TABLE OF CONTENTS - Malaysiastock.biz 12 Statement on Corporate Governance 16 Additional Compliance Information 18 Audit Committee Report 21 Statement on Internal Control 23 Financial

www.viztelsolutions.comAnnual Report 2008

Viztel Solutions Berhad (489232-W) 1

TABLE OF CONTENTS

02 Corporate Information03 Group Structure04 Board of Directors06 Management Team08 Chairman’s Statement11 Business Overview12 Statement on Corporate Governance16 Additional Compliance Information18 Audit Committee Report21 Statement on Internal Control23 Financial Statements64 Analysis of Shareholdings67 Notice of Annual General Meeting Form of Proxy


Viztel Solutions Berhad (489232-W)2

BOARD OF DIRECTORS

Dato’ Abdul Rahman bin Datuk Hj. Dahlan(Chairman & Director) - Independent & Non-Executive

Dato’ Rozabil @ Rozamujib bin Abdul Rahman(Executive Deputy Chairman & Director) - Non-Independent

Dato’ Che Sulaiman bin Shapie(Director) - Independent & Non-Executive

Encik Abdul Rahman bin Mohamed Rejab(Director) - Independent & Non-Executive

Mr. Lim Beng Guan(Director) - Independent & Non-Executive

Encik Azirruan bin Arifin(Director) - Independent & Non-Executive

AUDIT COMMITTEE

Encik Azirruan bin Arifin(Chairman) - Independent & Non-Executive

Dato’ Abdul Rahman bin Datuk Hj. Dahlan(Member) - Independent & Non-Executive

Dato’ Che Sulaiman bin Shapie(Member) - Independent & Non-Executive

Encik Abdul Rahman bin Mohamed Rejab(Member) - Independent & Non-Executive

AUDITORS

HorwathFirm No: AF 1018Chartered Accountants

COMPANY SECRETARY

Huang Miew Woon (MACS 00036)

Taibah binti Abdul Rahman@Ling Kiong (MAICSA 7003550)

HEAD OFFICE

Unit 712, Block E, Phileo Damansara 1No. 9, Jalan 16/11, 46350 Petaling JayaSelangor Darul EhsanMALAYSIA

Tel. No. : +60 3 79581606Fax. No. : +60 3 79582606

REGISTERED OFFICE

No. 30-3, Jalan 11/116BKuchai Entrepreneurs ParkOff Jalan Kuchai Lama58200 Kuala LumpurMALAYSIA

Tel. No. : +60 3 7981 3337Fax. No. : +60 3 7982 5708

REGISTRAR

Symphony Share Registrars Sdn. Bhd.(Company No. 378993-D)Level 26, Menara Multi-PurposeCapital Square, No. 8, Jalan Munshi Abdullah50100 Kuala LumpurMALAYSIA

Tel. No. : +60 3 2721 2222Fax. No. : +60 3 2271 2530

PRINCIPAL BANKERS

Public Bank BerhadMalayan Banking Berhad

LISTING

MESDAQ Market of Bursa MalaysiaStock Name : VIZTEL Stock Code : 0050

CORPORATE INFORMATION

2



Viztel Solutions Berhad

(489232-W)Investment Holding and Research,

Development & Deployment of Telecommunication Solutions,

Specialising in Voice and Messaging Technology, and the Provision of System Integration

Services and Solutions

Viztel Systems Sdn. Bhd. (700831-H)Provision of ICT Infrastructure, System Solutions & Integration

Viztel TechPro Sdn. Bhd. * (714529-A)Development and Marketing of ICT Solutions that involve various

strategic technology partners

Viztel Technologies Sdn. Bhd. (666457-W)Provision of telecommunication systems and solutions

Viztel Solutions (HK) Ltd. (726868)Development and Provision of WIreless and Voice Technology

Solutions and Applications

Moliba Technology Limited (695463)

Development of and Applications of Wireless and Voice Technology

Enabling Solutions and Applications

100%

100%

100%

* Formerly known as Viztel Network Services Sdn. Bhd.

100%

Defensa Consulting Sdn. Bhd. (834725-T)Provision of ICT Security Solutions

55%

Viztel Solutions (S) Pte. Ltd. (2000-04341-H)Service Provider for the telecommunication technologies

100%

100%

Picktips.com Limited (374988)Investment Holding

100%

GROUP STRUCTUREas at 15th May, 2009

3



BOARD OF DIRECTORS

4

BOARD OF DIRECTORS(continued)

DATO’ ABDUL RAHMAN BIN DATUK HJ. DAHLANChairman & Director - Independent and Non-Executive

Dato’ Abdul Rahman bin Datuk Hj. Dahlan, a Malaysian aged 43, was appointed to our Board on June 26, 2006. He holds a Bachelor in Economics and Management from Sonoma State University, Rohnert Park, California, USA.

He is currently the Member of Parliament for Kota Belud, Sabah. He was the former National Secretary of UMNO Youth, UMNO Youth Chief of Tuaran Division, Chief Political Secretary to the Chief Minister of Sabah, President of UMNO Club (Northern California - 1984) and President of Malaysian Students Association of Sonoma State University. He has been the Managing Director of HRPM Consulting Sdn. Bhd. since 1996.

Dato’ Abdul Rahman Datuk Hj Dahlan also sits on the Board of Padiberas Nasional Berhad Group.

He is a member of the Audit Committee. He has no family relationship with any directors or major shareholders of the Company and has no conflict of interest with the Company. Within the last 10 years, he has not been convicted for any offence other than traffic offence.

DATO’ ROZABIL @ ROZAMUJIB BIN ABDUL RAHMANExecutive Deputy Chairman - Non-Independent and Executive Director

Dato’ Rozabil bin Abdul Rahman, a Malaysian aged 37, was appointed to our Board on August 15, 2005. He holds a Bachelor in Business Administration.

He is currently the Treasurer for UMNO Youth Movement. He was also the former UMNO Youth Chief of Perlis and Chief Political Secretary to the Perlis Menteri Besar. Dato’ Rozabil has diversified interests ranging from construction and property development to trading and serves as director to several other companies.

He does not hold any directorships on the Board of other public companies in Malaysia.

He has no family relationship with any directors or major shareholders of the Company and has no conflict of interest with the Company. Within the last 10 years, he has not been convicted for any offence other than traffic offence.

DATO’ CHE SULAIMAN BIN SHAPIEDirector - Independent and Non-Executive

Dato’ Che Sulaiman bin Shapie, a Malaysian aged 52, was appointed to our Board on November 27, 2008. He holds a Bachelor of Economics (Hons.) from Universiti Kebangsaan Malaysia.

Dato’ Che Sulaiman was the former Speaker of Perlis State Assembly. He is a seasoned banker having been with Bank Islam Malaysia Berhad for 12 years since its inception and with Malayan Banking Berhad. He was also the Corporate Manager for Teknologi Tenaga Perlis Konsortium Sdn. Bhd. (an IPP) and Assistant Director of Perlis Islamic Foundation.

He is a member of the Audit Committee. He does not hold any directorships on the Board of other public companies in Malaysia.




BOARD OF DIRECTORS(continued)

5

ENCIK ABDUL RAHMAN BIN MOHAMED REJABDirector - Independent and Non-Executive

Encik Abdul Rahman bin Mohamed Rejab, a Malaysian aged 43, was appointed to our board on September 21, 2006. He holds a Bachelor Degree in Finance from St. Louis University, Missouri, USA. He has over 15 years of experience in the financial and asset management with his last attachment in AmBank (Malaysia) Berhad. Currently, he is a General Manager of a construction related company.

He is a member of the Audit Committee. He does not hold any directorships on the Board of other public companies in Malaysia.


MR. LIM BENG GUANDirector - Independent and Non-Executive

Mr. Lim Beng Guan, a Malaysian, aged 38, was appointed to our Board on 3 October 2006. He holds a Bachelor Degree in Accountancy (Hons.) from the University of Malaya, Malaysia. His previous experience includes being in corporate finance department of Commerce International Merchant Bankers Berhad and General Manager of Corporate Affairs in a public listed company. His corporate finance experience includes Mergers & Acquisitions and demerger exercise, corporate and debt restructuring, corporate takeovers, IPOs and fund raising.

He is also the Executive Director of Mutiara Goodyear Development Berhad and Non-Independent Non-Executive Director of Atis Corporation Berhad.


Mr. Lim Beng Guan who is due for retirement at the forthcoming Annual General Meeting does not wish to seek for re-election as Director of the Company.

ENCIK AZIRRUAN BIN ARIFINDirector - Independent and Non-Executive

Encik Azirruan bin Arifin, a Malaysian aged 34, was appointed to our board on February 7, 2007. He is a Chartered Accountant with the Malaysian Institute of Accountants and a member of the Institute of Internal Auditors Malaysia.He holds a Bachelor Degree in Accounting (Hons.) from Mara University of Technology, Malaysia.

He has numerous years of auditing and accounting experience in financial institutions. Currently, he is doing internal auditing with one of the companies listed on the main board of Bursa Malaysia. His previous employment includes that as Central Bank’s liaison officer for several financial institutions, in which he was instrumental in structuring, monitoring, advising and managing the compliance and governance of these financial institutions.

During the financial year, he was the Chairman of the Audit Committee. He does not hold any directorships on the Board of other public companies in Malaysia.




MANAGEMENT TEAM

6

MANAGEMENT TEAM(continued)

PUAN FARIZAH BINTI ZAINUDDINVice President - Operations

Puan Farizah binti Zainuddin, a Malaysian, aged 38, graduated from Deakin University, Australia with a Bachelor inScience (Hons.) in Mathematics and Computing. She also possesses a Master of Business Administration specializing in Information Technology Management from the University of Malaya, Malaysia in 2003. Currently, she manages a broad set of functions which include operation management, special projects and corporate affairs. She also oversees the Group’s expansion plan.

Puan Farizah began her career with Motorola Malaysia Sdn. Bhd. and has progressed into managing and headingvarious IT related companies. Prior to joining Viztel, she was the Managing Director for Virtue Integrated Sdn. Bhd.and General Manager for MCSB Data System Sdn. Bhd.

PUAN NOORHAYATI BINTI JALIVice President - Finance

Puan Noorhayati binti Jali, a Malaysian, aged 37, graduated with a Bachelor in Accountancy (Hons.) from South Bank University, United Kingdom. She also possesses a Master in Business Administration from Universiti Utara Malaysia in collaboration with the Institute of Management Studies. Puan Noorhayati is an Associated Member of Financial Planning Association of Malaysia (FPAM). She is currently in charge of the overall financial management of the Group.

Puan Noorhayati began her career in the banking sector and has since moved to pursue her career in the diversifiedfinance and accountancy field. Her last position prior to joining Viztel is Chief Financial Officer of Langkah TeknologiSdn. Bhd.

ENCIK SABARUDIN BIN ISMAILVice President - Business Development

Encik Sabarudin bin Ismail, a Malaysian, aged 42, graduated with a Bachelor of Science in Economics and Marketingfrom the University of Wisconsin, USA. Currently, he is responsible for the business development and planning of the Group.

Encik Sabarudin has been in sales and marketing for more than sixteen years in aviation industry, serving MalaysiaAirlines. His illustrious career with the national carrier include Special Assistant to Chairman as well as managing stations as District and Area Manager in domestic and international markets including Thailand, Australia, United Arab Emirates and Vietnam.

ENCIK MOHAMAD LOFTY MOHD AMINSenior Technical Manager

Encik Mohamad Lofty Mohd Amin, a Malaysian, aged 37, graduated with a Bachelor of Science in Computer Engineering from Lehigh University, Pennsylvania, USA. Currently, he is the acting Chief Technology Officer of the company, managing projects as well as leading technical team of the organisation.

Encik Mohamad Lofty has been ICT line for more than 15 years. He has been involved in designing, leading and managing projects of various sizes. He was also involved in product development and enhancement as well as development of ICT infrastructure. In VIztel he has been instrumental in the development of several web / internetapplications, telephony product deployment, digital signage, databases and networking solutions.



MANAGEMENT TEAM(continued)

7

ENCIK NUBLAN ZAKY DATO’ YUSOFF ZAKYSpecial Assistant to Executive Deputy Chairman

Encik Nublan Zaky, a Malaysian, aged 42, graduated from the International Islamic University, Malaysia with a Bachelor of Economics (Hons.). He is the recipient an Honourary Award from the World Assembly of Muslim Youth in 1989. He also possesses a Master of Science (Multimedia) and is currently pursuing his Ph.D in Islamic Banking and Finance. In Viztel, he assists the Executive Deputy Chairman of the Group in the strategic corporate finance, development and planning of the Group.

Encik Nublan Zaky has over 19 years of experience in the area of corporate finance, investment management, andventure capital both locally and internationally. He was the Managing Director of Abrar Venture Capital Sdn. Bhd.,Senior Manager of Abrar Unit Trust Management Bhd. and Abrar Global Asset Managers Sdn. Bhd., Chief FinancialOfficer of Empower Technologies Sdn. Bhd. as well as Vice President of OIC International Business Center Sdn. Bhd./ Dewan Perdagangan OIC Malaysia. Internationally, he is involved in several venture capital companies in Canadaand the USA.



CHAIRMAN’S STATEMENT

8

CHAIRMAN’S STATEMENT(continued)

PRELUDE

Viztel Group of Companies (the “Group”) faced enormous challenges in 2008. The global financial crisis sparked off by developments in the US had seriously affected business sentiments and confidence. With the setbacks in the Malaysian market and several significant but mandatory accounting adjustments as described in the Financial Performance Section below, the Company was indeed in a difficult situation.

The decline in sales was certainly not due to lack of efforts or business strategies but rather a manifestation of a broader market condition that emanated from the global crisis that was beyond the control of the Group. Many ‘sure’ orders were held back or deferred while profit margins dropped in an alarming manner.

The changed business conditions require efficient and effective business operations, increasing productivity i.e. doing more with fewer resources, and a network of outsourcing partners to move forward. The company has focused on reducing capital expenditures and streamlining the processes with a rigorous demand on systems. These include the use of quality management tools such as a human resource management system as well as an efficient document management system.

In the midst of all of this difficult news, the good news are the potentials generated for the provision of Human Capital competency systems. Operational efficiency and increased productivity are being emphasized by organizations. Enterprise Software Automation is one way to ensure this takes place and one area that the Group has embarked on. The various government stimulus packages are also directed towards improving productivity.

FINANCIAL PERFORMANCE

For the year ended 31 December 2008, the Group recorded revenue of only RM676,783 which represents a 55.5% drop compared to the total revenue of RM1,522,313 in the preceding year. As a result, the Group sufferred a loss after taxation of RM4,754,540 in 2008 compared to the loss after taxation of RM444,100 in the preceding year.

The loss was mainly due to the recognition of impairment losses totaling RM3,691,590, of which RM1,689,364 was impairment loss of development costs, RM1,200,000 of intangible assets and RM802,226 of goodwill. In arriving at the decision to recognise these losses, the Directors had carefully carried out reviews of the recoverable amount of the relevant development costs, intangible assets and goodwill, and have concluded that the assets are unable to generate sufficient future economic benefits, hence, their carrying values may not be recoverable and they are justified to be recognised as been impaired. There were also write offs totaling RM320,521 for plant and equipment as well as deposits. Although staff costs appeared to be increased by 150%, there was actually no significant increase in the total amount incurred. The bloated figure was due to the lower amount of staff costs been capitalised under development costs.

As at 31 December 2008, the Group has a deficit in shareholders’ equity of RM887,027. On 27 February 2009 and subsequently amended on 6 March 2009, Viztel Solutions Berhad (Viztel) announced that the Group had become an Affected Listed Company pursuant to Guidance Note No. 3/2006 (GN3) of the Listing Requirements of Bursa Malaysia Securities Berhad for the MESDAQ Market. In light of the aforesaid circumstances, the Group is in the process of evaluating various options to meet its obligations under GN3 including the formulation of a plan to regularise its financial condition. The last day for submission of the regularisation plan by the Group to the Approving Authority is on 27 October 2009.




9

OPERATIONS REVIEW

The Group has actively participated in several tenders in the area of IT Infrastructure as well as Solutions. Utilizing our core strengths as well as our technology partners, the Group is now recognized as one of the leading IT Infrastructure and Solution providers in Malaysia, which is evident in Viztel receiving more invitations to participate in tender processes. We have been shortlisted in several key tenders and the results will be known soon in the second half of 2009.

For our product solutions portfolio, following the K-Khutbah suite that was awarded to Viztel in 2007, MIMOS has further awarded the full suite of the K-Masjid Portal in 2008 to the Group. This has enhanced Viztel InfoChannel product solution suite. During the period under review, we have deployed the K-Mosque solution to sites in Pahang and Penang with further new sites to be deployed in Pahang as well as Perak.

Via our internal cost reduction exercise and in collaboration with our strategic technology partners, we have also developed our Enterprise Software Automation suite, namely V-DMS and V-HURMAT. V-DMS is Viztel Document Management System and V-HURMAT is Viztel Human Resource Management System. These systems can be deployed on the Enterprise LAN, web-based platform as well as packaged as a SaaS (Software as a Service) suite of solutions. This Enterprise Software Automation tools will soon be deployed to sites in Perlis as well as Pahang.

We have also embarked on a new service offering – Technology Testing Services. This service includes providing system-testing services for Hardware, Software and Network Systems. We have been awarded by MIMOS to be their partner in providing this Testing Services to the market. We expect this service to continue to grow in 2009 and to be one of our major revenue contributors.

PROSPECTS

With the current global economic downturn, the Group foresees worsening market conditions and greater challenges ahead in the financial year ending 31 December 2009. Many export and trade dependent economies in South East Asia are grappling with the deteriorating economic landscape with central banks forecasting negative GDP growth in 2009.

In response to the uncertain economic situation, we will maintain our prudent approach to business management and continue to adopt measures focusing on stringent cost containment, continuous improvements in the Group’s operational efficiency and effectiveness as well as prudent management of head count and close monitoring of staff performance.

On the business front, we will continue to deploy appropriate strategies and resources to meet the challenges ahead. We strive to enhance and extend our product applications to address more complex business requirements as well as exploit new business opportunities by expanding into new line of businesses and services.

We will leverage on our technical expertise and continue to direct our sales efforts towards new markets and segments.




10

BUSINESS OVERVIEW

UPDATE ON RESEARCH AND DEVELOPMENT

Innovation and technology are vital to the future growth of Viztel. We will continue to strengthen our R&D capabilities and strive to enhance and improve our existing product solutions in Enterprise Software Automation such as our V-DMS and V-HURMAT in line with the latest technology innovations in the market.

We collaborate with technology partners and industry leaders in order to deliver technology enabled innovations to our customers.

During the year ended 31 December 2008, the Group has incurred RM116,114 on research and development.

CORPORATE SOCIAL RESPONSIBILITIES ACTIVITIES

The Group recognizes the importance of formal education for all and is committed to support learning opportunities for its entire staff in need as part of its CSR initiatives.

The Group values its people and is never short of emphasizing the need to nurture its human capital with skills development. The knowledge, experience and expertise of staff constitute part of the Group’s intellectual capital. Supporting life long learning and development continues to be one of the key drivers to help the Group attract and maintain talent, that is needed to achieve superior results. The presence of a performance reward system has been designed to develop a strong high performance culture.

APPRECIATION

Again, we would like to record our sincere gratitude and appreciation to all our valued customers, partners, business associates and shareholders for your continued support during the past years.

Further, our appreciation goes out to the management and employees of Viztel for your passion and commitment.We look forward to better performance in the coming years.

DATO’ ABDUL RAHMAN BIN DATUK HJ. DAHLANChairman



BUSINESS OVERVIEW

11

OUTLOOK OF ICT INDUSTRY

The economic environment is tough and we believe it will remain tough for the next few quarters. Clearly, ICT spending is being scrutinized more now than it has been at any point in the 2003 to 2007 timeframe and for sure customers are showing more caution. Customers are continuing to spend in key areas that are core to their business. We also see the trend of customers focusing their ICT investments on areas that help them gain cost savings and increase their market advantage. In other words, companies that are able to make key investments to help gain market share are trying to take advantage of the economic climate while being careful to delay non-essential investments. This caution by the customers is manifesting itself in two related ways. Firstly, we are seeing customers fund ICT spending that have faster ROI’s, and secondly, we are seeing greater focus that technology is aligned with business objectives. Hence, the customer approval cycle is going through more senior management layers. In some cases, this means that the approval cycle takes longer - but fairly often we see that the focus on ROI and business alignment has shortened the approval cycle in some cases since many corporations are operating under a strong sense of urgency to get ahead of their competitors.

BUSINESS OFFERINGS

With the above in mind, the Group will continue to leverage its business opportunities in the following areas :-

• Technology Testing Services. This services include providing system-testing services for Hardware, Software and Network Systems. With the strength of our partner, MIMOS, we expect this service to continue to grow in 2009 and to be one of our major revenue contributors.

• Speech Solutions. Being a pioneer in delivering speech enabled solutions, the Group will continue to service the sector by focusing on further deployment of the system, maintenance and integration with a broader range of other systems. We are also assessing the viability of offering voice applications suite based on SaaS (Software as a Service) platform.

• ICT Infrastructure and Solutions. The Group will continue to actively participate in tenders in the area of IT Infrastructure and Solutions. After the restructuring of Viztel Systems Sdn. Bhd. (VSSB), the Group is now better poised to bid for major tenders in the market. This is evident in VSSB receiving more invitations to participate in tender processes. We have also been shortlisted in several key tenders and the results will be known soon in the second half of 2009 and early 2010.

• Enterprise Software Automation. V-DMS (Viztel Document Management System) and V-HURMAT (Viztel Human Resource Management System) will continue to be improvised, offered and deployed based on Enterprise LAN, web-based platform as well as packaged as a Software as a Service suite of solutions.

• InfoChannel Solutions. The Group will also focus on delivering mosque-centric community infochannel (K-Mosque / K-Masjid / Komunti Masjid) and government infochannel. Following the K-Khutbah suite that was awarded to Viztel in 2007, MIMOS has further awarded the full suite of the K-Masjid Portal in 2008 to the Group. This has enhanced our InfoChannel product solution suite.

The Group is currently awaiting the decision of several tenders and RFQ (Request for Quote) placed with several potential major customers for the above offerings. If awarded, the contracts would achieve a significant proportion of the Group’s forecasted revenue. Meanwhile, the Group will continue its efforts to secure more projects from various sources, including government and government linked companies.



The Board of Directors of Viztel Solutions Berhad (“the Board”) affirms its overall responsibility in ensuring that the highest standard of Corporate Governance is practiced throughout the Group, which is critical to building and enhancing long-term shareholders’ value and financial position of the Group. Apart from observance of the Principles and Best Practices on Corporate Governance as set out in the Malaysian Code on Corporate Governance(“the Code”), the Board has also moved to put in place stringent parameters and measures for adherence by the management.

The Board is pleased to report that during the financial year ended 31 December 2008, it had practiced good corporate governance in directing and managing the business affairs of the Company and its subsidiaries (“the Group”).

BOARD OF DIRECTORS

Composition of the Board and Board Balance

The current Board has six (6) members, comprising five (5) Independent & Non-Executives Directors and one (1) Executive Director. This composition complies with paragraph 15.02 of the Listing Requirements of Bursa Malaysia Securities Berhad (Bursa Securities) for the MESDAQ Market that requires a minimum of two (2) or one-third (1/3) of the board to be independent Directors, whichever is higher.

The existing Board is as follows:

Directors Directorate

Dato’ Abdul Rahman bin Datuk Hj. Dahlan Independent & Non-Executive ChairmanDato’ Rozabil @ Rozamujib bin Abdul Rahman Non-Independent & Executive Deputy ChairmanDato’ Che Sulaiman bin Shapie Independent & Non ExecutiveEncik Abdul Rahman bin Mohamed Rejab Independent & Non-ExecutiveMr. Lim Beng Guan Independent & Non-ExecutiveEncik Azirruan bin Arifin Independent & Non-Executive

The Independent Directors make up more than one-third (1/3) of the membership of the Board. They are independent of management and free from any business relationship that could materially interfere with the exercise of their judgement or the ability to act in the best interests of the Group and of the minority shareholders. The role of the Independent Directors is vital for the successful direction of the Group as they provide guidance, unbiased, fully balanced and independent advice and judgement to many aspects of the Group’s strategy so as to safeguard the interests of minority shareholders and to ensure that the Group maintained the highest standards of conduct and integrity. The Independent Directors can also provide second opinion more effectively because they come from numerous backgrounds.

The Executive Directors who have good knowledge of the business are responsible for implementing the corporate strategies and policies as well as charged with the management of the day-to-day operations of the business. The Non-Executive Directors complement the skills and experience of the Executive Directors in the formulation of corporate strategies and policies through their knowledge and experience of relevant sectors.

The differing roles of the Chairman and Executive Directors are clearly delineated in their fiduciary duties towards better corporate governance. The Chairman is responsible for ensuring Board effectiveness, implementation of policies and decisions, corporate affairs and overall financial performance of the Group whilst the Executive Directors has overall responsibility over the operating units, organisational effectiveness, coordinating the development and implementation of business and corporate strategy as well as the implementation of Board policies and decisions.

Board Responsibilities

The Board recognizes its key role in charting the strategic directions for the Group and regularly meets to review corporate strategies. The Board’s Primary Roles include :

• The protection and enhancement of long-term shareholders’ value.• Setting strategic direction, including establishing vision and mission for the Group.

STATEMENT ON CORPORATE GOVERNANCE



The Board’s Primary roles include (continued) :

• Review and approval of corporate plan, annual budget, quarterly and annual results, acquisitions and disposal of undertakings and properties of substantial value, major investments and financial decision.

• Succession planning for top management.• Advising, directing and supporting the management team in attaining the goals and objectives of the Group.• Building strong strategic, financial and programmatic foundations for the Group’s initiatives.• Developing a good rapport with the stakeholders and fostering good “esprit de corps” amongst the top

management.

Directors’ Meetings

The Board met four (4) times during the financial year 31 December 2008. The members of the board and their attendance at the meeting were as follows: Date Date MeetingsDirectors Appointed Resigned Attended / Held

Dato’ Abdul Rahman bin Datuk Hj. Dahlan 26.06.06 - 3/4Dato’ Rozabil @ Rozamujib bin Abdul Rahman 15.08.05 - 3/4Encik Abdul Rahman bin Mohamed Rejab 21.09.06 - 4/4Mr. Lim Beng Guan 03.10.06 - 2/4Encik Azirruan bin Arifin 07.02.07 - 3/4Dato Che Sulaiman bin Shapie 27.11.08 - 1/1Encik Ahmad Firdauss bin Anifah Amman 29.09.06 28.08.08 0/3 Mr. Wong Rhen Yen 21.09.06 28.05.08 1/1

Supply of Information to the Directors

An agenda and board papers containing information relevant to the business for consideration at the meeting are circulated prior to each directors’ meeting to enable the Directors to peruse, obtain additional information and explanation to facilitate informed decision-making, where necessary before the meetings.

Directors have access to all information within the Group whether as full board or in their individual capacity on a timely basis in an appropriate form and quality necessary to enable them to discharge their duties and responsibilities. In addition, independent professional advice might be sought at the Company’s expense if the Directors require it. However, before incurring such fees, the Director concerned would need to consult with the Chairman or two (2) other Directors (one of whom is non-executive). Such advice was not sought by any of the Directors during the financial year under review.

Directors also have direct access to the advice and the services of the Group’s Company Secretaries. The Directors are advised and updated on statutory and regulatory requirements pertaining to their duties and responsibilities as well as appropriate procedures for management of meetings.

Appointments of the Board and Re-election

The entire Board deals with appointment of Directors. Any appointment of additional director will be made as and when it is deemed necessary by the existing Board with due consideration given to the mix and range of expertise and experience required for an effective board. The Board then appoints the most suitable person to hold office, until the conclusion of the next annual general meeting of the Company and shall be eligible for re-election at such annual general meeting. The Board may initiate to set up the Nomination Committee.

Directors’ Training

The members of the Board who were appointed during the financial year ended 31 December 2008 completed theMandatory Accreditation Program (MAP) conducted by Busatara Sdn Bhd, a subsidiary of the Bursa Securities.

All Directors are also encouraged to attend relevant briefings, seminars and other continuing education event organized by the relevant regulatory authorities and professional bodies to keep abreast of latest developments in the market place as well as to enhance their skills and knowledge and changes in law and regulations.

STATEMENT ON CORPORATE GOVERNANCE (continued)



Directors’ Training (continued)

All Directors are also encouraged to attend relevant briefings, seminars and other continuing education event organized by the relevant regulatory authorities and professional bodies to keep abreast of latest developments in the market place as well as to enhance their skills and knowledge and changes in law and regulations.

During the financial year ended 31st December, 2008, the Company had organized the following in-house training programmes and all Directors attended the sessions :-

i. Amendments to the Companies Act, 1965 - Their impacts on directors’ duties and corporate governance.ii. The Impacts of Amendment to the Malaysian Code on Corporate Governance.

DIRECTORS’ REMUNERATION

Remuneration Policy and Procedures

The Board deals with directors’ remuneration. The Board may initiate to set up the Remuneration Committee.

The objective of the Company’s policy on Directors’ remuneration is to attract and retain Directors needed torun the Company successfully. In determining the Directors’ remuneration, the Board took into account the responsibilities, contribution and performance by each individual director.

The salaried Directors do not receive other benefits apart from the monthly salary and non-contractual bonuses.Non-Executive Directors did not received any fee during the current financial year except for meeting allowance.

Directors’ Remuneration

The details of the Directors’ remuneration for the financial year ended 31 December 2008 are:

Aggregate Remuneration Executives Directors Non-Executives Directorsby Category RM RM

Salaries and other emoluments - -Bonus - -Non-fee emoluments 24,000 -

Total 24,000 -

The number of directors of the Company whose total remuneration fall within the respective bands are analysed below: No. of Directors

Executives Directors Non-Executives DirectorsRange of Remuneration No. No.

RM50,001 - RM100,000 - -RM50,000 and below 1 0

Total 1 0

SHAREHOLDERS

Shareholders and Investors Relation

The Directors acknowledged the importance of maintaining a high level of disclosure and extensive communicationswith its shareholders with the provision of clear, comprehensive and timely information through a number of readily accessible channels. As such, the Group communicates regularly with its shareholders through release of financial results on a quarterly basis and announcements that give the shareholders an overview of the Group’s performance and operation. This is particularly important to shareholders for informed investment decision-making. In addition, discussions were held between the Executive Directors and analysts / investors throughout the year.




Shareholders and Investors Relation (continued)

Information disseminated to the investment community conforms to the Bursa Securities disclosure, rules and regulations. The Directors are cautious to ensure that market sensitive information such as corporate proposals, financial results and other material information are not disseminated to any party without first making an officialannouncement to the Bursa Securities.

Apart from the mandatory public announcement through Bursa Securities, the Group has also set a website at www.viztelsolutions.com for public access of Group information, business activities and recent developments to all shareholders and for feedback.

Annual General Meeting

The Annual General Meeting (AGM) is the principal forum for dialogue with the shareholders who are encouragedand are given sufficient opportunity to enquire about the Group’s activities and prospects as well as communicate their expectations and concerns. Notice of the AGM and the Group’s Annual Report are sent out to shareholders atleast 21 days before the date of the AGM.

At each AGM, the Directors present the progress and performance of the Group and provide shareholders with an opportunity to ask for more information, without limiting the time and types of questions asked, prior to seeking approval by show of hands from members and proxies on the Audited Accounts. The Chairman and Board members will respond to all questions and undertake to provide sufficient clarification on issues and concerns raised by the shareholders. The Directors will also ensure that each item of special business included in the notice of the AGM is accompanied by a full explanation of the effects of the proposed resolution.

Where Extraordinary General Meetings (EGM) are held to obtain shareholders’ approval on specific business or corporate proposals, comprehensive circulars with full explanation of the effects of the proposal are provided to the shareholders within prescribed deadlines in accordance with regulatory and statutory provisions. The shareholders at the EGM are given sufficient opportunity to ask questions about the proposals and also are encouraged to enquire about the Group’s activities and prospects.

ACCOUNTABILITY AND AUDIT

Financial Reporting

The Board has ensured that the annual financial statements presented to the shareholders and the quarterly results announced to Bursa Securities present a balanced and comprehensive assessment of the Group’s financial performance and prospects. Before the financial statements were drawn up, the Directors have taken the necessary steps to ensure that the Group had used all the applicable accounting policies consistently and supported by reasonable and prudent judgements and estimates. The Audit Committee assists the Board in ensuring accuracy and adequacy of information by reviewing and recommending for adoption of information for disclosure. Besides that the Committee is also responsible in ensuring that the financial reporting complies with the Malaysian Accounting Standard Board (MASB).

Internal Controls

The Board acknowledges its overall responsibility in maintaining a sound system of internal controls and risk management practices that provides reasonable assurance of effective and efficient operations, and compliance with laws and regulations, as well as internal procedures and guidelines.

The Group’s Statement on Internal Control is set out on page 21 of this Annual Report providing an overview of the state of internal controls of the Group.

Relationship with Auditors

The Group has established a transparent and formal relationship with the external auditors in seeking professional advice and ensuring compliance with the accounting standards in Malaysia and other related regulatory requirements. The role of Audit Committee in relation to the External Auditors can be found in the Audit Committee report as set out on pages 18 to 20 of this Annual Report.




DIRECTORS’ RESPONSIBILITY STATEMENT

The Directors are collectively responsible in ensuring that the annual financial statements of the Group are preparedwith the aim to provide a true and fair view of the financial position of the Group at the end of the financial year andthe transactions carried out during the financial year.

The Directors are required by the Companies Act, 1965 to prepare financial statements for each financial year and the results of the operations, changes in equity and cash flows of the Group and of the Company for the financialyear. In preparing those financial statements, the Directors are required to :

• Adopt suitable accounting policies and consistently apply them;• Make judgments and estimates that are reasonable and prudent;• Prepare the audited financial statements on a going concern basis; and• State whether applicable approved accounting standards have been followed, subject to any material departures

disclosed and explained in the financial statements.

The Directors are responsible in ensuring that proper accounting records are kept which disclose with reasonable accuracy the financial position of the Group and of the Company in compliance with the Companies Act, 1965. The Directors also have the overall responsibilities for taking such steps as are reasonably open to them to safeguard the assets of the Group and to prevent and detect fraud and other irregularities.


ADDITIONAL COMPLIANCE INFORMATION

UTILISATION OF PROCEEDS

As at 31 December 2008, the Company has fully utilised the proceeds raised from its Initial Public Offering in the timeframe as approved by the Securities Exchange and the Securities Commission.

SHARE BUYBACKS

The Company did not carry out any share buybacks for the financial year ended 31 December 2008.

OPTIONS, WARRANTS OR CONVERTIBLES SECURITIES

No options, warrants or convertibles securities were exercised during the financial year ended 31 December 2008.

DEPOSITORY RECEIPT (DR)

The Company did not sponsor any DR for the financial year ended 31 December 2008.

IMPOSITION OF SANCTIONS AND/OR PENALTY

There were no sanctions or penalties imposed on the Group and its subsidiaries, directors or management by the relevant regulatory bodies during the financial year ended 31 December 2008.

NON-AUDIT FEES

There is no non-audit fees paid to external auditor by the Group for the current financial year.



VARIATION IN RESULTS

On 8 May 2009, the Company had announced a net loss after taxation of RM3,905,955 in its quarterly unauditedfinancial results for the financial year ended 31 December 2008. Subsequent to that, a loss after taxation of RM4,754,540 was recorded in the audited accounts for the financial year ended 31 December 2008, i.e. a variance of exceeding 10%.

The reconciliation of the difference is set out below. RM

Net loss after taxation as announced on 8 May 2009 (3,905,955)

Adjustments:

Additional provision for doubtful debts (200,000)Impairment loss on development costs (net of deferred income recognised) (567,782)Other adjustments (80,803)

Audited net loss after taxation (4,754,540)

PROFIT GUARANTEE AND PROFIT FORECAST

No profit guarantee and profit forecast were issued by the Company in respect of the financial year ended 31 December 2008.

MATERIAL CONTRACT

During the current financial year, there were no contracts entered into by the Company and its subsidiaries involving Directors and major shareholders’ interests that are still subsisting at the end of the financial year.

RECURRENT RELATED PARTY TRANSACTIONS STATEMENT

During financial year ended 31 December 2008, the Company did not enter into any recurrent related party transactions of revenue or trading nature.

REVALUATION POLICY

There is no revaluation on the property, plant and equipment during the financial year.

LIST OF PROPERTIES

The company and/ or its subsidiaries does not own any landed properties as at the end of financial year.

ADDITIONAL COMPLIANCE INFORMATION

(continued)



COMPOSITION OF AUDIT COMMITTEE

Members Designation

Encik Azirruan bin Arifin (Chairman) Director (Independent & Non-Executive)Dato’ Abdul Rahman bin Datuk Hj. Dahlan Director (Independent & Non-Executive)Dato’ Che Sulaiman bin Shapie (appointed w.e.f. 27.11.2008) Director (Independent & Non-Executive)Encik Abdul Rahman bin Mohamed Rejab (appointed w.e.f. 27.11.2008) Director (Independent & Non-Executive)Encik Ahmad Firdauss bin Anifah Aman (resigned w.e.f. 28.08.2008) Director (Non-Independent & Executive)Mr. Wong Rhen Yen (resigned w.e.f. 28.05.2008) Director (Independent & Non-Executive)

TERMS OF REFERENCE OF AUDIT COMMITTEE

MEMBERSHIP

a) The Board should establish an Audit Committee comprising at least three (3) members, a majority of whom should independent. All members of the Audit Committee should be non executive directors.

b) The members of the Committee shall elect a Chairman from among their number who is an Independent Non-Executive Director.

c) If a member of the Committee retires, resigns, passed away or for any other reason ceases to be a member with the result that the number of members is reduced to below three, the Board of Directors shall, within three months of that event, appoint such number of new members as may be required to make up the minimum of three members.

d) No alternate director should be appointed as a member of the Committee.

e) In the event of any vacancy in the Committee resulting in the non-compliance of the Listing Requirements of the Exchange pertaining to composition of audit committee, the Board of Directors shall within three months of that event fill the vacancy.

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

ATTENDANCE AT MEETINGS

a) The Head of Finance and Head of Internal Audit, if any will attend the meetings.

b) At least twice a year, the Committee shall meet with external auditors without the presence of the Executive Directors and employees.

c) The Company Secretary shall be the secretary of the Committee, or in his absence, another person authorized by the Chairman of the Committee.

d) Other Directors, employees and a representative of the external auditors may attend any particular meeting only at the Committee’s invitation, specific to the relevant meeting.

FREQUENCY OF MEETINGS

a) Meetings will be held not less than four times a year.

b) The commitee should meet with the external auditors without the presence of executive board members at least twice a year.

c) A quorum shall consist of a majority of independent directors.

d) Decisions of the Audit Committee shall be made by majority of vote and in case equality of vote, the Chairman or if he is absent, the chairman elected from amongst the members attending the meeting shall have a second and final casting vote.

e) All internal audit reports shall be tabled at the meeting and the relevant staff shall be in attendance to present and discuss the relevant reports together with their recommendation.

e) The Finance Department will also report their follow up on all relevant discussion made by the Committee.

AUDIT COMMITTEE REPORT



AUTHORITY & RIGHTS

The Committee shall:

i) have explicit authority to investigate any matter within its terms of reference;

ii) have the resources which it needs to perform its duties;

iii) have full access to any information pertaining to the Company and Group which it requires in the course of performing its duties;

iv) have unrestricted access to the senior management of the Company and Group;

v) have direct communication channels with the external auditor and person(s) carrying out the internal audit function or activity (if any);

vi) be able to obtain independent professional or other advice in the performance of its duties;

vii) be able to convene meetings with external auditors, excluding the attendance of the executive members of the committee, whenever deemed necessary; and

viii) be able to invite outsiders with relevant experience to attend its meeting, whenever deemed necessary.

DUTIES

The Committee shall, amongst others, discharge the following functions:

a) To review the quarterly results and year end financial statements, prior to the approval by the Board of Directors, focusing particularly on:

i) the going concern assumption;ii) changes in or implementation of major accounting policy changes;iii) significant and unusual events; andiv) compliance with accounting standards and other legal requirements

b) To review if there were any related party transaction and conflict of interest situation that may arise within the Company or Group including any transaction, procedure or course of conduct that raises questions of management integrity.

c) To review with external auditors:

i) the audit plan;ii) his evaluation of the system of internal controls;iii) his audit report;iv) his management letter and management’s response; andv) the assistance given by the Company’s employees to the external auditors;

d) To review the effectiveness of the internal control, management information system and management’s risk, management practices and procedures.

e) In respect of the appointment of external auditors:

i) to review whether there is reason (supported by grounds) to believe that the external auditors are not suitable for reappointment;

ii) to consider the nomination of a person or persons as external auditors and the audit fee; andiii) to consider any questions of resignation or dismissal of external auditors

f) To promptly report such matter to the Securities Exchange if the Committee is of the view that the matter reported by it to the Board of Directors has not been satisfactorily resolved resulting in a breach of the Listing Requirements.

g) To carry out such other functions as may be agreed to by the Committee and the Board of Directors.

AUDIT COMMITTEE REPORT (continued)



REPORTING PROCEDURES

The Company Secretary shall circulate the minutes of meetings of the Committee to all members of the Audit Committee. The Chairman of the Committee shall report to the Board of Directors.

MEETING PROCEDURES

The Committee shall regulate its own procedure, in particular:

a) the calling of meetings;b) the notice to be given of such meetings;c) the voting and proceedings of such meetings;d) the keeping of minutes; ande) the custody, production and inspection of such minutes.

ACTIVITIES OF THE COMMITTEE

The Audit Committee met four times during the financial year ended 31 December 2008. The attendance record of each audit committee member since the last financial year or the date of appointment is as follows:

No. of Attendance duringMembers Financial Year 2008

Encik Azirruan bin Arifin (Chairman) 3 out of 4Dato’ Abdul Rahman bin Datuk Hj. Dahlan 3 out of 4Mr. Wong Rhen Yen (resigned w.e.f. 28.05.2008) 1 out of 1Encik Ahmad Firdauss bin Anifah Amman (resigned w.e.f. 28.08.2008) 0 out of 3Dato’ Che Sulaiman bin Shapie (appointed on 27.11.2008) 1 out of 1Encik Abdul Rahman bin Mohamed Rejab (appointed w.e.f. 27.11.2008) 1 out of 1

The summary of the activities of the Audit Committee in the discharge of its duties and responsibilities for the financial year ended 31 December 2008 included the followings :

a) Reviewed with appropriate officers of the Group and external auditors the quarterly financial results and annual audited financial statements of the Group and the Company including the announcements pertaining thereto, before recommending to the Board for their approval and release of the Group’s results to the Securities Exchange.

b) Reviewed and discussed with the external auditors of their audit findings inclusive of system evaluation, audit fees, issues raised and management letter together with management’s response.

c) Reviewed the performance and independence of the external auditors before recommending to the Board their reappointment and remuneration.

d) Reviewed related party transactions for compliance with the Listing Requirements of the Securities Exchange and the appropriateness of such transactions.

e) Monitoring and coordinating reviews on the effectiveness of Group’s system of internal controls through the Management.

f) Reported to the Board on its activities and significant findings and results.

INTERNAL AUDIT FUNCTION

Presently, the Company does not have an internal audit department. The Board has determined that the current control mechanisms are sufficient for the size of the Company. In compliance to the revised Corporate Governance, the Board may review their decision to establish an internal audit function which is independent of the activities it audits. Presently, the Executive Directors and the Senior Management Team through their daily involvement in the business operations and attendance at operational and management level meetings, monitor the Company’s policies and procedures. Any significant unresolved matters, requiring the Board of Directors’ intervention, will be reported by the Executive Directors accordingly.

EMPLOYEES’ SHARE OPTIONS SCHEME (“ESOS”)

There were no new options granted to employees during the financial year ended 31st December 2008 and none of the existing options were exercised.

AUDIT COMMITTEE REPORT (continued)



The Board of Directors of Viztel Solutions Bhd. is pleased to provide a statement on the state of the Group’s internal control for the financial year ended 31 December 2008.

BOARD RESPONSIBILITY

The Board reaffirms its responsibility for the Group’s system of internal controls, risk management and reviewing its adequacy and integrity of these systems.

It should be noted that any system of internal control is designed to manage rather than eliminate the risks to the achievement of business objectives. Therefore, the internal control system can only provide reasonable and not absolute assurance against material misstatement or loss.

RISK MANAGEMENT

Risk Management is regarded by the Board of Directors (“Board”) to be an integral part of managing the Company’s business operations. On a day-to-day basis, respective Heads of Department are responsible for managing risks of their department. Significant risks identified and the corresponding internal controls implemented are discussed at periodic management meetings.

CONTROL STRUCTURE AND ENVIRONMENT

The Group has work towards a structured control environment to provide sufficient assurance to safeguard the Group’s assets and to protect shareholders’ investment. The key control elements are:

a) Independent Audit Committee

The Audit Committee reviews the adequacy and integrity of the Group’s internal control systems, risk management processes and compliance with Group wide policies and procedures. In order to obtain the required assurance on the Group’s systems of internal control, the Audit Committee reviews report from the external auditors and the Management.

b) Scheduled Operational and Management Meetings

Regular scheduled meetings are being held on a periodical basis to deliberate and discuss operational and tactical issues.

c) Employment of Qualified and Capable Work Force

The Group adopts the policy of employing capable and qualified work force to oversee the operations and to develop key strategies of the Group.

d) Comprehensive Annual Budget

The annual budget which contains financial targets, capital proposals and performance indicators are reviewed by the Audit Committee and approved by the Board.

e) Clear Organisation Structure

Organizational structure with key responsibilities clearly defined as well as authorization policy sets out authority levels for all key aspects of the business.

CONCLUSION

The Board is of the view that the systems of internal control established throughout the Group are adequate and effective for the financial year ended 31st December, 2008. The system of internal control will continue to be reviewed in line with the changes in the operating environment.

STATEMENT ON INTERNAL CONTROL





FINANCIAL STATEMENTS

24 Directors’ Report27 Statement by Directors27 Statutory Declaration28 Independent Auditors’ Report30 Balance Sheets31 Income Statements32 Statements of Changes in Equity33 Cash Flow Statements35 Notes to the Financial Statements



The directors hereby submit their report and the audited financial statements of the Group and of the Company for the financial year ended 31 December 2008.

PRINCIPAL ACTIVITIES

The Company is principally engaged in the business of research, development and deployment of telecommunication solutions, specialising in voice and messaging technology and the provision of related consultancy services. The principal activities of the subsidiaries are set out in Note 6 to the financial statements. There have been no significant changes in the nature of these activities for the financial year.

RESULTS THE GROUP THE COMPANY RM RM

Loss after taxation (4,754,540) (3,882,323)

DIVIDENDS

No dividend was paid since the end of the previous financial year and the directors do not recommend the payment of any dividend for the current financial year.

RESERVES AND PROVISIONS

All material transfers to or from reserves or provisions during the financial year are disclosed in the financial statements.

ISSUES OF SHARES AND DEBENTURES

During the financial year,

(a) there were no changes in the authorised and issued and paid-up share capital of the Company; and(b) there were no issues of debentures by the Company.

OPTIONS GRANTED OVER UNISSUED SHARES

During the financial year, no options were granted by the Company to any person to take up any unissued shares in the Company.

BAD AND DOUBTFUL DEBTS

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

At the date of this report, the directors are not aware of any circumstances that would further require the writing off of bad debts, or the additional allowance for doubtful debts in the financial statements of the Group and of the Company.

Directors’ Report



CURRENT ASSETS

Before the financial statements of the Group and of the Company were made out, the directors took reasonable steps to ascertain that any current assets other than debts, which were unlikely to be realised in the ordinary course of business, including their value as shown in the accounting records of the Group and of the Company, have been written down to an amount which they might be expected so to realise.

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

VALUATION METHODS

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

CONTINGENT AND OTHER LIABILITIES

The contingent liabilities are disclosed in Note 33 to the financial statements. At the date of this report, there does not exist:-

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

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

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

CHANGE OF CIRCUMSTANCES

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

ITEMS OF AN UNUSUAL NATURE

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

There has not arisen in the interval between the end of the financial year and the date of this report any item, transaction or event of a material and unusual nature likely, in the opinion of the directors, to affect substantially the results of the operations of the Group and of the Company for the financial year.

Directors’ Report (continued)



DIRECTORS

The directors who served since the date of the last report are as follows:-

DATO’ ROZABIL @ ROZAMUJIB BIN ABDUL RAHMANDATO’ ABDUL RAHMAN BIN DATUK HJ DAHLANABDUL RAHMAN BIN MOHAMED REJAB LIM BENG GUANAZIRRUAN BIN ARIFINDATO’ CHE SULAIMAN BIN SHAPIE (APPOINTED ON 27 NOVEMBER 2008)AHMAD FIRDAUSS ANIFAH AMMAN (RESIGNED ON 28 AUGUST 2008)WONG RHEN YEN (RESIGNED ON 28 MAY 2008)

DIRECTORS’ INTERESTS

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

NUMBER OF ORDINARY SHARES OF RM0.10 EACH

AT ATTHE COMPANY 1.1.2008 BOUGHT SOLD 31.12.2008

DIRECT INTERESTS

Lim Beng Guan 2,234,700 - - 2,234,700Dato’ Rozabil @ Rozamujib Bin Abdul Rahman 747,800 997,900 - 1,745,700

INDIRECT INTEREST Dato’ Rozabil @ Rozamujib Bin Abdul Rahman 5,978,100 - - 5,978,100

None of the other directors had any interest in the shares of the Company and its related corporations during the financial year.

DIRECTORS’ BENEFITS

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

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

SIGNIFICANT EVENTS DURING THE FINANCIAL YEAR

The significant events of the Group and the Company during the financial year are disclosed in Note 34 to the financial statements.




STATEMENT BY DIRECTORS

We, Dato’ Rozabil @ Rozamujib Bin Abdul Rahman and Abdul Rahman Bin Mohd Rejab, being two of the directors of Viztel Solutions Berhad, state that, in the opinion of the directors, the financial statements are drawn up in accordance with Financial Reporting Standards and the Companies Act 1965 in Malaysia so as to give a true and fair view of the state of affairs of the Group and of the Company at 31 December 2008 and of their results and cash flows for the financial year ended on that date.

SIGNED IN ACCORDANCE WITH A RESOLUTION OF THE DIRECTORSDATED 07 MAY 2009

Dato’ Rozabil @ Rozamujib Bin Abdul Rahman Abdul Rahman Bin Mohd Rejab

STATUTORY DECLARATION

I, Noorhayati Bt Jali, I/C No. 720505-14-5164, being the officer primarily responsible for the financial management of Viztel Solutions Berhad, do solemnly and sincerely declare that the financial statements are to the best of my knowledge and belief, correct, and I make this solemn declaration conscientiously believing the same to be true and by virtue of the provisions of the Statutory Declarations Act 1960.

Subscribed and solemnly declared byNoorhayati Bt. Jali, I/C No. 720505-14-5164 at Kuala Lumpur in the Federal Territory on this 07 May 2009

Before me Faridah binti Abdul Hamid (W-420) Noorhayati Bt. JaliCommissioner for Oaths


SIGNIFICANT EVENT SUBSEQUENT TO THE BALANCE SHEET DATE

The significant event subsequent to the balance sheet date of the Group and the Company is disclosed in Note 35 to the financial statements.

AUDITORS

The auditors, Messrs. Horwath, have expressed their willingness to continue in office.

SIGNED IN ACCORDANCE WITH A RESOLUTION OF THE DIRECTORSDATED 07 MAY 2009

Dato’ Rozabil @ Rozamujib Bin Abdul Rahman Abdul Rahman Bin Mohd Rejab



Report on the Financial Statements

We have audited the financial statements of Viztel Solutions Berhad which comprise the balance sheets as at 31 December 2008 of the Group and of the Company, and the income statements, statements of changes in equity and cash flow statements for the financial year then ended, and a summary of significant accounting policies and other explanatory notes, as set out on pages 30 to 63 (Note : pages 10 to 62 on the attested copy of the Document).

Directors’ Responsibility for the Financial Statements

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

Auditors’ Responsibility

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

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

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

Opinion

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

Emphasis of Matter

Without qualifying our opinion, we draw attention to Note 5 (a)(i) to the financial statements which indicates that the Group has a deficit in shareholders’ equity of RM887,027 as a results of loss suffered during the financial year of RM4,754,540. These conditions, along with the other matters as set forth in Note 5(a)(i) to the financial statements, indicate the existence of material uncertainties that may cast significant doubt about the Group’s ability to continue as a going concern. On 27 February 2009 and subsequently amended on 6 March 2009, Viztel Solutions Berhad announced that the Group had become an Affected Listed Company pursuant to Guidance Note No. 3/2006 of the Listing Requirements of Bursa Malaysia Securities Berhad for the MESDAQ Market. The appropriateness of the going concern basis used in the preparation of the financial statements is dependent on the Group’s ability to generate sufficient operating cash flows to enable it to sustain its business operations and the ability to regularise its financial condition.

INDEPENDENT AUDITORS’ REPORTTO THE MEMBERS OF VIZTEL SOLUTIONS BERHAD(Incorporated in Malaysia)Company No. : 489232 - W



Report on Other Legal and Regulatory Requirements

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

(a) In our opinion, the accounting and other records and the registers required by the Act to be kept by the Company have been properly kept in accordance with the provisions of the Act;

(b) We have considered the financial statements and the auditors’ reports of all the subsidiaries of which we have not acted as auditors, which are indicated in Note 6 to the financial statements;

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

(d) The audit reports on the financial statements of the subsidiaries did not contain any qualification or any adverse comment made under Section 174(3) of the Act, except as disclosed in Note 6 to the financial statements.

Other Matters

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

Horwath James Chan Kuan CheeFirm No: AF 1018 Approval No: 2271/10/09 (J)Chartered Accountants Partner

Kuala Lumpur07 May 2009

INDEPENDENT AUDITORS’ REPORT (continued)



THE GROUP THE COMPANY 2008 2007 2008 2007

ASSETS NOTE RM RM RM RM

NON-CURRENT ASSETS Investments in subsidiaries 6 - - 5,010 4Investment in an associate 7 - - - 4,949Other investment 8 - - - -Plant and equipment 9 258,973 840,146 229,322 832,334Development costs 10 - 1,573,250 - 1,573,250Other intangible assets 11 - 1,200,000 - 1,200,000

258,973 3,613,396 234,332 3,610,537CURRENT ASSETS Trade receivables 12 447,015 1,368,468 262,412 1,179,409Other receivables, deposits and prepayments 13 277,000 775,177 132,264 656,073Amount owing by subsidiaries 14 - - 651,731 212,905Amount owing by an associate 15 - 655,385 - 655,385Tax refundable 2,687 - 2,087 -Fixed deposit with a licensed bank 16 151,930 147,100 - -Cash and bank balances 45,004 91,221 1,918 52,720

923,636 3,037,351 1,050,412 2,756,492

TOTAL ASSETS 1,182,609 6,650,747 1,284,744 6,367,029

EQUITY AND LIABILITIES

EQUITY Share capital 17 6,050,000 6,050,000 6,050,000 6,050,000Reserves 18 (6,937,027) (2,315,443) (7,932,180) (4,049,857)

SHAREHOLDERS’ EQUITY (887,027) 3,734,557 (1,882,180) 2,000,143

MINORITY INTERESTS 45 - - -

TOTAL EQUITY (886,982) 3,734,557 (1,882,180) 2,000,143 NON-CURRENT LIABILITY Deferred taxation 19 - 162 - -

CURRENT LIABILITIES Trade payables 20 265,415 175,915 137,843 106,755Other payables and accruals 21 1,056,329 962,232 796,667 632,748Amount owing to directors 22 716,961 619,207 716,961 619,207Amount owing to subsidiaries 14 - - 1,515,453 1,886,131Deferred income 23 - 1,121,582 - 1,121,582Provision for taxation 30,886 37,092 - 463

2,069,591 2,916,028 3,166,924 4,366,886

TOTAL LIABILITIES 2,069,591 2,916,190 3,166,924 4,366,886

TOTAL EQUITY AND LIABILITIES 1,182,609 6,650,747 1,284,744 6,367,029 NET (LIABILITIES)/ASSETS PER SHARE (sen) 24 (1.5) 6.2

BALANCE SHEETSAS AT 31ST DECEMBER 2008

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



THE GROUP THE COMPANY 2008 2007 2008 2007 NOTE RM RM RM RM REVENUE 25 676,783 1,522,313 676,783 1,330,583

DIRECT COSTS (617,155) (343,933) (617,155) (334,347) GROSS PROFIT 59,628 1,178,380 59,628 996,236 OTHER INCOME 1,314,824 241,800 1,644,688 215,629 1,374,452 1,420,180 1,704,316 1,211,865 ADMINISTRATIVE EXPENSES (1,426,729) (971,173) (1,402,076) (934,854)

OTHER EXPENSES (4,700,652) (888,319) (4,183,756) (885,156)

(6,127,381) (1,859,492) (5,585,832) (1,820,010) LOSS FROM OPERATIONS (4,752,929) (439,312) (3,881,516) (608,145)

FINANCE COST (807) (695) (807) (695) LOSS BEFORE TAXATION 26 (4,753,736) (440,007) (3,882,323) (608,840)

INCOME TAX EXPENSE 27 (804) (4,093) - - LOSS AFTER TAXATION (4,754,540) (444,100) (3,882,323) (608,840) ATTRIBUTABLE TO:- Equity holders of the Company (4,754,540) (444,100) (3,882,323) (608,840) LOSS PER SHARE (sen) :- 28 - basic (7.86) (0.73) - diluted -* -*

* Not applicable as there are no dilutive shares.

INCOME STATEMENTSFOR THE FINANCIAL YEAR ENDED 31ST DECEMBER 2008




STATEMENTS OF CHANGES IN EQUITYFOR THE FINANCIAL YEAR ENDED 31ST DECEMBER 2008

ATTRIBUTABLE TO EQUITY HOLDERS OF THE COMPANY

FOREIGN EXCHANGE SHARE SHARE TRANSLATION ACCUMULATED MINORITY TOTAL CAPITAL PREMIUM RESERVE LOSSES TOTAL INTERESTS EQUITY

THE GROUP RM RM RM RM RM RM RM Balance at 1.1.2007 6,050,000 9,030,811 (81,160) (10,736,929) 4,262,722 - 4,262,722 Currency translation differences of foreign subsidiary - - (84,065)* - (84,065) - (84,065)

Loss attributable to shareholders - - - (444,100) (444,100) - (444,100) Balance at 31.12.2007 / 1.1.2008 6,050,000 9,030,811 (165,225) (11,181,029) 3,734,557 - 3,734,557

Currency translation differences of foreign subsidiary - - 132,956* - 132,956 - 132,956

Minority interests arising on acquisition of a subsidiary - - - - - 45 45 Loss attributable to shareholders - - - (4,754,540) (4,754,540) - (4,754,540) Balance at 31.12.2008 6,050,000 9,030,811 (32,269) (15,935,569) (887,027) 45 (886,982) SHARE SHARE ACCUMULATED CAPITAL PREMIUM LOSSES TOTAL RM RM RM RM THE COMPANY Balance at 1.1.2007 6,050,000 9,030,811 (12,471,828) 2,608,983Loss after taxation for the financial year - - (608,840) (608,840) Balance at 31.12.2007/1.1.2008 6,050,000 9,030,811 (13,080,668) 2,000,143Loss after taxation for the financial year - - (3,882,323) (3,882,323) Balance at 31.12.2008 6,050,000 9,030,811 (16,962,991) (1,882,180)

* Represents losses not recognised in income statements.




CASH FLOW STATEMENTSFOR THE FINANCIAL YEAR ENDED 31ST DECEMBER 2008

THE GROUP THE COMPANY 2008 2007 2008 2007 NOTE RM RM RM RMCASH FLOWS FOR OPERATING ACTIVITIES

Loss before taxation (4,753,736) (440,007) (3,882,323) (608,840)

Adjustments for:-

Allowance for doubtful debts 345,000 265,600 659,092 265,600Bad debts written off 29,266 62,369 10,314 62,369Depreciation of plant 306,554 554,581 303,643 551,648 and equipmentImpairment losses: - Development costs 1,689,364 - 1,689,364 - - Other intangible asset 1,200,000 - 1,200,000 - - Goodwill 802,226 - - -Loss on disposal of equipment - 5,539 - 5,539Write off of plant and equipment 302,195 - 302,195 -Write off of deposits 18,326 - 18,326 -Deferred income recognised (1,121,582) - (1,121,582) -Interest income (5,050) (4,284) (219) -Government grant recognised as income (145,484) (94,051) (145,484) (94,051)Reversal of impairment loss - (84,432) - (84,432)Waiver of debts (16,242) - (353,403) -

Operating (loss) / profit before working capital changes (1,349,163) 265,315 (1,320,077) 97,833Decrease/(Increase)in trade and other receivables 951,610 (557,941) 1,067,166 (585,069)Increase/(Decrease) in trade and other payables 233,434 (135,039) 195,007 (197,807)

CASH FOR OPERATIONS (164,119) (427,665) (57,904) (685,043)Income tax paid (9,259) - (2,550) -

NET CASH FOR OPERATING ACTIVITIES (173,378) (427,665) (60,454) (685,043)

CASH FLOWS FROM/(FOR) INVESTING ACTIVITIES Acquisition of subsidiaries, net of cash and cash equivalent 2,643 - (57) -Purchase of plant and equipment (2,826) (56,404) (2,826) (56,404)Interest received 5,050 4,284 219 -Proceeds from disposal of equipment - 55,000 - 55,000(Increase)/Decrease in amount owing by subsidiaries - - (752,918) 412,481Decrease/(Increase) in amount owing by an associate - (263,908) 655,385 (263,908)Development costs paid (116,114) (665,316) (116,114) (665,316)Government grant received 145,484 247,504 145,484 247,504

NET CASH FROM / (FOR) 34,237 (678,840) (70,827) (270,643) INVESTING ACTIVITIES

BALANCE CARRIED FORWARD (139,141) (1,106,505) (131,281) (955,686)




CASH FLOW STATEMENTS (continued) FOR THE FINANCIAL YEAR ENDED 31ST DECEMBER 2008

THE GROUP THE COMPANY 2008 2007 2008 2007 NOTE RM RM RM RM

BALANCE BROUGHT FORWARD (139,141) (1,106,505) (131,281) (955,686)

CASH FLOWS FROM FINANCING ACTIVITIES Advances from directors 97,754 619,207 97,754 619,207Decrease in amount owing to subsidiaries - - (17,275) -

NET CASH FROM FINANCING ACTIVITIES 97,754 619,207 80,479 619,207

NET DECREASE IN CASH AND CASH EQUIVALENTS (41,387) (487,298) (50,802) (336,479)

CASH AND CASH EQUIVALENTS AT BEGINNING OF THE

FINANCIAL YEAR 238,321 725,619 52,720 389,199

CASH AND CASH EQUIVALENTS AT END OF THE FINANCIAL YEAR 29 196,934 238,321 1,918 52,720




NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31ST DECEMBER 2008

1. GENERAL INFORMATION

The Company is incorporated in Malaysia as a public company limited by shares under the Companies Act 1965 in Malaysia. The domicile of the Company is in Malaysia. The registered office and the principal place of business are as follows:-

Registered office : 30-3, Jalan 11/116B, Kuchai Entrepreneurs Park, Off Jalan Kuchai Lama, 58200 Kuala Lumpur.

Principal place of business : Unit 712, Block E, Phileo Damansara 1, 46350 Petaling Jaya, Selangor Darul Ehsan.

The financial statements were authorised for issue by the Board of Directors in accordance with a resolution of the directors dated 7 May 2009.

2. PRINCIPAL ACTIVITIES

The Company is principally engaged in the business of research, development and deployment of telecommunication solutions, specialising in voice and messaging technology and the provisions of related consultancy services. The principal activities of the subsidiaries are set out in Note 6 to the financial statements. There have been no significant changes in the nature of these activities for the financial year.

3. FINANCIAL RISK MANAGEMENT POLICIES

The Group’s financial risk management policy seeks to ensure that adequate financial resources are available for the development of the Group’s business whilst managing market, credit, liquidity and cash flow risks. The policies in respect of the major areas of treasury activity are as follows:-

(a) Market Risk

(i) Foreign Currency Risk

The Group is exposed to foreign exchange risk on investments that are denominated in foreign currencies. It manages its foreign exchange exposure by a policy of matching as far as possible receipts and payments in each individual currency.

Surpluses of convertible currencies are either retained in foreign currency or sold for Ringgit Malaysia. Foreign currency risk is monitored closely and managed to an acceptable level.

(ii) Interest Rate Risk

Surplus funds are placed with licensed financial institutions at the most favourable interest rates. (iii) Price Risk

The Group does not have any quoted investments and hence is not exposed to price risk.



NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31ST DECEMBER 2008 ... (continued)

3. FINANCIAL RISK MANAGEMENT POLICIES (continued)

(b) Credit Risk

The Group’s exposure to credit risks, or the risk of counterparties defaulting, arises mainly from receivables. The maximum exposure to credit risks is represented by the total carrying amount of these financial assets in the balance sheet reduced by the effects of any netting arrangements with counterparties.

The Group has a major concentration of credit risk related to the amount owing by three major customers that constituted 91% of the total trade receivables of the Group at the balance sheet date.

The Group manages its exposure to credit risk by the application of credit approvals, credit limits and monitoring procedures on an ongoing basis.

(c) Liquidity and Cash Flow Risks

The Group’s exposure to liquidity and cash flow risks arises mainly from general funding and business activities.

It practises prudent liquidity risk management by maintaining sufficient cash balances.

4. BASIS OF PREPARATION

The financial statements of the Group are prepared under the historical cost convention and modified to include other bases of valuation as disclosed in other sections under significant accounting policies, and in compliance with Financial Reporting Standards (“FRS”) and the Companies Act 1965 in Malaysia.

(a) During the current financial year, the Group has adopted the following:

(i) FRSs issued and effective for financial periods beginning on or after 1 July 2007:

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 134 Interim Financial Reporting FRS 137 Provisions, Contingent Liabilities and Contingent Assets

FRS 111 is not relevant to the Group’s operations. The adoption of the other standards did not have any material impact on the form and content of disclosures presented in the financial statements.

(ii) Amendment to FRS 121 The Effects of Changes in Foreign Exchange Rates - Net Investment in a Foreign Operation issued and effective for financial periods beginning on or after 1 July 2007.

The adoption of this amendment did not have any material impact on the financial statements of the Group.

(iii) IC Interpretations issued and effective for financial periods beginning on or after 1 July 2007:

IC Interpretation 1 Changes in Existing Decommissioning, Restoration and Similar Liabilities IC Interpretation 2 Members’ 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 under FRS 1292004 Financial Reporting in Hyperinflationary Economies IC Interpretation 8 Scope of FRS 2

The above IC Interpretations are not relevant to the Group’s operations.




4. BASIS OF PREPARATION (continued)

(b) The Group has not adopted the following FRSs and IC Interpretations that have been issued as at the date of authorisation of these financial statements but are not yet effective for the Group and the Company:

(i) FRS issued and effective for financial periods beginning on or after 1 July 2009:

FRS 8 Operating Segments FRS 8 replaces FRS 1142004 Segment Reporting and requires a “management approach”, under which

segment information is presented on the same basis as that used for internal reporting purposes. The adoption of this standard only impacts the form and content of disclosures presented in the financial statements of the Group. This FRS is expected to have no material impact on the financial statements of the Group upon its initial application.

(ii) FRSs issued and effective for financial periods beginning on or after 1 January 2010:

FRS 4 Insurance Contracts FRS 7 Financial Instruments: Disclosures FRS 139 Financial Instruments: Recognition and Measurement

FRS 4 is not relevant to the Group’s operations. The possible impacts of FRS 7 and FRS 139 on the financial statements upon their initial applications are not disclosed by virtue of the exemptions given in these standards.

(iii) IC Interpretations issued and effective for financial periods beginning on or after 1 January 2010:

IC Interpretation 9 Reassessment of Embedded Derivatives IC Interpretation 10 Interim Financial Reporting and Impairment

IC Interpretation 9 is not relevant to the Group’s operations. IC Interpretation 10 prohibits the impairment losses recognised in an interim period on goodwill and investments in equity instruments and in financial assets carried at cost to be reversed at a subsequent balance sheet date. This interpretation is expected to have no material impact on the financial statements of the Group upon its initial application.

5. SIGNIFICANT ACCOUNTING POLICIES

(a) Critical Accounting Estimates And Judgements

Estimates and judgements are continually evaluated by the directors and management and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The estimates and judgements that affect the application of the Group’s accounting policies and disclosures, and have a significant risk of causing a material adjustment to the carrying amounts of assets, liabilities, income and expenses are discussed below:-

(i) Going Concern

At the balance sheet date, the Group had the following:-

(i) loss after taxation of RM4,754,540 for the financial year; (ii) deficit in shareholders’ equity of RM887,027; and(iii) accumulated losses of RM15,935,569.




5. SIGNIFICANT ACCOUNTING POLICIES (continued)

(a) Critical Accounting Estimates And Judgements (continued)

(i) Going Concern (continued)

On 27 February 2009 and subsequently amended on 6 March 2009, the Group announced that it had become an Affected Listed Company pursuant to Guidance Note No. 3/2006 (“GN3”) of the Listing Requirements of Bursa Malaysia Security Berhad for the MESDAQ Market. In light of the aforesaid circumstances, the Group is in the process of evaluating various options to meet its obligations under GN3 including the formulation of a plan to regularise its financial condition. The last day for submission of the regularisation plan by the Group to the Approving Authority (as defined by GN3) is on 27 October 2009.

The Group is currently awaiting the decision of a tender placed with a potential major customer. If awarded, the contract would achieve a significant proportion of the Group’s forecasted revenue. Meanwhile, the Group continue its efforts to secure more projects from various sources, including government and government linked companies.

The directors consider that in preparing the financial statements, they have taken into account all information that could reasonably be expected to be available. On this basis, they consider that it is appropriate to prepare the financial statements on the going concern basis. This assumes that either the contract is awarded to the Group or that the regularisation plan is successful, thus resulting in the Group being able to operate profitably in the foreseeable future. The financial statements do not include any adjustments that would result if the contract were not awarded to the Group and the Director’s alternative plans were not successful.

(ii) Depreciation of Plant and Equipment

The estimates for the residual values, useful lives and related depreciation charges for the plant and equipment are based on commercial and production factors which could change significantly as a result of technical innovations and competitors’ actions in response to the market conditions.

The Group anticipates that the residual values of its plant and equipment will be insignificant. As a result, residual values are not being taken into consideration for the computation of the depreciable amount.

Changes in the expected level of usage and technological development could impact the economic useful lives and the residual values of these assets, therefore future depreciation charges could be revised.

(iii) Income Taxes

There are certain transactions and computations for which the ultimate tax determination may be different from the initial estimate. The Group recognises tax liabilities based on its understanding of the prevailing tax laws and estimates of whether such taxes will be due in the ordinary course of business. Where the final outcome of these matters is different from the amounts that were initially recognised, such difference will impact the income tax and deferred tax provisions in the period in which such determination may be different from the initial estimate.

(iv) Impairment of Assets

When the recoverable amount of an asset is determined based on the estimate of the value-in-use of the cash-generating unit to which the asset is allocated, the management is required to make an estimate of the expected future cash flows from the cash-generating unit and also to apply a suitable discount rate in order to determine the present value of those cash flows.





(a) Critical Accounting Estimates And Judgements (continued)

(v) Allowance for Doubtful Debts of Receivables

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

(b) Financial Instruments

Financial instruments are recognised in the balance sheet when the Group and the Company have become parties to the contractual provisions of the instruments.

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 an expense or income. Distributions to holders of financial instruments classified as equity are charged directly to equity.

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

Financial instruments recognised in the balance sheet are disclosed in the individual policy statement associated with each item.

(c) Functional and Foreign Currency

(i) Functional and Presentation Currency

The functional currency of the Group is measured using the currency of the primary economic environment in which the Group operates.

The consolidated financial statements are presented in Ringgit Malaysia (“RM”) which is the Company’s functional and presentation currency.

(ii) Transactions and Balances

Transactions in foreign currency are converted into the respective functional currencies on initial recognition, using the exchange rates approximating those ruling at the transaction dates. Monetary assets and liabilities at the balance sheet date are translated at the rates ruling as of that date. Non-monetary assets and liabilities are translated using exchange rates that existed when the values were determined. All exchange differences are taken to the income statement.





(c) Functional and Foreign Currency (continued)

(iii) Foreign Operations

The results and financial position of all the Group entities that have a functional currency different from the presentation currency are translated into the presentation currency for consolidation purpose on the following basis:-

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

(ii) income and expenses for each income statement are translated at average exchange rates for the year; and

(iii) all resulting exchange differences are recognised as a separate component of equity, as a foreign currency translation reserve. On disposal, accumulated translation differences are recognised in the consolidated income statements as part of the gain or loss on sale.

(d) Basis of Consolidation

The consolidated financial statements include the financial statements of the Company and all its subsidiaries made up to 31 December 2008.

A subsidiary is defined as a company in which the parent company has the power, directly or indirectly, to exercise control over its financial and operating policies so as to obtain benefits from its activities.

All subsidiaries are consolidated using the purchase method. Under the purchase method, the results of the subsidiaries acquired or disposed of are included from the date of acquisition or up to the date of disposal. At the date of acquisition, the fair values of the subsidiaries’ net assets are determined and these values are reflected in the consolidated financial statements. The cost of acquisition is measured at the aggregate of the fair values, at the date of exchange, of assets given, liabilities incurred or assumed, and equity instruments issued by the Group in exchange for control of the acquiree, plus any costs directly attributable to the business combination.

Intragroup transactions, balances and unrealised gains on transactions are eliminated; unrealised losses are also eliminated unless cost cannot be recovered. Where necessary, adjustments are made to the financial statements of subsidiaries to ensure consistency of accounting policies with those of the Group.

Minority interests in the consolidated balance sheets consist of the minorities’ share of fair values of the identifiable assets and liabilities of the acquiree as at the date of acquisition and the minorities’ share of movements in the acquiree’s equity.

Minority interests are presented in the consolidated balance sheet of the Group within equity, separately from the Company’s equity holders, and are separately disclosed in the consolidated income statement of the Group.

(e) Intangible assets

(i) Goodwill on Consolidation

Goodwill on consolidation represents the excess of the fair value of the purchase consideration over the Group’s share of the fair values of the identifiable net assets of the subsidiaries at the date of acquisition.





(e) Intangible assets (continued)

(i) Goodwill on Consolidation (continued)

Goodwill is measured at cost less accumulated impairment losses, if any. The carrying value of goodwill is reviewed for impairment annually. The impairment value of goodwill is recognised immediately in the consolidated income statement. An impairment loss recognised for goodwill is not reversed in a subsequent period.

If, after reassessments, the Group’s interest in the fair values of the identifiable net assets of the subsidiaries exceeds the cost of the business combinations, the excess is recognised immediately in the consolidated income statement.

(ii) Research and Development Expenditure

Research expenditure is recognised as an expense when it is incurred.

Development expenditure is recognised as an expense except that expenditure incurred on development projects are capitalised as long-term assets to the extent that such expenditure is expected to generate future economic benefits. Development expenditure is capitalised if, and only if the Group can demonstrate all of the following:-

(i) its ability to measure reliably the expenditure attributable to the asset under development;(ii) the product or process is technically and commercially feasible;(iii) its future economic benefits are probable;(iv) its ability to use or sell the developed asset; and(v) the availability of adequate technical, financial and other resources to complete the asset under

development.

Capitalised development expenditure is measured at cost less accumulated amortisation and impairment losses, if any. Development expenditure initially recognised as an expense are not recognised as assets in the subsequent period.

The development expenditure is amortised on a straight-line method over a period of 5 years when the products are ready for sale or use. In the event that the expected future economic benefits are no longer probable of being recovered, the development expenditure is written down to its recoverable amount.

(iii) Other Intangible Assets

An intangible asset shall be recognised if, and only if it is probable that the expected future economic benefits that are attributable to the asset will flow to the entity and that the cost of the asset can be measured reliably. An entity shall assess the probability of the expected future economic benefits using reasonable and supportable assumptions that represent management’s best estimate of the set of economic conditions that will exist over the useful life of the asset. An intangible asset shall be measured initially at cost.

The useful lives of intangible assets are assessed to be either finite or indefinite.

Intangible assets with finite lives are amortised on a straight line basis calculated to write off the cost of each asset over its estimated useful life and assessed for impairment whenever there is an indication that the intangible assets may be impaired. The amortisation period and the amortisation method for an intangible asset with a finite useful life is reviewed at least at each financial year end. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset is accounted for by changing the amortisation period or method, as appropriate, and treated as changes in accounting estimates. The amortisation expense on intangible assets with finite lives is recognised in the income statement in the expense category consistent with the function of the intangible asset.





(e) Intangible assets (continued)

(iii) Other Intangible Assets (continued)

Intangible assets with indefinite useful lives are tested for impairment annually either individually or at the cash generating unit level. Such intangibles are not amortised. The useful life of an intangible asset with an indefinite life is reviewed annually to determine whether indefinite life assessment continues to be supportable. If not, the change in the useful life assessment from indefinite to finite is made on a prospective basis.

(f) Investments

(i) Investments in Subsidiaries

Investments in subsidiaries are stated at cost in the balance sheet of the Company, and are reviewed for impairment at the end of the financial year if events or changes in circumstances indicate that their carrying values may not be recoverable.

On the disposal of the investments in subsidiaries, the difference between the net disposal proceeds

and the carrying amount of the investments is taken to the income statement.

(ii) Investments in Associates

An associate is an entity in which the Group has a long-term equity interest and where it exercises significant influence over the financial and operating policies.

The investments in associates in the consolidated financial statements are accounted for under the equity method, based on the financial statements of the associates made up to 31 December 2008. The Group’s share of the post acquisition profits of the associates is included in the consolidated income statement and the Group’s interest in associates is stated at cost plus the Group’s share of the post-acquisition retained profits and reserves.

Unrealised gains on transactions between the Group and the associates are eliminated to the extent of the Group’s interest in the associate. Unrealised losses are eliminated unless cost cannot be recovered.

(iii) Other Investments Other investments held on a long-term basis are stated at cost less allowance for permanent

diminution in value.

On the disposal of these investments, the difference between the net disposal proceeds and the carrying amount of the investments is taken to the income statement.

(g) Plant and Equipment

Plant and equipment are stated at cost less accumulated depreciation and impairment losses, if any.

Depreciation is calculated under the straight-line method to write off the depreciable amount of the assets over their estimated useful lives. Depreciation of an asset does not cease when the asset becomes idle or is retired from active use unless the asset is fully depreciated. The principal annual rates used for this purpose are:- Furniture and fittings 20% Office equipment 20% Computer equipment 20% - 33 1/3% Renovation 20%





(g) Plant and Equipment (continued)

The depreciation method, useful life and residual values are reviewed, and adjusted if appropriate, at each balance sheet date to ensure that the amount, method and period of depreciation are consistent with previous estimates and the expected pattern of consumption of the future economic benefits embodied in the items of the plant and equipment.

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

(h) Impairment of Assets

The carrying values of assets, other than those to which FRS 136 - Impairment of Assets does not apply, are reviewed at each balance sheet date for impairment when there is an indication that the assets might be impaired. Impairment is measured by comparing the carrying values of the assets with their recoverable amounts. The recoverable amount of the assets is the higher of the assets’ net selling price and its value- in-use, which is measured by reference to discounted future cash flow.

An impairment loss is charged to the income statement immediately unless the asset is carried at its revalued amount. Any impairment loss of a revalued asset is treated as a revaluation decrease to the extent of a previously recognised revaluation surplus for the same asset.

In respect of assets other than goodwill, and when there is a change in the estimates used to determine the recoverable amount, a subsequent increase in the recoverable amount of an asset is treated as a reversal of the previous impairment loss and is recognised to the extent of the carrying amount of the asset that would have been determined (net of amortisation and depreciation) had no impairment loss been recognised. The reversal is recognised in the income statement immediately, unless the asset is carried at its revalued amount. A reversal of an impairment loss on a revalued asset is credited directly to the revaluation surplus. However, to the extent that an impairment loss on the same revalued asset was previously recognised as an expense in the income statement, a reversal of that impairment loss is recognised as income in the income statement.

(i) Receivables

Receivables are carried at anticipated realisable value. Bad debts are written off in the period in which they are identified. An estimate is made for doubtful debts based on a review of all outstanding amounts at the balance sheet date.

(j) Payables

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

(k) Provisions

Provisions are recognised when the Group has a present obligation as a result of past events, when it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and when a reliable estimate of the amount can be made. Provisions are reviewed at each balance sheet date and adjusted to reflect the current best estimate. Where effect of the time value of money is material, the provision is the present value of the estimated expenditure required to settle the obligation.





(l) Income Taxes

Income taxes for the year comprise 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 or substantially enacted at the balance sheet date.

Deferred tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements.

Deferred tax liabilities are recognised for all taxable temporary differences other than those that arise from goodwill or excess of the acquirer’s interest in the net fair value of the acquiree’s identifiable assets, liabilities and contingent liabilities over the business combination costs 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.

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 future taxable profit will be available against which the deductible temporary differences, unused tax losses and unused tax credits can be utilised.

Deferred tax assets and liabilities are 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 the tax rates that have been enacted or substantially enacted at the balance sheet date.

Deferred tax is recognised in the income statement, except when it arises from a transaction which is recognised directly in equity, in which case the deferred tax is also charged or credited directly to equity, or when it arises from a business combination that is an acquisition, in which case the deferred tax is included in the resulting goodwill or excess of the acquirer’s interest in the net fair value of the acquiree’s identifiable assets, liabilities and contingent liabilities over the business combination costs. The carrying amounts of deferred tax assets are reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient future taxable profits will be available to allow all or part of the deferred tax assets to be utilised.

(m) Equity Instruments

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from proceeds.

Dividends on ordinary shares are recognised as liabilities when approved for appropriation.

(n) Segmental Information

Segment revenue and expenses are those directly attributable to the segments and include any joint revenue and expenses where a reasonable basis of allocation exists. Segment assets include all assets used by a segment and consist principally of plant and equipment (net of accumulated depreciation, where applicable), other investments, inventories, receivables and cash and bank balances.

Most segment assets can be directly attributed to the segments on a reasonable basis. Segment assets do not include income tax assets, whilst segment liabilities do not include income tax liabilities and borrowings from financial institutions.

Segment revenue, expenses and results include transfers between segments. The prices charged on intersegment transactions are based on normal commercial terms. These transfers are eliminated on consolidation.





(o) Cash and Cash Equivalents

Cash and cash equivalents comprise cash in hand, bank balances, demand deposits, deposits pledged with financial institutions, bank overdrafts and short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

(p) Employee Benefits

(i) Short-term Benefits

Wages, salaries, paid annual leave, bonuses, and non-monetary benefits are accrued in the period in which the associated services are rendered by employees of the Group.

(ii) Defined Contribution Plans

The Group’s contributions to defined contribution plans are charged to the income statement in the period to which they relate. Once the contributions have been paid, the Group has no further liability in respect of the defined contribution plans.

(q) Related Parties

A party is related to an entity if:-

(a) directly, or indirectly through one or more intermediaries, the party:- (i) controls, is controlled by, or is under common control with, the entity (this includes parents,

subsidiaries and fellow subsidiaries);(ii) has an interest in the entity that gives it significant influence over the entity; or(iii) has joint control over the entity;

(b) the party is an associate of the entity;(c) the party is a joint venture in which the entity is a venturer;(d) the party is a member of the key management personnel of the entity or its parent;(e) the party is a close member of the family of any individual referred to in (a) or (d);(f) the party is an entity that is controlled, jointly controlled or significantly influenced by, or for which

significant voting power in such entity resides with, directly or indirectly, any individual referred to in (d) or (e); or

(g) the party is a post-employment benefit plan for the benefit of employees of the entity, or of any entity that is a related party of the entity.

Close members of the family of an individual are those family members who may be expected to influence, or be influenced by, that individual in their dealings with the entity.

(r) Contingent Liabilities and Contingent Assets

A contingent liability is a possible obligation that arises from past events and whose existence will only be confirmed by the occurrence of one or more uncertain future events not wholly within the control of the Group. It can also be a present obligation arising from past events that is not recognised because it is not probable that an outflow of economic resources will be required or the amount of obligation cannot be measured reliably.

A contingent liability is not recognised but is disclosed in the notes to the financial statements. When a change in the probability of an outflow occurs so that the outflow is probable, it will then be recognised as a provision.

A contingent asset is a probable asset that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain events not wholly within the control of the Group.





(s) Revenue Recognition

(i) Sale of Goods

Revenue is recognised upon delivery of goods and customers’ acceptance and where applicable, net of sales tax, returns and trade discounts.

(ii) Services Revenue is recognised upon rendering of services and when the outcome of the transaction can

be estimated reliably. In the event the outcome of the transaction could not be estimated reliably, revenue is recognised to the extent of the expenses incurred that are recoverable.

(iii) Software Maintenance Fee

Software maintenance fee is recognised as revenue upon performance of services.

(iv) Interest Income

Interest income is recognised on accrual basis, based on the effective yield on the investment.

(t) Government Grants

Government grants are recognised initially at their fair value in the balance sheet as deferred income where there is reasonable assurance that the grant will be received and all attaching conditions will be complied with. Grants that compensate the Group for expenses incurred are recognised as income over the periods necessary to match the grant on a systematic basis to the cost that it is intended to compensate. Grants that compensate the Group for the cost of an asset are recognised as income on a systematic basis over the useful life of the asset.

6. INVESTMENTS IN SUBSIDIARIES

THE COMPANY

2008 2007 RM RM Unquoted shares, at cost 1,738,064 1,733,058Impairment loss (1,733,054) (1,733,054)

5,010 4 Details of the subsidiaries are as follows:- Country of Equity Interest (%) Name of Company Incorporation 2008 2007 Principal Activities Viztel Solutions (HK) Limited # Hong Kong 100 100 Inactive SAR Viztel Solutions (S) Pte. Ltd. ^ The Republic 100 100 Dormant. of Singapore

Picktips.Com Limited # The British 100 100 Inactive Virgin Islands




6. INVESTMENTS IN SUBSIDIARIES (continued)

Details of the subsidiaries are as follows:- (continued)

Country of Equity Interest (%) Name of Company Incorporation 2008 2007 Principal Activities

Viztel Technologies Sdn. Bhd. Malaysia 100 100 Service provider for the telecommunication systems and solutions.Viztel Techpro Sdn. Bhd. (formerly known as Viztel Malaysia 100 100 Dormant.Network Services Sdn. Bhd.)

Viztel Systems Sdn. Bhd. Malaysia 100 49 Provision of management and telecommunication system services

Defensa Consulting Sdn. Bhd. Malaysia 55 - Dormant.

Moliba Technology Limited *# Hong Kong SAR 100 100 Inactive

# Prepared on a non-going concern basis as the Board of Directors are taking steps to deregister the companies subsequent to the financial year end.

^ The Board of Directors are applying for strike off subsequent to the financial year end.* Held through Picktips.Com Limited.

All the subsidiaries are audited by firms of auditors other than Horwath.

During the financial year:-

(a) Viztel Systems Sdn. Bhd. (“VSSB”) became a wholly-owned subsidiary of the Company by the acquisition of an additional 51% equity interest comprising 5,151 ordinary shares of RM0.10 each in VSSB for a total consideration of RM2; and

(b) The Company acquired 55% equity interest comprising 55 ordinary shares of RM1.00 each in Defensa Consulting Sdn. Bhd. for a total consideration of RM55.

The financial effects of the acquisition of the subsidiaries during the financial year were not material to the Group and the Company, except for the goodwill which arose from the acquisition of RM802,226 and was subsequently impaired. The details of the goodwill are disclosed in Note 11 to the financial statements.

The auditors’ reports of Viztel Solutions (S) Pte. Ltd., Viztel Techpro Sdn. Bhd. and Viztel Systems Sdn. Bhd. contained an emphasis of matter with respect to the accounting principles applicable to a going concern. The financial statements are prepared on a going concern basis, notwithstanding the net current liabilities position, on the assumption that the subsidiaries will continue to receive financial support from Viztel Solutions Berhad, the payables, the shareholders and the directors.

7. INVESTMENTS IN AN ASSOCIATE THE GROUP THE COMPANY

2008 2007 2008 2007 RM RM RM RM

Unquoted shares, at cost - 4,949 - 4,949 Share of post-acquisition loss - (4,949) - - - - - 4,949




7. INVESTMENTS IN AN ASSOCIATE (continued)

The summarised financial information of the associate in the previous financial year was as follows:-

2008 2007 RM RM ASSETS AND LIABILITIES Non-current assets - 33,750 Current assets - 849,306 - 883,056 Non-current liabilities - - Current liabilities - 1,524,105 - 1,524,105 RESULTS Revenue - 825,211 Loss for the financial year - (290,718)

Details of the associate, which is incorporated in Malaysia, are as follows:- Equity Interest (%) Name of Company 2008 2007 Principal Activities

Viztel Systems Sdn. Bhd. - 49 Provision of management and telecommunication system services. During the financial year, the associate became the subsidiary of the Company as disclosed in Note 6 to the

financial statements.

In the previous financial year:-

(a) the associate was audited by a firm of auditor other than Horwath; and

(b) the Group had discontinued the recognition of its share of losses of the associate because the share of losses had exceeded the Group’s interest in the associate.

8. OTHER INVESTMENT THE GROUP/THE COMPANY 2008 2007 RM RMAt cost:- Unquoted shares in Malaysia 190,000 190,000Impairment loss (190,000) (190,000)

- -




9. PLANT AND EQUIPMENT

ACQUISITION AT OF A WRITTEN DEPRECIATION AT 1.1.2008 SUBSIDIARY ADDITIONS OFF CHARGE 31.12.2008 THE GROUP RM RM RM RM RM RM NET BOOK VALUE Office equipment 22,954 - - - (9,740) 13,214 Computer equipment 660,133 - 2,826 (229,491) (257,352) 176,116 Furniture and fittings 58,696 24,750 - - (13,803) 69,643 Renovation 98,363 - - (72,704) (25,659) - 840,146 24,750 2,826 (302,195) (306,554) 258,973

ACQUISITION AT OF A WRITTEN DEPRECIATION AT 1.1.2007 SUBSIDIARY ADDITIONS OFF CHARGE 31.12.2007 THE GROUP RM RM RM RM RM RM NET BOOK VALUE Office equipment 31,309 - 4,238 - (12,593) 22,954 Computer equipment 1,119,095 - 42,416 - (501,378) 660,133 Furniture and fittings 103,885 - 9,750 (39,989) (14,950) 58,696 Renovation 144,573 - - (20,550) (25,660) 98,363 1,398,862 - 56,404 (60,539) (554,581) 840,146

AT ACCUMULATED NET BOOK COST DEPRECIATION VALUETHE GROUP RM RM RM AT 31.12.2008 Office equipment 109,936 (96,722) 13,214Computer equipment 1,829,699 (1,653,583) 176,116Furniture and fittings 120,850 (51,207) 69,643Renovation - - - 2,060,485 (1,801,512) 258,973

AT 31.12.2007 Office equipment 109,936 (86,982) 22,954Computer equipment 2,723,560 (2,063,427) 660,133Furniture and fittings 75,849 (17,153) 58,696Renovation 128,300 (29,937) 98,363

3,037,645 (2,197,499) 840,146




9. PLANT AND EQUIPMENT (continued)

AT DEPRECIATION AT 1.1.2008 ADDITIONS WRITTEN OFF CHARGE 31.12.2008THE COMPANY RM RM RM RM RM NET BOOK VALUE Office equipment 15,256 - - (6,941) 8,315Computer equipment 660,019 2,826 (229,491) (257,240) 176,114Furniture and fittings 58,695 - - (13,802) 44,893Renovation 98,364 - (72,704) (25,660) - 832,334 2,826 (302,195) (303,643) 229,322

AT DEPRECIATION AT 1.1.2007 ADDITIONS DISPOSALS CHARGE 31.12.2007THE COMPANY RM RM RM RM RM NET BOOK VALUE Office equipment 20,811 4,238 - (9,793) 15,256Computer equipment 1,118,848 42,416 - (501,245) 660,019Furniture and fittings 103,884 9,750 (39,989) (14,950) 58,695Renovation 144,574 - (20,550) (25,660) 98,364 1,388,117 56,404 (60,539) (551,648) 832,334

AT ACCUMULATED NET BOOK COST DEPRECIATION VALUETHE COMPANY RM RM RM AT 31.12.2008 Office equipment 95,938 (87,623) 8,315Computer equipment 1,523,531 (1,347,417) 176,114Furniture and fittings 75,850 (30,957) 44,893Renovation - - - 1,695,319 (1,465,997) 229,322

AT 31.12.2007 Office equipment 95,938 (80,682) 15,256Computer equipment 2,417,393 (1,757,374) 660,019Furniture and fittings 75,850 (17,155) 58,695Renovation 128,300 (29,936) 98,364 2,717,481 (1,885,147) 832,334




10. DEVELOPMENT COSTS

THE GROUP / THE COMPANY

2008 2007 RM RM At 1 January 1,573,250 907,934Additions during the financial year 116,114 665,316Impairment loss recognised in income statement (1,689,364) - At 31 December - 1,573,250

Represented by the following projects:

- Automated Outbound Dialer (“AOD”) - 66,616- Info Channel - 142,401- Telephony Application Generator and Intelligent Agent (“TANIA”) - 1,364,233 Additions during the financial year include the following:-

Directors’ remuneration (Note 31) - 106,560Staff costs (Note 30) 116,114 558,756

The directors carried out a review of the recoverable amount of the development costs during the financial year, taking into consideration that the products have been unable to secure any projects or tenders and therefore, unable to generate sufficient future economic benefits to recover the carrying amount. The review led to the recognition of an impairment loss of RM1,689,364 recognised in Other Expenses.

11. OTHER INTANGIBLE ASSETS

THE GROUP

SIP Goodwill Total RM RM RMAT COST

At 1 January 2008 1,200,000 - 1,200,000Acquisition of a subsidiary - 802,226 802,226 At 31 December 2008 1,200,000 802,226 2,002,226

ACCUMULATED IMPAIRMENT LOSSES

At 1 January 2008 - - -Impairment losses recognised in income statement (1,200,000) (802,226) (2,002,226) At 31 December 2008 (1,200,000) (802,226) (2,002,226)

NET CARRYING AMOUNT

At 31 December 2008 - - - At 31 December 2007 1,200,000 - 1,200,000




11. OTHER INTANGIBLE ASSETS (continued)

THE COMPANY

2008 2007 RM RM SIP 1,200,000 1,200,000 Impairment loss recognised in income statement (1,200,000) -

- 1,200,000

The perpetual and non-exclusive licensing right to use SIP Billing Software (“SIP”) was acquired from LLS Ventures Sdn. Bhd. (“LLS”). At the request of the Company, LLS may include the sale and installation of equipment necessary for the proper functioning and integration of the SIP Billing Software into the Company’s telecommunication system.

There is no amortisation for the intangible assets because their useful lives are indefinite.

The directors carried out a review of the recoverable amount of the intangible assets during the financial year, taking into consideration that SIP has been unable to be integrated into the Company’s telecommunication system. A similar review was also performed on the recovery of goodwill and it was determined that the subsidiary which the goodwill relates to is not able to generate future economic benefits. These reviews led to the recognition of an impairment losses of RM2,002,226 recognised in Other Expenses.

12. TRADE RECEIVABLES

THE GROUP THE COMPANY

2008 2007 2008 2007 RM RM RM RM Trade receivables 545,579 3,976,444 352,412 3,778,821 Allowance for doubtful debts (98,564) (2,510,976) (90,000) (2,502,412) Interest-in-suspense - (97,000) - (97,000)

447,015 1,368,468 262,412 1,179,409 Allowance for doubtful debts:- At 1 January (2,510,976) (2,445,376) (2,502,412) (2,436,812) Addition for the financial year (45,000) (65,600) (45,000) (65,600) Write off during the financial year 2,457,412 - 2,457,412 - At 31 December (98,564) (2,510,976) (90,000) (2,502,412)

The normal credit terms of the Group and of the Company range from 30 days to 60 days. Other credit terms are assessed and approved on a case-by-case basis.




13. OTHER RECEIVABLES, DEPOSITS AND PREPAYMENTS

THE GROUP THE COMPANY 2008 2007 2008 2007 RM RM RM RM

Other receivables 598,336 1,105,584 505,005 1,017,630 Deposits 154,752 177,058 103,347 147,169 Prepayments 33,912 22,923 33,912 21,662 787,000 1,305,565 642,264 1,186,461 Allowance for doubtful debts (510,000) (530,388) (510,000) (530,388) 277,000 775,177 132,264 656,073 Allowance for doubtful debts:-

At 1 January (530,388) (330,388) (530,388) (330,388) Addition during the financial year (300,000) (200,000) (300,000) (200,000) Write off during the financial year 320,388 - 320,388 -

At 31 December (510,000) (530,388) (510,000) (530,388)

14. AMOUNTS OWING BY / (TO) SUBSIDIARIES

THE COMPANY 2008 2007 RM RM Amount owing by subsidiaries 1,034,185 281,267 Allowance for doubtful debts (382,454) (68,362) 651,731 212,905 Amount owing to subsidiaries 1,515,453 1,886,131

Allowance for doubtful debts:-

At 1 January (68,362) (68,362) Addition during the financial year (314,092) - At 31 December (382,454) (68,362)

The non-trade balances were unsecured, interest-free and repayable on demand. The amounts owing are to be

settled in cash.

15. AMOUNT OWING BY AN ASSOCIATE The amount owing in the previous financial year was unsecured, interest-free and repayable on demand. The

amount owing was to be settled in cash.




16. FIXED DEPOSIT WITH A LICENSED BANK

The Group’s fixed deposit is pledged to a licensed bank for a performance guarantee facility as disclosed in Note 33(a) to the financial statements.

The effective interest rate and the average maturity period of the fixed deposit at the balance sheet date were as follows:-

THE GROUP

2008 2007 Effective interest rate per annum 3.0% 3.0% Maturity period 30 days 30 days

17. SHARE CAPITAL THE COMPANY

2008 2007 2008 2007 NUMBER OF SHARES RM RM ORDINARY SHARES OF RM0.10 EACH:-

AUTHORISED 100,000,000 100,000,000 10,000,000 10,000,000

ISSUED AND FULLY PAID-UP 60,500,000 60,500,000 6,050,000 6,050,000

18. RESERVES THE GROUP THE COMPANY

2008 2007 2008 2007 RM RM RM RM

Share premium 9,030,811 9,030,811 9,030,811 9,030,811 Foreign exchange translation reserve (32,269) (165,225) - - Accumulated losses (15,935,569) (11,181,029) (16,962,991) (13,080,668)

(6,937,027) (2,315,443) (7,932,180) (4,049,857) 19. DEFERRED TAXATION THE GROUP

2008 2007 RM RM At 1 January 162 33,603 Foreign exchange translation differences - (905) Transfer to income statement (Note 27) (162) (32,536) At 31 December - 162

The deferred taxation relates to temporary differences between depreciation and capital allowances on the qualifying cost of plant and equipment.




20. TRADE PAYABLES

The normal trade credit terms granted to the Group and the Company range from 30 to 60 days.

21. OTHER PAYABLES AND ACCRUALS


2008 2007 2008 2007 RM RM RM RM Other payables 520,877 632,067 300,909 304,533 Accruals 535,452 330,165 495,758 328,215

1,056,329 962,232 796,667 632,748

22. AMOUNT OWING TO DIRECTORS

The amount owing is unsecured, interest-free and repayable on demand. The amount owing is to be settled in cash.

23. DEFERRED INCOME THE GROUP / THE COMPANY

2008 2007 RM RM Grant received from Multimedia Development Corporation Sdn. Bhd. 1,121,582 1,121,582 Deferred income recognised (1,121,582) - - 1,121,582 Deferred income represents grants received from Multimedia Development Corporation Sdn. Bhd. to part

finance the development costs incurred for Telephony Application Generator and Intelligent Agent (“TANIA”) project.

During the financial year, the deferred income was fully recognised as income due to impairment loss of TANIA as disclosed in Note 10 to the financial statements.

24. NET (LIABILITIES) / ASSETS PER SHARE

The net (liabilities)/assets per share is calculated based on the value of net liabilities of RM887,027 (2007 - net assets of RM3,734,557) divided by the number of ordinary shares in issue at the balance sheet date of 60,500,000 (2007 - 60,500,000).

25. REVENUE

Revenue represents the sale of software, hardware and accessories and services rendered for software development and maintenance.




26. LOSS BEFORE TAXATION


2008 2007 2008 2007 RM RM RM RM

Loss before taxation is arrived at after charging/(crediting):-

Allowance for doubtful debts 345,000 265,600 659,092 265,600 Audit fee - for the financial year 44,769 43,611 35,000 35,000 - underprovision in the previous financial year - 2,800 - - Bad debts written off 29,266 62,369 10,314 62,369 Depreciation of plant and equipment 306,554 554,581 303,643 551,648 Directors’ non-fee emoluments (Note 31) 24,000 49,800 24,000 49,800 Impairment losses - Development costs 1,689,364 - 1,689,364 - - Other intangible asset 1,200,000 - 1,200,000 - - Goodwill 802,226 - - - Realised loss on foreign exchange 822 - 822 - Loss on disposal of equipment - 5,539 - 5,539 Write off of deposits 18,326 - 18,326 - Write off of plant and equipment 302,195 - 302,195 - Rental of premises 179,422 183,436 179,422 183,436 Staff costs (Note 30) 970,196 389,432 970,196 389,432 Deferred income recognised (1,121,582) - (1,121,582) - Interest income (5,050) (4,284) (219) - Government grant recognised as income (145,484) (94,051) (145,484) (94,051) Rental income (24,000) (24,000) (24,000) (24,000) Reversal of impairment loss - (84,432) - (84,432) Waiver of debts (16,242) - (353,403) -

27. INCOME TAX EXPENSE


2008 2007 2008 2007 RM RM RM RM Current tax expense 966 36,629 - - Deferred taxation (Note 19) (162) (32,536) - - 804 4,093 - -

The Company has been granted the Multimedia Super Corridor status which qualifies the Company for Pioneer

Status incentive under the Promotion of Investments Act, 1986. The Company will enjoy full exemption from income tax on its statutory income from pioneer activities from 23 August 2005 to 22 August 2010.

Domestic income tax is calculated at the Malaysian statutory tax rate of 26% (2007 - 27%) of the estimated

assessable profit for the financial year. Taxation for other jurisdictions is calculated at the rates prevailing in the respective jurisdictions.




27. INCOME TAX EXPENSE (continued)

No deferred tax assets are recognised in the balance sheets for the following items which are available for offset against future taxable income:-


2008 2007 2008 2007 RM RM RM RM Unabsorbed capital allowances 1,268,500 1,064,000 1,246,000 1,064,000 Unutilised tax losses 9,612,000 6,347,000 8,934,000 6,254,000 10,880,500 7,411,000 10,180,000 7,318,000

A reconciliation of income tax expense applicable to the loss before taxation at the statutory tax rate to income tax expense at the effective tax rate of the Group and of the Company is as follows:-


2008 2007 2008 2007 RM RM RM RM

Loss before taxation (4,753,736) (440,007) (3,882,323) (608,840)

Tax at the statutory tax rate of 26% (2007 - 27%) (1,235,971 ) (118,802) (1,009,404) (164,387) Tax effects:-

Non-taxable gains (37,826) (25,394) (37,826) (25,394) Non-deductible expenses 48,237 51,180 39,252 46,250 Deferred tax assets not recognised during the financial year 1,226,364 132,546 1,007,978 143,531 Utilisation of deferred tax asset not recognised

in the previous financial year - (35,437) - - Tax for the financial year 804 4,093 - -

28. LOSS PER SHARE

The basic loss per share is arrived at by dividing the Group’s loss attributable to shareholders of RM4,754,540 (2007 - RM444,100) by the number of ordinary shares at the end of the financial year of 60,500,000 shares (2007 - 60,500,000 shares).

The fully diluted loss per share for the Group is not presented as there were no dilutive potential ordinary shares during the financial year.

29. CASH AND CASH EQUIVALENTS

For the purpose of the cash flow statements, cash and cash equivalents comprise the following:-


2008 2007 2008 2007 RM RM RM RM

Fixed deposit with a licensed bank 151,930 147,100 - - Cash and bank balances 45,004 91,221 1,918 52,720

196,934 238,321 1,918 52,720




30. STAFF COSTS THE GROUP / THE COMPANY

2008 2007 RM RM Salaries and wages 1,014,241 800,369 Employees Provident Fund and SOCSO 66,224 101,051 Other staff related expenses 5,845 46,768

1,086,310 948,188 Less:

Amount capitalised under development costs (Note 10) (116,114) (558,756) 970,196 389,432

31. DIRECTORS’ REMUNERATION

The aggregate amount of the emoluments received and receivable by the directors of the Group and of the Company during the financial year is as follows:-


2008 2007 RM RM Executive directors:-

Basic salaries, allowances and EPF - 151,360 Management consultancy fee 24,000 -

Less: Amount capitalised under development costs (Note 10) - (106,560)

Non-executive directors:- Fees and allowances - 5,000

24,000 49,800 The emoluments received/receivable by the directors of the Group and of the Company for the financial year

are in the following bands:-

THE GROUP/THE COMPANY

2008 2007 No. of Pax No. of Pax Executive directors:-

Below RM50,000 1 1 RM50,001 - RM100,000 - 1

Non-executive directors:-

Below RM50,000 - 5




32. SIGNIFICANT RELATED PARTY TRANSACTIONS

(a) Identities of Related Parties

The Company has a controlling related party relationship with its subsidiaries as disclosed in Note 6 to the financial statements.

(b) In addition to the balances detailed elsewhere in the financial statements, there is no significant transaction carried out with the related parties during the financial year.

(c) Key Management Personnel

Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the entity, directly or indirectly, including any director (whether executive or otherwise) of that entity.


2008 2007 RM RM Basic salaries, allowances, EPF and management consultancy fee:-

Included in administrative expenses 24,000 49,800 Amount capitalised under development costs - 106,560 Total short-term employment benefits 24,000 156,360

33. CONTINGENT LIABILITIES

(a) Performance guarantee


2008 2007 2008 2007 RM RM RM RM Secured:

- Contract performance guarantee given 151,930 147,100 - - to third party

The performance guarantee is secured by way of a fixed deposit pledged to a licensed bank as disclosed in Note 16 to the financial statements.

(b) Claims by TT DotCom Sdn. Bhd.

The Company has been named as the first defendant in a writ of summons dated 4 April 2007 served by TT DotCom Sdn. Bhd. (“TTDC”). TTDC claimed a sum of RM1,405,693 plus interest at the rate of 8% per annum from 14 October 2005 to final settlement from the Company and four other defendants, including Smartdial International Sdn. Bhd. (“Smartdial”) (a former subsidiary of the Group) and certain directors of the Company for services allegedly provided by them pursuant to a Strategic Alliance Agreement (Global IP) which was entered into between Smartdial with TTDC. The Statement of Defense was filed on 3 May 2007 and the case is fixed for a Pre-trial Case Management on 22 May 2008 before the Judge. The case was adjourned to 9 June 2009 for further pre-trial case management.

The directors have refuted the claim vehemently and have appointed a legal counsel to vigorously defend the Company’s interest. A defense has been filed for the above claim together with an application to strike out the claims against the Directors.




34. SIGNIFICANT EVENTS DURING THE FINANCIAL YEAR

The significant events of the Company during the financial year are as follows:-

(a) on 8 October 2008, the Company subscribed 55 ordinary shares of RM1.00 each in Defensa Consulting Sdn. Bhd. (“DFSB”), representing 55% of the issued and paid-up share capital of DFSB for a total consideration of RM55; and

(b) on 13 November 2008, the Company acquired 5,151 ordinary shares of RM0.10 each in Viztel Systems Sdn. Bhd. (“VSSB”), representing 51% of the issued and paid-up share capital of VSSB for a total consideration of RM2.

35. SIGNIFICANT EVENT SUBSEQUENT TO THE BALANCE SHEET DATE

On 27 February 2009 and subsequently amended on 6 March 2009, the Group announced that it had become an Affected Listed Company pursuant to Guidance Note No. 3/2006 of the Listing Requirements of Bursa Malaysia Securities Berhad for the MESDAQ Market.

36. FOREIGN EXCHANGE RATES

The principal closing rates used (expressed on the basis of one unit of foreign currency to RM equivalent) for the translation of foreign currency balances at the balance sheet date are as follows:-

2008 2007 RM RM United States Dollar 3.487 3.315 Hong Kong Dollar 0.450 0.425 Singapore Dollar 2.418 2.293

37. SEGMENTAL INFORMATION

(a) Business Segments Speech and Total network solutions Elimination Group 2008 RM RM RM

REVENUE External sales 676,783 - 676,783

RESULTS Segment results (4,209,613) (548,366) (4,757,979)

Finance cost (807) Interest income 5,050

Loss before taxation (4,753,736) Income tax expense (804) - (804)

Loss after taxation (4,754,540)

OTHER INFORMATION Segment assets 3,162,393 (1,982,471) 1,179,922

Segment liabilities - Unallocated liabilities 2,038,705

Depreciation 306,554 - 306,554 Impairment losses 3,691,590 - 3,691,590




37. SEGMENTAL INFORMATION (continued)

(a) Business Segments (continued)

Speech and Carrier Total network solutions Solutions Elimination Group 2007 RM RM RM RM

REVENUE External sales 1,489,213 33,100 - 1,522,313

RESULTS Segment results (425,064) (9,448) (9,084) (443,596)


Loss before taxation (440,007) Income tax expense (4,093) - - (4,093)

Loss after taxation (444,100)

OTHER INFORMATION Segment assets 3,337,364 5,079,491 (1,766,108) 6,650,747

Segment liabilities - Unallocated liabilities 2,878,936

Capital expenditure 637,105 84,615 - 721,720 Depreciation 554,581 - - 554,581

(b) Geographical Segments Malaysia Overseas Elimination Group 2008 RM RM RM RM

REVENUE External sales 676,783 - - 676,783

RESULTS Segment results (3,911,441) (298,172) (548,366) (4,757,979)


Loss before taxation (4,753,736) Taxation (804) - - (804)

Loss after taxation (4,754,540)


Segment liabilities 4,272,595 278,481 (2,512,371) 2,038,705 Depreciation 306,552 2 - 306,554 Impairment losses 3,691,590 - - 3,691,590




37. SEGMENTAL INFORMATION (continued)

(b) Geographical Segments (continued)

Malaysia Overseas Elimination Group 2007 RM RM RM RM

REVENUE External sales 1,522,313 - - 1,522,313

RESULTS Segment results (420,480) (14,032) (9,084) (443,596)


Loss before taxation (440,007) Taxation (36,791) 32,698 - (4,093)

Loss after taxation (444,100)


Segment liabilities 4,591,343 269,566 (1,981,973) 2,878,936 Capital expenditure 721,720 - - 721,720 Depreciation 554,581 - - 554,581

38. FAIR VALUES OF FINANCIAL INSTRUMENTS

Fair value is defined as the amount at which the financial instrument could be exchanged in a current transaction between knowledgeable willing parties in an arm’s length transaction, other than in a forced sale or liquidation.

The following methods and assumptions are used to estimate the fair value of each class of financial assets and liabilities of the Group and of the Company:-

(a) Unquoted Investments

It is not practicable to estimate the fair values of the Group and the Company’s unquoted investments because of the lack of quoted market prices and the inability to estimate their fair values without incurring excessive costs. However, the Group and the Company believe that the carrying amounts represent the recoverable amounts.

(b) Bank Balances and Short-term Receivables / Payables

The carrying amounts approximated their fair values due to the relatively short-term maturity of these instruments.




38. FAIR VALUES OF FINANCIAL INSTRUMENTS (continued)

(c) Contingent Liabilities

The nominal amount and net fair value of financial instruments not recognised in the balance sheets of the Group and of the Company are as follows:-

The Group The Company

Nominal Net Nominal Net Amount Fair Value Amount Fair Value RM RM RM RM

At 31 December 2008 (a) Performance guarantee 151,930 * - -(b) Claims by TT Dotcom Sdn. Bhd. 1,405,693 # 1,405,693 # At 31 December 2007 (a) Performance guarantee 147,100 * - -(b) Claims by TT Dotcom Sdn. Bhd. 1,405,693 # 1,405,693 #

* The fair value of contingent liabilities of the Company is expected to be minimal as the third party is expected to complete the performance.

# It is not practicable to estimate the fair value of contingent liabilities of the Group reliably due to uncertainties of timing, costs and eventual outcome.

The details of the contingent liabilities are disclosed in Note 33 to the financial statements.



ANALYSIS OF SHAREHOLDINGS AS AT 19 MAY 2009

SHARE CAPITAL

Authorised : RM10,000,000.00 divided into 100,000,000 ordinary shares of RM0.10 eachIssued and Fully Paid-Up : RM6,050,000.00 divided into 60,500,000 ordinary shares of RM0.10 eachClass of Shares : Ordinary shares of RM0.10 eachVoting Rights : 1 vote per ordinary share

ANALYSIS OF SIZE OF SHAREHOLDINGS

Size of Holdings No. of Holders % No. of shares Held %

Less than 100 12 1.51 650 0.01

100 to 1,000 127 15.98 86,980 0.14

1,001 to 10,000 411 51.70 2,117,180 3.50

10,001 to 100,000 204 25.66 6,765,060 11.18

100,001 to less than 5% of issued shares 37 4.65 25,872,050 42.76

5% and above of issued shares 4 0.50 25,658,080 42.41

Total 795 100.00 60,500,000 100.00

Remarks: 5% of issued shares is equivalent to 3,025,000 shares

DIRECTORS’ SHAREHOLDINGS AS AT 19 MAY 2009

Name of Directors No. of shares held in the company as at 19 May 2009

Direct % Indirect %

Dato’ Rozabil @ Rozamujib bin Abdul Rahman 1,745,700 2.89 5,978,100 * 9.88

Dato’ Abdul Rahman Datuk bin Hj. Dahlan - - - -

Encik Abdul Rahman bin Mohamed Rejab - - - -

Dato’ Che Sulaiman bin Shapie - - - -

Mr. Lim Beng Guan - - 2,234,700 ** 3.69

Encik Azirruan bin Arifin - - - -

Notes:

* Deemed interest by virtue of his substantial shareholdings in Benar Prima Capital Sdn. Bhd.** Deemed interest through shares held under account Alliancegroup Nominees (Tempatan) Sdn. Bhd. (Pledged Securities Account for Lim Beng Guan)



ANALYSIS OF SHAREHOLDINGS AS AT 19 MAY 2009 (continued)

SUBSTANTIAL SHAREHOLDERS(as per Register of Substantial Shareholders)

No. of shares held

No. Names Direct Interest % Indirect Interest %

1 Mayban Venture Capital Company Sdn. Bhd. (MVCC) 10,475,220 17.31 - -

2 Benar Prima Capital Sdn. Bhd. 5,978,100 9.88 - -

3 Positive Force Sdn. Bhd. 5,894,980 9.74 - -

4 HLG Nominees (Tempatan) Sdn. Bhd. 3,309,780 5.47 - - [Pledged Securities Account for Rozman bin Omar]

5 Malayan Banking Berhad - - * 10,475,220 17.31

6 Tan Sri Mohamed Basir bin Ahmad - - ** 10,475,220 17.31

7 Jasmani Hj Abbas - - *** 10,475,220 17.31

8 Dato’ Rozabil @ Rozamujib bin Abdul Rahman 1,745,700 2.89 ^ 5,978,100 9.88

9 Datuk Abdul Farish bin Abd Rashid - - ^^ 5,894,980 9.74

10 Datin Siti Rubiah binti Datuk Samad - - ^^^ 5,894,980 9.74

Notes :

* By virtue of deemed interest in MVCC

** By virtue of deemed interest in MVCC

*** By virtue of deemed interest in MVCC

^ Deemed interest by virtue of his substantial shareholdings in Benar Prima Capital Sdn. Bhd.

^^ By virtue of deemed interest in Positive Force Sdn. Bhd.

^^^ By virtue of deemed interest in Positive Force Sdn. Bhd.



ANALYSIS OF SHAREHOLDINGS AS AT 19 MAY 2009 (continued)

THIRTY (30) LARGEST SHAREHOLDERS

No. Name of shareholders Shareholdings %

1 Mayban Venture Capital Company Sdn. Bhd. 10,475,220 17.31

2 Benar Prima Capital Sdn. Bhd. 5,978,100 9.88

3 Positive Force Sdn. Bhd. 5,894,980 9.74

4 HLG Nominees (Tempatan) Sdn. Bhd. 3,309,780 5.47

[Pledged Securities Account for Rozman Bin Omar]

5 Liqua Health Marketing (M) Sdn. Bhd. 3,000,000 4.96

6 Chong Kam Hoe 2,759,640 4.56

7 AllianceGroup Nominee (Tempatan) Sdn. Bhd. 2,234,700 3.69

[Pledged Securities Account for Lim Beng Guan]

8 Dato’ Rozabil @ Rozamujib bin Abdul Rahman 1,745,700 2.89

9 Public Nominees (Tempatan) Sdn. Bhd. 1,729,900 2.86

[Pledged Securities Account for Chen Khai Voon]

10 Cahaya Serijuta Sdn. Bhd. 1,619,500 2.68

11 Dato’ Shahrin bin Zahari 1,490,900 2.46

12 Techpacific.com (BVI) Investment Limited 1,449,350 2.40

13 Pang Hao Chen 1,445,620 2.39

14 Lau Kim Wai 1,006,040 1.66

15 Loh Hui Mai 857,200 1.42

16 Au Chee Fai 827,600 1.37

17 Azim Sepadu Sdn. Bhd. 647,300 1.07

18 Lee Kok Keong 530,300 0.88

19 JF Apex Nominess (Tempatan) Sdn. Bhd. 437,000 0.72

[Pledged Securities Account for Tan Siew Booy]

20 Kua Meng Kiong 276,200 0.46

21 Kok Tiu Wan 265,000 0.44

22 Rosnah Binti Othman 255,100 0.42

23 AIBB Nominees (Tempatan) Sdn. Bhd. 243,800 0.40

[Pledged Securities Account for Tan Siew Booy]

24 Ahmad Nazry bin Abd Ajib 227,300 0.38

25 Lim Siam Hwoi 211,000 0.35

26 Citigroup Nominees (Asing) Sdn. Bhd. 210,500 0.35

[Exempt an for CITIBANK NA, Singapore (Julius Baer)

27 Nadarajan A/L Somasundaram 210,000 0.35

28 HDM Nominees (Tempatan) Sdn. Bhd. 209,000 0.35

[Pledged Securities Account for Goh Seng Guan]

29 Chow Yen-Lu Yale 201,000 0.33

30 Yusuf bin Taiyoob 200,000 0.33

Total 49,947,730 82.57



NOTICE OF ANNUAL GENERAL MEETING

NOTICE IS HEREBY GIVEN THAT The Ninth Annual General Meeting of Viztel Solutions Berhad will be held at Hotel Singgahsana Petaling Jaya, Persiaran Barat Off Jalan Sultan, 46760 Petaling Jaya, Selangor Darul Ehsan on Tuesday, 30 June 2009 at 10.00 A.M. for the following purposes:-

AGENDAORDINARY BUSINESS:-

1. To receive the Audited Financial Statements for the financial year ended 31 December 2008 Please refer together with the Reports of the Directors and Auditors thereon. to Note A

2. To re-elect the following Directors who shall retire in accordance with Article 96 of the Company’s Articles of Association and who, being eligible, offer themselves for re-election :-

i) Abdul Rahman Bin Mohamed Rejab Resolution 1

3. To re-elect the following Director who shall retire in accordance with Article 101 of the Company’s Articles of Association and who, being eligible, offer himself for re-election :-

i) Dato’ Che Sulaiman Bin Shapie Resolution 2

4. To re-appoint M/s Horwath as Auditors of the Company and to authorise the Directors to fix Resolution 3 their remuneration.

5. To transact any other ordinary business of which due notice shall be given. Resolution 4

BY ORDER OF THE BOARD

HUANG MIEW WOON (MACS 00036)TAIBAH BINTI ABDUL RAHMAN @ LING KIONG (MAICSA 7003550)Company Secretaries

Kuala LumpurDate: 8th June 2009

Note A

This agenda is meant for discussion only as the provisions of Section 169(1) of the Companies Act, 1965 do not require a formal approval of the shareholders and hence is not put forward for voting.

Proxy :-

1. A Member of the Company entitled to attend and vote at the abovementioned meeting is entitled to appoint a proxy to attend and vote in his stead. Such proxy may but needs not be a member of the Company. If the proxy is not a member he needs not be a qualified legal practitioner, an approved company auditor or a person approved by the Registrar. A member may appoint more than two (2) proxies to attend and vote at the meeting and a member who appoints more than one (1) proxy shall specify the proportion of his shareholding to be represented by each proxy.

2. The instrument appointing a proxy shall be in writing, under the hands of the appointer or of his attorney duly authorised in writing or if such appointer is a corporation under its common seal or the hand of its attorney duly authorised.

3. The instrument appointing a proxy together with the power of the attorney (if any) shall be deposited at the Registered Office of the Company situated at 30-3, Jalan 11/116B, Kuchai Entrepreneurs Park, Off Jalan Kuchai Lama, 58200 Kuala Lumpur not less than forty-eight (48) hours before the time for holding the meeting or any adjournment thereof.



STATEMENT ACCOMPANYING NOTICE OF

ANNUAL GENERAL MEETING

1. Directors who are standing for re-election at the Ninth Annual General Meeting of Viztel Solutions Berhad are :-

No. of shares held in the company as at 19 May 2009

Name of Directors Age Direct Indirect

Abdul Rahman Bin Mohamed Rejab 43 Nil Nil Dato’ Che Sulaiman Bin Shapie 52 Nil Nil

The details of the above Directors who are due for re-election are set out in the Section entitled “Board of Directors” on pages 4 to 5 of this Annual Report.

2. Mr. Lim Beng Guan who is due for retirement at the forthcoming Ninth Annual General Meeting has indicated that he does not wish to seek for re-election as Director of the Company. In this respect, he shall retire from office at the conclusion of the Annual General Meeting.

3. Place, date and time of the Ninth Annual General Meeting.

Date of Meeting Time of Meeting Venue of Meeting

Tuesday, 30 June 2009 10.00 a.m. Hotel Singgahsana Petaling Jaya Persiaran Barat Off Jalan Sultan 46760 Petaling Jaya, Selangor D.E.



FORM OF PROXY

I / We __________________________________________________________________________________________________ (Full Name in Block Letter)

I.C. No. or Company No.___________________________________ of ____________________________________________

(Address)________________________________________________________________________________________________________ (Address)

being a member/members of VIZTEL SOLUTIONS BERHAD (“the Company”) hereby appoint :

__________________________________________________________I.C. No. _______________________________________ (Full Name)

of _____________________________________________________________________________________________________ (Address)

or failing him / her_____________________________________________I.C. No.____ _______________________________ (Full Name)

of _____________________________________________________________________________________________________ (Address)

or failing him/her, the Chairman of the meeting as my/our proxy to vote for me/us on my/our behalf at the 9th Annual General Meeting of the Company to be held at Hotel Singgahsana Petaling Jaya, Persiaran Barat Off Jalan Sultan, 46760 Petaling Jaya, Selangor Darul Ehsan on Tuesday, 30 June 2009 at 10.00 a.m. and at any adjournment thereof.

For Against

Resolution 1 Re-election of Abdul Rahman Bin Mohamed Rejab as Director. Resolution 2 Re-election of Dato’ Che Sulaiman Bin Shapie as Director. Resolution 3 Re-appointment of M/s Horwath as Auditors of the Company.

Please indicate with ‘ X ’ how you wish to cast your vote. In the absence of specific directions, the proxy may vote or abstain as he/she thinks fit.

Dated this __________day of ___________2009.

________________________ Number of Shares Held Signature of Shareholder/Common Seal Notes:-

1. A Member of the Company entitled to attend and vote at the abovementioned meeting is entitled to appoint a proxy to attend and vote in his stead. Such proxy may but needs not be a member of the Company. If the proxy is not a member he needs not be a qualified legal practitioner, an approved company auditor or a person approved by the Registrar. A member may appoint more than two (2) proxies to attend and vote at the meeting and a member who appoints more than 1 proxy shall specify the proportion of his shareholding to be represented by each proxy.

2. The instrument appointing a proxy shall be in writing, under the hands of the appointer or of his attorney duly authorised

in writing or if such appointer is a corporation under its common seal or the hand of its attorney duly authorised.

3. The instrument appointing a proxy together with the power of the attorney (if any) shall be deposited at the Registered Office of the Company situated at 30-3, Jalan 11/116B, Kuchai Entrepreneurs Park, Off Jalan Kuchai Lama, 58200 Kuala Lumpur not less than forty-eight (48) hours before the time for holding the meeting or any adjournment thereof.

Viztel Solutions Berhad(489232-W)



Step 3 - Fold this flap for sealing

Step 2 - Then fold here

Step 1 - Fold here

THE COMPANY SECRETARYVIZTEL SOLUTIONS BERHAD (489232-W)30-3, Jalan 11/116B,Kuchai Entrepreneurs Park, Off Jalan Kuchai Lama,58200 Kuala Lumpur

AFFIXSTAMP

Documents

TABLE OF CONTENTS - Malaysiastock.biz 12 Statement on Corporate Governance 16 Additional Compliance Information 18 Audit Committee Report 21 Statement on Internal Control 23 Financial