Borderless Southeast Asia...Non-Executive Director Tan Tian Sin Group Managing Director...

annual report 2011

Borderless Southeast AsiaBorderless Southeast Asia

The 600 million inhabitants of Southeast Asia are rapidly embracing the internet era. Their daily lives and business activities are going digital and becoming more advanced. Information and transactions will soon be fully driven by technology and mobile devices.

At CBSA, we are at the forefront in delivering cutting edge technologies and local search solutions that cater to their needs.

Directors’ Responsibility Statement 24

Other Compliance Information 25

Audit Committee Report 26

Financial Statements 32

List Of Properties 89

Analysis Of Shareholdings 90

Notice Of Annual General Meeting 92

Appendix I 94

Proxy Form 97

Contents

Corporate Information 2

Corporate Structure And 4

5-Year Financial Highlights

Chairman’s Statement 6

Management Discussion And Analysis 9

Statement of Corporate Social Responsibility 13

Profile Of The Board Of Directors 14

Statement On Corporate Governance 17

Statement On Internal Control 22

Recognising

SuccessCBSA is where it is because

of the people supporting and

advancing it towards a mutual

goal. It is a collaborative effort

lead by an inspiring team that will

make CBSA synonymous with

technological innovation.

Corporate Information


CBSA Berhad Annual Report 20112

General Tan Sri Dato’ Seri Panglima Mohd Azumi Bin Mohamed (Rtd)Chairman and Independent Non-Executive Director

Tan Tian Sin Group Managing DirectorRe-designated on 18 May 2012

Song Hock KoonExecutive DirectorAppointed on 18 May 2012

Fong Wai LeongExecutive Director

Wong Mun WaiIndependent Non-Executive Director Appointed on 28 May 2012

Choo Kok LiongIndependent Non-Executive Director

BOARD OF DIRECTORS

CBSA Berhad Annual Report 2011 3


AUDIT COMMITTEEGeneral Tan Sri Choo Kok Liong Wong Mun Wai Dato’ Seri Panglima Member MemberMohd AzumiBin Mohamed (Rtd)Chairman

COMPANY SECRETARIESSeow Fei San Mok Mee KeeMAICSA 7009732 MAICSA 7029343

REGISTERED OFFICE802, 8th Floor, Block C, Kelana Square, 17, Jalan SS 7/26, 47301 Petaling Jaya, Selangor Darul Ehsan, Malaysia Tel: +603-7803 1126 Fax: +603-7806 1387

PRINCIPAL PLACE OF BUSINESS15, Jalan Ara SD 7/3A, Bandar Sri Damansara, 52200 Kuala Lumpur, MalaysiaTel: +603-6277 7018 Fax: +603-6277 6018 Website : www.cbsagroup.com

AUDITORSSJ Grant Thornton (Member of Grant Thorton International)Chartered AccountantsLevel 11, Faber Imperial Court, Jalan Sultan Ismail, 50250 Kuala Lumpur, MalaysiaTel: +603-2692 4022 Fax: +603- 2732 5119 Website: www.gt.com.my

SHARE REGISTRARTricor Investor Services Sdn BhdLevel 17, The Gardens North Tower, Mid Valley City, Lingkaran Syed Putra, 59200 Kuala Lumpur, MalaysiaTel: +603-2264 3883 Fax: +603-2282 1886 Website: www.tricorglobal.com

PRINCIPAL BANKERSMalayan Banking Berhad, RHB Bank Berhad, AmBank (M) Berhad, OCBC Bank (M) Berhad SOLICITORSSun & MicheleSreenevasan Young

STOCK EXCHANGE LISTINGMain Market of Bursa Malaysia Securities BerhadStock Name: CBSAStock Code: 0041


Corporate Structure & Financial Highlights

5-Year Revenue Review (RM’000)

20,825

6,8976,561

23,024

5-Year Profit Before Tax Review (RM’000)

‘07‘08‘09‘10‘11

‘07‘08‘09‘10‘11

5-YEAR FINANCIAL HIGHLIGHTS

2007 2008 2009 2010 2011RESULTS OF OPERATION Revenue RM’000 20,852 23,024 45,622 46,576 54,432 EBITDA

(Earnings Before Interest, Taxes, Depreciation and Amortization) RM’000 6,926 6,290 12,543 12,450 15,012

Profit Before Taxation RM’000 6,897 6,561 11,731 11,424 13,528 Profit After Taxation RM’000 6,421 5,617 11,195 10,628 13,210 Net profit Attributable To

Equity Holders RM’000 6,421 5,617 10,983 10,516 13,039 FINANCIAL POSITION Total Assets RM’000 49,825 46,896 65,666 77,810 97,903 Total Borrowings RM’000 - - 1,508 801 927 Shareholders’ Equity RM’000 2,520 30,949 43,475 54,620 68,341 FINANCIAL INDICATORS Return On Equity % 0.3 0.2 0.3 0.2 0.2 Return On Total Assets % 0.1 0.1 0.2 0.2 0.1 Gearing Ratio % - - 0.0 0.0 0.0 Interest Cover times - - 482.2 75.4 201.7 Basic Earning Per Share (Sen) Sen 4.3(1) 3.7 4.7(1) 4.4 5.5 Net Assets Per Share (Sen) Sen 24.9 20.4 27.8 22.9 28.6 Gross Dividend Per Share (Sen) Sen 10.4 - - - - Price Earning (PE) Ratio times 21.1 9.5 11.0 7.6 6.2 Gross Dividend Yield % 11.4 - - - - Share price as at the financial year end Sen 91.0 35.0 52.0 33.5 34.0

Note:

(1) Restated of preceding year to reflect the issuance of new ordinary shares pursuant to a bonus issue.

CORPORATE STRUCTURE & FINANCIAL HIGHLIGHTS


11,731

45,622

54,432

CORPORATE STRUCTURE

Corporate Structure & Financial Highlights

Cyber Business Solutions Sdn Bhd 100%

CBSA MSC Sdn Bhd 100%

CBSA Synergy Sdn Bhd 100%

CBSA Bizhub Sdn Bhd100%

CBSA International Sdn Bhd 100%

CBSA Pancommerce Sdn Bhd 90%

CASD Solutions Sdn Bhd 51%

CBSA Online Sdn Bhd100%

CBSA (Thailand) Co. Ltd 48%

CBSA Media Sdn Bhd 100%

13,528

46,576

11,424


Chairman’s Statement

Dear shareholders,

On behalf of the Board of Directors, I am pleased to present the Annual Report and Financial Statements of CBSA Berhad for the financial year ended 31 December 2011 (FY2011).

CHAIRMAN’S STATEMENT



FY2011 UNDER REVIEWFY2011 was an exciting year for the Group. During the year, our wholly-owned subsidiary, CBSA Online Sdn Bhd (“CBSA Online”) announced its partnership with Google to provide business listings from Panpages.com for Google Maps in 6 countries within the Southeast Asia region, namely Malaysia, Singapore, Indonesia, Thailand, the Philippines and Vietnam. This partnership with Google is an extension of the previous partnership in 2007, between Google and Super Pages Media Sdn Bhd (now known as CBSA Media Sdn Bhd), a wholly-owned subsidiary of CBSA, to provide Google with business listings from Superpages.com.my for Google Maps. The extended partnership will allow the businesses’ information listed on Panpages.com in Southeast Asia to be found through searches on Google Map and hence, increase their internet presence and reach. The tie-up with Google has also contributed a new revenue stream to the Group.

The Group had expanded its operations in Thailand, Vietnam, the Philippines and Indonesia during the year and had committed financial and human resources to build an extensive and comprehensive database for Panpages.com in these countries. Our associate company in Thailand, CBSA (Thailand) Co. Ltd, is also building up its sales and marketing force to market Panpages.com in the country. Although the company has yet to contribute to the Group’s profits in FY2011, we are optimistic about the potential growth that it will bring to the Group.

To enhance our offerings under e-commerce solutions, we had acquired a web portal, Trosworld.com in December 2011. Trosworld.com is an established online shopping portal for the B2C (Business to Consumers) and C2C (Consumers to Consumers). With this acquisition, the Group had added B2C and C2C to its existing B2B (“Business to Business”) platform. To facilitate the acquisition of Trosworld.com, CBSA had formed a 90%-owned subsidiary, CBSA Pancommerce Sdn Bhd, to undertake the online shopping portal business. The revenue from Trosworld.com has not been reflected in FY2011.

On the IT business front, we had maintained our focus on RFID solutions and e-security solutions. During the year, we had successfully rolled out the RFID Warehouse Management System (RWMS) for our client, Tenaga Nasional Berhad (TNB), in their warehouses in the Northern region of Peninsular Malaysia. This was the third phase of the RWMS implementation for TNB. The first two phases were implemented in 2008 and 2010 respectively. As a result of successful RWMS implementations in several warehouses throughout Peninsular Malaysia, TNB sees the benefits of RWMS and has again awarded us a new contract to implement RWMS for TNB’s warehouses in Manjung, Perak and Pork Dickson, Negeri Sembilan. In January 2012, TNB awarded CBSA as its outstanding ICT corporate vendor. Today, TNB is seen as one of the top drivers of RFID technology in the Southeast Asia region.

Throughout FY2011, we had also maintained a steady momentum in deploying our Paymate suite for a government agency and some financial institutions.

The increase in business operations and staff numbers had caused a lack of office space, leading the Group to operate from three separate locations in the Klang Valley. During the year, the Group had entered into a Sale and Purchase Agreement to acquire a piece of land covering approximately 37,400 square feet located in Taman Sains Selangor, Kota Damansara, Selangor Darul Ehsan. The plan was to construct a 3-storey detached light industrial building on this land for RM18 million. This will enable the CBSA Group to house all its existing business operations under one roof and operate more efficiently.

Enhancing our offerings to create new revenue streams


The building will also provide sufficient space to accommodate the future growth of the CBSA Group. This new building is expected to be completed in the third quarter of 2014.

I am encouraged by the results that we have achieved in FY2011 despite facing global challenges, namely the economic uncertainties arising from the Eurozone debt crisis and the struggling US economy.

The Group’s revenue had rose to RM54.43 million, an increase of 16.8% from RM46.58 million for financial year ended 31 December 2010 (FY2010). The jump in revenue was partly contributed by the IT segment due to a revenue recognition of RM7.11 million from the loan management system project after the Group had won the legal suit against a bank. Besides the revenue from the loan management system project, the sale of content arising from our partnership with Google had also contributed to a revenue increase for the Search & Advertising segment.

In line with the higher revenue, the Group’s profit before tax improved by 8.9%, from RM11.42 million for FY2010 to RM13.53 million despite higher administrative expenses.

As a result of the improvement in profit before tax and a lower effective tax rate of 2.3% for FY2011 compared with 7% for FY2010, net profit rose 24.3% to RM13.21 million from RM10.63 million for FY2010.

The Group continued to generate significant free cash flow and maintained a solid balance sheet during FY2011. As at 31 December 2011, total cash and cash equivalents stood at RM34.23 million and net assets stood at RM68.34 million.

While we are pleased with our achievement in FY2011, we strive to work harder to deliver better financial results for the coming year.

PROSPECT FOR 20122012 is expected to be another challenging year due to many uncertainties in the global economy. However, I am confident that CBSA will overcome the challenges given that our people have never doubted the Group’s potential and are willing to embrace changes and hard work to take CBSA to greater heights.

We will continue to manage our business prudently and with the Group’s strong foundation and numerous strengths, we remain optimistic of the Group’s business prospects in 2012.

APPRECIATIONFinally, I would like to thank the management team and all our staff for their commitment and dedication, and to our valued customers, business partners and shareholders for their continued support throughout the year.

General Tan Sri Dato’ Seri Panglima Mohd Azumi Bin Mohamed (Rtd)Chairman and Independent Non-Executive Director


9CBSA Berhad Annual Report 2011

Background of the Company

CBSA is a public listed company on the Main Market of Bursa Malaysia Securities Berhad. Founded in 1996 as an enterprise management solutions provider, CBSA evolved into a diversified IT solutions provider and emerged as one of the leading RFID solution providers in the Southeast Asia region. The CBSA Group has continued to develop and expand its product offerings to meet changing demands and market trends and look for new revenue streams. Since 2009, the CBSA Group has expanded its business profile beyond providing IT solutions, and has moved ahead towards business directories, e-commerce solutions and content development.

The Group has two business segments: InformationTechnology (IT) and Search & Advertising. Each segment has its own management team and portfolio of products and services.

PRODUCTS AND SERVICESIn the IT Segment, we provide a range of products and services that help our clients improve their business operations, security and cost efficiency. Our innovative offerings comprise RFID solutions, security solutions, enterprise management solutions and e-Procurement solutions. Our IT services range from application development, customisation to implementation, system integration, system and network management, and maintenance.

Our product offerings:(i) RFID solutions

We develop RFID software applications using the latest technologies and take advantage of the key benefits of RFID. We provide complete solutions to businesses by integrating software, hardware, maintenance and support services. We also provide customised RFID solutions to suit each client’s business requirements and operating environments. We deploy our industry knowledge and process skills to streamline business processes, helping our clients improve productivity and reduce costs. We have successfully developed the following modules under our Solmate Suite:

• RFID Warehouse Management System (Solmate RWMS)• Enterprise Asset Management System (Solmate EAMS)• Document Tracking and Management System (Solmate DocTrax)• Baby Management and Tracking System (Solmate Cuddles)• Baggage Tracking System (Solmate e-Baggage)• RFID Evidence Management System (Solmate REMS)

MANAGEMENT DISCUSSION AND ANALYSIS

Management Discussion And Analysis

10 CBSA Berhad Annual Report 2011

(ii) Security solutionsToday’s enterprises have become increasingly dependent on electronic data transmission to carry out daily business activities. Hence, they have become vulnerable to the risks of data loss and data corruption. With our security solutions, Paymate® Secure Suite, unmanaged data transmissions via insecure networks become more manageable, secure and reliable. Paymate® provides a powerful solution to securely transfer sensitive information or documents from one system to another. With its powerful cross-platform compatibility, sharing data between disparate systems becomes seamless. It reduces the risk of data being hijacked in transit. The solution also sets the foundation for enterprises to distribute large quantities of documents securely, or to receive files from third parties.

(iii) Enterprise management solutionsWe provide a comprehensive set of enterprise management solutions to help businesses adopt technology that supports their mission-critical business functions. The solutions we offer include Workload Automation, Performance Management, Content Management, IT Service Management, and Infrastructure Management. With our extensive experience and expertise, we have proven that working as a partner with our clients has helped them drive business success.

(iv) e-Procurement solutionsThe traditional paper form-driven approach in the purchasing process is often characterised as inefficient, time-consuming and expensive. Our e-Procurement Suite offers automated purchase order processing, good procurement practices, and enhanced administrative functions to buyers and suppliers. These elements improve operational efficiencies and provide cost-saving opportunities to businesses. Our e-Procurement Suite comprises e-Purchase, e-Tender and e-Bidding.

In the Search & Advertising segment, we specialise in business directories, internet marketing solutions which encompass web design, search engine optimisation, local search and e-commerce solutions, as well as database development.

(i) Local searchOur online business directory is a specialised Internet search engine that allows users to submit geographically constrained searches against a structured database of local business listings. These local search sites are primarily supported by advertising from businesses who wish to be prominently featured when users search for specific products and services in specific locations. Local search advertising can be highly effective because it allows ads to be targeted very precisely to the search terms and location provided by the user. Our local search sites are available in two versions – web and mobile.

We have two online directories, namely Superpages.com.my and Panpages.com. Superpages.com.my has come a long way and caters to domestic businesses whilst Panpages.com is our new brand name that targets businesses in the Southeast Asia region. Both Superpages.com.my and Panpages.com provide businesses with the facilities to upload their content and the flexibility to increase content and prominence in a way that suits their budget. Users can search for businesses via company name and business phone number.

(ii) Business directoriesOur business directories serve small and medium enterprises and are available in both print and digital versions. Our print directory, Super Pages is a comprehensive classified directory that serves both commercial and industrial business users. It also contains a directory of government departments and federal agencies, public services, hospitals and emergency numbers. In order to serve the users’ lifestyle needs better, Super Pages directory also provides a separate section called “Home and Living” in the directory.



(iii) e-Commerce solutionsOur e-Commerce solution, Trosworld.com is an online shopping portal for the C2C (“Consumers to Consumers”) and B2C (“Business to Consumers”) markets in Malaysia. Trosworld.com provides opportunities for small businesses to tap into online businesses with a low start-up cost. It assists small business owners who do not have the skills and resources to set up their own online store. Uploading photos, banners and logos can now be done with ease. Trosworld.com has more than one thousand customers. It enables merchants and consumers to sell and buy a broad variety of goods and services through the portal.

We are a strategic partner of Alibaba.com, a global leader in e-commerce for small businesses and the flagship company of Alibaba Group. Alibaba.com is a B2B (Business to Business) portal that makes it easy for millions of buyers and suppliers around the world to do business online. This portal provides opportunities for Malaysian SMEs to increase growth through e-commerce as it opens wider markets for their goods and services and offers access to overseas sales.

(iv) Database developmentCBSA’s collection of business listings is extensive and comprehensive. Our strong database is the reason why Google has appointed us as their strategic partner to provide business listings for Google Maps for countries such as Malaysia, Singapore, Indonesia, Thailand, the Philippines and Vietnam.

BUSINESS OBJECTIVES AND STRATEGIESIn FY2011, we have focused on revenue growth by offering innovative products and building strong sales force and brand names. Moving forward, we will continue to take our business towards higher growth and realise our full potential in the marketplace by focusing our resources on areas with the highest potential, while leveraging our strong customer base and brand name.

Search & AdvertisingWe have more than five thousand customers, with the majority of them being small and medium sized enterprises (SME). We aim to increase our revenue from our existing customers by offering a comprehensive suite of products and services, and continue to innovate to meet changing demands. Our strategy is to build a long-term relationship with our customers and engage in cross-selling initiatives.

Digital media such as internet and mobile devices have become more widely adopted nowadays. This change in trend has created challenges for our print business. Whilst the use of printed directories remain significant and highly cost-effective for advertising customers, we see a migration to digital media. To address this changing environment and user preference, we have further developed our digital search offerings as well as our sales force to grow the digital platform. We have also introduced a suite of products comprising print and digital media to serve our customers better. We expect our digital search products to register double digit growth in the coming year.

In times of economic uncertainty, many SMEs may spend less on advertising or turn to cheaper advertising tools. However, with our strong sales force, established brands and solid relationships with our customers, the retention rates will be maintained. We also offer packaged products that provide higher value and greater savings for our customers to increase our customer retention rates. We aim to acquire new customers by increasing our sales force and expanding geographical areas within Malaysia. Our partnership with Alibaba.com also helps us to expand our customer base. We will actively engage in brand-building activities that allow us to reach new customers.

We are also looking out for opportunities to expand our geographic footprint within the Southeast Asia region through organic growth as well as acquisition.

IT In the IT business, we will constantly monitor changes in the technology and business environments to ensure our products meet our customers’ business needs. The future revenues will depend on our success in enhancing and expanding our



product offerings to meet changing needs. We will continue to innovate and invest in line with changing trends by taking advantage of new technologies so as to improve our products. We have a dedicated and committed R&D team focusing on product development and enhancement.

A significant portion of our IT revenue comes from software maintenance, enhancement services and support. To maintain the recurring revenue, we are strengthening our customer service to improve the quality of our services and support. We also aim to improve our recurring revenue by offering premium support services to our customers, which include priority services such as guaranteed response time and on-site support.

FINANCIAL REVIEWRevenueThe Group registered revenue of RM54.43 million in FY2011 representing an increase of 16.8% compared to RM46.58 million in FY2010.

Revenue from IT segment grew by 31.6% to RM30.78 million from RM23.39 million for FY2010. The jump in revenue was mainly contributed by revenue recognition from the loan management system project amounted to RM7.11 million after the Group won the legal suit against a bank during the year. IT segment made up approximately 56.5% of the Group’s revenue.

Search & Advertising reported revenue of RM23.65 million compared to RM23.19 million for FY2010, representing 2.0% increase. The increase was primarily contributed from the sale of content of approximately RM1.06 million following the partnership with Google in June 2011 but the increase was partially offset by the decrease in revenue from B2B (“Business to Business”) products as a result of the change in the revenue recognition from gross to net.

ProfitabilityGross profit improved by 19.0% to RM27.94 million for FY2011 from RM23.47 million for FY2010 which is in line with the increased revenue. The profit margin improved marginally from 50.3% for FY2010 to 51.3% for FY2011 due to better margin recorded for IT contracts.

Profit before tax improved by 8.9% from RM11.42 million for FY2010 to FYRM13.53 million for 2011 attributed to higher revenue and gross profit achieved but offset by higher administrative expenses. The pre-tax margin maintained at 24.9% for FY2011 compared with 24.5% for FY2010.

Administrative expenses increased by 20.7% from RM12.14 million in FY2010 to RM14.65 million for FY2011 mainly due to increase in staff costs by RM2.47 million or 18.0% and share-based payment charge of RM0.66 million. The staff costs increased due to higher headcount and incentive payout to the employees as a result of the better financial performance.

The Group’s tax expense for FY2011 was RM0.32 million, after offset by an over-provision of prior year’s tax amounting to RM0.50 million. As a result, the Group’s effect tax rate was 2.3% compared to 7% for FY2010. The Group continues to enjoy lower effective tax rate than the statutory tax rate due to tax savings from its pioneer status subsidiaries.

In line with the improvement in profit before tax and lower tax expense, the Group posted net profits of RM13.21 million, increased by 24.3% from RM10.63 million for FY2010. Correspondingly, earnings per share grew by 23.5% from 4.42 sen for FY2010 to 5.46 sen for FY2011.

Cash Flow And Financial PositionThe Group’s continued to generate positive cash flow of RM13.95 million for FY2011. The Group’s cash and cash equivalents stood at RM34.23 million as at 31 December 2011.

The Group’s net assets increased by RM13.72 million from RM54.62 million as at 31 December 2010 to RM68.34 million as at 31 December 2011 due to profits for the period.



STATEMENT OF CORPORATE SOCIAL RESPONSIBILITYCBSA is committed to be a responsible corporate citizen. At CBSA, we care for our employees, the environment and local communities.

Statement Of Corporate Social Responsibility

EMPLOYEESCBSA recognises the value that its employees bring to the business. The Group aims to attract and retain the highest caliber of employees and provide them with learning and development opportunities to fulfill their potential. Appropriate career paths and internal recognition programmes are developed for both technical and non-technical staff.

The Group believes in equal opportunities and treats all employees fairly regardless of religion, disability, gender, age, marital status and race.

ENVIRONMENTBy nature, the Group’s business operations have a minimal impact on the environment. However, we acknowledge that there are inevitable environmental impacts associated with daily operations. In the course of our operations, we are taking measures to reduce energy consumption and strive to re-use and recycle wherever possible. We promote the efficient use of energy and other utilities by introducing a programme called “Save for Charity”, in which employees are encouraged to save energy and other utilities within office premises. The savings gained will be contributed to charity organisations.

LOCAL COMMUNITIESThe Group supports various local community projects from time to time, and also contributes financial support to charity organisations, including homes for orphans, old folks and special children, and hospitals. The Group also encourages its employees to participate in local community charity activities organised by the CBSA Sport Club.


General Tan Sri Dato’ Seri Panglima Mohd Azumi Bin Mohamed (Rtd)

Chairman and Independent Non-Executive Director64 years of age, Malaysian

General Tan Sri Dato’ Seri Panglima Mohd Azumi Bin Mohamed (Rtd) was appointed to the Board as the Chairman and Independent Non-Executive Director on 15 February 2008. He is also the Chairman of the Audit Committee, Nomination Committee and Remuneration Committee.

General Tan Sri Dato’ Seri Panglima Mohd Azumi bin Mohamed (Rtd) is the former Chief of Malaysian Army. He holds a Master of Science in Natural Resource and Strategy from the National Defense University Washington DC and a Graduate Diploma in Strategic Studies accredited by the Australian Capital Territory Accreditation Agency. He also attended the Comprehensive Programme of Advanced Studies in the Field of Emerging Information Technologies at the Information Resources College of National Defense University Washington DC.

He is the current Chairman of Cyber Security Malaysia, an agency under the Ministry of Science, Technology and Innovation that provides Cyber National Security Services. He is also the current Chairman of the Organization of Islamic Cooperation Computer Emergency Response Team. He is an Independent Director of Duty Free International Limited, a Company listed on the SGX. General Tan Sri Dato Seri Panglima Mohd Azumi (Rtd) is a Trustee of the Perdana Global Peace Foundation and a Member of the Alliance Leadership Team of the Sabah Ammonia and Urea Project Team led by Petronas. He is also a Member of the Dewan Negara Perak having been appointed by His Royal Highness the Sultan of Perak.

He does not have any interest in shares in the Company.

General Tan Sri Dato’ Seri Panglima Azumi (Rtd) does not have any family relationship with any director and/or major shareholder of the Company, nor any conflict of interest in any business arrangement involving the Company. He has no convictions for any offences within the past 10 years. General Dato’ Seri Panglima Azumi (Rtd) has attended three (3) out of four (4) Board meetings of the Company held during the financial year.

PROFILE OF THE BOARD OF DIRECTORS

Mr. Tan Tian Sin

Group Managing Director51 years of age, Malaysian

Tan Tian Sin was appointed to the Board as Executive Director on 22 October 2009 and re-designated as Non-Independent Non-Executive Director on 31 December 2010. He was re-designated as Group Managing Director on 18 May 2012 after the former Group Managing Director and the founder of the Company, Mr. Sun Chee Kong retired from the Group. He is also a member of the Remuneration Committee.

An engineer by profession, he worked as a sales engineer for Enctech Engineering Sdn Bhd and Mecomb Malaysia Sdn Bhd. He became a Sales Manager of Rosemount (M) Sdn Bhd prior to his involvement in establishing the directory publishing business.

He is the founder of Infodata Media Sdn Bhd (now known as CBSA Online Sdn Bhd) and Super Pages Media Sdn Bhd (now known as CBSA Media Sdn Bhd) and he is responsible for identifying new business growth and expansion plans in the region. He has more than 17 years of experience in the classified directory business.

He holds a Diploma in Electronic Engineering from Tunku Abdul Rahman College. He has a professional qualification in Electronic Electrical from Engineering Council in United Kingdom.

He has direct shareholding of 43,762,400 ordinary shares of RM0.10 each in the Company.

Mr. Tan does not have any family relationship with any director and/or major shareholder of the Company, nor any conflict of interest in any business arrangement involving the Company. He has no convictions for any offences within the past 10 years. Mr. Tan has attended all four (4) Board meetings of the Company held during the financial year.

Profile Of The Board Of Directors


Mr. Song Hock Koon

Executive Director49 years of age, Malaysian

Song Hock Koon was appointed to the Board as Executive Director on 18 May 2012. He is also the Chief Executive Officer of Search & Advertising division. He is responsible for the formulation of business directions and strategies in Search & Advertising division.

Mr. Song started his career as a Project Engineer and as the Technical Manager in Festo Sdn. Bhd. He was later promoted to management role as Operating Manager in-charge of logistic, order fulfillment and IT in 1999 and subsequently became the Business Development Manager in-charge of sales and marketing of automation solution in 2001.

Mr. Song joined Infodata Media Sdn Bhd (now known as CBSA Online Sdn Bhd) as Chief Operating Officer in 2003 and he was promoted as the Chief Executive Officer in 2005 as a result of his outstanding performance. In Search & Advertising division, he is responsible for leading the division that involves directory publication, online portal and database development business.

Mr. Song was a first (1st) class honors graduate in Bachelor of Electrical Engineering from University Malaya in 1987.

He has direct shareholding of 20,186,975 ordinary shares of RM0.10 each in the Company.

Mr. Song does not have any family relationship with any director and/or major shareholder of the Company, nor any conflict of interest in any business arrangement involving the Company. He has no convictions for any offences within the past 10 years. Mr. Song has not attended any Board meetings of the Company held during the financial year as he was appointed to the Board after the financial year.


Mr. Fong Wai Leong

Executive Director42 years of age, Malaysian

Mr. Fong Wai Leong was appointed to the Board as an Independent Non-Executive Director on 30 January 2009 and re-designated as Executive Director on 31 December 2010. He is responsible for the business development and the regional business of CBSA Group.

He is a member of Malaysia Institute of Certified Public Accountants.

Mr. Fong has over 20 years of working experience in banking and finance which includes advising on a number of public listings, mergers and acquisitions in various countries including Malaysia, China, Thailand, Singapore, South Africa and South America.

Mr. Fong is currently a Director of Devonshire Advisory Sdn Bhd (“Devonshire”). Prior to joining Devonshire in 2000, he was the General Manager of Kuala Lumpur City Securities (now known as Alliance Investment Bank) where he headed the firm’s corporate finance Division. He also worked in CIMB’s Corporate Finance Division from 1993 to 1997. He began his career at KPMG as an auditor from 1989 to 1993.

He has direct shareholding of 323,650 ordinary shares of RM0.10 each in the Company.

Mr. Fong does not have any family relationship with any director and/or major shareholder of the Company, or any conflict of interest in any business arrangement involving the Company. He has no convictions for any offences within the past 10 years. Mr. Fong has attended all four (4) Board meetings of the Company held during the financial year.


Mr. Choo Kok Liong

Independent Non-Executive Director47 years of age, Malaysian

Mr. Choo Kok Liong was appointed to the Board as an Independent Non-Executive Director on 20 January 2004. He is also a member of Audit Committee, Nomination Committee and Remuneration Committee.

He graduated from Deakin University of Australia and holds a Bachelor of Business Degree majoring in Accounting and Economics. He is a Certified Practising Accountant from CPA Australia and had undergone his training in one of the big four international accounting firms. He is also a Chartered Accountant of Malaysian Institute of Accountants. Currently he operates his own practice which offers management and consultancy services. Prior to this, he was an accountant with the Hyatt Regency Saujana Hotel.

He has direct shareholding of 140,000 ordinary shares of RM0.10 each in the Company.

Mr. Choo does not have any family relationship with any director and/or major shareholders of the Company, nor any conflict of interest in any business arrangement involving the Company. He has no convictions for any offences within the past 10 years. Mr. Choo attended all four (4) Board meetings of the Company held during the financial year.

Mr. Wong Mun Wai

Independent Non-Executive Director55 years of age, Malaysian

Mr. Wong was appointed to the Board as Independent Non-Executive Director on 28 May 2012. He is a fellow member of The Association of Chartered Certified Accountants, UK, member of The Chartered Institute of Chartered Secretaries and Administrators, UK and a member of Malaysian Institute of Accountants. He has over 30 years of experience gathered in the accounting profession as well as in commerce. He is also a member of the Audit Committee and Nomination Committee.

From 1982 to 1993 he was with Horwath & Horwath International and Moore Rowland, two firms of Accountants, where he gathered invaluable experience in the accounting profession. He joined a public listed Company involved in industrial paper manufacturing, health care, financial services and properties, where his last posting was Senior Finance Manager cum Company Secretary. He then joined another listed company involved in the paper manufacturing and trading industry in 1997 as the Chief Operating Officer and was promoted to Executive Director in 1998. Mr Wong left this group of companies in 2003 after having successfully restructuring the Group to start his own consultancy practice.

He is now with a medium size accounting firm as director of the consultancy/audit. In his years of experience, Mr. Wong has carried out various due diligent and systems review assignments and merger and acquisition exercises involving different industries and businesses including financial institutions, household appliances, furniture, timber and paper related industries, biotech, and fitness centres.

From 2006 to 2008 he sat on the board of a listed Information Technology group of companies as an Independence Director and a member of the Audit Committee. He is currently sitting on the Board of Directors of Comintel Corporation Berhad and is the chairman of the Audit Committee.

He does not have any interest in shares in the Company.

He does not have any family relationship with any director and/or major shareholder of the Company, nor any conflict of interest in any business arrangement involving the Company. He has no convictions for any offences within the past 10 years. He has not attended any Board meeting of the Company held during the financial year as he was appointed to the Board after the financial year.



The Board of Directors (“the Board”) of CBSA Berhad (“CBSA”) is fully committed to ensure the fulfillment of the highest standards of Corporate Governance as set out in the Malaysian Code on Corporate Governance (“Code”), which highlights the principles and best practices on structures and processes that the Company may use in their operations towards achieving the optimal governance framework.

The Board is pleased to present below a description of how the Group has applied the principles set out in the Code and except where stated otherwise, its compliance with the best practices of the Code for the year ended 31 December 2011.

A. DIRECTORS(i) The Board

The Company is led and managed by an experienced Board, with wide mix of knowledge, business acumen, management skills and industry expertise from various backgrounds. The Board is responsible for corporate governance, reviewing and adopting the Group’s strategic plans and overseeing the conduct of the Group’s businesses.

The Board delegates certain responsibilities to the Board committees, namely the Audit Committee, Nomination Committee, Remuneration Committee and Employees’ Share Option Scheme Committee. The respective Committees operate within defined terms of reference to assist the Board in discharging its fiduciary duties and responsibilities and report to the Board on matters considered and their recommendation thereon. The ultimate responsibility for the final decision on all matters, however, lies with the Board.

(ii) Board BalanceAs of the date of this statement, the Board consists of six (6) members, comprising three (3) Executive Directors, three (3) Independent Non-Executive Directors. This is in compliance with Paragraph 15.02 of the Bursa Malaysia Securities Berhad (“Bursa Securities”) Main Market Listing Requirements (“Listing Requirements”) which requires at least two (2) Independent Directors or one third of the Board, whichever is the higher. There is a clear division of responsibilities between and the Chairman and the Group Managing Director to ensure a balance of power and authority. The Chairman is responsible for the orderly conduct and working of the Board, ensuring all Directors receive timely, relevant information and they are properly briefed on issues arising at Board meetings. The Group Managing Director is responsible for the overall management of the Group and ensuring the policies and strategies set by the Board are effectively implemented.

STATEMENT ON CORPORATE GOVERNANCE

Statement On Corporate Governance


The presence of the Independent Non-Executive Directors brings an additional element of check and balance to the Board. They provide unbiased and independent advice, views and judgment which take into account the interests of the Group and all its stakeholders.

(iii) Board Meetings and AttendanceThe Board meets at least once every quarter and additional meetings are convened as and when necessary. All proceedings, deliberations and conclusions of the Board meetings are duly minuted and signed by the Chairman of the meetings.

During the financial year ended 31 December 2011, the Board had met four (4) times. The record of attendance is

as follows:

Directors Number of Meetings Attended by Directors

General Tan Sri Dato’ Seri Panglima Mohd Azumi Bin Mohamed (Rtd) 3/4

Mr. Sun Chee Kong (Resigned on 18 May 2012) 4/4

Mr. Choo Kok Liong 4/4

Mr. Fong Wai Leong 4/4

Mr. Tan Tian Sin 4/4

Mr. Song Hock Koon (Appointed on 18 May 2012) -

Mr. Wong Mun Wai (Appointed on 28 May 2012) -

All the Directors have complied with the minimum 50% attendance requirement as stipulated by the Listing Requirements of Bursa Securities.

(iv) Supply of InformationThe Chairman ensures that each Director is provided with timely notices for each Board meeting and Board papers are issued prior to the Board meetings to enable the Directors to review and consider the agenda items to be discussed in the Board meeting and where necessary, to obtain further explanations in order to be fully briefed before the meeting.

The Board has unrestricted access to timely and accurate information in furtherance of its duties.

All Directors have full access to the advice and services of the Company Secretaries and the Management and may seek independent professional advice when necessary, at the Company’s expense.

The Company Secretaries are also responsible for ensuring that Board meeting procedures are adhered to and that applicable rules and regulations are complied with. The Directors will be updated by the Company Secretaries on new statutory requirements relating to their duties and responsibilities.

(v) Directors’ TrainingAll members of the Board (except for Mr. Song Hock Koon who was appointed to the Board on 18 May 2012) have attended the Mandatory Accreditation Programme, prescribed by Bursa Securities.

Directors are encouraged to attend seminars and/or conferences organized by relevant regulatory authorities and professional bodies to keep abreast with latest developments in the market place and new statutory and regulatory requirements.



Details of trainings attended by the Directors for the financial year ended 31 December 2011 are as follows:

Name of Directors Training Programmes

General Tan Sri Dato’ Seri Panglima • The Board’s Responsibility for Mohd Azumi Bin Mohamed (Rtd) Corporate Culture

Mr. Sun Chee Kong • Converting Macro Theme Into (Resigned on 18 May 2012) High Conviction Ideas

Mr. Choo Kok Liong • Corporate Governance – Assessing the Risk and Control Environment

• 2012 Budget Talk Principles

Mr. Fong Wai Leong • Halal International Trade Conference

Mr. Tan Tian Sin • Global Investment Outlook Conference

Mr. Song Hock Koon (Appointed on 18 May 2012) -

Mr. Wong Mun Wai (Appointed on 28 May 2012) -

The Board is also regularly updated by the Company Secretaries on the latest update and amendments to the Listing Requirements of Bursa Securities. The Board will on continuing basis evaluate and determine the training needs of each Director, particularly on relevant new law and regulations and essential practices for effective corporate governance and risk management to enable the Directors to effectively discharge their duties.

(vi) Appointment to the BoardThe Nomination Committee was established for recommending the right candidates with the required mix of skills, knowledge and experience and other qualities to be appointed to the Board.

The Nomination Committee comprises three (3) Independent Non-Executive Directors. The members are:

Chairman: General Tan Sri Dato’ Seri Panglima Mohd Azumi Bin Mohamed (Rtd) (Independent Non-Executive Director)

Member: Mr. Choo Kok Liong Mr. Wong Mun Wai (Independent Non-Executive Director) (Independent Non-Executive Director) (Appointed on 28 May 2012)

The terms of reference of the Nomination Committee are as follows:a) to recommend the nomination of a person or persons for all directorships to be filled by the shareholders or the board; b) to consider, in making its recommendations, candidates for directorships proposed by the Managing Director and, within the bounds of practicability, by any other senior executive or any director or shareholder;c) to recommend to the board, directors to fill the seats on board committees;d) to identify, evaluate and recommend candidates for appointment as Company Secretary; discussion and voting of their own remuneration. e) to assess annually the effectiveness of the board as a whole, the committees of the board and the contribution of each existing individual director and thereafter, recommend its findings to the board; andf) to review annually the required mix of skills and experience and other qualities, including core competencies which non-executive directors should bring to the board and thereafter, recommend its findings to the board.

(vii) Re-electionIn accordance with the Articles of Association of the Company, one third (1/3) of the Directors shall retire at least once in each three (3) years and the retiring Director shall be eligible for re-election.



B. DIRECTORS’ REMUNERATIONThe objective of the Group’s policy on Directors’ remuneration is to ensure that the Group attracts and retains Directors with the relevant skills and knowledge to run the Group successfully.

The Remuneration Committee is responsible for developing the remuneration policy and determining the remuneration packages of Managing Director and Executive Directors. The remuneration packages of Non-Executive Directors would be determined by the Board as a whole. The Directors concerned will abstain from discussion and voting of their own remuneration.

Directors’ fees payable to Non-Executive Directors are subject to the approval of the Company’s shareholders at annual general meetings.

The Remuneration Committee comprises three (3) members of which one (1) is Executive Director and two (2) are Independent Non-Executive Directors. The members of the Committee are:

Chairman: General Tan Sri Dato’ Seri Panglima Mohd Azumi Bin Mohamed (Rtd) (Independent Non-Executive Director)

Members: Mr. Choo Kok Liong Mr. Tan Tian Sin (Independent Non-Executive Director) (Executive Director) (Appointed on 28 May 2012)

The breakdown of the remuneration of the Directors in the Company during the financial year is as follow:

Salaries and Other Benefit- Fees Emolument in-kind Total RM RM RM RM

Executive Directors - 685,452 77,238 762,690

Non-Executive Directors 72,000 - - 72,000

The number of Directors of the Company whose total remuneration fall within the respective band are as follows:

Remuneration band (RM) Executive Directors Non-executive Directors

RM50,000 and below 0 3

RM300,001 – RM350,000 1 -

RM400,000 – RM450,000 1 -

C. RELATION WITH SHAREHOLDERS AND INVESTORSThe Company recognises the importance of keeping shareholders and investors informed of the Group’s business and

corporate developments. Such information is disseminated via the Company’s annual reports, various disclosures to

Bursa Securities including quarterly financial results and various announcements made from time to time.

The Group maintains a website at www.cbsagroup.com where shareholders or investors may access for the latest

information on the Group.



The Annual General Meeting remains the principal forum for dialogue with shareholders where they are provided

with an opportunity to raise questions pertaining to issues in the Annual Report, Audited Financial Statements

and corporate developments in the Group, the resolutions being proposed and/or on the business of the Group.

Shareholders who are unable to attend are allowed to appoint proxies to attend and vote on their behalf. Members

of the Board as well as Auditors of the Company are present to answer questions raised at the meeting.

D. ACCOUNTABILITY AND AUDIT(i) Financial Reporting

The Board is responsible for presenting a balanced, clear and meaningful assessment of the Group’s financial position

and prospect to the Company’s shareholders through the annual financial statements and quarterly announcements.

The quarterly results and annual financial statements are reviewed by the Audit Committee and recommended to the

Board for approval before its release to Bursa Securities.

(ii) Internal Control

The Board has the overall responsibility in maintaining a sound and effective system of internal controls for the Group

which covers not only financial controls but also operational and compliance controls as well as risk management.

The Group outsourced its internal audit function to an external professional firm. The role of the internal auditors is

to perform regular and systematic review of the internal control systems and to provide the Audit Committee with

independent reviews and objective reports on the state of internal control of the Group.

The internal auditors adopt the risk assessment based internal audit approach and methodology in identifying and

prioritising business areas to be audited and the scope of the audit activities.

During the financial year, periodical visits and internal audit reviews have been carried out according to the risk

assessment based internal audit plan approved by the Audit Committee. Audit findings and recommendations

highlighted in the audit reports were presented and discussed during the Audit Committee meetings. The action

plans are reviewed and followed up by the internal auditors on a periodical basis to ensure the recommendations are

effectively implemented.

The cost incurred for the internal audit function for the financial year ended 31 December 2011 is RM27,000.

The Statement on Internal Control is furnished on page 22 of this Annual Report, and this provides an overview of the

state of internal controls within the Group.

(iii) Relationship with Auditors

The Board has established formal and transparent relationships with both the external and internal auditors through

the Audit Committee. The relationship between the Audit Committee and both the external and internal auditors are

described in the terms of reference of the Audit Committee Report.

E. COMPLIANCE WITH THE CODEThe Board strives to ensure that the Company complies with the Principles and Best Practices of the Code. The Board

will endeavour to improve and enhance the procedures from time to time.



The Board of Directors of CBSA (“the Board”) is pleased to present the statement on internal control of the Group in accordance with the Bursa Malaysia Securities Berhad Main Market Listing Requirements and as guided by the Statement on Internal Control: Guidance for Directors of Public Listed Companies.

BOARD RESPONSIBILITYThe Board acknowledges its responsibility in maintaining a sound and effective system

of internal controls and in seeking regular assurance on the adequacy and integrity of the

internal control systems to safeguard shareholders’ investments and the Group’s assets.

The Board also acknowledges that due to the limitations that are inherent in any system

of internal controls, the internal control system can only reduce but cannot totally

eliminate risks that impede the achievement of the Group’s business objective. Therefore,

the systems can only provide reasonable and not absolute assurance against material

misstatement or fraud and losses.

KEY ELEMENTS OF INTERNAL CONTROL SYSTEMThe key elements of the Group’s internal control system include:

• Formal organization structure with clearly defined roles and lines of responsibilities,

authority and accountability within the Group;

• Recruitment of adequate experienced, skilled and professional staff with the necessary caliber

to fulfill the respective responsibilities and ensuring that minimum controls are in place;

• Establishment of an effective segregation of duties via independent checks, review and

reconciliation activities to prevent human errors, fraud and abuses;

• Periodic review of the adequacy and effectiveness of the system of internal control by the

internal audit function;

• Annual budgeting process which requires all business units/divisions to prepare budget

and business plan on annual basis;

• Regular review of actual sales performance against target set by the management team.

This enables effective monitoring of significant variances and deviation from the target

and business objective;

• Establishment of the internal policies and procedures for key functional units within the

Group and regularly update the policies and procedures to reflect changing risks and

business needs or to resolve operational deficiencies;

STATEMENT ON INTERNAL CONTROL

Statement On Internal Control


• Senior management meetings are held on a fortnightly basis to review and discuss business performance, strategy,

business development, key management issues;

• Operation meetings are held on a weekly basis to review and discuss the progress of projects, sales activities, key operational

issues and action plans to address any areas of concern; and

• Engage and appoint solicitors, financial advisors and other competent professional as may be required in respect of any

corporate exercise undertaken by the Group.

The Board remains committed towards operating a sound internal control system. The internal control system will continue to

be reviewed and updated to meet the changing and challenging business environment. The Board will seek regular assurance

on the continuity and effectiveness of the internal control system through independent appraisal by the internal auditors.

The Board is of the view that the system of internal control in place for the year under review is adequate to cater for the

requirement of the Group at the existing level of operation and safeguard the Group’s interest.

During the year, there were no material losses incurred as a result of weaknesses in the system of internal control that would

require disclosure in the Company’s Annual Report.

Statement On Internal Control


The Directors of the Company are responsible for ensuring the financial statements of the

Group and the Company are properly drawn up in accordance with the provisions of the

Companies Act, 1965 and applicable approved accounting standards in Malaysia so as to give

a true and fair view of the state of affairs of the Group and the Company as at the end of the

financial year and of the results and cash flows of the Group and the Company for that period.

The Directors are satisfied that in preparing the financial statements of the Group and the

Company for the year ended 31 December 2011, the Group and the Company had applied

appropriate accounting policies on a consistent basis. The Directors also consider that

all applicable approved accounting standards are adhered to in the preparation of the

financial statements.

The Directors have general responsibilities for taking such steps that are reasonably

available to them to safeguard the assets of the Group, and to prevent and detect fraud and

other irregularities.

DIRECTORS’ RESPONSIBILITY STATEMENT

Directors’ Responsibility Statement

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