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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

In FY’18 the Group recorded higher revenue across all its major business units, culminating in a 16% or RM7.72 million increase in total revenue to RM55.20 million for FY’18 (FY’17: RM47.48 million). Revenue at paper products and plastic products increased by 26% (RM7.37million) and 6% (RM0.93 million) respectively, mainly due to additional orders from the existing customers and new customers resulted by competitive pricing and improved products quality measures taken by the Group.

The increased revenue in the paper segment and plastic segments were mitigated by the drop in colour separation and printing segment revenue, which shrank by 34% (RM0.68million) due to losing of major customers in the annual report business to our competitor.

(Loss)/Profit Before Taxation

The Group registered a loss before taxation of RM5.69 million in FY’18, compared to the FY’17 profit before taxation of RM0.73 million.

The significant drop was mainly due to the reduction in profits resulted by outsourced printing jobs to outsourced printers to cope with increased sales orders and increase in impairment of receivable due to uncollected debts.

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

The segment profit before taxation was decreased to RM0.99million in FY’18 as compared to RM3.59 million in FY’17. The unfavorable result was mainly due to increase in cost incurred to outsourced printers to cope with increased sales orders. Another main reason resulting in the drop of profit was due to the increase in administrative expenses.

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

In FY’18, the segment suffered a RM5.58 million loss before taxation as compared to RM0.96 loss before taxation in FY’17. The increase in loss was mainly due to the major repair works required for the machines and moulds which subsequently affecting the gross margin of the division. Another main reason for the additional loss before taxation was due to the increase in administrative expenses which arising from the increase in impairment of trade debtors.

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

The segment registered a loss before taxation of RM0.54 million in FY’18, compared against the FY’17 loss before taxation of RM0.30 million. The increase in loss of RM0.24 million was due to the loss of major customers in the annual report business to our competitors mitigated by cost saving measures implemented by the management.

 
Appreciation

On behalf of the Board of Directors, I am pleased to present the Annual Report and Audited Financial Statements of Versatile Creative Berhad (“VCB”) and its subsidiaries (“the Group”) for the financial year ended 31 March 2020.

The outbreak of the corona virus disease named COVID-19 by the World Health Organization (WHO) and declared as a pandemic at the time of writing is already disrupting many aspects of human activities. By the time this statement is published, how we live our life could have changed socially and economically.

The Group mainly involved in two (2) very challenging industries in Malaysia and globally. The paper packaging industry in Malaysia remains very challenging and the plastic business in the world remains very competitive. VCB is fortunate to be a player in the packaging industry with a wide range of customers including the Food and Beverage and Medical Sectors, which are essential if not critical for the normal daily lives and during the MCO.

It is hard to foresee into the year what can or would happen. I can only assure all stakeholders that VCB will stand firmly to withstand and overcome all challenges thrown its way and will take all prudent measures to ensure that it will stay financially strong. I believe in the resilience of my fellow Directors and my management team that we will perform, mindful of the obstacles we have identified. We have identified and put in place the processes towards achieving sustainability for all our stakeholders. Please refer to our Sustainability Statement.

The Group will continue working diligently to increase productivity by prioritising efficiency in our operations and also to aggressively seek new businesses in various lucrative markets. Consistent growth in revenues and earnings in the future will be the Board of Directors’ priorities. The Board will continue to strive to create and enhance value for its stakeholders with new business strategies.

On behalf of the Board, I would like to express my appreciation to the Board and management team during this hard time for their contribution, support and commitment, dedication and loyalty. I would like to thank our employees who have shown great tenacity and commitment with us. I am confident that VCB will improve its performance with your unwavering support. We look forward to contributing to the Group’s growth and further success in the coming years.

I would also like to extend my sincere appreciation and gratitude to our shareholders, valued customers, suppliers and financiers for their continued support and confidence in the Group.

Dato’ Seri Mohd Shariff Bin Omar
Independent Non-Executive Chairman
6 August 2020

 
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