m3 technologies (asia) berhad...annual report 2016 m3 technologies (asia) berhad (482772-d) m3...

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(482772-D)

www.m3tech.com.my

M3 Technologies (Asia) Berhad

(482772-D)

Lot 17.1, 17th Floor,Menara Lien Hoe,No. 8, Persiaran Tropicana, Tropicana Golf & Country Resort, 47410 Petaling Jaya,Selangor Darul Ehsan,Malaysia. Tel : 603-7886 2423 Fax : 603-7886 0592

ANNUAL REPORT 2016

Going the distance,realizing the dream

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Corporate Information

Corporate Structure

5 Years Financial Highlights

Directors’ Profile

Profile of Key Senior Management

Chairman’s Statement

Statement on Corporate Governance

Statement on Risk Management

and Internal Control

Audit Committee Report

Statement of Directors’ Responsibility

Additional Compliance Information

Financial Statements

Supplementary Information

List of Properties

Analysis of Shareholdings

Analysis of Warrant Holdings

Notice of Annual General Meeting

Appendix A

Proxy Form

CONTENTS

M3 TECHNOLOGIES (ASIA) BERHAD(482772-D)

2016ANNUAL REPORT

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AUDIT COMMITTEE

LIM KOOI SIANGChairperson

CHIN CHEE WING

YEOH BOON HOCK

NOMINATION COMMITTEE

CHOONG ENG CHOON Chairman

CHIN CHEE WING LIM KOOI SIANG

REMUNERATION COMMITTEE

CHIN CHEE WINGChairman

LIM SENG BOON

LIM KOOI SIANG

COMPANY SECRETARIES

Tea Sor Hua (MACS 01324)

Yong Yen Ling (MAICSA 7044771)

PRINCIPAL BANKER

Alliance Bank (Malaysia) Berhad

AUDITORS

ECOVIS AHL PLT Chartered Accountants No. 9-3, Jalan 109F, Plaza Danau 2, Taman Danau Desa, 58100 Kuala Lumpur, Malaysia Tel : 603-7981 1799 Fax : 603-7980 4796

CorporateInformation

CHEW SHIN YONG, MARKExecutive Chairman

LIM SENG BOONManaging Director

LIM KOOI SIANG

Independent Non-Executive Director

CHIN CHEE WINGIndependent Non-Executive Director

YEOH BOON HOCK

Independent Non-Executive Director

CHOONG ENG CHOONIndependent Non-Executive Director

DATO’ WOO HON KONGIndependent Non-Executive Director

DATUK CHAI WOON CHETNon-Independent Non-Executive Director

NG KOK HENGNon-Independent Non-Executive Director


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CORPORATE ANDHEAD OFFICE

Lot 17.1, 17th Floor,Menara Lien Hoe,No. 8, Persiaran Tropicana, Tropicana Golf & Country Resort, 47410 Petaling Jaya,Selangor Darul Ehsan,Malaysia. Tel : 603-7886 2423 Fax : 603-7886 0592

REGISTERED OFFICE

Third Floor, No. 79 (Room A) Jalan SS 21/60, Damansara Utama, 47400 Petaling Jaya, Selangor Darul Ehsan, Malaysia. Tel : 603-7725 1777 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)

LISTINGStock Name: M3TECHStock Code: 0017

WEBSITEwww.m3tech.com.my

Corporate Info (Cont’d)


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100%M3 Mobile Technologies (S) Pte.Ltd.(Singapore)

Messaging Technologies (Hong Kong) Ltd.(Hong Kong)

M3 Technologies (Xiamen) Co., Ltd.((The People’s Republic of China)

M3 Technologies(Shen Zhen) Co., Ltd.(The People’s Republic of China)

Way Way Innovations Company Limited(Hong Kong)

M3 Technologies Middle East FZE(United Arab Emirates)

M3 Technologies Pakistan (Private) Limited(f.k.n. AKN Messaging Technologies (Pvt.) Ltd.)(Pakistan)

PT Surya Genta Perkasa (Indonesia)

M3 ASIA Sdn. Bhd.(Malaysia)

M3 ONLINE Sdn. Bhd.(Malaysia)

M3 Asia Distribution (S) Pte. Ltd.(Singapore)

M3 Interactive (S) Pte. Ltd.(Singapore)

100%

60%

80%

100%

M3Shoppe (Asia) Sdn. Bhd.(Malaysia)

100%

100%

60%

Virtue Partners International Limited(British Virgin Island)

100%

20%

95%

100%

M3 Interactive(Shen Zhen) Co., Ltd.(The People’s Republic of China)

100%

100%

100%

M3 Technologies (Thailand) Co., Ltd.(Thailand)

95%

CorporateStructure

As at 30 June 2016


2016ANNUAL REPORT

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Revenue (RM’000)

2012 2013 2014

YEAR

2015 2016 2012 2013 2014

YEAR

2015 2016

2012 2013 2014 2015 2016 2012 2013 2014 2015 2016

YEAR YEAR

Profit / (Loss) Before Tax (RM’000)

Paid-Up Share Capital (RM’000) Net Tangible Asset (NTA) (RM’000)

(20,000)

(15,000)

(10,000)

(5,000)

0

5,000

10,000

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

0

5,000

10,000

15,000

20,000

0

10,000

20,000

30,000

40,000

50,000

60,000

19,732

16,3

52

17,9

61

17,9

61

18,5

61

24,256

37,4

36 39,6

41

28,8

68

27,9

80

40,533

(2,065)

56,285

7,56

6

(6,250)

(14,814)

(2,848)

49,869

38,885

35,288

30/6/2012 30/6/2013 30/6/2014 30/6/2015 30/6/2016 RM’000 RM’000 RM’000 RM’000 RM’000

Revenue 56,285 49,869 38,885 35,288 40,533 Profit / (Loss) Before Tax 7,566 (6,250) (14,814) (2,848) (2,065)Paid-up Share Capital 16,352 17,961 17,961 18,561 19,732 Net Tangible Asset (NTA) 37,436 39,641 28,868 27,980 24,256

5 Years Financial Highlights


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Mr. Lim Seng Boon, a Malaysian, Male, aged 59, 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 major shareholder of the Company.

He possesses over 20 years of the 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.

Lim Seng BoonManaging Director

Ms. Lim Kooi Siang, a Malaysian, Female, aged 65 was appointed to the Board on 8 December 2014 as an Independent Non-Executive Director of the Company. She is the Chairperson of Audit Committee and a member of both Nomination Committee and Remuneration Committee of the Company.

She is a Fellow of The Association of Chartered Certified Accountants, UK, as well as member of Malaysian Institute

Chew Shin Yong, MarkExecutive Chairman

Directors’ Profile

Mr. Chew Shin Yong, Mark, a Singaporean, Male, aged 48, 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,

Lim Kooi Siang Independent Non-Executive Director

Contents

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.

of Accountants and the Institute of Chartered Secretaries & Administrators, UK.

Ms. Lim has more than 40 years of experience in taxation and is a tax agent and GST tax agent approved by the Ministry of Finance, Malaysia.

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.


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Mr. Chin Chee Wing, a Malaysian, Male, age 60, 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.

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

Directors’ Profile (Cont’d)

Chin Chee WingIndependent Non-Executive Director

Yeoh Boon Hock Independent Non-Executive Director

Choong Eng ChoonIndependent Non-Executive Director

Choong Eng Choon, a Malaysian, Male, age 59, was appointed to the Board on 8 December 2014 as an Independent Non-Executive Director of the Company. He is the Chairman of the Nomination Committee of the Company.

Upon graduation, Mr. Choong started his career as an architect in the Penang Development Corporation which was involved in various projects, namely the original Bukit Jambul Country Club, amongst others.

From 1987 to 1990, he joined Forum Architects in Cambridge, England as a design and project architect.

Mr. Yeoh Boon Hock, a Malaysian, Male, age 61, was appointed to the Board on 8 December 2014 as an Independent Non-Executive Director of the Company. He is also a member of the Audit Committee of the Company.

Mr. Yeoh has been in the construction business for over 30 years. Since 1982, Mr Yeoh is the Managing Director of

During his working career, he has contributed significantly to the progress and achievement of the companies he have 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.

Astara ITS Sdn. Bhd., a civil works, contractor for data center and property management company. He is also currently a Director of MTRT Industries Sdn. Bhd., a company dealing in the energy sector of recycling and scrap tyres for fuel.

Subsequently, in 1990, he became a corporate member of Persatuan Akitek Malaysia, thus being a fully qualified professional architect.

In 1992, his own firm, Akitek CEC, was set up and became the principle architect of his firm. Projects undertaken by his firm included amongst others, residential and commercial projects focusing mainly in the Northern states of Malaysia, namely Penang and Kedah.

Since the mid of 1990s, he has undertaken both Design and Project Management works for clients, namely Natsteel Electronics of Singapore and AMD in the overseas such as China and Hungary.


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Datuk Chai Woon Chet, a Malaysian, Male, age 38, was appointed to the Board on 2 September 2016 as a Non-Independent Non-Executive Director. He was graduated in Diploma in Business Economics (KDU).

Datuk Chai was a Marketing Manager of Sanbumi Sawmill Sdn. Bhd. (a wholly-owned subsidiary of Sanbumi Holdings Berhad which is listed on the Main Board of Bursa Malaysia Securities Berhad). He had been involved in the timber business industry with buyers from Japan, Europe, South Africa and Korea for the past 8 years. He also has extensive experience in property development, construction and the automotive sector.

Datuk Chai was formerly the Managing Director of Lintasan Mayang Development Sdn. Bhd., which is the developer for Sabahs biggest integrated township, Alamesra, an innovative

Datuk Chai Woon ChetNon-Independent Non-Executive Director

Mr Ng Kok Heng, a Malaysian, Male, age 53, was appointed to the Board on 2 September 2016 as a Non-Independent Non-Executive Director. He was graduated with a Bachelor of Computer Science (Honours) from the Universiti Sains Malaysia, Penang.

Mr. Ng was appointed as Managing Director and Chief Executive Officer of XOX Bhd on 30 June 2010. On 9 December 2013, he retired as Managing Director of the Company but currently he continue to serve the Company as Chief Executive Officer of the Company.

He started his career in 1987 as a Sales Manager in Communications Technology Sdn. Bhd. and was in charge of sales and marketing. In 1992, he was appointed

Dato’ Woo Hon Kong Independent Non-Executive Director

Dato’ Woo Hon Kong, a Malaysian, Male, age 52, was appointed to the Board on 13 November 2015 as an Independent Non-Executive Director of the Company. He started his career in 1988 as a legal assistant and joined a mid size legal firm as a partner in 1989 until 1994.

Ng Kok Heng Non-Independent Non-Executive Director

Notes:

1. NoneoftheDirectorshavefamilyrelationshipswithanyotherDirectorsand/ormajorshareholdersofourCompanyexceptforMr.LimSengBoonwhoisthespouseofMadamGohLeeLang,amajorshareholderoftheCompany.

2. NoneoftheaboveDirectorshaveanyconflictofinterestwiththeCompany.3. NoneofourDirectorshasanyconvictionforoffences,publicsanctionorpenaltyimposedbytherelevantregulatorybodieswithin

thepast5years,otherthantrafficoffences.

Executive Director for MTL Communications Sdn. Bhd. and was responsible for the marketing, sales and business development of the Company. Subsequently in 2000, he joined Wilco Systems Sdn. Bhd. as the Managing Director and was responsible for the performance as well as the day-to-day operations of the Company.

He was also a consultant to Teligent AB, Sweden, a telecommunications provider and has worked with key players in various South East Asian countries such as Telekom Malaysia Berhad, Singapore Telecommunications Limited and Smart Communications Inc. He leads highly specialised teams of IT integrators and implementers to implement systems for telecommunications providers.

265 acre mixed development with gross development value of RM1.3 billion. Datuk Chai was also the former managing director of Maxims Circle Development Sdn. Bhd., which carried out property development projects at Kuala Lumpur with gross development value of RM23 million in Taman Permata, Melawati and RM66 million in Segambut.

At present, Datuk Chai also sits on the board of directors of Anzo Holdings Berhad, Astral Supreme Berhad and various other private companies. He is the Executive Director of KL Northgate Sdn. Bhd., a prime developer for 18 acres shopping mall and mixed development project at Selayang with a gross development value of RM1.6 billion and 86 acres Putra Medical City development project at Serdang.

Currently, Datuk Chai is a Managing Director of XOX Bhd.

He subsequently oversees the management and financial matters of companies involved in real estate and equities market locally and overseas prior to joining Atlan Holdings Bhd ‘s Group.

Currently he is an Independent Non-Executive Director of Atlan Holdings Bhd.

Directors’ Profile (Cont’d)


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Profile of Key Senior Management

Maisarah Binti Sahran (“Maisarah”)

Cik Maisarah, a Malaysian, Female, age 40, holding a BSC Computer Science, University Malaya.

She started her first career with M3Tech as a web developer in year 1999 , and subsequently promoted to Head of Research and Development, General Manager and was promoted to Deputy Vice President. In year 2013.

Maisarah is the chief of the research and development division of M3 Online Sdn Bhd, a wholly owned subsidiary of M3 Technologies (Asia) Berhad.

She has contributed significantly on the software development on most of the products including but not limited to M3Tech’s mobile solutions, I3Display platform, Getsnapps, I3Teamwork and etc.

Mr Ng Chen Lok

General Manager of M3 Technologies (Asia) Berhad

Mr, Ng Chen Lok, a Malaysian, Male, age 30 holding Bachelor’s Degree ( Business & Marketing ) and Bachelor’s Degree ( Computer Science). He started his career as a Sales and Marketing Manager in Wistom Tronic Sdn Bhd in year 2009 dealing with Smart Audio, Visual and Navigation products.

He further his career advance as a Deputy General Manager with Crear Industries Sdn Bhd, an import and supply of electrical products company and joined M3 Technologies (Asia) Berhad as Sales Manager in charge of mobile solution segment of M3Tech in the middle of 2015 and was promoted to General Manager in year 2016.

Mr. Shahbaz Ali Jamote

Country Manager of M3 Technologies (Pakistan) Private Limited and M3 Technologies Middle East (FZE) (United Arab Amirates)

Mr Shahbaz, a Pakistani, Male, age 37, holding an MBA in Marketing.

He started his first career with M3 Technologies (Pakistan) Private Limited as a Content Manager in 2004 and was promoted to Country Manager in year 2006. Mr Shahbaz is specialised in mobile and platform solutions, software application development and data analytics with excellent business acumen. His continuously efforts and contribution can be seen by the yearly profitable return on investment on the performance of our Pakistan subsidiary.

Mr Adnan Zubiar (“Adnan”)

Chief Financial Officer of M3 Technologies (Pakistan) Private Limited and M3 Technologies Middle East (FZE) (United Arab Amirates)

Mr Adnan, a Pakistani, Male, age 31, Chartered Accountant from the Institute of Chartered Accountants of Pakistan.

He started his first career in Grant Thornton Anjum Rahman, a member firm of Grant Thornton International. (providing audit and tax services) in year 2007 as an Audit Supervisor and promoted to Assistant Manager in the beginning of 2012. He further his career as Chief Financial Officer in M3 Technologies (Pakistan) Private Limited in year 2012.

Name of key Senior Management Family relationship with Conviction of offences within any Director/Major Shareholder the past five(5) years, other than traffic offences

1. Maisarah Binti Sahran None None2. Ng Chen Lok None None3. Shahbaz Ali Jamote None None4. Mr Adnan Zubiar None None


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Chairman’s Statement

REVIEW OF OPERATIONS AND FINANCIAL HIGHLIGHTS

For the financial year ended 30 June, 2016, the Group recorded revenue of RM40.5 million and a net loss after tax of RM3.4 million as compared to a revenue of RM35 million and a net loss after tax of RM3.4 million recorded in the previous financial year.

Even though there was a 15.7% increase in revenue, the Group has had to factor in the impairments on disposal of the Group’s share in Fotokem Sdn. Bhd., amounting to RM1 million. In addition to the above, income tax expenses of RM1.4 million and depreciation of RM1.2 million were among the largest contributors to the Group’s losses.

On 25 August 2016, the Group also successfully completed a rights issue exercise, raising RM39 million with the listing of and quotation for 389,525,880 Rights Shares together with 292,144,409 warrants on the ACE Market of Bursa Malaysia Securities Berhad at an issue price of RM0.10 per Rights Share on the basis of four Rights Shares together with three Warrants for every two existing M3 Tech Shares held on the entitlement date.

These results may initially seem to be below expectations, but as you can see, revenue increased despite a similarly lackluster market and operating environment as in the

previous year. Unfortunately, continued impairments caused our final result to be negative. After all the internal re-structuring and streamlining, we feel that we are past the consolidation stages, and have the impetus to move forward, but we are currently hindered by soft market conditions.

CORPORATE DEVELOPMENTS

For FYE 2016, the Group embarked on a strategic marketing initiative to narrow its focus on a range of products and services, the results of which were validated by the improved revenue figures, despite lower manpower headcounts.

Sales of i3Display exhibit steady growth, as the popularity and acceptance of displays in the market place continues. The more they are used, the more professional marketers think about unique applications for them. This ensures not only the acquisition of new users and clients, but there is a steady stream of existing users and clients returning for more units, or further customization of the software in existing units, which boosts the Group’s revenue.

A distribution agreement was signed with User Technologies of Shenzhen for them to distribute globally the software that the displays operate on. Not only does this show the quality of our programming, but it also ensures that the Group benefits from a steady income stream as and when our software is delivered pre-installed in their terminals.

i3TeamWorks in itself is an “Software as a Service (SaaS)” product that encompasses extreme functionality, winning fans and admirers whenever it is shown. The Group is still working hard to market the product, as its complexity may initially appear daunting to the average user. Therefore, rather than depending on traditional adverting methods, more interactive seminars, roadshows, and presentations are used to ensure that the core of i3TeamWorks is properly introduced to the public. On top of that, a lot of effort is being put into the compilation and presentation of after-sales support documentation to not only guide users, but to teach them the importance of monitoring and leading their staff in the implementation process.

Our GetSnapps platform for creating Google Android and Apple iOS applications (“apps”) is also gaining increased market share. As users begin to experience the simplicity and efficiency of our app-creation platform, we are beginning to reap the rewards of word-of-mouth promotion alongside our steady and continuous marketing efforts. The function library continues to grow on a day-to-day basis, cementing the relevance of GetSnapps in today’s fast-moving environment, maintaining its technical superiority, at the same time retaining a level of simplicity that clients and customers are able to appreciate.

Yet another exciting product is our co-branded GPS motorcycle tracker that we have launched in conjunction with Telkomsel, Indonesia’s largest mobile operator. User acceptance is growing, and the beauty of the arrangement lies in a monthly charge per user that will provide perpetual income to the Group in the foreseeable future. This has

Dear Valued Stakeholders,

On behalf of the Board, I hereby present to you the Annual Report of the Company and its subsidiaries (“Group”) for the financial year ended 30 June 2016 (“FYE 2016”).


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Chairman’s Statement (Cont’d)

already led to trials in Thailand with a public-listed motorcycle financing company with a market capitalization of US$150 million, along with additional interest from Indonesia as well as Vietnam.

All-in-all, FYE2016 has been a tremendously busy year, with increased public exposure for the Group, increased product offerings and their resulting revenue streams, and our continued efforts to streamline and re-structure the Group.

FUTURE OUTLOOK

With our new product lines, we now benefit from solutions of an international standard, opening up new opportunities in our associates and subsidiaries abroad. i3TeamWorks occupies a unique space, offering the functionality of many big international names such as Salesforce.com (a US$45 billion company) and SAP (a US$111 billion company), yet at an affordable price. Additional modules are being continuously being added, and we have received enquiries not only from parties interested in reselling in Asia, but also Europe and Australia.

It is however also important for the market in general to begin improving. Nevertheless, the Group continues its efforts, exploring new marketing and promotional strategies, reflected by our recent appearance in newsprint and online media. Combined with our planned appearances at trade shows and industry-specific events, we will have both the product and the visibility required to leapfrog ahead should the economic environment take a turn for the better.

In light of the above, I am confident that our continued perseverance will at the very least continue to improve the efficiencies of the Group, and we are likely to see yet more improvement in our performance in the following financial year.

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 will participate in various corporate events in support of various charities for the coming years.

DIVIDEND

There were no dividend payments during FYE 2016.

BOARD CHANGES

I would like to warmly welcome our newly appointed Directors namely Datuk Chai Woon Chet and Mr Ng Kok Heng as our Non-Independent & Non-Executive Directors. Both Datuk Chai and Mr. Ng bring with them a wealth of experience in international business and corporate governance.

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, MarkExecutive Chairman


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Statement on Corporate Governance

The Board of Directors (“Board”) of M3 Technologies (Asia) Berhad (“the Company”) 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 2012 (“the Code”). The Board supports the highest standards of corporate governance and the development of best practices for the Group.

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 ended 30 June 2016.

A. THEBOARD

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 Executive Directors are equally accountable for the Company’s activities, strategies 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.

The Board has delegated certain responsibilities to other Board level committees to assist the Board in carrying out its duties and responsibilities. The Board delegates certain functions to the following Committees to assist in the execution of its responsibilities:

a. Audit Committee b. Nomination Committee c. Remuneration Committee

The role of the Board Committees is to advise and make recommendations to the Board. The Chairman of various committees provide a verbal report on the outcome of their committee meetings to the Board, and any further deliberation is made at the Board level, if required.

Each committee operates in accordance with written terms of reference approved by the Board. The Board appoints the members and Chairman of each Committee.

i. BoardCharter

A Board Charter was formalised on 27 May 2013 to set out the composition and balance, roles and responsibilities, operation and processes of the Board and is to ensure that all Board members acting on behalf of the Company are aware of their duties and responsibilities as Board members. The Board has also adopted a Code of Ethics and Conduct which is incorporated in the Board Charter of the Company.

A copy of the Board Charter is published in the corporate website of the Company at http://m3tech.com.my/board-charter.php

ii. WhistleBlowingPolicy A Whistle Blowing Policy was formalised on 27 May 2013 with the intention to promote the highest standard of

corporate governance and business integrity that provides avenue for all employees of the Group and members of the public to raise concerns or disclose any improper conduct within the Group and to take appropriate action to resolve them effectively.


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Statement on Corporate Governance (Cont’d)

A. THEBOARD(CONT’D)

iii. CompositionandBalanceoftheBoard

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 nine (9) members comprising two (2) Executive Directors (including Mr. Chew Shin Yong, Mark who is the Executive Chairman), five (5) Independent Non-Executive Directors and two (2) Non-Independent Non-Executive Director. 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 profiles of the members of the Board are presented on Directors’ Profile section as set out in this Annual Report.

With the Company having an Executive Chairman on the Board, the Board is aware that it is not in compliance with the best practice of the Code which recommends that the Chairman of the Board must be a Non-Executive member of the Board. However, the presence of five (5) Independent Directors, who forms more than half (1/2) of the Board, provides the necessary check and balance in the Board.

iv. BoardResponsibilities

There is a clear separation of functions between the Board and Management. The Managing Director (“MD”) and the Executive Chairman have the responsibility to manage the day-to-day operations of the business, implementation of Board policies and making strategic decisions for the expansion of the business. The Non-Executive Directors contribute their expertise and experiences to give independent judgment to the Board on issues of strategy, performance and resources, including major policies, key directions and standards of conduct.

Mr. Chew Shin Yong, Mark is the Executive Chairman while Mr. Lim Seng Boon is the MD. There is a proper balance of power and authority on the Board, with clear division of responsibilities between the Chairman and the MD. This delineation provides a good check and balance, with the Chairman being responsible for leadership of the Board, while the MD leads the management of the Group and has overall responsibility for the operating units and the implementation of the Board’s policies and decisions.

No individual or group of individuals dominates the Board’s decision-making. Together, the Directors possess the wide range of business, commercial and financial knowledge, expertise and skills essential in the management and direction of a corporation with regional presence.

The Board provides overall strategic direction and effective control of the Company. The Board has reserved appropriate strategic, financial and operational matters for its collective decision. Key matters, such as approval of annual financial budgets, business plan, acquisitions and disposals of material investment, material agreements, major capital expenditures, budgets, long term plans and succession planning for top management, reviewing the adequacy and integrity of the Group’s internal control systems and management information systems are reserved for the Board.

The presence of Non-Executive Directors ensures that views, consideration, judgment and discretion exercised by the Board in decision making remains objective and independent whilst assuring the interest of other parties such as minority shareholders are fully addressed and adequately protected as well as being accorded with due consideration.


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v. TheBoardMeetings

The Board meets at least four (4) times a year, with additional meetings to be convened whenever necessary. The Board met five (5) times during the financial year ended 30 June 2016 and details of the Directors’ attendance

at Board meetings are set out as follows:

Directors MeetingAttendance

Chew Shin Yong, Mark 4/5 Lim Seng Boon 5/5 Lim Kooi Siang 5/5 Chin Chee Wing 5/5 Yeoh Boon Hock 4/5 Choong Eng Choon 5/5 Dato’ Woo Hon Kong (Appointed on 13 November 2015) 3/3 Datuk Chai Woon Chet (Appointed on 2 September 2016) N/A Ng Kok Heng (Appointed on 2 September 2016) N/A

The Board is satisfied with the level of time commitment given by the Directors of the Company towards fulfilling their duties and responsibilities. This is evidenced by the attendance record of the Directors as set out herein above.

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.

Senior Management and/or external professionals may be invited to attend these meetings to clarify and/or explain matters being tabled.

In the event a potential conflict of interest situation arises, the Director concerned is to declare his interest and shall abstain from any deliberation and participation in the decision making processes.

The proceedings and resolutions passed at each Board Meeting and decisions made by way of circular resolutions passed are minuted and kept in the statutory minutes book at the registered office of the Company.

vi. SupplyofInformationtotheBoard

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 (1) who is a Non-Executive Director). Such advice was not sought by any of the Directors for the financial year under review.

The Directors have unrestricted access to information from the Management, the Company Secretary, the outsourced Internal Auditors as well as the External Auditors of the Group, with or without senior management presences in furtherance of their duties.


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vi. SupplyofInformationtotheBoard(Cont’d)

The Board appoints the Company Secretaries, who play an important advisory role, and ensures that the Company Secretaries fulfills the functions for which they have been appointed. The Company Secretaries advice to the Board and its Committees on issues relating to compliance with procedures, laws, rules and regulations affecting the Company.

The Board recognises that the Company Secretaries are suitably qualified and capable of carrying out the duties required. The Board is satisfied with the service and support rendered by the Company Secretaries to the Board in the discharge of their functions.

vii. BoardCommittees

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. AuditCommittee

The composition and a summary of the activities of the Audit Committee during the financial year ended 30 June 2016 are set out separately in the Audit Committee Report in this Annual Report.

b. NominationCommittee

The Nomination Committee of the Company is responsible to oversee the selection and assessment of Directors. The committee’s responsibilities include assessing and making recommendations to the Board who will thereon assess the shortlisted candidates and arrive at a decision on the appointment of the Director.

In arriving at these recommendations, due consideration is given to the competencies, required mix of skills, expertise, experience and contribution that the proposed Director(s) shall bring to complement the Board.

The current Nomination Committee of the Company comprises of the following members, all being Independent Non-Executive Directors:-

• Mr. Choong Eng Choon Chairman, Independent Non-Executive Director

• Mr. Chin Chee Wing Member, Independent Non-Executive Director

• Ms. Lim Kooi Siang Member, Independent Non-Executive Director

The Nomination Committee meets as and when required. The Nomination Committee met once during the financial period under review.


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vii. BoardCommittees(Cont’d)

b. NominationCommittee(Cont’d)

During the financial year under review, the Nomination Committee undertook the following activities:

• Evaluate the balance of skills, knowledge and experience of the Board. In the light of this evaluation, reviewed the role of the Executive Chairman and the MD to ensure balance of power and authority, and a clear division of responsibilities as the head of the Company.

• Carried out the assessment and rating of each Director’s performance against the criteria as set out in the annual assessment form. The performance of Non-Executive Directors was also considered, including whether he/she could devote sufficient time to the role.

• Reviewed and assessed the independence of the Independent Directors of the Company.

• Considered and recommended to the Board for approval on the re-election of Directors who were due to retire at the Sixteenth Annual General Meeting pursuant to the Company’s Articles of Association.

• Reviewed, evaluated and considered the appointment of new Directors to the Board namely, Datuk Chai Woon Chet and Mr. Ng Kok Heng.

The Nomination Committee also carried out an assessment on the effectiveness of the Board as a whole, the Committees of the Board and contribution of each individual Director. The assessment considered the contribution and performance of Directors on their competency, time commitment, integrity and experience in meeting the needs of the Group and suggestions to enhance Board effectiveness. The evaluation process involve a peer and self-review assessment, where Directors assessed their own and also their fellow Directors’ performance and was led by the Chairman of the Nomination Committee.

c. RemunerationCommittee

The Remuneration Committee is responsible for assessing and reviewing the remuneration packages of the MD and Executive Directors and subsequently furnishes their recommendations to the Board for adoption.

The current members of the Remuneration Committee comprise of the following members:-

• Mr. Chin Chee Wing Chairman, Independent Non-Executive Director

• Mr. Lim Seng Boon Member, Managing Director

• Ms. Lim Kooi Siang Member, Independent Non-Executive Director

viii. AppointmentsoftheBoardandRe-electionofDirectors

The members of the Board are to be appointed in a formal and transparent practice as endorsed by the Code. The Nomination Committee is responsible for making recommendation for appointments to the Board. In discharging this duty, the Nomination Committee will assess the suitability of an individual to be appointed to the Board by taking into account the individual’s mix of skill, knowledge, expertise, experience, professionalism, integrity and other commitments.


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viii. AppointmentsoftheBoardandRe-electionofDirectors(Cont’d)

All Board members shall notify the Chairman of the Board before accepting any new Directorship in other public listed companies. The notification shall include an indication of time that will be spent on the new appointment. The Chairman shall also notify the Board if he has any new Directorship or significant commitments outside the Company.

In accordance with the Company’s Articles of Association, at least one third (1/3) of the Directors shall retire at the Annual General Meeting (“AGM”), and be eligible for re-election provided that all Directors shall retire at least once in every three (3) years.

Directors who are appointed by the Board in the course of the year shall be subject to re-election at the next AGM to be held following their appointment.

Directors who are over seventy (70) years of age are required to submit themselves for annual re-appointment in accordance with Section 129(6) of the Companies Act, 1965.

ix. TenureofIndependentDirector

The tenure of an Independent Director shall not exceed a cumulative term of nine (9) years. However, upon completion of the nine (9) years, the Independent Director may continue to serve the Board subject to the Director’s re-designation as a Non-Independent Director. In the event the Director is to remain designated as an Independent Director, the Board shall make a recommendation and provide justification to shareholders in general meeting to obtain their approval on a year to year basis.

x. EvaluationofthePerformanceoftheDirectorsandtheBoard’sasawhole

The Board recognises the importance of assessing the effectiveness of individual Directors, the Board as a whole and its Board Committees. The Nomination Committee is given the task to review and evaluate the individual Director’s performance and the effectiveness of the Board and the Board Committees on an annual basis. In assessing suitability of candidates, considerations will be given to the competencies, commitment, contribution and performance.

The Nomination Committee is required to report annually to the Board an assessment of the Board’s and the Board Committees’ performance. This will be discussed with the full Board. Every year, the Nomination Committee will evaluate each individual Director’s contributions to the effectiveness of the Board and the relevant Board Committees.

xi. AnnualAssessmentofIndependence

The Board had conducted an evaluation of level of independence of the Independent Non-Executive Directors of the Company and the Board is satisfied with the level of independence demonstrated by them and their ability to act in the best interest of the Company and/or the Group.

The Nomination Committee will continue, on an annual basis, to access the independence of the Independent Directors.

xii. BoardDiversityPolicy

The Board acknowledges the need for gender diversity for good governance practices and to enhance the efficient functioning of the Board. The Board believes the appointment of a new member is guided by the skills, experiences, competency and knowledge of the individual candidate and it shall review any potential candidate wherever reasonably possible.

The Board shall also accord due consideration to inculcate diversity policy in the boardroom and workplace which encapsulates not only gender, but also age and ethnicity for a well-functioned organisation. The Board currently have a female representation in the Board.


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xiii. Directors’Training

The Directors are encouraged to attend relevant seminars and training programmes to equip themselves with the knowledge to effectively discharge their duties as Directors. The Board will assess the training needs of the Directors and ensure Directors have access to continuing education programme.

The Directors are also being updated on a continuing basis by the Company Secretary on new and /or amended ACE Market Listing Requirements of Bursa Securities as and when the same as advised by Bursa Securities.

The following are seminars or conferences attended by the Directors during the financial year ended 30 June 2016:-

Directors Programmesattended

Chew Shin Yong, Mark • An overview of the Amendments to the ACE Market Listing Requirements of Bursa Malaysia Securities Berhad.

Lim Seng Boon • An overview of the Amendments to the ACE Market Listing Requirements of Bursa Malaysia Securities Berhad.

Lim Kooi Siang • National tax conference 2015 – conducted by Inland Revenue Board of Malaysia.

• Seminar Percukaian Kebangsaan 2015– conducted by Inland Revenue Board of Malaysia

• An overview of the Amendments to the ACE Market Listing Requirements of Bursa Malaysia Securities Berhad.

Chin Chee Wing • An overview of the Amendments to the ACE Market Listing Requirements of Bursa Malaysia Securities Berhad.

Yeoh Boon Hock • An overview of the Amendments to the ACE Market Listing Requirements of Bursa Malaysia Securities Berhad.

Choong Eng Choon • An overview of the Amendments to the ACE Market Listing Requirements of Bursa Malaysia Securities Berhad.

Dato’ Woo Hon Kong • A guide for Audit Committees and Independent Directors - Corporate Governance, updates on Bursa Listing and current issues in Financial Reporting – conducted by MAICSA.

• An overview of the Amendments to the ACE Market Listing Requirements of Bursa Malaysia Securities Berhad.

The Directors have also kept themselves abreast on financial and business matters through readings to enable them to contribute to the Board.

The Directors will continue to attend other relevant appropriate training programmes to enhance their skills and knowledge.

xiv. CorporateDisclosurePolicy The Board is committed to provide effective communication to its shareholders and general public regarding

the business, operations and financial performance of the Group and where necessary, information filed with regulators is in accordance with all applicable legal and regulatory requirements.

A Corporate Disclosure Policy was formalised on 23 May 2014 to promote comprehensive, accurate and timely disclosures pertaining to the Company and the Group to regulators, shareholders and stakeholders.


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B. DIRECTORS’REMUNERATION

i. RemunerationPolicyandProcedures

The Remuneration Committee recommends to the Board the remuneration framework and remuneration packages of the MD and Executive Directors of the Company. The level of remuneration reflects the experience, responsibilities, contribution and performance by each individual Director.

The Board recognises that levels of remuneration must be sufficient to attract, retain and motivate the Directors of the quality required to manage the business of the Company and to align the interest of the Directors with those of the shareholders.

The determination of the fees of the Non-Executive Directors is decided by the Board as a whole. Non-Executive Directors will be paid a basic fee as ordinary remuneration and will be paid a sum based on their responsibilities in committees and the Board, their attendance and/or special skills and expertise they bring to the Board. The fee shall be fixed in sum and not by a commission on or percentage of profits or turnover.

Each individual Director shall abstain from the deliberation and voting on his/her own remuneration/fee.

ii. Directors’Remuneration

The Board is of the view that the disclosure of remuneration by appropriate components and bands are sufficient to meet the objectives set out in the ACE Market Listing Requirements of Bursa Securities.

The remuneration of the Directors for the financial year under review is as follows:

Defined contribution planand Salaryand social other security TheCompany Fee emoluments contributions Total RM’000 RM’000 RM’000 RM’000

Executive Directors - 471 57 528 Non-Executive Directors 225 24 - 249

Total 225 495 57 777

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

Range Executive Non-Executive

Below RM 50,000 - 3 RM 50,001 - RM100,000 - 2 RM 100,001 – RM250,000 1 - RM 400,001 - RM500,000 1 -


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B. DIRECTORS’REMUNERATION(CONT’D)

Defined contribution planand Salaryand social other security TheGroup Fee emoluments contributions Total RM’000 RM’000 RM’000 RM’000

Executive Directors - 567 62 629 Non-Executive Directors 225 24 - 249

Total 225 591 62 878

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

Range Executive Non-Executive

Below RM 50,000 - 3 RM 50,001 - RM100,000 - 2 RM 100,001 – RM250,000 2 - RM 400,001 - RM500,000 1 -

C. SHAREHOLDERSANDINVESTORSRELATIONS

The Group values the importance of dialogue between the Group and its investors in order to provide them with the clearest and most complete picture of the Group’s performance and financial position. The Group communicates with its shareholders and investors primarily through its Annual General Meetings (“AGM”), Annual Report, Quarterly Financial Statements, Research Reports and the various announcements made to Bursa Securities. The Company’s corporate website at www.m3tech.com.my 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 Board will ensure that the General Meetings of the Company are conducted in an efficient manner and serve as a mode in shareholders communications. These include the supply of comprehensive and timely information to shareholders and the encouragement of active participation at the General Meetings.

The AGM remains as a principal forum used by the Company for communication with its shareholders. At the AGM, the shareholders are encouraged to participate and to raise questions on the resolutions proposed and the Group’s operations in general.

All resolutions set out in the Notice of the AGM are put to vote by poll. The outcome of all resolutions proposed at the AGM is to be announced to Bursa Securities by the end of the meeting day and a summary of the key matters discussed at the AGM will be published on the Company’s website for shareholders’ information.


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D. ACCOUNTABILITYANDAUDIT

i. FinancialReporting

The Board has overall responsibility for the quality and completeness of the financial statements of the Company and the Group, both quarterly and year-end, and has a duty to ensure that those financial statements are prepared based on appropriate and consistently applied accounting policies, supported by reasonably prudent judgment and estimates and in accordance to the applicable Financial Reporting Standards.

In presenting the annual audited financial statements and quarterly unaudited results, the Board aims to present a fair assessment of the Group’s position and prospects to the shareholders. The Audit Committee assists the Board in scrutinising information for disclosure to ensure accuracy, adequacy and completeness.

ii. InternalControlandRiskManagement

The Board acknowledges their responsibilities in maintaining an internal control system that provides reasonable assurance of effective and efficient operations, and compliance with laws and regulations as well as internal procedures and guidelines.

The Management is responsible for implementing the processes for identifying, evaluating, monitoring and reporting of risks and internal control, taking appropriate and timely corrective actions as needed, and for providing assurance to the Board that the processes have been carried out.

The Audit Committee has been entrusted by the Board to ensure effectiveness of the Group’s internal control systems. The activities of the outsourced Internal Auditors are reported regularly to the Audit Committee which provides the Board with the required assurance in relation to the adequacy and integrity of the Group’s system of internal controls. Details on the Statement on Risk Management and Internal Control are furnished in this Annual Report.

iii. RelationshipwithAuditors

The Group has established a transparent and appropriate relationship with the Internal Auditors and External Auditors. Such relationship allows the Group to seek professional advice on matters relating to compliance and corporate governance. The internal audit function of the Group is outsourced to a third party. Similar to the External Auditors, Internal Auditors too have direct reporting access to the Audit Committee to ensure that issues highlighted are addressed independently, objectively and impartially without any undue influence of the Management.

The Audit Committee of the Company undertakes an annual review of the suitability and independence of the External Auditors. Having assessed their performance, the Audit Committee will thereafter make its recommendation to the Board for their re-appointment, upon which the shareholders’ approval will be sought at the AGM of the Company.

E. STATEMENTOFCOMPLIANCEWITHTHEBESTPRACTICESOFTHECODE

The Company is committed to achieving high standards of corporate governance throughout the Company and 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.

This statement is made in accordance with a resolution of the Board dated 14 October 2016.


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Statement on Risk Management and Internal Control

Introduction

The Board of Directors (“theBoard”) of M3 Technologies (Asia) Berhad (“M3”) is committed in maintaining a robust system of internal controls throughout the Group and its subsidiaries (“the Group”) and is pleased to provide the following statement which outlines the nature and scope of risk management and internal control of the Group during the year under review.

This Statement on Risk Management and Internal Control is made in accordance with the Malaysian Code on Corporate Governance and Rule 15.26 (b) of the ACE Market Listing Requirements of Bursa Malaysia Securities Berhad, which requires Malaysian public listed companies to make a statement about their state of internal control, as a Group, in their annual report.

Board’sResponsibility

The Board recognises the importance of robust internal control for good corporate governance and further affirms its overall responsibility for the Group’s system of internal control. This covers operational and financial control, and review of the adequacy and integrity of those systems on an on-going basis.

The system of internal control is designed to manage rather than eliminate the risk of failure to achieve the Group’s business objectives. Accordingly, the internal control system can only provide reasonable and not absolute assurance against material misstatement or loss.

Material associated company has not been dealt with as part of the Group for purposes of applying the above guidance as it has its own system of internal controls in place. Nevertheless, the Board obtained operational and financial updates from Group management to monitor the unquoted investment.

RiskManagementFramework

The Board acknowledges that the Group’s business activities involve some degree of risk that may affect the achievement of its business objectives and an effective risk management framework should be an integral part of the Group’s daily operations.

It is the responsibility of the management, head of subsidiary companies and heads of department to identify, evaluate and manage risks faced by the Group on an ongoing basis. The deliberation of risks and related mitigating responses are carried out at regular management meetings attended by the Managing Director and key management staff. Significant risks are communicated to the Board at the quarterly scheduled meetings. The practices and initiatives by management serve as an on-going process adopted by the Group to continuously review, identify, evaluate and manage risks faced by the Group.

The material associated company has its own management to monitor it daily operations and therefore does not included in our Group Risk Management review.

InternalAudit

Our outsourced Internal Auditors , RSM Corporate Consulting (Malaysia) Sdn. Bhd. (“RSM”) an independent professional firm supports the Audit Committee, and by extension, the Board, to execute the internal audit function of the Group by providing independent assurance on the effectiveness of the Group’s system of internal control.


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Statement on Risk Management and Internal Control (Cont’d)

RSM has prepared an internal audit scope of coverage based on the understanding of our business operations, past financial performance and internal audit reports, which reflects the most current material risk profile of the Group’s major business operations. The internal audit scope is presented to the Audit Committee for review and assessment in order to lay out the risk areas to be the main focus for internal audit during the financial year. The scope of RSM’s function covers the audit and review of governance, risk assessment, compliance, operational and financial control across all business units. RSM has conducted internal audit review in accordance with the approved internal audit scope of coverage for the purpose of assessing the adequacy and effectiveness of the internal control system. The internal control of the Group is adequate and effective except as disclosed in the periodical Internal Auditors’ Report. The recommendations by the Internal Auditors are currently being rectified by Management or earmarked for improvement in the internal control system.

During the financial year under review, RSM appraised and contributed towards improving the Group’s risk assessment, governance and control systems and provided quarterly reporting on the same to the Audit Committee for the entire financial year ended 30 June 2016. In assessing the adequacy and effectiveness of the system of internal control and financial control procedures of the Group, the Audit Committee reports to the Board on its activities, significant audit results or findings and the necessary recommendations or actions needed to be taken by Management to rectify those issues.

Our material associated company which has been disposed as per our public announcement has not been dealt with by our Internal Audit scope as it has its own management team to oversee its operations.

RSM made reference to the Guidelines on the Internal Audit Function issued by The Institute of Internal Auditors Malaysia, the Standards for the Professional Practice of Internal Auditing (SPPIA) and the Code of Ethics issued by The Institute of Internal Auditors, Inc.

InternalControlSystem

The Group’s key internal control processes were identified and grouped based on the principles of COSO (Committee of Sponsoring Organisations of the Treadway Commission) Guidance on Internal Controls – Integrated Framework as follows:

ControlEnvironment

• The Group has established a clear vision, mission and strategic direction.

• Defined organisational and reporting structures are established at all levels within the Group which are aligned to business and operational requirements.

• The Group has adequate upper level managerial support and stewardship wherein, the senior management team is cohesive and complements each other in terms of skills and experience.

• The Group adopts a flat working structure but with appropriate segregation of duties and empowerment.

RiskAssessment

Management of individual subsidiaries and business divisions continuously assess risks within their business environment and formulated required controls / mitigating strategies / corrective actions to minimise negative outcomes, i.e. reduce losses and prevent erosion of business profit margin.

ControlActivities

• The Group has successfully renewed its ISO 9001:2008 compliance certification during the financial year under review. The documented standard operating policies and procedures reflected current practices of the business processes and key functions.


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• The Group has cascaded down these documented procedures to its employees for implementation. Compliance in their day-to-day operations is monitored by the respective department managers to ensure quality of work and products.

• External audit, internal audit and ISO audit are carried out either quarterly or yearly basis to improve operational efficiencies and consistency of quality of products and work standards.

• Financial Reporting Package (“FRP”) is in place for monthly management reporting and requires a declaration by the Head of subsidiaries or General Manager to confirm that the reports in the FRP have been reviewed by them to achieve accuracy, completeness and timeliness in the Group Financial Reporting.

InformationandCommunication

• The Group utilises internally developed front-end, budget panel as well as job allocation and monitoring systems to provide timely information and generate relevant reports that enable and facilitate the decision making process.

• Submission of regular, timely and comprehensive flow of information and reports to the Board and Management on all aspect of the Group’s operations facilitates the monitoring of performance against strategic plans.

• Management meetings and strategic planning workshops were convened at subsidiaries and Group level to share information, discuss financial and business development, progress and performance monitoring as well as to decide upon operational matters.

Monitoring

• Management constantly monitors and follow-up on performance gaps and highlights issues to improve on current processes and internal controls.

• Quarterly review on budgets were conducted to highlight any instances of significant variances that arose during the year which may require immediate management action.

• External and internal audit reports were tabled to Management and the Board for their consideration and further action. Follow-up status reports were also dealt with in similar manner.

Conclusion

The Board has received assurance from the Managing Director that the Group’s risk management and internal control system is operating effectively, in all material aspects, based on the risk management and internal control system of the Group.

For the financial year ended 30 June 2016, the Board is of the view that the system of internal control is adequate to safeguard shareholders’ interest and the Group’s assets and there were no material losses caused by the breakdown in internal controls. Management will continue to take measures and maintain an ongoing commitment to strengthen the Group’s control environment and processes.

As required by Rule 15.26 (b) of the Bursa Malaysia Securities Berhad ACE Market Listing Requirements, the External Auditors have reviewed this Statement on Risk Management and Internal Control. Their limited assurance review was performed in accordance with Recommended Practice Guide (RPG) 5 (Revised) issued by the Malaysian Institute of Accountants. RPG 5 (Revised) does not require the external auditors to form an opinion on the adequacy and effectiveness of the risk management and internal control system of the Group.

This statement was made in accordance with a resolution of the Board dated 14 October 2016. .

Statement on Risk Management and Internal Control (Cont’d)


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Audit Committee Report

The Audit Committee (“the Committee”) of the Company was established by the Board of Directors (“Board”) of M3 Technologies (Asia) Berhad (“the Company”) with the primary objective to assist the Board in fulfilling its fiduciary responsibilities relating to corporate governance, system of internal controls, risk management processes and management and financial reporting practices of the Company and its subsidiaries (“the Group”).

COMPOSITION

The current members of the Committee, all being Independent Non-Executive Directors, are as follows::

Chairperson Designation

Lim Kooi Siang Independent Non-Executive Director

Members

Chin Chee Wing Independent Non-Executive DirectorYeoh Boon Hock Independent Non-Executive Director

The Terms of Reference of the Audit Committee can be accessed from the Corporate website of the Company at http://m3tech.com.my/audit-committee.php

MEETINGS

During the financial year under review, the Committee held a total of five (5) meetings. Details of attendance of the Committee members are as follows:-

CommitteeMembers MeetingAttendance

Lim Kooi Siang 5/5Chin Chee Wing 5/5Yeoh Boon Hock 4/5

The Company’s other Board members, Internal Auditors, External Auditors, and certain senior management staff had attended the meetings at the invitation of the Chairperson of the Committee.

The Chairperson shall report to the Board on a quarterly basis on all significant matters discussed, deliberated upon and dealt with at the Audit Committee meetings. Amongst others, it covers the Audit Committee’s recommendation to approve the quarterly financial result for release to Bursa Securities, the annual financial statements as well as significant audit issues raised by the Internal and/or External Auditors.

SUMMARYOFWORKSDURINGTHEFINANCIALYEAR

The Committee had carried out the following works during the meetings in discharging their duties and responsibilities:

1. 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 the Group’s results to Bursa Securities.

2. Discussed and reviewed with External Auditors on their audit review memorandum for financial year ended 30 June 2016 and audit planning memorandum on the audit of the Group for the financial year then ending 30 June 2017.


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Audit Committee Report (Cont’d)

3. Reviewed with the outsourced External Auditors on the results and issues arising from their audit and their resolutions of such issues highlighted in their report to the Committee and took further steps to scrutinize the risk areas highlighted by the Internal Auditors by further review the existing operating procedure and suggested new practices and policies to further enhancement the internal control system.

4. Reviewed with the outsourced Internal Auditors, the internal audit plan to ensure principal risk areas are adequately covered in the audit plan.

5. Reviewed the results of the internal audit process to ensure that the recommendations made by the outsourced Internal Auditors and corrective actions taken by Management are adequately addressed on a timely basis.

6. Reviewed related party transactions, if any, for compliance with the ACE Market Listing Requirements of Bursa Securities.

7. Considered and recommended the re-appointment of Messrs. Ecovis AHL PLT as the External Auditors and their Audit Fee to the Board for consideration based on the competency, efficiency and transparency as demonstrated by them during their audit for financial year ended.

8. Meeting with External Auditors during the financial year without the presence of the Management and Executive Directors.

9. Reviewed the Corporate Governance Statement, Audit Committee Report and Statement on Risk Management and Internal Control to ensure adherence to legal and regulatory reporting requirement before recommending to the Board for approval for inclusion in the Company’s Annual Report.

INTERNALAUDITFUNCTION

The Group’s internal audit function is outsourced to an independent professional firm, which is independent of the activities and operations of the Group. The outsourced internal auditors are empowered by the Committee to provide objective evaluation of risk and controls in the auditable activities to ensure a sound system of internal controls.

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 auditors 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 under review, 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 internal audit function in respect of the financial year ended 30 June 2016 was RM 33,390

The following is a summary of work carries by the Internal Auditors during the financial year under review: -

1. Presentation of internal audit findings at the quarterly Audit Committee meetings.

2. Conducted follow up reviews to ensure action plans are properly and appropriately implemented by Management.


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Statement of Directors’ Responsibility

This statement is prepared pursuant to the ACE Market Listing Requirements of Bursa Securities.

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 Company and its subsidiaries (“the Group”) as at the end of each financial year.

In preparing these financial statements for the financial year ended 30 June 2016, the Directors have considered the following: -

• the Group 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

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

The Directors are responsible for ensuring that the Company maintains proper accounting records which disclose with reasonable accuracy of the financial position of the Group which enable them to ensure that the financial statements comply with the Companies Act, 1965.

The Directors have general responsibilities for taking such steps that are reasonably available to them to safeguard the assets of the Group and to prevent and detect fraud and other irregularities.


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Additional Compliance Information

UtilisationofProceedsfromCorporateExercises

Multiple Proposals

The Company had on 25 August 2016 completed its Rights Issue with Warrants exercise following the admission of the warrants to the Official List and the listing of and quotation for 389,525,880 new ordinary shares of RM0.10 each together with 292,144,409 warrants on the ACE Market of Bursa Securities.

The utilisation of gross proceeds raised as at 30 September 2016 is as follows:-

Balance Purposed Actual yettobe Estimated utilisation utilisation utilised timeframeforProposed (RM’000) (RM’000) (RM’000) utilisation

Purchase of i3Display terminals, screens and parts 8,000 154 7,846 Within 24 months

Purchase of products for distribution within 6,500 2,248 4,252 Within 24 months existing and new product range

Purchase of smart home solution devices 3,000 251 2,749 Within 24 months

Product/software development expenditure 3,500 198 3,302 Within 24 months

Working capital 16,952 1,593 15,359 Within 24 months

Estimated expenses for the proposals 1,000 270 730 Within 24 months

Total 38,952 4,714 34,248

AuditandNon-AuditFees

The audit fees to the External Auditors for the services rendered to the Company and the Group for the financial year ended 30 June 2016 amounted to RM106,242 and RM98,000 respectively, whereas the amount of non-audit fees paid to the external auditors by the Company and the Group for the financial year ended 30 June 2016 was RM9,600 and RM9,600 respectively.

MaterialContractsInvolvingDirectors’andMajorShareholders’Interest

There were no material contracts entered into by the Company or its subsidiaries, involving directors’ and major shareholders’ interest during the financial year under review.

RecurrentRelatedPartyTransactionsofaRevenueorTradingNature

The list of recurrent related party transactions of a revenue or trading nature entered into by the Group is disclosed in Note 33 to the financial statements. For the financial year ended 30 June 2016, 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.

30

34

34

35

37

38

39

41

43

102

Directors’ Report

Statement by Directors

Statutory Declaration

Independent Auditors’ Report

Statements of Profit or Loss and other Comprehensive Income

Statements of Financial Position

Statements of Changes in Equity

Statements of Cash Flows

Notes to the Financial Statements

Supplementary Information- Breakdown of Retained Profits into Realised and Unrealised

FinancialStatements


2016ANNUAL REPORT

30

Directors’ Report

The Directors hereby present their report together with the audited financial statements of the Group and of the Company for the financial year ended 30 June 2016.

PRINCIPALACTIVITIES

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

The principal activities of the subsidiaries are set out in Note 16 to the financial statements.

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

FINANCIAL RESULTS

Group Company RM RMLoss net of tax (3,476,018) (24,774,011) Attributable to: Owners of the Company (5,926,985) (24,774,011)Non-controlling interests 2,450,967 - (3,476,018) (24,774,011) 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 Note 16, 17 and 21 to the financial statements.

DIVIDENDS

No dividend has been paid, proposed or declared by the Company since the end of the previous financial year.

The Directors do not recommend the payment of any dividend for the financial year ended 30 June 2016.

DIRECTORS

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 BoonChin Chee WingLim Kooi Siang Choong Eng Choon Yeoh Boon HockDato’ Woo Hon Kong (Appointed on 13.11.2015)Datuk Chai Woon Chet (Appointed on 02.09.2016)Ng Kok Heng (Appointed on 02.09.2016)


2016ANNUAL REPORT

31

Directors’ Report (Cont’d)

DIRECTORS’BENEFITS

Neither at the end of the financial year, nor at any time during that financial 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 11 to the financial statements) by reason of a contract made by the Company or its related corporations 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.

DIRECTORS’INTERESTS

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

NumberofordinarysharesofRM0.10each At1July At30June 2015 Acquired Sold 2016

Directinterest:Lim Seng Boon 13,605,000 - - 13,605,000Chew Shin Yong, Mark 2,130,600 - - 2,130,600 Deemedinterest: Lim Seng Boon* 24,186,840 - - 24,186,840 Chew Shin Yong, Mark** 1,333,400 - - 1,333,400

DIRECTORS’ INTERESTS (CONT’D)

* Deemed interested by virtue of his spouse, Madam Goh Lee Lang’s shareholding in M3 Technologies (Asia) Berhad.** Deemed interested by virtue of his interest in Marmark (BVI) Limited, pursuant to section 6A of the Companies Act,

1965.

None of the other Directors in office at the end of the financial year had any interest in shares or options over shares of the Company or its related corporations during the financial year.

The above Directors, by virtue of their interest in shares of the Company are also deemed interested in shares of all the Company’s subsidiaries to the extent that the Company has an interest.

SHARESANDDEBENTURES

On 12 November 2015, the Company increased its issued and paid up share capital by RM1,170,570, from RM18,561,474 to RM19,732,044 via issuance of the second and final tranche of the private placement of 11,705,700 new ordinary shares of RM0.10 each at issue price of RM0.105 per share.

The new ordinary shares issued during the financial year rank pari passu in all respects with the existing ordinary shares of the Company.

There were no new issues of debentures during the financial year.


2016ANNUAL REPORT

32


TREASURYSHARES

There was no repurchase or resale of shares held as treasury shares by the Company during the financial year. Relevant details on the treasury shares are disclosed in Note 25 to the financial statements.

OTHERSTATUTORYINFORMATION

(a) Before the statements of financial position and statements of profit or loss and other comprehensive income 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 allowance 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 allowance 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 as and 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.


2016ANNUAL REPORT

33


SIGNIFICANTEVENTS

Significant events that occurred during and subsequent to the financial year are disclosed in Notes 38 and 39 to the financial statements respectively.

AUDITORS

The auditors, ECOVIS AHL PLT, have expressed their willingness to continue in office.

Signed on behalf of the Board in accordance with a resolution of the Directors dated 14 October 2016.

LimSengBoon ChewShinYong,Mark

Petaling Jaya


2016ANNUAL REPORT

34

Statement by DirectorsPursuant to Section 169(15) of the Companies Act, 1965

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 37 to 101, 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 Kuala Lumpur in the Federal Territory on 14 October 2016. LimSengBoon

Before me,

Commissioner for Oaths

We, Lim Seng Boon and Chew Shin Yong, Mark, 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 37 to 101 are drawn up in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of 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 2016 and of their financial performance and cash flows for the year then ended.

The supplementary information set out in Note 43 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 14 October 2016.

Lim Seng Boon Chew Shin Yong, Mark


2016ANNUAL REPORT

35

Independent Auditors’ Reportto the members of M3 Technologies (Asia) Berhad

(Incorporated in Malaysia) Company No: 482772 - D

Reportonthefinancialstatements

We have audited the financial statements of M3 Technologies (Asia) Berhad, which comprise the statements of financial position as at 30 June 2016 of the Group and of the Company, and the statements of profit or loss and other 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 37 to 101.

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 Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia. The Directors are also responsible for such internal control as the Directors determine is 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 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 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 Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of 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 2016 and of their financial performance and cash flows for the year then ended.

Reportonotherlegalandregulatoryrequirements

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 16 to the financial statements, being financial statements that have been included in the consolidated financial statements.


2016ANNUAL REPORT

36

Independent Auditors’ Report(Cont’d)to the members of M3 Technologies (Asia) Berhad

(Incorporated in Malaysia) Company No: 482772 - D

(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 than those subsidiaries with emphasis of matter paragraph in the auditors’ reports disclosed in Note 16 to the financial statements, the auditors’ reports on the financial statements of the remaining subsidiaries did not contain any qualification or any adverse comments made under Section 174(3) of the Companies Act, 1965 in Malaysia.

Otherreportingresponsibilities

The supplementary information set out in Note 43 on page 102 is disclosed to meet the requirement of Bursa Malaysia Securities Berhad and is not part of the financial statements. 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.

Othermatters

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.

ECOVISAHLPLT ChuaKahChunAF 001825 No: 2696/09/17 (J)Chartered Accountants Chartered Accountant

Kuala Lumpur14 October 2016


2016ANNUAL REPORT

37

Statements of Profit or Loss and other Comprehensive Income

For The Financial Year Ended 30 June 2016

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

Group Company Note 2016 2015 2016 2015 RM RM RM RM Revenue 5 40,532,976 35,287,643 15,309,622 13,700,672Cost of sales 6 (22,425,694) (22,153,472) (12,656,710) (10,816,915)

Grossprofit 18,107,282 13,134,171 2,652,912 2,883,757 Other income 7 552,291 2,846,869 1,622,117 1,886,516 Administrative expenses (18,342,141) (16,190,140) (4,752,285) (5,631,542)Selling and marketing expenses (260,432) (1,444,251) (30,003) (26,458)Other expenses (124,651) (924,710) (73,308) (84,425)Finance costs 8 (37,957) (39,196) (24,612) (33,658) Impairment loss on investment in subsidiaries 16 - - (16,485,088) (759,153)Impairment loss on investment in an associate 17 (1,065,122) - (2,218,121) -Impairment loss of amount due from subsidiaries 21 - - (5,278,686) (6,477,203) Share of results of an associate 17 (894,720) (230,879) - -

Lossbeforetax 9 (2,065,450) (2,848,136) (24,587,074) (8,242,166) Income tax expense 12 (1,410,568) (626,083) (186,937) (42,900)

Lossnetoftax (3,476,018) (3,474,219) (24,774,011) (8,285,066) Othercomprehensiveincome: Foreign currency translation (253,729) 2,453,332 - -

Totalcomprehensivelossfortheyear (3,729,747) (1,020,887) (24,774,011) (8,285,066) Lossattributableto: Owners of the Company (5,926,985) (4,364,799) (24,774,011) (8,285,066)Non-controlling interests 2,450,967 890,580 - -

(3,476,018) (3,474,219) (24,774,011) (8,285,066) Totalcomprehensivelossattributableto: Owners of the Company (6,240,742) (2,526,925) (24,774,011) (8,285,066)Non-controlling interests 2,510,995 1,506,038 - -

(3,729,747) (1,020,887) (24,774,011) (8,285,066)

Earningspershareattributabletoowners oftheCompany(sen) Basic/Diluted 13 (3.11) (2.46)


2016ANNUAL REPORT

38

Statements of Financial PositionAs at 30 June 2016


Group Company Note 2016 2015 2016 2015 RM RM RM RM Assets Non-currentassets Property, plant and equipment 14 3,917,807 4,199,485 2,375,558 2,197,024Intangible assets 15 4,198,152 3,705,918 318,824 525,836Investment in subsidiaries 16 - - 6,858,607 23,343,695Investment in an associate 17 - 5,740,159 - 5,998,438Interest in a joint venture 18 - - - -

8,115,959 13,645,562 9,552,989 32,064,993

Currentassets Inventories 19 3,916,081 3,161,104 50,415 291,406Trade and other receivables 20 23,757,364 23,523,297 4,470,073 6,895,374Amount owing from subsidiaries 21 - - 665,155 519,728Amount owing from a joint venture 22 63,684 49,557 63,684 9,081Tax refundable 1,136,577 782,589 - 1,075Deposits, cash and bank balances 23 6,408,025 3,512,060 35,013 248,185 35,281,731 31,028,607 5,284,340 7,964,849Asset classified as held for sale 24 3,780,317 - 3,780,317 -

39,062,048 31,628,607 9,064,657 7,964,849

Totalassets 47,178,007 44,674,169 18,617,646 40,029,842

Equityandliabilities EquityattributabletoownersoftheCompanyShare capital 25 19,732,044 18,561,474 19,732,044 18,561,474Share premium 25 4,631,231 4,572,702 4,631,231 4,572,702Treasury shares 25 (565,639) (565,639) (565,639) (565,639)Other reserves 26 1,310,992 1,624,749 16,074,240 16,074,240(Accumulated losses)/Retained profit 27 (3,338,730) 2,588,255 (32,126,794) (7,352,783)

21,769,898 26,781,541 7,745,082 31,289,994Non-controllinginterests 6,683,144 4,904,852 - -

Totalequity 28,453,042 31,686,393 7,745,082 31,289,994

Non-currentliabilities Loans and borrowings 28 429,310 588,479 422,009 557,719Deferred tax liabilities 29 59,638 55,336 - -Provision for gratuity 10 11,720 9,889 - -

500,668 653,704 422,009 557,719

CurrentliabilitiesTrade and other payables 30 17,900,235 11,655,731 9,501,632 6,776,303Amount owing to a subsidiary 21 - - 659,118 783,355Amount owing to a Director 31 160,000 500,000 160,000 500,000Loans and borrowings 28 164,062 159,997 129,805 122,471Income tax payable - 18,344 - -

18,224,297 12,334,072 10,450,555 8,182,129

Totalliabilities 18,724,965 12,987,776 10,872,564 8,739,848

Totalequityandliabilities 47,178,007 44,674,169 18,617,646 40,029,842


2016ANNUAL REPORT

39

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2016ANNUAL REPORT

40

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Statements of Changes in Equity (Cont’d) For the financial year ended 30 June 2016

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2016ANNUAL REPORT

41

Statements of Cash Flows For the financial year ended 30 June 2016

Group Company Note 2016 2015 2016 2015 RM RM RM RM Cashflowsfromoperatingactivities Loss before tax (2,065,450) (2,848,136) (24,587,074) (8,242,166)Adjustments for: Allowance for impairment of receivables 9 97,595 360,246 - - Allowance for impairment of amount owing from subsidiaries 9 - - 5,278,686 6,477,203 Allowance for impairment of amount owing from a joint venture 9 45,708 61,168 - - Amortisation of intangible assets 9 1,293,146 1,036,496 492,460 857,985 Bad debts written off 9 192,671 91,715 - - Deposit and prepayment written off 9 137,621 - - - Depreciation of property, plant and equipment 9 1,163,518 1,129,216 339,565 318,058 Dividend income 7 - - (1,099,047) - Impairment loss on investment in subsidiaries 9 - - 16,485,088 759,153 Impairment loss on investment in an associate 9 1,065,122 - 2,218,121 - Investment income from profit guarantee 7 (363,458) (1,854,663) (363,458) (1,854,663) Interest expense 8 37,957 39,196 24,612 33,658 Interest income 7 (12,351) (7,882) (7,869) (4,399) Inventories write-down 9 106,432 522,489 - - Inventories write-off 9 657,520 515,504 - - Gain on disposal of property, plant and equipment 7 (94,611) (3,954) (94,611) (3,954) Property, plant and equipment written off 9 8,885 174,623 - 6,222 Provision for gratuity 10 1,180 20,867 - - Share of results in an associate 17 894,720 230,879 - - Unrealised loss/(gain) on foreign exchange 9 473,633 (27,407) 51,738 65,072 Operatingprofit/(loss)beforeworking capitalchanges 3,639,838 (559,643) (1,261,789) (1,587,831)

(Increase)/decrease in inventories (1,518,929) 2,697,369 240,991 (214,414)(Increase)/decrease in trade and other receivables (814,929) (6,146,834) 2,788,758 (2,948,525)(Increase)/decrease in amount due from subsidiaries - - (5,600,088) 1,087,374Increase in amount due from a joint venture (83,303) (61,168) (54,603) (9,081)Increase in trade and other payables 6,244,504 2,295,015 2,725,330 2,952,692(Decrease)/increase in amount due to a Director (340,000) 500,000 (340,000) 500,000

Cashflowsgeneratedfrom/(usedin) operations 7,127,181 (1,275,261) (1,501,401) (219,785) Interest paid (37,957) (39,196) (24,612) (33,658)Interest received 12,351 7,882 7,869 4,399Income tax refund 6,471 17,888 6,471 17,888Income tax paid (1,789,371) (920,472) (192,333) (42,900)

Netgeneratedfrom/(usedin)operating activities 5,318,675 (2,209,159) (1,704,006) (274,056)


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Statements of Cash Flows (Cont’d)For the financial year ended 30 June 2016

Group Company Note 2016 2015 2016 2015 RM RM RM RM Cashflowsfrominvestingactivities Dividends received from a subsidiary - - 1,099,047 -Proceeds from disposal of property, plant and equipment 158,316 73,387 157,550 -Proceeds from transfer of property, plant and equipment - - - 25,922Acquisition of intangible assets 15 (1,756,080) (1,284,285) (285,448) (519,960)Purchase of property, plant and equipment 14 (890,042) (873,411) (581,038) (298,606)

Netcash(usedin)/generatedfrominvesting activities (2,487,806) (2,084,309) 390,111 (792,644)

Cashflowsfromfinancingactivities Dividends paid by a subsidiary to non-controlling interests (732,703) - - -Proceeds from issuance of share capital 25 1,229,099 780,000 1,229,099 780,000Repayment of letters of credit - net - (338,696) - (338,696)Repayment of term loan - net (63,738) (57,493) (63,738) (57,493)Repayment of finance lease obligations (101,825) (63,102) (64,638) (61,675)

Netcashfromfinancingactivities 330,833 320,709 1,100,723 322,136

Netincrease/(decrease)incashandcash equivalents 3,161,702 (3,972,759) (213,172) (744,564)

Effectsofforeignexchangerate (265,737) 1,827,678 - -

Cashandcashequivalentsasat1July 3,512,060 5,657,141 248,185 992,749

Cashandcashequivalentsasat30June 23 6,408,025 3,512,060 35,013 248,185



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Notes to the Financial StatementsFor the financial year ended 30 June 2016

1. Corporateinformation

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 registered office of the Company is located at Third Floor, No. 79 (Room A), Jalan SS21/60, Damansara Utama, 47400 Petaling Jaya, Selangor Darul Ehsan. The principal place of business of the Company is located at Unit 608, 707 & 1007, Block A, 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 16 to the financial statements.

There were 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 14 October 2016.

2. Basisofpreparation

The financial statements of the Group and of the Company have been prepared in accordance with Malaysian Financial Reporting Standards (“MFRS”), International Financial Reporting Standards (“IFRS”) and the requirements of the Companies Act, 1965 in Malaysia.

The financial statements of the Group and of the Company have been prepared on the historical cost basis unless otherwise indicated in the summary of significant accounting policies as disclosed in Note 3 to the financial statements.

The financial statements are presented in Ringgit Malaysia (“RM”), which is the Company’s functional currency. All information is presented in RM, except when otherwise indicated.

(a) Basisofconsolidation

The consolidated financial statements comprise the financial statements of the Company and its subsidiaries including the equity accounting of interest in an associate and a joint venture as at 30 June 2016. Further details on the accounting policies for interest in joint venture are disclosed in Note 3(c) to the financial statements.

The financial statements of the Company’s subsidiaries and joint venture are prepared for the same reporting date as the Company, using consistent accounting policies for transactions and events in similar circumstances.

Subsidiaries are consolidated from the date of acquisition or the date of incorporation, being the date on which

the Company obtains control and continue to be consolidated until the date that such control effectively ceases. Control is achieved when the Group is exposed to, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee.

When the Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and circumstances in assessing whether it has power over an investee, including:

• The contractual arrangement with the other vote holders of the investee;

• Rights arising from other contractual arrangements; and

• The Group’s voting rights and potential voting rights.

The Group reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control.


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Notes to the Financial Statements (Cont’d)For the financial year ended 30 June 2016

2. Basisofpreparation(cont’d)

(a) Basisofconsolidation(cont’d)

All intra-group assets and liabilities, equity, income, expenses, cash flows and unrealised gains and losses relating to transactions between members of Group are eliminated in full on consolidation.

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 parent.

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.

If the Group loses control over a subsidiary, it derecognises the assets (including goodwill) and liabilities of the subsidiary at their carrying amounts, the carrying amount of any non-controlling interest in the former subsidiary, the cumulative foreign exchange translation differences recorded in equity, the fair value of the consideration received, the fair value of any investment retained in the former subsidiary, any surplus or deficit in the profit or loss and the parent’s share of components previously recognised in other comprehensive income to profit or loss or retained earnings, if required in accordance with other MFRSs.

The accounting policies for business combination and goodwill are disclosed in Note 3(a) and 3(e) to the financial statements.

(b) Standardsandamendmentstopublishedstandardsissuedbutnotyeteffective

The following are standards and amendments to published standards issued by Malaysian Accounting Standard Board (MASB), but not yet effective, up to the date of issuance of the Company’s financial statements. The Group and the Company intend to adopt these standards and amendments to published standards, if applicable, when they become effective in the following financial year:

(i) Financial year beginning on or after 1 January 2016• MFRS 14 ‘Regulatory Deferral Accounts’• Amendments to MFRS 11 ‘Accounting for Acquisitions of Interests in Joint Operations’• Amendments to MFRS 101 ‘Disclosure Initiative’• Amendments to MFRS 127 ‘Equity Method in Separate Financial Statements’• Amendments to MFRS 116 and MFRS 138 ‘Clarification of Acceptable Methods of Depreciation’• Amendments to MFRS 116 and MFRS 141 ‘Agriculture: Bearer Plants’• Amendments to MFRS 10, MFRS 12 and MFRS 128 ‘Investment Entities: Applying the Consolidation

Exception’• Annual improvements to MFRSs 2012 - 2014 Cycle

(ii) Financial year beginning on or after 1 January 2017• Amendments to MFRS 107 ‘Disclosure Initiative’• Amendments to MFRS 112 ‘Recognition of Deferred Tax Assets for Unrealised Losses’

(iii) Financial year beginning on or after 1 January 2018• MFRS 15 ‘Revenue from Contracts with Customers’• MFRS 9 ‘Financial Instruments (IFRS 9 as issued by International Accounting Standards Board (“IASB”)

in July 2014)’• Amendments to MFRS 2 ‘Classification and Measurement of Share-Based Payment Transactions’


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2. Basisofpreparation(cont’d)

(b) Standardsandamendmentstopublishedstandardsissuedbutnotyeteffective(cont’d)

(iv) Financial year beginning on or after 1 January 2019 • MFRS 16 ‘Leases’

(v) To be announced• Amendments to MFRS 10 and MFRS 128 ‘Sale or Contribution of Assets between an Investor and its

Associate or Joint Venture’

These pronouncements are not expected to have any effect to the financial statement of the Group and the Company upon these initial application, except as describe below:

MFRS 9 Financial Instruments

In November 2014, the MASB issued the final version of MFRS 9 Financial Instruments, replacing MFRS 139. This Standard made changes to the requirements for classification and measurement, impairment, and hedge accounting. The adoption of this Standard will have an effect on the classification and measurement of the Group’s and the Company’s financial assets, but no impact on the classification and measurement of the Group’s and the Company’s financial liabilities.

MFRS 9 Financial Instruments also requires impairment assessments to be based on an expected loss model, replacing the MFRS 139 incurred loss model. Finally, MFRS 9 Financial Instruments aligns hedge accounting more closely with risk management, establish a more principle-based approach to hedge accounting and address inconsistencies and weaknesses in the previous model.

This Standard will come into effect on or after 1 January 2018 with early adoption permitted. Retrospective application is required, but comparative information is not compulsory. The impact of the adoption of this Standard in relation to the new requirements for classification and measurement and impairment are still being assessed, but the requirements for hedge accounting is not relevant to the Group and the Company.

MFRS 15 Revenue from Contracts with Customers

MFRS 15 introduces a new model for revenue recognition arising from contracts with customers. MFRS 15 will replace supersede MFRS 111 Construction contracts, MFRS 118 Revenue, IC 13 Customer Loyalty Programmes, IC 15 Agreements for the Construction of Real Estate, IC 18 Transfers of Assets from Customers and IC 31 Revenue - Barter Transactions Involving Advertising Services. The application of MFRS 15 may result in difference in timing of revenue recognition as compared with current accounting policies.

The Group and the Company is currently assessing the impact to the financial statements upon adopting MFRS 15, and will adopt MFRS 15 on the mandatory effective date.

MFRS 16 Leases

Currently under MFRS 117, leases are classified either as finance leases or operating leases. A lessee recognises on its statement of financial position assets and liabilities arising from the former but not the latter. As a result, many users have resorted to adjust the lessees’ financial statements for the effects of operating leases commitments to enable comparison with entities that borrow to buy assets.

MFRS 16 eliminates the distinction between finance and operating leases for lessees. All leases will be brought onto its statement of financial position as recording certain leases as off-balance sheet leases will no longer be allowed except for some limited practical exemptions. In other words, for a lessee that has material operating leases, the assets and liabilities reported on its statement of financial position are expected to increase substantially.


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3. Summaryofsignificantaccountingpolicies

(a) Businesscombination

Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the aggregate of the consideration transferred measured at acquisition date fair value and the amount of any non-controlling interests in the acquiree. For each business combination, the Group elects whether to measure the non-controlling interest in the acquiree at fair value or at the proportionate share of the acquiree’s identifiable net assets. Acquisition-related costs are expensed as incurred and included in administrative expenses. When the Group acquires a business, it assesses the financial assets and financial liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date.

If the business combination is achieved in stages, the previously held equity interest is remeasured at its acquisition date fair value and any resulting gain or loss is recognised in profit or loss. It is then considered in the determination of goodwill. Any contingent consideration to be transferred by the acquirer will be recognised at fair value at the acquisition date. Contingent consideration classified as an asset or liability that is a financial instrument and within the scope of MFRS 139 ‘Financial Instruments: Recognition and Measurement’ (“MFRS 139”) is measured at fair value with changes in fair value recognised either in profit or loss or as a change to other comprehensive income. If the contingent consideration is not within the scope of MFRS 139, it is measured in accordance with the appropriate MFRSs. Contingent consideration that is classified as equity is not remeasured and subsequent settlement is accounted for within equity.

(b) Investmentinsubsidiaries

A subsidiary is an entity controlled by the Company. Control exists when the Company has the power over the entity, is exposed to or has rights to variable returns from its involvement with the entity and has the ability to use its power over the entity to affect the amount of the company’s return. In assessing control, potential voting rights that presently are exercisable are taken into account.

In the Company’s separate financial statements, investment in a subsidiary is accounted for at cost less

accumulated impairment losses. The policy for the recognition and measurement of impairment losses is in accordance with Note 3(h). On disposal of such investment, the difference between the net disposals proceed and its carrying amount is recognised as gain or loss on disposal in profit or loss.

(c) Interestinassociateandjointventure

An associate is an entity over which the Group or the Company has significant influence. Significant influence is the power to participate in the financial and operating policy decisions of the investee, but is not control or joint control over those policies.

A joint venture is a type of joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the joint venture. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require unanimous consent of the parties sharing control.

The considerations made in determining significant influence or joint control is similar to those necessary to determine control over subsidiaries.

The Group’s interest in its associate and joint venture are accounted for using the equity method. The associate and joint venture are equity accounted for from the date the Group gains significant influence or joint control until the date the Group ceases to have significant influence over the associate or joint control over the joint venture.


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3. Summaryofsignificantaccountingpolicies(cont’d)

(c) Interestinassociateandjointventure(cont’d)

Under the equity method, the interest in associate and joint venture are initially recognised at cost. The carrying amount of the investment is adjusted for changes in the Group’s share of net assets of the associate or joint venture since the acquisition date.

The consolidated statement of profit or loss and other comprehensive income reflects the Group’s share of the results of operation of the associate and joint venture. Any change in other comprehensive income of those investees is presented as part of the Group’s statement of profit or loss and other comprehensive income. Where there has been a change recognised directly in the equity of the associate or joint venture, the Group recognises its share of such changes and discloses this, when applicable, in the consolidated statement of changes in equity. Unrealised gains and losses resulting from the transactions between Group and the associate and joint venture are eliminated to the extent of the interest in associate or joint venture. The aggregate of the Group’s share of profit or loss in associate and joint venture is shown on the face of the consolidated statement of profit or loss and other comprehensive income outside operating profit. The Group’s share of profit or loss in associate and joint venture represents profit or loss after tax and non-controlling interests in the associate or joint venture.

When the Group’s share of losses in an associate or joint venture equals or exceeds its interest in the associate

or joint venture, including any long term interests that, in substance, form part of the Group’s net interest in the associate or joint venture, the Group does not recognise further losses, unless it has incurred obligations or made payment on behalf of the associate or joint venture.

After application of the equity method, the Group determines whether it is necessary to recognise an impairment loss on its investment in its associate and joint venture. The Group determines at each reporting date whether there is any objective evidence that the interest in the associate and joint venture are impaired. If there is such evidence, the Group calculates the amount of impairment as the difference between recoverable amount of the associate or joint venture and its carrying amount, then recognises the amount in the ‘share of profit of associate or share of profit on joint venture’ on the face of the consolidated statement of profit or loss and other comprehensive income.

Upon loss of significant influence over the associate or joint control over the joint venture, the Group measures and recognises any retained investment at its fair value. Any difference between the carrying amount of the associate or joint venture upon loss of significant influence or joint control and the fair value of the retained investment and proceeds from disposals is recognised in the consolidated statement of profit or loss and other comprehensive income.

(d) Foreigncurrencies

(i) Functionalandpresentationcurrency

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 RM, which is also the Company’s functional currency.

(ii) Foreigncurrencytransactionsandbalances

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.


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(d) Foreigncurrencies(cont’d)

(ii) Foreigncurrencytransactionsandbalances(cont’d)

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.

(iii) Foreignoperations

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 through the foreign currency translation reserve. 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.

(e) Intangibleassets

(i) Goodwill

Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred and the amount recognised for non-controlling interests over the net identifiable assets acquired and liabilities assumed. If the fair value of the net assets acquired is in excess of the aggregate consideration transferred, the gain is recognised in profit or loss. After initial recognition, goodwill is measured at cost less accumulated impairment losses. Goodwill is reviewed for impairment annually, or more frequently, if events or changes in circumstances indicate that the carrying value may be impaired.

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

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

Where goodwill forms part of a CGU and part of the operation within that CGU 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 CGU retained.


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(e) Intangibleassets(cont’d)

(i) Goodwill(cont’d)

Goodwill and fair value adjustments arising on the acquisition of foreign operation on or after 1 January 2005 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 3(d) to the financial statements.

Goodwill and fair value adjustments which arose on acquisitions of foreign operation before 1 January 2005 are deemed to be assets and liabilities of the entity rather than assets and liabilities of the foreign operation translated at the exchange rate prevailing at the date of acquisition.

(ii) Productdevelopmentexpenditure 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 or the Company 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 between 2 to 5 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) Intellectualproperties Intellectual properties comprise digital content rights and licenses acquired and are considered to have

finite useful life due to the technological risks and advancement inherent in the industry. Intellectual properties of the Group or the Company are amortised on the straight-line basis over their estimated useful lives of 10 years.

(f) Property,plantandequipment

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 or the Company and the cost of the item can be measured reliably.

Subsequent to initial 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 or the Company 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 property, 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.


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(f) Property,plantandequipment(cont’d)

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

Buildings 2% Computers and software 10% - 50% Furniture, fixtures, fittings and office equipment 10% - 50% Motor vehicles 10% - 20% Renovation 10% - 33%

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 profit or loss in the year the asset is derecognised.

(g) Financialinstruments

Financial instruments are recognised in the statements of financial position when, and only when, the Group and the Company become a party to the contract provisions of the financial instruments.

A financial instrument is recognised initially, at its fair value plus, in the case of a financial instrument not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition or issue of the financial instrument.

An embedded derivative is recognised separately from the host contract and accounted for as a derivative if, and only if, it is not closely related to the economic characteristics and risks of the host contract and the host contract is not categorised at fair value through profit or loss. The host contract, the event an embedded derivative is recognised separately, is accounted for in accordance with policy applicable to the nature of the host contract.

The Company categorise the financial instruments as follows:

i) FinancialAssets

Financial assets at fair value through profit or loss

Financial assets are classified as fair value through profit or loss if they are held for trading, including derivatives, or are designated as such upon initial recognition.

Subsequent to initial recognition, financial assets at fair value through profit or loss are measured at fair value with the gain or loss recognised in profit or loss. Exchange differences, interest and dividend income on financial assets at fair value through profit or loss are recognised as other gains or losses in statements of profit or loss.

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 settlement date.


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(g) Financialinstruments(cont’d)

i) FinancialAssets(cont’d)

Loans and receivables

Financial assets with fixed or determinable payments that are not quoted in an active market, trade and other receivables and cash and cash equivalents 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 financial assets are classified as current assets, except for those having settlement

dates later than 12 months after the reporting date which are classified as non-current assets.

Held-to-maturity investments

Financial assets with fixed or determinable payments and fixed maturity that are quoted in an active market and the Group and the Company have the positive intention and ability to hold the investment to maturity is classified as held-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 assets.

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 with the gain or loss recognised in other comprehensive income, except for 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.

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.

ii) FinancialLiabilities

All financial liabilities are subsequently measured at amortised cost other than those categorised as fair value through profit or loss.


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(g) Financialinstruments(cont’d)

ii) FinancialLiabilities(cont’d)

Fair value through profit or loss comprises financial liabilities that are held for trading, derivatives (except for a derivative that is a financial guarantee contract or a designated and effective hedging instrument) or financial liabilities that are specifically designated as fair value through profit or loss upon initial recognition.

Derivative that are linked to and must be settled by delivery of unquoted equity instruments whose fair values cannot be reliably measured are measured at cost.

Other financial liabilities categorised as fair value through profit or loss is subsequently measured at their fair values with the gain or loss recognised in profit or loss.

Financial liabilities are classified as current liabilities unless the Group and the Company has an unconditional right to defer settlement of the liability for at least 12 months after the reporting date.

iii) Regularwaypurchaseorsaleoffinancialassets

A regular way purchase or sale is a purchase or sale of a financial asset under a contract whose terms require delivery of the asset within the time frame established generally by regulation or convention the marketplace concerned.

A regular way purchase or sale of financial asset is recognised and derecognised, as applicable, using trade date accounting. Trade date accounting refers to:

(i) the recognition of an asset to be received and the liability to pay for it on the trade date; and

(ii) derecognition of an asset that is sold, recognition of any gain or loss on disposal and the recognition of a receivable from the buyer for payment on the trade date.

iv) Derecognition

A financial asset is derecognised when the contractual rights to receive cash flows from the asset has expired or is transferred to another party without retaining control or substantially all risks and rewards of the asset. On derecognition of a financial asset, the difference between the carrying amount and the sum of the consideration and any cumulative gain or loss that had been recognised in other comprehensive income is recognised in the profit or loss.

A financial liability is derecognised when the obligation specified in the contract is discharged or cancelled or expires. On derecognition of a financial liability, the difference between the carrying amount and the consideration paid is recognised in profit or loss.

(h) Impairmentofassets

i) Impairmentoffinancialassets

All financial assets (except for financial assets categorised as fair value through profit or loss and investment in subsidiary) are assessed at each reporting date whether there is any objective evidence of impairment as a result of one or more events having an impact on the estimated future cash flows of the asset. Losses expected as a result of future events, no matter how likely, are not recognised. For an equity instrument, a significant or prolonged decline in the fair value below its cost is an objective evidence of impairment.


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(h) Impairmentofassets(cont’d)

i) Impairmentoffinancialassets(cont’d)

An impairment loss in respect of loans and receivables and held-to-maturity investments is recognised in profit or loss and is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the asset’s original effective interest rate. The carrying amount of the asset is reduced through the use of an allowance account.

An impairment loss in respect of available-for-sale financial assets is recognised in the profit or loss and is measured as the difference between the asset’s acquisition cost (net of any principal repayment and amortisation) and the asset’s current fair value, less any impairment loss previously recognised in the fair value reserve. Where a decline in the fair value of an available-for-sale financial asset has been recognised in the other comprehensive income, the cumulative loss in other comprehensive income is reclassified from equity and recognised to profit or loss.

An impairment loss in respect of unquoted equity instrument that is carried at cost is recognised in profit or loss and is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the current market rate of return for a similar financial asset.

Impairment losses recognised in profit or loss for an investment in an equity instrument is not reversed through the profit or loss.

If, in a subsequent period, the fair value of a debt instrument increases and the increase can be objectively related to an event occurring after the impairment loss was recognised, the impairment loss is reversed through profit or loss, to the extent that the asset’s carrying amount does not exceed what the carrying amount would have been had the impairment not been recognised at the date the impairment is reversed.

ii) Impairmentofnon-financialassets

The carrying values of assets, other than those to which MFRS 136 - Impairment of Assets does not apply, are reviewed at the end of each reporting period for impairment when there is an indication that the assets might be impaired. Impairment is measured by comparing the carrying values of the assets with their recoverable amounts. The recoverable amount of the assets is the higher of the assets’ fair value less costs to sell and their value-in-use, which is measured by reference to discounted future cash flow.

An impairment loss is recognised in profit or loss immediately unless the asset is carried at its revalued amount. Any impairment loss of a revalued asset is treated as a revaluation decrease to the extent of a previously recognised revaluation surplus for the same asset.

In respect of assets other than goodwill, and where there is a change in the estimates used to determine the recoverable amount, a subsequent increase in the recoverable amount of an asset is treated as a reversal of the previous impairment loss and is recognised to the extent of the carrying amount of the asset that would have been determined (net of amortisation and depreciation) had no impairment loss been recognised. The reversal is recognised in profit or loss immediately, unless the asset is carried at its revalued amount. A reversal of an impairment loss on a revalued asset is credited to other comprehensive income. However, to the extent that an impairment loss on the same revalued asset was previously recognised as an expense in profit or loss, a reversal of that impairment is recognised as 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.

(i) Cashandcashequivalents

For the purpose of the statements of cash flows, cash and cash equivalents comprise cash at bank and on hand and demand deposits. These also include bank overdrafts that form an integral part of the Group’s cash management.


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(j) 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 their 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.

(k) Provisionsforliabilities

Provisions for liabilities are recognised when the Group and the Company 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.

(l) Borrowingcosts

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 or the Company incurred in connection with the borrowing of funds.

(m) Employeebenefits

(i) Short-termbenefits

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) Definedcontributionplans 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 (EPF) 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.

(iii) Provisionforgratuity

The Group makes provision for payments to be made to employees upon the end of or termination of their employment contract, or retirement in its subsidiary in Dubai in accordance to the requirements of Federal Law No. 8 of 1980 Regulating Labour Relations of the United Arab Emirates.

Remeasurements of the provision for gratuity are recognised in profit or loss as employee benefits expense in the period in which they are incurred.


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(n) Financelease–theGrouportheCompanyaslessee

Assets acquired by way of hire purchase or finance leases are stated at an amount equal to the lower of their fair values and the present value of the minimum lease payments at the inception of the leases, less accumulated depreciation and accumulated impairment losses. The corresponding liability is included in the statement of financial position as finance lease obligations. In calculating the present value of the minimum lease payments, the discount factor used is the interest rate implicit in the lease, when it is practical to determine; otherwise, the entity’s incremental borrowing rate is used. Any initial direct costs are also added to the carrying amount of such assets.

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 for each accounting period. Finance charges are charged to profit or loss.

Leased assets are depreciated over the estimated useful life of the asset. However, if there is no reasonable certainty that the Group or the Company 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.

(o) Operatinglease-theGrouportheCompanyaslessee

Operating lease payments are recognised as an expense in profit or loss on the 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 the straight-line basis.

Assets leased out under operating leases are presented on the statement of financial position according to the nature of the assets. Rental income from operating leases is recognised on the straight-line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised on the straight-line basis over the lease term.

(p) Governmentgrants

Government grants are recognised when there is reasonable assurance that the Group and the Company will comply with conditions related to them and that the grants will be received.

Grants related to income are recognised in profit or loss over the periods necessary to match them with the related costs that they are intended to compensate. The timing of such recognition in profit or loss will depend on the fulfilment of any conditions or obligations attached to the grant.

Grants related to assets are either offset against the carrying amount of the relevant asset or presented as deferred income (liability) in the statement of financial position. The profit or loss will be affected by a reduced depreciation charge or by recognising deferred income in profit or loss systematically over the useful life of the related asset.

(q) Revenue

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

(i) Saleofgoods

Revenue from sale of goods is recognised net of value-added taxes, rebates, returns and trade discounts 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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(q) Revenue(cont’d)

(ii) Revenuefromservices

Revenue from services rendered is recognised net of service taxes, rebates and discounts as and when the services are performed and delivered to customers.

(iii) Interestincome

Interest income is recognised using the effective interest method.

(iv) Dividendincome

Dividend income is recognised when the Group’s or the Company’s right to receive payment is established.

(r) Incometaxes

(i) Currenttax

The tax expense in the profit or loss represents the aggregate amount of current tax and deferred tax. Current tax is the expected amount of income taxes payable (including withholding taxes payables by foreign subsidiaries on distribution of retained earnings to companies in the Group) in respect of the taxable profit for the period and is measured using the tax rates that have been enacted at the reporting date, and adjustment of tax payable in respect of the previous financial year.

(ii) Deferredtax

Deferred tax is provided for, using the liability method, on temporary differences at the reporting date arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. In principle, deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets are recognised for all deductible temporary differences, unused tax losses and unused tax credits to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, unused tax losses and unused tax credits can be utilised.

Deferred tax is measured at the tax rates that are expected to apply in the period when the asset is realised or the liability is settled, based on tax rates that have been enacted or substantively enacted at the reporting date. Deferred tax is recognised in the profit or loss, except when it arises from transaction which is recognised in other comprehensive income or directly in equity, in which case the deferred tax is charged or credited in other comprehensive income or directly in equity.

(iii) Goodsandservicetax(“GST”)andValueaddedtax(“VAT”)

Revenue, expenses and assets are recognised net of GST and VAT, unless the GST and VAT is not recoverable from the tax authority. The amount of GST and VAT not recoverable from the tax authority is recognised as an expense or as part of cost of acquisition of an asset. Receivables and payables relate to such revenue, expenses or acquisitions of assets are presented in the statement of financial position inclusive of GST and VAT recoverable or GST and VAT payable.

GST and VAT recoverable from or payable to tax authority may be presented on net basis should such

amounts are related to GST and VAT levied by the same tax authority and the taxable entity has a legally enforceable right to set off such amounts.


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(s) Segmentreporting

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 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.

(t) Sharecapitalandshareissuanceexpenses

An equity instrument is any contract that evidences a residual interest in the assets of the Group and the Company after deducting all of their 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.

(u) Treasuryshares

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.

(v) 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 or the Company.

Contingent liabilities and assets are not recognised but disclosed in the notes to the financial statements, unless the possibility of an outflow and inflow of resources embodying economic benefits is remote. When a change in the probability of an outflow occurs so that the outflow is probable, it will then be recognised as provision.

(w) Relatedparties

A party is related to an entity if:

(i) directly, or indirectly through one or more intermediaries, the party:• control, is controlled by, or is under common control with, the entity (this includes parents, subsidiaries

and fellow subsidiaries);• has an interest in the entity that gives it significant influence over the entity; or • has joint control over the entity;

(ii) the party is an associate of the entity; (iii) the party is a joint venture in which the entity is a venturer;(iv) the party is a member of the key management personnel of the entity or its parent;(v) the party is a close member of the family of any individual referred to in (i) or (iv);(vi) the party is an entity that is controlled, joint controlled or significantly influenced by, or for which significant

voting power in such entity resides with, directly or indirectly, any individual referred to in (iv) or (v); or (vii) the party is a post-employment benefit plan for the benefit of employees of the entity, or of any entity that

is a related party of the entity.(viii) the party, or any member of a group of which the party is a part of, provides key management personnel

services to the Company.

Close members of the family of an individual are those family members who may be expected to influence, or be influenced by, that individual in their dealings with the entity.


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(x) Fairvaluemeasurement

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using a valuation technique. The measurement assumes that the transaction takes place either in the principal market or in the absence of a principal market, in the most advantageous market. For non-financial asset, the fair value measurement takes into account a market’s participant’s ability to generate economic participant that would use the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.

For financial reporting purpose, the fair value measurements are analysed into level 1 to level 3 as follows:

Level 1: Inputs are quoted prices (unadjusted) in active markets for identical assets or liability that the entity can access at the measurement date;

Level 2: Inputs are inputs, other than quoted prices included within level 1, that are observable for the asset or liability, either directly or in directly; and

Level 3: Inputs are unobservable inputs for the asset or liability.

4. Significantaccountingjudgements,estimatesandassumptions

The preparation of the Group’s and the Company’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. Although these estimates and judgements are based on management’s best knowledge of current events and actions, actual results may differ. Uncertainty about these judgements, estimates and assumptions could result in outcomes that could require a material adjustment to the carrying amount of the asset or liability in the future.

The most significant uses of judgements, estimates and assumptions are as follows:

(a) Impairmentofinvestmentsinsubsidiariesandinterestinanassociate

Investments in subsidiaries and interest in an associate are tested for impairment at each reporting date.

If indicators are present, these investments are subjected to impairment review. The impairment review comprises a comparison of the carrying amounts of the investment and the investment’s estimated recoverable amounts.

Judgements made by management in the process of applying the Group’s accounting policies in respect of investment in subsidiaries and interest in associates are as follows:

(i) The Group determines whether its investments are impaired following certain indications of impairment such as, amongst others, prolonged shortfall between market value and carrying amount, significant changes with adverse effects on the investment and deteriorating financial performance of the investment due to observed changes in the economic environment; and

(ii) Depending on their nature and the location in which the investments relate to, judgments are made by management to select suitable methods of valuation such as, amongst others, discounted future cash flows or estimated fair value based on quoted market price of the most recent transactions.


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4. Significantaccountingjudgements,estimatesandassumptions(cont’d)

(a) Impairmentofinvestmentsinsubsidiariesandinterestinanassociate(cont’d)

Once a suitable method of valuation is selected, management makes certain assumptions concerning the future to estimate the recoverable amount of the specific individual investment. These assumptions and other key sources of estimation uncertainty at the reporting date, may have a significant risk of causing a material adjustment to the carrying amounts of the investments within the next financial year. Depending on the specific individual investment, assumptions made by management may include, amongst others, assumptions on expected future cash flows, revenue growth, terminal value, discount rate used for purposes of discounting future cash flows which incorporates the relevant risks and expected future outcome based on certain past trends. Management believes that no reasonably expected possible change in the key assumptions described above would cause the carrying amounts of the investments to materially exceed their recoverable amounts.

(b) Amortisationofintangibleassets

The determination of estimated economic useful life of intangible assets requires management’s judgements which includes analysing the circumstances, industry and market practice. Changes in the expected level of usage and technological development could impact the economic useful lives and therefore, future amortisation charges.

(c) Inventorieswrite-down

Inventories of the Group are written down to net realisable value based on analysis of the ageing profile and taking into account the expected sales patterns and expected selling prices of individual items held in inventory. Changes in future sales patterns and expected selling prices of those inventories may have an impact on the amount of write down recorded.

5. Revenue

Revenue of the Group represents the invoiced value of goods sold and services rendered, 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.

6. Costofsales

Cost of sales of the Company consists mainly of Short Message Service (SMS) and leased-line charges, royalty expenses, amortisation of product development expenditure, other incidental costs incurred for the provision of mobile solutions and the cost of inventories.

Cost of sales of the Group includes costs of products, carriage inwards, import duty, goods and service tax and other incidental cost incurred in connection to sale of goods.


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7. Otherincome

Group Company 2016 2015 2016 2015 RM RM RM RM Dividend income - - 1,099,047 - Gain on disposal of property, plant and equipment 94,611 3,954 94,611 3,954 Realised gain on foreign exchange - 820,858 - - Interest income 12,351 7,882 7,869 4,399 Investment income from profit guarantee 363,458 1,854,663 363,458 1,854,663 Rental income 2,710 - - - Government grants 1,353 - - - Other income 77,808 159,512 57,132 23,500

552,291 2,846,869 1,622,117 1,886,516

8. Financecosts

Group Company 2016 2015 2016 2015 RM RM RM RM

Interest expense: - Finance lease obligations 18,655 13,811 5,310 8,273 - Term loan 19,302 25,385 19,302 25,385

37,957 39,196 24,612 33,658

9. Lossbeforetax

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

Group Company 2016 2015 2016 2015 RM RM RM RM Allowance for impairment losses on receivables (Note 20) 97,595 360,246 - - Allowance for impairment of amount due from subsidiaries (Note 21) - - 5,278,686 6,477,203 Allowance for impairment of amount due from a joint venture (Note 22) 45,708 61,168 - - Amortisation of intangible assets (Note 15) 1,293,146 1,036,496 492,460 857,985 Auditors’ remuneration: Statutory audits - auditors of the Company 106,242 98,000 81,000 77,000 - other auditors 40,969 77,401 - - - under/(over) provision in previous financial year 980 (771) - - Other services - auditors of the Company 9,600 - 9,600 - - other auditors - 7,505 - -


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9. Lossbeforetax(cont’d)

The following items have been included in arriving at loss before tax: (cont’d)


Bad debt written off 192,671 91,715 - - Depreciation of property, plant and equipment (Note 14) 1,163,518 1,129,216 339,565 318,058 Deposit and prepayment written off 137,621 - - - Directors’ remuneration (Note 11) 1,141,458 1,284,749 776,514 976,547 Employee benefits expense (Note 10) 11,117,956 10,492,966 2,865,155 2,322,663 Impairment loss on investment in an associate (Note 17) 1,065,122 - 2,218,121 - Impairment loss on investment in subsidiaries (Note 16) - - 16,485,088 759,153 Inventories write-down 106,432 522,489 - - Inventories write-off 657,520 515,504 - - Lease payments for premises 1,048,428 443,338 58,800 - Net (gain)/loss on foreign exchange - realised (373,473) 125,853 21,571 19,352 Net loss/(gain) on foreign exchange - unrealised 473,633 (27,407) 51,738 65,072 Property, plant and equipment written off 8,885 174,623 - 6,222

10. Employeebenefitsexpense

Group Company 2016 2015 2016 2015 RM RM RM RM Wages and salaries 11,178,452 10,321,083 2,693,951 2,450,523 Social security contributions 232,663 270,189 25,020 23,199 Contribution to defined contribution plan 949,843 820,863 334,607 286,656 Provision for gratuity (Note 10(b)) 1,180 20,867 - - Other staff related expenses 239,500 133,560 97,025 82,245 12,601,638 11,566,562 3,150,603 2,842,623 Less: Capitalised in product development expenditure (Note 15) (1,483,682) (1,073,596) (285,448) (519,960) 11,117,956 10,492,966 2,865,155 2,322,663

(a) Included in employee benefits expense of the Group and the Company are executive directors’ remuneration amounting to RM892,811 (2015: RM1,108,749) and RM527,867 (2015: RM800,547) respectively.


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10. Employeebenefitsexpense(cont’d)

(b) Provision for gratuity

Group 2016 2015 RM RM As at 1 July 9,889 - Addition during the year 1,180 9,889 Exchange differences 651 - As at 31 June 11,720 9,889

11. Directors’remuneration


DirectorsoftheGroupandCompany Executive: Salaries and other emoluments 825,546 989,934 470,612 713,651 Defined contribution plan and social security contributions 67,265 118,815 57,255 86,896 892,811 1,108,749 527,867 800,547 Non-executive: Fees 224,647 168,000 224,647 168,000 Other emoluments 24,000 8,000 24,000 8,000 1,141,458 1,284,749 776,514 976,547

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

Numberofdirectors 2016 2015

Executive: RM100,001 - RM250,000 2* - RM250,001 - RM300,000 - 1 RM400,001 - RM450,000 1 - RM450,001 - RM500,000 - 1 Above RM500,000 - - Non-executive: Below RM50,000 3 6** RM50,001 - RM100,000 2 -

* Including a Director who had resigned during the financial year.** Including two (2) Directors who retired in prior year.


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12. Incometaxexpense

The major components of income tax expense are:

Group Company 2016 2015 2016 2015 RM RM RM RM Current tax: Foreign income tax 1,143,240 707,223 - - Foreign withholding tax 192,333 43,584 192,333 42,900 1,335,573 750,807 192,333 42,900 (Over)/under provision in prior year Local income tax (5,397) - (5,396) - Foreign income tax 80,392 (47,860) - - 1,410,568 702,947 186,937 42,900 Deferred tax (Note 29): Relating to origination and reversal of temporary differences - (76,864) - -

Income tax expense recognised in profit or loss 1,410,568 626,083 186,937 42,900

The reconciliation between tax expense and the product of accounting loss multiplied by the applicable corporate tax rate for the years ended 30 June 2016 and 2015 are as follows:

Group Company 2016 2015 2016 2015 RM RM RM RM Loss before tax (2,065,450) (2,848,136) (24,587,074) (8,242,166) Taxation at Malaysian statutory tax rate of 24% (2015: 25%) (495,708) (712,034) (5,900,897) (2,060,542) Adjustments: Different tax rates in other countries 145,765 (517,532) - - Income not subject to tax (759,976) (499,169) (288,367) (465,080) Expenses not deductible for tax purposes 1,476,402 569,535 6,085,892 2,296,058 Utilisation of capital allowance and tax loss brought forward (12,987) - - - Deferred tax assets not recognised during the year 789,744 1,815,968 103,372 229,564 Under/(over) provision of income tax in prior year 74,995 2,595 (5,396) - Withholding tax on dividend and other income received 192,333 43,584 192,333 42,900 Origination and reversal of temporary differences - (76,864) - -

Income tax expense recognised in profit or loss 1,410,568 626,083 186,937 42,900


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12. Incometaxexpense(cont’d)

Domestic current income tax is calculated at the Malaysian statutory tax rate of 24% (2015: 25%) of the estimated assessable profit for the year. The statutory tax rate had reduced to 24%, effective from year of assessment of 2016. The computation of deferred tax has reflected these charges.

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.

13. Earningspershare

Basic earnings per share is calculated by dividing loss for the year attributable to owners 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 loss and share data used in the computation of basic earnings per share for the years ended 30 June:

Group 2016 2015 Loss attributable to owners of the Company (RM) (5,926,985) (4,364,799) Weighted average number of ordinary shares in issue* 190,465,505 177,557,240 Basic earnings per share (sen) (3.11) (2.46)

* The weighted average number of ordinary 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.


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14. Property,plantandequipment

Furniture fixture Computers fittings and andoffice Motor Group Buildings software equipment vehicles Renovation Total RM RM RM RM RM RM

Cost At 1 July 2014 1,240,000 15,288,285 2,636,338 813,670 801,691 20,779,984 Additions - 812,554 42,831 43,541 2,219 901,145 Disposals - (65,987) (36,802) - - (102,789) Write-offs - (17,379) (175,883) - (185,696) (378,958) Exchange differences - 634,944 121,871 58,096 37,844 852,755 At 30 June 2015/ 1 July 2015 1,240,000 16,652,417 2,588,355 915,307 656,058 22,052,137 Additions - 777,424 109,140 13,937 - 900,501 Disposals - (77,131) (946) - - (78,077) Write-offs - (505,162) (255,502) - (8,885) (769,549) Exchange differences - 221,977 33,208 6,101 3,016 264,302 At 30 June 2016 1,240,000 17,069,525 2,474,255 935,345 650,189 22,369,314 Accumulateddepreciation At 1 July 2014 116,806 13,630,041 1,950,379 196,218 433,351 16,326,795 Depreciation charge for the year (Note 9) 24,800 682,843 265,898 93,544 62,131 1,129,216 Disposals - (15,741) (17,615) - - (33,356) Write-offs - (6,702) (120,141) - (77,492) (204,335) Exchange differences - 539,019 54,262 16,253 24,798 634,332 At 30 June 2015/ 1 July 2015 141,606 14,829,460 2,132,783 306,015 442,788 17,852,652 Depreciation charge for the year (Note 9) 24,800 701,011 293,990 102,637 41,080 1,163,518 Disposals - (14,192) (180) - - (14,372) Write-offs - (175,389) (574,557) - (10,718) (760,664) Exchange differences - 192,398 18,117 (678) 536 210,373 At 30 June 2016 166,406 15,533,288 1,870,153 407,974 473,686 18,451,507 Netcarryingamount At 30 June 2015 1,098,394 1,822,957 455,572 609,292 213,270 4,199,485 At 30 June 2016 1,073,594 1,536,237 604,102 527,371 176,503 3,917,807


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14. Property,plantandequipment(cont’d)

Furniture fixture Computers fittings and andoffice Motor Company Buildings software equipment vehicles Renovation Total RM RM RM RM RM RM

Cost At 1 July 2015 1,240,000 11,140,636 546,850 368,449 355,196 13,651,131 Additions - 297,246 1,360 - - 298,606 Disposals - (26,645) - - - (26,645) Write-offs - (8,000) - - - (8,000) At 30 June 2015 / 1 July 2015 1,240,000 11,403,237 548,210 368,449 355,196 13,915,092 Additions - 577,788 3,250 - - 581,038 Disposal - (77,131) - - - (77,131) At 30 June 2016 1,240,000 11,903,894 551,460 368,449 355,196 14,418,999 Accumulateddepreciation At 1 July 2015 116,806 10,485,482 458,543 70,620 275,014 11,406,465 Depreciation charge for the year (Note 9) 24,800 215,959 22,863 36,845 17,591 318,058 Disposals - (4,677) - - - (4,677) Write-offs - (1,778) - - - (1,778) At 30 June 2015 / 1 July 2015 141,606 10,694,986 481,406 107,465 292,605 11,718,068 Depreciation charge for the year (Note 9) 24,800 248,650 20,233 36,845 9,037 339,565 Disposal - (14,192) - - - (14,192) At 30 June 2016 166,406 10,929,444 501,639 144,310 301,642 12,043,441 Netcarryingamount At 30 June 2015 1,098,394 708,251 66,804 260,984 62,591 2,197,024 At 30 June 2016 1,073,594 974,450 49,821 224,139 53,554 2,375,558

The Group acquired a motor vehicle of RM13,937 (2015: RM44,431) of which RM10,459 (2015: RM27,734) was financed through finance lease. The carrying amount of motor vehicles held under finance lease at the reporting date is RM277,139 and RM224,139 (2015: RM383,649 and RM260,984) for the Group and the Company respectively. These motor vehicles are charged to financial institutions for finance lease disclosed in Note 28 to the financial statements.

The Company’s building with a carrying amount of RM614,900 (2015: RM628,100) is pledged to a licensed bank to

secure the Company’s term loan borrowings as disclosed in Note 28 to the financial statements.

The cash outflow on acquisition of property, plant and equipment amounted to RM890,042 (2015: RM873,411) and RM581,038 (2015: RM298,606) for the Group and the Company respectively.


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15. Intangibleassets

Product development Intellectual Goodwill expenditure property Total RM RM RM RM

Group Cost 1 July 2014 14,744,633 12,983,820 1,480,328 29,208,781 Additions - 1,073,596 210,689 1,284,285 Exchange differences - 1,335,175 550,554 1,885,729

At 30 June 2015/ 1 July 2015 14,744,633 15,392,591 2,241,571 32,378,795 Additions - 1,483,682 272,398 1,756,080 Exchange differences - (44,696) 77,413 32,717

At 30 June 2016 14,744,633 16,831,577 2,591,382 34,167,592

Accumulatedamortisationandimpairment At 1 July 2014 14,744,633 10,986,780 417,743 26,149,156 Amortisation (Note 9) - 857,985 178,511 1,036,496 Exchange differences - 1,090,378 396,847 1,487,225

At 30 June 2015/ 1 July 2015 14,744,633 12,935,143 993,101 28,672,877 Amortisation (Note 9) - 1,109,544 183,602 1,293,146 Exchange differences - (29,222) 32,639 3,417

At 30 June 2016 14,744,633 14,015,465 1,209,342 29,969,440

Netcarryingamount At 30 June 2015 - 2,457,448 1,248,470 3,705,918 At 30 June 2016 - 2,816,112 1,382,040 4,198,152


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15. Intangibleassets(cont’d)

Product development expenditure RM Company Cost At 1 July 2015 11,660,316 Additions 519,960

At 30 June 2015/ 1 July 2015 12,180,276 Additions 285,448

At 30 June 2016 12,465,724

Accumulatedamortisation At 1 July 2015 10,796,455 Amortised during the year (Note 9) 857,985

At 30 June 2015/ 1 July 2015 11,654,440 Amortised during the year (Note 9) 492,460

At 30 June 2016 12,146,900

Netcarryingamount At 30 June 2015 525,836 At 30 June 2016 318,824

Amortisationofproductdevelopmentexpenditureandintellectualproperties

Amortisation of the product development expenditure and intellectual properties (consisting of digital content rights and licenses acquired) of the Group and the Company have been included in the cost of sales.

16. Investmentsinsubsidiaries Company 2016 2015 RM RM

Unquoted shares at cost 38,621,883 38,621,883 Less: Accumulated impairment losses (31,763,276) (15,278,188) 6,858,607 23,343,695


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16. Investmentsinsubsidiaries(cont’d)

Details of the subsidiaries are as follows:

Countryof Effectiveequity incorporation interest Nameofsubsidiaries 2016 2015 % % M3 Asia Sdn. Bhd. (“M3Asia”) ++,∞ Malaysia 100 100 M3 Online Sdn. Bhd. +,∞ Malaysia 100 100 M3 Mobile Technologies (S) Pte. Ltd. *,+,∞ Singapore 100 100 M3 Asia Distribution (S) Pte. Ltd. *,++, ∞ Singapore 60 60 Messaging Technologies (H.K.) Limited (“M3Tech HK”) *,+,++,∞ Hong Kong, 100 100 SAR 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 100 100 Islands HeldunderM3Asia M3Shoppe (Asia) Sdn. Bhd. (“M3Shoppe”) ++++,∞ Malaysia 100 100 HeldunderM3TechHK M3 Technologies (Xiamen) Co., Ltd (“M3Tech Xiamen”) *,+,∆ The People’s 95 95 Republic of China M3 Technologies (Shen Zhen) Company Limited *,++,∆ The People’s 100 100 Republic of China Way Way Innovations Company Limited *,#,∞ Hong Kong, SAR 100 100 HeldunderM3TechPakistan M3 Technologies Middle East FZE *,+,++ United Arab Emirates 60 60 HeldunderM3TechXiamen M3 Interactive (Shen Zhen) Co., Ltd *,+++++,∆ The People’s 95 95 Republic of China

* Audited by firm of auditors other than Ecovis AHL PLT.+ Involved in provision of mobile solutions.++ Involved in distribution and retailing of fast-moving electronic goods and related products.+++ Investment holding company.++++ Involved in e-Commerce.+++++ Involved in provision of e-Educational services.# Dormant.∞ The auditors’ report of these subsidiaries contains an emphasis of matter relating to the appropriateness of

the going concern basis of accounting used in the preparation of their financial statements.∆ The audited financial statements are not available and the management’s financial statements were used in

preparation of the consolidated financial statements.


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16. Investmentsinsubsidiaries(cont’d)

(a) Impairmentassessmentofinvestmentsinsubsidiaries

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 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 additional provision for impairment of subsidiaries of RM16,485,088 (2015: RM759,153) has been made in the current year in respect of the investment in Messaging Technologies (H.K.) Limited, PT Surya Genta Perkasa and M3 Technologies (Thailand) Co., Ltd. as the estimated recoverable amounts of the investments are lower than their carrying amounts.

17. Investmentinanassociate

Group 2016 2015 RM RM

Unquoted shares, at cost 5,998,438 5,998,438 Share of post-acquisition reserves ^ (1,152,999) (258,279) Less: Accumulated impairment loss (1,065,122) - Less: Transfer to asset classified as held for sale (Note 24) (3,780,317) - - 5,740,159

Company 2016 2015 RM RM Unquoted shares, at cost 5,998,438 5,998,438 Less: Accumulated impairment loss (2,218,121) - Less: Transfer to asset classified as held for sale (Note 24) (3,780,317) - - 5,998,438

^ Share of post-acquisition reserves is based on the unaudited management accounts of the associate for the financial year ended 30 June 2016.

The details of the associate, which is incorporated in Malaysia, is as follow:

Effectiveequity Nameofassociate interest Principalactivities 2016 2015 % %

Fotokem Sdn. Bhd. (“Fotokem”) 23.993 23.993 Trading in photographic, digital, electronic and ICT goods & services


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17. Investmentinanassociate(cont’d)

The summarised financial information below represent amounts in the equity-accounted associate’s management accounts:

30.6.2016 30.4.2015 (Unaudited) (Audited) RM RM

Statementoffinancialposition Non-current assets 8,388,132 9,925,139 Current assets 21,653,459 27,464,681 Non-current liabilities (1,428,057) (1,583,777) Current liabilities (8,788,951) (11,601,084) Net assets 19,824,583 24,204,959

Statementofcomprehensiveincome Revenue 54,370,419 66,246,981 Total expenses (58,449,328) (68,554,377) Finance cost (271,694) (351,546)

Loss after tax/total comprehensive loss for the period/year (4,350,603) (2,658,942)

The company had on 22 November 2013 signed a profit guarantee agreement with the vendor (a shareholder of Fotokem) for an aggregate audited profit after taxation of RM7 million for the year ended 30 April 2014 and 30 April 2015.

During the financial year, the Company has further made accrual for investment income from the profit guarantee agreement of RM363,458 (2015: RM1,854,663) in proportion to its equity interest in the associate, as disclosed in Note 7 to the financial statements. The estimation of the investment income is based on the unaudited management accounts of the associate as at 30 June 2016, as the Director are certain that circumstances would not change materially so as to require reversal of the investment income.

18. Interestinajointventure

Group 2016 2015 RM RM Share of net assets of joint venture: Unquoted shares, at cost 46 46 Advances to a joint venture 1,105,782 1,037,184 Share of post-acquisition reserves (253,738) (237,997)

852,090 799,233 Exchange differences (123,315) (70,458)

728,775 728,775 Less: Allowance for impairment loss (728,775) (728,775)

- -


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18. Interestinajointventure(cont’d)

Company 2016 2015 RM RM Unquoted shares, at cost 46 46 Advances to a joint venture 951,603 951,603 Less: Allowance for impairment loss (951,649) (951,649) - -

The details of the joint venture, which is incorporated in Singapore, are as follow:

Effectiveequity Nameofjointventure interest Principalactivities 2016 2015 % %

M3 Interactive (S) Pte. Ltd. 20 20 Provision of e-Educational services

On 12 June 2012, M3 Interactive has filed a statement of claim in the High Court of Singapore against an ex-director of M3 Interactive and Nexgen Studio Pte Ltd (“Nexgen”) (Nexgen is a joint venturer) (“the defendants”). The suit was settled on 11 September 2012 via a settlement agreement, in which the defendants have agreed to pay a settlement sum of SGD120,000 to the Company. An amount of SGD50,000 has been received by M3 Interactive to date.

One of the terms of the settlement was that M3 Interactive would buy over Nexgen’s share in M3 Interactive. The value of the shares is to be determined by a valuer. The parties subsequently appointed an independent valuer, BDO Pte Ltd, (“BDO”) to carry out the valuation. On 14 August 2014, the Company has removed BDO from the exercise due to disputes between parties involved. The Company has urged the defendants to do the same and provided alternative to the defendants to appoint another independent valuer to carry out the valuation. As at the date of this report, the defendants have not responded.

The Company had provided total net advances of RM951,603 (2015: RM951,603) to M3 Interactive. The advances are unsecured, interest free, and were to fund the working capital requirements of M3 Interactive. In view of recent developments and the fact that M3 Interactive has ceased operations, the Company has impaired the entire amount of the advances.

On 24 August 2016, the Company had made an application for a winding up order of M3 Interactive with the Courts. On 16 September 2016, a winding up order of M3 Interactive was issued by High Court of Singapore.

Summarised financial information in respect of the joint venture is as set out below:

Group 2016 2015 RM RM (Audited) (Audited) Statementoffinancialposition Non-current assets - 17,425 Current assets - 2,136 Current liabilities (1,644,420) (1,492,096) Statementofcomprehensiveincome Income - - Expenses 74,111 58,464


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18. Interestinajointventure(cont’d)

The audited report of the joint venture contains basis of disclaimer of opinion in the preparation of financial statement, which stated as follow:-

i) Completeness of liabilities

A winding up order was issued to the Company by the High Court of Singapore on 16 September 2016 and liquidation proceedings had ensured thereafter. At the date of report, we are unable to ascertain whether the liabilities of the Company is complete.

ii) Intangible assets

The Company has intangible assets totaling RM898,789 (equivalent to SGD300,739), of which a full allowance for impairment was recognised. In the absence of available information, we are unable to ascertain the nature and value of these intangible assets and consequently, we are unable to determine the effects to the financial statements.

iii) Circularisation

In the reply to us by the director of holding company and the holding company, it was stated that they do not agree to the amount totaling RM209,202 (equivalent to SGD70,000) owing by them to the Company. This balance was brought forward from the previous financial years and full impairment had been recognised by the management. We are unable to satisfy ourselves as to the existence and valuation of this balance in the statement of financial position. Consequently, we are unable to determine whether any adjustment to the amount was necessary.

19. Inventories


At cost: Trading inventories 3,507,638 2,780,047 Goods in transit 326,895 381,057 3,834,533 3,161,104 At net realisable value: Trading inventories 81,548 - 3,916,081 3,161,104

Company 2016 2015 RM RM

At cost: Trading inventories 41,979 149,053 Goods in transit 8,436 142,353 50,415 291,406


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19. Inventories(cont’d)

During the year, the amount of inventories recognised as an expense in cost of sales of the Group and the Company was RM5,519,596 and RM314,754 (2015: RM10,411,416 and RM68,341) respectively.

Trading inventories are written down to their net realisable values when their marketable selling prices are below their purchased costs. In such circumstances, their expected marketable selling prices are the best available measure of their net realisable values.

20. Tradeandotherreceivables

Group 2016 2015 RM RM Trade receivables Third parties 20,728,446 19,814,815 Less: Allowance for impairment losses (1,235,917) (1,481,886) 19,492,529 18,332,929 Other receivables Sundry receivables 2,156,390 2,564,199 Deposits 1,305,489 1,597,662 Prepayments 724,162 931,077 Advances due from staff 78,794 97,430 4,264,835 5,190,368 Tradeandotherreceivables 23,757,364 23,523,297 Less: Prepayments (724,162) (931,077) 23,033,202 22,592,220 Add: Amount owing from a joint venture (Note 22) 63,684 49,557 Add: Deposits, cash and bank balances (Note 23) 6,408,025 3,512,060 Total financial assets classified as loans and receivables 29,504,911 26,153,837

Impairment of trade and other receivables

Movements of the allowance for impairment loss during the financial year are as follow:

Group 2016 2015 RM RM Allowance for impairment losses: At 1 July (1,481,886) (1,009,248) Addition during the financial year (97,595) (360,246) Written off during the year 386,364 - Exchange differences (42,800) (112,392) At 30 June (1,235,917) (1,481,886)


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20. Tradeandotherreceivables(cont’d)

Company 2016 2015 RM RM Trade receivables Third parties 2,700,771 4,700,028 Less: Allowance for impairment losses (52,603) (52,603) 2,648,168 4,647,425 Other receivables Sundry receivables 1,507,982 1,893,664 Deposits 274,067 248,117 Prepayments 39,856 106,168 1,821,905 2,247,949 Tradeandotherreceivables 4,470,073 6,895,374 Less: Prepayments (39,856) (106,168) 4,430,217 6,789,206 Add: Amount owing from subsidiary companies (Note 21) 665,155 519,728 Add: Amount owing from a joint venture (Note 22) 63,684 9,081 Add: Deposits, cash and bank balances (Note 23) 35,013 248,185 Total financial assets classified as loans and receivables 5,194,069 7,566,200

The currency exposure profile of the Group’s trade and other receivable are summarised below:


Third parties: - Ringgit Malaysia 6,034,847 8,536,424 - Singapore Dollar 29,614 179,713 - Hong Kong Dollar 4,571 15,280 - Chinese Yuan 1,611,511 1,495,971 - Pakistani Rupee 12,929,674 10,986,940 - United Arab Emirates Dirham 605,714 506,835 - Indonesian Rupiah 1,425,562 1,060,493 - Thai Baht 1,069,368 741,641 - Euro 46,503 - 23,757,364 23,523,297

The currency exposure profile of the Company’s trade and other receivable is Ringgit Malaysia.

Trade receivables of the Group and the Company are non-interest bearing and normal credit term range from 30 to 90 days (2015: 30 to 90 days). They are recognised at their original invoiced amounts which represent their fair values on initial recognition.

The Group and the Company have no significant concentration of credit risk that may arise from exposure to a single customer or to groups of customers, other than as disclosed in Note 34(a).


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20. Tradeandotherreceivables(cont’d)

Ageing analysis of trade receivables

The ageing analysis of the Group’s and Company’s trade receivables is as follows:


Neither past due nor impaired 9,034,188 9,923,388 1,546,602 4,080,439

1 to 30 days past due not impaired 419,701 1,339,994 99,685 64,517 31 to 60 days past due not impaired 1,553,802 1,077,690 402,441 226,306 61 to 90 days past due not impaired 2,189,871 1,739,204 177,279 184,406 More than 91 days past due not impaired 6,294,967 4,252,653 422,161 91,757

10,458,341 8,409,541 1,101,566 566,986 Impaired and provided for 1,235,917 1,481,886 52,603 52,603 20,728,446 19,814,815 2,700,771 4,700,028

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 or 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 RM10,458,341 (2015: RM8,409,541) and RM1,101,566 (2015: RM566,986) respectively that are past due at the reporting date but not impaired. These receivables are unsecured.

The management of the Group believes that no impairment allowance is necessary in respect of these trade receivables. They are substantially companies with good collection track record and no recent history of default.

Receivables that are impaired

The Group and the Company have trade receivables amounting to RM1,235,917 (2015: RM1,481,886) and RM52,603 (2015: RM52,603) respectively that are past due and have been impaired.


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21. Amountowingfrom/(to)subsidiariescompanies

The amount owing from subsidiaries companies is unsecured and interest-free. Inter-company balances which are trade in nature are subject to credit terms between 30 to 90 days (2015: 30 to 90 days) whilst, non-trade transactions are repayable upon demand.

Company 2016 2015 RM RM Amount owing from subsidiaries companies: Trade 1,424 - Non-trade 13,305,739 7,883,050

13,307,163 7,883,050 Less: Allowance for impairment loss (12,642,008) (7,363,322)

665,155 519,728 Accumulatedimpairmentlosses At 1 July 7,363,322 886,119 Addition during the financial year (Note 9) 5,278,686 6,477,203

At 30 June 12,642,008 7,363,322


Amount owing to a subsidiary company: Non-trade (659,118) (783,355)

The amount owing to a subsidiary company is unsecured, interest-free and repayable on demand.

The currency exposure profile of the Company’s amount owing from/(to) subsidiaries companies are summarised below:


Amount owing from subsidiaries companies: - Ringgit Malaysia 500,446 487,252 - Thai Baht 164,709 32,476

665,155 519,728

Amount owing to a subsidiary company: - United States Dollar (21,165) (142,767) - Pakistani Rupee (637,953) (640,588)

(659,118) (783,355)


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22. Amountowingfromajointventure

The amount owing from a joint venture is unsecured, interest-free, and repayable upon demand.

Group 2016 2015 RM RM Amount owing from a joint venture: Non-trade 484,123 400,820 Less: Allowance for impairment loss (420,439) (351,263) 63,684 49,557

Impairment of amount owing from a joint venture

Movements of the allowance for impairment loss during the financial year are as follow:

Group 2016 2015 RM RM Accumulated impairment losses: At 1 July 351,263 262,766 Addition during the financial year (Note 9) 45,708 61,168 Exchange differences 23,468 27,329 At 30 June 420,439 351,263

Company 2016 2015 RM RM Amount owing from a joint venture: Non-trade 63,684 9,081

The currency exposure profile of the Company’s amount owing from a joint venture is Ringgit Malaysia.

23. Deposits,cashandbankbalances

Group Company 2016 2015 2016 2015 RM RM RM RM Cash on hand and at banks 6,406,261 3,510,296 33,249 246,421 Deposits with licensed banks 1,764 1,764 1,764 1,764

6,408,025 3,512,060 35,013 248,185

Cash at banks are deposits held at call with licensed banks. Deposits with licensed banks at 30 June 2016 bore interests ranging from 2.2% to 2.6% (2015: 2.87% to 3.15%) per annum and have maturity periods ranging from 1 to 30 days (2015: 1 to 30 days) at financial year end for both Group and Company.


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23. Deposits,cashandbankbalances(cont’d)

The currency exposure profile of the Group’s cash and bank balances are summarised below:

Group 2016 2015 RM RM Cash and bank balances: - Ringgit Malaysia 155,161 410,942 - Singapore Dollar 65,683 52,594 - Hong Kong Dollar 43,903 61,993 - Indonesian Rupiah 126,082 47,588 - Pakistani Rupee 4,583,298 1,805,981 - Thai Baht 6,878 72,524 - United States Dollar 65,725 139,430 - United Arab Emirates Dirham 1,302,429 827,868 - Chinese Yuan 58,866 93,140 6,408,025 3,512,060

The currency exposure profile of the Company’s cash and bank balances is Ringgit Malaysia.

24. Assetclassifiedasheldforsale

Group Company 2016 2015 2016 2015 RM RM RM RM As at 1 July - - - - Transfer from investment in an associate (Note 17) 3,780,317 - 3,780,317 -

As at 30 June 3,780,317 - 3,780,317 -

On 7 June 2016, the Company has entered into settlement agreement with Ngui Woon Kong, Wong Lim Patt @ Wong Lim Fatt, Thean Yoke Peng @ Theam Yoke Peng, Shum Hok Yein and Khoo Chee Kuen to dispose 23.993% equity interest in associate company, Fotokem Sdn. Bhd. representing 383,900 ordinary shares for total consideration of RM3,780,317. The disposal is subject to fulfilment of condition precedent.

Subsequently, the consideration has been duly received by the Company on 8 September 2016 and the disposal is completed on the same date.


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25. Sharecapital,sharepremiumandtreasuryshares

Numberofordinaryshares ofRM0.10each Amount Totalshare Sharecapital Sharecapital capitaland (Issuedand Treasury (Issuedand Share share Treasury fullypaid) shares fullypaid) premium premium shares RM RM RM RM

GroupandCompany At 1 July 2015 185,614,740 (2,557,500) 18,561,474 4,572,702 23,134,176 (565,639) Issuance of shares 11,705,700 - 1,170,570 58,529 1,229,099 -

At 30 June 2016 197,320,440 (2,557,500) 19,732,044 4,631,231 24,363,275 (565,639)

At 1 July 2014 179,614,740 (2,557,500) 17,961,474 4,392,702 22,354,176 (565,639) Issuance of shares 6,000,000 - 600,000 180,000 780,000 -

At 30 June 2015 185,614,740 (2,557,500) 18,561,474 4,572,702 23,134,176 (565,639)

During the financial year, the Company increased its issued and paid up share capital by RM1,170,570 from RM18,561,474 to RM19,732,044 via issuance of the second tranche of the private placement of 11,705,700 new ordinary shares of RM0.10 each at issue price of RM0.105 per share. The new ordinary shares issued during the financial year rank pari passu in all respects with the existing ordinary shares of the Company.

Numberofordinaryshares ofRM0.10each Amount 2016 2015 2016 2015 RM RM

Authorisedsharecapital At 1 July 2014/ 30 June 2015/ 30 June 2016 250,000,000 250,000,000 25,000,000 25,000,000

(a) Sharecapital

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.

(b) Treasuryshares

This amount relates to the acquisition cost of treasury shares which are being held as treasury shares in accordance with Section 67A of the Companies Act, 1965.

26. Otherreserves

Group 2016 2015 RM RM Foreign currency translation reserve 1,310,992 1,624,749


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26. Otherreserves(cont’d)

Company 2016 2015 RM RM Special reserve 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 the functional currency of 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.

27. Retainedearnings

Under the single tier system which came into effect from the year assessment 2008, companies are not required to have tax credit under Section 108 of the Income Tax Act, 1967 for dividend payment purposes. Under this system, tax on the Company’s profits is the final tax and accordingly, any dividends to the shareholders are not subject to tax.

28. Loansandborrowings Group 2016 2015 RM RM Current Secured: Term loan 62,203 57,833 Obligation under finance leases (Note 32(b)) 101,859 102,164 164,062 159,997 Non-current Secured: Term loan 404,723 472,832 Obligation under finance leases (Note 32(b)) 24,587 115,647 429,310 588,479 Totalloansandborrowings Term loan 466,926 530,665 Obligation under finance leases (Note 32(b)) 126,446 217,811 593,372 748,476


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28. Loansandborrowings(cont’d)


Current Secured: Term loan 62,203 57,833 Obligation under finance leases (Note 32(b)) 67,602 64,638 129,805 122,471 Non-current Secured: Term loan 404,723 472,832 Obligation under finance leases (Note 32(b)) 17,286 84,887 422,009 557,719 Totalloansandborrowings Term loan 466,926 530,665 Obligation under finance leases (Note 32(b)) 84,888 149,525 551,814 680,190

The Company is required to comply with certain covenants, including the submission of audited financial statements to the lender bank within 6 months after the end of the financial year. The Company must obtain lender bank approval prior to declaring dividend to shareholders.

The term loan of the Company which is obtained from a licensed bank is secured by First Party First Legal Charge over a building of the Company as disclosed in Note 14 to the financial statements.

The loans and borrowings of the Group are denominated in the following currencies:

Group 2016 2015 RM RM Thai Baht 17,602 45,671 Indonesia Rupiah 23,956 22,615 Ringgit Malaysia 551,814 680,190 593,372 748,476

The Company’s loans and borrowings are denominated in RM (2015: RM).


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28. Loansandborrowings(cont’d)

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

Group Company 2016 2015 2016 2015 RM RM RM RM On demand or within 1 year 164,061 159,997 129,805 122,471 More than 1 year and less than 2 years 89,810 158,943 82,508 128,182 More than 2 years and less than 5 years 215,289 216,843 215,289 216,843 More than 5 years 124,212 212,693 124,212 212,694 593,372 748,476 551,814 680,190

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

Group Company 2016 2015 2016 2015 % % % %

Term loan 4.75 4.50 4.75 4.50 Obligation under finance leases 2.38-5.59 2.38-5.59 2.38-2.51 2.38-2.51

29. Deferredtaxliabilities

Group 2016 2015 RM RM At 1 July 55,336 129,853 Recognised in profit or loss (Note 12) - (76,864) Exchange differences 4,302 2,347 At 30 June 59,638 55,336

Presented as follows: Group 2016 2015 RM RM Deferred tax liabilities 59,638 55,336


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29. Deferredtaxliabilities(cont’d)

The component and movements of deferred tax liabilities during the financial year are as follows:

Property,plant andequipment RM Group As at 1 July 2015 55,336 Exchange differences 4,302 As at 30 June 2016 59,638 As at 1 July 2014 129,853 Recognised in profit or loss (76,864) Exchange differences 2,347 As at 30 June 2015 55,336

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

Group Company 2016 2015 2016 2015 RM RM RM RM Unused tax losses and capital allowances 15,545,168 10,809,193 3,985,410 3,308,620 Other taxable temporary differences, net (31,742) (41,290) - - Amounts not recognised, net 15,513,426 10,767,903 3,985,410 3,308,620 Potential deferred tax assets not recognised at 17% to 24% (2015: 17% to 24%) 3,424,208 2,584,297 956,498 794,069

The deferred tax assets arising from 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 recent history of losses and it is not probable that future taxable profit will be available against which the unused tax losses and unabsorbed capital allowances can be utilised. The unused tax losses and unabsorbed capital allowances are available indefinitely for offsetting against future taxable profits, subject to no substantial change in shareholding under the Income Tax Act, 1967 and guidelines issued by the tax authority.

At reporting date, no deferred tax liability (2015: 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 RM21,650,628 (2015: RM17,151,647). The deferred tax liability relating to such temporary differences which is not recognised is estimated to be RM2,165,063 (2015: RM1,715,165).


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30. Tradeandotherpayables


Tradepayables Third parties 12,570,420 8,189,599 Otherpayables Sundry payables 1,617,734 256,617 Other statutory payables 384,530 307,731 Accruals 3,216,992 2,867,416 Deferred revenue 110,559 34,368 5,329,815 3,466,132 Tradeandotherpayables 17,900,235 11,655,731 Add: Loans and borrowings (Note 28) 593,372 748,476 Add: Amount owing to a Director (Note 31) 160,000 500,000 Total financial liabilities carried at amortised cost 18,653,607 12,904,207


Tradepayables Third parties 8,687,086 5,991,765 Otherpayables Sundry payables 196,843 93,222 Other statutory payables 26,295 78,417 Accruals 517,368 578,531 Deferred revenue 74,040 34,368 814,546 784,538 Trade and other payables 9,501,632 6,776,303 Add: Loans and borrowings (Note 28) 551,814 680,190 Add: Amount owing to a subsidiary (Note 21) 659,118 783,355 Add: Amount owing to a Director (Note 31) 160,000 500,000 Total financial liabilities carried at amortised cost 10,872,564 8,739,848

Trade payables are non-interest bearing and the normal trade credit terms granted to the Group ranged from 30 to 90 days (2015: 30 to 90 days).


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30. Tradeandotherpayables(cont’d)

The currency profile of the trade and other payables are summarised below:-


Third parties: - Ringgit Malaysia 11,291,011 7,410,869 - Singapore Dollar 64,156 97,642 - Hong Kong Dollar 1,258,879 662,075 - Chinese Yuan 207,579 239,401 - Pakistani Rupee 3,316,885 2,927,044 - United Arab Emirates Dirham 53,099 17,416 - United States Dollar 6,688 11,045 - Indonesian Rupiah 1,141,340 225,897 - Thai Baht 560,598 64,342 17,900,235 11,655,731

31. AmountowingtoaDirector

Amounts due to a Director is unsecured, interest-free and repayable upon demand.

32. Commitments

(a) Operatingleasearrangements-aslessee

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. Certain subsidiaries of the Group have commitments for future minimum lease payments under non-cancellable operating lease rentals as follows:

Group Company 2016 2015 2016 2015 RM RM RM RM Less than one year 740,888 272,552 480,229 - Between one and five years 960,458 262,620 960,458 - 1,701,346 535,172 1,440,687 -


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32. Commitments(cont’d)

(b) Financeleaseobligations

The Group and the Company have finance leases for certain motor vehicles (Note 14). Future minimum lease payments under finance leases together with the present value of the net minimum lease payments are as follows:

Group Company 2016 2015 2016 2015 RM RM RM RM Minimumleasepayments: Not later than 1 year 107,868 115,028 69,948 69,948 Later than 1 year and not later than 2 years 25,164 105,082 17,410 69,948 Later than 2 years and not later than 5 years - 17,408 - 17,408

Total minimum lease payments 133,032 237,518 87,358 157,304 Amounts representing finance charges (6,586) (19,707) (2,470) (7,779)

Present value of minimum lease payments (Note 28) 126,446 217,811 84,888 149,525 Presentvalueofpayments: Not later than 1 year 101,859 102,164 67,602 64,638 Later than 1 year and not later than 2 years 24,587 98,363 17,286 67,602 Later than 2 years and not later than 5 years - 17,284 - 17,285

Present value of minimum lease payments 126,446 217,811 84,888 149,525 Less: Amount due within 12 months (Note 28) (101,859) (102,164) (67,602) (64,638)

Amount due after 12 months (Note 28) 24,587 115,647 17,286 84,887

Other information on financial risks of finance lease obligations is disclosed in Note 34 to the financial statements.

33. Significantrelatedpartydisclosures For the purposes of these financial statements, parties are considered to be related to the Company if the Company

has the ability, directly or indirectly, to control the party or exercise significant influence over the party in making financial and operating decisions, or vice versa, or where the Company and the party are subject to common control or common significant influence. Related parties may be individuals or other entities.

Related parties also include key management personnel defined as those persons having authority and responsibility for planning, directing and controlling the activities of the Company directly, or indirectly. The key management personnel include all the Directors of the Company, and certain members of senior management of the Company.

The Company has related party relationship with its subsidiaries, associate, joint venture, Directors and key management personnel.


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33. Significantrelatedpartydisclosures(cont’d)

Related party transactions have been entered into the normal course of business under terms agreed between the Company and the related parties. The significant related party transactions of the Group and of the Company are as follows:

(a) Significantrelatedpartytransactions


Income: Sales to subsidiary company, PT Surya Genta Perkasa 1,425 - Costofsales: Purchases from subsidiary company, PT Surya Genta Perkasa 34,650 - Purchases from subsidiary company, M3 Asia Sdn. Bhd. 1,959 - Others: Development fees charged by subsidiary company, M3 Online Sdn. Bhd. 105,475 31,800

(b) CompensationofDirectorsandkeymanagementpersonnel

The remuneration of Directors and key management personnel during the year are as follows:

Group Company 2016 2015 2016 2015 RM RM RM RM Short-term employee benefits 2,485,796 2,649,377 914,452 1,184,384 Defined contribution plans and social security contributions 283,482 280,090 112,820 146,969 Others 248,647 176,000 248,647 176,000 3,017,925 3,105,467 1,275,919 1,507,353

The above remuneration relating to Directors is disclosed in Note 11 to the financial statements.

34. Financialriskmanagementobjectivesandpolicies

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.


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34. Financialriskmanagementobjectivesandpolicies(cont’d)

(a) Creditrisk

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. 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. For other financial assets (including cash and bank balances), the Group and the Company minimises credit risk by dealing exclusively with reputable financial institutions with good credit ratings.

Exposure to credit risk

Information regarding credit enhancements for trade and other receivables is disclosed in Note 20 to the financial statements.

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:

Group 2016 2015 RM % RM %

Bycountry: Malaysia 4,185,609 21 6,252,047 34 Pakistan 12,422,160 64 10,402,727 57 Thailand 802,619 4 414,899 2 Singapore 24,814 0 82,495 0 China 319,152 2 211,310 1 Indonesia 1,387,646 7 870,121 5 United Arab Emirates 345,958 2 85,440 0 Other countries 4,571 < 1 13,890 < 1 19,492,529 100 18,332,929 100

The Group and the Company have approximately 27% (2015: 19%) and nil (2015: 35%) outstanding trade receivables as at 30 June 2016 due from various major telecommunication companies for the provision of SMS content and services.

In addition, the Group and the Company have no outstanding trade receivables 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 20 to the financial statements. Deposits with banks are placed with reputable bank financial institutions high credit ratings and no history of default.

Financial assets that are past due but not impaired and past due and impaired

Information regarding financial assets that are past due but not impaired and past due and impaired are disclosed in Note 20 to the financial statements.


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(b) Liquidityrisk

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 and Company manage their 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 and Company maintain sufficient levels of cash and deposits at bank to meet their working capital requirements.

Analysisoffinancialinstrumentsbyremainingcontractualmaturities

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.

Contractual Ondemand Carrying undiscounted orwithin 2to Morethan amount cashflows 1year 5years 5years RM RM RM RM RM 2016 Group Financialliabilities: Trade and other payables 17,900,235 17,900,235 17,900,235 - - Amount due to a Director 160,000 160,000 160,000 - - Loans and borrowings 593,372 677,330 190,907 357,321 129,102 18,653,607 18,737,565 18,251,142 357,321 129,102

2015 Group Financialliabilities: Trade and other payables 11,655,731 11,655,731 11,655,731 - - Amount due to a Director 500,000 500,000 500,000 - - Loans and borrowings 748,476 875,511 198,067 454,648 222,796 12,904,207 13,031,242 12,353,798 454,648 222,796


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(b) Liquidityrisk(cont’d)

Analysis of financial instruments by remaining contractual maturities (cont’d)

Contractual Ondemand Carrying undiscounted orwithin 2to Morethan amount cashflows 1year 5years 5years RM RM RM RM RM

2016 Company Financialliabilities: Trade and other payables 9,501,632 9,501,632 9,501,632 - - Amount due to a subsidiary 659,118 659,118 659,118 - - Amount due to a Director 160,000 160,000 160,000 - - Loans and borrowings 551,814 631,655 152,987 349,566 129,102 10,872,564 10,952,405 10,473,737 349,566 129,102

2015 Company Financialliabilities: Trade and other payables 6,776,303 6,776,303 6,776,303 - - Amount owing to subsidiaries 783,355 783,355 783,355 - - Amount due to a Director 500,000 500,000 500,000 - - Loans and borrowings 680,190 795,297 152,987 419,514 222,796 8,739,848 8,854,955 8,212,645 419,514 222,796

At the reporting date, carrying amount of financial guarantee is zero as the counterparty to the financial

guarantees does not have a right to demand cash since the default has not occurred.

(c) Interestraterisk

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 do not have any significant loans and borrowings, other than finance lease obligations 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.


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(d) Foreigncurrencyrisk 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. The transactional currency exposures arising from sales or purchases that are denominated in a currency other than the respective functional currencies of Group entities, are as follows:

Group 2016 Pakistani Chinese HongKong Rupee Yuan Dollar Others Total RM RM RM RM RM

Financialassets Trade and other receivable 12,929,674 1,611,511 4,571 3,176,761 17,722,517 Cash and bank balances 4,583,298 58,866 43,903 1,566,797 6,252,864 17,512,972 1,670,377 48,474 4,743,558 23,975,381 Financialliabilities Trade and other payables (3,316,885) (207,579) (1,258,879) (1,825,881) (6,609,224) Loans and borrowings - - - (41,558) (41,558) (3,316,885) (207,579) (1,258,879) (1,867,439) (6,650,782) Net exposure 14,196,087 1,462,798 (1,210,405) 2,876,119 17,324,599

2015

Financialassets Trade and other receivables 10,986,940 1,495,971 15,280 2,488,682 14,986,873 Cash and bank balances 1,805,981 93,140 61,993 1,140,004 3,101,118 12,792,921 1,589,111 77,273 3,628,686 18,087,991 Financialliabilities Trade and other payables (2,927,044) (239,401) (662,075) (416,342) (4,244,862) Loans and borrowings - - - (68,286) (68,286) (2,927,044) (239,401) (662,075) (484,628) (4,313,148) Net exposure 9,865,877 1,349,710 (584,802) 3,144,058 13,774,843


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(d) Foreigncurrencyrisk(cont’d)

Company 2016 United Thai States Pakistani Baht Dollar Rupee Total RM RM RM RM

Financialassets Amount owing from subsidiaries companies 164,709 - - 164,709 Financialliabilities Amount owing to a subsidiary company - (21,165) (637,953) (659,118) Net exposure 164,709 (21,165) (637,953) (494,409)

2015

Financialassets Amount owing from subsidiaries companies 32,476 - - 32,476 Financialliabilities Amount owing to subsidiaries companies - (142,767) (640,588) (783,355) Net exposure 32,476 (142,767) (640,588) (750,879)


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(d) Foreigncurrencyrisk(cont’d)

Sensitivity analysis for foreign currency risk

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

Group 2016 2015 Impacton Lossnet Impacton Lossnet equity oftax equity oftax Increase/ Decrease/ Increase/ Decrease/ (decrease) (increase) (decrease) (increase) RM RM RM RM USD/RM - strengthened 5% 57,351 2,243 47,612 4,814 - weakened 5% (57,351) (2,243) (47,612) (4,814) IDR/RM - strengthened 5% (34,086) 15,592 12,507 33,082 - weakened 5% 34,086 (15,592) (12,507) (33,082) RMB/RM - strengthened 5% 38,420 55,586 104,280 50,614 - weakened 5% (38,420) (55,586) (104,280) (50,614) PKR/RM - strengthened 5% 964,139 539,451 720,843 369,970 - weakened 5% (964,139) (539,451) (720,843) (369,970) THB/RM - strengthened 5% 331,401 19,595 360,039 28,118 - weakened 5% (331,401) (19,595) (360,039) (28,118) HKD/RM - strengthened 5% (160,474) (45,995) (110,021) (21,930) - weakened 5% 160,474 45,995 110,021 21,930 SGD/RM - strengthened 5% (192,821) 1,183 (183,404) 5,050 - weakened 5% 192,821 (1,183) 183,404 (5,050) AED/RM - strengthened 5% 74,731 70,492 66,339 49,398 - weakened 5% (74,731) (70,492) (66,339) (49,398) EUR/RM - strengthened 5% - 1,767 - - - weakened 5% - (1,767) - -

Company 2016 2015 Lossnet Lossnet oftax oftax Decrease/ Decrease/ (increase) (increase) RM RM THB/RM - strengthened 5% 6,259 1,217 - weakened 5% (6,259) (1,217) USD/RM - strengthened 5% (804) (5,354) - weakened 5% 804 5,354 PKR/RM - strengthened 5% (24,242) (24,022) - weakened 5% 24,242 24,022


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(e) Marketpricerisk

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

The Group and the Company are not exposed to market price risk as they do not have any investment in quoted equity instruments.

35. Fairvalueoffinancialinstruments

The carrying amounts of the financial assets and financial liabilities reported in financial statements approximately their fair values except for the following:-

Group Company 2016 2015 2016 2015 RM RM RM RM Finance lease liabilities: - Carrying amount 126,446 217,811 84,888 149,525 - Fair value 134,004 325,979 89,901 153,782

The following summarise the methods used to determine the fair values of the financial instruments:

(i) The financial assets and financial liabilities maturing within the 12 months approximated their fair values due to the relatively short-term maturity of the financial instruments.

(ii) The fair value of finance lease liabilities is determined by discounting the relevant cash flows using current interest rates for similar instruments as at the end of the reporting period.

(iii) The carrying amounts of the term loans approximated their fair values as these instruments bear interest at variable rates.

36. Fairvaluehierarchy

The Group and the Company does not have any financial instruments which are carried at fair value. Thus, no disclosures have been made in relation to the sources of inputs and the hierarchy used for the measurement of the fair values of the financial instruments.

37. Capitalmanagement

The primary objective of the Group’s and the Company’s capital management is to ensure that they maintain a strong credit rating and healthy capital ratios in order to support their business and maximise shareholders’ value.

The Group and Company manage their capital structure and make adjustments to it, in light of changes in economic conditions. To maintain or adjust the capital structure, the Group and Company 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 2016 and 30 June 2015.

The Group and the Company are not subject to any externally imposed capital requirements, other than certain debt covenants relating to the loans and borrowings (Note 28).


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37. Capitalmanagement(cont’d)

In addition to the covenants on loans and borrowings, the Group and the Company monitor capital using the net gearing ratio, which is net debt (or net cash) divided by equity attributable to owners of the parent. The Group’s and Company’s policy is to keep the Group and Company’s net gearing ratio at a level deemed appropriate considering business, economic and investment conditions.

Group Company 2016 2015 2016 2015 Note RM RM RM RM Loans and borrowings 28 593,372 748,476 551,814 680,190 Less: Deposits, cash and bank balances 23 (6,408,025) (3,512,060) (35,013) (248,185)

(Net cash)/net debt (5,814,653) (2,763,584) 516,801 432,005 Equity attributable to owners of the Group and Company 21,769,898 26,781,541 7,745,082 31,289,994 Netcash/netgearing Net Cash Net Cash 6.67% 1.38%

38. Significanteventsduringthefinancialyear

(a) On 8 October 2015, the Company (or “M3Tech”) made an announcement of issuance of circular to shareholders in relation to the:

(i) proposed renounceable rights issue of up to 395,152,428 new ordinary shares of RM0.10 each in M3Tech (“or M3Tech Shares”) (“Rights Shares”) together with up to 296,364,321 free detachable warrants (“Warrants”) at an issue price of RM0.10 per Rights Share on the basis of four Rights Shares together with three Warrants for every two existing M3Tech Shares held on an entitlement date to be determined and announced later based on a minimum subscription level of 80,000,000 Rights Shares together with 60,000,000 Warrants (“Proposed Rights Issue with Warrants”);

(ii) proposed establishment of an employees’ share option scheme (or “Scheme”) of up to 30% of the prevailing issued and paid-up share capital of the Company (excluding treasury shares) for the eligible employees (including Directors) of M3Tech and its subsidiaries, who meet the criteria of eligibility for participation in the Scheme as set out in the by-laws containing the rules, terms and conditions of the Scheme (“Proposed ESOS”);

(iii) proposed increase in the authorised share capital of M3Tech from RM25,000,000 comprising 250,000,000 M3Tech Shares to RM200,000,000 comprising 2,000,000,000 M3Tech Shares (“Proposed Increase in the Authorised Share Capital”); and

(iv) proposed amendments to the Memorandum and Articles of Association of M3Tech to facilitate the Proposed ESOS and Proposed Increase in Authorised Share Capital in Note 38(a)(ii) and (iii) above (“Proposed Amendments to the M&A”).

(b) On 12 November 2015, the proposed private placement has been completed following the listing and quotation for 11,705,700 placement shares, being the second (2nd) and final tranche of the proposed private placement.

(c) On 20 January 2016, Bursa Securities approved the company application for an extension of time of six (6) months from 17 March 2016 to 16 September 2016 to complete the implementation of the proposal as disclosed in Note 38(a).


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38. Significanteventsduringthefinancialyear(cont’d)

(d) On 2 March 2016, the Company had entered into a Memorandum of Understanding (“MOU”) with Shenzhen User Special Display Technologies Company Limited (“USER”). The main purpose of which is to collaborate in the promotion of M3Tech’s Getsnapps platform and I3D display technology throughout USER’s export market worldwide.

M3Tech shall provide the relevant technical support to USER throughout the countries where both M3Tech and USER’s subsidiaries located, which currently include: Malaysia, China, Hong Kong, Thailand, Singapore, Indonesia, Pakistan and Dubai.

The MOU shall commence on the date of execution and shall remain in force, unless otherwise terminated by either parties in writing.

(e) On 7 June 2016, the company had entered into settlement agreement with Ngui Woon Kong, Wong Lim Patt @ Wong Lim Fatt, Thean Yoke Peng @ Theam Yoke Peng, Shum Hok Yein and Khoo Chee Kuen to dispose 23.993% equity interest in associate company, Fotokem Sdn. Bhd. representing 383,900 ordinary shares for total consideration of RM3,780,317. The disposal is subject to fulfillment of conditions precedents.

(f) On 23 June 2016, the Company announced to undertake the renounceable rights issue of up to 394,640,880 new ordinary shares of RM0.10 each in M3Tech (“Rights Shares”) together with up to 295,980,660 free detachable warrants (“Warrants”) at an issue price of RM0.10 per Rights Shares on the basis of four (4) Rights Shares together with three (3) Warrants for every two (2) existing M3Tech Shares, based on minimum subscription level of 80,000,000 Rights Shares together with 60,000,000 Warrants (“Rights Issue with Warrants”).

39. Significanteventsafterthefinancialyear

(a) On 19 July 2016, a 95% owned subsidiary of the company, M3 Technologies (Thailand) Co. Ltd. had entered into a Master Leasing Agreement with Show DC Corporation Limited for the purpose of leasing of M3Tech’s i3D display platform at Show DC mall located at Jaturatid Road, Huai Khwangm Bangkok, Thailand for a period of 5 years.

(b) On 25 August 2016, the Company announced that the Rights Issue with Warrants has been completed following the admission of the Warrants to the Official List and the listing of and quotation for 389,525,880 Rights Shares together with 292,144,409 Warrants on the ACE Market of Bursa Securities.

(c) On 8 September 2016, the Company had received the settlement sum for the disposal of investment of an associate. In this regard, the disposal of investment in an associate is completed on the same date.

(d) On 15 September 2016, the Company announced that the Corporate Exercises has been completed upon submission of all necessary confirmation in respect of the ESOS to Bursa Securities as disclosed in Note 38(a) to the financial statement.

40. Litigationstatus

During the previous financial year, a singer along with Digital World (Private) Limited (“Digital World”) filed a civil suit against a subsidiary of the Group, M3 Technologies Pakistan (Private) Limited (“the subsidiary”) and 11 other companies for infringement of rights and proceeded for recovery of damages and royalty in the amount of Rupees 165,600,000 (RM5,382,000). The subsidiary acquired such content rights from Digital World. The case is pending before the Honourable Session Court.


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40. Litigationstatus(cont’d) The subsidiary had been arrayed as Defendant no. 12 in the said suit. There is no single specific allegation against the

subsidiary hence the legal advisors and the Directors are confident that the likelihood of an unfavourable outcome is quite low if not impossible and accordingly, no provision is made in the financial statements. There has been no material development in the legal proceedings since the end of the previous financial year.

41. Segmentalinformation

(a) Reportingformat

For management purpose, the Group is organised into business segments by the geographical areas in which the business units operate, and has four main reportable operating segments as follows:

i. Malaysia; ii. Thailand; iii. Pakistan; and iv. Other Countries.

The Board of Directors is the Group’s chief operating decision maker (“CODM”). The CODM monitors the operating results of its business units separately for the purpose of making decisions about resource allocation and performance assessment.

(b) Allocationbasisandtransferpricing

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 terms agreed between business segments. 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.


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41. Segmentalinformation(cont’d)

Geographicalsegments

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

OtherAsian 2016 Malaysia Thailand Pakistan Countries Elimination Consolidated RM RM RM RM RM RM

Revenue External sales 19,246,809 810,141 16,455,782 4,020,244 - 40,532,976 Inter-segment revenue 509,575 317,452 - 1,256,396 (2,083,423) -

Total revenue 19,756,384 1,127,593 16,455,782 5,276,640 (2,083,423) 40,532,976

Results Segment results (1,145,124) Interest expense (37,957) Interest income 12,351 Share of results of an associate (894,720)

Loss before tax (2,065,450) Income tax expense (1,410,568)

Loss for the year (3,476,018)

Assets Segment assets 19,290,189 7,809,760 22,021,938 17,648,294 (24,509,068) 42,261,113 Asset classified as held for sale 3,780,317 Tax assets 1,136,577

Total assets 47,178,007

Liabilities Segment liabilities 27,248,673 1,181,733 3,337,449 21,939,491 (35,042,019) 18,665,327 Tax liabilities 59,638

Total liabilities 18,724,965

Othersegmentinformation Capital expenditure 626,094 5,055 236,305 33,047 - 900,501 Additions of intangible assets 827,803 - 272,398 655,879 - 1,756,080 Depreciation 460,956 89,197 329,330 284,035 - 1,163,518 Amortisation 632,310 - 183,602 477,234 - 1,293,146 Unrealised loss/(gain) on foreign exchange 378,812 (240,384) - 335,205 - 473,633 Non-cash expenses other than depreciation, amortisation and unrealised exchange differences 26,893,479 44,112 52,413 647,847 (25,326,297) 2,311,554


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Geographicalsegments(cont’d)

OtherAsian 2015 Malaysia Thailand Pakistan Countries Elimination Consolidated RM RM RM RM RM RM

Revenue External sales 20,969,488 1,577,189 10,397,300 2,343,666 - 35,287,643 Inter-segment revenue 282,313 243,588 72,862 1,583,586 (2,182,349) -

Total revenue 21,251,801 1,820,777 10,470,162 3,927,252 (2,182,349) 35,287,643

Results Segment results (2,585,943) Interest expense (39,196) Interest income 7,882 Share of result of an associate (230,879)

Loss before tax (2,848,136) Income tax expense (626,083)

Loss for the year (3,474,219)

Assets Segment assets 37,801,474 7,844,552 17,636,342 13,371,406 (38,502,353) 38,151,421 Investment in an associate 5,740,159 Tax assets 782,589

Total assets 44,674,169

Liabilities Segment liabilities 7,933,692 643,769 2,962,981 26,828,957 (25,455,303) 12,914,096 Tax liabilities 73,680

Total liabilities 12,987,776

Othersegmentinformation Capital expenditure 336,769 6,120 235,663 322,593 - 901,145 Additions of intangible assets 519,961 210,689 - 553,635 - 1,284,285 Depreciation 476,273 84,863 307,809 260,271 - 1,129,216 Amortisation 857,985 - 178,511 - - 1,036,496 Unrealised loss/(gain) on foreign exchange 806,791 (224,485) (1,857) (607,856) - (27,407) Non-cash expenses other than depreciation, amortisation and unrealised exchange differences 1,079,801 148,464 12,618 340,410 - 1,581,293


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Non-current assets information based on the geographical location of assets is as follows:

Group 2016 2015 RM RM Malaysia 3,340,214 8,463,019 Thailand 270,249 344,881 Pakistan 1,830,729 1,768,125 Other countries 2,674,767 3,069,537 8,115,959 13,645,562

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

Group 2016 2015 RM RM Provision of mobile solutions 33,704,873 25,464,703 Sales of fast-moving electronic goods and related products 6,828,103 9,822,940 40,532,976 35,287,643

The revenue derived from various telecommunication companies in different countries constitutes 83% (2015: 72%) of the Group’s total revenue.

42. Comparativesfigures

The presentation and classification of items in the current year financial statements have been consistent with the previous financial year except for certain comparative amounts have been reclassified to conform with current year’s presentation.


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Supplementary Information

43. Supplementaryinformation–breakdownofretainedprofitsintorealisedandunrealised

On 25 March 2010, Bursa Malaysia Securities Berhad (“Bursa Malaysia”) issued a directive to all listed issuers pursuant to Paragraphs 2.06 and 2.23 of Bursa Malaysia Main Market Listing Requirements. The directive requires all listed issuers to disclose the breakdown of the retained profits or accumulated losses as at the end of reporting period, into realised and unrealised profits and/or losses.

On 20 December 2010, Bursa Malaysia further issued guidance on the disclosure and the format required.

Pursuant to the directive, the amounts realised and unrealised profits included in the retained profits of the Group and of the Company as at financial year end are as follows:

Group Company 2016 2015 2016 2015 RM RM RM RM The (accumulated losses)/ retained profit of the Group and of the Company - Realised (3,279,092) 2,643,591 (32,126,794) (7,352,783) - Unrealised (59,638) (55,336) - - (3,338,730) 2,588,255 (32,126,794) (7,352,783)

The determination of realised and unrealised profits or losses is based on Guidance of 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 on 20 December 2010.

The determination of realised and unrealised profits or losses is solely for complying with the disclosure requirements as stipulated in the directive of Bursa Malaysia Securities Berhad and should not be applied for any other purposes.


2016ANNUAL REPORT

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Location Description Landarea/ Tenure Approximate NetBookValue (Built-uparea) AgeofBuilding RM

Unit1007, Block A, Pusat Office Lot 2,506 sq.ft. Freehold 17 years 470,292.60Dagangan Phileo II Jalan SS 16/11, 46350 Petaling Jaya, Selangor Darul Ehsan,

Unit 708, Block A Pusat Office Lot 2,506 sq.ft. Freehold 17 years 628,100.00Dagangan Phileo II Jalan SS 16/11, 46350 Petaling Jaya, Selangor Darul Ehsan,

List of Properties

There was no market value evaluation on the above 2 properties since the date of acquiring the fixed assets.


2016ANNUAL REPORT

104

Analysis of ShareholdingsAs at 30 September 2016

Authorised Capital : RM200,000,000.00Issued and Fully Paid-Up Capital : RM58,684,632 comprising 586,846,320 Ordinary Shares of RM0.10 eachClass of Shares : 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

DistributionScheduleofShareholders

SizeofHoldings No.ofHolders No.ofShares %#

Less than 100 shares 32 1,460 *100 - 1,000 shares 403 312,365 0.051,001 - 10,000 shares 1,149 6,454,180 1.1010,001 - 100,000 shares 1,639 74,202,259 12.70100,001 - less than 5% of issued shares 624 337,466,056 57.765% and above of issued shares 3 165,852,500 28.39

Total 3,850 584,288,820 100.00

* Negligible# Based on the issued and paid-up capital of the Company of RM58,684,632.00 comprising 586,846,320 Shares after

deducting 2,557,500 treasury shares retained by the Company

SUBSTANTIALSHAREHOLDERS’SHAREHOLDINGS(AspertheRegisterofSubstantialShareholders)

DirectInterest IndirectInterestNameofSubstantialShareholders No.ofShares %# No.ofShares %#

Lim Seng Boon 53,605,000 9.17 24,186,840 (i) 4.14Goh Lee Lang 24,186,840 4.14 53,605,000 (ii) 9.17Papago (H.K.) Limited 52,912,500 9.06 - -XOX Bhd 71,690,000 12.27 - -

Notes:(i) Deemed interested by virtue of his spouse, Madam Goh Lee Lang’s shareholdings in M3 Technologies (Asia) Berhad(ii) Deemed interested by virtue of her spouse, Mr. Lim Seng Boon’s shareholdings in M3 Technologies (Asia) Berhad

DIRECTORS’SHAREHOLDINGS(AspertheRegisterofDirectors’Shareholdings)

DirectInterest IndirectInterestNameofDirectors No.ofShares %# No.ofShares %#

Chew Shin Yong, Mark 6,391,800 1.09 1,333,400 (i) 0.23 Lim Seng Boon 53,605,000 9.17 24,186,840 (ii) 4.14Chin Chee Wing 300,000 0.05 - -

Notes:(i) Deemed interested by virtue of his beneficial interest in Marmark (BVI) Limited pursuant to Section 6A of the Companies

Act, 1965(ii) Deemed interested by virtue of his spouse, Madam Goh Lee Lang’s shareholdings in M3 Technologies (Asia) Berhad


2016ANNUAL REPORT

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Analysis of Shareholdings (Cont’d)

As at 30 September 2016

ThirtyLargestRegisteredShareholdersasat30September2016(without aggregating securities from different securities accounts belonging to the same registered holder)

No. NameofShareholders No.ofSharesheld %#

1 XOX BHD 71,690,000 12.27

2 PAPAGO (H.K.) LIMITED 52,912,500 9.06

3 KENANGA NOMINEES (TEMPATAN) SDN BHD 41,250,000 7.06 PLEDGED SECURITIES ACCOUNT FOR LIM SENG BOON

4 GOH LEE LANG 21,972,600 3.76

5 CHOONG YEAN YAW 15,000,000 2.57

6 KOEK SEAM CHENG 14,278,000 2.44

7 LIM SENG BOON 12,355,000 2.11

8 CIMSEC NOMINEES (TEMPATAN) SDN BHD 8,135,600 1.39 PLEDGED SECURITIES ACCOUNT FOR NG WAI YUAN

9 PUBLIC NOMINEES (TEMPATAN) SDN BHD 7,000,000 1.20 PLEDGED SECURITIES ACCOUNT FOR SIA KIE KING

10 KENANGA NOMINEES (ASING) SDN BHD 6,391,800 1.09 PLEDGED SECURITIES ACCOUNT FOR CHEW SHIN YONG, MARK

11 GOH CHEANG HUANG 5,149,700 0.88

12 AFFIN HWANG NOMINEES (ASING) SDN. BHD. 4,100,000 0.70 EXEMPT AN FOR SANSTON FINANCIAL GROUP LIMITED

13 CITIGROUP NOMINEES (ASING) SDN BHD 3,996,300 0.68 EXEMPT AN FOR OCBC SECURITIES PRIVATE LIMITED

14 ABU SAIID MUHAMMAD ABDUL MAJID 3,684,400 0.63

15 ALLIANCEGROUP NOMINEES (TEMPATAN) SDN BHD 3,042,600 0.52 PLEDGED SECURITIES ACCOUNT FOR TEOW CHOO ANN

16 DATO ‘ LIM KOK HAN 3,000,000 0.51

17 SENG YAN CHUAN 2,400,000 0.41

18 LIM NYANG FONG 2,367,000 0.41

19 GOH LEE LANG 2,214,240 0.38

20 LEE CHONG AIK 2,000,000 0.34

21 LEONG HONG KUAN 2,000,000 0.34

22 TAN YEW GHEE 1,800,000 0.31

23 YEOH AH SIM 1,588,300 0.27

24 EH CHIAN LIANG 1,500,000 0.26

25 LOH WAI CHUAN 1,500,000 0.26

26 MAYBANK SECURITIES NOMINEES (TEMPATAN) SDN BHD 1,500,000 0.26 PLEDGED SECURITIES ACCOUNT FOR LIM PAIK HONG

27 RAVINDRAN A/L ANDIKOTRAMAN VELU 1,500,000 0.26

28 SJ SEC NOMINEES (TEMPATAN) SDN BHD 1,500,000 0.26 PLEDGED SECURITIES ACCOUNT FOR TAN HOR HONG

29 LEE HONG SANG 1,440,300 0.25

30 CHUAN BOON KANG 1,350,000 0.23

# 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.


2016ANNUAL REPORT

106

Analysis of Warrant HoldingsAs at 30 September 2016

Type of Securities : Warrants 2016/2019No. of Warrant Issued : 292,144,409Exercise Price : RM0.10Exercise Period of Warrant : 22 August 2016 to 21 August 2019

DistributionScheduleof2016/2019WarrantHoldings

No.of No.ofSizeofHoldings WarrantsHolders Warrants %

Less than 100 shares 11 682 *100 - 1,000 shares 14 7,633 *1,001 - 10,000 shares 184 1,057,275 0.3610,001 - 100,000 shares 615 30,260,375 10.36100,001 – less than 5% of issued warrants 375 187,862,194 64.315% and above of issued warrants 3 72,956,250 24.97

Total 1,202 292,144,409 100.00

* Negligible

DIRECTORS’WARRANTSHOLDINGS(AspertheRegisterofDirectors’WarrantHoldings)

DirectInterest IndirectInterest No.of No.ofNameofDirectors Warrants % Warrants %

Chew Shin Yong, Mark 3,195,900 1.09 - -Lim Seng Boon 30,000,000 10.27 - -


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Analysis of Warrant Holdings (Cont’d)

As at 30 September 2016

ThirtyLargest2016/2019WarrantsHoldersasat30September2016(without aggregating securities from different securities accounts belonging to the same registered holder)

No. NameofShareholders No.ofWarrantsheld %

1 KENANGA NOMINEES (TEMPATAN) SDN BHD 30,000,000 10.27 PLEDGED SECURITIES ACCOUNT FOR LIM SENG BOON

2 PAPAGO (H.K.) LIMITED 26,456,250 9.06

3 XOX BHD 16,500,000 5.65

4 TAN CHIN HOE 12,802,800 4.38

5 KOEK SEAM CHENG 10,674,000 3.65

6 ANG SOH MUI 7,300,300 2.50

7 GOH CHEANG HUANG 3,750,000 1.28

8 KENANGA NOMINEES (ASING) SDN BHD 3,195,900 1.09 PLEDGED SECURITIES ACCOUNT FOR CHEW SHIN YONG, MARK

9 JF APEX NOMINEES (TEMPATAN) SDN BHD 2,250,000 0.77 PLEDGED SECURITIES ACCOUNT FOR VOON SZE LIN

10 ALLIANCEGROUP NOMINEES (TEMPATAN) SDN BHD 2,000,019 0.68 PLEDGED SECURITIES ACCOUNT FOR TEOW CHOO ANN

11 CHOONG YEAN YAW 2,000,000 0.68

12 KENANGA NOMINEES (TEMPATAN) SDN BHD 2,000,000 0.68 PLEDGED SECURITIES ACCOUNT FOR PANG WAN LIH

13 TAY CHAI GNOH 2,000,000 0.68

14 CITIGROUP NOMINEES (ASING) SDN BHD 1,998,150 0.68 EXEMPT AN FOR OCBC SECURITIES PRIVATE LIMITED

15 TRACY TAN KER SIN 1,900,000 0.65

16 EE TECK HOON 1,800,000 0.62

17 HLIB NOMINEES (TEMPATAN) SDN BHD 1,750,000 0.60 PLEDGED SECURITIES ACCOUNT FOR LEOW KUAN SHU

18 MOHAMMAD MASOOD AKHTAR 1,540,000 0.53

19 MAYBANK SECURITIES NOMINEES (TEMPATAN) SDN BHD 1,500,000 0.51 PLEDGED SECURITIES ACCOUNT FOR VINCENT PHUA CHEE EE

20 TEE WHATT CHAI 1,500,000 0.51

21 HLIB NOMINEES (TEMPATAN) SDN BHD 1,475,000 0.50 PLEDGED SECURITIES ACCOUNT FOR LIM TIEN HOK

22 MAYBANK NOMINEES (TEMPATAN) SDN BHD 1,400,000 0.48 PLEDGED SECURITIES ACCOUNT FOR MUSTAFA BIN OMAR

23 SON CHEE LOON 1,350,000 0.46

24 CIMSEC NOMINEES (TEMPATAN) SDN BHD 1,300,000 0.44 PLEDGED SECURITIES ACCOUNT FOR TAN SIEW HUANG

25 CHAN KOK CHUAN 1,250,000 0.43

26 LIM TING WEE 1,200,000 0.41

27 MOHAMAD AZMAN BIN MUSTAFFA 1,200,000 0.41

28 TAN SI QI 1,200,000 0.41

29 TAN SUI LAN 1,178,000 0.40

30 LOW CHON 1,101,000 0.38


2016ANNUAL REPORT

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Notice of Annual General Meeting

NOTICEISHEREBYGIVEN that the Seventeenth Annual General Meeting (“17th AGM”) of M3 TECHNOLOGIES (ASIA) BERHAD (“M3Tech” or “the Company”) will be held at Inspire I, The Food Tree Restaurant (under Only World Group), No. 10, Jalan Pelukis U1/46, Kawasan Perindustrian Temasya, Selangor Darul Ehsan on Friday, 25 November 2016 at 9.00 a.m. to transact the following businesses:-

AGENDA

AsOrdinaryBusiness:

1. To receive the Audited Financial Statements for the financial year ended 30 June 2016 together with the Reports of the Directors and Auditors thereon.

2. To approve the payment of Directors’ fees for the financial year ended 30 June 2016.

3. To re-elect the following Directors who retire in accordance with Article 104 of the Company’s Articles of Association:-

i. Mr. Chew Shin Yong, Mark ii. Ms. Lim Kooi Siang iii. Mr. Choong Eng Choon

4. To re-elect the following Directors who retire in accordance with Article 110 of the Company’s Articles of Association:-

i. Datuk Chai Woon Chet ii. Mr. Ng Kok Heng

5. To re-appoint Messrs. Ecovis AHL PLT as Auditors of the Company until the conclusion of the next Annual General Meeting and to authorise the Directors to fix their remuneration.

AsSpecialBusiness:To consider and if thought fit, to pass the following Resolutions, with or without modifications :-

6. ORDINARYRESOLUTION GENERAL AUTHORITY FOR THE DIRECTORS TO ISSUE SHARES PURSUANT TO SECTION

132DOFTHECOMPANIESACT,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.”

7. SPECIALRESOLUTION PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION OF THE COMPANY

(“PROPOSEDAMENDMENTS”)

“THAT the proposed amendments to the Articles of Association of the Company as set out in the “Appendix A” annexed to the Company’s Annual Report for the financial year ended 30 June 2016 be and are hereby approved and adopted AND THAT the Directors and/or Secretaries of the Company be authorised to take all steps as are necessary and expedient in order to implement, finalise and give full effect to the Proposed Amendments for and on behalf of the Company.”

8. To transact any other business of which due notice shall have been given in accordance with the Companies Act, 1965.

PleaserefertoNotei

Resolution1

Resolution2Resolution3Resolution4

Resolution5Resolution6

Resolution7

Resolution8

Resolution9


2016ANNUAL REPORT

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Notice of Annual General Meeting (Cont’d)

By order of the Board

TEASORHUA(MACS01324)YONGYENLING(MAICSA7044771)Company Secretaries

Petaling Jaya, Selangor Darul EhsanDate : 28 October 2016

Notes:

i. The Agenda No. 1 is meant for discussion only as the provision of Section 169(1) of the Companies Act, 1965 does not require formal approval of shareholders. Hence, Agenda No. 1 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 Sections 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, either under the seal or under the hand of an officer or attorney duly authorised.

vi. Where a member of the Company is an authorised nominee as defined under the Securities Industry (Central Depositories) Act 1991, it may appoint at least one (1) proxy in respect of each securities account it holds with ordinary shares of the Company standing to the credit of the said securities account.

vii. 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.

viii. To be valid, 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 forty-eight (48) hours before the time for holding the Meeting or adjourned meeting at which the person named in the instrument proposes to vote, or in the case of a poll, not less than twenty-four (24) hours before the time appointed for the taking of the poll.

ix. The depositors whose names appear in the Record of Depositors as at 18 November 2016 shall be regarded as members and entitled to attend, speak and vote at the 17th AGM.

EXPLANATORYNOTESTOSPECIALBUSINESS

1. The Ordinary Resolution 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. This Ordinary Resolution, if passed, is to empower the Directors to issue shares in the Company up to an amount not exceeding in total ten per centum (10%) of the issued share capital of the Company for such purposes as the Directors consider would be in the interest of the Company. This would avoid any delay and cost involved in convening a general meeting to approve such an issue of shares. This authority will, unless revoked or varied by the Company at a general meeting, expire at the conclusion of the next annual general meeting or the expiration of the period within which the next annual general meeting is required by law to be held, whichever is the earlier.

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, no new shares in the Company were issued pursuant to the general mandate granted to the Directors at the last annual general meeting held on 10 December 2015 and it will lapse at the conclusion of the 17th AGM of the Company.

2. The Special Resolution proposed under item 7 of the Agenda is to streamline the Company’s Articles of Association with the recent amendments made to the ACE Market Listing Requirements of Bursa Malaysia Securities Berhad.


2016ANNUAL REPORT

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APPENDIX A

ArticleNo.

77

ExistingArticle

(1) At any general meeting a resolution put to the vote of the meeting shall be decided on a show of hands unless a poll is (before or on the declaration of the result of the show of hands) called for:-

(a) by the Chairman; or

(b) by at least three (3) members present in person or by proxy; or

(c) by any member or members present in person or by proxy and representing not less than one-tenth of the total voting rights of all the members having the right to vote at the meeting; or

(d) by a member or members holding shares in the Company conferring a right to vote at the meeting being shares on which an aggregate sum has been paid up equal to not less than one-tenth of the total sum paid up on all the shares conferring that right.

Provided that no poll shall be demanded on the election of a chairman of a meeting or on any question of adjournment.

(2) Unless a poll is so demanded a declaration by the Chairman that a resolution has on a show of hands been carried or carried unanimously, or by a particular majority, or lost, and an entry to that effect in the book containing the minutes of the proceedings of the Company shall be conclusive evidence of the fact without proof of the number or proportion of the votes recorded in favour of or against such resolution. The demand for a poll may be withdrawn.

ProposedAmendment

Subject to the Listing Requirements, at any general meeting all resolutions set out in the notice of such general meeting or a resolution put to vote of the meeting shall be decided by poll. Every Member present in person or by proxy or attorney or representative shall have one vote for each share he holds.

The poll may be conducted manually using voting slips or electronically using various forms of electronic voting devices. Such votes shall be counted by the poll administrator, and validated at least by one scrutineer.

PROPOSEDAMENDMENTSTOTHEARTICLESOFASSOCIATIONOFTHECOMPANY

The Articles of Association of the Company are proposed to be amended in the following manner:-


2016ANNUAL REPORT

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APPENDIX A (Cont’d)

ArticleNo.

78

86

98

ExistingArticle

If a poll is duly demanded it shall be taken in such manner and either at once or after an interval or adjournment or otherwise as the Chairman directs; and the result of the poll shall be the resolution of the meeting at which the poll was demanded but a poll demanded on the election of a chairman or on a question of adjournment shall be taken forthwith. The Chairman may (and if so directed by the meeting shall) appoint scrutineers for the purposes of a poll, and may adjourn the meeting to some place and time fixed by him for the purpose of declaring the results of the poll.

In the case of an equality of votes, whether on a show of hands or on a poll, the chairman of the meeting at which the show of hands takes place or at which the poll is demanded shall be entitled to a second or casting vote.

The instrument appointing a proxy and the power of attorney or other authority, if any, under which it is signed or a notarially certified copy of that power or authority shall be deposited at the registered office of the Company, or at such other place within Malaysia as is specified for that purpose in the notice convening the meeting, not less than forty-eight (48) hours before the time for holding the meeting or adjourned meeting at which the person named in the instrument proposes to vote, or in the case of a poll, not less than twenty-four (24) hours before the time appointed for the taking of the poll, and in default the instrument of proxy shall not be treated as valid.

ProposedAmendment

The poll shall be taken in such manner and either at once or after an interval or adjournment or otherwise as the Chairman of the meeting directs, and the result of the poll shall be the resolution of the meeting.

In the case of an equality of votes, the Chairman of the meeting shall be entitled to a second or casting vote.

The instrument appointing a proxy and the power of attorney or other authority, if any, under which it is signed or a notarially certified copy of that power or authority shall be deposited at the registered office of the Company, or at such other place within Malaysia as is specified for that purpose in the notice convening the meeting, not less than forty-eight (48) hours before the time for holding the meeting or adjourned meeting.

PROPOSEDAMENDMENTSTOTHEARTICLESOFASSOCIATIONOFTHECOMPANY(CONT’D)

The Articles of Association of the Company are proposed to be amended in the following manner:-

This page has been left blank intentionally

Proxy Form M3TECHNOLOGIES(ASIA)BERHAD(482772-D)(IncorporatedinMalaysia)

I/We NRIC No./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 letters)

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 Seventeenth Annual General Meeting of the Company to be held at Inspire I, The Food Tree Restaurant (under Only World Group), No. 10, Jalan Pelukis U1/46, Kawasan Perindustrian Temasya, Selangor Darul Ehsan on Friday, 25 November 2016 at 9.00 a.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.

Dated this day of 2016

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 Sections 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, either under the seal or under the hand of an officer or attorney duly authorised.

v. Where a member of the Company is an authorised nominee as defined under the Securities Industry (Central Depositories) Act 1991, it may appoint at least one (1) proxy in respect of each securities account it holds with ordinary shares of the Company standing to the credit of the said securities account.

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. To be valid, 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 forty-eight (48) hours before the time for holding the Meeting or adjourned meeting at which the person named in the instrument proposes to vote, or in the case of a poll, not less than twenty-four (24) hours before the time appointed for the taking of the poll.

viii. The depositors whose names appear in the Record of Depositors as at 18 November 2016 shall be regarded as members and entitled to attend, speak and vote at the 17th AGM.

CDSACCOUNTNO. NO.OFSHARESHELD

No. Resolutions For Against1. To approve the payment of Directors’ fees for the financial year ended 30 June 2016. 2. To re-elect Mr. Chew Shin Yong, Mark as Director who retires in accordance with Article 104 of the

Company’s Articles of Association.3. To re-elect Ms. Lim Kooi Siang as Director who retires in accordance with Article 104 of the

Company’s Articles of Association. 4. To re-elect Mr. Choong Eng Choon as Director who retires in accordance with Article 104 of the

Company’s Articles of Association. 5. To re-elect Datuk Chai Woon Chet as Director who retires in accordance with Article 110 of the

Company’s Articles of Association. 6. To re-elect Mr. Ng Kok Heng as Director who retires in accordance with Article 110 of the

Company’s Articles of Association.7. To re-appoint Messrs. Ecovis AHL PLT as Auditors of the Company until the conclusion of the next

Annual General Meeting and to authorise the Directors to fix their remuneration. 8. To approve the authority for Directors to issue shares pursuant to Section 132D of the Companies

Act, 1965. 9. To approve the proposed amendments to the Articles of Association of the Company.

Percentageofshareholdingstoberepresentedbytheproxies:

No.ofshares % Proxy1 Proxy2 TOTAL 100

To:

M3Technologies(Asia)Berhad(482772-D)

c/o Cospec Management Services Sdn. Bhd.

Third Floor, No. 79 (Room A)

Jalan SS21/60, Damansara Utama

47400 Petaling Jaya

Selangor Darul Ehsan, Malaysia

Please fold across the line and close

Please fold across the line and close

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m3 technologies (asia) berhad...annual report 2016 m3 technologies (asia) berhad (482772-d) m3...

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