DiGi.Com Berhad - Boardroom Limited · DiGi.Com Berhad (425190-X) 1 Aspiration Statement and Key Principles Corporate Milestones Corporate Information Directors’ Profiles Statement

DiGi Telecommunications Sdn Bhd 201283-M T (603) 5721 1800Lot 30 Jalan Delima 1/3 F (603) 5721 1857Subang Hi-Tech Industrial Park E [email protected] Shah AlamSelangor Darul Ehsan, Malaysia

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DiGi.Com Berhad (425190-X)

ANNUAL REPORT 2003 LAPORAN TAHUNAN

Perak

Ipoh40, Medan IstanaBandar Ipoh Raya30000 Ipoh, Perak

Negeri Sembilan

Seremban301, Taman AST70200 SerembanNegeri Sembilan

Sabah

Kota KinabaluLot 5/G3, Ground & 1st FloorsApi-Api Centre88000 Kota Kinabalu, Sabah

Sarawak

KuchingLot 2087, Block 10Bangunan Kueh Boon TeckJalan Tun Ahmad Zaidi Adruce93150 Kuching, Sarawak

MiriLot 938, Ground & 1st FloorsJalan Asmara, 98000 MiriSarawak

Sibu13, Ground & 1st FloorsLorong Kampung Datu 396000 Sibu, Sarawak

24-hour DiGi customer service line: 016-221 1800

DiGi.Com Berhad (425190-X)Lot 30, Jalan Delima 1/3Subang Hi-Tech Industrial Park40000 Shah Alam, Selangor

Mailing Address:P. O. Box 755140718 Shah Alam, SelangorTel: 03-5721 1800Fax: 03-5721 1857www.digi.com.my

Penang

Pulau Tikus368-1-02, Jalan Burmah10350 Pulau TikusPulau Pinang

Seberang Jaya8, Ground FloorJalan Todak DuaPusat BandarBandar Seberang Jaya13700 Prai, Pulau Pinang

Bukit Jambul6B-C-D, Jalan Tun Dr.AwangBukit Jambul Shop House11900 Pulau Pinang

Melaka

Melaka523, Taman Melaka Raya75000 Melaka

Johor

Johor Bahru8, Jalan Molek 1/12Taman Molek81100 Johor Bahru, Johor

Jalan Tun Abdul Razak64, Ground FloorJalan Tun Abdul Razak Susur 180000 Johor Bahru, Johor

Batu Pahat18, Jalan KundangTaman Bukit Pasir83100 Batu Pahat, Johor

Corporate Directory

List of Operating Offices

Principal Place ofBusiness/Head Office

Lot 30, Jalan Delima 1/3Subang Hi-Tech Industrial Park40000 Shah Alam, SelangorTel: 03-5721 1800Fax: 03-5721 1857

Central OperatingOffices

Lot 5, Jalan U1/15Hicom Glenmarie Industrial Park40150 Shah Alam, SelangorTel: 03-5721 1800Fax: 03-5721 1857

Lots 7 & 8, Jalan Delima 1/1Subang Hi-Tech Industrial Park40000 Shah Alam, SelangorTel: 03-5721 1800Fax: 03-5721 1857

Lot 28, Jalan Delima 1/3Subang Hi-Tech Industrial Park40000 Shah Alam, SelangorTel: 03-5721 1800Fax: 03-5721 1857

Regional OperatingOffices

Northern Region

62, 1st Floor, Jalan MayangPasir 1Off Jalan Mahsuri11950 Bayan Baru Pulau PinangTel: 04-641 2800Fax: 04-641 3800

Southern Region

8, Jalan Molek 1/12Taman Molek81100 Johor Bahru, JohorTel: 07-351 1800Fax: 07-352 8016

Eastern Region

3, Jalan Tun Ismail25000 Kuantan, PahangTel: 09-508 0071Fax: 09-508 0070

Sabah Region

Lot 36, SEDCO Light Industrial EstateJalan Kolombong88450 InanamKota Kinabalu, SabahTel: 088-431 800Fax: 088-430 016

Sarawak Region

Lot 2087, Block 10, Bangunan Kueh Boon TeckJalan Tun Ahmad Zaidi Adruce93150 Kuching, SarawakTel: 082-421 800Fax: 082-427 597

DiGi Centres

Selangor

USJSubang Taipan, 19 & 21Jalan USJ 10/1A, Subang Jaya47610 Petaling Jaya, Selangor

SS224, Jalan SS2/6647300 Petaling Jaya, Selangor

Selayang Baru57, Jalan 2/3A, Pasar Borong SelayangOff Jalan Ipoh68100 Batu Caves, Selangor

Klang90, Batu 1-1/2, Jalan Meru41050 Klang, Selangor

Kuala Lumpur

Pandan IndahM5A/13, Jalan Pandan Indah 4/1Taman Pandan Indah55100 Kuala Lumpur

KL PlazaLot G33-8, Ground Floor,179, KL PlazaJalan Bukit Bintang55100 Kuala Lumpur

Berjaya Times Square01-36, Berjaya Times Square, 1, Jalan Imbi ,55100 Kuala Lumpur

Pahang

Kuantan3, Jalan Tun Ismail25000 Kuantan, Pahang

D i G i . C o m B e r h a d ( 4 2 5 1 9 0 - X ) 1

Aspirat ion Statement and Key Pr inc ip les

Corporate Mi lestones

Corporate Informat ion

Directors ’ Prof i les

Statement on Corporate Governance

Statement on Internal Contro l

Other Compl iance Informat ion

Audi t Committee Report

Prof i le of Chief Execut ive Of f icer

Management Group

Group F inanc ia l Summary

Chairman’s Statement

Operat ions Review

Corporate Soc ia l Respons ib i l i ty

F inanc ia l Statements

L ist of Propert ies

Statement of Directors ’ Sharehold ings

Stat is t ics on Sharehold ings

Not ice of Annual Genera l Meet ing

Form of Proxy

Corporate Directory

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Our AspirationTo be the mobile communications leader in creatingexperiences with a difference for our customers andbusiness partners through our passion for success

We have a passion for our customers

We value ideas and encourage initiative

We emphasise mutual trust and respect

We believe in the power of teamwork

We build partnerships for success

Our Key Principles

D i G i . C o m B e r h a d ( 4 2 5 1 9 0 - X ) 3

4 DiGi.Com Berhad (425190-X)

1996 19971995

24 MayFirst telco in Malaysia tolaunch and operate a fullydigital cellular network

28 MayFirst operator to offer DiGiGuarantees, an exclusivecustomer benefitsprogramme

6 OctoberFirst operator in Asia to bepart of the InternationalRoaming Platform (IRP) andto commercially launch theuse of the dual-band mobilephones for use in GSM 900,1800 and 1900 networks byoffering the first GlobalCellular Service (GCS) inMalaysia

18 DecemberFirst telco (then known asMutiara Swisscom Bhd) tobe listed on the KualaLumpur Stock ExchangeMain Board under theInfrastructure ProjectCompanies category

28 MarchFirst GSM 1800 operator tooffer International Roamingfacilities

09 AprilFirst digital cellular networkto be operational in Sabahand Sarawak

03 JuneFirst operator to offerenhanced informationservices, in the form ofinteractive DiGi StockServices with DiGi StockAlert

Corporate Milestones

1998

20 JanuaryThe strategic alliance withTelenor International AS wasformed

18 AprilThe name of DiGi SwisscomBhd, the holding company ofDiGi TelecommunicationsSdn Bhd, was changed toDiGi.Com Berhad

8 MayFirst telco to launch theMobile Phone BankingService in Malaysia usingthe STK platform, incollaboration with UnitedOverseas Bank (Malaysia)Berhad

23 MayFirst telco in Malaysia toalign itself with MTV Asia,the top music channel inAsia, to bring to consumersan interactive and excitingmusic programme thatmarries technology andentertainment

1 FebruaryFirst GSM operator inMalaysia to offer AutomaticInternational Roamingservice to the United Statesof America

9 September First prepaid service providerto introduce the newgeneration prepaid serviceswhich include Quickmailservices, Voicemail andInternational Roaming

18 NovemberFirst telco to launch aninnovative and interactivewebsite in Malaysia as wellas Asia. Known as @DiGi, it is slated to be one of themost interactive websites inthe telecommunicationsmarket

7 DecemberFirst telco to introduce thee-pay system for convenientairtime reloads for customersas e-pay terminals are madeavailable at venues witheasy accessibility

1999 2000

DiGi.Com Berhad (425190-X) 5

1 JanuaryFirst operator in Malaysia tolaunch the highly popularprepaid mobile phoneservice, DiGi Prepaid

18 MayFirst operator to offerinnovative call programmesthat are designed forcustomer usage of mobilephones

20012000

4 SeptemberDiGi TelecommunicationsSdn Bhd entered into anagreement with Yahoo! Asia to jointly create WAP-enabled online services

18 OctoberFirst telco in Malaysia tolaunch a revolutionarymobile service in line withfull deregulation. Known as DiGi Mobile One™, thislatest roll-out promisessubstantial savings for allmobile customers

30 OctoberAn RM800 million contractwas signed with Ericsson(M) Sdn Bhd for theexpansion of DiGi’s existingGSM 1800 network, to boostboth coverage and quality ofservice. The contract alsoincludes the supply andimplementation of GPRStechnology

15 DecemberThe launch of iDiGi, DiGi’snew Internet Dial-up AccessService in the Klang Valley,which ensures faster accessspeeds and reliability

18 DecemberThe unveiling of djuice™,DiGi’s unique mobileInternet portal, with itshighly entertaining,informative and usefulservices for customers who need and want greatermobility

23 AugustDiGi signs agreement withConvenience Shopping SdnBhd, allowing customers toobtain DiGi Prepaid Plus™reloads and purchase chatz™24 hours a day, at all 7-Elevenstores located nationwide

10 SeptemberAn alternative reload methodusing a new interactivemedium, “Star Codes” islaunched by DiGi to enableprepaid credit reload for itsDiGi Prepaid Plus™ customers

14 SeptemberDiGi becomes first majorityforeign-owned service providerin Malaysia with Telenor’sincreased shareholdings inDiGi.Com to 61%

1 OctoberDiGi opens up inter-operatorShort Messaging Service(SMS) with all telcos inMalaysia

Early MarchDiGi reaches its one millionmobile customer mark dueto the combined success ofits innovative prepaid andpostpaid mobile services

16 March DiGi’s first-ever MTV-licensed SIM Card Packageand Reload Coupons waslaunched nationwide today.The DiGi-MTV SIM Pack andDiGi-MTV Reload Couponsare the first of their kind tobe released anywhere in theworld

19 MarchIntroduction of theinnovative DiGi Mobile MovieBooking Service, availableon DiGi’s djuice™ WAP, STKand SMS platforms, whichenables DiGi customers tomake bookings of movietickets at selected GoldenScreen Cinemas, anytimeand anywhere, using theirmobile devices

24 JulyDiGi & GHL Systems launchWhoops!, a prepaid reloadservice that allows prepaidcustomers to reload theirmobile airtime without anyphysical prepaid reloadcoupons or PIN numbers atterminals located nationwide


2002

4 JuneFirst telco in Malaysia tooffer Automatic InternationalRoaming and General PacketRadio Services (GPRS) to its prepaid mobilecustomers nationwide, andsimultaneously launch an exclusive LoyaltyProgramme to reward itsprepaid customers. DiGitoday becomes the firstoperator in the Asian regionto commercially launchGeneral Packet RadioServices (GPRS) on bothprepaid and postpaidplatforms

23 SeptemberDiGi establishes an e-commercemilestone through signing a strategic agreement withMOL AccessPortal Bhd toenable Malaysia’s firstautomatic online reloadservice for DiGi Prepaid Plus™and the purchase of chatz™,its International Calling Card

13 NovemberFirst telco to offer DiGi’sprepaid customers thecountry’s first auto reloadservice via an alliance withCitibank. The service allowsDiGi’s prepaid customers toperform automatic reloadsusing their credit cards

2003

27 MayDiGi signs a strategicagreement with SiemensMalaysia to upgrade itsGSM/GPRS mobile networkto next-generation wirelesstechnology, introducingEnhanced Data Rates forGlobal Evolution (EDGE) in the Klang Valley

Early AugustDiGi hits its two millionthmobile customer mark,through increasing customerrecognition of its innovativemobile communicationsproducts and services

27 AugustDiGi becomes the firstmobile communicationsservice provider to launchMultimedia MessagingService (MMS) for both itsprepaid and postpaid mobilecustomers in Malaysia

22 SeptemberThe launch of Beyond™Prepaid, DiGi’s new prepaidmobile service with itsintelligent automaticadjusting rates feature that automatically reducescall rates as the number of calls increase. Beyond™Prepaid comes with a hostof innovative features which include automaticinternational roaming, MMS,faster internet connectionvia DiGi’s GPRS network,call waiting, call divert andmulti-party conferencing

18 NovemberDiGi launches itsstraightforward and simpleHorizon™ Postpaid service,offering postpaid customersan attractive choice betweenits easy-to understandHorizon Optimum™ andHorizon Premier™ priceplans. Horizon Optimum™utilises DiGi’s popular autoadjusting rates featurewhich allows the rate perminute to be reduced withthe amount of calls the user makes, while HorizonPremier™ allows customers to enjoy a value-for-moneynationwide flat rate


Corporate Information

Board of Directors

Tan Sri Dato’ Seri Vincent Tan Chee Yioun (Chairman)

Arve Johansen (Deputy Chairman)

Tun Dato’ Seri Dr Lim Chong Eu

Ole Bjorn Sjulstad

Per Olav Fosse

Gunnar Johan Bertelsen

Dato’ Ab. Halim Bin Mohyiddin

Chan Kien Sing (Alternate to Tan Sri Dato’ Seri Vincent Tan Chee Yioun)

Thor Asbjorn Halvorsen (Alternate to Arve Johansen and Per Olav Fosse)

Audit Committee

Dato’ Ab. Halim Bin Mohyiddin (Chairman/Independent Non-Executive Director)

Tun Dato’ Seri Dr Lim Chong Eu (Independent Non-Executive Director)

Ole Bjorn Sjulstad (Non-Independent Non-Executive Director)

Secretaries

Su Swee Hong (MAICSA No.0776729)

Gan Swee Peng (MAICSA No.7001222)

Domicile and Country of Incorporation

Malaysia

Registered Office

11th Floor Menara Berjaya

KL Plaza, 179 Jalan Bukit Bintang

55100 Kuala Lumpur

Tel: 03-2935 8888

Fax: 03-2935 8043


Auditors

KPMG

Chartered Accountants

Wisma KPMG

Jalan Dungun

Damansara Heights

50490 Kuala Lumpur

Stock Exchange Listing

Main Board of Malaysia Securities

Exchange Berhad

Stock Short Name

DIGI (6947)

Share Registrars

Berjaya Registration Services Sdn Bhd

Lot C1-C3, Block C, 2nd Floor, KL Plaza

179 Jalan Bukit Bintang

55100 Kuala Lumpur

Tel: 03-2145 0533

Fax: 03-2145 9702

Principal Bankers

Affin Bank Berhad

AmMerchant Bank Berhad

Banca Intesa S.p.A., Hong Kong Branch

Bank of America N.A., Labuan Branch

Bumiputra-Commerce Bank Berhad

Crédit Agricole Indosuez, Labuan Branch

EON Bank Berhad

Fortis Bank S.A/N.V., Singapore

JPMorgan Chase Bank, Labuan Branch

Malayan Banking Berhad

Natexis Banques Populaires, Labuan Branch

Nordea Bank Sweden AB (publ)

OCBC Bank (Malaysia) Berhad

RHB Bank Berhad

Société Générale, Labuan Branch

Svenska Handelsbanken AB (publ), Sweden

The Bank of East Asia, Limited Labuan Branch

The Bank of Nova Scotia Berhad

The Bank of Nova Scotia, Labuan Branch


Directors’ Profiles

He was appointed to the Board on 18 October 1997 and wassubsequently appointed as the Chairman on 12 May 1999.

He is a businessman and entrepreneur with varied interestsin property development, telecommunications, gaming,stockbroking, manufacturing, trading, motor, hospitality andInternet-related businesses, utilities, media and insurancethrough various public and private companies including IntanUtilities Berhad, Berjaya Times Square Sdn Bhd and GoldenArches Restaurant Sdn Bhd, the local franchisee of theMcDonald’s fast food chain of restaurants.

Currently, he is the Chairman and Chief Executive Officer(“CEO”) of Berjaya Group Berhad, CEO of Berjaya Sports TotoBerhad and the Chairman of MOL.com Berhad and NexnewsBerhad. He also holds directorships in Berjaya Vacation ClubBerhad, Bukit Tinggi Resort Berhad, Bukit Kiara Resort Berhad,Berjaya Golf Resort Berhad and KDE Recreation Berhad as well as several other private limited companies including DiGiTelecommunications Sdn Bhd, a 100% owned subsidiary of theCompany.

(Chairman, Non-Independent/Non-Executive)

52 years of age, Malaysian

Tan Sri Dato’ Seri Vincent Tan Chee Yioun


He was appointed to the Board on 20 January 2000 as theDeputy Chairman of the Company. He holds a Master ofScience in Electrical Engineering (Telecommunications)from the Norwegian Institute of Technology in Trondheim,Norway and has taken part in a programme for ManagementDevelopment at the Harvard Business School in Boston, USA.

He has served as Senior Executive Vice President ofTelenor since 1999 and as Chief Executive Officer ofTelenor Mobile Communications AS since January 2000. Hejoined Telenor in 1989 and has held a number of positions,including President and Chief Executive Officer of TelenorInternational AS. Prior to this, he was Executive VicePresident of Elektrisk Bureau Telecom (Ericsson ofNorway), and a Research Engineer at the NorwegianInstitute of Technology (ELAB).

Currently, he is the Chairman and Director of severalcompanies in USA, Thailand, Greece and Norway. He alsosits on the Boards of Telenor Asia Pte Ltd and DiGiTelecommunications Sdn Bhd.

Arve Johansen

(Deputy Chairman, Non-Independent/Non-Executive)

54 years of age, Norwegian


He was appointed to the Board on 1 October 1997. He graduatedwith a Bachelor of Medicine and a Bachelor of Surgery (M.B.Ch.B)from the Edinburgh University,Scotland in 1944. He was theChief Minister of Penang from1969 to 1990 and the Chairman ofPenang Development Corporation.

He was conferred the DarjahUtama Pangkuan Negeri (D.U.P.N.)by the Tuan Yang Terutama (TYT)Governor of Penang; the Seri SetiaMahkota Malaysia (S.S.M.) by theYang Di-Pertuan Agong; the DatukAmar Bintang Kenyalang (DA) bythe TYT Governor of Sarawak; theGrand Cross 2nd Class Award byHis Excellency the President ofGermany; and the Order of theRising Sun, Gold and Silver Starby His Majesty, the EmperorAkihito of Japan.

He is currently the Chairmanof Chin Well Holdings Berhad,Suiwah Corporation Berhad andBerjaya Vacation Club Berhad. Healso sits on the Boards of SouthernSteel Berhad and United OverseasBank (Malaysia) Berhad.

He was appointed to the Board on 4 October 2001. He graduatedin Mechanical Engineering andBusiness Administration fromKongsberg Ingeniørhøgskole,Norway in 1983.

He has a background in offshoreoil business, ICT (Information andCommunications Technology) andtelecommunications.

He joined Telenor Asia PteLtd as Vice President in 2000.Currently, he is the ManagingDirector of Telenor Asia Pte Ltdand serves as a Board member in DiGi Telecommunications SdnBhd, GrameenPhone Ltd andUnited Communications PublicCompany Limited.

Tun Dato’ Seri Dr Lim Chong Eu(Independent/Non-Executive)


Ole Bjorn Sjulstad(Non-Independent/Non-Executive)



He was appointed to the Board on 20 February 2003. He holds a Masters Degree in BusinessAdministration from NorwegianSchool of Management and aBachelor Degree in ElectricalEngineering from Telenor’s Collegeof Engineering in Norway. Heserved as a Sergeant in theNorwegian Army through the yearof 1977, after completing theNorwegian Army’s Officers Schoolin 1976.

He has worked as an engineerin Norway and the United Statesand held top management postsin areas covering satellite, data,marketing and mobile. He hasalso served in board positions in Telenor as well as in othertelecommunications and technologycompanies in the United States,Africa and Europe.

Currently he is Senior VicePresident of Telenor MobileCommunications AS and serves as a director of companies inMalaysia, Thailand and Canada/USA.

Per Olav Fosse(Non-Independent/Non-Executive)


He was appointed to the Board on 18 February 2004. He was anAlternate Director from November2000 to February 2004. Hegraduated with a Diploma inAdvance Management of UniversityCollege Dublin, Ireland. He alsoholds a Masters Degree in BusinessAdministration of University CollegeDublin, Ireland.

Currently, he is the ProjectDirector of Telenor Asia Pte Ltd. He is also a Director of DiGiTelecommunications Sdn Bhd.

Gunnar Johan Bertelsen(Non-Independent/Non-Executive)



He was appointed to the Board on23 November 2001. He holds aBachelor of Economics in Accountingfrom University of Malaya and aMaster in Business Administrationfrom University of Alberta, Canada.

He was a lecturer at UniversityKebangsaan Malaysia from 1973to 1978. He joined Messrs PeatMarwick Mitchell (now known asKPMG) in 1977 and was admittedas a Partner in 1985. Prior to hisretirement on 1 October 2001, hewas the Partner in charge of theAssurance and Financial AdvisoryServices Divisions.

He is currently the VicePresident of the Malaysian Instituteof Certified Public Accountants(MICPA) and Chairman of itsEducation and Training Committee.He is also a council member of theMalaysian Institute of Accountants(MIA) and chairs its ExaminationCommittee. Internationally, he is a member of the EducationCommittee of the InternationalFederation of Accountants (IFAC).

He also sits on the Boards of HeiTech Padu Berhad, Arab-Malaysian Corporation Bhd, UtusanMelayu (Malaysia) Berhad, MCMTechnologies Berhad, KumpulanPerangsang Selangor Berhad, IdrisHydraulic (Malaysia) Bhd, Amway(Malaysia) Holdings Berhad,Idaman Unggul Berhad, KNMGroup Berhad and several privatelimited companies.


Dato’ Ab. Halim Bin Mohyiddin(Independent/Non-Executive)


He was appointed as an AlternateDirector on 27 February 2003. He holds a Master of Science in Electrical Engineering(Telecommunications andComputer Science) from theNorwegian Institute of Technologyin Trondheim, Norway and read a programme for ManagementDevelopment at INSEAD inFontainebleau, France.

He has served in severalExecutive Management positionsin Telenor including Chief ExecutiveOfficer (“CEO”) of Telenor Networksfrom 1995 to 1998 and CEO ofTelenor Business Solutions from1998. Prior to this, he has beenresponsible for sales activities,Product Management andDevelopments and differenttechnical activities both in thefixed and mobile networks.

Currently, he is ExecutiveVice President of Telenor Mobileand Director of several companiesin Norway and internationally. Heis also an Alternate Director inDiGi Telecommunications Sdn Bhd.

Thor Asbjorn Halvorsen(Alternate Director)


Chan Kien Sing(Alternate Director)


He was appointed as an AlternateDirector on 18 October 1997. He isa member of the Malaysian Instituteof Certified Public Accountants(MICPA) and Malaysian Instituteof Accountants (MIA).

Having articled with MessrsPeat Marwick Mitchell (now knownas KPMG) from 1975 to 1981, hesubsequently joined Arab-MalaysianMerchant Bank Berhad (nowknown as AmMerchant BankBerhad) specialising in corporatefinance until 1989 when he joinedBerjaya Group Berhad.

Currently, he is the ChiefExecutive Officer of Berjaya CapitalBerhad, an Executive Director ofBerjaya Group Berhad and BerjayaSports Toto Berhad. He is also aDirector of Matrix InternationalBerhad, Berjaya Vacation ClubBerhad, Berjaya Holdings (HK)Limited and International Lottery& Totalizator Systems Inc., USAand an Alternate Director inNexnews Berhad. He also holdsdirectorships in several otherprivate limited companies in the Berjaya Group of Companies andDiGi Telecommunications Sdn Bhd.

Save as disclosed,none of theDirectors have:-

1. Any familyrelationship withany directorsand/or majorshareholders ofthe Company;

2. Any conflict ofinterest with theCompany; and

3. Any convictionfor offenceswithin the past10 years otherthan trafficoffences.


in giving them the clearest and simplest

way to access our service, in making every

customer interface simple, in making sure

our communication is clear and impactful

In every aspect of our

interaction with our

customers, we find

ways to engage them

and strengthen their

relationship with DiGi...

by offering easy-to-use

products or services,

Statement on Corporate Governance

The Board of Directors (“Board”) fully appreciates the importance of adoptinghigh standards of corporate governance throughout the Group. The Board viewscorporate governance as synonymous with three key concepts, namelytransparency, accountability as well as corporate performance.

As such, the Board strives to adopt the substance behind corporate governanceprescriptions and not merely the form, with the aim of ensuring boardeffectiveness in enhancing shareholder value. The Board is thus fully committedto the maintenance of high standards of corporate governance by supporting andimplementing the prescriptions of the principles and best practices set out in Parts1 and 2 of the Malaysian Code of Corporate Governance (“Code”) respectively.

The following statement sets out how the Company has applied the key principlesand the extent of its compliance with the best practices throughout the financialyear ended 31 December 2003.

A. Board of Directors

Board Responsibilities

The Board of Directors plays a primary role in corporate governance by settingout the strategic direction of the Group, establishing goals, monitoring theachievement of the goals and ensuring a high degree of transparency andaccountability towards all stakeholders. The key responsibilities of the Boardare in tandem with the 6 principal responsibilities specified under BestPractice AAI of the Code.

Meetings

The Board met four (4) times during the financial year ended 31 December 2003.

Details of each existing Director’s meeting attendances are as follows:

Name Attendance

Tan Sri Dato’ Seri Vincent Tan Chee Yioun 3/4Non-Independent/Non-Executive

Arve Johansen 4/4Non-Independent/Non-Executive

Tun Dato’ Seri Dr Lim Chong Eu 4/4Independent/Non-Executive

Ole Bjorn Sjulstad 4/4Non-Independent/Non-Executive

Per Olav Fosse 4/4Non-Independent/Non-Executive

Dato’ Ab. Halim Bin Mohyiddin 4/4Independent/Non-Executive

Sigve Brekke (resigned on 18.2.2004) 2/4Non-Independent/Non-Executive



Two (2) out of the seven (7) Board members are considered independent inaccordance with the definition provided under paragraph 1.01 (Definition andInterpretations) of the Malaysia Securities Exchange Berhad (“MSEB”) ListingRequirements. As such, the Company fulfils the requirement to have at leastone third of the Board composed of Independent Non-Executive Directors.

Tun Dato’ Seri Dr Lim Chong Eu has been identified as the Senior IndependentNon-Executive Director of the Board to whom concerns may be conveyed.

Board Balance

The Board currently has seven (7) members, comprising two (2) IndependentNon-Executive Directors and five (5) Non-Independent Non-Executive Directors.Together, the Directors bring a wide experience relevant to the direction ofthe Group. The Directors combine in them expertise and experience in variousfields such as telecommunications, economics and investment, public servicesand accounting. Their expertise, experience and background result in thoroughexamination and deliberations of the various issues and matters affecting theGroup. A brief description of the background of each Director is presented onpages 10 to 15 of the Annual Report.

There is a clear division of responsibility between the Chairman and the ChiefExecutive Officer/Chief Operating Officer (CEO/COO) to ensure that there is abalance of power and authority. The Chairman is responsible for running theBoard and ensures that all Directors receive sufficient relevant information onfinancial and non-financial matters to enable them to participate actively inBoard decisions. The CEO/COO is responsible for the day to day managementof the business as well as implementation of Board’s policies and decisions.There is also balance in the Board because of the presence of IndependentNon-Executive Directors of the calibre necessary to carry sufficient weight inBoard decisions. Although all the Directors have an equal responsibility forthe Group’s operations, the role of these Independent Directors is particularlyimportant in ensuring that the strategies proposed by the executive managementare fully discussed and examined and take into account the long terminterest, not only of the shareholders, but also of employees, customers,suppliers, community and other stakeholders.

The Board is satisfied that the current Board composition fairly reflects theinvestment of minority shareholders in the Company.

Supply of Information

The Chairman ensures that all Directors have full and timely access toinformation with Board papers distributed in advance of meetings. EveryDirector has also unhindered access to the advice and services of theCompany Secretary and may obtain independent professional advice at theCompany’s expense in furtherance of their duties. Prior to the meetings ofthe Board, Board papers which include reports on group performance andmajor operational, financial, strategic and regulatory matters are circulated to all the Directors. These Board papers are issued at least seven (7) days inadvance to enable the Directors to obtain further explanation, where necessary,in order to be properly briefed before the meeting.

Statement on Corporate Governance20 DiGi.Com Berhad (425190-X)

In addition, there are matters reserved specifically for the Board’s decision,including the approval of corporate plans and budgets, acquisitions and disposalsof assets that are material to the Group, major investments, changes tocontrol structure of the Group, including key policies and authority limits.

Appointments to the Board

The Nomination Committee currently comprises the following members:

Ole Bjorn Sjulstad (Chairman) Non-Independent/Non-ExecutiveTun Dato’ Seri Dr Lim Chong Eu Independent/Non-ExecutiveDato’ Ab. Halim Bin Mohyiddin Independent/Non-Executive

The committee is empowered by its terms of reference to perform thefollowing primary functions:

(a) Recommend new nominations to the Board;(b) Recommend to the Board, Directors to fill the seats on Board Committees;(c) Review annually the required mix of skills and experience and other

qualities including core competencies that the Non-Executive Directorsshould bring to the Board

Directors’ Training

All Directors have attended and completed the Mandatory AccreditationProgramme (MAP) conducted by the Research Institute of InvestmentAnalysts Malaysia (RIIAM), an affiliate company of the Kuala Lumpur StockExchange Berhad. The Directors will continue to undergo other relevanttraining programmes to further enhance their skills and knowledge on acontinuous basis in compliance with Practice Note No. 15/2003 of the MSEBListing Requirements on the Continuing Education Programme.

Re-election

Any Director appointed during the year is required, under the Company’sArticles of Association, to retire and seek election by shareholders at thefollowing annual general meeting. The Articles also require that one-third ofthe Directors retire by rotation each year and seek re-election at the annualgeneral meeting. The Board has also agreed that every Director will submithimself for re-election at least every three years.

Directors over seventy (70) years of age are required to submit themselvesfor re-appointment annually in accordance with Section 129(6) of theCompanies Act, 1965.


B. Directors’ Remuneration

Remuneration Committee

The Remuneration Committee currently comprises the following members:

Arve Johansen (Chairman) Non-Independent/Non-Executive Tan Sri Dato’ Seri Vincent Tan Chee Yioun Non-Independent/Non-ExecutiveOle Bjorn Sjulstad Non-Independent/Non-Executive

Arve Johansen was appointed as the Chairman of the RemunerationCommittee on 18.2.2004 to replace Sigve Brekke who has resigned on thesame date.

The primary functions of the Remuneration Committee is to set up the policyframework and to make recommendations to the Board on all elements of the remuneration package and other terms of employment of the executivedirectors. Non-Executive Directors’ remuneration will be a matter to bedecided by the Board as a whole with the Director concerned abstaining fromdeliberations and voting on decision in respect of his individual remuneration.

Details of the Directors’ Remuneration

The aggregate Directors’ remuneration paid to all Directors of the Companyby the Group and categorised into appropriate components for the financialyear ended 31 December 2003 are as follows:

Allowances Bonus TotalRM’000 RM’000 RM’000

Non-Executive 211 30 241

The number of Directors of the Company whose total remuneration fall withinthe respective band are as follows:

Number of

Non-Executive Directors

RM50,000 and below 2RM50,001 to RM100,000 -RM100,001 to RM150,000 -RM150,001 to RM200,000 1

3

C. Shareholders

Dialogue between Company and Investors

The Company recognises the importance of regular communication withinvestors in the Company, with the annual report and financial statements,regular interim statements being the key media used. Enquiries by shareholdersare dealt with as promptly as practicably possible. Shareholders, investorsand members of the public may also access the Company’s website to obtaininformation on the Company.

The AGM

The key element of the Company’s dialogue with its shareholders is theopportunity to gather views of and answer questions from, both private andinstitutional shareholders on all issues relevant to the Company at the AGM.At the AGM, the shareholders are encouraged to ask questions both aboutthe resolutions being proposed or about the Group’s operations in general.Where it is not possible to provide immediate answers, the Chairman willundertake to furnish the shareholder with a written answer after the AGM.The Chairman of the Board also addresses the shareholders on the review ofthe Group’s operations for the financial year and outlines the prospects of theGroup for the subsequent financial year. The CEO/COO and members ofmanagement are also present at the AGM to clarify and explain any issue.

D. Accountability and Audit

Financial Reporting

DiGi aims to provide a balanced and meaningful assessment of the Group’sfinancial performance and prospects primarily through the annual report,quarterly financial statements and analyst presentations. The Board isassisted by the Audit Committee in overseeing the Group’s financial reportingprocess and the quality of its financial reporting.

Statement on Corporate Governance22 DiGi.Com Berhad (425190-X)


Statement of Directors’ Responsibility in Respect of the Financial Statements

The Directors are required by the Companies Act, 1965 to prepare financialstatements for each financial year/period which have been made out inaccordance with the applicable approved accounting standards in Malaysiaand give a true and fair view of the state of affairs of the Group and of theCompany and of the results and cash flows of the Group and of the Companyfor that year/period. In preparing those financial statements, the Directorsare required to:

• select suitable accounting policies and then apply them consistently;

• state whether applicable accounting standards have been followed, subjectto any material departures disclosed and explained in the financialstatements;

• make judgements and estimates that are reasonable and prudent; and

• prepare the financial statements on the going concern basis unless it isinappropriate to presume that the Company will continue in business.

The Directors are responsible for keeping proper accounting records whichdisclose with reasonable accuracy the financial position of the Group and ofthe Company and to enable them to ensure that the financial statementscomply with the Companies Act, 1965. The Directors are also responsible forsafeguarding the assets of the Group and hence for taking reasonable stepsfor the prevention and detection of fraud and other irregularities.

Internal Control

The Statement on Internal Control set out on pages 24 to 26 of the AnnualReport provides an overview on the state of internal controls within theGroup.

Relationship with the Auditors

Key features underlying the relationship of the Audit Committee with theexternal auditors are included in the Audit Committee’s terms of reference asdetailed on pages 27 to 30 of the Annual Report.

A summary of the activities of the Audit Committee during the year, includingthe evaluation of the independent audit process, are set out on page 27 ofthe Annual Report.

Introduction

The Board of Directors (“Board”) are committed to maintaining a sound systemof internal control in the Group and is pleased to provide the following statement,which outlines the nature and scope of internal control of the Group during thefinancial year.

Board Responsibility

The Board is ultimately responsible for the Group’s system of internal control whichincludes the establishment of an appropriate control environment and frameworkas well as reviewing its adequacy and integrity. The system of internal controlcovers, inter alia, risk management and financial, organizational, operational andcompliance controls. Because of the limitations that are inherent in any systemof internal control, this system is designed to manage, rather than eliminate, therisk of failure to achieve the Group’s objectives. Accordingly, it can only providereasonable but not absolute assurance against material misstatement or loss. Itis possible that internal controls can be circumvented or overridden. Furthermore,because of changing circumstances and conditions, the effectiveness of an internalcontrol system may vary over time.

Key Elements of the System of Internal Control

The following sets out the key elements of the system of internal control of theGroup, which have been in place throughout the financial year and up to thedate of the Directors’ Report.

There is in place a clearly defined organizational structure within the Group withformally defined lines of responsibility and delegation of authority. A process ofhierarchical reporting has been established which provides for a documented trailof accountability.

Significant changes in the business and the external environment are reported tothe Board during the Board meetings. Quarterly financial and other informationare also provided to the Audit Committee and the Board. This oversight reviewenables the Board to control and evaluate the business performance so as toensure that the Group is achieving its corporate objectives. The role of the AuditCommittee in respect of its review of the system of internal controls is describedin the Audit Committee Report included in this annual report.

There is also submission of monthly financial and operational information to theOperating Committee (the composition of which has been approved by the Board)that includes the monthly and year-to-date financial results and comparisons tothe pre-determined key performance indicators. Based on this monitoring ofresults against budget, significant variances are identified and managementaction taken, where necessary.

Statement on Internal Control24 DiGi.Com Berhad (425190-X)

There is an annual budgeting and business plan process where the operatingunits would prepare budgets for the forthcoming financial year and for whichthese are approved by the Operating Committee and the Board. The OperatingCommittee also review quarterly forecasts prepared and submitted by themanagement.

Other control procedures include the establishment of appropriate limits ofauthority for the Board, the Operating Committee and senior management forappropriate approval of transactions. There are established policies on health andsafety, employees training and development, staff performance and evaluation.These procedures are relevant across the Group’s operations and provide forcontinuous assurance to be given to management and, finally to the Board.

Enterprise Risk Management Framework

The Board with the assistance of the internal audit function reviewed the riskmanagement processes of the various operating businesses units with the aim of strengthening the risk management functions across the Group.

The consolidated risk profile of the Group was updated during the financial year.A summary of the key findings was subsequently submitted to the AuditCommittee for consideration.

For the purposes of further enhancing the Group’s risk management process, the following initiatives would be undertaken in 2004:

• A Risk Management Committee, to be headed by the Chief Executive Officer,shall be established with the responsibility of identifying and communicating to the Board via the Audit Committee, the critical risks (present and potential)the Group faces, their changes, and the management action plans to managethe risks.

• A full time dedicated Risk Officer shall coordinate the enterprise riskmanagement within the Group.

• A Risk Management Manual will be issued which outlines the risk managementframework for the Group and offers practical guidance to all employees on riskmanagement issues.

• There will be a requirement to submit quarterly risk management reports tothe Heads of functions for reporting to the Group Risk Management Committee.


Internal Audit Function

The Group has in place an internal audit function, which assists the Board inconducting appropriate reviews to ensure that key controls established by theBoard and management are operating effectively in order for the Board toachieve the objective of ensuring the adequacy and effectiveness of the systemof internal control.

Internal audit reviews the control processes implemented by the management,and reports to the Audit Committee on a quarterly basis. Internal audit adopts arisk-based approach in the review of the internal controls in the key activities ofthe Group’s businesses on the basis of an annual internal audit plan that hadbeen presented to and approved by the Audit Committee.

Weaknesses of Internal Controls that Result in Material Losses

There were no material losses incurred during the current financial year as aresult of weaknesses in internal control. Management continues to takemeasures to strengthen the control environment.

Non-Audit Fees

The amount of non-audit fees paid to external auditors for the financial yearended 31 December 2003 is RM88,600.

Material Contracts

There were no material contracts entered into by the Company and itssubsidiaries which involves directors’ and major shareholders’ interests either stillsubsisting at the end of the financial year ended 31 December 2003 or enteredinto since the end of the previous financial year.

Statement on Internal Control

Other Compliance Information



Audit Committee Report

Composition

Dato’ Ab. Halim Bin MohyiddinChairman/Independent Non-Executive Director

Tun Dato’ Seri Dr. Lim Chong EuMember/Independent Non-Executive Director

Ole Bjorn SjulstadMember/Non-Independent Non-Executive Director

Meetings

The Audit Committee held five meetings during the financial year ended31 December 2003 which were attended by all the members. Representatives ofthe external auditors and other officers of the Group were also invited to attendand brief the members on specific issues during deliberations by the AuditCommittee.

Summary of Activities

The activities undertaken by the Audit Committee during the financial year ended31 December 2003 included the following:

• Reviewed the quarterly unaudited financial results/reports and annual auditedfinancial statements before submission to the Board for consideration andapproval;

• Reviewed the external auditors’ scope of work and audit plans for the year;

• Reviewed and discussed the external auditors’ audit report and areas ofconcern in the management letter thereof, including management’s response;

• Assessed the adequacy and effectiveness of the system of internal control andaccounting control procedures and the weaknesses of the Group’s operatingunits by reviewing the various internal audit reports and managementresponses thereto and ensuring significant findings are adequately addressedby management;

• Reviewed the adequacy and relevance of the scope, functions and resources ofinternal audit and that it has the necessary authority to carry out its work; and

• Reported to the Board on its activities and significant findings and results.

Internal Audit Function

The Group has an established Internal Audit Division which assists the AuditCommittee in the discharge of its duties and responsibilities. The Group’s InternalAudit Division conducted programmed independent reviews and evaluated riskexposures relating to the Group’s governance, operations and informationsystems. The audit reviews also included assessing the means of safeguardingassets; and the economy and efficiency with which resources are employed.

Further details of the activities of the Internal Audit Division are set out in theStatement on Internal Control on pages 24 to 26.

Terms of Reference

1. Membership

The Committee shall be appointed by the Board from amongst the Directorsand shall consist of not less than three members, a majority of whom shall beIndependent Directors and at least one member of the Committee must be amember of the Malaysian Institute of Accountants or such other qualificationsand experience as approved by the Malaysia Securities Exchange Berhad.

A quorum shall consist of two members and a majority of the memberspresent must be Independent Directors.

If a member of the Audit Committee resigns, dies or for any other reasonceases to be a member with the result that the number of members isreduced to below three, the Board of Directors shall, within three months ofthat event, appoint such number of new members as may be required tomake up the minimum number of three members.

2. Chairman

The Chairman of the Committee shall be an Independent Director appointedby the Board. He shall report on each meeting of the Committee to the Board.

3. Secretary

The Company Secretary shall be the Secretary of the Committee and shall beresponsible, in conjunction with the Chairman, for drawing up the agenda andcirculating it, supported by explanatory documentation to the Committeemembers prior to each meeting.

The Secretary shall also be responsible for keeping the minutes of meetings ofthe Audit Committee and circulating them to the Committee members and tothe other members of the Board of Directors.

Audit Committee Report28 DiGi.Com Berhad (425190-X)


4. Frequency of Meetings

Meetings shall be held not less than four times a year and will normally beattended by the Officer charged with the responsibilities of the Group’sfinance and Head of Internal Audit. The presence of external auditors will berequested if required and the external auditors may also request a meeting ifthey consider it necessary.

The Committee may regulate its own procedure in lieu of convening a formalmeeting by means of video or teleconferencing or any other means of audioor audio-visual communications.

5. Authority

The Committee is authorised by the Board to investigate any activity within its terms of reference and shall have unrestricted access to both the internaland external auditors and to all employees of the Group. The Committee isalso authorised by the Board to obtain external legal or other independentprofessional advice as necessary.

The Committee is also authorised to convene meetings with the externalauditors excluding the attendance of the executive members of theCommittee, wherever deemed necessary.

6. Duties

The duties of the Committee shall be :

(a) To consider the appointment of external auditors, the audit fee and any questions of resignation or dismissal including recommending thenomination of person or persons as external auditors;

(b) To discuss with the external auditors where necessary, on the nature andscope of audit and to ensure coordination of audit where more than oneaudit firm is involved;

(c) To review the quarterly results and year-end financial statement prior tothe approval by the Board, focusing on:

• going concern assumption

• compliance with accounting standards and regulatory requirements

• any changes in accounting policies and practices

• significant issues arising from the audit

• major judgemental areas

(d) To prepare Audit Committee Report at the end of each financial year;

(e) To discuss problems and reservations arising from the interim and finalexternal audits, and any matters the external auditors may wish todiscuss (in the absence of management, where necessary);

(f) To review the external auditors’ management letter and management’sresponse;

(g) To review any related party transaction and conflict of interest situationthat may arise within the Company or Group including any transaction,procedure or course of conduct that raises question of managementintegrity;

(h) To do the following in respect of the internal audit function:

• review the adequacy of scope, functions and resources of the internalaudit function and that it has the necessary authority to carry out itswork;

• review internal audit programme;

• ensure coordination of external audit with internal audit;

• consider the major findings of internal audit investigations andmanagement’s response, and ensure that appropriate actions are taken on the recommendations of the internal audit function;

• review any appraisal or assessment of the performance of the staff ofthe internal audit function;

• approve any appointment or termination of senior staff member of theinternal audit function;

• inform itself of resignations of internal audit staff members and providethe resigning staff member an opportunity to submit his/her reason forresignation;

• to monitor related party transactions entered into by the Company andits subsidiaries, and to ensure that the Directors report such transactionsannually to shareholders via the annual report;

• to review and monitor the effectiveness of internal control systems andto evaluate the systems with the external auditors.

(i) To carry out such other responsibilities as may be defined jointly by theAudit Committee and the Board of Directors;

(j) In compliance with Paragraph 15.17 of the Malaysia Securities ExchangeBerhad (‘the Exchange’) Listing Requirements, where the Committee is of the view that a matter reported by it to the Board has not beensatisfactorily resolved resulting in a breach of the Listing Requirements,the Committee must promptly report such matter to the Exchange.


Audit Committee Report


Tore JohnsenChief Executive Officer

Profile of Chief Executive Officer

responsible for the cellular businessof NMT-450/900 and GSM 900networks. With his subsequentappointment as Project Director at Mobility, Telenor International, he was tasked with providing supportfor Telenor’s greenfield and mobileacquisition activities, as well as theirinternational mobile ventures. Justprior to joining DiGi as Head ofCorporate Strategy in January 2000,he was the Mobile Product Director at Telenor Asia in Singapore. Heassumed duties as DiGi’s ChiefOperating Officer on February 15,2001, before being appointed as Chief Executive Officer of DiGi.ComBerhad and DiGi TelecommunicationsSdn Bhd on January 1, 2004.

Tore Johnsen is the Chief ExecutiveOfficer of DiGi.Com Berhad and DiGiTelecommunications Sdn Bhd. Heobtained a Masters degree in ElectricalEngineering from the University ofTrondheim, Norway in 1972, beforeembarking on a long and distinguishedcareer at Telenor. He began as anengineer at Telenor Radio TransmissionOffice in 1974, and advancing through the ranks, soon increased his involvement in Telenor’s mobileactivities. He gained extensiveinternational experience in variouscellular business areas in hisappointment as Senior Advisor andDeputy CTO of Telenor Mobil AS. This naturally led to his next portfolioas Head of Product Management

Management Group32 DiGi.Com Berhad (425190-X)

Erik AasHead, Mobile

Khor Choo LinGM, Human Resource &Administation

Jon EddyChief Technical Officer

Tan Lay SweeGM, Internal Audit

Ho MengChief Financial Officer

Chua Seok ThengChief Information Officer

Tan Kim ShahSr GM, International

Chan Nam KiongGM, Sales & Distribution

Christina Ng Wai MengGM, Customer Services


Tore JohnsenChief Executive Officer

Roslan bin RosliDGM, Regulatory, Legal &Domestic Carrier Services

Jennifer NelsonSr Manager, CorporateCommunications

Documents

DiGi.Com Berhad - Boardroom Limited · DiGi.Com Berhad (425190-X) 1 Aspiration Statement and Key Principles Corporate Milestones Corporate Information Directors’ Profiles Statement