driving business solutions

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1 driving business solutions Censof Holdings Berhad (formerly known as Century Software Holdings Berhad) (Co. No.: A) annual report 2012

2 Contents contents 02 Corporate Information 03 Corporate Profile 06 Financial Highlights 09 Awards & Accreditations 10 Group Structure 11 Board of Directors & Key Management Team 16 Profile of Directors 18 Analysis of Shareholdings 22 Chairman s Statement 24 Group Managing Director s Review 26 Statement on Corporate Governance 36 Audit Committee Report 39 Statement on Risk Management and Internal Control 43 Corporate Social Responsibility Statement 45 Financial Statements 104 Notice of Annual General Meeting 107 Appendix I Proxy Form Censof Holdings Berhad Driving Business Solutions ANNUAL REPORT 2012

3 corporate information BOARD OF DIRECTORS Tan Sri Dato Mohd Ibrahim Bin Mohd Zain (Independent Non-Executive Chairman) Datuk Samsul Bin Husin (Group Managing Director) Tamil Selvan A/L M. Durairaj (Executive Director) Ameer Bin Shaik Mydin (Executive Director) Ang Hsin Hsien (Executive Director) Abdul Mushir Bin Che Chik (Non-Independent Non-Executive Director) Tuan Haji Ab. Gani Bin Haron (Senior Independent Non-Executive Director) Boey Tak Kong (Independent Non-Executive Director) AUDIT COMMITTEE Tuan Haji Ab. Gani Bin Haron (Chairman) Tan Sri Dato Mohd Ibrahim Bin Mohd Zain (Member) Boey Tak Kong (Member) REMUNERATION COMMITTEE Boey Tak Kong (Chairman) Tuan Haji Ab. Gani Bin Haron (Member) Datuk Samsul Bin Husin (Member) NOMINATION COMMITTEE Boey Tak Kong (Chairman) Tan Sri Dato Mohd Ibrahim Bin Mohd Zain (Member) Tuan Haji Ab. Gani Bin Haron (Member) COMPANY SECRETARIES Lim Seck Wah (MAICSA No.: ) M. Chandrasegaran A/L S. Murugasu (MAICSA No.: ) REGISTERED OFFICE Level 15-2, Bangunan Faber Imperial Court, Jalan Sultan Ismail, Kuala Lumpur Tel No.: Fax No.: CORPORATE OFFICE A-8, Block A, Level 8 Sunway PJ51A Jalan SS9A/19 Seri Setia Petaling Jaya Selangor Darul Ehsan Tel No.: Fax No.: SHARE REGISTRAR Symphony Share Registrars Sdn. Bhd. (Company No.: D) Level 6, Symphony House Block D13, Pusat Dagangan Dana 1 Jalan PJU 1A/ Petaling Jaya Selangor Darul Ehsan Tel No.: Fax No. : PRINCIPAL BANKERS Bank Islam Malaysia Berhad CIMB Bank Berhad Hong Leong Bank Berhad Malayan Banking Berhad AUDITORS Messrs Crowe Horwath Chartered Accountants Level 16, Tower C, Megan Avenue II 12 Jalan Yap Kwan Seng Kuala Lumpur Tel No.: Fax No.: STOCK EXCHANGE LISTING Main Market, Bursa Malaysia Securities Berhad Stock Code: 5195 Stock Name: Censof 2 Censof Holdings Berhad Driving Business Solutions

4 corporate profile Vision To be a leading global provider of financial management solutions by Mission We pledge to devote our expertise towards excellence by: PRoviding innovative business solutions for our customers, Instilling a positive corporate culture that motivates our people to deliver excellence, Delivering sustainable growth and value for stakeholders, Empowering our people to be caring citizens actively contributing to the community. ANNUAL REPORT

5 corporate profile (cont d) Business Solutions Engine Century Software (Malaysia) Sdn Bhd Financial Management Solutions (FMS) SOLUTIONS SERVICES System Support BPI Advisory Custom Development Project Management Training Century Integration T-Melmax Sdn Bhd Payment Aggregation Solutions (PAS) Cpay Portal Cpay Payroll Cpay Contribution Cpay Zakat Cpay Supplier Cpay B2B Cpay B2C Maxpaygate Maxlink MaxFile Manager MaxFile Transfer MaxNotify 4 Censof Holdings Berhad Driving Business Solutions

6 corporate profile (cont d) PT. Praisindo Teknologi Wealth Management Solutions (WMS) PRODUCTS Investment Management System Portfolio system & fund accounting unit registry system wealth management system Web Security & Wan Optimization Solution load balancing & high availability system reverse caching & accelerator system web security system online mutual fund SERVICES Custom Development Project Management System Support Corporate Web Development Corporate Web Operation Knowledgecom Corporation Sdn Bhd Training Solutions (TS) ANNUAL REPORT

7 financial highlights PROFIT AND LOSS (RM Million) Revenue Profit Before Taxation Profit After Taxation Profit Attributable to Shareholders BALANCE SHEET (RM Million) Share Capital Reserves Shareholder s Fund Non Controlling Interest Current Liabilities Non-Current Liability Property, Plant and Equipment Other Investments Current Assets RATIO Net Assets Per Share (Sen) Net Earnings Per Share (Sen) Dividend Amount Per Share (Sen) * * recommended dividend for 2012 is subject to shareholders approval in the forthcoming AGM for the company Announcement dates of the Quarterly Results for the Year 2012 Unaudited consolidated results for the 1st quarter ended 31 March 2012 Released on Wednesday, 02 May 2012 Unaudited consolidated results for the 2nd quarter ended 30 June 2012 Released on Wednesday, 22 August 2012 Unaudited consolidated results for the 3rd quarter ended 30 September 2012 Released on Wednesday, 21 November 2012 Unaudited consolidated results for the 4th quarter ended 31 December 2012 Released on Thursday, 21 February Censof Holdings Berhad Driving Business Solutions

8 financial highlights (cont d) (RM Million) 2010 (RM Million) 2011 (RM Million) 2012 (RM Million) 2010 (RM Million) 2011 (RM Million) 2012 Net Earnings Per Share (Sen) Net Assets Per Share (Sen) Dividend Per Share (%) * recommended dividend for 2012 is subject to shareholders approval in the forthcoming AGM for the company. ANNUAL REPORT

9 financial highlights/ (cont d) Profit & Loss (Segmental) Profit & Loss Profit & Loss Profit & Loss (RM Million) PAT (RM Million) PBT (RM Million) Revenue 8 Censof Holdings Berhad Driving Business Solutions

10 awards & accreditations FUTURE GOV AWARDS Service Innovation Award 2012 Electronic Revenue Accounting System (e-ras) PIKOM ICT LEADERSHIP AWARDS Member Excellence Award 2012 PIKOM ICT LEADERSHIP AWARDS 2011 Technopreneur Excellence Award MALAYSIA INDEPENDENCE AWARD 2012 Malaysia s Prominent IT Company NEF-AWANI ICT AWARDS 2010 Best Software Product IBM Framework for Government Certification Ready for IBM Informix Database Software validation NATIONAL AWARD FOR MANAGEMENT ACCOUNTING SME STAR Award 2010 SME Best Practice Award 2009 From MIA & CIMA ANNUAL REPORT

11 group structure Censof Holdings Berhad (formerly known as Century Software Holdings Berhad) ( A) Authorised Share Capital : RM 100,000,000 Paid-Up Share Capital : RM 34,420, ,200,000 Ordinary Shares of RM0.10 each Century Software (Malaysia) Sdn Bhd ( U) T-Melmax Sdn Bhd ( D) PT Praisindo Teknologi Knowledgecom Corporation Sdn Bhd ( A) Financial Management Solutions Division (FMS) Payment Aggregation Solutions Divisions (PAS) Wealth Management Solutions (WMS) Training Solutions (TS) Subsidiaries CENTURY SOFTWARE (MALAYSIA) SDN BHD T-MELMAX SDN BHD PT PRAISINDO TEKNOLOGI KNOWLEDGECOM CORPORATION SDN BHD Equity Interest 100% 100% 60% 80% Year of Incorporation Status BUMIPUTRA/MSC ISO : 2008 BUMIPUTRA - MSC Core Business FMS PAS WMS TS 10 Censof Holdings Berhad Driving Business Solutions

12 board of directors & key management team BOARD OF DIRECTORS Tan Sri Dato Mohd Ibrahim Bin Mohd Zain (Independent Non-Executive Chairman) Datuk Samsul Bin Husin (Group Managing Director) Tamil Selvan A/L M. Durairaj (Executive Director) Ameer Bin Shaik Mydin (Executive Director) Ang Hsin Hsien (Executive Director) Abdul Mushir Bin Che Chik (Non-Independent Non-Executive Director) Tuan Haji Ab. Gani Bin Haron (Senior Independent Non-Executive Director) Boey Tak Kong (Independent Non-Executive Director) KEY MANAGEMENT TEAM Group Corporate Office Datuk Samsul Bin Husin (Group Managing Director) Ameer Bin Shaik Mydin (Executive Director) Mark John Rees (Group Chief Technology Officer) Kularajah A/L M.Thavaratnam (Group Financial Controller) Divisional Heads Tamil Selvan A/L M. Durairaj Century Software (Malaysia) Sdn Bhd (Chief Executive Officer) Ameer Bin Shaik Mydin T-Melmax Sdn Bhd (Chief Executive Officer) Hazairin PT Praisindo Teknologi (Chief Executive Officer) Rubaneswaran ST Knowledgecom Corporation Sdn Bhd (Chief Executive Officer) ANNUAL REPORT

13 board of directors 12 Censof Holdings Berhad Driving Business Solutions

14 Sitting from left to right: Tuan Haji Ab. Gani Bin Haron (Senior Independent Non-Executive Director) Tan Sri Dato Mohd Ibrahim Bin Mohd Zain (Independent Non-Executive Chairman) Boey Tak Kong (Independent Non-Executive Director) Standing from left to right: Tamil Selvan A/L M. Durairaj (Executive Director) Datuk Samsul Bin Husin (Group Managing Director) Ang Hsin Hsien (Executive Director) Abdul Mushir Bin Che Chik (Non-Independent Non-Executive Director) Ameer Bin Shaik Mydin (Executive Director) ANNUAL REPORT

15 key management team Executive Directors Sitting From Left To Right Tamil Selvan A/L M. Durairaj Datuk Samsul Bin Husin Standing From Left To Right Ang Hsin Hsien Ameer Bin Shaik Mydin Divisional Heads Sitting From Left To Right Hazairin Datuk Samsul Bin Husin Standing From Left To Right Rubaneswaran ST Ameer Bin Shaik Mydin Tamil Selvan A/L M. Durairaj 14 Censof Holdings Berhad Driving Business Solutions

16 senior management team Century Software (M) Sdn Bhd PT Praisindo Teknologi T-Melmax Sdn Bhd Knowledgecom Corporation Sdn Bhd ANNUAL REPORT

17 profile of directors Tan Sri Dato Mohd Ibrahim Bin Mohd Zain (69 years old) Independent Non-Executive Chairman Tan Sri Dato Mohd Ibrahim Bin Mohd Zain was appointed as our Independent Non-Executive Chairman on 28 December He is also a member of the Audit and Nomination Committee. Upon his graduation in 1965, he was attached to University Technology MARA (formerly known as Institute of Technology MARA) as a lecturer where he was later appointed as a Council Member/Director, a position he held until October Tan Sri Dato Mohd Ibrahim is also a Director of Brahim s Holdings Berhad. He is also the Chairman of Yayasan Arshad Ayub. Previously, he had served as Chief Executive of Amanah International Finance Berhad, Amanah Chase Merchant Bank Berhad and Oriental Bank Berhad, Chairman and Chief Executive Officer of Setron (Malaysia) Berhad, Chairman of Bank Kerjasama Rakyat (M) Berhad, Bescorp Industries Berhad, Pan Malaysian Industries Berhad, Pan Malaysian Holdings Berhad, Pan Malaysia Capital Berhad, Chemical Company of Malaysia Berhad and Kawan Food Berhad, Deputy Chairman of Metrojaya Berhad and a Director of K & N Kenanga Holdings Berhad. Tamil Selvan A/L M. Durairaj (51 years old) Executive Director Mr. Tamil Selvan A/L M. Durairaj was appointed as our Managing Director on 28 December 2010 and was re-designated as the Executive Director on 26 September He was appointed as the CEO of CSM in He qualified as a member of the Chartered Institute of Management Accountants (CIMA) in Mr. Selvan joined the Accountant General Office as a Treasury Accountant in 1987 and was later transferred to the Perak State Secretariat as a Local Government Accountant. He specialises in Financial Management, Cost Accounting for both public and private sectors. This specialisation is coupled with a strong financial analytical skill and vast experience in implementation of various financial management systems in medium to large agencies and corporation. Mr. Selvan leads a team of financial consultants, IT professionals and accountants to deliver all projects in CSM. He also currently oversees our Group s accounting and financial reporting requirements as well as governance compliance of the Group moving forward. Datuk Samsul Bin Husin (50 years old) Group Managing Director Datuk Samsul Bin Husin was appointed as the Executive Deputy Chairman on 28 December 2010 and subsequently was redesignated as the Group Managing Director on 26 September He is also a member of the Remuneration Committee. Datuk Samsul is a Chartered Accountant and Certified Financial Planner. He has more than 20 years of experience in accounting and ICT. Datuk Samsul specialises in financial systems, system planning and designing. He started his career in 1986 with the Housing Division, State Planning and Development Unit, Selangor where he received hands-on experience in the planning, designing and the subsequent delivery of a billing system for low-cost housing development projects in the state. In 1987, Datuk Samsul joined the Accountant General Office to hold various positions in spearheading projects such as the enforcement of accounting procedures to the designing of new systems for the enhancement of existing financial management reporting for the office. He brings his vast experience in managing Government projects into the organisation. He also plans, organises and assists in charting the Group s future direction. In December 2011, Datuk Samsul was conferred the Darjah Pangkuan Seri Melaka (D.P.S.M) by the Tuan Yang Terutama Yang di-pertua Negeri Melaka which carries the title Datuk. Ameer Bin Shaik Mydin (49 years old) Executive Director En. Ameer Bin Shaik Mydin was appointed as our Executive Director on 28 December He was appointed as an Executive Director of CSM on 27 March 2002 and brings with him over 20 years of experience. He was appointed as the CEO of T-Melmax Sdn Berhad in He started his career in IT at PanGlobal Sistemaju Sdn Berhad upon graduation. He was involved in sales and marketing of Wang Banking System targeted at the Malaysian banking sector. Since then, he has continued his career in IT at Digital Equipment Corporation, as the Channels Account Manager, managing the value added resellers. En. Ameer then ventured into Business Management in IT at Applied Business Systems Sdn Berhad, a subsidiary of the then Formis Group, marketing Sun Hardware solutions to the Government sector. He then joined the management team of Kumpulan Netband (MSC) Sdn. Berhad., managing both the Government and Commercial business sectors. Prior to this current appointment, En. Ameer was the Business Manager for the Network Business at Unisys (M) Sdn. Berhad., involved in business development for the Government Sector. He oversees corporate business and manages business of CSM s large customer base. 16 Censof Holdings Berhad Driving Business Solutions

18 profile of directors (cont d) Ang Hsin Hsien (45 years old) Executive Director Ms. Ang Hsin Hsien was appointed as our Executive Director on 28 December She was appointed as the Director, Sales & Marketing of CSM in She has acquired over 18 years of wide IT based experience. As a key person in CSM s overall operations, she focuses on formulating the sales and marketing plan in business solutions for the e-government initiatives. She also manages strategic accounts to maintain supplier-clientele confidence and overseas business development buy identifying potential markets. Ms. Ang leads her team to take on a proactive approach in order to maintain sustainable competitive advantages including providing personalised ideas and cost-effective solutions to support client s business needs. Tuan Haji Ab. Gani Bin Haron (61 years old) Senior Independent Non-Executive Director Tuan Haji Ab. Gani Bin Haron was appointed as our Independent Non-Executive Director on 28 December He is the Chairman of the Audit Committee and Member of the Remuneration and Nomination Committee. He is a Chartered Accountant of the Malaysian Institute of Accountants. Tuan Haji Gani s broad-based experience and professional expertise spans over 30 years, in senior positions involving financial, management, audit and human resource management for the Accountant General Office of Malaysia. Since 2001, he has taken the role of Director of Accounting Development and Management Division and subsequently Deputy Accountant General of Malaysia. He has since been involved in human resource management for the accounting personnel of the Federal Government and the development of the accounting system for the Federal Government. Currently, he is the Director for YLI Holding Berhad and Amanah Raya Trustee Berhad. Abdul Mushir Bin Che Chik (51 years old) Non Independent Non Executive Director En. Abdul Mushir Bin Che Chik was appointed as our Executive Director on 28 December On 28 March 2011, En. Abdul Mushir was re-designated as Non-Independant Non-Executive Director. He brings with him over 20 years of experience in ICT and financial services having worked for local companies as well as MNCs. En. Mushir started his career in 1985 as a trainee systems engineer at Mesiniaga Berhad. He ascended to a position of Sales Manager in 1990 and eventually became a Senior Marketing Manager prior to leaving for Ericsson Telecommunication Malaysia in 1997, where he assumed the role of General Manager of the Service Provider Division. In 2000, he moved on to Ericsson Telecommunications China as the Director of Mobile Multimedia R&D Division. His long experience in ICT and strong command of Chinese language helped him to excel in his job earning him an advisory role for China Mobile, the leading cellular operator in China. In that capacity, he oversees the evaluation and launching of all mobile multimedia applications for the China market. Ever since he founded TMX in 2002, En. Mushir was involved in the growth of TMX by focusing on the business development, R&D activities and the overall company direction. The company over the years has gained market share in the banking industry. TMX also won many awards as a leading technology Company in Malaysia. In 2010, TMX merged with Century Software Sdn Bhd and the merged entity was listed on the Bursa Malaysia Securities Berhad in January Boey Tak Kong (59 years old) Independent Non-Executive Director Mr. Boey Tak Kong was appointed as our Independent Non- Executive Director on 28 December He is the Chairman of the Remuneration and Nomination Committee and a member of the Audit Committee. He is a Fellow member of the Chartered Association of Certified Accountants, United Kingdom, Associate member of the Institute of Chartered Secretaries & Administrators, United Kingdom, Chartered Accountant of the Malaysian Institute of Accountants, Member of the Malaysian Institute of Management and Associate member of the Institute of Marketing Malaysia. Mr. Boey s broad-based experience and professional expertise spans over 23 years in senior management positions involving financial management, internal audit, corporate affairs and overseas business development with five (5) listed public companies with listing in Malaysia, Singapore, United Kingdom, New Zealand and Australia. Presently, he is an approved trainer with Pembangunan Sumber Manusia Berhad and the Managing Director of Terus Mesra Sdn Berhad, a strategic management and leadership development training company. He is also a Director of Dutch Lady Milk Industries Berhad, Formis Resouces Berhad, Green Packet Berhad, Gadang Holdings Berhad and Permaju Industries Berhad, all listed on Bursa Malaysia Securities Berhad. Save as disclosed, none of Directors has any family relationship with any Director and/or major shareholder of the Company. None of the Directors has any conflict of interest with the Company nor have they been convicted of any offences within the past ten (10) years. ANNUAL REPORT

19 analysis of shareholdings ANALYSIS OF SHAREHOLDINGS AS AT 26 APRIL 2013 Authorized Capital : RM100,000, Issued and Fully Paid-Up Capital : RM 34,420, Class of Shares : Ordinary Shares of RM0.10 Each Voting Rights : One Vote Per Ordinary Share No. of Shareholders : 1,549 ANALYSIS BY SIZE AS AT 26 APRIL 2013 No. of % of total No. of % of Category Shareholders Shareholders Shares Shares Less than , , ,001 10, ,637, , , ,704, ,001 less than 5% of issued shares ,712, % and above of issued shares ,110, Total 1, ,200, LIST OF SUBSTANTIAL SHAREHOLDERS AS AT 26 APRIL 2013 Direct Indirect No. Names No. of Shares %* No. of Shares %* 1. SAAS Global Sdn. Bhd. 197,110, Datuk Samsul Bin Husin ,110, (a) 3. Ameer Bin Shaik Mydin ,110, (b) DIRECTORS INTERESTS IN SHARES AS AT 26 APRIL 2013 Direct Indirect No. Names No. of Shares % No. of Shares %* 1. Tan Sri Dato Mohd Ibrahim Bin Mohd Zain 10,349, Datuk Samsul Bin Husin ,110, (a) 3. Ameer Bin Shaik Mydin ,110, (b) 4. Abdul Mushir Bin Che Chik 9,647, Tuan Haji Ab. Gani Bin Haron Boey Tak Kong 320, Notes: (a) * Deemed Interest pursuant to Section 6A of the Act through his interest in SAAS Global Sdn Bhd (b) * Deemed Interest pursuant to Section 6A of the Act through his interest in SAAS Global Sdn Bhd 18 Censof Holdings Berhad Driving Business Solutions

20 analysis of shareholdings (cont d) 30 LARGEST SHAREHOLDERS AS AT 26 APRIL 2013 No Shareholder Shares % SAAS GLOBAL SDN BHD 80,000, SAAS GLOBAL SDN BHD 60,000, SAAS GLOBAL SDN BHD 37,110, MAYBANK NOMINEES (TEMPATAN) SDN BHD 20,000, EXPEDIENT EQUITY VENTURES SDN BHD 10,080, TASEC NOMINEES (TEMPATAN) SDN BHD 9,647, MAYBANK SECURITIES NOMINEES (TEMPATAN) SDN BHD 8,749, TASEC NOMINEES (TEMPATAN) SDN BHD 7,434, JF APEX NOMINEES (TEMPATAN) SDN BHD 4,602, HLIB NOMINEES (TEMPATAN) SDN BHD 3,500, YONG KIAN KEONG 3,000, CITIGROUP NOMINEES (TEMPATAN) SDN BHD 2,325, EB NOMINEES (TEMPATAN) SENDIRIAN BERHAD 2,300, JF APEX NOMINEES (TEMPATAN) SDN BHD 2,200, KUANG KIM SOON 2,190, KENANGA NOMINEES (TEMPATAN) SDN BHD 2,100, LIM HOOI KIANG 2,000, PUBLIC INVEST NOMINEES (ASING) SDN BHD 2,000, ALLIANCEGROUP NOMINEES (TEMPATAN) SDN BHD 2,000, SINGAPORE ENTERPRISES PRIVATE LIMITED 1,968, KUAH HUI SUAN 1,802, KOH CHEE MENG 1,800, RAJA MOHD NAZRI BIN RAJA ABD MALEK 1,642, MOHD IBRAHIM BIN MOHD ZAIN 1,600, PUBLIC NOMINEES (TEMPATAN) SDN BHD 1,600, JOAN YONG MUN CHING 1,500, AMSEC NOMINEES (TEMPATAN) SDN BHD 1,470, LAM LAM FOOK KEONG 1,434, AIBB NOMINEES (TEMPATAN) SDN BHD 1,300, PIARA SINGH A/L ANOKH SINGH 1,096, TOTAL 278,453, ANNUAL REPORT

21 analysis of shareholdings (cont d) ANALYSIS OF WARRANT HOLDINGS AS AT 26 APRIL 2013 Issued Warrants : 43,025,000 Exercise Period : 19 June 2012 to 18 July 2017 Exercise Price : RM 0.46 each No. of Warrant Holders : 1,310 Warrants Exercised : None ANALYSIS BY SIZE AS AT 26 APRIL 2013 No. of Warrant % of total No. of % of Category Holders Warrant Holders Warrant Warrant Less than , , , ,001 10, ,816, , , ,927, ,001 less than 5% of issued warrants ,447, % and above of issued warrants ,638, Total 1, ,025, LIST OF SUBSTANTIAL WARRANT HOLDERS AS AT 26 APRIL 2013 Direct Indirect No. Names No. of Warrants %* No. of Warrants %* 1. SAAS Global Sdn. Bhd. 24,638, Datuk Samsul Bin Husin ,638, (a) 3. Ameer Bin Shaik Mydin ,638, (b) DIRECTORS INTERESTS IN WARRANTS AS AT 26 APRIL 2013 Direct Indirect No. Names No. of Warrants % No. of Warrants %* 1. Tan Sri Dato Mohd Ibrahim Bin Mohd Zain 1,293, Datuk Samsul Bin Husin ,638, (a) 3. Ameer Bin Shaik Mydin ,638, (b) 4. Abdul Mushir Bin Che Chik 1,205, Tuan Haji Ab. Gani Bin Haron Boey Tak Kong 40, Notes: (a) * Deemed Interest pursuant to Section 6A of the Act through his interest in SAAS Global Sdn Bhd (b) * Deemed Interest pursuant to Section 6A of the Act through his interest in SAAS Global Sdn Bhd 20 Censof Holdings Berhad Driving Business Solutions

22 analysis of shareholdings (cont d) 30 LARGEST WARRANT HOLDERS AS AT 26 APRIL 2013 No Warrant Holder Shares % SAAS GLOBAL SDN BHD 10,000, SAAS GLOBAL SDN BHD 7,500, SAAS GLOBAL SDN BHD 7,138, EXPEDIENT EQUITY VENTURES SDN BHD 1,260, TASEC NOMINEES (TEMPATAN) SDN BHD 1,205, TASEC NOMINEES (TEMPATAN) SDN BHD 1,179, MAYBANK SECURITIES NOMINEES (TEMPATAN) SDN BHD 1,093, LOH YET KONG 1,065, HARBENDAR KAUR A/P NASHTER SINGH 845, PUBLIC NOMINEES (ASING) SDN BHD 498, RHB CAPITAL NOMINEES (TEMPATAN) SDN BHD 432, HLIB NOMINEES (TEMPATAN) SDN BHD 399, CITIGROUP NOMINEES (TEMPATAN) SDN BHD 375, TAN KEAT SEANG 307, KUANG KIM SOON 286, TAN MOK HOW 280, RHB CAPITAL NOMINEES (TEMPATAN) SDN BHD 220, MOHD IBRAHIM BIN MOHD ZAIN 200, WONG LEE ING 191, AMSEC NOMINEES (TEMPATAN) SDN BHD 183, MAYBANK NOMINEES (TEMPATAN) SDN BHD 172, YEW KIM YEW CHEE THEONG 172, YONG SUIT MUI 150, MAYBANK NOMINEES (TEMPATAN) SDN BHD 150, MAYBANK SECURITIES NOMINEES (TEMPATAN) SDN BHD 146, MOHD AKOB BIN AHMAD 145, HARBENDAR KAUR A/P NASHTER SINGH 144, TA SECURITIES HOLDINGS BERHAD 127, FIGURE TOP LIMITED 114, TAN MEI CHUEN 101, TOTAL 36,086, ANNUAL REPORT

23 chairman s statement Dear Shareholders, On behalf of the Board of Directors of Censof Holdings Berhad (Censof), (formerly known as Century Software Holdings Berhad) I am pleased to present to you the Annual Report and Audited Financial Statements for the financial year ended 31 December The year 2012 had been a challenging year for most companies operating in a global environment, with the risk of an economic uncertainty looming over the horizon. However, Censof managed to weather the storm, and we registered notable profits for the Company. In November 2012, we acquired an 80% stake in Knowledgecom Corporation Sdn Bhd (Knowledgecom), an ICT educational service provider. This business decision proved to be a good synergy for the Group and has already started to bear fruit. 22 Censof Holdings Berhad Driving Business Solutions

24 chairman s statement (cont d) Performance review For the current financial year under review, the Group registered revenue of RM44.77 million, which surpasses the previous year s revenue of RM43.34 million. This increase of 3.30% was due to an increase in software, training & implementation revenue compared to the previous year. Our profit before tax for the year stood at RM9.81 million, whilst the profit before tax was RM9.23 million in the previous financial year. This higher profit of 6.28% was also due to better services mix that contributed to higher overall margins. Dividend For the financial year ended 31 December 2012, the Board of Director s has resolved to recommend a first and final single tier dividend of 1.0 sen per ordinary share totaling to RM3.44 million, subject to approval in the forthcoming Fifth Annual General Meeting of the Company. Business Prospects Moving forward, the Group is confident of achieveing better performance for the financial year ending 31 December 2013 based on the market developments and business trends impacting the Group s business divisions as follows:- Financial Management Solutions division (FMS) - As public corporations continue to move towards better efficient and effective delivery systems infrastructure, the Group is focusing to secure further upgrading and enhancement projects involving the portfolio of current clients. Additionally, the Group has also added further enhancements to the Outcome Based Budgeting project to provide a stronger and more satisfactory sustainable growth. Payment Aggregate Solutions division (PAS) - This division had rationalized on its efforts to reposition its marketing activities with emphasis on e-transaction projects to establish a one-stop Payment and Collection portal for Statutory Payments, implement Mobile Payments using Near Field Communications (NFC) Technology, and e-ea Forms submission for Income Tax. As the market becomes more receptive towards internet transaction solutions, we see more opportunities for our digital products from this division. Wealth Management Solutions division (WMS) - We gained good market traction in this division as we were awarded our maiden project in January 2012 in Malaysia. We have also managed to secure a project with the Federal Bank of Indonesia. In the long run, we are setting our sights overseas as we work towards securing sales in overseas markets for our SIAP/ SIAR products. Training Solutions division (TS) Spreadheaded by newly acquired Knowledgecom Corporation Sdn Bhd (Knowledgecom), this acquisition acts as part of a new business pillar to enhance and grow talent within the Group using e-learning platform. KnowledgeCom specialises in Solutions and Training, IT Business Solutions, Corporate IT Training and Management Courses. As an award-winning Company, KnowledgeCom has developed various types of software and has trained over 800 companies in specialised ICT skills across Malaysia. This acquisition has successfully expanded our business offerings and KnowledgeCom has proven valuable in enhancing our downstream activities such as the Group s in-house training facilities. Appreciation On behalf of the Board, I would first and foremost like to convey my sincere appreciation to the Directors, Management and Staff of the Group for their commitment, contribution, and unwavering support towards the development and success of the Group over the year. I would also like to take this opportunity to thank the various Government authorities and agencies, valued customers, suppliers, and business associates for their assistance, guidance, contribution and continued support. Finally I wish to thank you, our valued Shareholders for your confidence and belief in the Board and Management of the Group. Tan Sri Dato Mohd Ibrahim Bin Mohd Zain Independent Non-Executive Chairman 4th June 2013 ANNUAL REPORT

25 group managing director s review The year 2012 was an eventful one for us, as we achieved many milestones worth mentioning. As of 26 June 2012, we were officially known as Censof Holdings Berhad. This was a significant step for us as we set out to rebrand ourselves as a progressive and robust enterprise. We also attained prominence amongst our peers when we were awarded the Prominent ICT Company Award at the 1957 Merdeka Independence Award This annual award is aimed at recognising companies and individuals who have demonstrated excellence and dedication in the corporate sector. Apart from that, we were also bestowed PIKOM s Member Excellence Award, which evaluates nominees based on a number of criteria among which are technological innovation, regional vision and strategy as well as profitability. At Censof, we aim to continuously develop our products and services. The latest addition to our portfolio is TenderWizard, an end-to-end online tender management system. It is locally developed and currently used in various institutions such as the Malaysian External Trade Development Corporation (MATRADE) and Tun Hussein Onn University (UTHM). In January we gained traction in the Wealth Management Solutions division for PT Praisindo as we were awarded our maiden project in Malaysia with PTPTN. Two months into 2012, our subsidiary Century Software (M) Sdn Bhd (CSMSB) was successfully registered as an approved training provider under the Kumpulan Wang Pembangunan Sumber Manusia for a period of one year. CSMSB is registered under category A and is allowed to conduct the PROLUS (inclusive of E-Learning) and Apprenticeship scheme. In April 2012, CSMSB accepted two Letters of Award from the Social Security Organisation (PERKESO) for two different contracts worth a total of RM33.08 million to design, develop, supply, deliver, install, integrate, test, deploy, commission, train and maintain the PERKESO social security information management system. In the same month, CSMSB was yet again awarded two Letters of Award from the Inland Revenue Board (LHDN) worth a total of RM5.6 million. The projects were for the maintenance of SAGA Century and its related hardware, as well as the upgrade, supply, installation and implementation of SAGA Century and its related hardware and peripherals. Apart from that, we were also given a Letter of Award in October by the Ministry of Finance that extended our initial contract along with additional scopes for the implementation of their budget online system. 24 Censof Holdings Berhad Driving Business Solutions

26 group managing director s review (cont d) The first half of the year has been an exciting one for us, as we capped it off with our first ever Global Conference, a three-day conference aimed at keeping the Group s clients informed and updated on the latest in global financial management solutions and technologies. This conference was held in Bandung, Indonesia, with the theme of Innovating the Future of Financial Management. With a large number of professionals in attendance, the conference was a roaring success and we intend to make this an annual event for the benefit of our clients. In July, we issued 43,025,000 Bonus Issue Warrants for our shareholders, on the basis of one free warrant for every eight existing ordinary share held. This was listed and quoted on the Main Market of Bursa Malaysia Securities Berhad with effect from 25 July 2012, marking the completion of the Bonus Issue of Warrants. In November 2012, we expanded our footprint yet again when we acquired an 80% stake in KnowledgeCom Corporation Sdn Bhd (KnowledgeCom) for a total purchase consideration of RM4.0 million. This purchase was funded by way of internally generated funds and short-term bridging loans. This acquisition was a strategic business decision, in which the acquisition came attached with a RM1.0 million profit guarantee that is expected to be realised in the Group s financials for the current year. The objective of acquiring KnowledgeCom was also part of our strategy to supplement our business, seeing as our users also require training. This will enable us to expand our business offerings and maintain the Group s competitive edge in the industry. KnowledgeCom has developed various types of software and has trained over 800 companies in specialised ICT skills across Malaysia and we believe that the addition of KnowledgeCom to our team will further support our downstream activities such as our current in-house training facilities. In line with our Roadmap to Market Leadership of and to ensure the Group s long-term performance, the management of the Group has put in place a five-year strategic plan. Starting in 2012 and culminating in turning the business into a leading global provider of financial management solutions by 2016, measurable short- and long-term milestones have been determined on the operational level. The milestones encompass four key areas customer, internal processes, people and innovation and financials. Customer Customer Satisfaction Project FAT Satisfaction Awards & Recognition Internal Processes Management of Principals/Main Contractors Profitablity Tracking Process Improvisation - Review Implementation Methodology - Product QC Improvements - Problem Solving Lab People & Innovation Research & Development Product Roadmap Career Development Programs Performance Management Financial Sales Profit After Tax To maintain our relevance in the industry, we have maintained a continuous effort of researching and developing software that will be able to assist banks, financial institutions and companies alike on improving their financial management system. We are also working towards a more personal, value-added approach to ensure our clients that we have their interest at heart. We are sensitive towards their needs and this translates into our commitment to further improve ourselves. Moving forward from 2012, we expect 2013 to be an even better year for us as we strive harder for the award of larger projects that will further enhance our portfolio. Datuk Samsul Bin Husin Group Managing Director ANNUAL REPORT

27 statement on corporate governance Introduction The Board of Directors is committed towards adhering to the requirements and guidelines as per the Malaysian Code on Corporate Governance 2012 (Code) as well as the Main Market Listing Requirements (MMLR) of Bursa Malaysia Securities Berhad and strives to adopt the substance behind the corporate governance prescriptions and not merely the form. This statement describes the practices that the Company had taken with respect to each of the key principles and the extent of its compliance with the Code during the financial year. A. Board of Directors Composition of the Board and Board Balance The Board comprises of an Independent Non-Executive Chairman, a Group Managing Director, a Non-Independent Non Executive Director, three Executive Directors and two Independent Non-Executive Directors. Furthermore, the Board comprises at least one third of Independent Non-Executive Directors as required by the MMLR of Bursa Malaysia Securities Berhad. The names and profile of the Directors are stated on the Director s profile page of this Annual Report. The members of the Board have a wide range of skills and experience which bring a wealth of expertise to the leadership of the Group. The mix of directors on the Board is broadly balanced to reflect the interests of major shareholders, management and minority shareholders. There is no one member of group which dominates the decision making processes that the Board undertakes. Furthermore, the number of Independent Directors ensures that issues of performance, strategy, compliance and resources are discussed and examined in depth in order to take into consideration the long-term interest of the Group s stakeholders. This framework enables the direction of the Group s affairs to be firmly in the Board s control. The Board, through the Nomination Committee will take steps to ensure that women candidates are sought as part of its gender diversity and recruitment exercise. Selection of women candidates to join the Board will be, in part, dependent on the pool of women candidates with the necessary skills, knowledge and experience. The ultimate decision will be based on merit and contributions the candidate brings to the Board. The Company currently has a female Executive Director on the Board, namely Ms Ang Hsin Hsien. Board Duties and Responsibilities The Board has several duties and responsibilities which encompass the following: to review and adopt a strategic plan for the Group in order to enhance its growth and profitability; to identify risks and ensure the implementation of suitable internal control systems to manage these risks; to approve compensation packages for key management and succession policies for the Group; to oversee the development and implementation of a communication policy for the Group; to oversee the Group s business conduct as well as to evaluate if the Group s businesses are properly managed and; to review the adequacy and the integrity of the Group s management information and internal control system as well as systems for compliance with applicable laws, regulations, directives, rules and guidelines. 26 Censof Holdings Berhad Driving Business Solutions

28 statement on corporate governance (cont d) Board of Directors (cont d) Board Charter and Code of Ethics The Company has established the Board Charter which shall be subject to review and update as and when the needs arise. The Company s Codes of Ethics for directors and employees continue to govern the standards of ethics and good conduct expected of directors and employees respectively. In addition, the Company s Whistle-blower Policy seek to foster an environment where integrity and ethical behaviour are maintained and any illegal or improper action and/or wrongdoing in the Group may be exposed. Board Meetings and Supply of Information to the Board The Board is scheduled to meet quarterly with additional meetings to be convened when urgent matter need to be discussed and approved in between these scheduled meetings. Sufficient notice is given to the Board prior to the meeting in order for them to be present. The board papers are disseminated to all Directors before the meeting, to give sufficient time to them to review and prepare for the meeting. The proceedings are minuted and thereafter confirmed by the Chairman of the meeting. The Directors have access to the Company Secretary and external independent experts who may be engaged at the Company s expense to seek advice and services. The Board is also regularly updated on new statutory and regulatory requirements concerning their duties and responsibilities and the operation of the Group. Appointment and Re-election of Directors Pursuant to the Articles of Association of the Company, one-third (or the number nearest to one-third) of the Directors are required to retire from office at each annual general meeting. Further, all the Directors are required to retire from office at least once in every three (3) years. However, a retiring Director is eligible for re-election at the meeting at which he or she retires. An election of the retiring Directors shall take place every year. Any person appointed as a Director, either to fill a casual vacancy or as an addition to the existing Directors shall hold office only until the conclusion of the next annual general meeting, and shall be eligible for re-election but shall not be taken into account in determining the directors who are to retire by rotation at that meeting. The Board met six (6) times during the financial year ended 31 December Attendance by each member of the Board during the financial year ended 31 December 2012 were as follows:- Name of Board Member Directorship Number of Meetings Attended (Out of 6 held) Tan Sri Dato Mohd Ibrahim Bin Mohd Zain Independent Non-Executive Chairman 6/6 Datuk Samsul Bin Husin Group Managing Director 6/6 Tamil Selvan A/L M. Durairaj Executive Director 6/6 Ameer Bin Shaik Mydin Executive Director 6/6 Ang Hsin Hsien Executive Director 6/6 Abdul Mushir Bin Che Chik Non-Independent Non-Executive Director 6/6 Tuan Haji Ab. Gani Bin Haron Senior Independent Non-Executive Director 6/6 Boey Tak Kong Independent Non-Executive Director 6/6 ANNUAL REPORT

29 statement on corporate governance (cont d) Appointment and Re-election of Directors (cont d) The Audit Committee has the Board s authority to: assess the independence and objectivity of external and internal auditors; ensure the internal control system is adequate and effective; have full access to information of the Group; exercise its full responsibility within the stipulated terms of reference and be given the necessary resources to do so; and investigate matters arising. The composition of our Audit Committee is as follows:- Name Designation Directorship Tuan Haji Ab. Gani Bin Haron Chairman Senior Independent Non-Executive Tan Sri Dato Mohd Ibrahim Bin Mohd Zain Member Independent Non-Executive Boey Tak Kong Member Independent Non-Executive The committee s report is detailed in the Audit Committee Report section of this Annual Report. Nomination Committee The Nomination Committee has the responsibility of proposing new nominees to the Board. Besides, it has the task of assessing the performance of the Directors on an annual basis. However, the decision as to who shall be appointed lies with the entire Board but after taking into consideration the recommendations of the Nomination Committee. Other than reviewing the performance of the members of the Board, assessing the effectiveness of the Board as an entity as well as the contributions of each individual director, the Nomination Committee reviews the needed skills, experience and core competencies which should be possessed by Non-Executive Directors. New appointments of member are made through a formal and transparent process which is consistent with the Company s Articles of Association and under the supervision of the Board. The appointment as well as the proposed re-appointment/re-election at the Annual General Meeting ( AGM ) is recommended by the Nomination Committee to the Board for its approval. Continuous reviews are made on the effectiveness as a whole, the various Committees of the Board and the contributions of each director. The composition of our Nomination Committee is as follows:- Name Designation Directorship Boey Tak Kong Chairman Independent Non-Executive Tan Sri Dato Mohd Ibrahim Bin Mohd Zain Member Independent Non-Executive Tuan Haji Ab. Gani Bin Haron Member Senior Independent Non-Executive During the financial year under review the Nomination Committee held one (1) meeting on 18 April 2012, which was attended by all (3) three members. 28 Censof Holdings Berhad Driving Business Solutions

30 statement on corporate governance (cont d) Remuneration Committee The Remuneration Committee is tasked with reviewing the performance of the Executive Directors and then to inform the Board of their recommendations on specific adjustments in remuneration as well as reward payments commensurate the respective contributions of the Executive Directors. The Remuneration Committee also recommends the framework of fees to the Non-Executive Directors. The remuneration, in this case, reflects the experience, responsibilities shouldered as well as the individuals non-involvement in discussions and decision making. The Remuneration Committee is responsible for setting the framework of the Executive Directors remuneration packages and makes recommendations to the Board on the elements of the remuneration and terms of appointment. The Directors concern will abstain from the deliberations and voting in respect of their remuneration. Nevertheless, it is the responsibility of the Board to approve the remuneration of these Directors. The composition of our Remuneration Committee is as follows:- Name Designation Directorship Boey Tak Kong Chairman Independent Non-Executive Tuan Haji Ab. Gani Bin Haron Member Senior Independent Non-Executive Datuk Samsul Bin Husin Member Group Managing Director During the financial year under review the Remuneration Committee held one (1) meeting on 18 April 2012, which was attended by all (3) three members. Director s Training All Directors have completed the Mandatory Accreditation Programme as prescribed by the MMLR of Bursa Securities. As part of the Continuous Education Programme to keep up to date with new developments Director s are encouraged to participate in seminars, trainings and conferences organised by the relevant regulatory authorities, professional bodies and commercial entities. The objective is to further enhance their skill, knowledge and expertise as well keep up to date with recent development in the industry in order to discharge their duties as Director s. During the financial year under review, the Directors attended the following training programme/courses and/or conferences listed below: Tan Sri Dato Mohd Ibrahim Bin Mohd Zain Business Transformation Leaders Conference-Promoting High-Value Agriculture through Public-Private Partnerships, Melaka International Trade Centre ( MITC ); Indonesia International Infrastructure Conference and Exhibition 2012, Jakarta Convention Center. Datuk Samsul Bin Husin Advocacy Sessions on Disclosure for CEOs & CFOs, BURSA; Asia Finance Shared Services and Outsourcing Summit 2012, ACCA; International Public Sector Conference (ipsc), Universiti Teknologi MARA; 17th Malaysian Capital Market Summit Malaysia The Rising Star Geared For Growth, Asian Strategy & Leadership Institute (ASLI); 4th Distinguished Lecture by H.E. Jorge Sampalo on Realizing the Global Movement of Moderates via the United Nations Alliance of Civilizations, Global Movement of Moderates Foundation; MIA International Accountants Conference 2012, Malaysian Institute of Accountants (MIA). Tamil Selvan A/L M. Durairaj Economic Outlook 2012 by David Mah, VISTAGE Malaysia Sdn Bhd; Designing & Implementing KPIs by Lee Lai Keong, VISTAGE Malaysia Sdn Bhd; Doing business in Indonesia, VISTAGE Malaysia Sdn Bhd; CEO as Coach by Datuk Danel, VISTAGE Malaysia Sdn Bhd; Mobile Insanity by Shaun Tan, VISTAGE Malaysia Sdn Bhd; The Secrets of Selling by Hanzo Ng, VISTAGE Malaysia Sdn Bhd; Information on Demand 2012, IBM; Building High Performance team by Lynn Leahy, VISTAGE Malaysia Sdn Bhd. Ameer Bin Shaik Mydin Advocacy Sessions on Disclosure for CEOs & CFOs, Bursa Malaysia Bhd; 5th Mobile Commerce Summit ASIA 2012, NeoEdge Pte Ltd. ANNUAL REPORT

31 statement on corporate governance (cont d) Director s Training (cont d) Ang Hsin Hsien Advocacy Sessions on Disclosure for CEOs & CFOs, Bursa Malaysia Bhd; 2012 LGMA National Congress and Business Expo, Local Government Managers Australia; National Tax Conference 2012, LHDN & Chartered Tax Institute of Malaysia; Blue Ocean Strategy Create Success, The National ICT Association of Malaysia; IBM BP Advisory Council 2012, IBM; Vistage CEO Summit 2012, Vistage Malaysia Sdn Bhd. Tuan Haji Abd. Gani Bin Haron Key amendments to Listing Requirements and Corporate Disclosure Guide. Abdul Mushir Bin Che Chik Ace The Media Interview Workshop, Teraju. Boey Tak Kong Corporate Governance The Competitive Advantage, Minority Shareholder Watchdog Group; Directors & Officers Liability: The Key Trend In D&O Liability, IJM Corporation Berhad; Accountants For Business Forum: Diversity Driving Performance In Global Business, The Chartered Association Of Certified Accountants; Malaysian Forum On Business Sustainability, Minority Shareholder Watchdog Group; 10th Women s Summit 2012 Break New Ground, Ministry Of Women, Family & Community Development Malaysia; Malaysian Code On Corporate Governance 2012, Solomon Wise; Corporate Commercial Laws Updates, Corporate Fraud In Malaysia & Corporate Health Check Corporate Governance & Whistle blowing & Security: Kidnapping & Extortion, British American Tobacco (Malaysia) Berhad and Too Many Bosses, Too Few Leaders, ACCA-ICLIF. B. Directors Remuneration Remuneration Policy and Procedures In order to attract and retain Directors of the high calibre, who are pivotal in order to successfully manage the Group, the Code states that the remuneration of the Directors needs to be determined. The remuneration for the Executive Directors link reward to corporate and individual performances. The remuneration of Non-Executive Directors reflects the level of experience and responsibilities they assume during the period reviewed. The remuneration made available to all Directors of the Company during the financial year ended 31 December 2012 are as shown below: i. Aggregate Remuneration of Director s categorised into appropriate components: Benefits in Salaries Kind Fees* Allowance Total Executive Director Datuk Samsul Bin Husin 268,800 17,400 35, ,200 Tamil Selvan A/L M. Durairaj 292,800 8,800 30, ,600 Ameer Bin Shaik Mydin 201,600 6,500 30, ,100 Ang Hsin Hsien 265,920 11,100 30, ,020 (cont d on next page) 30 Censof Holdings Berhad Driving Business Solutions

32 statement on corporate governance (cont d) Remuneration Policy and Procedures (cont d) Non-Executive Director Benefits in Salaries Kind Fees* Allowance Total Tan Sri Dato Mohd Ibrahim Bin Mohd Zain ,000 5,000 75,000 Abdul Mushir Bin Che Chik ,000 4,500 44,500 Tuan Haji Ab. Gani Bin Haron ,000 5,500 63,500 Boey Tak Kong ,000 5,000 66,000 Total 1,029,120 43, ,000 20,000 1,446,920 *Independent/Non-Independent Directors fees will be tabled for shareholders approval at the Fifth Annual General Meeting in June ii. The remuneration paid to the Directors, analysed in the following bands, is as below:- Range of Remuneration (RM) Executive Non-Executive Below 100, , , C. Shareholders and Investor Relations Dialogue with Investors and Shareholders It is of utmost importance that the shareholders and investors are informed of the Group s business as well as its corporate developments. The Company recognises this and therefore disseminates information via the Company s annual report, circulars to the shareholders and announcements periodically and adheres to the disclosure requirement of Bursa Malaysia Securities Berhad. In addition, shareholders also have access and may obtain the Company s latest announcements via the Investor Relations in the Company s website at and through Bursa Malaysia Securities Berhad. Shareholders are invited to take part in discussions with the Board with regards to the Group s operations and performance during its annual general meeting which serves as the main platform for dialogue between the management and its shareholders. The management, on its part, will note suggestions and comments put forward by the shareholders for consideration. Tuan Haji Ab. Gani Bin Haron is the appointed senior Independent Director to whom where concerns may be conveyed. ANNUAL REPORT

33 statement on corporate governance (cont d) C. Shareholders and Investor Relations (cont d) Annual General Meeting (AGM) The Annual General Meeting is the prime forum of dialogue with shareholders. The Notice together with a copy of the Group s Annual Report is sent to Bursa Securities and all shareholders at least twenty one (21) days prior to the meeting as required by the Companies Act 1965 in order to facilitate full understanding and evaluation of the issues involved. During the AGM, the Board presents the progress and performance of the Group as contained in the Annual Report. Shareholders are encouraged to participate and are given every opportunity to raise questions and seek clarification during the session. The Independent Non-Executive Chairman, the Group Managing Director and Board members are available to respond to all shareholders queries. For Financial Year 2011, the Group s 4th AGM was held at Sime Darby Convention Centre on Tuesday, 26 of June During which all resolutions were approved and was attended by Board of Directors, Company Secretary, Auditor and Senior Management and shareholders. The Chairman, Deputy Executive Chairman and Group Managing Director held a press conference immediately after the AGM updating the media representatives on current development and also taking question from the media. As for Financial Year 2012 the 5th AGM, the Notice and Proxy Forms are enclosed on page 104 of this Annual Report which is scheduled to be held on the 26 June Annual Report The Board s objective is to provide and present a comprehensive assessment of disclosures in the Annual Report to shareholders. In disclosing of this information, the Board is guided by the principles set out in the MMLR of Bursa Malaysia Securities Berhad. The information covers the areas of business, financials, governance and other key activities of the Group. All contents that form the Annual Report such as the Corporate Governance Statement, Audit Committee Report, Statement On Risk Management and Internal Control and Corporate Social Responsibility. Statements are all tabled at the Audit Committee meeting for its comments and recommendation to the Board of Directors for review and deliberation before being incorporated into the Annual Report. Year Date of Release Bursa Securities Deadline AGM Date Annual Report June June June 2013 Annual Report June June June 2012 Annual Report April June May 2011 Quarterly Briefings and other forms of communication The quarterly briefings are attended by the Group Managing Director, Executive Directors and Corporate Director of the Company. The Company holds quarterly briefings for fund managers, investment analysts, investors and media immediately after each quarter s announcement of financial results of the Group. During this time we provide updates, progress of current development and status of future developments to the investing public and other stakeholders. Compliance Statement The Company is committed in achieving high standards of corporate governance throughout the Group and to the highest level of integrity and ethical standards in all its business dealings. The Board considers that the Company has complied with the principles and best practices as set out in parts 1 and 2 respectively of the Code. 32 Censof Holdings Berhad Driving Business Solutions

34 statement on corporate governance (cont d) D. Accountability and Audit Financial Reporting It is the responsibility of the Directors to prepare the annual audited accounts. The Board, on its part, ensures that the accounts as well as other financial reports of the Group: are prepared in accordance with the Approved Accounting Standards and present a balanced and detailed assessment of the Group s performance and prospects; the Group s annual report and its quarterly announcements of results aim to give an updated financial performance of the Group from time to time and; present a meaningful assessment of all group s performance and prospects to shareholders, investor s and regulatory bodies. Directors Responsibility Statements Under Paragraph 15.26(a) of the MMLR of Bursa Malaysia Securities Berhad, the Boards of Directors are required to issue a statement explaining their responsibilities in the preparation of the annual financial statements. As stipulated in the Companies Act 1965, the Directors will undertake to prepare the financial statements for each financial year. These financial statements aim to give a true and fair account of the Group s state of affairs as well as their results at the end of each financial year. In preparing the financial statements, the Directors have: (i) (ii) (iii) (iv) Adopted the relevant and appropriate accounting policies consistently; Made judgements and estimates that are reasonable and prudent; Ensured that all applicable accounting standards have been appropriately and consistently adhered to; and Prepared the financial statements on a going concern basis after the Directors have made appropriate enquiries that the Company and the Group have the ability to continue operations in the foreseeable future. Internal Control It is the responsibility of the Directors to maintain a sound system of internal control which encompasses not only financial controls but also compliance controls. The Group is continuously revealing into the adequacy as well as the integrity of its system of internal controls as control can only provide reasonable but not absolute assurance against loss or mis-statements. Information on the Group s systems of Internal Control is presented in the Statement On Risk Management and Internal Control in this Annual Report. Whistle Blower Policy The company had a structured whistle blowing policy where grievance can be channelled directly to the Chairman of the Audit Committee, Tuan Haji Ab. Gani Bin Haron, who is also a Senior Independent Director. His contact details are available in the website for employees and the public to address their issues. Relationship with External Auditors The Board maintains a transparent as well as professional relationship with the external auditors in order to fulfil the set objectives. ANNUAL REPORT

35 statement on corporate governance (cont d) E. Other Additional Compliance Information As required by the MMLR Bursa Malaysia Securities Berhad. Share Buy-backs The Company did not carry out any share buy-backs during the financial year ended 31 December Recurrent Related Party Transactions There is no recurrent related party transactions entered during the financial year, except for the office rental agreement which is within the normal commercial term which does not exceed tenancy period of 3 years. Corporate Fund Raising Exercise On 14 May 2013, the Company announced the proposed Issuance of Redeemable Convertible Notes ( RCN ) with an aggregate principal value of up to RM 100,000,000.00, which is subject to the approval by shareholders at an EGM to be convened. The purpose for the issuance of RCN is to provide the essential funds for future strategic acquisitions and the RCN will be privately placed to and purchased by the Subscriber. No offering circular or information memorandum will be issued by the Company for the proposed placement of the RCN. Options, Warrants or Convertible Loan Stocks At the EGM held on 26 June 2012, the Company has obtained the approval from the shareholders for the bonus issue of 43,025,000 warrants on the basis of 1 free warrant for every 8 existing ordinary share of RM0.10 each held in the Company. The warrants are constituted under a Deed Poll executed on 28 June 2012 and were issued on the 19 July 2012 where each warrant entitles the registered holder the right at any time during the exercise period from 19 July 2012 to 18 July 2017 to subscribe in cash for one new ordinary share of RM0.10 each of the Company at an exercise price of RM0.46 each. The warrants were listed on the Main Market of Bursa Malaysia Securities Berhad on the 25 July 2012 and as at 31 December 2012, 43,025,000 warrants remained unexercised. Depository Receipts Programme The company did not sponsor any depository receipts programme during the financial year. Non-Audit Fees Non-audit fee paid to external auditors for the financial year was RM 4, Material Contracts There were no materials contracts entered into by the Company and its subsidiaries which involved directors and major shareholders interest during the financial year. Imposition of Sanctions/Penalties There were no sanctions and/or penalties imposed on the Company and its Subsidiaries, Directors or Management by the relevant regulatory bodies during the financial year. Profit Guarantee There were no profit guarantee were given during the financial year. 34 Censof Holdings Berhad Driving Business Solutions

36 statement on corporate governance (cont d) Other Additional Compliance Information (cont d) Variation in Result There were no material variations in the result for the financial year as compared to the announcement made for the quarter ended 31 December Utilisation of Proceeds Shares Issue The gross proceeds of RM 21,390, from the public issue of the Company s shares in conjunction with the listing on the Main Market of Bursa Securities were utilised as follows: Amount Utilised Amount Unutilised Expected time 31 Dec Dec 2012 frame for Proposed Utilisation RM 000 % RM 000 RM 000 utilisation Research and Development expenditure 6, ,600 2,400 By 30 January 2014 Business expansion and capital expenditure 4, , Working capital 4, , By 30 January 2014 Repayment of bank borrowings 4, , Estimated listing expenses 2, , , ,145 3,245 Warrants Issue The Company on 19 July 2012, had issued 43,025,000 warrants on the basis of 1 free warrant for every 8 existing ordinary share of RM0.10 each held in the Company. The exercise period is from 19 July 2012 to 18 July 2017 to subscribe in cash for one new ordinary share of RM0.10 each of the Company at an exercise price of RM0.46 each. As at 31 December 2012, 43,025,000 warrants remained unexercised. This statement is made in accordance with a resolution of the Board of Directors dated 22 May ANNUAL REPORT

37 audit committee report 1. Composition The Audit Committee was established by the Board on 28 December The Committee presently comprises of three (3) members of the Board which consists of Non-Executive Directors. Chairman Tuan Haji Ab Gani Bin Haron Senior Independent Non-Executive Member Tan Sri Dato Mohd Ibrahim Bin Mohd Zain Independent Non-Executive Member Boey Tak Kong Independent Non-Executive The AC Chairman, Tuan Haji Ab Gani Bin Haron and Mr. Boey Tak Kong are both members of the Malaysian Institute of Accountants, complies with paragraph 15.09(1)(c)(i) of the MMLR of Bursa Malaysia Securities Berhad. 2. Role of Audit Committee The Audit Committee assists, supports and implements the Board s responsibility to oversee the Group s operations in the following manner:- Investigate any matter within its terms of reference. Provides means for review the Group s processes for producing financial data, its internal controls and independence of the Group s Internal and External Auditors. Reinforces the independent of the Group s External Auditors. Reinforces the objectivity of the Group s Internal Auditors. 3. Key Functions and Responsibilities The key functions and responsibilities of the Audit Committee are as follows:- Financial Reporting To review the quarterly and year-end financial statements, prior to the approval by the Board of Directors, focusing particularly on: the going concern assumption, changes in or implementation of major accounting policy changes, significant and unusual events, compliance with the applicable approved accounting standards and other legal and regulatory requirements. Related Party transaction To review any related party transactions and conflict of interest situation that may arise within the Company or Group including any transaction, procedure or course of conduct that raises questions or management integrity. Audit Report To prepare and review the annual Audit Committee Report for the Board s approval. This includes the terms of reference, number of meeting held and attended by members and summary of activities for inclusion in the Annual report. 36 Censof Holdings Berhad Driving Business Solutions

38 audit committee report (cont d) Key Functions and Responsibilities (cont d) External Auditor To review whether there is reason to believe that the external auditors is not suitable for reappointment, to consider the nomination of a person or persons as external auditors and the audit fee and to consider any questions of resignation or dismissal of external auditors. To review external audit plan and scope for the Group. To review the Statement On Risk Management and Internal Control for the Company for the inclusion in the Annual report. To review matters arising from audit finding and to be satisfied with appropriate action taken in response to the findings. Internal Control To review the audit plan, evaluation of the system if internal controls, audit report and management letter and management response and any matters that the External Auditors may wish to discuss (in the absence of the management). To ensure that system of internal control are soundly intact, effectively administered and constantly monitored. Internal Audit To review the adequacy of the scope of the internal audit function, programme, processes or investigation undertaken and whether or not appropriate action is taken on the recommendations of the internal audit findings. Other Matters To promptly report such matter to the Bursa Malaysia Securities Berhad, if the Audit Committee is of the view that the matter reported by it to the Board of Directors has not been satisfactorily resolved resulting in a breach of the Listing Requirements. 4. Summary of Activities undertaken by the Audit Committee for 2012 The Audit Committee met six (6) times during the financial year ended 31 December Attendance by each member of the Audit Committee during the financial year ended 31 December 2012 are as follows:- Meetings Attended (Out of 6 held) Tuan Haji Ab Gani Bin Haron (Chairman) 6/6 Tan Sri Dato Mohd Ibrahim Bin Mohd Zain (Member) 6/6 Boey Tak Kong (Member) 6/6 The Audit Committee Members were served with the meeting agendas and relevant board papers which were distributed earlier before the meeting. The Company Secretary is the Secretary to all Audit Committee meetings. ANNUAL REPORT

39 audit committee report (cont d) Summary of Activities undertaken by the Audit Committee for 2012 (cont d) During the financial year, the activities of the Audit Committee were as follows:- Reviewed the financial statements and unaudited quarterly financial results and announcements of the results before recommending for the Board s approval. Reviewed the scope of audit plan from the Internal Auditors and External Auditors. Reviewed the audit reports and recommendation to improve internal control and management s response thereto. Considered and recommended to the Board the re-appointment of External Auditors and their fee. Review the related party transactions quarterly, if any. Assess on the risk profile of the Group and actions to be taken to mitigate the identified risks. 5. Internal Audit Function The Audit Committee is aware of the fact that an independent and adequately resourced internal audit function is essential to assist in obtaining the assurance it requires regarding the effectiveness of the system of internal control. The Board has outsourced its internal audit function to an independent professional service firm, Messrs KPMG Business Advisory Sdn Bhd. The Internal Auditors report to the Audit Committee at least half yearly. Findings arising from the internal audit review together with the level of concern, the Management s response, recommendations and personnel responsible for implementing corrective actions are presented to the Audit Committee for its review. The costs incurred for the internal audit function for the financial year 2012 is RM39, During the period under review, the Internal Auditors carried out the following activities:- Presented and obtained approval from the Audit Committee the annual internal audit plan, its audit strategy and scope of audit work. Performed audits according to the annual internal audit plan, to review the adequacy and effectiveness of the internal control system, compliance with policies and procedures and reported ineffective and inadequate controls and made recommendations to improve their effectiveness. Monitored and followed-up to ensure Management implemented the action plans as agreed. 38 Censof Holdings Berhad Driving Business Solutions

40 statement on risk management and internal control Introduction A listed company is required to maintain an effective system of risk management and internal control to safeguard shareholders investment and the Group s assets under the Malaysian Code on Corporate Governance Accordingly, the Board is pleased to provide the Statement on Risk Management and Internal Control ( Statement ) that was prepared in accordance with the Guidance for Directors of Public Listed Company issued by Bursa Malaysia Securities Berhad which outlines the processes to be adopted by the Board in reviewing the adequacy and integrity of the system of internal control of the Group. Board Responsibilities The Board acknowledges its overall responsibilities for maintaining a sustainable risk management and internal control systems to safeguard shareholders interests and the Group s assets; and for reviewing the adequacy and effectiveness of these systems. In view of the inherent limitations in any system of risk management and internal control, these systems are designed to manage, rather than to eliminate, the risk of failure to achieve business objectives. Therefore, the systems can only provide reasonable, but not absolute, assurance against material misstatement or financial loss. The process to identify, evaluate and manage the significant risks is a concerted and continuing effort by the Board and Management. The Audit Committee has approved a formal Group risk management policy that has been adopted by all its subsidiaries. It sets out the requirements for consistent reporting when identifying risk and management actions. Management Processes and Control Framework In maintaining a sound system of risk management and internal control, the Board has established an Internal Board (IB), Strategic Management Team ( SMT ) and a Management Committee ( MC ) to firm up key elements in the internal control framework of the Group. The Board has formalised a reporting structure comprising the Group Managing Director, Executive Directors and the Management to ensure that the communication of the Group s objectives, financial issues and risk matters are disseminated to all levels of management through meetings from the IB down to SMT and followed on to departmental level. The Board is firmly of the opinion that the Group consists of qualified professionals with relevant industry experience to manage the operations and business on a day to day basis. Meetings are convened fortnightly on a scheduled and ad hoc basis at IB, SMT and departmental level to strategise action plans, deliberate and resolve operational matters. The Group has the following element in its core system: Organisation Structure and Authorisation Procedures Well-defined Organisational structure with clear lines of reporting to the Board, Committees, SMT and Management with distinct responsibilities, authority limits, review and approval procedures and proper segregation of duties which supports the operation of a stable and controlled environment. Certain transactions are set and formalised with authority limits. Financial Results The financial results are reviewed and recommendation made to the Board for approval on quarterly basis by the Audit Committee. Upon review, the Board would approve and adopt the financial results of the Group. This is in conjunction with the announcement that needs to be made to Bursa Malaysia in compliance with their requirements; ANNUAL REPORT

41 statement on risk management and internal control (cont d) Management Processes and Control Framework (cont d) Internal Audit Function The Group internal audit function is outsourced to an independent professional firm, namely KPMG Management & Risk Consulting Sdn Bhd (formerly known as KPMG Business Advisory Sdn Bhd), which supports the Audit Committee and by extension, the Board, by providing independent assurance on the adequacy and effectiveness of the Group s system of internal controls. Issues noted from internal audit conducted are reported directly by the internal audit function to the Audit Committee, including action plans agreed by Management to be deployed to address the concerns raised. Follow-up is also conducted by the internal audit function which updates the Audit Committee on the status of action plans agreed by Management to address issues highlighted in previous internal audit reports issued; Operations Review and Monitoring The Group s performance is constantly monitored with management reports which are presented by the SMT during meetings periodically. The review covers the performance of the Group against budget and prior year performance on a monthly basis. Variances are analysed thoroughly and corrective actions are taken where necessary. Appropriate actions are taken to mitigate variances which are noted and priorities are placed to enhance performance to meet the budget and objective of the Group; and Human Capital Development and Training Substantial priority is placed on enhancing the quality and ability of employees throughout the year. This is done by planning the training and development for each level. The employees competencies are assessed monthly through the appraisal system and subsequently, potential areas for further development and training are highlighted by the SMT for follow-up. The Board continues to identify, assess and monitor key business risks to safeguard shareholders interests and Company s assests. Currently the Audit Committee at its quarterly meeting reviews the Risk Management Report presented by the respective CEO s of each operating subsidiaries, during which projects of high risk are highlighted and recommendation for action to mitigate the risk are discussed. The Audit Committee Chairman reports to the Board on risk matters and its related development. The Board conduct periodic review of risk management and internal control systems of the Group and the Board is constantly kept abreast on the development affecting the Group s affairs. Conclusion The Board is of the view that there were no material losses during the current financial year as a result of risk management or internal control failure. The Board and Management are firm on implementing continuous measures of improvement to further strengthen the current risk management and internal control systems. The Group Managing Director and Group Financial Controller also believe that the system of internal control is in place throughout the year under review and up to the date of this Statement is sound and effective to safeguard shareholders investment and Group s assets. In addition, the Board regards the risks faced by the Group are within acceptable levels in relation to the industry which the Group operates in. 40 Censof Holdings Berhad Driving Business Solutions

42 events 2012 Raya Open House Celebrating the festive season together as one big family has always been Censof s goal. The annual Raya open house was held on the 11th of September 2012 and it was a huge success. Over 500 guests were present at the event. It was a time of giving and sharing with our clients and suppliers. The day was filled with food, performances by a few in-house talents and not forgetting the presence of all our distinguished guests. In conjunction with the festive spirit and a supportive industry player, censof had also made cash donations to 5 orphanages around Kuala Lumpur and the children had joined us throughout out event. Censof had also taken the opportunity to celebrate our first year anniversary of the new building in Sunway PJ 51a and the opening was graced by the presence of our chairman, Tan Sri Dato Mohd Ibrahim Bin Mohd Zain. PIKOM Annual Gala Dinner Tan Sri Dato Mohd Ibrahim Zain with Datuk Samsul and Tuan Haji Abdul Gani after the cutting of the ribbon into the building Children from Surau Al Taqaw (one of the 5 orphanages) enjoying their meal The PIKOM Gala Dinner is held annually to celebrate the achievement of peers and colleagues in the ICT Industry. On the 2nd of November, Censof attended the dinner held at the Sime Darby Convention Centre. Censof was one of the nominees for the Members Excellence Award 2012.This award honors the PIKOM member for the achievements or breakthroughs made by the organization. The contenders of this award will be evaluated based on the following key criteria: The member must demonstrate significant progress made in the past 12 months that includes growth in Revenue Technological Innovation Regional Vision & Strategy Profitability Key achievements Leadership that created industry standards in operations, product quality, processes, new services or other notable benchmarks Censof was named the winner of this award at the Gala Dinner. ANNUAL REPORT