Company No: 736035-T Prelodgement Collection Slip wean ‘Tramezction OatwTim bagingRererance ho xo apr hee ope te Event Date Received Date 2 S67 BUTTERSCOTCH SDN. BHD. (Incorporated in Malaysia) REPORTS AND FINANCIAL STATEME! 31 DECEMBER 2009 Penyata Kewangan yang diaudit bagi syarikat dengan !sporan Juruaudit * Bersyerat / * Tidak Bersyarat bagi tahun kewangan berakhir sevweedh DECENDER, S8ttelah dibentangkan di Mesyuarat Agung Tahunan /- CONTENTS PAGES + Conporate Information 2 * Directors’ Report 36 * Statement by Directors and Statutory Declaration 1 * Independent Auditors’ Report 89 * Balance Sheet 10 © Income Statement n * Statement of Changes in Equity 12 * Cash Flow Statement 13 © Notes to the Financial Statements 14-21‘Company No: 736035- T BUTTERSCOTCH SDN. BHD. (Incorporated in Malaysia) CORPORATE INFORMATION DIRECTORS Pua Lee Lan Yu Yock Eng Cynthia Chua Ling Ling SECRETARY Yeo Bee Wah (resigned on 6.1.2010) Susie Chew Wei Wei (appointed on 6.1.2010) AUDITORS SJ Grant Thomton (Member of Grant Thornton International) Chartered Accountants Level 11, Faber Imperial Court Jalan Sultan Ismail 30250 Kuala Lumpur BANKERS Malayan Banking Berhad Public Bank Berhad Alliance Bank BerhadCompany No: 736035- T BUTTERSCOTCH SDN. BHD. (Incorporated in Malaysia) DIRECTORS’ REPORT The Directors hereby submit their report together with the audited financial statements of the Company for the financial year ended 31 December 2009. PRINCIPAL ACTIVITIES ‘The principal activities of the Company are engaged in the business of beauty salons. There have been no significant changes in the nature of these activities during the financial year. FINANCIAL RESULTS RM Net profit for the year 181,598 DIVIDENDS ‘There were no dividends paid or declared by the Company since the end of the previous financial period, RESERVES AND PROVISIONS ‘There were no material transfers to or from reserves or provisions during the financial year. ISSUE OF SHARES AND DEBENTURES There were no shares or debentures issued during the financial year.‘Company No: 736035-T INFORMATION ON THE FINANCIAL STATEMENTS Before the financial statements of the Company were made out, the Directors took reasonable steps:- (a) to ascertain that action had been taken in relation to the writing off of bad debts and the making of allowance for doubtful debts and satisfied themselves that there were no bad debts to be written off and that no allowance for doubtful debts was required; and () to ensure that any current assets which were unlikely to be realised in the ordinary course of business including their values as shown in the accounting records of the Company have been written down to an amount which they might be expected so to realise. At the date of this report, the Directors are not aware of any circumstances:- (@) which would render it necessary to write off any bad debts or to make any allowance for doubtful debts in the financial statements of the Company; or (6) which would render the values attributed to current assets in the financial statements of the Company misleading; or ©) which have arisen which render adherence to the existing method of valuation of assets or liabilities of the Company misleading or inappropriate. ‘No contingent or other liability has become enforceable or is likely to become enforceable within the period of twelve months after the end of the financial year which, in the opinion of the Directors, will or may affect the ability of the Company to meet its obligations as and when they fall due. At the date of this report, there does not exist:- (2) any charge on the assets of the Company which has arisen since the end of the financial year which secures the liability of any other person; or (6) any contingent liability of the Company which has arisen since the end of the financial year. OTHER STATUTORY INFORMATION The Directors state that:- At the date of this report, the Directors are not aware of any circumstances not otherwise dealt with in this report or the financial statements which would render any amount stated in the financial statements misleading.Company No: 736035- T OTHER STATUTORY INFORMATION (CONT'D) In the opinion of the Directors:- (a) the results of the Company's operations during the financial year were not substantially affected by any item, transaction or event of a material and unusual nature; and (b) there has not arisen in the interval between the end of the financial year and the date of this report any item, transaction or event of a material and unusual nature likely to affect substantially the results of the operations of the Company for the current financial year in which this report is made DIRECTORS ‘The Directors in office since the date of the last report are: Pua Lee Lan Yu Yok Eng Cynthia Chua Ling Ling According to the register of directors’ shareholdings, the interest of directors’ who held office at the end of the financial year in ordinary shares of the company are as follows:~ Asat Asat interes 11.2009 Bought Sold 31.12.2009 Pua Lee Lan 39,999 - - 39,999 Yu York Eng 1 : : 1 DIRECTORS’ BENEFITS During and at end of the financial year, no arrangements subsisted to which the Company is a party, with the object or objects of enabling Directors of the Company to acquire benefits by means of the acquisition of shares in the Company or any other body corporate. Since the end of the previous financial period, no Director has received or become entitled to receive any benefits 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. HOLDING COMPANY The Company is a subsidiary company of Spa Esprit Group Pte. Ltd., a company incorporated in Singapore.Company No: 736035-T AUDITORS Messrs SJ Grant Thornton have expressed their willingness to continue in office. On behalf of the Board U PUA LEE LAN DIRECTORS CYNTHIA CHUA LING LING Kuala Lumpur 09 JUN 2010‘Company No: 736035-T BUTTERSCOTCH SDN. BHD. (Incorporated in Malaysia) STATEMENT BY DIRECTORS In the opinion of the Directors, the financial statements set out on pages 10 to 21 are drawn up in accordance with the provisions of the Companies Act 1965 and applicable Private Entity Reporting Standards in Malaysia so as to give a true and fair view of the financial position of the Company as at 31 December 2009 and of the financial performance and cash flows of the Company for the financial year then ended. On behalf of the Board bur Kuala Lumpur 09 JUN 2010 STATUTORY DECLARATION 1, Pua Lee Lan, being the Director responsible for the financial management of Butterscotch Sdn. Bhd., do solemnly and sincerely declare that to the best of my knowledge and belief, the financial statements set out on pages 10 to 21 are correct and I make this solemn declaration conscientiously believing the same to be true and by virtue of the provisions of the Statutory Declarations Act, 1960. Subscribed and solemnly declared by) the abovenamed at Kuala Lumpur in) the Federal Territory this day of 09 JUN 2010 Before me: ‘Commissioner for ONGC <0 16 Tingkat Bawah Jalan Pudu, 535100 Kuala Lumpyoe GrantThornton INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF SJ Grant Thornton ar:0737) BUTTERSCOTCH SDN. BHD. Love 1, Faber Imperial Court (Incorporated in Malaysia) ela Stan era, Company No: 736035- T ‘50774 Kuala Lumpur, Malaysia T +6 (03) 2692 4022 F 46 (03) 2691 5229 worw.gt.com.my Report on the Financial Statements We have audited the financial statements of Butterscotch Sdn. Bhd., which comprise the balance sheet as at 31 December 2009, and the income statement, statement of changes in equity and cash flow statement for the financial year then ended, and a summary of significant accounting policies and other explanatory notes, as set out on pages 10 to 21, Directors’ Responsibilities for the Financial Statements ‘The directors of the Company are responsible for the preparation and fair presentation of these financial statements in accordance with Private Entity Reporting Standards and the Companies Act 1965 in Malaysia. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. Auditors’ Responsibilities Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with approved standards on auditing in Malaysia. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance 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 our judgement, including the assessment of risks of material misstatement of the financial statements, whether due to fraud or ‘error. In making those risk assessments, we consider internal control relevant to the Company's preparation and fair presentation of the financial statements in order to design audit procedures that ‘are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's intemal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. ‘Chartered Accountants Nenber ot Grant Totten ieternatana Le° GrantThornton ‘Company No: 736035-T Report on the Financial Statements (cont'd) Opinion In our opinion, the financial statements have been properly drawn up in accordance with Private Entity Reporting Standards and the Companies Act 1965 in Malaysia so as to give a true and fair view of the financial position of the Company as of 31 December 2009 and of its financial performance and cash flows for the financial year then ended. Report on Other Legal and Regulatory Requirements In accordance with the requirements of the Companies Act 1965 in Malaysia, we also report that in our opinion the accounting and other records and the registers required by the Act to be kept by the Company have been properly kept in accordance with the provisions of the Act. Other Matters This report is made solely to the members of the Company, as a body, in accordance with Section 174 of the Companies Act 1965 in Malaysia and for no other purpose. We do not assume responsibility to any other person for the content of this report. The financial statements of the Company as at 31 December 2008 were audited by another audit whose report dated 3 June 2009, expressed an unqualified opinion on those financial statements. = TaivTow DATO’ N. K.JASANI (NO. AF; 0737) CHARTERED ACCOUNTANT CHARTERED ACCOUNTANTS (NO: 708/03/12(5/PH)) PARTNER Kuala Lumpur 9 June 2010 9 Chartered Aecountants Maribe f Grar Maton rteratonal tdCompany No: 736035-T BUTTERSCOTCH SDN. BHD. (Incorporated in Malaysia) BALANCE SHEET AS AT 31 DECEMBER 2009 SHARE CAPITAL UNAPPROPRIATED PROFIT/(LOSS) NON-CURRENT LIABILITY Deferred taxation Represented by:~ NON-CURRENT ASSET Plant and equipment CURRENT ASSETS Inventories Trade receivables Other receivables Amount due from related companies Cash and bank balances Total current assets LESS: CURRENT LIABILITIES Trade payables Other payables Amount due to directors Amount due to ultimate holding company Tax payable Total current liabilities NET CURRENT ASSETS/(LIABILITIES) Note 10 u 2009 RM 100,000 154,960 254,960 3,012 161,173 110,744 2,004 19,475 240,174 393,328 825,725 339 68,332 195,425, 391,830 73,000 728,926 96,799. 257,972 2008 RM 100,000 26,638) 73,362 3,012 170,021 45,496 3,577 107,077 429,174 585,324 329 154,829 195,807 327,103, 903, 678,971 (93,647) 16,374 The accompanying notes form an integral part of the financial statements.‘Company No: 736035-T BUTTERSCOTCH SDN. BHD. (Incorporated in Malaysia) INCOME STATEMENT FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2009 1.1.2009 1.6.2008 to to Note 31.12.2009 31.12.2008 RM RM Revenue 12 2,203,141 1,241,122 Cost of sales (1,083,803) (382,924) Gross profit 1,119,338 858,198 Administration expenses (741,009) (759,379) Selling and distribution expenses (40,322) (17,318) Other operating expenses (83,409) (49,199) Profit before taxation 13 254,598 32,302 Taxation 14 (73,000) (8,305) Net profit for the year/period 181,598 23,997 ‘The accompanying notes form an integral part of the financial statements.Company No: 736035-T BUTTERSCOTCH SDN. BHD. (Incorporated in Malaysia) STATEMENT OF CHANGES IN EQUITY FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2009 (Accumulated loss) Share Unappropriated capital profit RM RM Balance at 1 June 2008 100,000 (50,635) Net profit for the period - 23,997 Balance at 31 December 2008 100,000 (26,638) Net profit for the year : 181,598 Balance at 31 December 2009 100,000, 154,960 ‘The accompanying notes form an integral part of the financial statements. I ‘otal RM 49,365 23,997 73,362 181,598 254,960‘Company No: 736035- T BUTTERSCOTCH SDN. BHD. (Incorporated in Malaysia) CASH FLOW STATEMENT FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2009 1.1.2009 1.6.2008 to to 31.12.2009 31.12.2008 RM RM CASH FLOWS FROM OPERATING ACTIVITIES Profit before taxation 254,598 32,302 Adjustments for :- Depreciation 29,577 14,384 Operating profit before working capital changes 284,175 46,686 Changes in working capital :- Inventories (65,248) (6,490) Receivables 29,175 64,045 Payables (86,487) 142,948 Related company (240,174) - Ultimate holding company 64,727 (117,337) Directors (382) 2 Cash (used in)/generated from operations (14,214) 129,854 Tax paid (903) : Net cash from operating activities 15,117 129,854 CASH FLOWS FROM INVESTING ACTIVITY Purchase of property, plant and equipment Net cash used in investing activity CASH AND CASH EQUIVALENTS Net (decrease)/increase At beginning of year/period Atend of year/period (20,729) (5,699) (20,729) 5,699) (35,846) 124,155 429,174 305,019 393,328 429,174 The accompanying notes form an integral part of the financial statements.Company No: 736035-T BUTTERSCOTCH SDN. BHD. (Incorporated in Malaysia) NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2009 1 BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS The financial statements of the Company have been prepared in accordance with the provisions of the Companies Act 1965 and applicable Private Entity Reporting Standards issued by Malaysian Accounting Standards Board (“MASB”), 2. FINANCIAL RISK MANAGEMENT POLICIES The Company's financial risk management policies seek to ensure that adequate financial resources are available for the development of the Company’s business whilst ‘managing its risks. The Company operates within policies that are approved by the Board and the Company's policies are not to engage in speculative transactions, ‘The main areas of financial risks faced by the Company and the policies in respect of the major areas of treasury activity are set out as follows:~ @ wredit risk The credit risk is controlled by the application of credit approvals, limits and monitoring procedures. An internal credit review is conducted if the credit risk is material. (&) Market risk For key product purchases, the Company establishes floating and fixed price levels that the Company considers acceptable and enters into physical supply agreements, where necessary, to achieve these levels. The Company does not face significant exposure of the risk from changes in price levels. (©) Liquidity and cash flow risks The Company reviews its cash flow position regularly and manages its exposure to fluctuation in future cash flows associated with its monetary financial instruments. 14Company No: 736035-T 3. SIGNIFICANT ACCOUNTING POLICIES, @ ) © @ © Accounting convention ‘The financial statements of the Company are prepared under the historical cost convention, unless otherwise indicated in the summary of significant accounting policies. Property, plant and equipment and depreciation Property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment loss. Depreciation on property, plant and equipment is calculated to write off the cost of the property, plant and equipment on a straight line basis over the estimated useful lives of the property, plant and equipment concerned. ‘The principal annual depreciation rates used are as follows: Air-conditioner 10% Computer and software 33.33% Furniture and fittings 10% Office equipment 10% Renovation 10% Signboard 10% Property, plant and equipment are written down to recoverable amount if, in the opinion of the Directors, itis less than their carrying value. Recoverable amount is the net selling price of the property, plant and equipment i.e. the amount obtainable from the sale of an asset in an arm’s length transaction between knowledgeable, willing parties, less the cost of disposal. Inventories Inventories which comprise of trading goods consists of the purchase price plus the cost of bringing the inventories to its present location. Inventories are stated at the lower of cost and net realisable value after adequate allowance has been made for all deteriorated, damaged, obsolete or slow-moving inventories. Cost is determined on the first-in-first out basis. Receivables Receivables are carried at anticipated realisable value. Bad debts are written off in the year in which they are identified. An estimate is made for doubtful debts based on a review of all outstanding amounts as at year end. Payables Payables are stated at cost which is the fair value of the consideration to be paid in the future for goods and services received. 15‘Company No: 736035- T , act SIGNIFICANT ACCOUNTING POLICIES (CONT’D) fp) @ (h) @ @ Revenue recognition Revenue from sale of goods and service are recognised upon delivery of products and customers’ acceptance, net of returns and discounts and upon the services rendered. Deferred tax liabilities and assets Deferred tax liabilities and assets are provided for under the liability method at the current tax rate in respect of all temporary differences between the carrying amount of an asset or liability in the balance sheet and its tax base including unabsorbed business losses and unutilised capital allowances. Deferred tax assets are recognised only to the extent that it is probable that taxable profit will be available against which the deductible temporary differences can be utilised. The carrying amount of deferred tax assets are reviewed at each balance sheet date, If it is no longer probable that sufficient taxable profit will be available to allow the benefit of part or all of that deferred tax assets to be utilised, the carrying amount of the deferred tax assets will be reduced accordingly. When it becomes probable that sufficient taxable profit will be available, such reductions will be reversed to the extent of the taxable profit. Employees benefits (@ Short-term benefits Wages, salaries, bonuses and social security contributions are recognised as expenses in the year in which the associated services are rendered by the employees of the Company. (i) Defined contribution plans The Company’s contribution to defined contribution plans under statutory provident fund schemes are charged to the income statement in the year in which they are related. ‘Cash and cash equivalents Cash and cash equivalents comprise cash on hand, balances with banks, short term demand deposits and highly liquid investments which are readily convertible to known amount of cash and which are subject to an insignificant risk of changes in value Impairment of assets The carrying values of assets are reviewed for impairment when there is an indication that the assets might be impaired. Impairment is measured by comparing the carrying values of the assets with their recoverable amounts. 16Company No: 736035-T 3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D) 6G) &) Impairment of assets (cont’. ‘The recoverable amount is the higher of net realisable value and value in use, which is measured by reference to discounted future cash flows, Recoverable amounts are estimated for individual assets, or if it is not possible, for the cash- generating unit. An impairment loss is charged to the income statement immediately. Subsequent increase in the recovereable amount of an asset is treated as reversal of the previous impairment loss and is recognised to the extent of the carrying amount of the asset that would have been determined (net of amortisation and depreciation) had no impairment loss been recognised. The reversal is recognised in the income statement immediately. Financial instruments Financial instruments carried on the balance sheet include cash and bank balances, receivables and payables. The particular recognition methods adopted are disclosed in the individual accounting policy statement associated with each item. PRINCIPAL ACTIVITIES AND GENERAL INFORMATION ‘The principal activities of the Company are engaged in the business of beauty salons, There have been no significant changes in the nature of these activities during the financial year. ‘The Company is a private limited liability company, incorporated and domiciled in Malaysia. The registered office is located at Suite 39.1.6., First Floor, Jalan Kenari 17C, Bandar Puchong Jaya, 47100 Puchong, Selangor. The principal place of business of the Company is located at No. 28, First Floor, Jalan Telawi 5, Bangsar Baru, 59100 Kuala Lumpur. The financial statements were authorised for issue by the Board of Directors in accordance with a resolution of the Directors passed on 9 June 2010. SHARE CAPITAL 2009 2008 RM RM Authorised:- Ordinary shares of RMI each At beginning/at end of year/period 100,000 100,000 7‘Company No: 736035-T 51 SHARE CAPITAL (CONT'D) 2009 2008 RM RM Issued and fully paid: Ordinary share of RMI each ‘At beginning/at end of year/period 100,000 100,000 DEFERRED TAXATION 2008 RM At beginning/end of year! period 3,012 3,012 The balance in the deferred taxation is made up of tax effect on temporary differences arising from:~ Carrying amount of qualifying property, plant and equipment in excess of their tax base 3,012 3,012 PLANT AND EQUIPMENT Furniture Computer & Office & Air Total Total fiings cauipment software Signbowrd Renovation conditioner 20092008, At cost RM RM RM RM RM RM RM RM At beginning of yeariperiod 14,664 26211-10561 «8,800 162,928 1310 224,470 218,771 Additions 364212537 - 4550 = 20.729 5.699 Atend of vyeariperiod 14,664 29,853 23,098 ___—8,800_167,474 1,310 245,199 224,470 Accumulated depreciation At beginning of yeariperiod 1921-5399 -5,639 2,200 39,203, 87 54449 40,065 Charge for the yeariperiod 1,466 986 7,367 880__16.747 13t__29,577__ 14.384 Atend of yeariperiod 3387 8.385 13,006 3,080 $5,950 218 84,026 54,449 Net book value BU December 2009 11,277 21,468 10,092 5,720 111,524 1,092 161,173 - 31 December 2008 12,743 20812 4,922 6,600_ 123,721 1223 = 17902 Depreciation charge forthe period ended 31 December 2008 73015891979 5139497 6 = 14,384 18Company No: 736035- T 10. u. 12. 13. INVENTORIES 2009 RM Mechandise goods, at cost 110,744 TRADE RECEIVABLES 2009 2008 RM RM Trade receivables 2,004 3,577 AMOUNT DUE TO DIRECTORS ‘The amount due to directors is unsecured, interest-free and repayable upon demand. AMOUNTS DUE TO/FROM ULTIMATE HOLDING COMPANY AND RELATED COMPANIES The ultimate holding company is Spa Esprit Group Pte. Ltd., a company incorporated in the Republic of Singapore. Related companies refer to members within Spa Esprit Group Pte, Ltd.. The amounts due to/from ultimate holding company and related companies are unsecured, bear no interest and no scheme of repayment has been arranged. REVENUE Revenue represents the invoiced value of goods sold, net of discounts and returns. PROFIT BEFORE TAXATION Profit before taxation has been determined after charging amongst other items the following: 1.1.2009 1.6.2008 to to 31.12.2009 31.12.2008 RM RM Audit fee 5,500 3,050 Depreciation 29,577 14384 Rental 76,640 43,465 19‘Company No: 736035- T 14. 15. TAXATION 11.2009 1.6.2008 to to 31.12.2009 31.12.2008 RM RM Provision for the year 73,000 8,305 Malaysian income tax is calculated at the statutory tax rate of 25% (2008: 26%) of the estimated assessable profits for the financial year. However, the above amounts are subject to the approval of the Inland Revenue Board of Malaysia. The reconciliation of income tax expenses applicable to profit/(oss) before taxation at the statutory tax rate to income tax expenses at the effective tax rate of the Company are as follows:- 1.12009 1.6.2008 to to 31.12.2005 31.12.2008 % % Taxation at Malaysian statutory tax rate 25.0 26.0 Tax effect in respect of:- Expenses not deductible for tax purposes 37 03 Taxation at average effective tax rate 28.7 251 RELATED PARTY TRANSACTIONS Significant related party transactions during the financial year were as follows:- 1.1.2009 1.6.2008 to 31.12.2008 RM ‘Management fees paid to ultimate holding company 842,111 359,520 Sales from related company 82,167 Purchases from ultimate holding company : 126,072 20Lodged by Tel Fax Company No: 736035-T 15. 16. 17. 18. RELATED PARTY TRANSACTIONS (CONT'D) The Directors of the Company are of the opinion that the terms of the above transactions were entered on a negotiated basis EMPLOYEES INFORMATION 1.1,2009 1.6.2008 to to 31.12.2009 31.12.2008 RM Staff costs 547,581 350,393 The number of employees of the Company at the end of the financial year was 15 (2008: 12) persons. FAIR VALUES The carrying amounts of financial assets and liabilities of the Company at the balance sheet date approximate their fair values. COMPARATIVE FIGURES ‘The comparative information is for the period from 1 June 2008 to 31 December 2008. Consequently, the comparative figures in the income statements, cash flow statements, statement of changes in equity and related notes are not comparable. Arris Management Services Sdn. Bhd. Suite 39.1.6, First Floor, Jalan Kenari 17C, Bandar Puchong Jaya, 47100 Puchong, Selangor Darul Ehsan. 21 603-8073 1293 603-8073 1232