ANNUAL REPORT SerSol Technologies Berhad ( X) ( X) ANNUAL REPORT 2008

Transcription

1 Multi Square Sdn. Bhd. No. 28, Jalan Canggih1, Taman Perindustrian Cemerlang, Ulu Tiram, Johor, Malaysia. T : (6) /3 F : (6) / E : msjb@multisquare.com 珠海马品涂料有限公司中国广东省珠海市金湾区红旗三板村一号厂邮编 : 电话 : (86) / 传真 : (86) 电邮 : mschina@multisquare.com PT. Multi Square JL Industri Selatan IV Block EE 2H Kawasan Industri Jababeka II, Cikarang Selatan, Jawa Barat, Indonesia T : (62) F : (62) E : ptms@multisquare.com Multi Square Coating (Thailand) Co.Ltd 19/37 Moo 10, Tambol Klong Neung, Amphur Klong Luang Pathumthani, Thailand T : (66) F : (66) E : msct@multisquare.com Multi Square (S) Pte.Ltd Reg Add: Blk 336 Smith Street, # New Bridge Centre, Singapore Asset Capital Holdings Ltd Reg Add: Rooms , 37/F West Tower, Shun Tak Centre, Connaught Road Central, Hong Kong. Deco Coatings Sdn. Bhd. No. 28, Jalan Canggih1, Taman Perindustrian Cemerlang, Ulu Tiram, Johor, Malaysia. T : (6) /3 Fax : (6) / E : marketing@decocoatings.com SerSol Technologies Berhad ( X) ANNUAL REPORT 2008 ( X) 我们确保您的产品涂层可靠性, 并且常与您分享最新涂料技术 We ensure your finishing coatings are reliable and will always update you with the latest coating technologies" ANNUAL REPORT 2008

2 Annual Report 2008 Content Corporate Information 4 Corporate Calender 5 Letter To Shareholders 6 股东汇报 8 Directors Profile 10 Corporate Governance Statement 12 Report Of Audit Committee 14 Additional Listing Requirements Compliance Information 17 Statement On Internal Control 18 Statement Of Directors Responsibility 20 Financial Statements 21 List Of Properties 67 Analysis Of Shareholding 68 Notice Of Sixth Annual General Meeting 70 Statement Accompanying The Notice Of Sixth Annual General Meeting 71 Proxy Form Enclosed

3 Multi Square Malaysia China Thailand Indonesia

4 Multi Square Our coating products are being used as cosmetic decorative on home audio, car audio, DVD, LCD, TV, handphone casing, handphone keypads, office equipment, games products & computer casing. UV coating on VM/ Sputtering series ( Aluminium ) UV coating on VM/ Sputtering series ( Aluminium ) UV coating on VM/ Sputtering series ( Tin ) 2 bake and UV topcoat on magnesium alloy 1k laser etch coating on hand phone key pad Coating on hand phone casing Coating on nylon (Fishing reel) Coating on aluminium (Bicycle paddle) Car audio color design Car audio color design Coating on stainless steel hand phone casing UV tinted colors on VM Coating on LCD Coating on home audio G-Earthmate Our special product G-Earthmate products are apply on building.

5 SerSol Technologies Berhad Corporate Information BOARD OF DIRECTORS Tan Fie Ping Tan Fie Jen Tan Bee Ngoh Tan Lay Beng Azahar bin Baharudin - Chairman and Managing Director - Executive Director - Executive Director - Independent Non-Executive Director - 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 ) AUDITOR Horwath (AF 1018) Level 30, Menara Landmark Mail Box 171, 12 Jalan Ngee Heng Johor Bahru Tel : Fax : SPONSOR OSK Investment Bank Berhad 20th Floor Plaza OSK, Jalan Ampang Kuala Lumpur Tel : Fax : REGISTERED OFFICE Level 31, Menara Landmark Mail Box 172, 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 : SHARE REGISTRAR Symphony Share Registrars Sdn Bhd Level 26, Menara Multi Purpose, Capital Square, 8 Jalan Munshi Abdullah Kuala Lumpur Tel : Fax : STOCK EXCHANGE LISTING MESDAQ MARKET OF BURSA MALAYSIA SECURITIES BERHAD

6 Annual Report Corporate Calender DATE EVENTS 18 June 2008 The Company announced that the Company s wholly-owned subsidiary company, Multi Square Sdn Bhd ( MSSB ), has on 17 June 2008, subscribed for an additional 50,000 ordinary shares of Thai Baht ( THB ) 100 each in Multi Square Coating (Thailand) Co. Ltd. ( MSCT ), a wholly-owned subsidiary company of MSSB. Consequently, the issued and paid-up share capital of MSCT has increased from THB4,000,000 to THB9,000,000. The said additional subscription arises is due to the capitalization of advances extended to MSCT by MSSB for working capital purposes. MSCT has also increased its authorised share capital from THB4,000,000 comprising 40,000 ordinary shares of THB100 each in MSCT to THB9,000,000 comprising 90,000 ordinary shares of THB100 each in MSCT.

7 6 SerSol Technologies Berhad 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 2008 ( FYE 2008 ). This review marks my fifth report as your chairman since we were listed on the MESDAQ Market of the Bursa Securities more than 4 years ago. During the past four years we have grown from a group with operations only in Malaysia to one where we now have operations in various countries in Asia including China, Indonesia, Singapore and Thailand. PERFORMANCE REVIEW Despite the current financial crisis which began in FYE 2008, for FYE 2008 our Sersol Group had achieved a profit after taxation of RM1.96 Million as compared to FYE 2007 where we only had a Profit after taxation of RM389,000. Our Sersol Group s revenue for FYE 2008 registered a sum of RM40.15 Million which represents an increase of approximately 29% from FYE After the deduction of minority interest, our Sersol Group s profit after taxation was RM1.75 Million as compared to the loss after taxation for FYE 2007 of RM326,000. With this increase in both our revenue and profits, our management team is indeed encouraged by these results and will continue to implement new business strategies to ensure that our Sersol Group remain profitable despite the current world economic crisis. For the FYE 2008, our Sersol Group has also written off bad debts and inventory amounting to RM279,000 and RM311,000 respectively. The management acknowledges that currently our Sersol Group operating procedures relating to credit control and inventory is still not up to the mark desired by our management. Our management team will seek to implement new measures to ensure our credit control and inventory procedures are tighten and enforced stringently to ensure better collection from our customers as well to maintain a healthy cash flow for our Sersol Group. With these new efforts, we are cautiously optimistic that we will ride through this world economic crisis. I will now go on to discuss the results of our Group s subsidiaries and measures going forward:- 1. MALAYSIA A. MULTI SQUARE SDN. BHD. ( MSSB ) In FYE 2007, MSSB lost one of its major customers. However for FYE 2008, through the implementation of MSSB s new business strategies by introducing new higher margin products to its customers, MSSB has been able to secure new contracts from old and new customers. Notwithstanding that our coating industry is still relatively new in terms of coating for these new high end products, MSSB has been able to successfully introduce these products to its customers as the customers were willing to jointly develop these products together with MSSB as our products have been found to assist in reducing material costs as well as yield higher production output. Further the customers were also willing to accept these products as the products are found to be stable and consistent in its quality. B. DECO COATINGS SDN. BHD. ( DCSB ) 2. THAILAND FYE 2008, continue to be a difficult year for DCSB as DCSB s products namely decorative paints have not gained market acceptance from the construction industry as architects and designers still find it difficult to accept these products. For FYE 2008, DCSB has suffered further losses amounting to RM269,000 and since its inception has an accumulated loss of RM682,000. We will continue to closely monitor the developments of DCSB and seek new measures to try and return the company to a non-loss making track. MULTI SQUARE COATING THAILAND CO. LTD. ( MSCT ) Since we acquired 100% interest in MSCT two years ago, MSCT has not produced positive results and continued to incur losses. For FYE 2008, MSCT recorded a loss of RM652,000 and has accumulated losses of RM1.19 Million since operations began. Despite the political instability in Thailand, we are confident that our management will be able to turn around MCST to a profit making company in the near future as Thailand does have the necessary population size and has a maturing automotive industry. Further, I am of the view that for Thailand, we would need to have a good succession plan to search for new talents either within or outside of our Sersol Group who has the necessary skills and know-how to run the operations in Thailand. Further, I am also of the view that MSCT has more geographical advantage than to import our products from Malaysia as in Thailand there are readily available resin and raw material suppliers. We will continue to seek new strategies to return MSCT to the profitability track.

8 Annual Report Letter To Shareholders (Cont d) 3. CHINA ASSET CAPITAL HOLDINGS LTD. ( ACHL ) AND ZHUHAI MS COATING LTD. ( ZMCL ) For FYE 2008, ACHL and ZMCL continue to contribute positively to the Sersol Group by delivering profit after taxation of RM681,000. However, the performance for FYE 2008 for both ACHL and ZMCL were not as good as compared to FYE For FYE 2008 profits after taxation fell by 60% from RM1.7 Million for FYE One of the main reasons for this fall in profits was due to a reduction in our margins due to us having to reduce the prices of our products drastically to stay competitive in this market. Further transportation charges for FYE 2008 increased due to the Beijing Olympics. We believe that China remains a good market for us to operate provided we continuously upgrade the skills and knowledge of our work force in ZMCL to enhance ZMCL s competitive advantage as well as to comply with new regulations impose by the local authorities. 4. INDONESIA PT MULTI SQUARE ( PTMS ) For FYE 2008, PTMS continue to produce disappointing results as for FYE 2008 PTMS recorded a loss of RM326,000 and has accumulated losses of RM953,000 since it begun operations. The main reasons are because PTMS was required to pay higher duties as well as value added tax for importing good into Indonesia. Theses duties and value added taxes under Indonesian regulations are not allowed to be set-off if our products are sold to tax free warehouses. For FYE 2009, PTMS will make the necessary application to the relevant authorities for sale to tax free warehouse to reduce the import duty and value added tax. 5. SINGAPORE MULTI SQUARE (S) PTE. LTD. ( MSPL ) Our presence in Singapore is purely for marketing and strategic considerations. PROSPECTS FOR FYE 2009 FYE 2009 will be a challenging year for Sersol Group due to the current world financial crisis as well as the implementation of new laws and regulations relating to hazardous materials in countries where we operate. However, with the implementation of our new strategies, we will use of best endeavours to ensure that the financial results for FYE 2009 remains positive. We remain positive as we have secured a number of new projects since the first quarter of FYE In Thailand we have also been accredited as Green Partner for Sony and this would assist Sersol Group to secure new projects in the coming years in Thailand and also in other countries. We believe that with our new business strategies as well as increasing and introducing our new products to our customers, we will be able to maintain positive results for FYE 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 8 SerSol Technologies Berhad 股东汇报 亲爱的股东们 : 你们好! 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 2008 年 12 月 31 日的年终报告, 这已是本人自四年前在自动报价市场上市后的第五个报告 在过去的四年, 盛资集团从马来西亚扩展至亚洲其他国家, 包括中国 印尼 新加坡和泰国 回顾 2008 年度的整个财政, 虽然本集团遭受金融风暴的影响, 但本集团能从 2007 年的税后盈利马币三十八万九千增加至马币一百九十六万 盛资集团的总营业额达马币四千零十五万, 比 2007 年的营业额增长 29% 在扣除少数权益后, 股东净亏从 2007 年的马币三十二万六千转变成股东净盈一百七十五万 随着营业额和盈利的增加, 推行新政策使本集团能在这经济不景气的时期仍然保持盈利 让本集团感到非常振奋 本集团在 2008 年的坏账处理为马币二十七万九千, 注销存货达马币三十一万 本集团认为属下的子公司对于信贷和库存的管理还有待改进, 所以本集团已推行一系列的策略来加强信贷和库存的管理, 从而保持健全的资金流动 我们相信随着一系列措施的推行, 我们能安然度过现在的经济危机 本人在此进一步汇报各个子公司的发展状况和新的策略 1. 马来西亚 2. 泰国 A. MULTI SQUARE SDN. BHD. ( MSSB ) 在 2007 年,MSSB 失去了它的一位主要顾客 在 2008 年,MSSB 研发了新的高品质产品, 并把它推荐给客户 虽然它是新产品, 但 MSSB 成功获得客户的认同, 并且和客户共同开发这些产品 这些产品被认为能够减低原料的使用量, 有持续性的稳定品质, 从而提高生产量 B. DECO COATINGS SDN. BHD. ( DCSB ) 由于 DCSB 的装潢涂料, 建筑涂料 尚未被建筑业者和建筑设计师广泛的认同,DCSB 于 2008 年的亏损为马币二十六万九千 从开业至今, 它的累积亏损达到马币六十八万二千 我们将严密关注 DCSB 的发展动向和采取新的策略来使它转亏为盈 MULTI SQUARE COATING THAILAND CO. LTD. ( MSCT ) 本集团于二年前拥有 MSCT100% 的控制权, 到目前为止,MSCT 还未达到理想的业绩 MSCT 于 2008 年的亏损为马币六十五万二千 从开业至今, 它的累积亏损达到马币一百一十九万 尽管泰国政局不稳定, 我们还是有信心能在不久的将来让 MCST 转亏为盈, 因为泰国有强大的人口和篷勃的汽车制造业 我认为, 我们必须要有很好的储备干部计划, 找寻适合的人选来扩展 MSCT 目前在泰国有现成的原料制造商, 所以 MSCT 往后不需要从马来西亚进口原料 我们将继续根据市场需求寻求新的战略, 使 MSCT 转亏为盈

10 Annual Report 股东汇报 ( 续 ) 3. 中国 4. 印尼 ASSET CAPITAL HOLDINGS LTD. ( ACHL ) AND ZHUHAI MS COATING LTD. ( ZMCL ) ACHL 和 ZMCL 在 2008 年持续保持税后盈利马币六十八万一千, 但是它的盈利比起去年同期下跌了 60% 盈利下跌的主要原因是我们降低销售价格, 以保持本身在市场的竞争性 ; 加上由于 2008 年北京奥林匹克运动会的进行, 我们的货运费成本也大大提高, 但我们相信中国还是一个有潜质的市场, 但是我们还得提高本身的技能 产品知识 加强竞争力, 同时严格遵守中国的 安全生产法 和危险化学品管理的相关法规 PT MULTI SQUARE ( PTMS ) 2008 年 PTMS 的亏损为马币三十二万六千, 从开业至今, 它的累积亏损达马币九十五万三千 部分主要因素是 PTMS 需要支付高进口税和增值税, 而当 PTMS 售卖产品给拥有免税仓库的客户时,PTMS 无法抵扣这些税额而增加了产品的成本, 所以 PTMS 已向印尼有关当局申请免税来降低进口税和增值税 到 2009 年第三季方知最终结果 5. 新加坡 MULTI SQUARE (S) PTE. LTD. ( MSPL ) 本集团涉足于新加坡是基于行销和策略性的原因 展望 由于世界经济不景气和当地政府的新危险化学品规定,2009 年将会是充满挑战性的一年 本集团会全力以赴, 积极实施新的商业策略, 使集团保持盈利 我们已于 2009 年第一个季度成功获得新的订单 在泰国, 我们成功获得 SONY 授权的 GREEN PARTNER 这将协助本集团取得在泰国和其他国家的新客户 我们深信以本集团的营运政策和增加新产品的策略, 将会让本集团在 2009 年取得盈利 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 10 SerSol Technologies Berhad Directors Profile TAN FIE PING Age 47, 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. TAN FIE JEN Aged 44, 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 sixteen (16) 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 Bhd as Marketing Director since TAN BEE NGOH Aged 47, 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. TAN LAY BENG Aged, 55, 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, Certified Financial Planner of the Financial Planning Association of Malaysia 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 choose 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.

12 Annual Report Directors Profile (Cont d) AZAHAR BIN BAHARUDIN Aged 53, 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 was subsequently promoted to an Officer in He left United Asian Bank in 1991 and joined Affin Bank Berhad as an Executive Officer. In 1992 he was promoted to Head of Credit and became a Deputy Branch Manager of Johor Bahru branch in In 1994 he has been promoted as Branch Manager and worked in various branch of the Bank in Johor. He served with the Bank until He is currently a freelance financial consultant. Overall he has twenty- nine (29) years of experience in the banking industry. WINSTON PAUL WONG CHI HUANG Age 39, Malaysian (Independent Non-Executive Director) Mr Winston Paul Wong Chi-Huang was appointed as Independent Non-Executive Director on 31 December 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 In 2008 he was admitted to practice in Singapore. 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, his firm of Winston Wong Law Chambers was merged with Tea, Kelvin Kang & Co under the name Tea, Kelvin Kang & Co (incorporating Winston Wong Law Chambers) In June 2007, he was appointed as a Foreign Legal Consultant with WongPartnership LLP, Singapore, one of Singapore s leading law firms. In June 2008, he was promoted to Senior Associate and in April 2009, he was promoted to being a partner of WongPartnership LLP, Singapore. Winston s main area of practice is equity and debt capital markets including Islamic Debt Capital Market, mergers and acquisitions, corporate banking and finance, securities and advisory and corporate and commercial affairs. Mr. Winston Wong is also very active in presenting papers at law conferences and one of his notable papers is his presentation at the International Pacific Bar Association Conference in Japan in 2001 on Security issues relating to Corporate Banking from a Malaysian Perspective. He has also co-authored and written a chapter in the book Due Diligence Law and Practice by Christopher Davis on The Importance of Due Diligence in Malaysia from the perspective of Securities Regulation In Malaysia. He is currently a member of the International Pacific Bar Association, Malaysia China Business Council and Malaysian Chinese Association.

13 12 SerSol Technologies Berhad Corporate Governance Statement A. DIRECTORS The Board The Board of Directors comprises six (6) Members, of whom three (3) are Executive Directors and three (3) are Independent Non-Executive Directors. The Independent Directors fulfill their role by exercising independent judgment and objective participation in the proceedings and decision making process of the Board. Board Meeting Four (4) Board meetings were held within the financial year ended 31 December Directors attendance to the meeting can be found in the Statement Accompanying the Notice of the Sixth Annual General Meeting on page 71. The Chairman of the Board 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. Directors Training All the Directors have attended various training as a continuous effort to enhance management skills. Stated below is the list of courses attended during financial year ended 31 December 2008: Name of Directors Name of courses Date Tan Fie Ping Tax Audit In Action & Income Reconstruction 2 December 2008 Enterprise Risk Management - 12 December 2008 Tan Bee Ngoh Internal QMS Auditing By Process Approach 22 August Budget And Tax Planning 5 September Budget Proposals On Tax Exempt Perquisites, 11 November 2008 BIK & Allowances Tax Audit In Action & Income Reconstruction 2 December 2008 Tan Fie Jen Internal QMS Auditing By Process Approach 22 August 2008 Effective Waste Management 23 August 2008 Tan Lay Beng Seminar Percukaian Hasil February 2008 Public Ruling On Property Development And 7 July 2008 Construction Contracts & Tax Audits And Investigations National Tax Conference August Budget Seminar 0 September 2008 Azahar Bin Baharudin Government Grants And Financial Assistance For 2 April 2008 Malaysian Company Managing Corporate Mergers And Acquisitions 22 December 2008 Winston Paul 3rd Annual Islamic Finance IQ Asia Conference January 2008 Wong Chi Huang Singapore Conference on Islamic Finance 22 April 2008 Fundamentals of Derivatives Seminar June 2008 Islamic Capital Markets & Investment Banking School October 2008 Remuneration Committee The Committee was set up on 22 November Its responsibilities include assessing the size of the Board, relevant mixed skills and experience and other qualifications of Non-Executive Directors and effectiveness of the Board as a whole. The members of the Remuneration Committee are as follows:- Tan Fie Ping Tan Lay Beng Azahar bin Baharudin

14 Annual Report Corporate Governance Statement (Cont d) Re-election of Directors 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 Sixth Annual General Meeting are disclosed in the Statement Accompanying the Notice of AGM on page 71 in this Annual Report. 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 (RM) (RM) (RM) Executive Directors 832, , ,618 Non-Executive Directors 3,750 72,000 85,750 Total 846, ,725 1,077,368 Number of Directors Non- Range of remuneration per annum Executive Executive Below RM50,000 3 RM 50,001- RM100,000 RM100,001- RM150,000 RM150,001- RM200,000 RM200,001- RM250,000 RM250,001- RM300,000 RM300,001- RM350,000 RM350,001- RM400,000 RM400,001- RM450,000 RM450,001- RM500,000 RM500,001- RM550,000 C. ACCOUNTABILITY AND AUDIT 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 20 of this annual report. D. OTHERS Audit Committee The composition and terms of reference of Audit Committee together with its report are presented on page of this annual report. Non-Audit Fees During the financial year under review, there were no non-audit fees paid to the external auditors of the Group.

15 14 SerSol Technologies Berhad Report Of Audit Committee 1. COMPOSITION 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 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. 2. TERMS 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.

16 Annual Report Report Of Audit Committee (Cont d) 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. 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 whilst ensuring that they are prepared in a timely and accurate manner complying with all accounting and regulatory requirements and are promptly published. 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 standards of internal controls and financial reporting of the Sersol Group of Companies. 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. Power 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 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 without the presence of the executive board members, whenever deemed necessary.

17 16 SerSol Technologies Berhad Report Of Audit Committee (Cont d) 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. Meetings Five (5) Audit Committee meeting were held within the financial year ended 31 December 2008 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 3/5 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. Activities During the financial year, the Audit Committee has conducted its activities in accordance with its existing Terms of Reference, which include quarterly meetings to review the quarterly results, discussions on the Internal Audit reports to assess the effectiveness of the system of internal controls in the areas audited. The Audit Committee also discussed the annual audited financial statements with the external auditors as well as their findings and recommendations.

18 Annual Report 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: RECURRENT RELATED PARTIES TRANSACTIONS Significant related parties transactions are as follows: RM RM Directors Legal services paid/payable 3,350 Rental of premises paid/payable 18,000 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.

19 18 SerSol Technologies Berhad Statement On Internal Controls INTRODUCTION The Malaysian Code on Corporate Governance ( the Code ) requires that the Board should maintain a sound system of internal control to safeguard shareholders investments and the Group s assets. This statement on internal control has been prepared pursuant to paragraph (b) of the Listing Requirements of Bursa Malaysia Securities Berhad for MESDAQ Market. BOARD RESPONSIBILITIES The Board of Sersol Technologies Berhad ( STB ) acknowledges the principal responsibilities in relation to internal control which are outlined in the Best Practices Provision AA I Part 2 of the Code: - Identifying the principal risks and ensuring the implementation of appropriate systems to manage these risks; - Reviewing the adequacy and integrity of the Group s internal control systems. 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 acknowledges the essential of a risk management system and that it should be embedded effectively in the operations of the Group. As such, the senior management of STB has been maintaining and adopting risk management approaches towards better business practices. During the financial year ended 31 December 2008, a risk management committee was formed within the Group and together with the respective heads of department within the Group the risk management committee performed an update on the Group s Key Risk Profile. The risk management committee has been continuously identifying the potential risk areas and managing this risk in order to reduce any risk that may have an impact on the Group. The risk management committee has presented the significant risks to the Board through the Group s Key Risk Profile and the same has been reviewed by the Board. INTERNAL AUDIT An in-house internal audit team Sersol Audit Service (SAS) has identified the areas to be audited based on the Group s own risk assessment methodology planned by the risk management committee. For the financial year ended 31 December 2008, SAS conducted 6 audits across the subsidiaries operations and attained a generally satisfactory view of the operations of the subsidiaries. SAS has presented its audit findings with recommended actions to the Audit Committee.

20 Annual Report Statement On Internal Controls (Cont d) OTHER KEY ELEMENTS OF INTERNAL CONTROL Apart from the above, other key elements of internal control are as follows: - An organisation structure with clear defined lines of responsibility and authority; - Internal control policies, manuals, procedures and work instruction are documented based on the guidelines of the International Organisation for Standardisation (ISO) accreditation programme; - 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 aware that it is essential to maintain a sound system of internal control that supports the achievement of the organisation s policies, aims and objectives. The Board is also aware that continual improvement is needed in the system to ensure that all activities and functions are conducted in an organised and competent manner.

21 20 SerSol Technologies Berhad 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.

22 Annual Report Financial Statements Directors Report 22 Statement by Directors & Statutory Declaration 26 Independent Auditors Report 27 Balance Sheets 29 Income Statements 31 Statements Of Changes in Equity 32 Cash Flow Statements 34 Notes To The Financial Statements 36

23 22 SerSol Technologies Berhad Directors Report The directors hereby submit their report and the audited financial statements of the Group and of the Company for the financial year ended 31 December PRINCIPAL ACTIVITIES The Company is principally involved in investment holding and the provision of management services. The principal activities of the subsidiaries are set out in Note 7 to the financial statements. There have been no significant changes in the nature of these activities during the financial year. RESULTS THE GROUP RM THE COMPANY RM Profit/(Loss) after tax for the financial year 1,960,629 (225,671) Minority interest (210,504) Profit/(Loss) attributable to equity holders of the Company 1,750,125 (225,671) DIVIDEND No dividend was paid since the end of the previous financial year and the directors do not recommend the payment of any dividend for the current financial year. RESERVES AND PROVISIONS There were no material transfers to or from reserves or provisions during the financial year except as disclosed in the financial statements. ISSUES OF SHARES AND DEBENTURES During the financial year, (a) (b) there were no changes in the authorised and issued and paid up share capital of the Company; and there were no issues of debentures by the Company. OPTIONS GRANTED OVER UNISSUED SHARES During the financial year, no options were granted by the Company to any person to take up any unissued shares in the Company. BAD AND DOUBTFUL DEBTS Before the financial statements of the Group and of the Company were made out, the directors took reasonable steps to ascertain that action had been taken in relation to the writing off of bad debts and the making of allowance for doubtful debts, and satisfied themselves that all known bad debts had been written off and that adequate allowance had been made for doubtful debts. At the date of this report, the directors are not aware of any circumstances that would further require the writing off of bad debts, or the making of additional allowance for doubtful debts in the financial statements of the Group and of the Company.

24 Annual Report Directors Report (Cont d) CURRENT ASSETS Before the financial statements of the Group and of the Company were made out, the directors took reasonable steps to ascertain that any current assets other than debts, which were unlikely to be realised in the ordinary course of business, including their values as shown in the accounting records of the Group and of the Company, have been written down to an amount which they might be expected so to realise. At the date of this report, the directors are not aware of any circumstances which would render the values attributed to the current assets in the financial statements of the Group and of the Company misleading. VALUATION METHODS At the date of this report, the directors are not aware of any circumstances which have arisen which render adherence to the existing methods of valuation of assets or liabilities of the Group and of the Company misleading or inappropriate. CONTINGENT AND OTHER LIABILITIES The contingent liabilities of the Group and of the Company are set out in Note 42 to the financial statements. At the date of this report, there does not exist:- (a) (b) any charge on the assets of the Group and of the Company that has arisen since the end of the financial year which secures the liabilities of any other person; or any contingent liability of the Group and of the Company which has arisen since the end of the financial year. No contingent or other liability of the Group and of the Company has become enforceable or is likely to become enforceable within the period of twelve months after the end of the financial year which, in the opinion of the directors, will or may substantially affect the ability of the Group and of the Company to meet their obligations when they fall due. CHANGE OF CIRCUMSTANCES At the date of this report, the directors are not aware of any circumstances not otherwise dealt with in this report or the financial statements of the Group and of the Company, which would render any amount stated in the financial statements misleading. ITEMS OF AN UNUSUAL NATURE The results of the operations of the Group and of the Company during the financial year were not, in the opinion of the directors, substantially affected by any item, transaction or event of a material and unusual nature. There has not arisen in the interval between the end of the financial year and the date of this report any item, transaction or event of a material and unusual nature likely, in the opinion of the directors, to affect substantially the results of the operations of the Group and of the Company for the financial year. HOLDING COMPANY The holding company is Sersol Holdings Sdn. Bhd., a company incorporated in Malaysia, which the directors also regard as the ultimate holding company.

25 24 SerSol Technologies Berhad Directors Report (Cont d) DIRECTORS The directors who served since the date of the last report are as follows:- AZAHAR BIN BAHARUDIN TAN BEE NGOH TAN FIE PING TAN FIE JEN TAN LAY BENG WINSTON PAUL WONG CHI HUANG Pursuant to Article 101 of the Articles of Association of the Company, Tan Bee Ngoh and Tan Lay Beng retire by rotation at the forthcoming annual general meeting and, being eligible, offer themselves for re-election. DIRECTORS INTERESTS According to the register of directors shareholdings, the interests of directors holding office at the end of the financial year in shares in the Company and its related corporations during the financial year were as follows:- NUMBER OF ORDINARY SHARES OF RM0.10 EACH AT AT THE COMPANY BOUGHT SOLD Direct Interests TAN BEE NGOH,385,489 1,385,489 TAN FIE JEN 372, ,824 TAN FIE PING 547, ,448 Indirect Interests TAN FIE JEN 50,268,949 60,000 50,328,949 TAN FIE PING 50,268,949 60,000 50,328,949 NUMBER OF ORDINARY SHARES OF RM1.00 EACH HOLDING COMPANY AT AT SERSOL HOLDINGS SDN. BHD BOUGHT SOLD Direct Interests TAN FIE JEN TAN FIE PING,195 1,195 By virtue of their interests in the holding company, Tan Fie Jen and Tan Fie Ping are deemed to have interest in shares in the subsidiaries to the extent of the Company s interest, in accordance with Section 6A of Companies Act None of the other directors holding office at the end of financial year had any interests in shares in the Company or its related corporations during the financial year.

26 Annual Report Directors Report (Cont d) DIRECTORS BENEFITS Since the end of the previous financial year, no director has received or become entitled to receive any benefit (other than a benefit included in the aggregate amount of emoluments received or due and receivable by directors as shown in the financial statements, or the fixed salary of a full-time employee of the Company) by reason of a contract made by the Company or a related corporation with the director or with a firm of which the director is a member, or with a company in which the director has a substantial financial interest except for any benefits which may be deemed to arise from transactions entered into in the ordinary course of business with certain directors as disclosed in Note 41 to the financial statements. Neither during nor at the end of the financial year was the Company a party to any arrangements whose object is to enable the directors to acquire benefits by means of the acquisition of shares in or debentures of the Company or any other body corporate. AUDITORS The auditors, Messrs. Horwath, have expressed their willingness to continue in office. SIGNED IN ACCORDANCE WITH A RESOLUTION OF THE DIRECTORS DATED 21 APRIL 2009 Tan Fie Ping Tan Bee Ngoh

27 26 SerSol Technologies Berhad Statement By Directors We, Tan Fie Ping and Tan Bee Ngoh, being two of the directors of Sersol Technologies Berhad, state that, in the opinion of the directors, the financial statements set out on pages 29 to 66 are drawn up in accordance with Financial Reporting Standards and the Companies Act 1965 in Malaysia so as to give a true and fair view of the state of affairs of the Group and of the Company at 31 December 2008 and of their results and cash flows for the financial year ended on that date. SIGNED IN ACCORDANCE WITH A RESOLUTION OF THE DIRECTORS DATED 21 APRIL 2009 Tan Fie Ping Tan Bee Ngoh Statutory Declaration I, Tan Fie Ping, I/C No.: , being the director primarily responsible for the financial management of Sersol Technologies Berhad, do solemnly and sincerely declare that the financial statements set out on pages 29 to 66 are, to the best of my knowledge and belief, correct, and I make this solemn declaration conscientiously believing the same to be true and by virtue of the provisions of the Statutory Declaration Act Subscribed and solemnly declared by Tan Fie Ping, I/C No.: , at Johor Bahru in the state of Johor on this 21 April 2009 Before me RUSLY B. MOHD. YUNUS P.I.S. (No. J112) Commissioner For Oaths Tan Fie Ping

28 Annual Report Independent Auditors Report To the members of SerSol Technologies Berhad Report on the Financial Statements We have audited the financial statements of Sersol Technologies Berhad, which comprise the balance sheets as at 31 December 2008 of the Group and of the Company, and the income statements, statements of changes in equity and cash flow statements of the Group and of the Company for the financial year then ended, and a summary of significant accounting policies and other explanatory notes, as set out in pages 29 to 66. Directors Responsibility for the Financial Statements The directors of the Company are responsible for the preparation and fair presentation of these financial statements in accordance with Financial Reporting Standards and the Companies Act 1965 in Malaysia. This responsibility includes designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error, selecting and applying appropriate accounting policies, and making accounting estimates that are reasonable in the circumstances. Auditors Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with approved standards on auditing in Malaysia. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on our judgement, including the assessment of risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the Company s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements have been properly drawn up in accordance with Financial Reporting Standards and the Companies Act 1965 in Malaysia so as to give a true and fair view of the financial position of the Group and of the Company as of 31 December 2008 and of their financial performance and cash flows for the financial year then ended.