m3 technologies (asia) berhad (482772-d) building upon a ... - 1333323329046...10200 penang,...

Unit 809, Block BPusat Dagangan Phileo IIJalan SS16/1146350 Petaling JayaSelangor Darul EhsanMalaysiaTel: +603 7955 0018Fax: +603 7955 8017

www.m3tech.com.my

M3 Technologies (Asia) Berhad (482772-D)

annual report | 2012

Building upon A Solid Foundation

Corporate Information 2

Corporate Structure 4

Financial Highlights 5

Directors’ Profile 6

Chairman’s Statement 10

Statement on Corporate Governance 13

Statement on Internal Control 18

Audit Committee Report 20

Statement of Directors’ Responsibility 23

Additional Compliance Information 24

Financial Statements 25

List of Property 88

Analysis of Shareholdings 89

Notice of Annual General Meeting 91

Statement Accompanying Notice of Annual General Meeting 94

Appendix I 95

Notice of Nomination of Auditors 96

Proxy Form Enclosed

contents

M3 Technologies (AsiA) BerhAd (482772-d) | Annual report 2012

2 corPorATe inForMATion

BoArd oF direcTors chew shin Yong, Mark Executive Chairman

lim seng Boon Managing Director lester ratnakumar neil Francis Executive Director cum Group Chief Operations Officer

Muhammad nagib gopal Bin Abdullah Independent Non-Executive Director chin chee Wing Independent Non-Executive Director

Mark Wing Kong Independent Non-Executive Director

AUdiT coMMiTTee Mark Wing KongChairman

Muhammad nagib gopal Bin Abdullah

chin chee Wing

noMinATion coMMiTTee Muhammad nagib gopal Bin Abdullah Chairman

Mark Wing Kong

chin chee Wing

reMUnerATion coMMiTTee chin chee Wing Chairman

lim seng Boon

Mark Wing Kong

coMPAnY secreTAries Tea sor hua (MACS 01324) chan Bee Fang (MAICSA 7032385)

PrinciPAl BAnKers Malayan Banking Berhad

AUdiTors ERNST & YOUNG Chartered Accountants


3

corPorATe oFFice Unit 608, 707 & 1007, Block A, Pusat Dagangan Phileo II, Jalan SS 16/11, 46350 Petaling Jaya, Selangor Darul Ehsan, Malaysia. Tel : 603-7955 1101 Fax : 603-7955 1103

heAd oFFice Unit 809, Block B, Pusat Dagangan Phileo II, Jalan SS 16/11, 46350 Petaling Jaya, Selangor Darul Ehsan, Malaysia. Tel : 603-7955 0018 Fax : 603-7955 8017

regisTered oFFice Third Floor, No.79 (Room A) Jalan SS 21/60, Damansara Utama, 47400 Petaling Jaya, Selangor Darul Ehsan, Malaysia. Tel : 603-7728 4778 Fax : 603-7722 3668

shAre regisTrAr Securities Services (Holdings) Sdn. Bhd. Suite 18.05 MWE Plaza, No.8 Lebuh Farquhar, 10200 Penang, Malaysia. Tel : 604-263 1966 Fax : 604-262 8544

sTocK eXchAnge Bursa Malaysia Securities Berhad (ACE Market)

lisTing Stock Name: M3TECH Stock Code: 0017

WeBsiTe www.m3tech.com.my

corPorATe inForMATion (cont’d)


4 corPorATe sTrUcTUre

M3 Technologies (AsiA) BerhAd

93.02%AKn Messaging Technologies(Xiamen) co., ltd.

100%M3 Technologies (shenZhen) co., ltd.

100%Way Way innovations co., ltd.

100%M3 Technologies Middle east FZe

100%M3 Mobile Technologies (s) Pte. ltd. (singapore)

95%M3 Technologies (Thailand) co., ltd.

100%Messaging Technologies (hong Kong) ltd.

60%M3 Technologies Pakistan (Private) limited

80% PT surya genta Perkasa (indonesia)

100% M3 AsiA sdn. Bhd.

100% M3 online sdn. Bhd.

100%Virtue Partners international limited(British Virgin island)

60%M3Asia distribution (s) Pte. ltd.(singapore)

20%M3 interactive (s) Pte. ltd.(singapore)


5

56,285

FinAnciAl highlighTs

30/6/2008 30/6/2009 30/6/2010 30/6/2011 30/6/2012rM’000 rM’000 rM’000 rM’000 rM’000

Turnover 32,319 34,984 39,847 50,902 56,285

Profit Before Tax 7,853 8,676 4,063 7,441 7,747

Paid-up Share Capital 16,352 16,352 16,352 16,352 16,352

Net Tangible Assets (NTA) 30,548 33,560 32,307 35,385 37,758

TUrnoVer

60,000

50,000

40,000

30,000

20,000

10,000

0

2008

32,319 34,98439,847

50,902

2009 2010 2011 2012

PAid-UP shAre cAPiTAl

20,000

15,000

10,000

5,000

0

2008

16,352 16,352 16,352 16,352 16,352

2009 2010 2011 2012

neT TAngiBle AsseTs (nTA)

45,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

5,000

0

2008

30,54833,560 32,307

35,385 37,758

2009 2010 2011 2012

ProFiT BeFore TAX

10,000

8,000

6,000

4,000

2,000

0

2008 2009 2010 2011 2012

7,853

8,676

4,063

7,4417,747


6 direcTors’ ProFile

cheW shin Yong, MArK

Mr. Chew Shin Yong, Mark, a Singaporean aged 44, was appointed to the Board on 27 February 2008 as an Executive Director and is now the Executive Chairman of the Company. Mr. Chew was also responsible for setting up the Hong Kong office of Messaging Technologies and is involved in its daily operations. In 1996, Mark graduated from Kingston University in the UK with a Bachelor of Science Degree in Computer Information Systems Design. He then obtained a Master’s Degree in Business Administration from the University of Surrey, also in the UK.

In 1997, Mark joined the Malahon Group of Companies in their stockbroking division, Malahon Securities Limited, and was appointed as a Director in 2002, having been a registered dealer with the Hong Kong Exchanges and the Securities and Futures Commission of Hong Kong. He currently sits on the Board of Malahon Credit Company Limited, which invests primarily in property.

Mr. Chew co-founded Mejority Capital Limited in 2012 and as a Principal, is actively involved in the firm’s public equity business via Mejority Securities Limited, a participant of the Stock Exchange of Hong Kong.


7

liM seng Boon

lesTer rATnAKUMAr neil FrAncis

Lim Seng Boon, a Malaysian aged 55, is the Managing Director and founder of the Company. He was appointed to the Board on 11 June 1999. He is a member of the Remuneration Committee of the Company. He is also a substantial shareholder of the Company.

Mr. Lim possesses over 20 years of experience in the computer/information technology industry, both locally and abroad. His experience ranges from computers to system integration, network implementation and the development of the business applications. In 1984, he established World Value Sdn. Bhd., a company dealing with computer hardware and systems integration.

He was also the key person responsible for the establishment of Multisoft Business Systems Sdn. Bhd., a company which has developed numerous business applications software focusing on the concept of messaging through the internet. He has established numerous ties with local and foreign corporations, namely Advox of Sweden, Infinite Technology of the USA, Microsoft Malaysia, EasyCall Malaysia and Celcom Berhad. He was solely responsible for the successful alliance between Advox’s technology in messaging and EasyCall pagers in January 1999.

Lester Ratnakumar Neil Francis, a Malaysian aged 42, was appointed to the Board on 27 May 2008 as an Executive Director and Group Chief Operations Officer of the Company. Mr. Francis graduated with a Bachelor of Applied Science Degree from Victoria University of Technology, Australia in 1992.

Upon his return to Malaysia, Mr. Francis has been actively involved in the development of the local fitness industry and the management of health & fitness facilities. Mr. Francis was previously the General Manager of Dataco (M) Sdn. Bhd., a leading, licensed Service Provider for Premium Rate Audiotex/Interactive Voice Response services. He was also actively involved in the TV production arm of Dataco, and acted as the Production Manager for all the company’s production efforts. He was at Dataco from 1997 - 1999 before he moved to M3 Technologies (Asia) Berhad (“M3Tech”) upon its incorporation.

His main responsibilities as the Group Chief Operations Officer and Executive Director are to maximise the shareholders’ wealth, focusing on improving the Group’s operational efficiency, performance & business development strategies and charting the future growth and direction of the Group regionally.

His experience in the industry for the past 13 years has proven invaluable in M3Tech’s growth locally and regionally.

direcTors’ ProFile (cont’d)


8 direcTors’ ProFile (cont’d)

chin chee Wing

MUhAMMAd nAgiB goPAl Bin ABdUllAh

Muhammad Nagib Gopal Bin Abdullah, a Malaysian age 56, was appointed to the Board on 23 November 2011 as an Independent Non-Executive Director of the Company. He is the Chairman of the Nomination Committee and a member of the Audit Committee of the Company. He holds a Master in Business Administration from University of Nottingham.

Encik Nagib is currently a General Partner of Ethos Capital Sdn Bhd and also responsible for all back office operations including governance, compliance and reporting.

From 2001 to 2006, he was a senior vice-president at Malaysian Venture Capital Management Bhd. He started his career in 1976 and has been attached with various companies including Ericsson Business Consulting Sdn. Bhd., TeamWorkz Technologies Sdn. Bhd., MCSB Systems Bhd. amongst others.

Chin Chee Wing, a Malaysian age 56, was appointed to the Board on 2 February 2012 as an Independent Non-Executive Director of the Company. He is the Chairman of the Remuneration Committee and a member of both the Audit Committee and Nomination Committee of the Company.

With more than 25 years in the ICT Industry, as Senior Manager of Acer Sales & Services, Chief Executive Officer/Managing Director of Wearnes Thakral Group and Chief Executive Officer/Managing Director of Epson Trading Malaysia, Mr. Chin has gained vast experience in the overall management and financial aspect of Companies involved in the design, manufacturing, sales and distribution of IT related products.

During his working career, he has contributed significantly to the progress and achievement of the Companies he managed and in the process, won many management awards. Notably, the most prestigious President Award from the President of Seiko Epson Inc., Japan.

He has also served a short stint as Chief Executive Officer in M-Mode Bhd. Prior to his retirement in 2011, he was the Group Chief Operating Officer in Pradonet Technology Sdn. Bhd., a Company involved in the design and development of security, identification, payment and authentication devices.


9

MArK Wing Kong

direcTors’ ProFile (cont’d)Mark Wing Kong, age 53, was appointed to the Board on 2 February 2012 as an Independent Non-Executive Director of the Company. He is the Chairman of the Audit Committee and a member of both the Remuneration Committee and Nomination Committee of the Company. He is a member of the Malaysian Institute of Certified Public Accountants.

Mr. Mark was with Kassim Chan & Co. from 1980 to 1986 and subsequently as Operations Manager with Arab-Malaysian Securities Sdn Berhad from 1986 to 1988. From 1988 to 1997, he was with Arab-Malaysian Merchant Bank Berhad (now known as AmInvestment Bank Berhad) where he was General Manager, Corporate Finance at time of resignation. Mr Mark is presently the Chief Executive Officer of LB Aluminium Berhad and an Independent Non-Executive Director of Oldtown Berhad.

Notes:

1. None of the Directors have family relationships with any other Directors and / or major shareholders of our Company except for Mr. Lim Seng Boon who is the spouse of Madam Goh Lee Lang, a major shareholder of the Company.

2. None of the above Directors have any personal interest in any business arrangement involving the Company except as disclosed in Note 27 of the Financial Statements on page 76 of this Annual Report.

3. None of our Directors have been convicted of any offences other than traffic offences in the past 10 years.


10 chAirMAn’s sTATeMenT

on behalf of the Board, i am pleased to present to you the Annual report of the group and company for the financial year ended 30 June, 2012.

reVieW oF oPerATions And FinAnciAl highlighTs For the financial year ended 30 June 2012, the Group recorded revenue of RM56 million and a net profit after tax of RM5.3

million as compared to a revenue of RM51 million and a net profit after tax of RM5.5 million recorded in the previous financial year.

Taking into consideration the in-roads that we have been making into different areas of business, each with their inevitable

building and inception requirements, the results remain promising. We therefore intend to maximize our return-on-investment for the financial year ending 30 June 2013 by increasing the efficiency of our business processes, and also by increased promotional and sales efforts to take the Group forward.


11chAirMAn’s sTATeMenT (cont’d)corPorATe deVeloPMenTs

The foundations that have been steadily laid in the past few years have now begun to bear fruit, but we are already looking past this, and are deploying more of our resources into electronic commerce and services, such as online retail and application development work. Ultimately, the Group’s direction is to build, operate, and excel in a trio of core businesses, namely: mobile solutions, online commerce, and trading & distribution.

Nevertheless, we are taking a cautious approach, and additions to our ranges of products and services are carefully selected so that the promotion and distribution does not create inefficiencies in their marketing and administration. Preferably, their development would also take advantage of the core competencies and efficiencies-of-scale that we have acquired.

M3 Technologies will continue to maintain and grow the mobile solutions aspect of the business. Even though these technologies have been present for a long time, with some in fact entering a sunset era, there are late-adopters entering the market. We will focus on increasing revenue from existing users, as well as the acquisition of new users.

We have now completed and launched several new websites and services. It has now established itself as a premier technology and application developer, creating “apps” for the most popular mobile operating services (Apple’s iOS, Google’s Android, and BlackBerry OS). Development and enhancement of the online store continues, adapting and employing cutting edge merchandising strategies in a concerted effort to increase our bottom-line.

M3 Asia’s relationships have developed so that we are now preferred distributors with suppliers approaching us to share ideas and strategies that may be mutually beneficial, as well as continuing our efforts to develop and maintain these direct relationships with manufacturers as well. Our focus in the last financial year remains on GPS-related products and Personal Navigational Devices (“PNDs”), the “Papago!” brand by Papago Inc. of Taiwan still holding pride of place. The “Hyper” range of products manufactured and developed by Sanho Corporation have also begun to make better contributions to our sales revenue. Their ever-increasing range of products for Apple merchandise have been joined by a diverse range of similar and complementary accessories from smaller manufacturers.

diVidend

In respect of the current financial year, there was an interim tax exempt dividend of 5% declared on 22 November 2011, and it was subsequently paid out on 6 January 2012 to the depositors who were registered in the Record of Depositors of the Company at the close of business on 9 December 2011.

indUsTrY Trends And deVeloPMenT

The industries that the Group operates in have their unique characteristics, but they all share the common trait of having enormous growth potential. Although penetration rates of mobile phones in Malaysia are quite advanced, they still lag behind Singapore and Thailand when compared amongst ASEAN countries. This shows that there is still room to grow, and increasing affordability will help to stimulate this growth.

The markets for smartphones such as Google’s Android based phones, or Apple’s iOS based phones, currently benefit from intense competition between manufacturers. New releases are regularly announced, and meet insatiable demand. This leads to lower prices via the used smartphone market, resulting in increased usage of such phones, to which we may market goods and services.

Advances continue to be made in online commerce, such as the ability of a user to access websites, along with more advanced and secure payment mechanisms that build confidence in users, making them less apprehensive about buying online. Fulfillment and logistics are also getting better, resulting in faster and more efficient delivery of good, with less errors, further increasing end-user confidence.


12

FUTUre oUTlooK

Now that we have identified and established the core businesses that we would like to concentrate on, we must endeavor to establish ourselves within each core business and industry that we operate in. Human and technical resources are now more clearly defined, and assigned in a manner that will avoid repetition of tasks, and minimize wastage.

Our retail presence throughout the South East Asian region has steadily increased their sales. However, the unfortunate flooding in Bangkok, Thailand in late 2011 had an adverse impact on our business because of accessibility problems to retailers, and retailers unwilling to keep stock for fear of damage to their inventory and/or looting. Barring such unforeseen circumstances, we remain confident that we may continue to grow our sales networks throughout FY 2013.

Mobile solutions are also evolving from the SMS-based services, to the creation and development of “apps”, both in-house and also at the request of clients. We will make an effort to become the preferred application developer of the mobile app market.

corPorATe sociAl resPonsiBiliTY

The Group views Corporate Social Responsibility as a continuing commitment by business to behave ethically and contribute to economic and social development while improving the quality of workforce, stakeholder’s value and the local community at large.

The Group has participated in various corporate events in support of various charities throughout the year and will continue to do so in the future.

BoArd chAnges There were several changes to the Board of Directors for the financial year ended 30 June 2012.

I would like to warmly welcome our new directors chronologically, firstly beginning with En. Muhammad Nagib Gopal Bin Abdullah, who was appointed to the Board on 23 November 2011. En. Nagib joins the Board of Directors as an Independent Non-Executive Director of the Company. Several months later, on 2 February 2012, both Mr. Mark Wing Kong and Mr. Chin Chee Wing were also appointed to the Board as Independent Non-Executive Directors of the Company. I look forward to a long and fruitful working relationship with our three new Directors, and am confident that their experience will be of great value to the Company.

I also wish to extend my sincere gratitude to En. Mohamad Najeb bin Ali who resigned on 2 February 2012, Ms. Lim Kooi Siang who resigned on 22 February 2012, and Mr. Lim Keong Yew who resigned on 10 May 2012. They have all moved on to focus more on their individual pursuits, and I wish them all the best in their every endeavor.

APPreciATion

On behalf of the Board of Directors, I wish to take this opportunity to extend my sincere gratitude and appreciation to members of our management team, as well as the staff for their hard work, commitment, and loyalty.

I also wish to record our gratitude and thanks to our customers, suppliers, business associates, bankers, government authorities, and most importantly, our shareholders for their continued support and confidence in the Company.

Chew Shin Yong, Mark Executive Chairman

chAirMAn’s sTATeMenT (cont’d)


13statement on corporate governanceThe Board of directors of M3 Technologies (Asia) Berhad (“the Board”) is committed towards ensuring good corporate governance practices are implemented and maintained throughout the company and its subsidiaries (“group”) as a fundamental part of discharging its duties to enhance shareholders’ values consistent with the principles and best practices set out in the Malaysian code on corporate governance (“the code”).

The Board recognises that the practice of good corporate governance is fundamental in this era of globalisation where corporate climate calls for enhancement of shareholders’ value, alongside safeguarding the interest of shareholders and stakeholders of the company.

The Board is pleased to state and affirm the means and manner which the group has applied the principles, and state the extent to which the group has complied with the Best Practices of the code during the financial year under the review.

a. tHe BoarD

The Board is entrusted with the proper stewardship of the company’s resources for the best interest of its shareholders and also to steer the group towards achieving the maximum economic value possible. The members of the Board have extensive experience and expertise in a wide range of related and unrelated industries and have been selected based on their skills, knowledge and their ability to add strength to the leadership.

The directors are equally accountable for the company’s activities, strategy and financial performance. Particular attention is given to ensure that the strategies proposed by the Management of the company are fully discussed and critically examined by the Board.

composition and Balance of the Board

The strength of the Board lies in the composition of its members, who has a wide range of expertise, extensive experience and diverse background in business, finance and technical knowledge.

The current Board has six (6) members comprising three (3) executive directors (including Mr. chew shin Yong, Mark who is the executive chairman) and three (3) independent non-executive directors. This composition complies with rule 15.02 of the Ace Market listing requirements of Bursa Malaysia securities Berhad (“Bursa securities”) wherein it states that at least two (2) or one third (1/3) of the Board of directors of a listed company, whichever is higher, are independent directors. The profile of each director is presented separately in the annual report.

Mr. chew shin Yong, Mark is the executive chairman while Mr. lim seng Boon is the Managing director of the company. The chairman is responsible for the Board’s effectiveness and conduct, whilst the Managing director has overall responsibilities over the business and operation of the group. The clear division of functions and responsibilities between these two roles will ensure a balance of power and authority.

non-executive directors play a crucial supervisory function. The presence of independent non-executive directors are essential in providing unbiased and independent views, advice and judgement, ensuring a balanced and impartial board decision making process, as well as safeguarding the interests of other parties, such as minority shareholders. All non-executive directors do not participate in the day-to-day management of the group.

Board responsibilities

The Board provides overall strategic direction and effective control of the company. The Board has reserved appropriate strategic, financial and organisational matters for its collective decision. Key matters, such as approval of annual and interim results, acquisitions and disposals of material investment, material agreements, major capital expenditures, budgets, long term plans and succession planning for top management are reserved for the Board.

14


statement on corporate governance (cont’d)a. tHe BoarD (cont'd)

the Board meetings

Board meetings are held quarterly with additional meetings held when necessary. The Board met six (6) times during the financial year ended 30 June 2012.

The meeting attendance record of the directors is as follows:

Directors meeting attendancechew shin Yong, Marklim seng Boonlester ratnakumar neil FrancisMuhammad nagib gopal Bin Abdullah (appointed on 23 november 2011)chin chee Wing (appointed on 2 February 2012)Mark Wing Kong (appointed on 2 February 2012)lim Keong Yew (resigned on 10 May 2012)lim Kooi siang (resigned on 22 February 2012)Mohamad najeb bin Ali (resigned on 2 February 2012)

5/66/66/63/32/33/34/53/43/3

Board committees

As appropriate or whenever required as provided by the Article of Association, the Board has delegated certain responsibilities to the Board committees, which operate within clearly defined terms of reference. The Board committees are:-

a. audit committee

The composition, terms of reference and a summary of the activities of the Audit committee are set out separately in the Audit committee report as laid out in this Annual report.

b. nomination committee The nomination committee of the company (“nc”) is responsible for making recommendations on board

appointments and maintaining a balance of skills and experience on the board and its committees.

nc comprises exclusively of independent non-executive directors and its current members are as follows:

committee members DesignationMuhammad nagib gopal bin Abdullah(Appointed on 23 november 2011)

chairman, independent non-executive director

Mark Wing Kong(Appointed on 2 February 2012)

Member, independent non-executive director

chin chee Wing(Appointed on 2 February 2012)


nc met twice during the financial year ended 30 June 2012 and has undertaken responsibility for assessing and recommending new directors to the Board as well as reviewing the effectiveness and contribution of the Board and performance of each individual director.

c. remuneration committee

The main role and function of the remuneration committee of the company (“rc”) is to assist the Board in reviewing and administering a fair and transparent procedure for determining the executive directors’ remuneration packages, on the basis of their merit, qualifications, and competence, and having regard to the company’s financial results, individual performance, and comparable market statistics.

rc consists of three (3) members which mainly are independent non-executive directors. The current members of rc are as follows:

committee members Designationchin chee Wing(Appointed on 2 February 2012)

chairman, independent non-executive director

Mark Wing Kong(Appointed on 2 February 2012)


lim seng Boon(Appointed on 10 May 2012)

Member, Managing director


15statement on corporate governance (cont’d) c. remuneration committee (cont’d)

rc met once during the financial year ended 30 June 2012, discussed and reviewed the remuneration packages in the light of the performance against agreed goals and objectives for each executive director.

supply of Information to the Board

Prior to each Board meeting, notice of meetings, setting out the agenda and accompanied by the relevant Board reports and documents are provided to the directors on a timely manner to allow the directors to peruse, obtain additional information and where applicable, seek further clarification on the matters to be tabled at the meeting.

Where applicable, there will be a schedule of matters reserved specifically for the Board’s decision, including the approval of corporate plans and budgets, acquisitions and disposals of major investments, change of management and control structure of the group, including key policies, procedures and authority limits.

The proceedings and resolutions passed at each Board Meeting are minuted and kept in the statutory minutes book at the registered office of the company.

directors have access to all information within the company whether as full board or in their individual capacity, in furtherance of their duties. in addition, whenever independent professional advice is required by the directors, outside experts may be engaged at the company’s expense. Before incurring such professional fees, the director concerned must consult with the chairman, or with two (2) other directors (one of whom is a non-executive director). such advice was not sought by any of the directors for the financial year under review.

directors also have direct access to the advice and the services of the group’s company secretary. The Board is advised and updated on statutory and regulatory requirements pertaining to their duties and responsibilities as well as appropriate procedures for management of meetings.

appointments of the Board and re-election

The members of the Board are appointed in a formal and transparent practice as endorsed by the code. The nomination committee will make recommendations to the Board who will thereon assess the shortlisted candidates and arrive at a decision on the appointment of director or the Board will go through this entire process on its own. The company secretary will ensure that all appointments are properly made and that all legal and regulatory obligations are met.

in accordance with the Articles of Association of the company, at least one third of the Board shall retire from office and all directors shall retire from office at least once in every three (3) years, but shall be eligible for re-election. A retiring director shall retain office until the close of the meeting at which he/she retires.

Directors’ training

All directors of the company have attended and successfully completed the Mandatory Accreditation Programme (“MAP”).

The directors are encouraged to and, in accordance with their respective needs, attend briefings, seminars and other continuing education programmes to keep abreast with current developments in the industry as well as changes in laws and regulations.

seminars and conference attended by the directors during the financial year ended 30 June 2012 are as follows:

Directors programme

lim seng Boon • Bursa Malaysia’s half day governance Programme

lester ratnakumar neil Francis • Bursa Malaysia’s half day governance Programme

Mark Wing Kong • Workshop on key amendments of listing requirements and corporate disclosure guide• Advocacy sessions on disclosure for ceos and cFos

chin chee Wing • Mandatory Accreditation Programme (MAP)

saved as disclosed above, other directors were not able to attend any directors’ training during this financial year under review due to overseas travelling and busy schedule. however, they have kept themselves abreast on financial and business matters through readings to enable them to contribute to the Board.

16


statement on corporate governance (cont’d)B. DIrectors’ remUneratIon

remuneration policy and procedures

The remuneration committee recommends to the Board the remuneration framework and remuneration package of the executive directors. The level of remuneration reflects the experience, responsibilities, contribution and performance by each individual director. The determination of the fees of the non-executive directors is decided by the Board as a whole. directors do not participate in decisions regarding their own remuneration packages.

directors’ fees which are subject to shareholders’ approval are payable only to non-executive directors. For the year ended 30 June 2012, the Board proposed a fee of rM 48,000 per annum for each independent non-executive director.

Directors’ remuneration

details of the directors’ remuneration for the financial year under review are as follows:

salaryrm’000

Bonusrm’000

Feerm’000

totalrm’000

executive directorsnon-executive directors

945–

59–

–121

1,004121

total 945 59 121 1,125

The directors, whose remuneration falls within the following bands are as follows:

range executive non-executiveBelow rM50,000rM50,000 - rM100,000rM400,001 – rM450,000rM450,001 – rM500,000

–111

6*–––

* including 3 directors who have resigned during the financial year.

c. sHareHoLDers

shareholders and Investors relations

The Board acknowledges its role in representing and promoting the interests of shareholders, and its accountability to shareholders for the performance and activities of the group. Briefings and discussions sessions with analysts and investors were held by the Managing director. The group has also conducted analysts briefing on an ad hoc basis with fund managers and potential investors.

The company’s corporate website at www.m3tech.com.my also serves as one of the most convenient ways for shareholders and members of the public to gain access to corporate information , news and events relating to the group.

The group recognises the importance of timely and thorough dissemination of information to shareholders. in this regard, the information that is disseminated to the investment community conforms strictly with the Bursa securities disclosure rules and regulations. care is taken to ensure that no market sensitive information such as corporate proposals, financial results and other material information is disseminated to any party without first making an official announcement through Bursa securities.

The annual report has comprehensive information pertaining to the group, while various disclosures on quarterly and annual results provide investors with financial information.


17statement on corporate governance (cont’d)c. sHareHoLDers (cont’d) annual general meeting

The Annual general Meeting (“AgM”) is a crucial mechanism and it is the principal forum in shareholder communication. shareholders are notified of the meeting and provided with a copy of the company’s annual report twenty one (21) days before the meeting. At each AgM, the Board presents the progress and performance of the company and provides shareholders with an opportunity to ask for more information pertaining to the financial statements, without limiting the time and questions asked.

during the AgM, the chairman and Board will respond to queries and undertake to provide sufficient explanation and clarification on issues and concerns raised by the shareholders.

The Board has ensured that each item of special business included in the notice of the AgM is accompanied by a full explanation of the effects of the proposed resolution to facilitate full understanding and evaluation of the issues involved.

Where extraordinary general Meetings are held to obtain shareholders’ approval on business or corporate proposals, comprehensive circulars are sent to shareholders within prescribed deadlines in accordance with regulatory and statutory provisions.

D. accoUntaBILItY anD aUDIt

Financial reporting

The Board is aware of its responsibilities to the shareholders and the requirements to present a balanced and comprehensive assessment of the group’s financial position, by means of the annual and quarterly report and other published information. in this regard, the Board is primarily responsible to present a fair and balanced report of the financial affairs of the group, which is prepared in accordance with the companies Act, 1965 and the approved accounting standards set by the Malaysian Accounting standards Board.

The Audit committee plays a crucial role in assisting the Board to scrutinize the information for disclosure to shareholders and to ensure material accuracy, adequacy and timeliness.

Internal control

The Board acknowledges its overall responsibility for maintaining a sound system of internal controls to safeguard shareholders’ investment and group’s assets. The statement on internal control as set out in the annual report providing an overview of the state of internal controls within the group.

relationship with auditors

The group has established a transparent and appropriate relationship with the group’s auditors, in seeking professional advice and ensuring compliance with the applicable accounting standards and statutory requirements in Malaysia. The Audit committee has been explicitly accorded the power to communicate directly with both the external Auditors and internal Auditors of the group.

during this financial year under review, the Audit committee also met up twice with the external Auditors without the presence of any executive Board members and Management.

e. statement oF compLIance WItH tHe Best practIces oF tHe coDe

The company is committed to achieve high standards of corporate governance throughout the group and to the highest level of integrity and ethical standards in all its business dealings. Apart from the above disclosure, the Board considers that it has complied throughout the financial year with the Best Practices as set out in the code.

18


statement on InternaL controLThis statement on internal control has been prepared in compliance to rule 15.26(b) of the Ace Market listing requirements of Bursa Malaysia securities Berhad (“Bursa securities”).

responsIBILItY oF tHe BoarD

The Board acknowledges its overall responsibility in maintaining a sound system of internal controls (including systems for compliance with applicable laws, regulations, rules, directives and guidelines) to safeguard shareholders’ investments and the group’s assets and for reviewing the effectiveness, adequacy and integrity of these systems. The Board also recognises that a sound system of internal controls is a concerted and continuing process, designed to reduce rather than eliminate the risk of failure in achieving the business objectives. it therefore provides reasonable assurance but not absolute assurance that the group will not be hindered in achieving its business objectives.

Following the publication of the statement on internal control: guidance for directors of Public listed companies (“the internal control guidance”), the Board confirms that there is an ongoing process for identifying, evaluating and managing significant risks faced by the group, that has been in place for the financial year and up to the date of approval of the annual report and financial statements, and that this process is regularly reviewed by the Board and accords with the internal control guidance.

controL strUctUre anD envIronment

The Board is fully committed to ensure that a proper and conducive control environment is maintained within the group to govern the manner in which the group and its employees conducting themselves. The key elements of internal controls are:

Independence of the audit committee

The Audit committee comprises of all independent non-executive directors and they have varied experience and qualification. The Audit committee has full access to both the internal as well as external auditors.

The Audit committee, on behalf of the Board, considers the effectiveness of the operation of internal control procedures in the group during the financial year. The Audit committee reviews internal control issues identified by the internal auditors, external auditors and management, and evaluates the adequacy and effectiveness of the group’s risk management and internal control system. it also conducts a review of the internal audit functions with emphasis on the scope of audits, quality and independence of the internal auditors.

organisation structure with defined roles and responsibilities

A clear-defined organizational set-up and reporting structure has also been established at all levels within the group and are aligned to business and operational requirements. There is adequate upper level managerial support wherein, the management team is cohesive and complements each other in terms of skills and experience.

Documented policies and procedures

Policies and control procedures which are developed by the senior management are also reviewed by the internal auditors for assessment of the effectiveness and adequacies of the internal control. They are updated regularly and distributed to all employees for their compliance and reference.

authority Limits

The limits of authority determine the respective levels of authority which are delegated to the employees of the respective levels to enable control of the group’s commitment of both capital and operational expenditure. The limits of authority are approved and updated as and when required by the senior management together with the executive directors.

Financial and operational information

Financial and operational information are prepared monthly for the executive directors’ review. This will ensure a close monitoring of the performance of the group and rectification measures can be taken promptly if there is any discrepancies and deviation from the plans.

The annual budgets which contain financial and operating targets, capital expenditure proposals and performance indicators, are reviewed and approved by the executive directors together with the senior management before being presented to the Board for final review and approval.


19statement on InternaL controL (cont’d)monItorIng anD revIeW

The Board has developed a monitoring and reporting process to continuously evaluate and monitor the significant risks in a formalised manner, which entail establishing procedures for reporting and monitoring for risks and controls. regular reviews will be conducted with additional reviews as and when required.

performance monitoring and review

Monthly performance reports are provided regularly and promptly to the executive directors for their review and assessment while the Board receives and discuss the quarterly reports on the financial results, business development and other corporate matters during the quarterly Board meeting.

monitoring controls

during the financial year, the Board and Audit committee have diligently continued their role as external overseers of governance and internal controls. The Audit committee reviews internal control issues identified by the internal auditors and monitors compliance with established policies and procedures on a regular basis.

Management also monitors the gaps and highlighted issues through the conduct of follow-up audits and has shown its commitment to improve on current processes and internal controls.

concLUsIon

The system of internal controls described in this statement is considered by the Board to be adequate and the risks are considered by the Board to be at an acceptable level within the context on the business environment throughout the group’s businesses. however, such system does not eliminate the possibility of human error, collusion, or deliberate circumvention of control procedures by employees and others. The Board is satisfied that for the financial year under review, there was no material losses, deficiencies or errors have arisen from any inadequacy or failure of the group’s system of internal control that would require separate disclosure in the group’s Annual report.

revIeW oF tHe statement BY eXternaL aUDItors

The external auditors have reviewed this statement on internal control for inclusion in the company’s Annual report for the financial year ended 30 June 2012 and reported to the Board that nothing has come to their attention that causes them to believe that the statement is inconsistent with their understanding of process adopted by the Board in reviewing the adequacy and integrity of the system of internal control.

This statement is made in accordance with a resolution of the Board dated 15 october 2012.

20


aUDIt commIttee reportThe Audit committee (“the committee”) was established by the Board of directors with the primary objective to assist the Board of directors in fulfilling its fiduciary responsibilities relating to corporate governance, system of internal controls, risk management processes and management and financial reporting practices of the group.

composItIon

The current members of the committee comprise:

chairman DesignationMark Wing Kong independent non-executive director

membersMuhammad nagib gopal Bin Abdullah independent non-executive directorchin chee Wing independent non-executive director

The committee comprises of 3 (three) members, all of whom are independent directors. chairman of the committee, Mr. Mark Wing Kong, is a member of the Malaysian institute of certified Public Accountants (MicPA). This composition complies with rule 15.09(1) of the Ace Market listing requirements of Bursa Malaysia securities Berhad (“Bursa securities”).

The members of the committee possess sound judgement, objectivity, independent attitude, management experience and knowledge of the industry.

terms oF reFerence

size and composition

The committee shall be appointed by the Board of directors amongst its members and consists of at least three (3) members, all of whom shall be non-executive directors and financial literate, with a majority of them being independent.

At least one member of the committee must be a member of Malaysia institute of Accountants or he must have at least three (3) years working experience and have passed the examinations specified in Part i of the 1st schedule of the Accountants Act 1967 or is a member of one of the associations of accountants specified in Part ii of the said schedule or a person who has fulfilled such other requirements as prescribed or approved by Bursa securities.

no alternate director of the Board shall be appointed as a member of the committee. in the event of any vacancy of committee resulting in the non-compliance with the listing requirements of Bursa securities, the Board shall appoint a new member within three (3) months.

meetings and attendance

The committee shall meet not less than four (4) times a year. Additional meetings may be called at any time depending on the scope of activities of the committee.

other Board members, senior management, internal and external auditors may be invited to attend meetings.

The committee should meet with the external auditors without the presence of executive board members at least twice in a financial year.

Functions

The functions of the committee are as follows:

i) To consider the appointment of external auditors, the audit fee and any questions of resignation of dismissal.

ii) To review with the external auditors:

a) the audit plan, scope and nature of the audit of the group;

b) their evaluation and findings of the system of internal controls; and the audit reports on the financial statements.

iii) To review the adequacy of the scope, function, competency and resources of internal audit and to ensure that it has the necessary authority to carry its work.


21aUDIt commIttee report (cont’d)terms oF reFerence (cont’D)

Functions (cont’d)

iv) To review any appraisal or assessment of the performance of the internal audit functions and to ensure that the internal audit function reports directly to the committee.

v) To review the quality, adequacy and effectiveness of the group’s internal control environment.

vi) To review the findings of the internal and external auditors.

vii) To review the quarterly and year end financial statements of the group, focusing particularly on any changes in or implementation of major accounting policies and practices, significant adjustments arising from the audit, the going concern assumption and compliance with applicable approved accounting standards and other legal and regulatory requirements.

viii) To review any related party transactions and conflicts of interest situation that may arise within the group including any transactions, procedures or course of conduct that raises questions of management integrity.

ix) To review the external auditors’ management letter and management’s response.

x) To review and verify the allocation of options pursuant to the employees’ share option scheme (“esos”) in compliance with the criteria as stipulated in the by law of esos of the group, if any.

xi) Any other function that may be mutually agreed upon by the committee and the Board which would be beneficial to the company and ensure the effective discharge of the committee’s duties and responsibilities.

authority

The committee is authorised by the Board to investigate any activity within its term of reference at the cost of the company:

i) to secure full and unrestricted access to any information pertaining to the company and its subsidiaries (“the group”).

ii) to communicate directly with the external auditors, internal auditors and all employees of the group. iii) to seek and obtain independent professional advice and to secure the attendance of outsiders with relevant experience

and expertise as it considers necessary.

iv) to convene meetings with external auditors and internal auditors or both, excluding the attendance of other directors and employees of the company, whenever deemed necessary.

meetIngs

during the year, the committee held a total of six (6) meetings. details of attendance of the committee members are as follows:-

committee members meeting attendanceMark Wing Kong (appointed on 2 February 2012 and re-designated as chairman on 22 February 2012)Muhammad nagib gopal Bin Abdullah (appointed on 23 november 2011)chin chee Wing (appointed on 2 February 2012)lim Kooi siang (resigned on 22 February 2012)Mohamad najeb bin Ali (resigned on 2 February 2012)

2/22/21/24/54/4

The company’s other Board members, internal auditor, external auditors, and certain senior management staff had attended the meetings at the invitation of the chairman of the committee.

22


aUDIt commIttee report (cont’d)sUmmarY oF actIvItIes

The committee had carried out the following activities during the financial year ended 30 June 2012 in discharging their duties and responsibilities:

·reviewed the quarterly financial results and annual audited financial statements of the company including the announcements pertaining thereto, before recommending to the Board for their approval and release of results to Bursa securities.

·reviewed with external auditors on their audit planning memorandum on the statutory audit of the group for the financial year ended 30 June 2012.

·reviewed with external auditors on the results and issues noted during their course of audit in relation to the financial statements of the company.

·reviewed with the internal auditor, the internal audit plan of the group.

·reviewed the results of the internal audit process to ensure that the recommendations made by the internal auditor and corrective actions taken by management are adequately addressed on a timely basis.

·reviewed the related party transactions transpired during the financial year under review.

InternaL aUDIt FUnctIon

The group’s internal Audit Function is outsourced to an independent professional consulting firm to assist the committee in maintaining a sound system of internal control. The internal audits were undertaken to provide independent assessments on the adequacy, efficiency and effectiveness of the group’s internal control systems in anticipating potential risks exposures over key business processes within the group. The committee has full access to internal auditor and received reports on all audits performed.

The resulting reports from the audits undertaken were forwarded to the Management for its attention and to take the necessary corrective actions as recommended. The Management is responsible for ensuring that corrective actions on reported weaknesses are taken within the required time frame.

during the financial year, the internal audit activities have been carried out in accordance to the internal audit plan, which have been approved by the committee.

The costs incurred for the outsourced internal audit function in respect of the financial year ended 30 June 2012 was rM 37,392.


23statement oF DIrectors’ responsIBILItY This statement is prepared pursuant to the Ace Market listing requirements of Bursa Malaysia securities Berhad.

The directors are required to prepare audited financial statements that give a true and fair view of the state of affairs, including the cash flow and results, of the group and the company as at the end of each financial year.

in preparing these financial statements, the directors have considered the following:

• the group and the company have used appropriate accounting policies, and are consistently applied;

• that reasonable and prudent judgements and estimates were made;

• that the approved accounting standards in Malaysia have been applied; and

• ensure the financial statements have been prepared on a going concern basis.

The directors are responsible for ensuring that the company maintains proper accounting records which disclose with reasonable accuracy the financial position of the group and the company, and which enable them to ensure that the financial statements comply with the companies Act 1965.

The directors have general responsibility for taking such steps that are reasonably available to them to safeguard the assets of the group and the company, and to prevent and detect fraud and other irregularities.

24


aDDItIonaL compLIance InFormatIonshare Buy Backduring the financial year, the company repurchased 943,000 of its own ordinary shares from the open market at an average price of rM0.27 per share. details of the share bought back and retained as treasury shares by the company during the financial year under review and up to 14 november 2012 are set out as below:

monthly Breakdown

no. of shares purchased and

retained as treasury shares

Highest pricerm

Lowest pricerm

average pricerm

total consideration paidrm

nov 2011dec 2011

10,000933,000

0.260.27

0.260.26

0.260.27

2,550247,452

As at 14 november 2012, a total of 2,557,500 ordinary shares have been bought back and held as treasury shares in accordance with section 67A of the companies Act, 1965. none of the treasury shares held was resold or cancelled during the financial year under review.

Utilisation of proceeds from corporate exerciseson 7 november 2012, 16,096,000 new ordinary shares of rM0.10 each in the company were issued at an issue price of rM0.2268 per share pursuant to the private placement exercise raising rM3,650,572.80 in proceeds.

The proceeds will be utilised for working capital purposes.

options, Warrants and convertible securitiesThere were no options, warrants or convertible securities issued by the company during the financial year.

Depository receipt programmeThe company did not sponsor any depository receipt Programme during the financial year.

Imposition of sanctions and penaltiesThere were no sanctions or penalties imposed on the company and its subsidiaries, directors or management by the relevant regulatory bodies during the financial year.

non-audit FeesThe amount of non-audit fees paid to the external auditors by the group for the financial year was rM16,100.

variation In results, profit estimate, Forecast or projectionThere were no material variance between the audited results for the financial year ended 30 June 2012 and the unaudited results previously announced by the company. The company did not release any profit estimate, forecast or projection for the financial year.

profit guaranteeThe company did not give any form of profit guarantee to any parties during the financial year.

material contracts Involving Directors’ and major shareholders’ InterestThere were no material contracts entered into by the company or its subsidiaries, involving directors’ and major shareholders’ interest during the financial year.

recurrent related party transactions of a revenue or trading natureThe list of recurrent related party transactions of a revenue or trading nature entered into by the group is disclosed in note 27 to the financial statements. For the financial year ended 30 June 2012, no shareholders mandate was required for the recurrent related party transactions of a revenue or trading nature entered into by the group pursuant to rule 10.09 of the Ace Market listing requirements of Bursa securities.

FInancIaL statements

directors’ report 26 - 29

statement by directors 30

statutory declaration 30

independent Auditors’ report 31-32

income statements 33

statements of comprehensive income 34

statements of Financial Position 35 -36

statements of changes in equity 37 -39

statements of cash Flows 40 - 41

notes to the Financial statements 42 - 86

supplementary information- Breakdown of retained Profits into realised and Unrealised 87

contents

26


The directors have pleasure in presenting their report together with the audited financial statements of the group and of the company for the financial year ended 30 June 2012.

prIncIpaL actIvItIes

The company is principally engaged in the provision of mobile solutions. The principal activities of the subsidiaries are set out in note 15 to the financial statements.

There have been no significant changes in the nature of these activities during the financial year.

resULts

group companyrm rm

Profit net of tax 5,278,852 207,423

Attributable to:owners of the parent 4,022,859 207,423non-controlling interests 1,255,993 –

5,278,852 207,423

There were no material transfers to or from reserves or provisions during the financial year other than as disclosed in the financial statements.

in the opinion of the directors, the results of the operations of the group and of the company during the financial year were not substantially affected by any item, transaction or event of a material and unusual nature other than as disclosed in the financial statements.

DIvIDenDs

The amounts of dividends paid by the company since 30 June 2011 were as follows:

rmin respect of the financial year ended 30 June 2011 as reported in the directors’ report of that year:second interim tax exempt dividend of 5%, on 161,904,240 ordinary shares, declared on 25 May 2011 and

paid on 28 July 2011 809,521Third interim tax exempt dividend of 5%, on 161,904,240 ordinary shares, declared on 18 August 2011 and

paid on 10 october 2011 809,521

in respect of the financial year ended 30 June 2012:First interim tax exempt dividend of 5%, on 161,894,240 ordinary shares, declared on 22 november 2011

and paid on 6 January 2012 809,4712,428,513

The directors do not recommend the payment of a final dividend for the financial year ended 30 June 2012.

DIrectors’ report


27

DIrectors

The names of the directors of the company in office since the date of the last report and at the date of this report are:

chew shin Yong, Marklim seng Boonlester ratnakumar neil FrancisMuhammad nagib gopal bin Abdullah (appointed on 23 november 2011)chin chee Wing (appointed on 2 February 2012)Mark Wing Kong (appointed on 2 February 2012)lim Keong Yew (resigned on 10 May 2012)lim Kooi siang (resigned on 22 February 2012)Mohamad najeb bin Ali (resigned on 2 February 2012)

DIrectors’ BeneFIts

neither at the end of the financial year, nor at any time during that year, did there subsist any arrangement to which the company was a party, whereby the directors might acquire benefits by means of acquisition of shares in or debentures of the company or any other body corporate. since the end of the previous financial year, no director has received or become entitled to receive a benefit (other than benefits included in the aggregate amount of emoluments received or due and receivable by the directors or fixed salary of a full-time employee of the company as shown in note 10 to the financial statements) by reason of a contract made by the company or a related corporation with any director or with a firm of which the director is a member, or with a company in which the director has a substantial financial interest, except as disclosed in note 27 to the financial statements.

DIrectors’ Interests

According to the register of directors’ shareholdings, the interests of directors in office at the end of the financial year in shares in the company during the financial year were as follows:

number of ordinary shares of rm0.10 each

name of director

1 July2011/Date of appointment acquired sold

30 June2012

Direct interest:lim seng Boon 12,681,000 824,000 – 13,505,000chew shin Yong, Mark 2,130,600 – – 2,130,600lester ratnakumar neil Francis 808,016 – – 808,016Muhammad nagib gopal Bin Abdullah 100,000 – (20,000) 80,000chin chee Wing 400,000 190,000 – 590,000

Deemed interest:lim seng Boon* * 24,186,840 – – 24,186,840chin chee Wing** ** 2,634,900 – – 2,634,900

* deemed interested by virtue of his spouse, Madam goh lee lang’s shareholdings in M3 Technologies (Asia) Berhad** deemed interested by virtue of his spouse, Madam cha lee Pin’s shareholdings in M3 Technologies (Asia) Berhad

none of the other directors in office at the end of the financial year had any interest in shares or options over shares in the company or its related corporations during the financial year.

lim seng Boon, by virtue of his interest in shares of the company is also deemed interested in shares of all the company’s subsidiaries to the extent that the company has an interest.

DIrectors’ report (cont’d)

28


treasUrY sHares

during the financial year, the company repurchased 943,000 of its own ordinary shares from the open market at an average price of rM0.27 per share. The total consideration paid for the repurchase including transaction costs was rM250,002. The shares repurchased are being held as treasury shares in accordance with section 67A of the companies Act, 1965.

As at 30 June 2012, the company held 2,557,500 shares as treasury shares out of its total 163,518,740 issued and paid-up ordinary shares. The treasury shares are held at a carrying amount of rM565,639. relevant details on the treasury shares are disclosed in note 20 to the financial statements.

otHer statUtorY InFormatIon

(a) Before the income statements, statements of comprehensive income and statements of financial position of the group and of the company were made out, the directors took reasonable steps:

(i) to ascertain that proper action had been taken in relation to the writing off of bad debts and the making of provi-sion for doubtful debts and satisfied themselves that all known bad debts had been written off and that adequate provision had been made for doubtful debts; and

(ii) to ensure that any current assets which were unlikely to realise their value as shown in the accounting records in the ordinary course of business had been written down to an amount which they might be expected so to realise.

(b) At the date of this report, the directors are not aware of any circumstances which would render:

(i) the amount written off for bad debts or the amount of the provision for doubtful debts in the financial statements of the group and of the company inadequate to any substantial extent; and

(ii) the values attributed to the current assets in the financial statements of the group and of the company misleading.

(c) At the date of this report, the directors are not aware of any circumstances which have arisen which would render adherence to the existing method of valuation of assets or liabilities of the group and of the company misleading or inappropriate.

(d) At the date of this report, the directors are not aware of any circumstances not otherwise dealt with in this report or financial statements of the group and of the company which would render any amount stated in the financial statements misleading.

(e) As at the date of this report, there does not exist:

(i) any charge on the assets of the group or of the company which has arisen since the end of the financial year which secures the liabilities of any other person; or

(ii) any contingent liability of the group or of the company which has arisen since the end of the financial year.

(f ) in the opinion of the directors:

(i) no contingent or other liability has become enforceable or is likely to become enforceable within the period of twelve months after the end of the financial year which will or may affect the ability of the group or of the company to meet their obligations when they fall due; and

(ii) no item, transaction or event of a material and unusual nature has arisen in the interval between the end of the financial year and the date of this report which is likely to affect substantially the results of the operations of the group or of the company for the financial year in which this report is made.



29

sIgnIFIcant events

significant events are disclosed in notes 14, 15, 16 and 20 to the financial statements.

aUDItors

The auditors, ernst & Young, retire and do not wish to seek re-appointment.

signed on behalf of the Board in accordance with a resolution of the directors dated 15 october 2012.

Lim seng Boon Lester ratnakumar neil Francis


30


We, lim seng Boon and lester ratnakumar neil Francis, being two of the directors of M3 Technologies (Asia) Berhad, do hereby state that, in the opinion of the directors, the accompanying financial statements set out on pages 33 to 86 are drawn up in accordance with Financial reporting standards and the companies Act, 1965 in Malaysia so as to give a true and fair view of the financial position of the group and of the company as at 30 June 2012 and of their financial performance and cash flows for the year then ended.

The information set out in note 35 to the financial statements have been prepared in accordance with the guidance on special Matter no.1, determination of realised and Unrealised Profits or losses in the context of disclosure Pursuant to Bursa Malaysia securities Berhad listing requirements, as issued by the Malaysian institute of Accountants.

signed on behalf of the Board in accordance with a resolution of the directors dated 15 october 2012.

Lim seng Boon Lester ratnakumar neil Francis

statUtorY DecLaratIonpursuant to section 169(16) of the companies act, 1965

i, lim seng Boon, being the director primarily responsible for the financial management of M3 Technologies (Asia) Berhad, do solemnly and sincerely declare that the accompanying financial statements set out on pages 33 to 87 are in my opinion correct, and i make this solemn declaration conscientiously believing the same to be true and by virtue of the provisions of the statutory declarations Act, 1960.

subscribed and solemnly declared by the abovenamed lim seng Boon at Petaling Jaya in the state of selangor darul ehsan on 15 october 2012: Lim seng Boon

Before me,

Pn Koh Twee Yong @ Koh Twee siewno: B357commissioner for oaths

statement BY DIrectorspursuant to section 169 (15) of the companies act, 1965


31

report on tHe FInancIaL statements

We have audited the financial statements of M3 Technologies (Asia) Berhad, which comprise the statements of financial position as at 30 June 2012 of the group and of the company, and the income statements, statements of comprehensive income, statements of changes in equity and statements of cash flows of the group and of the company for the year then ended, and a summary of significant accounting policies and other explanatory notes, as set out on pages 33 to 86.

Directors’ responsibility for the financial statements

The directors of the company are responsible for the preparation of financial statements that give a true and fair view in accordance with Financial reporting standards and the companies Act, 1965 in Malaysia, and for such internal control as the directors determine are necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ responsibility

our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with approved standards on auditing in Malaysia. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on our judgement, including the assessment of risks of material misstatement of the financial statements, whether due to fraud or error. in making those risk assessments, we consider internal control relevant to the entity’s preparation and fair presentation of financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

in our opinion, the financial statements have been properly drawn up in accordance with Financial reporting standards and the companies Act, 1965 in Malaysia so as to give a true and fair view of the financial position of the group and of the company as at 30 June 2012 and of their financial performance and cash flows for the year then ended.

InDepenDent aUDItors’ reportto the members of m3 technologies (asia) Berhad (Incorporated in malaysia)

company no: 482772 - D

32


report on otHer LegaL anD regULatorY reqUIrements

in accordance with the requirements of the companies Act, 1965 in Malaysia, we also report the following:

(a) in our opinion, the accounting and other records and the registers required by the Act to be kept by the company and its subsidiaries for which we have acted as auditors have been properly kept in accordance with the provisions of the Act.

(b) We have considered the financial statements and the auditors’ reports of all the subsidiaries of which we have not acted as auditors, which are indicated in note 15 to the financial statements, being financial statements that have been included in the consolidated financial statements.

(c) We are satisfied that the financial statements of the subsidiaries that have been consolidated with the financial statements of the company are in form and content appropriate and proper for the purposes of the preparation of the consolidated financial statements and we have received satisfactory information and explanations required by us for those purposes.

(d) The auditors’ reports on the financial statements of the subsidiaries were not subject to any qualification and did not include any comment required to be made under section 174(3) of the Act.

otHer reportIng responsIBILItIes

The supplementary information set out in note 35 on page 87 is disclosed to meet the requirement of Bursa Malaysia securities Berhad. The directors are responsible for the preparation of the supplementary information in accordance with guidance on special Matter no. 1, determination of realised and Unrealised Profits or losses in the context of disclosure Pursuant to Bursa Malaysia securities Berhad listing requirements, as issued by the Malaysian institute of Accountants (“MiA guidance”) and the directive of Bursa Malaysia securities Berhad. in our opinion, the supplementary information is prepared, in all material respects, in accordance with the MiA guidance and the directive of Bursa Malaysia securities Berhad.

otHer matters

This report is made solely to the members of the company, as a body, in accordance with section 174 of the companies Act, 1965 in Malaysia and for no other purpose. We do not assume responsibility to any other person for the content of this report.

ernst & Young teoh soo HockAF: 0039 no. 2477/10/13(J)chartered Accountants chartered Accountant

Kuala lumpur, Malaysia

15 october 2012

InDepenDent aUDItors’ report (cont’d)to the members of m3 technologies (asia) Berhad (Incorporated in malaysia) company no: 482772 - D


33

group companynote 2012 2011 2012 2011

rm rm rm rm

revenue 4 56,284,822 50,901,604 13,589,509 14,634,323cost of sales 5 (27,485,068) (23,850,224) (8,389,492) (7,352,322)gross profit 28,799,754 27,051,380 5,200,017 7,282,001

other items of incomeother income 6 264,435 344,750 1,672,713 2,249,301

other items of expenseAdministrative expenses (16,113,174) (14,677,901) (5,911,734) (6,326,693)selling and marketing expenses (4,853,254) (5,223,033) (667,309) (994,070)other expenses (310,217) (39,418) (50,620) (119,730)Finance costs 7 (6,712) (1,252) – –

share of results of a jointly controlled entity (33,389) (13,112) – –profit before tax 8 7,747,443 7,441,414 243,067 2,090,809

income tax expense 11 (2,468,591) (1,928,281) (35,644) (218,229)profit net of tax 5,278,852 5,513,133 207,423 1,872,580

profit attributable to:owners of the parent 4,022,859 4,712,659 207,423 1,872,580non-controlling interests 1,255,993 800,474 – –

5,278,852 5,513,133 207,423 1,872,580

earnings per share attributable to owners of the parent (sen)

Basic/diluted 12 2.49 2.91

Income statementsFor the financial year ended 30 June 2012

The accompanying accounting policies and explanatory notes form an integral part of the financial statements.

34


group company2012 2011 2012 2011

rm rm rm rm

profit net of tax 5,278,852 5,513,133 207,423 1,872,580other comprehensive income, net of tax:

Foreign currency translation (10,000) (524,655) – –total comprehensive income for the year 5,268,852 4,988,478 207,423 1,872,580

total comprehensive income attributable to:owners of the parent 4,130,450 4,325,191 207,423 1,872,580non-controlling interests 1,138,402 663,287 – –

5,268,852 4,988,478 207,423 1,872,580

statements oF compreHensIve IncomeFor the financial year ended 30 June 2012



35

note

group company2012

rm2011

rm2012

rm2011

rmassets

non-current assetsProperty, plant and equipment 13 3,640,756 3,798,973 1,195,430 1,356,140intangible assets 14 15,304,209 14,469,047 1,214,889 1,190,101investments in subsidiaries 15 – – 36,832,145 36,980,045interest in a jointly controlled entity 16 1,016,399 430,544 1,064,269 444,036deferred tax asset 24 – 107,954 – –

19,961,364 18,806,518 40,306,733 39,970,322

current assetsinventories 17 8,458,121 6,951,503 – –Trade and other receivables 18 16,471,397 15,054,540 12,236,992 11,063,112Tax refundable 266,203 78,216 95,545 68,423cash and bank balances 19 19,239,687 20,168,574 2,561,689 6,665,353

44,435,408 42,252,833 14,894,226 17,796,888total assets 64,396,772 61,059,351 55,200,959 57,767,210

equity and liabilities

equity attributable to owners of the parent share capital 20 16,351,874 16,351,874 16,351,874 16,351,874share premium 20 2,351,731 2,351,731 2,351,731 2,351,731Treasury shares 20 (565,639) (315,637) (565,639) (315,637)other reserves 21 (1,029,563) (1,137,154) 16,074,240 16,074,240retained earnings 22 31,915,972 29,512,105 17,331,383 18,742,952

49,024,375 46,762,919 51,543,589 53,205,160non-controlling interests 4,038,003 3,091,167 – –total equity 53,062,378 49,854,086 51,543,589 53,205,160

statements oF FInancIaL posItIon as at 30 June 2012


36


group companynote 2012 2011 2012 2011

rm rm rm rm

non-current liabilitiesloans and borrowings 23 152,075 34,933 – –deferred tax liabilities 24 158,005 289,556 – 104,642

310,080 324,489 – 104,642

current liabilitiesloans and borrowings 23 793,165 26,909 744,579 –Trade and other payables 25 9,392,795 9,350,268 2,912,791 3,647,887dividends payable – 809,521 – 809,521income tax payable 838,354 694,078 – –

11,024,314 10,880,776 3,657,370 4,457,408total liabilities 11,334,394 11,205,265 3,657,370 4,562,050total equity and liabilities 64,396,772 61,059,351 55,200,959 57,767,210

statements oF FInancIaL posItIon (cont’d)as at 30 June 2012



37statements oF cHanges In eqUItY

for the financial year ended 30 June 2012

att

ribu

tabl

e to

ow

ners

of t

he p

aren

tn

on-

cont

rolli

ng

inte

rest

sto

tal

equi

tyn

on-d

istr

ibut

able

Dis

trib

utab

le

shar

e ca

pita

lsh

are

prem

ium

trea

sury

sh

ares

Fore

ign

curr

ency

tr

ansl

atio

n re

serv

ere

tain

edea

rnin

gsto

tal

(not

e 20

)(n

ote

20)

(not

e 20

)(n

ote

21)

(not

e 22

)rm

rmrm

rmrm

rmrm

rmg

roup

at 1

July

201

016

,351

,874

2,35

1,73

1(3

08,6

87)

(749

,686

)26

,406

,953

44,0

52,1

852,

682,

933

46,7

35,1

18

tota

l com

preh

ensi

ve in

com

e–

––

(387

,468

)4,

712,

659

4,32

5,19

166

3,28

74,

988,

478

tran

sact

ions

wit

h ow

ners

incr

ease

in s

hare

of n

et a

sset

s as

a re

sult

of

addi

tiona

l inv

estm

ent i

n a

subs

idia

ry–

––

–11

,585

11,5

85(1

1,58

5)–

Purc

hase

of t

reas

ury

shar

es–

–(6

,950

)–

–(6

,950

)–

(6,9

50)

div

iden

ds p

aid

(not

e 32

) –

––

–(1

,619

,092

)(1

,619

,092

)(2

43,4

68)

(1,8

62,5

60)

Tota

l tra

nsac

tions

with

ow

ners

––

(6,9

50)

–(1

,607

,507

)(1

,614

,457

)(2

55,0

53)

(1,8

69,5

10)

at 3

0 Ju

ne 2

011

16,3

51,8

742,

351,

731

(315

,637

)(1

,137

,154

)29

,512

,105

46,7

62,9

193,

091,

167

49,8

54,0

86

38


statements oF cHanges In eqUItY (cont’d)for the financial year ended 30 June 2012

att

ribu

tabl

e to

ow

ners

of t

he p

aren

tn

on-

cont

rolli

ng

inte

rest

sto

tal

equi

tyn

on-d

istr

ibut

able

Dis

trib

utab

le

shar

e ca

pita

lsh

are

prem

ium

trea

sury

sh

ares

Fore

ign

curr

ency

tr

ansl

atio

n re

serv

ere

tain

edea

rnin

gsto

tal

(not

e 20

)(n

ote

20)

(not

e 20

)(n

ote

21)

(not

e 22

)rm

rmrm

rmrm

rmrm

rmg

roup

at 1

July

201

1 16

,351

,874

2,35

1,73

1(3

15,6

37)

(1,1

37,1

54)

29,5

12,1

0546

,762

,919

3,09

1,16

749

,854

,086

tota

l com

preh

ensi

ve in

com

e–

––

107,

591

4,02

2,85

94,

130,

450

1,13

8,40

25,

268,

852

tran

sact

ions

wit

h ow

ners

Purc

hase

of t

reas

ury

shar

es–

–(2

50,0

02)

––

(250

,002

)–

(250

,002

)d

ivid

ends

pai

d (n

ote

32)

––

––

(1,6

18,9

92)

(1,6

18,9

92)

(191

,566

)(1

,810

,558

)To

tal t

rans

actio

ns w

ith o

wne

rs–

–(2

50,0

02)

–(1

,618

,992

)(1

,868

,994

)(1

91,5

66)

(2,0

60,5

60)

at 3

0 Ju

ne 2

012

16,3

51,8

742,

351,

731

(565

,639

)(1

,029

,563

)31

,915

,972

49,0

24,3

754,

038,

003

53,0

62,3

78


39statements oF cHanges In eqUItY (cont’d)

for the financial year ended 30 June 2012n

on-d

istr

ibut

able

Dis

trib

utab

lesh

are

capi

tal

shar

e pr

emiu

mtr

easu

ry

shar

essp

ecia

l res

erve

reta

ined

ea

rnin

gsto

tal

equi

ty(n

ote

20)

(not

e 20

)(n

ote

20)

(not

e 21

)(n

ote

22)

rmrm

rmrm

rmrm

com

pany

at 1

July

201

016

,351

,874

2,35

1,73

1(3

08,6

87)

16,0

74,2

4018

,489

,464

52,9

58,6

22

tota

l com

preh

ensi

ve in

com

e–

––

–1,

872,

580

1,87

2,58

0

tran

sact

ions

wit

h ow

ners

Purc

hase

of t

reas

ury

shar

es–

–(6

,950

)–

–(6

,950

)d

ivid

ends

pai

d (n

ote

32)

––

––

(1,6

19,0

92)

(1,6

19,0

92)

Tota

l tra

nsac

tions

with

ow

ners

––

(6,9

50)

–(1

,619

,092

)(1

,626

,042

)

at 3

0 Ju

ne 2

011

16,3

51,8

742,

351,

731

(315

,637

)16

,074

,240

18,7

42,9

5253

,205

,160

at 1

July

201

116

,351

,874

2,35

1,73

1(3

15,6

37)

16,0

74,2

4018

,742

,952

53,2

05,1

60

tota

l com

preh

ensi

ve in

com

e –

––

–20

7,42

320

7,42

3

Purc

hase

of t

reas

ury

shar

es–

–(2

50,0

02)

––

(250

,002

)d

ivid

ends

pai

d (n

ote

32)

––

––

(1,6

18,9

92)

(1,6

18,9

92)

Tota

l tra

nsac

tions

with

ow

ners

––

(250

,002

)–

(1,6

18,9

92)

(1,8

68,9

94)

at 3

0 Ju

ne 2

012

16,3

51,8

742,

351,

731

(565

,639

)16

,074

,240

17,3

31,3

8351

,543

,589

The

acco

mpa

nyin

g ac

coun

ting

polic

ies

and

expl

anat

ory

note

s fo

rm a

n in

tegr

al p

art o

f the

fina

ncia

l sta

tem

ents

.

40


statements oF casH FLoWsfor the financial year ended 30 June 2012

group company

note 2012 2011 2012 2011rm rm rm rm

operating activities

Profit before tax 7,747,443 7,441,414 243,067 2,090,809Adjustments for:

Amortisation of intangible assets 8 1,314,504 1,138,819 1,206,356 1,082,731Bad debts written off 8 505,065 – 72,845 –depreciation of property, plant and equipment 8 1,086,666 917,749 356,903 452,609dividend income 6 – – (1,668,412) (2,243,443)impairment loss on investment in a subsidiary 8 – – 147,900 –interest expense 6,712 1,252 – –interest income 6 (264,435) (119,112) (4,301) (5,858)(gain)/loss on disposal of plant and equipment 8 (2,352) 14,688 – 538Plant and equipment written off 8 – 24,730 – 1,300reversal of impairment loss on trade

receivables 8 – (233,282) – (204,954)share of results in a jointly controlled entity 33,389 13,112 – –short-term accumulating absences 9 775 36,118 (7,348) 36,118Unrealised (gain)/loss on foreign exchange (51,886) (124,414) 45,533 118,669

operating profit before working capital changes 10,375,881 9,111,074 392,543

1,328,519

increase in inventories (1,506,618) (3,314,687) – –(increase)/decrease in trade and other

receivables (1,921,922) (787,254) 324,410 860,244increase/(decrease) in trade and other payables 93,638 3,702,597 (727,748) 415,996

cash flows generated from/(used in) operations 7,040,979 8,711,730 (10,795) 2,604,759interest paid (6,712) (1,252) – – income tax paid (2,528,357) (1,636,536) (167,408) (257,628)

net cash generated from/(used in) operating activities carried forward 4,505,910 7,073,942 (178,203) 2,347,131


41statements oF casH FLoWs (cont’d)

for the financial year ended 30 June 2012


group company note 2012 2011 2012 2011

rm rm rm rmInvesting activities

Acquisition of and advances to a jointly controlled entity (620,233) (444,036) (620,233) (444,036)

dividends received from subsidiaries – – 1,668,412 2,243,443interest received 264,435 119,112 4,301 5,858net change in amounts due from subsidiaries – – (1,571,135) 259,841Proceeds from disposal of plant

and equipment 18,866 3,275 – 660Acquisition of intangible assets and product

development expenditure paid (2,108,774) (1,639,001) (1,231,144) (1,279,270)Purchase of plant and equipment (795,724) (1,152,581) (196,193) (270,660)net cash (used in)/generated from investing

activities (3,241,430) (3,113,231) (1,945,992) 515,836

Financing activities

dividends paid (2,428,513) (809,571) (2,428,513) (809,571)

dividends paid by subsidiaries to non-controlling interests (191,566) (243,469) – –Purchase of treasury shares (250,002) (6,950) (250,002) (6,950)drawdown of bank borrowings 744,579 – 744,579 –

repayment of obligations under finance leases (34,854) (12,158) – – net cash used in financing activities (2,160,356) (1,072,148) (1,933,936) (816,521)

net (decrease)/increase in cash and cash equivalents (895,876) 2,888,563 (4,058,131) 2,046,446

effects of foreign exchange rate changes (33,011) (419,413) (45,533) (118,669)cash and cash equivalents as at 1 July 20,168,574 17,699,424 6,665,353 4,737,576cash and cash equivalents as at 30 June 19 19,239,687 20,168,574 2,561,689 6,665,353

42


1. corporate information

The company is a public limited liability company incorporated and domiciled in Malaysia, and is listed on the Ace Market of Bursa Malaysia securities Berhad. The principal place of business of the company is located at Unit 608, 707 & 1007, Block A and Unit 809 Block B, Pusat dagangan Phileo ii, 15, Jalan 16/11, 46350 Petaling Jaya, selangor darul ehsan.

The company is principally engaged in the provision of mobile solutions.

The principal activities of the subsidiaries are set out in note 15.

There have been no significant changes in the nature of these activities during the financial year.

The financial statements were authorised for issue by the Board of directors in accordance with a resolution of the directors on 15 october 2012.

2. summary of significant accounting policies

2.1 Basis of preparation

The financial statements of the group and of the company have been prepared in accordance with Financial reporting standards (“Frss") and the companies Act, 1965 in Malaysia. At the beginning of the current financial year, the group and the company adopted new and revised Frss which are mandatory for the current financial year as described fully in note 2.2.

The financial statements have been prepared on the historical cost basis except as disclosed in the accounting policies below.

The financial statements are presented in ringgit Malaysia (“rM”) except when otherwise indicated.

2.2 changes in accounting policies

The accounting policies adopted are consistent with those of the previous financial year except as follows:

on 1 July 2011, the group and the company adopted the following new and amended Frss and ic interpretations mandatory for the current financial year.

• limited exemption from comparative Frs 7 disclosures for First-time Adopters (Amendment to Frs 1)• Additional exemption for First-time Adopters (Amendments to Frs 1)• Amendments to Frs 1 [improvements to Frss (2010)]• group cash-settled share-based Payment Transactions (Amendments to Frs 2)• Amendments to Frs 3 [improvements to Frss (2010)]• improving disclosures about Financial instruments (Amendments to Frs 7)• Amendments to Frs 7 [improvements to Frss (2010)]• Amendments to Frs 101 [improvements to Frss (2010)]• Amendments to Frs 121 [improvements to Frss (2010)]• Amendments to Frs 128 [improvements to Frss (2010)]• Amendments to Frs 131 [improvements to Frss (2010)]• Amendments to Frs 132 [improvements to Frss (2010)]• Amendments to Frs 134 [improvements to Frss (2010)]• Amendments to Frs 139 [improvements to Frss (2010)]• Amendments to ic interpretation 13 [improvements to Frss (2010)]• ic interpretation 4 determining whether an Arrangement contains a lease• ic interpretation 14 Prepayments of a Minimum Funding requirement (Amendments to ic interpretation 14)• ic interpretation 18 Transfers of Assets from customers• ic interpretation 19 extinguishing Financial liabilities with equity instruments

notes to tHe FInancIaL statements For the financial year ended 30 June 2012


43

2. summary of significant accounting policies (cont’d)

2.2 changes in accounting policies (cont’d)

Adoption of the above standards and interpretations did not have any effect on the financial performance or position of the group and the company except for those discussed below:

amendments to Frs 7: Improving Disclosures about Financial Instruments

The amended standard requires enhanced disclosure about fair value measurement and liquidity risk. Fair value measurements related to items recorded at fair value are to be disclosed by source of inputs using a three level fair value hierarchy (level 1, level 2 and level 3), by class, for all financial instruments recognised at fair value. A reconciliation between the beginning and ending balance for level 3 fair value measurements is required. Any significant transfers between levels of the fair value hierarchy and the reasons for those transfers need to be disclosed. The amendments also clarify the requirements for liquidity risk disclosures with respect to derivative transactions and assets used for liquidity management. The fair value measurement disclosures are presented in note 29. The liquidity risk disclosures are presented in note 28(b).

2.3 malaysian Financial reporting standards (''mFrs Framework'')

on 19 november 2011, the Malaysian Accounting standards Board (''MAsB'') issued a new MAsB approved accounting framework, the MFrs Framework.

The MFrs Framework is to be applied by all entities other Than Private entities for annual periods beginning on or after 1 January 2012, with the exception of entities that are within the scope of MFrs 141 Agriculture (''MFrs 141'') and ic interpretation 15 Agreements for construction of real estate (''ic 15''), including its parent, significant investor and venturer.

The group will be required to prepare financial statements using the MFrs Framework in its first MFrs financial statements for the year ending 31 december 2012. in presenting its first MFrs financial statements, the group will be required to restate the comparative financial statements to amounts reflecting the application of MFrs Framework. The majority of the adjustments required on transition will be made, retrospectively, against opening retained profits.

The group has established a project team to plan and manage the adoption of the MFrs Framework.

The group has not completed its assessment of the financial effects of the differences between Financial reporting standards and accounting standards under the MFrs Framework. Accordingly, the consolidated financial performance and financial position as disclosed in these financial statements for the year ended 30 June 2012 could be different if prepared under the MFrs Framework.

The group considers that it is achieving its scheduled milestones and expects to be in a position to fully comply with the requirements of the MFrs Framework for the financial year ending 30 June 2013.

2.4 Basis of consolidation

The consolidated financial statements comprise the financial statements of the company and its subsidiaries as at the reporting date. The financial statements of the subsidiaries used in the preparation of the consolidated financial statements are prepared for the same reporting date as the company. consistent accounting policies are applied to like transactions and events in similar circumstances.

All intra-group balances, income and expenses and unrealised gains and losses resulting from intra-group transactions are eliminated in full.

Acquisitions of subsidiaries are accounted for by applying the acquisition method. identifiable assets acquired and liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. Acquisition-related costs are recognised as expenses in the periods in which the costs are incurred and the services are received.

in business combinations achieved in stages, previously held equity interests in the acquiree are re-measured to fair value at the acquisition date and any corresponding gain or loss is recognised in profit or loss.

notes to tHe FInancIaL statements (cont’d)For the financial year ended 30 June 2012

44



2.4 Basis of consolidation (cont’d)

The group elects for each individual business combination, whether non-controlling interest in the acquiree (if any) is recognised on the acquisition date at fair value, or at the non-controlling interest’s proportionate share of the acquiree net identifiable assets.

Any excess of the sum of the fair value of the consideration transferred in the business combination, the amount of non-controlling interest in the acquiree (if any), and the fair value of the group’s previously held equity interest in the acquiree (if any), over the net fair value of the acquiree’s identifiable assets and liabilities is recorded as goodwill in the statement of financial position. The accounting policy for goodwill is set out in note 2.8. in instances where the latter amount exceeds the former, the excess is recognised as a gain on bargain purchase in profit or loss on the acquisition date.

subsidiaries are consolidated from the date of acquisition, being the date on which the group obtains control, and continue to be consolidated until the date that such control ceases.

2.5 transactions with non-controlling interest

non-controlling interest represents the equity in subsidiaries not attributable, directly or indirectly, to owners of the company, and is presented separately in the consolidated statement of comprehensive income and within equity in the consolidated statement of financial position, separately from equity attributable to owners of the company.

changes in the company owners’ ownership interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions. in such circumstances, the carrying amounts of the controlling and non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiary. Any difference between the amount by which the non-controlling interest is adjusted and the fair value of the consideration paid or received is recognised directly in equity and attributed to owners of the parent.

2.6 Foreign currency

i. Functional and presentation currency

The individual financial statements of each entity in the group are measured using the currency of the primary economic environment in which the entity operates (“the functional currency”). The consolidated financial statements are presented in ringgit Malaysia (“rM”), which is also the company’s functional currency.

ii. Foreign currency transactions

Transactions in foreign currencies are measured in the respective functional currencies of the company and its subsidiaries and are recorded on initial recognition in the functional currencies at exchange rates approximating those ruling at the transaction dates. Monetary assets and liabilities denominated in foreign currencies are translated at the rate of exchange ruling at the reporting date. non-monetary items denominated in foreign currencies that are measured at historical cost are translated using the exchange rates as at the dates of the initial transactions. non-monetary items denominated in foreign currencies measured at fair value are translated using the exchange rates at the date when the fair value was determined.

exchange differences arising on the settlement of monetary items or on translating monetary items at the reporting date are recognised in profit or loss except for exchange differences arising on monetary items that form part of the group’s net investment in foreign operations, which are recognised initially in other comprehensive income and accumulated under foreign currency translation reserve in equity. The foreign currency translation reserve is reclassified from equity to profit or loss of the group on disposal of the foreign operation.

exchange differences arising on the translation of non-monetary items carried at fair value are included in profit or loss for the period except for the differences arising on the translation of non-monetary items in respect of which gains and losses are recognised directly in equity. exchange differences arising from such non-monetary items are also recognised directly in equity.



45


2.6 Foreign currency (cont’d)

iii. Foreign operations

The assets and liabilities of foreign operations are translated into rM at the rate of exchange ruling at the reporting date and income and expenses are translated at exchange rates at the dates of the transactions. The exchange differences arising on the translation are taken directly to other comprehensive income. on disposal of a foreign operation, the cumulative amount recognised in other comprehensive income and accumulated in equity under foreign currency translation reserve relating to that particular foreign operation is recognised in the profit or loss.

2.7 property, plant and equipment

All items of property, plant and equipment are initially recorded at cost. The cost of an item of property, plant and equipment is recognised as an asset if, and only if, it is probable that future economic benefits associated with the item will flow to the group and the cost of the item can be measured reliably.

subsequent to recognition, property, plant and equipment are measured at cost less accumulated depreciation and accumulated impairment losses.

When significant parts of property, plant and equipment are required to be replaced in intervals, the group recognises such parts as individual assets with specific useful lives and depreciation, respectively. likewise, when a major inspection is performed, its cost is recognised in the carrying amount of the plant and equipment as a replacement if the recognition criteria are satisfied. All other repair and maintenance costs are recognised in profit or loss as incurred.

depreciation is computed on a straight-line basis over the estimated useful lives of the assets, at the following annual rates:

Buildings 2%computers and software 10% - 33%Furniture, fixtures, fittings, and office equipment 15% - 33%Motor vehicles 10%renovation 10% - 33%

Assets under construction included in property, plant and equipment are not depreciated as these assets are not yet available for use.

The carrying values of property, plant and equipment are reviewed for impairment when events or changes in circumstances indicate that the carrying value may not be recoverable.

The residual value, useful life and depreciation method are reviewed at each financial year end, and adjusted prospectively, if appropriate.

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss on derecognition of the asset is included in the profit or loss in the year the asset is derecognised.


46



2.8 Intangible assets

i. goodwill

goodwill is initially measured at cost. Following initial recognition, goodwill is measured at cost less accumulated impairment losses.

For the purpose of impairment testing, goodwill acquired is allocated, from the acquisition date, to each of the group’s cash-generating units that are expected to benefit from the synergies of the combination.

The cash-generating unit to which goodwill has been allocated is tested for impairment annually and whenever there is an indication that the cash-generating unit may be impaired, by comparing the carrying amount of the cash-generating unit, including the allocated goodwill, with the recoverable amount of the cash-generating unit. Where the recoverable amount of the cash-generating unit is less than the carrying amount, an impairment loss is recognised in the profit or loss. impairment losses recognised for goodwill are not reversed in subsequent periods.

Where goodwill forms part of a cash-generating unit and part of the operation within that cash-generating unit is disposed of, the goodwill associated with the operation disposed of is included in the carrying amount of the operation when determining the gain or loss on disposal of the operation. goodwill disposed of in this circumstance is measured based on the relative fair values of the operations disposed of and the portion of the cash-generating unit retained.

goodwill and fair value adjustments arising on the acquisition of foreign operation on or after 1 January 2006 are treated as assets and liabilities of the foreign operations and are recorded in the functional currency of the foreign operations and translated at the closing rate at the reporting date in line with the accounting policy set out in note 2.6(iii).

goodwill and fair value adjustments which arose on acquisitions of foreign operation before 1 January 2006 are deemed to be assets and liabilities of the company and are recorded in rM at the rates prevailing at the date of acquisition.

ii. product development expenditure All research costs are recognised in the profit or loss as incurred.

expenditure incurred on projects to develop new products is capitalised and deferred only when the group can demonstrate the technical feasibility of completing the intangible asset so that it will be available for use or sale, its intention to complete and its ability to use or sell the asset, how the asset will generate future economic benefits, the availability of resources to complete the project and the ability to measure reliably the expenditure during the development. Product development expenditures which do not meet these criteria are expensed when incurred.

development costs, considered to have finite useful lives, are stated at cost less any impairment losses and are amortised using the straight-line basis over the commercial lives of the underlying products not exceeding 2 years. impairment is assessed whenever there is an indication of impairment and the amortisation period and method are also reviewed at least at each statement of financial position date.

iii. Intellectual property

intellectual property comprises digital content rights and licenses acquired and is considered to have finite useful life due to the technological risks and advancement inherent in the industry. intellectual property of the group is amortised on a straight line basis over its estimated useful lives ranging between 3 and 10 years.



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2.9 Impairment of non-financial assets

The group assesses at each reporting date whether there is an indication that an asset may be impaired. if any such indication exists, or when an annual impairment assessment for an asset is required, the group makes an estimate of the asset's recoverable amount.

An asset's recoverable amount is the higher of an asset's fair value less costs to sell and its value in use. For the purpose of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units ("cgU")).

in assessing value in use, the estimated future cash flows expected to be generated by the asset are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Where the carrying amount of an asset exceeds its recoverable amount, the asset is written down to its recoverable amount. impairment losses recognised in respect of a cgU or groups of cgUs are allocated first to reduce the carrying amount of any goodwill allocated to those units or groups of units and then, to reduce the carrying amount of the other assets in the unit or groups of units on a pro-rata basis.

impairment losses are recognised in profit or loss except for assets that are previously revalued where the revaluation was taken to other comprehensive income. in this case, the impairment is also recognised in other comprehensive income up to the amount of any previous revaluation.

An assessment is made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. A previously recognised impairment loss is reversed only if there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognised. if that is the case, the carrying amount of the asset is increased to its recoverable amount. That increase cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised previously. such reversal is recognised in profit or loss unless the asset is measured at revalued amount, in which case the reversal is treated as a revaluation increase. impairment loss on goodwill is not reversed in a subsequent period.

2.10 subsidiaries

subsidiaries are entities over which the group has the power to govern the financial and operating policies so as to obtain benefits from their activities.

in the company’s separate financial statements, investments in subsidiaries are accounted for at cost less impairment losses.

2.11 Jointly controlled entity

A jointly controlled entity is an entity that is subject to joint control, where the strategic financial and operating decisions relating to the entity require the unanimous consent of the parties sharing control. A jointly controlled entity is equity accounted for from the date the group obtains joint control until the date the group ceases to have joint control or significant influence over the entity.

The group’s investment in jointly controlled entity is accounted for using the equity method. Under the equity method, the investment in jointly controlled entity is measured in the statement of financial position at cost plus post-acquisition changes in the group’s share of net assets of the jointly controlled entity. goodwill relating to the jointly controlled entity is included in the carrying amount of the investment. Any excess of the group’s share of the net fair value of the jointly controlled entity’s identifiable assets, liabilities and contingent liabilities over the cost of the investment is excluded from the carrying amount of the investment and is instead included as income in the determination of the group’s share of the jointly controlled entity’s profit or loss for the period in which the investments are acquired.

After application of the equity method, the group determines whether it is necessary to recognise an additional impairment loss on the group’s investment in its jointly controlled entity. The group determines at each reporting date whether there is any objective evidence that the investment in the jointly controlled entity is impaired. if this is the case, the group calculates the amount of impairment as the difference between the recoverable amount of the jointly controlled entity and their carrying value and recognises the amount in profit or loss.


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2.11 Jointly controlled entity (cont’d)

The financial statements of the jointly controlled entity are prepared as of the same reporting date as the company. Where necessary, adjustments are made to bring the accounting policies in line with those of the group.

in the company’s separate financial statements, investment in jointly controlled entity is stated at cost less impairment losses. on disposal of such investment, the difference between net disposal proceeds and its carrying amount is included in profit or loss.

2.12 Financial assets

Financial assets are recognised in the statements of financial position when, and only when, the group and the company become a party to the contractual provisions of the financial instrument.

When financial assets are recognised initially, they are measured at fair value, plus, in the case of financial assets not at fair value through profit or loss, directly attributable transaction costs.

The group and the company determine the classification of their financial assets at initial recognition, and the categories include financial assets at fair value through profit or loss, loans and receivables, held-to-maturity investments and available-for-sale financial assets.

i. Financial assets at fair value through profit or loss Financial assets are classified as financial assets at fair value through profit or loss if they are held for trading or are

designated as such upon initial recognition. Financial assets held for trading are derivatives (including separated embedded derivatives) or financial assets acquired principally for the purpose of selling in the near term.

subsequent to initial recognition, financial assets at fair value through profit or loss are measured at fair value.

Any gains or losses arising from changes in fair value are recognised in profit or loss. net gains or net losses on financial assets at fair value through profit or loss do not include exchange differences, interest and dividend income. exchange differences, interest and dividend income on financial assets at fair value through profit or loss are recognised separately in profit or loss as part of other losses or other income.

Financial assets at fair value through profit or loss could be presented as current or non-current. Financial assets that are held primarily for trading purposes are presented as current whereas financial assets that are not held primarily for trading purposes are presented as current or non-current based on the settlement date.

ii. Loans and receivables

Financial assets with fixed or determinable payments that are not quoted in an active market are classified as loans and receivables.

subsequent to initial recognition, loans and receivables are measured at amortised cost using the effective interest method. gains and losses are recognised in profit or loss when the loans and receivables are derecognised or impaired, and through the amortisation process.

loans and receivables are classified as current assets, except for those having maturity dates later than 12 months after the reporting date which are classified as non-current.



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2.12 Financial assets (cont’d)

iii. Held-to-maturity investments

Financial assets with fixed or determinable payments and fixed maturity are classified as held-to-maturity when the group has the positive intention and ability to hold the investment to maturity.

subsequent to initial recognition, held-to-maturity investments are measured at amortised cost using the effective interest method. gains and losses are recognised in profit or loss when the held-to-maturity investments are derecognised or impaired, and through the amortisation process.

held-to-maturity investments are classified as non-current assets, except for those having maturity within 12 months after the reporting date which are classified as current.

The group and the company have not designated any financial assets as held-to-maturity investments.

iv. available-for-sale financial assets

Available-for-sale financial assets are financial assets that are designated as available for sale or are not classified in any of the three preceding categories.

After initial recognition, available-for-sale financial assets are measured at fair value. Any gains or losses from changes in fair value of the financial assets are recognised in other comprehensive income, except that impairment losses, foreign exchange gains and losses on monetary instruments and interest calculated using the effective interest method are recognised in profit or loss. The cumulative gain or loss previously recognised in other comprehensive income is reclassified from equity to profit or loss as a reclassification adjustment when the financial asset is derecognised. interest income calculated using the effective interest method is recognised in profit or loss. dividends on an available-for-sale equity instrument are recognised in profit or loss when the group’s and the company’s right to receive payment is established.

investments in equity instruments whose fair value cannot be reliably measured are measured at cost less impairment loss.

Available-for-sale financial assets are classified as non-current assets unless they are expected to be realised within 12 months after the reporting date.

The group and the company have not designated any financial assets as available-for-sale financial assets.

A financial asset is derecognised when the contractual right to receive cash flows from the asset has expired. on derecognition of a financial asset in its entirety, the difference between the carrying amount and the sum of the consideration received and any cumulative gain or loss that had been recognised in other comprehensive income is recognised in profit or loss.

regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the period generally established by regulation or convention in the marketplace concerned. All regular way purchases and sales of financial assets are recognised or derecognised on the trade date i.e., the date that the group and the company commit to purchase or sell the asset.


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2.13 Impairment of financial assets

The group and the company assess at each reporting date whether there is any objective evidence that a financial asset is impaired.

i. trade and other receivables and other financial assets carried at amortised cost

To determine whether there is objective evidence that an impairment loss on financial assets has been incurred, the group and the company consider factors such as the probability of insolvency or significant financial difficulties of the debtor and default or significant delay in payments. For certain categories of financial assets, such as trade receivables, assets that are assessed not to be impaired individually are subsequently assessed for impairment on a collective basis based on similar risk characteristics. objective evidence of impairment for a portfolio of receivables could include the group’s and the company's past experience of collecting payments, an increase in the number of delayed payments in the portfolio past the average credit period and observable changes in national or local economic conditions that correlate with default on receivables.

if any such evidence exists, the amount of impairment loss is measured as the difference between the asset's carrying amount and the present value of estimated future cash flows discounted at the financial asset's original effective interest rate. The impairment loss is recognised in profit or loss.

The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade receivables, where the carrying amount is reduced through the use of an allowance account. When a trade receivable becomes uncollectible, it is written off against the allowance account.

if in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed to the extent that the carrying amount of the asset does not exceed its amortised cost at the reversal date. The amount of reversal is recognised in profit or loss.

2.14 cash and cash equivalents

cash and cash equivalents comprise cash at bank and on hand, demand deposits, and short-term, highly liquid investments that are readily convertible to known amount of cash and which are subject to an insignificant risk of changes in value. These also include bank overdrafts that form an integral part of the group’s cash management.

2.15 Inventories

inventories comprise merchandise held for resale and are stated at the lower of cost and net realisable value.

cost is determined using the first in, first out method. The cost includes cost of purchase and other incidental expenses in bringing the items into its present location and condition.

net realisable value is the estimated selling price in the ordinary course of business less estimated costs of completion and the estimated costs necessary to make the sale.

2.16 provisions

Provisions are recognised when the group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of economic resources will be required to settle the obligation and the amount of the obligation can be estimated reliably.

Provisions are reviewed at each reporting date and adjusted to reflect the current best estimate. if it is no longer probable that an outflow of economic resources will be required to settle the obligation, the provision is reversed. if the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, where appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.



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2. summary of significant accounting policies

2.17 Financial liabilities

Financial liabilities are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability.

Financial liabilities, within the scope of Frs 139, are recognised in the statement of financial position when, and only when, the group and the company become a party to the contractual provisions of the financial instrument. Financial liabilities are classified as either financial liabilities at fair value through profit or loss or other financial liabilities.

i. Financial liabilities at fair value through profit or loss

Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss.

Financial liabilities held for trading include derivatives entered into by the group and the company that do not meet the hedge accounting criteria. derivative liabilities are initially measured at fair value and subsequently stated at fair value, with any resultant gains or losses recognised in profit or loss. net gains or losses on derivatives include exchange differences.

The group and the company have not designated any financial liabilities as at fair value through profit or loss.

ii. other financial liabilities

The group’s and the company’s other financial liabilities include trade payables, other payables and loans and borrowings.

Trade and other payables are recognised initially at fair value plus directly attributable transaction costs and subsequently measured at amortised cost using the effective interest method.

loans and borrowings are recognised initially at fair value, net of transaction costs incurred, and subsequently measured at amortised cost using the effective interest method. Borrowings are classified as current liabilities unless the group has an unconditional right to defer settlement of the liability for at least 12 months after the reporting date.

For other financial liabilities, gains and losses are recognised in profit or loss when the liabilities are derecognised, and through the amortisation process.

A financial liability is derecognised when the obligation under the liability is extinguished. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in profit or loss.

2.18Financial guarantee contracts

A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due.

Financial guarantee contracts are recognised initially as a liability at fair value, net of transaction costs. subsequent to initial recognition, financial guarantee contracts are recognised as income in profit or loss over the period of the guarantee. if the debtor fails to make payment relating to financial guarantee contract when it is due and the group, as the issuer, is required to reimburse the holder for the associated loss, the liability is measured at the higher of the best estimate of the expenditure required to settle the present obligation at the reporting date and the amount initially recognised less cumulative amortisation.


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2.19 Borrowing costs

Borrowing costs are capitalised as part of the cost of a qualifying asset if they are directly attributable to the acquisition, construction or production of that asset. capitalisation of borrowing costs commences when the activities to prepare the asset for its intended use or sale are in progress and the expenditures and borrowing costs are incurred. Borrowing costs are capitalised until the assets are substantially completed for their intended use or sale.

All other borrowing costs are recognised in profit or loss in the period they are incurred. Borrowing costs consist of interest and other costs that the group and the company incurred in connection with the borrowing of funds.

2.20 employee benefits

i. short term benefits

Wages, salaries, bonuses and social security contributions are recognised as an expense in the year in which the associated services are rendered by employees. short term accumulating compensated absences such as paid annual leave are recognised when services are rendered by employees that increase their entitlement to future compensated absences. short term non-accumulating compensated absences such as sick leave are recognised when the absences occur.

ii. Defined contribution plans

The group participates in the national pension schemes as defined by the laws of the countries in which it has operations. The Malaysian companies in the group make contributions to the employee Provident Fund in Malaysia, a defined contribution pension scheme. contributions to defined contribution pension schemes are recognised as an expense in the period in which the related service is performed.

2.21 Leases

as lessee

Finance leases, which transfer to the group substantially all the risks and rewards incidental to ownership of the leased item, are capitalised at the inception of the lease at the fair value of the leased asset or, if lower, at the present value of the minimum lease payments. Any initial direct costs are also added to the amount capitalised. lease payments are apportioned between the finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged to profit or loss. contingent rents, if any, are charged as expenses in the periods in which they are incurred.

leased assets are depreciated over the estimated useful life of the asset. however, if there is no reasonable certainty that the group will obtain ownership by the end of the lease term, the asset is depreciated over the shorter of the estimated useful life and the lease term.

operating lease payments are recognised as an expense in profit or loss on a straight-line basis over the lease term. The aggregate benefit of incentives provided by the lessor is recognised as a reduction of rental expense over the lease term on a straight-line basis.

2.22 revenue

revenue is recognised to the extent that it is probable that the economic benefits will flow to the group and the revenue can be reliably measured. revenue is measured at the fair value of consideration received or receivable.

i. sale of goods

revenue from sale of goods is recognised upon the transfer of significant risk and rewards of ownership of the goods to the customer. revenue is not recognised to the extent where there are significant uncertainties regarding recovery of the consideration due, associated costs or the possible return of goods.



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2.22 revenue (cont’d)

ii. revenue from services

revenue from services rendered is recognised net of service taxes and discounts as and when the services are performed.

iii. Interest income

interest income is recognised using the effective interest method.

iv. Dividend income

dividend income is recognised when the group’s right to receive payment is established.

2.23 Income taxes

i. current tax

current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the reporting date.

current taxes are recognised in profit or loss except to the extent that the tax relates to items recognised outside profit or loss, either in other comprehensive income or directly in equity.

ii. Deferred tax

deferred tax is provided using the liability method on temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

deferred tax liabilities are recognised for all temporary differences, except:

- where the deferred tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and

- in respect of taxable temporary differences associated with investments in subsidiaries and interests in joint ventures, where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.

deferred tax assets are recognised for all deductible temporary differences, carry forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilised except:

- where the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and

- in respect of deductible temporary differences associated with investments in subsidiaries and interests in joint ventures, deferred tax assets are recognised only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised.


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2.23 Income taxes (cont’d)

ii. Deferred tax (cont’d)

The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are reassessed at each reporting date and are recognised to the extent that it has become probable that future taxable profit will allow the deferred tax assets to be utilised.

deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted at the reporting date.

deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss. deferred tax items are recognised in correlation to the underlying transaction either in other comprehensive income or directly in equity and deferred tax arising from a business combination is adjusted against goodwill on acquisition.

deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.

iii. sales tax

revenues, expenses and assets are recognised net of the amount of sales tax except:

- Where the sales tax incurred in a purchase of assets or services is not recoverable from the taxation authority, in which case the sales tax is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and

- receivables and payables that are stated with the amount of sales tax included.

The net amount of sales tax recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the statements of financial position.

2.24 segment reporting

For management purposes, the group is organised into operating segments based on business segments which are independently managed by the respective segment managers responsible for the performance of the respective segments under their charge. The segment managers report directly to the management of the company who regularly review the segment results in order to allocate resources to the segments and to assess the segment performance. Additional disclosures on each of these segments are shown in the financial statements, including the factors used to identify the reportable segments and the measurement basis of segment information.

2.25 share capital and share issuance expenses

An equity instrument is any contract that evidences a residual interest in the assets of the group and the company after deducting all of its liabilities. ordinary shares are equity instruments.

ordinary shares are recorded at the proceeds received, net of directly attributable incremental transaction costs. ordinary shares are classified as equity. dividends on ordinary shares are recognised in equity in the period in which they are declared.

2.26 treasury shares

When shares of the company, that have not been cancelled, recognised as equity are reacquired, the amount of consideration paid is recognised directly in equity. reacquired shares are classified as treasury shares and presented as a deduction from total equity. no gain or loss is recognised in profit or loss on the purchase, sale, issue or cancellation of treasury shares. When treasury shares are reissued by resale, the difference between the sales consideration and the carrying amount is recognised in equity.



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2.27 contingencies

A contingent liability or asset is a possible obligation or asset that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of uncertain future event(s) not wholly within the control of the group.

contingent liabilities and assets are not recognised in the statements of financial position of the group.

3. significant accounting estimates and judgements

The preparation of the group’s financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities at the reporting date. however, uncertainty about these assumptions and estimates could result in outcomes that could require a material adjustment to the carrying amount of the asset or liability affected in the future.

3.1 Judgements made in applying accounting policies

There are no critical judgements made by management in the process of applying the group's accounting policies that has significant effect on the amounts recognised in the financial statements.

3.2 Key sources of estimation uncertainty

The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below:

(a) Impairment of goodwill

goodwill is tested for impairment annually and at other times when such indicators exist. This requires an estimation of the value in use of the cash-generating units to which goodwill is allocated.

When value in use calculations are undertaken, management must estimate the expected future cash flows from the asset or cash-generating unit and choose a suitable discount rate in order to calculate the present value of those cash flows. Further details of the carrying value and the key assumptions applied in the impairment assessment of goodwill are disclosed in note 14.

(b) Impairment of investments in subsidiaries and interest in a jointly controlled entity

investments in subsidiaries and the interest in a jointly controlled entity are tested for impairment when such indicators exist. This requires an estimation of the value in use of these investments.

When value in use calculations are undertaken, management must estimate the expected future cash flows from these investments and choose a suitable discount rate in order to calculate the present value of those cash flows. Further details of the carrying value and the key assumptions applied in the impairment assessment of these investments are disclosed in notes 15 and 16 respectively.

(c) Impairment and depreciation of property, plant and equipment

Property, plant and equipment are tested for impairment when such indicators exist. This requires an estimation of the value in use of the cash-generating units to which the property, plant and equipment are allocated.

When value in use calculations are undertaken, management must estimate the expected future cash flows from the asset or cash-generating unit and choose a suitable discount rate in order to calculate the present value of those cash flows.

The cost of property, plant and machinery is depreciated on a straight-line basis over the assets' useful lives. changes in the expected level of usage and technological developments could impact the economic useful lives and the residual values of these assets, therefore future depreciation charges could be revised.

The carrying amount of property plant and equipment and the related depreciation expense are disclosed in note 13.


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3. significant accounting estimates and judgements

3.2 Key sources of estimation uncertainty (cont’d)

(d) Impairment of loans and receivables

The group assesses at each reporting date whether there is any objective evidence that a financial asset is impaired. To determine whether there is objective evidence of impairment, the group considers factors such as the probability of insolvency or significant financial difficulties of the debtor and default or significant delay in payments.

Where there is objective evidence of impairment, the amount and timing of future cash flows are estimated based on historical loss experience for assets with similar credit risk characteristics. The carrying amount of the group’s loans and receivables at the reporting date is disclosed in note 18.

(e) Deferred tax

deferred tax assets are recognised for all unused tax losses, unabsorbed capital allowances, unused reinvestment allowances and unused allowance for increased exports to the extent that it is probable that taxable profit will be available against which the losses, capital allowances, unused reinvestment allowances and unused allowance for increased exports can be utilised. significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and level of future taxable profits together with future tax planning strategies. The carrying amount of deferred tax assets of the group as at 30 June 2012 is disclosed in note 24.

At the reporting date, no deferred tax liability has been recognised for taxes that would be payable on the undistributed earnings of certain foreign subsidiaries. The group has determined that these undistributed earnings of the subsidiaries will not be distributed in the foreseeable future, as disclosed in note 24.

(f) Inventories written down

inventories of the group are written down to net realisable value based on an analysis of the aging profile and taking into account the expected sales patterns of individual items held in inventory. changes in the inventory aging and the expected sales profiles may have an impact on the amount of written down recorded. The carrying amount of inventories of the group is disclosed in note 17.

4. revenue

revenue of the group represents the invoiced value of goods sold and services, net of sales tax or service tax, trade discounts and returns. revenue of the company represents the invoiced value of services, net of service tax and trade discounts. Further analysis of the revenue of the group is presented in note 31.

5. cost of sales

cost of sales consists mainly of sMs and leased-line charges, royalty expenses, amortisation of product development expenditure, other incidental costs incurred for the provision of mobile solutions and cost of inventories (note 17).

6. other income

group company2012 2011 2012 2011

rm rm rm rm

interest income 264,435 119,112 4,301 5,858dividend income – – 1,668,412 2,243,443gain on foreign exchange, net – 225,638 – –

264,435 344,750 1,672,713 2,249,301



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7. Finance costs

group2012 2011

rm rminterest expense:- Finance lease obligations 6,712 1,252

6,712 1,252

8. profit before tax

The following items have been included in arriving at profit before tax:

group company2012 2011 2012 2011

rm rm rm rmAmortisation of intangible assets (note 14) 1,314,504 1,138,819 1,206,356 1,082,731Auditors’ remuneration:

statutory audits- auditors of the company- other auditors- underprovision in previous financial year

146,00078,211

6,089

115,00064,243

–

126,000––

106,000––

other services - auditors of the company 6,500 18,000 6,500 18,000

Bad debts written off 505,065 – 72,845 –depreciation of property, plant and equipment

(note 13) 1,086,666 917,749 356,903 452,609employee benefits expense (note 9) 13,000,936 11,016,784 3,964,409 4,640,587impairment loss on investment in a subsidiary

(note 15) – – 147,900 –Minimum lease payments for premises 881,926 713,969 169,177 166,888non-executive directors’ remuneration (note 10) 138,497 74,768 121,113 70,000Plant and equipment written off – 24,730 – 1,300(gain)/loss on disposal of plant and equipment (2,352) 14,688 – 538net loss/(gain) on foreign exchange 302,880 (225,638) 50,620 118,669reversal of impairment loss on trade receivables – (233,282) – (204,954)

9. employee benefits expense

group company2012 2011 2012 2011

rm rm rm rm

Wages and salaries 13,083,601 10,475,896 4,462,540 4,842,761social security contributions 210,639 147,644 26,517 28,916contribution to defined contribution plan 921,121 786,598 515,846 570,475short term accumulating compensated absences 775 36,118 (7,348) 36,118other staff related expenses 445,525 849,798 197,998 441,587

14,661,661 12,296,054 5,195,553 5,919,857less: capitalised in product development

expenditure (1,660,725) (1,279,270) (1,231,144) (1,279,270)13,000,936 11,016,784 3,964,409 4,640,587

included in employee benefits expense of the group and the company are executive directors’ remuneration amounting to rM1,406,825 (2011: rM1,439,888) and rM929,029 (2011: rM817,347) respectively.


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10. Directors’ remuneration

group company2012 2011 2012 2011

rm rm rm rmDirectors of the companyexecutive:

salaries and other emoluments 899,709 788,949 828,164 728,660defined contribution plan and social security

contributions 104,442 91,701 100,865 88,6871,004,151 880,650 929,029 817,347

non-executive :Fees 121,113 70,000 121,113 70,000

1,125,264 950,650 1,050,142 887,347Directors of subsidiariesexecutive:

salaries and other emoluments 384,260 536,618 – –defined contribution plan 18,414 22,620 – –

402,674 559,238 – –non-executive :

Fees 17,384 4,768 – –420,058 564,006 – –

1,545,322 1,514,656 1,050,142 887,347

The number of directors of the company whose total remuneration during the financial year fall within the following bands is analysed below:

number of directors2012 2011

executive:rM50,001 - rM100,000 1 1rM350,001 - rM400,000 – 1rM400,001 - rM450,000 1 1rM450,001 - rM500,000 1 –

non-executive: Below rM50,000 6* 3

*including 3 directors who have resigned during the financial year.



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11. Income tax expense

major components of income tax expense

The major components of income tax expense are:

group company2012 2011 2012 2011

rm rm rm rmcurrent income tax:

Malaysian income tax 585,498 423,267 – 1,465Foreign income tax 1,720,161 1,190,260 – –Withholding tax 190,941 305,895 141,751 227,434

2,496,600 1,919,422 141,751 228,899(over)/underprovision in prior year:

Malaysian income tax (21,146) (24,312) (1,465) (24,312)Foreign income tax 12,419 (60,678) – –

(8,727) (84,990) (1,465) (24,312)2,487,873 1,834,432 140,286 204,587

deferred tax (note 24): relating to origination and reversal of temporary

differences (48,229) 100,990 (123,967) 58,336Under/(over)provision in prior year 28,947 (7,141) 19,325 (44,694)

(19,282) 93,849 (104,642) 13,642income tax expense recognised in profit or loss 2,468,591 1,928,281 35,644 218,229

reconciliation between tax expense and accounting profit

The reconciliation between tax expense and the product of accounting profit multiplied by the applicable corporate tax rate for the years ended 30 June 2012 and 2011 are as follows:

group company2012 2011 2012 2011

rm rm rm rm

Profit before tax 7,747,443 7,441,414 243,067 2,090,809

Taxation at Malaysian statutory tax rate of 25% (2011: 25%) 1,936,861 1,860,354 60,767 522,702

Adjustments:different tax rates in other countries (261,761) 132,941 – –income not subject to tax – (302,185) (417,103) (560,861)expenses not deductible for tax purposes 340,372 212,185 162,711 97,960deferred tax assets not recognised/derecognised

during the year 314,607 – 69,658 –Utilisation of previously unrecognised tax losses

and unabsorbed capital allowances (72,649) (188,778) – –overprovision of income tax in prior year (8,727) (84,990) (1,465) (24,312)Under/(over)provision of deferred tax in

prior year 28,947 (7,141) 19,325 (44,694)Withholding tax on dividend and

other income received 190,941 305,895 141,751 227,434income tax expense recognised in profit or loss 2,468,591 1,928,281 35,644 218,229

domestic current income tax is calculated at the Malaysian statutory tax rate of 25% (2011: 25%) of the estimated assessable profit for the year.

Taxation for other jurisdictions is calculated at the rates prevailing in the respective jurisdictions. The above reconciliation is prepared by aggregating separate reconciliation for each national jurisdiction.


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12. earnings per share

Basic earnings per share is calculated by dividing the profit for the year attributable to ordinary equity holders of the company by the weighted average number of ordinary shares in issue during the financial year, excluding treasury shares held by the company.

The following table reflects the profit and share data used in the computation of basic earnings per share for the years ended 30 June:

group2012 2011

Profit attributable to ordinary equity holders of the company (rM) 4,022,859 4,712,659

Weighted average number of ordinary shares in issue* 161,426,917 161,925,665

Basic earnings per share (sen) 2.49 2.91 * The weighted average number of shares takes into account the weighted average effect of changes in treasury shares

transactions during the year.

The company does not have any outstanding convertible instruments. Accordingly, the diluted earnings per share is presented as equal to the basic earnings per share.

13. property, plant and equipment

group Buildings

computersand

software

Furniturefixture

fittingsand office

equipmentmotor

vehicles renovation totalrm rm rm rm rm rm

costAt 1 July 2010 580,000 14,458,598 1,936,443 74,896 516,906 17,566,843Additions – 421,942 414,332 209,163 181,144 1,226,581disposals – (12,191) (21,998) – – (34,189)Write off – (68,964) (46,620) – – (115,584)exchange differences – (143,258) (73,817) 180 (6,507) (223,402)At 30 June 2011 and 1 July 2011 580,000 14,656,127 2,208,340 284,239 691,543 18,420,249Additions – 557,133 178,340 176,171 57,753 969,397disposals – (18,716) (20,602) – – (39,318)exchange differences – (58,931) 22,572 11,415 4,376 (20,568)At 30 June 2012 580,000 15,135,613 2,388,650 471,825 753,672 19,329,760



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13. property, plant and equipment (cont’d)

group Buildings

computersand

software

Furniturefixture

fittingsand office

equipmentmotor


accumulated depreciation and impairment loss

At 1 July 2010 51,706 12,351,344 1,295,576 30,545 246,282 13,975,453depreciation charge for the year

(note 8) 11,600 627,921 188,586 16,800 72,842 917,749disposals – (5,630) (10,596) – – (16,226)Write off – (64,824) (26,030) – – (90,854)exchange differences – (106,325) (55,420) (68) (3,033) (164,846)At 30 June 2011 and 1 July 2011 63,306 12,802,486 1,392,116 47,277 316,091 14,621,276depreciation charge for the year

(note 8) 11,600 757,998 192,976 51,117 72,975 1,086,666disposals – (17,781) (5,023) – – (22,804)exchange differences – (35,568) 33,513 698 5,223 3,866At 30 June 2012 74,906 13,507,135 1,613,582 99,092 394,289 15,689,004

net carrying amountAt 30 June 2011 516,694 1,853,641 816,224 236,962 375,452 3,798,973

At 30 June 2012 505,094 1,628,478 775,068 372,733 359,383 3,640,756


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13. property, plant and equipment (cont’d)

company Buildings

computersand

software

Furniturefixture

fittingsand office

equipmentmotor


costAt 1 July 2010 580,000 10,870,406 429,990 70,229 251,083 12,201,708Additions – 150,767 41,346 – 78,547 270,660disposals – (2,199) – – – (2,199)Write off – (40,183) (2,150) – – (42,333)At 30 June 2011 and 1 July 2011 580,000 10,978,791 469,186 70,229 329,630 12,427,836Additions – 194,818 1,375 – – 196,193At 30 June 2012 580,000 11,173,609 470,561 70,229 329,630 12,624,029

accumulated depreciation and impairment loss

At 1 July 2010 51,706 10,041,090 364,392 27,784 176,149 10,661,121depreciation charge for the year

(note 8) 11,600 377,922 32,571 7,023 23,493 452,609disposals – (1,001) – – – (1,001)Write off – (38,914) (2,119) – – (41,033)At 30 June 2011 and 1 July 2011 63,306 10,379,097 394,844 34,807 199,642 11,071,696depreciation charge for the year

(note 8) 11,600 291,112 20,439 7,023 26,729 356,903At 30 June 2012 74,906 10,670,209 415,283 41,830 226,371 11,428,599

net carrying amount

At 30 June 2011 516,694 599,694 74,342 35,422 129,988 1,356,140

At 30 June 2012 505,094 503,400 55,278 28,399 103,259 1,195,430

during the financial year, the group acquired a motor vehicle with an aggregate cost of rM174,690 (2011: rM83,580) of which rM173,673 (2011: rM74,000) is financed through a finance lease. The carrying amount of the motor vehicles held under finance lease at the reporting date is rM226,845 (2011: rM78,766).

The cash outflow on acquisition of property, plant and equipment amounted to rM795,724 (2011: rM852,584) and rM196,193 (2011: rM270,660) for the group and the company respectively.



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14. Intangible assets

goodwill

product development

expenditureIntellectual

property totalgroup rm rm rm rm

cost

at 1 July 2010 14,675,880 6,996,747 – 21,672,627Additions – 1,279,270 359,731 1,639,001exchange differences (52,253) – (7,684) (59,937)at 30 June 2011 and 1 July 2011 14,623,627 8,276,017 352,047 23,251,691Additions – 1,660,725 448,049 2,108,774exchange differences 47,669 13,555 (23,095) 38,129at 30 June 2012 14,671,296 9,950,297 777,001 25,398,594

accumulated amortisation and impairment

at 1 July 2010 1,641,838 6,003,185 – 7,645,023Amortisation (note 8) – 1,082,731 56,088 1,138,819exchange differences – – (1,198) (1,198)at 30 June 2011 and 1 July 2011 1,641,838 7,085,916 54,890 8,782,644Amortisation (note 8) – 1,237,252 77,252 1,314,504exchange differences – 975 (3,738) (2,763)at 30 June 2012 1,641,838 8,324,143 128,404 10,094,385

net carrying amount

At 30 June 2011 12,981,789 1,190,101 297,157 14,469,047

At 30 June 2012 13,029,458 1,626,154 648,597 15,304,209

product development

expenditurecompany rm

cost

at 1 July 2010 6,996,747Additions 1,279,270at 30 June 2011 and 1 July 2011 8,276,017Additions 1,231,144at 30 June 2012 9,507,161

accumulated amortisation and impairment

at 1 July 2010 6,003,185Amortisation (note 8) 1,082,731at 30 June 2011 and 1 July 2011 7,085,916Amortisation (note 8) 1,206,356at 30 June 2012 8,292,272

net carrying amount

At 30 June 2011 1,190,101

At 30 June 2012 1,214,889


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14. Intangible assets (cont’d)

(a) amortisation of product development expenditure and intellectual property

The amortisation of the product development expenditure and intellectual property (consisting of digital content rights and licenses acquired) of the group and the company have been included in the cost of sales.

(b) goodwill - Impairment loss recognised

The management of the group carries out a review of the recoverable amounts of the goodwill on an annual basis. no additional impairment loss was recognised in the current year. The recoverable amount was based on value-in-use and was determined at the cash-generating unit (cgU). in determining value-in-use for the cgU, the discount rate applied to cash flow projections is the group’s internal rate of return.

(c) Impairment tests for goodwill

allocation of goodwill

goodwill has been allocated to the group's cash generating unit ("cgU") identified according to the mobile solutions operations of the respective countries as follows:

2012 2011rm rm

indonesia 8,431,314 8,431,314Thailand 4,598,144 4,550,475

13,029,458 12,981,789 Key assumptions used in value-in-use calculations

The recoverable amount of the cgU is determined based on value-in-use calculations using cash flow projections based on financial forecasts approved by management covering a 5-year period. The cash flows beyond the 5-year period are extrapolated using growth rates which are consistent with the long-term average growth rate for the industry.

Key assumptions and management's approach to determine the values assigned to each key assumption are as follows:

(i) sales growth and selling prices

The sales growth and the selling prices used to calculate the cash inflows from operations were determined after taking into consideration price trends of the geographical locations which the cgUs are exposed. Values assigned are consistent with the external sources of information.

The mobile solutions operations in indonesia had been temporarily affected by the directive issued by the authorities in october 2011, requiring all telecommunications companies in indonesia to de-activate premium sMs services and to provide users with an option to re-subscribe to the services.

These services have gradually recommenced prior to year end. it is assumed that the mobile solutions operations of the group’s subsidiary in indonesia would gradually resume to normal and subsequently record consistent growth during the projection period.

The management has also assessed and concluded that the recent decision of the central Jakarta supreme court (which is under appeal), declaring a major telecommunications company in indonesia as being bankrupt following the legal action taken by certain creditors of the telecommunications company in september 2012, would not significantly impact the operations and the forecast sales growth of the mobile solutions operations of the group’s subsidiary in indonesia.



65

14. Intangible assets (cont’d)

(c) Impairment tests for goodwill (cont’d)

Key assumptions used in value-in-use calculations (cont’d)

(ii) Budgeted gross margin

The basis used to determine the value assigned to the budgeted gross margins is the average gross margin achieved in the year immediately before the budgeted year increased for expected efficiency improvements.

(iii) exchange rate

The exchange rate used to translate foreign currencies transactions into the cgUs' functional currency is based on the exchange rates obtained immediately before the forecast year. Values assigned are consistent with external sources of information.

(iv) discount rate

The discount rate used of 15% per annum (2011: 6% to 11% per annum) is pre-tax and reflect the specific risks relating to the operations in the respective countries.

(v) long term growth rate

The cash flows beyond the 5-year period are extrapolated using constant growth rates, which range from 1.5% to 6.5% per annum.

sensitivity to changes in assumptions

The management believes that no reasonable change in any of the above key assumptions would cause the carrying value of the cgU in Thailand to materially exceed its recoverable amount.

With regard to the assessment of the value-in-use of the cgU in indonesia, with all other variables held constant, had the terminal value beyond the 5-year projection period been extrapolated using constant perpetual annual cash flows with no long term growth rate being assumed, instead of a long term constant growth rate of 6.5% per annum, the incremental impairment of goodwill would have been approximately rM1.2 million.

15. Investment in subsidiaries

company2012 2011

rm rm

Unquoted shares at cost 38,621,883 38,621,883less: Accumulated impairment losses (1,789,738) (1,641,838)

36,832,145 36,980,045


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15. Investment in subsidiaries (cont’d)

details of the subsidiaries are as follows:

country of incorporation

effective equity interest held

name of subsidiaries 2012 2011 % %

M3 Asia sdn. Bhd.++ Malaysia 100 100

M3 online sdn. Bhd.# Malaysia 100 100

M3 Mobile Technologies (s) Pte. ltd. *,+ singapore 100 100

M3Asia distribution (s) Pte. ltd.*,++ singapore 60 60

Messaging Technologies (h.K.) limited (“M3Tech hK”) *,+,++ hong Kong, sAr 100 100

M3 Technologies (Thailand) co., ltd. *,+,++ Thailand 95 95

M3 Technologies Pakistan (Private) limited (“M3Tech Pakistan”) *,+ Pakistan 60 60

PT surya genta Perkasa*, +,++ indonesia 80 80

Virtue Partners international limited*,+++British Virgin

islands 100 100

Held under m3tech HK

AKn Messaging Technologies (Xiamen) co., ltd*,+The People’s

republic of china 93.02 93.02

M3 Technologies (shenZhen) company limited*,+The People’s

republic of china 100 100

Way Way innovations company limited*,# hong Kong, sAr 100 100

Held under m3tech pakistan

M3 Technologies Middle east FZe*,#United Arab

emirates 60 –

* Audited by firms of auditors other than ernst & Young+ involved in provision of mobile solutions++ involved in distribution and retailing of fast-moving electronic goods and related products+++ investment holding company# dormant



67

15. Investment in subsidiaries (cont’d)

a) Incorporation of subsidiary

on 10 April 2012, M3Tech Pakistan incorporated a wholly-owned subsidiary under the name of M3 Technologies Middle east FZe (“M3 Middle east”) in the United Arab emirates. The intended principal activity of this subsidiary is the provision of mobile solutions. This subsidiary has not commenced operations.

b) Impairment assessment of investments in subsidiaries

investments in subsidiaries are tested for impairment when such indicators exist. This requires an estimation of the value in use of these investments.

in making this assessment, amongst others, the management has taken into consideration the projected long term growth in both the provision for mobile solutions activities as well as the distribution and retailing activities of the respective subsidiaries of the group.

Based on the impairment assessment performed, an incremental provision for impairment of subsidiaries of rM147,900 has been made in the current year in respect of the investment in M3Asia distribution Pte ltd, as this subsidiary has incurred accumulated losses and depends on the company for continued financial support.

16. Interest in a jointly controlled entity

group company2012 2011 2012 2011

rm rm rm rm

Unquoted shares, at cost 46 46 46 46Advances to a jointly controlled entity 1,064,223 443,990 1,064,223 443,990share of post acquisition reserves (46,501) (13,112) – –

1,017,768 430,924 1,064,269 444,036exchange differences (1,369) (380) – –

1,016,399 430,544 1,064,269 444,036

on 24 december 2010, the company entered into an agreement with lim cheng Mong (“lcM”) and nexgen studio Pte ltd (“nexgen”) (“JV agreement”) with the intention of incorporating a company for the provision of e-educational services.

on 31 January 2011, the above-mentioned parties incorporated M3 interactive (s) Pte ltd (“M3 interactive”), which has an issued and paid up share capital of sgd100. The company has a 20% equity interest in this investment, which has been equity accounted for as a jointly controlled entity of the group.

in addition, the company has provided advances to M3 interactive amounting to sgd168,000 (rM443,990) in prior year. Following the completion of the first and second phases of the project, the company has provided additional advances of sgd252,000 (rM620,233) during the current year. Thus, the total advances as at the current date is rM1,064,223. The advances are unsecured, interest-free, and are to fund the working capital requirements of the application and software development project being undertaken by M3 interactive.

The company is entitled to demand the full payment of these advances or to convert the advances due from M3 interactive into equity, in the event certain milestones of the project as stipulated in the JV agreement are not completed. in addition, under the JV agreement, the company is required to capitalise the advances to M3 interactive upon the completion of the project.

The management has assessed and concluded that the fair value of this option to convert the advances into equity is insignificant as at 30 June 2012 and 2011, as the jointly controlled entity has not commenced commercial operations. The management has also concluded that no provision for impairment of the advances would be required as the advances are expected to be recoverable.


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16. Interest in a jointly controlled entity (cont’d) during the year, M3 interactive has filed a statement of claim in the high court of singapore against an ex-director of M3

interactive and nexgen (“the defendants”). subsequently, in september 2012, M3 interactive, the defendants and the company, which is also a party to the JV agreement, have entered into a settlement agreement on 11 september 2012, in which the parties involved have agreed a settlement amount of sgd120,000 to be paid by the defendants.

in addition, as part of the settlement agreement, an independent party would be appointed to perform a valuation on the shares in M3 interactive held by nexgen as at the date of the settlement, in accordance with the relevant clause in the JV agreement, which entitles the remaining non-defaulting parties of the JV agreement to acquire the shares in M3 interactive which are held by nexgen.

The settlement has not been completed as at the date of the authorisation of the consolidated financial statements of the group.

The aggregate amounts of the non-current assets, current assets, current liabilities, non-current liabilities, income and expenses related to the group’s 20% equity interest in the jointly controlled entity are as follows:

group2012 2011

rm rm

assets and Liabilities:non-current assets 240,231 61,329current assets 8,640 48,074current liabilities (291,710) (122,848)

Income and expensesincome – –expenses (33,389) (13,112)

17. Inventories

group2012 2011

rm rmcostTrading inventories 8,458,121 6,951,503

during the year, the amount of inventories recognised as an expense in cost of sales of the group was rM15,286,013 (2011:

rM12,442,306).



69

18. trade and other receivables

group company2012 2011 2012 2011

rm rm rm rmcurrenttrade receivables

Third parties 13,913,048 12,785,209 3,182,419 3,548,039

other receivablesdue from subsidiaries – – 9,530,519 7,959,384Prepayments 944,937 1,594,960 41,042 91,661sundry receivables 498,765 252,563 33,268 18,814deposits 1,070,086 409,828 227,477 222,947Advances due from staff 44,561 11,980 – –

2,558,349 2,269,331 9,832,306 8,292,806less: Allowance for impairment – – (777,733) (777,733)

2,558,349 2,269,331 9,054,573 7,515,073Trade and other receivables 16,471,397 15,054,540 12,236,992 11,063,112less: Prepayments (944,937) (1,594,960) (41,042) (91,661)

15,526,460 13,459,580 12,195,950 10,971,451Add: cash and bank balances (note 19) 19,239,687 20,168,574 2,561,689 6,665,353Total financial assets classified as loans

and receivables 34,766,147 33,628,154 14,757,639 17,636,804

The amounts due from subsidiaries are mainly in respect of advances. These balances are unsecured and are repayable on demand. The amounts which have been impaired in the prior year relates mainly to the amount due from a subsidiary, which operations have been scaled down.

Trade receivables are non-interest bearing and normal credit term range from 30 to 90 days (2011: 30 to 90 days) terms. They are recognised at their original invoice amounts which represent their fair values on initial recognition.

The group has no significant concentration of credit risk that may arise from exposures to a single customer or to groups of customers, other than as disclosed in note 28(a).

aging analysis of trade receivables

The aging analysis of the group’s and company’s trade receivables is as follows:

group company2012 2011 2012 2011

rm rm rm rmneither past due nor impaired 7,978,718 8,257,575 1,917,169 1,986,3061 to 30 days past due not impaired 1,937,848 1,679,906 561,439 794,17031 to 60 days past due not impaired 1,629,340 745,345 406,603 153,19561 to 90 days past due not impaired 506,163 873,693 49,101 290,979More than 91 days past due not impaired 1,860,979 1,228,690 248,107 323,389

5,934,330 4,527,634 1,265,250 1,561,73313,913,048 12,785,209 3,182,419 3,548,039


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18. trade and other receivables (cont’d)

receivables that are neither past due nor impaired

Trade receivables that are neither past due nor impaired are creditworthy debtors with good payment records with the group and the company.

none of the group's and the company’s trade receivables that are neither past due nor impaired have been renegotiated during the financial year.

receivables that are past due but not impaired

The group and the company have trade receivables amounting to rM5,934,330 (2011: rM4,527,634) and rM1,265,250 (2011: rM1,561,733) respectively that are past due at the reporting date but not impaired. These receivables are unsecured.

receivables that are impaired

As at the reporting date, there are no third party debtors’ balances which have been individually or collectively impaired.

19. cash and bank balances

group company2012 2011 2012 2011

rm rm rm rm

cash on hand and at banks 14,447,142 14,700,904 2,478,777 6,395,307deposits with licensed banks 4,792,545 5,467,670 82,912 270,046

19,239,687 20,168,574 2,561,689 6,665,353

The deposits with licensed banks bore interest ranging from 1.35% to 5.5% (2011: 1.35% to 7%) per annum and have maturity periods ranging from 1 to 180 days (2011: 1 to 180 days).

20. share capital, share premium and treasury shares

number of ordinary shares of rm0.10 each amount

share capital (Issued and

fully paid)treasury

shares

share capital (Issued and

fully paid)share

premium

total share capital

and share premium

treasury shares

rm rm rm rmgroup and company

At 1 July 2011 163,518,740 (1,614,500) 16,351,874 2,351,731 18,703,605 (315,637)Purchase of treasury shares – (943,000) – – – (250,002)At 30 June 2012 163,518,740 (2,557,500) 16,351,874 2,351,731 18,703,605 (565,639)

At 1 July 2010 163,518,740 (1,574,500) 16,351,874 2,351,731 18,703,605 (308,687)Purchase of treasury shares – (40,000) – – – (6,950)At 30 June 2011 163,518,740 (1,614,500) 16,351,874 2,351,731 18,703,605 (315,637)

number of ordinary shares of rm0.10 each amount

2012 2011 2012 2011rm rm

authorised share capitalAt 1 July 2011 and at 30 June 2012 250,000,000 250,000,000 25,000,000 25,000,000



71

20. share capital, share premium and treasury shares (cont’d)

(a) share capital

The holders of ordinary shares (except treasury shares) are entitled to receive dividends as and when declared by the company. All ordinary shares carry one vote per share without restrictions and rank equally with regard to the company's residual assets.

on 20 April 2012, 30 April 2012 and 2 May 2012, the company announced and updated the status of its proposal to undertake a private placement of up to 10% of the issued and paid-up share capital of the company (excluding treasury shares) (“Placement shares”), to investors to be identified for working capital purposes.

on 29 June 2012, the company further announced that it would endeavour to procure investors to subscribe the Placement shares not later than 17 november 2012, being the deadline of the six months from the date of approval obtained from Bursa securities for the listing application.

(b) treasury shares

This amount relates to the acquisition cost of treasury shares.

The shareholders of the company, by an ordinary resolution passed in the Annual general Meeting held on 22 november 2011 approved the renewal of the company's plan to repurchase its own ordinary shares. The directors of the company believe that the repurchase plan can be applied in the best interest of the company and its shareholders.

during the year, the company repurchased 943,000 of its issued ordinary shares from the open market at an average price of rM0.27 per share. The total consideration paid for the repurchase was rM250,002. The repurchase transactions were financed by internally generated funds. The shares repurchased are being held as treasury shares in accordance with section 67A of the companies Act, 1965.

21. other reserves (non-distributable)

group company2012 2011 2012 2011

rm rm rm rm

Foreign currency translation reserve (1,029,563) (1,137,154) – –special reserve – – 16,074,240 16,074,240

(1,029,563) (1,137,154) 16,074,240 16,074,240

(a) Foreign currency translation reserve

The foreign currency translation reserve is used to record exchange differences arising from the translation of the financial statements of foreign operations whose functional currencies are different from that of the group's presentation currency. it is also used to record the exchange differences arising from monetary items which form part of the group's net investment in foreign operations, where the monetary item is denominated in either the functional currency of the reporting entity or the foreign operation.

(b) special reserve

in the financial year ended 30 June 2005, the company had obtained approval from the high court of Malaya, pursuant to section 64 of the companies Act, 1965, to reduce the share premium account of the company by rM16,074,240 and for such amount to be transferred to a special reserve Account and thereon to set off the goodwill arising from the acquisition of a wholly owned subsidiary, Messaging Technologies (h.K.) limited against the special reserve Account.


72


22. retained earnings

Prior to the year of assessment 2008, Malaysian companies adopt the full imputation system. in accordance with the Finance Act 2007 which was gazetted on 28 december 2007, companies shall not be entitled to deduct tax on dividend paid, credited or distributed to its shareholders, and such dividends will be exempted from tax in the hands of the shareholders ("single tier system"). however, there is a transitional period of six years, expiring on 31 december 2013, to allow companies to pay franked dividends to their shareholders under limited circumstances. companies also have an irrevocable option to disregard the 108 balance and opt to pay dividends under the single tier system.

The change in the tax legislation also provides for the 108 balance to be locked-in as at 31 december 2007 in accordance with section 39 of the Finance Act 2007.

The company did not elect for the irrevocable option to disregard the 108 balance. Accordingly, during the transitional period, the company may utilise the credit in the 108 balance as at 30 June 2012 to distribute cash dividend payments to ordinary shareholdings as defined under the Finance Act 2007.

As at 30 June 2012, the company has sufficient tax exempt profits and credit in the 108 balance to pay franked dividends out of its entire retained earnings.

23. Loans and borrowings

group company2012 2011 2012 2011

rm rm rm rmcurrentsecured:

Bank borrowings 744,579 – 744,579 –obligation under finance leases (note 26(b)) 48,586 26,909 – –

793,165 26,909 744,579 –

non-currentsecured:

obligation under finance leases (note 26(b)) 152,075 34,933 – –152,075 34,933 – –

total loans and borrowingsBank borrowings 744,579 – 744,579obligation under finance leases (note 26(b)) 200,661 61,842 – –

945,240 61,842 744,579 –

The bank borrowings of the group and the company relate to trade facilities for the purchases of inventories by subsidiaries of the group. The borrowings are secured via a guarantee from a subsidiary, M3 Asia sdn Bhd.

The group and the company is required to comply with certain terms and conditions, including maintaining the debt service ratio prescribed by the bank. The debt service ratio is computed based on the earnings before tax, interest, depreciation and amortisation (eBiTdA) against the current portion of all term debts and interest expense.



73

23. Loans and borrowings (cont’d)

The remaining maturities of the loans and borrowings as at 30 June 2012 are as follows:

group company2012 2011 2012 2011

rm rm rm rm

on demand or within 1 year 793,165 26,909 744,579 –More than 1 year and less than 2 years 33,096 24,674 – –More than 2 years and less than 5 years 118,979 10,259 – –

945,240 61,842 744,579 –

At the reporting date, the applicable effective interest rates are as follows:

group company2012 2011 2012 2011

% % % %

Bank borrowings 1.42 – 1.42obligation under finance leases 4.30 – 5.35 4.30 – –

24. Deferred tax

group company2012 2011 2012 2011

rm rm rm rm

At 1 July 181,602 95,563 104,642 91,000recognised in the income statement (note 11) (19,282) 93,849 (104,642) 13,642exchange differences (4,315) (7,810) – –At 30 June 158,005 181,602 – 104,642

Presented after appropriate offsetting as follows:

group company2012 2011 2012 2011

rm rm rm rm

deferred tax assets – (107,954) – –deferred tax liabilities 158,005 289,556 – 104,642

158,005 181,602 – 104,642


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24. Deferred tax (cont’d)

The components and movements of deferred tax liabilities and assets during the financial year prior to offsetting are as follows:

group

property plant and

equipment

product development

expenditure othersUnutilised tax

losses totalrm rm rm rm rm

As at 1 July 2011 309,091 297,525 (128,529) (296,485) 181,602recognised in income statement (136,091) (297,525) 117,909 296,425 (19,282)exchange differences (4,375) – – 60 (4,315)As at 30 June 2012 168,625 – (10,620) – 158,005

As at 1 July 2010 288,000 248,000 (133,200) (307,237) 95,563recognised in income statement 23,032 49,525 4,671 16,621 93,849exchange differences (1,941) – – (5,869) (7,810)As at 30 June 2011 309,091 297,525 (128,529) (296,485) 181,602

company

As at 1 July 2011 88,838 297,525 (93,190) (188,531) 104,642recognised in income statement (88,838) (297,525) 93,190 188,531 (104,642)As at 30 June 2012 – – – – –

As at 1 July 2010 124,000 248,000 (83,000) (198,000) 91,000recognised in income statement (35,162) 49,525 (10,190) 9,469 13,642As at 30 June 2011 88,838 297,525 (93,190) (188,531) 104,642

deferred tax assets have not been recognised in respect of the following items:

group company2012 2011 2012 2011

rm rm rm rm

Unused tax losses and capital allowances 3,445,183 747,485 1,319,098 –other (taxable)/deductible temporary

differences, net (1,020,034) 52,279 (1,040,466) –Amounts not recognised, net 2,425,149 799,764 278,632 –

The deferred tax assets arising from the unutilised tax losses and capital allowances have only been recognised to the extent that the group and the company have sufficient taxable temporary differences available, as these arose from the company and certain subsidiaries with a recent history of losses and it is not probable that future taxable profit will be available against which the unused tax losses, unabsorbed capital allowances can be utilised.

The unused tax losses and unabsorbed capital allowances of the company are available indefinitely for offsetting against future taxable profits, subject to no substantial change in shareholdings under the income Tax Act, 1967 and guidelines issued by the tax authority.

At the reporting date, no deferred tax liability (2011: nil) has been recognised for taxes that would be payable on the undistributed earnings of certain foreign subsidiaries. The group has determined that these undistributed earnings of the subsidiaries will not be distributed in the foreseeable future. such temporary differences for which no deferred tax liability has been recognised aggregate to rM15,108,968 (2011: rM11,413,784). The deferred tax liability relating to such temporary differences which is not recognised is estimated to be rM1,644,415 (2011: rM1,271,466).



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25. trade and other payables

group company2012 2011 2012 2011

rm rm rm rmtrade payables Third parties 6,298,709 5,894,647 1,846,227 2,039,503

other payablesAccruals of other expenses 1,181,909 1,395,441 316,732 773,315Accruals of employee related expenses 1,254,217 1,262,304 529,601 589,075sundry payables 287,300 509,829 17,954 25,563other statutory payables 362,596 288,047 202,277 220,431Amount due to director 8,064 – – –

3,094,086 3,455,621 1,066,564 1,608,3849,392,795 9,350,268 2,912,791 3,647,887

less: Accruals of employee related expenses and other statutory payables (1,616,813) (1,550,351) (731,878) (809,506)

Add: loans and borrowings (note 23) 945,240 61,842 744,579 –Total financial liabilities carried at amortised cost 8,721,222 7,861,759 2,925,492 2,838,381

Trade payables are non-interest bearing and the normal trade credit terms granted to the group ranged from 30 to 90 days (2011: 30 to 90 days).

26. commitments

(a) operating lease arrangements - as lessee

The group and the company lease various properties under cancellable operating lease agreements. The group and the company are required to give appropriate notice for the termination of those agreements.

(b) Finance lease commitments

The group has finance leases for certain motor vehicles (see note 13). Future minimum lease payments under finance leases together with the present value of the net minimum lease payments are as follows:

group2012 2011

rm rmminimum lease payments:not later than 1 year 58,746 29,055later than 1 year and not later than 2 years 40,844 26,820later than 2 years and not later than 5 years 133,487 11,153Total minimum lease payments 233,077 67,028Amounts representing finance charges (32,416) (5,186)Present value of minimum lease payments (note 23) 200,661 61,842

present value of payments:not later than 1 year 48,586 26,909later than 1 year and not later than 2 years 33,096 24,674later than 2 years and not later than 5 years 118,979 10,259Present value of minimum lease payments 200,661 61,842less: Amount due within 12 months (note 23) (48,586) (26,909)Amount due after 12 months (note 23) 152,075 34,933

other information on financial risks of finance lease obligations is disclosed in note 28.


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27. related party disclosures (a) in addition to the transactions detailed elsewhere in the financial statements, the following significant transactions

between the group and related parties took place at terms agreed between the parties during the financial year:

2012 2011rm rm

group

rental expenses charged by Adventurous limited, a company in which a director, i.e. chew shin Yong, Mark has interest 60,813 80,910

Administration and service fee charged by Malahon credit company limited,a company in which a director, i.e. chew shin Yong, Mark has interest 22,656 –

(b) compensation of key management personnel

The remuneration of directors and other members of key management during the year was as follows:

group company2012 2011 2012 2011

rm rm rm rm

short-term employee benefits 2,683,178 2,573,565 1,315,787 1,310,684defined contribution plans and social security

contributions 230,129 214,209 160,821 159,758others 138,497 74,768 121,113 70,000

3,051,804 2,862,542 1,597,721 1,540,442

included in the total remuneration of key management personnel are:

group company2012 2011 2012 2011

rm rm rm rmdirectors’ remuneration- salaries and other emoluments (note 10) 1,406,825 1,439,888 929,029 817,347directors’ fees (note 10) 138,497 74,768 121,113 70,000

1,545,322 1,514,656 1,050,142 887,347



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28. Financial risk management objectives and policies

The group and the company are exposed to financial risks arising from their operations and the use of financial instruments. The key financial risks include credit risk, liquidity risk, interest rate risk, foreign currency risk and market price risk.

The Board of directors reviews and agrees policies and procedures for the management of these risks. The audit committee provides independent oversight to the effectiveness of the risk management process.

it is, and has been throughout the current and previous financial year, the group’s policy that no derivatives shall be undertaken.

The following sections provide details regarding the group's and company's exposure to the above-mentioned financial risks and the objectives, policies and processes for the management of these risks.

(a) credit risk

credit risk is the risk of loss that may arise on outstanding financial instruments should a counterparty default on its obligations. The group’s and the company’s exposure to credit risk arises primarily from trade and other receivables. For other financial assets (including cash and bank balances), the group and the company minimise credit risk by limiting the group’s associations to business partners with high creditworthiness. Trade receivables are monitored on an ongoing basis via the group’s management reports.

exposure to credit risk

information regarding credit enhancements for trade and other receivables is disclosed in note 18.

credit risk concentration profile

The group determines concentrations of credit risk by monitoring the country and industry sector profile of its trade receivables on an ongoing basis. The credit risk concentration profile of the group’s trade receivables at the reporting date are as follows:

2012 2011rm % rm %

By country:Malaysia 6,399,600 46 6,459,734 51Pakistan 3,732,514 27 2,866,717 22Thailand 1,380,420 10 933,877 7singapore 930,437 7 637,758 5china 658,175 5 862,454 7indonesia 577,134 4 945,720 7other countries 234,768 1 78,949 1

13,913,048 100 12,785,209 100

The group and the company have approximately 59% (2011: 61%) and 51% (2011: 59%) of the outstanding trade receivables as at 30 June 2012 due from various telecommunication companies mainly for the provision of sMs content and services.

in addition, approximately 10% (2011: 10%) of the outstanding trade receivables of the group are due from certain key distributors and wholesalers for the sales of electronic goods and related products.

Financial assets that are neither past due nor impaired

information regarding trade receivables that are neither past due nor impaired is disclosed in note 18. deposits with banks and other financial institutions, investment securities and derivatives that are neither past due nor impaired are placed with or entered into with reputable financial institutions or companies with high credit ratings and no history of default.


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28. Financial risk management objectives and policies (cont’d)

(a) credit risk (cont’d)

Financial assets that are either past due or impaired

information regarding financial assets that are either past due or impaired is disclosed in note 18.

(b) Liquidity risk

liquidity risk is the risk that the group or the company will encounter difficulty in meeting financial obligations due to shortage of funds. The group manages its debt maturity profile, operating cash flows and the availability of funding so as to ensure that all refinancing, repayment and funding needs are met. As part of its overall liquidity management, the group maintains sufficient levels of cash or cash convertible investments to meet its working capital requirements.

analysis of financial instruments by remaining contractual maturities

The table below summarises the maturity profile of the group’s and the company’s liabilities at the reporting date based on contractual undiscounted repayment obligations.

on demand or within 1 year

1 to 5 years

over 5 years total

2012 rm rm rm rmgroup

Financial liabilities:Trade and other payables* 7,775,982 – – 7,775,982loans and borrowings^ 805,087 174,331 – 979,418Total undiscounted financial liabilities 8,581,069 174,331 – 8,755,400

company

Financial liabilities:Trade and other payables* 2,180,913 – – 2,180,913loans and borrowings^ 746,341 – – 746,341Total undiscounted financial liabilities 2,927,254 – – 2,927,254

2011group

Financial liabilities:Trade and other payables* 7,799,917 – – 7,799,917loans and borrowings^ 29,055 37,973 – 67,028Total undiscounted financial liabilities 7,828,972 37,973 – 7,866,945

company

Financial liabilities:Trade and other payables* 2,838,381 – – 2,838,381

* excludes items which are not within the scope of Frs 139^ includes the interest portion of the finance lease obligations



79

28. Financial risk management objectives and policies

(c) Interest rate risk

interest rate risk is the risk that the fair value or future cash flows of the group’s and the company’s financial instruments will fluctuate because of changes in market interest rates. The group and the company’s exposure to interest rate risk is minimised, as the group and the company does not have any significant loans and borrowings, other than finance lease obligations and bank borrowings which bear interest at fixed rates.

The investment in financial assets are mainly short term in nature and they are not held for speculative purposes but have been mostly placed in fixed deposits which yield better returns than cash at bank.

As such, no sensitivity analysis of interest risk has been disclosed in the financial statements.

(d) Foreign currency risk

Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates.

The subsidiaries of the group transact mainly in their respective functional currencies. As such, the transactional currency exposures arising from sales or purchases that are denominated in a currency other than the respective functional currencies of group entities (primarily rM, hong Kong dollar ("hKd"), Pakistan rupees ("PKr"), United states dollar ("Usd"), and Thai Baht ("ThB")) is minimal.

The group and the company also hold cash and cash equivalents denominated in foreign currencies (other than the respective functional currencies of the group entities) for working capital purposes. At the reporting date, the rM equivalent of such foreign currency balances (mainly in Usd) amounted to rM444,602 (2011: rM498,455) and rM1,198,662 (2011: rM1,243,808) (in PKr) for the group and the company respectively. certain subsidiaries of the group also have trade payables denominated in Usd amounting to rM2,817,749 (2011: rM2,054,827).

sensitivity analysis for foreign currency risk

The following table demonstrates the sensitivity of the group’s profit net of tax to a reasonably possible change in the Usd exchange rates against the respective functional currencies of the group entities and an analysis of the effects of a change in the functional currencies of the group entities against the rM, with all other variables held constant.

group2012 2011

Impact on equity

profit net of tax

Impact on equity

profit net of tax

rm rm rm rm

Usd/MYr - strengthened 5% 132,950 (106,561) 108,454 10,904 - weakened 5% (132,950) 106,561 (108,454) (10,904)idr/MYr - strengthened 5% 129,935 (23,910) 134,333 5,982 - weakened 5% (129,935) 23,910 (134,333) (5,982)rMB/MYr - strengthened 5% 187,886 (76,787) 186,353 (22,693) - weakened 5% (187,886) 76,787 (186,353) 22,693PKr/MYr - strengthened 5% 220,803 41,338 139,600 695 - weakened 5% (220,803) (41,338) (139,600) (695)ThB/MYr - strengthened 5% 309,631 30,458 277,644 908 - weakened 5% (309,631) (30,458) (277,644) (908)hKd/MYr - strengthened 5% (68,899) (88,252) (78,496) (128,848) - weakened 5% 68,899 88,252 78,496 128,848sgd/MYr - strengthened 5% (57,239) (219,088) (30,187) (142,718) - weakened 5% 57,239 219,088 30,187 142,718Usd/hKd - strengthened 5% – 8,536 – 18,668 - weakened 5% – (8,536) – (18,668)Usd/idr - strengthened 5% – 4,348 – 10,569 - weakened 5% – (4,348) – (10,569)Usd/sgd - strengthened 5% – (16,193) – – - weakened 5% – 16,193 – –


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28. Financial risk management objectives and policies (cont’d)

(d) Foreign currency risk (cont’d)

company 2012 2011

profit net of tax profit net of taxrm rm

Usd/MYr - strengthened 5% (118,742) – - weakened 5% 118,742 –PKr/MYr - strengthened 5% 59,933 2,194 - weakened 5% (59,933) (2,194)

(e) market price risk

Market price risk is the risk that the fair value or future cash flows of the group's financial instruments will fluctuate because of changes in market prices (other than interest or exchange rates).

The group is not exposed to market price risk as it does not have any investment in quoted equity instrument.

29. Fair value of financial instruments

Determination of fair value

Financial instruments that are not carried at fair value and whose carrying amounts are reasonable approximation of fair value

The following are classes of financial instruments that are not carried at fair value and whose carrying amounts are

reasonable approximation of fair value:

note

Trade and other receivables (current) 18Trade and other payables (current) 25loans and borrowings (current and non-current) 23

The carrying amounts of these financial assets and liabilities are reasonable approximation of fair values, either due to their short-term nature or that they are floating rate instruments that are re-priced to market interest rates on or near the reporting date.

The carrying amounts of the current portion of loans and borrowings are reasonable approximations of fair values due to the insignificant impact of discounting.

The fair values of current loans and borrowings are estimated by discounting expected future cash flows at market incremental lending rate for similar types of lending, borrowing or leasing arrangements at the reporting date.

amounts due from subsidiaries and a jointly controlled entity and finance lease obligations

The fair values of these financial instruments are estimated by discounting expected future cash flows at market incremental lending rate for similar types of lending, borrowing or leasing arrangements at the reporting date.

option to convert advances to a jointly controlled entity into equity

The fair value of the option to convert the advances to a jointly controlled entity into equity as disclosed in note 16 is valued using a valuation technique, incorporating various inputs including the expected conversion rate and the estimated current fair value of the investment in the jointly controlled entity.



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29. Fair value of financial instruments (cont’d)

Determination of fair value (cont’d)

Fair value of financial instruments by classes that are carried at fair value

Fair value hierarchy

The group and the company classify fair value measurement using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. The fair value hierarchy has the following levels:

level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities;

level 2: inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and

level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).

The option to convert the advances given by the company to a jointly controlled entity (note 16), which the fair value has been assessed as minimal in 2012 and 2011 is determined based on the level 2 hierarchy.

There are no other financial assets or liabilities of the group and the company which are carried at fair value. There are no transfers between the different fair value hierarchies during the financial years ended 30 June 2012 and 2011.

30. capital management

The primary objective of the group’s capital management is to ensure that it maintains a strong credit rating and healthy capital ratios in order to support its business and maximise shareholder value.

The group manages its capital structure and makes adjustments to it, in light of changes in economic conditions. To

maintain or adjust the capital structure, the group may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. no changes were made in the objectives, policies or processes during the years ended 30 June 2012 and 30 June 2011.

The group and the company are not subject to any externally imposed capital requirements, other than certain debt covenants relating to the bank borrowings (note 23).

in addition to the covenants on the bank borrowings, the group monitors capital using net gearing ratio, which is net debt (or net cash) divided by equity attributable to the owners of the parent. The group's policy is to keep the group net gearing ratio at a level deemed appropriate considering business, economic and investment conditions.

note group company2012 2011 2012 2011

rm rm rm rm

loans and borrowings 23 945,240 61,842 744,579 –less: cash and bank balances 19 (19,239,687) (20,168,574) (2,561,689) (6,665,353)

net cash (18,294,447) (20,106,732) (1,817,110) (6,665,353)

equity attributable to the owners of the parent 49,024,375 46,762,919 51,543,589 53,205,160

net gearing/net cash net cash net cash net cash net cash


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31. segmental information

(a) reporting format

For management purpose, the group is organised into business segments on the geographical areas in which the business unit operates, and has four main reportable operating segments as follows:

(i) Malaysia;(ii) Thailand; (iii) Pakistan; and(iv) other Asian countries.

Management monitors the operating results of its business units separately for the purpose of making decisions about resource allocation and performance assessment. The comparative segmental information has been restated to be comparable to the segment presentation in the current year, due to the increased significance of certain operating segments.

(b) allocation basis and transfer pricing

segment results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Unallocated items comprise mainly corporate assets, liabilities and expenses.

Transfer prices between business segments are set on an arm's length basis in a manner similar to transactions with third parties. segment revenue, expenses and results include transfers between business segments. These transfers are eliminated on consolidation.

Interest income

interest income is separately reported from interest expense and excluded from calculation of segment results. interest revenue is classified under unallocated income while interest expense remains in finance costs.

geographical segments

The following table provides an analysis of the group's revenue, results, assets, liabilities and other information by geographical segments:

2012 malaysia thailand pakistanother asian

countries elimination consolidatedrm rm rm rm rm rm

revenueexternal sales 32,602,837 6,993,521 8,396,617 8,291,847 – 56,284,822inter-segment revenue 8,389 701,024 – 640,377 (1,349,790) –Total revenue 32,611,226 7,694,545 8,396,617 8,932,224 (1,349,790) 56,284,822

resultssegment results 7,523,109interest expense (6,712)interest income 264,435share of loss of a jointly

controlled entity (33,389)Profit before tax 7,747,443income tax expense (2,468,591)Profit for the year 5,278,852



83

31. segmental information (cont’d)

geographical segments (cont’d)

2012

malaysia thailand pakistanother asian


assetssegment assets 25,108,264 12,948,550 8,941,866 25,634,859 (9,519,369) 63,114,170interest in a jointly controlled

entity 1,016,399Tax assets 266,203Total assets 64,396,772

Liabilitiessegment liabilities 8,314,372 1,116,721 1,589,264 9,531,739 (10,214,061) 10,338,035Tax liabilities 996,359Total liabilities 11,334,394

other segment information capital expenditure 270,746 53,648 336,095 308,908 – 969,397Additions of intangible assets 1,231,144 – 448,049 429,581 – 2,108,774depreciation 444,544 105,543 241,339 295,240 – 1,086,666Amortisation 1,206,356 – 77,252 30,896 – 1,314,504Unrealised loss/(gain) on foreign

exchange 269,536 27,324 5,030 (353,776) – (51,866)non-cash expenses other than

depreciation, amortisation and unrealised exchange differences 73,579 – 431,486 – – 505,065

2011 malaysia thailand pakistanother asian


revenueexternal sales 29,557,709 6,296,207 5,843,558 9,204,130 – 50,901,604inter-segment revenue 719,167 70,659 – 391,534 (1,181,360) –Total revenue 30,276,876 6,366,866 5,843,558 9,595,664 (1,181,360) 50,901,604

resultssegment results 7,336,666interest expense (1,252)interest income 119,112share of loss of a jointly controlled entity (13,112)Profit before tax 7,441,414income tax expense (1,928,281) Profit for the year 5,513,133


84



geographical segments (cont’d)

2011

malaysia thailand pakistanother asian


assetssegment assets 27,606,801 11,974,032 5,517,679 23,844,154 (8,500,029) 60,442,637interest in a jointly controlled

entity 430,544Tax assets 186,170Total assets 61,059,351

Liabilitiessegment liabilities 9,450,051 1,357,379 945,305 7,974,410 (9,505,514) 10,221,631Tax liabilities 983,634Total liabilities 11,205,265

other segment information capital expenditure 469,211 96,547 362,852 297,971 – 1,226,581Additions of intangible assets 1,279,270 – 359,731 – – 1,639,001depreciation 521,603 115,327 155,152 299,230 (173,563) 917,749Amortisation 1,082,731 – 56,088 – – 1,138,819Unrealised gain on foreign

exchange (34,660) – (3,711) (86,043) – (124,414)non-cash expenses other than

depreciation, amortisation and unrealised exchange differences 4,384 12,563 15,883 6,382 – 39,212

non-current assets information, other than deferred tax asset, based on the geographical location of assets is as follows:

group2012 2011

rm rm

Malaysia 3,892,843 3,455,998Thailand** 4,868,740 4,885,347Pakistan 1,209,885 785,955other Asian countries** 9,989,896 9,571,264

19,961,364 18,698,564 ** includes the goodwill on consolidation allocated to the respective cgUs



85


The concentration of revenue from external customers is at the following countries:

group2012 2011

rm rm

Malaysia 32,602,837 30,268,606Pakistan 8,396,617 5,843,558

Thailand 6,993,521 6,158,587indonesia 2,804,147 2,687,846

revenue from external customers classified by service and product is as follows:

group2012 2011

rm rm

Provision of mobile solutions 31,407,655 33,733,023sales of fast-moving electronic goods and related products 24,877,167 17,168,581

56,284,822 50,901,604

The revenue derived from various telecommunication companies in different countries constitute 44% (2011: 49%) of the group’s total revenue.

32. Dividends

group and company2012 2011

rm rmrecognised during the financial year:

Third interim tax exempt dividend for 2011: 5% on 161,904,240 ordinary shares (0.5 sen per ordinary share) 809,521 –

First interim tax exempt dividend for 2012: 5% on 161,894,240 ordinary shares (0.5 sen per ordinary share) 809,471 –

First interim tax exempt dividend for 2011: 5% on 161,914,240 ordinary shares (0.5 sen per ordinary share) – 809,571

second interim tax exempt dividend for 2011: 5% on 161,904,240 ordinary shares (0.5 sen per ordinary share) – 809,521

1,618,992 1,619,092

The directors do not recommend the payment of a final dividend for the financial year ended 30 June 2012.


86


33. comparatives

The following comparative amounts have been reclassified to conform to the current year’s presentation:

previously

stated reclassifications restatedrm rm rm

2011 groupstatement of financial positionProperty, plant and equipment 4,096,130 (297,157) 3,798,973intangible assets 14,171,890 297,157 14,469,047

Income statementdepreciation of property, plant and equipment 973,837 (56,088) 917,749Amortisation of intangible assets 1,082,731 56,088 1,138,819

statement of cash flowsPurchase of plant and equipment (1,512,312) 359,731 (1,152,581)Acquisition of intangible assets and product development

expenditure paid (1,279,270) (359,731) (1,639,001) The reclassifications were made to separately reflect certain intellectual property consisting of digital content rights and

licenses amounting to rM359,731 which were acquired by a subsidiary in the prior financial year as intangible assets. consequently, the amortisation expense relating to these intangible assets have also been separately shown. The net carrying amount of the intellectual property amounted to rM297,157 as at 30 June 2011.

The statement of cash flows of the group has also been restated by including the cost of the acquisition of the intellectual property as part of the cost of intangible assets paid, instead of being included as part of the acquisition of property, plant and equipment.

As the intellectual property was only acquired during the financial year ended 30 June 2011, there is no impact to the statement of financial position as at the beginning of the previous financial year. consequently, a statement of financial position as at 1 July 2010 has not been presented.

34. authorisation of financial statements for issue

The financial statements for the year ended 30 June 2012 were authorised for issue in accordance with a resolution of the directors on 15 october 2012.



87

35. Breakdown of retained profits into realised and unrealised

The breakdown of the retained profits of the group and of the company as at 30 June 2012 into realised and unrealised profits is presented in accordance with the directive issued by Bursa Malaysia securities Berhad dated 25 March 2010 and prepared in accordance with guidance on special Matter no. 1, determination of realised and Unrealised Profits or losses in the context of disclosure Pursuant to Bursa Malaysia securities Berhad listing requirements, as issued by the Malaysian institute of Accountants.

The retained earnings as at reporting date may be analysed as follows:

group2012 2011

rm rmTotal retained profits of the company and its subsidiaries- realised 31,523,478 27,894,170-Unrealised (106,119) (57,188)

Total share of retained profits from a jointly controlled entity- realised (46,501) (13,112)

consolidation adjustments 545,114 1,688,23531,915,972 29,512,105

company2012 2011

rm rmTotal retained profits - realised 17,376,916 18,966,253-Unrealised (45,533) (223,311)

17,331,383 18,742,942

sUppLementarY InFormatIon

88


locationdescription/existing use

land area/(Built-up area) Tenure

date of Acquisition

ApproximateAge of

Building

net Book Value

rMUnit1007, Block A, Pusatdagangan Phileo ii Jalan ss 16/11, 46350 Petaling Jaya, selangor darul ehsan.

office lot 2,506 sq.ft. Freehold 15 January 2006 15 years 505,094

LIst oF propertY


89

Authorised capital : rM25,000,000issued and Fully Paid-Up capital : rM16,351,874 comprising 163,518,740 ordinary shares of rM0.10 eachclass of equity securities : ordinary shares of rM0.10 each (“shares”)Voting rights : one vote per shareholder on a show of hands or one vote per share on a poll

Distribution schedule of shareholders

no.of Holders size of Holdings no. of shares ** % #31 less than 100 shares 1,490 *436 100 - 1,000 shares 364,114 0.231,341 1,001 - 10,000 shares 6,991,700 4.34829 10,001 - 100,000 shares 28,672,040 17.81147 100,001 - less than 5% of issued shares 85,028,896 52.833 5% and above of issued shares 39,903,000 24.792,787 total 160,961,240 100.00

* negligible** excluding a total of 2,557,500 shares bought back and retained as treasury shares

sUBstantIaL sHareHoLDers’ sHareHoLDIngs (As per the register of substantial shareholders)

Direct Interest Indirect Interestname of substantial shareholders no. of shares % # no. of shares % #lim seng Boon 13,505,000 8.39 24,186,840 (1) 15.03 goh lee lang 24,186,840 15.03 13,505,000 (2) 8.39 lim Keong Yew – – 12,548,000 (3) 7.80exodius holdings sdn Bhd 12,548,000 7.80 – –

notes:(1) deemed interested by virtue of his spouse, Madam goh lee lang’s shareholdings in M3 Technologies (Asia) Berhad.(2) deemed interested by virtue of her spouse, Mr. lim seng Boon’s shareholdings in M3 Technologies (Asia) Berhad.(3) deemed interested by virtue of his interest in exodius holdings sdn Bhd.

DIrectors’ sHareHoLDIngs (As per the register of directors’ shareholdings)

Direct Interest Indirect Interestname of Directors no. of shares % # no. of shares % #chew shin Yong, Mark 2,130,600 1.32 – –lim seng Boon 13,505,000 8.39 24,186,840 (1) 15.03lester ratnakumar neil Francis 808,016 0.50 – –Muhammad nagib gopal Bin Abdullah 80,000 0.05 – –chin chee Wing 590,000 0.37 2,634,900 (2) 1.64

notes:(1) deemed interested by virtue of his spouse, Madam goh lee lang’s shareholdings in M3 Technologies (Asia) Berhad.(2) deemed interested by virtue of his spouse, Madam cha lee Pin’s shareholdings in M3 Technologies (Asia) Berhad.

anaLYsIs oF sHareHoLDIngsas at 31 octoBer 2012

90


anaLYsIs oF sHareHoLDIngs (cont’d)as at 31 octoBer 2012

30 Largest securities account Holders (without aggregating the securities from different securities accounts belonging to the same person)

no. name of shareholders no. of shares held % #1 goh lee lAng 15,100,000 9.382 eXodiUs holdings sdn Bhd 12,548,000 7.80 3 liM seng Boon 12,255,000 7.61 4 KoeK seAM cheng 7,673,800 4.77 5 goh lee lAng 6,872,600 4.276 choong YeAn YAW 5,080,900 3.16 7 M&A noMinee (Asing) sdn Bhd 4,972,200 3.09

SANSTON FINANCIAL GROUP LIMITED FOR AVESTRA ASSET MANAGEMENT LIMITED8 ciMsec noMinees (TeMPATAn) sdn Bhd 3,500,000 2.17

CIMB BANK FOR MAK TIAN MENG9 MAlAhon crediT coMPAnY liMiTed 2,836,800 1.76 10 goh cheAng hUAng 2,656,200 1.65 11 chA lee Pin 2,634,900 1.64 12 goh lee lAng 2,214,240 1.38 13 cheW shin Yong, MArK 2,130,600 1.32 14 TAn sWee Yeong 1,680,800 1.04 15 AlliAnce groUP noMinees (TeMPATAn) sdn Bhd 1,630,000 1.01

PLEDGED SECURITIES ACCOUNT FOR KOEK TIANG KUNG16 ong Peh hoon 1,350,000 0.84 17 ciTigroUP noMinees (Asing) sdn Bhd 1,347,100 0.84

EXEMPT AN FOR OCBC SECURITIES PRIVATE LIMITED 18 JF APeX noMinees (TeMPATAn) sdn Bhd 1,301,700 0.81

HUATAI FINANCIAL HOLDINGS (HK) LIMITED FOR HUATAI HK SPC-HUATAI VON MALAYSIA FUND SEGREGATED PORTFOLIO

19 liM seng Boon 1,250,000 0.78 20 goh Thong Beng 1,100,000 0.68 21 hsBc noMinees (TeMPATAn) sdn Bhd 1,000,000 0.62

HSBC (MALAYSIA) TRUSTEE BERHAD FOR AMANAH SAHAM SARAWAK22 TAn choo Jin 1,000,000 0.62 23 seng YAn chUAn 950,000 0.59 24 PAPAgo (h.K.) liMiTed 811,700 0.5025 lesTer rATnAKUMAr neil FrAncis 808,016 0.50 26 Ang leong chAi 757,300 0.47 27 dATo’ Khor Wooi chen 695,000 0.43 28 Tee YeoW 650,000 0.40 29 lee che Weng 642,700 0.40 30 chin chee Wing 590,000 0.37

# All percentage shareholding computations are based on the issued and paid-up capital of the company less 2,557,500 treasury shares arising from the share buy back exercise.


91notIce oF annUaL generaL meetIngnoTice is hereBY giVen that the Thirteenth Annual general Meeting of M3 Technologies (AsiA) BerhAd (“M3Tech” or “the company”) will be held at eugenia room, ground Floor, sime darby convention centre, 1A, Jalan Bukit Kiara 1, 60000 Kuala lumpur on Monday, 17 december 2012 at 2.30 p.m. to transact the following business:-

a g e n D a

1. To receive the Audited Financial statements for the financial year ended 30 June 2012 together with the reports of the directors and auditors thereon.

please refer to note i

2. To approve the payment of directors’ fees for the financial year ended 30 June 2012. resolution 1

3. To re-elect Mr. lim seng Boon as director who retires in accordance with Article 104 of the company’s Articles of Association.

resolution 2

4. To re-elect the following directors who retire in accordance with Article 110 of the company’s Articles of Association:

i. en. Muhammad nagib gopal bin Abdullahii. Mr. Mark Wing Kongiii. Mr. chin chee Wing

resolution 3resolution 4resolution 5

5. To appoint Auditors and to authorise the directors to fix their remuneration.

notice of nomination pursuant to section 172 (11) of the companies Act, 1965, a copy of which is annexed on page 96 has been received by the company for the nomination of Messrs. ecovis Ahl for appointment as Auditors and of the intention to propose the following ordinary resolution:

“ThAT Messrs. ecovis Ahl be and are hereby appointed as Auditors of the company in place of the retiring Auditors, Messrs ernst & Young to hold office untill the conclusion of the next annual general meeting at a remuneration to be agreed between the directors and the Auditors.”

resolution 6

6.

as special Business :To consider and if thought fit, to pass the following resolutions, with or without modifications :-

orDInarY resoLUtIon 1generaL aUtHorItY For tHe DIrectors to IssUe sHares pUrsUant to sectIon 132D oF tHe companIes act, 1965

“ThAT pursuant to section 132d of the companies Act, 1965, and subject to the approvals of the relevant governmental and/or regulatory authorities, the directors be and are hereby empowered to allot and issue shares in the company from time to time at such price, upon such terms and conditions, for such purposes and to such person or persons whomsoever as the directors may deem fit provided that the aggregate number of shares issued pursuant to this resolution does not exceed 10% of the issued share capital of the company for the time being And ThAT the directors be and are also empowered to obtain approval from the Bursa Malaysia securities Berhad for the listing of and quotation for the additional shares so issued And ThAT such authority shall continue in force until the conclusion of the next annual general meeting of the company.”

resolution 7

7. orDInarY resoLUtIon 2proposeD reneWaL oF tHe aUtHorItY For tHe pUrcHase oF Up to 10% oF tHe totaL IssUeD anD paID-Up orDInarY sHare capItaL oF m3tecH (“proposeD reneWaL”)

“ThAT, subject always to the companies Act, 1965 (“the Act”), the provisions of the Memorandum and Articles of Association of the company, Ace Market listing requirements of Bursa Malaysia securities Berhad (“Bursa securities”) and the approvals of any other relevant governmental and/or regulatory authorities, the company be and is hereby authorised, to the extent permitted by the law, to buy-back and/or hold such amount of ordinary shares of rM0.10 each in the company (“M3Tech shares”), as may be determined by the directors of the company from time to time, through Bursa securities upon such terms and conditions for such purposes as the directors may deem fit and expedient in the interest of the company provided that:-

resolution 8

92


i. the aggregate number of M3Tech shares which may be purchased and/or held as treasury shares does not exceed 10% of the total issued and paid up ordinary share capital of the company at the time of purchase;

ii. the maximum funds to be allocated for the share buy-back shall not exceed the aggregate of the retained profits and the share premium account of the company; and

iii. the M3Tech shares purchased pursuant to the Proposed renewal are to be treated in any of the following manner:-

a. cancel all or part of the purchased M3Tech shares; and/or b. retain all or part of the purchased M3Tech shares as treasury shares; and/or c. resell the treasury shares on Bursa securities; and/ord. distribute the treasury shares as share dividends to the shareholders of the company for

the time being.

And ThAT the authority conferred by this resolution shall commence upon the passing of this resolution until:-

a. the conclusion of the next annual general meeting (“AgM”) of the company following the general meeting at which this resolution was passed, unless by an ordinary resolution passed at the meeting, the authority is renewed, either unconditionally or subject to conditions; or

b. the expiration of the period within which the next AgM after that date it is required by law to be held; or

c. revoked or varied by ordinary resolution passed by the shareholders of the company at a general meeting of the company,

whichever occurs first, but not so as to prejudice the completion of the purchase(s) by the company of the M3Tech shares before the aforesaid expiry date and made in any event, in accordance with the provisions of the guidelines issued by Bursa securities and any prevailing laws, rules, regulations, orders, guidelines and requirements issued by any other relevant government and/or regulatory authorities;

And ThAT, the directors of the company be and are hereby authorised to take all such steps as are necessary or expedient to implement, finalise, complete or to effect the Proposed renewal with full powers to assent to any conditions, modifications, resolutions, variations and/or amendments (if any) as may be imposed by the relevant authorities and to do all such acts and things as they may deem fit and expedient in the best interest of the company to give effect to and to complete the purchase of the M3Tech shares.”

8. specIaL resoLUtIonproposeD amenDments to tHe artIcLes oF assocIatIon oF tHe companY

“ThAT the proposed amendments to the existing Articles of Association of the company as set out in the Appendix i attached to the Annual report 2012 be and are hereby approved and adopted And the Board of directors of the company be authorised to give effect to the said amendments.

resolution 9

9. To transact any other business of which due notice shall have been given in accordance with the companies Act, 1965.

By order of the Board

tea sor HUa (macs 01324)cHan Bee Fang (maIcsa 7032385)company secretaries

Petaling Jaya, selangor darul ehsan23 november 2012

notIce oF annUaL generaL meetIng (cont’d)


93

notes:

i. The Agenda no. 1 is meant for discussion only as the provision of s169(1) of the companies Act, 1965 does not require a formal approval of shareholders and hence, is not put forward for voting.

ii. A member entitled to attend and vote at the Meeting is entitled to appoint any person as his proxy to attend and vote in his instead. There shall be no restriction as to the qualification of the proxy. A proxy appointed to attend and vote at the Meeting shall have the same rights as the member to speak at the Meeting.

iii. A member shall be entitled to appoint up to two (2) proxies to attend and vote at the same meeting. Where a shareholder appoints two (2) proxies, he shall specify the proportion of his shareholdings to be represented by each proxy.

iv. A proxy may but need not be a member of the company and the provisions of section 149(1)(a) and (b) of the companies Act, 1965 shall not apply to the company.

v. The instrument appointing a proxy shall be in writing under the hand of the appointor or of his attorney duly authorised in writing or, if the appointor is a corporation, under the seal.

vi. Where a member of the company is an exempt authorised nominee which holds ordinary shares in the company for multiple beneficial owners in one securities account (“omnibus account”), there is no limit to the number of proxies which the exempt authorised nominee may appoint in respect of each omnibus account it holds.

vii. The instrument appointing a proxy must be deposited at the registered office of the company at Third Floor, no. 79 (room A), Jalan ss21/60, damansara Utama, 47400 Petaling Jaya, selangor darul ehsan not less than 48 hours before the time for holding the Meeting or at any adjournment thereof.

viii. The depositors whose names appear in the record of depositors as at 10 december 2012 shall be regarded as members and entitled to attend, speak and vote at the Thirteenth Annual general Meeting.

eXpLanatorY notes to specIaL BUsIness

1. The ordinary resolution 1 proposed under item 6 of the Agenda is a renewal of the general mandate for issuance of shares by the company under section 132d of the companies Act, 1965. The ordinary resolution, if passed, will give the directors of the company from the date of the above meeting, authority to allot and issue ordinary shares from the unissued capital of the company for such purposes as the directors consider would be in the interest of the company. The authority will, unless revoked or varied by the company in general Meeting, expire at the next Annual general Meeting.

This general mandate will provide flexibility to the company for allotment of shares for any possible fund raising activities, including but not limited to further placing of shares, for the purpose of funding future investment project(s), working capital and/or acquisition(s).

As at the date of this notice, 16,096,000 new ordinary shares of rM0.10 each were issued at an issue price of rM0.2268 pursuant to a mandate granted to the directors at the last annual general meeting held on 22 november 2011 and which will lapse at the conclusion of the Thirteenth annual general meeting. The total proceeds of rM3,650,572.80 raised from the private placement exercise will be utilised for working capital purposes.

2. The ordinary resolution 2 proposed under item 7 of the Agenda is to renew the shareholders’ mandate for the share buy-back by the company. The said proposed renewal of shareholders’ mandate will empower the directors to buy-back and/or hold up to a maximum of 10% of the company’s issued and paid-up share capital at any point of time, by utilizing the amount allocated which shall not exceed the total retained profits and/or share premium account of the company. This authority unless revoked or varied by the company at a general meeting, will expire at the conclusion of the next annual general meeting of the company, or the expiration of period within which the next annual general meeting is required by law to be held, whichever is earlier.

Please refer to the share Buy Back statement to shareholders dated 23 november 2012 for further details.

3. The special resolution proposed under item 8 of the Agenda is to amend the existing Articles of Association of the company to be in line with the Ace Market listing requirements of Bursa Malaysia securities Berhad.

details of the proposed amendments are set out in Appendix i attached to the Annual report 2012.

notIce oF annUaL generaL meetIng (cont’d)

94


1. The directors standing for re-election at the Thirteenth Annual general Meeting of the company are as follows:-

i. Mr. lim seng Boon (Article 104)ii. en. Muhammad nagib gopal bin Abdullah (Article 110)iii. Mr. Mark Wing Kong (Article 110)iv. Mr. chin chee Wing (Article 110)

Article 104 – At least one-third of the directors for the time being shall retire from office provided that all directors, shall retire from office once at least in every three years but shall be eligible for re-election.

Article 110 – Any director appointed to fill a casual vacancy or as an addition to the existing directors shall hold office only until the next following Annual general Meeting and shall then be eligible for re-election but shall not be taken into account in determining the directors who are to retire by rotation at that meeting.

2. details of directors who are standing for re-election are set out in the directors’ Profile section (pages 6 to 9 of the Annual report); while details of their interest in the securities of the company are set out in the Analysis of shareholdings – directors’ shareholdings, which appear on page 89 of this Annual report.

statement accompanYIng notIce oF annUaL generaL meetIng


95

proposed amendments to the articles of association

appenDIX I

article no existing articles new articles87 subject to any rights or restrictions for the time being

attaching to any class or classes of shares and subject further to Articles 65(2), (3) and (4) above, at the meetings of members or classes of members each member may vote in person or by proxy or by attorney in respect of any share or shares upon which all calls due to the company has been paid and on a show of hands every person present who is a member or a representative or a proxy of a member shall have one vote, and on a poll every member present in person or by proxy or by attorney or other duly authorised representative shall have one vote for every such share he holds. A proxy shall be entitled to vote on a show of hands on any question at any general meeting.

renumbered as Article 87(1)

87(2) no Provision A Member of the company entitled to attend and vote at a meeting of the company, or at a meeting of any class of members of the company, shall be entitled to appoint any person as his proxy to attend and vote instead of the Member at the meeting. There shall be no restriction as to the qualification of the proxy.

87(3) no Provision A proxy appointed to attend and vote at a meeting of the company shall have the same rights as the Member to speak at the meeting.

88(3) no Provision Where a Member of the company is an exempt authorised nominee which holds ordinary shares in the company for multiple beneficial owners in one securities account (“omnibus account”), there is no limit to the number of proxies which the exempt authorized nominee may appoint in respect of each omnibus account it holds.

An exempt authorised nominee refers to an authorised nominee defined under the depositories Act which is exempted from compliance with the provisions of subsection 25A(1) of depositories Act.

96


lester ratnakumar neil Francis106, Jalan Terasek 4Bangsar Baru59100 Kuala lumpur

date : 24 october 2012

The Board of directorsM3 Technologies (AsiA) BerhAdThird Floor, no.79 (room A)Jalan ss21/60, damansara Utama47400 Petaling Jaya, selangor

dear sirs,

notIce oF nomInatIon oF aUDItors

Pursuant to section 172(11) of the companies Act, 1965, i, being a shareholder of the company hereby give notice of my intention to nominate Messrs. ecovis Ahl for appointment as new auditors of the company and to propose the following as an ordinary resolution to be tabled at the forthcoming Annual general Meeting:

“ThAT Messrs. ecovis Ahl be and are hereby appointed as Auditors of the company in place of the retiring Auditors, Messrs ernst & Young to hold office untill the conclusion of the next Annual general Meeting at a remuneration to be agreed between the directors and the Auditors.”

Yours faithfully,

lester ratnakumar neil Francis

notIce oF nomInatIon oF aUDItors

m3 tecHnoLogIes (asIa) BerHaD (482772-D)

(Incorporated in malaysia)proXY Form

i/We nric/company no.(full name in capital letters)

of(full address)

being (a) member(s) of M3 Technologies (AsiA) BerhAd hereby appoint

nric no.(full name in capital letters)

of(full address)

or failing him/her, nric no.(full name in capital letter)

of(full address)

or failing him/her, the chairman of the Meeting as my/our proxy to vote for me/us on my/our behalf at the Thirteenth Annual general Meeting of the company to be held at eugenia room, ground Floor, sime darby convention centre, 1A, Jalan Bukit Kiara 1, 60000 Kuala lumpur on Monday, 17 december 2012 at 2.30 p.m. and at any adjournment thereof.

Please indicate with an “X” in the appropriate spaces how you wish your votes to be cast. if no specific direction as to vote is given, the Proxy will vote or abstain from voting at his/her discretion.

no. resolutions For against1. To approve the payment of directors’ fees for the financial year ended 30 June 2012.2. To re-elect Mr. lim seng Boon as director who retires pursuant to Article no. 104 of the

company’s Articles of Association.3. To re-elect en. Muhammad nagib gopal bin Abdullah as director who retires pursuant to

Article no. 110 of the company’s Articles of Association.4. To re-elect Mr. Mark Wing Kong as director who retires pursuant to Article no. 110 of the

company’s Articles of Association.5. To re-elect Mr. chin chee Wing as director who retires pursuant to Article no. 110 of the

company’s Articles of Association.6. To appoint Messrs. ecovis Ahl as Auditors of the company in place of the retiring Auditors,

Messrs. ernst & Young.7. To approve the authority for directors to issue shares pursuant to section 132d of the

companies Act, 1965.8. Proposed renewal of the authority for the share buy-back by the company.9. Proposed Amendments to the Articles of Association of the company.

dated this ______________ day of _________________ 2012

__________________________________signature of Member(s)/common seal

notes:i. A member entitled to attend and vote at the Meeting is entitled to appoint any person as his proxy to attend and vote in his instead. There shall be no restriction as to the qualification

of the proxy. A proxy appointed to attend and vote at the Meeting shall have the same rights as the member to speak at the Meeting.

ii. A member shall be entitled to appoint up to two (2) proxies to attend and vote at the same meeting. Where a shareholder appoints two (2) proxies, he shall specify the proportion of his shareholdings to be represented by each proxy.

iii. A proxy may but need not be a member of the company and the provisions of section 149(1)(a) and (b) of the companies Act, 1965 shall not apply to the company.

iv. The instrument appointing a proxy shall be in writing under the hand of the appointor or of his attorney duly authorised in writing or, if the appointor is a corporation, under the seal.

v. Where a member of the company is an exempt authorised nominee which holds ordinary shares in the company for multiple beneficial owners in one securities account (“omnibus account”), there is no limit to the number of proxies which the exempt authorised nominee may appoint in respect of each omnibus account it holds.

vi. The instrument appointing a proxy must be deposited at the registered office of the company at Third Floor, no. 79 (room A), Jalan ss21/60, damansara Utama, 47400 Petaling Jaya, selangor darul ehsan not less than 48 hours before the time for holding the Meeting or at any adjournment thereof.

vii. The depositors whose names appear in the record of depositors as at 10 december 2012 shall be regarded as members and entitled to attend, speak and vote at the Thirteenth Annual general Meeting.

no. oF sHares HeLD


Please fold across the line and close

Please fold across the line and close

STAMP

To:M3 Technologies (Asia) Berhad (482772-D)

The Company SecretariesThird Floor, No. 79 (Room A)Jalan SS21/60, Damansara Utama47400 Petaling JayaSelangor Darul Ehsan, Malaysia

Unit 809, Block BPusat Dagangan Phileo IIJalan SS16/1146350 Petaling JayaSelangor Darul EhsanMalaysiaTel: +603 7955 0018Fax: +603 7955 8017

www.m3tech.com.my

M3 Technologies (Asia) Berhad (482772-D)

annual report | 2012

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