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The Board of Directors of SerSol is pleased to announce that SerSol had on 28 July 2005 entered into a JV Agreement with Samchem Sdn Bhd (Samchem) and TN Chemie Sdn Bhd (TN Chemie) to form a JV company, PT. Multi Square (PTMS) pursuant to the power of attorney given by SerSol, Samchem and TN Chemie to the solicitors, Minang Warman Sofyan & Associates Law Offices to execute the Deed of Establishment of Limited Liability Company, PTMS (Deed) in the Republic of Indonesia on 11 May 2005.

The establishment of PTMS is subject to the approval of Ministry of Law and Human Rights of the Republic of Indonesia.

PTMS is established for an unlimited period commencing from the date of Ministry of Law and Human Rights Approval of the Deed, without prejudice to the Law No. 1 of 1967 as amended by Law No. 11 of 1970 on Foreign Capital Investment, only prevail to PTMS for the period of thirty (30) years, unless its investment approval has been renewed by the authorised as requested by the PTMSs Board of Directors.

Based on the Deed:

i) The authorised share capital of PTMS shall be Rp3,792,000,000 or equivalent to USD400,000 divided into 400,000 shares each having nominal value of Rp9,480 or equivalent to USD1 each (PTMS Shares); and

ii) SerSol, Samchem and TN Chemie are required to pay in full the nominal value of each issued share, i.e. Rp3,792,000,000 or equivalent to USD400,000 to PTMS.

The breakdown of the PTMS Shares to be subscribed by each of the above shareholder is set out in Table 1.

On 28 July 2005, SerSol has remitted RM199,545 (equivalent to approximately USD53,000 based on exchange rate of USD 1: RM3.765 as at 28 July 2005) to PTMS as payment for part subscription of its portion of PTMS Shares whilst Samchem and TN Chemie are expected to remit their respective remittances for subscription of their portion of PTMS Shares at a later stage. Resulting from SerSols subscription of PTMS Shares, the authorised share capital of PTMS is Rp502,440,000 or equivalent to USD53,000 divided into 53,000 PTMS Shares and the issued and paid-up share capital of PTMS will be Rp502,440,000 equivalent to USD53,000 comprising 53,000 PTMS Shares.

SerSol funded its subscription of PTMS Shares via its internally generated fund.

PTMS will be principally involved in the manufacturing of paints and plastic polymer coating.

The authorised share capital of Samchem is RM10,000,000 comprising 10,000,000 ordinary shares of RM1.00 each whilst its issued and paid-up share capital is RM10,000,000 comprising 10,000,000 ordinary shares of RM1.00 each (Samchem Shares).

The principal activity of Samchem is in the trading of industrial chemical.

As at 28 July 2005, the shareholders and directors of Samchem are set out in Table 2.

As at 28 July 2005, the shareholders and directors of TN Chemie are set out in Table 3.

PTMS is set up as part of SerSols regional expansion plan to carry on the business of manufacturing and marketing of specialised industrial paint and coatings for plastic/polymer, wood and automotive industries in the Republic of Indonesia. By producing locally in the Republic of Indonesia via PTMS, SerSol will be able to access and capture the industrial paints and coatings market in the Republic of Indonesia easier particularly, the Multinationals Corporations (MNCs) which are involve in the electrical and electronic; and automotive products. The establishment of PTMS will also enable SerSol to price its products more competitively.

The establishment of PTMS does not have any effect on the issued and paid-up share capital, net tangible assets and substantial shareholders shareholdings of SerSol.

Save for the approval required from the Ministry of Law and Human Rights of the Republic of Indonesia for the establishment of PTMS and Bank Negara Malaysia (BNM) for the transfer of funds of USD240,000 to PTMS for the subscription of 240,000 PTMS Shares, the establishment of PTMS is not subject to the approvals of SerSols shareholders and any other relevant authorities.

BNM had, vide its letter dated 22 December 2004, 10 March 2005 and 20 July 2005 approved the transfer of funds by SerSol to PTMS in the Republic of Indonesia for the subscription of its 60% equity interest in PTMS subject to the following conditions:

i) SerSol is required to repatriate all its dividends, profits or benefits and proceeds from the sale of its investment in PTMS immediately after payment of dividends, profits or benefits or disposal of investment in PTMS; and to notify the Foreign Exchange Administration Department (FEAD);
ii) SerSol is required to furnish its quarterly financial statements to FEAD within one (1) month after the quarter ended;
iii) SerSol to furnish the FEAD with a copy of the financial statements of SerSol and PTMS on a yearly basis.

As far as the Directors of SerSol are aware, none of the Directors, substantial shareholders and/or person(s) connected with the Directors and/or substantial shareholders of SerSol, has any interest, direct or indirect, in the establishment of PTMS.

The Board of Directors of SerSol, after having considered all aspects of the formation of JV Company, is of the opinion that the JV is in the best interest of the Company.

No adviser is required for the formation of JV Company and Southern Investment Bank Berhad (SIBB) is the Sponsor for SerSol.

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