ANNUAL REPORT 2017 - malaysiastock.biz subsidiary companies within Utusan Group namely Utusan Karya Sdn Bhd, Utusan Media Sales Sdn Bhd, Utusan Publications & Distributors Sdn Bhd,

ANN

UAL REPO

RT 2017

UTU

SAN M

ELAYU (M

ALAYSIA) BERHAD

www.u t u s a n g r o u p . c om.my

FRONT COVERBACK COVER

UTUSAN MELAYU (MALAYSIA) BERHAD | ANNUAL REPORT 2017

1

CONTENT

2 Five-Year Group Financial Highlights

4 Corporate Information

6 Profile Of The Board Of Directors

12 Profile Of The Key Senior Managements

20 Management And Heads Of Departments,Subsidiaries And Foundation

22 Chairman’s Statement

24 Group Managing Director’s Message AndManagement Discussion And Analysis Report

28 Audit Committee Report

32 Statement Of Risk Management AndInternal Control

34 Sustainability Report

43 Corporate Governance Overview Statement

50 Other Information Required By The ListingRequirement Of The Bursa MalaysiaSecurities Berhad

51 Corporate Calendar

57 Statement Of Directors’ Responsibility ForPreparation Of Financial Statements

58 Financial Statements

59 Directors’ Report

63 Statement By Directors

63 Statutory Declaration

64 Independent Auditors’ Report

68 Consolidated Statement Of Comprehensive Income

70 Consolidated Statement Of Financial Position

72 Consolidated Statement Of Changes In Equity

73 Consolidated Statement Of Cash Flows

76 Statement Of Comprehensive Income

77 Statement Of Financial Position

79 Statement Of Changes In Equity

80 Statement Of Cash Flows

82 Notes To The Financial Statements

171 List Of Properties

176 Analysis Of Shareholdings

177 List Of Top Thirty Largest Shareholders

178 Notice Of Annual General Meeting

182 Statement Accompanying Notice Of AnnualGeneral Meeting Of The Company

l Proxy Form


2

FIVE-YEAR GROUP FINANCIAL HIGHLIGHTS

‘13

‘14

‘15

‘16

‘17

342,432

291,195

248,867

227,419

244,980

‘13

‘14

‘15

‘16

‘17

2.53

1.75

1.56

0.93

0.59

‘13

‘14

‘15

‘16

‘17

279,837

193,921

172,655

103,503

95,785

‘13

‘14

‘15

‘16

‘17

533,145

502,324

469,309

405,701

423,950

‘13

‘14

‘15

‘16

‘17

(20,395)

(83,650)

(16,698)

(66,725)

(10,256)

‘13

‘14

‘15

‘16

‘17

(14.64)

(74.03)

(18.96)

(61.83)

(6.73)

GROUP REVENUE (RM'000)GROUP LOSS

BEFORE TAX (RM'000)BASIC EARNINGS PER SHARE (SEN)

NET TANGIBLE ASSETPER SHARE (RM)

EQUITY ATTRIBUTABLE TO OWNERS OF THE PARENT (RM'000) TOTAL ASSETS (RM'000)

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

YEAR ENDED 31 DECEMBER

2017RM’000

2016RM’000

2015RM’000

2014RM’000

2013RM’000

Group Revenue 244,980 227,419 248,867 291,195 342,432

Group Loss Before Tax (10,256) (66,725) (16,698) (83,650) (20,395)

Income Tax 2,800 (1,705) (3,902) 1,798 4,231

Zakat - - 261 (127) (50)

Loss From Discontinuing Operation, Net Of Tax - (36) (653) - -

Group Loss For The Year (7,456) (68,466) (20,992) (81,979) (16,214)

Attributable to:

Owners Of The Parent (7,456) (68,466) (20,992) (81,979) (16,214)

Earnings Per Share Attributable To

Owners Of The Parent (sen):

Basic, For Loss For The Year (6.73) (61.83) (18.96) (74.03) (14.64)

Gross Dividend Per Share (sen) - - - - -


3

FIVE-YEAR GROUP FINANCIAL HIGHLIGHTS

‘13

‘14

‘15

‘16

‘17

342,432

291,195

248,867

227,419

244,980

‘13

‘14

‘15

‘16

‘17

2.53

1.75

1.56

0.93

0.59

‘13

‘14

‘15

‘16

‘17

279,837

193,921

172,655

103,503

95,785

‘13

‘14

‘15

‘16

‘17

533,145

502,324

469,309

405,701

423,950

‘13

‘14

‘15

‘16

‘17

(20,395)

(83,650)

(16,698)

(66,725)

(10,256)

‘13

‘14

‘15

‘16

‘17

(14.64)

(74.03)

(18.96)

(61.83)

(6.73)

GROUP REVENUE (RM'000)GROUP LOSS

BEFORE TAX (RM'000)BASIC EARNINGS PER SHARE (SEN)

NET TANGIBLE ASSETPER SHARE (RM)

EQUITY ATTRIBUTABLE TO OWNERS OF THE PARENT (RM'000) TOTAL ASSETS (RM'000)

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 31 DECEMBER

2017RM’000

2016RM’000

2015RM’000

2014RM’000

2013RM’000

Share Capital 161,437 110,734 110,734 110,734 110,734

Reserves (65,652) (7,231) 61,921 83,187 169,103

Equity Attributable To Owners Of The Parent 95,785 103,503 172,655 193,921 279,837

Total Equity 95,785 103,503 172,655 193,921 279,837

Non-Current Liabilities 93,025 143,360 173,565 90,715 101,349

Current Liabilities 235,140 158,637 123,089 217,688 151,959

Liabilities Classified As Held-For-Sale - 201 - - -

Total Liabilities 328,165 302,198 296,654 308,403 253,308

TOTAL EQUITY AND LIABILITIES 423,950 405,701 469,309 502,324 533,145

Non-Current Assets 306,714 288,629 306,354 340,428 358,724

Current Assets 117,236 116,176 159,350 161,896 174,421

Asset Classified As Held-For-Sale - 896 3,605 - -

TOTAL ASSETS 423,950 405,701 469,309 502,324 533,145

Net Tangible Asset Per Share (RM) 0.59 0.93 1.56 1.75 2.53


4

CORPORATE INFORMATION

BOARD OF DIRECTORSTAN SRI MOHAMAD FATMI CHE SALLEHIndependent Non-Executive Chairman

DATUK MOHD NOORDIN ABBASGroup Managing Director

DATUK ABDUL AZIZ ISHAKGroup Editor-in-Chief

TAN SRI DATUK SERI ISMAIL YUSOFNon-Independent Non-Executive Director

DATUK SERI TENGKU SARIFFUDDIN TENGKU AHMADIndependent Non-Executive Director

DATUK MD AFENDI HAMDANIndependent Non-Executive Director

MOHD YUSOF ABU OTHMANIndependent Non-Executive Director

JAMALUL KIRAM MOHD ZAKARIAIndependent Non-Executive Director(Appointed w.e.f 14 February 2018)

DATO’ ZAKRI AFANDI ISMAILNon-Independent Non-Executive Director(Retired w.e.f 25 May 2017)

DATO’ DR. NORRAESAH MOHAMADIndependent Non-Executive Director(Resigned w.e.f 7 February 2017)

AUDIT COMMITTEEMOHD YUSOF ABU OTHMAN(Chairman)TAN SRI DATUK SERI ISMAIL YUSOFDATUK SERI TENGKU SARIFFUDDIN TENGKU AHMAD

NOMINATION & REMUNERATION COMMITTEEDATUK SERI TENGKU SARIFFUDDIN TENGKU AHMAD(Chairman)TAN SRI DATUK SERI ISMAIL YUSOFDATUK MD AFENDI HAMDANMOHD YUSOF ABU OTHMANJAMALUL KIRAM MOHD ZAKARIA

INVESTMENT COMMITTEEDATUK MOHD NOORDIN ABBASAHMAD RAZIF MOHAMEDW. NOR ASMAH W. ISMAIL(Retired w.e.f 6 December 2017)MOHD YUSOF ABU OTHMAN(Resigned w.e.f 20 April 2017)

COMPANY SECRETARYSHUHAILA YAAKOB(MACS 01567)

REGISTERED OFFICENo. 44, Jalan UtusanOff Jalan Chan Sow Lin55200 Kuala LumpurTel : 03-92322600Fax : 03-92210691Website : www.utusangroup.com.my

FOREIGN REPRESENTATIVE OFFICEThe Belleza Permata Hijau25-vs-6 (Versailles Residence)Jalan Arteri, Permata Hijau12210 Jakarta SelatanJakarta, IndonesiaTel/Fax : 021-25675848

SHARE REGISTRARTricor Investor & Issuing House Services Sdn BhdUnit 32-01, Level 32, Tower AVertical Business SuiteAvenue 3, Bangsar SouthNo. 8, Jalan Kerinchi59200 Kuala LumpurTel : 03-27839299Fax : 03-27839222

AUDITORSErnst & Young (AF0039)Level 23A, Menara MileniumJalan DamanlelaPusat Bandar DamansaraDamansara Heights50490 Kuala Lumpur

PRINCIPAL BANKERSMalayan Banking BerhadAffin Islamic Bank BerhadBank Muamalat Malaysia Berhad

STOCK EXCHANGE LISTINGMain Board of the Bursa Malaysia Securities BerhadStock Name : UTUSANStock Code : 5754Listing Date : 16 August 1994


5

BOARD

OF D

IRECTORS


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PROFILE OF THE BOARD OF DIRECTORS

INDEPENDENT Non-Executive Chairman. Joined the Board of Utusan Melayu (Malaysia) Berhad on 1 December 2015. Currently is the Chairman of Land and Asset Development Committee and a member of the Board of UPM, UPM Holdings Sdn Bhd and UPM Education & Training Sdn Bhd. He served as Political Secretary to Prime Minister and Deputy Prime Minister for nine (9) years. Graduated with a Masters Degree in Business Administration (MBA) from Tulane University, New Orleans, Louisiana, United States of America and Bachelor of Science (BSc) Marketing from Southern Illinois University, Carbondale, Illinois, United States of America. Does not have any other directorships in other public companies.

NON-INDEPENDENT Executive Director. Joined the Board of Utusan Melayu (Malaysia) Berhad on 5 June 2014. Joined Utusan Melayu (Malaysia) Berhad on 20 May 2014 as the Group Managing Director and also holds directorship in subsidiary companies within Utusan Group namely Utusan Karya Sdn Bhd, Utusan

Media Sales Sdn Bhd, Utusan Publications & Distributors Sdn Bhd, Utusan Land Sdn Bhd, Juasa Holdings Sdn Bhd, Utusan Technology Asia Sdn

Bhd and Asian Environmental Engineering Sdn Bhd. He has extensive experience in development banking particularly with regard to international project finance and management. He has served as the Chief Executive Officer in Malaysia Export Credit Insurance Berhad (MECIB) and Export-Import Bank of Malaysia Berhad (EXIM Bank). Holds a Bachelor Degree in Accounting and Finance from Southern Illinois University, United States of America and Masters Degree in Management Science (Operations Research) from St. Louis University, United States of America. Does not have any other directorships in other public companies.

TAN SRI MOHAMAD FATMI CHE SALLEHl Chairman l 61 years of age l Male l Malaysian

DATUK MOHD NOORDIN ABBASl Group Managing Director l 58 years of age l Male l Malaysian


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NON-INDEPENDENT Executive Director. Joined the Board of Utusan Melayu (Malaysia) Berhad on 23 November 2009. He held the post of Acting Group Editor-in-Chief of Utusan’s Group on 20 June 2008 before being appointed to the post on 1 December 2008. Joined Utusan Melayu (Malaysia) Berhad on 1 April 1984 and served in various capacities prior to his present post as the Group Editor-in-Chief. Holds a Degree in Strategic and Security Studies, National University of Malaysia and attended a Journalism Fellowship Programme in Securities Studies co-organised by the University of New York and East West Centre in Hawaii. Holds directorship in subsidiaries of Utusan Group namely Utusan Media Sales Sdn Bhd and Utusan Karya Sdn Bhd. He is also a member of the Board of Governors of Malaysian National News Agency (BERNAMA) since 16 February 2009 and serves as a member of the Consultation & Corruption Prevention Panel, Malaysian Anti-Corruption Commission (MACC) since 15 August 2016. He is also an independent non-executive director of Dataprep Holdings Berhad.

NON-INDEPENDENT Non-Executive Director. Joined the Board of Utusan Melayu (Malaysia) Berhad on 15 January 2004. A member of

the Audit Committee and Nomination & Remuneration Committee of the Board. Graduated with a Bachelor of Arts (Honours), University of Malaya. Held several posts in the government sector from 1967 to 1991. Currently a member of the Board of Trustees and is the Executive Vice-Chairman of the Albukhary Foundation. Current directorships of public companies include South Malaysia Industries Berhad, MINHO (M) Berhad and BCB Berhad.

DATUK ABDUL AZIZ ISHAKl Group Editor-In-Chief l 54 years of age l Male l Malaysian

TAN SRI DATUK SERI ISMAIL YUSOFl 74 years of age l Male l Malaysian


8


INDEPENDENT Non-Executive Director. Joined the Board of Utusan Melayu (Malaysia) Berhad on 25 March 2015. A member of the Nomination & Remuneration Committee of the Board. Graduated with a Bachelor of Science in Business Administration and minoring in Management Information System (Computer Science) from University of Wisconsin – Steven Point, United States of America in 1989. He was the Chairman of the National Film Development Corporation Malaysia (FINAS) in 2011. In 2015, he was appointed as a Board Member of Inland Revenue Board of Malaysia (LHDN) and was reappointed as a Commissioner of the Malaysian Communications and Multimedia Commission (MCMC) until present. He does not have any other directorships in other public companies.

INDEPENDENT Non-Executive Director. Joined the Board of Utusan Melayu (Malaysia) Berhad on 23 November 2009. He is the Chairman of

the Nomination & Remuneration Committe and a member of the Audit Committee of the Board. Holds a Diploma in Mass Communications from MARA University of Technology and attended Fellowship Programme at the University of Seoul, Korea. He was a journalist at the New Straits Times Press (M) Berhad from 1987 till 1997. Serves in the government services as the Press Secretary to the Prime Minister of Malaysia from 1997 till now. He is also the Media Director in the Prime Minister’s Office. Does not have any other directorships in other public companies.

DATUK MD AFENDI HAMDANl 56 years of age l Male l Malaysian

DATUK SERI TENGKU SARIFFUDDIN TENGKU AHMADl 55 years of age l Male l Malaysian


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INDEPENDENT Non-Executive Director. Joined the Board of Utusan Melayu (Malaysia) Berhad on 14 February 2018. He is a member of

the Nomination & Remuneration Committee of the Board. Holds a Bachelor Degree (Honors) in Social Science - Economy from Universiti Sains Malaysia. He is currently a member of the board of trustees and the treasurer of Rumah Darul Bakti in Kota Belud, Sabah and also the founder and owner of Kiram’s Village Cabin since 2007. He served as the Chief Executive Officer in Sabah Finance Berhad from 1995 to 2000 and as Branch Manager in Sabah Bank Berhad from 1982 to 1995. Does not have any other

directorships in other public companies.

JAMALUL KIRAM MOHD ZAKARIAl 61 years of age l Male l Malaysian

INDEPENDENT Non-Executive Director. Joined the Board of Utusan Melayu (Malaysia) Berhad on 16 January 2014. He is a Chartered Accountant from the Institute of Chartered Accountants in England and Wales and a member of the Malaysian Institute of Accountants. Chairman of the Audit Committee and a member of the Nomination & Remuneration Committee of the Board. He began his career in 1981 as a Project Accountant with Pernas-Sime Darby Holdings Sdn Bhd. Held several very senior posts in numerous companies, including Selangor State-owned and Malaysian Federal Government-owned companies, in various sectors from 1982 to 2004; including as Group Financial Controller in Kumpulan Perangsang Selangor Bhd, Chief Executive Officer in Malaysian Kuwaiti Investment Co Sdn Bhd, SB Development Sdn Bhd, Tabung Amanah Saham Selangor Bhd and as Vice President – Revenue Development in MIDF Sisma Securities Sdn Bhd; as well as in several privately owned companies. He became the first Chief Executive Officer of MSWG (Badan Pegawas Pemegang Saham Minoriti Berhad) from 2001 to 2004. He has also served as the Chief Operating Officer in MK Land Holdings Bhd from 2008 to 2010. He is currently the Chairman of a privately owned company in single-use medical device packaging, in which he is also a minority shareholder. He is an independent consultant offering professional services in Corporate Start-ups and Corporate Change Management. Does not have any other directorships in other public companies.

MOHD YUSOF ABU OTHMANl 66 years of age l Male l Malaysian


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SHUHAILA YAAKOBl Company Secretary


11

OTHER INFORMATION OF DIRECTORS

1. Family Relationship None of the Directors have any family relationship with each other and/or major shareholders of the Company.

2. Conflict of Interests None of the Directors have any personal interest in any business arrangement with the Company. 3. List of Convictions for Offences None of the Directors have been convicted of any offences (other than traffic offences) within the past five (5) years.

4. Attendance of Directors at Board Meeting There were six (6) Board Meetings held during the financial year ended 31 December 2017. Details of the attendance

of the Directors at Board Meetings are as follows :

DIRECTOR ATTENDANCE

Tan Sri Mohamad Fatmi Che Salleh 6/6

Datuk Mohd Noordin Abbas 6/6

Datuk Abdul Aziz Ishak 6/6

Tan Sri Datuk Seri Ismail Yusof 5/6

Datuk Seri Tengku Sariffuddin Tengku Ahmad 6/6

Datuk Md Afendi Hamdan 3/6

Mohd Yusof Abu Othman 6/6

Dato’ Zakri Afandi Ismail (Retired w.e.f. 25 May 2017) 2/2

Dato’ Dr. Norraesah Mohamad (Resigned w.e.f. 7 February 2017) -

5. Securities Holdings in the Company and its Subsidiaries The Directors’ shareholdings are disclosed on page 176 of this Annual Report.


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PROFILE OF THE KEY SENIOR MANAGEMENTS

Profile of Datuk Mohd Noordin Abbas (Group Managing Director) and Datuk Abdul Aziz Ishak (Group Editor-In-Chief) are disclosed in the Directors’ Profile on page 6 and 7 of this Annual Report.

DATE OF APPOINTMENT1 December 2008

ACADEMIC/PROFESIONAL QUALIFICATIONS(S)Bachelor of Arts (Honours), Universiti Kebangsaan Malaysia

PRESENT DIRECTORSHIP(S)• Listed Entity – Nil• Other Public Companies - Nil

WORKING EXPERIENCEJoined Utusan Group in 1998 as the Assistant News Editor. Had served as the News Editor, Senior News Editor, Assistant Editor and Editor of Utusan Malaysia before being appointed as the Assistant Editor-In-Chief 1 of Utusan Group.

Prior to joining Utusan Group, he served at the Malaysian National News Agency (‘BERNAMA’) since 1984. In BERNAMA, he served as the News Officer, Johor Bureau Chief and Sub-Editor Bahasa Melayu.

DATUK OTHMAN MOHAMADl Deputy Group Editor-In-Chief l 59 years of age l Male l Malaysian

DATUK ZULKEFLI HAMZAHl Editor of Utusan Malaysia l 51 years of age l Male l Malaysian

DATE OF APPOINTMENT1 April 2016

ACADEMIC/PROFESIONAL QUALIFICATIONS(S)Degree in Journalism, Universiti Teknologi Mara.

PRESENT DIRECTORSHIP(S)• Listed Entity – None

• Other Public Companies – None

WORKING EXPERIENCEJoined Utusan Melayu (Malaysia) Berhad (‘Utusan’) in 1990. He was appointed as the Pahang Bureau Chief in 1997 and then held a position as Correspondance in Jakarta, Indonesia before being appointed as

Editor of Utusan Malaysia on 1 April 2016.


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DATO’ BAHAROM MAHUSINl Editor of Kosmo! l 51 years of age l Male l Malaysian

BADRUL AZHAR AB RAHMANl Editor of Mingguan Malaysia l 58 years of age l Male l Malaysian


ACADEMIC/PROFESIONAL QUALIFICATIONS(S)Degree in Mass Communication, Institut Teknologi Mara.

PRESENT DIRECTORSHIP(S)• Listed Entity – None• Other Public Companies – None

WORKING EXPERIENCEJoined Utusan Melayu (Malaysia) Berhad (‘Utusan’) in 1981 as Cadet Journalist. Appointed as the Editor of Kosmo! in 2004 to 2008.

He has served as the Executive Director and Editor-in-Chief of Magazine in Utusan Karya Sdn Bhd, a wholly-owned subsidiary of Utusan from 2008 to 2016 before being appointed as the Editor of Mingguan Malaysia in 2016.


ACADEMIC/PROFESIONAL QUALIFICATIONS(S)Degree in Writing Field, Universiti Malaya.


WORKING EXPERIENCEJoined Utusan Melayu (Malaysia) Berhad (‘Utusan’) in 1990 as trainee journalist before being appointed as reporter and author of articles.

He was appointed as Utusan’s representative in London, United Kingdom in 1994 and has since then held various position in Utusan such as Assistant Editor of Utusan Malaysia’s News, Assistant Editor of Mingguan Malaysia, Editor of Massa Magazine, Assistant Editor of Kosmo!, Coordinator of Mega, Editor of Utusan Malaysia’s News, Senior News Editor and Assistant Editor of Utusan Malaysia from 1997 to 2008 before being appointed as Editor of Kosmo! in 2008.


14


ABD WAHID IDRISl General Manager of Finance l 48 years of age l Male l Malaysian

MOHD BASIR ABDUL RAHIMl Marketing Consultant l 61 years of age l Male l Malaysian

DATE OF APPOINTMENT1 January 2018

ACADEMIC/PROFESIONAL QUALIFICATIONS(S)Degree in Accountancy from University College of Wales, Aberystwyth, United Kingdom

PRESENT DIRECTORSHIP(S)• Listed Entity – Nil• Other Public Companies – Nil

WORKING EXPERIENCEJoined Utusan Melayu (Malaysia) Berhad (‘Utusan’) on 1 September 2001 as the Finance Manager and later as Senior Finance Manager on 15 January 2008 before being appointed as General Manager of Finance on 1 January 2018.

He began his career as Internal Audit Executive in 1994 with Johor State Economic Development Corporation (Johor Corporation). He then moved to Komplek Kewangan Malaysia Berhad (later known as Amanah Capital Malaysia Berhad) in 1996 to 2001. During those period, he served as Senior Accounts Executive and Finance Manager for Amanah Merchant Bank Berhad and The Ascott Kuala Lumpur respectively.

DATE OF APPOINTMENT15 August 2017

ACADEMIC/PROFESIONAL QUALIFICATIONS(S)Degree in Automobile Engineer, Madras Institute of Technology, India.

PRESENT DIRECTORSHIP(S)• Listed Entity – Nil

• Other Public Companies – Nil

WORKING EXPERIENCEJoined Utusan Melayu (Malaysia) Berhad (‘Utusan’) on 1 October 1992 as Marketing Executive and has held various position in Utusan.

He began his career as Sales Executive.


15


ROSMAN ZULKIFLIl General Manager of Logistics l 53 years of age l Male l Malaysian

DATE OF APPOINTMENT1 November 2017

ACADEMIC/PROFESIONAL QUALIFICATIONS(S)Diploma in Accounting, Institut Teknologi Mara


WORKING EXPERIENCEJoined Utusan Melayu (Malaysia) Berhad (‘Utusan’) in 1989 and has held various position in Utusan Group. He was the General Manager of Marketing since 2014 before being appointed as the General

Manager of Logistics on 1 November 2017. Prior to joining Utusan Group, he served in an audit firm.

AHMAD KHAIRUMUZAMIL ABDUL RAHMANl General Manager of Production l 52 years of age l Male l Malaysian


ACADEMIC/PROFESIONAL QUALIFICATIONS(S)Degree in Electrical & Electronic Engineering (Hons), Universiti Sains Malaysia


WORKING EXPERIENCEJoined Utusan Melayu (Malaysia) Berhad (‘Utusan’) in 1995 as the Electronic Engineer before being appointed as Production Manager in 2002.

He was appointed as the Senior Manager of Production in 2006 and later as the General Manager of Production from 2008 untill 2015.

In 2016, he was appointed as the General Manager of Special Task at the Group Managing Director’s Office.

On 1 April 2018, he has once again been appointed as the General Manager of Production.


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PROFILE OF THE KEY SENIOR MANAGEMENTSMOHD YAZID AHMADl Executive Director, Utusan Media Sales Sdn Bhdl 55 years of age l Male l Malaysian

AHMAD RAZIF MOHAMEDl Director, Juasa Holdings Sdn Bhd l 51 years of age l Male l Malaysian


ACADEMIC/PROFESIONAL QUALIFICATIONS(S)• Member of the Chartered Institute of Marketing, United Kingdom• Diploma in Marketing, Institute Teknologi Mara

PRESENT DIRECTORSHIP(S)• Listed Entity – Nil

• Other Public Companies - Nil

WORKING EXPERIENCEJoined Utusan Media Sales Sdn Bhd (‘UMES’) in 1990 as the Marketing Executive and has held various position in UMES. His last position before being appointed as the Executive Director of UMES in 2015 was the

Chief Executive Officer. Currently, he is also the Executive Director of Karya Outdoor Sdn Bhd since 1 December 2015, a subsidiary of Utusan Group carrying out outdoor advertising business.

Prior to joining Utusan Group, he served as a Marketing Executive at The New Straits Times Press (M) Berhad from 1987 to 1989.

DATE OF APPOINTMENT26 March 2013

ACADEMIC/PROFESIONAL QUALIFICATIONS(S)• Master of Business Administration, Universiti Islam Antarabangsa• Bachelor of Business Studies, LaTrobe University, Australia


WORKING EXPERIENCEAppointed as a Director of Juasa Holdings Sdn Bhd (‘Juasa’), a wholly-owned subsidiary of Utusan Melayu (Malaysia) Berhad (‘Utusan’) on 26 March 2013, but began to lead Juasa’s business operation on 15 February 2016, after the company’s restructuring.

Currently, he is also the General Manager of Corporate Services & Risk Management of Utusan since 1 January 2016.

Joined Utusan in 2002 as the Assistant Manager of Risk Management and since then has held various positions in Utusan Group

Prior to joining Utusan Group, he had served at Arab-Malaysian Merchant Bank (now known as AmInvestment Bank Bhd).


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ROZITA YUSOFFl Executive Director, Utusan Publications & Distributors Sdn Bhd l 52 years of age l Female l Malaysian

ZULKIFLI BASHARUDDINl Executive Director, Utusan Land Sdn Bhdl 56 years of age l Male l Malaysian


ACADEMIC/PROFESIONAL QUALIFICATIONS(S)• Bachelor of Commerce, Australian National University• Certified Practising Accountants (CPA), Australian Society of CPAs• Member of Malaysian Institute of Accountants (MIA)


WORKING EXPERIENCEJoined Utusan Melayu (Malaysia) Berhad on 4 September 1996 as the Senior Accountant and has held various position in Utusan Group.

Prior to joining Utusan Group, she served as an Accountant at Business Focus Sdn Bhd in 1994.

DATE OF APPOINTMENT1 March 2013

ACADEMIC/PROFESIONAL QUALIFICATIONS(S)Diploma in Investment Analysis from The Research Institute of Investment Analysts Malaysia (collaboration with Royal Melbourne Institute of Technology)


WORKING EXPERIENCEJoined Utusan Melayu (Malaysia) Berhad (‘Utusan’) on 1 November 1994 as the Senior Executive of Internal Audit and has held various

position in Utusan.

On 1 March 2013 he was seconded to Utusan Land Sdn Bhd, a wholly owned subsidiary of Utusan, as the Chief Executive Officer, the post that was later redesignated as Executive Director on 16 January 2016. Currently, he is also the Senior Manager, Property Services of Utusan since January 2016.

Before joining Utusan, he began his career with Messrs Kassim & Chan Deloitte in 1989 and later served at Bursa Saham Kuala Lumpur in 1993.


18


MOHAMED IZZAHAM IDRISl Executive Director, Utusan Technology Asia Sdn Bhdl 51 years of age l Male l Malaysian


ACADEMIC/PROFESIONAL QUALIFICATIONS(S)Sijil Tinggi Persekolahan Malaysia


WORKING EXPERIENCEJoined Utusan Melayu (Malaysia) Berhad (‘Utusan’) on 1 June 1980 as a reporter and has held various positions in Utusan. His last position before being appointed as the Executive Director of Utusan Karya Sdn Bhd in 2016 was Assistant Editor 2, Utusan Malaysia. Currently, he is also the Chief Editor, Magazine in Utusan Karya Sdn Bhd.

DATE OF APPOINTMENT18 July 2017

ACADEMIC/PROFESIONAL QUALIFICATIONS(S)• Master in Business Administration, Governors State University,

Illinois, United States of America. • Bachelor of Computer Science (minor in Business Administration),

Northern Illinois University, Illinois, United States of America.


WORKING EXPERIENCEAppointed as the Executive Director of Utusan Technology Asia Sdn Bhd, a wholly-owned subsidiary of Utusan Melayu (Malaysia) Berhad on 18 July 2017.

Has over 27 years of experience in information technology and has served in several organizations before joining Utusan Group including as General Manager at Theta Edge Bhd from 2008 until April 2013.

ARFFIN NORDINl Executive Director, Utusan Karya Sdn Bhd l 58 years of age l Male l Malaysian


19


Save as disclosed, the above Key Senior Management members have no family relationship with any Director and/or major shareholders of Utusan Melayu (Malaysia) Berhad (‘Utusan’), have no conflict of interest with Utusan, have not been convicted of any offences within the past five (5) years and have not been imposed of any penalty by the relevant regulatory bodies during the financial year 2017.

The disclosure on the particulars of the Key Senior Management of Utusan is made in compliance with the requirements under Appendix 9C of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad.


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MANAGEMENT AND HEADS OF DEPARTMENTS


DATUK ABDUL AZIZ ISHAKGroup Editor-In-Chief

DATUK OTHMAN MOHAMADDeputy Group Editor-In-Chief

DATUK ZULKEFLI HAMZAHEditor – Utusan Malaysia

BADRUL AZHAR AB RAHMANEditor – Mingguan Malaysia

DATO’ BAHAROM MAHUSINEditor – Kosmo!

MOHD NAZLAN OSMANGeneral Manager, Human Resource

MOHD BASIR ABDUL RAHIMMarketing Consultant

AHMAD RAZIF MOHAMEDGeneral Manager, Corporate Services & Risk Management

ABD WAHID IDRISGeneral Manager, Finance

ROSMAN ZULKIFLIGeneral Manager, Logistic

JAMAL AHMED ALI AHMAD @ WALI AHMATGeneral Manager, Corporate Communications

AHMAD KHAIRUMUZAMIL ABD RAHMANGeneral Manager, ProductionGeneral Manager, Special Projects at Group Managing Director’s Office

AZLAN NAIM ABDULLAHGeneral Manager at Group Managing Director’s Office

AZHA ABU BAKARGroup Creative Director

ZULKIFLI BASHARUDDINSenior Manager, Property Services

FARIDAH HASHIMSenior Manager, Group Internal Audit & Compliance

FAISAL MOKHTARSenior Manager, Procurement & Administration

HANISAH HAMZAHSenior Manager, Legal & Secretarial

NORIDZAN KAMALSenior Manager, Information Centre

SITI ROHAYA SYED HASSANSenior Manager, Information Technology

HAZURA AHMAD HALILManager, Brand Management

AINOL AMRIZ ISMAILManager, Editorial Department


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HEADS OF SUBSIDIARIES & FOUNDATION

MOHD YAZID AHMADExecutive DirectorUtusan Media Sales Sdn Bhd & Karya Outdoor Sdn Bhd

ROZITA YUSOFFExecutive DirectorUtusan Publications & Distributors Sdn Bhd

AHMAD RAZIF MOHAMEDDirectorJuasa Holdings Sdn Bhd

ZULKIFLI BASHARUDDINExecutive DirectorUtusan Land Sdn Bhd

ARFFIN NORDINExecutive DirectorUtusan Karya Sdn Bhd

MOHAMED IZZAHAM IDRISExecutive DirectorUtusan Technology Asia Sdn Bhd

DATO’ DR. A GANESAN ARUMUGAMExecutive DirectorYayasan Kumpulan Utusan


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CHAIRMAN’S STATEMENT

The Malaysian economy, as measured by gross domestic product (GDP), grew 5.9% whilst the Consumer Price Index rose 3.5% and the overall advertising market deteriorated 9.3%.

I am glad to report that the Group was able to register higher revenue and reduce its losses in 2017 against this backdrop of economic factors.

For the year ended 31 December 2017, the Group’s revenue increased by 7.7% to RM245.0 million from RM227.4 million a year ago. This translated into an improved loss after tax of RM7.5 million as compared to RM68.5 million loss in 2016. A detailed discussion on the financial performance of the Group is given in the Group Managing Director’s Message And Management Discussion and Analysis Report on page 24 to 27.

Dear Shareholders

Last year 2017 was yet another challenging period for Utusan

Melayu (Malaysia) Berhad and its subsidiaries (“Group”).

The persistent economic uncertainties, prolonged weak consumer sentiments, lower

advertising expenditure coupled with rapid technological and

consumer habit changes continued to impact the

operating environment of the media industry.


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CHAIRMAN’S STATEMENT

Our continuous efforts in strengthening our products have shown positive results. Mingguan Malaysia, our flagship newspaper maintained its lead as the highest circulated Bahasa Melayu print newspaper on Sunday for the fourth year running with average circulation of 257,502 copies per issue based on the latest report released by the Audit Bureau of Circulations Malaysia. Kosmo! also upheld its position as the number one Bahasa Melayu print daily with average circulation of 160,536 copies per issue whilst Utusan Malaysia remained resilient with average circulation of 115,830 copies per issue.

Meanwhile, in the digital front, our digital newspaper recorded the highest number of subscribers amongst other Bahasa Melayu digital titles with 138,473 copies subscribed daily from Monday to Friday and 139,196 copies on Sunday.

As mentioned in my report last year, the Group was awarded a contract by the Ministry of Education Malaysia to supply tablets to all Government teachers. This project has contributed significantly towards the increase of our digital newspaper subscription and also the branding of our e-learning product, Tutor Guru, which has been developed as a teaching tool for all teachers. As at the end of 2017, the Group has delivered tablets to teachers in Sarawak, Wilayah Persekutuan Kuala Lumpur, Selangor, Wilayah Persekutuan Putrajaya, Negeri Sembilan, Perak and Wilayah Persekutuan Labuan.

Looking ahead, we expect the operating environment to remain challenging for the coming year. We will continue our efforts to manage cost aggressively in order to reduce losses. At the same time, we will strive for sustainability and growth by embarking on projects that will expand our

revenue stream whilst strengthening the various platforms to meet the changing demands of our advertisers and consumers.

Apart from commercial endeavour, the Group strives to be a good corporate citizen by promoting and increasing civic awareness among the public especially the younger generation. Various programs have been designed to educate the community, concentrating on primary school children. We believe that by targeting this generation, we will be able to create a more civil and caring society for the betterment of our country.

IN APPRECIATION

On behalf of the Board, I would also like to express my gratitude to all employees of the Group for their tremendous efforts and dedication in seeing the Group through such a challenging and competitive business environment.

To our valued shareholders, readers, advertisers, business partners, unions, vendors and all other stakeholders, I would like to thank you for your continuous support, loyalty and confidence in the Group and its brands.

To my fellow directors, thank you for your invaluable support, guidance and wise counsel throughout the year.

Last but not least, I am confident that with the continued support of all our stakeholders, we can ride the challenges and strive for the long term sustainability and growth of the Group.

TAN SRI MOHAMAD FATMI CHE SALLEHNon-Executive Chairman


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GROUP MANAGING DIRECTOR’S MESSAGE ANDMANAGEMENT DISCUSSION AND ANALYSIS REPORT

BUSINESSES AND OPERATIONS

Utusan Melayu (Malaysia) Berhad and its subidiaries (“Utusan”) are primarily involved in the publishing, distribution and advertising businesses. Utusan has also embarked into other business segments including property and information technology. In 2017, total revenue generated from the publishing, distribution and advertising segment accounted for 86.5% of total revenue (2016 : 99.6%)

Four newspapers published by Utusan namely Utusan Malaysia, Mingguan Malaysia, Kosmo! and Kosmo! Ahad are still dominating the overall market of Malay language newspapers. In line with the significant shift of readers’ preference towards digital media, Utusan has enhanced its digital products such as e-paper and online TV. All magazines published by Utusan which include Wanita, URTV, Harmoni, Mastika and Saji are already available in digital forms.

Utusan’s newspapers and magazines are distributed nationwide from our printing plants in Selangor, Penang

Utusan Melayu (Malaysia) Berhad and its subidiaries (“Utusan”) are primarily involved in the publishing, distribution and

advertising businesses. Utusan has also embarked into other business segments including

property and information technology. In 2017, total revenue

generated from the publishing, distribution and advertising

segment accounted for 86.5% of total revenue (2016 : 99.6%)


25


and Terengganu. We are obliged to make sure that all our products are delivered to the market in a timely manner.

BUSINESS OBJECTIVES AND STRATEGIES

As the main publisher that dominates the market for the Malay-based newspapers (Chart 1), Utusan will continue to play its role in championing various issues involving national sovereignty and diversity. We remain confident that the media industry will continue to be relevant. However, to move with time, Utusan is currently focusing more on the digital media. Various efforts have been undertaken to achieve this including investing in assets to enhance the digital operation and training the journalists to be better equipped so as to embrace Mobile Journalism.

Copiesper issue

Jan 17 –June 17

Jan 16 –June 16

Variance (Copies)

Variance(%)

Utusan Malaysia 115,830 144,438 (28,608) (20)

Kosmo! 160,536 182,022 (21,486) (12)

Berita Harian 91,648 90,969 679 1

Harian Metro 133,003 149,253 (16,250) (11)

Copiesper issue

Jan 17 –June 17

Jan 16 –June 16

Variance (Copies)

Variance(%)

Mingguan Malaysia 257,502 313,495 (55,993) (18)

Kosmo! Ahad 171,946 198,116 (26,170) (13)

BH Ahad 77,614 89,798 (12,184) (14)

Metro Ahad 142,795 162,091 (19,296) (12)

Audited Net Circulation of Newspapers in Malaysia, 2017H1 vs 2016H1 (Source: Audit Bureau of Circulations Malaysia)

In order to increase advertising revenue, it is hoped that the restructuring of Utusan’s advertisement division will be able to contain the continuous slide in advertising revenue. Based on the growing demand for advertisements on digital platforms, the marketing executives are now geared to offer more competitive packages of digital advertising.

All magazines published by Utusan that are already available in digital forms will continue to be enhanced. Various discussions have been made and more aggressive efforts will be taken to ensure Utusan’s magazines remain the preferred choices of the readers.

Through our subsidiary Utusan Publications & Distributors Sdn Bhd, Utusan will continue to pursue the text books publishing contracts from the Ministry of Education. With established track records and extensive experience, Utusan is able to support the Government’s aspiration to have a world-class education system.

Nevertheless, Utusan acknowledges that it can no longer rely only on the media-centric business for continuity. As reported in the same report last financial year, we will continue the efforts to diversify into other business segments especially through collaboration with strategic partners.

FINANCIAL RESULTS

Utusan’s core businesses which are the newspaper publishing and advertising continued to face the impact of the rapid shift of readers’ interests from print media to digital and social media. The continuing decline in revenue from this segment is however cushioned by revenue from non-media related business such as property.

For the financial year ended 31 December 2017, Utusan’s after tax loss has reduced by RM61.0 million from RM68. 5 million in 2016 to RM7.5 million in the current financial year.

The reduction of the loss is due to an increase in revenue by RM17.6 million coupled with operating cost savings of

Nevertheless, Utusan acknowledges that it can no

longer rely only on the media-centric business for continuity. As reported in the same report last financial year, we will continue

the efforts to diversify into other business segments especially

through collaboration with strategic partners.


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RM38.1 million. The higher revenue recorded was mainly due to the recognition of gain on disposal of land of RM32.4 million. However, revenue from the publishing, distribution and advertising segment has shrunk by RM14.6 million or 6.4%. Newspaper sales decreased by RM9.6 million or 10.1% whilst advertising sales dropped by RM32.1 million or 33% mainly due to the expiry of a marketing contract for commercial air time of RTM’s radio and television channels on 31 December 2016.

Raw material costs decreased by RM17.2 million due to various cost saving measures that have been implemented such as the reduction of daily print order for newspapers and newsprint grammage used. Staff costs have reduced by RM11.1 million after the cessation of operations of Utusan Airtime Sdn Bhd and the closure of the printing factory in Tebrau, Johor.

Looking ahead, the Management and the Board of Directors take the sustainability aspects of the newspaper industry seriously, particularly its impact on Utusan’s business continuity. Accepting the fact that the income from the core businesses may not be able to increase drastically, Utusan is focusing more on exploring new business opportunities. The Management and the Board of Directors believe that the technology-sharing extended by our strategic business partners will help Utusan to attract others to conduct business with Utusan. One new industry that has been identified is environmental engineering in which Utusan has acquired a stake in Asian Environmental Engineering Sdn Bhd.

FINANCIAL POSITION AND CONDITION

As at 31 December 2017, current assets of Utusan stood at RM117.2 million compared with RM116.2 million the previous year. Of this amount, RM83.8 million was trade and other receivables which has increased by RM17.5 million. This increase was mainly attributed to the computer tablet project for the Ministry of Education. Total cash and bank balances amounted to RM17.8 million as at the reporting date, which fell by RM15.1 million compared with that of the previous year.

However, Utusan’s current liabilities of RM235.1 million increased by RM76.5 million compared with RM158.6 million the previous year. This significant increase was related to deferred income arising from the digital newspapers supplied for the computer tablet project.

As a result, Utusan was in the net current liabilities position of RM117.9 million as at 31 December 2017. However, this number is expected to reduce after all the expected income

from the digital newspapers for the computer tablet project are recognized in the income statement.

Total loans amounted to RM157.0 million compared with RM173.9 million as at the end of the previous year, a decrease of RM16.9 million due to repayments made as scheduled. Gearing ratio is still relatively high at 145% as against 136% recorded the previous year.

REVIEW OF OPERATING ACTIVITIES

Utusan continues to play an important role as the voice of all Malaysians by championing their rights and plights beyond racial boundaries. Utusan’s products will continue to highlight various issues and/or stories concerning society, politics, culture and nationwide achievements.

Aggressive changes are imperative as readers are demanding more timely news contents. Accordingly, Utusan further enhances its digital media platforms. Journalists are

Looking ahead, the Management and the Board of Directors take the sustainability aspects of the newspaper industry seriously,

particularly its impact on Utusan’s business continuity. Accepting

the fact that the income from the core businesses may not be able

to increase drastically, Utusan is focusing more on exploring

new business opportunities. The Management and the Board of Directors believe that the

technology-sharing extended by our strategic business partners

will help Utusan to attract others to conduct business with Utusan.


27


now equipped with the latest equipment such as Iphone mobile phones that enable them to send news in real time manner.

As the advertisers are now focusing more on digital platforms, Utusan offers advertising packages that include not only newspapers and magazines, but also social media platforms such as Instagram and Facebook as well as Utusan’s internet TV.

Nevertheless, Utusan acknowledges the fact that potential growth of revenue generated from digital media is still very slow. With this in mind, the Management continues to look for new business opportunities that can generate sustainable income for Utusan. Utusan’s involvement in the property sector has enabled us to record a gain on disposal of land of RM32.4 million in the financial year 2017.

The Management is determined to continue with its operating costs reduction strategies. Operating costs decreased by RM38.1 million or 12% as a result of some cost cutting measures implemented during the year 2017. These include the reduction in print order and newsprint grammage used. A restructuring of logistics and newspaper delivery is also implemented to ensure an efficient logistic system in terms of timeliness and cost efficiency.

Building bridges with communities

The decline of newspaper industry does not prevent Utusan to continue to add value to loyal readers in particular and the society in general. This is practiced well beyond the boundaries of religion and state. One such noble effort is through Rohingya Fund, launched in collaboration with Tabung Haji, whereby food aid was handed over to Rohingya refugees in Cox’s Bazaar, Bangladesh.

In addition, Yayasan Kumpulan Utusan (“Yayasan”) visited the residents of Pusat Pemulihan Dalam Komuniti (PDK) Cahaya Kasih, Subang Jaya, Selangor as one of its initiatives to reach out to the disabled communities.

Yayasan has also collaborated with the Department of Social Welfare, Subang Jaya to celebrate Aidilfitri with the less fortunate. Two hundred guests consisting of the disabled, the poor, senior citizens and single mothers from various races had been invited.

Utusan continues to strengthen its role in supporting the efforts to improve the education system that is based on 21st Century Learning. In addition to the existing educational products such as Tutor and Utusan Pelajar, Utusan has also introduced a Tutor Guru application, which is part of the

computer tablet package given by the Government to its teachers. This application is able to assist the teachers in the preparation of teaching framework in the classroom.

To assist the Government to develop an excellent and glorious nation, various programmes have taken place during the reporting year. Forums such as Wacana Bahasa Melayu Wasiat ke-6 Raja-Raja Melayu, Forum Memperingati Sumbangan Tan Sri Just Faaland kepada Pembangunan Sosioekonomi Malaysia, Forum Jihad Memerangi Dadah and Program Inspirasiku TN50 & Masa Depan Generasi Muda Malaysia were jointly organized with Majlis Perundingan Melayu (MPM).

Utusan plans to promote and increase civic awareness among the public, focusing mainly on the younger generation. Various programmes will be designed in the future to educate the community, concentrating particularly on primary school children in our effort to create a harmonious society. OUTLOOK AND PROSPECTS

Utusan’s biggest challenge is the continuing decline in revenue from its core media business. Newspaper circulation has stagnated at a level lower than previous years, advertising revenue continue to dwindle and digital media revenue growth continue to be insufficient to cover the losses from the declining revenue stream.

To worsen the situation, Utusan’s current cost structure is no longer able to support its business. It’s staff cost has already ballooned to become almost 50% of total revenue.

Utusan has secured the computer tablet project in 2016. This project is expected to be completed in 2018. Revenue from this project is expected to cushion the decline in media business.

For the long run, efforts have been intensified to generate income from new business segments through strategic partnership with external parties with expertise. Approval for cost rationalisation especially involving staff cost has been obtained and implemented in stages according to financial capability,

Insya-Allah, with the continued commitment and the spirit of camaraderie shown by the Management and staff alike, we will continue to take pride in steering this sacred institution towards a better future.



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AUDIT COMMITTEE REPORT

1. MEMBERSHIP

The Audit Committee (‘the Committee’) comprises two (2) Independent Non-Executive Directors and one (1) Non-Independent Non-Executive Director as follows:

MOHD YUSOF ABU OTHMAN – CHAIRMANIndependent Non-Executive Director

TAN SRI DATUK SERI ISMAIL YUSOFNon-Independent Non-Executive Director

DATUK SERI TENGKU SARIFFUDDIN TENGKU AHMADIndependent Non-Executive Director

2. MEETINGS AND ATTENDANCE

A total of five (5) meetings were held during the financial year ended 31 December 2017. The details of the attendance of each Committee member are as follows:

MEMBERS ATTENDANCE

Mohd Yusof Abu Othman 5/5

Tan Sri Datuk Seri Ismail Yusof 4/5

Datuk Seri Tengku Sariffuddin Tengku Ahmad 5/5

3. COMPOSITION AND TERMS OF REFERENCE

3.1 Composition The members of the Committee shall be appointed by the Board of Directors of Utusan Melayu (Malaysia)

Berhad (‘the Board’) from amongst its directors which fulfills the following requirements:a. The Committee shall comprise not less than three (3) members, all of whom shall be Non-Executive

Directors. The majority of the Committee members shall be Independent Directors.b. At least one (1) member of the Committee:

i. must be a member of the Malaysian Institute of Accountants (‘MIA’); orii. if he is not a member of the MIA, he must have at least three (3) years working experience and:

• he must have passed the examinations specified in Part I of the First Schedule of the Accountants Act 1967; or

• he must be a member of one of the associations of accountants specified in Part II of the First Schedule of the Accountants Act 1967.

iii. fulfills such other requirements as prescribed or approved by Bursa Malaysia Securities Berhad. c. The members shall elect a Chairman from amongst them whom shall be an independent director.

3.2 Procedure Of Meetingsa. Meetings shall be held not less than four (4) times a year.b. A quorum for the meeting shall be at least two (2) members and the majority present must be independent

directors.c. The General Manager of Finance and the head of the Group Internal Audit shall normally attend the meetings

to assist in deliberation and resolution of matters raised.d. At least twice a year, the Committee shall meet with the external auditors without the presence of the

Management.e. The Company Secretary shall be appointed as the Secretary of the Committee.


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3.3 Rights The Committee is authorised by the Board of Directors to have the following rights:

a. authority to investigate any activity within its terms of reference and the resources to do so.b. have full and unrestricted access to any information and documents pertaining to the Group.c. have direct communication channels with the external and internal auditors.d. obtain independent professional advice and to secure the attendance of outsiders with relevant experience

and expertise as it considers necessary.e. convene meetings with the external and the internal auditors without the attendance of Management

whenever deemed necessary.

3.4 Responsibilities and Duties The following is a summary of the main responsibilities and duties of the Committee and the same would be

reviewed and reported to the Board:a. External Audit

• to discuss the audit plan and scope whilst evaluating the Group’s system of risk management and internal controls with the external auditors.

• to review the audit reports and to discuss any issues arising from the statutory audits.• to assess the performance of the external auditors and make recommendations to the Board on their

appointment and removal.b. Financial Reporting

• to ensure that the financial report presents a true and fair view of the Group’s financial position and performance in compliance with regulatory requirements.

• to review the quarterly results and year-end financial statements, before submission to the Board, focusing particularly on:- changes in or implementation of new accounting policies and practices;- significant or material adjustments with financial impact arising from the audit;- significant unusual events or exceptional activities; and- compliance with approved accounting standards and other legal and regulatory requirements.

c. Internal Audit• to review and approve the Group Internal Audit (‘GIA’) Charter.• to review the adequacy of the scope, functions, competency and resources of the GIA, and that it has

the necessary authority to carry out its work.• to review the internal audit plan and results of the internal audit process to ensure that appropriate

and adequate remedial actions are taken by the Management on significant lapses in controls and procedures that are identified.

• to approve the appointment, replacement and dismissal of the Head of the GIA.d. Related Party Transactions

• to review any related party transactions and conflict of interests situation that may arise within the Company or Group and any other major transactions outside the normal course of business of the Company and Group.

e. Other Matters• to consider such other matters as the Committee considers appropriate or as authorised by the Board.


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4. SUMMARY OF ACTIVITIES OF THE COMMITTEE

The following activities were performed by the Audit Committee during the financial year ended 31 December 2017: 4.1 External Audit

a. The Committee met the external auditors twice a year in April and November whereby the following activities were performed:• reviewed with the external auditors their audit plan and scope covering areas of audit emphasis, the

Group’s system of risk management and internal control, new and revised auditor reporting standards and changes in other regulatory environment;

• reviewed the audited financial statements and key changes in financial results and positions;• reviewed the auditors’ report on the audited financial statements; and• deliberated on issues arising from the statutory audits and at some points, in the absence of the

Management.b. Reviewed the performance and independence of the external auditors and made recommendations to the

Board on their re-appointment and remuneration.

4.2 Internal Audit a. Reviewed with the Group Internal Audit (‘GIA’) Department the annual audit plan to ensure the scope and

coverage over the activities of the Group is adequate and comprehensive and to ensure the principal risk areas are adequately identified and covered in the plan.

b. Reviewed the effectiveness of the audit process and resource requirements for the year.c. Reviewed the GIA reports which were tabled during the year, the audit recommendations made and

Management’s response to these recommendations. Where appropriate, the Committee has directed Management to rectify and improve control procedures and workflow processes based on the internal auditors’ recommendations and suggestions for improvement.

d. Monitored the corrective actions taken on the outstanding audit issues to ensure that all the key risks and control lapses have been addressed.

4.3 Financial Reporting a. Reviewed the quarterly results with the General Manager of Finance and the Group Managing Director

before recommending to the Board for approval focusing on:• Significant or material financial impact arising from any development in business activities during the

reporting period;• Material events or exceptional activities that may have significant financial impact in the future;• Changes in the financial positions and liquidity position; • Changes in or implementation of new accounting policies and practices; and • Overall compliance with approved accounting standards and other regulatory requirements.

b. Reviewed the year-end audited financial statements with the General Manager of Finance, the Group Managing Director and the external auditors before recommending to the Board for approval focusing on the same aspects as stated above to ensure that the audited financial statements present a true and fair view of the Group’s performance and financial position in compliance with regulatory requirements.

c Deliberated on significant issues highlighted by the General Manager of Finance and the Group Managing Director or issues arising from external audit for resolution.

d. Upon conclusion of each meeting, recommended to the Management of the Group to improve on the internal controls, procedures and system of the Group where deemed appropriate.


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5. INTERNAL AUDIT FUNCTION

The in-house Group Internal Audit (‘GIA’) provides independent and objective assessment on the adequacy, integrity and effectiveness of the system of internal controls, risk management and governance processes throughout the Group. The purpose, authority and responsibility of the GIA are reflected in the GIA’s Charter. GIA has a total of 9 staff as at 31 December 2017. The total operation costs of the department for 2017 was RM920,573 (2016:RM888,378) comprising mainly salaries, staff welfare and travelling costs. GIA reports directly to the Audit Committee.

The GIA adopts a risk-based audit approach in formulating the Annual Audit Plan. The GIA also maintains a flexible audit approach and a dynamic audit plan that appropriately addresses current issues and risks as well as potential risk exposures over key business processes within the Group. All high risk activities in each auditable unit are audited annually. The coverage of auditable areas takes into consideration the strategic and operational risks, audit history and request by the Top Management/Audit Committee that is aligned to the organizational strategic objectives.

GIA adopts the International Professional Practices Framework (IPPF) inclusive of the mandatory elements; Core Principles for the Professional Practice of Internal Auditing, International Standards For The Professional Practice of Internal Auditing of The Institute of Internal Auditors (IIA), the definition of Internal Auditing and Code of Ethics to manage its functions and perform the audit engagement.

During the year, the GIA conducted finance, operations, management, compliance as well as network and information technology reviews. Among the key areas covered were:-

• Billing and collection• Procurement• Accounting and financial activities• Operations and maintenance• Sales and marketing• Credit control• Newspaper print order and unsold management• Network security• Regulatory compliance.

In performing such reviews, recommendations for improvement and enhancements to the existing system of internal controls and work processes are made. The resulting reports of audits undertaken were presented to the Audit Committee and forwarded to the Management’s concerned for their attention and necessary corrective actions. The Management is responsible for ensuring that corrective actions on reported weaknesses as recommended are taken within the required time frame.

The GIA continuously monitors the implementation of audit recommendations through periodic follow up reviews and works closely with the external auditors to resolve any control issues and assists in ensuring that appropriate Management actions are taken. The GIA works collaboratively with the Corporate Services and Risk Management Department to review and assess the risk management processes throughout the Group in respect of their adequacy and effectiveness.


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STATEMENT OF RISK MANAGEMENTAND INTERNAL CONTROL

BOARD’S RESPONSIBILITIES

The Board of Directors (‘Board’) acknowledges its overall responsibility for the Group’s risk management and system of internal control and for reviewing its adequacy and integrity in order to safeguard the Group’s assets and shareholders’ investments.

The risk management and system of internal control comprises risk management, financial, operational and compliance controls. Such a system is designed to manage rather than eliminate the risk of failure to achieve the business objectives of the Group. It can therefore, only provide reasonable and not absolute assurance against material misstatement or loss.

THE FRAMEWORK OF THE GROUP’S INTERNAL CONTROL SYSTEM

• The Senior Management oversees the conduct of the Group’s business and review the adequacy and integrity of the risk management and internal control system and compliance to applicable law and regulations. The Audit Committee (‘AC’) and the Board also review the operational and financial performance of the Group at Audit Committee and Board meetings.

• The Group Managing Director provides the Board with quarterly financial information. These include amongst others, the monitoring of results against budget with major variances being followed up and management action taken, where necessary. Business plan and budget are reviewed and approved by the Board on an annual basis. These processes are also practiced at each subsidiary level.

• The AC on behalf of the Board regularly reviews the effectiveness of the internal control system reported by the Group Internal Audit Department (‘GIAD’) and the external auditors. The AC also reviews the adequacy of scope, functions and resources of GIAD.

• The Group Managing Director supported by heads of business functions (‘The Management’) are entrusted with the responsibility of assisting the Board in overseeing the risk management practices throughout the Group. The Management reviews and recommends overall risk management policies and processes and monitors significant risks through review of risks profile and its mitigation plans.

• The Investment Committee is primarily responsible for assessing the viability of any investment proposal for the Group before recommending the same for the Board’s approval.

• Policies and procedures of key business processes are documented in the Operating Manuals and implemented throughout the Group. These policies and procedures are subject to regular reviews, updates and continuous improvements.

• Clear limits of authority are imposed in respect of day-to-day operations which sets the limit for operating and capital expenditure for each level of Management within the Group.

INTERNAL AUDIT FUNCTION

The Group has an Internal Audit Department which is independent of the activities or operations of the Group. GIAD conducts independent risk-based audits based on an approved Internal Audit Plan to ensure that the system of internal controls is effective and operating satisfactorily. GIAD reports directly to AC where significant findings and recommendations for improvement are highlighted on quarterly basis. GIAD’s practices and conduct are governed by the Internal Audit Charter.


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STATEMENT OF RISK MANAGEMENTAND INTERNAL CONTROL

RISK MANAGEMENT FRAMEWORK

The Board recognises that one of the key elements of a sound internal control is the management of risks associated with the Group’s business. The Group has developed a risk management framework to identify the key risks facing the Group, the potential impact and likelihood of those risks occurring, the control effectiveness and the action plans being taken to manage the risks to the desired level.

The Corporate Services & Risk Management Department (‘CSRMD’) has been entrusted to assist the Board in managing the risks within the Group. The CSRMD reports directly to the Group Managing Director and its major roles pertaining to risk management are to:

• be a central platform, whereby risks throughout the Group can be viewed on an enterprise-wide basis;

• standardise the risk measurement methodology in order to enable comparability;

• act as a central resource for evaluating risks to assist management, business and operating units;

• recommend means to control or minimise risks; and

• facilitate each department and subsidiary within the Group in the process of identifying, evaluating, managing and monitoring risks.

The Management conducts review of the status of risk management for the Group on a periodical basis.

The Board approved the Group’s Risk Management Policy. The policy outlines the role of the Board, the management and the staff of the Group pertaining to risk management.

Based on the risk management and internal control system stated above, we, Datuk Mohd Noordin Abbas and Datuk Abdul Aziz Ishak being two (2) of the Directors of Utusan Melayu (Malaysia) Berhad (‘UMMB’) and Abd Wahid Idris, being the officer primarily responsible for the financial management of UMMB do hereby assure that the Group’s risk management and internal control system is operating adequately and effectively in all material aspects.

Statement made in accordance with the resolution of the Board of Directors dated 17 April 2018.

Documents

ANNUAL REPORT 2017 - malaysiastock.biz subsidiary companies within Utusan Group namely Utusan Karya Sdn Bhd, Utusan Media Sales Sdn Bhd, Utusan Publications & Distributors Sdn Bhd,