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Dear Shareholders,

It is our pleasure, on behalf of the Board of Directors to present the Annual Report and Audited Financial Statements of JcbNext Berhad (“JcbNext” or “the Group”) for the financial year ended 31 December 2020. I hope you have been keeping yourself and your families safe and healthy. After a seemingly long year traversing between lockdowns of various levels and accepting life in the new normal, we now look forward to better days ahead as the vaccination exercise goes underway.


For the financial year ended 31 December 2020, the Group recorded revenue of RM6.02 million, profit before tax of RM7.88 million and a profit attributable to shareholders of RM6.45 million, representing year on year (“yoy”) contractions of 30.7%, 33.3% and 37.4% respectively. The Group’s financial performance was negatively impacted by the COVID-19 pandemic via the direct impact of the economic and health crisis on the businesses of our equity accounted associates, as noted in the decline in the share of profits from our associates from RM9.09 million in 2019 to RM8.42 million in 2020, a decline of 7.3% yoy. The pandemic and the resulting economic downturn and decrease in business confidence had also led to some of our investments lowering their dividend pay-outs in 2020. As a result, the Group’s dividend income had decreased by 39.7% yoy to RM2.00 million from RM3.31 million in 2019. The Group, with still a significant cash pile at its disposal, was in the cross hairs of our central bank as it slashed the Overnight Policy Rate four times from January to July 2020 for a total reduction of 125 basis points. That led to a significant decline in the Group’s interest income and investment distribution income from money market unit trust investments by 36.6% yoy to RM2.56 million in 2020 from RM4.03 million in the year before that.

During the year, we continued to monitor our costs with our operating expenses, excluding foreign exchange gains/losses, increasing slightly by 4.2% to RM6.03 million in 2020 from RM5.79 million in 2019. We will continue to ensure that our operations are managed prudently and spending where necessary only.

To have a balanced picture of the financial performance of the Group during the year, we would also have to look into the consolidated statement of financial position, specifically in equity. Despite recording a net profit attributable to shareholders of RM6.45 million in 2020, shareholders’ funds had decreased from RM325.82 million in 2019 to RM323.60 million in the current year. Besides shares bought back and dividends paid amounting to RM2.01 million and RM5.37 million respectively, there was a decrease in the fair value of the Group’s equity investments designated at fair value through other comprehensive income (“FVOCI investments”) amounting to RM6.39 million which was the primary reason for the decrease in net assets or shareholders’ fund during the year.

As at 31 December 2020, our total assets stood at RM325.52 million with shareholders’ funds recorded at RM323.60 million (RM2.41 per share), compared with RM327.83 million and RM325.82 million (RM2.40 per share) as at the end of 2019. With liquid cash and short-term investments totalling RM130.88 million, and no debt, we continue to actively search for acquisition opportunities and believe we are positioned well to enter into long-term partnerships when such opportunities eventually arise.

A detailed discussion on the Group’s financial performance can be found in the Management Discussion and Analysis included in this Annual Report.


The Board of Directors is pleased to propose a final single-tier dividend of 3.0 sen per share for the financial year 2020 (2019: 4.0 sen). The proposed dividend is subject to shareholders’ approval at the forthcoming Annual General Meeting.


In the area of investments, the Group had, during the year, invested approximately RM6.49 million in various equity investments. That sum may seem paltry compared to our cash reserves but these are still early days of our investment acquisitions post COVID-19. As you are aware, stock markets across the world witnessed extreme volatility in the months of February and March of 2020 but thereafter, markets rebounded and went on pretty much an upward trajectory till today, fuelled by a combination of factors such as progress on the vaccine front, government intervention measures and economic stimulus packages, prospect of technology stocks, low interest rates and so on. We are still in the midst of the pandemic as the vaccination process has only just begun. The Board of Directors will continue to be prudent and ensure that we do not chase any equity investments aggressively which will only hurt our returns or yields in the long run. I ask that shareholders continue to be patient as we invest only at prices that meet our investment objectives.

Towards the end of 2020, Mr. Mark Chang Mun Kee (“Mark”) the founder of the Company had relinquished his role as Chief Executive Officer (“CEO”). Nevertheless, he remains on the board of our significant investment, 104 Corporation, and also as a director of our subsidiaries in Singapore and Japan. As the Group’s controlling shareholder, Mark will continue to be engaged in the strategic direction of the Group albeit in a more indirect manner. Mark has been succeeded by Mr. Lionel Liong Wei Li (“Lionel Liong”) who took over as Acting CEO with effect from 1 January 2021.

We believe that at the prevalent share prices of the Company in 2020, buying back our shares was a good use of our cash. During the year, we had bought back 1,471,400 shares which substantially made up the 1,492,800 treasury shares held as at 28 December 2020 which were cancelled. Given how the share price of the Company had fallen further in 2021, we have been continuing with our share buy-back program.


The Board and management are committed to try to be patient and disciplined so that we invest only when the right opportunity presents itself at the right price. Our experience along these lines in the past, especially with 104 Corporation and Lion Rock Group Limited (“Lion Rock”), has been very fruitful and gives us confidence that this is the right path for us. After what was an excruciatingly painful and long year battling COVID-19 as the death toll mounted in alarming numbers worldwide, we are now hopefully seeing the light at the end of the tunnel as vaccines are gradually being administered worldwide. Although no one can guarantee the efficacy of the vaccines nor predict whether there will be further waves of infections, the step towards global vaccination and the reopening of economic sectors, albeit with strict adherence to standard operating procedures, is a step in the right direction. For sure the number of COVID-19 cases will remain high for a while, but life as we know it has to continue in some form. Amidst this backdrop, the Board and management will continue to look for pockets of opportunities, searching for yields and investing only when our pre-determined investment criteria has been met.


The Group continues to endorse principles of sustainability in its business operations and corporate activities. We are pleased to present to you our Sustainability Statement in the Annual Report where you can find our thoughts on the matter and also some of the initiatives that are already in place.


We would like to record our appreciation to all our employees, valued partners, business advisers and shareholders for your continued support during the past year.




Our revenue for FY2020 was RM6.0 million, a decrease of around 30.7% from the RM8.7 million in FY2019, according to accounting standards. Profit after tax for FY2020 fell to RM6.4 million, around a 38.1% drop from FY2019, reflecting in part the low interest rate environment and also the impact of the pandemic on the financial performances and dividend payout of some of our portfolio companies.

These figures, while often revealing for many businesses, might not fully illustrate the economic substance of our company. It’s perhaps more intuitive to think about our company using the following data points in our financial reports:

  1. As at 31 December 2020, the net asset value (NAV) of our company stood at about RM323.6 million, the biggest component of which are RM170.7 million in marketable securities (including stakes in our listed associate companies), RM130.9 million in cash and money market funds and RM18.4 million in investment properties, with no material debt. Our NAV figure in 2020 declined by approximately 0.7% compared to 2019.
  2. If we had calculated the value of our assets using the market prices of our associates (104 Corp and Innity), rather than what is shown on our balance sheet, that ‘adjusted NAV’ figure would be RM382.7 million in 2020, a decline of about 0.6% compared to 2019.
  3. These assets generated dividends, interest and rental incomes of about RM15.0 million in 2020, approximately 8.1% lower than the RM16.3 million in 2019.
  4. Meanwhile, staff costs and other operating expenses at our investment holding operations was RM5.1 million in 2020, an increase of about 10.5% from 2019. This excludes forex gains or losses, but includes the expenses related to operating all eight floors of Wisma JcbNext.
  5. Deducting taxes and making some other minor adjustments, the free cash flow generated by our business is estimated to have declined by about 26.9% to RM7.4 million in 2020, from about RM10.1 million in 2019.

Both the headline accounting figures and the metrics I have cited are unpleasant reading, with the latter perhaps reflecting a picture that is slightly less grim, but one that is nonetheless disappointing. We hope to see improvements. Rest assured – I would be as happy to be assessed on the same metrics during a year when the pure accounting numbers outperform.


As this is my first annual letter, let me reiterate how we view JcbNext. We hope that JcbNext could, primarily through our investments into other businesses, help our shareholders preserve their purchasing power, grow their wealth gradually and provide a regular income stream through a distribution of dividends.

The focus of the JcbNext management will be on increasing, over time, the amount of dividend per share we could pay out to our shareholders, while trying to minimise the downside risks of our investments by working towards a portfolio that is sufficiently diversified, conservative and sustainable.

Many of our investments going forward will likely be relatively small stakes in high-quality, established publicly-listed businesses, as those opportunities are less difficult to come by. However, we also explore possibilities of buying larger business operations if a ‘good’ business becomes available at the ‘right price’. Note though, in such cases, we will need a good management team that is as able, willing and enthusiastic about running the business after our purchase, as they were before.

A possible implication from this mindset is that, if we do our job well, we should see our dividend per share increase gradually, in small incremental amounts, over the long term. However, it’s equally important that I explain to you that, our conservatism and an emphasis on diversification would mean it’s highly improbable, or close to impossible, for you as investors to ever hit a ‘jackpot’, for example, the value of our portfolio shooting up 300% within 6 months.


To a large degree, the criteria that we continue to use in evaluating investment opportunities remain unchanged from what Mark wrote in the annual report previously: 1. Good businesses, 2. Shareholderfriendly managements, 3.Right prices

We like businesses that have excellent competitive moats and favourable economic characteristics, as they are usually the ones that can generate stable free cash flow that could be distributed to shareholders over the long term. The best ones could also reinvest that cash back into the business at a favourable rate of return, thus further growing their future cash-generating ability. Apart from such established businesses, we explore earlier stage or slightly riskier businesses too, but the amounts will likely be relatively small. We really do not like to lose the money that our shareholders have entrusted to us.

Note though, even if the business is ‘good’, it still needs a shareholder-friendly management team, so that investors are given the chance to share in the profits generated by the business. A ‘shareholder-friendly management’ would usually make a well-considered choice between distributing the cash generated from the business to shareholders, or investing back into the business, depending on which is expected to eventually create more ‘value’ for shareholders. One that is not will likely choose to enrich themselves ahead of shareholders.

After identifying the ‘good’ businesses and managements, we need to have the patience to buy at ‘right prices’, i.e. another way to reiterate to you that we’re conservative.


As at the end of 2020, the cash pile at JcbNext stood at RM130.9 million, about 40% of our net book value. This is high by almost all standards.

In March 2020, there was a market correction that offered many publicly-listed businesses at decent discounts. However, we only invested a very small amount during that month, before investing another RM6.0 million in the rest of FY2020. Since then, we have deployed a further RM6.3 million in 2021, as at the end of April, bringing our total investment since March 2020 to RM12.5 million.

In hindsight, we probably should have invested quicker and a much larger amount during the initial market correction in March 2020 and the few months after that. However, we hesitated as we thought that the market has more to fall and we were taken by surprise by how quick the market rebounded and the subsequent rise in equity prices since then - which came despite the lack of similar positive indicators in the real economy.

That said, looking back at the missed opportunities, there was a lot of uncertainties at the onset of the pandemic and we were guided by the principle that it is much more important that we do not lose the money our investors entrusted to us.


Before going further, allow me to hail the entrepreneurs running our portfolio companies, who have exhibited wonderful dedication and resilience during the strange year of 2020. They are truly a testament of the ingenuity of mankind during such testing times for business operators.

Let me focus on our largest portfolio company - 104 Corp, a job bank established in 1996 in Taiwan, of which we hold a stake of approximately 22.99%. The company contributed the bulk of our dividend income for 2020, about RM9.4 million, despite a challenging year in which its profits fell close to 10%. Their business appears to have rebounded strongly since Q2 2020.

During our own internal discussions about the company, challenges peculiar to the job board/ HR industry - something we have had first-hand experience in dealing with - and other factors that could affect 104’s financial performance, including general economic conditions and geopolitical tensions, are themes that have come up time and again.

However, what has never been in question is the dedication of the management team to continuously improve products and services to better solve the problems of their customers - and how the company appears so dedicated in helping create a compassionate society in Taiwan, alongside its role of human capital development.

I’m always still in awe whenever I’m reminded that the founder of the business still brings his own lunch and dinner boxes to the office, which according to folklore, is for saving time so that he can focus on improving his products! Some entrepreneurs and businesses not only bring the golden coins to our piggy banks, but also a smile to our faces.

Our other larger investments, including Lion Rock, Innity, Hastings and Nova Pharma have all, in one way or another, been affected by the pandemic, but all have illustrated incredible resilience during the year and we are proud to be part-owners of these companies. These are companies that have strong cash balances and we believe any impact from the pandemic on most of their business operations should be temporary.


Aside from the larger investments above, we have been building up a portfolio of equity investments, consisting of smaller stakes in listed companies across the Asia-Pacific region, including investments in Malaysia, China, Hong Kong and Australia.

The RM12.5 million equity investments made since March 2020, as mentioned earlier, would fall under this category and we believe more of our future investments would be of such nature - smaller stakes in high quality and/or undervalued listed companies both within and outside of Malaysia. The biggest components of this new equity portfolio so far are financial services and insurance companies.

Note, we view such smaller equity investments as part-ownership of good businesses and it’s our intention to hold such investments for the long term. We do not view them as a series of flashing stock tickers, arrows and numbers that we should trade on at every opportunity.


I should add that, with markets having risen significantly since the trough of 2020, the number of investment opportunities available at ‘right prices’ (for us) have reduced significantly in the past few months. However, we continue to try to identify ‘value’ in the market to put more of our cash to work.

How do we decide whether any investment opportunity is priced attractively? A general reference point would be the interest rates in the markets that we invest in. Equities in general look very cheap, even now, if interest rates remained at the current low levels for the long term. However, the big question is then whether rates will remain as such over the longer term and what are the factors that would push it one way or the other.

These are critical questions, that we unfortunately do not have clear answers to. As much as I am a believer of the reversion to mean for long term interest rates and the eventual tightening of credit conditions, there also appears to be strong tailwinds that could support continued easy fiscal and monetary policies for a long time, which would support high valuations.

As the situation ahead is unclear for us, in the absence of new information, I believe a prudent move would be to stick to our “normal” stance in investing, rather than being either more aggressive or defensive. Practically, that would mean our team continuing to try identity good businesses at the right prices, in an effort to put more of our cash to work. However, that would also mean that it’s likely for us to suffer from a ‘cash drag’ for a considerable amount of time, due to our cash pile, if market conditions remain.


At the company, since March 2020, most of our staff have been largely working from home, thanks to technology enabling us to work, collaborate, have discussions and even ‘meet up’ remotely. We continue to operate with a small but highly competent team of staff, whose collective efforts have enabled the company to almost seamlessly transition to a new way of working. The team has been a joy to work with.


Finally, I thank the Board of Directors and my mentor Mark for placing enough trust in me to allow me to take up this role, and I hope to earn yours for the many years to come as ‘partners’ in this business.

What I can promise is to treat you as ‘partners’ and put in place, as well-designed as we could conceive, incentive structures within the company that have our interest aligned. Over the longer term, we believe that if we stick to our investment strategy and philosophy, we should see incremental improvements to our portfolio that would hopefully translate to larger dividend payouts to our shareholders over time.

Acting Chief Executive Officer



JcbNext Berhad (“JcbNext”) is an investment holding company. It owned and operated the online job portal business from 2004 to 2014. In 2014, the job portal business was sold to SEEK Ltd for close to RM2 billion with the net proceeds paid as dividends to shareholders. Today, the Company has stakes in associates, 104 Corporation, the largest job site in Taiwan and Innity Corporation Berhad, a leading provider of interactive online marketing platforms and technologies in Malaysia. It also has a majority stake in a small consultancy business in Japan and operates the Autoworld automotive classifieds and content website. JcbNext also has quoted investments in Malaysia, Hong Kong, Australia and Singapore and owns a 8-storey office building in Kuala Lumpur and a 2-storey shoplot office in Johor.


During the year, the Group generated revenue from services, rental of office space, dividends, interest and other investment income. The Group’s revenue mix for 2020 and 2019 are as depicted below:-

As the Group is principally in investment holding, the biggest contributor to group revenue is dividends from equity investments at 33% of revenue or RM2.00 million in 2020. This is followed by interest income at 26%, rental income at 18% and investment distribution income from the placement of funds in money market unit trust funds at 17%. Services only contributed 6% of revenue and it is primarily from the Group’s subsidiary in Japan.

Total revenue had fallen by 30.7% in 2020. Bank Negara Malaysia had slashed the Overnight Policy Rate four times from January to July 2020 for a total reduction of 125 basis points. That led to a significant decline in the Group’s interest income and investment distribution income from money market unit trust funds by 36.6% yoy to RM2.56 million in 2020 from RM4.03 million in the year before that. In addition, the Company had withdrawn all of the funds held in the money market unit trust funds during March and April 2020 in view of the uncertainty arising from the COVID-19 situation then and the impending removal of the tax-exempt status of retail money market funds. This had also contributed to the lower investment distribution income in 2020.

Dividend income from equity investments had also fallen by 39.7% yoy to RM2.00 million in 2020 from RM3.31 million in the preceding year. This was primarily due to lower dividends received from Lion Rock Group Limited (“Lion Rock”) amounting to RM1.90 million in 2020 compared with RM2.82 million in 2019. New investments made by the Group in 2020 could not mitigate the decrease in dividends from Lion Rock as the Group had only acquired some of those investments in the second half of 2020 which was past the entitlement dates for their FY 2019 dividends. In other cases, some of the investees had not declared any dividends in 2020 due to the impact of COVID-19 on their businesses. In any case, these new investments are still small and not able to generate substantial dividends for the Group. Dividend income in 2019 had also included dividends amounting to RM0.49 million generated by an equity fund which was liquidated in April 2019. During 2020, the Group continued to receive dividends amounting to RM9.37 million from it associate, 104 Corporation, although such dividends are not accounted for as revenue.

On a brighter note, rental income from investment properties had increased from RM0.33 million in 2019 to RM1.09 million in 2020 due to the collection of rental from our tenant in Wisma JcbNext for a full year duration in 2020 compared with only 4 months in 2019. In addition, the tenant has also taken up an additional floor starting in September 2020. With that, the total area leased to them is approximately 23,700 square feet which is about 87% of net lettable area in Wisma JcbNext. The Group retains approximately 13% of Wisma JcbNext for its own use.

In terms of services, the Group derives revenue predominantly through its subsidiary in Japan which provides contract staffing consulting services on a small scale. The Group did not invest to expand the automotive classifieds and advertising services business via the Autoworld website in 2020 but nevertheless, the Group continued to update the website with automotive related content. Total revenue from the provision of services in 2020 fell 63.1% yoy to RM0.37 million compared with RM1.01 million in 2019 due to the challenging environment arising from the COVID-19 pandemic in 2020.

The Group’s operating expenses in 2020 amounted to RM6.27 million, an increase of 13.7% compared with the previous year’s operating expenses of RM5.52 million. The increase in staff costs from RM2.56 million in 2019 to RM2.98 million in 2020 was due to an average base salary increment of 5% for staff below senior management level and 0% for senior management, a small increase in headcount and the reversal of bonus provisions that had lowered staff costs in 2019. Other operating expenses had increased by 24.5% to RM2.53 million in 2020 compared with RM2.03 million in 2019. Included in other operating expenses are foreign exchange gains or losses. In 2019, other operating expenses included foreign exchange gains of RM0.27 million but in 2020, it was a loss of RM0.24 million. This was the primary reason for the apparent increase in other operating expenses. Looking into the individual components, the increase in utilities was due to the occupancy by tenants in Wisma JcbNext for a full year compared with only 4 months in 2019. Due to the restrictions in movement and travel in 2020, travelling expense decreased consequently. The slight increase in miscellaneous expense was mainly due to unrecoverable taxes deducted at source attributable to our subsidiary in India that was written off during the year.

Further breakdown of the Group’s other operating expenses is as follows:

Group 2020
Net foreign exchange losses/(gains) 241,179 (274,264)
Professional fees 772,828 990,751
Directors’ fees 288,000 255,000
Office expense 235,485 195,822
Security costs 148,977 128,268
Utilities 234,042 99,080
Staff benefits 135,757 137,792
Quit rent and assessments 66,733 61,171
Travelling 15,008 123,052
Telecommunication 31,828 36,714
Insurance 38,176 38,828
Miscellaneous 318,442 237,879
2,526,455 2,030,093

The Group continued to rely a great deal on our associates, primarily 104 Corporation, to contribute to the Group’s earnings in 2020. To recap, 104 Corporation is principally involved in the online job portal business and also provides executive search and HR consultancy services in Taiwan. 104 Corporation is listed on the Taiwan Stock Exchange since 2006. Our share of profit from 104 Corporation in 2020 had decreased slightly to RM8.49 million compared with RM8.82 million in the preceding year mainly due to the impact of the COVID-19 pandemic on Taiwan industries especially in the second quarter of 2020 which resulted in some companies deferring hiring activities and this in turn negatively impacted 104 Corporation’s revenue. However, this set back proved temporary as the Taiwanese economy roared back to life as it benefited from the strong demand for tech products globally as well as a relatively successful containment of the pandemic. Lockdowns imposed across the globe forced a greater number of people to work and study remotely. That in turn boosted demand for electronic products such as laptops. As the dominant leader of the global semiconductor industry, Taiwan was the fastest growing economy in Asia in 2020, growing 3.11% in contrast with the fate of many other countries as the COVID-19 pandemic slammed the brakes on economic activities. Under the aforementioned circumstances, 104 Corporation’s revenue in 2020 had remained flat at NT$1.63 billion compared with NT$1.64 billion in 2019 while its profit before taxation had decreased by 9.9% to NT$302.51 million compared with NT$335.93 million in 2019 mainly due to a 1.3% increase in operating expenses primarily from higher staff costs as the company continued to invest in developing new products and services. Net profit attributable to shareholders similarly decreased by 9.5% to NT$258.74 million compared with NT$286.00 million a year ago. The balance sheet of 104 Corporation remains solid with cash holdings of NT$2.24 billion at the end of 2020. 104 Corporation has recently announced a dividend of NT$7.80 per ordinary share representing 100% of their net profit attributable to shareholders for the 2020 financial year, which will be paid out after the company’s Annual General Meeting (“AGM”) on 27 May 2021.

Our other associate, Innity Corporation Berhad (“Innity”), is principally involved in the provision of technology-based online advertising solutions, to their customers in the Asia Pacific region, using in-house developed technology platforms. Innity’s role in the online advertising process is to serve as a one-stop centre for advertisers and advertising agencies in offering the 3 major functions of the online advertising process, namely Creative, Media and Research. In essence, the group assumes the role of the advertising agency, creative agency, media agency and researcher. Innity is a listed company since 2008 and currently its shares are traded on the ACE Market of Bursa Malaysia Securities Berhad (“Bursa Securities”). The group has an established presence in Malaysia, Hong Kong/ China, Indonesia, Philippines, Singapore, Taiwan, Thailand, South Korea, Myanmar, Cambodia and Vietnam. During 2020, most of the governments in countries where Innity has a presence, invoked full lock down or circuit breaker measures in their bid to contain the spread of the virus and to “flatten the curve” of new cases. As a result, Innity’s business was disrupted in Q1 and Q2 of 2020. Business gradually recovered in Q3 and Q4 attributable to the change in consumer habits from offline to online. Consumers adapted to the new norm of staying indoors during the pandemic. It was also during this time that the company undertook various cost-effective measures to optimise the group’s performance through cost control, developing new products, improving risk management and internal control procedures so as to minimise losses and improve the group’s cashflow. Innity posted a loss for the Financial Year 2020 (“FY2020”) and our share of that loss amounted to RM0.07 million, which contrasts with the share of profit amounting to RM0.26 million in the preceding year. Innity’s revenue fell 12.1% yoy to RM103.03 million compared with RM117.19 million in 2019. The decrease in revenue was mainly from its operations in Hong Kong/ China and Indonesia while its operations in Vietnam and Cambodia continued to register yoy growth in revenues. In tandem with the decrease in revenue, Innity recorded a loss after tax of RM1.32 million compared with profit after tax of RM1.39 million in Financial Year 2019 (“FY2019”). The decline in revenue and loss after tax were due to the negative impact of the pandemic on business confidence which resulted in advertisers adopting a cautious stance in their spending and advertising campaign commitments. The group’s loss was mitigated by COVID-19 government support grants awarded to its Singapore, Hong Kong and Taiwan business units, gain on disposal of an associate company and lower share of losses from its associates.

Overall, net profit attributable to shareholders for 2020 fell 37.4% to RM6.45 million from RM10.31 million in 2019. As highlighted earlier, this was primarily due to the decrease in interest income, investment distribution income, dividend income and share of profits from equity-accounted associates. As 2020 had indicated, the Group’s financial performance is sensitive to macroeconomic factors and dependent on the performance of its associates. Earnings per share amounted to approximately 4.80 sen per share. The Board has recommended the payment of a final dividend of 3.0 sen per ordinary share to be paid after the forthcoming AGM.

Our financial position remains strong with net assets attributable to shareholders of RM323.60 million as at 31 December 2020, down slightly from RM325.82 million at the end of the previous year. On a per share basis, this translates to RM2.41 per share with the Company’s share quoted at a price of RM1.40 as at 31 December 2020.


Group 2020
Investments in associate
- 104 Corporation 112,733,330 108,505,800
- Innity 12,358,134 12,439,438
125,091,464 120,945,238
Financial assets at fair value through other
  comprehensive income
- Lion Rock 22,506,275 34,200,967
- Nova Pharma Solutions Berhad 3,661,972 4,929,578
- Hastings Technology Metal 11,865,538 7,305,412
- Banking and financial services 3,701,674 -
- Other quoted investments 3,842,294 676,620
- Unquoted investments (Atomico IV) 4,638,039 3,005,558
50,215,792 50,118,135
Financial assets at fair value through profit or loss
- Money market unit trust funds 44,242,390 55,896,225
Cash reserves
- USD 14,727,696 16,590,148
- HKD 538,285 16,547
- SGD 34,044,384 32,685,065
- RM 37,013,247 30,880,178
- Others 315,537 458,853
86,639,149 80,630,791
306,188,795 307,590,389

The performance of the Group’s associates has already been detailed in the previous section of this report. The carrying value of the investments in associates on the Group’s balance sheet increased by 3.4% in 2020 to RM125.09 million. Against the Taiwan dollar, the Ringgit had weakened from TWD1:RM0.1364 as at end 2019 to TWD1:RM0.1430 as at end 2020 and this contributed to an increase of RM5.19 million in the carrying value of 104 Corporation on our balance sheet. In addition, while the share of profit from 104 Corporation for 2020 amounted to RM8.49 million, the dividend received from 104 Corporation during 2020 based on its 2019 net profit amounted to RM9.37 million. Although it does not benefit the Group’s bottom line, the dividend from 104 Corporation provides liquidity for the Group to fund its annual working capital requirement without having to tap into the Group’s reserves set aside for future investments. This is apparent from the Group’s statements of cash flows for 2020 which shows that the dividends it receives from 104 Corporation, Lion Rock and other investments in quoted securities totalling RM10.61 million being more than sufficient to cover the RM3.60 million working capital utilised in 2020

The largest investment under the FVOCI category is Lion Rock with a carrying value of RM22.51 million. Lion Rock is principally involved in the provision of printing services to international book publishers, trade, professional and educational conglomerates and print media companies. This is a stock that the Group had accumulated from 2011 to 2013, investing a total of RM2.98 million. Subsequently, in 2014, Cinderella Media Group Ltd, the parent company of Lion Rock at that time of which we had a stake in then, rewarded its shareholders by declaring a dividend-in-specie of its stake in Lion Rock and spinning it off as a separate listed company on the Hong Kong Stock Exchange. As a result of that, the Group’s stake in Lion Rock had increased by an additional 36.5 million shares in 2014. At the end of 2020, the Group held an equity interest of approximately 7.0% in Lion Rock. For the financial year ended 31 December 2020, the dividend yield on Lion Rock was 6.3%. During the year, the Group had received RM1.90 million in cash dividends from Lion Rock as well as 3.38 million shares in Left Field Printing Group Limited via a special dividend by way of distribution in specie of shares in Left Field on the basis of 1 Left Field share for every 16 shares of Lion Rock held. At its AGM on 12 May 2021, Lion Rock’s shareholders approved a final dividend of HK$0.05 per share. The fair value of the Group’s investment in Lion Rock had decreased by 34.2% in 2020 in line with the drop in its share price from HKD1.20 at the end of 2019 to HKD0.80 at the end of 2020.

Lion Rock’s revenue for the year ended 31 December 2020 decreased by 14.5% to HK$1,373.5 million from HK$1,607.0 million in the previous year. The decrease was mainly due to reduced orders from overseas customers during the economic uncertainty caused by the COVID-19 pandemic especially during the first half of 2020. Printing plants and bookshops were closed by occasional lockdowns, customers cut back on printing orders due to macroeconomic uncertainty and logistics was impacted by freight capacity crunch. In addition, the China-US trade war has forced publishers to re-examine their supply chain strategy and a number of leading publishing houses have shifted their print orders to non-China print manufacturers particularly in Europe. The competitiveness of China-based printers is also gradually being eroded by the continued appreciation of RMB and the increasing labour and material costs in China.

Lion Rock’s net profit for the year attributable to shareholders in 2020 fell 24.9% to HK$104.32 million from HK$138.80 million in the preceding year largely due to the decrease in revenue coupled with an increase in impairment of trade receivables by approximately HK$12.45 million. The shortfall in revenue and increase in impairment of trade receivables were mitigated by an increase in other income by HK$47.57 million to HK$96.41 million mainly due to various government subsidies and rebates received during the year of approximately HK$54.3 million. In addition, share of profit from an associate, namely the Quarto Group, Inc. (“Quarto”) increased to HK$8.73 million in 2020 compared with HK$5.06 million in 2019. Although Quarto’s revenue was down 6.6% yoy to US$126.88 million due to the impact of lockdowns in the US and US in Q1 which affected retail book sales, its profit after tax rose 58.5% yoy to US$4.57 million as a result of its strategy to publish less but better books and pruning corporate overhead costs including interest expenses.

The trend of publishing houses reshoring their print orders to non-China print manufacturers as mentioned above, underscores the importance of the Lion Rock’s strategy to diversify geographically. In addition to the acquisition of the OPUS Group in Australia back in 2014, the group had on 25 February 2020 completed the acquisition of Papercraft Sdn Bhd (“Papercraft”), a Johor-based printing plant. The consolidation of Papercraft was delayed by the COVID-19 movement control order in Malaysia but infrastructure upgrade works has since been re-initiated. The combined operation of Papercraft and C.O.S. Printers Pte Ltd, the group’s subsidiary in Singapore, will enable the group to also have a print manufacturing presence in South East Asia.

The next investment that we would like to update on is the Group’s investment in Hastings Technology Metals Limited (“Hastings”), an Australian Securities Exchange listed exploration and development company. To recap, the Group had, on 7 August 2019, subscribed for 20,700,000 new shares in Hastings for a total consideration of AUD3,519,000 (equivalent to RM10.14 million based on the exchange rate as at 7 August 2019 of AUD1:RM2.882). The subscription came with one free option for every two shares subscribed and each option is exercisable into one new share at an exercise price of AUD0.25 each. The options will expire on 12 April 2022. As at 31 December 2020, the Group has an equity interest of 1.72% in Hastings (subsequently diluted to 1.19% as at 10 May 2021). We wish to fully disclose that our major controlling shareholder, Mark, has a direct equity interest of 3.40% and a deemed interest of 4.59% in Hastings as at 10 May 2021. The fair value of the Group’s investment in Hastings had increased by 62.4% during the year, mainly due to the rise in its share price from AUD0.115 at the end of 2019 to AUD0.17 at the end of 2020 and the strengthening of the Australian dollar against the Ringgit by 7.8% in 2020.

Hastings is currently developing the Yangibana Rare Earths Project (“Yangibana Project”) in an area covering approximately 650 square kilometres located some 250 kilometres from Carnavon in Western Australia. Mining leases granted are for 50 square kilometres over 21 years. The Yangibana Project involves development, construction, mining and processing operations to produce Mixed Rare Earth Carbonate (“MREC”) with high concentrations of Neodymium (Nd) and Praseodymium (Pr). These elements are essential raw materials used in the production of permanent magnets, critical in many hightech products including electric vehicles, renewable energy wind turbines, robots, medical applications and others. Hastings aim to become the next significant producer of Neodymium and Praseodymium outside of China. The project’s total capital expenditure inclusive of contingencies is projected to be in the region of AUD516 million. On 20 April 2021, Hastings announced the signing of a major offtake contract with Thyssenkrupp Materials Trading GmbH for the supply of 9,000 tonnes per annum of MREC for the first 5 years and 5,000 tonnes per annum for the second 5 years, totalling 70,000 tonnes over a 10-year period. The committed volume represents 60% of Hasting’s annual Yangibana production volume for the first 5 years and 33% for the second 5 years. This contract is in addition to the offtake contracts signed with Schaeffler Technologies AG in June 2020 and Sky Rock Rare Earth New Materials Co Ltd in November 2018 for the supply of 5,000 and 2,500 tonnes of MREC per annum respectively.

Hastings intend to secure debt financing through a German government sponsored scheme for up to USD140 million which is conditional upon the signing of the Schaeffler offtake contract. The other major source of financing is an Australian government funded agency that is interested to fund a large part of the project’s infrastructure cost. The group had also received confirmation of in-principle eligibility from Finnvera Plc for project financing of up to AUD94 million. Pending the finalisation of these debt financing, Hastings has on 22 February 2021 received commitments to raise approximately AUD100.7 million through a two tranche share placement of approximately 530 million shares at AUD0.19 per share and on 7 April 2021, it announced the entry of L1 Capital Pty Ltd, a global investment manager with a track record of investments in natural resources, as a new substantial shareholder. Hastings intends to commence early infrastructure activities at the Yangibana mine site in the 3rd quarter of 2021.

The Group invested RM2 million in Nova Pharma Solutions Berhad (“Nova Pharma”) on 29 December 2017. Nova Pharma was listed on the LEAP Market of Bursa Securities on 9 March 2018. Nova Pharma is principally involved in the provision of engineering solutions for the pharmaceutical and biotechnology industries focusing on the initial design and building phase of pharmaceutical and/or biotechnology plants. The engineering solutions provided by the company range from pre-design (feasibility study and site selection) to design (conceptual design, basic design and detailed design) to post-design (tendering, procurement and site supervision) to other supporting activities (GMP documents review and gap analysis and assessment). Some of the pharmaceutical and biotechnology plants that Nova Pharma has been involved in include oral solid dosage, biopharmaceutical manufacturing, vaccine filling and finishing as well as ophthalmic manufacturing. The company’s principal markets are in Malaysia and Taiwan. For the year ended 31 December 2020, Nova Pharma reported unaudited revenue of RM4.24 million, representing a decrease of 32.7% from the previous year’s revenue of RM6.30 million. This was mainly due to the closure of international borders which negatively impacted revenue contribution from biotechnology industry as most biotechnology projects are from Taiwan. Revenue contribution from the biotechnology sector and Taiwan market fell 47.6% and 50.0% yoy respectively in 2020. Nova Pharma reported unaudited loss after tax of RM0.73 million in 2020 compared with a profit after tax of RM1.12 million in 2019. Apart from the decrease in revenue, the loss was also due to higher operating costs incurred for its subsidiary which was only incorporated in June 2019. As at end of 2020, the Group held an equity interest of 9.45% in Nova Pharma. Nova Pharma has declared an interim dividend of RM0.002 per share in December 2019 in respect of FY2019 of which the Group received approximately RM28,000 in January 2020. No dividends have been proposed or declared in respect of FY2020

Atomico IV is a private equity fund managed by Atomico. Founded in 2006 by Niklas Zennström, a serial entrepreneur who co-founded Skype and Kazaa, Atomico is a venture capital investment firm headquartered in London that manages funds which invest in the artificial intelligence and machine learning, climate technology, communication, financial technology, gaming, health-tech, SaaS, industry, mobility, consumer products and consumer services sectors. By 2020, the firm has already backed 11 companies past a USD1 billion valuation, known as unicorn status. 2020 was also the year that tech became undeniably essential. The COVID-19 pandemic transformed our lives – and made us more reliant on tech than ever before. One of the broadest effects has been an acceleration of technology adoption at work and at home. This adoption acceleration was driven by the needs of people in lockdown and the pivot by many companies to working virtually. Some of the 2020 winners in the tech industry are e-commerce sites, online streaming services, online communication platforms and food delivery companies. Atomico IV is Atomico’s fourth fund that was formed in 2015 and closed in 2017 with a size of USD765 million. The fund, which has a term of 10 years, invests in European startups from Series A on that have global potential. The Group participated in Atomico IV in 2016 with a relatively small commitment of USD500,000 of which approximately USD399,000 has been called and disbursed to the fund as at 31 December 2020 (approximately USD23,000 was disbursed in 2020). The fair value of the Group’s investment in Atomico IV at the end of 2020 amounted to RM4.64 million, up 54.3% yoy from RM3.01 million in 2019.

During the year, the Group invested RM6.39 million (2019: RM0.68 million) into stocks of 10 listed companies operating in a range of industries. For ease of reference, this portfolio of stocks acquired in 2019 and 2020 (excludes Lion Rock, Hastings, Nova Pharma and the associates) will hereinafter be referred to as the Equity Portfolio. These companies are listed in Malaysia, Hong Kong and Australia. The single largest investment in this portfolio is RM1.66 million. These investments as well as other targets emanated from research conducted internally in line with the Group’s investment objectives and are reviewed and approved by the Investment Committee and Board of Directors respectively. Should the prices of these stocks move within our target buy prices, we will be looking to further increase our investments in these stocks as well as to acquire other target stocks on our buy-list. This portfolio generated just approximately RM98,000 in dividends for the Group in FY2020 as a substantial portion of this portfolio was only acquired in the last 4 months of the year and some of these companies have reduced or did not declare any dividends altogether due to the impact of the COVID-19 pandemic on their businesses. As at 31 December 2020, the fair value of this portfolio amounted to RM7.54 million. To prevent any risk of front- running, the identities of the component stocks will be kept confidential save for any laws or regulations that require the Group to provide full disclosure.

Looking at the table below, the fair value of the Group’s investments in securities and funds including its listed associates as at 31 December 2020 are significantly above the Group’s cost of investment. The unrealised gains, with the exception of 104 Corporation and Innity, have been recognised in Other Comprehensive Income (“OCI”) at this stage. Pursuant to the MFRS 9 – Financial Instruments, the Group has elected to classify its equity investments as fair value through other comprehensive income (“FVOCI”) where fair value changes on the Group’s equity investments will continue to be presented in OCI but any cumulative gain or loss in OCI will be directly transferred to retained earnings upon the sale of the equity investments. The unrealised gains on 104 Corporation and Innity, as associates, have not been recognised at all.

Cost of Investment
Carrying Value
Fair Value
104 Corporationˆ 75,256,303 112,733,330 172,937,765
Innityˆ 8,487,984 12,358,134 11,261,265
Lion Rock 17,799,453 22,506,275 22,506,275
Nova Pharma 2,000,000 3,661,972 3,661,972
Hastings 10,141,758 11,865,538 11,865,538
Equity Portfolio 7,065,395 7,543,968 7,543,968
Atomico IV 1,655,170 4,638,040 4,638,040
  122,406,063 175,307,257 234,414,823

ˆ Accounted for using the equity method pursuant to MFRS 128, Investments in Associates and Joint Ventures

The Group’s treasury management objectives are to ensure there is available liquidity when needed and to preserve our long-term purchasing power to acquire investments. In that respect, the Group has decided that the main currencies that it will maintain are MYR, USD and SGD. While the Group will not convert existing MYR holdings into USD or SGD, a portion of any future foreign currency cash inflows such as dividends from 104 Corporation and Lion Rock will likely be converted into USD and SGD and deposited into interest bearing accounts. Although this may result in volatility in our P&L as seen in our 2016 and 2017 results, the Group does not intend to actively manage or trade currency positions nor engage in any speculative activities. The need to preserve our purchasing power came to the fore in late March 2020 when the Ringgit weakened to RM4.44 to the dollar in tandem with the fall in oil prices. The Group’s MYR holdings are placed in interest bearing bank deposits and money market unit trust funds. Towards the end of 2018, the government of Malaysia announced the abolishment of tax exemption on interest income earned by wholesale money market funds. To maximise yields, the Group transferred funds placed with wholesale money market funds into fixed deposits and retail money market funds. On 17 April 2020, the Ministry of Finance had announced the extension of the tax-exempt status of retail money market funds to 1 July 2021.

At the May 2019 policy meeting, Bank Negara had cut the Overnight Policy Rate (“OPR”) by 25 basis points (“bps”) to 3.00%. During FY 2020, Bank Negara cut OPR by another four times: 25bps to 2.75% in January, 25bps to 2.50% in March, 50bps to 2.00% in May and a further 25bps to 1.75% in July to cushion the economic impact of the pandemic on businesses and households and support the improvement in economic activity. These monetary policy actions by the central bank will mean lower yields on the Group’s Ringgit holdings in 2020 and possibly beyond.

While the Group manages its treasury function conservatively to safeguard the Group’s interests, the focus of the Board and management is still on identifying new strategic investments and/or developing a broad portfolio of investments which can contribute to the future growth of the Group. To be able to capitalise on any opportunities as and when they arise without sacrificing unduly on the Group’s returns on its reserves, the Group will need to maintain an appropriate mix of long and short-term investments and cash.


The COVID-19 pandemic has not ended at the time of writing. But hopes are high for an end to this crisis sooner than later as countries worldwide race to inoculate their populations against the virus. It would be unrealistic to expect the virus to be eradicated any time soon. Perhaps a more realistic target is for the pandemic to become an endemic much like all other diseases and viruses. The vaccination roll-out has only begun in earnest at the turn of the year and it will take time to vaccinate over 6 billion people on planet earth and such a massive endeavour is not helped by delays in vaccine supply and widespread (but perhaps unwarranted) fears over the safety of the vaccines. In the meantime, we should not be complacent and let our guard down. It would be premature to declare victory over the pandemic as India has shown recently. Even as the vaccination exercise is underway, there is no guarantee that further waves of infections will not happen, potentially triggering fresh lockdowns and restrictions in economic activities. The prognosis is made gloomier as the threat of mutations and the emergence of new variants continue to overshadow progress on the vaccination front.

As such, high uncertainty surrounds the global economic outlook and the path of the economy will depend significantly on the course of the virus. After an estimated contraction of -3.3% in 2020, the International Monetary Fund has projected the global economy to grow at 6% in 2021 fuelled by the anticipated vaccinepowered recovery in the second half of the year. However, future developments will depend on the path of the health crisis, including whether the new COVID-19 strains prove susceptible to vaccines or they prolong the pandemic; the effectiveness of policy actions to limit persistent economic damage; the evolution of financial conditions and commodity prices; and the adjustment capacity of the economy. GDP reports for the first quarter of 2021 are mixed, although mostly positive. An advance GDP report showed the US economy expanding 6.4% yoy in the first quarter, reflecting continued economic recovery, reopening of establishments and continued government response related to the pandemic. China posted its strongest quarterly growth on record as the world’s second largest economy continued its robust recovery from the pandemic. Its GDP growth of 18.3% yoy in the 1st quarter was the strongest since China began keeping records in 1992. Taiwan’s Q1 GDP grew 8.16% yoy, its strongest growth in more than a decade, as the work from home boom sparked strong global demand for the island’s hi-tech exports while Hong Kong’s Q1 GDP grew 7.9% yoy driven by recovery of its exports. On a lesser but similar trajectory, Singapore’s Q1 GDP expanded 0.2% yoy and South Korea by 1.8% yoy. It is a different story in Europe though. The eurozone slid into a double-dip recession in Q1 with a contraction of 0.6% quarter-on-quarter as output dropped under the weight of lockdown measures, leaving the bloc lagging behind the other major economies. Much of Europe was subjected to varying levels of lockdown in Q1 to contain a third wave of COVID-19 infections.

Despite the doom and gloom of the COVID-19 pandemic, 2020 was mostly a positive year for investors, the initial market shocks aside. In March, global stocks suffered one of the quickest declines on record, but broadly recovered and hit new highs by year-end. Global stocks as measured by the MSCI World Index climbed 14% in 2020, and in the process posted 2 consecutive years of double-digit gains after 2019’s 24%. The market recovery and subsequent rally was led by tech stocks as lockdowns and work-from-home trends increased the demand for tech products and services. This was against a backdrop of low interest rates, significant fiscal stimulus measures and rapid development of vaccines in the 2nd half of the year. 4 months into 2021, all three of the most closely watched bellwether US indices – S&P 500, Dow Jones Industrial Average and Nasdaq Composite – are now either near or at fresh record-high levels. Reasons underpinning the bull market are the accommodative monetary policies, massive fiscal stimulus packages and excitement over the reopening of economies with vaccinations. At its April 2021 meeting, the US Federal Open Market Committee voted to keep interest rates near zero and to continue buying at least USD120 billion in bonds each month and that any future change in this policy will be based on actual outcome, not forecasts or projections. The market rally is also in anticipation of companies reporting earnings growth for Q1 and general expectation of vaccine powered economy recovery as evidenced by rising US Treasury bond yields.

The local stock market has outperformed its neighbouring bourses with its benchmark index ending the year in the positive zone, except for Vietnam. The FBM KLCI gained 2.9% yoy to reach pre-pandemic levels of 1,627.21 points on December 31 after the index sank to a 10-year low of 1,207 points on March 19. What tech stocks did for the US markets, glove stocks like Top Glove and Supermax did the same for the KLCI. Economic stimulus measures such as loan repayment moratorium had also put extra money into the pockets of consumers which contributed to the stock market’s good performance in 2020. 4 months into 2021, the FBM KLCI has decreased about 19 points or 1.15% amid rising new COVID-19 cases, corrections to glove counters, political uncertainties and rising US Treasury yields while certain recovery stocks started to appreciate.

COVID-19 has not changed our strategy which is to develop a broad portfolio of long-term investments that can generate dividend income at targeted yields which in return can be paid onwards to our shareholders. It would seem that the Company would have done well by now had it invested a substantial portion of its cash into stocks last year but hindsight is 20/20. What we had done in 2020 was to invest RM6.39 million into the stocks of 11 listed companies operating in a range of industries whose products and services we believe will do well past the current pandemic. The acquisitions continued into 2021 with another RM6.30 million invested up to the end of April and we will continue to look for high quality and/or undervalued companies despite the prevailing market conditions.

History has shown that equities have almost always recouped all lost ground over the long term and short-term stock price volatility will be smoothened out over time. We take comfort in what history is telling us and we will not worry whether the stock markets will fall. It will at some point fall or even crash but in general, equities perform relatively well over time. Indeed, not all companies will succeed. Some will perform poorly and others may even fail and disappear and this is why we try to build a diversified portfolio made up of stocks selected based on strong fundamentals.

The path ahead is by no means certain. While the vaccine rollout provides hope, it cannot be said yet that we are completely out of the woods. The recent spike in COVID-19 cases in India, Europe and even Malaysia, demonstrates the unpredictable nature of the pandemic. On a brighter note, countries such as the US and UK are recording a marked reduction in daily new cases with the acceleration in their vaccination rollout plans. Yet for the rest of the world, there remains risk of delays in vaccination distribution, adoption or efficacy which could derail economic recovery. Premature monetary or fiscal policy tightening in major economies such as tapering of bond purchases in respond to rising inflation, could slow the recovery and deal a setback to the stock markets. Lingering structural economic impacts from the 2020 crisis and recession could also slow the economic rebound. Continued easy fiscal and monetary policy coupled with pandemic support programmes could also result in a drag on productivity and growth from so called “zombie” companies, defined as those with income insufficient to cover debt payments. While crisis aid has kept bankruptcies low, central banks and governments will face a huge task when they decide to reduce and eventually take out their support which may see insolvencies rise especially among such “zombie” companies and this in turn could lead to a recession. The on-going US-China trade war and escalation of geopolitical tensions in the Middle East and the Straits of Taiwan could also hamper the vaccine-powered economic recovery and increase stock market volatility. Rising sovereign debt exacerbated by the pandemic could also potentially lead to a debt crisis especially in emerging and developing countries.