Dagang NeXchange Berhad Annual Report 2019

KEY MESSAGES annual report 2019 15 BUSINESS RISKS Being in investment heavy business, the Group is exposed to risks relating to return on investments. The Management monitors the progress of the Group’s investments specifically new ones on monthly basis. This is carried out actively to ensure any risks arising are mitigated timely with fast decision making. Where required, the Management directly participates in key activities to protect the investment interest and mitigate financial exposure. DNeX major contracts are primarily with the Government. By virtue of this, the Group is exposed to risks when government policies change. Recent change of Government somewhat affects DNeX's businesses where certain contracts and projects awarded by the previous administration were reassessed by the contract awarder. On 10 July 2018, Dagang Net received a notice of proposed decision (“Proposed Decision”) from the Malaysia Competition Commission (“MyCC”) pursuant to Section 36 of the Competition Act 2010 [Act 712] (“MyCC Act”). The Proposed Decision by MyCC is pursuant to the investigation on alleged infringement by Dagang Net of one of the prohibitions under Part 1 of the MyCC Act. MyCC issued the Proposed Decision under Section 36 of the Act against Dagang Net for engaging in conduct which amounts to an abuse of its dominant position in breach of Section 10(1) read with Section 10(2)(c) and Section 10(3) of the Act. In its Proposed Decision, MyCC proposed to impose a financial penalty of RM17,397,695.30 and remedial action to be taken by Dagang Net. The oral representations were heard before a panel appointed by MyCC on 16 January 2019, 25 April 2019, and 29 July 2019 respectively. Dagang Net is currently awaiting decision from MyCC. As technology is the key enabler of our services, the Group is also exposed to technology risks relating to technological security, development, integration and infrastructure. Our technological assets are strictly maintained with continued updates and assessments to meet the required service level agreements and standard. Our technology staff developments are also kept well abreast with current methodology and technology advances in order to ensure processes are functioning, updated and working efficiently. Back-ups, secondary locations and contingency plans are in place to protect business and service continuity. DNeX takes adoption and compliance to governing bodies and services rendered to Government administration seriously. We strive to provide our services by adhering to all guidelines, professionalism and of quality. The same level of effort is directed towards agencies and communities that are linked to our systems. The Group continually invests in improving business expansion, internal resources, customer services, system reliability, technological advancement, and stakeholder management activities in view of retaining customer satisfaction and loyalty.