annualal report rt2011 theta edge berhad annual report 2011

Transcription

1 theta edge berhad Bangunan C, Peremba Square Saujana Resort, Section U Shah Alam, Selangor Darul Ehsan Tel : Fax : annual report 2011 annualal report rt2011

2 2 THETA EDGE BERHAD ( W) Contents Corporate Information Corporate Structure Core Business Board of Directors Profile of the Board of Directors Chairman s Statement Corporate Social Responsibility Statement Statement on Corporate Governance Audit Committee Report Statement on Internal Control Additional Compliance Information Financial Statements Analysis of Shareholdings Analysis of Warrants Holdings Notice of Annual General Meeting Statement Accompanying Notice of Annual General Meeting Proxy Form

3 Annual Report Growing Our Future Together

4 2 THETA EDGE BERHAD ( W) Corporate Information BOARD OF DIRECTORS TAN SRI DATO HASHIM BIN MEON Chairman, Non-Independent Non-Executive Director DATUK HJ. ABDUL AZEEZ BIN ABDUL RAHIM Independent Non-Executive Director DATO SYED SALEH BIN SYED ABDUL RAHMAN Non-Independent Non-Executive Director A. SHUKOR BIN S.A. KARIM Executive Director RICHARD GEORGE AZLAN BIN ABAS Executive Director MOHAMED RIDZA BIN MOHAMED ABDULLA Independent Non-Executive Director ADI AZUAN BIN ABDUL GHANI Non-Independent Non-Executive Director NOR BADLI MUNAWIR BIN MOHAMAD ALIAS LAFTI Non-Independent Non-Executive Director SPECIAL COMMITTEE A. SHUKOR BIN S.A. KARIM Chairman, Executive Director TAN SRI DATO HASHIM BIN MEON Non-Independent Non-Executive Director ADI AZUAN BIN ABDUL GHANI Non-Independent Non-Executive Director NOMINATION COMMITTEE NOR BADLI MUNAWIR BIN MOHAMAD ALIAS LAFTI Chairman, Non-Independent Non-Executive Director MOHAMED RIDZA BIN MOHAMED ABDULLA Independent Non-Executive Director A. SHUKOR BIN S.A. KARIM Executive Director AUDIT COMMITTEE MOHAMED RIDZA BIN MOHAMED ABDULLA Chairman, Independent Non-Executive Director TAN SRI DATO HASHIM BIN MEON Non-Independent Non-Executive Director DATUK HJ. ABDUL AZEEZ BIN ABDUL RAHIM Independent Non-Executive Director REMUNERATION COMMITTEE ADI AZUAN BIN ABDUL GHANI Chairman, Non-Independent Non-Executive Director MOHAMED RIDZA BIN MOHAMED ABDULLA Independent Non-Executive Director A. SHUKOR BIN S.A. KARIM Executive Director ADI AZUAN BIN ABDUL GHANI Non-Independent Non-Executive Director

5 Annual Report Corporate Information RISK MANAGEMENT COMMITTEE A. SHUKOR BIN S.A. KARIM Chairman, Executive Director TAN SRI DATO HASHIM BIN MEON Non-Independent Non-Executive Director MOHAMED RIDZA BIN MOHAMED ABDULLA Independent Non-Executive Director COMPANY SECRETARIES ABDUL JAMAL BIN ISMAIL (LS ) CYNTHIA GLORIA LOUIS (MAICSA ) CHEW MEI LING (MAICSA ) REGISTERED OFFICE Bangunan C, Peremba Square Saujana Resort, Section U Shah Alam Selangor Darul Ehsan Tel : Fax : AUDITORS Wong Weng Foo & Co Chartered Accountants 41, Damai Complex Jalan Dato Haji Eusoff Kuala Lumpur Tel : Fax : SHARE REGISTRAR Tricor Investor Services Sdn Bhd Level 17, The Gardens North Tower Mid Valley City, Lingkaran Syed Putra Kuala Lumpur Tel : Fax : PRINCIPAL BANKERS AmIslamic Bank Berhad Bank Islam Malaysia Berhad SOLICITORS Cheah Teh & Su Onn & Partners STOCK EXCHANGE LISTING Main Market of Bursa Malaysia Securities Berhad Stock Name : THETA Stock Code : 9075 Stock Code : 9075WA URL

6 4 THETA EDGE BERHAD ( W) Corporate Structure Advanced Business 100% 100% Solutions (M) Sdn Bhd Hi Pro Edar (M) Sdn Bhd 100% Impianas Sdn Bhd 100% Konsortium Jaya Sdn Bhd 100% Lityan Applications Sdn Bhd 100% Sistem Komunikasi Gelombang Sdn Bhd 100% THT Integrated Solutions Sdn Bhd 100% TH Computers Sdn Bhd 100% TH2.0 Sdn Bhd 50% Taha Alam Sdn Bhd

7 Annual Report Core Business Engineering Services System Integration Satellite Communication Trading Equipment Rental Application Development Managed Services

8 6 THETA EDGE BERHAD ( W) Board of Directors En. Richard George Azlan Bin Abas Tan Sri Dato Hashim Bin Meon En. A.Shukor Bin S.A. Karim En. Adi Azuan Bin Abdul Ghani

9 Annual Report Board of Directors En. Nor Badli Munawir Bin Mohamad Alias Lafti Dato Syed Saleh Bin Syed Abdul Rahman Datuk Hj. Abdul Azeez Bin Abdul Rahim En. Mohamed Ridza Bin Mohamed Abdulla

10 8 THETA EDGE BERHAD ( W) Profile of the Board of Directors TAN SRI DATO HASHIM BIN MEON Chairman, Non-Independent Non-Executive Director Tan Sri Dato Hashim Meon, aged 65, a Malaysian, was appointed to the Board of Theta Edge Berhad as a Non-Independent Non-Executive Director on 1 July 2011 and re-designated as Chairman, Non-Independent Non-Executive Director on 1 April He is also a member of the Special Committee, Audit Committee as well as the Risk Management Committee. He holds a Master in Public Administration from University of Southern California and Bachelor of Arts (Hons) from University of Malaya. Tan Sri Dato Hashim served the Malaysian Public Service for over 33 years since 1970 in several ministries and departments in various capacities. His last position was as Secretary General, Ministry of Defence, Malaysia prior to his retirement in September His wide range of experience includes Human Resources Management, ICT, Education and Training (including a stint as Senior Consul for Education at the Malaysian Consulate (Education) Sydney, Australia ( ). He also served as State Secretary, Selangor ( ). In the field of training and ICT, Tan Sri Dato Hashim played a role in several Government computerisation programmes. He was Head of Computer Training at the National Institute of Public Administration (INTAN ), Director ICT, MAMPU and Director ICT Unit, Prime Minister Office ( ). He was also involved in major landmark ICT developments including establishing MIMOS (Malaysian Institute of Microeletronics System), an R&D agency for ICT in Malaysia (1985) and was also founder member of MDeC (Multimedia Development Corporation ), a government agency created for the implementation of Multimedia Super Corridor (MSC) project initiated by Malaysian Government in In the organisations that he headed, he was responsible and personally supervised the implementation of ICT initiatives such as introduction of video-conferencing facilities and extensive usage of communication among members of the organisation at state level (Selangor) and Ministry of Defence. Upon his retirement Tan Sri Dato Hashim continued his service in the private sector as chairman/members of the board of several companies. He participates actively in a several voluntary and non-governmental organizations (NGO) related to leadership and strategy, mental health, human resource development and Islamic propagation and education. He has been on the Board of Lembaga Tabung Haji since January He has no family relationship with any director and/or major shareholder of the Company and does not have any equity interest in the Company and its subsidiaries. He is a representative of Lembaga Tabung Haji, the holding Company of Theta. He has no conflict of interest other than disclosed under the Additional Compliance Information Disclosure (Recurrent Related Party Transactions) which appears in the Annual Report. He has never been convicted for any offence.

11 Annual Report Profile of the Board of Directors EN. A. SHUKOR BIN S.A. KARIM Executive Director En. A. Shukor Bin S.A. Karim, aged 55, a Malaysian, was appointed to the Board of Theta Edge Berhad as an Independent Non-Executive Director on 15 June 2010 and re-designated to Executive Director on 1 April He is the Chairman of the Special Committee, Risk Management Committee and Tender Committee. He is also a member of the Nomination Committee, Remuneration Committee as well as ESOS Committee. He graduated with a BSc. (Honours) in Computation from the University of Manchester, Institute of Science and Technology, UK. En. Shukor began his career with the Government, Statistics Department in He later join Sapura Group in 1982 where he was one of the founding members of Sapura Information Technology (IT) and developed Sapura s IT business to be one of Malaysia s biggest IT companies with more than 1,000 employees in ASEAN and revenues exceeding RM600 million per annum in the late nineties with more than 20 subsidiaries involved in various aspects of the IT industry, from sales and distribution, systems integration to software development and IT education. En. Shukor was involved in many high profile IT projects in Malaysia and abroad. Amongst others, he was the Managing Director of STH Consortium which implemented the Total Airport Management System in KLIA. He was also involved in the Design and Implementation of the Cable plant for KLCC and in E-Government projects for the implementation of Generic Office Environment for the Government of Malaysia. He was also an Executive Director in Telecom Smart School Sdn Bhd, which implemented the Smart School Project for the Ministry of Education in Malaysia. He was directly involved in the setting up of the Asia Pacific Institute of Information Technology (APIT) which is today one of Malaysia s biggest IT education institutes. En. Shukor also was deeply involved in the development of the IT Industry in Malaysia and served as Chairman of Persatuan Industri Komputer Dan Multimedia, Malaysia (PIKOM) from 1993 to He also served as Director in the Multimedia Development Corporation (now MDec) for 2 years in the mid Currently, En. Shukor sits on the Board of Green Packet Berhad ( Green Packet ) as an Independent Non-Executive Director since 21 May 2008 and is the Chairman of Packet One Networks (Malaysia) Sdn Bhd a wholly owned subsidiary of Green Packet since 30 September He has no family relationship with any director and/or major shareholder of the Company and does not have any equity interest in the Company and its subsidiaries. He has no conflict of interest with the Company and has never been convicted for any offence.

12 10 THETA EDGE BERHAD ( W) Profile of the Board of Directors En. RICHARD GEORGE AZLAN BIN ABAS Executive Director En. Richard George Azlan, aged 48, a Malaysian, was appointed as Group Managing Director and Chief Executive Officer of Theta Edge Berhad on 15 June 2010 and re-designated to Executive Director on 1 April He holds a Bachelor of Commerce from the University of Western Australia. He is a Fellow of the Institute of Chartered Accountants in Australia and a Chartered Accountant of the Malaysian Institute of Accountants. He has attended the Management Development Program at the Asian Institute of Management. En. Richard George Azlan articled with Arthur Andersen from 1984 to 1989 and served the Arab-Malaysian Group from 1990 to He was the Group Chief Executive Officer of YPJ Holdings Sdn Bhd from 1997 to En. Richard George Azlan has been on the Board of Silver Bird Group Berhad as an Independent Non-Executive Director since May He has no family relationship with any director and/or major shareholder of the Company and details of his shareholdings held in the Company are disclosed on pages 119 and 123 of the Annual Report. He has no conflict of interest with the Company and has never been convicted for any offence.

13 Annual Report Profile of the Board of Directors EN. ADI AZUAN BIN ABDUL GHANI Non-Independent Non-Executive Director En. Adi Azuan Bin Abdul Ghani, aged 42, a Malaysian, was appointed to the Board of Theta Edge Berhad as a Non-Independent Non- Executive Director on 26 February He graduated with UK BSc. (Honours) Accounting from Queen s University of Belfast, UK. He is now a Fellow Member of the Association of Chartered Certified Accountants, UK, ACCA (FCCA) and also a member of Malaysian Institute of Accountants (MIA). En. Adi Azuan started his professional career in the auditing and accounting fields with PricewaterhouseCoopers, Kuala Lumpur in 1996 and was principally involved in the provision of audit and accounting services, mainly to banking and financial institutions before joining Lembaga Tabung Haji as the Divisional Head of Group Accounts in July Currently, En. Adi Azuan is the Deputy Group Chief Financial Officer of Lembaga Tabung Haji. He represents Lembaga Tabung Haji on the Board of Y.S.P. Southeast Asia Holding Berhad since 1 December 2004 and Silver Bird Group Berhad since 3 January 2008 as a Non- Independent Non-Executive Director. He is a Chairman of the Remuneration Committee and a member of the Special Committee, Audit Committee, ESOS Committee as well as the Tender Committee. He has no family relationship with any director and/or major shareholder of the Company and does not have any equity interest in the Company and its subsidiaries. He is a representative of Lembaga Tabung Haji, the holding Company of Theta. He has no conflict of interest other than disclosed under the Additional Compliance Information Disclosure (Recurrent Related Party Transactions) which appears in the Annual Report. He has never been convicted for any offence.

14 12 THETA EDGE BERHAD ( W) Profile of the Board of Directors DATO SYED SALEH BIN SYED ABDUL RAHMAN Non-Independent Non-Executive Director Dato Syed Saleh Bin Syed Abdul Rahman, aged 50, a Malaysian, was appointed to the Board of Theta Edge Berhad as a Non-Independent Non-Executive Director on 1 July He holds a BEng (Tech) in Civil Engineering and Master in Business Administration from the University of Wales Institute of Science and Technology, Cardiff, Wales, United Kingdom. He has spent the last 20 years of his career actively involved in various fields such as Corporate Finance & Services, Fund Management, Business Development, Equity & Property Investments and Hajj Management. Between 2004 to 2006, he was given the additional responsibility to spearhead one of Tabung Haji s subsidiaries, as the CEO of Tabung Haji Travel & Services Sdn. Bhd. He was also a Board member representing Tabung Haji as one of the founding member in the Minority Shareholders Watchdog Group ( ). Currently, he is the Senior General Manager of Lembaga Tabung Haji. He has no family relationship with any director and/or major shareholder of the Company and does not have any equity interest in the Company and its subsidiaries. He is a representative of Lembaga Tabung Haji, the holding Company of Theta Edge Berhad. He has no conflict of interest other than disclosed under Additional Compliance Information Disclosure (Recurrent Related Party Transactions) which appears in the Annual Report. He has never been convicted for any offence.

15 Annual Report Profile of the Board of Directors DATUK HJ. ABDUL AZEEZ BIN ABDUL RAHIM Independent Non-Executive Director Datuk Hj. Abdul Azeez bin Abdul Rahim, aged 46, a Malaysian, was appointed to the Board of Theta Edge Berhad as an Independent Non-Executive Chairman on 5 April 2011 and re-designated as an Independent Non-Executive Director effective 1 April He is also a member of the Audit Committee. He was the Chief Executive Officer of Fair Diversified Sdn. Bhd. and FD Auto Sdn. Bhd. from 1988 to In 1998 he became the Chief Executive Officer of Idsha Marketing Sdn. Bhd. and held that position until the year From 2000 to 2002 he was the Executive Director of Wilayah Arms Sdn. Bhd. He was the Executive Chairman of Sekreteriat Perunding Yayasan Pembangunan Ekonomi Islam Malaysia (YPEIM) from 2000 to He is currently the Chief Executive Officer of Azeera Management Consultants (M) Sdn. Bhd. since 2003 and Executive Director of AVP Engineering (M) Sdn Bhd since He has been on the Board of Lembaga Tabung Haji since January He has no family relationship with any director and/or major shareholder of the Company and does not have any equity interest in the Company and its subsidiaries. He has no conflict of interest other than disclosed under the Additional Compliance Information Disclosure (Recurrent Related Party Transactions) which appears in the Annual Report. He has never been convicted for any offence.

16 14 THETA EDGE BERHAD ( W) Profile of the Board of Directors EN. NOR BADLI MUNAWIR BIN MOHAMAD ALIAS LAFTI Non-Independent Non-Executive Director En. Nor Badli Munawir Bin Mohamad Alias Lafti, aged 45, a Malaysian, was appointed as the Group Managing Director and Chief Executive Officer of Theta Edge Berhad on 24 October 2007 and re-designated to Non-Independent Non-Executive Director on 7 June En. Nor Badli is also the Chairman of the Nomination Committee and a member of Tender Committee. He holds a Bachelor of Science (B.Sc.) Accountancy (Cum Laude) degree from Case Western Reserve University, Cleveland, Ohio, USA and a Masters in Business Administration (MBA) degree from the Arkansas State University, Arkansas, USA. He is currently the Group Chief Executive Officer of Ramunia Holdings Berhad, an associate company of Lembaga Tabung Haji that is engaged in the business of fabrication of offshore oil & gas related structures for various oil and gas companies. He previously held directorships in several private companies which he co-founded involved in various activities ranging from the supply of specialised production, process and safety equipment, HSE consultancy and marine logistics servicing both the upstream and downstream sectors of the oil & gas industry in Malaysia. En. Nor Badli was previously the Chief Financial Officer of FPSO Ventures Sdn. Bhd., a joint-venture and subsidiary company of MISC Berhad, the blue-chip energy shipping company s offshore business arm. He was a pioneer member of the management team until September Prior to this, En. Nor Badli was in the financial services industry for over 10 years where he accumulated significant merchant banking and financial advisory experiences. He was with Arab-Malaysian Merchant Bank Berhad ( AMMB ) Corporate Finance Division since He was later promoted to Assistant General Manager and transferred to the Privatisation & Project Finance Advisory Department in Prior to AMMB, Badli started as an Associate Consultant with Arthur Andersen & Co, a leading international public accounting and management consultancy firm. He rose to the rank of Senior Consultant before joining AMMB in He has no family relationship with any director and/or major shareholder of the Company and does not have any equity interest in the Company and its subsidiaries. He has no conflict of interest with the Company and has never been convicted for any offence.

17 Annual Report Profile of the Board of Directors EN. MOHAMED RIDZA BIN MOHAMED ABDULLA Independent Non-Executive Director En. Mohamed Ridza Bin Mohamed Abdulla, aged 43, a Malaysian, was appointed to the Board of Theta Edge Berhad as an Independent Non-Executive Director on 7 November He holds a Bachelor of Law (First Class Honours) from the International Islamic University, Malaysia and was admitted as a member of the Institute of Chartered Secretaries and Administrators (London) (ICSA) in En. Mohamed Ridza is a Fellow Member of the Institute of Chartered Secretaries and Administrators (FCIS) and an Associate Member of the Chartered Institute of Arbitrators (ACI Arb). En. Mohamed Ridza began his career as an advocate and solicitor at the firm of Rashid & Lee in Malaysia. He later joined Arab Malaysian Corporation Berhad ( AMCB ) as the group legal adviser. Being the group legal adviser, he was instrumental in setting up the legal department of the Amcorp Group of Companies. He left AMCB to become the General Legal Counsel of Technip Asia Pacific based in Kuala Lumpur and was previously attached at Technip headquarters in Paris, France. En. Mohamed Ridza is now the Managing Partner of Mohamed Ridza & Co. Prior to opening the firm, he was a partner and was head of his division at Zaid Ibrahim & Co. He is the Chairman of the Audit Committee and ESOS Committee and a member of the Nomination Committee, Remuneration Committee, Tender Committee as well as Risk Management Committee. He has no family relationship with any director and/or major shareholder of the Company and does not have any equity interest in the Company and its subsidiaries. He has no conflict of interest with the Company and has never been convicted for any offence.

18 { 16 THETA EDGE BERHAD ( W) { Dear Valued Shareholders and Stakeholders, On behalf of the Board of Directors, I am pleased to present our 2011 Annual Report. I replaced Y.Bhg. Datuk Hj. Abdul Azeez Bin Abdul Rahim on 1 April 2012 as Chairman. He helmed the Chair since the last Annual General Meeting. I would like to thank him for his efforts and for his willingness to continue to serve as a member of your Board. I would also like to thank Y.Bhg. Dato Hanafiah Omar, who chaired Lityan Holdings Berhad through our restructuring exercise and to the present Theta Edge Berhad. The rights issue during the financial year raised RM30.5 million in cash. We thank you for your support. As at end of the financial year we have a total of RM32.6 million cash and cash equivalent. We spent some of the money for projects identified earlier such as TH2.0, Very Small Aperture Terminals (VSAT), Building Information Systems (BIMS) and Real Register System to name a few. On 1 April 2012, En Richard George Azlan Bin Abas stepped down as Group Managing Director & CEO and he is now heading our TH2.0 project. The TH2.0 project recently saw our signing of a Joint Venture Agreement with Taha Alam Sdn. Bhd. ( Taha Alam ) and Islamic Corporation for the Development of the Private Sector ( ICD ). This was announced on 24 March 2012.

19 Annual Report Chairman s Statement In light of the above, the Board has formed a Special Committee (Special Committee) to oversee the day to day affairs of the Group and implement measures to protect your interests as well as seek a new CEO to helm the Group. The Special Committee is headed by En Shukor Karim with Tn. Hj Adi Azuan and myself as members. I would like to take this opportunity to thank En. Richard George Azlan Bin Abas for his services to the Group. PERFORMANCE During the year, the Group s total revenue fell by 32% from RM86.2 million to RM58.5 million as compared to the previous year. There were no major new contracts secured during The Group reported a loss before taxation of RM12.7 million for the current financial year as compared to the profit before taxation of RM1.1 million previously. Included in these losses of RM12.7 million were RM3.0 million being a one off allowance for stock obsolescence of inventories related to the Remote Meter Reading project. This contract was suspended early by the client and eventually expired early in the current financial year. While we seek to recover amounts from the client, your Board has deemed it prudent to make allowances of certain balances that we feel are not recoverable. Also included in the losses was an expense for employee cost of RM1.9 million relating to the Employees Share Options Scheme ( ESOS ). This is provided under the Financial Reporting Standards and this is a non cash item. Last year we reported that we would review our current business plans and strategic direction. The Board has assessed our strategic direction and decided upon a certain course of action. This includes reducing operating costs and overheads. We have started to reduce our headcount and downsize the head office in Peremba Square. PROSPECTS Information Technology and Communication ( ICT ) industry including telecommunication spending in Malaysia is expected to rise between 8% to 10% from the previous year to RM60 billion in The increase is driven by the Economic Transformation Programme ( ETP ) and Government Transformation Programme ( GTP ) which are largely ICT driven, which may spur growth and provide multiplier effect to the economy. Other than the increase in broadband and internet penetration, growth is expected from several areas such as outsourcing, e-commerce and managed services as the ICT trend moves towards innovation, cloud computing, connectivity, mobility, virtualization and globalization. However factors such as the impending general election and related uncertainties may also delay some public expenditures and projects. Competition in the ICT industry also continues to intensify. With the highly intense competition in the ICT industry, it is difficult to obtain sufficient large scale projects with acceptable margins to cover the costs of operations. This phenomena is a function of the competitive environment within the industry. As a system integrator, we have seen margins drop to levels that make business unprofitable. The value of services continues also to be

20 18 THETA EDGE BERHAD ( W) Chairman s Statement pressured by competition. The value in this industry is to own and manage intellectual property. We have therefore strategically decided to focus on areas where we have a core competence. These include, Geographical Information Systems, (GIS), accounting and finance for government, services to the telecommunication industry and services to our parent, Lembaga Tabung Haji. We have also decided to cease operations for certain loss-making businesses. The acquisition of TH Computers Sdn Bhd ( THC ) brought the Hewlett-Packard distributorship into the Group. Margins however are thin and dependent upon volume. CORPORATE DEVELOPMENT In July 2011 we completed the: (i) (ii) Proposed Renounceable Rights Issue of up to 31,551,967 new ordinary shares plus free detachable warrants on the basis of one (1) rights share and one (1) free detachable warrant for every two (2) existing shares held; Proposed conditional take-over offer to acquire all ordinary shares in THC; and (iii) Proposed Establishment of the ESOS. While we continue to develop our own businesses, the Board has also considered merger and acquisition opportunities. Industry consolidation of key players is needed for a strong entity to emerge to be able to provide the level and breadth of service to Government and private organisations. We continue to be alert to opportunities. Our joint venture with ICD on 24 March 2012 led to the creation of a new joint venture company, Taha Alam, in which we and ICD have a 50/50 share. Taha Alam shares are held by our wholly owned subsidiary, TH2.0 Sdn Bhd. The purpose of this joint venture is to harness the intellectual property of the Lembaga Tabung Haji Group and create value world wide. While this is a long term venture, your company has seeded this start up and may reduce its stake in the future as it seeks capital from other parties. Value however, will accrete to us over time. ACKNOWLEDGEMENTS On behalf of the Board, I would like to thank shareholders, regulatory authorities, customers, business partners, government agencies, bankers, business associates and financiers, and in particularly all our people, for their unwavering commitment and support. I also would like to express my appreciation to my fellow members of the Board for their invaluable guidance and advice. TAN SRI DATO HASHIM BIN MEON Chairman

21 Annual Report Corporate Social Responsibility Statement The Group recognises that it is important to engage all stakeholders such as its customers, employees, shareholders, communities whilst contributing positively to the sustainable management of the environment. This is applied equally to both internal and external stakeholders within the current environment and in seeking new partnerships and business horizons. As part of this commitment, the Group was involved in the following activities during the financial year. EMPLOYEE WELFARE AND DEVELOPMENT Employees are the most valuable asset in helping the Group attains its objectives. Training programmes and specialised courses are conducted regularly to upgrade the skills and improve the competency level of employees. Apart from training, employees are also provided with medical and healthcare insurance, adequate leave and compensation programs commensurate with their rank and level of seniority. Further, the Group acknowledges the need to provide a healthy and balanced lifestyle for its employees. The Group also promotes staff appreciation and recognition effort such as long service awards, appreciation dinners, festive gatherings and sporting events through its social club. CONTRIBUTION TO THE COMMUNITY Community support is a very important element in the Group culture. Throughout the year, the Group has contributed valuable assistance to various community projects, charitable organisations and local communities. These initiatives are as follows: Perhimpunan Sejuta Belia organised by Kementerian Belia dan Sukan at Putrajaya on 27 to 29 May 2011 Charity orchestra performance in aid of abandoned children home for Kuala Lumpur Rotary Charity Foundation on 25 June 2011 Majlis Berbuka Puasa dan Penyampaian Sumbangan kepada Persatuan Kebajikan Anak Yatim Wilayah Persekutuan on 5 August 2011 Donation for Tabung bantuan Mangsa Kebuluran Somalia, organised by Badan Amal Dan Kebajikan Tenaga Isteri-Isteri (BAKTI) in August 2012 CSR Hari Raya Aidil Fitri 1432H/2011M Jabatan Akauntan Negara Malaysia and Konsortium Jaya Sdn Bhd at Rumah Seri Kenangan Cheras on 27 September 2011 Sumbangan Sahabat Korporat Tabung Haji 2011 for 28,000 Pilgrims for Hajj 1432H/2011M National Battlebot 2011 organised by Yayasan PINTAR on 12 to 14 December 2011

22 20 THETA EDGE BERHAD ( W) Corporate Social Responsibility Statement COMMITMENT TO CUSTOMERS In view of our commitment to providing only the best for our customers, quality remains the main emphasis of all our products, services and management systems in our delivery. CORPORATE GOVERNANCE The Group is committed by ensuring that the operations and practises are managed responsibly and efficiently with the highest standards of accountability to safeguard the best interests of stakeholders, including shareholders, suppliers, customers and employees. ENVIRONMENTAL AWARENESS The Group is committed to contribute towards a greener environment. Through various efforts and initiatives, a continuation to implement key energy saving measures such as using energy efficient equipments, maintaining air-conditioning on a need-to-use basis, switching off nonessential lighting and equipment during non-operating hours and creating awareness among the staff on the recycling of waste materials to reduce the impact and preserve the environment.

23 Annual Report Statement on Corporate Governance The Board of Directors ( the Board ) of Theta Edge Berhad ( Company ) is committed to a corporate culture that is based on the principles and best practices of corporate governance throughout the Company and its subsidiary companies ( the Group ). The Group will continue to endeavour to comply with all the key Principles and Best Practices of the Malaysian Code on Corporate Governance ( the Code ) in its effort to observe high standards of transparency, accountability and integrity. The Group believes that good corporate governance will help to realize long term shareholders value, whilst taking into account the interest of other stakeholders. The following paragraphs describe how the Group has applied the Principles and Best Practices of the Code. BOARD OF DIRECTORS The Company is led and managed by experienced Board comprising members with a wide range of experience in relevant fields such as management, information technology, telecommunication, finance and law. The Directors bring a broad range of skills, experiences and knowledge required to successfully direct and supervise the Group s business activities. A brief profile of each Director is presented from pages 8 to 15 of the Annual Report. The Board has the overall responsibility for corporate governance, strategic and corporate plan, overseeing the investments and operations, material acquisition and disposal of securities/ assets/ businesses, identifying and managing principal risks, succession planning for senior management, developing and implementing shareholders communication policy and internal control systems and management information systems, financial related and legal matters. The matters above are specifically reserved for the Board s decision to ensure the direction and control of the Group is firmly in the Board s hand. Board Composition and Balance The Board consists of eight (8) members comprising the Chairman, who is a Non-Independent Non-Executive Director, two (2) Independent Non-Executive Directors, three (3) Non-Independent Non-Executive Directors and two (2) Executive Directors. It is a mandatory practice to have the Directors concerned to declare their interests and abstain from the decision making process when a potential conflict of interest arises. The roles of the Chairman of the Board and the Group Managing Director and Chief Executive Officer are segregated. The Chairman is primarily responsible for the proper conduct and working of the Board whilst the Managing Director and Chief Executive Officer is responsible for the day-to-day running of the business and implementation of Board policies and decisions.

24 22 THETA EDGE BERHAD ( W) Statement on Corporate Governance The Non-Executive Directors of the Company are independent of management and free from any business relationship which could materially interfere with the exercise of their judgement. They, particularly the Independent Non-Executive Directors, are actively involved in various Board Committees and provide guidance, unbiased, fully balanced and independent views, advice and judgement to various areas such as performance monitoring, enhancement of corporate governance and controls so as to safeguard the interest of minority shareholders and to ensure that the highest standards of conduct and integrity are maintained by the Group. The Board did not appoint a Senior Independent Non-Executive Director to whom concerns may be conveyed as the Chairman of the Board encourages the active participation of each and every Board member in the decision making process. Supply of Information Prior to Board meetings, an agenda together with the relevant documents and information are distributed to all Directors. The Senior Management and/or other relevant Board members will provide comprehensive explanation of pertinent issues and recommendations. The issues would then be deliberated and discussed thoroughly by the Board prior to decision-making. Apart from the above, the Board members are supplied with information and reports on financial, operational, corporate regulatory, business development and audit matters by way of board reports or upon specific request to enable them to discharge their duties and responsibilities. All Directors are notified of the corporate announcements released to Bursa Malaysia Securities Berhad ( BMSB ) and any amendment to BMSB Listing requirements. All Directors have access to the management and auditors for independent view and advice. In furtherance of their duties, the Directors may seek independent professional advice if necessary, at the expense of the Company.

25 Annual Report Statement on Corporate Governance Board Meetings There were nine (9) Board of Directors Meetings held during the financial year ended 31 December Details of the attendance of the Directors Meetings are as follows:- Directors Number of Board Meetings Attended Held En. Mohamed Ridza bin Mohamed Abdulla 9 9 En. A. Shukor bin S.A. Karim 9 9 En. Adi Azuan bin Abdul Ghani 9 9 En. Nor Badli Munawir bin Mohamad Alias Lafti 8 9 En. Richard George Azlan bin Abas 9 9 Datuk Hj. Abdul Azeez bin Abdul Rahim (Appointed on ) 6 6 Tan Sri Dato Hashim bin Meon (Appointed on ) 5 5 Dato Syed Saleh bin Syed Abdul Rahman (Appointed on ) 3 5 Dato Mohd Hanafiah bin Omar (Resigned on ) 3 3 Dato Syed Sidi Idid bin Syed Abdullah Idid (Resigned on ) 3 3 Appointments to the Board A Nomination Committee established by the Board comprising of two (2) Non-Executive Directors and one (1) Executive Director is responsible for recommending appointments to the Board. The decision on appointment rests on the Board as a whole after considering the recommendation by the Nomination Committee. Re-election of Directors In accordance with the provisions of the Articles of Association of the Company, at least one-third (1/3) of the Directors for the time being or if their number is not three (3) or multiples of three (3), then the number nearest to one-third (1/3) shall retire from office and shall be eligible for re-election at each Annual General Meeting ( AGM ). Consequently, each Director shall retire from office at least once in every three years but shall be eligible for re-election. Directors who are appointed to the Board during the year shall retire and seek re-election at the next AGM to be held following their appointments. Directors over the age of seventy years are required to submit themselves for re-appointment annually in accordance with Section 129 of the Companies Act, Directors Training All the Directors of the Company have attended the Mandatory Accreditation Programme. Directors are encouraged to attend relevant seminars and conferences to enhance their skills and knowledge and to keep abreast with the latest developments on laws and regulations.

26 24 THETA EDGE BERHAD ( W) Statement on Corporate Governance For the year under review, the training programmes and seminars attended by the Directors are as follows: i. Corporate Governance Blueprint 2011 Towards Excellence in Corporate Governance ii. 5th TH Corporate Directors Training Programme iii. The Politics of Economic and Social Transformation in the Era of Global Crisis iv. Transformasi Diri Ke Arah Pekerja Terbilang v. Board Composition and Diversity : Strategies, Lessons and Looking Forward vi. MINDA s Directors Forum Special Committee Following the secondment of Encik Richard George Azlan bin Abas, the CEO/Group Managing Director of Theta on 1 April 2012 to head the operations of TH2.0 Sdn. Bhd., its wholly owned subsidiary which has recently entered into a Joint Venture Agreement with Taha Alam Sdn. Bhd. and Islamic Corporation for the Development of the Private Sector, the Board of Theta has formed a Special Committee to oversee the day to day affairs of the Group. The Special Committee will function until a new CEO/Group Managing Director is appointed by the Company. Board Committees The Board delegated certain responsibilities to the Board Committees i.e. Audit Committee, Nomination Committee, Remuneration Committee, Risk Management Committee and Tender Committee who operate within the approved terms of reference. The Board Committees discuss the subject matter, put forward recommendations and report to the Board for a final decision. (a) Audit Committee The primary objective of the Audit Committee is to assist the Board in fulfilling its responsibility relating to accounting, risk management and reporting practices of the Group. The Audit Committee is accorded all resources required to perform its duties, have full and unrestricted access to any information pertaining to the Group, have direct communication channels with the external and internal Auditors and is entitled to obtain any external legal or other independent professional advice as necessary. The composition of the Audit Committee is as follows:- En. Mohamed Ridza bin Mohamed Abdulla (Chairman) (Independent Non-Executive Director) Datuk Hj. Abdul Azeez bin Abdul Rahim (Member) (Independent Non-Executive Director) Tan Sri Dato Hashim bin Meon (Member) (Non-Independent Non-Executive Director) En. Adi Azuan bin Abdul Ghani (Member) (Non-Independent Non-Executive Director)

27 Annual Report Statement on Corporate Governance Following the resignation of En. A. Shukor bin S.A. Karim on 1 April 2012, the composition of the Audit Committee does not comply with paragraph 15.09(1)(b) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad which requires majority of its members to be independent directors. The Company undertakes to fill the vacancy within 3 months from the date hereof. (b) Nomination Committee The Nomination Committee is appointed by the Board and has no executive powers. The appointment of a committee member automatically terminates when the member ceases to be a Director. The composition of the Nomination Committee is as follows:- En. Nor Badli Munawir bin Mohamad Alias Lafti (Chairman) (Non-Independent Non-Executive Director) En. Mohamed Ridza bin Mohamed Abdulla (Member) (Independent Non-Executive Director) En. A. Shukor bin S.A. Karim (Member) (Executive Director) The Nomination Committee comprising of two (2) Non-Executive Directors and one (1) Executive Director, has the primary duty to propose new appointments to the Board, Board Committees and personnel designated Chief and above and other strategic positions such as internal auditor, legal officer and risk officer after considering the nomination from Chief Executive Officer, Directors and shareholders. They shall recommend to the Board to fill the seats on the Nomination Committee. The Board through the Nomination Committee shall periodically review its required mix of skills and experience and other qualities, including core competencies which Non-Executive Directors should bring to the Board. The Nomination Committee meetings shall be convened at least once a year and they may invite other Board members, officers of the Company, employees and any other external parties to attend meetings or part thereof as and when necessary. Through its Chairman, the Nomination Committee reports to the Board on matters discussed at the next Board of Directors Meeting after each meeting. The Company Secretary is the Secretary to the Nomination Committee. Terms of Reference 1. To identify and recommend appointments as directors to the Board, Board Committees and personnel designated Chief and above and other strategic positions such as the heads of department for internal audit, legal and risk. 2. To assess and recommend the re-election/re-appointment of directors upon the expiry of their terms of appointment

28 26 THETA EDGE BERHAD ( W) Statement on Corporate Governance 3. To undertake periodic performance reviews of the Board and Board Committees. 4. To consider the balance of the Board and Board Committees membership and determine the core competencies and skills required of the Board in order to discharge its duties effectively. 5. To evaluate the effectiveness of the Board and Board Committees and the contributions of each of the Directors and Board Committees members. There were 3 meetings held during the financial year (c) Remuneration Committee The Remuneration Committee is appointed by the Board and has no executive powers. The appointment of a committee member automatically terminates when the member ceases to be a Director. The composition of the Remuneration Committee is as follows:- En. Adi Azuan bin Abdul Ghani (Chairman) (Non-Independent Non-Executive Director) En. Mohamed Ridza bin Mohamed Abdulla (Member) (Independent Non-Executive Director) En. A. Shukor bin S.A. Karim (Member) (Executive Director) The Remuneration Committee comprising of two (2) Non-Executive Directors and one (1) Executive Director, has the primary responsibility to provide assistance to the Board in determining, reviewing and developing a remuneration policy and reward system for the Board, personnel designated Chief and above and other strategic position such as internal auditor, legal officer and risk officer. The remuneration package links rewards to corporate and individual performance. A remuneration policy is presently in place to ensure the levels of remuneration are sufficiently attractive to retain Directors and Key Senior Management. The Remuneration Committee shall meet at least once a year and may invite other Board members, officers of the Company, employees and any other external parties to attend meetings or part thereof as and when necessary. The Remuneration Committee through its Chairman shall report to the Board at the next Board of Directors Meeting after each meeting. The Company Secretary is the Secretary to the Remuneration Committee. Terms of Reference 1. To review and recommend to the Board the remuneration package for Executive and Non-Executive Directors and assists the Board in ensuring that the remuneration of the Executive and Non Executive Directors commensurate with the responsibilities and duties undertaken by the Board members.

29 Annual Report Statement on Corporate Governance 2. To review and recommend to the Board the overall remuneration policy and reward systems for the Board and personnel designated Chief and above and other strategic positions such as internal auditor, legal officer and risk officer. 3. The Board as a whole determines the remuneration of each Director. Directors do not participate in decision regarding their own remuneration package. There were 3 meetings held during the financial year (d) Risk Management Committee The Board recognizes that for the Group to achieve its corporate objectives and meet its corporate governance standards, the Group need to enhance its existing risk management process. A Risk Management function has been established in the Group and the resources have been channeled into this function to ensure that the ERM is implemented successfully. The Risk Management Committee ( RMC ) and key personnel of the operating units will be involved, with the assistance of an external consultant, if necessary, in the development of key Risk Profile/ Register and the Corporate Risk Scorecard Report, its risk management tools/procedures, implementation and the continuous monitoring of these processes. The composition of RMC is as follows:- En. A. Shukor bin S.A. Karim (Chairman) (Executive Director) En. Mohamed Ridza bin Mohamed Abdulla (Member) (Independent Non-Executive Director) Tan Sri Dato Hashim bin Meon (Member) (Non-Independent Non-Executive Director) Objectives The RMC has the overall responsibility for overseeing the Group s risk management systems, approving appropriate risk management practices and procedures to ensure effectiveness of risk identification, management and monitoring. Its primary roles include the following:- a. To provide regular and timely reporting and update the Board on key risk management issues as well as adhoc evaluation and reporting of new ventures/investments proposals. b. To ensure the effective implementation of risk treatment policy and procedures.

30 28 THETA EDGE BERHAD ( W) Statement on Corporate Governance c. To assist and promote risk awareness so that risk management process and culture are adopted throughout the Group. d. To co-ordinate in the preparation of the Statement of Internal Control for inclusion in the Company s Annual Report and to recommend the same for the approval of the Board. The RMC delegates to the Risk Working Committee (RWC) the responsibility for identification and management of operational risks, training and ensuring effective implementation and maintenance of operation and divisional level risk management system. In this respect, RWC will assist the RMC by assuming direct responsibility for the routine risk management activities within the Group. The RWC provides updates on key risk management issues to the RMC by providing regular reporting of its activities. Meeting The RMC shall meet whenever deemed necessary to discuss the risk management issues of the Company and the Chairman of the RMC shall report the proceedings of each Committee Meeting to the Board. The Secretary of the Company shall serve as the Secretary of the Committee. Roles and Responsibilities a. Review the Enterprise Risk Profile/Register to ensure comprehensive and effective management of key risks. b. Responsible for ensuring that strategic risks are considered and addressed at Board level and Executive Director/s level. c. Follow-up on management risk treatment action plans reported by the RWC. d. Provide regular reporting and timely update on the operations of the ERM framework to the Board. Ad-Hoc Roles and Responsibilities a. Propose to the Board the monetary threshold and qualitative criteria of proposed investment and/or new ventures that require RMC evaluation and recommendation before submission to the Board. b. Review investment and/or new venture proposals prepared by project sponsor which meet the abovesaid threshold and requisite qualitative criteria.

31 Annual Report Statement on Corporate Governance DIRECTORS REMUNERATION The objectives of the Company s remuneration policy on Directors remuneration is to attract, retain and motivate the Directors of the highest quality and to recognize and reward the high performing Directors for achieving the Company s business and corporate goals. The Remuneration Committee shall ensure that the levels of remuneration are sufficient to attract and retain Directors of the quality required to manage the business of the Group. The Remuneration Committee is entrusted under its terms of reference to assist the Board, amongst others, to recommend to the Board the remuneration of the executive directors. In the case of non-executive directors, the level of remuneration shall reflect the experience and level of responsibilities undertaken by the non-executive directors concerned. Details of Directors remuneration for the financial year ended 31 December 2011 are set out as below:- Fees (RM) Salary & Bonus (RM) Benefit-in kind (RM) Other Emoluments (RM) Total (RM) Executive Directors - 558, , , Non-Executive Directors 217, , , The number of Directors whose total remuneration falls within the following bands for the financial year ended 31 December 2011 is as follows:- Number of Directors Range of Remuneration Executive Non-Executive RM50,000 and below - 3 RM50,001 to RM100,000-6 RM950,001 to RM1,000,