ANNUAL REPORT 2010 - aim-net.com.my · PDF file101 Annexure A Form of Proxy Contents. 2 Advance Information Marketing Berhad (644769-D) Corporate Information BOARD OF DIRECTORS

ANNUAL REPORT 2010

AN

NU

AL R

EP

OR

T 2010A

dvance Info

rmatio

n Marketing

Berhad

(644769-D)

02 Corporate Information

03 Company Profile

06 Board of Directors

08 Chairman’s Statement

09 Statement of Corporate Governance

15 Statement on Internal Control

17 Audit Committee Report

21 Additional Compliance Information

23 Financial Highlights

92 Statement by Directors and Statutory Declaration

93 Independent Auditors’ Report

95 Summary of Landed Properties

96 Analysis of Shareholdings

98 Notice of Annual General Meeting

101 Annexure A

Form of Proxy

Contents

2 Advance Information Marketing Berhad (644769-D)

Corporate Information

BOARD OF DIRECTORS

Dato’ Nik Ismail Bin Dato’ Nik Yusoff (Independent Non-Executive Chairman)

Mak Siew Wei(Executive Director)

Tan Chin Yen(Executive Director)

Sim Thean Wah(Independent Non-Executive Director)

Ong Tee Kein(Independent Non-Executive Director)

AUDIT COMMITTEE

Sim Thean Wah (Chairman) Dato’ Nik Ismail Bin Dato’ Nik YusoffOng Tee Kein

COMPANY SECRETARY

Kuan Hui Fang (MIA 16876)Tan Ai Peng (MAICSA 7018419)

REGISTERED OFFICE

Level 18, The Gardens North TowerMid Valley City, Lingkaran Syed Putra59200 Kuala LumpurTel No. : 03 - 2264 8888Fax No. : 03 - 2282 8997

HEAD OFFICE

Suite 2B-12-2, Block 2, Level 12Plaza Sentral Jalan Stesen Sentral 5 Kuala Lumpur Sentral 50470 Kuala Lumpur Tel No. : 03 - 4043 2699Fax No. : 03 - 4043 2690

SHARE REGISTRAR

Tricor Investor Services Sdn BhdLevel 17, The Gardens North TowerMid Valley City, Lingkaran Syed Putra59200 Kuala LumpurTel No. : 03 - 2264 3883Fax No. : 03 - 2282 1886

AUDITORS

Azman, Wong, Salleh & Co. (AF:0012) 12th Floor, Wisma Tun Sambanthan No. 2, Jalan Sultan Sulaiman 50000 Kuala Lumpur Tel No. : 03 - 2273 2688Fax No. : 03 - 2274 2688

PRINCIPAL BANKERS

CIMB Bank BerhadMalayan Banking Berhad

STOCK EXCHANGE LISTING

The ACE Market of Bursa Malaysia Securities Berhad Stock Name : AIM Stock Code : 0122

3ANNUAL REPORT 2010

Company Profile

AIM Group is a regional BPO (Business Process Outsourcing) solution provider offering a broad spectrum of loyalty

management services from consultation, technology infrastructure and technical support to procurement and logistics for

companies aiming to build and nurture a life long relationship with their customers.

As the total BPO solution provider in loyalty management services, our all-round expertise is applied in diverse industries.

In today’s competitive business climate, this experience has transformed into important business know-how and powerful

marketing tools to our clients. Our holistic approach enables us to provide strategic direction and consultancy to our

clients on how best to tailor, implement and manage their loyalty programs effectively and to meet their desired objectives.

Through outsourcing, our clients can rely on our expertise and stay focused on their core business competency.

On the technology front, AIM is a software research and development specialist, focusing primarily on the development

of enterprise marketing management solutions in the loyalty management scene. Through years of R & D efforts, AIM

has designed and developed a sophisticated enterprise marketing management solution, AIMS™ (Advance Information

Marketing System), and our continuous R & D initiatives will enhance the robustness and versatility of the system.

AIMS™ is integrated to our 5 service components namely Business Intelligence, Integrated Marketing Services, Contact

Centre Management, Procurement & Fulfillment and Technology Infrastructure to equip the companies with the right

marketing tools. This integrated platform provides complete information and better understanding of the customer

behavior and response to marketing initiatives implemented. As a result, at one single touch point with AIM, our clients are

able to understand their customer better, become more customer-centric and implement compelling marketing strategies

throughout the customer cycle.

Aside the core business that AIM has engaged in, AIM has also extended the business segment into the beauty and

skincare line. In October, 2010, AIM has been granted master distributorship of HABA products in Malaysia under

Advanced Supply Chain Solutions Sdn. Bhd. Currently HABA Malaysia has 4 retail counters, 1 call centre and 1 showroom.

The four retail counters are located at ISETAN - KLCC, ISETAN - The Gardens, Metrojaya - Mid Valley & Metrojaya - Bukit

Bintang Plaza. In extending its services, the inaugural HABA Showroom offers a full line of HABA products and is to be

equipped with a facial salon where indulgence packages are soon to be available. In line with its expansion plan, HABA

will continue to open more boutiques across Malaysia via licensing, which aim to provide customers from all walks of life

to enjoy the benefit of additive-free skincare.


Company Profile (cont’d)

Elite Relationship Marketing Sdn Bhd

(“ERM”)

51%

Customer Loyalty Solutions Sdn Bhd

(“CLS”)

100%

100%Advanced Supply Chain

Solutions Sdn Bhd(“ASCS”)

100%PT.CLS System

(Indonesia)(“PCS”)

Bounty Trading Pte Ltd(Singapore)

(“BT”)

100%Pride Group Limited

(“PGL”) - BVI

100%

AIM Group Corporate Structure

5ANNUAL REPORT 2010

Company Profile (cont’d)

Our HABA Counters and Showroom

Isetan, The Garden

Metrojaya, Mid Valley

Isetan, KLCC

Metrojaya, Bukit Bintang Plaza

Showroom, Plaza Permata


Board Of Directors

DATO’ NIK ISMAIL BIN DATO’ NIK YUSOFF, a Malaysian, aged 64, was appointed as Independent

Non-Executive Chairman on 12 July 2010. He is the Chairman of the Nomination Committee and a

member of the Audit Committee and Remuneration Committee.

He obtained a Diploma in Police Science from University Kebangsaan Malaysia. He began his carrier

with the Royal Malaysia Police in 1965, where he served in numerous senior positions with the Royal

Malaysia Police such as Head Special Branch Terengganu, Deputy Director 1, Special Branch (1995

- 1997) and Chief Police Officer of Terengganu (1997), Kedah (1997 - 1999), and Selangor (1999 -

2001). He retired from the force with the rank of Deputy Commissioner of Police in 2001. He currently

sits on the Board of Lebar Daun Bhd, and Malaysian AE Models Holdings Bhd.

MAK SIEw wEI, a Malaysian, aged 36, was appointed as Independent Non-Executive Director on

27 July 2010 and re-designated as Executive Director on 22 September 2010.

He pursued his education in the United States and graduated with a Bachelor Degree in Management

Information System and subsequently worked for Marvic International (NY) Ltd in New York as

Business Development manager for 3 years. He is a businessman with interest in financial services.

He is also an Independent Non-Executive Director of AutoV Corporation Berhad, Jotech Holdings

Berhad and Nakamichi Coporation Berhad.

TAN CHIN YEN, a Malaysian aged 42, was appointed as Executive Director on 12 April 2010.

She holds a Bachelor Degree in Finance & Business Administration. After graduation, she worked

in several private and public listed companies in Malaysia. She had held appointments in business

development, finance and accounting and has several years of experience in industry and consultancy

practice.

7ANNUAL REPORT 2010

Board Of Directors (cont’d)

SIM THEAN wAH, a Malaysian, aged 45 was appointed Independent Non-Executive Director on

3 January 2011. He is the Chairman of the Audit Committee and a member of the Nomination

Committee and Remuneration Committee of the Company.

He graduated with a Bachelor of Commerce from University of Queensland, Australia and is a member

of the Malaysian Institute of Accountants. He has over twenty years experience in financial advisory

practice specializing in restructuring and workouts, corporate finance, mergers and acquisition and

transaction support.

ONG TEE KEIN, a Malaysian, aged 54, was appointed as Independent Non-Executive Director on

10 February 2011. He is the Chairman of the Remuneration Committee and a Member of the Audit

Committee and Nomination Committee.

He has several years of experience in industry and consultancy practice. He holds a Master Degree in

Business Administration and is a member of the Malaysian Institute of Accountants and an Associate

of The Institute of Chartered Secretaries and Administrators. He is a director of Tracoma Holdings

Berhad and Mlabs Systems Berhad. He is also a director of several private limited companies.

Note: None of the Directors has any family relationship with any director and/or substantial shareholders of the Company.

None of the Directors has any conflict of interest with the Company. None of the Directors has been convicted of any offences within the past 10 years.


Chairman’s Statement

INTRODUCTION

For the year under review, the Group undertook a series of initiatives to further reduce costs, consolidate certain business segments and at the same time develop new markets and products. As the customer loyalty business in Malaysia has become increasingly saturated and challenging, the Group embarked on a program to grow its health and beauty care business through its distributorship of “HABA” products a leading healthcare brand in Japan. We initiated an aggressive advertising campaign, increase distributorships and outlets to increase customer awareness and sales. As part of our internal restructuring, we sold our warehouse property which was grossly unutilised, scaled down our staffing and office premises to further reduce costs. We increased our presence in Indonesia as the customer loyalty business in that market shows potential for growth.

FINANCIAL RESULTS

For the year ended 31 December 2010, the Group recorded revenue of RM23.72 million. Although the revenue for the year under review was considerably lower compared to 2009 revenue of RM46.14 million, the Group was able to post a profit before tax of RM917,351 compared to the previous year loss before tax of RM1,218,122. The gain from the sale of our warehouse property and improved margins from our existing business contributed to the profit.

PROSPECTS

Our Group has emerged as a company with clear and distinct businesses and missions. We intend to deepen and widen our customer loyalty business in Indonesia whilst consolidating our business in this sector in Malaysia. We will increase our resources to develop our health and beauty care business in Malaysia with the view of increasing our share in this growing market.

APPRECIATION

This year has been one of transition. Inevitably this has placed demands and strains on people at all levels. They have responded with enthusiasm and energy. The continuing exercise of these qualities in our chosen areas of business gives me confidence that we enter another year of progress for our company. I would also like to take this opportunity to thank our shareholders and other stakeholders for their support throughout the year. I also thank my fellow directors for their contribution and support.

Dato’ Nik Ismail Bin Nik YusoffIndependent Non-Executive Chairman

9ANNUAL REPORT 2010

Statement Of Corporate Governance

The Directors strongly endorses the importance of good corporate governance in steering the Group’s operations and business towards safeguarding and protection of shareholders’ interests and the financial performance of the Group. The Directors are fully committed to ensure the highest standard in corporate governance as articulated in the Principles and Best Practices set out in the Malaysian Code of Corporate Governance (“the Code”) is practised throughout the Group.

A. BOARD OF DIRECTORS

Composition of the Board and Board Balance

The Company is managed by a well-balanced Board which consists of members with wide range of business, technical and financial background. This brings diversity and insightful depth to the company leadership and management for the business.

The Board is made up of five (5) members as follows:

• Two (2) Executive Directors• Three (3) Independent Non-Executive Directors (including the Chairman)

All Independent and Non-Executive Directors fulfill their role through objective participation in the deliberations of the Board and by the exercise of independent judgement with regard to the long-term interest of the stakeholders of the Company. The Chairman is responsible for the Board’s effectiveness and conduct whilst the Executive Director has overall responsibilities over the business and operation. The clear division of responsibilities between these two roles will ensure a balance of power and authority. Give the current composition of the Board which reflects a strong independent element and the separation of roles amongst the Executive Directors, the Board does not consider it necessary at this juncture to nominate a Senior Independent Non-Executive Director.

The profiles of the Directors are presented on pages 6 to 7 of this annual report.

Board Responsibilities

The Board is responsible for setting and developing corporate objectives goals and strategic direction of the Group. The Board’s primary roles are:

• The protection and enhancement of long-term shareholders’ value and interest of the stakeholders.• Setting strategic direction, including establishing vision and mission for the Group.• Review and approval of corporate plan, annual budget, quarterly and annual results, acquisitions and disposal of

undertakings and properties of substantial value, major investments and financial decision.• Succession planning for top management.


A. BOARD OF DIRECTORS (CONT’D)

Directors’ Meetings

The Board meets regularly on a quarterly basis and as and when required. There were eight (8) meetings held during the financial year and the attendance record is as follows:

Meetings Attended

Dato’ Nik Ismail Bin Dato’ Nik Yusoff (Appointed on 12.7.2010) 4/4Tan Chin Yen (Appointed on 12.4.2010) 7/7Mak Siew Wei (Appointed on 27.07.2010) 4/4Sim Thean Wah (Appointed on 03.01.2011) -Ong Tee Kein (Appointed on 10.02.2011) -Datin Rahmah Binti Kassim (Resigned on 12.4.2010) 0/1Dato’ Shamsuddin Bin Hayroni (Resigned on 25.06.2010) 1/3Nyang Koon Seng (Resigned on 11.08.2010) 5/5Palani Selvam Muruganandam (Resigned on 25.06.2010) 3/3Tay Woon Teck (Resigned on 30.07.2010) 3/4Yeoh Aik Chuan (Resigned on 05.10.2010) 6/7Za’Ba Bin Hasrin (Resigned on 04.01.2011) 8/8

Supply of Information

All Directors are provided with notices to meetings, setting out the agenda accompanied by a full set of Board Papers in sufficient time before each meeting. The Board Papers provide sufficient detail of matters to be deliberated during the meeting. In the event that the Directors require additional information, a request is made and the additional information is provided together to resolve any clarifications sought, in sufficient detail in order for the Board members to understand fully the matter deliberated. Information provided to the Board are not limited to quantitative performance data, instead it includes qualitative information such as major operational and financial issues.

The proceedings at all Board meetings together with decisions taken by way of resolutions passed are duly minuted. These minutes are approved by the Chairman of the Meeting at the subsequent Board meeting and are kept at the registered office of the Company.

Members of the Board are given access to the services and advice of the Company Secretary. The Company Secretary is tasked with ensuring that all statutory obligations are complied with, including compliance with the Listing Requirements of Bursa Malaysia Securities Berhad for ACE Market or other regulatory requirements, as they may be applicable to the Company.

The Directors are given access to information within the Company in furtherance of their duties, whether on an individual or collective basis, including direct access to senior management personnel. They may further obtain independent professional advice in fulfilling their fiduciary duties at the Company’s expense, when necessary.

Appointments of the Board and Re-election

Appointments to the Board are based on the Nomination Committee’s recommendation.

In accordance with the Company’s Articles of Association, at least one-third of the Board shall retire from office provided always that all directors shall retire from office at least once in every three years. All Directors who are appointed by the Board during the year are subject to retirement and re-election at the annual general meeting subsequent to their appointment. A retiring director shall be eligible for re-election.

Statement Of Corporate Governance (cont’d)

11ANNUAL REPORT 2010

A. BOARD OF DIRECTORS (CONT’D)

Directors’ Training

The Board acknowledges that continuous education is vital in keeping abreast with changes in laws and regulations, business environment and corporate governance developments, besides enhancing professionalism and knowledge in enabling them to discharge their duties more effectively. Accordingly, the Group is committed to continuously provide pertinent educational program to the Board of Directors through both internal and external means. All Directors receive updates from time to time, on relevant new laws and regulations to enhance their acumen and skills to meet changing commercial risks and challenges. The Directors have attended the Mandatory Accreditation Programme (“MAP”) as required by the authorities. The Board would evaluate and determine the training needs of its Directors on a continuous basis.

The courses attended by the Directors during the financial year are as follows:-

• Managing related party transactions• Common Pitfalls in Chapter 10

B. BOARD COMMITTEES

The Board delegates certain responsibilities to Board Committees which operate within clear defined terms of reference. The Committees set up are the Audit Committee, the Nomination Committee and the Remuneration Committee. The Chairman of the respective Committees will report to the Board the outcome of their Committee decisions.

Audit Committee

A full Audit Committee report enumerating its membership, its role and its activities during the financial year is set out in pages 17 to 20 of this annual report.

Nomination Committee

The Nomination Committee was set up on 5 August 2010 and currently comprises of three (3) Independent Non-Executive Directors.

The Committee is responsible for making appropriate recommendations to the Board on matters of renewal, extension, retirement, appointment and re-appointment of directors as well as reviewing annually the mix of skills experience and competencies of the Board.

The current members of the Nomination Committee are:

Dato’ Nik Ismail Bin Dato’ Nik Yusoff – Chairman Sim Thean Wah – Member Ong Tee Kein – Member

Remuneration Committee

The Remuneration Committee was set up on 5 August 2010 and currently comprises of three (3) Independent Non-Executive Directors.

The Committee is responsible for developing the remuneration packages and benefits-in-kind of Executive Directors and making recommendation to the Board for approval. The remuneration of the Non-Executive Directors is decided by the entire Board. The Board has complied with the Code to review the remuneration of Directors such that the Group attracts and retains the right mix of Directors to run the Company successfully.



B. BOARD COMMITTEES (CONT’D)

Remuneration Committee (Cont’d)

The current members of the Remuneration Committee are:

Ong Tee Kein – Chairman Dato’ Nik Ismail Bin Dato’ Nik Yusoff – Member Sim Thean Wah – Member

C. DIRECTORS’ REMUNERATION

The Company has adopted the objective as recommended by the Code to determine the remuneration of the Directors so as to ensure that the Company attracts, retains and motivates the Directors of the quality needed to manage the business of the Group effectively. The remuneration scheme is reflective of the individual Director’s experience and level of responsibilities. In addition, the remuneration for Executive Directors is structured to link rewards to corporate and individual performance.

Remuneration Policy and Procedures

The Remuneration Committee reviews and recommends to the Board the remuneration package of the Executive Directors. The level of remuneration reflects the experience and responsibilities undertaken by the Executive Directors. The determination of the fees of the Non-Executive Directors is decided by the Board as a whole.

Directors’ Remuneration

The details of the Directors remuneration for the financial year are:-

Salaries & Meeting Other Emoluments Fees Allowance Total (RM) (RM) (RM) (RM)

Executive Directors 506,371 9,781 - 516,152Non-Executive Directors - 57,534 31,000 88,534

Number of Directors Executive Non-Executive Range of remuneration per annum Directors Directors

Below RM50,000 1 6RM50,001 to RM150,000 1 -RM150,001 to RM200,000 1 -




D. SHAREHOLDERS’ COMMUNICATION

The Board has always recognized the importance of timely dissemination of information to its shareholders and potential investors. The maintenance of an effective communication policy between members of the public and the Company is important.

Shareholders and potential investors are kept abreast with the major developments of the Group through the various means of communications as follows:

• The Annual General Meeting is used as the main forum of dialogue for shareholders to raise any issues relating to the Group’s operations and performance.

• Latest announcements and corporate disclosure to Bursa Securities are available on the website www.bursamalaysia.com.

• The Company’s website www.aim-net.com.my provides corporate information on the Group.

E. ACCOUNTABILITY AND AUDIT

Financial Reporting

The Board aims to provide a balanced and understandable assessment of the Group’s financial performance, financial position and prospects through the annual financial statements, Management’s discussion and announcement of quarterly results.

In the preparation of the financial statements, the directors have:

• Adopted suitable accounting policies and applied them consistently;• Made judgements and estimates to present a true and fair view financial performance;• Ensured applicable accounting standards have been allowed, subject to any material departures, disclosed and

explained in the financial statements; and• Prepared the financial statements on an ongoing basis.

Internal Control

The Board has overall responsibility for maintaining a system of internal controls, which provides reasonable assessments of effective and efficient operations, internal controls and compliance with laws and regulations. Currently, the Group’s outsourced its internal audit function to a professional services firm. A Statement on Internal Control is set out on pages 15 and 16 of the annual report. Relationship with Auditors

The Group’s independent external auditors hold an essential role for the shareholders by enhancing the reliability of the Group’s financial statements and providing assurance of that reliability to users of these financial statements. The Company has always maintained a close and transparent relationship with its external auditors in seeking professional advice and ensuring compliance with the accounting standards in Malaysia.

F. STATEMENT OF COMPLIANCE wITH THE BEST PRACTICES OF THE CODE

The Board is of the opinion that except for matters specifically identified, all the best practices of the Code has been adopted and complied with.


G. DIRECTOR’S RESPONSIBILITY STATEMENT IN RESPECT OF FINANCIAL STATEMENTS

The Directors are required to prepare the financial statements for each financial year, which give a true and fair view of the state of affairs of the Group and of the Company at the end of the financial year, and of the results and cash flow of the Group and of the Company for the financial year ended.

In preparing the financial statements, the Directors have ensured that applicable Financial Reporting Standards in Malaysia and the provisions of the Companies Act, 1965 have been applied.

The Directors also have a general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Group and to prevent and detect fraud and other irregularities.

H. CORPORATE SOCIAL RESPONSIBILITY

With regards to Corporate Social Responsibility the Group is guided in every aspects of its operations by recognizing that respect and fair regard are best earned by always conducting an affairs in a responsible manner and recognizing that the Group’s stakeholders comprise not only customers, employees and business associates, but also the communities in which the Group operates. It follows that the Group will continue to look after the environment, response to those in need as well as support causes related to education, personal development of young people, under-privileged and natural disaster victims.



Statement On Internal Control

A. INTRODUCTION

The Board is committed to maintain a sound system of internal control of the Group and is pleased to provide the following statement, which outlines the nature and scope of internal control of the Group during the year.

B. BOARD RESPONSIBILITIES

The Board recognizes the importance of sound internal control and risk management practices towards maintaining good corporate governance. The Board acknowledges its overall responsibility for maintaining a sound system of internal control and risk management which include reviewing the effectiveness, adequacy and integrity of these systems throughout the Group. However, the Directors are aware that such systems are designed to manage rather than to eliminate the risk of failure to achieve business objective. Accordingly, the Board is of the view that the Group’s system of internal control can only provide reasonable but not absolute assurance against material misstatement or loss.

The Group has in place an ongoing process for identifying, evaluating, monitoring and managing significant risks faced by the Group in order to attain a reasonable assurance that its business objectives are met. These controls are regularly reviewed by the Board and subject to continuous improvements.

C. RISK MANAGEMENT

The process of identifying, evaluating and managing significant risks faced by the Group is practiced continuously. These processes are managed under the leadership of the directors. Meetings are held regularly to review changes in the business environment and its’ potential significant impact on the Group’s mid to long term business objectives. Business strategies are reviewed and refined at the same time to ensure that operations are in accordance with the corporate expectation.

D. INTERNAL AUDIT

The Group’s outsourced its internal audit function to a professional services firm to provide the Audit Committee with an independent assessment of the adequacy and effectiveness of the Group’s system of internal controls. They report directly to the Audit Committee.

During the financial year ended 31 December 2010, the outsourced internal audit function carried out audits in accordance with the internal audit plan approved by the Audit Committee. The results of their review were presented to the Audit Committee to ensure that management’s action plans are adequate in respect of matters highlighted in the internal audit reports. Based on the internal audit reviews conducted, none of the weaknesses noted have resulted in any material losses, contingencies or uncertainties that would require a separate disclosure in this annual report.


Statement On Internal Control (cont’d)

E. INTERNAL CONTROL FRAMEwORK

The Group has established an organization with clearly defined lines of accountability and delegated authority where the current key elements of the Group’s internal control systems are described below:

• Regular monitoring of operational results against budgeted for the Board’s review and discussion;

• Regular and comprehensive information provided to the Board, covering financial performance and key business indicators;

• Regular updates of internal policies and procedures, to reflect changing risks or resolve operational deficiencies; and

• Regular meetings with management to address weaknesses and improve efficiency.

The Board believes that the systems of internal control in the Group are adequate and have been effective in their functions, with no significant problems noted during the period under review. Moving forward, the Group will continue to improve and enhance the existing systems of internal controls, taking into consideration the changing business environment.

F. REVIEw OF THE STATEMENT BY EXTERNAL AUDITORS

The external auditors have reviewed this Statement on Internal Control for the inclusion in the annual report of the Group for the financial year ended 31 December 2010 and reported to the Board that nothing has come to their attention that causes them to believe that the statement is inconsistent with their understanding of the process adopted by the Board in reviewing the adequacy and integrity of the system of internal controls.


Audit Committee Report

The Audit Committee (“the Committee”) was established with the primary objective of assisting the Board in the areas of corporate governance, systems of internal controls, risk management, and management and financial reporting practices of the Group.

1. COMPOSITION

The present members of the Audit Committee are:-

ChairmanSim Thean Wah* Independent Non-Executive Director

MembersDato’ Nik Ismail Bin Dato’ Nik Yusoff Independent Non-Executive ChairmanOng Tee Kein* Independent Non-Executive Director

* Member of Malaysian Institute of Accountants

During the financial year ended 31 December 2010, the Audit Committee held a total of five (5) meetings. The details of attendance of the Committee members are as follows:-

Meetings Attended

Sim Thean Wah (Appointed on 03.01.2010) -Ong Tee Kein (Appointed on 10.02.2011) -Dato’ Nik Ismail Bin Dato’ Nik Yusoff (Appointed on 12.07.2010) 2/2Tay Woon Teck (Resigned on 30.07.2010) 2/3Yeoh Aik Chuan (Resigned on 05.10.2010) 4/4Za’Ba Bin Hasrin (Resigned on 04.01.2011) 5/5Mak Siew Wei (Resigned as Audit Committee Member on 22.09.2010) 1/1

2. TERMS OF REFERENCE

A. Composition

The Audit Committee shall be appointed by the Board which shall fulfil the following requirements:-

i. the Audit Committee must comprise of no fewer than three (3) members;ii. all members of the Audit Committee must be Non-Executive Directors, with a majority of them being

Independent Directors;iii. the Chairman of the Audit Committee shall be an Independent Non-Executive Directors appointed by the

Board; iv. at least one member of the Audit Committee:-

• must be a member of the Malaysian Institute of Accountants (MIA); or• if he is not a member of the MIA, he must have at least 3 years’ experience and-

a. he must have passed the examinations specified in Part I of the First Schedule of the Accountants Act 1967;or

b. he must be a member of one of the association of accountants specified in Part II of the First Schedule of the Accountants Act 1967; or

• fulfils such other requirements as prescribed or approved by Bursa Malaysia Securities Berhad.

v. no alternate director shall be appointed as an Audit Committee member.


Audit Committee Report (cont’d)

2. TERMS OF REFERENCE (CONT’D)

B. Meetings and Minutes

The quorum for an Audit Committee meeting shall be two (2) members, the majority of whom must be Independent Directors.

The Audit Committee shall meet at least four (4) times a year although additional meetings may be called at any time at the discretion of the Chairman. Upon the request of the external auditors or internal auditors, the Chairman of the Audit Committee shall also convene a meeting of the Committee to consider any matter that the auditors believe should be brought to the attention of the directors or shareholders.

C. Authority

The Audit Committee shall have the following authority empowered by the Board:-

i. to have explicit authority to investigate any matter within its terms of reference;ii. to have full and unrestricted access to any information pertaining the Company and its subsidiaries;iii. to have direct communication channels with both the external auditors and the internal auditors or any

person(s) carrying out the internal audit function or activity;iv. to have free access to any employee or member of the management; v. to have free access to seek and accept independent professional advice and to secure the attendance of

outsiders with relevant experience and expertise as it considers necessary and the requisite resources to do so; and

vi. to convene meetings with the external auditors, the internal auditors or both, excluding the attendance of other directors and employees of the Company, whenever deemed necessary.

D. Duties and Responsibilities

The duties and responsibilities of the Audit Committee are as follows:-

i. to consider the appointment of external auditors, the audit fees and any questions of resignation or dismissal;

ii. to review with the external auditors:-

a. their audit plan, scope and nature of the audit for the Group;b. their audit report;c. the external auditors’ management letter and the management’s response with regard to problems and

reservations arising from their audits; andd. any matters the auditors may wish to discuss ( in the absence of management where necessary)

iii. determine the quality, adequacy and effectiveness of the Group’s internal control environment;iv. to review the adequacy of the scope, functions, competency and resources of the internal audit functions;v. to review the internal audit programme, processes and results of the internal audit function and whether or

not appropriate action is taken on the recommendations of the internal audit functions;vi. provide greater emphasis on the audit function by serving as the focal point for open line of communication

between the Board, internal auditors, external auditors and the management and providing a forum for discussion that is independent of the management. It is to be the Board’s principal agent in assuring the independence of the Company’s external auditors, the integrity of the management and the adequacy of disclosure to the shareholders;

vii. to review with management on a periodic basis, the Company’s general policies, procedures and controls especially in relation to management accounting, financial reporting, risk management and business ethics;


2. TERMS OF REFERENCE (CONT’D)

D. Duties and Responsibilities (Cont’d)

viii. to review the quarterly results and annual financial statements, prior to the approval by the Board, focusing particularly on:-

a. any change in accounting policies and practicesb. significant adjustment arising from the auditc. any other significant and unusual eventsd. compliance with accounting standards and other legal requirementse. major potential risk issues, if any

ix. to review related party transactions to ensure that they have been conducted at arm length and on normal commercial terms; and

x. to carry out such other functions as may be agreed to by the Committee and the Board of Directors.

E. Retirement and Resignation

In the event of any vacancy in the Audit Committee, the Company shall fill in the vacancy within three (3) months.

F. Attendance at Meetings

The Head of Finance and Head of Internal Audit Department shall normally be invited to attend the meetings. Other members of the Board may attend the meetings upon invitation of the Audit Committee. At least once a year, the Audit Committee shall meet the external auditors without any executive directors present.

3. SUMMARY OF ACTIVITIES UNDERTAKEN

During the financial year ended 31 December 2010, the activities undertaken by the Committee included:-

a) Discussed any problems and reservations arising from the interim and final audits and any matter the external auditors may wish to express (in the absence of the Management);

b) Reviewed the unaudited quarterly reports of the Group before recommending to the Board of Directors for their approval and release to Bursa Malaysia Securities Berhad;

c) Reviewed the results of the external audit, the audit report and the management letter, including Management’s response, considered and recommended to the Board for approval of the audit fees payable;

d) Reviewed the annual audited financial statements of the Group with the external auditors prior to submission to the Board for approval;

e) Reviewed with external auditors on the audit planning memorandum of the Group for the year;f) Reviewed the independence and objectivity of the external auditors and the services provided;g) Reviewed the recurrent related party transactions to ensure compliance with laws and regulations and the renewal

of shareholders mandate;h) Reviewed the Company’s compliance with the Listing Requirements of Bursa Securities, FRS and other relevant

legal and regulatory requirements;i) Reviewed the extent of the Group’s compliance with the provision set out under the Malaysian Code on Corporate

Governance for the purpose of the Corporate Governance Statement pursuant to the Listing Requirements of the Bursa Securities; and

j) Recommended to the Board of Directors on the re-appointment of the external auditors.



4. INTERNAL AUDIT FUNCTION

The Internal Audit Function, which is outsourced to a professional services firm, assists the Committee in ensuring the adequacy and effectiveness of the internal control systems. The activities of the Internal Audit Function during the financial year ended 31 December 2010 were as follows:-

a) regular review of business processes in accordance with the internal audit plan approved by the Committee;b) reporting the results of internal audit reviews and provide recommendations for improvement to the Committee

on a periodic basis; andc) followed up on the implementation of audit recommendations and action plans agreed upon by Management.

During the year, there were no weaknesses in the system of internal control that has resulted in any material losses, contingencies or uncertainties, which would require disclosure in the Company’s Annual Report.

The costs incurred for the internal audit function in respect of the financial year ended 31 December 2010 was RM6,000.



Additional Compliance Information

1. UTILIZATION OF PROCEEDS FROM CORPORATE EXERCISES

As at 31 December 2010, the status of the utilization of the proceeds of RM14.7 million raised by the Company from its Initial Public Offering is as follows:

Proposed Actual Balance Utilisation Utilisation Amount* RM’000 RM’000 RM’000

Expansion of the core and related business of the Group 3,900 3,900 -Purchase of software and hardware equipment 3,000 3,000 -R & D expenditure 4,800 4,051 749Working capital 1,300 1,300 -Estimated listing expenses 1,700 1,700 -

14,700 13,951 749

* The utilisation of proceeds is within the timeframe of 5 years as stated in the Company’s prospectus dated 28 March 2006.

2. SHARE BUY-BACK

During the year, the Company bought back 24,090,500 of its ordinary shares of RM0.10 each at a total consideration of RM4,057,844.

The shares bought back were held as treasury shares in accordance with Section 67A of the Companies Act, 1965 and none of the purchased shares were cancelled during the financial year.

Details of the shares repurchased by the Company during the financial year are as follows:

No. of Shares Purchase Price per Average Consideration Month Purchased Share (RM) price per paid Lowest Highest share (RM) (RM) September 16,490,500 0.175 0.195 0.185 3,081,233October 7,600,000 0.125 0.130 0.1275 976,611

24,090,500 4,057,844

3. OPTIONS, wARRANTS OR CONVERTIBLES SECURITIES

The Company has not issued any options, warrants or convertible securities during the financial year.

The Employee Share Option Scheme (ESOS) has expired on 12 April 2011 and there was no allocation of ESOS during the financial year.

4. DEPOSITORY RECEIPT PROGRAMME

The Company did not sponsor any depository programme during the financial year.


Additional Compliance Information (cont’d)

5. IMPOSITION OF SANCTIONS AND/OR PENALTY

There were no sanctions or penalties imposed on the Company and its subsidiaries, directors or management by the relevant regulatory bodies during the financial year.

6. NON-AUDIT FEES

The amount of non-audit fee paid to the external auditors for the financial year ended 31 December 2010 were RM8,000 for the Group. This is in respect of services rendered by the audit firm on contest management programme.

7. PROFIT ESTIMATES, FORECAST OR PROJECTIONS

There were no profit estimates, forecast or projection issued by the Company and its subsidiaries companies during the financial year ended 31 December 2010.

8. PROFIT GUARANTEE

The Company did not issue any profit guarantee during the financial year.

9. RECURRENT RELATED PARTY TRANSACTIONS OF A REVENUE OR TRADING NATURE

There were no recurrent related party transactions of a revenue or trading nature during the financial year ended 31 December 2010.

10. REVALUATION POLICY

The Company does not have a revaluation policy on landed properties.

11. MATERIAL CONTRACTS

There were no materials contracts entered into by the Company and/or its subsidiary companies involving Directors’ and Substantial Shareholders’ interests.

12. VARIATION IN RESULTS

There was no material variance between the audited and unaudited financial results for the year ended 31 December 2010.

24 Directors’ Report

28 Statements of Financial Position

30 Statements of Comprehensive Income

31 Statements of Changes in Equity

33 Statements of Cash Flows

34 Consolidated Statements of Cash Flows

35 Notes to the Financial Statements

FinancialHighlights


DIRECTORS’ REPORT

The directors hereby submit their report together with the audited financial statements of the Group and of the Company for the year ended 31 December 2010.

PRINCIPAL ACTIVITIES

The Group is principally engaged in the provision of end-to-end customer loyalty management solutions and business process outsourcing services.

The Company is principally engaged in the development and provision of loyalty and database management software applications and information technology infrastructure. The Company is currently involved in the promotion of its Enterprise Marketing Management application, namely Advance Information Marketing System (“AIMS”).

There have been no significant changes in the nature of these activities during the year.

RESULTS

GROUP COMPANY RM RM

Profit for the year attributable to:

Owners of the Company 837,172 4,266,363 Minority interest (86,240) -

750,932 4,266,363

RESERVES AND PROVISIONS

There were no material transfers to or from reserves or provisions during the year ended 31 December 2010 other than those disclosed in the financial statements or in the notes thereto.

DIVIDENDS

The directors do not recommend the payment of final dividend in respect of the year ended 31 December 2010.

SHARE CAPITAL

During the financial year, the issued and fully paid up share capital of the Company was increased from RM18,716,880 comprising 187,168,800 ordinary shares of RM0.10 each to RM24,406,157 comprising 244,061,566 ordinary shares of RM0.10 each by way of bonus issue of 56,892,766 new ordinary shares of RM0.10 each via the capitalisation of the Company’s share premium account pursuant to the members’ ordinary resolution on 22 September 2010.

The new ordinary shares issued during the financial year ranked pari passu in all respects with the existing ordinary shares of the Company.

Directors’ Report


Directors’ Report (cont’d)

TREASURY SHARES

In the current financial year, shareholders of the Company, by an ordinary resolution passed at the Annual General Meeting on 25 June 2010, renewed the approval of the Company’s plan to purchase its own shares.

During the financial year, the Company repurchased from the open market 24,090,500 of its ordinary shares listed and quoted on the Ace Market of Bursa Malaysia Securities Berhad at an average buy-back price of RM0.168 per share. The total consideration paid including transaction costs was RM4,057,844 and this was financed by internally generated funds. The shares repurchased are being held as treasury shares in accordance with Section 67A(3A)(b) of the Companies Act, 1965. None of the treasury shares were resold or cancelled during the financial year.

As at 31 December 2010, the Company held a total of 24,090,500 treasury shares of its 244,061,566 issued ordinary shares. Such treasury shares are held at a carrying amount of RM4,057,844. Further relevant details are disclosed in Note 20 to the financial statements.

DIRECTORS

The directors in office since the last Directors’ Report are as follows:-

Tan Chin YenDato’ Nik Ismail Bin Dato’ Nik Yusoff (Appointed on 12 July 2010)Mak Siew Wei (Appointed on 27 July 2010)Sim Thean Wah (Appointed on 3 January 2011)Ong Tee Kein (Appointed on 10 February 2011)Za’ba Bin Hasrin (Resigned on 4 January 2011)Yeoh Aik Chuan (Resigned on 5 October 2010)Nyang Koon Seng (Resigned on 11 August 2010)Tay Woon Teck (Resigned on 30 July 2010)Dato’ Shamsuddin Bin Hayroni (Resigned on 25 June 2010)Palani Selvam Muruganandam (Resigned on 25 June 2010)

In accordance with Article 89 of the Company’s Articles of Association, Dato’ Nik Ismail Bin Dato’ Nik Yusoff, Mak Siew Wei, Sim Thean Wah and Ong Tee Kein retire at the forthcoming Annual General Meeting and, being eligible, offer themselves for re-election.

DIRECTORS’ INTEREST

According to the Register of Directors’ shareholdings, directors holding office at the end of the financial year had no interest in the ordinary shares of the Company during the financial year.

DIRECTORS’ BENEFITS

Since the end of the previous financial year, no director of the Company has received or become entitled to receive any benefit (other than a benefit included in the aggregate amount of emoluments received or due and receivable by directors shown in the financial statements, or the fixed salary of a full time employee of the Company) by reason of a contract made by the Company or a related corporation with the director or with a firm of which the director is a member, or with a company in which the director has a substantial financial interest other than by virtue of transactions entered into in the ordinary course of business.


DIRECTORS’ BENEFITS (CONT’D)

Neither during nor at the end of the financial year was the Company a party to any arrangements whose object was 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.

BAD AND DOUBTFUL DEBT

Before the financial statements of the Group and of the Company were made up, 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 have satisfied themselves that all known bad debts had been written off and adequate allowance had been made for doubtful debts.

At the date of this report, the directors are not aware of any circumstances that would render the amount written off as bad debts or the amount allowed for doubtful debts in the financial statements of the Group and of the Company inadequate to any substantial extent.

CURRENT ASSETS

Before the financial statements of the Group and of the Company were made up, the directors took reasonable steps to ensure that any current assets which were unlikely to realise, in the ordinary course of business, their values as stated in the accounting records of the Group and of the Company have been written down to an amount which they might be expected so to realise.

At the date of this report, the directors are not aware of any circumstances which would render the values attributed to the current assets in the financial statements of the Group and of the Company misleading.

VALUATION METHODS

At the date of this report, the directors are not aware of any circumstances which have arisen that would render adherence to the existing method 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 :-

(a) any charge on the assets of the Group and of the Company that has arisen since the end of the financial year which secures the liabilities of any other person; and

(b) any contingent liability in respect of the Group and of the Company that has arisen since the end of the financial year.

No contingent liability or other liability of the Group and of the Company has become enforceable, or is likely to become enforceable within the period of twelve months after the end of the financial year which, in the opinion of the directors, will or may 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 that would render any amount stated in the financial statements of the Group and of the Company misleading.

ITEMS OF UNUSUAL NATURE

In the opinion of the directors:-

(a) the results of the operations of the Group and of the Company during the financial year were not substantially affected by any item, transaction or event of a material and unusual nature; and

(b) 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 to affect substantially the results of operations of the Group and of the Company for the financial year in which this report is made.

Signed in accordance with a resolution of the Board of Directors,

DATO’ NIK ISMAIL BIN DATO’ NIK YUSOFF

TAN CHIN YEN

Kuala Lumpur,Date: 28 April 2011



GROUP COMPANY 2010 2009 2010 2009 Note RM RM RM RM

ASSETS

Non-Current AssetsProperty, plant and equipment 4 3,692,596 8,503,220 1,784,678 1,554,417 Investment in subsidiaries 5 - - 3,746,695 3,588,315 Other investments 7 3,612,431 3,588,900 45,000 45,000 Intangible assets - development expenditure 8 596,029 1,017,192 596,029 1,017,192 Deferred tax assets 9 64,162 98,719 - -

7,965,218 13,208,031 6,172,402 6,204,924

Current AssetsInventories 10 1,445,985 1,331,631 - - Trade receivables 11 5,028,851 9,385,650 11,000 14,000 Other receivables, deposits and prepayments 12 4,701,670 495,065 85,392 56,758 Amount due from related party 13 - 416,628 - 256,588 Amount due from subsidiaries 14 - - 6,956,261 22,893,312 Tax recoverable 1,060,952 1,195,156 95,462 76,247 Short term deposits 15 13,964,993 20,730,631 13,214,136 6,339,772 Cash and bank balances 16 10,272,831 1,627,989 9,108,086 53,848

36,475,282 35,182,750 29,470,337 29,690,525 Non-current asset classified as held for sale 17 - 1,125,601 - 1,125,601

36,475,282 36,308,351 29,470,337 30,816,126

TOTAL ASSETS 44,440,500 49,516,382 35,642,739 37,021,050

EQUITY

Share capital 18 24,406,157 18,716,880 24,406,157 18,716,880 Share premium 19 896,204 6,638,922 896,204 6,638,922 Treasury shares 20 (4,057,844) - (4,057,844) - Fair value adjustment reserve 21 102,107 - - - Retained profits 22 9,271,050 8,433,878 14,221,263 9,954,900 Exchange fluctuation reserve (140,456) 11,738 - -

Equity attributable to the owners of the Company 30,477,218 33,801,418 35,465,780 35,310,702 Minority interest 47,417 133,657 - -

TOTAL EQUITY 30,524,635 33,935,075 35,465,780 35,310,702

Statements Of Financial Position As At 31 December 2010

The notes on pages 35 to 91 form part of these financial statements.


Statements Of Financial Position (cont’d) As At 31 December 2010


LIABILITIES

Non-Current LiabilitiesHire purchase payable 23 - 18,493 - 18,493

Current LiabilitiesTrade payables 24 12,270,298 13,594,499 11,723 21,722Other payables and accruals 25 1,596,908 1,741,550 143,975 198,099Hire purchase payable 23 21,261 30,161 21,261 30,161Amount due to related party 13 - 196,604 - 57,141Amount due to a subsidiary 14 - - - 1,384,732Tax payable 27,398 - - -

13,915,865 15,562,814 176,959 1,691,855

TOTAL LIABILITIES 13,915,865 15,581,307 176,959 1,710,348

TOTAL EQUITY AND LIABILITIES 44,440,500 49,516,382 35,642,739 37,021,050



Statements Of Comprehensive IncomeFor The Year Ended 31 December 2010


Revenue 26 23,725,890 46,144,411 1,112,005 3,014,877Cost of sales and services 27 (19,482,253) (41,206,146) (949,115) (1,429,755)

Gross profit 4,243,637 4,938,265 162,890 1,585,122Other income 28 2,756,187 985,529 312,842 154,444Administrative expenses (5,697,921) (6,298,976) (1,072,614) (1,034,460)Other operating (expenses)/income (384,552) (899,960) 4,863,469 (2,300,909)

Operating profit/(loss) 917,351 (1,275,142) 4,266,587 (1,595,803)Finance costs (2,086) (7,375) (2,086) (3,787)Share results of an associate - 64,395 - -

Profit/(loss) before taxation 29 915,265 (1,218,122) 4,264,501 (1,599,590)Taxation 32 (164,333) 102,778 1,862 (18,055)

Profit/(loss) for the year 750,932 (1,115,344) 4,266,363 (1,617,645)

Other comprehensive income/(expense)Exchange loss on translation of foreign operations (152,194) (108,905) - -Gain on changes in fair value of available-for-sale financial assets 64,673 - - -

Total other comprehensive income/ (expense) for the year, net of tax (87,521) (108,905) - -

Total comprehensive income/(loss) for the year 663,411 (1,224,249) 4,266,363 (1,617,645)

Profit/(loss) attributable to: Owners of the Company 837,172 (1,315,099) Minority interests (86,240) 199,755

750,932 (1,115,344)

Total comprehensive income/(loss) attributable to: Owners of the Company 749,651 (1,424,004) Minority interests (86,240) 199,755

663,411 (1,224,249)

Earnings/(loss) per share attributable to owners of the Company Basic 33 0.43 sen (0.70) sen

Fully diluted 33 0.43 sen (0.70) sen



Statements Of Changes In EquityFor The Year Ended 31 December 2010

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Statements Of Cash Flows For The Year Ended 31 December 2010

GROUP COMPANY 2010 2009 2010 2009 RM RM RM RM

Cash flows from operating activitiesProfit/(Loss) before taxation 915,265 (1,218,122) 4,264,501 (1,599,590)Adjustments for:-Depreciation of property, plant and equipment 1,036,019 1,308,889 590,060 775,394Property, plant and equipment written off 142,392 484,845 99,679 44,590(Gain)/loss on disposal of property, plant and equipment (1,673,898) (3,047) - 3,468Amortisation of intangible assets - development expenditure 421,163 615,550 421,163 615,550Loss on disposal of investment in associated company 62,865 - 62,865 -Net loss due to fire:-(i) Property, plant and equipment - reduction in net loss - (752,773) - -(ii) Inventories - reduction in net loss - (1,177,566) - -Unrealised loss on foreign exchange 79,038 6,536 - -Allowance for impairment loss 64,150 116,338 - -Allowance for impairment in value in respect of:- investment in subsidiaries - - - 1,991,629- investment in an associate - 316,673 - 240,180(Reversal)/allowance for obsolete and slow-moving inventories (307,474) 307,474 - -Inventories written off - 1,271 - -Foreign exchange differences 9,852 - - -Bad debts written off - 8,974 - -Interest expense on hire purchase 2,086 7,375 2,086 3,787Interest income on short term deposits (539,165) (486,451) (312,842) (154,444)Investment income- dividend income (177,466) (81,089) - -Share of profit in associate - (64,395) - -Reversal of impairment loss on trade receivables (75,617) - - -Reversal of allowance for doubtful debts for amount due from subsidiaries - - (5,000,000) -

Operating profit/(loss) before changes in working capital (40,790) (609,518) 127,512 1,920,564Decrease/(increase) in inventories 608,904 (335,087) - -Decrease/(increase) in trade receivables 4,284,865 (999,623) 3,000 (8,600)(Increase)/decrease in other receivables, deposits and prepayments (4,206,605) 4,153,131 (28,634) 516,469Decrease/(increase) in amount due from subsidiaries - - 19,552,320 (2,740,795)Decrease in amount due to subsidiaries - - - (218,057)Decrease in amount due from related parties - 1,247,007 199,447 1,065,497Increase/(decrease) in amount due to related parties - 7,775 - (82,661)(Decrease)/increase in trade payables (1,620,112) 3,634,984 (9,999) 3,999Decrease/increase in other payables and accruals (144,642) (2,833,893) (54,124) (16,429)

Cash (used in)/generated from operations (1,118,380) 4,264,776 19,789,522 439,987




Income tax paid 31,793 (256,713) (17,353) (51,000)Tax refund - - - 23,634

Net cash (used in)/generated from operating activities (1,086,587) 4,008,063 19,772,169 412,621

Cash flows from investing activitiesPurchase of property, plant and equipment (1,255,531) (3,006,067) (920,000) (548,754)Net proceeds from insurance - 719,038 - -Increase in intangible assets - development expenditure - (115,515) - (115,515)Investment in subsidiary company - - (158,380) -Increase in other investments - (3,543,900) - -Interest received from short term deposits 539,165 486,451 312,842 154,444Proceeds from disposal of property, plant and equipment 6,560,952 - - 800Investment income - dividend income 177,466 81,089 - -Proceeds from disposal of investment in subsidiary 1,062,736 51,531 1,062,736 -

Net cash generated from/(used in) investing activities 7,084,788 (5,327,373) 297,198 (509,025)

Cash flows from financing activitiesPrincipal repayment of hire purchase (27,393) (41,224) (27,394) (28,373)Interest paid on hire purchase (2,086) (7,375) (2,086) (3,787)Dividends paid:-- to minority shareholders - (194,326) - -Share issuance expense (53,441) - (53,441) -Purchase of treasury shares (4,057,844) - (4,057,844) -

Net cash used in financing activities (4,140,764) (242,925) (4,140,765) (32,160)

Net increase/(decrease) in cash and cash equivalents 1,857,437 (1,562,235) 15,928,602 (128,564)

Cash and cash equivalents at beginning of year 22,358,620 23,861,806 6,393,620 6,522,184

Exchange difference on cash and cash equivalents at beginning of year 21,767 59,049 - -

Cash and cash equivalents at end of year 24,237,824 22,358,620 22,322,222 6,393,620

Cash and cash equivalents comprise:Short term deposits 13,964,993 20,730,631 13,214,136 6,339,772Cash and bank balances (Note 16) 10,272,831 1,627,989 9,108,086 53,848

24,237,824 22,358,620 22,322,222 6,393,620

Consolidated Statements Of Cash Flows For The Year Ended 31 December 2010



Notes To The Financial Statements For The Year Ended 31 December 2010

1. General Information

Advance Information Marketing Berhad (“the Company”) is a public limited liability company, incorporated and domiciled in Malaysia and listed on the ACE Market of Bursa Malaysia Securities Berhad.

The address of the Company’s registered office is Level 18, The Gardens North Tower, Mid Valley City, Lingkaran Syed Putra, 59200 Kuala Lumpur.

The principal place of business of the Company is located at G.01 Suite Plaza Permata, 6 Jalan Kampar, 50400 Kuala Lumpur.

The Group is principally engaged in the provision of end-to-end customers loyalty management solutions and business outsourcing services.

The Company is principally engaged in the development and provision of loyalty and database management software applications and information technology infrastructure. The Company is currently promoting its Enterprise Marketing Management application, namely Advance Information Marketing System (“AIMS”).

The financial statements are presented in Ringgit Malaysia (“RM”).

The financial statements of the Group and the Company were authorised for issue on 28 April 2011 by the Board of Directors.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

2.1 Basis of preparation

The financial statements of the Group and of the Company are prepared under the historical cost convention unless otherwise indicated in this summary of significant accounting policies. The financial statements comply with Financial Reporting Standards (“FRSs”) and the provisions of the Companies Act, 1965 in Malaysia.

The Group has adopted the new and revised Financial Reporting Standards (“FRSs”), Issues Committee (“IC”) Interpretations and amendments to FRSs issued by the Malaysian Accounting Standards Board (“MASB”), as set out in Note 2.2 below, which are effective from the beginning of the current financial year.

2.2 New and Revised FRSs, IC Interpretations and Amendments to FRSs Adopted by the Group

The accounting policies adopted by the Group are consistent with those applied in the previous financial year other than the adoption of the following new and revised FRSs, IC Interpretations and amendments to FRSs that are relevant to the Group’s operations and effective from the beginning of the current financial year:-

FRS 7 Financial Instruments : Disclosures

FRS 8 Operating Segments

FRS 101 Presentation of Financial Statements (Revised)

FRS 123 Borrowing Costs (Revised)

FRS 139 Financial Instruments : Recognition and Measurement

IC Interpretation 9 Reassessment of Embedded Derivatives

IC Interpretation 10 Interim Financial Reporting and Impairment

IC Interpretation 13 Customer Loyalty Programmes


Notes To The Financial Statements (Cont’d) For The Year Ended 31 December 2010

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

2.2 New and Revised FRSs, IC Interpretations and Amendments to FRSs Adopted by the Group (Cont’d)

Amendments to FRS 1 First-time Adoption of Financial Reporting Standards

Amendments to FRS 7 Financial Instruments : Disclosures

Amendments to FRS 127 Consolidated and Separate Financial Statements: Cost of an Investment in a Subsidiary, Jointly Controlled Entity or Associate

Amendments to FRS 132 Financial Instruments : Presentation

- Puttable Financial Instruments and Obligations Arising on Liquidation

- Component Part Classification for a Compound Financial Instrument

Amendments to FRS 139 Financial Instruments : Recognition and Measurement

Amendments to FRSs Classified as “Improvement to FRSs (2009)”

The adoption of the new and revised FRSs and IC Interpretations and amendments to FRSs did not result in any significant effect on the results and financial position of the Group and of the Company nor any significant changes in the presentation and disclosure of amounts in the financial statements other than those as described hereunder:-

(a) FRS 7, Financial Instruments : Disclosures

Prior to 1 January 2010, the disclosure of information about factors that affect the amount, timing and certainty of an entity’s future cash flows relating to financial instruments was made in accordance with the requirements of FRS 132, Financial Instruments : Disclosure and Presentation. FRS 7 supersedes the disclosure requirements of FRS 132 and introduces enhanced disclosures on financial instruments. It requires disclosure of the significance of financial instruments for an entity’s financial position and performance and the qualitative and quantitative information about exposure to risks arising from financial instruments, including specified minimum disclosures about credit risk, liquidity and cash flow risks and market risk.

The Group has applied FRS 7 prospectively in accordance with the transitional provisions of the standard. Accordingly, certain comparative information for the new disclosures have not been presented. As the changes affect only the disclosures, there is no impact on the Group’s results or financial position.

(b) FRS 8, Operating Segments

FRS 8 which replaces FRS 1142004, Segment Reporting, specifies how an entity should report information about its operating segments. The FRS requires identification of operating segments on the basis of internal reports that are regularly reviewed by the entity’s chief operating decision maker in order to allocate resources to the segments and assess their performances. The FRS also requires the disclosures, based on available information, about the revenues derived by the entity from its products and services, the countries in which it earns revenues and holds assets and about the entity’s major customers.

FRS 8 has been adopted retrospectively by the Group. The operating segments determined in accordance with FRS 8 are the same as the business segments previously identified under FRS 1142004.

(c) FRS 101, Presentation of Financial Statements (Revised)

The revised FRS 101 introduces changes to the overall requirements for the presentation of financial statements, guidelines for their structure and minimum requirements for their content.





(c) FRS 101, Presentation of Financial Statements (Revised) (Cont’d)

The revised standard requires presentation of all owner changes in equity in the statement of changes in equity and all non-owners changes in equity to be presented separately in one statement of comprehensive income or in two linked statements. The Group has elected for the single statement presentation.

The revised standard also requires a statement of financial position as at the beginning of the earliest comparative period when there is a change in accounting policy retrospectively or when there is a retrospective restatement or reclassification of items in the financial statements.

In addition, the revised FRS 101 requires new disclosure of information that enables users of the financial statements to evaluate the Group’s objectives, policies and processes for managing capital.

The Group has adopted the revised FRS 101 retrospectively. The comparative financial information on the consolidated statement of comprehensive income have been re-presented as summarised below so that it is in conformity with the revised standard:-

Consolidated Consolidated statement of Income comprehensive Statement Effect of income As previously adopting As reported FRS 101 restated RM RM RM

Loss for the financial year (1,115,344) - (1,115,344)

Other comprehensive income Exchange loss on translation of foreign operations - (108,905) (108,905)

Total comprehensive income/(loss) for the financial year (1,115,344) (108,905) (1,224,249)

Since the changes affect only the presentation aspects, there is no impact on the Group’s results or financial position.

(d) FRS 139, Financial Instruments : Recognition and Measurement

FRS 139 establishes principles for recognising and measuring financial assets, financial liabilities and some contracts to buy or sell non-financial items. Hedge accounting is permitted only under strict circumstances. The Group has adopted FRS 139 prospectively beginning from 1 January 2010 in accordance with transitional provisions of the standard. The effects on the adoption of FRS 139 have been accounted for by adjusting the opening retained profits as at 1 January 2010. Comparatives are not restated.





(d) FRS 139, Financial Instruments : Recognition and Measurement (Cont’d)

The adoption of FRS 139 has resulted in changes to accounting policies relating to recognition and measurement of the Group’s financial instruments as described below:-

(i) Investments in non-current equity and debt instruments

Prior to 1 January 2010, non-current investments in equity other than investment in subsidiaries, and debt instruments that are not held for trading purposes, were stated at cost less allowance for diminution in value which is other than temporary in nature.

With the adoption of FRS 139, such investments are now categorised and measured as available-for-sale financial assets, as detailed in Note 2.21. Accordingly, the investments in quoted equity held by the Group as at 1 January 2010 had been restated at their fair values as of that date and the resulting increase in carrying amount of RM37,434 was adjusted to the fair value adjustment reserve as at 1 January 2010. Non-quoted investments continued to be carried at cost. The effects on the current year’s results and financial position are disclosed below.

(ii) Inter-company loans and advances

The Company grants interest-free loans or advances to its subsidiaries. Prior to 1 January 2010, these loans and advances were recorded at cost in the Company’s financial statements. With the adoption of FRS 139, the interest-free loans or advances are recorded initially at their fair values and subsequently measured at amortised cost. The Company had reassessed the carrying amount of the debt due from subsidiaries as at 1 January 2010 and determined there was no significant difference from the amount recognised previously. All debts due from subsidiaries are substantially settled except for certain balances due from overseas subsidiaries which are repayable on demand.

(iii) Impairment of trade and other receivables

Prior to 1 January 2010, an allowance for doubtful debts was made when a debt was considered to be doubtful of collection. Upon the adoption of FRS 139, an impairment loss is recognised when there is objective evidence that an impairment loss has been incurred. The amount of the loss is measured as the difference between the receivable’s carrying amount and the present value of estimated future cash flows discounted at the receivable’s original effective interest rate. The Group had reassessed the allowance for impairment loss as at 1 January 2010 in accordance with FRS 139 and determined that there is no difference with the amount recognised previously.





(d) FRS 139, Financial Instruments : Recognition and Measurement (Cont’d)

(iii) Impairment of trade and other receivables (Cont’d)

The effects arising from the adoption of FRS 139 on the financial statements of the Group are summarised as follows:-

Consolidated Statement of Financial Position

Increase As at As at 31.12.2010 1.1.2010 RM RM

Available-for-sale financial assets- Other investments 102,107 37,434 Other reserves - Fair value adjustment reserve 102,107 37,434

Consolidated Statements of Comprehensive Income for the Year Ended 31 December 2010

Increase RM

Other comprehensive income for the year, net of tax 64,673

Since FRS 139 is applied prospectively, the adoption does not affect the Group’s results for the previous financial year nor its financial positions as at the end of the previous reporting period. There is no impact on the Company’s financial statements.

The other new and revised FRSs and IC Interpretations issued by the MASB that are effective from the beginning of the current financial year but which are not applicable to the Group’s operations are as follows:-

FRS 4 Insurance ContractsAmendments to FRS 2 Share-based Payment - Vesting Conditions and CancellationsIC Interpretation 11 FRS 2 - Group and Treasury Share TransactionsIC Interpretation 14 FRS 119 - The Limit on a Defined Benefit Asset, Minimum Funding Requirements and Their Interaction




2.3 New and Revised FRSs, IC Interpretations and Amendments to FRSs and IC Interpretations That Are Not Yet Effective and Have Not Been Early Adopted

The Group has not early adopted the following new and revised FRSs and IC Interpretations and amendments to FRSs and IC Interpretations which have been issued but are not yet effective:-

Effective for financial period beginning on or after

FRS 1 First-time Adoption of Financial Reporting 1 July 2010 Standards (Revised)

FRS 3 Business Combinations (Revised) 1 July 2010

FRS 124 Related Party Disclosures 1 January 2012

FRS 127 Consolidated and Separate Financial Statements 1 July 2010 (Revised)

Amendments to FRS 1 First-time Adoption of Financial Reporting Standards - Limited Exemption from Comparative FRS 7 1 January 2011 Disclosure for First-time Adopters - Additional Exemptions for First-time Adopters 1 January 2011

Amendments to FRS 2 Share-based Payment - Scope of FRS 2 and revised FRS 3 1 July 2010 - Group Cash-settled Share-based Payment 1 January 2011 Transactions

Amendments to FRS 5 Non current Assets Held for Sale and 1 July 2010 Discontinued Operations - Plan to sell the controlling interest in a subsidiary

Amendments to FRS 7 Financial Instruments : Disclosures 1 January 2011 - Improving disclosures about Financial Instruments

Amendments to FRS 132 Financial Instruments : Presentation 1 March 2010 - Classification of Rights Issues

Amendments to FRS 138 Intangible Assets - Additional consequential 1 July 2010 amendments arising from revised FRS 3

IC Interpretation 4 Determining whether an Arrangement contains 1 January 2011 a Lease

Amendments to Reassessment of Embedded Derivatives 1 July 2010 IC Interpretation 9 - Scope of IC Interpretation 9 and revised FRS 3

IC Interpretation 12 Service Concession Arrangements 1 July 2010

Amendments to FRS 119 - The Limit on a Defined Benefit Asset, 1 July 2011 IC Interpretation 14 Minimum Funding Requirements and Their Interaction - Prepayments of a Minimum Funding Requirement

IC Interpretation 15 Agreements for the Construction of Real Estate 1 January 2012




2.3 New and Revised FRSs, IC Interpretations and Amendments to FRSs and IC Interpretations That Are Not Yet Effective and Have Not Been Early Adopted (Cont’d)

Effective for financial period beginning on or after

IC Interpretation 16 Hedges of a Net Investment in a Foreign 1 July 2010 Operation

IC Interpretation 17 Distribution of Non-cash Assets to Owners 1 July 2010

IC Interpretation 18 Transfers of Assets from Customers 1 January 2011

IC Interpretation 19 Extinguishing Financial Liabilities with Equity 1 July 2011 Instruments

Amendments to FRSs Classified as “Improvement to FRSs (2010)”

The Group plans to apply the above FRSs and Interpretations once they become effective. The adoption of these FRSs and Interpretations is not expected to have any material impact on the financial statements of the Group and of the Company other than as discussed below:-

(a) FRS 3, Business Combinations (Revised)

The revised FRS 3 will result in a change in the accounting for business combinations occurring on or after 1 July 2010. The principal changes are as follows:-

• The definitions of a “business” and a “business combination” have been amended and additional guidance was added for identifying when a group of assets constitutes a business.

• Minority interest (which will be known as non-controlling interest) must be measured either at fair value or at its proportionate share of the acquiree’s net identifiable assets.

• The recognition of contingencies acquired in a business combination that do not meet the definition of a liability is no longer permitted.

• Costs incurred in connection with a business combination must be accounted for separately from the business combination, which usually means that they are recognised as an expense rather than included in goodwill.

• Contingent consideration will be measured and recognised at fair value at the acquisition date and subsequent changes in fair value of contingent considerations classified as liabilities are recognised in accordance with FRS 139, FRS 137 or other FRSs as appropriate, rather than by adjusting goodwill.

The Group will apply the revised FRS 3 prospectively in accordance with the transitional provisions of the revised Standard to business combinations for which the acquisition date is on or after 1 July 2010.




2.3 New and Revised FRSs, IC Interpretations and Amendments to FRSs and IC Interpretations That Are Not Yet Effective and Have Not Been Early Adopted (Cont’d)

(b) FRS 127, Consolidated and Separate Financial Statements (Revised)

The main amendments made to FRS 127 are as follows:-

• The term “minority interest” will be replaced by the term “non-controlling interest”.

• The total comprehensive income shall be attributed to the owners of the parent and to the non-controlling interest even if this results in the non-controlling interest having a deficit balance. Currently, excess losses are allocated to the owners of the parent, except to the extent that the non-controlling interest has a binding obligation and is able to make an additional investment to cover the losses.

• Changes in a parent’s ownership interest in a subsidiary that do not result in the loss of control shall be accounted for as equity transactions. There are no requirements for such transactions in the current FRS.

The revised FRS 127 is not expected to have any material impact on the Group upon its initial application.

2.4 Basis of Consolidation

The consolidated financial statements include the audited financial statements of the Company and its subsidiaries made up to the end of the reporting date. The financial statements of the subsidiaries are prepared for the same reporting date as the Company and consistent accounting policies are applied to like transactions and events in similar circumstances.

Subsidiaries are those entities in which the Group has the power to exercise control over the financial and operating policies so as to obtain benefits from their activities. In assessing control, the existence and effect of potential voting rights that are currently exercisable or convertible are taken into account.

Subsidiaries are consolidated using the purchase method of accounting. Under the purchase method of accounting, the results of subsidiary companies acquired or disposed of during the financial year are included in the consolidated statement of comprehensive income from the date of acquisition up to the date of disposal. At the date of acquisition, the fair values of the net assets of subsidiary companies are determined and these values are reflected in the Group financial statements. The excess of the cost of acquisition over the net fair value of the Group’s share of the identifiable assets, liabilities and contingent liabilities acquired at the date of acquisition is reflected as goodwill. If the cost of acquisition is less than the net fair value of the identifiable assets, liabilities and contingent of the subsidiary acquired, the difference is recognised directly in profit or loss.

Minority interest represents that portion of profit or loss and net assets of a subsidiary attributable to equity interest that are not held by the Group. Minority interest is measured at the minority’s share of the fair value of the identifiable assets and liabilities of the subsidiary at the acquisition date and the minority’s share of changes in the subsidiary’s equity since then.

Where losses applicable to the minority exceed the minority’s interest in the equity of a subsidiary, the excess and any further losses applicable to the minority are charged against the Group’s interest except to the extent that the minority has a binding obligation to, and is able to, make additional investment to cover the losses. If the subsidiary subsequently reports profits, the Group’s interest is allocated all such profit until the minority’s share of losses previously absorbed by the Group has been recovered.




2.4 Basis of Consolidation (Cont’d)

Intra-group balances and transactions and the resulting unrealised profits are eliminated on consolidation. Unrealised losses are eliminated on consolidation and the relevant assets are assessed for impairment. The consolidated financial statements reflect external transactions and balances only.

2.5 Goodwill

Goodwill arising on the acquisition of a subsidiary represents the excess of the cost of the acquisition over the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities of the subsidiary recognised at the date of acquisition. Goodwill is recognised as an asset and is measured at cost less accumulated impairment losses. Goodwill is tested for impairment annually or more frequently if events or changes in circumstances indicate that the carrying value may be impaired. For the purpose of impairment testing, goodwill from acquisition date is allocated to each of the Group’s cash-generating unit (CGU) or groups of CGUs that are expected to benefit from the synergies of the combination in which the goodwill arose. The test for impairment of goodwill on consolidation is in accordance with the Group’s accounting policy for impairment of assets.

Where goodwill forms part of a CGU or groups of CGUs and part of the operation within that unit is disposed of, the goodwill associated with the operation disposed of is included in the carrying amount of the operation when determining the gain or loss on disposal of the operation. Goodwill disposed of in this circumstance is measured based on the relative values of the operation and the portion of the CGU retained.

2.6 Investment in Subsidiaries

A subsidiary is a company in which the Group has power to exercise control over the financial and operating policies of the subsidiary so as to obtain benefits from its activities.

Investments in subsidiaries are stated at cost less impairment losses. The investments are reviewed for impairment in accordance with the Group’s accounting policy for impairment of non financial assets.

2.7 Property, Plant and Equipment

Property, plant and equipment, other than freehold land are stated at cost less accumulated depreciation and impairment losses, if any. Cost includes expenditure that is directly attributable to the acquisition of the asset.

Freehold land is stated at cost less any impairment loss and is not depreciated.

Depreciation on other property, plant and equipment is calculated to write down the cost of the assets to their residual values on the straight line basis over the expected useful lives of the assets concerned. The annual rates used are:-

Warehouse 3% Apartment 3% Building 5% Furnitures and fittings 10% Renovation 10% - 20% Plant and machinery 20% Computer hardware and software 20% - 33 1/3% Office equipment 20% - 33 1/3%




2.7 Property, Plant and Equipment (Cont’d)

The residual values and useful lives of assets are reviewed at each financial year end and adjusted prospectively, if appropriate, where expectations differ from previous estimates. Property, plant and equipment are reviewed for impairment in accordance with the Group’s accounting policy for impairment of assets.

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 profit or loss.

2.8 Research and Development Costs

Research expenditure is recognised as an expense when incurred. Costs incurred on development projects (relating to the design and testing of new or improved products) are recognised as intangible assets when all the following criteria are fulfilled:

(a) it is technically feasible to complete the intangible asset so that it will be available for use or sale;

(b) management intends to complete the intangible asset and use or sell it;

(c) there is an ability to use or sell the intangible asset;

(d) it can be demonstrated how the intangible asset will generate probable future economic benefits;

(e) adequate technical, financial and other resources to complete the development and to use or sell the intangible asset are avaliable; and

(f) the expenditure attributable to the intangible asset during its development can be reliably measured.

Other development expenditures that do not meet these criteria are recognised as an expense when incurred. Development costs previously recognised as an expense are not recognised as an asset in a subsequent period. Capitalised development cost is recorded as intangible assets and amortised from the point at which the asset is ready for used on a straight-line basis over its useful life of five years.

Development assets are reviewed for impairment in accordance with the Group’s accounting policy for impairment of assets.

2.9 Non-current Assets (or Disposal Groups) Classified as Held for Sale

Non-current assets (or disposal groups) are classified as assets held for sale if their carrying amounts will be recovered principally through a sale transaction rather than through continuing use. This condition is regarded as met only when the sale is highly probable and the asset (or disposal group) is available for immediate sale in its present condition subject only to terms that are usual and customary.

On initial classification as held for sale, non-current assets or disposal groups (other than investment properties, deferred tax assets, employee benefits assets, financial assets and inventories) are measured at the lower of the carrying amount and fair value less costs to sell, any differences are included in profit or loss.




2.10 Impairment of Non-Financial Assets

The carrying amounts of non-financial assets (other than inventories and deferred tax assets) are reviewed for impairment at the end of each reporting period to determine whether there is any indication of impairment. If any such indication exists, the asset’s recoverable amount is estimated to determine the amount of impairment loss. For goodwill, intangible assets that have an indefinite useful life and intangible assets that are not yet available for use, the recoverable amount is estimated at the end of each reporting period or more frequently when indicators of impairment are identified.

An impairment loss is recognised if the carrying amount of an asset or a cash generating unit (CGU) exceeds its recoverable amount. A CGU is the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or group of assets. Impairment losses recognised in respect of CGUs (or groups of CGUs) are allocated first to reduce the carrying amount of any goodwill allocated to the units (or groups of units) and then to reduce the carrying amount of the other assets in the units (or groups of units) on a pro rata basis.

The recoverable amount of an asset or CGU is the higher of its fair value less costs to sell and its value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.

An impairment loss is charged to the profit or loss in the period in which it arises, unless the asset is carried at revalued amount. Any impairment loss of a revalued asset is recognised in other comprehensive income for that asset to the extent that the impairment loss does not exceed the amount held in the revaluation surplus account.

Impairment loss on goodwill is not reversed in a subsequent period. An impairment loss for an asset other than goodwill is reversed if, and only if, there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognised. The carrying amount of an asset other than goodwill is increased to its revised recoverable amount, provided that this amount does not exceed the carrying amount that would have been determined (net of amortisation or depreciation) had no impairment loss been recognised for the asset in prior years. A reversal of impairment loss for an asset other than goodwill is recognised to the profit or loss unless the asset is carried at revalued amount, in which case, such reversal is treated as a revaluation increase.

2.11 Hire Purchase and Finance Lease Arrangements and Operating Leases

A lease is recognised as a finance lease if it transfers substantially to the Group all the risks and rewards incident to ownership of the leased assets. All other leases are classified as operating leases.

Assets acquired under hire purchase arrangements are recognised and measured in a similar manner as finance leases.

(a) Assets Acquired under Hire Purchase and Finance Lease Arrangements

Assets acquired under hire purchase and finance lease arrangements are stated at the amounts equal at the inception of the arrangement to the lower of their fair values and the present values of the minimum hire purchase or lease payments.




2.11 Hire Purchase and Finance Lease Arrangements and Operating Leases (Cont’d)

(a) Assets Acquired under Hire Purchase and Finance Lease Arrangements (Cont’d)

The corresponding obligations are taken up as hire purchase or finance lease liabilities. Hire purchase or lease payments are apportioned between the outstanding liabilities and finance charges which are charged to profit or loss over the period of the hire purchase/lease term so as to produce a constant periodic rate of interest on the remaining balance of the liabilities for each period.

The depreciation policy of property, plant and equipment acquired under hire purchase and finance lease arrangements are consistent with the Group’s depreciation policy as set out in Note 2.7 above.

(b) Operating Lease

Operating lease payments are recognised as an expense in profit or loss on a straight line basis over the period of the relevant leases.

2.12 Inventories

Inventories are measured at the lower of cost and net realisable value.

Cost of inventories is measured by using first-in, first-out cost formula and includes all costs of purchase 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 costs to completion and applicable variable selling expenses.

2.13 Cash and Cash Equivalents

Cash and cash equivalents include cash in hand, bank balances, deposits with licensed banks and highly liquid investments which are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, reduced by bank overdrafts. The statements of cash flows are prepared using the indirect method.

Cash and cash equivalents (other than bank overdraft) are categorised and measured as loans and receivables in accordance with policy Note 2.21(c).

2.14 Share Capital

Ordinary shares are classified as equity. Distributions to holders of ordinary shares are debited directly to equity and dividends declared on or before the reporting date are recognised as liabilities. Costs directly attributable to equity transactions are accounted for as a deduction, net of tax, from equity.

2.15 Treasury Shares

Shares repurchased by the Company are held as treasury shares and are measured and carried at the cost of purchase. Treasury shares are presented in the financial statements as a set-off against equity.

No gain or loss is recognised in profit or loss on the purchase, sale, issue or cancellation of treasury shares. Should such shares be re-issued by re-sale in the open market, the difference between the sales consideration and the carrying amount of the treasury shares is shown as a movement in equity. Where treasury shares are distributed as share dividends, the cost of the treasury shares is applied in the reduction of the share premium account or distributable retained profits or both.




2.16 Employee Benefits

(a) Short-term employee benefits

Wages, salaries and social security contributions, paid annual and sick leave, bonuses and non monetary benefits are recognised as an expense or included in the costs of assets, where applicable, in the period in which the associated services are rendered by employees of the Group.

(b) Defined contribution plans

The Group provides post-employment benefits by way of contribution to defined contribution plans operated by the relevant authorities at the prescribed rates.

Defined contribution plans are post-employment benefits plans under which the Group pays fixed contributions into a separate entity (a fund) and will have no legal or constructive obligation to pay further contributions if the fund does not hold sufficient assets to pay all employee benefits relating to employee service in the current and prior periods.

The Group’s contributions to defined contribution plans are recognised as an expense in the statement of comprehensive income in the period to which the contributions relate or included in the costs of assets, where applicable.

(c) Termination benefits

Termination benefits are recognised as a liability and an expense when the Group is committed to terminate the employment of current employees according to a detailed formal plan without the possibility of withdrawal. Termination benefits falling over more than twelve months after the end of the reporting period are discounted to present value.

2.17 Income Taxes

Tax expense is the aggregate amount of current and deferred taxation. Current and deferred taxes are recognised as income or expense in profit or loss except to the extent that the taxes relate to items recognised outside profit or loss, either in other comprehensive income or directly in equity or a business combination.

Current tax is the expected tax payable on the taxable income for the year using tax rates enacted or substantially enacted at the end of the reporting period.

Deferred tax is provided using the liability method on temporary differences at end of the reporting period between the carrying amounts of assets and liabilities in the financial statements and the amounts attributed to those assets and liabilities for taxation purpose.

Deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets are recognised for all deductible temporary differences and unabsorbed tax losses and unused tax credits to the extent that it is probable that future taxable profit will be available against which the assets can be utilised.

The carrying amount of deferred tax assets is reviewed at the end of each reporting period and is reduced to the extent that it is no longer probable that the related tax benefits will be realised.

Tax rates enacted or substantively enacted at the end of the reporting period are used to determine deferred tax.




2.17 Income Taxes (Cont’d)

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets and liabilities on a net basis.

2.18 Provisions

Provisions are recognised when the Group has a present legal and constructive obligation as a result of past events 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. Where the effect of time value of money is material, the amount of provision is measured at the present value of the expenditure expected to be required to settle the obligation using a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. Where discounting is used, the increase in the amount of a provision due to passage of time is recognised as finance cost.

2.19 Foreign Currencies

(a) Functional and presentation currency

Items included in the financial statements of the Company and each of its subsidiary are measured using the currency of the primary economic environment in which each entity operates (the “functional currency”). The financial statements of the Group and the Company are presented in Ringgit Malaysia, which is the Company’s functional and presentation currency.

(b) Foreign currency transactions and balances

In preparing the financial statements of the individual entities, transactions in currencies other than the entity’s functional currency (foreign currencies) are recorded in the functional currencies using the exchange rates prevailing at the dates of the transactions. At the end of each reporting period, foreign currency monetary assets and liabilities are translated at exchange rates prevailing at the end of the reporting period. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates at the date of the transactions. Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined.

Exchange differences arising from the settlement of foreign currency transactions and from the translation of foreign currency monetary assets and liabilities are recognised in profit or loss.

Exchange differences arising on the translation of non-monetary items carried at fair value are included in profit or loss for the period except for the differences arising on the translation of non-monetary items in respect of which gains or losses are recognised directly in other comprehensive income. Exchange differences arising from such non-monetary items are recognised directly to other comprehensive income.

(c) Foreign operations

The results and financial position of foreign operations that have a functional currency different from the presentation currency (RM) of the consolidated financial statements are translated into RM as follows:-

(i) Assets and liabilities for each financial position date presented are translated at the closing rate prevailing at the end of the reporting period;




2.19 Foreign Currencies (Cont’d)

(c) Foreign operations (Cont’d)

(ii) Items of income and expenses are translated at average exchange rates for the year, which approximates the exchange rates at the dates of the transactions; and

(iii) All resulting exchange differences recognised in other comprehensive income are accumulated in exchange fluctuation reserve within equity.

Exchange differences arising from monetary items that form part of the Company’s net investment in a foreign operation and that are denominated in the functional currency of the Company or the foreign operation are recognised in the profit or loss of the Company or of the foreign operation, as appropriate. In the Group’s financial statements, such exchange differences are recognised initially in other comprehensive income and accumulated in equity under exchange fluctuation reserve. On disposal of a foreign operation, the cumulative amount recognised in other comprehensive income and taken to equity under exchange fluctuation reserve will be reclassfied to profit or loss.

Goodwill and fair value adjustments arising on the acquisition of foreign operations are treated as assets and liabilities of the foreign operations and are recorded in the functional currency of the foreign operations and translated at the closing rate at the end of the reporting period.

2.20 Revenue

Revenue of the Group is recognised upon rendering of services and customers’ acceptance, and when the outcome of the transaction can be estimated reliably.

Group revenue is stated net of all intra-group transactions.

Sales and services

Upon delivery of goods or rendering of services and when applicable, upon customers’ acceptance. In the event the outcome of the transaction could not be estimated reliably, revenue is recognised to the extent of the expenses incurred that are recoverable.

Royalty fee

When the fee is effectively chargeable.

Interest income - short term deposits

Interest income is recognised as it accrues, taking into account the effective yield on the deposits.

Commission income

When the terms and conditions attaching to the claim are satisfied.




2.21 Financial Assets

The Group recognises all financial assets in its statement of financial position when, and only when, the Group becomes a party to the contractual provisions of the instruments.

Classsification and measurement

Financial assets are initially measured at fair value plus, in the case of financial assets not at fair value through profit or loss, directly attributable transaction costs.

Financial assets are classified into the following specified categories depending on the nature and purpose of the financial assets and are determined at the time of initial recognition.

(a) Financial assets at fair value through profit or loss

Financial assets are classified at fair value through profit or loss when the financial assets are either held for trading or designated as such upon initial recognition.

A financial asset is classified as held for trading if:-

• it has been acquired principally for the purpose of selling it in the near term; or

• on initial recognition, it is part of a portfolio of identified financial instruments that the Group manages together and has a recent actual pattern of short-term profit-taking; or

• it is a derivative that is not designated and effective as a hedging instrument.

After initial recognition, financial assets at fair value through profit or loss are measured at fair value with any gains or losses arising from changes in fair values recognised in profit or loss. The net gains or losses do not include any exchange differences, dividend or interest earned on the financial asset. Exchange differences, dividend and interest earned on financial assets at fair value through profit or loss are recognised separately in profit or loss as part of other income or other expenses.

Derivative that are linked to and must be settled by delivery of unquoted equity instruments whose fair value cannot be reliably measured is measured at cost.

(b) Held-to-maturity investment

Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturity that the Group has the positive intention and ability to hold to maturity.

Subsequent to initial recognition, held-to-maturity investments are measured at amortised cost using the effective interest rate method. A gain or loss is recognised in profit or loss when the held-to-maturity investment is derecognised or impaired, and through the amortisation process.

(c) Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Trade receivables, loans and other receivables are classified as loans and receivables.

Subsequent to initial recognition, loans and receivables are measured at amortised cost using the effective interest method. Gains and losses are recognised in profit or loss when the loans and receivables are derecognised or impaired, and through the amortisation process.




2.21 Financial Assets (Cont’d)

(d) Available-for-sale financial assets

Available-for-sale financial assets are non-derivative financial assets that are designated as available for sale or are not classified as loans and receivables, held-to-maturity investments or at fair value through profit or loss. Available-for-sale financial assets include quoted and unquoted equity and debt instruments that are not held-for-trading.

Subsequent to initial recognition, quoted equity and debt instruments are measured at fair value and investments in equity instruments that do not have a quoted market price in an active market and whose fair value cannot be reliably measured are measured at cost. A gain or loss from changes in fair value is recognised in other comprehensive income, except that impairment losses, foreign exchange gains or losses on monetary instruments and interest calculated using the effective interest method are recognised in profit or loss. The cumulative gain or loss previously recognised in other comprehensive income is reclassified from equity to profit or loss as a reclassification adjustment when the financial asset is derecognised. Dividends on an equity instrument are recognised in profit or loss when the Group’s right to receive payment is established.

Regular way purchase or sale of financial assets

Regular way purchases or sales of financial assets are recognised and derecognised using trade date accounting. Trade date accounting refers to:-

• the recognition of an asset to be received and the liability to pay for it on the trade date which is the date the Group commits itself to purchase or sell an asset; and

• derecognition of an asset that is sold, the recognition of any gain or loss on disposal and the recognition of a receivable from the buyer for payment on the trade date.

Impairment of financial assets

The Group assesses at the end of each reporting period whether there is any objective evidence that a financial asset, other than financial assets at fair value through profit or loss, is impaired. Financial assets are considered to be impaired when objective evidence indicates that a loss event has occurred after the initial recognition of the assets and that the loss event had a negative effect on the estimated future cash flows of that asset that can be reliably estimated. Losses expected as a result of future events, no matter how likely, are not recognised. For an quoted equity instrument, a significant or prolonged decline in the fair value of the investment below its cost is considered to be objective evidence of impairment.

An amount of impairment loss in respect of financial assets measured at amortised cost is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the financial asset’s original effective interest rate i.e. the effective rate computed at initial recognition. The carrying amount of the asset is reduced through an allowance account. The amount of loss is recognised in profit or loss.

If, in a subsequent period, the amount of the impairment loss on financial assets measured at amortised cost decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed by adjusting the allowance account to the extent that the carrying amount of the financial asset does not exceed its amortised cost had the impairment not been recognised at the date the impairment is reversed. The amount of reversal is recognised in profit or loss.




2.21 Financial Assets (Cont’d)

Impairment of financial assets (Cont’d)

When an available-for-sale financial asset is impaired, the cumulative loss that had been recognised in other comprehensive income is reclassified from equity and recognised in profit or loss as a reclassification adjustment even though the financial asset has not been derecognised. The amount of cumulative loss that is reclassified is the difference between the acquisition cost (less any principal repayment and amortisation) and current fair value, less any impairment loss on that financial asset previously recognised in profit or loss.

Impairment losses recognised in profit or loss for an investment in an equity instrument classified as available-for-sale is not reversed through profit or loss. Increase in fair value, if any, subsequent to the impairment loss, is recognised in other comprehensive income.

If the fair value of a debt instrument classified as available-for-sale, increases in a subsequent period and the increase can be objectively related to an event occurring after the impairment loss was recognised in profit or loss, the impairment loss is reversed with the amount of the reversal is recognised in profit or loss.

An amount of impairment loss in respect of financial assets carried at cost is measured as the difference between the carrying amount of the financial asset and the present value of estimated future cash flows discounted at the current market rate of return for a similar financial asset. Such impairment losses are not reversed in subsequent periods.

Deregconition of financial assets

The Group decognises a financial asset when, and only when, the contractual rights to the cash flows from the financial asset expire or it transfers the financial asset without retaining control or substantially all the risks and rewards of ownership of the financial asset to another party.

On derecognition of a financial asset in its entirety, the difference between the carrying amount and the sum of the consideration received and any cumulative gain or loss that had been recognised in other comprehensive income is recognised in profit or loss.

2.22 Financial Liabilities

The Group recognises all financial liabilities in its statement of financial position when, and only when, the Group becomes a party to the contractual provisions of the instruments.

Classification and measurement

Financial liabilities are initially measured at fair value plus in the case of other financial liabilities, directly attributable transaction costs.

Financial liabilities are classified as either financial liabilities at fair value through profit or loss or other financial liabilities.

(a) Financial liabilities at fair value through profit or loss

Financial liabilities are classified as at fair value through profit or loss when the financial liability is either held for trading or it is designated as at fair value through profit or loss upon initial recognition.

A financial liability is classified as held for trading if:-

• it has been acquired principally for the purpose of repurchasing it in the near term; or




2.22 Financial Liabilities (Cont’d)

(a) Financial liabilities at fair value through profit or loss (Cont’d)

• on initial recognition, it is part of a portfolio of identified financial instruments that the Company manages together and has a recent actual pattern of short-term profit-taking; or

• it is a derivative that is not designated and effective as a hedging instrument.

After initial recognition, financial liabilities at fair value through profit or loss are measured at fair value with any gains or losses arising from changes in fair value recognised in profit or loss. The net gains or losses recognised in profit or loss do not include any exchange differences or interest paid on the financial liability. Exchange differences and interest expense on financial liabilities at fair value through profit or loss are recognised separately in profit or loss as part of other income or other expenses.

Derivative liability that is linked to and must be settled by delivery of an unquoted equity instrument whose fair value cannot be reliably measured is measured at cost.

(b) Other financial liabilities

All financial liabilities, other than those categorised as fair value through profit or loss are subsequently measured at amortised cost using the effective interest method. Other financial liabilities of the Group include trade and other payables, loans and borrowings.

A gain or loss on other financial liabilities is recognised in profit or loss when the financial liabilities are derecognised and through the amortisation process.

Deregconition of financial liabilities

A financial liability is derecognised when, and only when, the obligation specified in the contract is extingushed. When an existing financial liability is exchanged with the same lender on substantially different terms or the terms of an existing liability are substantially modified, they are accounted for as an extinguishment of the original financial liability and a new financial liability is recognised. The difference between the carrying amount of a financial liability extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in profit or loss.

2.23 Financial Guarantee Contracts A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse

the holder for a loss it incurs because a specified debtor fails to make payment when due in accordance with the original or modified terms of a debt instrument.

Financial guarantee contracts are recognised initially as a liability at fair value, net of transaction costs. Subsequent to initial recognition, financial guarantee contracts are amortised to profit or loss using the straight-line method over the contractual period or, when there is no specified contractual period, recognised in profit or loss upon discharge of the guarantee. When settlement of a financial guarantee contract becomes probable, an estimate of the obligation is made in accordance with FRS 137, Provisions, Contingent Liabilities and Contingent Assets. If the carrying amount of the financial guarantee is lower than the obligation estimated, the carrying value is adjusted to the obligation amount and accounted for as a provision.



3. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

The preparation of financial statements in conformity with the Financial Reporting Standards requires management to exercise their judgement in the process of applying the Group’s accounting policies and which may have significant effects on the amounts recognised in the financial statements. It also requires the use of accounting estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the results reported for the reporting period and that may have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year. Although these judgements and estimates are based on the management’s best knowledge of current events and actions, actual results may differ.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

(a) Significant judgements in applying the Group’s accounting policies

In the process of applying the Group’s accounting policies, which are described in Note 2, the management are of the opinion that any instances of application of judgement are not expected to have a significant effect on the amounts recognised in the financial statements, apart from those involving estimations which are dealt with below.

(b) Key sources of estimation uncertainty

The key assumptions 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 discussed below.

(i) Impairment of non-financial assets

The Group and the Company assess impairment of property, plant and equipment and investments in subsidiaries when events or changes in circumstances indicate that the carrying amounts of these assets may not be recoverable. In assessing such impairment, the recoverable amount of the assets is estimated using the latest available fair value (after taking into account the costs to sell) or the value in use of the relevant assets.

(ii) Deferred tax liabilities

No deferred tax liabilities are recognised for all the temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements because the Company was granted MSC status under the Promotion of Investments Act, 1986 whereby 100% of its statutory income is exempted from tax until 29 September 2014.

The Company estimates that any tax charge arising from temporary differences between the tax bases and the carrying amount of its assets and liabilities would be recognised upon expiry of the Pioneer Status tax exemption.

(iii) Armotisation of development cost

The development cost is amortised on a straight-line basis over the life span of the developed asset. Management estimated the useful life of this asset to be within 5 years. Changes in the technological developments could impact the economic useful life and the residual value of this asset, therefore future amortisation charges could be revised.



4. Property, Plant and Equipment

At Depreciation Disposal/ Exchange At

1.1.2010 Additions charge written off differences 31.12.2010

GROUP - 2010 RM RM RM RM RM RM

Net Book Value

Freehold land 1,850,000 - - (1,850,000) - -

Warehouse 2,613,955 - (79,700) (2,534,255) - -

Apartment 593,194 - (18,303) - - 574,891

Building 523,826 - (30,843) - 881 493,864

Furnitures and fittings 532,792 13,726 (75,818) (79,447) - 391,253

Computer hardware and software 1,529,789 308,468 (621,358) (67,726) - 1,149,173

Office equipment 74,660 30,190 (37,474) (8,113) (400) 58,863

Plant and machinery 385,277 9,564 (109,728) (164,893) 208 120,428

Renovation 399,727 893,583 (62,795) (326,391) - 904,124

8,503,220 1,255,531 (1,036,019) (5,030,825) 689 3,692,596

Accumulated Exchange Net book

At cost depreciation differences value

At 31.12.2010 RM RM RM RM

Apartment 610,017 (35,126) - 574,891

Building 583,879 (90,896) 881 493,864

Furnitures and fittings 422,781 (31,528) - 391,253

Computer hardware and software 4,369,885 (3,220,712) - 1,149,173

Office equipment 107,872 (48,609) (400) 58,863

Plant and machinery 330,603 (210,383) 208 120,428

Renovation 957,869 (53,745) - 904,124

7,382,906 (3,690,999) 689 3,692,596

At Depreciation Disposal/ Exchange At

1.1.2009 Adjustments* Additions charge written off differences 31.12.2009

GROUP - 2009 RM RM RM RM RM RM RM

Net Book Value

Freehold land 1,850,000 - - - - - 1,850,000

Warehouse - 1,211,301 1,445,370 (42,716) - - 2,613,955

Apartment 161,500 - 440,092 (8,398) - - 593,194

Building 519,906 - - (28,575) - 32,495 523,826

Furnitures and fittings 719,541 - 6,293 (93,283) (100,047) 288 532,792

Computer hardware

and software 1,910,031 - 563,774 (895,316) (48,858) 158 1,529,789

Office equipment 130,042 - 13,184 (47,965) (27,118) 6,517 74,660

Plant and machinery 318,584 - 235,479 (117,477) (48,484) (2,825) 385,277

Renovation 480,333 - 301,875 (75,159) (308,822) 1,500 399,727

6,089,937 1,211,301 3,006,067 (1,308,889) (533,329) 38,133 8,503,220



4. Property, Plant and Equipment (Cont’d)

Accumulated Exchange Net book At cost depreciation differences value At 31.12.2009 RM RM RM RM

Freehold land 1,850,000 - - 1,850,000 Warehouse 2,656,671 (42,716) - 2,613,955 Apartment 610,017 (16,823) - 593,194 Building 583,879 (92,548) 32,495 523,826 Furnitures and fittings 820,049 (287,545) 288 532,792 Computer hardware and software 5,114,914 (3,585,283) 158 1,529,789 Office equipment 253,130 (184,987) 6,517 74,660 Plant and machinery 749,889 (361,787) (2,825) 385,277 Renovation 619,450 (221,223) 1,500 399,727

13,257,999 (4,792,912) 38,133 8,503,220

Net book value of plant and machinery of the Group acquired under hire purchase is as follows:-

GROUP 2010 2009 RM RM

Plant and machinery 15,523 60,091

* Adjustments arising from finalisation of insurance claims during the financial year ended 31 December 2009.

At Depreciation Disposal/ At 1.1.2010 Additions charge write-off 31.12.2010 COMPANY - 2010 RM RM RM RM RM

Net Book ValueComputer hardware and software 1,282,842 320,000 (516,394) (9,192) 1,077,256Furniture and fittings 77,460 - (12,336) (32,267) 32,857 Renovation 132,934 600,000 (23,632) (58,169) 651,133 Plant and machinery 46,567 - (31,044) - 15,523 Office equipment 14,614 - (6,654) (51) 7,909

1,554,417 920,000 (590,060) (99,679) 1,784,678



4. Property, Plant and Equipment (Cont’d)

Accumulated Net book At cost depreciation value At 31.12.2010 RM RM RM

Computer hardware and software 4,297,964 (3,220,708) 1,077,256 Furniture and fittings 64,362 (31,505) 32,857 Renovation 703,595 (52,462) 651,133 Plant and machinery 155,225 (139,702) 15,523 Office equipment 33,518 (25,609) 7,909

5,254,664 (3,469,986) 1,784,678

At Depreciation Disposal/ At 1.1.2009 Additions charge write-off 31.12.2009 COMPANY - 2009 RM RM RM RM RM

Net Book ValueComputer hardware and software 1,489,580 548,754 (706,634) (48,858) 1,282,842 Furniture and fittings 89,797 - (12,337) - 77,460 Renovation 151,575 - (18,641) - 132,934 Plant and machinery 77,612 - (31,045) - 46,567 Office equipment 21,351 - (6,737) - 14,614

1,829,915 548,754 (775,394) (48,858) 1,554,417

Accumulated Net book At cost depreciation value At 31.12.2009 RM RM RM

Computer hardware and software 4,017,305 (2,734,463) 1,282,842 Furniture and fittings 123,367 (45,907) 77,460 Renovation 186,415 (53,481) 132,934 Plant and machinery 155,225 (108,658) 46,567 Office equipment 33,686 (19,072) 14,614

4,515,998 (2,961,581) 1,554,417

The plant and machinery of the Company were acquired under hire purchase arrangement.



5. INVESTMENTS IN SUBSIDIARIES

COMPANY 2010 2009 RM RM

Unquoted shares, at cost 6,426,745 6,268,365

Accumulated impairment losses:Balance as at 1 January (2,680,050) (688,421)Impairment for the year - (1,991,629)

Balance as at 31 December (2,680,050) (2,680,050)

3,746,695 3,588,315

Details of the subsidiaries are as follows:

Country of Effective Equity Interest Name of Company Incorporation 2010 2009 Principal Activity % %

Direct:-

Customer Loyalty Malaysia 100 100 Providing integrated solutions Solutions Sdn. Bhd. in the management of customer loyalty services

Advanced Supply Chain Malaysia 100 100 Providing procurement Solutions Sdn. Bhd. services through local suppliers and mail order programmes

* Bounty Trading Pte. Ltd. Singapore 100 100 Providing international outsourced procurement services

* PT CLS System Indonesia 100 100 Providing integrated solutions in the management of customer loyalty services

Pride Group Limited British Virgin 100 - Dormant Island

Indirect:-

Elite Relationship Malaysia 51 51 Providing integrated solutions Marketing Sdn. Bhd. in the management of customer loyalty services

* Not audited by Azman, Wong, Salleh & Co.

The Company incorporated a subsidiary, Pride Group Limited in British Virgin Island during the financial year. There is no significant financial impact for the current financial year arising from the incorporation as the subsidiary has yet to commence business operations.



6. INVESTMENT IN ASSOCIATE


Unquoted ordinary shares, at cost - 1,365,781 - 1,365,781 Allowance for impairment losses - (316,673) - (240,180)Group's share of post-acquisition results - 76,493 - - Net carrying amount classified as - (1,125,601) - (1,125,601) assets held for sale (Note 17)

- - - -

(a) The summarised financial information of the associated company are as follows:-


Assets and liabilities

Total assets - 15,267,091 Total liabilities - (9,534,243)

Net assets - 5,732,848

Results

Revenue - 19,855,830Profit for the year - 257,581

(b) Details of the associate are as follows:-

Place of Effective Equity Interest Name of Company Incorporation 2010 2009 Principal Activity % %

Customer Loyalty China - 25 Providing integrated solutions Solutions (Shanghai) in the management of customer Company Limited loyalty services ('CLSS')

The net carrying amount of the investment in CLSS of RM1,125,601 had been reclassified to asset held for sale in the financial year ended 31 December 2009 pending the completion of disposal of the associated company as disclosed in Note 17 to the financial statements. The disposal was completed during the current financial year ended 31 December 2010.



7. OTHER INVESTMENTS


Carrying amount of available-for-sale financial assets- Quoted investments, outside Malaysia 3,646,007 3,543,900 - - Exchange fluctuation reserve (78,576) - - -

3,567,431 3,543,900 - - Golf club membership, at cost 45,000 45,000 45,000 45,000

3,612,431 3,588,900 45,000 45,000

Representing investments measured:-

At cost 45,000 3,588,900 45,000 45,000 At fair value 3,567,431 - - -

3,612,431 3,588,900 45,000 45,000

Market value of quoted investments as at the end of the reporting period are as follows:-


Quoted investments, outside Malaysia 3,575,804 3,581,334

Upon the adoption of FRS 139, Financial Instruments : Recognition and Measurement during the financial year, the Group’s quoted investments have been categorised and measured as available-for-sale financial assets.

Effective from 1 January 2010, all available-for-sale financial assets are initially recognised at their fair values plus attributable transaction cost. After initial recognition, the investments are measured at fair values except for investments in equity or debts instruments that do not have a quoted market price in an active market and whose fair value cannot be reliably measured, are measured at cost. The effect of the measurement of the quoted investments at fair value on the adoption of FRS 139 is highlighted in Notes 2.2(d) and 21.



8. INTANGIBLE ASSETS - DEVELOPMENT EXPENDITURE

At Amortisation At 1.1.2010 Additions Charge 31.12.2010 Group and Company RM RM RM RM

2010Net Book Value

Internally generated development expenditure 1,017,192 - (421,163) 596,029

Accumulated Net Book Cost Amortisation Value At 31.12.2010 RM RM RM

Internally generated development expenditure 3,344,767 (2,748,738) 596,029

At Amortisation At 1.1.2009 Additions Charge 31.12.2009 RM RM RM RM

2009Net Book Value

Internally generated development expenditure 1,517,227 115,515 (615,550) 1,017,192

Accumulated Net Book Cost Amortisation Value At 31.12.2009 RM RM RM

Internally generated development expenditure 3,344,767 (2,327,575) 1,017,192

GROUP AND COMPANY 2010 2009 RM RM

Analysed as:

Staff costs of personnel engaged in development activities 596,029 995,568 Management/maintenance fees for services rendered by a related party - 21,624

596,029 1,017,192

The internally generated development cost is in respect of a software application known as Advance Information Marketing System (“AIMS”) and which is amortised over a period of 5 years. The amortisation charge is included in the statment of comprehensive income as cost of sales and services (Note 27).



9. DEFERRED TAX


Deferred tax assets 64,162 98,719 Deferred tax liabilities - -

64,162 98,719


At 1 January 98,719 (60,309)Exchange differences 14,815 - Recognised in profit or loss (Note 32) (49,372) 159,028

At 31 December 64,162 98,719

The component of deferred tax assets:

Provision for bonus - 26,115 Unabsorbed losses 197,629 99,869 Unabsorbed capital allowances 160,148 126,377 Offsetting (293,615) (153,642)

64,162 98,719

The component of deferred tax liabilities:

Property, plant and equipment (293,615) (153,642)Offsetting 293,615 153,642

- -



9. DEFERRED TAX (CONT’D)


The amount of temporary differences, unutilised capital allowances and unabsorbed tax losses for which no deferred tax assets/(liabilities) have been recognised are as follows:

Property, plant and equipment (1,064,797) (1,142,560) (1,064,797) (1,142,560)Development expenditure capitalised (596,029) (1,017,192) (596,029) (1,017,192)Unutilised capital allowances 1,312 441,316 - - Unabsorbed tax losses 4,465,353 4,102,744 - -

2,805,839 2,384,308 (1,660,826) (2,159,752)

Deferred tax assets in respect of unutilised capital allowances and unabsorbed tax losses of two of the subsidiaries have not been recognised in the financial statements due to the uncertainty of its realisation in the near future.

Deferred tax liabilities of the Company have not been recognised as the Company was granted MSC Status under the Promotion of Investment Act, 1986 whereby 100% of its statutory income is exempted from tax for the period from 30 September 2004 to 29 September 2014.

10. INVENTORIES


At cost

Merchandise goods 1,455,985 1,639,105

Allowance for obsolete and slow-moving inventories

Balance at 1 January (307,474) - Allowance for the year - (307,474)Written back during the year 307,474 -

Balance at 31 December - (307,474)

Carrying value at 31 December 1,455,985 1,331,631



10. INVENTORIES (CONT’D)


Analysed as:-

Cost 1,455,985 1,024,157 Net realisable value - 307,474

1,455,985 1,331,631

11. TRADE RECEIVABLES


Trade receivables 5,133,722 9,501,988 11,000 14,000Allowance for impairment loss (104,871) (116,338) - -

5,028,851 9,385,650 11,000 14,000

Trade receivables above are classified as loans and receivables and are therefore measured at amortised cost using the effective interest method.

The normal credit periods of trade receivables is 30 days (2009 : 30 days).

Trade receivables that are individually determined to be impaired comprised those customers who have defaulted on their payments and are considered to have financial difficulties in repaying their debts.

(a) The ageing analyses of the Group’s and the Company’s trade receivables are as follows:-

GROUP COMPANY 2010 2010 RM RM

Neither past due nor impaired 1,542,898 1,000 0 to 30 days past due 954,472 1,000 31 to 60 days past due 708,328 1,000 61 to 90 days past due 1,513,727 1,000 91 to 120 days past due 116,034 1,000 More than 121 days past due 298,263 6,000

5,133,722 11,000 Allowance for impairment loss (104,871) -

5,028,851 11,000



11. TRADE RECEIVABLES (CONT’D)

(a) The ageing analyses of the Group’s and the Company’s trade receivables are as follows (cont’d):-

Receivables that are neither past due nor impaired

Trade receivables that are neither past due nor impaired are creditworthy debtors with good payment records with the Group. Most of the Group’s trade receivables arose from sales to reputable public listed company and financial institutions.

Receivables that are past due but not impaired

As at 31 December 2010, the Group has trade receivables amounting to RM3,485,953 that are past due at the reporting date but not impaired. Trade receivables that are past due but not impaired relate to customers that have good track records with the Group. Based on past experience and no adverse information to date, the directors of the Group are of the opinion that no allowance for impairment is necessary in respect of these balances as there has not been significant change in credit quality and the balances are still considered to be fully recoverable.

The Group does not hold any collateral as security for the trade receivables as at the end of the reporting period.

During the financial year, the Group did not renegotiate the terms of any trade receivable.

(b) The movements of allowance for impairment losses during the financial year are as follows:-


Balance at beginning of year 116,338 - Impairment loss recognised during the year 64,150 116,338 Reversal of impairment loss (75,617) -

Balance at year end 104,871 116,338

(c) The forreign currency exposure profile of trade receivables is as follows:-


Indonesia Rupiah 380,270 1,162,992 Singapore Dollar - 148,786



12. OTHER RECEIVABLES, DEPOSITS AND PREPAYMENTS


Refundable deposits 142,474 221,831 69,975 47,528 Other receivables 11,887 147,921 - Prepayments 4,547,308 125,314 15,417 9,230

4,701,670 495,065 85,392 56,758

Analysis of foreign currency exposure:

Indonesia Rupiah 16,525 7,246 - - Singapore Dollar 12,287 47,963 - -

13. AMOUNT DUE FROM/(TO) RELATED PARTY


Trade balances with Electronic Commerce Technology Sdn. Bhd.

Amount due from - 416,628 - 256,588

The credit terms granted to the related party range from 60 to 90 days.


Amount due to - 196,604 - 57,141

The credit terms granted to the Group/Company range from 30 to 90 days.



14. AMOUNT DUE FROM/(TO) SUBSIDIARIES


(a) Amount due from subsidiaries: - trade - 11,311,252 - other 6,956,261 16,582,060 less : allowance for impairment loss - (5,000,000)

6,956,261 22,893,312

The movements of allowance for impairment loss in respect of amount due from subsidiaries during the financial year are as follows:-

Balance as at 1 January 5,000,000 5,000,000 Reversal of impairment loss (5,000,000) -

Balance as at 31 December - 5,000,000


Indonesian Rupiah 1,953,164 1,858,305 Singapore Dollar 4,298,473 4,302,830 United States Dollar 4,625 -

Analysis of trade balances:

Customer Loyalty Solutions Sdn. Bhd. - 6,370,269 Advanced Supply Chain Solutions Sdn. Bhd. - 4,940,983

- 11,311,252

Analysis of non-trade balances:

Customer Loyalty Solutions Sdn. Bhd. 700,000 4,111,131 Advanced Supply Chain Solutions Sdn. Bhd. - 4,800,000 Elite Relationship Marketing Sdn. Bhd. - 6,926 PT Customers Loyalty Solutions 1,953,164 1,988,938 Bounty Trading Pte. Ltd. 4,298,472 5,675,065 Pride Group Limited 4,625 -

6,956,261 16,582,060

For trade balances, the credit terms granted to the subsidiaries range from 30 to 90 days (2009: 30 to 90 days).

For non trade balances, the amounts owing are unsecured, interest-free and repayable on demand.



14. AMOUNT DUE FROM/(TO) SUBSIDIARIES (CONT’D)


(b) Amount due to subsidiary:- trade - 1,384,732

Analysis of trade balance:

Bounty Trading Pte. Ltd. - 1,384,732


Singapore Dollar - 1,384,732

The credit terms granted to the Company range from 30 to 90 days.

15. SHORT TERM DEPOSITS


Short term deposits placed with licensed financial institutions 13,957,770 18,046,285 13,214,136 6,339,772 Cash Management Trust Account 7,223 2,684,346 - -

13,964,993 20,730,631 13,214,136 6,339,772


Singapore Dollar 262,449 268,400 - - Indonesian Rupiah 296,000 204,000 - -

The effective weighted average interest rates of short term deposits are: 2.89% 2.52% 2.89% 2.52%

Short term deposits of the Group and the Company have an average maturity of less than 30 days (2009: 30 days).



16. CASH AND BANK BALANCES


Cash and bank balances 10,272,831 1,627,989 9,108,086 53,848



Indonesian Rupiah 244,113 121,297 - - Singapore Dollar 381,727 594,213 - - United States Dollar 203,191 119,099 - -

17. NON-CURRENT ASSET CLASSIFIED AS HELD FOR SALE


At net carrying amount:Investment in an associate - 1,125,601 - 1,125,601

The disposal of the investment in associate was completed during the current financial year and resulted in a loss of RM62,865 for the Group and the Company.

18. SHARE CAPITAL

GROUP AND COMPANY 2010 2009 2010 2009 No. of shares No. of shares RM RM

Ordinary shares of RM0.10 each

Authorised: Balance at 1 January/31 December 500,000,000 500,000,000 50,000,000 50,000,000

Issued and fully paid-up:

Balance at 1 January 187,168,800 187,168,800 18,716,880 18,716,880 Bonus issue of approximately 1 ordinary share for every 3 existing ordinary shares 56,892,766 - 5,689,277 -

Balance at 31 December 244,061,566 187,168,800 24,406,157 18,716,880



18. SHARE CAPITAL (CONT’D)

(a) During the financial year, the issued and fully paid-up share capital of the Company was increased from RM18,716,880 comprising 187,168,800 ordinary shares of RM0.10 each to RM24,406,157 comprising 244,061,566 ordinary shares of RM0.10 each by way of bonus issue of 56,892,766 new ordinary shares of RM0.10 each via the capitalisation of the Company’s share premium account.

The new ordinary shares issued during the financial year ranked pari passu in all respects with the existing ordinary shares of the Company.

(b) The holders of ordinary shares (except treasury shares) are entitled to receive dividends as and when declared by the Company. All ordinary shares carry one vote per share without restrictions and rank equally with regard to the Company’s residual assets.

19. SHARE PREMIUM

GROUP AND COMPANY 2010 2009 RM RM

Balance at 1 January 6,638,922 6,638,922 Capitalisation on bonus issue (5,689,277) - Share issuance expense (53,441) -

Balance at 31 December 896,204 6,638,922

This amount is not distributable by way of cash dividends and may be utilised only in the manner set out in Section 60(3) of the Companies Act, 1965.

Share issuance expense includes auditors’ remuneration of RM8,000.

20. TREASURY SHARES

The amount relates to the cost of acquisition of treasury shares.

In the current financial year, shareholders of the Company, by an ordinary resolution passed at the Annual General Meeting on 25 June 2010, renewed the approval of the Company’s plan to purchase its own shares.

During the financial year, the Company repurchased from the open market 24,090,500 of its ordinary shares listed and quoted on the Ace Market of Bursa Malaysia Securities Berhad at an average buy-back price of RM0.168 per share. The total consideration paid including transaction costs was RM4,057,844 and this was financed by internally generated funds. The shares repurchased are being held as treasury shares in accordance with Section 67A(3A)(b) of the Companies Act, 1965. None of the treasury shares were resold or cancelled during the financial year.



20. TREASURY SHARES (CONT’D)

Purchase price per share Average cost Date of purchase Number Total cost RM per share of shares RM Lowest Highest RM

7.9.2010 1,200,000 210,893 0.175 0.175 0.176 8.9.2010 2,400,000 443,739 0.180 0.185 0.185 13.9.2010 3,200,000 606,354 0.185 0.195 0.189 14.9.2010 3,800,000 716,576 0.175 0.190 0.189 15.9.2010 490,500 88,935 0.180 0.180 0.180 17.9.2010 4,000,000 754,682 0.185 0.190 0.189 20.9.2010 1,400,000 260,055 0.185 0.185 0.185 21.10.2010 5,000,000 650,338 0.125 0.130 0.130 22.10.2010 2,600,000 326,273 0.125 0.125 0.125

At the end of the financial year 24,090,500 4,057,844 0.168

As at the end of reporting period, the number of outstanding shares in issue after setting treasury shares off against equity is 219,971,066.

21. FAIR VALUE ADJUSTMENT RESERVE


At beginning of financial year- As previously reported - - - Effects of adopting FRS 139 - Difference between the fair value amount and carrying amount of available-for-sale (“AFS”) financial assets as at 1 January 2010 37,434 -

- As restated 37,434 -

Changes in fair value of AFS financial assets 64,673 -

At end of financial year 102,107 -

22. RETAINED PROFITS

As at 31 December 2010, the Company has sufficient credit in the Section 108 balance to pay franked dividend amounting to RM4,410,168 (2009 : RM4,410,168) out of its retained earnings. If the balance of the retained earnings of RM9,811,095 (2009 : RM5,544,232) were to be distributed as dividend, the Company may distribute such dividend under the single tier system.



22. RETAINED PROFITS (CONT'D)

The Company also has estimated tax exempt income of RM11,600,000 (2009 : RM10,246,399) at balance sheet date available for distribution as tax exempt dividend.

Pursuant to Finance Act, 2007, a single tier company income tax system was introduced with effect for the year of assessment 2008. Under the single tier tax system, tax on a company's profits is a final tax and dividends distributed to shareholders will be exempted from tax. Notwithstanding, the Section 108 tax credit balance above will be available to the Company until such time the credit is fully utilised or upon expiry of the six years transitional period on 31 December 2013, whichever is earlier.

23. HIRE PURCHASE PAYABLE

GROUP/COMPANY 2010 2009 RM RM

Hire purchase payable:Due within 1 year 21,715 32,160 Due between 1 to 2 years - 19,034

21,715 51,194 Less: Future finance charges (454) (2,540)

Principal outstanding 21,261 48,654

Analysed as:CurrentRepayable within 1 year 21,261 30,161

Non-CurrentRepayable between 1 to 2 years - 18,493

21,261 48,654

The interest rates applicable to the hire purchase payable at the balance sheet date is 3.05% (2009: 3.05%) per annum.

24. TRADE PAYABLES


Trade payables 12,270,298 13,594,499 11,723 21,722


Singapore Dollar 31,911 120,907 - - Indonesia Rupiah 42,343 109,277 - -



24. TRADE PAYABLES (CONT’D)

The normal credit terms granted to the Group/Company range from 30 to 60 days (2009: 30 to 60 days).

Included in trade payables of the Group are accrued cost attributable to the managed customer loyalty services amounting to RM11,757,531 (2009: RM9,048,393) in relation to the end-to-end customer loyalty management solutions services rendered by Customer Loyalty Solutions Sdn. Bhd.

25. OTHER PAYABLES AND ACCRUALS


Other payables and accruals 1,596,908 1,741,550 143,975 198,099


Singapore Dollar 11,094 55,212 - - Indonesia Rupiah 82,151 26,280 - - United States Dollar 999 - - -

26. REVENUE


Information technology licensing and data management 32,005 1,634,600 1,112,005 3,014,877 Sales and services under managed customer loyalty programme 23,496,510 44,122,824 - - Mail order 197,375 386,987 - -

23,725,890 46,144,411 1,112,005 3,014,877

Revenue of the subsidiaries represents the invoiced value of goods sold and services rendered in relation to providing end-to-end customer loyalty management solutions services to the operators of the loyalty programmes and servicing the members of respective loyalty programmes. The services rendered include marketing, procurement, warehousing, distribution and other support services.



27. COST OF SALES AND SERVICES


Cost of inventories sold 11,704,181 27,931,267 - - Amortisation of intangible assets (Note 8) 421,163 615,550 421,163 615,550 Depreciation of computer hardware and software 516,394 706,634 516,394 706,634 Other direct costs 6,840,515 11,952,695 11,558 107,571

19,482,253 41,206,146 949,115 1,429,755

28. OTHER INCOME


Interest income on short term deposits 539,165 486,451 312,842 154,444 Commission income - 9,411 - - Gain on foreign exchange - 209,585 - - Gain on disposal of property, plant and equipment 1,673,898 3,047 - - Investment income- dividend income 177,466 81,089 - - Others 365,658 195,946 - -

2,756,187 985,529 312,842 154,444



29. PROFIT/(LOSS) BEFORE TAXATION


This is arrived at after charging/ (crediting):-

Allowance for obsolete and slow-moving inventories - 307,474 - - Amortisation of intangible assets - development expenditure 421,163 615,550 421,163 615,550 Auditors’ remuneration • Statutory audit 68,974 63,548 34,600 23,000 - underprovision in prior year 7,500 500 - - Allowance for impairment in value in respect of:-- investment in subsidiaries - - - 1,991,629 - investment in associate - 316,673 - 240,180 Allowance for impaiment loss on trade receivables 64,150 116,338 - - Bad debts written off - 8,974 - - Inventories written off - 1,271 - - Depreciation of property, plant and equipment 1,036,019 1,308,889 590,060 775,394 (Gain)/loss on disposal of property, plant and equipment (1,673,898) (3,047) - 3,468 Loss on disposal of associate 62,865 - 62,865 - Realised loss on foreign exchange 1,360 29,039 - 340 Realised gain on foreign exchange - (209,585) - - Net loss due to fire:-(i) Property, plant and equipment - reduction in net loss - (752,773) - - (ii) Inventories - reduction in net loss - (1,177,566) - - Interest expense on hire purchase 2,086 7,375 2,086 3,787 Property, plant and equipment written off 142,392 484,845 99,679 44,590 Rental of warehouse and office premises 196,476 590,435 - 40,877 Research and development expenses - 80,301 - 80,301 Unrealised loss on foreign exchange 79,038 6,536 - - Write back of allowance for obsolete inventories (307,474) - - - Reversal of impairment loss on trade receivables (75,617) - - - Reversal of allowance for impairment loss for amount due from subsidiaries - - (5,000,000) -



30. DIRECTORS’ REMUNERATION


Directors of the CompanyExecutiveSalaries and allowances 236,559 569,280 215,839 84,000 Bonus 6,000 46,320 6,000 6,000 Contributions to EPF 6,480 43,078 6,480 - Fees 9,781 40,000 9,781 30,000

258,820 698,678 238,100 120,000 Non-ExecutiveFees 57,534 90,000 57,534 80,000 Allowance 31,000 7,000 31,000 7,000

347,354 795,678 326,634 207,000

Directors of subsidiariesExecutiveSalaries and allowances 244,849 92,909 - 1,419 Bonus - 21,730 - - Contributions to EPF 12,483 11,868 - - Fees - 20,000 - - SOCSO and other benefits - 620 - -

257,332 147,127 - 1,419

Total 604,686 942,805 326,634 208,419

Directors’ remuneration are included in the statement of comprehensive income as follows:-

Administrative expenses 604,686 942,805 326,634 208,419

Analysed as:Fees- directors of the Company 67,315 130,000 67,315 110,000 - other directors - 20,000 - -

67,315 150,000 67,315 110,000 Other emoluments- directors of the Company 280,039 665,678 259,319 97,000 - other directors 257,332 127,127 - 1,419

537,371 792,805 259,319 98,419

604,686 942,805 326,634 208,419



31. EMPLOYEE BENEFITS EXPENSES


Salaries, allowances and bonus 2,324,627 4,857,772 294,146 699,165 Commission 75,245 130,664 - - SOCSO and other short term benefits 242,068 257,326 15,298 15,746

2,641,940 5,245,762 309,444 714,911 Defined contribution plans- Employees Provident Fund 206,983 337,798 25,137 32,674 - Central Provident Fund 18,349 85,741 - -

2,867,272 5,669,301 334,581 747,585

Staff costs are taken up as follows:Intangible assets - development expenditure capitalised - 115,515 - 115,515 Cost of sales and services 105,881 153,724 105,881 153,724 Administrative expenses * 2,761,391 5,400,062 228,700 478,346

2,867,272 5,669,301 334,581 747,585

* This includes emoluments paid/payable to certain directors of Advance Information Marketing Berhad, Customer Loyalty Solutions Sdn. Bhd. and Advanced Supply Chain Solutions Sdn. Bhd. as follows:


Salaries, allowances and bonus 809,154 730,239 769,154 91,419 SOCSO and other short term benefits 31,155 620 31,155 -

840,309 730,859 800,309 91,419 Defined contribution plans- Employees Provident Fund 6,480 11,868 6,480 - - Central Provident Fund 12,333 43,078 - -

859,122 785,805 806,789 91,419



32. TAXATION


Current tax:

Current year - Malaysia 136,928 142,993 758 20,995 - Foreign - 53,686 - -

Under/(over)provision in prior year - Malaysia (2,459) 44,023 (2,620) (2,940) - Foreign - (184,452) - -

Withholding tax over provision in prior years in Singapore (19,507) - - -

114,962 56,250 (1,862) 18,055

Deferred tax: (Note 9) - Malaysia - (127,559) - - - Foreign 49,372 (31,469) - -

49,372 (159,028) - -

164,334 (102,778) (1,862) 18,055

The Company was granted MSC status under the Promotion of Investments Act, 1986 (PIA 1986) whereby 100% of its statutory income is exempted from tax for the period from 30 September 2004 to 29 September 2014. Taxation of the Company is provided on interest income derived from short term deposits and dividend income.

The general income tax rate in Malaysia is 25% (2009: 25%) of taxable income. The statutory tax rate of income tax in Singapore is 17% (2009: 17%). The statutory tax rate of income tax in Indonesia is 25% (2009: 28%) based on the amount of chargeable income.



32. TAXATION (CONT’D)

A reconciliation of tax applicable to the profit/(loss) before taxation at the statutory tax rates to current year’s tax expense of the Group/Company is as follows:-


Profit/(loss) before taxation 915,265 (1,218,122) 4,264,501 (1,599,590)

Tax applicable at 25% (2009: 25%) 228,816 (304,531) 1,066,125 (399,898)

Tax effect in respect of:-Income exempted from tax - pioneer status in Malaysia - (165,110) - (165,110)Expenses not deductible for tax purposes 204,364 782,257 111,847 613,321Income not subject to tax (498,951) (881,544) (1,314,824) (20,236)Net research and development expenditure claimed in arriving at exempt income - 112,675 - 112,675 Difference in tax rates 36,370 74,088 - - Net capital allowances claimed in arriving at exempt income (50) (1,059) - - Double tax relief in Singapore - (961) - - Loss carried back - 82,960 - - Withholding tax applicable in Singapore (19,508) - - - Unutilised losses 34,879 79,084 - - Overprovision in prior years (2,459) (139,436) (2,620) (1,947)Deferred tax assets not recognised 261,556 379,549 137,610 - Deferred tax liabilities not recognised (80,684) (120,750) - (120,750)

164,333 (102,778) (1,862) 18,055

33. EARNINGS/(LOSS) PER ORDINARY SHARE


Earnings/(loss) per ordinary share of RM0.10 each attributable to the owners of the Company is calculated as follows:-

Basic:-Net profit/(loss) for the year attributable to owners of the Company 837,172 (1,315,099)

Weighted average number of ordinary shares in issue 192,916,914 187,168,800

Basic earnings/(loss) per share 0.43 sen (0.70) sen



33. EARNINGS/(LOSS) PER ORDINARY SHARE (CONT’D)


Fully diluted:-Net profit/(loss) for the year attributable to owners of the Company 837,172 (1,315,099)

Weighted average number of ordinary shares in issue 192,916,914 187,168,800

Weighted average number of ordinary shares used to compute diluted earnings per share 192,916,914 187,168,800

Fully diluted earnings/(loss) per share 0.43 sen (0.70) sen

There are no dilutive effect of share options as there were no outstanding option in issue as at the end of the financial year.

34. DIVIDENDS

The directors do not recommend the payment of final dividend in respect of the year ended 31 December 2010 (2009 : Nil).

35. RELATED PARTY TRANSACTIONS

Parties are considered to be related if one party has the ability to control the other party or exercise significant influence over the other party or when both parties are under the common control of another party.

Related party relationships exist between the Group/Company and the following entities:-

(a) CG Assets Pte. Ltd. (“CGAS”) being the substantial shareholder with direct interest of 43% in the Company;

(b) Subsidiary companies as disclosed in Note 5;

(c) Electronic Commerce Technology Sdn. Bhd. (“ECT”) being a company in which certain directors of the Company have substantial indirect interest, the directors have resigned from the Company during the current financial year;

(d) Customer Loyalty Solutions Pte. Ltd. (“CLSPL”) being company in which certain directors of the Company have substantial indirect interest, the directors have resigned from the Company during the current financial year.

(e) Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the Group and the Company either directly or indirectly. The key management personnel are the directors of the Company and their remunerations are disclosed in Note 30. The year-end outstanding balance in relation to key management personnel compensation included under other payables is RM67,315 (2009 : RM110,000).



35. RELATED PARTY TRANSACTIONS (CONT’D)

Other than those disclosed elsewhere in these financial statements, the transactions carried out with related parties during the year are as follows:-


RevenueInfrastructure set-up, software licensing and system maintenance feesCustomer Loyalty Solutions Sdn. Bhd. - - 900,000 1,200,505 ECT - 247,000 - 247,000 Advanced Supply Chain Solutions Sdn. Bhd. - - 180,000 180,000

Sales of merchandiseCLS PL - 9,984 - - ECT - 440,995 - -

Procurement and fulfilment services fees including handling and related chargesECT - 129,029 - -

Management fee CLS PL - 131,760 - -

36. SEGMENT ANALYSIS

Segment revenue and expenses are those directly attributable to the segments and include any joint revenue and expenses where a reasonable basis of allocation exists. Segment revenue does not include dividend and interest income unless the segment’s operations are primarily of a financial nature.

Segment assets include all assets used by a segment and consist principally of cash, receivables, inventories and property, plant and equipment (net of allowances, accumulated depreciation and amortisation). Most segment assets can be directly attributed to the segments on a reasonable basis. Segment assets and liabilities do not include income tax assets and liabilities respectively.

(a) Primary reporting format - Business segments

The Group operates in three main business segments:

(i) Information technology - provision of information technology licensing - provision of data management

(ii) Managed customer loyalty services - sales and marketing services - client relationship management - outsourced contact centre management

(iii) Mail order - outsourced procurement and fulfilment services through mail order programmes



36. SEGMENT ANALYSIS (CONT’D)

These business segments are managed by segment managers who report directly to the Group’s executive director.

Primary reporting format - Business segments

Managed Customer Information Loyalty Technology Services Mail Order Elimination Consolidated RM RM RM RM RM 2010

Segment RevenueTotal revenue 1,112,005 30,275,107 197,375 - 31,584,487 Inter-segment revenue (1,080,000) (6,778,597) - - (7,858,597)

External revenue 32,005 23,496,510 197,375 - 23,725,890

Segment Results 4,266,587 1,111,600 - (5,000,000) 378,186 Interest income 312,842 226,323 - - 539,165 Finance costs (2,086) - - - (2,086)Taxation 1,862 (162,471) - - (164,333)

Profit after taxation 750,932

Segment Assets 35,547,277 18,471,065 - (10,702,956) 43,315,386 Tax recoverable 95,462 965,490 - - 1,060,952 Deferred tax assets - 64,162 - - 64,162

Total assets 44,440,500

Segment Liabilities 176,959 24,414,464 - (10,702,956) 13,888,467 Tax payable - 27,398 - - 27,398 Deferred tax liabilities - - - - -

Total liabilities 13,915,865

Other InformationCapital expenditure 920,000 335,531 - - 1,255,531 Depreciation 590,060 445,959 - - 1,036,019 Amortisation 421,163 - - - 421,163




Managed Customer Information Loyalty Technology Services Mail Order Elimination Consolidated RM RM RM RM RM 2009

Segment RevenueTotal revenue 3,014,877 44,122,823 386,987 - 47,524,687 Inter-segment revenue (1,380,276) - - - (1,380,276)

External revenue 1,634,601 44,122,823 386,987 - 46,144,411

Segment Results (1,750,247) (91,235) 144,284 - (1,697,198)Interest income 154,444 332,007 - - 486,451 Finance costs (3,787) (3,588) - - (7,375)Taxation (18,053) 120,831 - - 102,778

Loss after taxation (1,115,344)

Segment Assets 27,151,564 45,348,809 178 (24,278,044) 48,222,507 Tax recoverable 76,247 1,118,909 - - 1,195,156 Deferred tax asset - 98,719 - - 98,719

Total assets 49,516,382

Segment Liabilities 1,691,855 38,167,496 - (24,278,044) 15,581,307 Tax payable - - - - - Deferred tax liabilities - - - - -

Total liabilities 15,581,307

Other Information:Capital expenditure 548,754 2,457,313 - - 3,006,067 Depreciation 775,394 528,455 5,040 - 1,308,889 Amortisation 615,550 - - - 615,550




(b) Geographical information

The Group operates in three main geographical areas with Malaysia being the Company’s home country:-

(i) Malaysia - provision of information technology licensing and data management - managed customer loyalty services - mail order programmes

(ii) Singapore - managed customer loyalty services - outsourced procurement and fulfilment services - mail order programmes

(iii) Indonesia - managed customer loyalty and related services

Revenue and non-current assets information based on the geographical location of customers and non-current assets are based as follows:-

Non-current 2010 Revenue assets RM RM

Malaysia 18,210,235 3,762,233Singapore 316,049 - Indonesia 5,199,606 571,392

23,725,890 4,333,625

Non-current 2009 Revenue assets RM RM

Malaysia 41,224,526 8,956,399Singapore 760,826 14,193Indonesia 4,159,059 594,820

46,144,411 9,565,412

The non-current assets do not include financial instruments and deferred tax assets.

(c) Major Customers

Revenue from transactions with major customers who individually accounted for 10 percent or more of Group’s revenue are summarised below:-

Revenue Segment 2010 2009 RM RM

Customer A 8,361,250 8,387,141 Managed customer Customer B 5,559,563 9,846,524 loyalty services



37. FINANCIAL INSTRUMENTS

A financial instrument is any contract that gives rise to both a financial asset of one enterprise and a financial liability or equity instrument of another enterprise.

Financial assets of the Group include deposits, cash and bank balances, trade and other receivables and other investments.

Financial liabilities of the Group include trade and other payables and hire purchase payable.

In respect of the Company, financial assets also include amount due from subsidiaries.

Certain comparative figures have not been presented by virtue of the exemption given in paragraph 44AA of FRS 7.

(a) Categories of Financial Instruments

Financial assets per statement of financial position

Available- Loans for-sale Carrying and financial 2010 amount receivables assets RM RM RM

GROUP

Other investments 3,567,431 - 3,567,431 Trade receivables 5,028,851 5,028,851 - Other receivables and deposits 154,361 154,361 - Short term deposits 13,964,993 13,964,993 - Cash and bank balances 10,272,831 10,272,831 -

32,988,467 29,421,036 3,567,431

COMPANY

Trade receivables 11,000 11,000 - Other receivables and deposits 69,975 69,975 - Amount due from subsidiaries 6,956,261 6,956,261 - Short term deposits 13,214,136 13,214,136 - Cash and bank balances 9,108,086 9,108,086 -

29,359,458 29,359,458 -



37. FINANCIAL INSTRUMENTS (CONT’D)

(a) Categories of Financial Instruments (Cont’d)

Financial liabilities as per statement of financial position

Other financial liabilities measured at Carrying amortised 2010 amount cost RM RM

GROUP

Trade payables 12,270,298 12,270,298Other payables 1,596,908 1,596,908Hire purchase payable 21,261 21,261

13,888,467 13,888,467

COMPANY

Trade payables 11,723 11,723 Other payables 143,975 143,975 Hire purchase payable 21,261 21,261

176,959 176,959

(b) Financial Risk Management Objectives and Policies

The Group’s financial instruments are subject to a variety of financial risks including credit risk, liquidity and cash flow risks and market risk.

The Group’s overall financial risk management objective is to seek to address and control the risks to which the Group is exposed and to minimise or avoid the incidence of loss that may result from its exposure to such risks and to enhance returns where appropriate.

The Board is primarily responsible for the management of these risks and to formulate policies and procedures for the management thereof. The risks are managed by regular risk reviews, internal control systems, on-going formulation and adherence to financial risk policies and mitigated by insurance coverage where appropriate.

(i) Credit Risk

The credit risk is controlled by the application of credit approvals, limits and monitoring procedures. The carrying amount of trade and other receivables represent the Group maximum exposure to credit risk. The Group has no significant concentrate of credit risk with any single counterparty.




(b) Financial Risk Management Objectives and Policies (Cont’d)

(ii) Liquidity risk and cash flow risk

Liquidity or funding risk is the risk of the inability to meet commitments associated with financial instruments while cash flow risk is the risk of uncertainty of future cash flow amount associated with a monetary financial instrument.

The Group monitors its cash flows actively and maintains sufficient levels of cash and cash equivalents to meet its obligations as and when they fall due.

Maturity analysis

The maturity profile of the Group’s and the Company’s financial liabilities as at the end of the reporting period based on undiscounted contractual payments are as follows:-

Maturity Profile More than Effective 1 year and interest Less than less than More than rate 1 year 5 years 5 years Total % RM RM RM RM

GROUP

2010Trade payables 12,270,298 - - 12,270,298 Other payables 1,596,908 - - 1,596,908 Hire purchase payable 5.73 21,261 - - 21,261

2009Trade payables 13,594,499 - - 13,594,499 Other payables 1,741,550 - - 1,741,550 Hire purchase payable 5.73 30,161 18,493 - 48,654

COMPANY

2010Trade payables 11,723 - - 11,723 Other payables 143,975 - - 143,975 Hire purchase payable 5.73 21,261 - - 21,261

2009Trade payables 21,722 - - 21,722 Other payables 198,099 - - 198,099 Hire purchase payable 5.73 30,161 18,493 - 48,654



37. FINANCIAL INSTRUMENTS (CONT'D)

(b) Financial Risk Management Objectives and Policies (Cont'd)

(iii) Foreign currency risk

The Group undertakes certain transactions in foreign currencies where the amounts outstanding are exposed to foreign currency risk. The Group monitors its foreign exchange exposure closely. The carrying amounts of the Group’s and Company’s foreign currency denominated monetary assets at the reporting date are as disclosed in Note 11 for trade receivables and Note 16 for cash and bank balances.

Sensitivity analysis for foreign currency risk

The Group is mainly exposed to the currency of Indonesia Rupiah, United States Dollar and Singapore Dollar. The following table details the Group’s sensitivity to a 10% increase and decrease in the RM against the relevant foreign currency. 10% is the sensitivity rate used when reporting foreign currency risk internally to key management personnel and represents Management's assessment of the reasonably possible change in foreign exchange rates. The sensitivity analysis includes only outstanding foreign currency and denominated monetary items and adjusts their translation at the period end for a 10% change in foreign currency rates. A positive number below indicates an increase in profit and other equity where the RM weakens 10% against the relevant currency. For a 10% strengthening of the RM against the relevant currency, there would be a comparable impact on the profit and other equity, and the balances below would be negative.

Group Carrying Foreign Currency Risk Year ended 31 December 2010 amount +10% -10% RM RM RM

Indonesia Rupiah ImpactFinancial Assets

Trade & other receivables 396,795 (39,680) 39,680 Cash and bank balances 207,544 (20,754) 20,754 Fixed deposits with licensed financial institutions 251,600 (25,160) 25,160

Singapore Dollar ImpactFinancial Assets

Other investment 3,567,431 (356,743) 356,743 Fixed deposits with licensed financial institutions 262,449 (26,245) 26,245 Cash and bank balance 431,724 (43,172) 43,172

United States Dollar ImpactFinancial Assets

Cash and bank balance 153,147 (15,315) 15,315

Total (decrease)/increase (527,069) 527,069




(b) Financial Risk Management Objectives and Policies (Cont’d)

(iv) Interest rate risk

The Group is exposed to interest rate risk through the impact of rate changes on short-term investments and fixed deposits with licensed financial institutions. The interest rates of the Group’s short term investments and fixed deposits are disclosed in Note 15.

Interest rate risk sensitivity analysis

The sensitivity analysis below have been determined based on the exposure to interest rates for interest bearing short-term investment and fixed deposits with licensed financial institutions at the end of the reporting period. A 50 basis points increase or decrease is used when reporting interest rate risk internally to key management personnel and represents Management’s assessment of the reasonably possible change in interest rates. If interest rates had been 50 basis points higher/lower and all other variables were held constant, the Group’s profit for the year ended 31 December 2010 would increase/decrease by RM93,281. This is mainly attributable to the Group’s exposure to interest rates on its interest rates for interest bearing short-term investment and fixed deposits with licensed financial institutions.

(v) Price risk

The Group available-for-sales investments are subject to market price fluctuation as investment are measured and recognised as available-for-sale.

The Group does not engage in speculative trading in respect of its equity instruments.

Equity price risk sensitivity analysis

A 10% strengthening or weakening in the prices of equity instruments at the end of the reporting period would have increased or decreased equity by amount shown below. This analysis assumes that all other variables remain constant. Group 2010 Equity RM

Available-for-sale financial assets 667,332

(c) Fair value of financial instruments

(i) The fair value of quoted investments is determined by reference to their market bid price at the end of the reporting period.

(ii) The carrying amount of hire purchase payable approximates its fair value.

(iii) The carrying amounts of deposits, cash and bank balances, receivables and payables approximate their fair values due to the relatively short-term nature of these financial instruments.



38. CAPITAL MANAGEMENT

The Group’s objectives when managing capital is to maintain a strong capital base and safeguard the Group’s ability to continue as a going concern, so as to maintain investor, creditor and market confidence and to sustain future development of the business.

The Group manages its capital structure and makes adjustments to it, in light of changes in economic conditions. To maintain or adjust the capital structure, the Group may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares.

The Directors monitor the Group’s debt-to-equity ratio and strive to maintain a ratio of below 0.5. As at the end of the reporting period, the Group has excess cash and cash equivalents over its debts.

The Group has complied with the requirement of Guidance Note 3 issued by Bursa Malaysia Securities Berhad whereby the Group is required to maintain a consolidated shareholders’ equity equal to or not less than 25% of its issued and paid-up capital (excluding treasury shares).

No significant changes were made in the objectives, policies or processes in regards to the Group’s management of its capital structure during the years ended 31 December 2010 and 31 December 2009.

39. SIGNIFICANT EVENTS

The wholly owned subsidiary of the Company, Customer Loyalty Solutions Sdn Bhd (“CLS”), has on 10 February 2011, been served with a Writ of Summons and Statement of Claim from AmBank (M) Berhad (“the plaintiff”), praying for the following reliefs:

(1) A declaration that a sum of monies held in an AmInvestment account by CLS forms part of unutilized funds under the Service Level Agreement dated 11 April 2005 and is held under trust for AmBank for the AmBonus Program;

(2) A mandatory injunction against CLS to return the sum of RM7,316,667 in the AmInvestment account should the monies been disbursed;

(3) An injunction to prevent disbursement of the monies in the AmInvestment account;

(4) A mandatory injunction for the return of the sum of RM4,090,389 which represents 40% of the net operating funds pursuant to the Service Level Agreement;

(5) Interest, cost and any other reliefs the Honourable Court deems fit.

The Board has appointed legal counsel to defend the matter and the legal counsel has advised that CLS has a viable defence against the suit and CLS has counter-claimed against the plaintiff in the suit.

The plaintiff has served an official notification pursuant to clause 3.2 of the Service Level Agreement dated 11 April 2005, of their intention not to renew the same upon its expiry on 11 May 2011.

Upon hearing of the inter-partes of the said Summons in Chambers on 19 April 2011, CLS was injuncted from dealing on its own and/or through its officers and/or its staff and/or its bankers and/or through anyone else to withdraw any monies from the balance sum in the said AmInvestment account pending the disposal of the Writ of Summons at the High Court.

The High Court of Malaya has fixed 7 July 2011 for further case management and further fixed 22 to 25 August 2011 for full trial of the above matter.

The Board is of the opinion that the outcome of the suit will not have any material impact to the Group.



40. SUPPLEMENTARY INFORMATION DISCLOSED PURSUANT TO BURSA MALAYSIA SECURITIES BERHAD’S LISTING REQUIREMENTS

Realised and Unrealised Profits/(Loss)

The breakdown of retained profits of the Group and the Company as at 31 December 2010, into realised and unrealised profits/(loss), pursuant to the directive issued by Bursa Malaysia Securities Berhad dated 25 March 2010, is as follows:-

2010 Group Company RM RM

Total retained profits of Advance Information Marketing Berhad and its subsidiaries :

- Realised 10,161,473 14,221,263 - Unrealised (14,876) -

10,146,597 14,221,263 Less : Consolidation adjustments (875,547) -

Retained profits as per financial statements 9,271,050 14,221,263

The determination of realised and unrealised profits/(loss) is based on the Guidance of Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosures Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, issued by the Malaysian Institute of Accountants.


Statement By Directors

Statutory Declaration

We, DATO’ NIK ISMAIL BIN DATO’ NIK YUSOFF and TAN CHIN YEN, being two of the directors of ADVANCE INFORMATION MARKETING BERHAD, state that in the opinion of the directors, the financial statements set out on pages 28 to 91 are drawn up in accordance with the Financial Reporting Standards and the provisions of the Companies Act, 1965 in Malaysia so as to give a true and fair view of the state of affairs of the Group and of the Company as at 31 December 2010 and of their results and cash flows for the year ended on that date.

Signed in accordance with a resolution of the Board of Directors,

DATO’ NIK ISMAIL BIN DATO’ NIK YUSOFF

TAN CHIN YEN


I,TAN CHIN YEN, the director primarily responsible for the financial management of ADVANCE INFORMATION MARKETING BERHAD, do solemnly and sincerely declare that the financial statements set out on pages 28 to 91 are in my opinion 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, 1960. Subscribed and solemnly declared by ) the abovenamed TAN CHIN YEN at )Kuala Lumpur in Wilayah Persekutuan )on 28 April 2011 ) TAN CHIN YEN

Before me,


Independent Auditors’ ReportTo The Members Of Advance Information Marketing Berhad(Company No. 644769-D)

REPORT ON THE FINANCIAL STATEMENTS

We have audited the financial statements of ADVANCE INFORMATION MARKETING BERHAD, which comprise the statements of financial position as at 31 December 2010 of the Group and of the Company, and the statements of comprehensive income, statements of changes in equity and statements of cash flows of the Group and of the Company for the year then ended, and a summary of significant accounting policies and other explanatory information, as set out on pages 28 to 90.

Directors’ Responsibility for the Financial Statements

The directors of the Company are responsible for the preparation of financial statements that give a true and fair view in accordance with Financial Reporting Standards and the Companies Act 1965, in Malaysia, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with approved standards on auditing in Malaysia. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on our judgement, including the assessment of risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity’s preparation of financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the financial statements have been properly drawn up in accordance with Financial Reporting Standards and the Companies Act, 1965 in Malaysia so as to give a true and fair view of the financial position of the Group and of Company as at 31 December 2010 and of their financial performance and cash flows for the year then ended.

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

In accordance with the requirements of the Companies Act, 1965 in Malaysia, we also report the following:-

a) In our opinion, the accounting and other records and the registers required by the Act 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 Act.

b) We have considered the financial statements and the auditors’ reports of the subsidiaries of which we have not acted as auditors, which are indicated in Note 5 to the financial statements.


REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS (CONT’D)

c) 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 financial statements of the Group and we have received satisfactory information and explanations required by us for those purposes.

d) The audit reports on the financial statements of the subsidiaries did not contain any qualification or any adverse comment made under Section 174(3) of the Act.

OTHER REPORTING RESPONSIBILITIES

The supplementary information set out in Note 40 on page 91 is disclosed to meet the requirement of Bursa Malaysia Securities Berhad. The directors are responsible for the preparation of the supplementary information in accordance with Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants (“MIA Guidance”) and the directive of Bursa Malaysia Securities Berhad. In our opinion, the supplementary information is prepared, in all material respects, in accordance with the MIA Guidance and the directive of Bursa Malaysia Securities Berhad.

OTHER MATTERS

This report is made solely to the members of the Company, as a body, in accordance with Section 174 of the Companies Act, 1965 in Malaysia and for no other purpose. We do not assume responsibility to any other person for the content of this report.

AZMAN, wONG, SALLEH & COAF: 0012Chartered Accountants

KHOO PEK LING900/03/12(J/PH) Chartered Accountant


Independent Auditors’ Report (Cont’d)To The Members Of Advance Information Marketing Berhad(Company No. 644769-D)


The summary of the information on landed properties owned by our Group is as follows:-

Postal Address Description of Property/Existing Use

Status/ Registered

Owner

Audited Net Book Value

as at 31 December

2010(RM)

Approximate age of Building (Years)/CF Status

Tenure/ Expiry Date

of Lease

Approximate Land Area/ Approximate Total Built-up Area (Sq metre)

No. 158-2-2, Villa Flora, Jalan Burhanuddin Helmi, Taman Tun Dr. Ismail, 60000 Kuala Lumpur

Condo Owned / CLS

423,589 12 Issued with CF on 22 Feb 1999

Freehold Land Area 127 sq meter

Built up127 sq meter

Unit No. P-2-K, Storey No.2, Block C, Mawar Apartment, Mukim Bentong, Negeri Pahang

Apartment Owned / CLS

151,300 11 Issued with CF on 27 Jan 2000

Freehold Land Area 54.43 sq metre

Built-up 54.43 sq metre

Unit San Fransisco/28, Level 22, Jalan K.H Mas Mansyur, No. 121 Jakarta Pusat

Office lot Owned / PCS

232,958 4 Issued with CF on 22 Nov 2007

Freehold Land Area 86 sq metre

Built-up 86 sq metre

Unit Paris/30,Level 22, Jalan K.H. Mas Mansyur,No.121 Jakarta Pusat

Office lot Owned / PCS

233,706 4 Issued with CF on 22 Nov 2007

Freehold Land Area85.5 sq metre

Built-up 85.5 sq metre

Summary Of Landed Properties


Analysis Of ShareholdingsAs At 9 May 2011

Class of Equity Securities : Ordinary Shares of RM0.10 eachVoting Rights : One vote per shareholder on a show of hands or one vote per ordinary share on a poll

DISTRIBUTION SCHEDULE OF SHAREHOLDERS

No of Total Holdings Holders# Shareholdings# %#

1 to 99 102 4,615 0.002100 to 1,000 43 14,707 0.0061,001 to 10,000 287 1,647,470 0.74810,001 to 100,000 785 32,479,335 14.765100,001 to 10,998,552 (*) 282 138,446,117 62.93810,998,552 and above (**) 1 47,378,822 21.538

TOTAL 1,500 219,971,066 100.000

# Excluding 24,090,500 treasury shares.* Less than 5% of the issued shares.** 5% and above of issued shares.

SUBSTANTIAL SHAREHOLDERS

No of Ordinary Shares of RM0.10 Each Beneficially Held by the Shareholders Direct Indirect Name of Shareholders Interest %# Interest %#

CG Assets Pte Ltd 47,378,822 21.54 - -Ang Huat Keat* - - 47,378,822 21.54Ngai Yoon Fatt* - - 47,378,822 21.54

# Excluding 24,090,500 treasury shares.* Deemed interest through his shareholdings in CG Assets Pte Ltd pursuant to Section 6A(4) of the Companies Act

1965.

DIRECTORS’ SHAREHOLDINGS

Direct Indirect Name of Shareholders Interest % Interest % Dato’ Nik Ismail Bin Dato’ Nik Yusoff - - - -Tan Chin Yen - - - -Mak Siew Wei - - - -Sim Thean Wah - - - -Ong Tee Kein - - - -


Analysis Of Shareholdings (cont’d)As At 9 May 2011

30 LARGEST SECURITIES ACCOUNT HOLDERS(Without aggregating securities from different securities accounts belonging to the same person)

No Name No of Shares Held %#

1 CG Assets Pte Ltd 47,378,822 21.54

2 Amsec Nominees (Tempatan) Sdn Bhd Pledged Securities Account for Hon Pansy 4,542,666 2.07

3 Ham E Ven 4,280,000 1.95

4 HLG Nominee (Tempatan) Sdn Bhd Pledged Securities Account for Tan Kim Seong 4,000,000 1.82

5 Pacific & Orient Insurance Co Berhad 4,000,000 1.82

6 Malaysia Nominees (Tempatan) Sendirian Berhad Great Eastern Life Assurance (Malaysia) Berhad 3,381,866 1.54

7 Citigroup Nominees (Tempatan) Sdn Bhd Exempt AN for OCBC Securities Private Limited 3,333,333 1.52

8 Amsec Nominees (Tempatan) Sdn Bhd Pledged Securities Account for Hon Pansy 3,317,106 1.51

9 Foo Huay Nee 3,000,000 1.36

10 Lau Poh Yee 3,000,000 1.36

11 Chong Fut Ling 2,800,000 1.27

12 Tan Kiang Liong 2,580,333 1.17

13 Chung Shan Hui 2,320,000 1.05

14 Wong Paik Hea 2,193,000 1.00

15 Chew Yoke Peng 2,167,700 0.99

16 RHB Capital Nominees (Tempatan) Sdn Bhd Pledged Securities Account for Liew Lee Chin 2,117,333 0.96

17 Lau Shuet Yee 2,000,000 0.91

18 Tan Lay Peng 2,000,000 0.91

19 Chin Sin Yean 1,933,333 0.88

20 HDM Nominees (Tempatan) Sdn Bhd Pledged Securities Account for Goh Bon Kian 1,817,333 0.83

21 RHB Capital Nominees (Tempatan) Sdn Bhd Pledged Securities Account for Foong Cheng Keat 1,700,033 0.72

22 Alliancegroup Nominees (Tempatan) Sdn Bhd Pledged Securities Account for Chai Hon Wai 1,600,000 0.73

23 Mayban Nominees (Tempatan) Sdn Bhd Pledged Securities Account for Foong Chee Peng 1,575,800 0.72

24 Public Nominees (Tempatan) Sdn Bhd Pledged Securities Account for Low Chiew Khuan 1,480,000 0.67

25 Jonelle Huang Yyih Yun 1,437,333 0.65

26 BHLB Trustee Berhad Exempt AN for EPF Investment for Member Savings Scheme 1,429,667 0.65

27 Tan Ho Boon 1,386,666 0.63

28 Amsec Nominees (Tempatan) Sdn Bhd Pledged Securities Account for Tan Peng Nguang 1,300,000 0.59

29 Wong Swee Ying 1,066,666 0.48

30 Chan Ting Chu 1,000,000 0.45

# Excluding 24,090,500 treasury shares.


Notice Of Annual General Meeting

NOTICE IS HEREBY GIVEN that the 7th Annual General Meeting (“AGM”) of ADVANCE INFORMATION MARKETING BERHAD will be held at Crown 1, Level 1, Crystal Crown Hotel, Kuala Lumpur, No. 3, Jalan Jambu Mawar, Off Jalan Kepong, 52000 Kuala Lumpur on Monday, 27 June 2011 at 10.00 a.m. for the following purposes:-

AGENDA

ORDINARY BUSINESS 1. To receive the Audited Financial Statements for the year ended 31 December 2010 together with

the Reports of the Directors and Auditors thereon. 2. To approve the payment of Directors’ Fees for the financial year ended 31 December 2010.

3. To approve the payment of Directors’ Fees of RM100,000 for the financial year ending 31 December 2011.

4. To re-elect the following Directors who shall retire in accordance with the Article 89 of the Company’s Articles of Association and who being eligible, offer themselves for re-election:-

(i) Dato’ Nik Ismail Bin Dato’ Nik Yusoff (ii) Mak Siew Wei (iii) Sim Thean Wah (iv) Ong Tee Kein 5. To appoint the Auditors of the Company and to authorise the Directors to fix their remuneration.

Notice of Nomination pursuant to Section 172(11) of the Companies Act, 1965, a copy of which is annexed hereto and marked “Annexure A” have been received by the Company for the nomination of Folks DFK & Co., for appointment as Auditors and of the intention to propose the following ordinary resolution:- “THAT, subject to their consent to act, Folks DFK & Co. be appointed as Auditors of the Company in place of Messrs Azman, Wong, Salleh & Co. and to hold office until the conclusion of the next annual general meeting AND THAT the Directors be authorized to determine their remuneration.”

AS SPECIAL BUSINESS

To consider and, if thought fit, to pass the following resolutions, with or without modifications, as Ordinary Resolutions:-

6. ORDINARY RESOLUTION I

Authority to Allot and Issue Shares Pursuant to Section 132D of the Companies Act, 1965

“THAT pursuant to Section 132D of the Companies Act, 1965, the Directors be and are hereby empowered 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 that the aggregate number of shares to be issued pursuant to this resolution does not exceed 10% of the issued share capital of the Company at the time of issue 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 Bursa Malaysia Securities Berhad (“Bursa Securities”) AND THAT such authority shall continue to be in force until the conclusion of the next Annual General Meeting of the Company, subject always to the Companies Act, 1965, the Articles of Association of the Company and approval from Bursa Securities and other relevant regulatory bodies where such approval is necessary.”

(Please refer to Note A below)

Resolution 1

Resolution 2

Resolution 3Resolution 4Resolution 5Resolution 6

Resolution 7

Resolution 8


Notice Of Annual General Meeting (cont’d)

7. ORDINARY RESOLUTION II

Proposed Renewal Of Share Buy-Back Authority

“THAT, subject to the provisions of the Companies Act, 1965 (“Act”), the Memorandum and Articles of Association of the Company and the ACE Market Listing Requirements of Bursa Malaysia Securities Berhad (“Bursa Securities”), approval be and is hereby given to the Company to allocate funds not exceeding, at the time of purchase(s), the total retained earnings and share premium reserves of the Company to purchase up to ten percent (10%) of the issued and paid-up ordinary share capital of the Company (“Proposed Share Buy-Back”) as may be determined by the Directors of the Company from time to time through Bursa Securities, upon such terms and conditions as the Directors may deem fit and expedient in the interest of the Company; AND THAT authority be and is hereby given to the Directors of the Company to decide in their absolute discretion to retain the ordinary shares of RM0.10 each in the Company so purchased by the Company as treasury shares and/ or cancel them and/ or resell the treasury shares and/ or to distribute them as share dividends and/ or subsequently cancel them; AND THAT the Directors of the Company be and are hereby empowered generally to do all acts and things to give effect to the Proposed Share Buy-Back with full powers to assent to any condition, modification, revaluation, variation and / or amendment (if any) as may be imposed by the relevant authorities and / or do all such acts and things as the Directors may deem fit and expedient in the best interest of the Company; AND THAT such authority shall commence immediately upon passing of this resolution until:- (a) the conclusion of the next AGM of the Company following the general meeting at which

the ordinary resolution for the Proposed Share Buy-Back was passed, at which time it shall lapse unless by ordinary resolution passed at that meeting, the authority is renewed, either unconditionally or subject to conditions; or

(b) the expiration of the period within which the next AGM after that date is required by law to be

held; or (c) revoked or varied by ordinary resolution of the shareholders of the Company in general

meeting, whichever occurs first.” 8. To transact any other business for which due notice shall have been given.

By Order of the BoardKUAN HUI FANG (MIA 16876)TAN AI PENG (MAICSA 7018419)Company SecretariesKuala Lumpur

3 June 2011

Resolution 9


Notice Of Annual General Meeting (cont’d)

Notes:-1. A member of the Company entitled to attend and vote at this meeting is entitled to appoint a proxy to attend and vote

in his stead. A proxy may but need not be a member of the Company and the provision of Section 149(1)(b) of the Companies Act, 1965, shall not apply to the Company. If a member appoints two (2) or more proxies, 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 authorized nominee as defined under the Securities Industry (Central Depository) Act 1991, such member 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 and signed under the hand of the appointor or if the member is a corporation, either under seal or under the hand of an officer or attorney duly authorized.

4. The instrument appointing a proxy or a power of attorney must be deposited at the Registered Office of the Company at Level 18, The Gardens North Tower, Mid Valley City, Lingkaran Syed Putra, 59200 Kuala Lumpur not less than forty eight (48) hours before the time appointed for holding the meeting.

Note AThe Item no. 1 of the Agenda is meant for discussion only as the provision of Section 169(1) of the Companies Act, 1965 does not require a formal approval of the shareholders and hence is not put forward for voting.

Explanatory Notes to Special Business

Resolution 8Ordinary Resolution I – Authority to Allot and Issue Shares

This proposed Resolution is proposed pursuant to Section 132D of the Companies Act, 1965, and if passed, will give the Directors of the Company, from the date of the above AGM, authority to issue and allot shares in the Company up to and not exceeding in total ten per cent (10%) of the issued and paid-up share capital of the Company for such purposes as the Directors deem fit and in the best interest of the Company. This authority, unless revoked or varied at a general meeting, will expire at the conclusion of the next AGM of the Company.

This proposed Resolution is a renewal of the previous year’s mandate. The renewal of the general mandate is to provide flexibility to the Company to issue new securities without the need to convene separate general meeting to obtain its shareholders’ approval so as to avoid incurring additional cost and time. The purpose of this general mandate is for possible fund raising exercise including but not limited to further placement of shares for purpose of funding current and/or future investment projects, working capital, repayment of bank borrowings, acquisitions and/or for issuance of shares as settlement of purchase consideration or such other application as the Directors may deem fit in the best interest of the Company.

As at the date of this Notice, no new shares in the Company were issued pursuant to the mandate granted to the Directors at the last AGM held on 25 June 2010 and will lapse at the conclusion of the 7th AGM.

Resolution 9Ordinary Resolution II – Proposed Renewal of Share Buy-Back Authority

This proposed resolution, if passed, will give the Directors of the Company authority to purchase its own shares up to ten percent (10%) of its issued and paid-up share capital. This authority, unless revoked or varied by the shareholders of the Company in general meeting, will expire at the conclusion of the next Annual General Meeting.

Annexure A


This page has been intentionally left blank.

Form of Proxy

ADVANCE INFORMATION MARKETING BERHAD (644769-D)(Incorporated in Malaysia)

No. of shares held

Full Name (in Block) NRIC/Passport No. Proportion of Shareholdings

No. of Shares %

Address

Full Name (in Block) NRIC/Passport No. Proportion of Shareholdings

No. of Shares %

Address

CDS Account No.

- -

*I/We ____________________________________________________________________ Tel: _____________________________ [Full name in block, NRIC/Company No.]

of _________________________________________________________________________________________________________

___________________________________________________________________________________________________________

being member(s) of Advance Information Marketing Berhad, hereby appoint:-

*and / or (delete as appropriate)

or failing him, the Chairman of the Meeting as *my/our proxy(ies) to attend and vote for *me/us and on *my/our behalf at the 7th Annual General Meeting of the Company to be held at Crown 1, Level 1, Crystal Crown Hotel, Kuala Lumpur, No. 3, Jalan Jambu Mawar, Off Jalan Kepong, 52000 Kuala Lumpur on Monday, 27 June 2011 at 10.00 a.m. and at any adjournment thereof, and to vote as indicated below:-

Please indicate with an “X” in the space provided whether you wish your votes to be cast “for” or “against” the resolutions. In the absence of specific direction, your proxy will vote or abstain as he thinks fit.

Signed this _________ day of _________________ 2011

___________________________________________________ Signature/Common Seal of Shareholder

* Delete whichever is not applicable

Notes:i. A member of the Company entitled to attend and vote at this meeting is entitled to appoint a proxy to attend and vote in his stead. A proxy may but

need not be a member of the Company and the provision of Section 149(1)(b) of the Companies Act, 1965, shall not apply to the Company. If a member appoints two (2) or more proxies, the appointment shall be invalid unless he specifies the proportion of his shareholdings to be represented by each proxy.

ii. Where a member of the Company is an authorized nominee as defined under the Securities Industry (Central Depository) Act 1991, such member 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.

iii. The instrument appointing a proxy shall be in writing and signed under the hand of the appointor or if the member is a corporation, either under seal or under the hand of an officer or attorney duly authorized.

iv. The instrument appointing a proxy or a power of attorney must be deposited at the Registered Office of the Company at Level 18, The Gardens North Tower, Mid Valley City, Lingkaran Syed Putra, 59200 Kuala Lumpur not less than forty eight (48) hours before the time appointed for holding the meeting.

RESOLUTIONS FOR AGAINST

1 Approval of Directors’ Fees for the financial year ended 31 December 2010

2 Approval of Directors’ Fees for the financial year ending 31 December 2011

3 Re-election of Dato’ Nik Ismail Bin Dato’ Nik Yusoff as Director

4 Re-election of Mak Siew Wei as Director

5 Re-election of Sim Thean Wah as Director

6 Re-election of Ong Tee Kein as Director

7 Appointment of Folks DFK & Co as Auditors

8 Authority to Allot and Issue Shares

9 Proposed Renewal of Share Buy-Back Authority

Fold this flap for sealing

1st fold here

2nd fold here

The Company SecretaryADVANCE INFORMATION MARKETING BERHAD (644769-D)

Level 18, The Gardens North Tower,Mid Valley City,Lingkaran Syed Putra,59200 Kuala Lumpur.

Affix Stamp

ANNUAL REPORT 2010

Advance Information Marketing Berhad (644769-D)

Suite 2B-12-2Block 2, Level 12Plaza SentralJalan Stesen Sentral 5Kuala Lumpur Sentral50470 Kuala LumpurTel : 03-4043 2699Fax : 03-4043 2690Email : [email protected] : www.aim-net.com.my

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ANNUAL REPORT 2010 - aim-net.com.my · PDF file101 Annexure A Form of Proxy Contents. 2 Advance Information Marketing Berhad (644769-D) Corporate Information BOARD OF DIRECTORS