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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 2017.


For the financial year ended 31 December 2017, the Group recorded profit before tax of RM8.84 million and a profit attributable to shareholders of RM6.82 million. While we saw our revenue grow 7.2% during the financial year to RM9.90 million from RM9.23 million in 2016, our profit was negatively impacted during the year by foreign exchange losses of RM3.74 million predominantly related to the impact of the strengthening Ringgit against our USD and SGD bank deposits. Conversely, our profit in 2016 was positively impacted by unrealised gain on these deposits of RM3.25 million. Even though these SGD and USD deposits have resulted in volatility in our results, we believe it is prudent to maintain these deposits to ensure that we have purchasing power should there be an investment opportunity outside Malaysia during a time of crisis.

Aside from the increase in revenue, we also made progress in controlling our costs during the year with our operating expenses excluding foreign exchange losses decreasing to RM7.40 million in 2017 from RM8.47 million in 2016.

As at 31 December 2017, our total assets stood at RM337.04 million with shareholders’ funds recorded at RM335.04 million (RM2.40 per share), compared with RM333.42 million and RM331.03 million (RM2.37 per share) as at the end of 2016. With liquid cash and short-term investments totalling RM134.47 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 4.5 sen per share for the financial year 2017 (2016: 2.0 sen). The proposed dividend is subject to shareholders’ approval at the forthcoming Annual General Meeting.


While 2017 overall was a relatively quiet year, the Board has continued to try to increase long-term shareholder value through on-going share buy-back activities. During the year, we bought back 207,700 shares and all of the treasury shares including 142,300 shares bought back in previous years have been cancelled at the end of the year as we believe this is the appropriate action from a corporate governance perspective.

At the end of the year, we made a small investment of RM2 million in a company, Nova Pharma Solutions Berhad, which subsequently listed on the LEAP Market on Bursa Malaysia.


The Board and management are committed to try to be patient and disciplined so we can 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. However, as we believe valuations for good companies are still very high generally, we want to caution you that this process will take time. In the meantime, the Group will depend on the financial performance and dividends from its associates, 104 Corporation in Taiwan and Innity Corporation Berhad, and the performance of Lion Rock in Hong Kong.

You should note that the tenancy for most of the office space in Wisma JcbNext has expired in January 2018 with SEEK Asia relocating to another building where they have approximately double the floor space. We are currently working with multiple agents to source for a new tenant(s). While our building has an excellent location with great access to public transportation, there is an oversupply of office space in the Golden Triangle of Kuala Lumpur now and as such the market for tenants is very competitive.


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.



Dear shareholders,

For 2016, we saw the exit of some of our larger shareholders. After holding on for a couple of years since the sale of the operation, SEEK was keen to sell their shares and some other substantial shareholders through the years thought it was a good time to exit as well. Albert (Wong Siew Hui) and I decided to buy their block of shares which triggered a Mandatory Take-Over Offer to the rest of the shareholders. As the result of this exercise, management (including myself) now emerges as the majority shareholder of JcbNext. Hopefully, shareholders will now have extra comfort knowing that, being the majority shareholder, the management’s interest will be more aligned with the rest of the shareholders. With this corporate exercise, it also allows management to focus on longer-term and not short-term results.

The aspiration of JcbNext moving forward is to be a listed company that can continuously distribute dividends to shareholders every year and for many years to come. For that, our investment focus is on companies that are able to generate good free cash flow and willing to distribute those free cash as dividends back to shareholders. We are also mindful and conservative with our finances - we don't have much debt and prefer not to have any debt at all. Debt always increases the risk to our Company and has a higher chance to interrupt our future dividend payout. As management of this Company, our ultimate performance goal is the dividend payout to our shareholders. Revenue, profit, book value, share prices and others are secondary objectives.

As for the type of companies we are looking at, we look for both listed and unlisted companies and we don't mind buying a minority interest or 100% of companies. The criteria we look for will be:-

  1. Good business. We define good businesses as businesses that have good loyal customers, do not require a lot of capital reinvestment, a healthy profit margin, relatively stable business in operations for a number of years, and not in an overly competitive industry. Good businesses will generate good free cash flow that can be returned to shareholders as dividends.
  2. Shareholder-friendly management. Good management is a given criteria for any good company. Equally important is having a shareholder-friendly management so that when there is extra profit, those profit will be managed to the best interest of all the shareholders. Those extra profit can be reinvested in the company for future growth or returned to the shareholders as dividends. Non-shareholder-friendly management will use those extra cash for the benefit of their personal interest first. So the company could be a good business but as a shareholder, we receive only a small portion of our rightful share of the gain or potentially none at all.
  3. Right price. Even for a good business with a shareholder-friendly management, our investment will still be bad if acquired at a high price. It is important that we are conservative in our valuation of businesses so that we have a good margin of safety in our investments. As our main goal is investment for future dividend, we can compare the potential dividend return from an investment opportunity presented to us, versus returns from alternatives like S&P 500 ETF, KLSE Index ETF or money market fund. We could be busy evaluating all the various business ventures everyday but if the price is not right, we will not do any investment and we don't mind waiting for years to find the right company at the right price. This is an advantage JcbNext has as compared to other companies such as fund management companies where they have pressure to invest all year round even when the market is near its peak.

So far from our experience, the companies that would be attracted to JcbNext would be of the following kind:-

  1. Mature companies and entrepreneurs who wish to partially retire. We have come across a few of such companies. They are good companies with good entrepreneurs. However, their children might not want to take over the business and the entrepreneurs would like to have some cash up front that he can use and not have to feel too stressed that his entire retirement wealth is tied up to the fortunes of his company. The entrepreneur sells us part of his company, he has some cash up front to use, he continues to work in the company he loves - and he can sell the rest of his shares to us in the future, if he so chooses. We believe such an arrangement is a good win-win for both JcbNext and the entrepreneur. JcbNext will become a place where entrepreneurs can park their good companies with us knowing that we will continue with their legacy after they retire and help them to reduce their risk close to retirement.
  2. Smaller listed companies. All listed companies need shareholders. However, if the companies only consist of individual public shareholders and fund management companies, during economic downturn, listed companies normally experience panic selling of their shares, which would depress their share price and cause more panic among the remaining shareholders. Smaller listed companies can diversify their shareholders by having JcbNext as their long term shareholder because during an economic downturn, there is no pressure for JcbNext to sell our investments and on the contrary, JcbNext will be glad to buy more of the cheaper shares of a good company.
    Note: If you are an owner of a listed company and wish to diversify some of your shares to us, please contact us. For JcbNext to perform this function well, JcbNext must ensure we have good cash reserve and we don't have much debt so that when we receive the phone call, we can write the cheque.

We do look at startups for potential investment and so far, it is always the pricing that prevents us from investing into this group of companies. There is a saying about companies being "priced to perfection". In startup investing, we realized that a lot of startups are "priced to dream come true". That means the asking price of the startup is only a fair value to investors like us if the startup achieves what they dream. As we know, most of the time, dreams do not come true for most startups. We have discovered that we lack the ability to pick the “winners� from this group, without the ability to time-travel to the future and back. As such, we choose not to risk our shareholders’ money, when the valuation figures appear, in our view, high.

The main weakness in our Company’s search for investments is that we are not high risk takers willing to go out to offer the owner a price that he cannot refuse. We don't know how to drum our chest and drop a stash of cash in front of the owner to buy his company. We are also not the type of people who would go out to promise 101 things to the owner, and try to sweet talk him into selling his company to us at a bargain. In fact, there are times we ask the owner not to sell to us because he can get a better price selling his company to someone else. We are not a good Romeo. Princesses are most likely not attracted to us - except the wise ones :-)

While we are waiting for the right investment to come along, we need to make sure that we protect our current cash from inflation. Our treasury role is to ensure we invest cash into short term investments that are not high risk, are fairly liquid and diversified across a few currencies as a way to hedge against currency fluctuation. When the right investment opportunity comes along, we must be able to convert our treasury holdings into cash for the investment.

As any investment is risky in nature, we are rather careful with our investments and we try to reduce risks that we can control - like assuming no debt, making minimum investments into risky startups, keeping our operating cost low and ensuring we have ready cash for rainy days. The other risks that we have no control over, we have to find ways to live with it when it happens. In hindsight, we are glad that we did not get into many of the investments that were presented to us in the last 2 years.

As we continue with our investment journey, we constantly have to remind ourselves to be humble with our opinion as this world is so complicated and there are so many unknowns that we aren’t even aware of.

May we have wisdom and humility to guide us to seek good investments that contribute greatly to society.

Mark Chang
Chief Executive Officer

Note: For ease of reading, we refer to all business owners as he, him and his. There are equally many fantastic business owners who are female.



JcbNext Berhad 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 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. Dividends of RM3.31 million from the Group’s quoted investments contributed 33.5% of the Group’s revenue. This was followed by investment distribution income of RM2.70 million from the placement of funds into money market unit trust funds which contributed 27.4% of the Group’s revenue. Rental income of RM1.76 million from the Group’s investment properties contributed 17.8% of the Group’s revenue. Interest income from bank deposits amounting to RM1.17 million and revenue from services of RM0.96 million contributed the remaining 11.8% and 9.4% of the Group’s revenue respectively.

An analysis of the Group’s revenue is as follows:

Group 2017
Services 960,137 1,486,445
Rental income from investment properties 1,757,453 2,183,216
Dividends from other investments 3,308,018 1,964,756
Investment distribution income 2,701,947 2,208,447
Interest income 1,167,837 1,388,194
9,895,392 9,231,058

Total revenue had increased by 7.2% in 2017. This was mainly due to higher dividend income of RM3.31 million received from the Group’s quoted investments, an increase of 68.4% compared with RM1.96 million received in 2016. The increase in dividend income was due to the receipt of a special dividend of HK$0.015 per share for the financial year ended 31 December 2016 from Lion Rock Group Limited (“Lion Rock”) (formerly known as 1010 Printing Group Limited). Total dividend income from Lion Rock amounted to RM2.69 million in 2017 compared with RM1.96 million in 2016. The remainder of dividend income of RM0.62 million were from the underlying investments in quoted shares made through the Group’s Equity Portfolio Fund. During the year, the Group continued to receive dividends amounting to RM11.67 million from its associate, 104 Corporation, although such dividends are not accounted as revenue.

Interest income was reclassified as revenue with effect from 1 January 2017 in line with the Company operating predominantly as an investment holding company. Investment distribution income from investments in unit trust money market funds together with interest income totalled RM3.87 million which represented a modest increase of 7.6% compared with RM3.60 million in 2016. The increase was in line with the overall increase in cash and bank balances and short term investments in money market funds of RM134.47 million as at 31 December 2017 compared with RM130.76 million as at the end of 2016.

The Group’s rental income from its investment properties decreased by 19.5% to RM1.76 million in 2017. The decrease was mainly due to lower ancillary income from the provision of air-conditioning to the tenant of Wisma JcbNext (previously known as Wisma In January 2018, the tenancy agreements for the office space in Wisma JcbNext have expired and were not renewed. The tenant, who is the operator of the business, has relocated to another premise. The lease for the Group’s two-storey shoplot office in Johor to the operator of the business is still ongoing. The Group has engaged the services of real estate agents to procure new tenants for Wisma JcbNext. Although it is challenging to procure new tenants under the current office space market conditions, we believe the prominent location of Wisma JcbNext with Jalan Sultan Ismail frontage and proximity to the KL Monorail and LRT stations, may be desirable factors for prospective tenants.

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 2017 but nevertheless, the Group continued to update the website with automotive related content in an effort to increase traffic.

The Group’s operating expenses had increased 31.4% from RM8.47 million in 2016 to RM11.13 million in 2017. The increase was largely due to unrealised foreign exchange losses on the Group’s holding of foreign currencies namely USD and SGD bank deposits which we will discuss in more detail below. Excluding the foreign exchange losses, operating expenses in general have decreased 12.7% year-on-year in 2017. The decrease was mainly due to overprovision of bonuses in 2016 which was reversed in 2017 and lower staff costs in the Group’s subsidiary, Sdn Bhd. In addition, operating expenses in 2016 had included the cost of support services provided by SEEK Asia to the Group amounting to RM0.37 million. The provision of these support services had ceased mid 2016.

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

Group 2017
Foreign exchange losses 3,737,372 -
Professional fees 917,964 886,749
Utilities 321,853 318,253
Office expenses 250,981 219,417
Directors’ fees 213,000 218,833
Security costs 126,528 100,138
Staff benefits 78,014 132,965
Quit rent and assessments 66,399 66,923
Insurance 39,495 37,669
Telecommunication 29,664 26,301
Travelling 64,500 167,872
Support services - 370,100
Miscellaneous 184,506 (2,836)
6,030,276 2,542,384

The foreign exchange loss of RM3.74 million in 2017 was predominantly unrealised foreign exchange losses on the Group’s USD and SGD denominated bank deposits. The Group had USD7.60 million in bank deposits as at 31 December 2016 and as the Ringgit weakened from USD1:RM4.077 at the beginning of September 2016 to USD1:RM4.486 at the end of December 2016, the Group recorded a substantial unrealised foreign exchange gain of RM3.51 million in 2016 (included as part of Other Operating Income of RM2.45 million). In the current financial year, the Group had reduced its USD holdings to USD4.32 million and increased its SGD holdings to SGD8.32 million, of which SGD2.25 million is capitalised in JcbNext Pte Ltd. The year 2017 began with the Ringgit strengthening to USD1:RM4.427 in January and it continued to strengthen throughout the year before ending the year at USD1:RM4.059. Consequently, the substantial unrealised foreign exchange gain that was recorded in 2016 began to unwind in 2017 resulting in the Group recording unrealised foreign exchange losses of RM3.81 million in 2017. This explains the impact of foreign exchange on our financial results in 2016 and 2017.

The Group continued to rely a great deal on our associates, primarily 104 Corporation, to contribute to the Group’s earnings in 2017. To recap, 104 Corporation is principally involved in the online job portal business and also provides executive search and HR consultancy services in Taiwan. Our share of profit from 104 Corporation in 2017 amounted to RM10.32 million, down 12.3% from RM11.77 million in the preceding year. On the back of a modest GDP growth of 2.84% in Taiwan, 104 Corporation’s revenue grew 5.9% year-on-year to NT$1.54 billion compared with NT$1.45 billion in 2016. Despite the growth in revenue, 104 Corporation’s net profit attributable to shareholders decreased by 20.1% year on year to NT$318.12 million compared with NT$398.37 million a year ago. This was because in 2016, the company had benefited from the recognition of a tax credit of NT$43.14 million for the loss arising from the liquidation of a subsidiary in 2014 and a gain of NT$38.77 million from the disposal of its temporary staffing business. The balance sheet of 104 Corporation remains solid with cash holdings of NT$2.04 billion at the end of 2017. 104 Corporation has recently announced a dividend of NT$9.60 per ordinary share representing 100% of their net profit attributable to shareholders for the 2017 financial year, which will be paid out after the company’s AGM on 30 May 2018.

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 has an established presence in Malaysia, Hong Kong/ China, Indonesia, Philippines, Singapore, Taiwan, Thailand, South Korea, Myanmar, Cambodia and Vietnam. Innity posted revenue growth of 6.2% year-on-year to RM101.62 million in 2017 compared with RM95.65 million in 2016. The increase in revenue was mainly contributed by its operations in Malaysia, Singapore and Taiwan. Despite the growth in revenue, Innity’s PBT decreased by 68.2% to RM2.16 million compared with RM6.79 million in 2016 as its operating expenses had increased by 20.5% to RM44.67 million in 2017 compared with RM37.08 million in the previous year. The higher operating expenses in 2017 were mainly due to investment costs as they seek to grow the online advertising market and take market share. These investment costs include higher staff costs, additional marketing and sales resources incurred on expanding core product offerings and market share, allowance for doubtful debts and the impact of unfavourable exchange rate movements on its Malaysian operations. As a result of the lower profit posted by Innity, our share of profit from the associate had also decreased by 72.1% to RM0.26 million in 2017 from RM0.92 million in the preceding year.

The financial performance of the Group in 2017 was further negatively impacted by a decrease in the fair value of the Group’s investments which are classified as “fair value through profit or loss” of RM0.41 million. The decrease was mainly in respect of the Group’s investment in Holdings Ltd (“Asiatravel”). In addition, following the annual valuation exercise, the fair value of Wisma JcbNext was reduced by RM0.30 million in part due to the vacant status of the property.

Overall, the Group’s net profit attributable to shareholders for 2017 amounted to RM6.82 million, representing a substantial fall of 60.0% from RM11.35 million in 2016. As highlighted earlier, this was primarily due to unrealised foreign exchange losses on the Group’s USD and SGD bank deposits as well as the decrease in share of profits from 104 Corporation and Innity. The net profit at the Company level benefited from the reversal of impairment of RM6.08 million on loans given to its wholly-owned subsidiary, JcbNext Pte. Ltd. However, this reversal is eliminated at the Group level and did not have any impact to the net profit of the Group. As the Group’s 2017 financial performance indicates, the Group is sensitive to external factors and dependent on the performance of its associates. Earnings per share amounted to approximately 4.88 sen per share. The Board has recommended the payment of a final dividend of 4.5 sen per ordinary share to be paid after the AGM.

Despite the volatility in our P&L, our financial position remains strong with net assets of RM335.04 million as at 31 December 2017, up slightly from RM331.03 million at the end of the previous year. On a per share basis, this translates to RM2.40 per share with the Company’s share quoted at a price of RM1.75 as at 31 December 2017.


The Group’s investments and cash reserves comprise of:

Group 2017
Investments in associates
- 104 Corporation 109,620,767 112,737,062
- Innity 12,202,865 12,427,776
121,823,632 125,164,838
Available-for-sale investments
- Lion Rock (formerly known as 1010 Printing) 44,441,344 42,245,532
- Asiatravel 812,174 1,149,923
- Equity Portfolio Fund 11,037,213 12,153,064
- Unquoted investments 2,900,406 251,510
59,191,137 55,800,029
Financial assets at fair value through profit or loss
- Money market unit trust funds 48,580,485 94,379,859
Cash reserves
- USD 17,482,492 34,083,575
- HKD 47,931 6,039
- SGD 25,266,575 459,497
- RM 42,971,277 1,517,858
- Others 116,716 310,160
85,884,991 36,377,129
315,480,245 311,721,855

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 decreased marginally by 2.7% in 2017 to RM121.82 million, due to the strengthening of the Ringgit on the translation of our investment in 104 Corporation and the increase in dividends from 104 Corporation. Against the Taiwan dollar, the Ringgit had strengthened from TWD1:RM0.1392 as at end 2016 to TWD1:RM0.1368 as at end 2017 and this resulted in a decrease of RM1.89 million in the carrying value of 104 Corporation on our balance sheet. In addition, while the share of profit from 104 Corporation for 2017 amounted to RM10.32 million, the dividend received from 104 Corporation during 2017 amounted to RM11.67 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 2017 which shows that the dividends it receives from 104 Corporation and Lion Rock totalling RM14.97 million being more than sufficient to cover the RM5.76 million working capital utilised in 2017.

The largest investment under the AFS category is Lion Rock with a carrying value of RM44.44 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 accumulated from 2011 to 2013, investing a total of RM3.0 million. However, in 2014, Cinderella Media Group Ltd which used to be the parent company of Lion Rock, 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 increased by an additional 36.5 million shares in 2014. Lion Rock’s revenue for the year ended 31 December 2017 decreased by 2% to HK$1,582.7 million from HK$1,615.8 million in the previous year. The decrease in revenue was a result of the decrease in sales orders received and the disposal of its outdoor printing business by a subsidiary in 2016. However, the decrease was mitigated by revenue contributed by Regent Publishing Services Limited, a 75%-owned subsidiary which was acquired in March 2017. The challenge faced by the Lion Rock Group in 2017 was an increase in paper costs and price war started by two major industry players. The group’s ability to source paper from mills outside China helped to mitigate some of the margin erosion. Despite these challenges and notwithstanding that Lion Rock recorded a gain on disposal of a subsidiary amounting to HK$27.58 million and a gain on financial assets/liabilities through profit or loss amounting to HK$11.19 million in 2016, the group reported a net profit of HK$147.67 million for 2017, up marginally from HK$146.15 million in 2016. This was due to a decrease in profit attributable to non-controlling interests by HK$12.60 million and increase in net foreign exchange gain by HK$16.56 million. As at end of 2017, the Group held an equity interest of approximately 7.0% in Lion Rock. Lion Rock pays dividends regularly and for the year ended 31 December 2017, its dividend yield was 6.0%. The Group received approximately RM2.69 million in dividends from Lion Rock during the year.

Asiatravel continues to operate in a highly competitive industry. It is an online travel company that offers various travel products through its multi-channel distribution platforms. During the year, Asiatravel raised S$2.45 million via the issuance of a convertible note with a principal amount of S$10 million to its controlling shareholder, with the remaining S$7.55 million due to be received by 30 June 2018. Asiatravel’s share price ended the year at S$0.057, down from S$0.08 at the end of 2016.

The Equity Portfolio Fund (“Equity Fund”) is a discretionary mandate fund managed by a licensed firm of professional fund managers. This fund was started in 2012 with an initial injection of RM8 million which was subsequently increased by RM4.8 million in 2013 before the Group decided to redeem RM5 million in 2014. This fund is mandated to invest for the long term in high dividend yield stocks in the region. For the year ended 31 December 2017, the Equity Fund derived dividend income of RM0.62 million and PAT of RM0.27 million.

The only change to the composition of the Group’s AFS investments during 2017 was the investment of RM2.00 million into Nova Pharma Solutions Berhad (“Nova Pharma”) which was completed on 29 December 2017. Nova Pharma was listed on the LEAP Market of Bursa Malaysia recently on 9 March 2018. The LEAP Market is a new market offered by Bursa Malaysia which aims to provide SMEs and other companies with greater fund raising access and visibility via the capital market but this market is only accessible to sophisticated investors. 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 2017, Nova Pharma’s revenue amounted to RM7.13 million with a PAT of RM2.65 million. In the company’s Information Memorandum, it is stated that the company envisaged a dividend pay-out ratio of not less than 20% of their future net profit in each financial year. Subsequent to the listing of Nova Pharma on the LEAP Market, the Group has an equity interest of 9.45% in the company.

Looking at the table below, with the exception of Asiatravel, the fair value of the Group’s associates and AFS investments as at 31 December 2017 are significantly above the Group’s cost of investment. The unrealised gains, with the exception of 104 Corporation, Innity and Asiatravel, have been recognised in Other Comprehensive Income (“OCI”) at this stage. Pursuant to the new MFRS 9 “Financial Instruments” which come into effect on 1 January 2018 and assuming that the Group elects to classify its equity investments as fair value through other comprehensive income (“FVOCI”), 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, while the losses on Asiatravel have already been recognised in the Statement of Profit or Loss.

Cost of Investment
Carrying Value
Fair Value
104 Corporation ^ 75,256,303 109,620,767 170,136,792
Innity ^ 8,487,984 12,202,865 19,012,526
Lion Rock 17,799,453 44,441,344 44,441,344
Asiatravel 3,381,639 812,174 812,174
Nova Pharma∞ 2,000,000 2,000,000 2,000,000
Equity Portfolio Fund 8,923,536 11,037,213 11,037,213
115,848,915 180,114,363 247,440,049

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

∞ Fair value assumed to approximate cost of investment as the equity investment was made on 29 December 2017.

During 2017, a decision was made to reduce the Group’s investments in money market unit trust funds by placing the funds into conventional term deposits with banks. These are all RM denominated. As a result, the amount of funds in money market unit trust funds decreased from RM94.38 million at the end of 2016 to RM48.58 million at the end of 2017 and conversely, the RM denominated cash and bank deposits increased from RM1.52 million at the end of 2016 to RM42.97 million at the end of 2017. On the Group’s foreign currency cash holdings, the Group decided to pare down its US dollar cash holdings by converting a portion of the US dollars into SG dollars. To recap, the US dollar cash holdings were accumulated from the proceeds received from the mandatory unconditional cash offer from Cinderella Media Group Limited in 2015 and dividends received from 104 Corporation and Lion Rock in 2016 which were then converted to USD. In the second half of 2017, the Group diversified its foreign currency holdings by converting approximately USD5.61 million into SGD7.61 million. Dividends received from Lion Rock in 2017 amounting to HK$4.6 million were also converted to SGD0.80 million. The decision to diversify the Group’s cash to include USD and SGD, was in anticipation of future investments outside of Malaysia should opportunities present themselves, but unfortunately as seen in 2017, this has led to volatility in our financial results.

While these moves are necessary to safeguard the Group’s interests, the focus of the Board and management is still on identifying new strategic 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 Board and management will continue to identify and evaluate new investments into businesses or companies which can contribute to the financial performance of the Group. In addition, we will also continue to procure new tenants for Wisma JcbNext. Pending such investments and tenants to materialise, the Group’s future prospects will depend primarily on the performance of its associates, 104 Corporation and Innity Corporation Berhad. Future prospects will also depend upon investment income from dividends, interest and distributions from the money market unit trust funds and its operating activities namely the provision of consultancy services in our Japan subsidiary and rental income from its properties in Kuala Lumpur, upon securing new tenants, and Johor.