Serba Dinamik Annual Report 2021

Integrated Report 2021 87 DEAR SHAREHOLDERS, This annual report will be unlike the four previous annual reports since the listing of Serba Dinamik on the Main Board of Bursa Malaysia on 8 February 2017. As the company has decided to change its financial year end ("FYE") from 31 December 2020 to 30 June 2021 due to the continuous extension of the Movement Control Order ("MCO") in Malaysia and lockdowns in countries where it is operating in, this annual report will contain materials encompassing a period of 18 months. For the record, the global health crisis which emanated from Wuhan, China in late 2019 has hampered the Group’s ability to finalise financial statements ("FS"), hence the requirement of more time to finalise FS that cover the Group’s expansion of its operations in new countries. In a way, the extension of the company’s FYE is also intended to facilitate better audit planning and allocation of resources to avoid the peak financial reporting period. The new FYE aside, there is surely no hiding that Serba Dinamik has found itself “on the reverse gear” with massive erosion of its share price and market capitalisation following the flagging of statutory audit matters in its FY2020 accounts by the company’s former external auditor KPMG PLT (as per the Bursa Malaysia filing dated 25 May 2021). Albeit the net loss of RM185.37 million for the year, Serba Dinamik recorded total revenue of RM8.61 billion for the cumulative 18-month period ended 30 June 2021. Nevertheless, the Group has shown stellar year-on-year growth in its financial performance since its listing. In retaliation to KPMG’s allegations that Serba Dinamik has in excess of RM4.54 billion in questionable transactions in which the company has clarified and denied point-for-point, legal redress was sought by initiating a civil claim against KPMG on the grounds of professional negligence, breach of contract and breach of statutory duty on broadly the following grounds, among others. This has led to the resignation of KPMG as Serba Dinamik’s external auditor on 24 June 2021, prompting the eventual appointment of Nexia SSY PLT as the company’s new external auditor on 3 August 2021. Against such backdrop, Serba Dinamik wishes to assure its shareholders that the company is still in good hands by not letting the accounting saga overwhelms its day- by-day operations. In essence, it is still Business As Usual (BAU) at the Group with the key focus being proactively sourcing for new income streams - or expand the scope of existing ones - to enhance earnings and drive shareholders’ value. This is by no means an easy task given Serba Dinamik was forced at one stage to contend with an en masse resignation of its independent directors in view of their disagreement with the way the company was handling its so-called accounting saga. In addition to that, the company had also taken in its stride to facilitate the appointment of Ernst & Young Consulting Sdn. Bhd. ("EY") as the special independent reviewer to assess the veracity of the audit issues raised by its former auditor KPMG. Alongside its goals of strengthening the composition of its Board with right talents is the decision to implement an internal restructuringexerciseat seniormanagement level which culminates in the establishment of a new deputy CEO position. Therealignmentexercisewhichentails theappointment of Dr Mohamed Ackiel Mohamed as deputy CEO with effect from 1 October 2021 has also led to the appointment of a few key management personnel as heads of region in certain geographic business areas where Serba Dinamik possesses strong presence. In essence, such re-grouping manoeuvre is timely for Serba Dinamik to ensure a more effective global operation which will ultimately enable the Group to continue delivering its shareholder’s mandate. OIL PRICE OUTLOOK In all fairness, the company’s earnings prowess for the 18-month period ended 30 June 2021 must be weighed against extreme volatility of the oil & gas ("O&G") market at the height of the COVID-19 pandemic. Recall that during the first half of 2020, global responses to the COVID-19 pandemic had led to steep declines in global petroleum demand, hence the massive fluctuation of crude oil prices. As petroleum demand fell, West Texas Intermediate ("WTI") crude oil was traded at negative prices on 20 April 2020, the first time the price for the WTI futures contract fell to less than zero since trading began in 1983. CHAIRMAN’S STATEMENT