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Courage and ambition to go further

Annual Report 2010

...synergy to make it happen

Corporate Information 2

Corporate Structure 4

Financial Highlights 5

Director’s Profile 6

Chairman’s Statement 10

Statement on Corporate Governance 13

Statement on Internal Control 19

Audit Committee Report 21

Statement of Director’s Responsibility in Relation to the Audited Financial Statements

25

Additional Compliance Information 26

Financial Statements 28

List of Property 79

Analysis of Shareholdings 80

Notice of Annual General Meeting 82

Statement Accompanying Notice of Annual General Meeting

85

Notice of Nomination of Auditors 86

Proxy Form Enclosed

CONTENTS

2 Courage And Ambition To Go Further... Synergy To Make It Happen

BOARD OF DIRECTORS Chew Shin Yong, Mark Executive Chairman

Lim Seng Boon Managing Director

Lester Ratnakumar Neil Francis ExecutiveDirectorcumGroupChiefOperationsOfficer

Mohamad Najeb bin Ali Independent Non-Executive Director

Lim Kooi Siang Independent Non-Executive Director

Lim Keong Yew Independent Non-Executive Director

AUDIT COMMITTEE Lim Kooi Siang Chairman

Mohamad Najeb bin Ali

Lim Keong Yew

NOMINATION COMMITTEE Lim Keong Yew Chairman

Mohamad Najeb bin Ali

Lim Kooi Siang

REMUNERATION COMMITTEE Mohamad Najeb bin Ali Chairman

Lim Kooi Siang

Lim Keong Yew

COMPANY SECRETARIES Tea Sor Hua (MACS 01324) Chan Bee Fang (MAICSA 7032385)

PRINCIPAL BANKERS Malayan Banking Berhad

AUDITORS CROWE HORWATH Chartered Accountants

CORPORATE INFORMATION

M3 Technologies (Asia) Berhad (482772-D) • Annual Report 2010 3

CORPORATE INFORMATION (CONT’d)

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

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

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

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

STOCK EXCHANGE Bursa Malaysia Securities Berhad (ACE Market)

LISTING Stock Name: M3TECH Stock Code: 0017

4 Courage And Ambition To Go Further... Synergy To Make It Happen4

CORPORATE STRuCTuRE

91.84% AKN Messaging Technologies

(Xiamen) Co. Ltd.

100% M3 Technologies (ShenZhen) Co. Ltd.

100% Way Way Innovations Co. Ltd.

100% M3 Mobile Technologies (S) Pte. Ltd. (formerly known as AKN Messaging

Technologies (S) Pte. Ltd.)

(Singapore)

95% M3 Technologies (Thailand) Co. Ltd.

100% Messaging Technologies (Hong Kong) Ltd.

60% AKN Messaging Technologies (Pvt.) Ltd. (Pakistan)

80% PT Surya Genta Perkasa (Indonesia)

100% M3 Asia Sdn. Bhd.

100% M3 Online Sdn. Bhd.

100% Virtual Partners International Limited (British Virgin Island)

60% M3Asia Distribution (S) Pte. Ltd. (Singapore)

M3 Technologies (Asia) Berhad


6/30/2007RM’000

6/30/2008RM’000

6/30/2009RM’000

6/30/2010RM’000

Turnover 28,260 32,319 34,984 39,847

Profit / Loss Before Tax (3,106) 7,853 8,676 4,063

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

Net Tangible Asset (NTA) 25,775 28,780 31,128 29,624

FINANCIAl HIgHlIgHTS

40,000

35,000

30,000

25,000

20,000

15,000

10,000

5,000

0 2007 2008 2009 2010

28,260

32,319

34,984

39,847

20,000

15,000

10,000

5,000

0 2007 2008 2009 2010

16,35216,35216,352 16,352

35,000

30,000

25,000

20,000

15,000

10,000

5,000

0 2007 2008 2009 2010

25,775

28,780

31,12829,624

10,000

8,000

6,000

4,000

2,000

0

(2,000)

(4,000)

2007 2008 2009 2010

7,853

(3,106)

8,676

4,063

TURNOVER

PAID-UP SHARE CAPITAL

PROFIT/LOSS BEFORE TAX

NET TANGIBLE ASSET (NTA)


dIRECTORS’ PROFIlE

Chew Shin Yong, Mark, a Singaporean aged 42, was appointed to the Board on 27 February 2008 as an Executive Director of the Company. On 26 August 2010, he was re-designated from an Executive Director to an Executive Chairman of the Company. He graduated from Kingston University in the UK with a Bachelor of Science Degree in Computer Information Systems Design in 1996. He then obtained a Master’s Degree in Business Administration from the University of Surrey, also in the UK. In 1997, he joined Malahon Group of Companies in their stock-broking division as the Managing Director, and is a registered dealer with the Stock Exchange of Hong Kong (now known as Hong Kong Exchanges) and the Securities and Futures Commission of Hong Kong. He currently sits on the Board of Malahon Group of Companies and is actively involved in the all aspects of the Group’s businesses, comprising mainly of stock-broking, finance, property and general investments.

He was also responsible for setting up the subsidiary, Messaging Technologies (H.K.) Limited and is involved in the daily operations.

CHEW SHIN YONg, MARK


dIRECTORS’ PROFIlE (CONT’d)

Lim Seng Boon, a Malaysian aged 53, is the Managing Director and founder of the Company. He was appointed to the Board on 11 June 1999. He is also a substantial 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.

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.

lIM SENg BOON

lESTER RATNAKuMAR NEIl FRANCIS

Lester Ratnakumar Neil Francis, a Malaysian aged 40, was appointed to the Board on 27 May 2008 as an Executive Director and Group Chief Operations Officer of the Company. Mr. Francis graduated with a Bachelor of Applied Science Degree from Victoria University of Technology, Australia in 1992. Upon his return to Malaysia, Mr. Francis has been actively involved in the development of the local fitness industry and the management of health & fitness facilities.

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

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

His experience in the industry for the past 10 years has proven invaluable in M3Tech’s growth locally and regionally.


DIRECTORS’ PROFILE (COnT’D)

Lim Kooi Siang, a Malaysian, aged 59, was appointed to the Board on 27 November 2007 as an Independent Non-Executive Director of the Company. She is the Chairman of the Audit Committee and a member of the 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 the Malaysian Institute of Accountants and the Institute of Chartered Secretaries & Administrators, UK.

She has more than 35 years of experience in taxation and is a tax agent approved by the Ministry of Finance, Malaysia. Currently, she is also an Independent Non-Executive Director of AKN Technology Bhd.

LIM KOOI SIAnG

Mohamad Najeb bin Ali, a Malaysian aged 46, was appointed as an Independent Non-Executive Director of the Company on 2 April 2003. He is the Chairman of the Remuneration Committee and a member of the Audit Committee and Nomination Committee of the Company. He graduated with a Diploma in Quantity Surveying from Federal Institute of Technology Kuala Lumpur.

He possesses 19 years experience in business management as a Managing Director. Currently, he is also a Director of AKN Technology Bhd.

MOHAMAD nAJEB BIn ALI


dIRECTORS’ PROFIlE (CONT’d)

Note:1. None of the above Directors have family relationships with

any Directors or major shareholders except for Mr. Lim Seng Boon who is the spouse of Madam Goh Lee Lang, a substantial shareholder of the Company.

2. None of the above Directors have any personal interest in any business arrangement involving the Company and all the Directors have had no convictions for offences other than traffic offences in the past 10 years.

Lim Keong Yew, a Malaysian, aged 32, was appointed to the Board on 19 February 2009 as an Independent Non-Executive Director of the Company. He is the Chairman of the Nomination Committee and a member of the Audit Committee and Remuneration Committee of the Company.

He graduated from Queen Mary and Westfield College, University of London with a Bachelor of Science Degree in Computer Science at and subsequently attended City University for a course in Business Computing Systems.

He began his career with Glaxo Wellcome at the London Headquarters as a Project Manager, supporting drug discovery through computer technology. In 2000, Mr. Lim was invited aboard VXL Holdings, a boutique investment firm in Malaysia. He began his exposure to North Asia when he lived and worked in China. Over this 3-year period, VXL successfully invested and restructured companies in Malaysia, Beijing, Shanghai and Hong Kong. Major clients and partners include Dataprep Holdings Bhd., the Shanghai Municipal Council’s technology investment company; the State Administration of Radio, Film and Television (SARFT) of China; China Railcom; China Netcom; China Unicom.

He currently heads the Slingshot Group of Companies based in Hong Kong, with a focus on value and growth companies and holding strategic investments around the world.

lIM KEONg YEW


On behalf of the Board, I am pleased to present to you the Annual Report of the Group and Company for the financial year ended 30 June, 2010. REVIEW OF OPERATIONS AND FINANCIAL HIGHLIGHTS

For the financial year ended 30 June, 2010, the Group recorded revenue of RM40.0 million and a net profit after tax of RM2.4 million as compared to a revenue of RM35.0 million and a net profit after tax of RM6.2 million recorded in the previous financial year. Even though revenue has increased, the Group’s profitability has been affected by increased marketing and promotional expenses in an effort to solidly embed ourselves in the marketplace.

The Group is ready and poised to show the fruits of the efforts and sacrifices made well into the financial year ending 30 June 2011 (“FY2011”).

CHAIRMAN’S STATEMENT


CHAIRMAN’S STATEMENT (CONT’d)

CORPORATE DEVELOPMENTS

The Group has begun to shift some of its resources towards the development of applications and services that support the growing base of mobile phone users that have moved from a conventional mobile phone to a “Smartphone” that runs on either Google Inc’s Android operating system or Apple’s iOS operating system. With regard to Apple Inc’s iOS, there is the added advantage of relatively simple portability of the applications between devices, such as with their iPad tablet computer and iPod Touch portable media device.

M3 Online, incorporated last financial year to act as a technology provider for online related products and services, continues to develop, enhance and manage e-Commerce payment gateways, online platforms, and web storefronts.

M3 Asia, also incorporated last financial year to manage the acquisition and distribution of products, has increased its revenue and reach via not only online stores, but a steadily growing network of wholesalers, dealers and partners. Continuing efforts to develop and maintain direct relationships with manufacturers are proving highly valuable, allowing us to negotiate highly preferential terms and prices, and thereby increasing the Group’s competitiveness in the marketplace. The primary focus remains on GPS and Personal Navigational Devices (“PNDs”), although many new partnerships have been formed to offer complementary products and accessories to broaden our range.

In an effort to centralize the Group’s local Malaysian operations, the offices have now been consolidated into one location to enhance communications and efficiency, as well as to streamline costs.

DIVIDEND

An interim dividend of 5% (tax exempt) for the financial year ended 30 June 2010 was announced on 22 February 2010 and subsequently paid on 30 April 2010 to the depositors who were registered in the Record of Depositors of the Company as at the close of business on 6 April 2010.

INDUSTRY TRENDS AND DEVELOPMENT

The Malaysian mobile industry currently advances at a pace that is in line with all other major mobile economies, with new services being rolled out that support the ever-increasing new technologies available. Even with these new technologies though, many matured services remain firmly entrenched as favorites of the average user, namely SMS, WAP, and Java based services and applications.

However, modern handsets and “Smart” mobile phones are making a not inconsiderable impact, and together with improvements on the general mobile infrastructure by the networks, more and more users are steadily being enticed to make the switch. This opens the doorway to new content and services that are accessed via proprietary “Apps” or applications.

Apart from mobile services, online retail is another avenue that is continuing relentlessly along its growth path. As payment gateways become ever more acceptable, they will cease to be the obstacle that they once were, and the resulting effect may prove to be a highly rewarding prospect for those who are now ready to take advantage of it.


CHAIRMAN’S STATEMENT (CONT’d)

FUTURE OUTLOOK

Basic mobile services like the Group’s B2B and B2C products utilizing SMS and WAP will continue to be the primary source of income, supplemented by new mobile services on the latest Smartphone technologies. The Group has deployed a focused team to develop synergistic applications for new devices such as the iPad and numerous Android devices. These very applications are complemented and enhanced by the Group’s other offerings such as the online Digital Magazine portal (‘M3Mag’) and other corporate based services.

The Group benefits from a well established international infrastructure that is constantly being improved, one which already allows us to deploy and market newly developed goods and services with a level of efficiency unmatched by our competitors.

CORPORATE SOCIAL RESPONSIBILITY

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

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

BOARD CHANGES

On 25 November 2009, Dato’ Ahmad Kabeer bin Mohamed Nagoor retired as Chairman of the Board. On behalf of the Board, I would like to express our gratitude and sincere appreciation for services rendered.

In his place, Mr. Krishnan Menon was appointed as the new Chairman. Unfortunately, due to unforeseen commitments elsewhere, he resigned as Chairman of the Board on 25 May 2010. I would like to thank him for services rendered.

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


The Board of Directors of the Company (“Board”) is committed to the principles of the Malaysian Code on Corporate Governance (“the Code”) and strives to adopt the prescriptions of the Code.

The Board has continued its commitment in maintaining high standards of corporate governance and the effective application of the principles and best practices, as set out in the Code, throughout 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 under the review.

A. THE BOARD

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

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

Composition and Balance of the Board

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

The current Board has six (6) members comprising three (3) Executive Directors and three (3) Independent Non-Executive Directors. This composition complies with Rule 15.02 of the ACE Market Listing Requirements of Bursa Malaysia Securities Berhad (“Bursa Securities”) wherein it states that at least two (2) or one third (1/3) of the Board of Directors of a listed company, whichever is higher, are Independent Directors. The profile of each Director is presented separately in the annual report.

Mr. Chew Shin Yong, Mark is the Group’s Executive Chairman while Mr. Lim Seng Boon is the Group’s Managing Director. The Chairman is responsible for the Board’s effectiveness and conduct, whilst the Managing Director has overall responsibilities over the business and operation of the Group. The clear division of functions and responsibilities between these two roles will ensure a balance of power and authority.

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

Board Responsibilities

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

STATEMENT ON CORPORATE GOVERNANCE


A. THE BOARD (cont'd)

The Board Meetings

Board meetings are held quarterly with additional meetings held when necessary. The Board met five (5) times during the financial year ended 30 June 2010.

The meeting attendance record of the Directors is as follows:

Directors Meeting Attendance

Lim Seng BoonLester Ratnakumar Neil FrancisChew Shin Yong, MarkMohamad Najeb bin AliLim Kooi SiangLim Keong Yew Krishnan Menon (Resigned on 25 May 2010)Dato’ Ahmad Kabeer bin Mohamed Nagoor (Retired on 25 November 2009)

5/55/55/55/55/55/55/52/3

Board Committees

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

a. Audit Committee

The composition, terms of reference and a summary of the activities of the Audit Committee are set out separately in the Audit Committee Report as laid out on pages 21 to 24 of this Annual Report.

b. Nomination Committee

The role of the Nomination Committee is to review annually the required mix of skills, experience and other qualities of the Directors and to recommend new appointment, if any, to the Board.

The members of the Nomination Committee comprise the followings:-

• Lim Keong Yew (Chairman, Independent Non-Executive Director)• Mohamad Najeb bin Ali (Member, Independent Non-Executive Director)• Lim Kooi Siang (Member, Independent Non-Executive Director)

c. Remuneration Committee

The Remuneration Committee is responsible for the formulation of remuneration policy such as rewards and benefits and other terms of employment of the Executive Director.

The members of the Remuneration Committee comprise the followings:-

• Mohamad Najeb bin Ali (Chairman, Independent Non-Executive Director)• Lim Kooi Siang (Member, Independent Non-Executive Director)• Lim Keong Yew (Member, Independent Non-Executive Director)

STATEMENT ON CORPORATE GOVERNANCE (cont’d)




Supply of Information to the Board

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

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

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

Directors have access to all information within the Company whether as full board or in their individual capacity, in furtherance of their duties. In addition, whenever independent professional advice is required by the Directors, outside experts may be engaged at the Company’s expense. Before incurring such professional fees, the Director concerned must consult with the Chairman, or with two (2) other Directors (one who is a Non-Executive Director). Such advice was not sought by any of the Directors for the financial year under review.

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

AppOINTMENTS Of THE BOARD AND RE-ElECTION

The Board is appointed in a formal and transparent practice as endorsed by the Code. The Nomination Committee will make recommendations or the Board will go through this entire process on its own. The Company Secretary will ensure that all appointments are properly made and that all legal and regulatory obligations are met.

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

Directors’ Training

All Directors have attended the Mandatory Accreditation Programme (“MAP”) as required by Bursa Securities on all directors of listed companies.

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

Seminars and conference attended by Directors during the financial year ended 30 June 2010 are as follows:

Directors programme

Lim Kooi Siang • National Tax Conference• Tax & Economic Conference 2009• National Seminar on Taxation 2009• Forum On FRS 139 Financial Instrument: Recognisation & Measurement• Tax Updates 2010• One Day Workshop Programme For Directors & Senior Management

Mohamad Najeb bin Ali • Forum On FRS 139 Financial Instrument: Recognisation & Measurement



Directors’ Training (cont’d)

Mr. Lim Seng Boon, Mr. Lester Ratnakumar Neil Francis, Mr. Chew Shin Yong, Mark and Mr. Lim Keong Yew have not attended any training during this financial year. However, they have kept themselves abreast on financial and business matters through readings to enable him to contribute to the Board.

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

B. DIRECTORS’ REMUNERATION

Remuneration policy and procedures

The Remuneration Committee recommends to the Board the remuneration framework and remuneration package of the Executive Directors. The level of remuneration reflects the experience, responsibilities, contribution and performance by each individual director. The determination of the fees of the Non-Executive Directors is decided by the Board as a whole.

Directors’ fees which are subject to shareholders’ approval are payable only to Non-Executive Directors. For the year ended 30 June 2010, the Board proposed a fee of RM18,000 for each Non-Executive Director. In addition, the Board also proposed to pay additional fees of RM6,000 to the Chairman of the Board and the Chairman of the Audit Committee respectively.

Directors’ Remuneration

Details of the Directors’ remuneration for the financial year under review are as follows:

SalaryRM’000

BonusRM’000

feeRM’000

TotalRM’000

Executive DirectorsNon-Executive Directors

730–

16–

–78

746 78

Total 730 16 78 824

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

Range Executive Non-Executive

Below RM50,000RM50,000 - RM100,000RM100,001 - RM150,000RM150,001 - RM200,000RM200,001 - RM250,000RM250,001 - RM300,000 RM300,001 - RM350,000RM350,001 - RM400,000

–1–––1–1

4–––––––

The detailed remuneration of each Director is not disclosed as the information is sensitive and confidential.




C. SHAREHOlDERS

Shareholders and Investors Relations

The Board acknowledges its role in representing and promoting the interests of shareholders, and its accountability to shareholders for the performance and activities of the Group. Regular briefings and discussions sessions with analysts and investors were held by the Managing Director. The Group has also conducted analysts briefing with fund managers and potential investors.

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

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

Annual General Meeting

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

During the AGM, the Chairman and Board will respond to queries and undertake to provide sufficient explanation and clarification on issues and concerns raised by the shareholders.

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

Where Extraordinary General Meeting are held to obtain shareholders’ approval on business or corporate proposals,

comprehensive circulars are sent to shareholders within prescribed deadlines in accordance with regulatory and statutory provisions.

D. ACCOUNTABIlITY AND AUDIT

financial Reporting

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

With assistance from the Audit Committee, the Board scrutinised the financial aspect of the Audited Financial Statements and reviewed the statutory compliance aspects of the Audited Financial Statements.

Internal Control

The Board acknowledged its overall responsibility for maintaining a sound system of internal controls to safeguard shareholders’ investment and Group’s assets. The Statement on Internal Control is set out on pages 19 to 20 of the annual report providing an overview of the state of internal controls within the Group.


D. ACCOUNTABIlITY AND AUDIT (cont'd)

Relationship with Auditors

Through the Audit Committee, the Group has established a transparent and appropriate relationship with the Group’s auditors, in seeking professional advice and ensuring compliance with the applicable accounting standards and statutory requirements in Malaysia. The Audit Committee has been explicitly accorded the power to communicate directly with both the External Auditors and Internal Auditors.

During the financial year, the Audit Committee also met up twice with the External Auditors without the presence of any executive Board members and Management.

E. STATEMENT Of COMplIANCE WITH THE BEST pRACTICES Of THE CODE

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



STATEMENT ON INTERNAL CONTROL

This statement of internal control has been prepared in compliance to paragraph 15.26(b) of the ACE Market Listing Requirements of Bursa Malaysia Securities Berhad (“Bursa Securities”).

RESpONSIBIlITY Of THE BOARD

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

Following the publication of the Statement on Internal control: Guidance for Directors of Public Listed Companies (“the Internal Control Guidance”), the Board confirms that there is an ongoing process for identifying, evaluating and managing significant risks faced by the Group, that has been in place for the financial year and up to the date of approval of the annual report and financial statements, and that this process is regularly reviewed by the Board and accords with the Internal Control Guidance.

RISK MANAGEMENT fRAMEWORK

The Executive Directors with the assistance of the senior management and internal auditors undertook to identify, evaluate, monitor and manage the principal business risks that affecting the day-to-day operations of the Group. To facilitate the risk identification and evaluation, a checklist was developed and senior management were required to identify controls which could mitigate such risks and make appropriate assessment of any impact of such risks may have. The risks assessed were categorised under market & environment, financial, reporting and planning, process, information technology security, customer and integrity of employees. Regular review by the Board will be conducted on a yearly basis with additional reviews to be carried out as and when required.

CONTROl STRUCTURE AND ENVIRONMENT

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

Independence of the Audit Committee

The Audit Committee comprises of all Independent Non-Executive Directors and they have varied experience and qualification. The Audit Committee has full access to both the internal as well as external auditors.

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

Organisation structure with defined roles and responsibilities

Term of reference for the Chairman, Managing Director and the Board Committees are clearly defined while job functions for the management and employees in the Group have also been streamlined to provide well-defined roles and responsibilities. The above will ensure proper division and segregation of duties and responsibilities.

Documented policies and procedures

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

Authority limits

The limits of authority determine the respective levels of authority which are delegated to the employees of the respective levels to enable control of the Group’s commitment of both capital and operational expenditure. The limits of authority was approved and updated regularly by the senior management together with the Executive Directors.


CONTROl STRUCTURE AND ENVIRONMENT (cont'd)

financial and operational information

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

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

MONITORING AND REVIEW

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

performance monitoring and review

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

Monitoring Controls

The Group has an internal audit function whose primary responsibility is to provide an independent evaluation, enabling continual improvement in the processes and controls and to independently assure the board, through the Audit Committee, that the internal control procedures and policies are complied with and functioned as intended. Annual internal audit plan is presented to the Audit Committee for approval.

Internal Audit Division submits audit reports periodically for the Audit Committee’s review and approval. Included in the reports are recommended corrective measures on risk identified, if any, for implementation by the Management.

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

STATEMENT ON INTERNAL CONTROL (cont’d)


AUDIT COMMITTEE REPORT

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

COMpOSITION

The current members of the Committee comprise:

Chairman Status of Directorship

Lim Kooi Siang Independent Non-Executive Director

Members

Mohamad Najeb bin Ali Independent Non-Executive Director

Lim Keong Yew (Appointed on 25 November 2009) Independent Non-Executive Director

Krishnan Menon (Resigned on 25 November 2009) Independent Non-Executive Director

Detailed profile of the Committee members are contained in the “Directors’ Profile” as set out on pages 6 to 9 of this Annual Report. Members of the Committee possess sound judgement, objectivity, independent attitude, management experience and knowledge of the industry.

TERMS Of REfERENCE

The terms of reference of the Committee are as follows:

Membership

1. The Committee shall be appointed by the Board from among its members and shall comprise a minimum of three (3) members, whereby all members must be Non-Executive Directors and financially literate with a majority of them being Independent Directors, and at least one (1) member of the Committee:-

a) must be a member of the Malaysian Institute of Accountants; or

b) if he is not a member of the Malaysian Institute of Accountants, he must have at least three (3) years’ working experience and:

i. he must have passed the examinations specified in Part I of the 1st Schedule of the Accountants Act 1967; or

ii. he must be a member of one of the associations of accountants specified in Part II of the 1st Schedule of the Accountants Act 1967; or

c) fulfills such other requirements as prescribed or approved by the Bursa Malaysia Securities Berhad (“Bursa Securities”).

2. Alternate Director shall not be appointed as a member of the Committee.

3. The Committee shall elect a Chairman from among its members and the elected Chairman shall be an Independent Director.

4. In the event, the elected Chairman is not able to attend a meeting; the remaining members present shall elect one of themselves as Chairman for the meeting. The elected Chairman shall be an Independent Director.

5. If a member of the Audit Committee resigns, retired, dies or for any other reason ceases to be a member which resulting in the non-compliance with point 1 above, the Board shall fill the vacancy within three (3) months.

6. The Board shall review the term of office and performance of the Committee and each member at least once every three (3) years.


TERMS Of REfERENCE (cont’d)

frequency of meetings

1. Meetings shall be held not less than four (4) times a year. However, additional meetings may be called at anytime depending on the scope of activities of the Committee.

2. Other Board members, Senior management, Internal and External auditors may be invited to attend meetings.

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

4. Prior notice shall be given for all meetings.

Quorum

The minimum quorum for the meeting is two (2) members of the Committee, a majority of members present must be independent and Non-Executive Directors.

Secretary

The Company Secretary shall be the secretary of the Committee. The Secretary shall circulate the notice and minutes of the Committee to all members of Board.

functions

The functions of the Committee are as follows:

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

ii) To review with the external auditors:a) the audit plan, scope and nature of the audit of the Group;

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

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

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

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

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

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

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

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

x) To review and verify the allocation of options pursuant to the Employees’ Share Option Scheme (“ESOS”) in compliance with the criteria as stipulated in the by law of ESOS of the Group, if any.

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

AUDIT COMMITTEE REPORT (cont’d)



TERMS Of REfERENCE (cont’d)

Authority

The Committee is authorised by the Board to investigate any activity within its term of reference at the cost of the Company, to:

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

ii) communicate directly with the external auditors, internal auditors and all employees of the Group.

iii) seek and obtain independent professional advice and to secure the attendance of outsiders with relevant experience and expertise as it considers necessary.

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

MEETING

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

Committee Members Meeting Attendance

Lim Kooi SiangMohamad Najeb bin AliLim Keong Yew (Appointed on 25 November 2009)Krishnan Menon (Resigned on 25 November 2009)

5/55/52/22/2

The Company’s other Board members, internal auditor, external auditors, and certain senior management staff had attended all the meetings at the invitation of the Chairman of the Committee.

SUMMARY Of ACTIVITIES

• The Committee had carried out the following activities during the five (5) meetings in discharging their duties and responsibilities:

• Reviewed the quarterly financial results and annual audited financial statements of the Group and 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.

• Reviewed with external auditors on their audit planning memorandum on the statutory audit of the Group for the financial year ended 30 June 2010.

• Reviewed with external auditors on the results and issues arising from their audit of the financial year end statements and their resolutions of such issues highlighted in their report to the Committee.

• Reviewed the risk management framework report prepared by the senior management of the Group and the progress of the risk management functions.

• Reviewed with the internal auditor, the internal audit plan to ensure principal risk areas are adequately covered in the audit plan.

• Reviewed the results of the internal audit process to ensure that the recommendations made by the Internal Auditor and corrective actions taken by management are adequately addressed on a timely basis.

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



INTERNAl AUDIT fUNCTION

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

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

During the financial year, the internal audit activities have been carried out in accordance to the internal audit plan, which have been approved by the Audit Committee.


STATEMENT OF DIRECTORS’ RESPONSIBILITY

This statement is prepared pursuant to the ACE Market Listing Requirements of Bursa Malaysia Securities Berhad. The Directors are required to prepare audited financial statements that give a true and fair view of the state of affairs, including the cash flow and results, of the Group and the Company as at the end of each financial year.

In preparing these financial statements, the Directors have considered the following:

• the Group and the Company have used appropriate accounting policies, and are consistently applied;

• that reasonable and prudent judgements and estimates were made; and

• that the approved accounting standards in Malaysia have been applied.

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

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


ADDITIONAL COMPLIANCE INFORMATION

Share BuybackDetails of the share bought back and retained as treasury shares by the Company during the financial year under review and up to 29 October 2010 are set out as below:

Monthly Breakdown

No. of shares purchased and

retained as treasury shares

Highest price

RM

lowest price

RM

Average price

RM

Total Consideration

paidRM

July 2009Aug 2009Sept 2009Oct 2009Nov 2009Feb 2010Jun 2010

201,500400,000363,000 160,000 40,000 18,000 20,000

0.190.200.210.240.250.220.19

0.180.190.200.230.250.220.19

0.180.200.200.240.250.220.19

37,22078,38273,95036,560 9,800 3,870 3,700

None of the treasury shares held was resold or cancelled during the financial year under review.

Option, Warrants and Convertible SecuritiesThere were no Options, Warrants or Convertible Securities issued by the Company during the financial year under review.

American Depository Receipt (“ADR”) or Global Depository Receipt (“GDR”) programmeDuring the financial year, the Company did not sponsor any ADR and GDR Programme.

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

Non-Audit feesThe amount of non-audit fees paid to the external auditors by the Group for the financial year amounted to RM22,000.

profit Estimates, forecast or projectionThe Company did not issue any profit estimates, forecast or projection for the financial year.

profit GuaranteeThe Company did not issue any profit guarantee during the financial year.

Material Contract Involving Directors and Major ShareholdersThere were no material contracts entered into by the Company or its subsidiaries, involving Directors’ and major shareholders’ interest during the financial year.

Recurrent Related party Transactions of a Revenue or Trading NatureDetails of Recurrent Related Party Transactions of a Revenue or Trading Nature is disclosed in Note 35 to the Financial Statement on page 73 to 74.

Revaluation policyThe Company did not revalue any of its property, plant and equipment.

Direstors’ Report 28

Statement by Directors 32

Statuary Declaration 32

Independent Auditors’ Report 33

Balance Sheets 35

Income Statements 37

Statements of Changes in Equity 38

Cash FLow Statements 41

Notes to the Financial Statements 43

CONTENTS

FINANCIAL STATEMENTS


The directors hereby submit their report and the audited financial statements of the Group and of the Company for the financial year ended 30 June 2010.

pRINCIpAl ACTIVITIES

The Company is principally engaged in the business of providing mobile-internet messaging solutions using the Short Messaging Services (“SMS”), General Packet Radio Services (“GPRS”) and Wireless Application Protocol (“WAP”) technology. The principal activities of the subsidiaries are set out in Note 6 to the financial statements. There have been no significant changes in the nature of these activities during the financial year.

RESUlTS

The Group The Company

RM RM

Profit after taxation for the financial year 2,363,448 2,256,730

Attributable to:-

Equity holders of the Company 1,724,041 2,256,730

Minority interests 639,407 –

2,363,448 2,256,730

DIVIDENDS

Since the end of the previous financial year, the Company paid the following dividends:-

(i) a final tax exempt dividend of 10% on 161,982,240 ordinary shares in respect of the previous financial year as proposed in the directors’ report of that financial year; and

(ii) an interim tax exempt dividend of 5% on 161,964,240 ordinary shares in respect of the current financial year.

The directors do not recommend the payment of any further dividend for the current financial year.

RESERVES AND pROVISIONS

All material transfers to or from reserves or provisions during the financial year are disclosed in the financial statements.

ISSUES Of SHARES AND DEBENTURES

During the financial year,

(a) there were no changes in the authorised and issued and paid-up share capital of the Company; and

(b) there were no issues of debentures by the Company.

DIRECTORS’ REPORT


DIRECTORS’ REPORT (cont’d)

TREASURY SHARES

During the financial year, the Company repurchased 1,202,500 of its own ordinary shares from the open market at an average price of RM0.20 per share. The total consideration paid for the repurchase was RM243,483. The repurchase transactions were financed by internally generated funds. The shares repurchased are being held as treasury shares in accordance with Section 67A of the Companies Act, 1965.

As at the balance sheet date, the Company held 1,574,500 shares as treasury shares out of its total 163,518,740 issued and paid-up ordinary shares. The treasury shares are held at a carrying amount of RM308,687. Relevant details on the treasury shares are disclosed in Note 18 to the financial statements.

OpTIONS GRANTED OVER UNISSUED SHARES

During the financial year, no options were granted by the Company to any person to take up any unissued shares in the Company.

BAD AND DOUBTfUl DEBTS

Before the financial statements of the Group and of the Company were made out, the directors took reasonable steps to ascertain that 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 allowance had been made for doubtful debts.

At the date of this report, the directors are not aware of any circumstances that would require the further writing off of bad debts, or the additional allowance for doubtful debts in the financial statements of the Group and of the Company.

CURRENT ASSETS

Before the financial statements of the Group and of the Company were made out, the directors took reasonable steps to ascertain that any current assets other than debts, which were unlikely to be realised in the ordinary course of business, including their value as shown in the accounting records of the Group and of the Company, have been written down to an amount which they might be expected so to realise.

At the date of this report, the directors are not aware of any circumstances which would render the values attributed to the current assets in the financial statements of the Group and of the Company misleading.

VAlUATION METHODS

At the date of this report, the directors are not aware of any circumstances which have arisen which render adherence to the existing methods of valuation of assets or liabilities of the Group and of the Company misleading or inappropriate.

CONTINGENT AND OTHER lIABIlITIES

At the date of this report, there does not exist:-

(i) any charge on the assets of the Group and of the Company that 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 and of the Company which has arisen since the end of the financial year.

No contingent or other liability of the Group and of the Company has become enforceable or is likely to become enforceable within the period of twelve months after the end of the financial year which, in the opinion of the directors, will or may substantially affect the ability of the Group and of the Company to meet their obligations when they fall due.



CHANGE Of CIRCUMSTANCES

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

ITEMS Of AN UNUSUAl NATURE

The results of the operations of the Group and of the Company during the financial year were not, in the opinion of the directors, substantially affected by any item, transaction or event of a material and unusual nature.

There has not arisen in the interval between the end of the financial year and the date of this report any item, transaction or event of a material and unusual nature likely, in the opinion of the directors, to affect substantially the results of the operations of the Group and of the Company for the financial year.

DIRECTORS

The directors who served since the date of the last report are as follows:-

Dato’ Ahmad Kabeer bin Mohamed Nagoor (Retired on 25 November 2009)Krishnan A/L C K Menon (Resigned on 27 May 2010)Lim Seng BoonLester Ratnakumar Neil FrancisChew Shin Yong, MarkMohamad Najeb bin AliLim Kooi SiangLim Keong Yew

DIRECTORS’ INTERESTS

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

Number Of Ordinary Shares Of RM0.10 eachAt At

1.7.2009 Bought Sold 30.6.2010

Direct Interests

Lim Seng Boon 12,681,000 – – 12,681,000

Chew Shin Yong, Mark 2,130,600 – – 2,130,600

Lester Ratnakumar Neil Francis 808,016 – – 808,016

Indirect Interests

Lim Seng Boon 19,853,040* 3,892,600 – 23,745,640*

Lim Keong Yew 8,062,000** – 6,030,200 2,031,800**

* Deemed interested by virtue of his spouse, Madam Goh Lee Lang’s shareholdings in M3 Technologies (Asia) Berhad** Deemed interested by virtue of his interest in Exodius Holdings Sdn. Bhd.

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

By virtue of his shareholding in the Company, Lim Seng Boon is deemed to have interests in shares in the subsidiaries and related corporations to the extent of the Company’s interest, in accordance with Section 6A of Companies Act, 1965.



DIRECTORS’ BENEfITS

Since the end of the previous financial year, no director has received or become entitled to receive any benefit (other than a benefit included in the aggregate amount of emoluments received or due and receivable by directors as shown in the financial statements, or the fixed salary of a full-time employee of the Company) by reason of a contract made by the Company or a related corporation with the director or with a firm of which the director is a member, or with a company in which the director has a substantial financial interest except for any benefits which may be deemed to arise from transactions as disclosed in Note 35 to the financial statements.

Neither during nor at the end of the financial year was the Company a party to any arrangements whose object is to enable the directors to acquire benefits by means of the acquisition of shares in or debentures of the Company or any other body corporate.

AUDITORS

The auditors, Messrs. Crowe Horwath, have expressed that they do not wish to seek re-appointment at the forthcoming Annual General Meeting.

Signed In Accordance With A Resolution Of The DirectorsDated 12 October 2010

lim Seng Boon

lester Ratnakumar Neil francis


We, Lim Seng Boon and Lester Ratnakumar Neil Francis, being two of the directors of M3 Technologies (Asia) Berhad, state that, in the opinion of the directors, the financial statements set out on pages 35 to 78 are drawn up in accordance with Financial Reporting Standards and the Companies Act 1965 in Malaysia so as to give a true and fair view of the state of affairs of the Group and of the Company at 30 June 2010 and of their results and cash flows for the financial year ended on that date.

Signed In Accordance With A Resolution Of The DirectorsDated 12 October 2010

lim Seng Boon lester Ratnakumar Neil francis

STATUTORY DECLARATION

I, Lester Ratnakumar Neil Francis, I/C No. 701028-10-6467, being the director primarily responsible for the financial management of M3 Technologies (Asia) Berhad, do solemnly and sincerely declare that the financial statements set out on pages 35 to 78 are, to the best of my knowledge and belief, 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 byLester Ratnakumar Neil Francis,I/C No. 701028-10-6467, at Kuala Lumpur in the Federal Territoryon this 12 October 2010

lester Ratnakumar Neil francisBefore me

Mohd Radzi Bin YasinW327

Commisioner of Oaths

STATEMENT BY DIRECTORS Pursuant to Section 169(15) of the Companies Act, 1965


REpORT ON THE fINANCIAl STATEMENTS

We have audited the financial statements of M3 Technologies (Asia) Berhad, which comprise the balance sheets as at 30 June 2010 of the Group and of the Company, and the income statements, statements of changes in equity and cash flow statements of the Group and of the Company for the financial year then ended, and a summary of significant accounting policies and other explanatory notes, as set out on pages 35 to 78.

Directors’ Responsibility for the Financial Statements

The directors of the Company are responsible for the preparation and fair presentation of these financial statements in accordance with Financial Reporting Standards and the Companies Act 1965 in Malaysia. This responsibility includes designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error, selecting and applying appropriate accounting policies, and making accounting estimates that are reasonable in the circumstances.

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 Company’s preparation and fair presentation of the financial statements 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 Company’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial statements.

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

Opinion

In our opinion, the financial statements have been properly drawn up in accordance with Financial Reporting Standards and the Companies Act 1965 in Malaysia so as to give a true and fair view of the financial position of the Group and of the Company as at 30 June 2010 and of their financial performance and cash flows for the financial year then ended.

Other Matters

The financial statements of the Group and of the Company for the preceding financial year were audited by another firm of auditors whose report dated 8 October 2009, expressed an unqualified opinion on those statements.

INDEPENDENT AUDITORS’ REPORT to the Members of M3 Technologies (Asia) Berhad(Incorporated in Malaysia) Company No: 482772 - D


REpORT ON OTHER lEGAl AND REGUlATORY REQUIREMENTS

In accordance with the requirements of the Companies Act 1965 in Malaysia, we also report the following:-

(a) In our opinion, the accounting and other records and the registers required by the Act to be kept by the Company and its subsidiaries of 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 6 to the financial statements.

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

(d) The audit reports on the financial statements of the subsidiaries did not contain any qualification or any adverse comment made under Section 174(3) of the Act.

OTHER MATTERS

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

Crowe Horwath lee Kok WaiFirm No: AF 1018 Approval No: 2760/06/12 (J)Chartered Accountants Chartered Accountant

Kuala Lumpur12 October 2010

INDEPENDENT AUDITORS’ REPORT to the Members of M3 Technologies (Asia) Berhad(Incorporated in Malaysia) Company No: 482772 - D (cont’d)


BALANCE SHEETS at 30 June 2010

The Group The Company2010 2009 2010 2009

Note RM RM RM RM

ASSETS

NON-CURRENT ASSETS

Investments in subsidiaries 6 – – 36,980,045 36,332,147

Property, plant and equipment 7 3,591,390 4,438,208 1,540,587 2,553,257

Development expenditure 8 993,562 964,511 993,562 828,141

Goodwill on consolidation 9 13,034,042 13,166,966 – –

Deferred tax asset 10 109,237 114,252 – –

17,728,231 18,683,937 39,514,194 39,713,545

CURRENT ASSETS

Inventories 11 3,636,816 1,326,188 – –

Trade receivables 12 11,091,583 9,908,774 3,792,904 4,034,230

Other receivables, deposits and

prepayments 13 2,542,001 1,455,396 343,427 405,366

Amount owing by subsidiaries 14 – – 7,441,492 5,914,079

Tax refundable 21,929 7,934 15,382 1,362

Deposits with licensed banks 15 2,500,548 2,971,406 271,205 509,965

Cash and bank balances 16 15,198,876 19,143,481 4,466,371 4,860,111

34,991,753 34,813,179 16,330,781 15,725,113

TOTAl ASSETS 52,719,984 53,497,116 55,844,975 55,438,658

EQUITY AND lIABIlITIES

EQUITY

Share capital 17 16,351,874 16,351,874 16,351,874 16,351,874

Treasury shares 18 (308,687) (65,204) (308,687) (65,204)

Share premium 19 2,351,731 2,351,731 2,351,731 2,351,731

Other reserves 20 (749,686) (96,688) 16,074,240 16,074,240

Retained profits 21 26,006,533 26,717,315 18,089,044 18,261,958

43,651,765 45,259,028 52,558,202 52,974,599

MINORITY INTERESTS 2,682,933 2,432,742 – –

TOTAl EQUITY 46,334,698 47,691,770 52,558,202 52,974,599

The annexed notes form an integral part of these financial statements.



Note RM RM RM RM

NON-CURRENT lIABIlITY

Deferred tax liabilities 22 204,800 169,833 91,000 –

204,800 169,833 91,000 –

CURRENT lIABIlITIES

Trade payables 23 3,510,618 2,279,483 2,195,977 1,477,698

Other payables and accruals 24 2,225,349 2,407,210 999,796 967,138

Amount owing to a subsidiary 14 – – – 3,223

Amount owing to a director 25 – 16,000 – 16,000

Provision for taxation 444,519 932,820 – –

6,180,486 5,635,513 3,195,773 2,464,059

TOTAl lIABIlITIES 6,385,286 5,805,346 3,286,773 2,464,059

TOTAl EQUITY AND lIABIlITIES 52,719,984 53,497,116 55,844,975 55,438,658

BALANCE SHEETS at 30 June 2010 (cont’d)



INCOME STATEMENTS for the year ended 30 June 2010


Note RM RM RM RM

REVENUE 26 39,846,900 34,983,830 14,808,178 13,671,761

COST OF SALES (17,197,558) (11,123,596) (6,744,166) (5,673,358)

GROSS PROFIT 22,649,342 23,860,234 8,064,012 7,998,403

OTHER INCOME 565,094 519,564 2,603,627 1,755,667

23,214,436 24,379,798 10,667,639 9,754,070

SELLING AND DISTRIBUTION

EXPENSES (4,403,234) (4,265,471) (804,907) (700,742)

ADMINISTRATIVE EXPENSES (12,044,715) (9,398,019) (5,698,396) (5,935,758)

OTHER EXPENSES (2,698,002) (2,040,216) (1,518,467) (1,261,705)

FINANCE COSTS (5,078) – – –

(19,151,029) (15,703,706) (8,021,770) (7,898,205)

PROFIT BEFORE TAXATION 27 4,063,407 8,676,092 2,645,869 1,855,865

INCOME TAX EXPENSE 29 (1,699,959) (2,488,796) (389,139) (186,988)

PROFIT AFTER TAXATION 2,363,448 6,187,296 2,256,730 1,668,877

ATTRIBUTABLE TO:-

Equity holders of the Company 1,724,041 5,343,189 2,256,730 1,668,877

Minority interests 639,407 844,107 – –

2,363,448 6,187,296 2,256,730 1,668,877

EARNINGS PER SHARE

- Basic 30 1.06 3.27

- Diluted 30 N/A N/A



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pre

miu

m

f ore

ign

Cur

renc

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ansl

atio

n R

eser

veR

etai

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pro

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Tota

lM

ino

rity

Inte

rest

sM

ino

rity

Inte

rest

sN

ote

RM

RM

RM

RM

RM

RM

RM

RM

The

Gro

up

Bal

ance

at

1.7.

2008

16,3

51,8

74–

2,35

1,73

1(7

62,2

51)

24,6

44,5

0042

,585

,854

1,76

7,89

844

,353

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ntin

g

ne

t in

com

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d e

xpen

se r

ecog

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d

d

irect

ly in

eq

uity

––

–66

5,56

3–

665,

563

(62,

768)

602,

795

Pro

fit a

fter

tax

atio

n fo

r th

e fin

anci

al y

ear

––

––

5,34

3,18

95,

343,

189

844,

107

6,18

7,29

6

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l inc

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gnis

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fo

r th

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ar

––

–66

5,56

35,

343,

189

6,00

8,75

278

1,33

96,

790,

091

Pur

chas

e of

tre

asur

y sh

ares

–(6

5,20

4)–

––

(65,

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Div

iden

ds

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d

31

––

––

(3,2

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(3,2

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(116

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)(3

,386

,869

)

Bal

ance

at

30.6

.200

9/1.

7.20

0916

,351

,874

(65,

204)

2,35

1,73

1(9

6,68

8)26

,717

,315

45,2

59,0

282,

432,

742

47,6

91,7

70

STATEMENTS OF CHANGES IN EQUITY for the year ended 30 June 2010

The

anne

xed

not

es fo

rm a

n in

tegr

al p

art

of t

hese

fina

ncia

l sta

tem

ents

.


STATEMENTS OF CHANGES IN EQUITY for the year ended 30 June 2010 (cont’d) A

ttri

but

able

To

Eq

uity

Ho

lder

s O

f T

he C

om

pan

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Cur

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lM

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sM

ino

rity

Inte

rest

sN

ote

RM

RM

RM

RM

RM

RM

RM

RM

The

Gro

up

Bala

nce

at 3

0.6.

2009

/1.7

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916

,351

,874

(65,

204)

2,35

1,73

1(9

6,68

8)26

,717

,315

45,2

59,0

282,

432,

742

47,6

91,7

70

Fore

ign

curre

ncy

trans

latio

n

repr

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ting

net e

xpen

se re

cogn

ised

dire

ctly

in e

quity

––

–(6

52,9

98)

–(6

52,9

98)

(171

,291

)(8

24,2

89)

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t afte

r tax

atio

n fo

r the

fina

ncia

l yea

r–

––

–1,

724,

041

1,72

4,04

163

9,40

72,

363,

448

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com

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fo

r the

yea

r–

––

(652

,998

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724,

041

1,07

1,04

346

8,11

61,

539,

159

Subs

crip

tion

of s

hare

s in

sub

sidi

ary

by

min

ority

sha

reho

lder

s–

––

––

–98

,600

98,6

00

Dec

reas

e in

sha

re o

f net

ass

ets

as a

resu

lt of

add

ition

al in

vest

men

t in

a

subs

idia

ry

––

––

(5,1

79)

(5,1

79)

5,17

9–

Purc

hase

of t

reas

ury

shar

es–

(243

,483

)–

––

(243

,483

)–

(243

,483

)

Div

iden

ds p

aid

31–

––

–(2

,429

,644

)(2

,429

,644

)(3

21,7

04)

(2,7

51,3

48)

Bala

nce

at 3

0.6.

2010

16,3

51,8

74(3

08,6

87)

2,35

1,73

1(7

49,6

86)

26,0

06,5

3343

,651

,765

2,68

2,93

346

,334

,698

The

anne

xed

not

es fo

rm a

n in

tegr

al p

art

of t

hese

fina

ncia

l sta

tem

ents

.


STATEMENTS OF CHANGES IN EQUITY for the year ended 30 June 2010 (cont’d)


Non-Distributable Distributable

Share Treasury Share Special Retained

Capital Shares premium Reserve profits Total

Note RM RM RM RM RM RM

The Company

Balance at 1.7.2008 16,351,874 – 2,351,731 16,074,240 19,863,455 54,641,300

Purchase of treasury shares – (65,204) – – – (65,204)

Profit after taxation for the financial year – – – – 1,668,877 1,668,877

Dividends paid 31 – – – – (3,270,374) (3,270,374)

Balance at 30.6.2009/1.7.2009 16,351,874 (65,204) 2,351,731 16,074,240 18,261,958 52,974,599

Purchase of treasury shares – (243,483) – – – (243,483)

Profit after taxation for the financial year – – – – 2,256,730 2,256,730

Dividends paid 31 – – – – (2,429,644) (2,429,644)

Balance at 30.6.2010 16,351,874 (308,687) 2,351,731 16,074,240 18,089,044 52,558,202


CASH FLOW STATEMENTS for the year ended 30 June 2010



Note RM RM RM RM

CASH FLOWS FROM

OPERATING ACTIVITIES

Profit before taxation 4,063,407 8,676,092 2,645,869 1,855,865

Adjustments for:-

Allowance for doubtful debts 14,553 60,733 – –

Amortisation of development expenditure 995,692 984,095 903,020 821,121

Bad debts written off 135,928 – – –

Depreciation of property, plant and equipment 1,998,524 1,978,589 1,205,582 1,261,247

Plant and equipment written off 49,184 894 48,679 458

Interest expense 5,078 – – –

Development expenditure written off 38,261 – – –

Dividend income – – (2,583,673) (1,648,312)

Loss/(Gain) on disposal of plant and equipment 230 (433) 250 (835)

Interest income (178,164) (317,786) (6,150) (104,651)

Unrealised loss/(gain) on foreign exchange 568,841 (126,686) 263,957 –

Short-term accumulating absences 1,391 43,945 5,536 42,348

Waiver of debts (4,807) – – –

Writeback of allowance for doubtful debts (54,494) – – –

Operating profit before working capital changes 7,633,624 11,299,443 2,483,070 2,227,241

Increase in inventories (2,310,628) (1,326,188) – –

(Increase)/Decrease in trade and other receivables (2,357,086) 1,120,847 303,265 143,525

Increase in trade and other payables 479,213 239,329 745,401 418,321

CASH FROM OPERATIONS 3,445,123 11,333,431 3,531,736 2,789,087

Interest paid (5,078) – – –

Income tax paid (2,174,004) (2,642,461) (312,159) (202,264)

NET CASH FROM OPERATING ACTIVITIES CARRIED FORWARD 1,266,041 8,690,970 3,219,577 2,586,823


CASH FLOW STATEMENTS for the year ended 30 June 2010 (cont’d)



2010 2009 2010 2009

Note RM RM RM RM

NET CASH FROM OPERATING ACTIVITIES BROUGHT FORWARD 1,266,041 8,690,970 3,219,577 2,586,823

CASH FLOWS FOR INVESTING ACTIVITIES

Subscription of shares in a subsidiary – – (147,900) (4)

Additional investment in a subsidiary – – (499,998) –

Dividend received from subsidiaries – – 2,583,673 1,648,312

Interest received 178,164 317,786 6,150 104,651

Purchase of plant and equipment (1,275,357) (462,568) (245,197) (150,242)

Proceeds from disposal of plant and equipment 6,912 2,794 3,356 34,297

Development expenditure incurred (1,068,441) (1,035,848) (1,068,441) (891,163)

Advances to subsidiaries – – (1,527,413) (1,229,330)

NET CASH FOR INVESTING ACTIVITIES (2,158,722) (1,177,836) (895,770) (483,479)

CASH FLOWS FOR FINANCING ACTIVITIES

Dividends paid (2,429,644) (3,270,374) (2,429,644) (3,270,374)

Dividends paid to minority interests of subsidiaries (321,704) (308,895) – –

Proceeds from issuance of shares to minority shareholders 98,600 – – –

Purchase of treasury shares (243,483) (65,204) (243,483) (65,204)

(Repayment to)/Advances from a subsidiary – – (3,223) 3,223

Repayment to a director (16,000) (34,000) (16,000) (34,000)

NET CASH FOR FINANCING ACTIVITIES (2,912,231) (3,678,473) (2,692,350) (3,366,355)

NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS (3,804,912) 3,834,661 (368,543) (1,263,011)

Effect of exchange rate changes (610,551) 281,828 (263,957) –

CASH AND CASH EQUIVALENTS AT BEGINNING OF THE FINANCIAL YEAR 22,114,887 17,998,398 5,370,076 6,633,087

CASH AND CASH EQUIVALENTS AT END OF THE FINANCIAL YEAR 33 17,699,424 22,114,887 4,737,576 5,370,076


NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 June 2010

1. GENERAl INfORMATION

The Company is a public company limited by shares and is incorporated under the Companies Act 1965 in Malaysia. The domicile of the Company is Malaysia. The registered office is as follows:-

Registered office : Third Floor, No. 79 (Room A) Jalan SS21/60, Damansara Utama, 47400 Petaling Jaya, Selangor.

The Company operates in two main locations:-

(a) Unit 608, 707 & 1007, Block A, Pusat Dagangan Phileo II, Jalan SS16/11, 46350 Petaling Jaya, Selangor.

(b) Unit 809, Block B, Pusat Dagangan Phileo II, Jalan SS16/11, 46350 Petaling Jaya, Selangor.

The financial statements were authorised for issue by the Board of Directors in accordance with a resolution of the directors dated 12 October 2010.

2. pRINCIpAl ACTIVITIES

The Company is principally engaged in the business of providing mobile-internet messaging solutions using the Short Messaging Services (“SMS”), General Packet Radio Services (“GPRS”) and Wireless Application Protocol (“WAP”) technology. The principal activities of the subsidiaries are set out in Note 6 to the financial statements. There have been no significant changes in the nature of these activities during the financial year.

3. fINANCIAl RISK MANAGEMENT pOlICIES

The Group’s financial risk management policy seeks to ensure that adequate financial resources are available for the development of the Group’s business whilst managing its market, credit, liquidity and cash flow risks. The policies in respect of the major areas of treasury activity are as follows:-

(a) Market Risk

(i) Foreign Currency Risk

The Group operates in the Asia Pacific region and is exposed to various currencies, mainly Hong Kong Dollar, Singapore Dollar, Thai Baht, Chinese Renminbi, Pakistani Rupee and Indonesian Rupiah. The Group’s exposure to foreign currency risk mainly arises from foreign currency denominated assets and liabilities together with expected cash flows from purchases and sales.

The Group did not hedge its foreign currency assets as the net unhedged position is deemed to be immaterial.

There are no significant unhedged financial assets and liabilities of the companies within the Group that are not denominated in their respective functional currencies.

Foreign currency risk is monitored closely and managed to an acceptable level.

(ii) Interest Rate Risk

The Group does not have any interest-bearing borrowings and hence is not exposed to interest rate risks.

Surplus funds are placed with licensed financial institutions at the most favourable interest rates.

(iii) Price Risk

The Group does not have any quoted investments and hence is not exposed to price risks.


3. fINANCIAl RISK MANAGEMENT pOlICIES (cont’d)

(b) Credit Risk

The Group’s exposure to credit risks, or the risk of counterparties defaulting, arises mainly from receivables. The maximum exposure to credit risks is represented by the carrying amounts of these financial assets in the balance sheet reduced by the effects of any netting arrangements with counterparties.

The Group’s concentration of credit risk relates to the amounts owing by various telecommunication companies mainly for the provision of SMS content and services which made up 52% of its total receivables at the balance sheet date.

The Group manages its exposure to credit risk by the application of credit approvals, credit limits and monitoring procedures on an ongoing basis.

(c) liquidity and Cash flow Risks

The Group’s exposure to liquidity and cash flow risks arises mainly from general funding and business activities.

It practises prudent liquidity risk management by maintaining sufficient cash balances.

4. BASIS Of pREpARATION

The financial statements of the Group are prepared under the historical cost convention and modified to include other bases of valuation as disclosed in other sections under significant accounting policies, and in compliance with Financial Reporting Standards (“FRS”) and the Companies Act 1965 in Malaysia.

(a) During the current financial year, the Group adopted FRS 8: Operating Segment that has been issued and effective from 1 July 2009.

FRS 8 replaces FRS 1142004 Segment Reporting and requires an entity to report financial and descriptive

information about its operating segments. Under FRS 8, the disclosure on operating segments is based on the internal reporting segments adopted by the entity and group for the purpose of evaluation of performances and allocation of resources. The Group concluded that the reportable operating segments determined in accordance with FRS 8 are the same as the business segments previously identified under FRS 1142004. The adoption of this standard only impacts the form and content of disclosures presented in the financial statements of the Group. These revised disclosures, including the related revised comparative information, are shown in Note 38 to the financial statements.

(b) The Group has not applied in advance the following accounting standards and interpretations (including the consequential amendments) that have been issued by the Malaysian Accounting Standards Board (MASB) but are not yet effective for the current financial year:

fRSs and IC Interpretations (including the Consequential Amendments) Effective date

FRS 1 (Revised) First-time Adoption of Financial Reporting Standards 1 July 2010

FRS 3 (Revised) Business Combinations 1 July 2010

FRS 4 Insurance Contracts 1 January 2010

FRS 7 Financial Instruments: Disclosures 1 January 2010

FRS 101 (Revised) Presentation of Financial Statements 1 January 2010

FRS 123 (Revised) Borrowing Costs 1 January 2010

FRS 127 (Revised) Consolidated and Separate Financial Statements 1 July 2010

FRS 139 Financial Instruments: Recognition and Measurement 1 January 2010

Amendments to FRS 1 and FRS 127: Cost of an Investment in a Subsidiary, Jointly Controlled Entity or Associate 1 January 2010

Amendments to FRS 1: Limited Exemption from Comparative FRS 7 Disclosures for First-time Adopters 1 January 2011

Amendments to FRS 1: Additional Exemptions for First-time Adopters 1 January 2011

Amendments to FRS 2: Vesting Conditions and Cancellations 1 January 2010

NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 June 2010 (cont’d)



4. BASIS Of pREpARATION (cont’d)

fRSs and IC Interpretations (including the Consequential Amendments) (cont’d) Effective date

Amendments to FRS 2: Scope of FRS 2 and FRS 3 (Revised) 1 July 2010

Amendments to FRS 2: Group Cash-settled Share-based Payment Transactions 1 January 2011

Amendments to FRS 5: Plan to Sell the Controlling Interest in a Subsidiary 1 July 2010

Amendments to FRS 7, FRS 139 and IC Interpretation 9 1 January 2010

Amendments to FRS 7: Improving Disclosures about Financial Instruments 1 January 2011

Amendments to FRS 101 and FRS 132: Puttable Financial Instruments and Obligations Arising on Liquidation

1 January 2010

Amendments to FRS 132: Classification of Rights Issues and the Transitional Provision in Relation to Compound Instruments

1 January 2010/ 1 March 2010

Amendments to FRS 138: Consequential Amendments Arising from FRS 3 (Revised) 1 July 2010

IC Interpretation 4 Determining Whether An Arrangement Contains a Lease 1 January 2011

IC Interpretation 9 Reassessment of Embedded Derivatives 1 January 2010

IC Interpretation 10 Interim Financial Reporting and Impairment 1 January 2010

IC Interpretation 11: FRS 2 – Group and Treasury Share Transactions 1 January 2010

IC Interpretation 12 Service Concession Arrangements 1 July 2010

IC Interpretation 13 Customer Loyalty Programmes 1 January 2010

IC Interpretation 14: FRS 119 – The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction

1 January 2010

IC Interpretation 15 Agreements for the Construction of Real Estate 1 January 2012

IC Interpretation 16 Hedges of a Net Investment in a Foreign Operation 1 July 2010

IC Interpretation 17 Distributions of Non-cash Assets to Owners 1 July 2010

IC Interpretation 18 Transfers of Assets from Customers 1 January 2011

Amendments to IC Interpretation 9: Scope of IC Interpretation 9 and FRS 3 (Revised) 1 July 2010

Annual Improvements to FRSs (2009) 1 January 2010

The above accounting standards and interpretations (including the consequential amendments) are not relevant to the Group’s operations except as follows:

The FRS 3 (Revised) introduces significant changes to the accounting for business combinations, both at the

acquisition date and post acquisition, and requires greater use of fair values. In addition, all transaction costs, other than share and debt issue costs, will be expensed as incurred. This revised standard will be applied prospectively and therefore there will not have any financial impact on the financial statements of the Group for the current financial year but may impact the accounting for future transactions or arrangements.

The Group considers financial guarantee contracts entered into to be insurance arrangements and accounts for them under FRS 4. In this respect, the Group treats the guarantee contract as a contingent liability until such a time as it becomes probable that the Group will be required to make a payment under the guarantee. The adoption of FRS 4 is expected to have no material impact on the financial statements of the Group.

The possible impacts of FRS 7 (including the subsequent amendments) and FRS 139 on the financial statements upon their initial applications are not disclosed by virtue of the exemptions given in these standards.

The FRS 101 (Revised) has introduced terminology changes (including revised titles for the financial statements) and changes in the format and content of the financial statements. In addition, a statement of financial position is required at the beginning of the earliest comparative period following a change in accounting policy, the correction of an error or the reclassification of items in the financial statements. The adoption of this revised standard will only impact the form and content of the presentation of the Group’s financial statements in the next financial year.

The FRS 127 (Revised) requires accounting for changes in ownership interests by the group in a subsidiary, while maintaining control, to be recognised as an equity transaction. When the group loses control of a subsidiary, any interest retained in the former subsidiary will be measured at fair value with the gain or loss recognised in profit or loss. The revised standard also requires all losses attributable to the minority interest to be absorbed by the minority interest instead of by the parent. The Group will apply the major changes of FRS 127 (Revised) prospectively and therefore there will not have any financial impact on the financial statements of the Group for the current financial year but may impact the accounting for future transactions or arrangements.


4. BASIS Of pREpARATION (cont’d)

Amendments to FRS 1 and FRS 127 remove the definition of ‘cost method’ currently set out in FRS 127, and instead require an investor to recognise all dividend from subsidiaries, jointly controlled entities or associates as income in its separate financial statements. In addition, FRS 127 has also been amended to deal with situations where a parent reorganises its group by establishing a new entity as its new parent. Under this circumstance, the new parent shall measure the cost of its investment in the original parent at the carrying amount of its share of the equity items shown in the separate financial statements of the original parent at the reorganisation date. The amendments will be applied prospectively and therefore there will not have any financial impact on the financial statements of the Company for the current financial year but may impact the accounting for future transactions or arrangements.

IC Interpretation 10 prohibits the impairment losses recognised in an interim period on goodwill, investments in equity instruments and financial assets carried at cost to be reversed at a subsequent balance sheet date. This interpretation is expected to have no material impact on the financial statements of the Group upon its initial application.

IC Interpretation 11 provides guidance on whether share-based transactions involving treasury shares or involving group entities (for example, options over a parent’s shares) should be accounted for as equity-settled or cash settled share-based payment transactions in the separate financial statements of the parent and group companies. This interpretation is expected to have no material impact on the financial statements of the Group upon its initial application.

Annual Improvements to FRSs (2009) contain amendments to 21 accounting standards that result in accounting changes for presentation, recognition or measurement purposes and terminology or editorial amendments. These amendments are expected to have no material impact on the financial statements of the Group upon their initial application.

5. SIGNIfICANT ACCOUNTING pOlICIES

(a) Critical Accounting Estimates And Judgements

Estimates and judgements are continually evaluated by the directors and management and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The estimates and judgements that affect the application of the Group’s accounting policies and disclosures, and have a significant risk of causing a material adjustment to the carrying amounts of assets, liabilities, income and expenses are discussed below:-

(i) Depreciation of Property, Plant and Equipment The estimates for the residual values, useful lives and related depreciation charges for the property, plant

and equipment are based on commercial factor which could change significantly as a result of technical innovations and competitors’ actions in response to the market conditions.

The Group anticipates that the residual values of its property, plant and equipment will be insignificant. As a

result, residual values are not being taken into consideration for the computation of the depreciable amount. Changes in the expected level of usage and technological development could impact the economic useful

lives and the residual values of these assets, therefore future depreciation charges could be revised.

(ii) Income Taxes

There are certain transactions and computations for which the ultimate tax determination may be different from the initial estimate. The Group recognises tax liabilities based on its understanding of the prevailing tax laws and estimates of whether such taxes will be due in the ordinary course of business. Where the final outcome of these matters is different from the amounts that were initially recognised, such difference will impact the income tax and deferred tax provisions in the period in which such determination is made.

(iii) Impairment of Assets

When the recoverable amount of an asset is determined based on the estimate of the value-in-use of the cash-generating unit to which the asset is allocated, the management is required to make an estimate of the expected future cash flows from the cash-generating unit and also to apply a suitable discount rate in order to determine the present value of those cash flows.



5. SIGNIfICANT ACCOUNTING pOlICIES (cont’d)

(a) Critical Accounting Estimates And Judgements (cont’d)

(iv) Allowance for Doubtful Debts of Receivables

The Group makes allowance for doubtful debts based on an assessment of the recoverability of receivables. Allowances are applied to receivables where events or changes in circumstances indicate that the carrying amounts may not be recoverable. Management specifically analyses historical bad debt, customer concentrations, customer creditworthiness, current economic trends and changes in customer payment terms when making a judgement to evaluate the adequacy of the allowance for doubtful debts of receivables. Where the expectation is different from the original estimate, such difference will impact the carrying value of receivables.

(v) Allowance for Inventories

Reviews are made periodically by management on damaged, obsolete and slow-moving inventories. These reviews require judgement and estimates. Possible changes in these estimates could result in revisions to the valuation of inventories.

(vi) Deferred Tax Assets

Deferred tax assets are recognised for unused tax losses, unabsorbed capital allowances and other deductible temporary differences to the extent that it is probable that taxable profit will be available against which the losses, capital allowances and other deductible temporary differences can be utilised. Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based on the likely timing and level of future taxable profits together with tax planning strategies.

(b) financial Instruments

Financial instruments are recognised in the balance sheet when the Group has become a party to the contractual provisions of the instruments.

Financial instruments are classified as liabilities or equity in accordance with the substance of the contractual arrangement. Interest, dividends, gains and losses relating to a financial instrument classified as a liability, are reported as an expense or income. Distributions to holders of financial instruments classified as equity are charged directly to equity.

Financial instruments are offset when the Group has a legally enforceable right to offset and intends to settle either on a net basis or to realise the asset and settle the liability simultaneously.

Financial instruments recognised in the balance sheet are disclosed in the individual policy statement associated with each item.

(c) functional and foreign Currencies

(i) Functional and Presentation Currency

The individual financial statements of each entity in the Group are presented in the currency of the primary economic environment in which the entity operates, which is the functional currency. The consolidated financial statements are presented in Ringgit Malaysia, which is the Company’s functional and presentation currency.




(c) functional and foreign Currencies (cont’d)

(ii) Foreign Currency Transactions

In preparing the financial statements of the individual entities, transactions in currencies other than the entity’s functional currency (foreign currencies) are recorded in the functional currencies using the exchange rates prevailing at the dates of the transactions. At each balance sheet date, monetary items denominated in foreign currencies are translated at the rates prevailing at the balance sheet date. Non-monetary items carried at fair value that are denominated in foreign currencies are translated at the rates prevailing on the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not translated.

Exchange differences arising on the settlement of monetary items, and on the translation of monetary items, are included in profit or loss for the period except for exchange differences arising on monetary items that form part of the Group’s net investment in foreign operation. Exchange differences arising on monetary items that form part of the Group’s net investment in foreign operation, where that monetary item is denominated in either the functional currency of the reporting entity or the foreign operation, are initially taken directly to the foreign currency translation reserve within equity until the disposal of the foreign operations, at which time they are recognised in profit or loss. Exchange differences arising on monetary items that form part of the Group’s net investment in foreign operation, where that monetary item is denominated in a currency other than the functional currency of either the reporting entity or the foreign operation, are recognised in profit or loss for the period. Exchange differences arising on monetary items that form part of the Company’s net investment in foreign operation, regardless of the currency of the monetary item, are recognised in profit or loss in the Company’s financial statements or the individual financial statements of the foreign operation,as appropriate.

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.

The results and financial position of foreign operations that have a functional currency different from the presentation currency (RM) of the consolidated financial statements are translated into RM as follows:

- Assets and liabilities for each balance sheet presented are translated at the closing rate at the date of the balance sheet;

- Income and expenses for the income statement are translated at the average exchange rates for the year; and

- All resulting exchange differences are taken to the foreign currency translation reserve within equity.

Goodwill and fair value adjustments arising on the acquisition of foreign operations on or after 1 July 2006 are treated as assets and liabilities of the foreign operations and are recorded in the functional currency of the foreign operations and translated at the closing rate at the balance sheet date. Goodwill and fair value adjustments which arose on the acquisition of foreign subsidiaries before 1 July 2006 are deemed to be assets and liabilities of the parent company and are recorded in RM at the rates prevailing at the date of acquisition.





(d) Basis of Consolidation

The consolidated financial statements include the financial statements of the Company and its subsidiaries made up to 30 June 2010.

A subsidiary is defined as a company in which the parent company has the power, directly or indirectly, to exercise control over its financial and operating policies so as to obtain benefits from its activities.

All subsidiaries are consolidated using the purchase method of accounting. Under the purchase method of accounting, the results of the subsidiaries acquired or disposed of are included from the date of acquisition or up to the date of disposal. At the date of acquisition, the fair values of the subsidiaries’ net assets are determined and these values are reflected in the consolidated financial statements. The cost of acquisition is measured at the aggregate of the fair values, at the date of exchange, of assets given, liabilities incurred or assumed, and equity instruments issued by the Group in exchange for control of the acquiree, plus any costs directly attributable to the business combination.

Intragroup transactions, balances and unrealised gains on transactions are eliminated; unrealised losses are also eliminated unless cost cannot be recovered. Where necessary, adjustments are made to the financial statements of subsidiaries to ensure consistency of accounting policies with those of the Group.

Minority interests in the consolidated balance sheets consist of the minorities’ share of fair values of the net identifiable assets, liabilities and contingent liabilities of the acquiree as at the date of acquisition and the minorities’ share of movements in the acquiree’s equity.

Minority interests are presented in the consolidated balance sheet of the Group within equity, separately from the Company’s equity holders, and are separately disclosed in the consolidated income statement of the Group.

(e) Goodwill on Consolidation

Goodwill on consolidation represents the excess of the fair value of the purchase consideration over the Group’s share of the fair values of the identifiable assets, liabilities and contingent liabilities of the subsidiaries acquired at the date of business acquisition.

Goodwill is measured at cost less accumulated impairment losses, if any. The carrying value of goodwill is reviewed for impairment annually, and is written down for impairment where it is considered necessary. The impairment value of goodwill is recognised immediately in the consolidated financial statement. An impairment loss recognised for goodwill is not reversed in a subsequent period.

If, after reassessment, the Group’s interest in the fair values of the identifiable assets, liabilities and contingent liabilities of the subsidiaries exceeds the cost of the business combinations, the excess is recognised immediately in the consolidated income statement.

(f) Investments in Subsidiaries

Investments in subsidiaries are stated at cost in the balance sheet of the Company, and are reviewed for impairment at the end of the financial year if events or changes in circumstances indicate that their carrying values may not be recoverable.

On the disposal of the investments in subsidiaries, the difference between the net disposal proceeds and the carrying amount of the investments is taken to the income statement.



(g) property, plant and Equipment

Property, plant and equipment are stated at cost less accumulated depreciation or amortisation and impairment losses, if any.

Depreciation or amortisation is calculated under the straight-line method to write off the depreciable amount of the assets over their estimated useful lives. Depreciation of an asset does not cease when the asset becomes idle or is retired from active use unless the asset is fully depreciated. The principal annual rates used for this purpose are:-

Building 2%Computers and software 10% - 33%Furniture, fixtures, fittings, and office equipment 15% - 33%Motor vehicles 10%Renovation 10% - 33%

The depreciation method, useful life and residual values are reviewed, and adjusted if appropriate, at each balance sheet date to ensure that the amount, method and period of depreciation are consistent with previous estimates and the expected pattern of consumption of the future economic benefits embodied in the items of the property, plant and equipment.

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

(h) Impairment of Assets

The carrying values of assets, other than those to which FRS 136 - Impairment of Assets does not apply, are reviewed at each balance sheet date 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’ net selling price and their value-in-use, which is measured by reference to discounted future cash flow.

An impairment loss is charged to the income statement 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 when 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 the income statement immediately, unless the asset is carried at its revalued amount. A reversal of an impairment loss on a revalued asset is credited directly to the revaluation surplus. However, to the extent that an impairment loss on the same revalued asset was previously recognised as an expense in the income statement, a reversal of that impairment loss is recognised as income in the income statement.





(i) Development Expenditure

Research expenditure is recognised as an expense when it is incurred.

Development expenditure is recognised as an expense except that expenditure incurred on development projects are capitalised as long-term assets to the extent that such expenditure is expected to generate future economic benefits. Development expenditure is capitalised if, and only if an entity can demonstrate all of the following:-

(i) its ability to measure reliably the expenditure attributable to the asset under development;

(ii) the product or process is technically and commercially feasible;

(iii) its future economic benefits are probable;

(iv) its ability to use or sell the developed asset; and

(v) the availability of adequate technical, financial and other resources to complete the asset under development.

Capitalised development expenditure is measured at cost less accumulated amortisation and impairment losses, if any. Development expenditure initially recognised as an expense are not recognised as assets in the subsequent period.

The development expenditure is amortised on a straight-line method over the commercial lives of the underlying products not exceeding two years. In the event that the expected future economic benefits are no longer probable of being recovered, the development expenditure is written down to its recoverable amount.

(j) leases

(i) Classification

A lease is recognised as a finance lease if it transfers substantially to the Group all the risks and rewards incidental to ownership. Leases of land and buildings are classified as operating or finance leases in the same way as leases of other assets and the land and buildings elements of a lease of land and buildings are considered separately for the purposes of lease classification. All leases that do not transfer substantially all the risks and rewards are classified as operating leases.

(ii) Operating leases - the Group as lessee

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

(k) Inventories

Inventories are stated at the lower of cost and net realisable value. Cost is determined on the first in first out basis, and comprises the purchase price and incidentals incurred in bringing the inventories to their present location and condition.

Net realisable value represents the estimated selling price less the estimated costs of completion and the estimated costs necessary to make the sale.

Where necessary, allowance is made for obsolete, slow-moving and defective inventories.

(l) Receivables

Receivables are carried at anticipated realisable value. Bad debts are written off in the period in which they are identified. An estimate is made for doubtful debts based on a review of all outstanding amounts at the balance sheet date.



(m) payables

Payables are stated at cost which is the fair value of the consideration to be paid in the future for goods and services rendered.

(n) Income Taxes

Income taxes for the year comprise current and deferred tax.

Current tax is the expected amount of income taxes payable in respect of the taxable profit for the year and is measured using the tax rates that have been enacted or substantively enacted at the balance sheet date.

Deferred tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements.

Deferred tax liabilities are recognised for all taxable temporary differences other than those that arise from goodwill or excess of the acquirer’s interest in the net fair value of the acquiree’s identifiable assets, liabilities and contingent liabilities over the business combination costs or from the initial recognition of an asset or liability in a transaction which is not a business combination and at the time of the transaction, affects neither accounting profit nor taxable profit.

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 future taxable profits will be available against which the deductible temporary differences, unused tax losses and unused tax credits can be utilised.

Deferred tax assets and liabilities are 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 the tax rates that have been enacted or substantively enacted at the balance sheet date.

Deferred tax is recognised in the income statement, except when it arises from a transaction which is recognised directly in equity, in which case the deferred tax is also charged or credited directly to equity, or when it arises from a business combination that is an acquisition, in which case the deferred tax is included in the resulting goodwill or excess of the acquirer’s interest in the net fair value of the acquiree’s identifiable assets, liabilities and contingent liabilities over the business combination cost. The carrying amounts of deferred tax assets are reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient future taxable profits will be available to allow all or part of the deferred tax assets to be utilised.

(o) Equity Instruments

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax from proceeds.

Dividends on ordinary shares are recognised as liabilities when approved for appropriation.

(p) Treasury Shares

When the Company’s own shares recognised as equity are bought back, the amount of the consideration paid, including all directly attributable transaction costs, are recognised as a deduction from equity. Own shares purchased that are not subsequently cancelled are classified as treasury shares and are presented as a deduction from total equity.

No gain or loss is recognised in the income statement on the purchase, sale, issue or cancellation of the Company’s own equity instruments. When such shares are issued by resale, the difference between the sales consideration and the carrying amount is shown as a movement in shareholders’ equity.





(q) Segmental Information

Segment information is presented in respect of the Group’s business segments, which is based on the Group’s management and internal reporting structure.

Segment results, assets and liabilities include item directly attributable to a segment as well as those that can

be allocated on a reasonable basis. Unallocated items comprise mainly investments and related income, loans and borrowings and related expenses, corporate assets (primary the Company’s headquarters) and head office expenses, and tax assets and liabilities.

Segment capital expenditure is the total cost incurred during the year to acquire property, plant and equipment, and intangible assets other than goodwill.

Segment revenue, expenses and results include transfers between segments. The price charged on inter-segment transactions are based on normal commercial terms. These transfers are eliminated on consolidation.

(r) provisions

Provisions are recognised when the Group has a present obligation as a result of a past event and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate of the amount can be made. Provisions are reviewed at each balance sheet date and adjusted to reflect the current best estimate. Where 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. Where discounting is used, the increase in the provision due to the passage of time is recognised as finance cost.

(s) Cash and Cash Equivalents

Cash and cash equivalents comprise cash in hand, bank balances, demand deposits, deposits pledged with financial institutions, bank overdrafts and short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

(t) Employee Benefits

(i) Short-termBenefits

Wages, salaries, paid annual leave, bonuses, and non-monetary benefits are accrued in the period in which the associated services are rendered by employees of the Group. 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, and short-term non-accumulating compensated absences such as sick leave are recognised when the absences occur.

(ii) DefinedContributionPlans

The Group’s contributions to defined contribution plans are charged to the income statement in the period to which they relate. Once the contributions have been paid, the Group has no further liability in respect of the defined contribution plans.

(u) Related parties

A party is related to an entity if:-

(i) directly, or indirectly through one or more intermediaries, the party:- • controls, 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, jointly 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.



(u) Related parties (cont’d)

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.

(v) Revenue Recognition

(i) Sale of Goods

Revenue is recognised upon delivery of goods and customers’ acceptance and where applicable, net of sales tax, returns and trade discounts.

(ii) Services

Revenue is recognised upon rendering of services and when the outcome of the transaction can be estimated reliably. In the event the outcome of the transaction could not be estimated reliably, revenue is recognised to the extent of the expenses incurred that are recoverable. Revenue from services rendered is recognised net of service tax and trade discounts.

(iii) Dividend Income

Dividend income from investment is recognised when the right to receive dividend payment is established.

(iv) Interest Income

Interest income is recognised on an accrual basis using the effective interest method.

6. INVESTMENTS IN SUBSIDIARIES

The Company 2010 2009

RM RM

Unquoted shares at cost 38,621,883 37,973,985

Accumulated impairment losses (1,641,838) (1,641,838)

36,980,045 36,332,147



6. INVESTMENTS IN SUBSIDIARIES (cont’d)

Details of the subsidiaries are as follows:-

Name of Company Country of Incorporation

Effective Equity Interest

2010 2009

% %

Direct Subsidiaries:-

M3Asia Distribution (S) Pte. Ltd. *,++ The Republic of Singapore 60 –

M3 Asia Sdn. Bhd. ++ Malaysia 100 100

M3 Online Sdn. Bhd. # Malaysia 100 100

AKN Messaging Technologies (S) Pte. Ltd. *,+ The Republic of Singapore 100 100

Messaging Technologies (H.K.) Limited (“M3TECH HK”) *,+,++ Hong Kong, SAR 100 100

M3 Technologies (Thailand) Ltd. *,+,++ Thailand 95 95

AKN Messaging Technologies (Pvt.) Limited *,+ Pakistan 60 60

PT Surya Genta Perkasa *,+,++ Indonesia 80 80

Virtue Partners International Limited *,+++ The British Virgin Islands 100 100

Indirect Subsidiaries:-

Held under M3TECH HK

AKN Messaging Technologies (Xiamen) Ltd. *,+ The People’s Republic of China 91.84 89.67

M3 Technologies (ShenZhen) Company Limited *,+ The People’s Republic of China 100 –

Way Way Innovations Company Limited *,# Hong Kong, SAR 100 –

* Not audited by Messrs.Crowe Horwath.

+ Involved in the provision of mobile-internet messaging solutions using the Short Messaging Services (“SMS”), General Packet Radio Services (“GPRS”) and Wireless Application Protocol (“WAP”) technology.

++ Involved in retailing of GPS navigators and other IT accessories.

+++ Investment holding company.

# Dormant.



NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 June 2010 (cont’d)7.

p

RO

pE

RT

Y, p

lAN

T A

ND

EQ

UIp

ME

NT

At

1.7.

2009

A

dd

itio

nsD

isp

osa

lsW

ritt

en O

ffD

epre

ciat

ion

Cha

rge

Exc

hang

eD

iffer

ence

sA

t30

.6.2

010

RM

RM

RM

RM

RM

RM

RM

The

Gro

up

Net

Bo

ok

Valu

e

Bui

ldin

g53

9,89

4–

––

(11,

600)

–52

8,29

4

Com

pute

rs a

nd s

oftw

are

3,28

1,62

561

3,32

6(4

,391

)(9

,412

)(1

,729

,887

)(4

4,00

7)2,

107,

254

Furn

iture

, fixt

ures

, fitt

ings

and

offic

e eq

uip

men

t33

9,91

049

2,92

0(2

,751

)(2

,550

)(1

70,3

58)

(16,

304)

640,

867

Mot

or v

ehic

les

51,7

48–

––

(7,4

88)

9144

,351

Ren

ovat

ion

225,

031

169,

111

–(3

7,22

2)(7

9,19

1)(7

,105

)27

0,62

4

4,43

8,20

81,

275,

357

(7,1

42)

(49,

184)

(1,9

98,5

24)

(67,

325)

3,59

1,39

0

At

1.7.

2008

A

dd

itio

nsD

isp

osa

lsW

ritt

en O

ffD

epre

ciat

ion

Cha

rge

Exc

hang

eD

iffer

ence

sA

t30

.6.2

009

RM

RM

RM

RM

RM

RM

RM

The

Gro

up

Net

Bo

ok

Valu

e

Bui

ldin

g55

1,49

4–

––

(11,

600)

–53

9,89

4

Com

pute

rs a

nd s

oftw

are

4,69

5,57

635

5,27

6(1

,595

)–

(1,7

37,3

51)

(30,

281)

3,28

1,62

5

Furn

iture

, fixt

ures

, fitt

ings

and

o

ffice

eq

uip

men

t40

9,34

389

,619

(766

)(8

94)

(163

,006

)5,

614

339,

910

Mot

or v

ehic

les

59,2

91–

––

(7,4

56)

(87)

51,7

48

Ren

ovat

ion

260,

208

17,6

73–

–(5

9,17

6)6,

326

225,

031

5,97

5,91

246

2,56

8(2

,361

)(8

94)

(1,9

78,5

89)

(18,

428)

4,43

8,20

8



7. pROpERTY, plANT AND EQUIpMENT (cont’d)

AtCost

AccumulatedDepreciation

Net Book Value

RM RM RM

The Group

At 30.6.2010

Building 580,000 (51,706) 528,294

Computers and software 14,458,598 (12,351,344) 2,107,254

Furniture, fixtures, fittings and office equipment 1,936,443 (1,295,576) 640,867

Motor vehicles 74,896 (30,545) 44,351

Renovation 516,906 (246,282) 270,624

17,566,843 (13,975,453) 3,591,390

AtCost


Net Book Value

RM RM RM

At 30.6.2009

Building 580,000 (40,106) 539,894


Furniture, fixtures, fittings and office equipment 1,556,184 (1,216,274) 339,910

Motor vehicles 74,714 (22,966) 51,748

Renovation 491,479 (266,448) 225,031

16,871,965 (12,433,757) 4,438,208


7.

pR

Op

ER

TY,

plA

NT

AN

D E

QU

IpM

EN

T (c

ont

’d)

At

1.7.

2009

Ad

dit

ions

Dis

po

sal

Wri

tten

Off

Dep

reci

atio

nC

harg

eA

t30

.6.2

010

RM

RM

RM

RM

RM

RM

The

Co

mp

any

Net

Bo

ok

Valu

e

Bui

ldin

g53

9,89

4–

––

(11,

600)

528,

294

Com

pute

rs a

nd s

oftw

are

1,73

0,54

422

2,90

8(3

,606

)(9

,412

)(1

,111

,118

)82

9,31

6

Furn

iture

, fixt

ures

, fitt

ings

and

offic

e eq

uip

men

t86

,703

19,2

28–

(2,0

45)

(38,

288)

65,5

98

Mot

or v

ehic

les

49,4

68–

––

(7,0

23)

42,4

45

Ren

ovat

ion

146,

648

3,06

1–

(37,

222)

(37,

553)

74,9

34

2,55

3,25

724

5,19

7(3

,606

)(4

8,67

9)(1

,205

,582

)1,

540,

587

At

1.7.

2008

Ad

dit

ions

Dis

po

sals

Wri

tten

Off

Dep

reci

atio

nC

harg

eA

t30

.6.2

009

RM

RM

RM

RM

RM

RM

The

Co

mp

any

Net

Bo

ok

Valu

e

Bui

ldin

g55

1,49

4–

––

(11,

600)

539,

894

Com

pute

rs a

nd s

oftw

are

2,78

0,22

511

3,31

0(5

,349

)–

(1,1

57,6

42)

1,73

0,54

4

Furn

iture

, fixt

ures

, fitt

ings

and

offic

e eq

uip

men

t12

5,22

636

,052

(27,

266)

(458

)(4

6,85

1)86

,703

Mot

or v

ehic

les

56,4

91–

––

(7,0

23)

49,4

68

Ren

ovat

ion

184,

746

880

(847

)–

(38,

131)

146,

648

3,69

8,18

215

0,24

2(3

3,46

2)(4

58)

(1,2

61,2

47)

2,55

3,25

7




7. pROpERTY, plANT AND EQUIpMENT (cont’d)

AtCost


Net Book Value

RM RM RM

The Company

At 30.6.2010

Building 580,000 (51,706) 528,294

Computers and software 10,870,406 (10,041,090) 829,316

Furniture, fixtures, fittings and office equipment 429,990 (364,392) 65,598

Motor vehicles 70,229 (27,784) 42,445

Renovation 251,083 (176,149) 74,934

12,201,708 (10,661,121) 1,540,587

AtCost


Net Book Value

RM RM RM

At 30.6.2009

Building 580,000 (40,106) 539,894


Furniture, fixtures, fittings and office equipment 423,573 (336,870) 86,703

Motor vehicles 70,229 (20,761) 49,468

Renovation 380,977 (234,329) 146,648

12,249,470 (9,696,213) 2,553,257



8. DEVElOpMENT ExpENDITURE

The Group The Company 2010 2009 2010 2009

RM RM RM RM

Product development expenditure, at cost

At 1 July 2009/2008 6,441,962 5,377,338 5,928,306 5,037,143

Addition during the financial year

- employee benefits expense (Note 28) 1,068,441 1,035,848 1,068,441 891,163

Written off (493,177) – – –

Exchange differences (20,478) 28,776 – –

At 30 June 6,996,748 6,441,962 6,996,747 5,928,306

Accumulated amortisation

At 1 July 2009/2008 (5,477,451) (4,476,593) (5,100,165) (4,279,044)

Amortisation for the financial year (995,692) (984,095) (903,020) (821,121)

Written off 454,916 – – –

Exchange differences 15,041 (16,763) – –

At 30 June (6,003,186) (5,477,451) (6,003,185) (5,100,165)

993,562 964,511 993,562 828,141

9. GOODWIll ON CONSOlIDATION

The Group

2010 2009 RM RM

Cost 14,808,804 14,546,709

Exchange differences (132,924) 262,095

14,675,880 14,808,804

Accumulated impairment losses (1,641,838) (1,641,838)

13,034,042 13,166,966

Goodwill has been allocated to the Group’s cash generating unit (“CGU”) identified according to the respective countries as follows:-

The Group

2010 2009

RM RM

Indonesia 8,431,314 8,431,314

Thailand 4,602,728 4,735,652

13,034,042 13,166,966



9. GOODWIll ON CONSOlIDATION (cont’d)

The recoverable amount of a cash-generating unit is determined based on value-in-use calculations using cash flow projections based on financial budgets approved by management covering a period of five year. Key assumptions and management’s approach to determine the values assigned to each key assumption are as follows:

(i) Budgeted gross margin

The basis used to determine the value assigned to the budgeted gross margins is the average gross margin achieved in the year immediately before the budgeted year adjusted for expected changes in sales mix in relevant countries.

(ii) Sales growth and selling price

The sales growth and the selling price used to calculate the cash inflows from operations were determined after taking into consideration price trends of the industries which the CGUs are exposed.

(iii) Exchange rate

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

(iv) Discount rate

The discount rates used, which range from 6% to 11% per annum (2009 - 6% to 15% per annum) are pre-tax and reflect the specific risks relating to the relevant countries.

Sensitivity to changes in assumptions

With regard to the assessment of the value-in-use of all CGUs, management believes that no reasonable change in any of the above key assumptions would cause the carrying value of the units to materially exceed their recoverable amounts.

10. DEfERRED TAx ASSET

The Group

2010 2009

RM RM

At 1 July 2009/2008 114,252 120,275

Recognised in the income statement (Note 29) – (7,212)

Exchange differences (5,015) 1,189

At 30 June 109,237 114,252

The deferred tax asset of the Group consists of the tax effect of unutilised tax losses of a subsidiary.

11. INVENTORIES

The Group

2010 2009

RM RM

At cost:-

Inventories held for resale 3,636,816 1,326,188

None of the inventories is carried at net realisable value.



12. TRADE RECEIVABlES


2010 2009 2010 2009

RM RM RM RM

Trade receivables 11,789,629 11,013,676 4,462,622 5,067,184

Allowance for doubtful debts:-

At 1 July 2009/2008 (1,104,902) (5,967,754) (1,032,954) (5,956,539)

Allowance for the financial year (14,553) (60,733) – –

Write-off during the financial year 363,236 4,923,585 363,236 4,923,585

Write-back during the financial year 54,494 – – –

Exchange differences 3,679 – –

At 30 June (698,046) (1,104,902) (669,718) (1,032,954)

11,091,583 9,908,774 3,792,904 4,034,230

The Group’s normal trade credit terms range from 30 to 120 days (2009 - 30 to 120 days). Other credit terms are assessed and approved on a case-by-case basis.

The foreign currency exposure profile of the trade receivables is as follows:-

The Group

2010 2009

RM RM

RM equivalent of trade receivables denominated in:-

Singapore Dollar 733,295 21,565

Thailand Baht 868,183 1,601,538

Hong Kong Dollar 96,937 345,974

Chinese Renminbi 890,757 900,619

Pakistani Rupee 1,682,412 1,301,139

Indonesian Rupiah 1,454,877 1,608,391

United States Dollar 74,927 60,488

5,801,388 5,839,714



13. OTHER RECEIVABlES, DEpOSITS AND pREpAYMENTS

The foreign currency exposure profile of the other receivables, deposits and prepayments is as follows:-

The Group

2010 2009

RM RM

RM equivalent of other receivables, deposits and prepayments denominated in:-


Thailand Baht 97,714 64,312



Pakistani Rupee 133,778 38,105

Indonesian Rupiah 347,943 137,767


1,047,835 745,339

14. AMOUNTS OWING BY/(TO) SUBSIDIARIES

The Company

2010 2009

RM RM

Amount owing by subsidiaries:

Non-trade balances 8,219,225 6,691,812

Allowance for doubtful debts (777,733) (777,733)

7,441,492 5,914,079

Amount owing to a subsidiary:

Non-trade balance – 3,223

The amount owing is unsecured, interest-free and is repayable on demand.

The amount owing is to be settled in cash.

15. DEpOSITS WITH lICENSED BANKS

The effective interest rates and the maturity periods of the deposits at the balance sheet date are as follows:-


2010 2009 2010 2009

% % % %

Effective interest rates 1.35 - 7.00 1.35 - 8.00 1.50 - 2.52 2.90 - 3.10

days days days days

Maturity periods 1 - 180 1 - 127 30 30


15. DEpOSITS WITH lICENSED BANKS (cont’d)

The foreign currency exposure profile of the deposits with licensed banks is as follows:-

The Group

2010 2009

RM RM

RM equivalent of deposits with licensed banks denominated in:-

Chinese Renminbi 1,678,950 1,287,750

Indonesian Rupiah 550,393 1,173,691

2,229,343 2,461,441

16. CASH AND BANK BAlANCES

The foreign currency exposure profile of the cash and bank balances is as follows:-


RM RM RM RM

RM equivalent of cash and bank balances denominated in:-

Singapore Dollar 621,482 496,139 – –

Thailand Baht 5,654,722 7,885,969 – –

Hong Kong Dollar 187,934 663,513 – –

Chinese Renminbi 1,198,394 1,042,159 – –

Pakistani Rupee 2,636,246 2,311,511 899,936 –

Indonesian Rupiah 318,407 798,872 – –

United States Dollar 116,828 982,116 – –

10,734,013 14,180,279 899,936 –

17. SHARE CApITAl

The Company

2010 2009 2010 2009

Number Of Shares RM RM

Ordinary Shares Of RM0.10 Each:-

Authorised 250,000,000 250,000,000 25,000,000 25,000,000

Issued And Fully Paid-Up 163,518,740 163,518,740 16,351,874 16,351,874

Out of the total 163,518,740 (2009 - 163,518,740) issued and fully paid-up ordinary shares as at 30 June 2010, 1,574,500 (2009 - 372,000) are held as treasury shares by the Company. As at 30 June 2010, the number of outstanding ordinary shares in issue and fully paid-up net of treasury shares amounted to 161,944,240 (2009 - 163,146,740) ordinary shares of RM0.10 each.




18. TREASURY SHARES

The shareholders of the Company, by an ordinary resolution passed in the Annual General Meeting held on 25 November 2009 approved the renewal of the Company’s plan to repurchase its own ordinary shares of up to 10% of the total issued and paid-up share capital of the Company.

During the current financial year, the Company repurchased 1,202,500 of its issued ordinary shares from the open market at an average price of RM0.20 per share. The total consideration paid for the repurchase was RM243,483. The repurchase transactions were financed by internally generated funds. The shares repurchased are being held as treasury shares in accordance with Section 67A of the Companies Act, 1965.

As at the balance sheet date, the Company held 1,574,500 (2009 - 372,000) as treasury shares out of its total 163,518,740 (2009 - 163,518,740) issued and fully paid-up ordinary shares. The treasury shares are held at a carrying amount of RM308,687 (2009 - RM65,204).

19. SHARE pREMIUM

The share premium is not distributable by way of cash dividends and may be utilised in the manner as set out in Section 60(3) of the Companies Act 1965.

20. RESERVES


2010 2009 2010 2009

RM RM RM RM

Foreign currency translation reserve (749,686) (96,688) – –

Special reserve – – 16,074,240 16,074,240

(749,686) (96,688) 16,074,240 16,074,240

(i) Foreign Currency Translation Reserve

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

(ii) Special Reserve

In the financial year ended 30 June 2005, the Company 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, M3TECH HK against the Special Reserve Account.

21. RETAINED pROfITS

Subject to agreement with the tax authorities, at the balance sheet date, the Company has sufficient tax credits under Section 108 of the Income Tax Act, 1967 and tax-exempt income to frank the payment of dividends out of its entire retained profits without incurring additional tax liabilities.

At the balance sheet date, the Company has not elected for the single tier tax system. When the tax credit balance

is fully utilised, or by 31 December 2013 at the latest, the Company will automatically move to the single tier tax system. Under the single tier tax system, tax on the Company’s profits is a final tax, and dividends distributed to the shareholders will be exempted from tax.



22. DEfERRED TAx lIABIlITIES


2010 2009 2010 2009

RM RM RM RM

At 1 July 2009/2008 169,833 174,262 – –

Recognised in the income statement (Note 29) 28,251 – 91,000 –

Exchange differences 6,716 (4,429) – –

At 30 June 204,800 169,833 91,000 –

The deferred tax consists of the tax effects of temporary differences arising from the following items:-


2010 2009 2010 2009

RM RM RM RM

Deferred tax liabilities:-

Accelerated capital allowances 288,000 169,833 124,000 –

Development expenditure 248,000 – 248,000 –

536,000 169,833 372,000 –

Deferred tax assets:-

Unutilised tax losses (198,000) – (198,000) –

Others (133,200) – (83,000) –

(331,200) – (281,000) –

204,800 169,833 91,000 –

No deferred tax assets are recognised for the following items:-


2010 2009 2010 2009

RM RM RM RM

Unabsorbed capital allowances 105,000 – – –

Unutilised tax losses 339,000 1,477,000 – 792,000

Others:

- deductible temporary differences 61,000 – – –

- taxable temporary differences (83,000) (545,000) – (545,000)

422,000 932,000 – 247,000



23. TRADE pAYABlES

The normal trade credit terms granted to the Group range from 30 to 90 days (2009 - 30 to 90 days).

The foreign currency exposure profile of the trade payables is as follows:-

The Group

2010 2009

RM RM

RM equivalent of trade payables denominated in:-

Singapore Dollar 62,890 97






1,218,849 724,895

24. OTHER pAYABlES AND ACCRUAlS


2010 2009 2010 2009

RM RM RM RM

Other payables 384,400 359,196 114,690 29,346

Accruals 1,840,949 2,048,014 885,106 937,792

2,225,349 2,407,210 999,796 967,138

The foreign currency exposure profile of the other payables and accruals is as follows:-

The Group

2010 2009

RM RM

RM equivalent of other payables and accruals denominated in:-







1,013,001 1,422,432

25. AMOUNT OWING TO A DIRECTOR

The amount owing in the previous financial year was unsecured, interest-free and repayable on demand. The amount owing was settled in cash.


26. REVENUE

Revenue of the Group and of the Company represents the invoiced value of goods sold and services rendered, net of sales tax or service tax, trade discounts and returns.

27. pROfIT BEfORE TAxATION

Profit before taxation is arrived at after charging/(crediting):-


2010 2009 2010 2009

RM RM RM RM

Allowance for doubtful debts 14,553 60,733 – –

Amortisation of development expenditure 995,692 984,095 903,020 821,121

Audit fee

- for the financial year 162,517 154,090 92,950 100,000

- underprovision in the previous financial year 1,000 – 1,000 –

Bad debts written off 135,928 – – –

Depreciation of property, plant and equipment 1,998,524 1,978,589 1,205,582 1,261,247

Directors’ fees (Note 34) 78,000 112,000 78,000 112,000

Directors’ non-fee emoluments (Note 34) 745,877 656,925 688,207 611,192

Interest expense 5,078 – – –

Rental of premises 1,112,533 729,508 505,914 381,269

Rental of equipment 138,482 – 83,847 –

Employee benefits expense (Note 28) 8,521,922 6,998,215 3,373,461 3,595,849

Plant and equipment written off 49,184 894 48,679 458

Development expenditure written off 38,261 – – –

Dividend income – – (2,583,673) (1,648,312)

Loss/(Gain) on disposal of plant and equipment 230 (433) 250 (835)

Interest income (178,164) (317,786) (6,150) (104,651)

Net (gain)/loss on foreign exchange:

- realised (130,253) (28,711) (13,804) (664)

- unrealised 568,841 (126,686) 263,957 –

Waiver of debts (4,807) – – –

Writeback of allowance for doubtful debts (54,494) – – –



28. EMplOYEE BENEfIT ExpENSE


2010 2009 2010 2009

RM RM RM RM

Salaries and other staff related expenses 8,963,345 7,670,237 4,009,737 4,130,249

Pension costs - defined contribution plan 625,627 319,881 426,629 314,415

Short-term accumulating compensated absences 1,391 43,945 5,536 42,348

9,590,363 8,034,063 4,441,902 4,487,012

Less: Capitalised in development expenditure (Note 8) (1,068,441) (1,035,848) (1,068,441) (891,163)

8,521,922 6,998,215 3,373,461 3,595,849

29. INCOME TAx ExpENSE


2010 2009 2010 2009

RM RM RM RM

Current tax expense:

- for the financial year

Malaysian income tax 35,000 26,163 35,000 26,163

Foreign tax 1,646,682 2,367,326 272,749 164,831

1,681,682 2,393,489 307,749 190,994

- (over)/underprovision in the previous financial year

Malaysian income tax (9,610) (4,006) (9,610) (4,006)

Foreign tax (364) 92,101 – –

(9,974) 88,095 (9,610) (4,006)

Deferred tax expense: (Notes 10 and 22)

- relating to origination and reversal of temporary differences 74,222 – 91,000 –

- (over)/underprovision in the previous financial year (45,971) 7,212 – –

28,251 7,212 91,000 –

1,699,959 2,488,796 389,139 186,988




29. INCOME TAx ExpENSE (cont’d)

During the current financial year, the Malaysian statutory tax rate remained at 25%.

A reconciliation of income tax expense applicable to the profit before taxation at the statutory tax rate to income tax expense at the effective tax rate of the Group and of the Company is as follows:-


2010 2009 2010 2009

RM RM RM RM

Profit before taxation 4,063,407 8,676,092 2,645,869 1,855,865

Tax at the Malaysian statutory tax rate of 25% (2009 - 25%) 1,015,852 2,169,023 661,467 463,967

Tax effects of:-

Differential in domestic tax rates (68,619) – – –

Effect of different tax rates in other countries 309,930 428,035 – –

Non-taxable gains (323,954) (245,233) (668,314) (412,078)

Non-deductible expenses 563,480 257,741 169,759 86,280

Effect of change in tax rate on the deferred tax asset of a foreign subsidiary – (154,450) – –

Deferred tax assets not recognised during the financial year 107,928 30,856 – –

Utilisation of deferred tax assets not recognised in previous financial years (197,929) (369,498) (36,912) (112,006)

(Over)/Underprovision in the previous financial year:

- current tax (9,974) 88,095 (9,610) (4,006)

- deferred tax (45,971) 7,212 – –

Withholding tax on dividend income received 349,216 277,015 272,749 164,831

Tax for the financial year 1,699,959 2,488,796 389,139 186,988

The Company has been accorded the Multimedia Super Corridor (MSC) Status and was granted Pioneer Status effective from 24 October 2000, which exempts 100% of the statutory business income from taxation for a period of 5 years, with an extended pioneer period for a further 5 years, granted from 24 October 2005 to 23 October 2010.

The Company’s tax charge for the current year is in respect of interest income and withholding tax on dividend income received from foreign subsidiaries.

30. EARNINGS pER SHARE

The basic earnings per share is arrived at by dividing the Group’s profit attributable to shareholders of RM1,724,041 (2009 - RM5,343,189) by the weighted average number of ordinary shares in issue during the financial year excluding treasury shares held by the Company of 162,174,424 (2009 - 163,496,154).

The fully diluted earnings per share for the Group is not presented as there were no dilutive potential ordinary shares during the financial year.



31. DIVIDENDS

The Company

2010 2009

RM RM

Dividends paid:-

Final tax-exempt dividend of 10%, on 163,518,740 ordinary shares in respect of the previous financial year – 1,635,187 (1 sen per ordinary share)

Interim tax-exempt dividend of 10%, on 163,518,740 ordinary shares in respect of the current financial year – 1,635,187 (1 sen per ordinary share)

Final tax-exempt dividend of 10%, on 161,982,240 ordinary shares in respect of the previous financial year 1,619,823 – (1 sen per ordinary share)

Interim tax-exempt dividend of 5%, on 161,964,240 ordinary shares in respect of the current financial year 809,821 – (0.5 sen per ordinary share)

2,429,644 3,270,374

32. ACQUISITION Of SUBSIDIARIES

(a) A wholly-owned subsidiary of the Company, M3TECH HK had:-

(i) on 21 July 2009, incorporated a wholly-owned subsidiary in the People’s Republic of China known as M3 Technologies (ShenZhen) Pte. Ltd. (“M3TECH ShenZhen”). The registered capital of M3TECH ShenZhen is HKD600,000 and M3TECH HK has fully subscribed for it as at the balance sheet date.

(ii) on 15 October 2009, incorporated a wholly-owned subsidiary in Hong Kong known as Way Way Innovations Company Limited (“Way Way”). The issued and paid share capital of Way Way at the date of incorporation was HKD 1.

(b) on 14 December 2009, the Company acquired 60,000 ordinary shares of SGD1 each in M3Asia Distribution (S) Pte Ltd (“M3Asia Dist”) representing 60% of the issued and paid-up share capital of M3Asia Dist for a cash consideration of SGD60,000. M3Asia Dist was dormant with an issued and paid-up share capital of SGD100,000 at the date of acquisition. Thus, the consideration paid represents the fair value of the net assets at the date of acquisition.

The effects of the acquisition of the subsidiary on the financial results of the Group in the current financial year are as follows:-

The Group

RM

Revenue 1,320,618

Loss after taxation for the year (141,969)


33. CASH AND CASH EQUIVAlENTS

For the purpose of the cash flow statements, cash and cash equivalents comprise the following:-


2010 2009 2010 2009

RM RM RM RM

Deposits with licensed banks 2,500,548 2,971,406 271,205 509,965

Cash and bank balances 15,198,876 19,143,481 4,466,371 4,860,111

17,699,424 22,114,887 4,737,576 5,370,076

34. DIRECTORS’ REMUNERATION

Directors’ fees

The aggregate amount of directors’ fees received and receivable by Directors of the Group and of the Company during the financial year are as follows:-


2010 2009 2010 2009

RM RM RM RM

Non-executive directors 78,000 112,000 78,000 112,000

Details of the fees for the directors of the Group and of the Company received/receivable for the financial year in the band of RM50,000 are as follows:-


2010 2009 2010 2009

No. No. No. No.

Non-executive directors:

- Below RM50,000 4 5 4 5

Directors’ Non-fee Emoluments

The aggregate amount of emoluments received and receivable by the Directors of the Group and of the Company during the financial year are as follows:-


2010 2009 2010 2009

RM RM RM RM

Executive directors:

- salaries and other emoluments 745,877 656,925 688,207 611,192



34. DIRECTORS’ REMUNERATION (cont’d) Details of the emoluments for the Directors of the Group and of the Company received/receivable for the financial

year in the following bands are as follows:-


2010 2009 2010 2009

No. No. No. No.

Executive directors

Below RM50,000 – 1 – –

RM50,001 - RM100,000 1 – – –

RM250,001 - RM300,000 1 1 1 1

RM300,001 - RM350,000 – 1 – 1

RM350,001 - RM400,000 1 – 1 –

35. RElATED pARTY DISClOSURES

(a) Identities of related parties

The Group and/or the Company have related party relationships with:-

(i) its subsidiaries as disclosed in Note 6 to the financial statements;

(ii) key management personnel; and

(iii) a company in which a director of the Company has interest.

(b) In addition to the information detailed elsewhere in the financial statements, the Group and the Company carried out the following transactions with the related parties during the financial year:

(i) Subsidiaries

The Company 2010 2009

RM RM

Dividend income from subsidiaries 2,583,673 1,648,312

Purchases from a subsidiary 2,698 –

Transfer of plant and equipment to a subsidiary – 31,867

(ii) Key management personnel


2010 2009 2010 2009

RM RM RM RM

Short-term employee benefits:

- Directors’ remuneration 823,877 768,925 766,207 723,192

- Remuneration to other key management personnel 1,370,757 973,720 315,749 280,844

2,194,634 1,742,645 1,081,956 1,004,036



35. RElATED pARTY DISClOSURES (cont’d)

(b) In addition to the information detailed elsewhere in the financial statements, the Group and the Company carried out the following transactions with the related parties during the financial year: (cont’d)

(iii) Other related parties

The Group 2010 2009

RM RM

Rental expenses charged by Adventurous Limited, a company in which a director of the Company, i.e. Chew Shin Yong, Mark has interest 104,515 129,469

36. COMMITMENTS

(a) Capital Commitments

The Group 2010 2009

RM RM

Approved and contracted for:

Plant and equipment – 55,000

(b) Operating lease arrangements

The Group also leases various properties under cancellable operating lease agreements. The Group is required to give appropriate notice for the termination of those agreements.

37. fOREIGN ExCHANGE RATES

The principal closing foreign exchange rates used (expressed on the basis of one unit of foreign currency to Ringgit Malaysia equivalent) for the translation of foreign currency balances at the balance sheet date are as follows:-

2010 2009

RM RM

Singapore Dollar 2.3242 2.4309

Thailand Baht 0.1004 0.1033

Hong Kong Dollar 0.4184 0.4540

Chinese Renminbi 0.4797 0.5151

Pakistani Rupee 0.0383 0.0436

Indonesian Rupiah 100 0.0359 0.0345

United States Dollar 3.2575 3.5185



38. SEGMENTAl INfORMATION

For management purposes, the Group is organised into business units based on the geographical areas in which the business unit operates, and has three main reportable operating segments as follows:-

(i) Malaysia;(ii) The People’s Republic of China and Hong Kong; and(iii) Other Asian Countries.

Management monitors the operating results of its business units separately for the purpose of making decisions about resource allocation and performance assessment.

Transfer prices between operating segments are based on normal commercial terms.

Malaysia

The people’sRepublic of

China and Hong Kong

Other AsianCountries Eliminations Group

RM RM RM RM RM

2010

Revenue

External sales 21,080,758 3,499,990 15,266,152 – 39,846,900

Inter-segment revenue 271,843 6,668,647 189,449 (7,129,939) –

21,352,601 10,168,637 15,455,601 (7,129,939) 39,846,900

Results

Segment results (317,246) (145,265) 4,352,832 – 3,890,321

Interest expense – – (5,078) – (5,078)

Interest income 6,150 35,152 136,862 – 178,164

(311,096) (110,113) 4,484,616 – 4,063,407

Income tax expense (389,139) (8,716) (1,302,104) – (1,699,959)

Net (loss)/profit for the year (700,235) (118,829) 3,182,512 – 2,363,448

2010

Assets and liabilities

Segment assets 24,388,155 8,488,483 19,864,337 (152,157) 52,588,818

Tax assets 131,166

Consolidated total assets 52,719,984

Segment liabilities 8,716,671 5,829,835 4,530,243 (13,340,782) 5,735,967

Tax liabilities 649,319

Consolidated total liabilities 6,385,286




38. SEGMENTAl INfORMATION (cont’d)

Malaysia


China and Hong Kong


RM RM RM RM RM

Other information

Capital expenditure 600,196 115,061 560,100 – 1,275,357

Development expenditure 1,068,441 – – – 1,068,441

Amortisation of development expenditure 903,020 92,672 – – 995,692

Depreciation 1,243,089 167,685 587,750 – 1,998,524

Unrealised loss/(gain) on foreign exchange 263,956 309,521 (4,636) – 568,841

Non-cash expenses other than depreciation, amortisation and unrealised exchange differences 48,929 (1,676) 131,602 – 178,855

2009 (Restated)

Revenue

External sales 14,123,750 5,272,345 15,587,735 – 34,983,830

Inter-segment revenue – 834,908 – (834,908) –

14,123,750 6,107,253 15,587,735 (834,908) 34,983,830

Results

Segment results 9,367 921,504 7,427,435 – 8,358,306

Interest expense – – – – –

Interest Income 104,651 33,494 179,641 317,786

114,018 954,998 7,607,076 – 8,676,082

Income tax expense (186,988) – (2,301,808) – (2,488,796)

Net (loss)/profit for the year (72,970) 954,998 5,305,268 – 6,187,296

2009 (Restated)

Assets and liabilities

Segment assets 20,217,599 6,269,831 33,904,220 (7,016,720) 53,374,930

Tax assets 122,186

Consolidated total assets 53,497,116

Segment liabilities 3,678,388 3,734,197 4,770,934 (7,480,826) 4,702,693

Tax liabilities 1,102,653

Consolidated total liabilities 5,805,346




Malaysia


China and Hong Kong


RM RM RM RM RM

Other information

Capital expenditure 156,780 57,025 248,763 – 462,568

Development expenditure 891,163 144,685 – – 1,035,848

Amortisation of development expenditure 821,121 162,974 – – 984,095

Depreciation 1,262,125 164,456 552,008 – 1,978,589

Unrealised gain on foreign exchange (8,348) (108,726) (9,612) – (126,686)

Non-cash expenses other than depreciation, amortisation and unrealised exchange differences (377) 61,571 – – 61,194

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

The Group

2010 2009

RM RM

Malaysia 2,887,840 3,418,925

The People’s Republic of China and Hong Kong 339,612 558,052

Other Asian Countries 14,391,542 14,592,708

17,618,994 18,569,685

The concentration of non-current assets is at the following countries:-

The Group

2010 2009

RM RM

Malaysia 2,887,840 3,418,925

Thailand 4,800,435 4,968,561

Indonesia 9,177,324 9,130,068

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

The Group

2010 2009

RM RM

Malaysia 21,080,758 14,123,750

Pakistan 4,415,699 4,011,965

Indonesia 3,267,127 3,526,944

Thailand 6,192,653 7,914,145



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

The Group

2010 2009

RM RM

Provision of mobile-internet messaging solutions 30,479,809 34,166,437

Sales of GPS and other IT accessories 9,367,091 817,393

39,846,900 34,983,830

The revenue derived from various telecommunication companies in different countries constituted 41% (2009 - 60%) of the Group’s total revenue.

39. fAIR VAlUES Of fINANCIAl INSTRUMENTS

Fair value is defined as the amount at which the financial instrument could be exchanged in a current transaction between knowledgeable willing parties in an arm’s length transaction, other than in a forced sale or liquidation.

The carrying amounts of the financial assets and liabilities approximated their fair values at the balance sheet date.

40. COMpARATIVE fIGURES

The following comparative figures have been reclassified to conform with the presentation of the current financial year:-


As Restated

AspreviouslyReported

As Restated

AspreviouslyReported

RM RM RM RM

Balance Sheets (extract):-Development expenditure 964,511 – 828,141 –Goodwill on consolidation 13,166,966 – – –Intangible assets – 14,131,477 – 828,141Trade and other receivables – 11,364,170 – 10,353,675Trade receivables 9,908,774 – 4,034,230 –Other receivables, deposits and prepayments 1,455,396 – 405,366 –Amount owing by subsidiaries – – 5,914,079 –Deposits with licensed banks 2,971,406 – 509,965 –Cash and bank balances 19,143,481 22,114,887 4,860,111 5,370,076Trade and other payables – 4,702,693 – 2,464,059Trade payables 2,279,483 – 1,477,698 –Other payables and accruals 2,407,210 – 967,138 –Amount owing to a subsidiary – – 3,223 –

Amount owing to a director 16,000 – 16,000 –

Income Statements (extract):-Cost of sales (11,123,596) (11,172,308) – –Other income 519,564 375,604 1,755,667 1,752,963Other gains – 141,863 – 205Selling and distribution expenses (4,265,471) (4,216,759) – –Administrative expenses (9,398,019) (11,436,138) (5,935,758) (7,194,964)

Other expenses (2,040,216) – (1,261,705) –

Cash Flow Statements (extract):-Net cash from operating activities 8,690,970 8,974,756 2,586,823 1,431,367Net cash (for)/from investing activities (1,177,836) (1,495,622) (483,479) 641,200Net cash for financing activities (3,678,473) (3,644,473) (3,366,355) (3,335,578)



LIST OF PROPERTY

location Descriptionland area/

(Built-up area) TenureApproximate

Age of Building Net Book

Value RM

1007, Block A, Pusat Dagangan Phileo 2 Jalan16/11, 46350 Petaling Jaya

Office Lot 2,506 sq.ft. Freehold 10 years 528,293


ANALYSIS OF SHAREHOLDINGS as at 29 October 2010

Authorised Capital : RM25,000,000.00Issued and Fully Paid-Up Capital : RM16,351,874.00 comprising 163,518,740 Ordinary Shares of RM0.10 each Class of Equity Securities : Ordinary Shares of RM0.10 each (“Shares”)Voting Rights : One vote per Share

Distribution scheDule of shareholDers

no of holders size of holdingsno. of

shares** % #

28 Less than 100 shares 1,380 *

464 100 - 1,000 shares 393,064 0.24

1,646 1,001 - 10,000 shares 8,935,160 5.52

1,114 10,001 - 100,000 shares 37,848,200 23.38

198 100,001 - less than 5% of issued shares 88,235,436 54.48

2 5% and above of issued shares 26,531,000 16.38

3,452 total 161,944,240 100.00

* Negligible** Excluding a total of 1,574,500 Shares bought back and retained as treasury shares.

substantial shareholDers’ shareholDinGs (As per the Register of Substantial Shareholders)

Direct interest indirect interestname of substantial shareholders no. of shares % # no. of shares % #

Lim Seng Boon 12,681,000 7.83 24,186,840(1) 14.94

Goh Lee Lang 24,186,840 14.94 12,681,000(2) 7.83

Notes:(1) Deemed interested by virtue of his spouse, Madam Goh Lee Lang’s shareholdings in M3 Technologies (Asia) Berhad(2) Deemed interested by virtue of her spouse, Mr. Lim Seng Boon’s shareholdings in M3 Technologies (Asia) Berhad

Directors’ shareholDinGs (As per the Register of Directors’ Shareholdings)

Direct interest indirect interestname of Directors no. of shares % # no. of shares % #

Chew Shin Yong, Mark 2,130,600 1.32 – –

Lim Seng Boon 12,681,000 7.83 24,186,840(1) 14.94

Lester Ratnakumar Neil Francis 808,016 0.50 – –

Mohamad Najeb bin Ali – – – –

Lim Kooi Siang – – – –

Lim Keong Yew – – 2,134,600(2) 1.32

Notes:(1) Deemed interested by virtue of his spouse, Madam Goh Lee Lang’s shareholdings in M3 Technologies (Asia) Berhad(2) Deemed interested by virtue of his interest in Exodius Holdings Sdn. Bhd.


ANALYSIS OF SHAREHOLDINGS as at 29 October 2010 (cont’d)

30 larGest securities account holDers (without aggregating the securities from different securities accounts belonging to the same person)

no name no. of shares

held % #

1 Goh Lee Lang 15,100,000 9.32

2 Lim Seng Boon 11,431,000 7.06

3 Lembaga Tabung Haji 8,063,300 4.98

4 Goh Lee Lang 6,872,600 4.24

5 Citigroup Nominees (Tempatan) Sdn BhdExempt An For Ocbc Securities Private Limited

3,401,000 2.10

6 Choong Yean Yaw 3,386,200 2.09

7 Malahon Credit Company Limited 2,836,800 1.75

8 Goh Lee Lang 2,214,240 1.37

9 Exodius Holdings Sdn Bhd 2,134,600 1.32

10 Chew Shin Yong, Mark 2,130,600 1.32

11 Koek Seam Cheng 2,130,300 1.32

12 Cha Lee Pin 2,110,200 1.30

13 Ng Zhi Cong 1,850,000 1.14

14 Alliancegroup Nominees (Tempatan) Sdn BhdPledged Securities Account For Koek Tiang Kung

1,630,000 1.01

15 Ong Peh Hoon 1,350,000 0.83

16 Lim Seng Boon 1,250,000 0.77

17 Malahon Securities Limited 1,163,200 0.72

18 Public Nominees (Tempatan) Sdn BhdPledged Securities Account For Lee Hean Guan

1,000,000 0.62

19 HSBC Nominees (Tempatan) Sdn BhdHSBC (Malaysia) Trustee Berhad For Amanah Saham Sarawak

1,000,000 0.62

20 Tee Yeow 1,000,000 0.62

21 Tor Seo Eng @ Toh Siew Yang 920,000 0.57

22 Lester Ratnakumar Neil Francis 808,016 0.50

23 Teoh Boon Beng @ Teoh Eng Kuan 758,200 0.47

24 Ang Leong Chai 757,300 0.47

25 Ong Liang Ching 647,100 0.40

26 Lee Che Weng 642,700 0.40

27 HLG Nominee (Tempatan) Sdn BhdPledged Securities Account For Koo Jon Mean @ Koh Jon Mean

620,000 0.38

28 Junoh Bin Seman 619,100 0.38

29 Ambank (M) BerhadPledged Securities Account For Ali Bin Abdul Kadir

589,000 0.36

30 Tie Teck Chung 571,000 0.35

# All percentage shareholding computations are based on the issued and paid-up capital of the Company of RM16,351,874.00 comprising of 163,518,740 Shares after deducting 1,574,500 treasury shares retained by the Company as per Record of Depositors.


NOTICE OF ANNUAL GENERAL MEETING

NOTICE IS HEREBY GIVEN that the Eleventh Annual General Meeting of M3 TECHNOLOGIES (ASIA) BERHAD (“M3Tech” or “the Company”) will be held at Eugenia Room, Ground Floor, Sime Darby Convention Centre, 1A, Jalan Bukit Kiara 1, 60000 Kuala Lumpur on Thursday, 16 December 2010 at 10.30 a.m. to transact the following business:-

AGENDA

1. To receive the Audited Financial Statements for the financial year ended 30 June 2010 together with the reports of the directors and auditors thereon.

please refer to Note a

2. To approve the payment of directors’ fees for the financial year ended 30 June 2010. Resolution 1

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

i. En. Mohamad Najeb bin Ali Resolution 2

ii. Ms. Lim Kooi Siang Resolution 3

4. To appoint Auditors and to authorise the Directors to fix their remuneration. Resolution 4

Notice of Nomination pursuant to Section 172 (11) of the Companies Act, 1965, a copy of which is annexed on page 86 has been received by the Company for the nomination of Messrs. Ernst & Young for appointment as Auditors and of the intention to propose the following ordinary resolution:

“THAT Messrs. Ernst & Young be and are hereby appointed as Auditors of the Company in place of the retiring Auditors, Messrs Crowe Horwath to hold office until the conclusion of the next annual general meeting at a remuneration to be agreed between the Directors and the Auditors.”

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

5. ORDINARY RESOlUTION 1

GENERAl AUTHORITY fOR THE DIRECTORS TO ISSUE SHARES pURSUANT TO SECTION 132D Of THE COMpANIES ACT, 1965

Resolution 5

“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.”

6. ORDINARY RESOlUTION 2

pROpOSED RENEWAl Of THE AUTHORITY fOR THE pURCHASE Of Up TO 10% Of THE TOTAl ISSUED AND pAID-Up ORDINARY SHARE CApITAl Of M3TECH (“pROpOSED RENEWAl”)

Resolution 6

“THAT, subject always to the Companies Act, 1965 (“the Act”), the provisions of the Memorandum and Articles of Association of the Company, Bursa Malaysia Securities Berhad (“Bursa Securities”) ACE Market Listing Requirements (“ACE LR”) and the approvals of any other relevant governmental and/or regulatory authorities, the Company be and is hereby authorised, to the extent permitted by the law, to buy-back and/or hold such amount of ordinary shares of RM0.10 each in the Company (“M3Tech Shares”), as may be determined by the Directors of the Company from time to time, through Bursa Securities upon such terms and conditions for such purposes as the Directors may deem fit and expedient in the interest of the Company provided that:-

i. the aggregate number of M3Tech Shares bought-back and/or held as treasury shares does not exceed 10% of the total issued and paid up ordinary share capital of the Company subject to a restriction that the issued and paid up share capital of the Company does not fall below the applicable minimum share capital requirement and the public shareholding spread requirement of the ACE LR;


ii. the maximum funds to be allocated for the share buy-back shall not exceed the aggregate of the retained profits and the share premium account of the Company; and

iii. the M3Tech Shares purchased pursuant to the Proposed Renewal are to be treated in any of the following manners:-

a. cancel the purchased M3Tech Shares;

b. retain the purchased M3Tech Shares as treasury shares to be held by the Company; or

c. retain part of the purchased M3Tech Shares as treasury shares to be held by the Company and cancel the remainder;

as prescribed by the Act, rules, regulations and orders made pursuant to the Act and the ACE LR and any other relevant governmental and/or regulatory authorities. The treasury shares may be distributed as dividend to the shareholders and/or resold on the market of Bursa Securities and/or subsequently cancelled;

AND THAT the authority conferred by this resolution shall commence upon the passing of this resolution until:-

a. the conclusion of the next annual general meeting (“AGM”) of the Company following the general meeting at which this resolution was passed, unless by an ordinary resolution passed at the meeting, the authority is renewed, either unconditionally or subject to conditions; or

b. the expiration of the period within which the next AGM after the date it is required by law to be held; or

c. revoked or varied by ordinary resolution passed by the shareholders of the Company at a general meeting of the Company,

whichever occurs first, but not so as to prejudice the completion of the purchase(s) by the Company of the M3Tech Shares before the aforesaid expiry date and made in any event, in accordance with the provisions of the guidelines issued by Bursa Securities and any prevailing laws, rules, regulations, orders, guidelines and requirements issued by any other relevant government and/or regulatory authorities;

AND THAT, the Directors of the Company be and are hereby authorised to take all such steps as are necessary or expedient to implement, finalise, complete or to effect the Proposed Renewal with full powers to assent to any conditions, modifications, resolutions, variations and/or amendments (if any) as may be imposed by the relevant authorities and to do all such acts and things as they may deem fit and expedient in the best interest of the Company to give effect to and to complete the purchase of the M3Tech Shares.”

7. SpECIAl RESOlUTIONpROpOSED AMENDMENT TO THE ARTIClES Of ASSOCIATION Of THE COMpANY

“THAT the existing Article 159 of the Articles of Association of the Company be deleted in its entirety and substituted with the new Article 159 as set out below:-

Any dividend, interest or other money payable in cash in respect of shares may be paid by cheque or warrant sent through the post directed to the registered address of the holder or by direct crediting the dividend entitlements to the bank account of the holder (as provided to the Bursa Depository from time to time) (“eDividend”) who is named on the register of Members or Record of Depositors or to such person and to such address as the holder may in writing direct. Every such cheque or warrant shall be made payable to the order of the person to whom it is sent and the payment of any such cheque or warrant or direct crediting to the holder’s bank account shall operate as a good discharge to the Company in respect of the dividend represented thereby, notwithstanding that it may subsequently appear that the same has been stolen or that the endorsement thereon has been forged or there is discrepancy given by the Member in the details of bank account(s). Every such cheque or warrant shall be sent or direct credited at the risk of the person entitled to the money thereby represented. Where the holders have provided to the Bursa Depository the relevant contact details for the purposes of electronic notifications in connection with eDividend, the Company shall notify them electronically once the Company has paid the cash dividends out of its account.

AND THAT the Directors and the Secretaries of the Company be and are hereby authorised to do all acts, things and deeds which are necessary to give effect to the Proposed Amendment to the Articles of Association of the Company.”

Resolution 7

NOTICE OF ANNUAL GENERAL MEETING (cont’d)


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

By order of the Board

TEA SOR HUA (MACS 01324)CHAN BEE fANG (MAICSA 7032385)Company Secretaries

Petaling Jaya, Selangor24 November 2010

Notes:

a. The Agenda No. 1 is meant for discussion only as the provision of S169(1) of the Companies Act, 1965 does not require a formal approval of shareholders and hence, is not put forward for voting.

b. A shareholder 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.

c. A proxy may but need not be a member of the Company and the provisions of Section 149(1)(a) and (b) of the Companies Act, 1965 shall not apply to the Company.

d. The instrument appointing a proxy shall be in writing under the hand of the appointor or of his attorney duly authorised in writing or, if the appointor is a corporation, under the seal.

e. 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 not less than 48 hours before the time for holding the Meeting or at any adjournment thereof.

ExplANATORY NOTE TO SpECIAl BUSINESS

1. The Ordinary Resolution 1 proposed under Agenda 5 is primarily to give flexibility to the Board of Directors of the Company to allot and issue shares at any time in their absolute discretion without convening a general meeting. This authority unless revoked or varied by the Company at a general meeting, will expire at the conclusion of the next annual general meeting of the Company.

This new mandate will provide flexibility to the Company 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 settlement of banking facilities.

2. The Ordinary Resolution 2 proposed under Agenda 6 is to renew the shareholders’ mandate for the share buy-back by the Company. The said proposed renewal of shareholders’ mandate will empower the Directors to buy-back and/or hold up to a maximum of 10% of the Company’s issued and paid-up share capital at any point of time, by utilizing the amount allocated which shall not exceed the total retained profits and/or share premium account of the Company. This authority unless revoked or varied by the Company at a general meeting, will expire at the conclusion of the next annual general meeting of the Company, or the expiration of period within which the next annual general meeting is required by law to be held, whichever is earlier.

Please refer to the Share Buy Back Statement to Shareholders dated 24 November 2010 for further details.

3. The Special Resolution proposed under Agenda 7 is to amend the Articles of Association of the Company to facilitate the implementation of the Electronic Dividend payment (“eDividend”) in line with the amendments to the ACE Market Listing Requirements of Bursa Malaysia Securities Berhad pertaining to the eDividend.

NOTICE OF ANNUAL GENERAL MEETING (cont’d)


1. The Directors standing for re-election at the Eleventh Annual General Meeting of the Company are as follows:-

i. En. Mohamad Najeb bin Ali

ii. Ms. Lim Kooi Siang

Article 104 – At least one-third of the Directors for the time being shall retire from Office provided that all Directors, shall retire from office once at least in every three years but shall be eligible for re-election.

2. Details of Directors who are standing for re-election are set out in the Directors’ Profile Section (page 6 to 9 of the Annual Report); while details of their interest in the securities of the Company are set out in the Analysis of Shareholdings – Directors’ Shareholdings, which appear on page 80 of this Annual Report.

STATEMENT ACCOMPANYING NOTICE OF ANNUAL GENERAL MEETING


NOTICE OF NOMINATION OF AUDITORS

Lester Ratnakumar Neil Francis106, Jalan Terasek 4Bangsar Baru59100 Kuala Lumpur

Date: 18 OCTOBER 2010

The Board of DirectorsM3 TECHNOLOGIES (ASIA) BERHADThird Floor, No. 79 (Room A)Jalan SS21/60, Damansara Utama47400 Petaling Jaya, Selangor

Dear Sirs,

NOTICE Of NOMINATION Of AUDITORS

Pursuant to Section 172(11) of the Companies Act, 1965, I, being a shareholder of the Company hereby give notice of my intention to nominate Messrs. Ernst & Young for appointment as new auditors of the Company and to propose the following as an ordinary resolution to be tabled at the forthcoming Annual General Meeting:

“THAT Messrs. Ernst & Young be and are hereby appointed as Auditors of the Company in place of the retiring Auditors, Messrs. Crowe Horwath to hold office until the conclusion of the next Annual General Meeting at a remuneration to be agreed between the Directors and the Auditors.”

Yours faithfully,

Lester Ratnakumar Neil Francis

I/We NRIC/Company No.(full name in capital letters)

of (full address)

being (a) member(s) of M3 TECHNOLOGIES (ASIA) BERHAD hereby appoint

NRIC No.(full name in capital letters)

of(full address)

or failing him/her, NRIC No.(full name in capital letter)

of(full address)

or failing him/her, the Chairman of the Meeting as my/our proxy to vote for me/us on my/our behalf at the Eleventh Annual General Meeting of the Company to be held at Eugenia Room, Ground Floor, Sime Darby Convention Centre, 1A, Jalan Bukit Kiara 1, 60000 Kuala Lumpur on Thursday, 16 December 2010 at 10.30 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.

No. Resolutions for Against

1. To approve the payment of directors’ fees for the financial year ended 30 June 2010.

2. To re-elect En. Mohamad Najeb bin Ali as director who retires pursuant to Article No. 104 of the Company’s Articles of Association.

3. To re-elect Ms. Lim Kooi Siang as director who retires pursuant to Article No. 104 of the Company’s Articles of Association.

4. To appoint Messrs. Ernst & Young as Auditors of the Company in place of the retiring Auditors, Messrs. Crowe Horwath.

5. To approve the authority for Directors to issue shares pursuant to Section 132D of the Companies Act, 1965.

6. To approve the renewal of the authority for the Share buy-back by the Company.

7. Proposed Amendment to the Articles of Association of the Company.

Dated this ______________ day of _________________ 2010

__________________________________Signature of Member(s)/Common Seal

NOTES:

1. A shareholder 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.

2. A proxy may but need not be a member of the Company and the provisions of Section 149(1)(a) and (b) of the Companies Act, 1965 shall not apply to the Company.

3. The instrument appointing a proxy shall be in writing under the hand of the appointor or of his attorney duly authorised in writing or, if the appointor is a corporation, under the seal.

4. 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 not less than 48 hours before the time for holding the Meeting or at any adjournment thereof.

M3 TECHNOlOGIES (ASIA) BERHAD (482772-D)

(Incorporated in Malaysia)pROxY fORM

NO. OF SHARES HELD

Please fold across the line and close

Please fold across the line and close

STAMP

To:M3 Technologies (Asia) Berhad (482772-D)

The Company SecretaryThird Floor, No. 79 (Room A)Jalan SS21/60, Damansara Utama47400 Petaling JayaSelangor, Malaysia

Unit 809, Block BPusat Dagangan Phileo IIJalan SS16/1146350 Petaling JayaSelangor Darul EhsanMalaysiaTel: +603 7955 0018Fax: +603 7955 8017 www.m3tech.com.my

M3 Technologies (Asia) Berhad (482772-D)

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