SOLUTION ENGINEERING HOLDINGS BERHAD P

Transcription

1 Equipment for Engineering Education and Research Annual Report 2007 SOLUTION ENGINEERING HOLDINGS BERHAD P (Incorporated in Malaysia under the Companies Act, 1965)

2 Table Of CONTENTS Notice Of Annual General Meeting Corporate Information Corporate Structure Directors Profile Chairman s Statement Statement On Corporate Governance Statement On Internal Control Audit Committee Report Additional Disclosures Financial Statements List Of Properties Analysis Of Shareholding Form Of Proxy

3 Notice Of ANNUAL GENERAL MEETING NOTICE IS HEREBY GIVEN that the Fourth Annual General Meeting of Solution Engineering Holdings Berhad will be held at Greens 1 Room, Tropicana Golf & Country Resort, Jalan Kelab Tropicana, Petaling Jaya, Selangor on Thursday, 15 May 2008 at a.m. to transact the following businesses: AGENDA 1. To receive the Audited Financial Statements for the financial year ended 31 December 2007 and the Reports of the Directors and Auditors thereon. 2. To re-elect the following Directors of the Company who are retiring pursuant to Article 83 of the Company s Articles of Association. (a) Datuk Dr. Syed Muhamad Bin Syed Abdul Kadir (b) Mr. Low Wei Ngee 3. To approve the payment of Directors fees of RM144,000 for the financial year ended 31 December To re-appoint Messrs. Wong Weng Foo & Co. as Auditors of the Company and to authorise the Directors to determine their remuneration. Resolution 1 Resolution 2 Resolution 3 Resolution 4 Resolution 5 5. Special Business To consider and if thought fit, pass the following resolution, with or without modifications, as an ordinary resolution: Authority to Directors to issue shares That pursuant to Section 132D of the Companies Act, 1965 and subject always to the approval from the relevant authorities, where such approval is necessary, the Board of Directors be authorised to issue and allot shares in the Company at any time and upon such terms and conditions and for such purposes as the Directors may, in their absolute discretion deem fit, PROVIDED ALWAYS THAT the aggregate number of ordinary shares to be issued pursuant to this resolution does not exceed ten percent (10%) of the issued capital of the Company for the time being and that the Directors be and are also empowered to obtain the approval for the listing of and quotation for the additional shares so issued on the MESDAQ Market of Bursa Malaysia Securities Berhad and that such authority shall continue to be in force until the conclusion of the next Annual General Meeting ( AGM ) of the Company or the expiration of the period within which the next AGM is required by law to be held or revoked/varied by a resolution passed by the shareholders in general meeting whichever is the earlier. Resolution 6 6. To transact any other business for which due notice shall have been given under the Companies Act, Annual Report 2007 Solution Engineering Holdings Berhad

4 Notice Of ANNUAL GENERAL MEETING Cont d BY ORDER OF THE BOARD ONG WHEE TIONG Secretary (MAICSA No: ) Kuala Lumpur 23 April 2008 NOTES: 1. A member entitled to attend and vote at the meeting is entitled to appoint one or more [but not more than three (3)] proxies, each representing a minimum of 100 shares held by the member to vote on his behalf. A proxy may but need not be a member of the Company and the provisions of Section 149(1)(a) and (b) of the Companies Act, 1965 shall not apply. Where a member appoints two (2) or more proxies to attend and vote at the meeting, the appointment shall be invalid unless he specifies the proportion of his shareholdings to be represented by each proxy. 2. Where a member of the Company is an authorised nominee as defined under the Securities Industry (Central Depositories) Act, 1991, it may appoint at least one (1) proxy in respect of each securities account it holds with ordinary shares of the Company standing to the credit of the said securities account. 3. The instrument appointing a proxy shall be in writing under the hand of the appointer or his attorney duly authorised in writing or if the appointer is a corporation, either under its common seal or under the hand of an attorney duly authorised. 4. The instrument appointing a proxy and the power of attorney or other authority (if any), under which it is signed or a notarially certified copy thereof, shall be deposited at the Registered Office of the Company at Suite 705, Block A, Kelana Business Centre, 97 Jalan SS 7/2, Petaling Jaya, Selangor Darul Ehsan not less than forty-eight (48) hours before the time set for holding the Fourth Annual General Meeting or any adjournment thereof. 5. Explanatory statement on Special Business- Resolution 6 Resolution 6, if passed, will give the Directors of the Company the authority to issue and allot shares in the Company up to an amount not exceeding in total 10% of the issued share capital of the Company without having to convene a general meeting. This authority, unless revoked or varied at a general meeting, will expire at the conclusion of the next Annual General Meeting of the Company. Solution Engineering Holdings Berhad Annual Report

5 Notice Of ANNUAL GENERAL MEETING Cont d STATEMENT ACCOMPANYING NOTICE OF ANNUAL GENERAL MEETING 1. Directors who are standing for re-election at the Fourth Annual General Meeting of the Company are: a. Datuk Dr. Syed Muhamad Bin Syed Abdul Kadir b. Mr. Low Wei Ngee 2. Details of attendance of Directors at Board Meeting During the financial year ended 31 December 2007, five (5) Board Meeting were held and the details of the attendance of the Directors are as follows: Number of Meeting Attended Executive Directors Lim Yong Hew 5/5 Lim Hai Guan 5/5 Lim Chiou Kim 4/5 Mohd Shahrin Bin Abd Rahman 4/5 Non-Executive Directors Datuk Dr. Syed Muhamad bin Syed Abdul Kadir 5/5 Low Wei Ngee 5/5 3. Date, Time and Venue of the Fourth Annual General Meeting of the Company Venue : Greens 1 Room, Tropicana Golf & Country Resort, Jalan Kelab Tropicana, Petaling Jaya, Selangor Date & Time : Thursday, 15 May 2008 at a.m 4. Profile of Directors seeking re-election are set out under the Directors Profile appearing on pages 7 to 8. 4 Annual Report 2007 Solution Engineering Holdings Berhad

6 Corporate INFORMATION BOARD OF DIRECTORS Datuk Dr. Syed Muhamad bin Syed Abdul Kadir Independent Non-Executive Director/ Chairman Lim Yong Hew Group Managing Director Lim Hai Guan Executive Director Mohd Shahrin bin Abd Rahman Executive Director Lim Chiou Kim Executive Director Low Wei Ngee Independent Non-Executive Director AUDIT COMMITTEE Datuk Dr. Syed Muhamad bin Syed Abdul Kadir Independent Non-Executive Director / Chairman Lim Yong Hew Group Managing Director Low Wei Ngee Independent Non-Executive Director COMPANY SECRETARY Mr. Ong Whee Tiong [MAICSA No: ] SOFTWARE R&D OFFICE G-2A, Incubator 3 Technology Park Malaysia Bukit Jalil Kuala Lumpur Tel: (603) solution@solution.com.my WEBSITE PRINCIPAL BANKER Malayan Banking Berhad AUDITORS Wong Weng Foo & Co (AF: 0829) Chartered Accountants 41, Damai Complex Jalan Dato Haji Eusoff Kuala Lumpur REGISTERED OFFICE Suite 705, Block A Kelana Business Centre 97, Jalan SS 7/ Petaling Jaya Selangor Darul Ehsan Tel: (603) Fax: (603) PRINCIPAL OFFICE No. 3, Jalan TPK 2/4 Taman Perindustrian Kinrara Puchong, Selangor Tel: (603) Fax: (603) solution@solution.com.my SHARE REGISTRAR PFA Registration Services Sdn. Bhd. Level 13, Uptown 1 No. 1, Jalan SS21/58 Damansara Uptown Petaling Jaya Selangor Darul Ehsan Tel: (603) Fax: (603) SPONSOR Aseambankers Malaysia Berhad 33rd Floor, Menara Maybank 100, Jalan Tun Perak Kuala Lumpur Tel : (603) Fax : (603) STOCK EXCHANGE LISTING MESDAQ Market of Bursa Malaysia Securities Berhad Solution Engineering Holdings Berhad Annual Report

7 Corporate STRUCTURE Solution Engineering Holdings Berhad ( P) 100% Solution Engineering Sdn. Bhd. ( M) 70% Solution E&E Technology Sdn. Bhd. ( K) 100% Solution Biogen Sdn. Bhd. ( M) 6 Annual Report 2007 Solution Engineering Holdings Berhad

8 Directors PROFILE Left to right Top: Lim Hai Guan, Datuk Dr. Syed Muhamad bin Syed Abdul Kadir and Lim Yong Hew Bottom: Mohd Shahrin bin Abd Rahman, Lim Chiou Kim and Low Wei Ngee Datuk Dr. Syed Muhamad bin Syed Abdul Kadir, aged 61, was appointed Chairman and Independent Non-Executive Director of Solution on 28 May He graduated with a Bachelor of Arts (Hons) from the University of Malaya in He obtained a Masters of Business Administration from the University of Massachusetts, USA in 1977 and proceeded to obtain a Ph.D (Business Management) from Virginia Polytechnic Institute and State University, USA in In 2005, he obtained a Bachelor of Jurisprudence (Hons) from the University of Malaya. He began his career in 1973 as Senior Project Officer, School of Financial Management at the National Institute of Public Administration (INTAN) and held various positions before his final appointment as Deputy Director (Academic). In November 1988, he joined the Ministry of Education as Secretary of Higher Education and thereafter assumed the post of Deputy Secretary (Foreign and Domestic Borrowing, Debt Management) Finance Division Federal Treasury. From 1993 to 1997, he joined the Board of Directors Asian Development Bank, Manila, Philippines first as Alternate Executive Director and later as Executive Director. Datuk Dr. Syed then joined the Ministry of Finance as Secretary, Tax Analysis Division and later became Deputy Secretary General (Operations). Prior to his retirement, Datuk Dr. Syed was Secretary General, the Ministry of Human Resources. During his career, he wrote and presented many papers relating to Human Resources Development. His special achievement was that his dissertation A Study on Board of Directors and Organisational Effectiveness was published by Garland Publisher, Inc. of New York in Datuk Dr. Syed Muhamad is a Director of Bumiputra-Commerce Holdings Berhad and CIMB Bank Berhad. In addition, he is also a Chairman of CIMB Islamic Bank Berhad and Director of Euro Holdings Berhad. Lim Yong Hew, aged 49, is the founder and Group Managing Director of the Solution Group. He was appointed as the Group Managing Director of Solution on 28 May Mr. Lim graduated from Salford University in 1982 with a Bachelor of Engineering, Electrical Engineering (Hons) majoring in Control and Instrumentation. After graduation, Mr. Lim joined George Kent Malaysia as a Project Engineer. He was involved in the design, installation, hook-up and commissioning of building automation and security services. Projects in which he was involved whilst there include the Dayabumi Complex and Putra World Trade Centre. In 1985, Mr. Lim joined Foxboro Malaysia as a Sales Engineer, where he was responsible for the sales and application of process control instrumentation for the oil and gas, petrochemicals, palm oil, food and electronics industries. In 1988 he established SESB and Solution Engineering Holdings Berhad Annual Report

9 Directors PROFILE Cont d took on the position of Managing Director. The growth and development of SESB is attributed to Mr. Lim s vision and business experience. He is currently responsible for business development and corporate strategy, sales and marketing activities of Solution Group. real time systems for teaching and research, as well as the development of application software using Visual Basic and C++. In 2002, she was promoted to Software Engineering Manager, overseeing the design and development of e-learning software. Lim Hai Guan, aged 41, was appointed as an Executive Director of Solution on 28 May Mr. Lim graduated from Tuanku Abdul Rahman College in 1990 with a Diploma in Mechanical and Manufacturing Engineering. After graduation, Mr. Lim joined SESB as a Mechanical Engineer. In 1998, he was promoted to Project Manager. He is currently the Equipment Engineering Manager. As part of his duties, he monitors the works of installation, calibration, hook-up, fabrication, testing and commissioning of education equipment. He is also responsible for the process design and engineering calculations and preparation of teaching manuals and other related documentation. Mohd Shahrin bin Abd Rahman, aged 45, was appointed as an Executive Director of Solution on 28 May He graduated from University of Southern California (USA) in 1987 with a Bachelor of Science in Chemical Engineering. After graduation, he joined Lasera Systems Sdn. Bhd. as Sales and Project Engineer (Scientific Equipment Division) where he was responsible for the marketing of laboratory and scientific products to various local universities. He was subsequently appointed as a Project Engineer responsible for the management of supply of locally fabricated engineering education equipment to local universities. En. Mohd Shahrin joined SESB in 2000 as the R&D Manager of the R&D Department. He oversees the activities of the R&D Department and is heavily involved in the software and equipment R&D works. Lim Chiou Kim, aged 36, was appointed as an Executive Director of Solution on 28 May She graduated from Tunku Abdul Rahman College in 1996 with a Bachelor of Science in Information Systems. After her graduation, she joined SESB in 1996 as a System Analyst. She was involved in the design and development of man-machine interface for automation systems and development of multimedia, Low Wei Ngee, aged 36, was appointed as an Independent Non-Executive Director of Solution on 28 May He graduated from Monash University, Australia in 1993 with a Bachelor of Business, Accounting. Mr. Low is presently a member of Malaysian Institute of Accountants and CPA, Australia. Upon graduation, he joined Coopers & Lybrand (now known as PriceWaterhouseCoopers), Kuala Lumpur where he was involved in a variety of assignments including auditing, accounting, merger & acquisition exercises, initial public offering exercises and company secretarial work. In 1997, Mr. Low then joined Waterfront Group and was in charge of finance and treasury operations of the Waterfront s hotel and casino respectively, in Cebu City, Philippines. In 1998, he joined Technology Park Malaysia Corporation Sdn Bhd, managing the portfolio of finance, treasury, venture capital and retail business. Mr. Low currently is the CEO of Kichy Innotech (Beijing) Co.,Ltd. Family Relationship None of the directors of the company have any family relationship with any other directors and/or major shareholders of the company except Mr. Lim Yong Hew is the uncle to Mr. Lim Hai Guan and Ms. Lim Chiou Kim. Further, Mr. Lim Hai Guan and Ms. Lim Chiou Kim are siblings. Mr. Lim Yong Hew, Mr. Lim Hai Guan and Ms. Lim Chiou Kim own and control the entire equity interest of Solvest Sdn Bhd, a substantial shareholder of Solution. Conflict of Interest There is no conflict of interest between the Directors and the Group. Conviction for Offences None of the Directors has been convicted of any offences (excluding traffic offences, if any) within the past ten years. Details of Directors attendances at the Board Meeting are set out in the statement on Corporate Governance. 8 Annual Report 2007 Solution Engineering Holdings Berhad

10 Chairman s STATEMENT Dear Shareholders, On behalf of the Board of Directors, I am pleased to present the Annual Report and the Audited Financial Statements of the Group and the Company for the year ended 31 December INDUSTRY TRENDS AND DEVELOPMENT ACCELERATING LIFELONG LEARNING The implementation of lifelong learning programs will be accelerated to enable all segments of society to continuously learn and acquire knowledge and skills. Lifelong learning infrastructure such as community colleges will be expanded and upgraded. In addition, e-learning and distance education will be further promoted to increase accessibility. EDUCATION PROGRAMS Tertiary Education Greater access to tertiary education will be provided to achieve the target of 40 per cent participation rate of the age group years in Enrolment at the post-graduate level will be expanded to meet the target of 25 per cent of the total enrolment at degree levels in A special programme will be implemented to increase the enrolment of post-graduate students, particularly in Science and Technology programmes. Enhancing Quality Measures will be undertaken to enhance the quality of public and private institutions of higher education to be at par with world renowned universities. Towards this end, the quality of institutions of higher education will be benchmarked against international standards to enable these institutions to become globally competitive. Institutions of higher education will design their academic programs and develop their curricular based on market requirement to ensure the employability of graduates. Developing Regional Center of Excellence for Education and Training Efforts will be intensified to develop Malaysia into a regional center for excellence in education and training through smart public-private partnership. A dedicated agency will be established to promote and export higher education through more strategic marketing and branding of educational products in order to attract a target of 100,000 foreign students at all levels including the school level by (Source : Chapter 11, 9 th Malaysia Plan) Solution Engineering Holdings Berhad Annual Report

11 Chairman s STATEMENT Cont d HARNESSING SCIENCE, TECHNOLOGY AND INNOVATION In an increasingly competitive global economy, the ability to leverage on science, technology and innovation will become strategically more important in national development. Therefore, the Government will place greater emphasis on capacity building and strengthening the National Innovation System to build upon leading-edge technologies and know-how. Towards this end, the target will be to increase national R&D expenditure to 1.5% of GDP by To reap the value of this investment, research and innovation capability of local institutions of higher education will be strengthened to develop indigenous capacity building, particularly in key technology areas and to nurture an innovative society with a strong science & technology capability. Towards this end, the enrolment of students in science & technology programs at all levels will be increased to facilitate the creation of a critical mass of research scientists and engineers (RSEs) to meet the target ratio of 50 RSE per 10,000 labour force in Post graduate programs will be given greater emphasis to provide the necessary support for R&D projects as well as enhance technology transfer and development. The curriculum of institutions of higher education will be continuously reviewed to improve the quality of science, engineering and management programs. (Source : Chapter 12, 9 th Malaysia Plan) BENEFITS TO THE COMPANY Favourable Government policies and positive developments in industry due to the rollout of RM9 projects are expected to contribute to higher sales of SOLTEQ products in the near future. RESEARCH AND DEVELOPMENT (R&D) The Group continues to be actively involved in R&D activities to develop new products in consultation with the end-users and the commercialisation of its R&D works to widen the existing product range. The potential of biotechnology has been well acknowledged in the world. Malaysian government has recognised the importance of the biotechnology and is undertaking a serious and concerted effort in providing the right environment to assist those with expertise to carry out the biotech driven R&D or to develop biotech driven business. Under its wholly-owned subsidiary company, Solution Biogen Sdn Bhd, R&D activities are being carried out to develop biolubricant products using pilot plant technology. The R&D is expected to complete by end of year Apart from that, the Company is also developing a range of bioreactors for industry, education and research. 10 Annual Report 2007 Solution Engineering Holdings Berhad

12 Chairman s STATEMENT Cont d UTILISATION OF PROCEEDS As at 31 December 2007, the status of utilisation of the proceeds of RM8,500,000 raised by the Company from its initial public offering is as follows: Amount Balance amount Proposed utilised as at unutilised as at utilisation Settlement of bank borrowings on the purchase of premises 600, ,000 - Demonstration and Training Centre 500, , ,051 Research & Development Expenditure 2,100,000 1,081,267 1,018,733 Working Capital - Local 2,500,000 2,500,000 - Working Capital - Overseas 1,500, , ,352 Listing Expenses 1,300,000 1,300,000* - Total 8,500,000 6,470,864 2,029,136 * Unutilised listing expenses of RM253,532 have been transferred to working capital. FINANCIAL PERFORMANCE For the financial year ended 31 December 2007, the Group registered revenue of RM million, an increase of 5.6% as compared to RM million in the previous financial year ended 31 December The improvement in revenue is mainly due to higher local sales recognition of SOLTEQ products. The Group posted a higher profit before taxation of RM2.352 million in the year under review, representing approximately 8.6% growth as compared to RM2.165 million in the preceding year ended 31 December As a result, the Group s profit after taxation has also increased by 8.3% to RM2.263 million for the financial year ended 31 December 2007 as compared to RM2.089 million in the preceding financial year ended 31 December DIVIDENDS The Board had declared two interim tax-exempt dividends of 10% and 5% each in respect of the financial year ended 31 December The first interim dividend was paid on 18 May 2007 and the second interim dividend was paid on 24 December Total of the two interim dividends for the financial year ended 31 December 2007 is 15% tax-exempt (1.5 sen per ordinary share of RM0.10) amounting to RM1.898 million as compared to 10% tax-exempt (1 sen per ordinary share of RM0.10) amounting to RM1.265 million paid for the previous financial year. PROSPECTS FOR 2008 The Group will continue to focus on its key business activities as demand for SOLTEQ equipment is expected to grow due to the rollout of the 9th Malaysia Plan. Solution Engineering Holdings Berhad Annual Report

13 Chairman s STATEMENT Cont d The Group intends to expand its overseas market by venturing into Vietnam and is currently in the progress of setting up an office with local partners in Vietnam. When the joint business commences, it is expected to contribute to the revenue and earnings of the Group. Going forward, the Group is planning to explore business opportunities in Kazakhstan, Azerbaijan, Nepal and North and South America to establish new customer bases as there are prospects to increase the sale of SOLTEQ engineering equipment. As for the Middle East market, the Group is also continuing to strengthen its position in these markets. The Board of Directors of SEHB Group is optimistic of the future growth and prospects of the Group for the financial year ending 31 December APPRECIATION AND ACKNOWLEDGEMENT On behalf of the Board of Directors, I wish to express gratitude and appreciation to the management and staff for their commitment and contribution towards the success of the Group; valuable customers, business associates and most importantly, our shareholders for their continued support to the Group. In closing, I would like to personally thank my fellow Directors for their dedication and excellent commitment throughout the years. Datuk Dr. Syed Muhamad Bin Syed Abdul Kadir Chairman 12 Annual Report 2007 Solution Engineering Holdings Berhad

14 Statement on CORPORATE GOVERNANCE The Board of Directors of Solution Engineering Holdings Berhad ( SEHB ) recognises the importance of corporate governance requirements outlined in Malaysian Code on Corporate Governance ( Code ). Good corporate governance establishes and maintains a legal and ethical environment which strives to preserve and enhance the interests of all shareholders. This statement below describes how SEHB has applied in its corporate governance framework and practices of the Group to comply with the principles of the Malaysian Code of Corporate Governance and Listing Requirements of the MESDAQ Market. BOARD OF DIRECTORS Board Composition The Board currently has six (6) members comprising two (2) Independent Non-Executive Directors and four (4) Executive Directors. The Chairman is primarily responsible for the orderly conduct of meetings of the Board and the Managing Director is responsible for the day-to-day management of the businesses as well as the implementation of decisions of the Board. The strength of the Board lies in the composition of its members, who has a wide range of expertise, extensive experience and diverse background in business, finance and technical knowledge. The balance enables the Board to provide clear and effective leadership and independent judgement to the Company. Duties and Responsibilities of the Board The Board s principal focus is the overall strategic direction, development and control of the Group. The Board is responsible for the protection and enhancement of long-term value and returns for the shareholders. The Board also reviews the action plans that are implemented by the Management to achieve business targets, provides corporate direction and reviews financial results of the Group. Board Meetings The Board meets regularly, at least once in a quarter, with additional meetings held as and when necessary. The attendance of the relevant Directors is as follows: Name of Director Board Meetings Attendance Datuk Dr. Syed Muhamad bin Syed Abdul Kadir 5/5 (Chairman and Independent Non-Executive Director) Lim Yong Hew 5/5 (Managing Director) Lim Hai Guan 5/5 (Executive Director) Lim Chiou Kim 4/5 (Executive Director) Mohd Shahrin Bin Abd Rahman 4/5 (Executive Director) Low Wei Ngee 5/5 (Independent Non-Executive Director) Solution Engineering Holdings Berhad Annual Report

15 Statement on CORPORATE GOVERNANCE Cont d BOARD OF DIRECTORS (Cont d) Access to Information Agenda and documents relevant to the Board meetings are circulated in advance to the Directors for their review before the meetings to ensure the effectiveness of the Board meetings. Any additional information requested by the Directors will be provided in timely manners. The proceedings at all Board meetings are duly minuted. The minutes of these proceedings are kept at the registered office of SEHB. The Company Secretary attends all Board meetings and ensures the Board procedures and all other rules and regulations applicable to the Company are complied with. The Board of Directors have full and unrestricted access to all information pertaining to the businesses and affairs of the Group and as well as services of the Company Secretary to enable them to discharge their duties effectively. Appointments to the Board and Re-election of Directors The Board appoints its members through a formal and transparent selection process which is consistent with the Articles of Association of the Company. This process has been reviewed, approved and adopted by the Board. In accordance with the Company s Articles of Association, at least one-third of the directors shall retire from office, at least once in three (3) years, but shall be eligible for re-election. A retiring Director shall retain office until the close of the meeting at which he retires. The Company Secretary will ensure that all appointments are properly made, and that legal and regulatory requirements are complied with. Directors Training All Board members have attended the Mandatory Accreditation Program ( MAP ) pursuant to Bursa Malaysia Securities Berhad ( Bursa Securities ) guidelines on training for Directors. The Directors are also encouraged to attend any relevant training programs to further enhance their knowledge to enable them to discharge their responsibilities effectively. During the financial year ended 31 December 2007, there was a workshop organized by the Company on Be an Effective Leader which was attended by Mr Lim Yong Hew, Mr Lim Hai Guan, Ms Lim Chiou Kim and Encik Mohd Shahrin bin Abd Rahman. Datuk Dr. Syed Muhamad Bin Syed Abdul Kadir attended various seminars during the financial year ended 31 December 2007 included Regionalisation for Growth, Risk Based Supervisory Framework Briefing, Programme for Building High Performance Directors on IMD (Module II and III) and ICLIF-Focus Group on Directors Education. The Directors will continue to undergo other relevant training programs to further enhance their skills and knowledge. 14 Annual Report 2007 Solution Engineering Holdings Berhad

16 Statement on CORPORATE GOVERNANCE Cont d DIRECTORS REMUNERATION The determination of the remuneration of Non-Executive Directors is a matter of the Board as a whole with the interested Directors abstaining from discussions with respect to their remuneration. The breakdown of the Directors remuneration for the financial year ended 31 December 2007 is as follows: Independent Executive Non-Executive Directors Directors Total RM RM RM Fees 72,000 72, ,000 Salaries and other emoluments 557, ,748 Benefits in kind 39,950-39,950 Total 669,698 72, ,698 The number of directors whose total remuneration during the financial year fell within the following bands is analysed below: Number of Directors Independent Range of remuneration Executive Non-Executive Directors Directors Below RM50,000-1 RM50,001 to RM100,000-1 RM100,001 to RM150, RM150,000 to RM200, RM200,001 to RM250, RM250,001 to RM300, INVESTOR RELATIONS AND SHAREHOLDERS COMMUNICATION The Group recognises the importance of timely and thorough dissemination of information to investors and shareholders. Announcements and release of financial results on a quarterly basis provide the shareholders and the investing public with an overview of the Group s performance and operations. Apart from the mandatory public announcements through Bursa Malaysia, the Group has also set up a web site at for public access of Group information, business activities and recent developments to all stakeholders and for feedback. ACCOUNTABILITY AND AUDIT Financial Reporting The Board has ensured that the annual financial statements presented to the shareholders and the quarterly results announced to Bursa Malaysia present a fair assessment of the Group s position and prospects. Before the financial statements were drawn up, the Directors have taken the necessary steps to ensure that the Group had used all the applicable accounting policies consistently and supported by reasonable and prudent judgements and estimates. The Audit Committee assists the Board in ensuring the accuracy, adequacy and completeness of information for disclosure. Solution Engineering Holdings Berhad Annual Report

17 Statement on CORPORATE GOVERNANCE Cont d Internal Control The Board acknowledges its overall responsibility in maintaining an internal control system that provides reasonable assurance of effective and efficient operations, and compliance with laws and regulations, as well as internal procedures and guidelines. The Statement on Internal Control is set out in page 17 of this Annual Report providing an overview of the state of internal control within the Group. Audit Committee The Board has set up an Audit Committee, which composition is in compliance with the relevant regulatory requirements. The composition, terms of reference, attendance of meetings by individual members and the function of audit committee is discussed on pages 18 to 20. Relationship with Auditors The Board has established a transparent and appropriate relationship with the external auditors in seeking their professional advice and towards ensuring compliance with the accounting standards through Audit Committee. STATEMENT OF DIRECTORS RESPONSIBILITIES IN RELATION TO THE FINANCIAL STATEMENTS The Directors are required by the Companies Act, 1965 to prepare financial statements for each financial year which give a true and fair view of the financial position of the Group and Company at the end of the financial year and of their results and cash flows of the Group and Company for the financial year then ended. In preparing the financial statements, the Directors have: - adopted suitable accounting policies and applying them consistently - made judgements and estimates that are prudent and reasonable - ensured applicable accounting standards have been followed - prepared the financial statements on the going concern basis The Directors have responsibility for ensuring that the Company keeps accounting records which disclose with reasonable accuracy of the financial position of the Group and Company and which enable them to ensure that the financial statements comply with the Companies Act, The Directors have overall responsibilities for taking such steps as are reasonably open to them to safeguard the assets of the Group to prevent and detect fraud and other irregularities. 16 Annual Report 2007 Solution Engineering Holdings Berhad

18 Statement on INTERNAL CONTROL INTRODUCTION The Malaysian Code on Corporate Governance stipulated that the Board of Directors of public listed companies should maintain a sound system of internal control to safeguard shareholders investment and Group s assets. Pursuant to the above requirement, the Board is committed to maintaining a sound system of internal control of the Company and is pleased to present this Statement on Internal Control with reference to the Bursa Securities Statement on Internal Control:Guidance for Directors of Public Listed Companies. BOARD RESPONSIBILITY The Board recognises the importance of a sound system of internal control and effective risk management practices to good corporate governance. The Board is ultimately responsible for the Group s system of internal control and reviews the adequacy and integrity of the system. However, it is recognised that such system is designed to manage rather than eliminate the risk of failure to achieve business objectives. The system of internal control provides reasonable, but not absolute assurance against material misstatements or loss. RISK MANAGEMENT FRAMEWORK The Board recognises that the management of principal risks play an important and integral part of the Group s daily operations and that the identification and the management of such risks will affect the achievement of the Group s corporate objectives. The Board and the Management are continuously identifying, evaluating and managing significant business risks that may affect the Group s operations, efficiency and profitability. The Board is assisted by the Management in the implementation of the approved policies and procedures on risk and control. Meetings are held regularly to review changes in the business environment and its impact on the operations. Some of the key elements of controls are described as follows : Organisation structure that clearly defines the management functions, responsibilities and authorities. Documented organisation-wide standard operating policies and procedures are set out and communicated to all levels. These are periodically reviewed and updated in accordance with changes in the operating environment. The Group s computerised information systems are continuously being monitored and streamlined to ensure compliance with hardware and software regulations and guidelines for system integrity, effectiveness and efficiency. Timely financial reporting process in providing relevant financial information for management review. Announcement of financial information is further subjected to Audit Committee s review prior to Board s approval. In addition, statutory auditors opinion is sought for as and when required. Board meetings are scheduled regularly. Board papers are distributed to the members ahead of the meetings and information is presented and deliberated which would ensure that the Board maintains full and effective control on the direction of the Group. Weekly production meetings are conducted to identify key production issues and to allocate responsibility for tracking and monitoring of all on-going projects. Management meetings are held regularly among key management staff for various planning and monitoring as well as review processes embedded in the Group s overall operations. Establishment of Management Review Meeting under the ISO 9001:2000 to review quality policy and quality objectives for continual improvement of the effectiveness of Quality Management System. The Board of Directors is of the view that the existing system of internal controls is sound and sufficient to cater for the Group s requirement at the existing level of operations. The Group continues to take necessary measures to strengthen its internal controls structure and manage the risk. Solution Engineering Holdings Berhad Annual Report

19 Audit COMMITTEE REPORT MEMBERS OF THE AUDIT COMMITTEE The Audit Committee of the Company was established by the Board of Directors ( Board ) on 17 June Members of the Audit Committee during the financial year ended 31 December 2007 are as follows: Members Datuk Dr. Syed Muhamad bin Syed Abdul Kadir (Chairman) Lim Yong Hew Low Wei Ngee Designation Independent Non-Executive Director Executive Director Independent Non-Executive Director TERMS OF REFERENCE Composition of Audit Committee The Audit Committee shall be appointed by the Board from among its members and shall comprise at least three (3) members, a majority of whom shall be Independent Directors. In the event of any vacancy with the result that the number of members is reduced to below three, the vacancy must be filled within two (2) months, but in any case not later than three (3) months. Chairman The members of the Committee shall elect a Chairman from among their members, who is an Independent Director. In the event the elected Chairman is not able to attend a meeting, a member of the Audit Committee shall be nominated as Chairman for the meeting. The nominated Chairman shall be an Independent Director. Secretary The Company Secretary shall be the secretary of the Audit Committee and be responsible for drawing up agendas in consultation with the Chairman. The agenda together with the relevant documents shall be circulated to the committee members, one week prior to each meeting. The Company Secretary shall be responsible for recording attendance, keeping minutes of meetings and circulating to committee members and members of the Board Meetings The quorum for a meeting shall be two (2) members, provided that the majority of the members present at the meeting shall be Independent Directors. 18 Annual Report 2007 Solution Engineering Holdings Berhad

20 Audit COMMITTEE REPORT Cont d The Committee shall meet at least four (4) times a year to coincide with the review of the quarterly and annual financial statement prior to presentation to the Board for approval. Additional meetings may be called as and when required with reasonable notice as the Committee Members deem fit. The Committee may invite the external auditors, any other Board members and senior management of the Group to be in attendance during meetings to assist in its deliberations. Authority The Audit Committee shall have explicit authority to investigate any matter within its terms of reference and shall have the resources required to perform its duties. The Committee has full and unrestricted access to all information and documents pertaining to the Group. The Committee is also authorised to have direct communication channels with the external auditors. The Committee should be able to obtain independent professional or other advice, if necessary. Duties and Responsibilities of the Audit Committee In fulfilling its primary objectives, the Committee shall undertake the following duties and responsibilities: The adequacy of existing external audit arrangements, with particular emphasis on the scope and quality of audit; The effectiveness of the internal control and management information systems; The financial statements of the Company with both the external auditors and management; Review the external audit reports to ensure that appropriate and prompt remedial actions are taken by the management on major deficiencies in controls or procedures that are identified. Any management letters sent by the external auditors to the Company and the management s response to such letters; Any letter of resignation from the Company s external auditors; The assistance given by the Company s officers to the external auditors; All areas of significant financial risk and the arrangements in place to contain those risks to acceptable levels; All related party transactions and potential conflict of interest situations. Quarterly reports on consolidated results and annual financial statements prior to submission to the Board of Directors; and To consider the appointment and/or re-appointment of auditors, the audit fee and any questions of resignation or dismissal including recommending the nomination of person or persons as auditors to the Board. Summary of Activities of the Audit Committee There were five (5) Audit Committee meetings held during the financial year ended 31 December The number of meetings attended by the Committee Members is as follows: Name of Director Audit Committee Meetings Attendance Datuk Dr. Syed Muhamad bin Syed Abdul Kadir 5/5 (Chairman and Independent Non-Executive Director) Lim Yong Hew 5/5 (Managing Director) Low Wei Ngee 5/5 ((Independent Non-Executive Director) Solution Engineering Holdings Berhad Annual Report

21 Audit COMMITTEE REPORT Cont d During the financial year ended 31 December 2007, the main activities undertaken by the Audit Committee were as follows: reviewed the unaudited quarterly financial reports before recommending to the Board for their approval and release of the Group s results to Bursa Malaysia; reviewed the research reports for the half-year ended 30 June 2007 and 31 December 2007; reviewed and approved the Audit Committee Report, Statement on Corporate Governance and Statement on Internal Control; reviewed with the External Auditors on the Group s financial year end statements and issues and findings arising from the audit and their resolutions; and recommend to the Board of Directors on the re-appointment of the external auditors. Internal Audit Function At present, the Group does not have an internal audit department and the Audit Committee relied on discussions with the management and executive directors, review of quarterly financial statements and input from external auditors to discharge its duties. 20 Annual Report 2007 Solution Engineering Holdings Berhad

22 Additional DISCLOSURE PURSUANT TO THE LISTING REQUIREMENTS OF THE BURSA MALAYSIA SECURITIES Share Buy-Back During the financial year ended 31 December 2007, the Company did not enter into any share buy-back transaction. Options, Warrants or Convertible Securities No options, warrants or convertible securities were issued by the Company during the financial year. Depository Receipt Programme The Company did not sponsor any depository receipt programme during the financial year. Imposition of Sanctions and/or Penalties There were no material sanctions and/or penalties imposed on the Company and its subsidiaries, directors or management by the relevant regulatory bodies during the financial year. Non-Audit Fees The amount of non-audit fees payable to the external auditors by the Group during the financial year was RM8,400, which was for taxation services rendered and professional fees rendered in respect of review of Statement of Internal Control of the Group. Variation of Results The Company did not issue any profit estimate, forecast or projection for the financial year. There was no significant variance between the results for the financial year ended 31 December 2007 as per the audited financial statements and the unaudited results previously announced. Profit Guarantee The Company did not give any profit guarantee during the financial year. Material Contracts Involving Directors and Substantial Shareholders Interests There were no material contracts entered into by the Company and its subsidiaries, involving the directors and substantial shareholders interests during the financial year. Revaluation Policy The Group has not adopted a revaluation policy for its property, plant and equipment. Corporate Social Responsibilities The Group had made some contributions/donations to Government bodies as well as local universities, for the financial year ended 31 December Solution Engineering Holdings Berhad Annual Report

23 Financial STATEMENTS PAGE CONTENTS Directors Report Statement by Directors Statutory Declaration Report of the Auditors Consolidated Balance Sheet Consolidated Income Statements Consolidated Statement of Changes in Equity Consolidated Cash Flow Statements Balance Sheets Income Statements Statement of Changes in Equity Cash Flow Statements Notes to the Financial Statements 22 Annual Report 2007 Solution Engineering Holdings Berhad

24 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 31st December, PRINCIPAL ACTIVITIES The Company s principal activities are that of investment holding and provision of management services. The principal activities of the subsidiaries are stated in Note 6 to the financial statements. There have been no significant changes in the nature of these principal activities during the financial year. RESULTS Group RM Company RM Profit after income tax and minority interests 2,267,377 2,842,335 Retained profit (Accumulated loss) brought forward 2,374,466 (69,719) Profit available for appropriation 4,641,843 2,772,616 First and second interim tax exempt dividends of 10% and 5%, respectively (1,897,830) (1,897,830) Retained profit carried forward 2,744, ,786 DIVIDENDS Since the end of the previous financial year, a first and second interim tax exempt dividends of 10% and 5% for the financial year ended 31st December, 2007 was paid on 18th May, 2007 and 24th December, 2007, respectively, amounting to RM1,897,830 based on 126,522,000 ordinary shares of RM0.10 each. The directors do not recommend any final dividend in respect of the financial year ended 31st December, RESERVES AND PROVISIONS There were no material transfers to or from reserves or provisions during the financial year. ISSUE OF SHARES OR DEBENTURES There were no issue of shares or debentures by the Company during the financial year. OPTIONS GRANTED OVER UNISSUED SHARES No share options were granted during the financial year. Solution Engineering Holdings Berhad Annual Report

25 Directors REPORT (Cont d) BAD AND DOUBTFUL DEBTS Before the income statements and balance sheets 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 there are no known bad or doubtful debts. At the date of this report, the directors are not aware of any circumstances that would necessitate the writing off of bad debts or allowance to be made for doubtful debts. CURRENT ASSETS Before the income statements and balance sheets of the Group and of the Company were made out, the directors took reasonable steps to ascertain whether any current assets which were unlikely to realise in the ordinary course of business their value as shown in the accounting records of the Group and of the Company and to the extent so ascertained were written down to an amount that they might be expected to realise. At the date of this report, the directors are not aware of any circumstances that would render the values attributed to the current assets 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 At the date of this report, there does not exist:- (i) (ii) any charge on the assets of the Group or 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 in respect of the Group or of the Company that has arisen since the end of the financial year. No contingent liability or other liability of the Group or 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 as and 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 in the financial statements of the Group and of the Company that would render any amount stated in the respective 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. 24 Annual Report 2007 Solution Engineering Holdings Berhad

26 Directors REPORT (Cont d) ITEMS OF AN UNUSUAL NATURE (Cont d) 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 in which this report is made. DIRECTORS OF THE COMPANY The directors who served since the date of the last report are as follows:- Datuk Dr. Syed Muhamad Bin Syed Abdul Kadir Lim Yong Hew Lim Hai Guan Lim Chiou Kim Mohd Shahrin Bin Abd Rahman Low Wei Ngee DIRECTORS INTEREST According to the register of directors shareholdings, the interest of directors in office at the end of the financial year in shares of the Company and related corporations during the financial year ended 31st December, 2007 are follows:- No of Ordinary Shares of RM0.10 each Balance Balance The Company at at Bought Sold Direct Interest: Datuk Dr. Syed Muhamad Bin Syed Abdul Kadir 1,025, ,025,211 Lim Yong Hew 46,250, ,250,525 Lim Hai Guan 7,878, ,878,158 Lim Chiou Kim 1,785,630 1,000,000-2,785,630 Mohd Shahrin Bin Abd Rahman 5,451, ,451,263 Low Wei Ngee 400, ,000 *Indirect Interest: Lim Yong Hew 22,205,052 - (14,801,600) 7,403,452 Lim Hai Guan 22,205,052 - (14,801,600) 7,403,452 Lim Chiou Kim 22,205,052 - (14,801,600) 7,403,452 * Deemed interest pursuant to Section 6A of the Companies Act, 1965 via their substantial shareholdings in Solvest Sdn. Bhd., a company in corporated in Malaysia and a substantial corporate shareholder of the Company. By virtue of their substantial shareholdings in Solvest Sdn. Bhd. and the Company, Messrs Lim Yong Hew, Lim Hai Guan and Lim Chiou Kim are also deemed interested in shares in all the subsidiaries to the extent the Company has an interest. Solution Engineering Holdings Berhad Annual Report

27 Directors REPORT (Cont d) DIRECTORS BENEFITS Since the end of previous financial year, no director of the Company has received or become entitled to receive any benefit (other than as disclosed in the financial statements) 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. Neither during nor at the end of the financial year, was the Company a party to any arrangement 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 Wong Weng Foo & Co., have expressed their willingness to continue in office. DIRECTORS REPORT Signed on behalf of the Board of directors in accordance with a resolution dated 14 April, 2008 LIM YONG HEW Director LIM HAI GUAN Director KUALA LUMPUR 26 Annual Report 2007 Solution Engineering Holdings Berhad

28 Statement BY DIRECTORS PURSUANT TO SECTION 169(15) OF THE COMPANIES ACT, 1965 We, LIM YONG HEW and LIM HAI GUAN, being two directors of the Company, do hereby state that in the opinion of the directors, the financial statements set out on pages 29 to 60 are drawn up in accordance with the provisions of the Companies Act, 1965 and applicable MASB Approved Accounting Standards in Malaysia for Entities Other Than Private Entities so as to give a true and fair view of the state of affairs of the Group and of the Company as at 31st December, 2007 and of their results and cash flows for the year ended on that date. Signed on behalf of the Board of directors in accordance with a resolution dated 14 April, 2008 LIM YONG HEW Director LIM HAI GUAN Director KUALA LUMPUR Statutory DECLARATION PURSUANT TO SECTION 169(16) OF THE COMPANIES ACT, 1965 I, VENNY TAY HOONG LIAN being the officer responsible for the financial management of SOLUTION ENGINEERING HOLDINGS BERHAD, do solemnly and sincerely declare that the financial statements set out on pages 29 to 60 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 Declarations Act, Subscribed and solemnly declared ) by the abovenamed at Kuala Lumpur ) this 14 April, 2008 ) Before me:- K. Mariasoosay Commissioner for Oaths No. W344 Kuala Lumpur Solution Engineering Holdings Berhad Annual Report

29 Report OF THE AUDITORS TO THE MEMBERS OF SOLUTION ENGINEERING HOLDINGS BERHAD We have audited the financial statements set out on pages 29 to 60. These financial statements are the responsibility of the Company s directors. It is our responsibility to form an independent opinion, based on our audit, on the financial statements and to report our opinion to you, as a body, in accordance with Section 174 of the Companies Act, 1965 and for no other purpose. We do not assume responsibility towards any other person for the content of this report. We conducted our audit in accordance with Approved Standards on Auditing in Malaysia. These standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimate made by the directors, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion. In our opinion:- (a) the financial statements are properly drawn up in accordance with the provisions of the Companies Act, 1965 and applicable MASB Approved Accounting Standards in Malaysia for Entities Other Than Private Entities so as to give a true and fair view of:- (i) (ii) the state of affairs of the Group and of the Company as at 31st December, 2007 and of their results and cash flows for the year ended on that date; and the matters required by Section 169 of the Companies Act, 1965 to be dealt with in the financial statements of the Group and of the Company; and (b) the accounting and other records, and the registers required by the Companies Act, 1965 to be kept by the Company and its subsidiaries of which we have acted as auditors, have been properly kept in accordance with the provisions of the said Act. We are satisfied that the financial statements of the subsidiaries that have been consolidated with the Company s financial statements are in form and content appropriate and proper for the purposes of the preparation of the consolidated financial statements and we have received satisfactory information and explanations as required by us for those purposes. The auditors reports on the financial statements of the subsidiaries were not subject to any qualification and did not include any comment made under subsection (3) of Section 174 of the Companies Act, WONG WENG FOO & CO. AF: 0829 CHARTERED ACCOUNTANTS WONG WENG FOO 1218/03/10 (J/PH) KUALA LUMPUR Dated this : 14 April, Annual Report 2007 Solution Engineering Holdings Berhad

30 Consolidated BALANCE SHEET AS AT 31ST DECEMBER 2007 As restated ASSETS Note RM RM Non-Current Assets Property, plant and equipment 3 1,388,015 1,518,649 Prepaid lease payments 4 2,763,155 2,804,846 Intangible assets 5 615, ,231 4,766,626 4,787,726 Current Assets Inventories 7 222, ,999 Trade and other receivables 8 11,152,905 5,144,740 Tax recoverable - 4,261 Deposits, cash and bank balances 11 8,760,115 11,830,061 20,135,987 17,147,061 Total Assets 24,902,613 21,934,787 EQUITY Capital and reserves attributable to the equity holders of the Company Share capital 12 12,652,200 12,652,200 Reserves 13 6,797,545 6,427,998 19,449,745 19,080,198 Minority Interests 38,385 42,972 Total Equity 19,488,130 19,123,170 LIABILITIES Non-Current Liabilities Hire-purchase creditors , ,634 Term loan , ,209 Deferred income tax liabilities ,000 75, , ,651 Current Liabilities Trade and other payables 17 2,656,598 1,589,238 Hire-purchase creditors 14 72, ,594 Term loan , ,272 Trust receipt 15 1,447,776 - Bank overdraft ,050 - Current income tax liabilities 215 6,862 4,582,761 1,878,966 Total Liabilities 5,414,483 2,811,617 Total Equity and Liabilities 24,902,613 21,934,787 The attached notes form an integral part of the Financial Statements. Solution Engineering Holdings Berhad Annual Report

31 Consolidated INCOME STATEMENT FOR THE YEAR ENDED 31ST DECEMBER 2007 As restated Note RM RM OPERATING REVENUE 18 13,212,416 12,515,019 COST OF SALES 19 (8,543,492) (7,936,430) GROSS PROFIT 4,668,924 4,578,589 OTHER OPERATING INCOME 379, ,600 ADMINISTRATIVE & DISTRIBUTION EXPENSES (2,521,704) (2,470,182) PROFIT FROM OPERATIONS 20 2,526,566 2,429,007 FINANCE COST 20 (174,367) (264,060) PROFIT BEFORE INCOME TAX 20 2,352,199 2,164,947 INCOME TAX EXPENSE 21 (89,409) (75,683) PROFIT FOR THE YEAR 2,262,790 2,089,264 ATTRIBUTABLE TO: EQUITY HOLDERS OF THE COMPANY 2,267,377 2,091,292 MINORITY INTERESTS (4,587) (2,028) EARNINGS PER SHARE ATTRIBUTABLE TO EQUITY HOLDERS OF THE COMPANY (SEN) 2,262,790 2,089,264 BASIC AND DILUTED EARNINGS PER SHARE (SEN) sen 1.65 sen The attached notes form an integral part of the Financial Statements. 30 Annual Report 2007 Solution Engineering Holdings Berhad

32 Consolidated STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31ST DECEMBER 2007 Attributable to the equity holders of the Company Share Share Retained Minority capital premium profit interests Total (Note 12) (Note 13) (Note 13) RM RM RM RM RM At 1st January, ,652,200 4,053,532 1,548,394-18,254,126 Share issue to minority shareholders ,000 45,000 Net profit for the year - - 2,091,292 (2,028) 2,089,264 Dividends (Note 23) - - (1,265,220) - (1,265,220) At 31st December, 2006/ 1st January, ,652,200 4,053,532 2,374,466 42,972 19,123,170 Profit for the year - - 2,267,377 (4,587) 2,262,790 Dividends (Note 23) - - (1,897,830) - (1,897,830) At 31st December, ,652,200 4,053,532 2,744,013 38,385 19,488,130 The attached notes form an integral part of the Financial Statements. Solution Engineering Holdings Berhad Annual Report

33 Consolidated CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST DECEMBER 2007 As restated RM RM Cash Flow From Operating Activities Profit before income tax 2,352,199 2,164,947 Adjustments for:- Depreciation 234, ,807 Amortisation of prepaid lease payments 41,691 41,691 Amortisation of development expenditure 93,285 93,285 Write-down of inventories - 46,098 Interest expense 174, ,060 Interest income (232,739) (244,309) Operating profit before working capital changes 2,663,627 2,578,579 (Increase) / Decrease in inventories (54,968) 76,518 (Increase) / Decrease in receivables (6,008,165) 5,275,409 Increase / (Decrease) in payables 1,067,360 (213,649) Cash (used in) / generated from operating activities (2,332,146) 7,716,857 Interest paid (174,367) (264,060) Tax paid (48,603) (68,296) Net cash (used in) / generated from operating activities (2,555,116) 7,384,501 Cash Flow from Investing Activities ^Acquisition of property, plant and equipment (104,190) (370,506) Development costs incurred (244,510) (158,106) Proceeds from disposal of property, plant and equipment - 117,591 Interest received 232, ,309 Net cash used in investing activities (115,961) (166,712) Cash Flow From Financing Activities Repayment of term loans (117,272) (117,351) Payments of hire-purchase obligations (107,593) (106,628) Trust receipts 1,447,776 (1,544,105) Payment of dividends (1,897,830) (1,264,037) Proceeds from minority interests - 45,000 Net cash used in financing activities (674,919) (2,987,121) Net changes in cash and cash equivalents (3,345,996) 4,230,668 *Cash and cash equivalents brought forward 11,830,061 7,599,393 *Cash and cash equivalents carried forward 8,484,065 11,830, Annual Report 2007 Solution Engineering Holdings Berhad

34 Consolidated CASH FLOW STATEMENT (Cont d) FOR THE YEAR ENDED 31ST DECEMBER 2007 Note: * Cash and cash equivalents consist of:- As restated RM RM Deposit with a money market fund 2,517,530 - Deposits with a financial institution 2,033,715 - Fixed deposits with licensed banks 2,977,188 8,857,318 Cash and bank balances 1,231,682 2,972,743 Bank overdraft (276,050) - ^Acquisition of property, plant and equipment were made by the following means: 8,484,065 11,830,061 Cash 104, ,506 Hire-purchase arrangements - 350, , ,506 The attached notes form an integral part of the Financial Statements. Solution Engineering Holdings Berhad Annual Report

35 Balance SHEETS AS AT 31ST DECEMBER Note RM RM ASSETS Non-Current Assets Investment in subsidiaries 6 23,735,263 23,735,263 Current Assets 23,735,263 23,735,263 Amount due from subsidiaries 10 6,544,579 6,794,753 Deposit and bank balances 11 1,190,919 1,338 7,735,498 6,796,091 Total Assets 31,470,761 30,531,354 EQUITY Capital and reserves attributable to the equity holders of the Company Share capital 12 12,652,200 12,652,200 Reserves 13 18,806,476 17,861,971 Total Equity 31,458,676 30,514,171 LIABILITIES Current Liabilities Other payables 17 12,085 17,183 12,085 17,183 Total Liabilities 12,085 17,183 Total Equity and Liabilities 31,470,761 30,531,354 The attached notes form an integral part of the Financial Statements. 34 Annual Report 2007 Solution Engineering Holdings Berhad

36 Income STATEMENTS FOR THE YEAR ENDED 31ST DECEMBER Note RM RM OPERATING REVENUE 18 3,000,000 - OTHER OPERATING INCOME 41,217 - ADMINISTRATIVE EXPENSES (194,251) (104,719) FINANCE COST 20 (4,631) - PROFIT/ (LOSS) BEFORE INCOME TAX 20 2,842,335 (104,719) INCOME TAX EXPENSE PROFIT/ (LOSS) AFTER INCOME TAX 2,842,335 (104,719) The attached notes form an integral part of the Financial Statements. Solution Engineering Holdings Berhad Annual Report

37 Statement OF CHANGES IN EQUITY FOR THE YEAR ENDED 31ST DECEMBER 2007 Share Share Merger Retained capital premium reserve profit Total (Note 12) (Note 13) (Note 13) (Note 13) RM RM RM RM RM At 1st January, ,652,200 4,053,532 13,878,158 1,300,220 31,884,110 Loss for the year (104,719) (104,719) Dividends (Note 23) (1,265,220) (1,265,220) At 31st December, 2006/ 1st January, ,652,200 4,053,532 13,878,158 (69,719) 30,514,171 Profit for the year ,842,335 2,842,335 Dividends (Note 23) (1,897,830) (1,897,830) At 31st December, ,652,200 4,053,532 13,878, ,786 31,458,676 The attached notes form an integral part of the Financial Statements. 36 Annual Report 2007 Solution Engineering Holdings Berhad

38 Cash Flow STATEMENTS FOR THE YEAR ENDED 31ST DECEMBER RM RM Cash Flow From Operating Activities Profit (Loss) before income tax 2,842,335 (104,719) Adjustment for: Interest expense 4,631 - Operating profit (loss) before working capital changes 2,846,966 (104,719) Decrease in amount due from subsidiaries 250,174 1,964,961 (Decrease) Increase in payables (5,098) 10,040 Cash generated from operating activities 3,092,042 1,870,282 Interest paid (4,631) - Net cash provided by operating activities 3,087,411 1,870,282 Cash Flow from Investing Activities Acquisition of subsidiaries - (605,000) Net cash used in investing activities - (605,000) Cash Flow From Financing Activities Payment of dividends (1,897,830) (1,264,037) Net cash used in financing activities (1,897,830) (1,264,037) Net changes in cash and cash equivalents 1,189,581 1,245 *Cash and cash equivalents brought forward 1, *Cash and cash equivalents carried forward 1,190,919 1,338 *Cash & cash equivalents consist of;- Deposit with a money market fund 1,073,198 - Bank balances 117,721 1,338 1,190,919 1,338 The attached notes form an integral part of the Financial Statements. Solution Engineering Holdings Berhad Annual Report

39 Notes TO THE FINANCIAL STATEMENTS 31ST DECEMBER PRINCIPAL ACTIVITIES The Company s principal activities are that of investment holding and provision of management services. The principal activities of the subsidiaries are stated in Note 6 to the financial statements. There have been no significant changes in the nature of these principal activities during the financial year. 2. SIGNIFICANT ACCOUNTING POLICIES Unless otherwise stated, the following significant accounting policies have been used consistently in dealing with items which are considered material in relation to the financial statements. 2.1 Basis of Preparation The financial statements of the Group and of the Company have been prepared under the historical cost convention except as disclosed in this summary of significant policies. The preparation of financial statements in conformity with applicable MASB Approved Accounting Standards in Malaysia for Entities Other Than Private Entities and the provisions of the Companies Act, 1965 requires the directors to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reported financial year. Although these estimates are based on the directors best knowledge of current events and actions, actual results could differ from those estimates. 2.2 Adoption of revised FRS During the financial year ended 31st December, 2007, the Group has adopted the revised FRS117, Leases. Prior to 1st January, 2007, leasehold properties held for own use was classified as property, plant and equipment and were stated at revaluation less accumulated depreciation and impairment losses. The adoption of the revised FRS 117 has resulted in a change in the accounting policy relating to the classification of leases of lands and buildings. Leases of lands and buildings are classified as operating or finance leases in the same way as leases of other assets. Leasehold properties held for own use are now classified as operating lease. The up-front payment represents prepaid lease payments and are amortised on a straight-line basis. The Group has applied the change in accounting policy in respect of leasehold properties in accordance with the transitional provisions of FRS 117. At 1st January, 2007, the unamortised amount of leasehold properties are retained as the surrogate carrying amount of prepaid lease payments as allowed by the transitional provisions. The reclassification of leasehold land and building as prepaid lease payments has been accounted for retrospectively and as disclosed in Note 26(i). 2.3 Significant Accounting Estimates and Assumptions The key assumption concerning the future and other key sources of estimation uncertainty at the balance sheet date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are as stated below:- a) Depreciation of property, plant and equipment During the year based on a review undertaken, the residual values for certain major plant and machinery of the Group were ascertained at a percentage of cost to reflect their approximate fair value at the end of their estimated useful lives. 38 Annual Report 2007 Solution Engineering Holdings Berhad

40 Notes TO THE FINANCIAL STATEMENTS (Cont d) 31ST DECEMBER SIGNIFICANT ACCOUNTING POLICIES (Cont d) 2.3 Significant Accounting Estimates and Assumptions (Cont d) a) Depreciation of property, plant and equipment (Cont d) Property, plant and equipment are depreciated on a straight line basis over their estimated useful lives. Management estimates the useful lives of the plant and equipment to be 3 to 10 years. Changes in the expected level of usage and technological developments could impact the economic useful lives and residual values of the plant and equipment. Therefore the future depreciation charges could be revised. b) Net realisable values of inventories Review are made periodically by management on damaged, obsolete and slow-moving inventories. These reviews require judgment and estimates. Possible changes in these estimates could result in revisions to the valuations of inventories. c) Recoverability of receivables The Group makes allowances for doubtful debts based on an assessment of the recoverability of receivables. Allowances are applied to receivables where events or changes in circumstances indicate that the carrying amounts may not be recoverable. Management specifically analysed historical bad debts, customer concentrations, customer credit worthiness, current ecomic trends and changes in customer payment terms when making a judgment to evaluate the adequacy of the allowance for doubtful debts of receivables. Where the expectation is different from the original estimate, such difference will impact the carrying value of receivables. (d) Impairment and amortisation of development costs The Group reviews for any indication of impairment on the development costs capitalised as at the balance sheet date. In assessing the extent of impairment, the management have given due consideration to all pertinent information relating to the ability of the projects to generate future benefits to the Group. The Group also reviews the useful lives of the projects at each balance sheet date, and changes if any, are treated as changes in estimates. 2.4 Subsidiaries and Basis of Consolidation Subsidiary companies are enterprises controlled by the Company. Control exists when the Company has the power to govern the financial and operating policies of the enterprises so as to obtain benefits from their activities. The consolidated financial statements comprise the financial statements of the Company and its subsidiaries as at the balance sheet date. The financial statements of the subsidiaries are prepared for the same reporting date as the Company. Prior to 1st January 2006, acquisition of subsidiary that meets the conditions of a merger are accounted for using the merger method. Under merger method of accounting, the result of subsidiaries are presented as if the merger had been effected throughout the current and previous years. In the consolidated financial statements, the cost of the merger is cancelled with the nominal values of the shares received. Any resulting credit difference is classified as equity and regarded as a non distributable reserve. Any resulting debits differences is adjusted against any suitable reserve. Solution Engineering Holdings Berhad Annual Report

41 Notes TO THE FINANCIAL STATEMENTS (Cont d) 31ST DECEMBER SIGNIFICANT ACCOUNTING POLICIES (Cont d) 2.4 Subsidiaries and Basis of Consolidation (Cont d) Beginning 1st January, 2006, acquisition of subsidiaries are accounted for using the purchase method. The purchase method of accounting involves allocating the cost of the acquisition to the fair value of the assets acquired and liabilities and contingent liabilities assumed at the date of acquisition. The cost of an acquisition is measured as the aggregate of the fair values, at the date of exchange, of the assets given, liabilities incurred or assumed, and equity instruments issued, plus any costs directly attributable to the acquisition. All intercompany transactions and balances are eliminated on consolidation and the consolidated financial statements reflect external transactions only. 2.5 Property, Plant and Equipment and Depreciation All items of property, plant and equipment are initially recorded at cost. Subsequent costs are included in the asset s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to the income statement during the financial period in which they are incurred. Subsequent to recognition, property, plant and equipment are stated at less accumulated depreciation and accumulated impairment loss, if any. Depreciation of property, plant and equipment is calculated on the straight line method to write off their costs to their residual value over their estimated useful lives at the following annual rates;- Office equipment, furniture and fittings 10% - 33% Tools 10% Motor vehicles 10% Signboard 10% Renovation 10% The residual value, useful life and depreciation method are reviewed at each financial year end to ensure that the amount, method and period of depreciation are consistent with previous estimates and the expected pattern of consumption of the future economic benefits embodied in the items of property, plant and equipment. An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. The difference between the net disposal proceeds, if any and the net carrying amount is recognised in income statement. 2.6 Leases i) Classification A lease is recognised as a finance lease if it transfers substantially to the Group all the risks and rewards incidental to ownership. Leases of lands and buildings are classified as operating or finance leases in the same way as leases of other assets and the land and buildings elements of a lease of land and buildings are considered separately for the purposes of lease classification. All leases that do not transfer substantially all the risks and rewards are classified as operating leases. 40 Annual Report 2007 Solution Engineering Holdings Berhad

42 Notes TO THE FINANCIAL STATEMENTS (Cont d) 31ST DECEMBER SIGNIFICANT ACCOUNTING POLICIES (Cont d) 2.6 Leases (Cont d) ii) Finance Leases Assets acquired by way of finance leases are stated at an amount equal to the lower of their fair values and the present value of the minimum lease payments at the inception of the leases, less accumulated depreciation and impairment losses. The corresponding liability is included in the balance sheet as borrowings. In calculating the present value of the minimum lease payments, the discount factor used is the interest rate implicit in the lease, when it is practicable to determine, otherwise, the Group s or Company s incremental borrowing rate is used. Any initial direct costs are also added to the carrying amount of such assets. Lease payments are apportioned between the finance costs and the reduction of the outstanding liability. Finance costs, which represent the difference between the total leasing commitments and the fair value of the assets acquired, are recognised as an expense in income statement over the term of the relevant lease so as to produce a constant periodic rate of charge on the remaining balance of the obligations for each accounting period. iii) Operating Leases 2.7 Investments Operating lease payments are recognised as an expense on a straight-line basis over the term of the relevant lease. The aggregate benefit of incentives provided by the lessor is recognised as a reduction of rental expense over the lease term on a straight-line basis. In the case of a lease of land and buildings, the minimum lease payments or the up-front payments made are allocated, whenever necessary, between the land and the buildings elements in proportion to the relative fair values for leasehold interests in the land element and buildings element of the lease at the inception of the lease. The up-front payment represents prepaid lease payments and are amortised on a straight-line basis over the lease terms. The amortisation policy for leased assets is in accordance with that for depreciable property, plant and equipment as described in Note 2.5. Leasehold land is amortised over the period of its lease of 90 years and leasehold building is amortised at 2% per annum. Investments in subsidiaries are stated at cost less impairment losses, if any. 2.8 Impairment of Assets The carrying values of assets, other than inventories, are reviewed for impairment when there is an indication that the assets might be impaired. Impairment is measured by comparing the carrying values of the assets with their recoverable amounts. An impairment loss is charged to the income statement immediately unless the asset is carried at revalued amount. Any impairment loss of a revalued asset is treated as a revaluation decrease to the extent of previously recognised revaluation surplus for the same asset. Solution Engineering Holdings Berhad Annual Report

43 Notes TO THE FINANCIAL STATEMENTS (Cont d) 31ST DECEMBER SIGNIFICANT ACCOUNTING POLICIES (Cont d) 2.8 Impairment of Assets (Cont d) Subsequent increase in the recoverable amount of an asset is treated as reversal of the previous impairment loss and is recognised to the extent of the carrying amount of the asset that would have been determined (net of depreciation) had no impairment loss been recognised. The reversal is recognised in the income statement immediately, unless the asset is carried at revalued amount. A reversal of an impairment loss on a revalued asset is credited directly to revaluation surplus. However, to the extent that an impairment loss on the same revalued asset was previously recognised as an expense in the income statement, a reversal of that impairment loss is recognised as income in the income statement. 2.9 Research and Development Costs All research costs are recognised in the income statement as incurred. Expenditure incurred on projects to develop new products is capitalised and deferred only when the Group can demonstrate the technical feasibility of completing the intangible asset so that it will be available for use or sale, its intention to complete and its ability to use or sell the asset, how the asset will generate future economic benefits, the availability of resources to complete the project and the ability to measure reliably the expenditure during the development. Product development expenditures which do not meet these criterias are expensed when incurred. Development costs, considered to have finite useful lives, are stated at cost less any impairment losses and are amortised using the straight-line basis over the commercial lives of the underlying products not exceeding five years. Impairment is assessed whenever there is an indication of impairment and the amortisation period and method are also reviewed at least at each balance sheet date Inventories Inventories, which comprise engineering equipment components, are stated at the lower of cost and net realisable value. Cost is determined using the average cost method. The cost of components comprises costs of purchase, conversion and other costs incurred in bringing the inventories to their present location and condition. Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs to be incurred in marketing, selling and distribution Receivables Receivables are carried at anticipated realisable values. Bad debts are written off when identified. Allowance is made for doubtful debts based on a review of all outstanding amounts as at the balance sheet date Contract Work-In-Progress Construction work are stated at cost plus attributable profit less progress billings. Cost comprised direct labour, material costs, sub-contract sum and an allocated proportion of directly related overheads. Administrative and general expenses are charged to the income statement as and when incurred. 42 Annual Report 2007 Solution Engineering Holdings Berhad

44 Notes TO THE FINANCIAL STATEMENTS (Cont d) 31ST DECEMBER SIGNIFICANT ACCOUNTING POLICIES (Cont d) 2.12 Contract Work-In-Progress (Cont d) Where the outcome of a construction contract can be estimated reliably, contract revenue and contract costs are recognised as revenue and expenses respectively by reference to the stage of completion of the contract activity at the balance sheet date. The stage of completion is measured by reference to the proportion of contract costs incurred for work performed to date to the estimated total contract costs. Where the outcome of a construction contract cannot be estimated reliably, contract revenue is recognised to the extent of contract costs incurred that it is probable will be recoverable. Contract costs are recognised as expenses in the period in which they are incurred. When it is probable that total contract costs will exceed total contract revenue, the expected loss is recognised as an expense immediately. When the total of costs incurred on construction contracts plus, recognised profits (less recognised losses) exceeds progress billings, the balance is classified as amount due from customers on contracts. When progress billings exceed costs incurred plus, recognised profits (less recognised losses), the balance is classified as amount due to customers on contracts Cash and Cash Equivalents Cash and cash equivalents consists of cash in hand, bank balances, fixed deposits with licensed banks and deposit with a financial institution, net of outstanding bank overdrafts which have an insignificant risk of changes in value and deposit with a money market fund net of impairment Payables Payables are stated at cost which is the fair value of the consideration to be paid in the future for goods and services received Provisions Provisions are recognised when there is a present obligation, legal or constructive as a result of a past event, and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Provisions are reviewed at each balance sheet date and adjusted to reflect the current best estimate Hire-Purchase Property, plant and equipment acquired under hire-purchase are capitalised and are depreciated on the same basis as owned assets as stated in Note 2.5 and the corresponding obligations relating to the remaining capital payments are treated as liabilities. Finance charges are charged to the income statement over the period of the plan and accounted for on a straight line method Interest-Bearing Borrowings Interest-bearing bank loans and overdrafts are recorded at the amount of proceeds received, net of transaction costs. Borrowing costs directly attributable to the acquisition of property, plant and equipment are capitalised as part of the cost of those assets, until such time as the assets are ready for their intended use. All other borrowing costs are charged to the income statement as an expense in the period in which they are incurred. Solution Engineering Holdings Berhad Annual Report

45 Notes TO THE FINANCIAL STATEMENTS (Cont d) 31ST DECEMBER SIGNIFICANT ACCOUNTING POLICIES (Cont d) 2.18 Share Capital Ordinary shares are classified as equity. Dividends on ordinary shares are recognised in equity in the period in which they are declared Income Tax Income tax on the profit for the year comprises current and deferred income tax liabilities. Current income tax liabilities is the expected amount of income taxes payable in respect of the taxable profit for the year and is measured using the tax rates that have been enacted at the balance sheet date. Deferred income tax liabilities is provided for, using the liability method, on temporary differences at the balance sheet date between the tax bases of assets and liabilities and their carrying amounts in the financial statements. In principle, deferred income tax liabilities are recognised for all taxable temporary differences and deferred income tax assets are recognised for all deductible temporary differences, unused tax losses and unused tax credits to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, unused tax losses and unused tax credits can be utilised. A deferred income tax asset is recognised only to the extent that it is probable that taxable profit will be available against which the deductible temporary differences can be utilised. The carrying amount of a deferred income tax asset is reviewed at each balance sheet date. If it is no longer probable that sufficient taxable profit will be available to allow the benefit of part or all of that deferred income tax asset to be utilised, the carrying amount of the deferred income tax asset will be reduced accordingly. When it becomes probable that sufficient taxable profit will be available, such reduction will be reversed to the extent of the taxable profit Foreign Currencies (i) Functional and Presentation Currency Items included in the financial statements of each of the Group s entities are measured using the currency of the primary economic environment in which the entities operates (the functional currency ). The financial statements are presented in Ringgit Malaysia, which is the Company s functional and presentation currency. (ii) Foreign Currency Transactions Transactions in foreign currencies are converted into Malaysian Ringgit, the Company s functional currency, at the rate of exchange ruling at the date of the transaction. Assets and liabilities in foreign currencies at the balance sheet date have been converted into Ringgit Malaysia at the rate of exchange ruling at that date. Exchange differences are dealt with through the income statement. The principal closing rates used in translation of foreign currency amounts are follows: Foreign currency RM RM 1 US Dollar Pound sterling Euro Annual Report 2007 Solution Engineering Holdings Berhad

46 Notes TO THE FINANCIAL STATEMENTS (Cont d) 31ST DECEMBER SIGNIFICANT ACCOUNTING POLICIES (Cont d) 2.21 Financial Instruments (i) Financial instruments are recognised in the respective balance sheets when the Group have become a party to the contractual provisions of the instruments. The particular recognition methods adopted are disclosed in the individual accounting policy statements associated with each item. Financial instruments are classified as liabilities or equity in accordance with the substance of the contractual arrangement. Interest, dividends, gains and losses relating to a financial instrument classified as liability are reported as expense or income. Distributions to holders of financial instruments classified as equity are charged directly to equity. Financial instruments are offset when the Group have a legally enforceable right to set off the recognised amounts and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously. (ii) Fair value estimation for disclosure purposes: (a) (b) The carrying amounts of financial assets and liabilities with a maturity of less than one year are assumed to approximate their fair values. The fair values of long term borrowings and hire-purchase creditors are estimated using discounted cash flow analysis at current market interest rate available for similar types of lending and borrowing arrangements Employee Benefits (i) Short term employee benefits Wages, salaries, paid annual leave and sick leave, bonuses and non monetary benefits are accrued in the period in which the associated services are rendered by the employees of the Group. (ii) Post-employment benefits Defined contribution plan The Group s contributions to the defined contribution plan ( Employees Provident Fund ) are charged to the income statement in the period in which they relate. Once the contributions have been paid, the Group have no further payment obligations Revenue Recognition Operating revenue of the Group and of the Company represents invoiced value of goods sold net of returns and discounts. Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. The following specific recognition criteria must also be met before revenue is recognised:- Sale of goods - as net of sales taxes and discounts upon the transfer of risks and rewards. Contract revenue - is accounted for by the stage of completion method as described in Note Interest income - on a time proportion basis that reflects the effective yield on the asset. Dividend income - when the Group s right to receive payment is established. Solution Engineering Holdings Berhad Annual Report

47 Notes TO THE FINANCIAL STATEMENTS (Cont d) 31ST DECEMBER PROPERTY, PLANT AND EQUIPMENT Group Office equipment 2007 furniture Motor and fittings Tools vehicles Signboard Renovation Total Cost RM RM RM RM RM RM At 1st January 494, ,461 1,089,373 4, ,306 2,211,611 Additions 63,168 41, ,190 Disposals At 31st December 557, ,483 1,089,373 4, ,306 2,315,801 Accumulated Depreciation At 1st January 212,537 70, ,815 1, , ,962 Charges for the year 79,334 32,211 98, , ,824 Disposals At 31st December 291, , ,007 2, , ,786 Net Book Value At 31st December 265, , ,366 2, ,154 1,388,015 As restated Office equipment 2006 furniture Motor and fittings Tools vehicles Signboard Renovation Total Cost RM RM RM RM RM RM At 1st January 404, , ,277 4, ,366 1,762,573 Additions 101,634 41, ,514-63, ,506 Disposals (12,050) - (259,418) - - (271,468) At 31st December 494, ,461 1,089,373 4, ,306 2,211,611 Accumulated Depreciation At 1st January 153,496 41, ,600 1,599 89, ,032 Charges for the year 65,914 29,244 93, , ,807 Disposals (6,873) - (147,004) - - (153,877) At 31st December 212,537 70, ,815 1, , ,962 Net Book Value At 31st December 281, , ,558 2, ,921 1,518, Annual Report 2007 Solution Engineering Holdings Berhad

48 Notes TO THE FINANCIAL STATEMENTS (Cont d) 31ST DECEMBER PROPERTY, PLANT AND EQUIPMENT (Cont d) During the financial year, the Group acquired property, plant and equipment at aggregate costs of RM104,190 (2006 : RM720,506) of which Nil (2006 : RM350,000) were acquired by means of hirepurchase arrangements. Net book value of property, plant and equipment held under hire-purchase are as follows: Group RM RM Motor vehicles 634, , PREPAID LEASE PAYMENTS Group As restated At group cost: RM RM At 1st January 2,804,846 2,846,537 Amortisation for the year (41,691) (41,691) At 31st December 2,763,155 2,804,846 Analysis of cost and valuation for long term leasehold land and building are as follows: 2007 Long term leasehold land Building Total RM RM RM Valuation/ Cost At valuation 290, , ,000 At cost 1,306, ,660 2,300,000 1,596,340 1,353,660 2,950,000 Net Book Value At valuation 257, , ,967 At cost 1,252, ,041 2,186,188 1,509,562 1,253,593 2,763,155 As restated 2006 Long term leasehold land Building Total Valuation/ Cost RM RM RM Valuation/ Cost At valuation 290, , ,000 At cost 1,306, ,660 2,300,000 1,596,340 1,353,660 2,950,000 Solution Engineering Holdings Berhad Annual Report

49 Notes TO THE FINANCIAL STATEMENTS (Cont d) 31ST DECEMBER PREPAID LEASE PAYMENTS (Cont d)) As restated 2006 Long term leasehold land Building Total RM RM RM Net Book Value At valuation 260, , ,270 At cost 1,266, ,914 2,220,576 1,527,336 1,277,510 2,804,846 a) Certain leasehold properties previously disclosed under property, plant and equipment were revalued and stated at their revalued amounts and have not been revalued since. The Group availed itself to the transitional provisions of IAS 16 (Revised): Property, plant and equipment, by virtue of which these properties continue to be stated at their revalued amount less accumulated depreciation and impairment. The Group has applied the change in accounting policy in respect of leasehold properties in accordance with the transitional provisions of FRS 117. At 1st January, 2007, the unamortised amount of leasehold properties are retained as the surrogate carrying amount of prepaid lease payments as allowed by the transitional provisions. As at 31st December, 2007, had the revalued long term leasehold land and building been carried under the cost model, the net book value would have been RM377,138 (2006 : RM381,968) (b) The net book value of property, plant and equipment pledged as securities for borrowings (Note 15) are as follows: Group RM RM Long term leasehold land 1,509,562 1,527,336 Building 1,253,593 1,277,510 2,763,155 2,804, INTANGIBLE ASSETS Group Development costs RM RM At 1st January 624, ,423 Add: Additions during the year 244, , , ,529 Less: Accumulated amortisation (253,583) (160,298) At 31st December 615, , Annual Report 2007 Solution Engineering Holdings Berhad

50 Notes TO THE FINANCIAL STATEMENTS (Cont d) 31ST DECEMBER INTANGIBLE ASSETS (Cont d) Development costs represents costs incurred on the Group s internally generated software and equipment for projects such as Thermal Conductivity of Building Materials, Hydrology Study System Apparatus, Double Effect Climbing Evaporator, Two Shaft Gas Turbine, Gas Absorption Unit, Liquid Extraction Unit, Distillation Unit and Column Absorption Unit, Heat Transfer and Thermodynamics Equipment, Bioreactors and Data Logger. Such development costs are expected to have definite useful lives of not exceeding 5 years. The amortisation period and amortisation method are reviewed annually, and changes, if any, are treated as changes in estimates. Current year addition represent costs incurred on Heat Transfer and Thermodynamics, Fluid Mechanics and Unit Operations Equipment, Bioreactors and Data Logger projects which are expected to generate future benefits to the Group. The projects are expected to have useful lives of not exceeding 5 years. Included in the development expenditure is the following expenses capitalised during the financial year: RM RM Director s on board of a subsidiary company: - remuneration 85,704 39,864 - bonus 10,464 9,966 - allowances EPF & Socso 11,628 6, INVESTMENT IN SUBSIDIARIES Company RM RM Unquoted shares, at cost 23,735,263 23,130,263 Additions - 605,000 At 31st December 23,735,263 23,735,263 The subsidiaries, incorporated in Malaysia, are as follows:- Name of Company Effective Interest Principal Activities Solution Engineering Sdn. Bhd. 100% 100% Design and development of equipment for engineering education and research, and provision of training and curriculum content development Solution Biogen Sdn. Bhd. 100% 100% Design and development of pilot plant for biolubricant project Solution E & E Technology Sdn. Bhd. 70% 70% Dormant Solution Engineering Holdings Berhad Annual Report

51 Notes TO THE FINANCIAL STATEMENTS (Cont d) 31ST DECEMBER INVENTORIES Group RM RM Engineering equipment components 222, , TRADE AND OTHER RECEIVABLES Group Trade receivables RM RM Third parties 6,821,910 3,484,411 Due from customers on contracts (Note 9) 4,051,707 1,519,700 10,873,617 5,004,111 Other receivables Deposits 19,212 18,562 Other receivables 247, ,067 Prepayment 12, , ,629 Trade and other receivables 11,152,905 5,144,740 Trade receivables are generally non-interest bearing and on 180 days term. Other credit terms are assessed and approved on a case-by-case basis. Included in trade receivables are debts amounting to RM260,065 (2006 : RM359,241) whereby the debts are no longer repayable by the debtor after final accounts settlement. Four of the directors of the Company have agreed to make good any losses that may arise should these debts failed to realise and is currently paying a 36 monthly instalment of RM12,397 each to settle this debt. Accordingly, no allowance for doubtful recovery has been made for these debts. Up to the date of this report, out of the Group s total trade receivables of RM10,873,617 existing as at 31st December, 2007, RM5,105,587 was already received in settlement. The Group has no significant concentration of credit risk that may arise from exposures to a single debtor or to groups of debtors. 9. DUE FROM CUSTOMERS ON CONTRACTS Group RM RM Contract costs incurred to date 5,079, ,200 Attributable profits 1,660,820 1,055,226 6,740,561 1,834,426 Less: Progress billings (2,688,854) (314,726) Due from customers on contracts (Note 8) 4,051,707 1,519, Annual Report 2007 Solution Engineering Holdings Berhad

52 Notes TO THE FINANCIAL STATEMENTS (Cont d) 31ST DECEMBER AMOUNTS DUE FROM SUBSIDIARIES The amounts due from subsidiaries are interest free, unsecured and have no fixed terms of repayment. 11. DEPOSITS, CASH AND BANK BALANCES Group Company RM RM RM RM Deposits with a money market fund 2,549,531-1,086,587 - Less: Impairment (32,001) - (13,389) - 2,517,530-1,073,198 - Deposit with a financial institution 2,033, Fixed deposits with licensed banks 2,977,188 8,857, Cash in hand and at bank 1,231,682 2,972, ,721 1,338 8,760,115 11,830,061 1,190,919 1,338 Interest rate for fixed deposits with licensed banks 3.5% - 3.7% 3.0% - 4.0% - - Maturity period for fixed deposits with licensed banks 6 to 12 months 6 to 12 months - - Fixed deposits amounted to RM2,977,188 (2006 : RM2,807,897) as at balance sheet date are under lien to secure credit facilities granted to the Group. The deposits with a money market fund and with a financial institution of the Group can be uplifted as and when required. 12. SHARE CAPITAL Company Number of Number of ordinary ordinary shares of shares of RM0.10 each RM RM0.10 each RM Authorised: 250,000,000 25,000, ,000,000 25,000,000 Issued and Fully Paid: 126,522,000 12,652, ,522,000 12,652,200 Solution Engineering Holdings Berhad Annual Report

53 Notes TO THE FINANCIAL STATEMENTS (Cont d) 31ST DECEMBER RESERVES Group Company RM RM RM RM Retained profit / (accumulated loss) 2,744,013 2,374, ,786 (69,719) Share premium reserve 4,053,532 4,053,532 4,053,532 4,053,532 Merger relief reserve ,878,158 13,878,158 Retained profit 6,797,545 6,427,998 18,806,476 17,861,971 As at 31st December, 2007, the Company has tax exempt account of approximately RM1,185,000 (2006 : RM83,000) available for distribution of dividends subject to the agreement of the Inland Revenue Board. The Company has no tax credit under Section 108 of the Income Tax Act, 1967 to frank the payment of dividends. Share premium reserve This represents premium arising from issues of shares, net of its related expenses. This reserve is restricted but can be utilised for bonus issue. Merger relief reserve The acquisition of Solution Engineering Sdn. Bhd. was accounted for using the merger method pursuant to a group restructuring exercise for the purpose of an initial public offering. 14. HIRE-PURCHASE CREDITORS Group RM RM Minimum payments Not later than one year 84, ,133 Later than one year but not later than five years 260, , , ,622 Less: Future hire-purchase charges (51,746) (69,394) 293, ,228 Total payable 293, ,228 Less: Payable within one year (72,715) (107,594) Payable after one year 220, ,634 The terms for hire-purchase arrangements are 3 to 7 years ( to 7 years) in respect of the financial year ended 31st December, The borrowing rates ranges from 2.59% to 3.90% ( % to 3.90%) per annum. The interest rates are fixed at the inception of the hire-purchase arrangements. 52 Annual Report 2007 Solution Engineering Holdings Berhad

54 Notes TO THE FINANCIAL STATEMENTS (Cont d) 31ST DECEMBER TERM LOAN, BANK OVERDRAFTS AND OTHER CREDIT FACILITIES RM RM Term loan I : Interest at 4.25% per annum for 1st year, 6.00% per annum for 2nd year and 1.25% per annum above the bank s base leading rate from 3rd year onwards, repayable by 180 monthly instalments of RM14,606 each 621, ,481 Repayable as follows: Within twelve months 129, ,272 Between one to two years 140, ,272 Between two to five years 351, , , , , ,481 The term loans, bank overdrafts and credit facilities obtained from licensed banks are secured as follows:- i) facility agreement for the term loan of RM1,600,000; ii) iii) iv) existing first party legal charge over the Group s leasehold land and building; corporate guarantee by the Company; certain fixed deposits of a subsidiary Company (Note 11); and v) existing corporate Guarantee Corporation under the New Principal Guarantee Scheme The trust receipt and bank overdraft bear interest at agreed commercial banking rates per annum. 16. DEFERRED INCOME TAX LIABILITIES Group RM RM At 1st January 75,808 67,929 Transferred from income statement (Note 21) 43,192 7,879 At 31st December 119,000 75,808 The deferred income tax liabilities are in respect of temporary differences between tax base of assets and their carrying value in financial statements upon expiry of pioneer status 119,000 75,808 Solution Engineering Holdings Berhad Annual Report

55 Notes TO THE FINANCIAL STATEMENTS (Cont d) 31ST DECEMBER TRADE AND OTHER PAYABLES Group Company RM RM RM RM Trade payables 2,549,069 1,339, Other payables: - accruals 98, ,208 11,000 16,000 - deposit received 8,200 90, dividends payable 1,085 1,183 1,085 1, , ,206 12,085 17,183 Trade and other payables 2,656,598 1,589,238 12,085 17,183 Trade payables are non-interest bearing and the normal trade credit terms granted to the Group range from 30 to 90 days terms, although it is customary for creditors to extend the terms to 120 days but not beyond 180 days. 18. OPERATING REVENUE Group Company RM RM RM RM Sales of goods 781,615 3,046, Contract revenue 12,430,801 9,468, Dividend income - - 3,000,000-13,212,416 12,515,019 3,000, COST OF SALES Group Company RM RM RM RM Cost of goods sold 565,000 2,750, Contract costs 7,978,492 5,185, ,543,492 7,936, Annual Report 2007 Solution Engineering Holdings Berhad

56 Notes TO THE FINANCIAL STATEMENTS (Cont d) 31ST DECEMBER PROFIT/ (LOSS) BEFORE INCOME TAX Group Company As restated Profit/ (loss) before income tax is arrived at after charging/(crediting):- RM RM RM RM Auditors remuneration - statutory audits 18,000 20,200 11,000 8,000 - other services 3,000 5,000-5,000 Amortisation of development expenditure 93,285 93, Depreciation (Note 3) 234, , Tax exempt dividend received - - (3,000,000) - Amortisation of prepaid lease payment (Note 4) 41,691 41, Directors remuneration and allowances 349, , Directors bonus 50,456 31, Directors EPF & Socso 49,354 53, Directors fees 156, ,000 72,000 - Write-down of inventories - 46, Rental of equipment 7, Rental of premises 16,809 63, Impairment of deposits with money market fund 32,001-13,389 - Net realised loss/ (gain) on foreign exchange 44,078 (59,005) - - Staff cost: - Salaries and wages 487, , Bonus 44,427 44, Socso 6,376 8, EPF 50,527 52, Other benefits 51, , , , Gross distribution from money market fund (87,694) - (41,217) - Interest income (232,739) (244,309) - - Finance cost: - trust receipts 29, , bank overdrafts 7,328 5, term loan 58,000 55, hire-purchase 17,544 19, others 4,631-4, bank and guarantee charges 57,258 48, , ,060 4,631 - Solution Engineering Holdings Berhad Annual Report

57 Notes TO THE FINANCIAL STATEMENTS (Cont d) 31ST DECEMBER PROFIT/ (LOSS) BEFORE INCOME TAX (Cont d) Group RM RM Directors remuneration Directors remuneration are analysed as follows: Included in income statement - Executive Directors - salaries and allowances 449, ,538 - fees 72,000 72,000 - benefits in kind 39,950 27,700 Non-Executive Directors - fees 72,000 72,000 Other director (on board of a subsidiary company) Non-Executive Directors - fees 12,000 12,000 Capitalised in development expenditure:- Executive Director - salaries and allowances 108,596 56, The number of Director Non- Nonwhose remuneration fell Executive Executive Executive Executive within the following ranges (per annum):- Below RM150, RM150,000 RM200, RM200,001 RM250, RM250,001 RM300, Other director (on board of a subsidiary company) Below RM50, INCOME TAX EXPENSE Group Company RM RM RM RM Current taxation Estimate for the year 47,000 56, (Over)/ Underprovision in prior years (783) 10, Deferred taxation: 46,217 67, Transferred to deferred income tax liabilities (Note 16) 43,192 7, Annual Report 2007 Solution Engineering Holdings Berhad 89,409 75,

58 Notes TO THE FINANCIAL STATEMENTS (Cont d) 31ST DECEMBER INCOME TAX EXPENSE (Cont d) A reconciliation of income tax expense applicable to profit/ (loss) before income tax at the statutory tax rate to income tax expense at the effective income tax rate of the Group and of the Company are as follows: Group Company RM RM RM RM Profit/ (Loss) before income tax 2,352,199 2,164,947 2,842,335 (104,719) Taxation using Malaysian tax rate of 27% ( %) 635, , ,430 (29,321) Effect of tax savings on tax rate of 20% on first RM500,000 (2006 : RM500,000) on estimated assessable profit for the year (16,511) (22,745) - - Income exempted from tax (684,446) (586,182) (820,957) - Expenses not deductible for tax purposes 168, ,492 53,527 29,321 Current year tax losses not utilised 4, Current year capital allowances not utilised 1, Increase in unabsorbed tax losses 4, Deferred tax asset not recognised (5,877) Capital allowance utilised (59,730) (72,888) - - Transferred to deferred income tax liabilities 43,192 7, Other item (174) ,192 64, (Over)/ Underprovision in prior years (783) 10, ,409 75, EARNINGS PER SHARE Group Basic and diluted earnings per share amounts are calculated by dividing the net profit for the year attributable to equity holders of the Company by the number of ordinary shares in issue during the financial year RM RM Profit attributable to ordinary equity holders of the Company 2,267,377 2,091,292 Number of ordinary shares in issue 126,522, ,522,000 Basic and diluted earnings per share 1.79 sen 1.65 sen Solution Engineering Holdings Berhad Annual Report

59 Notes TO THE FINANCIAL STATEMENTS (Cont d) 31ST DECEMBER DIVIDENDS Group & Company RM RM Financial year ended 31st December, A first and final tax exempt dividend of 10% paid on 20th June, ,265,220 Financial year ended 31st December, First interim tax exempt dividend of 10% paid on 18th May, ,265, Second interim tax exempt dividend of 5% paid on 24th December, ,610-1,897,830 1,265, CONTINGENT LIABILITIES Group RM RM Indemnity provided for bank guarantee utilised by - third parties 929, ,149 - subsidiary 35, , RELATED PARTY TRANSACTION Company RM RM Tax exempt dividend received from a subsidiary company 3,000, COMPARATIVE FIGURES i) Arising from the adoption of FRS117, leases during financial year ended 31st December, 2007 the following figures have been restated accordingly:- Group As previously reported FRS117 As restated Balance Sheet RM RM RM Non-current assets Property, plant and equipment 4,323,495 (2,804,846) 1,518,649 Prepaid lease payments - 2,804,846 2,804,846 Income and Cash Flow Statements Depreciation of property, plant and equipment 254,498 (41,691) 212,807 Amortisation of prepaid lease payments - 41,691 41, Annual Report 2007 Solution Engineering Holdings Berhad

60 Notes TO THE FINANCIAL STATEMENTS (Cont d) 31ST DECEMBER COMPARATIVE FIGURES (Cont d) ii) iii) Certain comparative figures have been reclassified to conform with current financial year s presentation. The comparative figures were audited by another firm of chartered accountants other than Wong Weng Foo & Co. 27. FINANCIAL INSTRUMENTS Financial Risk Management Objectives and Policies The operations of the Group are subject to a variety of financial risks, including credit risk, foreign currency exchange risk, interest rate risk, liquidity and cash flow risk and market risk. The Group has formulated guidelines and policies as well as internal controls which seek to minimise the Group s exposure to risks associated with the financing, investing and operating activities of the Group. (a) Interest rate risk The Group s exposure to interest rate risk arises from interest-bearing borrowings and the placement of excess funds in interest earning deposits of which the Management reviews and monitors the interest rates at regular intervals. (b) Foreign currency exchange risk The Group is exposed to currency risk as a result of the Group s transactions with foreign trade receivables and payables. The Group monitors the movements in foreign currency exchange rates closely to ensure their exposure is minimised. (c) Liquidity risk and cash flow risk The Group actively manages its operating cash flows and the availability of funding so as to ensure that all repayment and funding needs are met. As part of its overall prudent liquidity management, the Group maintains sufficient levels of cash and cash equivalents to meet its working capital requirements and prudently balances its portfolio of short term and long term funding requirements. (d) Credit risk Fair values The Group has a credit policy in place to evaluate customers requiring credit over a certain amount or period. Credit risk is further minimised and monitored via strictly limiting the Group s associations to business partners with high creditworthiness. Trade receivables are monitored on an ongoing basis via the Group s management reporting procedures. In the opinion of the directors, the carrying values of financial assets and financial liabilities of the Group as at 31st December, 2007 are not materially different from their fair values. Solution Engineering Holdings Berhad Annual Report

61 Notes TO THE FINANCIAL STATEMENTS (Cont d) 31ST DECEMBER GENERAL INFORMATION 28.1 The Company is a public limited company, incorporated and domiciled in Malaysia, listed on the MESDAQ Market of the Bursa Malaysia Securities Berhad The principal place of business is located at No. 3, Jalan TPK 2/4, Taman Perindustrian Kinrara, Puchong, Selangor Darul Ehsan. 60 Annual Report 2007 Solution Engineering Holdings Berhad

62 List OF PROPERTIES PARTICULARS OF THE LANDED PROPERTIES Description /Address Owner Age of Building (Years) Tenure / Expiry Existing Use Land Area Built Up Area Audited Net Book Value/ Cost Status of Certificate of Fitness or Occupational Certificate Restrictions-in-interest of the property Encumbrances A three storey shop office situated on a piece of leasehold land held under PN18656 Lot No , Mukim Batu, Daerah Kuala Lumpur, Wilayah Persekutuan (previously held under HS(D) PT 7172, Mukim Batu, Daerah Kuala Lumpur, Wilayah Persekutuan) ) with the postal address of Lot 11, Ground Floor (11G), First Floor (11-1) and Third Floor (11-2), Jalan 3A/2B, Taman Desa Bakti, Salayang 68100, Kuala Lumpur, Wilayah Persekutuan SESB 20 Leasehold for 99 years. Expiring 21 May Currently leased out for use as a shoplot and office sq mt sq mt RM576,967 / RM650,000 as per audited accounts dated 31 December The property is in compliance with building regulations with the Certificate of Fitness for Occupation, dated 26 June The transfer of interest of the property is restricted to the extent that it may not be transferred, leased or charged without the consent of the Land Executive Council, Kuala Lumpur. It is a condition of title to the property that the building erected thereon must only be used as a shoplot. The property is presently charged to Malayan Banking Berhad under Presentation No. 7479/94 and 3524/2001 for loan facilities granted to SESB. A double storey detached factory situated on a piece of leasehold land held under H.S.(M) 23157, P.T. No , Mukim Petaling Daerah Petaling, Negeri Selangor Darul Ehsan, with a postal address of No. 3, Jalan TPK 2/4, Taman Perindustrian Kinrara, Puchong, Selangor Darul Ehsan SESB 13 Leasehold for 99 years. Expiring 18 January Currently used by SESB as its Equipment Demonstration and Training Centre. The factory also houses Solution s Equipment R&D Department, Design & Engineering Department, Sales &, Marketing Department, Finance & Administration Department and the Customer Support and Services Department. 1, sq mt 1, sq mt RM2,186,188 / RM2,300,000 as per audited accounts dated 31 December The property is in compliance with building regulations with the Certificate of Fitness for Occupation, dated 29 January There is a restriction of interest on the property requiring the State Authority s consent to any transfer or charge of the property. The property is presently charged to Malayan Banking Berhad under Presentation No. 5029/2004 for loan facilities granted to SESB. Solution Engineering Holdings Berhad Annual Report

63 Analysis OF SHAREHOLDING As at 21 March 2008 Authorised Capital : RM20,000,000 Issued and Paid-Up Capital : RM12,652,200 Class of shares : Ordinary Shares of RM0.10 each Voting rights : One vote per ordinary shares Distribution of Shareholdings Range of Holdings No. of Holders % No. of Shares % to , ,001 to 10, ,293, ,001 to 100, ,612, ,001 to 6,326,099 * ,003, ,326,099 & above ** ,506, Total ,522, Remarks : * Less than 5% of issued shares ** 5% and above of issued shares 30 LARGEST SECURITIES HOLDERS AS AT 21 MARCH 2008 No. Name No. of Shares Held % 1. Lim Yong Hew 23,305, Lim Yong Hew 22,944, Solvest Sdn. Bhd. 7,401, Lim Hai Guan 6,854, Technology Park Malaysia Corporation Sdn.Bhd. 6,300, Mohd Shahrin Bin Abd Rahman 2,741, Mohd Shahrin Bin Abd Rahman 2,709, Lim Book Yam 2,707, Lim Choi Lim Bok Eng 2,707, Toh Chee Thin 2,256, Ding Ring Diong 2,205, Lim Leong Yok 1,510, Lim Chiou Kim 1,370, Chan Yee Wah 1,186, Asia Water & Environment Sdn.Bhd. 1,083, Chow Mun Heng 1,067, Syed Muhamad Bin Syed Abdul Kadir 1,025, Wong Ah Wong Ah Nooi 1,024, Lim Hai Guan 1,023, Lim Chiou Kim 1,010, Peter Wong Neng Kwong 1,000, TA Nominees (Tempatan) Sdn.Bhd. Pledged Securities Account for Liew Tian Kooi 1,000, Zainuddin Bin Muhamad 925, Siew Chin Sing 845, Annual Report 2007 Solution Engineering Holdings Berhad

64 Analysis OF SHAREHOLDING (Cont d) 30 LARGEST SECURITIES HOLDERS AS AT 21 MARCH 2008 (Cont d) No. Name No. of Shares Held % 25. Wong San San 765, Kow Chee Kiang 747, Lim Bee Leyong 590, Lim Kian Ann 563, Seah Sow Kim 520, Chai Teck Fung 515, Total 99,911, REGISTER OF SUBSTANTIAL SHAREHOLDERS AS AT 21 MARCH 2008 No. Name of shareholders Direct Indirect Interest Interest No. of Shares % No. of shares % 1. Lim Yong Hew 46,250, ,453, (1) 2. Lim Hai Guan 7,878, ,111, (2) 3. Solvest Sdn.Bhd. 7,403, (1) Deemed interested by virtue of his spouse s interest and shareholding in Solvest Sdn.Bhd. pursuant to Section 6A of the Companies Act, (2) Deemed interested by virtue of his parent s interest and shareholding in Solvest Sdn.Bhd. pursuant to Section 6A of the Companies Act, REGISTER OF DIRECTORS SHAREHOLDINGS AS AT 21 MARCH 2008 No. Name of shareholders Direct Indirect Interest Interest No. of Shares % No. of shares % 1. Lim Yong Hew 46,250, ,453, Lim Hai Guan 7,878, ,111, Mohd Shahrin Bin Abd Rahman 5,451, Lim Chiou Kim 2,785, ,111, Datuk Dr. Syed Muhamad Bin Syed Abdul Kadir 1,025, Low Wei Ngee 400, Solution Engineering Holdings Berhad Annual Report