the chief executive officer’s report 11-05-2009 · • enhanced our partnership with microsoft...

�AnnualReport2008

the chief Executive Officer’s report

2008 has been a challenging year set against the global

financial turmoil and volatile economy. Amidst that, we

continued with our planned endeavours, grew and

strengthened our offerings. We made further advancement

in capturing market share in the verticals and countries that

we focused on and enhanced and created new relationships

with our solution partners and business partners. Some

of the highlights of the year under review were:

• Set up key international clients team to focus on existing

and new international clients;

• Established Beijing office to approach and focus on

China market;

• Established Cuscapi Outsourcing to increase product

and service offering to clients;

• Enhanced our R&D capabilities to meet the needs and

demands of clients;

• Enhanced our partnership with Microsoft to grow our

products and offerings in effort to grow our value for our

clients; and

• Grew our staff strength by 24 percent in 2008 with a

total headcount of 205 to meet both operations and

support needs.

Financial ReviewWe recorded profit for the third consecutive year, registering

a modest pre-tax profit of RM1.11 million for the financial

year ended 31 December 2008. The pre-tax profit was

lower compared to the year before and was attributable to

increased costs in line with the investment and expansion

undertaken, including increased international business

development activities, R&D and marketing initiatives, and

increased recruitment of resources and expertise.

Business ReviewWe continued to deepen our foothold in the local F&B

industry with the securing of new clients; the first Bubba

Gump Shrimp Company, the first four Wendy’s stores, and

Theobroma Chocolate Lounge’s first two stores in the

country. J.Co Coffee and Donuts opted for Transight solutions

for two more subsequent outlets, while ten O’Brien’s stores

throughout the Klang Valley replaced its previous systems

with Transight solutions.

In the retail space, our retail solutions was picked by Camel

Active in Pavilion Kuala Lumpur, and we deployed passport

readers for nine retail outlets in Kuala Lumpur International

Airport (KLIA) and the Low Cost Carrier Terminal (LCCT).

Given the vast potentials in retail, efforts to grow our

presence and chart our growth in this industry would be

further boosted.

CuscapiBerhad�

Genpacx, our other proprietary software enabled clients

Formula Bikes Sdn Bhd, Nippon Motors Sdn Bhd, Sing

Haik Lee Engineering Works, Soo & Sons Metal Works Sdn

Bhd, and Syaifar Realty Sdn Bhd to electronically register

commercial vehicles with the Malaysia Road Transport

Department (RTD) through the adoption of electronic dealer

management application hosting services. Genpacx was

implemented for Nasim to enable both electronic vehicle

registrations with RTD and new vehicle declaration, as well

as excise duties payments with the Royal Customs of

Malaysia. Client Boon Siew Honda Sdn Bhd also picked

Genpacx to manage its daily sales operations that were

accessed by approximately 400 dealers nationwide. Genpacx

will continue to see greater awareness and growth on an

international scale as we increase our presence and market

share internationally.

In the local financial, securities and insurance scene, clients

Alliance Bank, AmBank, BH Insurance, CIMB Bank, Great

Eastern Insurance, Hong Leong Bank, MAA, Malaysian

Electronic Payment System (MEPS), Pricewaterhouse

Coopers, RHB Bank, and UOB Bank contracted us for supply,

implementation and maintenance of various enterprise

and gateway security, as well as antivirus systems.

We were awarded to supply, implement and support IT

infrastructure and security systems for Cititel Hotel and

The Saujana Kuala Lumpur, while newcomers, GCH Retail

(Giant Hypermarkets), convenience store chain, 7-Eleven

and QR Retail Automation picked us to supply, implement

and support their various security systems.

Internationally, 2008 saw us securing more accounts and

installed sites. More than 2,300 installation bases were

secured, mainly in China, Hong Kong, Indonesia, Philippines,

and Thailand.

Jollibee opened its first store in Shenzhen, China with

Transight solutions completely in Chinese language, while

Yoshinoya migrated operations in all eight stores in

Shanghai to Transight solutions and commissioned the

solutions for two new stores in Fuzhou.

Over in the Middle East region, Transight solutions entered

Kingdom of Saudi Arabia when Jollibee opened its first

store in Jeddah and into the African continent when

Solitaire Café in Khartoum, Sudan opted for the solutions

for its F&B operations. Arazak, Egypt-based F&B operator

also picked Transight solutions for its two stores in Cairo.

Breadtalk continued to commission Transight for their outlets

in four cities in India – Bangalore, Gurgoan, Hyderabad and

Mumbai, its maiden store in Seoul, Korea and in Muscat,

Oman following the successful stint in Singapore, China,

Thailand and Philippines last year. The implementation

enables consolidation and integration of operational

information back to its headquarters in Singapore.

In Thailand, Yum Restaurants International commissioned

Transight solutions for 17 KFC stores, while CRG

commissioned the solutions for three of its brands, Auntie

Anne’s, Pizza Hut and Pepper Lunch for major stores,

which were located mainly in Bangkok.

Having gained the largest account in the Vietnamese

F&B sector when KFC upgraded its outlets throughout

the country in 2007, Transight solutions were further

commissioned to Pizza Hut’s first two outlets in the country

in the fiscal year under review. The solutions also entered

the Cambodian market when KFC opened two stores in the

city of Phnom Penh.

In the Republic of Singapore, the largest Chinese restaurant

chain, Tunglok Group of Restaurants handpicked Transight

solutions for two of its restaurants, while Park Hotel Group

commissioned the Electronic Procurement System (EPS) for

six of its properties in the Republic, Hong Kong and China.

Introduced in the last fiscal year, EPS spun off from the

Genpacx platform for the hospitality industry and was

designed to manage procurement activities.

In line with our commitment to continuously be at the

forefont of innovation and service, we launched Transight

Xpress, a simplified version of our premier F&B business

management solutions, Transight. Designed by our own

research and development (R&D) team, Transight Xpress

caters for the small-and-medium-sized F&B operations. In

addition, we complemented our proprietary solutions,

Transight and Genpacx with enterprise resource planning

capabilities through Microsoft Dynamics Navision.

�AnnualReport2008

Through our R&D team, we also continued to enhance our

value creation by providing client-specific enhancements

for Transight Point-of-Sale, Manager and Headquarters

modules for existing major clients, while the Transight

Centralised Call Centre module was given stability

enhancements.

Business Direction for 2009As we forge ahead in the current financial year of 2009, we

will continue to build our capabilities, and in doing so, we:

• Have restructured to be more market (geography) and

vertical (industry) focused to enable us to focus on the

specific needs within each market as we aim to be a key

business solutions provider in each particular market;

• Have built our R&D capability in Suzhou, China to extend

beyond the current R&D for our product offerings;

• Will set up international offices, where appropriate and

necessary; and

• Will continue to grow Cuscapi Outsourcing’s capabilities.

In addition, we will continue to focus on building our

recurring revenue portfolio and to position ourselves as

the main solutions provider to our key clients by increasing

our value proposition to them, through new offerings such

as Business Intelligence, Supply Chain Management,

Customer Relationship Management, IT Outsourcing, and

Business Process Outsourcing.

While we gear forward towards building a stronger brand

and presence, we will also continue to build the skills and

knowledge of our people in equipping ourselves for better

and higher growth, domestically and internationally.

Danny Leong Kah ChernchIef executIve offIcer

CuscapiBerhad�

Group Structure

Note: *Cuscapi Outsourcing Sdn Bhd is a Jointly Controlled Entity, of which Cuscapi Berhad holds 55% of interest.

Cuscapi Malaysia Sdn Bhd

Cuscapi International Sdn Bhd

Cuscapi Innovation Lab Sdn Bhd

Cuscapi Solutions Sdn Bhd

Cuscapi International Pte Ltd

Cuscapi Berhad

Cuscapi Outsourcing Sdn Bhd

Cuscapi Beijing Co Ltd

�AnnualReport2008

corporate information

BOARD OF DIRECTORSDato’ Gan Nyap Liou @ Gan Nyap Liow

Independent non-executIve chaIrman

Leong Kah Chern

chIef executIve offIcer

Her Chor Siong

executIve dIrector

Ang Chin Joo

non-Independent non-executIve dIrector

Rosman bin Abdullah

non-Independent non-executIve dIrector

Tai Keat Chai

Independent non-executIve dIrector

Dr Ravindranath a/l P.D. Nayer

Independent non-executIve dIrector

COMPANY SECRETARYTan Leh Kiah

(MAICSA NO.: 0719692)

AUDIT COMMITTEETai Keat Chai

chaIrman


Ang Chin Joo

NOMINATION COMMITTEEDato’ Gan Nyap Liou @ Gan Nyap Liow

chaIrman

Rosman bin Abdullah

Her Chor Siong

REMUNERATION COMMITTEEDato’ Gan Nyap Liou @ Gan Nyap Liow

chaIrman

Tai Keat Chai


REGISTERED BUSINESS OFFICELevel 1, Block B, Peremba Square

Saujana Resort, Seksyen U2

40150 Shah Alam

Selangor Darul Ehsan

Tel : 603-7623 7777

Fax : 603-7622 1999

STOCK EXCHANGE LISTINGBursa Malaysia Securities Bhd (BMSB) –

MESDAQ Market

BMSB Code: 0051

Reuters Code: CUSC.KL

Bloomberg Code: CUSC:MK

AUDITORS Baker Tilly Monteiro Heng

22-1, Jalan Tun Sambanthan Tiga

50470 Kuala Lumpur

Tel : 603-2274 8988

Fax : 603-2260 1708

PRINCIPAL BANKERHSBC Bank Malaysia Berhad

Malayan Banking Berhad

REGISTRARSecurities Services (Holdings) Sdn Bhd

Level 7, Menara Milenium

Jalan Damanlela

Pusat Bandar Damansara

Damansara Heights

50490 Kuala Lumpur

Tel : 603-2084 9000

Fax : 603-2094 9940

CuscapiBerhad10

Board of directors

BOARD OF DIRECTORS (from top left)

Dato’ Gan Nyap Liou @ Gan Nyap Liow, Danny Leong Kah Chern,

Her Chor Siong, Ang Chin Joo, Rosman bin Abdullah,

Dr Ravindranath a/l P.D. Nayer, Tai Keat Chai

11AnnualReport2008

Dato’ Larry Gan Nyap Liou @ Gan Nyap LiowIndependent non-executIve chaIrman

Age 54, Malaysian

Dato’ Larry Gan was appointed to the Board of Directors of the

Company on 22 June 2006.

Dato’ Larry Gan exemplifies Cuscapi’s commitment to delivery

excellence and has built a reputation for his extraordinary

work ethic, strategic thinking and visionary ability. During his

26 years with Accenture, he held many global leadership roles,

consulted on strategic projects for government organisations

and multinational corporations, and often worked with innovative

technologies around the world. He was Managing Partner –

Malaysia from 1989 to 2004, Managing Partner – ASEAN from

1993 to 1996, and Managing Partner – ASIA from 1997 to

1999. As Managing Partner, Corporate Development, ASIA

PACIFIC from 1999 to 2002, he managed the firm’s multibillion

dollar Venture Fund in Asia Pacific. Between 1997 and 2004,

he was a member of the Global Management Council, and sat

on the many global management committees governing partner

admissions, rewards and compensation.

He served as Chairman of the Association of Computer Industry

Malaysia (PIKOM) and the Vice-President of the Association of

Asian Oceania Computer Industry Organization, a Member of

the Minister of Science & Technology Think Tank, Copyright

Tribunal, Labuan International Financial Exchange Committee

and MIMOS Berhad.

Presently, Dato’ Larry Gan is a Board member of Redtone

International Berhad, Tanjong Plc, AmBank (M) Berhad,

AmDevelopment Berhad, Lotus International Group Limited,

and IPGA Limited. He is also associated with the Minority

Shareholder Watchdog Group, British Malaysian Chamber of

Commerce and the Yayasan Tuanku Nur Zahirah.

Dato’ Larry Gan is a chartered accountant and a certified

management consultant.

CuscapiBerhad12

Her Chor SiongexecutIve dIrector

Age 37, Malaysian

Her Chor Siong has been appointed to the Board of

Directors since 17 August 2006. As the Executive Director

of Cuscapi Berhad, he is responsible for the day-to-day

operations of Cuscapi’s business in the F&B, Retail,

Hospitality, and Automotive industries, as well as its

international business.

Previously, Chor Siong founded and managed Adeptis

Solutions in 2003 and played a key role in facilitating the

acquisition of Adeptis by Cuscapi Berhad in 2006. As CEO

of Adeptis Solutions, Chor Siong was directly involved in

various aspects of its business operations, from sales

and marketing to product development, human resource,

finance, administration, and corporate strategy.

Prior to the founding of Adeptis Solutions, he held a senior

position within the telecommunication business unit of

Accenture, a global consulting company. Chor Siong has

more than ten years of wide range of experiences in the

delivery of consulting services for Accenture’s clients,

particularly in the area of Client Relationship Management

(CRM), Service Provisioning, Billing, Revenue Assurance

and IT Project Management.

Possessing an analytical mind and exceptional creativity,

Chor Siong has personally served various telecommunication

and financial services clients across Malaysia, Singapore,

Thailand and South Korea. His portfolio of clients includes

Maxis Communications, Telekom Malaysia, Celcom, TM

Cellular, Mobile One, Advanced Information Services, Hanaro

Telecom, TimedotCom, MBf Finance, Daimler Chrysler, and

Hyundai-Sime Darby.

Chor Siong is a graduate of the National University of

Malaysia and holds a Bachelor of Arts (Honours) in

Sociology.

Danny Leong Kah Chern chIef executIve offIcer & executIve dIrector

Age 37, Malaysian

Danny Leong has been the Chief Executive Officer (CEO) of

Cuscapi Berhad and a member of the company’s Board of

Directors since 17 August 2006.

As the CEO of Cuscapi, Danny is focused on driving the

company to a higher level and positioning Cuscapi as a

preferred partner in the Information Technology (IT) industry.

Prior to joining Cuscapi, Danny spent over nine years with

Accenture Malaysia, where he gained extensive experience

in managing various IT implementation projects alongside

regulators/government bodies and directly contributed to

the success of nine strategic and syndicated consulting

engagements with leading regional telecommunication

players. Subsequently, he co-founded Adeptis Solutions

in 2003, a leading provider of Collaborative Fulfillment

management solutions for the automotive, communications,

consumer and healthcare industries. In Adeptis Solutions,

Danny held various management, operations, sales and

marketing roles that greatly contributed to the subsequent

acquisition of the company by Cuscapi Berhad.

Presently, Danny is the Head of Research for Outsourcing

Malaysia.

Danny holds a Bachelor of Arts degree in Accounting and

Financial Management from the University of Essex, United

Kingdom.

1�AnnualReport2008

Rosman bin Abdullahnon-Independent non-executIve dIrector

Age 42, Malaysian

Rosman bin Abdullah is a Non-Executive Director of the

Company.

Rosman brings over 20 years of experience in corporate

management and advisory services. His career started in

1989 when he joined Hanafiah Raslan & Mohammad, a

public accounting firm that subsequently merged with

Arthur Andersen & Co. He then served Arthur Andersen &

Co. for almost nine years in the areas of auditing, financial

and corporate advisory and corporate finance.

Currently, Rosman serves as a Non-Independent Non-

Executive Director of KUB Malaysia Berhad and an

Independent Non-Executive Director of Kumpulan FIMA

Berhad and Narra Industries Berhad. He was the Executive

Director of Main Board-listed Malaysia Airport Holdings

Berhad from 1997 to 2003, and Chief Executive Officer of

PECD Berhad from June 2006 until May 2009.

Rosman graduated with a Bachelor of Commerce

(Accounting) Degree from the Australian National University

in 1988 and is a chartered member of the Malaysian

Institute of Accountants and a member of the Australian

Society of Certified Practising Accountants. He has also

completed the Advanced Management Programme at the

Oxford University under the British Government Chevening

Scholarship Award.

Ang Chin Joonon-Independent non-executIve dIrector

Age 57, Malaysian

Ang Chin Joo is a Non-Executive Director of the Company.

As a former Executive Director and CEO, Ang was responsible

for setting up the business directions and formulating the

strategy for the Company in its earlier years. Ang has been

on the Board since 29 May 1998.

He began his career in the IT industry with Computer

Systems Advisers Berhad (CSA) in 1976. Ang joined

IBM Malaysia in 1981 where he spent 13 years in various

sales marketing, services, management and consulting

positions covering various industries such as banking,

telecommunications, airlines, utilities, as well as small

and medium enterprises. His consulting stint in IBM in

1992 and 1993 included being the Principal of the IBM

Consulting Group for the ASEAN region.

Ang left IBM in 1994 to become the first Country Manager

for Compaq Computer Malaysia. After spending three

years in Compaq, he moved on to become the CEO of

IT Partners Sdn Bhd in 1996 and the Managing Director

of Transight Systems in 1997. Ang is currently a Director

of Milux Corporation Berhad and the President of PIKOM,

the Association of the Computer and Multimedia Industry

of Malaysia.

Ang graduated with a Bachelor of Applied Science (Honours)

from the University of Science Malaysia in 1976.

CuscapiBerhad1�

Dr Ravindranath a/l P.D. Nayer Independent non-executIve dIrector

Age 59, Malaysian

Dr Ravindranath is a medical specialist registered with the

Malaysian Medical Council. He was appointed to the Board

on 28 May 2004.

Dr Ravindranath graduated from the University of Malaya

in 1973 and obtained his post-graduate qualifications of

Member of the Royal College of Physicians of the United

Kingdom in 1976.

He had worked as a medical doctor in the Malaysian

government hospitals as well as hospitals in Sydney,

Australia before commencing private practice in Kuala

Lumpur since 1985. Dr Ravindranath is also a member of

the board of directors of Mediconsult Planning and

Consultancy Services Sdn Bhd involved in Consultancy for

Hospital Planning, Medical Equipment Planning and

Hospital Information Systems.

Tai Keat ChaiIndependent non-executIve dIrector

Age 55, Malaysian

Tai Keat Chai was appointed to the Board on 28 May 2004.

Tai brings with him many years of valuable experience and

insight through his work in KPMG, London between 1977

and 1978, after which he returned to Malaysia and

commenced working with PricewaterhouseCoopers in

Kuala Lumpur. In 1981, he joined Alliance Investment Bank

Berhad where he worked in corporate finance for seven years

before he ventured into stock broking, during which he

worked in SJ Securities Sdn Bhd, A. A. Anthony Securities

Sdn Bhd and ECM Libra Investment Bank Berhad.

Tai is a Fellow of the Institute of Chartered Accountants in

England & Wales and a member of the Malaysian Institute

of Accountants. He is also a Director of Chuan Huat

Resources Berhad, Disccomp Berhad, PECD Berhad,

Imaspro Corporation Berhad, Opensys (M) Berhad, SILK

Holdings Berhad and a few other unlisted companies.


QUARTER 1

Cuscapi set up Cuscapi Beijing Co Ltd to establish direct

presence in the thriving China market and to further

enhance operational efficiency and promote greater growth.

Cuscapi presented its comprehensive F&B business

management solutions, Transight at the inaugural China POS & Automation Industry Conference 2008 held in

HeBei, China.

Transight solutions were implemented for the first Bubba Gump Shrimp Company store at The Curve, first four Wendy’s stores in Sunway Pyramid, Jaya One, Berjaya Times Square

and IOI Mall, and Nandos at Jaya One, Petaling Jaya.

Retail solutions were implemented for Camel Active in

Pavilion Kuala Lumpur.

Cuscapi was awarded a contract to supply, implement and

support IT infrastructure & security solutions for Cititel Hotel, and IT infrastructure and wireless broadband systems

for The Saujana Kuala Lumpur.

Cuscapi was awarded a contract to supply, implement and

support enterprise gateway and endpoint security systems

for CIMB Bank, and enterprise network security systems

for RHB Bank.

Sing Haik Lee Engineering Works and Syaifar Realty Sdn Bhd subscribed to Cuscapi’s electronic dealer management (Genpacx) application hosting services to

enable electronic vehicle registration with the Malaysia

Road Transport Department.

Jollibee’s first store in Shenzhen, China began operations

on Transight solutions, running completely in Chinese

language, and polling sales data back to its headquarters

in Manila, Philippines.

Highlights of achievements

Ourachievementsin2008continuedtospeak

ofourcommitmenttogrowandstrengthen

ourbusinessandcredentials.Challenging

asitwas,wecontinuedinourvaluecreation

forourclientsthroughourofferingsinthe

sevenverticalsthatwefocuson–F&B,Hospitality,

Retail,Automotive,Telecommunications,

FinancialServices,andPublicService.

CuscapiBerhad1�

QUARTER 2

Cuscapi participated in the exhibition and career talk at the Malaysia 7th Career & Training Fair 2008 held in Kuala Lumpur.

Cuscapi showcased its proprietary Transight solutions under the Hospitality Technology category at the Food & Hotel Asia (FHA) 2008 in Singapore.

Cuscapi signed collaboration with the Association of the Computer and Multimedia Industry of Malaysia (PIKOM) to provide maintenance services for personal computers at all community centres under the Projek M.A.IN. PC. The initiative is aimed at promoting PC literacy among the general public.

Transight solutions were implemented for Spaghetti Grill Restaurant in Mid Valley Megamall, Kuala Lumpur, and Radix Fried Chicken Restaurant in Sg Petani, Kedah.

70 units of passport readers were deployed for nine retail outlets in Kuala Lumpur International Airport and the Low Cost Carrier Terminal (LCCT).

Cuscapi was contracted to supply, implement and support the content security management, gateway and endpoint antivirus systems for Great Eastern nationwide.

PriceWaterhouseCoopers contracted Cuscapi to supply, implement and support the internet proxy and content security management systems.

Cuscapi was awarded a contract to supply, implement and support enterprise gateway security systems for Alliance Bank, and enterprise gateway and endpoint antivirus systems for AmBank nationwide.

The implementation of electronic dealer management system (Genpacx) for Nasim was rolled out to enable vehicle registration with the Malaysia Road Transport Department, and facilitate online new vehicle declaration and excise duties payments with the Royal Customs of Malaysia.

Cuscapi won the contract to supply Microsoft licenses for the dental system project for the Ministry of Health Malaysia.

Transight solutions gained entry into South Korea when Breadtalk maiden store in the country was opened in Seoul.

Egypt-based F&B operator, Arazak implemented Transight solutions for two outlets in Cairo.

Jollibee opened its first store in Jeddah, Kingdom of Saudi Arabia running on Transight solutions.

QUARTER 3

Cuscapi incorporated its outsourcing arm, Cuscapi Outsourcing through a joint venture with Proteas Innovation Sdn Bhd to provide outsourcing services to its clients.

Transight solutions were implemented for Carcosa Seri Negara Hotel, and for Australian-based premier chocolatier, Theobroma Chocolate Lounge outlets in Kuala Lumpur.

QR Retail Automation (Asia) contracted Cuscapi to supply, implement and support the Internet gateway security and VPN systems.

Cuscapi was awarded a contract to provide upgrade and maintenance support for gateway security systems for BH Insurance, while UOB Bank renewed its annual maintenance and support of IT security systems.

Cuscapi was contracted by 7-Eleven to assess, upgrade and provide maintenance support for its infrastructure and security systems.

Transight solutions entered Cambodia when implementation was completed for the first two KFC stores in Phnom Penh.

Yoshinoya migrated operations in all eight of its outlets in Shanghai to Transight solutions and implemented the solutions for two new outlets in Fuzhou, China.

All Breadtalk stores in four cities in India, namely Bangalore, Gurgoan, Hyderabad, and Mumbai began operations running fully on Transight solutions.

Transight solutions landed in Africa when Solitaire Café in Khartoum, Sudan opted for the solutions for its F&B operations.


QUARTER 4

Cuscapi partnered Microsoft for Dynamics Navision to further complement its existing proprietary solutions, Transight and Genpacx with enterprise resource planning (ERP) capabilities.

Cuscapi introduced Transight Xpress, a simplified version of its existing premier F&B business management solution, Transight for the small-and-medium-sized F&B players.

Cuscapi Outsourcing participated in the inaugural Outsourcing Malaysia Conference 2008 held in Kuala Lumpur, and was part of a panel that discussed how providers in the global marketplace have adopted and adapted value selling models.

Cuscapi set up its R&D centre in Suzhou, China to further enhance its research and development capabilities for its international growth and market penetration strategies.

Transight solutions were implemented for ten O’Brien’s outlets throughout Klang Valley and replaced a competitor’s solution for 7atenine Kuala Lumpur, while J.Co Donuts & Coffee extended its operations in its third and fourth stores in Giant, Kota Damansara and Johor Bahru with Transight solutions.

Cuscapi was contracted to supply, implement and provide maintenance support for gateway and endpoint security systems for CIMB Bank, gateway and endpoint security systems for MAA Group, and enterprise security content management systems for Hong Leong Bank.

Cuscapi was awarded a contract by Malaysian Electronic Payment System (MEPs) to upgrade and provide maintenance support for its gateway security systems.

Cuscapi’s electronic dealer management system (Genpacx) was implemented for Boon Siew Honda Sdn Bhd to manage its daily sales operations that were accessed by approximately 400 dealers nationwide.

Park Hotel Group contracted Cuscapi to implement its electronic procurement system (Genpacx) for six properties under the group; three in Singapore, two in China and one in Hong Kong.

Formula Bikes Sdn Bhd, Nippon Motors Sdn Bhd, and Soo & Sons Metal Works Sdn Bhd subscribed to Cuscapi’s electronic dealer management (Genpacx) application hosting services to enable electronic vehicle registration with the Malaysia Road Transport Department.

Two restaurants under the Tunglok Group of Restaurants, Singapore began operations running on Transight solutions.

Transight solutions were implemented for the first two Pizza Hut outlets in Vietnam.

CRG commissioned Transight solutions for major Auntie Anne’s, Pizza Hut and Pepper Lunch stores in Bangkok, Thailand.

Transight solutions entered Oman when Breadtalk opened its first store in Muscat.

CuscapiBerhad1�

corporate Governance Statement

The Board of Directors (“Board”) of Cuscapi Berhad

appreciates the importance of embedding corporate

governance best practices in the business and affairs of

the Company and the Group and views corporate governance

as synonymous with transparency, accountability and

outstanding corporate performance. The Board is fully

committed to sustaining its high standards of corporate

governance with the goal of ensuring that the Group is in

the forefront of good governance and is recognised as an

exemplary organisation in this respect by further supporting

and implementing the prescriptions of the Principles and

Best Practices set out in Parts 1 and 2 of the Malaysian

Code on Corporate Governance (“Code”).

In October 2007 the Malaysian Code of Corporate Governance

(“the Code”) was revised in line with developments in the

domestic and international capital markets, to further

improve corporate governance standards and strengthen

investor confidence. The key amendments to the Code are

aimed at strengthening Board of Directors and the Audit,

Remuneration and Nomination Committees, and ensuring

their roles and responsibilities are discharged effectively.

The Board will ensure that the changes are adequately

reflected and updated in the Terms of Reference of the

Audit, Remuneration and Nomination Committees and the

Board endeavours to adequately reflect all changes by the

requirement deadline in 2009.

STATEMENT OF PRINCIPLESThe following sets out the manner in which the Principles

in Part 1 of the Code have been applied by the Company

and are under the headings of Board of Directors, Directors’

Remuneration, Shareholders and Investors, and Accountability

and Audit.

A. BOARD OF DIRECTORS

Board Responsibilities The Company is led and controlled by an effective

Board that has the overall responsibility to protect and

enhance shareholder value. The Company acknowledges

the pivotal role played by the Board of Directors in the

stewardship of its strategic business direction and

ultimately in the enhancement of its long-term

shareholder value. Key responsibilities of the Board

include the primary responsibilities prescribed under

the Best Practices Provision AA I in Part 2 of the Code.

The Board remains resolute and upholds its

responsibility in governing, guiding and monitoring the

direction of the Company with the eventual objective of

enhancing long term sustainable value creation aligned

with shareholders’ interests whilst taking into account

the long term interests of all stakeholders, including

shareholders, employees, customers, business

associates and the communities in which the Group

conducts its business.

The Board assumes responsibility for the following

matters:

• Reviewing and adopting a corporate strategy for the

Group;

• Succession planning including appointing, training

and monitoring management;

• Developing and implementing an effective public

communications programme for the Group;

• Reviewing the adequacy and integrity of the Group’s

internal control systems and management information

systems, including system for compliance with applicable

laws, regulations, rules, directives and guidelines; and

• Developing an effective framework for identifying and

monitoring significant business risks.

Board Committees The Board of Directors delegates certain responsibilities

to the Board Committees, namely the Audit Committee,

Nomination Committee, and Remuneration Committee

in order to enhance business and operational efficiencies

as well as efficacies.

All Board Committees have written terms of reference

and charters and the Board receives all minutes and

reports of their proceedings and deliberations, where

relevant. The Chairmen of the various Committees report

to the Board on the outcome of Committee meetings.

Such reports are usually incorporated in the minutes of

the full Board meetings.


Board Composition and Balance The Board consists of a total of seven (7) Directors and

the status of their directorship is as follows:

DIRECTOR STATUS

Dato’ Larry Gan Nyap Liou Independent

@ Gan Nyap Liow Non-Executive

chairman

Danny Leong Kah Chern Executive

Her Chor Siong Executive

Rosman Bin Abdullah Non-Independent

Non-Executive

Ang Chin Joo Non-Independent

Non-Executive

Tai Keat Chai Independent

Non-Executive

Dr Ravindranath a/l P.D. Nayer Independent

Non-Executive

Cuscapi Berhad complies with the Bursa Malaysia

Listing Requirements with regard to board composition

and the required ratio of independent directors. The

profiles of the directors are set out on pages 10 to 14 of

this Annual Report.

The roles of the Chairman and the Chief Executive

Officer are segregated and clearly defined by their

individual position descriptions. The Chairman is

responsible for running the Board and ensures that all

directors receive sufficient and relevant information on

financial and non-financial matters to enable them to

participate actively in Board decisions. The Chief Executive

Officer is responsible for the day-to-day management

of the business as well as the implementation of Board

policies and decisions.

The Board will, from time to time, review its composition

and size to ensure it fairly reflects the investments of

the shareholders of the Company.

Re-election of Directors An election of directors will take place at each Annual

General Meeting whereby one-third of the directors shall

retire from office and being eligible offer themselves for

re-election. This provides an opportunity for shareholders

to renew their mandate. New directors appointed by the

Board are subject to election by the shareholders at the

next Annual General Meeting following their appointments.

Meetings During the financial year ended 31 December 2008,

the Board met on six (6) occasions, deliberating upon

and considering a variety of matters including the

Group’s financial results, major investments, strategic

decisions and the overall direction of the Group.

Agenda and matters for discussion are prepared and

circulated in advance of each meeting. All proceedings

from Board meetings are recorded and the minutes

maintained by the Company Secretary. During the

financial year under review the Board meetings were

held as follows:

2008 – January 18, February 28, March 26, May 12,

August 15 and November 12

Details of Directors attendance at meetings of the Board

during the financial year under review are as follows:

DIRECTOR ATTENDANCE

Dato’ Larry Gan Nyap Liou

@ Gan Nyap Liow 6/6

chairman

Danny Leong Kah Chern 6/6

Her Chor Siong 5/6

Rosman Bin Abdullah 5/6

Ang Chin Joo 6/6

Tai Keat Chai 6/6

Dr Ravindranath a/l P.D. Nayer 6/6

CuscapiBerhad20

Supply of Information All members of the Board are supplied with information

in a timely manner. Board reports and papers are

circulated prior to Board meetings to enable directors

to obtain further information and explanations, where

required, before the meetings.

Each director has unhindered access to information

pertaining to the Group’s business and affairs to enable

them to discharge their duties. In addition, certain

matters are reserved specifically for the Board’s decision.

These include approval of material acquisitions and

disposals of assets, major corporate plans, financial

results, and Board appointments.

The directors also have direct access to the advice of

the Company Secretary, independent professional

advisors and Internal and External Auditors, as and

when appropriate, at the Company’s expense.

Appointments to the Board NOMINATION COMMITTEE The Nomination Committee is responsible for identifying

and recommending to the Board suitable nominees for

Board appointments. The Committee also assists the

Board in determining directors’ remuneration. Ultimate

responsibility and final decisions on all matters, however,

lies with the Board.

The Nomination Committee comprised the following

members in the financial year under review and their

attendance at meetings is as follows:

MEMBERS ATTENDANCE


@ Gan Nyap Liow 1/1

chairman

Rosman bin Abdullah 1/1

Her Chor Siong 1/1

DIRECTORS’ TRAINING The Board, through the Nomination Committee, ensures

that it recruits to the Board only individuals of sufficient

calibre, knowledge, and experience to appropriately

perform the duties of director. As at the end of the

financial year under review, all directors have

successfully completed the Mandatory Accreditation

Programme. In addition, directors undergo continuous

training to equip themselves with the necessary

knowledge and to keep abreast with developments to

effectively discharge their duties as a director.

B. DIRECTORS’ REMUNERATION

Remuneration Committee The Remuneration Committee comprised the following

members in the financial year under review and their

attendance at meetings is as follows:

MEMBERS ATTENDANCE


@ Gan Nyap Liow 1/1

chairman

Tai Keat Chai 1/1


The Committee is responsible for recommending

the remuneration framework for executive directors

and senior management staff. In formulating the

recommended framework and levels of remuneration,

the Committee has considered information prepared

by management and independent consultants and survey

data on the remuneration practices of comparable

companies.

The Board, as a whole, determines the remuneration of

non-executive directors, with each director concerned

abstaining from any decision as regards his

remuneration. Taking into account the performance of

the Group and the responsibilities and performance of

the directors, directors’ fees are set in accordance with

a remuneration framework comprising responsibility

fees and attendance fees. The Company pays its

directors an annual fee which is approved annually

by shareholders. Details of the nature and amount

of each major element of the remuneration of directors

of the Company, during the financial year, are as

follows:

21AnnualReport2008

Remuneration Executive Non-Executive (RM) Directors Directors

Salaries 720,000 –

Benefits-in-Kind – –

Fees – 164,000

Allowances – 29,200

The number of directors whose remuneration fell within

the respective bands is as follows:

Range of Executive Non-Executive Remuneration (RM) Directors Directors

10,000 to 100,000 – 5

100,001 to 200,000 – –

200,001 to 300,000 – –

300,001 to 400,000 2 –

C. SHAREHOLDERS AND INVESTORS

Communication The Company recognises the importance of

communicating with its shareholders and other

stakeholders and does this through the Annual Reports,

Annual General Meetings (AGM) and the various

disclosures and announcements made to Bursa

Malaysia Securities Berhad (BMSB). At the AGM, the

shareholders are encouraged to ask questions both

about the resolutions being proposed or about the

Group’s operations in general.

In addition, the Company makes various announcements

through Bursa Malaysia Securities Berhad (BMSB), in

particular, the timely release of the quarterly results

within two (2) months from the close of a particular

quarter. Summaries of the quarterly and full year

results and copies of the full announcements are

supplied to shareholders and members of the public

upon request. Members of the public can also obtain the

full financial results and Company announcements from

the Bursa Malaysia website.

Investor Relations Along with good corporate governance practices, the

Company has embarked on appropriate corporate

policies to provide greater disclosure and transparency

through all its communications with its shareholders,

investors and the general public. The Company strives

to promote and encourage bilateral communication with

its shareholders through participation at its general

meetings and also ensures timely dissemination of any

information to investors, analysts and the general public.

The Group maintains the following website that allows

all shareholders and investors access to information

about the Group: www.cuscapi.com

D. ACCOUNTABILITY AND AUDIT

Financial Reporting The Board aims to provide a balanced and meaningful

assessment of the Group’s financial performance and

prospects at the end of the financial year, primarily

through the annual financial statements, quarterly

announcements of results to shareholders and the

Chairman’s Statement in the Annual Report. The Board

is assisted by the Audit Committee in overseeing the

Group’s financial reporting processes and the quality

of its financial reporting.

Internal Control The Board has overall responsibility for maintaining a

system of internal control and risk management that

provides a reasonable assurance of effective and efficient

operations and compliance with laws and regulations,

as well as with internal procedures and guidelines.

The Statement on Internal Control furnished on pages

24 to 26 of this Annual Report provides an overview of

the internal control framework within the Group during

the financial year under review.

Relationship with the Auditors The Company has established a transparent arrangement

with the Auditors to meet their professional requirement.

Key features underlying the relationship of the Audit

Committee with the Internal and External Auditors are

included in the Audit Committee Report on pages 27 to

31 of this Annual Report.

CuscapiBerhad22

A summary of the activities of the Audit Committee

during the financial year under review, including an

evaluation of the independent audit process is also set

out in the Audit Committee Report.

Internal Audit In the pursuit of greater independence in the internal

audit function, the Internal Audit activity continued to

be outsourced during the financial year under review

to Messrs Stanco & Ruche Consulting, a company

specialising in the provision of internal audit services.

A summary of the activities of the Audit Committee and

the Internal Auditors during the financial year under

review is set out in the Audit Committee Report.

Statement on Directors’ Responsibility The Companies Act 1965 (the Act) requires the

Directors to present financial statements of Cuscapi

Berhad (the Company) and its subsidiaries (the Group)

which give a true and fair view of the Group and the

Company at the end of the financial year. As required

by the Act and the Listing Requirements of Bursa

Malaysia Securities Berhad (BMSB), the financial

statements have been prepared in accordance with

the Companies Act 1965 and the MASB Approved

Accounting Standards in Malaysia. The financial

statements include the consolidated balance sheet,

cash flows and income statements and are made out

in accordance with relevant provisions of the Act and

applicable accounting standards.

The Directors have placed reliance on the system of

internal control within the Company and the Group to

form a basis of reasonable grounds that accounting

systems and records maintained by the Company and

the Group provide a true and fair view of the current

state of affairs of the Company and the Group, a true

and fair view of the financial year results and that it

sufficiently explains the transactions and financial

position of the Company and the Group. The Directors

also have a general responsibility in taking steps to

preserve the interests of stakeholders and to safeguard

the assets of the Company and the Group.

The Directors have the further responsibility of ensuring

that reasonably proper, accurate, timely and reliable

accounting records are kept. The annual audited financial

statements have been prepared based on relevant and

appropriate accounting policies and with usage of

reasonable and prudent judgment and estimates.

The Directors have also a general responsibility for

taking such steps as are reasonably open to them to

safeguard the assets of the Group and to prevent and

detect fraud and other irregularities.

In compliance with the several responsibilities of the

Directors, the Directors present the financial statements

of the Company and the Group for the financial year

ended 31 December 2008 as set out on pages 40 to

77 of this annual report.

E. ADDITIONAL COMPLIANCE INFORMATION

Options, Warrants or Convertible Securities The Company did not issue any options, warrants or

convertible securities during the financial year ended

31 December 2008.

Non-Audit Fees The amount of non-audit fees paid to the external

auditors by the Company for the financial year was

RM3,000 (2007: RM11,950).

Recurrent Related Party Transactions (“RRPT”) The details of RRPT for the financial year under review

are disclosed in Note 28 of the financial statements.

The above related party transactions are of revenue or

trading in nature and are entered into in the ordinary

course of business.

Revaluation of Landed Property The Group has no property that falls within the definition

of investment property.

Share Buy-Backs During the financial year under review, the Company

did not enter into any share buy-back transactions.


Sanctions and/or Penalties In the financial year ended 31 December 2008 the

company was not subject to any sanctions or penalties.

Profit Estimates, Forecasts or Projections There were no significant variances noted between the

reported results and the unaudited results announced.

The Company did not make any release on the profit

estimates, forecasts or projections for the financial year.

Profit Guarantees There were no profit guarantees given by the Company

during the financial year.

Material Contract Involving Directors and Substantial Shareholders

The Company and its subsidiary companies have not

entered into any material contracts outside the ordinary

course of business, involving directors and substantial

shareholders since the end of the previous financial

year (31 December 2007).

F. STATEMENT OF COMPLIANCE The Group has complied throughout the financial year

ended 31 December 2008 with all the Best Practices

of Corporate Governance set out in Part 2 of the Code.

CuscapiBerhad2�

Statement of internal control

1. INTRODUCTION

The Malaysian Code of Corporate Governance requires

listed companies to maintain a sound system of internal

controls to safeguard shareholders’ investments and

assets of the Group.

The Bursa Malaysia Securities Berhad (BMSB) Listing

Requirements Paragraph 15.27(b) requires Directors

of listed companies to include a statement in their

annual report on the state of their internal controls.

The Board of Directors of Cuscapi Berhad, in recognition

of this responsibility, hereby issues the following

statement which is prepared in accordance with the

abovementioned requirements and the Statement of

Internal Control: Guidance for Directors of Public Listed

Companies.

2. BOARD RESPONSIBILITY

The Board of Directors acknowledges that it is their

overall responsibility to maintain a sound system of

internal controls to cover all aspects of the Group’s

business and to safeguard the interests of its

shareholders. This responsibility requires Directors to

establish procedures, controls and policies and to

seek continuous assurance that the system is operating

satisfactorily in respect of the strategic direction,

financial, operational, compliance and risk management

policies and procedures.

The Directors are also aware that a sound internal

control system provides reasonable and not absolute

assurance that the company will not be hindered in

achieving its business objectives in the ordinary course

of business. It should also be appreciated that the

whole system of internal control is designed to manage

and control risks appropriately rather than a definitive

system designed for the total avoidance of risks or for

eliminating the risk of failure.

The Board of Directors maintains full control over

strategic, financial, organisational and compliance

issues and has put in place an organisation with formal

lines of responsibility, clear segregation of duties and

appropriate delegation of authority. The Board has

delegated to the executive management the

implementation of the system of internal controls

within an established framework throughout the Group.

The Board of Directors also acknowledges the need to

establish an ongoing process for identifying, evaluating

and managing significant risks faced by the Group and

to regularly review this process in conjunction with the

Statement on Internal Control: Guidance for Directors

of Public Listed Companies.

3. CONTROL STRUCTURE & RISK MANAGEMENT FRAMEWORK

Day-to-day operations is monitored by the Chief

Executive Officer. This control is exercised through

Executive Directors and Senior Management in respect

of commercial, financial and operational aspects of the

Group. The Chief Executive Officer, Executive Directors

and Senior Management meet regularly in respect of

such matters.

The Board of Directors fully supports the contents of

the Statement on Internal Control: Guidance for Directors

of Public Listed Companies and through the Audit

Committee continually reviews the adequacy and

effectiveness of the risk management processes in

place within the various operating units with the aim of

strengthening the risk management functions across

the Group.

Management also acknowledges its responsibility for

the management of risks, for developing, operating

and monitoring the system of internal control and for

providing assurance to the Board of Directors that it

has done so in accordance with the policies adopted

by the Board of Directors. Further assurance is provided

by the Internal Audit function which operates across

the Group with emphasis on key operating units within

the Group. Acknowledging the need for an effective

and independent Internal Audit function as an integral

part of the control structure and risk management

framework of the Group, the decision was taken to

outsource the Internal Audit activity to a third party

service provider.


The Board of Directors and Senior Management also

recognise and acknowledge that the development of

an effective internal control system is an ongoing process

and to this end maintains a continuous commitment to

strengthen the existing internal control environment of

the Group.

4. INTERNAL AUDIT FUNCTION

In a desire to maintain total independence in the

management of the internal control environment and

remain in compliance with the Bursa Malaysia Securities

Berhad (BMSB) Listing Requirements, the Group has

appointed Messrs Stanco & Ruche Consulting to

manage the Group’s Internal Audit function on an

outsourced basis.

Stanco & Ruche Consulting reports independently and

directly to the Audit Committee in respect of the

Internal Audit function. The Audit Committee together

with Stanco & Ruche Consulting agrees on the scope

and planned Internal Audit activity annually and all

audit findings arising therefrom are reported to the

Audit Committee on a quarterly basis.

Stanco & Ruche Consulting is allowed complete and

unrestricted access to all documents and records of

the Group deemed necessary in the performance of its

function and independently reviews the risk identification

procedures and control processes implemented by

Management. It also reviews the internal controls in

the key activities of the Group’s business based on the

risk profiles of the business units in the Group. In

addition, Stanco & Ruche Consulting carry out periodic

assignments to ensure the policies and procedures

established by the Board of Directors are complied

with by Management. All reports and findings arising

from these reviews are discussed primarily with the

respective process custodians prior to a formal report

being presented to the Audit Committee.

As an additional function to the Group, Stanco & Ruche

Consulting also provide business improvement

recommendations for the consideration of management

and the Board of Directors to assist in the continuous

development of a more efficient and comprehensive

internal control environment.

In the financial year under review, Stanco & Ruche

Consulting undertook three assignments covering the

following specific areas:

• Property, Plant & Equipment Management

• Debtors & Credit Control Management

• Sales & Order Processing Management

5. OTHER KEY INTERNAL CONTROL ELEMENTS

• Clearly defined terms of reference, authorities and

responsibilities of the various committees which

include the Audit Committee, Nomination Committee

and Remuneration Committee.

• Well defined organisational structure with clear lines

for the segregation of duties, accountability and the

delegation of responsibilities to senior management

and the respective division heads, including appropriate

authority limits to ensure accountability and approval

responsibility.

• Budgets are prepared annually for the Business /

Operating units and approved by the Board of Directors.

The budgets include operational, financial and capital

expenditure requirements and performance monitored

on a monthly basis and the business objectives and

plans are reviewed in the monthly management

meetings attended by division and business unit heads.

The Chief Executive Officer & Executive Director meet

regularly with Senior Management to consider the

Group’s financial performance, business initiatives

and other management and corporate issues.

• There are regular Board meetings and Board papers

are distributed in advance to all Board members who

are entitled to receive and access all necessary and

relevant information. Decisions of the Board of

Directors are only made after the required information

is made available and deliberated on by the Board of

Directors. The Board of Directors maintains complete

and effective control over the strategies and direction

of the Group.

• The Audit Committee reviews the effectiveness of the

Group’s system of internal control on behalf of the

Board of Directors. The Audit Committee comprises

of non-executive members of the Board, the majority

CuscapiBerhad2�

of whom are independent directors. The Audit

Committee is not restricted in any way in the conduct

of its duties and has unrestricted access to the

Internal and External Auditors and to all employees of

the Group. The Audit Committee is also entitled to

seek such other third party independent professional

advice deemed necessary in the performance of its

responsibilities.

• Review by the Audit Committee of internal control

issues identified by the Internal and External Auditors

and action taken by management in respect of the

findings arising therefrom. The Internal Audit function

reports directly to the Audit Committee. Findings are

communicated to management and the Audit

Committee with recommendations for improvements

and follow up to confirm all agreed recommendations

are implemented. The Internal Audit plan is structured

on a risk-based approach and is reviewed and approved

by the Audit Committee.

• Review of all proposals for material capital and

investment opportunities by the management

committee and approval for the same by the Board of

Directors prior to expenditure being committed.

• There are sufficient reports generated in respect of the

business and operating units to enable proper review

of the operational, financial and regulatory environment.

Management accounts are prepared timely, and on a

monthly basis and is reviewed by the Chief Executive

Officer, Executive Director and Senior Management.

• The professionalism and competency of staff are

enhanced through a structured training and

development programme and potential candidates/

entrants are subject to a stringent recruitment

process. A performance management system is in

place with established key performance indicators

to measure and review staff performance on an

annual basis.

• The decision of the Board of Directors to the appointment

of Messrs Stanco & Ruche Consulting, a firm specialising

in the provision of Internal Audit services, to manage the

Internal Audit function of the Group on an outsourced basis

for greater independence and accountability in the Internal

Audit function.

6. WEAKNESSES IN INTERNAL CONTROL RESULTING IN MATERIAL LOSS

The Board of Directors is of the opinion that there is no

significant weakness in the system of internal control,

contingencies or uncertainties that could result in

material loss and adversely affect the Group. The Group

continues to take necessary measures to strengthen its

internal control structure and the management of risks.


audit committee report

CHANGES TO THE MALAYSIAN CODE OF CORPORATE GOVERNANCE

As released by the Securities Commission in October 2007, the Malaysian Code of Corporate Governance (“the Code”) has been revised in line with developments in the domestic and international capital markets, to further improve corporate governance standards and strengthen investor confidence. The key amendments to the Code are aimed at strengthening Board of Directors and Audit Committees, and ensuring their roles and responsibilities are discharged effectively.

The Board has ensured that the changes are adequately reflected and updated in the Terms of Reference of the Audit Committee in the year under review and the Board endeavours to adequately reflect all other changes by the requirement deadline in 2009.

TERMS OF REFERENCE

The Audit Committee was established to act as a Committee of the Board of Directors to fulfill its fiduciary responsibilities in accordance with the Audit Committee Charter of Cuscapi Berhad.

1.0 COMPOSITION 1.1 The Committee shall fulfill the following requirements:- a. The Committee must be composed of no fewer than three (3) members. If a member of the Committee

ceases to be a member resulting in the number of members reducing to below three (3), the Board of Directors shall within three (3) months thereof appoint such number of new members required to make up the minimum required number.

b. All members of the Committee shall be non executive Directors with a majority of them being independent directors. An independent director has the meaning as ascribed to it under paragraph 1.01 of the Listing Requirements of Bursa Malaysia Securities Berhad (BMSB) for the Mesdaq Market (“Listing Requirement”), including any amendment thereto that may be made from time to time; and

c. At least one (1) member of the Committee:- i. must be a member of the Malaysian Institute of Accountants; or ii. if he is not a member of the Malaysian Institute of Accountants, he must have at least three (3) years’

working experience and:- aa. he must have passed the examination specified in Part 1 of the First Schedule of the Accountants Act,

1967; or bb. he must be a member of one of the Association of Accountants specified in Part II of the First Schedule

of the Accountants Act, 1967; or cc. Fulfills such other requirements as prescribed by Bursa Malaysia Securities Berhad (BMSB). iii. Be a holder of a degree/masters/doctorate in accounting or finance and has at least three (3) years’ post

qualification experience in accounting or finance; or iv. Have at least seven (7) years’ experience being a chief financial officer of a corporation or having the

function of being primarily responsible for the management of the financial affairs of a corporation 1.2 Members of the Committee shall elect from among them a Chairman who shall be an independent non-executive

director. 1.3 No alternate director should be appointed as a member of the Committee. 1.4 In the event of any vacancy in the Committee resulting in the non-compliance of the Listing Requirements

pertaining to composition of Audit Committee, the Board of Directors shall within three (3) months of that event fill the vacancy.

1.5 The Committee is authorised by the Board to investigate any activity of the Company and its subsidiaries. It is authorised to seek any information it requires from any employee and all employees are directed to cooperate as requested by members of the Committee.

Where the Committee is of the view that a matter reported by it to the Board has not been satisfactorily resolved resulting in a breach of the Bursa Malaysia Securities Berhad (BMSB) Listing Requirements, the Committee shall promptly report such matter to the BMSB.

CuscapiBerhad2�

2.0 MEMBERSHIP 2.1 The present members of the Committee comprise of the following Directors: Mr Tai Keat Chai – Chairman Dr Ravindranath a/l P.D. Nayer Mr Ang Chin Joo

3.0 MEETINGS 3.1 Frequency 3.1.1 Meetings shall be held at least four (4) times annually, or more frequently if circumstances so require

the Committee to do so. 3.1.2 Upon the request of the external auditor, the Chairman of the Committee shall convene a meeting of the

Committee to consider any matter the External Auditor believes should be brought to the attention of the Directors or shareholders.

3.2 Quorum 3.2.1 A quorum shall consist of a majority of independent directors. In the absence of the Chairman, the

members present shall elect a Chairman for the meeting from amongst the members present. 3.3 Secretary 3.3.1 The Company Secretary shall be the Secretary of the Committee or in his absence, another person

authorised by the Chairman of the Committee. The Secretary in conjunction with the Chairman shall draw up an agenda which shall be circulated at least one (1) week before each meeting to members of the Committee.

3.4 Attendance 3.4.1 The Committee may require the members of management, the Internal Auditors and representatives of

the External Auditors to attend any of its meetings as it determines. 3.4.2 Other Directors, employees and a representative of the External and Internal Auditors may attend any

particular meeting only at the Committee’s invitation, specific to the relevant meeting. 3.5 Reporting Procedure 3.5.1 The Minutes of each meeting shall be circulated to all members of the Board. 3.6 Meeting Procedure The Committee shall regulate its own procedure, in particular:- a) The calling of meetings; b) The notice to be given of such meetings; c) The voting and proceedings of such meetings; d) The keeping of minutes; and e) The custody, production and inspection of such minutes.

4.0 AUTHORITY The Committee shall: a) Have explicit authority to investigate any matter within its terms of reference; b) Have the resources it needs to perform its duties; c) Have full access to any information pertaining to the Company and Group which it requires in the course of

performing its duties; d) Have unrestricted access to the senior management of the Company and Group; e) Have direct communication channels with the External Auditor and person(s) carrying out the Internal Audit

function or activity; f) Be able to obtain independent professional or other advice in the performance of its duties; g) Be able to convene meetings with External Auditors, excluding the attendance of the executive members of the

committee, whenever deemed necessary; and h) Be able to invite outsiders with relevant experience to attend its meeting, whenever deemed necessary.


5.0 DUTIES AND RESPONSIBILITIES The Committee shall, amongst others, discharge the following functions: 5.1 To review a) The quarterly result and year-end financial statements, prior to the approval by the Board of Directors,

focusing particularly on:- i. the going concern assumption; ii. changes in or implementation of major accounting policy changes; iii. significant and unusual events; and iv. compliance with accounting standards and other legal requirements. b) Any related party transaction and conflict of interest situation that may arise within the Company or Group,

including any transaction, procedure or course of conduct that raises questions of management integrity. c) With the External Auditor: i. the audit plan; ii. his evaluation of the system of internal controls; iii. his audit report; iv. his management letter and management’s response; and v. the assistance given by the Company’s employees to the External Auditor. 5.2 To review the effectiveness of the internal control, management information system and management’s risk

management practices and procedures. 5.3 In respect of the appointment of External Auditors: a) to review whether there is reason (supported by grounds) to believe that the External Auditor is not suitable

for reappointment; b) to consider the nomination of a person or persons as External Auditors and the audit fee; and c) To consider any questions of resignation or dismissal of External Auditors. 5.4 In respect of the Internal Audit function: a) to review the adequacy of the scope, functions, competency and resources of the Internal Audit function and

that it has the necessary authority to carry out its work; b) to review the Internal Audit programme, processes, the results of the Internal Audit programme, processes

or investigation undertaken and whether or not appropriate action is taken on the recommendations of the Internal Audit function;

c) to review any appraisal or assessment of the performance of members of the Internal Audit function; d) to approve any appointment or termination of the Internal Audit function staff members; and e) to provide a resigning Internal Audit function staff member the opportunity to submit his reasons for resigning.

5.5 To promptly report such matters to Bursa Malaysia Securities Berhad (BMSB) if the Committee is of the view that any matter reported by it to the Board of Directors has not been satisfactorily resolved resulting in a breach of the Listing Requirements.

5.6 To carry out such other function as may be agreed to by the Committee and the Board of Directors.

CuscapiBerhad�0

audit committee report in respect of the year under review

1. MEMBERSHIP The Directors who served as members of the Audit Committee during the financial year under review and as at the

date of this report are:

Independent Non-Executive Directors Mr Tai Keat Chai – chairman


Non-Independent Non-Executive Director Mr Ang Chin Joo

2. MEETINGS The Audit Committee convened a total of four (4) meetings and recorded an attendance of its members during the

financial year as follows:

ATTENDANCE

Mr Tai Keat Chai – chairman 4/4


Mr Ang Chin Joo 4/4

The Audit Committee met on the following dates in the financial year under review:

February 28, May 12, August 15 and November 12.

The Company Secretary was present at all meetings.

Also attended by invitation were the Chief Executive Officer, Executive Director, Senior Management and Internal Auditors.

Where appropriate, the External Auditors were invited to attend and brief the Audit Committee and to provide responses

to queries raised by the Audit Committee in respect of the Company’s Financial Statements and reporting requirements.

3. SUMMARY OF ACTIVITIES OF THE AUDIT COMMITTEE DURING THE FINANCIAL YEAR UNDER REVIEW 3.1 Reviewed the unaudited quarterly financial results of the Group before recommending to the Board of Directors

for their approval and release of the Group’s financial results to Bursa Malaysia Securities Berhad (BMSB).

3.2 Reviewed the Audit Planning Memorandum of the Group for the financial period ended 31 December 2008 with

the External Auditors.

3.3 Reviewed the audited financial statements of the Group, the issues arising from the audit, their resolution and

the audit report prior to recommending to the Board of Directors for approval.

3.4 Reviewed the role and management of the Internal Audit function and the continued option to outsource the Internal

Audit function in the financial period ended 31 December 2008.

3.5 Reviewed with the Internal Auditors the internal audit findings and recommendations presented and the manner

in which the issues raised by the Internal Auditors was subsequently resolved by management.

3.6 Reviewed other pertinent issues of the Group, which has significant impact on the results of the Group and the

statutory audits.

�1AnnualReport2008

4. INTERNAL AUDIT FUNCTION It is the responsibility of the Internal Auditors to provide the Audit Committee with independent and objective reports

on the state of internal control of the various operating units within the Group and the extent of compliance of the

units with the Group’s established policies and procedures.

To this end the functions of the Internal Auditors are to:

1. Perform audit work in accordance with the pre-approved Internal Audit plan;

2. Carry out reviews on the systems of internal control of the Group;

3. Review and comment on the effectiveness and adequacy of the existing control policies and procedures; and

4. Provide recommendations, if any, for the improvement of the control policies and procedures.

The Audit Committee and Board of Directors are satisfied with the performance of the Internal Auditors and have in

the interest of continuity and greater independence in the Internal Audit function, taken the decision to continue with

the outsourcing of the internal audit function to Messrs Stanco & Ruche Consulting, a firm specialising in the provision

of outsourced Internal Audit services.

In respect of the financial year ended 31 December 2008, the Internal Auditors undertook three (3) operational

reviews and with the adoption of the recommendations made by the Internal Auditors, the reviews were found to be

satisfactory. The three (3) operational reviews undertaken in the year under review were:

• Fixed Asset Management

• Debtors & Credit Control Management

• Sales & Order Processing Management

5. STATEMENT ON EXECUTIVE SHARE OPTION SCHEME BY THE COMMITTEE The Company’s Executive Share Option Scheme has lapsed and there is at the moment no immediate plan to introduce

another scheme in its place.

DIRECTORS’ REPORT

The directors hereby submit their report together with the audited financial statements of Cuscapi Berhad (“the Company”) and its subsidiaries (“the Group”) for the financial year ended 31st December 2008.

PRINCIPAL ACTIVITIES

The principal activities of the Company during the financial year were investment holding and the provision of management services to its subsidiaries. The principal activities of the subsidiaries and a jointly controlled entity are set out in Note 7 and Note 8 to the financial statements.

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

RESULTS

Group Company

RM RM

Net profit/(loss) for the financial year 980,074 (444,753)

Attributable to:Equity holders of the Company 980,956 (444,753)Minority interests (882) –

980,074 (444,753)

DIVIDEND

An interim tax exempted dividend of 1 sen per share, amounting to RM2,224,322/- was paid on 18th April 2008 in respect of the financial year ended 31st December 2007.

The directors do not recommend the payment of any final dividend in respect of the financial year ended 31st December 2008.

RESERVES AND PROVISIONS

All material transfers to and from reserves and provisions during the financial year have been disclosed in the financial statements.

BAD AND DOUBTFUL DEBTS

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

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

Directors’ Report

32 Cuscapi Berhad

Annual Report 2008 33

CURRENT ASSETS

Before the income statements and balance sheets of the Group and of the Company were made out, the directors took reasonable steps to ensure that any current assets, other than debts, which were unlikely to be realised in the ordinary course of business, their values as shown in the accounting records of the Group and of the Company had been written down to an amount that they might be expected to be realised.

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

VALUATION METHODS

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

CONTINGENT AND OTHER LIABILITIES

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

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

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

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

CHANGE OF CIRCUMSTANCES

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

ITEMS OF AN UNUSUAL NATURE

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

No item, transaction or event of a material and unusual nature has arisen in the interval between the end of the financial 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 financial year in which this report is made.

ISSUE OF SHARES AND DEBENTURES

During the financial year, the Company increased its authorised share capital from RM25,000,000/- to RM60,000,000/- by the creation of an additional 350,000,000 ordinary shares of RM0.10 each.

The Company did not issue any new shares or debentures during the financial year.

Cuscapi Berhad34

DIRECTORS

The names of the directors of the Company in office since the date of the last report and at the date of this report are:-

Ang Chin JooRosman Bin AbdullahTai Keat ChaiRavindranath a/l P.D. NayerDato’ Gan Nyap Liou @ Gan Nyap Liow Her Chor Siong Leong Kah Chern

DIRECTORS’ INTERESTS

According to the register of directors’ shareholdings kept by the Company under Section 134 of the Companies Act, 1965, the interests of those directors who held office at the end of the financial year in shares in the Company and its related corporations during the financial year ended 31st December 2008 are as follows:-

Number of ordinary shares of RM0.10 each

At At 1.1.2008 Bought Sold 31.12.2008

The Company:-Cuscapi Berhad

Ang Chin Joo 11,400,000 – – 11,400,000Tai Keat Chai 30,000 – – 30,000Ravindranath a/l P.D. Nayer 30,000 – – 30,000Dato’ Gan Nyap Liou @ Gan Nyap Liow 6,140,000 5,649,300 (20,000) 11,769,300Her Chor Siong 26,666,667 – (3,500,000) 23,166,667Leong Kah Chern 23,343,333 – (3,500,000) 19,843,333

Indirect interest by virtue of shares held by a company in which a director has interestTransight Systems Sdn. Bhd.

Rosman Bin Abdullah 53,120,000 – (5,000,000) 48,120,000

Other than as disclosed above, none of the directors in office at the end of the financial year had any interest in shares in the Company and its related corporations during the financial year.

DIRECTORS’ BENEFITS

Since the end of the previous financial year, no director of the Company has received or become entitled to receive a benefit (other than benefits included in the aggregate amount of emoluments received or due and receivable by the directors shown in the financial statements) by reason of a contract made by the Company or a related corporation with the director or with a firm of which the director is a member, or with a company in which the director has a substantial financial interest.

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

SIGNIFICANT EVENTS

Significant events that occurred during and after the financial year end are disclosed in Note 29 to the financial statements.

Directors’ Report


AUDITORS

The auditors, Messrs Baker Tilly Monteiro Heng, have expressed their willingness to continue in office.

On behalf of the Board,

DATO’ GAN NYAP LIOU @ GAN NYAP LIOWDirector

LEONG KAH CHERNDirector

Kuala Lumpur

Date: 24 April 2009

Cuscapi Berhad36

We, DATO’ GAN NYAP LIOU @ GAN NYAP LIOW and LEONG KAH CHERN, being two of the directors of Cuscapi Berhad, do hereby state that in the opinion of the directors, the financial statements set out on pages 40 to 77 are drawn up 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 2008 and of the results and cash flows of the Group and of the Company for the financial year ended on that date in accordance with the Financial Reporting Standards and the provisions of the Companies Act, 1965 in Malaysia.

On behalf of the Board,

DATO’ GAN NYAP LIOU @ GAN NYAP LIOWDirector


Kuala Lumpur

Date: 24 April 2009

Statement by Directors


I, LEONG KAH CHERN, being the director primarily responsible for the financial management of Cuscapi Berhad, do solemnly and sincerely declare that to the best of my knowledge and belief, the financial statements set out on pages 40 to 77 are 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 24 April 2009

Before me,

Commissioner for Oaths

Statutory Declaration

Cuscapi Berhad38

We have audited the financial statements of Cuscapi Berhad, which comprise the balance sheets as at 31st December 2008, and the income statements, statements of changes in equity and cash flow statements of the Group and of the Company for the financial year then ended, and a summary of significant accounting policies and other explanatory notes, as set out on pages 40 to 77.

Directors’ Responsibility for the Financial Statements

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

Auditors’ Responsibility

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

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

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

Opinion

In our opinion, the financial statements have been properly drawn up in accordance with the Financial Reporting Standards and the provisions of the Companies Act, 1965 in Malaysia so as to give a true and fair view of the financial position of the Group and of the Company as of 31st December 2008 and of their financial performance and cash flows for the financial year then ended.

Independent Auditors’ Reportto the Members of Cuscapi Berhad(Incorporated in Malaysia)


Report on Other Legal and Regulatory Requirements

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

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

(b) We have considered the financial statements and the auditors’ reports of all the subsidiaries which we have not acted as auditors, which are indicated in Note 7 to the financial statements.

(c) We are satisfied that the financial statements of the subsidiaries that have been consolidated with the Company’s financial statements are in form and content appropriate and proper for the purposes of the preparation of the financial statements of the Group and we have received satisfactory information and explanations required by us for those purposes.

(d) The audit reports on the financial statements of the subsidiaries did not contain any qualification or any adverse comment made under Section 174(3) of the Act.

Other Matters

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

Baker Tilly Monteiro Heng M.J. MonteiroNo. AF 0117 No. 828/05/10 (J/PH)Chartered Accountants Partner

Kuala Lumpur

Date: 24 April 2009

Cuscapi Berhad40

Balance Sheetsas at 31 December 2008

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

Group Company

2008 2007 2008 2007 Note RM RM RM RM

ASSETS

Non-current assetsProperty, plant and equipment 3 3,226,192 3,250,448 710,300 496,094Investment property 4 – – – –Goodwill on consolidation 5 8,596,889 8,596,889 – –Development costs 6 3,871,661 3,641,346 – –Investment in subsidiaries 7 – – 13,007,806 13,007,806Investment in a jointly controlled entity 8 – – – –Other investments 9 70,000 70,000 70,000 70,000

15,764,742 15,558,683 13,788,106 13,573,900

Current assetsInventories 10 1,718,549 1,362,643 – –Trade receivables 11 14,963,327 15,989,141 1,268,920 2,332,105Other receivables 12 1,269,940 1,194,009 734,907 500,372Amount owing by subsidiaries 13 – – 17,306,119 11,800,717Amount owing by a jointly controlled entity 14 607,047 – 607,047 –Tax recoverable 493,822 433,218 – 4,263Short-term deposits with licensed banks 15 5,731,729 11,425,625 3,036,436 11,125,625Cash and bank balances 1,696,913 1,475,773 380,132 179,516

26,481,327 31,880,409 23,333,561 25,942,598

TOTAL ASSETS 42,246,069 47,439,092 37,121,667 39,516,498

EQUITY AND LIABILITIESEquity attributable to equity holders of the CompanyShare capital 16 22,243,227 22,243,227 22,243,227 22,243,227Reserves 17 15,966,668 16,886,151 8,148,146 10,817,221

Shareholders’ funds 38,209,895 39,129,378 30,391,373 33,060,448

Minority interests – 882 – –

Total equity 38,209,895 39,130,260 30,391,373 33,060,448

Non-current liabilityDeferred tax liabilities 18 207,610 316,437 – –

Current liabilitiesTrade payables 19 1,434,050 5,310,882 6,090 2,130,334Other payables 20 2,389,567 2,463,299 867,653 421,692Amount owing to subsidiaries 21 – – 5,851,678 3,904,024

Tax payable 4,947 218,214 4,873 –

3,828,564 7,992,395 6,730,294 6,456,050

Total liabilities 4,036,174 8,308,832 6,730,294 6,456,050

TOTAL EQUITY AND LIABILITIES 42,246,069 47,439,092 37,121,667 39,516,498


Group Company

2008 2007 2008 2007 Note RM RM RM RM Revenue 22 36,279,756 38,678,378 3,850,508 9,519,053 Cost of sales (15,206,939) (19,038,669) (337,508) (2,429,053)

Gross profit 21,072,817 19,639,709 3,513,000 7,090,000

Other revenue 109,875 2,018,943 5,011 63,080 Administrative expenses (20,201,807) (13,933,911) (4,125,438) (3,663,091)Finance revenue 23(a) 188,157 230,214 161,728 154,884 Finance expenses 23(b) – (286,058) – – Share of loss from jointly controlled entity 8 (55,000) – – –

Profit/(Loss) before taxation 24 1,114,042 7,668,897 (445,699) 3,644,873 Taxation 25 (133,968) (957,378) 946 (35,200)

Net profit/(loss) for the financial year 980,074 6,711,519 (444,753) 3,609,673

Attributable to: Equity holders of the Company 980,956 6,712,245 (444,753) 3,609,673 Minority interests (882) (726) – –

980,074 6,711,519 (444,753) 3,609,673

Earnings per share attributable to equity holders of the Company 26 – basic (sen) 0.44 3.03 Dividends per ordinary share (RM) – Interim dividend of 1 sen per share, tax exempted 27 – 0.01

Income Statementsfor the financial year ended 31 December 2008

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

Cuscapi Berhad42

Statements of Changes in Equityfor the financial year ended 31 December 2008

A

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21,8

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–

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3,6

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–

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Net

loss

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–

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(444,7

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At

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Cash Flow Statementsfor the financial year ended 31 December 2008

Group Company

2008 2007 2008 2007 RM RM RM RM Cash Flows from Operating Activities

Profit/(loss) before taxation 1,114,042 7,668,897 (445,699) 3,644,873 Adjustments for: Amortisation of development costs 1,196,321 875,239 – – Allowance for doubtful debts 61,127 97,182 98,264 412,354 Dividend revenue – – – (4,300,000) Inventories written off 4,046 88,174 – – Inventories written back (24,685) – – – Impairment loss on investment in a jointly controlled entity – – 55,000 – Impairment loss on investment in subsidiaries – – – 136,296 Allowance for doubtful debts no longer required (28,043) (4,034) – – Currency realignment 323,883 6,427 – – Depreciation 1,122,228 1,008,426 211,319 153,608 Gain on disposal of quoted investment – (62,893) – (62,893) Gain on disposal of investment property – (1,934,507) – – Loss on disposal of property, plant and equipment 278 102,891 278 – Gain on disposal of property, plant and equipment (58) – – – Interest revenue (188,157) (230,214) (161,728) (154,884) Interest expense – 286,058 – – Property, plant and equipment written off 18,390 – – – Reserve on consolidation – (17,356) – – Share of results of jointly controlled entity 55,000 – – – Share option expenses granted under ESOS – – – 18,544 Unrealised (gain)/loss on foreign exchange (49,738) 3,705 (4,900) –

3,604,634 7,887,995 (247,466) (152,102) Changes in working capital: Inventories (335,267) 256,571 – – Receivables 1,024,477 (8,380,739) 833,550 (2,694,524) Payables (3,955,803) 3,738,580 (1,683,522) 2,282,144 Inter-company balances – – 622,628 (2,407,853) Jointly controlled entity balances (30,000) – (30,000) –

308,041 3,502,407 (504,810) (2,972,335) Tax refund 24,000 – 24,000 – Net tax paid (540,666) (974,674) (13,918) –

Net Operating Cash Flow (208,625) 2,527,733 (494,728) (2,972,335)

Cuscapi Berhad44

Group Company

2008 2007 2008 2007 RM RM RM RM Cash Flows from Investing Activities

Dividends paid (2,219,083) – (2,219,083) – Investment in a jointly controlled entity (55,000) – (55,000) – Development costs paid (1,426,636) (1,813,169) – – Purchase of property, plant and equipment (1,119,394) (826,816) (360,498) (210,775) Proceeds from disposal of property, plant and equipment 2,812 6 752 – Proceeds from disposal of quoted investment – 101,921 – 101,921 Proceeds from disposal of investment property – 16,852,376 – – Interest received 188,157 230,214 161,728 154,884

Net Investing Cash Flow (4,629,144) 14,544,532 (2,472,101) 46,030 Cash Flows from Financing Activities

Net advances (to)/from subsidiaries – – (4,286,757) 18,870,872 Net advances to a jointly controlled entity (634,987) – (634,987) – Repayment to directors – (221,000) – – Repayment of term loan – (5,421,614) – (5,421,614) Proceeds from the issue of shares – 569,170 – 569,170 Fixed deposits held as security value – 200,000 – – Interest paid – (286,058) – –

Net Financing Cash Flow (634,987) (5,159,502) (4,921,744) 14,018,428

Net change in cash and cash equivalents (5,472,756) 11,912,763 (7,888,573) 11,092,123 Cash and cash equivalents at beginning of the financial year 12,901,398 988,635 11,305,141 213,018

Cash and cash equivalents at end of the financial year 7,428,642 12,901,398 3,416,568 11,305,141

Analysis of cash and cash equivalents

Short-term deposits with licensed banks 5,731,729 11,425,625 3,036,436 11,125,625 Cash and bank balances 1,696,913 1,475,773 380,132 179,516

7,428,642 12,901,398 3,416,568 11,305,141

Cash Flow Statementsfor the financial year ended 31 December 2008


Notes to the Financial Statements

1. CORPORATE INFORMATION

The principal activities of the Company during the financial year were investment holding and the provision of management services to its subsidiaries. The principal activities of the subsidiaries and a jointly controlled entity are set out in Note 7 and Note 8 to the financial statements. There have been no significant changes in the nature of these principal activities during the financial year.

The Company is a public limited liability company, incorporated and domiciled in Malaysia and listed on the MESDAQ Market of the Bursa Malaysia Securities Berhad.

The registered office and principal place of business of the Company are both located at Level 1, Block B, Peremba Square, Saujana Resort, Seksyen U2, 40150 Shah Alam, Selangor Darul Ehsan.

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

The financial statements were authorised for issue by the board of directors in accordance with a resolution of the directors on 24 April 2009.

2. SIGNIFICANT ACCOUNTING POLICIES

2.1 Basis of Preparation

The financial statements of the Group and of the Company have been prepared in accordance with the Financial Reporting Standards (“FRS”) and the provisions of the Companies Act, 1965 in Malaysia.

The financial statements of the Group and of the Company have been prepared under the historical cost basis.

The preparation of financial statements in conformity with FRS requires the use of certain critical accounting estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amounts of the revenue and expenses during the reported period. It also requires the directors’ best knowledge of current events and actions, and therefore actual results may differ.

The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in Note 2.4 to the financial statements.

Cuscapi Berhad46

2. SIGNIFICANT ACCOUNTING POLICIES (continued)

2.2 New FRS, Amendments to FRS and IC Interpretations

(a) Adoption of new FRS, Amendments to FRS and IC InterpretationsThe Group and the Company had adopted the following new FRS, amendments to FRS and IC Interpretations (“IC Int”) that are effective for the current financial year:-

FRS

FRS 107 Cash Flow StatementsFRS 111 Construction ContractsFRS 112 Income TaxesFRS 118 RevenueFRS 120 Accounting for Government Grants and Disclosure of Government AssistanceFRS 134 Interim Financial ReportingFRS 137 Provisions, Contingent Liabilities and Contingent Assets

Amendments to The Effects of Changes in Foreign Exchange Rates – Net Investment in aFRS 121 Foreign Operation

IC Interpretations

IC Int 1 Changes in Existing Decommissioning, Restoration & Similar LiabilitiesIC Int 2 Members’ Shares in Co-operative Entities & Similar InstrumentsIC Int 5 Rights to Interest arising from Decommissioning, Restoration & Environmental

Rehabilitation FundsIC Int 6 Liabilities arising from Participating in a Specific Market – Waste Electrical &

Electronic EquipmentIC Int 7 Applying the Restatement Approach under FRS 129 Financial Reporting in

Hyperinflationary EconomiesIC Int 8 Scope of FRS 2

The adoption of the above new FRS, amendments to FRS and IC Int did not result in any substantial changes in the Group’s and the Company’s accounting policies, and have any material impact on the results and the financial positions of the Group and of the Company.

(b) New FRS and IC Interpretations that are issued, not yet effective and have not been early adoptedThe Group and the Company have not adopted the following FRS and IC Int that have been issued as at the date of authorisation of these financial statements but are not yet effective for the Group and the Company:-

Effective for financial periods beginning on or after

New FRS

FRS 4 Insurance Contracts 1 January 2010 FRS 7 Financial Instruments: Disclosures 1 January 2010 FRS 8 Operating Segments 1 July 2009 FRS 139 Financial Instruments: Recognition and Measurement 1 January 2010

IC Int IC Int 9 Reassessment of Embedded Derivatives 1 January 2010

IC Int 10 Interim Financial Reporting and Impairment 1 January 2010 Other than FRS 139, the directors do not anticipate that the application of the above new FRS and IC Int, when they are effective, will have a material impact on the results and the financial position of the Group and of the Company.

The Group and the Company are exempted from disclosing the possible impact, if any, to the financial statements upon the initial application of FRS 139.




2.3 Summary of Significant Accounting Policies

(a) Subsidiaries and Basis of ConsolidationThe consolidated financial statements include the financial statements of the Company and all its subsidiaries made up to the end of the financial year. The financial statements of the parent and its subsidiaries are all drawn up at the same reporting date.

Subsidiaries are entities over which the Group has power to exercise control over the financial and operating policies so as to obtain benefits from their activities, generally accompanying a shareholding of more than one half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity.

Subsidiaries are consolidated using the purchase method of accounting. Under the purchase method of accounting, subsidiaries are fully consolidated from the date on which control is transferred to the Group and are de-consolidated from the date that control ceases. The cost of an acquisition is measured as the aggregate of the fair value of the assets acquired, equity instruments issued and liabilities and contingent liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the acquisition. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date, irrespective of the extent of any minority interest.

The excess of the cost of acquisition over the fair value of the Group’s share of the identifiable net assets acquired at the date of acquisition is reflected as goodwill. The accounting policy on goodwill is set out in Note 2.3 (e)(i). If the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is recognised immediately in the income statement.

Intragroup transactions and balances and unrealised gains on transactions between Group companies are eliminated on consolidation. Unrealised losses are also eliminated to the extent of the cost of the asset that can be recovered. The extent of the costs that cannot be recovered is treated as write downs or impairment losses as appropriate. Where necessary, adjustments are made to the financial statements of the subsidiaries to ensure consistency with the accounting policies adopted by the Group.

Minority interests represent the portion of the profit or loss and net assets of subsidiaries attributable to equity interests that are not owned, directly or indirectly through subsidiaries, by the parent. It is measured at the minorities’ share of the fair value of the subsidiaries’ identifiable assets and liabilities at the acquisition date and the minorities’ share of changes in the subsidiaries’ equity since that date.

Where losses applicable to the minority exceed the minority’s interest in the equity of a subsidiary, the excess and any further losses applicable to the minority are charged against the Group’s interest except to the extent that the minority has a binding obligation to, and is able to, make additional investment to cover the losses. If the subsidiary subsequently reports profits, the Group’s interest is allocated all such profit until the minority’s share of losses previously absorbed by the Group has been recovered. In the Company’s separate financial statements, investments in subsidiaries are stated at costs less impairment losses, if any. The policy for the recognition and measurement of impairment losses is in accordance with Note 2.3(n). On disposal of such investments, the difference between the net disposal proceeds and their carrying amount is included in the income statement.

In the Group’s consolidated financial statements, the difference between the net disposal proceeds and the Group’s share of the subsidiary’s net assets together with any balance of goodwill is reflected as a gain or loss on disposal in the consolidated income statement.

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2.3 Summary of Significant Accounting Policies (continued)

(b) Jointly controlled entitiesJointly controlled entities are corporations, partnerships or other entities in which the Group has contractually agreed to share its control with one or more parties, where strategic financial and operating decisions relating to the jointly controlled entity required unanimous consent of the parties.

In the Company’s separate financial statements, investment in a jointly controlled entity is stated at cost less impairment losses, if any. The policy for the recognition and measurement of impairment losses is in accordance with Note 2.3(n).

The Group’s interest in jointly controlled entities are accounted for in the consolidated financial statements using the equity method of accounting and are recognised at cost less impairment losses, if any. Under the equity method, the investment in jointly controlled entity is carried in the consolidated balance sheet at cost adjusted for post acquisition changes in the Group’s share of net assets of the jointly controlled entity. The Group’s share of the net profit or loss of the jointly controlled entity is recognised in the consolidated income statement.

In applying the equity method, unrealised gains and losses on transactions between the Group and the jointly controlled entity are eliminated to the extent of Group’s interest in the jointly controlled entity, and the unrealised losses are eliminated to the extent of the costs that can be recovered. Where necessary, in applying the equity method, adjustments are made to the financial statements of the jointly controlled entity to ensure consistency of accounting policies with those of the Group.

When the Group’s share of losses in a jointly controlled entity equals or exceeds its interest in the jointly controlled entity, including any other unsecured receivables, the Group’s interest is reduced to nil and recognition of further losses is discontinued except to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of the jointly controlled entity.

After the application of the equity method, the Group determines whether it is necessary to recognise any impairment loss with respect to the Group’s net investment in the jointly controlled entity. The jointly controlled entity is equity accounted for from the date the Group obtains significant influence until the date the Group ceases to have significant influence over the jointly controlled entity.

The results of the newly incorporated joint controlled entity, Cuscapi Outsourcing Sdn. Bhd., is accounted for in the consolidated financial statements based on the audited financial statements of Cuscapi Outsourcing Sdn. Bhd. made up from its date of incorporation on 30th May 2008 to 31st December 2008 and are prepared using accounting policies that conform to those used by the Group for like transactions and events in similar circumstances.

On disposal of such investment, the difference between net disposal proceed and the carrying amount of the investment in a jointly controlled entity is reflected as a gain or loss on disposal in the consolidated income statement.





(c) Property, Plant and Equipment and DepreciationProperty, plant and equipment are stated at cost less accumulated depreciation and impairment loss, if any. Cost includes expenditure that is directly attributable to the acquisition of the asset. When significant parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items of property, plant and equipment. The cost of replacing part of an item of property, plant and equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Group and its cost can be measured reliably. The costs of the day-to-day servicing of property, plant and equipment are recognised in the income statement as incurred.

Depreciation of property, plant and equipment is provided on the straight line basis to write off the cost of each asset to its residual value over their estimated useful lives, at the following annual rates:-

Plant and equipment 10% – 20%Furniture and fittings 15% – 20%Motor vehicles 20%Computers 20% – 40%Renovation 2% – 10%

The residual values, useful lives and depreciation method are reviewed, and adjusted if appropriate, at each balance sheet date. The effects of any revisions of the residual values, useful lives and depreciation method are included in the income statement for the financial year in which the changes arise.

Fully depreciated assets are retained in the accounts until the assets are no longer in use.

At each balance sheet date, the Group assesses whether there is any indication of impairment. If such indications exist, an analysis is performed to assess whether the carrying amount of the asset is fully recoverable. A write down is made if the carrying amount exceeds the recoverable amount. The policy for the recognition and measurement of impairment losses is in accordance with Note 2.3(n).

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

Cuscapi Berhad50



(d) Investment PropertyInvestment property is property which is held either to earn rental income or for capital appreciation or for both and is not substantially occupied by the Group. Such property is measured initially at cost, including transaction costs. Subsequent to initial recognition, investment property is stated at cost less accumulated depreciation and impairment losses. At each balance sheet date, the Group assesses whether there is any indication of impairment. If such indications exist, an analysis is performed to assess whether the carrying amount of the asset is fully recoverable. A write down is made if the carrying amount exceeds the recoverable amount. The policy for the recognition and measurement of impairment losses is in accordance with Note 2.3(n).

Depreciation of investment property is provided on the straight line basis to write off the cost of investment property over their estimated useful lives. The annual rate used for this purpose is 2%.

Investment property is derecognised when either it has been disposed off or when the investment property is permanently withdrawn from use and no future economic benefit is expected from its disposal. Any gain or loss on the retirement or disposal of investment property is recognised in the income statement in the period in which it arises.

(e) Intangible Assets (i) Goodwill on Consolidation

Goodwill represents the excess of the cost of business combination over the fair value of the Group’s share of the identifiable net assets at the date of acquisition.

Following the initial recognition, goodwill is measured at cost less accumulated impairment losses. Goodwill is reviewed for impairment annually or more frequently if events or changes in circumstances indicate that the carrying value may be impaired. Impairment losses on goodwill are not reversed. Gain and loss on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.

Goodwill is allocated to cash-generating units for the purpose of impairment testing. The allocation is made to those cash-generating units or groups of cash-generating units that are expected to benefit from the synergies of the business combination in which the goodwill arose. The policy for the recognition and measurement of impairment losses is in accordance with Note 2.3(n).

(ii) Research and Development Costs

All research costs are recognised in the income statement as incurred.

Expenditure incurred on projects to develop, design and test new products is capitalised as intangible assets and deferred only when the Group can demonstrate the 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 benefits, the availability of resources to complete the project and the ability to measure reliably the expenditure during the development. Other development expenditure which do not meet these criteria are expensed when incurred.

Development costs, considered to have finite useful lives, are stated at cost less any impairment losses and are amortised using the straight line basis over the commercial lives of the underlying products not exceeding five years. Impairment is assessed whenever there is an indication of impairment. The recoverable amount of development costs not yet available for use are measured annually, irrespective of whether there is any indication that it may be impaired. The policy for the recognition and measurement of impairment losses is in accordance with Note 2.3(n). The amortisation period and method are also reviewed at least at each balance sheet date.





(f) InvestmentsInvestments in shares, bonds and debentures held as long term investment are stated at cost less impairment losses. Where an indication of impairment exists, the carrying amount of the investment is reviewed, and if found to be in excess of recoverable amount, is written down immediately to its recoverable amount. See accounting policy Note 2.3(n) on impairment of assets.

On disposal of an investment, the difference between net disposal proceeds and its carrying amount is charged or credited to the income statement.

(g) InventoriesInventories are stated at the lower of cost and net realisable value.

Cost is determined using the weighted average method. The cost of inventories comprises cost of purchase and incidental costs in bringing the inventories to their present location and condition.

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

(h) ReceivablesReceivables are carried at anticipated realisable values. Bad debts are written off when identified. An estimate is made for doubtful debts based on a review of all outstanding amounts as at the balance sheet date.

(i) PayablesPayables are stated at cost which is the fair value of the consideration to be paid in the future, whether or not billed to the Group.

(j) TaxationThe tax expense in the income statement represents the aggregate amount of current tax and deferred tax. Current tax is the expected amount of income taxes payable in respect of the taxable profit for the year and is measured using the tax rates that have been enacted 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 bases of assets and liabilities and their carrying amounts in the financial 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 profit will be available against which the deductible temporary differences, unused tax losses and unused tax credits can be utilised. Deferred tax is not recognised if the temporary difference arises from goodwill or negative goodwill or from the initial recognition of an asset or liability in a transaction which is not a business combination and at time of the transaction, affect neither accounting profit nor taxable profit.

Deferred tax is measured at the tax rates that are expected to apply in the period when the asset is realised or the liability is settled, based on 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 in 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 the amount of any excess of the acquirer’s interest in the net fair value of the acquiree’s identifiable assets, liabilities and contingent liabilities over the cost of the combination.

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(k) Foreign Currencies (i) Functional and presentation currency

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

(ii) Transactions and balancesForeign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement.

Non-monetary items are measured in terms of historical cost in a foreign currency or translated using the exchange rates as at the date of the initial transaction. Non-monetary items measured at fair value in foreign currency are translated using the exchange rates at the date when the fair value was determined.

(iii) Foreign OperationsThe results and financial position of all the group entities (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows:-

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

• income and expenses for each income statement are translated at average exchange rates (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the rate on the dates);

• all resulting exchange differences are recognised as a separate component of equity.

On consolidation, exchange differences arising from the translation of the net investment in foreign operations are taken to shareholders’ equity. When a foreign operation is partially disposed of or sold, exchange differences that were recorded in equity are recognised in the income statement as part of the gain or loss on sale.

Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate.





(l) Revenue Recognition Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. The following specific recognition criteria must also be met before revenue is recognised:

(i) Sales of Goods and Services RenderedRevenue is measured at the fair value of the consideration received or receivable for the sale of goods and services in the ordinary course of the Group’s activities and is recognised in the income statement when the significant risks and rewards of ownership of the goods have been transferred to the buyer and when the services are rendered.

(ii) Rental RevenueRental revenue comprises Point of Sale (“POS”) equipment and is recognised on accrual basis.

(iii) Interest RevenueInterest revenue is recognised on a time proportion basis, taking into account the principal outstanding and the effective rate over the period to maturity, when it is determined that such revenue will accrue to the Group.

(iv) Dividend RevenueDividend revenue is recognised when the right to receive payment is established.

(m) Financial Instruments Financial instruments are recognised in the balance sheet when the Group has become a party to the contractual provisions of the instruments. The particular recognition methods adopted are disclosed in the individual accounting policy statements associated with each item.

Financial instruments are classified as liabilities or equity in accordance with the substance of the contractual arrangement. Interest, dividends, gains and losses relating to a financial instrument classified as liability are reported as expenses or income. Distributions to holders of financial instruments classified as equity are charged directly to equity. Financial instruments are offset when the Group has a legally enforceable right to set off the recognised amounts and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.

Cuscapi Berhad54



(n) Impairment of Assets The carrying amount of assets, other than inventories, deferred tax assets and financial assets (except investment in subsidiaries and a jointly controlled entity), are reviewed at each balance sheet date to determine whether there is any indication of impairment. If any such indication exists, the asset’s recoverable amount is estimated to determine the amount of impairment loss.

For goodwill, intangible assets that have an indefinite useful life and intangible assets that are not available for use, the recoverable amount is estimated at each balance sheet date or more frequently when indicators of impairment are identified.

For the purpose of impairment testing of these assets, the recoverable amount is determined on an individual asset basis unless the asset does not generate cash flows that are largely independent of those from other assets. If this is the case, the recoverable amount is determined for the cash-generating unit (“CGU”) to which the asset belongs to. Goodwill acquired on a business combination is, from the acquisition date, allocated to each of the Group’s CGUs, or groups of CGUs that are expected to benefit from the synergies of the combination, irrespective of whether other assets or liabilities of the Group are assigned to those units or groups of units.

An asset’s recoverable amount is the higher of an asset’s of CGU’s fair value less cost to sell and its value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risk specific to the asset. Where the carrying amount of an asset exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. Impairment losses recognised in respect of a CGU or groups or CGUs are allocated first to reduce the carrying amount of any goodwill allocated to those units or groups of units and then, to reduce the carrying amount of the other assets in the unit or groups of units on a pro-rata basis.

An impairment loss is recognised in the income statement in the period in which it arises.

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

(o) Borrowing CostsBorrowing costs are charged to the income statement as an expense in the period in which they are incurred.





(p) Employee Benefits (i) Short-term employee benefits

Wages, salaries, social security contribution, bonuses and non-monetary benefits are accrued in the period in which the associated services are rendered by the employees. 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 sick leave, maternity and paternity leave are recognised when absences occur.

(ii) Post-employment benefitsThe Group contributes to the Employees’ Provident Fund, the national defined contribution plan. The contributions are charged to the income statement in the period to which they are related. Once the contributions have been paid, the Group has no further payment obligations.

(q) Segment Reporting Segment reporting is presented for enhanced assessment of the Group’s risks and returns. A business segment is a group of assets and operations engaged in providing products or services that are subject to risks and returns that are different from those of other business segments. A geographical segment is engaged in providing products or services within a particular economic environment that are subject to risks and returns that are different from those components.

Segment revenue, expense, assets and liabilities are those amounts resulting from the operating activities of a segment that are directly attributable to the segment and the relevant portion that can be allocated on a reasonable basis to the segment. Segment revenue, expense, assets and segment liabilities are determined before intragroup transactions are eliminated as part of the consolidation process, except to the extent that such intragroup balances and transactions are between group enterprises within a single segment. Segment revenue and segment expenses exclude dividends from within the Group. Segment assets and liabilities do not include income tax assets and liabilities. All income, expenses, assets and liabilities are directly allocated to each reported segment. Interest income and other income and expenses which cannot be allocated to respective segment on a reasonable basis are disclosed as either unallocated income or unallocated expenses, while the related assets and liabilities are disclosed as unallocated assets and unallocated liabilities.

The accounting policies used in deriving the individual segment revenue, segment results, segment assets and segment liabilities are the same as those disclosed in the summary of significant accounting policies.

Transfers between segments are priced at the estimated fair value of the products or services as negotiated between the operating units.

(r) Cash and Cash EquivalentsFor the purpose of the cash flows statement, cash and cash equivalents comprise cash in hand, bank balances, demand deposits, other short-term and highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. Cash and cash equivalents are stated net of bank overdrafts which are repayable on demand.

Cuscapi Berhad56


2.4 Critical Accounting Estimates and Judgments

The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, rarely equal the related actual results. To enhance the information content of the estimates, certain key variables that are anticipated to have material impact to the Group’s results and financial position are tested for sensitivity to changes in the underlying parameters. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are as stated below:-

(a) Key Sources of Estimation (i) Impairment of Goodwill

The Group determines whether goodwill is impaired at least on an annual basis. This requires an estimation of the value-in-use of the cash-generating units (“CGU”) to which goodwill are allocated. Estimating a value-in-use amount requires management to make an estimate of the expected future cash flows from the CGU and also to choose a suitable discount rate in order to calculate the present value of those cash flows. The carrying amount of goodwill as at 31st December 2008 was RM8,596,889/- (2007: RM8,596,889/-).

(ii) Depreciation of Property, Plant and Equipment

Property, plant and equipment are depreciated on the straight line basis over their estimated useful lives. Management estimates the useful lives of the property, plant and equipment to be 2.5 to 50 years. The carrying amount of property, plant and equipment of the Group as at 31st December 2008 was RM3,226,192/- (2007: RM3,250,448/-). Changes in expected level of usage and technological developments could impact the economic useful lives and residual values of the property, plant and equipment, therefore the future depreciation charges could be revised.

(iii) Income taxesThe Group is subject to income taxes in numerous jurisdictions. Significant judgement is required in determining the capital allowances and deductibility of certain expenses during the estimation of the provision for income taxes. There are many transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the income tax and deferred income tax provisions in the period in which such determination is made.

(iv) Deferred Tax Assets Deferred tax assets are recognised for all unused tax losses and unabsorbed capital allowances to the extent that it is probable that taxable profit will be available against which the tax losses and capital allowances can be utilised. Significant management judgment is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and level of future taxable profits together with future tax planning strategies. The total carrying amount of deferred tax assets not recognised of the Group and of the Company are disclosed in Note 18 to the financial statements.




2.4 Critical Accounting Estimates and Judgments (continued)

(a) Key Sources of Estimation (continued) (v) Impairment of Development Costs

The Group determines whether development costs, not yet available for use, are impaired, at least on an annual basis. Development costs have finite useful lives and are assessed for impairment whenever there is an indication of impairment.

This requires an estimation of the value-in-use of the assets. Estimating a value-in-use amount requires management to make an estimate of the expected future cash flows from the assets and also to choose a suitable discount rate in order to calculate the present value of the cash flows. The carrying amount of development costs as at 31st December 2008 was RM3,871,661/- (2007: RM3,641,346/-).

(vi) Net realisable values of inventoriesReviews are made periodically by management on damaged, obsolete and slow-moving inventories. These reviews require judgements and estimates. Possible changes in these estimates could result in revisions to the valuations of inventories.

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

(viii) Impairment of investment in subsidiariesThe Group carried out the impairment test based on a variety of estimation including the value-in-use of the cash-generating unit. Estimating the value-in-use requires the Group to make an estimate of the expected future cash flows from the cash-generating unit and also to choose a suitable discount rate in order to calculate the present value of those cash flows. Changes in assumptions could significantly affect the results of the Group’s tests for impairment of investment in subsidiaries.

(b) Critical judgements made in applying accounting policiesThere are no critical judgements made by management in the process of applying the Group’s accounting policies that have significant effect on the amounts recognised in the financial statements.

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3. PROPERTY, PLANT AND EQUIPMENT

Plant Furniture and and Motor Equipment Fittings Vehicles Computers Renovation Total Group 2008 RM RM RM RM RM RM

Cost At 1st January 2008 715,776 424,414 59,744 4,418,643 855,305 6,473,882 Additions 118,655 55,666 165,000 667,355 112,718 1,119,394 Disposals/Write offs (20,138) (47,025) – (118,761) – (185,924)

At 31st December 2008 814,293 433,055 224,744 4,967,237 968,023 7,407,352

Accumulated Depreciation At 1st January 2008 197,685 317,746 59,742 2,604,639 43,622 3,223,434 Depreciation for the financial year 60,246 71,853 24,750 899,433 65,946 1,122,228 Disposals/Write offs (11,255) (47,018) – (106,229) – (164,502)

At 31st December 2008 246,676 342,581 84,492 3,397,843 109,568 4,181,160

Net Book Value at 31st December 2008 567,617 90,474 140,252 1,569,394 858,455 3,226,192

Group 2007

Cost At 1st January 2007 639,999 641,351 59,744 4,073,844 209,463 5,624,401 Additions 80,687 40,100 – 591,750 114,279 826,816 Reclassification – – – – 531,563 531,563 Disposals/write offs (4,910) (257,037) – (246,951) – (508,898)

At 31st December 2007 715,776 424,414 59,744 4,418,643 855,305 6,473,882

Accumulated Depreciation At 1st January 2007 158,550 326,036 53,769 1,899,875 26,549 2,464,779 Depreciation for the financial year 39,544 90,479 5,973 848,818 17,073 1,001,887 Disposals/write offs (409) (98,769) – (144,054) – (243,232)

At 31st December 2007 197,685 317,746 59,742 2,604,639 43,622 3,223,434

Net Book Value at 31st December 2007 518,091 106,668 2 1,814,004 811,683 3,250,448



3. PROPERTY, PLANT AND EQUIPMENT (continued)

Plant Furniture and and Motor Equipment Fittings Vehicles Computers Renovation Total Company 2008 RM RM RM RM RM RM Cost At 1st January 2008 260,689 252,923 59,744 1,069,397 75,850 1,718,603 Additions 13,187 – 165,000 173,811 8,500 360,498 Transfers from subsidiaries 39 67,807 – 19,295 – 87,141 Transfers to subsidiaries (11,503) – – (72,874) – (84,377)Disposals/Write offs (480) – – (4,386) – (4,866)

At 31st December 2008 261,932 320,730 224,744 1,185,243 84,350 2,076,999

Accumulated Depreciation At 1st January 2008 142,048 135,765 59,742 881,576 3,378 1,222,509 Depreciation for the financial year 21,643 52,572 24,750 110,809 1,545 211,319 Transfers to subsidiaries (5,602) – – (57,691) – (63,293)Disposals/Write offs (152) – – (3,684) – (3,836)

At 31st December 2008 157,937 188,337 84,492 931,010 4,923 1,366,699

Net Book Value at 31st December 2008 103,995 132,393 140,252 254,233 79,427 710,300

Company 2007

Cost At 1st January 2007 235,796 223,636 59,744 926,147 62,505 1,507,828 Additions 24,893 29,287 – 143,250 13,345 210,775

At 31st December 2007 260,689 252,923 59,744 1,069,397 75,850 1,718,603

Accumulated Depreciation At 1st January 2007 120,592 107,031 53,769 785,426 2,083 1,068,901 Depreciation for the financial year 21,456 28,734 5,973 96,150 1,295 153,608

At 31st December 2007 142,048 135,765 59,742 881,576 3,378 1,222,509

Net Book Value at 31st December 2007 118,641 117,158 2 187,821 72,472 496,094

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4. INVESTMENT PROPERTY

Group

2008 2007 RM RM

Freehold office buildingCostAt 1st January – 15,926,251 Reclassified to property, plant and equipment – (560,508)Additions – – Disposal – (15,365,743)

At 31st December – –

Accumulated DepreciationAt 1st January – 633,049 Depreciation for the financial year – 6,539 Reclassified to property, plant and equipment – (28,945)Disposal – (610,643)

At 31st December – –

Net book valueAt 31st December – –

5. GOODWILL ON CONSOLIDATION

Group

2008 2007 RM RM

At 1st January/31st December 8,596,889 8,596,889



6. DEVELOPMENT COSTS

Group

2008 2007 RM RM

Cost At 1st January 5,829,498 4,016,329 Additions – internally developed 1,426,636 1,813,169

At 31st December 7,256,134 5,829,498

AmortisationAt 1st January 2,188,152 1,312,913 Amortisation for the financial year 1,196,321 875,239

At 31st December 3,384,473 2,188,152 Net book value At 31st December 3,871,661 3,641,346

GroupDevelopment costs principally comprise internally generated expenditure on development on major projects where it is reasonably anticipated that the costs will be recovered through future commercial activities. The remaining amortisation period at year end range from 2 to 5 years (2007: 3 to 5 years).

Development costs during the financial year include staff costs of RM1,426,636/- (2007: RM1,813,169/-).

Amortisation charge for the financial year of RM1,196,321/- (2007: RM875,239/-) has been expensed in the income statement under cost of sales.

7. INVESTMENT IN SUBSIDIARIES

Company

2008 2007 RM RM

Unquoted shares, at cost 13,144,102 13,144,102 Less: Impairment loss for Transight (S) Pte. Ltd. (136,296) (136,296)

13,007,806 13,007,806

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7. INVESTMENT IN SUBSIDIARIES (continued)

Details of the subsidiaries are as follows:- Country of Group’s EffectiveName of Company Incorporation Equity Interest Principal Activities

2008 2007 % %

Direct subsidiaries

Cuscapi Innovation Lab Sdn. Bhd. Malaysia 100 100 Software development

Cuscapi Consulting Services Sdn. Bhd. Malaysia 100 100 Inactive

Cuscapi Network Solutions Sdn. Bhd. Malaysia 100 100 Inactive

Cuscapi International Sdn. Bhd. Malaysia 100 100 Provision of POS and business management solutions and system integration services

Cuscapi Malaysia Sdn. Bhd. Malaysia 100 100 Provision of POS and business management solutions, remedial services for POS hardware and related software implementation and support services, network infrastructure and security solutions and services

Cuscapi Hospitality Solutions Sdn. Bhd. Malaysia 100 100 Inactive

Transight (S) Pte. Ltd.+ Singapore 95 95 Inactive

BRG Asia Sdn. Bhd. Malaysia 51 51 Dormant

Cuscapi Solutions Sdn. Bhd. Malaysia 100 100 Software development

Cuscapi International Pte. Ltd.+ Singapore 100 100 Investment holding

Indirect subsidiaries

Cuscapi Beijing Co. Ltd.+* China 100 – Provision of POS and business management solutions and system integration services

Cuscapi Suzhou Co. Ltd.#* China 100 – Inactive

2008The Company had on 13th March 2008, incorporated a wholly-owned subsidiary, Cuscapi Beijing Co. Ltd. in China with a paid up share capital of USD168,000 consisting of 168,000 ordinary shares of USD1 each.

The Company had on 31st October 2008, incorporated a wholly-owned subsidiary, Cuscapi Suzhou Co. Ltd. in China.

2007The Company had on 18th October 2007, incorporated a wholly-owned subsidiary, Cuscapi International Pte. Ltd. in Singapore with a paid up share capital of SGD2 consisting of 2 ordinary shares of SGD1 each.

+ These companies are not audited by Baker Tilly Monteiro Heng.* Held indirectly through Cuscapi International Pte. Ltd.# Management financial statements were used in the preparation of consolidated financial statements as the first set

of financial statements is prepared from 31st October 2008 to 31st December 2009.



8. INVESTMENT IN A JOINTLY CONTROLLED ENTITY

Group Company

2008 2007 2008 2007 RM RM RM RM

Unquoted shares, at cost 55,000 – 55,000 –Less: Impairment loss – – (55,000) –Less: Share of loss (55,000) – – –

– – – –

The Group’s aggregate share of assets, liabilities and income and expenses of the jointly controlled entity is as follows:-

2008 2007 RM RM

Assets and liabilitiesCurrent assets 521,616 –Non-current assets 11,374 –

Total assets 532,990 –

Non-current liabilities 532,990 –

ResultsRevenue – –Expenses including finance costs and tax expense 167,940 –

The details of the jointly controlled entity which was incorporated in Malaysia are as follows:-

Country of Group’s EffectiveName of Company Incorporation Equity Interest Principal Activities

2008 2007 % %

Direct subsidiaries

Cuscapi Outsourcing Sdn. Bhd. Malaysia 55 – Provision of contact centre outsourcing services

During the financial year, the Company entered into a joint venture agreement with Protéas Innovation Sdn. Bhd. (“Protéas”) to incorporate a jointly controlled entity, Cuscapi Outsourcing Sdn. Bhd. (“Cuscapi Outsourcing”) in Malaysia to provide contact centre outsourcing services with a total paid up share capital of RM100,000/- consisting of 100,000 ordinary shares of RM1/- each as at 31st December 2008. The Company subscribed for 55% of the shares in Cuscapi Outsourcing whilst Protéas subscribed for the remaining 45% of the shares in Cuscapi Outsourcing. In the initial start up, certain strategic financial and operating decisions of Cuscapi Outsourcing require the unanimous consent of both the Company and Protéas, and accordingly this investment has been accounted for as an investment in a jointly controlled entity instead of investment in a subsidiary.

Cuscapi Berhad64

9. OTHER INVESTMENTS

Group and Company

2008 2007 RM RM

Transferable club membership, at cost 80,000 80,000 Less: Accumulated impairment loss (10,000) (10,000)

70,000 70,000

10. INVENTORIES

Group

2008 2007 RM RM

At costPOS related equipment, components and parts 1,707,279 1,261,693 Others 11,270 100,950

1,718,549 1,362,643

11. TRADE RECEIVABLES

Group Company

2008 2007 2008 2007 RM RM RM RM

Trade receivables 15,169,825 16,211,012 1,316,534 2,379,719 Less: Allowance for doubtful debts (206,498) (221,871) (47,614) (47,614)

14,963,327 15,989,141 1,268,920 2,332,105 Analysis of trade receivables by currency

Ringgit Malaysia 11,096,292 14,711,526 1,268,920 2,328,744 US Dollar 3,536,994 1,276,512 – 3,361 Singapore Dollar 1,131 1,103 – – Renminbi 328,910 – – –

14,963,327 15,989,141 1,268,920 2,332,105 The Group’s and the Company’s normal trade credit terms range from 30 days to 60 days. Other credit terms are

assessed and approved on a case-by-case basis.



12. OTHER RECEIVABLES

Group Company

2008 2007 2008 2007 RM RM RM RM

Other receivables 539,242 528,804 221,619 2,762 Less: Allowance for doubtful debts (2,492) (11,975) – –

536,750 516,829 221,619 2,762 Deposits 606,757 586,920 466,276 451,560 Prepayments 126,433 90,260 47,012 46,050

1,269,940 1,194,009 734,907 500,372

13. AMOUNT OWING BY SUBSIDIARIES

Company

2008 2007 RM RM

Trade 7,699,148 3,030,573Non-trade 10,059,649 9,182,498

17,758,797 12,213,071Less: Allowance for doubtful debts (452,678) (412,354)

17,306,119 11,800,717

The amount owing by subsidiaries is unsecured, interest-free and has no fixed terms of repayment.

14. AMOUNT OWING BY A JOINTLY CONTROLLED ENTITY

Group and Company

2008 2007 RM RM

Trade 30,000 –Non-trade 634,987 –

664,987 –Less: Allowance for doubtful debts (57,940) –

607,047 –

The amount owing by a jointly controlled entity is unsecured, interest-free and repayable on demand.

Cuscapi Berhad66

15. SHORT-TERM DEPOSITS WITH LICENSED BANKS

GroupThe short-term deposits bear interest at rates ranging from 2.10% to 3.70% (2007: rates ranging from 3.30% to 3.45%) per annum.

CompanyThe short-term deposits bear interest at rates ranging from 2.30% to 3.70% (2007: 3.45%) per annum.

16. SHARE CAPITAL

Group and Company Group and Company

2008 2007 2008 2007 Number of shares RM RM

Ordinary shares of RM0.10 each Authorised: At 1st January 250,000,000 250,000,000 25,000,000 25,000,000 Created during the financial year 350,000,000 – 35,000,000 –

At 31st December 600,000,000 250,000,000 60,000,000 25,000,000 Issued and fully paid: At 1st January 222,432,267 218,715,067 22,243,227 21,871,507 Issued during the financial year – Exercise of ESOS – 3,717,200 – 371,720

At 31st December 222,432,267 222,432,267 22,243,227 22,243,227

During the financial year, the Company increased its authorised share capital from RM25,000,000/- to RM60,000,000/- by creation of an additional 350,000,000 ordinary shares of RM0.10 each.

17. RESERVES

Group Company

2008 2007 2008 2007 RM RM RM RM

Non-distributableShare premium 7,275,823 7,275,823 7,275,823 7,275,823Foreign Currency translation reserve 327,556 3,673 – –

DistributableRetained earnings 8,363,289 9,606,655 872,323 3,541,398

15,966,668 16,886,151 8,148,146 10,817,221

Subject to agreement with the Inland Revenue Board, the Company has sufficient tax credits under Section 108 of the Income Tax Act, 1967 and tax exempt account under Section 12 of the Income Tax (Amendment) Act, 1999 to frank the payment of dividends out of its entire retained profits as at 31st December 2008.



18. DEFERRED TAX LIABILITIES

Group

2008 2007 RM RM

At 1st January (316,437) (159,705)Charged to income statement (Note 25): – property, plant and equipment 108,827 (278,235)– tax losses – 121,503

108,827 (156,732)

At 31st December (207,610) (316,437) Deferred tax assets have not been recognised for the following items:-

Group Company

2008 2007 2008 2007 RM RM RM RM

Unutilised tax losses 366,510 64,750 64,750 64,750 Taxable temporary difference 496,500 299,873 491,299 299,873

863,010 364,623 556,049 364,623 Potential deferred tax assets not recognised at 25% (2007: 26%) 215,752 94,802 139,012 94,802 The availability of the unutilised tax losses for offsetting against future taxable profits of the Company are subject to no substantial changes in shareholdings of the Company under Section 44 (5A) and (5B) of Income Tax Act, 1967.

19. TRADE PAYABLES

Group Company

2008 2007 2008 2007 RM RM RM RM

Analysis of trade payables by currency Ringgit Malaysia 948,813 4,813,522 6,090 2,130,334 US Dollar 417,056 497,360 – – Renminbi 68,181 – – –

1,434,050 5,310,882 6,090 2,130,334 The normal trade credit terms granted to the Group and the Company range from 30 days to 60 days.

Cuscapi Berhad68

20. OTHER PAYABLES

Group Company

2008 2007 2008 2007 RM RM RM RM

Other payables 175,408 307,969 61,424 171,568 Accruals 1,232,960 1,408,577 800,229 244,124 Deposits 596,356 342,907 6,000 6,000 Advance receipts from customer for maintenance contract 384,843 403,846 – –

2,389,567 2,463,299 867,653 421,692

21. AMOUNT OWING TO SUBSIDIARIES

Company

2008 2007 RM RM

Trade 93,599 (5,197,604)Non-trade 5,758,079 9,101,628

5,851,678 3,904,024

The amount owing to subsidiaries is unsecured, interest-free and has no fixed terms of repayment.

22. REVENUE

Group Company

2008 2007 2008 2007 RM RM RM RM

Sale of goods 23,595,096 24,023,567 263,600 1,918,297 Rental revenue – 2,038,581 – – Services 12,624,660 12,616,230 73,908 510,756 Management fees 60,000 – 3,513,000 2,790,000 Dividend revenue – – – 4,300,000

36,279,756 38,678,378 3,850,508 9,519,053



23. FINANCE REVENUE/(EXPENSES)

Group Company

2008 2007 2008 2007 RM RM RM RM

(a) Finance revenue Interest revenue – licensed banks 188,157 230,214 161,728 154,884 (b) Finance expenses Interest expense – term loan – (286,058) – –

24. PROFIT/(LOSS) BEFORE TAXATION

Group Company

2008 2007 2008 2007 RM RM RM RM

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

Allowance for doubtful debts 61,127 97,182 98,264 412,354Amortisation of development cost 1,196,321 875,239 – –Audit fee– statutory 61,884 39,095 16,500 8,000– non-statutory 47,800 11,200 47,800 11,200Depreciation– property, plant and equipment 1,122,228 1,001,887 211,319 153,608– investment property – 6,539 – –Directors’ remuneration– fees 164,000 153,809 164,000 153,809– salaries and other emoluments 849,820 648,960 849,820 648,960– Employees’ Provident Fund 98,448 48,833 98,448 48,833Inventories written off 4,046 88,174 – –Impairment loss on investment in a jointly controlled entity – – 55,000 –Impairment loss on investment in subsidiaries – – – 136,296Loss on disposal of property, plant and equipment 278 102,891 278 –Loss on foreign exchange– realised – 2,999 – 2,999– unrealised – 3,705 – –Property, plant and equipment written off 18,390 – – – Rental of premises 1,167,436 460,770 202,608 230,376 Share option expense granted under ESOS – – – 18,544 Staff costs – salaries, allowances and bonuses 8,833,858 5,519,005 1,005,301 784,800 – Employees’ Provident Fund 1,115,930 854,450 121,022 95,414 – other staff-related costs 817,808 164,952 133,738 71,288

Cuscapi Berhad70

24. PROFIT/(LOSS) BEFORE TAXATION (continued)

Group Company

2008 2007 2008 2007 RM RM RM RM

And crediting:-

Allowance for doubtful debts no longer required 28,043 4,034 – – Gain on disposal of investment property – 1,934,507 – – Gain on disposal of property, plant and equipment 58 – – – Inventories written back 24,685 – – – Unrealised gain on foreign exchange 49,738 – 4,900 – Gain on disposal of quoted investments – 62,893 – 62,893 Reserve on consolidation – 17,356 – – Rental revenue 31,800 – – –

25. TAXATION

Group Company

2008 2007 2008 2007 RM RM RM RM

Income tax expense – current year (312,764) (719,004) (40,873) (41,819)– prior years 69,969 (81,642) 41,819 6,619 Deferred taxation (Note 18) – current year 22,141 (331,809) – – – prior years 86,686 175,077 – –

108,827 (156,732) – –

(133,968) (957,378) 946 (35,200) The income tax is calculated at the statutory tax rate of 26% (2007 : 27%) of the estimated taxable profit for the fiscal year. The statutory tax rate will be reduced to 25% from the current year’s rate of 26% for the year of assessment 2009. The computation of deferred tax as at 31st December 2008 has been reflected with these changes accordingly.



25. TAXATION (continued)

A reconciliation of income tax expense applicable to profit/(loss) before taxation at the statutory income tax rate to income tax expense at the effective income tax rate of the Group and of the Company are as follows:-

Group Company

2008 2007 2008 2007 RM RM RM RM

Profit/(loss) before taxation 1,114,042 7,668,897 (445,699) 3,644,873 Tax at applicable tax rate of 26% (2007: 27%) (289,651) (2,070,602) 115,882 (984,116)Tax effects arising from: – non-deductible expenses (887,511) (249,216) (106,985) (213,155)– non-taxable income 379,336 414,343 – 1,177,981 – SME tax savings 30,247 102,692 – – – tax incentives – pioneer status 597,977 522,157 – – – origination of deferred tax assets not recognised in the financial statements (120,950) (17,340) (44,210) (17,340)– deferred tax recognised at different tax rates (71) 247,153 (5,560) (5,189)Over accrual in prior years 156,655 93,435 41,819 6,619 Taxation expense for the financial year (133,968) (957,378) 946 (35,200)

26. EARNINGS PER SHARE

Basic Earnings Per Share

Basic earnings per share is calculated by dividing the net profit for the financial year attributable to equity holders of the Company by the weighted average number of ordinary shares in issue during the financial year:-

Group

2008 2007 RM RM

Profit attributable to equity holders of the Company 980,956 6,712,245 Number of issued and fully paid ordinary shares at 1st January 222,432,267 218,715,067 Effect of shares issued during the financial year – 2,770,636

Weighted average number of ordinary shares 222,432,267 221,485,703 Basic earnings per share (sen) 0.44 3.03

Diluted Earnings Per Share

No calculation is made on the diluted earnings per share in respect of the current and previous financial year as there are no dilutive potential ordinary shares.

Cuscapi Berhad72

27. DIVIDENDS

Net dividends Amount per ordinary share

2008 2007 2008 2007 RM RM Sen Sen

Interim Tax exempted dividends, on 222,432,267 ordinary shares – 2,224,322 – 1

An interim tax exempted dividend of 1 sen per share, amounting to RM2,224,322/- was paid on 18th April 2008 in respect of the financial year ended 31st December 2007.

28. SIGNIFICANT RELATED PARTY TRANSACTIONS

(a) The Group and the Company had the following transactions with related parties during the financial year are as follows:-

Group Company

2008 2007 2008 2007 RM RM RM RM

Income: Management fees receivable from subsidiaries – Cuscapi Solutions Sdn. Bhd. – – 44,000 358,000 – Cuscapi Malaysia Sdn. Bhd. – – 2,711,000 1,031,000 – Cuscapi Hospitality Solutions Sdn. Bhd. – – – 166,000 – Cuscapi Network Solutions Sdn. Bhd. – – – 467,000 – Cuscapi Consulting Services Sdn. Bhd. – – – 344,000 – Cuscapi Innovation Lab Sdn. Bhd. – – 459,000 402,000 – Cuscapi International Sdn. Bhd. – – 239,000 22,000 Rental income from A & W (Malaysia) Sdn. Bhd.* 462,972 465,108 – – Remedial and maintenance income from A & W (Malaysia) Sdn. Bhd.* 154,064 48,464 – – Sale transactions with AmBank (M) Berhad + 1,057,272 – – –

* Transactions with A & W (Malaysia) Sdn. Bhd, a wholly-owned subsidiary of KUB Malaysia Berhad, whereby Encik Rosman Bin Abdullah is a board member of KUB Malaysia Berhad.

+ Transactions with AmBank (M) Berhad, whereby Dato’ Larry Gan Nyap Liou @ Gan Nyap Liow is a board member of AmBank (M) Berhad.



28. SIGNIFICANT RELATED PARTY TRANSACTIONS (continued)

Group Company

2008 2007 2008 2007 RM RM RM RM

Expenses: Purchases from subsidiaries – Cuscapi Network Solutions Sdn. Bhd. – – – 92,385 – Cuscapi Malaysia Sdn. Bhd. – – 73,908 – – Cuscapi Consulting Services Sdn. Bhd. – – – 2,880 – Cuscapi Solutions Sdn. Bhd. – – 263,600 2,336,668 Rental expenses paid to a subsidiary – Cuscapi International Sdn. Bhd. – – – 119,179 Other expenses paid to – Cuscapi Consulting Services Sdn. Bhd. – – 2,400 2,880

(b) The remuneration of directors and other members of Key Management of the Group and the Company during the financial year were as follows:-

Group Company

2008 2007 2008 2007 RM RM RM RM

Expenses: Directors’ remuneration – fees 164,000 153,809 164,000 153,809 – salaries and other emoluments 849,820 648,960 849,820 648,960 Post-employment benefits: – Defined contribution plan 98,448 48,833 98,448 48,833

1,112,268 851,602 1,112,268 851,602

29. SIGNIFICANT EVENTS DURING AND AFTER THE FINANCIAL YEAR END

(a) Incorporation of a Wholly-Owned Indirect Subsidiary

The Company had on 13th March 2008, through its wholly-owned subsidiary, Cuscapi International Pte. Ltd., incorporated a wholly-owned subsidiary, Cuscapi Beijing Co. Ltd., in China, with a paid up share capital of USD168,000/- consisting of 168,000 ordinary shares of USD1/- each.

(b) Incorporation of a Jointly Controlled Entity

As disclosed in Note 8 to the financial statements, the Company had on 30th May 2008 entered into a joint venture agreement with Protéas Innovation Sdn. Bhd. (“Protéas”) to incorporate Cuscapi Outsourcing Sdn. Bhd. (“Cuscapi Outsourcing”) in Malaysia to provide contact centre outsourcing services with a total paid up share capital of RM100,000 consisting of 100,000 ordinary shares of RM1/- each as at 31st December 2008. The Company subscribed for 55% of the shares in Cuscapi Outsourcing whilst Protéas subscribed for the remaining 45% of the shares in Cuscapi Outsourcing. As certain strategic financial and operating decisions of Cuscapi Outsourcing require the unanimous consent of both the Company and Protéas, accordingly this investment has been accounted as investment in a jointly controlled entity instead of investment in a subsidiary.

Cuscapi Berhad74

29. SIGNIFICANT EVENTS DURING AND AFTER THE FINANCIAL YEAR END (continued)

(c) Incorporation of a Wholly-Owned Indirect Subsidiary

The Company had on 12th January 2009 through its wholly-owned subsidiary, Cuscapi International Pte. Ltd. incorporated a wholly-owned subsidiary, Cuscapi Singapore Pte. Ltd. in Singapore with paid up share capital of SGD2/- consisting of 2 ordinary shares of SGD1/- each.

(d) Incorporation of a Wholly-Owned Indirect Subsidiary

The Company had on 31st October 2008, through its wholly-owned subsidiary, Cuscapi International Pte. Ltd. incorporated a wholly-owned China incorporated subsidiary, Cuscapi Suzhou Co. Ltd. (“Cuscapi Suzhou”). Subsequently on 3rd March 2009, the Company subscribed for 140,000 ordinary shares of USD1/- each at par, representing 100% interest in Cuscapi Suzhou.

30. FINANCIAL INSTRUMENTS

(a) Financial Risk Management and Objectives

The Group seeks to manage effectively various risks namely credit, liquidity, foreign currency and interest rate risks, to which the Group is exposed to in its daily operations.

(i) Credit RiskThe management has a credit policy in place to monitor and minimise the exposure of default. Credit evaluations are performed on all customers requiring credit over certain amount.

As at balance sheet date, there were no significant concentrations of credit risk. The maximum exposure to credit risk for the Group is represented by the carrying amount of each financial asset.

(ii) Liquidity Risk

The Group actively manages its debt maturity profile, operating cash flows and the availability of funding so as to ensure that all financing, repayment and funding needs are met. As part of its overall prudent liquidity management, the Group maintains sufficient levels of cash and cash equivalents to meet their working capital requirements.

(iii) Foreign Currency Risk During the financial year, the Group incurred foreign currency risk on overseas operating subsidiaries and transactions that were denominated in currencies other than Ringgit Malaysia. The currencies giving rise to this risk are primarily US Dollar, Singapore Dollar and Renmimbi. Exposures to foreign currency risks are monitored on an ongoing basis.



30. FINANCIAL INSTRUMENTS (continued)

(a) Financial Risk Management and Objectives (continued)

(iv) Interest Rate Risk The Group’s primary interest rate risk relates to interest-bearing debts as at 31st December 2008. The investments in financial assets are mainly short-term in nature and they are not held for speculative purposes.

Effective interest rates

Effective Interest Within 1 -5 More than Rate 1 Year Years 5 Years Total % RM RM RM RM

Group As at 31st December 2008

Financial Asset Short-term deposits with licensed banks 2.10-3.70 5,731,729 – – 5,731,729

As at 31st December 2007

Financial AssetShort-term deposits with licensed banks 3.45 11,425,625 – – 11,425,625

CompanyAs at 31st December 2008

Financial Asset Short-term deposits with a licensed bank 2.30-3.70 3,036,436 – – 3,036,436

As at 31st December 2007

Financial Asset Short-term deposits with a licensed bank 3.45 11,125,625 – – 11,125,625

(b) Fair Values

(i) Recognised financial instruments In the opinion of the directors, there were no significant differences between the fair values and book values of the financial assets and financial liabilities of the Group and of the Company.

(ii) Unrecognised financial instruments There were no unrecognised financial instruments as at 31st December 2008.

Cuscapi Berhad76

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32. COMPARATIVES

The following comparative amounts for the financial year ended 31st December 2008 have been reclassified to conform with the current year’s presentation:-

Company

As previously As reported Reclassification restated

RM RM RM Balance Sheet Amount owing by subsidiaries 20,144,803 (8,344,086) 11,800,717 Amount owing to subsidiaries (12,248,110) 8,344,086 (3,904,024)

Cuscapi Berhad78

Shareholding Statisticsas at 1 April 2009

Authorised Capital : RM60,000,000Issued and Fully Paid-up : RM22,243,226.70Class of Shares : Ordinary shares of RM0.10 each fully paid-upVoting Rights : One vote per RM0.10 share

ANALYSIS OF SHAREHOLDINGS AS AT 1 APRIL 2009

Size of Holdings No. of Holders No. of Shares %

1 – 99 3 150 0.00100 – 1,000 493 473,600 0.211,001 – 10,000 344 2,114,850 0.9510,001 – 100,000 343 14,325,800 6.44100,001 – 11,121,612 (*) 133 91,528,567 41.1511,121,613 AND ABOVE (**) 6 113,989,300 51.25

TOTAL 1,322 222,432,267 100.00

Remark:* – Less than 5% of issued holdings** – 5% and above of issued holdings

SUBSTANTIAL SHAREHOLDERS AS AT 1 APRIL 2009 Country ofNo. Name Incorporation Shareholdings %

1 Transight Systems Sdn Bhd Malaysia 26,190,000 11.772 Her Chor Siong Malaysia 23,166,667 10.423 AmBank (M) Berhad Malaysia 21,930,000 9.86 Pledged Securities Account for Transight Systems Sdn Bhd (Datascan)4 Leong Kah Chern Malaysia 19,833,333 8.925 CIMSEC Nominees (Tempatan) Sdn Bhd Malaysia 11,469,300 5.16 CIMB for Gan Nyap Liou @ Gan Nyap Liow (PB)6 Ang Chin Joo Malaysia 11,400,000 5.13

DIRECTORS’ SHAREHOLDINGS AS AT 1 APRIL 2009 No. of ShareholdingsNo. Name of Directors Direct % Nominees %

1 Dato’ Gan Nyap Liou @ Gan Nyap Liow – – – – CIMSEC Nominees (Tempatan) Sdn Bhd – – 11,469,300 5.16 CIMB for Gan Nyap Liou @ Gan Nyap Liow (PB) CIMSEC Nominees (Tempatan) Sdn Bhd – 300,000 0.13 CIMB Bank for Gan Nyap Liou @ Gan Nyap Liow (MY0382) 2 Tai Keat Chai 30,000 0.01 – –3 Dr Ravindranath a/l P.D. Nayer 30,000 0.01 – –4 Rosman bin Abdullah – – – –5 Ang Chin Joo 11,400,000 5.13 – –6 Leong Kah Chern 10,000 – – – Leong Kah Chern 19,833,333 8.92 – –7 Her Chor Siong 23,166,667 10.42 – –

TOTAL 54,470,000 24.49 11,769,300 5.29


LIST OF TOP 30 LARGEST SHAREHOLDINGS AS AT 1 APRIL 2009

No. Name Shareholdings %

1 Transight Systems Sdn Bhd 26,190,000 11.77

2 Her Chor Siong 23,166,667 10.42

3 AmBank (M) Berhad 21,930,000 9.86 Pledged Securities Account for Transight Systems Sdn Bhd (Datascan)

4 Leong Kah Chern 19,833,333 8.92

5 CIMSEC Nominees (Tempatan) Sdn Bhd 11,469,300 5.16 CIMB for Gan Nyap Liou @ Gan Nyap Liow (PB)

6 Ang Chin Joo 11,400,000 5.13

7 Koay Teng Heng 9,997,000 4.49

8 Ong Pig Suang @ Ong Phaik Suan 8,191,400 3.68

9 Teoh Hoay Ming 6,666,667 3.00

10 Jonah Lau Kung Hui 5,264,000 2.37

11 Hassan bin Che Abas 3,500,000 1.57

12 Mohd Razali bin Abdul Rahman 3,500,000 1.57

13 ECML Nominees (Tempatan) Sdn. Bhd 2,700,000 1.21 Pledged Securities Account for Lee Teck Seng Patrick (MG0000166)

14 Ling Yoke Tek 2,340,000 1.05

15 CIMSEC Nominees (Tempatan) Sdn Bhd 2,120,000 0.95 CIMB for Chan Hiok Khiang (PB)

16 Mohamad Fazli bin Mohamad Sarujee 2,013,100 0.91

17 Sreekumar a/l P Narayana Pillai 1,895,000 0.85

18 Cheah Kok Chew 1,815,200 0.82

19 Teh Chin Joo 1,668,300 0.75

20 Ng Kam Man 1,459,000 0.66

21 Lee Teck Seng Patrick 1,450,000 0.65

22 Mohd Razali Bin Abdul Rahman 1,350,000 0.61

23 Tan Poh Keat 1,320,000 0.59

24 Citigroup Nominees (Tempatan) Sdn Bhd 1,191,400 0.54 Pledged Securities Account for Syed Hishamuddin bin Syed Kamaruddin (472615)

25 Tsai Chang, Hsiu-Hsiang 1,100,000 0.49

26 RHB Capital Nominees (Tempatan) Sdn Bhd 1,043,600 0.47 Pledged Securities Account for Tan Leh Kiah (CEB)

27 Wong Yoke Yung 1,000,000 0.45

28 Ooi Yen Hwa 854,000 0.38

29 Tan Poh Gek 839,000 0.38

30 Rezal Zain bin Abdul Rashid 822,100 0.37

Statement of Shareholdingas at 1 April 2009

Cuscapi Berhad80

Notice of Annual General Meeting

NOTICE IS HEREBY GIVEN THAT the Thirtieth Annual General Meeting of Cuscapi Berhad will be held at Zamrud Room, The Saujana, 2km, Off Sultan Abdul Aziz Shah Airport Highway, Saujana, 47200 Subang, Selangor Darul Ehsan on Tuesday, 2 June 2009 at 10.00 a.m. for the following purposes:-

AGENDA

1. To receive and adopt the audited financial statements for the financial year ended 31 December 2008 together with the Reports of the Directors and Auditors thereon.

Resolution 1

2. To approve the payment of Directors’ fees for the financial year ended 31 December 2008.

Resolution 2

3. To re-elect the following Directors retiring in accordance with Article 91 of the Company’s Articles of Association and who being eligible, have offered themselves for re-election:-

i) Rosman Bin Abdullah

ii) Dr Ravindranath a/l P.D. Nayer

Resolution 3

Resolution 4

4. To re-appoint Auditors and to authorise the Directors to fix their remuneration. Resolution 5

5. Special BusinessTo consider and if thought fit, to pass the following resolutions:-

5.1 Ordinary Resolution

Authority to Allot and Issue Shares in General Pursuant to Section 132D of the Companies Act,1965

“That pursuant to Section 132D of the Companies Act, 1965, and subject to the approval of all relevant authorities being obtained, the Directors be and are hereby empowered to issue shares in the Company at any time and upon such terms and conditions and for such purposes as the Directors may, in their absolute discretion deem fit, provided that the aggregate number of shares issued pursuant to this resolution in any one financial year does not exceed 10% of the issued capital of the Company for the time being and that the Directors be and are also empowered to obtain the approval for the listing of and quotation for the additional shares so issued on the Bursa Malaysia Securities Berhad and that such authority shall continue in force until the conclusion of the next Annual General Meeting of the Company.”

Resolution 6


5.2 Ordinary Resolution

Proposed Renewal of Existing Shareholders’ Mandate for Recurrent Related Party Transactions of a Revenue or Trading Nature

“THAT approval be and is hereby given to the Cuscapi Group to enter into and to give effect to recurrent related party transactions of a revenue or trading nature with the Transacting Related Party as stated in Section 2.2 of the Circular which are necessary for the day-to-day operations of the Cuscapi Group, subject to the following:

(i) the transactions are in the ordinary course of business and are on terms not more favourable to the related parties than those generally available to the public and is not detrimental to the minority shareholders and that such transactions are made on an arm’s length basis and on normal commercial terms;

Resolution 7

(ii) disclosure is made in the annual report of the aggregate value of transactions conducted pursuant to this shareholders’ mandate during the financial year; and

(iii) the authority hereby given shall continue to be in force until:

(a) the conclusion of the next AGM of the Company, at which time it will lapse, unless by a resolution passed at the meeting, the authority is renewed; or

(b) the expiration of the period within which the AGM of the Company is required to be held pursuant to Section 143(1) of the Companies Act,1965 (but shall not extend to such extensions as may be allowed pursuant to Section 143(2) of the Companies Act,1965); or

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

whichever is the earlier,

AND THAT the Directors of the Company be authorised to complete and do all such acts and things (including executing all such documents as may be required) as they may consider expedient or necessary to give effect to the transactions contemplated or authorised by this resolution.”

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

By Order of the Board

TAN LEH KIAHTAY CHEE WAHSUZANA BINTI AHMADSecretariesKuala Lumpur11 May 2009

Cuscapi Berhad82

Notes:1. A member entitled to attend and vote at the meeting is entitled to appoint a proxy or proxies to attend and vote in his

stead. A proxy may but need not be a member of the Company and a member may appoint any other person to be his proxy and the provisions of Section 149(1) of the Companies Act, 1965 shall not apply to the Company.

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

3. The instrument appointing a proxy shall be in writing under the hand of the appointor or his attorney duly authorised in writing or, if the appointor is a corporation, either under its Common Seal or signed by an officer or attorney so authorised.

4. The instrument of proxy must be deposited with the Company’s Registered Office at Level 1, Block B, Peremba Square, Saujana Resort, Seksyen U2, 40150 Shah Alam, Selangor Darul Ehsan not less than forty-eight (48) hours before the time appointed for holding the meeting or any adjournment thereof.

5. Explanatory note under Special Business:-

Resolution 6 – Authority to Directors to issue shares

The authorisation will empower the Directors to issue shares in the Company up to an amount not exceeding in total 10% of the issued share capital of the Company. This authority, unless revoked or varied at a general meeting, will expire at the conclusion of the next Annual General Meeting of the Company.

Resolution 7 – Proposed Shareholders’ Mandate

The proposed Resolution 7, if passed, will enable the Company and each of its subsidiaries to enter into a recurrent related party transactions with the parties as set out in the Circular to Shareholders of the Company dated 11 May 2009 despatched together with the Annual Report. This authority, subject to renewal thereof, will expire at the conclusion of the next Annual General Meeting of the Company or the expiration of the period within which the next Annual General Meeting of the Company is required to be held under the Companies Act 1965 (excluding any extension of such period as may be allowed under the Companies Act 1965) whichever is earlier, unless earlier revoked or varied by a resolution in a general meeting.

Notice of Annual General Meeting


NAME OF DIRECTORS STANDING FOR RE-ELECTION

The following are directors standing for re-election at the forthcoming AGM:

i) Rosman Bin Abdullahii) Dr Ravindranath a/l P.D. Nayer

The profile of the directors are set out on pages 11-14 of this Annual Report.

DETAILS OF BOARD MEETINGS

Six (6) Board Meetings were held during financial year ended 31 December 2008. Details of the meetings are as follows:

Date of Meeting Venue

18 January 2008Cuscapi Meeting Room 1, 2nd Floor, Block B, Peremba Square, Saujana Resort, Seksyen U2, 40150 Shah Alam, Selangor Darul Ehsan

28 February 2008Cuscapi Meeting Room 1, 1st Floor, Block B, Peremba Square, Saujana Resort, Seksyen U2, 40150 Shah Alam, Selangor Darul Ehsan

26 March 2008Cuscapi Meeting Room 1, 1st Floor, Block B, Peremba Square, Saujana Resort, Seksyen U2, 40150 Shah Alam, Selangor Darul Ehsan

12 May 2008Cuscapi Meeting Room 1, 1st Floor, Block B, Peremba Square, Saujana Resort, Seksyen U2, 40150 Shah Alam, Selangor Darul Ehsan

15 August 2008Cuscapi Meeting Room 1, 1st Floor, Block B, Peremba Square, Saujana Resort, Seksyen U2, 40150 Shah Alam, Selangor Darul Ehsan

12 November 2008Cuscapi Meeting Room 1, 1st Floor, Block B, Peremba Square, Saujana Resort, Seksyen U2, 40150 Shah Alam, Selangor Darul Ehsan

DETAILS OF ATTENDANCE OF DIRECTORS

Details of attendance of Directors at the Board Meetings held in the financial year ended 31 December 2008 are as follows:

Name of Directors No. of Meetings Attended

Dato’ Gan Nyap Liou @ Gan Nyap Liow 6/6

Leong Kah Chern 6/6

Her Chor Siong 5/6

Ang Chin Joo 6/6

Rosman Bin Abdullah 5/6

Tai Keat Chai 6/6


Statement AccompanyingNotice of Annual General Meeting

THIS PAGE IS INTENTIONALLY LEFT BLANK

I/We,

of

being a Member/Members of CUSCAPI BERHAD, hereby appoint

of

or failing him / her,

of

or failing him / her, the Chairman of the meeting as my/our proxy to vote for me/us on my/our behalf at the Thirtieth Annual General Meeting of the Company to be held at Zamrud Room, The Saujana, 2km, Off Sultan Abdul Aziz Shah Airport Highway, Saujana, 47200 Subang, Selangor Darul Ehsan on Tuesday, 2 June 2009 at 10.00 a.m. and at any adjournment thereof.

My / Our proxy is to vote as indicated below:-(Please indicate an “X” how you wish your vote to be cast. If no specific direction as to voting is given, the proxy will vote or abstain from voting at his direction.)

Resolutions For Against

1. To receive and adopt the audited financial statements for the financial year ended 31 December 2008 together with the Reports of the Directors and Auditors thereon.

2. To approve the payment of Directors’ fees for the financial year ended 31 December 2008.

3. To re-elect Rosman bin Abdullah as Director.

4. To re-elect Dr Ravindranath a/l P.D. Nayer as Director.

5. To re-appoint Auditors.

6. To authorise Directors to issue and allot shares pursuant to Section 132D of the Companies Act, 1965.

7. To approve the Renewal of Existing Shareholders’ Mandate for Recurrent Related Party Transactions of a Revenue or Trading Nature

Dated this day of , 2009

Signature(If shareholder is a corporation, this part should be executed under seal)

Notes:1. A member entitled to attend and vote at the meeting is entitled to appoint a proxy or proxies to attend and vote in his stead. A proxy may

but need not be a member of the Company and a member may appoint any other person to be his proxy and the provisions of Section 149(1) of the Companies Act, 1965 shall not apply to the Company.

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

3. The instrument appointing a proxy shall be in writing under the hand of the appointor or his attorney duly authorised in writing or, if the appointor is a corporation, either under its Common Seal or signed by an officer or attorney so authorised.

4. The instrument of proxy must be deposited with the Company’s Registered Office at Level 1, Block B, Peremba Square, Saujana Resort, Seksyen U2, 40150 Shah Alam, Selangor Darul Ehsan not less than forty-eight (48) hours before the time appointed for holding the meeting or any adjournment thereof.

Form of Proxy CUSCAPI BERHAD (43190-H)

No. of shares held

Please fold here to seal

Please fold here to seal

The Company Secretary CUSCAPI BERHAD (43190-H)

Level 1, Block B, Peremba SquareSaujana Resort, Seksyen U240150 Shah AlamSelangor Darul Ehsan, Malaysia.

Stamp

Cuscapi Berhad (43190-H)

Level 1, Block B, Peremba Square, Saujana ResortSeksyen U2, 40150 Shah Alam, Selangor, Malaysia.TeL +603 7623 7777 FAx +603 7622 1999

www.cuscapi.com

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