Scheme 2 Latest April 2019 - ICT Zone Sdn. Bhd.€¦ · Means the ICT Interest Holder being an...
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ISSUED UNDER SECTION 28 OF THE INTEREST SCHEMES ACT 2016 THIS PROSPECTUS IS DATED 20th October 2019 AND EXPIRES ON 19th April 2020 PROSPECTUS
Transcript of Scheme 2 Latest April 2019 - ICT Zone Sdn. Bhd.€¦ · Means the ICT Interest Holder being an...
ISSUED UNDER SECTION 28 OF THE INTEREST SCHEMES ACT 2016
THIS PROSPECTUS IS DATED 20th October 2019 AND EXPIRES ON 19th April 2020
PROSPECTUS
Company No. 888104-M
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15.SHARIAH ADVISER’S REPORT
(PKF)
(SGS)
(IBFIM)
CONSULTANT
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Section 263 of the Companies Act
2016 2017
Means the exclusive agreements entered into between the Management Company and ICT Equipment Rental Partners.
Means the calculation provided in Clause 11.2 of the Management Agreement in respect of the Aggregate Net Profit for the Term as at the Maturity Date based on the ICT Equipment Rental Operations under this Scheme 2 during the Term as managed by the Management Company such calculation being based on the Profit Sharing Ratio of 30:70 that is to say 30% being the share of the Net Profit to be pro-rated between and amongst the 5,000 ICT Interests and 70% being the share of the Net Profit to be retained by the Management Company save and except that the entitlement or obligation of each ICT Interest and its registered ICT Interest Holder to its pro-rated value of the FPSC shall be the sum of such pro-rated value after deducting the value of the Interim Net Yield received by or attributable to such ICT Interest during the Term.
Means another approved scheme managed and operated by the Management Company known as the ICT Zone Ventures Scheme - Mudharabah Al-Mua’ddat (hereinafter referred to as the “First Scheme”) which was established by a trust deed dated 17th February 2011 and a first supplementary trust deed dated 5th October 2012.
"First Scheme"
Means the Management Company’s ICT rental operations such as software, personal computers, laptops, printers, scanners and projectors and, peripheral equipment to support ICT functions of rental customers under the Scheme 2 either directly or by way of ICT Equipment Rental Partners.
Means the persons and corporations with whom the Management Company has entered into Exclusive ICT Equipment Rental Agreements.
Means a person who has subscribed to the ICT Interests and entered into a Management Agreement with the Management Company and the plural expression shall be “ICT Interest Holders”.
Means any of the five thousand (5,000) redeemable interests created under the Scheme 2 herein in respect of the Management Company’s ICT Equipment Rental Operations for which any ICT Interest Holder has paid the ICT Interest Value and in consideration of which each ICT Interest Holder has obtained a contractual right under the Scheme 2 herein, which entitles the ICT Interest Holder to receive at the Maturity Date the Final Profit Share together with a redemption of the ICT Interest Value of each ICT Interest registered in the name of the ICT Interest Holder where the Management Company has issued to the ICT Interest Holder a ICT Interest Certificate and, multiples thereof as speci-fied in Section 4 of the First Schedule of the Management Agreement and “ICT Interests” means either a single ICT Interest or several ICT Interests (as the case may be).
Means a contract made between two parties to finance a business venture, that is to say, a profit sharing investment Scheme 2. The parties are a Rabbul Mal or an investor who solely provides the capital and a Mudarib or an entrepreneur who solely manages the project. If the venture is profitable, the profit will be distributed based on a pre-agreed ratio. If the business is a Loss, it will be borne solely by the provider of the capital.
Means the redeemable consideration by whatever name used in the Management Agreement and payable by each ICT Interest Holder to subscribe for one (1) ICT Interest or multiples thereof as specified in Section 4 of the First Schedule thereto at the times and in the manner stated in the Second Schedule thereto.
Means the professional adviser, firm or company having the requisite experience and expertise in the proper manage-ment and operation of the ICT Equipment Rental Operations or ordinary operations in the information technology industry.
Means the annual interim payment or attribution of the Final Profit Share on an annualised basis in respect of each ICT Interest during the Term. The interim payment is the projected average value of eight percent (8%) of the ICT Interest Value which shall be subject to any adjustment or reconciliation at the Maturity Date based on the Final Profit Sharing Computation. The interim payment shall be paid by the Management Company to each ICT Interest Holder under the respective Management Agreement within fourteen (14) days from each anniversary date of each Prospectus Period Start Date as specified in each Management Agreement save and except that the Interim Net Yield and shall be a pro-rated amount where the Commencement Date falls after the relevant Prospectus Period Start Date specified in each Management Agreement.
“Maturity Date”Means the date upon which the Management Agreement shall expire as specified in Section 6 of the First Schedule of the Management Agreement being one of the dates set out in the Fifth Schedule of this Agreement.
“Loss”Means loss of the capital of the Scheme 2.
“Mudharabah”
“Mudarib”
Means the Management Company as the entrepreneur of the Scheme 2 which is a mudharabah joint venture.
“Minister”
Means the annual audited profit after tax of the Management Company in respect of the ICT Equipment Rental Operations under this Scheme 2.
Means the date of the first Prospectus in respect of the Scheme 2 herein.
“Interest Schemes Act”Means the Interest Schemes Act (Act 778) and Interest Schemes Regulations 2017.
Means profit apportionment ratio between the Management Company or Mudarib and each Interest Unit Holder based on the ratio of 30:70 that is to say 30% being the share of the Aggregate Net Profit to be pro-rated between and amongst the Total Interest Units and 70% being the share of the Aggregate Net Profit to be retained by the Management Company.
Means the statement issued from time to time in respect of the Scheme 2 created herein pursuant to the Interest Schemes Act the first of which being issued on the Initial Launch Date.
Means the ICT Interest Holder being an investor who solely provides the capital for Scheme 2’s ICT Equipment Rental Operations.
Means the register of ICT Interests established and maintained by the Management Company entering and updating the same from time to time those registered as existing ICT Interest Holders of the Scheme 2.
Means the one thousand five hundred (1,500) ICT Interests that are held by the Management Company not for public subscription and may be released for public subscription only upon the approval of the Registrar of Companies.
“Scheme 2”Means the approved Scheme 2 herein and may also be referred to as the “ICT Zone Ventures Scheme 2 Mudharabah Al-Mua’ddat”.
Means the ICT equipment and software acquired and owned by the Management Company for the purpose and use of the ICT Equipment Rental Operations under this Scheme 2.
“Scheme 2 Expiry Date”Means the date of expiry of the Scheme 2 being the fifteenth (15th) anniversary date from the Initial Launch Date.
Means the relevant validity period set out in the Fourth Schedule of the Management Agreement within which the Commencement Date of a Management Agreement shall be specified in Section 6 of the First Schedule of the Management Agreement.
Means the date on which each Prospectus Period comes into effect as set out in the second column of the Fourth Schedule of the Management Agreement.
Means the Registrar as designated under section 20A of the Companies Commission Act 2001.
Means the time period of fifteen (15) years commencing on the Initial Launch Date and expiring on the Scheme 2 Expiry Date.
“Scheme 2 Period”
“Profit Sharing Ratio” or "PSR"
“Prospectus Period”
“Prospectus Period Start Date"
“Rabbul Mal”
"Scheme 2 Asset"
Means the person or Institution appointed pursuant to the Trust Deed and who are duly qualified to provide advise to the relevant parties in respect of the Scheme 2’s compliance with the requirements of the Shariah.
Means a scheme which is based on the spirit of cooperation and helping each other by providing financial assistance to participants when needed and participants agree to give contribution for the said purpose.
Means the validity period of nine (9) years for each Management Agreement which shall commence on the Com-mencement Date specified in Section 1 of the First Schedule and shall expire on the Maturity Date as specified in Section 6 of the First Schedule of the Management Agreement.
Means the sum of Ringgit Malaysia Fifty Million (RM50,000,000-00) derived from 5,000 ICT Interests created under the Scheme 2 herein.
Means the five thousand (5,000) ICT Interests created under the Scheme 2 herein.
Means a sum equivalent to Ringgit Malaysia One Hundred (RM100-00) payable to the Management Company in relation to any application for transfer or assignment of the ICT Interests.
Means the form for transfer or to assign any ICT Interests set out in the Third Schedule to the Management Agreement.
Means the Trust Deed entered into between the Management Company of the first part, the Trustee of the second part and the ICT Interest Holders of the final part to establish this Scheme 2 and shall include any amendments, modifications or changes made thereto from time to time and shall include the attachments, schedules and annexures herein.
Means PACIFIC TRUSTEES BERHAD (Company No. 317001-A), and shall include the trustee for the time being of this Deed, whether original, additional or substituted.
The Management Company has a core business in ICT rental operations such as software, personal computers, laptops, printers, scanners and projectors and, peripheral equipment to support ICT functions of rental customers.
The Management Company is operating another approved scheme known as the ICT Zone Ventures Scheme - Mudharabah Al-Mua’ddat (hereinafter referred to as the “First Scheme”) which was established by a Trust Deed dated 17th February 2011 and a first supplementary Trust Deed dated 5th October 2012.
It intends to establish, manage and operate the ICT Zone Ventures Scheme 2 - Mudharabah Al-Mua’ddat or Scheme 2 based on its ICT Equipment Rental Operations whereby the Management Company agrees to offer for public subscription redeemable ICT Interests. Scheme 2 shall operate for a period of fifteen (15) years under the Scheme 2 Period which shall commence on the Initial Launch Date and expire on the Scheme 2 Expiry Date. Each ICT Interest shall have a lifespan of nine (9) years during the Term which starts on the Commence-ment Date and expires on the Maturity Date specified in the First Schedule of each Management Agreement.
The Scheme 2 will involve the offer to the public of ICT Interests in respect of the ICT Operations. The ICT Interests are established pursuant to the Interest Schemes Act which provides for the creation of interests under a “common enterprise” but shall exclude business activities where profit payments are received or receivable.
Each ICT Interest shall have an initial subscription price of Ringgit Malaysia Ten Thousand (RM10,000-00) at the Initial Launch Date and all subsequent ICT Interests shall be at such subscription price as shall be stipulated by the Management Company from time to time based on market forces.
The Management Company will establish five thousand (5,000) ICT Interests under the Scheme 2 of which three thousand five hundred (3,500) ICT Interests are intended for public subscription to the public and the remaining one thousand five hundred (1,500) ICT Interests are designated as Reserved ICT Interests not for public subscription and may be released for public subscription only upon the approval of the Registrar of Companies.
Under the Scheme 2, each ICT Interest is entitled to receive the Final Profit Share after deducting the value of the Interim Net Yield received by or attributable to such ICT Interest for the Term as at the Maturity Date based on the ICT Equipment Rental Operations under this Scheme 2 managed by the Management Company.
The Scheme 2 will be operated by the Management Company whereby only Applicants who are invited or permitted or approved by the Management Company shall be allowed to participate in the Scheme 2 upon such terms and conditions as the Management Company shall stipulate, with prior consent from the Trustee, in the Management Agreement to be entered into between the Management Company and each Applicant. The Management Company will be the operator and issuer of the ICT Interests. The Management Company is not liable to be removed by the Trustee or the ICT Interest Holders.
An Applicant who subscribes to any ICT Interests shall be designated as an ICT Interest Holder and shall receive the Interim Net Yield in each calendar year during the Term and the Final Profit Share at the Maturity Date.
5 Years Business Performance Summary for Scheme 2
The Management Company undertakes hereby to ensure that the Scheme 2 Assets shall be properly identified and listed as property attributed to the Scheme 2. The list of Scheme 2 Assets shall be updated every calendar month and such list shall be made available for inspection by the Trustee, Approved Company Auditor, Independent Consultant and Registrar of Companies.
In relation to the ICT Interest Holders, only those persons who have obtained or entered into a Management Agreement with the Management Company shall be permitted to participate in the Scheme 2 upon the conditions stipulated in the Management Agreement. It is hereby expressly stipulated that the Management Agreement shall not confer on a ICT Interest Holder any proprietary right, title, interest, estate or share over the assets whether movable or immovable of the ICT Equipment Rental Operations or the Management Company BUT will only confer upon him the right to participate in the Scheme 2 as contained in the Management Agreement. Accordingly, no property will be vested in the Trustee and/or ICT Interest Holder.
This Prospectus has been lodged with the Registrar of Companies who takes no responsibility for its contents and is obtainable at the Business Office of the Management Company during office hours.
The Management Company hereby declares:
that no ICT Interest shall be transferred pursuant to this Prospectus later than six (6) months after the date of this Prospectus, unless otherwise approved by the Registrar of Companies;
that ICT Interest Certificate evidencing each ICT Interest shall be issued to any Applicant who subscribes for an ICT Interest pursuant to this Prospectus not later than two (2) months after the date of the full payment of the ICT Interest Value by the ICT Interest Holder.
The Trustee or representatives of the Trustee shall ensure that the Register of ICT Interests is properly maintained and to this end the Trustee is empowered and required to ensure compliance by the Management Company in issuing the ICT Interest Certificates to the ICT Interest Holder as aforesaid.
Invested Rental Assets
Asset Investment
Accumulated Depreciation
Net Book Value
Investment Scheme
Investment Received
Capital Fund Reserved
Income Tax Return Report **
Taxable Income
Note: * Subject for Actual Income Tax Return YA2019 ** At Company Level (inclusive Scheme 1)
18,453,559
5,652,363
31.1.2015
1.2.2014
210,0007,970,000
541,500
13,572,929
7,013,530
18,255,307
10,375,444
144,500
3,150,000
2,890,599
2,592,351
(298,248)(6,559,399
31.1.2016
1.2.2015CumulativeYTD
*
* 9,127,677
16,550,278
123,000
(110,000)
3,014,951
2,017,790
(997,161)
48,500
10,000
2,719,152
1,038,795
17,433,544
3,672,670
(1,680,358)
31.1.2017
1.2.2016
31.1.2018
1.2.2017
1,252,829
31.1.2019
1.2.2018
225,000
3,190,000
3,381,512
(2,441,436)
940,077
14,585,156
(i)
(ii)
210,000
Another significant milestone achieved in year 2013 is our successful registration of Leasing and Factoring with Bank Negara, hence recognizing ICT Zone Ventures Berhad being a niche business in both ICT and financial business in Malaysia.
2014 is a year of recognition for ICT Zone Ventures as we won the prestigious award from Sin Chew Daily for the category of Young and Emerging Excellent Business Award on 19th September 2014.
Hence, tapping into the experience of our business partners, achievement and recognition above, the Management Company and its key management staff is confident of the successful implementation of the Scheme 2 and the ICT Equipment Rental Operations.
329,052 (535,857)
(22,250)
(296,907)(243,930)
(563,087)
(563,087)
(93,212)
(656,299)
(22,250)
645,884(353,707)
(124,355)(146,944)
20,878
(63,739)
(301,786)
(258,924)
(238,046)
292,177
1,513,975
1,855,564(1,071,897)
(113,424)(176,654)
506,889
(90,902)
(75,924)
(491,911)
14,978
783,667
13,300
2,442,563
2,769,077(1,825,620)
(113,171)(147,650)
687,169
(101,533)
329,215
(256,420)
430,748
943,457
4,532Other Income
(Loss)/Profit and othercomprehensive (loss)/incomefor the financial year/period
Earning before Finance Cost, Taxes and Depreciation (EBITA)
31.1.2015
1.2.2014
31.1.2016
1.2.2015
31.1.2017
1.2.2016
31.1.2018
1.2.2017
31.1.2019
1.2.2018
3,689,546(2,776,503)
(253,894)
562,992483,814
134,157
54,980
(79,178)
913,043300
(175,635))
3,140,809
5 Years Business Performance Summary for Scheme 2 (Continued)
Maximum Noof ICT Interest
5,000:3,500 (Intended for public subscription)1,500(Reserved ICT Interest)
Price per each ICT Interest (RM)
No. of ICT Interests subscribed as at 08/10/2019
Movement from past 6 months
Balance ofICT Interest available forsubscription
Total 10,000
10,000 800
800
73
73
2,700
2,700
as at 08/10/2019
1.6 Summary Table Of Secured Equipment Rental Contract As At 31st Jul 2019 To Be Billed Until 2024
Type OfContract Total Unbilled Amount
ICT Rental Partner - Govern'tContract
ICT RentalPartner - Corporate Contract
No OfContract
38
77
115 2,563,380
1,355,006
TotalSecuredAmount
5,958,348
11,716,417
5,758,069
TotalInvoicedAmount
as at 31st
Jan 2020as at 31st
Jan 2021
1,137,539
514,761
as at 31st
Jan 2022
1,303,503
823,249
2,126,752
as at 31st
Jan 2019
979,362
1,787,228
807,866 1,208,374 622,778
437,945
145,090
as at 31st
Jan 2023
292,855
225,448
29,680
as at 31st
Jan 2024
195,768
* The Management Company has as at 31st Jul 2019 secured a total of 115 contracts valued at RM 11,716,417.
* The contracts are each secured for a period of 1 to 5 years, hence the management company has secured book ordersunutilised throughout 2019 until 2024 amounting to RM 1,787,228 (2019), RM 2,563,380 (2020), RM 1,137,539 (2021), RM437,945 (2022), RM 225,448 (2023), and RM 21,607 (2024).
* For the period from 1st Feb 2019 until 31st Jul 2019, a total of 11 government contracts valued at RM 1,754,441 were expiredand a total of 8 new government contracts valued at RM 1,080,560 were secured. Meanwhile a total of 25 corporate contractsvalued at RM 708,974 were expired and a total of 23 new corporate contracts valued at RM 1,257,194.73 were secured duringthe corresponding period.
33%
67%
100% 100%
%
51%
49%
%
21,607
-
as at 31st
Jan 2025
21,607
Datuk Ng Thien Phing
Tel : 603-4289 5329Fax : 603- 4289 5350E-mail : [email protected]
Datuk Ng Thien Phing
ICT Zone Holding Sdn Bhd
Datuk Ng Thien Phing
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Level 3, Block E, Excella Business Park, Jalan Ampang Putra, 55100 Kuala Lumpur
A-11-8, 11th Floor, Megan Avenue 1, 189, Jalan Tun Razak, 50400 Kuala Lumpur
Level 33, Menara IMK, Kompleks 1 Mont Kiara,No. 1, Jalan Kiara, Mont Kiara, 50480 Kuala Lumpur
Independent Consultant
Ground Floor, Block H, Excella Business Park, Jalan Ampang Putra, 55100 Kuala Lumpur
Menara Takaful Malaysia
(10871-T)
(AF0911)Pacific Trustees Berhad (Company No. 317001-A)
(763075-W)
Tower B
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Datuk Ng Thien Phing
Datuk Ng Thien Phing, was recently conferred of the "Panglima Mahkota Wilayah (P.M.W)" award by Yang di-Pertuan Agong Tuanku Abdul Halim Mu'adzam Shah which carries the title “Datuk”, was presented at Istana Negara, Kuala Lumpur on 1 February 2014 in conjunctions with the Federal Territories Day.
Datuk
Datuk
Datuk
Datuk
Datuk
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DATUK NG THIEN PHING
With tertiary background in accounting and business administration, Mr. Lim Kok Kwang started his career as a sales and marketing executive at Exxon Mobil Malaysia. He later established ICT Zone Holding Sdn Bhd together with Datuk Ng Thien Phing in 2000 to focus on audio-visual equipment sales and training. Over the years the corporate group has grown tremendously with the establishment of many new subsidiaries including ICT Zone Sdn Bhd, Techfin Capital Sdn Bhd, Haas Technologies Sdn Bhd (an MSC status company).
Under his management and leadership, the corporate group underwent business re-engineering such as merging and acquisition of IT and AV business under ICT Zone Sdn Bhd. Mr. Lim also successfully set up a joint venture company, Techfin Capital Sdn Bhd partnering with South Korean partners that ventured into transfer of technology and expertise. Techfin Capital Sdn Bhd is the first and only company in Malaysia to repair projector in chips and component level. With Haas Technologies Sdn Bhd Mr Lim has successfully initiated several IT researches and developments.
The group has achieved another milestone in 2011 with the approval from Suruhanjaya Syarikat Malaysia (SSM) to establish, manage and operate the first non-agriculture based interest scheme in Malaysia – ICT Zone Ventures Scheme through ICT Zone Ventures Berhad. The scheme scored another first in 2012 as the first Shariah-compliant Interest Scheme in Malaysia. It is now known to public as Mudharabha Al-Mua’ddat Investment. In 2013, the company has complied with the Section 19(1) of the Banking and Financial Institutions Act (BAFIA) 1989 to carry out the leasing business and factoring business.
In addition, Mr. Lim has been actively involved in the IT industry as a Persatuan Industri Komputer dan Multimedia Malaysia (PIKOM) and International Technology Rental Association (ITRA) member, contributing ideas and views in industry dialogues with the government and international IT organizations such as ASOCIO and WITSA. Mr Lim has been consecutively appointed as a member of the Partner Advisory Board Committee of Hewlett-Packard Asia Pacific and Japan since 2010 to represent Malaysian Hewlett-Packard partners for planning and improving the strategy of Hewlett Packard business in the region. Mr. Lim is also a founding partner of Federation of Interest Scheme Operators Malaysia (FISOM) and his contribution to interest scheme industry has been recognized with his election to FISOM presidency 2014.
Leading the team to manage the growth of the ICT business in the corporate group through his focus on the ICT Equipment Rental Operations, Mr Lim is noted for his considerable experience to grow the group’s turnover at average 30% growth since 2000. Mr Lim has also been successful in the implementation of ERP system, ISO 9001:2008 and 5’S System to ensure the standard and quality service of the group’s business operations.
Mr Lim is still very much involved in day-to-day operation, imparting the group’s finance and business operation with his vast knowledge of the changing market needs. His pragmatic approach to business has been instrumental in grooming the group as the market leader in ICT rental and leasing business through innovative fund raising scheme – ICT Zone Ventures Scheme.
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Interest
CONSULTANT
Invest in Scheme.
based on Interim Net Yield.
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The public is invited to participate in the ICT Zone Ventures Scheme 2 which is involved in the ICT Equipment Rental Operations by subscribing to ICT Interests and entering into the Management Agreement with the Management Company where ICT Interest Holders may receive the interim Net Yield (if any) in each calendar year during the term and the Final Profit Share at the Maturity Date.
The terms and conditions governing the Scheme 2 and the ICT Interests are as stated in this Prospectus, the Trust Deed, the Management Agreement.
The Management Company is obliged to accept the return of the ICT Interests prior to the Maturity Date from any ICT Interest Holder based on the following valuations:
Any ICT Interest returned and accepted by the Management Company may be re-offered for public subscription by the Management Company at a value to be determined by the Management Company based on market forces and if such ICT Interest is not re-offered for public subscription any residual value of such ICT Interests shall, at the Maturity Date, be taken into account and pro-rated to the remaining ICT Interest.
For administrative efficiency and effectiveness, any and all ICT Interests to be returned to the Management Company shall be processed only during the calendar months of March, June, September and December.
In each calendar year commencing from the Initial Launch Date, the Management Company’s obligation to accept the return of any ICT Interest shall be limited to Five Percent (5%) of the value of the total number of ICT Interests subscribed or to accept the return of ICT Interests to an aggregate value up to the limit of Ringgit Malaysia One Million Five Hundred Thousand only (RM1,500,000-00), whichever is higher.
Where the request for return of an ICT Interest is made before the first anniversary from the relevant Prospectus Period Start Date as specified in the Management Agreement, the amount to be refunded to ICT Interest Holder is one hundred percent (100%) of the ICT Interest Value paid by the ICT Interest Holder after deducting an administrative charge equal to five percent (5%) of the ICT Interest Value paid by the ICT Interest Holder being Scheme 2 establishment and marketing expenses together with operational expenses arising from the return of ICT Interest from such ICT Interest Holder. Such operational expenses must be approved by the Shariah Adviser and such refund shall be drawn from the ICT Interest Value contributed by the ICT Interest Holder.
Where the request for return of an ICT Interest is made after the first anniversary from the relevant Prospectus Period Start Date as specified in the Management Agreement, the amount to be refunded to ICT Interest Holder is one hundred percent (100%) of the ICT Interest Value paid by the ICT Interest Holder after deducting an amount equivalent in value to fifty percent (50%) of the Interim Net Yield received by the ICT Interest Holder as at the date when the request for return of the ICT Interests is made and after deducting an administrative charge equal to one percent (1%) of the ICT Interest Value paid by the ICT Interest Holder being operational expenses incurred by the Scheme 2 arising from the return of ICT Interest from such ICT Interest Holder. Such operational expenses must be approved by the Shariah Adviser and such refund shall be drawn from the ICT Interest Value contributed by the ICT Interest Holder.
Arrangements for acceptance and return of ICT Interests
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A copy of the current Prospectus which shall be provided by the Management Company to the ICT Interest Holder who so decides to transfer his ICT Interest on payment of a fee of RM 20.00 to the Management Company. The ICT Interest Holder is required to furnish to the subsequent subscriber with a copy of the current Prospectus failing which such ICT Interest Holder will be committing an offence under the Interest Schemes Act;
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The Management Company covenants that the maximum number of ICT Interests that will be issued by the Management Company shall not exceed five thousand (5,000). At the Initial Launch Date the Management Company shall offer for public subscription three thousand five hundred (3,500) ICT Interests.
The Management Company intends to offer the ICT Interests at the Initial Launch Date of the Scheme 2 for public subscription at the initial subscription price of Ringgit Malaysia Ten Thousand only (RM10,000-00). After the Initial Launch Date, the ICT Interest Value will be determined by the Management Company from time to time based on market forces.
The Management Company is required to hold the remaining one thousand five hundred (1,500) ICT Interests as Reserved ICT Interests which shall not be available for public subscription and may be released for public subscription only upon the approval of the Registrar of Companies.
As the Scheme 2’s principal activity is the ICT Equipment Rental Operations, the Scheme 2 is susceptible to certain business risks inherent in the general economic health of Malaysia as well as general business risks. These include but are not limited to:-
The Management Company seeks to limit these risks through effective risk management practices. However, there is no assurance that adverse changes in the business environment will not have an impact on the Scheme 2.
Before subscribing for any ICT Interest, you should pay particular attention to the fact that the Scheme 2, and to a large extent the Scheme 2’s activities, are subject to legal, regulatory and business environment in Malaysia. The Scheme 2’s ICT Operations business is subject to a number of factors, many of which are outside the Management Company’s control. Prior to making the decision to subscribe for any ICT Interest, you should carefully consider along with the other matters in this Prospectus, the risk considerations set out below. The risks set out below are not an exhaustive list of the challenges that we currently face or that may develop in the future. Additional risks, whether known or unknown, may in the future have a material adverse effect on the Management Company or the Scheme 2.
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The Management Company will continue to make strenuous efforts to further enhance the ICT systems management system. If serious trouble occurs in computer systems despite the Management Company’s efforts, it could hamper the ICT Equipment Rental Operations affecting earnings and overall performance of the Scheme 2.
The Management Company’s core business is the ICT Equipment Rental Operations. The trend of information equipment investment in capital expenditure of the government sector and private sector might adversely affect the Management Company’s business and the Scheme 2’s operating results.
The Scheme 2 is based on the concept of participation by the ICT Interest Holders in the ICT Equipment Rental Operations on a profit-and- loss-sharing basis. There is always a risk, however remote, that Scheme 2 and the ICT Equipment Rental Operations may incur losses due to commercial and economic factors.
The risk is mitigated by the business and operational experience of the management team and the Scheme 2’s underlying principle of profit-and-loss sharing which is a progressive one as it encourages good performance and better resource management.
This is the risk of the Scheme 2 not conforming to Shariah principles. The Scheme 2 can only operate within the principles of the Shariah.
In the event that the Scheme 2 enters into any transaction, arrangement or investment that does not comply with Shariah principles such transaction, arrangement or investment will be disposed or withdrawn from the Scheme 2 with immediate effect. In the event of the transaction, arrangement or investment resulting in any gains (through profits, capital gain or dividend), such gain is to be channelled to baitulmal or any other charitable bodies as advised by the Shariah Adviser. If the disposal of the investment resulted in losses to the Scheme 2, the losses are to be borne by the Management Company.
This risk is mitigated through the appointment of a Shariah Adviser for the Scheme 2, who will be responsible to ensure that the Scheme is managed and administered in accordance with Shariah Principles.
To ensure proper protection of Scheme 2 Assets from any liability exposure to the First Scheme, the Management Company has implemented processes and procedures to ensure that the Scheme 2 Assets shall be properly identified and listed as property attributed to the Scheme 2. The list of Scheme 2 Assets shall be updated every calendar month and such list shall be made available for inspection by the Trustee, Approved Company Auditor, Independent Consultant and Registrar of Companies.
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6.9 Protection of Scheme 2 Assets
Though the Management Company intends to cope with the intense competition by reinforcing its earnings structure such intense competition may adversely affect the ICT Equipment Rental Operations and the Scheme 2’s operating results despite the efforts.
21
CONSULTANT
An independent Auditor shall be appointed by the Management Company and the independent Auditor shall conduct a semi-annual review and inspection of the Scheme’s operations which encompasses a review of the quality of work carried out at the scheme and, the independent Auditor will prepare a semi-annual written report a copy of which will be submitted to the Management Company, Trustee and the Registrar of Companies and, also be incorporated into the next published Prospectus.
The Management Company reserves the right to refuse any application without assigning any reason therefore. A rejection notice will be given to unsuccessful applicants together with a refund of any monies paid to Management Company.
of the Management Agreement and a refund of any monies paid to Management Company by the ICT Interest Holder.
22
The Management Company shall appoint a Chief Executive Officer subject to the prior consent of the Registrar of Companies.
The Chief Executive Officer shall handle the operations and responsibilities of the Management Company upon such terms as shall be agreed upon between the Management Company and the Chief Executive Officer.
The Chief Executive Officer shall be responsible to look into and resolve any complaints relating to the Scheme 2 and its operations.
that it is a public limited company incorporated in Malaysia with an issued and paid-up capital of Ringgit Malaysia Five Million (RM5,000,000.00) and is empowered to carry on the business of operating the Scheme 2 and offering ICT Interests to members of the public in respect of the Scheme 2;
that some of its officers involved in the development, management and operation of the Scheme 2 have had prior experience and expertise in managing public companies or related businesses;
except for those ICT Interests for public subscription at the ICT Interest Value stated at the Initial Launch of the Scheme 2, offer for public subscription all other ICT Interests subsequent thereto at such ICT Interest Value as will be determined by the Management Company and with prior notice to the Trustee in accordance with market forces;
ensure that the Scheme 2 Assets shall be properly identified and listed as property attributed to the Scheme 2. The list of Scheme 2 Assets shall be updated every calendar month and such list shall be made available for inspection by the Trustee, Approved Company Auditor, Independent Consultant and Registrar of Companies;
a)
a)
b)
b)
c)
c)
d)
d)
23
give to the Trustee or the Trustee’s representative or to any Approved Company Auditor appointed by the Management Company such oral or written information as the Trustee requires with respect to all matters relating to the operation and management of the Scheme 2 or any property forming part of the Scheme 2 (whether acquired before or after the date of the Trust Deed) or otherwise relating to the affairs thereof;
prepare or cause to be prepared accounts that truly and fairly reflect all the accounting records or financial transactions including business, income, and expense attributable to the Scheme 2;
clearly indicate in the Prospectus the risks that may occur and what are the approaches or measures to mitigate such risks;
ensure that any advertisement by the Management Company in relation to the Scheme 2 shall be prepared in compliance with the provisions of Sections 40 and 363(10) of the Act and the relevant policy guidelines and requirements, practice notes and any of the same that are issued from time to time by the Registrar; and;
ensure that there shall be no usage of the Registrar’s logo in any such advertisement.
make available or ensure that there is made available to the Trustee or the Trustee’s representative such details as the Trustee or the Trustee’s representative requires with respect to all matters relating to the development and other aspects of the Scheme 2;
furnish to the Trustee copies of notices of all annual general meetings or extraordinary general meetings of the shareholders of the Management Company and in this respect, the Management Company shall invite the Trustee to attend such aforesaid meetings PROVIDED ALWAYS that the Trustee shall not be vested nor deemed to be vested with any right whatsoever to vote at such meetings; and;
obtain the approval of the Trustee and the Registrar of Companies in relation to any advertisement, circular or other document containing any Prospectus with respect to the Scheme 2 prior to its publication of any such advertisement, circular or other document;
e)
f )
g)
h)
i)
j)
k)
l)
a)
b)
c)
d)
(i)
(ii)D P
it shall cover and/or caused to be covered under an approved Takaful Scheme all relevant ICT Equipment Rental Operations assets from loss or damage by fire up to their respective full coverable value and to pay all takaful contribution necessary for that purpose; and
24
e)
g)
h)
i)
f )
it shall ensure that the statements in the advertisements are consistent with the disclosures contained in the Prospectus and shall not include additional facilities or amenities that are not stated in the Prospectus or change the substantive nature of the Scheme 2.
it shall ensure that where any advertisement is disseminated by means of broadcasting, television or cinematograph, the advertisement should contain the address where a copy of the Prospectus can be requested by the public. The Prospectus shall be supplied to the public within seven (7) days from the date of such request.
it shall assign a reference number to each advertisement. The advertisement shall be stated in each published advertisement.
it shall submit to the Registrar of Companies a certificate before publishing or disseminating the advertisement.
The certificate shall be signed by at least two (2) directors of the Management Company.
it shall ensure that the advertisement shall contain a statement which carries the following meaning:
25
As required by Section 91(1) of the Companies Act, the invitation to the Applicants in this Prospectus requires a Trust Deed. A copy of the Trust Deed will be made available to ICT Interest Holders for their perusal at the Management Company’s premises during office hours. The Trustee is a trust company registered under the Trust Companies Act, 1949.
The parties to the Trust Deed and the First Supplementary Trust Deed are :-
Pacific Trustees Berhad; and
Capital
Capital
26
-
At the written request of the Management Company for specific amounts supported by reasonable justifications in respect of financial support for the Scheme 2 or the ICT Equipment Rental Operations, the Trustee may withdraw from the Capital Reserve Fund and transfer to the Management Company such amounts requested.
Upon each anniversary of the Prospectus Period Start Date, the Management Company is obliged to make an annual contribution to the Capital Reserve Fund from the net annual revenue received by the Management Company from the ICT Equipment Rental Operations and the amount of such annual contribution shall be calculated based on the following table where the monetary value of the annual contribution is shown as a percentage of the ICT Interest Value received by the Scheme 2 from the ICT Interest Holders:
Annual contribution to Capital Reserve Fund by the Management Company as a percentage of each ICT Interest Value received by
the Scheme 2 in respect of each ICT Interest .
27
3,500
The Trustee shall ensure that all relevant ICT Equipment Rental Operations assets are covered under an approved Takaful Scheme from loss or damage by fire up to their respective full coverable value.
Maximum Number of ICT Interests Available for public subscription
Consent to public subscription and Advertising
All sums deposited in the Interim Net Yield Contingency Fund and Capital Reserve Fund may be invested by the Trustee in suitably liquid and secure Shariah-Compliant investments or any other Shariah-compliant investment authorised by law and approved by the Management Company and Shariah Adviser as well as any profit earned thereon shall be accumulated to the principal until release thereof to the Management Company in accordance with the Trust Deed.
28
2
The Scheme 2 herein shall continue to subsist for so long as there shall be a valid Management Agreement, ICT Interest and its related ICT Interest Certificate in existence or for such other time as shall be agreed between the Trustee and the Management Company.
In the event that the Management Company is under liquidation or any situation to which Section 95 of the Act may apply has arisen, and the Trustee, having already exhausted the means under Section 95 of the Act to wind up the Scheme 2, has reached a situation of deadlock, the Trustee may apply to the Court for the following directions-
Having regard to all the circumstances of the case the most equitable mode of winding up and/or terminating the Scheme 2;
Whether the ICT Interest Holders (or any one or more of them) have to be compensated at all;
If the Court is of the opinion that the ICT Interest Holders have a right to be compensated then to what extent each of the ICT Interest Holders have to be compensated;
(iii)
Any other directions which the Trustee deem expedient to seek form the Court for the effective winding up and/or termination of the Scheme 2;
(iv)
Any other directions which the Trustee deem expedient to seek form the Court for determination of any of the following questions-
Any question arising in the execution of a trust;
(v)
(a)
Any question as to the composition of any class of persons having a claim in any property subject to a trust;
(b)
Any question as to the rights or interests of a person claiming to be beneficially entitled under a trust.
(c)
(k)
(p)
29
.
The Trustee shall report to the Registrar of Companies any non-compliance of Trust Deed by Management Company and procure and obtain that the reports from the Independent Consultant to ensure that the development of Scheme 2 as promised in the Trust Deed is fullfilled.
General information2
This report has been prepared for the inclusion in the prospectus dated 20th October 2019 issued under the Interest Schemes Act, 2016 in Malaysia in connection with the Company’s invitation to the public to subscribe for ICT Interests promoted by ICT Zone Ventures Berhad (“Management Company” or “the Company”).
The Management Company was incorporated in Malaysia on 28 January 2010 as a private limited company under the name ICT Zone Ventures Sdn. Bhd.. On 19 May 2010, the Management Company was converted to a public limited company and adopted its current name.
ICT Zone Ventures Berhad is principally engaged in the ICT equipment rental operations and operates and manages the ICT Zone Ventures Scheme - Mudharabah Al-Mua’ddat and ICT Zone Ventures Scheme 2 - Mudharabah Al-Mua’ddat.
The authorised share capital of the Company at the date of incorporation was RM100,000 divided into 100,000 ordinary shares of RM1 each and was subsequently increased to RM5,000,000 divided into 5,000,000 ordinary shares of RM1 each on 20 May 2010. Presently, the authorised share capital is RM5,000,000 divided into 5,000,000 ordinary shares of RM1 each.
The movement in the Company’s issued and paid-up share capital, consisting of ordinary shares of RM1 each, since its incorporation are as follows:
30
08th October 2019
Level 3, Block E
ICT Zone Ventures Berhad is the Management Company intended to establish, manage and operate the ICT Zone Ventures Scheme 2 - Mudharabah Al-Mua’ddat Scheme 2 based on its rental operations for software, personal computers, laptops, printers, scanners and projectors and peripheral equipment to support ICT functions of rental customers under the Scheme either directly or by way of ICT Equipment Rental Partners.
The ICT Interest offered for subscription under the Scheme 2 are based on a scheme where, under the terms and conditions of the Management Agreement, the ICT Interest Holders have the rights to receive the Final Profit Share after deducting the value of the Interim Nett Yield received by or attributable to such ICT Interest as at Maturity Date.
There are 5,000 ICT Interests under the Scheme 2, however, 1,500 ICT Interests are designated as Reserved ICT Interests not for public subscription and may be released for subscription only upon the approval of the Registrar of Companies. The total number and type of ICT Interests issued by the Company as at 08th October 2019 are as follows:
Subject to the terms and conditions contained in the Management Agreement, the ICT Interests are freely transferable and ICT Interest Holders are at liberty to transfer, give or bequeath their ICT Interests subscribed and fully paid to whoever they choose.
Request for transfer must be in writing in the prescribed Transfer Form. Upon the approval of the Manage-ment Company, the Transfer fee of RM100 is payable to the Management Company.
The Company has undertaken another approved scheme known as ICT Zone Ventures Scheme - Mudharabah Al-Mua’ddat (“First Scheme”) which was established by a trust deed dated 17th February 2011 and a first supplementary trust deed dated 5th October 2012.
The Company is under the obligation to accept the return of any of the ICT Interests which it has publicly offered prior to the maturity date.
We have acted as the statutory auditors of the Company since the financial year ended 31 January 2011.
Publicly Offered
3,500
5,000
1,500
(800)
2,7001,500
4,200
public subscription
31
ICT Interest under the Scheme 2
RM10,000.
Audited Financial statements4
(800)
32
The Company has no taxable income for the financial years ended 31 January 2019, 31 January 2017, 31 January 2016, and 31 January 2014. The tax expense for the financial years ended 31 January 2019, 31 January 2017, 31 January 2016 and 31 January 2014 are derived from the provision of deferred tax liabilities. For the financial year ended 31 January 2018 and 31 January 2015, taxable income arose from profit received during the financial year.
The summarised results of the Company based on the audited financial statements for the financial year ended 31 January 2018, 31 January 2017, 31 January 2016 31 January 2015 and 31 January 2014 are as follows and should be read in conjunction with the notes presented in part 8 of the report:
Summarised statement of profit or loss and other comprehensive income
Other Income
8.6(Loss) /Profit and other comprehensive (loss)/ income for the financial year
9,401,157(7,019,792)
(950,090)(767,476)
745,009
(298,278)
(1,806,111)
(2,252,842)
(1,507,833)
2,381,36581,210
31.1.2015
1.2.2014
18,535,603(12,960,562)
(1,083,113)(1,001,447)
5,522,250
(663,882)
1,905,868
(2,952,500)
2,569,750
5,575,0412,031,769
31.1.2017
1.2.2016
22,262,477(14,351,234)
(1,067,541)(892,986)
6,178,465
(960,672)
2,271,658
(2,946,135)
3,232,330
7,911,243227,749
31.1.2018
1.2.2017
21,643,544(17,152,288)
(1,340,327)(1,463,395)
2,264,692
708,225
(81,361)
(3,054,278)
(789,586)
4,491,256(577,158
31.1.2019
1.2.2018
13,293,345(9,223,876)
(1,130,501)(806,687)
2,142,609
(203,966)
(629,425)
(2,568,068)
(425,459)
4,069,46910,328
31.1.2016
1.2.2015
Tax income/(expense)
33
Effective tax rate (20%)
31.1.2015
1.2.2014
(49%)
31.1.2016
1.2.2015
25%
31.1.2017
1.2.2016
30%
31.1.2018
1.2.2017
90%
31.1.2019
1.2.2018
No dividend has been paid or declared by the Company for the years under review.
(Continued)
34
The following statement of financial position of the Company is prepared based on the audited financial statements as at 31 January 2019 and should be read in conjunction with the no tes presented in part 8 of the report.
2019
30,932,99917,092,500
3,647,957671,898
1,582,351
3,628,445
29,661,400
32,108,884
2,447,484
3,415,9289,810,553
13,226,481
45,335,365
53,963,810
8,628,445
5,938,311
48,025,499
53,963,810
36,105
Non-trade receivables, Islamic deposits and prepayments Islamic fixed deposits with licensed banksTax Recoverable
-
Retained earnings
ASSETS
Trust funds
Equity attributable to owner of the Company
8.9
8.11
8.128.13
8.148.15
Tax payable -
35
Earnings before finance cost, taxes and depreciation Earnings before finance cost and taxes
Gross Profit Margin
(3%)
(5%)
Net Profit / (Loss) Margin before tax
2015RM
6,875,036
745,009
25%
(16%)
(19%)
2016RM
10,364,190
2,142,609
31%
14%
10%
2017RM
16,954,762
5,522,250
30%
15%
10%
19,725,790
6,178,465
36%
2018RM
(4%)
(0.4%)
17,847,660
2,264,692
23%
2019RM
Net Profit / (Loss) Margin after tax
Results and Ratio Analysis
36
Basis of preparation
The financial statements of the Company have been prepared in accordance with Malaysian Financial Reporting Standards (“MFRSs”), International Financial Reporting Standards and the Companies Act, 2016 in Malaysia.
The accompanying financial statements have been prepared assuming that the Company will continue as going concern which contemplates the realisation of assets and settlement of liabilities in the normal course of business.
The financial statements are presented in the Ringgit Malaysia (“RM”), which is the Company’s functional and presentation currency.
The Directors do not expect the adoption of the new and amended MFRS and interpretation above will have significant impact on the financial statements of the Company. The changes of accounting policies for the Company for the newly effective standards has been stated in Note 1(c).
Standards issued and effective
On 1 February 2018, the Company has also adopted the following new and amended
MFRSs which are mandatory for annual financial periods beginning on or after 1
January 2018.
1 January 2018
1 January 2018
1 January 2018
1 January 2018
1 January 2018
1 January 2018
1 January 2018 1 January 2018 1 January 2018
(a)
• Annual improvements to MFRSs 2014-2016 cycle- Amendments to MFRS 1, First-time Adoptions ofMalaysian Financial Reporting Standards- Amendments to MFRS 128, Investment inAssociates and Joint Ventures• Amendments to MFRS 2, Share-based Payment:Classification and Measurements of Share-based Payment Transactions• Amendments to MFRS 4, Insurance Contracts:Applying MFRS 9 Financial Instrument with MFRS 4 Insurance Contracts• MFRS 9, Financial Instruments• MFRS 15, Revenue from Contract with Customers• Clarifications to MFRS 15, Revenue from Contractswith Customers • Amendments to MFRS 140, Investment Property:Transfer of Investment property• IC Interpretation 22, Foreign Currency Transactionsand Advance Consideration
37
Standards issued but not yet effective
The Company has not adopted the following standards and interpretations that have been issued but not yet effective:
(b)
1 January 2019
1 January 2019 1 January 2019 1 January 2019
1 January 2020 1 January 2020
1 January 2020 1 January 2020
1 January 20201 January 2020 1 January 2019 1 January 2021
1 January 2019
1 January 2019
1 January 2019
1 January 2020
1 January 2020
1 January 2019 1 January 2020 1 January 2020
Deferred
•- - - -
Annual improvements to MFRSs 2015 - 2017 cycle Amendments to MFRS 3, Business Combinations Amendments to MFRS 11, Joint Arrangements Amendments to MFRS 112, Income Taxes Amendments to MFRS 123, Borrowing
• Amendments to MFRS 119, Employee Benefits: PlanAmendment, Curtailment and Settlement• Amendments to MFRS 2, Share-based Payment• Amendments to MFRS 3, Business Combinations• Amendments to MFRS 6, Exploration for and Evaluation ofMineral Resources• Amendments to MFRS 14, Regulatory Deferral Accounts• Amendments to MFRS 101, Presentation of Financial Statements• Amendments to MFRS 108, Accounting Policies, Changesin Accounting Estimates and Errors• Amendments to MFRS 134, Interim Financial Reporting• Amendments to MFRS 137, Provisions, Contingent Liabilitiesand Contingent Assets• Amendments MFRS 138, Intangible Assets• MFRS 16, Leases• MFRS 17, Insurance Contracts• Amendments to MFRS 10, Consolidated FinancialStatements and MFRS 128 Investment in Associate and Joint Ventures: Sales or Contribution of Assets Between an Investor and its Associate or Joint Venture• Amendments to MFRS 9, Financial Instruments: PrepaymentFeatures with Negative Compensation• Amendments to MFRS 128, Investment in Associates andJoint Ventures: Long-term Interests in Associates and Joint Ventures• IC Interpretation 23, Uncertainty over Income Tax Treatments• Amendments to IC Interpretation 12, Service ConcessionArrangements
38
(b)
MFRS 16 Leases
The initial application of the abovementioned accounting standards, amendments or interpretations are not expected to have any material impacts to the financial statement of the Company except as mentioned below:
MFRS 16, which upon the effective date will supersede MFRS 117 Leases, introduces a single lessee accounting model and requires a lessee to recognise assets and liabilities for all leases with a term of more than 12 months, unless the underlying asset is of low value. Specifically, under MFRS 16, a lessee is required to recognise a right-of-use asset representing its right to use the underlying leased asset and a lease liability representing its obligation to make lease payments. Accordingly, a lessee should recognise depreciation of the right-of-use asset and interest on the lease liability, and also classifies cash repayments of the lease liability into a principal portion and an interest portion and presents them in the statement of cash flows. Also, the right-of-use asset and the lease liability are initially measured on a present value basis. The measurement includes non-cancellable lease payments and also includes payments to be made in optional periods if the lessee is reasonably certain to exercise an option to extend the lease, or not to exercise an option to terminate the lease. This accounting treatment is significantly different from the lessee accounting for leases that are classified as operating leases under the predecessor standard, MFRS 117.
The adoption of MFRS 16 will result in a change in accounting policy. The Company is currently assessing the financial impact of adopting MFRS 16.
In respect of the lessor accounting, MFRS 16 substantially carries forward the lessor accounting requirements in MFRS 117. Accordingly, a lessor continues to classify its leases as operating leases or finance leases, and to account for those two types of leases differently.
Standards issued but not yet effective (coutinued)
The Company has not adopted the following standards and interpretations that have been issued but not yet effective:
• Amendments to IC Interpretation 19, Extinguishing Financial Liabilities with Equity Instruments• Amendments to IC interpretation 20, Stripping Costs in theProduction Phase of a Surface Mine• Amendments to IC Interpretation 22, Foreign CurrencyTransactions and Advance Consideration• Amendments to IC Interpretation 132, Intangible Assets -Web Site Costs
1 January 2020
1 January 2020
1 January 2020
1 January 2020
39
(i)
(ii)
Under adoption of MFRS 9, the classification of financial assets is driven by cash flow characteristics and the business model in which an asset is held. The new model also results in a single impairment model being applied to all financial instruments.
In essence, if a financial asset is a simple debt instrument and the objective of the entity’s business model within which it is held to collects its contractual cash flows, the financial asset is measured at amortised cost. In contrast, if that asset is held in a business model the objective of which is achieved by both collecting contractual cash flows and selling financial assets, then the financial asset is measured at fair value in the statements of financial position, and amortised cost information is provided through profit or loss. If the business model is neither of these, then fair value information is increasingly important, so it is provided both in the profit or loss and in the statements of financial position.
New expected-loss impairment model that will require more timely recognition of expected credit losses. Specifically, this Standard requires entities to account for expected credit losses from when financial instruments are first recognised and to recognise full lifetime expected losses on a more timely basis. The model requires an entity to recognised expected credit losses at all times and to update the amount of expected credit losses recognised at each reporting date to reflect changes in the credit risk of financial instruments. This model eliminates the threshold for the recognition of expected credit losses, so that it is no longer necessary for a trigger event to have occurred before credit losses are recognised.
Basis of preparation (continued)
Explanation on change in accounting policy
The adoption of the above MFRSs did not have any significant effect on the financial statements of the Company.
In the current financial year, the Company has adopted MFRS 9 Financial Instruments (“MFRS 9”) effective for the annual financial period beginning on or after 1 January 2018. The date of initial application is as of the beginning of the first MFRS reporting period.
MFRS 9 Financial instrument
(c)
40
Critical accounting estimates and judgements (d)
There are certain transactions and computations for which the ultimate tax determination may be different from the initial estimate. The Company recognises tax liabilities based on its understanding of the prevailing tax laws and estimates of whether such taxes will be due in the ordinary course of business. Where the final outcome of these matters is different from the amounts that were initially recognised, such difference will impact the income tax and deferred tax provisions in the year in which such determination is made.
The financial statements have been prepared on the historical cost basis other than as disclosed in Note 8.2 to the Accountant’s Report.
Basis of measurement(c)
Estimates and judgements are continually evaluated by the Directors and management and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The estimates and judgements that affect the application of the Company’s accounting policies and disclosures, and have a significant risk of causing a material adjustment to the carrying amounts of assets, liabilities, income and expenses are discussed below:-
(i) Income Taxes
(ii) Depreciation of Property, Plant and Equipment
The estimates for the residual values, useful lives and related depreciation charges for property, plant and equipment are based on commercial factors which could change significantly as a result of technical innovations and competitors’ actions in response to the market conditions.
The Company anticipates that the residual values of its property, plant and equipment will be insignificant. As a result, residual values are not being taken into consideration for the computation of the depreciable amount.
Changes in the expected level of usage and technological development could impact the economic useful lives and the residual values of these assets, therefore future depreciation charges could be revised.
(iii) Impairment of Non-financial Assets
When the recoverable amount of an asset is determined based on the estimate of the value-in-use of the cash-generating unit to which the asset is allocated, the management is required to make an estimate of the expected future cash flows from the cash-generating unit and also to apply a suitable discount rate in order to determine the present value of those cash flows.
41
(a) Revenue
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured.
Rental income from rental asset is recognised in profit or loss on a straight-line basis over the term of the lease
(d) Critical accounting estimates and judgements (continued)
(iv) Fair Value Estimates for Certain Financial Assets and Liabilities
The Company uses a provision matrix to calculate ECLs for trade receivables and contract assets. The provision rates are based on the payment profiles of sales over a period of 36 months before the end of the reporting period and the corresponding historical credit losses experienced within this period.
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 the profit or loss in the period in which actual realisation and settlement occurs.
The provision matrix is initially based on the Company’s historical observed default rates. The Company will calibrate the matrix to adjust the historical credit loss experience with forward-looking information on macroeconomic factors affecting the ability of the customers to settle the receivables. The historical observed default rates are updated and changes in the forward-looking estimates are analysed at every end of the reporting period.
(v)
The Company carries certain financial assets and liabilities at fair value, which requires extensive use of accounting estimates and judgement. While significant components of fair value measurement were determined using verifiable objective evidence, the amount of changes in fair value would differ if the Group uses different valuation methodologies. Any changes in fair value of these assets and liabilities would affect profit and/or equity.
(v) Deferred Tax Assets and Liabilities
Rental income
Provision for expected credit losses (“ECLs”) of trade receivables
42
(c)
Wages, salaries, bonuses and social security contributions are recognised as an expense in the financial year in which the associated services are rendered by employees of the Company.
Short term accumulating compensated absences such as paid annual leave are recognised when services are rendered by employees that increase their entitlement to future compensated absences, and short term non-accumulating compensated absences such as sick leave are recognised when the absences occur.
The Company’s contribution to defined contribution plans is charged to the profit or loss in the period to which they relate. Once the contributions have been paid, the Company has no further liability in respect of the defined contribution plans.
Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted at the reporting date.
Current taxes are recognised in profit or loss except to the extent that the tax relates to items recognised outside profit or loss, either in other comprehensive income or directly in equity.
Deferred tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements.
Deferred tax liabilities are recognised for all taxable temporary differences other than those that arise from goodwill or excess of the acquirer’s interest in the net fair value of the acquiree’s identifiable assets, liabilities and contingent liabilities over the business combination costs or from the initial recognition of an asset or liability in a transaction which is not a business combination and at the time of the transaction, affects neither accounting profit nor taxable profit.
43
(c)
(d)
Current Financial year
Deferred tax (continued)
Unless specifically disclosed below, the Company generally applied the following account-ing policies retrospectively. Nevertheless, as permitted by MFRS 9, Financial Instruments, the Company elected not to restate the comparatives.
The Company recognises loss allowances for expected credit losses on financial assets measured at amortised cost, expected credit losses are a probability-weighted estimate of credit losses.
The Company measures loss allowances at an amount equal to lifetime expected credit loss, except for cash and bank balances. Loss allowances for trade receivables are always measured at an amount equal to lifetime expected credit loss.
Deferred tax assets are recognised for all deductible temporary differences, unused tax losses and unused tax credits to the extent that it is probable that future taxable profits will be available against which the deductible temporary differences, unused tax losses and unused tax credits can be utilised.
The carrying amounts of deferred tax assets are reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient future taxable profits will be available to allow all or part of the deferred tax assets to be utilised.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period when the asset is realised or the liability is settled, based on the tax rates that have been enacted or substantively enacted at the end of the reporting cost.
Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss. Deferred tax items are recognised in correlation to the underlying transactions either in other comprehensive income or directly in equity and deferred tax arising from a business combination is included in the resulting goodwill or excess of the acquirer’s interest in the net fair value of the acquiree’s identifiable assets, liabilities and contingent liabilities over the business combination cost.
44
Financial assets carried at amortised cost
When determining whether the credit risk of a financial asset has increased significantly since initial recognition and when estimating expected credit loss, the Company considers reasonable and supportable information that is relevant and available without undue cost or effort. This includes both quantitative and qualitative information and analysis, based on the Company’s historical experience and informed credit assessment and including forward-looking information, where available.
Lifetime expected credit losses are the expected credit losses that result from all possible default events over the expected life of the asset, which 12-month expected credit losses are the portion of expected credit losses that result from default events that are possible within the 12-months after the reporting date. The maximum period considered when estimating expected credit losses is the maximum contractual period over which Company is exposed to credit risk.
The Company estimates the expected credit losses on trade receivables using a provision matrix with reference to historical credit loss experience.
An impairment loss in respect of financial assets measured at amortised cost is recognised in profit or loss and the carrying amount of the asset is reduced through the use of an allowance amount.
At each reporting date, the Company assesses whether financial assets carried at amortised cost are credit-impaired. A financial asset is credit impaired when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred.
The gross carrying amount of a financial asset is written off (either partially or full) to the extent that there is no realistic prospect of recovery. This is generally the case when the Company determines that the debtor does not have assets or sources of income that could generate sufficient cash flows to repay the amounts subject to the write-off. However, financial assets that are written off could still be subject to enforcement activities in order to comply with the Company’s procedures for recovery amounts due.
The Company assesses at each reporting date whether there is any objective evidence that a financial asset is impaired.
To determine whether there is objective evidence that an impairment loss on financial assets has been incurred, the Company consider factors such as the probability of insolvency or significant financial difficulties of the debtor and default or significant delay in payments.
Previous financial year
(d)
45
The Company assesses at each reporting date whether there is an indication that an asset be impaired. If any such indication exists, or when an annual impairment assessment for an asset is required, the Company makes an estimate of the asset’s recoverable amount.
An asset’s recoverable amount is the higher of an asset’s fair value less costs to sell and its value in use. For the purpose of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units (“CGU”)).
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 receiva-bles could include the Company’s past experience of collecting payments, an increase in the number of delayed payments in the portfolio past the average credit period and observable changes in national or local economic conditions that correlate with default on receivables.
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 profit 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.
(d)
(continued)
Financial assets carried at amortised cost (continued)
46
Such reversal is recognised in profit or loss unless the asset is measured at revalued amount, in which case the reversal is treated as a revaluation increase Impairment loss on goodwill is not reversed in a subsequent period.
All items of property, plant and equipment are initially recorded at cost. The cost of an item of property, plant and equipment is recognised as an asset if, and only if, it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably.
Subsequent to recognition, property, plant and equipment are measured at cost less accumulated depreciation and accumulated impairment losses. When significant parts of property, plant and equipment are required to be replaced in intervals, the Company recognises such parts as individual assets with specific useful lives and depreciation, respectively. Likewise, when a major inspection is performed, its cost is recognised in the carrying amount of the property, plant and equipment as a replacement if the recognition criteria are satisfied. All other repair and maintenance costs are recognised in profit or loss as incurred..
A previously recognised impairment loss is reversed only if there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognised. If that is the case, the carrying amount of the asset is increased to its recoverable amount. That increase cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised previously.
An assessment is made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased.
(d)
(e)
In assessing value in use, the estimated future cash flows expected to be generated by the asset are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Where the carrying amount of an asset exceeds its recoverable amount, the asset is written down to its recoverable amount. Impairment losses recognised in respect of a CGU or groups of CGUs are allocated first to reduce the carrying amount of any goodwill allocated to those units or groups of units and then, to reduce the carrying amount of the other assets in the unit or groups of units on a pro-rata basis.
Impairment losses are recognised in profit or loss except for assets that are previously revalued where the revaluation was taken to other comprehensive income. In this case the impairment is also recognised in other comprehensive income up to the amount of any previous revaluation.
47
Depreciation of other property, plant and equipment is provided for on a straight-line basis, at the following annual rates:
f
e
Amortised costs
The carrying amount of property, plant and equipment are reviewed for impairment when events or changes in circumstances indicate that the carrying amount may not be recoverable.
The residual value, useful life and depreciation method are reviewed at each financial year end, and adjusted prospectively, if appropriate.
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 on derecognition of the asset is included in the profit or loss in the year the asset is derecognised.
Categories of financial assets are determined on initial recognition and are not reclassified subsequent to their initial recognition unless the Company changes its business model for managing financial assets in which case all affected financial assets are reclassified on the first day of the first reporting period following the change of the business model.
Profit income is recognised by applying effective profit rate to the gross carrying amount except for credit impaired financial assets where the effective profit rate is applied to the amortised cost.
Amortised cost category comprises financial assets that are held within a business model whose objective is to hold assets to collect contractual cash flows and its contractual terms give rise on specified dates to cash flows that are solely payments of principal and profit on the principal amount outstanding. The financial assets are not designated as fair value through profit or loss. Subsequent to initial recognition, these financial assets are measured at amortised cost using the effective profit method. The amortised cost is reduced by impairment losses. Profit income, foreign exchange gains and losses and impairment are recognised in profit or loss. Any gain or loss on derecognition is recognised in profit or loss.
20%-33%
48
Financial assets are recognised in the statements of financial position when, and only when, the Company become a party to the contractual provisions of the financial instrument.
When financial assets are recognised initially, they are measured at fair value, plus, in the case of financial assets not at fair value through profit or loss, directly attributable transaction costs.
The Company determines the classification of its financial assets at initial recognition, and the categories include receivables.
f
Receivables
Previous financial year
Financial assets with fixed or determinable payments that are not quoted in an active market are classified as receivables.
Subsequent to initial recognition, receivables are measured at amortised cost using the effective profit method. Gains and losses are recognised in profit or loss when the financing and receivables are derecognised or impaired, and through the amortisation process.
Receivables are classified as current assets, except for those having maturity dates later than 12 months after the reporting date which are classified as non-current.
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.
Regular way 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 marketplace concerned. All regular way purchases and sales of financial assets are recognised or derecognised on the trade date i.e., the date that the Company commit to purchase or sell the asset.
49
Other financial liabilities not categorised as fair value through profit or loss are subsequently measured at amortised cost using the effective profit method.
Financial liabilities are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability.
The Company’s other financial liabilities include trade payables and non-trade payables and accruals.
Trade and non-trade payables and accruals are recognised initially at fair value plus directly attributable transaction costs and subsequently measured at amortised cost using the effective profit method.
For other financial liabilities, gains and losses are recognised in profit or loss when the liabilities are derecognised, and through the amortisation process.
Financing are stated at cost with any difference between cost and redemption value being recognised in the profit or loss over the period of the borrowings using the effective profit method.
Financing are classified as current liabilities unless the Company has an unconditional right to defer settlement of the liability for at least 12 months after the reporting date.
Financial liabilities, are recognised in the statement of financial position when, and only when, the Company become a party to the contractual provisions of the financial instrument. Financial liabilities are classified as other financial liabilities measured at amortised cost.
Profit expense and foreign exchange gains and losses are recognised in the profit or loss. Any gains or losses on derecognition are also recognised in the profit or loss.
g
(h)
Cash and cash equivalents comprise cash at bank and on hand, Islamic demand deposits, short term and highly liquid Shariah-compliant investments that are readily convertible to known amount of cash and which are subject to an insignificant risk of changes in value.
Current financial year
Previous financial year
Amortised cost
Financial liabilities measured at amortised cost
Financial Liabilities
50
(h)
(i)
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.
A provision is recognised if, as a result of a past event, the Company has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The unwinding of the discount is recognised as finance cost.
Where it is not probable that an outflow of economic benefits will be required, or the amount cannot be estimated reliably, the obligation is not recognised in the statements of financial position and is disclosed as a contingent liability, unless the probability of outflow of economic benefits is remote. Possible obligations, whose existence will only be confirmed by the occurrence or non-occurrence of one or more future events, are also disclosed as contingent liabilities unless the probability outflow of economic benefits is remote.
(j) Contingencies
(i)
Where an inflow of economic benefits of an asset is probable where it arises from past events and where existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the entity, the asset is not recognised in the statement of financial position but is disclosed as a contingent asset. When the inflow of benefit is virtually certain, then the related asset is recognised.
(ii) Contingent assets
Contingent liabilities
Provision
51
An equity instrument is any contract that evidences a residual profit in the assets of the Company after deducting all of its liabilities.
Shariah-compliant ordinary shares are recorded at the proceeds received, net of directly attributable incremental transaction costs. Shariah-compliant ordinary shares are classified as equity. Dividends on Shariah-compliant ordinary shares are recognised from equity in the period in which they are distributed.
(k)
31.1.2015
1.2.2014
423,388
50,038
5,38824,629
503,443
427,451
18,576
620
446,647
950,090
31.1.2016
1.2.2015
524,206
61,153
6,34835,286
626,994
478,575
24,312
620
503,507
1,130,501
31.1.2017
1.2.2016
555,571
71,621
7,64355,698
690,533
368,348
23,472
760
392,580
1,083,113
31.1.2018
1.2.2017
540,606
64,604
6,93461,100
673,244
361,798
31,680
819
394,297
1,067,541
31.1.2019
1.2.2018
716,131
81,685
5,19267,152
870,160
429,622
39,600
945
470,167
1,340,327
52
(Loss)/Profit from operations
(Loss)/Profit from operations is arrived at after charging/(crediting):
statutory
(Gain)/Loss on disposal of property,
Statutory
Reversal of Interim Nett Yield on ICT Interest Value
31.1.2015
1.2.2014
14,50025,500
6,130,027
561,164
104,40014,12478,000
(40,737)
189,013
31.1.2016
1.2.2015
31.1.2015
1.2.2014
14,50024,000
8,221,581
492,520
104,40014,12484,000
242,390
31.1.2016
1.2.2015
31.1.2017
1.2.2016
14,50024,000
19,50024,000
11,432,512
1,102,714
99,4005,954
118,675
317,710
31.1.2017
1.2.2016
2,252,8422,568,0682,952,500
2,252,8422,568,0682,952,500
Takaful Amortised cost - -(797,085)
31.1.2018
1.2.2017
13,547,325
(679,915)
92,4004,320
74,978
346,952
31.1.2018
1.2.2017
2,746,090
(187,865)
19,50024,000
31.1.2019
1.2.2018
15,582,968
(499,118)
93,6004,320
984,950
-
335,381
31.1.2019
1.2.2018
3,054,278
3,054,278
Effective Interim Yield on ICT Interest Value Term financing ---200,045
2,946,135
-
167,494
53
31.1.2015
1.2.2014
31.1.2015
1.2.2014
(211,503)
8,000560,102
560,102
217,670
182,900
8,000
501,781
290,278
298,278
(1,507,833)
(376,958)
(203,503)
--
--137,718
173,455
298,278
18,453,559
31.1.2016
1.2.2015
31.1.2016
1.2.2015
137,718
66,292
204,010
203,966
(425,459)
(106,365)
244,082
203,966
18,489,169
(44)
501,78166,292
(44)
(44)
-
563,142
31.1.2017
1.2.2016
31.1.2017
1.2.2016
563,142
168,736
663,882400,570
960,672
3,232,330
775,759
663,882
2,569,750
(67,996)
616,740
(67,996)
(191,300)
137,702
663,882960,672
27,147,760
168,736
-
-777,772
(69,648)71,661
182,900
-
31.1.2018
1.2.2017
31.1.2018
1.2.2017
(560,102)
(560,102)
(88,732)
(59,391)
(148,123)
(708,225)
(789,586)
(182,502)
(708,225)
(560,102)
-(88,732)
40,199
60,571
(59,391)
-
31.1.2019
1.2.2018
31.1.2019
1.2.2018
Current tax- current year- overprovision in prior year
Reconciliation of effective tax expense
(Loss)/Profit before tax
Non-taxable income
The Company has unabsorbed capital allowances to be set off against future taxable profits as follows:
Tax calculated using statutory tax rate at 24% (2015-2016:25%)
- current year (Note 8.13)- (over)/under provision in prior year -effect of changes in tax rate
Tax (income)/ expense
Non-deductible expenses
Effect of changes in tax rate Overprovision of current tax in prior year (Over)/Under provision of deferred tax in prior years
CR05
Rectangle
CR05
Rectangle
54
-
-
280,00017,025
16,490 44,619 270,998 23,501 69,170 11,281
17,025 67,143-
67,143
280,000
150
-
16,640
385
51,316
15,827
276,998
3,002
27,298
10,786
69,170
19
12,918
3,462
41,740,198
34,012,715
30,867,518
42,202,538
34,448,774
30,932,999
6,697 6,000 3,797 15,556,687
(7,829,204) (7,829,204)
15,582,9681,637
38,084
38,08414,593,85466,917,834
72,607,716 73,135,537
(8,903,972) (8,903,972)14,633,85467,405,655
At 31 January 2019
At 1 February 2018
At 1 February 2018
At 31 January 2019
Carrying amountAt 31 January 2019
Motor Vehicle
-
8,000
32,000
8,000
40,000
40,000
55
Upon each anniversary of the Initial Launch Date of the ICT Zone Ventures Scheme 1 (“the Scheme 1”) and the ICT Zone Ventures Scheme 2 (“the Scheme 2”, and collectively, “the Schemes”), the Management Company is obliged to make an annual contribution to the Capital Reserve Fund from the net annual revenue received by the Management Company from the ICT Equipment Rental Operations and the amount of such annual contribution shall be calculated based on the following table where the monetary value of the annual contribution is shown as percentage of the ICT Interest Value received by the Schemes from the ICT Interest Holders:
2019
17,092,500-
17,092,500
fund
The Capital Reserve Fund is set up for the purpose towards the refund of the ICT Interest Value to, and redemption of each ICT Interest from, the ICT Interest Holders after the Maturity Date.
The Management Company shall within seven (7) days from the date of receipt of any ICT Interest Value remit such ICT interest Value to the Trustee and, upon receipt of such ICT Interest Value the Trustee shall forthwith deposit such ICT Interest Value into the Trust Account.
Upon expiry of the Cooling-Off Period, which is ten (10) working days (from the day application for the subscription of an ICT Interest is lodged with the Company), the Trustee shall release to the Management Company all and any ICT Interest Value received and deposited in the Trust Account.
Annual Contribution to Capital Reserve Fund by the Management Company as a percentage of the ICT Interest
Value received by the Schemes from the ICT Interest Holder
56
Any ICT Interest Value deposited into the Trust Account by the Management Company prior to the expiry of the Cooling-Off Period shall be held in trust by the Trustee for the Applicant until the expiry of the Cooling-Off Period and in the event that any application is withdrawn by an Applicant during the Cooling-Off Period, the Trustee shall release such ICT Interest Value to the Applicant.
The amount was deposited with a licensed bank as the Islamic fixed deposit for profit income purpose. The effective profit rate of the Islamic fixed deposit is 3.30% per annum. The original maturity of Islamic deposit as at the end of the financial year is 6 months.
2019
2019
34,470412,085
225,343
671,898
The related party transactions are disclosed in Note 8.17 to the Accountants’ Report.
2,849,558798,400
3,647,957
Amount due from a related partyAmount due from a third partyAt 31 January
Islamic �xed deposits with licensed banks
The related party is a company in which certain Directors have financial interest and has common Directors as the Company.
Trust fund (continued)
Non-trade receivable Islamic depositsPrepaymens
Non-trade receivable, Islamic deposits and prepayments
The normal trade credit terms of the Company are 60 days. Other credit terms are assessed and approved on a case-by-case basis.
57
5,520 645
The Company is the Management Company intended to establish, manage, and operate the ICT Zone Ventures Scheme 1 (“the Scheme 1”) and ICT Zone Ventures Scheme 2 (“the Scheme 2”, and collectively, “the Scheme”) based on its rental operations for software, personal computers, laptops, printers, scanners and projections and peripheral equipment to support ICT functions of rental customers under the Scheme either directly or by way of ICT Equipment Rental Partners.The Management Company offered the ICT Interests at the Initial Launch Date of the Scheme 1 and Scheme 2 to public subscription at ICT Interest Value of RM5,000 and RM10,000,respectively, for each ICT Interest. The following refers to the number of ICT Interest sold or assigned as at 31 January 2019:
Number of ICT Interest sold or assigned as at 31 January 2019
Scheme 1 Scheme 2
ICT Zone Ventures Scheme 2
ICT Interest Value refers to the redeemable consideration by whatever name used in the Management Agreement and payable by each ICT Interest Holder to subscribe for one (1) ICT Interest.
2019
27,600,000
34,050,000
29,661,400
ICT Interest Value-Scheme 1
6,450,000-Scheme 2
(4,388,600)ICT Interest ValueLess: Transaction cost up incurred to date
The ICT Interest offered for subscription under the ICT Zone Ventures Scheme 2 is based on a scheme where, under the terms and conditions of the Management Agreement, the ICT Interest Holders may receive the Interim Nett Yield of 8% during the period commencing on the Commencement Date and expiring on the Maturity Date.
ICT Interest Value refers to the redeemable consideration by whatever name used in the Management Agreement and payable by each ICT Interest Holder to subscribe for one (1) ICT Interest.
There are 5,000 ICT Interests under the Scheme of which 3,500 ICT Interests are intended for public subscription and the remaining 1,500 ICT Interests are designated as Reserved ICT Interest not for sale and may be released for sale only upon the approval of the Registrar of Companies..
The Management Company offered the ICT Interest at the Initial Launch Date of the Scheme 2 to the public subscription at ICT Interest Value of RM10,000 for each ICT Interest.
58
(645)3,500
5,000
1,5002,8551,500
(645) 4,355
-
The Management Company is obliged to accept the return of the ICT Interest prior to the Maturity Date from any ICT Interest Holder based on the following valuations:
Subject to that in each calendar year commencing from the Initial Launch Date, the Management Company’s obligation to accept the return of any ICT Interest shall be limited to five percent (5%) of the value of the total number of ICT Interests subscribed or to accept the return of ICT Interests to an aggregate value up to the limit of RM1,500,000, whichever is higher
Where the request for return of an ICT Interest is made before the first anniversary from the relevant Prospectus Period Start Date as specified in the Management Agreement, the amount to be refunded to ICT Interest Holder is one hundred percent (100%) of the ICT Interest Value paid by the ICT Interest Holder after deducting an administrative charge equal to five percent (5%) of the ICT Interest Value paid by the ICT Interest Holder being Scheme 2 establishment and marketing expenses together with operational expenses arising from the return of ICT Interest from such ICT Interest Holder. Such operational expenses must be approved by the Shariah Adviser and such refund shall be drawn from the ICT Interest Value contributed by the ICT Interest Holder; and
Where the request for return of an ICT Interest is made after the first anniversary from the relevant Prospectus Period Start Date as specified in the Management Agreement, the amount to be refunded to ICT Interest Holder is one hundred percent (100%) of the ICT Interest Value paid by the ICT Interest Holder after deducting an amount equivalent in value to fifty percent (50%) of the Interim Net Yield received by the ICT Interest Holder as at the date when the request for return of the ICT Interests is made and after deducting an administrative charge equal to one percent (1%) of the ICT Interest Value paid by the ICT Interest Holder being operational expenses incurred by the Scheme 2 arising from the return of ICT Interest from such ICT Interest Holder. Such operational expenses must be approved by the Shariah Adviser and such refund shall be drawn from the ICT Interest Value contributed by the ICT Interest Holder;
ICT Zone Ventures Scheme 2 (continued)
8.17
a)
b)
January 2019
59
At 1 February 2018 2,595,607
2,595,607
-(300,679)
(300,679)
152,556
2,447,484
2,748,163
(148,123)
At 1 February 2018
At 1 February 2018
At 31 January 2019
At 31 January 2019
At 31 January 2019
2019
8.13
At 31 January 3,415,928
The related party is a company in which certain Directors have financial interest and has
common Directors as the Company.
Trade payables are fixed and the normal trade credit term granted to the Company is 60 days.
2019
3,402,69613,232
Amount due to a related partyAmount due to a third party
8.14
The related party transactions are disclosed in Note 8.17 to the Accountants’ Report.
60
6,996,218Current:Amount due to third parties Less: Amortised cost (363,037)
6,633,181
43,5323,133,840Amount due to related parties
AccrualsAt 31 January 2019 9,810,553
2019
The related party transactions are disclosed in Note 8.17 to the accountants’ report.
The related parties are companies which certain Directors have financial interest and which have common directors as the Company or a company where the Director and the shareholder is also a key management of the Company.
The amount due to related party represent expenses paid on behalf and is unsecured, charged at cost, and payable on demand.
8.15
Current Term financing 1,808,413
2018
Payable within one year 1,808,413
1,808,413
The maturity structure of the term financing can be analysed as follows:
2018
-
2019
-
-
2019
8.16 Borrowings
(i) Tawarruq Facility Agreement as Principal Instrument;
Islamic Joint & Several Guarantee to be executed by certain directors and a related party’s director:
Specific Deed of Assignment of contract proceeds to be executed between Company and the Bank for the contract to be financed by the Bank ;
(ii)
Tripartite Deed of Assignment over the contract proceeds between Company, a related party and the Bank;
Term financing facility bears financing rate of 7.60% above base financing rate of 6.60% per annum and is secured by way of:
(iii)
(iv)
61
Tenure of term �nancingNumber of monthly
installmentInstallment amount
RM
The payment of term financing is as follows:
Term financing 1 2017-2019 20 208,227
8.16 Borrowings (continued)
(v) Upfront three (3) months instalments is to be maintained with the Bank at all times.:and
Charge over Company’s and a related party’s escrow account and all monies standing to the credit of the account.
2019 2019
Trade in nature
The aggregate value of significant related party transactions and outstanding balances were as follows:Balance
outstandingfrom/(to) as at
31 JanuaryTransaction
Value
(3,402,696)--
816,373(6,155,647)
-
8.17
Non-trade in nature Management Fee
ICT Zone Holding Sdn. Bhd.
-(202,066)
(355,730) (10,956)Risco Consulting Sdn. Bhd. Non-trade in nature
Purchase
(vi)
Rental received for ICT Equipment Disposal of ICT Equipment Purchase of ICT Equipment
157,266HaaS Technologies Sdn Bhd. Trade in nature
Rental received -
The Directors are of the opinion that the terms and conditions and prices of the above transactions are not materially different from those obtainable in transactions with unrelated parties.
62
8.18
Categories of financial instruments
The Company has categorised its financial assets as receivables and financial liabilities as other
financial liabilities.
3,647,957
446,5551,582,351
Carryingamount
RM
Company2019
Financial assets
Trade receivablesNon-trade receivables, and Islamic deposits (exclude prepayment) Cash and bank balances
5,676,863
3,647,957
446,5551,582,351
Financial assets
measured at amortised
costRM
5,676,863
-
--
Financial liabilities
measured at amortised cost
RM
-
Carryingamount
RM
Company2019
Financial liabilities
Financial assets
measured at amortised
costRM
Financial liabilities
measured at amortised cost
RM
3,415,9289,810,553
29,661,400
Trade payablesNon-trade payables and accruals ICT interest value
42,887,881
---
-
3,415,9289,810,553
29,661,400
42,887,881
Net gains and losses arising from financial instruments 2019RM
Net gains/(losses) arising from: Financial assets at amortised cost Profit income
Financial liabilities at amortised cost
Profit expense
12,290
(40,592)
(28,302)
63
The Company’s financial risk management policy seeks to ensure that adequate financial resources are available for the development of the Company’s businesses whilst managing its credit risk, interest rate risk and liquidity risk.
The Company’s exposure to credit risk, or the risk of counterparties defaulting, arises mainly from trade and non-trade receivables. The Company manages its exposure to credit risk by the application of credit approvals, credit limits and monitoring procedures on an ongoing basis. For other financial assets (including cash and bank balances), the Company minimises credit risk by dealing exclusively with high credit rating counterparties.
8.18
The Company is exposed to financing risks arising from its operations and the use of financial instruments. The key financial risks include credit risk, liquidity risk and interest rate risk.
Credit risk concentration profile
The Company’s major concentration of credit risk relates to the amounts owing by 2 major customers which constituted approximately 89% of its trade receivables for the trade in nature transaction as at the end of the reporting period.
Exposure to credit risk
At the end of the reporting period, the Company’s maximum exposure to credit risk is represented by the carrying amount of each class of financial assets recognised in the statement of financial position
2,797,143Past due:- 1 to 30 days - 31 to 60 days
2,797,143
850,324490
850,324490
3,647,957 3,647,957
Ageing analysis
Lossallowances
2019
The ageing analysis of the Company’s trade receivables as at 31 January 2019 is as follows:
-
--
-
The following sections provide details regarding the Company’s exposure to the above-mentioned financial risks and the objectives, policies and processes for the management of these risks.
The Company establishes an allowance for impairment that represents its estimate of incurred losses in respect of the trade and non-trade receivables as appropriate. The main components of this allowance are a specific loss component that relates to individually significant exposures, and a collective loss component established for groups of similar assets in respect of losses that have been incurred but not yet identified. Impairment is estimated by management based on prior experience and the current economic environment.
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8.18
At the end of the reporting period, trade receivables that are individually impaired were those in significant financial difficulties and have defaulted on payments. These receivables are not secured by any collateral or credit enhancement.
The collective impairment allowance is determined based on estimated irrecoverable amounts from the services rendered, determined by reference to past default experience. The Directors are of the opinion that no collective impairment is necessary for the current and previous financial year.
A significant portion of trade receivables that are neither past due nor impaired are regular customers that have been transacting with the Company. The Company use ageing analysis to monitor the credit quality of the trade receivables. Any receivables having significant balances past due, which are deemed to have higher credit risk, are monitored individually.
Financial risk management objectives and policies (continued)
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company’s exposure to interest rate risk arises mainly from its financial liabilities.
The above interest rate is a general economic indicator that will have an impact on the management of the scheme regardless whether it is an Islamic scheme or otherwise. It does not any suggest that the scheme will invest in conventional financial instruments. All the investment carried out for the scheme are in accordance with Shariah requirements.
The Company’s policy is to obtain the most favourable rates available. Any surplus funds of the Company will be placed with licensed financial institutions to generate profit income.
In respect of its financial liabilities, the following table indicates its effective profit rates at the reporting date and the periods in which they reprice or mature, whichever is earlier:
8.00
Over5 years
- 29,661,400 29,661,400
Within1 yearAnnum
The Company believes that no impairment allowance is necessary in respect of these trade receivables. They are substantially companies with good collection track record and no recent history of default.
Effective interest rates and repricing analysis
The following table shows information on the Company’s exposure to interest rate risk.
Effects on profit after tax
Effects on equity
2019
Interest rate risk senstivity analysis
The following table details the sensitivity analysis to a reasonably possible change in the interest
rates as at the end of the reporting period, with all other variables held constant:
(22,543)22,543
(22,543)22,543
8.18 Financial insturments (continued)
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Interest rate risk (continued)
Liquidity risk
Liquidity risk arises mainly from general funding and business activities. The Company practises prudent risk management by maintaining sufficient cash balances.
The following table sets out the maturity profile of the financial liabilities as at the end of the reporting period based on contractual undiscounted cash flows (including profit payments computed using contractual rates or, if floating, based on the rates at the end of the reporting period):
2019Trade payablesNon-trade payables and accruals ICT Interest Value
3,415,9289,810,553
29,661,400
3,415,9283,925,978
-
-5,717,081
34,050,000
42,887,881 7,341,906
3,415,9289,643,059
34,050,000
ContractualUndiscounted
cash flowRM
47,108,987 39,767,081
Over 1YearRM
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8.18
17,092,500 17,092,500Financial assets Trust Funds
29,661,400 29,661,400
The aggregate fair values and the carrying amounts of the financial asset and financial liability carried on the statement of financial position as at 31 January 2019 are as below:
The financial assets and financial liabilities maturing within the next 12 months approximated fair values due to the relatively short-term maturity of the financial instruments.
Fair value hierarchy
The table below analyses financial instrument carried at fair value, by valuation method. The different levels have been defined as follows:
- 29,661,400 29,661,400
17,092,500 17,092,500
2019Financial assets Trust Funds
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: Inputs other than quoted prices included within Level 1 that are observable for assets orliabilities, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
Level 3: Input for the assets or liabilities that are not based on observable market data(unobservable inputs).
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9,810,55329,661,400(1,582,351)
46,518,047
4.39
37,889,6028,628,445
The Company’s strategies were unchanged from the previous financial year.
The debt-to-equity ratio of the Company as at the end of the reporting period was as follows:
Non-trade payablesICT Interest ValueLess: cash and cash equivalents
Net debtTotal equity
Total capital
2019
Gearing ratio (times)
8.19 Capital Management
The Company manages its capital to ensure the Company will maintain an optimal capital structure so as to support the businesses and maximise shareholder(s) value. To achieve this objective, the Company may make adjustments to the capital structure in view of changes in economic conditions, such as adjusting the amount of dividend payment, returning of capital to shareholders or issuing new shares.
Other Income
Profit from operations
Profit before tax
Scheme 1RM
Scheme 2RM
AmalgamatedRM
Profit after tax
2019
8.20 Profit or loss of the Schemes
17,953,998 3,689,546 21,643,544(14,411,434) (2,740,854) (17,152,288)
3,542,564 948,692 4,491,256612,506 (35,348) 577,158
(2,374,193) (429,529) (2,803,722)
1,780,877 483,815 2,264,692(2,491,286) (562,992) (3,054,278)
(710,409) (79,177) (789,586)
(81,361)
708,225
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8.20 Profit or loss of the Schemes (continued)
Maximum interests for public’s subscription @ Value per interest (RM)Total Scheme Value (RM)
Weight of the Scheme interests
Scheme 1 Scheme 2 Total
Costs and expenses which are not directly attributable to are apportioned based on the following basis :
The above disclosure of profit or loss of the Schemes is made solely for information purpose and is not part of the financial statements.
15,400 3,500 18,9005,000 10,000 15,000
77,000,000 35,000,000 112,000,000
0.68 0.31 1.00
No audited financial statements have been made up in respect of any period subsequent to 31 January 2019.
The Company is principally engaged in the business of ICT Equipment Rental Operations, managing the ICT Zone Ventures Scheme and leasing and factoring.
Yours truly,
The principal place of business of the Company is located at Ground Floor, Block H, Excella Business Park, 55100, Jalan Ampang Putra, Kuala Lumpur.
The registered office of the Company is located at Level 3, Block E, Excella Business Park, Jalan Ampang Putra, 55100 Kuala Lumpur.
8.21 General information
9 Audited financial statements
The Company is a public limited company by shares that is incorporated and domiciled in Malaysia.
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The objectives of this audit were:
Audit Objectives
Audit Conclusions
• To confirm that it conforms with all the requirements Work Flow For Payment of ICT Interest Value (“IV”)– Fund Transferred to ICT Zone Ventures Berhad and thereafter to Trust Account;
• To confirm that the organization’s Policies & Procedures – ICT Zone Ventures Scheme 2Transactions – the Policy And Procedures of DO’s and Don’ts have effectively implemented;
• To provide feedback to the organization to facilitate continual improvement.
The audit was successfully conducted in meeting the stated objectives. The auditors had reviewed and confirmed the organization work flow processes below as meeting the ICT Scheme’s standard requirements, policies and procedures and demonstrated the ability of the system to systematically achieve agreed requirements for products or services within the scope & standard :
CONSULTANT’S
• Workflow – investment-batching and processing,Investment – confirmation report,Workflow – investment – confirmation report – management agreement – certificate,Investment work flow - Work Flow For Payment of ICT Interest Value (“IV”) – Fund Transferredto ICT Zone Ventures Berhad and thereafter to Trust Account,Policies & Procedures – ICT Zone Ventures Scheme Transactions (Sales / Purchases),Withdrawal / Cooling-off, Repurchase / Redemption – Buy Back Option,Transfer,Dividend / Net Yield Master set up,Outflow processes (total investment vs equipment) andThe Policy and Procedures of DO’s and Don’ts were audited.
•
• • •
• •
•
Ground Floor, Block H
Dear Sirs
08th October 2019
•
•
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In summary, the surveillance audit carried on 29th August 2019 was successful in meeting the Scheme's operation which encompasses a review of the ICT Scheme's standard requirements, policies and procedures.
Kenny Looi Tuck KianCertification and Business Enhancement (CBE) Division General ManagerCertification and Business Enhancement (CBE) Division Country Business Manager
Yours faithfully ,
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15. SHARIAH ADVISER'S REPORT
IBFIM (763075-W)
3rd Floor, Menara Takaful Malaysia, Jalan Sultan Sulaiman, 50000 Kuala Lumpur , MALAYSIA.Tel: (603) 2031 1010 Fax: (603) 2078 5250 Email: info@ibÿm.com Website: www.ibÿm.com
To the Unitholders of ICT Zone VenturesWe have acted as the Shariah Adviser of ICT Zone Ventures Scheme 2 Mudharabah Al-Mua’ddat (“the Scheme”).
Our responsibility is to ensure that the structure of the Scheme is in accordance with Shariah principles.
In our opinion, ICT Zone Ventures Bhd has managed and administered the Scheme in accordance with Shariah principles.
If you require further information, please do not hesitate to contact us at (603) 2031 1010.
Thank you.
Yours faithfully,for IBFIM
HAJI RAZLI RAMLI Head/ Principal Advisor Business Advisory
08th October 2019
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6
16.1
Interest Schemes Act
The Trustee shall on retirement vest the Trust Account, and Capital Reserve Fund or cause the same to be vested on the new trustee and deliver all books, documents, records and other property whatsoever relating to the same to the new trustee. The cost and expenses incidental thereto shall be paid by the Management Company.
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16.2
16.3
The quorum for an ICT Interest Holder meeting shall be fifty (50) or one-tenth (1/10) in number of the ICT Interest Holders present in person or by proxy, whichever is the lesser on the date of the meeting present in person or by proxy. No business shall be transacted at any meeting unless the requisite quorum is present at the commencement of business.
74
75
76
16.4
:-
:-
Interest Schemes Act
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16.6
16.8
16.9
16.5 Expiry of Scheme 2
Validity Period of Prospectus
On the Scheme 2 Expiry Date being the end of the Scheme 2 Period the Trust Deed and Scheme 2 shall terminate absolutely subject always to Clause 18.2 of the Trust Deed which provides that the Trust Deed shall continue to subsist for so long as there shall be a valid Management Agreement in existence or for such other time as shall be agreed between the Trustee and the Management Company.
In addition to this Scheme 2, the Management Company is managing and operating the First Scheme.
16.7
This Prospectus dated 20th October 2019 is valid for six (6) months from the said date whereby no ICT interests will be subscribed if this Prospectus is later than six (6) months after the date of this Prospectus unless the Prospectus has been updated and a current Prospectus is lodged with and registered by the Registrar of Companies.
The expiry of the Scheme 2 and this Deed shall not prejudice the Management Company’s rights against any ICT Interest Holder in respect of any antecedent breach by such ICT Interest Holders of any of terms of the Management Agreement
In order to receive the payments arising under Clause 19 of the Trust Deed, every ICT Interest Holder shall be obliged to surrender the ICT Interest Certificates to the Management Company for cancellation and for redemption of the ICT Interest; and
16.10
Datuk Ng Thien Phing
B-5-6, Tower B, Plaza Pantai,Jalan Pantai Baharu,Bangsar 59200, Kuala Lumpur.Tel: 603 2283 2373Fax: 603 2284 2373
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Lim Kok Kwang
08th October 2019
