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Chairman's Statement
Business Environment & Prospects

On behalf of the Board of Directors, I am pleased to present the Annual Report and Audited Financial Statements of Versatile Creative Berhad for the financial year ("FY") ended 31 March 2018.

The global economy keeps growing stronger than expected underpinned by faster growth in the advanced economies as well as the continued improvements in the emerging market and developing economies. The growth momentum is expected to continue this year as well next year but on a moderated pace.

TReal GDP for 2018 is expected to grow by 5.5% and further weakened to the range of 4.8-5.3% next year. The growth will be driven by domestic demand and reinforced by strong external sector.

However, domestic demand is expected to grow at a slower pace of 5.8% y-o-y this year, compared to 6.5% last year, and further moderate to 5.3% next year. Strong growth in domestic demand last year was inflationary as revealed by the CPI headline inflation that averaged at 3.5% last year.

Revenue

The Group’s revenue for FYE 2021 decreased by 11.05% to RM41.88 million from RM47.08 million in the financial year 2020 (“FYE 2020”). The decrease was attributed to the reduction in turnover from both Plastic Products Division and Paper Products Division by RM3.00 million and RM2.07 million respectively.

(Loss)/Profit Before Taxation

Gross margin for FYE 2021 decreased to 9.54% from 13.10% in FYE 2020. The lower profit margin was mainly due to the increase in raw material prices and changes in product mix from non-essential to essential due to the COVID-19 pandemic. Essential products contribute lower margin compared to non-essential products.

Paper Products Segment (Versatile Paper Boxes Sdn. Bhd.)

The Paper Products Division is less impacted by the pandemic as it is supporting the essential sectors such as medical product and the food & beverage industries. Nevertheless, yearly revenue decreased slightly by 5.77% due to the drop in sales to non-essential product customers arising from the slower retail activities caused by the MCO imposed since March 2020 followed by numerous MCO extensions. In addition, sales to overseas customers has significantly reduced resulted from the global impact of COVID-19 pandemic as most of our overseas customers were undergoing respective lockdown orders and/or operating on half capacity.

Gross profit margin reduced by 3.20% as compared to FYE 2020 mainly pertains to the increase in raw material prices caused by uncertainty in paper supplies and change in product mix from non-essential to essential due to the pandemic. Essential products generally contribute lower margin compared to non-essential products.

The physical movement of goods for both raw materials and finished goods were also affected, especially shipments of our imported raw materials from countries which are affected badly by the pandemic and experiencing respective lockdown orders. Towards the third quarter of FYE 2021 as the global economy started to recover, the supply chain problems persisted as demand for raw materials began to outstrip supply. Increasing demand in shipping led to global shortages of containers and shipping lines, delayed in delivery of raw materials as well as increase in materials cost.

Plastic Products Segment (Versatile Creative Plastic Sdn. Bhd.)

Revenue decreased by 27.47% (RM3.00 million) mainly due to, amongst others, dampened customers demand and internal operational difficulties such as aging machineries that requires various repair work and unexpected breakdown of production machine during FYE 2021.

The gross margin decreased significantly by 9.92% from -6.64% to -16.56% due to the slowdown in production activities and significant increase in materials and transportation costs.

 
Colour Separation & Printing Segment (Imagescan Creative Sdn. Bhd.)

Revenue and gross profit decreased by 33.42% (RM0.13 million) and 72.52% (RM0.10 million) respectively due as this division is not in operation during the MCO periods.

 
Appreciation

On behalf of the Board of Directors of Versatile Creative Berhad (“Versatile” or “the Company”), I have the pleasure of presenting to you the Annual Report and the Audited Financial Statements for the financial year ended 31 March 2021 (“FYE 2021”).

FYE 2021 has been a challenging year due to the COVID-19 pandemic which has adversely impacted industries worldwide. The World Health Organisation declared the COVID-19 a pandemic on 11 March 2020. This unexpected event has resulted in the occurrences of several movement restriction orders and quarantine measures undertaken by the Government of Malaysia (“Government”) causing disruption to business and economic activities.

With the recent spike in positive cases and new variants of the virus detected, the Government had also announced “Total Nationwide Lockdown” effective 1 June 2021 to 28 June 2021, and was subsequently extended beyond 28 June 2021. The lockdown has affected not just domestic economic activities particularly from the services sector reliant on in-person interactions but also caused supply-chain disruptions in the manufacturing sector due to intermittent shutdowns of operations.

Our paper products and plastic products segments have obtained conditional approval from the Ministry of International Trade and Industry to continue operation even though at a lower capacity. Versatile is also fortunate that as a player in the packaging industry it has a wide range of customers including the Food and Beverage and Medical Sectors which are essential if not critical for the normal daily lives.

With strict standard operating procedures, social distancing, constant sanitising, and rotation ‘Work From Home’ arrangements for management team, we are able to minimise the disruption to our business and operation to ensure our financial performance is not significantly affected.

The Group will continue working diligently to increase productivity and efficiency in our two main existing business divisions; Paper Product Divisions and Plastics Product Divisions.

The Company has recently diversified into the grocer business in collaboration with our major shareholder, NSK Trading Sdn. Bhd. (“NSK”). With the involvement of NSK, an established industry player in the grocer business, the Group anticipates that the grocer business will contribute positively to the future earnings and financial position of the Group.

 

On behalf of the Board of Directors, I would like to express my heartfelt appreciation to the management team and all employees of Versatile who have shown great tenacity, commitment, loyalty and for their contribution during this challenging time. I am confident that Versatile will be able to improve its performance with your unwavering support and contribution to the Group’s growth and further success in the coming years.

I would also like to take this opportunity to extend my sincere appreciation and gratitude to my fellow directors, our shareholders, valued customers, suppliers and financiers and other stakeholders for their continuous support, co-operation and confidence in the Group.

Dato’ Seri Mohd Shariff Bin Omar

Independent Non-Executive

Chairman                                                                     

20 August 2021

 

 

 
 
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