rexit 2016 final-a4 - malaysiastock.biz and the acceptability of our products and services ... and...

REXIT BERHAD (668114-K)REXIT BERHAD

CONTENTSCORPORATE INFORMATION................................................................ CORPORATE PROFILE............................................................................ PRODUCTS & SERVICES........................................................................ CORPORATE STRUCTURE..................................................................... DIRECTORS’ PROFILES.......................................................................... CHAIRMAN’S STATEMENT................................................................... MANAGEMENT OVERVIEW.................................................................. STATEMENT ON CORPORATE GOVERNANCE.................................

ADDITIONAL COMPLIANCE INFORMATION.................................... STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL................................................................... REPORT ON AUDIT COMMITTEE......................................................... FINANCIAL STATEMENTS.................................................................... DETAILS OF LANDED PROPERTY....................................................... ANALYSIS OF SHAREHOLDINGS........................................................ NOTICE OF ANNUAL GENERAL MEETING....................................... PROXY FORM

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REXIT BERHAD

BOARD OF DIRECTORS

Datuk Ng Kam ChiuChairman / Independent Non-Executive Director

Datuk Chung Hon CheongChief Executive Officer / Executive Director

Si Tho Yoke MengChief Operating Officer / Executive Director

Dato’ Abdul Murad Bin KhalidNon-Independent Non-Executive Director

Kuah Hun LiangNon-Independent Non-Executive Director

Chan Chee YuanIndependent Non-Executive Director

AUDIT COMMITTEE


Dato’ Abdul Murad Bin KhalidMember / Non-Independent Non-Executive Director

Chan Chee YuanMember, Independent Non-Executive Director

REMUNERATION COMMITTEE


Dato’ Abdul Murad Bin KhalidMember / Non-Independent Non-Executive Director

Datuk Chung Hon CheongMember / Executive Director

NOMINATING COMMITTEE


Chan Chee YuanMember, Independent Non-Executive Director

COMPANY SECRETARIES

Ng Heng Hooi (MAICSA 7048492)

Wong Mee Kiat (MAICSA 7058813)

Jane Ong Su Ping (MAICSA 7059946)

CORPORATE OFFICE

42, Jalan BM 1/2Taman Bukit Mayang Emas47301 Petaling JayaSelangor Darul EhsanTel: 03-7803 1131 Fax: 03-7803 8896www.rexit.com

REGISTERED OFFICE

Lot 6.08, 6th FloorPlaza First NationwideNo. 161, Jalan Tun H.S. Lee50000 Kuala LumpurTel: 03-2072 8100 Fax: 03-2072 8101

PRINCIPAL BANKERS

Standard Chartered Bank Malaysia BerhadCIMB Bank Berhad

AUDITORS

Sekhar & Tan Chartered AccountantsSuite 16-8, Level 16, Lobby BWisma UOA IINo. 21, Jalan PinangP.O. Box 1056850718 Kuala LumpurTel: 03- 2170 2688 Fax: 03- 2171 1987

SHARE REGISTRAR

Bina Management (M) Sdn. Bhd. Lot 10, The Highway CentreJalan 51/205, 46050 Petaling JayaSelangor Darul EhsanTel: 03-7784 3922 Fax: 03-7784 1988

STOCK EXCHANGE LISTING

ACE Market of Bursa Malaysia Securities Berhad Stock Name : REXITStock Code : 0106

CORPORATE INFORMATION

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Rexit Berhad (“Rexit”) is a company that focuses on delivering solutions and services to the General Insurance industry. Rexit’s intimate knowledge and understanding of the business processes and operations of the industry, its capability to continually identify advances in technology and successfully adapting those for the benefit of its customers have made Rexit the solutions partner of choice.

Rexit has grown from a four-person operation in 1998 into a public-listed company by November 2005. Rexit is listed on the ACE market of Bursa Malaysia Securities Berhad.

Rexit offers several web-based insurance solutions which cater for the front-end marketing and sales functions, as well as the back-end operations and management requirements of insurance companies.

e-Cover – Enabling online insurance transactions

Rexit’s business model is the provision of Software as a Service (“SaaS”) which is based on a ‘pay per use’ basis. This business strategy has enabled Rexit to be a key partner to the financial and legal services industries. The SaaS model was adopted in order to help companies to address the biggest concerns in IT investments, namely the high capital expenditure, difficulties in retaining IT expertise, the technology risk, and the high costs of operating and maintaining IT systems.

Rexit e-Cover suite of web-based solutions which provided an on-line system for insurance companies and their intermediaries. Insurance transaction data is now entered by thousands of agents with the e-Cover system instead of relying on the personnel of the insurance companies.

Through a common interface, agents can transact for multi-principals using the multiple devices instead of different terminals and operating environments in the past. Today, the e-Cover portal can be accessed using different browsers like Internet Explorer, Google Chrome, Mozilla Firefox and Safari from various devices running on Windows, Android and Apple iOS. The capability is extended to any location so long as there is access to the Internet. This fits into the business model of providing service anytime, anywhere which most insurance agents operate in.

The e-Cover portal has since launched the De-tariffed Module to cater for the market liberalization with the first phase in the progressive liberalization of the motor tariff in July 2017. This Module and its proprietary Rating Engine have been implemented in both Thailand and Singapore. Rexit will be targeting the Malaysian insurance market as the motor tariff will be gradually abolished over the next few years. With the experience of the liberalized market requirements gained in the region, Rexit is well-placed to offer additional services to its clients.

The e-Cover system is currently deployed in Malaysia, Singapore, Thailand and Hong Kong.

e-PPA – Enabling online unit trust investment through EPF

Although Rexit’s core business is focused on the Insurance industry, it has recognized the opportunities in expanding its business model in the other financial services sector.

Rexit has also expanded the SaaS model to include the Malaysian unit trust industry following our appointment by the Federation of Investment Managers Malaysia (“FIMM”) as the third party administrator for electronic submissions by their member companies to the Employees Provident Fund (“EPF”). The application known as the e-Pelaburan Pilihan Ahli (“e-PPA”) system is an industry platform for the submission of unit trust investment and redemption applications which are settled electronically using the EPF member’s contributions. The e-PPA system provides a closed loop process involving the unit trust companies, the EPF and their nominated bank for all processes within a turnaround time of less than 3 days.

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CORPORATE PROFILE

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The e-PPA system is adopted by all FIMM as well as non-FIMM member companies.

InfoGuardian – Enabling online legal documentation

Rexit has further broadened its SaaS solutions with the introduction of the InfoGuardian Work Management Suite (“InfoGuardian”). InfoGuardian is an integrated workflow, case management and document management system specially designed for the financial and legal services industries, to provide and facilitate an on-line information sharing environment for multiple users within and outside customer organizations.

InfoGuardian provides key tools that enable quick and informed business decisions and promotes transparency between the various parties involved in any work process. The InfoGuardian Suite can be easily adapted for various industries.

InfoGuardian is used by an international Islamic bank and a local bank together with their panel of legal firms and property valuation firms.

As a public-listed entity, Rexit not only has the financial capacity to undertake large IT projects but also has the experience of managing large IT infrastructures. It also operates under the stringent requirements of various regulatory bodies ensuring that there is proper corporate governance and prudence in its operations.

Overseas Operations

Rexit International Sdn Bhd, a MSC Malaysia status company was formed to develop and market Rexit’s solutions and services internationally. It is well placed to reinforce our presence through our existing customers in Hong Kong, Singapore and Thailand. The implementation of these projects means that our software has undergone the process of localization in these countries. This further enhances the marketability and the acceptability of our products and services in these markets.

We will continue our efforts to market our e-Cover to the regional market with local strategic partners in the market identified. The ‘local’ partners with a comprehensive knowledge of the local business environment will be in the best position to provide the necessary linkages to the government and the business sectors.

The successful adoption of the e-Cover system by a multinational insurance company based in Singapore and recently in Thailand, has provided the Group with the opportunity to localize the e-Cover system to meet the local industry requirements in these countries. In Singapore, the green light given by the relevant authority allowing us to provide e-Cover services is an important milestone for Rexit to explore further opportunities in the Republic.

In order for the Group to continuously stay ahead in the competitive information technology business and to provide new and enhanced software solutions to meet the needs of our customers, Rexit has set up Rexit Software (Guangzhou) Co Ltd for the purpose of carrying out research and development for our overseas projects. Furthermore, the setting up of this base will provide the Group with the availability of additional resources for projects in the region.

CORPORATE PROFILE

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Rexit offers a broad range of solutions and services specifically for the Insurance and Financial Services industries that want to benefit from implementing secured e-commerce.

Our products support the entire spectrum of insurance processes and operations spanning from the external sales and marketing processes through the various distribution channels which include agents, brokers and banks through to the internal operations that involve the management of intermediaries and service providers, policy administration, underwriting, customer services, claims management, compliance, reinsurance, etc.

Rexit also has the capacity to provide solutions and data management services for large scale nationwide implementations and support various government initiatives.

Our primary products are:

InfoGuardianEnabling online legal documentation

e-PPAEnabling online unit trust investments through EPF

e-CoverEnabling online insurance transactions

InfoGuardian, an integrated workflow, case management and document management system that provides and

facilitates an on-line information sharing environment for multiple users within and outside customer organizations.

e-PPA, an online system used by all approved unit trust companies in Malaysia to submit investment and redemption applications to the EPF whenever EPF

members invest in the selected unit trusts using their EPF contributions.

e-Cover, an online insurance transaction system that enables a business to deliver products and services electronically and within a short time-to-market. It is available 24x7 anywhere.

The shared services model adopted significantly reduces the cost of ownership.

PRODUCTS AND SERVICES

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100 % Rexit (M) Sdn Bhd

100 % Rexit Solutions Sdn Bhd

100 % Rexit Software(Guangzhou) Co Ltd

100 % Reward-Link.comSdn Bhd

100 %

Rexit Software Sdn Bhd

100 % Rexit InternationalSdn Bhd

CORPORATE STRUCTURE

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Front (From Left to Right) : Kuah Hun Liang, Datuk Ng Kam Chiu, Dato’ Abdul Murad Bin Khalid, Chan Chee Yuan,Back (From Left to Right) : Datuk Chung Hon Cheong, Si Tho Yoke Meng

DATUK NG KAM CHIU 70 years of age, Malaysian, MaleChairman / Independent Non-Executive Director

YBhg Datuk Ng was appointed to the Board on 2 September 2005. He holds a Bachelor of Social Science (Honours) degree from the University of Singapore and a Masters in Public Administration degree from the University of Southern California (Washington D.C.). He started his career with the Malaysian Administrative and Diplomatic Service in 1970 and worked in the Penang State Secretary’s Office. He has served in the National Institute of Public Administration, the Prime Minister’s Department, the Road Transport Department, and the Ministry of Science, Technology and Environment. He retired from the civil service in 2002.

YBhg Datuk Ng is the Chairman of the Audit Committee, Nominating Committee and Remuneration Committee. He attended all the four (4) Board meetings held in the financial year ended 30 June 2016.

DATO’ ABDUL MURAD BIN KHALID 62 years of age, Malaysian, MaleNon-Independent Non-Executive Director

YBhg Dato’ Abdul Murad was appointed to the Board on 17 October 2007. He holds a Diploma in Accounting and Bachelor of Economics (Honours) degree from the University of Malaya. He is a Member of Malaysian Institute of Chartered Public Accountants. He started his career with Bank Negara in 1976 as an Administrative Officer and appointed as Assistant Governor in 1994 until his resignation in 1999. He joined RHB Bank Berhad in January 1999 as Executive Director until his resignation in September 1999. He currently sits on the Board of several private limited companies.

YBhg Datuk Abdul Murad is a Member of the Audit Committee and Remuneration Committee. He attended all the four (4) Board meetings held in the financial year ended 30 June 2016.

DIRECTORS’ PROFILES

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KUAH HUN LIANG 55 years of age, Malaysian, MaleNon-Independent Non-Executive Director

Mr. Kuah was appointed to the Board on 17 December 2007. He holds a Bachelor of Science (Hons) degree in Applied Economics from the University of East London. Mr. Kuah has more than 30 years’ experience in the financial markets. He started his banking career in Public Bank Berhad in 1983. He joined Deutsche Bank AG in 1989 where he served as a Treasurer and was then promoted as the Managing Director and Head of Global Markets. He gained extensive experience in the field of trading and sales, as well as debt and equity capital markets during his tenure as the Head of Global Markets. In 2000, he was appointed as an Executive Director of Deutsche Bank (M) Berhad and promoted to be the Chief Executive Officer in 2002 and held the position till September 2006. Mr. Kuah was a former Treasurer and Director of Malaysian-German Chamber of Commerce and Chairman of Star Publications (Malaysia) Berhad.

Mr. Kuah is currently the Independent Non-Executive Director of Alliance Investment Bank Berhad, Alliance Bank Malaysia Berhad and MPHB Capital Berhad. He attended all the four (4) Board meetings held in the financial year ended 30 June 2016.

DATUK CHUNG HON CHEONG 55 years of age, Malaysian, MaleChief Executive Officer / Executive Director

YBhg Datuk Chung was appointed to the Board on 2 September 2005. He started his involvement in IT in the early 80’s with Computer Information Systems Sdn Bhd, a bureau services company providing data processing services for insurance companies. He then left to join System Maju Sdn Bhd, a Wang Computers distributor, a company specializing in IT hardware and software. In 1985, he co-founded Power Computer Supplies Sdn Bhd, a company principally involved in software development for general insurance companies. He subsequently sold his shares in this venture in 1996. From 1996 to 2001, he was involved in providing general consultancy services. In 2002, he was appointed Managing Director of Rexit Solutions Sdn Bhd (“Rexit Solutions”) and subsequently in 2003, he acquired Rexit Solutions through Rexit Venture Sdn Bhd (“Rexit Venture”). With great vision and leadership, he is recognised in the general insurance industry and is also a key factor in steering the steady growth of Rexit Group to become a respected software company in the IT industry.

YBhg Datuk Chung is the Chairman of the Options Committee and a Member of the Remuneration Committee. He attended all the four (4) Board meetings held in the financial year ended 30 June 2016.

SI THO YOKE MENG 55 years of age, Malaysian, MaleChief Operating Officer / Executive Director

Mr. Si Tho was appointed to the Board on 2 September 2005. He started his career in the early 80’s with Komputer Usaha Sdn Bhd, which he contributed vastly in development and project management. In 1987, he joined Power Computer Supplies Sdn Bhd, a company principally involved in software development for general insurance companies, where he was involved in managing, planning, directing and monitoring IT development activities. From 1996 to 2001, he was involved in providing general consultancy services. In 2001, he joined ETSC Dotcom Sdn Bhd (now known as e-Resource.com Sdn Bhd), a company involved in conducting research and development in RFID applications. The company successfully developed the electronic locate, identify and track engine (e-LIT engine), an RFID-based application which was tested in collaboration with University Sains Malaysia with commendable results. In 2002, he was appointed the Executive Director of Rexit Solutions and subsequently acquired Rexit Solutions through Rexit Venture in 2003. His vision and leadership is essential in establishing and managing the Rexit Group.

Mr. Si Tho is a Member of the Options Committee. He attended all the four (4) Board meetings held in the financial year ended 30 June 2016.


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CHAN CHEE YUAN 49 years of age, Malaysian, MaleIndependent Non-Executive Director

Mr. Chan was appointed to the Board on 26 August 2015. He holds a Bachelor of Science (Hons) degree in Economics and Accountancy from The City University, London, England. He started his career as an investment analyst in 1990 with Schroder Investment Management in Singapore. In 1992, he joined Schroder Investment Management in London, and in 1994, returned to join Seacorp Schroder Capital Management in Kuala Lumpur as an analyst and fund manager. In 2000, he joined Netresearch-Asia Sdn Bhd, an investment advisory company licensed by Securities Commission Malaysia. He is currently an Associate Director and a Capital Markets Services Representative’s License holder of the company. He is also a director of a private company involved in the provision of investor relations services.

Mr. Chan is a Member of the Audit Committee and Nominating Committee. He attended all the three (3) Board meetings held after his date of appointment in the financial year ended 30 June 2016.

NotesNone of the Directors have any family relationship with any director and/or major shareholder of the Company.None of the Directors have any conflict of interest with the Company.None of the Directors have been convicted for offences within the past 5 years other than traffic offences.None of the Directors have any public sanction or penalty imposed by the relevant regulatory bodies during the financial year.

KEY SENIOR MANAGEMENT PROFILES

CHAN SHIH FEI 54 years of age, Malaysian, FemaleChief Financial Officer

Ms. Chan joined Rexit Group on 15 September 2004. Prior to joining Rexit Group, she was the Group Financial Controller of Proven Resources Sdn Bhd Group of companies since 1996. She began her career with Deloittes and later joined KPMG, gaining a total of more than 8 years of experience in these 2 major accounting firms. She was also the Group Financial Controller of the RSH (Malaysia) Sdn Bhd Group of companies. She is a member of the Malaysian Institute of Certified Public Accountants. She obtained her Bachelor of Arts degree in Economics from the University of Malaya. Ms. Chan does not hold any directorship in public companies and listed corporations.

She does not have any family relationship with any director and/or major shareholder of the Company. She does not have any conflict of interest with the Company. She has not been convicted for offences within the past 5 years other than traffic offences and does not have any public sanction or penalty imposed by the relevant regulatory bodies during the financial year.


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Dear Shareholders,

On behalf of the Board of Directors, I am pleased to present to you the Annual Report and the audited financial statements of Rexit Berhad for the financial year ended 30 June 2016 (“FY2016”).

Overview

In my previous year’s statement, I highlighted that we were cautiously optimistic of reporting a positive set of financial results for FY2016. I am glad to inform that we were right on the target. I must congratulate the management for the excellent work.

The 5 Years Consolidated Results 2012 to 2016 below shows the upturn in revenue and profit before taxation beginning 2014 and continues to progress upwards in 2016. Our sustainable business model leveraging on our core competencies and strength will ensure a continuous stream of recurring revenue and customer satisfaction despite the challenging economic environment.

The e-Cover continues to generate significant annual recurring revenue for us. The quantum received depends on the total number of transactions per year as our business model is on ‘the user pay per transaction.’ The InfoGuardian services and e-PPA has also performed satisfactorily and continues to contribute to our revenue.

Financial Performance

For the FY2016, revenue rose 10.83 % from RM17.002 million in 2015 to RM18.844 million. The increase is due to the improved utilization of the e-Cover, the InfoGuardian services, e-PPA and software sales. The Profit before taxation rose 51.98 % from RM5.816 million in the previous year to RM8.839 million in FY2016. After providing RM 1.982 million for taxation, profit after tax still improved by 28.79 % from RM5.324 million to RM6.857 million.

RM

(mill

ion)

5 Years Consolidated Results

18.020.0

16.014.012.010.08.06.04.02.00.0

2012 2013 2014 2015 2016Financial Year

Revenue

Profitbeforetaxation

13.413.8

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17.0 18.8

3.5

4.8

3.5

5.88.8

CHAIRMAN’S STATEMENT

Datuk Ng Kam ChiuChairman

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At 30 June 2016, our Group’s Cash and Cash Equivalents recorded RM26.038 million of which RM19.817 million is investment in cash funds. These cash funds are highly liquid instruments which are readily convertible to known amounts of cash and are not subject to any significant risk of changes in value. The Cash and bank balances recorded RM6.221 million.

For the FY2016, 1,794,100 ordinary shares were purchased from the open market. To date, Rexit holds a total of 10,086,300 ordinary shares in its Treasury.

Dividend

We have been paying annual dividends consistently as an acknowledgement of our shareholders’ loyal support. FY2016 is no exception and 2.0 sen per ordinary share of RM0.10 was paid.

Outlook and Prospects

Our country’s economic outlook in 2016 is expected to remain cautious. Economic growth is projected to be 4.0 – 4.5 per cent amid a challenging economic environment. Despite this, the Information and Communication (ICT) sector outlook is reported to remain positive throughout 2016, the medium and the long term. As ICT has become the strategic enabler and the chief driver of the Government’s Economic Transformation Program, it will continuously undertake strategic initiatives to address issues encompassing broadband speed, penetration, accessibility, affordability, security, reliability, human resources availability and the like. There will be high demand for IT products and services in particular in developing software solutions to support enabling technologies and maintenance related services from the government sector, the business enterprises and the local community throughout 2016-2020. The National ICT Association (Pikom) is cautiously optimistic that the ICT industry will grow by 12 -14% in 2016.

We welcome the first phase in the progressive liberalization of the motor insurance tariff in July 2017. Insurance companies will have to invest in technologies to develop premium pricing models and improve process and delivery channel to gain market share. Our De-tariffed Module and its proprietary Rating Engine implemented in Singapore and Thailand is well placed to offer our services to the insurance industry to partake effectively in the liberalization process. We expect positive response to our De-tariffed module and contribution to the Group.

Having carefully considered the state of our country’s economic growth, the opportunities in the IT industry in 2016-2017, the demand from insurance enterprises for IT customization services, our sustainable business model, our niche technologies, our IT talent pool and management’s integrity, the Board is cautiously optimistic of a better and improved performance in the next financial year.

Corporate Social Responsibility

With the high availability of our applications, we strongly believe that we have and continue to contribute effectively towards bringing e-commerce to the business community and the public. Making service delivery accessibility anytime and anywhere helps improve our quality of life.

We are constantly reviewing the carbon footprint in all aspects of our operations. This includes the critical areas like our data center operations and office workplace. Emphasis to upgrade to more energy saving and efficient equipment are being invested when required. We also fully recognize that our human resources are our vital assets. They contribute towards the success and the growth of the company. We are committed to nurturing and growing our human resources to reach their full potential by continuously providing appropriate opportunities for knowledge acquisition through formal and on the job training. The Management and other personnel are encouraged to attend approved training programs organized in house and by professional trainers.


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We believe that our Group has a corporate responsibility to give back to the community. Over the years we have contributed to various charitable initiatives and shall continue with this practice whenever our financials permit.

Corporate Governance

The Board places strong emphasis in maintaining high standards of corporate governance as it is our responsibility to protect and maximize shareholders’ value and to ensure the sustainability of Our Group’s business. The Statement of Corporate Governance highlighting the measures taken is in this Annual Report.

Appreciation

On behalf of the Board, I must extend my thanks to all our shareholders and stakeholders for your continued support throughout the years. My sincere appreciation to our business partners for their kind support and our loyal customers for their trust and confidence in our ability to deliver.

I would also like to thank the management and personnel of our company for their excellent work and dedication to produce an improved set of financial results for FY2016.

Thank You

Datuk Ng Kam Chiu PJN; KMN.Chairman

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Financial Performance

For the FYE 2016, the Rexit Group achieved a profit after tax of RM6.857 million on recorded revenue of RM18.844 million, mainly attributable to software sales including subscription and transaction fees for the e-Cover services. In addition, there were revenues generated from customization which are non-recurring. Profit after tax has also increased in line with the rise in revenue.

Group Prospects

The Rexit Group will continue to strengthen its core competencies in further developments to the e-Cover products and services, improvement in operational efficiency, and to extend its marketing efforts in the Asia Pacific region. We have identified the following as the main areas of growth:

Rexit has been increasing its efforts to introduce its e-Cover non-motor products to our existing customers. The current challenging economic situation has created opportunities for Rexit to engage our customers for the implementation of additional products, as a result of the insurance companies looking at ways to further improve their operational efficiency. Nevertheless, the continuing consolidation of the local insurance industry presents a challenging operating landscape for the Company.

In addition to leveraging on our existing customers, Rexit is actively exploring opportunities in the Asia Pacific region with potential partners to market our products and services in these markets.

The successful adoption of the e-Cover system by four (4) multinational insurance companies in Hong Kong, Singapore, and Thailand, is very significant as it provided the Group with the opportunity to localize the e-Cover system to meet the respective country’s industry requirements.

The e-Cover projects in Singapore and Thailand are significant to Rexit as they involve the implementation of the e-Cover De-tariff Module. With the gradual removal of the Motor Tariff in Malaysia, Rexit has the experience and expertise to roll-out this new service to our existing clients as well as to win new ones. The proprietary e-Cover Rating Engine is now able to cater for the business requirements in Singapore and Thailand, where the insurance markets have been liberalized. The Rating Engine has been designed to handle the different pricing models of the individual insurance companies.

Additionally, the e-Cover portal is also gradually being refreshed to give it a more contemporary look and feel as well as to improve the user interface. The e-Cover portal can now support various types of devices, including tablets and smartphones using Apple iOS, Google Android and Microsoft Windows Phone.

Rexit has successfully implemented e-PPA for the Federation of Investment Managers Malaysia (“FIMM”) in 2010, and its usage has since been expanded to include non-FIMM member companies.

The e-PPA continues to contribute to Rexit’s revenue in the current financial year and will continue to contribute positively to Rexit’s revenue on a sustainable basis in the coming years.

(b) e-PPA

(a) e-Cover

MANAGEMENT OVERVIEW

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Research & Development

The Rexit Group’s research and development efforts are to expand and extend the e-Cover services to the financial services sector and other segments of e-commerce by leveraging on the large 24x7 secured e-Cover infrastructure. Furthermore, continuous software development work is being undertaken to introduce an e-Cover mobile version to cater to the growing number of Apple and Android device users, some of which have already been launched.

Rexit Software (Guangzhou) Co Ltd is currently carrying out the development for our overseas projects. The additional resources from this base, can be made available for any projects in the region to ensure a more efficient and timely delivery of projects.

Training

The Rexit Group continues to invest in human capital through our in-house and external courses. All these are targeted at the rapid development of our staff in line with the expansion of the Group.

Our staff are provided training in all the key aspects of our operations like technical knowledge, soft skills training, project management skills, etc. which are in the form of classroom learning, as well as on-the-job training.

Corporate Governance

Rexit will continue to strive on improving its financial performance during these challenging and volatile economic conditions, while conforming to set standards and practices which contribute towards enhancing the effectiveness of the organization. We will continue to place strong emphasis on business and corporate governance principles and best practices, including risk management and internal control, communications and adherence to regulations, strategic management, and financial and operational performance.

Taking into consideration the domestic and regional economic environment which is expected to be more volatile in 2016, the Group believes that the prospects of Rexit for the next financial year would remain challenging.

One of InfoGuardian customers, an international Islamic bank has further expanded its use of the system to its Security Documentation Department. Furthermore, additional legal firms and property valuation firms have joined the program resulting in a wider collaboration network for financial institutions. The bank is looking to expand the usage of InfoGuardian to other types of external service provider e.g. debt collection agencies.

Rexit has also successfully implemented InfoGuardian for a local bank and its panel of legal firms. Rexit is confident that with the recent contract, InfoGuardian will be able to boost its future revenues, as businesses look to improve their profitability through better efficiency.

(c) InfoGuardian

MANAGEMENT OVERVIEW

STATEMENT ON CORPORATE GOVERNANCE

The Board of Directors (“the Board”) is committed in ensuring good corporate governance is practiced throughout the Group as a fundamental part of discharging its fiduciary responsibilities to protect and enhance shareholders’ value and the financial performance of the Group.

The Board is pleased to disclose below the Company and its subsidiaries (“Group”)’s application of the Principles and Recommendations of the Malaysian Code on Corporate Governance 2012 (“Code”) throughout the financial year.

PRINCIPLE 1 – ESTABLISH CLEAR ROLES AND RESPONSIBILITIES OF THE BOARD

Clear functions of the Board and Management

The Board’s main responsibility is to lead and manage the Group in an effective manner including developing strategic directions and objectives in line with its vision and missions, implement plans and supervise the conduct of the Group’s business as a whole. The Board’s role is to provide leadership of the Group within a framework of prudent and effective controls whilst ensuring risks are consistently assessed and controlled.

The Executive Directors have executive responsibilities for the day-to-day operations of the Group’s business and shall implement policies, strategies and decisions and shall be accountable for the conduct and performance of their businesses within the agreed business strategies.

Clear Roles and Responsibilities

The Board recognises the key role it plays in charting the strategic direction of the Company and has assumed the following principal responsibilities in discharging its fiduciary and leadership functions:

• Review and approve strategic plans and significant policies; • Overseeing the conduct of the Company’s business and financial performance and major capital commitments of the Company and the Group; • Review and approve any major corporate proposals, new business ventures or joint ventures of the Group; • Identifying principal risks and ensuring the implementation of appropriate systems of internal control to manage these risks; • Reviewing the adequacy and integrity of internal control systems and management information systems in the Company and within the Group; • Overseeing development and implementation of a shareholder communications policy for the Company; and • Overseeing an appropriate succession plan for members of the Board and senior management.

The Board has also formed different Board committees, comprising mainly the non-executive and independent directors, to support and provide independent oversight of management and to ensure that there are appropriate checks and balances in place. Currently, the various Board Committees of the Board are the Audit Committee, Nominating Committee and Remuneration Committee. Each of the Board Committee operates within its respective terms of reference (“TOR”) that also clearly define its respective functions and authorities. Notwithstanding the above, the ultimate responsibility for decision making still lies with the Board.

Ethical Standards through Code of Business Ethics

The Board acknowledges the importance of establishing a healthy corporate culture and has formalised in writing a Code of Conduct and Ethics for the Board, which sets out the standards of good behaviour by underscoring the core ethical values that are vital for their business decisions.

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Strategies Promoting Sustainability

The Group acknowledges that sustainability is an important aspect of its business and continues to undertake responsible practices that impact the society and environment in a positive manner and to inculcate a culture of responsibility in all aspects of our business. It therefore adopts a business approach to create shareholders value by embracing opportunities and managing risks deriving from economic, environmental and social developments. The Board ensures that its long-term financial viability, loyalty of key stakeholders and preservation of the environment are achieved.

Access to Information and Advice

The Board recognises that the decision making process is highly dependent on the quality of information furnished. As such, in discharging their duties, the Directors have full and timely access to all information concerning the Company and the Group. Prior to each Board meeting, the agenda together with relevant reports and Board papers would be circulated to all Directors in sufficient time to enable effective discussions and decision making during Board meetings.

All Board members have access to the advice and services of the Company Secretaries and senior management. The Board, whether as a full board or in their individual capacity, in the furtherance of their duties, may seek independent professional advice in discharge of their duties and responsibilities at the Company’s expense.

Qualified and Competent Company Secretary

The Company Secretaries play an advisory role to the Board in relation to the Company’s compliances to relevant regulatory requirements, guidelines and legislation and are capable of carrying out their duties efficiently to ensure the effective functioning of the Board. The Company Secretaries are suitably qualified and have attended relevant training and seminars to keep abreast with the statutory and regulatory requirements’ updates. The Company Secretaries circulate relevant guidelines and updates on statutory and regulatory requirements from time to time for the Directors’ reference. They also ensure that all Board and Board Committee meetings are properly convened and that deliberations, proceedings and resolutions are properly minuted and documented.

Board Charter

The Board Charter sets out the composition and balance, roles and responsibilities and processes of the Board and is to ensure that all Board members acting on behalf of the Company are aware of their duties and responsibilities as Board members.

The Board Charter shall be reviewed by the Board as and when required to ensure its relevance in assisting the Board to discharge its duties with the changes in the corporate laws and regulations that may arise from time to time and to remain consistent with the Board's objectives and responsibilities.

The Board Charter is published on the Company’s website.

Nominating Committee (“NC”)

The NC is delegated the responsibility to ensure a formal and transparent procedure for the appointment of new directors to the Board. The NC will review and assess the proposed appointment of new directors, and thereupon make the appropriate recommendations to the Board for approval.

1.4

1.5

1.6

1.7

2.1

PRINCIPLE 2 – STRENGTHEN COMPOSITION OF THE BOARD


17

In addition, the NC is also responsible for reviewing candidates for appointment to the Board Committees and making appropriate recommendations to the Board for approval. It is also tasked with assessing the competencies and effectiveness of the Board, the Board Committees and the performance of individual directors in ensuring that the required mix of skills and experience are present on the Board.

The NC is appointed by the Board and consists entirely of Independent Non-Executive Directors.It comprises the following members:-

During the financial year, the NC convened one (1) meeting to review and recommend to the Board, new appointment of a director and board committee; re-election of retiring directors; and carried out assessment on performance of the Board, Board Committees and individual board members.

Datuk Ng Kam Chiu

Chan Chee Yuan

Chairman - Independent Non-Executive Director

Member – Independent Non-Executive Director

Members Designation

Among others, the duties and responsibilities of NC are as follows:-

Assessing and recommending candidates to the Board with the necessary skills, knowledge, experience and competency for new appointments; Assessing the effectiveness of the Board, Board Committees and the contribution of each director, taking into consideration the required mix of skills, knowledge and expertise and experience and other requisite qualities including core competencies contributed by Non-Executive Directors;Reviewing and recommending retiring directors for re-election or re-appointment;Assessing the independence and recommending the retention of Independent Non-Executive Directors;Ensuring adequate training and orientation are provided for new members of the Board.

(i)

(ii)

(iii)(iv)

(v)

Develop, Maintain and Review Criteria for Recruitment and Annual Assessment of Directors 2.2

Recruitment or New Appointment of Directors

The NC considers candidates proposed by the Chairman, Directors, Senior Management and/or shareholders. In making its recommendations, the NC shall assess and consider the candidates’ skills, knowledge, expertise, experience, professionalism, time commitment to effectively discharge his/her role as a director, contribution and performance, character, integrity and competence.

In the case of candidates for the position of Independent Non-Executive Directors, the NC shall also evaluate the candidates’ ability to discharge such responsibilities/functions as are expected from Independent Non-Executive Directors. New Directors are provided with comprehensive information on the Group to enable them to gain a better understanding of the Group’s strategies and operations, and hence allow them to effectively contribute to the Board. The NC will ensure that orientation programme is in place for future new recruits to the Board.

Gender, Ethnicity and Age Group Diversity Policy

The Board does not have a specific policy on gender, ethnicity and age group for candidates to be appointed to the Board. The Company does not practice any form of gender, ethnicity and age group biasness as all candidates shall be given fair and equal treatment. The Board believes that there is no detriment to the Company in not adopting a formal gender, ethnicity and age group diversity policy as the Company is committed to provide fair and equal opportunities and nurturing diversity within the Company. In identifying suitable candidates for appointment to the Board, the NC will consider candidates on merit against objective criteria and with due regard for the benefits of diversity on the Board.

(a)

(b)


18

Annual Assessment

During the financial year, the NC reviewed and assessed the mix of skills, expertise, composition, size and experience of the Board, including core competencies of the Directors, the contribution of each individual Director as well as their character, integrity and time commitment, independence of the Independent Directors, effectiveness of the Board as a whole, and the Board Committees; and also the retirement of Directors eligible for re-election. Self-evaluations had been conducted by each Director and a summary of the self- evaluation was furnished to the NC.

Re-election of Directors

The Company’s Articles of Association provides that at each Annual General Meeting (“AGM”), one-third (1/3) of the Directors for the time being shall retire from office and an election of Directors shall take place provided always that each Director shall retire at least once in every three (3) years but shall be eligible for re-election. Any Directors appointed during the year shall hold office only until the next AGM and then be eligible for re-election.

The following Directors shall retire by rotation at the forthcoming Twelfth AGM of the Company. Being eligible, they have offered themselves for re-election:-

(a) Dato’ Abdul Murad Bin Khalid (b) Si Tho Yoke Meng

Pursuant to Section 129(6) of the Companies Act, 1965, Datuk Ng Kam Chiu, a Director of the Company who is over seventy (70) years of age, shall retire after the conclusion of the forthcoming AGM of the Company, and may offer himself for re-appointment to hold office until the conclusion of the next AGM.

The NC has assessed the performances of all the above Directors due for re-election and has made recommendation to the Board for their re-election to be tabled for shareholders’ approval at the forthcoming AGM.

A brief description on the profile of each Director and their respective attendance in Board Meetings are presented in the Annual Report.

(c)

(d)

Datuk Ng Kam Chiu

Dato’ Abdul Murad Bin Khalid

Datuk Chung Hon Cheong


Member - Non-Independent Non-Executive Director

Member - Executive Director

Members Designation

Remuneration Committee

The Remuneration Committee (“RC”) is delegated the responsibility to review and recommend to the Board the remuneration packages and terms of employment of the Executive Directors. The policy practiced on Directors’ remuneration by the RC is to provide the remuneration packages necessary to attract, retain and motivate Directors of the quality required to manage the business of the Company and to align the interest of the Directors with those of the shareholders.

The RC comprises the following members: -

2.3


19

The remuneration package of each Executive Director is structured to reflect his experience, performance and scope of responsibilities. The remuneration of Non-Executive Directors are in the form of annual fees and reflects the experience and the level of responsibilities undertaken by the Non-Executive Director concerned. Executive Directors shall abstain from the deliberation and voting on decisions in respect of their own remuneration package. In the event where the Chairman’s remuneration is to be decided, he stall abstain from discussion and voting. The remuneration and entitlements of Non-Executive Directors should be a matter for the Board as a whole. The individuals concerned should abstain from discussions pertaining to their own remuneration. The activities of the RC are developed from year to year by the Committee in consultation with the Board.

The Remuneration Committee convened one (1) meeting during the financial year to review and recommend to the Board, the remuneration package for Executive Directors.

The aggregate remuneration of the Directors of the Group for the financial year ended 30 June 2016 is as follows:-

Company

Fees

Salaries and Allowances

Total

0

0

0

116,000

116,000

0

116,000

116,000

0

Remuneration Executive Directors(RM)

Non-Executive Directors(RM)

Total(RM)

Group

Fees

Salaries and Allowances

Total

0

1,253,334

1,253,334

116,000

116,000

0

116,000

1,369,334

1,253,334

Remuneration Executive Directors(RM)

Non-Executive Directors(RM)

Total(RM)

The number of directors whose total remuneration from the Company falls within the following band for the financial year ended 30 June 2016 is as follows:-

On the non-disclosure of detailed remuneration of each Director, the Board is of the view that the transparency of Directors’ remuneration has been sufficiently dealt with by the band disclosure presented in this Statement.

Below RM50,000

RM450,001 – RM500,000

RM750,001 – RM800,000

0

1

1

4

0

0

Range of Remuneration Executive Directors Non-Executive Directors


20

Annual Assessment of Independence

The Board recognises the importance of independence and that the Board members are responsible to act in the best interest of the shareholders of the Company. On an annual basis, the Board through the NC carries out an assessment of the independence of its independent directors. When assessing independence, the Board focuses on the independent director’s background, family relationships and considers whether the independent director can continue to bring independent and objective judgment to board deliberations.

During the financial year, the Board carried out the assessment and is satisfied with the level of independence demonstrated by the Independent Directors and their ability to act in the best interest of the Company.

Tenure of Independent Directors

As a matter of policy, the Board has established that the tenure of Independent Directors shall not exceed a cumulative term of twelve (12) years. The Board believes that this tenure provides a balance of effectiveness and independence that is appropriate for the Group.

The Independent Non-Executive Director may continue to serve on the Board beyond the twelve (12) years tenure provided the Independent Non-Executive Director is re-designated as a Non-Independent Director. Where the Board is of the view that the Independent Non-Executive Director can continue beyond the twelve (12) years tenure, it must justify and seek shareholders’ approval.

The Company does not have term limits for the Independent Non-Executive Directors as the Board believes that experience with the Company’s business operations brings benefits to the Board and the long serving Independent Directors possess knowledge of the Company’s affairs.

Shareholders’ approval for the retention of Independent Directors who have served more than twelve (12) years

None of the independent directors have served the Company for more than twelve years.

Separation of Positions of the Chairman and Executive Directors

The Chairman is an Independent Non-Executive Director. The roles of the Chairman and CEO are distinct and separate with individual responsibilities. Each of them has clearly defined duties and authority thus ensuring balance of power and greater capacity for independent decision-making. The separation of powers ensures a balance of power and authority and provides a safeguard against the exercise of unfettered power in decision-making.

The Chairman is responsible for ensuring Board effectiveness and conduct whilst the CEO is responsible for the Group’s operations and implementation of Board policies and making operational decisions.

3.1

3.2

3.3

3.4

PRINCIPLE 3 – REINFORCE INDEPENDENCE OF THE BOARD


21

PRINCIPLE 4 – FOSTER COMMITMENT OF DIRECTORS

Time Commitment and Directorship in other companies

The Board meets at least four (4) times a year at quarterly intervals with additional meetings convened when necessary. The Board is satisfied with the level of time commitment of the Directors from their attendance at the Meetings. The record of the Directors’ attendance at Board Meeting and various Committees’ Meeting for the financial year ended 30 June 2016 is as follows:-

4.1

Datuk Ng Kam Chiu


Si Tho Yoke Meng


Kuah Hun Liang

Chan Chee Yuan

4/4

4/4

4/4

Board Members Attendance

4/4

3/3

4/4

None of the Directors of the Company hold more than five (5) directorships in public listed companies and there is no restriction on number of directorships in non-public listed companies, as stipulated in the Listing Requirements of Bursa Securities.

The Directors observe the recommendation of the Code that they are required to notify the Chairman of the Board before accepting any new directorships and to indicate the time expected to be spent on the new appointment. Generally, Directors are at liberty to accept other Board appointments so long as such appointments are not in conflict with the business of the Company and do not adversely affect the Director’s performance as a member of the Board.

3.5 Composition of the Board

The Board currently has six (6) members comprising two (2) Executive Directors, two (2) Independent Non-Executive Directors and two (2) Non-Independent Non-Executive Directors. The Chairman of the Board is an Independent Non-Executive Director. The current composition of the Board is in compliance with the Listing Requirements of Bursa Malaysia Securities Berhad (“Bursa Securities”), which states that at least 2 directors or 1/3 of the board of directors, whichever is higher, must be independent directors. The Board members, with different background and specialisation, collectively bring with them a wide range of experience and expertise to lead and control the Company. With their intimate knowledge of the Group’s business, all Board members are committed to take on the primary responsibilities to direct towards successful growth of the Company and ultimately the enhancement of long-term shareholders’ value.

The Board does not consider it necessary to nominate a recognized senior independent non-executive director to whom any concerns may be conveyed, in view of the present independent element of the Board composition and the segregation of the roles of the Chairman and CEO.


22

Compliance with Applicable Financial Reporting Standards

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

The Audit Committee (“AC”) plays a crucial role in assisting the Board to scrutinize the information for disclosure to shareholders to ensure material accuracy, adequacy and timeliness.

PRINCIPLE 5 – UPHOLD INTEGRITY IN FINANCIAL REPORTING BY THE COMPANY

The Company Secretaries regularly updates the Board on changes to Listing Requirements of Bursa Securities and other relevant guidelines/legislation at Board meetings. The External Auditors also briefed the Board members on changes to the Malaysian Financial Reporting Standards that would affect the Group’s financial statements during the financial year under review. The Directors will continue to undergo relevant training programmes to further enhance their skills and knowledge in the discharge of their stewardship role.

Directors’ Training

All the Directors of the Company have completed the Mandatory Accreditation Programme prescribed by Bursa Securities. The Directors will continue to participate in relevant training programmes to keep abreast with the latest developments in the IT & financial services industry, particularly in areas of corporate governance and regulatory changes so that they would be able to discharge their duties as directors effectively.

During the financial year ended 30 June 2016, the Directors attended individually or collectively various training programmes, conferences, seminars and courses organised by the Group, the relevant regulatory authorities and professional bodies as follows:-

Datuk Ng Kam Chiu


Si Tho Yoke Meng


Kuah Hun Liang

Chan Chee Yuan

Business Continuity Management




Name Programme Attended

FIDE Forum : Beyond Compliance to Growth- Board's Strategy in Cultivating Real Growthwithin a Conducive Governance Environment;

Board Briefing by PwC- (1) Understanding AML/CFT Risks;(2) Social Media Governance;(3) South East Asian Banking: Perfect Storm, A Case for Change;(4) MFRS 9 "Financial Instruments"

Mandatory Accreditation Programme;Corporate Finance Activities in an investment bank;Practical Equity Valuation

4.2

5.1


23

PRINCIPLE 7 – ENSURE TIMELY AND HIGH QUALITY DISCLOSURE

Corporate Disclosure Policy

The Company is committed to provide clear, accurate and timely disclosure of all material information pertaining to its performance and operations to its stakeholders and the general public. The Board will ensure that it adheres to and comply with the disclosure requirements of the Listing Requirements of Bursa Securities as well as the Corporate Disclosure Guide issued by Bursa Securities.

The Board acknowledges the importance of timely and equal dissemination of material information to the shareholders, investors and public at large. As such, the Board accords a high priority in ensuring that information is made available and disseminated as early as possible.

Details of the Group’s internal control systems and the state of internal controls are further elaborated under the Statement on Risk Management and Internal Control, which has been reviewed by the Company’s external auditors, provided separately on pages 26 to 27 of this Annual Report.

7.1

Assessment of Suitability and Independence of External Auditors

The AC undertakes an annual review of the suitability and independence of the external auditors. The External Auditors have confirmed that they were, and have been, independent throughout the conduct of the audit engagement in accordance with the terms of all relevant professional and regulatory requirements. The External Auditors can be engaged to perform non-audit services that are not perceived to be in conflict with their role as External Auditors.

Having assessed their performance, the AC is satisfied with the competence and independence of the External Auditors and had recommended to the Board, upon which the shareholders’ approval will be sought at the forthcoming AGM of the Company.

5.2

PRINCIPLE 6 – RECOGNISE AND MANAGE RISK OF THE GROUP

Establish a sound framework to manage risks

The Board acknowledges its responsibilities of setting up and maintaining an effective system in ensuring a proper risk management environment. In achieving this, the Board has ensured that the system of internal control has taken into account the process of identifying key risks, the likelihood of occurrence and materiality. The Board believes that the internal control systems and procedures provide reasonable but not absolute assurance that assets are safeguarded, transactions are authorised and recorded properly and that material errors and irregularities are either detected or minimised to prevent recurrence.

Internal Audit function to report directly to the AC

The internal auditors perform its functions with impartiality, proficiency and due professional care. It undertakes regular monitoring of the Group’s key controls and procedures, which is an integral part of the Group’s system of internal control.

The internal audit reports are presented to the AC for its review and deliberation. The AC will be briefed on the progress made in respect of each recommendation, and of each corrective measure taken as recommended by the audit findings. The internal auditors report directly to the AC to ensure independency.

6.1

6.2


24

STATEMENT ON DIRECTORS’ RESPONSIBILITY

The Directors are required under the Companies Act, 1965 (“the Act”) to prepare financial statements for each financial year which give a true and fair view of the state of affairs of the Company and of the Group and the results and cash flows of the Company and of the Group for that period.

Hence, the Directors have ensured that the financial statements have been prepared in accordance with applicable accounting standards in Malaysia, the requirements of the Act and other statutory requirements. In preparing the financial statements, the Directors have applied appropriate accounting policies on a consistent basis and made judgments and estimates that are reasonable and prudent.

The Directors are responsible for ensuring that proper accounting records are kept which disclose with reasonable accuracy the financial position of the Group and the Company to enable them to ensure that the financial statements comply with the Act. The Directors have overall responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Group and to prevent and detect fraud and other irregularities.

This statement is made in accordance with a resolution of the Board dated 30 September 2016.

PRINCIPLE 8 – STRENGTHEN RELATIONSHIP BETWEEN COMPANY AND SHAREHOLDERS

Shareholders participation at general meetings

The Company encourages its shareholders to attend the AGM. The Annual Report and Notice of the AGM are sent to all shareholders in accordance with the provisions of the Listing Requirements of Bursa Securities. The Notice of AGM is also published in a national newspaper. The Notice would include explanatory statements for proposed resolutions to facilitate understanding and evaluation of issues involving the shareholders.

The AGM is the primary forum for the Directors to communicate with shareholders. The Board provides opportunities for shareholders to raise questions pertaining to issues in the Annual Report, corporate developments in the Group, the resolutions being proposed and the business of the Group.

Poll voting

Pursuant to the Paragraph 8.29A(1) of the Listing Requirements of Bursa Securities, the Company is required to ensure that any resolution set out in the notice of general meetings is voted by poll.

All resolutions set out in the notice of Twelfth AGM will be voted by way of poll.

Effective communication and engagements with shareholders

The Board recognises the importance of an effective communication channel between the Board and shareholders. The Company’s website is updated regularly with the latest corporate developments of the Group and is accessible to shareholders, investors and the public. Shareholders may also send their queries to the Company’s Executive Director, Mr. Si Tho Yoke Meng at [email protected] or the Chief Financial Officer, Ms. Chan Shih Fei, at [email protected].

8.1

8.2

8.3

Usage of information technology for effective dissemination of information

The annual reports, press releases, quarterly results and any announcements on material corporate exercises are the primary modes of disseminating information on the Group’s business activities and financial performance. The Board ensures that shareholders are kept fully informed through information provided on the Company’s website at www.rexit.com.

7.2

25

ADDITIONAL COMPLIANCE INFORMATION

Audit and Non-Audit Fees

During the financial year ended 30 June 2016, the amount of audit fees paid to the external auditors on the Company and Group basis were RM20,000 and RM76,960 respectively.

There were no non-audit fees paid or payable to the external auditors, or a firm or corporation affiliated to the auditors’ firm by the Company and Group during the financial year ended 30 June 2016.

Material Contracts

There were no material contracts entered into by the Company and/or its subsidiaries during the financial year ended 30 June 2016 involving the interest of Directors and/or major shareholders.

Recurrent Related Party Transactions (“RRPT”)

There were no recurrent related party transactions entered into by the Company and/or its subsidiaries during the financial year ended 30 June 2016.

1.

2.

3.

STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL

INTRODUCTION

The Malaysian Code on Corporate Governance 2012 states that listed companies are required to maintain a sound system of risk management and internal control to safeguard shareholders’ investments and Group’s assets.

Under paragraph 15.26(b) of the Listing Requirements of the Bursa Securities for the ACE Market, the Board of Directors of listed companies are required to include in their annual report a statement about the state of risk management and internal control of the listed entity as a group.

The Board of Directors of Rexit is always mindful on the importance of conformance to good corporate governance practices and is committed to maintaining a sound system of risk management and internal control to safeguard shareholders’ investments and the Group’s assets and is pleased to provide the following statement.

RESPONSIBILITIES

The Board stresses on the importance of a sound risk management and internal control system which covers financial, organizational, operational and compliance control. The Board also affirms its overall responsibility for the Group’s systems of internal control and systems of compliance with applicable law, regulations, rules, directives and guidelines and reviews the adequacy and effectiveness of the risk management and internal control system from time to time.

The Board having reviewed the adequacy and effectiveness of the risk management and internal control system in place is satisfied that it is adequate and effective. However, because of the limitations that are inherent in any systems of internal control, those systems are designed to manage rather than eliminate the risk of failure to achieve business objectives, and can only provide reasonable and not absolute assurance against material misstatement or loss.

RISK MANAGEMENT FRAMEWORK

The Board resolves that the management of core risks is an integral and critical part of the day-to-day operations of the Group. The experience, knowledge and expertise to identify and manage such risks throughout the financial year under review enables the Group to make cautious, mindful and well-informed decisions through formulation and implementation of requisite action plans and monitoring regime which are imperative in ensuring the accomplishment of the Group’s objectives.

SYSTEMS OF INTERNAL CONTROL

The following key processes have been established in reviewing the adequacy and integrity of the Group’s system of internal control:

Clear Lines of Accountability & Reporting Within the OrganisationKey responsibilities and accountability in the organizational structure is clearly defined, with clear reporting lines up to the Board and to Management. Established delegation of authority sets out the appropriate authority levels for decision-making, including matters requiring Board approval.

Formalised & Documented Policies and ProceduresInternal policies and procedures which are set out in a series of clearly documented standard operating manuals covering a majority of areas within the Group are maintained and subject to review as and when necessary.

Financial PerformanceThe preparation of periodic and annual results and the state of affairs, as published to shareholders, are reviewed and approved by the Board. The full year financial statements are also audited by the external auditors.

26

27

STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL

The Audit Committee

The Audit Committee comprises non-executive directors all of whom bring with them a wide variety of experience. The Audit Committee has full and unimpeded access to both the internal as well as external auditors.

The Audit Committee operating within its Terms of Reference and ensuring that there are effective risk monitoring and compliance procedures to provide the level of assurance required by the Board.

The Audit Committee, on behalf on the Board, regularly reviews and holds discussions with Management on the actions taken on internal risk management and control issues identified in reports prepared by the internal auditors, the external auditors and the Management.

INTERNAL AUDIT

The Internal Audit function of the Group is undertaken by the Internal Audit Department (IAD) established to assist the Audit Committee and the Board in reviewing the system of risk management and internal control of the Company in line with the Listing Requirements of Bursa Malaysia Securities Berhad for the ACE Market and Malaysian Code on Corporate Governance.

In supporting the Rexit Group to accomplish its objectives, the roles of the IAD are:

To provide an effective and value added internal process compliance audit function focusing on operational processes and practices;

To provide an independent, objective appraisal and consulting mechanism designed to add value to improve the Company’s operations;

To provide management the required information to enhance the effectiveness of project management, improve software processes and documentation currently in place and to instill good governance practices by all staff;

To maintain records in Central Repository where process documents are stored for reference;

To facilitate, monitor and verify that the processes, procedures and guidelines are clearly documented and defined to meet the requirements of the Capability Maturity Model Integration (“CMMI”);

To independently ascertain and implement the findings and proposals raised by Bank Negara Malaysia (“BNM”) during BNM’s audit.

ADEQUACY AND EFFECTIVENESS OF THE GROUP’S RISK MANAGEMENT FRAMEWORK AND INTERNAL CONTROL SYSTEM

The Board has received assurance from the Chief Executive Officer and Chief Financial Officer that the Group’s risk management and internal control is operating adequately and effectively, in all material aspects, based on the risk management and internal control system of the Group and its subsidiaries for the financial period ended 30 June 2016.

Pursuant to the above, the Board is of the view that the risk management framework and internal control system are satisfactory and no material weakness and/or reported shortfall in the risk management framework and internal control system has resulted and/or give rise to any material loss, contingency and/or uncertainty during the financial year under review.

The Group continues to take necessary measures to ensure that the system of risk management and internal control is in place and functions effectively.

REPORT ON AUDIT COMMITTEE

MEMBERSHIP

The Audit Committee (“the Committee”) comprises the following members:-

Datuk Ng Kam Chiu


Chan Chee Yuan


Member - Non-Independent Non-Executive Director

Member - Independent Non-Executive Director

Members Designation

SUMMARY OF ACTIVITIES AND WORK OF THE AUDIT COMMITTEE

The Committee had carried out their duties in line with its Terms of Reference. The activities undertaken by the Committee during the financial year were as follows: -

Datuk Ng Kam Chiu


Chan Chee Yuan

Kuah Hun Liang

4/4

4/4

3/3*

1/1^

Members Attendance

MEETING ATTENDANCE

During the financial year ended 30 June 2016, a total of four (4) meetings were held and the details of attendance are set out below:-

* Appointed on 26 August 2015.^ Resigned on 27 August 2015.

• Reviewed the quarterly financial results and recommended to the Board for approval;• Reviewed the audit fees payable to the external auditors in respect of the financial year ended 30 June 2016 and recommended to the Board for approval;• Reviewed and evaluated the performance of the external auditors covering areas such as quality processes, audit team, audit scope, audit governance and independence as well as the audit fees, and recommended their appointment;• Reviewed the audited financial statements with the external auditors to ensure that the audited financial statements were drawn up in accordance with the provisions of the Companies Act, 1965, and the applicable Malaysian Financial Reporting Standards (“MFRS”).• Reviewed with the external auditors the audit findings in respect of the financial statements of the Group for the financial year ended 30 June 2016;• Reviewed the statutory audit plan for the financial year under review and updates on the development of applicable MFRS and all other related statutory requirements;• Conducted two sessions of private discussion with the external auditors without the presence of management; • Reviewed the internal audit report and follow-up report on the Group operations;

28

REPORT ON AUDIT COMMITTEE

• Reviewed the internal audit plan and provided recommendations;• Reviewed the debtors’ ageing and made recommendation for provision of doubtful debts; • Verified with the management on existence of related party transactions and/or conflict of interest situation that may arise within the Group;• Reviewed and confirmed the minutes of the Audit Committee Meetings;• Reviewed the Audit Committee Report for inclusion in the Annual Report; and• Reviewed the report on the Statement on Risk Management and Internal Control for inclusion in the Annual Report.

INTERNAL AUDIT FUNCTION

The Company recognizes that an internal audit function is essential to ensure the effectiveness of the Group’s system of internal control and is an integral part of the risk management process. The Company has an established Internal Audit Division whose primary function is to assist the Audit Committee in discharging its duties and responsibilities. The Head of Internal Auditor Division reports directly to the Committee on a quarterly basis by presenting the internal audit plans and reports.

The following activities were carried out during the financial year:-

The internal audit carried out during the financial period ended 30 June 2016 did not reveal weakness that have resulted in any material losses.

The cost incurred for the Internal Audit Department for the financial year 2016 amounted to RM94,140.

• Conducted internal audit reviews in accordance with the internal audit plan;• Reviewed compliance with internal policies, procedures and standards and assessing the adequacy and effectiveness of the Group’s internal controls;• Issued internal audit reports incorporating audit recommendations and management’s responses in relation to audit findings on weaknesses in the systems and controls;• Presented internal audit plans and reports to the Audit Committee for review;• Followed up review to ensure that recommendations are implemented effectively and in a timely manner.

29

FINANCIAL STATEMENTSYear Ended 30 June 2016

DIRECTORS’ REPORT

STATEMENT BY DIRECTORS

STATUTORY DECLARATION

INDEPENDENT AUDITORS’ REPORT

STATEMENTS OF FINANCIAL POSITION

STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

STATEMENTS OF CHANGES IN EQUITY

STATEMENTS OF CASH FLOWS

NOTES TO THE FINANCIAL STATEMENTS

Page

Page

Page

Page

Page

Page

31

35

35

36

38

39

40

44

46

Page

Page

Page

DIRECTORS’ REPORT

The directors hereby submit their report and the audited financial statements of the Group and of the Company for the financial year ended 30 June 2016.

PRINCIPAL ACTIVITIES

The principal activity of the Company is investment holding whilst those of its subsidiary companies are disclosed in note 6 to the financial statements.

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

RESULTS

Group CompanyRM RM

6,857,396 3,954,009

Profit after taxation

DIVIDENDS

Dividends paid, declared or proposed by the Company since the end of the previous financial year were:

in respect of the financial year ended 30 June 2016: Single tier interim dividend of 20% per ordinary share, paid on 25 March 2016

The directors do not recommend the payment of any final dividend in respect of the current financial year.

RESERVES AND PROVISIONS

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

BAD AND DOUBTFUL DEBTS

Before the financial statements of the Group and of the Company were made out, the directors took reasonable steps to ascertain that proper action had been taken in relation to the writing off of bad debts and the making of allowance for doubtful debts, and are satisfied that were no bad and doubtful debts.

At the date of this report, the directors are not aware of any circumstances which would render it necessary to write off bad debts or to make an allowance for doubtful debts.

CURRENT ASSETS

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

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

RM

3,585,141

31

DIRECTORS’ REPORT (Cont’d)

32

VALUATION METHODS

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

CONTINGENT AND OTHER LIABILITIES

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

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 of the Group and of the Company which has arisen since the end of the financial year.

(i)

(i)

(ii)

(ii)

CHANGE OF CIRCUMSTANCES

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

ITEMS OF AN UNUSUAL NATURE

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.

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

TREASURY SHARES

The shareholders of the Company granted a mandate to the Company to repurchase its own shares at the Annual General Meeting held on 30 October 2008. The shareholders’ mandate was subsequently renewed at the 11th Annual General Meeting held on 27 November 2015. The directors of the Company are committed to enhance the value of the Company to its shareholders and believe that the repurchase plan can be applied in the best interest of the Company and its shareholders.

During the financial year, the Company repurchased 1,794,100 of its issued share capital from the open market. The average price paid for the shares repurchased was RM0.42 per share. The repurchase transactions were financed by internally generated funds. The shares repurchased are being held as treasury shares in accordance with Section 67A of the Companies Act, 1965.

As at 30 June 2016, the Company held as treasury shares a total of 10,086,300 of its 189,333,333 issued ordinary shares. Such treasury shares are held at a carrying amount of RM4,307,588.

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


DIRECTORS

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

Datuk Ng Kam ChiuDatuk Chung Hon CheongSi Tho Yoke MengDato’Abdul Murad Bin KhalidKuah Hun LiangChan Chee Yuan

Shareholdings registeredin the name of the directors

Other shareholdings in which directorsare deemed to have an interest

SoldAt

30.6.2016 Bought SoldAt

30.6.2016 BoughtAt

1.7.2015 The Company At

1.7.2015

Datuk NgKam Chiu Datuk ChungHon Cheong Kuah HunLiang Si Tho YokeMeng Dato’AbdulMurad BinKhalid

268,000

223,334

18,057,300

6,900,000

- -

-

-

- -

-

- -

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

268,000

223,334

18,057,300

6,900,000

6,100

71,361,227

71,361,227

20,690,000

6,100

71,361,227

71,361,227

Chan CheeYuan --100,000-100,000- -

20,690,000

No. of ordinary shares of RM0.10 each

By virtue of their substantial interests in the shares of the Company, Datuk Chung Hon Cheong and Mr. Si Tho Yoke Meng are also deemed to have interests in the shares of its subsidiary companies to the extent the Company has an interest during the financial year.

DIRECTORS' BENEFITS

Since the end of the previous financial year, no director has received or become entitled to receive any benefit (other than as disclosed 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 arrangements whose object is to enable the directors to acquire benefits by means of the acquisition of shares in or debentures of the Company or any other body corporate.

The directors holding office at the end of the financial year and their interests in shares in the Company and its related companies, as recorded in the register of directors’ shareholdings were as follows:

33


REGISTERED OFFICE AND PRINCIPAL PLACE OF BUSINESS

The registered office of the Company is located at Lot 6.08, 6th Floor, Plaza First Nationwide, No. 161, Jalan Tun H.S. Lee, 50000 Kuala Lumpur.

The principal place of business of the Company is located at No. 42, Jalan BM 1/2, Taman Bukit Mayang Emas, 47301 Petaling Jaya, Selangor Darul Ehsan.

AUDITORS

The auditors, Sekhar & Tan, have indicated their willingness to accept re-appointment.

Signed in accordance with a resolution of the directors,

..........................................................................Datuk Chung Hon Cheong

..........................................................................Si Tho Yoke Meng

Kuala LumpurDate: 30 September 2016

34

STATEMENT BY DIRECTORS

We, Datuk Chung Hon Cheong and Si Tho Yoke Meng, being directors of REXIT BERHAD do hereby state that in the opinion of the directors, the accompanying financial statements give a true and fair view of the financial position of the Group and of the Company as at 30 June 2016 and of their financial performance and cash flows for the financial year ended on that date and are properly drawn up in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia.

The information set out in note 31 to the financial statements have been prepared in accordance with the Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants.

Signed in accordance with a resolution of the directors,

..........................................................................Datuk Chung Hon Cheong

..........................................................................Si Tho Yoke Meng


STATUTORY DECLARATION

I, Chan Shih Fei, the officer primarily responsible for the financial management of REXIT BERHAD do solemnly and sincerely declare that the accompanying financial statements are in my opinion correct, and I make this solemn declaration conscientiously believing the same to be true and by virtue of the provisions of the Statutory Declarations Act, 1960.

Subscribed and solemnly declared by the abovenamed )Chan Shih Fei a t Kuala Lumpur in Wilayah )Persekutuan on 30 September 2016 ) ..........................................................................

Chan Shih Fei

Before me,

Commissioner for Oaths

35


TO THE MEMBERS OF REXIT BERHAD

Report on the Financial Statements

We have audited the financial statements of Rexit Berhad, which comprise the statements of financial position as at 30 June 2016 of the Group and the Company, and the statements of profit or loss and other comprehensive income, statements of changes in equity and statements of cash flows of the Group and the Company for the year then ended, and a summary of significant accounting policies and other explanatory notes, as set out on pages 38 to 84.

Directors’ Responsibility for the Financial Statements

The directors of the Company are responsible for the preparation of financial statements that give a true and fair view in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia. The directors are also responsible for such internal control as the directors determine 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 Company’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 Company’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial statements.

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

Opinion

In our opinion, the financial statements give a true and fair view of the financial position of the Group and of the Company as of 30 June 2016 and of their financial performance and cash flows for the year then ended in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia.

36


TO THE MEMBERS OF REXIT BERHAD (Cont’d)

Report on Other Legal and Regulatory Requirements

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

In our opinion, the accounting and other records and the registers required by the Act to be kept by the Company and the subsidiary companies of which we have acted as auditors have been properly kept in accordance with the provisions of the Act;

We have considered the financial statements and the auditors’ report of the subsidiary company of which we have not acted as auditors, and which is indicated in note 6 to the financial statements;

We are satisfied that the financial statements of all 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 consolidated financial statements of the Group and we have received satisfactory information and explanations required by us for those purposes; and

The auditors’ reports on the financial statements of the subsidiary companies did not contain any qualification or any adverse comment made under Section 174(3) of the Act.

(a)

(b)

(c)

(d)

Other Reporting Responsibilities

The supplementary information set out in note 31 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.

Other Matters

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

Sekhar & TanNo. AF 0926Chartered Accountants


Tan Ghee Kiat No. 432/07/17 (J/PH)Chartered Accountant

37

STATEMENTS OF FINANCIAL POSITION

AT 30 JUNE 2016

The notes on pages 46 to 84 form an integral part of these financial statementsAuditors' report on pages 36 to 37

Note 2016 2015 2016 2015RM RM RM RM

ASSETSNon-current assetsProperty, plant and equipment 4 5,784,233 6,383,320 - - Intangible assets 5 433,273 374,750 - -

-

13,841,000

Investment in subsidiary companies 6

7

Group Company

8

9

-45,000

13,841,000 45,000

143,000- -

370,735 - - 6,633,241 6,946,070 13,841,000 13,841,000

- 10,106,000 3,031,800 2,794,254 4,265,083 -

- -

340,378 912,003 - - 305,801 282,535 6,613 1,906

26,038,280 10,509,130 3,873,772 1,270,28729,478,713 26,074,751 3,880,385 4,303,993

36,111,954 33,020,821 17,721,385 18,144,993

16

1011

12

131314

8

15

Other investmentDeferred tax assets

Current assetsInvestment in quoted fundsTrade and other receivablesPrepaymentsTax recoverableCash and cash equivalents

TOTAL ASSETS

EQUITY AND LIABILITIESEquity attributable to owners of the CompanyShare capitalTreasury sharesReservesTotal equity

Non-current liabilityDeferred tax liabilities

Current liabilitiesTrade and other payablesDeferred incomeTax payable

Total liabilities

TOTAL EQUITY AND LIABILITIES

18,933,333 18,933,333 18,933,333 18,933,333(4,307,588) (3,546,087) (4,307,588) (3,546,087) 17,589,675 14,469,626 3,076,672 2,739,604 32,215,420 29,856,872 17,702,417 18,126,850

137,168 248,791 - -

-

788,570 1,080,608 18,968 18,143 2,227,482 1,724,888 -

743,314 109,662 -3,759,366 2,915,158 18,968 18,143

3,896,534 3,163,949 18,968 18,143

36,111,954 33,020,821 17,721,385 18,144,993

-

38

YEAR ENDED 30 JUNE 2016

STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

Note 2016 2015 2016 2015RM RM RM RM

Revenue 17 18,843,865 17,001,929 4,128,493 3,152,249 Direct costs 18 (4,933,395) (5,964,892) - - Gross profit 13,910,470 11,037,037 4,128,493 3,152,249 Other operating income 758,667 726,951 59,100 2,098,595 Administrative expenses (5,830,161) (6,130,469) (234,717) (226,366)

Share of profit of an associated company, net of tax -

182,583 - -

Profit before taxation 19

8,838,976

5,816,102 3,952,876 5,024,478 Taxation 20

(1,981,580)

(492,495) 1,133 (5,107) Profit after taxation 6,857,396

223,090 193,800 27,300

5,323,607 3,954,009 5,019,371

Other comprehensive income for the year, net of tax: Items that may be reclassified subsequently to profit or loss Gain on fair value changes on available-for-sale financial assets

Net fair value changes on

31,800

31,800

available-for-sale financial assets

Group Company

reclassified to profit or loss (329,091) (59,068) (59,100) - Foreign currency translation (loss)/gain (46,205) 13,581 - -

(152,206)

148,313 (31,800) Total comprehensive income for the year 6,705,190

5,471,920 3,922,209 5,051,171

Profit attributable to Owners of the Company 6,857,396

5,323,607

Total comprehensive income attributable to Owners of the Company 6,705,190

5,471,920

Earnings per share attributable to Owners of the Company (sen): Basic 21

4 3


39

STATEMENTS OF CHANGES IN EQUITY


Exch

ange

Fair

valu

eSh

are

trans

latio

nad

just

men

tTr

easu

ryR

etai

ned

Not

eca

pita

lre

serv

ere

serv

esh

ares

prof

itsTo

tal

Gro

upR

MR

MR

MR

MR

MR

M

At 1

July

201

418

,933

,333

(5

2,94

3)

(28,

731)

(3

,264

,176

)

11,7

96,7

97

27,3

84,2

80

Net

fair

valu

e ch

ange

s on

avai

labl

e-fo

r-sa

le fi

nanc

ial a

sset

s-

-

13

4,73

2

-

- -

-

134,

732

Fo

reig

n cu

rren

cy tr

ansl

atio

n di

ffer

ence

s for

fo

reig

n op

erat

ion

- 13

,581

13

,581

To

tal o

ther

com

preh

ensi

ve in

com

e fo

r the

yea

r-

13,5

81

134,

732

-

-

14

8,31

3

Prof

it af

ter t

axat

ion

- -

--

-

5,

323,

607

5,

323,

607

To

tal c

ompr

ehen

sive

inco

me

for t

he y

ear

- 13

,581

13

4,73

2

-

5,

323,

607

5,

471,

920

Tr

ansa

ctio

ns w

ith o

wne

rs:

-

S

hare

s rep

urch

ased

13 -

-

-

(281

,911

)

-

(281

,911

)

D

ivid

ends

22 -

-

-

-

(2

,717

,417

)

(2,7

17,4

17)

To

tal t

rans

actio

ns w

ith o

wne

rs-

-

-

(281

,911

)

(2

,717

,417

)

(2,9

99,3

28)

A

t 30

June

201

518

,933

,333

(3

9,36

2)

106,

001

(3

,546

,087

)

14,4

02,9

87

29,8

56,8

72

Att

ribu

tabl

e to

ow

ners

of

the

Com

pany

Dis

trib

utab

leN

on-d

istr

ibut

able

40

STATEMENTS OF CHANGES IN EQUITY (Cont’d)


Exch

ange

Fair

valu

eSh

are

trans

latio

nad

just

men

tTr

easu

ryR

etai

ned

Not

eca

pita

lre

serv

ere

serv

esh

ares

prof

itsTo

tal

Gro

upR

MR

MR

MR

MR

MR

M

At 1

July

201

518

,933

,333

(3

9,36

2)

106,

001

(3

,546

,087

)

14,4

02,9

87

29,8

56,8

72

Net

fair

valu

e ch

ange

s on

avai

labl

e-fo

r-sa

le fi

nanc

ial a

sset

s-

-

-

(106

,001

)

- -

-

-

(106

,001

)

Fore

ign

curr

ency

tran

slat

ion

diff

eren

ces f

or

fore

ign

oper

atio

n-

(46,

205)

(4

6,20

5)

Tota

l oth

er c

ompr

ehen

sive

inco

me

for t

he y

ear

-

(4

6,20

5)

(106

,001

)

-

-

(152

,206

)

Prof

it af

ter t

axat

ion

-

-

- -

6,85

7,39

6

6,85

7,39

6

Tota

l com

preh

ensi

ve in

com

e fo

r the

yea

r-

(46,

205)

(1

06,0

01)

-

6,85

7,39

6

6,70

5,19

0

Tran

sact

ions

with

ow

ners

:

S

hare

s rep

urch

ased

13 -

-

-

(761

,501

)

-

(761

,501

)

D

ivid

ends

22 -

-

-

-

-

(3,5

85,1

41)

(3

,585

,141

)

Tota

l tra

nsac

tions

with

ow

ners

- -

-

(7

61,5

01)

(3,5

85,1

41)

(4

,346

,642

)

At 3

0 Ju

ne 2

016

18,9

33,3

33

(85,

567)

(4,3

07,5

88)

17

,675

,242

32

,215

,420

Dis

trib

utab

leN

on-d

istr

ibut

able

Att

ribu

tabl

e to

ow

ners

of

the

Com

pany

41

Shar

eN

ote

capi

tal

Com

pany

RM

Fair

valu

ead

just

men

tre

serv

eR

M

At 1

July

201

418

,933

,333

-

-

Net

fair

valu

e ch

ange

s on

avai

labl

e-fo

r-sa

le fi

nanc

ial a

sset

s- -

31,8

0031

,800

31,8

00

To

tal o

ther

com

preh

ensi

ve in

com

e fo

r the

yea

rPr

ofit

afte

r tax

atio

n

13 -

-

Tota

l com

preh

ensi

ve in

com

e fo

r the

yea

r

22 -

-

-

Tran

sact

ions

with

ow

ners

:

Tota

l tra

nsac

tions

with

ow

ners

Sha

res r

epur

chas

ed

D

ivid

ends

A

t 30

June

201

5

Trea

sury

shar

esR

M

(3,2

64,1

76)

-

--

-

Ret

aine

dpr

ofits

Tota

lR

MR

M

405,

850

16,0

75,0

07

31,8

0031

,800

- -

5,01

9,37

15,

019,

371

5,01

9,37

15,

051,

171

-

-

-

-

18

,933

,333

31,8

00

(281

,911

)

(281

,911

)

(3

,546

,087

)

-(2

81,9

11)

(2,7

17,4

17)

(2,7

17,4

17)

(2,9

99,3

28)

(2,7

17,4

17)

2,

707,

804

18,1

26,8

50

Dis

trib

utab

leA

ttri

buta

ble

to o

wne

rs o

f th

e C

ompa

ny



42



Shar

eN

ote

capi

tal

Com

pany

RM

Fair

valu

ead

just

men

tre

serv

eR

M

At 1

July

201

518

,933

,333

-

Net

fair

valu

e ch

ange

s on

avai

labl

e-fo

r-sa

le fi

nanc

ial a

sset

s- -

(31,

800)

(31,

800)

(31,

800)

(31,

800)

(31,

800)

31,8

00

To

tal o

ther

com

preh

ensi

ve in

com

e fo

r the

yea

rPr

ofit

afte

r tax

atio

n

13

- -

To

tal c

ompr

ehen

sive

inco

me

for t

he y

ear

22

-

-

-

Tr

ansa

ctio

ns w

ith o

wne

rs:

Tota

l tra

nsac

tions

with

ow

ners

Sha

res r

epur

chas

ed

Div

iden

ds

At 3

0 Ju

ne 2

016

Trea

sury

shar

esR

M

(3,5

46,0

87)

-

--

-

Ret

aine

dpr

ofits

Tota

lR

MR

M

2,70

7,80

418

,126

,850

- -

3,95

4,00

93,

954,

009

3,95

4,00

93,

922,

209

-

-

-

- -

18,9

33,3

33

(761

,501

)

(761

,501

)

(4

,307

,588

)

-(7

61,5

01)

(3,5

85,1

41)

(3,5

85,1

41)

(4,3

46,6

42)

(3,5

85,1

41)

3,

076,

672

17,7

02,4

17

Dis

trib

utab

leA

ttri

buta

ble

to o

wne

rs o

f th

e C

ompa

ny

The

note

s on

page

s 46

to 8

4 fo

rm a

n in

tegr

al p

art o

f the

se fi

nanc

ial s

tate

men

tsA

udito

rs' r

epor

t on

page

s 36

to 3

7

43

STATEMENTS OF CASH FLOWS


2016 2015 2016 2015RM RM RM RM

CASH FLOWS FROM OPERATING ACTIVITIESProfit before taxation 8,838,976 5,816,102 3,952,876 5,024,478 Adjustments for: Amortisation of development expenditure 43,190 82,229 - - Depreciation 862,636 914,220 - - Loss on disposal of long term investment - 2,304 - - Net fair value gain on available-for-sale financial assets (transferred from equity on redemption of investment in quoted funds) (329,091) (59,068) (59,100) - Reversal of impairment loss on investment in a subsidiary companies - - - (2,098,595) Dividend income - - (4,000,000) (3,000,000) Interest income (18,452) (43,489) (3,055) (23,381) Distribution income from investment in cash funds (454,065) (325,397) (125,438) (128,868) Deposit written off 300 - - - Property, plant and equipment written off 11,120 - - - Unrealised loss/(gain) on foreign exchange 13,010 (185,199) - - Share of profit of an associated company - (182,583) - - Operating profit/(loss) before working capital changes 8,967,624 6,019,119 (234,717) (226,366) Decrease/(increase) in receivables 2,029,095 (1,978,503) - - Increase/(decrease) in payables 243,979 (439,561) 825 143 Cash generated from/(used in) operations 11,240,698 3,601,055 (233,892) (226,223) Tax paid (1,746,825) (837,624) (6,457) (7,610) Tax refunded 2,883 105,400 2,883 - Net cash from/(used in) operating activities 9,496,756 2,868,831 (237,466) (233,833)

Company Group

2016RM

8,838,976

43,190 862,636

-

(329,091)

- -

(18,452)

(454,065) 300

11,120

13,010

-

8,967,624 2,029,095

243,979

11,240,698(1,746,825)

2,883

9,496,756

2016RM

3,952,876

- -

-

(59,100)

- (4,000,000)

(3,055)

(125,438) -

-

-

-

(234,717) -

825

(233,892) (6,457) 2,883

(237,466)

44

2016 2015 2016 2015RM RM RM RM

CASH FLOWS FROM INVESTING ACTIVITIESInterest received 18,452 43,489 3,055 23,381 Distribution income received from investment in cash funds 454,065 325,397 125,438 128,868 Dividend received - - 4,000,000 3,000,000 Purchase of intangible asset (101,713) (44,000) - - Acquisition of a subsidiary company net of cash and cash equivalents (Note 6) - 2,912,121 - (3,500,000) Proceeds from disposal of investment in quoted fund 10,329,090 4,221,242 3,059,100 - Purchase of property, plant and equipment (274,784) (1,320,841) - - Purchase of short term investment - (10,000,000) - (3,000,000) Net cash from/(used in) investing activities 10,425,110 (3,862,592) 7,187,593 (3,347,751)

CASH FLOWS FROM FINANCING ACTIVITIESDividends paid (3,585,141) (2,717,417) (3,585,141) (2,717,417) Shares repurchased (761,501) (281,911) (761,501) (281,911) Net cash used in financing activities (4,346,642) (2,999,328) (4,346,642) (2,999,328)

NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS 15,575,224 (3,993,089) 2,603,485 (6,580,912)

CURRENCY TRANSLATION DIFFERENCE (46,074) 48,922 - -

CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 10,509,130 14,453,297 1,270,287 7,851,198 CASH AND CASH EQUIVALENTS AT END OF YEAR (NOTE 12) 26,038,280 10,509,130 3,873,772 1,270,287

Group Company

CASH AND CASH EQUIVALENTS

CURRENCY TRANSLATION DIFFERENCE

CASH AND CASH EQUIVALENTS AT BEGINNING OF YEARCASH AND CASH EQUIVALENTS AT END OF YEAR (NOTE 12)





DIFFERENCE


STATEMENTS OF CASH FLOWS (Cont’d)



45


46


CORPORATE INFORMATION

The Company is principally engaged in investment holding whilst those of its subsidiary companies are disclosed in note 6 to the financial statements.There have been no significant changes in the nature of these activities during the year.

The Company is a public company limited by shares, incorporated and domiciled in Malaysia and listed on the ACE Market of Bursa Malaysia Securities Berhad.

The financial statements of the Group and of the Company were authorised for issue in accordance with a resolution of the directors on 30 September 2016.

SIGNIFICANT ACCOUNTING POLICIES

Basis of Accounting

The financial statements of the Group and of the Company have been prepared under the historical cost convention unless otherwise disclosed in the accounting policies below, and comply with Malaysian Financial Reporting Standards [“MFRSs”], International Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia.

The preparation of financial statements in conformity with MFRSs require management to exercise its judgement in the process of applying the Group’s and the Company’s accounting policies. It also requires the use of accounting estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the year. Although these estimates are based on management’s best knowledge of current events and actions, actual results may ultimately differ from those estimates. Critical accounting estimates and assumptions used that are significant to the financial statements, and areas involving a higher degree of judgement or complexity, are disclosed in note 3 to the financial statements.

During the year, the Group and the Company adopted all of the new or revised MFRSs that are effective for the Group’s and the Company’s financial period beginning 1 July 2015.

The adoption of these new and revised MFRSs has no material effect on the financial statements.

As at the date of authorisation of these financial statements, the following Standards, Amendments and IC Interpretations have been issued by the Malaysian Accounting Standards Board [“MASB”] but are not yet effective and have not been early adopted by the Group and the Company:

Effective for annual financial periods beginning on or after 1 January 2016:

MFRS 14Amendments to MFRS 10,MFRS 12 and MFRS 128Amendments to MFRS 11Amendments to MFRS 101Amendments to MFRS 116and MFRS 138Amendments to MFRS 116and MFRS 141Amendments to MFRS 127Annual Improvements to MFRSs 2012 – 2014 Cycle

1.

2.

(a)

Regulatory Deferral AccountsInvestment Entities: Applying the Consolidation Exception

Accounting for Acquisitions of Interests in Joint Operations Disclosure InitiativeClarification of Acceptable Methods of Depreciation and AmortisationAgriculture: Bearer Plants

Equity Method in Separate Financial Statements


47


2.

Disclosure InitiativeRecognition of Deferred Tax Assets for Unrealised Losses

Financial Instruments (2014)Revenue from Contracts with CustomersClassification and Measurements of Share-based PaymentTransactions

Sale or Contribution of Assets between an Investor and itsAssociate or Joint Venture

Leases

Basis of Accounting (Cont’d)


Amendments to MFRS 107Amendments to MFRS 112


MFRS 9MFRS 15Amendments to MFRS 2


MFRS 16

Effective for a date yet to be confirmed:

Amendments to MFRS 10 and MFRS 128

MFRS 14 and 16, and Amendments to MFRS 2, 10, 11, 12, 128 and 141 will not have any financial impact to the Group and the Company as they are not relevant to the Group and the Company’s operations.

The Group and the Company will adopt the above pronouncements when they become effective in the respective financial periods. These pronouncements are not expected to have any material financial effect to the financial statements of the Group and the Company upon their initial application, except as disclosed below:

MFRS 9 Financial Instruments

MFRS 9 replaces the guidance in MFRS 139 Financial Instruments: Recognition and Measurement. MFRS 9 includes revised guidance on the classification and measurement of financial instruments, including a new expected credit loss model for calculating impairment on financial assets, and the new general hedge accounting requirements. It also carries forward the guidance on recognition and derecognition of financial instruments from MFRS 139.

MFRS 15 Revenue from Contracts with Customers

MFRS 15 establishes a comprehensive framework for determining whether, how much and when revenue is recognised. It replaces existing revenue recognition guidance, including MFRS 118 Revenue, MFRS 11 Construction Contracts and IFRIC 13 Customer Loyalty Programmes.

The Group and the Company are assessing the potential impact on its financial statements resulting from the application of MFRS 9 and MFRS 15.

(a)

SIGNIFICANT ACCOUNTING POLICIES (Cont’d)


48


2.

Basis of Consolidation

The consolidated financial statements include the financial statements of the Company and its subsidiary companies, made up to the end of the year.

Subsidiary companies are entities, including unincorporated entities, controlled by the Group. The Group controls an entity when it is exposed to, or has rights to, variable returns through its power over the entity and has the ability to affect those returns through its power over the entity. The existence and effect of substantive potential voting rights are considered when assessing whether the Group has such power over another entity.

The financial statements of subsidiary companies are included in the consolidated financial statements from the date that control effectively commences until the date that control effectively ceases. Subsidiary companies are consolidated using the acquisition method of accounting.

Identifiable assets acquired and liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. Acquisition-related costs are recognised as expenses in the periods in which the costs are incurred and the services are received.

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

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

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

Intragroup transactions, balances and unrealised gains are eliminated on consolidation and the consolidated financial statements reflect external transactions only. Unrealised losses are also eliminated on consolidation unless cost cannot be recovered.

Non-controlling interest represents the equity in subsidiary companies not attributable, directly or indirectly, to owners of the Company, and is presented separately in the consolidated statements of profit or loss and other comprehensive income and within equity in the consolidated statement of financial position, separately from equity attributable to owners of the Company.

Changes in the Company’s ownership interest in 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 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 gain or loss on disposal of a subsidiary company is the difference between net disposal proceeds and the Group’s share of its net assets together with exchange differences which were not previously recognised in the consolidated statements of profit or loss and other comprehensive income.

(b)




2.

Property, Plant and Equipment and Depreciation

Property, plant and equipment are stated at cost less accumulated depreciation and impairment losses.

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when the cost is incurred and it is probable that future economic benefits associated with the asset will flow to the Group and the cost can be reliably measured. Other subsequent expenditure is recognised as an expense during the financial year in which it is incurred. The carrying amount of the replaced part is derecognised.

Cost also comprises the initial estimate of dismantling and removing the asset and restoring the site on which it is located for which the Group is obligated to incur when the asset is acquired, if applicable.

Depreciation is calculated on a straight-line basis over the expected useful lives of the assets concerned. The principal annual rates are:

BuildingMotor vehicleComputersOffice equipmentFurniture and fittingsRenovation

Freehold land is not depreciated as it has an indefinite useful life.

At each reporting date, the carrying amount of an item of property, plant and equipment is assessed for impairment when events or changes in circumstances indicate that the carrying value may not be recoverable (see note 2(f) on impairment of non-financial assets).

The residual values, useful lives and depreciation methods are reviewed at each year-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 items of property, plant and equipment.

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. The difference between the net disposal proceeds, if any, and the carrying value is recognised in profit or loss.

Intangible Assets

Intangible assets are recognised only when the identifiability, control and future economic benefit probability criteria are met.

Intangible assets are initially measured at cost. After the initial recognition, intangible assets are carried at cost less any accumulated amortisation and any accumulated impairment losses. The useful lives of intangible assets are assessed to be either finite or indefinite. Intangible assets with finite lives are amortised on a straight-line basis over the estimated economic useful lives and are assessed for any indication that the asset may be impaired (see note 2(f) on impairment of non-financial assets). If any such indication exists, the entity shall estimate the recoverable amount of the asset.

The amortisation period and the amortisation method for an intangible asset with a finite useful life are reviewed at least at each financial year end. The amortisation expense on intangible assets with finite lives is recognised in profit or loss and is included within the direct costs.

2%20%

10% to 25%10% to 20%10% to 20%

20%

(c)

(d)


49


50


2.

Intangible Assets (Cont’d)

An intangible asset has an indefinite useful life when based on the analysis of all the relevant factors, there is no foreseeable limit to the period over which the asset is expected to generate net cash inflows to the Group. Intangible assets with indefinite useful lives are tested for impairment annually and wherever there is an indication that the carrying amount may be impaired. Such intangible assets are not amortised. Their useful lives are reviewed each period to determine whether events and circumstances continue to support the indefinite useful life assessment for the asset. If they do not, the change in the useful life assessment from indefinite to finite is accounted for as a change in accounting estimate in accordance with MFRS 108 Accounting Policies, Changes in Accounting Estimates and Errors.

Expenditure on an intangible item that is initially recognised as an expense is not recognised as part of the cost of an intangible asset at a later date.

An intangible asset is derecognised on disposal or when no future economic benefits are expected from its use. The gain or loss arising from the derecognition determined as the difference between the net disposal proceeds, if any, and the carrying amount of the asset is recognised in profit or loss when the asset is derecognised.

Goodwill

Goodwill is initially measured at cost. Following initial recognition, goodwill is measured at cost less accumulated impairment losses. For the purpose of impairment testing, goodwill acquired is allocated, from the acquisition date, to each of the Group’s cash-generating units ("CGU") that are expected to benefit from the synergies of the combination.

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

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

Research and development

Expenditure on development activities of internally developed products is recognised as an intangible asset when it relates to the production of new or substantively improved products and processes and when the Group and the Company can demonstrate that it is technically feasible to develop the product or processes, adequate resources are available to complete the development and that there is an intention to complete and sell the product or processes to generate future economic benefits.

Capitalised development costs are amortised on a straight-line basis over a period of five years. Development expenditure not satisfying the criteria mentioned and expenditure arising from research or from the research phase of internal projects are recognised in profit or loss as incurred.

Other intangible assets

System, application and computer software that do not form an integral part of the related hardware are treated as intangible assets with finite lives and are amortised over their estimated useful lives. The principal amortisation period of software is 4 years.

(d)




2.

Investment in Subsidiary Companies

Investment in subsidiary companies are stated in the Company’s separate financial statements at cost. Where an indication of impairment exists, the carrying amount of the investment is assessed and written down immediately to its recoverable amount. See accounting policy on impairment of non-financial assets in note 2(f).

Upon disposal of an investment, the difference between the net disposal proceeds and the carrying value is charged or credited to the profit or loss.

Impairment of Non-Financial Assets

The carrying amounts of assets, other than deferred tax, are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, the asset’s recoverable amount is estimated to determine the amount of impairment loss.

For the purpose of impairment testing of these assets, recoverable amount is determined on an individual asset basis unless the asset does not generate cash flows that are largely independent of those from other assets. If this is the case, recoverable amount is determined for the cash-generating unit [“CGU”] to which the asset belongs to.

An asset’s recoverable amount is the higher of an asset’s or CGU’s fair value less costs to sell and its value in use. 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. Where the carrying amount of an asset exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.

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

An impairment loss for an asset is reversed if, and only if, there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognised. The carrying amount of an asset is increased to its revised recoverable amount, provided that this amount does not exceed the carrying amount that would have been determined (net of amortisation or depreciation) had no impairment loss been recognised for the asset in prior years. A reversal of impairment loss for an asset is recognised in profit or loss, unless the asset is carried at revalued amount, in which case, such reversal is treated as a revaluation increase.

Taxation

Income tax expense comprises current and deferred tax.

Current tax is the amount of income taxes payable or receivable in respect of the taxable profit or loss for the year. Current tax for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities using the tax rates that have been enacted or substantive enacted by the reporting date.

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

Deferred tax liabilities and assets are provided for, using the liability method, in respect of all temporary differences between the carrying amount of an asset or liability in the statement of financial position and its tax base including unabsorbed tax losses and capital allowances unless the deferred tax arises from the initial recognition of an asset or liability in a transaction which is not a business combination and at the time of transaction, affects neither accounting profit nor taxable profit.

(e)

(f)

(g)


51


52


2.

Taxation (Cont’d)

A deferred tax asset is recognised only to the extent that it is probable that taxable profit will be available against which the deductible temporary differences can be utilised. The carrying amount of a deferred tax asset is reviewed at each reporting date. If it is no longer probable that sufficient taxable profit will be available to allow the benefit of part or all of that deferred tax asset to be utilised, the carrying amount of the deferred tax asset will be reduced accordingly. When it becomes probable that sufficient taxable profit will be available, such reduction will be reversed to the extent of the taxable profit.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when the deferred income taxes relate to the same taxation authority.

Deferred tax will be recognised as income or expense and included in the profit or loss for the period unless the tax relates to items recognised outside the profit or loss. Deferred tax items are recognised in correlation to the underlying transaction either in other comprehensive income or directly to equity and deferred tax arising from a business combination is adjusted against goodwill on consolidation.

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

Foreign Currencies

Functional and Presentation Currency

The financial statements of the Company and its subsidiary companies are measured using the currency of the primary economic environment in which the entity operates [“the functional currency”]. The consolidated financial statements are presented in Ringgit Malaysia [“RM”], which is also the Company’s functional and presentation currency.

Foreign Currency Transactions and Translations

Transactions in currencies other than the Company’s and its subsidiary companies’ functional currency [“foreign currencies”] are recorded in the functional currency using the exchange rates prevailing at the dates of the transactions. At each reporting date, monetary items denominated in foreign currencies are translated at the rates prevailing on the reporting date. Non-monetary items carried at fair value that are denominated in foreign currencies are translated at the rates prevailing on the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not translated.

Exchange differences arising on the settlement of monetary items, and on the translation of monetary items, are included in profit or loss for the period.

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.

Foreign Operations

Financial statements of foreign operations are translated at year end exchange rates with respect to the assets and liabilities, and at exchange rates at the dates of the transactions with respect to profit or loss. All resulting translation differences are recognised as a separate component in equity.

In the consolidated financial statements, exchange differences arising from the translation of net investment in foreign operations are taken to equity. When a foreign operation is partially disposed of or sold, exchange differences that were recorded in equity are recognised in profit or loss as part of the gain or loss on disposal.

(g)

(h)




2.

Foreign Currencies (Cont’d)

Foreign Operations (Cont’d)

Fair value adjustments to the assets and liabilities arising from the acquisition of a foreign operation are treated as assets and liabilities of acquired entity and translated at the exchange rate ruling at the reporting date.

Financial Assets

Financial assets are recognised in the statement of financial position when, and only when the Group or the Company becomes a party to the contractual provisions of the financial instrument.

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

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

(h)

(i)


(i)

(ii)

(iii)

Financial assets at fair value through profit or loss

Financial assets are classified as financial assets at fair value through profit or loss if they are held for trading or are designated as such upon initial recognition. Financial assets held for trading are derivatives (including separated embedded derivatives) or financial assets acquired principally for the purpose of selling in the near term.

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

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

Loan and receivables

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

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

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

Held-to-maturity investments

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

53


54


2.Financial Assets (Cont’d)(i)

(j)


(iii)

(iv)

Held-to-maturity investments (Cont’d)

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

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

Available-for-sale financial assets

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

After initial recognition, available-for-sale financial assets are measured at fair value. Any gains or losses from changes in fair value of the financial 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.

Investments in equity instruments and club membership whose fair value cannot be reliably measured are measured at cost less impairment loss.

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

(i) Trade and other receivables and other financial assets carried at amortised cost

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

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

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

Impairment of Financial Assets

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



2.

(j)


Impairment of Financial Assets (Cont’d)

(i)

(ii)

Trade and other receivables and other financial assets carried at amortised cost (Cont’d)

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

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

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-for-sale financial assets are impaired.

If an available-for-sale financial asset is impaired, an amount comprising the difference between its cost (net of any principal payment and amortisation) and its current fair value, less any impairment loss previously recognised in profit or loss, is transferred from equity to profit or loss.

Impairment losses on available-for-sale equity investments are not reversed in profit or loss in the subsequent periods. Increase in fair value, if any, subsequent to impairment loss is recognised in other comprehensive income. 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.

(k)

(l)

(i) Financial liabilities at fair value through profit or loss

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

Cash and Cash Equivalents

For purposes of the statement of cash flows, cash and cash equivalents include cash on hand and in banks and deposits at call and other short term, highly liquid investments which are readily convertible to cash and are subject to insignificant risk of changes in value, net of outstanding bank overdrafts and fixed deposits pledged as collateral.

Financial Liabilities

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

Financial liabilities, within the scope of MFRS 139, are recognised in the statement of financial position when, and only when, the Group and the Company become parties to the contractual provisions of the financial instrument. Financial liabilities are classified as either financial liabilities at fair value through profit or loss or other financial liabilities.

55


56


2. SIGNIFICANT ACCOUNTING POLICIES (Cont’d)

(i)

(ii)

Financial liabilities at fair value through profit or loss (Cont’d)

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

Other financial liabilities

Other financial liabilities include trade payables, other payables and loans and borrowings.

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

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

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

(l) Financial Liabilities (Cont’d)

(m)

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

Equity Instruments

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

Ordinary shares are recorded at the nominal value and proceeds in excess of the nominal value of shares issued, if any, are accounted for as share premium. Both ordinary shares and share premium are classified as equity. Transaction costs of an equity transaction are accounted for as a deduction from equity, net of any related income tax benefit. Otherwise, they are charged to profit or loss.

Dividends to shareholders are recognised in equity in the period in which they are declared.

If the Company reacquires its own equity instruments, the consideration paid, including any attributable transaction costs, is deducted from equity as treasury shares until they are cancelled. No gain or loss is recognised in profit or loss on the purchase, sale, issue or cancellation of the Company’s own equity instruments. Where such shares are issued by resale, the difference between the sales consideration and the carrying amount is shown as movement in equity. When the treasury shares are distributed as share dividend, the cost of the treasury shares will be reduced against share premium account or the distributable reserve, or both.




(n)

(o)

(p)

(q)

Revenue Recognition

Revenue is measured at the fair value of the consideration received or receivable net of discounts and rebates. Revenue is recognised to the extent that it is probable that the economic benefits associated with the transaction will flow to the Group and the Company, and the amount of revenue and the cost incurred or to be incurred in respect of the transaction can be reliably measured. The Group and the Company assess their revenue arrangements to determine if they are acting as principal or agent. The following specific recognition criteria must be met for each of the Group’s and the Company’s activities before revenue is recognised:

Hardware sales and services - upon confirmation of order and delivery

Software sales and services - upon confirmation of order and completion

Subscription - on accrual basis

Transaction fees - upon usage of services

Set-up fees - upon delivery and installation of the e-Cover Note software

Interest income - on a time proportion basis that takes into account the effective yield on the asset

Dividend income - when the right to receive payment is established

Employee Benefits

Wages, salaries, social security contributions, paid annual leave and sick leave, bonuses and non-monetary benefits are recognised as an expense in the period which the employees have rendered the associated services.

Short term accumulating compensated absences such as paid annual leave are recognised as an expense when employees render services that increase their entitlement to future compensated absences. Short term non-accumulating absences such as sick leave are recognised when the absences occur.

Bonuses are recognised as an expense when there is a present, legal or constructive obligation to make such payments, as a result of past events and when a reliable estimate can be made of the amount of the obligation.

The Group and the Company make contributions to a statutory provident fund. The contributions are recognised as a liability after deducting any contribution already paid and as an expense in the period in which the employees render their services.

Deferred Income

Deferred income represents unearned revenue received in advance and is recognised in profit or loss when the services are provided.

Fair Value Measurements

The Group and the Company adopted MFRS 13 Fair Value Measurement which prescribed that fair value of an asset or a liability, except for lease transactions, is determined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The measurement assumes that the transaction to sell the asset or transfer the liability takes place either in the principal market or in the absence of a principal market, in the most advantageous market.

57


58



(q)

(r)

(s)

(a)

3.

Fair Value Measurements (Cont’d)

For non-financial asset, the fair value measurement takes into account a market participant’s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.

Transfer between levels of the fair value hierarchy are deemed to have occurred on the date of the event or change in circumstances that caused the transfer.

Provision

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

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

Contingencies

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

Contingent liabilities and assets are not recognised in the statements of financial position of the Group and the Company.

CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS

Estimates and judgements are continually evaluated by the directors and management and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

Key sources of estimation uncertainty

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

Depreciation

Property, plant and equipment are depreciated on a straight-line basis over their estimated useful lives. Management estimated the useful lives of these property, plant and equipment to be within 4 to 50 years. These are common life expectancies applied in the industry. The carrying amount of the Group’s property, plant and equipment at 30 June 2016 is stated in note 4 to the financial statements. Changes in the expected level of usage and technological developments could impact the economic useful lives and the residual values of these assets, therefore future depreciation charges could be revised. A 5% difference in the expected useful lives of these assets from management’s estimates would result in approximately 0.63% (2015: 1.01%) variance in the Group’s profit for the year.



3. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS (Cont’d)

(a)

(b)

Key sources of estimation uncertainty (Cont’d)

Income taxes

Judgement is involved in determining the provision for income taxes. There are certain transactions and computations for which the estimation of the provision for income taxes is made and which the ultimate tax determination is uncertain during the ordinary course of business. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the income tax and deferred income tax provisions, where applicable, in the period in which such determination is made.

Impairment of loans and receivables

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

Where there is objective evidence of impairment, the amount and timing of future cash flows are estimated based on historical loss experience for assets with similar credit risk characteristics. The carrying amounts of loans and receivables are stated in note 10 to the financial statements.

Critical judgements in applying accounting policies

The following judgement, which may have a significant effect on the amounts recognised in the financial statements, has been made by the management in applying the Group’s accounting policies:

Deferred tax assets

Deferred tax assets are recognised for all deductible temporary differences only to the extent that it is probable that taxable profit will be available against which the deductible temporary differences can be utilised. Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and level of future taxable profits together with future tax planning strategies. These judgements and assumptions are subject to risks and uncertainty, hence there is a possibility that changes in circumstances will alter expectations, which may impact the amount of deferred tax assets recognised in the statement of financial position and the amount of unrecognised tax losses and unrecognised temporary differences. The details are disclosed in note 8.

Impairment of investments in subsidiary companies

Investments in subsidiary companies are assessed for impairment losses whenever events or changes in circumstances indicate that the carrying amount of these assets may not be recoverable. Such assessment required the directors to make estimates of the recoverable amount. Impairment loss is recognised for the amount by which the carrying amount of the assets exceed its recoverable amount, which is the higher of an asset's fair value less cost to sell and its value in use. The carrying amounts of the investments in subsidiary are disclosed in note 6 to the financial statements.

59


60


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61


62


5. INTANGIBLE ASSETS

Group Goodwill on Developmentconsolidation expenditure Licence Software Total

RM RM RM RM RMCost: At 1 July 2015 336,250 2,495,728 44,000 - 2,875,978 Addition - - - 101,713 101,713 At 30 June 2016 336,250 2,495,728 44,000 101,713 2,977,691

Accumulated amortisation: At 1 July 2015 - 2,495,728 5,500 - 2,501,228 Charge for the year - - 22,000 21,190 43,190 At 30 June 2016 - 2,495,728 27,500 21,190 2,544,418

Net carrying amount at 30 June 2016 336,250 - 16,500 80,523 433,273

Group Goodwill on Developmentconsolidation expenditure Licence Total

RM RM RM RMCost: At 1 July 2014 - 2,495,728 - 2,495,728 Addition - - 44,000 44,000 Acquisition of a subsidiary company (Note 6) 336,250 - - 336,250 At 30 June 2015 336,250 2,495,728 44,000 2,875,978

Accumulated amortisation: At 1 July 2014 - 2,418,999 - 2,418,999 Charge for the year - 76,729 5,500 82,229 At 30 June 2015 - 2,495,728 5,500 2,501,228

Net carrying amount at 30 June 2015 336,250 - 38,500 374,750



5.

6.

INTANGIBLE ASSETS (Cont’d)

Goodwill on consolidation

The Group considers each subsidiary company as a single CGU and the carrying amount of goodwill is allocated to the respective subsidiary companies.

The recoverable amount of a CGU has been determined based on value-in-use calculation. Value in use was determined by discounting the future cash flows expected to be generated from the continuing use of the unit and was based in the following key assumptions: •

•

•

•

The management carried out an annual review of recoverable amounts of its goodwill each financial year. The review in the current financial year did not give rise to impairment losses.

The Group believes that any reasonable possible change in the above key assumptions applied are not likely to materially cause recoverable amounts to be lower than their carrying amounts.

INVESTMENT IN SUBSIDIARY COMPANIES

Cash flows were projected based on past experience, actual operating results and the 5-year business plan. Cash flows for a further 5-year period were extrapolated using growth rate between 3% and 5%. Management believes that this 10-year forecast period was justified due to the long-term nature of the business.Annual revenue growth included in the cash flow projections was 3% for the years 2017 to 2021 based on average growth levels experienced over the five years.Operating cost growth, based on past experience, was estimated to be between 3% and 5% in 2017, and in line with inflation thereafter. A pre-tax discount rate of 4.21% was applied in determining the recoverable amount of the unit based on weighted average cost of capital of the Group after incorporating the estimated risk premium.

2016 2015RM RM

Unquoted equity shares, at cost 26,686,724 26,686,724 Accumulated impairment losses (12,845,724) (12,845,724)

13,841,000 13,841,000

Company

63


64


6. INVESTMENT IN SUBSIDIARY COMPANIES (Cont’d) The details of the subsidiary companies are as follows:

Principal place ofbusiness/country 2016 2015

Name of company of incorporation Principal activities % %

Direct subsidiary companies of the Company

Rexit Solutions Malaysia Sales of application 100 100 Sdn. Bhd. ["RSSB"] software solutions and

related products and services

Rexit (M) Sdn. Bhd. Malaysia Provision of software 100 100 technical and consultancy services

Rexit Software Malaysia Research and development 100 100 Sdn. Bhd. ["RSWSB"] of application software

solutions and provisions of related services

Rexit Software People's Republic Design, development and 100 100 (Guangzhou) Co. of China production of software, Ltd.* ["RSGZ"] sale of its developed

products and provision of consultancy services

Rexit International Malaysia Provision of shared and 100 100 Sdn. Bhd. ["RISB"] outsourcing services to

insurance companies outside Malaysia

Reward-Link.com Malaysia The Government 100 100 Sdn. Bhd. ["RLSB"] authorised Road Transport

Department [“JPJ”] eINSURANS gateway provider between the insurance companies in Malaysia and the JPJ

Group's effective interest

* Subsidiary company not audited by Sekhar & Tan.



INVESTMENT IN SUBSIDIARY COMPANIES (Cont’d)6. INVESTMENT IN SUBSIDIARY COMPANIES (Cont’d)

2015Acquisition of a subsidiary company

In prior year, the Group acquired an additional 51% equity interest in RLSB comprising 2,550,000 ordinary shares of RM1 each for a cash consideration of RM3,500,000. Upon the completion of the acquisition, the Group’s equity interest in RLSB increased to 100% and RLSB became a wholly owned subsidiary company of the Group.

The following table summarises the recognised amounts of assets acquired and liabilities assumed at the acquisition date.

Property, plant and equipment (Note 4)Trade and other receivablesPrepaymentsTax recoverableCash and cash equivalentsDeferred tax liabilities (Note 8)Trade and other payablesFair value of identifiable net assets acquired

The cash outflow on acquisition is as follows:Purchase consideration satisfied by cash and total cash outflow of the CompanyCash and cash equivalents of subsidiary company acquiredNet cash inflow of the Group

The trade and other receivables comprise gross contractual amount receivable.

Goodwill was recognised as a result of the acquisition as follows:

Total consideration transferredFair value of identified net assetsFair value of existing interest in RLSBGoodwill (Note 5)

The goodwill is attributable mainly to the synergies expected to be achieved from integrating the company into the Group’s existing business. None of the goodwill recognised is expected to be deductible for income tax purpose.

( )

( )

( )

( )

Group10 November 2014

RM

766, 871507,129200,77021,000

6,412,121231,00044,171

7,632,720

RM

3,500,0006,412,1212,912,121

Group2015RM

3,500,0007,632,7204,468,970

336,250

65


66


6.

7.

8.

INVESTMENT IN SUBSIDIARY COMPANIES (Cont’d)

The Group determines the carrying amount of the Group’s existing 49% in RLSB reflects its fair value and hence there is no gain or loss arising from the re-measurement of the Group’s existing interest in RLSB.

The Group incurred acquisition related cost of RM10,300 related to professional fees which has been included in the administrative expenses in the Group’s consolidated Statement of Profit or Loss and Other Comprehensive Income.

From the date of acquisition, RLSB has contributed RM592,481 to the Group’s profit net of tax. If the combination had taken place at the beginning of the financial year, the Group’s profit net of tax would have been RM5,637,158.

Impairment losses

In prior year, a reversal of impairment loss amounting to RM2,098,595 has been recognised to fully write back the investment in RISB based on the recoverable amount of the investment in RISB. The recoverable amount is determined based on the value in use method.

OTHER INVESTMENT

DEFERRED TAX ASSETS/(LIABILITIES)

Group2016 2015RM RM

Available-for-sale financial assetsInvestment in golf club membership At cost 45,000 45,000

2016 2015RM RM

At 1 July 2015/2014 (105,791) (62,000) Acquisition of a subsidiary company (Note 6) - (231,000) Recognised in profit or loss (Note 20) 339,358 187,209 At 30 June 233,567 (105,791)

Presented after appropriate offsetting as follows: Deferred tax assets 877,135 143,000 Deferred tax liabilities (643,568) (248,791)

233,567 (105,791)

Group



8. DEFERRED TAX ASSETS/(LIABILITIES) (Cont’d)

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

Group Unabsorbedtax losses Property,

and capital plant and Deferredallowances equipment income* Other Total

Deferred tax assets RM RM RM RM RM (before offsetting)At 1 July 2014 - - - - - Recognised in profit or loss: Under provision in respect of prior year 192,000 14,000 - (63,000) 143,000 At 30 June 2015/ 1 July 2015 192,000 14,000 - (63,000) 143,000 Recognised in profit or loss: Current year 320,520 (117,593) 455,324 52,627 710,878 Under provision in respect of prior year (6,120) 11,542 - 17,835 23,257 At 30 June 2016 506,400 (92,051) 455,324 7,462 877,135

Less: Offsetting (643,568) Deferred tax assets (after offsetting) 233,567

* Effective YA 2016, the new Section 24(1A) of the Income Tax Act, 1967 provides that, when a company receives advance payment for any services to be rendered in the course of carrying out its business, the amount that is received shall be treated as gross income of that company in the basis period the amount is received notwithstanding that the services has yet to be rendered or dealt with.

67


68


8. DEFERRED TAX ASSETS/(LIABILITIES) (Cont’d)

Group Property,plant and

equipmentDeferred tax liabilities (before offsetting) RMAt 1 July 2014 (62,000) Acquisition of a subsidiary company (Note 6) (231,000) Recognised in profit or loss: Current year 93,354 Over provision in respect of prior year (49,145) At 30 June 2015/1 July 2015 (248,791) Recognised in profit or loss: Current year (394,777) At 30 June 2016 (643,568) Less: Offsetting 643,568 Deferred tax liabilities (after offsetting) -

2016 2015RM RM

Unrecognised Deferred Tax Assets (Stated at gross): Unabsorbed capital allowances and tax losses available for set off against future taxable profits 13,540,000 12,796,000 Deferred income 333,000 -

13,873,000 12,796,000

Group

Deferred tax assets have not been recognised in respect of the above items because it is not probablethat future taxable profits will be available against which the subsidiary company can utilise the benefits therefrom.

9. INVESTMENT IN QUOTED FUNDS

2016 2015 2016 2015RM RM RM RM

Available-for-sale financial assetsQuoted funds in Malaysia, Carrying amount - 10,106,000 - 3,031,800

Group Company



10. TRADE AND OTHER RECEIVABLES

2016 2015 2016 2015RM RM RM RM

Trade and other receivables: Trade receivables - Third parties 2,641,530 4,135,640 - -

Other receivables: Deposits 151,866 72,013 - - Third parties 858 57,430 - -

152,724 129,443 - - 2,794,254 4,265,083 - -

Group Company

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

2016 2015 2016 2015RM RM RM RM

Neither past due nor impaired 1,870,252 2,077,204 - - 1 to 30 days past due not impaired 72,345 52,233 - - 31 to 60 days past due not impaired 321,340 2,006,203 - - More than 60 days past due not impaired 377,593 - - -

771,278 2,058,436 - - 2,641,530 4,135,640 - -

Group Company

Receivables that are neither past due nor impaired

Trade receivables are non-interest bearing and the Group’s normal credit terms ranged from 30 to 60 (2015: 30 to 60) days. They are recognised at their original invoiced amounts which represent their fair balues on initial recognition.

69

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

None of the Group’s trade receivables that are neither past due nor impaired have been renegotiated during the year.


70


10.

11.

12.

TRADE AND OTHER RECEIVABLES (Cont’d)

Receivables that are past due but not impaired

The Group has trade receivables amounting to RM771,278 (2015: RM2,058,436) that are past due at the reporting date but not impaired. These are unsecured in nature.

Information on the financial risks of receivables are disclosed in note 27 to the financial statements.

PREPAYMENTS

Group

This represents prepayments for hardware and software maintenance services and other expenses.

CASH AND CASH EQUIVALENTS

Investment in cash funds represent investment in highly liquid money market instruments, which are readily convertible to known amounts of cash and are subject to an insignificant risk of changes in value.

Information on the financial risks of cash and cash equivalents are disclosed in note 27 to the financial statements.

2016 2015 2016 2015RM RM RM RM

Investment in cash funds 19,816,927 6,478,463 3,652,616 1,183,583 Cash and bank balances 6,221,353 4,030,667 221,156 86,704

26,038,280 10,509,130 3,873,772 1,270,287

Group Company

13. SHARE CAPITAL

During the year, the Company repurchased 1,794,100 (2015: 737,000) of its issued share capital from the open market. The average price paid for the shares repurchased was RM0.42 (2015: RM0.38) per share. The repurchase transactions were financed by internally generated funds. The shares repurchased are being held as treasury shares in accordance with Section 67A of the Companies Act, 1965.

At the reporting date, the number of outstanding ordinary shares in issue after setting off the treasury shares of 10,086,300 (2015: 8,292,200) against its equity of 189,333,333 is 179,247,033 (2015: 181,041,133).

Details relating to the repurchase during the year are as follows:

2016 2015RM RM

Authorised: 250,000,000 ordinary shares of RM0.10 each 25,000,000 25,000,000

Issued and fully paid: 189,333,333 ordinary shares of RM0.10 each 18,933,333 18,933,333

Group and Company



14. RESERVES

Number of shares2016 2015 2016 2015

RM RM

At 1 July 2015/2014 8,292,200 7,555,200 3,546,087 3,264,176 Shares repurchased during the year 1,794,100 737,000 761,501 281,911 At 30 June 10,086,300 8,292,200 4,307,588 3,546,087

Amount

2016 2015 2016 2015RM RM

Non-distributableExchange translation reserve (85,567) (39,362) - - Fair value adjustment reserve - 106,001 - 31,800

DistributableRetained profits 17,675,242 14,402,987 3,076,672 2,707,804

17,589,675 14,469,626 3,076,672 2,739,604

Group Company

Exchange translation reserve

The exchange translation reserve represents exchange differences arising from the translation of the financial statements of foreign operation whose functional currency is different from that of the Group’s presentation currency.

Fair value adjustment reserve

The fair value adjustment reserve represents the cumulative fair value changes, net of tax, of available-for-sale financial assets until they are disposed of or impaired.

71

Trade payables are non-interest bearing and the Group’s normal credit terms ranged from 60 to 90 (2015: 60 to 90) days.

Information on the financial risks of payables are disclosed in note 27 to the financial statements.

DEFERRED INCOME

Group

Deferred income represents unearned subscriptions received in advance.

REVENUE

15.

16.

17.

TRADE AND OTHER PAYABLES


72


2016 2015 2016 2015RM RM RM RM

Trade payables: Third parties 23,693 64,532 - -

Other payables: Third parties 78,999 114,241 - - Accruals 685,878 901,835 18,968 18,143

764,877 1,016,076 18,968 18,143 Financial liabilities carried at amortised cost (Note 27) 788,570 1,080,608 18,968 18,143

Group Company

2016 2015 2016 2015RM RM RM RM

Dividends received from receivable from a a subsidiary company - - 4,000,000 3,000,000 Interest income 3,055 - 3,055 152,249 Distribution income from investment in cash funds 125,438 - 125,438 - Set-up fees 26,400 68,380 - - Transaction fees 11,300,355 8,598,622 - - Hardware sales 234,962 1,433,500 - - Software sales and services 2,915,292 3,313,809 - - Software development 211,751 286,746 - - Subscription 4,026,612 3,300,872 - -

18,843,865 17,001,929 4,128,493 3,152,249

Group Company

18. DIRECT COSTS

2016 2015RM RM

This includes: Amortisation of intangible assets 43,190 82,229 Depreciation 113,945 - Inventories recognised as cost of sales 218,044 -

Group

19. PROFIT BEFORE TAXATION



2016 2015 2016 2015RM RM RM RM

This has been arrived at:after charging: Auditors' remuneration: Current year 76,960 68,234 20,000 18,000 Under provision in respect of prior year 8,000 - 2,000 - Depreciation 862,636 914,220 - - Loss of disposal on long term investment - 2,304 - - Loss on foreign exchange: Realised 12,659 10,561 - - Unrealised 13,010 1,493 - - Net fair value loss on investment in cash funds 15,615 - 6,405 - Rental of premises 180,949 173,052 - - Property, plant and equipment written off 11,120 - - - Deposit written off 300 - - -

CompanyGroup

and crediting: Interest income 15,397 43,489 -

-

Distribution income from investment in cash funds 328,627 325,397 - - Gain on foreign exchange: Realised 107,758 122,866 - - Unrealised - 185,199 - - Net fair value gain on available-for-sale financial assets (transferred from equity on redemption of investment in quoted funds) 329,091 59,068 59,100 - Net fair value gain on investment in cash funds 15 - - - Reversal of impairment loss on investment in a subsidiary company - - - 2,098,595

73

20. TAXATION


74


2016 2015 2016 2015RM RM RM RM

Recognised in profit or lossTaxation for the year: Malaysian income tax 2,192,750 564,040 750 6,000 Foreign income tax 110,828 118,734 - - Deferred taxation (Note 8) (316,101) (93,354) - -

1,987,477 589,420 750 6,000 Under/(over) provision of Malaysian income tax in respect of prior years 17,360 (3,070) (1,883) (893) Under provision of deferred taxation in respect of prior years (Note 8) (23,257) (93,855) - -

1,981,580 492,495 (1,133) 5,107

CompanyGroup

Malaysian income tax is calculated at the statutory rate of 24% (2015: 25%) on the estimated taxable profit for the year.

Tax expense for other taxation authority is calculated at the rate prevailing in the respective jurisdiction.

20. TAXATION (Cont’d)

The numerical reconciliation between the tax expense in the profit or loss and the income tax expense applicable to profit before taxation at the statutory income tax rates of the Group and of the Company is as follows:



2016 2015 2016 2015RM RM RM RM

Profit before taxation 8,838,976 5,816,102 3,952,876 5,024,478

Tax at the Malaysian statutory rates of 24% (2015: 25%) 2,121,354 1,454,026 948,690 1,256,120 Tax effects of: Expenses not deductible for tax purposes 45,248 332,820 56,349 56,746 Income not subject to tax (549,918) (1,422,252) (1,004,289) (1,306,866) Pioneer status income and expenses not subject to income tax - 11,961 - - Changes in tax rate on deferred tax liabilities - (6,616) - - Share of results of an associated company - (45,646) - - Deferred tax assets not recognised 259,965 523,543 - - Utilisation of unabsorbed tax losses not recognised in prior years - (377,150) - - Under/(over) provision of Malaysian income tax in respect of prior years 17,360 (3,070) (1,883) (893) Under provision of deferred taxation in respect of prior years (23,257) (93,855) - - Foreign income tax 110,828 118,734 - - Tax expense recognised in profit or loss 1,981,580 492,495 (1,133) 5,107

Group Company

Tax saving arising from utilisation of tax losses amounting to RM186,000 (2015: RM377,150) for the Group.

At the reporting date, the Company has tax exempt income for payment of tax exempt dividends of approximately RM18,272,303 (2015: RM18,140,027).

EARNINGS PER SHARE

Group

The earnings per share is calculated based on the Group’s net profit for the year of RM6,857,396 (2015: RM5,323,607) over the weighted average number of ordinary shares in issue during the year of 179,601,123 (2015: 181,315,218).

The calculation of earnings per share is in accordance with MFRS 133 Earnings Per Share.

21.

75

22. DIVIDENDS

23. EMPLOYEE BENEFITS


76


RELATED PARTIES

Group and Company

Identity of related parties

For the purpose of these financial statements, parties are considered to be related to the Group or to the Company 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.

Key management personnel are defined as those persons having authority and responsibility for planning, directing and controlling the activities of the Group and of the Company either directly or indirectly. The key management personnel include all the directors of the Group and of the Company. The remuneration of directors during the year are disclosed in note 23 to the financial statements.

(a)

24.

2016 2015RM RM

In respect of the year ended 30 June 2016: Single tier interim dividend of 20% per ordinary share, paid on 25 March 2016 3,585,141 -

In respect of the year ended 30 June 2015: Interim tax exempt dividend of 15% per ordinary share, paid on 18 March 2015 - 2,717,417

3,585,141 2,717,417

Group and Company

2016 2015 2016 2015Included in: RM RM RM RM

Direct costsStaff costs: Salaries and other emoluments 2,427,478 2,013,594 - - Employees' provident fund 291,783 214,979 - -

Administrative expensesDirectors' remuneration: Directors of the Company: Fees 116,000 96,000 116,000 96,000 Salaries and other emoluments 1,150,494 1,075,281 - - Employees' provident fund 102,840 94,800 - - Staff costs: Salaries and other emoluments 2,020,733 2,379,843 - - Employees' provident fund 252,853 276,735 - -

6,362,181 6,151,232 116,000 96,000

Group Company

24.

25.

26.

(b)

RELATED PARTIES (Cont’d)

Group and Company (Cont’d)

Transactions with related parties

There are no significant related party transactions during the year.

COMMITMENT

Group

The Group had entered into non-cancellable lease agreements for office use and staff housing, resulting in future rental commitments which can, subject to terms in the agreements, be revised annually based on prevailing market rates. The Group has aggregate future minimum lease commitment as at the reporting date as follows:

SEGMENTAL INFORMATION

Business Segments

Segmental information is not presented as the Group is primarily engaged in only one business segment which is to provide information technology [“IT”] solutions and related services. Besides, management monitors the operating results of the Group as a whole for the purpose of making decisions about resources allocation and performance assessment. Accordingly, the Group has only one reportable segment.

Geographical Segments

The Group operates principally in Malaysia and Hong Kong.

In presenting information on the basis of geographical segments, segment revenue is based on geographical location of customers. geographical location of customers.



2016 2015RM RM

Not later than one year - 30,180

2016 2015RM RM

Malaysia 15,741,099 14,205,870 Hong Kong 2,589,316 2,589,883 Other countries 513,450 206,176

18,843,865 17,001,929

GroupRevenue

Revenue from three (3) (2015: three (3)) major customers with revenue equal or more than 10% of the Group’s total revenue amounted to RM7,052,764 (2015: RM7,553,642).

77

27.

(a)

(b)

FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

The Group’s and the Company’s financial risk management policies seek to ensure that adequate financial resources are available for the development of the Group’s and the Company’s businesses whilst managing their interest rate, price, liquidity, credit and foreign exchange risks. The Group and the Company operate within clearly defined guidelines that are approved by the directors and the Group’s and the Company’s policies are not to engage in speculative transactions.

Interest Rate Risk

The Group’s and the Company’s income and operating cash flows are substantially independent of changes in market interest rates. Interest rate exposure arises from the Group’s and the Company’s deposits. These financial assets are mainly short term in nature and they are not held for speculative purposes.

The following tables set out the carrying amounts, the weighted average effective interest rates [“WAEIR”] of the Group’s and the Company’s financial instruments as at the reporting date and the periods in which they reprice or mature, whichever is earlier:


78


Note WAEIR Within 1 year 1 - 5 years TotalGroup (%) RM RM RMAt 30 June 2016Floating rateBank balances 0.42 2,188,526 - 2,188,526 Investment in cash funds 12 3.34 19,816,927 - 19,816,927

At 30 June 2015Floating rateBank balances 0.45 2,046,750 - 2,046,750 Investment in cash funds 12 3.18 6,478,463 - 6,478,463

CompanyAt 30 June 2016Floating rateBank balances 0.50 221,156 - 221,156 Investment in cash funds 12 3.21 3,652,616 - 3,652,616

At 30 June 2015Floating rateBank balances 0.50 86,704 - 86,704 Investment in cash funds 12 3.12 1,183,583 - 1,183,583

Sensitivity analysis for interest rate risk

At the reporting date, if interest rates on floating rate financial assets had been 100 basis points higher/lower, with all other variables held constant, the Group’s and the Company’s profit net of tax would have been RM214,803 and RM38,206 (2015: RM80,135 and RM12,486) higher/lower respectively, arising mainly as a result of higher/lower interest income from floating rate money market instruments.

Other Price Risk

Other price risk is the risk that the fair value of future cash flows of the financial instruments of the Group and of the Company would fluctuate because of changes in market prices (other than interest or distribution rates).

27.

(b)

(c)

FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (Cont’d)

Other Price Risk (Cont’d)

The Group and the Company are exposed to market price risks arising from cash funds, which are quoted and investments in quoted funds. These instruments are classified as financial assets designated at fair value through profit or loss and available-for-sale respectively. The fund investments of the Group and of the Company are managed by a reputable assets management company. All investment and redemption decisions are approved by Directors of the Group and of the Company.

Liquidity Risk

Liquidity risk is the risk that the Group and the Company will not be able to meet their financial obligations as they fall due. In the management of liquidity risk, the Group and the Company monitor and maintain a level of cash and cash equivalents deemed adequate by the management to finance the Group’s and the Company’s operations where required, and mitigate the effects of fluctuation in cash flows.

The summary of the maturity profile of the Group’s and the Company’s financial liabilities at the reporting date based on contractual undiscounted repayments obligations is as follows:

(d) Credit Risk

Credit risk arises when sales and services are made or provided on deferred credit terms. The Group and the Company seek to invest cash assets safely and profitably. They also seek to control credit risk by setting counterparty limits and ensuring that sales of products and services are made to customers with an appropriate credit history. The Group and the Company consider the risk of material loss in the event of non-performance by a financial counterparty to be unlikely.

As the Group and the Company do not hold any collateral, the maximum exposure to credit risk is the carrying amount of the related financial assets recognised on the statement of financial position.

The exposure of credit risk for trade receivables as at the reporting period by geographic region was:



Note Within 1 year 1 - 5 years TotalRM RM RM

GroupAt 30 June 2016Trade and other payables 15 788,570 - 788,570

At 30 June 2015Trade and other payables 15 1,080,608 - 1,080,608

CompanyAt 30 June 2016Trade and other payables 15 18,968 - 18,968

At 30 June 2015Trade and other payables 15 18,143 - 18,143

2016 2015RM RM

Malaysia 2,391,510 3,110,855 Hong Kong 235,072 1,015,322 Other countries 14,948 9,463

2,641,530 4,135,640

Group

79

27.

(d)

(e)

FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (Cont’d)

Credit Risk (Cont’d)

Significant concentration of credit risk

The Group has significant exposure to several customers. At the reporting date, approximately 83% (2015: 79%) of the Group’s trade receivables were due from seven (7) (2015: nine (9)) major customers.

Information regarding financial assets that are neither past due nor impaired and that are past due but not impaired are disclosed in note 10 to the financial statements.

Foreign Currency Risk

The Group and the Company are exposed to foreign currency risk as a result of their normal operating activities, where the currency denomination differs from the local currency, Ringgit Malaysia [“RM”]. The Group’s and the Company’s policies are to keep the foreign exchange exposure to an acceptable level.

The net unhedged financial assets and financial liabilities of the Group and the Company that are not denominated in the functional currency are as follows:

Sensitivity analysis for foreign currency risk

The following table demonstrated the sensitivity of the Group’s and the Company’s profit after taxation to a reasonably possible change in Hong Kong Dollar, Singapore Dollar, United States Dollar and Chinese Renminbi exchange rates against the functional currency of the Group and of the Company, with all other variables held constant. The Group’s and the Company’s profit after taxation would increase/(decrease), as applicable, by the amounts stated below if the individual foreign currency had strengthened/weakened by the following percentage:


80


2016 2015 2016 2015RM RM RM RM

Trade and other receivablesHong Kong Dollar 235,072 1,043,227 - - Singapore Dollar 14,948 9,463 - - Chinese Renminbi 15,616 15,664 - -

Cash and cash equivalentsHong Kong Dollar 4,031,636 1,971,567 - - United States Dollar 13,281 8,951 - - Chinese Renminbi 214,577 105,499 - -

Trade and other payablesHong Kong Dollar 98,472 256,735 - - Chinese Renminbi 14,044 10,761 - -

Group Company

Change incurrency rate 2016 2015 2016 2015

(%) RM RM RM RM

Hong Kong Dollar 10 416,824 275,806 - - Singapore Dollar 10 1,495 946 - - United States Dollar 10 1,328 895 - - Chinese Renminbi 10 21,615 11,040 - -

Group Company

28. CATEGORIES OF FINANCIAL INSTRUMENTS



Note 2016 2015 2016 2015RM RM RM RM

Financial assetsAvailable-for-sale: Other investment 7 45,000 45,000 - - Quoted trust funds 9 - 10,106,000 - 3,031,800 Loan and receivables: Trade and other receivables 10 2,794,254 4,265,083 - - Cash and bank balances 12 6,221,353 4,030,667 221,156 86,704 Fair value through profit or loss: Investment in cash funds 12 19,816,927 6,478,463 3,652,616 1,183,583

Financial liabilitiesOther financial liabilities: Trade and other payables 15 788,570 1,080,608 18,968 18,143

Group Company

81

29.

(a)

FAIR VALUE OF FINANCIAL INSTRUMENTS

Fair value of financial instruments that are carried at fair value

The following table shows an analysis of financial instruments carried at fair value by level of fair value hierarchy:


82


Quoted price Significantin active markets other Significant

for identical observable unobservableinstruments inputs inputs

(Level 1) (Level 2) (Level 3) TotalRM RM RM RM

GroupAt 30 June 2016Financial assets: Fair value through profit or loss: Investment in cash funds 19,816,927 - - 19,816,927

At 30 June 2015Financial assets: Available-for-sale: Equity instruments quoted funds in Malaysia 10,106,000 - - 10,106,000

Fair value through profit or loss: Investment in cash funds 6,478,463 - - 6,478,463

CompanyAt 30 June 2016Financial assets: Fair value through profit or loss: Investment in cash funds 3,652,616 - - 3,652,616

At 30 June 2015Financial assets: Available-for-sale: Equity instruments quoted funds in Malaysia 3,031,800 - - 3,031,800

Fair value through profit or loss: Investment in cash funds 1,183,583 - - 1,183,583

29.

(a)

(b)

FAIR VALUE OF FINANCIAL INSTRUMENTS (Cont’d)

Fair value of financial instruments that are carried at fair value (Cont’d)

Fair value hierarchy

The fair value measurement hierarchies used to measure financial assets and liabilities carried at fair value in the statements of financial position as at 30 June 2016 are as follows:

There were no transfers between Level 1, Level 2 and Level 3 during the current financial year.

The Group and the Company do not have any financial liabilities carried at fair value classified as above as at 30 June 2016.

Determination of fair value

Quoted equity instruments - Fair value is determined by direct reference to their bid price quotations in an active market at the end of the reporting period.

Investment in cash funds - Fair value is determined by reference to their published net asset values as at the reporting date.

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

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

The carrying amounts of these financial assets and liabilities are reasonable approximation of fair values, due to their short term nature.

It was not practicable to estimate the fair value of the Group’s investment in club membership due to the lack of comparable quoted prices in an active market and the fair value cannot be reliably measured.



(i)

(ii)

(iii)

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 assets or liabilities, either directly (i.e. prices) or indirectly (i.e. derived from prices).

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

2016 2015 2016 2015RM RM RM RM

Trade and other receivables 2,794,254 4,265,083 - - Cash and bank balances 6,221,353 4,030,667 221,156 86,704 Trade and other payables 788,570 1,080,608 18,968 18,143

Group Company

83

30.

31.

CAPITAL MANAGEMENT

The Group’s and the Company’s objectives when managing capital are to safeguard the Group’s and the Company’s abilities to continue as going concerns and to maintain optimal capital structures so as to maximise shareholder value. The Group’s and the Company’s policies are to maintain an adequate capital base so as to maintain investor, creditor and market confidence and to sustain future business developments. The Group and the Company fund their operations and growth through internally generated funds.

The management does not set a target level of gearing but uses capital opportunistically to support its business and to add value for shareholders. The key discipline adopted is to widen the margin between the return on capital employed and the cost of that capital.

There was no change in the Group’s and the Company’s approaches to capital management during the financial year.

The Group and the Company have no external borrowings. The debt-to-adjusted capital ratio does not provide a meaningful indicator of the risk of borrowings.

SUPPLEMENTARY INFORMATION ON REALISED AND UNREALISED PROFITS OR LOSSES

The retained profits as at the end of the reporting period may be analysed as follows:

The supplementary information on realised and unrealised profits or losses has been prepared in accordance with Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants (“MIA Guidance”) and the directive of Bursa Malaysia Securities Berhad.


84


2016 2015 2016 2015RM RM RM RM

Total retained profits: - Realised 17,688,252 14,217,788 3,076,672 2,707,804 - Unrealised (13,010) 185,199 - - Total retained profits as per consolidated financial statements 17,675,242 14,402,987 3,076,672 2,707,804

Group Company

DETAILS OF LANDED PROPERTY

AS AT 30 JUNE 2016

Proprietor : Rexit Solutions Sdn Bhd

Location : 42, Jalan BM 1/2 Taman Bukit Mayang Emas 47301 Petaling Jaya Selangor Darul Ehsan

Description : 3-storey shop office

Approximate AgeOf Building : 22 years

Existing Use : Office

Total Land Area : 368.4 sq m

Total Build-up Area : 923.14 sq m

Tenure : Freehold

Net Book Value : RM2,064,004

Date of acquisition/revaluation : 30 August 2001

85

ANALYSIS OF SHAREHOLDINGS

AS AT 30 SEPTEMBER 2016

Authorised Share Capital RM25,000,000.00Issued and fully paid-up RM18,933,333.00 (Inclusive of 10,304,300 Treasury Shares) Class of Shares Ordinary shares of RM0.10 eachVoting Rights One vote per ordinary share

Distribution of shareholdings

Size of shareholdings No. of Holders % No. of Shares % Less than 100 53 3.39 2,267 0.00 100 - 1,000 435 27.81 107,125 0.06 1,001 - 10,000 524 33.50 3,141,331 1.75 10,001 - 100,000 444 28.39 15,950,583 8.91 100,001 and to less than 5% of issued shares 106 6.78 68,776,500 38.42 5% and above of issued shares 2 0.13 91,051,227 50.86 Total 1,564 100.00 179,029,033 100.00

List of top 30 largest shareholders

Name of Shareholders No. of Shares %

1. REXIT VENTURE SDN BHD 70,361,227 39.30

2. GLOBAL HARTABUMI SDN BHD 20,690,000 11.56

3. KENANGA NOMINEES (TEMPATAN) SDN BHD 8,557,300 4.78 PLEDGED SECURITIES ACCOUNT FOR KUAH HUN LIANG (001)

4. CIMSEC NOMINEES (TEMPATAN) SDN BHD 8,100,000 4.52 CIMB FOR SEOW LUN HOO @ SEOW WAH CHONG (PB)

5. MERCSEC NOMINEES (TEMPATAN) SDN BHD 6,150,000 3.44 PLEDGED SECURITIES ACCOUNT FOR ABDUL MURAD BIN KHALID

6. CIMSEC NOMINEES (TEMPATAN) SDN BHD 5,680,000 3.17 CIMB BANK FOR KUAH HUN LIANG (PBCL-0G0193)

7. CIMSEC NOMINEES (TEMPATAN) SDN BHD 3,820,000 2.13 CIMB FOR KUAH HUN LIANG (PB)

8. DB (MALAYSIA) NOMINEE (ASING) SDN BHD 2,650,000 1.48 EXEMPT AN FOR BANK OF SINGAPORE LIMITED

9. JASON YAW CHEUK HING 2,021,300 1.13

10. CHAN SIEW KUEN 1,615,600 0.90

11. AFFIN HWANG NOMINEES (TEMPATAN) SDN BHD 1,426,000 0.80 PLEDGED SECURITIES ACCOUNT FOR CHIENG ING MUI

12. HSBC NOMINEES (ASING) SDN BHD 1,200,000 0.67 EXEMPT AN FOR CREDIT SUISSE (SG BR-TST-ASING)

13. LOW CHU MOOI 1,200,000 0.67

14. YANG FATIMAH BINTI MOHD PIAH 1,080,000 0.60

15. MOHD DAUD BIN SAMSUDDIN 1,000,000 0.56

16. REXIT VENTURE SDN BHD 1,000,000 0.5686


0



17. LEE SHWU SIAN 751,700 0.42

18. MERCSEC NOMINEES (TEMPATAN) SDN BHD PLEDGED SECURITIES ACCOUNT FOR CHEW BEOW SOON 750,000 0.42

19. TENG WOON SOON 740,000 0.41

20. AFFIN HWANG NOMINEES (TEMPATAN) SDN BHD 687,000 0.38 PLEDGED SECURITIES ACCOUNT FOR WEE INN KOON

21. ABDUL HALIM KHAN BIN LALL KHAN 650,000 0.36

22. CHONG HON MIN 631,667 0.35

23. LIM AH NOOI 592,000 0.33

24. FOONG KUOK JIAN 520,000 0.29

25. SEOW SHU XING 466,900 0.26

26. CIMSEC NOMINEES (TEMPATAN) SDN BHD 450,000 0.25 CIMB BANK FOR GAN KONG HIOK (M52019)

27. TAN SEE KIAN 450,000 0.25

28. HAW SWEE BENG 445,000 0.25

29. MAYBANK NOMINEES (TEMPATAN) SDN BHD 414,200 0.23 PLEDGED SECURITIES ACCOUNT FOR TEH TI KIAM

30. KENANGA NOMINEES (ASING) SDN BHD 397,600 0.22 EXEMPT AN FOR PHILLIP SECURITIES PTE LTD (CLIENT ACCOUNT)


87


88


Direct Shareholding Indirect Shareholding

Name of Shareholders No. of Shares % No. of Shares %

Rexit Venture Sdn. Bhd. 71,361,227 39.86 0 0.00Global Hartabumi Sdn. Bhd. 20,690,000 11.56 0 0.00Kuah Hun Liang 18,057,300 10.09 0 0.00Dato’ Abdul Murad Bin Khalid 6,150,000 3.44 20,690,000 (b) 11.56Datuk Chung Hon Cheong 223,334 0.12 71,361,227 (a) 39.86Si Tho Yoke Meng 0 0.00 71,361,227 (a) 39.86Mohd Azmil Bin Dato’ Abdul Murad 0 0.00 20,690,000 (b) 11.56

Substantial Shareholders

Direct Shareholding Indirect Shareholding

Name of Directors No. of Shares % No. of Shares %

Datuk Ng Kam Chiu 268,000 0.15 6,100 (c) 0.00Datuk Chung Hon Cheong 223,334 0.12 71,361,227 (a) 39.86Si Tho Yoke Meng 0 0.00 71,361,227 (a) 39.86Dato’ Abdul Murad Bin Khalid 6,150,000 3.44 20,690,000 (b) 11.56Kuah Hun Liang 18,057,300 10.09 0 0.00Chan Chee Yuan 100,000 0.06 0 0.00

Notes :(a) Deemed interested by virtue of his shareholding in Rexit Venture Sdn. Bhd. pursuant to Section 6A of the Companies Act, 1965 (“the Act”).(b) Deemed interested by virtue of his shareholding in Global Hartabumi Sdn. Bhd. pursuant to Section 6A of the Act.(c) Deemed interested by virtue of his children’s shareholdings pursuant to Section 134 of the Act.

Directors’ Shareholdings

NOTICE OF ANNUAL GENERAL MEETING

NOTICE IS HEREBY GIVEN that the Twelfth Annual General Meeting of the Company will be held at Greens 3 (Sports Wing), Club House, Tropicana Golf & Country Resort, Jalan Kelab Tropicana, 47410 Petaling Jaya, Selangor Darul Ehsan on Friday, 25 November 2016 at 9.30 a.m. for the following purposes: -

AGENDA

AS ORDINARY BUSINESS:

AS SPECIAL BUSINESS:

To consider and if thought fit, to pass the following resolutions:-

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

To re-elect the following Directors who retire pursuant to Article 94 of the Company’s Articles of Association:-

(a) Dato’ Abdul Murad Bin Khalid (b) Si Tho Yoke Meng

To re-appoint Datuk Ng Kam Chiu as a Director of the Company and to hold office until the conclusion of the next Annual General Meeting of the Company pursuant to Section 129(6) of the Companies Act, 1965.

To approve the payment of Directors’ fees amounting to RM116,000 for the financial year ended 30 June 2016.

To re-appoint Messrs Sekhar & Tan as Auditors of the Company and to authorise the Directors to fix their remuneration.

Ordinary Resolution - Authority to Issue and Allot Shares Pursuant to Section 132D of the Companies Act, 1965

“THAT, subject to the Companies Act, 1965 (“the Act”), the Articles of Association of the Company and the approvals of the relevant governmental/regulatory authorities, where such approval is necessary, the Directors be and are hereby empowered pursuant to Section 132D of the Act, to issue shares in the Company, from time to time and upon such terms and conditions and for such purposes the Directors may deem fit and expedient in the interest of the Company, provided that the aggregate of number of shares issued pursuant to this resolution does not exceed 10% of the issued and paid-up capital of the Company for the time being and that such authority shall continue to be in force until the conclusion of the next Annual General Meeting of the Company.”

Ordinary Resolution - Proposed Renewal of Authority for the Purchase by the Company of its own Shares

“THAT subject to the Companies Act, 1965, the Articles of Association of the Company, the Listing Requirements of Bursa Malaysia Securities Berhad (“Bursa Securities”) for the ACE Market and the approval of such relevant governmental and/or regulatory authorities where necessary, the Company be and is hereby authorised to purchase its own shares of RM0.10 each (“Shares”) on the ACE Market of Bursa Securities at any time, upon such terms and conditions as the

Please refer toNote 1

Resolution 1Resolution 2

Resolution 3

Resolution 4

Resolution 5

Resolution 6

Resolution 7

1.

2.

3.

4.

5.

6.

7.

89


Directors shall in their discretion deem fit and expedient in the best interests of the Company provided that:

(a)

(b)

THAT, upon the purchase by the Company of its own Shares, the Board be and are hereby authorised to:-

(i) cancel all or part of the Shares so purchased; and/or

(ii) retain all or part of the Shares so purchased as Treasury Shares; and/or

(iii) distribute the Treasury Shares as share dividends to the Company’s shareholders for the time being and/or resell the Treasury Shares on Bursa Securities.

THAT, such authority shall commence upon the passing of this resolution and shall continue to be in force until:-

(a)

(b)

(c)

whichever occurs first, but not so as to prejudice the completion of purchase by the Company before the aforesaid expiry date and in any event, in accordance with the provisions of the guidelines issued by Bursa Securities and any other relevant authority;

AND THAT, authority be and is hereby given to the Directors of the Company and/or any one of them to complete and do all such acts and things as they may consider necessary or expedient in the best interest of the Company, including executing all such documents as may be required or necessary and with full powers to assent to any conditions, modifications, variations and/or amendments (if any) as the Directors in their discretion deem it and expedient to give effect to the aforesaid purchase contemplated and/or authorised by this Ordinary Resolution.”

To transact any other business for which due notice shall have been given.

the aggregate number of Shares which may be purchased pursuant to this resolution does not exceed ten percent (10%) of the issued and paid-up shares capital of the Company at the time of purchase; and

the maximum funds to be allocated by the Company for the purchase ofShares shall not exceed the total retained profits and/or share premium ofthe Company at the time of the said purchase;

the conclusion of the next Annual General Meeting (“AGM”) of the Company at which time the authority shall lapse unless by ordinary resolution passed at that meeting the authority is renewed either unconditionally or subject to conditions; or

the expiration of the period within which the next AGM is required by law to be held; or

revoked or varied by ordinary resolution passed by the shareholders of the Company in a general meeting;

with the provisions of the guidelines issued by Bursa Securities and any other relevant authority;

AND THATand/or any one of them to complete and do all such acts and things as they may consider necessary or expedient in the best interest of the Company, including executing all such documents as may be required or necessary and with full powers to assent to any conditions, modifications, variations and/or amendments (if any) as the Directors in their discretion deem it and expedient to give effect to the aforesaid purchase contemplated and/or authorised by this Ordinary Resolution.”

To transact any other business for which due notice shall have been given.



AND THATand/or any one of them to complete and do all such acts and things as they may consider necessary or expedient in the best interest of the Company, including executing all such documents as may be required or necessary and with full powers to assent to any conditions, modifications, variations and/or amendments (if any) as the Directors in their discretion deem it and expedient to give effect to the aforesaid purchase contemplated and/or authorised by this Ordinary

90

8.


By Order of the Board

NG HENG HOOI (MAICSA 7048492) WONG MEE KIAT (MAICSA 7058813) JANE ONG SU PING (MAICSA 7059946) Company SecretariesDated: 28 October 2016

Notes:-Agenda item no. 1 is meant for discussion only. The provisions of Section 169 of the Companies Act, 1965 and the Articles of Association of the Company require that the Audited Financial Statements and the Reports of the Directors and Auditors thereon be laid before the Company at its Annual General Meeting. As such, this agenda item is not a business which requires a resolution to be put to vote by shareholders.

Only members whose names appear in the Record of Depositors as at 18th November 2016 will be entitled to attend and vote at the Meeting.

A member of the Company entitled to attend and vote at the meeting is entitled to appoint not more than two (2) proxies to attend and vote in his stead. Where a member appoints two proxies, the appointment shall be invalid unless the member specifies the proportion of his holdings to be represented by each proxy. The provision of Section 149(1)(b) of the Companies Act, 1965 shall not apply.

Where a member of the Company is an exempt authorised nominee as defined under the Securities Industry (Central Depositories) Act, 1991 which holds ordinary shares in the Company for multiple beneficial owners in one (1) 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.

The instrument appointing a proxy shall be in writing under the hand of the appointor or of his attorney duly authorised in writing, or if the appointor is a corporation, either under its common seal or the hand of its officer or its duly authorised attorney.

The instrument appointing a proxy shall be deposited at the Registered Office of the Company at Lot 6.08, 6th Floor, Plaza First Nationwide, No. 161, Jalan Tun H.S. Lee, 50000 Kuala Lumpur, not less than forty-eight (48) hours before the time for holding the meeting or at any adjournment thereof.

(i)

(ii)

(iii)

Resolution 6 - Authority to Issue and Allot Shares Pursuant to Section 132D of the Companies Act, 1965

Pursuant to Section 132D of the Act, the Ordinary Resolution No. 6, if passed will give the Directors of the Company from the date of the above meeting, authority to issue and allot ordinary shares from the unissued capital of the Company for such purposes as the Directors consider would be in the interest of the Company. The authority will, unless revoked or varied by the Company in General Meeting, expire at the next AGM.

The Company is seeking the approval from shareholders on the renewal of the above mandate for the purpose of possible fund raising exercise including but not limited to further placement of shares for working capital requirements. The Company did not exercise the mandate under Section 132D of the Act given by the shareholders at the Eleventh AGM held on 27 November 2015.

Resolution 7 - Proposed Renewal of Authority for Share Buy-BackThe Proposed Resolution 7, if passed, will empower the Directors of the Company to purchase the Shares up to ten percent (10%) of the issued and paid-up share capital of the Company by utilising the funds allocated which shall not exceed the total retained earnings of the Company. Further information on the Proposed Share Buy-Back is set out in the Statement to Shareholders dated 28 October 2016, which is dispatched together with the Company’s Annual Report 2016.

(a)

(b)

(iv)

(v)

(vi)

Explanatory Notes on Special Business:-

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REXIT BERHAD (Company No. 668114-K)(Incorporated in Malaysia)

FORM OF PROXY

I / We ___________________________________________________________________(NRIC No. ________________________________________)

of ______________________________________________________________________________________________________________________

being a member/members of REXIT BERHAD, hereby appoint ________________________________________________________________________

(NRIC No. ________________________________________) of _____________________________________________________________________

or failing him, ___________________________________________________________ (NRIC No. _________________________________________)

of ______________________________________________________________________________________________________________________or failing him, the Chairman of the Meeting as my/our proxy/proxies to attend and vote for me/us and on my/our behalf at the Twelfth Annual General Meeting of the Company to be held at Greens 3 (Sports Wing), Club House, Tropicana Golf & Country Resort, Jalan Kelab Tropicana, 47410 Petaling Jaya, Selangor Darul Ehsan on Friday, 25 November 2016 at 9.30 a.m. and at any adjournment thereof, in the manner indicated below:-

Resolutions

1. To re-elect Dato’ Abdul Murad Bin Khalid as Director.

2. To re-elect Si Tho Yoke Meng as Director.

3. To re-appoint Datuk Ng Kam Chiu as Director.

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

5. To re-appoint Messrs Sekhar & Tan as Auditors of the Company and to authorise the Directors to fix their remuneration.

6. To approve the authority to issue shares pursuant to Section 132D of the Company Act, 1965.

7. To renew authority to purchase its own shares by the Company.

For Against

Please indicate with an “X” how you wish your vote to be cast. If no specific direction as to voting is given, the proxy will vote or abstain at hisdiscretion.

If appointment of proxy is under hand

__________________________________Signed by *individual member/*officer or attorney of member/*authorised nominee of ________________________________(beneficial owner)

If appointment of proxy is under seal

The Common Seal of

____________________________________was hereto affixed in accordance with its Articles of Association in the presence of :-

________________ ________________Director Director/Secretary

in its capacity as *member/*attorney of member/*authorised nominee of

____________________________________(beneficial owner)

Seal

No. of Shares held : ____________________

Securities Account No :

____________________________________(CDS Account No.) (Compulsory)

Date :

The proportions of my/our holding to be represented by my/our proxies are as follows:-

First Proxy

No. of Shares : ________________

Percentage : ________________%

Second Proxy

No. of Shares : ________________

Percentage : ________________%

No. of Shares held : ____________________

Securities Account No :

____________________________________(CDS Account No.) (Compulsory)

Date :

Notes:-(i) Only members whose names appear in the Record of Depositors as at 18th November 2016 will be entitled to attend and vote at the Meeting.

A member of the Company entitled to attend and vote at the meeting is entitled to appoint not more than two (2) proxies to attend and vote in his stead. Where a member appoints two proxies, the appointment shall be invalid unless the member specifies the proportion of his holdings to be represented by each proxy. The provision of Section 149(1)(b) of the Companies Act, 1965 shall not apply.

Where a member of the Company is an exempt authorised nominee as defined under the Securities Industry (Central Depositories) Act, 1991 which holds ordinary shares in the Company for multiple beneficial owners in one (1) 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.

The instrument appointing a proxy shall be in writing under the hand of the appointor or of his attorney duly authorised in writing, or if the appointor is a corporation, either under its common seal or the hand of its officer or its duly authorised attorney.

The instrument appointing a proxy shall be deposited at the Registered Office of the Company at Lot 6.08, 6th Floor, Plaza First Nationwide, No. 161, Jalan Tun H.S. Lee, 50000 Kuala Lumpur, not less than forty-eight (48) hours before the time for holding the meeting or at any adjournment thereof.

Please strike out whichever inapplicable.

(Full name in block letters)



(ii)

(iii)

(iv)

(v)

*

Please fold here

The Company Secretary

REXIT BERHAD (668114-K)LOT 6.08, 6TH FLOORPLAZA FIRST NATIONWIDENO. 161, JALAN TUN H.S. LEE50000 KUALA LUMPUR

Please fold here

Stamp

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