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CBS TECHNOLOGY BERHAD (537337M)

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C B

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CBS Technology Berhad (537337M)

15, Jalan Ara SD7/3A,

Bandar Sri Damansara,

52200 Kuala Lumpur,

Malaysia.

www.cbs.com.my

Tel: 603-6277 7018

Fax: 603-6277 6018 A n n u a l R e p o r t

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C B S T E C H N O L O G Y B ER H A D (537337M ) 1 A n n u a l R e p o r t 2 0 0 8

2 CO RPO RATE INFOR M ATION3 CO RPO RATE STRUC TURE AND 5-YEAR FINANCIAL HIGHLIGHTS

4 CHAIRM ANS STATEM ENT7 DIRECTO RS PRO FILE

10 STATEMENT ON CO RPO RATE GO VERNANCE

14 STATEMENT ON INTERNAL CO NTRO L15 DIRECTO RS RESPON SIBILITY STATEMENT 15 OTHER C OM PLIANCE INFOR M ATION 16 AUDIT CO M M ITTEE REPORT20 FINANCIAL STATEM ENTS 57 LIST O F PR O PERTIES58 ANALYSIS OF SHAREHOLDINGS60 NO TICE OF ANNUAL GENERAL M EETING 62 STATEMENT ACC OM PANYING THE NOT ICE O F ANNUAL G ENERAL M EETING FOR M OF PRO XY

CONTENTS

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C B S T E C H N O L O G Y B ER H A D (537337M ) 2 A n n u a l R e p o r t 2 0 0 8

C O R P O R A T E INFORMATION

BOARD OF DIRECTORSG eneral Dato Seri Panglima Mohd AzumiBin M ohamed (Rtd)Chairman and Independent Non-Executive Director

Sun Chee KongManaging Director

Tan Chong C hew @ Tan Ying YingExecutive Director

C hoo K ok LiongIndependent Non-Executive Director

Anthony PowerNon-Independent N on-Executive Director

Fong Wai LeongIndependent Non- Executive Director(appointed on 30.01 .2009)

Lai Soon O nnAlternate Director t o Tan Chong Chew @ Tan Ying Ying

Wong K ang SaiExecutive Director (deceased on 21.10.2008)

Lee Siew K enAlternate Director to Wong Kang Sai(ceased on 21.10 .2008)

AUDIT C OM M ITTEE G eneral Dato Seri Panglima Mohd AzumiBin M ohamed (Rtd)Chairman

C hoo K ok LiongMember

Fong Wai LeongMemb er (appointed on 30.01.2009)

Tan Chong C hew @ Tan Ying YingMemb er (resigned on 3 0.01.2009)

COMPANY SECRETARIESSeow Fei SanM AISC A 7009732

Wong Siew YeenM AISC A 7018749

REG ISTERED O FFICE312, 3rd Floor, B lock C ,K elana Square,17 Jalan SS 7/2647301 P etaling JayaSelangor Darul EhsanM alaysiaTel: +603-7803 1126Fax: +603-7806 1387

PRINCIPAL PLACE OF BUSINESS

15, Jalan Ara SD 7/3ABandar Sri Damansara52200 K uala LumpurM alaysiaTel: +603-6277 7018Fax: +603-6277 6018Website: www.cbs.com.my

AUDITORSSJ Grant Thornton(M ember of G rant Thornton International)C hartered AccountantsLevel 11, Faber Imperial CourtJalan Sultan IsmailM alaysia50250 Kuala LumpurTel: +603-2692 4022Fax: +603-2732 5119Website: www.gt.com.my

SHARE REGISTRAREpsilon Registration Services Sdn BhdLevel 17, The Gardens North TowerM id Valley C ityLingkaran Syed Putra

59200 K uala LumpurM alaysiaTel: +603-2264 3883Fax: +603-2282 1886Website: www.tricorglobal.com

PRINC IPAL BANK ERMalayan Banking Berhad7 & 8, Jalan Tanjung SD13/1Bandar Sri Damansara52200 K uala LumpurM alaysia

STOC K EXCHANGE LISTINGM ESD AQ M arket of Bursa M alaysia Securities BerhadStock Name: C BSTEC HStock Code: 0041

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C B S T E C H N O L O G Y B ER H A D (537337M ) 3 A n n u a l R e p o r t 2 0 0 8

C O R P O R A T E STRUCTURE

100% 100% 100%CYBER BUSINESS

SOLUTIONS SDN BHDCBS MSCSDN BHD

5 - Y E A R FINAN CIAL HIGHLIGHTS

R evenue

(RM 000)

25

20

15

10

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P rofit Before Tax

(RM 000)

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RM000 2004(1) 2005 (2) 2006 2007 2008

Revenue 11,075 14,897 15,887 20,852 23,024

Prot Before Taxation 4,257 4,319 5,344 6,897 6,561

Prot Attributable To Equity HoldersO f The C ompany 3,519 4,005 4,995 6,421 5,617

Net Assets 18,778 22,874 28,105 25,203 30,949

Basic Earnings Per Share (Sen) 4.1 4.1 5.1 6.5 3.7

Dividend Per Share (Sen) - net of tax - - - 10.0 -

Net Assets Per Share (Sen) 19.3 23.5 28.6 24.9 20.4

(1) The nancial period is from 19 January 2004 to 31 December 2004

(2) R estated to comply with new and revised FRS s.

CBS TECHNOLOGY BERHAD (537337M)

CBS SYNERGYSDN BHD

49%

51%CASD SOLUTIONS

SDN BHD

CBS TECHNOLOGYGmbH

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C B S T E C H N O L O G Y B ER H A D (537337M ) 4 A n n u a l R e p o r t 2 0 0 8

C H A I R M A N S STATEMENT

On behalf of the Board of Directors( Board ), I am pleased to present theAnnual Report and Financial Statementsof CBS Technology Berhad ( CBS ) for the nancial year ended 31 December 2008( FY2008 ).

REVIEW OF FINANCIAL PERFORMANCEAgainst the backdrop of a weakening market in FY2008, the G roup continued to maintain business growth momentum with theG roups revenue increased by RM 2.17 million or 10.42% to RM 23.02 million compared to RM 20.85 million in the nancial yearended 31 December 2007 (FY2007). With the escalating costs and increased manpower expenses, the overall gross protmargin had reduced and as a result, the Groups gross prot grew slightly by RM 0.13 million or 1.15% to RM 11.82 million. The Groups pre-tax prot for the FY2008 has declined by 4.87% to RM 6.56 million from R M 6.90 million reported in the FY 2007.This was mainly attributable to higher administrative expenses relating to the share based payment under the employees shareoption scheme of C BS and higher depreciation and amortisation expenses. O ther expenses incurred in FY2008 were due to

allowance for diminution in value of investment in a jointly controlled entity.

Despite the lower pre-tax prot achieved, the Groups taxation for FY 2008 increased by RM 0.47 million resulted from the incometax provision made by C BS s wholly owned subsidiary, C BS M SC Sdn Bhd (C BS M SC ). C BS M SC was granted P ioneer Statuswith tax exemption for a period of ve (5) years until 25 September 2008. The extension of the P ioneer Status for another ve(5) years was only approved on 23 M arch 2009 which was after the nalisation of the nancial statements of CB S M SC for theFY 2008. Hence, the adjustments for the tax provision will only be reected in the next nancial year.

As a result of higher taxation, the Groups net prot for the FY 2008 has decreased by 12.52% from R M 6.42 million in FY2007 toRM 5.62 million in FY2008.

The G roup maintained a strong and healthy balance sheet with net current assets of RM 19.72 million, total assets of RM 46.90million and shareholders funds of RM 30.95 million. The overall nancial position of the G roup remained sound with no bankborrowings. T he G roups total cash and cash equivalents plus short term investments stood at RM 19.49 million as at 31 December2008.

Based on the weighted average number of 151,739,187 shares in C BS, the G roups basic earnings per share for FY 2008 was3.70 sen, as compared to 4.32 sen in FY 2007.

Dear Shareholders,

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C H A I R M A N S STATEMENT (contd )

REVIEW OF OPERATIONDuring the year, C BS continued to make signicant progress to be the leading R adio Frequency Identication (RFID) solutionsprovider. C BSs wholly owned subsidiary, C yber Business Solutions Sdn Bhd was awarded a project by a national utility company,Tenaga Nasional Berhad (T NB ) to implement CB S proprietary Solmate RFID Warehouse M anagement System (R WM S ) atone of TN Bs warehouses. S olmate R WM S is a web-based solution that will enable tagging, storage, retrieval and tracking ofwarehouse materials to enhance operational efciencies and warehouse effectiveness. The project is the rst of its kind undertak enby a utility company in M alaysia to deploy the R FID technology in warehouse management system. C BS is proud to lead anotherRFID pilot site for a national utility company proven to improve its operational efciencies and effectiveness for its long termbusiness value. C BS will leverage on its success in the implementation of RWM S project for TNB to seek new opportunities in theother sectors and new markets. We believe CBS is well positioned to exploit these opportunities by extending our RFID solutionsto address more complex business requirements.

C BSs strategy in adapting quickly to the fast changing business environment and offering innovative products and services thatmeet the demands of customers are our key strength. In anticipation of the global economy crisis and inated costs of living,we have over the past one year