Annual. Report. XOX Bhd ( X)

Transcription

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2 Annual 2013 Report XOX Bhd ( X)

3 Contents Corporate Information... 2 Corporate Structure... 4 Directors' Profile... 5 Chairman's Statement... 8 Statement on Corporate Governance Audit Committee Report Statement on Risk Management and Internal Control Statement of Directors' Responsibility Other Compliance Disclosures Financial Statements Analysis Of Shareholdings Notice Of Annual General Meeting Form of Proxy... Enclosed 1 XOX Bhd ( X) Annual Report 2013

4 Corporate Information Board of Directors Dato Seri Abdul Azim bin Mohd Zabidi Non-Independent Non-Executive Chairman Ng Kok Heng Managing Director and Chief Executive Officer Soo Pow Min Independent Non-Executive Director Khoo Chuin Yuen Independent Non-Executive Director Faidzan bin Hassan Independent Non-Executive Director Cheong Wai Loong Independent Non-Executive Director Hew Tze Kok Independent Non-Executive Director Audit Committee Faidzan bin Hassan Chairman Soo Pow Min Khoo Chuin Yen Nomination Committee (Vacant) Chairman Soo Pow Min Khoo Chuin Yen Remuneration Committee (Vacant) Chairman Khoo Chuin Yen Faidzan bin Hassan Company Secretaries Tan Tong Lang (MAICSA ) Chong Voon Wah (MAICSA ) Principal Bankers Ambank (M) Berhad (8515-D) Public Bank Berhad (6463-H) Hong Leong Bank Berhad (97141-X) 2 XOX Bhd ( X) Annual Report 2013

5 Corporate Information Registered Office Suite 10.03, Level 10, The Gardens South Tower Mid Valley City, Lingkaran Syed Putra Kuala Lumpur Telephone: (03) Facsimile: (03) Business Office 31-3, Block C, Jaya One 72A, Jalan Universiti Petaling Jaya Selangor Darul Ehsan Telephone: (03) Facsimile: (03) Sponsor AmInvestment Bank Berhad (23742-V) 22 nd Floor, Bangunan AmBank Group 55 Jalan Raja Chulan Kuala Lumpur Telephone: (03) Facsimile: (03) Auditors UHY Suite 11.05, Level 11 The Gardens South Tower Mid Valley City Lingkaran Syed Putra Telephone: (03) Facsimile: (03) Share Registrar Symphony Share Registrars Sdn Bhd ( D) Level 6, Symphony House Pusat Dagangan Dana 1 Jalan PJU 1A/ Petaling Jaya Selangor Darul Ehsan Telephone: (03) Facsimile: (03) Listing ACE Market of Bursa Malaysia Securities Berhad Stock Name: XOX Stock Code: 0165 Website XOX Bhd ( X) Annual Report 2013

6 Corporate Structure XOX Bhd 100% XOX Com Sdn Bhd 51% XOX Lifestyle Sdn Bhd 100% XOX Media Sdn Bhd 100% XOX Management Services Sdn Bhd 100% XOX Wallet Sdn Bhd 100% XOX Mobile Sdn Bhd 4 XOX Bhd ( X) Annual Report 2013

7 Directors Profile Dato Seri Abdul Azim bin Mohd Zabidi Dato Seri Abdul Azim bin Mohd Zabidi, a Malaysian aged 54, is the Non-Independent Non- Executive Chairman of the Company having being appointed to the Board on 30 June He graduated with a Masters of Arts in Business Law from the London Metropolitan University, United Kingdom in He is a Fellow Member of The Institute of Chartered Secretaries and Administrators. Dato Seri Abdul Azim started his career in 1984 as an officer in Bank of Commerce (M) Berhad and was promoted to Assistant Branch Manager in In 1989, he was appointed as the Group Head of Corporate Banking Department, a position he held until Dato Seri Abdul Azim joined Commerce Property Trust Managers Berhad (now known as Amanah Property Trust Managers Berhad) in 1990 as an Assistant General Manager in 1995 for Commerce Property Trust Managers Berhad/Commerce Asset Fund Managers Sdn Bhd. In 1999, Dato Seri Abdul Azim was appointed as the Chairman of Bank Simpanan Nasional, a position he held until Dato Seri Abdul Azim was appointed Chairman of Sungei Wang Plaza Sdn Bhd in 2007, a position he holds to date. Dato Seri Abdul Azim also sits on the board of directors of Tadmax Resources Berhad, Timberwell Berhad, Wang-Zheng Berhad and Patimas Computers Berhad. Ng Kok Heng Ng Kok Heng, a Malaysian aged 50, is the Managing Director and Chief Executive Officer of the Company, having been appointed to the Board on 30 June He graduated with a Bachelor of Computer Science (Honours) from the Universiti Sains Malaysia, Penang in He started his career in 1987 as a Sales Manager in Communications Technology Sdn Bhd and was in charge of sales and marketing. In 1992, he was appointed Executive Director for MTL Communications Sdn Bhd and was responsible for the marketing, sales and business development of the company. Subsequently in 2000, he joined Wilco Systems Sdn Bhd as the Managing Director and was responsible for the performance as well as the day-to-day operations of the company. He was also a consultant to Teligent AB, Sweden, a telecommunications provider and has worked with key players in various South East Asian countries such as Telekom Malaysia Berhad, Singapore Telecommunications Limited and Smart Communications Inc. He leads highly specialised teams of IT integrators and implementers to implement systems for telecommunications providers. Soo Pow Min Soo Pow Min, a Malaysian aged 48, was appointed to the Board on 30 June 2010 as a Non- Independent Non-Executive Director and was redesignated on 5 January 2012 to an Independent Non-Executive Director. He graduated in 1990 with a Bachelor of Architecture in Structural Engineering from the University of Illinois, Chicago, United States of America. 5 XOX Bhd ( X) Annual Report 2013

8 Directors Profile He started his career in 1990 with YTL Corporation Berhad as an Architect and was responsible for overseeing the architectural work of the company. In 1994, he founded Urban Builder as a sole proprietorship but subsequently ceased business in 1999 when he was appointed Director of Pembinaan Wincon Sdn Bhd, a position which he held to date. In 2009, he founded DP Land Sdn Bhd and has been the Director of DP Land Sdn Bhd since. Mr Soo is presently the Member of the Audit Committee and Nomination Committee of the Company. Khoo Chuin Yuen Khoo Chuin Yuen, a Malaysian aged 39, was appointed to the Board on 29 September 2011, as an Independent Non-Executive Director. He graduated with a Bachelor of Finance from the University of New Orleans, United States of America. He started his career as a Credit and Marketing Executive in MBF Finance Bhd in In 1999, he joined Citibank Berhad as a management associate and within three years, became the Manager of Mortgage Sales & Share Margin Financing. From 2004 to 2007, he worked in Prudential Fund Management Bhd, beginning as the Senior Regional Manager of Northern Region, before being promoted to be the Director of Marketing & Communications in 2006, and Chief Retail Marketing Officer in He was subsequently Chief Executive Officer & Acting Chief Investment Officer of Inter- Pacific Asset Management Sdn Bhd from January 2008 to February From November 2009 to date, he is the Chief Executive Officer of Standard Financial Planner Sdn Bhd. He is presently the Member of the Audit Committee, Remuneration Committee and Nomination Committee of the Company. Faidzan bin Hassan Faidzan bin Hassan, a Malaysian aged 53, was appointed to the Board on 4 July 2012, as an Independent Non-Executive Director. He graduated with an Advanced Diploma in Accounting from the University Institute Technology Mara. He was the Executive Director of Innosabah Securities Sdn Bhd from 1992 to Since 1995, he has been the principal partner/trustee of Sititrust & Administrators Limited, and since 2003, the Deputy Chairman of KIC Oil & Gas Ltd and the KIC Group of Companies. Encik Faidzan is presently the Chairman of the Audit Committee and Member of the Remuneration Committee of the Company. 6 XOX Bhd ( X) Annual Report 2013

9 Directors Profile Cheong Wai Loong Cheong Wai Loong, a Malaysian aged 41, was appointed to the Board on 30 September 2013 as an Independent Non-Executive Director. Mr Cheong graduated with a Bachelor Degree in Business Accounting & Finance, is a Fellow Member of The Institute of Public Accountants Australia and a member of the National Institute of Accountants, Australia. Mr Cheong is one of the pioneer shareholders of XOX Bhd who helped the Company open its first branch in Malaysia upon listing on Bursa Malaysia Securities Berhad and launching of the "Go Green recycling project". He is currently the Managing Director of Linear Design Sdn Bhd, a multi-award winning Interior Architecture Firm for some of the major developers in Malaysia and he also sits on the Boards of numerous private companies. Hew Tze Kok Hew Tze Kok, a Malaysian aged 36, was appointed to the Board on 21 October 2013 as an Independent Non-Executive Director. Mr Hew is a fellow member of the Association of Chartered Certified Accountants ( FCCA ). He started his career path by practising in accounting firms, namely Wong Yew Seng & Co and BDO Binder for approximately 7 years. Thereafter he served the Securities Commission Malaysia ( SC ) for approximately 5 years in the area of enforcement of securities law. He was then appointed as an Investigating Officer of the SC with a ranking of Senior Manager. Subsequent to that, he joined KPMG Forensic Investigation Services as an Associate Director. Currently, Mr Hew also sits on the board of directors of Asia Bioenergy Technologies Berhad as Independent Non-Executive Director. Note : The Directors do not have any family relationship with any other Directors and/or major shareholders of the Company. The Directors do not have any conflict of interest with the Company and have no conviction for any offences, other than traffic offences, if any, within the past ten (10) years. 7 XOX Bhd ( X) Annual Report 2013

10 Chairman s Statement On behalf of the Board, I am pleased to present to you the Annual Report of the Group and Company for the financial year ended 30 June Financial Performance The Group continues to face intense competition from incumbent and new operators as well as having to deal with a challenging operating environment arising from the increased use of smartphones and mobile applications which led to lower industry wide ARPU from traditional voice and short message service (SMS). We also faced slower than expected response to some of our programmes and products. During the financial year ended 30 June 2013, the Group acquired 125,030 subscribers. The Average Revenue per User (ARPU) for the year was RM24. During the financial year, the Group continues with its focus on subscriber retention and quality subscriber acquisition. The Group recorded lower revenues of RM40.8 million during the financial year compared to RM61.7 million in the 18 months of the previous financial period. However, as a result of the strategy mentioned in the preceding paragraph, the Group recorded an improvement in its gross profit by RM15.7 million compared to the previous financial period, as net selling prices were higher in the current financial year. In addition, cost reductions from reduced rates and further discounts granted by a trade creditor also contributed to the improvement in gross profit. The Group also managed to reduce its selling and distribution expenses significantly by approximately RM7.9 million compared to the previous financial period, from the reallocation of the spending of those expenses from high cost programmes such as billboards and radio to lower costs targeted programmes such as internet based advertising and shop front advertising. Administrative expenses were also reduced by RM1.4 million compared to the previous financial year. As a result, the Group recorded a profit before taxation of RM4.5 million compared to a loss of RM20.67 million in the previous financial period. Industry Trend and Development In Bank Negara Malaysia s Quarterly Economic Bulleting for quarter 2 of 2013, it was reported that the growth for the communication sub-sector remained robust at 9.0% and 9.8% growth for the first and second quarter of 2013 respectively, reflecting the continued demand for data communication services. The growth in demand for data services is expected to lead to lower demand for traditional mobile services such as voice, SMS and multimedia messaging service (MMS). This is because more consumers will be able to use the widely available mobile applications such as WhatsApp, Viber, Skype, Line and many others to enjoy low or no cost voice, SMS and MMS services. 8 XOX Bhd ( X) Annual Report 2013

11 Chairman s Statement Future Prospects The Group remains committed in maintaining its focus on introducing innovative products and services to expand our subscriber base in accordance with the fast changing trends in the mobile telecommunications industry. In view of the changing consumer behaviour in using more data services for various communication needs such as mobile applications on smart-phones to communicate and the erosion in traditional voice, SMS and MMS revenues, we have realigned and planed our Group s focus to ensure that it is in line with current consumer trends. Specific examples include the following: Focus and promotion and enhancements on data plans; Re-branding for a younger and fresher image; Planned re-launch and commercial roll-out of the SIM-Free mobile numbers with mobile service through a mobile application brand named Voopee; and Online promotion and activities to promote focussed advertising and branding messages to the target customers. The Group s financial performance is dependent on the growth of its subscriber base and the average monthly revenue from the sales of recharge vouchers per subscriber. We expect the Group to continue to make headway in the acquisition of subscribers through the various products and initiatives launched and planned to be launched. Corporate Social Responsibility In pursuit of any business objective, the Group needs to strike a balance between profitability and social responsibilities. The group is committed and uses its best endeavour, on an on-going basis to integrate corporate social responsibility practices into its day to day business operations. The Group has reviewed and will constantly review the staff benefits to enhance the quality of life of its employees. The Group also practices recycling by ensuring that its waste paper is sent for recycling. Appreciation Lastly, we would like to offer our sincere gratitude and appreciation to our shareholders, customers, business associates, bankers, government authorities for their continued support and to our Board of Directors for their wisdom and guidance. Special gratitude and appreciation is also extended to our major trade supplier who has tirelessly backed us. Our appreciation also goes out to our valued employees for their continuing commitment and dedication to the Group. Dato Seri Abdul Azim bin Mohd Zabidi Non-Independent Non-Executive Chairman 9 XOX Bhd ( X) Annual Report 2013

12 Statement on Corporate Governance The Board of Directors ( the Board ) of XOX Bhd ( XOX or the Group or the Company ) strives to ensure good corporate governance practices are implemented and maintained throughout the Company and its subsidiaries ( Group ) as a fundamental part of discharging its duties to enhance shareholders values consistent with the principles and best practices set out in the Malaysian Code on Corporate Governance 2012 ( the Code ). The Board will continuously evaluate the Group s corporate governance practices and procedures, and where appropriate will adopt and implement the best practices as enshrined in the Code to the best interest of the shareholders of the Company. The statement below sets out the manner in which the Group has applied the key principles and the extent of its compliance with the best practices set out in the Code throughout the financial year under review pursuant to Rule of the ACE Market Listing Requirements of Bursa Securities ( Listing Requirements ). A. Board of Directors The Board assumes responsibility for leading and controlling the Group. The Board has the overall responsibilities for corporate governance, risk management, internal controls, strategic direction, succession planning, formulation of policies and overseeing the investment and business of the Group. In carrying out its functions, the Board has delegated specific responsibilities to three Board Committees, namely Audit Committee, Nomination Committee and Remuneration Committee. These committees have the authority for their own specific issues and their recommendations are reported back to the Board. A.1 Board Balance The current Board of Directors consists of seven (7) members, comprising a Non- Independent Non-Executive Chairman, one (1) Executive Director who is also the Managing Director/Chief Executive Officer and five (5) Independent Non-Executive Directors. The Company thus complies with Rule of the Listing Requirements whereby at least two (2) or one-third (1/3) of the Board of Directors, whichever is higher, are independent directors. There is a clear division of responsibilities between the Chairman of the Board and the Managing Director/Chief Executive Officer to ensure that there is a balance of power and authority. The Chairman is responsible for running the Board and ensuring that all Directors receive sufficient and reliable information on financial and non-financial matters to enable them to participate actively in Board decisions whilst the Managing Director/Chief Executive Officer is responsible over the operating units, organisation effectiveness and implementation of the Board s policies and decisions. The size and composition of the Board reflects a balance of executive and non-executive directors who are reputable and professional person of calibre in the business environment to provide leadership and exercise control of the Group. The independent non-executive 10 XOX Bhd ( X) Annual Report 2013

13 Statement on Corporate Governance directors provide an unbiased and independent judgement to ensure a balanced an impartial Board decision making process. The Board has yet to identify a Senior Independent Non-Executive Director to whom concerns may be conveyed by shareholders and the general public. However, the Chairman of the Board encourages the active participation of each and every Board member in the decision making process. A.2 Board Meetings and Supply of Information to the Board Board meetings are held regularly and the details of the attendance during the financial year ended 30 June 2013 are as follows: No. of Meetings Name of Directors Attended Dato Seri Abdul Azim bin Mohd Zabidi 11/12 Ng Kok Heng 12/12 Soo Pow Min 12/12 Khoo Chuin Yuen 11/12 Faidzan bin Hassan 7/12 Yeoh Eng Kong (appointed 30 January 2013 and resigned on 1 5/5 November 2013) Wong Yip Kee (resigned on 12 October 2012) 3/3 Izaddeen bin Daud (resigned on 18 April 2013) 4/9 Cheong Wai Loong (appointed 30 September 2013) Not applicable Datuk Chai Woon Chet (appointed 30 September 2013 and Not applicable resigned on 22 October 2013) Hew Tze Kok (appointed 21 October 2013) Not applicable The Directors have full and timely access to all information pertaining to the Group s business and affairs to enable them to discharge their duties. Senior management are invited to attend the Board meetings to explain and clarify matters as required. Prior to the Board meetings, the agenda for every meeting together with a full set of Board papers containing information relevant to the business of the meetings are circulated to the Directors for their perusal in advance before the meeting date. This is to allow the Directors to have sufficient time to review and consider the agenda items before the meeting and to obtain further explanations or clarifications, where necessary. The proceedings and resolutions reached at each Board meeting are documented in the minutes and signed by the Chairman of the next Board meeting. Besides Board meetings, the Board exercises control on matters that require Board s approval through circulation of Directors Resolutions. These documents are kept at the registered office. All Directors have access to all information within the Company as well as the advice and services of the Company Secretaries who are qualified professionals, whether as a full Board or in their individual capacity to assist them in their decision making. When necessary, 11 XOX Bhd ( X) Annual Report 2013

14 Statement on Corporate Governance Directors may also obtain independent professional advice at the Company s expense to enable the directors to discharge their duties with adequate knowledge on the matters being deliberated. A.3 Re-election of Directors In accordance with the Company s Articles of Association, at the first Annual General Meeting ( AGM ) of the Company, all the Directors shall retire from office, and at the AGM in every subsequent year, an election of directors shall take place and one-third (1/3) of the Directors (including the Managing Director) for the time being, or if their number is not three (3), or a multiple of three (3), then the number nearest to one-third (1/3) with a minimum of one (1) shall retire from office and be eligible for re-election PROVIDED ALWAYS that all Directors including a Managing Director 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 retires and shall be eligible for re-election. Any Director appointed during the year is required to retire and seek re-election by shareholders at the first AGM following his appointment. Directors over seventy (70) years of age are required to submit themselves for re-appointment annually in accordance with the Section 129 (6) of the Companies Act, A.4 Nomination Committee In line with the Best Practices of the Code, the Board has established a Nomination Committee which comprise exclusively of Non-Executive Directors and majority are Independent Non-Executive Directors. The present members of the Nomination Committee of the Company are: Chairman (Vacant) * * Due to resignation of Mr Yeoh Eng Kong as Independent Non-Executive Director and Chairman of Nomination Committee on 1 November Members Soo Pow Min (Independent Non-Executive Director) Khoo Chuin Yen (Independent Non-Executive Director) The functions of the Nomination Committee are summarise as following: a) Proposing new nominees for appointment to the board of directors. b) Recommend to the board, directors to fill the seats on other board committees. c) To annually assess the effectiveness of the Board as a whole, Board Committees and the contributions of each individual Director, taking into consideration the required mix of skills, expertise, experience and other requisite qualities including core competencies contributed by the Directors. 12 XOX Bhd ( X) Annual Report 2013

15 Statement on Corporate Governance d) Orientating and educating new directors as to the nature of the business, current issues within the company and the corporate strategies, the expectations of the company concerning input from the directors and the general responsibilities of directors. e) To recommend to the Board the re-election of directors who retire at annual general meeting. A.5 Directors Training All the Directors appointed to the Board (except for Mr Cheong Wai Loong) have completed the Mandatory Accreditation Programme as prescribed by the Listing Requirements of Bursa Malaysia Securities Berhad. The Directors remain committed to undergoing further continuing education training programmes to upgrade and enhance their business acumen and professionalism in discharging their duties to the Group. The following Board members have attended several relevant courses/seminars during the financial year ended 30 June 2013 as detailed below: Name of Director Courses Attended Dato Seri Abdul Azim bin The Malaysian Code on Corporate Governance 2012 Mohd Zabidi Seminar - Implications and Challenges to the Board of Directors Corporate Compliance: Focusing on Directors Duties, Liabilities and Expectations Ng Kok Heng SIMposium Asia 2012 Khoo Chuin Yuen Professional Development Day Series 3/2012: Investment Process & Planning Forum on Private Retirement Scheme in Malaysia Faidzan bin Hassan 4 day MBA for Oil and Gas Executives Cheong Wai Loong Not applicable * (appointed 30 September 2013) Hew Tze Kok (appointed Not applicable * on 21 October 2013) * Cheong Wai Loong was appointed as a director of the Company on 30 September 2013 and Hew Tze Kok was appointed as a director of the Company on 21 October Saved as disclosed above, Mr Soo Pow Min was not able to attend any Directors training during the financial year due to overseas travelling and his busy work schedule. However, he has kept himself abreast on financial and business matters through readings to enable him to contribute to the Board. He is also aware of the duties and responsibilities and will continue to undergo other relevant training programmes to keep abreast with new regulatory developments and requirements in compliance with the Listing Requirements on continuing education. 13 XOX Bhd ( X) Annual Report 2013

16 Statement on Corporate Governance A.6 Reinforce Independence The Non-Executive Directors are not employees of the Group and do not participate in the day to day management of the Group. The Non-Executive Directors are independent directors and are able to express their views without any constraint. This strengthens the Board which benefits from the independent views expressed before any decisions are taken. The Nomination Committee has reviewed the performance of the independent directors and is satisfied they have been able to discharge their responsibilities in an independent manner. None of the current independent board members had served the company for more than nine (9) years as per the recommendations of the Code. Should the tenure of an independent director exceed nine (9) years, shareholders approval will be sought at a General Meeting or if the services of the director concerned are still required, the director concerned will be re-designated as a non-independent director. B. Directors Remuneration The determination of the remuneration for Non-executive Directors is decided by the Board as a whole. The remuneration of Executive Directors is the purview of the Remuneration Committee who will evaluate and recommend to the Board. Individual directors concerned have abstained from discussing and deciding on their own remuneration. The Directors fee including Non-Executive Directors if any, have to be endorsed by the Board and would seek approval from the shareholders of the Company at the Annual General Meeting. The compensations for Non-Executive Directors are linked to their experience and level of responsibility taken. B.1 Remuneration Committee In line with the Best Practices of the Code, the Board has established a Remuneration Committee which comprise exclusively of Independent Non-Executive Directors of the Company. The present members of the Remuneration Committee of the Company are: Chairman (Vacant) * * Due to resignation of Mr Yeoh Eng Kong as Independent Non-Executive Director and Chairman of Remuneration Committee on 1 November Members Khoo Chuin Yen (Independent Non-Executive Director) Faidzan bin Hassan (Independent Non-Executive Director) 14 XOX Bhd ( X) Annual Report 2013

17 Statement on Corporate Governance The Remuneration Committee is principally responsible for assessing and reviewing the remuneration packages of the Executive Directors including their fees and subsequently furnishes recommendations to the Board on specific adjustments in remuneration to commensurate with the respective contributions of the Directors. The functions of the Remuneration Committee are: a) Recommend to the board the framework of executive remuneration and its cost, and the remuneration package for each executive director, taking into account the performance of the individual, the inflation price index and information from independent sources on the rates of salary for similar jobs in selected group of comparable companies. b) To reimburse reasonable expenses incurred by the directors in course of their duties as directors. c) To review and determine the bonus scheme for executive directors depending on various performance measurements of the Group. d) To review and determine the other benefits in kind for the executive directors. e) To review annually the executive directors service contracts. B.2 Details of Directors Remuneration The details of directors remuneration for the financial year ended 30 June 2013 are as follows: Fee RM Salaries RM Allowances RM Total RM Category Executive Directors - 1,295,897 57,300 1,353,197 Non-executive Directors , ,500 Total - 1,295, ,800 1,665,697 The Directors remuneration within the following bands is as follows: Range of Remuneration Number of Executive Directors Number of Non- Executive Directors Below RM50,000-2 RM50,001 RM100,000-4 RM350,001 RM400, RM950,001 RM1,000, The above includes directors who have resigned during the financial year. The Board is of the view that the detailed remuneration disclosure of each director is not disclosed as the information will not add significantly to the understanding and evaluation of the Group s corporate governance. 15 XOX Bhd ( X) Annual Report 2013

18 Statement on Corporate Governance C. Communication with Shareholders and Investors C.1 Relationship with Shareholders The Board recognises the need for transparency and accountability to the Company s shareholders as well as regular communication with its shareholders, stakeholders and investors on the performance and major developments in the Company. The Company ensures that timely releases of the quarterly financial results, press releases and corporate announcements are made to its shareholders and investors, which are clear, unambiguous, succinct, accurate and contains sufficient and relevant information. The Group also maintains a website whereby information can be obtained. C.2 Annual General Meeting The Annual General Meeting ( AGM ) represents the principal forum for dialogue and interaction with all the shareholders of the Company. At the AGM, the Board provides opportunities for shareholders to participate in the question and answer session where all Directors as well as the external auditors are present to respond to the shareholders questions during the AGM. The Company values feedback from its shareholders and encourages them to actively participate in discussion and deliberations. D. Accountability and Audit D.1 Financial Reporting The Board has a responsibility and aims to provide and present a fair and balanced assessment of the Group s financial performance and its prospects. The financial statements of the Company are drawn up in accordance with the requirements of the applicable accounting standards in Malaysia and provision of the Companies Act, With assistance from the Audit Committee, the Board oversees the Group s financial reporting processes and the quality of its financial reporting. D.2 Internal Control The Board is overall responsible for maintaining a sound system of internal controls and risk management practises to safeguard shareholders investment and Group s assets. The Statement on Risk Management and Internal Control as set out on page 23 of the annual report provides an overview of the state of internal controls within the Group. D.3 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. From time to time, the auditors will highlight to the Audit Committee and the 16 XOX Bhd ( X) Annual Report 2013

19 Statement on Corporate Governance Board of Directors on matters that require the Audit Committee s and Board s attention and action. The Audit Committee has been explicitly accorded the power to communicate directly with both the External Auditors and Internal Auditors. Annual appointment or reappointment of the external auditor is via shareholders resolution at the AGM on the recommendation of the Board. E. Statement of Compliance with the Code The Board is committed to ensure high standards of corporate governance and to their best ability and knowledge complied with the Best Practices set out in the Code. 17 XOX Bhd ( X) Annual Report 2013

20 Audit Committee Report 1 Members of the Audit Committee The Board has established a Audit Committee to assists the Board in fulfilling its fiduciary responsibilities relating to corporate accounting, financial reporting practices, system of internal control, the audit process and the process of monitoring compliance with laws and regulations. The members of Audit Committee shall be appointed by the Board from amongst the Directors of the Company and shall comprise of at least three (3) members, all of whom must be Non-Executive Directors, with a majority of them being independent. The Board shall at all the times ensure that at least one (1) member of the Audit Committee: i) must be a member of the Malaysian Institute of Accountants ( MIA ); or ii) if he is not a member of the MIA, he must have at least three (3) years' working experience and: a) passed the examinations specified in Part I of the First Schedule of the Accountants Act 1967; or b) must be a member of one of the associations of accountants specified in Part II of the First Schedule of the Accountants Act 1967; or iii) fulfils such other requirements as prescribed or approved by Bursa Malaysia Securities Berhad ( Bursa Securities ). No alternate director shall be appointed as a member of the Audit Committee. The members of the Audit Committee shall elect a Chairman from among their number who shall be an Independent Director. The term of office and performance of the Audit Committee and each of its members shall be reviewed by the Board at least once every three (3) years to determine whether the members have carried out their duties in accordance with their terms of reference. If a member of the Audit Committee resigns or for any other reason ceases to be a member with the result that the number of members is reduced to below three (3), the Board shall, within three (3) months from the date of that event, appoint such number of new members as may be required to make up the minimum number of three (3) members. The Company Secretary or his nominee or such other persons authorised by the Board shall act as the Secretary of the Audit Committee. The present members of the Audit Committee are as follows: Designation Name Directorship Chairman Faidzan bin Hassan Independent Non-Executive Director Member Soo Pow Min Independent Non-Executive Director Member Khoo Chuin Yuen Independent Non-Executive Director 18 XOX Bhd ( X) Annual Report 2013

21 Audit Committee Report 2 Functions of the Audit Committee The Audit Committee assists the Board in discharging its oversight responsibilities. The objectives of the Audit Committee are to provide an additional assurance to the Board by giving objective and independent reviews of the financial, operational and administrative controls and procedures, establishing and maintaining internal controls and reinforce the independence of the external auditors, ensuring that the auditors have free reign in the audit process. The Audit Committee shall, amongst others, discharge the following functions: (a) Review the following and report the same to the Board of Directors of the Company: (i) with the external auditors, the audit plan, the nature and scope of work and ascertain that it will meet the needs of the Board, the shareholders and regulatory authorities; (ii) with the external auditors, their evaluation of the quality and effectiveness of the entire accounting system, the adequacy and integrity of the internal control system and the efficient of the Group s operations; (iii) with the external auditors, their audit report; (iv) the assistance given by employees of the Group to the external and internal auditors; (v) the adequacy of the scope, functions, competency and resources of the internal audit function and that it has the necessary authority to carry out its work including inter-alia the appointment of internal auditors; (vi) the internal audit programme, processes and results of the internal audit programme, processes, major findings of internal investigation and Management s response and whether or not appropriate action is taken on the recommendations of the internal audit function; (vii) review any appraisal or assessment of the performance of members of the internal audit function; (viii) the quarterly results and annual financial statements prior to the approval by the Board of Directors, focussing particularly on: i. changes in or implementation of major accounting policies and practices; ii. significant and unusual events; iii. significant adjustments arising from the audit; iv. compliance with accounting standards, other statutory and legal requirements and the going concern assumption; v. the accuracy and adequacy of the disclosure of information essential to a fair and full presentation of the financial affairs of the Group. (ix) any related party transactions and conflict of interest situations that may arise within the Company or the Group and any related parties outside the Group including any transaction, procedure or course of conduct that raises questions of management integrity; (x) any letter of resignation from the external auditors of the Company; (xi) whether there is any reason (supported by grounds) to believe that the Company s external auditors are not suitable for re-appointment; and 19 XOX Bhd ( X) Annual Report 2013

22 Audit Committee Report (xii) any significant audit findings, reservations, difficulties encountered or material weaknesses reported by the external and internal auditors, particularly any comments and responses in Management letters as well as the assistance given by the employees of the Group in order to be satisfied that appropriate action is being taken. (b) (c) (d) (e) (f) Recommend the nomination of a person or persons as external auditors and the external audit fee. Promptly report to Bursa Securities on any matter reported by it to the Board of the Company which has not been satisfactorily resolved resulting in a breach of the Listing Requirements. To verify the allocation of option pursuant to a share scheme for employees at the end of each financial year and to prepare a statement verifying such allocation in the annual reports. Carry out any other functions that may be mutually agreed upon by the Audit Committee and the Board which would be beneficial to the Company and ensure the effective discharge of the Audit Committee s duties and responsibilities. To ensure the internal audit function of the Company reports directly to the Audit Committee. 3 Authorities of the Audit Committee (a) (b) (c) (d) The Audit Committee is authorised by the Board to investigate any matter within the Audit Committee s terms of reference. It shall have full and unrestricted access to any information pertaining to the Group and shall have the resources it requires to perform its duties. All employees of the Group are required to comply with the requests made by the Audit Committee. The Audit Committee is authorised by the Board to obtain outside legal or external independent professional advice and secure the attendance of outsiders with relevant experience and expertise if it considers this necessary, the expenses of which will be borne by the Company. The Audit Committee shall have direct communication channels with the external auditors and person(s) carrying out the internal audit function or activity. The Audit Committee shall be able to convene meetings with the external auditors, the internal auditors or both, excluding the attendance of other Directors and employees of the Company, whenever deemed necessary, in order to enable the Audit Committee and the external auditors or the internal auditors or both, to discuss problems and reservations and any other matter the external auditors or internal auditors may wish to bring up to the attention of the Audit Committee. 20 XOX Bhd ( X) Annual Report 2013

23 Audit Committee Report (e) The Internal Auditors report directly to the Audit Committee and shall have direct access to the Chairman of the Audit Committee on all matters of control and audit. All proposals by Management regarding the appointment, transfer and removal of senior staff members of the Internal Audit of the Group shall require prior approval of the Audit Committee. The Audit Committee is also authorised by the Board to obtain information on any resignation of internal audit staff members and provide the staff member an opportunity to submit his reasons for resigning. 4 Meetings of the Audit Committee The Audit Committee shall meet at least four (4) times in a financial year, although additional meetings may be called at any time at the Audit Committee Chairman's discretion. The quorum for a meeting of the Audit Committee shall consist of not less than two (2) members, majority of whom must be Independent Directors. Other than in circumstances which the Chairman of the Audit Committee considers inappropriate, the Chief Financial Officer, the representatives of the internal auditors and external auditors will attend any meeting of the Audit Committee to make known their views on any matter under consideration by the Audit Committee or which in their opinion, should be brought to the attention of the Audit Committee. Other Board members, employees and external professional advisers shall attend any particular meetings upon invitation by the Audit Committee. At least twice in a financial year, the Audit Committee shall meet with the external auditors without the Executive Directors being present. The Audit Committee shall report to the Board and its minutes tabled and noted by the Board of Directors. The books containing the minutes of proceedings of any meeting of the Audit Committee shall be kept by the Company at the registered office or the principal office of the Company, and shall be open for inspection of any member of the Audit Committee and the Board. During the financial year under review, the Audit Committee held five (5) meetings and the details of the attendance are as follows: Members Meeting Attendance Faidzan bin Hassan (appointed as Audit Committee 3/4 Chairman on 30 August 2012) Soo Pow Min 5/5 Khoo Chuin Yuen 5/5 Izaddeen bin Daud (resigned on 18 April 2013) 1/4 5 Summary of Activities of the Audit Committee The Audit Committee had carried out the following activities during the financial year under review in discharging their duties and responsibilities: Reviewed and assessed the adequacy of the scope and functions of the Internal Audit Plan. 21 XOX Bhd ( X) Annual Report 2013

24 Audit Committee Report Reviewed the External Audit Plan for the Company and the Group presented by the external auditors, with the external auditors to ensure the audit scope and activities is adequately covered. Reviewed quarterly and annual financial reports for the Company and the Group prior to submission to the Board for consideration and approval. Reviewed and approved the proposed final audit fees for the external auditors and internal auditors in respect of their audit of the Company and the Group. Considered the reappointment of the external auditors. Met with the external auditors to discuss various issues on the Company, excluding the attendance of the executive members of the Board and management. Reviewed related party transactions, if any, for compliance with the Listing Requirements. 6 Internal Audit Activities In discharging its duties, the Audit Committee is supported by an internal audit function which is outsourced to an independent internal audit service company ( Internal Auditor ), who undertakes the necessary activities to enable the Audit Committee to discharge its functions effectively. The Internal Auditor is independent of the activities audited by the external auditors. The Audit Committee has full access to the Internal Auditor and received reports on all audits performed. During the financial year under review, the internal audit has conducted various assignments on a quarterly basis and made recommendations in improving the system of internal controls to the Audit Committee. The areas internal audit covered were billing, collection and receivables, inventory, marketing, sales, customer services and call centre service. The cost incurred by the Group for the internal audit function during the financial year ended 30 June 2013 amounted to RM39, XOX Bhd ( X) Annual Report 2013

25 Statement on Risk Management and Internal Control The Code requires listed companies to maintain a sound system of internal controls to safeguard shareholders investments and the Group s assets. The Board is pleased to include a statement on the state of the Group s risk management and internal control during the financial year under review. The statement is prepared in accordance with the Listing Requirements and released Statement on Risk Management & Internal Control : Guidelines for Directors of Listed Issuers. Board Responsibility The Board acknowledges its overall responsibility for reviewing the adequacy and integrity of the Group s system of internal controls, identifying principal risks and establishing an appropriate control environment and framework to manage risks. However, the effectiveness of the Group s system of internal control is designed to manage rather than to eliminate the risk of failure to achieve business objectives. Accordingly, the Group s system of internal control can only provide reasonable but not absolute assurance against material misstatement or loss. The Board either directly or via the Audit Committee, have an on-going process for identifying, evaluating and managing the significant risks of the Group with the management. The Board has received assurance from the Managing Director and Chief Executive Officer that the Group s risk management and internal control system is operating adequately and effectively, in all material aspects, based on the risk management and internal control system of the Group. The Board is of the view that the risk management and internal control system in place for the year under review and up to the date of issuance of the financial statements is adequate and effective to safeguard the shareholders investment, the interests of customers, regulators, employees and the Group s assets. Audit Committee The Audit Committee reviews the adequacy and effectiveness of the Group s systems of internal control as well as reviewing issues identified by the internal auditors. The Audit Committee also ensures that there is continuous effort by management to address and resolve areas where control weaknesses exist. The Audit Committee reviews the quarterly results of the Group and recommends adoption of such results to the Board before announcement to Bursa Securities is made. Internal Audit The Group outsources the internal audit function to an external firm. The firm is appointed by and reports directly to the Audit Committee. Its role is to provide the Audit Committee with regular assurance on the continuity, integrity and effectiveness of the internal control 23 XOX Bhd ( X) Annual Report 2013

26 Statement on Risk Management and Internal Control system through regular monitoring and review of the internal control framework and management processes. The internal audit firm prepares audit plans for presentation to the Audit Committee for approval wherein the scope of work encompasses management and operational audit of functions in the Group. During the financial year under review, the internal audit has conducted various assignments on a quarterly basis and made recommendations in improving the system of internal controls to the Audit Committee. The areas internal audit covered were billing, collection and receivables, inventory, marketing, sales, customer services and call centre service. Other Key Internal Control Elements The Board meets on a regular basis to review the performance and operations of the Group. The Group has in place an organisational structure that is aligned to business and operational requirements, with clearly defined lines of accountability. Active involvement by the Managing Director and Chief Executive Officer in the day-today business operations of the Group including weekly operational and management meetings to identify, discuss and resolve business and operational issues. Periodic review of management accounts by key personnel including the Managing Director and Chief Executive Officer. The management accounts are also presented to the Board and Audit Committee during the respective meetings. Review of the Statement by External Auditors The external auditors have reviewed this Statement on Risk Management and Internal Control for inclusion in the annual report of the Group for the year ended 30 June 2013 and reported to the Board that nothing has come to their attention that causes them to believe that the statement is inconsistent with their understanding of the process adopted by the Board in reviewing the adequacy and effectiveness of the risk management and internal control system. 24 XOX Bhd ( X) Annual Report 2013

27 Statement on Risk Management and Internal Control Conclusion For the financial year under review, there were no significant internal control deficiencies or material weaknesses resulting in material losses or contingencies requiring disclosure in the Annual Report. The Board is of the view that the existing system of the internal control is adequate. Nevertheless, the Board recognises that the development of internal control system is an ongoing process. Therefore, in striving for continuous improvement, the Board will continue to take appropriate action plans to further enhance the Group s system of internal control. This statement is made in accordance with the resolution of the Board of Directors dated 8 November XOX Bhd ( X) Annual Report 2013

28 Statement of Directors Responsibility The Directors are required to take reasonable steps in ensuring that the financial statements of the Group are properly drawn up in accordance with the provisions of the Companies Act, 1965, applicable financial reporting standards and approved accounting standards in Malaysia so to give a true and fair view of the state of affairs of the Group and the Company as at the end of the financial year and of the results and the cash flows of the Group and the Company for that year then ended. The Directors consider that in preparing the financial statements for the financial year ended 30 June 2013: the Group and the Company have adopted the appropriate accounting policies and applied them consistently; reasonable and prudent judgements and estimates have been made; and all applicable approved accounting standards in Malaysia have been followed. The Directors are also responsible for ensuring that the Group and the Company maintain accounting records that disclose with reasonable accuracy at any time of the financial position of the Group and of the Company and which enable them to ensure that the financial statements comply with the Companies Act, The Directors have general responsibilities 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 and material misstatements. Such systems, by their nature, can only provide reasonable and not absolute assurance against material misstatement, loss or fraud. 26 XOX Bhd ( X) Annual Report 2013

29 Other Compliance Disclosures 1 Share Buyback The Company did not enter into any share buyback transactions during the financial year under review. 2 Options, Warrants or Convertible Securities There were no options, warrants or convertible securities were issued during the financial year under review. 3 Depository Receipt Programme The Company did not sponsor or participate in any depository receipt programme during the financial year under review. 4 Imposition of Sanctions and/or Penalties There were no public sanctions and/or penalties imposed on the Company and/or its subsidiaries, Directors or management by any regulatory bodies during the financial year under review. 5 Non-Audit Fee Paid to External Auditors The non-audit fee paid to the external auditors of the Company and the Group for the financial year under review amounting to RM20,000. The non-audit fee is for a special review service. 6 Profit Guarantee The Company does not provide any profit guarantees during the financial year under review. 7 Material Contracts and Contracts Relating to Loan There were no material contracts or contracts relating to loan entered into by the Company and its subsidiaries involving the interests of the Directors and major shareholders during the financial year under review. 27 XOX Bhd ( X) Annual Report 2013

30 Other Compliance Disclosures 8 Status of Utilisation of Proceeds The status of the gross proceeds of RM37,400,00 million raised from the Initial Public Offering ( IPO ) are as follows: Nature Balance as at 25 October 2012 RM 000 Utilisation RM 000 Balance RM 000 Capital Expenditure 31 (31) - Working capital 3,192 (3,192) - 3,223 (3,223) - The Group has completed the utilisation of proceeds from the Public Issue during the financial year. 9 Variance in Results The Company did not release any profit estimate, forecast or projection for the financial year. Variance between Unaudited Loss after Taxation and Audited Profit after Taxation for the Financial Year ended 30 June 2013 The Company had on 8 November 2013 announced that the Group s audited profit after taxation for the financial year ended 30 June 2013 has deviated by approximately % from the unaudited loss after taxation of RM3,589,000 as announced on 30 August The reconciliation of the difference is set out as follows: RM Loss after taxation as per unaudited financial statements (3,589,000) Add/less changes: 1) Credit note from a trade creditor 1 10,000,000 2) Impairment of trade receivable (1,963,222) 3) Other adjustments 2 65,817 4) Rounding difference 181 Profit after taxation as per audited financial statements 4,513,776 Notes 1. During the financial year, a subsidiary company had undertaken negotiations with a major trade creditor for a discount on the cost of sales incurred. The trade creditor has agreed in principle to grant the discount of RM10 million to the subsidiary company during the year and the credit note has been received subsequent to the financial year end. Therefore, the subsidiary company has taken up the discount and adjusted its financial statements for the current financial year ended 30 June 2013 accordingly. 28 XOX Bhd ( X) Annual Report 2013

31 Other Compliance Disclosures 2. Other adjustments include under provision of tax expenses (RM3,234) and rectification of error in income statement (RM69,051). 10 Material Properties The Group does not own any properties during the financial year under review. 11 Recurrent Related Party Transactions of a Revenue and Trading Nature ( RRPT ) There was no material RRPT during the financial year under review. 29 XOX Bhd ( X) Annual Report 2013

32 Financial Statements Contents Directors Report. 31 Statement by Directors.. 36 Statutory Declaration.. 37 Independent Auditors Report to the Members 38 Statements of Financial Position.. 43 Statements of Comprehensive Income 45 Statements of Changes in Equity Statements of Cash Flows..48 Notes to the Financial Statements.. 51 Supplementary Information on the Disclosure of Realised and Unrealised Profits or Losses XOX Bhd ( X) Annual Report 2013

33 XOX BHD. (Incorporated in Malaysia) DIRECTORS REPORT The Directors have pleasure in submitting their report together with the audited financial statements of the Group and of the Company for the financial year ended 30 June Principal Activities The Company is principally engaged in the business of investment holding. The principal activities of the subsidiary companies are set out of in Note 5 to the financial statements. There have been no significant changes in the nature of these activities during the financial year. Financial Results Group RM Company RM Profit/(Loss) after taxation for the financial year 4,513,776 (110,298) Attributable to: Owners of the parent 4,593,177 (110,298) Non-controlling interests (79,401) - 4,513,776 (110,298) In the opinion of the Directors, the results of the operations of the Group and of the Company for the financial year have not been substantially affected by any item, transaction or event of a material and unusual nature. Dividend No dividend was paid since the end of the previous financial period and the Directors do not recommend any dividend payments for the current financial year. Reserves and Provisions There were no material transfers to or from reserves or provisions during the financial year. 31 XOX Bhd ( X) Annual Report 2013

34 Issue of Shares and Debentures There were no new issue of shares and debentures by the Company during the financial year. Options Granted Over Unissued Shares No options were granted to any person to take up unissued shares of the Company during the financial year. Directors The Directors in office since the date of the last report are: Dato Seri Abdul Azim Bin Mohd Zabidi Ng Kok Heng Soo Pow Min Khoo Chuin Yuen Faidzan Bin Hassan Cheong Wai Loong (Appointed on 30 September 2013) Hew Tze Kok (Appointed on 21 October 2013) Yeoh Eng Kong (Appointed on 30 January 2013; resigned on 1 November 2013) Datuk Chai Woon Chet (Appointed on 30 September 2012; resigned on 22 October 2013) Izaddeen Bin Daud (Resigned on 18 April 2013) 32 XOX Bhd ( X) Annual Report 2013

35 Directors Interest The interests and deemed interests in the shares and options over shares of the Company and of its related corporations (other than wholly-owned subsidiary companies) of those who were Directors at year end (including their spouses or children) according to the Register of Directors Shareholdings are as follows: Number of ordinary shares of RM1.00 each At Bought Sold At Direct Interests Dato' Seri Abdul Azim Bin Mohd Zabidi 43,161, ,161,160 Ng Kok Heng 47,464,060 - (5,000,000) 42,464,060 Yeoh Eng Kong - 1,100,000-1,100,000 Faidzan bin Hassan 3,000, ,000,000 Indirect Interests Dato' Seri Abdul Azim Bin Mohd Zabidi (1) 3,741, ,741,600 Soo Pow Min (1) 322, ,510 (1) Deemed interested through spouse's shareholdings in Company. By virtue of their shareholdings in the Company, Dato Seri Abdul Azim Mohd Bin Mohd Zabidi, Ng Kok Heng, Yeoh Eng Kong, Faidzan bin Hassan and Soo Pow Min are deemed to have interests in shares in its related corporations during the financial year to the extent of the Company s interests, in accordance with Section 6A of the Companies Act, None of the other Directors holding office at the end of the financial year had any interest in the ordinary shares and options of the Company or its related Corporation during the financial year. Directors Benefits Since the end of the previous financial period, no Director of the Company 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) 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. Neither during nor at the end of the financial year, was the Company a party to any arrangement the object of which 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. 33 XOX Bhd ( X) Annual Report 2013

36 Other Statutory Information (a) Before the statement of comprehensive income and statement of financial position of the Group and of the Company were made out, the Directors took reasonable steps: (i) (ii) to ascertain that action had been taken in relation to the writing off of bad debts and the making of provision for doubtful debts and satisfied themselves that adequate allowance had been made for doubtful debts and there were no bad debts to be written off; and to ensure that any current assets which were unlikely to realise in the ordinary course of business including their values as shown in the accounting records of the Group and of the Company had been written down to an amount which they might be expected so to realise. (b) At the date of this report, the Directors are not aware of any circumstances: (i) (ii) (iii) (iv) which would render it necessary to write off any bad debts or the amount of the provision for doubtful debts in the financial statements of the Group and of the Company inadequate to any substantial extent; or which would render the values attributed to current assets in the financial statements of the Group and of the Company misleading; or which have arisen which would render adherence to the existing method of valuation of assets or liabilities of the Group and of the Company misleading or inappropriate; or not otherwise dealt with in this report or the financial statements which would render any amount stated in the financial statements misleading. (c) At the date of this report, there does not exist: (i) (ii) any charge on the assets of the Group and of the Company which has arisen since the end of the financial year which secures the liabilities of any other person; or any contingent liability in respect of the Group and of the Company which has arisen since the end of the financial year. (d) No contingent or other liabilities of the Group and of the Company have become enforceable or are likely to become enforceable within the period of twelve months after the end of the financial year which will or may affect the ability of the Group and of the Company to meet its obligations as and when they fall due other than those disclosed in Note 31 to the financial statements. Subsequent Events Details of subsequent events are disclosed in Note 33 to the financial statements. 34 XOX Bhd ( X) Annual Report 2013

37 Auditors The Auditors, Messrs UHY, have expressed their willingness to continue in office. Signed on behalf of the Board of Director in accordance with a resolution of the Directors dated 8 November 2013 DATO SERI ABDUL AZIM BIN MOHD ZABIDI NG KOK HENG 35 XOX Bhd ( X) Annual Report 2013

38 XOX BHD. (Incorporated in Malaysia) STATEMENT BY DIRECTORS Pursuant to Section 169(15) of the Companies Act, 1965 We, the undersigned, being the two Directors of the Company, do hereby state that, in the opinion of the Directors, the financial statements set out on pages 43 to 106 are drawn up in accordance with Malaysian Financial Reporting Standards, International 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 the Company as of 30 June 2013 and of their financial performance and cash flows of the Group and of the Company for the financial year then ended. The supplementary information set out in page 107, which is not part of the financial statements, is prepared in all material respects, in accordance with Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants and the directive of Bursa Malaysia Securities Berhad. Signed on behalf of the Board in accordance with a resolution of the Directors dated 8 November DATO SERI ABDUL AZIM BIN MOHD ZABIDI NG KOK HENG 36 XOX Bhd ( X) Annual Report 2013

39 XOX BHD. (Incorporated in Malaysia) STATUTORY DECLARATION Pursuant to Section 169(16) of the Companies Act, 1965 I, CHU CHIU LOC being the officer primarily responsible for the financial management of XOX BHD., do solemnly and sincerely declare that the financial statements set out on pages 43 to 106 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, Subscribed and solemnly declared by the abovenamed at KUALA LUMPUR in the Federal Territory on 8 November 2013 ) ) ) CHU CHIU LOC Before me, COMMISSIONER FOR OATHS TENGKU FARIDDUDIN BIN TENGKU SULAIMAN W XOX Bhd ( X) Annual Report 2013

40 INDEPENDENT AUDITORS REPORT TO THE MEMBERS OF XOX BHD. (Company No. : X) (Incorporated in Malaysia) Report on the Financial Statements We have audited the financial statements of XOX Bhd., which comprise the statements of financial position as at 30 June 2013 of the Group and of the Company, and the statements of comprehensive income, statements of changes in equity and statements of cash flows of the Group and of the Company for the financial year then ended, and a summary of significant accounting policies and other explanatory information, as set out on pages 43 to 106. Directors Responsibility for the Financial Statements The Directors of the Company are responsible for the preparation of financial statements so as to give a true and fair view in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the Companies Act, 1965 in Malaysia. The Directors are also responsible for such internal control as the Directors determine are necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with approved standards on auditing in Malaysia. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on our judgement, including the assessment of risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity s preparation of financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. An audit also includes evaluating the appropriateness 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. 38 XOX Bhd ( X) Annual Report 2013

41 INDEPENDENT AUDITORS REPORT TO THE MEMBERS OF XOX BHD. (CONT D) (Company No. : X) (Incorporated in Malaysia) Opinion In our opinion, the financial statements give a true and fair view of the financial position of the Group and of the Company as of 30 June 2013 and of their financial performance and cash flows for the financial year then ended in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the Companies Act, 1965 in Malaysia. Emphasis of Matters Without qualifying our opinion, we draw attention to Note 2 of the financial statements which discloses the premise upon which the Group and the Company have prepared their financial statements by applying the going concern assumption is as follows: (a) (b) notwithstanding that the Group s and the Company s current liabilities exceeded its current assets by RM16,637,917 and RM31,331 thereby indicating the existence of material uncertainty which may cast doubt about the Group s and the Company s ability to continue as a going concern; and a major creditor has given a credit note of RM10 million in relation to the discount on mobile traffic up to June 2013 to the Group. The credit note for the discount which was recognised in the financial statements of the Group that was agreed in principle by the creditor during the year has been received. The balance of the outstanding amount is to be restructured under the Proposed Composite Scheme as disclosed in Notes 2 (c) and 33 to the financial statements respectively. 39 XOX Bhd ( X) Annual Report 2013

42 INDEPENDENT AUDITORS REPORT TO THE MEMBERS OF XOX BHD. (CONT D) (Company No. : X) (Incorporated in Malaysia) Report on Other Legal and Regulatory Requirements In accordance with the requirements of the Companies Act, 1965 in Malaysia, we also report the followings: (a) (b) (c) In our opinion, the accounting and other records and the registers required by the Act to be kept by the Company and its subsidiary companies of which we have acted as auditors have been properly kept in accordance with the provisions of the Act. We are satisfied that the accounts of the subsidiary companies 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. The auditors reports on the financial statements of the subsidiaries were not subject to any qualification and did not include any comment required to be made under Section 174(3) of the Act. The supplementary information set out on page 107 is disclosed to meet the requirement of Bursa Malaysia Securities Berhad and is not part of the financial statements. The Directors are responsible for the preparation of the supplementary information in accordance with Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants ( MIA Guidance ) and the directive of Bursa Malaysia Securities Berhad. In our opinion, the supplementary information is prepared, in all material respects, in accordance with the MIA Guidance and the directive of Bursa Malaysia Securities Berhad. 40 XOX Bhd ( X) Annual Report 2013

43 INDEPENDENT AUDITORS REPORT TO THE MEMBERS OF XOX BHD. (CONT D) (Company No. : X) (Incorporated in Malaysia) Other Matters 1. As stated in Note 2(a) to the financial statements, the Group and the Company adopted Malaysian Financial Reporting Standards on 1 July 2012 with a transition date of 1 January These standards were applied retrospectively by Directors to the comparative information in these financial statements, including the statements of financial position as at 30 June 2012 and 1 January 2011, and the statement of comprehensive income, statement of changes in equity and statement of cash flows for the financial period ended 30 June 2012 and related disclosures. We were not engaged to report on the restated comparative information and it is unaudited. Our responsibilities as part of our audit of the financial statements of the Group and of the Company for the financial year ended 30 June 2013 have, in these circumstances, included obtaining sufficient appropriate audit evidence that the opening balances as at 1 July 2012 do not contain misstatements that materially affect the financial position as of 30 June 2013 and financial performance and cash flows for the financial year then ended. 2. The financial statements of the prior year were audited by another firm of auditors in which it contained a qualified opinion in the auditor s report dated 31 October The qualification were due to the following: (a) (b) No impairment made for trade receivables which have been long outstanding amounting to RM4.9 million and due to the nature of the debt, the predecessor auditors are of the opinion that the receivables may not be recoverable and hence impairment losses on receivables should be provided for. Based on our assessment and the audit work performed during the financial year ended 30 June 2013 coupled with the appropriate impairment provided, we are satisfied that the carrying amount of the trade receivables during the financial year ended 30 June 2013 is fairly stated. The predecessor auditors were unable to obtain sufficient appropriate audit evidence that the capital work-in-progress amounting to RM3.5 million was not impaired and that the Group will has sufficient financial resources to complete the development of the capital work-in-progress for their intended use. During the current financial year, the said capital work-in-progress has been properly transferred to telecommunication network and equipment which are currently in use and operating effectively. Hence, we are of the view that the carrying amount of property, plant and equipment of the Group for the current financial year ended 30 June 2013 is fairly stated. 41 XOX Bhd ( X) Annual Report 2013

44 INDEPENDENT AUDITORS REPORT TO THE MEMBERS OF XOX BHD. (CONT D) (Company No. : X) (Incorporated in Malaysia) Other Matters (Cont d) (c) The predecessor auditors were unable to obtain sufficient appropriate audit evidence to substantiate the non-accrual of cost for unrealised sales amounting to approximately RM2.3 million. During the current financial year, we have obtained sufficient appropriate evidence that the accrual of cost is properly taken up and recorded. 3. 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. UHY Firm Number: AF 1411 Chartered Accountants STEPHEN WAN YENG LEONG Approved Number: 2963/07/15 (J) Chartered Accountant KUALA LUMPUR 8 November XOX Bhd ( X) Annual Report 2013

45 XOX BHD. (Incorporated in Malaysia) STATEMENTS OF FINANCIAL POSITION AS AT 30 JUNE 2013 Group Company Note RM RM RM RM RM RM Non-Current Assets Property, plant and equipment 4 33,254,129 32,989,626 12,950, Investments in subsidiary companies , ,002 - Goodwill ,254,129 32,989,626 12,950, , ,002 - Current Assets Inventories 7 783, , , Trade receivables 8 10,511,132 7,080,477 1,842, Other receivables 9 3,236,837 3,777,113 6,983,613 88,376 28, ,734 Amounts owing by subsidiary companies , ,000 - Tax recoverable 5,482 5, Fixed deposits with a licensed bank 11-8,000, Short-term investment 12 19,635 9,049 2,422, Cash and bank balances 244,987 1,021, ,175 15,253 31, ,801,735 20,688,052 12,193, , , ,219 Total Assets 48,055,864 53,677,678 25,144, , , , XOX Bhd ( X) Annual Report 2013

46 XOX BHD. (Incorporated in Malaysia) STATEMENTS OF FINANCIAL POSITION AS AT 30 JUNE 2013 (CONT D) Group Company Note RM RM RM RM RM RM Equity Share capital 13 30,200,000 30,200,000 24,880,000 30,200,000 30,200,000 2 Share premium 14 32,610,011 32,610, ,002 32,410,009 32,410,009 - Capital reserve 15 2,200,000 2,200,000-2,200,000 2,200,000 - Accumulated losses (48,811,650) (53,404,827) (30,534,631) (64,599,338) (64,489,040) (850,721) Shareholder's equity 16,198,361 11,605,184 (5,454,629) 210, ,969 (850,719) Non-controlling interest 18, Total Equity 16,216,960 11,605,184 (5,454,629) 210, ,969 (850,719) Non-Current Liabilities Deferred tax liabilities 16 3, Hire purchase payables , , , , Current Liabilities Trade payables 18 16,795,104 29,658, , Other payables 19 14,449,115 11,659,612 27,698, , ,597 1,013,438 Amounts owing to subsidiary companies , Amount owing to a Director Hire purchase payables , , Bank borrowings ,778, Tax payable 11, ,439,652 41,492,844 30,599, , ,597 1,013,938 Total Liabilities 31,838,904 42,072,494 30,599, , ,597 1,013,938 Total Equity and Liabilities 48,055,864 53,677,678 25,144, , , , The accompanying notes form an integral part of the financial statements.

47 XOX BHD. (Incorporated in Malaysia) STATEMENTS OF COMPREHENSIVE INCOME FOR THE FINANCIAL YEAR ENDED 30 JUNE 2013 Group Company to to to to Note RM RM RM RM Revenue 22 40,807,147 61,719, Cost of sales (15,194,251) (51,836,758) - - Gross profit 25,612,896 9,882, Other income 436, ,776 27,040,611 53,353 Selling and distribution expenses (3,453,423) (11,337,084) (9,774) (7,398) Administrative expenses (17,899,279) (19,295,255) (27,141,135) (61,484,274) Finance costs 23 (160,730) (384,280) - - Profit/(Loss) before taxation 24 4,536,110 (20,670,165) (110,298) (61,438,319) Taxation 25 (22,334) (31) - - Net profit/(loss) for the financial year/period, representing total comprehensive income for the financial year/period 4,513,776 (20,670,196) (110,298) (61,438,319) Net profit/(loss) for the financial year/period attributable to: Owners of the parent 4,593,177 (20,670,196) Non-controlling interests (79,401) - 4,513,776 (20,670,196) Earnings/(Loss) per share (sen) Basic (7.19) 45 The accompanying notes form an integral part of the financial statements.

48 XOX BHD. (Incorporated in Malaysia) STATEMENTS OF CHANGES IN EQUITY FOR THE FINANCIAL YEAR ENDED 30 JUNE 2013 Share Share Capital Accumulated Non-Controlling Total Capital Premium Reserve Losses Total Interest Equity Group Note RM RM RM RM RM RM RM At 1 July ,200,000 32,610,011 2,200,000 (53,404,827) 11,605,184-11,605,184 Disposal of partial interest in a subsidiary company ,000 98,000 Net profit for the financial year, representing total comprehensive Attributable to owners of the parent Non-Distributable income for the financial year ,593,177 4,593,177 (79,401) 4,513,776 At 30 June ,200,000 32,610,011 2,200,000 (48,811,650) 16,198,361 18,599 16,216,960 At 1 January ,880, ,002 - (30,534,631) (5,454,629) - (5,454,629) Shares issued pursuant to the listing scheme - acquisition of subsidiary companies 140, , ,000 - special issue 500,000 1,300,000 2,200,000 (2,200,000) 1,800,000-1,800,000 - public issue 4,680,000 32,760, ,440,000-37,440,000 Net loss for the financial period, representing total comprehensive income for the financial period (20,670,196) (20,670,196) - (20,670,196) Listing expenses - (1,649,991) - - (1,649,991) - (1,649,991) At 30 June ,200,000 32,610,011 2,200,000 (53,404,827) 11,605,184-11,605, XOX Bhd ( X) Annual Report 2013

49 XOX BHD. (Incorporated in Malaysia) STATEMENTS OF CHANGES IN EQUITY FOR THE FINANCIAL YEAR ENDED 30 JUNE 2013 (CONT D) Company Non-Distributable Share Share Capital Accumulated Total Capital Premium Reserve Losses Equity Note RM RM RM RM RM At 1 July ,200,000 32,410,009 2,200,000 (64,489,040) 320,969 Net loss for the financial year, representing total comprehensive income for the financial year (110,298) (110,298) At 30 June ,200,000 32,410,009 2,200,000 (64,599,338) 210,671 At 1 January (850,721) (850,719) Shares issued pursuant to the listing scheme - acquisition of subsidiary companies 25,019, ,019,998 - special issue 500,000 1,300,000 2,200,000 (2,200,000) 1,800,000 - public issue 4,680,000 32,760, ,440,000 Net loss for the financial period, representing total comprehensive income for the financial period (61,438,319) (61,438,319) Listing expenses - (1,649,991) - - (1,649,991) At 30 June ,200,000 32,410,009 2,200,000 (64,489,040) 320, The accompanying notes form an integral part of the financial statements.

50 XOX BHD. (Incorporated in Malaysia) STATEMENTS OF CASH FLOWS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2013 Cash Flows From Operating Activities Group Company to to to to Note RM RM RM RM Profit/(Loss) before taxation 4,536,110 (20,670,165) (110,298) (61,438,319) Adjustments for: Depreciation of property, plant and equipment 3,174,461 3,499, Dividend income (281) (Gain)/Loss on unrealised foreign exchange (198,507) 21, Impairment on: - Capital work-in-progress - 100,000-33,099,998 - Trade receivables 1,963, ,800 4,352,469 27,039,315 - Investments in subsidiary companies ,000,000 - Interest expenses 160, , Interest income (49,459) (395,699) (1,297) (53,353) Inventories written down 13, Loss on disposal of property, plant and equipment 3, Property, plant and equipment written off 450 9, Goodwill written off - 44, Gain on bargain purchase - (6,905) - - Reversal of impairment of amounts owing by subsidiary companies - - (27,039,314) - Operating profit/(loss) before working capital changes 9,603,243 (16,758,989) (798,440) (1,352,359) 48 XOX Bhd ( X) Annual Report 2013

51 XOX BHD. (Incorporated in Malaysia) STATEMENTS OF CASH FLOWS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2013 (CONT D) Group Company to to to to Note RM RM RM RM Changes in working capital: Inventories (3,103) (575,921) - - Receivables (4,853,601) (2,282,993) (59,556) 133,914 Payables (9,875,328) 13,468, ,652 (903,842) Subsidiary companies ,856 (27,269,314) Director - (500) - (500) (14,732,032) 10,609, ,952 (28,039,742) Cash (used in)/generated from operations (5,128,789) (6,149,581) 84,512 (29,392,101) Interest received 49, ,699 1,297 53,353 Interest paid (160,730) (384,280) - - Tax refunded 1, Tax paid (9,091) (5,381) (300) - (118,374) 6, ,353 Net cash (used in)/generated from operating activities (5,247,163) (6,143,543) 85,509 (29,338,748) Cash Flows From Investing Activities Acquisition of a subsidiary company, net of cash and cash equivalents acquired 5 - (32,855) - - Additional investments in subsidiary companies - - (200,000) (33,240,000) Disposal of partial interest in a subsidiary company ,000 - Dividend received Purchase of property, plant and equipment 4(a) (3,399,293) (22,728,491) - - Proceeds from disposal of property, plant and equipment 54, Net cash used in investing activities (3,344,439) (22,761,346) (102,000) (33,240,000) 49 XOX Bhd ( X) Annual Report 2013

52 XOX BHD. (Incorporated in Malaysia) STATEMENT OF CASH FLOWS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2013 (CONT D) Group Company to to to to Note RM RM RM RM Cash Flows From Financing Activities Listing expenses - (1,649,991) - (1,649,991) Proceeds from issuance of shares - 39,380,000-64,259,998 Repayment of hire purchase payables (174,790) (165,560) - - Repayment of revolving credit - (2,778,848) - - Net cash (used in)/generated from financing activities (174,790) 34,785,601-62,610,007 Net (decrease)/increase in cash and cash equivalents (8,766,392) 5,880,712 (16,491) 31,259 Cash and cash equivalents at beginning of the financial year/period 9,031,014 3,150,302 31, Cash and cash equivalents at end of the financial year/period 264,622 9,031,014 15,253 31,744 Cash and cash equivalents at end of the financial year/period comprises: Fixed deposits with licensed banks - 8,000, Short-term investment 19,635 9, Cash and bank balances 244,987 1,021,965 15,253 31, ,622 9,031,014 15,253 31, The accompanying notes form an integral part of the financial statements.

53 XOX BHD. (Incorporated in Malaysia) NOTES TO THE FINANCIAL STATEMENTS 1. Corporate Information The Company is a public limited by shares, incorporated and domiciled in Malaysia and is listed on the Ace Market of the Bursa Malaysia Securities Berhad. The principal place of business of the Company is at 31-3, Block C, Jaya One, No.72A, Jalan Universiti, Petaling Jaya, Selangor Darul Ehsan. The registered office of Company is located at Suite 10.03, Level 10, The Gardens South Tower, Mid Valley City, Lingkaran Syed Putra, Kuala Lumpur. The Company is principally engaged in the business of investment holding. The principal activities of the subsidiary companies are set out in Note 5. There have been no significant changes in the nature of these activities during the financial year. 2. Basis of Preparation (a) Statement of compliance The financial statements of the Group and of the Company have been prepared on the historical cost convention except as disclosed in the notes to the financial statements and in accordance with Malaysian Financial Reporting Standards ( MFRSs ), International Financial Reporting Standards and the Companies Act, 1965 in Malaysia. In the previous period, the financial statements of the Group and the Company were prepared in accordance with Financial Reporting Standards ( FRS ). These are the Group s and the Company s first financial statements prepared in accordance with MFRSs and MFRS 1, First-time Adoption of Malaysian Financial Reporting Standards has been applied. The transition to MFRS does not have financial impact to the financial statements of Group and of the Company. The Group and the Company have not applied the following MFRSs that have been issued by the Malaysian Accounting Standards Board but are not yet effective for the Group and the Company: Effective dates for financial periods beginning on or after MFRS 10 Consolidated Financial Statements 1 January XOX Bhd ( X) Annual Report 2013

54 2. Basis of Preparation (Cont d) (a) Statement of compliance (Cont d) Effective dates for financial periods beginning on or after MFRS 11 Joint Arrangements 1 January 2013 MFRS 12 Disclosure of Interests in Other 1 January 2013 Entities MFRS 13 Fair Value Measurement 1 January 2013 MFRS 119 (2011) Employee Benefits 1 January 2013 MFRS 127 (2011) Separate Financial Statements 1 January 2013 MFRS 128 (2011) Investments in Associates and Joint 1 January 2013 Ventures MFRS 3 Business Combinations (IFRS 3 issued by IASB in March 2004) 1 January 2013 MFRS 127 Consolidated and Separate 1 January 2013 Financial Statements (IAS 27 revised by IASB in December 2003) IC Interpretation 20 Stripping Costs in the Production 1 January 2013 of A Surface Mine Amendments to Government Loans 1 January 2013 MFRS 1 Amendments to Disclosure - Offsetting Financial 1 January 2013 MFRS 7 Assets and Financial Liabilities Amendments to Consolidated Financial Statements, 1 January 2013 MFRSs 10, 11 Joint Arrangements and and 12 Disclosure of Interests in Other Entities: Transition Guidance Amendments to MFRSs contained in the document 1 January 2013 entitled Annual Improvements Cycle Amendments to MFRS 132 Offsetting Financial Assets and Financial Liabilities 1 January 2014 Amendment to Investment Entity 1 January 2014 MFRS 10 MFRS 9 (IFRS 9 (2009)) MFRS 9 (IFRS 9 (2010)) Financial Instruments (IFRS 9 issued by IASB in November 2009) Financial Instruments (IFRS 9 issued by IASB in October 2010) 1 January January 2015 The Group and Company intend to adopt the above MFRSs when they become effective. The initial application of the standards which will be applied prospectively or which requires extended disclosures, is not expected to have any financial impacts to the current and prior period s financial statements upon the first adoption. 52 XOX Bhd ( X) Annual Report 2013

55 2. Basis of Preparation (Cont d) (a) Statement of compliance (Cont d) The possible financial impacts of initial application of MFRSs, which will be applied retrospectively is as follows: MFRS 9 Financial Instruments MFRS 9 (IFRS 9 (2009)) replaces the guidance in MFRS 139 Financial Instruments: Recognition and Measurement on classification and measurement of financial asset. MFRS 9 requires financial asset to be measured at fair value or amortised cost. The classification depends on the entity s business model for managing its financial instruments and the contractual cash flow characteristics of the instrument. MFRS 9 (IFRS 9 (2010)) includes the requirements for the classification and measurement of financial liabilities and for derecognition. Measurement for financial liability designated as at fair value through profit or loss, requires the amount of change in the fair value of the financial liability, that is attributable to the change of credit risk of that liability, is presented in other comprehensive income, unless the recognition of the effects of changes in the liability s credit risk in other comprehensive income would create or enlarge an accounting mismatch in profit or loss. Under MFRS 139, the entire amount of the change in fair value of the financial liability designated as fair value through profit or loss was presented in profit or loss. The adoption of MFRS 9 will result in a change in accounting policy. The Group and the Company are currently examining the financial impact of adopting MFRS 9. MFRS 10 Consolidated Financial Statements MFRS 10 replaces all the guidance on control and consolidation in MFRS 127 Consolidated and Separate Financial Statements and IC Interpretation 112 Consolidation Special Purpose Entities MFRS 10 changes the definition of control. An investor controls an investee when it is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. It establishes control as the basis for determining which entities are consolidated in the consolidated financial statements and sets out the accounting requirements for the preparation of consolidated financial statements. The adoption of MFRS 10 may lead to consolidation of entities that were previously not included in the Group. The Group is currently examining the financial impact of application of MFRS XOX Bhd ( X) Annual Report 2013

56 2. Basis of Preparation (Cont d) (a) Statement of compliance (Cont d) MFRS 13 Fair Value Measurement MFRS 13 defines fair value and sets out a framework for measuring fair value, and the disclosure requirements about fair value. This standard is intended to address the inconsistencies in the requirements for measuring fair value across different accounting standards. The definition of fair value under this standard emphasises the principle that fair value is a market-based measurement, not an entity specific measurement. The adoption of MFRS 13 will result in a change in accounting policy. The Group and the Company are currently examining the financial impact of adopting MFRS 13. MFRS 127 Separate Financial Statements (2011) Upon the adoption of MFRS 10, the accounting requirements relating to the preparation of consolidated financial statements are no longer covered under MFRS 127. This revised MFRS 127 only cover the requirements relating to the accounting for investments in subsidiary companies, associated companies and joint ventures in the separate financial statements of the entity. In such cases, the entity should account for such investments either at cost, or in accordance with MFRS 9. The adoption of MFRS 127 (2011) will result in a change in accounting policy. The Group is currently examining the financial impact of adopting MFRS 127 (2011). The initial applications of other MFRSs are not expected to have any material financial impact to the financial statements of the Group and of the Company. MFRS 119 Employee Benefits (2011) This revised MFRS 119 will supersede the existing MFRS 119 when effective. This new standard makes significant changes to the recognition and measurement of defined benefit pension expense and termination benefits, and to the disclosures for all employee benefits. Actuarial gains and losses will no longer be deferred using the corridor approach. Past service costs, whether unvested or already vested, are recognised immediately in the profit or loss as incurred and the annual defined benefit costs in the profit or loss will include net interest expense/ income on the defined benefit asset/liability. The adoption of MFRS 119 (2011) will result in a change in accounting policy. The Group and the Company are currently examining the financial impact of adopting MFRS 119 (2011). 54 XOX Bhd ( X) Annual Report 2013

57 2. Basis of Preparation (Cont d) (b) Functional and presentation currency These financial statements are presented in Ringgit Malaysia ( RM ), which is the Group s and Company s functional currency and all values has been rounded to the nearest RM except when otherwise stated. (c) Significant accounting estimates and judgements The summary of accounting policies as described in Note 3 are essential to understand the Group s and the Company s results of operations, financial position, cash flows and other disclosures. Certain of these accounting policies require critical accounting estimates that involve complex and subjective judgements and the use of assumptions, some of which may be for matters that are inherently uncertain and susceptible to change. The Directors exercise their judgement in the process of applying the Group s accounting policies. Estimates, assumptions concerning the future and judgements are made in the preparation of the financial statements. They affect the application of the Group s and Company s accounting policies, reported amounts of assets, liabilities, income and expenses, and disclosures made. Estimates and underlying assumptions are assessed on an on-going basis and are based on experience and relevant factors, including expectations of future events that are believed to be reasonable under the circumstances. The actual results may differ from the judgements, estimates and assumptions made by management, and will seldom equal the estimated results. The key assumptions concerning the future and other key sources of estimation or uncertainty at the end of the reporting period, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are set out below: Useful lives of property, plant and equipment The Management estimates the useful lives of the property, plant and equipment to be within 5 to 10 years and reviews the useful lives of depreciable assets at end of each reporting period. At 30 June 2013, the Management assesses that the useful lives represent the expected utilisation of the assets to the Group. Actual results, however, may vary due to change in the business plan and strategies, expected level of usage and technological developments, resulting in the adjustment to the Group s assets. A reduction in the estimated useful lives of property, plant and equipment would increase the recorded depreciation and decrease the value of property, plant and equipment. Write-down of inventories Reviews are made periodically by Management on expired, obsolete and slowmoving inventories. These reviews require judgement and estimates. Possible changes in these estimates could result in revisions to the valuation of inventories. 55 XOX Bhd ( X) Annual Report 2013

58 2. Basis of Preparation (Cont d) (c) Significant accounting estimates and judgements (Cont d) Impairment of loans and receivables The Group and the Company assess at end of each reporting period whether there is any objective evidence that a financial asset is impaired. To determine whether there is objective evidence of impairment, the Group and the Company consider factors such as the probability of insolvency or significant financial difficulties of the receivables and default or significant delay in payments. Where there is objective evidence of impairment, the amount and timing of future cash flows are estimated based on historical loss experience of assets with similar credit risk characteristics. The impairment of loans and receivables of the Group and of the Company are disclosed in Notes 8 and 10 respectively. Income taxes There are certain transactions and computations for which the ultimate tax determination is uncertain during the ordinary course of business. Significant judgement is involved especially in determining tax base allowances and deductibility of certain expense in determining the company-wide provision for income taxes. The Company and its subsidiary companies recognise liabilities for expected tax issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recognised, such differences will impact the income tax and deferred tax provisions in the financial year in which such determination is made. Impairment on investments in subsidiary companies and the related goodwill The carrying values of investments in subsidiary companies and the related goodwill are reviewed for impairment. In the determination of the value in use of the investment, the Company is required to estimate the expected cash flows to be generated by the subsidiary companies and also to choose a suitable discount rate in order to calculate the present value of those cash flows. When the value in use of the investment is between the carrying amounts, the investments in subsidiary companies are impaired. Simultaneously, the related goodwill will be impaired accordingly and vice versa. Accrual of cost of recharge usage Accrual of cost of recharge usage is recognised on a monthly basis by using the average 6 months costs margin which is the directors best estimate of the expenditure required to settle the Group s obligation. When the actual invoices received, the Management will do the necessary under/over provision in the accrual account to reflect the actual costs incurred. 56 XOX Bhd ( X) Annual Report 2013

59 2. Basis of Preparation (Cont d) (c) Significant accounting estimates and judgements (Cont d) Recognition of additional discount granted from a trade creditor During the financial year, the Group has recognised RM10 million ( to : RM13 million) discount which was granted by a trade creditor to the Group. The discount was in relation to the mobile traffic up to 30 June 2013 ( to : up to 30 June 2012). The Directors are of the opinion that the discount granted will not be recalled, rescinded and restated by the creditor and therefore has taken up the discount in the current financial statements. (d) Going concern The Group and the Company have prepared their financial statements by applying the going concern assumption, notwithstanding that the Group s and the Company s current liabilities exceeded its current assets by RM16,637,917 ( : RM20,804,792) and RM31,331 ( : current assets exceeded current liabilities by RM180,967). This condition indicates the existence of a material uncertainty which may cast significant doubt about the Group s and the Company s ability to continue as a going concern and therefore the Group and the Company may be unable to realise its assets and discharge its liabilities respectively in the normal course of business respectively. Notwithstanding this condition, the financial statements of the Group and of the Company have been prepared on going concern basis as the creditors of the Group and the shareholders of the Company have undertaken to provide appropriate financial support to the Group and to the Company to enable it to meet its obligations respectively as and when they fall due. The going concern is also dependent on the success of the future business plan of the Group and of the Company coupled with the continuous operational support from a major creditor as disclosed in Note XOX Bhd ( X) Annual Report 2013

60 3. Significant Accounting Policies (a) Basis of consolidation The consolidated financial statements incorporate the financial statements of the Company and all its subsidiary companies, its associate companies through equity accounting, and its jointly controlled entities through proportionate consolidation, which have been prepared in accordance with the Group s accounting policies, and are all drawn up to the same reporting period. In the Company s separate financial statements, investments in subsidiary companies are stated at cost less impairment losses in accordance with Note 3(h). On disposal of these investments, the difference between the net disposal proceeds and the carrying amount is recognised in the statements of comprehensive income. (i) Subsidiary companies Subsidiary companies are those companies in which the Group has long term equity interest and has the power, directly or indirectly, to govern the financial and operating policies so as to obtain benefits from its activities, generally accompanying a shareholding of more than one half of the voting rights. Investments in subsidiary companies are stated at cost less any impairment losses in the Company s statement of financial position, unless the investment is held for sale or distribution. The cost of investments includes transaction costs. Upon the disposal of investment in a subsidiary company, the difference between the net disposal proceeds and its carrying amount is included in profit or loss. (ii) Business combination Subsidiary companies are consolidated from the date on which control is transferred to the Group and are no longer consolidated from the date that control ceases. All intra-group balances, income and expenses and unrealised gains and losses resulting from intra-group transactions are eliminated in full. 58 XOX Bhd ( X) Annual Report 2013

61 3. Significant Accounting Policies (Cont d) (a) Basis of consolidation (Cont d) (ii) Business combination (Cont d) Changes in the Company owners ownership interest in a subsidiary company that do not result in a loss of control are accounted for as equity transactions. In such circumstances, the carrying amounts of the controlling and non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiary company. Any difference between the amount by which the non-controlling interest is adjusted and the fair value of the consideration paid or received is recognised directly in equity and attributed to owners of the parent. The acquisition of XOX Com Sdn. Bhd. by the Company has been accounted for as a business combination amongst entities under common control. Accordingly, the financial statements of the Group have been consolidated using the merger method of accounting. Under the merger method of accounting, the results of the subsidiary company are presented as if the merger had been effected throughout the current and previous financial year. The assets and liabilities combined are accounted for based on the carrying amounts from the perspective of common control shareholder at the date of transfer. On consolidation, the cost of the merger is cancelled with the values of the shares received. Any resulting debit or credit difference is classified as a non-distributable reserve. (iii) Goodwill on consolidation The other subsidiary companies are consolidated using the purchase method of accounting. Under the purchase method of accounting, the results of subsidiary companies 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 subsidiary companies 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. 59 XOX Bhd ( X) Annual Report 2013

62 3. Significant Accounting Policies (Cont d) (a) Basis of consolidation (Cont d) (iii) Goodwill on consolidation (Cont d) The excess of the consideration transferred the amount of any noncontrolling interest in the acquiree and the acquisition-date fair value of any previous equity interest in the acquiree over the fair value of the Group s share of the identifiable net assets acquired is recorded as goodwill. If this is less than the fair value of the net assets of the subsidiary company acquired (i.e. a bargain purchase), the gain is recognised in profit or loss. Following the initial recognition, goodwill is measured at cost less accumulated impairment losses. Goodwill is not amortised but instead, it is reviewed for impairment annually or more frequent when there is objective evidence that the carrying value may be impaired, in accordance with Note 3(h). Goodwill is allocated to cash-generating units for the purpose of impairment testing. The allocation is made to those cash-generating units or groups of cash-generating units that are expected to benefit from the business combination in which the goodwill arose. Gains or losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold. As part of its transition to MFRS framework, the Group elected not to restate those business combinations that occurred before the date of transition to MFRS. Goodwill arising from acquisitions before 1 January 2011 has been carried forward from the previous FRS framework as at the date of transition. 60 XOX Bhd ( X) Annual Report 2013

63 3. Significant Accounting Policies (Cont d) (b) Property, plant and equipment Property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses. The policy of recognition and measurement of impairment losses is in accordance with Note 3(h). (i) Recognition and measurement Cost includes expenditures that are directly attributable to the acquisition of the assets and any other costs directly attributable to bringing the asset to working condition for its intended use, cost of replacing component parts of the assets, and the present value of the expected cost for the decommissioning of the assets after their use. The cost of self-constructed assets also includes the cost of materials and direct labour. For qualifying assets, borrowing costs are capitalised in accordance with the accounting policy on borrowing costs. All other repair and maintenance costs are recognised in profit or loss as incurred. When significant parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment. Capital work-in-progress represents assets under construction, and which are not ready for commercial use at the reporting period. Capital work-inprogress is stated at cost, transferred to the relevant category of assets and depreciated accordingly when the assets are completed and ready for commercial use. Property, plant and equipment are derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Gains or losses arising on the disposal of property, plant and equipment are determined as the difference between the disposal proceeds and the carrying amount of the assets and are recognised in profit or loss. On disposal of a revalued asset, the amounts in revaluation reserve relating to those assets are transferred to retained earnings. (ii) Subsequent costs The cost of replacing part of an item of property, plant and equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Group and to the Company and the cost can be measured reliably. The costs of the day-to-day servicing of property, plant and equipment are recognised in the statements of comprehensive income as incurred. 61 XOX Bhd ( X) Annual Report 2013

64 4. Significant Accounting Policies (Cont d) (b) Property, plant and equipment (Cont d) (iii) Depreciation Depreciation is recognised in the profit or loss on straight line basis to write off the cost of each asset to its residual value over its estimated useful life. Leased assets are depreciated over the shorter of the lease term and their useful lives. Property, plant and equipment are depreciated based on the estimated useful lives of the assets as follows: Telecommunication network and equipment Office equipment Furniture and fittings Renovation Motor vehicles 10 years 5 years 10 years 10 years 5 years The residual values, useful lives and depreciation method are reviewed at each reporting period end 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 property, plant and equipment. (c) Leases The determination of whether an arrangement is, or contains, a lease is based on the substance of the arrangement at the inception date, whether fulfilment of the arrangement is dependent on the use of a specific asset or asset or the arrangement conveys a right to use the asset, even if that right is not explicitly specific in an arrangement. For arrangements entered into prior to 1 January 2011, the date of inception is deemed to be 1 January 2011 in accordance with the MFRS 1. (i) Finance lease Leases in terms of which the Group and the Company assume substantially all the risks and rewards of ownership are classified as finance lease. Upon initial recognition, the leased asset is measured at an amount equal to the lower of its fair value and the present value of the minimum lease payments. Subsequent to initial recognition, the asset is accounted for in accordance with the accounting policy applicable to that asset. 62 XOX Bhd ( X) Annual Report 2013

65 3. Significant Accounting Policies (Cont d) (c) Leases (Cont d) (i) Finance lease (Cont d) Minimum lease payments made under finance leases are apportioned between finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are recognised as finance costs in the profit or loss. Contingent lease payments are accounted for by revising the minimum lease payments over the remaining term of the lease when the lease adjustment is confirmed. (ii) Operating lease Leases, where the Group or the Company do not assume substantially all the risks and rewards of ownership are classified as operating leases and, except for property interest held under operating lease, the leased assets are not recognised on the statement of financial position. Payments made under operating leases are recognised in profit or loss on a straight-line basis over the term of the lease. Lease incentives received are recognised in profit or loss as an integral part of the total lease expense, over the term of the lease. Contingent rentals are charged to profit or loss in the reporting period in which they are incurred. (d) Financial assets Financial assets are recognised on the statements of financial position when, and only when, the Group and the Company become a party to the contractual provisions of the financial instrument. Financial assets are initially recognised at fair value plus transaction costs. Embedded derivative is recognised separately from the host contract and accounted for as a derivative if, and only if, it is not closely related to the economic characteristics and risks of the host contract and the host contract is not categorised at fair value through profit or loss. The host contract, in the event an embedded derivative is recognised separately, is accounted for in accordance with policy applicable to the nature of the host contract. 63 XOX Bhd ( X) Annual Report 2013

66 3. Significant Accounting Policies (Cont d) (d) Financial assets (Cont d) The Group and the Company classify their financial assets depending on the purpose for which it was acquired at initial recognition, into the following categories: (i) Loan and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are presented as current assets, except for those maturing later than 12 months after the end of the reporting period which are presented as non-current assets. After initial recognition, financial assets categorised as loans and receivables are measured at amortised cost using the effective interest method, less impairment losses. Gains and losses are recognised in profit or loss when the loans and receivables are derecognised or impaired, and through the amortisation process. (ii) Available-for-sale financial assets Available-for-sale financial assets are non-derivatives that are either designated in this category or not classified in any of the other categories. They are presented as non-current assets unless the Management intends to dispose of the assets within 12 months after the end of the reporting period. After initial recognition, available-for-sale financial assets are measured at fair value. Any gains or losses from changes in fair value of the financial asset are recognised in other comprehensive income, except that impairment losses, foreign exchange gains and losses on monetary instruments and interest calculated using the effective interest method are recognised in profit or loss. The cumulative gain or loss previously recognised in other comprehensive income is reclassified from equity to profit or loss as a reclassification adjustment when the financial asset is derecognised. Interest income calculated using the effective interest method is recognised in profit or loss. Dividends on an available-for-sale equity instrument are recognised in profit or loss when the Group s and the Company's right to receive payment is established. Investment in equity instruments that do not have a quoted market price in an active market and whose fair value cannot be reliably measured are measured at cost less impairment loss. 64 XOX Bhd ( X) Annual Report 2013

67 3. Significant Accounting Policies (Cont d) (d) Financial assets (Cont d) Regular way purchase or sale of financial assets A regular way purchase or sale is a purchase or sale of a financial asset under a contract whose terms require delivery of the asset within the time frame established generally by regulation or convention in the marketplace concerned. All regular way purchases and sales of financial assets are recognised or derecognised on the trade date i.e., the date that the Group and the Company commit to purchase or sell the asset. Derecognition of financial assets Financial assets are derecognised when the contractual rights to receive cash flows from the financial assets have expired or have been transferred and the Group and the Company have transferred substantially all risks and rewards of ownership. On derecognition of a financial asset, the difference between the carrying amount and the sum of consideration received and any cumulative gains or loss that had been recognised in equity is recognised in the profit or loss. (e) Financial liabilities Financial liabilities are recognised on the statements of financial position when, and only when the Group and the Company become a party to the contractual provisions of the financial instrument. 65 XOX Bhd ( X) Annual Report 2013

68 3. Significant Accounting Policies (Cont d) (e) Financial liabilities (Cont d) The Group and the Company classify their financial liabilities at initial recognition into other liabilities measured at amortised cost. Other financial liabilities are non-derivatives financial liabilities. The Group s and the Company s other financial liabilities comprise trade and other payables as well as borrowings. Other financial liabilities are classified as current liabilities; except for maturities more than 12 months after the end of the reporting period, in which case they are classified as non-current liabilities. Other liabilities are subsequently measured at amortised cost using the effective interest method. Gains and losses are recognised in the profit or loss when the liabilities are derecognised as well as through the effective interest rate method amortisation process. Derecognition of financial liabilities A financial liability or a part of it is derecognised when, and only when, the obligation specified in the contract is discharged or cancelled or expires. On derecognition of a financial liability, the difference between the carrying amount of the financial liability extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in profit or loss. Offsetting of financial instruments A financial asset and financial liability are offset and the net amount reported in the statement of financial position if, and only if, there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, or to realise the assets and settle the liabilities simultaneously. 66 XOX Bhd ( X) Annual Report 2013

69 2. Significant Accounting Policies (Cont d) (f) Inventories Inventories are stated at the lower of cost and net realisable value. Cost is determined on weighted average basis and comprises the purchase price and incidentals incurred in bringing the inventories to their present location and condition. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and the estimated costs necessary to make the sale. (g) Cash and cash equivalents Cash and cash equivalents comprise cash in hand, bank balances, demand deposits, bank overdraft and highly liquid investments that are readily convertible to known amount of cash and which are subject to an insignificant risk of changes in value. For the purpose of statement of cash flows, cash and cash equivalents are presented net of bank overdrafts and pledged deposits. (h) Impairment of assets (i) Non-financial assets The carrying amounts of non-financial assets are reviewed at the end of each reporting period to determine whether there is any indication of impairment. If any such indication exists then the asset s recoverable amount is estimated. An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. Impairment loss is recognised immediately in profit or loss, unless the asset is carried at a revalued amount, in which such impairment loss is recognised directly against any revaluation surplus for the asset to the extent that the impairment loss does not exceed the amount in the revaluation surplus for that same asset. A cash-generating unit is the smallest identifiable asset group that generates cash flows that largely are independent from other assets and groups. The recoverable amount of an asset or cash-generating units is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. 67 XOX Bhd ( X) Annual Report 2013

70 3. Significant Accounting Policies (Cont d) (h) Impairment of assets (Cont d) (i) Non-financial assets (Cont d) Previously recognised impairment losses are assessed at the end of each reporting period whether there is any indication that the loss has decreased or no longer exists. An impairment loss is reversed only if there has been a change in the assumptions used to determine the asset s recoverable amount since the last impairment loss was recognised. The reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior year/period. Such reversal is recognised in the profit or loss unless the asset is carried at a revalued amount, in which case the reversal is treated as a revaluation increase. (ii) Financial assets All financial assets, other than those at fair value through profit or loss, are assessed at each reporting date whether there is any objective evidence of impairment as a result of one or more events having an impact on the estimated future cash flows of the asset. Available-for-sale financial assets Significant or prolonged decline in fair value below cost, significant financial difficulties of the issuer or obligor, and the disappearance of an active trading market are considerations to determine whether there is objective evidence that investment securities classified as available-forsale financial assets are impaired. If an available-for-sale financial asset is impaired, the amount of impairment loss is recognised in profit or loss and is measured as the difference between its cost (net of any principal payment and amortisation) and its current fair value, less any impairment loss previously. When a decline of fair value of an available-for-sale financial asset has been recognised in other comprehensive income, the cumulative loss is reclassified from equity to profit or loss. Impairment losses on available-for-sale equity investment that is carried at cost are not reversed in profit or loss in the subsequent periods. For available-for-sale debt investments, impairment losses are subsequently reversed in profit or loss, if an increase in the fair value of the investment can be objectively related to an event occurring after the recognition of the impairment loss in profit or loss. 68 XOX Bhd ( X) Annual Report 2013

71 3. Significant Accounting Policies (Cont d) (i) Share capital An equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting all of its liabilities. Ordinary shares are equity instruments. Ordinary shares are recorded at the nominal value of shares issued. Ordinary shares are classified as equity. Dividends on ordinary shares are accounted for in equity as appropriation of retained earnings and recognised as a liability in the period in which they are declared. (j) Foreign currency transactions Transactions in foreign currency are recorded in the functional currency of the respective Group entities using the exchange rates prevailing at the dates of the transactions. At each reporting date, monetary items denominated in foreign currencies are retranslated at the rates prevailing on that date. Non-monetary items denominated in foreign currencies that are measured at fair value are retranslated to the functional currency at the exchange rate at the date on which the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the rate at the date of transaction. 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. 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. 69 XOX Bhd ( X) Annual Report 2013

72 3. Significant Accounting Policies (Cont d) (k) Employee benefits (i) Short term employee benefits Wages, salaries, bonuses and social security contributions are recognised as expenses in the reporting period in which the associated services are rendered by employees of the Group and the Company. Short term accumulating compensated absences such as paid annual leave are recognised when services are rendered by employees that increase their entitlement to future compensated absences. Short term non-accumulating compensated absences such as sick and medical leave are recognised when the absences occur. The expected cost of accumulating compensated absences is measured as additional amount expected to be paid as a result of the unused entitlement that has accumulated at the end of the reporting period. (ii) Defined contribution plans As required by law, companies in Malaysia make contributions to the state pension scheme, the Employees Provident Fund ( EPF ). Such contributions are recognised as an expense in the profit or loss as incurred. Once the contributions have been paid, the Group and the Company have no further payment obligations. (l) Revenue (i) Sales of goods Revenue recognised upon delivery of goods and customers acceptance and where applicable, net of sales tax, return and trade discounts. (ii) Rental income Rental income is accounted for on a straight-line basis over the lease terms. The aggregate costs of incentives provided to lessees are recognised as a reduction of rental income over the lease term on a straight-line basis. (iii) Interest income Interest income is recognised on accruals basis using the effective interest method. 70 XOX Bhd ( X) Annual Report 2013

73 3. Significant Accounting Policies (Cont d) (m) Borrowing costs Borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset are capitalised as part of the cost of the assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale. All other borrowing costs are recognised in profit or loss in the period in which they are incurred. Borrowing costs consist of interest and other costs that the Group and the Company incurred in connection with the borrowing of funds. The capitalisation of borrowing costs as part of the cost of a qualifying asset commences when expenditure for the asset is being incurred, borrowing costs are being incurred and activities that are necessary to prepare the asset for its intended use or sale are in progress. Capitalisation of borrowing costs is suspended or ceases when substantially all the activities necessary to prepare the qualifying asset for its intended use or sale are interrupted or completed. Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation. (n) Income taxes Tax expense in profit or loss comprises current and deferred tax. Current tax and deferred tax is recognised in profit or loss except to the extent that it relates to a business combination or items recognised directly in equity or other comprehensive income. Current tax is the expected tax payable or receivable on the taxable income or loss for the year/period, using tax rates enacted or substantively enacted by the end of the reporting period, and any adjustment to tax payable in respect of previous year/period. Deferred tax is recognised using the liability method for all temporary differences between the carrying amounts of assets and liabilities in the statement of financial position and their tax bases. Deferred tax is not recognised for the temporary differences arising from the initial recognition of goodwill, the initial recognition of assets and liabilities in a transaction which is not a business combination and that affects neither accounting nor taxable profit or loss. Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the end of the reporting period. The measurement of deferred tax is based on the expected manner of realisation or settlement of the carrying amount of the assets and liabilities, at the end of the reporting period. 71 XOX Bhd ( X) Annual Report 2013

74 3. Significant Accounting Policies (Cont d) (n) Income taxes (Cont d) Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realised simultaneously. A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which the temporary difference can be utilised. Deferred tax assets are reviewed at the end of each reporting period and are reduced to the extent that it is no longer probable that the related tax benefit will be realised. (o) Contingent liabilities A contingent liability is a possible obligation that arises from past events and whose existence will only be confirmed by the occurrence of one or more uncertain future events not wholly within the control of the Group and of the Company. It can also be a present obligation arising from past events that is not recognised because it is not probable that an outflow of economic of resources will be required or the amount of obligation cannot be measured reliably. A contingent liability is not recognised but is disclosed in the notes to the financial statements. When a change in the probability of an outflow occurs so that the outflow is probable, it will then be recognised as a provision. 72 XOX Bhd ( X) Annual Report 2013

75 4. Property, plant and equipment Telecommunication Furniture Capital network and Office and Motor work-in-progress equipment equipment fittings Renovation vehicles Total GROUP RM RM RM RM RM RM RM Cost At 1 July ,299,578 22,689,755 2,198, , ,895 1,157,550 37,035,246 Additions 1,089,817 1,733, ,051 17,978 60,435-3,497,293 Transfers (10,338,132) 10,338, Disposals - - (95,610) (95,610) At 30 June ,051,263 34,760,899 2,698, , ,330 1,157,550 40,436,929 Accumulated depreciation At 1 July ,748, ,178 45, , ,802 3,945,620 Charge for the year - 2,359, ,381 19,628 52, ,510 3,174,461 Disposals - - (37,281) (37,281) At 30 June ,108,110 1,256,278 64, , ,312 7,082,800 Accumulated impairment loss At 1 July 2012/At 30 June 2013 (100,000) (100,000) Carrying amount At 30 June ,263 29,652,789 1,442, , , ,238 33,254, XOX Bhd ( X) Annual Report 2013

76 4. Property, Plant and Equipment (Cont d) Telecommunication Furniture Capital network and Office and Motor work-in-progress equipment equipment fittings Renovation vehicles Total GROUP RM RM RM RM RM RM RM Cost At 1 January ,927,733 1,009,877 1,062, , ,918-13,398,617 Additions 16,621,563 4,430,160 1,148,207 71, ,977 1,157,550 23,648,491 Transfers (17,249,718) 17,249, Written off - - (11,862) (11,862) At 30 June ,299,578 22,689,755 2,198, , ,895 1,157,550 37,035,246 Accumulated depreciation At 1 January , ,366 20,269 55, ,636 Charge for the period - 2,637, ,777 24,909 63, ,802 3,499,949 Written off - - (1,965) (1,965) At 30 June ,748, ,178 45, , ,802 3,945,620 Accumulated impairment loss At 1 January Provision for the periods (100,000) (100,000) At 30 June 2012 (100,000) (100,000) Carrying amount At 30 June ,199,578 19,941,102 1,416, , , ,748 32,989,626 At 1 January ,927, , ,738 99, ,526-12,950, XOX Bhd ( X) Annual Report 2013

77 4. Property, Plant and Equipment (Cont d) (a) The aggregate additional cost for the property, plant and equipment of the Group during the financial year/period under finance lease arrangement and cash payment are as follows: Group to to RM RM Aggregate costs 3,497,293 23,648,491 Less: Finance lease arrangement (98,000) (920,000) Cash payments 3,399,293 22,728,491 (b) Included in the property, plant and equipment of the Group are motor vehicles acquired under hire purchase with carrying amount of RM675,238 ( : RM906,748; : Nil). 5. Investments in Subsidiary Companies Company RM RM Unquoted shares, at cost At the beginnig of the financial year/period 33,240,000 33,240,000 Additions 22,200,000 - Disposals (98,000) - At the end of the financial year/period 55,342,000 33,240,000 Accumulated impairment loss At the beginnig of the financial year/period 33,099,998 - Additions 22,000,000 33,099,998 At the end of the financial year/period 55,099,998 33,099, , , XOX Bhd ( X) Annual Report 2013

78 5. Investments in Subsidiary Companies (Cont d) The details of the subsidiary companies, which are incorporated in Malaysia are as follows: Name of Company Effective Equity Interest Pricipal Activities XOX Com Sdn Bhd 100% 100% - Provider of mobile telecommunication products and services XOX Management Services 100% 100% - Provision of management Sdn Bhd services XOX Media Sdn Bhd 100% 100% - Provision of mobile application services XOX Wallet Sdn Bhd 100% 100% - Provision of mobile wallet services and the trading of telecommunications airtime as a traded commodity for Shariah compliant financing XOX Lifestyle Sdn Bhd 51% - - Special marketing arm of ("XOX Lifestyle") XOX Mobile for telecommunication and broadband internet services Company held by XOX Com Sdn Bhd XOX Mobile Sdn Bhd 100% 100% - Agent for marketing promotion, support services and managing the distribution channels of mobile telecommunication products and services All the subsidiary companies are audited by UHY. 76 XOX Bhd ( X) Annual Report 2013

79 5. Investments in Subsidiary Companies (Cont d) Acquisition of new subsidiary company On 27 March 2013, the Company acquired 2 ordinary shares of RM1.00 each of XOX Lifestyles for a total cash consideration of RM2. Consequently, XOX Lifestyle became a wholly-owned subsidiary of the Company. The fair values of the identifiable assets and liabilities of the subsidiary company as at the date of acquisition were as follows: Group At date of acquisition Carrying Fair Value Amount Recognised RM RM Cash and cash equivalents 2 2 Net identifiable assets and liabilities 2 2 Total purchase consideration 2 Less: Cash and cash equivalents of the subsidiary company acquired (2) Net cash outflow for acquisition of a subsidiary company - The effects of the acquisition of a subsidiary company on the financial results of the Group at the end of the financial year are as follows: to RM Loss after taxation - On April 2013, the Company subscribed for an additional 101,998 ordinary shares of RM1.00 each in XOX Lifestyle representing 51% of the enlarged issued and paid up share capital of XOX Lifestyle by way of capitalisation of an amount owing by XOX Lifestyle to the Company amounting to RM101, XOX Bhd ( X) Annual Report 2013

80 6. Goodwill Group RM RM At beginning of the financial year/period - - Acquisition of a new subsidiary Company - 44,744-44,744 Less: written off - (44,744) At end of the financial year/period Inventories Group RM RM RM At cost Sim cards and recharge cards, at costs 783, , , Trade Receivables Group RM RM RM Trade receivables 12,728,154 7,334,277 1,842,148 Less: Accumulated impairment loss (253,800) (253,800) - 12,474,354 7,080,477 1,842,148 Allowance for impairment losses: Group RM RM At beginning of the financial year/period 253,800 - Provision for the financial year/period - 253,800 At end of the financial year/period 253, , XOX Bhd ( X) Annual Report 2013

81 8. Trade Receivables (Cont d) The normal trade credit terms granted is 7 to 90 days ( and : 7 to 60 days). Other credit terms are assessed and approved on a case by case basis. Analysis of the trade receivables ageing as at the end of the financial year/period is as follow: Group RM RM RM Neither past due nor impaired 10,014,274 1,771,063 1,842,148 Past due but not impaired: Less than 30 days 81, , to 60 days 122, More than 60 days 292,913 4,841,258-10,511,132 7,334,277 1,842,148 Impaired 253, ,800-10,764,932 7,588,077 1,842,148 The Directors are of the opinion that the debts which have been pass due but not impaired will be recovered. Accordingly no allowance for impairment losses has been made as the Directors are confident on the recoverability of these debts. Trade receivables that are individually determined to be impaired at the reporting date relate to debtors of which the Directors are of the view that the recoverability of these debts are in doubts. These are not served by any collateral or credit enhancement. 9. Other Receivables Group RM RM RM Other receivables 2,409,299 2,030,150 5,395,745 Deposits 420, , ,389 Prepayments 406,696 1,506,737 1,418,479 3,236,837 3,777,113 6,983, XOX Bhd ( X) Annual Report 2013

82 9. Other Receivables (Cont d) Company RM RM RM Other receivables ,104 Deposits 64,500 21,800 - Prepayments 23,876 7, ,376 28, , Amounts Owing by/to Subsidiary Companies Company RM RM RM Amounts owing by subsidiary companies 234,989 27,269,315 - Less: Accumulated impairment loss At beginning of the financial year/period 27,039,315 27,039,315 - Reversal during the financial year/period (27,039,315) - - At the end of the financial year/period - 27,039, , ,000 - The amounts owing by/to subsidiary companies represent unsecured, interest-free advances and are receivable/payable on demand. 11. Fixed Deposits with a Licensed Bank In prior year, the deposits with a licensed bank of the Group is non-interest bearing and were pledged as security for guarantees provided to the Group by a trade creditor. 80 XOX Bhd ( X) Annual Report 2013

83 12. Short-Term Investment Group RM RM RM At cost: AmIncome 19,635 9,049 - ING cash plus - - 2,422,127 19,635 9,049 2,422,127 Market value of investment: AmIncome 19,635 9,049 - ING cash plus - - 2,422,127 19,635 9,049 2,422, Share Capital At 1 July 2012/ Par Number of Number of Value shares shares RM Units RM Units RM 30 June ,000,000,000 1,000,000, ,000, ,000,000 At 1 January ,000,000, , ,000,000 2 Issuance of shares during the financial period ,900,000-25,019,998 Sub-division of the par value of ordinary shares of RM1.00 each into RM0.10 Authorised Group/Company Issued and fully paid each ,000, ,180,000 Special issue ,000,000 Public issue ,800,000 At 30 June ,000,000,000 1,000,000, ,000, ,000,000 The new ordinary shares issued ranked pari passu in all respects with the existing ordinary shares of the company. The holders of ordinary shares are entitled to receive dividends as and when declared by the Company. All ordinary shares carry one vote per share without restrictions and rank equally with regard to the Company s residual assets. 81 XOX Bhd ( X) Annual Report 2013

84 14. Share Premium The movements in the share premium are as follows: Group # RM RM RM At the beginning of the financial year/period 32,610, ,002 4,140,000 Issue of new shares - - 4,060,000 Bonus issue - - (7,999,998) Special issue - 1,300,000 - Issue of new shares pursuant to public issue - 32,760,000 - Listing expenses - (1,649,991) - At the end of the financial year/period 32,610,011 32,610, ,002 Company RM RM RM At the beginning of the financial year/period 32,410, Special issue - 1,300,000 - Issue of new shares pursuant to public issue - 32,760,000 - Listing expenses - (1,649,991) - At the end of the financial year/period 32,410,009 32,410,009 - Note:- # - The comparative figures are prepared on the assumption that the Group had been in existence as at the previous reporting date. The consolidated share premium represents the share premium of XOX Bhd. adjusted for the share premium issued for the purpose of the business combination. The share premium is not distributed by way of cash dividends and may be utilised in the manner as set out in Section 60(3) of the Companies Act, Capital Reserve The capital reserve arose from the special issue of share to selected pioneer management team of the Group and is not distributable by way of dividends. 82 XOX Bhd ( X) Annual Report 2013

85 16. Deferred Tax Liabilities Group RM RM At beginning of the financial year/period - - Recognised in profit or loss 3,622 - At end of the financial year/period 3,622 - Presented after appropriate offsetting: Group RM RM RM Deferred tax liabilites 5,321,736 12,439, ,000 Deferred tax assets (5,318,114) (12,439,000) (293,000) 3, The estimated deferred tax (assets)/liabilities of the Group arising from temporary differences recognised in the financial statements are as flows: Group RM RM RM Differences between the carrying amount of property, plant and equipment and their tax base 5,321,736 12,439, ,000 Other timing differences (5,318,114) (12,439,000) (293,000) 3, XOX Bhd ( X) Annual Report 2013

86 16. Deferred Tax Liabilities (Cont d) The timing differences of which no deferred tax assets are recognised in the financial statements are as follows: Group RM RM RM Unabsorbed capital allowances 51,296 4,914,635 - Unutilised tax losses 37,745,660 40,980,653 8,463,000 Other timing differences 6,103,000 3,103,000 19,007,000 43,899,956 48,998,288 27,470, Finance Lease Payables Group RM RM RM (a) Minimum lease payments: Payable within one year 207, ,480 - Payable between two and five years 414, , , ,820 - Less: Future finance charges (42,690) (75,380) - Present value of minimum lease payments 579, ,440 - (b) Present value of minimum lease payments Repayable within one year 184, ,790 - Repayable between two to five years 395, , , ,440 - Analysed as: Repayable within twelve months 184, ,790 - Repayable after twelve months 395, , , ,440 - The finance lease payables bears interest rate at 4.80% ( : 4.80% and : Nil) per annum. 84 XOX Bhd ( X) Annual Report 2013

87 17. Finance Lease Payables (Cont d) The maturity profile of finance lease payables is as follows: Group RM RM RM Within one year 184, ,790 - Between one to two years 193, ,020 - Between two to three years 202, ,250 - Between three to four years - 202, , , Trade Payables The normal trade credit terms granted to the Group and Company range from 30 to 45 days ( and : 30 to 45 days). Other credit terms are assessed and approved on a case by case basis. 19. Other Payables Group RM RM RM Other payables 6,299,870 7,374,311 7,046,743 Deposits 229,270 75, ,500 Accruals 7,919,975 4,209,641 20,290,159 14,449,115 11,659,612 27,698,402 Company RM RM RM Other payables 105,449 10,497 19,459 Accruals 247,800 99, , , ,597 1,013,438 Included in accruals of the Group is the accrual cost of recharge usage from a trade creditor amounting to RM6,284,340 ( : RM3,103,367; : RM19,007,595). 85 XOX Bhd ( X) Annual Report 2013

88 19. Other Payables Included in the other payables of the Group is the amount due to the vendor for the purchase of telecommunication network equipments which amounting to RM4,402,840 ( : RM6,204,136 and : RM5,723,939). The foreign currency exposure profile of other payables is as follows: Group RM RM RM United States Dollar ("USD") 4,402,840 6,204,136 5,723, Amount Owing to a Director This represents unsecured, interest-free advance and is repayable on demand. 21. Bank Borrowings Group RM RM RM Revolving credit - - 2,778,848 The average effective interest rate per annum is as follows: Group % % % Interest rate Revenue Revenue of the Group represents the invoiced value of goods sold less discounts, commissions and returns. 86 XOX Bhd ( X) Annual Report 2013

89 23. Finance costs Group to to RM RM Hire purchase 32,690 41,920 Bank guarantee 128,040 - Term loan - 342, , , Profit/(Loss) before tax Profit/(Loss) before tax is carried at after charging/(crediting): Group Company to to to to RM RM RM RM Auditors remuneration 150, ,200 45,000 30,000 Depreciation of property, plant and equipment 3,174,462 3,499, Company s Directors' remuneration - Fees - 50,000-50,000 - Salary and other emoluments 1,471,714 2,010, , ,435 - EPF 199, , Other Directors' remuneration - Salary and other emoluments 140, EPF 16, Goodwill written off - 44, Loss on disposal of property, plant and equipment 3, Impairment on: - trade receivables 1,963, ,800-27,039,314 - amounts owing by subsidiary companies - - 4,352, capital work-in-progress - 100,000-33,099,998 - investments in subsidiary companies ,000, XOX Bhd ( X) Annual Report 2013

90 24. Profit/(Loss) before tax (Cont d) Group Company to to to to RM RM RM RM Incorporation expenses 2,750 4, Inventories written down 13, Listing expenses - 837, ,215 (Gain)/Loss on foreign exchange - realised 32,017 65, unrealised (177,397) 21, Property, plant and equipment written off 450 9, Rental of premises 563, , Reversal of impairment on amounts owing by subsidiary companies - - (27,039,315) - Discount received from creditor (10,000,000) (13,000,000) - - Gain on bargain purchase - (6,905) - - Interest income (49,459) (395,699) (1,297) (53,353) Rental income (10,000) (45,000) Taxation Group to to RM RM Tax expense for the financial year/period: Current tax provision 18,526 - Under provision in prior year/period , Deferred tax: Relating to origination or reversal of temporary differences 3,622-22, Current income tax is calculated based on the statutory tax rate of 25% ( to : 25%) of the estimated assessable profit for the financial year/period. 88 XOX Bhd ( X) Annual Report 2013

91 25. Taxation (Cont d) Group Company to to to to RM RM RM RM Profit/(Loss) before tax 6,499,332 (20,670,165) (110,298) (61,438,319) Tax at statutory tax rate of 25% ( to : 25%) 1,624,833 (5,167,500) (27,575) (15,359,600) Expenses not deductible for tax purpose 966, ,500 27,575 - Income not subject to tax (803,325) Utilisation of previously unrecognised deferred tax assets (1,533,245) Deferred tax assets not recognised 258,100 4,475,000-15,359,600 Under provision of taxation in respect of prior year/period Tax expense for the financial year/period 513, XOX Bhd ( X) Annual Report 2013

92 26. Earnings/(Loss) Per Share The basic earnings/(loss) per share is arrived at by dividing the Group s profit/(loss) attributable to the owners of the Group of RM4,513,776 ( to : loss of RM20,670,196) by the following weighted average number of ordinary shares in issue during the financial year/period. Group to to Units Units Ordinary shares in issued at beginning of the financial year/period 302,000, ,800,000 Effect of acquisition of subsidiary companies - 1,161,974 Effect of special issue - 4,149,909 Effect of public issue - 33,367, ,000, ,479,342 The fully diluted earnings/(loss) per share for the Group was not presented as there were no dilutive potential ordinary shares outstanding at the end of the reporting period. 27. Employee Benefits Expenses Group to to RM RM Employee benefits expenses (excluding Directors) 5,692,300 6,390,715 Included in the total employee benefits expenses above are contributions made to EPF under a defined contribution plan for the Group and the Company amounting to RM509,799 ( to : RM628,522). 90 XOX Bhd ( X) Annual Report 2013

93 28. Related Party Disclosures (a) Identity of related parties For the purposes of these financial statements, parties are considered to be related to the Group if the Group or the Company has the ability, directly or indirectly, to control the party or exercise significant influence over the party in making financial and operating decisions, or vice versa, or where the Group or the Company and the party are subject to common control or common significant influence. Related parties may be individuals or other entities. Related parties also include key management personnel defined as those persons having authority and responsibility for planning, directing and controlling the activities of the Group either directly or indirectly. The key management personnel include all the Directors of the Group and certain members of senior management and chief executive officers of major subsidiary companies of the Group. The Group has related party relationships with its subsidiary companies and key management personnel. (b) Key management personnel include personnel having authority and responsibility for planning, directing and controlling the activities of the entity, including any Director of Company. The remunerations of the key management are as follows:- Group Company to to to to RM RM RM RM Short-term employee benefits 988,582 2,160,600 44,400 72, Segment Information Information about segment assets and liabilities are neither included in the internal management reports nor provided regularly to the Management. Furthermore, the Group has only one business segment namely telecommunication services which is presented in the internal management report that are reviewed by the management. Hence, no disclosures are made on segment assets and liabilities as well as the business segment as well as the business segment. 91 XOX Bhd ( X) Annual Report 2013

94 30. Financial Instruments (a) Classification of financial instruments Financial assets and financial liabilities are measured on an ongoing basis either at fair value or at amortised cost. The principal accounting policies in Note 3 describe how the classes of financial instruments are measured, and how income and expense, including fair value gains and losses, are recognised. The following table analyses the financial assets and liabilities in the statements of financial position by the class of financial instruments to which they are assigned, and therefore by the measurement basis: Other financial Available liabilities for Loans and at amortised sales receivables cost Total Group RM RM RM RM Financial Assets Trade receivables - 10,511,132-10,511,132 Other receivables - 3,236,837-3,236,837 Short-term investment 19, ,635 Cash and bank balances - 244, ,987 Total financial assets 19,635 13,992,956-14,012, XOX Bhd ( X) Annual Report 2013

95 30. Financial Instruments (Cont d) (a) Classification of financial instruments (Cont d) Other financial Available liabilities for Loans and at amortised sales receivables cost Total RM RM RM RM Group Financial Liabilities Trade payables ,795,104 16,795,104 Other payables ,449,115 14,449,115 Hire purchase payables , ,650 Total financial liabilties ,823,869 31,823, Financial Assets Trade receivables - 7,080,477-7,080,477 Other receivables - 3,777,113-3,777,113 Fixed deposits with a licesed bank - 8,000,000-8,000,000 Cash and bank balances - 1,021,965-1,021,965 Short-term investment 9, ,049 Total financial assets 9,049 19,879,555-19,888,604 Financial Liabilities Trade payables ,658,442 29,658,442 Other payables ,659,612 11,659,612 Finance lease payables , ,440 Total financial liabilities ,072,494 42,072, Financial Assets Trade receivables - 1,842,148-1,842,148 Other receivables - 6,983,613-6,983,613 Cash and bank balances - 728, ,175 Short-term investment 2,422, ,422,127 Total financial assets 2,422,127 9,553,936-11,976,063 Financial Liabilities Trade payables , ,818 Other payables ,698,402 27,698,402 Amount owing to a director Bank borrowings - - 2,778,848 2,778,848 Total financial liabilities ,599,568 30,599, XOX Bhd ( X) Annual Report 2013

96 30. Financial Instruments (Cont d) (a) Classification of financial instruments (Cont d) Other financial Available liabilities for Loans and at amortised sales receivables cost Total RM RM RM RM Company Financial Assets Other receivables - 88,376-88,376 Amounts owing by subsidiary companies - 234, ,989 Cash and bank balances - 15,253-15,253 Total financial assets - 338, ,618 Financial Liabilities Other payables , ,249 Amounts owing to subsidiary companies ,000 17,000 Total financial liabilities , , Financial Assets Other receivables - 28,820-28,820 Amounts owing by subsidiary companies - 230, ,000 Cash and bank balances - 31,744-31,744 Total financial assets - 290, ,564 Financial Liability Other payables , , Financial Assets Other receivables - 162, ,734 Cash and bank balances Total financial assets - 163, ,219 Financial Liabilities Trade payables - - 1,013,438 1,013,438 Other payables Total financial liabilities - - 1,013,938 1,013, XOX Bhd ( X) Annual Report 2013

97 30. Financial Instruments (Cont d) (b) Financial risk management objectives and policies The Group s and the Company s financial risk management policy are to ensure that adequate financial resources are available for the development of the Group s and the Company s operation whilst managing their financial risks, including foreign currency exchange risk, interest rate risk, credit risk, liquidity and cash flows risks. The Group and the Company operate within clearly defined guidelines that are approved by the Board and the Group s and the Company s policy are not to engage in speculative transactions. The following sections provide details regarding the Group s and the Company s exposure to the abovementioned financial risks and the objectives, policies and processes for the management of these risks. (i) Credit risk Financial assets that are primarily exposed to credit risks are receivables, inter-company balances, cash and bank balances. Credit risk is the risk of a financial loss to the Group and to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations. The Group s exposure to credit risk arises principally from the inability of its customers to make payments when due. The Company s exposure to credit risk arises principally from loans and advances to subsidiary companies and financial guarantees given to banks for credit facilities granted to subsidiary companies. The Group have adopted a policy of only dealing with creditworthy counterparties. Management has a credit policy in place to control credit risk by dealing with creditworthy counterparties and deposit with banks and financial institutions with good credit rating. The exposure to credit risk is monitored on an ongoing basis and action will be taken for long outstanding debts. The Company only provided loans and advances to subsidiary companies and the results of the subsidiary companies are monitored regularly. The carrying amounts of the financial assets recorded on the statements of financial position at the end of the financial year/period represents the Group s and the Company s maximum exposure to credit risk. The Group has significant concentration of credit risk arise from its dealing with two of the customers ( and : two), which in aggregate represents 51% ( : 70%; : 100%) of the total trade receivables. 95 XOX Bhd ( X) Annual Report 2013

98 30. Financial Instruments (Cont d) (b) Financial risk management objectives and policies (Cont d) (i) Credit risk (Cont d) Trade receivables that are neither past due nor impaired A significant portion of trade receivables that are neither past due nor impaired are regular customers that have been transacting with the Group. The Group uses ageing analysis to monitor the credit quality of the trade receivables. Any receivables having significant balances past due or more than 90 days, which are deemed to have higher credit risk, are monitored individually. Trade receivables that are past due but not impaired The Group believes that adequate impairment has been made in respect of these trade receivables. This represents companies with ongoing business with the Group with active transactions. (ii) Liquidity risk Liquidity risk refers to the risk that the Group or the Company will encounter difficulty in meeting its financial obligations as they fall. The Group s and the Company s exposure to liquidity risk arises primarily from mismatches of the maturities of financial assets and liabilities. The Group s and the Company s funding requirements and liquidity risk is managed with the objective of meeting business obligations on a timely basis. The Group finances its liquidity through internally generated cash flows. The Group and the Company rely on its creditors and shareholders for appropriate financial support to enable it to meet its obligations as and when they fall due. The following table analyses the remaining contractual maturity for nonderivative financial liabilities. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Group and the Company can be required to pay. 96 XOX Bhd ( X) Annual Report 2013

99 30. Financial Instruments (Cont d) (b) Financial risk management objectives and policies (Cont d) (ii) Liquidity risk (Cont d) On demand or Total repayable 1 to 2 2 to 5 contractual Carrying within one year years years cash flow amount Group RM RM RM RM RM Financial Liabilities Trade payables 16,795, ,795,104 16,795,104 Other payables 14,449, ,449,115 14,449,115 Finance lease payables 207, , , ,650 31,451, ,860-31,866,559 31,823, Financial Liabilities Trade payables 29,658, ,658,442 29,658,442 Other payables 11,659, ,659,612 11,659,612 Finance lease payables 207, , , , ,440 41,525, , ,860 42,147,874 42,072, Financial Liabilities Trade payables 121, , ,818 Other payables 27,698, ,698,402 27,698,402 Amount owing to a director Bank borrowings 2,778, ,778,848 2,778,848 30,599, ,599,568 30,599, XOX Bhd ( X) Annual Report 2013

100 30. Financial Instruments (Cont d) (b) Financial risk management objectives and policies (Cont d) (ii) Liquidity risk (Cont d) On demand or repayable Carrying within one year amount Company RM RM Financial Liability Other payables 353, , Financial Liability Other payables 109, , Financial Liabilities Other payables 1,013,438 1,013,438 Amount owing to a director ,013,938 1,013, XOX Bhd ( X) Annual Report 2013

101 30. Financial Instruments (Cont d) (b) Financial risk management objectives and policies (Cont d) (iii) Market risks (a) Foreign currency exchange risk The Group incur foreign currency risk on transactions that are denominated in foreign currency. The currency giving rise to this risk is primarily the USD. The Group has not entered into any derivative instruments for hedging or trading purposes as the net exposure to foreign currency risk is not significant. The carrying amounts of the Group s foreign currency denominated financial liabilities at the end of the reporting period are as follows: Other payables RM Revolving credit RM USD 4,402, USD 6,204, USD 5,723,939 2,778,848 Foreign currency sensitivity analysis A 10% strengthening of RM against USD at the end of the reporting period would increase the profit before tax and other comprehensive income by the amount shown below. This analysis assumes that all other variables remain unchanged. Profit or Loss to to RM RM USD 440, , XOX Bhd ( X) Annual Report 2013

102 30. Financial Instruments (Cont d) (b) Financial risk management objectives and policies (Cont d) (iii) Market risks (Cont d) (a) Foreign currency exchange risk (Cont d) A 10% weakening of RM against USD at the end of the reporting period would have had the equal but opposite effect on the amount shown above, on the basis that all other variables remain unchanged. (b) Interest rate risk The Group exposed to interest rate risk arises primarily from financing through interest bearing financial assets and financial liabilities. The Group s and the Company s policy are to obtain the financing with the most favourable interest rates in the market. The Group constantly monitors its interest rate risk by reviewing its debts portfolio to ensure favourable rates are obtained. The Group does not utilise interest swap contracts or other derivative instruments for trading or speculative purposes. The Group is exposed to interest rate risk arising from its short term debts obligations and its fixed deposits. Fixed deposits interest rate is insignificant and any fluctuations in the rate would have no material impact on the results of the Group. The carrying amounts of the Group s and of the Company s financial instruments that are exposed to interest rate risk are as follows: Group RM RM RM Financial Assets Short-term investment - - 2,300,000 Fixed deposits with a licensed banks - 8,000,000 - Financial Liabilities Revolving credit - - 2,778, XOX Bhd ( X) Annual Report 2013

103 30. Financial Instruments (Cont d) (b) Financial risk management objectives and policies (Cont d) (iii) Market risks (Cont d) (b) Interest rate risk (Cont d) Interest rate risk sensitivity An increase in market interest rates by 1% on financial assets and liabilities of the Group which have variable interest rates at the end of the reporting date would reduce the profit before taxation by Nil ( : increased by RM80,000; : RM4,788). This analysis assumes that all other variables remain unchanged. A decrease in market interest rates by 1% on financial assets and liabilities of the Group which have variable interest rates at the end of the reporting period would have had the equal but opposite effect on the amounts shown above, on the basis that all other variables remain unchanged. (c) Fair values of financial instruments Financial instrument at fair value The fair value measurement hierarchies used to measure financial instruments at fair value in the statements of financial position are as follows: Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices) Level 3: Inputs for the asset or liability that is not based on observable market data (unobservable inputs). Level 1 Total RM RM Group Financial asset Short-term investment 19,635 19, Financial asset Short-term investment 9,049 9, Financial asset Investment in quoted shares 2,422,127 2,422, XOX Bhd ( X) Annual Report 2013

104 30. Financial Instruments (Cont d) (c) Fair values of financial instruments Financial instrument other than those carried at fair value The carrying amounts of the financial assets and financial liabilities of the Group and of the Company at the reporting date reasonably approximate their fair values except as follows: Carrying Fair amount value RM RM Group Financial liability Finance lease payables - non-current 395, ,791 Company Financial asset Unquoted investments in subsidiary companies 242,002 -* Group Financial liability Finance lease payables - non-current 579, ,364 Company Financial asset Unquoted investments in subsidiary companies 140,002 -* * It was not practicable to estimate the fair value of investment in unquoted equity due to the lack of comparable market prices and the inability to estimate fair value without incurring excessive costs. 102 XOX Bhd ( X) Annual Report 2013

105 31. Capital Management The Group s Management manages its capital to maintain a strong capital base and safeguard the Group s ability to continue as a going concern and maintains an optimal capital structure, so as to maximise shareholders value. The Management reviews the capital structure by considering the cost of capital and the risks associated with the capital. In order to maintain or adjust the capital structure, the Group may issue new shares or sell assets to reduce debt. Total capital managed at Group level, which comprises shareholders funds, cash and cash equivalents and bank borrowings. The gearing ratios are as follows: Group RM RM RM Total bank borrowings - - 2,778,848 Adjustment for: Cash and cash equivalent 244,987 1,021, , ,987 1,021,965 2,050,673 Total equity 18,180,182 11,605,184 (5,454,629) Gearing ratio -* -* (0.38) * The gearing ratio is not applicable as the Group does not incur any borrowing during the financial year/period. There were no changes in the Group s approach to capital management during the financial year. The Group is not subject to any externally imposed capital requirements. 32. Contingent Liability On 30 July 2012, a subsidiary, XOX Com Sdn Bhd, was served a Writ of Summons and Statement of Claim by one of its suppliers. The total outstanding sum of approximately RM422,500 together with interest at the rate of 1.5% per month on the amount claimed from the date of accrual until the date of full settlement. 103 XOX Bhd ( X) Annual Report 2013

106 32. Contingent Liability (Cont d) The Group is not expected to incur any material loss arising from the Writ Summons and the Statement of Claim as the Group has provided for the amount comprising invoices from December 2011 to May 2012 amounting to RM253,800 which represent approximately 91% of the total outstanding sum claimed by the said supplier. XOX Com Sdn. Bhd. has filed a defence and counter claim on 3 September 2012 against the said supplier. The total counterclaim filed amounted to approximately RM323,000. The court has fixed the case management to be held on 19 May 2014 and 9 to 13 June 2014 for trial. 33. Subsequent Events Subsequent to the financial year, the following events took place for the Company and for the subsidiary companies: (i) (ii) On 27 September 2013, the Company acquired 1 ordinary shares of RM1.00 each of the share capital of XOX Retail Sdn. Bhd. ( XOX Retail ) which represents 50% of the issued and paid up share capital of XOX Retail for a consideration of RM1. Consequently, XOX Retail became the associated company of the Company. During the financial year, a subsidiary company had undertaken negotiations with a major trade creditor for a discount on the cost of sales incurred. The trade creditor has agreed in principle to grant the discount of RM10 million to the subsidiary company during the year and the credit note has been received subsequent to the financial year end. Therefore, the subsidiary company has taken up the discount and adjusted its financial statements for the current financial year ended 30 June 2013 accordingly. 104 XOX Bhd ( X) Annual Report 2013

107 33. Subsequent Events (Cont d) (iii) On 7 November 2013, the Group agreed on a Proposed Composite Scheme ( PCS ) with a trade creditor of the Group and the salient terms of the PCS are as follows:- (a) The trade creditor agreed to convert the net balance outstanding at the financial year end of approximately RM16.6 million to Redeemable Convertible Unsecured Loan Stocks ( RCULS ). The salient terms of the RCULS, not limited to, shall be as follow: (i) the RCULS is transferable and convertible at the creditor s discretion; (ii) the RCULS can be converted into equity in part or in it s entirely; (iii) should the creditor decide to convert the RCULS into equity, the creditor and/or its nominee shall be entitled to nominate director(s), chief executive officer and other top management personnel of the creditor s choice at the creditor s discretion; (iv) the RCULS shall be issued at a price of RM0.10 per RCULS of the nominal amount or the current market value whichever is lower; and (v) other terms and conditions to be mutually agreed by the Group and the creditor. (b) The Group undertakes: (i) the PCS will proceed as briefed and will be completed on or before 31 March 2014; (ii) upon completion of the PCS: (a) the RCULS to the value of the balance sum or any balance thereof will be issued in the creditor s favour; and (b) to effect change of the Group's top management personnel immediately; (iii) that it will pay a minimum of RM2 million or 90% of the invoices amount issued by the creditor after 30 June 2013 in accordance with the terms and conditions provided in the Mobile Virtual Network Operator Services Agreement between the creditor and the Group; and (iv) to remit to the creditor 50% of the total amount raised through a private placement immediately subsequent to the date of this PCS. Both the Group and the creditor further hereby further agree that this settlement arrangement is subject to the following: (a) the Group completing the PCS on or before 31 March 2014; (b) the Group issuing RCULS in the creditor's favour within 14 days from the completion of the PCS; and (c) the shareholders adhering to the guarantee and indemnity agreement. The above arrangement has been agreed in principal and is subject to the approval from the relevant parties. 105 XOX Bhd ( X) Annual Report 2013

108 34. Date of Authorisation for Issue The financial statements of the Group and the Company for the financial year ended 30 June 2013 were authorised for issue in accordance with a resolution of the Board of Directors on 8 November XOX Bhd ( X) Annual Report 2013

109 SUPPLEMENTARY INFORMATION ON THE DISCLOSURE OF REALISED AND UNREALISED PROFITS OR LOSSES The following analysis of realised and unrealised accumulated losses of the Group and of the Company at 30 June 2013 is presented in accordance with the directive issued by Bursa Securities dated 25 March 2010 and prepared in accordance with Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Securities Listing Requirements, as issued by the Malaysian Institute of Accountants. The accumulated losses of the Group and of the Company as at 30 June 2013 is analysed as follows: Group Company RM RM RM RM Total accumulated losses of the Company and its subsidiary companies - realised 48,811,650 53,404,826 64,599,338 64,489,040 The disclosure of realised and unrealised profit or losses above is solely for complying with the disclosure requirements stipulated in the directive of Bursa Securities and should not be applied for any other purposes. 107 XOX Bhd ( X) Annual Report 2013

110 Analysis Of Shareholdings as at 30 October 2013 A. SHARE CAPITAL Authorised Share Capital : RM100,000, Issued and Paid-Up Capital : RM30,200, Class of Shares : Ordinary Shares of RM0.10 each Voting Rights : One vote for each ordinary share held B. DISTRIBUTION OF SHAREHOLDINGS AS AT 30 OCTOBER 2013 SIZE OF SHAREHOLDINGS NO. OF HOLDERS % NO. OF SHARES % , , ,001 10,000 1, ,402, , ,000 1, ,892, ,001 15,099,999 (*) ,821, ,100,000 AND ABOVE (**) ,751, TOTAL 3, ,000, REMARK : * - LESS THAN 5% OF ISSUED SHARES ** - 5% AND ABOVE OF ISSUED SHARES C. SUBSTANTIAL SHAREHOLDERS AND DIRECTORS SHAREHOLDINGS AS AT 30 OCTOBER 2013 Substantial Shareholders Direct Indirect No. of Percentage No. of Percentage Shares Held Held Shares Held Held 1 Dato Seri Abdul Azim bin 24,902, Mohd Zabidi 2 Ng Kok Heng 17,474, Wong Yip Kee 15,984, ,939 (a) Mara Incorporated Sdn Bhd 23,119, (a) Deemed interested through direct holding of spouse. Directors interests in shares Direct Indirect No. of Percentage No. of Percentage Shares Held Held Shares Held Held Dato Seri Abdul Azim bin 24,902, Mohd Zabidi Ng Kok Heng 17,474, Soo Pow Min ,510 (1) 0.11 Khoo Chuin Yuen Faidzan bin Hassan 3,000, Cheong Wai Loong 718, Hew Tze Kok (1) Deemed interested through direct holding of spouse. 108 XOX Bhd ( X) Annual Report 2012

111 LIST OF TOP 30 LARGEST SECURITIES ACCOUNTS HOLDERS (ACCORDING TO THE REGISTER OF DEPOSITORS AS AT 30 OCTOBER 2013) No. Name Shares Held Percentage 1. MARA INCORPORATED SDN BHD 23,119, CIMSEC NOMINEES (ASING) SDN BHD BANK OF SINGAPORE LTD FOR WISE HEIGHTS GROUP INC. 20,631, DATO SERI ABDUL AZIM BIN MOHD ZABIDI 14,902, DATO SERI ABDUL AZIM BIN MOHD ZABIDI 10,000, NG KOK HENG 10,000, WONG YIP KEE 10,000, NG KOK HENG 7,474, WONG YIP KEE 5,884, CITIGROUP NOMINEES (ASING) SDN BHD CBHK PBGSGP FOR SUNNYVALE HOLDINGS LTD 3,500, LOH AIK BIN 3,330, FAIDZAN BIN HASSAN 3,000, LAW KEE KONG 2,662, AMSEC NOMINEES (TEMPATAN) SDN BHD PLEDGED SECURITIES ACCOUNT FOR SHIA CHEE FONG 2,550, LAW KEE KONG 2,510, TA NOMINEES (TEMPATAN) SDN BHD PLEDGED SECURITIES ACCOUNT FOR MOHAMED ABU BAKAR BIN SM ABDUL KARIM 2,049, MAYBANK NOMINEES (TEMPATAN) SDN BHD PLEDGED SECURITIES ACCOUNT FOR PHANG SHAY NAM 2,000, PEMBINAAN MUSALI SDN BHD 2,000, WONG SEE KHIENG 1,939, CHIA MIN HUAN 1,902, AMSEC NOMINEES (ASING) SDN BHD PLEDGED SECURITIES ACCOUNT FOR LAU SIU YIN AMY 1,890, CHUNG TAT WAH 1,800, CHAN CHEE HONG 1,765, CHUNG SHAN KWANG 1,599, KIM BENG HOENG 1,587, SITI ROHANA BINTI ABD WAHAB 1,385, CHAN CHEE MENG 1,346, MALACCA EQUITY NOMINEES (TEMPATAN) SDN BHD EXEMPT AN FOR PHILLIP CAPITAL MANAGEMENT SDN BHD (EPF) 1,339, AMSEC NOMINEES (TEMPATAN) SDN BHD PLEDGED SECURITIES ACCOUNT AMBANK (M) BERHAD FOR ZULKIFRI BIN SARWAN (SMART) 1,060, PUBLIC NOMINEES (TEMPATAN) SDN BHD PLEDGED SECURITIES ACCOUNT FOR PADZUL BIN MOHAMAD (E-JBU) 1,060, HSBC NOMINEES (ASING) SDN BHD EXEMPT AN FOR SKANDINAVISKA ENSKILDA BANKEN S.A. 1,000, Total 145,290, XOX Bhd ( X) Annual Report 2012

112 XOX BHD (Company No: X) (Incorporated in Malaysia) NOTICE OF ANNUAL GENERAL MEETING NOTICE IS HEREBY GIVEN THAT the Third (3 rd ) Annual General Meeting of XOX Bhd ( XOX or the Company ) will be held at Inspire I & II, Only World Group, No. 10 Jalan Pelukis U1/46, Section U1, Temasya Industrial Park, Glenmarie, Shah Alam on Monday, 9 December 2013 at 8.30 a.m. for the purpose of transacting the following businesses:- AGENDA 1. To receive the Audited Financial Statements for the financial year ended 30 June 2013 together with the Directors and Auditors Reports thereon. Please refer to Note A. 2. To re-elect the following Directors retiring pursuant to the Company s Articles of Association:- i) Mr. Ng Kok Heng (Article 84) ii) Mr. Cheong Wai Loong (Article 91) iii) Mr. Hew Tze Kok (Article 91) 3. To re-appoint Messrs. UHY as Auditors of the Company and to authorise the Directors to fix their remuneration. Ordinary Resolution 1 Ordinary Resolution 2 Ordinary Resolution 3 Ordinary Resolution 4 SPECIAL BUSINESSES :- To consider and, if thought fit, to pass the following Resolution:- 4. Authority To Directors To Allot And Issue Shares Ordinary Resolution 5 THAT subject to the Companies Act, 1965, and the approval of the relevant government and/or regulatory authorities, the Directors be and are hereby empowered pursuant to Section 132D of the Companies Act, 1965, to issue shares of the Company from time to time upon such terms and conditions and 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 shall not exceed 10% of the issued capital of the Company for the time being, subject always to the approval of all the relevant regulatory bodies having been obtained for such allotment and issue, and such authority shall continue to be in force until the conclusion of the next annual general meeting of the Company; and FURTHER THAT the Directors be and are hereby empowered to obtain the approval for the listing and quotation for the additional shares so issued on the Bursa Malaysia Securities Berhad ( Bursa Securities ). 5. To transact any other business of the Company for which due notice shall have been given. By order of the Board, Tan Tong Lang (MAICSA ) Chong Voon Wah (MAICSA ) Company Secretaries Kuala Lumpur 15 November XOX Bhd ( X) Annual Report 2012

113 Notes A. This Agenda item is meant for discussion only as Section 169(1) of the Companies Act, 1965 and the Company s Articles of Association provide that the audited financial statements are to be laid in the general meeting. Hence, it is not put forward for voting. 1. A member entitled to attend and vote at the Meeting is entitled to appoint a maximum of two (2) proxies to attend and vote in his/her stead. A proxy may but need not be a member of the Company. The provision of Section 149(1)(b) of the Act shall not apply to the Company. 2. Where a member appoints more than one proxy to attend the same meeting, the appointment shall be invalid unless he/she specifies the proportion of his/her holdings to be represented by each proxy. 3. Where a member of the Company is an exempt authorised nominee defined under the Central Depositories Act which is exempted from compliance with the provision of subsection 25A(1) of the Central Depositories Act which holds ordinary shares in the Company for multiple beneficial owners in one Securities Account ( omnibus account ), there is no limit to the number of proxies which the exempt authorised nominee may appoint in respect of each omnibus account it holds. 4. The instrument appointing a proxy shall be in writing under the hand of the appointer or his attorney duly authorized in writing or, if the appointer is a corporation, either under its Common Seal or signed by attorney so authorised. 5. The Form of Proxy must be deposited at the Registered Office of the Company at Suite 10.03, Level 10, The Gardens South Tower, Mid Valley City, Lingkaran Syed Putra, Kuala Lumpur not less than 48 hours before the time set for holding the meeting or any adjournment thereof. 6. For the purpose of determining members eligibility to attend this meeting, only members whose names appear in the Record of Depositors as at 2 December 2013 shall be entitled to attend this meeting or appoint proxy(ies) to attend and/or vote on his/her behalf. EXPLANATORY NOTES ON SPECIAL BUSINESS Ordinary Resolution 5: Authority To Directors To Allot And Issue Shares The Proposed Ordinary Resolution 5, if passed, is a renewal of General Mandate to empower the Directors to issue and allot shares up to an amount not exceeding 10% of the issued share capital of the Company for the time being for such purposes as the Directors consider would be in the best interest of the Company. This authority, unless revoked or varied by the Company at a General Meeting, will expire at the next Annual General Meeting. The General 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 acquisitions. As at the date of this Notice, no new shares in the Company were issued pursuant to the General Mandate granted to the Directors at the Annual General Meeting held on 5 December 2012 and which will lapse at the conclusion of the Third (3 rd ) Annual General Meeting. 111 XOX Bhd ( X) Annual Report 2012

114 STATEMENT ACCOMPANYING NOTICE OF ANNUAL GENERAL MEETING The Directors who are standing for re-election at the Third (3 rd ) Annual General Meeting of the Company are:- (i) Mr. Ng Kok Heng Article 84 (Ordinary Resolution 1) (ii) Mr. Cheong Wai Loong Article 91 (Ordinary Resolution 2) (iii) Mr. Hew Tze Kok Article 91 (Ordinary Resolution 3) The profile of the above Directors are set out on pages 5 and 7 of the Annual Report The details of the interest of the above Directors in the securities of the Company or its related corporations are disclosed in the Directors report on pages 33 and 108 of the aforesaid Annual Report. The details of the Directors attendance for Board Meetings are disclosed in the Statement on Corporate Governance on page 11 of the Annual Report The Third (3 rd ) Annual General Meeting of the Company will be held at Inspire I & II, Only World Group, No. 10 Jalan Pelukis U1/46, Section U1, Temasya Industrial Park, Glenmarie, Shah Alam on Monday, 9 December 2013 at 8.30 a.m. 112 XOX Bhd ( X) Annual Report 2012

115 FORM OF PROXY (Before completing this form please refer to the notes below) XOX BHD ( X) I / We (Full Name in Block Letters) NRIC No. / Passport No. / Company No. of being a member of XOX BHD, hereby appoint NRIC No. / Passport of and/or of NRIC No. / Passport No. or failing him/her, the CHAIRMAN OF THE MEETING as my/our proxy to vote for me/us on my/our behalf at the Third (3 rd ) Annual General Meeting of the Company to be held at Inspire I & II, Only World Group ( OWG ), No. 10 Jalan Pelukis U1/46, Section U1, Temasya Industrial Park, Glenmarie, Shah Alam on Monday, 9 December 2013 at 8.30 a.m. or at any adjournment thereof. My/Our Proxy(ies) is/are to vote as indicate below :- No. Resolutions For Against Ordinary Resolutions 1. To re-elect Mr. Ng Kok Heng as Director. 2. To re-elect Mr. Cheong Wai Loong as Director. 3. To re-elect Mr. Hew Tze Kok as Director. 4. To re-appoint Messrs. UHY as Auditors of the Company for the ensuing year and to authorise the Directors to fix their remuneration. As Special Business :- 5. To approve the ordinary resolution pursuant to Section 132D of the Companies Act, (Please indicate with a in the space provided on how you wish your vote to be cast. If no specific direction as to voting is given, the proxy will vote or abstain at his/her discretion) Dated this day of, Signature/Common Seal of Member NUMBER OF SHARES HELD CDS ACCOUNT NO. The proportions of my/our holdings to be represented by my/our proxies are as follows:- First Proxy No. of Shares: Percentage :.% Second Proxy No. of Shares: Percentage :.% NOTES: 1. A member entitled to attend and vote at the Meeting is entitled to appoint a maximum of two (2) proxies to attend and vote in his/her stead. A proxy may but need not be a member of the Company. The provision of Section 149(1)(b) of the Act shall not apply to the Company. 2. Where a member appoints more than one proxy to attend the same meeting, the appointment shall be invalid unless he/she specifies the proportion of his/her holdings to be represented by each proxy. 3. Where a member of the Company is an exempt authorised nominee defined under the Central Depositories Act which is exempted from compliance with the provision of subsection 25A(1) of the Central Depositories Act which holds ordinary shares in the Company for multiple beneficial owners in one Securities Account ( omnibus account ), there is no limit to the number of proxies which the exempt authorised nominee may appoint in respect of each omnibus account it holds. 4. The instrument appointing a proxy shall be in writing under the hand of the appointer or his attorney duly authorized in writing or, if the appointer is a corporation, either under its Common Seal or signed by attorney so authorised. 5. The Form of Proxy must be deposited at the Registered Office of the Company at Suite 10.03, Level 10, The Gardens South Tower, Mid Valley City, Lingkaran Syed Putra, Kuala Lumpur not less than 48 hours before the time set for holding the meeting or any adjournment thereof. 6. For the purpose of determining members eligibility to attend this meeting, only members whose names appear in the Record of Depositors as at 2 December 2013 shall be entitled to attend this meeting or appoint proxy(ies) to attend and/or vote on his/her behalf.

116 ... Affix Stamp THE COMPANY SECRETARY XOX BHD ( X) Suite 10.03, Level 10, The Gardens South Tower Mid Valley City, Lingkaran Syed Putra Kuala Lumpur

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