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Annual Report 2007 Connecting the Future [ ] (618933-D)

Annual Report 2007 - Rapid Conn · 2020. 1. 1. · CORPORATE PROFILE 2007 [ connecting the future ] CONNECTCOUNTY HOLDINGS BERHAD (618933-D) The ConnectCounty Group is an integrated

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Page 1: Annual Report 2007 - Rapid Conn · 2020. 1. 1. · CORPORATE PROFILE 2007 [ connecting the future ] CONNECTCOUNTY HOLDINGS BERHAD (618933-D) The ConnectCounty Group is an integrated

Annual Report 2007

Connecting the Future[ ]

(618933-D)

Page 2: Annual Report 2007 - Rapid Conn · 2020. 1. 1. · CORPORATE PROFILE 2007 [ connecting the future ] CONNECTCOUNTY HOLDINGS BERHAD (618933-D) The ConnectCounty Group is an integrated

CONTENTS

2007

[ connecting the future ]

CONNECTCOUNTY HOLDINGS BERHAD

(618933-D)

CCoonnnneeccttiinngg tthhee FFuuttuurree Corporate Information 1 Corporate Profile 2

Chairman’s Statement 3

Directors’ Profile 6

Statement on Corporate Governance 9

Audit Committee Report 14

Statement on Internal Control 17

Additional Compliance Information 18

Financial Statements 20

Directors’ Report 21 Statement by Directors 26 Statutory Declaration 27

Report of the Auditors 28 Income Statements 29 Balance Sheets 30

Consolidated Statement of Changes in Equity 31 Company Statements of Changes in Equity 32 Cash Flow Statements 33 Notes to the Financial Statements 35

Analysis of Shareholdings 73

Notice of Annual General Meeting 75

Notice of Nomination of Auditors 77 Statements Accompanying Notice of Annual General Meeting 78

Proxy Form 80

Page 3: Annual Report 2007 - Rapid Conn · 2020. 1. 1. · CORPORATE PROFILE 2007 [ connecting the future ] CONNECTCOUNTY HOLDINGS BERHAD (618933-D) The ConnectCounty Group is an integrated

CORPORATE INFORMATION

2007

[ connecting the future ]

CONNECTCOUNTY HOLDINGS BERHAD

(618933-D)

Board of Directors • Ang Chuang Juay, Chairman cum Group Managing Director • Turker Hidirlar, Executive Director (Resigned on 25 February 2008) • Robert Jean Tondreault, Executive Director (Resigned on 31 December 2007) • Huang Yan Teo, Independent Non-Executive Director • Toh Wing Yew, Independent Non-Executive Director (Resigned on 18 September 2007) • Dato’ Dr. Mohamed Ariffin Bin Hj. Aton, Independent Non-Executive Director (Appointed on 1 October 2007) • Lim Bee San, Independent Non-Executive Director (Appointed on 2 January 2008)

Company Secretary • Sujata Menon A/P K.R.D.S

Chandran (LS 0002004)

Audit Committee • Huang Yan Teo (Chairperson) • Dato’ Dr. Mohamed Ariffin Bin Hj.

Aton • Lim Bee San

Nomination Committee • Dato’ Dr. Mohamed Ariffin Bin Hj.

Aton (Chairperson) • Huang Yan Teo • Ang Chuang Juay

Remuneration Committee • Huang Yan Teo (Chairperson) • Ang Chuang Juay • Dato’ Dr. Mohamed Ariffin Bin Hj.

Aton

ESOS Committee • Ang Chuang Juay (Chairperson) • Huang Yan Teo • Lim Bee San

Auditors Moore Stephens Associates & Co Suite 5.2A, Level 5, Menara Pelangi, No. 2, Jalan Kuning, Taman Pelangi, 80400 Johor Bahru, Johor Tel : (607) 333 8800 Fax : (607) 334 6151 Share Registrar Chua, Woo & Company Sdn Bhd Suite 1301, 13th Floor, City Plaza Jln Tebrau, 80300 Johor Bahru, Johor Tel : (607) 332 2088 Fax : (607) 332 8096 Sponsor Public Investment Bank Berhad 25th Floor, Menara Public Bank, 146 Jalan Ampang, 50450 Kuala Lumpur Tel : (603) 2166 9382 Fax : (603) 2166 9386 Principal Banker • AmBank (M) Berhad

Registered Office Suite 5.3A, Level 5, Menara Pelangi, No.2, Jln Kuning, Taman Pelangi, 80400 Johor Bahru, Johor Tel : (607) 334 1750 Fax : (607) 331 8617 Business Office Lot 2-29, Jalan TTC 8, Taman Teknologi Cheng, 75250 Melaka Tel : (606) 336 4648 Fax : (606) 336 4650 Stock Exchange Listing MESDAQ Market of

Bursa Malaysia Securities Bhd Bursa Code: 0102 Reuters Code: 0102.KL Bloomberg Code: CCHB MK Other Information Corporate Websites: http://www.connectcounty.com/ http://www.rapidconn.com/ Investor Relations Channel: http://ir.wallstraits.net/connectcounty/

1

Page 4: Annual Report 2007 - Rapid Conn · 2020. 1. 1. · CORPORATE PROFILE 2007 [ connecting the future ] CONNECTCOUNTY HOLDINGS BERHAD (618933-D) The ConnectCounty Group is an integrated

CORPORATEPROFILE

2007[ connecting the future ]

CONNECTCOUNTY HOLDINGS BERHAD

(618933-D)

The ConnectCounty Group is an integrated provider of interconnect solutions. With highly automated manufacturing facilities in Malaysia, People’s Republic of China, and the United States of America, the Group undertakes the design, development, manufacture and marketing of cables, connectors and related products. The Group has also a marketing office in Singapore.

Our engineering research is primarily performed at the US subsidiary, Rapid Conn, Inc. and product development is undertaken at our Asian facilities. We are specialized in interconnect solutions for diverse industries of medical, automotive, entertainment and telecommunication, and produce cables and connectors under our own brand name of “Rapid Conn”

Our solutions include:

Value-added products and services:-We enhance existing products in terms of additional features, improved product performance or product quality.

Customized products:-We provide customized product development, inclusive of conceptualisation, design, prototyping, tool building, testing and debugging, tooling and manufacture.

Industry Standard Products (“ISP”):-We manufacture a wide range of ISP cables and connectors.

CORPORATESTRUCTURE

2

ConnectCountyHoldingsBerhad

USA

Rapid Conn Inc

CHINA

Rapid Conn(Shen Zhen)

Co Ltd

SINGAPORE

Rapid Conn (S)Pte Ltd

MALAYSIA

Rapid ConnInterconnect (M)

Sdn Bhd

Page 5: Annual Report 2007 - Rapid Conn · 2020. 1. 1. · CORPORATE PROFILE 2007 [ connecting the future ] CONNECTCOUNTY HOLDINGS BERHAD (618933-D) The ConnectCounty Group is an integrated

CHAIRMAN’S STATEMENT

2007 [ connecting the future ]

CONNECTCOUNTY HOLDINGS BERHAD

(618933-D)

Dear Shareholders, The Board of Directors of ConnectCounty Holdings Berhad (“ConnectCounty”) is pleased to present to you the 2007 Annual Report for the financial year ended 31 December 2007 (“FY2007”) The global economy grew at a relatively slower pace in 2007 while inflation set in. In addition, the insatiable appetite for primary commodities from the industrializing nat ions such as China and India did not help in averting the rising prices of raw materials especially copper and aluminium, which are widely used in the electronics and electrical manufacturing sector. For most of 2007, the Group, as with the entire interconnect industry, needed to adjust to the rising material prices as the lag time of higher production costs set in to affect the overall competitiveness of the industry. However, the industry continued to register volume growth during the year under review, as global demand for interconnect products continued to remain strong, albeit with an indication of increasing competitiveness still. Financial Review For FY2007, the Group managed to maintain the top line at RM64.53m compared to RM63.76 million in the previous year. The exchange rate, especially the US Dollar, had dropped against Ringgit in the year 2007. The Group’s revenue would have been RM2.88 million more or 4.5% had the exchange rates remained consistent. Despite the revenue being sustained, the Group could not reduce the pre-tax loss in FY2007, which posted a loss before taxation of RM4.12 million at the same level compared to the previous year. Besides the more competitive margins in our revenue mix for the year, the other factors that adversely affected the Group’s financial performance included the prudent write-offs of RM1.06 million of plant and equipment, inventory obsolescence, and development expenditure. The other attributing reason was the share based payment of RM0.30 million due to ESOS scheme granted and the foreign exchange loss of approximately RM0.10 million incurred during the year. Furthermore the Group continued to undertake investments amounting to RM1.64 million to beef up the production facility in China in FY2007 in anticipation of making it the Group’s main facility in the future. The Group’s focus on developing the China operations in an aggressive manner is part of the strategy to undertake our own manufacturing requirements in order to ensure consistently high product quality as well as expand our product margins in the future. Operation Review For the year under review, the Group continued its strategy of increasing the market share, as well as setting up presence in key markets. The Group now has operations in four (4) different countries: namely, Melaka, Malaysia; Singapore; Shenzhen, China; and Southern California, the United States of America (“USA”). Our USA operations contributed RM46.76 million, or about 72.5% to the Group’s revenues of RM64.53 million, versus RM44.96 million or 70.5% respectively of the previous financial year. The Singapore operations, which are positioned to target multi-national companies in Singapore and Europe, meanwhile, contributed 26.2% or RM16.91 million to the group revenues. For the year under review, the operations there saw a 87.5% increase in business volume, from RM8.93 million achieved in 2006. Effectively, the impressive growth rate reflected the increasing confidence that the market has for our products and quality.

3

Page 6: Annual Report 2007 - Rapid Conn · 2020. 1. 1. · CORPORATE PROFILE 2007 [ connecting the future ] CONNECTCOUNTY HOLDINGS BERHAD (618933-D) The ConnectCounty Group is an integrated

CHAIRMAN’S STATEMENT (CONT’D)

2007 [ connecting the future ]

CONNECTCOUNTY HOLDINGS BERHAD

(618933-D)

Our set up in China mainly provided goods to other Group companies. In 2007 its revenue was RM4.40 million, of which RM4.10 million was derived from inter company sales. During the year under review, the team in China remained focused on developing the marketing plans in order to establish a considerable presence in the huge market, as well as creating awareness of our brand name. The Malaysian operations also provided goods to other Group companies. In 2007 its revenue was RM3.09 million, of which RM2.52 million was inter-company sales. The Malaysian subsidiary would continue to improve its performance. Despite the weak financial performance, in terms of profitability, we believe that we have at least maintained our market share in the vast cables and connector industry worldwide, judging from the steady revenue of the Group. In 2008 and beyond the Group would continue to see improved margins in its products manufactured in the China set up as the production processes have now included the cable extrusion process thus recouping manufacturing profit. As the Group become more self reliant, we increasingly undertake our own manufacturing requirements in order to ensure consistently high product quality wh i le keeping costs manageable. Product innovation through R&D The Group’s presence in the fast-moving and highly-competitive interconnect industry has made it necessary for us to place a high premium on R&D initiatives, so as to enable us to continuously maintain our leading edge in interconnect technology. Our R&D center in the China has undertaken numerous initiatives to ensure the continual pipeline of new products that fulfil our customers’ demanding requirements without compromise to quality and innovativeness. To this end, the Group invested approximately RM2.91million in R&D activities in FY2007, as compared to RM1.00 million in FY2006. Corporate Direction The Group has put in place several business strategies and is optimistic on the prospects moving into 2008 and beyond, as we believe our growth will be driven by new market development in order to increase our market share, as well as niche product development. The Group continues the marketing efforts to establish new overseas markets. With strong presence already in the USA, we are now targeting the European market. For the year under review, we continue to find successes selling our products in Hungary and France. And we will continue to look for new frontiers for our products. At the same time, we are constantly on the lookout for new customers in the markets that we are already in. The case in point here is China, where we believe our high quality interconnect products have the edge over our competitors’. A testament to our quality products is when the China operations, via Rapid Conn (ShenZhen) Co., Ltd., was awarded the ISO certification in January 2007.

4

Page 7: Annual Report 2007 - Rapid Conn · 2020. 1. 1. · CORPORATE PROFILE 2007 [ connecting the future ] CONNECTCOUNTY HOLDINGS BERHAD (618933-D) The ConnectCounty Group is an integrated

CHAIRMAN’S STATEMENT (CONT’D)

2007 [ connecting the future ]

CONNECTCOUNTY HOLDINGS BERHAD

(618933-D)

Going forward, we are committed to be cost competitive in our products. We aim to see our China operations help us achieve that. We are currently streamlining our group operations with the continued refinement of our manufacturing facilities in China. This strategy will not only enhance our overall profit margins but also position us closer to our potential customers in China. We also understand the need to be flexible in meeting the clients’ needs. To this end, we have taken numerous market driven initiatives. For instance, we have been working closely with our customers to design customized interconnects. This strategy, we believe, would help us broaden the target market segments for our products. Corporate Governance The Board believes in maintaining high standards of corporate governance practices within the Group, as this is a fundamental aspect in discharging our responsibilities to protect and maximize shareholders’ value, and enhance the business prosperity of the Group. The measures implemented are highlighted in the Corporate Governance Statement in this Annual Report. Appreciation At this juncture, on behalf of the Board, I would like to acknowledge my appreciation to all our employees who have worked hard to drive the Group’s growth in the past year. A word of thanks also to our valued customers, shareholders and business associates both locally and abroad, for their continuous support for the Group. Together, we look forward to the Group’s brighter future ahead. Ang Chuang Juay Chairman cum Group Managing Director 5 May 2008

5

Page 8: Annual Report 2007 - Rapid Conn · 2020. 1. 1. · CORPORATE PROFILE 2007 [ connecting the future ] CONNECTCOUNTY HOLDINGS BERHAD (618933-D) The ConnectCounty Group is an integrated

DIRECTORS’ PROFILE

2007

[ connecting the future ]

CONNECTCOUNTY HOLDINGS BERHAD

(618933-D)

ANG CHUANG JUAY Chairman cum Group Managing Director Ang Chuang Juay, Singaporean, aged 50 is the Chairman cum Group Managing Director of the Company. He was appointed to the Board on 18 August 2003 and has been the Managing Director since then. He is the Chairman of the Employee Share Option Scheme (“ESOS”) Committee. He is a member of the Nomination and Remuneration Committees. Mr. Ang graduated in 1983 with a Bachelor degree in Engineering from National University of Singapore.

Mr. Ang began his career with Wearnes Technology as the Head of its Printed Circuit Board assembly operations. He remained with the company for six (6) years throughout which he obtained extensive exposure in surface mount technology (“SMT”), floppy disk drive (“FDD”) and hard disk drive (“HDD”) operation. He was seconded to Taiwan to head the production unit and sent to China to set up the FDD Operation. He has also worked as the Managing Director of a UK IT company based in Singapore specializing in networking. After the takeover of the IT company by another firm, he became a consultant to NS-Tech Co. Ltd. His talents and natural drive were spotted by the founding member of NS-Tech Co. Ltd. and he was roped in to help expand into the USA and set up a presence in Singapore. Not satisfied with merely being a subcontractor for OEMs and with his mind firmly set on working in the forefront technology with MNCs, he decided to pursue his own goals and visions by divesting his interests in NS-Tech Co. Ltd. and forming the ConnectCounty Holdings Berhad Group (“CCHB”). He does not have any family relationship with directors and/or substantial shareholders of the Company. He has not been convicted of any offences within the past 10 years. He has no conflict of interest with the Company or hold any directorships of other public companies.

HUANG YAN TEO Independent Non Executive Director Huang Yan Teo, Malaysian aged 61, is an Independent Non-Executive Director of the Company. He was appointed to the Board on 20 May 2005. He is the Chairman of the Audit Committee and Remuneration Committee, a member of the Nomination and ESOS Committees. He is a Chartered Accountant by profession. He is a member of the Malaysian Institute of Accountants, a member of the Malaysian Institute of Taxation and a Fellow Member of the Association of Chartered Certified Accountants (UK). He has his own accountancy practice, Huang Yan Teo & Co. which he has established since 1981. Prior to that, from 1966 to 1974, he served for an audit firm, Coopers and Lybrand, before moving on to hold the position as a Financial Controller with a firm in the private sector from 1974 until 1981. He is also the director of London Biscuits Berhad, Khee San Berhad and Denko Industrial Corporation Berhad. He does not have any family relationship with directors and/or substantial shareholders of the Company. He has not been convicted of any offences within the past 10 years. He has no conflict of interest with the Company.

6

Page 9: Annual Report 2007 - Rapid Conn · 2020. 1. 1. · CORPORATE PROFILE 2007 [ connecting the future ] CONNECTCOUNTY HOLDINGS BERHAD (618933-D) The ConnectCounty Group is an integrated

DATO’ DR MOHAMED ARIFFIN BIN HJ ATON Independent Non-Executive Director

Dato’ Dr Mohamed Ariffin Bin Hj Aton, Malaysian aged 62, is an Independent Non-Executive Director of the Company. He was appointed to the Board on 1 October 2007. He is the Chairman of the Nomination Committee, a member of the Audit Committee and Remuneration Committee. He graduated in 1970 with a Bachelor degree in Science (Hons) Chemical Engineering from University of Surrey, UK and in 1975 with a PhD in Chemical Engineering From University of Leeds, UK. He was a Professor in Chemical Engineering in the Department of Chemical and Process Engineering in University Kebangsaan Malaysia from 1989 to 1994 as well as a member of the key management at Petroliam Nasional Berhad (“Petronas”) Research and Development, a division of Petronas. From 1994 to 1996, he was Managing Director cum Chief Executive Officer of Petronas Research & Scientific Services Sdn. Bhd. He was resigned from Sime Engineering Services Bhd on completion of the merger between Sime Darby, Guthrie & Golden Hope on 22 Aug 2007 and completed contract as President & CEO of Sirim on 1st Sept 2007, hence relinquished all his directorships with Sirim & its related companies. He was appointed to the Board of Core Competencies Sdn Bhd & became its Chairman on 2 Nov 2007. He is also a director of Titan Chemicals Corp. Berhad, MEMS Technology Berhad and Perisai Petroleum Technologi Berhad. He does not have any family relationship with other directors and/or substantial shareholders of the Company. He has not been convicted of any offences within the past 10 years. He has no conflict of interest with the Company.

LIM BEE SAN Independent Non-Executive Director Lim Bee San, Malaysian aged 39, is an Independent Non- Executive Director of the Company. She was appointed to the Board on 2 January 2008. She is a member of the Audit Committee and ESOS Committee. She is a lawyer by profession. She holds a Law and Accounting & Finance Degree, BA (Hons) and is a Barrister-at-law (Middle Temple, London). She had previously practiced in two legal firms as legal assistant from year 1996 to 1999. She became partner of a legal firm from 2000 to 2006. She is the Founding Partner of M/s The Law Chambers of Yeap & Lim since 2006. She does not have any family relationship with any directors/or substantial shareholders of the Company. She has not been convicted of any offences within the past 10 years. She has no conflict of interest with the Company or hold any directorships of other public companies.

DIRECTORS’

PROFILE

2007

(CONT’D)

[ connecting the future ]

CONNECTCOUNTY HOLDINGS BERHAD (618933-D)

7

Page 10: Annual Report 2007 - Rapid Conn · 2020. 1. 1. · CORPORATE PROFILE 2007 [ connecting the future ] CONNECTCOUNTY HOLDINGS BERHAD (618933-D) The ConnectCounty Group is an integrated

2007connecting the future[ ]

Page 11: Annual Report 2007 - Rapid Conn · 2020. 1. 1. · CORPORATE PROFILE 2007 [ connecting the future ] CONNECTCOUNTY HOLDINGS BERHAD (618933-D) The ConnectCounty Group is an integrated

STATEMENT ON CORPORATE GOVERNANCE

2007

[ connecting the future ]

CONNECTCOUNTY HOLDINGS BERHAD

(618933-D)

The Malaysian Code on Corporate Governance (“Code”) sets out the principles and best practices that companies may apply in the direction and management of their business and affairs towards the ultimate objective of maximising shareholders value.

The statement sets out how the Group has applied the key principles and the extent of its compliance with the best practices throughout the financial year ended 31 December 2007.

DIRECTORS

(i) Board Composition

The Board has overall responsibility for the strategic direction and control of the Group. Presently, the Board has four (4) Members, of which comprising of one (1) Executive Directors which is Managing Director, three (3) Independent Non-Executive Directors. The profiles of the Board members are as set out on pages 6 to 7 of this Annual Report.

In line with the Listing Requirements of Bursa Malaysia Securities Berhad, one-third of the Board consists of Independent Non-Executive Directors; thereby bringing objective and independent judgment to facilitate a balanced leadership in the Group as well as safeguard the interest of the shareholders in ensuring the highest standard of conduct and integrity are maintained.

The Board ordinarily has five (5) scheduled meetings annually, with additional meetings to be held between the scheduled meetings as and when necessary.

For this financial year under review, a total of five (5) Board Meetings were held. The record of attendance of these meetings by the current Board is as follows:

Directors Attendance Ang Chuang Juay 5/5 Turker Hidirlar (Resigned on 25 February 2008) 5/5 Robert Jean Tondreault (Resigned on 31 December 2007) 4/5 Huang Yan Teo* 5/5 Toh Wing Yew* (Resigned on 18 September 2007) 4/4 Dato’ Dr Mohamed Ariffin Bin Hj Aton * (Appointed on 1 October 2007) 1/1 Lim Bee San* (Appointed on 2 January 2008) 0/0

* Denotes Independent Non-Executive Director

(ii) Supply of Information

Each Director is provided with full and timely information which enables them to discharge their responsibilities. Prior to each Board meeting, the agenda together with the detailed reports and supplementary papers are circulated to the Directors in advance. This is to enable the Directors to obtain further explanations, where necessary, to be adequately informed before the meeting.

The Directors have full access to all information within the Company in furtherance of their duties. In addition, all Directors have access to the advice and services of the Company Secretaries who are responsible for ensuring that the Board procedures are followed. The Directors may also seek external independent professional advice at the Company’s expenses, to assist them in their decision-making.

9

Page 12: Annual Report 2007 - Rapid Conn · 2020. 1. 1. · CORPORATE PROFILE 2007 [ connecting the future ] CONNECTCOUNTY HOLDINGS BERHAD (618933-D) The ConnectCounty Group is an integrated

STATEMENT ON CORPORATE GOVERNANCE (CONT’D)

2007

[ connecting the future ]

CONNECTCOUNTY HOLDINGS BERHAD

(618933-D)

(iii) Directors’ Training

All the Directors have attended and successfully completed the Mandatory Accreditation Program (MAP). The Directors will continue to attend other relevant training programs as may be determined by the Board to keep them abreast with the latest developments in the relevant areas. All directors receive updated from time to time, on relevant new laws and regulations to enhance their business acumen and skills to meet changing commercial risks and challenges.

(iv) Appointment and Re-election

In accordance with the Company’s Articles of Association, one third of the Directors shall retire from office and be eligible for re-election at each Annual General Meeting and all Directors shall retire from once at least in each three (3) years but shall be eligible for re-election.

The Directors shall have the power at any time and from time to time to appoint any person to be a Director, either to fill a casual vacancy or as an addition to the existing Directors, but so that the total number of Directors shall not any time exceed the number fixed in accordance with the Company’s Articles of Association. Any Director so appointed shall hold office only until the next following annual general meeting and shall then be eligible for re-election but shall not be taken into account in determining the Directors who are to retire by the rotation at that meeting.

(v) Role of Board Committees

In line with the Board’s commitment to having good corporate governance, the Board has set up the following four (4) board committees, each entrusted with specific tasks to assist the Board in carrying out its duties and responsibilities. These committees are:

- Audit Committee; - Nomination Committee; - Remuneration Committee; and - ESOS Committee.

a) Audit Committee

The terms of reference of the Audit Committee are set out on pages 14 and 16 of the annual report.

b) Nomination Committee

The Nomination Committee is set up to propose new nominees for the Board and to evaluate each individual Director on an on-going basis. The Nomination Committee also seeks to ensure an optimal mix of qualification, skill and experience among the Board members.

The Nomination Committee comprises wholly of Non-Executive Directors as follows:-

Name Position

Dato’ Dr Mohamed Ariffin Bin Hj Aton Chairman (Appointed on 1 October 2007) Huang Yan Teo Member Ang Chuang Juay Member

10

Page 13: Annual Report 2007 - Rapid Conn · 2020. 1. 1. · CORPORATE PROFILE 2007 [ connecting the future ] CONNECTCOUNTY HOLDINGS BERHAD (618933-D) The ConnectCounty Group is an integrated

STATEMENT ON CORPORATE GOVERNANCE (CONT’D)

2007

[ connecting the future ]

CONNECTCOUNTY HOLDINGS BERHAD

(618933-D)

(v) Role of Board Committees (cont’d)

c) Remuneration Committee

The Remuneration Committee is responsible to recommend to the Board the framework and quantum values for the Executive Directors’ as well as senior management’s remuneration package, terms of employments, reward structure and perks.

In general, the remuneration is structured so as to link rewards to corporate and individual performance as in the case of the Executive Directors and senior management. As for the Non-Executive Directors, the level of remuneration reflects the experience and level of responsibilities undertaken individually by the director concerned.

The Remuneration Committee comprises the following members:

Name Position

Huang Yan Teo Chairman Ang Chuang Juay Member Dato’ Dr Mohamed Ariffin Bin Hj Aton Member (Appointed on 1 October 2007)

d) ESOS Committee

The ESOS Committee is appointed by the Board to administer the Employee Share Option Scheme (“ESOS”) in accordance with the objectives as stated in the By-Laws of the ESOS.

The ESOS Committee comprises the following members:

Name Position

Ang Chuang Juay Chairman Huang Yan Teo Member Lim Bee San (Appointed on 25 February 2008) Member

As at 31 December 2007, the Company had offered 14,170,000 ESOS options to eligible Directors and

employees of the Group.

DIRECTORS’ REMUNERATION

(i) Details of Directors’ remuneration

The Company pays its Non-Executive Directors allowances based on attendance of meetings. There are service contracts between the three (3) Executive Directors and the Company.

The details of the remuneration of Directors of the Company which includes remuneration received/receivable from the Company and its subsidiary companies during the financial year are as follows:

a) Aggregate remuneration of Directors categorised into the appropriate components:

Executive Directors

RM

Non-Executive Directors

RM

Total RM

Salaries and other emoluments 1,550,593 56,000 1,606,593Fees 36,000 24,000 60,000

11

Page 14: Annual Report 2007 - Rapid Conn · 2020. 1. 1. · CORPORATE PROFILE 2007 [ connecting the future ] CONNECTCOUNTY HOLDINGS BERHAD (618933-D) The ConnectCounty Group is an integrated

STATEMENT ON CORPORATE GOVERNANCE (CONT’D)

2007

[ connecting the future ]

CONNECTCOUNTY HOLDINGS BERHAD

(618933-D)

(i) Details of Directors’ remuneration (cont’d)

The number of Directors whose remuneration falls into each successive band of RM50,000 for the financial ended 31 December 2007 are as follows:

Remuneration Executive Directors

Non-Executive Directors Total

Below RM100,000 - 3 3 RM450,001 – RM500,00 2 - 2 RM500,001 – RM550,000 - - - RM550,001 – RM600,000 - - - RM600,001 - RM650,000 1 - 1 RM650,001 – RM700,000 - - -

(ii) Directors’ share options

The Group also rewards staff with share options under its Employees' Share Option Scheme. The movement in Directors’ share options during the financial year ended 31 December 2007 are set out on page 23.

SHAREHOLDERS

Investor Relations and Shareholders’ Communication

The Board recognizes the importance to have timely and equal dissemination of relevant information on the Group’s performance and other development via an appropriate channel of communication.

Shareholders, investors and analysts are kept abreast with the major developments of the Group through the various means of communications as follows:-

• Quarterly financial statements and annual report • Announcements on major developments made to Bursa Malaysia Securities Berhad • Company’s general meetings • Company’s Investor Relations Channel at http://ir.wallstraits.net/connectcounty

Annual General Meeting (“AGM”)

The AGM is the principal forum for dialogue with public shareholders. Notice of AGM and annual reports will be sent to the shareholders within the period prescribed by the Company’s Articles of Association. In addition, the Notice of AGM will be advertised in the newspaper. Any items of special business included in the Notice of AGM will be accompanied by a full explanation of the effects of the proposed special business.

12

Page 15: Annual Report 2007 - Rapid Conn · 2020. 1. 1. · CORPORATE PROFILE 2007 [ connecting the future ] CONNECTCOUNTY HOLDINGS BERHAD (618933-D) The ConnectCounty Group is an integrated

STATEMENT ON CORPORATE GOVERNANCE (CONT’D)

2007

[ connecting the future ]

CONNECTCOUNTY HOLDINGS BERHAD

(618933-D)

ACCOUNTABILITY AND AUDIT

(i) Financial Reporting

The Board aims to provide and present a balanced and meaningful assessment of the Group’s financial statements, quarterly announcement of results to shareholders as well as the Chairman’s Statement in the annual report.

The Board is assisted by the Audit Committee to oversee the Group’s financial reporting process to ensure accuracy and adequacy of all relevant information for disclosure, accounting policies adopted have been consistently applied, the financial statements are prepared in accordance with the provisions of the Companies Act, 1965 and the approved accounting standards in Malaysia and all estimates made are prudent and reasonable.

(ii) Statement of Directors’ Responsibility in respect of the Financial Statements

The Companies Act, 1965 requires the Directors to prepare financial statements which reflect a true and fair view of the state of affairs of the Company and of the Group and of the results of the Company and of the Group for that period. In preparing those financial statements, the Directors are required to :

- prepare the financial statements on a going concern basis unless otherwise indicated; - state whether applicable approved accounting standards have been properly followed; - select suitable accounting policies and apply them consistently; and - make reasonable judgment and prudent estimate.

The Directors are responsible for ensuring that proper accounting records are kept which disclose with reasonable accuracy at any time, the financial position of the Company and Group and to enable them to ensure the financial statements comply with the provisions of the Companies Act, 1965 and the applicable approved accounting standards in Malaysia. They are responsible for taking reasonable steps to safeguard the assets of the Company and Group, for the prevention and detection of fraud and other irregularities.

The Board has established a formal and transparent arrangement with its external auditors to meet their professional requirements. The auditors have continued to highlight to the Audit Committee and Board of Directors matters that require the Board’s attention.

(iii) Internal Control

The Board of Directors is responsible for the Group’s system of internal control which supports effective and efficient operations and compliance with laws and regulations.

Information pertaining to the Company’s internal control is presented in the Statement on Internal Control laid out on page 17 of this annual report.

(iv) Relationship with the Auditors

The Board has established a formal and transparent arrangement with its external auditors to meet their professional requirements.

(v) Corporate Social Responsibility

The Group has not carried out any major social activities during the financial ended 31 December 2007.

13

Page 16: Annual Report 2007 - Rapid Conn · 2020. 1. 1. · CORPORATE PROFILE 2007 [ connecting the future ] CONNECTCOUNTY HOLDINGS BERHAD (618933-D) The ConnectCounty Group is an integrated

AUDIT COMMITTEE REPORT

2007

[ connecting the future ]

CONNECTCOUNTY HOLDINGS BERHAD

(618933-D)

The Board is pleased to present the Audit Committee Report for the financial year ended 31 December 2007.

COMPOSITION AND DESIGNATION OF AUDIT COMMITTEE

Name Designation Directorship Huang Yan Teo

Chairman

Independent Non-Executive Director

Dato’ Dr Mohamed Ariffin Bin Hj Aton (Appointed on 1 October 2007)

Member of the Committee

Independent Non-Executive Director

Lim Bee San (Appointed on 2 January 2008)

Member of the Committee

Independent Non-Executive Director

TERMS OF REFERENCE

In line with the amendments to the Listing Requirement of Bursa Malaysia Securities Berhad for the Mesdaq Market in relation to Corporate Governance, the terms of reference of the Audit Committee of the Company was amended and adopted by the Board of Directors.

i) COMPOSITION

The Audit Committee shall be appointed by the Board from amongst their members and shall fulfil the following requirements:

1) The Committee shall consist of not less than three (3) members, all must be non-executive directors, with

majority of them being Independent Directors.

2) The Committee shall elect a Chairman from among its members who is an independent Non-Executive Director.

3) At least one (1) member of the Committee;

(i) Must be a member of the Malaysian Institute of Accountants (MIA),

(ii) If he/she is not a member of MIA, he/she must have at least three (3) years’ working experience and;

(a) Must have passed the examinations specified in Part I of the 1st Schedule of the Accountants Act,

1967; or (b) Must be a member of one of the associations of accountants specified in Part II of the 1st Schedule

of the Accountants Act, 1967; or (c) Fulfils such other requirements as prescribed or approved by Bursa Malaysia Securities Berhad.

(iii) No alternate director shall be appointed as a member of the Committee,

(iv) Persons related or deemed related to Executive Directors shall not be eligible for appointment as

a member of the Committee.

If a member of the Committee resigns, dies or for any other reasons ceased to be a member resulting in the number of members to be reduced to two (2), the Board of Directors shall within three (3) months of that event, appoint such number of new members as may be required to make up the minimum number of three (3) members.

The Board shall review the terms of the Committee no less than every three (3) years.

14

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AUDIT COMMITTEE REPORT (CONT’D)

2007

[ connecting the future ]

CONNECTCOUNTY HOLDINGS BERHAD

(618933-D)

TERMS OF REFERENCE (CONT’D)

ii) AUTHORITY OF THE COMMITTEE

The Committee is authorised to:

1) investigate any activity within its terms of reference.

2) have unrestricted access to any information pertaining to the Company and its subsidiary companies for the purpose of discharging its functions and responsibilities.

3) Consult independent experts where they consider it necessary to carry out their duties. 4) be able to convene meetings with the external auditors, the internal auditors or both, excluding the

attendance of other directors and employees of the listed company, whenever deemed necessary.

iii) FREQUENCY AND ATTENDANCE OF COMMITTEE MEETINGS

The Committee shall meet at least (5) five times a year and such meetings as the Chairman shall decide in order to fulfil its duties.

A quorum shall consist of a majority of Committee members.

Member of committee may participate in a meeting by means of conference telephone, conference videotape or any similar or other communications equipment by means of which all persons participating in the meeting can hear each other. Such participation in a meeting shall constitute presence in person at such meeting.

iv) MINUTES

The minutes of each meeting shall be kept and distributed to each member. All minutes of the meetings shall be circulated to every member of the Board. The Secretary of the Committee shall be the Company Secretary.

v) FUNCTIONS

The functions of the Committee are as follows:

1. review the audit plan with the external auditor;

2. review with the external auditors his evaluation of the system of internal controls;

3. review the audit report of the external auditors;

4. determine the assistance given by the Company’s officer to the auditors;

5. the adequacy of the scope, functions, competency and resources of the internal audit functions and that it

has the necessary authority to carry out its work;

6. review the scope and result of the internal procedures; 7. review the balance sheet and profit and loss account;

8. review any related party transactions that may arise within the Company or the Group;

9. to review and report the same to the Board of Directors any letter of resignation from the external auditors of

the Company as well as whether there is any reason (supported by grounds) to believe that the Company’s external auditors are not suitable for re-appointment;

10. to make recommendations concerning the appointment of the external auditors and their remuneration to

the Board of Directors;

15

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AUDIT COMMITTEE REPORT (CONT’D)

2007

[ connecting the future ]

CONNECTCOUNTY HOLDINGS BERHAD

(618933-D)

v) FUNCTIONS (CONT’D)

The functions of the Committee are as follows: (cont’d)

11. prompt reporting to Bursa Securities on any matter reported by the Committee to the Board which has not been satisfactory resolved resulting in a breach of the Listing Requirements of Bursa Securities;

12. to verify the allocation of ESOS at the end of each financial year; and

13. to perform any other work that is required or empowered to do by statutory legislation or guidelines as

prepared by the relevant Government authorities.

SUMMARY OF ACTIVITIES

During the financial year ended 31 December 2007, the Audit Committee convened five (5) meetings. The details of attendance are as follows:

Committee Members Attendance

Huang Yan Teo 5/5 Toh Wing Yew (Resigned on 18 September 2007) 4/4 Turker Hidirlar (Resigned on 25 February 2008) 5/5 Dato’ Dr Mohamed Ariffin Bin Hj Aton (Appointed on 1 October 2007) 1/1 Lim Bee San (Appointed on 2 January 2008) 0/0

The summary of the activities of the Audit Committee in the discharge of its duties and responsibilities for the financial year included the following:

- Reviewed the external auditors’ scope of work and audit plan for the year; - Reviewed the unaudited quarterly reports and announcements for the Board’s consideration and approval;

and - Discussed any other matters raised during the meeting.

INTERNAL AUDIT FUNCTION

The Company has out-sourced the internal audit functions to SSA Professional Services Sdn. Bhd. It is responsible for conducting periodic audits on internal control matters to ensure compliance with systems and standard operating procedures in each of the operations of the Group. The main objective of these audits is to provide a reasonable assurance they operate satisfactorily and effectively. Audits are to be conducted with regard to various specific areas of concern and high-risk areas.

STATEMENT BY THE AUDIT COMMITTEE IN RELATION TO THE ESOS ALLOCATION Appendix 9C item no. 27 of the Mesdaq Market Listing Requirement of Bursa Malaysia Securities Berhad requires a statement by the Audit Committee in relation to the allocation of the options pursuant to any share scheme for employees as required under Rule 8.24. The Audit Committee has reviewed and is of the view that the criteria for allocation of the Group’s ESOS for the financial year under review:

(a) has been made know to all eligible employees; and (b) the allocation of the said ESOS is made in compliance with the criteria as se out in the ESOS Policy Guidelines

and the ESOS By-Laws of the Company.

An 14,170,000 options approved by the ESOS committee were granted in year 2007 and may be exercised from 14 June 2007 to 29 September 2010, subject to the terms and conditions of the By-Laws.

16

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STATEMENT ON INTERNAL CONTROL

2007

[ connecting the future ]

CONNECTCOUNTY HOLDINGS BERHAD

(618933-D)

The Malaysian Code on Corporate Governance requires listed companies to maintain a sound system of internal control to safeguard shareholders investments and the Group’s assets. The Board of Directors of the Company is pleased to present this Statement on Internal Control, with respect to state, nature and scope of the Group during the year.

RESPONSIBILITY

The Board of Directors is responsible for the Group’s system of internal control and reviewing the adequacy and integrity of this system. The system of internal control can only provide reasonable, but not absolute, assurance against any material misstatement or loss as it is designated to managed rather than eliminate the risk of failure to achieve the Group’s business objectives.

RISK MANAGEMENT FRAMEWORK

Presently, the Board’s primary objective and direction in managing the Group’s risks is focused on the achievement of the Group’s business objectives. Throughout the current financial year, the Board has identified, evaluated and managed those significant risks faced by the Group through monitoring the Group’s business operations to enhance shareholders’ wealth. Furthermore, the Board has entrusted the Executive Directors with the responsibility of reviewing and resolving and operational issues arising.

INTERNAL CONTROL

The Group currently relies on existing internal control mechanisms to provide management with the required level of assurance that the business is being operated in an orderly manner.

The Company has outsourced its internal audit functions to a professional services organization which will provide support to the Audit Committee in discharging its duties with regard to the adequacy and integrity of the system of internal controls within the Group.

The Board is of the view that the existing system of internal control is sound and adequate for the current level of operations. There were no significant weaknesses or material problems in the internal control procedures that had arisen during the financial year.

17

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ADDITIONAL COMPLIANCE INFORMATION

2007

[ connecting the future ]

CONNECTCOUNTY HOLDINGS BERHAD

(618933-D)

To comply with the Listing Requirements of Bursa Malaysia Securities Berhad, the following information is provided:

Recurrent Related Party Transactions of a Revenue or Trading Nature

Details of transactions with related parties undertaken by the Group during the financial year under review on page 65 of this annual report.

Material Contracts Involving Directors and Substantial Shareholders’ Interest

Saved for the Recurrent Related Party Transactions noted above, there were no material contracts entered into by the Company or its subsidiaries involving directors’ and substantial shareholders’ interest in the financial year ended 31 December 2007.

Non-Audit Fee

The non-audit fee paid by the Company to external auditors for the financial year ended 31 December 2007, is disclosed in Note 5 to the financial statements.

Profit Forecast

The Company did not issue any profit forecast in public documents during the financial year.

Share Buybacks

There were no share buyback during the financial year ended 31 December 2007.

Options, Warrants or Convertible Securities Exercised

The Company has not issued any options, warrants or convertible securities in respect of the financial year ended 31 December 2007 other than those disclosed in the Note 33 to the Financial Statements.

American Depository Receipt (“ADR”) or Global Depository Receipt (“GDR”)

The Company has not sponsored any ADR or GDR programme for the financial year ended 31 December 2007.

Sanction and/or penalties

The Company and its subsidiaries, Directors and management have not been imposed with any sanctions and/or penalties by and regulatory authorities.

Profit Guarantee

No profit guarantee was given by the Company in respect of the financial year ended 31 December 2007.

18

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ADDITIONAL COMPLIANCE INFORMATION (CONT’D)

2007

[ connecting the future ]

CONNECTCOUNTY HOLDINGS BERHAD

(618933-D)

Revaluation of Landed Properties

The Company and the Group has no landed properties.

Utilisation of Proceeds

The status of the utilisation of the proceeds raised from the initial public offer (“IPO”) on 20 October 2005 pursuant to its listing on the Mesdaq Market of Bursa Malaysia Securities Berhad and the subsequent approval by SC for the redeployment of RM 2.01 million originally allocated for research and development (“R&D”) for use as working capital are as follows:

Gross Proceeds

Revision

Approved by SC

After Revision

Utilised

as of 31.12.2007

Balance After

Utilisation of Proceeds Timeline

RM’000 RM’000 RM’000 RM’000 RM’000

Capital expenditure on tools

and equipment for research and development 6,891 (2,010) 4,881 4,881 -

Fully utilised by 31 Dec 07

Capital expenditure on

manufacturing equipment and machinery 600 - 600 600 -

Fully utilised by 30 Jun 07

Capital expenditure on Enterprise

Resource Planning System 300 - 300 300 -

Capital expenditure on renovation works 250 - 250 250 -

The Company had obtained the approval from the Securities Commission (“SC”) for the extension of time to utilised the remaining IPO proceeds vide its approval letter dated 9 January 2007. During the current financial year the Company has raised a total RM 5.5 million from the Private Placement exercise. As at 31 December 2007, the status of utilisation of the proceeds raised from the Private Placement exercise are as follow:

Gross

Proceeds

Utilised

as of 31.12.2007

Balance After

Utilisation of

Proceeds

RM’000 RM’000 RM’000 Working capital

5,076

3,383

1,693

Listing expenses

424

424

-

5,500 3,807 1,693

The unutilised proceeds of approximately RM 1.693 million as at 31 December 2007 is 30.78% from the original total of RM 5.5 million. The Company intend to utilise the balance of the unutilised proceeds within the stipulated time frame.

19

Working capital 6,208 2,010 8,218 8,218 -

Listing expenses

2,000

-

2,000

2,000

-

16,249 - 16,249 16,249 -

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DIRECTORS' REPORT CONNECTCOUNTY

HOLDINGS BERHAD (618933-D)

The directors have pleasure in presenting their report together with the audited financial statements of the Group and of the Company for the financial year ended 31 December 2007.

PRINCIPAL ACTIVITIES

The principal activity of the Company is investment holding.

The principal activities of the subsidiaries are that of design, manufacture, sales, marketing, services and trading of cables, connectors and related products.

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

RESULTS

Group CompanyRM RM

Net loss for the year 5,954,554 1,861,583

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

In the opinion of the directors, the results of the operations of the Group and the Company during the financial year were not substantially affected by any item, transaction or event of a material and unusual nature. The adoption of new and revised FRS’s has no material impact on the results of the operations of the Group and of the Company during the financial year.

ISSUE OF SHARES

During the financial year, the issued and fully paid-up share capital of the Company was increased from RM 15,000,000 to RM 20,114,000 by the issuance of new ordinary shares of RM 0.10 each as follows:

(i) issuance of 1,140,000 new ordinary shares of RM 0.10 each for cash pursuant to the Employee’s Share Option Scheme (“ESOS”) of the Company at an exercise price of RM 0.10 per ordinary share.

(ii) issuance of 50,000,000 new ordinary shares of RM 0.10 each for cash pursuant to a private placement exercise at an issue price of RM 0.11 per ordinary share.

The resultant premium arising from the shares issued pursuant to the private placement exercise of RM 500,000 was credited to the share premium account as disclosed in Note 21 to the financial statements.

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

21

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DIRECTORS' REPORT (CONT’D) CONNECTCOUNTY

HOLDINGS BERHAD (618933-D)

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 Chuang Juay Huang Yan Teo Dato’ Dr Mohamed Ariffin Bin Hj Aton (Appointed on 1 October 2007) Lim Bee San (Appointed on 2 January 2008) Turker Hidirlar (Resigned on 25 February 2008) Robert Jean Tondreault (Resigned on 31 December 2007) Toh Wing Yew (Resigned on 18 September 2007)

DIRECTORS' BENEFITS

Neither at the end of the financial year, nor at anytime during that year, did there subsist any arrangement to which the Company was a party, whereby the directors might acquire benefits by means of acquisition of shares in or debentures of the Company or any other body corporate, other than those arising from the share options granted to the directors pursuant to the Employees’ Share Option Scheme (“ESOS”).

Since the end of the previous financial year, no director 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 as shown in Note 7 to the financial statements) by reason of a contract made by the Company or a related corporation with any director or with a firm of which he is a member, or with a company in which he has a substantial financial interest.

DIRECTORS’ INTERESTS

According to the register of directors’ shareholdings, the interests of directors in office at the end of the financial year in shares in the Company and its related corporations during the financial year were as follows:

Name of option holders Number of options over ordinary shares of RM 0.10 each ta sa ecnalaB ta sa ecnalaB 7002.21.13 dloS thguoB 7002.1.1

Direct Interest:

035,998,92 )000,000,6( - 035,998,53 yauJ gnauhC gnA 054,855,2 - - 054,855,2 ralridiH rekruT

Robert Jean Tondreault 1,465,000 - (300,000) 1,165,000 000,001 - - 000,001 oeT naY gnauH

Indirect Interest:

Ang Chuang Juay*1 070,002 )000,004( 000,002 070,004

Robert Jean Tondreault*2 - )006,641( 009,58 007,06

*1 Indirect interest by virtue of the shareholdings of his spouse. *2 Indirect interest by virtue of the shareholdings of his spouse.

22

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DIRECTORS' REPORT (CONT’D) CONNECTCOUNTY

HOLDINGS BERHAD (618933-D)

DIRECTORS’ INTERESTS (CONT’D)

In addition to the above, the directors are also deemed to have an interest in the shares of the Company to the extent of options granted to them pursuant to the ESOS of the Company which was implemented on 14 June 2007 as follows:

Name of option holders Number of options over ordinary shares of RM 0.10 each ta sa ecnalaB ta sa ecnalaB 7002.21.13 desicrexE detnarG 7002.1.1

000,000,2 - 000,000,2 - yauJ gnauhC gnA 000,004,1 - 000,004,1 - ralridiH rekruT 000,004,1 - 000,004,1 - tluaerdnoT naeJ treboR

Ang Chuang Juay by virtue of his interest in shares in the Company is also deemed interested in shares of all the Company’s subsidiaries to the extent the Company has an interest.

Other than as disclosed above, the other Directors do not have any interest in the shares or options over shares of the Company or of its related companies during and at the end of the financial year.

EMPLOYEE SHARE OPTION SCHEME

The Connectcounty Holdings Berhad Employee Share Option Scheme (“ESOS”) is governed by the by-laws approved by the shareholders at an Extraordinary General Meeting held on 30 September 2005. The ESOS was approved on 30 September 2005 and is to be in force for a period of 5 years from the date of approval.

The salient features and other terms of the ESOS are disclosed in Note 6 (b) to the financial statements.

The share options granted and exercised during the financial year are as follows:

hcae 01.0 MR fo serahs yranidro revo snoitpo fo rebmuN Exercisable Exercise price Balance as at Balance as at from per ordinary 1.1.2007 Granted Exercised 31.12.2007

erahS MR

000,030,31 )000,041,1( 000,071,41 - 01.0 7002 enuJ 41

The Company has been granted exemption by the Companies Commission of Malaysia from having to disclose the names of option holders, other than directors, who have been granted options to subscribe for less than 1,000,000 ordinary shares of RM 0.10 each. During the financial year, none of the employee has been granted more than 1,000,000 share options.

OTHER STATUTORY INFORMATION

(a) Before the income statements and balance sheets of the Group and the Company were made out, the directors took reasonable steps:

(i) to ascertain that proper action had been taken in relation to the writing off of bad debts and the making of provision for doubtful debts and satisfied themselves that all known bad debts had been written off and that no provision for doubtful debts was necessary; and

23

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DIRECTORS' REPORT (CONT’D) CONNECTCOUNTY

HOLDINGS BERHAD (618933-D)

OTHER STATUTORY INFORMATION (CONT’D)

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

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

(i) the amount written off for bad debts inadequate to any substantial extent or require a provision for doubtful debts in the financial statements of the Group and of the Company, and

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

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

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

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

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

(ii) any contingent liability of the Group or of the Company which has arisen since the end of the financial year.

(f) In the opinion of the directors:

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

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

24

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DIRECTORS' REPORT (CONT’D) CONNECTCOUNTY

HOLDINGS BERHAD (618933-D)

SIGNIFICANT EVENTS

The significant events during the financial year are as disclosed in Note 33 to the financial statements.

SUBSEQUENT EVENT

Details of subsequent events are disclosed in Note 34 to the financial statements.

AUDITORS

The auditors, Moore Stephens Associates & Co., have expressed their willingness to continue in office. Signed on behalf of the Board in accordance with a resolution of the directors

__________________________ ANG CHUANG JUAY

___________________________ HUANG YAN TEO

Johor Bahru, Malaysia Dated: 24 April 2008

25

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STATEMENT BY DIRECTORS CONNECTCOUNTY

HOLDINGS BERHAD (618933-D)

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

We, ANG CHUANG JUAY and HUANG YAN TEO, being two of the directors of CONNECTCOUNTY HOLDINGS BERHAD, do hereby state that, in the opinion of the directors, the accompanying financial statements set out on pages 29 to 72 are drawn up in accordance with applicable MASB Approved Accounting Standards in Malaysia for entities other than Private Entities and the provisions of the Companies Act, 1965 so as to give a true and fair view of the financial position of the Group and of the Company as at 31 December 2007 and of the results and the cash flows of the Group and of the Company for the year then ended.

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

ANG CHUANG JUAY

HUANG YAN TEO

Johor Bahru Date: 24 April 2008

26

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STATUTORY DECLARATION CONNECTCOUNTY

HOLDINGS BERHAD (618933-D)

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

I, ANG CHUANG JUAY, being the director primarily responsible for the financial management of CONNECTCOUNTY HOLDINGS BERHAD., do solemnly and sincerely declare that the accompanying financial statements set out on pages 29 to 72 are in my opinion correct, and I make this solemn declaration conscientiously believing the same to be true and by virtue of the provisions of the Statutory Declarations Act, 1960.

Subscribed and solemnly declared by the ) abovenamed ANG CHUANG JUAY ) at Johor Bahru in the ) State of Johor on 24 April 2008 ) ANG CHUANG JUAY

Before me:

PERIETHAMBY A/L SUPAIYA NO: J149 Commission of Oaths No.22, Jln Tan Hiok Nee 80000 Johor Bahru, Johor.

27

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REPORT OF THE AUDITORS CONNECTCOUNTY

TO THE MEMBERS OF CONNECT COUNTY HOLDINGS BERHAD HOLDINGS BERHAD (618933-D)

We have audited the financial statements set out on pages 29 to 72. These financial statements are the responsibility of the Company's directors.

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

We conducted our audit in accordance with applicable Approved Standards on Auditing in Malaysia. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the directors, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.

In our opinion :

(a) The financial statements have been properly drawn up in accordance with the provisions of the Companies Act, 1965 and applicable MASB Approved Accounting Standards in Malaysia for entities other than Private Entities so as to give a true and fair view of :

(i) the financial position of the Group and of the Company as at 31 December 2007 and of the results and the cash flows of the Group and of the Company for the year then ended; and

(ii) the matters required by Section 169 of the Companies Act, 1965 to be dealt with in the financial statements; and

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

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

The auditors’ report on the financial statements of the subsidiaries were not subject to any qualification material to the consolidated financial statements and did not include any comment required to be made under Section 174 (3) of the Act other than those disclosed in Note 13 (b) to the financial statements.

Moore Stephens Associates & Co. Bala Krishnan A/L Ponniah Chartered Accountants Partner AF1494 1394/07/09 (J/PH)

Johor Bahru Date : 24 April 2008

28

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INCOME STATEMENTS CONNECTCOUNTY

FOR THE YEAR ENDED 31 DECEMBER 2007 HOLDINGS BERHAD (618933-D)

YNAPMOC PUORG

NOTE 2007 2006 2007 2006

RM RM RM RM

3 euneveR 64,534,751 63,758,180 - -

4 selas fo tsoC (56,380,823) (54,247,734) - -

tiforp ssorG 8,153,928 9,510,446 - -

emocni rehtO 350,394 13,375 601,182 1,230,184

sesnepxe evitartsinimdA (7,895,784) (7,847,630) (969,972) (1,367,061)

Distribution and selling expenses (3,191,522) (3,435,752) - -

sesnepxe rehtO (1,227,346) (2,253,280) (1,561,321) (5,368,262)

5 snoitarepo morf ssoL (3,810,330) (4,012,841) (1,930,111) (5,505,139)

8 ten ,stsoc ecnaniF (310,977) (117,175) 65,681 103,894

noitaxat erofeb ssoL (4,121,307) (4,130,016) (1,864,430) (5,401,245)

9 noitaxaT (1,833,247) 405,307 2,847 31,725

Net loss for the year attributable to equity holders of the Company (5,954,554) (3,724,709) (1,861,583) (5,369,520)

Loss per share attributable to equity holders of the Company (sen)

01 cisaB - (3.82) (2.48)

- 01 detuliD Not applicable

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

29

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BALANCE SHEETS CONNECTCOUNTY

HOLDINGS BERHAD (618933-D)

GROUP COMPANY

NOTE 2007 2006 2006

ASSETS RM RM RM RM NON-CURRENT ASSETS

Property, plant and equipment 11 5,065,568 7,022,519 4,056 5,731

Development expenditure 12 1,746,099 2,630,635 - -

Investments in subsidiaries 13 - - 10,776,332 11,179,379

Goodwill on consolidation 14 - - - -

51 stessa xat derrefeD 30,042 1,379,392 - -6,841,709 11,032,546 10,780,388 11,185,110

CURRENT ASSETS

61 seirotnevnI 3,993,457 3,313,113 - - 71 selbaviecer edarT 15,813,452 15,488,569 - -

81 selbaviecer rehtO 2,550,427 1,351,433 8,538,841 6,188,469 Cash and bank balances 19 2,875,321 5,228,581 1,814,325 2,945,580

25,232,657 25,381,696 10,353,166 9,134,049

TOTAL ASSETS 32,074,366 36,414,242 21,133,554 20,319,159

EQUITY AND LIABILITIES Equity attributable to equity

holders of the Company

02 latipac erahS 20,114,000 15,000,000 20,114,000 15,000,000 12 muimerp erahS 6,857,481 6,756,365 6,857,481 6,756,365

Foreign exchange reserves 22 (176,069) 1,163 - -Share option reserve 23 278,723 - 278,723 -

sessol detalumuccA (12,441,324) (6,486,770) (7,440,345) (5,578,762)

TOTAL EQUITY 14,632,811 15,270,758 19,809,859 16,177,603

NON-CURRENT LIABILITIES

42 sgniworroB 554,029 599,290 - -

Deferred tax liabilities 15 383,536 283,250 - -937,565 882,540 - -

CURRENT LIABILITIES

42 sgniworroB 2,710,917 2,891,910 - -

62 selbayap edarT 11,937,686 13,736,729 - -

72 selbayap rehtO 1,544,190 3,544,029 1,319,206 4,131,646 Provision for taxation 311,197 88,276 4,489 9,910

16,503,990 20,260,944 1,323,695 4,141,556

TOTAL LIABILITIES 17,441,555 21,143,484 1,323,695 4,141,556

TOTAL EQUITY AND LIABILITIES 32,074,366 36,414,242 21,133,554 20,319,159

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

30

Page 33: Annual Report 2007 - Rapid Conn · 2020. 1. 1. · CORPORATE PROFILE 2007 [ connecting the future ] CONNECTCOUNTY HOLDINGS BERHAD (618933-D) The ConnectCounty Group is an integrated

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Page 34: Annual Report 2007 - Rapid Conn · 2020. 1. 1. · CORPORATE PROFILE 2007 [ connecting the future ] CONNECTCOUNTY HOLDINGS BERHAD (618933-D) The ConnectCounty Group is an integrated

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32

Page 35: Annual Report 2007 - Rapid Conn · 2020. 1. 1. · CORPORATE PROFILE 2007 [ connecting the future ] CONNECTCOUNTY HOLDINGS BERHAD (618933-D) The ConnectCounty Group is an integrated

CASH FLOW STATEMENTS CONNECTCOUNTY

FOR THE YEAR ENDED 31 DECEMBER 2007 HOLDINGS BERHAD (618933-D)

YNAPMOC PUORG

2007 2006 2007 2006

MR RM RM RM

CASH FLOWS FROM OPERATING

ACTIVITIES :

Loss before taxation (4,121,307) (4,130,016) (1,864,430) (5,401,245)

Adjustments for :

Amortisation of development expenditure 653,834 696,439 - -

Bad debts written off 198 732,736 - -

Deposits written off - 30,197 - -

Depreciation 2,156,269 1,976,415 1,675 1,675

Development expenditure written off 112,920 320,411 - -

Impairment loss on investments in subsidiaries - - 1,250,901 5,036,054

Impairment of goodwill - 496,103 - -

Inventories written off 183,512 384,513 - -

Inventories written down 72,893 - - - Loss on disposal of property, plant and equipment 4,086 - - -

Property, plant and equipment written off 692,001 8,777 - -

Share options granted under ESOS 303,109 - 303,109 -

Unrealised exchange loss 276,002 532,923 307,444 332,190

Unrealised profits on stocks 4,585 19,373 - -

Interest expenses 339,647 184,352 - 3,791

Interest income (84,323) (115,423) (66,278) (101,215) Operating profit/(loss) before working capital

changes 593,426 1,136,800 (67,579) (128,750)

Inventories (1,100,018) (1,556,087) - -

Receivables (1,830,610) (8,643,526) (2,657,816) (2,082,766)

Payables (3,612,439) 7,110,773 (2,812,440) (254,809)

Cash used in operations (5,949,641) (1,952,040) (5,537,835) (2,466,325)

Interest paid (339,647) (184,352) - (3,791)

Tax refunded 46,386 - - -

Tax paid (190,264) (36,500) (2,574) (255)

Net cash used in operating activities (6,433,166) (2,172,892) (5,540,409) (2,470,371)

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

33

Page 36: Annual Report 2007 - Rapid Conn · 2020. 1. 1. · CORPORATE PROFILE 2007 [ connecting the future ] CONNECTCOUNTY HOLDINGS BERHAD (618933-D) The ConnectCounty Group is an integrated

CASH FLOW STATEMENTS (CONT’D) CONNECTCOUNTY

FOR THE YEAR ENDED 31 DECEMBER 2007 HOLDINGS BERHAD (618933-D)

PUORG COMPANY

7002 2006 2007 2006

MR RM RM RM

CASH FLOWS FROM INVESTING ACTIVITIES:

Additional investment in a subsidiary - - (847,854) (921,166)

Development expenditure (7,312) (5,613) - -

Interest received 84,323 115,423 66,278 101,215

Placement of fixed deposit (50,000) - - - Proceed from disposal of property, plant and equipment 195,086 - - -

Purchase of property, plant and equipment (780,001) (1,752,929) - -

Net cash used in investing activities (557,904) (1,643,119) (781,576) (819,951)

CASH FLOWS FROM FINANCING ACTIVITIES:

Repayment of hire purchase (307,685) (286,727) - -

Repayment of term loan (117,410) (228,004) - -

Repayment of other short term borrowings (117,402) - - -

Drawdown of other short term borrowings - 2,207,577 - -

Proceeds from issuance of ordinary shares 5,190,730 - 5,190,730 -

Net cash generated from financing activities 4,648,233 1,692,846 5,190,730 -

NET DECREASE IN CASH AND CASH

EQUIVALENTS (2,342,837) (2,123,165) (1,131,255) (3,290,322)

670,8 SEGNAHC ETAR EGNAHCXE FO STCEFFE (59,590) - - CASH AND CASH EQUIVALENTS AT BEGINNING OF

THE FINANCIAL YEAR 5,033,210 7,215,965 2,945,580 6,235,902 CASH AND CASH EQUIVALENTS AT END OF THE

FINANCIAL YEAR 944,896,2 )91 ETON( 5,033,210 1,814,325 2,945,580

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

34

Page 37: Annual Report 2007 - Rapid Conn · 2020. 1. 1. · CORPORATE PROFILE 2007 [ connecting the future ] CONNECTCOUNTY HOLDINGS BERHAD (618933-D) The ConnectCounty Group is an integrated

NOTES TO THE FINANCIAL STATEMENTS CONNECTCOUNTY

FOR THE YEAR ENDED 31 DECEMBER 2007 HOLDINGS BERHAD (618933-D)

1. CORPORATE INFORMATION

The Company is a public limited liability company, incorporated and domiciled in Malaysia, and is listed on the MESDAQ Market of Bursa Malaysia Securities Berhad. The registered office of the Company is located at Suite 5.3 A, Level 5, Menara Pelangi, No. 2, Jalan Kuning, Taman Pelangi, 80400 Johor Bahru, Johor.

The principal activity of the Company is investment holding. The principal activities of the subsidiaries are that of design, manufacture, sales, marketing, services and trading of cables, connectors and related products. There have been no significant changes in the nature of these principal activities during the financial year.

The financial statements were authorised for issue by the Board of Directors in accordance with a resolution of the directors on 24 April 2008.

2. SIGNIFICANT ACCOUNTING POLICIES

(a) Basis of Preparation

The financial statements of the Group and of the Company have been prepared under historical cost convention and comply with the provisions of the Companies Act, 1965 and applicable MASB Approved Accounting Standards in Malaysia for entities other than Private Entities.

The financial statements are presented in Ringgit Malaysia (RM) except when otherwise indicated.

(b) Changes in Accounting Policies

The accounting policies adopted by the Group and the Company are consistent with those adopted in previous years except for the adoption of the following:

(i) FRS 119 Employee Benefits – Actuarial Gain and Losses, Group Plans and Disclosure issued by the Malaysian Accounting Standards Board (“MASB”) that is effective for the Group and the Company’s annual reporting date, 31 December 2007.

(ii) During the financial year, the following Financial Reporting Standards (“FRS”), amendments to FRS and IC Interpretations were issued by MASB. These are effective for financial years beginning 1 July 2007, and are available for early adoption. The Group and the Company have chosen to early adopt all these FRS’s, amendments to FRS and IC Interpretations:

- FRS 107 Cash Flow Statements - FRS 111 Construction Contracts - FRS 112 Income Taxes - FRS 118 Revenue - FRS 120 Accounting for Government Grants and Disclosure of

Government Assistance - FRS 126 Accounting and Reporting by Retirement Benefit Plans - FRS 129 Financial Reporting in Hyperinflationary Economies - FRS 134 Interim Financial Reporting - FRS 137 Provisions, Contingent Liabilities and Contingent Assets

35

Page 38: Annual Report 2007 - Rapid Conn · 2020. 1. 1. · CORPORATE PROFILE 2007 [ connecting the future ] CONNECTCOUNTY HOLDINGS BERHAD (618933-D) The ConnectCounty Group is an integrated

NOTES TO THE FINANCIAL STATEMENTS CONNECTCOUNTY

FOR THE YEAR ENDED 31 DECEMBER 2007 (CONT’D) HOLDINGS BERHAD (618933-D)

2. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

- Amendment to FRS 121 The Effects of Changes in Foreign Exchange Rates – Net Investment in a Foreign Operation

- IC Interpretation 1 Changes in Existing Decommissioning, Restoration and Similar Liabilities - IC Interpretation 2 Member’ Shares in Co-operative Entities and Similar Instruments - IC Interpretation 5 Rights to Interests arising from Decommissioning, Restoration and

Environmental Rehabilitation Funds - IC Interpretation 6 Liabilities arising from Participating in a Specific Market – Waste

Electrical and Electronic Equipment - IC Interpretation 7 Applying the Restatement Approach to FRS 129 Financial Accounting in

Hyperinflationary Economies - IC Interpretation 8 Scope of FRS 2 Share-based Payments

The above FRS’s amendments to FRS and IC Interpretations does not have any significant financial impact on the Group and the Company.

In the previous financial year, the MASB had also issued FRS 139 Financial Instruments: Recognition and Measurement for which the MASB has yet to announce the effective date. The Impact of applying FRS 139 on the financial statements upon first adoption of this standard as required by paragraph 30(b) of FRS 108 Accounting Policies, Changes in Accounting Estimates and Errors is not required to be disclosed by virtue of exemptions provided under paragraph 103AB of FRS 139.

(c) Significant Accounting Estimates and Judgments

Estimates, assumptions concerning the future and judgments are made in the preparation of the financial statements. They affect the application of the Group’s and the Company’s accounting policies, reported amounts of assets, liabilities, income and expenses, and disclosures made. They are assessed on an on-going basis and are based on experience and relevant factors, including expectations of future events that are believed to be reasonable under the circumstances.

(i) Key sources of estimation uncertainty

The key assumptions concerning the future and other key sources of estimation uncertainty at the balance sheet date, that have significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below:

Income taxes

Significant judgment is involved in determining the Group’s and the Company’s provision for income taxes. The Group and the Company recognizes liabilities for expected tax issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recognized, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made. The carrying amount of the Group’s tax payables at 31 December 2007 was RM 311,197 (2006: RM 88,276) and that of the Company was RM 4,489 (2006: RM 9,910)

36

Page 39: Annual Report 2007 - Rapid Conn · 2020. 1. 1. · CORPORATE PROFILE 2007 [ connecting the future ] CONNECTCOUNTY HOLDINGS BERHAD (618933-D) The ConnectCounty Group is an integrated

NOTES TO THE FINANCIAL STATEMENTS CONNECTCOUNTY

FOR THE YEAR ENDED 31 DECEMBER 2007 (CONT’D) HOLDINGS BERHAD (618933-D)

2. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

(c) Significant Accounting Estimates and Judgments (cont’d)

(i) Key sources of estimation uncertainty (cont’d)

Depreciation of property, plant and equipment

The cost of property, plant and equipment for the Group and the Company are depreciated on a straight-line basis over the assets’ useful lives. Management estimates the useful lives of these property, plant and equipment to be within 3 to 10 years. The carrying amount of the Group’s and Company’s property, plant and equipment at 31 December 2007 are RM 5,065,568 (2006: RM 7,022,519) and RM 4,056 (2006: RM 5,731) respectively. Changes in the expected level of usage and technological developments could impact the economic useful lives and the residual values of these assets, therefore future depreciation charges could be revised.

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 is 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. Further details are disclosed in Note 14.

(d) Subsidiaries and Basis of Consolidation

(i) Subsidiaries

Subsidiaries are entities over which the Group has a long term equity interest and where it has power to exercise control over the financial and operating policies so as to obtain benefits from their activities. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group has such power over another entity.

In the Company’s separate financial statements, investments in subsidiaries are stated at cost less impairment losses. On disposal of such investments, the difference between net disposal proceeds and their carrying amounts is included in income statement.

(ii) Basis of consolidation

The consolidated financial statements comprise the financial statements of the Company and its subsidiaries as at the balance sheet date. The financial statements of the subsidiaries are prepared for the same reporting date as the Company.

Subsidiaries are consolidated using the acquisition method of accounting. Under the acquisition method of accounting, the result of subsidiaries acquired or disposed of during the financial year are included in the consolidated income statements from the effective date of acquisition or up to the effective date of disposal, as appropriate. The assets and liabilities of the subsidiaries are measured at their fair values at the date of acquisition and these values are reflected in the consolidated balance sheet. The difference between the cost of an acquisition and the fair value of the Group’s share of the net assets of the acquired subsidiary at the date of acquisition is included in the consolidated balance sheet as goodwill or negative goodwill arising on consolidation.

37

Page 40: Annual Report 2007 - Rapid Conn · 2020. 1. 1. · CORPORATE PROFILE 2007 [ connecting the future ] CONNECTCOUNTY HOLDINGS BERHAD (618933-D) The ConnectCounty Group is an integrated

NOTES TO THE FINANCIAL STATEMENTS CONNECTCOUNTY

FOR THE YEAR ENDED 31 DECEMBER 2007 (CONT’D) HOLDINGS BERHAD (618933-D)

2. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

(d) Subsidiaries and Basis of Consolidation (cont’d)

(ii) Basis of consolidation (cont’d)

Intra-group transactions, balances and resulting unrealised gains are eliminated on consolidation and the consolidated financial statements reflect external transactions only. Unrealised losses are eliminated on consolidation unless costs cannot be recovered.

(e) Goodwill

Goodwill acquired in a business combination is initially measured at cost being the excess of the cost of business combination over the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities. Following the initial recognition, goodwill is measured at cost less any accumulated impairment losses. Goodwill is not amortised but instead, it is reviewed for impairment, annually or more frequently if events or changes in circumstances indicate that the carrying value may be impaired. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.

(f) Property, Plant and Equipment and Depreciation

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

Subsequent to recognition, property, plant and equipment are stated at cost less accumulated depreciation and any accumulated impairment losses.

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

Plant and machinery 10% to 20%

Office equipment, furniture and fittings 10% to 33.3%

Motor vehicles 20%

Renovation 10%

At each balance sheet date, the Group assesses whether there is any indication of impairment. If any such indication exists, 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 of assets is in accordance with Note 2 (o).

38

Page 41: Annual Report 2007 - Rapid Conn · 2020. 1. 1. · CORPORATE PROFILE 2007 [ connecting the future ] CONNECTCOUNTY HOLDINGS BERHAD (618933-D) The ConnectCounty Group is an integrated

NOTES TO THE FINANCIAL STATEMENTS CONNECTCOUNTY

FOR THE YEAR ENDED 31 DECEMBER 2007 (CONT’D) HOLDINGS BERHAD (618933-D)

2. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

(f) Property, Plant and Equipment and Depreciation (cont’d)

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

(g) Development Expenditure

Product development expenditure incurred in respect of specific products and for the design of prototypes for new products are charged to the income statement in the year in which it is incurred, except in so far it relates to a clearly defined project where the benefits there from can reasonably be regarded as assured. Development expenditure so deferred are limited to the value of the future benefits and are stated at cost incurred. The deferred development expenditure will be amortised over a period of five years upon commencement of commercial production of related products. Impairment is assessed whenever there is an indication of impairment and the amortisation period and method are also reviewed at least at each balance sheet date.

(h) Inventories

Inventories are stated at the lower of cost and net realisable value.

Cost is determined using the first in, first out method. The costs of raw materials comprise costs of purchase. The cost of finished goods and work-in-progress comprises direct materials, direct labour, other direct costs and appropriate proportions production overheads.

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

(i) Cash and Cash Equivalents

For the purposes of the cash flow statements, cash and cash equivalents include cash on hand and at bank and deposits at call which have an insignificant risk of changes in value, net of outstanding bank overdrafts.

39

Page 42: Annual Report 2007 - Rapid Conn · 2020. 1. 1. · CORPORATE PROFILE 2007 [ connecting the future ] CONNECTCOUNTY HOLDINGS BERHAD (618933-D) The ConnectCounty Group is an integrated

NOTES TO THE FINANCIAL STATEMENTS CONNECTCOUNTY

FOR THE YEAR ENDED 31 DECEMBER 2007 (CONT’D) HOLDINGS BERHAD (618933-D)

2. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

(j) Leases

A lease is recognised as a finance lease if it transfers substantially to the Group all the risks and rewards incident to ownership. All other leases are classified as operating leases.

(i) Finance Leases

Assets acquired by way of hire purchase or finance leases are stated at an amount equal to the lower of their fair values and the present value of the minimum lease payments at the inception of the leases, less accumulated depreciation and impairment losses. The corresponding liability is included in the balance sheet as borrowings. In calculating the present value of the minimum lease payments, the discount factor used is the interest rate implicit in the lease, when it is practicable to determine; otherwise, the Company’s incremental borrowing rate is used. Any initial direct costs are also added to the carrying amount of such assets.

Lease payments are apportioned between the finance costs and the reduction of the outstanding liability. Finance costs, which represent the difference between the total leasing commitments and the fair value of the assets acquired, are charged to the income statement over the term of the relevant lease so as to produce a constant periodic rate of charge on the remaining balance of the obligations for each accounting period.

The depreciation policy for leased assets is consistent with that for depreciable plant and equipment as described in Note 2 (f).

(ii) Operating leases

Operating lease payments are recognised as an expense in the income statement on a straight-line basis over the term of the relevant lease.

(k) Income Tax

Income tax on the profit or loss for the year comprises current 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 the time of the transaction, affects neither accounting profit nor taxable profit.

40

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NOTES TO THE FINANCIAL STATEMENTS CONNECTCOUNTY

FOR THE YEAR ENDED 31 DECEMBER 2007 (CONT’D) HOLDINGS BERHAD (618933-D)

2. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

(k) Income Tax (cont’d)

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 as income or an expense and included in the income statement for the period, except when it arises from a transaction which is recognised directly in equity, in which case the deferred tax is also recognised 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.

(l) Employee Benefits Expense

(i) Short term benefits

Wages, salaries, bonuses and social security contributions are recognised as an expense in the year in which the associated services are rendered by 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, and short term non-accumulating compensated absences such as sick leave are recognised when the absences occur.

(ii) Defined contribution plans

Defined contribution plans are post-employment benefit plans under which the Group pays fixed contributions into separate entities or funds and will have no legal or constructive obligation to pay further contributions if any of the funds do not hold sufficient assets to pay all employee benefits relating to employee services in the current and preceding financial years. Such contributions are recognised as an expense in the income statement as incurred.

As required by law, companies in Malaysia make contributions to the Employees Provident fund (“EPF”). Some of the Group’s foreign subsidiaries make contributions to their respective countries’ statutory pension schemes.

(iii) Termination benefits

Termination benefits are payable when employment is terminated before the normal retirement date or whenever an employee accepts voluntary redundancy in exchange for these benefits. The Group recognises termination benefits as a liability and an expense when it is demonstrably committed to either terminate the employment of current employees according to detailed plan without possibility of withdrawal or providing termination benefits as a result of an offer made to encourage voluntary redundancy. In the case of an offer made to encourage voluntary redundancy, the measurement of termination benefits is based on the number of employees expected to accept the offer. Benefits falling due more than twelve months after balance sheet date are discounted to present value.

41

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NOTES TO THE FINANCIAL STATEMENTS CONNECTCOUNTY

FOR THE YEAR ENDED 31 DECEMBER 2007 (CONT’D) HOLDINGS BERHAD (618933-D)

2. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

(l) Employee Benefits Expense (cont’d)

(iv) Share-based compensation

The Company has an Employee’s Share Option Scheme whereby options to subscribe for ordinary shares in the Company were granted by the Company to eligible employees, including directors of the Group.

The Group and the Company recognises an increase in share capital and share premium when the options were exercised. The total fair value of share options granted to employees is recognised as an employee cost with a corresponding increase in the share option reserve within equity over the vesting period.

The equity amount is recognised in the share option reserve until the option is exercised, upon which it will be transferred to share premium or until the option expires, upon which it will be transferred directly to retained earnings.

The fair value of share options is measured at grant date.

(m) Revenue Recognition

Revenue is recognised to the extent that it is probable that the economic benefits associated with the transaction will flow to the Group and the amount of the revenue can be measured reliably.

Revenue relating to sale of goods is recognised net of sales taxes and discounts upon the transfer of risks and rewards.

(n) Foreign Currencies

(i) Functional and presentation currency

Items included in the financial statements of each of the Group’s entities 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 Company’s functional and presentation currency.

(ii) Transactions and balances

Foreign 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.

42

Page 45: Annual Report 2007 - Rapid Conn · 2020. 1. 1. · CORPORATE PROFILE 2007 [ connecting the future ] CONNECTCOUNTY HOLDINGS BERHAD (618933-D) The ConnectCounty Group is an integrated

NOTES TO THE FINANCIAL STATEMENTS CONNECTCOUNTY

FOR THE YEAR ENDED 31 DECEMBER 2007 (CONT’D) HOLDINGS BERHAD (618933-D)

2. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

(n) Foreign Currencies (cont’d)

(iii) Group companies

The 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 that 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 of the transactions); and

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

On consolidation, exchange differences arising from the translation of 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.

(o) Impairment of Non-Financial Assets

Assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the carrying amount of the asset exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there is separately identifiable cash flows (cash generating units). Non-financial assets other than goodwill that suffered an impairment are reviewed for possible reversal of the impairment at each reporting date.

The impairment loss is charged to the income statement. Impairment losses on goodwill are not reversed. In respect of other assets, any subsequent increase in recoverable amount is recognised in the income statement.

43

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NOTES TO THE FINANCIAL STATEMENTS CONNECTCOUNTY

FOR THE YEAR ENDED 31 DECEMBER 2007 (CONT’D) HOLDINGS BERHAD (618933-D)

2. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

(p) Financial Instruments

Financial instruments are recognised in the balance sheet when the Group has become a party to the contractual provisions of the instrument.

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 a liability are reported as expense 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 offset and intends to settle either on a net basis or to realise the asset and settle the liability simultaneously.

(i) Trade Receivables

Trade receivables 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.

(ii) Trade Payables

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

(iii) Interest - bearing borrowings

Interest-bearing bank loans and overdrafts are recorded at the amount of proceeds received less directly attributable transaction costs. After initial recognition, interest bearing borrowings are subsequently measured at amortised cost using the effective interest method.

All borrowings costs are recognised as an expense in the income statement in the period in which they are incurred.

(iv) Equity Instruments

Ordinary shares are classified as equity. Dividends on ordinary shares are recognised in equity in the period in which they are declared.

3. REVENUE

This represents invoiced sales after allowance for goods returned and trade discount.

4. COST OF SALES

Cost of sales represents cost of inventories sold.

44

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NOTES TO THE FINANCIAL STATEMENTS CONNECTCOUNTY

FOR THE YEAR ENDED 31 DECEMBER 2007 (CONT’D) HOLDINGS BERHAD (618933-D)

5. LOSS FROM OPERATIONS

45

Group Company2007 2006 2007 2006

RM RM RM RM Loss from operations is stated after

charging/(crediting):

Auditors remuneration - Statutory audit - current year 73,697 67,161 12,000 15,000 - Over provided in prior year (28) - (3,000) - - Other services 9,700 2,800 9,700 2,800

Amortisation of development expenditure 653,834 696,439 - -

Bad debts written off 198 732,736 - - Development expenditure written

off 112,920 320,411 - -Depreciation 2,156,269 1,976,415 1,675 1,675 Deposits written off - 30,197 - - Employee benefits expense (Note 6) 9,312,071 7,324,999 665,060 312,759 Foreign exchange losses/(gains)

- Unrealised 276,002 532,923 307,444 332,190 - Realised (174,135) 235,039 2,976 (864)

Inventories written off 183,512 384,513 - - Inventories written down 72,893 - - - Impairment of goodwill - 496,103 - - Impairment on investment in Subsidiaries - - 1,250,901 5,036,054 Loss on disposal of property, plant

and equipment 4,086 - - -Property, plant and equipment

written off 692,001 8,777 - -Rental of equipment 76,086 75,722 - - Rental of motor vehicles - 10,338 - - Rental of premises 1,443,173 1,436,831 - - Unrealised profit on inventories 4,585 19,373 - -

Page 48: Annual Report 2007 - Rapid Conn · 2020. 1. 1. · CORPORATE PROFILE 2007 [ connecting the future ] CONNECTCOUNTY HOLDINGS BERHAD (618933-D) The ConnectCounty Group is an integrated

NOTES TO THE FINANCIAL STATEMENTS CONNECTCOUNTY

FOR THE YEAR ENDED 31 DECEMBER 2007 (CONT’D) HOLDINGS BERHAD (618933-D)

6. EMPLOYEE BENEFITS EXPENSE

(a) Included in employee benefits expense of the Group and of the Company are directors’ remuneration amounting to RM 2,038,223 (2006: RM 2,429,431) and RM 116,000 (2006: RM 122,000) respectively as disclosed in Note 7.

(b) Employee Share Options Scheme (“ESOS”)

The Connectcounty Holdings Berhad Employee Share Options Scheme (“ESOS”) is governed by the by-laws approved by the shareholders at an Extraordinary General Meeting held on 30 September 2005. The ESOS was approved on 30 September 2005 and is to be in force for a period of 5 years from the date of approval.

The salient features of the ESOS are as follows:-

(i) The Options Committee appointed by the Board of Directors to administer the ESOS, may from time to time grant options to eligible employees of the Group to subscribe for new ordinary shares of RM 0.10 each in the Company.

(ii) Subject to the discretion of the Options Committee, any employee whose employment has been confirmed and any executive directors holding office in a full-time executive capacity of the Group, shall be eligible to participate in the ESOS.

(iii) The total number of shares to be issued under the ESOS shall not exceed in aggregate 12% of the issued share capital of the Company at any point of time during the tenure of the ESOS and out of which not more than 50% of the shares shall be allocated, in aggregate, to directors and senior management. In addition, not more than 10% of the shares available under the ESOS shall be allocated to any individual director or employee who, either singly or collectively through his/her associates, holds 20% or more in the issued and paid-up capital of the Company.

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

(v) All new ordinary shares issued upon exercise of the options granted under the ESOS will rank pari passu in all respects with the then existing issued and paid-up ordinary shares of the Company other than as may be specified in a resolution approving the distribution of dividends prior to their exercise dates.

46

Group Company2007 2006 2007 2006

RM RM RM RM

Wages, salaries and bonuses 7,910,318 6,471,580 331,351 287,265 Social security contributions 333,025 155,863 1,488 840 Defined contribution plans 200,913 346,316 25,862 19,254 Other staff related expenses 564,706 351,240 3,250 5,400 Share- options granted under ESOS 303,109 - 303,109 -

9,312,071 7,324,999 665,060 312,759

Page 49: Annual Report 2007 - Rapid Conn · 2020. 1. 1. · CORPORATE PROFILE 2007 [ connecting the future ] CONNECTCOUNTY HOLDINGS BERHAD (618933-D) The ConnectCounty Group is an integrated

NOTES TO THE FINANCIAL STATEMENTS CONNECTCOUNTY

FOR THE YEAR ENDED 31 DECEMBER 2007 (CONT’D) HOLDINGS BERHAD (618933-D)

6. EMPLOYEE BENEFITS EXPENSE (CONT’D)

(b) Employee Share Options Scheme (“ESOS”) (cont’d)

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

(vii) The movement during the financial year in the number of options over the ordinary shares of RM 0.10 each in the Company is as follows:

Exercise As at As at Grant Expire Price 1.1.2007 Granted Exercised 31.12.2007 date date RM ‘000 ‘000 ‘000 ‘000

14June2007

29September2010

0.10 - 14,170 (1,140) 13,030

(viii) The fair value of share options granted during the year was estimated by the directors of the Company using Black-Scholes method model, taking into account the terms and conditions upon which the options were granted. The fair value of share options measured at grant date and the assumption are as follows:

2007

120.0 )MR( 7002 enuJ 41 no snoitpo erahs fo eulav riaF

5901.0 )MR( ecirp erahs egareva dethgieW

01.0 )MR( ecirp esicrexe egareva dethgieW

01 )%( ytilitalov detcepxE

52.3 )sraey( efil detcepxE

5.3 )%( etar eerf ksiR

0 )%( dleiy dnedivid detcepxE

The expected life of the options is based on historical data and is not necessarily indicative of exercise patterns that may occur. The expected volatility reflects the assumption that the historical volatility is indicative of future trends, which may also not necessarily be the actual outcome. No other features of the option grant were incorporated into the measurement of fair value.

47

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NOTES TO THE FINANCIAL STATEMENTS CONNECTCOUNTY

FOR THE YEAR ENDED 31 DECEMBER 2007 (CONT’D) HOLDINGS BERHAD (618933-D)

7. DIRECTORS’ REMUNERATION

Group Company2007 2006 2007 2006

RM RM RM RM

ynapmoC eht fo srotceriD

Executive: Salaries and other emoluments 1,415,869 1,468,359 - - Fees 36,000 36,000 36,000 36,000 Benefits-in-kind 134,724 199,856 - -

1,586,593 1,704,215 36,000 36,000

Non-executive: Other emoluments 56,000 62,000 56,000 62,000 Fees 24,000 24,000 24,000 24,000

80,000 86,000 80,000 86,000

Other Directors of Subsidiaries

Executive: Salaries and other emoluments

506,354 839,072 - -Benefits-in-kind - 24,839 - -

749,271,2 latoT 2,654,126 116,000 122,000

Analysis excluding Benefits- in-kind:

Total executive directors’ remuneration (Note 31 (b)) 1,958,223 2,343,431 36,000 36,000

Total non-executive directors’ remuneration 80,000 86,000 80,000 86,000

Total Directors’ remuneration (Note 6 (a)) 2,038,223 2,429,431 116,000 122,000

48

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NOTES TO THE FINANCIAL STATEMENTS CONNECTCOUNTY

FOR THE YEAR ENDED 31 DECEMBER 2007 (CONT’D) HOLDINGS BERHAD (618933-D)

7. DIRECTORS’ REMUNERATION (CONT’D)

The number of directors of the Company whose total remuneration during the year fell within the following bands is analysed below:

Number of Directors 2007 2006

:srotcerid evitucexEBelow RM 100,000 - - RM 450,001 to RM 500,000 2 1 RM 500,001 to RM 550,000 - 1 RM 550,001 to RM 600,000 - - RM 600,001 to RM 650,000 1 - RM 650,001 to RM 700,000 - 1

:srotcerid evitucexe-noNBelow RM 50,000 3 2

8. FINANCIAL COSTS, NET

9. TAXATION Group Company

2007 2006 2007 2006RM RM RM RM

Current income tax: Malaysian income tax 7,063 9,910 7,063 9,910

Foreign tax 315,800 67,347 - -

(Over)/Under provision in prior years: Malaysian income tax (9,910) (41,635) (9,910) (41,635) Foreign tax 53,104 (12,822) - -

366,057 22,800 (2,847) (31,725)

49

Group Company2007 2006 2007 2006

RM RM RM RM

Interest income (84,323) (115,423) (66,278) (101,215) Bank interest 339,647 184,352 - (3,791) Bank charges 55,653 48,246 597 1,112

310,977 117,175 (65,681) (103,894)

Page 52: Annual Report 2007 - Rapid Conn · 2020. 1. 1. · CORPORATE PROFILE 2007 [ connecting the future ] CONNECTCOUNTY HOLDINGS BERHAD (618933-D) The ConnectCounty Group is an integrated

NOTES TO THE FINANCIAL STATEMENTS CONNECTCOUNTY

FOR THE YEAR ENDED 31 DECEMBER 2007 (CONT’D) HOLDINGS BERHAD (618933-D)

9. TAXATION (CONT’D)

Deferred tax (Note 15): Relating to

origination and

reversal of temporary

differences (198,882) (191,196) - - Over/(Under) provision

in prior years 1,666,072 (236,911) - -

Total income tax expense/(income) 1,833,247 (405,307) (2,847) (31,725)

Domestic income tax is calculated at the Malaysian statutory tax rate of 27% (2006: 28%) of the estimated assessable profit for the year. The domestic statutory tax rate will be reduced to 26% from the current year’s rate of 27%, effective year of assessment 2008. The computation of deferred tax as at 31 December 2007 has reflected these changes.

Taxation for other jurisdiction is calculated at the rates prevailing in the respective jurisdictions.

A reconciliation of income tax expense applicable to 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 is as follows:

2007 2006Group MR RM

Loss before taxation (4,121,307) (4,130,016)

Taxation at Malaysian statutory tax rate of 27% (2006: 28%) (1,112,753) (1,156,404) Effect of different tax rates in other countries 572,307 347,756 Effect of expenses not deductible for tax purposes 591,593 627,273 (Under)/Overprovision of tax in prior years 43,194 (54,457) (Under)/Overprovision of deferred tax in prior years 1,666,072 (236,913) Utilisation of previously unrecognised tax losses (455,623) (140,214) Utilisation of previously unrecognised capital allowances - (62,358) Deferred tax assets not recognised 528,457 270,010

1,833,247 (405,307)

50

Page 53: Annual Report 2007 - Rapid Conn · 2020. 1. 1. · CORPORATE PROFILE 2007 [ connecting the future ] CONNECTCOUNTY HOLDINGS BERHAD (618933-D) The ConnectCounty Group is an integrated

NOTES TO THE FINANCIAL STATEMENTS CONNECTCOUNTY

FOR THE YEAR ENDED 31 DECEMBER 2007 (CONT’D) HOLDINGS BERHAD (618933-D)

9. TAXATION (CONT’D)

2007 2006Company MR MR

Loss before taxation (1,864,430) (5,401,245)

Taxation at Malaysian statutory tax rate of 27% (2006: 28%)

(503,396) (1,512,349)

Effect of expenses not deductible for tax purposes 510,459 1,522,259 (Over)/Under provision of tax in prior years (9,910) (41,635)

(2,847) ( 31,725)

10. LOSS PER SHARE

(a) Basic loss per share

Basic loss per share amounts are calculated by dividing the net loss for the year attributable to ordinary equity holders of the Company by the weighted average number of ordinary shares in issue during the financial year.

2007 2006

Net loss for the year (RM) (5,954,554) (3,724,709)

Weighted average number of ordinary shares in issue 155,948,616 150,000,000

Basic loss per share (sen) (3.82) (2.48)

(b) Diluted loss per share

No diluted loss per share is presented as the conversion of Employee Share Option Scheme is anti-dilutive.

51

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NOTES TO THE FINANCIAL STATEMENTS CONNECTCOUNTY

FOR THE YEAR ENDED 31 DECEMBER 2007 (CONT’D) HOLDINGS BERHAD (618933-D)

11. PROPERTY, PLANT AND EQUIPMENT

Plant and Machinery

Office Equipment,

Furniture and Fittings

Motor Vehicles Renovations Total

MR MR MR MR MR puorG

At 31 December 2007

tsoC

At 1 January 2007 10,094,555 1,728,445 364,182 861,493 13,048,675

Additions 552,720 146,059 384,092 81,168 1,164,039

Written off (1,900,593) - - - (1,900,593)

Disposal - (5,346) (278,316) - (283,662)

Exchange differences (131,381) (45,649) 3,478 (1,213) (174,765)

At 31 December 2007 8,615,301 1,823,509 473,436 941,448 11,853,694

AccumulatedDepreciation and Impairment losses

At 1 January 2007 4,970,603 753,679 96,465 205,409 6,026,156

Charge for the year 1,574,103 371,003 54,258 156,905 2,156,269

Written off (1,208,592) - - - (1,208,592)

Disposal - (3,696) (80,794) - (84,490)

Exchange differences (70,982) (25,889) 797 (5,143) (101,217)

At 31 December 2007 5,265,132 1,095,097 70,726 357,171 6,788,126

eulaV kooB teN

At 31 December 2007 3,350,169 728,412 402,710 584,277 5,065,568

52

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NOTES TO THE FINANCIAL STATEMENTS CONNECTCOUNTY

FOR THE YEAR ENDED 31 DECEMBER 2007 (CONT’D) HOLDINGS BERHAD (618933-D)

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

Plant and Machinery

Office Equipment,

Furniture and Fittings

Motor Vehicles Renovations Total

MR MR MR MR MR puorG

At 31 December 2006

tsoC

At 1 January 2006 8,601,081 815,455 364,320 349,083 10,129,939

363,121,3 504,955 - 580,529 378,636,1 snoitiddA

)503,71( )760,4( - )832,31( - ffo nettirW

- )113,23( - 113,23 - noitacifissalceR

Exchange differences (143,399) (31,168) (138) (10,617) (185,322)

At 31 December 2006 10,094,555 1,728,445 364,182 861,493 13,048,675

AccumulatedDepreciation and Impairment losses

At 1 January 2006 3,472,746 518,618 50,760 115,916 4,158,040

Charge for the year 1,565,846 254,441 45,439 110,689 1,976,415

)825,8( )928( - )996,7( - ffo nettirW

- )429,21( - 429,21 - noitacifissalceR

Exchange differences (67,989) (24,605) 266 (7,443) (99,771)

At 31 December 2006 4,970,603 753,679 96,465 205,409 6,026,156

Net Book Value

At 31 December 2006 5,123,952 974,766 267,717 656,084 7,022,519

53

Page 56: Annual Report 2007 - Rapid Conn · 2020. 1. 1. · CORPORATE PROFILE 2007 [ connecting the future ] CONNECTCOUNTY HOLDINGS BERHAD (618933-D) The ConnectCounty Group is an integrated

NOTES TO THE FINANCIAL STATEMENTS CONNECTCOUNTY

FOR THE YEAR ENDED 31 DECEMBER 2007 (CONT’D) HOLDINGS BERHAD (618933-D)

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

OfficeEquipment,

Furniture and Fittings

Company RM

At 31 December 2007

Cost

At 1 January 2007 8,244

Additions -

At 31 December 2007 8,244

Accumulated Depreciation

At 1 January 2007 2,513

Charge for the year 1,675

At 31 December 2007 4,188

Net Book Value

At 31 December 2007 4,056

At 31 December 2006

Cost

At 1 January 2006 8,244

Additions -

At 31 December 2006 8,244

Accumulated Depreciation

At 1 January 2006 838

Charge for the year 1,675

At 31 December 2006 2,513

Net Book Value

At 31 December 2007 5,731

(a) During the year, the Group acquired property, plant and equipment by means of:

Group

2007 2006

RM RM

Cash 780,001 1,752,929

Finance lease 384,038 493,868

Others included in

sundry payables (Note 27) - 874,566

1,164,039 3,121,363

54

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NOTES TO THE FINANCIAL STATEMENTS CONNECTCOUNTY

FOR THE YEAR ENDED 31 DECEMBER 2007 (CONT’D) HOLDINGS BERHAD (618933-D)

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

(b) The net book value of property, plant and machinery of the Group held under hire purchase arrangements at the end of the year was RM 602,777 (2006: RM 720,994).

(c) Included in plant and equipment of the Group are fully depreciated assets which are still in use costing RM 1,418,085 (2006: RM 467,697).

12. DEVELOPMENT EXPENDITURE

Group

2007

RM

2006

RM

At cost:

At 1 January 2,630,635 3,862,260

Additions:

Patent-in-progress 7,312 5,613

2,637,947 3,867,873

Less:

Amortisation of development expenditure (653,834) (696,439)

Development expenditure written off (112,920) (320,411)

Exchange differences (125,094) (220,388)

At 31 December 1,746,099 2,630,635

13. INVESTMENTS IN SUBSIDIARIES

55

Company

2007 RM

2006RM

Unquoted shares, at cost 17,063,287 16,215,433 Less : Accumulated impairment losses (6,286,955) (5,036,054)

10,776,332 11,179,379

Page 58: Annual Report 2007 - Rapid Conn · 2020. 1. 1. · CORPORATE PROFILE 2007 [ connecting the future ] CONNECTCOUNTY HOLDINGS BERHAD (618933-D) The ConnectCounty Group is an integrated

NOTES TO THE FINANCIAL STATEMENTS CONNECTCOUNTY

FOR THE YEAR ENDED 31 DECEMBER 2007 (CONT’D) HOLDINGS BERHAD (618933-D)

13. INVESTMENTS IN SUBSIDIARIES (CONT’D)

(a) Details of the subsidiaries are as follows:

Name of Subsidiaries Country of Incorporation

Effective Interest Held (%)

Principal Activities

2007 2006

Rapid Conn Interconnect (M) Sdn. Bhd.

Malaysia 100 100 Design, manufacture, sales, marketing and services of cables, connectors and related products and system assembly/sub-assembly services.

Rapid Conn Inc. United State of

America 100 100 Design, manufacture,

sales, marketing and services of cables, connectors and related products.

Rapid Conn (S) Pte. Ltd. Singapore 100 100 Trading and marketing of cables, connectors and related products.

Rapid Conn (Shen Zhen) Co., Ltd.

People’sRepublic of

China

100 100 Manufacture and trading of cables, connectors and related products.

(b) Auditors Report of subsidiaries

Rapid Conn Interconnect (M) Sdn. Bhd’s auditors report contain the audit emphasis of matter as follows:

Without qualifying our opinion, we draw attention to Note 2 (a) to the financial statements which states that the financial statements of the company have been prepared assuming that the company will continue as a going concern. The company incurred a net loss of RM 3,092,795 for the year ended 31 December 2007 and, as of that date, the company’s current liabilities exceeded its current assets by RM 2,884,917. In view of these factors, the basis of preparation of the financial statements on a going concern is dependent on its success of its future operations, financial support from the holding company, Connect County Holdings Berhad, and directors and/or its attaining sufficient cash inflows to sustain its operations. The financial statements of the company do not include any adjustments relating to the amounts and classification of assets and liabilities that might be necessary should the company be unable to continue as a going concern.

56

Page 59: Annual Report 2007 - Rapid Conn · 2020. 1. 1. · CORPORATE PROFILE 2007 [ connecting the future ] CONNECTCOUNTY HOLDINGS BERHAD (618933-D) The ConnectCounty Group is an integrated

NOTES TO THE FINANCIAL STATEMENTS CONNECTCOUNTY

FOR THE YEAR ENDED 31 DECEMBER 2007 (CONT’D) HOLDINGS BERHAD (618933-D)

14. GOODWILL ON CONSOLIDATION

Group2007

RM2006

RM

At 1 January - 496,103

Impairment loss recognised in income statement (Note 5) - (496,103)At 31 December - -

15. DEFERRED TAX

Group2007

RM2006

RM

At 1 January (1,096,142) (652,536) Recognised in the income statement 1,467,190 (428,107) Exchange differences (17,554) (15,499) At 31 December 353,494 (1,096,142)

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set-off current tax assets against current tax liabilities and when the deferred income taxes relate to the same tax authority. The net deferred tax assets and liabilities shown on the balance sheet after appropriate offsetting are as follows:

Group2007 2006

RM RM Deferred tax assets, net (30,042) (1,379,392) Deferred tax liabilities, net 383,536 283,250

353,494 (1,096,142)

Deferred tax assets and liabilities prior to offsetting are summarised as follows:

Group2007 2006

RM RM Deferred tax assets (97,230) (1,896,784) Deferred tax liabilities 450,724 800,642

353,494 (1,096,142)

57

Page 60: Annual Report 2007 - Rapid Conn · 2020. 1. 1. · CORPORATE PROFILE 2007 [ connecting the future ] CONNECTCOUNTY HOLDINGS BERHAD (618933-D) The ConnectCounty Group is an integrated

NOTES TO THE FINANCIAL STATEMENTS CONNECTCOUNTY

FOR THE YEAR ENDED 31 DECEMBER 2007 (CONT’D) HOLDINGS BERHAD (618933-D)

15. DEFERRED TAX (CONT’D)

The components and movements in deferred tax assets and liabilities during the financial year prior to offsetting are as follows:

Deferred tax assets of the Group

UnabsorbedCapital

AllowancesRM

UnutilisedBusiness Losses

RM Total RM

)487,698,1( )386,659( )101,049( 7002 yraunaJ 1 tA

Recognised in the income statement 843,637 952,826 1,796,463 190,3 758,3 )667( secnereffid egnahcxE )032,79( - )032,79( 7002 rebmeceD 13 tA

Deferred tax liabilities of the Group

AcceleratedCapital

AllowancesRM

DeferredDevelopment

ExpenditureRM

TotalRM

246,008 257,393 098,604 7002 yraunaJ 1 tA

Recognised in the income statement (216,212) (113,061) (329,273) )546,02( )377,81( )278,1( secnereffid egnahcxE 427,054 819,162 608,881 7002 rebmeceD 13 tA

Deferred tax assets have not been recognised in respect of the following items as it is not probable that the respective subsidiary company will generate sufficient future taxable profits available against which it can be utilised:

Group2007 2006

RM RM Unutilised tax losses 2,864,000 2,831,000 Unutilised capital allowances 4,038,000 3,383,000

16. INVENTORIES

58

Group 2007 2006 RM RM

At cost: Raw materials 502,189 196,661 Finished goods 971,932 1,293,199 Components 1,254,060 982,103 Good in transit 896,796 841,150 Work in progress 111,615 -

3,736,592 3,313,113 At net realisable value: Raw materials 8,085 -

Finished goods 1,093 - Components 247,687 -

3,993,457 3,313,113

Page 61: Annual Report 2007 - Rapid Conn · 2020. 1. 1. · CORPORATE PROFILE 2007 [ connecting the future ] CONNECTCOUNTY HOLDINGS BERHAD (618933-D) The ConnectCounty Group is an integrated

NOTES TO THE FINANCIAL STATEMENTS CONNECTCOUNTY

FOR THE YEAR ENDED 31 DECEMBER 2007 (CONT’D) HOLDINGS BERHAD (618933-D)

17. TRADE RECEIVABLES

The Group’s normal trade credit term are up to 90 days. Other credit terms are assessed and approved on a case-by-case basis.

The Group has no significant concentration of credit risk that may arise from exposures to a single debtor or to groups of debtors other. Trade receivables are non-interest bearing.

Details on related party transactions are disclosed in Note 31.

Other information on financial risks of receivables are disclosed in Note 32.

18. OTHER RECEIVABLES

The amounts due from subsidiaries are unsecured, interest-free and have no fixed term of repayment.

The Group has no significant concentration of credit risk that may arise from exposures to a single debtor or to groups of debtors except that 99% of receivables are due from subsidiaries at Company level.

Details on related party transactions are disclosed in Note 31.

Other information on financial risks of receivables are disclosed in Note 32.

59

Group Company2007 2006 2007 2006

RM RM RM RM

Due from subsidiaries - - 8,536,841 6,155,282 Sales tax and purchase tax recoverable 616,029 598,034 - -Deposits 1,440,097 548,029 1,000 1,000 Prepayments 108,122 195,052 1,000 31,500 Sundry receivables 386,179 10,318 - 687

2,550,427 1,351,433 8,538,841 6,188,469

Page 62: Annual Report 2007 - Rapid Conn · 2020. 1. 1. · CORPORATE PROFILE 2007 [ connecting the future ] CONNECTCOUNTY HOLDINGS BERHAD (618933-D) The ConnectCounty Group is an integrated

NOTES TO THE FINANCIAL STATEMENTS CONNECTCOUNTY

FOR THE YEAR ENDED 31 DECEMBER 2007 (CONT’D) HOLDINGS BERHAD (618933-D)

19. CASH AND CASH EQUIVALENTS

The fixed deposit amounting to RM50,000 is registered under a director’s name and it is pledged to a licensed bank for issuance of bank guarantee on behalf of a subsidiary company.

20. SHARE CAPITAL

Group and CompanyNumber of Ordinary shares of

RM0.10 each Amount

2007 2006 2007 2006

RM RM

Authorised:

At 1 January/31 December 250,000,000 250,000,000 25,000,000 25,000,000

Issued and fully paid:

At 1 January 150,000,000 150,000,000 15,000,000 15,000,000

Issued during the year:

Private Placement 50,000,000 - 5,000,000 -

ESOS 1,140,000 - 114,000 -

At 31 December 201,140,000 150,000,000 20,114,000 15,000,000

60

Group Company2007 2006 2007 2006

RM RM RM RM

Fixed deposits with licensed bank 1,800,000 2,783,958 1,750,000 2,783,958

Cash on hand and atbanks 1,075,321 2,444,623 64,325 161,622

Cash and bankbalances 2,875,321 5,228,581 1,814,325 2,945,580

Less: Bank overdraft (Note 24) (126,872) (195,371) - -

Less: Fixed deposits pledge as security (50,000) - - -

Cash and cash equivalents 2,698,449 5,033,210 1,814,325 2,945,580

Page 63: Annual Report 2007 - Rapid Conn · 2020. 1. 1. · CORPORATE PROFILE 2007 [ connecting the future ] CONNECTCOUNTY HOLDINGS BERHAD (618933-D) The ConnectCounty Group is an integrated

NOTES TO THE FINANCIAL STATEMENTS CONNECTCOUNTY

FOR THE YEAR ENDED 31 DECEMBER 2007 (CONT’D) HOLDINGS BERHAD (618933-D)

21. SHARE PREMIUM (NON DISTRIBUTABLE)

Group and Company2007

RM2006

RM

At 1 January 6,756,365 6,756,365 Credited during the year 500,000 - Transferred from Share Option Reserve 24,386 - Expenses pertaining to Private Placement (423,270) - At 31 December 6,857,481 6,756,365

The share premium which is non-distributable represents the premium arising from the issue of shares and transfer from Share Option Reserve over the period when ESOS is exercised.

22. FOREIGN EXCHANGE RESERVES (NON DISTRIBUTABLE)

Group2007

RM2006

RM

At 1 January 1,163 96,642 Arising in the year (177,232) (95,479) At 31 December (176,069) 1,163

The foreign exchange reserve comprises all foreign exchange differences arising from the translation of the financial statements of foreign subsidiaries whose functional currencies are different from that of the Group’s presentation currency. It is also used to record the exchange differences arising from monetary items which form part of the Group’s net investment in operations, where the monetary item is denominated in either the functional currency of the reporting entity or the foreign operation.

23. SHARE OPTION RESERVE

Share option reserve represents the equity-settled share options granted to employees. This reserve is transferred to the share premium over the period when the ESOS is exercised.

61

Page 64: Annual Report 2007 - Rapid Conn · 2020. 1. 1. · CORPORATE PROFILE 2007 [ connecting the future ] CONNECTCOUNTY HOLDINGS BERHAD (618933-D) The ConnectCounty Group is an integrated

NOTES TO THE FINANCIAL STATEMENTS CONNECTCOUNTY

FOR THE YEAR ENDED 31 DECEMBER 2007 (CONT’D) HOLDINGS BERHAD (618933-D)

24. BORROWINGS Group

2007RM

2006RM

Short Term Borrowings :deruceS

Bank overdraft 126,872 195,371 Hire purchase payables 142,351 156,819 Factoring facility 2,329,558 2,423,960

2,598,781 2,776,150 Unsecured: Term loan 112,136 115,760

2,710,917 2,891,910

sgniworroB mreT gnoLSecured: Hire purchase payables 554,029 487,661

Unsecured: Term loan - 111,629

554,029 599,290

Total borrowings Bank overdraft (Note 19) 126,872 195,371 Term loan 112,136 227,389 Hire purchase payables (Note 25) 696,380 644,480 Factoring facility 2,329,558 2,423,960

3,264,946 3,491,200

Maturity of borrowings (excluding hire purchase) Within one year 2,568,566 2,735,091 More than one year and less than 5 years - 111,629

2,568,566 2,846,720

The weighted average effective interest rates at the balance sheet date for borrowings, excluding hire purchase, were as follows:

Group2007

% 2006

%Overdraft 8.5 8.5 Term loan 15 5 - 15 Factoring facility 8.23-8.33 8.23 - 8.33

The unsecured term loan is required to be repaid in full on 10 October 2008.

Other information on financial risks of borrowings are disclosed in Note 32.

62

Page 65: Annual Report 2007 - Rapid Conn · 2020. 1. 1. · CORPORATE PROFILE 2007 [ connecting the future ] CONNECTCOUNTY HOLDINGS BERHAD (618933-D) The ConnectCounty Group is an integrated

NOTES TO THE FINANCIAL STATEMENTS CONNECTCOUNTY

FOR THE YEAR ENDED 31 DECEMBER 2007 (CONT’D) HOLDINGS BERHAD (618933-D)

25. HIRE PURCHASE PAYABLES

Group2007

RM2006

RM

:stnemyap esael dna esahcrup erih muminim erutuFNot later than 1 year 211,185 208,772 Later than 1 year and not later than 2 years 191,935 622,346 Later than 2 year and not later than 5 years 320,994 - More than 5 years 219,915 -

944,029 831,118 Less: Future finance charges (247,649) (186,638)

Present value of hire purchase liabilities (Note 24) 696,380 644,480

Analysis of present value of hire purchase liabilities : Not later than 1 year 142,351 156,818 Later than 1 year and not later than 2 years 132,193 487,662 Later than 2 year and not later than 5 years 225,956 - More than 5 years 195,880 -

696,380 644,480

The hire purchase bore interest at the balance sheet date at rates between 5.17% and 13.7% per annum (2006: 5.17% and 13.7%).

Other information on financial risks of hire purchase payables are disclosed in Note 32.

26. TRADE PAYABLES

Trade payables are non-interest bearing and the normal trade credit terms granted to the Group ranges from 30 to 120 days.

Details on related party transactions are disclosed in Note 31.

Other information on financial risks of trade payables are disclosed in Note 32.

63

Page 66: Annual Report 2007 - Rapid Conn · 2020. 1. 1. · CORPORATE PROFILE 2007 [ connecting the future ] CONNECTCOUNTY HOLDINGS BERHAD (618933-D) The ConnectCounty Group is an integrated

NOTES TO THE FINANCIAL STATEMENTS CONNECTCOUNTY

FOR THE YEAR ENDED 31 DECEMBER 2007 (CONT’D) HOLDINGS BERHAD (618933-D)

27. OTHER PAYABLES

Included in previous years’ Group sundry payables was an amount of RM 874,566 which is in relation to the purchase of property, plant and equipment as indicated in note 11 (a).

^ The amounts due to subsidiaries are unsecured, interest-free and have no fixed term of repayment. * These balances are unsecured, interest-free and are repayable on demand.

Details on related party transactions are disclosed in Note 31.

Other information on financial risks of payables are disclosed in Note 32.

28. COMMITMENTS

Group2007

RM2006

RM

(a) Capital expenditure: :rof detcartnoc dna devorppA

Property, plant and equipment 786,300 -

:stnemtimmoc latneR )b(Payable within one year 1,846,610 1,747,090 Payable more than one year 6,113,840 8,079,420

7,960,450 9,826,510

29. CONTINGENT LIABILITIES

Company2007 2006

RM RM Unsecured : Corporate Guarantees Guarantees given to financial institutions for credit facilities

granted to subsidiaries 2,457,000 2,619,000

64

Group Company2007 2006 2007 2006

RM RM RM RM

Due to subsidiaries ^ - - 1,160,922 4,006,351 Due to a shareholder* - 129,138 - - Due to a director* - 33,000 - 33,000 Accruals 1,131,755 984,264 119,175 79,589 Sundry payables 412,435 2,397,627 39,109 12,706

1,544,190 3,544,029 1,319,206 4,131,646

Page 67: Annual Report 2007 - Rapid Conn · 2020. 1. 1. · CORPORATE PROFILE 2007 [ connecting the future ] CONNECTCOUNTY HOLDINGS BERHAD (618933-D) The ConnectCounty Group is an integrated

NOTES TO THE FINANCIAL STATEMENTS CONNECTCOUNTY

FOR THE YEAR ENDED 31 DECEMBER 2007 (CONT’D) HOLDINGS BERHAD (618933-D)

30. CONTINGENT ASSET

One of the subsidiary company has raised a claim amounting to RM 110,000 against an insurance company in respect of damages to one of its machinery caused by flood, the net book value of which has already been written off in the financial statements for the year ended 31 December 2007.

31. SIGNIFICANT RELATED PARTY TRANSACTIONS

(a) In addition to the transactions detailed elsewhere in the financial statements, the Group and the Company had the following transactions with related parties during the financial year:

2007RM

2006RM

Group

Related company - Le Champ (South East Asia) Pte. Ltd., in which a substantial shareholder of the Company has interest

Sales (628) (14,216) Purchase of plant and equipment - 20,411 Repair and maintenance of plant and equipment 7,390 74,971

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

(b) Compensation of key management personnel

The remuneration of directors and other members of key management during the year were as follows:

Group Company2007 2006 2007 2006

RM RM RM RM

Short term employee benefits 1,569,446 1,681,496 36,000 36,000

Post-employment benefits: Defined contribution plan 17,147 22,719 - -

1,586,593 1,704,215 36,000 36,000

Included in the total key management personnel are: Director remuneration excluding benefits in kind (Note 7) 1,958,223 2,343,431 36,000 36,000

65

Page 68: Annual Report 2007 - Rapid Conn · 2020. 1. 1. · CORPORATE PROFILE 2007 [ connecting the future ] CONNECTCOUNTY HOLDINGS BERHAD (618933-D) The ConnectCounty Group is an integrated

NOTES TO THE FINANCIAL STATEMENTS CONNECTCOUNTY

FOR THE YEAR ENDED 31 DECEMBER 2007 (CONT’D) HOLDINGS BERHAD (618933-D)

32. FINANCIAL INSTRUMENTS

(a) Financial Risk Management Objectives and Policies

The Group’s financial risk management policy seeks to ensure that adequate financial resources are available for the development of the Group’s businesses whilst managing its interest rate, foreign exchange, liquidity and credit risk. The Group operates within clearly defined guidelines that are approved by the Board and the Group’s policy is not to engage in speculative transactions.

(b) Interest Rate Risk

The Group’s exposure to market risk for changes in interest rates relate primarily to interest bearing debts. The Group monitors the interest rate on borrowings closely to ensure that the borrowings are maintained at favourable rates. The Group does not use derivative financial instruments to hedge interest rate risk.

(c) Foreign Currency Risk

The Group operates internationally and is exposed to various currencies, mainly United States Dollars, Chinese Renminbi and Singapore Dollars. Foreign currency denominated assets and liabilities together with expected cash flows from highly probable purchases and sales give rise to foreign exchange exposures.

(d) Liquidity Risk

The Group actively manages its debt maturity profile, operating cash flows and the availability of funding so as to ensure that all repayment and funding needs are met. As part of its overall prudent liquidity management, the Group maintains sufficient levels of cash to meet its working capital requirements. In addition, the Group strives to maintain available banking facilities of a reasonable level to its overall debt position.

(e) Credit Risk

Credit risk, or risk of counterparties defaulting, is controlled by the application of credit approvals, limits and monitoring procedures. Credit risks are minimised and monitored by limiting the Group’s associations to business partners with high creditworthiness. Trade receivables are monitored on an ongoing basis via Group management reporting procedures.

The Group does not have any significant exposure to any individual customer or counterparty nor does it have any major concentration of credit risk related to any financial instruments.

Management has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis.

The carrying amounts of trade and other receivables represent the Group’s maximum exposure to credit risk. As at the balance sheet date, there were no significant concentrations of credit risk with any particular entity other than as disclosed in Note 18 to the financial statements.

66

Page 69: Annual Report 2007 - Rapid Conn · 2020. 1. 1. · CORPORATE PROFILE 2007 [ connecting the future ] CONNECTCOUNTY HOLDINGS BERHAD (618933-D) The ConnectCounty Group is an integrated

NOTES TO THE FINANCIAL STATEMENTS CONNECTCOUNTY

FOR THE YEAR ENDED 31 DECEMBER 2007 (CONT’D) HOLDINGS BERHAD (618933-D)

32. FINANCIAL INSTRUMENTS (CONT’D)

(f) Fair Value

The carrying amounts of the financial assets and financial liabilities as reflected in the balance sheet are carried at market value or at amounts which, because of their short-term nature, approximate their fair values.

The aggregate net fair values of financial liabilities which are not carried at fair value on the balance sheet of the Group as at the end of the financial year are represented as follow:

Note Carrying

Amount Fair Value RM RM

seitilibaiL laicnaniF

At 31 December 2007 Hire Purchase payables 25 696,380 522,836

At 31 December 2006 Hire Purchase payables 25 644,480 512,587

The following method and assumptions are used to estimate the fair value of the following classes of financial instruments:

(i) Cash and Cash Equivalents, Term Loan, Trade and Other Receivables / Payables

The carrying amounts approximate fair values due to the relatively short term maturity of these financial instruments.

33. SIGNIFICANT EVENTS

During the financial year,

(a) the issue and paid-up ordinary share capital of the Company was increased fromRM 15,000,000 to RM 20,114,000 by way of the followings:

(i) issuance of 1,140,000 new ordinary shares of RM 0.10 each for cash pursuant to the Employee’s Share Option Scheme (“ESOS”) of the Company at an exercise price of RM 0.10 per ordinary share.

(ii) issuance of 50,000,000 new ordinary shares of RM 0.10 each for cash pursuant to a private placement exercise at an issue price of RM 0.11 per ordinary share.

The resultant premium arising from the shares issued pursuant to the private placement exercise of RM 500,000 was credited to the share premium account as disclosed in Note 21 to the financial statements.

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

(b) the Company subscribed for additional registered capital amounting to RMB 1,880,838 in its wholly owned subsidiary, namely Rapid Conn (ShenZhen) Co. Ltd., a company incorporated in the People’s Republic of China.

67

Page 70: Annual Report 2007 - Rapid Conn · 2020. 1. 1. · CORPORATE PROFILE 2007 [ connecting the future ] CONNECTCOUNTY HOLDINGS BERHAD (618933-D) The ConnectCounty Group is an integrated

NOTES TO THE FINANCIAL STATEMENTS CONNECTCOUNTY

FOR THE YEAR ENDED 31 DECEMBER 2007 (CONT’D) HOLDINGS BERHAD (618933-D)

34. SUBSEQUENT EVENT

On 25 January 2008, the Company allotted and issued 1,685,000 new ordinary shares of RM 0.10 each respectively, pursuant to the Employees’ Share Option Scheme.

35. COMPARATIVE FIGURES

The following comparative figures of Income Statement and Balance Sheet have been reclassified to conform with current year's presentation:

As previously stated Reclassification As restated

RM RM RM Income Statement - Group Cost of sales (54,607,517) 359,783 (54,247,734)

Selling expenses (3,075,969) (359,783) (3,435,752)

Balance Sheet – Group

Deferred tax assets 1,096,142 283,250 1,379,392

Trade receivables 15,471,508 17,061 15,488,569

Deferred tax liabilities - (283,250) (283,250)

Trade payables (13,719,668) (17,061) (13,736,729)

Consolidated Cash Flow Statement

Receivables 7,093,712 17,061 7,110,773

Payables (8,626,465) 17,061 (8,643,526)

68

Page 71: Annual Report 2007 - Rapid Conn · 2020. 1. 1. · CORPORATE PROFILE 2007 [ connecting the future ] CONNECTCOUNTY HOLDINGS BERHAD (618933-D) The ConnectCounty Group is an integrated

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69

Page 72: Annual Report 2007 - Rapid Conn · 2020. 1. 1. · CORPORATE PROFILE 2007 [ connecting the future ] CONNECTCOUNTY HOLDINGS BERHAD (618933-D) The ConnectCounty Group is an integrated

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70

Page 73: Annual Report 2007 - Rapid Conn · 2020. 1. 1. · CORPORATE PROFILE 2007 [ connecting the future ] CONNECTCOUNTY HOLDINGS BERHAD (618933-D) The ConnectCounty Group is an integrated

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Page 74: Annual Report 2007 - Rapid Conn · 2020. 1. 1. · CORPORATE PROFILE 2007 [ connecting the future ] CONNECTCOUNTY HOLDINGS BERHAD (618933-D) The ConnectCounty Group is an integrated

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72

Page 75: Annual Report 2007 - Rapid Conn · 2020. 1. 1. · CORPORATE PROFILE 2007 [ connecting the future ] CONNECTCOUNTY HOLDINGS BERHAD (618933-D) The ConnectCounty Group is an integrated

ANALYSIS OF SHAREHOLDINS as at 2 May 2008

2007

[ connecting the future ]

CONNECTCOUNTY HOLDINGS BERHAD

(618933-D)

Distribution of Shareholdings

Holdings No. of

Shareholders Percentage of

Shareholders(%) No. of Shares

Less than 100 shares 3 0.00 150 101 to 1,000 shares 306 0.14 290,000 1001 to 10,000 shares 664 2.21 4,486,400 10,001 to 100,000 shares 379 7.76 15,736,900 100,001 to less than 5% of issued shares 137 59.00 119,658,740 5% and above of issued shares 2 30.89 62,652,810

1,491 100.00 202,825,000 List of 30 Largest Shareholders

No. Name No. of Shares Held Percentage (%)

1 Chng Seng Chye @ Chng Hung Seng 34,553,280 17.04 2 AmSec Nominees (Asing) Sdn. Bhd. Ambank (M) Berhad for

Ang Chuang Juay 28,099,530 13.85

3 RHB Nominees (Asing) Sdn Bhd Rising Flame International Limited

7,000,000 3.45

4 Ke-Zan Nominees (Asing) Sdn. Bhd. Kim Eng Securities Pte. Ltd. for Ng Chee Yong Benjamin

6,000,000 2.96

5 Ho Lee Fong 5,650,000 2.79

6 Ke-Zan Nominees (Tempatan) Sdn. Bhd. Kim Eng Securities Pte. Ltd. for Lim You Moy

5,434,800 2.68

7 Ng Poh Seng 4,726,920 2.33 8 Ke-Zan Nominees (Asing) Sdn. Bhd. Kim Eng Securities Pte.

Ltd. for Louisson Investment Pte Ltd 4,020,000 1.88

9 Tan Wai Ling 4,000,000 1.97

10 Ke-Zan Nominees (Asing) Sdn. Bhd. Kim Eng Securities Pte. Ltd. for Lee Thian Guan John

3,417,000 1.68

11 Lionel Koh Kok Peng 3,200,000 1.58 12 Kenanga Nominees (Asing) Sdn. Bhd. Pledged Securities

Account for Ang Chuang Juay 3,181,070 1.57

13 Ang Cheng Tee 2,836,158 1.40 14 Lee Siew Kee 2,836,152 1.40 15 AIBB Nominees (Tempatan) Sdn. Bhd. Pledged Securities

Account for Batu Bara Resources Corporation Sdn. Bhd. 2,787,500 1.37

16 Tan Eiam Hian 2,700,000 1.33 17 Phoo Keng Hui 2,601,000 1.28

73

Class of Shares : Ordinary Shares of RM 0.10 each Authorised Share Capital : RM25,000,000 Issued and Fully Paid-up Capital : RM20,282,500 Voting Rights : One (1) Vote Per Ordinary Share Number of Holders : 1,491

Page 76: Annual Report 2007 - Rapid Conn · 2020. 1. 1. · CORPORATE PROFILE 2007 [ connecting the future ] CONNECTCOUNTY HOLDINGS BERHAD (618933-D) The ConnectCounty Group is an integrated

ANALYSIS OF SHAREHOLDINGS as at 2 May, 2008 (CONT’D)

2007

[ connecting the future ]

CONNECTCOUNTY HOLDINGS BERHAD

(618933-D)

List of 30 Largest Shareholders (cont’d)

No. Name No. of Shares Held Percentage (%)

18 Kenanga Nominees (Asing) Sdn. Bhd. Pledged Securities Account for Loh Tong Yew

2,314,280 1.14

19 Beh Chin Heng 2,300,000 1.13 20 Ng Keng How 2,300,000 1.13 21 Ke-Zan Nominees (Tempatan) Sdn. Bhd. Kim Eng Securities

Pte. Ltd. for Phang Eng Yon 2,300,000 1.13

22 Ke-Zan Nominees (Tempatan) Sdn. Bhd. Kim Eng Securities Pte. Ltd. for Pee Guat Lim

2,300,000 1.13

23 Ke-Zan Nominees (Asing) Sdn. Bhd. Kim Eng Securities Pte. Ltd. for Tan Keng Peng

2,300,000 1.13

24 Tan Eiam Hian 2,204,000 1.09 25 Goh Choon Cheok 2,000,000 0.99 26 HDM Nominees (Asing ) Sdn. Bhd. UOB Kay Hian Pte. Ltd. for

Teo Kim Hor 1,800,000 0.89

27 Mayban Securities Nominees (Asing) Sdn. Bhd. UOB Kay Hian Pte. Ltd. for Ang Cheau Hoon

1,600,000 0.79

28 Kenanga Nominees (Asing) Sdn Bhd. Pledge Securities Accoount for Ng Poh Seng

1,453,090 0.72

29 Mayban Nominees (Tempatan) Sdn. Bhd. Pledged SecuritiesAccount for Ng Hoo Kui

1,277,100 0.63

30 Ooi Chin Tiong 1,010,000 0.50

Statement of Directors’ Interest

Ordinary shares of RM0.10 each

Name of Directors Direct Interest Deemed Interest No.of shares % No.of shares %

Ang Chuang Juay 31,280,600 15.42 - -

Huang Yan Teo 100,000 0.05 - - Dato’ Dr Mohamed Ariffin Bin Hj Aton - - - - Lim Bee San - - - -

By virtue of their interest in the shares of the Company, all the directors are deemed to be interested in the shares of all the subsidiaries of the Company to the extent the Company has an interest.

List of Substantial Shareholders

Ordinary shares of RM 0.10 each Direct Interest Deemed Interest

Substantial shareholders No.of shares % No.of shares %

Chng Seng Chye @ Chng Hung Seng 34,553,280 17.04 - - AmSec Nominees (Asing) Sdn Bhd 31,280,600 15.42 - -

AmBank (M) Berhad for Ang Chuang Juay

74

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NOTICE OF ANNUAL GENERAL MEETING

2007

[ connecting the future ]

CONNECTCOUNTY HOLDINGS BERHAD

(618933-D)

NOTICE IS HEREBY GIVEN that the 5th Annual General Meeting of CONNECTCOUNTY HOLDINGS BERHAD (Co.No.618933-D) will be held at Dewan Johor, 2nd Floor, Hotel Mutiara Johor Bahru, Jalan Dato’ Sulaiman, Taman Century, 80990 Johor Bahru, Johor on Monday, the 23rd day of June, 2008 at 11:00 a.m. for the following purposes :

AGENDA ORDINARY BUSINESS

1 To receive the Audited Financial Statements for the financial year ended 31 December 2007 and 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 2007.

Resolution 2

3

To re-elect the following Directors retiring in accordance with Article 83 of the Articles of Association of the Company:-

(a) Mr. Huang Yan Teo

Resolution 3

4

To re-elect the following Directors retiring in accordance with Article 90 of the Articles of Association of the Company:-

(a) Dato Dr Mohamed Ariffin Bin Hj Aton

Resolution 4

(b) Ms. Lim Bee San

Resolution 5 5

To appoint Auditors and to authorize the Directors to fix their remuneration. Notice of Nomination pursuant to Section 172(11) of the Companies Act, 1965, a copy of which is annexed hereto and marked “Annexure A” has been received by the Company for the nomination of Messrs Moore Stephens AC who have given their consent to act, for appointment as Auditors and of the intention to propose the following ordinary resolution:- “That Messrs Moore Stephens AC be and are hereby appointed as Auditors of the Company in place of the retiring Auditors, Messrs Moore Stephens Associates & Co. to hold office until the conclusion of the next Annual General Meeting at a remuneration to be determined by the Directors.”

Resolution 6

SPECIAL BUSINESS To consider and thought fit, to pass the following resolutions as Special and Ordinary Resolutions:-

6 ORDINARY RESOLUTION AUTHORITY TO ALLOT AND ISSUE SHARES PURSUANT TO SECTION 132D OF THE COMPANIES ACT, 1965

“That pursuant to Section 132D of the Companies Act,1965, the Directors be and are hereby authorised to allot and issue shares in the Company from time to time at such price, upon such terms and conditions, for such purposes and to such person or persons whomever as the Directors may deem fit provided that the aggregate number of shares so 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 such authority shall continue in force until the conclusion of the next Annual General Meeting of the Company”.

Resolution 7

75

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NOTICE OF ANNUAL GENERAL MEETING (CONT’D)

2007

[ connecting the future ]

CONNECTCOUNTY HOLDINGS BERHAD

(618933-D)

7 To transact any other business for which due notice shall be given in accordance with the

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

BY ORDER OF THE BOARD

SUJATA MENON A/P K.R.D.S. CHANDRAN (LS 0002004) Company Secretary Johor Bahru Date : 30 May 2008

Notes:

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

stead. A proxy may but need not be a member of the Company.

2. A member shall be entitled to appoint more than one (1) proxy to attend and vote at the same meeting.

3. Where a member appoints more than one (1) proxy, the appointment shall be invalid unless he specifies the proportion of his holdings to be represented by each proxy.

4. Where a member is an authorised nominee as defined under the Securities Industry (Central Depository) Act,

1991, it may appoint at least one (1) proxy in respect of each securities account it holds with ordinary shares of the Company standing to the credit of the said securities account.

5. Where the Proxy Form is executed by a corporation, it must be either under its Common Seal or under the hand of

an attorney duly authorised.

6. The Proxy Form must be deposited with the Company Secretary at the Registered Office, Suite 5.3A, Level 5, Menara Pelangi, No.2, Jln Kuning, Taman Pelangi, 80400 Johor Bahru, Johor not less than 48 hours before the time set for the meeting.

Notes on Special Business:

1. The proposed Ordinary Resolution 7 under item 6 if passed, is primarily to give flexibility to the Directors to issue and allot shares at any time in their absolute discretion without convening a general meeting. This authority, unless revoked or varied by the shareholders of the Company at a general meeting, will expire at the conclusion of the next annual general meeting of the Company.

76

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NOTICE OF NOMINATION OF AUDITORS

ANNEXURE A

ANG CHUANG JUAY NO. 15, DIX ROAD SINGAPORE 549697 Date : 5 May 2008 The Board of Directors CONNECTCOUNTY HOLDINGS BERHAD Suite 5.3A, Level 5 Menara Pelangi, No. 2, Jalan Kuning, Taman Pelangi 80400 Johor Bahru Dear Sirs, NOTICE OF NOMINATION OF AUDITORS Pursuant to Section 172 (11) of the Companies Act, 1965, I being the shareholder of the Company, hereby give notice of my intention to nominate Messrs Moore Stephens AC for appointment as Auditors of the Company and to propose the following as ordinary resolution to be tabled at the forthcoming Annual General Meeting:- “That Messrs Moore Stephens AC be and are hereby appointed as Auditors of the Company in place of the retiring Auditors, Messrs Moore Stephens Associates & Co. to hold office until the conclusion of the next Annual General Meeting at a remuneration to be determined by the Directors.” Yours faithfully ANG CHUANG JUAY

77

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STATEMENT ACCOMPANYING NOTICE OF ANNUAL GENERAL MEETING

* Name of Directors who are standing for re-election :

1. Mr. Huang Yan Teo (Independent Non-Executive Director) 2. Dato Dr Mohamed Ariffin Bin Hj Aton (Independent Non-Executive Director) 3. Ms. Lim Bee San (Independent Non-Executive Director)

2007

[ connecting the future ]

CONNECTCOUNTY HOLDINGS BERHAD

(618933-D)

* Details of attendance of Directors at the Board of Directors’ Meetings held during the financial year :

Name of Directors No. of Board Meetings attended

during the financial year

Ang Chuang Juay 5 out of 5 Turker Hidirlar (Resigned on 25 February 2008) 5 out of 5 Robert Jean Tondreault (Resigned on 31 December 2007) 4 out of 5 Huang Yan Teo 5 out of 5 Toh Wing Yew (Resigned on 18 September 2007) 4 out of 4 Dato Dr Mohamed Ariffin Bin Hj Aton (Appointed on 1 October 2007) 1 out of 1 Lim Bee San (Appointed on 2 January 2008) 0 out of 0

* The place, date and hour of the 5th Annual General Meeting :

Date Time Place

23 June 2008 (Monday) 11:00 a.m. Dewan Johor, 2nd Floor, Hotel Mutiara Johor Bahru, Jalan Dato’ Sulaiman, Taman Century, 80990 Johor Bahru, Johor.

* Securities holdings in the Company and its subsidiaries by the directors standing for re-election.

(Please refer to the Statement of Directors’ Interests in the Company and related corporations on Page 74).

* Profile of Directors standing for re-election

(Please refer to section on Profile of Directors on pages 6 to 7).

78

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79

Page 82: Annual Report 2007 - Rapid Conn · 2020. 1. 1. · CORPORATE PROFILE 2007 [ connecting the future ] CONNECTCOUNTY HOLDINGS BERHAD (618933-D) The ConnectCounty Group is an integrated

PROXY FORM

2007[ connecting the future ]

CONNECTCOUNTY HOLDINGS BERHAD

(618933-D)

I/We, (Name)

of___________________________________________________________________________________________________(Address)

a member / members of CONNECTCOUNTY HOLDINGS BERHAD, hereby appoint Mr / Ms

_______________________________________________________________________________________________________(Name)

of (Address)

Or failing him / her, (Name)

of (Address)

As -*my / our proxy to vote for *me / us and on *my / our behalf at the 5th Annual General Meeting of the Company to be held on Monday, 23 June, 2008 at Dewan Johor, 2nd Floor, Hotel Mutiara Johor Bahru, Jalan Dato’ Sulaiman, Taman Century, 80990 Johor Bahru, Johor at 11:00 a.m. and at any adjournment thereof.

My / Our proxy is to vote as indicated below :-

For Against

RESOLUTION 1

RESOLUTION 2

RESOLUTION 3

RESOLUTION 4

RESOLUTION 5

RESOLUTION 6

RESOLUTION 7

(Please indicate with ‘X’ in the space provided how you wish your votes to be casted. If no specific direction as tovoting is given, the proxy will vote or abstain from voting at his discretion.)

NO. OF SHARES HELD

Signature of Shareholder(s)

Signed this ________day of _______________________, 2008.

Notes :

1. A member entitled to attend and vote at the meeting is entitled to appoint a proxy to attend and vote in his stead. A proxy may but need not be a member of the Company.

2. A member shall be entitled to appoint more than one (1) proxy to attend and vote at the same meeting.

3. Where a member appoints more than one (1) proxy, the appointment shall be invalid unless he specifies the proportion of his holdings to be represented by each proxy.

4. Where a member is an authorised nominee as defined under the Securities Industry (Central Depository Act, 1991, it may appoint at least one (1) proxy in respect of each securities account it holds with ordinary shares of the Company standing to the credit of the said securities account.

5. Where the Proxy Form is executed by a corporation, it must be either under its Common Seal or under the hand of an attorney duly authorised.

6. The Proxy Form must be deposited with the Company Secretary at the Registered Office, Suite 5.3A, Level 5, Menara Pelangi, No.2, Jalan Kuning, Taman Pelangi, 80400 Johor Bahru, Johor not less than 48 hours before the time set for the meeting.

80

Page 83: Annual Report 2007 - Rapid Conn · 2020. 1. 1. · CORPORATE PROFILE 2007 [ connecting the future ] CONNECTCOUNTY HOLDINGS BERHAD (618933-D) The ConnectCounty Group is an integrated

Fold Here

Please affix postage

stamp here

The Company Secretary of

CONNECTCOUNTY HOLDINGS BERHAD (618993-D)

Suite 5.3A, Level 5, Menara Pelangi No. 2 Jalan Kuning, Taman Pelangi

80400 Johor Bahru, Johor

Fold Here

Page 84: Annual Report 2007 - Rapid Conn · 2020. 1. 1. · CORPORATE PROFILE 2007 [ connecting the future ] CONNECTCOUNTY HOLDINGS BERHAD (618933-D) The ConnectCounty Group is an integrated

Annual Report 2007

Connecting the Future[ ]

CONNECTCOUNTY HOLDINGS BERHADLot 2-29, Jalan TTC 08,Taman Teknologi Cheng,75250 Melaka, Malaysia.Tel: 06-336 4648 Fax: 06-336 4650Website: http://www.rapidconn.com

(618933-D)

(618933-D)

(618933-D)