CONTENTS. Corporate Information 6. Corporate Calender 7. Letter to Shareholders 8-9 股东汇报 Directors Profile 12-14

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1 CONTENTS Corporate Information 6 Corporate Calender 7 Letter to Shareholders 8-9 股东汇报 Directors Profile Corporate Governance Statement Report of Audit Committee Additional Listing Requirements Compliance Information 24 Statement on Internal Control 25 Statement of Directors Responsibility 26 Financial Statements Supplementary Information 87 List of Properties 88 Analysis of Shareholding Notice of Eighth Annual General Meeting Statement Accompanying the Notice of Eighth Annual General Meeting 93 Proxy Form Enclosed 1 Annual Report 2010

2 Malaysia Thailand Indonesia China

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4 Menyerap dan menghuraikan bahan-bahan berbahaya Menyerap dan menghuraikan bau Menyerap dan melepaskan kelembapan untuk bernafas Kalis api dan anti pembakaran COMPLY WITH SINGAPORE GREEN LABELLING SCHEME (SGLS), CATEGORY 032

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6 Corporate Information BOARD OF DIRECTORS Tan Fie Ping - Chairman and Managing Director Tan Fie Jen - Executive Director Lau Lee Cheng ( Appointed on 21st May 2010 ) - Executive Director Tan Bee Ngoh ( Resigned on 1st June 2010 ) - Executive Director Tan Lay Beng - Independent Non-Executive Director Azahar bin Baharudin - Independent Non-Executive Director Winston Paul Wong Chi Huang - Independent Non-Executive Director COMPANY SECRETARIES Rokiah Binti Abdul Latiff (LS ) Ow Pee Juan (f) (MAICSA ) Noriah Binti Md Yusof (LS ) SHARE REGISTRAR Symphony Share Registrars Sdn Bhd Level 6, Symphony House Block D13, Pusat Dagangan Dana 1 Jalan PJU 1A/46, Petaling Jaya, Selangor Tel: Fax: AUDITOR Crowe Horwath (Formerly known as Horwath) Level 30, Menara Landmark Mail Box 171, 12 Jalan Ngee Heng Johor Bahru Tel : Fax : PRINCIPAL BANKER EON Bank Berhad 37 & 39 Jalan Johar 1, Taman Desa Cemerlang Ulu Tiram Johor Tel : REGISTERED OFFICE Level 31, Menara Landmark Mail Box 172, 12 Jalan Ngee Heng Johor Bahru Tel : Fax : STOCK EXCHANGE LISTING ACE MARKET OF BURSA MALAYSIA SECURITIES BERHAD Stock Name : SERSOL Stock Code : 0055 CORPORATE WEBSITE 6 Sersol Technologies Berhad ( X)

7 Corporate Calender DATE 6 July 2010 EVENTS The Company announced that the Securities Commission ("SC") has vide its letter dated 2 July 2010, approved the application made by TA Securities Holdings Berhad ("TA Securities") on behalf of SerSol, in respect of : (1) proposed revision of the 30% Bumiputera equity participation to 12.5%; and (2) proposed extension of time to comply with the Bumiputera equity participation. The SC has approved an extension of time of up to 2 January 2012 for the Company to allot 12.5% of its enlarged issued and paid-up share capital ("Bumiputera Shares") to Bumiputera investors recognised by the Ministry of International Trade and Industry ("MITI"). TA Securities/the Company is required to implement the following: (i) To submit to the SC within a period of six (6) months from the date of MITI's approval in relation to the recognition of the existing Bumiputera shareholders of the Company, a corporate proposal which would allow the Company to comply with the Bumiputera equity condition imposed on the Company; (ii) To submit an application to the MITI for the allocation of Bumiputera Shares to the (iii) Bumiputera investors; and To submit to the SC, a quarterly report on the progress of the allocation process in respect of paragraph (ii) above. In the event that the Bumiputera Shares are not fully subscribed by the Bumiputera investors or MITI is unable to allocate the said Bumiputera Shares within a period of one (1) year from the date of application made by TA Securities to MITI, the Company will be deemed to have complied with the Bumiputera Equity condition. 21 ST JULY 2010 The Company announced that the MITI has approved the following: (i) Extension of time of fifteen (15) months up to 2 January 2012 to comply with the 12.5% Bumiputera equity participation ("Extension of Time"); and (ii) Recognition of the existing Bumiputera shareholders of SerSol holding 4,810,700 ordinary shares of 0.10 each in SerSol representing approximately 5.07% of SerSol's issued and paid-up share capital as at 31 March 2010 as "Bumiputera Investors". 30 th DECEMBER 2010 The Company announced that SerSol had submitted the following proposals to the Equity Compliance Unit of Securities Commission and MITI for approval. (i) The issuance of up to 8,064,000 new ordinary shares of 0.10 each in SerSol ( SerSol Shares ), representing approximately 8.5% of the existing issued and paid-up share capital of SerSol, at an issue price to be determined later to the Bumiputera investors to be nominated by the MITI which fall within the ambit of Schedules 6 and 7 of the Capital Markets and Services Act 2007 ( MITI Nominated Bumiputera Investors ) ( Proposed Special Bumiputera Issue ) such that the total Bumiputera equity interest in the Company after the Proposed Special Bumiputera Issue and the existing 4,810,700 the Company Shares held by the existing Bumiputera investors recognised by the MITI pursuant to the letter of approval from the MITI dated 20 July 2010 will aggregate to 12.5% of the enlarged issued and paid-up share capital of SerSol; (ii) An increase in its authorised share capital from 10,000,000 comprising 100,000,000 SerSol s Shares to 25,000,000 comprising 250,000,000 SerSol s Shares ( Proposed Increase in Authorised Share Capital ) to facilitate the Proposed Special Bumiputera Issue in the event the MITI Nominated Bumiputera Investors subscribe for more than 5,069,000 new SerSol s Shares. The Proposed Increase in Authorised Share Capital will cater for the issuance of more than 5,069,000 new SerSol s Shares pursuant to the Proposed Special Bumiputera Issue as well as to cater for any future issuance of new SERSOL s Shares; and (iii) An amendment to its Memorandum & Articles of Association to effect the Proposed Increase in Authorised Share Capital if the Proposed Increase in Authorised Share Capital is undertaken. 7 Annual Report 2010

8 Letter to Shareholders Dear Shareholders, on behalf of my fellow Board members, I am pleased to present to you the annual report of our Company and our review of the financial results of our SerSol Group for the financial year ended 31 December 2010 ( FYE 2010 ). I look forward to your utmost tolerance and support. PERFOANCE REVIEW The review of 2010 s financial report revealed that the 2009 s financial crisis has subsequent-impact onto the 2010 s earnings. In FYE 2010, our SerSol Group recorded a loss after taxation of 2.40 million as compared to a loss after taxation of 1.35 million for the FYE Our Sersol Group s revenue for FYE 2010 amounting to million represents an increase of approximately 12.99% from FYE After the deduction of minority interest, our SerSol Group s loss after taxation was 1.88 million. At every quarterly Board s meeting held in 2010, the Board of Directors was concerned with our SerSol Group s core business and whether the Management s competencies can match with this evolving time. In this ever-changing business environment, the group needs to adjust its business model and sends our staffs for continuous training. The group expands its business frontier; harnesses different themes and creates new winning formulas. I will now summarize the results for our Group s subsidiaries and the measures going-forward: 1. MALAYSIA A. MULTI SQUARE SDN. BHD. ( MSSB ) MSSB s turnover increases from million for FYE 2009 to million for FYE 2010, representing an increase of 23.52%. There is no sign of increase in the demand of plastic coating at this moment, as our customers have no intention of changing the cosmetic colors. Our customers understand that outlook can no longer be the key factor to command the market, thus spurring them to upgrade the electric appliances functionalities. For the purpose of business developments, MSSB will be ever innovative and ever adaptive. In consideration of cost-benefits analysis, product life cycle and risk involved, MSSB is moving towards protective coating and copper slitting business. B. DECO COATINGS SDN. BHD. ( DCSB ) In view of the unsatisfactory performance of granite-paint business, the management decided to halt it and move on to green product Diatomite material for wall plastering. DCSB looks forward for a breakthrough. 2. THAILAND MULTI SQUARE COATING THAILAND CO. LTD. ( MSCT ) SerSol Group refreshes the entire fleet of MSCT s management team and technical team in the hope that the year 2011 can bring good records for the Group. 3. INDONESIA PT MULTI SQUARE ( PTMS ) In the year 2010, PTMS s total revenue is 2.47 million with a profit after taxation of 12,000. Demand of coating for electronic appliances is declining. The business model for PTMS is heading towards a much broader market base. PTMS has now embarked on trading in floor-care products. 8 Sersol Technologies Berhad ( X)

9 Letter to Shareholders... continued 4. CHINA ASSET CAPITAL HOLDINGS LTD. ( ACHL ) AND ZHUHAI MS COATING LTD. ( ZMCL ) In view that China is geared towards speed-economy, outdated business model will no longer be suitable in the ever competitive China s market. ACHL and ZMCL need to adjust its current business-model. In the year 2010, price comparison business model was used which resulted in its poor performance. In the year 2011, quality and service business model will be their new directives. 5. SINGAPORE MULTI SQUARE (S) PTE. LTD. ( MSPL ) MSPL has signed a 5 years worldwide distributorship agreement with a professional floor care product company. PROSPECTS FOR FYE 2011 Despite of the economic uncertainties that existed around the globe, we understand the principles of this ever-changing world. Therefore, our SerSol Group harnesses existing resources and gears the current situations towards brighter prospects. For the financial year ending 2011, I believe that it will be a challenging year for SerSol Group. However I believe that with our new strategies and continuous effort to seek new business ventures, the performance of SerSol Group will improve. ACKNOWLEDGEMENTS On behalf of the Board of Directors, I would like to thank our management team and our employees for their dedication, loyalty and hard work. Further, on behalf of our Board of Directors and management, I would also like to express my sincere gratitude to all our shareholders, customers, business associates, vendors, bankers and regulatory authorities for their continuous support and trust in our SerSol Group and our Board. Finally, on a personal note, I would like to thank my fellow directors for their invaluable advice and contribution to the success of SerSol Group. Tan Fie Ping Chairman 9 Annual Report 2010

10 股东汇报 亲爱的股东们 : 您们好! 本人非常荣幸代表董事局向各位股东们汇报盛资科技集团与属下子公司 ( 以下简称 盛资集团 或 本集团 ) 截止至 2010 年 12 月 31 日的年终报告 在此希望股东给予最大的容忍与支持 年的财务报告显示,2009 年的金融危机延续影响了 2010 年的收入 以致本集团从 2009 年的税后亏损马币一百三十五万, 跌至 2010 年的税后亏损马币二百四十万 而盛资集团 2010 的总营业额达马币二千五百万, 比 2009 年的营业额多了 12.99% 扣除少数权益后, 实際税后亏损是马币一百八十八万 回顾董事局在 2010 每季度会议里, 都关心于集团核心産品, 管理人的能力是否能与時並进 在这变幻莫测的商业环境里, 集团时常调整商业模式, 并给予员工培训 在搭积木 (LEGO) 模型行业当中, 扩大策略范围 善用不同的搭配方式, 创造新的赢利组合 本人在此进一步汇报各个子公司的发展状况和商业方向 1. 马来西亚 A. MULTI SQUARE SDN. BHD. ( MSSB ) 在 2010 年里, MSSB 的总营业额从 2009 年的马币一千五百三十万升至马币一千八百九十万, 升幅达 23.52% 目前 OEM 廠商無意更改塑胶品的外观颜色, 导致塗料需求無增长的趋势 我们的客户了解, 再也不能以貌爭取市场 ; 从而带动他们升级电器功能 为着企业的发展, 唯一途径是不断的创新 在创新里考虑成本效益分析, 产品生命周期, 涉及的风险之下, MSSB 将朝向着保护塗料及铜分条业务 B. DECO COATINGS SDN. BHD. ( DCSB ) 鉴于外墙塗料表现欠佳, 管理层决定停止外墙塗料的生意, 并转移到绿色产品 - 硅藻泥墙面塗料 DCSB 期待突破 2. 泰国 MULTI SQUARE COATING THAILAND CO. LTD. ( MSCT ) 本集团重整 MSCT 人事资源, 把旧有的泰籍管理与技术人员彻底更換, 希望能在 2011 年给予集团新的成绩單 3. 印尼 PT MULTI SQUARE ( PTMS ) 2010 年 PTMS 的总营业额为马币二百四十七万, 税后盈利为马币一万二千 末耒展望是 : 电器塗料再也不是主要收入耒源, PTMS 将朝向较大市场领域发展. PTMS 已着手于石材护理塗层之贸易 4. 中国 ASSET CAPITAL HOLDINGS LTD. ( ACHL ) AND ZHUHAI MS COATING LTD. ( ZMCL ) 鉴于中国正在朝向速度经济, 过时的商业模式不再适合当今竞爭激烈的中囯 ACHL 和 ZMCL 调整目前的商业模式 在 2010 年里, 采用价格比较商业模式, 结果表现不佳 在 2011 年, 优质的质量和服务商业模式将是新的指标 10 Sersol Technologies Berhad ( X)

11 股东汇报... 续 5. 新加坡 MULTI SQUARE (S) PTE. LTD. ( MSPL ) 新加坡公司与一家专业石材护理塗层产品公司签暑代理囯際市场开发权为期五年 2011 的展望 尽管全球经济存在不确定性, 我们理解这个不断变化世界的原则 因此, 集团充份利用现有的资源, 把目前的情况驰向光明的前景 我相信 2011 将是一个充满挑战的一年 我们新的战略和持续的努力寻求新的商业商机, 集团的表现将会改善 鸣谢 本人代表董事局, 感谢我们的管理层和全体员工一直以来尽忠职守和竭诚服务, 同时也由衷感谢各位尊贵的股东 客户 商业同仁 供应商, 政府机关和有关当局一直以来给于盛资集团及属下子公司的支持与合作 最后, 本人谨此感谢董事局成员过去一年来对本集团的支持与信任, 对于各董事局成员提出的宝贵意见深感谢意 Tan Fie Ping 主席 11 Annual Report 2010

12 Directors Profile TAN FIE PING Age 49, Malaysian (Chairman and Managing Director) Mr Tan Fie Ping, began his career as a production supervisor in Daihwa (M) Sdn Bhd in He was appointed to the Board of SerSol Technologies Berhad on 1 September He is currently the Chairman and Managing Director of the Company. He graduated with a Bachelor of Business Studies degree in 1985 from the University of Winnipeg, Canada. While serving in Daihwa, he was holding several key positions in the company during different period of time. These positions include Head of Department for the 2nd Process Department, Head of Secondary Sales and Marketing Department and Head of the Purchasing Department. He left Daihwa and joined Lea Tat (M) Sdn Bhd as Manager in 1991 before leaving the Company in 1992 to set up his own business. He is the pioneer of the Group and has vast working experience in the Electrical and Electronics and industrial coatings industries. He is the spouse of Tan Bee Ngoh and the brother of Tan Fie Jen. He has no conflict of interest with the company and has no conviction for any offences within the past 10 years. TAN FIE JEN Aged 46, Malaysian (Executive Director) Mr Tan Fie Jen, was appointed to the Board on 1 September He is currently the Executive Director of the Company. He graduated from the Tunku Abdul Rahman College with a Diploma in Building in He began his career as Sales Executive in various companies such as Hunter Products (M) Sdn Bhd, Supermax Enterprise and Lea Tat (M) Sdn Bhd. He joined the Group of the Company as Sales Executive in 1992 and has been promoted as Assistant General Manager in He has 17 years of experience in the industrial coating industries. He was promoted to Chief Operating Officer in Multi Square Sdn Bhd in 2006 and currently, he is working in SerSol Technologies Berhad as Marketing Director since He is the brother of Tan Fie Ping. He has no conflict of interest with the company and has no conviction for any offences within the past 10 years. TAN BEE NGOH (Resigned on 1st June 2010) Aged 49, Malaysian (Executive Director) Ms Tan Bee Ngoh was appointed as an executive Director on 1 September She graduated with a Bachelor of Economics degree from the University of Winnipeg, Canada in She has started her career as a Purchaser in Claytan Industries Sdn Bhd for three years before she joined Fairwood Furniture (M) Sdn Bhd as a Personnel Officer. She then joined the Group in 1992 as a Director and the Administrator of the Company. She is the spouse of Tan Fie Ping. She has no conflict of interest with the company and has no conviction for any offences within the past 10 years. 12 Sersol Technologies Berhad ( X)

13 Directors Profile... continued LAU LEE CHENG (Appointed on 21st May 2010) Age 33, Malaysian (Executive Director) Ms. Lau Lee Cheng was appointed as an executive Director on 21st May She graduated with a Master s degree in Science, majoring in Chemistry Industry from University of Technology Malaysia in the year She started her career with the Company as a Chemist and was promoted to Chemical Engineer in the year In 2005, she was promoted to Manager for R&D department. In the year 2006 and 2008, she was appointed as Assistant General Manager and General Manager of Multi Square Sdn Bhd respectively. She does not have any family relationship with any Director and / or substantial shareholder of the Company, nor does she have any personal interest in any business arrangement involving the Company. She has no convictions for any offences within the past 10 years. TAN LAY BENG Aged, 57, Malaysian (Independent Non-Executive Director) Ms Tan Lay Beng was appointed as Independent Non-Executive Director of the Company on 1 September She obtained her certificate as a Certified & Chartered Accountants (ACCA) from the Association of Certified and Chartered Accountants United Kingdom in 1984 and was subsequently accredited with Fellow Certified and Chartered Accountant (FCCA). She is currently a Chartered Accountant of the Malaysian Institute of Accountants and a Fellow Member of the Malaysian Institute of Taxation. She has started her career in the accounting and auditing field in After eight (8) years, she chose to specialize in taxation work whereby she became the Tax manager of a medium size firm and then continued her career in taxation work with Price Waterhouse in She left the firm to set-up her own consultancy firm. She does not have any family relationship with any Director and / or substantial shareholder of the Company, nor does she have any personal interest in any business arrangement involving the Company. She has no convictions for any offences within the past 10 years. AZAHAR BIN BAHARUDIN Aged 55, Malaysian (Independent Non-Executive Director) En Azahar was appointed as Independent Non-Executive Director of the Company on 1 September He graduated from MARA Institute of Technology in He began his career in 1977 in United Asian Bank and joined Affin Bank Berhad in 1991 as an Executive Officer. In 1992 he was promoted to Head of Credit and became a Deputy Branch Manager of Johor Jaya branch in In 1994 he has been promoted as Branch Manager and worked in various branches of the Bank in Johor. He served with the Bank until 2003 with his last position as its Johor, Business Centre Head. He is currently a freelance financial consultant. Overall he has 27 years of experience in the banking industry. He is currently also an Independent Non Executive Director of Gromutual Berhad, a public-listed company on the main board of Bursa Securities. He does not have any family relationship with any Director and / or substantial shareholder of the company, nor any personal interest in any business arrangement involving the company. He has no convictions for any offences within the past 10 years. 13 Annual Report 2010

14 ... continued Directors Profile Winston Paul Wong Chi-Huang Independent Non-Executive Director Winston Paul Wong Chi-Huang, aged 41, a Malaysian, was appointed to the Board as an Independent Non-Executive Director on 31 December He is also the member of the Nomination Committee and the Audit Committee. He graduated from the University of Keele, UK in 1993 with a Bachelor of Arts Degree Second Class Upper (Hons) in Law and Management. In 1997 he obtained his Masters of Laws degree from the National University of Singapore. He was called to English Bar in 1994 and admitted to practice to the Malaysian Bar in 1995 and to the Singapore Bar in He started his career as a lawyer in the firm of Messrs Abdul Raman Saad & Associates in 1995 and was with the firm until February While he was at Messrs Abdul Raman Saad & Associates, he was a Partner and Head of Department of the Corporate Finance and Capital Markets Department. In March 2006, Mr. Winston Wong joined Messrs Adi Radlan & Co as a Partner and he was also the Head of the Corporate and Commercial Department of Messrs Adi Radlan & Co until March In April 2007, he and Ms Pamela Wong set up a new law firm under the name of Winston Wong Law Chambers. In May 2009, the law firm of Winston Wong Law Chambers was merged with Messrs Tea, Kelvin Kang & Company and since then, he has been a partner of Messrs Tea, Kelvin Kang & Company. Since June 2007 he has also been attached to Wong Partnership LLP, one of Singapore s leading law firms and in April 2009, he was appointed as partner of Wong Partnership LLP. While in Wong Partnership LLP, he was a partner in the debt capital markets practice group. He retired from legal practice in both Malaysia and Singapore in February 2011 after 16 years in practice. In February 2011, he joined Avnet Asia Pte Ltd, a subsidiary of Avnet Inc as associate general counsel for Asia-Pacific for its information technology solutions business. Avnet Inc, is the world leading electronic components and information technology solutions distributor and has been listed on the New York Stock Exchange for 50 years. He is currently also an independent non-executive director of Plastrade Technology Berhad, a company listed on the ACE Market of Bursa Securities. He does not have any family relationship with any Director and/or substantial shareholder of the Company, nor any personal interest in any business arrangement involving the Company. He has had no convictions for any offences within the past 10 years. 14 Sersol Technologies Berhad ( X)

15 Corporate Governance Statement The Board recognizes the importance of corporate governance in discharging its responsibilities, protecting and enhancing shareholders value through promoting and practicing high standards of corporate governance throughout the Group. The Board adopts and applies the principles and best practices as governed by the Listing Requirements of Bursa Malaysia Securities Berhad for the ACE Market and the Malaysia Code on Corporate Governance (Revised 2007) (Code). The following statements set out the Group s compliance with the principles of the Code. A. DIRECTORS 1. The Board The Board of Directors has primary responsibility for the governance and management of the Group and fiduciary responsibility for the financial health of the company. The Group acknowledges the importance of having an effective Board to lead and control the Group. The Board s responsibilities include: a) Review and approve the annual corporate plan for the Group b) Review and approve strategic initiatives including corporate business restructuring or streamlining and strategic alliances. c) Oversee the conduct of the Group s businesses to evaluate whether the businesses are being properly managed d) Indentify principal risks and ensure the implementation of appropriate systems to manage these risks e) Develop succession plan for senior management and an investor relations programme. f) Regularly review the adequacy and the integrity of the Group s internal control system and management information systems to ensure compliance with the applicable laws, regulations, directives and guidelines. g) Review the Memorandum and Articles of Association of the Company if there is any change of object clause and Company s internal affair. h) Regularly review the adequacy and ensure the Group s operation is in compliance with the requirements and regulations of Bursa Malaysia and Securities Commission. i) Define the limits of management responsibility. Review the information from management which includes: i) Customers satisfaction ii) Products and service quality iii) Market response and market reaction iv) Environmental performance 2. Board Balance The Board of Directors comprises six (6) Members, of whom three (3) are Executive Directors and three (3) are Independent Non-Executive Directors. The Board comprises professionals drawn from various backgrounds in business, finance, technical and legal. They are bringing in-depth and diversified experience, expertise and perspectives to the Group s business operations. The Chairman of the Board, Mr Tan Fie Ping is the pioneer of the Group and has vast working experience in the coating industry. He is also the Managing Director of the Company. The role of Chairman and Managing Director is combined due to his proven track record in displaying his entrepreneurship and leadership skills and in-depth experience in coating industry. Despite the combined roles, the Board is of the view that there are sufficient Independent Directors on the Board to ensure fair and objectives deliberations at Board meetings. The Independent Directors play a crucial role in exercising independent judgment and objective participation in the proceedings and decision making process of the Board. The Board is satisfied that the current Board composition fairly reflects the interests of minority shareholders. 2.1 Board Meeting Five (5) Board meetings were held during the financial year ended 31 December Directors attendance to the meeting can be found in the Statement Accompanying the Notice of the Eighth Annual General Meeting on page Annual Report 2010

16 ... continued Corporate Governance Statement 3. Supply of Information All Board members are provided with documents and relevant information for them to review the agenda items prior to Board meetings. Senior management staff are invited to attend Board meetings when necessary to provide further clarifications on matters being tabled. The Board has access to information with regard to the activities within the Group and to the advice and services of the Company Secretary, who is responsible for ensuring the Board meeting procedures are adhered to. As and when necessary, the Board may seek independent advice, at the Company s expense. 4. Board Committees The following principal Board Committees that have been established to assist the Board in discharging its duties effectively: Audit Committee Nomination Committee Remuneration Committee The terms of reference of each Board Committee have been approved by Board and, where applicable, comply with the recommendations of the Code. These Committees have the authority to examine particular issues and report to the Board and report to the Board with their recommendations. Nonetheless, the ultimate responsibility for the final decision on such matters lies with the Board. 4.1 Audit Committee The Board has established the Audit Committee to assist the Board in discharging its duties. The Audit Committee works closely with the external and internal auditors and maintains a transparent professional relationship with them. The composition, term of reference, duties and responsibilities and other information of Audit Committee are set out on pages 20 to 23 in this Annual Report. 4.2 Nomination Committee The Nomination Committee consists of three Non-Executive Directors and meets as and when required. The Nomination Committee is responsible for annual review of Board s required mix of skill, experience, quality and core competencies of the Directors, annual assessment of the effectiveness of the Board as a whole and the contribution of each individual Director. The Nomination Committee is also responsible for making recommendations for new appointment to the Board by considering the skills, knowledge, professionalism required by the Group. The actual decision as to who should be nominated will be the responsibility of the full board after considering the recommendations of the committee. The Company Secretaries will ensure that all appointments are properly made; all the necessary information is obtained as well as all legal and regulatory obligations are met. The members of the Nomination Committee are as follows:- Tan Lay Beng Azahar bin Baharudin Winston Paul Wong Chi Huang (Independent Non-Executive Director) (Independent Non-Executive Director) (Independent Non-Executive Director) 4.3 Remuneration Committee The Committee was set up on 22 November Its responsibilities include reviewing and recommending the remuneration package for each director based on the employment conditions within the industry. The Executive Directors remuneration package will be assessing based on individual performance while the remuneration of Non-Executive Director will be evaluated on individual contribution and responsibilities. Director does not participate in the discussion of his individual remuneration. It is, nevertheless, the ultimate responsibility of the entire Board to approve the remuneration of these Directors. The determination of the remuneration of Non-Executive Directors is a matter of the Board as a whole. The members of the Remuneration Committee are as follows:- 16 Tan Fie Ping Tan Lay Beng Azahar bin Baharudin (Chairman and Managing Director) (Independent Non-Executive Director) (Independent Non-Executive Director) Sersol Technologies Berhad ( X)

17 Corporate Governance Statement... continued 5. Appointment and Re-election of Directors Any appointment of a new Director to the Board or Board Committee is recommended by Nomination Committee for consideration and approval by the Board. In accordance with the Company s Articles of Association, one-third of the Directors for the time being shall retire from office at each Annual General Meeting ( AGM ). A retiring director shall be eligible for re-election. Directors who are appointed by the Board during the financial year are subject to re-election by the shareholders at the next AGM held following their appointments. Details of Directors seeking re-election at the Eighth Annual General Meeting are disclosed in the Statement Accompanying the Notice of AGM on page 93 in this Annual Report. 6. Directors Training The directors are aware of their duty to undergo appropriate trainings from time to time; so as to ensure that they are equipped to carry out their duties effectively. The following Directors have attended various trainings as a continuous effort to enhance management skills. Stated below is the list of courses attended for the financial year ended 31 December 2010: Name of Directors Name of courses Date Tan Fie Ping Mergers and Acquisitions 22 & 23 April 2010 Tsinghua CEO Programme 2010 May, June, September, October, November 2010 Lau Lee Cheng Fraud Management Training 11 & 12 March 2010 Mandatory Accreditation Programme (MAP) 22 & 23 September 2010 for Directors of Public Listed Companies Tan Lay Beng Analysis of recent tax cases 11 March 2010 National Tax Conference 6 July 2010 Panelist for 2011 Budget for LHDN (JB) 21 October 2010 Panelist for 2011 Budget for LHDN (Muar) 4 November 2010 Azahar Bin Baharudin Mastering The Innovative & Creativity Skill 10 &11 June 2010 Winston Paul An overview of Business Trust 11 January 2010 Wong Chi Huang Takeover Process 19 March 2010 Insider Trading 29 March 2010 Security Documents 23 April 2010 Continuing Listing Obligations for SGX Listed 19 May 2010 Companies Derivatives Workshop 22/ & 29 July 2010 Circular for SGX Listed Companies 30 September 2010 Functions of Take-over Process 2 November 2010 Tan Fie Jen Due to busy oversea business trips, no training record for the year Annual Report 2010

18 ... continued Corporate Governance Statement B. DIRECTORS REMUNERATION The Directors fees are subject to the approval of shareholders at the Company s Annual General Meeting (AGM). The aggregate remuneration of Directors of the Company during the financial year are as follows:- Salaries & other Emoluments Fees Total () () () Executive Directors 845,023 48, ,023 Non-Executive Directors 17,050 72,000 89,050 Total 862, , ,073 Number of Directors Range of remuneration per annum Executive Non-Executive Below 50, , , , , , , , , , , , , , , , , , , , ,000 C. SHAREHOLDERS 1. Dialogue Between Companies and Investors The Group recognizes the importance of keeping shareholders and investors informed of the Group s business and corporate developments. Such information is disseminated via the Group s annual report, circulars to shareholders, quarterly financial results and the various announcements made from time to time. The Group s website is and shareholders as well as members of the public are invited to access for the latest information of the Group. 2. Annual General Meeting The Annual General Meeting (AGM) is the principal forum for dialogue with individual shareholders and investors. Shareholders are given opportunity to seek clarification on any matter pertaining to the business activities and financial performance. 18 Sersol Technologies Berhad ( X)

19 Corporate Governance Statement... continued D. ACCOUNTABILITY AND AUDIT 1. Financial Reporting It is the Board s responsibility and commitment to provide a balanced and comprehensive assessment of the Group s operation and prospects in all the quarterly reports and annual financial statements to shareholders, investors and Regulatory Authorities. The Board is assisted by the Audit Committee to review information for disclosure, the quality of the financial reporting and to ensure accuracy and completeness. The statement of Directors Responsibility in respect of the Audited Financial Statements of SerSol Technologies Berhad is set out on page 26 of this annual report. 2. Internal Control The Board recognizes the responsibilities to maintain an effective system of internal controls to safeguard the shareholders interest and the Group s assets. The Group s system of internal controls is presented in the Statement on Internal Control on page 25 in this Annual Report. 3. Relationship with Auditors The Board ensures that there are formal and transparent arrangements for the achievement of objectives and maintenance of professional relationship with external auditors. The external auditors have full access to the books and records of the Group at all times. From time to time, the external auditors highlight and update the Board and Audit Committee on matters that require their attention. E. OTHERS Audit Committee The composition and terms of reference of Audit Committee together with its report are presented on pages 20 to 23 of this annual report. Non-Audit Fees During the financial year under review, the amount of non-audit fees paid out or payable to the external auditors of the Group is 38, Annual Report 2010

20 Report of Audit Committee 1. COMPOSITION The Audit Committee shall be appointed by the Board amongst its directors and shall be financially literate. At least one member of the Audit Committee a. must be a member of the Malaysian Institute of Accountants (MIA); or b. if he is not a member of MIA, he must have at least three years working experience; and i) he must have passed the examinations specified in Part I of the 1st Schedule of the Accountants Act 1967 ; or ii) he must be a member of one of the associations of accountants specified in Part II of the 1st Schedule of the Accountants Act 1967 c. fulfills such other requirements as prescribed by Bursa Malaysia Securities Berhad or approved by the Securities Commission. The present Audit Committee comprises of 3 members of the Board. The Company has complied to the Bursa Securities Listing Requirements that came into effect on 1 June 2001, which require a majority of Audit Committee members to be independent Directors. In addition, the Audit Committee has one Director who is also member of the Malaysian Institute of Accountants ( MIA ) and the Chairman of the Audit Committee is an Independent Non-Executive Director. 1.1 Members Members of the Audit Committee are as follows: Ms Tan Lay Beng En Azahar bin Baharudin Mr Winston Paul Wong Chi Huang Independent Non-Executive Director (Appointed with effect from 01/09/2004) Independent Non-Executive Director (Appointed with effect from 01/09/2004) Independent Non-Executive Director (Appointed with effect from 31/12/2007) 1.2 Chairman of Audit Committee The Chairman of the Audit Committee is Ms Tan Lay Beng, an Independent Non-Executive Director 1.3 Constitution The Audit Committee of SerSol Techonologies Berhad ( Sersol ) was established by the Board of Directors ( the Board ) in The terms of Reference of Audit Committee are set out in this page of this Annual Report. 20 Sersol Technologies Berhad ( X)

21 Report of Audit Committee... continued 2. TES OF REFERENCE 2.1 Composition of the Audit Committee The Audit Committee shall be appointed by the Board of Directors from amongst its members, which fulfills the following requirements:- a. The Audit Committee must comprise at least 3 members. b. A majority of the Audit Committee must be Independent Directors. c. No Alternate Director shall be appointed as a member of the Audit Committee. d. None of the Audit Committee members must be Executive Directors The Members of Audit Committee shall then elect a Chairman from among themselves who shall be an Independent Director. All members of Audit Committee, including the Chairman, will hold office only so long they serve as Directors of SerSol Technologies Berhad. The Board of Directors must review the term of office and performance of the Audit Committee and each of its members at least once every 3 years to determine whether the Audit Committee has carried out its duties in accordance with its terms of reference. 2.2 Secretaries of the Audit Committee The Company Secretaries of SerSol Technologies Berhad shall be the Secretaries of the Audit Committee. 2.3 Objective of the Audit Committee The objective of the Audit Committee is to assist the Board to discharge its responsibilities by reviewing the adequacy and integrity of the Company and the Group s internal control systems and management information systems, including system for compliance with applicable laws, regulations, rules, directives and guidelines. Audit Committee is also to reinforce the independence of the external auditors and thereby helps assure that they will have rein in the audit process and to provide, by way of regular meetings, a line of communication between the Board and the external auditors. 21 Annual Report 2010

22 ... continued Report of Audit Committee 3. Duties and Responsibilities of Audit Committee The following are the main duties and responsibilities of the Audit Committee: a. To recommend to the Board on the appointment and annual reappointment of the external auditors and their audit fee, after taking into consideration the independence and objectivity of the external auditors and cost effectiveness. b. Discuss with the external auditors before the audit commences the nature and scope of the audit, the audit plan and ensure co-ordination where more than one audit firm is involved. c. To review the quarterly interim results, half year and annual financial statements of the Company and the Group prior to the approval by the Board and focusing on :- i) change in accounting policies and practices ii) significant adjustments arising from the audit iii) the going concern assumption and iv) compliance with accounting standards and other regulatory requirements. d. Discuss problems arising from the interim and final audits and any matter the auditor may wish to discuss in the absence of the management where necessary. e. Review the external auditor s management letter and management s response. f. Evaluate the internal audit function on: i) adequacy of the scope, functions and resources of the internal audit function and that it has the necessary authority to carry out its work ii) the internal audit programme and results of the internal audit process and, where necessary, ensure that appropriate actions are taken on the recommendations of the internal audit function. iii) iv) the review of appraisal or assessment of the performance of members of the internal audit function the approval of any appointment or termination of senior staff members of the internal audit function ; and v) the resignations of internal audit staff members and provide the resigning staff member an opportunity to submit his reasons for resigning. g. Consider the major findings of internal investigations and management s response. h. Review any related party transactions and conflict of interest situation that may arise within SerSol Group, including any transaction, procedure or source of conduct that raises questions of management integrity. i. Consider other issues as defined by the Board. 4. Authority of the Audit Committee a. Have explicit authority to investigate any matter within its terms of reference. b. Have the resources required to perform its duties. c. Have full and unrestricted access to any information, records, properties and personnel of SerSol Technologies Berhad and any of other companies within the Group. d. Have direct communication channels with the external auditors and person(s) carrying out the internal audit function or activity (if any) e. Be able to obtain independent professional or other advice and to invite outsiders with relevant experience and expertise to attend the Audit Committee s meeting (if required) and to brief the Audit Committee; f. Be able to convene meetings with external auditors or management team without the presence of the executive board members, whenever deemed necessary. 22 Sersol Technologies Berhad ( X)

23 Report of Audit Committee... continued 5. Frequency of Meetings The Audit Committee shall hold a minimum of at least four (4) meetings in a financial year. The number of Committee meetings held during a financial year and the details of attendance of each individual member in respect of meetings held shall be disclosed annually. The meeting shall be chaired by the Chairman of Audit Committee or in the absence of the Chairman, another committee member who is an Independent Director nominated by the committee members. The quorum of the meeting is the majority of whom shall be Independent Directors. The Chairman also has the discretion to call for additional meetings at any time. The Committee Secretaries shall attend each Audit Committee Meeting and record the proceedings of the meeting. 6. Meetings Five (5) Audit Committee meeting were held within the financial year ended 31 December 2010 during the tenure of the present Audit Committee. Details of the attendance of the members at the Audit Committee meeting are as follows: Name of Audit Committee Member No. of Meeting attended Ms Tan Lay Beng 5/5 En Azahar bin Baharudin 5/5 Mr Winston Paul Wong Chi Huang 5/5 The Managing Director of the Company and the representatives from the External Auditors have attended the Audit Committee meetings conducted during the financial year under review. 7. Activities During the financial year, the Audit Committee has conducted its activities in accordance with its existing Terms of Reference, which include: a) Quarterly meetings to review the quarterly results b) Discuss with the management on the business performance c) Review Risk Management reports and Internal Audit reports with Head of Internal Audit to assess the effectiveness of the system of internal controls in the areas audited. d) Discuss the annual audited financial statements with the external auditors as well as their findings and recommendations. e) Review and consider any related party transaction that may or have arisen within the Group. 23 Annual Report 2010

24 Additional Listing Requirements Compliance Information The information set out in the Annual Report is made up to a date not earlier than 6 weeks from the date of Annual General Meeting of the Company. To comply with the Listing Requirements of Bursa Securities, the following additional information is provided: SHARE BUYBACKS There were no share buy backs during the financial year ended 31 December OPTIONS, WARRANTS OR CONVERTIBLE SECURITIES EXERCISED The Company has not issued any options, warrants or convertible securities in respect of the financial year ended 31 December AMERICAN DEPOSITORY RECEIPT ( ADR ) OR GLOBAL DEPOSITORY RECEIPT ( GDR ) The Company has not sponsored any ADR or GDR programme for the financial year ended 31 December SANCTIONS AND / OR PENALTIES The Company and its subsidiaries, Directors and management have not been imposed with any sanctions and/or penalties by any regulatory bodies. PROFIT GUARANTEE No profit guarantee was given by the Company in respect of the financial year ended 31 December MATERIAL CONTRACTS There were no material contracts by the Company and its subsidiaries involving Directors and major shareholders interest. REVALUATION OF LANDED PROPERTIES The Company does not have a revaluation policy on landed properties. CONTRACT RELATED TO LOAN BY THE COMPANY There were no contracts relating to loan by the Company. CORPORATE SOCIAL RESPONSIBILITY 24 The Company and its subsidiaries have made regular cash donations to welfare organizations and charitable institutions. The Group also emphasize on quality work environment by adopting strict health and safety measures where safety values are inculcated into the staff force as part of their work ethics. The Company and its subsidiaries also play a part in the conservation of the environment by promoting paperless whereby using software systems which include E-Document System and ERP (Enterprise Resources Planning) System to store the documents and information without having to print hardcopies. Sersol Technologies Berhad ( X)

25 Statement of Internal Controls INTRODUCTION The Malaysian Code on Corporate Governance ( the Code ) requires that the Board of a listed company should maintain a sound system of internal control to safeguard the shareholders investments and the Group s assets. This statement of internal control has been prepared pursuant to paragraph (b) of the Listing Requirements of Bursa Malaysia Securities Berhad ( Bursa Securities ) for ACE Market. BOARD RESPONSIBILITIES The Board of Sersol Technologies Berhad ( STB ) recognises the importance of a sound system of internal controls and risk management framework and is dedicated to affirm its overall responsibility for the group s system of internal controls. The Board s responsibility includes the establishment of appropriate control environment and framework and at the same time conduct review on its adequacy and integrity. Nevertheless, the Board is aware that the internal control established can only provide reasonable but not absolute assurance against material misstatement or loss, as it is designed to manage rather than eliminate the risk of failure to achieve business objectives. RISK MANAGEMENT FRAMEWORK The Board is aware that an effective risk management system is an integral part of the daily operations of the Group. In this regard, the management of STB has embedded risk management as part of its business practice. During the financial year, the internal audit unit known as Sersol Audit Services ( SAS ), with the assistance of management, updated the key risk profile. The risks identified are based on the possibility of occurrence and the impact to the Group in the event the risks take place. The internal control environment and processes are periodically reviewed by SAS who report to the audit committee to ensure the adequacy and effectiveness of the internal control procedures throughout the Group. The costs incurred in respect of internal audit functions for the financial year ended 31 December 2010 amounted to 20,000 which included travelling expenses and staff salary. OTHER KEY ELEMENTS OF INTERNAL CONTROL In addition to the above, other key elements of internal control are as follows: - Clearly defined lines of reporting, responsibilities and delegation of authority within the Group. - Internal control policies, manuals, procedures and work instruction are documented based on the guidelines of the International Organization for Standardization ( ISO ) accreditation programme. Furthermore, ISO audits are conducted internally by an in-house committee established and by external parties during the financial year. - Regular management meetings are held where information covering operational performances are reviewed. - Regular training programs are being attended by employees with the objective of enhancing their knowledge and competency. CONCLUSION The Board is committed towards maintaining a sound system of internal controls throughout the Group. The Board recognises the fact that the system of internal controls and risk management practices should evolve with the ever changing and challenging business environment in order to support the Group s operation. The board will put in place appropriate action plans to rectify potential weaknesses and improve the system of internal control as when is necessary. The Board is of the opinion that based on the current level of activities, the Group s system of internal control is adequate and is in accordance with provisions set out in the Code. 25 Annual Report 2010

26 ... continued Statement of Directors Responsibility In respect of the Audited Financial Statements Directors are legally required to prepare financial statements for each financial year which give a true and fair view of the state of affairs of the Group and of the Company at the end of the financial year and of the results of the Group and of the Company for the financial year then ended. In preparing those financial statements, the Directors of the Company have: adopted suitable accounting policies and then applied them consistently; made judgments and estimates that are prudent and reasonable; ensured applicable accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements; and prepared the financial statement on the going concern basis unless it is inappropriate to presume that the Group and the Company will continue in business. The Directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the Group and of the Company and to enable them to ensure that the financial statements comply with the Companies Act and applicable approved accounting standards. The Directors are also responsible for the assets of the Group and of the Company and, hence, for taking reasonable steps for the prevention and detection of fraud and other irregularities. 26 Sersol Technologies Berhad ( X)