Krishnan Menon
Chairman






Dear Shareholders,

On behalf of the Board of Directors, I am pleased to present the Annual Report of Scicom (MSC) Berhad for the financial year (FY) ended 30 June 2011.

It has indeed been an eventful year for us at Scicom. As we march towards new and exciting times, we are also cognisant of the fact that we must constantly reinvent ourselves and make our offerings relevant in the global marketplace.

The aftershocks of the global economic crisis of 2008 and 2009 still linger and in spite of the continuing economic uncertainty, I am pleased to say that we have delivered on our key objectives for FY 2011.

Our strategy of product and services differentiation, based on a deep domain understanding of our core business, has provided us with a competitive advantage for the future in terms of growth potential, market penetration and product relevance.

Based on the challenging economic environment, our strategy was to focus on servicing clients from our more competitive cost base in Malaysia. As a result we took the decision to wind down our United States operations.

The savings from winding down our US operations, increasing domestic profits and streamlining costs enabled us to drive growth in terms of revenues and profit. Our prudent financial management allowed us to fund our growth through internally generated funds and we ended this year with zero debt.

Corporate Developments

On 30 May 2011, the Group established a wholly owned subsidiary PT Scicom Indonesia in the Republic of Indonesia in order to explore and develop business opportunities in the region’s fastest growing economy. Indonesia’s rapid growth and consumer base augurs well for the establishment of a local presence. This will enable us to ensure that our products and services are made available in that rapidly expanding economy.

The Ministry of Higher Education, Malaysia vide a letter dated 23 June 2011 granted approval to the Company’s subsidiary, Scicom International College Sdn Bhd to establish a private institution of Higher Learning in Malaysia.

The recognition of our proposition followed a comprehensive validation procedure by the Ministry and we are delighted that this approval has now been granted. The second stage of the approval process is the validation of our programmes by the Malaysian Qualification Agency (MQA) under the auspices of the Ministry of Higher Education. We expect the approval within FY 2012.

Financial Performance

The Group achieved significant milestones in its efforts to provide differentiated services through its Consulting, Outsourcing and Education divisions. Our strategy of services differentiation not only made us relevant to our discerning client base but has also laid the foundation towards our goal of obtaining greater margin differentiation for our business.

It is my pleasure to announce that the Group’s revenue for current financial year was RM140.98 million, representing a 14.9% increase from the preceding financial year. Net profit for FY 2011 was RM13.28 million representing an increase of 59.3% over the preceding financial year. We expect to see continued improvement in revenue and profit in FY 2012.

Bonus Issue and Dividend

The Board proposed a 1 for 10 bonus issue to the shareholders at the EGM of the Company held on the 10 November 2010. The bonus issue was subsequently approved by the shareholders and paid up capital of the Company increased by 26,928,300 new ordinary shares of RM 0.10 each on the 19 November 2010.

The Board’s view is this is the most appropriate avenue available to reward the existing shareholders of the Company while at the same time enhancing the Company’s capital base to be more reflective of its current scale of operations and assets employed.

The Board has recommended a final dividend payment of 1.0 sen per ordinary share, tax exempt, in respect of the financial year ended 30 June 2011. Two interim dividends of 1.0 sen per ordinary share each, tax exempt, were paid on 10 March 2011 and 19 September 2011 respectively. The interim dividends together with proposed final dividend collectively amount to a dividend payout for the financial year of 3.0 sen per ordinary share, tax exempt on the enlarged share capital.

This recommendation translates to a dividend payout ratio on profits of approximately 67% and reflects the board’s commitment towards maintaining a stable dividend payout for its shareholders.

Focus Areas for Sustainable Growth

As the global economy grapples with uncertainty in established first world markets, our business focus has been in the emerging markets of Asia Pacific region for our core businesses. This strategy we feel will provide us with a stable platform for sustained growth in terms of regional focus for the foreseeable future.

The Group has been growing its capability to define, design and implement large and complex projects in a manner consistent with global competition and today is well positioned in terms of brand, size, management bandwidth, track record and domain expertise to compete globally.

Coupling this with our Customer Services Management diversification in Global Service Education, E-Commerce and CRM solutions, will provide, we feel, a sustainable foundation for growth in both revenue and earnings moving forward.

2012 Outlook

The Group having now consolidated and embarked on marketing its comprehensive suite of Customer Services Management as standalone solution sets, is better positioned to respond to opportunities for these services in Malaysia and the region.

The second focus area we have identified is to continue to up-sell our suite of value added services to our multi-national client base in FY 2012 , not only making us more relevant to their evolving needs but also contributing towards achieving the Groups goals of both enhanced client retention and margin differentiation.

Appreciation

I wish to thank David Burke, for his invaluable advice and guidance during his tenure as a Non-Executive Director of Scicom.

I wish to thank the Government of Malaysia, the regulators, our shareholders and other stakeholders, our loyal clients, suppliers, and more importantly, our dedicated staff spanning the many jurisdictions which we operate in, for their support in making our Group’s business a success.

Finally, I would like to express my gratitude to my fellow Board members for their support, dedication and prudent governance in shaping the Group’s direction to ensure our continuous growth and success.

Thank You.