ANNUAL REPORT 2011 - R&A Telecommunication Report 2011 2011 ANNUAL REPORT R&A Telecommunication...

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2011ANNUAL REPORT

R&A Telecommunication Group Berhad (645677-D)No. 2, Jalan Pengacara U1/48, Section U1, Temasya Industrial Park, 40150 Shah Alam, Selangor Darul Ehsan, Malaysia (Head Quarters)

TEL : +603 55691801 FAX : +603 55695730

R&A is aggressively expanding not only in the local Malaysian market, but also focusing on overseas establishment of regionally viable countries.

R&A’s diversification & expansion from a civil, mechanical and electrical (“CME”) based background to different areas and type of business is proof of the ability and prospective growth of the company into the export market.

R&A has a solid background and reputation with operators and multinational corporation (“MNC”) vendors. Encouragement of vendors for us to move into the international market by going global through special projects and opportunities gives proof of our ability.

GROWTH

DIVERSIFY

CLIENT

OUR MISSIONWe strive to become a one-stop centre for the telecommunications industry by being a total turnkey solutions provider. We believe with our solid foundation, performance and recognition, the Group will become one of the leaders in telecommunication engineering services industry.

CO

NT

ENT

S Financial Highlights

Chairman’s Statement

Corporate Profile

Corporate Information

Directors’ Profile

Corporate Governance

Accountability And Audit

Audit Committee Report

Summary Of Audit Committee Activities

Statement On Internal Control

Corporate Social Responsibility

Additional Compliance Information

Financial Statements

Analysis Of Shareholdings

Analysis Of Warrantholdings

Notice Of Annual General Meeting

Statement Accompanying Notice OfAnnual General Meeting

Proxy Form

02

03

05

10

11

13

17

18

21

22

24

25

27

89

92

94

96

2 R&A Telecommunication Group Berhad (645677-D)

Annual Report 2011

FinancialHIGHLIGHTS

0 10 20 30 40 50

-4 -2 0 2 4 6 8 10

REVENUE (RM’000)

PRofit AftER tAx (RM’000)

2,788

2,053

2,508

2,249

(1,007)

(2,748)

212

114

42,042

8,016

2007

2008

2009

2010

2011

2007

2008

2009

2010

2011

fiVE YEAR GRoUP fiNANciAl SUmmARY

2007 2008 2009 2010 2011

fiNANciAl RESUltS (Rm’000)

Revenue 2,788 2,053 2,508 2,249 42,042 Operating profit / (loss) (1,007) (2,748) 212 114 12,272 Profit before tax / (Loss before taxation) (1,007) (2,748) 212 114 11,220 Profit after taxation / (Loss after taxation) (1,007) (2,748) 212 114 8,016

KEY BAlANcE SHEEt DAtA (Rm’000)

Total Assets 7,363 5,458 5,744 5,706 128,983 Total Liabilities 478 1,134 1,208 1,056 34,721 Shareholders’ equity 6,885 4,324 4,536 4,650 94,262

SHARES iNfoRmAtioN

Basic earnings per share (sen) (1.55) (4.22) 0.32 0.18 1.60 Net assets per share attributable to equity holders (RM) 0.11 0.07 0.07 0.07 0.11

3R&A Telecommunication Group Berhad (645677-D)

Annual Report 2011

Dear Valued Shareholders,

The year 2011 marks the successful listing of R&A telecommunication Group Berhad (“R&A”) on the AcE market of Bursa malaysia Securities Berhad on 27 June 2011 via a reverse takeover of KZEN Solutions Berhad.

chairman’sSTATEMENT

Francis Tan Hock LeongChairman

On behalf of the Board of Directors of R&A, I am pleased to present the Annual Report and Audited Financial Statements of the Group for the financial year ended 31 December 2011.

R&A is the first company amongst its peers in the telecommunication engineering services industry to be listed on the ACE Market of Bursa Malaysia. It has always been our goal to be the preferred partner for the telecommunication operators and vendors in Malaysia; and this listing has definitely opened up more doors and opportunities for us to achieve that goal. We aim to be the one stop centre of the industry by delivering a full range of engineering services for the mobile, broadband and fixed network segments.

oPERAtioNAl ENViRoNmENt

Whilst 2011 has seen many countries struggled with economic uncertainties, especially in the US and Europe, the telecommunication sector in Malaysia is experiencing a boom. To take full advantage of the current and potential growth of this industry, R&A has undertaken various steps to invest and grow our capability, capacity and efficiency, so that we are well positioned to grow our market share as well as to prepare ourselves for the implementation of the next generation technology in the telecommunication industry.

Our determination and endeavours to always deliver results to our clients have not gone unnoticed. R&A was recently recognised as the Best Multi Business Development Partner (Engineering Services) by our vendor, Huawei Technologies (M) Sdn Bhd and R&A was also awarded the Next Generation Broadband Goal Achievement by Maxis Broadband Sdn Bhd.

coRPoRAtE DEVEloPmENt

On 20 December 2011, the Company announced a proposed bonus issue of 87,896,600 warrants on the basis of one (1) free warrant for every ten (10) existing ordinary shares of RM0.10 each in R&A. The proposed bonus issue was approved by the shareholders of R&A at the Extraordinary General Meeting held on 27 February 2012 and the warrants were successfully listed on 29 March 2012.

The bonus issue is a way for the Company to reward its shareholders and is preferred as it does not put a strain on the Group’s cashflow, which would be better use to invest in the Group’s operation to generate growth. In addition, the warrants issued, when converted, would increase the Company’s share base and raise further proceeds for the Company.

fiNANciAl RESUltS

For 2011, the Group recorded revenues of RM42.04 million and profit after tax of RM8.02 million. The revenue of the Group was derived from the various segments of the Group’s operation comprising full turnkey design and engineering solutions for telecommunication networks, fabrication and installation of telecommunications infrastructure.

As the acquisition of R&A Telecommunication Sdn Bhd (“RASB”) was completed on 27 June 2011, the results of RASB was consolidated as part of the Group’s results with effect from 27 June 2011. Thus, for 2011, only the post-acquisition results of RASB subsequent to 27 June 2011 was consolidated.

Human capital management System (“HcmS”)

Revenues derived from HCMS amounted to RM0.91 million or equivalent to 2.2% of the Group’s total revenues. Pursuant to the disposal of its subsidiary company, KaizenHR Sdn Bhd on 15 July 2011, the Group has discontinued this revenue segment.


Annual Report 2011

chairman’sSTATEMENT(cont’d)

civil, mechanical and electrical works (“cmE”)

CME is the top revenue contributor of the Group for 2011, whereby this segment recorded revenues of RM37.04 million, which represented 88.1% of the Group’s total revenues. This segment is the highest as the products and services offered under this segment such as infrastructure build and fixed network solutions are the most in-demand by the telecommunication vendors and service providers due to the aggressive roll-out and expansion of the fiberisation network in Malaysia.

telecommunication equipment installation (“ti”)

TI recorded revenues of RM2.81 million or 6.7% of the Group’s total revenue. The revenues mainly comprised products and services such as installation and commissioning of equipment, drive tests and fabrication of steel structures.

in-building system (“iBS”)

IBS contributed the remaining 3.0% of the Group’s total revenue or RM1.3 million. Revenues from this segment are mainly derived from radio frequency design and equipment installations for telecommunication coverage within buildings.

iNDUStRY oUtlooK AND GRoUP PRoSPEct

The Malaysian Government’s initiative to accelerate the broadband penetration nationwide and emergence of new technology to meet the present and future demands has created a strong opportunity of growth within the telecommunication sector.

The growth in this sector is affirmed by the Communications Content & Infrastructure NKEA Report, which estimated a Gross National Income creation of RM 35.7 billion by the year 2020, with 43,000 jobs being created along the way to meet that target. Therefore, R&A are constantly evolving and proactively responding to the emerging demands by leveraging on our strength,skills and experience, trusted relationships with our clients and our ability to deliver quality work performance.

Our goals for 2012 will involve 3 key areas,• Growingthelocaltelecommunicationsectorbusiness,• Venturingintoothernon-telecommunicationsectorsand• Expandingbeyondourbordersinternationally.

We will strive to achieve our goals by having a strong business focus and strategy, applying sustainable future expansion plans and practicing prudent financial management. I am confident that with the calibre and leadership of the Board and the senior management team of R&A, the Group’s aims and goals for 2012 and beyond are achieavable.

AcKNowlEDGEmENt AND APPREciAtioN

On behalf of the Board, I would like to take this opportunity to extend our gratitude and appreciation to all our stakeholders for their support and continued confidence to our business.

I am also grateful for the ongoing support of our business vendors and clients. Our relationships have strengthened over the many years of proven results and works delivered. We also appreciate all the cooperation and assistance given by the vendors who have collaborated with us throughout the years.

Finally I would also like to thank the Board of Directors, senior management team and all the dedicated staff for your invaluable hard work and commitment during the year in assisting the Group to achieve our various goals.

Thank you.

francis tan Hock leongGroup Chairman and CEO


Annual Report 2011

The new enlarged Group was formed on 27 June 2011 when R&A Telecommunication Group Berhad (formerly known as Kzen Solutions Berhad) acquired RASB and R&A Metals Sdn Bhd.

At present, R&A Telecommunication Group structure is as follows :-

The Group perform various business activities through its subsidiary companies:

• TotalTurnkeySolutionsForWirelessIndustry- Infrastructure Build (Site Acquisition, Technical Site Survey, Local Council / Authority Liaison)- Equipment Installation, Commissioning & Integration- Radio Network Planning and Optimization- In-building System- Managed Service Operations & Maintenance

• OutsidePlantFixedNetworkSolutions• FabricationofTelecommunicationSteelStructuresandMaterials

oUR SUBSiDiARY comPANiES

R&A telecommunication Sdn Bhd

RASB was established in 1993 and ventured into the telecommunication industry in 1996. RASB kicked off from a site engineering company involved mainly in site construction works and over the years, RASB has transformed into a full-fledged total turnkey solutions engineering company. RASB principal’s business activities involved CME, TI and IBS. R&A metals Sdn Bhd

As a wholly owned subsidiary of R&A, R&A Metals Sdn Bhd was established in the year 1997. R&A Metals Sdn Bhd principally provides fabrication and installation of telecommunication structure.

corporatePROFILE

R&A tElEcommUNicAtioN GRoUP BERHAD

R&A tElEcommUNicAtioN SDN BHD

100%

R&A mEtAlS SDN BHD100%


Annual Report 2011

oUR PRoDUctS & SERVicES

total turnkey Solution for wireless industry

infrastructure Build (Site Acquisition, technical Site Survey, local council / Authority liaison)

initiation • Siteacquisition• Localcouncil&authoritypermitting• Powerapplication• Technicalsitesurvey• Sitedesign• Soiltest

implementation• Structuraltest• Siteclearing• Foundationworks• Piling• Erectionofsteelstructures,e.g.towers,minitowers,aestheticmonotrees,lamp-poleBTS, guyed masts, antenna & microwave booms, tripod etc• Erectionofcabinse.g.PU/concrete• Roomrenovationwithgypsumboards• M&Eworks-lighting,ACDB,air-conditioningsystem,aviationlighting• Lightingprotection&groundingworks• Fire-fightingsystem• Premix Equipment installation, commissioning & integration

• Equipmentinstallationandcommissioning• Antennasysteminstallationandcommissioning• Equipmentdecommissioningandswapping• Networkintegration

Radio Network Planning and optimization

• Pre-planningincludingcapacityplanningandnetworkdimensioning• Frequencyplanning• Sitesearch• Parameteroptimization• Troubleshootingdropcallsthroughdrivetestandstaticalanalysis• Conductantennanetworkstocaterforcapacityandfrequencyrequirement• Networkbenchmarking

corporatePROFILE(cont’d)


Annual Report 2011

in-building System

Leading IBS consultant. With the need to increase and improve coverage inside buildings and offload external cells’ capacity, we provide expertise to operators and commissioned many systems, including initial design and implementation of IBS.

managed Service operations & maintenance (“o&m”)

• ChecksonBTSsystems• ChecksonmicrowavesystemsandpotentialLOSblockage• Groundingsystemverification• Auditonconditionofcabins,air-conandotherM&Eworks• Structuralchecksontowers,mini-towers,booms• Recommendrectificationworks• Alarmattendance• Preventive/Scheduledmaintenance• Gensetmaintenance• Fiberbreakdown

outside Plant / fixed Network Solutions

• End-to-endoutsideplant/fixednetworksolutionswhichincludeplanning,coordinating and laying fiber network cables.

• Fiberequipmentintegration(Fibersplicing,cutoverandelectronic swap / upgrade)

fabrication of telecommunication Steel Structures and materials

corporatePROFILE

(cont’d)


Annual Report 2011

oUR milEStoNES

1993 • RASBwasincorporated

1995 • Startedoperationasasteelworkssupplierforthetelecommunicationsector

1997 • DiversifiedintoCivil,Mechanical&ElectricalworksandTesting&Installationofequipmentforthetelecommunicationsector

1997 • Formednewsubsidiary,R&AMetalsSdnBhd,tohandlethefabricationandinstallationoftelcoinfrastructures,whiletheholding company focuses on the turnkey and engineering solutions

2003 • StarteddivisionsforRFDesignandIn-buildingSystem• Performedanddeliveredfirstend-to-endsolutions

2008 • PerformedfirstCoverageOptimizationAnalysisforamulti-nationalvendor

2010 • ExpandeditspersonnelandscopeofworkstobecomeanEnd-to-endSolutionsprovidertothetelecommunicationindustry– Planning, Survey, CME, TI, MW, IC&I, Fiber, Cellular & VSAT

• Hasoneofthelargerin-houseteamfortheroll-outoftheFiberOpticNetworkinMalaysia• MovedintotheManagedServicessector

2011 • On27June2011,thenewR&AwasformedwiththeacquisitionofRASB&R&AMetalsSdnBhd• InDec2011,R&AhadproposedbonusissueofOnefreewarrantforeveryTenexistingordinarysharesheldinR&A

corporatePROFILE(cont’d)


Annual Report 2011

corporatePROFILE

(cont’d)

mEDiA & ANAlYSt BRiEfiNG

YEAR2011 iN

PictURES

ANNUAl DiNNER


Annual Report 2011

BoARD of DiREctoRS fRANciS tAN HocK lEoNGGroup Chairman / Chief Executive Officer

NESAKUmAR A/l REtNASAmYExecutive Director

tAN cHUEK HooiExecutive Director (Re-designated from Independent Non-Executive Director on 18 April 2012)

tAY mUN KitIndependent, Non-Executive Director

cHoo SENG cHooN Independent, Non-Executive Director

AUDit committEE

tAY mUN KitChairmanIndependent, Non-Executive Director

cHoo SENG cHooNMember, Independent, Non-Executive Director

tAN cHUEK HooiExecutive Director (Resigned on 18 April 2012 upon re-designation as Executive Director)

NomiNAtioN committEE



REmUNERAtioN committEE



SPoNSoR

oSK iNVEStmENt BANK BERHAD (14152-V)20th Floor, Plaza OSK, Jalan Ampang50450 Kuala LumpurTel: 03-2333 8333 Fax: 03-2175 3217

corporateINFORMATION

AUDitoRS

cHoNG & co (Af 0524)Chartered AccountantsSuite 3.03, 3rd Floor, Wisma TCL470 Jalan Ipoh, 3rd Mile, 51200 Kuala Lumpur

comPANY SEcREtARY

lAANG JHE How (miA 25193)

StocK ExcHANGE liStiNG

Bursa Malaysia Securities Berhad(ACE Market)

PRiNciPAl BANKERS

mAlAYAN BANKiNG BERHADUNitED oVERSEAS BANK (mAlAYSiA) BERHADAlliANcE BANK mAlAYSiA BERHADPUBlic BANK BERHADAmBANK (m) BERHADAmiNVEStmENt BANK BERHADStANDARD cHARtERED BANK mAlAYSiA BERHAD

REGiStERED officE

149A, Jalan Aminuddin BakiTaman Tun Dr Ismail, 60000 Kuala LumpurTel: 03-7729 1519 Fax: 03-7728 5948Email: [email protected]

REGiStRAR

iNSURBAN coRPoRAtE SERVicES SDN BHD149, Jalan Aminuddin BakiTaman Tun Dr Ismail, 60000 Kuala LumpurTel: 03-7729 5529 Fax: 03-7728 5948Email: [email protected]

PRiNciPAl PlAcE of BUSiNESS

No. 2, Jalan Pengacara U1/48Temasya Industrial ParkSection U1, 40150 Shah AlamSelangor Darul EhsanTel: 03-5569 1801Fax: 03-5569 5730


Annual Report 2011

directors’ PROFILE

fRANciS tAN HocK lEoNG

A Malaysian aged 45, Francis Tan is the Group founder and was appointed as the Group Chief Executive Officer/ Executive Director on 27 June 2011. He is also the Group’s Chairman. He is responsible for the entire business operations, strategic planning and directions of the Group.

He is the founder and Chief Executive officer of RASB. He founded RASB in 1993 together with his wife, Cheok Chun Lian, and has been steadily nurturing and charting the growth of the company. Prior to RASB, he was working for Public Bank Berhad before moving on to Orix Leasing Sdn Bhd. He is also the Director of R&A Metals Sdn Bhd, another subsidiary of the Group.

He attended all the Board meetings held during his tenure in office for the financial year ended 31 December 2011.

He has no conflict of interest with the Group and has no conviction for offences within the past 10 years other than traffic offences.

NESAKUmAR A/l REtNASAmY

A Malaysian aged 43, Nesakumar was appointed as the Executive Director of R&A on 27 June 2011.

He has over 16 years of experience in the telecommunication industry.Nesakumar is also the Chief Operating Officer for RASB, a subsidiary of the Group. Nesakumar is responsible for the management, planning and implementation of technical focus of the company as well as strategic planning of the Group.

He obtained a degree in Bachelor of Engineering major studies in Communication and Electronic Engineering from Swinburne University of Technology, Victoria, Australia in 1994.



tAY mUN Kit

A Malaysian aged 35, Tay Mun Kit was appointed as the Independent Non-Executive Director of the Company on 10 August 2010. He was then elected as Chairman of the Audit Committee on 17 August 2010.

He is the member of the Association of Chartered Certified Accountants (“ACCA”) (United Kingdom).

He is the Chief Financial Officer for EA Holdings Berhad, a company involved in the provision of investment holding, management and consultancy services. Before joining EA Holdings Berhad, he was attached to an audit firm and has more than 11 years of experience in the field of auditing and corporate services. He attended all the Board meetings held during his tenure in office for the financial year ended 31 December 2011.



Annual Report 2011

tAN cHUEK Hooi

A Malaysian aged 51, Tan Chuek Hooi was appointed as the Independent Non-Executive Director of R&A on 27 June 2011. He was re-designated as an Executive Director on 18 April 2012.

He graduated from University of Windsor, Ontario, Canada in 1983 with a Bachelor of Commerce (Honours) in Business Administration majoring in Accounting and minoring in Business Statistics.

He started his career as an accountant with United Computers Sdn Bhd in 1984. In 1986, he joined Imagineering Sdn Bhd as its Finance Manager, where he was responsible for the implementation of the company’s operation procedure. In 1987, he accepted an appointment from Tech Pacific NZ Ltd in Auckland New Zealand, where he acted as its Finance Manager. During his stay, he was in charge of, among others, the company system administration, credit control and financial accounting. After seven years working in New Zealand, he then returned to Malaysia and later joined Tele Dynamics Sdn Bhd as its Financial Controller. He was mainly responsible for maintaining the company’s whole financial system which included, among others, treasury function, financial accounting, corporate planning and cash flow management.



cHoo SENG cHooN

A Malaysian aged 38, Choo Seng Choon was appointed as the Independent Non-Executive Director of R&A on 27 June 2011.

Seng Choon is a Fellow Member of the Association of Chartered Certified Accountants, a Chartered Member of the Malaysian Institute of Accountants, a Chartered Member of the Institute of Internal Auditors, Malaysia and a Certified Internal Auditor. He also holds a Diploma in Financial Accounting from Tunku Abdul Rahman College, Kuala Lumpur.

He has over 15 years of professional experience that includes internal audits, risk management, investigations, business management consulting, business process re-engineering, corporate governance advisory, due diligence, financial projections and financial audits.

He is currently the Executive Director and Chief Operating Officer of Audex Governance Sdn Bhd, a professional services firm that specialises in the provision of internal audit, risk management and management consulting services to a wide range of multinational and public listed conglomerate clients operating in the Asia Pacific Region. He also sits on the Research and Technical Advisory Committee of the Institute of Internal Auditors, Malaysia.

He is also on the board of directors of EA Holdings Berhad and I-Power Berhad. In addition, he also sits on the board of directors of several private limited companies.



directors’ PROFILE(cont’d)


Annual Report 2011

corporateGOVERNANCE

The Corporate Governance framework is in place to create a balance, safe and sound business operations while complying with relevant laws and regulations.

The Board of Directors of R&A are fully committed to maintain a good standard of corporate governance within the group and are pleased to report to the shareholders on how the Group has applied and complied the principles and best practices as set out in the Malaysian Code on Corporate Governance (“the Code”).

BoARD of DiREctoRS

Roles And Principal Responsibilities

The Board has overall responsibility for the corporate governance, proper conduct and strategic direction of the Group. The Board recognizes the value in each of the Board member’s knowledge and experience in providing oversight for the Group. Board of directors are also review management performances and affairs of the Group to ensure and enhance the long term returns for the shareholders.

Francis Tan, being the Chairman and Chief Executive Officer, oversees the orderly conduct and working of the Board and ensuring integrity and effectiveness of the Group corporate governance and internal control system. He also leads the strategic planning and manages the overall business operation of the Group and is accountable to the Board for the overall organisation and management of the Group.

Board composition and Balance

The Board currently consists of five (5) members, consisting of three (3) Executive Directors and two (2) Independent Non-Executive Directors. Their biographies are set out in the Profile of Directors and illustrates the Directors’ range of backgrounds and experiences. The Directors, with their diverse backgrounds, qualifications and specialisations, collectively add value to the group through their wide range of expertise and experience to ensure that all matters tabled to the Board for consideration are well reviewed and deliberated.

Part 2 of the Code on Best Practices in Corporate Governance states that there should be a clearly accepted division of responsibilities at the head of the Company and where the roles of the Chairman and Chief Executive Officer are combined, there should be a strong independent element on the Board.

Francis Tan is currently holding the combined roles of the Chairman of the Group and Chief Executive Officer as the Board is confident that Francis Tan, who is respected and experienced in the industry, is able to contribute towards accomplishing the Group’s objectives. Currently represented on the Board are two (2) Independent Non-Executive Directors who provide unbiased and independent views, advice and judgment to the Board’s decision making process. Moreover, Independent Non-Executive Directors also ensure the issues brought to the board are fully addressed and examined, such that the interests of the shareholders and stakeholders are well safeguarded.

BoARD mEEtiNGS AND SUPPlY of iNfoRmAtioN to tHE BoARD

The Board will meet at least four (4) times a year with additional meetings being held as and when required. For the financial year ended 31 December 2011, the Board has met five (5) times.

The agendas for the Board meetings were circulated well in advance to the Directors. The Directors are also supplied with the detailed reports and relevant supporting documents pertaining to the matters to be discussed such as financial performance, investments and strategic direction prior to the meetings for their perusal and consideration to assist them in making well-informed decisions.

All deliberations, issues discussed and decisions made at the Board meetings were properly recorded to provide a record and insight into those decisions. Senior management were invited to the Board meetings to enlighten the Board on matters tabled to the Board and if required, to advise and provide clarification on matters of concern raised by the Board.


Annual Report 2011

The Board is also supported by the various Board committees as recommended by the Malaysian Code on Corporate Governance. The committees set-up are the Audit Committee, Nomination Committee and Remuneration Committee. All Board committees discharged their duties within their terms of reference and make recommendation to the Board if matters are beyond their authority limit.

The Board members are given unrestricted access to all information pertaining to the Company; whether as a full Board or individually to assist them in carrying out their duties. Should it be deemed necessary, the Directors are allowed to engage independent professionals at the Company’s expense on specialized issues to enable the Board to discharge their duties with adequate knowledge on matters being deliberated.

The attendance of the Directors at Board meetings during the financial year are as shown below:

No. Name of members Designation AttendancePercentage of

Attendance

1 Francis Tan Hock Leong(Appointed on 27 June 2011)

Executive Director / Chief Executive Officer 2/2 100%

2 Nesakumar A/L Retnasamy(Appointed on 27 June 2011)

Executive Director 2/2 100%

3 Tay Mun Kit Independent Non-Executive Director 5/5 100%4 Tan Chuek Hooi

(Appointed on 27 June 2011)Executive Director (Redesignated as Executive Director w.e.f. 18 April 2012)

2/2 100%

5 Choo Seng Choon Independent Non-Executive Director 2/2 100%6 Ng Boon Sing

(Resigned on 27 June 2011)Chief Executive Officer & Chairman 3/3 100%

7 Chow Wei Hoon(Resigned on 27 June 2011)


8 Chan Seong Sun(Resigned on 27 June 2011)


9 Abdul Hafidz bin Win(Resigned on 27 June 2011)

Independent Non-Executive Director 2/3 67%

10 Leong Nyu Kuan(Resigned on 27 June 2011)

Non-Independent Non-Executive Director 3/3 100%

Remuneration committee and Directors’ Remuneration

The Remuneration Committee comprises exclusively of Independent Non-Executive Directors. The Committee’s composition is as follows :-

1 Tay Mun Kit Chairman, Independent Non-Executive Director2 Choo Seng Choon Independent Non-Executive Director

The Remuneration Committee reviews, assesses and recommends to the Board the remuneration packages of the executive directors in all forms to ensure that they are at sufficiently competitive levels. None of the executive directors participated in any way in determining their individual remuneration. The Board as whole determines the remuneration of the non-executive Chairman and non-executive directors with individual directors abstaining from decisions in respect of their individual remuneration.

corporateGOVERNANCE(cont’d)


Annual Report 2011

In carrying out its duties and responsibilities, the Remuneration Committee have full, free and unrestricted access to any information, record, properties and personnel of the Company. The Remuneration Committee may seek comparative information on remuneration and conditions of service in comparable organisations if required.

The Remuneration Committee establishes a formal and transparent procedure for developing policy on remuneration packages of individual directors. The remuneration package is designed to support the Company’s strategy and to provide an appropriate incentive to maximise individual and corporate performance, whilst ensuring that overall rewards are market competitive. The Executive Directors’ package consists of basic salary, contribution to the national pension fund and benefits-in-kind such as medical care, car allowance and fuel whilst the Non-executive Directors’ package primarily consists of fees only.

The details of the Directors’ remuneration of the Company for the financial year ended 31 December 2011 by category and in successive bands of RM50,000 are as follows :- Range of Remuneration Executive Directors

No. of DirectorsNon-Executive Directors

No. of Directors

1 – 50,000 - 350,001 – 100,000 - -100,001 – 150,000 2 -totAl 2 3

Nomination committee and Appointments to the BoardThe Nomination Committee comprises exclusively of independent Non-Executive Directors. The Committee’s composition is as follows :-

1 Tay Mun Kit Chairman, Independent Non-Executive Director2 Choo Seng Choon Independent Non-Executive Director

The Nomination Committee is set up to safeguard formal and transparent procedure for the appointment of new directors to the Board. The Nomination Committee considers and recommends to the Board suitable candidates who have an appropriate balance of skills, experience and would add a good value and complementing addition to the Board. The appointment of the Directors remains the responsibility of the Board after taking into consideration the recommendations of the Nomination Committee. The assessment on the effectiveness of the Board collectively and individually is an on-going continuous process undertaken by the Nomination Committee. Whenever deemed necessary, the Committee would forward the relevant recommendations to the Board for consideration.

In carrying out its duties and responsibilities, the Nomination Committee have full, free and unrestricted access to any information, record, properties and personnel of the Company. The Committee may seek external professional services to source the right candidate for directorship or seek independent professional advice whenever necessary.

Re-election

One third of the Board shall retire from office and be eligible for re-election at each Annual General Meeting and all directors shall retire from office once in every three (3) years but shall be eligible for re-election.

Directors over seventy (70) years of age are subject to re-appointment by shareholders on an annual basis in accordance with Section 129(6) of the Companies Act, 1965.

Directors appointed by the Board during the financial year shall be subject to retirement and re-election by shareholders in the next Annual General Meeting held following their appointments.

corporateGOVERNANCE

(cont’d)


Annual Report 2011

Directors’ training

During the financial year ended 31 December 2011, Francis Tan Hock Leong and Nesakumar a/l Retnasamy have attended and completed their Mandatory Accreditation Programme training to help them dispense their responsibilities and duties. In addition, the other Directors have attended other training and education programmes individually in their own professional capacity whilst the Company has also given regular updates and briefings on the changes in corporate governance, legislation, rules and regulation, etc, during the Board meetings.

The Company will continuously arrange trainings for the Directors to further enhance their skills and knowledge on relevant and changing commercial environment to keep abreast with the developments in the economy, industry and technology which the Group operates, in order to effectively carry out their duties and responsibilities.

Relationship with Shareholders and investors

The Group believes that a high standard of disclosure is important in raising the level of corporate governance.The Board keeps all shareholders and investors well informed of the Group’s business and corporate developments. Such information are disseminated through the Group’s website, quarterly results, annual reports and through various disclosures via Bursa Malaysia Securities Berhad’s website.

The forthcoming Annual General Meeting will be a great avenue of meeting between the Board of Directors, shareholders and investors.

Annual General meeting

The Annual General Meeting (AGM) is an important platform for communication and dialogue between the Group and the shareholders. The Board provides opportunities for shareholders to raise questions pertaining issues in the Annual Report, corporate developments in the Group, and the business operations of the Group in general at every AGM. The CEO and Board members are present to address all shareholders’ queries on issues relevant to the Group. However, if the queries raised are not immediately answerable during the AGM, the CEO will send a written letter containing the explanation after the AGM is over. Notice of the AGM is released to shareholders at least 21 days before the date of the meeting.

The shareholders have direct access to the Board and are encouraged to participate in the open question and answer session.

corporateGOVERNANCE(cont’d)


Annual Report 2011

accountability AND AUDIT

The Board always strives to maintain a balanced and meaningful assessment of the Group’s corporate and financial state of affairs and hence various measures have been in place.

Audit Committee

The Audit Committee was set up to assist the Board with added focus in discharging its responsibilities and duties as set out under its terms of reference.

Financial Reporting

The Board ensures the Group uses appropriate accounting policies that are consistently applied and supported by reasonable, prudent judgements and estimates. A balanced and fair assessment of the Group’s position and prospects is released through annual financial statements and quarterly financial results.

Quarterly financial results are reviewed by the Audit Committee and approved by the Board of Directors before being released to Bursa Malaysia Securities Berhad.

Internal Control

The Board of Directors recognises the importance of an effective system of internal controls which include the financial aspect, operations and compliance controls as well as risk management to safeguard the interests of the shareholders and stakeholders of the Group. The effectiveness of the internal control system was reviewed by the Board through the Audit Committee with the assistance of an outsourced independent Internal Auditor, who carried out risk assessment and auditing of different areas of the business covering financial, operational and compliance.

Relationship With Auditors

The Audit Committee’s terms of reference formalises the relationship with the External Auditors to report to the members of the Audit Committee on their findings. The Group enforces a transparent and professional relationship with the Company’s auditors. The Audit Committee has met the external auditors twice to review and discuss the audit plan, scope and nature of the audit, audit findings and financial statements for financial year ended 31 December 2011. These meetings were conducted without the presence of the Executive Directors and the Company’s management staff.

Directors’ Responsibility Statement

The Board is responsible for ensuring that the financial statements of the Group are properly drawn up in accordance with applicable financial policies and standards in Malaysia so as to give a true and fair view of the Company’s state of affairs as at the financial year and of the results and cash flows of the Company for that period.

It is also the Board responsibility to ensure the Group keeps proper accounting records and that such records are disclosed with reasonable accuracy to ensure that the financial statements comply with the Companies Act, 1965. The Board, with the assistance of the Internal Auditors, takes the responsibilities of safeguarding assets of the Company to prevent and detect fraud and other irregularities seriously.


Annual Report 2011

auditCoMMITTEE REpoRT

Audit Committee Members

Chairman Tay Mun Kit (Independent, Non-Executive Director) Members Choo Seng Choon (Independent, Non-Executive Director)

(Appointed on 27 June 2011)Tan Chuek Hooi (Executive Director)(Appointed on 27 June 2011, resigned as Audit Committee member on 18 April 2012 upon his redesignation as Executive Director)Abdul Hafidz bin Win (Independent Non-Executive Director)(Resigned on 27 June 2011)Leong Nyu Kuan (Non-Independent Non-Executive Director)(Resigned on 27 June 2011)

Secretary Laang Jhe How (Company Secretary)

Audit Committee Terms of Reference

1. Composition

(a) The Board shall elect an Audit Committee from amongst themselves (pursuant to a resolution of the Board of Directors) comprising not less than three (3) members where the majority of them shall be composed of independent non-executive members of the Board.

(b) The Committee shall include at least one (1) person who is a member of the Malaysian Institute of Accountants or possessing such financial related qualification or experience as maybe required by Bursa Malaysia Securities Berhad.

(c) The term of office of the Audit Committee is two (2) years and may be re-nominated and appointed by the Board.

(d) The members of the Audit Committee shall elect a Chairman from amongst themselves who shall be an independent director. The Chairman of the Audit Committee shall be approved by the Board.

(e) All members of the Audit Committee, including the Chairman, will hold office only so long as they serve as Directors of the Company. Should any member of the Audit Committee cease to be a Director of the Company, his membership in the Audit Committee would cease forthwith.

(f ) No Alternate Director of the Board shall be appointed as a member of the Audit Committee.

(g) If the number of members of the Audit Committee for any reason be reduced to below three (3), the Board of Directors shall within three (3) months of the event, appoint such number of new members as may be required to make up the minimum number of three (3) members.

2. Objectives

The primary objectives of the Audit Committee are:

(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.


Annual Report 2011

audit

(cont’d)CoMMITTEE REpoRT

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

3. Duties and Responsibilities

The duties and responsibilities of the Audit Committee shall be to review the following and report the same to the Board:

(a) The appointment of the external auditors, the audit fee, and any questions of resignation or dismissal.

(b) The nature and scope of the audit including the co-operation of auditors where more than one audit firm is involved.

(c) The quarterly and annual financial statements, focusing particularly on:

i. changes in accounting policies and practicesii. major judgement areasiii. significant adjustments resulting from the auditiv. the going concern assumption.v. compliance with accounting standardsvi. compliance with Bursa Malaysia Securities Berhad’s rules and other legal requirements.

(d) to discuss problems and reservations arising from the interim and final audits, and any matters the auditors may wish to discuss (in the absence of management where necessary).

(e) to review the internal audit programmes, to consider the major findings of internal audit programmes and management’s response, and to ensure co-ordination between the internal and external auditors.

(f ) to keep under review the effectiveness of internal control systems, and in particular review the external auditors’ management letter and management’s response.

(g) to discuss the related party transaction and conflict of interest situation that may arise within the Company including any transactions, procedures or conduct that give rise to questions of management integrity.

(h) to review assistance given by the employees of the Company to the auditors.

(i) To do the following, in relation to the internal audit function :-

• Reviewtheadequacyofthescope,functionsandresourcesoftheinternalauditfunction,andthatithasthe necessary authority to carry out its work;

• Reviewtheinternalauditprogrammeandresultsoftheinternalauditprocessand,wherenecessary,ensurethat the appropriate actions are taken on the recommendations of the internal audit function.

(j) to carry other duties and responsibility as may be agreed to by the Audit Committee and the Board.

4. Authority

The Audit Committee shall, in accordance with a procedure to be determined by the Board and at the expense of the Company :

(a) have authority to investigate any matters within its terms of reference and to seek any information it requires from any employees.


Annual Report 2011

audit

(cont’d)CoMMITTEE REpoRT

(b) have right to retain persons having special competence as necessary to assist the Committee in fulfilling its responsibilities.

(c) have adequate resources to perform its duties.

(d) have full and unrestricted access to any information pertaining to the Company.

(e) have direct communication channels with the External Auditors and person(s) carrying out the internal audit function or activity (if any).

(f ) be able to convene meetings with the External Auditors, excluding the attendance of the executive members of the Committee, whenever deemed necessary.

5. Meetings and Minutes

The Audit Committee shall hold not less than four (4) meetings a year to review the quarterly results and year end financial statements. In order to form the quorum for each meeting, a minimum of two (2) members present shall be Independent Directors.

In addition to the Committee members, the head of internal audit shall normally attend the meetings. Representatives of the external auditors shall attend meetings where matters relating to the audit of the statutory accounts and/or the external auditors are to be discussed.

Minutes of each meeting shall be kept and distributed to each member of the Committee and also to the other members of the Board. The Committee Chairman shall report on each meeting to the Board.

The Secretary to the Audit Committee shall be the Company Secretary.

6. Internal Audit Function

The Company’s has outsourced its internal audit function to an independent professional internal audit service provider, which reports directly to the Audit Committee. The Internal Auditors adopt a risk-based approach when preparing its annual audit plan and strategy. The principal role of the internal audit is to conduct independent and regular reviews of the various operations of the Company and to provide objective reports on the state of the internal controls to the Audit Committee. All internal audit reports will be presented to the Audit Committee for deliberation. The Audit Committee would then make the relevant recommendations for the management further action.


Annual Report 2011

summary ofAUDIT CoMMITTEE ACTIvITIES

Summary Of Activities

During the financial year ended 31 December 2011, in line with the terms of reference, the Committee carried out the following activities in discharge of its functions and duties:

1. Meeting with the external auditors to review the audited financial statements for the financial year ended 31 December 2011;

2. Reviewed the audit reports of the Company prepared by the external auditors and considered the major findings by the auditors and management’s responses thereto;

3. Reviewed the quarterly and year-end financial results of the Company prior to submission to the Board for consideration and approval;

4. Reviewed the disclosure of related party transactions entered into by the Company in the annual report of the Company;

5. Reviewed and deliberated on the audit plan, nature and scope of the external auditors and considering their audit fee;

6. Reviewed and deliberated on the audit plan, nature and scope proposed by the internal auditors;

7. Reviewed and deliberated on the appointment of the internal auditors for the Group.

Meeting Attendance

The Committee held five (5) meetings during the year ended 31 December 2011. The details of the attendance are as follows: Directors No. of meetings attended

Tay Mun Kit 5/5Choo Seng Choon(Appointed on 27 June 2011)

2/2

Tan Chuek Hooi(Appointed on 27 June 2011, resigned as Audit Committee member on 18 April 2012upon his redesignation as Executive Director)

2/2

Abdul Hafidz bin Win (Resigned on 27 June 2011)

2/3

Leong Nyu Kuan(Resigned on 27 Jjune 2011)

3/3


Annual Report 2011

statement onINTERNAL CoNTRoL

paragraph 15.26(b) of the Listing Requirements of Bursa Malaysia Securities Berhad for the ACE Market requires the Board of Directors to include in its annual report a statement about the state of internal control of the listed company as a group.

The Malaysian Code of Corporate Governance requires listed companies to maintain a sound system of internal controls to safeguard shareholders’ investment and the Group’s assets.

Board Responsibilities

The Board of Directors (“the Board”) believes the importance of maintaining a sound system of internal controls and risk management to safeguard shareholders’ investment and the Group’s assets. The Board acknowledges its overall responsibility for reviewing the adequacy and integrity of the Company’s system of internal control, identifying principal risks and establishing an appropriate control environment and framework to manage risks and evaluating the Group’s operational effectiveness and efficiency.

The Board has reviewed the adequacy and effectiveness of the system of internal controls of the Group. It recognizes that due to inherent limitations, the internal control systems are designed to manage rather than to eliminate the risk of business failure. As such, these systems could only provide reasonable but not absolute assurance against material misstatements or losses.

System of Internal Control

The key measures implemented in the Group are as follows :-

(i) A well-defined organization structure with distinct lines of accountability that sets out the authority delegated to the board and management committees.

(ii) performance reports such as quarterly financial review, business development and other corporate matters are regularly provided to the Directors for discussion and deliberations at Board of Directors meetings.

(iii) Review of quarterly and annual financial results by the Audit Committee.

(iv) Regular meetings by the management team to discuss and review reports and business developments and to resolve key operations and managements issues.

(v) Review the adequacy and effectiveness of the system of internal control, with the assistance of the internal audit function.

Internal Audit Function

The Company’s internal audit function is outsourced to an independent professional internal audit service provider, which reports directly to the Audit Committee. The Internal Auditors adopt a risk-based approach when preparing its annual audit plan and strategy. The principal role of the internal audit is to conduct independent and regular reviews of the various operations of the Company and to provide objective reports on the state of the internal controls to the Audit Committee. All internal audit reports will be presented to the Audit Committee for deliberation. The Audit Committee would then make the relevant recommendations for the management further action. No cost has been incurred for the outsourcing of the Internal Audit function for the FYE 31 December 2011 as the independent professional internal service provider was appointed subsequent to the FYE 31 December 2011.


Annual Report 2011

statement onINTERNAL CoNTRoL

(cont’d)

The internal audit function reports directly to the Audit Committee and is independent of the management. The internal audit reports are submitted to the Audit Committee who would review and deliberate on the findings before making the necessary recommendations to the Board to strengthen its system internal control and policies.

This Statement was made in accordance with a resolution of the Board dated 24 April 2012.


Annual Report 2011

corporateSoCIAL RESpoNSIBILITY

R&A understands the impact of our business operations towards the communities and we are committed to adopt corporate social responsibility (“CSR”) as part of our business operations. As a public listed company, R&A also recognizes our responsibility to oblige to the statutory compliance of CSR and extend it further by implementing various measures in our operations.

(a) The Community

The Group emphasizes on equality and fairness in our operations through non-discrimination on the basis of gender, race, or religion which are not relevant to employment. All employees are treated equally in the company.

(b) The Marketplace

The Group always seeks to maintain a high standard of Corporate Governance and integrity within the company to promote confidence in management and governance standards.

(c) The Workplace

The Group believes a healthy and conducive workplace is vital for a productive workforce. The group strives to protect the health and safety of our employees and provides employees a quality work environment which complies with the health and safety standards to increase the employees’ efficiency and productivity besides improving the quality of life of our employees. Employees are also sent for external training from time to time to enhance their skills and abilities which would offer excellent opportunities for personal and career development besides internal training by superiors.

In addition, we also organize activities and gatherings to foster closer ties within the Group and instil the employees with

a strong sense of belonging.

(d) The Environment

The Group implemented various environmental practices in our operations to conserve and minimize the impact to the environment. (i) Recycling

Staffs are encouraged to print on both sides of the papers to minimize paper usage while unwanted papers and recyclable items are collected and sent to be recycled. This initiative is in place to support the government’s Go Green effort.


Annual Report 2011

additionalCoMpLIANCE INFoRMATIoN

(a) Statement on Compliance with the best practices in Corporate Governance

Save as disclosed below, the Group is in general compliance with the Best practices in Corporate Governance as set out in part 2 of the Code.

The Board is mindful of the dual roles held by the Group Chairman/Chief Executive officer but is of the view that there is sufficient independent minded Directors with wide experience to provide the necessary check and balance. The Group Chairman/Chief Executive officer, as a rule, will abstain from all deliberations and voting of matters which he is directly or deemed interested.

(b) Utilisation of Proceeds

The status of utilisation of the gross proceeds of RM12.9 million from the private placement by the Group as at 31 December 2011 are as follows:-

Description

Proposed Utilisation

RM’000

AmountUtilisedRM’000

AmountUnutilised

RM’000

Working capital 11,460 10,125 848Estimated expenses 1,500 1,987 -TOTAL 12,960 12,112 848

(c) Share Buybacks

There were no Share Buyback arrangement during the financial year.

(d) Options, Warrants or Convertible Securities

Save for the options granted and exercised as disclosed on page 74 of this annual report, the Company has not issued any options, warrants or convertible securities during the financial year ended 31 December 2011.

(e) American Depository Receipt (ADR) or Global Depository Receipt (GDR) Programme

During the financial year, the Company did not sponsor any ADR or GDR programme.

(f ) Sanctions and Penalties

There were no material sanctions and penalties imposed on the Company, Directors or management by the relevant regulatory bodies.

(g) Non-Audit Fees

The amount of non-audit fees incurred for services rendered to the Company by its external auditors for the financial year ended 31 December 2011 was RM4,000

(h) Profit Estimates, Forecast or Projection

The vendors of RASB have provided a profit guarantee that the forecasted audited profit after tax of RASB shall not be less than RM8.8 million for the financial year ended 31 December 2011. As per the audited financial statements as at 31 December 2011,RASB has recorded revenues of RM63.55 million and profit after tax of RM8.94 million, thus surpassing the said profit guarantee.


Annual Report 2011

additional

(cont’d)CoMpLIANCE INFoRMATIoN

(i) Profit Guarantee

Save as disclosed in (h) above, there were no other profit guarantee given by the Company in respect of the financial year.

(j) Material Contracts

During the financial year, there were no material contracts of the Company involving its Directors’ and major shareholders’ interest.

(k) Revaluation Policy

The Company does not have a revaluation policy in respect of its properties.

(l) Recurrent Related Party Transactions of Revenue Nature (“RRPT”)

During the financial year, the Company did not enter into any RRpT.

FIN

ANC

IAL

STAT

EMEN

TS Directors’ Report

Statement By Directors

Statutory Declaration

Independent Auditors’ ReportTo The Members

Statement of Financial position

Statement of Comprehensive Income

Statement of Changes In Equity

Statement of Cash Flow

Notes To The Financial Statements

28

32

32

33

35

37

38

39

41


Annual Report 2011

directors’REpoRT

The directors have pleasure in submitting their report together with the audited financial statements of the Group and the Company for the year ended 31 December 2011.

PRINCIPAL ACTIVITIES

The Company is principally engaged in the business of investment holding and the development of the Human Capital Management System(“HCMS”) but has disposed of the business during the financial year and is currently engaged in investment holding and provision of management services. The principal activities of its subsidiary companies are disclosed in Note 6 in the notes to the financial statements. There have been no significant changes in the nature of the activities of the subsidiary companies during the financial year.

FINANCIAL RESULTS

The Group The Company

RM RM

profit / (Loss) before tax 11,220,807 (2,167,180)Income tax expense (3,204,640) - Net profit / (loss) for the year 8,016,167 (2,167,180)Accumulated losses brought forward (4,385,307) (3,974,791)Realisation of merger deficit (1,349,492) - Retained profit / (Accumulated losses) carried forward 2,281,368 (6,141,971)

DIVIDENDS

There were no dividends paid or proposed since the end of the last financial year. The directors do not recommend the payment of any dividend in respect of the current financial year.

RESERVES AND PROVISIONS

There were no material transfers to or from reserves or provisions during the financial year except as disclosed in the financial statements.

ISSUE OF SHARES AND DEBENTURES

During the financial year, the Company has issued the following ordinary shares:

Date of issue No. of Shares Issued Issue Price (RM) Purposes

21.06.2011 6,500,000 0.1215 Exercise of Employees’ Share option Scheme 21.06.2011 109,000,000 0.1189 private placement21.06.2011 698,000,000 0.1000 Acquisition of subsidiaries22.06.2011 186,000 0.1800 Exercise of Employees’ Share option Scheme


Annual Report 2011

directors’

(cont’d)

OPTIONS

No option has been granted during the financial year to take up unissued shares of the Company.

EMPLOYEES’S SHARE OPTION SCHEME (“ESOS”)

The Company’s ESoS is governed by the ESoS By-Laws and was approved by the shareholders at an Extraordinary General Meeting held on 19 June 2006. The ESoS was implemented on 20 November 2006 and is to be in force for a period of five years from the date of implementation.

The salient features and other terms of the ESoS are disclosed in Note 28 to the financial statements.

All the options have been exercised during the financial year.

DIRECTORS

The directors in office since the date of the last report are:

Francis Tan Hock Leong (appointed on 27 June 2011)Tan Chuek Hooi (appointed on 27 June 2011)Nesakumar A/L Retnasamy (appointed on 27 June 2011)Choo Seng Choon (appointed on 27 June 2011)Tay Mun Kit

Ng Boon Sing (resigned on 27 June 2011)Chow Wei Hoon (resigned on 27 June 2011)Chan Seong Sun (resigned on 27 June 2011) Abdul Hafidz Bin Win (resigned on 27 June 2011)Leong Nyu Kuan (resigned on 27 June 2011)

The appointment and retirement of the directors are in accordance with the provisions of the Articles of Association of the Company.

DIRECTORS’ BENEFITS

During and at the end of the financial year, no arrangement subsisted to which the Company is a party, with the object or objects of enabling directors of the Company to acquire benefits by means of the acquisition of shares in or debentures of the Company or any other body corporate.

Since the end of the previous financial year, no director has received or become entitled to receive a benefit (other than directors’ remuneration and fee as disclosed in the financial statements) by reason of a contract made by the Company 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.

REpoRT


Annual Report 2011

DIRECTORS’ INTERESTS

Details of the directors who held office at the end of the financial year having interest in shares of the Company during the financial year were:

Number of ordinary shares of RM0.10 each

At start ofthe year Bought Sold

At end ofthe year

Direct interest

Francis Tan Hock Leong - 337,822,053 - 337,822,053Tan Chuek Hooi - - - -Nesakumar A/L Retnasamy - - - -Tay Mun Kit - - - -Choo Seng Choon - - - -

Indirect interest

Francis Tan Hock Leong* - 60,203,338 - 60,203,338

* Deemed interest through shares held by his spouse, Cheok Chun Lian.

By virtue of the directors interests in the shares of the Company, the directors are also deemed to have interests in the shares of the subsidiary companies during the financial year to the extent that the Company has an interest.

INFORMATION ON THE FINANCIAL STATEMENTS

Before the income statement and the balance sheet of the Group and the Company were made out, the directors took reasonable steps:

1. to ascertain the action taken in relation to the writing off of bad debts and the making of allowances for doubtful debts and satisfied themselves that there were no known bad debts in the financial statements and therefore no allowances was necessary; and

2. to ensure that any current assets which were unlikely to realise in the ordinary course of business their value as shown in the accounting records of the Group and 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:

1. which would render the allowance for doubtful debts necessary;

2. which would render the values attributed to current assets in the financial statements of the Group and the Company misleading; or

3. which have arisen which render adherence to the existing method of valuation of assets or liabilities of the Group and the Company misleading or inappropriate.

No contingent or other liability 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 the Company to meet their obligations when they fall due

directors’

(cont’d)REpoRT


Annual Report 2011

At the date of this report, there does not exist:

1. any charge on the assets of the Group and the Company which has arisen since the end of the financial year which secures the liability of any other person; or

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

OTHER STATUTORY INFORMATION

The directors state that at the date of this report, they are not aware of any circumstances not otherwise dealt with in this report or the financial statements which would render any amount stated in the financial statements misleading.

In the opinion of the directors,

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

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

AUDITORS

The Auditors, Messrs. Chong & Co., have expressed their willingness to continue in office.

on behalf of the Board in accordance with a resolution of the Directors dated 24 April 2012.

Francis Tan Hock Leong Tan Chuek Hooi

Kuala Lumpur

directors’

(cont’d)REpoRT


Annual Report 2011

PURSUANT TO SECTION 169(15) OF THE COMPANIES ACT, 1965

We, Francis Tan Hock Leong and Tan Chuek Hooi, being two of the directors of R&A TELECOMMUNICATION GROUP BERHAD, state that in the opinion of the directors, the accompanying balance sheet, income statement, statement of changes in equity and statement of cash flow of the Group and the Company, together with notes thereto, are drawn up in accordance with the provisions of the Companies Act, 1965 and the applicable approved Financial Reporting Standards in Malaysia so as to give a true and fair view of the state of affairs of the Company as at 31 December 2011 and of the results of its business, changes in equity and cash flows for the year ended on that date.

on behalf of the Board in accordance with a resolution of the Directors dated 24 April 2012.

Francis Tan Hock Leong Tan Chuek Hooi

Kuala Lumpur

PURSUANT TO SECTION 169(16) OF THE COMPANIES ACT, 1965

I, Tan Chuek Hooi, being the director primarily responsible for the financial management of R&A TELECOMMUNICATION GROUP BERHAD, do solemnly and sincerely declare that the accompanying balance sheet, income statement, statement of changes in equity and statement of cash flow of the Group and the Company, together with notes thereto are, in my opinion, correct and I make this solemn declaration conscientiously believing the same to be true and by virtue of the provisions of the Statutory Declaration Act, 1960.

Tan Chuek Hooi

Subscribed and solemnly declared by the abovenamed at Kuala Lumpur in the Federal Territory on 24 April 2012, before me.

JAAPAR BIN MD.JANI (W487)Commissioner for OathsKuala Lumpur

statement by

statutory

DIRECToRS

DECLARATIoN


Annual Report 2011

Report on the Financial Statements

We have audited the financial statements of R&A TELECoMMUNICATIoN GRoUp BERHAD, which comprise the statement of financial position as at 31 December 2011 of the Group and the Company, and the statement of comprehensive income, statement of changes in equity and statement of cash flow of the Group and the Company for the year then ended, and a summary of significant accounting policies and other explanatory information, as set out on pages 35 to 88.

Directors’ Responsibility for the Financial Statements

The directors of the Company are responsible for the preparation of the financial statements that give a true and fair view in accordance with Financial Reporting Standards and the Companies Act, 1965 in Malaysia and for such internal control as the directors determine are necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ Responsibility

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

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

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

Opinion

In our opinion, the financial statements have been properly drawn up in accordance with the 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 the Company as at 31 December 2011 and of its financial performance and cash flows for the year then ended.

Report on Other Legal and Regulatory Requirements

In accordance with the requirements of the Companies Act, 1965 in Malaysia, we also report the following:

a) In our opinion, the accounting and other records and registers required by the Act to be kept by the Company and its subsidiary companies have been properly kept in accordance with the provisions of the Act.

b) We are satisfied that the financial statements of the subsidiary companies 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.

c) our audit reports on the financial statements of the subsidiary companies did not contain any qualification or any adverse comment made under Section 174(3) of the Act.

independentAUDIToRS’ REpoRT

To THE MEMBERS oF R&A TELECoMMUNICATIoN GRoUp BERHAD(Incorporated in Malaysia)


Annual Report 2011

The supplementary information set out in Note 46 on page 88 is disclosed to meet the requirement of Bursa Malaysia Securities Berhad and is not part of the financial statements. The directors are responsible for the preparation of the supplementary information in accordance with Guidance on Special Matter No. 1, Determination of Realised and Unrealised profits or Losses in the Context of Disclosure pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants (“MIA Guidance”) and the directive of Bursa Malaysia Securities Berhad. In our opinion, the supplementary information is prepared, in all material respects, in accordance with the MIA Guidance and the directive of Bursa Malaysia Securities Berhad.

Other Matters

This report is made solely to the members of the Company, as a body, in accordance with Section 174 of the Companies Act, 1965 in Malaysia and for no other purpose. We do not assume responsibility to any other person for the content of this report.

CHoNG & Co. CHoNG LINAF - 0524 882/3/14 (J)Chartered Accountants (M) proprietor

Kuala Lumpur

Date : 24 April 2012

independentAUDIToRS’ REpoRT To THE MEMBERS oF R&A TELECoMMUNICATIoN GRoUp BERHAD(Incorporated in Malaysia) (cont’d)


Annual Report 2011


Notes 2011 2010 2011 2010

RM RM RM RM

NON-CURRENT ASSETS

property, plant and equipment 4 17,470,012 58,229 2,293,608 5,199Investment properties 5 544,467 - - - Investment in subsidiary companies 6 - - 69,800,000 1,759,998Development expenditures 7 3,948,891 2,227,106 - 2,227,106Goodwill 8 49,724,347 - - -

71,687,717 2,285,335 72,093,608 3,992,303

CURRENT ASSETS

Inventories 9 2,166,891 - - - Contract customers 10 15,252,952 - - - Trade receivables 11 30,615,636 609,851 - -other receivables 12 4,935,526 73,847 - 30,588Amount owing by subsidiary company 13 - - 13,845,009 325,545Current tax assets 14 - 15,048 - - Short-term investment 15 988 2,354,734 988 2,354,734Fixed deposits with licensed banks 16 3,475,588 307,941 - - Cash and cash equivalents 17 847,840 59,801 440,706 26,168

57,295,421 3,421,222 14,286,703 2,737,035

CURRENT LIABILITIES

Trade payables 18 4,211,052 141,824 - - other payables 19 1,413,248 914,336 541,771 318,933Amount owing to a director 20 203,000 - - - Banker’s acceptance 21 6,112,968 - - - Hire purchase payables 22 2,508,982 - - - Term loans 23 4,490,027 - - - Bank overdrafts 24 8,473,259 - - - Current tax liabilities 14 4,077,949 - - -

31,490,485 1,056,160 541,771 318,933NET CURRENT ASSETS 25,804,936 2,365,062 13,744,932 2,418,102

97,492,653 4,650,397 85,838,540 6,410,405

statement ofFINANCIAL poSITIoN

AS AT 31 DECEMBER 2011

THE ACCoMpANYING NoTES FoRM AN INTEGRAL pART oF THE FINANCIAL STATEMENTS


Annual Report 2011


Notes 2011 2010 2011 2010

RM RM RM RM

REPRESENTED BY :

CAPITAL AND RESERVES

Share capital 25 87,896,600 6,528,000 87,896,600 6,528,000Share option reserve 26 - 578,539 - 578,539Share premium 27 4,083,911 3,278,657 4,083,911 3,278,657Merger Deficit 29 - (1,349,492) - - Retained profit / (Accumulated losses) 30 2,281,368 (4,385,307) (6,141,971) (3,974,791)

94,261,879 4,650,397 85,838,540 6,410,405

NON-CURRENT LIABILITIES

Hire purchase payables 22 2,642,139 - - - Term loans 23 22,168 - - - Deferred tax liabilities 31 566,467 - - -

3,230,774 - - - 97,492,653 4,650,397 85,838,540 6,410,405


statement ofFINANCIAL poSITIoNAS AT 31 DECEMBER 2011(cont’d)


Annual Report 2011


Notes 2011 2010 2011 2010

RM RM RM RM

Revenue 3(k) 42,042,011 2,248,822 317,952 711,643Less: Direct cost (21,523,190) (165,878) (13,292) - Gross profit 20,518,821 2,082,944 304,660 711,643other operating income 3(k) 1,121,942 284,775 335,551 251,519Distribution costs (1,373,682) - - - Staff costs 32 (5,452,122) (1,382,154) (329,963) (441,646)Administrative expenses (1,673,347) (522,873) (271,528) (244,440)other operating expenses (869,552) (348,277) (2,205,900) (1,570,436)profit/ (Loss) from operations 12,272,060 114,415 (2,167,180) (1,293,360)Finance costs (1,051,253) - - - profit/ (Loss) before tax 33 11,220,807 114,415 (2,167,180) (1,293,360)Income tax expense 34 (3,204,640) - - - profit / (Loss) for the year 8,016,167 114,415 (2,167,180) (1,293,360)other comprehensive income - - - - TOTAL COMPREHENSIVE INCOME / (LOSS) FOR THE FINANCIAL YEAR 8,016,167 114,415 (2,167,180) (1,293,360)

Earnings per Share (sen per share) 35Basic 1.60 0.18Diluted - -


statement ofCoMpREHENSIvE INCoME

FoR THE YEAR ENDED 31 DECEMBER 2011


Annual Report 2011

The Group

Share Capital

Share premium

Share option reserve

Merger deficit

(Accumulated Losses) /Retained

profit Total

RM RM RM RM RM RM

Balance as at 1 January 2010 6,528,000 3,278,657 578,539 (1,349,492) (4,499,722) 4,535,982Net profit for the year - - - - 114,415 114,415Balance as at 31 December 2010 6,528,000 3,278,657 578,539 (1,349,492) (4,385,307) 4,650,397Net profit for the year - - - - 8,016,167 8,016,167Realisation of merger deficit - - - 1,349,492 (1,349,492) -Issue of shares during the year 81,368,600 - - - - 81,368,600Change in other reserves - 805,254 (578,539) - - 226,715Balance as at 31 December 2011 87,896,600 4,083,911 - - 2,281,368 94,261,879

The Company

Share Capital Share premiumShare option

reserveAccumulated

Losses Total

RM RM RM RM RM

Balance as at 1 January 2010 6,528,000 3,278,657 578,539 (2,681,431) 7,703,765Net loss for the year - - - (1,293,360) (1,293,360)Balance as at 31 December 2010 6,528,000 3,278,657 578,539 (3,974,791) 6,410,405Net loss for the year - - - (2,167,180) (2,167,180)Issue of shares during the year 81,368,600 - - - 81,368,600Change in other reserves - 805,254 (578,539) - 226,715Balance as at 31 December 2011 87,896,600 4,083,911 - (6,141,971) 85,838,540

statement ofCHANGES IN EQUITYFoR THE YEAR ENDED 31 DECEMBER 2011



Annual Report 2011


2011 2010 2011 2010

RM RM RM RM

CASH FLOW FROM OPERATING ACTIVITIES

profit / (Loss) before tax 11,220,807 114,415 (2,167,180) (1,293,360)Adjustments for:Amortisation of development expenditure 160,630 133,858 160,630 133,858Allowance for impairment losses on receivables - 97,301 - 565,000Allowance for impairment losses on receivables written back - (219,881) - - Bad debts written off - 11,537 - - Depreciation 2,110,797 105,580 1,028 10,660Fixed deposit interest received (249,248) - - - Impairment loss on investment in a subsidiary - - - 707,185Interest income (35,254) (64,208) (35,254) (61,519)Interest expenses 1,308,656 - - - Investment written off 6,532 - - - Deposit forfeited 1,059 - 1,059 - Loss on disposal of plant and equipment 40,685 - - - Gain on disposal of investment (33,334) - 1,759,997 -plant and equipment written off 7,525 - 7,507 - Amount owing by subsidiary company written off 301,565 - 301,565 - Waiver of amount owing to other payables (300,297) - (300,297) - operating profit / (loss) before working capital changes 14,540,123 178,602 (270,945) 61,824Inventories (373,697) - - - Contract customers 7,176,014 - - - Receivables (19,781,883) 443,173 29,529 175,649payables (166,813) (151,548) 523,135 (225,982)Director (22,319) - - - Subsidiary companies - - (13,821,029) (715,898)Cash generated from / (used in) operations 1,371,425 470,227 (13,539,310) (704,407)

Tax paid (1,232,392) - - - Interest paid (1,308,656) - - - Net cash (used in) / generated from operating activities (1,169,623) 470,227 (13,539,310) (704,407)

statement ofCASH FLoW

FoR THE YEAR ENDED 31 DECEMBER 2011



Annual Report 2011


2011 2010 2011 2010

RM RM RM RM

CASH FLOW FROM INVESTING ACTIVITIES

Interest received 35,254 64,208 35,254 61,519payment for development expenditure 705,323 (423,863) 2,066,476 (423,863)purchase of plant and equipment (3,388,401) (14,212) (2,296,944) (1,016)purchase of investment properties (544,468) - - -proceed from disposal of investment - - 1 - proceed from disposal of plant and equipment 173,022 - - - placement of fixed deposits with licensed bank (364,921) - - - Net cash and cash equivalents acquired (19,518,413) - - - Net cash and cash equivalents disposed (108,055) - - - Net cash used in investing activities (23,010,659) (373,867) (195,213) (363,360)

CASH FLOW FROM FINANCING ACTIVITIES

Advance from subsidiary - - - 1,131,302proceed from allotment of shares 11,795,315 - 11,795,315 - Repayment to hire purchase payables (2,474,135) - - - Term loan released 5,914,251 - - - Repayment of term loan (1,402,056) - - - Net cash generated from financing activities 13,833,375 - 11,795,315 1,131,302

NET (DECREASE)/ INCREASE IN CASH AND CASH EQUIVALENTS (10,346,907) 96,360 (1,939,208) 63,535CASH AND CASH EQUIVALENTS BROUGHT FORWARD 2,722,476 2,626,116 2,380,902 2,317,367CASH AND CASH EQUIVALENTS CARRIED FORWARD (7,624,431) 2,722,476 441,694 2,380,902

Represented by :

Short-term investment 988 2,354,734 988 2,354,734Cash and bank balances 847,840 307,941 440,706 26,168Fixed deposits with licensed bank - 59,801 - - Bank overdrafts (8,473,259) - - -

(7,624,431) 2,722,476 441,694 2,380,902

statement ofCASH FLoWFoR THE YEAR ENDED 31 DECEMBER 2011(cont’d)



Annual Report 2011

1) GENERAL INFORMATION

The Company is principally engaged in the business of investment holding and the development of the Human Capital Management System(“HCMS”) but has disposed of the business during the financial year and is currently engaged in investment holding and provision of management services. The principal activities of its subsidiaries are disclosed in Note 6 in the notes to the financial statements. There have been no significant changes in the nature of the activities of the Company and of its subsidiaries during the financial year.

The Company is a private company limited by shares and domiciled in Malaysia. The financial statements of the Company are presented in Ringgit Malaysia (RM) which is the Company’s functional currency.

The financial statement were authorised for issue by the Board of Directors in accordance with a resolution of the directors dated 24 April 2012.

2) BASIS OF PREPARATIONS OF FINANCIAL STATEMENTS

a) Statement Of Compliance

The financial statement of the Group and the Company have been prepared on the historical cost basis in accordance with the provisions of Companies Act, 1965 in Malaysia and Financial Reporting Standards (FRSs).

b) Changes In Accounting Policies

on 1 January 2011, the Group and the Company adopted the following new and amended Financial Reporting Standards (“FRS”), amendments to FRSs, Issue Committee (“IC”) Interpretation, Technical Releases (“TR”) and Statement of principles (“Sop”) mandatory for annual financial periods beginning on or after 1 January 2011:

FRSs, Amendments to FRSs, IC Interpretation and Technical Releases

FRS 1 First-Time Adoption of Financial Reporting StandardsFRS 3 Business Combinations (Revised)FRS 127 Consolidated and Separate Financial StatementsAmendments to FRS 1 Limited Exemption from Comparatives FRS 7 Disclosures for First-time

AdoptersAmendments to FRS 1 Additional Exemptions for First-time AdoptersAmendments to FRS 1 First-time Adoption of Financial Reporting StandardsAmendments to FRS 2 Share-based paymentAmendments to FRS 2 Company Cash-settled Share-based payment TransactionsAmendments to FRS 3 Business CombinationsAmendments to FRS 5 Non-current Assets Held for Sale and Discontinued operationsAmendments to FRS 7 Improving Disclosures about Financial InstrumentsAmendments to FRS 7 Financial Instruments: DisclosuresAmendments to FRS 101 presentation of Financial StatementsAmendments to FRS 121 The Effects of Changes in Foreign Exchange RatesAmendments to FRS 128 Investments in AssociatesAmendments to FRS 131 Interests in Joint venturesAmendments to FRS 132 Classification of Rights Issues

notes to theFINANCIAL STATEMENTS


Annual Report 2011

2) BASIS OF PREPARATIONS OF FINANCIAL STATEMENTS (cont’d)

b) Changes In Accounting Policies (cont’d)

FRSs, Amendments to FRSs, IC Interpretation and Technical Releases

Amendments to FRS 134 Interim Financial ReportingAmendments to FRS 138 Intangible AssetsAmendments to FRS 139 Financial Instruments: Recognition and MeasurementIC Interpretation 4 Determining Whether an Arrangement Contains a LeaseIC Interpretation 12 Service Concession ArrangementsIC Interpretation 15 Agreements for the Construction of Real EstateIC Interpretation 16 Hedges of a Net Investment in a Foreign operationIC Interpretation 17 Distributions of Non-cash Assets to ownersIC Interpretation 18 Transfers of Assets from CustomersIC Interpretation 19 Extinguishing Financial Liabilities with Equity InstrumentsAmendments to IC Interpretation 9

Reassessment of Embedded Derivatives

Amendments to IC Interpretation 13

Customer Loyalty programmes

Amendments to IC Interpretation 14

prepayments of a Minimum Funding Requirement

TR 3 Guidance on Disclosures of Transition to IFRSsTR i-4 Shariah Compliant Sale Contracts

The above FRSs, IC Interpretation and Amendments are not relevant to the Company except FRS 3, Amendment to FRS 3, FRS 127, Amendment to FRS 7, Amendment to FRS 101, Amendment to FRS 138 and Amendment to FRS 139. The applicable FRSs, IC Interpretation and Amendments are expected to have no significant impact on the financial statements of the Group and the Company.

c) FRSs, Amendment To FRSs, IC Interpretation Issued But Not Yet Effective

The Group and the Company have not applied the following new / revised accounting standards (including the consequential amendments) and interpretations that have been issued by the Malaysian Accounting Standards Board (MASB) but are not yet effective for the Group and the Company:

FRSs, Amendment to FRSs, and IC Interpretations

Effective for annual periods beginning

on or after

Amendment to IC Interpretation 14

prepayments of a Minimum Funding Requirement 1 July 2011

IC Interpretation 19 Extinguish Financial Liabilities with Equity Instruments 1 July 2011FRS 124 Related party Disclosures (revised) 1 January 2012Amendments to FRS7 Financial Instruments: Disclosures - Transfer of

Financial Assets 1 January 2012

Amendments to FRS112 Income Taxes - Deferred Tax: Recovery of Underlying Assets 1 January 2012

notes to theFINANCIAL STATEMENTS(cont’d)


Annual Report 2011

2) BASIS OF PREPARATIONS OF FINANCIAL STATEMENTS (cont’d)

c) FRSs, Amendment To FRSs, IC Interpretation Issued But Not Yet Effective (cont’d)

FRSs, Amendment to FRSs, and IC Interpretations

Effective for annual periods beginning

on or after

Amendments to FRS101 presentation of Financial Statement - presentation of Items of other Comprehensive Income

1 July 2012

FRS 9 Financial Instruments (2009) 1 January 2013FRS 9 Financial Instruments (2010) 1 January 2013FRS 10 Consolidated Financial Statements 1 January 2013FRS 11 Joint Agreements 1 January 2013FRS12 Disclosure of Interests in other Entities 1 January 2013FRS 13 Fair value Measurement 1 January 2013FRS 119 Employee Benefits (2011) 1 January 2013FRS 127 Separate Financial Statements (2011) 1 January 2013FRS 128 Investments in Associates and Joint ventures (2011) 1 January 2013IC Interpretation 20 Stripping Costs in the production phase of a Surface Mine 1 January 2013

on 19 November 2011, the MASB announced the adoption of the Malaysian Financial Reporting Standards (MFRS Framework). The MFRS framework is effective from 1 January 2012 is to facilitate convergence with the International Financial Reporting Standards (IFRS). Following the announcement, the Group and the Company’s next set of financial statements for annual period beginning on 1 January 2012 will be prepared in accordance with the MFRS framework issued by MASB and IFRS. As a result for the Group and the Company’s adoption of the MFRS framework, the Group and the Company will not be adopting the above FRSs, Interpretations and Amendments.

The change of the financial reporting framework is not expected to have any significant impact on the financial position and performance of the Group and the Company.

d) Significant Accounting Judgements And Estimates

The preparation of the Group and the Company’s financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and tax disclosure of contingent liabilities at the reporting date. However, uncertainty about these assumptions and estimates could result in outcome that could require a material adjustment to the carrying amount of the asset or liability affected in the future.

Estimates and underlying assumptions are reviewed on an on-going basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected. There are no significant areas of estimation uncertainty and critical judgements in applying accounting policies that have significant effect on the amount recognised in the financial statements.

3) SIGNIFICANT ACCOUNTING POLICIES

The accounting policies set out below applied consistently to all periods presented in these financial statements, and have been applied consistently by the Group and the Company, unless otherwise stated in the notes to the financial statements.


(cont’d)


Annual Report 2011

3) SIGNIFICANT ACCOUNTING POLICIES (cont’d)

a) Basis Of Consolidation

i) Subsidiary companies

Subsidiaries are entities, including un-incoporated entities controlled by the Group. Control exists when the Group has the ability to exercise its power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, potential voting rights that presently are exercisable are taken into account.

Investment in subsidiaries are measured in the Company’s statement of financial position at cost less impairment losses, unless the investment is held for sales or distribution. The cost of investments included transaction costs.

The accounting policies of subsidiaries are changed when necessary to align them with the policies adopted by the Group.

ii) Accounting For Business Combinations

Business combination are accounted for using the acquisition method from the acquisition date, which is the date of control is transferred to the Group.

From 1 January 2011, the Group has applied FRS 3, Business Combinations (revised) in accounting for business combinations. The changes in the accounting policies has been applies prospectively in accordance with the transitional provisions provided by the standard and does not have impact on earnings per shares.

For acquisitions on or after 1 January 2011, the Group measured goodwill at the acquisition date as:

- the fair value of the consideration transferred; plus

- the recognised amount of any non-controlling interests in the acquiree; plus

- if the business combinations is achieved in stages, the fair value of the existing equity interest in the acquire; less

- the net recognised amount (generally fair value) of the identifiable assets acquired and liabilities assumed.

When the excess is negative, a bargain purchase gain is recognised immediately in profit or loss.

The consideration transferred does not amount related to the settlement for pre-existing relationship. Such amounts are generally recognised on profit or loss.

Costs related to the acquisition, other than those associated with the issue of debts and equity securities, that the Group incur in connection with a business combination are expensed as incurred.

Any contingent consideration payable is recognised at fair value at the acquisition date. If the contingent consideration is classified as equity, it is not remeasured and settlement is accounted for within equity. otherwise, subsequent changes to the fair value of the contingent consideration are recognised in profit or loss.



Annual Report 2011


a) Basis Of Consolidation (cont’d)

iii) Accounting for acquisitions of non-controlling interests

The Group treats all changes in its ownership interest in a subsidiary that do not result in a loss of control as equity transactions between the Group and its non-controlling interest holders. Any difference between the Group’s share of net assets before and after the change, any consideration received or paid, is adjusted to or against Group reserves.

iv) Non-controlling interests

Non-controlling interests at the end of the reporting period, being the equity in a subsidiary not attributable directly or indirectly to the equity holders of the Company, are presented in the consolidated statement of financial position and statement of changes in equity within equity, separately from equity attributable to the owners of the Company. Non-controlling interest in the results of the Group is presented in the consolidated statement of comprehensive income as an allocation of the profit or loss and the comprehensive income for the year between non-controlling interests and the owners of the Company.

v) Transactions Eliminated On Consolidation

Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group transactions, are eliminated in preparing the consolidated financial statements.

b) Property, Plant And Equipment And Depreciation

plant and equipment are initially recorded at cost. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the Company and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to profit or loss during the year in which they are incurred.

Subsequent to recognition, plant and equipment are stated at cost less accumulated depreciation and impairment losses, if any. The policy for the recognition and measurement of impairment losses is in accordance with Note 3(e).

plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses, if any, except for freehold land and buildings.

Freehold land and buildings are stated at their revalued amount, being its fair value at the date of revaluation, less subsequent accumulated depreciation and subsequent impairment losses, if any. Revaluations are made with sufficient regularity to ensure that the carrying amount does not differ materially from that which would be determined using fair value at the end of the financial year.

Any revaluation increase arising from the revaluation is credited to revaluation reserves account, except when the increase is recognised in the profit or loss to the extent that it reverses a revaluation decrease of the same asset previously recognised in profit or loss. Any revaluation decrease arising from the revaluation is recognised in profit or loss, except when the decrease is debited to the revaluation reserves account to the extent of any credit balance existing in the revaluation reserves account in respect of that asset. Revaluation surplus is transferred directly to retained profits when the asset is retired or disposed of.


(cont’d)


Annual Report 2011


b) Property, Plant And Equipment And Depreciation (cont’d)

Depreciation of an asset begins when it is ready for its intended use. Except for freehold land, depreciation of property, plant and equipment are provided on a straight line basis to write off the cost or valuation of each asset to their residual value over the estimated useful lives, as follows:

Freehold buildings 2%

Renovation and furniture and fittings 10 - 15%

office equipment 15 - 20%

Computers 40%

All other plant and equipment 20%

Upon the disposal of an item of property, plant and equipment, the difference between the net disposal proceed and the carrying amount is recognised in profit or loss.

The residual values, useful life and depreciation method are reviewed at each financial year-end to ensure that the amount, method and period of depreciation are consistent with previous estimates and the expected pattern of consumption of the future economic benefits embodied in the items of equipment.

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. The difference between the net disposal proceeds, if any, and the net carrying amount is recognised in profit or loss.

c) Investment Property

Investment property which is held to earn rentals or for capital appreciation or both, including property that is being constructed or developed for future use as investment property, is measured initially at its cost. Transaction costs are included in the initial measurement.

After initial recognition as investment property, an item of investment property is stated at cost less accumulated depreciation and accumulated impairment losses, if any.

d) Intangible Assets

Intangible assets are recognised when it is probable that the future economic benefits that are attributable to the assets will flow to the Group and the Company and the cost of the assets can be measured reliably.

i) Internally Generated Intangible Assets

Costs associated with internally generated intangible assets arising from research activities are recognised in profit or loss in the period in which the expenditure is incurred.

An internally generated intangible asset arising from development activities is recognised only when all of the following conditions are demonstrated:

- the technical feasibility of completing the intangible asset so that it will be available for use or sale.

- the intention to complete the intangible asset and thereafter use it or sell it.

- the ability to either use or sell the intangible asset.



Annual Report 2011


d) Intangible Assets (cont’d)

i) Internally Generated Intangible Assets (cont’d)

- how the intangible asset will generate probable future economic benefits.

- the availability of adequate technical, financial and other resources to complete the development and thereafter use or sell the intangible asset.

- the ability to measure reliably the expenditure attributable to the intangible asset during its development phrase.

other development expenditure is recognised in profit or loss and when it is incurred.

After initial recognition, internally generated intangible assets are stated at cost less any accumulated amortisation and impairment losses. The amortisation period and method are reviewed at least at the end of each reporting period. Amortisation will commence once the development work is completed.

The carrying amounts of intangible assets are derecognised on disposal or when no future economic benefits are expected from their use or disposal. Any gain or loss from derecognition of an intangible asset, determined as the difference between the net disposal proceeds, if any, and the carrying amounts of the asset, is recognised in profit or loss. Neither the sale proceeds nor any gain on disposal is classified as revenue.

e) Impairment

i) Financial Assets

All financial assets (except for financial assets categorised as fair value through profit or loss and investment in subsidiaries) are assessed at each reporting date whether there is any objective evidence of impairment as a result of one or more events having an impact on the estimated future cash flow of the assets. Losses expected as a result of future events which cannot be reasonably estimated, no matter how likely, are not recognised. For an equity instrument, a significant or prolonged decline in the fair value below its cost is an objective evidence of impairment.

An impairment loss in respect of loans and receivables and held-to-maturity investments is recognised in the profit or loss and is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flow discounted at the asset’s original effective interest rate. The carrying amount of the asset is reduced through the use of an allowance account.

An impairment loss in respect of available-for-sale financial assets is recognised in profit or loss and is measured as the difference between the asset’s acquisition cost (net of any principal repayment and amortisation) and the asset’s current fair value, less any impairment loss previously recognised. Where a decline in the fair value of an available-for-sale financial asset has been recognised in the other comprehensive income is reclassified from equity and recognised to profit or loss.

An impairment loss in respect of unquoted equity instrument that is carried at cost is recognised in the profit or loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the current market rate for a similar financial asset.

Impairment losses recognised in profit or loss for an investment in an equity instrument classified as available-for-sale is not reversed through profit and loss.


(cont’d)


Annual Report 2011


e) Impairment (cont’d)

i) Financial Assets (cont’d)

If, in a subsequent period, the fair value of a debts instrument increases and the increase can be objectively related to an event occurring after the impairment loss was recognised in profit or loss, the impairment loss is reversed, to the extent that the asset’s carrying amount does not exceed what the carrying amount would have been had the impairment not been recognised at the date the impairment is reversed. The amount of reversal is recognised in profit or loss.

ii) Non-Financial Assets

The carrying amount of non-financial assets (except for deferred tax asset) are reviewed at the end of each reporting period to determine whether there is any indication of impairment.

If any such indication exists, then the asset’s recoverable amount is estimated. For the purpose of impairment testing, assets are grouped together into the smallest group of assets that generates cash inflow from continuing use that are largely independent of the cash inflows of other assets or group of assets (the “cash-generating unit”). The goodwill acquired in a business combination, for the purpose of impairment testing, is allocated to cash-generating units that are expected to benefit from the synergies of the combination.

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

An impairment loss is recognised if the carrying amount of an asset or its cash generating unit exceeds its recoverable amount.

Impairment losses are recognised in profit or loss. Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to the units and then to reduce the carrying amount of the other assets in the unit (group of units) on a pro-rata basis.

An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognised in prior periods are assessed at the end of each reporting period for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount since the last impairment loss was recognised. Reversals of impairment losses are credited to profit or loss in the year in which the reversals are recognised.

f ) Financial Instrument

Financial instrument are categorised and measured using accounting policies as mentioned below:

Initial recognition and measurement

A financial asset or a financial liability is recognised in the statement of financial position when and only when, the Group and the Company become party to the contractual provisions of the instrument.

A financial instrument is recognised initially, at its fair value plus, in the case of a financial instrument not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition or issue of the financial instrument.



Annual Report 2011


f ) Financial Instrument (cont’d)

An embedded derivative is recognised separately from the host contract and accounted for as a derivative if, and only if, it is not closely related to the economic characteristics and risk of the host contract and the host contract is not categorised as fair value though profit or loss. The host contract, in the event an embedded derivative is recognised separately, is accounted for in accordance with policy applicable to the nature of the host contract.

Financial instrument categories and subsequent measurement

The Group and the Company categorised financial instruments as follows:

Financial assets

i) Financial Assets At Fair Value Through Profit Or Loss

Fair value through profit or loss category comprises financial assets that are held for trading, including derivatives (except for a derivative that is a financial guarantee contract or designated as effective hedging instrument) or financial assets that are specifically designated into this category upon initial recognition.

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

other financial assets categorised as fair value through profit or loss are subsequently measured at their fair values with the gain or loss recognised in profit or loss.

ii) Held-To-Maturity Instrument

Held-to-maturity investments category comprises debt instruments that are quoted in an active market and where the Group and the Company has the positive intention and ability to hold to maturity. Financial assets categorised as held-to-maturity investments are subsequently measures at amortised cost using the effective interest method.

iii) Loans And Receivables

Loans and receivables category comprises debt instruments that are not quoted in an active market and trade and other receivables. Financial assets categorised as loans and receivables are subsequently measured at amortised cost using the effective interest method.

iv) Available-For-Sale Financial Assets

Available-for-sale financial assets category comprises investment in equity and debts securities instruments that are not held for trading.

Investment in equity instruments that do not have quoted market price in an active market and whose fair value cannot be reliably measured are measured at cost. other financial assets categorised as available-for-sale are subsequently measured at their fair values with the gain or loss recognised in the other comprehensive income, except for impairment losses, foreign exchange gains and losses arising from monetary items and gains and losses of hedged items attributable to hedge risks of fair value hedges which are recognised in profit or loss. on derecognition, the cumulative gain or loss recognised in other comprehensive income is reclassified from equity into profit or loss. Interest calculated for a debts instrument using the effective interest method is recognised in profit or loss.


(cont’d)


Annual Report 2011


f ) Financial Instrument (cont’d)

Financial assets (cont’d)

iv) Available-For-Sale Financial Assets (cont’d)

All financial assets, except for those measured at fair value through profit or loss, are subject to review for impairment.

Financial liabilities

All financial liabilities are subsequently measured at amortised cost other than those categorised as fair value though profit or loss.

Fair value through profit or loss category comprises financial liabilities that are held for trading, including derivatives (except for a derivative that is a financial guarantee contract or designated as effective hedging instrument) or financial liabilities that are specifically designated into this category upon initial recognition.

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

other financial liabilities categorised as fair value though profit or loss are subsequently measured at their fair value with the gain or loss recognised in profit or loss.

Derecognition

A financial asset or part of it is derecognised when, and only when the contractual rights to the cash flows from the financial asset expire or the financial asset is transferred to another party without retaining control or substantially all risk and rewards of the asset. on derecognition of a financial asset, the difference between the carrying amount and the sum of the consideration received (including any new asset obtained less any new liability assumed) and any cumulative gain or loss that had been recognised in equity is recognised in the profit or loss.

A financial liabilities or a part of it is derecognised when, and only when, the obligation specified in the contract is discharged or cancelled or expires. on the derecognition of financial liability, the difference between the carrying amount of the financial liability extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in profit or loss.

g) Share Capital And Share Issuance Expenses

An equity instrument is any contract that evidences a residual interest in the assets of the Group and the Company after deducting all of its liabilities. ordinary shares are equity instruments.

ordinary shares are recorded at the proceeds received, net of directly attributable incremental transaction costs. ordinary shares are classified as equity. Dividends on ordinary shares are recognised in equity in the period in which they are declared.

h) Provisions For Liabilities

provisions are recognised when the Group and the Company have a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of economic resources will be required to settle the obligation and the amount of the obligation can be estimated reliably.



Annual Report 2011


h) Provisions For Liabilities (cont’d)

provisions are reviewed at each reporting date and adjusted to reflect the current best estimate. If it is no longer probable that an outflow of economic resources will be required to settle the obligation, the provision is reversed. If the effect of the time value of money is material, provisions are discounted using a current pre tax rate that reflects, where appropriate, the risk specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.

i) Cash And Cash Equivalents

Cash and cash equivalents comprise cash and bank balances, short-term deposits and other short-term, highly liquid investments that are readily convertible to a known amount of cash with an insignificant risk of changes in value. For the purpose of the statement of cash flow, cash and cash equivalents includes short term investment and are presented net of bank overdrafts.

j) Income Tax

Tax expense is the aggregate amount included in the determination of profit or loss for the period in respect of current tax and deferred tax.

Current tax and deferred tax are charged or credited directly to other comprehensive income or equity if the tax relates to items that are credited or charged directly to other comprehensive income or equity.

Current tax for current and prior periods is recognised as a liability to the extent unpaid. If the amount already paid in respect of the current and prior periods exceeds the amount due for those periods, the excess is recognised as an asset.

Current tax assets and liabilities for the current and prior periods are measured at the amounts expected to be paid or recovered, using the tax rates that have been enacted or substantially enacted by the end of the reporting period.

Current tax assets and liabilities are offset only when the Group and the Company have a legally enforceable right to set off the recognised amounts and intend either to settle on a net basis, or to realise the asset and settle the liability simultaneously.

Deferred tax is provided in full on temporary differences which are the differences between the carrying amounts in the financial statements and the corresponding tax base of an asset or liability at the end of the reporting period.

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

Deferred tax liabilities and assets are not recognised if the temporary differences arise from initial recognition of goodwill and the initial recognition of assets or liabilities that is not a business combination and at the time of the transaction, affected neither accounting profit nor taxable profit.

Deferred tax liabilities and assets reflect the tax consequences that would follow from the manner in which the Group and the Company expect to recover or settle the carrying amounts of their assets and liabilities and are measured at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled, based on tax rates that have been enacted or substantially enacted by the end of the reporting period.


(cont’d)


Annual Report 2011


j) Income Tax (cont’d)

The carrying amounts of the deferred tax assets are reviewed at the end of each reporting period, and they are reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow the benefit or part of the deferred tax assets to be utilised. The reduction is reversed to the extent that it becomes probable that sufficient taxable profit will be available.

Deferred tax assets and liabilities are offset when the Group and the Company have a legally enforceable right to set off current tax assets and liabilities, and the deferred tax assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities which intend either to settle current tax liabilities and assets on a net basis or to realise the assets and settle the liabilities simultaneously, in each future period in which significant amounts of deferred tax liabilities or assets are expected to be settled or recovered.

k) Revenue And Income Recognition

Revenue is recognised when it is probable that the economic benefits associated with the transaction will flow to the enterprise and the amount of revenue can be measured reliably. Revenue is measured at the fair value of consideration received or receivable.

Income from the business activities of the Group and the Company is recognised using the following bases:

i) Revenue From Sales Of Human Capital Management System (“HCMS”)

Revenue relating to the sales of HCMS is recognised based on the stage of completion method, net of trade discount.

ii) Revenue From Services

Revenue from services rendered is recognised upon performance of service, net of trade discount.

iii) Revenue From Contract

Revenue from providing full turnkey design and engineering solutions for telecommunication networks is recognised when the work has been completed.

iv) Rental Income

Rental income is recognised on an accrual basis in accordance with the substance of the relevant agreement.

v) Fixed Deposit Interest Income

Fixed deposit interest income is recognised on an accrual basis, based on the effective yield on the fixed deposits.

vi) Other income

other income is recognised when the right of the Group and the Company over such income is established.



Annual Report 2011


l) Employee Benefits

i) Short Term Employee Benefits

Short-term employment benefits, such as wages, salaries and social security contributions, are recognised as an expense in the financial year in which the associated services are rendered by employees of the Group and the Company.

Short-term accumulating compensated absences, such as paid annual leave, are recognised when the employees render services that increase their entitlement to future compensated absences. Non-accumulating compensated absences, such as sick and medical leaves, are recognised when the absences occur.

The expected cost of accumulating compensated absences is measured as the additional amount expected to be paid as a result of the unused entitlement that has accumulated at the balance sheet date.

profit-sharing and bonus plans are recognised when the Group and the Company have a present legal or constructive obligation to make payments as a result of past events and a reliable estimate of the obligation can be made. A present obligation exists when, and only when the Group and the Company have no realistic alternative but to make the payments.

ii) Defined Contribution Plans

Contributions to the statutory pension scheme are recognised as an expense in income statements in the financial year to which they relate.

m) Hire Purchase And Finance Lease Payables

Hire purchase and leases of property, plant and equipment are classified as finance lease where substantially all the risks and benefits incidental to the ownership of the assets, but not the legal ownership, are transferred to the Group and the Company.

The Group and the Company initially recognises finance leases as assets and liabilities in the statements of financial position at amounts equal to the fair value of the leased assets or, if lower, the present value of the minimum lease payments at the inception of the leases. Any initial direct costs are added to the amount recognised as an asset.

Minimum lease payments are apportioned between the finance charge and the reduction of the outstanding liability. A finance charge is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability. Finance charges are recognised in profit or loss unless they are attributable to qualifying assets, in which case they are capitalised in accordance with the accounting policy for borrowing costs. Contingent rents are charged as an expense in profit or loss in the period in which they are incurred.

The depreciation policy for depreciable leased assets is consistent with that of depreciable assets that are owned. If there is no reasonable certainty that the Group and the Company will obtain ownership by the end of the lease term, the leased assets are depreciated over the shorter of the lease terms and their useful lives.

n) Inventories

Inventories are stated at the lower of cost and net realisable value. Cost comprises direct materials, direct labour costs and overheads, where applicable, that have been incurred in bringing the inventories to their present location and condition. Cost is calculated using the weighted average method. Net realisable value represents the estimated selling price less all estimated costs of completion and costs to be incurred in marketing, selling and distribution.


(cont’d)


Annual Report 2011



n) Inventories (cont’d)

Net realisable value is estimated based on the most reliable evidence available at the time the estimates are made as to what the inventories are expected to realise upon completion of the cycle.

o) Borrowing Costs

Borrowing costs are capitalised as part of the cost of a qualifying asset if they are directly attributable to the acquisition the asset. Capitalisation of borrowing costs commences when the activities to prepare the asset for its intended use or sale are in progress and the expenditures and borrowing costs are incurred. Borrowing costs are capitalised until the assets are substantially completed for their intended use or sale.

All other borrowing costs are recognised in profit or loss in the period they are incurred. Borrowing costs consist of interest and other costs that the Group and the Company incurred in connection with borrowing of fund.

p) Foreign Currencies

i) Foreign Currency Transactions

Transactions in foreign currencies are measured in the respective functional currencies of the Group and the Company and are recorded on initial recognition in the functional currencies at exchange rates approximating those ruling at the transaction dates. Monetary assets and liabilities denominated in foreign currencies are translated at the rate of exchange ruling at the reporting date. Non-monetary items denominated in foreign currencies that are measured at historical cost are translated using the exchange rates as at the dates of the initial transactions. Non-monetary items denominated in foreign currencies measured at fair value are translated using the exchange rates at the date when the fair value was determined.

Exchange differences arising on the settlement of monetary items or on translating monetary items at the reporting date are recognised in profit or loss except for exchange differences arising on monetary items that form part of the Group and the Company’s net investment in foreign operations, which are recognised initially in other comprehensive income and accumulated under foreign currency translation reserve in equity. The foreign currency translation reserve is reclassified from equity to profit or loss of the Group and the Company on disposal of the foreign operation.

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

q) Contract Customers

i) Accrued Billings

Accrued billings represent job completed and revenue recognised in the profit or loss in accordance to Note 2(k) but were not invoiced at the end of the financial year. Accrued billings are stated at fair value of the revenue recognised and to be receivables.

ii) Aggregate Cost Incurred To-Date

Aggregate cost incurred to-date represents direct cost associated to contracts incomplete as at end of the financial year.


Annual Report 2011


(cont’d)


r) Operating Segments

An operating segment is a component of the Group and the Company that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Group and the Company’s other component. An operating segment’s operating results are reviewed regularly by the Chief Executive officer of the Group and the Company, to make decisions about resources to be allocated to the segment and assess its performance, and for which discrete financial information is available.

s) Earnings per shares

The Company presents basic and diluted earnings per share data for its ordinary shares (“EpS”). Basic EpS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Group and the Company by the weighted average number of ordinary shares outstanding during the period.

Diluted EpS is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding for the effects of all dilutive potential ordinary shares, which comprise convertible notes and shares options granted to employees.

4) PROPERTY, PLANT AND EQUIPMENT

The Group

2011Balance As At

1 January 2011

Acquisition / (Disposal) of

subsidiary AdditionsDisposals / Written off

Balance As At 31 December

2011

RM RM RM RM RM

Cost

At valuation

Freehold land - 3,250,000 - - 3,250,000Freehold building - 1,750,000 - - 1,750,000At cost

Renovation 99,758 223,195 53,404 - 376,357office equipment/ plant and machinery 464,499 7,068,354 4,712,330 (829,561) 11,415,622Computers 321,717 (183,495) 2,293,608 (138,222) 2,293,608Furniture and fittings 37,376 56,823 - (2,464) 91,735Motor vehicles - 4,685,036 735,067 (34,827) 5,385,276

923,350 16,849,913 7,794,409 (1,005,074) 24,562,598


Annual Report 2011

4) PROPERTY, PLANT AND EQUIPMENT (cont’d)

The Group (cont’d)

2011Balance As At

1 January 2011

Acquisition / (Disposal) of

subsidiaryCharge

for the yearDisposals / Written off

Balance As At 31 December 2011

RM RM RM RM RM

Accumulated depreciation:

At valuation

Freehold land - - - - - Freehold building - 106,902 35,000 - 141,902At cost

Renovation 69,685 191,880 15,701 - 277,266office equipment / plant and machinery 458,542 2,119,004 1,459,125 (632,684) 3,403,987Computers 312,192 (174,850) 203 (137,545) - Furniture and fittings 24,702 68,183 123 (1,293) 91,715Motor vehicles - 2,604,818 585,092 (12,194) 3,177,716

865,121 4,915,937 2,095,244 (783,716) 7,092,586

2010Balance As At

1 January 2010 AdditionDisposals / Written off


RM RM RM RM

Cost:

Renovation 99,758 - - 99,758office equipment 464,499 - - 464,499Computers 307,505 14,212 - 321,717Furniture and fittings 37,376 - - 37,376

909,138 14,212 - 923,350

2010Balance As At

1 January 2010Charge

for the yearDisposals / Written off


RM RM RM RM

Accumulated depreciation

Renovation 59,710 9,975 - 69,685office equipment 385,197 73,345 - 458,542Computers 293,219 18,973 - 312,192Furniture and fittings 21,415 3,287 - 24,702

759,541 105,580 - 865,121



Annual Report 2011



2011 2010

RM RM

Carrying amount:

At valuation

Freehold land 3,250,000 - Freehold building 1,608,098 - At cost

Renovation 99,091 30,073office equipment / plant and machinery 8,011,635 5,957Computers 2,293,608 9,525Furniture and fittings 20 12,674Motor vehicles 2,207,560 -

17,470,012 58,229

Freehold land and buildings were pledged to the banks for banking facilities as referred to in Note 21, Note 23 and Note 24.

property, plant and equipment at cost of RM2,293,608 (2010 – RMNil) was transferred from development expenditure.

The Group’s freehold land and buildings were revalued by professional valuers, Azmi & Co (Shah Alam) Sdn. Bhd. in year 2008 based on open market value on existing use basis. Upon valuation, the surplus was transferred to the revaluation reserve account in the subsidiary company.

Had the freehold land and buildings been carried at historical cost less accumulated depreciation and any accumulated impairment losses, the carrying amounts of the freehold land and building would have been as follow:

2011 2010

RM RM

Freehold land 1,466,667 -Freehold building 1,196,000 -

2,662,667 -


(cont’d)


Annual Report 2011



The carrying amount of plant and equipment of the Group acquired under hire purchase are as follow:

2011 2010

RM RM

Motor vehicles 2,102,973 -office equipment / plant and machinery 3,575,483 -

5,678,456 -

plant and equipment of the Group at cost of RM3,532,208 (2010 – RMNil) had been fully depreciated to their residual value of RM145 (2010 – RMNil) but were still in use at end of the financial year.

The Company

Balance As At 1 January 2011 Additions Written off


2011 RM RM RM RM

Cost

Computers 138,222 2,293,608 (138,222) 2,293,608office equipment 6,461 3,337 (9,798) - Furniture and fittings 2,464 - (2,464) -

147,147 2,296,945 (150,484) 2,293,608

Balance As At 1 January 2011

Charge for the year Written off


2011 RM RM RM RM

Accumulated Depreciation

Computers 137,341 203 (137,544) - office equipment 3,437 702 (4,139) - Furniture and fittings 1,170 123 (1,293) -

141,948 1,028 (142,976) -

Balance As At 1 January 2010 Addition Written off


2010 RM RM RM RM

Cost

Computers 137,206 1,016 - 138,222office equipment 6,461 - - 6,461Furniture and fittings 2,464 - - 2,464

146,131 1,016 - 147,147



Annual Report 2011


The Company


Charge for the year Written off


2010 RM RM RM RM

Accumulated Depreciation

Computers 128,220 9,121 - 137,341office equipment 2,145 1,292 - 3,437Furniture and fittings 923 247 - 1,170

131,288 10,660 - 141,948

2011 2010

RM RM

Carrying amount

Computers 2,293,608 881office equipment - 3,024Furniture and fittings - 1,294

2,293,608 5,199

property, plant and equipment at cost of RM2,293,608 (2010 – RMNil) was transferred from development expenditure.

5) INVESTMENT PROPERTIES

The Group

2011Balance As At

1 January 2011Acquisition of

subsidiary Addition DisposalBalance As At

31 December 2011

RM RM RM RM RM

Cost :

Freehold buildings - 724,024 - - 724,024


Acquisition of subsidiary

Charge for the year Disposal


RM RM RM RM RM


Freehold buildings - 164,004 15,553 - 179,557


(cont’d)


Annual Report 2011

5) INVESTMENT PROPERTIES (cont’d)


2010Balance As At

1 January 2010 Addition DisposalBalance As At

31 December 2010

RM RM RM RM

Cost :

Freehold buildings - - - -


Charge for the year Disposal


RM RM RM RM


Freehold buildings - - - -

2011 2010

RM RM

Carrying amount:

Freehold buildings 544,467 -

Freehold buildings were pledged to the bank for banking facilities as referred to in Note 24.

6) INVESTMENT IN SUBSIDIARY COMPANIES

Unquoted shares at cost in subsidiary companies:

2011 2010

RM RM

Cost

Balance as start of the financial year 3,499,998 3,499,998Less: Disposal during the financial year (3,499,998) - Add: Acquisition during the financial year 69,800,000 - Balance at end of the financial year 69,800,000 3,499,998

Accumulated impairment losses

Balance at start of financial year 1,740,000 840,000Add: Impairment loss for the financial year - 900,000Less: Disposal during the financial year (1,740,000) - Balance at end of the financial year - 1,740,000Carrying amount 69,800,000 1,759,998



Annual Report 2011

6) INVESTMENT IN SUBSIDIARY COMPANIES (cont’d)

particulars of the subsidiary companies are:

Group’s effective interest (%)

Name 2011 2010 Principal Activities

Direct

KaizenHR Sdn. Bhd. - 100% Sales and marketing the provision of post sales implementations and support services for Human Capital Management Services

RASB 100% - providing full turnkey design and engineering solutions for telecommunication networks

Group’s effective interest (%)

Name 2011 2010 Principal Activities

Indirect

R&A Metals Sdn. Bhd.* 100% - Fabrication and installation of telecommunication infrastructure

* Held under RASB

All the companies were incorporated in Malaysia. KaizenHR Sdn. Bhd. was not audited by Chong & Co and has been disposed of during the financial year. All other subsidiary companies were audited by Chong & Co.

7) DEVELOPMENT EXPENDITURE


2011 2010 2011 2010

RM RM RM RM

Cost

Balance at start of financial year 3,360,397 2,936,534 2,360,964 1,937,101Less: Disposal of subsidiary (999,433) - - - Add: Acquisition of subsidiary 2,587,737 - - - Add: Additional during the financial year 1,588,286 423,863 227,132 423,863Less: Transferred to plant and equipment (2,588,096) - (2,588,096) - Balance at end of the financial year 3,948,891 3,360,397 - 2,360,964


(cont’d)


Annual Report 2011

7) DEVELOPMENT EXPENDITURE (cont’d)


2011 2010 2011 2010

RM RM RM RM

Accumulated amortisation

Balance at start of financial year 1,133,291 999,433 133,858 - Less: Disposal of subsidiary (999,433) - - -Add: Additional during the financial year 160,630 133,858 160,630 133,858Less: Transferred to plant and equipment (294,488) - (294,488) - Balance at end of the financial year - 1,133,291 - 133,858Carrying amount 3,948,891 2,227,106 - 2,227,106

Development costs in year 2010 capitalised are costs of personnel who have been working on improvements to the HCMS range of products or the creation of new products. These are intended to extend the life, improve significantly the marketability of the original product or target different market segments.

All capitalised development costs were determined to have a finite life of 5 years and are amortised using the straight line method. If impairment indication arises, the recoverable amount is estimated and impairment loss is recognised if the recoverable amount is lower than the carrying amount. The Group and the Company review the amortisation period and amortisation method at least once at the end of each reporting period.

The development cost has been transferred to plant and equipment as the Group and the Company’s human resource management systems during the financial year.

Development cost in year 2011 includes labour and material cost incurred by a subsidiary company for the development of a prototype of the subsidiary company’s new telecommunication network design and engineering. No amortisation is provided as the prototype is still at the development stage.

8) GOODWILL

Goodwill represents the excess of purchase price over the fair value of the identifiable assets and liabilities in subsidiary companies acquired and are stated at cost.

9) INVENTORIES

Inventories are stated at cost and consist of:

The Group

2011 2010

RM RM

Finished goods 161,201 - Raw materials 2,005,690 -

2,166,891 -



Annual Report 2011

10) CONTRACT CUSTOMERS

The Group

2011 2010

RM RM

Accrued billings 8,325,741 - Aggregate cost incurred to date 6,927,211 -

15,252,952 -

11) TRADE RECEIVABLES

The Group

2011Gross trade receivables

Impairment loss

Carrying amount

RM RM RM

Neither pass due nor impaired

Less than 30 days 24,949,221 - 24,949,22131 to 60 days 3,299,558 - 3,299,558

28,248,779 - 28,248,779Pass due but not impaired

Less than 30 days 307,000 - 307,00031 to 60 days - - - 61 to 90 days 889,116 - 889,11691 to 120 days 120,188 - 120,188More than 120 days 1,050,553 - 1,050,553

2,366,857 - 2,366,857Total 30,615,636 - 30,615,636


Impairment loss

Carrying amount

RM RM RM

Neither pass due nor impaired

Less than 30 days 158,113 - 158,11331 to 60 days 206,944 - 206,94461 to 90 days 54,482 - 54,482

419,539 - 419,539


(cont’d)


Annual Report 2011

11) TRADE RECEIVABLES (cont’d)



Impairment loss

Carrying amount

RM RM RM

Pass due but not impaired

91 to 120 days 190,312 - 190,312

Impaired

More than 120 days 98,622 (98,622) - 708,473 (98,622) 609,851

Receivables that are neither pass due nor impaired

Trade receivables that are neither pass due nor impaired are creditworthy receivables with good payment records with the Group and there is no recent history of material default.

None of the Group’s trade receivables that are neither pass due nor impaired have been renegotiated during the financial year.

Receivables that are pass due but not impaired

The Group has trade receivables amounting to RM2,366,857 (2010 - RM190,312) that are past due at the reporting date but not impaired.

No impairment loss on these trade receivables has been made as in the opinion of the management, these receivables still collectible.

Impaired

The movement of the of the allowance account used to record the impairment are as follow:

The Group

2011 2010

RM RM

Balance at beginning of the financial year 98,622 28,387Add: Addition during the financial year - 97,301Less: Write-back during the financial year (98,622) (27,066)Balance at end of the financial year - 98,622

Trade receivables that are individually determined to be impaired at the reporting date relate to balances for which recoveries are doubtful. These receivables are not secured by any collateral.

The normal credit term granted by the Group was 60 days (2010 – 30 to 90 days). other credit term are assessed and approved on a case-by-case basis.



Annual Report 2011

12) OTHER RECEIVABLES


2011 2010 2011 2010

RM RM RM RM

other receivables 1,538,792 33,727 - 3,700Deposits 2,737,974 40,120 - 26,888prepayments 658,760 425,356 - 425,356

4,935,526 499,203 - 455,944

Allowance for impairment losses

Balance at start of financial year 425,356 618,171 425,356 618,171Less: Write-back during the financial year - (192,815) - (192,815)Less: Written off during the financial year (425,356) - (425,356) - Balance at end of financial year - 425,356 - 425,356Carrying amount 4,935,526 73,847 - 30,588

13) AMOUNT OWING BY A SUBSIDIARY COMPANY

The Company

2011 2010

RM RM

Trade balance - 4,636,004Non-trade balance 13,845,009 (2,245,459)

13,845,009 2,390,545

Allowance for impairment

Balance at start of financial year - 1,500,000Add: Additional during the year - 565,000Balance at end of financial year - 2,065,000Carrying amount 13,845,009 325,545

The amount in 2010 was owing by KaizenHR Sdn. Bhd. and it has been written off due to disposal of the subsidiary company during the financial year.

The Company’s normal trade credit terms range from 30 to 60 days. The amount owing is unsecured and is to be settled in cash.

The non-trade balance arose mainly from inter-company advances and payment made on behalf. This amount is interest free, unsecured and repayable on demand.


(cont’d)


Annual Report 2011

14) CURRENT TAX LIABILITIES / (ASSETS)

The Group

2011 2010

RM RM

At start of the financial year (15,048) (15,048)Add: Disposal of subsidiary company 15,048 - Add: Acquisition of subsidiary companies 2,079,175 -

2,079,175 (15,048)Add/(Less): Current year tax provision 3,000,000 - over provision in prior year 174,798 - Taxation cost 136,557 -

5,390,530 (15,048)Less: payment made during the year (1,312,581) - At end of the financial year 4,077,949 (15,048)

15) SHORT TERM INVESTMENT

The Group / The Company

2011 2010

RM RM

Quoted unit trusts in Malaysia 988 2,354,734

At fair value 988 2,654,734

Short-term investment represents funds placed with investment fund management companies. As at the end of the reporting period, these funds accrue interest at rates ranging from 2.11% to 2.83% (2010 - 2.27% to 2.85%) per annum and can be withdrawn without any restriction at any point in time.

16) FIXED DEPOSITS WITH LICENSED BANKS

The fixed deposit in year 2010 with weighted average interest rate of the fixed deposits at the end of the reporting period is 2.75% per annum. The fixed deposits have maturity periods of 30 days.

The fixed deposits in year 2011 have been pledged with licensed banks as lien for some of the banking facilities as referred to in Note 21 and Note 22.

The effective interest rates during the year ranged from 2% to 2.55% per annum and the average maturity period of these deposits are 30 to 90 days.

17) CASH AND CASH EQUIVALENTS

Cash and cash equivalents consist of cash and bank balances.



Annual Report 2011

18) TRADE PAYABLES

The trade credit terms granted to the Group ranges from 30 days to 90 days.

19) OTHER PAYABLES


2011 2010 2011 2010

RM RM RM RM

Other payables and accruals 1,391,888 914,336 541,771 318,933Deposits received 21,360 - - -

1,413,248 914,336 541,771 318,933

20) AMOUNT OWING TO A DIRECTOR

This amount is unsecured, interest free and repayable on demand.

21) BANKERS’ ACCEPTANCE

The Group

Banker’s acceptance 1

Banker’s acceptance of up to 90 days was granted by a licensed bank to a subsidiary company with a limit of RM6,500,000 and commission of 1.5% per annum. The facilities was secured by guarantee from Syarikat Jaminan pembiayaan perniagaan Berhad and joint and several guarantee by the directors of the subsidiary company. This facility had been converted to term loan 2 during the financial year as referred to in Note 23.

Banker’s acceptance 2

Banker’s acceptance of up to 180 days was granted by a licensed bank to a subsidiary company together with bank overdraft 1 and 2 and with a joint limit of RM8,000,000 with the bank overdraft 2 .

The facility together with bank overdraft 1 and 2 were secured by:

a) existing master facility agreement for RM9,000,000;

b) existing assets purchase agreement for RM9,000,000;

c) existing asset sales agreement for RM10,911,846.98 over freehold land and building of the Group as refer to Note 4;

d) existing assignment of all contract proceed from a customer;

e) existing note of assignment cum instruction to remit all contract proceed due from a customer into the subsidiary company’s collection account to be maintained at the licensed bank;

f ) existing joint and several guaranteed by the directors of the subsidiary company;


(cont’d)


Annual Report 2011

21) BANKERS’ ACCEPTANCE (cont’d)


Banker’s acceptance 2 (cont’d)

g) fresh supplemental facility agreement reflecting the changes in the Facilities Structure; and

h) fresh corporate guarantee issued by the Company . The interest rate charged by the bank was 1.5% above base finance rate. Effective rate will vary according to changes in bank finance rate provided that it shall not exceed selling price rate of 10.60%. The base finance rate at the end of the year was 6.6%.

22) HIRE PURCHASE PAYABLES

The Group

2011 2010

RM RM

payable within 1 year 2,798,521 - payable between 1 and 5 years 2,745,285 - payable after 5 years 26,010 -

5,569,816 - Less: Future interest charges (418,695) -

5,151,121 -

Current liability- payable within 1 year 2,508,982 -

Non-current liability- payable between 1 and 5 years 2,616,129 - - payable after 5 years 26,010

5,151,121 -

The effective interest rates of the Group were from 3.65% to 9.76% (2010 - Nil) per annum on monthly rest.

23) TERM LOANS

The Group has been granted term loans as follows:

Term loan 1 (Bai-Bithaman Ajil)

principal amount of RM800,000 under Islamic banking granted by a licensed bank to a subsidiary company for the purchase of semi-detached light industrial factory, the freehold land and building of the Group.

The loan is repayable by 96 equal monthly instalments of RM11,177 until full settlement. Interest rate charged by the bank was 7.65% (2010 – Nil) per annum fixed rate.



Annual Report 2011

23) TERM LOANS (cont’d)

The loan was secured by:

a) existing property purchase Agreement of RM800,000 and property Sales Agreement of RM1,088,282;

b) existing first party first legal charge for RM1,088,282 over the property as refer to Note 4; and

c) joint and several guaranteed by the directors of a subsidiary company under their personal capacity.

Term loan 2

A twelve months term loan granted by a licensed bank to a subsidiary company with limit of RM5,390,000 to restructure the banker’s acceptance 1 and bank overdraft 4.

The loan is repayable by equal monthly instalments of RM517,456 for eleven months with adjusted last instalment. Interest rate charged by the bank was 2.0% per annum above base lending rate. The bank’s base lending rate at the end of the financial year was 6.6%

The term loan was secured by:

a) 80% guarantee coverage from Syarikat Jaminan pembiayaan Berhad and is valid for a duration of 5 years commencing from the date of disbursement of facilities by the bank;

b) joint and several guaranteed of the directors of the subsidiary company;

c) letter of subordination signed by the directors the subsidiary company supported by an undertaking signed by the subsidiary company with board resolution.

The term loans were repayable as follows:

The Group

2011 2010

RM RM

payable within 1 year (current liability) 4,490,027 - payable between 1 and 5 years 22,168 -

4,512,195 -

24) BANK OVERDRAFTS

The Group was granted the following bank overdraft facilities and some of the facilities has been renewed during the financial year:

Bank overdraft 1 and 2 (Murabahah Cashline - i5/OD/ Contract/ i6/OD/ Work order)

Bank overdraft 1 and 2 granted together with banker’s acceptance 2 by a licensed bank to a subsidiary company for working capital requirement.

Bank overdraft 1 has a limit of RM1,000,000. Bank overdraft 2 has a joint limit with banker’s acceptance 2 of RM8,000,000.


(cont’d)


Annual Report 2011

24) BANK OVERDRAFTS (cont’d)

The overdraft facilities together with banker’s acceptance 2 were secured by:



c) existing asset sales agreement for RM10,911,846.98 over freehold land and building of the Group as refer to in Note 4;



f ) existing joint and several guarantee by the directors of the subsidiary company;


h) fresh corporate guarantee issued by the Company.

The interest rate charged by the bank was 1.5% above base finance rate. Effective rate will vary according to changes in bank finance rate provided that it shall not exceed selling price rate of 10.60%. The base finance rate at the end of the year was 6.6%.

Bank overdraft 3

An overdraft limit of RM260,000 granted by a licensed bank to part finance the purchase of a 4 storey strata title shop office comprises of 6 units, an investment property of the Group as refer to Note 5.

The overdraft facility was secured by loan agreement cum Deed of Assignment in respect of the property held, first legal charge over the properties and jointly and severally guaranteed by the directors of the subsidiary company. The interest rate charge by the bank is 2.00% (2010 – 2.00%) per annum above the bank’s base lending rate on monthly rest. The bank’s base lending rate at end of the financial year was 6.6% (2010 – 5.8%).

Bank overdraft 4

An overdraft limit of RM500,000 granted by a licensed bank to a subsidiary company for working capital requirement. The interest rate charged by the bank is 1.50% per annum above the bank’s base lending rate.

The overdraft facility was secured by:

a) 80% guarantee coverage from Syarikat Jaminan pembiayaan Berhad and is valid for a duration of 5 years commencing from the date of disbursement of facilities by the bank;

b) jointly and severally guaranteed by the directors of the subsidiary company;

c) letter of subordination signed by the directors of the subsidiary company supported by an undertaking signed by the Company with board resolution.

This bank overdraft facility has been converted to Term loan 2 during the financial year.



Annual Report 2011


Bank overdraft 5 (Murabahah Cashline - i2/OD/PC)

An Islamic banking overdraft facility with a limit of RM13,000,000 granted by a licensed bank to a subsidiary company for working capital requirement.

The facility was secured by:



c) existing asset sales agreement for RM19,695,000 over freehold land and building of the Group as refer to in Note 4;



f ) existing joint and several guarantee by the directors of and the subsidiary company;


h) fresh corporate guarantee issued by the Company.

The interest rate charged by the bank was 1.25% above base finance rate. Effective rate will vary according to changes in bank finance rate provided that it shall not exceed selling price rate of 10.60%. The base finance rate at the end of the year was 6.6%.

Bank overdraft 6 (Murabahah Cashline - i4/Issuance of Banker Cheque)

An Islamic banking overdraft facility with a limit of RM10,000,000 granted by a licensed bank for issuance of banker cheque to local councils only.

The bank overdraft was secured by:



c) existing asset sales agreement for RM15,150,000 over freehold land and building of the Group as refer to in Note 4;

d) against existing 40% deposit under general investment account in the name of the subsidiary company to be placed as and when the line is utilise;

e) existing assignment of all contract proceed from a customer;

f ) existing note of assignment cum instruction to remit all contract proceed due into the subsidiary company’s collection account to be maintained at the licensed bank;

g) existing joint and several guarantee by the directors of the subsidiary company;


(cont’d)


Annual Report 2011


Bank overdraft 6 (Murabahah Cashline - i4/Issuance of Banker Cheque) (cont’d)

h) fresh supplemental facility agreement reflecting the changes in the Facilities Structure; and

i) fresh corporate guarantee issued by the Company.

The interest rate charged by the bank was 1.25% above base finance rate respectively. Effective rate will vary according to changes in bank finance rate provided that it shall not exceed selling price rate of 10.60%. The base finance rate at the end of the year was 6.6%.

25) SHARE CAPITAL

The Company

2011 2010

RM RM

ordinary shares of RM0.10 each

Authorised:Balance at start of the financial year 25,000,000 25,000,000Add: Additional during the financial year 75,000,000 - Balance at end of the financial year 100,000,000 25,000,000

Issued and fully paid:Balance at start of the financial year 6,528,000 6,528,000Add: Allotment during the financial year 81,368,600 - Balance at end of the financial year 87,896,600 6,528,000

on 15 June 2011, the Company’s authorised share capital was increased from 250,000,000 ordinary shares of RM0.10 each to 1,000,000,000 ordinary shares of RM0.10 each.

The new ordinary shares issued rank pari passu in respect of the distribution of dividends and repayment of capital with the existing shares.

During the financial year, the Company has issued the following ordinary shares:

Date of issue No. of Shares Issued Issue Price (RM) Purposes

21.06.2011 6,500,000 0.1215 Exercise of Employees’ Share option Scheme (Note 28)

21.06.2011 109,000,000 0.1189 private placement21.06.2011 698,000,000 0.1000 Acquisition of subsidiaries22.06.2011 186,000 0.1800 Exercise of Employees’ Share option Scheme

(Note 28)



Annual Report 2011

25) SHARE CAPITAL (cont’d)

Acquisition

on 22 october 2010, the Company entered into a sales and purchase of shares agreement for acquisition of 2,500,000 ordinary shares of RM1.00 of RASB representing 100% of the issued and paid up share capital of RASB for a purchase consideration of RM69,800,000 to be satisfied entirely by the issuance of 698,000,000 ordinary shares of RM0.10 each at par.

Private placement

on 22 June 2011, 109,000,000 ordinary shares of RM0.10 each were issue by way of placement to identified investors at issue price of RM0.1189 per share.

26) SHARE OPTION RESERVE

Share option reserve represents the equity-settled share options granted to employees. This reserve is made up of the cumulative value of services received from employees recorded on the grant of share options. Details of the employees’ share options scheme are provided in Note 28.

27) SHARE PREMIUM

Share premium arose from the issue of ordinary shares in excess of the par value as follow:

The Group / The Company

2011 RM

Balance at start of the year 3,278,657Add: Issued of shares - Exercise of Employees’ Share option Scheme of 6,500,000 ordinary share of RM0.10 at 0.1215 139,665- placement to identified investors of 109,000,000 ordinary shares of RM0.10 at issue price of RM0.1189 per share 2,060,100- Exercise of Employees’ Share option Scheme of 186,000 ordinary share of RM0.10 at 0.1800 14,880

5,493,302Add: Transferred from share option reserve 578,539

6,071,841Less: Issuance expenses (1,987,930)Balance at end of financial year 4,083,911

2010 RM

Balance at start and end of the financial year 3,278,657


(cont’d)


Annual Report 2011

28) EMPLOYEES’ SHARE OPTIONS SCHEME (“ESOS”)

The Company’s ESoS is governed by the by-laws approved by the shareholders at an Extraordinary General Meeting held on 19 June 2006. The ESoS was implemented on 20 November 2006 and was to be in force for a period of 5 years from the date of implementation.

The exercise prices and the details in the movement of the options are as follows:-

Exercise PricesAs at

1 January 2011 Granted Lapsed ExercisedAs at

31 December 2011

RM0.18 394,500 - (208,500) (186,000) - RM0.15 1,949,000 - - (1,949,000) - RM0.12 2,598,000 - - (2,598,000) - RM0.10 1,953,000 - - (1,953,000) -

6,894,500 - (208,500) (6,686,000) -

All options granted and vested could be exercised at any point in time up to 19 November 2011.

The salient terms and conditions of the ESoS are as follows:-

a) The options Committee appointed by the Board of Directors to administer the ESoS may from time to time grant options to eligible employees of the Group to subscribe for new ordinary shares of RM0.10 each in the Company;

b) Subject to the discretion of the options Committee, any employee whose employment has been confirmed and any executive directors holding office in a full-time executive capacity of the Group, shall be eligible to participate in the ESoS;

c) The total number of shares to be issued under the ESoS shall not exceed in aggregate 20% of the issued share capital of the Company at any point of time during the tenure of the ESoS and out of which not more than 50% of the shares shall be allocated, in aggregate, to directors and senior management. In addition, not more than 10% of the shares available under the ESoS shall be allocated to any individual director or employee who, either singly or collectively through his/her associates, holds 20% or more in the issued and paid-up capital of the Company;

d) The option price for each share shall be the weighted average of the market price as quoted in the Daily official List issued by Bursa Malaysia Securities for the 5 market days immediately preceding the date on which the option is granted less, if the options Committee shall so determine at their discretion from time to time, a discount of not more than 10% or the par value of the shares of the Company of RM0.10;

e) The options shall become exercisable to the extent of one-fourth of the shares granted on each of the first four anniversaries from the date of the grant provided that the employee has been in continuous service with the Group throughout the period. The employees’ entitlements to the options are vested as soon as they become exercisable;

f ) All new ordinary shares issued upon exercise of the options granted under the ESoS will rank pari passu in all respects with the existing ordinary shares of the Company other than as may be specified in a resolution approving the distribution of dividends prior to their exercise dates; and

g) The persons to whom the options have been granted have no right to participate by virtue of the options, in any share issue of any other company.



Annual Report 2011

29) MERGER DEFICIT

Merger deficit arising from the acquisition of KaiZenHR Sdn. Bhd. which was accounted for using the merger method pursuant to a group restructuring exercise for the purpose of an initial public offering. The amount has been realised during the financial year due to disposal of the subsidiary company.

30) RETAINED PROFITS

Effective 1 January 2008, the Group is given the option to make an irrevocable election to move to a single tier system or continue to use its tax credit under Section 108 of the Income Tax Act, 1967 for the purpose of dividend distribution until the tax credit is fully utilised or latest by 31 December 2013. The Company has elected to continue to use its tax credit under Section 108 of the Income Tax Act, 1967.

Accordingly, during the transitional period, the Group may utilise the credit in the Section 108 balance as at 31 December 2007 to distribute cash dividend payments to ordinary shareholders as defined under the Finance Act, 2007.

At the balance sheet date, subject to the agreement by the Inland Revenue Board, the Group has sufficient tax credit under Section 108 (6) of the Income Tax Act, 1967 to frank the payment of dividends out of all its retained profits without incurring additional tax liability.

31) DEFERRED TAX LIABILITY

The Group

2011 2010

RM RM

Balance at start of the financial year - - Add: Acquisition of subsidiary 497,664Add: Transfer from income statement 68,803 - Balance at end of the financial year 566,467 -

The balance in deferred tax liability of the Group is made up of tax effect of taxable temporary differences arising from excess of capital allowance over depreciation.

Deferred tax assets of RM427,682 (2010 – RM320,312) are not recognised for temporary differences arising from unabsorbed capital allowance and unutilised tax losses as it is not probable that future taxable profit will be available against which the deductible temporary differences and unused tax losses can be utilised by the Group as the future profit streams are unpredictable. However, the unused tax losses may be carried forward indefinitely.


(cont’d)


Annual Report 2011

32) STAFF COSTS


2011 2010 2011 2010

RM RM RM RM

Director:Fees, salaries, allowances and bonuses 645,000 739,860 297,000 520,240Employees provident Fund 56,160 77,760 14,400 55,080other benefits 50,874 46,726 50,874 28,522

752,034 864,346 362,274 603,842Less: Amount capitalised under development expenditure (99,000) (241,680) (99,000) (241,680)

653,034 622,666 263,274 362,162

Staff:Salaries, allowances and bonuses 4,171,827 682,373 31,000 16,110Employees provident Fund 578,002 77,115 33,488 - other benefits and related expenses 49,259 - 2,201 63,374

4,799,088 759,488 66,689 79,484Staff costs 5,452,122 1,382,154 329,963 441,646

33) NET PROFIT / (LOSS) BEFORE TAX

The following items have been charged / (credited) in arriving at net profit / (loss) before tax:


2011 2010 2011 2010

RM RM RM RM

Allowance for impairment losses on receivable - 97,301 - 565,000Amortisation of development expenditure 160,630 133,858 160,630 133,858Amount owing by a subsidiary company written off - - 301,565 - Audit fee-Current year 90,000 26,000 20,000 17,000-prior year (3,290) (1,000) 7,000 (500)Bank overdrafts interest 619,641 - - - Banker’s acceptance interest 126,437 - - - Bad debts written off - 11,537 - - Depreciation 2,110,797 105,580 1,028 10,660Directors’ fees 63,000 70,000 63,000 70,000



Annual Report 2011


2011 2010 2011 2010

RM RM RM RM

Directors’ remuneration-Salary and allowance 831,000 622,666 135,000 362,162-other benefits 50,874 - 50,874 - Fixed deposits interest received (249,248) - - - Hire purchase interest 370,725 - - -

Loss on disposal of plant and equipment 40,685 - - - Gain on disposal a of subsidiary (33,334) - 1,759,997 - plant and equipment written off 7,525 - 7,507 - Impairment loss on investment in a subsidiary - - - 900,000Rental of motor vehicles 82,027 - - - Rental of office 437,924 80,520 8,099 40,260Rental of office equipment 228,786 10,800 2,700 5,400Term loan interest 191,853 - - - Allowance for impairment losses on receivable written back - (219,881) - (192,815)Interest income (35,254) (64,208) (35,254) (61,519)Rental income (640,503) - - - Waiver of amount owing to other payables (300,297) - (300,297) -

34) INCOME TAX EXPENSE

The major components of the income tax expense are:


2011 2010 2011 2010

RM RM RM RM

provision for current year tax 2,830,239 - - - over provision in prior year 174,798 - - - Taxation cost 136,557 - - - Transfer to deferred taxation account 63,046 - - -

3,204,640 - - -


(cont’d)


Annual Report 2011

34) INCOME TAX EXPENSE (cont’d)

The numerical reconciliation between the tax expense and the product of accounting profit / (loss) multiplied by the applicable tax rates are as follows:


2011 2010 2011 2010

RM RM RM RM

Accounting profit / (loss) 11,220,807 114,415 (2,167,180) (1,293,360)

Tax at applicable rate of 25% 2,805,201 28,604 (541,795) (323,340)

Add / (Less):Expenses not deductible for tax purpose 188,431 73,191 581,031 244,652Income not taxable (92,221) - (83,888) - Deferred tax assets not recognised: -Current year 427,682 320,312 317,339 320,312-prior year (320,312) (241,624) (320,312) 241,624previous year deferred taxation not taken up (126,568) - 47,625 - over provision in prior year 174,798 - - - Taxation cost 136,557 - - - Increase in tax rate 1,439 - - - Rounding of provision for taxation 9,633 - - - Utilisation of deferred tax assets not recognised in previous financial year - (180,483) - - Income tax expense for the financial year 3,204,640 - - 483,248

Subject to the agreement with the Inland Revenue Board, the unabsorbed capital allowance and unutilised tax losses at the end of the of the financial year available to be carried forward for offset against future taxable business income are as follow:


2011 2010 2011 2010

RM RM RM RM

Unabsorbed capital allowance 97,505 442,000 69,246 69,000Unutilised tax losses 1,581,777 3,812,000 1,200,106 956,000others - (1,805,000) - 260,000

1,679,282 2,449,000 1,269,352 1,285,000



Annual Report 2011

35) EARNINGS PER SHARE

a) Basic earnings per share

Earnings per share is calculated by dividing the profit for the period attributable to equity holder of the Group by the weighted average number of ordinary shares in issue during the financial year

The Group

2011 2010

RM RM

profit for the year 8,016,167 114,415

Weighted average shares for the financial year:Shares at beginning of the year 6,528,000 6,528,000Effect of issuance of shares during the financial year 43,247,900 - Shares at end of the year 49,775,900 6,528,000Earnings per share (sen) 1.60 0.18

b) Diluted earnings per share

Diluted earnings per share is not applicable for the financial year as the unexercised convertible warrants were anti-dilution in nature. This is due to the average market share price of the Company being below the exercise price of warrants.

36) DIVIDENDS

There were no dividends paid or proposed since the end of the last financial year. The directors do not recommend the payment of any dividend in respect of the current financial year.

37) RELATED COMPANY DISCLOSURE

a) For the purpose of the financial statements, the Group and the Company have related party relationship with:-

i) Its subsidiary as disclosed in Note 6 to the financial statements;

ii) The directors who are the key management personnel; and

b) In addition to the information detailed elsewhere in the financial statements, the Group and the Company carried out the following transactions with its related parties during the financial year:


2011 2010 2011 2010

RM RM RM RM

Subsidiary

Sales to subsidiary - - 317,952 711,643

Key management personnel compensation

Short-term employees benefits - 934,346 - 673,842


(cont’d)


Annual Report 2011

38) SEGMENTAL INFORMATION

Business Segments

The Group is operating in the following operation segments:-

a) Human Capital Management System (“HCMS”)

Development of HCMS and the sales and provision of post sales implementation and support services for its HCMS.

b) Civil, Mechanical And Electrical Works (CME)

i) Infrastructure Build (Site Acquisition, Technical Site Survey, Local Council/Authority Liaison)

ii) Equipment Installation, Commissioning & Integration

iii) Managed Services operations & Maintenance

iv) Fixed Network Solutions (Includes outside plant, open Trenching, Micro-Trenching, Horizontal Directional Drilling For optical Fiber Installation.)

v) Fabrication of Steel Structures And Materials

c) Telecommunication Equipment Installation (TI)

i) Radio Frequency Design

ii) Drive-Test, post processing, Analysis And optimization of Coverage

iii) Infrastructure Build (Site Acquisition, Technical Site Survey, Local Council/Authority Liaison)

iv) Equipment Installation, Commissioning & Integration

v) Managed Services operations & Maintenance

vi) Fixed Network Solutions (Includes outside plant, open Trenching, Micro-Trenching, Horizontal Directional Drilling For optical Fiber Installation.)

vii) Fabrication of Steel Structures And Materials

d) In-Building System (IBS)

i) Radio Frequency Design

ii) Equipment Installation, Commissioning & Integration

iii) Managed Services operations & Maintenance

iv) Fixed Network Solutions (Includes outside plant, open Trenching, Micro-Trenching, Horizontal Directional Drilling For optical Fiber Installation.



Annual Report 2011

38) SEGMENTAL INFORMATION (cont’d)

Business Segments (cont’d)

HMSC CME TI IBS Total

RM RM RM RM RM

Revenue from external customer 906,704 37,044,017 2,811,125 1,280,165 42,042,011Cost of sales (636,902) (17,355,310) (2,717,452) (813,526) (21,523,190)Gross profit 269,802 19,688,707 93,673 466,639 20,518,821

profit before tax 11,220,807Income tax expense (3,204,640)other comprehensive income - Total comprehensive income 8,016,167

The Company has disposed the business operation for Human Capital Management System (“HCMS”) pursuant to the disposal of KaizenHR Sdn. Bhd. during the financial year.

Geographical Segments

The Group‘s segmental information by geographical location is not shown as the activities of the Group are in Malaysia.

39) ACQUISITION OF SUBSIDIARY COMPANIES

The following subsidiary companies were acquired during the financial year for a total consideration of RM69,800,000 :

Group Effective interest %

Effective acquisition date

Direct interest

RASB 100% 27 June 2011Indirect interest

R&A Metals Sdn. Bhd.* 100% 27 June 2011

* Held under RASB


(cont’d)


Annual Report 2011

39) ACQUISITION OF SUBSIDIARY COMPANIES (cont’d)

The net assets acquired in the transaction, and the goodwill arising therefrom, are as follow:

Carrying amount

RM

Non-current assets 16,462,318Current assets 47,914,658Non-current liabilities (43,803,662)Current liabilities (497,664)

20,075,650Goodwill on consolidation 49,724,350purchase consideration 69,800,000Less: purchase consideration by issuance of new ordinary shares (69,800,000)

- Cash and cash equivalent acquired 19,518,413Net cash outflow on acquisition 19,518,413

The effect of the acquisition on the financial position as at the balance sheet date are as follow:

Carrying amount

RM

property, plant and equipment 15,176,404Investment properties 544,467Development expenditure 3,948,891Inventories 1,851,337Contract customers 15,252,952Trade receivables 30,615,636other receivables 4,935,526Fixed deposit with licensed banks 3,475,588Cash and cash equivalents 407,134Trade payables (4,211,052)other payables (871,477)Amount owing to a director (203,000)Banker’s acceptance (6,112,968)Hire purchase payables (5,151,121)Term loan (4,512,195)Bank overdrafts (8,473,259)Current tax liabilities (4,077,949)Deferred taxation (566,467)Increase in Group’s net assets 42,028,447



Annual Report 2011

39) ACQUISITION OF SUBSIDIARY COMPANIES (cont’d)

The effects of the acquisition of RASB and R&A Metals Sdn. Bhd. on the financial results of the Group during the financial year are as follow:

Carrying amount

RM

Income 64,475,374Expenses (55,533,832)Increase in Group’s net profit 8,941,542

40) DISPOSAL OF SUBSIDIARY

on 15 July 2011, the Company disposed of its entire interest in a subsidiary KaiZenHR Sdn. Bhd.

The net assets of KaiZenHR Sdn. Bhd. at the date of disposal were as follow:

The Group

RM

Non-current assets 59,030Current assets 995,131Current liabilities (1,087,494)Net liabilities (33,333)Gain on disposal 33,334Total consideration 1Cash and cash equivalent disposed (108,056)Net cash outflow from disposal of subsidiary (108,055)

41) FINANCIAL INSTRUMENTS

a) Categories of Financial Instruments

Financial Assets

Loan and Receivables at amortised cost:


2011 2010 2011 2010

RM RM RM RM

Contract customers (excluding aggregate cost incurred to date) 8,325,741 - - - Trade receivables 30,615,636 609,851 - -


(cont’d)


Annual Report 2011

41) FINANCIAL INSTRUMENTS (cont’d)

a) Categories of Financial Instruments (cont’d)

Financial Assets (cont’d)

Loan and Receivables at amortised cost: (cont’d)


2011 2010 2011 2010

RM RM RM RM

other receivables (excluding prepayment) 4,935,526 33,727 - 3,700Amount owing by subsidiary company - - 13,845,009 325,545Fixed deposits with licensed banks 3,475,588 307,941 - - Cash and cash equivalent 847,840 59,801 440,706 26,168

39,874,590 1,011,320 14,285,715 355,413

Fair value through profit or loss

Short-term investment 988 2,354,734 988 2,354,734

Financial liabilities

other Financial Liabilities at amortised cost:


2011 2010 2011 2010

RM RM RM RM

Trade payables 4,211,052 141,824 - - other payables 1,413,248 914,336 541,771 318,933Amount owing to a director 203,000 - - - Banker’s acceptance 6,112,968 - - - Hire purchase payables 5,151,121 - - - Term loans 4,512,195 - - - Bank overdrafts 8,473,259 - - -

30,076,843 1,056,160 541,771 318,933

b) Financial Risk Management Objective And Policies

The Group and the Company are exposed to financial risks arising from their operations and the use of financial instruments. The key financial risks include credit risk, liquidity risk, and market risk.

The Board of Directors reviews and agrees policies and procedures for the management of these risks. The audit committee provides independent oversight to the effectiveness of the risk management process.



Annual Report 2011


b) Financial Risk Management Objective And Policies (cont’d)

The following sections provide details regarding the Group and the Company’s exposure to the above-mentioned financial risks and the objectives, policies and processes for the management of these risks.

i) Credit Risk

Credit risk is the risk of loss that may arise on outstanding financial instruments should a counterparty default on its obligations. The Group’s exposure to credit risk represented by the carrying amount of each class of financial assets recognised in the statement of financial position.

Receivables

The management has a credit policy in place and the exposure to credit risk is controlled by the application of credit approvals, limits and monitoring procedures. Credit risks are minimised and monitored via strictly limiting the company’s associations to business partners with high creditworthiness and those with long established history. Trade receivables are monitored on an on- going basis via regular company’s reporting procedures.

As at 31 December 2011, certain trade receivables of the Group has exceeded its normal trade credit terms but the Group does not anticipate the carrying amounts recorded at the reporting date to be significantly different from the values that will eventually be received.

As at the end of the reporting period, the maximum exposure to credit risk arising from receivables is represented by the carrying amounts shown in the statement of financial position as disclosed in Note 9. Note 10 and Note 11.

Management has taken reasonable steps to ensure that receivables that are not impaired are stated at their realisable values. A significant portion of these receivables are regular customers that have been transacting with the Group. The Group uses ageing analysis to monitor the credit quality of the receivables

Inter company balances

The Company provides unsecured loans and advances to subsidiary company. The Company monitors the results of its subsidiary company regularly.

As at 31 December 2011, the maximum exposure to credit risk is represented by their carrying amounts in the statement of financial position.

Management has taken reasonable steps to ensure that intercompany receivables are stated at the realisable values. As at 31 December 2011, there was no indication that the loans and advances extended to the subsidiary company are not recoverable.

Financial guarantees

The Company provides unsecured financial guarantees to banks in respect of banking facilities granted to certain subsidiaries. The Company monitors on an ongoing basis the results of the subsidiary company and repayment made by the subsidiary company.

The maximum exposure to credit risk amounts to RM19,098,422 (2010 – RMNil) representing the outstanding banking facilities of the subsidiary company as at end of the reporting period.

As at 31 December 2011, there was no indication that any subsidiary company would default on repayment.


(cont’d)


Annual Report 2011



i) Credit Risk (cont’d)

Financial guarantees (cont’d)

Financial guarantees have not been recognised since the fair value on initial recognition was not material as the probability of the subsidiary company defaulting on its banking facilities is remote.

Fixed deposits with licensed banks and cash and cash equivalent

Fixed deposits with licensed banks and cash and cash equivalent are placed with approved financial institutions and reputable banks. The likelihood of non -performance by these financial institutions is remote based on their high credit ratings.

ii) Liquidity Risk

Liquidity risk, also referred to as funding risk, is the risk that the Group will encounter difficulties in raising funds to meet commitments associated with financial instruments. The Group actively manages their operating cash flows and the availability of funding so as to ensure that all funding needs a met. As part of its overall prudent liquidity management, the Group maintain sufficient levels of cash to meet their working capital requirements.

All financial liabilities of the Group that will be due and payable within the next 12 months are classified within current liabilities. The contractual cash flows of hire purchase payables and term loans are presented below:

Hire purchase payables Total

RM RM RM

2011

Within 1 year 2,798,521 4,649,792 7,448,313Between 1 to 5 years 2,745,285 22,344 2,767,629After 5 years 26,010 - 26,010Total contractual undiscounted cash flows 5,569,816 4,672,136 10,241,952Total carrying amount 5,037,779 4,512,195 9,549,974

2010

Within 1 year - - - Between 1 to 5 years - - - After 5 years - - - Total contractual undiscounted cash flows - - - Total carrying amount - - -



Annual Report 2011



iii) Market Risk

Market risk refers to the risk that changes in market prices, such as foreign exchange rates, interest rates and prices will affect the Group’s financial position and cash flows.

Currency risk

The Group have a potential currency risk exposure arising from trade transactions entered with companies where the amounts are denominated in currencies other than Ringgit Malaysia. Exposure to foreign currency risk is monitored on an on-going basis and where considered necessary, the Group may consider using financial instruments to hedge its foreign currency risk. The Group is not significantly exposed to currency risk.

Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of the Group’s financial instrument will fluctuate because of changes in market interest rates.

The Group’s exposure to interest rate risks relates primarily to the Group’s fixed deposits with licensed banks and interest bearing borrowings.

Surplus funds are placed with licensed financial institutions to earn interest income based on prevailing market rates. The Group manages its interest rate risks by placing such funds on short tenures of 12 months or less.

The Group generally borrows principally on a floating rate basis and ensure that interest risk rates obtained are competitive.

The interest rate profile of the Group’s significant interest-bearing financial instrument have been presented in Notes12, Note 19, Note 20 and Note 21.

Cash flow sensitivity analysis for variable rate instruments

At the reporting date, if interest rates had been 0.25% lower/higher, with all other variables held constant, the Group’s pre-tax profit would have been approximately RM334,125 higher/lower, arising mainly as a result of lower/higher interest expense on floating rate borrowings, and higher/lower negative fair value of interest rate swap. The assumed movement in percentage for interest rate sensitivity analysis is based on the currently observable market environment.

c) Fair Value Of Financial Instruments

The carrying amount of financial assets and liabilities classified within current assets and current liabilities respectively proximate their fair values due to the relatively short term nature of these financial instruments.

The fair value of quoted investment is estimated based on their quoted market prices as at the end of the reporting period.

The carrying amount of the non-current portion of hire purchase payables and term loans are a reasonable approximation of its fair value due to the insignificant impact of discounting.


(cont’d)


Annual Report 2011

42) CONTINGENT LIABILITIES

The Company has a unsecured contingent liability in respect of corporate guarantee given to RASB, the subsidiary company as referred to in Note 6, for banking facilities granted to the subsidiary company.

43) CAPITAL COMMITMENT

Capital commitment of the Group in respect of the purchase of plant and machineries which are contracted but not provided for in the financial statement amounted to approximately RM752,127 (2010 – RMNil).

44) CHANGE OF NAME

The Company changed its name from Kzen Solutions Berhad to R&A Telecommunication Group Berhad (“R&A”) on 14 June 2011.

45) SUBSEQUENT EVENTS

on 20 December 2011, the Company had made an announcement to undertake the following proposals:

a) A bonus issue of 87,896,600 Warrants in R&A on the basis of one (1) free Warrant for every ten (10) existing ordinary shares of RM0.10 each in R&A Shares held on an entitlement date to be determined later (“proposed Bonus Issue of Warrants”);

b) An increase in the authorised share capital of R&A from RM100,000,000 comprising 1,000,000,000 R&A Shares to RM150,000,000 comprising 1,500,000,000 R&A Shares; and

c) Amendments to the Memorandum and Article of Association of R&A.

The above proposals were completed on 29 March 2012.

46) SUPPLEMENTARY INFORMATION – DISCLOSURE OF REALISED AND UNREALISED PROFIT / LOSSES

The breakdown of the accumulated losses of the Group and of the Company as at the end of the reporting period into realised and unrealised profits/(losses) are presented in accordance with the directive issued by Bursa Malaysia Securities Berhad and prepared in accordance with Guidance on Special Matter No. 1, Determination of Realised and Unrealised profits or Losses in the Context of Disclosure pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants, as follows:


2011 2010 2011 2010

RM RM RM RM

Total retained profit/ (accumulated loss)-Realised 17,611,688 (6,099,803) (6,141,971) (3,974,791)-Unrealised (566,467) - - - (in respect of deferred tax recognised in the income statement) - - - - Less: Consolidation adjustment (14,763,853) 1,714,496 - - Total retained profit / accumulated loss 2,281,368 (4,385,307) (6,141,971) (3,974,791)



Annual Report 2011

analysis ofSHAREHoLDINGS

SHAREHOLDINGS STRUCTURE AS AT 3 MAY 2012

Share CapitalAuthorised Share Capital RM150,000,000 Issued and fully paid-up capital RM87,896,600 Class of shares Ordinary Shares of RM0.10 eachVoting Rights One vote per share

DISTRIBUTION OF SHAREHOLDINGS AS AT 3 MAY 2012

No. of holders % No. of shares %

Less than 100 2 0.06 100 0.00 100 - 1,000 60 1.89 38,400 0.00 1,001 - 10,000 503 15.86 3,817,000 0.43 10,001 - 100,000 1,965 61.97 101,153,000 11.51 100,001 and below 5% 638 20.09 245,717,700 27.96 5% and above 3 0.13 528,239,800 60.10 TOTAL 3,171 100.00 878,966,000 100.00

SUBSTANTIAL SHAREHOLDERS AS AT 3 MAY 2012

Name

Direct Interest Deemed Interest

No. of shares % No. of shares %

Francis Tan Hock Leong 337,822,053 38.43 60,203,338 6.85 Ruslan Bin Rawi 130,214,409 14.81 - - Cheok Chun Lian 60,203,338 6.85 - -

Francis Tan Hock Leong is deemed interested under Section 134(12)(c ) of the Companies Act, 1965, by virtue of his spouse, Cheok Chun Lian’s shareholding in R&A

DIRECTORS’ SHAREHOLDINGS AS AT 3 MAY 2012

Name


No. of shares % No. of shares %

Francis Tan Hock Leong 337,822,053 38.43 60,203,338 6.85 Nesakumar A/L Retnasamy - - - - Tan Chuek Hooi - - - - Tay Mun Kit - - - - Choo Seng Choon - - - -



Annual Report 2011

analysis ofSHAREHoLDINGS(cont’d)

LIST OF 30 LARGEST SHAREHOLDERS AS AT 3 MAY 2012

NO. NAME NO. OF SHARES %

1 FRANCIS TAN HoCK LEoNG 287,715,293 32.7

2 RUSLAN BIN RAWI 101,250,705 11.5

3 CHEoK CHUN LIAN 51,273,802 5.8


5 RUSLAN BIN RAWI 28,963,704 3.3

6 Foo CHooN ToW 10,000,000 1.1


8 MAYBANK NoMINEES (TEMpATAN) SDN BHDBENEFICIARY : pLEDGED SECURITIES ACCoUNT FoR NG KIAN BooN

5,672,000 0.6

9 pUBLIC NoMINEES (TEMpATAN) SDN BHDBENEFICIARY : pLEDGED SECURITIES ACCoUNT FoR Ho HAU LING (E-ppG)

4,500,000 0.5

10 RHB CApITAL NoMINEES (TEMpATAN) SDN BHDBENEFICIARY : pLEDGED SECURITIES ACCoUNT FoR pHoA BooN TING (CEB)

4,000,000 0.5

11 CIMB CoMMERCE TRUSTEE BERHADBENEFICIARY : EXEMpT AN FoR EMpLoYEES pRovIDENT FUND (pCM)

2,976,000 0.3

12 LAI AH CHAN 2,500,000 0.3

13 pUBLIC NoMINEES (TEMpATAN) SDN BHDBENEFICIARY : pLEDGED SECURITIES ACCoUNT FoR LEE poH HoCK (E-SS2/TDI)

2,400,000 0.3

14 CIMSEC NoMINEES (TEMpATAN) SDN BHDBENEFICIARY : pLEDGED SECURITIES ACCoUNT FoR ENG TECK KIEW (MELAKA R-CL)

2,040,000 0.2

15 LEE CHEE KEoNG 2,000,000 0.2

16 SIM MUI KHEE 2,000,000 0.2

17 A.A. ANTHoNY NoMINEES (TEMpATAN) SDN BHDBENEFICIARY : pLEDGED SECURITIES ACCoUNT FoR TEH ENG HUAT

1,995,500 0.2

18 pUBLIC NoMINEES (TEMpATAN) SDN BHDBENEFICIARY : pLEDGED SECURITIES ACCoUNT FoR pHoA BooN TING (E-KLG)

1,950,000 0.2

19 HLG NoMINEE (TEMpATAN) SDN BHDBENEFICIARY : HoNG LEoNG BANK BHD FoR CHoo CHIN HooNG

1,700,000 0.2

20 oW pUNG HoCK 1,700,000 0.2


Annual Report 2011

(cont’d)

LIST OF 30 LARGEST SHAREHOLDERS AS AT 3 MAY 2012 (cont’d)

NO. NAME NO. OF SHARES %

21 SoH AH TEE 1,682,900 0.2

22 SEAH SIEW KHIM 1,626,600 0.2

23 SIEW SING KoNG 1,600,000 0.2

24 GAN MENG YoNG 1,500,000 0.2

25 JoNELLE HUANG YIH YUN 1,500,000 0.2

26 LIM KIAN MIN 1,500,000 0.2

27 TAN KIAN GUAN 1,500,000 0.2

28 pUBLIC NoMINEES (TEMpATAN) SDN BHDBENEFICIARY : pLEDGED SECURITIES ACCoUNT FoR TEH ENG HUAT (E-TAI)

1,480,500 0.2

29 pUBLIC NoMINEES (TEMpATAN) SDN BHDBENEFICIARY : pLEDGED SECURITIES ACCoUNT FoR CHEAH ENG GUAN (E-SpI/pLI)

1,430,000 0.2

30 KHoR GEE MEE 1,400,000 0.2

analysis ofSHAREHoLDINGS


Annual Report 2011

analysis ofWARRANTHoLDINGS

WARRANTHOLDINGS STRUCTURE AS AT 3 MAY 2012

Type of Securities Warrants 2012/2017 (“Warrants”) Voting Rights one vote per warrant in respect of a meeting of warrant holders

DISTRIBUTION OF WARRANTHOLDINGS AS AT 3 MAY 2012

Name No. of holders % No. of warrants %

Less than 100 43 1.85 1,300 0.00 100 - 1,000 447 19.20 312,508 0.36 1,001 - 10,000 1,290 55.41 6,592,320 7.50 10,001 - 100,000 454 19.50 15,812,310 17.99 100,001 and below 5% 91 3.91 29,383,869 33.43 5% and above 3 0.13 35,794,293 40.72 TOTAL 2,328 100.00 87,896,600 100.00

DIRECTORS’ WARRANTHOLDINGS AS AT 3 MAY 2012

Name


No. of warrants % No. of warrants %

Francis Tan Hock Leong 25,669,224 29.20 4,004,049 4.56 Nesakumar A/L Retnasamy - - - - Tan Chuek Hooi - - - - Tay Mun Kit - - - - Choo Seng Choon - - - -



Annual Report 2011

analysis ofWARRANTHoLDINGS

(cont’d)

LIST OF 30 LARGEST WARRANTHOLDERS AS AT 3 MAY 2012

NO. NAME NO. OF

WARRANTS %


2 RUSLAN BIN RAWI 10,125,069 11.52



5 RUSLAN BIN RAWI 2,896,370 3.30

6 HLG NoMINEE (TEMpATAN) SDN BHDBENEFICIARY : HoNG LEoNG BANK BHD FoR CHoo CHIN HooNG

1,720,000 1.96

7 TAN KoK KENG 1,029,000 1.17

8 DAN YoKE pYNG 1,000,000 1.14

9 WoNG CHER HUA 900,000 1.02

10 CHEoK CHUN LIAN 892,953 1.02

11 pUBLIC NoMINEES (TEMpATAN) SDN BHDBENEFICIARY : pLEDGED SECURITIES ACCoUNT FoR SAW LIAN pECK (E-KLG/TSK)

700,000 0.80

12 CHoNG YI XIoNG 638,500 0.73

13 WoNG MIN JIE 600,000 0.68

14 LEE MEE KUEN 500,000 0.57

15 LoH KAH LENG 450,000 0.51

16 GAN CHEE DIN 415,000 0.47

17 HoW ENG HUAT 415,000 0.47

18 CHEN SUIT LAI 400,000 0.46

19 CHoo WAI HUNG 400,000 0.46

20 MAYBANK NoMINEES (TEMpATAN) SDN BHDBENEFICIARY : CHE HARUN BIN MAMAT

400,000 0.46

21 TAY CHIN LEoNG 362,000 0.41

22 LoH pAI LEoNG 350,000 0.40

23 TAN KIAN GUAN 320,000 0.36

24 JoHN LAI YoKE HoN 300,000 0.34

25 MAYBANK NoMINEES (TEMpATAN) SDN BHDBENEFICIARY : pLEDGED SECURITIES ACCoUNT FoR TAN TAI KUAN

300,000 0.34

26 MAYBANK NoMINEES (TEMpATAN) SDN BHDBENEFICIARY : pLEDGED SECURITIES ACCoUNT FoR SIA TENG THo

300,000 0.34

27 SIM KWoNG TECK 300,000 0.34

28 MAYBANK NoMINEES (TEMpATAN) SDN BHDBENEFICIARY : pLEDGED SECURITIES ACCoUNT FoR NG GUo CHING

282,400 0.32

29 CIMSEC NoMINEES (TEMpATAN) SDN BHDBENEFICIARY : pLEDGED SECURITIES ACCoUNT FoR NG CHEE THIAN (W GENTING-CL)

280,000 0.32

30 SIM SWEE MIN 275,000 0.31


Annual Report 2011

notice ofANNUAL GENERAL MEETING

NOTICE IS HEREBY GIVEN that the Eighth Annual General Meeting of the Company will be held at Redang Room, Bukit Jalil Golf & Country Resort, Jalan 3/155B, Bukit Jalil, 57000 Kuala Lumpur on Tuesday, 26 June 2012 at 10.00 a.m. to transact the following business :

AGENDA

AS ORDINARY BUSINESS1. To receive and adopt the Audited Financial Statements for the financial year ended 31 December

2011 and the Reports of Directors and Auditors thereon.Resolution 1

2. To approve the payment of Directors’ fees amounting to RM63,000 for the financial year ended 31 December 2011.

Resolution 2

3. To re-elect the Directors who retire in accordance with Article 85 of the Company’s Articles of Association as follows :-

(a) Francis Tan Hock Leong(b) Choo Seng Choon(c) Tan Chuek Hooi(d) Nesakumar A/L Retnasamy

Resolution 3Resolution 4Resolution 5Resolution 6

4. To re-appoint Messrs. Chong & Co. as auditors of the Company and to authorize the Directors to fix their remuneration.

Resolution 7

5. AS SPECIAL BUSINESS

To consider and, if deemed fit, to pass the following resolution :

Ordinary ResolutionAuthority To Allot Shares Pursuant To Section 132D Of The Companies Act 1965

“THAT subject to the Companies Act, 1965, the Articles of Association of the Company and the approvals from Bursa Malaysia Securities Berhad and other relevant government / regulatory authorities, where such approval is necessary, the Directors be and are hereby empowered pursuant to Section 132D of the Companies Act, 1965 to issue new ordinary shares of RM0.10 each in the Company, from time to time and upon such terms and conditions and for such purposes and to such persons whomsoever the Directors may, in their absolute discretion deem fit and expedient in the interest of the Company, provided that the aggregate number of shares issued pursuant to this resolution does not exceed 10% of the issued and paid-up share capital AND THAT such authority shall continue in force until the conclusion of the next Annual General Meeting of the Company.”

Resolution 8

6. To transact any other business for which due notice shall have been given.

By order of the Board

LAANG JHE HOW (MIA 25193)Company Secretary

Kuala Lumpur4 June 2012


Annual Report 2011

notice ofANNUAL GENERAL MEETING

(cont’d)

Notes:-

1) A member entitled to attend and vote at the meeting is entitled to appoint a proxy or proxies to attend and vote in his/her stead. A proxy may but need not be a member of the Company and the provision of Section 149(1) (b) of the Companies Act, 1965 shall not apply.

2) Where a member appoints two (2) or more proxies, the appointment shall be invalid unless he/she specifies the proportion of his/her holdings to be represented by each proxy.

3) The instrument appointing a proxy shall be in writing under the hand of the appointer or his/her attorney duly authorised in writing or

4) In the case of a corporate body, the proxy appointed must be in accordance with the Memorandum and Articles of Association, and the instrument appointing a proxy shall be given under the Common Seal of the Company or under the hand of an officer or attorney duly authorized.

5) The instrument appointing a proxy/proxies must be deposited at the Company’s Registered office, situated at No. 149A, Jalan Aminuddin Baki, Taman Tun Dr. Ismail, 60000 Kuala Lumpur, not less than forty-eight (48) hours before the time appointed for the holding of the meeting.

6) In respect of deposited securities, only members whose names appear in the Record of Depositors on 19 June 2012 (“General Meeting Record of Depositors”) shall be eligible to vote, attend and speak at the Meeting.

1. Explanatory notes on Ordinary Business :-

AUDITED FINANCIAL STATEMENTS FoR THE YEAR ENDED 31 DECEMBER 2011

The 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 for the Audited Financial Statements. Hence, the Agenda will not be put forward for voting.

2. Explanatory notes on Special Business :-

Authority to issue shares pursuant to Section 132D of the Companies Act, 1965

The Company wishes to renew the mandate on the authority to issue shares pursuant to Section 132D of the Companies Act 1965 at the Eighth AGM of the Company (hereinafter referred to as the “General Mandate”).

The Company had been granted a general mandate by its shareholders at the Seventh AGM of the Company held on 20 June 2011 (hereinafter referred to as the “previous Mandate”).

The previous Mandate granted by the shareholders had not been utilised and hence no proceed was raised therefrom.

The purpose to seek the General Mandate is to enable the Directors of the Company to issue and allot shares any time to such persons in their absolute discretion without convening a general meeting as it would be both time and cost-consuming to organise a general meeting. This authority, unless revoked or varied by the Company in a general meeting, will expire at the next Annual General Meeting. The proceeds raised from the General Mandate will provide flexibility to the Company for any possible fund raising activities, including but not limited to further placing of shares, for purpose of funding future investment project(s), working capital and / or acquisitions.


Annual Report 2011

statement accompanyingNoTICE oF ANNUAL GENERAL MEETING1. Date, Time and Venue of the Eighth Annual General Meeting (“AGM”)

The Eighth AGM of the Company will be held as follows:

Date : Tuesday, 26 June 2012Time : 10.00 a.m.venue : Redang Room, Bukit Jalil Golf & Country Resort, Jalan 3/155B, Bukit Jalil, 57000 Kuala Lumpur

2. Directors’ who are standing for re-election/re-appointment at the Eighth AGM

Directors who retire in accordance with Article 85 of the Company’s Articles of Association are as follows :-

(a) Francis Tan Hock Leong(b) Choo Seng Choon(c) Tan Chuek Hooi(d) Nesakumar A/L Retnasamy

The profiles of the above four (4) Directors and the record of their attendances at Board Meetings held in the financial year ended 31 December 2011 are presented in the “Directors’ profile” section on pages 11 to 12. Their securities holdings in the Group are presented in the “Statement of Directors’ Interest” section on page 30.

3. Board Meetings held in the financial year ended 31 December 2011

Five (5) Board Meetings were held during the financial year ended 31 December 2011. A record of the Directors’ attendances at the Board Meetings is presented in the “Statement of Corporate Governance” appearing on pages 13 to 16 of the Annual Report 2011.

4. General Meeting Record of Depositors

For the purpose of determining who shall be entitled to attend this meeting, the Company shall be requesting the Bursa Malaysia Depository Sdn Bhd to make available to the Company pursuant to Article 49 (B) of the Articles of Association of the Company and paragraph 7.16(2) of the Bursa Malaysia Securities Berhad’s Ace Market Listing Requirements, a Record of Depositors as of 19 June 2012, and a depositor whose name appears on such Record of Depositors shall be entitled to attend this meeting or appoint proxy to vote and speak in his stead.

This page has been intentionally left blank

PROXY FORM FOR ANNUAL GENERAL MEETING

*I/We _____________________________________________________ NRIC/Company no. ______________________________ of ________________________________________________________________________________________________________

being *a member / members of R&A TELECOMMUNICATION GROUP BERHAD (645677-D), do hereby appoint ______________

____________________________________________________________ NRIC No. /passport No. __________________________

of ________________________________________________________________________________________________________

or failing him/her ______________________________________________ NRIC No. /passport No. __________________________ of ________________________________________________________________________________________________________ or failing *him /her *the Chairman of the Meeting as *my/our proxy to vote for *me/us on *my/our behalf at the Eighth Annual General Meeting of the Company to be held at Redang Room, Bukit Jalil Golf & Country Resort, Jalan 3/155B, Bukit Jalil, 57000 Kuala Lumpur on Tuesday, 26 June 2012 at 10.00 a.m. and at any adjournment thereof.

RESOLUTIONS FOR AGAINST

1. To receive and adopt the Audited Financial Statements for the financial year ended 31 December 2011 and the Reports of Directors and Auditors thereon.

2. To approve the payment of Directors’ fees amounting to RM63,000 for the financial year ended 31 December 2011.

3. To re-elect the Director, Francis Tan Hock Leong, who retires in accordance with Article 85 of the Company’s Articles of Association.

4. To re-elect the Director, Choo Seng Choon, who retires in accordance with Article 85 of the Company’s Articles of Association.

5. To re-elect the Director, Tan Chuek Hooi, who retires in accordance with Article 85 of the Company’s Articles of Association.

6. To re-elect the Director, Nesakumar A/L Retnasamy, who retires in accordance with Article 85 of the Company’s Articles of Association.

7. To re-appoint Messrs. Chong & Co. as auditors of the Company and to authorize the Directors to fix their remuneration.

8. To approve authority to issue shares pursuant to Section 132D of the Companies Act, 1965.

please mark with “ X “ in either box if you wish to direct the proxy how to vote. If no mark is made the proxy may vote on the resolution or abstain from voting as the proxy thinks fit.

* Strike out whichever not applicable.

Signed this ________ day of ______________ 2012 No. of Shares held____________________

______________________________ __________________________________ Signature(s) of Member(s) Affix Company’s Seal (if applicable)

Notes:-

1) A member entitled to attend and vote at the meeting is entitled to appoint a proxy or proxies to attend and vote in his/her stead. A proxy may but need not be a member of the Company and the provision of Section 149(1) (b) of the Companies Act, 1965 shall not apply.

2) Where a member appoints two (2) or more proxies, the appointment shall be invalid unless he/she specifies the proportion of his/her holdings to be represented by each proxy.

3) The instrument appointing a proxy shall be in writing under the hand of the appointer or his/her attorney duly authorised in writing.4) In the case of a corporate body, the proxy appointed must be in accordance with the Memorandum and Articles of Association, and the instrument

appointing a proxy shall be given under the Common Seal of the Company or under the hand of an officer or attorney duly authorized.5) The instrument appointing a proxy/proxies must be deposited at the Company’s Registered Office, situated at No. 149A, Jalan Aminuddin Baki,

Taman Tun Dr. Ismail, 60000 Kuala Lumpur, not less than forty-eight (48) hours before the time appointed for the holding of the meeting.6) In respect of deposited securities, only members whose names appear in the Record of Depositors on 19 June 2012 (“General Meeting Record of

Depositors” ) shall be eligible to vote, attend and speak at the Meeting.

R&A Telecommunication Group Berhad (645677-D)

please fold here

please fold here

AFFIXSTAMp

THE CoMpANY SECRETARYR&A TELECOMMUNICATION GROUP BERHAD (645677-D)

No. 149A, Jalan Aminuddin BakiTaman Tun Dr. Ismail60000 Kuala Lumpur

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2011ANNUAL REPORT

R&A Telecommunication Group Berhad (645677-D)No. 2, Jalan Pengacara U1/48, Section U1, Temasya Industrial Park, 40150 Shah Alam, Selangor Darul Ehsan, Malaysia (Head Quarters)

TEL : +603 55691801 FAX : +603 55695730

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