iss consulting solutions berhad (675362-P) AnnuAl RepoRt … 4 ISS coNSULTING SoLUTIoNS BerHAD (675362-P) ANNUAL rePorT 2009 THE SERVICES • SAP Consulting – Providing End-to-End

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AnnuAl RepoRtwww.iss-consulting.com

contents AnnuAl report 2009

Pg 02Corporate Profile

Pg 06 Chief Executive Officer’s Address

Pg 09 Group Financial Highlights

Pg 10 Corporate Information

Pg 11 Corporate Structure

Pg 12 Profile of Board of Directors

Pg 15 Statement on Corporate Governance

Pg 21 Statement on Internal Control

Pg 23 Audit Committee Report

Pg 27 Financial Statements

Pg 80 Analysis of Shareholdings

Pg 83 Notice of Annual General Meeting

Pg 86 Statement Accompanying the Notice of Annual General Meeting

Proxy Form

ISS CONSULTING SOLUTIONS BERHAD (675362-P)

OUR VISION• To be the Preferred and Largest SAP Solutions Provider in Asia Pacific

OUR MISSION• We will work with our Customers to improve their business

• We will provide the most comprehensive industry focused products

based on SAP software

• We will create the best place to do great work

OUR VALUES - i CAREIntegrity : We say what we do, and we do what we say

Commitment : We put in the best effort in everything we do

Accountability : We take responsibility for the outcome of our actions

REspect : We treat each other professionally

TEAMWORK MAKES THE DREAM WORK.

John C. Maxwell

”

“

2 ISS coNSULTING SoLUTIoNS BerHAD (675362-P)

ANNUAL rePorT 2009

ISS Consulting is one of the leading service providers of integrated

business solutions in the SAP environment. With its Head Office

based in Malaysia, ISS Consulting has a total staff force of close to

120 SAP consultants employed in Singapore, Thailand, Indonesia

as well as Malaysia. On the strength of a customer base of over 150

built up over the years, the Group has deployed state-of-the art SAP

solutions across various industries and spanning over the continent

of Asia.

ISS consulting offers tailored solutions and service portfolio for the entire life cycle of an IT investment. our industry competence and our SAP industry solutions make us a strategic partner of medium-sized companies. At the same time, Large enterprises rely on our subject competence of SAP’s innovative solutions, where ISS leads the path in implementing SAP’s latest products, helping customers to deploy new solutions that are launched by SAP.

THE SOLUTIONS

• SAPBUSINESSSUITE–BusinessProcessEfficiencyacrosstheEnterprise

SAP Business Suite is a modular enterprise software that supports end-to-end industry processes. Using SAP Business Suite allows a company to effectively coordinate business and IT strategies at the same time. comprehensive business process support, with industry level specifics, helps a company execute strategies that save operational costs or stimulate productivity, without the complexity of managing multiple technology platforms.

Business and IT decision makers can use SAP Business Suite applications to improve visibility into mission critical business processes – and expand and innovate without disruption through proven, built-in best practices for access to information anytime, anywhere.

Built on an open, service-oriented architecture (SoA) – and powered by the SAP NetWeaver technology platform, SAP Business Suite offers companies the opportunity to transform business processes efficiently and integrate business processes effectively.

Corporate

PROfILE


ANNUAL rePorT 2009

Corporate

profile

• ISSXPRESSSOLUTIONS–EmpoweringSmallandMedium-SizedBusinesses

ISS is a proven expert at helping companies evolve and grow, delivering the robust power of SAP in a real, sustainable way. With more than a decade of experience and trust, ISS has built up expertise in various industries, such as chemicals, pharmaceuticals, agribusiness, maritime, automotive, retail as well as manufacturing and distribution.

With this industry knowledge, ISS has developed its XPress suite of solutions based on the SAP erP platform. These products incorporate SAP’s state of-the-art functionality, Best Industry Practices, ISS industry experience, and a proven implementation methodology to deliver affordable pre-configured and industry specific solutions for the mid-market segment. Today, we have developed and commercialized solutions, such as:

With speed in implementation, ISS XPress Solutions allows companies to streamline their business processes, improve operational efficiency and gain visibility across the entire enterprise, within weeks instead of months.

• BUSINESSINTELLIGENCE–VisualizingBusinessInformation

SAP Businessobjects offers a broad portfolio of tools and applications designed to help companies optimize business performance by connecting people, information, and businesses across business networks.

SAP Businessobjects XI solutions include SAP Businessobjects enterprise software, as well as software for information discovery and delivery; information management; and query, reporting, and analysis. With these solutions, ISS consulting help companies establish a business intelligence (BI) platform that provides immediate access to trusted business information.

crystal reports, the leading report generation software that allows report designers to create highly formatted reports that are connected to virtually any data source.

It helps customers with on-report sorting and filtering, giving them the tool to make informed decisions instantly. Xcelsius, the leading Dashboard and visualization software from Business objects, allows the creation of dynamic and interactive dashboards, which can be embedded in Microsoft office files, or other familiar formats.


ANNUAL rePorT 2009

THESERVICES

• SAPConsulting–ProvidingEnd-to-EndSolutions

ISS offers a wide scope of SAP services ranging from feasibility studies to full scale implementation for growing companies and established multinational organizations. With a strong commitment in providing our clients with comprehensive end-to-end business solutions through a high degree of team work and the ideal project methodology, we have successfully delivered the desired results consistently.

We also provide key user and end-user training, conduct spot consulting and quality assessment checks. our team has the technical expertise that can be called upon to supplement your existing internal SAP competence center, as and when required.

• ApplicationManagementSupport–ExpertiseonRequest

ISS maintains a certified SAP Helpdesk center that provides support services for our customers across Asia. With teams in Malaysia, Singapore and Thailand, we support customers of all sizes with services ranging from 1st level telephone support to remote installation and development of enhancements. We provide complete technical competence and ensure the smooth running of SAP systems, so customers can concentrate on their core business without having to invest in large internal SAP support teams.

• Upgrade&Migration–ContinuousImprovement

ISS provides upgrade & migration services that include key user training, delta training, technical and application support as well as data migration services. We have executed many upgrade projects and helped our customers through all phases of the upgrade. With the full resources and best practices of ISS’ knowledgeable support, customers are able to continuously benefit from the latest products offered by SAP

• InternationalRoll-OutProjects

over the last 10 years ISS consulting has established itself as an SAP rollout Specialist in Asia. We have helped a significant number of customers with rollout projects covering countries such as china, Japan, Korea, Australia, New Zealand and others in Asia. Using a mix of local and regional consultants for such rollouts, ISS provides a cost effective alternative to address both local, cultural and legal issues as well as regional standardization requirements.

• CustomizedDevelopment

An experienced team of Java, PHP, and ABAP Developers is available to develop any requested custom-build solution. We have delivered solutions across the whole spectrum of bespoke requirements: from enhancements to existing SAP installations to a completely custom developed erP solution for the steel industry.

We have developed point-of-sale systems which are being deployed by leading retailers in the region, and integrated those into SAP back-office solutions. Using state-of-the-art development tools, we have created solutions for hand-held devices to automate and improve Warehouse Management operations, interface solutions between systems and companies, and have been responsible for various solutions covering the full range of the software development lifecycle.

Corporate

profile


ANNUAL rePorT 2009

A pAssion

for progress


ANNUAL rePorT 2009

Chief Executive Officer’s

ADDRESS

THE YEAR in REviEW

On behalf of the Board of Directors, i am pleased to present the Annual Report of iSS Consulting Solutions Berhad (‘iSS Consulting’ or ‘the Company’) and its subsidiary companies (‘iSS Group’) for the financial year ended 31 December 2009.

RICHARD LAUchief executive officerISS consulting Solutions Berhad


ANNUAL rePorT 2009

Year 2009 marked the beginning of a significant milestone for ISS Group with the acquisition of Diversified Gateway Berhad (`DGB’) and the subsequent reverse takeover of ISS consulting by Formis resources Berhad (`Formis’). I am pleased to inform that the acquisition and the reverse takeover exercise, which started in october 2009 was completed on 14 April 2010.

With this completion, ISS Group is now part of Formis and is set to embark on a new chapter in its roadmap towards becoming a major provider of IT solutions and services.

ECONOMICANDINDUSTRyOUTLOOk

on the economic front, 2009 was a year of unprecedented economic challenges with the sharpest ever global contraction since World War II experienced in 1H 09. The effects of the international financial crisis and the ensuing credit crunch led to a sharp decline in private sector demand, both in the international markets as well as the domestic market.

The Malaysian economy experienced the full impact of the global recession in the first quarter of 2009, with a decline of 6.2%. However, the accelerated implementation of various fiscal stimulus measures contributed to the stabilization and gradual recovery in the later part of the year. As a result of these measures, the Malaysian economy recorded a growth rate of 4.5% in the fourth quarter, and an overall moderate contraction of 1.7% for 2009, with the support of fiscal policies (Source : Bank Negara report 2009).

In Singapore, the economy contracted by 2.0% in 2009 with all major service sectors reporting a contraction except for the information and communications sector and the business services sector. A recovery was seen in the second half year and by fourth quarter of 2009, real gross domestic product expanded by 4.0% year on year. (Source : Ministry of Trade and Industry, Singapore).

outlook for the year ahead is positive and economic recovery is forecast in Malaysia and Singapore which are the major countries in which ISS Group operates. Malaysia GDP growth for 2010 is forecast at 5.2% (Source: Malaysian Institute of economic research) whilst Singapore growth rate is forecast at between 7% and 9% (Source: Ministry of Trade and Industry, Singapore).

Despite the economic downturn in 2009, the Information and communications Technology (`IcT’) industry remained fairly buoyant, as both private and public sectors take cognizance that development of IcT remains central in the pursuit for productivity and competitiveness. In particular, we foresee opportunities with the Large enterprises and Government linked companies as they look towards IT for long term cost savings.

REVIEwOfOPERATIONS

Amidst the financial crisis already seen in Q4 08, ISS took the necessary steps to address the expected challenges ahead. At the beginning of 2009, we had reduced the strength of our workforce in line with an anticipated decline in demand and introduced various cost saving measures across most of the subsidiaries within the Group. These cost savings measures continued for the whole of 2009 and would not have been achieved without the strong support from all the employees in the Group. For the year under review, Group revenue grew by 19.3% from rM42.30 million in 2008 to rM50.47 million in 2009. The increase is attributable to increase in license and services revenue from our foreign subsidiaries. our operations in Singapore and Thailand contributed significantly to the increased revenue of the Group during the year. It is noted that in spite of the challenging external factors of 2009, orders closed by our foreign subsidiaries have been commendable.

In 2009, we secured a number of projects across the region, the most notable of which was the implementation of an integrated SAP system for Singapore Pools (Private) Ltd , the Singapore Totalisator Board and the Singapore Turf club. This project is the single largest contract awarded to ISS Group, the implementation of which will continue into 2010.

The Group’s loss for the year has reduced significantly from rM9.91 million (adjusted) in 2008 to r0.26 million in 2009. The main contributor to the loss for the year was in the Malaysian operations which fell short of expectations.


address


ANNUAL rePorT 2009

MOVINGfORwARD

Moving forward, ISS Group will continue to grow the SAP business in the countries in which we operate currently, leveraging on its existing customer base and technical capabilities combined with the strong presence of Formis as our ultimate holding company. There will be tremendous synergistic benefits that can be drawn on, particularly in the area of providing end to end business solutions to our customers, through cross selling of products.

2010 will be an interesting year for everyone as ISS work towards integrating its cultures and business processes with Formis. In addition, both ISS and Formis look forward to tap on the individual strength of each other and to grow the organization to be a total solutions provider in the region.

ACkNOwLEDGEMENT

2009 was a difficult year for ISS Group, having to face the challenges of external influences coupled with the rigorous tasks that come with a corporate exercise. on behalf of the Board of Directors, I would like to thank the past Board members for their valuable insights and guidance to the Group. I would also like to extend our gratitude to our clients, suppliers and business partners for their support and cooperation.

Lastly but most importantly, my sincere thanks to all our staff members for their loyalty and commitment throughout the year and look forward to their continued support.

RichardLauchief executive officerISS consulting Solutions Berhad


address

ProfileofChiefExecutiveOfficer

LauChiChiang, a Malaysian aged 46, was appointed as chief executive officer of the company on 14 April 2010.

He graduated with a Bachelor of Arts (Honours) from Universiti of Malaya, Malaysia. He pursued his higher education and obtained his Master of Business Administration from Southern cross University, Australia.

He started his career as an Account Manager at Innovest Systems and Services Sdn Bhd in 1989 and later left to join Digital Transmission Systems Sdn Bhd in 1991 as General Sales Manager until 1997.

In 1997, he joined Diversified Gateway Berhad (“DGB”) and currently serves as Managing Director of DGB.

He has a direct interest of 70,075,000 fully paid ordinary shares of rM0.10 each in the company. He also has an indirect interest of 40,000 fully paid ordinary shares of rM0.10 each in the company held by his spouse.

NotestoChiefExecutiveOfficer’sProfile

Save where disclosed, the chief executive officer:

• does not have any family relationship with anyDirectors and/or major shareholders of the company;

• hasnotbeenconvicted for anyoffenceswithin thepast ten (10) years other than traffic offences; and

• does not have any conflict of interest with thecompany.


ANNUAL rePorT 2009

Group Financial

HIGHLIGHTS

financialhighlightsfortheyearended31December 2009 2008

Total revenue rM50.47m rM42.30m

Total revenue Growth 19% 8%

Product revenue rM18.39m rM18.28m

% of Product revenue 36% 43%

Net Loss before taxes (rM0.26m) (rM9.91m)#

Net Loss margin (Net Loss before taxes as a percentage of total revenue) (0.5%) (23%)#

Net cash generated from /(for) operating Activities rM3.17m (rM3.41m)

Net cash used for investing activities rM0.05m rM1.32m

Days sales outstanding 97 days 101 days

# Adjusted for one-off non recurring items

2009Revenuebreakdownbygeographicalsegment(byprojectrolloutsite)

Malaysia6,588•13%

Indonesia 1,625•3%

Thailand 9,365•19%

India726•1%

Singapore31,714•63%

Others450•1%

ToTAL reveNUe50,468

InRM’000•percentageoftotal


ANNUAL rePorT 2009

Corporate

INfORMATION

BOARD Of DIRECTORS

Dato’HairuddinBinMohamedIndependent Non-executive chairman(appointed as Director on 2 April 2010 and redesignated as chairman on 20 April 2010)

Haraldweinbrechtexecutive Director

GloriaChanMeiLingexecutive Director

wongkitLeongIndependent Non-executive Director(appointed on 12 February 2010)

AuyongkamwengIndependent Non-executive Director(appointed on 2 April 2010)

NeoPohLian executive Director(appointed on 14 April 2010)

RobinLimJinHeeexecutive Director(appointed on 14 April 2010)

LooChanyueIndependent Non-executive chairman(resigned on 11 February 2010)

MdNaharBinNoordinIndependent Non-executive Director(resigned on 4 January 2010)

MohamedNorBinAbdulHamidIndependent Non-executive Director(resigned on 18 March 2010)

ChristinaIngeburgOrthexecutive Director / chief Financial officer(resigned on 22 March 2010)

TanAikPingexecutive Director(resigned on 22 March 2010)

NgoTongyongexecutive Director(resigned on 22 March 2010)

AUDITCOMMITEE

Auyongkamwengchairman(appointed as Member on 2 April 2010 and redesignated as chairman on 20 April 2010)

wongkitLeongMember (appointed on 12 February 2010)

Dato’HairuddinBinMohamedMember (appointed on 2 April 2010)

MohamedNorBinAbdulHamidchairman (resigned on 18 March 2010)

MdNaharBinNoordinMember (resigned on 4 January 2010)

LooChanyueMember (resigned on 11 February 2010)

COMPANySECRETARIES

LimMingToong (MAIcSA 7000281)

MasharumBintiAbdulwahab (MAIcSA 7041619)

AUDITORS

CroweHorwath (formerly known as Horwath) (AF 1018), chartered AccountantsLevel 16, Tower c, Megan Avenue II, 12 Jalan Yap Kwan Seng, 50450 Kuala LumpurTel : (603) 2166 0000 Fax : (603) 2166 1000

SHARE REGISTRAR

SymphonyShareRegistrarsSdnBhdLevel 6, Symphony House Block D13, Pusat Dagangan Dana 1 Jalan PJU 1A/46 47301 Petaling Jaya Selangor Darul ehsan Tel : (603) 78418000Fax : (603) 78418008

SPONSOR

M&ASecuritiesSdnBhd45-3 The BoulevardMid valley cityLingkaran Syed Putra59200 Kuala LumpurTel : (603) 22842911Fax : (603) 22842718(Appointed on 7 october 2009 and effective 14 April 2010)

kenangaInvestmentBankBhd8th Floor Kenanga International, Jalan Sultan Ismail50250 Kuala LumpurTel : (603) 21646689Fax : (603) 21646690(ceased on 31 December 2009)

PublicBankBerhad12, 14 & 16, Jalan 14/14, 46100 Petaling Jaya, Selangor Darul ehsanTel : (603) 7958 2585 Fax : (603)7958 2593

REGISTERED OffICE

10th Floor, Menara Hap Seng, No. 1 & 3, Jalan P. ramlee, 50250 Kuala LumpurTel : (603) 2382 4288 Fax : (603) 2382 4170

HEAD/MANAGEMENTOffICE

Level 9, Tower 1 Jaya 33, No 3 Jalan Semangat,46100 Petaling Jaya, Selangor Darul ehsanTel : (603) 7953 8388 Fax : (603) 7953 8389

wEBSITE

www.iss-consulting.com

STOCkEXCHANGE

Ace Market of Bursa Malaysia Securities BerhadSector : TechnologyStock Name : ISSStock code : 0131


ANNUAL rePorT 2009

Corporate

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49% ISS coNSULTING (THAILAND) LTD

100% PT ISS coNSULTING INDoNeSIA

70% coGeNT coNSULTING SDN BHD

100% coGeNT BUSINeSS SoLUTIoNS (S) PTe LTD

ISS COnSuLTInG SOLuTIOnS bERHAdI n T E G R A T E d S O F T W A R E S O L u T I O n S


ANNUAL rePorT 2009

HARALDwEINBRECHT

Executive Director

German. Age 43, Degree in Business Computer Science from the University of Applied Sciences, Karlsruhe, Germany

He was appointed as Managing Director cum chief executive officer of ISS consulting on 26 May 2006 and is one of the Group’s co-founders. on 14 April 2010, he was redesignated as executive Director.

career began in 1992 as a Software Developer with SAP AG and was responsible for developing various components of the SAP software. In 1993, he joined the International consulting Department of SAP, where he was responsible for supporting customers on implementation of SAP software as well as training new consultants and customers. He then joined SAP Asia as a corporate Pre-Sales consultant, responsible for supporting the local presales team, product demonstration and marketing for SAP’s products in Asia. Later, he was promoted to customer Support Manager with SAP Asia, where he managed the accounts of customers such as Singapore Telecom Ltd. Prior to establishing the ISS Group, he facilitated SLI consulting Sdn Bhd with the establishments of its operations in Asia and USA. Within the first six months, he set up two subsidiary companies of SLI in San Francisco, USA and Kuala Lumpur, Malaysia.

In September 1997, he cofounded ISS Malaysia together with christina Ingeburg orth, and has since been responsible for the overall management of the ISS Group until the takeover by Formis Group in April 2010.

DATO’HAIRUDDINBINMOHAMED

Chairman of the Board/Independent Non-Executive Director

Malaysian. Age 59, Bachelor of Social Science (Hons) from Universiti Sains Malaysia.

He joined the Board on 2 April 2010. He was also appointed a member of the Audit committee on the same date. on 20 April 2010, he was redesignated as chairman of the Board.

He was formerly the commissioner of Police at commercial crimes Investigation Department. During his service of 36 years, he had held several senior positions in the Force, amongst them were Deputy commissioner of Police (chief, Police officer of Kedah), Senior Assistant commissioner I (Deputy Director of Administration (Training)) and Senior Assistant commissioner II (crime Investigation Department Sarawak).

Apart from his chairmanship in the company, he also serves as director on the board of Formis resources Berhad, BIMB Holdings Berhad, Triumphal Associates Bhd, Yoong onn corporation Berhad, Formis Holdings Berhad , Diversified Gateway Berhad and several other private companies.

He does not hold any shares in the company.

Profile of board of

DIRECTORS


ANNUAL rePorT 2009

Profile of Board of

Directors

GLORIACHANMEILING

Executive Director / Head of Research & Development

Malaysian. Age 45, Bachelor of Science in Industrial Management from Purdue University, USA

She was appointed as executive Director of ISS consulting on 26 May 2006.

career began in 1987 as a Quality Assurance executive and capacity Planner with Franklin Porcelain Sdn Bhd where she was responsible for incorporating quality assurance policies and implementing a capacity requirements plan in the factory. In 1989, she joined ernst & Young consulting (S) Pte Ltd as a Manufacturing engineering consultant and subsequently Thomson consumer electronics (S) Pte Ltd - Tv division in 1991. She joined SAP Asia (Singapore) in 1994 as a Senior consultant and was promoted to Pre-Sales consultant in January 1996. In 1997, she was transferred to SAP America, providing consultancy services for customers in the Silicon valley, california. In January 1998, she joined ISS Malaysia as Principal consultant, being responsible for SAP consulting services in the area of Materials, Warehouse and Quality Management.

As Head of research & Development, she is responsible for the development and roll-out of ISS Xpress solutions.

wONGkITLEONG

Independent Non-Executive Director

Malaysian, Age 39, Bachelor of Commerce from University of British Columbia, Vancouver, Canada.

career began in 1996 at citibank Malaysia under the Management Associate program. rose to senior transactor within citicorp capital Sdn. Bhd. , the private equity arm of citibank Malaysia. He subsequently joined Abric Berhad in 1999, a company listed on Bursa Malaysia as General Manager, Business Development. He was instrumental in expanding the business of Abric globally setting up offices in the UK, US and South America. He was subsequently promoted to executive Director in 2001 and later made the chief operating officer of the company. He is currently Director of Pacific regal Sdn. Bhd., a corporate consultancy firm.

AUyONGkAMwENG

Independent Non-Executive Director

Malaysian. Age 54, MICPA (Malaysian Institute of Certified Public Accountants)

He joined the Board on 2 April 2010. He was also appointed a member of the Audit committee on the same date. on 20 April 2010, he was appointed the chairman of Audit committee.

A MIcPA graduate, he is also a member of the Malaysian Institute of Accountants. He was employed as a financial controller as well as a general manager for several large Malaysian companies, such as Avetani (M) Sdn Bhd, South Malaysia Industries Berhad and Asian Pac Holdings Berhad. Thereafter he took up his current employment as a remisier at Hwang-DBS Securities Berhad.

He continues to keep updated with the development in accounting standards and risk management. With his extensive training and experience in the field of accounts and finance, he will be able to contribute significantly to the Group in the areas of financial reporting and compliance.

He currently serves as director on the board of Formis resources Berhad.

He does not hold any shares in the company.


ANNUAL rePorT 2009

NEO POH LIAN

Executive Director

Malaysia. Age 49, B.A (Hons) in Finance with Accounting, University of East London

She joined the Board as an executive Director on 14 April 2010.

Upon her graduation, she remained in London for three years for her articleship. She returned to Malaysia in early 1988 and later joined Formis computer Services Sdn Bhd (FcS) in June as Finance executive. In the following year, she was promoted to Finance and Administration Manager. In 1994, she was involved in a Management buy-out of FcS and was subsequently appointed to the Board in the same year. Ms Neo was appointed executive director of Perduren (M) Berhad (Perduren) from 2000 to 2006.

She was then appointed to Formis resources Berhad (FrB) upon the completion of its acquisition of all the IT businesses of Perduren in 2006. Ms Neo, in her capacity as corporate vice President, operations is responsible for all matters relating to operations of FrB group of companies including finance and accounting

She currently serves as director on the board of Formis Holdings Berhad and Diversified Gateway Berhad.

She does not hold any shares in the company.

Profile of Board of

Directors

ROBINLIMJINHEE

Executive Director

Malaysian. Age 48, Bachelor of Science specializing in Computer Science, University of Toronto, Canada

He joined the Board as an executive Director on 14 April 2010.

He joined Diversified Gateway Berhad in 1997 as General Manager and was appointed as executive Director in 2003. Having been in the IT industry since 1983, he has been exposed to various lines of employment covering software customisation to marketing. Some of his previous employers include AIM computer Sdn Bhd, computer Protocol Sdn Bhd and Digital Transmission Systems Sdn Bhd.

He currently serves as director on the board of Diversified Gateway Berhad.

He has a direct interest of 44,101,000 fully paid ordinary shares of rM0.10 each in the company. He also has an indirect interest of 2,000 fully paid ordinary shares of rM0.10 each in the company held by his spouse.

NotestoDirectors’Profile

Save where disclosed , none of the Directors has :• anyfamilyrelationshipwithanyDirectorand/ormajor

shareholder of the company• anyconflictofinterestwiththeCompany• anyconvictionforoffenceswithinthepast10years

other than traffic offences

The Directors do not have any family relationship with any Directors and/or major shareholders of the company, except for Harald Weinbrecht and Gloria chan Mei Ling, who are husband and wife.

The details of the Directors’ securities holdings are set out in the Analysis of Shareholdings as at 30 April 2010.

The details of the Directors’ attendance at Board and Audit committee meetings are set out on page 16 and 23 of the Annual report respectively.

None of the Directors have been convicted for any offences within the past ten (10) years other than traffic offences, if any. None of the Directors have any conflict of interest with the company.

The composition of the Board of Directors complies with rule 15.02 of the Listing requirements for the Ace Market of Bursa Malaysia Securities Berhad (“Bursa Securities”) (“MMLr”) whereby the number of Independent Directors exceeds 1/3 of the Board.


ANNUAL rePorT 2009

Statement On Corporate

GOVERNANCE

The Board of Directors of ISS consulting Solutions Berhad supports the Principles of corporate

Governance (“the code”) as laid out in the Malaysian code of corporate Governance and is

committed to ensuring that the highest standards of corporate governance are implemented

and maintained throughout the Group in enhancing shareholders’ value and the long term

value of the Group.

The Board is pleased to outline below mentioned the manner in which the principles of the code has been applied and the extent to which the best practices in the code has been complied with.

BOARD Of DIRECTORS

The Board has the overall responsibilities for corporate governance and strategic direction of the company and is entrusted to exercise reasonable and proper care in utilising the Group’s resources for the best interests of its shareholders and to safeguard the Group’s assets. The roles and responsibilities of the chairman and the chief executive officer are made clearly distinct, to further enhance the existing balance of power and authority. The chairman is primarily responsible for matters pertaining to the Board and overall conduct of the Group. The chief executive officer has the principal responsibility of reporting, clarifying and communicating matters relating to day-to-day operations of the Group to the Board.

The Board comprises members from diverse professional backgrounds with a wide range of skills ranging from business, technical and financial experience, that is relevant to lead and manage the Group.

Dato Hairuddin Bin Mohamed was appointed the chairman of the company on 20 April 2010.

DIRECTORS’TRAINING

All executive Directors have been with the company for several years and are familiar with their duties and responsibilities as directors. For newly appointed directors, briefings and orientation will be given by an executive Director and top management of the company on business activities of the Group and its strategic directions, as well as their duties and responsibilities as directors.

The Directors’ training needs are analyzed annually in conjunction with the Board review. The Board fully supports the need for its members to further enhance their skills and knowledge on relevant new laws and regulations and changing commercial risk to keep abreast with the developments in the economy, industry, technology and the changing business environment within which the Group operates.

During the financial year, Harald Weinbrecht and Gloria chan Mei Ling have not attended any training due to their business commitments, both overseas and locally.


ANNUAL rePorT 2009


governance

BOARDCOMPOSITION

At the date of reporting, the Board consists of a chief executive officer and seven other Directors, three of whom are independent Non-executive Directors which is in compliance with rule 15.02 of the Listing requirements of Bursa Malaysia Securities Berhad for the Ace Market.

The executive Directors are responsible for making and implementing operational decisions whilst the Non-executive Directors support the skills and experience of the executive Directors, contributing to the formulation of policy and decision making through their knowledge and experience.

The Independent Non-executive Directors are independent of management and free from any business relationship, which could materially interfere with the exercise of their independent judgement. Together, they play an important role in ensuring that the strategies tabled at the Board are fully deliberated and examined, taking account of the long term interest of the shareholders, customers, employees and suppliers of the Group.

The Board for the moment has not assigned the role of Senior Independent Non-executive Director to whom any concerns may be conveyed. The Board of Directors will collectively deal with any issues that need their attention.

The profile of each Director is given on pages 12 to 14.

BOARDMEETINGS

The Board has met ten (10) times during the financial year ended 31 December 2009. At each Board meeting, the chief executive officer and members of the Management team, table and present comprehensive reports for the Board’s information, deliberation and direction. The Directors have full and unrestricted access to all information pertaining to the Group’s business or affairs to enable them to discharge their duties. Written reports on operational performance and profitability, human resources, business plans and various financial indicators are made available in advance to members of the Board.

In addition, whenever independent professional advice is required by the Directors for the furtherance of their duties, external expertise may be engaged at the Group’s expense. All Directors have access to the advice and services of the company Secretaries, whose appointments and resignations are subject to Board approval.

Details of the Directors’ attendance at these meetings are summarised as follow:

NumberofBoard MeetingsAttendedforthefinancialyearDirectors ended31December2009

Harald Weinbrecht 10/10christina Ingeburg orth 9/10Gloria chan Mei Ling 9/10Loo chan Yue 10/10Mohamed Nor Bin Abdul Hamid 10/10Md Nahar Bin Noordin 9/10Tan Aik Ping 8/10Ngo Tong Yong 10/10


ANNUAL rePorT 2009

APPOINTMENTSANDRE-ELECTION

In accordance with the company’s Articles of Association, any casual vacancy occurring in the Board of Directors may be filled by any person appointed by the Directors. Any person so chosen shall retain his office only until the next Annual General Meeting of the company, but he or she shall be eligible for re-election at that meeting. An election of Directors takes place every year, with each Director retiring from office at least once every three years. Directors retiring by rotation are eligible for re-election by the shareholders at the Annual General Meeting.

NOMINATIONCOMMITTEE

This committee comprises three (3) Independent Non-executive Directors.

• DatoHairuddinBinMohamed(Chairman) (Appointed as Nomination committee chairman on 20 April 2010)

• AuYongKamWeng(Member) (Appointed as Nomination committee member on 20 April 2010)

• WongKitLeong(Member) (Appointed as Nomination committee member on 20 April 2010)

• MohamedNorBinAbdulHamid(Chairman) (resigned as Director on 18 March 2010)

• MdNaharBinNoordin(Member) (resigned as Director on 4 January 2010

• LooChanYue(Member) (resigned as Director on 11 February 2010)

The primary objective of the Nomination committee (‘Nc’) is to act as a committee of the full Board to assist in discharging the following responsibilities:

(a) To recommend to the Board, candidates for directorships.(b) To recommend the Directors to sit on respective Board committees.(c) To administer the annual assessment of Directors, including a review of the skill, qualification and competencies of

the Board as a whole.(d) To identify suitable orientation, educational and training programmes for continuous development of Directors.(e) To ensure that all Directors receive appropriate continuous training programmes in order to keep abreast with

developments in the industry and with changes in the relevant statutory and regulatory requirements.

For the year under review, the Nc held a meeting, which was attended by all former members.

The Nc reviews the criteria for evaluating the Board’s performance. Based on the recommendations of the Nc, the Board has established processes for evaluating the effectiveness of the Board as a whole.

The performance criteria for the Board evaluation includes an evaluation of the size and composition of the Board, the Board’s access to information, accountability, Board processes, Board performance in relation to discharging its principal responsibilities, communication with management and standards of conduct of directors.


governance


ANNUAL rePorT 2009

REMUNERATIONCOMMITTEE

This committee comprises two (2) Independent Non-executive Directors and one (1) executive Director:

• DatoHairuddinBinMohamed(Chairman)–IndependentNon-ExecutiveChairman (Appointed as remuneration committee chairman on 20 April 2010)

• AuYongKamWeng(Member)–IndependentNon-ExecutiveDirector (Appointed as remuneration committee Member on 20 April 2010)

• RobinLimJinHee(Member)–ExecutiveDirector (Appointed as remuneration committee Member on 20 April 2010)

• MdNaharBinNoordin(Chairman)–IndependentNon-ExecutiveDirector (resigned as Director on 4 January 2010)

• MohamedNorBinAbdulHamid(Member)–IndependentNon-ExecutiveDirector (resigned as Director on 18 March 2010)

• ChristinaIngeburgOrth(Member)–ExecutiveDirector (resigned as Director on 22 March 2010)

The primary objective of the remuneration committee (`rc’) is to act as a committee of the full Board to assist in assessing the remuneration of the executive Directors reflecting their responsibility and commitment undertaken by them.

The remuneration received by the independent non-executive Directors is based on the competitive market situation, taking into consideration the Directors’ business and financial experience relevant to the Group. The determination of independent non-executive Directors’ fees is a matter for the company’s Board of Directors as a whole and the independent non-executive Directors concerned do not participate in the deliberations and voting on decisions in respect of their remuneration.

An analysis of the aggregate Directors’ remuneration for the financial year ended 31 December 2009 is set out below:

Executive Non-Executive Directors Directors RM’000 RM’000

Salaries and other emoluments 1,534 -Fees - 75

The number of Directors whose remuneration falls into each band of rM50,000 for the financial year ended 31 December 2009 are set out as below:

No.ofDirectors Executive Non-ExecutiveRangeofremuneration Directors Directors

Below rM50,000 - 3rM100,001-rM150,000 1 -rM150,001-rM200,000 1 -Above rM200,000 3 -


governance


ANNUAL rePorT 2009

AUDITCOMMITTEE

The Audit committee has wide powers with authority to regulate its own procedures and has its own terms of reference. The Audit committee’s role and functions are set out in the Audit committee report on pages 23 to 26 of this Annual report.

DIALOGUEBETwEENCOMPANyANDINVESTORS

The company acknowledges the importance of transparency and accountability to its shareholders and investors in support of the Malaysian code on corporate Governance. An important channel to reach shareholders and investors is the Annual report of the company. Besides including comprehensive details of the business, financial performance and other activities of the Group, efforts are made to ensure that the contents of the Annual report are in line with corporate governance practices.

In addition, the Annual General Meeting provides a channel for shareholders to be updated on current developments and an opportunity for shareholders to seek clarifications and provide feedback and comments to the Directors and Management for consideration.

From time to time, the Directors meet with financial research analysts to explain the Group’s strategy, performance and major developments. The Directors are mindful of the statutory and legal framework in relation to disclosure of material information.

INTERNAL CONTROL

The Board has maintained a system of internal control that provides reasonable assurance of effective and efficient operations, and compliance with laws and regulations, as well as with internal procedures to safeguard shareholders’ investments and the Group’s assets. The company’s Statement on Internal control is set out on pages 21 to 22.


governance

RELATIONSHIPwITHAUDITORS

The Board via the Audit committee works closely with the external auditors and maintains a transparent relationship with them in seeking professional advice and ensuring compliance with applicable approved accounting standards and statutory requirements.

The Board has established an internal audit function for the Group which operates within a plan approved by the Audit committee and such function is outsourced to a professional company.

From time to time, the auditors bring to the attention of the Audit committee and Board of Directors matters of significant importance for due deliberation.

fINANCIAL REPORTING

It is the commitment of the Board to provide a balanced, clear and meaningful assessment of the financial position and prospect of the Group in all the reports to shareholders and investors. The company announces its quarterly financial statements through Bursa Link covering details of the Group’s business performance, current issues and concerns. The Directors scrutinise these announcements at their Board Meetings prior to publication to ensure that they are accurate and present a balanced assessment of the Group’s affairs. The Board is assisted by the Audit committee to oversee the financial reporting process and the quality of financial reporting of the Group.

COMPLIANCESTATEMENT

The Board is satisfied that as at the date of this report, the company has complied with the best practices of the code.


ANNUAL rePorT 2009

STATEMENT Of DIRECTORS’ RESPONSIBILITy fORPREPARINGTHEfINANCIALSTATEMENTS

The Directors are required by the companies Act, 1965 to prepare financial statements for each financial year which have been made in accordance with the applicable approved accounting standards and the provisions of the companies Act, 1965, which give a true and fair view of the state of affairs of the Group at the end of the financial year and of the results and cash flows of the Group for the financial year.

In preparing the financial statements, the Directors have:

• selectedsuitableaccountingpoliciesandappliedthemconsistently;

• made judgments and estimates that are reasonableand prudent;

• ensured that all applicable approved accountingstandards and provisions of the companies Act, 1965 have been followed; and

• basedsuchstatementsonagoingconcernbasisastheDirectors have a reasonable expectation, having made enquiries, that the Group have adequate resources to continue in operational existence for the foreseeable future.

The Directors have responsibility for ensuring that the Group maintains accounting records which disclose with reasonable accuracy the financial position of the Group and which enable them to ensure that the financial statements comply with the companies Act, 1965, applicable approved accounting standards and other regulatory provisions.

The Directors have overall responsibilities for taking such steps that are reasonably open to them to safeguard the assets of the Group to prevent and detect fraud and other irregularities.

ADDITIONALCOMPLIANCEINfORMATION

a) MaterialContractsAwardedtoDirectorsandMajorShareholders

There were no material contracts entered into by the company involving the company’s Directors’ and/or major shareholders’ interests either still subsisting at the end of the financial year, or which were entered into since the end of the previous financial year.


governance

b) CorporateSocialResponsibility ISS Group is committed towards the implementation

of corporate Social responsibility initiatives. As a first initiative since listing in August 2006, ISS Group established the ISS Academy, in support of the government’s drive to reduce the graduate unemployment rate. The Academy’s main objective is to offer graduates an opportunity to learn SAP and to build up their work experience in the information technology sector. ISS Group continued with this initiative up until last year when it was discontinued due to the financial crisis.

c) OptionwarrantsAndConvertibleSecurities The company has not issued any warrants and

convertible securities during the financial year.

d) DepositoryReceipts The company did not sponsor any Depository receipts

during the financial year.

e) Sanctionsand/orPenaltiesImposed There were no sanctions and/or penalties imposed

on the company and its Directors by the relevant regulatory bodies during the financial year under review.

f) ProfitGuarantee During the financial year, there was no profit guarantee

issued by the company.

g) Non-Auditfees There were no non-audit fees paid by the company to

external auditors or company affiliated to the external auditor’s firm for the financial year ended 31 December 2009.

i) RevaluationPolicyOnLandedProperties The company does not hold any property during the

financial year under review.


ANNUAL rePorT 2009

Statement On Internal

CONTROL

INTRODUCTION

The Malaysian code on corporate Governance stipulates that the Board of Directors of listed

companies should maintain a sound system of internal controls to safeguard shareholders’

investments and the Group’s assets. In pursuance thereof, the Board of Directors (the

“Board”) of ISS consulting Solutions Berhad is pleased to set out below its Statement on

Internal control covering the scope of the internal control function.

BOARDRESPONSIBILITy

The Board acknowledges its responsibilities and recognizes the importance of ensuring a sound system of internal controls and effective risk management practices to be in place in the Group. The Board is aware that ultimately, the responsibility for the Group’s system of internal control, which includes the establishment of an appropriate control environment and framework as well as reviewing its adequacy and integrity rest with the Board.

As there are limitations inherent in any system of internal control, the system is therefore designed to manage rather than eliminate risks that may impede the Group in achieving its business objectives. The Board acknowledges that the system can only provide reasonable and not absolute assurance against any material misstatement, losses or fraud. The Board confirms that appropriate initiatives to implement a system of internal control with the elements highlighted above are currently being implemented. There will be an ongoing process for identifying and managing the significant risks faced by the company. The process is reviewed by the Board through the Audit committee which is assisted by the internal audit function.

RISkMANAGEMENTfRAMEwORk

The Board recognises that effective risk management framework is an integral part of the business operations. The risk assessment has been conducted through interviews with key management personnel and it allows the key management personnel to identify, evaluate and manage risks that affect the achievement of the Group’s business objectives within defined risk parameters in a timely and effective manner.

All residual risks are individually ranked as high, significant, moderate or low, having regard to:

• themagnitudeoftheimpactofanidentifiedriskoccurring;• thelikelihoodofsuchariskoccurring;and• theeffectivenessoftheriskmitigationstrategiesandcontrolscurrentlyinplacetomanagesuchrisks.

The Management have undertaken the necessary measures to manage the risks identified.


ANNUAL rePorT 2009

Statement On Internal

control

INTERNAL AUDIT fUNCTION

The Group has engaged a professional firm to provide outsourced internal audit services that supports the Audit committee in discharging its duties with respect to the adequacy and integrity of the Group’s internal control system. During the financial year under review, an amount of rM16,500 was incurred on internal audit fees.

The internal audit adopts a risk-based approach towards planning and conduct of audit. During the financial year, the Management, with the assistance of the internal auditor, has established a detailed audit plan for the Group. The audit plan was presented to the Audit committee and subsequently was approved by the Board.

The internal auditor has reviewed the system on internal controls in respect of selective operations in the Group and reports to the Audit committee.

OTHERkEyELEMENTSOfINTERNALCONTROL

Apart from risk management and internal audit, the other key elements of the company’s internal control system are described below:

1. The Board and Management has put in place an organisation structure with defined lines of responsibility and delegation of authority.

2. The Board and Management are provided with quarterly performance reports that give comprehensive information on financial performance and key business indicators for monitoring.

3. The Management conducts monthly performance reviews covering financial performance and other key operational aspects such as credit control and resource utilization.

CONCLUSION

The Board confirms that there were no material losses reported during the current financial year as a result of weaknesses in internal control. The Board and Management will continue to take measures to strengthen the internal control environment.

This Statement is made in accordance with the resolution adopted by the Board in its meeting held on 25 May 2010.


ANNUAL rePorT 2009

Audit Committee

REPORT

The Audit committee supports and provides assistance to the Board in discharging its responsibilities to meet the objectives of enhancing shareholders’ value with accountability. Its role in reviewing the Group’s financial reporting processes, internal control system and reinforcing the independence of the internal and external auditors adds credence to the governance and transparency of the Board.

The existing committee as at the date of reporting comprises three (3) Independent Non-executive Directors :

• AuYongKamWeng – Appointedasmemberon2April (chairman) 2010 and redesignated as chairman on 20 April 2010

• Dato’HairuddinbinMohamed – Appointedon2April2010

• WongKitLeong – Appointedon12February2010

The following Audit committee members resigned during the period up to the reporting date:

• MohamedNorBinAbdulHamid – Resignedon18March2010 (chairman)

• MdNaharBinNoordin – Resignedon4January2010

• LooChanYue – Resignedon11February2010

As at the reporting date, the qualifying criteria for composition of members were met.

There were five (5) Audit committee meetings held during the financial year ended 31 December 2009. The details of the attendance of the Audit committee members are as follows:

NumberofAuditCommittee MeetingsAttendedforthe financialyearended31December2009

Mohamed Nor Bin Abdul Hamid 5/5Md Nahar Bin Noordin 5/5Loo chan Yue 5/5

Objectives

The primary objective of the committee is to assist the Board of Directors in the following responsibilities relating to the Group:

a. to provide assistance to the Board in fulfilling its fiduciary responsibilities particularly relating to business ethics, policies, and practices and financial management and control.

b. to provide greater emphasis on the audit functions by increasing the objectivity and independence of external and internal auditors and providing a forum for discussion that is independent of the management.

c. to maintain a direct line of communication between the Board and the external auditors, internal auditors and management, through regularly scheduled meetings.


ANNUAL rePorT 2009

Audit Committee

report

SummaryofActivities

During the financial year ended 31 December 2009, in line with the terms of reference, the committee carried out the following activities in discharge of its functions and duties:

(a) reviewed and agreed on the scope of work in the audit plan with the external and internal auditors.

(b) reviewed the internal audit functions and presented the internal control reviews by the internal auditors to the Board.

(c) reviewed the audit reports of the company and the Group prepared by the external auditors and management’s responses thereto.

(d) reviewed the quarterly and annual reports of the company and Group prior to submission to the Board for consideration and approval.

(e) reviewed the disclosure of related party transactions, if any entered into by the company and Group in the annual report of the Group.

(f) After the financial year ended 31 December 2009, the Audit committee had also reviewed the audit reports of the external auditors in relation to the audit and accounting issues arising from the audit. The Independent Non-executive Audit committee members had discussed the matters arising from the audit of the Group with the external auditors without the presence of executive Board members and management.

AuditCommitteeTermsofReference

1. composition The committee shall be appointed from amongst the Board and shall comprise no fewer than three (3) members,

a majority of whom shall be independent directors and all members should be non-executive directors. At least one (1) member must be a member of the Malaysian Institute of Accountants or possess such other qualifications and/or experience as approved by Bursa Malaysia Securities Berhad.

In the event of any vacancy with the result that the number of members is reduced to below three, the vacancy shall be filled within three (3) months. Therefore a member of the Audit committee who wishes to retire or resign should provide sufficient written notice to the company so that a replacement may be appointed before he leaves.

The term of office and performance of an audit committee and each of its members must be reviewed by the Board of Directors at least once every three (3) years to determine whether such audit committee and members have carried out their duties in accordance with their terms of reference.

2. chairman The chairman, who shall be elected by the Audit committee, shall be an independent director. In the event of the

chairman’s absence, the meeting shall be chaired by an independent director.

The chairman should engage on a continuous basis with senior management, such as the chairman, the chief executive officer, the finance director, the head of internal audit and the external auditors in order to be kept informed of matters affecting the company.


ANNUAL rePorT 2009

Audit Committee

report

AuditCommitteeTermsofReference(cont’d)

3. Secretary The company Secretary shall be the Secretary of the committee and shall be responsible, in conjunction with the

chairman, for drawing up the agenda and circulating it prior to each meeting.

The Secretary shall also be responsible for keeping the minutes of meetings of the committee and circulating them to the committee Members. The committee Members may inspect the minutes of the Audit committee at the registered office or such other place as may be determined by the Audit committee.

4. Meetings The committee shall meet at least four (4) times in each financial year and may regulate its own procedure in lieu of

convening a formal meeting by means of video or teleconference. The quorum for a meeting shall be the majority of members present, who shall be independent directors.

The committee may call for a meeting as and when required with reasonable notice as the committee Members deem fit.

All decisions at such meeting shall be decided on a show of hands on a majority of votes.

The external auditors and internal auditors have the right to appear at any meeting of the Audit committee and shall appear before the committee when required to do so by the committee. The external auditors may also request a meeting if they consider it necessary.

5. rights The Audit committee shall:

(a) have authority to investigate any matter within its terms of reference;

(b) have the resources which are required to perform its duties;

(c) have full and unrestricted access to any information pertaining to the Group;

(d) have direct communication channels with the external auditors and person(s) carrying out the internal audit function or activity;

(e) have the right to obtain legal or independent professional or other advice at the company’s expense;

(f) have the right to convene meetings with the external auditors, internal auditors or both excluding the presence of the executive board members, whenever deemed necessary;

(g) promptly report to the Bursa Malaysia Securities Berhad (“Bursa Securities”), or such other name(s) as may be adopted by Bursa Securities, matters which have not been satisfactorily resolved by the Board of Directors resulting in a breach of the listing requirements;

(h) have the right to pass resolutions by a simple majority vote from the committee and that the chairman shall have the casting vote should a tie arise;

(i) meet as and when required on a reasonable notice;

(j) the chairman shall call for a meeting upon the request of the external Auditors.


ANNUAL rePorT 2009

AuditCommitteeTermsofReference(cont’d)

6. Duties(a) To review with the external auditors on:

(i) the audit plan, its scope and nature;(ii) the audit report;(iii) the results of their evaluation of the accounting policies and systems of internal accounting controls within

the Group; and(iv) the assistance given by the officers of the company to external auditors, including any difficulties or disputes

with Management encountered during the audit.

(b) To review the adequacy of the scope, functions, competency and resources and set the standards of the internal audit function.

(c) To recommend such measures as to be taken by the Board of Directors on the effectiveness of the system of internal control, management information and risk management practices of the Group.

(d) To review the internal audit programme, processes the results of the internal audit programme, processes or investigation undertaken and whether or not appropriate action is taken on the recommendations of the internal audit function.

(e) To take cognizance of resignation of the outsourced internal audit service provider and provide an opportunity for them to explain the reasons for resigning.

(f) To review with management:

(i) audit reports and management letter issued by the external auditors and the implementation of audit recommendations;

(ii) interim financial information; and(iii) the assistance given by the officers of the company to external auditors.

(g) To discuss problems and reservations arising from interim and final audits, and any matter the auditor may wish to discuss (in the absence of management where necessary).

(h) To monitor related party transactions entered into by the company or the Group and to determine if such transactions are undertaken on an arm’s length basis and normal commercial terms and on terms not more favourable to the related parties than those generally available to the public, and to ensure that the Directors report such transactions annually to shareholders via the annual report, and to review conflicts of interest that may arise within the company or the Group including any transaction, procedure or course of conduct that raises questions of management integrity.

(i) To review the quarterly reports on consolidated results and annual financial statements prior to submission to the Board of Directors, focusing particularly on:

(i) changes in or implementation of major accounting policy and practices;(ii) significant and / or unusual matters arising from the audit;(iii) the going concern assumption; and(iv) compliance with accounting standards and other legal requirements.

(j) To consider the appointment and / or re-appointment of auditors, the audit fee and any questions of resignation or dismissal including recommending the nomination of person or persons as auditors to the board.

(k) To verify the allocation of options pursuant to a share scheme for employees as being in compliance with the criteria for allocation of options under the share scheme, at the end of each financial year.

Audit Committee

report

28 Directors’ Report

32 Statement by Directors

32 Statutory Declaration

33 Independent Auditors’ Report

35 Balance Sheets

37 Income Statements

38 Statements of Changes in Equity

40 Cash Flow Statements

42 Notes to the Financial Statements

iss consulting solutions berhad (675362-P) • AnnuAl RepoRt 2009

FINANCIAl Statements

28 ISS CONSULTING SOLUTIONS BERHAD (675362-P)

ANNUAL REPORT 2009

DIRECTORS’Report

The directors hereby submit their report and the audited financial statements of the Group and of the Company for the financial year ended 31 December 2009.

PRINCIPAl ACTIvITIES

The Company is principally engaged in the business of investment holding whilst the principal activities of the subsidiaries are set out in Note 6 to the financial statements. There have been no significant changes in the nature of these activities during the financial year.

RESulTS

ThE GROuP ThE COmPANy

Rm Rm

Loss after taxation for the financial year (612,900) (265,214)

Minority interests (72,194) -

Loss attributable to equity holders of the Company (685,094) (265,214)

DIvIDENDS

No dividend was paid since the end of the previous financial year and the directors do not recommend the payment of any dividend for the current financial year.

RESERvES AND PROvISIONS

All material transfers to or from reserves or provisions during the financial year are as disclosed in the financial statements.

ISSuES OF ShARES AND DEBENTuRES

During the financial year:-

(a) there were no changes in the authorised and issued and paid-up share capital of the Company; and

(b) there were no issue of debentures by the Company.

OPTIONS GRANTED OvER uNISSuED ShARES

During the financial year, no options were granted by the Company to any person to take up any unissued shares in the Company.


ANNUAL REPORT 2009

DIRECTORS’Report (cont’d)

BAD AND DOuBTFul DEBTS

Before the financial statements of the Group and of the Company were made out, the directors took reasonable steps to ascertain that action had been taken in relation to the writing off of bad debts and the making of allowance for doubtful debts, and satisfied themselves that all known bad debts had been written off and that adequate allowance had been made for doubtful debts.

At the date of this report, the directors are not aware of any circumstances that would require the further writing off of bad debts, or the additional allowance for doubtful debts in the financial statements of the Group and of the Company.

CuRRENT ASSETS

Before the financial statements of the Group and of the Company were made out, the directors took reasonable steps to ascertain that any current assets other than debts, which were unlikely to be realised in the ordinary course of business, including their value as shown in the accounting records of the Group and of the Company, have been written down to an amount which they might be expected so to realise.

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

vAluATION mEThODS

At the date of this report, the directors are not aware of any circumstances which have arisen which render adherence to the existing methods of valuation of assets or liabilities of the Group and of the Company misleading or inappropriate.

CONTINGENT AND OThER lIABIlITIES

The contingent liabilities are disclosed in Note 44 to the financial statements. At the date of this report, there does not exist:-

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

(ii) any contingent liability of the Group and of the Company which has arisen since the end of the financial year.

No contingent or other liability of the Group and of the Company has become enforceable or is likely to become enforceable within the period of twelve months after the end of the financial year which, in the opinion of the directors, will or may substantially affect the ability of the Group and of the Company to meet their obligations when they fall due.

ChANGE OF CIRCumSTANCES

At the date of this report, the directors are not aware of any circumstances not otherwise dealt with in this report or the financial statements of the Group and of the Company which would render any amount stated in the financial statements misleading.


ANNUAL REPORT 2009


ITEmS OF AN uNuSuAl NATuRE

The results of the operations of the Group and of the Company during the financial year were not, in the opinion of the directors, substantially affected by any item, transaction or event of a material and unusual nature.

There has not arisen in the interval between the end of the financial year and the date of this report any item, transaction or event of a material and unusual nature likely, in the opinion of the directors, to affect substantially the results of the operations of the Group and of the Company for the financial year.

DIRECTORS

The directors who served since the date of the last report are as follows:-

Wong Kit Leong (Appointed on 12.2.2010)Dato’ Hairuddin Bin Mohamed (Appointed on 2.4.2010)Au Yong Kam Weng (Appointed on 2.4.2010)Robin Lim Jin Hee (Appointed on 14.4.2010)Neo Poh Lian (Appointed on 14.4.2010)Harald Weinbrecht Gloria Chan Mei Ling Md. Nahar Bin Noordin (Resigned on 4.1.2010)Loo Chan Yue (Resigned on 11.2.2010)Mohamed Nor Bin Abdul Hamid (Resigned on 18.3.2010)Christina Ingeburg Orth (Resigned on 22.3.2010)Ngo Tong Yong (Resigned on 22.3.2010)Tan Aik Ping (Resigned on 22.3.2010)

DIRECTORS’ INTERESTS

According to the register of directors’ shareholdings, the interests of directors holding office at the end of the financial year in shares in the Company during the financial year are as follows:-

NumBER OF ORDINARy ShARES OF Rm0.10 EACh

AT AT

1.1.2009 AllOTTED SOlD 31.12.2009

The Company

Direct Interests

Harald Weinbrecht 69,025,969 - (22,195,226) 46,830,743

Christina Ingeburg Orth 19,046,694 - - 19,046,694

Gloria Chan Mei Ling 5,197,259 - (1,387,920) 3,809,339

Ngo Tong Yong 11,812,500 - - 11,812,500

Tan Aik ping 11,812,500 - - 11,812,500

Indirect Interests

Harald Weinbrecht * 5,197,259 - (1,387,920) 3,809,339

Gloria Chan Mei Ling * 69,025,969 - (22,195,226) 46,830,743

Loo Chan Yue ^# 6,134,321 - (2,688,700) 3,445,621


ANNUAL REPORT 2009


DIRECTORS’ INTERESTS (cont’d)

* Deemed interest by virtue of shares held by spouse.^ Deemed interest by virtue of his shareholding in JL Nexus Sdn. Bhd. pursuant to Section 6A of the Companies Act,

1965.# Deemed interest by virtue of the shares held by his spouse, Rina Pang May Li, pursuant to Section 134(12)(C) of the

Companies Act, 1965.

By virtue of their shareholdings in the Company, Harald Weinbrecht and Gloria Chan Mei Ling are deemed to have interests in shares in the subsidiaries to the extent of the Company’s interests in accordance with Section 6A of the Companies Act 1965 in Malaysia.

Save for the above, the other directors holding office at the end of the financial year had no interests in shares in the Company or its related corporations during the financial year.

DIRECTORS’ BENEFITS

Since the end of the previous financial year, no director has received or become entitled to receive any benefit (other than benefits included in the aggregate amount of emoluments received or due and receivable by directors as shown in the financial statements, or the fixed salary of a full-time employee of the Group and of the Company) by reason of a contract made by the Company or a related corporation with the director or with a firm of which the director is a member, or with a company in which the director has a substantial financial interest except for any benefits which may be deemed to arise from transactions entered into in the ordinary course of business with companies in which certain directors have substantial financial interests as disclosed in Note 40 to the financial statements.

Neither during nor at the end of the financial year, was the Group and the Company a party to any arrangements whose object is to enable the directors to acquire benefits by means of the acquisition of shares in or debentures of Company or any other body corporate.

SIGNIFICANT EvENT DuRING ThE FINANCIAl yEAR

The significant event during the financial year is disclosed in Note 43 to the financial statements.

AuDITORS

The auditors, Messrs. Crowe Horwath (formerly known as Messrs. Horwath), have expressed their willingness to continue in office.

SIGNED IN ACCORDANCE WITh A RESOluTION OF ThE DIRECTORS DATED 20 APRIl 2010

harald Weinbrecht

Gloria Chan mei ling


ANNUAL REPORT 2009

STATEmENTby Directors

We, Harald Weinbrecht and Gloria Chan Mei Ling, being two of the directors of ISS Consulting Solutions Berhad, state that, in the opinion of the directors, the financial statements set out on pages 35 to 79 are drawn up in accordance with Financial Reporting Standards and the Companies Act 1965 in Malaysia so as to give a true and fair view of the state of affairs of the Group and the Company at 31 December 2009 and of their results and cash flows for the financial year ended on that date.

SIGNED IN ACCORDANCE WITh A RESOluTION OF ThE DIRECTORS DATED 20 APRIl 2010

harald Weinbrecht Gloria Chan mei ling

I, Christina Ingeburg Orth, Passport No: 332604948, being the person primarily responsible for the financial management of ISS Consulting Solutions Berhad, do solemnly and sincerely declare that the financial statements set out on pages 35 to 79 are, to the best of my knowledge and belief, correct, and I make this solemn declaration conscientiously believing the same to be true and by virtue of the provisions of the Statutory Declarations Act, 1960.

Subscribed and solemnly declared byChristina Ingeburg Orth, Passport No: 332604948,at Kuala Lumpur in the Federal Territory on this 20 April 2010

Christina Ingeburg OrthBefore meDatin hajah Raihela Wanchik (No. W-275)Commissioner for Oaths

STATuTORyDeclaration


ANNUAL REPORT 2009

INDEPENDENTAuditors’ Report to the members of ISS Consulting Solutions Berhad (Incorporated in Malaysia) (Company No : 675362-P)

Report on the Financial Statements

We have audited the financial statements of ISS Consulting Solutions Berhad, which comprise the balance sheets as at 31 December 2009 of the Group and of the Company, and the income statements, statements of changes in equity and cash flow statements of the Group and of the Company for the financial year then ended, and a summary of significant accounting policies and other explanatory notes, as set out on pages 35 to 79.

Directors’ Responsibility for the Financial Statements

The directors of the Company are responsible for the preparation and fair presentation of these financial statements in accordance with Financial Reporting Standards and the Companies Act 1965 in Malaysia. This responsibility includes designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error, selecting and applying appropriate accounting policies, and making accounting estimates that are reasonable in the circumstances.

Auditors’ Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with approved standards on auditing in Malaysia. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on our judgement, including the assessment of risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the Company’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the financial statements have been properly drawn up in accordance with Financial Reporting Standards and the Companies Act 1965 in Malaysia so as to give a true and fair view of the financial position of the Group and of the Company as of 31 December 2009 and of their financial performance and cash flows for the financial 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 subsidiary 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 all the subsidiaries of which we have not acted as auditors, which are indicated in Note 6 to the financial statements.


ANNUAL REPORT 2009

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 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.

Crowe horwath lee Kok WaiFirm No: AF 1018 Approval No: 2760/06/10 (J)Chartered Accountants Chartered Accountant

Kuala Lumpur

20 April 2010

INDEPENDENTAuditors’ Report (cont’d)


ANNUAL REPORT 2009

BAlANCESheets as at December 31, 2009


2009 2008 2009 2008

NOTE Rm Rm Rm Rm

ASSETS

NON-CuRRENT ASSETS

Investments in subsidiaries 6 - - 39,626,037 39,626,032

Equipment 7 1,778,161 2,479,104 - -

Software development costs 8 - - - -

Deferred tax assets 9 202,464 175,232 - -

Goodwill on consolidation 10 11,322,505 11,322,502 - -

13,303,130 13,976,838 39,626,037 39,626,032

CuRRENT ASSETS

Trade receivables 11 16,770,688 10,480,975 - -

Other receivables, deposits and

prepayments 12 3,312,232 1,872,312 350,418 -

Amount owing by subsidiaries 13 - - 2,817,502 2,997,503

Tax recoverable 21,340 21,340 21,340 21,340

Short-term investments 14 35,562 35,035 35,562 35,035

Fixed deposits with licensed banks 15 3,181,937 1,685,977 - -

Cash and bank balances 16 4,674,334 2,839,538 11,853 15,183

27,996,093 16,935,177 3,236,675 3,069,061

TOTAl ASSETS 41,299,223 30,912,015 42,862,712 42,695,093


ANNUAL REPORT 2009

BALANCESheets (cont’d)


2009 2008 2009 2008

NOTE Rm Rm Rm Rm

EQuITy AND lIABIlITIES

EQuITy

Share capital 17 25,587,709 25,587,709 25,587,709 25,587,709

Share premium 18 15,246,120 15,246,120 15,246,120 15,246,120

Reserves 19 (22,047,429) (20,679,862) 1,311,235 1,576,449

18,786,400 20,153,967 42,145,064 42,410,278

mINORITy INTERESTS 146,688 218,882 - -

TOTAl EQuITy 18,933,088 20,372,849 42,145,064 42,410,278

NON-CuRRENT lIABIlITIES

Provision for employee entitlements 20 38,144 38,144 - -

Long-term borrowings 21 23,326 108,143 - -

61,470 146,287 - -

CuRRENT lIABIlITIES

Trade payables 22 10,180,557 2,032,627 - -

Other payables and accruals 23 7,805,944 4,706,832 293,652 209,815

Amount owing to directors 24 423,996 444,531 423,996 75,000

Provision for taxation 1,102,842 989,265 - -

Short-term borrowings 25 2,791,326 2,219,624 - -

22,304,665 10,392,879 717,648 284,815

TOTAl lIABIlITIES 22,366,135 10,539,166 717,648 284,815

TOTAl EQuITy AND lIABIlITIES 41,299,223 30,912,015 42,862,712 42,695,093

NET ASSETS PER ShARE (SEN) 30 7.34 7.88


ANNUAL REPORT 2009

INCOmEStatement for the financial year ended December 31, 2009


2009 2008 2009 2008

NOTE Rm Rm Rm Rm

REVENUE 31 50,467,772 42,302,471 - -

DIRECT COSTS (36,043,256) (34,406,628) - -

GROSS PROFIT 14,424,516 7,895,843 - -

OTHER INCOME 404,918 640,304 527 2,773,816

14,829,434 8,536,147 527 2,773,816

ADMINISTRATIVE EXPENSES (13,051,467) (12,335,305) (265,741) (346,762)

MARKETING AND DISTRIBUTION COSTS (36,649) (412,785) - -

OTHER EXPENSES (1,788,778) (27,415,520) - (640,000)

(LOSS)/PROFIT FROM OPERATIONS (47,460) (31,627,463) (265,214) 1,787,054

FINANCE COSTS (216,853) (56,911) - -

(LOSS)/PROFIT BEFORE TAXATION 32 (264,313) (31,684,374) (265,214) 1,787,054

INCOME TAX EXPENSE 33 (420,781) (602,472) - -

(LOSS)/PROFIT AFTER TAXATION (685,094) (32,286,846) (265,214) 1,787,054

ATTRIBUTABLE TO:-

Equity holders of the Company (612,900) (32,402,658) (265,214) 1,787,054

Minority interests (72,194) 115,812 - -

(685,094) (32,286,846) (265,214) 1,787,054

LOSS PER SHARE (SEN):

- BASIC 34 (0.24) (12.66)

- DILUTED 34 Not applicable Not applicable


ANNUAL REPORT 2009

STATEmENTSof Changes in Equity for the financial year ended December 31, 2009

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ANNUAL REPORT 2009

STATEMENTSof Changes in Equity (cont’d)

ShARE ShARE RETAINED

CAPITAl PREmIum PROFITS TOTAl

Rm Rm Rm Rm

ThE COmPANy

Balance at 1.1.2008 25,587,709 15,246,120 (210,605) 40,623,224

Profit for the financial year - - 1,787,054 1,787,054

Balance at 31.12.2008/1.1.2009 25,587,709 15,246,120 1,576,449 42,410,278

Loss for the financial year - - (265,214) (265,214)

Balance at 31.12.2009 25,587,709 15,246,120 1,311,235 42,145,064

The annexed notes form an integral part of these financial statements.


ANNUAL REPORT 2009

CASh FlOWStatement for the financial year ended December 31, 2009


2009 2008 2009 2008

NOTE Rm Rm Rm Rm

CASh FlOWS FROm/(FOR) OPERATING ACTIvITIES

(loss)/Profit before taxation (264,313) (31,684,374) (265,214) 1,787,054

Adjustments for:-

Allowance for doubtful debts:

- trade receivables 1,180,658 1,118,377 - -

- a subsidiary - - - 640,000

Amortisation of development costs - 1,473,214 - -

Depreciation of equipment 796,545 756,565 - -

Dividend income - - - (2,767,479)

Equipment written off 1,394 11,569 - -

Interest expense 216,853 56,911 - -

Interest income (38,471) (32,334) (527) (6,337)

Loss on disposal of equipment - 1,129 - -

Unrealised loss on foreign exchange 262,657 119,691 - -

Unrealised gain on foreign exchange (519,300) (107,465) - -

Impairment loss:

- goodwill - 4,456,533 - -

- software development costs - 17,320,679 - -

Operating profit/(loss) before working capital changes 1,636,023 (6,509,505) (265,741) (346,762)

(Increase)/Decrease in trade and other receivables (8,933,383) 4,743,959 (350,418) -

Increase/(Decrease) in trade and other payables 11,247,042 231,726 83,838 (708,187)

CASh FlOWS FROm/(FOR) FROm OPERATIONS 3,949,682 (1,533,820) (532,321) (1,054,949)

Interest paid (216,853) (56,911) - -

Income tax paid (561,590) (1,818,215) - -

NET CASh FROm/(FOR) OPERATING ACTIvITIES/ BAlANCE CARRIED FORWARD 3,171,239 (3,408,946) (532,321) (1,054,949)


ANNUAL REPORT 2009

cash flowStatement (cont’d)


2009 2008 2009 2008

NOTE Rm Rm Rm Rm

BAlANCE BROuGhT FORWARD 3,171,239 (3,408,946) (532,321) (1,054,949)

CASh FlOWS (FOR)/FROm INvESTING ACTIvITIES

Investment in a subsidiary - - (5) (385,000)

Purchase of equipment 35 (88,551) (660,715) - -

Acquisition of subsidiaries, net of cash acquired 36 (3) (105,269) - -

Addition of development costs - (589,951) - -

Repayment from/ (Advances to) subsidiaries - - 180,000 2,819,179

Interest received 38,471 32,334 527 6,337

NET CASh FROm/(FOR) INvESTING ACTIvITIES (50,083) (1,323,601) 180,522 2,440,516

CASh FlOWS FROm/(FOR) FINANCING ACTIvITIES

(Repayment to)/ Advances from directors (20,535) (2,164,117) 348,996 (1,802,975)

Drawdown of revolving credit 796,388 1,633,425 - -

Repayment of hire purchase and lease payables (275,246) (373,253) - -

NET CASh FROm/(FOR) FINANCING ACTIvITIES 500,607 (903,945) 348,996 (1,802,975)

NET INCREASE/ (DECREASE) IN CASh AND CASh EQuIvAlENTS/ BAlANCE CARRIED FORWARD 3,621,763 (5,636,492) (2,803) (417,408)

BAlANCE BROuGhT FORWARD 3,621,763 (5,636,492) (2,803) (417,408)

CASh AND CASh EQuIvAlENTS AT BEGINNING OF ThE FINANCIAl yEAR 4,251,328 8,907,701 50,218 467,626

FOREIGN ExChANGE TRANSlATION DIFFERENCES (256,223) 980,119 - -

CASh AND CASh EQuIvAlENTS AT END OF ThE FINANCIAl yEAR 37 7,616,868 4,251,328 47,415 50,218

The annexed notes form an integral part of these financial statements.


ANNUAL REPORT 2009

NOTES TO ThEFinancial Statementsfor the financial year ended December 31, 2009

1. GENERAl INFORmATION

The Company is a public company limited by shares and is incorporated under the Companies Act 1965 in Malaysia. The domicile of the Company is Malaysia. The registered office and principal place of business are as follows:-

Registered office : 10th Floor Menara Hap Seng, No. 1 & 3 Jalan P.Ramlee, 50250 Kuala Lumpur.

Principal place of business : Level 9, Tower 1, Jaya 33, No. 3, Jalan Semangat, 46100 Petaling Jaya, Selangor Darul Ehsan.

The financial statements were authorised for issue by the Board of Directors in accordance with a resolution of the directors dated 20 April 2010.

2. PRINCIPAl ACTIvITIES

The Company is principally engaged in the business of investment holding whilst the principal activities of the subsidiaries are set out in Note 6 to the financial statements. There have been no significant changes in the nature of these activities during the financial year.

3. FINANCIAl RISK mANAGEmENT POlICIES

The Group’s financial risk management policy seeks to ensure that adequate financial resources are available for the development of the Group and of the Company’s business whilst managing its market, liquidity and cash flow risks. The policies in respect of the major areas of treasury activity are as follows:-

(a) market Risk

(i) Foreign Currency Risk

The Group is exposed to foreign exchange risk on investments, sales and other business transactions that are denominated in foreign currencies. It manages its foreign exchange exposure by a policy of matching as far as possible receipts and payments in each individual currency.

(ii) Interest Rate Risk

The Group obtains financing through bank borrowings, leasing and hire purchase facilities. Its policy is to obtain the most favourable interest rates available.

Information relating to the Group’s interest rate exposure is disclosed in the notes on borrowings, including hire purchase payables.

(iii) Price Risk

The Group’s principal exposure to price risks arises mainly from changes in the prices of short-term investments. Price risk is monitored closely and managed to an acceptable level.


ANNUAL REPORT 2009

NOTES TO THEFinancial Statements (cont’d)

3. FINANCIAl RISK mANAGEmENT POlICIES (cont’d)

(b) Credit Risk

The Group’s exposure to credit risks, or the risk of counterparties defaulting, arises mainly from receivables. The maximum exposure to credit risks is represented by the total carrying amount of these financial assets in the balance sheet reduced by the effects of any netting arrangements with counterparties.

The Group does not have any major concentration of credit risk related to any individual customer or counterparty.

The Group manages its exposure to credit risk by investing its cash assets safely and profitably, and by the application of credit approvals, credit limits and monitoring procedures on an ongoing basis.

(c) liquidity and Cash Flow Risk

The Group’s exposure to liquidity and cash flow risks arises mainly from general funding and business activities.

The Group practises prudent liquidity risk management by maintaining sufficient cash and the availability of funding through certain committed credit facilities.

4. BASIS OF PREPARATION

The financial statements of the Group and of the Company are prepared under the historical cost convention and modified to include other bases of valuation as disclosed in other sections under significant accounting policies, and in compliance with Financial Reporting Standards (“FRS”) and the Companies Act 1965 in Malaysia.

The Company has not applied in advance the following accounting standards, amendments and interpretations that have been issued by the Malaysian Accounting Standards Board (MASB) but are not yet effective for the current financial year:

FRSs/IC Interpretations Effective date

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

Revised FRS 3 (2010) Business Combinations 1 July 2010

FRS 4 Insurance Contracts 1 January 2010

FRS 7 Financial Instruments: Disclosures 1 January 2010

FRS 8 Operating Segments 1 July 2009

Revised FRS 101 (2009) Presentation of Financial Statements 1 January 2010

Revised FRS 123 (2009) Borrowing Costs 1 January 2010

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

Revised FRS 139 (2010) Financial Instruments: Recognition and Measurement 1 January 2010

Amendments to FRS 1 and FRS 127: Cost of an Investment in a Subsidiary, Jointly Controlled Entity or Associate

1 January 2010

Amendment to FRS 1: Limited Exemption from Comparative FRS 7 Disclosures for First-time Adopters

1 January 2011

Amendments to FRS 2: Vesting Conditions and Cancellations 1 January 2010


ANNUAL REPORT 2009


4. BASIS OF PREPARATION (cont’d)

FRSs/IC Interpretations (cont’d) Effective date

Amendments to FRS 2: Scope of FRS 2 and Revised FRS 3 (2010) 1 July 2010

Amendments to FRS 5: Plan to Sell the Controlling Interest in a Subsidiary 1 July 2010

Amendments to FRS 7, FRS 139 and IC Interpretation 9 1 January 2010

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

Amendments to FRS 132: Classification of Rights Issues and the Transitional Provision In Relation To Compound Instruments

1 January 2010/1 March 2010

Amendments to FRS 138: Consequential Amendments Arising from Revised FRS 3 (2010) 1 July 2010

IC Interpretation 9 Reassessment of Embedded Derivatives 1 January 2010

IC Interpretation 10 Interim Financial Reporting and Impairment 1 January 2010

IC Interpretation 11: FRS 2 – Group and Treasury Share Transactions 1 January 2010

IC Interpretation 12 Service Concession Arrangements 1 July 2010

IC Interpretation 13 Customer Loyalty Programmes 1 January 2010

IC Interpretation 14: FRS 119 – The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction 1 January 2010

IC Interpretation 15 Agreements for the Construction of Real Estate 1 July 2010

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

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

Amendments to IC Interpretation 9: Scope of IC Interpretation 9 and Revised FRS 3 (2010) 1 July 2010

Annual Improvements to FRSs (2009) 1 January 2010

The above FRSs, IC Interpretations and amendments are not relevant to the Group’s operations except as follows:

The revised FRS 3 (2010) introduces significant changes to the accounting for business combinations, both at the acquisition date and post acquisition, and requires greater use of fair values. In addition, all transaction costs, other than share and debt issue costs, will be expensed as incurred. This revised standard will be applied prospectively and therefore there will not have any financial impact on the financial statements of the Group for the current financial year but may impact the accounting for future transactions or arrangements.

The Group considers financial guarantee contracts entered into to be insurance arrangements and accounts for them under FRS 4. In this respect, the Group treats the guarantee contract as a contingent liability until such a time as it becomes probable that the Group will be required to make a payment under the guarantee. The adoption of FRS 4 is expected to have no material impact on the financial statements of the Group.

The possible impacts of FRS 7 (including the subsequent amendments) and the revised FRS 139 (2010) on the financial statements upon their initial applications are not disclosed by virtue of the exemptions given in these standards.

FRS 8 replaces FRS 1142004 Segment Reporting and requires a “management approach”, under which segment information is presented on the same basis as that used for internal reporting purposes. The adoption of this standard only impacts the form and content of disclosures presented in the financial statements of the Group. This FRS is expected to have no material impact on the financial statements of the Group upon its initial application.


ANNUAL REPORT 2009


4. BASIS OF PREPARATION (cont’d)

The revised FRS 101 (2009) has introduced terminology changes (including revised titles for the financial statements) and changes in the format and content of the financial statements. In addition, a statement of financial position is required at the beginning of the earliest comparative period following a change in accounting policy, the correction of an error or the reclassification of items in the financial statements. The adoption of this revised standard will only impact the form and content of the presentation of the Group’s financial statements in the next financial year.

The revised FRS 127 (2010) requires accounting for changes in ownership interests by the group in a subsidiary, while maintaining control, to be recognised as an equity transaction. When the group loses control of a subsidiary, any interest retained in the former subsidiary will be measured at fair value with the gain or loss recognised in profit or loss. The revised standard also requires all losses attributable to the minority interest to be absorbed by the minority interest instead of by the parent. The Group will apply the major changes of the revised FRS 127 (2010) prospectively and therefore there will not have any financial impact on the financial statements of the Group for the current financial year but may impact the accounting for future transactions or arrangements.

Amendments to FRS 1 and FRS 127 remove the definition of “cost method’ currently set out in FRS 127, and instead require an investor to recognise all dividend from subsidiaries, jointly controlled entities or associates as income in its separate financial statements. In addition, FRS 127 has also been amended to deal with situations where a parent reorganises its group by establishing a new entity as its new parent. Under this circumstance, the new parent shall measure the cost of its investment in the original parent at the carrying amount of its share of the equity items shown in the separate financial statements of the original parent at the reorganisation date. The amendments will be applied prospectively and therefore there will not have any financial impact on the financial statements of the Company for the current financial year but may impact the accounting for future transactions or arrangements.

IC Interpretation 9 requires embedded derivatives to be separated from the host contract and accounted for as a derivative on the basis of the conditions that existed at the later of the date the entity first became a party to the contract. The possible impacts of IC Interpretation 9 on the financial statements upon its initial application are not disclosed by virtue of the exemptions given under the revised FRS 139 (2010).

IC Interpretation 10 prohibits the impairment losses recognised in an interim period on goodwill, investments in equity instruments and financial assets carried at cost to be reversed at a subsequent balance sheet date. This interpretation is expected to have no material impact on the financial statements of the Group upon its initial application.

IC Interpretation 14 provides guidance on assessing the limit in FRS 119 on the amount of the surplus that can be recognised as an asset. It also explains how the pension asset or liability may be affected by a statutory or contractual minimum funding requirement. This interpretation is expected to have no material impact on the financial statements of the Group upon its initial application.

Amendments to IC Interpretation 9 are a consequential amendment from the revised FRS 3 (2010). These amendments are expected to have no material impact on the financial statements of the Group and the Company upon its initial application.

Annual Improvements to FRSs (2009) contain amendments to 21 accounting standards that result in accounting changes for presentation, recognition or measurement purposes and terminology or editorial amendments. These amendments are expected to have no material impact on the financial statements of the Group and the Company upon their initial application.


ANNUAL REPORT 2009

5. SIGNIFICANT ACCOuNTING POlICIES

(a) Critical Accounting Estimates and Judgements

Estimates and judgements are continually evaluated by the directors and management and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The estimates and judgements that affect the application of the Group’s accounting policies and disclosures, and have a significant risk of causing a material adjustment to the carrying amounts of assets, liabilities, income and expenses are discussed below:-

(i) Depreciation of Equipment

The estimates for the residual values, useful lives and related depreciation charges for the equipment are based on commercial factors which could change significantly as a result of technical innovations and competitors’ actions in response to the market conditions.

The Group anticipates that the residual values of its equipment will be insignificant. As a result, residual values are not being taken into consideration for the computation of the depreciable amount.

Changes in the expected level of usage and technological development could impact the economic useful lives and the residual values of these assets, therefore future depreciation charges could be revised.

(ii) Income Taxes

There are certain transactions and computations for which the ultimate tax determination may be different from the initial estimate. The Group recognises tax liabilities based on its understanding of the prevailing tax laws and estimates of whether such taxes will be due in the ordinary course of business. Where the final outcome of these matters is different from the amounts that were initially recognised, such difference will impact the income tax and deferred tax provisions in the period in which such determination is made.

(iii) Impairment of Assets

When the recoverable amount of an asset is determined based on the estimate of the value-in-use of the cash-generating unit to which the asset is allocated, the management is required to make an estimate of the expected future cash flows from the cash-generating unit and also to apply a suitable discount rate in order to determine the present value of those cash flows.

(iv) Allowance for Doubtful Debts of Receivables

The Group makes allowance for doubtful debts based on an assessment of the recoverability of receivables. Allowances are applied to receivables where events or changes in circumstances indicate that the carrying amounts may not be recoverable. Management specifically analyses historical bad debt, customer concentrations, customer creditworthiness, current economic trends and changes in customer payment terms when making a judgement to evaluate the adequacy of the allowance for doubtful debts of receivables. Where the expectation is different from the original estimate, such difference will impact the carrying value of receivables.



ANNUAL REPORT 2009

5. SIGNIFICANT ACCOuNTING POlICIES (cont’d)

(a) Critical Accounting Estimates and Judgements (cont’d)

(v) Fair Value Estimates for Certain Financial Assets and Liabilities

The Group carries certain financial assets and liabilities at fair value, which requires extensive use of accounting estimates and judgement. While significant components of fair value measurement were determined using verifiable objective evidence, the amount of changes in fair value would differ if the Group uses different valuation methodologies. Any changes in fair value of these assets and liabilities would affect profit and equity.

(b) Financial Instruments

Financial instruments are recognised in the balance sheet when the Group has become a party to the contractual provisions of the instruments.

Financial instruments are classified as liabilities or equity in accordance with the substance of the contractual arrangement. Interest, dividends, gains and losses relating to a financial instrument classified as a liability are reported as an expense or income. Distributions to holders of financial instruments classified as equity are charged directly to equity.

Financial instruments are offset when the Group has a legally enforceable right to offset and intends to settle either on a net basis or to realise the asset and settle the liability simultaneously.

Financial instruments recognised in the balance sheet are disclosed in the individual policy statement associated with each item.

(c) Functional and Foreign Currencies

(i) Functional and Presentation Currency

The functional currency of each of the Group’s entity is the currency of the primary economic environment in which that entity operates.

The consolidated financial statements are presented in Ringgit Malaysia (“RM”) which is the parent’s functional and presentation currency.

(ii) Transactions and Balances

Transactions in foreign currencies are converted into the respective functional currencies on initial recognition, using the exchange rates approximating those ruling at the transaction dates. Monetary assets and liabilities at the balance sheet date are translated at the rates ruling as of that date. Non-monetary assets and liabilities are translated using exchange rates that existed when the values were determined. All exchange differences are taken to the income statement.



ANNUAL REPORT 2009


(c) Functional and Foreign Currencies (cont’d)

(iii) Foreign Operations

The results and financial position of all the Group entities that have a functional currency different from the presentation currency are translated into the presentation currency as follows:-

(a) assets and liabilities for each balance sheet presented are translated at the closing rate at the date of the balance sheet;

(b) income and expenses for the income statement are translated at the average exchange rates for the year; and

(c) all resulting exchange differences are recognised as a separate component of equity, as a foreign currency translation reserve. On disposal, accumulated translation differences are recognised in the consolidated income statements as part of the gain or loss on sale.

(d) Basis of Consolidation

The consolidated financial statements include the financial statements of the Company and all its subsidiaries made up to 31 December 2009.

A subsidiary is defined as a company in which the parent company has the power, directly or indirectly, to exercise control over its financial and operating policies so as to obtain benefits from its activities.

All subsidiaries are consolidated using the purchase method. Under the purchase method, the results of the subsidiaries acquired or disposed of are included from the date of acquisition or up to the date of disposal. At the date of acquisition, the fair values of the subsidiaries’ net assets are determined and these values are reflected in the consolidated financial statements. The cost of acquisition is measured at the aggregate of the fair values, at the date of exchange, of assets given, liabilities incurred or assumed, and equity instruments issued by the Group in exchange for control of the acquiree, plus any costs directly attributable to the business combination.

Intragroup transactions, balances and unrealised gains on transactions are eliminated; unrealised losses are also eliminated unless cost cannot be recovered. Where necessary, adjustments are made to the financial statements of subsidiaries to ensure consistency of accounting policies with those of the Group.

Minority interests in the consolidated balance sheets consist of the minorities’ share of fair values of the identifiable assets and liabilities of the acquiree as at the date of acquisition and the minorities’ share of movements in the acquiree’s equity.

Minority interests are presented in the consolidated balance sheet of the Group within equity, separately from the

Company’s equity holders, and are separately disclosed in the consolidated income statement of the Group.

(e) Goodwill on Consolidation

Goodwill on consolidation represents the excess of the fair value of the purchase consideration over the Group’s share of the fair values of the identifiable net assets of the subsidiaries at the date of acquisition.

Goodwill on consolidation represents the excess of the fair value of the purchase consideration over the Group’s share of the fair values of the identifiable net assets of the subsidiaries at the date of acquisition.



ANNUAL REPORT 2009


(e) Goodwill on Consolidation (cont’d)

Goodwill is measured at cost less accumulated impairment losses, if any. The carrying value of goodwill is reviewed for impairment annually. The impairment value of goodwill is recognised immediately in the consolidated income statement. An impairment loss recognised for goodwill is not reversed in a subsequent period.

If, after reassessment, the Group’s interest in the fair values of the identifiable net assets of the subsidiaries exceeds the cost of the business combinations, the excess is recognised immediately in the consolidated income statement.

(f) Research and Development Expenditure

Research expenditure is recognised as an expense when it is incurred.

Development expenditure is recognised as an expense except that expenditure incurred on development projects are capitalised as long-term assets to the extent that such expenditure is expected to generate future economic benefits. Development expenditure is capitalised if, and only if an entity can demonstrate all of the following:-

(i) its ability to measure reliably the expenditure attributable to the asset under development;

(ii) the product or process is technically and commercially feasible;

(iii) its future economic benefits are probable;

(iv) its ability to use or sell the developed asset; and

(v) the availability of adequate technical, financial and other resources to complete the asset under development.

Capitalised development expenditure is measured at cost less accumulated amortisation and impairment losses, if any. Development expenditure initially recognised as an expense are not recognised as assets in the subsequent period.

The development expenditure is amortised on a straight-line method over a period of 15 years when the products are ready for sale or use. In the event that the expected future economic benefits are no longer probable of being recovered, the development expenditure is written down to its recoverable amount.

(g) Investments

(i) Investments in Subsidiaries

Investments in subsidiaries are stated at cost in the balance sheet of the Company, and are reviewed for impairment at the end of the financial year if events or changes in circumstances indicate that their carrying values may not be recoverable.

On the disposal of the investments in subsidiaries, the difference between the net disposal proceeds and the carrying amount of the investments is taken to the income statement.



ANNUAL REPORT 2009


(g) Investments (cont’d)

(ii) Short-term Investments Investments held as current assets are stated at the lower of cost and market value at the balance sheet

date.

The market value of the short-term investments is determined based on the quoted bid prices at the balance sheet date.

On the disposal of an investment, the difference between the net disposal proceeds and its carrying amount is recognised in the income statement.

(h) Provisions

Provisions are recognised when the Company has a present obligation as a result of past events, when it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and when a reliable estimate of the amount can be made. Provisions are reviewed at each balance sheet date and adjusted to reflect the current best estimate. Where effect of the time value of money is material, the provision is the present value of the estimated expenditure required to settle the obligation.

(i) Equipment

Equipment is stated at cost less accumulated depreciation and accumulated impairment losses, if any.

Depreciation is calculated under the straight-line method to write off the cost of the assets over their estimated useful lives. Depreciation of an asset does not cease when the asset becomes idle or is retired from active use unless the asset is fully depreciated. The principal annual rates used for this purpose are:-

Computers and printers 25%Furniture and fittings 10% - 20%Motor vehicles 20%Office equipment 20%Renovation 10%

The depreciation method, useful life and residual values are reviewed, and adjusted if appropriate, at each balance sheet date to ensure that the amount, method and period of depreciation are consistent with previous estimates and the expected pattern of consumption of the future economic benefits embodied in the items of the equipment.

An item of equipment is derecognised upon disposal or when no future economic benefits are expected from its use. Any gain or loss arising from derecognition of the asset is included in the income statement in the year the asset is derecognised.



ANNUAL REPORT 2009


(j) Impairment of Assets

The carrying amounts of assets, other than those to which FRS 136 - Impairment of Assets does not apply, are reviewed at each balance sheet date for impairment when there is an indication that the assets might be impaired. Impairment is measured by comparing the carrying values of the assets with their recoverable amounts. The recoverable amount of the assets is the higher of the assets’ net selling price and their value-in-use, which is measured by reference to discounted future cash flow.

An impairment loss is charged to the income statement immediately unless the asset is carried at its revalued amount. Any impairment loss of a revalued asset is treated as a revaluation decrease to the extent of a previously recognised revaluation surplus for the same asset.

In respect of assets other than goodwill, and when there is a change in the estimates used to determine the recoverable amount, a subsequent increase in the recoverable amount of an asset is treated as a reversal of the previous impairment loss and is recognised to the extent of the carrying amount of the asset that would have been determined (net of amortisation and depreciation) had no impairment loss been recognised. The reversal is recognised in the income statement immediately, unless the asset is carried at its revalued amount. A reversal of an impairment loss on a revalued asset is credited directly to the revaluation surplus. However, to the extent that an impairment loss on the same revalued asset was previously recognised as an expense in the income statement, a reversal of that impairment loss is recognised as income in the income statement.

(k) Assets under Finance leases and hire Purchase

Leases of equipment where substantially all the benefits and risk of ownership are transferred to the Group are classified as finance leases.

Equipment acquired under finance lease and hire purchase are capitalised in the financial statements.

Each lease or hire purchase payment is allocated between the liability and finance charges so as to achieve a constant rate on the finance balance outstanding. The corresponding outstanding obligations due under the finance lease and hire purchase after deducting finance charges are included as liabilities in the financial statements.

Finance charges are allocated to the income statement over the period of the respective lease and hire purchase agreements.

Equipment acquired under finance leases and hire purchase are depreciated over the useful lives of the assets. If there is no reasonable certainty that the ownership will be transferred to the Group, the assets are depreciated over the shorter of the lease terms and their useful lives.

(l) Operating leases

Leases of assets where a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments are made under operating leases (net of any incentives received from the lessor) are charged to the income statements on the straight-line basis over the lease period. When an operating lease is terminated before the lease period has expired, any payment required to be made to the lessor by way of penalty is recognised as an expense in the period in which termination takes place.



ANNUAL REPORT 2009


(m) Receivables

Receivables are carried at anticipated realisable value. Bad debts are written off in the period in which they are identified. An estimate is made for doubtful debts based on a review of all outstanding amounts at the balance sheet date.

(n) Payables

Payables are stated at cost which is the fair value of the consideration to be paid in the future for goods and services received.

(o) Income Taxes

Income taxes for the year comprise current and deferred tax.

Current tax is the expected amount of income taxes payable in respect of the taxable profit for the year and is measured using the tax rates that have been enacted or substantively enacted at the balance sheet date.

Deferred tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements.

Deferred tax liabilities are recognised for all taxable temporary differences other than those that arise from goodwill or excess of the acquirer’s interest in the net fair value of the acquiree’s identifiable assets, liabilities and contingent liabilities over the business combination costs or from the initial recognition of an asset or liability in a transaction which is not a business combination and at the time of the transaction, affects neither accounting profit nor taxable profit.

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

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period when the asset is realised or the liability is settled, based on the tax rates that have been enacted or substantively enacted at the balance sheet date.

Deferred tax is recognised in the income statement, except when it arises from a transaction which is recognised directly in equity, in which case the deferred tax is also charged or credited directly to equity, or when it arises from a business combination that is an acquisition, in which case the deferred tax is included in the resulting goodwill or excess of the acquirer’s interest in the net fair value of the acquiree’s identifiable assets, liabilities and contingent liabilities over the business combination costs. The carrying amounts of deferred tax assets are reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient future taxable profits will be available to allow all or part of the deferred tax assets to be utilised.



ANNUAL REPORT 2009


(p) Interest-bearing Borrowings

Interest-bearing borrowings are recorded at the amount of proceeds received, net of transactions costs.

All borrowing costs are charged to the income statement as expenses in the period in which they are incurred.

(q) Equity Instruments

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from proceeds.

Dividends on ordinary shares are recognised as liabilities when approved for appropriation.

(r) Segmental Information

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 assets include all assets used by a segment and consist principally of plant and equipment (net of accumulated depreciation, where applicable), other investments, inventories, receivables and cash and bank balances.

Most segment assets can be directly attributed to the segments on a reasonable basis. Segment assets do not include income tax assets, whilst segment liabilities do not include income tax liabilities and borrowings from financial institutions.

Segment revenue, expenses and results include transfers between segments. The prices charged on intersegment transactions are based on normal commercial terms. These transfers are eliminated on consolidation.

(s) Cash and Cash Equivalents

Cash and cash equivalents comprise cash in hand, bank balances, demand deposits, deposits pledged with financial institutions, bank overdrafts and short term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

(t) Employee Benefits

(i) Short-term Benefits

Wages, salaries, paid annual leave, bonuses and non-monetary benefits are accrued in the period in which the associated services are rendered by employees of the Group.

(ii) Defined Contribution Plans

The Group’s contributions to defined contribution plans are charged to the income statement in the period to which they relate. Once the contributions have been paid, the Group has no further liability in respect of the defined contribution plans.



ANNUAL REPORT 2009


(u) Related Parties

A party is related to an entity if:-

(i) directly, or indirectly through one or more intermediaries, the party:-controls, is controlled by, or is under common control with, the entity (this includes parents, subsidiaries •and fellow subsidiaries);has an interest in the entity that gives it significant influence over the entity; or•has joint control over the entity;•

(ii) the party is an associate over the entity;(iii) the party is a joint venture in which the entity is a venturer;(iv) the party is a member of the key management personnel of the entity or its parent;(v) the party is a close member of the family of any individual referred to in (i) or (iv); (vi) the party is an entity that is controlled, jointly controlled or significantly influenced by, or for which significant

voting power in such entity resides with, directly or indirectly, any individual referred to in (iv) or (v); or(vii) the party is a post-employment benefit plan for the benefit of employees of the entity, or of any entity that

is a related party of the entity.

Close members of the family of an individual are those family members who may be expected to influence, or be influenced by, that individual in their dealings with the entity.

(v) Revenue Recognition

(i) Products and Services

Revenue is recognised upon the sale of products and rendering of services and when the outcome of the transaction can be estimated reliably. 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.

(ii) Interest Income

Interest income is recognised on an accrual basis.

(iii) Dividend Income

Dividend income from other investments is recognised when the right to receive payment is established.

6. INvESTmENTS IN SuBSIDIARIES

ThE COmPANy

2009 2008

Rm Rm

Unquoted shares, at cost

At 1 January 39,626,032 39,241,032

Addition during the financial year 5 385,000

At 31 December 39,626,037 39,626,032



ANNUAL REPORT 2009

6. INvESTmENTS IN SuBSIDIARIES (cont’d)

During the financial year, the Company acquired two ordinary shares of RM1.00 each in Cogent Business Solutions (S) Pte Ltd representing a 100% equity interest for a total purchase consideration of RM5 which was satisfied in cash. Details of the acquisition are disclosed in Note 36 to the financial statements.

Details of the subsidiaries are as follows:-

NAmE OF COmPANyCOuNTRy OF INCORPORATION

EFFECTIvE EQuITy

INTEREST PRINCIPAl ACTIvITIES

2009 2008

ISS Consulting (Malaysia) Sdn. Bhd. Malaysia 100% 100% Advisers and consultants for computer software solutions.

ISS Consulting (S) Pte. Ltd. ^ The Republic of Singapore

100% 100% Advisers and consultants for computer software solutions.

ISS Consulting (Thailand) Ltd. # Thailand *49% *49% Advisers and consultants for computer software solutions.

PT ISS Consulting Indonesia ^ Indonesia 100% 100% Advisers and consultants for computer software solutions.

Ledge Consulting Pte. Ltd. ^ The Republic of Singapore

100% 100% Advisers and consultants for computer software solutions.

Cogent Consulting Sdn. Bhd.^ Malaysia 70% 70% Advisers and consultants for computer software solutions.

Cogent Business Solutions (S) Pte. Ltd.^

The Republic of Singapore

100% - Advisers and consultants for computer software solutions.

# Audited by affiliates of Crowe Horwath International.

^ Not audited by Messrs. Crowe Horwath.

* In accordance with the Memorandum and Articles of Association of ISS Consulting (Thailand) Ltd., one voting right is attached to every one ordinary share and one voting right is attached to every five preference shares. Based on the existing total issued and paid-up share capital of ISS Consulting (Thailand) Ltd. of 24,500 ordinary shares of THB100 each and 25,500 preference shares of THB100 each, the total voting rights are 29,600 comprising 24,500 voting rights for ordinary shares and 5,100 voting rights for preference shares. ISS Consulting Solution Berhad holds 24,500 ordinary shares which carry with them 24,500 voting rights or 82.77% of the total voting rights in ISS Consulting (Thailand) Ltd. As ISS Consulting Solutions Berhad has control of ISS Consulting (Thailand) Ltd., ISS Consulting (Thailand) Ltd. is consolidated into the Group.



ANNUAL REPORT 2009

7. EQuIPmENT

AT1.1.2009 ADDITIONS

WRITTENOFF

DEPRECIATIONChARGE

TRANSlATIONDIFFERENCE

AT31.12.2009

Rm Rm Rm Rm Rm Rm

ThE GROuP

Computers and printers 1,264,190 68,228 (1) (533,233) 3,572 802,756

Furniture and fittings 341,079 20,323 - (50,645) 82 310,839

Motor vehicle 86,149 - - (27,205) - 58,944

Office equipment 182,776 - (1,393) (54,443) 3,782 130,722

Renovation 604,910 - - (131,019) 1,009 474,900

2,479,104 88,551 (1,394) (796,545) 8,445 1,778,161

AT1.1.2008

ACQuISITIONOF A

SuBSIDIARyADDITIONS WRITTEN

OFF DISPOSAlDEPRECIATION

ChARGETRANSlATION

DIFFERENCEAT

31.12.2008

RM RM RM RM RM RM RM RM

ThE GROuP

Computers and printers 908,685 4,101 854,700 (11,569) (1,129) (498,843) 8,245 1,264,190

Furniture and fittings 384,759 150 5,209 - - (50,104) 1,065 341,079

Motor vehicle 113,354 - - - - (27,205) - 86,149

Office equipment 122,777 1 117,003 - - (57,428) 423 182,776

Renovation 608,722 1 113,420 - - (122,985) 5,752 604,910

2,138,297 4,253 1,090,332 (11,569) (1,129) (756,565) 15,485 2,479,104

COSTACCumulATED DEPRECIATION

NET BOOK vAluE

AT 31.12.2009 RM RM RM

Computers and printers 4,235,907 (3,433,151) 802,756

Furniture and fittings 555,110 (244,271) 310,839

Motor vehicle 136,025 (77,081) 58,944

Office equipment 598,074 (467,352) 130,722

Renovation 806,342 (331,442) 474,900

6,331,458 (4,553,297) 1,778,161



ANNUAL REPORT 2009

7. EQuIPmENT (cont’d)

COSTACCumulATED DEPRECIATION

NET BOOK vAluE

AT 31.12.2008 RM RM RM

Computers and printers 4,148,713 (2,884,523) 1,264,190

Furniture and fittings 527,127 (186,048) 341,079

Motor vehicle 136,025 (49,876) 86,149

Office equipment 555,943 (373,167) 182,776

Renovation 803,953 (199,043) 604,910

6,171,761 (3,692,657) 2,479,104

The following assets were acquired under hire purchase and lease terms:-

ThE GROuP

2009 2008

Rm Rm

Carrying amount:-

Lease terms:

- computers and printers 366,146 663,110

Hire purchase terms:

- motor vehicle 58,944 86,149

425,090 749,259

8. SOFTWARE DEvElOPmENT COSTS

ThE GROuP

2009 2008

Rm Rm

At cost:-

At 1 January - 22,014,668

Addition during the financial year - 589,951

Translation difference - (273,037)

Impairment loss - (22,331,582)

- -



ANNUAL REPORT 2009

8. SOFTWARE DEvElOPmENT COSTS (cont’d)

ThE GROuP

2009 2008

Rm Rm

Accumulated amortisation:-

At 1 January - (3,590,356)

Amortisation charge - (1,473,214)

Translation difference - 52,667

Impairment loss - 5,010,903

- -

At 31 December - -

Software development costs relate to costs incurred for the development of the Xpress software.

Included in the software development costs incurred in the previous financial year were the following items:-

ThE GROuP

2009 2008

Rm Rm

Directors’ non-fee emoluments - 112,500

Staff costs - 477,451

- 589,951

In the previous financial year, SAP AG introduced the ̀ Fast Start’ solution into the market and this had a direct impact on the value of the Xpress Suite due to the significant similarities of the two solutions. The Group has taken the decision to provide for the full value of the software development costs due to the uncertainties over the future potential of the Xpress software.

9. DEFERRED TAx ASSETS

ThE GROuP

2009 2008

Rm Rm

At 1 January 175,232 152,989

Recognised in income statement (Note 33) 19,597 21,254

Translation difference 7,635 989

At 31 December 202,464 175,232



ANNUAL REPORT 2009

9. DEFERRED TAx ASSETS (cont’d)

Deferred tax assets are attributable to the following:-

ThE GROuP

2009 2008

Rm Rm

Provision for employee entitlements 46,486 40,611

Other provisions 155,978 134,621

202,464 175,232

10. GOODWIll ON CONSOlIDATION

ThE GROuP

2009 2008

Rm Rm

At 1 January 11,322,502 15,634,533

Arising from the acquisition of subsidiaries (Note 36) 3 144,502

Impairment loss - (4,456,533)

At 31 December 11,322,505 11,322,502

Goodwill is stated at cost and reviewed for impairment annually.

For the purpose of impairment testing, goodwill is allocated to groups of companies acquired (“the Units”) at which the goodwill is monitored for internal management purposes.

The recoverable amount of the above is based on the value-in-use calculations using cash flow projections covering a five-year period approved by management.

The following describes the key assumptions on which management has based its cash flow projections to undertake impairment testing of goodwill:-

There will be no material changes in the structure and principal activities of the Group;(i)

There will not be any significant increase in the labour costs, adverse changes in economic conditions or other (ii) abnormal factors, which will adversely affect the operations of the Units;

Statutory income tax rate – the rate for Malaysia is 25% for the current year. There will be no material changes in (iii) the present legislation or regulations, rates of duties, levies and taxes affecting the Units’ activities; and

Discount rate of 10% is applied in determining the recoverable amounts of the Units. The discount rate was (iv) estimated based on the Group’s existing rate of borrowings.



ANNUAL REPORT 2009

11. TRADE RECEIvABlES

ThE GROuP

2009 2008

Rm Rm

Trade receivables 19,468,379 11,974,916

Allowance for doubtful debts:-

At 1 January (1,493,941) (373,742)

Addition for the financial year (1,180,658) (1,118,377)

Translation difference (74,110) (1,822)

Written off during the financial year 51,018 -

At 31 December (2,697,691) (1,493,941)

16,770,688 10,480,975

The Group’s normal trade credit terms range from 30 to 90 days.

Included in trade receivables of the Group at the balance sheet date is an amount of approximately RM9,435,000 (2008 – RM2,440,000) representing accrued revenue in respective of projects in progress.

The foreign currency exposure profile of the trade receivables is as follows:-

ThE GROuP

2009 2008

Rm Rm

Singapore Dollar 11,617,866 4,624,394

United States Dollar - 472,362

Thai Baht 2,318,602 2,060,802

Indonesian Rupiah - 25,011

12. OThER RECEIvABlES, DEPOSITS AND PREPAymENTS

The foreign currency exposure profile of the other receivables, deposits and prepayments is as follows:-

ThE GROuP

2009 2008

Rm Rm

Singapore Dollar 1,553,643 396,408

Thai Baht 153,038 281,551

Indonesian Rupiah 796,604 752,125



ANNUAL REPORT 2009

13. AmOuNT OWING By SuBSIDIARIES

The amount owing is non-trade in nature, unsecured, interest-free and repayable on demand.

ThE COmPANy

2009 2008

Rm Rm

Amount owing by subsidiaries 3,457,502 3,637,503

Allowance for doubtful debts:-

At 1 January (640,000) -

Addition for the financial year - (640,000)

At 31 December (640,000) (640,000)

2,817,502 2,997,503

14. ShORT-TERm INvESTmENTS

ThE GROuP/ThE COmPANy

2009 2008

Rm Rm

Unquoted unit trusts in Malaysia

At cost:-

At 1 January 35,035 428,698

Addition during the financial year 527

Withdrawal during the financial year - (393,663)

At 31 December 35,562 35,035

15. FIxED DEPOSITS WITh lICENSED BANKS

The fixed deposits are pledged to banks as security for banking facilities granted to the Group.

The weighted average effective interest rate of the fixed deposits at the balance sheet date was 0.73% (2008 – 1.8%) per annum. The fixed deposits have maturity periods ranging from 6 months to 12 months (2008 – 6 months to 12 months).



ANNUAL REPORT 2009

15. FIxED DEPOSITS WITh lICENSED BANKS (cont’d)

The foreign currency exposure profile of the fixed deposits is as follows:-

ThE GROuP

2009 2008

Rm Rm


16. CASh AND BANK BAlANCES

The foreign currency exposure profile of the cash and bank balances is as follows:-

ThE GROuP

2009 2008

Rm Rm

Indonesian Rupiah 9,491 593


Thai Baht 1,791,229 1,159,875

17. ShARE CAPITAl

ThE GROuP/ThE COmPANy

2009 2008 2009 2008

NumBER OF ShARES Rm Rm

Ordinary Shares Of RM0.10 Each:-

Authorised 500,000,000 500,000,000 50,000,000 50,000,000

Issued And Fully Paid-Up 255,877,090 255,877,090 25,587,709 25,587,709

18. ShARE PREmIum

The share premium is not distributable by way of dividends and can only be utilised in the manner set out in Section 60(3) of the Companies Act, 1965.



ANNUAL REPORT 2009

19. RESERvES


2009 2008 2009 2008

Rm Rm Rm Rm

Non-distributable:-

Exchange fluctuation reserve 204,967 959,634 - -

Distributable:-

(Accumulated losses)/Retained profits (22,252,396) (21,639,496) 1,311,235 1,576,449

(22,047,429) (20,679,862) 1,311,235 1,576,449

Subject to the agreement of the tax authorities, at the balance sheet date, the Company has sufficient tax credits under Section 108 of the Income tax Act, 1967 and tax exempt income to frank the payment of dividends out of its entire retained profits without incurring additional tax liabilities.

At the balance sheet date, the Company has not elected for the single tier tax system. When the tax credit balance is fully utilised, or by 31 December 2013 at the latest, the Company will automatically move to the single tier tax system. Under the single tier tax system, tax on the Company’s profits is a final tax, and dividends distributed to the shareholders will be exempted from tax.

20. PROvISION FOR EmPlOyEE ENTITlEmENTS

ThE GROuP

2009 2008

Rm Rm

At 1 January 42,490 42,490

Translation difference (4,346) (4,346)

At 31 December 38,144 38,144 The foreign currency exposure profile of the provision for employee entitlements is as follows:-

ThE GROuP

2009 2008

Rm Rm


The provision for employee entitlements represents a foreign subsidiary’s estimated liabilities for employees termination, gratuity and compensation benefit.



ANNUAL REPORT 2009

20. PROvISION FOR EmPlOyEE ENTITlEmENTS (cont’d)

The Company used the projected unit credit method in the determination of assessment, with the assumptions as follows:

ThE GROuP

2009 2008

Discounted rate 8% 8%

Salary growth rate 10% 10%

Retirement age 55 years 55 years

21. lONG-TERm BORROWINGS

ThE GROuP

2009 2008

Rm Rm

Hire purchase and lease payables (Note 26) 23,326 108,143

22. TRADE PAyABlES

The normal credit terms granted to the Group range from 30 to 120 days.

The foreign currency exposure profile of the trade payables is as follows:-

ThE GROuP

2009 2008

Rm Rm


Thai Baht 236,057 263,746




ANNUAL REPORT 2009

23. OThER PAyABlES AND ACCRuAlS

The foreign currency exposure profile of the other payables and accruals is as follows:

ThE GROuP

2009 2008

Rm Rm


Thai Baht 856,903 559,724

Indonesian Rupiah (29,799) 4,143

24. AmOuNT OWING TO DIRECTORS

The amount owing is unsecured, interest-free and repayable on demand. The amount is to be settled in cash.

25. ShORT-TERm BORROWINGS

ThE GROuP

2009 2008

Rm Rm

Hire purchase and lease payables (Note 26) 86,548 276,977

Revolving credit (Note 27) 1,941,793 1,633,425

Bank overdrafts (Note 28) 274,965 309,222

Bank loans (Note 29) 488,020 -

2,791,326 2,219,624



ANNUAL REPORT 2009

26. hIRE PuRChASE AND lEASE PAyABlES

ThE GROuP

2009 2008

Rm Rm

Minimum hire purchase and lease payments:

- not later than one year 100,902 296,388

- later than one year and not later than five years 27,584 113,018

128,486 409,406

Future finance charges (18,612) (24,286)

Present value of hire purchase and lease payables 109,874 385,120

The net hire purchase and lease payables are repayable as follows:-

Current

- repayable within one year (Note 25) 86,548 276,977

Non-current

- repayable after one year (Note 21) 23,326 108,143

109,874 385,120

The hire purchase and lease payables bore effective interest at the balance sheet date at rates ranging from 2.93% to 6.98% per annum (2008 - 2.93% to 6.98%).

27. REvOlvING CREDIT

The revolving credit bore an effective interest of 7% per annum at the balance sheet date and is secured by:-

(a) the assignment of certain contract proceeds of a subsidiary;

(b) debentures incorporating fixed and floating charges over all present and future assets and undertakings of a subsidiary; and

(c) a corporate guarantee of the Company.



ANNUAL REPORT 2009

28. BANK OvERDRAFTS

At the balance sheet date, the bank overdraft bore interest at 6.5% per annum and is secured by:-

(a) a charge on the cash deposits of not less than SGD150,000 maintained with the bank pursuant to an existing Security Memorandum (First Party);

(b) a joint and several guarantee of certain directors; and

(c) a corporate guarantee of the Company.

29. BANK lOANS

ThE GROuP

2009 2008

Rm Rm

Term loan - repayable within 1 year and shown under current liabilities (Note 25) 488,020 -

Term loan is secured by a corporate guarantee of the ultimate holding company and fixed deposits with financial institutions.

The weighted average annual effective interest rate is 6.25% (2008 - Nil) per annum.

30. NET ASSETS PER ShARE

The net assets per share of the Group is calculated based on the net assets value at the balance sheet date of RM18,786,400 (2008 – RM20,153,967) divided by the number of ordinary shares in issue at the balance sheet date of 255,877,090 (2008 – 255,877,090) shares.

31. REvENuE

Revenue of the Group represents billings for sale of products, project management and consultancy services rendered less discounts and service tax.



ANNUAL REPORT 2009

32. (lOSS)/PROFIT BEFORE TAxATION


2009 2008 2009 2008

Rm Rm Rm Rm

(Loss)/Profit before taxation is arrived at after charging/ (crediting):-

Allowance for doubtful debts:

- trade receivables 1,180,658 1,118,377 - -

- a subsidiary - - - 640,000

Amortisation of development costs - 1,473,214 - -

Audit fee 135,979 132,586 15,000 15,000

Depreciation of equipment 796,545 756,565 - -

Directors’ fees 75,000 75,000 75,000 75,000

Directors’ non-fee emoluments 1,533,953 1,270,401 - -

Equipment written off 1,394 11,569 - -

Impairment loss:

- goodwill - 4,456,533 - -

- software development costs - 17,320,679 - -

Interest expense 216,853 56,911 - -

Loss on foreign exchange

- realised 72,706 1,903,877 - -

- unrealised 262,657 119,691 - -

Rental of car park 73,686 74,400 - -

Rental of office 1,129,161 1,095,516 - -

Rental of office equipment 3,828 3,828 - -

Staff costs 23,950,533 27,090,014 - -

Dividend income - - - (2,767,479)

Gain on foreign exchange

- realised (4,482) (315,735) - -

- unrealised (519,300) (107,465) - -

Loss on disposal of equipment - 1,129 - -

Interest income (38,471) (32,334) (527) (6,337)



ANNUAL REPORT 2009

33. INCOmE TAx ExPENSE


2009 2008 2009 2008

Rm Rm Rm Rm

Current tax:-

Malaysian tax:

- for the current financial year - 112,886 - -

- underprovision in the previous financial year 286 - - -

Foreign tax:

- for the current financial year 537,155 534,730 - -

- overprovision in the previous financial year (97,063) (23,890) - -

440,378 623,726 - -

Deferred tax (Note 9): -

Foreign tax:

- for the current financial year - (21,254) - -

Local tax:

- for the current financial year (19,597) - - -

420,781 602,472 - -

During the financial year, the Malaysian statutory tax rate was reduced from 26% to 25% as announced in the Malaysian Budget 2008.

Domestic income tax is calculated at the Malaysian statutory tax rate of 25% (2008 - 26%) of the estimated assessable profit for the year. Taxation for other jurisdictions is calculated at the rates prevailing in the respective jurisdictions.

As gazetted in the Finance Act 2009, certain subsidiaries of the Company will no longer enjoy the preferential tax rate of 20% on their chargeable income of up to RM500,000 effective from year of assessment 2009 as the Company has a paid-up share capital exceeding RM2,500,000.

A subsidiary was granted the Multimedia Super Corridor Status which qualifies the subsidiary for the pioneer status incentive with tax exemption on the subsidiary’s income from pioneer activities during the pioneer period from 19 August 1998 to 31 July 2009.

The pioneer status incentive expired on 31 July 2009 with no further extension.



ANNUAL REPORT 2009

33. INCOmE TAx ExPENSE (cont’d) A reconciliation of the income tax expense applicable to the (loss)/profit before taxation at the statutory tax rate to

income tax expense at the effective tax rate of the Group and of the Company is as follows:-


2009 2008 2009 2008

Rm Rm Rm Rm

(Loss)/Profit before taxation (264,313) (31,684,374) (265,214) 1,787,054

Tax at the statutory tax rate of 25% (2008 - 26%) (66,078) (8,237,937) (66,303) 464,634

Tax effects of:-

Tax-exempt income (69,211) (45,086) - (719,544)

Non-taxable gains (95,823) - - -

Non-deductible expenses 713,704 7,429,051 66,303 254,910

Deferred tax asset not recognised during the financial year 694,137 643,074 - -

Utilisation of deferred tax assets not recognised in prior years (394,479) (20,569) - -

Differential in tax rates (148,818) 244,253 - -

(Over)/Underprovision of current tax in the previous financial year (96,795) (23,890) - -

Others (115,856) 613,576 - -

420,781 602,472 - -

34. lOSS PER ShARE

The basic loss per share is calculated by dividing the Group’s loss attributable to shareholders of RM612,900 (2008 – RM32,402,658) by the weighted average number of ordinary shares of RM0.10 each in issue during the financial year of 255,877,090 (2008 – 255,877,090).

The fully diluted loss per share for the Group is not presented as there were no potential dilutive ordinary shares during the financial year.



ANNUAL REPORT 2009

35. PuRChASE OF EQuIPmENT

ThE GROuP

2009 2008

Rm Rm

Cost of equipment purchased 88,551 1,090,332

Amount financed through hire purchase and lease - (429,617)

Cash disbursed for the purchase of equipment 88,551 660,715

36. ACQuISITION OF A SuBSIDIARy

The details of the net assets acquired and cash flow arising from the acquisition of a subsidiary are as follows:-

ThE GROuP

2009 2008

Rm Rm

Non-current assets - 4,253

Current assets 2 508,425

Current liabilities - (169,110)

Fair value of net assets acquired 2 343,568

Goodwill on consolidation (Note 10) 3 144,502

Minority interests - (103,070)

Total purchase consideration 5 385,000

Satisfied by the issuance of shares - -

Cash outflow from acquisition of subsidiaries 5 385,000

Cash and cash equivalents of subsidiaries acquired (2) (279,731)

Net cash outflow on acquisition of subsidiaries 3 105,269



ANNUAL REPORT 2009

36. ACQuISITION OF A SuBSIDIARy (cont’d)

The effects of the acquisition of a subsidiary on the financial results of the Group at the end of the financial year are as follows:-

ThE GROuP

2009 2008

Rm Rm

Revenue 744,412 1,483,950

(Loss)/Profit after taxation (13,173) 270,229

37. CASh AND CASh EQuIvAlENTS

For the purpose of the cash flow statements, cash and cash equivalents comprise the following:-


2009 2008 2009 2008

Rm Rm Rm Rm

Short-term investments (Note 14) 35,562 35,035 35,562 35,035

Fixed deposits with licensed banks (Note 15) 3,181,937 1,685,977 - -

Cash and bank balances 4,674,334 2,839,538 11,853 15,183

Bank overdraft (Note 28) (274,965) (309,222) - -

7,616,868 4,251,328 47,415 50,218

38. DIRECTORS’ REmuNERATION

The aggregate amount of emoluments received and receivable by directors of the Group and of the Company during the financial year are as follows:-


2009 2008 2009 2008

Rm Rm Rm Rm

Executive directors:

- basic salaries,

Employees Provident Fund, allowances and bonuses 1,533,953 1,270,401 - -

Non-executive directors:

- fees 75,000 75,000 75,000 75,000

1,608,953 1,345,401 75,000 75,000



ANNUAL REPORT 2009

38. DIRECTORS’ REmuNERATION (cont’d)

The fees and emoluments received/receivable by directors are further analysed as follows:-


2009 2008 2009 2008

Rm Rm Rm Rm

Capitalised into software development costs - 112,500 - -

Recognised in the income statement 1,608,953 1,232,901 75,000 75,000

1,608,953 1,345,401 75,000 75,000

Details of the emoluments for the directors of the Group and of the Company received/receivable for the financial year in the bands of RM50,000 are as follows: -


2009 2008 2009 2008

Executive director: -

RM100,001 - RM150,000 1 - - -

RM150,001 - RM200,000 1 2 - -

RM200,001 - RM250,000 - - - -

Above RM250,000 3 3 - -

Non-executive directors:

Below RM50,000 3 3 3 3

8 8 3 3

39. OPERATING lEASE COmmITmENT

The future minimum lease payments under the non-cancellable operating lease are as follows:-

ThE GROuP

2009 2008

Rm Rm

Not later than one year 870,952 1,068,040

Later than one year and not later than five years 1,282,247 277,156

2,153,199 1,345,196



ANNUAL REPORT 2009

40. SIGNIFICANT RElATED PARTy DISClOSuRES The balances with related parties at the balance sheet date are disclosed in Note 13 and Note 24 to the financial

statements.

In addition to the balances detailed elsewhere in the financial statements, the Group and the Company carried out the following transactions with related parties during the financial year:-


2009 2008 2009 2008

Rm Rm Rm Rm

Professional service income from Azign Technologies Pte. Ltd., a company in which certain directors have substantial financial interests - 27,733 - -

Key management compensation:-

Salaries and other short-term employee benefits 3,856,676 3,225,977 75,000 75,000



ANNUAL REPORT 2009

41. SEGmENTAl REPORTING

The Group is engaged in the provision of project management, consulting and programming services primarily related to mySAP Products as well as in the sale of its XPress suite of products. The business segments can be analysed as follows:-

Analysis by Products and Services

Products Services Total

2009 Rm Rm Rm

Revenue 18,394,746 32,073,026 50,467,772

Cost of sales (12,600,769) (23,442,487) (36,043,256)

Gross profit 5,793,977 8,630,539 14,424,516

Other operating income 404,918

14,829,434

Administrative expenses (13,051,467)

Marketing and distribution costs (36,649)

Other operating expenses (1,788,778)

Finance costs (216,853)

Loss before taxation (264,313)

Taxation (420,781)

Loss after taxation (685,094)

Minority Interests 72,194

Loss attributable to shareholders (612,900)

unallocated Segment

Total assets # 40,278,815

Total liabilities * (21,263,293)

Capital expenditure 88,551

Depreciation of equipment (796,545)



ANNUAL REPORT 2009

41. SEGmENTAl REPORTING (cont’d)

Analysis by Products and Services (cont’d)

Products Services Total

2008 Rm Rm Rm

Revenue 18,283,650 24,018,821 42,302,471

Cost of sales (14,663,795) (19,742,833) (34,406,628)

Gross profit 3,619,855 4,275,988 7,895,843

Other operating income 640,304

8,536,147

Administrative expenses (12,335,305)

Marketing and distribution costs (412,785)

Other operating expenses (27,415,520)

Finance costs (56,911)

Loss before taxation (31,684,374)

Taxation (602,472)

Loss after taxation (32,286,846)

Minority Interests (115,812)

Loss attributable to shareholders (32,402,658)

unallocated Segment

Total assets # 30,715,443

Total liabilities * (9,549,901)

Capital expenditure 1,090,332

Depreciation of equipment (756,565)

Amortisation of software development costs (1,473,214)

Impairment loss:

- goodwill (4,456,533)

- software development costs (17,320,679)



ANNUAL REPORT 2009

41. SEGmENTAl REPORTING (cont’d)

Analysis by Products and Services (cont’d)

Assets and liabilities of the Group could not be allocated to the individual segment as they were incurred in a pool to generate revenue.

# - Segment assets comprise total current and non-current assets, excluding income tax assets.

* - Segment liabilities comprise total current and non-current liabilities, excluding income tax liabilities.

Analysis by Geographical Area

Amortisation

Segment Segment Capital Depreciation of development

Revenue assets liabilities expenditure of equipment costs

2009 Rm Rm Rm Rm Rm Rm

Malaysia 6,587,002 16,913,734 (6,997,241) 26,631 481,322 -

Singapore 31,714,325 18,811,132 (12,859,040) - 224,355 -

Thailand 9,364,759 4,544,458 (1,195,862) 61,920 85,091 -

Indonesia 1,625,476 9,491 (211,150) - 5,777 -

China 340,448 - - - - -

India 725,534 - - - - -

Philippines 110,228 - - - - -

50,467,772 40,278,815 (21,263,293) 88,551 796,545 -

2008

Malaysia 12,008,882 15,958,052 (5,044,933) 617,168 (446,987) (1,155,506)

Singapore 16,899,128 6,774,141 (3,517,180) 271,343 (237,680) -

Thailand 9,424,890 3,802,238 (769,440) 201,821 (56,805) (141,517)

Indonesia 858,226 4,181,012 (218,348) - (15,093) (176,191)

China 487,925 - - - - -

Korea 932,132 - - - - -

Japan 438,675 - - - - -

India 1,166,883 - - - - -

New Zealand 85,730 - - - - -

42,302,471 30,715,443 (9,549,901) 1,090,332 (756,565) (1,473,214)



ANNUAL REPORT 2009

42. FOREIGN ExChANGE RATES

The applicable closing foreign exchange rates used (expressed on the basis on one unit of foreign currency to Ringgit Malaysia equivalent, unless otherwise stated) in the translation of foreign currency monetary assets and liabilities and the financial statements of overseas subsidiaries are as follows:-

2009 2008

Rm Rm

Singapore Dollar 2.4401 2.4070

100 Thai Baht 10.27 9.9400

100 Indonesian Rupiah 0.0364 0.0316

43. SIGNIFICANT EvENT DuRING ThE FINANCIAl yEAR

Acquisition of Diversified Gateway Berhad (“DGB”) During the financial year, the Company entered into a Share Sale Agreement with Formis Holdings Berhad (“FHB”),

a wholly-owned subsidiary of Formis Resources Berhad and the management team of DGB for the acquisition of the entire equity interest of DGB from FHB for a consideration of RM110,000,000. The purchase consideration was satisfied via the issuance of 1,100,000,000 ordinary shares of RM0.10 each in the Company at par.

The acquisition was duly completed on 14 April 2010.

Under the acquisition of DGB, the acquirer is deemed to be DGB and the Group, the issuing entity, is the acquiree as FHB would control the combined entity subsequent to the completion of the acquisition.

The acquisition of DGB by the Group is accounted for, in reverse, as an acquisition of the Group by DGB.

As a result, effective 14 April 2010, the Group’s financial statements represent a continuation of the financial statements of DGB, known as the legal subsidiary and accounting parent.

44. CONTINGENT lIABIlITIES

ThE COmPANy

2009 2008

Rm Rm

Unsecured:

Corporate guarantees given to financial institutions for credit facilities granted to certain subsidiaries

10,610,500 10,610,500

Performance guarantee for a subsidiary 10,961,478 10,961,478

21,571,978 21,571,978



ANNUAL REPORT 2009

45. FAIR vAluES OF FINANCIAl INSTRumENTS

Fair value is defined as the amount at which the financial instrument could be exchanged in a current transaction between knowledgeable willing parties in an arm’s length transaction, other than in a forced sale or liquidation.

The following methods and assumptions are used to estimate the fair value of each class of financial instruments:-

(a) hire Purchase and lease Payables

The carrying amounts of the hire purchase and lease payables approximated their fair values. The fair values of hire purchase and lease payables are determined by discounting the relevant cash flows using current interest rates for similar instruments at the balance sheet date.

(b) Cash and Bank Balances and Other Short-term Receivables/Payables

The carrying amounts approximated their fair values due to the relatively short-term maturity of these instruments.

(c) Contingent liabilities

The nominal amount and net fair values of the financial instrument amounting to RM21,571,978 (2008 – RM21,571,978) are not recognised in the balance sheet of the Company.

The net fair values of the contingent liabilities are estimated to be minimal as the subsidiaries are expected to fulfill their obligations.



ANNUAL REPORT 2009

ANAlySISof Shareholdingsas at April 30, 2010

Authorised Share Capital : RM500,000,000.00

Issued and Paid-Up Share Capital : RM135,587,709.00 comprising of 1,355,877,090 ordinary shares of RM0.10 each

Class of Shares : Ordinary shares of RM0.10 each

Voting Rights : Every member of the Company, present in person or by proxy, shall have on a show of hands, one (1) vote or on a poll, one (1) vote for each share held

Number of Shareholders : 7,952

DISTRIBuTION OF ShAREhOlDINGS

SIZE OF ShAREhOlDINGSNO. OF

ShAREhOlDERS NO. OF ShARESPERCENTAGE

(%)

less than 100 473 20,367 0.00

100 - 1,000 3,709 1,624,995 0.12

1,001 - 10,000 2,095 11,491,648 0.85

10,001 - 100,000 1,268 51,621,240 3.81

100,001 - 67,793,853 * 405 412,761,439 30.44

67,793,854 and above ** 2 878,357,401 64.78

TOTAl 7,952 1,355,877,090 100.00

Notes:* - less than 5% of issued shares** - 5% and above of issued shares

Substantial Shareholders according to the Register of Substantial Shareholders(holding 5% or more of the share capital)

DIRECT INDIRECT

ShAREhOlDERSNO. OF

ShARES %NO. OF

ShARES %

Formis Holdings Berhad 808,282,401 59.61 - -

Lau Chi Chiang 70,075,000 5.17 40,000 [1] 0.003

Formis Resources Berhad - - 808,282,401[2] 59.61

Tan Sri Dato’ Seri Megat Najmuddin Bin Datuk Seri Dr. Hj. Megat Khas 35,280,743 [3] 2.60 808,282,401[4] 59.61

Dato’ Mah Siew Kwok 25,250,935 [5] 1.86 808,282,401[4] 59.61

Notes:[1] Deemed interested by virtue of the shares held by his spouse, Dr Tan Niap Ming pursuant to Section 134(12)(c) of the Companies Act, 1965.[2] Deemed interested by virtue of Formis Holdings Berhad (“FHB”) being a wholly-owned subsidiary of Formis Resources Berhad pursuant to Section 6A

of the Companies Act, 1965.[3] Dividend-in-specie of ISS Shares by Formis Resources Berhad (“FRB”) to the shareholders of FRB on the basis of one (1) ISS Share for every one (1)

existing ordinary share of RM1.00 each in FRB.[4] Deemed interested by virtue of his substantial shareholding in FRB, the holding company of FHB pursuant to Section 6A of the Companies Act,

1965.[5] Subsequent to his acquisition of FRB shares on 22 April 2010, he owns 15.07% equity interest in FRB. By virtue of his interest in FRB, he is deemed

interested in the shares of ISS Consulting Solutions Berhad pursuant to Section 6A of the Companies Act, 1965.


ANNUAL REPORT 2009

ANALYSISof Shareholdings (cont’d)

list of Thirty (30) largest Registered Shareholders

NAmE NO. OF ShARES hElD PERCENTAGE (%)

1 Formis Holdings Bhd 808,282,401 59.61

2 Lau Chi Chiang 66,000,000 4.87

3 Robin Lim Jin Hee 44,101,000 3.25

4 Christina Ingeburg Orth 19,046,694 1.40

5 Amsec Nominees (Tempatan) Sdn Bhd 16,599,900 1.22

Pledged Securities Account for Yip Yew Kin @ Justin

6 Gloria Chan Mei Ling 16,570,041 1.22


Pledged Securities Account for Mah Siew Kwok

8 M.I.T Nominees (Tempatan) Sdn Berhad 15,807,853 1.17

Pledged Securities Account for Megat Najmuddin Bin Haji Megat Khas

9 CIMSEC Nominees (Asing) Sdn Bhd 12,070,041 0.89

CIMB Bank for Harald Weinbrecht

10 Ngo Tong Yong 11,812,500 0.87

11 Tan Aik Ping 11,812,500 0.87

12 Koperasi Permodalan Felda Berhad 8,469,200 0.62


Pledged Securities Account for Megat Najmuddin Bin Haji Megat Khas

14 Mayban Securities Nominees (Tempatan) Sdn Bhd 5,868,100 0.43

Pledged Securities Account for Wong Tiang Chin

15 OSK Nominees (Tempatan) Sdn Bhd 5,856,000 0.43

Pledged Securities Account for Rahim Bin Baba

16 Malaysia Venture Capital Management Bhd 5,578,563 0.41

17 JF Apex Nominees (Tempatan) Sdn Bhd 4,471,250 0.33

Teh & Lee for Chan Ngow


Teh & Lee for Rahim Bin Baba


Teh & Lee for Megat Najmuddin Bin Megat Khas

20 Abdul Halim Bin Abdul Karim 4,004,200 0.30

21 OSK Nominees (Tempatan) Sdn Bhd 3,445,597 0.25

OSK Capital Sdn Bhd for JL Nexus Sdn Bhd

22 Tio Sian Hooi 3,150,000 0.23

23 Chan Sau Chun 3,043,700 0.22

24 CIMSEC Nominees (Tempatan) Sdn Bhd 3,000,000 0.22

CIMB Bank for Gunananthan a/l Nithyanantham

25 Lau Chi Chiang 3,000,000 0.22


ANNUAL REPORT 2009

ANALYSISof Shareholdings (cont’d)

list of Thirty (30) largest Registered Shareholders (cont’d)

NAmE NO. OF ShARES hElD PERCENTAGE (%)

26 RHB Capital Nominees (Tempatan) Sdn Bhd 2,749,000 0.20

Pledged Securities Account for Mohamad Azril Bin Abdul Razak

27 Looi Bian Cheong 2,740,000 0.20


Pledged Securities Account for Rahim Bin Baba

29 RHB Capital Nominees (Tempatan) Sdn Bhd 2,650,900 0.20

Pledged Securities Account for Choong Foong Ming

30 Public Investment Bank Bhd 2,566,300 0.19

Clearing for Public Mutual Berhad

Total 1,116,798,501 82.37

Directors’ Shareholdings according to the Register of Directors’ Shareholdings

DIRECT INDIRECT

NO. OF ShARES % NO. OF ShARES %

Dato’ Hairuddin Bin Mohamad - - - -

Robin Lim Jin Hee 44,101,000 3.25 2,000 [1] *

Neo Poh Lian - - - -

Harald Weinbrecht 12,070,041 0.89 16,570,041 [2] 1.22

Gloria Chan Mei Ling 16,570,041 1.22 12,070,041 [3] 0.89

Wong Kit Leong - - - -

Au Yong Kam Weng - - - -

* negligible

Notes:[1] Deemed interested by virtue of the shares held by his spouse, Teng Meng Hwee pursuant to Section 134(12)(c) of the Companies Act, 1965.[2] Deemed interested by virtue of the shares held by his spouse, Gloria Chan Mei Ling pursuant to Section 134(12)(c) of the Companies Act, 1965.[3] Deemed interested by virtue of the shares held by her spouse, Harald Weinbrecht pursuant to Section 134(12)(c) of the Companies Act, 1965.


ANNUAL REPORT 2009

NOTICE OFAnnual General Meeting

NOTICE IS HEREBY GIVEN that the Fifth Annual General Meeting of ISS CONSULTING SOLUTIONS BERHAD (“Company” or “ISS”) will be held at Card Room, Royal Selangor Club, Jalan Raja, 50704 Kuala Lumpur on Wednesday, 23 June 2010 at 10.00 a.m. for the following purposes:-

1. To lay the audited financial statements for the financial year ended 31 December 2009 together with the Reports of the Directors and Auditors thereon. (Please refer to Note A)

2. To re-elect the following Directors who are retiring in accordance with Article 111 of the Articles of Association of the Company:

i) Mr Harald Weinbrecht (Ordinary Resolution 1)

3. To re-elect the following Directors who are retiring in accordance with Article 97 of the Articles of Association of the Company:

i) Mr Wong Kit Leong; (Ordinary Resolution 2)ii) Mr Au Yong Kam Weng; (Ordinary Resolution 3)iii) Dato’ Hairuddin Bin Mohamed; (Ordinary Resolution 4)iv) Ms Neo Poh Lian; and (Ordinary Resolution 5)v) Mr Robin Lim Jin Hee (Ordinary Resolution 6)

4. Directors’ fees To approve the payment of Directors’ fees amounting to RM75,000.00 for the financial year ended 31 December

2009.(Ordinary Resolution 7)

5. To re-appoint Messrs Crowe Horwath (formerly known as Horwath) as Auditors and to authorise the Directors to fix their remuneration.

(Ordinary Resolution 8)

6. Special Business

Ordinary Resolution *Authority to Allot 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 allot and issue shares in the share capital of the Company at any time until the conclusion of the next Annual General Meeting 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 does not exceed ten per centum (10%) of the issued share capital of the Company for the time being, subject to the Articles of Association of the Company and approval for the listing of and quotation for the additional shares so issued on Bursa Malaysia Securities Berhad (“Bursa Securities”) and other relevant bodies where such approval is necessary.”


7. Proposed Shareholders’ mandate for Recurrent Related Party Transactions of a Revenue or Trading Nature (“Proposed Shareholders’ mandate”)

“THAT the Company and/or its subsidiaries be and is/are hereby authorised to enter into recurrent related party transactions from time to time with Related Parties who may be a Director, a Major Shareholder of the Company and/or its subsidiaries or a person connected with such a Director or Major shareholder, as specified in section 2.3 of the Circular to Shareholders dated 31 May 2010 subject to the following:-


ANNUAL REPORT 2009

NOTICE OFAnnual General Meeting (cont’d)

i) the transactions are of a revenue or trading in nature which are necessary for the day-to-day operations of the Company and/or its subsidiaries and are transacted on terms consistent or comparable with market or normal trade practices and/or normal trade practices and/or based on normal commercial terms and on terms not more favourable to the Related Parties than those generally available to the public and are not to the detriment of the minority shareholders; and

ii) disclosure is made in the annual report of the aggregate value of transactions conducted during the financial year pursuant to the shareholders’ mandate in accordance with the ACE Market Listing Requirements of Bursa Malaysia Securities Berhad.

THAT the mandate given by the shareholders of the Company shall only continue to be in force until the conclusion of the next Annual General Meeting of the Company or the expiry of the period within which the next Annual General Meeting is required to be held pursuant to Section 143(1) of the Companies Act, 1965 (the “Act”) (but shall not extend to such extension as may be allowed pursuant to Section 143(2) of the Act); unless revoked or varied by Ordinary Resolution of the shareholders of the Company in general meeting, whichever is the earlier;

AND THAT the Directors for the Company be authorised to complete and do such acts and things as they may consider expedient or necessary to give effect to the shareholders’ mandate.”


8. Special Resolution Proposed Amendment to the Articles of Association of the Company

“THAT the Proposed Amendment to Article 144 of the Articles of Association of the Company is as follows:

Article 144 – Payment of Dividend

(2) Subject to the provision of the Act, the Central Depositories Act and the Rules, any dividend, interest or other money payable in cash or such other mode of electronic means to the bank account of the holders whose names appear in the Register or Record of Depositors respectively, in respect of shares may be paid by cheque or warrant and sent through the post directed to the address of the holder in the Register or Record of Depositors or, if several persons are entitled thereto in consequence of the death or bankruptcy of the holder, to any one of such person or to such person and to such address as such persons may by writing direct.

(3) The payment of any dividend by such electronic means shall constitute a good and full discharge to the Company of the dividend to which it relates regardless of any discrepancy in the details of the bank account(s) given by the member.

(4) No unpaid dividend or unpaid interest shall bear interest as against the Company.(Special Resolution)

By Order of the Board

LIM MING TOONG (MAICSA 7000281)MASHARUM BINTI ABDUL WAHAB (MAICSA 7041619)Company Secretaries

Kuala Lumpur31 May 2010


ANNUAL REPORT 2009

NOTICE OFAnnual General Meeting (cont’d)

Notes:A. This Agenda item 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.

(1) A member entitled to attend and vote at the meeting may appoint another person as his proxy to attend and vote in his stead. A proxy may but need not be a member of the Company and a member may appoint any person to be his proxy without limitation and the provisions of Section 149(1)(a) and (b) of the Companies Act, 1965 shall not apply to the Company.

(2) A member shall be entitled to appoint up to two (2) proxies to attend and vote at the same meeting and where a member appoints two (2) proxies, the appointment shall be invalid unless the member specifies the proportions of his holdings to be represented by each proxy.

(3) The instrument appointing a proxy shall be in writing under the hand of the appointor or of his attorney duly authorized in writing or, if the appointor is a corporation, either under its common seal or under the hand of the attorney.

(4) The instrument appointing a proxy and the power of attorney (if any) under which it is signed or a notarially certified copy thereof shall be deposited at the Registered Office of the Company at 10th Floor Menara Hap Seng, No. 1 & 3 Jalan P. Ramlee, 50250 Kuala Lumpur not less than forty-eight (48) hours before the time for holding of the meeting or adjourned meeting.

Explanatory note to Special Business:(i) Ordinary Resolution 9 *Authority to Allot Shares Pursuant to Section 132D of the Companies Act, 1965

The proposed Ordinary Resolution 9 is a renewal mandate, if passed, will give the flexibility to the Directors of the Company to allot and issue up to a maximum of 10% of the issued share capital of the Company for the time being (other than bonus or rights issue) for such purposes as they consider would be in the best interest of the Company. This authority, unless revoked or varied at a general meeting, will expire at the next Annual General Meeting of the Company.

The rationale for this resolution is to eliminate the need to convene general meeting(s) from time to time to seek shareholders’ approval as and when the Company issues new shares for future business opportunities and thereby reducing administrative time and cost associated with the convening of such meeting(s). No shares had been issued and allotted by the Company since obtaining the said authority from its shareholders at the last Annual General Meeting held on 23 June 2009. The Directors would utilise the proceeds raised from this mandate for working capital or such other applications they may in their absolute discretion deem fit.

(ii) Ordinary Resolution 10 Proposed Shareholders’ Mandate

Further information on the Recurrent Related Party Transactions is set out in the Circular to Shareholders dated 31 May 2010 which is despatched together with the 2009 Annual Report of the Company.

(iii) Special Resolution Proposed Amendment to the Articles of Association of the Company

The proposed amendment, if passed, will bring the Articles of Association of the Company to be in line with the ACE Market Listing Requirements of Bursa Securities.


ANNUAL REPORT 2009

Pursuant to Rule 8.29 of the Listing Requirements of Bursa Malaysia Securities Berhad for the ACE Market:

1. Names of Directors who are standing for re-election at the Fifth Annual General meeting of the Company:

i) Harald Weinbrecht;

ii) Wong Kit Leong;

iii) Au Yong Kam Weng;

iv) Dato’ Hairuddin Bin Mohamed;

v) Neo Poh Lian; and

iv) Robin Lim Jin Hee.

The details of the above Directors who are standing for re-election are set out in the Directors’ Profile appearing on pages 12 to 14 of this Annual Report and their attendance of Board Meeting are set out on page 16 of this Annual Report.

2. Shareholdings of Directors who are standing for re-election

Shareholdings of Directors who are standing for re-election are set out in the Analysis of Shareholdings on page 82 of this Annual Report.

STATEmENT ACCOmPANyINGThe Notice of Annual General Meeting

ISS CONSulTING SOluTIONS BERhAD (675362-P)(Incorporated in Malaysia)

* I/We

of

being a Member(s) of ISS CONSULTING SOLUTIONS BERHAD (675362-P), hereby appoint

of

or failing him/her

of

or # THE CHAIRMAN OF THE MEETING as *my/our proxy to vote for *me/us on *my/our behalf at the Fifth Annual General Meeting of the Company to be held at Card Room, Royal Selangor Club, Jalan Raja, 50704 Kuala Lumpur on Wednesday, 23 June 2010 at 10.00 a.m. or at any adjournment thereof and to vote as indicated below :-

Ordinary Resolution For Against

1 Re-election of Mr Harald Weinbrecht as Director

2 Re-election of Mr Wong Kit Leong as Director

3 Re-election of Mr Au Yong Kam Weng as Director

4 Re-election of Dato’ Hairuddin Bin Mohamed as Director

5 Re-election of Ms Neo Poh Lian as Director

6 Re-election of Mr Robin Lim Jin Hee as Director

7 Approval for payment of Directors’ fees amounting to RM75,000.00 in respect of the financial year ended 31 December 2009

8 Re-appointment of Messrs Crowe Horwath (formerly known as Horwath) as Auditors

9 Special BusinessOrdinary ResolutionAuthority to Allot Shares Pursuant to Section 132D of the Companies Act, 1965

10 Special BusinessOrdinary ResolutionProposed Shareholders’ Mandate for Recurrent Related Party Transactions of a Revenue or Trading Nature

11 Special Resolution Proposed Amendment to the Articles of Association of the Company

Please indicate with an “X” how you wish your vote to be cast. In the absence of specific directions, your Proxy may vote or abstain at his/her discretion.

# If you wish to appoint other person(s) to be your proxy/proxies, kindly delete the words “The Chairman of the Meeting” and insert the name(s) of the person(s) desired.

* Delete if not applicable.

The proportions of my/our holding to be represented by my/our proxies are as follows: -First Proxy “A” %Second Proxy “B” % 100%

In case of a vote taken by a show of hands, the First Proxy shall vote on my/our behalf.

Dated this day of 2010 Signature /Common Seal of member

Notes:(1) A member entitled to attend and vote at the meeting may appoint another person as his proxy to attend and vote in his stead. A proxy may but need not be a member of the Company and a member

may appoint any person to be his proxy without limitation and the provisions of Section 149(1)(a) and (b) of the Companies Act, 1965 shall not apply to the Company.

(2) A member shall be entitled to appoint up to two (2) proxies to attend and vote at the same meeting and where a member appoints two (2) proxies, the appointment shall be invalid unless the member specifies the proportions of his holdings to be represented by each proxy.

(3) The instrument appointing a proxy shall be in writing under the hand of the appointor or of his attorney duly authorised in writing or, if the appointor is a corporation, either under its common seal or under the hand of the attorney.

(4) The instrument appointing a proxy and the power of attorney (if any) under which it is signed or a notarially certified copy thereof shall be deposited at the Registered Office of the Company at 10th Floor Menara Hap Seng, No. 1 & 3 Jalan P. Ramlee, 50250 Kuala Lumpur not less than forty-eight (48) hours before the time for holding of the meeting or adjourned meeting.

Number Of Shares Held

PROxyForm

The Company Secretaries

ISS CONSulTING SOluTIONS BERhAD (675362-P)

10th Floor, Menara Hap SengNo. 1 & 3 Jalan P. Ramlee50250 Kuala Lumpur

Affix Stamp

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