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Content

Corporate Information ………………………………………………….... 2

Chairman’s Statement …………………………………………………..... 3

Profile of the Board of Directors ………………………………………... 5

Statement of Corporate Governance ………………………………….... 8

Statement of Internal Control ………………………………………….. 13

Audit Committee Report ………………………………………………... 14

Statement of Directors’ Responsibilities ……………………………… 17

Other Compliance Information ………………………………………… 18

Financial Statements …………………………………………………….. 19

Analysis of Shareholdings ………………………………………………. 67

List of Properties ……………………………………………………….... 70

Notice of Annual General Meeting …………………………………….. 71

Proposed Amendments to the Articles of the Company ……………. . 74

Proxy Form ……………………………………………………………...... 77

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Board of DirectorsShahabuddin Bin Abdullah @ Lee Seng Pun Chairman

Eow Kwan Hoong Executive Director

Lee Seng Hoong Executive Director

Chow Pak Lim Executive Director

Leom Chit Dein @ Lim Jit Teng Executive Director

Syed Abdullah Bin Syed Abd Kadir Non-Executive Director

Dato’ Mohamad Suparadi Bin Md Noor Non-Executive Director

Chan Fin Fui @ Chan Kim Fee Non-Executive Director

Chan Feoi Chun Non-Executive Director

Corporate Information

Stock Exchange Listing

The Main Board of the Bursa Malaysia Securities Berhad

Registrar

Tricor Investor Services Sdn Bhd (formerly known as Epsilon Registration Services Sdn Bhd) Level 17, The Gardens North Tower, Mid Valley City, Lingkaran Syed Putra, 59200 Kuala Lumpur. Tel No :- 603 - 2264 3883 Fax No :- 603 - 2282 1886

Registered Office

Level 18, The Gardens North Tower, Mid Valley City, Lingkaran Syed Putra, 59200 Kuala Lumpur, Malaysia Tel No :- 603 - 2264 8916 Fax No :- 603 - 2282 2733

Corporate Business Office

Lot 30745, Jalan Pandan Indah, Pandah Indah, 55100 Kuala Lumpur. Tel No :- 603 - 4292 1288 Fax No :- 603 - 4291 0085

Company Secretaries

Ng Yen Hoong (LS 008016) Wong Peir Chyun (MAICSA 7018710)

Audit Committee

Syed Abdullah Bin Syed Abd Kadir - Chairman Dato’ Mohamad Suparadi Bin Md Noor - Member Chan Fin Fui @ Chan Kim Fee - Member Chan Feoi Chun -Member

Nomination Committee

Dato’ Mohamad Suparadi Bin Md Noor - Chairman Syed Abdullah Bin Syed Abd Kadir - Member Chan Fin Fui @ Chan Kim Fee - Member

Remuneration Committee

Syed Abdullah Bin Syed Abd Kadir - Chairman Chan Fin Fui @ Chan Kim Fee - Member Eow Kwan Hoong - Member

Auditors

Baker Tilly Monteiro Heng (AF 0117) Chartered Accountants 22-1, Monteiro & Heng Chambers, Jalan Tun Sambathan 3, 50470 Kuala Lumpur, Malaysia. Tel No :- 603 - 2274 8988 Fax No :- 603 - 2260 1708

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On behalf of the Board of Directors of Versatile Creative Berhad (“VCB”), I hereby present the Annual Report and Audited Financial Statements of the Group and of the Company for the financial year ended 31 December 2009.

Business Environment

In the year 2009 the Malaysian economy experienced the full impact of the global downturn arising from the US subprime and credit crisis that started in 2008. The Malaysian GDP posted a decline of 1.7% while the manufacturing sector declined by 9.3% in 2009.

An uptrend was noted towards the end of the year 2009 leading into the following year, both domestically and on the global front. For the year 2010, the manufacturing sector is expected to expand by 6.5% and the Malaysian GDP to grow by 4.5% to 5.5%.

The performance of the Group was affected during the first half of the financial year and an improvement was felt towards the last quarter.

Financial Performance

In line with the weaker business environment, the VCB Group recorded lower revenue of RM52.6 million for the year ended 31 December 2009 compared to RM65.8 million in the previous year. Nevertheless, the Group recorded a profit before tax of RM1.6 million as compared to a loss before tax of RM13.8 million in the previous year.

The significant reduction of revenue by 25% was mainly due to sluggish demand from our customers as a result of the overall decline of the economy, especially in the first half of 2009.

At the profit / (loss) before tax level, the improvement in performance was mainly due to a write back in the value of quoted investments which amounted to RM8.6 million compared to a write down of RM13.1 million in the previous year. Excluding the preceding item, the operating loss before tax for the Group amounted to RM7.0 million compared to RM0.7 million previously. The higher operating loss can be attributable mainly to the extremely difficult and competitive trading environment during the year.

Net assets as at 31 December 2009 stood at RM54.4 million (31 December 2008 : RM52.9 million).

Operations Review

The Group continued to strive to identify ways to reduce costs and selectively invest in new plant and machinery in order to increase productivity and capacity. Despite the difficult and competitive trading environment the Group invested in excess of RM1.5 million in additional fixed assets for the year ended 31 December 2009. The Group continues to explore new business opportunities beyond our traditional markets.

The year 2009 has ended on an uptrend and we believe that the momentum will continue into 2010.

Appreciation

On behalf of the Board and the management team, I wish to express our gratitude to our valued stakeholders, including but not limited to our valued customers, business partners, shareholders, financiers and staff for their unequivocal support and confidence in us in a very difficult year.

Shahabuddin Bin Abdullah @ Lee Seng PunChairman

Chairman ’s Statement

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Financial Highlights

2007

2009 2008 2007 2006 2005 RM’000 RM’000 RM’000 RM’000 RM’000

Revenue 52,574 65,825 72,388 69,814 68,151

Profit/(Loss)before tax 1,556 (13,750) (25,399) 1,678 216

Shareholders' funds/Net assets 54,547 52,927 65,762 90,818 89,207

Revenue(RM'000)

Profit/(Loss) before tax (RM'000)

Shareholders' funds/Net assets(RM'000)

Chairman ’s Statement

20,000

RM’000

52,574

72,38869,81468,151 65,825

40,00060,00080,000

5000RM’000

5000

10,000

15,000

20,000

25,000

1,678 1,556

25,399

13,750

216

20,000

RM,000

54,54765,762

90,818

89,207

52,927

40,00060,00080,00090,000100,000

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Profi le of The Board of Directors

Shahabuddin Bin Abdullah (Chairman and Non-Independent Executive Director,

Malaysian), aged 67, was appointed to the Board of VCB and elected as Chairman on

28 October 2003. He graduated from the University of Malaya with a Bachelor of Arts

(Hons) Degree in 1966 and started his career as Production Controller with Metal Box

Malaysia Bhd (“Metal Box”), a company which was principally involved in packaging. He

was promoted to Branch Manager in 1970. He was appointed as Director of Metal Box, Security Printing

Bhd and Plasticon Bhd in 1984. He has held various positions in the group including that of Operations

Director, Manufacturing Director, Technical and Strategic Planning Director during his career with Metal

Box. Encik Shahabuddin has more than thirty (30) years of experience in the printing and packaging

industry and with his extensive knowledge and competency, he has contributed to the sound management

and progress of the company. He is the brother of Mr Lee Seng Hoong and is deemed to be the Major

shareholder of VCB by virtue of his wife's (Noor Azmi bte Ahmad) 30% shareholding in Wisefield Resources

Sdn Bhd, which owns 100% of Versatile Credit & Leasing Sdn Bhd. He has no conflict of interest with VCB

and has no convictions for any offences within the past 10 years other than traffic offences.

Eow Kwan Hoong (Non-Independent Executive Director, Malaysian), aged 57, was

appointed to the Board on 28 October 2003. He was appointed as an Executive Director

of Versatile Paper Boxes Sdn Bhd and its subsidiaries in 1997. He is a member of the

Malaysian Institute of Accountants as well as a fellow member of the Chartered Institute

of Management Accountants, United Kingdom. He joined the Lion Group as an Accounts

Manager in 1982. After serving the Group for 17 years and holding the post of Group Chief Accountant, he

resigned in December 1997. Currently, he holds Directorships in IRIS Corporation Berhad, Delloyd Ventures

Berhad and Silverstone Corporation Berhad. In addition, he also sits on the Boards of several Malaysian

private limited companies. He is also the Immediate Past President of Chartered Institute of Management

Accountants Malaysia Division and Council member of Malaysian Institute of Accountants. He has no family

relationship with any other Director and/or substantial shareholder of VCB. He has no conflict of interest

with VCB and has no convictions for any offences within the past 10 years other than traffic offences.

Lee Seng Hoong (Non-Independent Executive Director, Malaysian), aged 61, was appointed

to the Board on 28 October 2003. He was appointed as an Executive Director of Versatile

Paper Boxes Sdn Bhd and its subsidiaries in 1997. He holds a Bachelor of Economics

(Hons) Degree from the University of Malaya. He started his career as an Officer with

Standard Chartered Bank, Malaysia in 1973 and has served the Bank in various capacities

including lending, trade finance, branch and retail banking. In 1989, he was seconded to Hong Kong as a

Senior Business Analyst responsible for the implementation of the Bank Group's core deposits processing

system. He returned to Malaysia in 1992 and headed the project which successfully implemented the

system for the Bank in Malaysia. In 1994, he was appointed as Head of the Cards Division, responsible for

the Bank's credit cards business in Malaysia. He left the Bank in 1996 and represented IRIS Technologies

(M) Sdn Bhd as an independent consultant in 1997 on the Multi-Purpose Card Advisory Panel formed

by Bank Negara Malaysia to advise the Government on the drafting of the Concept Request for Proposal

in relation to the national Multi-Purpose Card project. He has retired from his position as the

Executive Director, Operations for IRIS Corporation Berhad. He is also a Director of Versatile Smart

Components Sdn Bhd. He is the brother of Encik Shahabuddin Bin Abdullah. He has no conflict of interest

with VCB and has no convictions for any offences within the past 10 years other than traffic offences.

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Chow Pak Lim (Non-Independent Executive Director, Malaysian), aged 55, was appointed

to the Board on 28 October 2003. He was appointed as Managing Director of Versatile

Paper Boxes Sdn Bhd (“Versatile”) in 1982. He started his career with Versatile in 1973

as a sales personnel and rose through rank and file to his current position. He has

extensive experience in the manufacturing and trading of paper box packaging and

offset printing, having worked in the printing and packaging industry for more than thirty (30) years.

He has no family relationship with any other Director and/or substantial shareholder of VCB. He has

no conflict of interest with VCB and has no convictions for any offences within the past 10 years other

than traffic offences.

Leom Chit Dein @ Lim Jit Teng (Non-Independent Executive Director, Malaysian),

aged 56, was appointed to the Board on 28 October 2003. He was appointed as

a Director of Versatile Paper Boxes Sdn Bhd in 2002. He worked in the colour

separation industry for 15 years before setting up Imagescan Creative Sdn Bhd

("Imagescan") in 1992 with a small capital and a team of eight (8) supporting staff.

He is actively involved in the management and operation of the business. Imagescan grew over the

years and today has a diverse clientele which include international advertising agencies and overseas

publishing houses. He continues to play an important role in the formulation of corporate plans and

setting the directions of Imagescan. He has no family relationship with any other Director and/or

substantial shareholder of VCB. He has no conflict of interest with VCB and has no convictions for

any offences within the past 10 years other than traffic offences.

Syed Abdullah Bin Syed Abd Kadir (Independent Non-Executive Director, Malaysian), aged 56, was

appointed to the Board on 28 October 2003 and is also the Senior Independent Non-Executive Director.

He was appointed as a Director of Versatile Paper Boxes Sdn Bhd in 1997. He graduated with a double

degree in Bachelor of Science (Engineering Production) and Bachelor of Commerce (Economics) from

the University of Birmingham, United Kingdom in 1977. He has extensive experience

in the banking and financial services sector, having worked in a commercial bank

(Hongkong and Shanghai Banking Corporation Ltd), a merchant bank (Bumiputera

Merchant Bankers Berhad) and a public listed company (Amanah Capital Partners) with

subsidiaries involved in, among others, discount house, money broking, unit trusts,

finance companies and fund management operations. Presently, he is also a Director of

IRIS Corporation Berhad, YTL Corporation Berhad, YTL Power International Berhad, YTL E-Solutions

Berhad, Extiva Communications Sdn Bhd and Stenta Films (M) Sdn. Bhd. He has no family relationship

with any other Director and/or substantial shareholder of VCB. He has no conflict of interest with VCB

and has no convictions for any offences within the past 10 years other than traffic offences.

Profi le of The Board of Directors

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Dato' Mohamad Suparadi Bin Md Noor (Independent Non-Executive Director,

Malaysian), aged 51, was appointed to the Board on 28 October 2003. He started his

career as Assistant Accountant with Bank Bumiputra (M) Berhad in 1983. In 1988, he

became a Dealer Representative in BBMB Securities Sdn Bhd. Subsequently, he became a

remisier in SJ Securities Sdn Bhd in 1990. Since 2002, he was appointed as the Chairman

of National Sports Complex, Bukit Jalil. Currently, he is the Chairman of Chart Plus (M) Sdn Bhd and

CPS Master Sdn Bhd and a Director of IRIS Corporation Berhad. He has no family relationship with any

other Director and/or substantial shareholder of VCB. He has no conflict of interest with VCB and has no

convictions for any offences within the past 10 years other than traffic offences.

Chan Fin Fui @ Chan Kim Fee (Independent Non-Executive Director, Malaysian), aged

71, was appointed to the Board on 28 October 2003. He started his career in 1962 as an

officer with Citibank Malaysia Berhad. He has extensive experience in the banking and

financial services sector, having served in credit and risk evaluation in 1969, international

trade finance in 1971, headed the Local Corporate Banking Group in 1972 and served as

Senior Credit Officer for Citibank Malaysia in 1980 and was promoted to the position of Vice President of

Commercial Foreign Exchange & Derivative Products which he held until 1994. Subsequently, he acted as a

consultant for the treasury operations for OCBC Bank (M) Berhad for 1996 and 1997. Since then, he took

on the role of a personal adviser to Bright Rims (M) Sdn Bhd and is responsible for the assessment of major

business decisions and various financial matters. He has no family relationship with any other Director and/

or substantial shareholder of VCB. He has no conflict of interest with VCB and has no convictions for any

offences within the past 10 years other than traffic offences.

Chan Feoi Chun (Independent Non-executive Director, Malaysian), age 57, was appointed

to the Board on 23 January 2009. He is a Fellow of the Chartered Institute of Management

Accountants, UK (CIMA), a Member of Malaysian Institute of Accountants and a

Graduate of the Institute of Chartered Secretaries and Administrators UK (ICSA). He also

holds a Master of Business Studies (Banking & Finance) from University College Dublin,

Ireland. He is an independent non-executive director of Perisai Petroleum Tecknologi

Berhad and Iris Corporation Berhad. He is currently employed as the Chief Executive Officer of Swiss

Garden International Vacation Club Bhd. He held various senior positions in PJD Holdings Berhad Group

of Companies. Prior to joining the PJD Group in 1994, he held senior management positions in the financial

services Group of MBF Holdings. He is currently the Deputy President of CIMA, Malaysia Division. He

has no family relationship with any other Director and/or substantial shareholder of VCB. He has no

conflict of interest with VCB and has no convictions for any offences within the past 10 years other than

traffic offences.

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The Board of Directors fully appreciates the importance of adopting high standards of corporate governance within the Group.

In this regard, the Board is fully committed to the maintenance of high standards of corporate governance by supporting and implementing the best practices of the Malaysian Code on Corporate Governance (“Code”).

The Board is pleased to provide the following statement, which outlines the main corporate governance

practices that were in place throughout the financial year.

Principle Statements

The following statements set out how the Company has applied the principles in Part 1 of the Code.

A. Directors

The Board

The Group recognises the important role played by the Board of Directors in sett ing out the direction and operations of the Group and ultimately the enhancement of long-term shareholder value. To fulfill this role, the Board is responsible for the overall corporate governance of the Group, including its strategic direction, establishing goals for management and monitoring the achievement of these goals, formulation of policies and overseeing and monitoring the investments and business of the Group.

Meetings

The Board schedules to meet at least four (4) times a year at quarterly intervals with additional meetings convened when necessary.

The Board meetings will deliberate upon and consider a variety of matters including the Group's financial results, major investments and strategic decisions and the business plan and directions of the Group.

The Board receives documents on matters requiring its consideration prior to and in advance of the meetings. All proceedings from the Board meetings are minuted.

Details of each Director’s meeting attendances during financial year are as follows:

Number of Board Meetings

Directors Attended

Shahabuddin Bin Abdullah @ Lee Seng Pun Chairman 4/4

Eow Kwan Hoong Executive Director 4/4

Lee Seng Hoong Executive Director 3/4

Chow Pak Lim Executive Director 4/4

Leom Chit Dein @ Lim Jit Teng Executive Director 4/4

Syed Abdullah Bin Syed Abd Kadir Independent Non-Executive Director 4/4

Dato' Mohamad Suparadi Bin Md Noor Independent Non-Executive Director 4/4

Chan Fin Fui @ Chan Kim Fee Independent Non-Executive Director 4/4

Chan Feoi Chun Independent Non-Executive Director 4/4

Statement of Corporate Governance

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Board Committees

The Board of Directors delegates certain responsibilities to the Nomination Committee, Remuneration

Committee and Audit Committee.

All committees have written terms of reference and operating procedures, and the Board receives reports

of their proceedings and deliberations. The Chairmen of the various committees will report to the Board

the outcome of the Committee meetings and such reports are incorporated in the minutes of the full Board

meeting. These committees were formed in order to enhance business and operational efficiency as well

as efficacy. The Board retains full responsibility for the direction and control of the Company and of

the Group.

Board Balance

As at the date of this statement, the Board consists of nine (9) members comprising four (4) Independent

Non-Executive Directors and five (5) Executive Directors.

The concept of independence adopted by the Board is in tandem with the definition of an Independent

Director based on the Listing Requirements of Bursa Malaysia. The key elements for fulfilling the criteria

are the appointment of Directors who are not members of management (Non-Executive Directors) and who

are free of any relationship which could interfere with the exercise of independent judgment or the ability

to act in the best interests of the Company.

The Board is satisfied that the current Board composition fairly reflects the interests of minority shareholders

in the Company.

Supply of Information

The Board recognises that the decision making process is highly contingent on the strength of information

furnished. As such, Directors have unrestricted access to any information pertaining to the Company.

The Chairman plays a key role in ensuring that all Directors have full and timely access to information

with Board papers circulated in advance of the Board meetings. This ensures that Directors have sufficient

time to appreciate issues deliberated at the Board meetings and expedites the decision making process. A

comprehensive balance of financial and non-financial information is encapsulated in the papers covering

strategic, operational, regulatory, marketing and human resources issues.

Every Director has also unhindered access to the advice and services of the Company Secretaries.

The Board believes that the current Company Secretaries are capable of carrying out their duties to ensure

the effective functioning of the Board.

The Audit Committee reviews issues of accounting policies and presentations for external financial reporting

and ensures that an objective professional relationship is maintained with the external auditors.

Detailed periodic briefings on the industry outlook and Company performance are also conducted for the

Directors to ensure that the Board is well informed on the latest market and industry trends.

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Appointments to the BoardAppointment process The proposed appointment of new member(s) of the Board is recommended by the Nomination Committee, which is made up of three Non-Executive Directors.

The terms of reference of the Nomination Committee are as follow:

• To assess and recommend to the Board, the minimum requirements for the Board such as required mix of skills, experience, qualification and other core competencies required of a Director.

• To assess the suitability of candidates for appointment as members of the Board.

• To recommend the proposed appointment of new member(s) to the Board.

• To recommend to the Board, the members of any committees proposed to be established by the Board.

• To assess the effectiveness of the Board as a whole, the committees of the Board and the contribution of each individual Director through annual reviews.

• To consider and recommend any other measures for enhancing the effectiveness of the Board.

The Board appoints its members through a formal process, which is consistent with the Articles of Association of the Company. The Company Secretaries will ensure that all appointments are properly made, and that legal and regulatory obligations are met.

The Board believes that the current composition of the Board brings the required mix of skills and core competencies required for the Board to discharge its duties effectively.

Director's Training

All the Directors of the Company have completed the Mandatory Accreditation Programme prescribed by Bursa Malaysia.

During the course of the year, they received briefings and updates on the Group’s businesses, operations, risk management, internal controls, finance and any new or changes to the companies and other relevant legislation, rules and regulations.

The Directors are encouraged to attend briefings, conferences, forums, trade fairs (locally and internationally), seminars and training to keep abreast with the latest developments in the industry and to enhance their skills and knowledge.

Amongst the training and seminar courses attended by some of the directors were as follows:

• Finance for Non-finance directors – Main Market Listing Requirements which take effect on 03.08.2009

• Corporate Governance : Lessons from Hong Kong

• CIMA World Conference

• Leading and Managing in Financially Difficult Times

Shahabuddin Bin Abdullah, Lee Seng Hoong, Chow Pak Lim, Leom Chit Dein @ Lim Jit Teng, Syed Abdullah Bin Syed Abd Kadir, Dato’ Mohamed Suparadi Bin Md Noor, and Chan Fin Fui @ Chan Kim Fee did not attend any structured training and seminar/courses during the year due to their busy business commitments during the year. The Directors will undertake to attend relevant trainings and seminars courses in 2010 to continue enhancing their skills and knowledge for the purpose of discharging their duties and responsibilities.

Re-election

The Articles of Association provide that at least one-third of the Board is subject to retirement by rotation at each Annual General Meeting. The Directors to retire in each year are the Directors who have been longest in office since their appointment or re-appointment. A retiring Director is eligible for re-appointment. This provides an opportunity for shareholders to renew their mandates. The election of each Director is voted on separately.


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B. Directors' remuneration

The Directors' remuneration is structured to attract, retain and motivate Directors of the quality required

to manage the business of the Company and to align the interests of the Directors with those of the

shareholders.

The Board appointed a Remuneration Committee with the following terms of reference:

• To review and recommend to the Board the terms of engagement and the remuneration packages of

the Executive Directors

• To review the performance of the Executive Directors

• To review and recommend to the Board the revisions and improvements of remuneration packages,

fringe benefits, perquisites and bonuses as considered appropriate for the Group's Executive Directors.

The remuneration committee meeting was held once subsequent to the financial year and was attended by

all the members of the Committee.

Details of the Directors’ remuneration

Details of remuneration paid to Directors of the Group for the financial year ended 31 December 2009,

are as follows:-

Basic salaryRM

BonusesRM

FeesRM

OthersRM

TotalRM

Non-Executive - - 81,500 - 81,500

Executive 527,504 - 63,500 - 591,004

Total 527,504 - 145,000 - 672,504

Remuneration(per annum)

Non-Executive Executive

RM 50,000 - below 4 -

RM 50,001 - RM 100,000 - 3

RM 100,000 - RM 150,000 - -

RM 150,001 - RM 200,000 - -

RM 200,001 - RM 250,000 - 2

Executive Directors may receive bonuses based on the achievement of specific goals related to the

performance of the operating results. Non-Executive Directors do not receive any performance related

remuneration.

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C. Shareholders

The Board acknowledges the need for shareholders to be informed of all material business matters

affecting the Group. In addition to the various announcements made, the timely release of financial

results on a quarterly basis provides shareholders and the investing public with an overview of the

Group's performance and operations.

In addition, the Board encourages full participation by shareholders at every Annual General Meeting

and Extraordinary General Meeting of the Company and opportunity will be given to the shareholders

to ask questions and seek clarification on the Group's business activities and financial performance.

D. Accountability and Audit

Financial Reporting

The Board aims to provide and present a balanced and meaningful assessment of the Group's financial

performance and prospects at the end of the financial year, primarily through the annual financial

statements and quarterly announcement of results to the shareholders as well as the Chairman's

statement and review of operations in the annual report. The Board is assisted by the Audit Committee

to oversee the Group's financial reporting processes and the quality of its financial reporting.

In preparing the financial statements, the Directors have selected and applied consistently suitable

accounting policies and made reasonable and prudent judgments and estimates. The Directors also have

a general responsibility for taking such steps as are reasonably open to them to safeguard the assets of

the Group and to prevent and detect fraud and irregularities.

Relationship with the Auditors

Key features underlying the relationship of the Audit Committee with the external auditors are included

in the Audit Committee's terms of reference.

A summary of the activities of the Audit Committee during the year are set out in the Audit Committee

Report.

Compliance Statement

Save and except where stated otherwise, the Company has complied throughout the financial year with

all the best practices of corporate governance.

E. Corporate Social Responsibilities

The Company recognizes its social obligation to society and strives for a balanced approach between

fulfilling its key business objectives and contributing to society and the environment.

In playing its part to ensure a sustainable environment for future generations, the Company had

previously invested in a waste water treatment plant to treat potentially hazardous by products arising

from its manufacturing operations. The Company also continuously strives to identify ways to make its manufacturing processes more environmentally friendly. These demonstrate the Company’s commitment

and seriousness in taking on its corporate social responsibility through its daily business operations.

The Company’s employees also actively engage in CSR-related activities, such as working with the local

fire department to train a team of voluntary fire fighters that can be mobilized in times of need.

The Company also actively encourages its staff to perform voluntary work and had contributed resources in supporting such activities.


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Introduction

Paragraph 15.27(b) of the Bursa Malaysia Listing Requirements require the Board of Directors of public listed companies to include in its annual reports a statement about the state of internal controls of the listed issuer as a group. The Board of Directors (“the Board”) of Versatile Creative Berhad (“Versatile” or “the Group”) is committed to maintaining a sound system of internal control in the Group and is pleased to provide the following statement, which outlines the nature and scope of internal control of the Group during the financial year.

Board Responsibility

The Board of Directors of Versatile acknowledges the importance of the systems of internal control and affirms that it is their responsibility to maintain a sound system of internal control including review of its adequacy and integrity in safeguarding the Group's value. In this respect, the Board of Directors assumes its responsibility for identifying principal risks, ensuring the implementation of appropriate systems to manage these risks and reviewing the adequacy and integrity of the Group's internal control system. However, it should be noted that such system of internal control is designed to manage rather than eliminate the risk of failure to achieve business objectives. Therefore these systems can only provide reasonable and not absolute assurance against material misstatements or losses.

Internal Controls

The process of identifying, evaluating and managing significant risks faced by the Group was dealt with as part of the operations management, which was carried out by the subsidiaries' Managing Directors and senior management continuously throughout the year under review and is subject to on-going improvement. Meetings are held regularly at the Group's management level to review changes in the business environment and its impact on the operations.

Corporate issues and matters discussed at the Group's management levels are brought to the attention of the Board of Directors for further deliberation to ensure that risks are appropriately considered and addressed. Business strategies are reviewed and refined at the same time to ensure that strategies are in-line with the corporate expectation.

In order to assist the Board of Directors in reviewing the internal control system of the Group, the Audit Committee is tasked to review the compliance, control and audit issues with the assistance of both internal and external auditors. Issues and findings from the reviews are reported by the Audit Committee to the Board of Directors and steps are taken to improve the internal control system. Furthermore, the Group's key controls include the management review of performance of the Group to the Board of Directors. In addition, annual budget is prepared, approved and used as a yardstick of measurement of the Group's performance.

Weaknesses in Internal Controls that Result in Material Losses

There were no material losses incurred during the current financial year as a result of weaknesses in internal control. Management continues to take measures to strengthen the control environment.

Based on the above, the Board of Directors is of the opinion that the internal controls in place are adequate.

This Statement is made pursuant to a resolution of the Board of Directors dated 28 April 2010.

Internal Audit Function

Pleiades Associates Sdn Bhd (“Pleiades”), an independent internal audit service provider, supports the Audit Committee, and by extension, the Board, by providing independent assurance on the effectiveness of the Group’s system of internal controls.

Pleiades submits audit reports and plan status for review and approval to the Audit Committee which included the reports with the recommended corrective measures on risks identified, if any, for implementation by the management of the business units and operation.

The internal audit work plan, which reflects the risk profile of the Group’s major business sectors is periodically reviewed and approved by the Audit Committee.

Statement of Internal Control

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Membership

The present members of the Audit Committee (the “Committee”) comprise:

Syed Abdullah bin Syed Abd Kadir

Dato' Mohamad Suparadi bin Md Noor

Chan Fin Fui @ Chan Kim Fee

Chan Feoi Chun

Terms of Reference

The primary function of the Audit Committee is to assist the Board of Directors in fulfilling the following oversight objectives on the Group's activities:

a. Risk Management

• To review the adequacy and effectiveness of risk management, internal control and governance systems instituted in the Group.

b. Internal Audit Function

• To review the adequacy of the scope of the audits conducted by the Internal Auditors.

c. External Audit

• To evaluate the external auditors' audit plans, scope of their audits and their audit reports. • The performance of the external auditors and make recommendations to the Board of Directors on their appointment and remuneration.

d. Audit Reports

• Internal and external audit reports to ensure that remedial actions are taken by management on significant lapses in controls and procedures that are identified. • Significant internal and external audit findings and management's responses.

e. Financial Reporting

• To review the quarterly and annual financial statements of the Group for recommendation to the Board of Directors for approval, focusing particularly on: - changes in or implementation of new accounting policies and practices; - significant and unusual events; and - compliance with the applicable approved accounting standards and other legal and regulatory requirements.

f. Related Party Transactions

• Any related party transactions that may arise within the Group.

g. Other Matters

• Such other matters as the Committee considers appropriate or as authorised by the Board of Directors.

Audit Committee Report

15

Meeting

The Committee convened four (4) meetings, and the attendance of each committee member is as

follows:-

Directors

Syed Abdullah Bin Syed Abd Kadir Chairman 4/4

Dato' Mohamad Suparadi Bin Md Noor Member 4/4

Chan Fin Fui @ Chan Kim Fee Member 4/4

Chan Feoi Chun Member 4/4

The meetings were appropriately structured through the use of agendas, which were distributed to members with sufficient notification.

Summary of activities during the financial year

During the year, the Committee has carried out its duties in accordance with its terms of reference. The main activities undertaken by the Committee were as follows:

• Reviewed the external auditors' scope of work and audit plans for the year. Prior to the audit, representatives from the external auditors presented their audit strategy and plan.

• Reviewed with the external auditors the results of the audit, the audit report and the management letter, including management's response.

• Consideration and recommendation to the Board for approval of the audit fees payable to the external auditors.

• Reviewed independence, objectivity and effectiveness of services provided by the external auditors.

• Reviewed the internal audit reports, which highlighted the audit issues, recommendations and management's response. Discussed with management actions taken to improve the system of internal control based on improvement opportunities identified in the internal audit reports.

• Reviewed the application of corporate governance principles and the extent of the Group's compliance with the best practices set out under the Malaysian Code on Corporate Governance for the purpose of preparing the Corporate Governance Statement and Statement on Internal Control pursuant to the Listing Requirements.

• Reviewed the annual report and the audited financial statements of the Company prior to submission to the Board for their consideration and approval. The review was to ensure that the audited financial statements were drawn up in accordance with the provisions of the Companies Act 1965 and the applicable approved accounting standards for entities other than private entities issued by the Malaysian Accounting Standards Board. Any significant issues resulting from the audit of the financial statements by the external auditors were deliberated.

• Reviewed the quarterly unaudited financial results announcements before recommending them for the Board's approval.

• In respect of the quarterly and year end financial statements, reviewed the Company's compliance with the Listing Requirements of the Bursa Malaysia, Financial Reporting Standards and other relevant legal and regulatory requirements.

• Reviewed the related party transactions entered into by the Group.

Attended

16

Internal audit function The internal audit function is independent of the activities or operations of other operating units. The principal role of this function is to undertake independent, regular and systematic reviews of the risk management, internal control and governance systems so as to provide reasonable assurance that such systems continue to operate satisfactorily and effectively. It is the responsibility of the internal audit function to provide the Audit Committee with independent and objective reports on the state of internal controls and governance of the various operating units within the Group and the extent of compliance of the units with the Group's established policies and procedures as well as relevant statutory requirements.

Composition

The Board shall elect and appoint Committee members from amongst their number, comprising no fewer than three (3) Directors, the majority of which shall be Independent Non-Executive Directors of the Company. The Board shall at all times ensure that at least one (1) member of the Committee shall be a member of the Malaysian Institute of Accountants.

If a member of the Committee resigns, dies or for any reason ceases to be a member with the result that the number of members is reduced below three (3), the Board shall within three (3) months of the event appoint such number of new members as may be required to fill the vacancy.

The Chairman of the Committee shall be an Independent Non-Executive Director. No alternate Director may be appointed as a member of the Committee.

Quorum and Committee's procedures

Meetings shall be conducted at least four (4) times annually, or more frequently as circumstances dictate.

In order to form a quorum for the meeting, the majority of the members present must be Independent Non-Executive Directors. In the absence of the Chairman, the members present shall elect a Chairman for the meeting from amongst the members present.

The Company Secretaries shall be appointed Secretaries of the Committee.

The Committee may, as and when deemed necessary, invite other Board members and senior management members to attend the meetings.

The Chairman shall submit an annual report to the Board summarising the Committee's activities during the year and the related significant results and findings.

Authority

The Committee is authorised by the Board to seek any information it requires from the employees, who are required to cooperate with any request made by the Committee. The Committee shall have full and unrestricted access to any information pertaining to the Group.

The Committee shall have direct communication channels with the external auditors and with senior management of the Group and shall be able to convene meetings with the external auditors whenever it considers necessary.

Responsibilities and duties

In fulfilling its primary objectives, the Committee has undertaken their responsibilities and duties of reviewing with the external auditor, the audit scope and plan, including any changes to the planned scope of the audit plan and reviewing the adequacy of the internal audit scope and plan, functions and

that it has necessary authority to carry out its work.

Audit Comittee Report

17

The Directors are required by law to prepare financial statements for each financial year which give a

true and fair view of the state of affairs of the Group and of the Company at the end of the financial year

and of the results and cash flows of the Group and of the Company for the financial year then ended.

The Directors consider that, in preparing the financial statements for the financial year ended 31

December 2009, the Group has used appropriate accounting policies and applied them consistently

and made judgments and estimates that are reasonable and prudent. The Directors also consider that all

applicable approved accounting standards have been followed.

The Directors are responsible for ensuring that the Group and the Company keep accounting records

which disclose with reasonable accuracy at any time the financial position of the Group and of the

Company and which enable them to ensure that the financial statements comply with the provisions of

the Companies Act, 1965 and the applicable approved accounting standards in Malaysia.

The Directors are also responsible for taking reasonable steps to safeguard the assets of the Group and

of the Company to prevent and detect fraud and other irregularities.

This Statement is made pursuant to a resolution of the Board of Directors dated 28 April 2010.

Statement of Directors’ Responsibilities

Material Contracts

There were no material contracts of the Company and its subsidiaries involving Directors and/or major

shareholders entered into since the end of the previous financial year.

Share Buybacks

There were no share buybacks by the Company.

Options, Warrants or Convertible Securities

There were no options, warrants or convertible securities issued or exercised during the financial year.

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

The Company did not sponsor any ADR or GDR programme during the financial year.

Imposition of Sanctions/Penalties

There were no public sanctions and/or penalties imposed on the Company and its subsidiary companies,

Directors or management during the year.

Non-Audit Fees Paid to External Auditors or a firm or company affiliated to the auditors' firm

Non-audit fees paid to external auditors or a firm or company affiliated to the auditors' firm has been

disclosed under the notes to the financial statements.

Variation in Results

There were no profit estimates, forecasts or projections or unaudited results released which differ by

10% or more from the audited results.

Profit Guarantees

There were no profit guarantees received or given by the Company.

Revaluation of Landed Properties

The Group does not adopt any revaluation policy on the landed properties.

Contracts Relating to Loans

There were no contracts relating to loans made by the Company in respect of the abovementioned

contracts.

Other Compliance Information

18

FINANCIAL STATEMENTS

Contents Page No

Directors’ Report 20

Balance Sheet 24

Income Statements 25

Statements of Changes In Equity 26

Cash Flow Statements 27

Notes to the Financial Statements 29

Statement By Directors 63

Statutory Declaration 64

Indenpendent Auditors' Report 65

19

20

VERSATILE CREATIVE BERHAD(Incorporated in Malaysia)

AND ITS SUBSIDIARIES DIRECTORS' REPORT FOR THE YEAR ENDED 31ST DECEMBER 2009

The directors hereby submit their report together with the audited financial statements of Versatile Creative Berhad (“the Company”) and its subsidiary companies (“the Group”) for the financial year ended 31st December 2009.

PRINCIPAL ACTIVITIES

The principal activity of the Company is investment holding. The principal activities of the subsidiary companies are disclosed in Note 7 to the financial statements. There have been no significant changes in the nature of these principal activities during the financial year.

RESULTS

GROUP COMPANY RM RM

Net profit/(loss) for the financial year 1,620,007 (9,562,788)

DIVIDEND

No dividend was paid or declared by the Company since the end of the previous financial year.

The directors do not recommend the payment of any dividends in respect of the financial year ended 31st December 2009.

RESERVES AND PROVISIONS

All material transfers to and from reserves and provisions during the financial year have been disclosed in the financial statements.

BAD AND DOUBTFUL DEBTS

Before the income statements and balance sheets 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 had 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 render the amount written off for bad debts, or the amount of the allowance for doubtful debts, in the financial statements of the Group and of the Company inadequate to any substantial extent.

CURRENT ASSETS

Before the income statements and balance sheets of the Group and of the Company were made out, the directors took reasonable steps to ensure that any current assets, other than debts, which were unlikely to be realised in the ordinary course of business, their values as shown in the accounting records of the Group and of the Company had been written down to an amount that they might be expected to be realised.

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

21

VALUATION METHODSAt 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 LIABILITIESAt 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 liabilities in respect of the Group and of the Company that has arisen since the end of the financial year.

No contingent liabilities or other liabilities 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 as and when they fall due.

CHANGE OF CIRCUMSTANCESAt 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 that would render any amount stated in the financial statements misleading.

ITEMS OF AN UNUSUAL NATUREThe results of the operations of the Group and of the Company for 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.

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

ISSUE OF SHARES AND DEBENTURESThe Company did not issue any shares and debenture during the financial year.

DIRECTORS

The directors in office since the date of the last report and at the date of this report are:-

Shahabuddin bin Abdullah @ Lee Seng Pun

Eow Kwan Hoong

Lee Seng Hoong

Chow Pak Lim

Leom Chit Dein @ Lim Jit Teng

Syed Abdullah bin Syed Abd Kadir

Dato’ Mohamad Suparadi bin Md Noor

Chan Fin Fui @ Chan Kim Fee

Chan Feoi Chun

22

DIRECTORS’ INTERESTS

According to the Register of Directors’ Shareholdings kept by the Company under Section 134 of the Companies Act, 1965, the interests of those directors who held office at the end of the financial year in shares in the Company and its related corporations during the financial year ended 31st December 2009 are as follows:-

Number of ordinary shares of RM1/- each At At 1.1.2009 Bought Sold 31.12.2009

Direct interest:

Chow Pak Lim 5,114,779 - - 5,114,779

Leom Chit Dein @ Lim Jit Teng 3,265,552 - - 3,265,552

Chan Feoi Chun 50,000 - - 50,000

Indirect interest:

Chow Pak Lim * 197,000 - - 197,000

Deemed interest:

Chow Pak Lim ** 2,982,196 - - 2,982,196

Shahabuddin bin Abdullah @ Lee Seng Pun *** 22,837,821 - - 22,837,821

* Miss Au Lai Yoong is the wife of Chow Pak Lim. In accordance with Section 134(12)(c) of the Companies Act, 1965, the interests of Miss Au Lai Yoong in the shares of the Company shall also be treated as the interests of Chow Pak Lim.

** Deemed interested by virtue of shares held by persons connected to Chow Pak Lim.

*** Cik Noor Azmi Binti Ahmad is the wife of Shahabuddin bin Abdullah @ Lee Seng Pun. In accordance with Section 134(12)(c) of the Companies Act, 1965, the interests of Cik Noor Azmi Binti Ahmad in the shares of the Company shall also be treated as the interests of Shahabuddin bin Abdullah @ Lee Seng Pun.

By virtue of their interests in the shares of the Company, Chow Pak Lim and Leom Chit Dein @ Lim Jit Teng, are also deemed interested in the shares of the subsidiary companies during the financial year to the extent that Versatile Creative Berhad has an interest. Other than as stated above, none of the other directors in office at the end of the financial year 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 of the Company has received or become entitled to receive a benefit (other than benefits included in the aggregate amount of emoluments received or due and receivable by the directors shown in the financial statements) 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 or any of its related corporations a party to any arrangement, whose object was 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.

23

AUDITORS

The auditors, Messrs Baker Tilly Monteiro Heng, have expressed their willingness to continue in office.

On behalf of the Board,

………………………………………………………………

SHAHABUDDIN BIN ABDULLAH @ LEE SENG PUN

Director

………………………………………………………………

EOW KWAN HOONG

Director

KUALA LUMPUR

Date: 28 April 2010

24


AND ITS SUBSIDIARIES

BALANCE SHEETS AS AT 31ST DECEMBER 2009

GROUP COMPANY Note 2009 2008 2009 2008 RM RM RM RMASSETS

Non-current assetsProperty, plant and equipment 4 35,122,501 39,021,549 14,808 20,164Goodwill on consolidation 5 18,770,596 18,770,596 - - Prepaid lease payments 6 1,453,682 1,480,853 - -Investment in subsidiary companies 7 - - 21,452,617 30,723,902Other investments 8 19,457,888 11,398,483 - -Amount owing by subsidiary companies 9 - - 5,965,682 6,275,759

Total non-current assets 74,804,667 70,671,481 27,433,107 37,019,825

Current assetsInventories 10 7,423,777 7,979,758 - -Receivables, deposits and prepayments 11 12,782,519 18,082,129 - 2,362Tax recoverable 241,814 425,760 4,025 1,575Fixed deposits 12 639,051 616,135 - -Cash and bank balances 2,138,499 416,496 17,444 283

Total current assets 23,225,660 27,520,278 21,469 4,220

TOTAL ASSETS 98,030,327 98,191,759 27,454,576 37,024,045

EQUITY AND LIABILITIES

Equity attributable to equity holders of the CompanyShare capital 13 110,643,081 110,643,081 110,643,081 110,643,081Capital redemption reserve 14 3,000,000 3,000,000 - -Accumulated losses (59,096,416) (60,716,423) (83,423,780) (73,860,992)

SHAREHOLDERS' FUNDS 54,546,665 52,926,658 27,219,301 36,782,089

Non-current liabilitiesHire purchase liabilities 15 1,544,502 1,602,022 - -Borrowings 16 4,757,155 5,310,087 - -Deferred tax liabilities 17 3,506,911 3,530,564 - -

9,808,568 10,442,673 - -Current liabilitiesPayables and accruals 18 11,203,832 9,470,751 235,275 241,956Amount owing to a director 19 22,200 22,200 - -Borrowings 16 21,624,675 24,394,411 - -Hire purchase liabilities 15 824,387 935,066 - -

Total current liabilities 33,675,094 34,822,428 235,275 241,956

TOTAL LIABILITIES 43,483,662 45,265,101 235,275 241,956

TOTAL EQUITY AND LIABILITIES 98,030,327 98,191,759 27,454,576 37,024,045

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

25


AND ITS SUBSIDIARIES INCOME STATEMENTS FOR THE FINANCIAL YEAR ENDED

31ST DECEMBER 2009

GROUP COMPANY 2009 2008 2009 2008 Note RM RM RM RMREVENUE 20 52,573,605 65,824,936 579,309 729,082Cost of sales (46,324,306) (58,312,883) - -

GROSS PROFIT 6,249,299 7,512,053 579,309 729,082

Other income 9,884,249 2,686,837 - -Distribution expenses (7,137,411) (2,003,216) - -Administrative expenses (5,757,495) (6,649,318) (870,812) (927,278)Other expenses - (13,062,907) (9,271,285) (9,394,000)

OPERATING PROFIT/(LOSS) 21 3,238,642 (11,516,551) (9,562,788) (9,592,196)

Finance costs (net) 22 (1,682,427) (2,233,440) - -

PROFIT/(LOSS) BEFORE TAXATION 1,556.215 (13,749,991) (9,562,788) (9,592,196)

Taxation 23 63,792 915,105 - (11,085)

NET PROFIT/(LOSS) FOR THE FINANCIAL YEAR 1,620,007 (12,834,886) (9,562,788) (9,603,281)

Attributable to:

Equity holders of the company 1,620,007 (12,834,886) (9,562,788) (9,603,281)Minority interest - - - - 1,620,007 (12,834,886) (9,562,788) (9,603,281)Earnings/(Loss) per ordinary share (sen)- basic 24 1.46 (11.60)


26



STATEMENTS OF CHANGES IN EQUITYFOR THE FINANCIAL YEAR ENDED 31ST DECEMBER 2009

<- - - -Attributable to equity holders--- - -> Capital Share Redemption Accumulated Capital Reserve Losses Total RM RM RM RMGroup

Balance at 1st January 2008 110,643,081 3,000,000 (47,881,537) 65,761,544

Net loss for the financial year - - (12,834,886) (12,834,886)

Balance at 31st December 2008 110,643,081 3,000,000 (60,716,423) 52,926,658

Net profit for the financial year - - 1,620,007 1,620,007

Balance at 31st December 2009 110,643,081 3,000,000 (59,096,416) 54,546,665

Share Accumulated Capital Losses Total

RM RM RM

Company

Balance at 1st January 2008 110,643,081 (64,257,711) 46,385,370

Net loss for the financial year - (9,603,281) (9,603,281)

Balance at 31st December 2008 110,643,081 (73,860,992) 36,782,089

Net loss for the financial year - (9,562,788) (9,562,788)

Balance at 31st December 2009 110,643,081 (83,423,780) 27,219,301


27



CASH FLOW STATEMENTS FOR THE FINANCIAL YEAR ENDED 31ST DECEMBER 2009

GROUP COMPANY

2009 2008 2009 2008 RM RM RM RMCASH FLOW FROM OPERATING ACTIVITIES:Profit/(Loss) before taxation 1,556,215 (13,749,991) (9,562,788) (9,592,196)

Adjustments for:

Amortisation of

prepaid lease payments 27,171 27,173 - -

Depreciation 5,175,047 5,380,931 5,356 5,173

Allowance for doubtful debts 5,337,609 883,159 - -

Bad debts written off 398,149 - - -

Bad debts recovered (573,374) (1,511,958) - -

Doubtful debts recovered (10,559) - - -

Gain on disposal of

property, plant and equipment (151,325) (97,006) - -

Gain on disposal of

asset held for sale - (433,736) - -

Impairment loss on investment

in subsidiary companies - - 9,271,285 9,394,000

Impairment loss on other investments - 13,062,907 - -

Impairment loss on other investments

no longer required (8,614,405) - - -

Loss on disposal of other investments 240,500 - - -

Property, plant and equipment written off 188,322 - - -

Unrealised gain on foreign exchange (98,986) - - -

Interest income (24,190) (25,700) - -

Interest expense 1,706,617 2,259,140 - -

5,156,791 5,794,919 (286,147) (193,023)

Changes in working capital:

Inventories 555,981 337,145 - -

Receivables 246,770 4,211,086 2,362 -

Payables 1,733,081 (3,502,688) (6,681) 37,852

7,692,623 6,840,462 (290,466) (155,171)

Interest received 24,190 25,700 - -

Interest paid (719,070) (2,051,069) - -

Income tax paid (137,911) (323,973) (2,450) (51,895)

Income tax refund 361,996 353,258 - -

Net Operating Cash Flow 7,221,828 4,844,378 (292,916) (207,066)

28



CASH FLOW STATEMENTS (Continued)FOR THE FINANCIAL YEAR ENDED 31ST DECEMBER 2009

GROUP COMPANY

2009 2008 2009 2008 RM RM RM RMCASH FLOW FROM INVESTING ACTIVITIES:Acquisition of property, plant and equipment (Note 25) (580,555) (1,556,130) - (10,230)Fixed deposit held as security value (22,916) (21,926) - -Proceeds from disposal of property, plant and equipment 207,209 173,009 - -Proceeds from disposal of asset held for sale - 930,000 - -Proceeds from disposal of other investment 314,500 - - -Net Investing Cash Flows (81,762) (475,047) - (10,230)

CASH FLOW FROM FINANCING ACTIVITIES:Drawndowns of the term loans 1,453,000 - - -Interest paid (987,547) (208,071) - -Repayment from subsidiaries companies - - 310,077 213,567Repayment of borrowings (3,823,526) (4,231,484) - -Payment of hire purchase liabilities (1,107,849) (1,071,810) - -Net Financing Cash Flow (4,465,922) (5,511,365) 310,077 213,567

NET CHANGE IN CASH AND CASH EQUIVALENTS 2,674,144 (1,142,034) 17,161 (3,729)

CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE FINANCIAL YEAR (4,811,842) (3,669,808) 283 4,012

CASH AND CASH EQUIVALENTS AT THE END OF THE FINANCIAL YEAR (2,137,698) (4,811,842) 17,444 283

ANALYSIS OF CASH AND CASH EQUIVALENTS:Cash and bank balances 2,138,499 416,496 17,444 283Fixed deposits 639,051 616,135 - -Less: Bank overdraft (4,276,197) (5,228,338) - - Fixed deposits held as security value (639,051) (616,135) - - (2,137,698) (4,811,842) 17,444 283


29



NOTES TO THE FINANCIAL STATEMENTS - 31ST DECEMBER 2009

1. GENERAL INFORMATION

The principal activity of the Company is investment holding. The principal activities of the subsidiary companies are disclosed in Note 7. There have been no significant changes in the nature of these principal activities during the financial year.

The Company is a limited liability company, incorporated and domiciled in Malaysia and listed on the Main Market of the Bursa Malaysia Securities Berhad.

The principal place of the Company is located at Lot 30745, Jalan Pandan Indah, Pandah Indah, 55100 Kuala Lumpur.

The registered office of the Company is located at Level 18, The Gardens, North Tower, Mid Valley City, Lingkaran Syed Putra, 59200 Kuala Lumpur.

The financial statements are expressed in Ringgit Malaysia.

The financial statements were authorised for issue by the Board of Directors in accordance with a resolution of the directors on 28 April 2010

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

2.1 Basis of Preparation

The financial statements of the Group and of the Company have been prepared under the historical cost convention unless otherwise indicated in the accounting policies set out in Note 2.3 to the financial statements, and comply with the Financial Reporting Standards (“FRS”) and the provisions of the Companies Act, 1965 in Malaysia.

The preparation of financial statements in conformity with FRS requires the use of certain accounting estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements, and reported amounts of the revenue and expenses during the reported financial year. It also requires the directors’ best knowledge of current events and actions, and therefore actual results may differ.

The areas involving high degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in Note 3 to the financial statements.

2.2 New and Revised FRSs, Amendments/Improvements to FRSs and IC Interpretations (“IC Int”)

(a) Adoption of New and Revised FRSs, Amendments/Improvements to FRSs and IC Int

There are no new and revised FRSs, amendments/improvements to FRSs and IC Int that are effective and applicable for the Group’s financial year ended 31st December 2009.

(b) New and Revised FRSs, Amendments/Improvements to FRSs and IC Int that are issued, not yet effective and have not been adopted early

The Group and the Company have not adopted the following new and revised FRSs, amendments/improvements to FRSs and IC Int 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:

30

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

2.2 New and Revised FRSs, Amendments/Improvements to FRSs and IC Interpretations (“IC Int”) (Continued)

(b) New and Revised FRSs, Amendments/Improvements to FRSs and IC Int that are issued, not yet effective and have not been adopted early (Continued)

New FRSs

FRS 4 Insurance Contracts 1 January 2010

FRS 7 Financial Instruments: Disclosures 1 January 2010

FRS 8 Operating Segments 1 July 2009

FRS 139 Financial Instruments: Recognition and 1 January 2010

Measurement

Revised FRSs

FRS 1 First-time Adoption of Financial Reporting Standards 1 July 2010

FRS 3 Business Combinations 1 July 2010

FRS 101 Presentation of Financial Statements 1 January 2010

FRS 123 Borrowing costs 1 January 2010

FRS 127 Consolidated and Separate Financial Statements 1 July 2010

Amendments/Improvements to FRSs

FRS 1 First-time Adoption of Financial Reporting 1 January 2010

Standards and 1 January 2011

FRS 2 Share-based Payment 1 January 2010

and 1 July 2010

FRS 5 Non-current Assets Held for Sale and Discontinued 1 January 2010

Operations and 1 July 2010

FRS 7 Financial Instruments: Disclosure 1 January 2010

and 1 January 2011

FRS 8 Operating Segments 1 January 2010

FRS 107 Statement of Cash Flows 1 January 2010

FRS 108 Accounting Policies, Changes in Accounting Estimates and Errors 1 January 2010

FRS 110 Events After the Reporting Period 1 January 2010

FRS 116 Property, Plant and Equipment 1 January 2010

FRS 117 Leases 1 January 2010

FRS 118 Revenue 1 January 2010

FRS 119 Employee Benefits 1 January 2010

FRS 120 Accounting for Government Grants and Disclosure of 1 January 2010

Government Assistance

FRS 123 Borrowing Costs 1 January 2010

FRS 127 Consolidated and Separate Financial Statements : 1 January 2010

Cost of an Investment in a Subsidiary, Jointly Controlled

Entity or Associate

Effective for financial periods

beginning on or after

31


2.2 New and Revised FRSs, Amendments/Improvements to FRSs and IC Interpretations (“IC Int”) (Continued)

(b) New and Revised FRSs, Amendments/Improvements to FRSs and IC Int that are issued, not yet effective and have not been adopted early (Continued)

Amendments /Improvements to FRSs

FRS 127 Consolidated and Separate Financial Statements: 1 January 2010

FRS 128 Investment in Associates 1 January 2010

FRS 129 Financial Reporting in Hyperinflationary Economies 1 January 2010

FRS 131 Interests in Joint Ventures 1 January 2010

FRS 132 Financial Instruments: Presentation 1 January 2010

and 1 March 2010

FRS 134 Interim Financial Reporting 1 January 2010

FRS 136 Impairment of Assets 1 January 2010

FRS 138 Intangible Assets 1 January 2010

and 1 July 2010

FRS 139 Financial Instruments : Recognition and Measurement 1 January 2010

FRS 140 Investment Property 1 January 2010

IC Int

IC Int 9 Reassessment of Embedded Derivatives 1 January 2010

and 1 July 2010

IC Int 10 Interim Financial Reporting and Impairment 1 January 2010

IC Int 11 FRS 2 – Group and Treasury Share Transactions 1 January 2010

IC Int 12 Service Concession Arrangements 1 July 2010

IC Int 13 Customer Loyalty Programmes 1 January 2010

IC Int 14 FRS 119 – The Limit on a Defined Benefit Asset, 1 January 2010

Minimum Funding Requirements and their Interaction

IC Int 15 Agreements for the Construction of Real Estate 1 July 2010

IC Int 16 Hedges of a Net Investment in a Foreign Operation 1 July 2010

IC Int 17 Distributions of Non-cash Assets to Owners 1 July 2010

Other than FRS 139, the directors do not anticipate that the application of the above new and revised FRSs, amendments/improvements to FRSs and IC Int, when they are effective, will have a material impact on the results and the financial position of the Group and of the Company.

The impact of applying FRS 7 and FRS 139 on the financial statements upon first adoption as required by Paragraph 30(b) of FRS 108, Accounting Policies, Changes in Accounting Estimates and Errors are not disclosed by virtue of the exemptions given in the respective FRSs.

2.3 Significant Accounting Policies

(a) Subsidiary Companies and Basis of Consolidation

Subsidiary companies are entities in which the Group has the power to exercise control over the financial and operating policies so as to obtain benefits from their activities, generally accompanying a shareholding of more than one half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group has such power over another entity.

Effective for financial periods

beginning on or after

32


2.3 Significant Accounting Policies (Continued)

(a) Subsidiary Companies and Basis of Consolidation (Continued)

The consolidated financial statements include the financial statements of the Company and its subsidiary companies made up to the end of the financial year. The financial statements of the parent and its subsidiary companies are all drawn up to the same reporting date.

Subsidiary companies are consolidated using the purchase method of accounting. Under the purchase method of accounting, subsidiary companies are fully consolidated from the date on which control is transferred to the Group and are deconsolidated from the date the control ceases. In preparing the consolidated financial statements, intra-group transactions, balances and resulting unrealised gains on transactions within the Group are eliminated on consolidation. Unrealised losses are also eliminated to the extent of the cost of the asset that can be recovered. The extent of the costs that cannot be recovered is treated as write downs or impairment losses as appropriate. When necessary, adjustments are made to the financial statements of the subsidiary companies to ensure consistency of accounting policies with those adopted by the Group.

The cost of an acquisition is measured as fair value of the assets acquired, equity instruments issued and liabilities and contingent liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the acquisition. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the date of acquisition, irrespective of the extent of any minority interest.

(b) Property, Plant and Equipment and Depreciation

Property, plant and equipment are stated at cost or valuation less accumulated depreciation and impairment losses, if any. The policy for the recognition and measurement of impairment losses is in accordance with Note 2.3(o).

Cost includes expenditure that are directly attributable to the acquisition of the asset and any other costs directly attributable to bringing the asset to working condition for its intended use, and the cost of dismantling and removing the items and restoring the site on which they are located. Purchased software that is integral to the functionality of the related equipment is capitalised as part of that equipment. When significant parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items of property, plant and equipment.

The cost of replacing part of an item of property, plant and equipment is included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that the future economic benefits associated with the part will flow to the Group and its cost can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to the income statement as incurred.

The Group has availed itself to the transitional provision when the MASB first adopted IAS 16, Property, Plant and Equipment in 1998. Certain leasehold land and building were revalued in March 1998 and no later valuation has been recorded for these properties.

The cost of property, plant and equipment recognised as a result of business combination is based on fair value at acquisition date. The fair value of property is the estimated amount for which a property could be exchanged between a willing buyer and a willing seller in an arm’s length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion. The fair value of other items of plant and equipment is based on the quoted market prices for similar terms.

Depreciation is calculated on a straight line method so as to write off the costs of the property, plant and equipment over their expected useful lives. The principal annual rates used for this purpose are as follows:-

Motor vehicles 20 – 25%

Plant and machinery 10 – 20%

Office equipment 10 – 20%

Furniture and fittings 10%

Renovation 10 - 20%

Factory building 2%

33



(b) Property, Plant, and Equipment and Depreciation (Continued)

No depreciation is provided on the freehold land as it has an infinite useful life.

Capital work-in-progress are stated at cost and not depreciated until it is ready for its intended use. Upon completion, capital work-in-progress are transferred to categories of property, plant and equipment, depending on the nature of the assets.

The residual values, useful lives and depreciation method are reviewed, and adjusted if appropriate, at each balance sheet date. The effects of any revisions of the residual values, useful lives and depreciation method are included in the income statement for the financial year in which the changes arise.

Fully depreciated assets are retained in the accounts until the assets are no longer in use.

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Gain and losses on disposal of an item of property, plant and equipment are determined by comparing the proceeds from disposal with the carrying amount of property, plant and equipment and are recognised net within “other income” or “other expenses” respectively in the income statement. When revalued assets are sold, the amounts included in the revaluation surplus reserve are transferred to retained earnings.

(c) Goodwill on Consolidation

Goodwill arising from acquisition represents the excess of cost of business combination over the Group’s share of the net fair value of the identifiable assets, liabilities and contingent liabilities. Following the initial recognition, goodwill is stated at cost less impairment losses, if any. The policy for the recognition and measurement of impairment losses is in accordance with Note 2.3 (o).

Goodwill is not amortised but is reviewed for impairment, annually or more frequently for impairment in value and is written down where it is considered necessary. Impairment losses on goodwill are not reversed. The calculation of gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.

Negative goodwill represents the excess of the fair value of the Group’s share of net assets acquired over the cost of acquisition. Negative goodwill is recognised directly in the income statement.

(d) Investments

(i) Investment in subsidiary companies

Investments in subsidiary companies are stated at cost less impairment losses, if any. The policy for the recognition and measurement of impairment losses is in accordance with Note 2.3(o).

On disposal of an investment, the difference between net disposal proceeds and its carrying amount is charged or credited to the income statement.

(ii) Investment in debt and equity securities

Investment in debt and equity are recognised initially at fair value plus attributable transaction costs.

Subsequent to initial recognition:

(i) Investments in non-current equity securities other than investments in subsidiary companies are stated at cost less impairment losses.

(ii) Investment in non-current debt securities are stated at amortised cost using the effective interest method less impairment losses.

(iii) All current investments are carried at the lower of cost and market value, determined on an individual investment basis by category of investments.

Where in the opinion of the directors, there is a decline other than temporary in the value of non-current equity securities and non-current debt securities other than investment in subsidiary companies, the impairment losses is recognised as an expense in the financial year in which the decline is identified.

34



(d) Investments (Continued)

(ii) Investment in debt and equity securities (Continued)

On disposal of an investment, the difference between net disposal proceeds and its carrying amount is charged or credited to the income statement. All investments in debt and equity securities are accounted for using settlement date accounting. Settlement date accounting refers to:

(i) the recognition of an asset on the day it is received by the entity, and

(ii) the derecognition on an asset and recognition of any gain or loss on disposal on the date it is delivered.

(e) Inventories

Inventories comprise raw materials, consumables, work-in-progress and finished goods that are stated at the lower of cost and net realisable value. The cost of inventories is based on the weighted average cost principle, and includes expenditure incurred in acquiring the inventories and bringing them to their existing location and condition.

Cost in the case of finished goods and work-in-progress include cost of raw materials, direct labour and an appropriate proportion of fixed and variable production overheads.

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

(f) Receivables

Receivables are carried at anticipated realisable values. Bad debts are written off when identified. An estimate is made for doubtful debts based on a review of all outstanding amounts as at the balance sheet date.

(g) Equity instruments

(i) Ordinary shares

Ordinary shares are classified as equity. Dividends on ordinary shares are recognised as liabilities when declared before the balance sheet date. A dividend proposed or declared after the balance sheet date, but before the financial statements are authorised for issue, is not recognised as a liability at the balance sheet date.

The transaction costs of an equity transaction are accounted for as deductions from equity, net of tax. Equity transaction costs comprise only those incremental external costs directly attributable to the equity transaction which would otherwise have been avoided.

(ii) Preference shares

Preference shares are classified as equity if they are non-redeemable, or are redeemable but only at the Company’s option and dividends are discretionary at the option of the issuers Dividends thereon are recognised as distributions within equity. Preference shares are classified as liability if they are redeemable on a specific date or at the option of the shareholders and dividends thereon are recognised in the income statement as interest expense. Preference shares that are compound instruments are split into liability and equity components. Each component is accounted for separately. Dividends on preference shares are recognised on an accrual basis.

(h) Payables

Payables are stated at the fair value of the consideration to be paid in the future for goods and services received.

(i) Borrowings

Borrowings are initially recognised based on the proceeds received, net of transaction cost incurred. In the subsequent periods, borrowings are stated at amortised cost using the effective yield method; any difference between proceeds (net of transaction costs) and the redemption value is recognised in the income statement over the period of the borrowings.

Interest, dividends, losses and gains relating to a financial instrument, or a component part, classified as liability is reported within finance cost in the income statement.

35



(i) Borrowings (Continued)

Borrowings are classified as current liabilities unless the Group has an unconditional rights to defer settlement of the liability for at least 12 months after the balance sheet date.

(j) Employee Benefits

(i) Short term employee benefits

Wages, salaries, social security contribution, bonuses and non-monetary benefits are accrued in the period in which the associated services are rendered by the employees. Short-term accumulating compensated absences such as paid annual leave are their entitlement to future compensated absences. Short-term non-accumulating compensated absences sick leave, maternity and paternity leave are recognised when absences accur.

(ii) Post-employment benefits

The Group contributes to the Employee’s Provident Fund, the national defined contribution plan. The contributions are charged to the income statement in the period to which they are related. Once the contributions have been paid, the Group has no further payment obligations.

(k) Leases

(i) Finance leases

Assets acquired under leases which transfer substantially all the risks and rewards incidental to ownership of the assets are capitalised under property, plant and equipment and the corresponding obligations are treated as liabilities. The assets and the corresponding lease obligations are recorded at their fair values of, if lower, at present value of the minimum lease payments of the leased assets at the inception of the respective leases.

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

The depreciation policy for leased assets and assets under hire purchase is consistent with that for depreciable property, plant and equipment.

(ii) Operating leases

Leases of assets where a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating lease are charged to income statement over the lease period.

Lease of land held for own use with title not expected to pass to lessee by the end of the lease term is treated as operating lease. The up-front payments made on entering into a lease or acquiring a leasehold land that is accounted for as an operating lease are accounted for as prepaid lease payments that are amortised over the lease term on a straight line basis. The up-front payments made are allocated between the land and the buildings elements in proportion to their relative fair values for leasehold interests in the land element and building element of the lease at the inception of the lease.

The Group had previously revalued its leasehold land and has retained the unamortised revalued amount as the surrogate carrying amount of prepaid lease payments in accordance with the transitional provisions in FRS 117.67A. Such prepaid lease payments is amortised to the income statement on a straight line basis over the lease term.

(l) Taxation

The tax expense in the income statement represents the aggregate amount of current tax and deferred tax. Current tax is the expected amount of income taxes payable in respect of the taxable profit for the year and is measured using the tax rates that have been enacted at the balance sheet date, and adjustment of tax payable in respect of the previous year.

36



(l) Taxation (Continued)

Deferred tax is provided for, using the liability method, on temporary differences at the balance sheet date arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. In principle, deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets are recognised for all deductible temporary differences, unused tax losses and unused tax credits to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, unused tax losses and unused tax credits can be utilised. Deferred tax is not recognised if the temporary differences arises from goodwill or negative goodwill or from the initial recognition of an asset or liability in a transaction which is not a business combination and at time of the transaction, affects neither accounting profit nor taxable profit.

Deferred tax is measured at the tax rates that are expected to apply in the period when the asset is realised or the liability is settled, based on tax rates that have been enacted or substantively enacted at the balance sheet date. Deferred tax is recognised in the income statement, except when it arises from transaction which is recognised directly in equity, in which case the deferred tax is charged or credited directly in equity, or when it arises from a business combination that is an acquisition, in which case the deferred tax is included in the resulting goodwill or negative goodwill.

(m) Foreign Currency Translation

The individual financial statements of each entity in the Group are measured using the currency of the primary economic environment in which the entity operates (“the functional currency”). The financial statements are presented in Ringgit Malaysia, which is the Group’s and the Company’s functional currency and presentation currency.

Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are translated into the functional currency at the exchange rate at that date. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement.

Non-monetary items are measured in terms of historical cost in a foreign currency or translated using the exchange rates as at the date of the initial transaction. Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are retranslated to the functional currency at the exchange rate at the date that fair value determined. Foreign currency differences arising on retranslation are recognised in the income statement.

(n) Financial Instruments

Financial instruments are recognised in the balance sheet when the Group has become a party to the contractual provisions of the instruments. The particular recognition methods adopted are disclosed in the individual accounting policy statements associated with each item.

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 liability are reported as expense or income. Distributions to holders of financial instruments classified as equity are charged directly to equity. Financial instruments are offset when the Group has a legally enforceable right to set off the recognised amounts and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.

(o) Impairment of Assets

The carrying amount of assets, other than inventories, deferred tax assets and financial assets (except investment in subsidiary companies), are reviewed at each balance sheet date to determine whether there is any indication of impairment. If each indication exists, the asset’s recoverable amount is estimated to determine the amount of impairment loss.

37



(o) Impairment of Assets (Continued)

For goodwill, intangible assets that have an indefinite useful life and intangible assets that are not available for use, the recoverable amount is estimated at each balance sheet date or more frequently when indicators of impairment are identified.

For the purpose of impairment testing of these assets, the recoverable amount is determined on an individual asset basis unless the asset does not generate cash flows that are largely independent of those from other assets. If this is the case, the recoverable amount is determined for the cash-generating unit (“CGU”) to which the asset belongs to. Goodwill acquired on a business combination is, from the acquisition date, allocated to each of the Group’s CGUs, or groups of CGUs, that are expected to benefit from the synergies of the combination, irrespective of whether other assets or liabilities of the Group are assigned to those units or groups of units.

An asset’s recoverable amount is the higher of an asset’s or CGU’s fair value less cost to sell and its value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risk specific to the asset. Where the carrying amounts of an asset exceed its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. Impairment losses recognised in respect of a CGU or groups or CGUs are allocated first to reduce the carrying amount of any goodwill allocated to those units or groups of units and then, to reduce the carrying amount of the other assets in the unit or groups of units on a prorata basis.

An impairment loss is recognised in the income statement in the period in which it arises.

Impairment loss on goodwill is not reversed in a subsequent period. An impairment loss for an asset other than goodwill is reversed if, and only if, there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment was recognised. The carrying amount of an asset other than goodwill is increased to its revised recoverable amount, provided that this amount does not exceed its carrying amount that would have been determined (net of amortisation or depreciation) had no impairment loss been recognised for the asset in prior years. A reversal of impairment loss for an asset other than goodwill is recognised in the income statement.

(p) Revenue Recognition

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. The following specific recognition criteria must also be met before revenue is recognised.

(i) Sales of Goods

Revenue from sale of goods is measured at the fair value of the consideration received or receivable for the sale of goods, net of return and allowance, trade discounts and volume rebates. Revenue is recognised when the significant risks and rewards of ownership of the goods have been transferred to the buyer.

(ii) Services

Revenue from services rendered is recognised in the income statement in proportion to the stage of completion of the transaction at the balance sheet date. The stage of completion is assessed by reference to surveys of work performed.

(iii) Rental income

Rental income is recognised in the income statement on accrual basis.

(iv) Management fee

Management fee is recognised for services rendered, including professional and management advice, marketing, management information system and accounting services and administrative matters to the subsidiary companies.

38



(q) Segmental Reporting

Segment reporting is presented for enhanced assessment of the Group’s risks and returns. Business segments provide products or services that are subject to risks and returns that are different from those of other business segments. Geographical segments provide products or services within a particular economic environment that is subject to risks and returns that are different from those components operating in other economic environments.

Segment revenue, expense, asset and liabilities are those amounts resulting from the operating activities of a segment that are directly attributable to the segment and the relevant portion that can be allocated on a reasonable basis to the segment. Segment revenue, expense, assets and segment liabilities are determined before intragroup balances and transactions are eliminated as part of the consolidation process, except to the extent that such intragroup balances and transactions are between group enterprises within a single segment. Segment revenue and segment expenses exclude dividends from within the Group. Segment assets and liabilities do not include income tax assets and liabilities.

All income, expenses, assets and liabilities are directly allocated to each reported segment. Interest income and other income and expenses which cannot be allocated to the respective segment on a reasonable basis are disclosed as either unallocated income or unallocated expenses, while the related assets and liabilities are disclosed as unallocated assets and allocated liabilities.

The accounting policies used in deriving the individual segment revenue, segment results, segment assets and segment liabilities are the same as those disclosed in the summary of significant accounting policies.

Transfers between segments are priced at the estimated fair value of the products or services as negotiated between the operating units.

(r) Cash and Cash Equivalents

For the purpose of cash flow statements, cash and cash equivalents comprise cash in hand, bank balances, fixed deposits, demand deposits and other short term and highly liquid investments, that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, net of bank overdrafts and deposits pledged to financial institutions.

3. SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGEMENTS

Estimates and judgements are continually evaluated by the directors and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

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

(a) Key Sources of Estimation

(i) Impairment of goodwill

The Group determines whether goodwill is impaired at least on an annual basis. This requires an estimation of the value-in-use of the cash generating units (“CGU”) to which goodwill is allocated. Estimating a value-in-use amount requires management to make an estimation of the expected future cash flows from the CGU and also to choose a suitable discount rate in order to calculate the present value of those cash flows based on the following key assumption:-

(i) Cash flows were projected based on actual operating results and the 1-year business plan.

(ii) The anticipated annual growth remains the same as 2009 actual revenue in the cash flow projections for the years 2010.

39

3. SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGEMENTS (Continued)

(a) Key Sources of Estimation (Continued)

(i) Impairment of goodwill (Continued)

(iii) A pre-tax discount rate of 6% was applied in determining the recoverable amount of

the unit. The discount rate was estimated based on the Company’s incremental

borrowing rate.

The carrying amounts of goodwill as at 31 December 2009 was RM18,770,596/-(2008:

RM18,770,596/-).

(ii) Useful lives of property, plant an equipment

The Group estimates the useful lives of property, plant and equipment based on the period

over which the assets are expected to be available for use. The estimated useful lives of

property, plant and equipment are reviewed periodically and are updated if expectations

differ from previous estimates due to physical wear and tear, technical or commercial

obsolescence and legal or other limits on the use of the relevant assets. In addition, the

estimation of the useful lives of property, plant and equipment are based on internal

technical evaluation and experience with similar assets. It is possible, however, that future

results of operations could be materially affected by changes in the estimates brought

about by changes in factors mentioned above. The amounts and timing of recorded

expenses for any period would be affected by changes in these factors and circumstances.

A reduction in the estimated useful lives of the property, plant and equipment would

increase the recorded expenses and decrease the non-current assets.

(iii) Income taxes

The Group is subject to income taxes in numerous jurisdictions. Significant judgement

is required in determining the capital allowances and deductibility of certain expenses

during the estimation of the provision for income taxes. There are many transactions

and calculations for which the ultimate tax determination is uncertain during the ordinary

course of business. Where the final tax outcome of these matters is different from the

amounts that were initially recorded, such differences will impact the income tax and

deferred income tax provisions in the period in which such determination is made.

(iv) Deferred tax assets

Deferred tax assets are recognised for all unutilised tax losses, unabsorbed capital

allowances and reinvestment allowances to the extent that it is probable that taxable profit

will be available against which the losses, capital allowances and reinvestment allowances

can be utilised. Significant management judgement is required to determine the amount of

deferred tax assets that can be recognised, based upon the likely timing and level of future

taxable profits together with future tax planning strategies. The total carrying values of

unrecognised tax losses, capital allowances and reinvestment allowances of the Group and

of the Company were disclosed in Note 23.

40

3. SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGEMENTS (Continued)

(a) Key Sources of Estimation (Continued)

(v) Allowance for doubtful debts The Group makes allowances 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 analysed historical bad debts, customer concentrations, customer creditworthiness, current economic trends and changes in customer payment terms when making a judgement to evaluate the adequacy of the allowance of doubtful debts of receivables. Where the expectation is different from the original estimate, such difference will impact the carrying value of receivables.

(vi) Net realisable values for inventories Reviews are made periodically by management on damaged, obsolete and slow moving

inventories. These reviews require judgement and estimates. Possible changes in these estimates could result in revisions to the valuation of inventories.

(vii) Impairment of investment in subsidiaries The Company carried out the impairment test based on a variety of estimation including

the value-in-use of the cash generating unit. Estimating the value-inuse requires the Company to make an estimate of the expected future cash flows from the cash generating unit and also to choose a suitable discount rate in order to calculate the present value of those cash flows. Changes in assumptions could significantly affect the results of the Company’s tests for impairment of investment in subsidiary companies.

(b) Critical judgements made in applying accounting policies There are no critical judgements made by management in the process of applying the

Group’s accounting policies that have significant effect on the amounts recognised in the financial statements.

41

4. PROPERTY, PLANT AND EQUIPMENT Office equipment, Motor vehicles, furniture and Capital Freehold plant and fittings, and work-in- Land Buildings machinery renovation progress Total RM RM RM RM RM RMGroup

2009

Cost/ValuationAt 1st January 2009 1,067,498 17,968,625 57,731,856 8,010,917 945,000 85,723,896Transfer during the financial year - - 943,800 1 ,200 (945,000) -Additions - - 1,412,135 108,070 - 1,520,205Disposals/Write offs - - (1,501,319) (1,016,246) - (2,517,565)At 31st December 2009 1,067,498 17,968,625 58,586,472 7,103,941 - 84,726,536

Representing:Cost 1,067,498 3,862,775 58,586,472 7,103,941 - 70,620,686Valuation - 14,105,850 - - - 14,105,850 1,067,498 17,968,625 58,586,472 7,103,941 - 84,726,536

Accumulated DepreciationAt 1st January 2009 - 3,882,271 37,767,603 5,052,473 - 46,702,347Depreciation for the financial year - 275,463 4,348,126 551,458 - 5,175,047Disposals/Write offs - - (1,257,903) (1,015,456) - (2,273,359)At 31st December 2009 - 4,157,734 40,857,826 4,588,475 - 49,604,035

Net Book Value at 31st December 2009 1,067,498 13,810,891 17,728,646 2,515,466 - 35,122,501

Representing:Cost 1,067,498 3,165,141 17,728,646 2,515,466 - 24,476,751Valuation - 10,645,750 - - - 10,645,750 1,067,498 13,810,891 17,728,646 2,515,466 - 35,122,501

42

4. PROPERTY, PLANT AND EQUIPMENT (Continued) Office equipment, Motor vehicles, furniture and Capital Freehold plant and fittings, and work-in- Land Buildings machinery renovation progress Total RM RM RM RM RM RM

Group

2008

Cost/Valuation

At 1st January 2008 1,067,498 17,968,625 57,058,175 7,011,830 - 83,106,128

Additions - - 1,260,501 1,018,544 945,000 3,224,045

Disposals - - (586,820) (19,457) - (606,277)

At 31st December 2008 1,067,498 17,968,625 57,731,856 8,010,917 945,000 85,723,896

Representing:

Cost 1,067,498 3,862,775 57,731,856 8,010,917 945,000 71,618,046

Valuation - 14,105,850 - - - 14,105,850

1,067,498 17,968,625 57,731,856 8,010,917 945,000 85,723,896

Accumulated

Depreciation

At 1st January 2008 - 3,606,809 33,711,836 4,533,045 - 41,851,690

Depreciation for the

financial year - 275,462 4,566,637 538,832 - 5,380,931

Disposals - - (510,870) (19,404) - (530,274)

At 31st December 2008 - 3,882,271 37,767,603 5,052,473 - 46,702,347

Net Book Value at

31st December 2008 1,067,498 14,086,354 19,964,253 2,958,444 945,000 39,021,549

Representing:

Cost 1,067,498 3,237,446 19,964,253 2,958,444 945,000 28,172,641

Valuation - 10,848,908 - - - 10,848,908

1,067,498 14,086,354 19,964,253 2,958,444 945,000 39,021,549

43

4. PROPERTY, PLANT AND EQUIPMENT (Continued)

Office Equipment RMCompany

2009CostAt 1st January 2009 36,429Additions -Disposals -At 31st December 2009 36,429

Accumulated DepreciationAt 1st January 2009 16,265Depreciation for the financial year 5,356Disposals -At 31st December 2009 21,621

Net Book Value at 31st December 2009 14,808

2008CostAt 1st January 2008 26,199Additions 10,230Disposals -At 31st December 2008 36,429

Accumulated DepreciationAt 1st January 2008 11,092Depreciation for the financial year 5,173Disposals -At 31st December 2008 16,265

Net Book Value at 31st December 2008 20,164

The leasehold land as disclosed in Note 6 and certain buildings are stated at Directors’ valuation based on the professional valuation made by a chartered surveyor on the open market basis conducted in March 1998.

Had the building been carried under the cost model, the carrying amount of the building would have been RM6,378,505/-(2008: RM6,521,351/-).

Property, plant and equipment of the Group with the net book value of RM25,390,470/-(2008: RM24,852,285/-) have been pledged to licensed banks to secure credit facilities granted to the Company and its subsidiary companies.

Property, plant and equipment of the Group with the net book value of RM3,457,297/-(2008: RM3,752,071/-) are acquired under hire purchase instalment plans.

44

5. GOODWILL ON CONSOLIDATION Group 2009 2008 RM RMCostAt 1st January/31st December 29,996,968 29,996,968

Accumulated impairment lossAt 1st January/31st December (11,226,372) (11,226,372)Balance as at 31st December 18,770,596 18,770,596

6. PREPAID LEASE PAYMENTS

Leasehold land

unexpired period

more than 50 years

RMGroup

2009CostAt 1st January 2009 1,821,077Additions -Disposals -At 31st December 2009 1,821,077

AmortisationAt 1st January 2009 340,224Amortised during the financial year 27,171Disposals -At 31st December 2009 367,395

Carrying amount at 31st December 2009 * 1,453,682

* Representing items at: Cost 474,675 Directors' valuation 979,007 1,453,682

2008CostAt 1st January 2008 1,821,077Additions -Disposals -At 31st December 2008 1,821,077

AmortisationAt 1st January 2008 313,051Amortised during the financial year 27,173Disposals -At 31st December 2008 340,224

Carrying amount at 31st December 2008* 1,480,853

* Representing items at: Cost 483,547 Directors' valuation 997,306 1,480,853

45

6. PREPAID LEASE PAYMENTS (Continued)

The basis of revaluation for prepaid lease payments is the same as disclosed in Note 2.3(b) and Note 4.

Had the prepaid lease payments been carried under the cost model, the carrying amount of the prepaid lease payments would have been RM1,013,295/-(2008: RM1,035,925/-).

7. INVESTMENT IN SUBSIDIARY COMPANIES Company 2009 2008 RM RM

Unquoted shares-at cost 79,067,902 79,067,902Less: Impairment loss (57,615,285) (48,344,000)

21,452,617 30,723,902

The following information relates to the subsidiary companies which are all incorporated in Malaysia.

Name of Company Effective Equity Interests Principal Activities 2009 2008 % % Direct subsidiary companies Versatile Paper Boxes Sdn. Bhd. 100 100 Manufacturing and trading of

paper, board packaging products, specialising in offset- printed boxes and offset- laminated cartons

Fairpoint Packaging Sdn Bhd + 100 100 Dormant

Indirect subsidiary companies held through Versatile Paper Boxes Sdn. Bhd. Fairpoint Plastic Industries Sdn. 100 100 Manufacturing and sale of

Bhd. plastic packaging products

Versatile Smart Components Sdn. 100 100 Dormant Bhd.

Imagescan Creative Sdn. Bhd. 100 100 Provision of colour separation and lithography services and printed materials

+ This company is not audited by Baker Tilly Monteiro Heng.

46

8. OTHER INVESTMENTS Group 2009 2008 RM RM Quoted shares in Malaysia: Cost 36,683,464 36,683,464 Less: Disposal during the year (555,000) - 36,128,464 36,683,464 Less: Impairment loss (16,670,577) (25,284,982) Carrying amount 19,457,887 11,398,482 Unquoted shares in Malaysia: Cost 2,000,000 2,000,000 Less: Impairment loss (1,999,999) (1,999,999) Carrying amount 1 1 Total 19,457,888 11,398,483 Market value: Quoted shares in Malaysia 19,595,729 11,398,483

9. AMOUNT OWING BY SUBSIDIARY COMPANIES The amount owing by subsidiary companies is non-trade in nature, unsecured, interest

free, and has no fixed terms of repayment.

10. INVENTORIES Group 2009 2008 RM RM At cost Raw materials and consumables 3,977,392 4,738,702 Work-in-progress 1,128,242 1,328,624 Finished goods 2,318,143 1,912,432 7,423,777 7,979,758 Carrying amount of inventories pledged as security for bank borrowings (Note 16) 3,432,550 3,565,113

47

11. RECEIVABLES, DEPOSITS AND PREPAYMENTS

Group Company 2009 2008 2009 2008 RM RM RM RM Trade receivables 18,524,917 18,607,763 - - Less: Allowance for doubtful debts (6,914,427) (2,150,192) - - 11,610,490 16,457,571 - - Other receivables 470,911 610,682 - 2,362 Deposits 194,401 315,418 - - Prepayments 506,717 698,458 - - 12,782,519 18,082,129 - 2,362

The Group’s normal trade credit term ranges from 60 to 120 days. The currency exposure profile of trade receivables are as follows: Group 2009 2008 RM RM Ringgit Malaysia 16,216,400 15,386,680 Singapore Dollar 83,072 348,836 US Dollar 1,001,882 1,394,271 Pounds Sterling 1,090,849 1,196,666 Australian Dollar 132,714 281,310 18,524,917 18,607,763

Included in trade receivables of the Group is an amount totalling RM 49,849/- (2008: RM 106,779/-) owing by companies in which certain directors have interests.

12 . FIXED DEPOSITS

The fixed deposits placed with licensed banks are pledged to the licensed banks to secure credit facilities granted to the Company and its subsidiary companies as disclosed in Note 16.

48

13. SHARE CAPITAL

Group and Company

2009 2008

Number Number

of Shares of Shares

Unit RM Unit RM

Authorised:

Ordinary shares of

RM 1/- each 500,000,000 500,000,000 500,000,000 500,000,000

Non-cumulative preference

shares of RM 1 each 3,000,000 3,000,000 3,000,000 3,000,000

503,000,000 503,000,000 503,000,000 503,000,000

Issued and fully paid:

Ordinary shares of

RM 1/- each 110,643,081 110,643,081 110,643,081 110,643,081

14. CAPITAL REDEMPTION RESERVE

The capital redemption reserve relates to the redemption of preference shares of a subsidiary company.

15. HIRE PURCHASE LIABILITIES

Group

2009 2008

RM RM

Amount payable under finance lease:

- within one year 941,293 1,047,333

- later than one year and not later than five years 1,785,112 1,847,354

2,726,405 2,894,687

Future finance charges (357,516) (357,599)

Present value of hire purchase liabilities 2,368,889 2,537,088

Represented by :

Current

- not later than one year 824,387 935,066

Non-current

- later than one year but not later than five years 1,544,502 1,602,022

2,368,889 2,537,088

49

16. BORROWINGS

Group

2009 2008

RM RM

Current

Secured bankers' acceptance 13,766,000 14,810,000

Secured bank overdrafts 4,276,197 4,893,013

Unsecured bankers' acceptance - 247,000

Unsecured bank overdrafts - 335,325

Secured bank loans due within one year 2,082,478 2,609,073

Revolving credits - secured 1,500,000 1,500,000

21,624,675 24,394,411

Non-current

Secured bank loans due after one year 4,757,155 5,310,087

The repayment schedule of the secured bank loans is as follows:-

Group

2009 2008

RM RM

Outstanding loans principals 6,839,633 7,919,160

Less: Portion due within one year (2,082,478) (2,609,073)

Portion due after one year 4,757,155 5,310,087

Within the next twelve months

(including under current liabilities) 2,082,478 2,609,073

After the next twelve months

(included under non-current liabilities)

- not later than two years 1,356,941 2,152,344

- later than two years but not later than five years 2,621,963 3,099,510

- later than five years 778,251 58,233

4,757,155 5,310,087

6,839,633 7,919,160

50

16. BORROWINGS (Continued)

Security The borrowings are secured as follows:-

(i) Joint and several guarantee by certain directors and shareholders; (ii) Fixed and floating charge over the entire assets of the subsidiary companies including present and future

assets of the subsidiary companies; (iii) Lien over fixed deposits together with letter of set-off; (iv) Pledge of quoted investment shares, at 90% of the market value of shares pledged margin of advance

or the approved limit, whichever is lower; (v) Legal charge over property and machineries of the respective subsidiary companies; and

The main covenants of the borrowings and term loans are as follows:

Positive Covenants

Undertaking not to create or exist any mortgage, charge, pledge, lien, encumbrances or other security interest of any kind on its present and future assets without the prior written consent of the bank.

Negative Covenants

(i) Grant loans to directors, shareholders or related companies; (ii) Enter into profit sharing arrangement with other party unless such arrangement is entered into the

ordinary course of business; (iii Change the nature of the existing business; (iv) Incur additional indebtedness including lease obligation; (v) Cease to exercise control over the financed machinery and shall not lease, rent,

transfer or dispose of it; (vi) Change its ownership or permit any form of merger, reconstruction, consolidation, amalgamation or

reduction in share capital; (vii Dispose or lease its property, plant and equipment except in the ordinary course of its business; and (viii) Declare or pay any dividend or make any distribution of share capital.

51

17. DEFERRED TAX LIABILITIES

Group 2009 2008 RM RM Balance at 1st January 3,530,564 4,686,000 Transfer to income statement (Note 23) (23,653) (1,155,436) Balance at 31st December 3,506,911 3,530,564 Representing the tax effects of: Temporary differences between net book values and the corresponding tax written down values 3,506,911 3,530,564

18. PAYABLES AND ACCRUALS

Group Company 2009 2008 2009 2008 RM RM RM RM Trade payables 5,170,075 4,255,092 - - Other payables 4,731,071 3,165,751 227,008 219,775 Accruals 1,302,686 2,049,908 8,267 22,181 11,203,832 9,470,751 235,275 241,956

The Group’s normal trade credit ranges from 30 to 120 days. The currency exposure profile of trade payables are as follows: Group 2009 2008 RM RM Ringgit Malaysia 5,120,263 4,174,030 US Dollar 2,679 5,786 Australian Dollar 22,283 23,497 Euro Dollar 24,850 42,334 Swedish Krona (SEK) - 9,445 5,170,075 4,255,092

19. AMOUNT OWING TO A DIRECTOR

The amount owing to a director is non-trade in nature, unsecured, interest free, and has no fixed term of repayment.

20. REVENUE Group

Revenue represents the gross income from the manufacturing and trading of paper, board packaging products, specialising in offset-printed boxes and offset-laminated cartons, manufacture and sale of plastic packaging products, provision of colour separation, printed material and provision of specialised outdoor advertising media services.

Company Revenue represents income from services rendered, including professional and management advice, marketing, management information system and accounting services and administrative matters to the subsidiary companies.

52

OPERATING PROFIT/(LOSS) Operating profit/(loss) has been arrived at:-

Group Company

2009 2008 2009 2008

RM RM RM RM

After charging:- Allowance for doubtful debts 5,337,609 883,159 - - Amortisation of prepaid lease payments 27,171 27,173 - - Audit fee Statutory - current year 49,770 65,920 11,970 11,970 - (over)/underaccrual in prior year (13,950) 1,000 - 1,000 - others 22,500 25,000 22,500 25,000 Bad debts written off 398,149 - - - Depreciation 5,175,047 5,380,931 5,356 5,173 Directors' remuneration - fees 145,000 133,000 145,000 133,000 - other emoluments 527,504 575,775 154,398 151,113 Impairment loss on investment in subsidiary companies - - 9,271,285 9,394,000 Impairment loss on other investments - 13,062,907 - - Loss on disposal of other investments 240,500 - - - Realised loss on foreign exchange 270,707 277,137 - - Staff costs: - EPF 810,210 812,350 29,040 31,307 - SOSCO 115,665 115,871 1,838 1,704 - Salaries, wages, bonuses and allowances 9,611,674 10,202,069 126,806 269,379 - Welfare and training 348,953 404,902 5,698 7,584 Property, plant and equipment written off 188,322 - - - Rental of factory and warehouse 299,746 459,886 - - Rental of machinery 76,000 45,798 - - Rental payable to directors 8,150 16,950 - - And crediting:- Bad debts recovered 573,374 1,511,958 - - Doubtful debts receoverd 10,559 - - - Gain on disposal of asset held for sale - 433,736 - - Impairment loss on other investments no longer required 8,614,405 - - - Gain on disposal of property, plant and equipment 151,325 97,006 - - Insurance claim - 452,224 - - Management fees - - 579,309 729,082 Realised gain on foreign exchange 289,942 73,725 - - Rental income - 90,000 - - Unrealised gain on foreign exchange 98,986 - - -

21.

53

FINANCE COSTS (NET)

Group

2009 2008

RM RM

Interest income 24,190 25,700

Interest expenses:

- bank overdrafts (261,344) (330,008)

- loans (391,112) (796,761)

- other borrowings (1,054,161) (1,132,371)

(1,706,617) (2,259,140)

(1,682,427) (2,233,440)

TAXATION

Group Company

2009 2008 2009 2008

RM RM RM RM

Taxation

- current year (85,623) ( 215,000) - -

- over/(under)accrual in

prior year 125,762 (25,331) - (11,085)

Deferred taxation (Note 17)

- current year 347,345 482,156 - -

- (under)/overaccrual in

prior year (323,692) 673,280 - -

23,653 1,155,436 - -

63,792 915,105 - (11,085)

The income tax is calculated at the statutory rate of 25% (2008: 26%) of the estimated taxable profit for the

fiscal year.

22.

23.

54

23. TAXATION (Continued) A reconciliation of income tax expense applicable to profit/(loss) before taxation at the statutory income

tax rate to income tax expense at the effective income tax rate of the Group and of the Company are as

follows:-

Group Company

2009 2008 2009 2008

RM RM RM RM

Profit/(loss) before

taxation 1,556,215 (13,749,991) (9,562,788) (9,592,196)

Tax at applicable tax rate (389,054) 3,574,998 2,390,697 2,493,971

Tax effects arising from

- non-deductible expenses (1,805,475) (4,568,473) (2,381,684) (2,485,555)

- non-taxable income 2,301,046 553,067 - -

- SME tax savings - 22,417 - -

- tax incentives 223,063 114,218 - -

- changes in tax rates - (1,678) - (321)

- (origination)/reversal of

deferred tax assets not recognised (67,858) 572,607 (9,013) (8,095)

- (under)/overaccrual

in prior year (197,930) 647,949 - (11,085)

Tax expense for the

financial year 63,792 915,105 - (11,085)

The amount of temporary differences for which no deferred tax assets have been recognised are as

follows:-

Group Company

2009 2008 2009 2008

RM RM RM RM

Unutilised tax losses 349,727 319,030 67,951 37,254

Unabsorbed reinvestment

allowances 17,126,204 16,861,332 - -

Deductible temporary

differences 1,719,566 1,743,702 12,115 6,759

19,195,497 18,924,064 80,066 44,013

Potential deferred tax assets

not recognised at

25% (2008: 25%) 4,798,874 4,731,016 20,016 11,003

The availability of the unutilised tax losses, unabsorbed reinvestment allowances and deductible temporary

differences for offsetting against future taxable profits of the Company and its subsidiary companies are

subject to no substantial changes in shareholdings of the Company and its subsidiary companies under

Section 44(5A) and 5(B) of Income Tax Act, 1967.

55

24. EARNING/(LOSS) PER ORDINARY SHARE

Basic Earnings/(Loss) Per Ordinary Share

The basic earnings/(loss) per ordinary share for the financial year has been calculated based on the Group’s

profit/(loss) for the financial year attributable to the equity holders of the Company of approximately

RM1,620,007/- (2008: RM(12,834,886)/-) and on the number of 110,643,081 (2008: 110,643,081)

ordinary shares as at year end.

Diluted Earnings/(Loss) Per Ordinary Share

Diluted earnings/(loss) per ordinary share was not presented as there were no dilutive potential ordinary

shares in issue.

25. PURCHASE OF PROPERTY, PLANT AND EQUIPMENT

During the financial year, the Group and the Company made the following cash payments to purchase of

property, plant and equipment:-

Group Company

2009 2008 2009 2008

RM RM RM RM

Purchase of property, plant

and equipment 1,520,205 3,224,045 - 10,230

Financed by hire purchase

arrangements (939,650) (1,667,915) - -

Cash payments on purchase

of property, plant and equipment 580,555 1,556,130 - 10,230

26. CAPITAL COMMITMENT Group

2009 2008

RM RM

Capital expenditure commitment

Plant and equipment

- approved but not contracted for 3,728,876 4,827,154

27. CONTINGENT LIABILITIES Group

2009 2008

RM RM

Corporate guarantee to creditors of a

subsidiary company 1,700,000 1,700,000

Corporate guarantee to licenced banks for

credit facilities granted to its subsidiary companies 17,159,282 17,838,368

18,859,282 19,538,368

56

28. SIGNIFICANT RELATED PARTY TRANSACTIONS

(a) The Group and the Company had the following transactions with related parties during the financial

year:-

Group Company

2009 2008 2009 2008

RM RM RM RM

Management fees received from:

- Fairpoint Plastic Industires - - 281,572 357,560

Sdn. Bhd.

- Imagescan Creative Sdn. Bhd. - - 80,078 134,397

- Versatile Paper Boxes Sdn. Bhd. - - 217,659 237,125

Rental charged by directors:

- Chow Pak Lim 8,150 12,000 - -

- Leom Chit Dein @ - 4,950 - -

Lim Jit Teng

Sales to a company in which the directors,

Eow Kwan Hoong and Syed Abdullah

bin Syed Abd Kadir, have interests:

- Iris Corporation Berhad 1,150 21,152 - -

- Iris Technologies (M) Sdn. Bhd. - 1,051 - -

Sales to a company in which a director's

immediate family member, Hanafi

bin Shahabuddin, has interests:

- Sentuhan Seni Sdn. Bhd. 661 1,537 - -

- D.I. Creative Sdn. Bhd. 67,634 88,965 - -

The directors of the Company are of the opinion that the above transactions have been entered into

in the normal course of business and the terms are no less favourable than those arranged with

third party.

57

SIGNIFICANT RELATED PARTY TRANSACTIONS (Continued)

(b) The remuneration of directors and other members of Key Management of the Group and the

Company during the financial year were as follows:-

Group Company

2009 2008 2009 2008

RM RM RM RM

Directors' fee 145,000 133,000 145,000 133,000

Directors' remuneration 527,504 575,775 154,398 151,113

672,504 708,775 299,398 284,113

29.SEGMENTAL REPORTING

Business segments

The Group’s operating businesses are classified according to the nature of activities as follows:

Paper products : Manufacturing and trading of paper board packaging products,

specialising in offset-printed boxes and offset-laminated cartons.

Plastic products : Manufacturing and sale of plastic packaging products.

Colour separation and : Provision of colour separation and lithography services and printed

printing materials.

Others : Investment holding and provision of specialised outdoor advertising

media services.

Segment revenue, expenses and results include transfer between segments. The prices charged on inter-

segment transactions are the same as those charged for similar goods to parties outside the economic entity

and are at arm’s length. These transfers are eliminated on consolidation.

Geographical segments

The activities of the Group are carried out in Malaysia. The major market for all the divisions is in

Malaysia.

In presenting information on the basis of geographical segments, segment revenue is based on the

geographical location of customer. Segment assets and segment liabilities are based on the geographical

location of assets.

28.

58

29. SEGMENTAL REPORTING (Continued)

PRIMARY REPORTING - BUSINESS SEGMENT

Colour Paper Plastic separation products products and printing Others Elimination Total

RM RM RM RM RM RM

Group

2009

REVENUE 19,779,253 7,280,886 25,597,399 579,309 (663,242) 52,573,605

RESULTS

Segment results 3,239,588 (4,493,146) 326,593 (9,568,791) 13,734,398 3,238,642

Finance costs (1,506,636) 17,431 (193,222) - - (1,682,427)


taxation 1,732,952 (4,475,715) 133,371 (9,568,791) 13,734,398 1,556,215

Taxation (142,138) 378,049 (172,119) - - 63,792

Profit/(loss) for the

financial year 1,590,814 (4,097,666) (38,748) (9,568,791) 13,734,398 1,620,007

OTHER

INFORMATION

Segment assets 49,222,761 25,203,743 4,558,050 18,803,959 - 97,788,513

Total assets 49,319,408 25,313,062 4,589,871 18,807,986 - 98,030,327

Segment liabilities 26,595,327 10,495,012 2,648,328 238,084 - 39,976,751

Total liabilities 28,517,385 11,666,807 3,061,386 238,084 - 43,483,662

Capital expenditure 505,352 884,804 130,049 - - 1,520,205

Depreciation and

amortisation 1 ,729,917 2,525,658 941,287 5,356 - 5,202,218

Non cash expenses

other than depreciation

and amortisation (3,031,565) 14,392 4,104,504 9,271,285 (13,734,398)

Malaysia Others Elimination Total

GEOGRAPHICAL SEGMENTS RM RM RM RM

Revenue 42,470,728 10,682,186 (579,309) 52,573,605

Segment results 3,238,642 - - 3,238,642

Segment assets 97,788,513 - - 97,788,513

Segment liabilities 39,976,751 - - 39,976,751

Capital expenditure 1,520,205 - - 1,520,205

Depreciation and amortisation 5,202,218 - - 5,202,218

Non cash expenses other than

depreciation and amortisation (3,375,782) - -

(3,375,782)

(3,375,782)

59

29. SEGMENTAL REPORTING (Continued)

PRIMARY REPORTING - BUSINESS SEGMENT

Colour

Paper Plastic separation

products products and printing Others Elimination Total

RM RM RM RM RM RM

Group

2008

REVENUE 21,199,464 32,505,460 12,120,012 729,082 (729,082) 65,824,936

RESULTS

Segment results (11,830,030) 906,512 1,207,785 (9,598,164) 7,797,346 (11,516,551)

Finance costs (1,789,206) (221,103) (223,131) - - (2,233,440)


taxation (13,619,236) 685,409 984,654 (9,598,164) 7,797,346 (13,749,991)

Taxation 663,102 595,006 (331,918) (11,085) - 915,105

Profit/(loss) for the

financial year (12,956,134) 1,280,415 652,736 (9,609,249) 7,797,346 (12,834,886)

OTHER

INFORMATION

Segment assets 42,398,134 26,650,901 9,922,494 18,794,470 - 97,765,999

Total assets 42,504,532 26,844,657 10,046,525 18,796,045 - 98,191,759

Segment liabilities 27,859,493 9,822,475 3,809,124 243,445 - 41,734,537

Total liabilities 29,656,963 10,855,650 4,509,043 243,445 - 45,265,101

Capital expenditure 2,079,815 1,025,369 108,631 10,230 - 3,224,045

Depreciation and

amortisation 1,688,571 2,740,523 973,837 5,173 - 5,408,104

Non cash expenses

other than depreciation

and amortisation 13,101,392 - 252,704 9,985,970 (9,394,000) 13,946,066

Malaysia Others Elimination Total

GEOGRAPHICAL SEGMENTS RM RM RM RM

Revenue 51,801,685 14,752,333 (729,082) 65,824,936

Segment results (11,516,550) - - (11,516,550)

Segment assets 97,765,999 - - 97,765,999

Segment liabilities 41,734,537 - - 41,734,537

Capital expenditure 3,224,045 - - 3,224,045

Depreciation and amortisation 5,408,104 - - 5,408,104

Non cash expenses other than

depreciation and amortisation 13,946,066 - - 13,946,066

60

FINANCIAL INSTRUMENTS

(a) Financial Risk Management and Objectives

The Group is exposed to credit, liquidity, foreign currency and interest rate risks that arise in the

normal course of business. The Group’s overall financial risk management objectives are to ensure

that the Group creates and optimises value for its shareholders and to minimise any potential

adverse effects on the financial performance and position based on its prevailing capability and

capacity. The general risk management philosophy, policies, and the overall business strategies are

reviewed annually by the Board of Directors and quarterly review are undertaken to ensure that

the Group’s policy guidelines adhered to.

(i) Credit risk

The management has in place a credit procedure to monitor and minimise the exposure of default.

Trade receivables are monitored on an ongoing basis.

As at balance sheet date, there were no significant concentrations of credit risk in the Group. The

maximum exposure to credit risk for the Group is represented by the carrying amount of the

financial statement.

(ii) Liquidity Risk

The Group actively manages its debt maturity profile, operating cash flows and the availability of

funding so as to ensure that all financing, repayment and funding needs are met. As part of its

overall prudent liquidity management, the Group maintains sufficient level of cash or cash

equivalents to meet its working capital requirements.

(iii) Foreign Currency Risk

The Group is exposed to currency risk as a result of the foreign currency transactions, mainly

in US Dollar, Singapore Dollar, Pounds Sterling, Australian Dollar, Euro Dollar and

Swedish Krona.

30.

61

FINANCIAL INSTRUMENTS (Continued)

(a) Financial Risk Management and Objectives (Continued)

(iv) Interest Rate Risk

The Group’s primary interest rate risk relates to interest-bearing debt as at 31st December 2009.

The investments in financial assets are mainly short-term in nature and they are not held for

speculative purposes.

Effective

Interest Within 2 - 5 More than

Rate 1 year year 5 years Total

% RM RM RM RM

As at

31st December 2009

Financial asset

Fixed deposits 2.50 - 3.70 639,051 - - 639,051

Financial liabilities

Bank loan 4.80 - 8.00 2,082,478 3,978,904 778,251 6,839,633

Bank overdraft 7.05 - 8.25 4,276,197 - - 4,276,197

Bankers' acceptance 3.30 - 4.98 13,766,000 - - 13,766,000

Revolving credits 4.74 - 8.00 1,500,000 - - 1,500,000

Hire purchase liabilities 2.28 - 3.90 824,387 1,544,502 - 2,368,889

As at

31st December 2008

Financial asset

Fixed deposits 3.00 - 3.70 616,135 - - 616,135

Financial liabilities

Bank loan 4.00 - 8.25 2,609,073 5,251,854 58,233 7,919,160

Bank overdrafts 7.75 - 8.25 5,228,338 - - 5,228,338

Bankers' acceptance 4.71 - 5.80 15,057,000 - - 15,057,000

Revolving credits 6.21 - 8.25 1,500,000 - - 1,500,000

Hire purchase liabilities 2.95 - 4.95 935,066 1,602,022 - 2,537,088

30.

62

30. FINANCIAL INSTRUMENTS (Continued)

(b) Fair Values (i) Recognised financial instruments In the opinion of the directors, there was no significant difference between the fair values and

the book values of the financial assets and financial liabilities. (ii) Unrecognised financial instruments There are no financial instruments not recognised in the balance sheets as at 31st December

2009 that are required to be disclosed.

63



STATEMENT BY DIRECTORS

We, SHAHABUDDIN BIN ABDULLAH @ LEE SENG PUN and EOW KWAN HOONG, being two of the

directors of Versatile Creative Berhad, do hereby state that in the opinion of the directors, the accompanying

financial statements set out on page 24 to 62, are drawn up so as to give a true and fair view of the state of affairs

of the Group and of the Company as at 31st December 2009 and of the results and cash flows of the Group and

of the Company for the financial year ended on that date in accordance with the Financial Reporting Standards

and the provisions of the Companies Act, 1965 in Malaysia.

On behalf of the Board,

……………………………………………………………..

SHAHABUDDIN BIN ABDULLAH @ LEE SENG PUN

Director

…………………………………

EOW KWAN HOONG

Director

Kuala Lumpur

Date:28 April 2010

64



STATUTORY DECLARATION

I, EOW KWAN HOONG, being the director primarily responsible for the financial management of Versatile

Creative Berhad, do solemnly and sincerely declare that to the best of my knowledge and belief, the financial

statements set out on page 24 to 62, are 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.

..................................................

EOW KWAN HOONG

Subscribed and solemnly declared by the abovenamed at Kuala Lumpur in the Federal Territory on 28 April 2010

Before me,

..................................................

Commissioner for Oaths

65



INDEPENDENT AUDITORS’ REPORT TO THE MEMBERSOF VERSATILE CREATIVE BERHAD (Incorporated in Malaysia)

Report on the Financial Statements

We have audited the financial statements of Versatile Creative Berhad (“the Company”), which comprise the

balance sheets as at 31st December 2009 of the Group and of the Company, and the income statements,

statements of changes in equity and cash flow statements of the Group and of the Company for the financial

year then ended, and a summary of significant accounting policies and other explanatory notes, as set out on

pages 24 to 62.

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 the Financial Reporting Standards, and the provisions of the Companies Act,

1965 in Malaysia. The responsibility includes: designing, implementing and maintaining internal controls

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 as to whether the

financial statements are free of 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 judgment, 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 controls 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 controls. 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.

66

Opinion

In our opinion, the financial statements have been properly drawn up in accordance with the Financial Reporting Standards and the provisions of 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 at 31st December 2009 and of their financial performance and cash flows for the financial year then ended.

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 and the subsidiary companies of which we have acted as auditors have been properly kept in accordance with the provisions of the Act.

b) We have considered the financial statements and the auditors’ report of all the subsidiary companies of which we have not acted as auditors, which are indicated in note 7 to the financial statements.

c) We are satisfied that the financial statements of the subsidiary companies 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.

d) The audit reports on the financial statements of the subsidiary companies did not contain any qualification or any adverse comment made under Section 174(3) of the Act.

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.

Baker Tilly Monteiro HengNo. AF 0117Chartered Accountants

M.J MonteiroNo. 828/05/10 (J/PH)Partner

Kuala Lumpur

Date: 28 April 2010

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ANALYSIS OF SHAREHOLDINGS

As at 27 April 2010

Ordinary Shares

Authorised share capital - 500,000,000 ordinary shares of RM1.00 eachPaid up capital - 110,643,081 ordinary shares of RM1.00 eachClass of shares - Ordinary share of RM1.00 eachVoting rights - One vote per ordinary share

Distribution of shareholdings

No. ofshareholders

% ofshareholders

Totalholdings

% of totalholdings

Size of shareholding:

Less than 1,000 10,609 80.37 2,367,612 2.14

1,001 to 10,000 1,894 14.35 7,480,736 6.76

10,001 to 100,000 598 4.53 18,207,300 16.46

100,001 to less than 5% of issued shares

98 0.74 54,094,112 48.89

5% and above of issued shares

2 0.02 28,493,321 25.75

Total 13,201 100.00 110,643,081 100.00

Substantial shareholders as per Register of substantial shareholders

Directors’ shareholdings

Name No. of Shares held % of issued capital

1. Shahabuddin bin Abdullah @ Lee Seng Pun - -

2. Chow Pak Lim 5,114,779 4.62

3. Leom Chit Dein @ Lim Jit Teng AllianceGroup Nominees (Tempatan) Sdn Bhd

Qualifi er: Pledged Securities Account for Leom Chit Dein @ Lim Jit Teng (100688)

265,5523,000,000

0.242.71

4. Lee Seng Hoong - -

5. Syed Abdullah Bin Syed Abd Kadir - -

6. Chan Fin Fui @ Chan Kim Fee - -

7. Eow Kwan Hoong - -

8. Dato' Mohamad Suparadi bin Md Noor - -

9. Chan Feoi Chun 50,000 0.05

Total 8,430,331 7.62

Name No. of Shares held %

1. Versatile Credit & Leasing Sdn Bhd 22,837,821 20.64

2. Kamarudin Bin Meranun 5,655,500 5.11

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1. VERSATILE CREDIT & LEASING SDN BHD 22,837,821 20.64

2. KAMARUDIN BIN MERANUN 5,655,500 5.11

3. SITI MUNAJAT BINTI MD GHAZALI 5,222,000 4.72

4. CHOW PAK LIM 5,114,779 4.62

5. ABDUL RADZIM BIN ABDUL RAHMAN 4,300,000 3.89

6. ZAKARIA BIN MERANUN 4,232,800 3.83

7. HLG NOMINEE (TEMPATAN) SDN BHD 3,668,700 3.32

QUALIFIER: PLEDGED SECURITIES ACCOUNT

FOR TAN SAY JIM

8. TENGKU AB MALEK BIN TENGKU MOHAMED 3,116,900 2.82

9. ALLIANCEGROUP NOMINEES (TEMPATAN) 3,000,000 2.71

SDN BHD


FOR LEOM CHIT DEIN @ LIM JIT TENG (100688)

10. KENANGA NOMINEES (ASING) SDN BHD 1,727,000 1.56


FOR IOANNIS KOROMILAS


SDN BHD


FOR CHOW PAK LEONG (100698)


SDN BHD


FOR CHOW PAK SENG (100699)

13. PUBLIC NOMINEES (TEMPATAN) SDN BHD 868,200 0.78


FOR CHAU SAM TAI @ CHOW SAM TAI (E-KUG)

14. TA NOMINEES (TEMPATAN) SDN BHD 803,500 0.73


FOR LIEW YAM FEE

15. CHOO SEONG KIAT 782,500 0.71

16. AMSEC NOMINEES (TEMPATAN) SDN BHD 615,000 0.56


FOR ABDOLLAH TARMIDZI BIN MOIS

30 Largest shareholders as at 27 April 2010


69


17. HLG NOMINEE (TEMPATAN) SDN BHD 578,200 0.52


FOR ROZMAN BIN OMAR (C03RMT2MTR520M)

18. PARQUIN SDN. BHD. 550,000 0.50

19. CHOO THEN SANG 500,428 0.45

20. NG KIAN KOK 498,300 0.45

21. JF APEX NOMINEES (TEMPATAN) SDN BHD 485,400 0.44


FOR PHANG NYOK CHIN

22. CHOW CHEE YUT 480,480 0.43

23. LEE WEI LIM 458,200 0.41

24. PETER LING EE KONG 450,000 0.41

25. CHOW PAK LEONG 377,098 0.34

26. WONG SENG HUAT 362,700 0.33

27. CHIN KA WONG 340,000 0.31

28. YONG HON CHONG 336,100 0.30

29. CIMB BANK BERHAD 333,537 0.30

30. ADELINE CHAN CHENG PHENG 316,000 0.29

30 Largest shareholders as at 27 April 2010 (Continued)


70

LIST OF PROPERTIES

Location Tenure Area Year Description Net Book Age of Date of Acres of /Existing use Value as at building acquisition expiry 31-12-2009 (years) RM

Lot 30745, Jalan Pandan Leasehold 3.0/2.18 2063 Industrial 12,413,454 16 09.12.1993Indah, Pandan Indah, Land/Factory55100 Kuala Lumpur Building

No.5, Jalan Teras 4, Freehold 0.94/0.58 - Industrial 2,139,249 14 31.12.1995Kawasan Industrial Teras, Land/ Tmn Industrial Selesa Factory Jaya, 43300 Balakong Building Selangor

No.12, Jalan Teras 3, Freehold 0.45/0.21 - Industrial 1,779,369 14 19.08.2003Kawasan Industrial Teras, Land/ Tmn Industrial Selesa Factory Jaya, 43300 Balakong BuildingSelangor

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Ordinary Business

1 To receive the Audited Financial Statements for the financial year ended 31 December 2009 together with the Reports of the Directors and Auditors thereon.

2. To re-elect Shahabuddin Bin Abdullah @ Lee Seng Pun who retires pursuant to Article 73 of the Company’s Articles of Association.

3. To re-elect Eow Kwan Hoong who retires pursuant to Article 73 of the Company’s Articles of Association.

4. To re-elect Syed Abdullah Bin Syed Abd Kadir who retires pursuant to Article 73 of the Company’s Articles of Association.

5. To re-appoint Messrs Baker Tilly Monteiro Heng as Auditors of the Company and to authorise the Directors to fix their remuneration.

Special Business

6. To consider and if thought fit, to pass the following resolution in accordance with Section 129 of the Companies Act, 1965:-

“THAT pursuant to Section 129 of the Companies Act, 1965, Chan Fin Fui @ Chan Kim Fee who is over the age of 70 years be and is hereby re-appointed as Director of the Company and to hold office until the conclusion of the next Annual General Meeting.”

7. To consider and if thought fit, to pass the following resolution:-

“THAT the payment of Directors’ fees of RM145,000 for the financial year ended 31 December 2009 be approved.”

To consider and if thought fit, to pass the following resolutions, with or without modifications, as Ordinary Resolution/Special Resolution of the Company:-

8. ORDINARY RESOLUTION

AUTHORITY TO ISSUE SHARES

“THAT pursuant to Section 132D of the Companies Act, 1965, the Directors of the Company be and are hereby empowered to issue shares in the Company at any time and upon such terms and conditions and for such purposes as the Directors may in their absolute discretion deem fit provided that the aggregate number of shares issued pursuant to this resolution in any one financial year does not exceed 10% of the issued share capital of the Company for the time being and that the Directors be and are also empowered to obtain approval for the listing of and quotation for the additional shares so issued on Bursa Malaysia Securities Berhad and that such authority shall continue to be in force until the conclusion of the next Annual General Meeting of the Company unless revoked or varied by the Company at a general meeting.”

(Please refer to Explanatory Note 1)

(Resolution 1)

(Resolution 2)

(Resolution 3)

(Resolution 4)

(Resolution 5)

(Resolution 6)

(Resolution 7)

(Company No. 603770-D)(Incorporated in Malaysia)

NOTICE OF SEVENTH (7TH) ANNUAL GENERAL MEETING

NOTICE IS HEREBY GIVEN that the 7th Annual General Meeting of the Company will be held at Versatile Creative Berhad, Audio Room, Lot 30745, Jalan Pandan Indah, 55100 Kuala Lumpur on Tuesday, 22 June 2010 at 10.00 a.m. to transact the following business:-

AGENDA

72

By Order of the Board

NG YEN HOONG (LS 008016)

WONG PEIR CHYUN (MAICSA 7018710)

Company Secretaries

Kuala Lumpur

31 May 2010

NOTES:

1. Notes on Appointment of Proxy

(a) A proxy may but need not be a member of the Company and the provisions of Section 149(1)(b) of the Act shall not apply to the Company.

(b) The instrument appointing a proxy shall be in writing (in the common seal or usual form) under the hand of the appointer or his attorney duly authorised in writing or, if the appointer is a corporation, either under Seal or under the hand of an officer or attorney duly authorised. The duly completed form must be deposited at the Registered Office of the Company at Level 18, The Gardens North Tower, Mid Valley City, Lingkaran Syed Putra, 59200 Kuala Lumpur not less than 48 hours before the time for holding the meeting Provided That in the event member(s) duly executes the form of proxy but does not name any proxy, such member(s) shall be deemed to have appointed the Chairman of the meeting as his/their proxy, Provided Always that the rest of the proxy form, other than the particulars of the proxy have been duly completed by the member(s).

(c) A member shall be entitled to appoint more than one (1) proxy to attend and vote at the same meeting provided that the provisions of Section 149(1)(c) of the Act are complied with.

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

2. Explanatory Notes

(i) Item 1 of Agenda

This item is meant for discussion only as the provision of Section 169(1) of the Companies Act, 1965 does not require a formal approval of the shareholders for the Audited Financial Statements. Hence, this Agenda is not put forward for voting.

Special Business

(ii) Resolution 5 – Re-appointment of Director Pursuant to Section 129 of the Companies Act, 1965

The re-appointment of Chan Fin Fui @ Chan Kim Fee, a person over the age of 70 years as Director of the Company to hold office until the conclusion of the next Annual General Meeting of the Company pursuant to Section 129 of the Companies Act, 1965 shall take effect if this proposed Resolution is passed by a majority of not less than three-fourths (3/4) of such members as being entitled to vote in person or, where proxies are allowed by proxy, at a general meeting of which not less than 21 days’ notice specifying the intention to propose the resolution has been duly given.

9. SPECIAL RESOLUTION

PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION

“THAT the amendments to the Company’s Articles of Association as set out in Appendix I be and is hereby approved and adopted.

THAT the Board of Directors of the Company be and is hereby authorised to do all such acts, deeds, and things as are necessary and/or expedient in order to give full effect to the Proposed Amendments with full powers to assent to any conditions, modifications and/or amendments as may be required by any relevant authorities.”

(Resolution 8)

73

(iii) Resolution 6 – Directors’ Fees

This Resolution, if passed, will authorise the Company to pay a Directors’ fees of RM145,000 for the financial year ended 31 December 2009.

(iv) Resolution 7 – Authority to Issue Shares

The Proposed Resolution 6 is proposed for the purpose of granting a renewed general mandate (“General Mandate”) and empowering the Directors to issue shares in the Company up to an amount not exceeding in total ten per centum (10%) of the Issued Share Capital of the Company for such purposes as the Directors consider would be in the interest of the Company.

This authority, unless revoked or varied by the Company at a general meeting, will expire at the next Annual General Meeting.

The General Mandate will provide flexibility to the Company for allotment of shares for any possible fund raising activities, including but not limited for further placing of shares, for the purpose of funding future investments(s), acquisition(s) and/or working capital.

As at the date of this Notice, the Company did not issue any shares pursuant to the mandate granted to the Directors at the Eighth Annual General Meeting, because there were no investment(s), acquisition(s) or working capital that required fund raising activity.

(v) Resolution 8 – Proposed Amendments to the Articles of Association

This Resolution, if passed, will authorise the Company to amend its Articles of Association. The Proposed Amendments are for the purpose of facilitating some administrative issues.

Please refer to Appendix I for full details of the Proposed Amendments.

By Order of the Board

NG YEN HOONG (LS 008016)

WONG PEIR CHYUN (MAICSA 7018710)

Company Secretaries

Kuala Lumpur

31 May 2010

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APPENDIX I

PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION OF VERSATILE CREATIVE BERHAD

The existing Articles of Association (“Articles”) of the Company is proposed to be amended as set out in the third column below:-

Article No.

ToamendArticle

53

ToamendArticle

107

Existing Provision

All business shall be special that istransacted at an extraordinary generalmeeting, and also all that is transacted atan annual general meeting, with theexception of declaring a dividend, theconsideration of the accounts,balance sheet, and report of the Directors and auditors, the election of Directors in place of those retiring and the appointment and fixing of the remuneration of the auditors.

The Secretary shall in accordance with the Act be appointed by the Directors for such term, at such remuneration, and upon such conditions as they may think fit, and any Secretary so appointed may be removed by them. The Directors may also appoint a Joint Secretary, Deputy Secretary or any Assistant Secretary.

Amended Provision

Subject always to the provisions of Section 151 of the Act no business shall be transacted at an extraordinary general meeting except business of which notice has been given in the notice convening the meeting and no business shall be transacted at an annual general meeting other than business of which notice has been given aforesaid. All business shall deemed special that is transacted at any extraordinary general meeting and also all business that is transacted at an annual general meeting with the exception of receipts and consideration of the profit and loss accounts, balance sheets and the report of the Directors and Auditors, the declaration of dividend, the appointment of Directors, the election of Directors, fixing of remuneration of Directors, and the appointment and fixing of the remuneration of Auditors.

(i) The Secretary shall in accordance with the Act be appointed by the Directors for such term, at such remuneration, and upon such conditions as they may think fit, and any Secretary so appointed may be removed by them. The Directors may also appoint a Joint Secretary, Deputy Secretary or any Assistant Secretary.

The First Secretary of the Company shall be SIVAPALAN A/L VIVEKARAJAH @ MAVNEKARAJAH (MAICSA 7010048).

75

Article No.

ToamendArticle

122

Existing Provision

The First Secretary of the Company shall be SIVAPALAN A/L VIVEKARAJAH @ MAVNEKARAJAH (MAICSA 7010048).

Any dividend, interest, or other money payable in cash in respect of shares may be paid by cheque or warrant sent through the post direct to the registered address of the holder. Every such cheque or warrant shall be made payable to the order of the person to whom it is sent.

Amended Provision

(ii) The office of the Secretary shall be vacated if the secretary resigns by notice in writing to the company, left at the Office and copies sent to all the directors for the time being at their last known residential addresses. Where a Secretary gives notice of resignation to the directors, the Secretary shall cease to act as Secretary with immediate effect, and unless provided in the terms of engagement, within the stipulated time.

Any dividend, interest, or other monies payable in cash in respect of shares may be paid by cheque or warrant sent through the post and to the last registered address of the member or person entitled thereto or by direct transfer or such other mode of electronic means (subject to the provisions of the Act, the Central Depositories Act and the Rules, the Listing Requirements and/or other regulatory authorities) to the bank account of the holder whose name appear in the Register or Record of Depositors respectively. Every such cheque or warrant or payment by direct transfer shall be made payable to the order of the person to whom it is sent or to such person as the holder or person or persons entitled to the share in consequence of the death or bankruptcy of the holder may direct and the payment of the cheque or warrant by such electronic means shall be a good discharge to the Company of the dividend to which it relates, regardless that it may subsequently appear that the cheque or warrant has been stolen or that endorsement thereon has been forged or of any discrepancy given by the member in the details of the bank account(s). Every such cheque or warrant shall be sent at the risk of the person entitled to the money represented thereby.

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PROXY FORM

I/We____________________________________________________________________________________of ______________________________________________________________________________________being a member/members Versatile Creative Berhad hereby appoint_________________________________of ___________________________________________________________________________or falling him,

__________________________________________________________________________________of_______________________________________________________________________________________

as *my/our proxy to vote for *me/us and on *my/our behalf at the 7th Annual General Meeting of the Company to be held at Versatile Creative Berhad, Audio Room, Lot 30745, Jalan Pandan Indah, 55100 Kuala Lumpur on Tuesday, 22 June 2010 at 10.00 a.m. and, at my adjournment thereof *for/against the resolution(s) to be proposed thereat.

Item AGENDA Resolution For Against

Ordinary Business1. Receive the Audited Financial Statements for the financial year ended 31 December 2009 together with the Reports of the Directors and Auditors thereon. 2. Re-election of Shahabuddin Bin Abdullah @ Lee Seng Pun 1 as Director of the Company pursuant to Article 73 of the Company’s Articles of Association.3. Re-election of Eow Kwan Hoong as Director of the 2 Company pursuant to Article 73 of the Company’s Articles of Association.4. Re-election of Syed Abdullah Bin Syed Abd Kadir as 3 Director of the Company pursuant to Article 73 of the Company’s Articles of Association.5. Re-appointment of Messrs Baker Tilly Monteiro Heng as 4 Auditors of the Company and to authorise the Directors to fix their remuneration. Special Business6. Re-appointment of Chan Fin Fui @ Chan Kim Fee as 5 Director of the Company pursuant to Section 129 of the Companies Act, 1965.7. Approval of Directors’ fees amounting to RM145,000 6 for the financial year ended 31 December 2009.8. Authority to the Directors to issue shares pursuant to 7 Section 132D of the Companies Act, 1965.

9. Proposed amendments to the Articles of Association. 8

Please indicate with an “X” in the space provided whether you wish your votes to be cast for or against the resolutions. In the

absence of specific directions, your proxy will vote or abstain as he/she thinks fits.

As witness my/our hand(s) this _________day of ____________________2010.

Signature or Common Seal of Member(s)

*Strike out whichever is not desired. (Unless otherwise instructed the proxy may vote as he thinks fit)

No of shares held

78

Notes :

i. A proxy may but need not be a member of the Company and the provisions of Section 149(1)(b) of the Act shall not apply to the Company.

ii. The instrument appointing a proxy shall be in writing (in the common seal or usual form) under the hand of the appointer or his attorney duly authorised in writing or, if the appointer is a corporation, either under Seal or under the hand of an officer or attorney duly authorised. The duly completed form must be deposited at the Registered Office of the Company at Level 18, The Gardens North Tower, Mid Valley City, Lingkaran Syed Putra, 59200 Kuala Lumpur not less than 48 hours before the time for holding the meeting Provided That in the event member(s) duly executes the form of proxy but does not name any proxy, such member(s) shall be deemed to have appointed the Chairman of the meeting as his/their proxy, Provided Always that the rest of the proxy form, other than the particulars of the proxy have been duly completed by the member(s).

iii. A member shall be entitled to appoint more than one (1) proxy to attend and vote at the same meeting provided that the provisions of Section 149(1)(c) of the Act are complied with.

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

The Company SecretariesVersatile Creative Berhad

Level 18, The Gardens North Tower,Mid Valley City, Lingkaran Syed Putra,

59200 Kuala Lumpur.

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Affixpostage

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