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17 SystechBhd ( T) DIRECTORS REPORT PRINCIPAL ACTIVITIES The Company is principally an investment holding company. The principal activities of the subsidiaries are disclosed in Note 6 RESULTS FOR THE FINANCIAL YEAR Group Company 1,233 1,736 Owners of the parent 1,203 1,736 Non-controlling interest 30-1,233 1,736 DIVIDENDS the proposed dividend, where upon approval by shareholders, will only then be accounted for in shareholders equity as an Except for the foregoing mentioned, no other amount has been paid or recommended to be paid by way of dividend since the RESERVES AND PROVISIONS ISSUE OF SHARES AND DEBENTURES 46

18 AnnualReport DIRECTORS REPORT TREASURY SHARES RM0.18 per share. The total consideration paid for the repurchase was RM16,200. The shares repurchased are being held as treasury shares in accordance with Section 67A of the Companies Act As at 31 March, the Company held as treasury shares a total of 90,000 of its 317,338,000 issued ordinary shares. Such treasury OPTIONS GRANTED OVER UNISSUED SHARES There were no options granted by the Company to any person to take up any unissued shares in the Company. BAD AND DOUBTFUL DEBTS out, the Directors took reasonable steps to ascertain that action had been taken in relation to the writing off of bad debts and the adequate allowance had been made for impairment losses on receivables. At the date of this report, the Directors advise that they are not aware of any circumstances which would render it necessary to write off bad debts or the allowance for impairment losses on receivables inadequate to any substantial extent. CURRENT ASSETS out, the Directors took reasonable steps to ascertain that any current assets other than debts, which were unlikely to be realised in the ordinary course of business, including their value as shown in the accounting records of the Group and of the Company, have been written down to an amount which they might be expected so to realise. At the date of this report, the Directors are not aware of any circumstances which would render the values attributed to the current VALUATION METHODS At the date of this report, the Directors are not aware of any circumstances which have arisen which render adherence to the existing methods of valuation of assets or liabilities of the Group and of the Company misleading or inappropriate. CONTINGENT AND OTHER LIABILITIES At the date of this report, there does not exist: i. secures the liabilities of any other person; or ii. No contingent or other liability of the Group and of the Company has become enforceable or is likely to become enforceable within the the ability of the Group and of the Company to meet their obligations as and when they fall due. CHANGE OF CIRCUMSTANCES 47

19 SystechBhd ( T) DIRECTORS REPORT ITEMS OF AN UNUSUAL NATURE Directors, substantially affected by any item, transaction or event of a material and unusual nature. event of a material and unusual nature likely, in the opinion of the Directors, affect substantially the results of the operations of DIRECTORS The Directors who served since the date of the last report are as follows: FOO LEE KHEAN TAN HOCK ANN TAN HOCK SOON TERENCE SELVARAJAH A/L PETER SELVARAJAH ROBERT KOONG YIN LEONG DIRECTORS INTERESTS Shareholdings kept by the Company under Section 134 of the Companies Act, 1965, are as follows: No. of ordinary shares of RM0.10 each The Company As at Bought Sold As at FOO LEE KHEAN - Direct Interest - Indirect Interest - 180,687, ,687,820 TAN HOCK ANN - Direct Interest - Indirect Interest - 180,687, ,687,820 TAN HOCK SOON - Direct Interest - Indirect Interest - 180,687, ,687,820 TERENCE SELVARAJAH A/L PETER SELVARAJAH 50, ,000 ROBERT KOONG YIN LEONG - 18,800-18,800 By virtue of their interest in the shares of the Company, the above-mentioned Directors are also deemed interested in the 48

20 AnnualReport DIRECTORS REPORT DIRECTORS BENEFITS Company or any other body corporate. SIGNIFICANT SUBSEQUENT EVENTS HOLDING COMPANIES The intermediate and ultimate holding companies are Leinet Technology Berhad and IKL Resources Sdn. Bhd. respectively. Both the holding companies are incorporated and domiciled in Malaysia. AUDITORS Messrs. T. H. KUAN & CO., Chartered Accountants, have expressed their willingness to accept re-appointment. Signed on behalf by the Board of Directors in accordance with a resolution of the Directors. TAN HOCK ANN TAN HOCK SOON Petaling Jaya, Selangor Darul Ehsan Date: 18 July 49

21 SystechBhd ( T) STATEMENT BY DIRECTORS We, TAN HOCK ANN and TAN HOCK SOON, being two of the Directors of SYSTECH BHD., do hereby state that, in the applicable approved Malaysian Financial Reporting Standards, International Financial Reporting Standards and the provisions Disclosure Pursuant to Bursa Malaysia Listing Requirements, as issued by the Malaysian Institute of Accountants and the directive of Bursa Malaysia Securities Berhad. Signed on behalf by the Board of Directors in accordance with a resolution of the Directors. TAN HOCK ANN TAN HOCK SOON Petaling Jaya, Selangor Darul Ehsan Date: 18 July STATUTORY DECLARATION and belief, correct, and I make this solemn declaration conscientiously believing the same to be true and by virtue of the provisions of the Statutory Declarations Act Subscribed and solemnly declared by TAN HOCK SOON at Petaling Jaya in the state of Selangor Darul Ehsan this 18 July TAN HOCK SOON Before Me S. AROKIADASS A.M.N B460 Commissioner For Oaths 50

22 AnnualReport INDEPENDENT AUDITORS REPORT TO THE MEMBERS OF SYSTECH BHD Report on the Financial Statements March of the Group and of the Company, and the statements of comprehensive income, statements of changes in equity accounting policies and other explanatory information, as set out on page 53 to 103. Directors Responsibility for the Financial Statements 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 or error. Auditors Responsibility accordance with approved standards on auditing in Malaysia. Those standards require that we comply with ethical requirements misstatement. statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the 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 Opinion Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirement of the Companies Act, 1965 in Malaysia. 51

23 SystechBhd ( T) INDEPENDENT AUDITORS REPORT TO THE MEMBERS OF SYSTECH BHD 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 its subsidiaries have been properly kept in accordance with the provisions of the Act. statements of the Group and we have received satisfactory information and explanations required by us for those purposes. comment made under Section 174(3) of the Act. Other Reporting Responsibilities for the preparation of the supplementary information in accordance with Guidance on Special Matter No. 1, Determination of 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. T. H. KUAN & CO. AF: 1216 CHARTERED ACCOUNTANTS TAN KIM HOR No. 3014/01/17(J) CHARTERED ACCOUNTANT Petaling Jaya, Selangor Darul Ehsan. Date: 18 July 52

24 AnnualReport STATEMENTS OF FINANCIAL POSITION AS AT 31 MARCH Note Group ASSESTS Non-Current Assets Property, plant and equipment 5 7,694 8,748 Goodwill 7 20,896 21,521 Investment properties 8 2,276 1,190 Development expenditure 9 5,732 4,648 Other investment Total Non-Current Assets 36,761 36,270 Current Assets Inventories, at cost Trade receivables 12 1,996 1,383 Other receivables, deposits and prepayments Current tax assets Cash and cash equivalents 15 6,118 7,790 Total Current Assets 9,031 9,441 TOTAL ASSETS 45,792 45,711 EQUITY AND LIABILITIES Equity Share capital 16 31,734 31,734 Treasury shares 17 (16) - Exchange translation reserve 3-5,474 6,175 37,195 37,909 Non-controlling interest Total Equity 37,518 38,202 Non-Current Liabilities Term loans 18 6,134 5, Deferred tax liabilities Total Non-Current Liabilities 6,729 6,258 Current Liabilities Trade payables Other payables and accruals Term loans Total Current Liabilities 1,545 1,251 Total Liabilities 8,274 7,509 TOTAL EQUITY AND LIABILITIES 45,792 45,711 53

25 SystechBhd ( T) STATEMENTS OF FINANCIAL POSITION AS AT 31 MARCH Note Company ASSESTS Non-Current Assets Investment in subsidiaries 6 28,688 28,688 Total Non-Current Assets 28,688 28,688 Current Assets Amount owing by subsidiaries 14 5,491 5,550 Current tax assets 5 4 Cash and cash equivalents Total Current Assets 5,893 6,129 TOTAL ASSETS 34,581 34,817 EQUITY AND LIABILITIES Equity Share capital 16 31,734 31,734 Treasury shares 17 (16) - 2,741 2,909 Total Equity 34,459 34,643 Current Liabilities Other payables and accruals Amount owing to a subsidiary Total Current Liabilities Total Liabilities TOTAL EQUITY AND LIABILITIES 34,581 34,817 54

26 AnnualReport AnnualReport2014 STATEMENTS OF COMPREHENSIVE INCOME FOR THE FINANCIAL YEAR ENDED 31 MARCH Group Company Note Revenue 23 11,221 10,382 2,000 2,000 Cost of revenue (3,838) (2,961) - - 7,383 7,421 2,000 2,000 Other income Administration expenses (3,426) (2,664) (275) (355) Selling and distribution expenses (267) (162) - - Other operating expenses (2,407) (1,593) - - 1,624 3,474 1,736 1,675 Finance cost 24 (261) (176) ,363 3,298 1,736 1,675 Income tax expenses 27 (130) (155) - (2) 1,233 3,143 1,736 1,673 Other comprehensive income loss: - Exchange translation differences of foreign operation Total comprehensive income 1,236 3,143 1,736 1,673 Owners of the parent 1,203 3,095 1,736 1,673 Non-controlling interest ,233 3,143 1,736 1,673 Earnings per share ( EPS ) attributable to owners of the parent (sen per share)

27 SystechBhd ( T) STATEMENTS OF CHANGES IN EQUITY FOR THE FINANCIAL YEAR ENDED 31 MARCH 56

28 AnnualReport Share capital (Note 16) Treasury shares (Note 17) Exchange translation reserve Retained Equity attributable to owners of the parent Noncontrolling interest Total equity GROUP At 1 April , ,032 35,766-35,766 Transactions with owners Allotment of shares Dividend (Note 36) (952) (952) - (952) Total transactions with owners (952) (952) 245 (707) Total comprehensive income ,095 3, ,143 At 31 March 31, ,175 37, ,202 Transactions with owners Purchase of treasury shares - (16) - - (16) - (16) Dividend (Note 36) (1,904) (1,904) - (1,904) Total transactions with owners - (16) - (1,904) (1,920) - (1,920) ,203 1, ,233 Other comprehensive income Total comprehensive income ,203 1, ,236 At 31 March 31,734 (16) 3 5,474 37, ,518 Share capital (Note 16) Treasury shares (Note 17) Retained Total COMPANY At 1 April ,734-2,188 33,922 Transactions with owners Dividend (Note 36) - - (952) (952) - - 1,673 1,673 At 31 March 31,734-2,909 34,643 Transactions with owners Purchase of treasury shares - (16) - (16) Dividend (Note 36) - - (1,904) (1,904) Total transactions with owners - (16) (1,904) (1,920) - - 1,736 1,736 At 31 March 31,734 (16) 2,741 34,459 57

29 SystechBhd ( T) STATEMENTS OF CASH FLOWS FOR THE FINANCIAL YEAR ENDED 31 MARCH 58

30 AnnualReport CASH FLOWS FROM OPERATING ACTIVITIES Note Group Company 1,363 3,298 1,736 1,675 Adjustments for: Amortisation of development expenditure 9 1,602 1, Amortisation of goodwill Amortisation of investment properties Depreciation of property, plant and equipment 5(b) Interest expense Allowance for impairment losses of trade receivables Interest income 25 (220) (210) (11) (30) Gain on disposal of property, plant and equipment 25 (81) (238) - - Property, plant and equipment written off ,186 5,376 1,725 1,645 Changes in working capital Inventories (237) Trade and other receivables (837) Trade and other payables (56) 23 Amount owing by/(to) subsidiaries (1,214) Cash from operations 3,360 6,622 1, Tax (paid) / refunded (298) (224) (1) 1 Net cash from operating activities 3,062 6,398 1, CASH FLOWS FROM INVESTING ACTIVITIES Purchase of property, plant and equipment (502) (7,279) - - Payment for development expenditure 9 (2,654) (2,097) - - Proceeds from disposal of property, plant and equipment Interest received Investment in subsidiary (255) Acquisition of other investment 10 - (51) - - Net cash (used in)/from investing activities (2,753) (8,969) 11 (225) CASH FLOWS FROM FINANCING ACTIVITIES Purchase of treasury shares 17 (16) - (16) - Term loans drawndown 629 4, Repayment of term loans (374) (216) - - (319) (194) - - Proceeds from non-controlling interest for allotment of shares in subsidiary Dividend 36 (1,904) (952) (1,904) (952) (1,984) 2,983 (1,920) (952) NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS (1,675) 412 (178) (722) EFFECT OF EXCHANGE TRANSLATION CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR 7,790 7, ,297 CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR 15 6,118 7,

31 SystechBhd ( T) NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 60

32 AnnualReport NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 1. CORPORATE INFORMATION The Company is a public limited liability company, incorporated and domiciled in Malaysia. Wilayah Persekutuan and principal place of business of the Company is located at Unit T05, Tower Block, Plaza Dwitasik, Jalan Tasik Permaisuri 1, Bandar Sri Permaisuri, Kuala Lumpur, Wilayah Persekutuan. The Company is principally an investment holding company. The principal activities of the subsidiaries are disclosed in on 18 July. 2. BASIS OF PREPARATION OF FINANCIAL STATEMENTS 2.1 Basis of Preparation Malaysian Financial Reporting Standards ( MFRSs ), International Financial Reporting Standards and the provisions of new and amended MFRSs and Issues Committee ( IC ) Interpretations issued by Malaysian Accounting Standards Board 2.2 Amendments to MFRSs and New MFRSs Adopted of the Group and of the Company: Amendments to MFRS 119 Amendments to MFRS 2, MFRS 3, MFRS 8, MFRS 116 MFRS 124 and MFRS 138 Amendments to MFRS 3, MFRS 13 and MFRS 140 Annual Improvements to MFRSs Cycle Annual Improvements to MFRSs Cycle position of the Group and of the Company. 61

33 SystechBhd ( T) NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2.3 Standards issued but have not been effective have been issued by the MASB but have not been effective and have not been adopted by the Group and the Company: Amendments to MFRS 5, MFRS 7, MFRS 119 and MFRS 134 Amendments to MFRS 11 MFRS 14 Amendments to MFRS 116 And MFRS 138 Amendments to MFRS 127 Amendments to MFRS 10, MFRS 12 and MFRS 128 Amendments to MFRS 101 Annual improvements to MFRSs 2012 Cycle Accounting for Acquisitions of Interests in Joint Operation Regulatory Deferral Accounts Amortisation Equity Method in Separate Financial Statements Investment Entities: Applying the Consolidation Exception Disclosure Initiative MFRS 107 MFRS 112 Disclosure Initiative Recognition of Deferred Tax Assets for Unrealised Losses MFRS 9 MFRS 15 Financial instruments Revenue from Contracts with Customers MFRS 16 Leases and of the Company upon their initial application. 3. SIGNIFICANT ACCOUNTING POLICIES 3.1 Basis of Accounting unless otherwise indicated in the accounting policies stated below. 3.2 Investment in Subsidiaries A subsidiary is an entity over which the Group has the following: i. Power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of the investee); ii. Exposure, or rights, to variable returns from its involvement with the investee; and iii. The ability to use power over the investee to affect the amount of the Company s returns. Investment in subsidiaries is stated at cost less impairment losses. Such impairment loss is made when there is a decline other than temporary in the value of investments and is recognised as an expense in the period in which the decline occurred. The policy for recognition and measurement of impairment losses is in accordance with Note 3.6. On disposal of an investment, the difference between net disposal proceeds and its carrying amount is charged or credited to the statements of comprehensive income. 62

34 AnnualReport NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 3.3 Basis of Consolidation (a) Subsidiaries statements are prepared for the same reporting date as the Company. Accounting policies are consistently applied to transactions and events in similar circumstances. The Company controls an investee if and only if the Company has all the following: i. Power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of the investee); ii. Exposure, or rights, to variable returns from its involvement with the investee; and iii. The ability to use power over the investee to affect the amount of the Company s returns. When the Company has less than a majority of the voting rights of an investee, the Company considers the following investee: i. The size of the company s holding of voting rights relative to the size and dispersion of holdings of the other vote holders; ii. Potential voting rights held by the company, other vote holders or other parties; iii. Rights arising from other contractual arrangements; and iv. Any additional facts and circumstances that indicate the company has, or does not have, the current ability to direct the relevant activities at the time that decisions need to be made, including voting patterns at previous shareholders meeting. Subsidiaries are consolidated when the Company obtains control over the subsidiaries and ceases when the Company losses control of the subsidiaries. All intra-group balances, income and expenses and unrealised gains and losses resulting from intra-group transactions are eliminated in full. Changes in the Group s ownership interest in subsidiaries that do not result in the Group losing control over the subsidiaries are accounted for as equity transactions. The carrying amounts of the Group s interest and the non- difference is recognised directly in equity and attributed to owners of the Company. When the Group loses control of a subsidiary, a gain or loss calculated as the difference between the aggregate of the fair value of the consideration received and the fair value of any retained interest and the previous carrying amount of the assets and liabilities of the subsidiary and any non-controlling interest, is recognised in statements of comprehensive income. The subsidiary s cumulative gain or loss which has been recognised in other comprehensive transferred directly to retained earnings. The fair value of any investment retained in the former subsidiary at the date control is lost is regarded as cost on initial recognition of the investment. (b) Business Combinations Acquisitions of subsidiaries are accounted for using the acquisition method. The cost of an acquisition is measured as the aggregate of the consideration transferred, measured at acquisition date fair value and the amount of any noncontrolling interest in the acquiree. The Group elects on a transaction-by-transaction basis whether to measure the net assets. Transaction costs incurred are expensed and included in administration expenses. 63

35 SystechBhd ( T) NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH Any contingent consideration to be transferred by the acquirer will be recognised at fair value at the acquisition date. Subsequent changes in the fair value of the contingent consideration which is deemed to be an asset or liability, will be recognised in accordance with MFRS 139 either in statements of comprehensive income or as a change to other settlement is accounted for within equity. In instances where the contingent consideration does not fall within the scope of MFRS 139, it is measured in accordance with the appropriate MFRS. conditions as at the acquisition date. This includes the separation of embedded derivatives in host contracts by the acquiree. If the business combination is achieved in stages, the acquisition date fair value of the acquirer s previously held equity interest in the acquiree is remeasured to fair value at the acquisition date through statements of comprehensive income. (c) Non-Controlling Interest and are presented separately in the statements of comprehensive income of the Group and within equity in the interests are accounted for using the entity concept method, whereby, transactions with non-controlling interests are accounted for as transactions with owners. On acquisition of non-controlling interests, the difference between the consideration and book value of the share of the net assets acquired is recognised directly in equity. Gain or loss on disposal to non-controlling interests is recognised directly in equity. 3.4 Intangible Assets Intangible assets represent goodwill arising from business combination and is initially measured at cost which is the excess contingent liabilities. Thereafter, goodwill is measured at cost less any accumulated impairment losses. The policy for the recognition and measurement of impairment losses is in accordance with Note Property, Plant and Equipment and Depreciation All property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses. The carrying amount of property, plant and equipment are reviewed on a regular basis to ascertain any indication of impairment and valuations are carried out when such indication arises. Depreciation on property, plant and equipment is calculated on the straight-line method so as to write off the cost of the property, plant and equipment net of impairment loss over their estimated useful lives. The principal annual rates used are as follows: Computer software and equipment 33 1/3% Motor vehicles 20% 20% 20% Renovation 20% 2% items of property, plant and equipment. 64

36 AnnualReport NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH Upon the disposal of an item of property, plant and equipment, the difference between the net disposal proceeds and the net carrying amount is recognised in the statements of comprehensive income and the unutilised portion of the revaluation 3.6 Impairment of Non-Financial Assets The Group and the Company assess at each reporting date whether there is an indication that an asset may be impaired. If any such indication exists, or when an annual impairment assessment for an asset is required, the Group and the Company make an estimate of the asset s recoverable amount. An asset s recoverable amount is the higher of an asset s fair value less costs to sell and its value in use. For the purpose (cash-generating units ( CGU )). to reduce the carrying amount of any goodwill allocated to those units or groups of units and then, to reduce the carrying amount of the other assets in the unit or groups of units on a pro-rata basis. Impairment losses are recognised in the statements of comprehensive income except for assets that are previously revalued where the revaluation was taken to other comprehensive income. In this case the impairment is also recognised in other comprehensive income up to the amount of any previous revaluation. An assessment is made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. A previously recognised impairment loss is reversed 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. If that is the case, the carrying amount of the asset is increased to its recoverable amount. The increase cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised previously. Such reversal is recognised in the statements of comprehensive income unless the asset is measured at revalued amount, in which case the reversal is treated as a revaluation increase. Impairment loss on goodwill is not reversed in a subsequent period. 3.7 Investment Properties Investment properties consist of investments in land and buildings that are not substantially occupied for use by, or in the operations of the Group and of the Company. Investment properties are treated as long term investments and are stated at cost less accumulated amortisation and provision for impairment in value. Amortisation on investment properties is provided at an annual rate of 2%. Upon the disposal of an investment property, the difference between the net disposal proceeds and the carrying amount is charged or credited to the statements of comprehensive income. 3.8 Financial Instruments instrument of another enterprise. another enterprise under conditions that are potentially favourable to the Group and the Company. 65

37 SystechBhd ( T) NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH conditions that are potentially unfavourable to the Group and the Company. An embedded derivative is separated from the host contract and accounted for as a derivative if, and only if the economic characteristics and risks of the embedded derivative is not closely related to the economic characteristics and risks of the (a) Financial Assets measurement: i. recognition. gains and losses, interest and dividend income. Such income is recognised separately in the statements of comprehensive income as components of other income or other operating losses. However, derivatives that is linked to and must be settled by delivery of unquoted equity instruments that do not have a quoted market price in an active market are recognised at cost. ii. Held-to-maturity investments ability to hold to maturity. impaired, and through the amortisation process. iii. Loans and receivables determinable payments that are not quoted in an active market. 66 derecognised or impaired, and through the amortisation process.

38 AnnualReport NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH iv. are recognised directly in other comprehensive income, except for impairment losses and foreign exchange previously recognised in other comprehensive income are recognised in the statements of comprehensive income. However, interest calculated using the effective interest method is recognised in the statements of comprehensive income whilst dividends on available-for-sale equity instruments are recognised in the statements of comprehensive income when the Group s right to receive payment is established. of consideration received (including any new asset obtained less any new liability assumed) and any cumulative gain or loss that had been recognised directly in other comprehensive income shall be recognised in the statements of comprehensive income. delivery of the asset within the time frame established generally by regulation or market place convention. (b) Financial Liabilities of subsequent measurement: i. gains and losses, interest and dividend income. Such income is recognised separately in the statements of comprehensive income as components of other income or other operating losses. ii. 67

39 SystechBhd ( T) NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH in the contract is discharged or cancelled or expires. An exchange between an existing borrower and lender of and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in the statements of comprehensive income. 3.9 Share Capital An equity instrument is any contract that evidences a residual interest in the assets of the Group and of the Company after deducting all of its liabilities. Ordinary shares are equity instruments. shares are recognised in equity in the period in which they are declared Treasury Shares When shares of the Company, that have not been cancelled, recognised as equity are reacquired, the amount of of treasury shares. When treasury shares are reissued by resale, the difference between the sales consideration and the carrying amount is recognised in equity Impairment of Financial Assets is impaired. receivables, receivables that are reasonably 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 effective interest rate. The impairment loss is recognised in statements of comprehensive income. exception of trade receivables, where the carrying amount is reduced through the use of an allowance account. When a trade receivable becomes uncollectible, it is written off against the allowance account. 68

40 AnnualReport NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 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 statements of comprehensive income. (b) Unquoted equity securities carried at cost assets carried at cost has been incurred, the amount of the loss is measured as the difference between the asset s the disappearance of an active trading market are considerations to determine whether there is objective evidence principal payment and amortisation) and its current fair value, less any impairment loss previously recognised in the statements of comprehensive income, is transferred from equity to the statements of comprehensive income. Impairment losses on available-for-sale equity investments are not reversed in the statements of comprehensive income 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 the statements of comprehensive income 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 the statements of comprehensive income Contingencies A contingent liability or asset is a possible obligation or asset that arises from past events and whose existence will be and the Company Cash and Cash Equivalents Cash and cash equivalents comprise cash and bank balances and short-term, highly liquid investments that are readily 3.14 Provisions Provisions are recognised when the Group and the Company has a present obligation as a result of past events, when it a reliable estimate of the amount can be made. Provisions are reviewed at the end of each reporting period and adjusted value of the estimated expenditure required to settle the obligation. 69

41 SystechBhd ( T) NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 3.15 Finance Lease Finance lease, which transfer to the Group substantially all the risks and rewards incidental to ownership of the leased item, are capitalised at the inception of the lease at the fair value of the leased asset or, if lower, at the present value of the minimum lease payments. Any initial direct costs are also added to the amount capitalised. Lease payments interest on the remaining balance of the liability. Finance charges are charged to the statements of comprehensive income. Contingent rents, if any, are charged as expenses in the periods in which they are incurred. Leased assets are depreciated over the estimated useful life of the asset. However, if there is no reasonable certainty that the Group will obtain ownership by the end of the lease term, the asset is depreciated over the shorter of the estimated useful life and the lease term. Operating lease payments are recognised as an expense in the statements of comprehensive income on a straight-line expense over the lease term on a straight-line basis Income Tax been enacted at the relevant reporting periods. Deferred tax is provided for, using the liability method, on temporary differences at the end of the reporting periods tax liabilities are recognised for all taxable temporary differences and deferred tax assets are recognised for all deductible available against which the deductible temporary differences, unused tax losses and unused tax credits can be utilised. Deferred tax is not recognised if the temporary difference arises from goodwill or negative goodwill or from the initial recognition of an asset or liability in a transaction which is not a business combination and at the time of the transaction, Deferred tax is measured at the tax rates that are expected to apply in the period when the asset is realised or the liability is settled, based on tax rates that have been enacted or substantively enacted at the end of the reporting periods. Deferred tax is recognised in the statements of comprehensive income, except when it arises from a transaction which is recognised directly in equity, in which case the deferred tax is also recognised directly in equity, or when it arises from a business combination that is an acquisition, in which case that deferred tax is included in the resulting goodwill or negative goodwill Goods and Services Tax ( GST ) GST is a consumption tax based on value added-concept. GST is imposed on goods and services at every production and distribution stage in the supply chain including importation of goods and services, at the applicable tax rate of 6%. Input GST that the Group and the Company paid on purchases of business inputs can be deducted from their respective output GST. Revenue, expenses and assets are recognised net of GST, unless the GST is not recoverable from the tax authority. The amount of GST not recoverable from the tax authority is recognised as an expense or as part of cost of acquisition of an asset. Receivables and payables relate to such revenue, expenses or acquisitions of assets are presented in the statements of 70 GST recoverable from or payable to tax authority may be presented on net basis should such amounts are related to GST levied by the same tax authority and the taxable entity has a legally enforceable right to set off such amounts.

42 AnnualReport NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 3.18 Borrowing Costs Interest-bearing borrowings are recognised based on the proceeds received, net of transactions costs incurred. Borrowings costs directly attributable to the acquisition of property, plant and equipment are capitalised as part of the cost of those assets, until such time as the assets are ready for their intended use or sale. All other borrowings costs are charged to the statements of comprehensive income as expenses in the period in which they are incurred Revenue Revenue represents the net invoiced value for software sales and services rendered and sales of software related products within Malaysia and abroad. Revenue from short-term contract is recognised on the completion basis and comprised of the following: i. Licensing revenue of the product acceptance and collection is probable. ii. Customisation and contracts of a customisation nature Revenue from customisation contracts relating to customisation of e-business and cyber security solutions provided to customers is recognised on the percentage of completion method when the outcome of the contract can be estimated reliably. The percentage of completion is determined by the proportion of costs incurred for work performed to date bears to estimated total contract costs to date as a percentage of total services to be rendered. Any foreseeable loss is recognised immediately in the statements of comprehensive income. iii. Maintenance services Revenue from maintenance services rendered is recognised on a straight-line basis over the contracted maintenance period. Revenue from interest income is recognised using the effective interest method and dividend income from marketable and non-marketable securities is recognised when the Group s and the Company s right to receive payment is established Wages, salaries, bonuses and social security contributions are recognised as an expense in the year in which the associated services are rendered by employees of the Group and the Company. As required by law, companies in Malaysia make contributions to Employee Provident Fund ( EPF ). This contribution is recognised as an expense in the statements of comprehensive income as incurred. Once contributions have been paid, the Group and the Company have no further payment obligations Foreign Currency Financial and presentation currency Malaysia ( RM ), which is also the Group s and the Company s functional currency. 71

43 SystechBhd ( T) NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH Transactions and balances Foreign currency transactions are accounted for at exchange rates ruling at the transaction dates. Foreign currency monetary assets and liabilities are translated at exchange rates ruling at the reporting date. Exchange differences arising from the settlement of foreign currency transactions and from the translation of foreign currency monetary assets and liabilities are recognised in the statements of comprehensive income. Foreign Operations The assets and liabilities of foreign operations are translated into RM at the rate of exchange ruling at the reporting date and income and expenses are translated at exchange rates at the dates of the transactions. The exchange differences arising on the translation are taken directly to other comprehensive income. On disposal of a foreign operation, the cumulative amount recognised in other comprehensive income and accumulated in equity under foreign currency translation reserve relating to that particular foreign operation is recognised in the statements of comprehensive income. Goodwill and fair value adjustments arising on the acquisition of foreign operations are treated as assets and liabilities of the foreign operations and are recorded in the functional currency of the foreign currency of the foreign operations and translated at the closing date of the reporting date Investments Quoted investments are stated at cost less provision for any diminution in value. Any permanent diminution in value is recognised as an expense in the year in which the decline occurs. On disposal of an investment, the difference between net disposal proceeds and the carrying amount is charged or credited to the statements of comprehensive income Development Expenditure Development expenditure are expensed in the year in which they are incurred except when the cost incurred on the development projects are recognised as development assets to the extent that such expenditure is expected to generate proportion of overheads. Capitalised development expenditure is stated at cost less accumulated amortisation and impairment loss, if any Inventories Inventories are stated at the lower of cost and net realisable value. Cost comprises purchase price and directly attributable determined on an item-by-item basis or on group of similar item basis Related Parties A party is related to an entity if: directly, or indirectly through one or more intermediaries, the party: i. controls, is controlled by, or is under common control with, the entity (this includes parents, subsidiaries and fellow subsidiaries); or ii. iii. has joint control over the entity. the party is an associate of the entity; or 72

44 AnnualReport NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH the party is a joint venture in which the entity is a venturer; or the party is a member of the key management personnel of the entity or its parent; or the party is a close member of the family of any individual referred to in (a) or (d); or voting power in such entity resides with, directly or indirectly, any individual referred to in (d) or (e); or related party of the entity Fair Value Measurement Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either: In the principal market for the asset or liability; or In the absence of a principal market, in the most advantageous market for the asset or liability. The principal or the most advantageous market must be accessible by the Group. The fair value of an asset or liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest. asset in its highest and best use. to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs. measurement as a whole: (a) Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities. (b) Level 2 - is directly or indirectly observable. (c) Level 3 - is unobservable. whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest 3.27 Operating Segments An operating segment is a component of the Company that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Company s other components. Operating segment results are reviewed regularly by the chief operating decision maker, which in this case is the Managing Director of the Company, to make decisions about resources to be allocated to the segment 73

45 SystechBhd ( T) NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 4. SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGEMENTS 4.1 Critical Judgements Made in Applying Accounting Policies There is no critical judgement made by management in the process of applying the Group s and the Company s accounting estimates, which are dealt with below. Impairment of Non-Financial Assets When the recoverable amount of an asset is determined based on the estimate of the value-in-use of the cashgenerating unit to which the asset is allocated, the management is required to make an estimate of the expected Impairment of Trade and Other Receivables customer concentrations, customer creditworthiness, current economic trends and changes in the customer payment terms when making a judgement to evaluate the adequacy of the allowance for impairment losses. Where historical loss experience for assets with similar credit risk characteristics. If the expectation is different from the estimation, such difference will impact the carrying amount of receivables. Valuation of Investment Properties In estimating fair value of investment properties, the Group uses market observable data to the extent it is available. Information about the valuation techniques and inputs used in determining the fair value of investment properties are disclosed in Note 8. Impairment of Interest in Subsidiaries Interest in subsidiaries which include the investment in subsidiaries and advances to subsidiaries are assessed at the end of each reporting period to determine whether there is any indication of impairment. If such impairment exist, an estimation of their recoverable amount is required. from the subsidiaries and also to choose a suitable discount rate in order to calculate the present value of those 74

46 AnnualReport NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 4.2 Key Sources of Estimation Uncertainty The following are key assumptions concerning the future and other key sources of estimation uncertainty at the end of the Useful lives of property, plant and equipment The Group and the Company estimates the useful lives of property, plant and equipment based on factors such as the expected level of usage due to physical wear and tear, future technological developments and legal or other limits on the relevant assets. Future results of operations could be materially affected by changes in these estimates brought about by changes in the factors mentioned. A reduction in the estimated useful lives of property, plant and equipment would increase the recorded depreciation and the carrying value of property, plant and equipment. Amortisation of intangible assets in view of the likelihood of technology changes and other factors. Impairment of goodwill The Group determines whether goodwill is impaired at least on an annual basis. This requires an estimation of the value-in-use of the cash generating unit to which goodwill is allocated. Estimating value-in-use amount requires Taxation computations for which the ultimate tax determination is uncertain during the ordinary course of business. The Group estimated the tax liabilities based on the understanding of prevailing tax laws and estimates of whether initially recognised, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made. Deferred tax assets Deferred tax assets are recognised for all unused tax losses and unabsorbed capital allowances to the extent 75

47 SystechBhd ( T) NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 5. PROPERTY, PLANT AND EQUIPMENT Group Computer software and equipment Motor vehicles Furniture equipment Renovation Long term leasehold under construction Long term leasehold Total Cost At 1 April 343 1, ,107 4,786 9,509 Additions Written off (7) (7) Disposal - (507) (507) (Note 8) (1,126) - (1,126) At 31 March 453 1, ,281 4,786 8,651 Accumulated Depreciation At 1 April Charge of the year Written off (6) (6) Disposal - (405) (405) At 31 March Net Book Value At 31 March ,281 4,626 7,694 Computer software and equipment Motor vehicles Furniture equipment Renovation Long term leasehold under construction Long term leasehold Total Cost At 1 April , ,055-2,562 Additions ,052 4,786 7,734 Written off (25) - - (50) (155) - - (230) Disposal (11) (546) (557) At 31 March 343 1, ,107 4,786 9,509 Accumulated Depreciation At 1 April ,193 Charge of the year Written off (22) - - (49) (152) - - (223) Disposal (1) (546) (547) At 31 March Net Book Value At 31 March ,107 4,722 8,748 76

48 AnnualReport NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH Group Included in property, plant and equipment of the Group are the following fully depreciated assets which are still in use: Cost Computer software and equipment Motor vehicles Depreciation charged during the year is as follows: Statements of comprehensive income (Note 25) Development expenditure (Note 9) Included in the property, plant and equipment of the Group at the end of the reporting period are RM708,991). disclosed in Note 18. under construction is RM41,190 (: RM26,508). Internally generated funds 202 3,829 Financed under hire purchases Financed under term loans 300 3, ,734 The title for the properties with net book value of RM1,280,925 (: RM2,107,088) is still under the respective master title of the properties. 77

49 SystechBhd ( T) NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 6. INVESTMENT IN SUBSIDIARIES Company At 1 April 28,688 28,433 Additions At 31 March 28,688 28,688 The details of the subsidiaries are as follows: Name of Subsidiaries Country of Incorporation Principal Activities % of ownership interest held by Group % of ownership interest held by noncontrolling interest Syscatech Sdn Bhd Malaysia Software research and development, provision of the related software services and trade in software related peripherals Mobysys Sdn Bhd Malaysia Software research and development, provision of the related software services and trade in software related peripherals Techcasys Sdn Bhd* Malaysia Software research and development, provision of the related software services and trade in software related peripherals SysArmy Sdn Bhd Malaysia Principally engaged in the provision of cyber security software and hardware systems and the related application and consultancy services Syscatech, Inc.** California, United States of America Procurement, development and trading of software solutions*** All subsidiaries undertakings are included in the consolidation. The proportion of the voting rights in the subsidiary undertakings held directly by the parent company do not differ from the proportion of ordinary shares held. * The auditors report contained an emphasis of matter paragraph as there is an indication of a material uncertainty that *** Has yet to commence operation. 78

50 AnnualReport NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH Financial information of SysArmy Sdn Bhd, a subsidiary that have material non-controlling interest are provided below: Non-current assets Current assets 1, Total assets 2, Non-current liabilities 40 - Current liabilities 1, Total liabilities (1,401) (311) Net assets Equity attributable to equity holders of the Company Non-controlling interest Summarised statement of comprehensive income Revenue 1, Total comprehensive income Net cash from/(used in) operating activities 603 (103) Net cash used in investing activities (494) (126) Net increase in cash and cash equivalents Cash and cash equivalents at the beginning of the year Cash and cash equivalents at the end of the year

51 SystechBhd ( T) NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 7. GOODWILL Group Cost At 1 April 21,521 22,146 Amortisation for the year (Note 25) (625) (625) At 31 March 20,896 21,521 The net carrying amount of RM20,896,000 (: RM21,521,000) represents goodwill arising from the acquisition of the wholly owned subsidiaries, Syscatech Sdn Bhd and Mobysys Sdn Bhd by the Company. 8. INVESTMENT PROPERTIES Group suites suite Total Cost At 1 April 1,252-1,252 under construction (Note 5) - 1,126 1,126 At 31 March 1,252 1,126 2,378 At 1 April (62) - (62) Amortisation for the year (Note 25) (25) (15) (40) At 31 March (87) (15) (102) Net Book Value At 31 March 1,165 1,111 2,276 suites suite Total Cost At 1 April / 31 March 1,252-1,252 At 1 April (37) - (37) Amortisation for the year (25) - (25) At 31 March (62) - (62) Net Book Value At 31 March 1,190-1,190 80

52 AnnualReport NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH granted as disclosed in Note 18. respective master title of the properties. Fair Value Information Investment properties comprise commercial properties that are held for capital appreciation. The fair value was based on Directors estimation using the latest available market information and recent experience and knowledge in the location and category property being valued. The fair value of investment properties of the Group as at 31 March 1,433 1,374 1,140-2,573 1,374 statements as the Group adopts the historical cost basis in accounting for its investment properties. The Directors estimate the fair value of the Group s investment property based on the following key assumptions: Comparison of the Group s investment property with similar properties that were listed for sale within the same locality or other comparable localities; and Enquiries from relevant property valuers and real estate agents on market conditions and changing market trends. 81

53 SystechBhd ( T) NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 9. DEVELOPMENT EXPENDITURE Group Cost At 1 April 13,363 11,238 Additions 2,686 2,125 At 31 March 16,049 13,363 At 1 April (8,715) (7,349) Amortisation for the year (Note 25) (1,602) (1,366) At 31 March (10,317) (8,715) Net Book Value At 31 March 5,732 4,648 The development expenditure includes the following expenses: Rental of premises Depreciation of property, plant and equipment (Note 5(b)) Staff cost 2,326 1,678 Director s remuneration: - Salaries and bonus Other emoluments OTHER INVESTMENT Group Investment available for sale, quoted outside Malaysia At cost At 1 April Additions - 51 At 31 March Market value At 31 March

54 AnnualReport NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 11. INVENTORIES Group At cost Computer peripherals TRADE RECEIVABLES Group Gross receivables 2,090 1,654 Allowance for impairment losses (94) (271) Trade receivables, net 1,996 1,383 Allowance for impairment losses: At 1 April Written off (197) At 31 March (Note 29.2 (b)) The normal credit term granted by the Group to its customers range from 30 to 60 days (: 30 to 60 days). Other credit terms are assessed and approved on a case-by-case basis. 13. OTHER RECEIVABLES, DEPOSITS AND PREPAYMENTS Group Deposits and prepayments Deferred expenditure AMOUNT OWING BY/(TO) SUBSIDIARIES Company The amount owing by/(to) subsidiaries to the Company is unsecured, interest free and receivable/(repayable) on demand. 83

55 SystechBhd ( T) NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 15. CASH AND CASH EQUIVALENTS Group Company Cash and bank balances 896 1, Short term deposits with licensed banks - 1, ,722 4, Fixed deposit with licensed bank ,118 7, % (: Nil) per annum and the average maturity period for these deposits is between 30 days to 3 months. The effective rate of interest from money market deposits is 3% (: 3%) and is realisable upon demand. 16. SHARE CAPITAL Number of ordinary shares of RM0.10 each Amount At 1 April / 31 March 1,000,000 1,000, , ,000 At 1 April / 31 March 317, ,338 31,734 31, TREASURY SHARES Treasury shares relate to ordinary shares of the Company that are held by the Company. The amount consists of the acquisition costs of treasury shares net of the proceeds received on their subsequent sale or issuance. During the year, the Company repurchased 90,000 ordinary shares of RM0.10 each from the open market for a total consideration of RM16,200 and this was presented as a component within shareholders equity. The repurchased was shares held as at 31 March were 90,000 or % of the total paid up share capital of the Company. 84

56 AnnualReport NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 18. TERM LOANS Group Not later than one (1) year , ,044 4,744 Total non-current portion 6,134 5,680 Total outstanding term loans 6,281 5,793 Corporate guarantee given by the Company. The term loans bear interest at 4.60% to 4.95% (: 4.60% to 4.95%) and are repayable by 240 equal monthly installments for each of the term loan with monthly installment of RM1,972, RM2,114, RM6,234 and RM11, OBLIGATION UNDER FINANCE LEASE Group Not later than one (1) year (65) (64) Present value of minimum lease payments Not later than one (1) year lease is at 4.81% to 5.39% ( : 4.42% to 4.92%) per annum. 85

57 SystechBhd ( T) NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 20. DEFERRED TAX LIABILITIES Group At 1 April (103) (53) Provision for deferred tax liabilities during the year (Note 27) (40) (50) At 31 March (143) (103) Represented by: Deferred tax assets Deferred tax liabilities (231) (117) (143) (103) 20.1 Deferred tax liabilities Property, plant and equipment Development expenditure Total At 1 April - (117) (117) Provision (15) (99) (114) At 31 March (15) (216) (231) At 1 April - (67) (67) Provision - (50) (50) At 31 March - (117) (117) 20.2 Deferred tax assets Property, plant and equipment Unabsorbed business loss and capital allowances Total At 1 April Provision At 31 March At 1 April Provision At 31 March 14-14

58 AnnualReport NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 21. TRADE PAYABLES Group Trade payables are non-interest bearing and are normally settled within 30 to 90 days (: 30 to 90 days) terms. 22. OTHER PAYABLES AND ACCRUALS Group Company Other payables Accruals Deferred income Other payables are non-interest bearing and are normally settled on an average term of three (3) months (: three (3) months). 23. REVENUE Group Revenue of the Group represents the net invoiced value for software sales and services rendered and sales of software related products within Malaysia and abroad. Company Revenue of the Company represents dividend income from investments and is recognised when the shareholders right to receive payment is established. 24. FINANCE COST Group Interest expense on: Term loans (Note 25)

59 SystechBhd ( T) NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 25. PROFIT BEFORE TAX Group Company Note Auditors remuneration - Statutory audits Other services Allowance for impairment losses of trade receivables Amortisation of development expenditure 9 1,602 1, Amortisation of goodwill Amortisation of investment properties Depreciation of property, plant and equipment 5(b) Directors remuneration - Salaries and bonus Fee Other emoluments Net realised loss on foreign currency Term loans interest Property, plant and equipment written off Rental of premises Staff costs - Salaries, allowances and bonus 1, EPF and SOCSO contributions Other staff related expenses Dividend income - - (2,000) (2,000) Interest income from: - Current account with a licensed bank (5) Short term deposits with licensed banks (1) (15) - (5) - Fixed deposit with licensed bank (9) (205) (195) (11) (25) (220) (210) (11) (30) Gain on disposal of property, plant and equipment (81) (238) - - Net realised gain on foreign exchange (29) The average number of employees of the Group is 73 (: 54). 88

60 AnnualReport NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 26. DIRECTORS REMUNERATION Group Company Directors of the Company Salaries Other emoluments Fee Bonus Salaries Other emoluments Fee Bonus Total 1,013 1, The number of Directors of the Company whose total remuneration paid by the Group during the year fall within the following bands are as follows: Number of Directors Executive Director RM550,000 RM650, RM650,001 RM750,000-1 Non-Executive Directors RM250,000 and below 3 3 RM250,001 RM350, RM350,001 RM450,

61 SystechBhd ( T) NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 27. INCOME TAX EXPENSES Group Company Income tax expenses Estimated current tax Local income tax Foreign income tax Over provision in prior year (17) Deferred tax liabilities Provision for the year income tax expenses at the effective tax rate of the Group and of the Company is as follows: Group Company 1,363 3,298 1,736 1,675 Tax at the statutory tax rate of 24% (: 25%) Tax effects of: Tax-exempt income under Promotion of Investment Act, 1986 (661) (1,042) - - Income not subject to tax (56) (79) (482) (506) Non-deductible expenses Foreign income tax Over provision of taxation (17) Deferred tax liabilities The subsidiary, Mobysys Sdn Bhd was granted the Pioneer Status with effect from 17 June 2008, which exempts 100% 90

62 AnnualReport NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 28. RELATED PARTY TRANSACTIONS between the Group and related party took place at terms and conditions mutually agreed between the parties during 28.1 Compensation of Key Management Personnel Group Company 1,584 1, ,782 1, Comprised amounts paid to: Directors (Note 9, 25 and 26) 1,013 1, Other key management personnel ,782 1, Company Dividend income from subsidiary 2,000 2, FINANCIAL INSTRUMENTS AND RELATED DISCLOSURES 29.1 Group Loans and receivables Company Loans and receivables Note Trade receivables 12 1,996 1, Other receivables and deposits Amount owing by subsidiaries ,491 5,550 Cash and cash equivalents 15 6,118 7,

63 SystechBhd ( T) NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH Group Financial liabilities at amortised cost Company Financial liabilities at amortised cost Note Trade payables Other payables and accruals Amount owing to a subsidiary Term loans 18 6,281 5, Determination of fair value notional amounts, reasonably approximate their fair values because these are mostly short-term in nature or that they are Fair value hierarchy The fair value hierarchy of the Group s assets as at the end of the reporting period is as follows: 31 March Fair value measurement using Total Quoted prices in active market (Level 1) observable input (Level 2) unobservable input (Level 3) Investment properties (Note 8) 2, ,573 Other investment (Note 10) March Fair value measurement using Total Quoted prices in active market (Level 1) observable input (Level 2) unobservable input (Level 3) Investment properties (Note 8) 1, ,374 Other investment (Note 10)

64 AnnualReport NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH There is no transfer between levels in the fair value hierarchy during the year Risk Disclosures the development of the Group s business whilst managing market risks (including foreign currency risk, interest rate risk and equity price risk), credit risks and liquidity risk. The policies in respect of the major areas of treasury activity are as follows: Market Risks i. Foreign Currency Risk The Group had venture into the United States of America by setting up a new wholly owned subsidiary, namely Syscatech, Inc., which has yet to involve actively in its intended business since the previous purchases that are denominated in currencies other than the respective functional currency of the Group, Ringgit Malaysia ( RM ). The currencies giving rise to this risk are primarily United States Dollar ( ÚSD ) and Chinese Renminbi ( RMB ). The Group s exposure to foreign currency risk, based on the carrying amount of the trade receivables at the reporting date is as follow: At 31 March USD RMB Others RM Total Trade receivables ,663 1,996 Currency exposure At 31 March USD RMB Others RM Total Trade receivables ,326 1,383 Currency exposure

65 SystechBhd ( T) NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH possible change in the major foreign currency USD against the functional currency with all other variables held constant: Effect on taxation Effect on equity Effect on taxation Effect on equity USD Strengthened by 10% (:5%) Weakened by 10% (:5%) (22) (22) (3) (3) ii. Interest Rate Risk The Group s exposures to interest rate risk arising primarily from short term deposits, money market deposits, the reporting date is as follows: Note Effective interest rate % Effective interest rate % Financial assets Fixed rate instruments Short term deposits with licensed banks ,997 Money market deposits with licensed , ,785 Fixed deposit with licensed bank to Financial liabilities Floating rate instruments Term loans to , to , to to at amortised cost. Therefore, a change in interest rates at the end of the reporting period would not affect the 94

66 AnnualReport NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH iii. Equity Price Risk The Group is exposed to equity price risk and the risk relates only to the other quoted investment as disclosed have exposure to commodity price risk. Credit Risks The Group s exposure to credit risks, or the risk of counterparties defaulting, arises mainly from trade receivables. The Group manages its exposure to credit risk by the application of credit approvals, credit limits and monitoring minimises credit risk by dealing exclusively with high credit rating counterparties. The Group establishes an allowance for impairment that represents its estimate of incurred losses in respect estimated by management based on prior experience and the current economic environment. The Group s major concentration of credit risk relates to the amounts owing by eight (8) customers which constituted approximately 55% of its trade receivables as at the end of the reporting period. These eight (8) receivables are established companies in the industry that they are involved with. At the reporting date, the Group s and the Company s maximum exposure to credit risk is represented by the As at the end of the reporting period, the Group and the Company does not hold any collateral and the maximum any netting arrangements with counterparties. The aging analysis of the Group s trade receivables as at the end of the reporting period are as follows: Neither past due nor impaired Past due, not impaired: 1 to 30 days to 60 days to 90 days to 120 days More than 121 days , Past due and impaired (Note 12) Gross receivables (Note 12) 2,090 1,654 95

67 SystechBhd ( T) NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH The Group s trade receivables that are past due and impaired at the reporting date are as follows: Trade receivable - nominal amounts Allowance for impairment losses (94) (271) - - The movement of the allowance accounts used to record the impairment is disclosed in Note 12 to the enhancement. The collective impairment allowance is determined based on estimated irrecoverable amounts from the services rendered, determined by reference to past default experience. The Group believes that no impairment allowance is necessary in respect of these trade receivables. They are substantially comprised of companies with continuous prompt repayment and no recent history of default. been transacting with the Group. The receivables that are past due but not impaired are unsecured in nature. Liquidity Risk Liquidity risk arises mainly from general funding and business activities. The Group practices prudent committed credit facilities. based on contractual undiscounted repayment obligations. 31 March Within one (1) year Between two (2) to years (5) years Total Trade payables Other payables and accruals Term loans 147 1,090 5,044 6, ,113 1,542 5,044 7,699 96

68 AnnualReport NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 31 March Within one (1) year Between two (2) to years (5) years Total Trade payables Other payables and accruals Term loans ,744 5, ,251 1,411 4,744 7, CAPITAL MANAGEMENT The primary objective of the Group s and the Company s capital management is to ensure that it maintains a strong credit rating and healthy capital ratios in order to support its business and maximise shareholder value. The Group and the Company manages its capital structure and makes adjustments to it, in light of changes in economic conditions. To maintain or adjust the capital structure, the Group and the Company may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. No changes were made in the objectives, policies or The Group and the Company monitors capital using a gearing ratio, which is net debts divided by total capital plus net debts. The Group and the Company includes within net debts, trade and other payables, amount owning to a subsidiary, Group Company Trade payables Other payables and accruals Amount owing to a subsidiary Term loans 6,281 5, ,699 7, Less: Cash and cash equivalents (6,118) (7,790) (397) (575) Net debts 1,581 (384) (275) (401) Total capital 37,195 37,909 34,459 34,643 Capital and net debts 38,776 37,525 34,184 34,242 Gearing ratio 4.08% N/A N/A N/A 97

69 SystechBhd ( T) NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 31. CAPITAL COMMITMENTS Group Authorised and contracted but not provided for The above outstanding capital commitment is in respect of the following: construction where progress payments have been included as carrying cost CONTINGENT LIABILITY Group Company Unsecured facilities granted to a subsidiary, Syscatech Sdn Bhd - - 6,871 6,395 In the opinion of the Directors, the carrying amount of the guarantee is a reasonable approximation of its fair values and 33. EARNINGS PER SHARE The basic earnings per share ( EPS ) are calculated as follows: Group Company 1,203 3,095 1,736 1,673 Number of ordinary shares ( 000) 317, , , ,338 Weighted average number of ordinary shares ( 000) 317, , , ,338 EPS (sen) The diluted earnings per share are not presented as there are no potential ordinary shares outstanding at the end of reporting period. 98

70 AnnualReport NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 34. SEGMENTAL INFORMATION Primary Reporting Segmental Geographical Segments The Group operates in eight (8) (: seven (7)) principal geographical areas with the provision of e-business and cyber security solutions and services. 31 March Malaysia Hong Kong Indonesia Thailand Singapore China Korea Others Total Revenue from external customers 5,497 1, , ,221 Segment assets 45, ,792 Non-current assets 36, , March Malaysia Hong Kong Indonesia Thailand Singapore China Korea Others Total Revenue from external customers 4,050 1, ,300 1, ,382 Segment assets 45, ,711 Non-current assets 36, ,107 geographical segment which are mainly denominated in Ringgit Malaysia. The non-current assets information presented consist of the following items as presented in the consolidated Property, plant and equipment 7,694 8,748 Goodwill 20,896 21,521 Investment properties 2,276 1,190 Development expenditure 5,732 4,648 36,598 36,107 99

71 SystechBhd ( T) NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH Secondary Reporting Segmental - Operating Segments The principal business of the Group is organised into business units based on their products and services and has two (2) main reportable operating segments which are indicated below: i. The e business solution segment which comprised of software research and development, provision of the related software services and trade in software related peripherals. ii. The cyber security solution segment which is engaged in the provision of cyber security software and hardware systems and the related application and consultancy services. Except as indicated above, no other operating segments have been aggregated to form the above reportable operating segments. Management monitors the operating results of its business units separately for the purpose of resource allocation and basis and are not allocated to operating segments. 31 March E-business solution Cybersecurity solution Adjustments and eliminations Note Consolidated External customers 9,261 1,960-11,221 Inter-segment (350) (i) - Total revenue 9,261 2,310 (350) 11,221 Interest income Depreciation Amortisation of development expenditure 1, ,602 Amortisation of goodwill Allowance for impairment losses of trade receivables Interest expense (ii) 261 1, (700) (iii) 1,363 Additions to non-current assets 2, (iv) 3,168 Segment assets 40,945 2,041 2,806 (v) 45,792 Segment liabilities 4, ,124 (vi) 8,

72 AnnualReport NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 31 March E-business solution Cybersecurity solution Adjustments and eliminations Note Consolidated External customers 9, ,382 Inter-segment Total revenue 9, ,382 Interest income Depreciation Amortisation of development expenditure 1, ,366 Amortisation of goodwill Allowance for impairment losses of trade receivables Interest expense (ii) 176 3, (673) (iii) 3,298 Additions to non-current assets 8, (iv) 8,807 Segment assets 43, ,512 (v) 45,711 Segment liabilities 6, ,079 (vi) 7,509 follows: Inter-segment revenues is eliminated on consolidation. Term loan interest income: Amortisation of goodwill Interest expense

73 SystechBhd ( T) NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH Additions to non-current assets consist of: Property, plant and equipment 482 6,682 Development expenditure 2,686 2,125 3,168 8,807 Addition and (deduction) of segment assets to arrive at total assets reported in the consolidated statement of Investment properties 2,276 1,190 Other investment Current tax assets ,806 1,512 Addition and (deduction) of segment liabilities to arrive at total liabilities reported in the consolidated statement of Term loans 2, Deferred tax liabilities ,124 1,

74 AnnualReport NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 35. SIGNIFICANT SUBSEQUENT EVENT On 25 June, the subsidiary, SysArmy Sdn Bhd incorporated a 51% owned subsidiary in the Republic of Indonesia with an incorporated name of PT SysArmy Indocyber Security and had entered into a shareholders agreement with Sjahrial Ong, an Indonesian national and holder of the remaining 49% equity interest in the subsidiary, to regulate their rights and obligations as shareholders of the subsidiary and the manner in which the subsidiary will be managed and 36. DIVIDENDS Amount Net dividend per ordinary share sen sen ordinary share of RM0.10 each declared and paid 1, ordinary share of RM0.10 each declared and paid SUPPLEMENTARY INFORMATION Disclosure Pursuant to Bursa Malaysia Listing Requirements, as issued by the Malaysian Institute of Accountants. Group Company Realised 5,617 6,278 2,741 2,909 Unrealised (143) (103) - - 5,474 6,175 2,741 2,

75 SystechBhd ( T) PROPERTIES OWNED BY THE GROUP Location/Address Description of properties Built-up Area (sq.ft) Approximate Age of Building (year) Tenure Net carrying amount 31 March RM Existing use Date of acquisition 1 Unit AO23B-T2-18-3A 18th Floor, 8trium@Sri Damansara Bandar Sri Damansara Kuala Lumpur Suite Freehold 379,179 Investment property Unit AO23B-T th Floor, 8trium@Sri Damansara Bandar Sri Damansara Kuala Lumpur Suite 1,040 4 Freehold 406,557 Investment property Unit AO23B-T th Floor, 8trium@Sri Damansara Bandar Sri Damansara Kuala Lumpur Suite Freehold 379,179 Investment property Unit 13A-02 Level 13A, Vertical, Bangsar South Bangsar South City Kuala Lumpur Suite 1,380 1 Leasehold 99 years 1,110,859 Investment property Unit D-13A-B3 Level 13A, Tower 1, KL Gateway Bangsar Kuala Lumpur Suite 1,700 Note 1 Leasehold 99 years 1,280,925 Under Construction Unit T04 and T05 Tower Block, Plaza Dwitasik Jalan Tasik Permaisuri 1 Bandar Sri Permaisuri Kuala Lumpur Suite 11, Leasehold 99 years 4,626,501 premises Notes: 104

76 AnnualReport ANALYSIS OF SHAREHOLDINGS As at 12 July Authorised Share Capital RM100,000, Issued and fully paid-up Share Capital RM31,733, (inclusive of 434,000 Treasury shares) Class of Shares Ordinary Shares of RM0.10 each Voting Rights One vote per share Distribution Schedule of Shareholders Size of Holdings No. of Shareholders % of Shareholders No. of Shares % of Issued Shares* Less than , , , ,001-10, ,338, , ,000 1, ,909, ,001 to less than 5% of Issued Shares ,799, % of Issued Shares and above ,687, Total 2, ,903, * Exclude 434,000 ordinary shares of RM0.10 each bought back by the Company and held as treasury shares as at 12 July. Substantial Shareholders * Exclude 434,000 ordinary shares of RM0.10 each bought back by the Company and held as treasury shares as at 12 July. Notes: Directors Shareholdings Direct Interest * Exclude 434,000 ordinary shares of RM0.10 each bought back by the Company and held as treasury shares as at 12 July. Notes: Indirect Interest Name of Substantial Shareholder No. of Shares % of Issued Shares* No. of Shares % of Issued Shares* Leinet Technology Berhad 180,687, IKL Resources Sdn Bhd ,687, IKL Corporation Sdn Bhd ,687, Tan Hock Ann ,687, Tan Hock Soon ,687, Foo Lee Khean ,687, Direct Interest Indirect Interest Name of Directors No. of Share % of Issued Shares* No. of Shares % of Issued Shares* Foo Lee Khean ,687, Tan Hock Ann ,687, Tan Hock Soon ,687, Terence Selvarajah A/L Peter Selvarajah 50, Robert Koong Yin Leong 18,

77 SystechBhd ( T) LIST OF TOP 30 SHAREHOLDERS (without aggregating the securities from different securities accounts belonging to the same person) No. Name No. of Shares % of Issued Shares* 1. Leinet Technology Berhad 116,187, Leinet Technology Berhad 64,500, HSBC Nominees (Asing) Sdn Bhd [Exempt an for BSI SA (BSI BK SG-NR)] 10,000, Positive Force Sdn Bhd 2,947, Benar Prima Capital Sdn Bhd 2,448, AllianceGroup Nominees (Tempatan) Sdn Bhd [Pledged securities account for Lai Chie King ( )] 1,590, Chong Kam Hoe 1,379, CIMSEC Nominees (Tempatan) Sdn Bhd [CIMB Bank for Tan Chee Young (MY2263)] 1,300, Tong Fong Realty Sdn Berhad 1,300, Low Chuan Lee 1,281, Leong Chee Him 1,247, Liqua Health Marketing (M) Sdn Bhd 1,228, Ngo Chung Yuen 1,150, Tay Hock Tiam 1,100, Toh Su-N 1,050, Roger Chin Boon Tat 1,038, CIMSEC Nominees (Asing) Sdn Bhd [Exempt an for CIMB Securities (Singapore) Pte Ltd (Retail Clients)] 1,029, AmBank (M) Berhad [Pledged securities account for Wong Ah Yong (Smart)] 888, Lee Chew Foong 880, A Karthigesu A/L K A Alagirisamy 866, Chia Soon Hooi 800, Citigroup Nominees (Asing) Sdn Bhd [Exempt an for OCBC Securities Private Limited (Client A/C-NR)] 792, Public Nominees (Tempatan) Sdn Bhd [Pledged securities account for Tey Heong Tiong (E-TCS)] 657, Sin Lian Company Sdn Berhad 650, Ooi Chaw Ying 600, Public Invest Nominees (Tempatan) Sdn Bhd [Exempt an for Phillip Securities Pte Ltd (Clients)] 571, Maybank Nominees (Tempatan) Sdn Bhd [Jeyasilan A/L Karpudewan] 557, Sim Mui Khee 550, Koid Li Yee 548, Tan Toh Thai 500, Total 219,638, * Exclude 434,000 ordinary shares of RM0.10 each bought back by the Company and held as treasury shares as at 12 July.

78 AnnualReport NOTICE OF THE SIXTH ANNUAL GENERAL MEETING NOTICE IS HEREBY GIVEN THAT the Sixth Annual General Meeting of the Company will be held at Unit T05, Tower Block, Plaza Dwitasik, Jalan Tasik Permaisuri 1, Bandar Sri Permaisuri, Kuala Lumpur on Thursday, 18 August at 9.00 a.m. to transact the following businesses: 107

79 SystechBhd ( T) NOTICE OF THE SIXTH ANNUAL GENERAL MEETING AGENDA As Ordinary Business 1. with the Reports of the Directors and Auditors thereon. 2. Resolution 1 3. Resolution 2 4. To re-elect the following Directors who are retiring under Article 91 of the Articles of Association: i. Mr. Foo Lee Khean ii. Mr. Terence Selvarajah A/L Peter Selvarajah 5. To re-appoint Messrs. T.H. Kuan & Co. as the Auditors of the Company for the ensuing year and Resolution 3 Resolution 4 Resolution 5 As Special Business 6. Ordinary Resolution Resolution 6 Authority to allot and issue shares pursuant to Section 132D of the Companies Act, 1965 ( the Act ). THAT subject always to the approvals of the relevant authorities, the Directors be and are hereby empowered pursuant to Section 132D of the Act, to allot and issue shares in the Company at any time and upon such terms and conditions and for such purposes as the Directors may in does not exceed 10% of the issued share capital of the Company at the time of issue and the Directors are hereby further empowered to obtain approval for the listing of and quotation for the additional shares so issued on Bursa Malaysia Securities Berhad ( Bursa Securities ) and that such authority shall continue to be in force until the conclusion of the next Annual General Meeting ( AGM ) of the Company. 7. Ordinary Resolution Resolution 7 Authority for the Company to purchase its own ordinary shares of up to 10% of the issued and paid-up share capital ( Proposed Renewal of Share Buy-Back Mandate ) THAT subject to the Act, the provisions of the Company s Memorandum and Articles of Association, the ACE Market Listing Requirements of Bursa Securities ( AMLR ) and all other prevailing laws, guidelines, rules, regulations and orders issued and/or amended from time to time by the relevant regulatory authorities, the Company be and is hereby authorised to purchase its own ordinary shares of RM0.10 each ( Shares ) of up to 10% of the issued and paid-up share capital of the Company as may be determined by the Directors of the Company from time to time through Bursa Securities upon such terms and conditions as the Directors may for the Proposed Renewal of Share Buy-Back Mandate; 108

80 AnnualReport NOTICE OF THE SIXTH ANNUAL GENERAL MEETING AND THAT upon completion of the purchase(s) of the Shares by the Company, authority be and is hereby given to the Directors of the Company to decide at their absolute discretion to either to cancel the Shares so purchased and/or to retain the Shares so purchased as treasury shares and if retained as treasury shares, may resell the treasury shares on Bursa Securities and/or to distribute as share dividends to shareholders and/or subsequently cancelling the treasury shares or any combination of the three; AND FURTHER THAT the Directors of the Company be and are hereby authorised to carry out the Proposed Renewal of Share Buy-Back Mandate immediately upon passing of this ordinary resolution until: i. the conclusion of the next AGM of the Company, at which time the authority shall lapse unless renewed by ordinary resolution, either unconditionally or conditionally; or ii. the expiration of the period within which the next AGM is required by law to be held; or iii. revoked or varied by ordinary resolution passed by the shareholders in a general meeting of the Shares before the aforesaid expiry date and to take all such steps as are necessary and/ of the Company to give full effect to the Proposed Renewal of Share Buy-Back Mandate with imposed by the relevant authorities. 8. To transact any other business for which due notice shall have been given in accordance with the Company s Articles of Association and the Act. NOTICE OF DIVIDEND PAYMENT AND DIVIDEND ENTITLEMENT DATE NOTICE IS ALSO HEREBY GIVEN THAT, subject to the approval of the shareholders at the Sixth AGM of the Company, a single Company on 15 September. The entitlement date for the said dividend shall be 1 September. A depositor shall qualify for entitlement to the dividend only in respect of: Shares transferred to the depositor s securities account before 4.00 p.m. on 1 September in respect of ordinary transfers; and Shares bought on Bursa Securities on a cum entitlement basis according to the Rules of Bursa Securities. By Order of the Board WONG YOUN KIM (MAICSA ) CHEW SIOK BEE (MAICSA ) Company Secretaries Kuala Lumpur 27 July 109

81 SystechBhd ( T) NOTICE OF THE SIXTH ANNUAL GENERAL MEETING A. Proxy 1. A proxy may but need not be a member of the Company and the provisions of Section 149(1)(a) & (b) of the Act shall not apply to the Company. 2. holding the meeting Provided That in the event the member(s) duly executes the form of proxy but does not name any proxy, such member(s) shall be deemed to have appointed the Chairman of the meeting as his/her/their proxy, Provided Always that the rest of the proxy form, other than the particulars of the proxy/proxies have been duly completed by the member(s). 3. A member may appoint up to two (2) proxies to attend and vote at the same meeting. Where a member appoints two (2) proxies, the 4. respect of each securities account it holds with ordinary shares of the Company standing to the credit of the said securities account. 5. limit to the number of proxies which the exempt authorised nominee may appoint in respect of each omnibus account it holds. 6. If the appointor is a corporation, this form must be executed under its common seal or under the hand of an attorney duly authorised. 7. Only depositors whose names appear in the Record of Depositors as at 12 August shall be entitled to attend the Sixth AGM. B. Audited Financial Statements Item 1 of the Agenda is meant for discussion only as the provision of Section 169(1) of the Act does not require a formal approval of shareholders for the Audited Financial Statements. Hence, this item on the Agenda is not put forward for voting. Explanatory Notes on Special Business 8. Resolution 6 Authority to allot and issue shares pursuant to Section 132D of the Act The Company had, during the Fifth AGM held on 21 August, obtained its shareholders approval for the general mandate for issuance of shares pursuant to Section 132D of the Act. As at the date of this notice, the Company did not issue any shares pursuant to the mandate obtained. The Ordinary Resolution proposed under item 6, is a new mandate and if passed, will authorise the Directors of the Company to allot and issue shares up to a maximum of 10% of the issued share capital of the Company for the time being for such purposes as the Directors consider would be in the best interest of the Company. This authority, unless revoked or varied by the shareholders of the Company in a general meeting will expire at the conclusion of the next AGM. obtain shareholders approval so as to eliminate any delay and avoid incurring additional cost. The purpose of this mandate is to facilitate the Company to undertake possible fund raising exercises including but not limited to further placement of shares for purposes of funding current and/or future investment projects, working capital and/or acquisitions. 9. Resolution 7 Authority for the Company to purchase its own ordinary shares of up to 10% of the issued and paid-up share capital The Company had, during the Fifth AGM held on 21 August, also obtained its shareholders approval for the general mandate for the authority to purchase its own ordinary shares of up to 10% of the issued and paid-up share capital of the Company. The Ordinary Resolution proposed under item 7, is a renewal of the mandate and if passed, will empower the Company to buy-back and/or hold up to maximum of 10% of the Company s issued and paid-up share capital at any point of time on Bursa Securities, by utilising the funds varied by the Company in a general meeting, will expire at the conclusion of the next AGM of the Company, or the expiration of period within which the next AGM is required by law to be held, whichever is earlier. For further information on the Proposed Renewal of Share Buy-Back Mandate, please refer to the Circular to Shareholders dated 27 July, which is dispatched together with the Company s Annual Report Personal data privacy By submitting an instrument appointing a proxy(ies) and/or representative(s) to attend, speak and vote at the AGM and/or any adjournment thereof, a member of the Company (i) consents to the collection, use and disclosure of the member s personal data by the Company (or its agents) for the purpose of processing and administration by the Company (or its agents) of proxies and representatives appointed for the AGM (including any adjournment thereof) and the preparation and compilation of the attendance lists, minutes and other documents relating to the AGM (including any adjournment thereof), and in order for the Company (or its agents) to comply with any applicable laws, listing rules, regulations and/or guidelines (collectively, the Purposes ), (ii) warrants that where the member disclose the personal data of the member s proxy(ies) and/or representative(s) to the Company (or its agents), the member has obtained prior consent of such proxy(ies) and/or representative(s) for the Purposes, and (iii) agrees that the member will indemnify the Company in respect of any penalties, liabilities, claims, demands, losses and damages as a result of the member s breach of warranty.

82 AnnualReport STATEMENT ACCOMPANYING THE NOTICE OF ANNUAL GENERAL MEETING 1. Sixth Annual General Meeting of the Company will be held at Unit T05, Tower Block, Plaza Dwitasik, Jalan Tasik Permaisuri 1, Bandar Sri Permaisuri, Kuala Lumpur on Thursday, 18 August at 9.00 a.m. 2. The Directors who are standing for re-election at the Sixth Annual General Meeting of the Company pursuant to Article 91 of the Articles of Association of the Company are: i. Mr. Foo Lee Khean ii. Mr. Terence Selvarajah A/L Peter Selvarajah page 10 and 11 of this Annual Report. 3. year ended 31 March are disclosed in the Statement on Corporate Governance set out on page 22 of this Annual Report. 111

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84 PROXYFORM ( T) *I/We *NRIC No./Co. No of being a *member / members of Systech Bhd ( T) ( the Company ), hereby appoint the following person(s): Name of Proxy NRIC No Address No of Shares to be represented or failing him/her, THE CHAIRMAN OF THE MEETING as *my/our proxy to vote for *me/us on *my/our behalf at the Sixth Annual General Meeting of the Company to be held at Unit T05, Tower Block, Plaza Dwitasik, Jalan Tasik Permaisuri 1, Bandar Sri Permaisuri, Kuala Lumpur on Thursday, 18 August at 9.00 a.m. or at any adjournment thereof and to vote as indicated below: FIRST PROXY SECOND PROXY For Against For Against RESOLUTION 1 RESOLUTION 2 RESOLUTION 3 RESOLUTION 4 RESOLUTION 5 RESOLUTION 6 RESOLUTION 7 31 March Re-election of Mr. Foo Lee Khean Re-election of Mr. Terence Selvarajah A/L Peter Selvarajah Re-appointment of Messrs. T. H. Kuan & Co. as the Auditors of the their remuneration Authority to allot and issue shares pursuant to Section 132D of the Companies Act, 1965 Authority for the Company to purchase its own ordinary shares of up to 10% of the issued and paid-up share capital Notes

85 Fold This Flap For Sealing Please Fold Here AFFIX STAMP HERE The Company Secretaries SYSTECH BHD ( T) Level 2, Tower 1, Avenue 5 Bangsar South City Kuala Lumpur Malaysia Please Fold Here

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