CONTENTS2-4 Notice of Fifteenth Annual General Meeting

5 Statement Accompanying Notice of Annual General Meeting

6 Corporate Information

7-8 Profile of Directors

9 Chairman’s Statement

10-11 Audit Committee Report

12-13 Statement on Internal Control

14-17 Statement on Corporate Governance

18 Financial Highlights

19-63 Reports and Financial Statements

64-65 Analysis of Shareholdings

66 Particulars of Properties

67 Proxy Form

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Notice of Fifteenth Annual General Meeting

NOTICE IS HEREBY GIVEN THAT the Fifteenth Annual General Meeting of the Company will be held at Hang Tuah, Level 3, Mines Wellness Hotel, Jalan Dulang, MINES Resort City, 43300 Seri Kembangan, Selangor Darul Ehsan on Friday, 24 June 2011 at 11:30 a.m. for the following purposes:

ORDINARY BUSINESS :

1 To receive and adopt the Report of the Directors and the Audited Financial Statements To refer to for the financial year ended 31 December 2010 and the Report of the Auditors thereon. Explanatory Note 1

2. To approve the payment of a First and Final Dividend of 10% (less 25% Income Tax) in respect of the financial year ended 31 December 2010. (Resolution 1)

3. To approve the payment of Directors’ Fees of RM163,000.00 for the financial year ended 31 December 2010. (Resolution 2)

4. To re-appoint Mr. Ma Huak Huang, the Director who retires in accordance with Section 129 of the Companies Act, 1965. (Resolution 3)

5. To re-elect the following Directors who retire in accordance with Article 87.1 of the Company’s Articles of Association :

(i) Mr. Chua Ah Lak (Resolution 4) (ii) Mr. Chua Ngeun Lok (Resolution 5)

6. To re-appoint Messrs KPMG as the Auditors of the Company for the ensuing year and to authorise the Directors to fix their remuneration. (Resolution 6)

AS SPECIAL BUSINESS:

To consider and if thought fit, pass with or without modification, the following resolutions:

Ordinary Resolution7. Authority to issue shares pursuant to Section 132D of the Companies Act, 1965 (Resolution 7)

“THAT pursuant to Section 132D of the Companies Act, 1965 and approvals from Bursa Malaysia Securities Berhad and other relevant governmental/ regulatory authorities where such authority shall be necessary, the Board of Directors of the Company be and are hereby authorised to issue and allot shares in the Company from time to time until the conclusion of the next Annual General Meeting and upon such terms and conditions and for such purposes as the Board of Directors may, in their absolute discretion, deem fit provided that the aggregate number of shares to be issued shall not exceed ten per centum (10%) of the issued share capital of the Company for the time being, and that the Board of Directors be and are also empowered to obtain the approval for the listing of and quotation for the additional shares so issued on Bursa Malaysia Securities Berhad”.

8. Proposed renewal of Share Buy-Back Authority (Resolution 8)

“THAT subject always to the Companies Act, 1965 (“Act”), the provisions of the Memorandum and Articles of Association of the Company, the Listing Requirements of Bursa Malaysia Securities Berhad (“Bursa Securities”), and the approvals of all relevant governmental and/or the relevant authorities, the Company be authorised, to buy-back such amount of ordinary shares of RM1.00 each in the Company as may be determined by the Directors of the Company from time to time through Bursa Securities upon such terms and conditions as the Directors may deem fit and expedient in the interest of the Company provided that:-

(i) The aggregate number of shares bought back does not exceed 10% of the total issued and paid-up share capital of the Company at any point of time;

(ii) The maximum amount of funds to be allocated for the share buy-back shall not exceed the aggregate of the retained profits and/or share premium of the Company; and

(iii) The shares purchased are to be treated in either of the following manner:-

a. Cancel the purchased ordinary shares; or

b. Retain the purchased ordinary shares as treasury shares held by the Company; or

c. Retain part of the purchased ordinary shares as treasury shares and cancel the remainder;

(hereinafter referred to as the “Proposed Share Buy-Back”).

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Notice of Fifteenth Annual General Meeting

The treasury shares may be distributed as dividends to the shareholders and/or resold through Bursa Securities and/or subsequently cancelled;

AND THAT the authority conferred by this resolution shall commence upon the passing of this resolution until:-

(i) the conclusion of the next annual general meeting (“AGM”) of UPA, unless by ordinary resolution passed at that meeting, the authority is renewed, either unconditionally or subject to conditions; or

(ii) the expiration of the period within which the next AGM after the date it is required to be held pursuant to section 143(1) of the Act (but shall not extend to such extension as may be allowed pursuant to section 143(2) of the Act); or

(iii) revoked or varied by ordinary resolution passed by shareholders of the Company at a general meeting of the Company,

whichever occurs first;

AND THAT the Directors of the Company be and are hereby authorised to take such steps to give full effect to the Proposed Share Buy-Back with full power to assent to any conditions, modifications, variations and/or amendments as may be imposed by the relevant authorities and/or to all acts and things as the Directors may deem fit and expedient in the best interest of the Company.”

Special Resolution9. Proposed Amendments to the Articles of Association of the Company (Resolution 9)

“THAT the following existing Article 151 be deleted in its entirely and be replaced with the following:-

Existing Article 151 Any dividend, interest or other money payable in cash in respect of shares may be paid by cheque or warrant sent through the post directly to the registered address of the holder or such person and to such address as the holder may in writing direct or, if several persons are entitled thereto in consequence of the death or bankruptcy of the holder, to any one of such persons or to such person and to such address as such persons may by writing direct, subject to the Rules. Every such cheque or warrant shall be made payable to the order of the person to whom it is sent or to such person as the holder or person or persons entitled to the share in consequence of the death or bankruptcy of the holder may direct and the payment of such cheque or warrant shall operate as a good discharge to the Company in respect of the dividend represented thereby. Every such cheque or warrant shall be sent at the risk of the person entitled to the money thereby represented.

New Article 151 Any dividend, interest or other money payable in cash in respect of shares may be paid by cheque or warrant sent through the post directly to the registered address or by direct electronic transfer to the bank account of the holder or such person and to such address as the holder may in writing direct or, if several persons are entitled thereto in consequence of the death or bankruptcy of the holder, to any one of such persons or to such person and to such address as such persons may by writing direct, subject to the Rules. Every such cheque or warrant shall be made payable to the order of the person to whom it is sent or to such person as the holder or person or persons entitled to the share in consequence of the death or bankruptcy of the holder may direct and the payment of any such cheque or warrant, if purporting to be endorsed, or direct electronic transfer shall operate as a good discharge to the Company in respect of the dividend represented thereby notwithstanding that it may subsequently appear that the same has been stolen or that the endorsement thereon has been forged or there is discrepancy given by the Member in the details of bank account(s). Every such cheque or warrant shall be sent or by electronic transfer at the risk of the person entitled to the money thereby represented. Where the Members have provided to the Central Depository the relevant contact details for purposes of electronic notifications, the Company shall notify them electronically once the Company has paid the cash dividends out of its accounts. All dividends unclaimed shall be dealt with by the Company in accordance with the Unclaimed Money Act, 1965.

10. To transact any other ordinary business of which due notice shall have been given.

NOTICE OF DIVIDEND ENTITLEMENT AND PAYMENT

NOTICE IS HEREBY GIVEN THAT a first and final dividend of 10% (less 25% income tax) for the financial year ended 31 December 2010, if approved, will be paid on 28 July 2011 to Depositors whose names appear in the Record of Depositors at the close of business on 8 July 2011.

A depositor shall qualify for the dividend entitlement only in respect of:

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(a) shares transferred into the Depositor’s Securities Account before 4.00 p.m. on 8 July 2011 in respect of ordinary transfers; or

(b) shares bought on the Bursa Malaysia Securities Berhad on a cum entitlement basis according to the Rules of the Bursa Malaysia Securities Berhad.

By Order of the Board

CHOK KWEE WAH (MACS 00550) TAN KEAN WAI (MAICSA 7056310) Company Secretaries

Petaling Jaya 3 June 2011

Notes:

1. A member entitled to attend and vote at this meeting is entitled to appoint a proxy to attend and to vote in his stead. A proxy may but need not be a member of the Company.2. The instrument appointing a proxy shall be in writing signed by the appointor or his attorney duly authorised in writing, or if the appointor is a corporation, either under its common seal or signed by an officer or attorney duly authorised.3. Where the member of the Company appoints two proxies or more, the appointment shall be invalid unless the member specifies the proportion of his shareholding to be represented by each proxy.4. Where the member of the Company is an authorised nominee as defined under the Securities Industry (Central Depositories) Act 1991, it may appoint at least one (1) proxy in respect of each securities account it holds.5. The instrument appointing the proxy and the power of attorney or other authority, if any, under which it is signed or a notarially certified copy thereof must be deposited at the Registered Office of the Company at Lot 10, The Highway Centre, Jalan 51/205, 46050 Petaling Jaya, Selangor Darul Ehsan not less than forty-eight (48) hours before the time appointed for holding the meeting or adjourned meeting.

Explanatory Notes

6. Item 1 of the Agenda

This item is meant for discussion only as the provision of Section 169 (1) of the Companies Act, 1965 does not require shareholders’ approval for the Audited Financial Statements. Henceforth, this item is not put forward for voting.

7. Ordinary Resolution 7

The proposed ordinary resolution No. 7, if passed, will empower the Directors of the Company to allot and issue shares up to an aggregate amount not exceeding in total 10% (ten per centum) of the issued share capital of the Company for the time being and for such purposes as the Directors consider would be in the interest of the Company. In order to avoid any delay and costs involved in convening a general meeting, it is thus appropriate to seek shareholders’ approval. This authority unless revoked or varied by the Company in general meeting will expire at the next Annual General Meeting of the Company.

The Company has not issued any new shares pursuant to Section 132D of the Companies Act 1965 under the general authority which was approved at the Fourteenth Annual General Meeting (“AGM”) held on 25 June 2010 and which will lapse at the conclusion of the Fifteenth AGM to be held on 24 June 2011.

The authority will provide flexibility to the Company for allotment of shares for any possible fund raising activities, including but not limiting to further placing of shares, for the purpose of funding future investment(s), acquisition(s) and/or working capital.

8. Ordinary Resolution 8

The proposed ordinary resolution No. 8, if passed, will empower the Company to purchase and/or hold the Company’s shares up to ten percent (10%) of the issued and paid-up share capital of the Company by utilizing the funds allocated which shall not exceed the total retained profits and/or share premium account of the Company. This authority unless renewed, revoked or varied at a general meeting, will expire at the conclusion of the next Annual General Meeting. Further information on the Proposed Renewal of Share Buy-Back Authority is set out in the Circular to Shareholders dated 3 June 2011 which is despatched together with the Company’s 2010 Annual Report.

9. Special Resolution 9

The proposed special resolution No. 9, if passed, will empower the Directors of the Company to take such steps that are necessary to amend the Company’s Articles of Association to be in line with the amendments to the Listing Requirements of Bursa Malaysia Securities Berhad in relation to the implementation of e-Dividend.

Notice of Fifteenth Annual General Meeting

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Statement Accompanying Notice of Annual General Meeting

RE-ELECTION OF DIRECTORS

The retiring directors who are standing for re-election at the forthcoming Annual General Meeting together with their relevant Article of the Company’s Articles of Association and provision of Companies Act, 1965 are given as below:

1. Ma Huak Huang - Section 129 (6) of Companies Act, 1965 2. Chua Ah Lak - Article 87.1

3. Chua Ngeun Lok - Article 87.1

Their profile can be found in pages 7 to 8 and their shareholdings in page 65 of the Annual Report.

BOARD MEETINGS

A total of seven (7) Board Meetings were held during the financial year and the details of attendance by each of the Directors are given as below: Name of Directors No of meetings attended

Chua Ah Lak 5/7

Kok Kam Moi 7/7

Chua Ngeun Lok 7/7

Chua Ngeun Seong 7/7

Ma Huak Huang 7/7

Yeo Wee Thow @ Yeo Ngo Tee 5/7

All Directors have complied with the minimum attendance at Board Meeting as stipulated in the Bursa Malaysia Listing Requirements during the financial year.

DATE, TIME AND PLACE OF THE FIFTEENTH ANNUAL GENERAL MEETING

Date : 24 June 2011

Time : 11.30am

Place : Hang Tuah Level 3, Mines Wellness Hotel, Jalan Dulang, MINES Resort City, 43300 Seri Kembangan, Selangor Darul Ehsan.

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Corporate Information

BOARD OF DIRECTORS

Chua Ah Lak – Chairman (Independent & Non-Executive Director)Kok Kam Moi – Managing DirectorChua Ngeun Lok – Executive DirectorChua Ngeun Seong – Executive DirectorMa Huak Huang – Non-Independent & Non-Executive DirectorYeo Wee Thow @ Yeo Ngo Tee – Independent & Non-Executive Director

COMPANY SECRETARIES – Chok Kwee Wah (MACS 00550) – Tan Kean Wai (MAICSA 7056310)

AUDITORS – KPMG Chartered Accountant Level 10, KPMG Tower, 8 First Avenue, Bandar Utama, 47800 Petaling Jaya, Selangor Darul Ehsan

REGISTRAR – Bina Management (M) Sdn Bhd (50164-V) Lot 10, Highway Centre Jalan 51/205 46050 Petaling Jaya Selangor Darul Ehsan Tel : 03-77843922 Fax : 03-77841988

REGISTERED OFFICE – Lot 10, Highway Centre Jalan 51/205 46050 Petaling Jaya Selangor Darul Ehsan Tel : 03-77843922 Fax : 03-77841988

PRINCIPAL BANKERS – Public Bank Berhad – HSBC Bank Malaysia Berhad – United Overseas Bank (M) Bhd

STOCK EXCHANGE – Bursa Malaysia Securities Berhad – Main Market

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Profile Of Directors

MR. CHUA AH LAKCHAIRMAN - INDEPENDENT & NON-EXECUTIVE

Mr. Chua Ah Lak, Malaysian, aged 62, was appointed as Independent & Non-Executive Director of UPA Corporation Bhd on 3 January 2005. He holds Honours Degree in Chemical Engineering from Adelaide University, Australia and MBA from University of Malaya, Malaysia. He retired from Nylex Group on 31 October 2004 after serving as Chief Executive Officer of Nylex (Malaysia) Berhad and a director of Nylex’s Board.

He is the Chairman of the audit committee, nomination committee as well as remuneration committee.

MR. KOK KAM MOIMANAGING DIRECTOR

Mr. Kok Kam Moi, Malaysian, aged 63, was appointed as Managing Director of UPA Corporation Bhd on 6 January 1997. He is the co-founder of the UPA Group with Mr. Chua Ngeun Lok.

Mr Kok has more than 30 years of experience in printing industry. After obtaining his qualification in Commercial Art in 1971, he ventured into general printing before specializing in rebuilding of printing machinery. His vast experience in printing industry and technical know-how has contributed to the success of the Machinery Division. The Machinery Division deals with rebuilding of Web printing machinery, Sheet fed printing machinery and book binding machinery.

Under his guidance in the past 20 years, UPA Machinery Sdn Bhd, a subsidiary of the Group, has grown to be one of the biggest printing equipment rebuilding factory in South East Asia.

Mr. Kok is involved in the Group’s business development and oversees the machinery Division of the Group. He is a member of Remuneration Committee.

MR. CHUA NGEUN LOKEXECUTIVE DIRECTOR

Mr. Chua Ngeun Lok, Malaysian, aged 60, was appointed as Executive Director of UPA Corporation Bhd on 6 January 1997. He is the co-founder of the UPA Group with Mr. Kok Kam Moi.

Mr. Chua has more than 30 years experience in the printing industry. After obtaining his qualifications in Commercial Art in 1972, he ventured into general printing before specializing in paper products and diary manufacturing. His creative skills have contributed to the many innovative products manufactured by UPA.

Under his guidance in the past 30 years, UPA Press Sdn Bhd, a subsidiary of the Group, has grown to be the biggest diary manufacturer in Malaysia. He had been intensively involved in the development of the Company to become one of the leading diary and paper products manufacturers in Asia.

He is currently the Vice President of Selangor and Federal Territory Chinese Printing Presses Association and Council Member of K.L. Selangor Chinese Chamber of Commerce.

Mr. Chua is involved in the Group’s business development and oversees the financial management of the Group. He is the brother of Mr. Chua Ngeun Seong, the Executive Director of UPA Corporation Berhad. Mr. Chua is a member of the Remuneration Committee.

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Profile Of Directors

IR. CHUA NGEUN SEONGEXECUTIVE DIRECTOR

Ir. Chua Ngeun Seong, Malaysian, aged 63, was appointed to the Board of UPA Corporation Bhd on 6 January 1997. Thereafter he was made Executive Director on 1st June 1998. He holds a Diploma in Mechanical Engineering from Council of Engineering Institutions UK and he is also a Registered Professional Engineer in Malaysia. He has 39 years working experience in engineering as well as general management encompassing project planning, design, installation, test and commissioning of palm oil mills, palm kernel crushing plant, palm oil refinery plants, cocoa butter substitute speciality fats plant, steam boilers, power generation plants and other related machine and equipment. He also has 14 years of working experience in plastic sheets extrusion and calendaring.

Ir. Chua sits on the Board of two of UPA Corporation Bhd’s subsidiaries as well as several other private limited companies. He is the Director of UPA Holdings Sdn Bhd which is the ultimate holding company and substantial shareholder of UPA Corporation Bhd and is also the brother of Mr. Chua Ngeun Lok, the Executive Director of UPA Corporation Bhd.

MR. MA HUAK HUANGNON-INDEPENDENT & NON-EXECUTIVE

Mr. Ma Huak Huang, Malaysian, aged 72 was appointed to the Board of UPA Corporation Bhd on 6 January 1997. He is a self-made entrepreneur with more than 30 years experience in the field of agriculture chemical and feedstuff.

Mr. Ma is a member of Audit Committee, Remuneration Committee as well as Nomination Committee. He sits on the Board of several of UPA Corporation Bhd’s subsidiaries as well as other private limited companies. He is also the Director of UPA Holdings Sdn Bhd, the ultimate holding company and substantial shareholder of UPA Corporation Bhd. He is also the brother-in-law of Mr. Kok Kam Moi.

MR. YEO WEE THOW @ YEO NGO TEEINDEPENDENT & NON-EXECUTIVE

Mr. Yeo Wee Thow, Malaysian, ages 62, was appointed an Independent and Non-Executive Director of UPA Corporation Bhd on 29 June 2001. He is a member of Malaysian Institute of Accountants, a fellow member of the Association of Chartered Certified Accountants (UK) and an associate member of the Institute of Chartered Secretaries and Administrators (UK). He owns a public accounting firm in Kuala Lumpur which was set up in 1979.

Mr. Yeo is a member of Audit Committee, Nomination Committee as well as Remuneration Committee.

SAVE AS DISCLOSED ABOVE, NONE OF THE DIRECTORS HAS :

1) any other family relationship with any Director and/or substantial shareholder of the Company.

2) any other conflict of interest with the Company.

3) any conviction of offences for the past ten years other than traffic offences.

PLEASE REFER TO THE ANALYSIS OF SHAREHOLDINGS ON PAGE 64 AND 65 FOR THE DETAILS OF THE DIRECTORS’ SHAREHOLDINGS IN THE COMPANY

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Chairman’s Statement

To all our valued shareholders, I am pleased to present you the Annual Report and Audited Financial Statements of UPA Corporation Berhad for the financial year ended 31 December 2010.

BUSINESS REVIEW

For the financial year of 2010, the Group recorded a higher turnover of RM129.31 million as compared to RM119.07 million recorded in the preceding year. Despite achieving an increase of 8.60% in turnover, the profit before tax however remained at RM18.68 million as compared to RM18.62 recorded in the previous financial year. The financial year 2010 proved to be a very challenging year for the Group with the adverse market condition. The appreciation of Ringgit generates lesser income for the Group from its export business while the increase of the price of the raw material significantly increases the cost of production.

PROSPECT

The new financial year will be more challenging with the ongoing global economic uncertainties. The Group acknowledges the need to be cautious on various factors which can affect the operational efficiency and profitability rate.

UPA Press Sdn Bhd will continue to focus on the printing and manufacturing of diaries and other printed material. It has also identified packaging materials as one of the viable business areas for diversification. Macro Plastic Sdn Bhd will start its plant operation in Thailand in 2012, when approval is granted by Thailand’s Board of Investment. It has also been expanding its production capacity locally with the acquisition of extra calendaring lines. UPA Machinery Sdn Bhd will however remain adversely affected by the current market condition. The age of digitisation has negatively impacted the sale of printing machines. Coupled with the current uncertainties in the global economy and local market sentiment, the printing industry shall remain cautious to commit to new capital investment. UPA Machinery Sdn Bhd has therefore rationalised and streamlined its existing operations in order to reduce operating costs in these difficult times.

NEW CORPORATE DEVELOPMENT

The Group had successfully implemented bonus issue in year 2010 on the basis of one bonus share for every five existing shares held on the entitlement date of 10 August 2010. The bonus issue resulted in 13,045,240 bonus shares which was subsequently listed and quoted on the main market of Bursa Malaysia Securities Berhad on 11 August 2010. The current issued and paid up capital of Group after the bonus issue stands at RM79,581,840 consisting of 79,581,840 ordinary shares of RM1.00 each.

CORPORATE SOCIAL RESPONSIBILITY

The Group will not neglect its corporate social responsibility while carrying out its usual business activities. The Group is committed to continually promote and creating awareness among the employees on the occupational hazard and safety at the work place. Besides that the Group had in 2010 either sponsored the conference and sports activities of certain organizations or contributed donations to charitable groups.

DIVIDEND

The Board is pleased to recommend a first and final dividend of 10% (less income tax) per share for the financial year ended 31 December 2010 for the approval of the shareholders at the forthcoming annual general meeting.

ACKNOWLEDGEMENT

On behalf of the Board, I would like to take this opportunity to extend my sincere gratitude and appreciation to all our employees, valued shareholders, customers, suppliers and business associates for their dedication, assistance and support throughout the years.

Last but not least, I would like to thank my fellow members of the Board for their advice, invaluable assistance, support and contribution extended to the Board all these years.

Thank you.

CHUA AH LAKCHAIRMAN

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Audit Committee Report

COMPOSITION

The Audit Committee was established on 7 January 1997. The committee comprises of the following members as at the end of financial year 2010 : Meetings attended

1. Chua Ah Lak (CHAIRMAN) 4 / 4 Independent & Non-Executive Director 2. Yeo Wee Thow @ Yeo Ngo Tee 4 / 4 Independent & Non-Executive Director

3. Ma Huak Huang 4 / 4 Non-Independent & Non-Executive Director Mr. Yeo Wee Thow @ Yeo Ngo Tee is a member of the Malaysian Institute of Accountants (MIA). The composition of the Audit Committee complies with the Bursa Malaysia Listing Requirements.

TERM OF REFERENCE

Composition

The Committee should be appointed by the Board and the following requirements must be met :

a. Members of the Committee should be from among the current Board’s membersb. Should comprise no fewer than three (3) members c. Independent Directors must form the majority d. All members of the committee should be Non-Executive Directorse. Members of the Committee should consist of at least one member who is a member of Malaysian Institute of Accountantsf. Chairman of the Committee must be an Independent Directorg. Alternate Director is not eligible to be appointed

Meetings

a. A minimum number of four (4) meetings should be held during a financial year b. Quorum of a meeting should be two (2) members and the majority of members present must be Independent Directors c. The internal and external auditors have the right to appear and to be heard at any of the meeting and shall appear before the Committee when required to do so by the Committee d. The Company Secretary shall be appointed as Secretary to the Committee.

Duties and Responsibilities

a. Review on the internal and external auditors’ scope of works and their audit plans b. Review with the external auditors on the result of their audit and evaluate on the accounting policies and system of internal accounting control within the Group.c. Review with the internal auditors on the findings of their audit and evaluate on the system of internal control within the Group.d. Review with the management on the audit reports and management letters issued by the internal and external auditors and the implementation of their recommendations. e. Evaluate on the performance of the internal and external auditors and to put forward recommendation on their appointment to the Board.

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Audit Committee Report

f. Review on the quarterly and year end financial results and recommending for the Board’s approval before releasing to the relevant authorities.g. Review on the Group’s compliance with the accounting standards set by the Malaysian Accounting Standards Board. h. Review on the Group’s compliance with the Bursa Malaysia Listing Requirements. i. Review on the Group’s status of compliance with the Malaysian Code on Corporate Governance.

Authority

The Audit Committee is empowered to :

a. have authorities to investigate any matter within its term of reference b. have full access to any information in regard of the Group’s activitiesc. have direct communication with the internal auditors, external auditors and management staff in order to seek clarification or any further information d. have the right to seek meetings with the internal as well as external auditors either with or without the attendance of any of the Executive Directore. have the right to obtain advice or other necessary services from independent professionals in regard of matters within its term of reference.

SUMMARY OF ACTIVITIES

The activities undertaken by the Audit Committee during the financial year are summarized as follow : a. Review all quarterly results and annual audited financial statement of the Group before recommending the same for the Board’s approval and subsequent announcement to Bursa Malaysia.b. Review the annual external audit plan, the scope and the extent of coverage by the external auditors and to make recommendations to the Board in regard of internal control and financial matters based on the external audit report.c. Review and approve the internal audit plan for the year and make recommendation to the Board for improvement to the significant risk areas based on the internal audit report.d. Review on any related party transaction and conflict of interest within the Group e. Monitoring the Group’s continuous compliance with the Bursa Malaysia Listing Requirements, the Malaysian Accounting Standard Board guidelines, the Companies Act 1965 and the Malaysian Code of Corporate Governancef. Review the annual reports to ensure compliance to Bursa Malaysia Listing Requirements.

INTERNAL AUDIT FUNCTION

The principal roles of the appointed external consultant on internal audit are to assist the Audit Committee in assessing risks faced by the Group, recommend possible measures to mitigate the identified risks, review the adequacy of effective system of controls for the operation of the Group.

The major findings of the internal audit reports will be reported directly to the Audit Committee meetings in order to formulate appropriate corrective measures.

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The Board of Directors is committed to maintaining a sound system of internal control in the Group and is pleased to provide the following Statement on Internal Control which outlines the nature and scope of internal control of the Group during the year pursuant to paragraph 15.26 (b) of the Bursa Malaysia Listing Requirements.

Board responsibility

The Board of Directors is responsible for the Group’s system of internal controls covering not only financial controls but also operational and compliance controls as well as risk management. The internal control system involves each business and key management from each business, including the Board, and is designed to meet the Group’s particular needs and to manage the risks to which it is exposed. This system, by its nature, can only provide reasonable but not absolute assurance against material loss or against the Group failing to achieve its objectives.

The Board has established an ongoing process for identifying, evaluating and managing significant risks faced by the Group. This process has been in place throughout the year and is reviewed by the Board and accords with the Statement on Internal Control: Guidance for Directors of Public Listed Companies. For the purposes of this framework, associates are not dealt with as part of the Group.

Enterprise risk management framework

The Board supports the contents of the Statement of Internal Control: Guidance for Directors of Public Listed Companies and through the Audit Committee, continually reviews the adequacy and effectiveness of the risk management processes in place within the various operating businesses.

The Board believes that maintaining a sound system of internal control is founded on a clear understanding and appreciation of the following key elements of the Group’s enterprise risk management framework :

• A risk management structure which outlines the lines of reporting and responsibility at the Board, Audit Committee, Risk Management Committee and management levels have been established.

• A formal risk policy and guidelines have been established and communicated to Risk Management Committee comprising of management personnel.

• Amongst the members of the Risk Management Committee, a member has been appointed as the Risk Officer to coordinate enterprise risk management within the Group.

• The Group’s management identifies the key risks facing each business unit, the potential impact and likelihood of those risks occurring and effectiveness of the existing controls.

Statement On Internal Control

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Internal audit function

The Group has outsourced the internal audit function to a professional firm of consultants, which provides the Board with the assurance it requires regarding the adequacy and effectiveness of internal control systems. Internal audit independently reviews the control processes implemented by the management, and report to the Audit Committee. Internal audit also reviews the internal controls in the key activities of the Group’s businesses on the basis of an annual internal audit strategy and a detailed annual internal audit plan presented to the Audit Committee for approval. The internal audit function adopts a risk-based approach and prepares its audit strategy and plan based on the risks facing each of the major business units of the Group.

The Audit Committee considers reports from internal audit and from management, before reporting and making recommendations to the Board in strengthening the internal control systems. The Audit Committee presents its findings to the Board.

Fees paid to the outsourced Internal Auditor for financial year ended 31 December 2010 amounted to RM 24,000.

Other Risks and Control Processess

Apart from risk management and internal audit, the Group also has in place an organizational structure with defined line of responsibility, delegation of authority and a process of hierarchical reporting.

Weakness in internal controls that result in material losses

There were no material losses incurred during the current financial year as a result of weaknesses in internal control. Management will continue to review and strengthen the internal control systems of the Group.

Statement On Internal Control

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Statement On Corporate Governance

The Board of Directors of UPA recognises the importance of good corporate governance and the needs to ensure that the principles and best practices on corporate governance are observed and practised throughout the Group. The Board is pleased to present below a description of how the Group had applied the principles of good governance and the extent of compliance with the best practices as set out in the Malaysian Code on Corporate Governance.

BOARD OF DIRECTORS

The Group is headed by an experienced Board comprising of professionals and entrepreneurs with diverse knowledge and experience in business, financial, management and engineering background. The Board effectively leads the Group by providing directions and guidance to the management and staff. As at the end of financial year 2010, the Board consists of six (6) members of which three (3) are Executive Directors while the other three (3) are Non-Executive Directors. Out of the three (3) Non-Executive Directors, two (2) are also functioning as Independent Directors. The current composition satisfies the requirement of Listing Requirement and the Board considers its current size as adequate and capable to lead the Group through efficient and effective discussion and decision makings.

The three (3) Executive Directors are responsible for the Group’s operations namely manufacturing and machine trading. The three (3) Non-Executive Directors do not participate in the day-to-day management of the Group, instead their functions are to provide independent views, assessment and advice on various management proposals.

A brief profile of each of the Directors is presented on page 7 to 8.

BOARD MEETINGS AND SUPPLY OF INFORMATION

Attendance of all the Directors at the Board Meetings are disclosed in the Statement Accompanying the Notice of Annual General Meeting in page 5.

The agenda together with the detailed reports and preliminary proposals to be tabled at the Board meeting are circulated to all the Directors for their perusal and consideration prior to each Board meeting.

All matters arising, deliberations and conclusions of the Board meetings are accurately recorded in the minutes by the Company Secretary, confirmed by the Board and signed as correct record by the Chairman of the meeting.

Senior Management staff as well as outside advisers or professionals were invited to attend the Board meeting as and when necessary to provide the Board with their views and explanation in relation to the pre-set agenda and also to furnish clarification on matters that may be raised by the Directors.

DIRECTORS’ TRAINING

All Directors had attended and completed the Mandatory Accreditation Programme conducted by the Research Institute of Investment Analysts Malaysia (RIAAM).

During the financial year 2010, the Directors attended training programmes and seminars on various areas such as finance, economy and management. The Directors also attended related trade fairs all over the world to keep abreast with the latest technology and market trend in the printing as well as plastic manufacturing industries. The Directors will continue to undergo relevant trainings and seminars as to further enhance their knowledge and to keep updated with the new developments in the market and new regulations or legislations introduced by the relevant authorities.

RE-ELECTION OF DIRECTORS

Article 87.1 of the Company’s Articles of Association provides that one-third of the Directors, or if their numbers are not three (3) or a multiple of three (3), then the number nearest to but not exceeding one-third shall retire from office. The Company shall ensure that all Directors shall retire from office once at least in each three (3) years but shall be eligible for re-election.

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Statement On Corporate Governance

BOARD COMMITTEES

The Board had established the following committees and delegated specific tasks and responsibilities to them. These committees are to report back to the Board the outcomes and recommendations thereon for the Board to make final decision. The main committees that were set up are :

1. Nomination Committee

The Nomination Committee was set up on 8 May 2002 with the given tasks of monitoring and appointing any new Director when the need arises. It comprises of the following members :

Chua Ah Lak (Chairman) Independent Non-Executive Director Yeo Wee Thow @ Yeo Ngo Tee Independent Non-Executive Director

Ma Huak Huang Non-Executive Director

The Nomination Committee would be responsible, inter alia:

• to identify and recommend suitable candidates to fill seats on the Board when the need arises; • to review the appropriate combination of skills, knowledge and experience among the members of the Board so as to add effectiveness to its function • to ensure numbers of Directors on the Board truly reflect the size of investment by the shareholders • to evaluate the effectiveness of the function of various committees of the Board and also the Board itself

2. Remuneration Committee

The Remuneration Committee was established on 8 May 2002. The Committee, inter alia, reviews and recommends to the Board the appropriate remuneration payable to the Directors.

The committees comprised of the following members:

Chua Ah Lak (Chairman) Independent Non-Executive Director Yeo Wee Thow @ Yeo Ngo Tee Independent Non-Executive Director Ma Huak Huang Non-Executive Director

Kok Kam Moi Managing Director

Chua Ngeun Lok Executive Director

3. Audit Committee

The composition, terms of reference and other related report on Audit Committee are presented on page 10 to 11.

DIRECTORS’ REMUNERATION

The details of the Directors’ remuneration which include benefit-in-kind for the financial year 2010 are as follow:

Executive Directors Non-Executive Directors RM RMSalaries 540,000 -Fees 360,000 133,000Bonus 120,000 -Benefit-in Kind 37,200 -Total 1,057,200 133,000

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Statement On Corporate Governance

The Directors’ remuneration which include the benefit-in-kind for the financial year 2010 categorised into band of RM50,000 are as follow :

Range of Remuneration Executive Director Non-Executive DirectorRM

50,000 and below - 250,001 to 100,000 - 1100,001 to 150,000 - -150,001 to 200,000 - -200,001 to 250,000 - -250,001 to 300,000 - -300,001 to 350,000 2350,001 to 400,000 1400,001 to 450,000 - -450,001 to 500,000 - -

FINANCIAL REPORTING

The Group’s financial statements are prepared in accordance with the requirements of the applicable approved accounting standards in Malaysia and the provisions of the Companies Act, 1965. The Board is responsible to ensure that the financial statements of the Group present a balanced, accurate and understandable assessment of the Group’s financial position and prospect. The announcement of the quarterly and annual results was made to the public within the stipulated time frame based on the recommendation of the audit committee.

INTERNAL CONTROL

The Statement On Internal Control furnished on page 12 to 13 of the annual report provides an overview on the state of internal control within the Group.

RELATIONSHIP WITH AUDITORS

The role of the Audit Committee in relation to the external auditors is set out on page 10 and 11.

RELATIONSHIP WITH SHAREHOLDERS

A copy of the annual report is sent to all the shareholders and notice of General Meeting is published in major newspapers at least 21 days in advance of the actual date of meeting as to comply with the Listing Requirements. The annual report will be also made available upon request to those interested parties.

The Board members, the company secretary and the external auditors are present at the Annual General Meeting in order to provide an opportunity for the shareholders to seek clarification and to have better understanding on the Group’s activities.

OTHER DISCLOSURE REQUIREMENTS

Imposition of sanction/penalties

There were no sanctions/penalties imposed on the Group, Directors or Management by the relevant regulatory bodies during the financial year.

Non-audit fee

An amount of RM31,000 of non-audit fee was paid to the external auditors during the financial year.

Material contract

There were no material contracts on the Group or its subsidiaries entered into during the financial year which involve Directors’ and major shareholders’ interests.

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Statement On Corporate Governance

Profit guarantee

The Company is not subject to any requirement for profit guarantee for the whole of the financial year.

Share buy-back

The Company had on 25 June 2010 sought and obtained approval from its shareholders in respect of share buy-back of up to 10% of the issued and paid up share capital of the company.

During the financial year 2010, the company had bought back from the open market 450,700 units of its issued ordinary share of RM1.00 each listed on the Main Market. A monthly breakdown of the shares bought back during the financial year 2010 is given as below :

No of Consideration Minimum Maximum Average Month shares paid (RM)* price paid price paid price paid (RM) (RM) (RM)

January 10,000 15,157.00 1.50 1.57 1.52March 112,000 163,517.00 1.45 1.46 1.46April 89,400 130,618.00 1.46 1.47 1.46 July 10,000 17,350.00 1.73 1.74 1.74August 53,300 76,229.00 1.43 1.44 1.43December 176,000 233,650.00 1.28 1.40 1.33

*including transaction cost

None of these purchased shares were resold or cancelled by the Company as at 25 April 2011.

Option, Warrants or convertible Securities

No option, warrant or convertible securities were issued by the Group during the financial year ended 31 December 2010.

American Depository Receipt (ADR) or Global Depository Receipt (GDR) programme

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

Revaluation of landed properties

The Group revalues its investment properties every year. The Directors estimate the fair value of the Group’s investment properties without involvement of independent valuers for 4 years. An external, independent valuation firm, having appropriate recognised professional qualifications and recent experience in the location and category of property being valued, values the Group’s investment property portfolio on every fifth year.

Recurrent related party transactions of a revenue nature

There is no recurrent related party transaction of a revenue nature which require shareholders’ mandate during the financial year.

Directors’ responsibility statement in respect of the audited Financial Statement

The Company’s financial statements are prepared in accordance with the requirement of Financial Reporting Standards (FRSs), generally accepted accounting standards in Malaysia and the Companies Act, 1965. The Directors take responsibility in ensuring that the annual financial statement and the quarterly announcement of results of the Company are presented to convey a balanced, accurate and understandable assessment of the Group’s financial status and future prospects.

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5 Year Performance Highlights

0

2

6

4

8

10

2010 2009 2008 2007 2006

RM (SEN)

1010 10 10 10(proposed)

Gross Dividend PaidGross Dividend Paid

0.0

10.0

20.0

30.0

5.0

15.0

25.0

35.0

2010 2009 2008 2007 2006

RM (SEN)

23.87

18.022.91

19.23

26.8424.08

18.31

23.65

17.1020.9

Earnings per share (Gross)

Earnings per share (Net)

Gross & Gross & Net Earnings per shareNet Earnings per share

0.0

60.0

120.0

90.0

150.0

180.0

2010 2009 2008 2007 2006

RM (MILLION) 166.4141.3

129.9

116.0

149.9157.9

Shareholders’ FundShareholders’ Fund

0.0

5.0

10.0

15.0

20.0

2010 2009 2008 2007 2006

RM (MILLION) 18.7

14.1

18.2

15.4

20.819.1

14.4

18.6

14.1

16.2

Profit before tax

Profit after tax

Pro�tPro�t

TurnoverTurnover30.0

00.0

60.0

90.0

120.0

150.0

2010 2009 2008 2007 2006

115.9

RM (MILLION)

119.1

139.3138.3133.5129.3

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Directors’ report for the year ended 31 December 2010

The Directors have pleasure in submitting their report and the audited financial statements of the Group and of the Company for the financial year ended 31 December 2010.

Principal activities

The Company is principally engaged in investment holding and provision of management services, whilst the principal activities of the subsidiaries are as stated in Note 29 to the financial statements. There has been no significant change in the nature of these activities during the financial year.

Results Group Company RM’000 RM’000

Profit for the year attributable to: Owners of the Company 14,090 10,772 Minority interest - - 14,090 10,772Reserves and provisions

There were no material transfers to or from reserves and provisions during the financial year under review except as disclosed in the financial statements.

Dividends

Since the end of the previous financial year, the Company paid a first and final dividend of 10 sen per ordinary share less tax at 25% totalling RM4,892,000 (7.5 sen net per ordinary share) in respect of the year ended 31 December 2009 on 28 July 2010.

The Directors recommend a first and final dividend of 10 sen per ordinary share less tax at 25% totalling RM5,969,000 (7.5 sen net per ordinary share) for the financial year ended 31 December 2010.

Directors of the Company

Directors who served since the date of the last report are:

Chua Ah Lak Chua Ngeun Lok Kok Kam Moi Ma Huak Huang Chua Ngeun Seong Yeo Wee Thow @ Yeo Ngo Tee

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Directors’ interests

The interests and deemed interests in the shares of the Company and of its related corporations (other than wholly-owned subsidiaries) of those who were Directors at year end (including the interests of the spouses or children of the Directors who themselves are not Directors of the Company) as recorded in the Register of Directors’ Shareholdings are as follows:

Number of Ordinary Shares of RM1 each At Bonus Bought/ AtHolding company 1.1.2010 issue (Sold) 31.12.2010- UPA Holdings Sdn. Bhd. Kok Kam Moi - direct interest 426,670 - - 426,670 - deemed interest 171,199 - - 171,199 Chua Ngeun Lok - direct interest 391,290 - - 391,290 - deemed interest 399,666 - - 399,666 Ma Huak Huang - direct interest 171,199 - - 171,199 - deemed interest 611,352 - - 611,352 Chua Ngeun Seong - direct interest 399,666 - - 399,666 - deemed interest 391,290 - - 391,290 Number of Ordinary Shares of RM1 each At Bonus Bought/ AtThe Company 1.1.2010 issue (Sold) 31.12.2010 - UPA Corporation Bhd. Kok Kam Moi - direct interest 961,310 192,262 - 1,153,572 - deemed interest 34,049,241 6,809,848 - 40,859,089 Chua Ngeun Lok - direct interest 819,039 163,807 - 982,846 - deemed interest 35,060,121 7,012,024 - 42,072,145 Ma Huak Huang - direct interest 259,446 53,089 - 312,535 - deemed interest 35,294,096 7,057,878 (4,700) 42,347,274 Chua Ngeun Seong - direct interest 350,080 70,016 - 420,096 - deemed interest 35,329,080 7,065,818 - 42,394,898 Yeo Wee Thow @ - direct interest 820,750 164,150 - 984,900 Yeo Ngo Tee - deemed interest 896,000 179,200 - 1,075,200 Chua Ah Lak - direct interest 280,600 56,120 - 336,720 - deemed interest 93,000 18,600 - 111,600

Number of Ordinary Shares of RM1 each At Bonus Bought/ AtSubsidiary 1.1.2010 Issue (Sold) 31.12.2010- Sukiwa Corporation Sdn. Bhd.

Kok Kam Moi - deemed interest 4,453,000 - - 4,453,000 Chua Ngeun Lok - deemed interest 4,453,000 - - 4,453,000 Ma Huak Huang - deemed interest 4,453,000 - - 4,453,000 Chua Ngeun Seong - deemed interest 4,453,000 - - 4,453,000 By virtue of their interests in the shares of the Company, Kok Kam Moi, Chua Ngeun Lok, Ma Huak Huang and Chua Ngeun Seong are also deemed interested in the shares of the subsidiaries during the financial year to the extent that UPA Corporation Bhd. has an interest.

Directors’ report

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Directors’ benefits

Since the end of the previous financial year, no Director of the Company has received nor become entitled to receive any benefit (other than a benefit included in the aggregate amount of emoluments received or due and receivable by Directors as shown in the financial statements or the fixed salaries of full time employees of related companies) by reason of a contract made by the Company or a related corporation with the Director or with a firm of which the Director is a member, or with a company in which the Director has a substantial financial interest.

There were no arrangements during and at the end of the financial year which had the object of enabling Directors of the Company to acquire benefits by means of the acquisition of shares in or debentures of the Company or any other body corporate.

Issue of shares

During the financial year, the Company issued 13,045,240 new ordinary shares of RM1.00 each as bonus shares. There were no other changes in the authorised capital of the Company during the financial year.

The bonus issue of shares was approved by the shareholders at the Extraordinary General Meeting held on 25 June 2010 and completed on 11 August 2010. The bonus shares were issued on the basis of one (1) bonus share for every five (5) existing ordinary shares held via capitalisation of share premium of RM3,896,858 and retained earnings of RM9,148,382.

Share buy-back

On 25 June 2010, the shareholders of the Company renewed their approval for the Company to buy-back its own shares. During the financial year, the Company bought back from the open market, 450,700 of its issued ordinary shares of RM1.00 each (“UPA Shares”) listed on the Main Market of Bursa Malaysia at an average buy-back price of RM1.42 per ordinary share. The total consideration paid for the share buy-back of UPA Shares by the Company during the financial year, including transaction costs, was RM639,585 and was financed by internally generated funds. The UPA Shares bought back are held as treasury shares in accordance with Section 67A Sub-section 3(A)(b) of the Companies Act, 1965. None of the treasury shares held were resold or cancelled during the financial year.

As at 31 December 2010, the Company held 1,539,700 UPA Shares as treasury shares out of its total issued and paid-up share capital of 79,581,840 UPA Shares. Such treasury shares are held at a carrying amount of RM2,166,468. Further information is as disclosed in Note 13 to the financial statements.

Other statutory information

Before the statements of financial position and statements of comprehensive income of the Group and of the Company were made out, the Directors took reasonable steps to ascertain that:

i) all known bad debts have been written off and adequate provision made for doubtful debts, and

ii) any current assets which were unlikely to be realised in the ordinary course of business 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: i) that would render the amount written off for bad debts, or the amount of the provision for doubtful debts, in the Group and in the Company inadequate to any substantial extent, or

ii) that would render the value attributed to the current assets in the financial statements of the Group and of the Company misleading, or

iii) which have arisen which render adherence to the existing method of valuation of assets or liabilities of the Group and of the Company misleading or inappropriate, or iv) not otherwise dealt with in this report or the financial statements, that would render any amount stated in the financial statements of the Group and of the Company misleading.

Directors’ report

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At the date of this report, there does not exist:

i) any charge on the assets of the Group or of the Company that has arisen since the end of the financial year and which secures the liabilities of any other person, or

ii) any contingent liability in respect of the Group or of the Company that has arisen since the end of the financial year.

No contingent liability or other liability of any company in the Group has become enforceable, or is likely to become enforceable within the period of twelve months after the end of the financial year which, in the opinion of the Directors, will or may substantially affect the ability of the Group and of the Company to meet their obligations as and when they fall due.

In the opinion of the Directors, the results of the operations of the Group and of the Company for the financial year ended 31 December 2010 have not been substantially affected by any item, transaction or event of a material and unusual nature nor has any such item, transaction or event occurred in the interval between the end of that financial year and the date of this report.

Auditors

The auditors, Messrs KPMG, have indicated their willingness to accept re-appointment.

Signed on behalf of the Board of Directors in accordance with a resolution of the Directors:

…………………………………………………………Chua Ngeun Lok

…………………………………………………………Kok Kam Moi

Kuala Lumpur,Date: 28 April 2011

Directors’ report

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Statements of financial positionat 31 December 2010

Group Company Note 31.12.2010 31.12.2009 1.1.2009 31.12.2010 31.12.2009 RM’000 RM’000 RM’000 RM’000 RM’000 restated restated

Assets Property, plant and equipment 3 65,987 65,105 70,094 - - Investments in subsidiaries 4 - - - 62,040 48,540 Investments in associates 5 8,260 8,011 8,483 4,716 4,716 Investment properties 6 13,897 13,897 9,950 - - Deferred tax assets 7 571 571 1,371 - - Total non-current assets 88,715 87,584 89,898 66,756 53,256 Other investments 8 1,252 934 - 1,252 934 Inventories 9 41,955 41,751 36,770 - - Trade and other receivables 10 39,171 42,589 43,593 9,388 20,843 Current tax assets 1,276 1,712 1,593 130 143 Cash and cash equivalents 11 35,563 40,508 20,321 4,778 3,655 Asset classified as held for sale 12 - 719 - - 490

Total current assets 119,217 128,213 102,277 15,548 26,065

Total assets 207,932 215,797 192,175 82,304 79,321

Equity Share capital 79,582 66,537 66,537 79,582 66,537 Reserves (2,223) 2,328 2,933 (2,166) 2,370 Retained earnings 89,067 89,017 80,477 4,343 7,611

Total equity attributable to owners of the Company 166,426 157,882 149,947 81,759 76,518

Minority interest 263 263 1,599 - -

Total equity 166,689 158,145 151,546 81,759 76,518

Liabilities Borrowings 14 4,715 8,075 11,255 - - Deferred tax liabilities 7 7,595 7,543 8,027 - -

Total non-current liabilities 12,310 15,618 19,282 - -

Borrowings 14 16,456 27,845 10,271 - - Provision 168 168 168 - - Current tax liabilities 3,311 2,422 2,767 - - Trade and other payables 15 8,998 11,599 8,141 545 2,803

Total current liabilities 28,933 42,034 21,347 545 2,803

Total liabilities 41,243 57,652 40,629 545 2,803

Total equity and liabilities 207,932 215,797 192,175 82,304 79,321

The notes on pages 29 to 60 are an integral part of these financial statements.

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Statements of comprehensive incomefor the year ended 31 December 2010

Group Company Note 2010 2009 2010 2009 RM’000 RM’000 RM’000 RM’000

Revenue 16 129,314 119,075 11,855 508Cost of sales (105,022) (96,069) - -

Gross profit 24,292 23,006 11,855 508Other income 5,898 6,753 2,194 - Distribution costs (4,715) (3,472) - - Administrative expenses (3,788) (3,578) (411) (341)Other operating expenses (2,842) (3,781) - (629)

Results from operating activities 17 18,845 18,928 13,638 (462)Finance income 19 392 460 83 147Finance costs 20 (778) (1,016) - -

Operating profit/(loss) 18,459 18,372 13,721 (315)Share of profit of equity accounted associates, net of tax 225 247 - -

Profit/(Loss) before tax 18,684 18,619 13,721 (315)Tax expense 21 (4,594) (4,458) (2,949) (112)

Profit/(Loss) for the year 14,090 14,161 10,772 (427)

Foreign currency translation for foreign operations (15) (42) - -

Total comprehensive income/ (expense) for the year 14,075 14,119 10,772 (427)

Profit/(Loss) for the year attributable to:Owners of the Company 14,090 13,464 10,772 (427)Minority interest - 697 - -

14,090 14,161 10,772 (427)

Total comprehensive income/ (expense) for the year attributable to:Owners of the Company 14,075 13,422 10,772 (427)Minority interest - 697 - -

14,075 14,119 10,772 (427)

Basic earnings per ordinary share (sen) 22 18.00 17.10 (restated)

The notes on pages 29 to 60 are an integral part of these financial statements.

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Consolidated statement of changes in equity for the year ended 31 December 2010

Reserves Non-distributable Distributable Share Share Translation Treasury Retained Sub- Minority capital premium reserve shares profits Total interest Total Note RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

At 1 January 2009 66,537 3,897 - (964) 80,477 149,947 1,599 151,546

Total comprehensive income

for the year - - (42) - 13,464 13,422 697 14,119

Acquisition of treasury shares - - - (563) - (563) - (563)

Acquisition of minority interest 30 - - - - - - (2,215) (2,215)

Acquisition by minority interest - - - - - - 182 182

Dividends to owners of the Company

- 2008 final 23 - - - - (4,924) (4,924) - (4,924)

At 31 December 2009 / 66,537 3,897 (42) (1,527) 89,017 157,882 263 158,145

1 January 2010

Total comprehensive income

for the year - - (15) - 14,090 14,075 - 14,075

Acquisition of treasury shares - - - (639) - (639) - (639)

Bonus issue of shares 13,045 (3,897) - - (9,148) - - -

Dividends to owners of the Company

- 2009 final 23 - - - - (4,892) (4,892) - (4,892)

At 31 December 2010 79,582 - (57) (2,166) 89,067 166,426 263 166,689

Note 13.1 Note 13.2 Note 13.3

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Statement of changes in equityfor the year ended 31 December 2010

Non-distributable Distributable Share Share Treasury Retained Note capital premium shares earnings Total RM’000 RM’000 RM’000 RM’000 RM’000

At 1 January 2009 66,537 3,897 (964) 12,962 82,432

Total comprehensive expense

for the year - - - (427) (427)

Acquisition of treasury shares - - (563) - (563)

Dividend to owners of the

Company - 2008 final 23 - - - (4,924) (4,924)

At 31 December 2009/ 1 January 2010 66,537 3,897 (1,527) 7,611 76,518

Total comprehensive income

for the year - - - 10,772 10,772

Acquisition of treasury shares - - (639) - (639)

Bonus issue of shares 13,045 (3,897) - (9,148) -

Dividend to owners of the

Company - 2009 final 23 - - - (4,892) (4,892)

At 31 December 2010 79,582 - (2,166) 4,343 81,759

Note 13.1 Note 13.3 Note 13.4

The notes on pages 29 to 60 are an integral part of these financial statements.

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Statements of cash flowsfor the year ended 31 December 2010

Group Company Note 2010 2009 2010 2009 RM’000 RM’000 RM’000 RM’000 restated

Cash flows from operating activities Profit/(Loss) before tax 18,684 18,619 13,721 (315) Adjustments for: Depreciation 6,321 6,529 - - Dividend income (17) (13) (11,161) (13) Gain on disposal of associate (1,901) - (2,130) - Gain on disposal of property, plant and equipment (759) (990) - - Gain on fair value of investment properties - (3,947) - - Impairment loss on investment in associate - - - 559 Interest expense 778 1,016 - - Interest income (392) (460) (83) (147) Share of profit of associates (225) (247) - - Unrealised foreign exchange (gains)/losses (216) 51 - - Write-down of inventories 1,201 1,461 - - Write-down of other investments - 71 - 71 Write-off of property, plant and equipment 20 - - -

Operating profit before working capital changes 23,494 22,090 347 155 Changes in working capital: Inventories (1,405) (6,442) - - Trade and other receivables 3,619 997 11,455 3,449 Trade and other payables (2,601) 3,458 (2,258) 1,761

Cash generated from operations 23,107 20,103 9,544 5,365 Interest received 392 460 83 147 Tax paid (3,217) (4,606) (2,936) (164)

Net cash generated from operating activities 20,282 15,957 6,691 5,348

Cash flows from investing activities Acquisition of minority interest - (2,301) - - Acquisition by minority interest - 182 - - Acquisition of other investments (318) (1,005) (318) (1,005) Dividends received from subsidiary - - 11,144 - Dividends received from other investments 17 13 17 13 Increase in investments in subsidiaries - - (13,500) (2,301) Increase in investment in associate (24) - - - Proceeds from disposal of associate 2,620 - 2,620 - Proceeds from disposal of property, plant and equipment 759 3,865 - - Purchase/Addition of property, plant and equipment (ii) (7,223) (4,415) - -

Net cash used in investing activities (4,169) (3,661) (37) (3,293)

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Statements of cash flowsfor the year ended 31 December 2010 (continued)

Group Company Note 2010 2009 2010 2009 RM’000 RM’000 RM’000 RM’000 restated

Cash flows from financing activities Acquisition of treasury shares (639) (563) (639) (563) Dividends paid to owners (4,892) (4,924) (4,892) (4,924) Interest paid (778) (1,016) - - Payment of finance lease liabilities (111) (154) - - Repayment of term loans (3,195) (2,769) - - Repayment of other borrowings (11,443) - - - Proceeds from other borrowings - 17,317 - -

Net cash (used in)/generated from financing activities (21,058) 7,891 (5,531) (5,487)

Net (decrease)/increase in cash and cash equivalents (4,945) 20,187 1,123 (3,432)

Cash and cash equivalents at 1 January 40,508 20,321 3,655 7,087

Cash and cash equivalents at 31 December (i) 35,563 40,508 4,778 3,655

(i) Cash and cash equivalents

Cash and cash equivalents included in the cash flow statements comprise the following balance sheet amounts:

Group Company 2010 2009 2010 2009 RM’000 RM’000 RM’000 RM’000

Cash and bank balances 16,563 23,508 4,778 3,655 Deposits with licensed banks 19,000 17,000 - -

35,563 40,508 4,778 3,655

(ii) Purchase/Addition of property, plant and equipment

In 2009, included in the purchase of property, plant and equipment during the financial year was an amount of RM117,000 being the transfer and capitalisation of an inventory to plant and machinery.

The notes on pages 29 to 60 are an integral part of these financial statements.

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Notes to the financial statements

UPA Corporation Bhd. is a public limited liability company, incorporated and domiciled in Malaysia and is listed on the Main Market of Bursa Malaysia Securities Berhad. The addresses of its registered office and principal place of business are as follows:

Registered office Lot 10, Highway CentreJalan 51/205, Petaling Jaya46050 Selangor Darul Ehsan

Principal place of businessLot 8228, 6.5 MilesJalan Kuchai Lama58200 Kuala Lumpur

The consolidated financial statements of the Group as at and for the year ended 31 December 2010 comprise the Company and its subsidiaries (together referred to as the Group and individually referred to as “Group entities”) and the Group’s interest in associates. The financial statements of the Company as at and for the year ended 31 December 2010 do not include other entities.

The Company is principally engaged in investment holding and provision of management services, whilst the principal activities of the subsidiaries are as stated in Note 29 to the financial statements.

The ultimate holding company during the financial year is UPA Holdings Sdn. Bhd., a company incorporated in Malaysia.

These financial statements were authorised for issue by the Board of Directors on 28 April 2011.

1. Basis of preparation

(a) Statement of compliance

These financial statements have been prepared in accordance with Financial Reporting Standards (FRSs), generally accepted accounting principles and the Companies Act, 1965 in Malaysia.

The Group and the Company have not applied the following accounting standards, amendments and interpretations that have been issued by the Malaysian Accounting Standards Board (MASB) but are not yet effective:

FRSs, Interpretations and amendments effective for annual periods beginning on or after 1 March 2010 • Amendments to FRS 132, Financial Instruments: Presentation – Classification of Rights Issues

FRSs, Interpretations and amendments effective for annual periods beginning on or after 1 July 2010 • FRS 1, First-time Adoption of Financial Reporting Standards (revised) • FRS 3, Business Combinations (revised) • FRS 127, Consolidated and Separate Financial Statements (revised) • Amendments to FRS 2, Share-based Payment • Amendments to FRS 5, Non-current Assets Held for Sale and Discontinued Operations • Amendments to FRS 138, Intangible Assets • IC Interpretation 12, Service Concession Agreements • IC Interpretation 16, Hedges of a Net Investment in a Foreign Operation • IC Interpretation 17, Distributions of Non-cash Assets to Owners • Amendments to IC Interpretation 9, Reassessment of Embedded Derivatives

FRSs, Interpretations and amendments effective for annual periods beginning on or after 1 January 2011 • Amendments to FRS 1, First-time Adoption of Financial Reporting Standards – Limited Exemption from Comparative FRS 7 Disclosures for First-time Adopters – Additional Exemptions for First-time Adopters • Amendments to FRS 2, Group Cash-settled Share Based Payment Transactions • Amendments to FRS 7, Financial Instruments: Disclosures – Improving Disclosures about Financial Instruments • IC Interpretation 4, Determining whether an Arrangement contains a Lease • IC Interpretation 18, Transfers of Assets from Customers • Improvements to FRSs (2010)

FRSs, Interpretations and amendments effective for annual periods beginning on or after 1 July 2011 • IC Interpretation 19, Extinguishing Financial Liabilities with Equity Instruments • Amendments to IC Interpretation 14, Prepayments of a Minimum Funding Requirement

FRSs, Interpretations and amendments effective for annual periods beginning on or after 1 January 2012 • FRS 124, Related Party Disclosures (revised) • IC Interpretation 15, Agreements for the Construction of Real Estate

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The Group and the Company plan to apply the abovementioned standards, amendments and interpretations from the annual period beginning 1 January 2011 for those standards, amendments or interpretations that will be effective for annual periods beginning on or after 1 March 2010, 1 July 2010 and 1 January 2011, except for FRS 1 (revised), Amendments to FRS 2, Amendments to FRS 138, IC Interpretation 12, IC Interpretation 16, IC Interpretation 17, IC Interpretation 18 and Amendments to FRS 1 (revised), which are not applicable to the Group and the Company.

The initial application of a standard, an amendment or an interpretation, which will be applied prospectively or which requires extended disclosures, is not expected to have any financial impacts to the current and prior periods financial statements upon their first adoption.

The initial applications of the other standards, amendments and interpretations are not expected to have any material impact on the financial statements of the Group and the Company.

Following the announcement by the MASB on 1 August 2008, the Group and the Company financial statements will be prepared in accordance with the International Financial Reporting Standards (IFRS) framework for annual periods beginning on 1 January 2012. The change of the financial reporting framework is not expected to have any significant impact on the financial position and performance of the Group and the Company.

(b) Basis of measurement

These financial statements have been prepared on the historical cost basis other than as disclosed in Note 2 to the financial statements.

(c) Functional and presentation currency

These financial statements are presented in Ringgit Malaysia (RM), which is also the Company’s functional currency. All financial information presented in RM has been rounded to the nearest thousand, unless otherwise stated.

(d) Use of estimates and judgements

The preparation of financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.

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 and in any future periods affected.

There are no significant areas of estimation uncertainty and critical judgements in applying accounting policies that have significant effect on the amounts recognised in the financial statements other than those disclosed in Note 6 to the financial statements on valuation of investment properties.

2. Significant accounting policies The accounting policies set out below have been applied consistently to the periods presented in these financial statements, and have been applied consistently by the Group and the Company other than those disclosed in the following notes: • Note 2 (c) – Financial instruments • Note 2 (e) – Leased assets • Note 2 (f ) – Investment properties • Note 2 (q) – Borrowing costs • Note 2 (t) – Operating segments

(a) Basis of consolidation (i) Subsidiaries

Subsidiary is an entity, including unincorporated entity controlled by the Group. Control exists when the Group has the ability to exercise its power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, potential voting rights that presently are exercisable are taken into account. Subsidiaries are consolidated using the purchase method of accounting.

Under the purchase method of accounting, the financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases.

Investments in subsidiaries are stated in the Company’s statement of financial position at cost less any impairment losses.

Notes to the financial statements

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(ii) Associates

Associates are entities in which the Group has significant influence, but not control, over the financial and operating policies.

Investments in associates are accounted for in the consolidated financial statements using the equity method less any impairment losses. The consolidated financial statements include the Group’s share of the profit or loss and other comprehensive income of the equity accounted associates, after adjustments, if any, to align the accounting policies with those of the Group, from the date that significant influence commences until the date that significant influence ceases.

When the Group’s share of losses exceeds its interest in an equity accounted associate, the carrying amount of that interest (including any long-term investments) is reduced to nil, and the recognition of further losses is discontinued except to the extent that the Group has an obligation or has made payments on behalf of the investee.

Investments in associates are stated in the Company’s statement of financial position at cost less any impairment losses. (iii) Changes in Group composition

The Group treats all other changes in group composition as equity transactions between the Group and its minority interest holders. Any difference between the Group’s share of net assets before and after the change, and any consideration received or paid, is adjusted to or against Group reserves. (iv) Minority interests

Minority interests at the end of the reporting date, being the portion of the net identifiable assets of subsidiaries attributable to equity interests that are not owned by the Company, whether directly or indirectly through subsidiaries, are presented in the consolidated statement of financial position and statement of changes in equity within equity, separately from equity attributable to the owners of the Company. Minority interests in the results of the Group are presented on the face of the consolidated statement of comprehensive income as an allocation of the comprehensive income for the year between minority interests and the owners of the Company.

Where losses applicable to the minority exceed the minority’s interest in the equity of a subsidiary, the excess, and any further losses applicable to the minority, are charged against the Group’s interest except to the extent that the minority has a binding obligation to, and is able to, make additional investment to cover the losses. If the subsidiary subsequently reports profits, the Group’s interest is allocated with all such profits until the minority’s share of losses previously absorbed by the Group has been recovered.

(v) Transactions eliminated on consolidation

Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group transactions, are eliminated in preparing the consolidated financial statements.

Unrealised gains arising from transactions with equity accounted investees are eliminated against the investment to the extent of the Group’s interest in the investees. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment.

(b) Foreign currency

Transactions in foreign currencies are translated to the respective functional currencies of Group entities at exchange rates at the dates of the transactions.

Monetary assets and liabilities denominated in foreign currencies at the end of the reporting period are retranslated to the functional currency at the exchange rate at that date. Non-monetary assets and liabilities denominated in foreign currencies are not retranslated at the end of the reporting date except for those that are measured at fair value are retranslated to the functional currency at the exchange rate at the date that the fair value was determined.

Foreign currency differences arising on retranslation are recognised in profit or loss.

(c) Financial instruments

Arising from the adoption of FRS 139, Financial Instruments: Recognition and Measurement, with effect from 1 January 2010, financial instruments are categorised and measured using accounting policies as mentioned below. Before 1 January 2010, different accounting policies were applied. Significant changes to the accounting policies are discussed in Note 31 to the financial statements.

Notes to the financial statements

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(i) Initial recognition and measurement

A financial asset or a financial liability is recognised in the statement of financial position when, and only when, the Group or the Company becomes a party to the contractual provisions of the instrument.

A financial instrument is recognised initially, at its fair value plus, in the case of a financial instrument not categorised as fair value through profit or loss, transaction costs that are directly attributable to the acquisition or issue of the financial instrument.

An embedded derivative is recognised separately from the host contract and accounted for as a derivative if, and only if, it is not closely related to the economic characteristics and risks of the host contract and the host contract is not categorised as fair value through profit or loss. The host contract, in the event an embedded derivative is recognised separately, is accounted for in accordance with policy applicable to the nature of the host contract.

(ii) Financial instrument categories and subsequent measurement

The Group and the Company categorise financial instruments as follows:

Financial assets

(a) Financial assets at fair value through profit or loss

Fair value through profit or loss category comprises financial assets that are held for trading, including derivatives (except for a derivative that is a financial guarantee contract or a designated and effective hedging instrument) or financial assets that are specifically designated into this category upon initial recognition.

Derivatives that are linked to and must be settled by delivery of unquoted equity instruments whose fair values cannot be reliably measured are measured at cost.

Other financial assets categorised as fair value through profit or loss are subsequently measured at their fair values with the gain or loss recognised in profit or loss.

(b) Loans and receivables

Loans and receivables category comprises debt instruments that are not quoted in an active market.

Financial assets categorised as loans and receivables are subsequently measured at amortised cost using the effective interest method.

All financial assets, except for those measured at fair value through profit or loss, are subject to review for impairment (see note 2(k)(i)).

Financial liabilities

All financial liabilities are subsequently measured at amortised cost other than those categorised as fair value through profit or loss.

Fair value through profit or loss category comprises financial liabilities that are held for trading, derivatives (except for a derivative that is a financial guarantee contract or a designated and effective hedging instrument) or financial liabilities that are specifically designated into this category upon initial recognition.

Derivatives that are linked to and must be settled by delivery of unquoted equity instruments whose fair values cannot be reliably measured are measured at cost.

Other financial liabilities categorised as fair value through profit or loss are subsequently measured at their fair values with the gain or loss recognised in profit or loss.

(iii) Financial guarantee contracts

A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due in accordance with the original or modified terms of a debt instrument.

Financial guarantee contracts are classified as deferred income and are amortised to profit or loss using a straight-line method over the contractual period or, when there is no specified contractual period, recognised in profit or loss upon discharge of the guarantee. When settlement of a financial guarantee contract becomes probable, an estimate of the obligation is made. If the carrying value of the financial guarantee contract is lower than the obligation, the carrying value is adjusted to the obligation amount and accounted for as a provision.

Notes to the financial statements

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Notes to the financial statements

(iv) Regular way purchase or sale of financial assets

A regular way purchase or sale is a purchase or sale of a financial asset under a contract whose terms require delivery of the asset within the time frame established generally by regulation or convention in the marketplace concerned. A regular way purchase or sale of financial assets is recognised and derecognised, as applicable, using trade date accounting. Trade date accounting refers to: (a) the recognition of an asset to be received and the liability to pay for it on the trade date, and (b) derecognition of an asset that is sold, recognition of any gain or loss on disposal and the recognition of a receivable from the buyer for payment on the trade date.

(v) Derecognition

A financial asset or part of it is derecognised when, and only when the contractual rights to the cash flows from the financial asset expire or the financial asset is transferred to another party without retaining control or substantially all risks and rewards of the asset. On derecognition of a financial asset, the difference between the carrying amount and the sum of the consideration received (including any new asset obtained less any new liability assumed) and any cumulative gain or loss that had been recognised in equity is recognised in profit or loss. A financial liability or a part of it is derecognised when, and only when, the obligation specified in the contract is discharged or cancelled or expires. On derecognition of a financial liability, the difference between the carrying amount of the financial liability extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in profit or loss.

(d) Property, plant and equipment

(i) Recognition and measurement

Items of property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses, if any. Cost includes expenditures that are directly attributable to the acquisition of the asset and any other costs directly attributable to bringing the asset to the working condition for its intended use, and the costs of dismantling and removing the items and restoring the site on which they are located. The cost of self-constructed assets also includes the cost of materials and direct labour. For qualifying assets, borrowing costs are capitalised in accordance with the accounting policy on borrowing costs. When significant parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment. Gains and losses on disposal of an item of property, plant and equipment are determined by comparing the proceeds from disposal with the carrying amount of property, plant and equipment and are recognised net within “other income” or “other operating expenses” respectively in profit or loss.

(ii) Subsequent costs

The cost of replacing part of an item of property, plant and equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Group or the Company, and its cost can be measured reliably. The carrying amount of the replaced part is derecognised to profit or loss. The costs of the day-to-day servicing of property, plant and equipment are recognised in profit or loss as incurred.

(iii) Depreciation

Depreciation is calculated over the depreciable amount, which is the cost of an asset, or other amount substituted for cost, less its residual value. Depreciation is recognised in profit or loss on a straight-line basis over the estimated useful lives of each part of an item of property, plant and equipment. Leased assets are depreciated over the shorter of the lease term and their useful lives unless it is reasonably certain that the Group will obtain ownership by the end of the lease term. Freehold land is not depreciated. Property, plant and equipment under construction are not depreciated until the assets are ready for their intended use. The estimated useful lives for the current and comparative periods are as follows: • Leasehold land 60 - 97 years • Office buildings 50 years • Apartment 50 years • Factory buildings 50 years • Motor vehicles 5 years • Plant and machinery 10 years • Renovation, furniture and fittings 20 years • Office and factory equipment 10 years Depreciation methods, useful lives and residual values are reviewed, and adjusted as appropriate at the end of the reporting period.

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(e) Leased assets (i) Finance lease

Leases in terms of which the Group or the Company assume substantially all the risks and rewards of ownership are classified as finance leases. On initial recognition, the leased asset is measured at an amount equal to the lower of its fair value and the present value of the minimum lease payments Subsequent to initial recognition, the asset is accounted for in accordance with the accounting policy applicable to that asset.

Minimum lease payments made under finance leases are apportioned between the finance expense and the reduction of the outstanding liability. The finance expense is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability. Contingent lease payments are accounted for by revising the minimum lease payments over the remaining term of the lease when the lease adjustment is confirmed.

(ii) Operating lease

Leases, where the Group and the Company does not assume substantially all the risks and rewards of the ownership are classified as operating leases, and the leased assets are not recognised in the statement of financial position of the Group or the Company.

In the previous years, a leasehold land that normally had an indefinite economic life and title was not expected to pass to the lessee by the end of the lease term was treated as an operating lease. The payment made on entering into or acquiring a leasehold land that was accounted for as an operating lease represents prepaid lease payments, except for leasehold land classified as investment property.

The Group has adopted the amendment made to FRS 117, Leases in 2010 in relation to the classification of lease of land. Leasehold land which in substance is a finance lease has been reclassified and measured as such retrospectively.

Payments made under operating leases are recognised in profit or loss on a straight-line basis over the term of the lease unless another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed. Lease incentives received are recognised in profit or loss as an integral part of the total lease expense, over the term of the lease.

(f) Investment properties

(i) Investment properties carried at fair value

Investment properties are properties which are owned or held under a leasehold interest to earn rental income or for capital appreciation or for both. These include land held for a currently undetermined future use.

Investment properties are measured initially at cost and subsequently at fair value with any change therein recognised in profit or loss in the period in which they arise.

An investment property is derecognised on its disposal, or when it is permanently withdrawn from use and no future economic benefits are expected from its disposal. The difference between the net disposal proceeds and the carrying amount is recognised in profit or loss in the period in which the item is derecognised.

Following the amendment made to FRS 140, Investment Property, with effect from 1 January 2010, investment property under construction is classified as investment property. Where the fair value of the investment property under construction is not reliably determinable, the investment property under construction is measured at cost until either its fair value becomes reliably determinable or construction is complete, whichever is earlier.

(ii) Reclassification to/from investment property

When an item of property, plant and equipment is transferred to investment property following a change in its use, any difference arising at the date of transfer between the carrying amount of the item immediately prior to transfer and its fair value is recognised in other comprehensive income and accumulated in equity as revaluation reserve. However, if a fair value gain reverses a previous impairment loss, the gain is recognised in profit or loss. Upon disposal of an investment property, any surplus previously recorded in equity is transferred to retained earnings; the transfer is not made through profit or loss.

When the use of a property changes such that it is reclassified as property, plant and equipment or inventories, its fair value at the date of reclassification becomes its deemed cost for subsequent accounting.

Notes to the financial statements

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Notes to the financial statements

(iii) Determination of fair value

The Directors estimate the fair values of the Group’s investment properties without involvement of independent valuers for four years. An external, independent valuation firm, having appropriate recognised professional qualifications and recent experience in the location and category of property being valued, values the Group’s investment property portfolio on every fifth year.

The fair values are based on market values, being the estimated amount for which a property could be exchanged on the date of the valuation between a willing buyer and a willing seller in an arm’s length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion.

In the absence of current prices in an active market, the valuations are prepared by considering the aggregate of the estimated cash flows expected to be received from renting out the property. A yield that reflects the specific risks inherent in the net cash flows is then applied to the net annual cash flows to arrive at the property valuation.

(g) Inventories

Inventories comprise raw materials, work-in-progress, manufactured inventories, printing and other machines held for trading which are measured at the lower of cost and net realisable value.

The cost of raw materials, work-in-progress and manufactured inventories is based on the first-in first-out principle and includes expenditure incurred in acquiring the inventories and bringing them to their existing location and condition. In the case of work-in-progress and manufactured inventories, cost includes an appropriate share of production overheads based on normal operating capacity. In the case of printing and other machines held for trading, cost consists of the actual value paid for each individual inventory and is determined on a specific identification basis.

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

(h) Receivables

Prior to 1 January 2010, receivables were initially recognised at their costs and subsequently measured at cost less allowance for doubtful debts.

Following the adoption of FRS 139, trade and other receivables are categorised and measured as loans and receivables in accordance with note 2(c).

(i) Non-current assets held for sale

Non-current assets (or disposal groups comprising assets and liabilities) that are expected to be recovered primarily through sale rather than through continuing use are classified as held for sale.

Immediately before classification as held for sale, the assets (or components of a disposal group) are remeasured in accordance with the Group’s accounting policies. Thereafter, generally the assets (or disposal group) are measured at the lower of their carrying amount and fair value less cost of sell.

Any impairment loss on a disposal group is first allocated to goodwill, and then to the remaining assets and liabilities on pro rata basis, except that no loss is allocated to inventories, financial assets, deferred tax assets and investment property, which continue to be measured in accordance with the Group’s accounting policies. Impairment losses on initial classification as held for sale and subsequent gains or losses on remeasurement are recognised in profit or loss. Gains are not recognised in excess of any cumulative impairment loss.

(j) Cash and cash equivalents Cash and cash equivalents consist of cash in hand, balances and deposits with banks and highly liquid investments which have an insignificant risk of changes in value. For the purpose of the statement of cash flows, cash and cash equivalents are presented net of bank overdrafts and pledged deposits.

Cash and cash equivalents (other than bank overdrafts) are categorised and measured as loans and receivables in accordance with note 2(c).

(k) Impairment

(i) Financial assets

All financial assets (except for financial assets categorised as fair value through profit or loss, investment in subsidiaries and investment in associates) are assessed at each reporting date whether there is any objective evidence of impairment as a result of one or more events having an impact on the estimated future cash flows of the asset. Losses expected as a result of future events, no matter how likely, are not recognised.

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An impairment loss in respect of loans and receivables is recognised in profit or loss and is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the asset’s original effective interest rate. The carrying amount of the asset is reduced through the use of an allowance account.

If, in a subsequent period, the fair value of a debt instrument increases and the increase can be objectively related to an event occurring after the impairment loss was recognised in profit or loss, the impairment loss is reversed, to the extent that the asset’s carrying amount does not exceed what the carrying amount would have been had the impairment not been recognised at the date the impairment is reversed. The amount of the reversal is recognised in profit or loss.

(ii) Other assets

The carrying amounts of other assets (except for inventories, assets arising from construction contract, deferred tax asset, assets arising from employee benefits, investment property that is measured at fair value and non-current assets (or disposal groups) classified as held for sale) are reviewed at the end of each reporting period to determine whether there is any indication of impairment.

If any such indication exists, then the asset’s recoverable amount is estimated. For the purpose of impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets (the “cash-generating unit”).

The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell. 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.

An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount.

Impairment losses are recognised in the profit or loss. Impairment losses recognised in prior periods are assessed at the end of each reporting period for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount since the last impairment loss was recognised. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised. Reversal of impairment losses is credited to profit or loss in the year in which the reversal is recognised.

(l) Equity instruments

Instruments classified as equity are measured at cost on initial recognition and are not re-measured subsequently.

Repurchase of share capital

When share capital recognised as equity is repurchased, the amount of the consideration paid, including directly attributable costs, is recognised as a deduction from equity and is not re-valued for subsequent changes in the fair value or market price of shares. Repurchased shares that are not subsequently cancelled are classified as treasury shares and are presented as a deduction from total equity.

Where treasury shares are distributed as share dividends, the cost of the treasury shares is applied in the reduction of the share premium account or distributable reserves, or both.

Where treasury shares are reissued by re-sale in the open market, the difference between the sales consideration net of directly attributable costs and the carrying amount of the treasury shares is recognised in equity.

(m) Employee benefits

(i) Short-term employee benefits

Short-term employee benefit obligations in respect of salaries, annual bonuses, paid annual leave and sick leave are measured on an undiscounted basis and are expensed as the related service is provided.

A liability is recognised for the amount expected to be paid under short-term cash bonus or profit-sharing plans if the Group has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.

(ii) State plans

The Group’s contribution to the statutory pension funds are charged profit or loss in the year to which they relate. Once the contributions have been paid, the Group has no further payment obligations.

Notes to the financial statements

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(n) Provisions

A provision is recognised if, as a result of a past event, the Group has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The unwinding of the discount is recognised as finance cost.

Warranties

A provision for warranties is recognised when the underlying products or services are sold. The provision is based on historical warranty data and a weighting of all possible outcomes against their associated probabilities. (o) Contingent liabilities

Where it is not probable that an outflow of economic benefits will be required, or the amount cannot be estimated reliably, the obligation is disclosed as a contingent liability, unless the probability of outflow of economic benefits is remote. Possible obligations, whose existence will only be confirmed by the occurrence or non-occurrence of one or more future events are also disclosed as contingent liabilities unless the probability of outflow of economic benefits is remote. (p) Revenue and other income

(i) Goods sold

Revenue from the sale of goods is measured at fair value of the consideration received or receivable, net of returns and allowances, trade discounts and volume rebates. Revenue is recognised when the significant risks and rewards of ownership have been transferred to the buyer, recovery of the consideration is probable, the associated costs and possible return of goods can be estimated reliably, and there is no continuing management involvement with the goods.

(ii) Services

Revenue from services rendered is recognised in profit or loss in proportion to the stage of completion of the transaction at the end of the reporting period. The stage of completion is assessed by reference to services performed to date as a percentage of total services to be performed.

(iii) Commission

When the Group acts in the capacity of an agent rather than as the principal in a transaction, the revenue recognised is the net amount of commission made by the Group.

(iv) Rental income

Rental income from investment property is recognised in profit or loss on a straight-line basis over the term of the lease. Lease incentives granted are recognised as an integral part of the total rental income, over the term of the lease.

(v) Dividend income

Dividend income is recognised in profit or loss on the date that the Group’s or the Company’s right to receive payment is established, which in the case of quoted securities is the ex-dividend date.

(vi) Interest income

Interest income is recognised as it accrues using the effective interest method in profit or loss except for interest income arising from temporary investment of borrowings taken specifically for the purpose of obtaining a qualifying asset which is accounted for in accordance with the accounting policy on borrowing costs.

(q) Borrowing costs

Borrowing costs that are not directly attributable to the acquisition, construction or production of a qualifying asset are recognised in profit or loss using the effective interest method.

Before 1 January 2010, all borrowing costs were recognised in profit or loss using the effective interest method in the period in which they are incurred.

Following the adoption of revised FRS 123, 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 capitalised as part of the cost of those assets.

Notes to the financial statements

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The capitalisation of borrowing costs as part of the cost of a qualifying asset commences when expenditure for the asset is being incurred, borrowing costs are being incurred and activities that are necessary to prepare the asset for its intended use or sale are in progress. Capitalisation of borrowing costs is suspended or ceases when substantially all the activities necessary to prepare the qualifying asset for its intended use or sale are interrupted or completed.

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.

(r) Income tax

Income tax expense comprises current and deferred tax. Income tax expense is recognised in profit or loss except to the extent that it relates to items recognised directly in equity or other comprehensive income.

Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the end of the reporting period, and any adjustment to tax payable in respect of previous years.

Deferred tax is recognised using the liability method, providing for temporary differences between the carrying amounts of assets and liabilities in the statement of financial position and their tax bases. Deferred tax is not recognised for the following temporary differences: the initial recognition of goodwill, and the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss. Deferred tax is measured at the tax rates that are expected to apply to the temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the end of the reporting period.

A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which the temporary difference can be utilised. Deferred tax assets are reviewed at the end of each reporting period and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.

A tax incentive that is not a tax base of an asset is recognised as a reduction of tax expense in profit or loss as and when it is granted and claimed. Any unutilised portion of the tax incentive is recognised as a deferred tax asset to the extent that it is probable that future taxable profits will be available against which the unutilised tax incentive can be utilised.

(s) Earnings per share

The Group presents basic and diluted earnings per ordinary share (EPS) data for its ordinary shares.

Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the period.

Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding for the effects of all dilutive potential ordinary shares.

(t) Operating segments

In the previous years, a segment was a distinguishable component of the Group that was engaged either in providing products or services (business segment), or in providing products or services within a particular economic environment (geographical segment) which was subject to risks and rewards that were different from those of other segments.

Following the adoption of FRS 8, Operating Segments, 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. An operating segment’s operating results are reviewed regularly by the chief operating decision maker in making decisions about resources to be allocated to the segment and assess its performance, and for which discrete financial information is available.

Notes to the financial statements

UPA

CO

RPO

RATI

ON

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39

Notes to the financial statements3.

Pro

pert

y, p

lant

and

equ

ipm

ent

Re

nova

tion,

Plan

t fu

rnitu

re

Off

ice

and

G

roup

Le

aseh

old

Off

ice

Fa

ctor

y M

otor

an

d an

d fa

ctor

y

land

bu

ildin

gs

Apa

rtm

ent

build

ings

ve

hicl

es

mac

hine

ry

fitt

ings

e

quip

men

t To

tal

RM

’000

RM

’000

RM

’000

RM

’000

RM

’000

RM

’000

RM

’000

R

M’0

00

RM’0

00

Cost

At 1

Janu

ary

2009

-

prev

ious

ly s

tate

d

-

6,39

4 85

18

,040

2,

949

56,7

96

1,17

5 3,

827

89,2

66

-

effec

t of a

dopt

ing

FRS1

17

amen

dmen

ts

25,8

01

-

-

-

-

-

-

-

25,8

01

At 1

Janu

ary

2009

, res

tate

d 25

,801

6,

394

85

18,0

40

2,94

9 56

,796

1,

175

3,82

7 11

5,06

7

Add

ition

s -

-

-

15

7 -

3,

918

173

167

4,41

5

Dis

posa

l (2

,894

) -

-

-

-

(2

15)

-

-

(3,1

09)

At 3

1 D

ecem

ber 2

009,

rest

ated

/

1

Janu

ary

2010

22

,907

6,

394

85

18,1

97

2,94

9 60

,499

1,

348

3,99

4 11

6,37

3

Add

ition

s -

41

5 -

29

2 15

2 5,

801

260

303

7,22

3

Dis

posa

l -

-

-

-

(9

5)

(2,4

50)

-

(5)

(2,5

50)

Writ

e off

-

-

-

-

-

-

-

(9

1)

(91)

Tran

sfer

-

-

-

-

-

-

12

(1

2)

-

At 3

1 D

ecem

ber 2

010

22,9

07

6,80

9 85

18

,489

3,

006

63,8

50

1,62

0 4,

189

120,

955

UPA

CO

RPO

RATI

ON

BH

D

40

Notes to the financial statements3.

Pr

oper

ty, p

lant

and

equ

ipm

ent (

cont

inue

d)

Re

nova

tion,

Pl

ant

furn

iture

O

ffic

e an

d G

roup

Le

aseh

old

Off

ice

Fa

ctor

y M

otor

an

d an

d fa

ctor

y

land

bu

ildin

gs

Apa

rtm

ent

build

ings

ve

hicl

es

mac

hine

ry

fitt

ings

e

quip

men

t To

tal

RM

’000

RM

’000

RM

’000

RM

’000

RM

’000

RM

’000

RM

’000

RM

’000

RM

’000

Dep

reci

atio

n

At 1

Janu

ary

2009

-

prev

ious

ly s

tate

d

-

583

25

4,29

3 2,

128

32,9

52

593

2,37

8 42

,952

-

effec

t of a

dopt

ing

FRS1

17

am

endm

ents

2,

021

-

-

-

-

-

-

-

2,02

1 A

t 1 Ja

nuar

y 20

09, r

esta

ted

2,02

1 58

3 25

4,

293

2,12

8 32

,952

59

3 2,

378

44,9

73D

epre

ciat

ion

for t

he y

ear

381

109

2 42

5 33

4 4,

878

71

329

6,52

9D

ispo

sal

(105

) -

-

-

-

(1

29)

-

-

(234

)

At 3

1 D

ecem

ber 2

009,

rest

ated

/

1 Ja

nuar

y 20

10

2,29

7 69

2 27

4,

718

2,46

2 37

,701

66

4 2,

707

51,2

68D

epre

ciat

ion

for t

he y

ear

345

142

2 47

1 28

5 4,

653

85

338

6,32

1D

ispo

sal

-

-

-

-

(95)

(2

,450

) -

(5

) (2

,550

)W

rite

off

-

-

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-

-

-

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(71)

(7

1)Tr

ansf

er

-

-

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-

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-

12

(12)

-

At 3

1 D

ecem

ber 2

010

2,64

2 83

4 29

5,

189

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2 39

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76

1 2,

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68

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ying

am

ount

s

At 1

Janu

ary

2009

, res

tate

d

23,7

80

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1 60

13

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82

1 23

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58

2 1,

449

70,0

94

At 3

1 D

ecem

ber 2

009,

rest

ated

/ 1

Janu

ary

2010

20

,610

5,

702

58

13,4

79

487

22,7

98

684

1,28

7 65

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At 3

1 D

ecem

ber 2

010

20,2

65

5,97

5 56

13

,300

35

4 23

,946

85

9 1,

232

65,9

87

UPA

CO

RPO

RATI

ON

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Notes to the financial statements

3. Property, plant and equipment (continued)

Security

Certain property, plant and equipment of the Group with a carrying amount of RM8,559,751 (2009 - RM8,768,012) and certain leasehold land of the Group with a carrying amount of RM13,140,000 (2009 - RM13,357,000) in subsidiaries have been charged to licensed banks for credit facilities granted to subsidiaries as set out in Note 14.

Assets under finance lease

Included in property, plant and equipment of the Group are assets acquired under finance lease agreements with carrying amount as follows:

Group 2010 2009 RM’000 RM’000

Motor vehicles 170 371

4. Investments in subsidiaries Company 2010 2009 RM’000 RM’000

Unquoted shares, at cost 62,040 48,540

Details of the subsidiaries are shown in Note 29.

5. Investments in associates Group Company 2010 2009 2010 2009 RM’000 RM’000 RM’000 RM’000 Unquoted shares, at cost 6,961 7,507 5,275 5,765 Less: Impairment loss - (80) (559) (559)

6,961 7,427 4,716 5,206 Share of post-acquisition reserves 1,299 1,303 - - Transfer to asset held for sale - (719) - (490)

8,260 8,011 4,716 4,716

The Group has not recognised its share of the losses relating to Web-Tech Colors Co. Ltd., attributable to the loss for the year of RM365,000 (2009: RM1,856,000) since the Group’s investment in Web-Tech Colors Co. Ltd. has been fully written down and the Group has no obligation in respect of these losses.

Summary financial information on associates

Effective Profit/ Total Total Country ownership Revenue (Loss) assets liabilities of interest (100%) (100%) (100%) (100%) incorporation % RM’000 RM’000 RM’000 RM’000

2010 Sharp Litho Sdn. Bhd.* # Malaysia 49.0 - (16) 2,357 (328) Acta UPA Sdn. Bhd.* # Malaysia 49.0 - (1) 109 (2) The Malaya Press Sdn. Bhd.* ^ Malaysia 35.5 7,249 656 14,337 (1,436) Web-Tech Colors Co. Ltd. @ China 49.0 13,270 (365) 7,396 (9,863) UPA Machinery Co. Ltd. @ Thailand 46.0 2,354 (176) 1,161 (1,237) 2009 Sharp Litho Sdn. Bhd.* # Malaysia 49.0 - (21) 2,339 (331) Acta UPA Sdn. Bhd.* # Malaysia 49.0 - (1) 113 (2) The Malaya Press Sdn. Bhd.* ^ Malaysia 35.5 7,441 514 13,154 (910) Trinity Ventures Sdn. Bhd.* ∞ Malaysia 35.0 840 214 10,101 (8,069) Web-Tech Colors Co. Ltd. @ China 49.0 7,885 (1,856) 8,281 (10,542)

* These associates were held directly by the Company. # Equity accounted based on unaudited management accounts for the year ended 31 December 2010 (2009 - 31 December 2009). @ Equity accounted based on audited accounts for the year ended 31 December 2010 (2009 - 31 December 2009). ^ Equity accounted based on audited accounts for the year ended 31 March 2010/9 and 9 months unaudited management accounts for the period ended 31 December 2010/9. ∞ Equity accounted based on audited accounts for the year ended 30 September 2009 and 3 months unaudited management accounts for the period ended 31 December 2009.

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Notes to the financial statements

6. Investment properties Group 2010 2009 RM’000 RM’000 Freehold land At 1 January 13,897 9,950 Gain on fair value - 3,947

At 31 December 13,897 13,897

Revaluation

In the previous year, the Directors valued the freehold land of the subsidiaries based on professional valuation made by independent professional qualified valuers using an open market basis.

There are two pieces of freehold land held by two subsidiaries respectively. Professional valuation was performed on one piece of freehold land held by a subsidiary whilst the fair value of the other subsidiary’s piece of freehold land was assessed by the Directors using the indicative valuation derived from the valuation report made by the independent professional qualified valuer on the freehold land of the first subsidiary as both pieces of land have similar usage and are adjacent to each other. For the current year ended, the Directors are of the view that the carrying amounts of the properties approximate fair values in view that there has been no changes in the status of the freehold land.

Had the freehold land of the Group been carried under the cost model, the carrying amounts that would have been included in the financial statements at the end of the reporting period are RM4,873,720 (2009: RM4,873,720).

The following are recognised in the profit or loss in respect of investment properties: Group 2010 2009 RM’000 RM’000 Direct operating expenses Non-income generating investment properties 6 6

Security

The freehold land have been charged to licensed banks for credit facilities granted to certain subsidiaries as set out in Note 14.

7. Deferred taxation Recognised deferred tax assets and liabilities

Deferred tax assets and liabilities are attributable to the following:

Assets Liabilities Net Group 2010 2009 2010 2009 2010 2009 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Property, plant and equipment (182) (182) (4,879) (4,821) (5,061) (5,003) Allowances 753 753 - - 753 753 Fair value adjustment in business combination # - - (2,716) (2,722) (2,716) (2,722)

Net tax assets/(liabilities) 571 571 (7,595) (7,543) (7,024) (6,972)

Movement in temporary differences during the year

Recognised Recognised in income in income At statements At statements At 1.1.2009 (Note 21) 31.12.2009 (Note 21) 31.12.2010 Group RM’000 RM’000 RM’000 RM’000 RM’000

Property, plant and equipment (5,299) 296 (5,003) (58) (5,061) Allowances 1,371 (618) 753 - 753 Fair value adjustment in business combination # (2,728) 6 (2,722) 6 (2,716)

(6,656) (316) (6,972) (52) (7,024)

# Relates to deferred taxation on restructuring of the UPA Group pursuant to its Restructuring and Listing Scheme in 1996.

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Notes to the financial statements

8. Other investments Group and Company 2010 2009 RM’000 RM’000

Quoted shares - In Malaysia 1,252 402 - Outside Malaysia - 532

1,252 934

Market values Quoted shares 1,252 934

Following the adoption of FRS 139, quoted shares that are held for trading are categorised as fair value through profit or loss.

9. Inventories Group 2010 2009 RM’000 RM’000

Raw materials 17,732 15,836 Work-in-progress 444 660 Manufactured inventories 9,452 6,357 Printing and other machines held for trading 14,327 18,898

41,955 41,751

During the financial year, RM1,201,000 (2009 - RM1,461,000) was written down to net realisable value and recognised as part of cost of sales in the profit or loss.

10. Trade and other receivables Group Company 2010 2009 2010 2009 Note RM’000 RM’000 RM’000 RM’000

Trade receivables 36,291 40,621 - - Impairment loss (1,990) (1,837) - -

34,301 38,784 - - Subsidiaries - non-trade 10.1 - - 9,388 20,843 Associates - trade 10.2 2,811 1,685 - - - non-trade 10.2 798 1,633 - - Other receivables 1,148 377 - - Deposits 10.3 113 110 - -

39,171 42,589 9,388 20,843

10.1 Subsidiaries

The amounts due from subsidiaries are unsecured, interest free and repayable on demand.

10.2 Associates

The amounts due from associates are unsecured, interest free and repayable on demand. Trade balance of RM1,200,000 (2009 - RM1,685,000) due from an associate is denominated in U.S. Dollar. The balances is net of allowance for doubtful debts of RM4,772,000 (2009 - RM4,000,000).

10.3 Deposits

The deposits are net of allowance for doubtful debts of RM70,000 (2009 - RM70,000).

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Notes to the financial statements

11. Cash and cash equivalents Group Company 2010 2009 2010 2009 RM’000 RM’000 RM’000 RM’000

Cash and bank balances 16,563 23,508 4,778 3,655 Deposits with licensed banks 19,000 17,000 - -

35,563 40,508 4,778 3,655

12. Asset classified as held for sale

As at 31 December 2009, the investment in an associate, Trinity Ventures Sdn. Bhd. with carrying amounts of RM719,000 and RM490,000 in the Group’s and Company’s financial statements respectively, were presented as an asset held for sale following the proposed disposal of the entire 35% equity interest in the associate. The disposal was completed in the current financial year.

13. Share capital and reserves

13.1 Share capital Company 2010 2009 Number Number of shares Amount of shares Amount ‘000 RM’000 ‘000 RM’000

Ordinary shares of RM1.00 each Authorised: At 1 January/31 December 100,000 100,000 100,000 100,000

Issued and fully paid: At 1 January 66,537 66,537 66,537 66,537 Bonus issue of shares 13,045 13,045 - -

At 31 December 79,582 79,582 66,537 66,537

The bonus issue of shares was approved by the shareholders at the Extraordinary General Meeting held on 25 June 2010 and completed on 11 August 2010. The bonus shares were issued on the basis of one (1) bonus share for every five (5) existing ordinary shares held via capitalisation of share premium of RM3,896,858 and retained earnings of RM9,148,382.

13.2 Translation reserve The translation reserve comprises foreign currency differences arising from the translation of the financial statements of a foreign operation.

13.3 Treasury shares

On 25 June 2010, the shareholders of the Company renewed their approval for the Company to buy-back its own shares. During the financial year, the Company bought back from the open market, 450,700 of its issued ordinary shares of RM1.00 each (“UPA Shares”) listed on the Main Market of Bursa Malaysia at an average buy-back price of RM1.42 per ordinary share. The total consideration paid for the share buy-back of UPA Shares by the Company during the financial year, including transaction costs, was RM639,585 and was financed by internally generated funds. The UPA Shares bought back are held as treasury shares in accordance with Section 67A Sub-section 3(A)(b) of the Companies Act, 1965. None of the treasury shares held were resold or cancelled during the financial year.

As at 31 December 2010, the Company held 1,539,700 UPA Shares as treasury shares out of its total issued and paid-up share capital. As at 31 December 2010, the number of outstanding shares in issued and paid-up is therefore 78,042,140 ordinary shares of RM1.00 each.

None of the treasury shares held were resold or cancelled during the financial year. While the shares are held as treasury shares, the rights attached to them as voting, dividends and participation in other distribution and otherwise are suspended.

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Notes to the financial statements

13.4 Section 108 tax credit

Subject to agreement by the Inland Revenue Board, the Company has sufficient Section 108 tax credit and tax exempt income to fully frank its retained earnings at 31 December 2010 if paid out as dividends.

The Finance Act 2007 introduced a single tier company income tax system with effect from year of assessment 2008. As such, the Section 108 tax credit as at 31 December 2010 will be available to the Company until such time the credit is fully utilised or upon expiry of the six-year transitional period on 31 December 2013, whichever is earlier.

14. Borrowings Group 2010 2009 RM’000 RM’000

Current Fixed rate term loans - secured 14.1 3,136 3,064 Finance lease liabilities - secured 93 111 Trust receipts - unsecured 13,227 24,670

16,456 27,845

Non-current Fixed rate term loans - secured 14.1 4,616 7,883 Finance lease liabilities - secured 99 192

4,715 8,075

21,171 35,920

14.1 Security

The term loans are secured by way of legal charges over: (i) certain property, plant and equipment (see Note 3); and (ii) the freehold land classified as investment properties (see Note 6).

14.2 Finance lease liabilities

Finance lease liabilities are payable as follows:

Minimum Minimum lease lease payments Interest Principal payments Interest Principal 2010 2010 2010 2009 2009 2009 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Less than one year 99 (6) 93 121 (10) 111 Between one and five years 102 (3) 99 201 (9) 192

201 (9) 192 322 (19) 303

15. Trade and other payables Group Company 2010 2009 2010 2009 Notes RM’000 RM’000 RM’000 RM’000

Trade payables 3,325 3,472 - - Associates - non-trade 15.1 521 438 521 438 Other payables and deposits 2,698 5,456 24 2,275 Amount due to a director - non-trade 15.1 190 127 - - Amount due to subsidiary - non-trade 15.1 - - - 90 Accrued expenses 2,264 2,106 - -

8,998 11,599 545 2,803

15.1 The non-trade amounts due to a director, subsidiary and associates are unsecured, interest free and repayable on demand.

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16. Revenue Group Company 2010 2009 2010 2009 RM’000 RM’000 RM’000 RM’000

Revenue - sale of goods 126,776 115,254 - - - servicing of machineries 2,521 2,728 - - - commission - 1,070 - - - dividends 17 13 11,161 13 - management fees - 10 694 495

129,314 119,075 11,855 508

17. Results from operating activities Group Company 2010 2009 2010 2009 RM’000 RM’000 RM’000 RM’000 restated Results from operating activities are arrived at after charging:

Auditors’ remuneration Audit fees - KPMG Malaysia 115 85 25 20 Non-audit fees - KPMG Malaysia 31 4 31 4 - Local affiliates of KPMG Malaysia 24 24 6 6 Depreciation 6,321 6,529 - - Impairment loss on investment in associate - - - 559 Impairment loss on receivables 1,225 2,284 - - Personnel expenses - Contribution to Employees’ Provident Fund 1,026 953 - - - Wages, salaries and others 17,851 14,953 - - Realised loss on foreign exchange - 135 - - Rental expense 220 216 - - Unrealised loss on foreign exchange - 51 - - Write-down of inventories 1,201 1,461 - - Write-off of property, plant and equipment 20 - - -

after crediting:

Change in fair value of investment properties - 3,947 - - Gain on disposal of associate 1,901 - 2,130 - Gain on disposal of property, plant and equipment 759 990 - - Gross dividends received from quoted shares 17 13 17 13 Gross dividends received from unquoted shares - - 11,144 - Realised gain on foreign exchange 1,551 799 - - Rental income 45 50 - - Reversal of impairment loss on receivables 300 - - - Unrealised gain on foreign exchange 216 - - -

18. Key management personnel compensation Group Company 2010 2009 2010 2009 RM’000 RM’000 RM’000 RM’000

Directors - Fees 457 457 167 167 - Remuneration 1,551 1,524 - - - Other short-term employee benefits (including estimated monetary value of benefits-in-kind) 62 73 - -

2,070 2,054 167 167

Notes to the financial statements

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19. Finance income Group Company 2010 2009 2010 2009 RM’000 RM’000 RM’000 RM’000

Interest income on: Deposits with licensed banks 392 460 83 147 20. Finance costs Group 2010 2009 RM’000 RM’000

Interest expense on: Term loans 500 728 Finance lease liabilities 10 16 Trust receipts and bankers’ acceptances 268 240 Others - 32

778 1,016

21. Tax expense Group Company 2010 2009 2010 2009 RM’000 RM’000 RM’000 RM’000

Current tax expense - current 4,298 4,113 2,949 117 - under/(over) provision in prior years 244 29 - (5)

Total current tax 4,542 4,142 2,949 112

Deferred tax expense - origination/reversal of temporary differences 48 (190) - - - under provision in prior years 4 506 - -

Total deferred tax 52 316 - -

4,594 4,458 2,949 112 Share of tax of equity accounted associates 69 68 - -

Total tax expense 4,663 4,526 2,949 112

Reconciliation of effective tax expense

Profit/(Loss) for the year 14,090 14,161 10,772 (427) Total tax expense 4,663 4,526 2,949 112

Profit/(Loss) excluding tax 18,753 18,687 13,721 (315)

Tax at Malaysian tax rate of 25% 4,688 4,672 3,430 (79)

Effect of temporary differences not recognised 600 460 - - Non-deductible expenses 433 732 51 196 Tax incentives (892) (556) - - Non-taxable income (532) (1,308) (532) - Others 118 (9) - - Under/(Over) provision in prior years 248 535 - (5)

Tax expense 4,663 4,526 2,949 112

Notes to the financial statements

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22. Earnings per ordinary share - Group

Basic earnings per ordinary share

The calculation of basic earnings per ordinary share at 31 December 2010 was based on the profit attributable to ordinary shareholders of the Company of RM14,090,000 (2009 - RM13,464,000) and the weighted average number of ordinary shares outstanding calculated as follows: 2010 2009 restated

Issued ordinary shares at beginning of the year 66,536,600 66,536,600 Effect of bonus issue of shares (see Note 13.1) 13,045,240 13,045,240 Effect of treasury shares held (see Note 13.3) (1,320,947) (854,282)

Weighted average number of ordinary shares 78,260,893 78,727,558

sen sen Basic earnings per ordinary share 18.00 17.10

Basic earnings per ordinary share is not diluted as there is no potential ordinary share in issue at the end of the reporting period.

23. Dividends

Dividends recognised in the current year by the Company are:

Sen per Total share amount Date of (net of tax) RM’000 payment 2010 Final 2009 ordinary 7.5 4,892 28 July 2010

2009 Final 2008 ordinary 7.5 4,924 28 July 2009

Subsequent to the end of reporting date, the following dividend was proposed by the Directors. The dividend will be recognised in subsequent financial report upon approval by the shareholders.

Sen per Total share amount (net of tax) RM’000

Final 2010 ordinary 7.5 5,969

24. Operating segments

The Group has two segments, as described below, which are the Group’s strategic business units. These strategic business units are managed separately due to their differences in terms of products, types of customers and market segments. For each of the strategic business units, the Group’s chief operating decision maker reviews internal management reports on a quarterly basis. The following summary describes the operations of each operating segments:

(a) Manufacturing Manufacturing of paper-based products and plastic products. (b) Machine trading Selling, reconditioning and servicing of printing and printing related machines

Other non-reportable segments comprise operations related to the holding of properties and trading of plastic products.

Performance is measured based on profit before tax as included in the internal management reports that are reviewed by the Group’s chief operating decision maker. Segment profit is used to measure performance as management believes that such information is the most relevant in evaluating the results of these segments relative to other entities that operate in within these industries.

Notes to the financial statements

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Segment assets The total of segment assets is measured based on all assets of a segment, as included in the internal management reports that are reviewed by the Group’s chief operating decision maker.

Segment liabilities Segment liabilities information is neither included in the internal management reports nor provided regularly to the Group’s chief operating decision maker. Hence, no disclosure is made on segment liabilities.

Manufacturing of paper and Machine plastic products trading Total 2010 2010 2010 RM’000 RM’000 RM’000

Segment profit/(loss) 17,194 (512) 16,682

Included in the measure of segment profit/(loss) are: Revenue from external customers 102,060 23,460 125,520 Inter-segment revenue 2,991 6,467 9,458 Depreciation (5,974) (392) (6,366) Finance income 278 28 306 Finance costs (472) (300) (772)

Segment assets 138,745 36,668 175,413

Included in the measure of segment assets are: Additions to non-current assets other than financial instruments and deferred tax assets 7,865 394 8,259

Manufacturing of paper and Machine plastic products trading Total 2009 2009 2009 RM’000 RM’000 RM’000

Segment profit/(loss) 14,683 (727) 13,956

Included in the measure of segment profit/(loss) are: Revenue from external customers 93,050 25,208 118,258 Depreciation (6,061) (410) (6,471) Finance income 193 46 239 Finance costs (615) (393) (1,008)

Segment assets 135,125 49,099 184,224

Included in the measure of segment assets are: Additions to non-current assets other than financial instruments and deferred tax assets 4,494 174 4,668

Reconciliations of reportable segment profit or loss

2010 2009 RM’000 RM’000

Profit or loss Total profit or loss for reportable segments 16,682 13,956 Other non-reportable segments 2,867 4,464 Elimination of inter-segment profits (903) (209) Others (187) 237 Share of profit of associates not included in reportable segments 225 171

Consolidated profit before tax 18,684 18,619

Notes to the financial statements

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Notes to the financial statements24

. Ope

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Geographical segments In presenting information on the basis of geographical segments, segment revenue is based on geographical location of customers. Segment assets are based on the geographical location of the assets. The amounts of non-current assets do not include financial instruments (including investments in associates) and deferred tax assets.

Non-current Revenue assets Geographical information RM’000 RM’000

2010 Malaysia 66,391 79,884 North America 19,127 - Europe 23,247 - Asia Pacific 20,549 -

129,314 79,884

2009 Malaysia 68,231 79,092 North America 15,829 - Europe 20,583 - Asia Pacific 14,432 -

119,075 79,092

Major customers

The Group has one major customer within the manufacturing segment who contributes approximately 20% of the Group’s total revenue.

Notes to the financial statements

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Notes to the financial statements

25. Contingent liabilities - unsecured Group Company 2010 2009 2010 2009 RM’000 RM’000 RM’000 RM’000 Guarantee given to a financial institution in respect of machine sales 4,080 5,280 - - Corporate guarantee to banks in respect of banking facilities granted to subsidiaries - - 114,538 117,538 Corporate guarantee to banks in respect of banking facilities granted to associate - 2,800 - 2,800

26. Financial instruments

Certain comparative figures have not been presented for 31 December 2009 by virtue of the exemption given in paragraph 44AA of FRS 7.

26.1 Categories of financial instruments

The table below provides an analysis of financial instruments categorised as follows: (a) Loans and receivables (“L&R”) (b) Fair value through profit or loss (“FVTPL”) - Held for trading (“HFT”) (c) Financial liabilities measured at amortised cost (“OL”) Carrying FVTPL amount L&R -HFT RM’000 RM’000 RM’000

2010 Financial assets Group Other investments 1,252 - 1,252 Trade and other receivables 39,171 39,171 - Cash and cash equivalents 35,563 35,563 -

75,986 74,734 1,252

Company Other investments 1,252 - 1,252 Trade and other receivables 9,388 9,388 - Cash and cash equivalents 4,778 4,778 -

15,418 14,166 1,252

Carrying amount OL RM’000 RM’000

2010 Financial liabilities Group Borrowings 21,171 21,171 Trade and other payables 8,998 8,998

30,169 30,169

Company Trade and other payables 545 545

26.2 Net gains and losses arising from financial instruments Group Company 2010 2010 RM’000 RM’000

Fair value through profit or loss - Held for trading 17 17 Loans and receivables 429 63 Financial liabilities measured at amortised cost 1,583 -

2,029 80

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Notes to the financial statements

26.3 Financial risk management

The Group has exposure to the following risks from financial instruments: • Credit risk • Liquidity risk • Market risk

26.4 Credit risk

Credit risk is the risk of a financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations. The Group’s exposure to credit risk arises principally from its receivables from customers and investment securities.

Receivables

Risk management objectives, policies and processes for managing the risk

Management has a credit policy in place and the exposure to credit risk is monitored regularly. Credit evaluations are performed on certain customers requiring credit over a certain amount. The Group does not require collateral in respect of receivables.

Exposure to credit risk, credit quality and collateral

As at the end of the reporting period, the maximum exposure to credit risk arising from receivables is represented by the carrying amounts in the statement of financial position. The five (5) largest debtors account for 29% (2009 - 28%) of total trade receivables. Except for this, there were no significant concentrations of credit risk.

Management has taken reasonable steps to ensure that receivables that are neither past due nor impaired are measured at their realisable values. A significant portion of these receivables are regular customers that have been transacting with the Group. The Group uses ageing analysis to monitor the credit quality of the receivables. Any receivables having significant balances past due more than 120 days, which are deemed to have higher credit risk, are monitored individually.

Impairment losses

The ageing of trade receivables as at the end of the reporting date was: Individual Gross impairment Net RM’000 RM’000 RM’000

Group 2010 Not past due 15,625 - 15,625 Past due 0 - 30 days 6,546 - 6,546 Past due 31 - 60 days 4,480 - 4,480 Past due 61 - 90 days 1,915 - 1,915 Past due 91 - 120 days 1,699 - 1,699 Past due > 120 days 6,026 (1,990) 4,036

36,291 (1,990) 34,301

The credit period granted to trade receivables ranging from 30 to 90 days. Trade receivables are deemed past due when the counterparty failed to make payment when contractually due. Individual impairment is recognised when it is no longer probable that the amount owing from customers will be recoverable.

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Notes to the financial statements

The movements in the allowance for impairment losses of trade and other receivables during the financial year were:

Group 2010 RM’000

At 1 January 1,837 Impairment loss recognised 453 Impairment loss reversed (300)

At 31 December 1,990 Inter-company balances

The Company provides unsecured advances to subsidiaries. The Company monitors on an on-going basis the results of the subsidiaries. The maximum exposure to credit risk is represented by the carrying amounts in the statement of financial position.

As at the end of the reporting period, there was no indication that the advances to the subsidiaries are not recoverable. The Company does not specifically monitor the ageing of the advances to the subsidiaries.

Financial guarantees

The Company provides unsecured financial guarantees to banks in respect of banking facilities granted to certain subsidiaries. The Company monitors on an on-going basis the results of the subsidiaries and repayments made by the subsidiaries.

The maximum exposure to credit risk amounts to RM19,652,000 (2009 - RM29,085,000) representing the outstanding banking facilities of the subsidiaries at the end of the reporting period.

The financial guarantees have not been recognised since the fair value on initial recognition was not material. At the end of the reporting period, there was no indication that any subsidiary would default on repayment.

26.5 Liquidity risk

Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group’s exposure to liquidity risk arises principally from its various payables and borrowings.

The Group maintains a level of cash and bank balances deemed adequate by management to finance the Group’s operations and to mitigate the effects of fluctuation in cash flows.

Maturity analysis

The table below summarises the maturity profile of the Group’s and the Company’s financial liabilities as at the end of the reporting period based on undiscounted contractual payments.

Carrying Contractual Contractual Under 1 1 - 2 2 - 5 More than amount interest rate cash flows year years years 5 years RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Group 2010 Non-derivative financial liabilities Term loans 7,752 7.30% - 9.90% 8,509 3,471 2,533 1,790 715 Finance lease liabilities 192 3.00% 201 99 102 - - Trust receipts 13,227 2.05% 13,227 13,227 - - - Trade and other payables 8,998 - 8,998 8,998 - - -

30,169 30,935 25,795 2,635 1,790 715

Company 2010 Non-derivative financial liabilities Trade and other payables 545 - 545 545 - - -

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Notes to the financial statements

26.6 Market risk

Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and other prices will affect the Group’s financial position or cash flows.

26.6.1 Currency risk

The Group incurs foreign currency risk on sales and purchases that are denominated in currencies other than Ringgit Malaysia. The currencies giving rise to this risk are mainly U.S. Dollar, Euro, Great Britain Pound, Japanese Yen and Singapore Dollar.

The Group manages this risk by selectively hedging, through forward exchange contracts, its trade receivables and trade payables denominated in foreign currencies. Hedging contracts entered into is based on judgement made by the management in relation to the significance and future trend of foreign currencies being exposed.

As at the end of the reporting period, the Group does not have any material outstanding forward exchange contracts.

Exposure to foreign currency risk

The Group’s exposure to foreign currency risk, based on significant carrying amounts at the end of the reporting period was:

Denominated in Group USD JPY SGD THB RM’000 RM’000 RM’000 RM’000

2010 Cash and bank balances 1,420 - 304 1,332 Trade receivables 1,782 - 2,448 1,028 Trust receipts (12,279) - - - Trade payables - (24) (121) -

Exposure in the statement of financial position (9,077) (24) 2,631 2,360

2009 Trade receivables 6,003 - 1,721 - Trust receipts (14,052) (7,148) (2,928) - Trade payables (610) (112) (121) -

Exposure in the statement of financial position (8,659) (7,260) (1,328) -

Currency risk sensitivity analysis

The Group’s exposure to foreign currency risk, based on significant carrying amounts at the end of the reporting period was:

A 10% strengthening of the Ringgit Malaysia against the major currencies of USD, JPY, SGD and THB at the end of the reporting period would have increased profit or loss by RM411,000. This analysis assumes that all other variables, in particular interest rates, remained constant and ignores any impact of forecasted sales and purchases.

A 10% weakening of Ringgit Malaysia against the above currencies at the end of the reporting period would have had equal but opposite effect on the above currencies to the amounts shown above, on the basis that all other variables remained constant.

26.6.2 Interest rate risk

The Group’s exposure to interest rate risk arises from deposits and borrowings with licensed banks. The deposits are placed with varying interest rates and maturity dates. Similarly, various financial products are used to borrow and these include term loan, overdraft, finance lease liability and trade financing so that the Group is not fully dependent on a single class of financial product.

The Group does not hedge its exposure arising from interest rate risk.

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Notes to the financial statements

Exposure to interest rate risk

The Group’s exposure to interest rate risk, based on carrying amounts at the end of the reporting period was:

Group Company 2010 2009 2010 2009 RM’000 RM’000 RM’000 RM’000

Fixed rate instruments Financial assets 19,000 17,000 - - Financial liabilities (21,171) (35,920) - -

(2,171) (18,920) - -

Interest rate risk sensitivity analysis

The Group is not affected by interest rate sensitivity due to:

(a) the Group does not account for any fixed rate financial assets and liabilities at fair value through profit or loss, and the Group does not designate derivatives as hedging instruments under a fair value hedged accounting model; and

(b) the Group does not have financial assets or financial liabilities that are subject to floating interest rates.

26.6.3 Other price risk

The Group is exposed to equity price risk from its investment in quoted shares. As at the end of the reporting period, the Group has only invested in domestic securities.

Other price risk sensitivity analysis

A 10% strengthening of the prices of the quoted shares at the end of the reporting period would have increased (decreased) profit or loss by RM125,000. A 10% weakening of the prices of the quoted shares would have had equal but opposite effect on profit or loss.

26.7 Fair values

At the end of the reporting period, the carrying amounts of receivables, payables and accruals, cash and cash equivalents and short term borrowings approximate fair values due to the relatively short term nature of these financial instruments.

The fair values of other financial liabilities are as follows:

2010 2010 2009 2009 Carrying Fair Carrying Fair amount value amount value Group RM’000 RM’000 RM’000 RM’000

Finance lease liabilities 192 189 303 283 Fixed rate term loans 7,752 6,824 10,947 9,527

The fair values of the fixed rate term loan and finance lease liabilities have been determined by discounting the relevant cash flows using the current interest rates ranging from 3.5% to 6.3% (2009 - 3.5% to 6.5%) for similar instruments at the end of the reporting period.

27. Capital management

The Group’s objective when managing capital is to maintain a strong capital base and safeguard the Group’s ability to continue as a going concern, so as to maintain investor, creditor and market confidence and to sustain future development of the Group’s business. The Directors regard share capital and retained earnings as the Group’s capital base and monitor the adequacy of capital on an on-going basis. There were no changes in the Group’s approach to capital management during the financial year.

Under the requirement of Bursa Malaysia Practice Note No. 17/2005, the Company is required to maintain a consolidated shareholders’ equity equal to or not less than the 25 percent of the issued and paid-up capital (excluding treasury shares) and such shareholders’ equity is not less than RM40 million. The Company has complied with this requirement.

The Directors are not aware of any non-compliance with external capital requirements that may be imposed on the Group or the Company.

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Notes to the financial statements

28. Related parties

Identity of related parties

For the purposes of these financial statements, a party is related to the Group or the Company if the Group or the Company has the ability, directly or indirectly, to control the party or exercise significant influence over the party in making financial and operating decisions, or vice versa, or where the Group or the Company and the party are subject to common control or common significant influence. Related parties may be individuals or other entities.

Related parties also include key management personnel defined as those persons having authority and responsibility for planning, directing and controlling the activities of the Group either directly or indirectly. The key management personnel include all the Directors of the Group, and certain members of senior management of the Group.

The Group has a related party relationship with its subsidiaries (Note 29) and associates (Note 5), Directors and key management personnel.

Significant related party transactions

Significant related party transactions of the Group and the Company, other than key management personnel compensation as disclosed in Note 18 to the financial statements, are as follows:

Group Company 2010 2009 2010 2009 RM’000 RM’000 RM’000 RM’000

Subsidiaries Dividends receivable - - (11,144) - Management fees receivable - - (693) (485)

Associates Sales (2,366) (1,953) - - Purchases 104 92 - -

Affiliated company Sales (78) (154) - -

Related party transactions have been entered into in the normal course of business under normal trade terms.

Significant related party balances

Details of significant related party balances of the Group and the Company at the end of the reporting date are as follows:

Allowance Gross for Net Impairment balance impairment balance loss outstanding loss outstanding recognised RM’000 RM’000 RM’000 RM’000

Group 2010 Included in trade and other receivables Associate - trade 3,811 (1,000) 2,811 - - non-trade 4,570 (3,772) 798 772

Included in trade and other payables Associate - non-trade 521 - 521 - Affiliate - trade 477 - 477 -

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Notes to the financial statements

Significant related party balances (continued)

Allowance Gross for Net Impairment balance impairment balance loss outstanding loss outstanding recognised RM’000 RM’000 RM’000 RM’000

Group 2009 Included in trade and other receivables Associate - trade 2,685 (1,000) 1,685 (1,000) - non-trade 4,633 (3,000) 1,633 (2,000)

Included in trade and other payables Associate - non-trade 438 - 438 - Affiliate - trade 96 - 96 -

Company 2010 Included in trade and other receivables Subsidiaries - non-trade 9,388 - 9,388 -

Included in trade and other payables Associate - non-trade 521 - 521 -

2009 Included in trade and other receivables Subsidiaries - non-trade 20,843 - 20,843 -

Included in trade and other payables Associate - non-trade 438 - 438 - Subsidiaries - non-trade 90 - 90 -

The terms of non-trade balances are as disclosed in Note 10 and Note 15 to the financial statements.

29. Subsidiaries in the Group

The principal activities of the subsidiaries in the Group and the interest of UPA Corporation Bhd. are as follows:

Effective Name of company Principal activities ownership interest 2010 2009 % % UPA Press Sdn. Bhd.* Manufacturing of paper products 100 100 UPA Machinery Sdn. Bhd.* Selling, reconditioning and servicing 100 100 of printing and printing related machines

UPA Plastik Sdn. Bhd.* Marketing of plastic products 100 100

Macro Plastic Sdn. Bhd.* Manufacturing and trading of 100 100 and its subsidiary: plastic products

Macroplas Industries Manufacturing and trading of 95 95 Co., Ltd.# plastic products

Wangsa Seputih Sdn. Bhd.* Property investment 100 100

Sukiwa Corporation Sdn. Bhd.* Investment holding and property 99 99 and its subsidiary: investment

Danau Cekal Sdn. Bhd.* Property investment 99 99

UPA Products Sdn. Bhd. * Dormant 100 100

* Subsidiary incorporated in Malaysia and audited by KPMG. # Subsidiary incorporated in Thailand and audited by another firm of accountants.

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Notes to the financial statements

30. Acquisition of minority interest

On 18 July 2009, the Group acquired an additional 17.07% interest in Sukiwa Corporation Sdn. Bhd. (“SCSB”) for RM2,301,000 in cash, increasing its ownership from 82.04% to 99.11%. The carrying amount of SCSB’s net assets in the consolidated financial statements on the date of acquisition was RM2,215,000. The Group recognised a decrease in minority interest of RM2,215,000.

31. Significant changes in accounting policies 31.1 FRS 139, Financial Instruments: Recognition and Measurement

The adoption of FRS 139 has resulted in several changes to accounting policies relating to recognition and measurement of financial instruments. Significant changes in accounting policies are as follows:

Investments in equity securities Prior to the adoption of FRS 139, current investments were carried at the lower of cost and market value, determined on an aggregate portfolio basis by category of investments. With the adoption of FRS 139, current investments are now categorised and measured as fair value through profit or loss as detailed in Note 2(c).

Derivatives Prior to the adoption of FRS 139, derivative contracts were recognised in the financial statements on settlement date. With the adoption of FRS 139, derivative contracts are now categorised as fair value through profit or loss and measured at their fair values with the gain or loss recognised in profit or loss.

Financial guarantee contracts Prior to the adoption of FRS 139, financial guarantee contracts were not recognised in the statement of financial position unless it becomes probable that the guarantee may be called upon. With the adoption of FRS 139, financial guarantee contracts are now recognised initially at their fair values and subsequently measured at their initially measured amount less cumulative amortisation. When settlement of a financial guarantee contract becomes probable, an estimate of the obligation is made.

Inter-company loans Prior to the adoption of FRS 139, inter-company loans were recorded at cost. With the adoption of FRS 139, inter-company loans are now recognised initially at their fair values, which are estimated by discounting the expected cash flows using the current market interest rate of a loan with similar risk and tenure. Finance income and costs are recognised in profit or loss using the effective interest method.

Impairment of trade and other receivables Prior to the adoption of FRS 139, an allowance for doubtful debts was made when a receivable is considered irrecoverable by the management. With the adoption of FRS 139, an impairment loss is recognised for trade and other receivables and is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the asset’s original effective interest rate.

These changes in accounting policies have been made in accordance with the transitional provisions of FRS 139. In accordance to the transitional provisions of FRS 139 for first-time adoption, adjustments arising from remeasuring the financial instruments at the beginning of the financial year were recognised as adjustments of the opening balance of retained earnings or another appropriate reserve. There has been no material impacts arising from the first-time adoption of FRS 139.

Consequently, the adoption of FRS 139 does not affect the basic and diluted earnings per ordinary share for prior periods. It is not practicable to estimate the impact arising from the adoption of FRS 139 to the current year’s basic and diluted earnings per share.

31.2 FRS 8, Operating Segments

As of 1 January 2010, the Group determines and presents operating segments based on the information that internally is provided to the Group’s chief operating decision maker. This change in accounting policy is due to the adoption of FRS 8. Previously operating segments were determined and presented in accordance with FRS 1142004, Segment Reporting.

Comparative segment information has been re-presented. Since the change in accounting policy only impacts presentation and disclosure aspects, there is no impact on earnings per share.

31.3 FRS 101, Presentation of Financial Statements (revised) The Group applies FRS 101 (revised) which became effective as of 1 January 2010. As a result, the Group presents all non-owner changes in equity in the consolidated statement of comprehensive income.

Comparative information has been re-presented so that it is in conformity with the revised standard. Since the change only affects presentation aspects, there is no impact on earnings per share.

31.4 FRS 117, Leases The Group has adopted the amendment to FRS 117. The Group has reassessed and determined that all leasehold land of the Group which are in substance finance leases and has reclassified the leasehold

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Notes to the financial statements

land to property, plant and equipment. The change in accounting policy has been made retrospectively in accordance with the transitional provisions of the amendment.

The reclassification does not affect the basic and diluted earnings per ordinary share for the current and prior periods.

32. Comparative figures

32.1 FRS 101, Presentation of Financial Statements (revised) Arising from the adoption of FRS 101 (revised), income statement for the year ended 31 December 2009 have been re-presented as statement of comprehensive income. All non-owner changes in equity that were presented in the statement of changes in equity are now included in the statement of comprehensive income as other comprehensive income. Consequently, components of comprehensive income are not presented in the statement of changes in equity.

32.2 FRS 117, Leases Following the adoption of the amendment to FRS 117, certain comparatives have been re-presented as follows: Group 31.12.2009 1.1.2009 As As As previously As previously restated stated restated stated RM’000 RM’000 RM’000 RM’000 Statement of financial position Property, plant and equipment 65,105 44,495 70,094 46,314 Prepaid lease payments - 20,610 - 23,780

Statement of cash flows Amortisation of prepaid lease payments - 381 Depreciation 6,529 6,148 Gain on disposal of property, plant and equipment (990) (14) Gain on disposal of prepaid lease payments - (976) Proceeds from disposal of property, plant and equipment 3,865 100 Proceeds from disposal of prepaid lease payments - 3,765

33. Event subsequent to reporting date On 29 March 2011, a wholly-owned subsidiary of the Group, Macro Plastic Sdn. Bhd. increased its paid-up capital from RM6,300,000 to RM9,300,000 via issuance of RM3,000,000 ordinary shares of RM1.00 each at par for cash for working capital purposes.

34. Supplementary information on the breakdown of realised and unrealised profits or losses On 25 March 2010, Bursa Malaysia Securities Berhad (“Bursa Malaysia”) issued a directive to all listed issuers pursuant to Paragraphs 2.06 and 2.23 of Bursa Malaysia Main Market Listing Requirements. The directive requires all listed issuers to disclose the breakdown of the unappropriated profits or accumulated losses as at the end of the reporting period, into realised and unrealised profits or losses.

On 20 December 2010, Bursa Malaysia further issued another directive on the disclosure and the prescribed format of presentation.

The breakdown of the retained earnings of the Group and of the Company as at 31 December 2010, into realised and unrealised profits, pursuant to the directive, is as follows: Group Company RM’000 RM’000 Total retained profits of UPA Corporation Bhd. and its subsidiaries - Realised 108,793 4,343 - Unrealised 3,426 -

112,219 4,343 Total share of retained profits from associate - Realised 1,299 - - Unrealised - -

113,518 4,343 Less: Consolidation adjustments (24,451) -

Total retained profits as per statements of financial position 89,067 4,343

The determination of realised and unrealised profits is compiled based on Guidance of Special Matter No.1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, issued by the Malaysian Institute of Accountants on 20 December 2010.

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In the opinion of the Directors, the financial statements set out on pages 23 to 60 are drawn up in accordance with Financial Reporting Standards and the Companies Act, 1965 in Malaysia so as to give a true and fair view of the financial position of the Group and of the Company as of 31 December 2010 and of their financial performance and cash flows for the year then ended.

In the opinion of the Directors, the information set out in Note 34 on page 60 to the financial statements has been compiled in accordance with the Guidance on Special Matter No.1, Determination of Realised and Unrealised Profits or

Losses in the Context of Disclosures Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, issued by the Ma-laysian Institute of Accountants, and presented based on the format prescribed by Bursa Malaysia Securities Berhad.

Signed on behalf of the Board of Directors in accordance with a resolution of the Directors:

…………………………………………………………Chua Ngeun Lok

…………………………………………………………Kok Kam Moi

Kuala Lumpur,Date: 28 April 2011

Statement by Directors pursuant to Section 169(15) of the Companies Act, 1965

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Statutory declaration pursuant to Section 169(16) of the Companies Act, 1965

I, Wong Kok Wah, the officer primarily responsible for the financial management of UPA Corporation Bhd., do solemnly and sincerely declare that the financial statements set out on pages 23 to 60 are, to the best of my knowledge and belief, 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 in Kuala Lumpur on 28 April 2011.

…………………………………………………………Wong Kok Wah

Before me:

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Report on the Financial Statements

We have audited the financial statements of UPA Corporation Bhd., which comprise the statements of financial posi-tion as at 31 December 2010 of the Group and of the Company, and the statements of comprehensive income, chang-es in equity and cash flows of the Group and of the Company for the year then ended, and a summary of significant accounting policies and other explanatory notes, as set out on pages 23 to 60.

Directors’ Responsibility for the Financial Statements

The Directors of the Company are responsible for the preparation of financial statements that give a true and fair view in accordance with Financial Reporting Standards and the Companies Act, 1965 in Malaysia, and for such internal control as the directors determine are necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with approved standards on auditing in Malaysia. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance 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 entity’s preparation of financial statements that give a true and fair view 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 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.

Opinion

In our opinion, the financial statements have been properly drawn up in accordance with Financial Reporting Standards and the Companies Act, 1965 in Malaysia so as to give a true and fair view of the financial position of the Group and of the Company as of 31 December 2010 and of their financial performance and cash flows for the year then ended.

Report on Other Legal and Regulatory Requirements

In accordance with the requirements of the Companies Act, 1965 in Malaysia, we also report the following:

a) In our opinion, the accounting and other records and the registers required by the Act to be kept by the Company and its subsidiaries of which we have acted as auditors have been properly kept in accordance with the provisions of the Act.

b) We have considered the accounts and the auditors’ report of the subsidiary of which we have not acted as auditors, which is indicated in Note 29 to the financial statements.

c) We are satisfied that the accounts of the subsidiaries that have been consolidated with the Company’s financial statements are in form and content appropriate and proper for the purposes of the preparation of the financial statements of the Group and we have received satisfactory information and explanations required by us for those purposes.

d) The audit reports on the accounts of the subsidiaries did not contain any qualification or any adverse comment made under Section 174(3) of the Act.

Other Reporting Responsibilities

Our audit was made for the purpose of forming an opinion on the financial statements taken as a whole. The informationset out in Note 34 on page 60 to the financial statements has been compiled by the Company as required by the Bursa Malaysia Securities Berhad Listing Requirements and is not required by the Financial Reporting Standards. In our opinion, the information has been properly compiled, in all material respects, in accordance with the Guidance on Special Matter No.1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosures Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, issued by the Malaysian Institute of Accountants and presented based on the format prescribed by Bursa Malaysia Securities Berhad.

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.

KPMG Loh Kam HianFirm Number: AF 0758 Approval Number: 2941/09/12(J)Chartered Accountants Chartered Accountant

Petaling Jaya, SelangorDate: 28 April 2011

Independent auditors’ report to the members of UPA Corporation Bhd.

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Analysis Of Shareholdings as at 25 April 2011

Authorised share capital : RM 100,000,000Issued and fully paid up share capital : RM 79,581,840 (inclusive of 1,539,700 treasury shares)Class of share : Ordinary share of RM 1.00 eachVoting right : One voting right for each ordinary share

DISTRIBUTION OF SHAREHOLDERS AS AT 25 APRIL 2011

Holdings No. of % Total % holders holdings

Less than 100 327 11.80 19,514 0.02100 to 1,000 137 4.95 75,285 0.101,001 to 10,000 1,929 69.64 6,157,745 7.8910,001 to 100,000 318 11.48 8,577,290 10.99100,001to less than 5% of the issued shares 58 2.09 22,437,217 28.755% and above of the issued shares 1 0.04 40,775,089 52.25

Total 2,770 100.00 78,042,140 100.00

30 LARGEST SHAREHOLDERS AS AT 25 APRIL 2011

Name No. of % share

1 UPA Holdings Sdn Bhd 40,775,089 52.252 Mastercraft Products Sdn Bhd 3,503,096 4.493 EB Nominees (Tempatan) Sdn Bhd 1,776,600 2.28 - Pledged securities account for Mohamed Zameel Bin Mohamed Hussain4 Kok Kam Moi 1,153,572 1.485 CIMSEC Nominees (Tempatan) Sdn Bhd 785,400 1.01 - Pledged securities account for Raja Nong Chik B. Raja Zainal Abidin6 Yeo Wee Thow @ Yeo Ngo Tee 774,900 0.997 Chu Soong Tau 760,000 0.978 Malaysia Nominees (Tempatan) Sendirian Berhad - Great Eastern Life Assurance (Malaysia) Berhad (LPF) 508,320 0.659 Abdul Aziz Bin Mohd Zain 504,000 0.6510 Citigroup Nominees (Tempatan) Sdn Bhd 504,000 0.65 - Pledged securities account for Chua Ngeun Lok11 Chu Soong Tau 500,000 0.6412 Lee Seow Chang 480,880 0.6213 Lee Mui Kien 437,148 0.5614 Chang Ching Chau @ Tew King Chang 434,400 0.5615 K.L. Union Trading (Papers) Sdn Bhd 432,960 0.5516 Ng Seow Sing 420,000 0.5417 Quality Synthetics (M) Sdn Bhd 420,000 0.5418 Chu Sheng Taur 410,940 0.5319 Lim Seng Heng 399,779 0.5120 Golden Circle Resources Sdn Bhd 386,400 0.5021 Mepro Holdings Berhad 368,040 0.4722 M.I.T. Nominees (Tempatan) Sdn Bhd 360,000 0.46 - Pledged securities account for Mohamed Zameel Bin Mohamed Hussain23 CIMSEC Nominees (Tempatan) Sdn Bhd 358,846 0.46 - Pledged securities account for Chua Ngeun Lok

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Analysis Of Shareholdings

24 Chua Ah Lak 336,720 0.4325 Lee Hock Seng 319,876 0.4126 Ma Huak Huang 312,535 0.4027 Mrs Nafesah Raja Nong Chik Abidin 273,000 0.3528 Yap San San 273,000 0.3529 Ng Seow Sing 235,200 0.3030 Sim Heng Siong 233,511 0.30

SUBSTANTIAL SHAREHOLDER AS AT 25 APRIL 2011(as per Register of Substantial Shareholders)

No. of ordinary shares held Name Direct % Indirect %

1 UPA Holdings Sdn Bhd 40,775,089 52.25 - -2 Kok Kam Moi 1,153,572 1.48 40,859,089 52.363 Chua Ngeun Lok 862,846* 1.11 42,192,145# 54.064 Chua Ngeun Seong 420,096** 0.54 42,274,895# 54.175 Ma Huak Huang 312,535 0.40 42,347,274 54.26

Note : * representing 358,846 ordinary shares held under CIMSEC Nominees (Tempatan) Sdn Bhd and 504,000 ordinary shares held under Citigroup Nominees (Tempatan) Sdn Bhd ** including 218,496 ordinary shares held under Citigroup Nominees (Tempatan) Sdn Bhd, # Deemed interested by virtue of Section 6A (4) and Section 122 A of the Companies Act, 1965

DIRECTORS’ SHAREHOLDINGS AS AT 25 APRIL 2011(as per Register of Directors’ Shareholdings)

No. of ordinary shares held Name Direct % Indirect %

1 Chua Ah Lak 336,720 0.43 111,600## 0.142 Kok Kam Moi 1,153,572 1.48 40,859,089# 52.363 Chua Ngeun Lok 862,846* 1.11 42,192,145# 54.064 Chua Ngeun Seong 420,096** 0.54 42,274,895# 54.175 Ma Huak Huang 312,535 0.40 42,347,274# 54.266 Yeo Wee Thow @ Yeo Ngo Tee 984,900 1.26 1,075,200# 1.38

Note : * representing 358,846 ordinary shares held under CIMSEC Nominees (Tempatan) Sdn Bhd and 504,000 ordinary shares held under Citigroup Nominees (Tempatan) Sdn Bhd ** including 218,496 ordinary shares held under Citigroup Nominees (Tempatan) Sdn Bhd # Deemed interested by virtue of Section 6A (4) and Section 122 A of the Companies Act, 1965 ## Deemed interested by virtue of Section 122A of the Companies Act, 1965

The analysis of sharholdings is based on the issued and paid up share capital of the company after deducting 1,539,700 ordinary shares bought back by the company and held as Treasury Shares as at 25 April 2011.

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Proprietor Location Tenure(expiry of lease)

Description of existing use

Land Area/ built-uparea (sq.metres)

Date ofrevaluation/acquisition

EstimatedAge ofBuilding(years)

Net BookValueRM

UPA Press Lot 27678 Mukim Of Kuala Lumpur,Sdn Bhd Wilayah Persekutuan Lot 27678, Simpang Salak South Industrial Area, Batu 5 1/2, Jalan Sungai Besi, Kuala Lumpur.

Building – Factory and 3 storey -/7,000 20-4-1996/- 37 1,970,178 office building

Land Leasehold Land on which a 10,049/- 20-4-1996/- – 2,461,326 20-4-2071 factory and 3 storey office building was built

UPA Press P.T. No 19514 Mukim Of Petaling. Leasehold 3 storey shop-lotSdn Bhd Wilayah Persekutuan 11-11-2076 and office building 126/388 20-4-1996/- 32 618,779 52, Jalan Mega Mandung, Batu 5, Jalan Kelang Lama, Kuala Lumpur.

UPA Press No. 12-1A Jalan 3/116B, Freehold One unit of -/87 20-4-1996/- 21 56,666Sdn Bhd Kuchai Enterpreneurs’ Park, apartment for staff Off Jalan Kuchai Lama, Kuala Lumpur. accommodation.

UPA Press P.T. No 3473 Mukim Of Petaling, Leasehold Factory for -/9,000 20-4-1996/- 16 6,086,618Sdn Bhd Selangor. 10-1-2089 manufacturing of Lot 3, Jalan 6/1, plastic products Seri Kembangan Industrial Estate, Seri Kembangan, Selangor Darul Ehsan. ( Building only ) office -/1,486 20-4-1996/- 12 1,055,112

UPA Press HS (D) 62387 Lot 8228, Leasehold Land on which a 10,445/ -/2005 41 8,559,751Sdn Bhd Mukim Of Petaling, 11-11-2065 2 storey factory and 8,500 Daerah Kuala Lumpur, office building was Wilayah Persekutuan. built

UPA Press HS (D) 381 PT28156, Leasehold Factory and 2 storey 3,342/500 -/2005 17 5,896,205Sdn Bhd Mukim Of Kuala Lumpur, 31-12-2065 office building Daerah Kuala Lumpur, Wilayah Persekutuan.

Wangsa P.T. No 3473 Mukim Of Petaling, Leasehold Land on which an 16,214/- 20-4-1996/- – 4,124,815Seputih Selangor. 10-1-2089 office and a factory Sdn Bhd Lot 3, Jalan 6/1, was built Seri Kembangan Industrial Estate, Seri Kembangan, Selangor Darul Ehsan. ( Land Only )

Sukiwa Lot 5811 Mukim Of Petaling, Freehold Vacant Land 30,882/- 30-04-2009/- – 8,310,000Corporation Selangor.Sdn Bhd

Danau Lot 5813 Mukim Of Petaling, Freehold Vacant Land 20,764/- 30-04-2009/- – 5,587,000Cekal Selangor.Sdn Bhd

UPA HS (M) 13714 P.T. No 3746 Leasehold Land on which a 10,302/- 12-12-2005/- – 4,579,936Machinery Mukim Of Petaling, 20-1-2089 factory was builtSdn Bhd Selangor.

Building – Factory -/5,000 26-11-2008 3 4,187,413

Particulars Of Properties at 31 December 2010

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I/ We.......................................................................................................................................................................of............................................................................................................................................................................being a *member/ members of UPA CORPORATION BHD, hereby appoint...........................................................................................................................................................................................................................................of............................................................................................................................................................................and/or failing him/ her, ..........................................................................................................................................of............................................................................................................................................................................or the Chairman of the Meeting as *my/ our proxy to attend and vote for *me/ us on *my/ our behalf at the Fifteenth Annual General Meeting of the Company to be held at Hang Tuah, Level 3, Mines Wellness Hotel, Jalan Dulang, MINES Resort City, 43300 Seri Kembangan, Selangor Darul Ehsan on Friday, 24 June 2011 at 11.30 a.m. and at any adjournment thereof:-

No. Resolutions For Against

1 Declaration of First and Final Dividend

2 Payment of Directors’ Fees

3 Re-appointment of Mr. Ma Huak Huang as Director

4 Re-election of Mr. Chua Ah Lak as Director

5 Re-election of Mr. Chua Ngeun Lok as Director

6 Re-appointment of Auditors and authorising Directors to fix their remuneration

7 Authority to issue shares pursuant to Section 132D

8 Proposed Renewal of Share Buy-Back Authority

9 Proposed Amendment to the Articles of Association of the Company

The proportion of *my/our holding to be represented by my/our *proxy/proxies are as follows:First Named Proxy %Second Named Proxy %

100%

In case of a vote taken by show of hands, the first named proxy shall vote on *my/our behalf.

..........................................................................Signature of ShareholderTelephone No. ...................................Dated this................................... day of June 2011.

NOTES:

i. A member entitled to attend and vote at this meeting is entitled to appoint a proxy to attend and to vote in his stead. A proxy may but need not be a member of the Company.ii. The instrument appointing a proxy shall be in writing signed by the appointor or his attorney duly authorised in writing, or if the appointor is a corporation, either under its common seal or signed by an officer or attorney duly authorised.iii. Where the member of the Company appoints two proxies or more, the appointment shall be invalid unless the member specifies the proportion of his shareholding to be represented by each proxy.iv. Where the member of the Company is an authorised nominee as defined under the Securities Industry (Central Depositories) Act 1991, it may appoint at least one (1) proxy in respect of each securities account it holds.v. The instrument appointing the proxy and the power of attorney or other authority, if any, under which it is signed or a notarially certified copy thereof must be deposited at the Registered Office of the Company at Lot 10, The Highway Centre, Jalan 51/205, 46050 Petaling Jaya, Selangor Darul Ehsan not less than forty-eight (48) hours before the time appointed for holding the meeting or adjourned meeting.

Proxy Form

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