Adventus Holdings Limited

Transcription

1 Annual Report 2009 The document has been reviewed by the Company s Sponsor, Stamford Corporate Services Pte Ltd. It has not been examined or approved by the Exchange and the Exchange assumes no responsibility for the contents of this document, including the correctness of any of the statement or opinions made or reports contained in this document. The contact person for the Sponsor is Mr. Bernard Lui. Tel: bernard.lui@stamfordlaw.com.sg

2 Latin come to arrive; arrive at reach be brought; develop set in arise. Heralding the arrival of a new opportunity to grow, we are adopting a new identity to better communicate our Group s renewed energy to take on the challenges and prospects that come with our bid to become a bigger, more dynamic organisation. Derived from the Latin word that means the arrival of something momentous or of significance, our name Adventus encapsulates both our forward-looking stance and willingness to embrace and explore new growth possibilities. Contents Chairman s and Executive Director s Message 01 Board of Directors 04 Key Management 06 Corporate Structure 07 Corporate Information 08 Corporate Governance Report 09

3 Chairman s and Executive Director s Message Dear Shareholders, 2009 marked a significant year for ( Adventus ). It was a year that could be headlined as Making the Change as the Board and the management continued the previous year s efforts to improve the business fundamentals for the Company. With the uncertainties in the global financial and economic markets in the later part of 2008, which continued into the first quarter of 2009, Adventus chose to change its business direction and divest its holdings and business activities which were not profitable, mainly in the electronics sector. Over the previous year (FY08) and going into 2009, the electronics sector saw slow growth on the back of reduced market demand and growing competition. The Board had to take decisive action and accelerate plans to diversify the earning base of Adventus into other business sectors. The eventual divestment of non-profitable business from the electronics sector also helped the Adventus group of companies ( Group ) reduce its contingent liabilities, thus enabling it to be on surer footing when it sought to tap funds from the capital and debt markets. In March 2009, the Company entered into an agreement for funding through a redeemable zero coupon convertible bond programme ( Bond ) with an aggregate principal amount of $60 million. This Bond, issuable in 60 equal tranches of principal amounts of $1 million each, would form a part of the Group s pool of funds for potential acquisitions and future working capital requirements. In May and November 2009, Adventus divested two major associated companies, Watson Plastics Industries Pte Ltd and Intraco Technology Pte Ltd, respectively. The divestments of both associates resulted in the Group having to make impairments accounting for 63% of the Group s losses in FY09. With the divestments completed, the Group will put greater focus on new investments with a view to returning the Company to a profitable position also marked the beginning of a new chapter in which Adventus started both its Telecommunications & Media ( Telcom ) and Commodities and Mineral Resources ( Resources ) businesses. One of the key aims of the present Board when it took office back in 2008 was to look into diversifying the earnings base of the Group to lessen its dependence on any one particular business sector. The Board continues to hold a view that such diversification of the earning base is in the long term interest of our Shareholders. The new businesses will give the Group access to new markets, new product and service offerings and a more balanced risk profile. In July 2009, the Company announced that it had entered into two Heads of Agreement for the supply of commodities and mineral resources with PT Lu Kuang Group and Sino Int l Mining Corporation Pte Ltd respectively. To date, no Sale & Purchase Agreements have been finalized as both parties are still working on certain commercial terms and arrangements including credit facilities and pricing of contracts. However, the Company has completed several contracts with other parties in the second half of the year. The announcement on the two Heads of Agreement was followed up by another announcement on its acquisition of Synergy Technologies (Asia) Limited or Synergy in August Both these announcements signaled the entry of Adventus into the Resources and Telcom businesses respectively. Towards the close of FY2009, the Company announced in December 2009 that it had entered into a Sale and Purchase Agreement to acquire a 30% interest in a gypsum mine located in Tai Sun in the People s Republic of China ( PRC or China ). In an announcement released on 16 March 2010, the Company stated that it had mutually agreed to terminate the Sale & Purchase Agreement, without further costs to either party, as certain conditions in the Sale and Purchase Agreement could not be satisfactorily completed. The Board and the Management believe that it is prudent and in the best interests of the Shareholders to terminate this transaction. Annual Report

4 Chairman s and Executive Director s Message Financial Overview The Group returned a loss of $7,673,023 for FY09, which compares to a loss of $8,011,227 for FY08. Revenues in FY09 remained largely unchanged as compared to FY08 at $9,749,404; the second half of FY09 saw a revenue contribution of $5,834,120 from the operations of Synergy, the Telecom System Integration and Distribution company that was acquired by Adventus wholly owned subsidiary, Adventus Alliances & Services Pte Ltd ( AAS ) in August The year in review also saw an improvement in cashflows brought about largely by the draw downs under the Bond programme. While this has alleviated part of the cash crunch that the Group was facing due to operational losses in FY08, the Board and management are mindful that this cashflow from the Bond programme will need to be managed well in order to maintain operational effectiveness, and yet be able to respond to acquisition opportunities that may arise. Cash outflow from operations was $2,245,060 compared to $2,062,685 a year ago in FY08. However, cash inflow from investing activities showed a turnaround compared to the cash outflow in FY08. In the Group s results announcement on 1 March 2010, it was stated that a like for like comparison in performance between FY09 and FY08 was not possible due to the transitional changes that Adventus went through in divesting most of its electronics related businesses and commencing activities in the Telcom and Resources sectors. By the end of FY09, the Group has transformed itself into a diversified holding company with three distinct business segments, namely, Equipment Distribution & Services, Telecommunications & Media, and Commodities & Mineral Resources. From FY10, the Equipment Distribution & Services segment will be renamed Advanced Materials & Solutions. Operations Overview The Group s Equipment Distribution & Services recorded a flat performance for FY09 as our subsidiary, Micro Screen Production Pte Ltd, in the business of silk screen printing and sales of printing equipment, saw sales reduce from $2,716,904 in FY08 to $2,471,380 in FY09 as a result of the difficult market conditions. We expect an improved performance in FY10, on the back of a recovery in the economy, and improving demand for such products and services in the electronics sector. The Group will also continue to look for fresh strategic investments and partners to strengthen the growth prospects for this sector. As mentioned above, the Group completed its acquisition of Synergy in August 2009; for FY09, Synergy contributed revenues of $5,834,120 and profits of $70,180, with a net profit margin of 1.2%. Synergy continues to strengthen its relationship with its distribution network channels such as Broadway, Fortress & Chung Yuen and strategic partners such as Acer, Samsung, Gigabyte and CSL, the largest telecommunications carrier in Hong Kong. Other strategic partners include Hutchison Telecoms, Smartone and other telecommunications carriers in Hong Kong. These relationships are strategic advantages which will give Synergy the leverage in improving the volume of its handset sales. Synergy s other main activity of System Integration ( SI business ), which relates to the supply & installation of wireless systems infrastructure, remains stable. Synergy will continue to strengthen its relationships with key suppliers such as Aruba, Trapeze and Ruckus, and is currently expanding its SI business into southern China, starting with the city of Guangzhou. The Group is working on enhancing the working capital and financial resources of Synergy to support its growth plans. 2

5 Chairman s and Executive Director s Message Strengthening Financial Resources Putting in place the $60 million convertible bond programme with tranches of $1 million each, has enabled the Group to expand its financial resources to move into the Telcom and Resources businesses. To date, the Company has made four subscriptions (or draw-downs) amounting to $4 million, with most of the funds being earmarked for acquisitions and business expansion. The additional funds have also helped to bolster the Company s equity base and balance sheet, while Adventus continued in its planned divestments of unprofitable businesses. As Adventus embarks on its path towards revenue and profit growth, it is expected that more financial resources will be needed. The Board has confidence that the management will efficiently manage funds generated through the business activities and the Bond programme. Outlook Although the Company terminated the Sale and Purchase Agreement for the acquisition of a 30% interest in a Chinese gypsum mine, the Management will continue to search for good acquisition targets in the mining and commodities trade. The Company expects to continue its focus on activities in China as the economic development and industrialization efforts spread inland with the expected growing demand for resources such as coal, bauxite and other minerals and commodities. The opportunities to invest in or acquire trading and/or mining operations will also extend to other countries such as Indonesia and Australia, these being resource rich countries and markets that Adventus cannot ignore. The Resources business is still in its infancy stage of growth for the Group and there are intentions to strengthen the management team and enhance its credit status with the financial institutions to build this business to take advantage of the growth opportunities that the Resources sector provides. In March 2010, the Company incorporated a new wholly owned subsidiary in Australia named Adventus Australia Ltd. This subsidiary was set up with a view to tapping business opportunities in Australia for both the Telcom and Resources business. Our Telcom sector will continue to focus on new products and service offerings to meet consumer demands in our key markets of Hong Kong, Macau, southern China and South East Asia. Both the Cambodian and southern China markets will be the focus of growth in the coming year and it is expected that Synergy will take the lead in developing both markets. Two key factors in ensuring success in building the Cambodian and southern China markets will be working capital management and obtaining credit support from the Group s bankers in Singapore and Hong Kong. In general, the Asian economies, though showing a strong recovery trend since the last quarter of 2009, continue to be over-shadowed by uncertainties elsewhere in the world that could stall or even reverse the promising economic recovery here in Asia. However, the management team, with the Board s guidance, will continue its efforts to build and strengthen the Company in its business and financial resources. Appreciation We would like to thank our staff and the Board of Directors for their commitment, dedication and shared sacrifices as the Group navigated its way through the difficult period of the financial crisis, and to its eventual transformation in FY09. We would like to also record a note of appreciation and thanks to our business partners and shareholders for their continuing support and confidence in the management as Adventus looks forward to better years ahead Annual Report

6 Board of Directors Lim Keng Hock Jonathan Chairman and Non-Executive Director Mr Lim was appointed as Chairman and Non-Executive Director of the Group on 14 May In addition to being an entrepreneur, Mr Lim is also an investor, promoter and venture capitalist in various listed and unlisted companies in advanced materials, oil sands, heavy oil and mineral businesses both locally and overseas. Mr Lim brings to the Board a depth of knowledge and skill on account of his considerable business experience over the past 25 years. Mr Lim is presently the Chairman and acting CEO of Enzer Corporation Ltd. Khoo Gee Choo Executive Director Ms Khoo joined the Group as an Independent Director on 29 May 2008 and was appointed Executive Director on 15 September In addition to having over 20 years of experience in accounting and corporate finance, she also has extensive experience on project financing, company funding, initial public offering, as well as investment evaluations and structuring. Prior to joining, she held key positions in STT Communications Ltd and its subsidiaries, mainly in the areas of Finance and Investments. Ms Khoo holds a Bachelor of Accountancy degree from the National University of Singapore and a MBA degree from the University of Hull in the United Kingdom. She is a member of the Institute of Certified Public Accountants of Singapore and the Singapore Institute of Directors. Tan Poh Chye Allan Non-Executive Independent Director and Chairman of Nominating Committee and Remuneration Committee Mr Tan was appointed as a Non-Executive Independent Director on 21 May He was also appointed as Chairman of both the Nominating Committee and Remuneration Committee. Mr Tan is a Partner at the firm of Colin Ng & Partners LLP and practices in the field of corporate finance. Mr Tan holds a Bachelor of Laws (Honours) degree from the University of Buckingham (U.K.) and a Masters degree in Law from London-Guild Hall. He is also a Barrister of Gray s Inn. Mr Tan has been nominated for re-election under Article 95 of the Company s Article of Association at this AGM. 4

7 Board of Directors Gersom G. Vetuz Non-Executive Independent Director and Chairman of Audit Committee Mr Vetuz joined the Group on 15 September 2008 as a Non-Executive Independent Director. He was also appointed as Chairman of the Audit Committee. Mr Vetuz has over 34 years of experience in Public Accounting in Singapore, and extensive experience in financial audits of multinational companies, public listed companies and local companies in various industries. He worked with Deloitte & Touche, Singapore from 1987 to 2005, one of the big four Public Accounting firms rising to become an Audit Principal. In 2005 he became a member of the Singapore Institute of Directors. In 2006 he was appointed Independent Director and Chairman of Audit Committee of Singapore-listed Abterra Ltd; he resigned from both positions on 30 June He was admitted as a Partner with Moore Stephens LLP in January He obtained a Bachelor s degree in Business Administration (Major in Accounting) in 1965 from the University of the East, Manila, Philippines. He qualified as a Certified Public Accountant in the Philippines in In 1982, he attended the Executive Program in Business Administration at Columbia University, New York, USA. Annual Report

8 Key Management Gavin McIntyre Chief Financial Officer Mr McIntyre was appointed as the Group s Chief Financial Officer on 14 July He started his career in the field of public accounting, where he was involved in providing financial advisory services and managing financial restructuring and insolvency assignments. In the course of his career, he has been active in a number of high profile local and international restructuring cases with clients in a wide range of industries including precision manufacturing, animal feed production, poultry farming, power generation, sugar and edible oils production. Between 1996 and 1998, he was based in Australia as a controller for the international division of a listed company. From 1999 till 2005, he worked with Deloitte & Touche in Thailand and Singapore where he last held the position of Director of Financial Advisory Services. After 15 years of experience in public accounting, he crossed over to the corporate sector in 2007 and held the position of Finance Director in a regional waste management company that had operations in Thailand, Indonesia and Singapore. Mr McIntyre is an Accounting graduate from Curtin University in Australia, and has been a CPA since 1994 with CPA Australia. He is also a member of the Institute of Certified Public Accountants of Singapore. Ng Lay Bee Managing Director, Micro Screen Production Pte Ltd Ms Ng has more than 18 years of experience in the screen printing industry. She is the co-founder and Managing Director of the Group s subsidiary, Micro Screen Production Pte Ltd. Since the company s founding in 1990, Ms Ng has been instrumental in growing Micro Screen from a humble start up with seven staff to a leading regional supplier of screen and pad printing machines. Currently, she helms the overall operations and direction of the company. Before setting up Micro Screen, she was employed as the Personal Assistant to the Managing Director of Sprintecs Co Pte Ltd, a silk screen printing company, from September 1985 to July Ms Ng holds a degree in Business Administration from the National University of Singapore. Chok Se Ho Francis Vice President Business Development Mr Chok was appointed as the Chief Operating Officer of the Company s subsidiary, Adventus Alliances & Solutions Pte Ltd on August He concurrently holds the position of Vice President, Business Development in Adventus Holdings Limited. Mr Chok has an extensive working experience in the fast moving consumer products (FMCG) sector, having worked with one of the largest regional telecom equipment distribution and retailers, Singapore-listed TeleChoice International Ltd From 2004 to 2008, as the Vice President (Strategic & Business Development). He has held senior positions with various other companies and he experiences ranged from business development, project management & implementation, formulating business plan and regional sales activities. Mr Chok holds a Master of Science degree in Radio Communication from the Brimingham University, UK, and Bachelor of Science (Honours) degree in Electronic Engineering from Bolton Institute of Technology, UK. 6

9 Corporate Structure As at 31March 2010 Telecommunications and Media Equipment Distribution and Services* Commodities and Mineral Resources Adventus Australia Ltd. Micro Screen Production Pte Ltd Adventus Resources Pte. Ltd. Adventus Alliances & Solutions Pte. Ltd. Eternal Exposure Sdn Bhd Gennex Solutions (Shanghai) Co., Ltd Synergy Technologies (Asia) Limited W-Data Technologies Limited * Effective FY10, this segment will be renamed Advanced Materials & Solutions. Annual Report

10 Corporate Information Company Registration Number R Registered Office 150 Kampong Ampat #06-01 KA Centre, Singapore Tel: (65) Fax: (65) Board of Directors Lim Keng Hock Jonathan (Chairman) Khoo Gee Choo Tan Poh Chye Allan Gersom G. Vetuz Audit Committee Gersom G. Vetuz (Chairman) Tan Poh Chye Allan Lim Keng Hock Jonathan Nominating Committee Tan Poh Chye Allan (Chairman) Gersom G. Vetuz Lim Keng Hock Jonathan Remuneration Committee Tan Poh Chye Allan (Chairman) Gersom G. Vetuz Lim Keng Hock Jonathan Secretary Lee Bee Fong Share Registrar Tricor Barbinder Share Registration Services #11-00 PwC Building 8 Cross Street Singapore Tel: Fax: info@sg.tricorglobal.com Website: Bankers United Overseas Bank Limited DBS Bank Ltd. Independent Auditor Foo Kon Tan Grant Thornton LLP Public Accountants and Certified Public Accountants 47 Hill Street #05-01 Singapore Chinese Chamber of Commerce & Industry Building Singapore Partner-in-charge: Yeo Boon Chye (with effect from financial year ended 31 December 2008) 8

11 Corporate Governance Report The Board of Directors (the Board ) is committed to maintaining a high standard of corporate governance and transparency within the Company and its subsidiaries in the spirit of the Code of Corporate Governance 2005 ( the Code ) as reviewed by the Council on Corporate Disclosure Governance, whose recommendations to revise the Code have been accepted by the Government in July In line with the commitment by the Board to maintaining high standards of corporate governance, the Company will continually review its corporate governance processes to strive to fully comply with the Code. This report describes the Company s corporate governance processes and activities for the year ended 31 December BOARD OF DIRECTORS Principle 1 Every company should be headed by an effective Board to lead and control the company. The Board is collectively responsible for the success of the company. The Board works with Management to achieve this and the Management remains accountable to the Board. Principle 2 There should be a strong and independent element on the Board, which is able to exercise objective judgment on corporate affairs independently, in particular, from Management. No individual or small group of individuals should be allowed to dominate the Board s decision making. Principle 6 In order to fulfil their responsibilities, Board members should be provided with complete, adequate and timely information prior to Board meetings and on an ongoing basis. The Board is responsible for setting the strategic direction for the Company. Every Director is expected to act in good faith and always in the best interest of the Company. The Board currently comprises four directors, three of whom are non-executive (including the Chairman) and whose collective experience and contributions are valuable to the Company. Two of the non-executive directors are independent directors. The Board adopts the Code s defi nition of what constitutes an independent director and reviews this on an annual basis. The Board members as at the date of this report are: Name of Director Appointment Date appointed Mr Lim Keng Hock Jonathan Chairman, Non-executive Director 14 May 2008 Ms Khoo Gee Choo Executive Director 29 May 2008 Mr Tan Poh Chye Allan Non-executive Independent Director 21 May 2008 Mr Gersom G Vetuz Non-executive Independent Director 15 September 2008 The profi le of our directors can be found on pages 4 to 5 of this Annual Report. The Board has examined its size and is of the view that the current arrangement is adequate given that the independent directors form not less than one-third of the Board composition. The criteria of independence are based on the defi nition given in the Code. The independent directors are respected individuals from different backgrounds whose core competencies, qualifi cations, skills and experience are extensive and complementary. Annual Report

12 Corporate Governance Report BOARD MATTERS The Board is entrusted with the responsibility for the overall management of the Company. The Board s primary responsibilities include review and approval of policy guidelines, setting direction to ensure that the strategies undertaken lead to enhanced shareholders wealth. The following matters require the Board s approval: Statutory requirements such as approval of annual report and fi nancial statements; Other requirements such as half year and full year results announcements; Corporate strategic direction, strategies and action plans; Issuance of key policies and business initiatives; Authorization of acquisition/disposal and other material transactions; Declaration of interim dividends and proposal of fi nal dividends; and Convening of Shareholders Meetings. The directors have a separate and independent access to the Company Secretary and the external auditors at all times. The Company currently does not have a formal procedure to seek independent and professional advice for the furtherance of the Board s duties. However, the directors may, on a case-to-case basis, propose to the Board for such independent and professional advice, the cost of which will be borne by the Company. The Company Secretary assists in the conduct of the Board meetings and ensures that Board procedures are adhered to. The Company Secretary will also ensure that the requirements of the Companies Act and all other rules and regulations of the SGX-ST are complied with. To assist the members of the Board, the Company has arranged for the Board to be updated by the Company Secretary and its other consultants on the continuing obligations and various requirements expected of a public company. When a director is fi rst appointed to the Board, an orientation program is arranged for him to ensure that he is familiar with the Company s business and governance practices. In recognition of the high standard of accountability to our shareholders, our Directors have established a Nominating Committee, a Remuneration Committee and an Audit Committee. The Committees are chaired by an independent director. All the members are non-executive directors, a majority of whom are independent. DIRECTORS ATTENDANCE AT BOARD, AUDIT COMMITTEE ( AC ), NOMINATING COMMITTEE ( NC ) AND REMUNERATION COMMITTEE ( RC ) MEETINGS Meeting of : Board AC NC RC Total held in FY 2009 and up to the date of this report Mr Lim Keng Hock Jonathan Ms Khoo Gee Choo Mr Tay Gim Sin Leonard 3 (resigned on 16 April 2009) Mr Tan Poh Chye Allan Mr Gersom G Vetuz Mr Jonathan Ow Kim Chuan 6 (appointed on 1 August 2009 and resigned on 30 September 2009)

13 Corporate Governance Report 1 Non-executive Non-independent Chairman and member of RC and NC with effect 29 May Replaced Tay Gim Sin Leonard as member of AC with effect from 17 April Non-executive Independent Director, Chairman of AC and member of RC and NC from 29 May 2008 to 15 September Executive Director with effect from 15 September Non-executive Independent Director and member of AC with effect from 29 May 2008 to 15 Aug Nonindependent Director with effect from 15 Aug Non-executive Independent Director, Chairman of RC and NC and member of AC with effect from 29 May Non-executive Independent Director, Chairman of AC and member of RC and NC with effect from 15 September Executive Director with effect from 1 August 2009 Note: The Executive Director and Chief Financial offi cer were present at all of the AC meetings by invitation. Chairman and Executive Director Principle 3 There should be a clear division of responsibilities at the top of the company the workings of the Board and the executive responsibility of the company s business which will ensure a balance of power and authority, such that no one individual represents a considerable concentration of power. The Company is cognizant of the principle that there should be a clear division of responsibility between the Chairman and the Chief Executive Offi cer ( CEO ) or the CEO equivalent. Currently, the Company does not have a CEO. However, our sole Executive Director, Khoo Gee Choo undertakes full executive responsibility of the Company s business, while our Non-executive Chairman is responsible for, inter alia, exercising control over quality, quantity and timeliness of fl ow of information between management and the Board, and assisting in ensuring compliance with our Company s guidelines on corporate governance. Our Executive Director is responsible for strategic planning, business development and generally charting the growth of our Company. Nominating Committee ( NC ) Principle 4 There should be a formal and transparent process for the appointment of new directors to the Board. Principle 5 There should be a formal assessment of the effectiveness of the Board as a whole and the contribution by each director to the effectiveness of the Board. The NC comprises the following members: Mr Tan Poh Chye Allan (appointed on 29 May 2008) Mr Gersom G Vetuz (appointed on 15 September 2008) Mr Lim Keng Hock Jonathan (appointed on 29 May 2008) - Chairman and Independent Director - Member, Independent Director - Member, Non-executive Non-independent Director The NC comprises of non-executive directors, a majority of whom are independent. The previous Board of Directors had adopted a Terms of Reference for the NC. However with the change of the composition of the Board and Committees during the fi nancial year 2008, the Board is looking to re-draft and revamp the existing Terms of Reference for the NC and to adopt a new Terms of Reference during the course of the year Annual Report

14 Corporate Governance Report Currently, the NC s principal functions are as follows: (a) (b) (c) (d) identify suitable candidates and to review all nominations for appointments and re-election to the Board; determine the independence status of the directors annually; determine whether or not a director is able to and has been adequately carrying out his duties as a director of the Company; and evaluate the performance and effectiveness of the Board as a whole and the contribution of each director. The NC is satisfi ed that the current size and composition of the Board has adequate ability to meet the Company s existing scope of needs and the nature of operations. From time to time, the NC will review the appropriateness of the current Board size, taking into consideration the changes in the nature and scope of operations as well as the regulatory environment. In its search and selection process for new directors, the NC appraises the nominees to ensure that the candidates possess relevant experience and have the calibre to contribute to the Group and its businesses, having regard to the attributes of the existing Board and the requirements of the Group. New directors are appointed by way of a Board resolution, upon their nomination from NC. In accordance with the Company s Articles, these new directors who are appointed by the Board are subject to re-election by shareholders at the fi rst opportunity after their appointment. The Articles also provide that at least one third of the remaining directors be subject to re-election by rotation at each Annual General Meeting ( AGM ). This will enable all shareholders to exercise their rights in selecting all Board members. In accordance with the requirements of the Code, the NC has reviewed the status of the Independent Directors and is of the view that they are in compliance with the Code s defi nition on independence. At the date of this report, the NC has adopted a formal process to assess the effectiveness of the Board and committees of the Board as a whole. The qualitative measures include the effectiveness of the Board in its monitoring role and the attainment of the strategic objectives set by the Board. The evaluation exercise is carried out annually. The NC has recommended the following director to retire pursuant to Article 95 of the Company s Articles of Association, and being eligible and having consented, be nominated for re-appointment at the forthcoming Annual General Meeting: Name of Director Appointment Date appointed Mr Tan Poh Chye Allan Non-executive Independent Director 21 May 2008 REMUNERATION COMMITTEE ( RC ) Principle 7 There should be a formal and transparent procedure for developing policies on executive remuneration and for fixing the remuneration packages of individual directors and certain key management. No director should be involved in deciding his own remuneration. The RC comprises the following members: Mr Tan Poh Chye Allan (appointed on 29 May 2008) Mr Gersom G Vetuz (appointed on 15 September 2008) Mr Lim Keng Hock Jonathan (appointed on 29 May 2008) - Chairman and Independent Director - Member, Independent Director - Member, Non-executive Non-independent Director Pursuant to the amended Code, the RC comprises entirely of non-executive directors, a majority of whom are independent. 12

15 Corporate Governance Report The RC s tasks include reviewing and deliberating upon the compensation packages of Board members as well as key managers in the Company and the Group. Each director will abstain from voting on any resolutions in respect of his remuneration. All recommendations of the RC will be submitted for endorsement by the entire Board. All aspects of remuneration, including but not limited to directors fees, salaries, allowances, bonuses, options and benefi ts in kind shall be covered by the RC. In determining remuneration packages of executive directors and key managers, the RC will ensure that directors and executives are adequately but not excessively rewarded. The RC will also consider, in consultation with the Board, amongst other things, their responsibilities, skills, expertise and contribution to the Company s performance and whether the remuneration packages are competitive and suffi cient to ensure that the Company is able to attract and retain the best available executive talent. Presently, only the Executive Director has entered into a service contract with the Company which will be for an initial term of three (3) years commencing 15 September DISCLOSURE ON REMUNERATION Principle 8 The level of remuneration should be appropriate to attract, retain and motivate the directors needed to run the company successfully but companies should avoid paying more than is necessary for this purpose. A significant proportion of executive directors remuneration should be structured so as to link rewards to corporate and individual performance. Principle 9 Each company should provide clear disclosure of its remuneration policy, level and mix of remuneration, and the procedure for setting remuneration, in the company s annual report. It should provide disclosure in relation to its remuneration policies to enable investors to understand the link between remuneration paid to directors and key executives, and performance. The breakdown of the remuneration of Directors paid for the fi nancial year ended 31 December 2009 is as follows: Remuneration band and name of Director Salary* Bonus# Fees Benefits Share Options + Below $250,000 Khoo Gee Choo 1 100% ,000,000 Lim Keng Hock Jonathan Tay Gim Sin Leonard (resigned on 16 April 2009) % - 2,000,000 Tan Poh Chye Allan % - 250,000 Gersom G Vetuz % - 250,000 Jonathan Ow Kim Chuan (resigned on 30 September 2009) 3 100% * Salary is inclusive of allowances, Employee & Employer CPF contributions and other emoluments. # Bonus is inclusive of Employee & Employer CPF contributions. + There were 2 rounds of grants issued during the year under review, in January & August Ms Khoo Gee Choo was appointed as Executive Director with effect from 15 September Her total remuneration during the year under review amounted to S$225, Annual Report

16 Corporate Governance Report 2 Mr Tay Gim Sin Leonard was appointed as Non-Independent Director with effect from 15 Aug 2008 until his resignation on 16 April His total remuneration during the year under review amounted to S$24,000 which comprised of consultancy fees in relation to a consultancy agreement with the Company. Mr Tay s unexercised options were cancelled upon his resignation. 3 Mr Jonathan Ow Kim Chuan was appointed as Non-Independent Director with effect from 1 Aug 2009 until his resignation on 30 September His total remuneration during the year under review amounted to S$37,306. Information on the Adventus Employee Share Option Scheme ( Scheme ) such as size of grants, exercise price of options that were granted as well as outstanding and vesting period of options are set out on pages 14, 15, 16, 23 and 24 of this Annual Report. Under the current Board of Directors, fees paid/payable to the Executive Director are determined by the Board after considering the Company s and the Executive Director s relative performances against comparable organisations after taking into account factors such as the duties and responsibilities required of the position. The fees paid/ payable to Non-executive Directors take into account factors such as their level of contribution to the Board, the effort and time spent, and responsibilities of these directors. Each Director is paid a basic fee. In addition, Nonexecutive Directors who serve as Chairman of the Board and the Audit, Remuneration & Nomination Committees are paid additional fees in view of the heavier responsibilities carried by that offi ce. The remuneration of Nonexecutive Directors is submitted for approval at the AGM. For the year under review, the Executive Director has opted to forego her Directors Fees. The profi le of each of the key management is set out on Page 6 of this Annual Report. The remuneration of each of the key management of the Group (excluding Directors of the Company) did not exceed $250,000 for the fi nancial year ended 31 December To maintain confi dentiality of staff remuneration matters, and for competitive reasons, only their remuneration mix is disclosed as follows: Remuneration band of key management staff Salary* Bonus# Share Options + Below $250,000 Key Management 100% 0% - 7.6% 800,000 (who are not Directors of the Company) * Salary is inclusive of allowances, Employee & Employer CPF contributions and other emoluments. # Bonus is inclusive of Employee & Employer CPF contributions. + There were 2 rounds of grants issued during the year under review, in January & August ADVENTUS EMPLOYEE SHARE OPTION SCHEME The Scheme is a share incentive scheme and provides an opportunity for eligible executives and directors of the Company and its subsidiaries, other than executives who are substantial shareholders of the Company, to participate in the equity of the Company and to motivate them to a greater dedication, loyalty and higher standards of performance. 14

17 Corporate Governance Report The Scheme was approved and adopted by members of the Company at the Extraordinary General Meeting held on 17 February 2004 and amended pursuant to an Extraordinary General Meeting held on 29 December The Scheme is administered by the RC comprising the following members: Mr Tan Poh Chye Allan (appointed on 29 May 2008) Mr Gersom G Vetuz (appointed on 15 September 2008) Mr Lim Keng Hock Jonathan (appointed on 29 May 2008) - Chairman and Independent Director - Member, Independent Director - Member, Non-executive Non-independent Director Under the Scheme, selected employees and directors of the Company and its subsidiaries (the Group ) and associates are eligible to participate in the Scheme at the discretion of the RC. Controlling shareholders and their associates (as defi ned in the Rules of Catalist) shall not participate in the Scheme. The Scheme shall continue in force at the discretion of the RC, subject to a maximum period of 10 years commencing from 17 February 2004, provided always that the Scheme may continue beyond the above stipulated period with the approval of shareholders by ordinary resolution in general meeting and of any relevant authorities which may then be required. The information regarding the Scheme is as follows:- (a) The exercise price for each option is the weighted average of the last traded price of the shares in the three consecutive trading days immediately preceding the date of grant (the Market Price ), or such higher price as may be determined by the RC in its absolute discretion. The RC has the discretion to issue options with an exercise price which is at a discount of not more than 20% to the Market Price in respect of that option. (b) (c) (d) (e) Options granted at Market Price may be exercised (in whole or in part) after one year from the date of grant whereas options granted at a discount may only be exercised (in whole or in part) after two years from the date of grant. Eligible grantees who participate in the Scheme may also be eligible to participate in other share option or share incentive schemes, whether or not implemented by any of the other companies within the Group or any other company. The total number of shares over which options may be granted pursuant to the Scheme when added to the number of shares issued and issuable in respect of all options granted thereunder, shall not exceed 15% of the Company s total issued shares on the day proceeding the date of which the option is granted. The offer of an option to an eligible grantee, if not accepted by him within 30 days from the date of such offer will lapse. Upon acceptance of the offer, the eligible grantee to which the option is granted shall pay to the Company a nominal consideration of $1.00. During the year under review, the Company had granted options to eligible participants to the Scheme (mainly the key executives and the Board Members) to align their interest with that of the shareholders and as a motivation to steer the Company towards an improved performance for 2009 and beyond. Details of the options granted are provided in the Directors Report section at pages 23 and 24. Annual Report

18 Corporate Governance Report In accordance with Rule 851(1)(b) of the SGX-ST Listing Manual (Section B: Rules of Catalist), the following table sets out the options granted to the following directors: Name of Director Options granted during financial year under review (Market Price Option) Aggregate options granted since commencement of Scheme to end of financial year under review Aggregate options exercised since commencement of Scheme to end of financial year under review Aggregate options outstanding as at end of financial year under review Ms Khoo Gee Choo 4,000,000 4,000,000-4,000,000 Mr Tan Poh Chye Allan 250, , ,000 Mr Gersom G Vetuz 250, , ,000 Mr Lim Keng Hock Jonathan, being a substantial shareholder of the Company, is not eligible to participate in the Scheme, unless shareholders approval is obtained. Apart from the above, no other participants received 5% or more of the total number of options available under the Scheme. REMUNERATION OF OTHER EMPLOYEES RELATED TO A DIRECTOR None of the employees of the Group whose annual remuneration exceeds $150,000 are immediate family members of the Chief Executive Offi cer or any other Director of the Company as at 31 December AUDIT COMMITTEE ( AC ) Principle 10 The Board should present a balanced and understandable assessment of the company s performance, position and prospects. Principle 11 The Board should establish an Audit Committee with written terms of reference which clearly sets out its authority and duties. The AC comprises three Board members, all of whom two are non-executive and independent directors. The members are:. Mr Gersom G Vetuz - Chairman, Independent Director (appointed on 15 September 2008) Mr Tan Poh Chye Allan - Member, Independent Director (appointed on 29 May 2008) Mr Lim Keng Hock Jonathan - Member 1, Non-executive Non-independent Director (appointed on 17 April 2009) 1 Mr Lim Keng Hock Jonathan was appointed a member of the AC on 17 April 2009 replacing Mr Tay Gim Sin Leonard after the change in the composition of the Board. 16

19 Corporate Governance Report The AC carried out its functions in accordance with Section 201B (5) of the Singapore Companies Act, and has been entrusted with the following functions: (a) (b) (c) (d) (e) (f) (g) (h) (i) review with the auditors the audit plans, their evaluation of the system of internal controls, audit report and management letter; review the fi nancial statements before release to external and relevant parties; review the scope and results of the internal audit function and ensuring co-ordination between the internal and external auditors and the Management; review the co-operation given by the Company s offi cers to the auditors; review the legal and regulatory matters that may have a material impact on the fi nancial statements, related exchange compliance policies and programs and reports received from the regulators; review the cost effectiveness and independence and objectivity of the auditors; review the nature and extent of non-audit services, if any, provided by the external auditors and seek to balance the maintenance of objectivity and value for money; nominate the appointment of external auditor; and review and ratify all interested person transactions to ensure that they comply with the approved internal control procedures and have been conducted at arm s length basis. The AC meets at least two times a year (following the Company s admission to Catalist) and as frequently as is required. In particular, the AC meets to review the fi nancial statements before announcement. In the year under review, the AC has met to review and approve the audit plan, the half-year and full-year unaudited results for announcement purposes. The AC may meet with the auditors at any time, without the presence of the Company s Management. It may also examine any other aspects of the Company s affairs, as it deems necessary, where such matters relate to exposures or risks of a regulatory or legal nature, and monitor the Company s compliance with its legal, regulatory and contractual obligations. The AC has power to conduct or authorise investigations into any matters within the AC s scope of responsibility. At least once a year, the internal and external auditors will meet separately with the AC without the presence of the Management. The AC has reviewed the non-audit services provided by the external auditors and is of the opinion that such services would not affect the independence of the auditors. During the year under review, a total of $9,500 was payable to the external auditors in respect of non-audit services. Messrs Albert Wong & Co are the appointed external auditors of two subsidiaries of the Company, Synergy Technologies (Asia) Limited and W-Data Technologies Limited, and accordingly, the Board and AC are satisfi ed that Rule 716 has been complied with. Any interested party transaction for the year under review will be duly disclosed. CATALIST SPONSOR In compliance to Rule 1204(20) of the SGX-ST Listing Manual (Section B: Rules of Catalist), no non-sponsor fees were paid to the Sponsor for the year under review. Annual Report

20 Corporate Governance Report INTERNAL CONTROLS AND INTERNAL AUDIT Principle 12 The Board should ensure that the Management maintains a sound system of internal controls to safeguard the shareholders investments and the company s assets. Principle 13 The Company should establish an internal audit function that is independent of the activity it audits. The Board believes in the importance of maintaining a sound system of internal controls to safeguard the interests of the shareholders and the Company s assets. Annual reviews of these controls are conducted by the Company s internal and external auditors and any recommendations for improvement are reported to the AC. In the absence of any evidence to the contrary, the Board believes that the system of internal controls maintained by the Company is in place throughout the year and up to the date of this report. It provides reasonable, but not absolute, assurance against material fi nancial misstatements or losses, and includes the safeguarding of assets, the maintenance of proper accounting records, the reliability of fi nancial information, compliance with appropriate legislation, regulations and best practices, and the identifi cation and containment of fi nancial, operational and compliance risks. However, the Board notes that no system of internal controls could provide absolute assurance in this regard, or absolute assurance against the occurrence of material errors, poor judgment in decision-making, human error, losses, fraud or other irregularities. The Company has outsourced its internal audit function to Messrs Yang Lee & Associates, an external professional services firm. The internal audit plan for 2009 drawn up by the internal auditors was approved by the AC. The work undertaken by the internal auditors includes the audit of the Group s system of internal control over its key operations. The internal auditors shall report their audit findings and recommendations to the AC. The internal audit reports shall also be given to the external auditors to ensure effective use of resources and to avoid duplication of efforts. POLICY ON DISSEMINATION OF PUBLIC INFORMATION Principle 14 Companies should engage in regular, effective and fair communication with shareholders. Principle 15 Companies should encourage greater shareholder participation at AGM, and allow shareholders the opportunity to communicate their views on various matters affecting the company. The Company believes that a high standard of disclosure is crucial to raising the level of corporate governance. All information relating to the Company s new initiatives are fi rst disseminated via SGXNET followed by a news release (if appropriate), which is also available on the SGX-ST s website. The Company does not practice selective disclosure. Price sensitive information is publicly released and results and annual reports are announced or issued within the mandatory period. All shareholders of the Company will receive a copy of the Annual Report and the Notice of the AGM. At the AGM, shareholders are given opportunities to express their views and ask the Board and Management questions regarding the operations of the Company. The Chairman of the AC, RC and NC will normally be present at the AGM to answer any questions relating to the work of their respective committees. The external auditors are also present to assist the Directors in addressing any relevant queries from the shareholders. At AGMs and other general meetings, separate resolutions will be set out on distinct issues for approval by shareholders. 18