annual report - Efficient E-Solutions Bhd report/EFFICEN-AnnualReport2… · started his career...

a n n u a l r e p o r t

Efficient E-Solutions Berhad

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Our VisionTo be a Trusted and Preferred Business

Process Outsourcing (BPO) service provider to organisations in key segments of

economies in the region and beyond

Our MissionWe strive to delight our customers with

BPO services that use cutting edge technologies and best practices, enabled by

committed people and innovative processes that protect the integrity and security of our

customer’s data and documents

Chairman’s Statement

Corporate Information

Corporate Structure

Board of Directors’ Profi le

Audit Committee Report

Corporate Governance Statement

Internal Control Statement

Additional Compliance Information

Financial Statements 2006

List of Properties

Analysis of Shareholdings

Notice of Annual General Meeting

Statement Accompanying Notice of AGM

Proxy Form

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CONTENTS

Effi cient E-Solutions Berhad (632479-H) annual report 20062

CHAIRMAN’S STATEMENT

FINANCIAL ACHIEVEMENTSEFFICIENT’s net profi t soared 63.11% to RM12.114 million in fi nancial year ended 31 December 2006 from RM7.427 million in the previous year on the back of higher revenue. The Group’s revenue rose 38.19% to RM43.013 million from RM31.125 million the year before and its earnings per share improved to 4.04 sen from 2.48 sen.

EFFICIENT attributed the growth to the increase in volume of data printing from existing customers as well as software application development services rendered in relation to data capture and conversion.

DIVIDEND A fi rst interim tax exempt dividend of 3.5% per ordinary share of RM0.10 each was declared during the fi nancial year and paid on 15 January 2007.

CORPORATE DEVELOPMENTThe shareholders of the Company have on 21 June 2006 approved the proposed bonus issue of 198,000,030 new ordinary shares of RM0.10 each on the basis of three (3) new ordinary shares for every two (2) shares. The bonus shares were issued on 8 August 2006.

On 30 October 2006, the Group acquired the balance 80% interest in Printegrate Sdn Bhd (“Printegrate”). This move is expected to allow EFFICIENT to move upstream into the production of computer forms for digital and specialised printing (pressure seal forms – which were being purchased from Printegrate), as well as enable EFFICIENT to explore possibilities of increased revenue through the supply of these specialised forms to its existing customers.

On behalf of the Board of Directors of EFFICIENT E-SOLUTIONS BERHAD (“EFFICIENT”)I have great pleasure in presenting the Annual Report and Audited Financial Statements of EFFICIENT Group for the fi nancial year ended 31 December 2006.

DATO’ ABDUL LATIF BIN ABDULLAHChairman

Effi cient E-Solutions Berhad (632479-H)annual report 2006 3

CHAIRMAN’S STATEMENT (cont’d)

INDUSTRY TREND AND DEVELOPMENT IDC press release dated 28 September 2006 expects the business processing outsourcing services (“BPO”) market for Malaysia to grow signifi cantly. This is especially so when compared with the overall Malaysia information technology services market, which is expected to grow approximately 15% from 2006 through 2010. IDC forecasts that Malaysia BPO service market would grow at a compound annual growth rate of 23.3% from 2006 to 2010.

EFFICIENT Group foresees healthy growth in its DDP and EBP businesses as outsourcing business becomes an integral component of business in Malaysia.

In order to preserve and grow its competitive advantages, the Group expects to continue to expand its operations by continuing to offer services for delivery of both paper and electronic presentment. It will also introduce new value added services such as its scanning and archival services and its Service-Oriented Architecture (“SOA”) services. EFFICIENT will soon be rolling out SOA services for existing customers in the banking sector.

SOA is a new methodology for delivering information technology (“IT”) application software using a design approach which provides for a better, more seamless integration of IT systems. With the SOA approach, EFFICIENT’s software is created not as standalone products, but as shareable software “services”, which can be integrated with software services of other systems, regardless of underlying technology.

EFFICIENT is currently in negotiations with a potential partner in Indonesia, and is also looking for a suitable partner for the China market, in which the Board of Directors of EFFICIENT expects substantial growth opportunities, driven the expected growth in credit card customers following the expected liberalization of the regulations on the issuance of credit cards in China. The Board of Directors of EFFICIENT, believe that there are substantial growth opportunity in China driven mainly by the expected growth in the number of credit card customers.

Description

(i) Research & Development expenditure(ii) New facility in Shah Alam(iii) Branding & promotion(iv) Working capital(v) Defray listing expenses

Total

Amount utilised RM’000

1,6726,000

1068,7001,600

18,078

Total amount of proceeds

RM’0002,0006,000

6008,7001,600

18,900

Unutilised balanceRM’000

328-

494--

822

UTILISATION OF PROCEEDSFor the fi nancial year ended 31 December 2006, the Company had utilised approximately RM18 million of the total proceeds raised from its Initial Public Offering. The status of the utilization of proceeds is listed below:


CHAIRMAN’S STATEMENT (cont’d)

RESEARCH AND DEVELOPMENTEFFICIENT Group will continue to invest in R&D as an integral part of providing and improving innovative value added services for its customers.

EFFICIENT Group has allocated RM2.0 million from the proceeds raised from its initial public offering (“IPO”) towards the continuing Research and Development (“R&D”) efforts of the Group and the continuing development of its software applications, namely e-TALKTM, e-DOCTM and e-FLOWTM. The Group is committed to continually invest in R&D as an integral part of providing and improving innovative value added services for its customers. To date, the Group has spent RM1.62 million on its R&D from the proceeds of the IPO. EFFICIENT expects to continue to spend about RM500,000 per annum on its R&D. EFFICIENT expects its R&D efforts to yield continuous improvement in its products and services, eventually contributing positively to the future results of the Group.

APPRECIATION On behalf of the Board of Directors, I wish to record special appreciation to the management and employees of EFFICIENT for helping make the Group’s strategies a reality. The EFFICIENT staff force is an invaluable asset driving the Group to greater heights.

I also wish to record my appreciation and gratitude to all our valued customers, shareholders, business partners, shareholders and the Board of Directors, who have given their unwavering support and valuable feedback.

DATO’ ABDUL LATIF BIN ABDULLAH Chairman


CORPORATE INFORMATION

BOARD OF DIRECTORS

Dato’ Abdul Latif bin Abdullah Chairman / Independent Non-Executive Director

Vincent Cheah Chee Kong Managing Director

Victor Cheah Chee Wai Executive Director

Esther Soon Yoke Leng Executive Director

Datuk Syed Hussian bin Syed Junid Independent Non-Executive Director

Shaik Aqmal bin Shaik Allaudin Non-Independent Non-Executive Director

Ho Hin Choy Independent Non-Executive Director

AUDIT COMMITTEE

Datuk Syed Hussian bin Syed Junid Chairman

Dato’ Abdul Latif bin Abdullah

Victor Cheah Chee Wai

Ho Hin Choy

Company SecretariesEsther Soon Yoke Leng MAICSA 7002027 Zoe Lim Hoon Hwa MAICSA 7031771

Registered Offi ceNo. 45-49 Jalan PJS 1/28Taman Petaling Utama46000 Petaling JayaTel: 03 7781 2555Fax: 03 7781 6846Homepage: www.effi cient.com.my

SponsorRHB Sakura Merchant Bankers BerhadLevel 10, Tower OneRHB CentreJalan Tun Razak50400 Kuala LumpurTel: 03 9287 3888

Share RegistrarSymphony Share Registrars Sdn BhdLevel 26 Menara Multi-PurposeCapital SquareNo. 8 Jalan Munshi Abdullah50100 Kuala LumpurTel: 03 2721 2222Fax: 03 2721 2530 / 2721 2531

AuditorsPoh & Co (AF 0587)Chartered Accountants19-1 Jalan 3/146Bandar Tasik Selatan57100 Kuala LumpurTel: 03 9057 7222

SolicitorsScully & Yoon

Principal BankersAlliance Bank Malaysia BerhadAffi n Bank Berhad

Stock Exchange Listing MESDAQ Market of Bursa Malaysia Securities Berhad


Efficient E-Solutions Berhad

Efficient SofTech Sdn Bhd VPI International Sdn Bhd

PrinteGrate Sdn BhdRegalia Records

Management Sdn Bhd

Efficient MailCom Sdn Bhd Regalia Solutions Sdn Bhd

15

CORPORATE STRUCTURE


BOARD OF DIRECTORS’ PROFILE

DATO’ ABDUL LATIF BIN ABDULLAH

was appointed as the Chairman and Independent Non-Executive Director of EFFICIENT on 2 August 2004. He is also a member of Audit Committee. He gained his Bachelor of Arts (Hons) in International Relations from University Malaya in 1975, Master of Science (Marine Law & Policy) from University of Wales (UWIST) in 1981, Senior Management Development Program from Harvard Business School in 1992 and a member of Chartered Institute of Logistics & Transport, UK in 1990.

He began his career as an Offi cer with the Ministry of Foreign Affairs in 1975 and later, joined the Malaysian International Shipping Corporation Berhad as an Executive until 1982. He was a member of the pioneer team that established the second national line, Perbadanan Nasional Shipping Line Berhad in 1982, where he remained until 1992, holding the position as Director/General Manager before joining Mitsui OSK Lines (M) Sdn Bhd in 1992 as a founder Director and currently holds the position of Chairman.

On 1 January 2004, Dato’ Abdul Latif was appointed Chairman of Penang Port Sdn Bhd by the Ministry of Finance after serving as a Director (non-executive) for 5 years. Recently, on 24 March 2006, he was appointed as Executive Chairman of Realmild (M) Sdn Bhd. He also holds prominent posts in associations and statutory bodies, such as Board member of Light Dues Board (Lembaga Dius Api Semenanjung Malaysia), Merchantile Marine Fund (Kumpulan Wang Pusat Perdagangan Laut), as well as Chairman of the International Shipowners’ Association of Malaysia. He sits on the boards of Bursa Malaysia Berhad, Ekowood International Berhad and Tamco Corporate Holdings Berhad and various other private limited companies.

VINCENT CHEAH CHEE KONG

was appointed as the Managing Director of EFFICIENT on 21 January 2004. He is also a member of the Option Committee. He holds a Bachelor of Arts (General Political Science) from the University of Waterloo, Canada. He has over 20 years of experience as an entrepreneur in industries covering sectors including outsourcing services, information technology, security systems, garment manufacturing, food & beverage and government supplies. He was one of the pioneering members of Effi cient MailCom Sdn Bhd, a wholly owned subsidiary of EFFICIENT, which he joined in 1990 and has been instrumental in establishing and managing the initial operations of the company. He is responsible for formulating and implementing business policies and corporate strategies of the Group and has been instrumental in spearheading the progress and development of the Group. He also sits on the board of several other private limited companies.

VICTOR CHEAH CHEE WAI

was appointed as an Executive Director of EFFICIENT on 21 January 2004. He is also a member of Audit Committee and Option Committee. He graduated from the University of Newcastle, Sydney with a Bachelor of Commerce in 1992. He started his career with Sime Darby Berhad in 1992 as Executive and was subsequently transferred to Chubb (M) Sdn Bhd, a subsidiary of Sime Darby Berhad in 1993 as Project Executive. In 1997, he joined Effi cient MailCom Sdn Bhd, a wholly owned subsidiary of EFFICIENT, as Director. He is responsible for marketing of the Group’s solutions and services. He also sits on the board of several other private limited companies.

Malaysian, aged 57 years




BOARD OF DIRECTORS’ PROFILE (cont’d)

ESTHER SOON YOKE LENG

was appointed as an Executive Director of EFFICIENT on 21 January 2004. She is also the Joint Company Secretary of EFFICIENT. She completed the examinations of the Institute of Chartered Secretaries and Administrators, United Kingdom in December 1988 under the Financial Administration and Management stream. Presently, she is an Associate Member of the Malaysian Institute of Chartered Secretaries and Administrators.

She started her career at Borneo Motor Credit Sdn Bhd, a hire purchase company, as Accounts Executive in 1982. She then joined Dayamaha Leasing Sdn Bhd, a leasing company, as Senior Accounts Executive in 1985 until 1988. From 1988 to 1996, she was a Director of Bangsar Seafood Garden Restaurant Sdn Bhd. She was one of the pioneering members of Effi cient MailCom Sdn Bhd, a wholly owned subsidiary of EFFICIENT, which she joined in 1990 and has been instrumental in establishing and managing the initial operations of the company. She is responsible for the human resources, secretarial and administrative functions of the Group. She also sits on the board of several other private limited companies.

DATUK SYED HUSSIAN BIN SYED JUNID

was appointed as an Independent Non-Executive Director of EFFICIENT on 2 August 2004. He is also the Chairman of the Audit Committee and Option Committee. He started his career with The American Malaysian Insurance Sdn Bhd as a Trainee Executive in 1982. In 1986, he was promoted as the Penang Branch Manager. Later in 1989, he was promoted as the Regional Manager covering Penang, Perlis, Kedah and Perak. Currently he is the Director of Business Operations & Sales Support Asia in Western Digital Sdn Bhd, a company involved in manufacture of hard-disc drives. He also sits on the board of various other private limited companies.

SHAIK AQMAL BIN SHAIK ALLAUDIN

was appointed as a Non-Executive Director of EFFICIENT on 22 February 2006. He graduated from the Hawaii Pacifi c University, USA with a Bachelor of Science in Marketing. He is the Managing Director of VPI International Sdn Bhd. He is an accomplished professional in the area of information system, software development and implementation for fi nancial institutions and services industry.

Prior to setting up VPI International Sdn Bhd, he was the Marketing Director for the Asia Pacifi c Region for SSQC Technologies, a NESDAQ Listed Company. He also sits on the board of various other private limited companies.





BOARD OF DIRECTORS’ PROFILE (cont’d)

HO HIN CHOY

was appointed as an Independent Non-Executive Director of EFFICIENT on 26 February 2007. He graduated from the University of New South Wales, Sydney with a Bachelor of Commerce in Accounting. He also holds a Diploma in Marketing from Chartered Institute of Marketing (United Kingdom). He is also a Chartered Accountant with the Malaysian Institute of Accountants and a Certifi ed Financial Planner with the Certifi ed Financial Planner Board of Standards, Inc., United States of America. He started his career in 1987 with Bland and Partners, Sydney as an audit and tax agent. He subsequently joined Touche Ross & Co, England as an exchange trainee in 1988. He joined Price Waterhouse, Singapore in 1988 as an Auditor. In 1990, he joined DHL International (S) Pte Ltd, a courier services company, in Singapore, as a Financial Accountant and subsequently, in 1991, he joined DHL Worldwide Express Sdn Bhd, a courier services company, in Petaling Jaya, as a Finance Manager. Since 1995, he has been a dealer’s representative with Public Investment Bank Bhd. He also sits on the board various other private limited companies in Malaysia.

Family relationshipsNone of the directors of the Company have any family relationship with any other directors and / or major shareholders of the Company except Mr Vincent Cheah Chee Kong who is the brother of Mr Victor Cheah Chee Wai.

Confl ict of interestsThere is no confl ict of interest between the Directors and the Group except for the related party transactions disclosed in the Circular to Shareholders dated 29 May 2007.

Conviction for offencesNone of the Directors has been convicted of any offences (excluding traffi c offences, if any) within the last 10 years.

Board Meetings A total of fi ve (5) Board Meetings were held during the fi nancial year ended 31 December 2006. The record of attendance is as follows:-

No. of meeting attended

Dato’ Abdul Latif bin Abdullah 3/5

Vincent Cheah Chee Kong 4/5

Victor Cheah Chee Wai 5/5

Esther Soon Yoke Leng 4/5

Datuk Syed Hussian bin Syed Junid 5/5

Shaik Aqmal bin Shaik Allaudin (Appointed on 22 February 2006) 4/4

Sreedhar Subramaniam (Resigned on 22 August 2006) 4/4

Dato’ Kalimullah bin Masheerul Hassan (Retired on 21 June 2006) 3/3

Ho Hin Choy (Resigned on 28 February 2006 and re-appointed on 26 February 2007) 1/1


Effi cient E-Solutions Berhad (632479-H)annual report 200610

AUDIT COMMITTEE REPORT

Datuk Syed Hussian bin Syed Junid

Victor Cheah Chee Wai (Resigned on 28 December 2006 and re-appointed on 26 February 2007)

Dato’ Abdul Latif bin Abdullah

Ho Hin Choy (Resigned on 28 February 2006 and re-appointed on 26 February 2007)

Esther Soon Yoke Leng (Appointed on 28 December 2006 and resigned on 26 February 2007)

No. of meeting attended

5/5

5/5

3/4

1/1

-

The Audit Committee comprises the following directors:

CHAIRMANDatuk Syed Hussian bin Syed Junid Independent Non-Executive Director

MEMBERSDato’ Abdul Latif bin Abdullah Independent Non-Executive DirectorVictor Cheah Chee Wai Executive DirectorHo Hin Choy Independent Non-Executive Director

MEETINGSA total of fi ve (5) Audit Committee Meetings were held during the fi nancial year ended 31 December 2006.The record of attendance is as follows:-

SUMMARY OF ACTIVITIES OF THE COMMITTEE During the fi nancial year ended 31 December 2006, the activities of the Audit Committee covered, amongst others, the following:-• Reviewed the audited fi nancial statements of the Group for the fi nancial year ended 31 December 2006;• Reviewed the unaudited interim fi nancial reports for the quarter ended 31 March 2006, 30 June 2006, 30 September

2006 and 31 December 2006; • Reviewed the research reports for the half-year ended 30 June 2006 and 31 December 2006; • Reviewed the terms of the recurrent related party transactions;• Verifi ed the allocation of options pursuant to Employees’ Share Option Scheme;• Reviewed and approved the Audit Committee Report; • Reviewed the Corporate Governance Statement and Internal Control Statement;• Reviewed and approved the Audit Charter, Audit Plan and fi ndings by the internal audit; and• Considered the performance of the external auditors and recommended their re-appointment to the Board.


AUDIT COMMITTEE REPORT (cont’d)

STATEMENT BY THE AUDIT COMMITTEE IN RELATION TO THE ESOS ALLOCATIONThere was no ESOS allocation for the fi nancial year ended 31 December 2006.

There is no option offered to non-executive directors in accordance with the ESOS By-Law.

INTERNAL AUDIT FUNCTION As at the date of this report, the Company has engaged BDO Governance Advisory Sdn Bhd to carry out the internal audit function for the Group. The internal auditors shall assist the Audit Committee to identify risk areas, strengthen internal controls of the Group and optimize the Group’s business processes.

TERMS OF REFERENCE Composition The members of the Committee shall be appointed by the Board from amongst the directors and shall consist of not fewer than three (3) members, a majority of whom shall be independent directors. At least one member of the audit committee:-

(i) must be a member of Malaysian Institute of Accountant (MIA); or

(ii) If he is not a member of MIA, he must have at least three (3) years of working experience and:(a) he must have passed the examination specifi ed in Part I of the First Schedule of the Accountant Act 1967; or (b) he must be a member of one of the associations of the accountants specifi ed in Part II of the First Schedule of the Accountant Act, 1967.

No Chief Executive Offi cer of the Company or alternate director shall be appointed as a member of the Audit Committee.

In the event of any vacancy in the Committee resulting in non-compliance in respect of composition of Committee, the Company must fi ll the vacancy within 2 months, but in any case not later than 3 months.

Chairman The Chairman of the Committee must be an independent director. In the absence of the Chairman, the members shall elect any one of the members present at the meeting to be the Chairman of the meeting.

Secretary The Company Secretary shall be the Secretary of the Committee.

Meeting ProcedureAt least four (4) meetings shall be convened during a year. The meetings shall be scheduled regularly by the Secretary and due notice shall be distributed to the members before the meeting together with the agenda and supporting papers. The minutes of the meeting shall be recorded for reference and inspection purposes.

The executive directors, accountant, representative of the external auditors may be present in any meeting by invitation of the Committee.


Authority The Committee shall have the authority to do the following:- • Have explicit authority to investigate any matters within its term of reference;• Have the resources which it needs to perform its duties;• Have full access to any information which it requires in the course of performing its duties;• Have unrestricted access to the chief executive offi cer and the chief fi nancial offi cer;• Have direct communication channels with the external auditors and internal auditors; • Be able to obtain independent professional or other advice to perform its duties; and• Be able to invite outsiders with relevant experience to attend its meetings if necessary.

Functions The Committee shall discharge the following duties and responsibilities and report the same to the Board:-• To review the nomination of the external auditors; • To review the adequacy of existing external audit arrangements, with particular emphasis on the scope and quality of

the audit; • To review the effectiveness of the internal audit function;• To review the effectiveness of the internal control and management information systems;• To review quarterly results and year end fi nancial statements, prior to the approval of the Board of Directors, particularly

focusing on the following:(i) going concern assumption;(ii) changes in or implementation of major accounting policy changes;(iii) signifi cant and unusual events; and (iv) compliance with accounting standards and other legal requirements.

• To review the resignation or dismissal of the external auditors of the Company;• To review the assistance given by the Company’s and Group’s employees to the external auditors;• To monitor any related party transaction and confl icts of interest situations that may arise within the Group including

any transaction, procedure or course of conduct that raises questions of management integrity; and• To verify the criteria of allocation of the Employee Share Options Scheme (ESOS).

Term of Offi ce The terms of offi ce and performance of the Committee and each of its members shall be reviewed by the Board of Directors at least once in every three (3) years to determine whether the Committee and its members have carried out their duties in accordance with the terms of reference.

AUDIT COMMITTEE REPORT (cont’d)


CORPORATE GOVERNANCE STATEMENT

The Board of Directors of Effi cient E-Solutions Berhad is pleased to report that during the fi nancial year ended 31 December 2006, it has practiced good corporate governance as fundamental part of discharging its responsibilities to protect and enhance shareholders’ value and the interest of other stakeholders.

The Board fully supports the implementations of the Malaysian Code on Corporate Governance (“the Code”) and the Listing Requirements of Bursa Malaysia Securities Berhad for MESDAQ Market (“the Listing Requirements”).

DIRECTORSThe BoardThe Group is led and managed by an effective Board. The members of the Board, with their different backgrounds and specializations, bring along a wide range of skills, expertise and experience ranging from information technology, marketing, fi nance and general management discipline. Such good mix of skills, experience and expertise are suitable in managing the Group’s business in the outsourcing industry. The Board has overall responsibility for strategic direction and control of the Company. It focuses mainly on issues in relation to strategies, fi nancial performance and material business operations.

The profi le of the Board of Directors is presented on pages 7 to 9.

The Board has established sub-committees namely Audit Committee and Option Committee to assist the Board in discharging their duties.

Board Balance The Board consists of seven (7) members, comprising three (3) executive directors, one (1) non-independent non-executive director and three (3) independent non-executive directors. The Board is well balanced with one third (1/3) of its members comprises of independent directors. The selection and appointment of independent directors shall be a matter for the Board as a whole.

The role of the Chairman and Managing Director are defi ned to ensure balance of power and authority. The Chairman of the Company, Dato’ Abdul Latif bin Abdullah, holds an independent position and is primarily responsible for the conduct of the Board while the Managing Director, Mr Vincent Cheah Chee Kong, overseeing the implementation of the Board’s decisions and policies.

Supply of InformationThe directors are provided with an agenda together with full set of board papers containing information relevant to the business of the meeting prior to each board meeting. The board papers are issued on a timely basis to enable the directors to obtain further explanation, when necessary, in order to be properly briefed before the meetings, to discharge in the furtherance of the fi duciary duties.

The directors also have access to the advice and service of the company secretary and the management representatives whether as full Board or in their individual capacity. Where considered necessary, the Board may engage the service of professionals at the expense of the Group on specialised issues.


Appointments to the BoardThe Board appoints its members through a selection process, which is consistent with the Articles of Association of the Company. The company secretary shall ensure that all appointments are properly made and that legal and regulatory obligations are met.

Re-elections to the BoardIn accordance with the Company’s Articles of Association, all directors (except the Managing Director) are required to retire by rotation at least once every three (3) years at the Annual General Meetings (AGM). Any director appointed during the year shall retire at the next AGM. A retiring director shall be eligible for re-election. Directors’ TrainingAll directors of EFFICIENT have completed their Mandatory Accreditation Programme as prescribed by Bursa Malaysia Securities Berhad. The directors had, amongst others, attended training, seminars and conferences in the areas of fi nancial reporting, taxation, technical updates on DDP and other BPO services. The directors would continue to evaluate and determine the training needs of the directors, which aids the directors in discharging their duties.

Directors’ RemunerationThe Board recognised the importance of having remuneration framework for directors as well as the remuneration packages of the executive directors, which should be structured to link rewards to corporate and individual performance.

The details of directors’ remuneration for the fi nancial year ended 31 December 2006 are as follows:-

Salaries and other emoluments

Fees

Bonus

Benefi t in kind

Total

CORPORATE GOVERNANCE STATEMENT (cont’d)

Executive Director(RM)

870,300

-

-

41,350

911,650

Non-Executive Director(RM)

-

72,000

-

-

72,000


The remuneration of the directors summarized in bands of RM50,000 for the fi nancial year ended 31 December 2006 are as follows:-

* The above disclosure includes the remuneration of the resigned / retired directors namely Sreedhar Subramaniam and Dato’ Kalimullah bin Masheerul Hassan.

RELATIONSHIP WITH SHAREHOLDERS AND INVESTORSThe Board acknowledges the need for shareholders to be informed of all major developments of the Company. The quarterly fi nancial results and other announcements are released on timely basis to Bursa Malaysia Securities Berhad. Shareholders can also access the corporate developments through the Annual Report.

EFFICIENT has also conducted numerous company visits and meetings with analysts, fund managers, investors and media representatives.

The Annual General Meeting of the Company further provides a means of communication between the Company and shareholders. The Board presents the performance of the Group and encourages the shareholders to participate in the Question and Answer session.

ACCOUNTABILITY AND AUDITFinancial ReportingThe Board aims to present a clear, balanced and understandable assessment of the Group’s fi nancial performance and prospects to the shareholders as well as the public as a whole. The Audit Committee assists by reviewing the information to be disclosed to ensure accuracy and adequacy.

Internal Control A statement on the internal control of the Group is set out in page 17 of the Annual Report.

Relationship with the AuditorsThe Company has established a formal and transparent relationship with the Group’s external auditors, Messrs Poh & Co.


Non-Executive

5

-

-

-

-

-

Executive

-

1

-

-

2

1

Range of Remuneration

Below RM50,000

RM50,000 to RM100,000

RM100,001 to RM150,000

RM200,000 to RM250,000

RM250,001 to RM300,000

RM300,001 to RM350,000

Number of Directors


STATEMENT ON COMPLIANCE WITH THE CODEThe Group complied with the principles and best practices of the Malaysian Code on Corporate Governance throughout the fi nancial year 31 December 2006, save as explained above.

DIRECTORS’ RESPONSIBILITY STATEMENTThe fi nancial statements of the Group as set out in this Report are properly drawn so as to give a true and fair view of the state of affairs of the Group and Company as at 31 December 2006 and the results of its operations and of the cash fl ow of the company for the fi nancial year.

The directors consider that in preparing the fi nancial statements, the Group has:-• selected suitable accounting policies and applied them consistently; • made judgments and estimates that are reasonable and prudent; and• applied applicable accounting standards in preparing the fi nancial statements.

The directors are responsible to ensure that the Company maintains accounting records that discloses with reasonable accuracy at any time, the fi nancial position of the Group and Company, and to ensure that the fi nancial statements comply with the Companies Act, 1965 and applicable approved accounting standards.

The directors have responsibility for taking reasonable steps to safeguard the assets of the Group and prevent any fraud as well as irregularities.



INTERNAL CONTROL STATEMENT

The Board of Directors of EFFICIENT acknowledges their responsibility for the Group’s system of internal controls covering not only fi nancial controls but also operational, and compliance controls. This system is designed to ensure that the risks facing the Group’s businesses in pursuit of its objectives are identifi ed and managed at known and acceptable levels.

The system of internal control of the Group aims to:-(a) safeguard shareholders’ investment and the Group’s assets;(b) ensure that proper accounting records are maintained; and(c) that the fi nancial information used by the business and for publication to the public is reliable.

The Board are aware that such a system can only provide reasonable but not absolute assurance against material misstatement or loss.

The key elements of the Company’s internal control system are described below:-

(i) A defi ned organisation structure that is aligned to business and operations requirements and each strategic function is headed by a responsible head of department. The line of accountability and responsibility, approval, authorisation and control procedures have been laid down and communicated throughout the Group.

(ii) The Group’s management team carries out regular monitoring and review of fi nancial results for all businesses within the Group and the operational and fi nancial performance of the Group and formulate action plan to address areas of concern.

(iii) Regular and comprehensive fi nancial information is provided to the Audit Committee for quarterly and ad-hoc review and to present to the Board for review and approval.

(iv) The Group’s management team undertakes on-going reviews of the key commercial and fi nancial risks facing the Group’s businesses together with more general risks such as those relating to compliance with laws and regulations. The monitoring arrangements in place give reasonable assurance that there is an acceptable level of risk throughout the Group’s business.

The Board is of the view that there has been no signifi cant breakdown or weaknesses of internal controls of the Group that may result in material losses incurred by the Group for the fi nancial year ended 31 December 2006.

In line with the Group’s effort to continue strengthening its internal control, the Company has, subsequent to the fi nancial year ended 31 December 2006, engaged BDO Governance Advisory Sdn Bhd to carry out the internal audit function for the Group. The internal auditors shall assist the Audit Committee to identify risk areas, strengthen internal controls of the Group and optimize the Group’s business processes.


ADDITIONAL COMPLIANCEINFORMATION

SHARE BUY-BACKSDuring the fi nancial year ended 31 December 2006, there were no share buy-backs by the Company.

OPTIONS, WARRANTS OR CONVERTIBLE SECURITIESThe Company had on 16 November 2005 granted an option to the eligible employees and executive directors and as to date, there is no exercised of the option.

DEPOSITORY RECEIPT (“DR”)The Company did not sponsor any DR during the fi nancial year.

IMPOSITION OF SANCTIONS AND / OR PENALTIES BY THE RELEVANT REGULATORY BODIESThere was no sanction or penalties imposed on the Company and its subsidiaries, directors or management by any regulatory bodies.

NON-AUDIT FEE There was no non-audit fee incurred for services rendered to the Company and its subsidiaries by the auditors for the fi nancial year ended 31 December 2006.

VARIANCE IN RESULTSThere was no signifi cant variation between the audited results for the fi nancial year and the unaudited results previously announced.

PROFIT GUARANTEE The Company did not give any profi t guarantee.

MATERIAL CONTRACTSThere were no material contracts (not being contract entered into the ordinary course of business) subsisting as at or entered into since the end of the previous fi nancial year, by the Company or its subsidiaries, which involved the interests of the directors and major shareholders.

REVALUATION POLICYThe Company has not adopted a revaluation policy on landed properties.


Directors’ Report 20

Balance Sheets 26

Income Statement 28

Consolidated Statement of Changes in Equity 29

Company Statement of Changes in Equity 30

Consolidated Cash Flow Statement 31

Cash Flow Statement 33

Notes to the Financial Statements 34

Statement by Directors 80

Statutory Declaration 81

Report of the Auditors 82

FINANCIAL STATEMENTS 2006


DIRECTORS’ REPORT

The directors have pleasure in presenting their report together with the audited fi nancial statements of the Group and of the Company for the fi nancial year ended 31st December 2006.

PRINCIPAL ACTIVITIES

The principal activity of the Company is that of investment holding.

The principal activities of the subsidiaries are described in Note 6 to the fi nancial statements.

There have been no signifi cant changes in the nature of these activities during the fi nancial year.

RESULTS

Group Company

RM RM

Profi t for the year 12,113,818 6,599,916

Attributable to:Equity holders of the Company 12,113,818 6,599,916

Minority interests - - 12,113,818 6,599,916

In the opinion of the directors, the results of the operations of the Group and of the Company during the fi nancial year have not been substantially affected by any item, transaction or event of a material and unusual nature.

RESERVES AND PROVISIONS

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

DIVIDEND

The amount of dividends declared and paid by the Company since 31st December 2005 were as follows:

RMIn respect of the fi nancial year ended 31st December 2006

First interim dividend of 3.5% tax exempt on 300,312,550ordinary shares of RM0.10 each, paid on 15th January, 2007 1,051,094


ISSUE OF SHARES AND DEBENTURES

During the fi nancial year, the Company increased its:

(a) authorised ordinary share capital from RM25,000,000 to RM50,000,000 through the creation of 250,000,000 new ordinary shares of RM0.10 each; and

(b) issued and paid-up ordinary share capital from RM12,000,002 to RM30,031,255 by way of:

(i) the issuance of 20,000 and 262,500 ordinary shares of RM0.10 each for cash pursuant to the Company’s Employees’ Share Options Scheme (ESOS) at an exercise price of RM0.51 and RM0.204 respectively per ordinary share; and

(ii) bonus issue of 180,030,030 ordinary shares of RM0.10 each on the basis of 3 (three) new ordinary share for every 2 (two) existing shares held.

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

There was no issue of debentures by the Company during the fi nancial year.

EMPLOYEES’ SHARE OPTION SCHEME

The Company has obtained approval of Bursa Malaysia Securities Berhad to establish the Employees’ Share Option Scheme (ESOS). The ESOS allows the granting of options to the eligible employees and Executive Directors of the Company and its subsidiaries to subscribe for new shares up to a maximum of 10% of the issued and paid-up share capital of the Company at any point in time during the tenure of the ESOS, subject to the terms and conditions of the By-Laws approved by the shareholders.

The ESOS was implemented on 16th November, 2005 and shall be in force for a period of 5 years, subject to any extension or renewal for a further period of 5 years commencing from the day after the date of expiry of the original 5 years period.

The salient features and other terms of the ESOS are disclosed in Note 31 to the fi nancial statements.

The Company has been granted exemption by the Companies Commission of Malaysia from having to disclose the options held by the list of option holders and their holdings except for those holders who have options of 1,200,000 ordinary shares and above.

There is no holder who has options of 1,200,000 ordinary shares and above except for the Executive Directors. Details of the options granted to Executive directors are disclosed in the section on Directors’ Interest in this report.

DIRECTORS’ REPORT (cont’d)


DIRECTORS

The directors who served since the date of the last report and at the date of this report are:

Dato’ Abdul Latif bin AbdullahCheah Chee KongVictor Cheah Chee WaiSoon Yoke LengDatuk Syed Hussian bin Syed JunidShaik Aqmal bin Shaik AllaudinHo Hin Choy (Appointed with effect from 26/02/2007)Dato’ Kalimullah bin Masheerul Hassan (Retired on 21/06/2006)Sreedhar Subramaniam (Resigned with effect from 22/08/2006)

DIRECTORS’ INTEREST

Neither at the end of the fi nancial year, nor at any time during that year, did there subsist any arrangement to which the Company is a party, whereby directors might acquire benefi ts by means of the acquisition of shares in or debentures of the Company or any other body corporate.

The shareholdings of those who were directors at the fi nancial year end in shares in the Company and its related companies during the fi nancial year are as follows:



Number of ordinary shares of RM0.10 each

The Company 1.1.2006 / *At Date of Bought / Appointment Bonus shares Sold 31.12.2006

Direct Interest

Dato’ Abdul Latif bin Abdullah 496,000 7,148,000 - 7,644,000Cheah Chee Kong 4,349,120 3,160,780 (4,300,000) 3,209,900Victor Cheah Chee Wai 520,000 330,000 (300,000) 550,000Soon Yoke Leng 535,000 352,500 (300,000) 587,500Datuk Syed Hussian binSyed Junid 316,000 602,250 - 918,250Shaik Aqmal bin ShaikAllaudin *320,000 480,000 - 800,000

Indirect Interest Cheah Chee Kong 69,369,000 104,053,500 (48,675,000) 124,747,500Victor Cheah Chee Wai 69,369,000 104,053,500 (48,675,000) 124,747,500Soon Yoke Leng 41,610,000 62,415,000 (37,675,000) 66,350,000Shaik Aqmal bin ShaikAllaudin *1,081,900 1,831,900 (248,300) 2,665,500

Number of options over ordinary shares of RM0.10 each

The Company Options arising from 1.1.2006 bonus issue Exercised 31.12.2006

Cheah Chee Kong 1,200,000 1,800,000 - 3,000,000Victor Cheah Chee Wai 1,200,000 1,800,000 - 3,000,000Soon Yoke Leng 1,200,000 1,800,000 - 3,000,000



DIRECTORS’ INTEREST (CONT’D)

Cheah Chee Kong, Victor Cheah Chee Wai and Soon Yoke Leng, by virtue of their direct and indirect interest in shares of the Company are also deemed interested in shares of all the related companies to the extent to which the Company has an interest.

DIRECTORS’ BENEFITS

Since the end of the previous fi nancial year, no director has received or become entitled to receive any benefi t (other than those as disclosed in the fi nancial statements) by reason of a contract made by the Company with the director or with a fi rm of which the director is a member or with a company in which the director has a substantial fi nancial interest as required to be disclosed by Section 169(8) of the Companies Act, 1965.

OTHER STATUTORY INFORMATION

(a) Before the fi nancial statements of the Group and of the Company were made up, the directors took reasonable steps:

(i) to ascertain that proper action has been taken in relation to the writing off of bad debts and the making of allowance for doubtful debts and satisfi ed themselves that there were no bad and doubtful debts; and

(ii) to ensure that any current assets which were unlikely to realise their value as shown in the accounting records in the ordinary course of business have been written down to an amount which they might be expected so to realise.

(b) At the date of this report, the directors are not aware of any circumstances which would render:

(i) it necessary to write off any bad debt or to make the allowance for doubtful debts in the fi nancial statements of the Group and of the Company; or

(ii) the values attributed to current assets in the fi nancial statements of the Group and of the Company misleading.

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

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

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

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

(ii) any contingent liability in respect of the Group and of the Company which has arisen since the end of the fi nancial year.



OTHER STATUTORY INFORMATION (CONT’D)

(f ) In the opinion of the directors:

(i) no contingent liability or other liability has become enforceable or is likely to become enforceable within the period of twelve months after the end of the fi nancial year which will or may affect the ability of the Group and of the Company to meet its obligations as and when they fall due; and

(ii) no item, transaction or event of a material and unusual nature has arisen in the interval between the end of the fi nancial year and the date of this report which is likely to affect substantially the results of the operations of the Group and of the Company for the fi nancial year in which this report is made.

AUDITORS

The retiring auditors, Messrs. Poh & Co., have indicated their willingness to continue in offi ce.

Signed on behalf of the Board of Directors in accordance with a resolution of the directors.

CHEAH CHEE KONG

SOON YOKE LENG

Kuala LumpurDate : 27 April 2007



NON CURRENT ASSETSProperty, plant and equipmentPrepaid lease paymentsInvestment in subsidiary companiesInvestment in associated companiesSoftware development expenditureGoodwill on consolidation

CURRENT ASSETSInventoriesTrade receivablesOther receivablesAmount due from subsidiary

companiesFixed deposits with licensed banksCurrent tax assetsCash and bank balances

CURRENT LIABILITIESTrade payablesOther payablesHire purchase payablesTerm loans and other borrowingsBank overdraftCurrent tax liabilitiesDividend payable

NET CURRENT ASSETS

Note

456789

101112

1314

15

1617181920

21

2006RM

25,588,433378,446

-1,584,288

7 79,6191,582,719

29,913,505

1,033,16522,386,941

1,007,974

-417,022

22,4676,701,369

31,568,938

2,920,7801,038,8572,302,087

579,16290,336

432,4001,051,094

8,414,716

23,154,222

53,067,727

2005RM

19,391,359383,236

-1,242,333

547,964-

21,564,892

718,87713,540,660

2,452,920

-5,751,485

134,2242,142,857

24,741,023

2,612,0221,592,535

6 99,658607,780

--

864,000

6,375,995

18,365,028

39,929,920

2006RM

247,562-

9,100,0001,100,000

--

10,447,562

--

2,300

22,310,055-

22,467252,975

22,587,797

-56,500

----

1,051,094

1,107,594

21,480,203

31,927,765

2005RM

--

9,100,000400,000

--

9,500,000

---

11,954,2915,506,706

10,436220,760

17,692,193

-13,000

----

864,000

877,000

16,815,193

26,315,193

BALANCE SHEETSAS AT 31ST DECEMBER 2006

Group Company

The annexed notes form an integral part of the fi nancial statements


Financed by:

Share capitalShare premiumRetained earnings

LONG TERM LIABILITIESHire purchase payablesTerm loans and other borrowingsLong term payableDeferred tax liabilities

Note

2223

18192526

2006RM

30,031,25527,300

18,245,713

48,304,268

1,938,4321,140,405

-1,684,622

4,763,459

53,067,727

2005RM

12,000,00214,287,05110,890,741

37,177,794

775,525411,482

20,0001,545,119

2,752,126

39,929,920

2006RM

30,031,25527,300

1,869,210

31,927,765

----

-

31,927,765

2005RM

12,000,00214,287,051

28,140

26,315,193

----

-

26,315,193

Group Company

BALANCE SHEETSAS AT 31ST DECEMBER 2006 (cont’d)



Revenue

Cost of sales

Gross profi t

Other operating income

Administrative and operatingexpenses

Finance costs

Share of profi t of associates

Profi t before taxation

Income tax expense

Profi t attributable to shareholders

Earnings per share

- Basic

- Diluted

Note

27

28

32

33

33

2005RM

31,124,711

(17,766,097)

13,358,614

308,857

(4,674,722)

(330,320)

446,625

9,109,054

(1,682,511)

7,426,543

2.48

2.42

2006RM

43,012,509

(21,680,657)

21,331,852

87,923

(7,047,426)

(532,836)

162,975

14,002,488

(1,888,670)

12,113,818

4.04

3.81

2006RM

9,200,000

-

9,200,000

79,845

(397,709)

-

-

8,882,136

(2,282,220)

6,599,916

2005RM

1,215,000

-

1,215,000

233,885

(190,916)

-

-

1,257,969

(408,969)

849,000

INCOME STATEMENTFOR THE YEAR ENDED 31ST DECEMBER 2006

Group Company



Balance at 1st January 2005

Net profi t for the year

Listing expenses

Dividend paid (Note 21)

Dividend declared (Note 21)

Balance at 31st December 2005

Effects of adopting FRS 3 (Note 24)

Issuance of shares pursuantto ESOS

Bonus issue




ShareCapital

RM

12,000,002 -

-

-

-

12,000,002

-

28,250

18,003,003

-

-

30,031,255

SharePremium

RM

15,900,000

-

(1,612,949)

-

-

14,287,051

-

35,500

(14,295,251)

-

-

27,300

RetainedEarnings

RM

4,543,567

7,426,543

-

(475,200)

(864,000)

10,630,910

259,831

-

(3,707,752)

12,113,818

(1,051,094)

18,245,713

Reserves

RM

259,831

-

-

-

-

259,831

(259,831)

-

-

-

-

-

CONSOLIDATED STATEMENT OF CHANGES IN EQUITYFOR THE YEAR ENDED 31ST DECEMBER 2006

Total

RM

32,703,400

7,426,543

(1,612,949)

(475,200)

(864,000)

37,177,794

-

63,750

-

12,113,818

(1,051,094)

48,304,268



Balance at 1st January 2005


Listing expenses

Dividend paid (Note 21)



Issuance of shares pursuantto ESOS

Bonus issue




ShareCapital

RM

12,000,002

-

-

-

-

12,000,002

28,250

18,003,003

-

-

30,031,255

SharePremium

RM

15,900,000

-

(1,612,949)

-

-

14,287,051

3 5,500

(14,295,251)

-

-

27,300

RRRRetainedEarnings

RM

518,340

849,000

-

(475,200)

(864,000)

28,140

-

(3,707,752)

6,599,916

(1,051,094)

1,869,210

Total

RM

28,418,342

849,000

(1,612,949)

(475,200)

(864,000)

26,315,193

63,750

-

6,599,916

(1,051,094)

31,927,765

COMPANY STATEMENT OF CHANGES IN EQUITYFOR THE YEAR ENDED 31ST DECEMBER 2006



CASH FLOWS FROM OPERATING ACTIVITIESProfi t before taxation

Adjustments for:Amortisation of prepaid lease paymentsAmortisation of software development expenditureDepreciationInventories written offLoss / (Gain) on disposal of plant and equipmentInterest incomeInterest expensesShare of results of associated companies

Operating profi t before changes in working capitalIncrease in inventoriesIncrease in trade and other receivablesDecrease in trade and other payables

Cash generated from / (used in) operating activitiesInterest expensesTax paid, net of tax refundedDividend paid

Net cash generated from / (used in) operating activities

CASH FLOWS FROM INVESTING ACTIVITIESInterest from fi xed depositsInvestment in associated companiesIncrease in deferred expenditureAcquisition of subsidiary company net of cash acquiredDividend from associate companyProceeds from disposal of plant and equipmentAcquisition of property, plant and equipmentCapitalisation of software development expenditureNet withdrawal of fi xed deposits

Net cash used in investing activities

Note

6

A

2006

RM

14,002,488

4,79065,660

4,596,27817,40832,667

(87,923)532,836

(162,975)

19,001,229(107,678)

(8,851,048)(276,459)

9,766,044( 1,295)

(1,253,388)(864,000)

7,647,361

79,845(700,000)

-(1,866,150)

19,872-

(2,761,922)(297,315)

-

(5,525,670)

2005

RM

9,109,054

-38,706

2,253,868-

(8,398)(8,616)

330,320(446,625)

11,268,309(108,608)

(9,950,246)(4,907,649)

(3,698,194)-

(1,560,591)(475,200)

(5,733,985)

8,616(380,000)(799,111)

--

50,000(2,389,277)

(323,834)(8,616)

(3,842,222)

CONSOLIDATED CASH FLOW STATEMENTFOR THE YEAR ENDED 31ST DECEMBER 2006



CASH FLOWS FROM FINANCING ACTIVITIESRepayment of term loan and borrowingsRepayment of hire purchase payablesInterest expenseProceeds from issuance of ordinary shares

Net cash used in fi nancing activities

Net decrease in cash and cash equivalents

Cash and cash equivalents at beginning of the year

Cash and cash equivalents at end of the year

Note A:Property, plant and equipment purchased were by means of:

CashHire purchaseInter-company transferTerm loan

Note

15

CONSOLIDATED CASH FLOW STATEMENTFOR THE YEAR ENDED 31ST DECEMBER 2006 (cont’d)

2006

RM

(632,695)(1,895,570)

(531,541)63,750

(2,996,056)

(874,365)

7,649,563

6,775,198

2,761,9226,392,470

3,9161,100,000

10,258,308

2005

RM

(808,164)(983,117)(330,320)

-

(2,121,601)

(11,697,808)

19,347,371

7,649,563

2,389,2771,356,000

--

3,745,277



CASH FLOWS FROM OPERATING ACTIVITIESProfi t before taxation

Adjustments for:DepreciationDividend incomeInterest income

Operating profi t before changes in working capital

(Increase) / Decrease in account receivablesIncrease / (Decrease) in account payablesIncrease in subsidiary account

Cash used in operating activitiesTax paid net of tax refundedDividend paid

Net cash used in operating activities

CASH FLOWS FROM INVESTING ACTIVITIESIncrease in deferred expenditureInvestment in subsidiary companyInvestment in associated companyPurchase of plant and equipmentFixed deposits interest receivable

Net cash used in investing activities

CASH FLOWS FROM FINANCING ACTIVITIESProceeds from issuance of ordinary shares

Net cash generated from fi nancing activities

Net decrease in cash and cash equivalentsCash and cash equivalents at beginning of the year

Cash and cash equivalents at end of the year

Note

15

CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST DECEMBER 2006

2006

RM

8,882,136

24,983(2,268,000)

(79,845)

6,559,274

(2,300)43,500

(10,355,764)

(3,755,290)(26,251)

(864,000)

(4,645,541)

--

(700,000)(272,545)

79,845

(892,700)

63,750

63,750

(5,474,491)5,727,466

252,975

2005

RM

1,257,969

-(340,200)(233,885)

683,884

499,932(144,952)

(12,491,902)

(11,453,038)(36,675)

(475,200)

(11,964,913)

(799,111)(99,997)

(380,000)-

233,885

(1,045,223)

-

-

(13,010,136)18,737,602

5,727,466



1. GENERAL INFORMATION

The Company is a public limited liability company, incorporated and domiciled in Malaysia, and is listed on the MESDAQ Market of Bursa Malaysia Securities. The registered offi ce and principal place of business is situated at 45-49, Jalan PJS 1/28 (Petaling Utama 3), Taman Petaling Utama, 46000 Petaling Jaya, Selangor.

The principal activity of the Company is that of investment holding. The principal activities of the subsidiaries are described in Note 6 to the fi nancial statements. There have been no signifi cant changes in the nature of these activities during the fi nancial year.

The fi nancial statements of each entity in the Group are presented in the functional currency, which is the currency of the primary economic environment in which the entity operates. The functional currency of the Company is Ringgit Malaysia (RM) as the sales and purchases are mainly denominated in RM and receipts from operations are usually retained in RM and funds from fi nancing activities are generated in RM. For the purpose of the consolidated fi nancial statements, the results and fi nancial position of each entity are expressed in Ringgit Malaysia, which is the functional currency of the Company, and the presentation currency for the consolidated fi nancial statements.

The fi nancial statements were authorised for issue by the Board of Directors in accordance with a resolution of the directors on 27 April 2007.

2. ADOPTION OF NEW AND REVISED FINANCIAL REPORTING STANDARDS

During the fi nancial year, the Group and the Company have adopted the following new and revised Financial Reporting Standards and the Interpretations (collectively “FRSs”), issued by the Malaysian Accounting Standards Board that are relevant to its operations and effective for the fi nancial periods beginning on 1 January 2006:-

FRS 1 First-time Adoption of Financial Reporting Standards FRS 2 Share-Based Payment FRS 3 Business Combinations FRS 5 Non-current Assets Held for Sale and Discontinued Operations FRS 101 Presentation of Financial Statements FRS 102 Inventories FRS 108 Accounting Policies, Changes in Accounting Estimates and Errors FRS 110 Events After the Balance Sheet Date FRS 116 Property, Plant and Equipment FRS 121 The Effects of Changes in Foreign Exchange Rates FRS 127 Consolidated and Separate Financial Statements FRS 128 Investments in Associates FRS 131 Financial Reporting of Interests in Joint Ventures FRS 132 Financial Instruments: Disclosure and Presentation

NOTES TO THE FINANCIAL STATEMENTS31ST DECEMBER 2006


2. ADOPTION OF NEW AND REVISED FINANCIAL REPORTING STANDARDS (CONT’D)

FRS 133 Earnings Per ShareFRS 136 Impairment of AssetsFRS 138 Intangible AssetsFRS 140 Investment Property

The impact of these changes in accounting policies does not have signifi cant fi nancial impact on the Group except for those as discussed in Note 3 (p).

In addition, the Group and the Company have early adopted the following new and revised FRSs for the fi nancial year beginning 1 January, 2006:-

FRS 117 LeasesFRS 124 Related Party Disclosures

3. SIGNIFICANT ACCOUNTING POLICIES

(a) Basis of Preparation

The fi nancial statements are prepared on historical basis in accordance with the provisions of the Companies Act, 1965 and the applicable Malaysian Accounting Standards Board (MASB) approved accounting standards in Malaysia for Entities Other Than Private Entities.

(b) Subsidiaries and Basis of Consolidation

Subsidiaries are entities over which the Group has the ability to control the fi nancial and operating policies so as to obtain benefi ts from their activities. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group has such power over another entity.

In the Company’s separate fi nancial statements, investments in subsidiaries are stated at cost, less impairment losses, if any.

The consolidated fi nancial statements incorporate the fi nancial statements of the Company and its subsidiaries.

The results of subsidiaries acquired or disposed of during the year are included in the consolidated fi nancial statements from the acquisition date or up to the effective date of disposal, where appropriate. Consolidated fi nancial statements are prepared using uniform accounting policies for like transactions and other events in similar circumstances. All intragroup balances, transactions, income and expenses are eliminated in full on consolidation.

NOTES TO THE FINANCIAL STATEMENTS31ST DECEMBER 2006 (cont’d)


3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D) (b) Subsidiaries and Basis of Consolidation (Cont’d)

Acquisition of subsidiaries is accounted for using purchase method. The purchase method of accounting involves allocating the cost of the acquisition to the fair value of the assets acquired and liabilities assumed at the date of acquisition. The cost of an acquisition is measured as the aggregate of the fair values, at the date of exchange, of assets given, liabilities incurred or assumed, and equity instruments issued by the acquirer, in exchange for control of the acquiree, plus any costs directly attributable to the business combination.

Any excess of the cost of the acquisition over the Group’s interest in the net fair value of the identifi able assets, liabilities and contingent liabilities represents goodwill.

If, after reassessment, the Group’s interest in the net fair value of the identifi able assets, liabilities and contingent liabilities recognized exceeds the cost of the business combination, the excess is recognized immediately in the profi t or loss.

Minority interests represent the portion of profi t and loss and net assets in subsidiaries not held by the Group. It is measured at the minorities’ share of the fair value of the subsidiaries’ identifi able assets and liabilities at the acquisition date and the minorities’ share of changes in the subsidiaries’ equity since then.

(c) Investment in Associates

An associate is an entity over which the Group has signifi cant infl uence and that is neither a subsidiary nor an interest in a joint venture. Signifi cant infl uence is the power to participate in the fi nancial and operating policy decisions of the investee but is not control or joint control over those policies.

Investment in associates is accounted for in the consolidated fi nancial statements using the equity method of accounting. Under the equity method, the investment in associate is carried in the consolidated balance sheet at cost adjusted for post-acquisition changes in the Group’s share of net assets of the associate. The Group’s share of net profi t or loss of the associate is recognised in the consolidated profi t or loss. Where there has been a change directly in the equity of the associate, the Group recognises its share of such changes. In applying the equity method, unrealised gains and losses on transactions between the Group and the associate are eliminated to the extent of the Group’s interest in the associate. After application of the equity method, the Group determines whether it is necessary to recognise any additional impairment loss with respect to the Group’s net investment in the associate. The associate is equity accounted for from the date the Group obtains signifi cant infl uence until the date the Group ceases to have signifi cant infl uence over the associate.

Goodwill relating to an associate is included in the carrying amount of the investment and is not amortised. Any excess of the Group’s share of the net fair value of the associate’s identifi able assets, liabilities and contingent liabilities over the cost of the investment is excluded from the carrying amount of the investment and is instead included as income in the determination of the Group’s share of the associate’s profi t or loss in the period in which the investment is acquired.



3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

(c) Investment in Associates

When the Group’s share of losses in an associate equals or exceeds its interest in the associate, including any long-term interests that, in substance, form part of the Group’s net investment in the associate, the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the associate.

The most recent available audited fi nancial statements of the associated are used by the Group in applying the equity method. Where the dates of the audited fi nancial statements used are not coterminous with those of the Group, the share of results is arrived at from the last audited fi nancial statements available and management fi nancial statements to the end of the accounting period. Uniform accounting policies are adopted for like transactions and events in similar circumstances.In the Company’s separate fi nancial statements, investments in associates are stated at cost less impairment losses.On disposal of such investments, the difference between the net disposal proceeds and their carrying amounts is included in profi t or loss.

(d) Property, Plant and Equipment and Depreciation

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

Freehold land has an unlimited useful life and therefore is not depreciated. Buildings under construction are not depreciated as these assets are not available for use.

Long term leasehold building is amortised over lease term and the remaining period of the lease is 79 years. Freehold offi ce lot is not depreciated as it was only available for use in the next fi nancial year. On other plant and equipment, depreciation is calculated on the straight line method to write off the cost of each asset over their estimated useful lives. Depreciation of an asset begins when it is ready for its intended use.

The annual rates of depreciation used are:

Electrical fi ttings 20% Furniture and fi ttings 20% Machinery 10% Motor vehicles 10% Offi ce equipment 20% -40% Renovation 10% Signboard 10%

The residual value, useful life and depreciation method are reviewed at each fi nancial year end to ensure that the amount, method and period of depreciation are consistent with the previous estimates and the expected pattern of consumption of the future economic benefi ts embodied in the items of property, plant and equipment.




(d) Property, Plant and Equipment and Depreciation

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

(e) Impairment Of Assets

At each balance sheet date, the subsidiaries reviews the carrying amounts of its assets to determine whether there is indication of impairment. If any such indication exists, impairment is measured by comparing the carrying values of the assets with their recoverable amounts. Recoverable amount is the higher of net selling price and value in use, which is measured by reference to discounted future cash fl ows.

An impairment loss is recognised as an expense in income statement immediately, unless the asset is carried at a revalued amount. Any impairment loss of a revalued asset is treated as a revaluation decrease to the extent of any unutilised previously recognised revaluation surplus for the same asset.

(f) Goodwill on Consolidation

Goodwill arising on the acquisition of a subsidiary or a proportionately consolidated jointly controlled entity, being the excess of the cost of the business combination over the Group’s interest in the net fair value of the identifi able assets, liabilities and contingent liabilities recognised, is initially measured at cost and recognised as an asset. Goodwill is subsequently measured at cost less impairment losses, if any.

On disposal of a subsidiary or a proportionately consolidated jointly controlled entity, the attributable amount of goodwill is included in the determination of the profi t or loss on disposal.

(g) Software Development Expenditures

Expenditure incurred on projects to develop new products is capitalised and deferred only when the Group can demonstrates technical feasibility of completing the intangible asset so that it will be available for use or sale, its intention to complete and its ability to use or sell the asset, how the asset will generate future economic benefi ts, the availability of resources to complete the project and the ability to measure reliably the expenditure during the development. Product development expenditures which do not meet these criteria are expensed when incurred.

Development costs, considered to have fi nite useful lives, are stated at cost less any impairment losses and are amortised using the straight line basis over the period of fi ve years. Impairment is assessed whenever there is an indication of impairment and the amortisation period and method are also reviewed at each balance sheet date.




(h) Inventories

Inventories are valued at the lower of cost and net realisable value after adequate provision has been made for all deteriorated, damaged, obsolete or slow-moving inventories. Cost, is determined principally on the fi rst-in fi rst-out basis and includes, where relevant, appropriate proportions of inward overheads.

Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale.

(i) Leased Assets

Assets fi nanced by hire purchase and lease arrangements that transfer substantially all risks and rewards of ownership to the Group are capitalised as property, plant and equipment and the corresponding obligations are treated as liabilities. These property, plant and equipment capitalised are depreciated on the same basis as owned assets.

Finance charges on these hire purchase and lease arrangements are allocated to the income statement over the period of the arrangements to give a constant periodic rate of interest on the outstanding liability at the end of each accounting period.

Lease of assets under which all risks and benefi ts of ownership are retained by the lessor are classifi ed as operating lease. Payments made under operating lease are charged to income statement on a straight line basis over the period of the lease.

When operating lease is terminated before the lease period has expired, any payment required to be made to the lessor by way of penalty is recognised as an expense in the period in which termination takes place.

(j) Provisions For Liabilities

Provisions for liabilities are recognised when the Group has a present obligation as a result of a past event and it is probable that an outfl ow of resources embodying economic benefi ts will be required to settle the obligations, and a reliable estimate of the amount can be made. Provisions are reviewed at each balance sheet date and adjusted to refl ect the current best estimate. Where the effect of the time value of money is material, the amount of a provision is the present value of the expenditure expected to be required to settle the obligation.




(k) Foreign Currency

Transactions in foreign currencies are initially translated at the exchange rate at the dates of the transactions.

At the balance sheet date, foreign currency monetary assets and liabilities are translated into Ringgit Malaysia at the exchange rate ruling at that date. Exchange differences arising on the settlement or translation of monetary items are recognised in profi t or loss.

Non-monetary assets and liabilities measured at historical cost in a foreign currency are translated using exchange rates at the date of the transactions. Non-monetary assets and liabilities measured at fair value in a foreign currency are translated using exchange rates at the date when the fair value was determined.

The principal closing rates used in translation of foreign currencies amounts are as follow:

(l) Financial Instruments

Financial instruments are classifi ed as liabilities or equity in accordance with the substance of the contractual arrangement. Interests, dividends, gains and losses relating to a fi nancial instrument classifi ed as equity are charged directly to equity.

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

(i) Receivables

Receivables are stated at nominal value as reduced by the appropriate allowances for estimated irrecoverable amounts. Receivables considered to be uncollectible are written off while allowance for doubtful debts is made for receivables considered doubtful in nature.

(ii) Payables

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

(iii) Cash and cash equivalents

For the purpose of cash fl ow statements, cash and cash equivalents include cash on hand and at bank, deposit at call and short term highly liquid investments which have an insignifi cant risk of changes in value, net of bank overdrafts.


1 AUS Dollar

2006

RM

2.692

2005

RM

2.772



(l) Financial Instruments (Cont’d)

(iv) Interest-bearing borrowings

Borrowing costs are charged to income statement as an expense in the period in which they are incurred on accrual basis.

(v) Other non-current investments

Non-current investments other than investments in subsidiaries and associates are stated at cost less impairment losses. On disposal of an investment, the difference between net disposal proceeds and its carrying amount is recognised in income statement.

(vi) Equity instruments

Ordinary shares are classifi ed as equity. Dividends on ordinary shares will be recognised as liabilities when the shareholders’ rights to receive the dividends are established.

(m) Revenue Recognition

Revenue is recognised to the extent that it is probable that the economic benefi ts will fl ow to the Group and the revenue can be reliably measured. The following specifi c recognition criteria must also be met before revenue is recognised:

(i) Trading income

Revenue is recognised in income statement upon services rendered or when the signifi cant risks and rewards of ownership have been transferred to the buyer.

(ii) Dividend income

Dividend income is recognised when the Group’s right to receive payment is established.

(iii) Interest income

Interest on deposit is accounted for on accrual basis using the effective interest method.




(n) Income Tax

Income tax on the profi t and loss for the year comprises current and deferred tax. Current tax is the expected amount of income taxes payable in respect of the taxable profi t for the year and is measured using the tax rates that have been enacted at the balance sheet date.

Deferred tax is provided for using the liability method, on temporary differences at the balance sheet date between the tax base of assets and liabilities and their carrying amounts in the fi nancial statements. In principle, deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets are recognised for all deductible temporary differences, unused tax losses and unused tax credits to the extent that it is probable that taxable profi t will be available against which the deductible temporary differences, unused tax losses and unused tax credits can be utilised.

Deferred tax is measured at the tax rates that are expected to apply in the year when the asset is realised or the liability is settled, based on tax rates that have been enacted or substantively enacted at the balance sheet date. Deferred tax is recognised in the income statement, except when it arises from a transaction which is recognised directly in equity, in which case the deferred tax is also charged or credited directly to equity, or when it arises from a business combination that is an acquisition, in which case the deferred tax is included in the resulting goodwill or negative goodwill.

(o) Employee Benefi ts

(i) Short term benefi ts

Wages, salaries, bonus and social contributions are recognised as an expense in the year in which the associated services are rendered by employees of the subsidiaries. Short term accumulating compensated absences such as paid annual leave are recognised when services are rendered by employees that increase their entitlement to future compensated absences. Short term non-accumulating compensated absences such as sick leave are recognised when the absences occur.

(ii) Defi ned contribution plans

As required by law, companies in Malaysia make contributions to the Employees Provident Fund (EPF). Such contributions are recognised as an expense in income statement as incurred.




(o) Employee Benefi ts (Cont’d)

(iii) Share-based payments

The Company issue equity-settled share-based payment schemes to allow the employees to acquire shares of the Company. The fair value of the options granted is recognised as an employee expense with a corresponding increase in equity. The fair value determined at the grant date is expensed in accordance with FRS 2 over the period during which the employees become unconditionally entitled to the options, based on the Group’s estimate of the shares that will eventually vest, and adjusted for the effect of non market-based vesting conditions.

At each balance sheet date, the Company revises the estimates of the number of options that are expected to become exercisable, and recognise the impact of the revision of the original estimates in employee expenses and in a corresponding adjustment to equity over the remaining vesting period.

As stated in the transitional provisions of FRS 2, options granted after 31st December 2004 but had not yet vested on 1st January, 2006 are to apply the said FRS. As the Company’s options were granted on 16th November 2005 and vest immediately, these options are not subject to FRS 2.

(p) Changes in Accounting Policies and Effects Arising from Adoption of New and Revised FRSs

The principal changes in accounting policies and their effects resulting from the adoption of new and revised FRSs are discussed below:

(i) FRS 3: Business Combination

Under FRS 3, any excess of the Group’s interest in the net fair value of acquirees’ identifi able assets, liabilities and contingent liabilities over cost of acquisitions (previously known as negative goodwill), after reassessment, is now recognised immediately in income statement. In accordance with the transitional provisions of FRS 3, the negative goodwill as at 1 January 2006 of RM259,831 was derecognised with a corresponding increase in retained earnings. The Group has applied FRS 3 retrospectively and as disclosed in Note 3 (q)(iii), certain comparatives have been restated. The effects on the consolidated balance sheet for the year ended 31st December 2006 are set out in Note 3(q)(i). There were no effects on the Company’s fi nancial statements.




(p) Changes in Accounting Policies and Effects Arising from Adoption of New and Revised FRSs (Cont’d)

(ii) FRS 101: Presentation of Financial Statements

The adoption of the revised FRS 101 has affected the presentation of minority interest, share of net profi t after tax results of associates and other disclosures.

Prior to 1 January 2006, minority interests at the balance sheet date were presented in the consolidated balance sheet separately from liabilities and equity. Upon the adoption of the revised FRS 101, minority interests are now presented within total equity. In the consolidated income statement, minority interests are presented as an allocation of the total profi t and loss for the year. A similar requirement is also applicable to the statement of changes in equity, total recognised income and expenses for the year, showing separately the amounts attributable to equity holders of the Company and to minority interests.

Prior to 1 January 2006, the Group’s share of taxation of associates accounted for using the equity method was included as part of the Group’s income tax expense in the consolidated income statement. Upon the adoption of the revised FRS 101, the share of taxation of associates accounted for using the equity method are now included in the respective shares of profi t or loss reported in the consolidated income statement before arriving at the Group’s profi t or loss before tax.

These changes in presentation have been applied retrospectively and as disclosed in Note 3(q)(iii), certain comparatives have been restated. The effects on the consolidated income statement for the year ended 31st December 2006 are set out in Note 3(q)(ii). These changes in presentation have no impact on the Company’s fi nancial statements.

(iii) FRS 117: Leases

Prior to 1 January 2006, leasehold land held for own use was classifi ed as property, plant and equipment and was stated at cost less accumulated depreciation and impairment losses. The adoption of the revised FRS 117 has resulted in a change in the accounting policy relating to the classifi cation of leases of land and buildings. Leases of land and buildings are classifi ed as operating and fi nance leases in the same way as leases of other assets and the land and buildings elements of a lease of land and buildings are considered separately for the purposes of lease classifi cation. Leasehold land held for own use is now classifi ed as operating lease and where necessary, the minimum lease payments or the up-front payments made are allocated between the land and the buildings elements in proportion to the relative fair values for leasehold interests in the land element and buildings element of the lease at the inception of the lease. The up-front payment represents prepaid lease payments and are amortised on a straight line basis over the lease term.




(p) Changes in Accounting Policies and Effects Arising from Adoption of New and Revised FRSs (Cont’d)

(iii) FRS 117: Leases (Cont’d)

The Group has applied the change in accounting policy in respect of leasehold land in accordance with the transitional provisions of FRS 117. At 1 January 2006, the unamortised amount of leasehold land is retained as the surrogate carrying amount of prepaid lease payments as allowed by the transitional provisions. The reclassifi cation of leasehold land as prepaid lease payments has been accounted for retrospectively and as disclosed in Note 3 (q)(iii), certain comparatives have been restated. The effects on the consolidated balance sheet as at 31st December 2006 are set out in Note 3(q)(i). These changes in presentation have no impact on the Company’s fi nancial statements.

(q) Summary of Effects of Adopting New and Revised FRSs on the Current Year’s Financial Statements

The following tables provide estimates of the extent to which each of the line items in the balance sheet and income statement for the year ended 31st December 2006 is higher or lower than it would have been had the previous policies been applied in the current year.

(i) Effects on balance sheet as at 31st December 2006

Description of change

Group

Property, plant and equipmentPrepaid lease paymentsRetained earningsReserves on consolidation

FRS 3Note 3(p)(i)

RM

--

259,831(259,831)

FRS 101Note 3(p)(ii)

RM

----

FRS 117Note 3(p)(iii)

RM

(383,236)383,236

--

TotalRM

(383,236)383,236259,831

(259,831)

Increase / (Decrease)




(q) Summary of Effects of Adopting New and Revised FRSs on the Current Year’s Financial Statements (Cont’d)

(ii) Effects on income statement for the year ended 31st December 2006

(iii) Restatement of comparatives

The following comparative amounts have been restated as a result of adopting the new and revised FRSs:


Group

Operating profi tShare of profi t of associatesProfi t before taxationIncome tax expenseProfi t for the yearEarnings per share:- Basic, for profi t for the year- Diluted, for profi t for the year

FRS 3 Note 3(p)(i)RM

-----

--

FRS 101 Note 3(p)(ii)RM

-(13,087)(13,087)(13,087)

-

--

TotalRM

-(13,087)(13,087)(13,087)

-

--

Increase / (Decrease)


At 1 January 2005Group

Retained earningsReserves onconsolidation

At 31 December 2005Group

Property, plant and equipment

Prepaid lease paymentsRetained earningsReserves on

consolidation


-

-

---

-

FRS 117 Note 3(p)(iii)RM

-

-

(383,236)383,236

-

-

TotalRM

4,803,398

-

19,391,359383,236

10,890,741

-


259,831

(259,831)

--

259,831

(259,831)

4,543,567

259,831

19,774,595-

10,630,910

259,831

Increase / (Decrease)Previously

stated Restated




At 31 December 2005Group

Operating profi tShare of profi t ofassociatesProfi t before taxIncome tax expenseProfi t for the yearEarnings per share:- Basic- Diluted


-

(166,182)(166,182)166,182

-

--

TotalRM

8,662,429

446,6259,109,054

(1,682,511)7,426,543

6.19 sen6.06 sen

FRS 117 Note 3(p)(iii)RM

-

----

--


-

----

--

8,662,429

612,8079,275,236

(1,848,693)7,426,543

6.19 sen6.06 sen



(q) Summary of Effects of Adopting New and Revised FRSs on the Current Year’s Financial Statements (Cont’d)

(iii) Restatement of comparatives (Cont’d)

Increase / (Decrease)Previously

stated Restated


Group

Net Book ValueAt 1.1.2006AdditionsAcquisition of a subsidiaryDisposalsDepreciation charged

At 31.12.2006

At 31.12.2006CostAccumulated depreciation

Net Book Value

Net Book ValueAt 1.1.2005AdditionsDisposals/Reclassifi cationDepreciation charged

At 31.12.2005


Net Book Value

Land andBuildings

[Note 4(a)]

RM

5,727,1002,768,211

--

(11,178)

8,484,133

8,607,088(122,955)

8,484,133

5,985,659129,468

(383,236)(4,791)

5,727,100

5,838,877(111,777)

5,727,100

Machinery

RM

10,918,509372,255437,175

-(1,639,962)

10,087,977

17,425,548(7,337,571)

10,087,977

9,562,4592,892,176

-(1,536,126)

10,918,509

16,507,962(5,589,453)

10,918,509

Motorvehicles

RM

1,297,999272,545211,990

(172,667)(188,813)

1,421,054

2,040,441(619,387)

1,421,054

1,361,783151,845(41,602)

(174,027)

1,297,999

1,733,248(435,249)

1,297,999

Offi ceequipment

RM

1,016,157415,172

13,311(3,916)

(515,634)

925,090

2,531,706(1,606,616)

925,090

1,012,201447,416

(524)(442,936)

1,016,157

2,096,091(1,079,934)

1,016,157

Computerequipment

RM

-6,392,470

5,450-

(2,130,966)

4,266,954

6,401,044(2,134,090)

4,266,954

----

-

--

-

4. PROPERTY, PLANT AND EQUIPMENT



Group

Net Book ValueAt 1.1.2006AdditionsAcquisition of a subsidiaryDisposalsDepreciation charged

At 31.12.2006


Net Book Value

Net Book ValueAt 1.1.2005AdditionsDisposals/Reclassifi cationDepreciation charged

At 31.12.2005


Net Book Value

Furnitureand fi ttings

RM

126,62137,655

3,278-

(37,822)

129,732

250,887(121,155)

129,732

69,90681,710

-(24,995)

126,621

207,612(80,991)

126,621

Electricalfi ttings

RM

128,903---

(46,405)

82,498

256,298(173,800)

82,498

151,38522,834

-(45,316)

128,903

256,298(127,395)

128,903

Renovation

RM

163,212-

40,423-

(23,808)

179,827

391,512(211,685)

179,827

168,83118,403

-(24,022)

163,212

294,496(131,284)

163,212

Signboard

RM

12,858---

(1,690)

11,168

16,890(5,722)

11,168

13,0881 ,425

-(1,655)

12,858

16,890(4,032)

12,858

Total

RM

19,391,35910,258,308

711,627(176,583)

(4,596,278)

25,588,433

37,921,414(12,332,981)

25,588,433

18,325,3123,745,277

(425,362)(2,253,868)

19,391,359

26,951,474(7,560,115)

19,391,359

4. PROPERTY, PLANT AND EQUIPMENT (CONT’D)



Company

Net Book ValueAt 1.1.2006AdditionsDepreciation charge

Net book value at 31.12.2006


Net Book Value

Motor vehicle2006

RM

-272,545( 24,983)

247,562

272,545( 24,983)

247,562

2005

RM

---

-

--

-




Group

Net Book ValueAt 1.1.2006AdditionsDisposalsDepreciation charged

At 31.12.2006


Net Book Value

Net Book ValueAt 1.1.2005AdditionsDepreciation chargedReclassifi ed to prepaid

lease payments

At 31.12.2005


Net Book Value

Freeholdoffi ce lot

RM

-1,457,279

--

1,457,279

1,457,279-

1,457,279

---

-

-

--

-

Total

RM

5,727,1002,768,211

-(11,178)

8,484,133

8,607,088(122,955)

8,484,133

5,985,659129,468

(4,791)

(383,236)

5,727,100

5,838,877(111,777)

5,727,100

(a) Land and buildings comprise the followings:

Freehold land and building under

construction

RM

4,832,8811,310,932

--

6,143,813

6,143,813-

6,143,813

4,703,4131 29,468

-

-

4,832,881

4,832,881-

4,832,881

Long termlease holdbuildings

RM

894,219--

(11,178)

883,041

1,005,996(122,955)

883,041

1,282,246-

(4,791)

(383,236)

894,219

1,005,996(111,777)

894,219




The net book values of properties pledged as securities for borrowings are as follows:

All the properties have been charged as collateral to secure banking facilities granted to the subsidiary companies.

The net book value of other plant and equipment acquired by means of hire purchase and Islamic fi nancing facilities are as follows:

5. PREPAID LEASE PAYMENTS

Long term leasehold buildingFreehold land and building under constructionFreehold offi ce lot

2006

RM

883,0416,143,8131,457,279

8,484,133

2005

RM

894,219--

894,219

Group

MachineryMotor vehiclesOffi ce equipment

2006

RM

3,256,7471,052,1444,261,647

8,570,538

2005

RM

3,918,0271,288,434

-

5,206,461

Group

At beginning of the yearReclassifi ed from property, plant and equipment(Note 4)

Amortisation of prepaid lease payments

At end of the year

Group



2006

RM

383,236

-

(4,790)

378,446

2005

RM

-

383,236

-

383,236


6. INVESTMENT IN SUBSIDIARY COMPANIES

5. PREPAID LEASE PAYMENTS (CONT’D)

During the fi nancial year ended 31st December 2005, following the early adoption of FRS 117, the leasehold land of the Group previously classifi ed as fi nance lease with the amount of prepaid lease payments recognised as property, plant and equipment are now being treated as operating lease, with the unamortised carrying amount classifi es as prepaid lease payments in the balance sheet. In accordance with the transitional provision of FRS 117, the effect of this change has been applied retrospectively, as mentioned in Note 3(p)(iii).

The unexpired portion of lease of the leasehold land of the Group as at end of the year is 79 years (2005: 80 years). The leasehold land has been charged as security for banking facilities granted to a subsidiary as disclosed in Note 19 to the fi nancial statements.

Unquoted shares, at cost

2006

RM

9,100,000

2005

RM

9,100,000

Details of subsidiaries are as follow:-

Name of company

Effi cient MailcomSdn. Bhd.

Effi cient SoftechSdn. Bhd.

Printegrate Sdn.Bhd.*

Equity interest2006

100%

100%

100%

Principal activities

Provision of integrated outsourcing solutions in data and documentprocessing, ranging from data extraction, to conversion, formatting ofdocuments, to data printing and preparation of printed documents for distribution by post.

Provision of information technology services, primarily the development of proprietary applications for work-fl ow management, data conversion and electronic distribution ofdocuments.

To carry on business relating to web-fi nishing products, forms printing,integrated cards, labels, stickers and other related business documents.

Place ofincorporation

Malaysia

Malaysia

Malaysia

Equity interest2005

100%

100%

20%

*Held through subsidiary; Effi cient Mailcom Sdn. Bhd. and not audited by Poh & Co.



6. INVESTMENT IN SUBSIDIARY COMPANIES (CONT’D)

(a) Changes in the Composition of the Group

On 30th October 2006, a wholly owned subsidiary of the Company, Effi cient Mailcom Sdn. Bhd., acquired additional 80% equity interest in Printegrate Sdn. Bhd. through two separate conditional Share Sale agreements which effectively increased the collective equity interest from 20% to 100%, making Printegrate Sdn. Bhd. a wholly owned subsidiary at a cash consideration of RM2,080,000.

The acquired subsidiary has contributed the following results to the Group:

RevenueProfi t for the year

2006

RM

212,600193,808

(b) Assets and Liabilities Arising from Acquisition of Subsidiary

The assets and liabilities assumed from the acquisition are as follows:

Property, plant and equipment (Note 4)InventoriesTrade and other receivablesDeposits with licensed banksCash and bank balances

Trade and other payablesBorrowingsCurrent tax liabilitiesDeferred tax liabilities

Fair value of net assetsLess: Share of net assets previously equity accounted forLess: Minority interestsGroup’s share of net assetsGoodwill on acquisition of previous 20% holdingGoodwill on acquisition (Note 9)

Total cost of acquisition

2006

RM

711,627224,018327,848164,165

49,685

1,477,343

(31,540)(398,997)

(24,618)(23,760)

(478,915)

998,428(199,685)

-798,743

(301,462)1,582,719

2,080,000



6. INVESTMENT IN SUBSIDIARY COMPANIES (CONT’D)

(c) Acquisition of Subsidiary Company Net of Cash

The cash outfl ow on acquisition is as follows:

Purchase consideration satisfi ed by cashCost attributable to the acquisition paid in cashTotal cash outfl ow of subsidiary companyCash and cash equivalents of subsidiary acquired

Net cash outfl ow of the Group

2006

RM

2,080,000-

2,080,000(213,850)

1,866,150

Unquoted shares, at costShare of results ofassociates

Represented by:Share of net tangibleassetsGoodwill

2005

RM

700,000

5 42,333

1,242,333

940,871301,462

1,242,333

2006

RM

1,100,000

484,288

1,584,288

1,584,288-

1,584,288

2006

RM

1,100,000

-

1,100,000

1,100,000-

1,100,000

2005

RM

400,000

-

400,000

400,000-

400,000

Group Company

7. INVESTMENT IN ASSOCIATED COMPANIES



7. INVESTMENT IN ASSOCIATED COMPANIES (CONT’D)

Details of associates are as follow:-

Name of company

VPI International Sdn. Bhd. *

Regalia Solutions Sdn. Bhd.*

Regalia RecordsManagement Sdn. Bhd.**

Equity interest2006

20%

30%

30%

Principal activities

Provision of integrated outsourcing solutions in data and document processing, ranging from data extraction, to conversion, formatting of documents, to data printing and preparation of printed documents for distribution by post.

Dormant

Dormant

Place ofincorporation

Malaysia

Malaysia

Malaysia

Equity interest2005

20%

30%

-

* Not audited by Poh & Co.

** During the fi nancial year, the Company subscribed 600,000 ordinary shares of RM1.00 each representing 30% equity interests of the issued and paid-up capital of Regalia Records Management Sdn. Bhd. (formerly known as Regalia Record Management Sdn. Bhd.) for cash consideration of RM600,000.

The summarised fi nancial information of the associates is as follows:

Assets and liabilitiesCurrent assetsNon-current assets

Total assets

Current liabilitiesNon-current liabilities

Total liabilities

ResultsRevenueProfi t for the year

2006

RM

22,472,37147,469,049

69,941,420

(26,769,009)(37,458,061)

(64,227,070)

20,471,489579,200

2005

RM

11,163,58216,071,487

27,235,069

(14,255,744)(8,665,626)

(22,921,370)

10,146,3932,235,160



Group

8. SOFTWARE DEVELOPMENT EXPENDTURE

At beginning of the yearAdd: Addition of software

development expenditure

Less: Amortisation

At end of the year

Included in the software development expenditure is an amount of RM24,000 (2005: RM9,000), being capitalisation of director’s remuneration of a subsidiary company.

9. GOODWILL ON CONSOLIDATION

At the beginning of the yearAcquisition of subsidiary [Note 6(b)]

At the end of the year

2006

RM

-1,582,719

1,582,719

2005

RM

--

-

10. INVENTORIES

At cost:-

Finished goods

11. TRADE RECEIVABLES

The Group’s normal trade credit terms range from 14 to 30 days. Other credit terms are assessed and approved on a case by case basis.

The Group has no signifi cant concentration of credit risk that may arise from exposures to a single receivable or to groups of receivables.


Group

2005

RM

262,836

323,834586,670(38,706)

547,964

2006

RM

547,964

297,315845,279(65,660)

779,619

Group

2006

RM

1,033,165

2005

RM

718,877


Group Company

Sundry receivablesDepositsPrepayments

2005

RM

358,31771,445

2,023,158

2,452,920

2006

RM

460,925199,393347,656

1,007,974

2006

RM

2,300--

2,300

2005

RM

---

-

Group Company

12. OTHER RECEIVABLES

13. AMOUNT DUE FROM / (TO) SUBSIDIARY COMPANIES

These are unsecured, interest free and have no fi xed term of repayment.

14. DEPOSITS WITH LICENSED BANKS

Free from encumbrancesOn lien

2005

RM

5,506,7062 44,779

5,751,485

2006

RM

164,165252,857

417,022

2006

RM

--

-

2005

RM

5,506,706-

5,506,706

The Group’s deposits which are on lien comprise:

(a) security deposits of RM199,323 (2005: RM192,955) were invested in accordance with the Syariah principle of Al Mudharabah General Investment Account (GIA) as security deposits in respect of Islamic banking facilities granted to a subsidiary company; and

(b) security deposit of RM53,534 (2005: RM51,824) was for bank guarantee granted to a subsidiary company.

The Group’s deposits with interest accrued thereon are pledged to the bank for banking facilities granted to a subsidiary company as disclosed in Note 19 to the fi nancial statements.

The effective interest rate of these deposits at the balance sheet date is 3.30% (2005:3.00% to 3.58%) per annum.



15. CASH AND BANK BALANCES

For the purpose of cash fl ow statements, cash and cash equivalents include the followings:

Cash and bank balancesFixed deposits withlicensed banksShort term deposits withfund mangement companyBank overdraft

2005

RM

2,142,857

5,506,706

--

7,649,563

2006

RM

5,701,369

164,165

1,000,000(90,336)

6 ,775,198

2006

RM

252,975

-

--

2 52,975

2005

RM

220,760

5 ,506,706

--

5,727,466

Group Company

The deposits with licensed banks exclude the security deposits of RM252,857 (2005: RM244,779) which have been pledged to the bank in respect of the banking facilities granted to the Group.

16. TRADE PAYABLES

The normal trade credit term granted to the Group ranges from 30 to 60 days.

17. OTHER PAYABLES

Sundry payablesAccrualsAdvance postage received

2005

RM

679,915352,070560,550

1,592,535

2006

RM

291,682405,723341,452

1,038,857

2006

RM

-56,500

-

56,500

2005

RM

-13,000

-

13,000

Group Company



18. HIRE PURCHASE PAYABLES

Future minimum hire purchase payments:Amount due within 1 fi nancial yearAmount due between 2 and 5 fi nancial years

Future fi nance charges

Aging analysis:Amount due within 1 fi nancial yearAmount due between 2 and 5 fi nancial years

2,603,4161,947,328

4,550,744(310,225)

4,240,519

2,302,0871,938,432

4,240,519

788,768876,172

1,664,940(189,757)

1,475,183

699,658775,525

1,475,183

Finance lease liabilities are effectively secured as the rights to the leased assets revert to the lessors in the event of default.

The effective interest rates applicable to the lease liabilities range from 1.92% to 4.10% (2005: 1.92% to 4.80%) per annum.

19. TERM LOANS AND OTHER BORROWINGS

Bill payablesTerm loansIslamic fi nancing facilities

Less: Amount repayable within 12 months

Amount repayable after 12 months

Current portion of term loans and other borrowings:Bill payablesTerm loans and Islamic fi nancing facilitiesLong term payable (Note 25)

155,0001,150,881

393,686

1,699,567(559,162)

1,140,405

155,000404,162

20,000

579,162

-169,331829,931

999,262(587,780)

411,482

-587,780

20,000

607,780


Group

2005

RM

2006

RM

Group

2005

RM

2006

RM


19. TERM LOANS AND OTHER BORROWINGS (CONT’D)

Term loans comprise:

(a) Term loan I of RM50,881 (2005: RM126,722), bearing interest at 1.75% (2005: 1.75%) per annum above the base lending rate of the lender and repayable over a period of 12 years;

(b) Term loan II (2005: RM42,609), bearing interest at 1.75% (2005: 1.75%) per annum above the base lending rate of the lender has been fully settled during the fi nancial year; and

(c) Term loan III of RM1,100,000 (2005: RM Nil), bearing interest at a prescribed rate of 3.00% per annum for the fi rst twelve months from the date of fi rst drawn down of facility, subsequently at a prescribed rate of 5.00% per annum for the next twelve months and thereafter 0.30% per annum above the lender’s prevailing Base Lending Rate (BLR) is repayable over a period of 10 years.

Term loans are secured by:-

(a) Term loan I - First and second charge over the leasehold land and building of a subsidiary company and jointly and severally guaranteed by certain directors of the Company; and

(b) Term loan III - First party fi rst deed of assignment which upon issuance of strata title, a fi rst legal charge to be created over the freehold offi ce lot of another subsidiary company, and secured by corporate guarantee from the Company.

The Islamic fi nancing facilities are granted in accordance with the Syariah principle of Al Bai’ Bithaman Ajil and are repayable by 60 monthly installments. These facilities are secured by the followings:

(i) The Asset Purchase & Sale Agreement for the amount of facilities approved;

(ii) First fi xed charge over machinery under fi nance by way of execution of debenture over the said machinery;

(iii) Pledge of security deposits with interest accrued invested in Al Mudharabah General Investment Account by executing a Memorandum of Deposit and Letter of Set-Off; and

(iv) Joint and several guarantees by directors of the Company.

The effective interest rate at the balance sheet date range from 3.00% to 8.05% (2005: 7.40 to 8.05%).

20. BANK OVERDRAFT

The secured bank overdraft of RM90,336 has a limit of RM120,000 and bears interest at 1.00% per annum above the lender’s prevailing Base Lending Rate (BLR). The securities of this facility are as disclosed in term loan facility in Note 19(c) to the fi nancial statements.



21. DIVIDENDS

In respect of fi nancial year ended 31 December 2006

- First interim dividend of 3.5% tax exempt, on300,312,550 ordinary shares of RM0.10 each whichwas paid on 15th January, 2007


- First interim dividend of 10.0% less 28% taxation, on120,000,200 ordinary shares of RM0.10 each whichwas paid on 20th January, 2006


- First and fi nal dividend of 5.5% less 28% taxation, on120,000,200 ordinary shares of RM0.10 each whichwas paid on 18th August, 2005

1,051,094

-

-

-

864,000

475,200

21. SHARE CAPITAL

Authorised:-Ordinary shares of RM0.10 eachAt beginning of the yearCreated during the year

At end of the year

Issued and fully paid:-Ordinary shares of RM0.10 eachAt beginning of the yearIssued pursuant to ESOS (Note 31)Bonus issue

2

25,000,00025,000,000

50,000,000

12,000,00228,250

18,003,003

30,031,255

25,000,000-

25,000,000

12,000,002--

12,000,002

COMPANY


Company

2005

RM

2006

RM

Company

2005

RM

2006

RM


22. SHARE CAPITAL (CONT’D)

During the fi nancial year, the Company increased its authorised share capital from RM25,000,000 to RM50,000,000 by creation of 250,000,000 new ordinary shares of RM0.10 each. Subsequently, the issued and paid up ordinary share capital was increased from RM12,000,002 to RM30,031,255 by the issuance of:

(a) 180,030,030 new ordinary shares of RM0.10 each at par by way of bonus issue;

(b) 20,000 new ordinary shares of RM0.10 each at an exercise price of RM0.51 for cash pursuant to ESOS; and

(c) 262,500 new ordinary shares of RM0.10 each at an exercise price of RM0.204 for cash pursuant to ESOS.

The new shares issued rank pari passu with the existing ordinary shares of the Company.

Subsequent to the fi nancial year end, the issued and paid up capital of the Company was further increased to RM32,877,505 by issuance of 28,462,500 new ordinary shares of RM0.10 each at par for cash pursuant to ESOS as disclosed in Note 31 to the fi nancial statements.

23. SHARE PREMIUM

At beginning of the yearIssue of 20,000 shares at a premium of RM0.41 pershareIssue of 262,500 shares at a premium of RM0.104per shareLess: Capitalisation for bonus issueLess: Listing expenses

At end of the year

14,287,051

8 ,200

27,300(14,295,251)

-

27,300

15,900,000

-

--

(1,612,949)

14,287,051


Company

2005

RM

2006

RM


24. RESERVES

Group

At 1 January 2005As previously statedEffects of adopting FRS 3 [Note 3(p)(iii)]

At 1 January 2005 (restated)

Reserves onconsolidation

RM

259,831 (259,831)

-

Total

RM

4,803,398-

4,803,398

Retainedearnings

RM

4,543,567259,831

4,803,398

Under FRS 3, negative goodwill, after reassessment is now recognised immediately in income statement. In accordance with the transitional provisions of FRS 3, the negative goodwill as at 1 January, 2006 was derecognised with a corresponding increase in retained earnings. The Group has applied FRS 3 retrospectively and the above comparatives have been restated.

25. LONG TERM PAYABLES

Long term payablesLess: Amount repayable within 12 months(Classifi ed under current liabilities - Note 19)

Amount repayable after 12 months

20,000

(20,000)

-

40,000

(20,000)

20,000

This is unsecured, interest free and has no fi xed term of repayment.

26. DEFERRED TAX LIABILITIES

At beginning of the yearAcquisition of subsidiaryTransferred from income statement

Under / (Over) provision in prior year

1,545,11923,76098,476

1,667,35517,267

1,684,622

1,360,119-

266,814 1,626,933

(81,814)1,545,119

Balance carried forward represents temporary difference which is due to excess of capital allowances over depreciation of property, plant and equipment.


Group

2005

RM

2006

RM

Group

2005

RM

2006

RM


27. REVENUE

Services rendered lessdiscountsDividend income (gross)

2005

RM

31,124,711-

31,124,711

2006

RM

43,012,509-

43,012,509

2006

RM

-9 ,200,000

9 ,200,000

2005

RM

-1,215,000

1,215,000

Group Company

28. PROFIT BEFORE TAXATION

This is stated after charging:Audit fee- current year- over provision in prior yearAmortisation of softwaredevelopment expenditureAmortisation of lease rentalBank overdraft interestDepreciationHire purchase interestInventories written offLoss on disposal of plant and equipmentLoss on foreign exchange - RealisedRental of premisesStaff costs (Note 29)Term loan interest

and crediting:Dividend income from subsidiariesGain on disposal of plant and equipmentGain on foreign exchange -RealisedInterest income

2005

RM

26,000(3,210)

38,706-

5,9712,253,868

137,025---

357,7114,494,172

1 87,324

-8,398

27,958242,501

2006

RM

35,100(2,400)

65,6604,7903,635

4,596,278508,451

17,40832,667

306474,362

6,225,48222,045

--

-87,923

2006

RM

7,000(1,000)

----------

72,000-

9,200,000-

-79,845

2005

RM

7,000-----------

72,000-

1,215,000-

-233,885

Group Company



Group Company

29. STAFF COSTS

Salaries and otheremolumentsFeesEmployees ProvidentFund and Socialsecurity contributions

2005

RM

4,097,493-

396,679

4,494,172

2006

RM

5,550,1217 9,000

596,361

6,225,482

2006

RM

72,000--

-

72,000

2005

RM

72,000--

-

72,000

Included in staff costs are the Executive Directors’ and Non-Executive Directors’ remuneration amounting to RM818,220 and RM72,000 respectively (2005: RM600,150 and RM72,000 respectively) as disclosed in Note 30. The number of employees in the Group at the end of the fi nancial year was 320 (2005: 189).

30. DIRECTORS’ REMUNERATION

Directors of theCompanyExecutive directors:-

Salaries and other emolumentsEmployees ProvidentFund and Socialsecurity contributions

Less: Capitalised tosoftware developmentexpenditure

Non-Executive directors:-Fees


Group Company

2006

RM

730,000

88,220

818,220

-

818,220

72,000

2005

RM

545,000

64,150

609,150

(9,000)

600,150

72,000

2006

RM

-

-

-

-

-

72,000

2005

RM

-

-

-

-

-

72,000


Directors of theSubsidiariesExecutive directors:-Salaries and otheremolumentsFeesEmployees ProvidentFund and Socialsecurity contributions

Less: Capitalised tosoftware developmentexpenditure

Group Company

31. EMPLOYEES’ SHARE OPTIONS SCHEME (ESOS)

The Company’s Employees’ Share Options Scheme (ESOS) is governed by the By-Laws approved by Bursa Malaysia Securities Berhad and the shareholders of the Company on 20th July 2004 and 20th August 2004 respectively. The ESOS was implemented on 16th November, 2005 and is to be in force for a period of 5 years, subject to any extension or renewal for a further period of 5 years commencing from the day after the date of expiry of the original 5 years period.

The salient features of the ESOS are as follows:

(a) The ESOS allows the granting of options to eligible employees and executive directors of the company and its subsidiaries to subscribe for new shares up to a maximum of 10% of the issued and paid up share capital of the Company at any point in time during the tenure of the ESOS, subject to terms and conditions of the By-Laws approved by the shareholders.

(b) Subject to any adjustments which may be made under By-Law, the aggregate number of Shares comprised in the Options to be offered to an Eligible Employee in accordance with the Scheme shall be determined at the discretion of the Option Comittee after taking into consideration the Eligible Employee’s performance, position, seniority and the number of years in service subject to the following:

(i) that the aggregate number of shares comprised in the Options made available under the Scheme shall not exceed the amount stipulated in By-Law;

(ii) that not more than fi fty percent (50%) of the shares available under the Scheme at the point in time when an Offer is made shall be allocated in aggregate, to Executive Directors and senior management; and


30. DIRECTORS’ REMUNERATION (CONT’D)

2005

RM

--

-

-

-

-

2006

RM

53,5007,000

6,380

66,880

(24,000)

4 2,880

2006

RM

--

-

-

-

-

2005

RM

--

-

-

-

-


31. EMPLOYEES’ SHARE OPTIONS SCHEME (ESOS) (CONT’D)

(iii) that not more than ten percent (10%) of the shares available under the Scheme at the point in time when an Offer is made shall be granted to any individual Eligible Employee who, either singly or collectively through persons connected with an Eligible Employee, holds twenty percent (20%) or more in the paid-up capital of the Company.

(c) The option price for each share shall be based on the weighted average market price of the shares for the fi ve (5) market days immediately preceding the offer date subject to a discount of not more than ten percent (10%), or at par value of the shares, whichever is higher.

(d) The number of new shares of which such option may be exercised shall not be less than one hundred (100) and shall be in multiples of one hundred (100).

(e) An option shall be personal to the person to whom the options have been granted and cannot be assigned, transferred or otherwise disposed of in any manner whatsoever.

(f ) The new shares to be allotted and issued upon the exercise of the options will upon such allotment and issuance, rank pari passu in all respects with the then issued and fully paid-up shares except that the shares so allotted will not be entitled to any dividends, rights, allotments or other distributions, the entitlement date (namely the date as at the close of business on which shareholders must be recognised in order to be entitled to any dividends, rights, allotments and other distributions) of which is prior to the date of allotment of the new Shares and will be subject to all provisions of the Articles of Associations relating to the transfer, transmission and otherwise of the shares.

(g) In the event of any alteration in the capital structure of the Company during the option period, whether by way of rights issues, bonus issues or other capitalisation issues, consolidation or subdivision of shares or capital reduction, or otherwise howsoever taking place, the option price and / or the number of new shares comprised in the option so far as unexercised shall be adjusted, provided always that:

(i) no adjustment to the option price shall be made which would result in the new shares to be issued on the exercise of the option being issued at a discount to par value, and if such an adjustment would but for this provision have so resulted, option price payable shall be the par value of the new shares;

(ii) upon any adjustment being made pursuant to the By-Law hereof, the Option Committee shall within ten (10) market days of the effective date of the alteration in the capital structure of the Company notify the person to whom the options have been granted of the adjusted option price thereafter in effect and / or the revised number of new shares thereafter to be issued on the exercise of the option; and

(iii) the capital outlay to be incurred by option holders in exercising their options remains unaffected.



The following table illustrates the number of, and movements in, share options during the fi nancial year:

20062004 Options

20052004 Options

Number of Share Options

The outstanding share options at the end of the fi nancial year have an exercise price of RM0.204 and exercise period until 15 November 2010.

As disclosed in Note 22 to the fi nancial statements, options exercised during the fi nancial year resulted in the issuance of 20,000 and 262,500 (2005: Nil) ordinary shares at an exercise price of RM0.51 and RM0.204 each respectively.

As stated in the transitional provisions of FRS 2, options granted after 31st December 2004 but had not yet vested on 1st January, 2006 are to apply the said FRS. As the Company’s options were granted on 16th November 2005 and vest immediately, these options are not subject to FRS 2.

32. INCOME TAX EXPENSE

Malaysian taxationbased on the result forthe yearTransferred to deferredtaxation

(Over) / Under provisionin prior year- Income tax- Deferred tax

2005

RM

1,417,500

266,814

1,684,314

8 0,011(81,814)

1,682,511

2006

RM

1,837,132

98,476

1,935,608

(64,205)17,267

1,888,670

2006

RM

2,290,358

-

2,290,358

(8,138)-

2,282,220

Group Company

2006

RM

405,700

-

405,700

3,269-

408,969


31. EMPLOYEES’ SHARE OPTIONS SCHEME (ESOS) (CONT’D)

at 31st Dec

000

29,075

12,000

at 31st Dec

000

29,075

12,000

Forfeited

000

(365)

-

Granted

000

-

12,000

Exercised

000

(282)

-

Bonus issue

000

17,722

-

at 1st Jan

000

12,000

-

Outstanding Movements during the year Outstanding Exercisable


A reconciliation of income tax expense applicable to profi t before taxation at the statutory income tax rate to the income tax expense at the effective income tax rate of the Company is as follows:

Reconciliation of taxexpense withaccounting profi t:

Accounting profi t

Tax expenses at 28%

Add: Tax effect ofNon deductibleexpensesPermitted expensesDepreciation of nonqualifi edassetsShare of profi t ofassociates, net of taxTax exempt incomeOthers

(Over) / Under provisionin prior year- Income tax- Deferred tax

(Taxable) / Deductibletemporary difference notrecognised

Tax expense

2005

RM

9,109,054

2,550,535

104,567(8,212)

41,523

(125,055)(775,023)

(88,612)

1,699,723

80,011(81,814)

(15,409)

1,682,511

2006

RM

14,002,488

3,920,697

99,891-

65,343

(45,633)(2,100,955)

13,718

1,953,061

(64,205)17,267

(17,453)

1,888,670

2006

RM

8,882,136

2,486,998

89,496-

5,712

-(308,000)

14,869

2,289,075

(8,138)-

1,283

2,282,220

2005

RM

1,257,969

352,231

53,457(8,212)

-

--

8,224

405,700

3 269-

-

408,969

Group Company


32. INCOME TAX EXPENSE (CONT’D)


Tax exempted income relates to income of one of the subsidiaries which have been granted Multimedia Super Corridor (MSC) status, for which income derived from development of Crosstalk Data Exchange System (e-Talk) and development of Total Electronic Billing System (e-Doc) is exempted from tax.

Subject to the agreement of the Inland Revenue Board:-

(i) the Group has tax exempt income of approximately RM10,040,000 (2005: RM3,637,000) available for distribution as tax exempt dividend; and

(ii) the Company has suffi cient tax credit under Section 108 of the Income Tax Act, 1967 to frank the payment of dividends out of its entire retained earnings without incurring additional tax liability.

33. EARNINGS PER SHARE

(a) Basic Earnings Per Ordinary Share

The basic earnings per ordinary share for the fi nancial year has been calculated based on the consolidated net profi t for the fi nancial year divided by the weighted average number of ordinary shares in issue during the fi nancial year.

Consolidated net profi t for the fi nancialyear (RM)

Weighted average number of ordinaryshares in issue

Basic earnings per ordinary share (sen)

2006

12,113,818

300,062,790

4 .04

2005

7 ,426,543

300,000,050

2 .48

(b) Diluted Earnings per Ordinary Shares

The diluted earnings per ordinary share for the fi nancial year has been calculated based on the consolidated net profi t for the fi nancial year divided by the adjusted weighted average number of ordinary shares that would have been in issue.


32. INCOME TAX EXPENSE (CONT’D)


34. RELATED PARTY TRANSACTIONS

During the fi nancial year, the Group has transacted with the following related parties.The transactions are principally receivable from / (payable to) the related parties in respect of:

(b) Diluted Earnings per Ordinary Shares (cont’d)

Consolidated net profi t for the fi nancialyear (RM)

Weighted average number of ordinaryshares in issueWeighted average number of ordinaryshares deemed to have been issued forno consideration under Employees’Share Option SchemeAdjusted weighted average number ofordinary shares that would have been inissue

Diluted earnings per ordinary share

12,113,818

300,062,790

17,702,870

317,765,660

3.81

7,426,543

300,000,050

6 ,279,070

306,279,120

2 .42

Name of Companies

Printegrate Sdn. Bhd. [PG]

VPI International Sdn.Bhd. [VPI]

(1,683,837)

11,287,798

595,950

144,000

72,000

Nature of transactions

Purchase of pressure seal forms

Provision of software applicationdevelopments for data anddocuments processing and datacapture and conversion services

Provision of data and documents processing services Management fee for the provision of project management / administration of data and document processing services

Billing of license fee for the usage of e-TALK and e-DOC software applications

(2,231,833)

3,620,000

838,200

144,000

144,000


33. EARNINGS PER SHARE (CONT’D)

2006 2005

Group

2005

RM

2006

RM


34. RELATED PARTY TRANSACTIONS

The above related parties are deemed related to the Group as follows:

(a) PG is deemed related to the Group by virtue of Yeoh Lai Num’s directorship and shareholding in PG. Yeoh Lai Num is the brother-in-law of Soon Yoke Leng who is a director and substantial shareholder of the Company. Upon the acquisition on 30th October, 2006, PG is now wholly-owned subsidiary of Effi cient Mailcom Sdn. Bhd., a wholly-owned subsidiary the Company.

(b) VPI is deemed related to the Group by virtue of Shaik Aqmal bin Shaik Allaudin’s common directorship in VPI and the Company as well as Shaik Aqmal bin Shaik Allaudin is a substantial shareholder of VPI.

The directors of the Company are of the opinion that all the transactions above have been entered into in the normal course of business and have been established on terms and conditions that are not materially different from those obtainable in transactions with unrelated parties.



35. SEGMENTAL ANALYSIS

The Group adopts business segment analysis as its primary reporting format and no geographical segment is prepared as the Group operates principally in Malaysia.

Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis.

Segment capital expenditure comprises additions to property, plant and equipment.

2006Operating RevenueExternal salesInter-segment salesInter-segment dividends

Total operating revenue

ResultsProfi t from operationsFinance costAssociated companies - share of results

Profi t before taxationTaxation


Data andDocumentProcessing

RM

31,439,761--

31,439,761

6,559,006(211,301)162,975

6,510,680 (1,804,619)

SoftwareDevelopment

RM

11,360,1481,837,300

-

13,197,448

7,886,111(320,206)

-

7,565,905-

FormsPrinting

RM

212,600297,135

-

509,735

272,696(1,329)

-

271,367(77,559)

Elimination

RM

-(2,134,435)(9,200,000)

(11,334,435)

(9,227,600)--

(9,227,600)2,275,728

Total

RM

43,012,509--

43,012,509

14,372,349 (532,836)

162,975

14,002,488(1,888,670)

12,113,818

Others

RM

--

9,200,000

9,200,000

8,882,136--

8,882,136(2,282,220)



2006Net AssetsSegment assetsAssociates

Total assets

Segment Liabilities

Other InformationCapital expenditureAmortisationDepreciation


RM

36,297,0814 84,288

36,781,369

24,820,516

2,038,4264 ,790

2,326,837

SoftwareDevelopment

RM

21,857,805-

21,857,805

11,117,110

7,947,33765,660

2,229,121

FormsPrinting

RM

1,748,097-

1,748,097

555,861

--

1 5,337

Elimination

RM

(24,422,906)-

(24,422,906)

(24,422,906)

---

Total

RM

59,898,1551,584,288

61,482,443

13,178,175

10,258,30870,450

4,596,278

Others

RM

24,418,0781,100,000

25,518,078

1,107,594

272,545-

24,983

2005Operating RevenueExternal salesInter-segment salesInter-segment dividends

Total operating revenue

ResultsProfi t from operationsFinance costAssociated companies - share of results

Profi t before taxationTaxation


27,334,987--

27,334,987

5,819,724(330,320)612,807

6,102,211(1,779,924)

3,789,7241,220,000

-

5,009,724

3,130,056--

3,130,056-

---

-

---

--

-(1,220,000)(1,215,000)

(2,435,000)

(1,215,000)--

(1,215,000)340,200

31,124,711--

31,124,711

8 ,992,749(330,320)612,807

9,275,236(1,848,693)

7,426,543

--

1,215,000

1,215,000

1,257,969--

1,257,969(408,969)


35. SEGMENTAL ANALYSIS (CONT’D)


2005

Net AssetsSegment assetsAssociates

Total assets

Segment Liabilities

Other InformationCapital expenditureAmortisationDepreciation


RM

32,270,833842,333

33,113,166

17,425,355

3,724,343-

2,185,068

SoftwareDevelopment

RM

7,744,008-

7,744,008

3,469,218

344,76838,70668,800

FormsPrinting

RM

--

-

-

---

Elimination

RM

(12,643,452)-

(12,643,452)

(12,643,452)

---

Total

RM

45,063,5821,242,333

46,305,915

9,128,121

4,069,11138,706

2,253,868

Others

RM

17,692,1934 00,000

18,092,193

877,000

---

36. CONTINGENT LIABILITY

Unsecured

Corporate guarantee given to fi nancial institutions forbanking facilities granted to subsidiary companies

2006

RM

2,220,000

2005

RM

1,000,000

Company


35. SEGMENTAL ANALYSIS (CONT’D)


37. CAPITAL COMMITMENT

Capital expenditures authorisedand contracted for

38. FINANCIAL INSTRUMENTS

The Group’s fi nancial risk management policy seeks to ensure that adequate fi nancial resources are available for the development of the Group’s businesses whilst managing its risks.

The main areas of fi nancial risks faced by the Group and the policies in respect of the major areas of treasury activities are set out as follows:

(a) Credit Risk

The credit risk is controlled by application of credit approval, limits and monitoring procedures. An internal credit review is conducted if the credit risk is material.

(b) Liquidity And Cash Flow Risks

The Group seeks to achieve a balance between certainty of funding and a fl exible, cost-effective borrowing structure. This is to ensure that at the minimum, all projected net borrowing needs are covered by committed facilities. Also, the objective for debt maturity is to ensure that the amount of debt maturing in any one year is not beyond the Company’s means to repay and refi nance.

(c) Foreign Currency Risk

The Group is exposed to foreign currency risk as a result of its normal trading activities where the currency denomination differs from the local currency, Ringgit Malaysia (RM). The Group’s policy is to minimise the exposure of transaction risk by matching local currency income against local currency costs.

(d) Interest Rate Risk

The Group’s policy is to borrow principally on the fl oating rate basis but to retain a proportion of fi xed rate debt. The objectives for the mix between fi xed and fl oating rate borrowings are set to reduce the impact of an upward change ininterest rates while enabling benefi ts to be enjoyed if interest rates fall.

The Group’s primary interest rate risk relates to interest-bearing debt as at 31st December 2006. The investments in fi nancial assets are mainly short term in nature and they are not held for speculative purposes.

2006

RM

9,850,000

2005

RM

8,000,000

Group



GroupAs at 31/12/2006Financial AssetsFixed deposits

Financial LiabilitiesHire purchase payablesBank overdraftsBill payablesTerm loansIslamic fi nancing facilities

As at 31/12/2005Financial AssetsFixed deposits

Financial LiabilitiesHire purchase payablesTerm loansIslamic fi nancing facilities

CompanyAs at 31/12/2005Financial AssetsFixed deposits

More than5 years

RM

-

---

605,223-

-

---

-

Total

RM

417,022

4,240,51990,336

155,0001,150,881

393,686

5,751,485

1,475,183169,331829,931

5,506,706

2-5 years

-

1,938,432--

379,221155,961

-

775,52537,790

373,691

-

Within 1year

RM

417,022

2,302,08790,336

155,000166,437237,725

5,751,485

699,658131,541456,240

5,506,706

Effectiveinterest

rate

%

3.30

1.92 - 4.107.61

3.80 - 4.353.00 - 8.05

7.40

3.00 - 3.58

1.92 - 4.808.057.40

3.00


38. FINANCIAL INSTRUMENTS (CONT’D)



(e) Fair Values

The carrying amounts of fi nancial assets and liabilities of the Group at the balance sheet date approximated their fair values except for the followings:

It is not practicable to estimate the fair values of advances to/(from) subsidiary companies due principally to a lack of fi xed repayment terms entered into by the parties involved and without incurring excessive costs.

The following methods and assumptions are used to estimate the fair values of the following classes of fi nancial instruments:

(i) Cash and Cash Equivalents, Trade receivables/Payables and Short-term Borrowings

The carrying amounts approximate fair values due to the relatively short term nature of these fi nancial instruments.

(ii) Borrowings

The fair values of borrowings are estimated by discounting the expected future cash fl ows using the current interest rates for liabilities with similar risk profi les.

Financial LiabilitiesAt 31st December 2006Hire purchase payablesTerm loansIslamic fi nancing facilities

Carryingamount

RM

4,240,5191,150,881

393,686

Fairvalue

RM

4,198,3041,147,090

356,555

Note

181919

38. FINANCIAL INSTRUMENTS (CONT’D)


Pursuant to Sub-section (15) ofSection 169 of the Companies Act, 1965

We, the undersigned, being two of the directors of

EFFICIENT E-SOLUTIONS BERHAD

do hereby state that, in the opinion of the directors, the fi nancial statements set out on pages 7 to 59 are drawn up in accordance with the provisions of the Companies Act, 1965 and the applicable approved accounting standards in Malaysia for Entities Other Than Private Entities so as to give a true and fair view of the state of affairs of the Group and of the Company as at 31st December

2006 and of their results and cash fl ow for the year ended on that date.

Signed on behalf of the Board of Directors in accordance with a resolution of the directors

CHEAH CHEE KONG

SOON YOKE LENG


STATEMENT BY DIRECTORS


Pursuant to Sub-section (16) ofSection 169 of the Companies Act, 1965

I, CHONG CHEN TONG, being the offi cer primarily responsible for the fi nancial management of

EFFICIENT E-SOLUTIONS BERHAD

do solemnly and sincerely declare that the fi nancial statements set out on pages 7 to 59 are to the best of my knowledge and belief, correct and I make this solemn declaration conscientiously believing the same to be true and by virtue of the provisions of the Statutory Declarations Act, 1960.

Subscribed and solemnly declared )by the abovenamed at Kuala Lumpur )In the Federal Territory on 27 April 2007 )

_________________________________ CHONG CHEN TONG

Before me,

STATUTORY DECLARATION


We have audited the fi nancial statements set out on pages 7 to 59 of EFFICIENT E-SOLUTIONS BERHAD. The preparation of the fi nancial statements is the responsibility of the Company’s directors.

It is our responsibility to form an independent opinion, based on our audit, on the fi nancial statements and to report our opinion to you, as a body, in accordance with Section 174 of the Companies Act, 1965 and for no other purpose. We do not assume responsibility to any other person for the content of this report.

We conducted our audit in accordance with approved standards on auditing in Malaysia. These standards require that we plan and perform the audit to obtain reasonable assurance about whether the fi nancial statements are free of material misstatements. An audit includes examining, on a test basis, evidence relevant to the amount and disclosures in the fi nancial statements. An audit also includes an assessment of the accounting principles used and signifi cant estimates made by the directors as well as evaluating the adequacy of the presentation of information in the fi nancial statements.

We believe our audit provides a reasonable basis for our opinion.

In our opinion:

(a) The fi nancial statements are properly drawn up in accordance with the provisions of the Companies Act, 1965 and applicable approved accounting standards in Malaysia for Entities Other Than Private Entities so as to give a true and fair view of:-

(i) the matters required by Section 169 of the Companies Act, 1965 to be dealt with in the fi nancial statements of the Group and of the Company; and

(ii) the state of affairs of the Group and of the Company as at 31st December 2006 and of the results of the operations of the Group and of the Company and of the cash fl ow of the Group and of the Company for the year ended on that date;

and

(b) the accounting and other records and the registers required by the Companies Act, 1965 to be kept by the Company and the subsidiaries of which we have acted as auditors have been properly kept in accordance with the provisions of the said Act.

We are satisfi ed that the fi nancial statements of the subsidiaries that have been consolidated with the Company’s fi nancial statements are in form and content appropriate and proper for the purposes of the preparation of the consolidated fi nancial statements and we have received satisfactory information and explanations required by us for those purpose.

The audit reports on the fi nancial statements of the subsidiaries were not subject to any qualifi cation and did not include any comment made under subsection (3) of Section 174 of the Companies Act, 1965.

POH LIONG BAN POH & CO.1195/3/07 Firm Number : AF : 0587Partner Chartered Accountant


REPORT OF THE AUDITORS TO THE MEMBERS OF EFFICIENT E-SOLUTIONS BERHAD


LIST OF PROPERTIES as at 31 DECEMBER 2006

Title / Location Description / existing use

Tenure/ date of expiry of

lease

Date of Acquisition

by the Company

Approximate age of

building

Total land areas

Total built-up

area

Net book value as at

31.12.2006

(years) (sq. m) (sq. m) (RM)

HS(M) 7212, Lot No. PT 6724, Tempat B6 ½, Jalan Klang Lama, Mukim Petaling, Daerah Petaling, Negeri Selangor

Industrial land –end-lot 2 ½ storey terrace light industrial building / production facility and administration offi ce

Leasehold land expiring on 04.03.2085

14.9.1995 20 222.96 379.04

HS(M) 7213, Lot No. 6725, Tempat B6 ½, Jalan Klang Lama, Mukim Petaling, Daerah Petaling, Negeri Selangor

Industrial land –2 ½ storey terrace light industrial building / production facility and administration offi ce


14.9.1995 20 193.2 309.18 1,261,487

HS(M) 7214, Lot No. 6726, Tempat B6 ½, Jalan Klang Lama, Mukim Petaling, Daerah Petaling, Negeri Selangor

Industrial land –2 ½ storey terrace light industrial building / production facility and administration offi ce


14.9.1995 20 193.2 309.18

HS (D) 142710, PT No. 17655, Mukim Damansara, Daerah Petaling, Negeri Selangor

Industrial land –2 storey industrial building with 4 storey offi ce building under construction / production facility and administration offi ce

Freehold land 6.4. 2004 N/A 8,152.24 N/A 6,143,813

Parcel No. 2A-21-1, Level 21, Block 2A, Plaza Sentral Phase II, Jalan Stesen Sentral, 50470 Kuala Lumpur

Commercial offi ce lot / Administration offi ce

Freehold Offi ce Lot

11.7.2006 N/A N/A 252.56 1,457,279


ANALYSIS OF SHAREHOLDINGSAS AT 27 APRIL 2007

Substantial Shareholders

Name

Direct Shareholdings %

Indirect Shareholdings %

Cheah Chee Kong Sdn Bhd 53,897,500 16.39 66,350,000 20.18

Cheah Chee Kong 3,232,400 0.98 120,247,500 36.57Victor Cheah Chee Wai 3,000,000 0.91 120,247,500 36.57Cheah Swee Sin Sdn Bhd 66,350,000 20.18 - -Soon Yoke Leng 3,000,000 0.91 66,350,000 20.18Ho Choong Lim 250,000 0.08 66,350,000 20.18KSC Strategic Fund 24,878,000 8.28 - -

Notes:1. Deemed interested by virtue of its shareholdings in Cheah Swee Sin Sdn Bhd (“CSSSB”) pursuant to Section 6A of the

Companies Act, 19652. Deemed interested by virtue of his shareholdings in Cheah Chee Kong Sdn Bhd (“CCKSB”) and CCKSB’s shareholdings in CSSSB

pursuant to Section 6A of the Companies Act, 19653. Deemed interested by virtue of his / her shareholdings in CSSSB pursuant to Section 6A of the Companies Act, 1965

Directors’ Shareholdings

Name

Direct Shareholdings %

Indirect Shareholdings %

Dato’ Abdul Latif bin Abdullah 7,409,000 2.25 - -Cheah Chee Kong 3,232,400 0.98 120,247,500 36.57Victor Cheah Chee Wai 3,000,000 0.91 120,247,500 36.57Soon Yoke Leng 3,000,000 0.91 66,350,000 20.18Datuk Syed Hussian bin Syed Junid 995,250 0.30 - -Shaik Aqmal bin Shaik Allaudin 800,000 0.24 5,115,600 1.56Ho Hin Choy 320,000 0.10 - -

Notes:1. Deemed interested by virtue of his shareholdings in Cheah Chee Kong Sdn Bhd (“CCKSB”) and CCKSB’s shareholdings in

Cheah Swee Sin Sdn Bhd (“CSSSB”) pursuant to Section 6A of the Companies Act, 19652. Deemed interested by virtue of her shareholdings in CSSSB pursuant to Section 6A of the Companies Act, 19653. Deemed interested by virtue of his shareholdings in VPI International Sdn Bhd pursuant to Section 6A of the Companies Act,

1965

1

2

2

3

3

1

1

2

3


ANALYSIS OF SHAREHOLDINGSAS AT 27 APRIL 2007 (cont’d)

Class of Equity Security

Authorised share capital : RM50,000,000Issued & fully paid-up capital : RM32,877,505Class of shares : Ordinary shares of RM0.10 eachVoting rights : One vote per ordinary share

Distribution of Shareholdings

Holdings No. of Holders Total Holdings %Less than 100 shares 14 639 0.00100 to 1,000 shares 23 12,175 0.001,001 to 10,000 shares 382 2,190,900 0.6710,001 to 100,000 shares 288 10,470,775 3.19100,001 to less than 5% of issued shares 114 157,126,461 47.795% and above of issued shares 4 158,974,100 48.35

Total 825 328,775,050 100.00



Thirty Largest Shareholders(without aggregating securities from different securities accounts belonging to the same person)

No Name Shareholding %

1 Cheah Swee Sin Sdn Bhd 66,350,000 20.18

2 DB (Malaysia) Nominees (Tempatan) Sdn Bhd 39,226,600 11.93Exempt An for Kumpulan Sentiasa Cemerlang Sdn Bhd

3 Amsec Nominees (Tempatan) Sdn Bhd 30,000,000 9.12Ambank (M) Berhad for Cheah Chee Kong Sdn Bhd

4 Cheah Chee Kong Sdn Bhd 23,397,500 7.12

5 Amanah Raya Nominees (Tempatan) Sdn Bhd 12,313,750 3.75Public Smallcap Fund

6 Asian New Century Capital Sdn Bhd 10,400,000 3.16

7 Beh Eng Par 10,000,000 3.04

8 AMMB Nominees (Tempatan) Sdn Bhd 7,696,100 2.34Amtrustee Berhad for Pacifi c Pearl Fund

9 Abdul Latif bin Abdullah 7,409,000 2.25

10 HLG Nominee (Tempatan) Sdn Bhd 7,000,000 2.13PB Trustee Services Berhad for HLG Growth Fund

11 Amsec Nominees (Tempatan) Sdn Bhd 6,500,000 1.98Ambank (M) Berhad for Helinna Hanum Dadameah

12 AMMB Nominees (Tempatan) Sdn Bhd 6,000,000 1.82Amtrustee Berhad for HLG Strategic Fund

13 Perspektif Padu Sdn Bhd 4,514,400 1.37

14 VPI International Sdn Bhd 3,840,350 1.17

15 HSBC Nominees (Tempatan) Sdn Bhd 3,714,000 1.13HSBC (M) Trustee Bhd for Hwang-DBS Select Small Caps Fund



No Name Shareholding %

21 Maju Raya Sdn Berhad 2,958,500 0.90

22 Mayban Nominees (Tempatan) Sdn Bhd 2,328,750 0.71Hwang-DBS Investment Management Bhd for Employees Provident Fund

23 Moh Wai Ching 2,294,500 0.70

24 Amanah Raya Nominees (Tempatan) Sdn Bhd 2,289,500 0.70Public Islamic Opportunities Fund

25 Chooi Oi Ying 2,242,600 0.68

26 Alliancegroup Nominees (Tempatan) Sdn Bhd 2,222,750 0.68Alliance Capital Asset Management Sdn Bhd for Employees Provident Fund

27 HSBC Nominees (Tempatan) Sdn Bhd 2,214,700 0.67HSBC (M) Trustee Bhd for Hwang-DBS Dana Izdihar

28 Goh Kim Kooi 2,201,500 0.67

29 BHLB Trustee Berhad 2,190,000 0.67Pacifi c Recovery Fund

30 Tang Kim Yoke 2,187,500 0.67

277,594,000 84.43

16 BHLB Trustee Berhad 3,658,600 1.11TA Small Cap Fund

17 Alliancegroup Nominees (Tempatan) Sdn Bhd 3,232,400 0.98Pledged securities account for Cheah Chee Kong

18 HSBC Nominees (Tempatan) Sdn Bhd 3,211,000 0.98HSBC (M) Trustee Bhd for the Hwang-DBS Select Opportunity Fund

19 Victor Cheah Chee Wai 3,000,000 0.91

20 Soon Yoke Leng 3,000,000 0.91


1 To receive and adopt the audited fi nancial statements for the fi nancial year ended 31 December 2006 and the reports of the directors and auditors thereon.

2 To re-elect Mr Vincent Cheah Chee Kong, the managing director who retire in accordance with Article

112 of the Company’s Articles of Association. 3. To re-elect the following directors who retire in accordance with Article 120 of the Company’s Articles

of Association. (i) Mr Victor Cheah Chee Wai (ii) Datuk Syed Hussian bin Syed Junid 3. To re-elect Mr Ho Hin Choy, the director who retire in accordance with Article 98 of the Company’s

Articles of Association. 4. To re-appoint Messrs Poh & Co as auditors of the Company and to authorise the directors to fi x their

remuneration.

Special Business:

To consider and if thought fi t, pass with or without modifi cation, the following ordinary resolutions:

5. Authority to allot and issue shares pursuant to Section 132D of the Companies Act, 1965“That pursuant to Section 132D of the Companies Act, 1965, the directors be and are hereby authorised to issue shares in the Company at any time until the conclusion of the next Annual General Meeting and upon such terms and conditions and for such purposes as the directors may, in their absolute discretion, deem fi t provided that the aggregate number of shares to be issued does not exceed 10% of the issued share capital of the Company for the time being (excluding the number of ordinary shares arising from the exercise of the Employees’ Share Option Scheme), subject always to the approvals of all the relevant regulatory authorities being obtained for such issue and allotment”.

(Resolution 1)

(Resolution 2)

(Resolution 3)(Resolution 4)

(Resolution 5)

(Resolution 6)

(Resolution 7)

NOTICE IS HEREBY GIVEN that the 4th Annual General Meeting of Effi cient E-Solutions Berhad will be held at Eastin Hotel, 13 Jalan 16/11, 46350 Petaling Jaya, Selangor Darul Ehsan on Thursday, 21 June 2007 at 3:00 p.m. for the purpose of transacting the following business:

NOTICE OF ANNUAL GENERAL MEETING


NOTICE OF ANNUAL GENERAL MEETING (cont’d)

6. Proposed renewal of shareholders’ mandate for recurrent related party transactions of a revenue or trading nature

“That, pursuant to Rule 10.09 of the Listing Requirements of Bursa Malaysia Securities Berhad for the

MESDAQ Market, approval be and is hereby given for the Company and its subsidiaries to enter into recurrent related party transactions of a revenue or trading nature with the related parties (“RRPTs”) as set out in Section 2.1.1 of the Circular to the Shareholders dated 29 May 2007 (“the Circular”), subject further to the following:

(i) the RRPTs are entered into in the ordinary course of business on terms not more favourable to

the related parties than those generally available to the public, and the RRPTs are undertaken on arms’ length basis and are not to the detriment of the minority shareholders of the Company;

(ii) the disclosure is made in the annual report of the breakdown of the aggregate value of the RRPTs conducted pursuant to the shareholders’ mandate during the fi nancial year, amongst others, based on the following information:

(a) the type of RRPTs made; and (b) the names of the related parties involved in each type of RRPTs made and their

relationship with the Company;

(iii) the shareholders’ mandate is subject to annual renewal and this shareholders’ mandate shall only continue to be in full force until:

(a) the conclusion of the next Annual General Meeting (“AGM”) of the Company following

this AGM, at which this shareholders’ mandate will lapse, unless by a resolution passed at the next AGM, such authority is renewed;

(b) the expiration of the period within which the next AGM after the date it is required to

be held pursuant to Section 143(1) of the Companies Act, 1965 (“Act”) (but shall not extend to such extension as may be allowed pursuant to Section 143(2) of the Act); or

(c) revoked or varied by resolution passed by the shareholders in general meeting;

whichever is the earliest;

and that, the directors and/or any of them be and are hereby authorised to complete and do all such acts and things as they may consider expedient or necessary (including executing such documents as may be required) to give effect to the RRPTs contemplated and/or authorised by this Ordinary Resolution;

(Resolution 8)


NOTICE OF ANNUAL GENERAL MEETING (cont’d)

and that, the estimates given of the RRPTs specifi ed in Section 2.1.1 of the Circular being provisional in nature, the directors and/or any of them be and are hereby authorised to agree to the actual amount or amounts thereof provided always that such amount or amounts comply with the procedures set out in Section 2.1.3 of the Circular.”

Special Resolution: 7. Proposed Amendment to the Articles of Association of the Company

“That the deletions, alterations, modifi cations, variations and additions to the Articles of Association of the Company as set out in Appendix I of the Circular to Shareholders of the Company dated 29 May 2007 be and are hereby approved”

8. To transact any other matter for which due notices shall have been given in accordance with the

Company’s Articles of Association and the Companies Act, 1965.

(Resolution 9)

By Order of the Board

ESTHER SOON YOKE LENG MAICSA 7002027ZOE LIM HOON HWA MAICSA 7031771Company SecretariesPetaling Jaya29 May 2007

Notes:1. A member entitled to attend and vote at the Meeting is entitled to appoint one or more proxies to attend and vote on his behalf .2. A proxy may but need not be a member of the Company and the provision of Section 149(1)(a) and (b) of the Companies Act, 1965 shall

not apply.3. Where a member appoints more than one proxy, the appointment shall be invalid unless he specifi es the proportion of his shareholding

to be represented by each proxy.4. Where a member is an authorized nominee as defi ned under the Securities Industry (Central Depositories) Act 1991, it may appoint not

more than two (2) proxies with ordinary shares of the Company standing to the credit of the said securities account.5. The instrument appointing a proxy shall be in writing under the hand of the appointer or his attorney duly authorized in writing or, if the

appointer is a corporation, under its common seal, or the hand of its attorney duly authorized. 6. The instrument appointing a proxy must be deposited at the Registered Offi ce of the Company not less than forty-eight (48) hours before

the time appointed for holding the Meeting or adjourned Meeting.

Explanatory Notes on Special Businesses1. The proposed Resolution 5, if passed, will empower the directors of the Company to issue and allot shares in the Company up to an

aggregate amount not exceeding 10% of the issued share capital of the Company for the time being for such purposes as they consider would be in the interest of the Company. This authority unless revoked or varied at a general meeting will expire at the next Annual General Meeting.

2. For further information of the proposed Resolution 6 and 7, kindly refer to the circular to shareholders dated 29 May 2007 accompanying the Company’s Annual Report for the year ended 31 December 2006.


STATEMENT ACCOMPANYING NOTICE OF ANNUAL GENERAL MEETING

Directors standing for re-election and their details

Vincent Cheah Chee Kong (Retired in accordance with Articles 112 of the Company’s Articles of Association)

Victor Cheah Chee Wai(Retired in accordance with Articles 120 of the Company’s Articles of Association)

Datuk Syed Hussian bin Syed Junid(Retired in accordance with Articles 120 of the Company’s Articles of Association)

Ho Hin Choy(Retired in accordance with Articles 98 of the Company’s Articles of Association)

Position Executive Director Executive Director Independent Non-Executive Director

Independent Non-Executive Director

Age 48 37 46 42

Nationality Malaysian Malaysian Malaysian Malaysian

Qualifi cation Details as contained on page 7

Details as contained on page 7



Working experience and occupation





Other directorships of public companies





Securities holdings in the Company and its subsidiaries

Direct: 3,232,400Indirect: 120,247,500

Direct: 3,000,000Indirect: 120,247,500

Direct: 995,250Indirect: Nil

Direct: NilIndirect: Nil

Family relationships with any directors and/ or substantial shareholders of the Company

He is the brother of Victor Cheah Chee Wai, a director and substantial shareholders of the Company.

He is the brother of Vincent Cheah Chee Kong, a director and substantial shareholders of the Company.

Nil Nil

Confl ict of interest with the Company

Nil Nil Nil Nil

Conviction of offences Nil Nil Nil Nil

The Place, Date and Time of General Meeting

The Fourth Annual General Meeting of the Company will be held at Eastin Hotel, 13 Jalan 16/11, 46350 Petaling Jaya, Selangor Darul Ehsan on Thursday, 21 June 2007 at 3:00 p.m.

This page has been intentionally left blank.


I/We, I.C. / passport / Company No.

of being a member of

EFFICIENT E-SOLUTIONS BERHAD hereby appoint

I.C. / passport No. of

or failing whom, I.C. / passport No.

ofor the Chairman of the Meeting as my / our proxy to vote for me / us on my / our behalf at the 4th Annual General Meeting of the Company to be held at Eastin Hotel, 13 Jalan 16/11, 46350 Petaling Jaya, Selangor Darul Ehsan on Thursday, 21 June 2007 at 3:00 p.m. and any adjournment thereof in the manner as indicated below:

No. Resolution For Against

1 Adoption of Reports and Audited Financial Statements

2 Re-election of Vincent Cheah Chee Kong

3 Re-election of Victor Cheah Chee Wai

4 Re-election of Datuk Syed Hussian bin Syed Junid

5 Re-election of Ho Hin Choy

6 Re-appointment of Messrs Poh & Co as Auditors

Special Business

7 Authority to Issue Shares

8 Renewal of Shareholders’ Mandate

9 Amendments of Articles of Association

Dated this day of , 2007

No of shares Signature(s) of Shareholder(s)

NOTESi. A member entitled to attend and vote at the Meeting is entitled to appoint one or more proxies to attend and vote on his behalf. ii. A proxy may but need not be a member of the Company and the provision of Section 149(1) (a) and (b) of the Companies Act, 1965 shall not apply.iii. Where a member appoints more than one proxy, the appointment shall be invalid unless he specifi es the proportion of his shareholding to be represented by each

proxy.iv. Where a member is an authorized nominee as defi ned under the Securities Industry (Central Depositories) Act 1991, it may appoint not more than two (2) proxies

with ordinary shares of the Company standing to the credit of the said securities account.v. The instrument appointing a proxy shall be in writing under the hand of the appointer or his attorney duly authorized in writing or, if the appointer is a corporation,

under its common seal, or the hand of its attorney duly authorized. vi. The instrument appointing a proxy must be deposited at the Registered Offi ce of the Company not less than forty-eight (48) hours before the time appointed for

holding the Meeting or adjourned Meeting.

PROXY FORM

The Company Secretary

EFFICIENT E-SOLUTIONS BERHAD (632479 H)

45-49 Jalan PJS 1/28

Taman Petaling Utama

46000 Petaling Jaya

Selangor Darul Ehsan

Postage

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