Page 1

VICPLAS

Forefront INNovation Strength in Diversity

2010 annual report


Mission Statement Our mission is to multiply profitability through continuous technological innovation and product and service improvements. This will help us to fulfill our commitment to provide optimum value for our customers, business partners and shareholders.


Annual Report 2010

The Group has two core businesses • The research, design, development and manufacture of innovative medical devices through our wholly-owned subsidiaries, Forefront Medical Technology (Pte) Ltd in Singapore and Forefront (Xiamen) Medical Devices Co., Ltd in China. Forefront Medical Technology (Pte) Ltd has quality certifications of ISO13485:2003 and ISO9001:2008 and is also registered in United States Food and Drug Administration Medical Device Establishment as an approved contract manufacturer. Forefront (Xiamen) Medical Devices Co., Ltd has quality certifications of ISO13485:2003 and ISO9001:2008 and a Class II Medical Device Manufacturing License in China. • The manufacturing and distribution of plastic building products including uPVC pipes and pipe fittings and electrical conduits through our wholly-owned subsidiaries, VicPlas Holdings Pte Ltd in Singapore and Rimplas Industries Sdn. Bhd. in Malaysia. Both VicPlas Holdings Pte Ltd and Rimplas Industries Sdn. Bhd. have quality certification of ISO9001:2008. All our plastic building products are marketed under the VicPlas brand and we serve customers primarily in Singapore, Malaysia and Bangladesh.

Contents Chairman’s Statement

02

Operational and Financial Review

Board of Directors and Senior Management Corporate Information

08

04

Organisation Structure

12 Corporate Governance Report 13

11

Financial Statements

20 1


VicPlas International Ltd

Statement by Chairman and Deputy Chairman

Dear Shareholders

On behalf of the Board of Directors of VicPlas International Ltd, we are pleased to present the Group’s results for the financial year ended July 31, 2010. Financial Performance We had a year of growth for the financial year ended July 31, 2010 (“FY 2010”). Group revenue increased by 22.4% to $57.3 million in FY 2010, from the revenue of $46.8 million in the financial year ended July 31, 2009 (“FY 2009”). This reflects healthy increases in both the medical devices segment and the uPVC pipes and pipe fittings segment of our business. After expenses, which included some increases in the costs of raw materials, we are pleased to report a net profit for the Group of $4.4 million for FY 2010. The increased sales and profitability in FY 2010, along with our strong balance sheet, resulted from the Group’s focus on quality products and prudent approach to cost management. We remain confident about the outlook for both the medical devices and the uPVC pipes and pipe fittings segments, and the opportunities to enhance the Group’s business. We are pleased to recommend a dividend for FY 2010 of $0.0025 per ordinary share.

2


Annual Report 2010

Operational Initiatives The Group continues to focus on expanding our customer base, particularly in the medical devices segment. Our Xiamen plant has commenced manufacturing for a new customer. We have also broadened our business scope through our acquisition of a new business line from a U.S. company. This purchase of plant and equipment, intellectual property rights and customer contracts provides us with access to new coating technologies which we can apply in our business, capability to offer new products in the Catheter supply market and new customers. In the uPVC pipes and pipe fittings segment, the construction industry in Singapore continued its robust performance with new and ongoing projects by Singapore’s Housing and Development Board. We were also involved in an increased number of civil engineering and infrastructure projects, particularly in the telecommunications sector.

Succession We wish to express our gratitude for the contributions of Mr Tan Joon Hoe, who has retired from our Board, and to welcome Mr Ng Cher Yan, who brings with him a wealth of experience from his years of service with listed companies in Singapore.

Appreciation On behalf of the board, we would like to thank our customers, suppliers, shareholders and employees for their continued loyal support throughout the year.

Yeo Wico Chairman

Nicos Nicolaides Deputy Chairman

3


VicPlas International Ltd

Operational and Financial Review Revenue for the Group increased to $57.3 million in FY 2010 from $46.8 million in FY 2009. Total operating expenses for the Group increased from $44.9 million in FY 2009 to $52.9 million in FY 2010, reflecting increased production volume in both the medical devices segment and the uPVC pipes and pipe fittings segment. There was, however, an increase in per-unit raw material cost resulting from rising commodity prices in an improved economy. During FY 2010, the Group acquired property, plant and equipment with an aggregate cost of $5.0 million. The Group also acquired the plant and equipment, intellectual property rights and customer relationship assets of a Catheter business line from a U.S. company. The Group’s management is conscious of the volatility in raw material prices and the collectability of receivables and continues to exercise prudence in managing these risks. During FY 2010 the Group generated cash from operations of $4.8 million and remained in a healthy cash position with cash and bank balances of $8.5 million and borrowings of $1.2 million at the end of FY 2010.

PROFIT AND LOSS STATEMENT REVIEW 60,000 55,000 50,000 45,000

46,796

57,273

FY 2010 FY 2009

40,000 35,000 30,000 25,000 20,000 15,000 10,000

5,316

5,000

4,365

4,365

0 -5,000 -10,000 -15,000

(13,512) Revenue

4

Profit (Loss) Before Income Tax

(13,849) Profit (Loss) for the Year

(13,853) Profit (Loss) Attributable to Owners of the Company


Annual Report 2010

Revenue for the Group increased to $57.3 million in FY 2010 from $46.8 million in FY 2009. 5


VicPlas International Ltd

Operational and Financial Review BALANCE SHEET FY 2010 50,000 45,000 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0

FY 2009

48,879 42,952

38,065 33,611

9,341

Total Assets

10,814

Total Liabilities

Equity Attributable to Owners of the Company

Medical Devices This segment experienced revenue growth, increasing its contribution to the Group’s overall performance from 60% of Group revenue in FY 2009 to 65% in FY 2010. Segment revenue increased 32% to $37.2 million due to a substantial increase in orders by a major customer of Forefront Medical Technology (Pte) Ltd and a multi-fold ramp up of production in our Xiamen facility. In line with the group’s focus on expanding our customer base in this segment, the purchase of the Catheter business line from a U.S. company brought with it several new customers. Our facility in Xiamen has also commenced manufacturing for a new European customer. The Group continues its rigorous quality policy in this segment. In addition to the ISO13485:2003 and ISO9001:2008 certifications and approved medical device contract manufacturer status with the United States Food and Drug Administration (FDA), our wholly-owned subsidiary Forefront (Xiamen) Medical Devices Co., Ltd was awarded a Class II Medical Device Manufacturing License in China this year.

uPVC Pipes and Pipe Fittings Revenue for this segment rose by 8% to $20 million in FY 2010, reflecting record sales for this segment. The construction industry remained strong in Singapore and Malaysia, and the segment experienced growth in projects related to housing, especially by Singapore’s Housing and Development Board, and in the infrastructure and civil engineering sector. Both companies in this segment, VicPlas Holdings Pte Ltd and Rimplas Industries Sdn. Bhd., have quality certification of ISO9001:2008. Our focus on quality products also resulted in continuing support from customers in Singapore, Malaysia and Bangladesh. 6


Annual Report 2010

This segment continued its ongoing marketing efforts in Malaysia, and revenue increased by $0.7 million in this market in FY 2010.

Assets The Group’s assets increased from $43.0 million in FY 2009 to $48.9 million in FY2010, reflecting a substantial increase in inventories, along with investments in property, plant and equipment.

Liabilities The Group’s liabilities rose from $9.3 million in FY 2009 to $10.8 in FY 2010 with a decrease in loans and leases counterbalanced by an increase in payables.

Cash Flow The Group remains in a healthy cash position with cash and bank balances of $8.5 million and borrowings of $1.2 million as at the end of FY 2010. During FY 2010, the Group generated cash from operations of $4.8 million. Net cash used in investing activities in FY 2010 increased 46% from $3.8 million in FY 2009 to $5.6 million due to purchase of property, plant and equipment to support the growth of the Group, particularly for the Xiamen facility. Net cash used in financing activities decreased by 71% to $1.1 million in FY 2010, with loans and finance leases further decreasing from FY 2009.

CASH FLOWS FY 2010 FY 2009

10,000 5,000 0 5,000 5,500 6,000

6,009 4,838 (3,822) (5,575) Net Cash Generated Net Cash From Operating used in Investing Activities Activities

(3,629)

(1,053)

Net Cash used in Financing Activities

7


VicPlas International Ltd

Board of Directors and Senior Management Yeo Wico Yeo Wico, aged 43, was appointed as a Non-Executive Director in June 2008. He is Chairman of the Board of Directors and serves as a member on the Audit, Nominating and Remuneration Committees. Mr Yeo is currently a partner of Allen and Gledhill LLP, a Singapore law firm. He has been in legal practice in Singapore as an Advocate and Solicitor of the Supreme Court of Singapore since 1992. In addition, Mr Yeo has been admitted to the Roll of Solicitors in England and Wales and as an Attorney and Counselorat-Law in the State of New York. He graduated from the National University of Singapore in 1991 and holds a LLB (Hons) degree.

Nicos Nicolaides Nicos Nicolaides, aged 58, was appointed as a Non-Executive Director in December 2006. He is Deputy Chairman of the Group and serves as a member of the Audit Committee. Mr. Nicolaides qualified as a Chartered Accountant in the United Kingdom in 1978. He was a partner in an international audit firm from 1984 to 2001. He is currently the Managing Partner of Abacus in Cyprus, a professional services organisation that provides company administration and other related services primarily to international businesses operating out of Cyprus. He holds a number of directorships and various appointments in business organisations in Cyprus and has served on the Board of the Cyprus Securities and Exchange Commission.

Ang Mong Seng Ang Mong Seng, aged 61, joined the Board as a Non-Executive Director in April 1999. He serves as the Chairman of the Nominating and Remuneration Committees and member of the Audit Committee. He has more than 34 years of experience in estate management. Mr. Ang is presently a Member of Parliament for Hong Kah GRC (Bukit Gombak), Chairman of Hong Kah Town Council and Chief Operating Officer of EM Services Pte Ltd. He also serves as Independent Non-Executive Director on various public listed companies.

Robert Gaines-Cooper Robert Gaines-Cooper, aged 73, was appointed as a Non-Executive Director in October 2009. Mr. Gaines-Cooper is Chairman of the Board of Directors of Venner Capital S.A. and a Director of Chelle Medical Limited and LMA International N.V.. Mr. Gaines-Cooper holds a Bachelor of Arts Degree in Business Administration from Kensington University Glendale California and has completed the Program for Management Development at Harvard Business School, Boston. He is also a Fellow of the Royal Society of Medicine.

8


Annual Report 2010

Board of Directors and Senior Management David Curtis-Bennett David Curtis-Bennett, aged 73, was appointed as a Non-Executive Director in October 2009. He serves as a member of the Nominating and Remuneration Committees. Mr. CurtisBennett has been the Managing Director of Chelle Medical Limited, which assembles medical devices for anesthesia, since 1994 and Inter Medical Supplies since 1996. Both companies are based in the Seychelles. He also sits on the Board of Directors of Venner Capital S.A., Venner Trading S.A. and LMA International N.V..

Ng Cher Yan Ng Cher Yan, aged 51, was appointed as a Non-Executive Director in May 2010. He serves as a member of the Audit Committee. Mr. Ng is currently practising as a Certified Public Accountant and is the Chairman of the Citizens’ Consultative Committee of the Braddell Heights Constituency in Singapore. Mr. Ng holds a Bachelor of Accountancy degree from the National University of Singapore, and is a fellow member of the Institute of Certified Public Accountants of Singapore and also a member of the Institute of Chartered Accountants in Australia. He also serves as Independent Non-Executive Director on various public listed companies.

Mark Samlal Mark Samlal, aged 45, was appointed as Group Chief Executive Officer in December 2008. He is responsible for the Group’s business development, in particular, strategic planning, new product development, marketing and overall corporate management. Prior to joining the Group, Mr. Samlal was an Executive Director and Corporate Development Officer for a global precision engineering and injection molding firm headquartered in Singapore. He has more than 15 years of experience in business turnarounds, strategic business development, acquisition projects and global strategy development and managing diverse employee populations, in manufacturing, business process outsourcing and information technology organisations.

Gan Ying Hui Gan Ying Hui, aged 31, joined the Group as Financial Controller in August 2008. She is responsible for the Group’s financial management, internal control system and accounting functions. Prior to that, she was an audit manager with a “Big Four” Public Accounting Firm. Ms. Gan is a non-practising member of the Institute of Certified Public Accountants of Singapore.

9


10


Annual Report 2010

Organisation Structure

VICPLAS INTERNATIONAL LTD

VICPLAS HOLDINGS PTE LTD

RIMPLAS INDUSTRIES SDN BHD

FOREFRONT MEDICAL TECHNOLOGY (PTE) LTD

100%

100%

100%

FOREFRONT INVESTMENT PTE LTD

100%

FOREFRONT (XIAMEN) MEDICAL DEVICES CO., LTD

100%

11


VicPlas International Ltd

Corporate Information Board Of Directors

Registered Office

Mr. Yeo Wico Chairman Mr. Nicos Nicolaides Deputy Chairman Mr. Ang Mong Seng Independent Director Mr. Ng Cher Yan Independent Director Mr. Robert Gaines-Cooper Non-Executive Director Mr. David Curtis-Bennett Non-Executive Director

35 Joo Koon Circle Singapore 629110 Telephone: (65) 62623888 Facsimile: (65) 63493877 Share Registrar

Audit Committee

Mr. Nicos Nicolaides Chairman Mr. Ang Mong Seng Member Mr. Yeo Wico Member Mr. Ng Cher Yan Member

Remuneration Committee

Mr. Ang Mong Seng Chairman Mr. Yeo Wico Member Mr. David Curtis-Bennett Member

Nominating Committee

Mr. Ang Mong Seng Chairman Mr. Yeo Wico Member Mr. David Curtis-Bennett Member Company Secretaries Jennifer Lee Siew Jee, ACIS Tan Cheng Siew @ Nur Farah Tan, ACIS

12

B.A.C.S. Private Limited 63 Cantonment Road Singapore 089758 Auditors Deloitte & Touche LLP Certified Public Accountants 6 Shenton Way #32-00 DBS Building Tower Two Singapore 068809 Audit Partner: Leow Chung Chong Yam Soon Appointed on November 27, 2008 Principal Bankers DBS Bank Ltd 6 Shenton Way DBS Building Tower One Singapore 068809 United Overseas Bank Limited 80 Raffles Place UOB Plaza 1 Singapore 048624


Annual Report 2010

Corporate Governance Report The Board of Directors of the Company is committed to maintaining high standards of corporate conduct to ensure that effective self-regulatory corporate practices exist to protect the interests of shareholders. The Company recognises the importance of practicing good corporate governance and fully supports the Code of Corporate Governance (“Code”). BOARD OF DIRECTORS Principle 1: Board’s Conduct of its Affairs The Board is responsible for overall corporate governance, strategic direction, formulation of policies and overseeing the investment and business of the Group. The Board supervises the management of the business and affairs of the Group. Apart from its fiduciary duties and statutory responsibilities, the Board evaluates and approves important matters such as major investments, capital expenditures and funding decisions. It also reviews the financial statements, annual reports and authorises announcements of financial results to be issued. The Board believes that a high standard of disclosure is the key to raising the level of corporate governance. The Board meets at least four times a year and as and when necessary. Four meetings were held during the financial year ended July 31, 2010. The agenda and full set of Board papers for consideration were distributed before the meetings of the Board to ensure that directors have sufficient time to study them and obtain further information and explanation, where necessary. Apart from Board meetings, important matters are also put to the Board for approval by way of circulating resolutions in writing. The Board is mindful of the best practice in the Code to initiate programme for directors to meet their relevant training needs. In this regard, the Company is supportive of members in the participation of industry conferences and seminars and to fund directors’ attendance at any course or training programme in connection with their duties as directors. The Board is supported by three Board Committees with specific terms of reference. They are the Audit Committee (“AC”), Nominating Committee (“NC”) and Remuneration Committee (“RC”). The attendance of the directors and committee members at the meetings of the Board and various Committees are as follows: Board

Names

Yeo Wico (8) Nicos Nicolaides Ang Mong Seng David CurtisBennett (1) Robert GainesCooper (2) Ng Cher Yan (3) Loh Beng Seng (4) Lim Hock Beng (5) Trevor John Swete (6) Tan Joon Hoe (7)

Audit Nominating Remuneration Committee Committee Committee No. of No. of No. of No. of No. of No. of No. of No. of meetings meetings meetings meetings meetings meetings meetings meetings held attended held attended held attended held attended 4 4 4 4 1 1 1 NA 4 4 4 4 NA NA NA NA 4 4 4 4 1 1 1 1 4 3 NA NA 1 NA 1 NA 4

2

NA

NA

NA

NA

NA

NA

4 4 4 4

1 0 1 1

4 NA 4 NA

1 NA 1 NA

NA NA 1 NA

NA NA 1 NA

NA NA 1 NA

NA NA 1 NA

4

1

4

1

1

NA

1

1

13


VicPlas International Ltd and its Subsidiaries

Corporate Governance Report Notes 1. Mr David Curtis-Bennett was appointed as a Non–Executive Director and member of the Remuneration Committee on October 23, 2009 and member of the Nominating Committee on March 9, 2010. 2.

Mr Robert Gaines-Cooper was appointed as a Non–Executive Director on October 23, 2009.

3. Mr Ng Cher Yan was appointed as an Independent Director and member of the Audit Committee on May 3, 2010. 4.

Mr Loh Beng Seng retired as an Executive Director on November 25, 2009.

5. Mr Lim Hock Beng ceased to be a member of the Audit, Remuneration and Nominating Committees on October 23, 2009 and retired as a Non-Executive Director on November 25, 2009. 6.

Mr Trevor John Swete retired as a Non-Executive Director on November 25, 2009.

7. Mr Tan Joon Hoe resigned as an Independent Director, Chairman of the Audit Committee, member of the Remuneration and Nominating Committees on December 9, 2009. 8.

Mr Yeo Wico was appointed member of the Remuneration Committee on March 9, 2010.

Principle 2: Board Composition and Balance The Board has six members, all non-executive directors. Four of the six directors are independent directors comprising two third of the Board. Details of the directors’ shareholdings in the Company are set out in the Directors’ Report. The four independent non-executive directors are Mr. Yeo Wico, Mr. Nicos Nicolaides, Mr. Ang Mong Seng and Mr. Ng Cher Yan. The Board’s adoption of the independence concept is in line with the definition of an “independent director” in the Code. The key elements of fulfilling the criteria are the appointment of an independent director who is not a member of the management and is free of relationship with the Company, related companies or its officers that could interfere with the exercise of independent judgement or the ability to act in the interest of the Company. Every director is expected to act in good faith and always in the best interest of the Company. They are to contribute positively to the Company with their expertise and knowledge in business, accounting, finance, technology and management. They should also bring with them impartial judgement and independence in decision making at the Board level. The NC, after reviewing the independence of each non-executive director for financial year 2010, is of the view that the non-executive directors of the Company satisfy the criteria of independency and each and every director shares equal responsibility on the Board. The NC is also of the view that the current board size is adequate, taking into consideration the nature and scope of the Group’s operations. The Company’s Articles of Association require, one third of the Board to retire and subject to re-election by shareholders at every annual general meeting (“AGM’). The directors must offer themselves for re-nomination and re-election at regular intervals of at least once every three years. In addition, a newly appointed director will offer himself for retirement and re-election at the AGM immediately following his appointment. Thereafter, he is subject to retirement by rotation once every three years. The directors standing for re-election at the forthcoming AGM under Articles 115 and 119 of the Company’s Articles of Association are Mr. Ang Mong Seng and Mr. Ng Cher Yan respectively.

14


Annual Report 2010

Corporate Governance Report The NC recommends their re-election and re-appointment after assessing their contribution and performance (including attendance, preparedness and participation) and their effectiveness as director. The Board has accepted the NC’s recommendation. Each member of the NC had abstained from the deliberation in respect of his re-nomination as a Director. The directors standing for re-appointment pursuant to Section 153(6) of the Companies Act, Cap. 50 at the forthcoming AGM are Messrs Robert Gaines-Cooper and David Curtis-Bennett. A brief profile of each director is included elsewhere in this annual report. Principle 3: Chairman and Chief Executive Officer The positions of Chairman and Chief Executive Officer are held by separate persons in order to maintain an effective segregation of duties and an appropriate balance of power. Mr. Yeo Wico is our non-executive Chairman and Mr. Nicos Nicolaides is our non-executive Deputy Chairman and they are responsible for the control over the quality and timeliness of the flow of information between management and the Board and ensuring compliance with the Group’s guidelines on corporate governance. They also ensure that Board meetings are held on a regular basis. Mr. Mark Samlal, who does not sit on the Board, is the Chief Executive Officer. He is responsible for the overall management, investment decisions, direction and policies, as well as expansion and growth of the Group. Principle 6: Access to Information Principle 10: Accountability Board members have separate and independent access to senior management and the company secretary at all times. The Board or an individual Board member may also take independent professional advice, if necessary, at the Company’s expense. The company secretary attended all Board meetings and Board committee meetings conducted during the year. The company secretary ensures that board procedures are followed and that the Company complies with the requirements of the Companies Act and other rules and regulations of the SGX, which are applicable to the Company. Shareholders are provided with the Company’s performance, position and prospects on a half yearly basis. The management provides Directors with quarterly management accounts and information on major developments and material transactions are also circulated to directors as and when they arise. Principle 4: Board Membership Principle 5: Board Performance Nominating Committee (“NC”) The NC is made up of three members, all of whom are non-executive directors: Mr. Ang Mong Seng (Chairman, Independent Director) Mr. Yeo Wico (Independent Director) Mr. David Curtis-Bennett (Non-Executive Director)

15


VicPlas International Ltd and its Subsidiaries

Corporate Governance Report The NC is entrusted with the specific task of recommending to the Board on all Board appointments. This function extends to the recommendation on re-nomination having regard to the directors’ contribution and performance. It is charged with determining, on an annual basis, whether a director is independent and where a director has multiple board representations, whether the director is able to and has been adequately carrying out his duties as a director of the Company. It is also mandated to undertake reviews on the performance of the Board. Each member of the NC shall abstain from voting on any resolution in respect of the assessment of his performance or re-nomination as a director. In determining the independence of Directors annually, the NC reviewed and is of the view that Mr. Ang, Mr. Yeo, Mr. Nicolaides and Mr. Ng are independent. The NC also reviewed and is satisfied that the non-executive directors who sit on multiple boards have been able to devote time and attention to the affairs of the Company to fulfill their duties as Directors of the Company in addition to their multiple board appointments. The numbers of meetings held by the NC and the attendance of its members are included elsewhere in this statement. The NC assesses the performance and effectiveness of the Board and the contribution of each Director as a whole on an annual basis. Consistent with the Code, the Chairman of the NC is independent and is not associated with the substantial shareholders of the Company. REMUNERATION MATTERS Principle 7: Remuneration Committee (“RC”) The Remuneration Committee comprises the following members, all of them are non-executive directors: Mr. Ang Mong Seng (Chairman, Independent Director) Mr. Yeo Wico (Independent Director) Mr. David Curtis-Bennett (Non-Executive Director) The role of the RC is to recommend to the Board a framework of remuneration for the Board and key executives and to determine the remuneration packages for executive directors, chief executive officer and key executives of the Group. In its review, the Committee’s objective is to establish a remuneration policy that would be appropriate to attract, retain and motivate a pool of executive talent by ensuring the individual performance and reward are reflective of the business objectives of the Group. The RC will have access to expert advice in the field of executive compensation outside the Company, when required. The directors’ fees to be paid to the directors are subject to the approval at the Company’s AGM every year. The proposed fees are determined after considering factors such as effort and time spent, contribution from the directors and market practice. The numbers of meetings held by the RC and the attendance of its members are included elsewhere in this statement.

16


Annual Report 2010

Corporate Governance Report Principle 8: Level and Mix of Remuneration Principle 9: Disclosure of Remuneration The remuneration paid to each of the directors and top 5 key executives for the year ended July 31, 2010 is set out below: Remuneration Band & Name of Director Below S$250,000 Yeo Wico Nicos Nicolaides Ang Mong Seng Robert Gaines-Cooper David Curtis-Bennett Ng Cher Yan Tan Joon Hoe * Lim Hock Beng * Loh Beng Seng * Trevor John Swete *

Salary

Bonus %

Director’s Fees %

Total Remuneration %

% -

-

100 100 100 100 100 100 100 100 100 100

100 100 100 100 100 100 100 100 100 100

* Mr Tan resigned and Mr Lim, Mr Loh and Mr Swete retired as directors during the financial year. Remuneration Band & Name of key executive

Salary

Bonus

Other Benefits

%

%

%

Total Remuneration %

S$250,000 to S$499,999 Mark Samlal

91

-

9

100

Below S$250,000 Eric Cheng Ron Wight Gan Ying Hui Koh Chong Hiam

85 75 71 89

12 16 29 5

3 9 6

100 100 100 100

Principle 11: Audit Committee (“AC”) The Audit Committee comprises four members, all of whom are independent non-executive directors. The members of the AC at the date of this report are: Mr. Nicos Nicolaides (Chairman, Independent Director) Mr. Ang Mong Seng (Independent Director) Mr. Yeo Wico (Independent Director) Mr. Ng Cher Yan (Independent Director) The AC held four meetings during the financial year ended July 31, 2010. The AC reviews issues of accounting policy and presentation of external financial reporting as well as the internal financial control, for which the directors are responsible. The following are some of the functions performed by the AC: -

17


VicPlas International Ltd and its Subsidiaries

Corporate Governance Report •

reviewed with the external auditors, their audit plan, the results of their examinations and their evaluation of the system of internal accounting controls, the auditors’ management letter and management’s response to it, and the audit report;

reviewed interested person transactions;

reviewed the half-yearly and annual financial statements of the Company and the consolidated financial statements of the Group, including announcements to shareholders prior to submission to the Board; and

nominate the external auditors for reappointment.

To effectively discharge its responsibilities, the AC has full access to and the co-operation of Group’s management. Full resources are made available to the AC to enable it to discharge its functions properly. The AC has full discretion to invite any director and executive to attend the meetings. The AC met with the internal auditors and external auditors separately without the presence of management. The AC having reviewed the amount of non audit related services to the Group and being satisfied that such services will not prejudice the nature and extent of independence and objectivity of the external auditors, have recommended to the Board, the nomination of Deloitte & Touche LLP for re-appointment as external auditors of the Company. Principle 12: Internal Control The Board recognises the importance of maintaining a sound system of internal control, covering not only the financial control, but also operational and compliance controls including risk management to safeguard shareholders’ investments and the Group’s assets. Procedures are in place to identify major business risks and evaluate potential financial effects. The Board is continuously looking into the adequacy and improvement of its system of internal controls. The Company has put in place a Whistle-Blowing Policy to provide employees with well defined and accessible channels to report in good faith and confidence, their concerns about possible improprieties in financial reporting or other matters and ensure independent investigation of such matters and appropriate follow-up action. Principle 13: Internal Audit The Group outsourced its internal audit function to an accounting firm that is not the external auditors. The internal auditors report to the Audit Committee and assist in monitoring and updating risks and adequacy of the internal controls systems. The internal auditors assist management to identify, evaluate and update significant risks and develop risks based audit plan for review and approval by the Audit Committee. Principle 14 and 15: Communication with Shareholders The Board believes in regular, timely and effective communications with shareholders. In addition to the mandatory public announcements made through the SGXNET, timely release of the financial results provides shareholders with an overview of the Group’s performances and operations. The principal forum for dialogue with shareholders remains the Annual General Meeting, during which shareholders are encouraged to raise questions and participate in discussions pertaining to the operations and financials of the Group. Any queries and concerns regarding the Group can be conveyed to the following person:

18


Annual Report 2010

Corporate Governance Report Ms. Gan Ying Hui, Group Financial Controller Telephone no. 63493875 Facsimile no. 63493877 Email: gan.yh@vicplas.com.sg SECURITIES TRANSACTIONS The Company has a policy governing dealings in the Company’s securities by its directors and executives within the Group. The Company has adopted its own internal Code of Best Practices on Securities Transactions (“the Code”). It emphasises that the law on insider dealing is applicable at all times notwithstanding the Code provides certain window periods for them to deal in the shares of the Company. The Code also enables the Company to monitor such share transactions by requiring Executives to report to the Company whenever they deal in the Company’s shares. In addition, the Directors, key officers and employees of the Group are discouraged from dealing in the Company’s securities on short term considerations. In the opinion of the Directors, the Company has complied with the Best Practices stipulated in Rule 1207(18) of the SGX-ST Listing Manual. INTERESTED PERSON TRANSACTION The Company has established procedures to ensure that all transactions with interested persons are reported on a timely manner to the Audit Committee and that the transactions are on an arm’s length basis. All interested transactions are subject to review by the Audit Committee to ensure compliance with the established procedures. A Shareholders’ Mandate will be obtained at a forthcoming Annual General Meeting to authorise the carrying on of these transactions in the coming financial year. INTERESTED PERSON TRANSACTIONS The following are the disclosure under Rule 907 of the Listing Manual. Name of interested person

Sales of goods to Venner Capital S.A. and subsidiaries and related parties Income from mould and maintenance services received from Venner Capital S.A. and subsidiaries and related parties Miscellaneous income received from Venner Capital S.A. and subsidiaries and related parties

Aggregate value of all interested person transactions during the financial year under review (excluding transactions less than S$100,000 and transactions under shareholders’ mandate pursuant to Rule 920)

Aggregate value of all interested person transactions conducted under shareholders’ mandate pursuant to Rule 920 (excluding transactions less than S$100,000)

-

36,713,753

-

135,000

227,298

-

MATERIAL CONTRACTS No material contracts to which the company or any related company is a party and which involve directors’ interest subsisted at, or have been entered into since the end of the previous financial year. FINANCIAL RISKS AND MANAGEMENT Information relating to financial risks and management are set out elsewhere in this annual report. 19


VicPlas International Ltd and its Subsidiaries

CONTENTS PAGE

20

Report of the Directors

21-23

Statement of Directors

24

Independent Auditors’ Report

25-26

Statements of Financial Position

27-28

Consolidated Statement of Comprehensive Income

29

Statements of Changes in Equity

30

Consolidated Statement of Cash Flows

31-32

Notes to Financial Statements

33-80

Analysis of Shareholdings

81-82

Notice of Annual General Meeting

83-88

Proxy Form

89-90


Annual Report 2010

Report of the Directors The directors present their report together with the audited consolidated financial statements of the Group and statement of financial position and statement of changes in equity of the Company for the financial year ended July 31, 2010. 1

DIRECTORS

The directors of the Company in office at the date of this report are: Yeo Wico Nicos Nicolaides Ang Mong Seng Robert Gaines-Cooper (Appointed on October 23, 2009) David Curtis-Bennett (Appointed on October 23, 2009) Ng Cher Yan (Appointed on May 3, 2010)

2 ARRANGEMENTS TO ENABLE DIRECTORS TO ACQUIRE BENEFITS BY MEANS OF THE ACQUISITION OF SHARES AND DEBENTURES Neither at the end of the financial year nor at any time during the financial year did there subsist any arrangement whose object is to enable the directors of the Company to acquire benefits by means of the acquisition of shares or debentures in the Company or any other body corporate. 3

DIRECTORS’ INTERESTS IN SHARES AND DEBENTURES

The directors of the Company holding office at the end of the financial year had no interests in the share capital and debentures of the Company and related corporations as recorded in the register of directors’ shareholdings kept by the Company under Section 164 of the Singapore Companies Act except as follows: Name of director and company in which interests are held

Shareholdings registered in name of director At beginning of year, or date of appointment, if later At end of year

Shareholdings in which directors are deemed to have an interest At beginning of year, or date of appointment, if later At end of year

VicPlas International Ltd (Ordinary shares) Robert Gaines-Cooper(1) David Curtis-Bennett

5,000,000

5,000,000

252,819,495 -

252,819,495 -

Venner Capital S.A. (“Venner”) is owned by the Bird Island Trust, a fully discretionary trust under Liechtenstein law, the trustee of which is CTX Treuhand, a trust company based in Liechtenstein. Mr. Robert Gaines-Cooper is presently the sole beneficiary and protector under the trust. Mr. Robert Gaines-Cooper is deemed to be interested in the shares of the Company owned by Bird Island Trust through Venner. He is also deemed to be interested in the 5,000,000 ordinary shares held by his wife, Mrs Jane Rose Philomene Gaines-Cooper.

(1)

By virtue of Section 7 of the Singapore Companies Act, Robert Gaines-Cooper is deemed to have an interest in the Company and in all the subsidiaries of the Company.

The director’s interests in the shares of the Company at August 21, 2010 are the same as at July 31, 2010. 21


VicPlas International Ltd and its Subsidiaries

Report of the Directors 4

DIRECTORS’ RECEIPT AND ENTITLEMENT TO CONTRACTUAL BENEFITS

Since the beginning of the financial year, no director has received or become entitled to receive a benefit which is required to be disclosed under Section 201(8) of the Singapore Companies Act, by reason of a contract made by the Company or a related corporation with the director or with a firm of which he is a member, or with a company in which he has a substantial financial interest except for salaries, bonuses and other benefits as disclosed in the financial statements. Certain directors received remuneration from related corporations in their capacity as directors and/or executives of those related corporations. 5

SHARE OPTIONS

(a)

Options to take up unissued shares

During the financial year, no options to take up unissued shares of the Company or any corporation in the Group were granted.

(b)

Options exercised

During the financial year, there were no shares of the Company or any corporation in the Group issued by virtue of the exercise of an option to take up unissued shares.

(c)

Unissued shares under option

At the end of the financial year, there were no unissued shares of the Company or any corporation in the Group under option. 6

AUDIT COMMITTEE

The Audit Committee of the Company is chaired by Mr Nicos Nicolaides (independent non-executive director) and includes Mr Ang Mong Seng (independent non-executive director), Mr Yeo Wico (independent non-executive director) and Mr Ng Cher Yan (independent non-executive director). The Audit Committee has met four times since the last Annual General Meeting (“AGM”) and has reviewed the following, where relevant, with the executive directors and external and internal auditors of the Company:

a) the audit plans and results of the internal auditors’ examination and evaluation of the Group’s systems of internal accounting controls;

b)

c) the consolidated financial statements of the Group and statement of financial position and statement of changes in equity of the Company before their submission to the directors of the Company and external auditors’ report on those financial statements;

d) the half-yearly and annual announcements as well as the related press releases on the results and financial position of the Company and the Group;

e) the co-operation and assistance given by the management to the Group’s external auditors; and

f)

22

the Group’s financial and operating results and accounting policies;

the re-appointment of the external auditors of the Group.


Annual Report 2010

Report of the Directors The Audit Committee has full access to and has the co-operation of the management and has been given the resources required for it to discharge its function properly. It also has full discretion to invite any director and executive officer to attend its meetings. The external and internal auditors have unrestricted access to the Audit Committee. The Audit Committee has recommended to the directors the nomination of Deloitte & Touche LLP for re-appointment as external auditors of the Group at the forthcoming AGM of the Company. 7

AUDITORS

The auditors, Deloitte & Touche LLP, have expressed their willingness to accept re-appointment.

ON BEHALF OF THE DIRECTORS

Yeo Wico

Nicos Nicolaides

November 2, 2010

23


VicPlas International Ltd and its Subsidiaries

Statement of Directors In the opinion of the directors, the consolidated financial statements of the Group and the statement of financial position and statement of changes in equity of the Company as set out on pages 27 to 80 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 July 31, 2010, and of the results, changes in equity and cash flows of the Group and changes in equity of the Company for the financial year then ended and at the date of this statement, there are reasonable grounds to believe that the Company will be able to pay its debts when they fall due.

ON BEHALF OF THE DIRECTORS

Yeo Wico

Nicos Nicolaides

November 2, 2010

24


Annual Report 2010

Independent Auditors’ Report To The Members Of VicPlas International Ltd We have audited the accompanying financial statements of VicPlas International Ltd (the “Company”) and its subsidiaries (the “Group”) which comprise the statement of financial position of the Group and the Company as at July 31, 2010, the statement of comprehensive income, statement of changes in equity and statement of cash flows of the Group and the statement of changes in equity of the Company for the year then ended, and a summary of significant accounting policies and other explanatory notes, as set out on pages 27 to 80. Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with the provisions of the Singapore Companies Act, Cap. 50 (the “Act”) and Singapore Financial Reporting Standards. This responsibility includes: devising and maintaining a system of internal accounting controls sufficient to provide a reasonable assurance that assets are safeguarded against loss from unauthorised use or disposition; and transactions are properly authorised and that they are recorded as necessary to permit the preparation of true and fair profit and loss account and balance sheets and to maintain accountability of assets; 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 Singapore Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’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 entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, 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.

25


VicPlas International Ltd and its Subsidiaries

Independent Auditors’ Report To The Members Of VicPlas International Ltd Opinion In our opinion, a) the consolidated financial statements of the Group and the statement of financial position and statement of changes in equity of the Company are properly drawn up in accordance with the provisions of the Act and Singapore Financial Reporting Standards so as to give a true and fair view of the state of affairs of the Group and of the Company as at July 31, 2010 and of the results, changes in equity and cash flows of the Group and changes in equity of the Company for the year ended on that date; and b) the accounting and other records required by the Act to be kept by the Company and by those subsidiaries incorporated in Singapore of which we are the auditors have been properly kept in accordance with the provisions of the Act.

Deloitte & Touche LLP Public Accountants and Certified Public Accountants

Singapore November 2, 2010

26


Annual Report 2010

Statements of Financial Position July 31, 2010 Group

Company 2010 2009 $’000 $’000

Note

2010 $’000

2009 $’000

Current assets Cash and bank balances Trade receivables Other receivables Inventories Total current assets

7 8 9 10

8,472 10,534 834 6,431 26,271

10,184 8,910 353 3,668 23,115

4,650 18,354 23,004

5,451 1,004 6,455

Non-current assets Deposits Property, plant and equipment Club memberships Intangible assets Subsidiaries Available-for-sale investments Goodwill Total non-current assets

11 12 13 14 15 16 17

1,372 20,063 94 944 135 22,608

1,220 18,407 118 92 19,837

25,831 25,831

25,742 25,742

48,879

42,952

48,835

32,197

18 19 20

464 3,248 4,292

859 1,930 3,649

1,173

644

21

123 735 8,862

165 605 7,208

1 1,174

5 649

ASSETS

Total assets LIABILITIES AND EQUITY Current liabilities Bank borrowings Trade payables Other payables Current portion of finance leases Income tax payable Total current liabilities

See accompanying notes to financial statements. 27


VicPlas International Ltd and its Subsidiaries

Statements of Financial Position July 31, 2010 Group

Non-current liabilities Bank borrowings Finance leases Deferred tax liabilities Total non-current liabilities Capital, reserves and non-controlling interests Share capital Capital reserve Currency translation reserve Revaluation reserve (Accumulated losses) Retained earnings Total equity

2010 $’000

2009 $’000

18 21 22

448 171 1,333 1,952

913 275 945 2,133

-

-

23

44,714 (3) 688

44,714 (49) 645

44,714 -

44,714 -

(7,334) 38,065

(11,699) 33,611

2,947 47,661

(13,166) 31,548

48,879

42,952

48,835

32,197

24

Total liabilities and equity

See accompanying notes to financial statements. 28

Company 2010 2009 $’000 $’000

Note


Annual Report 2010

Consolidated Statement of Comprehensive Income Year ended July 31, 2010 Group Note

2010 $’000

2009 $’000

Revenue

25

57,273

46,796

Other operating income Changes in inventories of finished goods and work-in-progress Raw materials and consumables used Purchase of finished goods for resale Employee benefits expense Depreciation and amortisation expense Other operating expenses Finance costs Exceptional items Profit (Loss) before income tax Income tax expense Profit (Loss) for the year

26

983

928

1,032 (17,608) (1,064) (17,135) (3,295) (14,785) (85) 5,316 (951) 4,365

(149) (15,638) (942) (12,702) (3,517) (11,985) (235) (16,068) (13,512) (337) (13,849)

46 43 89

12 (634) (32) (654)

4,454

(14,503)

4,365 4,365

(13,853) 4 (13,849)

4,454 4,454

(14,507) 4 (14,503)

27 28 29 30 31

Other comprehensive income: Exchange differences on translation of foreign operations Revaluation gain (loss) (Note 24) Capital reserves Other comprehensive income for the year, net of tax Total comprehensive income for the year Profit (Loss) attributable to: Owners of the Company Non-controlling interests

Total comprehensive income (loss) attributable to: Owners of the Company Non-controlling interests Earnings (Loss) per share (in cents): Basic

32

0.99

(3.13)

Diluted

32

0.99

(3.13)

See accompanying notes to financial statements. 29


30 32 (32) -

-

44,714

44,714

Capital reserve $’000

44,714

Balance at August 1, 2008 Total comprehensive loss for the year Balance at July 31, 2009 Total comprehensive income for the year Balance at July 31, 2010

Company

Balance at August 1, 2008 Acquisition of noncontrolling interests Total comprehensive loss for the year Balance at July 31, 2009 Total comprehensive income for the year Balance at July 31, 2010

Group

Share capital $’000

46 (3)

12 (49)

-

(61)

43 688

(634) 645

-

1,279

4,365 (7,334)

(13,853) (11,699)

-

2,154

44,714 44,714 44,714

Share capital $’000

4,454 38,065

(14,507) 33,611

-

48,118

-

4 -

(214)

210

Noncontrolling interests $’000

(9,661) (3,505) (13,166) 16,113 2,947

(Accumulated losses) Retained earnings $’000

Retained Currency earnings Attributable translation Revaluation (Accumulated to owners of reserve reserve losses) the Company $’000 $’000 $’000 $’000

35,053 (3,505) 31,548 16,113 47,661

Total $’000

4,454 38,065

(14,503) 33,611

(214)

48,328

Total $’000

VicPlas International Ltd and its Subsidiaries

Statement of Changes in Equity

Year ended July 31, 2010


Annual Report 2010

Consolidated Statement of Cash Flows Year ended July 31, 2010 Group 2010 $’000 Operating activities Profit (Loss) before income tax Adjustments for: Depreciation of property, plant and equipment Interest income Interest expense Allowance for (Write-back of) impairment loss on club memberships Impairment loss on goodwill and intangible assets Impairment loss on available-for-sale investments Amortisation of intangible assets Gain on disposal of property, plant and equipment, net Gain on disposal of subsidiary (b) Goodwill written off on acquisition of minority interests Reversal of capital reserves on disposal of subsidiary Property, plant and equipment written off Allowance for inventories obsolescence Allowance for (Write back of allowance for) doubtful trade receivables, net Reversal of inventories previously written down to net realisable value Operating cash flows before movements in working capital

2009 $’000

5,316

(13,512)

3,295 (24) 85 24 (2) 3 31

3,117 (7) 235 (4) 16,068 234 400 (11) (51) 46 (32) 21 2 (1)

(9) 8,719

(41) 6,464

Trade receivables Other receivables Inventories Trade payables Other payables Cash generated from operations

(1,655) (481) (2,757) 1,318 192 5,336

(190) 539 585 (390) (665) 6,343

Interest paid Interest received Income taxes paid Net cash from operating activities

(85) 24 (437) 4,838

(235) 7 (106) 6,009

31


VicPlas International Ltd and its Subsidiaries

Consolidated Statement of Cash Flows Year ended July 31, 2010 Group 2010 $’000

2009 $’000

Investing activities Purchase of property, plant and equipment (Note 35) (a) Purchase of intangible assets (Note 35) Deposit placed for purchase of property, plant and equipment Disposal of subsidiary (b) Acquisition of minority interests Proceeds on disposal of property, plant and equipment Net cash used in investing activities

(4,523) (944) (152) 44 (5,575)

(2,674) (1,220) 61 (260) 271 (3,822)

Financing activities Repayment of bank borrowings Repayment of obligations under finance leases Net cash used in financing activities

(860) (193) (1,053)

(3,225) (404) (3,629)

Net decrease in cash and cash equivalents Cash and cash equivalents at beginning of year Effect of foreign exchange rate changes Cash and cash equivalents at end of year (Note 7)

(1,790) 10,184 78 8,472

(1,442) 11,633 (7) 10,184

Note (a): During the year, the Group acquired property, plant and equipment with an aggregate cost of $5,021,000 (2009 : $2,714,000) of which $451,000 (2009 : $40,000) was acquired and remain unpaid at year end and $47,000 (2009 : $Nil) was acquired under finance lease arrangements. Cash payments of $4,523,000 (2009 : $2,674,000) were made to purchase property, plant and equipment. Note (b): In prior year, the Group disposed of a subsidiary, VicPlas Polymers Pte Ltd, in order to place more focus on the Group’s other businesses. The disposal was completed on May 29, 2009, on which date control of the company passed to the acquirer. See Note 34 for details.

See accompanying notes to financial statements. 32


Annual Report 2010

Notes to the Financial Statements July 31, 2010 1

GENERAL

The Company (Registration No. 199805362R) is incorporated in Singapore with its principal place of business and registered office at 35 Joo Koon Circle, Singapore 629110. The Company is listed on the Mainboard of the Singapore Exchange Securities Trading Limited. The financial statements are expressed in Singapore dollars.

The principal activity of the Company is that of investment holding.

The principal activities of the subsidiaries are disclosed in Note 15.

The consolidated financial statements of the Group and statement of financial position and statement of changes in equity of the Company for the financial year ended July 31, 2010 were authorised for issue by the Board of Directors on November 2, 2010. 2

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 ASIS OF ACCOUNTING - The financial statements are prepared in accordance with the historical cost B basis, except as disclosed in the accounting policies below, and are drawn up in accordance with the provisions of the Singapore Companies Act and Singapore Financial Reporting Standards (“FRS”).

 DOPTION OF NEW AND REVISED STANDARDS - In the current financial year, the Group has adopted A all the new and revised FRSs and Interpretations of FRS (“INT FRS”) that are relevant to its operations and effective for annual periods beginning on or after August 1, 2009. The adoption of these new/ revised FRSs and INT FRSs does not result in changes to the Group’s and Company’s accounting policies and has no material effect on the amounts reported for the current or prior years except as disclosed below:

FRS 1 – Presentation of Financial Statements (Revised)

FRS 1 (2008) has introduced terminology changes (including revised titles for the financial statements) and changes in the format and content of the financial statements. In addition, the revised Standard requires the presentation of a third statement of financial position at the beginning of the earliest comparative period presented if the entity applies new accounting policies retrospectively or makes retrospective restatements or reclassifies items in the financial statements.

FRS 27 (Revised) - Consolidated and Separate Financial Statements; and FRS 103 (Revised) - Business Combinations

FRS 103 (Revised) has been adopted in the current year (business combinations for which the acquisition date is on or after the beginning of the first annual period beginning on or after July 1, 2009). In accordance with the relevant transitional provisions, FRS 103 (Revised) has been applied prospectively to business combinations for which the acquisition date is on or after July 1, 2009. The revisions to FRS 27 principally affect the accounting for transactions or events that result in a change in the Group’s interests in its subsidiaries. It is likely that these amendments will significantly affect the accounting for such transactions in future accounting periods, but the extent of such impact will depend on the detail of the transactions, which cannot be anticipated. The changes will be adopted prospectively for transactions after date of adoption of the revised standards and, therefore, no restatements will be required in respect of transactions prior to the date of adoption. The adoption of FRS 103 (Revised) has resulted in the recognition of professional fees related to the acquisition of assets and related business of $37,000 in the current year’s consolidated profit or loss. 33


VicPlas International Ltd and its Subsidiaries

Notes to the Financial Statements July 31, 2010 2

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Amendments to FRS 107 Financial Instruments : Disclosures – Improving Disclosures about Financial Instruments The amendments to FRS 107 expand the disclosures required in respect of fair value measurements and liquidity risk. The Group has elected not to provide comparative information for these expanded disclosures in the current year in accordance with the transitional reliefs offered in these amendments.

FRS 108 – Operating Segments

The Group adopted FRS 108 with effect from August 1, 2009. FRS 108 requires operating segments to be identified on the basis of internal reports about components of the Group that are regularly reviewed by the chief operating decision maker in order to allocate resources to the segment and to assess its performance. In contrast, the predecessor Standard (FRS 14 Segment Reporting) required an entity to identify two sets of segments (Business and Geographical), using a risks and rewards approach, with the entity’s ‘system of internal financial reporting to key management personnel’ serving only as the starting point for the identification of such segments. For the Group, the operating segments identified under FRS 108 are consistent with those previously identified under FRS 14. At the date of authorisation of these financial statements, the following FRSs and amendments to the FRSs that are relevant to the Group and the Company were issued but not effective:

FRS 24 Amendment to FRS 7

- -

Related Party Disclosures (Revised) Statement of Cash Flow

Consequential amendments were also made to various standards as a result of these new/revised standards. The management anticipates that the adoption of the above FRSs and amendments to FRS that were issued but only effective in future periods will have no material impact on the financial statements of the Group and the Company in the period of their initial adoption, except for the following:

FRS 24 (Revised) - Related Party Disclosures

FRS 24 (Revised) is effective for annual periods beginning on or after January 1, 2011. The revised Standard clarifies the definition of a related party and consequently additional parties may be identified as related to the reporting entity. In addition, the revised Standard provides partial exemption for government-related entities, in relation to the disclosure of transactions, outstanding balances and commitments.

Amendments to FRS 7 - Statement of Cash Flows

The amendments (also part of Improvements to FRSs issued in June 2009) specify that only expenditures that result in a recognised asset in the statement of financial position can be classified as investing activities in the statement of cash flows. Consequently, cash flows in respect of development costs that do not meet the criteria in FRS 38 Intangible Assets for capitalisation as part of an internally generated intangible asset (and, therefore, are recognised in profit or loss as incurred) will be reclassified from investing to operating activities in the statement of cash flows. The amendments to FRS 7 will be adopted for periods beginning on or after January 1, 2010.

34


Annual Report 2010

Notes to the Financial Statements July 31, 2010 2

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

BASIS OF CONSOLIDATION - The consolidated financial statements incorporate the financial statements of the Company and entities (including special purpose entities) controlled by the Company (its subsidiaries). Control is achieved where the Company has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. The results of subsidiaries acquired or disposed of during the year are included in the consolidated statement of comprehensive income from the effective date of acquisition or up to the effective date of disposal, as appropriate. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies into line with those used by other members of the Group.

All intra-group transactions, balances, income and expenses are eliminated on consolidation.

Non-controlling interests in subsidiaries are identified separately from the Group’s equity therein. The interests of non-controlling shareholders may be initially measured either at fair value or at the noncontrolling interests’ proportionate share of the fair value of the acquiree’s identifiable net assets. The choice of measurement basis is made on an acquisition by acquisition basis. Subsequent to acquisition, the carrying amount of non-controlling interests is the amount of those interests at initial recognition plus the non-controlling interests’ share of subsequent changes in equity. Total comprehensive income is attributed to non-controlling interests even if this results in the non-controlling interests having a deficit balance. Prior to July 1, 2009, losses applicable to the non-controlling in excess of the non-controlling interest in the subsidiary’s equity are allocated against the interests of the group except to the extent that the non-controlling has a binding obligation and is able to make an additional investment to cover its share of those losses. Changes in the group’s interests in subsidiaries that do not result in a loss of control are accounted for as equity transactions. The carrying amounts of the group’s interests and the non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiaries. Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received is recognised directly in equity and attributed to owners of the company. When the group loses control of a subsidiary, the profit or loss on disposal is calculated as the difference between (i) the aggregate of the fair value of the consideration received and the fair value of any retained interest and (ii) the previous carrying amount of the assets (including goodwill), and liabilities of the subsidiary and any non-controlling interests. Amounts previously recognised in other comprehensive income in relation to the subsidiary are accounted for (i.e. reclassified to profit or loss or transferred directly to retained earnings) in the same manner as would be required if the relevant assets or liabilities were disposed of. The fair value of any investment retained in the former subsidiary at the date when control is lost is regarded as the fair value on initial recognition for subsequent accounting under FRS 39 Financial Instruments: Recognition and Measurement or, when applicable, the cost on initial recognition of an investment in an associate or jointly controlled entity. In the Company’s financial statements, investments in subsidiaries are carried at cost less any impairment in net recoverable value that has been recognised in the profit or loss.

35


VicPlas International Ltd and its Subsidiaries

Notes to the Financial Statements July 31, 2010 2

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

 USINESS COMBINATIONS PRIOR TO JULY 1, 2009 - The acquisition of subsidiaries is accounted for B using the purchase method. The cost of the acquisition is measured at the aggregate of the fair values, at the date of exchange, of assets given, liabilities incurred or assumed, and equity instruments issued by the group in exchange for the control of the acquiree, plus any costs directly attributable to the business combination. The acquiree’s identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition under FRS 103 are recognised at their fair values at the acquisition date, except for non-current assets (or disposal groups) that are classified as held for sale in accordance with FRS 105 Non-Current Assets Held for Sale and Discontinued Operations, which are recognised and measured at fair value less costs to sell.

Goodwill arising on acquisition is recognised as an asset and initially measured at cost, being the excess of the cost of the business combination over the group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities recognised. If, after reassessment, the Group’s interest in the net fair value of the acquiree’s identifiable assets, liabilities and contingent liabilities exceeds the cost of the business combination, the excess is recognised immediately in profit or loss. The interest of non-controlling shareholders in the acquiree is initially measured at the non-controlling interests proportion of the net fair value of the assets, liabilities and contingent liabilities recognised. BUSINESS COMBINATIONS ON OR AFTER JULY 1, 2009 - Acquisitions of subsidiaries and businesses are accounted for using the acquisition method. The consideration for each acquisition is measured at the aggregate of the fair values (at the date of exchange) of assets given, liabilities incurred or assumed, and equity instruments issued by the Group in exchange for control of the acquiree. Acquisition-related costs are recognised in profit or loss as incurred. Where applicable, the consideration for the acquisition includes any asset or liability resulting from a contingent consideration arrangement, measured at its acquisition-date fair value. Subsequent changes in such fair values are adjusted against the cost of acquisition where they qualify as measurement period adjustments (see below). All other subsequent changes in the fair value of contingent consideration classified as an asset or liability are accounted for in accordance with relevant FRSs. Changes in the fair value of contingent consideration classified as equity are not recognised. Where a business combination is achieved in stages, the Group’s previously held interests in the acquired entity are remeasured to fair value at the acquisition date (i.e. the date the Group attains control) and the resulting gain or loss, if any, is recognised in profit or loss. Amounts arising from interests in the acquiree prior to the acquisition date that have previously been recognised in other comprehensive income are reclassified to profit or loss, where such treatment would be appropriate if that interest were disposed of. The acquiree’s identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition under FRS 103 Business Combinations are recognised at their fair value at the acquisition date, except that:

 eferred tax assets or liabilities and liabilities or assets related to employee benefit arrangements d are recognised and measured in accordance with FRS 12 Income Taxes and FRS 19 Employee Benefits respectively;

liabilities or equity instruments related to the replacement by the group of an acquiree’s sharebased payment awards are measured in accordance with FRS 102 Share-based Payment; and

36


Annual Report 2010

Notes to the Financial Statements July 31, 2010 2

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

 ssets (or disposal groups) that are classified as held for sale in accordance with FRS 105 Nona current Assets Held for Sale and Discontinued Operations are measured in accordance with that Standard.

If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the Group reports provisional amounts for the items for which the accounting is incomplete. Those provisional amounts are adjusted during the measurement period (see below), or additional assets or liabilities are recognised, to reflect new information obtained about facts and circumstances that existed as of the acquisition date that, if known, would have affected the amounts recognised as of that date. The measurement period is the period from the date of acquisition to the date the Group obtains complete information about facts and circumstances that existed as of the acquisition date and is subject to a maximum of one year. FINANCIAL INSTRUMENTS - Financial assets and financial liabilities are recognised on the Group’s and Company’s statement of financial position when the Group and the Company become a party to the contractual provisions of the instrument.

Effective interest method

The effective interest method is a method of calculating the amortised cost of a financial instrument and of allocating interest income or expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts or payments (including all fees on points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial instrument, or where appropriate, a shorter period. Income and expense are recognised on an effective interest rate basis for debt instruments.

Financial assets

Trade and other receivables

Trade and other receivables are measured at amortised cost using the effective interest method less impairment. Interest is recognised by applying the effective interest method, except for short-term receivables when the recognition of interest would be immaterial.

Available-for-sale financial assets

Certain shares held by the Group are classified as being available for sale and are stated at fair value. Fair value is determined in the manner described in Note 4. Gains and losses arising from changes in fair value are recognised in other comprehensive income with the exception of impairment losses, interest calculated using the effective interest method and foreign exchange gains and losses on monetary assets which are recognised directly in profit or loss. Where the investment is disposed of or is determined to be impaired, the cumulative gain or loss previously recognised in other comprehensive income and accumulated in revaluation reserve is reclassified to profit or loss. Dividends on availablefor-sale equity instruments are recognised in profit or loss when the Group’s right to receive payments is established. The fair value of available-for-sale monetary assets denominated in a foreign currency is determined in that foreign currency and translated at the spot rate at the end of the reporting period. The change in fair value attributable to translation differences that result from a change in amortised cost of the asset is recognised in profit or loss, and other changes are recognised in other comprehensive income.

37


VicPlas International Ltd and its Subsidiaries

Notes to the Financial Statements July 31, 2010 2

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Impairment of financial assets

Financial assets are assessed for indicators of impairment at the end of each reporting period. Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the financial assets have been impacted. For available-for-sale equity instruments, a significant or prolonged decline in the fair value of the investment below its cost is considered to be objective evidence of impairment. For financial assets carried at amortised cost, the amount of the impairment is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade receivables where the carrying amount is reduced through the use of an allowance account. When a trade receivable is uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against the allowance account. Changes in the carrying amount of the allowance account are recognised in profit or loss. When an available-for-sale financial asset is considered to be impaired, cumulative gains or losses previously recognised in other comprehensive income are reclassified to profit or loss. With the exception of available-for-sale equity instruments, if, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment loss was recognised, the previously recognised impairment loss is reversed through profit or loss to the extent the carrying amount of the financial assets at the date the impairment is reversed does not exceed what the amortised cost would have been had the impairment not been recognised. In respect of available-for-sale equity investments, impairment loss previously recognised in profit or loss are reversed through profit or loss. Any subsequent increase in fair value after an impairment loss is recognised in other comprehensive income.

Derecognition of financial assets

The Group derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. If the Group neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Group recognises its retained interest in the asset and an associated liability for amounts it may have to pay. If the Group retains substantially all the risks and rewards of ownership of a transferred financial asset, the Group continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received.

38


Annual Report 2010

Notes to the Financial Statements July 31, 2010 2

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Financial liabilities and equity instruments

Classification as debt or equity

Financial liabilities and equity instruments issued by the Group and the Company are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability and an equity instrument.

Equity instruments

An equity instrument is any contract that evidences a residual interest in the assets of the Group and the Company after deducting all of its liabilities. Equity instruments are recorded at the proceeds received, net of direct issue costs.

Financial liabilities

Trade and other payables are initially measured at fair value, net of transaction costs, and are subsequently measured at amortised cost, using the effective interest method, with interest expense recognised on an effective yield basis. Interest-bearing bank borrowings are initially measured at fair value, and are subsequently measured at amortised cost, using the effective interest method. Any difference between the proceeds (net of transaction costs) and the settlement or redemption of borrowings is recognised over the term of the borrowings in accordance with the Group’s accounting policy for borrowing costs (see below).

Financial guarantees

Financial guarantee contract liabilities are measured initially at their fair values and subsequently at the higher of the amount of obligation under contract recognised as a provision in accordance with FRS 37 Provisions, Contingent Liabilities and Contingent Assets and the amount initially recognised less cumulative amortisation in accordance with FRS 18 Revenue. The Company has issued corporate guarantee to a bank for borrowings made by the subsidiary. This guarantee is a financial guarantee as it requires the Company to reimburse the bank if the subsidiary fails to make principal or interest payments when due in accordance with the terms of the borrowings.

Derivative financial instruments

The Group enters into a variety of derivative financial instruments (primarily foreign currency forward contracts) to manage its exposure to foreign exchange rate risk. Further details of derivative financial instruments are disclosed in Note 4. Derivatives are initially recognised at fair value at the date a derivative contract is entered into and are subsequently remeasured to their fair value at the end of each reporting period. The resulting gain or loss is recognised in profit or loss immediately.

Derecognition of financial liabilities

The Group derecognises financial liabilities when, and only when, the Group’s obligations are discharged, cancelled or they expire.

39


VicPlas International Ltd and its Subsidiaries

Notes to the Financial Statements July 31, 2010 2

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

LEASES - Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.

The Group as lessor

Rental income from operating leases is recognised on a straight-line basis over the term of the relevant lease unless another systematic basis is more representative of the time pattern in which use benefit derived from the leased asset is diminished. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised on a straight-line basis over the lease term.

The Group as lessee

Assets held under finance leases are recognised as assets of the Group at their fair value at the inception of the lease or, if lower, at the present value of the minimum lease payments. The corresponding liability to the lessor is included in the statement of financial position as a finance lease obligation. Lease payments are apportioned between finance charges and reduction of the lease obligation so as to achieve a constant rate of interest on the remaining balance of liability. Finance charges are charged directly to profit or loss, unless they are directly attributable to qualifying assets, in which case they are capitalised in accordance with the Group’s general policy on borrowing costs (see below). Contingent rentals are recognised as expenses in the periods in which they are incurred. Rentals payable under operating leases are charged to profit or loss on a straight-line basis over the term of the relevant lease unless another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed. Contingent rentals arising under operating leases are recognised as an expense in the period in which they are incurred. In the event that lease incentives are received to enter into operating leases, such incentives are recognised as a liability. The aggregate benefit of incentives is recognised as a reduction of rental expense on a straight-line basis, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed. INVENTORIES - Inventories are stated at the lower of cost and net realisable value. Cost comprises direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the inventories to their present location and condition. Cost is calculated using the first-in, first-out method. Net realisable value represents the estimated selling price less all estimated costs of completion and costs to be incurred in marketing, selling and distribution.

40


Annual Report 2010

Notes to the Financial Statements July 31, 2010 2

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

PROPERTY, PLANT AND EQUIPMENT - Property, plant and equipment are carried at cost less accumulated depreciation and any accumulated impairment losses. Depreciation is charged so as to write off the cost of assets, over their estimated useful lives, using the straight-line method, on the following bases:

Office equipment Leasehold property Leasehold improvements Plant and equipment Motor vehicles

- - - - -

10% to 20% Shorter of 50 years or lease term which is 56 years 10% to 20% 10% to 20% 10% to 20%

The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis.

 apital work-in-progress are plant and equipment under construction at the end of the reporting period C and not yet available for use. No depreciation is charged on capital work-in-progress.

Fully depreciated assets still in use are retained in the financial statements.

Assets held under finance leases are depreciated over their expected useful lives on the same basis as owned assets or, if there is no certainty that the lessee will obtain ownership by the end of the lease term, the asset shall be fully depreciated over the shorter of the lease term and its useful life. The gain or loss arising on disposal or retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying amounts of the asset and is recognised in profit or loss. CLUB MEMBERSHIPS - Club memberships are held on a long-term basis and are stated at cost less impairment losses.

INTANGIBLE ASSETS

Intangible assets acquired separately

Intangible assets acquired separately are reported at cost less accumulated amortisation and accumulated impairment losses. Intangible assets with finite useful lives are amortised on a straightline basis over their estimated useful lives. The estimated useful life and amortisation method are reviewed at the end of each annual reporting period, with the effect of any changes in estimate being accounted for on a prospective basis.

Internally-generated intangible assets - research and development expenditure

Expenditure on research activities is recognised as an expense in the period in which it is incurred.

41


VicPlas International Ltd and its Subsidiaries

Notes to the Financial Statements July 31, 2010 2

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

An internally-generated intangible asset arising from development (or from the development phase of an internal project) is recognised if, and only if, all of the following have been demonstrated:

t he technical feasibility of completing the intangible asset so that it will be available for use or sale;

the intention to complete the intangible asset and use or sell it;

the ability to use or sell the intangible asset;

how the intangible asset will generate probable future economic benefits;

t he availability of adequate technical, financial and other resources to complete the development and to use or sell the intangible asset; and

t he ability to measure reliably the expenditure attributable to the intangible asset during its development.

The amount initially recognised for internally-generated intangible assets is the sum of the expenditure incurred from the date when the intangible asset first meets the recognition criteria listed above. Where no internally-generated intangible asset can be recognised, development expenditure is charged to profit or loss in the period in which it is incurred. Subsequent to initial recognition, internally-generated intangible assets are reported at cost less accumulated amortisation and accumulated impairment losses, on the same basis as intangible assets acquired separately.

Intangible assets acquired in a business combination

Intangible assets acquired in a business combination are identified and recognised separately from goodwill where they satisfy the definition of an intangible asset and their fair values can be measured reliably. The cost of such intangible assets is their fair value at the acquisition date. Subsequent to initial recognition, intangible assets acquired in a business combination are reported at cost less accumulated amortisation and accumulated impairment losses, on the same basis as intangible assets acquired separately. The intangible assets pertain to intellectual properties and customer relationship acquired through the acquisition described in Note 35. These intangible assets are amortised on a straight line basis over the estimated useful lives. The estimated useful lives and amortisation method are reviewed at the end of each annual reporting period, with the effect of any changes in estimate being accounted for on a prospective basis. GOODWILL PRIOR TO JULY 1, 2009 - Goodwill arising on the acquisition of a subsidiary represents the excess of the cost of acquisition over the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities of the subsidiary recognised at the date of acquisition. Goodwill is initially recognised as an asset at cost and is subsequently measured at cost less any accumulated impairment losses.

42


Annual Report 2010

Notes to the Financial Statements July 31, 2010 2

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

For the purpose of impairment testing, goodwill is allocated to each of the Group’s cash-generating units expected to benefit from the synergies of the combination. Cash-generating units to which goodwill has been allocated are tested for impairment annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit. An impairment loss recognised for goodwill is not reversed in a subsequent period. On disposal of a subsidiary, the attributable amount of goodwill is included in the determination of the profit or loss on disposal. IMPAIRMENT OF TANGIBLE AND INTANGIBLE ASSETS EXCLUDING GOODWILL – At the end of each reporting period, the Group and the Company review the carrying amounts of their tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the Company and the Group estimate the recoverable amount of the cashgenerating unit to which the asset belongs. Where a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual cash-generating units, or otherwise they are allocated to the smallest group of cash-generating units for which a reasonable and consistent allocation basis can be identified. Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment annually, or whenever there is an indication that the asset may be impaired. Recoverable amount is the higher of fair value less costs to sell and 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 risks specific to the asset for which the estimates of future cash flows have not been adjusted. If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease. Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treatment as a revaluation increase.

43


VicPlas International Ltd and its Subsidiaries

Notes to the Financial Statements July 31, 2010 2

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

PROVISIONS - Provisions are recognised when the Group or the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that the Group or the Company will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows. When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, the receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably. GOVERNMENT GRANTS – Jobs credit scheme is not recognised until there is reasonable assurance that the Group will comply with the conditions attaching to them and the grants will be received. REVENUE RECOGNITION - Revenue is measured at the fair value of the consideration received or receivable. Revenue is reduced for estimated customer returns, rebates and other similar allowances.

Sale of goods

Revenue from the sale of goods is recognised when all the following conditions are satisfied:

t he Group has transferred to the buyer the significant risks and rewards of ownership of the goods;

t he Group retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold;

the amount of revenue can be measured reliably;

it is probable that the economic benefits associated with the transaction will flow to the entity; and

the costs incurred or to be incurred in respect of the transaction can be measured reliably.

Rendering of services

Revenue from the rendering of services that are of a short duration is recognised when the services are completed.

Management fees

Management fee income from subsidiaries is recognised on an accrual basis.

Interest income

Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable.

44


Annual Report 2010

Notes to the Financial Statements July 31, 2010 2

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Dividend income

Dividend income from investments is recognised when the shareholders’ rights to receive payment have been established.

Rental income

Rental income is recognised in accordance with the accounting policy for leases as detailed above. BORROWING COSTS - Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale. Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation.

All other borrowing costs are recognised in profit or loss in the period in which they are incurred.

RETIREMENT BENEFIT COSTS - Payments to defined contribution retirement benefit plans are charged as an expense as they fall due. Payments made to state-managed retirement benefit schemes, such as the Singapore Central Provident Fund, are dealt with as payments to defined contribution plans where the Group’s obligations under the plans are equivalent to those arising in a defined contribution retirement benefit plan. EMPLOYEE LEAVE ENTITLEMENT - Employee entitlements to annual leave are recognised when they accrue to employees. A provision is made for the estimated liability for annual leave as a result of services rendered by employees up to the end of the reporting period.

INCOME TAX - Income tax expense represents the sum of the tax currently payable and deferred tax.

The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit as reported in the statement of comprehensive income because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are not taxable or tax deductible. The Group’s liability for current tax is calculated using tax rates (and tax laws) that have been enacted or substantively enacted in countries where the Company and subsidiaries operate by the end of the reporting period. Deferred tax is recognised on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit. Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.

45


VicPlas International Ltd and its Subsidiaries

Notes to the Financial Statements July 31, 2010 2

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset realised based on the tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets and liabilities on a net basis. Current and deferred tax are recognised as an expense or income in profit or loss, except when they relate to items credited or debited outside profit or loss (either in other comprehensive income or directly to equity), in which case the tax is also recognised outside profit or loss (either in other comprehensive income or directly in equity, respectively), or where they arise from the initial accounting for a business combination. In the case of a business combination, the tax effect is taken into account in calculating goodwill or determining the excess of the acquirer’s interest in the net fair value of the acquiree’s identifiable assets, liabilities and contingent liabilities over cost. FOREIGN CURRENCY TRANSACTIONS AND TRANSLATION - The individual financial statements of each Group entity are measured and presented in the currency of the primary economic environment in which the entity operates (its functional currency). The consolidated financial statements of the Group and the statement of financial position and statement of changes in equity of the Company are presented in Singapore dollars, which is the functional currency of the Company, and the presentation currency for the consolidated financial statements. In preparing the financial statements of the individual entities, transactions in currencies other than the entity’s functional currency are recorded at the rates of exchange prevailing on the date of the transaction. At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at the end of each reporting period. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing on the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated. Exchange differences arising on the settlement of monetary items, and on retranslation of monetary items are included in profit or loss for the period. Exchange differences arising on the retranslation of non-monetary items carried at fair value are included in profit or loss for the period except for differences arising on the retranslation of non-monetary items in respect of which gains and losses are recognised in other comprehensive income. For such non-monetary items, any exchange component of that gain or loss is also recognised in other comprehensive income. For the purpose of presenting consolidated financial statements, the assets and liabilities of the Group’s foreign operations (including comparatives) are expressed in Singapore dollars using exchange rates prevailing at the end of the reporting period. Income and expense items (including comparatives) are translated at the average exchange rates for the period, unless exchange rates fluctuated significantly during that period, in which case the exchange rates at the dates of the transactions are used. Exchange differences arising, if any, are recognised in other comprehensive income and accumulated in a separate component of equity. On the disposal of a foreign operation, the cumulative amount of the exchange differences relating to that foreign operation accumulated in a separate component of equity, shall be reclassified from equity to profit or loss (as at reclassification adjustment) when the gain or loss on disposal is recognised. 46


Annual Report 2010

Notes to the Financial Statements July 31, 2010 2

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

On consolidation, exchange differences arising from the translation of the net investment in foreign entities (including monetary items that, in substance, form part of the net investment in foreign entities), and of borrowings, are recognised in other comprehensive income and accumulated in foreign currency translation reserve. Goodwill and fair value adjustments arising on the acquisition of a foreign operation are treated as assets and liabilities of the foreign operation and translated at the closing rate. SEGMENT REPORTING – An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Group’s other components. The Group determines and presents operating segments based on information that is internally provided to the Chief Executive Officer (“CEO”) and the Board of Directors (“BOD”), who are the Group’s chief operating decision makers. All operating segments’ operating results are reviewed regularly by the Group’s CEO and BOD to make decision about resources to be allocated to the segment and assess its performance, and for which discrete financial information is available. CASH AND CASH EQUIVALENTS - Cash and cash equivalents comprise cash on hand, bank balances, demand deposits and bank overdrafts that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value. 3

CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

In the application of the Group’s accounting policies, which are described in Note 2, management is required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

Critical judgements in applying the entity’s accounting policies

Apart from those involving estimations (see below), the management is of the opinion that any instances of application of judgements are not expected to have a significant effect on the amounts recognised in the financial statements.

Key sources of estimation uncertainty

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

47


VicPlas International Ltd and its Subsidiaries

Notes to the Financial Statements July 31, 2010 3

CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

(Continued)

Allowances for inventories

The management of the Group reviews the aging analysis of inventories at the end of each reporting period, and makes allowances for inventory items that are identified as obsolete and slow-moving. The management estimates the net realisable value for goods for resale based primarily on the latest selling prices and current market conditions. The carrying amounts of the inventories are disclosed in Note 10.

Allowances for doubtful receivables

The Group makes allowances for bad and doubtful debts based on an assessment of the recoverability of trade and other receivables. Allowances are applied to trade and other receivables where events or changes in circumstances indicate that the balances may not be collectible. The identification of bad and doubtful debts requires the use of judgement and estimates. Where the expectation is different from the original estimate, such difference will impact the carrying value of trade and other receivables and doubtful debts expenses in the period in which such estimate has been changed. The carrying amounts of the Group’s trade and other receivables are disclosed in Notes 8 and 9 respectively.

Depreciation of property, plant and equipment

The Group depreciates its property, plant and equipment over their estimated useful lives using the straight line method. The estimated useful lives reflect the management’s estimate of the periods that the Group expects to derive future economic benefits from the use of the property, plant and equipment. Changes in the expected level of usage and technological development could impact the economic useful lives and residual values of these assets. Therefore future revision to depreciation charges may arise.

Impairment for investments in subsidiaries

When there is an indication that a subsidiary may have suffered an impairment loss, for example the subsidiary is in capital deficit and has suffered operating losses, a test is made to assess whether the investment in subsidiary has suffered any impairment, in accordance with the stated accounting policy. This determination requires an estimation of the value in use. The value in use calculation requires management to estimate the future cash flows expected to arise from the CGUs and a suitable discount rate of 11.2% in order to calculate present value. As the exercise is based on both prospective financial and non-financial information such as future profitability of the subsidiary, and the financial health of and near-term business outlook for the subsidiary, including factors such as industry and sector performance, and operating cash flow, it requires considerable judgement and is highly subjective in nature. Accordingly, actual outcome could be different from that forecasted since anticipated events frequently do not occur as expected. As at July 31, 2010 any reasonable possible change to the key assumptions applied is not likely to cause the recoverable amounts to be below the carrying amount of the CGU. Based on management’s judgements and estimates, no impairment loss was recognised during the current and prior financial years. The carrying amounts of the investments in subsidiaries of the company are disclosed in Note 15 to the financial statements.

48


Annual Report 2010

Notes to the Financial Statements July 31, 2010 3

CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

(Continued)

Useful life of intellectual properties and customer relationship

Determining the estimated useful life of the intellectual properties and customer relationship requires an estimation of the period in which the future economic benefits arising from the intangible assets will accrue to the entity. Management has assessed the appropriate useful lives to be 10 years and 4 years, respectively, for intellectual properties and customer relationship. The estimated useful lives will be reviewed at the end of each reporting period to determine if they are still appropriate in light of current events and circumstances. 4

FINANCIAL INSTRUMENTS, FINANCIAL RISKS AND CAPITAL RISKS MANAGEMENT

(a)

Categories of financial instruments The following table sets out the financial instruments as at the end of the reporting period:

2010 $’000

Group 2009 $’000

Company 2010 2009 $’000 $’000

19,627 135 19,762

19,323 92 19,415

22,986 22,986

6,440 6,440

6,994 912

5,192 1,772

1,154 -

626 -

294

440

-

-

8,200

7,404

1,154

626

Financial Assets Loans and receivables (including cash and bank balances) Available-for-sale financial assets

Financial Liabilities Trade and other payables Bank loan (Non-current and current) Non-current and current finance leases

The maximum amount that the Company could be required to settle under the financial guarantee contract is $9,685,000 (2009 : $9,685,000). The Group and Company consider that it is more likely than not that no amount will be payable under the arrangement.

(b)

Financial risk management objectives and policies

The Group’s overall policy with respect to managing risk arising in the normal course of the Group’s business as well as that associated with financial instruments is to minimise the potential adverse effects on the financial performance of the Group. The policies for managing specific risks are summarised below.

The Group does not hold or issue derivative financial instruments for speculative purposes.

49


VicPlas International Ltd and its Subsidiaries

Notes to the Financial Statements July 31, 2010 4

FINANCIAL INSTRUMENTS, FINANCIAL RISKS AND CAPITAL RISKS MANAGEMENT

(Continued)

There has been no change to the Group’s exposure to these financial risks or the manner in which it manages and measures the risk. Market risk exposures are measured using sensitivity analysis indicated below.

Foreign exchange risk management

The Group is exposed to foreign currency risk on sales and purchases that are denominated in currencies other than Singapore dollars. The currency giving rise to this risk is primarily United States dollars. Foreign currency exposures are monitored by management on an ongoing basis. The Group utilises foreign currency forward exchange contracts to manage firm commitments to suppliers for the purchase of goods. The Group has no outstanding forward exchange contracts at the end of the reporting period. At the end of the reporting period, the carrying amounts of monetary assets and monetary liabilities denominated in currencies other than the respective group entities’ functional currencies are as follows: Group Liabilities

United States Dollar (“USD”) Singapore Dollar (“SGD”) Euro (“EUR”) Chinese Renminbi (“RMB”) Japanese Yen (“JPY”) Great Britain Pound (“GBP”)

Assets

2010

2009

2010

2009

$’000

$’000

$’000

$’000

791 68 137 -

850 203 112

328 354 2 -

407 245 82 -

1

The Company has certain investments in foreign subsidiaries whose net assets are exposed to currency translation risk.

Foreign currency sensitivity

The following table details the sensitivity to a 10% increase and decrease in the relevant foreign currencies against the functional currency of each Group entity. 10% is the sensitivity rate used when reporting foreign currency risk internally to key management personnel and represents management’s assessment of the possible change in foreign exchange rates. The sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their translation at the period end for a 10% change in foreign currency rates. The sensitivity analysis includes external borrowings as well as loans to foreign operations within the Group where they gave rise to an impact on the Group’s profit or loss. There is no impact on the Group’s equity.

50


Annual Report 2010

Notes to the Financial Statements July 31, 2010 4

FINANCIAL INSTRUMENTS, FINANCIAL RISKS AND CAPITAL RISKS MANAGEMENT

(Continued)

If the relevant foreign currency weakens by 10% against the functional currency of each Group entity, profit for the year will increase (decrease) by: USD impact SGD impact EUR impact RMB impact JPY impact GBP impact 2010 2009 2010 2009 2010 2009 2010 2009 2010 2009 2010 2009 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 Group Profit or loss

46

44

(35)

(25)

7

-

-

(8)

14

20

-

11

If the relevant foreign currency strengthens by 10% against the functional currency of each Group entity, profit for the year will increase (decrease) by: USD impact SGD impact EUR impact RMB impact JPY impact GBP impact 2010 2009 2010 2009 2010 2009 2010 2009 2010 2009 2010 2009 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 Group Profit or loss

(46)

(44)

35

25

There is no impact to the Company.

Interest rate risk management

(7)

-

-

8

(14)

(20)

-

(11)

The Group’s exposure to interest rate risk mainly arises from the bank loan and bills payable. The terms of repayment of bank loan and bills payable are shown in Note 18.

Interest rate sensitivity

The sensitivity analyses below have been determined based on the exposure to interest rates for non-derivative instruments at the end of the reporting period and the stipulated change taking place at the beginning of the financial year and held constant throughout the reporting period in the case of instruments that have floating rates. A 100 basis point increase or decrease is used when reporting interest rate risk internally to key management personnel and represents management’s assessment of the possible change in interest rates. As at the end of the reporting period and in prior year, interest rate sensitivity analysis have not been performed as the impact on the Group’s profit or loss are not expected to be material.

51


VicPlas International Ltd and its Subsidiaries

Notes to the Financial Statements July 31, 2010 4

FINANCIAL INSTRUMENTS, FINANCIAL RISKS AND CAPITAL RISKS MANAGEMENT

(Continued)

The Group’s sensitivity to interest rates has decreased during the current year mainly due to lower bills payable balance at the end of the reporting period. There is no impact on the Group’s equity. The Group’s exposure to interest rate risk mainly arises from the fixed deposits. The interest rates and tenure are disclosed in Note 7.

Credit risk management

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group. The Group has adopted a stringent procedure in extending credit terms to customers and monitoring its credit risk. Credit evaluations are performed on all customers requiring credit over a certain amount. Where appropriate, letters of credit, cash and/ or advance payments are required for new customers and those with an unacceptable credit assessment. The carrying amount of financial assets recorded in the financial statements, grossed up for any allowances for losses, represents the Group’s and Company’s maximum exposure to credit risk without taking into account of the value of any collateral obtained.

Liquidity risk management

The Group finances its operations by a combination of bank borrowings and internally generated cash flows. Adequate lines of credit and availability of committed funding lines are maintained at all times to meet its obligations as and when they fall due. The Group maintains sufficient cash and cash equivalents, and internally generated cash flows to finance their activities. Undrawn facilities are disclosed in Note 18.

Liquidity and interest risk analyses

Non-derivative financial assets

The Group’s and Company’s non-derivative financial assets of $19,762,000 (2009 : $19,415,000) and $22,986,000 (2009 : $6,440,000) respectively, are due on demand or within one year from the end of the reporting period.

52


Annual Report 2010

Notes to the Financial Statements July 31, 2010 4

FINANCIAL INSTRUMENTS, FINANCIAL RISKS AND CAPITAL RISKS MANAGEMENT

(Continued)

Non-derivative financial liabilities

The following tables detail the remaining contractual maturity for non-derivative financial liabilities. The tables have been drawn up based on the earliest date on which the Group and Company can be expected to pay. The table includes both interest and principal cash flows. Weighted average On effective demand interest or within rate 1 year % $’000

Within 2 to 5 years $’000

After 5 years $’000

Adjustment $’000

Total $’000

Group 2010 Non-interest bearing Finance lease liability (fixed rate) Fixed interest rate instruments

-

6,994

-

-

-

6,994

5.65

143

196

-

(45)

294

4.50

505

468

-

(61)

912

-

5,192

-

-

-

5,192

5.65

190

315

-

(65)

440

4.00

395

-

-

-

395

4.50

526

974

-

(123)

1,377

-

1,154

-

-

-

1,154

-

626

-

-

-

626

2009 Non-interest bearing Finance lease liability (fixed rate) Variable interest rate instruments Fixed interest rate instruments Company 2010 Non-interest bearing 2009 Non-interest bearing

53


VicPlas International Ltd and its Subsidiaries

Notes to the Financial Statements July 31, 2010 4

FINANCIAL INSTRUMENTS, FINANCIAL RISKS AND CAPITAL RISKS MANAGEMENT

(Continued)

Fair value of financial assets and financial liabilities

The carrying amounts of cash and cash equivalents, trade and other current receivables and payables, approximate their respective fair values due to the relatively short-term maturity of these financial instruments. The fair values of other classes of financial assets and liabilities are disclosed in the respective notes to financial statements. The fair values of financial assets and financial liabilities are determined as follows:

t he fair value of financial assets and financial liabilities with standard terms and conditions and traded on active liquid markets are determined with reference to quoted market prices;

the fair value of other financial assets and financial liabilities (excluding derivative instruments) are determined in accordance with generally accepted pricing models based on discounted cash flow analysis using prices from observable current market transactions and dealer quotes for similar instruments; and

the fair value of derivative instruments are calculated using quoted prices. Where such prices are not available, discounted cash flow analysis is used, based on the applicable yield curve of the duration of the instruments for non-optional derivatives, and option pricing models for optional derivatives.

The Group classifies fair value measurements using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. The fair value hierarchy has the following levels:

(a)

quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1);

(b) inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices) (Level 2); and

(c) inputs for the asset or liability that are not based on observable market data (unobservable inputs) (Level 3).

The fair values of the Group’s available-for-sale financial assets are classified as Level 1.

Derivative financial instruments

It is the Group’s policy not to trade in derivative contracts. From time to time and in the normal course of business, the Group enters into forward exchange contracts to manage the currency exposure arising from firm commitments to suppliers for the purchase of goods. The exchange gain/loss on the forward exchange contracts is dealt with in the same manner as in the underlying hedged items.

54


Annual Report 2010

Notes to the Financial Statements July 31, 2010 4

FINANCIAL INSTRUMENTS, FINANCIAL RISKS AND CAPITAL RISKS MANAGEMENT

(Continued)

As at the end of the reporting period, the Group has no outstanding commitments.

In prior year, the Group had the following outstanding commitments: Notional contract sum $’000

Net fair value asset $’000

142

-

2009 Forward foreign exchange contracts (Bought USD)

Capital risk management policies and objectives

The Group manages its capital to ensure that entities in the Group will be able to continue as a going concern, while maximising the return to stakeholders through the optimisation of the debt and equity balance. The capital structure of the Group consists of debt, which includes the bank borrowings as disclosed in Note 18, cash and cash equivalents and equity attributable to owners of the parent, comprising issued capital and retained earnings. The Group is in compliance with externally imposed financial covenant requirements on its bank borrowings for the financial years ended July 31, 2010 and 2009. 5

RELATED COMPANY TRANSACTIONS

The Company is a subsidiary of Venner Capital S.A., incorporated in the Republic of Panama, which is also its ultimate holding company. Some of the Company’s transactions and arrangements are with the subsidiaries in the Group and the effect of these on the basis determined between the parties is reflected in these financial statements. The intercompany balances are unsecured, interest-free and repayable on demand, unless otherwise stated. Transactions between the Company and its subsidiaries have been eliminated on consolidation and are therefore not disclosed in this note. Transactions and arrangements between the Group and group companies of the ultimate holding company are reflected in these financial statements. The balances are unsecured, interest-free and repayable on demand unless otherwise stated.

55


VicPlas International Ltd and its Subsidiaries

Notes to the Financial Statements July 31, 2010 5

RELATED COMPANY TRANSACTIONS (Continued)

During the year, Group entities entered into the following transactions with group companies of the ultimate holding company: Group 2010 $’000

2009 $’000

49 212 15

14 26 74 4

5,329 23 70 5

4,263 17 60 1

Ultimate holding company Income from mould and maintenance services, net Product development income Miscellaneous charges Miscellaneous income Subsidiaries of the ultimate holding company Sale of goods Miscellaneous charges Rental income Miscellaneous income 6

RELATED PARTY TRANSACTIONS

Related parties are entities with common direct or indirect shareholders and/or directors. Parties are considered to be related if one party has the ability to control the other party or exercise significant influence over the other party in making financial and operating decisions. Some of the Company’s transactions and arrangements are with related parties and the effect of these on the basis determined between the parties is reflected in these financial statements. The balances are unsecured, interest-free and repayable on demand unless otherwise stated.

During the year, the Group entities entered into the following transactions with related parties: Group

Sale of goods to associates of the ultimate holding company Rental income from associates of the ultimate holding company Income from mould and maintenance services (net) from associates of the ultimate holding company Purchase of goods from associates of the ultimate holding company Miscellaneous income from associates of the ultimate holding company Miscellaneous charges from associates of the ultimate holding company Service income from associates of the ultimate holding company

56

2010 $’000

2009 $’000

31,385 84

23,798 76

107 44 34

236

16

200

-

32


Annual Report 2010

Notes to the Financial Statements July 31, 2010 6

RELATED PARTY TRANSACTIONS (Continued)

Compensation of directors and key management personnel

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

Short-term benefits Post-employment benefits

2010 $’000

2009 $’000

1,126 41 1,167

747 27 774

The remuneration of directors and key management is determined by the Remuneration Committee having regard to the performance of individuals and market trends. 7

CASH AND BANK BALANCES Group

Cash and bank balances Fixed deposits Total

2010 $’000

2009 $’000

4,630 3,842 8,472

4,751 5,433 10,184

Company 2010 2009 $’000 $’000 937 3,713 4,650

151 5,300 5,451

Fixed deposits bear interest at an average effective interest rate of 0.23% to 2.67% (2009 : 0.27% to 3.7%) per annum and for tenure of approximately 92 to 365 days days (2009 : 92 to 365 days). The Group’s fixed deposits are readily convertible to cash at minimal costs. The Group’s cash and bank balances that are not denominated in the functional currencies of the respective entities are as follows: Group

United States Dollar Euro British Pound Singapore Dollar

2010 $’000

2009 $’000

240 2 1 354

397 245

57


VicPlas International Ltd and its Subsidiaries

Notes to the Financial Statements July 31, 2010 8

TRADE RECEIVABLES Group 2010 $’000 Outside parties Allowance for doubtful trade receivables Subsidiaries of ultimate holding company (Note 5) Associates of the ultimate holding company (Note 6) Total

2009 $’000

6,311 (199) 6,112 872 3,550 10,534

5,787 (171) 5,616 1,002 2,292 8,910

The average credit period on sale of goods is 30 to 90 days (2009 : 30 to 90 days). No interest is charged on the outstanding balance. An allowance has been made for estimated irrecoverable amounts from the sale of goods to outside parties of $199,000 (2009 : $171,000). Allowance for doubtful trade receivables is provided based on the assessment of outstanding debts more than 60 days after the credit term and by reference to past default experience. Before accepting any new customer, the Group obtained customers’ general profile from an external credit monitoring service provider to assess the potential customer’s credit worthiness and defines credit limits to customer. Credit limits attributed to customers are reviewed periodically. Of the trade receivables balance at the end of the year, $3,550,000 (2009 : $2,286,000) is due from an associate of the ultimate holding company, The Laryngeal Mask Company (Singapore) Pte Ltd, the Group’s largest customer. There are 3 (2009 : 3) customers who represent 45.0% (2009 : 38.7%) of the total balance of trade receivables. Included in the Group’s trade receivable balance are debtors with a carrying amount of $2,260,000 (2009 : $1,808,000) which are past due at the reporting date for which the Group has not provided as there has not been a significant change in credit quality and the amounts are still considered recoverable. The Group does not hold any collateral over these balances.

Below is an analysis of trade receivables: Group 2010 $’000

2009 $’000

Not past due nor impaired Past due but not impaired (i)

8,244 2,260 10,504

7,059 1,808 8,867

Impaired receivables Less: Provision for impairment

229 (199) 30 10,534

214 (171) 43 8,910

Total trade receivables, net

58


Annual Report 2010

Notes to the Financial Statements July 31, 2010 8

TRADE RECEIVABLES (Continued)

(i)

Aging of receivables that are past due but not impaired Group

1 month to 3 months 3 months to 4 months 4 months to 12 months

2010 $’000

2009 $’000

2,073 20 167 2,260

1,612 104 92 1,808

In determining the recoverability of a trade receivable the Group considers any change in the credit quality of the trade receivable from the date credit was initially granted up to the end of the reporting date. Accordingly, the management believes that there is no further credit provision required in excess of the allowance for doubtful debts. The Group does not hold any collateral over these balances.

Movement in the allowance for doubtful debts: Group 2010 $’000 Balance at beginning of the year Amounts written off during the year Increase (Decrease) in allowance recognised in profit or loss Balance at end of the year

2009 $’000

171 (3) 31 199

172 (1) 171

The Group and Company’s trade receivables that are not denominated in the functional currencies of the respective entities are as follows: Group

United States Dollar

2010 $’000

2009 $’000

83

10

59


VicPlas International Ltd and its Subsidiaries

Notes to the Financial Statements July 31, 2010 9

OTHER RECEIVABLES Group

Subsidiaries of ultimate holding company (Note 5) Associates of the ultimate holding company (Note 6) Deposits Dividend receivable from subsidiaries of the Company Other receivables due from subsidiaries of the Company Others Total

Company

2010 $’000

2009 $’000

2010 $’000

2009 $’000

140

-

5

-

168 206

27 153

-

-

-

-

16,000

-

320 834

173 353

2,331 18 18,354

985 19 1,004

The Group and Company’s other receivables that are not denominated in the functional currencies of the respective entities are as follows: Group

United States Dollar Chinese Renminbi 10

2010 $’000

2009 $’000

5 -

82

INVENTORIES Group

Raw materials Work-in-progress Finished goods Total

2010 $’000

2009 $’000

3,702 220 2,509 6,431

1,915 132 1,621 3,668

Due to having inventories sold above carrying amount, the Group reversed $9,000 (2009 : $41,000), being part of an inventory write-down made in 2008, to the current year profit or loss. The reversal is included in “Other operating income”. 11

DEPOSITS

During the year, the Group paid a deposit of $1,372,000 (2009 : $1,220,000) for the purchase of property, plant and equipment.

60


#

1,462 219 1,681 222 (57) 1,846

493 166

(1) 658 109 (9) (2) 3 759

11,218 11,218 (57) 11,161

Leasehold property $’000

(4) 659 413 (102) (4) 966

469 194

732 1,034 (16) 134 8 1,892 589 (102) (29) 2,350

Leasehold improvements $’000

(529) (193) (344) (18) 14,532 2,427 (795) 38 16,202

13,177 2,439

21,697 1,202 (1,133) (467) (365) (22) 20,912 3,083 (795) 38 23,238

Plant and equipment $’000

Group

(39) (1) 669 124 (54) 2 741

610 99

889 178 (39) (1) 1,027 186 (96) 1,117

Motor vehicles $’000

-

-

545 238 (134) 649 1,092 1,741

Capital work-inprogress $’000

(529) (236) (344) (20) 18,199 3,295 (1,017) (2) 39 20,514

16,211 3,117

35,929 2,714 (1,133) (522) (365) (17) 36,606 5,021 (1,059) (2) 11 40,577

Total $’000

Included in additions during the year is the purchase of property, plant and equipment amounting to $268,000 in relation to the acquisition of assets and related business (Note 35).

Accumulated depreciation: At August 1, 2008 Depreciation Eliminated on disposal of a subsidiary Disposals Written off Exchange differences At July 31, 2009 Depreciation Disposals Written off Exchange differences At July 31, 2010

848 62 (2) 908 71 (9) (2) 2 970

Office equipment $’000

PROPERTY, PLANT AND EQUIPMENT

Cost: At August 1, 2008 Additions Disposal of a subsidiary Disposals Written off Reclassification Exchange differences At July 31, 2009 Additions # Disposals Written off Exchange differences At July 31, 2010

12

Annual Report 2010

Notes to the Financial Statements July 31, 2010

61


62 9,537

1,233

1,384

-

-

-

Leasehold improvements $’000

6,380

7,036

-

(604) (26)

630

Plant and equipment $’000

Group

358

376

-

-

-

Motor vehicles $’000

649

1,741

-

-

-

Capital work-in-progress $’000

18,407

20,063

-

(604) (26)

630

Total $’000

Area

Leasehold factory 9,000 sq metre and office

Description

Lease term of 56 years from February 1, 2000

Tenure

 he fair value of the Group’s leasehold property at July 31, 2010 is $13,000,000 (2009 : $12,000,000) and has been determined on the basis of T valuation carried out at the end of the reporting period by an independent valuer having an appropriate recognised professional qualification. The valuation was arrived at by reference to market evidence of transaction prices for similar properties and was performed in accordance with International Valuation Standards.

The Group leasehold property is recorded at cost less depreciation.

35 Joo Koon Circle Singapore 629110

Location

Details of the leasehold property held by the Group as at July 31, 2010 are set out below:

The Group has pledged leasehold property having a carrying amount of approximately $9,315,000 (2009 : $9,537,000) to secure banking facilities granted to the Group.

The carrying amounts of the Group’s plant and equipment and motor vehicles include amounts of $300,000 (2009 : $611,000) and $88,000 (2009 :$106,000) respectively, in respect of assets held under finance leases.

250

At July 31, 2009

9,315

-

-

211

-

-

Carrying amount: At July 31, 2010

-

Leasehold property $’000

-

Office equipment $’000

PROPERTY, PLANT AND EQUIPMENT (Continued)

Impairment: At August 1, 2008 Eliminated on disposal of a subsidiary Disposals At July 31, 2009 and July 31, 2010

12

VicPlas International Ltd and its Subsidiaries

Notes to the Financial Statements

July 31, 2010


Annual Report 2010

Notes to the Financial Statements July 31, 2010 13

CLUB MEMBERSHIPS Group

Cost Impairment Carrying amount

2010 $’000

2009 $’000

136 (42) 94

136 (18) 118

Movement in impairment of club memberships: Group 2010 $’000 Balance at beginning of the year Impairment charged (written back) during the year Balance at end of the year

14

18 24 42

2009 $’000 22 (4) 18

INTANGIBLE ASSETS Group Intellectual Development Customer Development properties costs relationship right $’000 $’000 $’000 $’000 Cost: At August 1, 2008 and July 31, 2009 Addition during the year (Note 35) At July 31, 2010

Total $’000

-

289

2,157

800

3,246

326 326

289

618 2,775

800

944 4,190

-

-

240 240 480

93 160 253

333 400 733

-

-

-

-

-

-

289

598

547

1,434

-

289

1,079 1,677

547

1,079 2,513

Carrying amount: At July 31, 2010

326

-

618

-

944

At July 31, 2009

-

-

-

-

-

Accumulated amortisation: At August 1, 2008 Amortisation for the year At July 31, 2009 and 2010 Impairment: At August 1, 2008 Impairment loss recognised in profit or loss (Note 29) Impairment loss recognised in equity At July 31, 2009 and 2010

63


VicPlas International Ltd and its Subsidiaries

Notes to the Financial Statements July 31, 2010 14

INTANGIBLE ASSETS (Continued)

In the prior year, the Group had impaired fully the intangible assets after considering the uncertainties prevailing in the market place at that time, the technical progress in commercialising product development, the results of the medical devices segment, and the difficulty in projecting future cash flow arising from the announced plan of one key customer that it would set up its own manufacturing facility. No amortisation expense has been recognised in respect of the intangible assets acquired during the current financial year as these assets are not yet available for use. 15

SUBSIDIARIES Company $’000

64

Cost: At August 1, 2008 Acquired during the year At July 31, 2009

39,777 240 40,017

Deemed investment arising from financial guarantee provided to a subsidiary At July 31, 2010

89 40,106

Impairment: At August 1, 2008 Impairment loss At July 31, 2009 and 2010

3,987 10,288 14,275

Carrying amount: At July 31, 2010

25,831

At July 31, 2009

25,742


Annual Report 2010

Notes to the Financial Statements July 31, 2010 15

SUBSIDIARIES (Continued)

Details of the Company’s subsidiaries at July 31, 2010 are as follows:

Name of subsidiary and country of incorporation and operation

Principal activity

Proportion of ownership interest and voting power held 2010 2009 % %

VicPlas Holdings Pte Ltd (a) (Singapore)

Manufacturing, trading and distributing of uPVC pipes and pipe fittings.

100

100

Rimplas Industries Sdn Bhd (b) (Malaysia)

Manufacturing and distributing of uPVC pipes and pipe fittings.

100

100

Forefront Medical Technology (Pte) Ltd (a) (Singapore)

Developing and manufacturing of medical devices.

100

100

Investment holding

100

100

Manufacturing and assembly of medical devices

100

100

Subsidiary of Forefront Medical Technology (Pte) Ltd Forefront Investment Pte. Ltd. (a) (Singapore) Subsidiary of Forefront Investment Pte. Ltd. Forefront (Xiamen) Medical Devices Co., Ltd (c) (People’s Republic of China)

Note:

(a)

Audited by Deloitte & Touche LLP, Singapore.

(b)

Audited by overseas practice of Deloitte Touche Tohmatsu.

(c)

Audited by overseas practise of Deloitte Touche Tohmatsu for consolidation purpose.

The impairment in prior year was related to the company’s investment in FMT. Please refer to Note 17 for details on the reasons for the impairment made in prior year.

65


VicPlas International Ltd and its Subsidiaries

Notes to the Financial Statements July 31, 2010 16

AVAILABLE-FOR-SALE INVESTMENTS Group 2010 $’000 Quoted equity shares, at fair value

2009 $’000

135

92

The fair values of these securities are based on the quoted closing market prices on the last market day of the financial year. The available-for-sale investments are denominated in Singapore dollars, the functional currency of the entity. 17

GOODWILL Group 2010 $’000 At beginning of year Impairment loss recognised in profit or loss (Note 29) At end of year

2009 $’000 -

14,634 (14,634) -

Goodwill acquired in a business combination is allocated, at acquisition, to the cash generating units (CGUs) that are expected to benefit from the business combination. Goodwill arose solely from the acquisition of Forefront Medical Technology (Pte) Ltd and its subsidiaries (“FMT Group”) and thus is a single CGU. In the prior year, the Group had impaired fully the goodwill after considering the uncertainties prevailing in the market place at that time, the results of the medical devices segment, the announced plan of one key customer that it would set up its own manufacturing facility and the significant judgement involved in ascertaining an exact value of the CGU in view of the foregoing. 18

BANK BORROWINGS Group

Bank loan Bills payable

2010 $’000

2009 $’000

912 912

1,377 395 1,772

464 448 912

859 464 449 1,772

(464) 448

(859) 913

The borrowings are repayable as follows: On demand or within one year In the second year In the third year Less: Amount due for settlement within 12 months (shown under current liabilities) Amount due for settlement after 12 months 66


Annual Report 2010

Notes to the Financial Statements July 31, 2010 18

BANK BORROWINGS (Continued) Group 2010 % per annum

2009 % per annum

The average effective interest rates were as follows: Bank loan Bills payable

4.5 3.0

4.5 3.0

The management estimates the fair value of the Group’s borrowings, by discounting their future cash flows at the market rate, to be as follows: Group 2010 $’000 Bank loan Bills payable

2009 $’000

898 -

1,397 395

The loan is repayable over a period of 4 years by equal monthly instalments commencing from November 19, 2007. A portion of the bank loan amounting to $465,000 (2009 : $464,000) has been repaid during the year. The bank loan and bills payables are secured by a legal mortgage over the Group’s leasehold property at 35 Joo Koon Circle, Singapore 629110 (Note 12) and a corporate guarantee by the Company of $9,685,000 (2009 : $9,685,000) given to financial institutions for credit facilities granted to subsidiaries. At July 31, 2010, the Group had available $7,220,000 (2009 : $7,233,000) of undrawn credit facilities in respect of which all existing terms and conditions had been met. The Group’s bank overdrafts and loan that are not denominated in the functional currencies of the respective entities are as follows: Group 2010 $’000 United States Dollar 19

2009 $’000

-

395

TRADE PAYABLES Group 2010 $’000 Outside parties

3,248

2009 $’000 1,930

67


VicPlas International Ltd and its Subsidiaries

Notes to the Financial Statements July 31, 2010 19

TRADE PAYABLES (Continued)

The average credit period on purchases of goods is 30 to 75 days (2009 : 30 to 75 days). No interest is charged on the outstanding balance. The Group’s trade payables that are not denominated in the functional currencies of the respective entities are as follows: Group

United States Dollar Euro British Pound 20

2010 $’000

2009 $’000

787 68 -

454 112

OTHER PAYABLES Group

Outside parties Accruals Directors (Note 6) Other payables due to subsidiaries of the Company Subsidiaries of ultimate holding company (Note 5) Associates of the ultimate holding company (Note 6) Total

Company 2010 2009 $’000 $’000

2010 $’000

2009 $’000

3,690 373 209

3,396 240

103 373 209

404 240

-

-

488

-

7

-

-

-

13 4,292

13 3,649

1,173

644

The Group’s other payables that are not denominated in the functional currencies of the respective entities are as follows: Group

Japanese Yen United States Dollar

68

$’000 2010

$’000 2009

137 4

203 1


Annual Report 2010

Notes to the Financial Statements July 31, 2010 21

FINANCE LEASES Group Present value of minimum lease payments

Minimum lease payments

Amounts payable under finance leases: Within one year In the second to fifth years inclusive Less: Future finance charges Present value of lease obligations

2010 $’000

2009 $’000

2010 $’000

2009 $’000

143 196 339 (45) 294

190 315 505 (65) 440

123 171 294 294

165 275 440 440

(123)

(165)

171

275

Less: Amount due for settlement within 12 months (shown under current liabilities) Amount due for settlement after 12 months

It is the Group’s policy to lease certain of its plant and equipment under finance leases. The average lease term is 5 years (2009 : 5 years). For the year ended July 31, 2010, the average effective borrowing rate was 5.65% (2009 : 5.65%) per annum. Interest rates are fixed at the contract date, and thus expose the Group to fair value interest rate risk. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments.

The fair values of the Group’s lease obligations approximate their carrying amounts.

The Group’s obligations under finance leases are secured by the lessors’ title to the leased assets.

22

DEFERRED TAX LIABILITIES

The following are the deferred tax liabilities recognised by the Group: Group Accelerated tax depreciation $’000

At August 1, 2008 Credit to equity for the year (Note 24) Credit to profit or loss for the year (Note 30) At July 31, 2009 Acquisition of assets and related business (Note 35) Charged to profit or loss for the year (Note 30) At July 31, 2010

Provision $’000

Revaluation of assets $’000

Total $’000

1,032

-

345

1,377

-

-

(211)

(211)

1,032

(87) (87)

(134) -

(221) 945

-

-

206

206

182 1,214

(87)

206

182 1,333 69


VicPlas International Ltd and its Subsidiaries

Notes to the Financial Statements July 31, 2010 23

SHARE CAPITAL Group and Company 2010 2009 ’000 ’000 Number of ordinary shares Issued and paid up: At beginning and end of year

442,138

442,138

2010 $’000

2009 $’000

44,714

44,714

Fully paid ordinary shares, which have no par value, carry one vote per share and carry a right to dividends when declared by the Company. 24

REVALUATION RESERVE

The revaluation reserve arose on the revaluation of property, plant and equipment and inventories as a result of an acquisition of the remaining 50% interest of its jointly controlled entity and on the revaluation of available-for-sale financial assets. When a re-valued asset is sold or impaired, the portion of the reserve that relates to that asset or financial asset is effectively realised and is recognised in retained earnings.

The revaluation reserve is not available for distribution to the owners of the Company.

During the year, there was a gain of $43,000 recognised in revaluation reserve arising from changes in fair value of available-for-sale financial assets. In prior year, there was a reversal of revaluation reserve on impairment of intangible assets amounting to $868,000 and an impairment loss on available-for-sale investments recognised in profit or loss amounting to $234,000. 25

REVENUE

Revenue represents sales of goods at invoiced value, reduced for rebates and other similar allowances.

70


Annual Report 2010

Notes to the Financial Statements July 31, 2010 26

OTHER OPERATING INCOME 2010 $’000 Product development income from ultimate holding company (Note 5) Gain on disposal of property, plant and equipment Gain on disposal of subsidiary Write back of allowance for doubtful trade receivables Write back of impairment of club memberships Write back of inventories written down to net realisable value Interest income from outside parties Income from mould and maintenance services, net: Related party (Note 6) Outside party Ultimate holding company (Note 5) Miscellaneous income: Related parties (Note 6) Outside parties Ultimate holding company (Note 5) Subsidiaries of ultimate holding company (Note 5) Government grant - job credit scheme Rental income from related parties (Note 6) Rental income from subsidiaries of ultimate holding company (Note 5) Service income from related parties (Note 6) Trade bad debts recovered

27

Group

2009 $’000

212 2 9 24

26 11 51 1 4 41 7

107 1 49

50 14

34 53 15 5 315 84 70 3 983

236 45 4 1 269 76 60 32 928

OTHER OPERATING EXPENSES 2010 $’000 Allowance for doubtful trade receivables Allowance for inventories obsolescence Net foreign exchange loss Goodwill written off on acquisition of non-controlling interests Property, plant and equipment written off Impairment loss on available-for-sale investments Impairment loss on club memberships Factory consumables Insurance Packaging materials Professional fees Repair and maintenance Sterilisation and decontamination Transportation and freight Travelling and entertainment Upkeep of factory premises Water and electricity Others

31 3 29 24 776 274 2,539 580 1,213 939 2,431 411 637 2,282 2,616 14,785

Group

2009 $’000

2 188 46 21 234 318 176 2,297 592 1,222 806 1,846 364 402 1,656 1,815 11,985

71


VicPlas International Ltd and its Subsidiaries

Notes to the Financial Statements July 31, 2010 28

FINANCE COSTS Group 2010 $’000 Interest on bank borrowings Interest on obligations under finance leases

29

2009 $’000

58 27 85

192 43 235

EXCEPTIONAL ITEMS Group 2010 $’000 Impairment loss on goodwill (Note 17) Impairment loss on intangible assets (Note 14)

-

2009 $’000 14,634 1,434 16,068

In the prior year, the Group had impaired fully the goodwill and intangible assets after considering the uncertainties prevailing in the market place at that time, the technical progress in commercialising product development, the results of the medical devices segment and the difficulty in projecting future cash flow arising from the announced plan of its key customer that it would set up its own manufacturing facility. 30

INCOME TAX EXPENSE Group

Current tax Adjustment in respect of underprovision of current tax in prior year Deferred tax expense relating to the origination and reversal of temporary difference (Note 22) Reversal of deferred tax asset (Note 22) Adjustment in respect of overprovision of deferred tax in prior year (Note 22) Withholding tax Income tax expense for the year

2010 $’000

2009 $’000

674 62

386 139

338 -

(134)

(156) 33 951

(87) 33 337

Domestic income tax is calculated at 17% (2009 : 17%) of the estimated assessable profit (loss) for the year.

72


Annual Report 2010

Notes to the Financial Statements July 31, 2010 30

INCOME TAX EXPENSE (Continued)

The total charge for the year can be reconciled to the accounting profit (loss) as follows: Group 2010 $’000 Profit (Loss) before income tax Tax at the domestic income tax rate 17% (2009 : 17%) Tax effect of expenses that are not deductible in determining taxable profit Tax exempt income Income on pioneer status activity which is disregarded in determining taxable profit Reversal of deferred tax Underprovision in prior years – current tax Overprovision in prior years – deferred tax Effect on change in tax rate Withholding tax Others Income tax expense for the year

31

PROFIT (LOSS) FOR THE YEAR

Profit (Loss) for the year has been arrived at after charging:

2009 $’000

5,316

(13,512)

904

(2,297)

287 (118)

2,687 -

62 (156) 33 (61) 951

(18) (134) 139 (87) (35) 33 49 337

Group 2010 $’000 Amortisation of development expenditure Amortisation of customer relationship Non-audit fees paid to auditors of the Company Costs of defined contribution plans included in employee benefits expense Cost of inventories recognised as an expense Directors’ fees: Current year Underprovision in prior year Directors’ remuneration included in employee benefits expenses Impairment loss on available-for-sale investments Property, plant and equipment written off

2009 $’000

4

160 240 11

744 42,394

582 34,741

209 479 -

240 49 393 234 21

73


VicPlas International Ltd and its Subsidiaries

Notes to the Financial Statements July 31, 2010 32

EARNINGS (LOSS) PER SHARE Group 2010 $’000

2009 $’000

4,365

(13,853)

2010 ’000

2009 ’000

442,138

442,138

0.99

(3.13)

Earnings (Loss) Earnings (Loss) for the purposes of basic earnings per share Profit (Loss) for the year attributable to owners of the Company

Number of shares Weighted average number of ordinary shares for the purpose of basic earnings per share Earnings (Loss) per share (cents) – basic and diluted 33

SEGMENT INFORMATION

For management purposes, the Group is currently organised into two main business activities. The business activities are the basis on which the Group reports to the chief operating decision maker for the purposes of resource allocation and assessment of segment performance.

The two main business activities are as follows:

(a) uPVC pipes and pipe fittings – Manufacturing, trading and distributing of uPVC pipes and pipe fittings

(b)

Medical devices – Manufacturing and developing medical devices

Segment revenue and expense: Segment revenue and expense are the operating revenue and expense reported in the Group’s profit or loss that are directly attributable to a segment and the relevant portion of such revenue and expense that can be allocated on a reasonable basis to a segment to arrive at segment results. Segment assets and liabilities: Segment assets include all operating assets used by a segment and consist principally of operating receivables, inventories and property, plant and equipment, net of allowances and provisions. Capital additions include the total cost incurred to acquire property, plant and equipment, and intangible assets directly attributable to the segment. Segment liabilities include all operating liabilities and consist principally of accounts payable and accruals. Inter-segment transfers: Segment revenue and expenses include transfers between business segments. Inter-segment sales are charged at prevailing market prices. These transfers are eliminated on consolidation. The measurement basis of the Group’s reportable segments is in accordance with its accounting policy as described in Note 2.

74


Annual Report 2010

Notes to the Financial Statements July 31, 2010 33

SEGMENT INFORMATION (Continued)

Segment revenue and results:

Medical devices $’000

Group uPVC pipes and pipe fittings Eliminations $’000 $’000

Total $’000

2010 Revenue External sales

37,205

20,068

-

57,273

4,532

3,001

(825)

6,708

Results Segment result Unallocated corporate expense Interest expense Interest income Profit before tax Income tax expense Profit for the year

(1,331) (85) 24 5,316 (951) 4,365

-

(85) 24

-

5,076 (2,260)

889 (1,035)

-

5,965 (3,295)

21,406

22,800

-

44,206 4,673 48,879

5,763

4,367

-

10,130 684 10,814

Other information Capital additions Depreciation and amortisation Statement of financial position Assets Segment assets Unallocated corporate assets (a) Consolidated total assets Liabilities Segment liabilities Unallocated corporate liabilities (b) Consolidated total liabilities

75


VicPlas International Ltd and its Subsidiaries

Notes to the Financial Statements July 31, 2010 33

SEGMENT INFORMATION (Continued)

Medical devices $’000

Group uPVC pipes and pipe fittings Eliminations $’000 $’000

Total $’000

2009 Revenue External sales

28,196

18,600

-

46,796

(14,516)

3,292

(791)

(12,015)

-

(235) 7

-

2,122 (2,366)

592 (1,151)

-

2,714 (3,517)

(234)

-

-

(234)

(16,068)

-

-

(16,068)

17,719

19,763

-

37,482 5,470 42,952

3,503

5,189

-

8,692 649 9,341

Results Segment result Unallocated corporate expense Interest expense Interest income Loss before tax Income tax expense Loss for the year

(1,269) (235) 7 (13,512) (337) (13,849)

Other information Capital additions Depreciation and amortisation Impairment loss on availablefor-sale investments Impairment loss on goodwill and intangible assets Statement of financial position Assets Segment assets Unallocated corporate assets (a) Consolidated total assets Liabilities Segment liabilities Unallocated corporate liabilities (b) Consolidated total liabilities

(a)

(b) Unallocated corporate liabilities comprise of the accruals and provision for corporate expenses

76

Unallocated corporate assets comprise of bank balances, fixed deposits and prepayments


Annual Report 2010

Notes to the Financial Statements July 31, 2010 33

SEGMENT INFORMATION (Continued)

Geographical information

Revenue is analysed by the location of the customers. Segment assets and additions to property, plant and equipment are analysed by the geographical area in which the assets are located.

Revenue 2010 2009 $’000 $’000 Singapore Malaysia China

55,182 2,008 83 57,273

45,515 1,281 46,796

Additions to Carrying amount of property, plant and Non-current assets segment assets equipment 2010 2009 2010 2009 2010 2009 $’000 $’000 $’000 $’000 $’000 $’000 20,637 177 1,794 22,608

18,746 244 847 19,837

42,973 2,108 3,798 48,879

40,036 1,490 1,426 42,952

3,769 52 1,200 5,021

1,955 26 733 2,714

Information about major customer

Included in revenues arising from the sales of medical devices are revenues of approximately $31.39 million (2009 : $23.80 million) which arose from sales to the Group’s largest customer. Apart from this largest customer, there was no other single customer that contributed more than 10% of the consolidated revenue for the years ended July 31, 2010 and 2009. 34

DISPOSAL OF SUBSIDIARY

On May 29, 2009, the Group disposed of a subsidiary, VicPlas Polymers Pte Ltd.

Details of the disposal are as follows: 2009 $’000 Book value of net assets disposed: Cash and bank balances Other receivables Other payables Net assets disposed Gain on disposal Total consideration Net cash inflow arising on disposal: Cash consideration received Cash and cash equivalents disposed

94 16 (6) 104 51 155

155 (94) 61

77


VicPlas International Ltd and its Subsidiaries

Notes to the Financial Statements July 31, 2010 35

ACQUISITION OF ASSETS AND RELATED BUSINESS

On November 19, 2009, a subsidiary of the Group entered into a sale and purchase agreement with a third party for the purchase of certain assets and related business. This transaction has been accounted in accordance with FRS 103 (Revised) – Business Combinations.

The purchase consideration paid is $1,006,000. This has been approved by the Board of Directors.

The net assets acquired in the transaction are as follows: Fair value $’000 Net assets acquired: Property, plant and equipment Intellectual properties Customer relationship Deferred tax liabilities Net cash outflow arising on acquisition

36

268 326 618 (206) 1,006

CAPITAL COMMITMENTS Group 2010 $’000 Estimated amounts committed for future capital expenditure but not provided in the financial statements

37

346

2009 $’000 2,435

CONTINGENT LIABILITIES Group 2010 $’000 Guarantee given to banks and financial institutions for credit facilities granted to subsidiaries (unsecured) Bankers’ guarantee issued in favour of third parties (secured)

2009 $’000

Company 2010 2009 $’000 $’000

-

-

9,944

10,089

272

200

-

-

The bankers’ guarantee issued in favour of third parties are secured by way of a legal mortgage over the Group’s leasehold property and a corporate guarantee by the Company of $9,685,000 (2009 : $9,685,000). Management has determined the fair values of the above financial guarantee contracts provided by the Company to be immaterial, in accordance to FRS 39 Financial Instruments: Measurement and Recognition. Accordingly, the fair values have not been recognised in the financial statements.

78


Annual Report 2010

Notes to the Financial Statements July 31, 2010 38

OPERATING LEASE ARRANGEMENTS Group 2010 $’000

2009 $’000

400

288

The Group as lessee Minimum lease payments under operating leases recognised as an expense in the year

At the end of the reporting period, the Group has outstanding commitments of non-cancellable operating leases, which fall due as follows: Group 2010 $’000 Within one year In the second to fifth year inclusive After five years

2009 $’000

536 1,277 5,008 6,821

296 1,009 4,938 6,243

Operating lease payments represent rentals payable by the Group for its factory space and office premises. Leases are negotiated for a term of 5 to 56 years and rental is fixed over the duration of the lease.

The Group as lessor

The Group rents out part of its office premises to a subsidiary of ultimate holding company and a related party under operating leases. Rental income earned during the year was $154,000 (2009 : $136,000). At the end of the reporting period, the Group has contracted with tenants for the following future minimum lease payments: Group 2010 $’000 Within one year In the second to fifth years inclusive 39

167 70 237

2009 $’000 42 42

DIVIDENDS

In respect of the financial year ended July 31, 2010, the Directors recommend the declaration of a taxexempt final dividend of $0.0025 per ordinary share. This dividend is subject to approval by shareholders at the Annual General Meeting scheduled to be held in November 2010 and has not been included as a liability in these financial statements. The total estimated dividend to be declared is $1,105,000.

79


VicPlas International Ltd and its Subsidiaries

Notes to the Financial Statements July 31, 2010 40

EVENTS AFTER THE REPORTING PERIOD

Subsequent to the financial year end, the Group held an extraordinary general meeting on September 20, 2010 to pass the following resolutions:

i) The Proposed Alterations to the Articles of Association ii) The Proposed Authority to issue new Shares pursuant to the VicPlas International Ltd Scrip Dividend Scheme iii) The Proposed VicPlas International Share Option Plan iv) Grant of Options at a Discount to the Market Price under the Share Option Plan

On the same date, all the above were put to and duly passed.

80


Annual Report 2010

Analysis of Shareholdings Issued and fully paid Number of shares Class of shares Voting rights

: : : :

S$44,714,000 442,138,028 Ordinary shares Ordinary shares One vote per share

Distribution Of Shareholdings as at 18 October 2010

Size of Shareholdings

No. of Shareholders

%

No. of shares

%

1 999 1,000 10,000 10,001 - 1,000,000 1,000,001 and above

7 1,096 832 23

0.35 55.98 42.49 1.18

2,518 5,632,000 64,272,500 372,231,010

0.00 1.27 14.54 84.19

Total

1,958

100.00

442,138,028

100.00

Twenty Largest Shareholders as at 18 October 2010 No. of shares

No.

Name

%

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

Venner Capital S.A. DBS Vickers Securities (S) Pte Ltd Chua Kim Hua Loh Beng Seng UOB Kay Hian Pte Ltd Cheng Liang Lim Sim Moi Kim Eng Securities Pte Ltd Irene Tay Gek Lim Curtis-Bennet David Dangar Henry Honywood Gaines Cooper Jane Rose Philomene Chua Eng Eng HSBC (Singapore) Nominees Pte Ltd United Overseas Bank Nominees Pte Ltd Tan Seow Leng Chua Yean Cheng (Cai Yingqing) Ho Lai Heng DBS Nominees Pte Ltd Lim Boon Hock Chua Yean Shien (Cai YingXian)

184,000,000 64,381,995 23,081,000 19,690,018 12,751,000 10,168,497 9,938,000 8,075,000 5,500,000 5,000,000 5,000,000 3,535,000 3,248,000 3,216,000 2,876,000 2,000,000 1,868,000 1,572,500 1,428,000 1,370,000

41.62 14.56 5.22 4.45 2.88 2.30 2.25 1.83 1.24 1.13 1.13 0.80 0.73 0.73 0.65 0.45 0.42 0.36 0.32 0.31

Total

368,699,010

83.39

Based on the information available to the Company as at 18 October 2010, approximately 29.59% of the issued ordinary shares of the Company is held by the public and, therefore, Rule 723 of the Listing Manual issued by the Singapore Exchange Securities Trading Limited is complied with.

81


VicPlas International Ltd and its Subsidiaries

Analysis of Shareholdings Substantial Shareholders as shown in the Register of Substantial Shareholders Name Of Substantial Shareholders Shareholders

Venner Capital S.A. CTX Treuhand AG, as trustee of the Bird Island Trust Robert Gaines-Cooper Chua Kim Hua

No. Of Shares Beneficially Held By Substantial Shareholders

No. Of Shares In Which The Substantial Are Deemed To Have An Interest

%

247,819,495

-

56.05

23,081,000

247,819,495 (1) 252,819,495 (2) -

56.05 57.18 5.22

(1)

Venner Capital S.A. is owned by the Bird Island Trust, a fully discretionary trust under Liechtenstein law, the trustee of which is CTX Treuhand AG, a trust company based in Liechtenstein. Mr. Robert GainesCooper is presently the sole beneficiary and protector under the trust.

(2)

Venner Capital S.A. is owned by the Bird Island Trust, a fully discretionary trust under Liechtenstein law, the trustee of which is CTX Treuhand AG, a trust company based in Liechtenstein. Mr. Robert GainesCooper is presently the sole beneficiary and protector under the trust. Mr. Robert Gaines-Cooper is deemed to be interested in the shares of the Company owned by Bird Island Trust through Venner Capital S.A.. He is also deemed to be interested in the 5,000,000 shares held by his wife, Mrs. Jane Rose Philomere Gaines-Cooper.

82


Annual Report 2010

Notice of Annual General Meeting VicPlas International Ltd

(Company Registration No. 199805362R)

NOTICE IS HEREBY GIVEN that the Twelfth Annual General Meeting of VicPlas International Ltd (the “Company”) will be held at 35 Joo Koon Circle, Singapore 629110 on Thursday, November 25, 2010 at 10:00 a.m. to transact the following business: AS ORDINARY BUSINESS 1. To receive and adopt the Directors’ Report and Audited Accounts for the year ended July 31, 2010 and the Auditors’ Report thereon. (Resolution 1) 2. To approve the Directors’ Fees of S$209,301/- (2009: S$240,000/- ) for the year ended July 31, 2010. (Resolution 2) 3. To declare a first and final tax-exempt (one tier) dividend of $0.0025 per share in respect of the year ended July 31, 2010. (Resolution 3) 4. To re-appoint the following Directors pursuant to Section 153(6) of the Companies Act, Cap. 50 and to hold such office from the date of this Annual General Meeting until the next Annual General Meeting of the Company:

a. b.

Robert Gaines-Cooper David Curtis-Bennett

(Resolution 4) (Resolution 5)

5. To re-elect the following Directors, retiring pursuant to Articles 115 and 119 of the Articles of Association of the Company and who, being eligible, offer themselves for re-election: a. Ang Mong Seng (Retiring under Article 115) (Resolution 6) b. Ng Cher Yan (Retiring under Article 119) (Resolution 7) 6.

To appoint Auditors and to authorise the Directors to fix their remuneration.

(Resolution 8)

7. To transact any other ordinary business which may properly be transacted at an Annual General Meeting. AS SPECIAL BUSINESS To consider and, if thought fit, to pass the following resolutions with or without any modifications: ORDINARY RESOLUTIONS 8.

Authority to allot and issue shares

“That pursuant to Section 161 of the Companies Act, Cap. 50 (“Companies Act”) and the listing rules of the Singapore Exchange Securities Trading Limited (“SGX-ST”), authority be and is hereby given to the Directors of the Company to:

(a)

(i) issue shares in the capital of the Company (whether by way of rights, bonus or otherwise) (ii) make or grant offers, agreements or options (collectively, “Instruments”) that might or would require shares to be issued, including but not limited to the creation and issue of (as well as adjustments to) warrants, debentures or other instruments convertible into shares,

at any time and upon such terms and conditions and for such purposes and to such persons as the Directors may in their absolute discretion deem fit; and 83


VicPlas International Ltd and its Subsidiaries

Notice of Annual General Meeting

(b) (notwithstanding that the authority conferred by this Resolution may have ceased to be in force) issue shares in pursuance of any Instrument made or granted by the Directors while this Resolution is in force,

Provided that:

(i) the aggregate number of shares to be issued pursuant to this Resolution (including shares to be issued in pursuance of Instruments made or granted pursuant to this Resolution):

(1) by way of renounceable rights issues on a pro rata basis to shareholders of the Company (“Renounceable Rights Issues”) does not exceed 100 per cent (100%) of the total number of issued shares, excluding treasury shares, in the capital of the Company (as calculated in accordance with sub-paragraph (ii) below);

(2) otherwise than by way of Renounceable Rights Issues (“Other Share Issues”) does not exceed 50 per cent (50%) of the total number of issued shares, excluding treasury shares, in the capital of the Company (as calculated in accordance with sub-paragraph (iii) below), of which the aggregate number of shares to be issued other than on a pro rata basis to shareholders of the Company does not exceed 20 per cent (20%) of the total number of issued shares, excluding treasury shares, in the capital of the Company (as calculated in accordance with sub-paragraph (iii) below);

(ii) the Renounceable Rights Issues and Other Share Issues shall not, in aggregate, exceed 100 per cent (100%) of the total number of issued shares, excluding treasury shares, in the capital of the Company (as calculated in accordance with sub-paragraph (iii) below);

(iii) (subject to such manner of calculation as may be prescribed by the SGX-ST), for the purpose of determining the aggregate number of shares that may be issued under sub-paragraph (i) above, the percentage of issued shares shall be based on the total number of issued shares, excluding treasury shares, in the capital of the Company at the time this Resolution is passed, after adjusting for:

(a)

new shares arising from the conversion or exercise of convertible securities;

(b) new shares arising from exercising share options or vesting of share awards outstanding or subsisting at the time this Resolution is passed, provided the options or awards were granted in compliance with Part VIII of Chapter 8 of the listing manual of SGX-ST; and

(c)

any subsequent bonus issue, consolidation or subdivision of shares;

(iv) in exercising the authority conferred by this Resolution, the Company shall comply with the provisions of the listing manual of the SGX-ST for the time being in force (unless such compliance has been waived by the SGX-ST), all applicable legal requirements under the Companies Act and otherwise, and the Articles of Association for the time being of the Company; and

(v) unless revoked or varied by the Company in general meeting, the authority conferred by this Resolution shall continue in force until the conclusion of the next Annual General Meeting of the Company or the date by which the next Annual General Meeting of the Company is required by law to be held, whichever is the earlier.” [See Explanatory Note] (Resolution 9)

84


Annual Report 2010

Notice of Annual General Meeting 9.

The proposed renewal of the Shareholders’ Mandate for interested person transactions

“(a) That approval be and is hereby given for the purposes of Chapter 9 of the Listing Manual (“Chapter 9”) of the SGX-ST, for the Company, its subsidiaries and associated companies that are entities at risk (as that term is used in Chapter 9), or any of them, to enter into transactions falling within the types of interested person transactions described in the Appendix to the Company’s Circular to Shareholders dated November 8, 2010 (“the Circular”) with any party who is of the class of interested persons described in the Appendix to the Circular, provided that such transactions are made on normal commercial terms and will not be prejudicial to the interests of the Company and minority shareholders and in accordance with the guidelines and procedures for such interested person transactions as set out in the Appendix to the Circular;

(b) That the approval given in paragraph (a) above (the “Shareholders’ Mandate”) shall, unless revoked or varied by the Company in general meeting, continue in force until the conclusion of the next Annual General Meeting of the Company; and

(c) That the Directors of the Company and/or any of them be and are hereby authorised to complete and do all such acts and things (including executing all such documents as may be required) as they and/or he may consider expedient or necessary or in the interests of the Company to give effect to the Shareholders’ Mandate and/or this Resolution.” [See Explanatory Note] (Resolution 10)

10.

The proposed renewal of the Share Purchase Mandate

“(a) That for the purposes of Sections 76C and 76E of the Companies Act, Cap. 50 (“Companies Act”), the exercise by the Directors of the Company of all the powers of the Company to purchase or otherwise acquire ordinary shares in the capital of the Company (the “Shares”) not exceeding in aggregate the Prescribed Limit (as hereafter defined), at such price(s) as may be determined by the Directors of the Company from time to time up to the Maximum Price (as hereafter defined), whether by way of:market purchase(s) on the SGX-ST (each a “Market Purchase”); and/or

(i)

(ii) off-market purchase(s) (each an “Off-Market Purchase”) effected otherwise than on the SGX-ST in accordance with any equal access scheme(s) as may be determined or formulated by the Directors of the Company as they consider fit, which schemes shall satisfy all the conditions prescribed by the Companies Act,

and otherwise in accordance with all other laws, regulations and rules of the SGX-ST as may for the time being be applicable, be and is hereby authorised and approved generally and unconditionally (the “Share Purchase Mandate”);

(b) That unless varied or revoked by the Company in general meeting, the authority conferred on the Directors of the Company pursuant to the Share Purchase Mandate may be exercised by the Directors at any time and from time to time during the period commencing from the passing of this Resolution and expiring on the earlier of:

(i)

the date on which the next Annual General Meeting of the Company is held; or

(ii) the date by which the next Annual General Meeting of the Company is required by law to be held;

85


VicPlas International Ltd and its Subsidiaries

Notice of Annual General Meeting

(c)

That in this Resolution:

“Prescribed Limit” means that number of issued Shares representing ten per cent (10%) of the total number of issued Shares of the Company as at the date of the passing of this Resolution (excluding any Shares which are held as treasury shares as at that date); and “Maximum Price” in relation to a Share to be purchased or acquired, means the purchase price (excluding brokerage, commission, stamp duties, applicable goods and services tax and other related expenses) not exceeding:

(i)

in the case of a Market Purchase: 105% of the Average Closing Price of the Shares; and

(ii)

in the case of an Off-Market Purchase: 120% of the Average Closing Price of the Shares,

where: “Average Closing Price” means the average of the closing market prices of the Shares over the last five (5) consecutive market days, on which transactions in the Shares were recorded, before the day on which the Shares are transacted on the SGX-ST, immediately preceding the date of Market Purchase by the Company or, as the case may be, the date of the making of the offer pursuant to the Off-Market Purchase pursuant to the equal access scheme, and deemed to be adjusted for any corporate action that occurs after the relevant five (5) consecutive market days; “date of the making of the offer” means the date on which the Company announces its intention to make an offer for the purchase or acquisition of Shares from shareholders of the Company stating the purchase price (which shall not be more than the Maximum Price calculated on the foregoing basis) for each Share and the relevant terms of the equal access scheme for effecting the Off-Market Purchase;

(d) That the Directors of the Company and/or any of them be and are hereby authorised to deal with the Shares purchased by the Company, pursuant to the Share Purchase Mandate in any manner as may be permitted under the Companies Act; and

(e) That the Directors of the Company and/or any of them be and are hereby authorised to complete and do all such acts and things (including executing such documents as may be required) as they and/or he may consider expedient or necessary to give effect to the transactions contemplated by this Resolution.” [See Explanatory Note] (Resolution 11)

11. Authority to grant options, and allot and issue shares pursuant to the VicPlas International Share Option Plan “That approval be and is hereby given to the Directors of the Company to offer and grant options in accordance with the provisions of the VicPlas International Share Option Plan (“Share Option Plan”) and to allot and issue from time to time such number of ordinary shares in the capital of the Company as may be required to be issued pursuant to the exercise of options under the Share Option Plan, provided that the aggregate number of new ordinary shares to be issued pursuant to the Share Option Plan shall not exceed 15 per cent (15%) of the total number of issued ordinary shares in the capital of the Company, excluding treasury shares, from time to time.” [See Explanatory Note] (Resolution 12)

86


Annual Report 2010

Notice of Annual General Meeting 12.

Authority to issue new shares pursuant to the VicPlas International Ltd Scrip Dividend Scheme

“That pursuant to Section 161 of the Companies Act, Cap.50, authority be and is hereby given to the Directors of the Company, to allot and issue from time to time such number of ordinary shares in the capital of the Company as may be required to be allotted and issued pursuant to the VicPlas International Ltd Scrip Dividend Scheme.” [See Explanatory Note] (Resolution 13) By Order of the Board JENNIFER LEE SIEW JEE TAN CHENG SIEW Company Secretaries Singapore November 8, 2010 Note: A member is entitled to appoint a proxy to attend and vote in his place. A proxy need not be a Member of the Company. Members wishing to vote by proxy at the Meeting may use the proxy form enclosed. To be valid, the completed proxy form must be lodged at the registered office of the Company at 35 Joo Koon Circle, Singapore 629110 not less than 48 hours before the Meeting. EXPLANATORY NOTES 1. The effect of the Ordinary Resolutions 4 and 5 proposed in item (4) above, if passed, are to re-appoint Messrs Robert Gaines-Cooper and David Curtis-Bennett, both of whom are over the age of 70 years old, as Directors of the Company to hold office until the next Annual General Meeting of the Company. Section 153(6) of the Companies Act, Cap. 50 requires the re-appointment to be approved by way of ordinary resolution at the Annual General Meeting of the Company. 2. The Ordinary Resolutions 6 and 7 proposed in item (5) above, if passed, will re-elect Messrs Ang Mong Seng and Ng Cher Yan as Directors of the Company. Upon their respective re-elections, Messrs Ang Mong Seng and Ng Cher Yan, both of whom are independent, will remain as members of the Audit Committee. 3. The Ordinary Resolution 9 proposed in item (8) above, if passed, will empower the Directors of the Company from the date of this Meeting until the date of the next Annual General Meeting, to issue shares in the Company and/or to make or grant instruments convertible into shares, and to issue shares in pursuance of such instruments, up to a number not exceeding (i) 100 per cent (100%) for Renounceable Rights Issues, and (ii) 50 per cent (50%) for Other Share Issues of which up to 20 per cent (20%) may be issued other than on a pro rata basis to shareholders, and provided that the total number of shares which may be issued pursuant to (i) and (ii) shall not exceed 100 per cent (100%) of the issued shares, excluding treasury shares, in the capital of the Company. The authority for the 100 per cent (100%) Renounceable Rights Issue is proposed pursuant to the SGX News Release of 19 February 2009 (“News Release”) which introduced further measures to accelerate and facilitate issuers’ fund raising efforts. The News Release states that this new measure will be in effect until December 31, 2010 whereupon it will be reviewed by the SGX-ST.

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VicPlas International Ltd and its Subsidiaries

Notice of Annual General Meeting 4. The Ordinary Resolution 10 proposed in item (9) above, if passed, will renew the Shareholders’ Mandate for transactions with interested persons and empower the Directors of the Company from the date of this Meeting until the date of the next Annual General Meeting to enter into transactions falling within the types of interested person transactions described in the Appendix to the Company’s Circular to Shareholders dated November 8, 2010. For more details, please refer to paragraph 2 and the Appendix of Company’s Circular to Shareholders dated November 8, 2010. 5. The Ordinary Resolution 11 proposed in item (10) above is to renew the Share Purchase Mandate to permit the Company to purchase or acquire issued ordinary shares in the capital of the Company on the terms and subject to the conditions of the Resolution. The Company intends to use internal resources or external borrowings or a combination of both to finance its purchase or acquisition of its ordinary shares. The amount of financing required for the Company to purchase or acquire its ordinary shares, and the impact on the Company’s financial position, cannot be ascertained as at the date of this Notice as these will depend on the number of its ordinary shares purchased or acquired, whether the purchase or acquisition is made out of profits or capital, the price at which such ordinary shares were purchased or acquired and whether the ordinary shares purchased or acquired are held in treasury or cancelled. The financial effects of the purchase or acquisition of such ordinary shares by the Company pursuant to the proposed Share Purchase Mandate on the audited financial statements of the Group and the Company for the financial year ended July 31, 2010 are based on the assumptions set out in paragraph 3.7 of the Company’s Circular to Shareholders dated November 8, 2010 and are for illustration only. 6. The Ordinary Resolution 12 proposed in item (11) above, if passed, will empower the Directors of the Company to offer and grant options, and to allot and issue from time to time such number of ordinary shares in the capital of the Company as may be required to be issued pursuant to the exercise of options under the VicPlas International Share Option Plan, provided that the aggregate number of new shares to be issued pursuant to the VicPlas International Ltd Share Option Plan shall not exceed 15 per cent (15%) of the total number of issued ordinary shares in the capital of the Company, excluding treasury shares, from time to time. 7. The Ordinary Resolution 13 proposed in item (12) above, if passed, will empower the Directors of the Company to allot and issue ordinary shares in the capital of the Company pursuant to the VicPlas International Ltd Scrip Dividend Scheme to eligible members who, in respect of a qualifying dividend, have elected to receive scrip in lieu of the cash amount of that qualifying dividend.

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VICPLAS INTERNATIONAL LTD

Important: 1 For investors who have used their CPF monies to buy shares in the capital of VicPlas International Ltd, this Annual Report is forwarded to them at the request of their CPF Approved Nominees and is sent solely FOR INFORMATION ONLY.

PROXY FORM

2

(Incorporated in the Republic of Singapore) (Company Registration No. 199805362R)

This Proxy Form is not valid for use by CPF investors and shall be ineffective for all intents and purposes if used or purported to be used by them.

(Name) (Address)

I/We of being a *member/members of VicPlas International Ltd (the “Company”), hereby appoint Name

Address

NRIC/ Passport Number

Proportion of Shareholdings (%)

Address

NRIC/ Passport Number

Proportion of Shareholdings (%)

and/or (delete as appropriate)

Name

or failing *him/her, the Chairman of the Twelfth Annual General Meeting (“AGM”) of the Company, as *my/our *proxy/proxies to attend and to vote for *me/us on *my/our behalf and, if necessary, to demand a poll, at the AGM of the Company to be held at 35 Joo Koon Circle Singapore 629110 on Thursday, November 25, 2010 at 10.00 a.m. and at any adjournment thereof. *I/We direct *my/our *proxy/proxies to vote for or against the Resolutions to be proposed at the AGM as indicated hereunder. If no specific direction as to voting is given, the *proxy/proxies will vote or abstain as *he/they may think fit, as he/they will on any other matter arising at the AGM. If no person is named in the above boxes, the Chairman of the AGM shall be *my/our *proxy/proxies to vote, for or against the Resolutions to be proposed at the AGM as indicated hereunder, for *me/us and on *my/our behalf and, if necessary, to demand a poll, at the AGM and at any adjournment thereof. No. Ordinary Resolutions 1. To receive and adopt the Directors’ Report and Audited Accounts for the year ended July 31, 2010. 2. To approve the Directors’ Fee of S$209,301/- (2009: S$240,000/-) for the year ended July 31, 2010. 3. To declare a first and final tax-exempt (one tier) dividend of $0.0025 per share in respect of the year ended July 31, 2010. 4. To re-appoint Mr. Robert Gaines-Cooper as a Director pursuant to Section 153(6) of the Companies Act, Cap. 50. 5. To re-appoint Mr. David Curtis-Bennett as a Director pursuant to Section 153(6) of the Companies Act, Cap. 50. 6. To re-elect Mr. Ang Mong Seng as a Director. 7. To re-elect Mr. Ng Cher Yan as a Director. 8. To appoint Auditors and to authorise the Directors to fix their remuneration . 9. To approve the Share Issue Mandate. 10. To approve the renewal of the Shareholders’ Mandate for interested person transactions. 11. To approve the renewal of the Share Purchase Mandate. 12. To authorise the grant of options, and the allotment and issuance of shares pursuant to the VicPlas International Share Option Plan. 13. To authorise the issuance of shares pursuant to the VicPlas International Ltd Scrip Dividend Scheme.

Signed this

day of

For**

Against**

2010 Total No. Of Ordinary Shares In

No. of Ordinary Shares

CDP Register

Register of Members Signature(s) of Member(s) or Common Seal * Delete Accordingly ** Please indicate your vote “For” or “Against” with a tick (√) within the box provided.

89


Notes: a) Please insert the total number of Shares held by you. If you have Shares entered against your name in the Depository Register (as defined in Section 130A of the Companies Act, Chapter 50 of Singapore), you should insert that number of Shares. If you have Shares registered in your name in the Register of Members, you should insert that number of Shares. If you have Shares entered against your name in the Depository Register and Shares registered in your name in the Register of Members, you should insert the aggregate number of Shares entered against your name in the Depository Register and registered in your name in the Register of Members. If no number is inserted, the instrument appointing a proxy or proxies shall deem to relate to all the Shares held by you. b) A member of the Company entitled to attend and vote at a meeting of the Company is entitled to appoint one or two proxies to attend and vote instead of him/her. A proxy need not be a member of the Company. c) Where a member appoints two proxies, the appointments shall be invalid unless he specifies the proportion (expressed as a percentage of the whole) of his shareholding to be represented by each proxy. d) The instrument appointing a proxy shall be in writing under the hand of the appointor or of his attorney duly authorised in writing or if such appointor is a corporation under its common seal or under the hand of its attorney. e) An instrument appointing a proxy must be deposited at the registered office of the Company, 35 Joo Koon Circle, Singapore 629110 not less than 48 hours before the time appointed for holding the meeting. f) The Company shall be entitled to reject a Proxy Form which is incomplete, improperly completed, illegible or where the true intentions of the appointor are not ascertainable from the instructions of the appointor specified on the Proxy Form. In addition, in the case of shares entered in the Depository Register, the Company may reject a Proxy Form if the member, being the appointor, is not shown to have shares entered against his name in the Depository Register as at 48 hours before the time appointed for holding the Meeting, as certified by The Central Depository (Pte) Limited to the Company.

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VicPlas International Ltd Company Registration No. 199805362R

35 Joo Koon Circle Singapore 629110 Tel : 65-6262 3888 Fax : 65-6349 3877 Email: vicplas@vicplas.com.sg

VicPlas International Annual Report 2010  

Copywriting by Electrotype for annual report for Singapore listed VicPlas International Ltd

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