CONTENTS. Corporate Information. Profile of Directors and Chief Executive Officer. Chairman s Statement. Event Highlights

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2 CONTENTS Corporate Information Profile of Directors and Chief Executive Officer Chairman s Statement Event Highlights Corporate Social Responsibility Plans/Products 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

3 Corporate Information Board of Directors Dato Seri Abdul Azim bin Mohd Zabidi Non-Independent Non-Executive Chairman Datuk Chai Woon Chet Managing Director Soo Pow Min 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 Datuk Lor Chee Leng Independent Non-Executive Director Audit Committee Faidzan bin Hassan (Chairman) Soo Pow Min (Member) Hew Tze Kok (Member) Nomination and Remuneration Committee Cheong Wai Loong (Chairman) Soo Pow Min (Member) Hew Tze Kok (Member) 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) 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 Lot 8.1, 8th Floor, Menara Lien Hoe No. 8, Persiaran Tropicana Tropicana Golf & Country Resort Petaling Jaya Selangor Darul Ehsan Telephone : (03) Facsimile : (03) Auditors Messrs UHY Suite 11.05, Level 11 The Gardens South Tower Mid Valley City Lingkaran Syed Putra Kuala Lumpur Telephone : (03) Facsimile : (03) Share Registrar Shareworks Sdn Bhd ( U) No 2-1, Jalan Sri Hartamas 8 Sri Hartamas Kuala Lumpur Telephone : (03) Facsimile : (03) Stock Exchange Listing ACE Market of Bursa Malaysia Securities Berhad Stock Name : XOX Stock Code : 0165 Website 2 ANNUAL REPORT 2015

4 Profile of Directors and Chief Executive Officer Dato Seri Abdul Azim bin Mohd Zabidi Dato Seri Abdul Azim bin Mohd Zabidi, a Malaysian aged 56, is the Non-Independent Non-Executive Chairman of the Company having been appointed to the Board on 30 June He graduated with a Master of Arts in Business Law from the London Metropolitan University, United Kingdom in He is also a Fellow of The Chartered Institute of Secretaries, United Kingdom. Dato Seri Azim was Chairman of Bank Simpanan Nasional ( BSN ), Malaysia s National Savings Bank. During his 10 years as Chairman of BSN, has seen a steady improvement in operating profits. Dato Seri Azim started his career in banking in 1984 and rose quickly through the ranks when in 1990 he was appointed Group Head of the Bank s Corporate Banking Department. He was then seconded to Commerce Property Trust Managers (now known as Amanah Property Trust Managers) and initiated the establishment of Commerce BT Fund Managers (today known as CIMB-Principal Asset Management). His association with the fund management industry saw him elected as President of the Federation of Malaysian Unit Trust Managers (now know as Federation of Investment Managers Malaysia) from During this period, he was appointed to the Board of the International Investment Funds Association and was Chairman of its Audit Committee. He held the position of Chairman of Bank Simpanan Nasional from 1999 to 2009 and during his tenure, he was actively involved with the World Savings Banks Institute ( WSBI ). In 2000, he was appointed President (Asia Pacific) for WSBI and in 2003, he was elevated to its Board of Directors. Dato Seri Azim was elected as Vice President and Treasurer of WSBI in September 2006, a position he relinquished in April He now sits on numerous local and foreign Boards of Companies, both public and private, amongst which are Anzo Holdings Berhad (formerly known as Harvest Court Industries Berhad), Wang-Zheng Berhad and Timberwell Berhad. Datuk Chai Woon Chet Datuk Chai Woon Chet, a Malaysian aged 37, was appointed to the Board on 13 January 2014 as Managing Director. He graduated with a Diploma in Business Economics (KDU). Datuk Chai was a Marketing Manager of Sanbumi Sawmill Sdn. Bhd. (a wholly-owned subsidiary of Sanbumi Holdings Berhad which is listed on the Main Board of Bursa Malaysia Securities Berhad). He had been involved in the timber business industry with buyers from Japan, Europe, South Africa and Korea for the past 8 years. He also has extensive experience in property development, construction and the automotive sector. Datuk Chai was formerly the Managing Director of Lintasan Mayang Development Sdn Bhd, which is the developer for Sabah s biggest integrated township, Alamesra, an innovative 265 acre mixed development with gross development value of RM1.3 billion. Datuk Chai was also the former managing director of Maxims Circle Development Sdn Bhd, which carried out property development projects at Kuala Lumpur with gross development value of RM23 million in Taman Permata, Melawati and RM66 million in Segambut. At present, Datuk Chai also sits on the board of directors of Anzo Holdings Berhad (formerly known as Harvest Court Industries Berhad), Astral Supreme Berhad and various other private companies. He is the Executive Director of KL Northgate Sdn Bhd, a prime developer for 18 acres shopping mall and mixed development project at Selayang with a gross development value of RM1.6 billion and 86 acres Putra Medical City development project at Serdang. ANNUAL REPORT

5 Profile of Directors and Chief Executive Officer Soo Pow Min Soo Pow Min, a Malaysian aged 50, 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. 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 and Remuneration Committee of the Company. Faidzan bin Hassan Faidzan bin Hassan, a Malaysian aged 55, 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 of the Company. Cheong Wai Loong Cheong Wai Loong, a Malaysian aged 43, 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, and is instrumental in the opening of the Company s first branch in Malaysia upon listing on Bursa Malaysia Securities Berhad. He is currently the Managing Director of Linear Design Sdn Bhd, a multi-award winning Interior Architecture Firm whereby major developers in Malaysia make up its clientele list and he also sits on the Boards of numerous private companies that are involved in property development, hospitality, landscape architecture and trading. Mr. Cheong is also the General Committee of the Royal Lake Club for 2015 and is Chairman for the Events Subcommittee and the Youth Subcommittee. He is also the Deputy Chairman for the F&B Subcommittee. Mr Cheong is the Chairman of the Nomination and Remuneration Committee of the Company. 4 ANNUAL REPORT 2015

6 Profile of Directors and Chief Executive Officer Hew Tze Kok Hew Tze Kok, a Malaysian aged 38, 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. Mr Hew is presently the Member of the Audit Committee and Nomination and Remuneration Committee of the Company. Datuk Lor Chee Leng Datuk Lor Chee Leng, a Malaysian aged 51, was appointed to the Board on 19 March 2014 as an Independent Non-Executive Director. He graduated with a Bachelor degree from the National University of Singapore. Datuk Lor was previously the Group CEO of EON Bank Group, Malaysia. Under his leadership, EON Bank Group recorded many notable product innovations and financial achievements. Most significant was the transformation of the banking group from being previously perceived as a non-descript player in the industry to being regarded as a rapidly growing bank and one of the most talked about in the country. EON Bank Group was awarded the Asia s Best Employer Brand Malaysia in 2011 and was ranked 337 in the Top 500 Most Valuable Global Banking Brands by Brand Finance Plc. Before joining EON Bank, he was the Worldwide Director for Banking Solutions with Hewlett Packard Asia Pacific, and prior to that he was the EVP and Head of Consumer Banking for RHB Bank Malaysia. Prior to returning to Malaysia in 2004, he was a Managing Director with DBS Bank (a leading bank in SEA) for 17 years, serving in various senior management capacities in both their Singapore and Thailand operations. He has more than 25 years of senior level banking experience with extensive focus in retail banking, strategy formulation, business transformation, sales and marketing; and human capital development in various SEA countries. He has previously, also served as a Director of the Malaysia Electronic Payment System (MEPS) Berhad as well as a member of the EMVCo Global Board of Advisors. ANNUAL REPORT

7 Profile of Directors and Chief Executive Officer Ng Kok Heng Chief Executive Officer Ng Kok Heng, a Malaysian aged 52, is the Chief Executive Officer of the Company. He graduated with a Bachelor of Computer Science (Honours) from the Universiti Sains Malaysia, Penang in Mr Ng was appointed as Managing Director and Chief Executive Officer of the Company on 30 June On 9 December 2013, he retired as Managing Director of the Company but continue to serve the Company as Chief Executive Officer of the Company. He started his career in 1987 as a Sales Manager in Communications Technology Sdn Bhd and was in charge of sales and marketing. In 1992, he was appointed 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. 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. 6 ANNUAL REPORT 2015

8 Chairman s Statement On behalf of the Board of Directors of XOX Bhd, I am pleased to present the Annual Report of the Group and the Company for the financial year ended ( FYE ) on 30 June Financial Performance 2015 continues to be a challenging year for XOX where the Group had to operate in an intensely competitive environment. The effects of the recently introduced GST coupled with the constant growing demand for quality mobile Internet services had contributed to these challenges. Even now, more users are turning towards their smart phones and mobile internet to meet their daily communication needs resulting in a lower Average Revenue Per User (ARPU) from traditional voice and short messaging service (SMS). Despite the difficult business environment, the Group registered an impressive improvement in its Revenue of RM91.02 million compared to RM57.05 million in the previous financial year, a growth of almost 60%. The increase in revenue was mainly attributed to the 179% growth in our revenue generating subscribers, whereby we were able to add about 420,000 subscribers during the financial year. In addition, throughout the financial year, we pressed on with our efforts on product branding, subscriber retention and quality subscriber acquisition through various business strategies and product and marketing activities. In 2015, XOX delivered a higher Earning Before Interest, Taxes, Depreciation, and Amortisation ( EBITDA ) of RM6.19 million compared to RM2.79 million recorded in The higher EBITDA was attributed to the higher revenue registered from increased quality subscribers after taking into consideration higher marketing expenditure to support the business. As a result, Profit After Tax of RM1.17 million was registered for the financial year compared to a Loss After Tax of RM1.58 million in Industry Trends and Development Bank Negara Malaysia s Second Quarterly Bulletin of 2015 reported that the growth in information and communication sector was driven by strong demand for data communication services amid attractive packages from telecommunications companies. RAM Ratings was of the view that Malaysian telecommunication operators are facing heightened competition amid a crowded landscape and the persistent downtrend in traditional voice and SMS revenues and project a 3% revenue growth for telcos in On the other hand, the growth in data revenue would be insufficient to offset the loss in traditional voice revenue. To stay in the game, telcos must keep on improving their service quality and strive to remain relevant through their pricing propositions. Telcos focus on the protection of their average revenue per user (ARPU) would be by monetizing data. According to BMI Research Report, data continues to be a major growth driver in mobile service revenue, driven by rising smart phone adoption rates and the shift in demand towards more dataheavy premium services such as online shopping and OTT video streaming. The high speed broadband (HSBB) and suburban broadband (SUBB) projects will also improve accessibility and affordability of broadband when these are completed, and BMI believes that Malaysia will continue to observe strong growth in data consumption in the next five years. ANNUAL REPORT

9 Chairman s Statement Future Prospects The telecommunication industry is undergoing a major revolution driven by changes of user requirements together with revenue drivers and new technologies. With this as the backdrop, the Group expects to face challenges from the market through stiffer competition among industry players, product offerings, pricing and regulatory changes. All these will have a direct impact on our business. It is on this cautious note that the Group will strive harder to achieve better performance through our marketing activities, subscriber retention, quality subscriber acquisition and also by introducing innovative products and services, promoting the Group s SIM-free mobile application brand named Voopee, to be in line with current consumer trends in order to stay ahead of the competition. Our Group s mobile network service subscribers consist of a mix between prepaid and postpaid subscribers. As at FYE 30 June 2016, our Group had a wider base of prepaid subscribers as compared to postpaid subscribers, however, the revenue contribution from our Group s prepaid subscribers were not regular. In other words, the subscribers only utilised the subscription during the trial period when the prepaid mobile package was acquired, after which, in a short period, the service was discontinued and the package disposed. As such, this resulted in a lack of recurring revenue from our mobile network service subscriptions. The key priorities in 2016 will be switching the focus to attract more quality subscribers, namely post-paid subscribers, by offering innovative products and services to broaden the subscriber base in order to better respond to subscribers needs. To this end, the Group is making great strides in gaining more post-paid subscribers by embarking on providing phone bundling services to mobile network users. Good operational momentum and capability established in 2015 has set a solid foundation for the Group which translates to a good head start for XOX. The Group has also put in place innovative growth strategies, driving continuous improvements to our business and operating models and we have also enhanced our management team. Appreciation On behalf of the Board, I would like to express my most sincere thanks and appreciation to our major creditor for their continued support and encouragement, our shareholders who continue to believe in our business strategy, all our loyal customers, business partners, bankers and regulatory authorities for their continued support. To my fellow colleagues on the Board, I would wish to express my sincere appreciation for their guidance and support. The Board also wishes to acknowledge the management team and every employee for their commitment and efforts through the year for the Group s achievements and success. Dato Seri Abdul Azim bin Mohd Zabidi Non-Independent Non-Executive Chairman 8 ANNUAL REPORT 2015

10 Event Highlights The 1,600 Pandas World Tour MY XOX Mobile was appointed as the Community Creative and Cultural Partner for the 1,600 Pandas World Tour Malaysia, which was a collaboration between World Wide Fund for Nature and the panda s creator Paulo Grangeon, to promote the message of panda conservation and sustainable development, with the theme of Initiating the Culture of Creative Conservation. The adorable pandas had their nationwide journey to more than 15 iconic landmarks in Malaysia from 21 st of December 2014 till 25 th of January The pandas were used symbolically to promote awareness of our natural environment and the importance of environmental conservation and sustainable development. XOX PIALA FA 2015 XOX secured the prestigious title sponsorship of the Football Association of Malaysia FA Cup, ahead of the hotly contested finals between Kelantan Club and Singapore Lions XII on Saturday, 23 rd of May The FA Cup final held at Stadium Bukit Jalil, attracted a crowd of 70,000 football fans. XOX Mobile sponsorship is an extension of the XOX Program of Nurturing Future Youth Leaders via Sports. A joint press conference to mark the occasion was held at the Bukit Jalil Stadium with XOX Mobile and FAM representatives ANNUAL REPORT

11 Event Highlights Car Craze Contest 2015 The XOX Car Craze Contest was officially launched during the Dealers Conference at Genting on 8 th March The Car Craze Contest campaign from March to December 2015 consists of 1 Volkswagen Passat, 3 Volkswagen Polo Sedan and 100 Tech Gadgets as prizes to be won! To participate, the XOX customer needs to do a minimum top up of RM ANNUAL REPORT 2015

12 Corporate Social Responsibility The Board, whilst pursuing the business objectives of growth in enhancing shareholder value, is also cognizant of its corporate social responsibilities ( CSR ) and the importance of the contribution it can make in respect thereof, particularly towards improving the workplace, the community it operates in and the environment. The Group is constantly reviewing its workplace and policies to provide a conducive working environment and ensure proper development and utilization of its human resources. Personal development is important and employees are encouraged to improve their knowledge through attendance at relevant seminars and workshops. Apart from that, the Group considers health and safety management to be equally as important as other management functions. It is the management s responsibility to provide the framework to promote, stimulate and encourage the highest standard of safety and health at work. At the marketplace, the Company and its subsidiaries maintain high integrity of corporate governance practices as well as enhancing the shareholders value. We believe in conducting business fairly, impartially and in full compliance with all laws and regulations. Honesty and integrity underlie all of our relationships, including those with customers, vendors, contractors, the business community at large and among employees. The Group is accountable for the impact of its business operations on the environment. We constantly review and monitor our operations to make positive contribution to the environment, economic and social wellbeing of our stakeholders, employees and the broader community. In the office, the employee is encouraged to recycle used papers for internal office use, set power save mode for desktops and notebooks, and switch off air-conditioning and lights during lunch time and after office hours. The Group continues its social roles to support the community by contributing to several needy and charitable organisations through donations. Employees are encouraged and supported to actively participate in social work and community service. ANNUAL REPORT

13 Corporate Social Responsibility During the financial year, the Group has undertaken the following activities: 75th Anniversary Charity Painting Exhibition of Bruce Lee Penang Chief Minister Mr Lim Guan Eng with XOX Group CEO Mr Ng Kok Heng and other officials officiated the opening of 75 th Anniversary Charity Painting Exhibition of Bruce Lee at ICT Mall, Komtar. This exhibition was jointly organized by Gabungan Impian Kelantan and Bruce Lee International Club with the aim to raise funds for flood disaster relief and reconstruction, in conjunction with Bruce Lee 75th birthday. 12 ANNUAL REPORT 2015

14 Corporate Social Responsibility My Carnival Another of XOX social values is community education. XOX participated in the Nanyang Xiang Pau and Astro s MY Carnival project by raising funds for the Chinese primary schools. Kechara Soup Kitchen Distribution on the Street XOX Berhad raised awareness for the homeless with the staff and their spouse/family members and initiated a volunteer food distribution with basic medical care with Kechara Soup Kitchen on 19 th September XOX Berhad made a donation of RM5, to Kechara Soup Kitchen. ANNUAL REPORT

15 Plans / Products Prepaid Plus Get talkin for less with XOX Prepaid Plus. With the lowest call rates you ll ever find, make short calls from just 5 Sen. Call other networks at a mere 15 Sen/ min. Top-up any amount you like to start chatting. No minimum on top-ups, usage and definitely no sneaky hidden charges. MNP Switch your number to XOX now and keep your current Number with 28-months validity. At the same time, because we love giving our subscriber more bang for their buck get free SMS, free data and free calls when you switch!. 14 ANNUAL REPORT 2015

16 Plans / Products Season Pass A plan that is shareable with rewarding up-front Discount and FREE calls. It s a revolutionary new prepaid that can shared with any XOX prepaid subscribers. The Season pass plan from XOX gives you the ultimate freedom to decide what you need when you need. Absolutely no monthly commitment ANNUAL REPORT

17 Plans / Products Penang#1758 Special Hor Penang Lang Niaa! Call to anywhere in Malaysia from the state of Penang. A plan exclusively designed for Penangites, receive the latest news & updates from the State via SMS. From Penang, you can make calls from as low as 9 sen for the first 2 minutes. So, go on and call your buddies and make use of this exclusive plan brought to you by XOX Mobile. Voopee Voopee is a SIM-FREE app that provides you with an actual mobile number on your existing smartphone without the need of an additional SIM CARD. Traveling? Need to Call Home? Get Voopee on the Google Play or App Store and make calls home to Malaysia instantly via WIFI or Mobile data connection. Only RM0.10 per minute and avoid the SKY HIGH roaming charges! 16 ANNUAL REPORT 2015

18 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 ( MCCG ). 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 MCCG 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 MCCG throughout the financial year under review pursuant to Rule of the ACE Market Listing Requirements of Bursa Malaysia Securities Berhad ( 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 two (2) Board Committees, namely Audit Committee and Nomination 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 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 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 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 Directors of the Company play a key role in providing unbiased and independent views, advice and contributing their knowledge and experience toward the formulation of policies and in the decision making process. The Board structure ensures that no individual or group of individuals dominates the Board s decision-making process. Although all the Directors ANNUAL REPORT

19 Statement on Corporate Governance have equal responsibility for the Company and the Group s operations, the role of the Independent Directors are particularly important in ensuring that the strategies proposed by the Executive Directors are deliberated on and have taken into account the interest, not only of the Company, but also that of the shareholders, employees, customers, suppliers and the community. 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. The Board has not set a gender diversity targets as of the reporting period as it is of the view the Board membership should be determined based on a candidate s skills, experience and other qualities regardless of gender but will nevertheless considers appointing more directors of the female gender where suitable. A.2 Code of Conduct and Ethics The Board is committed in maintaining a corporate culture which engenders ethical conduct through its Code of Conduct and Ethics, which summarises what the Company must endeavour to do proactively in order to increase corporate value, and which describes the areas in daily activities that require caution in order to minimise any risks that may occur. A copy of the Code of Conduct and Ethics is available at the Company s website. A.3 Board Charter As part of governance process, the Board has formalised and adopted the Board Charter. This Board Charter sets out the composition and balance, roles and responsibilities, operation and processes of the Board and is to ensure that all Board members acting on behalf of the Company are aware of their duties and responsibilities as Board members. A copy of the Board Charter is available at the Company s website. A.4 Promote Sustainability The Board ensures that the Company s strategies promote sustainability with attention given particularly to environmental, social and governance ( ESG ) aspects of business which underpin sustainability. The Board understands that balancing ESG aspects with the interests of various stakeholders is essential to enhancing investor perception and public trust. Disclosures on corporate responsibility are presented under Corporate Social Responsibility of this Annual Report. 18 ANNUAL REPORT 2015

20 Statement on Corporate Governance A.5 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 2015 are as follows: Name of Directors No. of Meetings Attended Dato Seri Abdul Azim bin Mohd Zabidi 6/6 Datuk Chai Woon Chet 6/6 Soo Pow Min 6/6 Faidzan bin Hassan 4/6 Cheong Wai Loong 6/6 Hew Tze Kok 5/6 Datuk Lor Chee Leng 5/6 Khoo Chuin Yuen (Retired as Director on 04/12/2014) 4/4 The Board is satisfied with the level of time commitment given by the Directors of the Company towards fulfilling their duties and responsibilities. This is evidenced by the attendance record of the Directors as set out herein above. 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 direct access to the advice and services of the Company Secretary who is responsible for ensuring the Board s meeting procedures are adhered to and that applicable rules and regulations are complied with. The Board recognises that the Company Secretary is suitably qualified and capable of carrying out the duties required. The Board is satisfied with the service and support rendered by the Company Secretary in discharge of their functions. When necessary, Directors may whether as a full Board or in their individual capacity, seek independent professional advice, including the internal and external auditors, at the Company s expense to enable the directors to discharge their duties with adequate knowledge on the matters being deliberated. ANNUAL REPORT

21 Statement on Corporate Governance A.6 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 reelection. 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.7 Nomination and Remuneration Committee In line with the Best Practices of MCCG, the Board has established a Nomination and Remuneration Committee ( NRC ) which comprise exclusively of Independent Non- Executive Directors, with the responsibilities of assessing the balance composition of Board members, nominate the proposed Board member by looking into his skills and expertise for contribution to the Company on an ongoing basis. At the same time, the NRC is authorised by the Board to establish a formal and transparent procedure for developing policy on executive remuneration and for fixing the remuneration packages of individual Directors. The remuneration of Directors shall be the ultimate responsibility of the full Board after considering the recommendations of the NRC. The NRC meets as and when deemed necessary. The present members of the NRC of the Company are: Designation Name Directorship Chairman Cheong Wai Loong Independent Non-Executive Director Member Soo Pow Min Independent Non-Executive Director Member Hew Tze Kok Independent Non-Executive Director The functions of the NRC are summarise as following: a) The Committee shall regularly review the structure, size and composition of the Board and make recommendations to the Board with regard to any adjustments that are deemed necessary; b) The Committee has to evaluate the effectiveness of the Board as a whole, the various Committees and each individual Director s contribution to the effectiveness on the decision making process of the Board; 20 ANNUAL REPORT 2015

22 Statement on Corporate Governance c) The Committee shall give full consideration to succession planning for Directors and other senior executives in the course of its work, taking into account the challenges and opportunities facing the company, and the skills and expertise needed on the Board in the future; d) The Committee shall prepare a description of the role and capabilities required for a particular appointment; e) The Committee shall be responsible for identifying and nominating for the approval of the Board, candidates to fill board vacancies as and when they arise; f) In determining the process for the identification of suitable new candidates, the Committee will ensure that an appropriate review or search is undertaken by an independent third party to ensure the requirement and qualification of the candidate nominated; g) The Committee shall make recommendations to the Board on candidates it considers appropriate for appointment; h) The Committee shall recommend to the Board concerning the re-election by shareholders of any director under the retirement by rotation provisions in the Company s Article of Association; i) The Committee shall review and recommend to the Board the framework of remuneration of the Executive Directors and Senior Management, 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; j) The Committee shall review and determine the bonus scheme for Executive Directors depending on various performance measurements of the Group; k) The Committee shall review and determine the other benefits in kind for the Executive Directors; and l) The Committee may request management or external consultants to provide necessary information upon which the Board may make its assessment. ** Subject to shareholders approval in the general meeting, the Board as a whole determines the level of remuneration of the Non-Executive Director of the Company. The review of the remuneration of the Non-Executive Director should take into consideration fee levels and trends for similar positions in the market, time commitment required from the director and any additional responsibilities undertaken such as a director acting as chairman of a board committee or as the senior independent nonexecutive director. The individuals concerned should abstain from discussion of their own remuneration. ANNUAL REPORT

23 Statement on Corporate Governance The appointment of new Directors is the responsibility of the full Board after considering the recommendations of the NRC. As a whole, the Company maintains a very lean number of Board members. In general, the process for the appointment of director to the Board is as follows: (i) The NRC reviews the Board s composition through Board assessment/evaluation; (ii) The NRC determines skills matrix; (iii) The NRC evaluates and matches the criteria of the candidates, and will consider diversity, including gender, where appropriate; (iv) The NRC recommends to the Board for appointment; and (v) The Board approves the appointment of the candidates. The NRC does an annual review of the composition of the Board and makes recommendations to the Board accordingly, with a view to meeting current and future requirements of the Group. The NRC is satisfied with the current size of the Board, and with the mix of qualifications, skills & experience among the Board members. Among other evaluation criteria is the commitment displayed, the depth of contribution, ability to communicate and undertake assignments on behalf of the Board. A.8 Directors Training All the Directors appointed to the Board 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 2015 as detailed below: Name of Director Dato Seri Abdul Azim bin Mohd Zabidi Datuk Chai Woon Chet Soo Pow Min Faidzan bin Hassan Cheong Wai Loong Hew Tze Kok Datuk Lor Chee Leng Courses Attended 1. New Zealand Technology Showcase 2. Financial Reporting and the Control Environment 3. An Evening with Boris Johnson 4. Management Course for Board of Directors and Shareholders of Security Company Financial Reporting and the Control Environment 1. Financial Reporting and the Control Environment 2. Bursa Nominating Committee Programme Financial Reporting and the Control Environment 1. Financial Reporting and the Control Environment 2. Bursa Nominating Committee Programme 1. Roles and Responsibilities of BOD in Relation to Financial Statements. 2. Impact of Coods And Services Tax (GST) on Businesses 3. Financial Reporting and the Control Environment Financial Reporting and the Control Environment 22 ANNUAL REPORT 2015

24 Statement on Corporate Governance In addition to the above, Directors would be updated on recent developments in the areas of statutory and regulatory requirements from the briefing by the External Auditors, the Internal Auditors and Company Secretary during the Committee and Board Meetings. A.9 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 and Remuneration 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 MCCG. 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 remunerations of the Executive Directors were determined fairly based on the performance and the profitability of the Group as a whole. The Directors remuneration is at the discretion of the Board, taking into account the comparative market rates that commensurate with the level of contribution, experience and participation of each Director. The overriding principle adopted in setting the remuneration packages for the Executive Directors by the Nomination and Remuneration Committee is to ensure that the Company attracts and retains the appropriate Directors of the caliber needed to run the Group successfully. The determination of the remuneration for Non-Executive Directors is a matter of the Board as a whole. The level of remuneration for Non-Executive Directors reflects the amount paid by other comparable organisations, adjusted for the experience and levels of responsibilities undertaken by the particular Non-Executive Directors concerned. The remuneration package of Non-Executive Directors will be a matter to be deliberated by the Board, with the Director concerned abstaining from deliberations and voting on deliberations in respect of his individual remuneration. In addition, the Company also reimburses reasonable out-of-pocket expenses incurred by all the Non-Executive Directors in the course of their duties as Directors of the Company. The aggregate annual Directors fees are to be approved by shareholders at the Annual General Meeting based on recommendations of the Board. ANNUAL REPORT

25 Statement on Corporate Governance B.1 Details of Directors Remuneration The details of directors remuneration for the financial year ended 30 June 2015 are as follows: Fee Salaries Allowances Total Category RM RM RM RM Executive Directors - 485,020 33, ,020 Non-Executive Directors , ,900 Total - 485, , ,920 The Directors remuneration within the following bands is as follows: Number of Number of Range of Remuneration Executive Directors Non-Executive Directors Below RM50,000-6 RM50,001 RM100,000-1 RM500,001 RM600, The above includes Directors who have resigned during the financial year. Details of the remuneration disclosure of each director are not disclosed in this report as the Board is of the view that the above remuneration disclosures by band and analysis between Executive and Non-Executive Directors satisfy the accountability and transparency aspects of MCCG. 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. The Company s Annual Report and financial results are dispatched on annually basis to the shareholders to provide an overview of the Group s business activities and performances. The Share Registrar is available to attend to administrative matters relating to shareholders interests. 24 ANNUAL REPORT 2015

26 Statement on Corporate Governance C.2 Annual General Meeting The Annual General Meeting ( AGM ) is the principal forum for dialogue with the shareholders. The shareholders will be given sufficient notice of the holding of the AGM through the Annual Report that is sent to them. At the AGM, the Board will present to the shareholders with a comprehensive report on the progress and performance of the Group and the shareholders are encouraged to participate in the questions and answers session there at, where they will be given the opportunity to raise questions or seek more information during the AGM. Informal discussions between the Directors, senior management staff, the shareholders and investors are always active before and after the general meetings. Apart from contacts at general meetings, currently there is no other formal program or schedule of meetings with investors, shareholders, stakeholders and the public generally. However, the management has the option of calling for meetings with investors/analysts if it deems necessary. Thus far, the management is of the opinion that the existing arrangement has been satisfactory. On poll voting, the Board is of the opinion that with the current level of shareholders attendance at general meetings, voting by way of a show of hands continues to be efficient. During the general meetings, the Chairman of the meeting will remind all members present about their right to demand for a poll in accordance with the provisions of the Company s Articles of Association in voting on any resolutions. Currently, all resolutions put forth for the shareholders approval are carried out by a show of hands, unless a poll is properly demanded or specifically required. 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 acknowledges its overall responsibility for maintaining a system of risk management and internal controls, which provides reasonable assessment of effective and efficient operations, internal controls and compliance with laws and regulations. The Statement on Risk Management and Internal Control as set out on page 32 of the annual report provides an overview of the state of internal controls within the Group. ANNUAL REPORT

27 Statement on Corporate Governance 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 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 re-appointment of the External Auditor is via shareholders resolution at the AGM on the recommendation of the Board. E. Statement of Compliance with MCCG 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 MCCG. 26 ANNUAL REPORT 2015

28 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 Hew Tze Kok Independent Non-Executive Director ANNUAL REPORT