esthetics international group...bukit jelutong, seksyen u8 40150 shah alam selangor darul ehsan...

ESTHETICS INTERNATIONAL GROUP

Notice of Annual General Meeting 2

Corporate Information 4

Board of Directors 5

Profile of Directors 6

Corporate Structure 9

Statement on Corporate Governance 10

Statement of Internal Control 16

Report of the Audit Committee 18

Statement of Directors’ Responsibilities 21

Group Financial Highlights and Five-YearFinancial Summary 22

Board of Directors’ Report 23

Financial Statements 29

Analysis of Shareholdings 84

List of Properties 86

Proxy Form Enclosed

CONTENTS

COVER RATIONALE

At EIG, our purpose is to create long-term value through the conceptualization, development and delivery of a diversified range of innovativeproducts that cater to our customer’s everyday needs. The key drivers in supporting our purpose are our people, our assets, our integrity, ourbusiness conduct, our product pipeline and our growth prospects. With these elements as our foundation, we aim to lead through innovation.

The images on the cover depict the diverse product and service offerings that we offer through multiple marketing channels. Harnessing theadvancement of science and technology, we are able to develop and distribute products and services that complement each other for totalwellness and better quality of life. This never ending quest of pursuing innovation and high quality products and services mean a strong focuson quality and a continuous search for new ways to improve everything we do.

We are proud of our contribution for creating a healthier tomorrow today while delivering value and sustainable returns for ourshareholders.

CORPORATE VISIONEnhancing total wellness and quality oflife of people around the world

CORPORATE MISSION• To be the leading total wellness

company offering great productsand services

• To achieve customer delight throughGreat Interactive Experience

• To accomplish sustainable growth,profitability and brand equity

CORPORATE VALUES (3Cs)Customer Focus Commitment

- Speed - Innovation- Result Oriented- Value Creation

Care for our stakeholdersSimplicity

Notice of Annual General Meeting


2 ANNUAL REPORT 2008

NOTICE IS HEREBY GIVEN THAT the Eleventh Annual General Meeting of the Company will be held at the Auditorium, Lot 11,Jalan Astaka U8/88, Bukit Jelutong, Seksyen U8, 40150 Shah Alam, Selangor Darul Ehsan, Malaysia, on Wednesday, 20 August2008 at 9.30 a.m. to transact the following businesses:-

AGENDA

As Ordinary Business

1. To receive and adopt the Audited Financial Statements for the financial year ended 31 March2008 together with the Directors’ and Auditors’ Reports thereon.

2. To declare a final dividend of 7% less 26% tax in respect of the financial year ended 31 March2008.

3. To re-elect the following Directors who are retiring by rotation pursuant to Article 87 of theCompany’s Articles of Association:a) Ms Melissa M Chenb) Encik Johan Zainuddin Bin Dzulkifli

4. To re-elect the following Director who is retiring pursuant to Article 94 of the Company’sArticles of Association:a) Dr Chu Siew Mun

5. To approve the payment of Directors’ fees of RM62,500.00 for the financial year ended 31March 2008.

6. To appoint Messrs Horwath as Auditors of the Company in place of the retiring Auditors,Messrs KPMG, to hold office until the conclusion of the next Annual General Meeting and toauthorise the Directors to fix their remuneration.

As Special Business

To consider and, if thought fit, to pass the following Ordinary Resolution:-

7. Authority under Section 132D of the Companies Act, 1965 for the Directors to issue shares

“THAT pursuant to Section 132D of the Companies Act, 1965, the Directors be and are herebyauthorised to issue shares in the Company at any time until the conclusion of the next AnnualGeneral Meeting upon such terms and conditions and for such purposes as the Directors may,in their absolute discretion, deem fit provided that the aggregate number of shares to beissued does not exceed ten per centum (10%) of the issued Share Capital of the Company forthe time being, subject always to the approval of all relevant regulatory bodies beingobtained for such allotment and issue.”

8. To consider any other ordinary business of the Company of which due notice shall have beenreceived.

Ordinary Resolution 1


Ordinary Resolution 3Ordinary Resolution 4





3ANNUAL REPORT 2008


NOTICE OF DIVIDEND PAYMENT

NOTICE IS ALSO HEREBY GIVEN THAT, subject to the approval of the shareholders at the Eleventh Annual General Meeting,a final dividend of 7% less 26% tax in respect of the financial year ended 31 March 2008 will be paid to shareholders on8 October 2008. The entitlement date for the said dividend shall be 12 September 2008.

A Depositor shall qualify for entitlement to the Dividend only in respect of:-

a) Shares transferred into the Depositor’s securities account before 4.00 p.m. on 12 September 2008 in respect of thetransfers,

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

BY ORDER OF THE BOARD

LEE WAI NGAN (LS 00184)CHAN MUN WAH (MIA 8935)Secretaries

Shah Alam, Malaysia29 July 2008

NOTES:

1. A member of the Company entitled to attend and vote at the meeting is entitled to appoint a proxy or proxies to attendand vote in his stead. A proxy may but need not be a member of the Company and the provision of Section 149 (1) (b)of the Companies Act, 1965 shall not apply.

2. Where a member appoints more than one (1) proxy, the appointment shall be invalid unless he specifies the proportionof his holdings to be represented by each proxy.

3. The instrument appointing a proxy shall be in writing under the hand of the appointor or of his attorney duly authorisedin writing or, if the appointor is a corporation, either under its Common Seal or under the hand of the attorney.

4. The instrument appointing a proxy must be deposited at the Registered Office of the Company at Lot 11, Jalan AstakaU8/88, Bukit Jelutong, Seksyen U8, 40150 Shah Alam, Selangor Darul Ehsan, Malaysia not less than 48 hours before thetime set for holding the meeting or any adjournment thereof.

EXPLANATORY NOTES TO ORDINARY RESOLUTION 7 AND THE SPECIAL BUSINESS

5. A notice of nomination pursuant to Section 172 (11) of the Companies Act, 1965 in respect of the nomination of MessrsHorwath for appointment as Auditors of the Company in place of the retiring Auditors, Messrs KPMG, has been receivedby the Company, a copy of which is circulated with the Annual Report. Messrs Horwath have given their consent to act.

6. Authority under Section 132D of the Companies Act, 1965 for the Directors to issue shares

Ordinary Resolution 8, if passed, will empower the Directors to allot and issue shares in the Company up to an amountnot exceeding in total ten percentum (10%) of the issued Share Capital of the Company for such purposes as the Directorsconsider would be in the interest of the Company. This authority, unless revoked or varied by the Company at a generalmeeting, will expire at the next Annual General Meeting.

Corporate InformationAs at 18 July 2008



BOARD OF DIRECTORS

EDDY CHIENG ING HUONG(Non Independent Non-Executive Chairman)

LIM YEE SOON (Group CEO)

MELISSA M CHEN(Chief Technical Officer and Executive Director,Education)

JOHAN ZAINUDDIN BIN DZULKIFLI(Senior Independent Non-Executive Director)

FELICIA LIM CHANG CHING(Non Independent Non-Executive Director)

DR CHU SIEW MUN(Independent Non-Executive Director)

AUDIT COMMITTEE

Johan Zainuddin Bin Dzulkifli - ChairmanEddy Chieng Ing Huong - MemberDr Chu Siew Mun - Member

NOMINATION COMMITTEE

Eddy Chieng Ing Huong - ChairmanJohan Zainuddin Bin Dzulkifli - MemberDr Chu Siew Mun - Member

REMUNERATION COMMITTEE

Eddy Chieng Ing Huong - ChairmanLim Yee Soon - MemberJohan Zainuddin Bin Dzulkifli - Member

AUDITORS

KPMGChartered AccountantsLevel 10, KPMG Tower8, First Avenue, Bandar Utama47800 Petaling JayaSelangor Darul EhsanMalaysiaTel: 603-7721 3388Fax: 603-7721 3399

REGISTERED OFFICE

Lot 11, Jalan Astaka U8/88 Bukit Jelutong, Seksyen U8 40150 Shah Alam Selangor Darul EhsanMalaysiaTel: 603-7809 6688Fax: 603-7809 6699

SHARE REGISTRARS

Systems & Securities Sdn BhdWisma Selangor Dredging6th Floor, South Block142-A, Jalan Ampang50450 Kuala LumpurMalaysiaTel: 603-2161 5466Fax: 603-2163 6968

COMPANY SECRETARIES

Lee Wai Ngan (LS 00184)Chan Mun Wah (MIA 8935)

STOCK EXCHANGE LISTING

Bursa Malaysia Securities BerhadMain Board, Trading/Services SectorDate of Listing: 11 March 2004Stock Code: 5081

PRINCIPAL PLACE OF BUSINESS

Lot 11, Jalan Astaka U8/88 Bukit Jelutong, Seksyen U8 40150 Shah Alam Selangor Darul EhsanMalaysiaTel: 603-7809 6688Fax: 603-7809 6699Website: www.estheticsgroup.com

PRINCIPAL BANKERS

HSBC Bank Malaysia BerhadRHB Bank BerhadPublic Bank BerhadMalayan Banking BerhadCitibank Bank BerhadCIMB Bank Berhad

5ANNUAL REPORT 2008


Board of Directors

From Left to right:Dr Chu Siew Mun, Johan Zainuddin Bin Dzulkifli, Melissa M Chen, Eddy Chieng Ing Huong, Lim Yee Soon, Felicia Lim Chang Ching

Profile of Directors



Lim Yee Soon Group CEO

Lim Yee Soon, aged 48, is the Group CEO of EIG Group. Hegraduated from the National University of Singapore witha Degree in Bachelor of Art, majoring in ArchitecturalStudies in 1983. Upon graduation, he joined ArchurbanArchitects in Singapore in February 1984 as a TraineeArchitect and left in December 1984 to further pursuestudies. In 1987, he obtained his Bachelor of ArchitectureDegree at the National University of Singapore.

His involvement with the Group started in February 1989when he became the Chief Executive Officer of DermalEsthetica Sdn Bhd. He has been the driving force behindthe development, growth and expansion of the EIG Group.He is also responsible for the strategic direction of the EIGGroup and plays an active role in the overall management.He is a Director of Amita Pearls Sdn Bhd, a companyinvolved in the trading of pearls and jewelry and HartsvilleSdn Bhd, which is an investment holding company. He wasappointed to the Board of the Company on 29 October1996.

Mr Lim Yee Soon attended all of the four (4) Boardmeetings which were held during the financial year ended31 March 2008.

Eddy Chieng Ing HuongNon Independent Non-Executive Chairman

Eddy Chieng Ing Huong, aged 50, is the Non IndependentNon-Executive Chairman of the Company. He is also theChairman of the Nomination Committee andRemuneration Committee. He was appointed to the Boardof the Company on 4 February 2004.

He graduated in 1980 from the University of New SouthWales, Australia with a Bachelor of Commerce Degree withMerit in Accounting, Finance and Information Systems. Hequalified as a Chartered Accountant in 1981 and is amember of the Institute of Chartered Accountants,Australia. He is also a Chartered Accountant registeredwith the Malaysian Institute of Accountants since 1983.

He has extensive senior management and workingexperience in both Malaysia and Australia. Since March1999, he is the Senior Vice President-Business Developmentof Hwang DBS Investment Bank Berhad. Other than beingthe Managing Director of his private group of companies,he is also he Chairman of Selangor Dredging Berhad andSenior Independent and Non-Executive Drector of QLResources Berhad. He was previously the Independent andNon-Executive Director of Ancom Berhad and Nylex(Malaysia) Berhad respectively, Chairman of Asia PolyHoldings Berhad and Founder Director / Substantialshareholder of Nationwide Express Courier ServicesBerhad.

Mr Eddy Chieng Ing Huong attended all of the four (4)Board meetings which were held during the financial yearended 31 March 2008.

7ANNUAL REPORT 2008


Melissa M Chen Chief Technical Officer and Executive Director, Education

Melissa M Chen, aged 48, is the Chief Technical Officer andExecutive Director of Education. To-date, she has obtainednumerous international beauty qualifications since 1984.Amongst others:

• Diploma in Beautician from the Confederation ofInternational Beauty Therapy & Cosmetology (London)

• Diploma International CIDESCO (Zurich) (COMITÉINTERNATIONAL D’ESTHETIQUE ET DE COSMETOLOGIE)

• Post Graduate Diploma in European Skin CareTechniques (USA)

• Diploma in Clinical Aromatherapy (HK)• Post Graduate courses in Sunscreens and Sun Care and

Skin Care and Basic Cosmetic Ingredients at theUniversity of California Los Angeles (UCLA) in USA

She began her career in 1984 as the Founder and SoleProprietor of Head to Toe Beauty Centre. Since then, as thevisionary behind the EIG Group, she has held numerous topmanagement positions within the Group. She is a memberof the British Association of Beauty Therapy andCosmetology Ltd since 1984. She was appointed to theBoard of the Company on 29 October 1996.

Ms Melissa M Chen attended all of the four (4) Boardmeetings which were held during the financial year ended31 March 2008.

Johan Zainuddin Bin DzulkifliSenior Independent Non-Executive Director

Johan Zainuddin Bin Dzulkifli, aged 45, is the SeniorIndependent Non-Executive Director and Chairman of theAudit Committee. He was appointed to the Board of theCompany on 23 March 2005.

He is a Fellow of the Association of Chartered CertifiedAccountants and has a Post-Graduate Diploma in IslamicBanking and Finance from International Islamic University,Malaysia. He began his career as a Financial Accountantwith a multinational petroleum company in 1986 after hisgraduation. In 1989, he joined a merchant bank asAssistant Manager in the Corporate Advisory department.He subsequently left and joined a public listed company asVice President of Corporate and Business Development in1992 and, in 1997 he joined another public listed companyas Head of Corporate Services until 2002. He is well versedin areas of corporate advisory and business development.

Currently, he is an Executive Director of a company in theoil and gas industry. He also sits on the Board of SunwayInfrastructure Berhad as a Non Independent Non-ExecutiveDirector.

Encik Johan Zainuddin Bin Dzulkifli attended all of thefour (4) Board meetings which were held during thefinancial year ended 31 March 2008.

Profile of Directors (cont’d)



Dr Chu Siew MunIndependent Non-Executive Director

Dr Chu Siew Mun, aged 65, is the Independent Non-Executive Director of the Company. He was appointed tothe Board of the Company on 22 February 2008.

Dr Chu graduated from University of Malaya with Bachelorof Medicine and Bachelor of Surgery degrees in 1969. In1974, he became a member of the Royal College ofPhysicians of London and obtained a Diploma inDermatology from the University of London. He has beena fellow of the Royal College of Physicians of London since1991 and a fellow of the Academy of Medicine of Malaysiasince 2002.

He lectured in Medicine and Dermatology at University ofMalaya from 1973 to 1977 and was a ConsultantDermatologist at Assunta Hospital till 1987. He was thepioneer group of doctors and consultant dermatologists atSubang Jaya Medical Centre (since 1985) and also atMegah Medical Specialist Group (“MMSG”) since 1997, ofwhich he was a past member of the Board of Directors. Hehas written papers and presentations in Dermatologyconferences and was the President of DermatologicalSociety of Malaysia from 1988 to 1989.

Dr Chu is currently in private practice as a consultantdermatologist.

Felicia Lim Chang ChingNon Independent Non-Executive Director

Felicia Lim Chang Ching, aged 33, graduated fromSheffield University in the United Kingdom in 1996 with aBachelor of Arts in Business Studies. She is currently theExecutive Director of Paos Holdings Berhad, a public listedcompany involved in the production of value-addedproducts from oil palm, such as finished soap and animalfeed.

Prior to joining Paos, she was the Chief Operating Officerof Hospital Pantai Indah from September 2005 to August2006. Before her involvement in Pantai, she was theDirector of Business Development, for the Asia Poly Groupfrom 1998 to 2005; where she managed all the sales cummarketing, customer service, trading and logistics aspectsof the entire Group. Before joining Asia Poly in 1998, shewas attached to Intercontinental Specialty Fats Sdn. Bhd. asCommercial Executive from 1996 to 1998. She wasappointed to the Board of the Company on 18 July 2007.

Ms Felicia Lim Chang Ching attended all of the three (3)Board meetings since her appointment to the Board, whichwere held during the financial year ended 31 March 2008.

All of the Directors of the Company are Malaysian.

9ANNUAL REPORT 2008


Corporate StructureAs at 18 July 2008

MALAYSIA

100% Leonard Drake (M) Sdn Bhd

100% Asterspring Franchise International Sdn Bhd

100% Dermal Esthetica Sdn Bhd

100% EIG Pharma Asia Sdn Bhd

100% Lexwel International Sdn Bhd

100% Clinelle (M) Sdn Bhd

100% Esthetics Concept Sdn Bhd

100% Esthetics and Wellness International Sdn Bhd

100% Klientec International Sdn Bhd

100% Beuxstar Sdn Bhd

100% Averine (Malaysia) Sdn Bhd

100% Leonard Drake Fitness (M) Sdn Bhd

100% Head to Toe Skin Care Centre (KL) Sdn Bhd

100% Airellis International Sdn Bhd

SINGAPORE

100% EIG Global Pte Ltd

100% Leonard Drake (S) Pte Ltd

100% Ina Gail Pte Ltd

100% Lexwel International (S) Pte Ltd

HONG KONG

THAILAND

AUSTRALIA

100% EIG (Thailand) Co Ltd

49.9% Dermal Wellness International Co Ltd

149.9% Dermal Concept Co Ltd

49.9% Leonard Drake (Thai) Co Ltd

100% Leonard Drake (HK) Ltd

100% EIG Global (HK) Ltd

100% Lexwel International Pte Limited

100% EIG Global Australia Pty Ltd

Investment Holding

Professional Services and Sales

Product Distribution

Other Services

Dormant

LEGEND:

Statement on Corporate Governance



The Board of Directors (“Board”) of Esthetics International Group Berhad (“EIG” or “the Company”) is committed to theprinciples and best practices of corporate governance in the Malaysian Code on Corporate Governance (“Code”) and ensuresthat standards of corporate governance are being observed to realize the objective of increasing shareholders’ value.

THE BOARD AND BOARD STRUCTURES

An effective Board leads and controls the Company. The Directors are from diverse professional and business backgroundswith a wide range of academic and professional qualifications and business and financial experience relevant to lead theGroup’s business activities and as such are able to effectively discharge their duties and responsibilities on issues of strategicplanning, performance evaluation, resource allocation, setting of standards of conduct, identifying principal risks, reviewinginternal control systems etc.

The Board has delegated certain responsibilities to the Board Committees with clearly defined terms of reference to assist indischarging their duties. The Board Committees include the Audit Committee, Nomination Committee and RemunerationCommittee. The Chairman of the Committee will report and table to the Board their respective recommendations forconsideration and adoption.

There were a total of four (4) Board meetings held during the financial year ended 31 March 2008 and all the Directors haveattended the respective meeting with 100% attendance.

BOARD COMPOSITION

The current Board consists of six (6) members, the Non Independent Non-Executive Chairman, the Group CEO, one (1)Executive Director, two (2) Independent Non-Executive Directors and one (1) Non Independent Non-Executive Director. Aprofile of each Director is presented on pages 6 to 8 of this Annual Report.

The Group CEO and Executive Director are generally responsible for making and implementing operational decisions whilethe Independent Directors and Non-Executive Directors complement their expertise and experience towards the formulationof policy and decision-making process with effective check and balance. The Group CEO and the Executive Director, areexperienced in EIG line of business having been fully engaged in the industry since 1980’s and collectively bring to the Groupmany years of experience, skills and knowledge in the sector.

The presence of Independent Non-Executive Directors provides an effective Board with a mix of industry specific knowledgeand broad business and commercial experience. The balance enables the Board to provide fair and independent views, adviceand judgement to the Company and to bring informed and independent judgement to many aspects of the Company’sstrategy and performance so as to ensure that the highest standards of conducts and integrity are maintained by theCompany, as well as to safeguard the interest of other stakeholders.

One third of the Board comprises Independent Non-Executive Directors since the Company recognises the contribution ofIndependent Non-Executive Directors as equal Board members to the development of the Company’s strategy, the importanceof representing the interests of public shareholders and providing a balanced and independent view of the Board. AllIndependent Non-Executive Directors are independent of management and free from any relationship which could interferewith their independent judgement.

The Articles of Association of the Company provides that at least one-third of the Board is subject to retirement by rotationat every Annual General Meeting (“AGM”). Further, each of the Director of the Company shall retire at least once every three(3) years. A retiring Director is eligible for re-election. This provides an opportunity for shareholders to renew their mandate.The election of every Director is voted on separately.

11ANNUAL REPORT 2008


BOARD MEETINGS AND SUPPLY OF INFORMATION TO THE BOARD

There are quarterly Board meetings, convened for purposes such as to review and approve the Group’s quarterly financialstatements and to deliberate and assess business issues that require decision from the Board. The Board also reviews theGroup’s business plan on an annual basis so as to align the business directions and goals with the prevailing economic andmarket conditions. The Board approves the Group’s annual budget and carries out periodic review of the progress made bythe various business units.

All Directors have full and unrestricted access to timely information, necessary in the furtherance of their duties. Prior to eachBoard meeting, all Directors receive an agenda and a full set of Board papers for each agenda item to be discussed. Minutesfor every Board meeting are circulated to all Directors for their perusal prior to confirmation of the minutes at the followingBoard meeting. Relevant Executive Directors will provide explanation of pertinent issues. All proceedings from the Boardmeetings are minuted. The Board is constantly kept updated on the Company’s financial performance, activities and itsoperations. All Directors have access to the advice and services of the Company Secretaries.

APPOINTMENT TO THE BOARD

The Nomination Committee comprises three (3) members who are the Non-Executive Directors of the Company. The Chairmanof the Committee is Mr Eddy Chieng Ing Huong and the other members are Encik Johan Zainuddin Bin Dzulkifli and Dr ChuSiew Mun. The Committee is empowered to bring to the Board recommendations as to the appointment/re-appointment/re-election of any Executive or Non-Executive Director, provided that the Chairman of the Nomination Committee, in developingsuch recommendations, consults all Directors and reflects that consultation in any recommendation of the NominationCommittee brought forward to the Board.

The Nomination Committee also ensures that the Board has an appropriate balanced mix of skills, expertise, experience,ability and other core competencies and oversees the overall composition of the Board in terms of the appropriate size andskills and the balance between Executive Directors, Non-Executive Directors and Independent Directors. For this purpose, theCommittee assesses the effectiveness of the Board as a whole and performance of the Directors of the Company on an on-going basis. Terms of reference of the Committee are clearly defined.

Meetings of the Nomination Committee are held as and when required, and at least once a year. During the financial yearended 31 March 2008, the Nomination Committee held one (1) meeting which was attended by all members.

DIRECTORS’ REMUNERATION

The Remuneration Committee is made up of three (3) members comprising the Non Independent Non-Executive Chairman,the Group CEO and the Senior Independent Non-Executive Director namely:-

• Mr Eddy Chieng Ing Huong (Chairman)• Mr Lim Yee Soon (Member)• Encik Johan Zainuddin Bin Dzulkifli (Member)

The objective of the Committee is to assist the Board of Directors in their responsibilities in assessing the remuneration policiesof the Directors to ensure that the same remains in support of its corporate objectives and shareholder value and is in tandemwith its culture and strategy. The Director concerned will not be present when matters affecting his own remunerationarrangement are considered.

The determination of remuneration of the Non-Executive Directors is a matter for the Board as a whole. The Non-ExecutiveDirectors abstain from discussion of their own remuneration. Non-Executive Directors are paid annual fees and attendanceallowance for Board meetings that they attend. Terms of reference of the Committee are clearly defined. Meetings of the

Statement on Corporate Governance (cont’d)



Remuneration Committee are held as and when necessary, and at least once a year. During the financial year ended 31 March2008, the Remuneration Committee held one (1) meeting which was attended by all members.

The aggregate remuneration of Directors of the Company categorised into appropriate components for the financial year areas follows:

RM’000 Salaries & Other Emoluments* Benefits In Kind*** Fees Total

Executive Directors 1,664** 34** – 1,698Non–Executive Directors – 21 63 84

* Other emoluments include bonuses and employer contribution to the Employees’ Provident Fund.** Inclusive for one Director who resigned during the financial year.*** Benefits in-kind are in respect of motor vehicle provided for Executive Director and gift certificates for treatment services

for Non-Executive Directors.

The numbers of Directors whose remuneration for the financial year falling into the following bands are as follows:-

Range of remuneration per annum No. of DirectorsExecutive Directors Non-Executive Directors

Below RM50,000 1* 5*RM800,001 to RM850,000 2 –

* Inclusive for Directors who were appointed or resigned during the financial year.

CONTINUING EDUCATION OF THE DIRECTORS

All members of the Board have attended the Mandatory Accreditation Program (“MAP”) of Bursa Malaysia Securities Berhad(“Bursa Malaysia”). The Directors have continued to upgrade themselves through attending continuing education programsrecommended by accredited institutions and authorities to further enhance their skills and knowledge and update themselveson new developments in the business environment.

CORPORATE SOCIAL RESPONSIBILITY

In line with the corporate social responsibility initiatives adopted, Asterspring Franchise International Sdn Bhd participated ina fund raising event in aid of Institut Jantung Malaysia. Several staff welfare activities were also organised in the variouscountries during the financial year.

ACCOUNTABILITY AND AUDIT

THE AUDIT COMMITTEE

The Audit Committee comprises two (2) Independent Non-Executive Directors and the Non Independent Non-ExecutiveChairman namely:-

• Encik Johan Zainuddin Bin Dzulkifli (Chairman)• Mr Eddy Chieng Ing Huong (Member)• Dr Chu Siew Mun (Member)

The composition and terms of reference of the Audit Committee together with its report are set out on pages 18 to 20 of thisAnnual Report.



FINANCIAL REPORTING

The Board is responsible for presenting a balanced, clear and meaningful assessment of the Group’s operations, financialposition and prospects whenever it releases its quarterly report and annual financial statements to shareholders. The AuditCommittee has assisted the Board in overseeing the financial reporting processes and the quality of financial reporting byscrutinizing information for disclosure to ensure accuracy, adequacy and completeness. A Statement of Directors’Responsibilities in respect of the preparation of the audited financial statements is presented on page 21 of this AnnualReport.

INTERNAL CONTROL

The Board acknowledged its responsibility for the Group’s system of internal control that provides reasonable assurance ofeffective and efficient operations, and compliance with laws and regulations, as well as internal procedures and guidelines,and the need to review its effectiveness regularly. In doing so, the Board has the right to seek information and clarificationfrom the Management, seeks input from the Audit Committee, the internal and external auditors and other experts at theexpense of the Company.

In addition to that, the Board recognizes that risks cannot be eliminated completely, therefore, the systems and processes putin place would have to be aimed at minimizing and managing the risks of material errors, fraud or losses occurring. The AuditCommittee has been empowered to assist the Board in fulfilling the above roles via functions laid down in its terms ofreference. The Audit Committee also acts as a forum for discussion on internal control and risk management issues. Theminutes of the Audit Committee meetings are tabled to the Board for noting and for action by the Board where appropriate.

The Group’s Statement of Internal Control which provides an overview of the state of internal control is set out on pages 16and 17 of this Annual Report.

RELATIONSHIP WITH THE EXTERNAL AUDITORS

Through the Audit Committee, the Company has always maintained a close and transparent relationship with its externalauditors in seeking professional advice and ensuring compliance with the financial reporting standards in Malaysia, to discusstheir audit plan, audit findings and the financial statements.

COMMUNICATION WITH SHAREHOLDERS AND INVESTORS

The Company strictly adheres to the disclosure requirements of Bursa Malaysia and recognises the importance of timely andequal dissemination of information to shareholders and stakeholders to fulfill transparency and accountability objectives.Another key channel of communication with shareholders, investors and the investment community at large is the Group’sinvestor relations function. The institutional shareholders, fund managers, research analysts and substantial shareholdershave a direct channel and are able to enter into dialogue with the Company’s representatives.

The AGM is the principal forum for communication and dialogue with shareholders. Shareholders are notified of the meetingand provided with a copy of Company’s Annual Report at least twenty one (21) days before the date of the meeting.

The Board members are prepared to respond to all queries and undertake to provide sufficient clarification on issues andconcerns raised by the shareholders. The external auditors are also present to provide their professional and independentclarification on queries raised by shareholders. Status of all resolutions proposed at the AGM is announced to Bursa Malaysiaat the end of the meeting day. Proceedings of the AGM are properly minuted. The Company also maintains a website(www.estheticsgroup.com) through which shareholders and members of the public in general can gain access to informationabout the Group.

Statement on Corporate Governance (cont’d)



STATEMENT OF COMPLIANCE WITH THE BEST PRACTICES OF THE MALAYSIAN CODE ON CORPORATE GOVERNANCE

The Board has to the best of its ability and knowledge complied with the Best Practices in Corporate Governance set out inPart II of the Code.

OTHER INFORMATION IN COMPLIANCE WITH THE LISTING REQUIREMENTS OF BURSA MALAYSIA

Share Buy Back

There were no share buy back by the Company during the financial year.

Options, Warrants or Convertible Securities

There were no options, warrants or convertible securities issued by the Company during the financial year.

American Depository Receipt (ADR)/Global Depository Receipt (GDR)

There were no ADR or GDR programmes sponsored by the Company during the financial year.

Sanctions and/or Penalties

There were no sanctions and/or penalties imposed on the Company and its subsidiary companies, Directors or Managementby the relevant regulatory authorities during the financial year.

Variation in Results

The Company has not made any profit estimate/forecast/projection/unaudited results announcement that differ by more thanten percent (10%) margin.

Profit Guarantee

No profit guarantee was given to or by the Company or its subsidiary companies during the financial year.

Material Contracts

There were no material contracts (not being contracts entered into in the ordinary course of business) entered into by theCompany and/or its subsidiary companies which involve Directors’ and substantial shareholders’ interests either still subsistingat the end of the financial year ended 31 March 2008 or entered into since the end of the previous financial year.

Revaluation Policy on Landed Properties

No revaluation was carried out on the landed properties of the Group.

Non-audit Fees

Non-audit fees paid to the external auditors, KPMG for the financial year ended 31 March 2008 amounted to RM15,000.00.

Conflict of Interest and Conviction of Offences

None of the Directors has any conflict of interest with the Company and the Group and none of them has been convicted forany offence in the past ten (10) years other than traffic offences.

Related Party Transactions

There were no material related party transactions (not being transactions in the ordinary course of business) during thefinancial year.



Family Relationship with Directors and Substantial Shareholders

Ms Melissa M Chen is the spouse of Mr Lim Yee Soon.

Directorship in Public Companies

None of the Directors hold any directorships in other public companies except as indicated below:-

Director Public Companies

Eddy Chieng Ing Huong Selangor Dredging BerhadQL Resources Berhad

Johan Zainuddin Bin Dzulkifli Sunway Infrastructure Berhad

Felicia Lim Chang Ching Paos Holdings Berhad

This Statement is made in accordance with a resolution of the Board of Directors dated 16 May 2008.

Statement of Internal Control



BOARD’S RESPONSIBILITIES AND COMMITMENT

The Board of Directors (“the Board”) of Esthetics International Group Berhad (“EIG” or “the Company”) acknowledges itsoverall responsibility for the Group’s system of internal control and its effectiveness and for reviewing its adequacy andintegrity. The system of internal control is designed to safeguard shareholders’ investment and the Group’s assets. By itsnature, it can only provide reasonable assurance but not absolute assurance against material misstatement of managementand financial information and records, loss and fraud. It is designed to manage the Group’s risk within an acceptable riskprofile, rather than eliminate the risk of failure to achieve the policies and business objectives of the Group.

The Board believes that the Group’s system of internal control, financial or otherwise should provide reasonable assuranceregarding the achievement of the Group’s objectives in:-

• Effectiveness and efficiency of operations• Reliability and transparency of financial information• Compliance with laws and regulations• Safeguarding of the Group’s assets

It is the Board’s view that in order to achieve a sound system of internal control, it is important to provide a conduciveenvironment to attain this objective and having in place an on-going process of identifying, evaluating and managingsignificant risks faced by the Group.

INTERNAL CONTROL AND RISK MANAGEMENT

The Malaysian Code on Corporate Governance has made risk management a responsibility of the Board of Directors. Part 2of the Best Practices in Corporate Governance states, in relation to risk management, that “the Board should identify principalrisks and ensure the implementation of appropriate systems to manage these risks”.

In discharging its stewardship responsibilities, the Board recognises that risk management:-

• Is a logical and systematic method of identifying, analysing, assessing, treating and monitoring of the Group’s risks• Is a continuous and an on-going process• Is an integral part of the Group’s management practices• Enables the Group to not only minimise losses but also to maximise opportunities.

The Board’s primary objective and direction in managing the Group’s principal risks are to enhance the Group’s ability toachieve its business objectives. In order to measure the achievement of the business objectives, the Board monitors theGroup’s performance and profitability at its Board meetings.

The Group is structured as such that the heads of each operating unit has a clear reporting line and the management of theGroup as a whole is assigned to the Group CEO and Executive Director. The management of the Group’s individual operatingunits is assigned to divisional management who are accountable for the conduct and performance of their businesses withinthe agreed business strategy. The Group CEO, Executive Director and senior management throughout the current financialyear, attended periodic management and operational meetings. Financial and/or operations reports, where applicable, arealso circulated for the Group CEO, Executive Director and senior management review in order to monitor the performance ofthe Group. These meetings and reports coupled with the ‘close to operation’ policy employed by the Group CEO, ExecutiveDirector and senior management present a platform for identification of the Group’s risks and systems to manage those riskson an informal basis. The Group CEO and Executive Director update the Board of any significant matters, which require thelatter’s attention.



INTERNAL CONTROL ENVIRONMENT AND KEY INTERNAL CONTROL PROCESSES

The current system of internal control in the Group has the following key elements:-

• Clear Group vision, mission and strategic direction• A Board which retains control over the Group and monitors Management to ensure that the Group’s operations are in

accordance with the corporate objectives and strategies • Review of monthly financial and operating reports and monitoring of approved annual budget against actual with

variance analysis • Centralised control of procurement and payment functions at the Head Office• Periodic Board meetings to review business operations, performance and approve significant transactions• Clearly defined delegation of responsibilities to Committees of the Board• A clearly defined organisation structure to achieve Group’s objectives• Periodic management meetings to review matters such as operations, business strategies and human resource

development• Segregation of duties, system access controls and physical safeguards

ASSURANCE

The Board has assigned the Audit Committee with the duty of reviewing and monitoring the effectiveness of the Group’ssystem of internal control. Moores Rowland Risk Management Sdn Bhd has been the appointed internal auditors providinginternal audit services to the Group during the financial year.

The scope of work of internal audit encompasses the examination and evaluation of the adequacy, existence and effectivenessof the system of internal control, risk management framework and corporate governance of the Group, which include, interalia, the following:-

• reviewing the reliability and integrity of financial and operating information and the means used to identify, measure,classify and report such information

• evaluating the systems established to ensure compliance with policies, plans, procedures, laws and regulations whichcould have a significant impact on operations

• examining the means of safeguarding assets and, as appropriate, verifying the existence of such assets • assessing the economy and efficiency with which resources are employed• appraising operations or programmes to ascertain whether results are consistent with established objectives and goals

and whether the operations or programmes are being carried out as planned.

Any areas for improvement identified during the course of the internal audit review will be brought to the attention of theAudit Committee. The internal auditors are to report to the Audit Committee through their quarterly internal audit reports.Three (3) internal audit reports have been tabled at the Audit committee meetings held during the financial year.

The Board remains committed towards operating a sound system of internal control and therefore recognises that the systemmust continuously evolve to support the type of business and size of operations of the Group. As such, the Board, in strivingfor continuous improvement will put in place appropriate action plans, when necessary, to further enhance the Group’ssystem of internal control.

This Statement is made in accordance with a resolution of the Board of Directors dated 16 May 2008

Report of the Audit Committee



MEMBERS

Encik Johan Zainuddin Bin Dzulkifli (Chairman), Senior Independent Non-Executive DirectorMr Eddy Chieng Ing Huong, Non Independent Non-Executive ChairmanDr Chu Siew Mun, Independent Non-Executive Director

TERMS OF REFERENCE

The terms of reference of the Audit Committee are set out below:

Composition

The Audit Committee shall be appointed by the Board from amongst their numbers and shall:

1. Consist of no less than three (3) members;2. Consist of majority of independent directors who are exclusively Non-Executive Directors; and3. Have at least one (1) member who is a member of the Malaysian Institute of Accountants or who fulfils such other

requirements as prescribed in the Bursa Malaysia Securities Berhad Listing Requirements.

The members of the Audit Committee shall elect a Chairman from amongst their numbers who is an Independent Director.

In the event of any vacancy in the Audit Committee resulting in the non compliance of the above stated conditions, theCompany shall fill the vacancy within three (3) months.

The terms of office and performance of the Audit Committee and its members should be reviewed by the Board no less thanevery three (3) years. The terms of office and performance of the Audit Committee and its members have last been reviewedand renewed by the Board on 25 May 2007.

Authorities

The Audit Committee shall:-

1. Have authority to investigate any matter within its terms of reference2. Have the resources which are required to perform its duties3. Have full and unrestricted access to any information pertaining to the Group4. Have direct communication channels with the external auditors and person(s) carrying out the internal audit function or

activity5. Have the right to obtain independent professional or other advice at the Company’s expense6. Have the right to convene meetings with the external auditors and/or internal auditors or both, excluding the

attendance of the other Directors and Management, whenever deemed necessary, and7. Promptly report to Bursa Malaysia matters which have not been satisfactorily resolved by the Board of Directors resulting

in the breach of the Listing Requirements.

Functions

The functions of the Audit Committee shall be to review:-

1. With the external auditors, the audit plan and scope2. With the external auditors, his evaluation of the accounting policies and system of internal control3. With the external auditors, his audit report and the assistance given by the Company’s officers to the auditors



4. The adequacy of the scope, functions, competency and resources of the internal audit function and the system of internalcontrols within the Group and that it has the necessary authority to carry out its work

5. The internal audit programmes, processes, results of the internal audit programmes, processes or investigationundertaken and whether or not appropriate action is taken on the recommendations of the internal audit function

6. The quarterly reports on consolidated results and annual financial statements prior to submission to the Board ofDirectors, focusing particularly on changes in or implementation of major accounting policy changes, significant andunusual events and compliance with financial reporting standards and other legal requirements

7. Any letter of resignation from the auditors of the Group and to consider the nomination of a person or person(s) asauditors (internal and external)

8. Suitability of the external auditors for re-appointment9. Any related party transactions and conflict of interest that may arise within the Company or Group10. To consider other topics as defined by the Board.

Meetings

The Audit Committee shall meet at least once every quarter of a financial year and at such additional meetings as theChairman shall decide in order to fulfill its duties. The Company Secretary or any person appointed by the Audit Committeeshall act as the secretary of the Audit Committee and shall be responsible, in conjunction with the Chairman, for drawing upthe agenda and other explanatory documentation for circulation to the Committee members prior to each meeting. TheSecretary shall be responsible for keeping the minutes of the meeting of the Audit Committee, and circulating them to theCommittee members and to other members of the Board of Directors. The Chairman shall convene a meeting of the AuditCommittee to consider any matter the auditors believe should be brought to the attention of the Directors or shareholders.The Company must ensure that other Directors and employees attend any particular Audit Committee meeting only at theAudit Committee’s invitation, specific to the relevant meeting.

A quorum shall consist of a majority of members present who must be Independent Directors.

INTERNAL AUDIT FUNCTION

The Board has, during the financial year, appointed Moores Rowland Risk Management Sdn Bhd as the internal auditors toassist the Board and the Audit Committee on the following objectives and to provide an independent assessment on theadequacy, existence and effectiveness of the system of internal control, risk management and corporate governance and toprovide Management with recommendations of best practices for further improvement:

• maintaining a good corporate governance standard as well as a sound system of internal control• facilitating the effective discharge of its stewardship responsibilities in respect of strategic business operations and

related controls• identifying principal risks and ensuring the implementation of appropriate risk management framework• reviewing the adequacy and integrity of the systems of internal control and management information systems.

MEETINGS AND ATTENDANCE

During the financial year ended 31 March 2008, there were four (4) Audit Committee meetings held and members of theAudit Committee attended all the Audit Committee meetings held with 100% attendance with the exception of Dr Chu SiewMun who was appointed to the Audit Committee on 22 February 2008.

Report of the Audit Committee (cont’d)



SUMMARY OF ACTIVITIES

During the financial year, the Audit Committee carried out the following activities:

Financial Results

a. Reviewed the quarterly unaudited financial results before recommending for approval of the Board.

External Audit

a. Reviewed the audit plan and scope of the external auditors for the audit for the financial year ended 31 March 2008.

Internal Audit

a. Reviewed the internal audit reports tabled, audit recommendations made and Management’s response to therecommendations.

The Audit Committee has also reviewed the Statement of Internal Control for inclusion in this Annual Report.

This Report of the Audit Committee is dated 16 May 2008



The Directors are legally required to prepare financial statements for each financial year which give a true and fair view ofthe state of affairs of the Group and of the Company at the end of the financial year and of the results and cash flows of theGroup and the Company for the financial year then ended.

In preparing those financial statements, the Directors of the Company have:-

• Adopted suitable accounting policies and then applied them consistently• Made judgement and estimates that are prudent and reasonable• Ensured applicable financial reporting standards have been followed, subject to any material departures disclosed and

explained in the financial statements, and• Prepared the financial statements on the going concern basis unless it is inappropriate to presume that the Group and

the Company will continue in business.

The Directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time thefinancial position of the Group and of the Company and to enable them to ensure that the financial statements comply withthe Companies Act, 1965 and applicable approved financial reporting standards and the Listing Requirements of BursaMalaysia Securities Berhad. The Directors are also responsible for the assets of the Group and of the Company and hence, fortaking reasonable steps for the prevention and detection of fraud and other irregularities.

This Statement is made in accordance with a resolution of the Board of Directors dated 16 May 2008

Statement of Directors’ ResponsibilitiesIn respect of the Audited Financial Statements

Group Financial Highlights and Five-YearFinancial Summary



(RM’000) 31.1.2004 31.1.2005 31.3.2006 *** 31.3.2007 31.3.2008

Revenue 62,586 80,656 114,376 124,660 167,152Profit before tax 16,037 17,636 18,888 18,101 21,175Net profit 11,688 12,183 14,053 13,759 15,773Shareholders’ funds 65,235 89,134 97,071 105,476 123,870Number of shares* (‘000) 96,660 120,000 120,000 120,000 132,000Earning Per Share (EPS) (RM) 0.12 0.10** 0.12 0.11 0.12****Net Assets per share (RM) 0.67 0.74 0.81 0.88 0.94

NOTES

* Based on ordinary shares of RM0.50 each.** Based on weighted average number of ordinary shares of 117,449,000.*** The Company changed its financial year to 31 March commencing for the financial year ended 31 March 2006.

Financial year ended 31 March 2006 represents a fourteen (14) months financial period.**** Based on weighted average number of ordinary shares of 129,115,000.

REVENUE RM’000 PROFIT BEFORE TAX RM’000

NET PROFIT RM’000 SHAREHOLDERS’ FUNDS RM’000



Board of Directors’ Report

The Board of Directors (“the Board”) ofEsthetics International Group Berhad (“theCompany”) is pleased to present the AnnualReport and the Audited Financial Statements ofthe Group and the Company for the financialyear ended 31 March 2008

FINANCIAL PERFORMANCE

The Group recorded revenue of RM167.15 million for thefinancial year in comparison to RM124.66 million for theprevious year, representing a 34% growth. The Group profitbefore tax and net profit were RM21.18 million (2007 :RM18.10 million) and RM15.77 million (2007 : RM13.76million) respectively, an increase of 17% and 15%. Theresults for the previous financial year ended 31 March 2007included a RM2.73 million gain on disposal of the oldcorporate office. After the exclusion of the above gain ondisposal, profit before tax from operating activities for thecurrent financial year has increased by RM5.81 million or39% as compared to the year before.

Earnings per share for the financial year stood at 12.20 sen(2007 : 11.5 sen) with a return on equity of 13.0% (2007:13%). Net assets per share were RM0.94 as at 31 March 2008.

BUSINESS OPERATIONS REVIEW

Professional Services and Sale

Operating under the trade name of AsterSpring Origin ofBeauty and Leonard Drake, the professional services andsale segment contributed 46% of Group revenue and 43%of profit before tax for the year. Revenue for the segmentincreased to RM77.46 million versus RM49.56 million for theprevious year.

Leonard Drake (S) Pte Ltd and Leonard Drake (HK) Ltd,acquired in December 2006 (now with ten (10) outletslocated throughout Singapore and six (6) outlets in HongKong) has enable the Group to continue strategicallypositioning itself to capture the demand of its targetclientele, comprising the more quality conscious andaffluent consumers in this region.

In Malaysia, the Group further strengthened its localoperations to maintain its leadership position in the market.

AsterSpring Origin of Beauty opened a flagship outlet inDecember 2007 at the prestigious Suria KLCC, KualaLumpur. Measuring 1,013 square meters, it is the largestprofessional wellness centre in Malaysia. Five (5) other newopening in Malaysia included at the Pavilion KL ShoppingMall, Kuala Lumpur, Sunway Pyramid, Petaling Jaya, JuscoAEON, Bukit Tinggi Shopping Centre, Klang, Bayan Indah,Penang and Metro Point Complex, Kajang.

Regionally, Thailand office has been aggressively expandingthe AsterSpring Origin of Beauty network culminating inthe opening of three (3) new outlets in Esplanade Ratchada,Avenue Pattaya and the prestigious Gaysorn Plaza.

In Malaysia, the Group currently has a chain of twelve (12)AsterSpring Origin of Beauty outlets and twenty (20)Leonard Drake professional skin care outlets. There are alsothree (3) Dermalogica Consultation Pods (DCP) and one (1) Averine kiosk. Coupled with nine (9) outlets and one (1)DCP in Singapore, three (3) outlets and three (3) DCPs inHong Kong and five (5) outlets and one (1) DCP in Thailand,the regional network of corporate owned outlets stood atfifty eight (58).

The education and training business under EWI Academyhas been steadily increasing its student / trainee network.During the year under review, EWI Academy, Malaysia andEWI Academy, Hong Kong held graduation ceremonieswhich saw its graduates receiving their scrolls from theAcademy Principal and Guests of Honour from CIDESCOInternational.

Product Distribution

Complete with distribution reach in the professionaldistribution channel, Fast Moving Consumer Goods(“FMCG”) channel and direct selling channel, the product

Board of Directors’ Report (cont’d)



distribution segment recorded revenue of RM89.52 millionfor the year (2007 : RM75.02 million). This represented 54%of Group revenue and 57% of profit before tax.

The regional and export businesses of the Group havecontinued to grow significantly and for the current year, thepercentage of Group revenue generated out of Malaysiaincreased to 51%, from 40% last year. The distribution armin Hong Kong, EIG Global (HK) Ltd has reported continuousrevenue and profitability growth while the expansion of InaGail Pte Ltd in Singapore further entrenched the Group’sleadership position in skincare and wellness productsdistribution in this region.

In the countries of Malaysia, Singapore, Hong Kong andThailand whereby the Group has its own distributionsubsidiaries or associates, the Group has direct access to anetwork of more than two thousand (2,000) customerscomprising professional skin care centres, beauty salons,wellness centres and spas.

The regional revenue growth for Dermalogica has beenstrong and positively re-inforced by the launches of severalnew product lines. The Group continued to maintain itsleadership position in the professional skincare distributionchannel in Malaysia, Singapore, Hong Kong and Vietnamthrough the exclusive distributorship of Dermalogica brand. Revenue growth has also been recorded for the distribution of Dermalogica products in Thailand, Indonesia, Brunei,Philippines and Cambodia.

The Group has been actively enlarging and deepening thebase of its product portfolio. The Group has successfullylaunched many new SKUs for the brand range of Airellis,Averine, Bioxil and Clinelle.

Through the FMCG distribution channel, Clinelle is now beingfound on the retail shelves of thousands of retailers for e.g.chain pharmacies like Guardian / Mannings, Watson’s,departmental stores, hypermarkets and independentpharmacies etc in Malaysia, Singapore and Hong Kong.Clinelle has also penetrated into the Taiwan market.

Leveraging on the “Airellis Wellness Studio Chain” businessconcept (the first of its kind offered by a Malaysian MultiLevel Marketing company and awarded by the MalaysiaBook of Records of having “the largest simultaneous beautychain stores opening”), Lexwel introduced the new “LexwelVirtual Studio” (“LVS”) business concept as an integration ofchain studio and network marketing to create a hyper chaindirect selling business model. This enables the networkmarketing business to be duplicated easier within broaderboundaries. After few months of launching, many virtualstudio owners have been recruited in Malaysia, Singaporeand Brunei.

A super antioxidant product, Astacell, launched by Lexwelin October 2007 has received strong market response. It hasbecome one of the leading antioxidant product in themarket and one of the best selling line of Lexwel range.

CORPORATE DEVELOPMENT

In line with its corporate identity streamlining, theCompany’s shares were traded and quoted under the newstock short name of “EIG”, from “ESTETICS” with effectfrom 14 April 2008.

In December 2007, the Company announced the acquisitionof 100% equity interest in Klientec International Sdn Bhd(“KlienTec”). KlienTec is principally engaged in the business



of information communication technology that focuses ondeveloping marketing automation solution with internettools and technology, web-based application development,interactive multimedia and website development. KlienTecis a MSC Malaysia-status company approved by MultimediaDevelopment Corporation and granted Pioneer Statusunder the Promotion of Investments Act, 1986.

The acquisition has enable the Group to acquire technologyin marketing automation / solution that is complementaryto the marketing activities of its existing core businesses.

SHAREHOLDERS’ VALUE AND DIVIDENDS

In recognition of the continued support of our valuedshareholders, the Board is pleased to declare a finaldividend of 7% less 26% tax. Together with the interimdividend of 5% less 26% tax paid, the dividend payout ratiofor the current financial year was 37% (2007 : 38%).

The above dividend distributions are consistent with thegeneral dividend policy approved by the Board in May 2007that endeavour to distribute between 30% to 50% of theGroup’s net profit, after taking into consideration, interalia, the performance of the Group, the availability of cashresources and reinvestment opportunities for the next two(2) financial years.

PROSPECTS AND OUTLOOK

We, at EIG Group continued to strongly believed in thewellness revolution, that the wellness industry is theindustry of the future, and that most successful wellnesscompanies today focus on distributing the highest qualityproducts and services. The Group has therefore been stayingfocused on its vision to be the leading total wellnesscompany offering great products and services to enhancequality of life and will continue to build a high performance

management team with a strong work culture to achievethe Group’s objectives. For the financial year 2008/09, themain growth and earnings drivers continued to be comingfrom:

a) Introduction of new wellness products and services

Dermalogica has lined up the launches of many newand exciting ranges in 2008. Coupled with thecontinuous commitment to grow and develop thebrand with aggressive regional promotion leveragingon the current networks and infrastracture, the Groupis confident that Dermalogica brand will see furtherstrong growth in the region.

The Group will also be launching new and betterproducts, the majority of which constitute productswithin the brand range of Airellis, Averine, Bioxil,Clinelle and other new brands. The launches willinclude several product categories, including productscatering to a variety of skin types and specific needsand health supplements as well, steadfast in our beliefthat external beauty is also a result of good innerhealth nurtured optimally.

The Group will continue to harness and capitalise onthe latest technology in ingredients and production tosource, develop and introduce more new wellnessproducts and services for the various distributionchannels and geographical locations.

Bioxil, positioned as a premium brand is acosmoceutical skin care product system that works insynergy with nutraceutical supplements to deliver skinand body health. This includes Bioxil Innertreats, foodsupplements targeted to address today’s lifestylechanges. Bioxil seen its first foray into the direct toconsumers retail concept via the opening the inaugural

Board of Directors’ Report (cont’d)



Bioxil Skin Lab in Suria KLCC, Kuala Lumpur in January2008. This is followed by the opening of other BioxilSkin Labs in Vivocity in Singapore and Ocean Terminalin Hong Kong in June / July 2008.

b) Continuous extension of distribution network ofdealers / distributors and corporate owned outlets

Top on the agenda is the continuous expansion of theprofessional dealer network (in terms of new accountsand representation exclusivity) in Malaysia, HongKong, Singapore and Thailand, where the Groupmaintain its own distribution arms.

As customer loyalty is fundamental to the success ofthe operations of AsterSpring Origin of Beauty andLeonard Drake, the Group will continue to buildcustomer retention and attract new clientele. Otherinitiatives include improve branding and salon image,achieve the highest customer service standards,introduce innovative marketing and sales strategies,review of treatment menus to align with customerneeds and operational review to maximise efficiencyand cost effectiveness.

New corporate owned outlets will continued to beestablished in tandem with the opening of newshopping centres that fits the Group’s stringentselection criteria.

c) Expansion of the FMCG business

The FMCG business will continue its strategies ofappointing more retail outlets as distributors andexpanding the existing range of products. Havingestablished a proven business model with qualityproducts, the Group will be exploring new exportmarkets for Clinelle while continuing to implementinnovative marketing campaigns to capture higher

market share in Malaysia, Singapore, Hong Kong andTaiwan.

New brands of both in house developed and externallysourced skincare, nutritional, hair care and otherwellness products are being lined up to be launched,leveraging on the existing infrastructure and networkof the Group’s distribution network in this region.

d) Growth of the direct selling business

With the launch of Airellis range of skin care products,Lexwel wellness products and the introduction of theAirellis wellness studio chain and Lexwel Virtual Studiobusiness concept, Lexwel International Sdn Bhd andLexwel International (S) Pte Ltd will continuously beexpanding its revenue, business / membership networkand distribution channels aggressively all overMalaysia, Singapore and the Brunei market.

Lexwel has also planned to expand its business intoother countries in the region.

The Research and Development unit of the Group iscontinuously developing new and innovative productsto be introduced under the multi level marketingdistribution channel.

e) Development of the ethical market

The Group has commenced the distribution of skincareproducts to doctors and medical practitioners for theethical market through the Therapeutic DermatologicFormula (“TDF”) brand in Malaysia which has seenencouraging growth.

Exclusive distributorship have been secured in March2008 to distribute the Dermaheal brand for theterritories of Malaysia, Singapore, Hong Kong,



Thailand, Brunei, Vietnam, Australia, New Zealand,Philippines, Indonesia, Cambodia and Laos and to theethical market.

The ethical market is foreseen to present a nichemarket opportunity for the Group to further expand itsdistribution reach.

f) Growth of the distribution of beauty equipment

The Group holds the exclusive distributorship of severalbeauty equipment brands in several countries in theregion. The brands comprised of Syneron, Radiancy,UMO, APS, Mattioli, New life and etc.

The distribution business of beauty equipment willcontinue to see growth for the existing brand portfoliowhile new distributorship be added to position theGroup as a solution provider to meet the demands of itsclientele for efficacious and high-tech equipment.

g) Franchise scheme and expansion of the education andtraining business

Having established a network of four (4) franchisees inMalaysia, the franchise scheme is poised to penetratemore extensively into the regional markets, which maybe beyond the current reach of the Group.

EWI Academy is in constant discussion with interestedestablished institutions of higher learning in the areaof aesthetics and wellness. The potential partnershipwill take a two prong approach; to create local andinternational market presence by riding on the partnerinstitutions and the demand for innovative coursesbeyond the normal offerings where academic coursesare concerned.

h) Export of Company Brands / Mergers and Acquisitions

Recognisant that the Malaysian market is comparativelymore mature as compared to other regional countries for the Group businesses, regional expansion has alwaysbeen a high priority. With the regional expansionplatform in place, the Group has been pursuing thegrowth of the regional businesses to a new level. Thesestrategic moves will enable the Group to grow moreexpeditiously and enjoy higher operating margins.Other strategic action includes the export of the Group’sbrands to the global markets.

The Company is also on the constant lookout formergers and acquisitions potentials in the region whichwill be synergistic and can add value to the businessesof the Group.

With the above business plans in place, the Board isconfident that the Group will be able to record another yearof growth, barring unforeseen circumstances and will striveto achieve another set of respectable financial performancefor the forthcoming new financial year.

APPRECIATION

The Board would like to record our appreciation to themanagement and staff for their dedicated effort and hardwork in contributing to the achievement of the Group’svision, mission and objectives. To our customers,shareholders, principals, suppliers, bankers, businessassociates and governmental authorities, thank you for yourcontinued confidence and support in EIG.

18 July 2008



Directors’ Report 30

Statement by Directors 34

Statutory Declaration 34

Independent Auditors’ Report 35

Balance Sheets 36

Income Statements 38

Statements of Changes in Equity 39

Cash Flow Statements 41

Notes to the Financial Statements 43

FINANCIAL STATEMENTS

Directors’ Reportfor the year ended 31 March 2008



The Directors have pleasure in submitting their report and the audited financial statements of the Group and of the Companyfor the year ended 31 March 2008.

PRINCIPAL ACTIVITIES

The Company is principally engaged in investment holding, whilst the principal activities of the subsidiaries, including thoseacquired during the year, are as stated in Note 7 to the financial statements. There has been no significant change in thenature of these activities during the financial year.

RESULTS

Group CompanyRM’000 RM’000

Profit for the year 15,773 6,497

RESERVES AND PROVISIONS

There were no material transfers to or from reserves and provisions during the year under review.

DIVIDENDS

Since the end of the previous financial year, the Company paid:

i) a final tax exempt dividend of 5% amounting to RM3,300,000 in respect of the financial year ended 31 March 2007 on10 September 2007; and

ii) an interim dividend of 5% less 26% tax amounting to RM2,442,000 for the financial year ended 31 March 2008 on 25April 2008.

The final dividend recommended by the Directors in respect of the year ended 31 March 2008 is 7% less 26% tax amountingto RM3,418,800 which is subject to the shareholders' approval at the forthcoming Annual General Meeting of the Company.

DIRECTORS OF THE COMPANY

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

Chieng Ing HuongLim Yee SoonMelissa M ChenJohan Zainuddin Bin DzulkifliLim Chang Ching (appointed on 18 July 2007) Dr Chu Siew Mun (appointed on 22 February 2008)Kan Kok Chee (resigned on 18 July 2007)Wong Chin Mun (resigned on 22 August 2007)



DIRECTORS' INTERESTS

The holdings and deemed holdings in the ordinary shares of the Company and of its related corporations (other than wholly-owned subsidiaries) of those who were Directors at year end as recorded in the Register of Directors' Shareholdings are asfollows:

Number of ordinary shares of RM0.50 eachAt At

1.4.2007 Bought Sold 31.3.2008

Interest in the Company

Direct interests:

Lim Yee Soon 32,377,500 – – 32,377,500Melissa M Chen 26,858,200 – – 26,858,200

Indirect/Deemed interests:

Lim Chang Ching* 8,400,000 – – 8,400,000Chieng Ing Huong ** 6,748,000 2,700,000 – 9,448,400

* Deemed interest by virtue of interest in Gambir Capital Sdn. Bhd.** Deemed interest by virtue of interest in Providence Capital Sdn. Bhd.

By virtue of their interests in the shares of the Company, Lim Yee Soon and Melissa M Chen are also deemed interested in theshares of the subsidiaries during the financial year to the extent that the Company has an interest.

None of the other Directors holding office at 31 March 2008 had any interest in the ordinary shares of the Company and ofits related corporations during the financial year.

DIRECTORS' BENEFITS

Since the end of the previous financial year, no Director of the Company has received nor become entitled to receive anybenefit (other than a benefit included in the aggregate amount of emoluments received or due and receivable by Directorsas shown in the financial statements of the Group, the Company and of related companies) by reason of a contract made bythe Company or a related corporation with the Director or with a firm of which the Director is a member, or with a companyin which the Director has a substantial financial interest except as disclosed in Note 27 to the financial statements.

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

ISSUE OF SHARES AND DEBENTURES

During the financial year, the Company issued 12,000,000 new ordinary shares at RM0.72 per ordinary share for cash forworking capital purposes via private placement.

Directors’ Report (Cont’d)for the year ended 31 March 2008



OPTIONS GRANTED OVER UNISSUED SHARES

No options were granted to any person to take up unissued shares of the Company during the financial year.

OTHER STATUTORY INFORMATION

Before the financial statements of the Group and of the Company were made out, the Directors took reasonable steps toascertain that:

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

ii) all current assets have been stated at the lower of cost and net realisable value.

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 Groupand in the Company inadequate to any substantial extent, or

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

iii) which have arisen which render adherence to the existing method of valuation of assets or liabilities of the Group andof 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 financialstatements of the Group and of the Company misleading.

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 whichsecures 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 becomeenforceable within the period of twelve months after the end of the financial year which, in the opinion of the Directors, willor 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 ended31 March 2008 have not been substantially affected by any item, transaction or event of a material and unusual nature norhas any such item, transaction or event occurred in the interval between the end of that financial year and the date of thisreport.



SIGNIFICANT EVENTS

The significant events during the year are disclosed in Note 29 to the financial statements.

SUBSEQUENT EVENT

The event subsequent to balance sheet date is as disclosed in Note 30 to the financial statements.

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:

Chieng Ing Huong

Lim Yee Soon

Shah Alam,22 July 2008

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

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



In the opinion of the Directors, the financial statements set out on pages 36 to 83 are drawn up in accordance with theprovisions of the Companies Act, 1965 and applicable approved Financial Reporting Standards issued by the MalaysianAccounting Standards Board so as to give a true and fair view of the state of affairs of the Group and of the Company at 31March 2008 and of the results of their operations and cash flows for the year ended on that date.

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

Chieng Ing Huong

Lim Yee Soon

Shah Alam,22 July 2008

I, Lim Yee Soon, the Director primarily responsible for the financial management of Esthetics International Group Berhad, dosolemnly and sincerely declare that the financial statements set out on pages 36 to 83 are, to the best of my knowledge andbelief, correct and I make this solemn declaration conscientiously believing the same to be true, and by virtue of the provisionsof the Statutory Declarations Act, 1960.

Subscribed and solemnly declared by the above named in Petaling Jaya on 22 July 2008.

Lim Yee Soon

Before me:

Soong Foong CheeCommissioner For OathsPetaling Jaya



REPORT ON THE FINANCIAL STATEMENTS

We have audited the financial statements of Esthetics International Group Berhad, which comprise the balance sheets as at 31March 2008 of the Group and of the Company, and the income statements, statements of changes in equity and cash flowstatements of the Group and of the Company for the year then ended, and a summary of significant accounting policies and otherexplanatory notes, as set out on pages 36 to 83.

DIRECTORS’ RESPONSIBILITY FOR THE FINANCIAL STATEMENTS

The directors of the Company are responsible for the preparation and fair presentation of these financial statements in accordancewith Financial Reporting Standards and the Companies Act, 1965 in Malaysia. This responsibility includes: designing, implementingand maintaining internal control relevant to the preparation and fair presentation of financial statements that are free frommaterial misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and makingaccounting estimates that are reasonable in the circumstances.

AUDITORS’ RESPONSIBILITY

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordancewith approved standards on auditing in Malaysia. Those standards require that we comply with ethical requirements and plan andperform 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 judgment, including the assessment of risks of material misstatement of the financialstatements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to theCompany’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriatein the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control. Anaudit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimatesmade 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 theCompanies Act, 1965 in Malaysia so as to give a true and fair view of the financial position of the Group and of the Company asof 31 March 2008 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 itssubsidiaries 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’ reports of all the subsidiaries of which we have not acted as auditors,which are indicated in note 7 to the financial statements.

c) We are satisfied that the accounts of the subsidiaries that have been consolidated with the Company’s financial statementsare in form and content appropriate and proper for the purposes of the preparation of the financial statements of the Groupand 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 underSection 174(3) of the Act.

OTHER MATTERS

This report is made solely to the members of the Company, as a body, in accordance with Section 174 of the Companies Act, 1965in Malaysia and for no other purpose. We do not assume responsibility to any other person for the content of this report.

KPMG Ng Kim TuckFirm Number: AF 0758 PartnerChartered Accountants Approval Number: 1150/03/10(J/PH)

Chartered AccountantPetaling Jaya, Selangor22 July 2008

Independent Auditors’ ReportTo the Members of Esthetics International Group Berhad (Company No. 408061-P) (Incorporated In Malaysia)

Balance SheetsAs at 31 March 2008



Group CompanyNote 2008 2007 2008 2007

RM'000 RM'000 RM'000 RM'000Restated

AssetsProperty, plant and equipment 3 51,055 45,164 – –Intangible assets 4 3,791 3,477 – –Prepaid lease payments 5 853 871 – –Investment properties 6 4,714 4,801 – –Investments in subsidiaries 7 – – 8,119 6,725Investments in associates 8 2,448 1,034 – –Deferred tax assets 9 781 512 – –Receivables 11 – – 71,213 64,355

Total non-current assets 63,642 55,859 79,332 71,080

Other investment 10 554 592 – –Receivables, deposits and prepayments 11 36,797 34,078 22 2Inventories 12 47,064 34,448 – –Tax recoverable 431 421 139 43Cash and cash equivalents 13 12,948 13,624 61 28

Total current assets 97,794 83,163 222 73

Total assets 161,436 139,022 79,554 71,153

EquityShare capital 66,000 60,000 66,000 60,000Reserves 5,589 3,226 6,097 3,527Retained earnings 52,281 42,250 4,847 4,092

Total equity attributable to shareholders of the Company 14 123,870 105,476 76,944 67,619




RM'000 RM'000 RM'000 RM'000Restated

LiabilitiesBorrowings 16 83 107 – –Deferred tax liabilities 9 985 848 – –

Total non-current liabilities 1,068 955 – –

Deferred revenue 8,529 11,223 – –Payables and accruals 15 25,490 20,793 2,610 3,534Borrowings 16 26 27 – –Taxation 2,453 548 – –

Total current liabilities 36,498 32,591 2,610 3,534

Total liabilities 37,566 33,546 2,610 3,534

Total equity and liabilities 161,436 139,022 79,554 71,153

The notes on pages 43 to 83 are an integral part of these financial statements.

Income StatementsFor the year ended 31 March 2008




RM'000 RM'000 RM'000 RM'000

Revenue 17 167,152 124,660 9,500 6,300Cost of sales/services (72,328) (61,417) – –

Gross profit 94,824 63,243 9,500 6,300Other income 866 3,603 – –Distribution expenses (21,166) (13,166) – –Administrative expenses (47,999) (31,871) (437) (429)Other expenses (5,659) (4,250) (167) –

Results from operating activities 20,866 17,559 8,896 5,871Interest income 253 846 – –Finance costs (24) (42) – –

Operating profit 18 21,095 18,363 8,896 5,871Share of profit/(loss) after tax of equity

accounted associates 80 (262) – –

Profit before tax 21,175 18,101 8,896 5,871Tax expense 19 (5,402) (4,342) (2,399) (783)

Profit for the year 15,773 13,759 6,497 5,088

Attributable to:Shareholders of the Company 15,773 13,759 6,497 5,088

Basic earnings per ordinary share (sen): 20 12.2 11.5




Non-distributable DistributableShare Share Translation Retained

capital premium reserve earnings TotalGroup Note RM'000 RM'000 RM'000 RM'000 RM'000

At 1 April 2006 60,000 3,527 (137) 33,681 97,071

Exchange differences on translation of the financial statements of foreign entities – – (164) – (164)

Net profit for the year – – – 13,759 13,759

Total recognised incomeand expenses for the year – – (164) 13,759 13,595

Dividends 21 – – – (5,190) (5,190)

At 31 March 2007/1 April 2007 60,000 3,527 (301) 42,250 105,476

Exchange differences on translation of the financial statements of foreign entities – – (207) – (207)

Net profit for the year – – – 15,773 15,773

Total recognised incomeand expenses for the year – – (207) 15,773 15,566

Shares issued 6,000 2,640 – – 8,640

Share issuance expenses – (70) – – (70)

Dividends 21 – – – (5,742) (5,742)

At 31 March 2008 66,000 6,097 (508) 52,281 123,870

Note 14 Note 14

Statements of Changes in EquityFor the year ended 31 March 2008

Statement of Changes in Equity (Cont’d)For the year ended 31 March 2008



Non-distributable Distributable

Share Share Retainedcapital premium earnings Total

Company RM'000 RM'000 RM'000 RM'000

At 1 April 2006 60,000 3,527 4,194 67,721

Dividends – – (5,190) (5,190)

Net profit for the year – – 5,088 5,088

At 31 March 2007/1 April 2007 60,000 3,527 4,092 67,619

Shares issued 6,000 2,640 – 8,640

Share issuance expenses – (70) – (70)

Dividends – – (5,742) (5,742)

Net profit for the year – – 6,497 6,497

At 31 March 2008 66,000 6,097 4,847 76,944

Note 14 Note 14




Group Company2008 2007 2008 2007

RM'000 RM'000 RM'000 RM'000

Cash flows from operating activities

Profit before tax 21,175 18,101 8,896 5,871Adjustments for:

Depreciation of property, plant and equipment 7,089 5,048 – –Amortisation of development cost 25 – – –Amortisation of prepaid lease payments 18 9 – –Change in fair value of investment properties 87 83 – –Finance costs 24 42 – –Gain on disposal of property, plant and equipment (23) (2,671) – –Interest income (253) (846) – –Inventories written off 240 633 – –Negative goodwill recognised – (129) – –Other investment written off 46 – – –Property, plant and equipment written off 230 128 – –Share of (profit)/loss of equity accounted associates (80) 262 – –Unrealised foreign exchange loss 365 393 – –

Operating profit before changes in working capital 28,943 21,053 8,896 5,871Changes in working capital:

Inventories (12,856) (4,224) – –Receivables, deposits and prepayments (2,950) 8,312 (6,878) (860)Payables and accruals 4,213 (15,160) (1,176) (56) Deferred revenue (2,694) 3,613 – –

Cash generated from operating activities 14,656 13,594 842 4,955Interest received 253 846 – –Tax paid (3,639) (3,458) (2,495) (808)

Net cash generated from/(used in) operating activities 11,270 10,982 (1,653) 4,147

Cash flows from investing activities

Refund by property developer of investment property – 85 – –Acquisition of property, plant and equipment (13,992) (9,293) – –Acquisition of subsidiaries, net of cash acquired (Note 28) 1 2,959 – –Acquisition of intangible assets (248) – – –Investment in associates (1,334) (1,193) – –Increase in investment in subsidiaries – – (1,394) (1,193)Proceeds from disposal of investment properties – 179 – –Proceeds from disposal of property, plant and equipment 807 4,976 – –

Net cash used in investing activities (14,766) (2,287) (1,394) (1,193)

Cash Flow StatementsFor the year ended 31 March 2008

Cash Flow Statements (Cont’d)For the year ended 31 March 2008




RM'000 RM'000 RM'000 RM'000

Cash flows from financing activities

Net proceeds from issuance of shares 8,570 – 8,570 –Dividends paid to shareholders of the Company (5,490) (3,000) (5,490) (3,000)Repayment of borrowings (25) (55) – –Interest paid (24) (42) – –

Net cash generated from/(used in) financing activities 3,031 (3,097) 3,080 (3,000)

Net (decrease)/increase in cash and cash equivalents (465) 5,598 33 (46)

Effect of exchange rate fluctuations on cash held (211) (69) – –

Cash and cash equivalents at 1 April (i) 13,624 8,095 28 74

Cash and cash equivalents at 31 March (i) 12,948 13,624 61 28

i) Cash and cash equivalents

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

Group Company2008 2007 2008 2007

RM'000 RM'000 RM'000 RM'000

Deposits placed with licensed banks 3,400 1,740 61 28 Cash and bank balances 9,548 11,884 – –

12,948 13,624 61 28




Esthetics International Group Berhad is a public limited liability company, incorporated and domiciled in Malaysia and is listedon the Main Board of the Bursa Malaysia Securities Berhad. The address of its registered office and principal place of businessis as follows:

REGISTERED OFFICE/PRINCIPAL PLACE OF BUSINESS

Lot 11, Jalan Astaka U8/88 Bukit Jelutong, Seksyen U840150 Shah AlamSelangor Darul EhsanMalaysia

The consolidated financial statements as at and for the year ended 31 March 2008 comprises the Company and its subsidiaries(together referred to as the Group). The financial statements of the Company as at and for the year ended 31 March 2008 donot include other entities.

The Company is principally engaged in investment holding activities, whilst the principal activities of the subsidiaries are asstated in Note 7 to the financial statements.

The financial statements were approved by the Board of Directors on 22 July 2008.

1. BASIS OF PREPARATION

(a) Statement of compliance

The financial statements of the Group and of the Company have been prepared in accordance with applicableapproved Financial Reporting Standards (FRSs) issued by the Malaysian Accounting Standards Board (MASB),accounting principles generally accepted in Malaysia and the provisions of the Companies Act, 1965. These financialstatements also comply with the applicable disclosure provisions of the Listing Requirements of the Bursa MalaysiaSecurities Berhad.

The accounting policies adopted by the Group and the Company are consistent with those adopted in the previousyear except for the adoption of the new and revised FRSs issued by MASB that are effective for the financial periodbeginning on or after 1 January 2007 as follows:

FRS 117 LeasesFRS 124 Related Party Disclosures

Other than the expanded disclosure requirements as shown in Note 5 and Note 27, the adoption of FRS 117 and FRS124 does not have any significant financial impact on the financial statements of the Group and the Company.

Notes to the Financial Statements

Notes to the Financial Statements (Cont’d)



1. BASIS OF PREPARATION (Cont’d)

(a) Statement of compliance (Cont’d)

The MASB has also issued the following FRSs and Interpretations that are effective for annual periods beginningafter 1 January 2007, and that have not been applied in preparing these financial statements:

FRSs/Interpretations Effective date

FRS 107, Cash Flow Statements 1 July 2007FRS 111, Construction Contracts 1 July 2007FRS 112, Income Taxes 1 July 2007FRS 118, Revenue 1 July 2007FRS 120, Accounting for Government Grants and Disclosure of Government Assistance 1 July 2007Amendment to FRS 121, The Effects of Changes in Foreign Exchange Rates

- Net Investment in a Foreign Operation 1 July 2007FRS 134, Interim Financial Reporting 1 July 2007FRS 137, Provisions, Contingent Liabilities and Contingent Assets 1 July 2007FRS 139, Financial Instruments: Recognition and Measurement To be announcedIC Interpretation 1, Changes in Existing Decommissioning, Restoration

and Similar Liabilities 1 July 2007IC Interpretation 2, Members' Shares in Co-operative Entities and Similar Instruments 1 July 2007IC Interpretation 5, Rights to Interests arising from Decommissioning, Restoration and

Environmental Rehabilitation Funds 1 July 2007IC Interpretation 6, Liabilities arising from Participating in a Specific Market

- Waste Electrical and Electronic Equipment 1 July 2007IC Interpretation 7, Applying the Restatement Approach under FRS1292004

Financial Reporting in Hyperinflationary Economies 1 July 2007IC Interpretation 8, Scope of FRS 2 1 July 2007

The Group and the Company plan to apply the abovementioned FRSs and Interpretations for the annual periodbeginning 1 April 2008 except for FRS 139, Financial Instruments: Recognition and Measurement for which theeffective date has yet to be announced.

The impact of applying FRS 139 on the financial statements upon first adoption as required by paragraph 30(b) ofFRS 108, Accounting Policies, Changes in Accounting Estimates and Errors is not disclosed by virtue of the exemptiongiven in FRS 139.103AB.

The initial application of the other FRSs and Interpretations are not expected to have any material impact on thefinancial statements of the Group and the Company.

(b) Basis of measurement

The financial statements have been prepared on the historical cost basis except as disclosed in the notes to thefinancial statements.



1. BASIS OF PREPARATION (Cont’d)

(c) Functional and presentation currency

These financial statements are presented in Ringgit Malaysia (RM), which is the Company's functional currency. Allfinancial 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 thataffect 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 arerecognised 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 thathave a significant effect on the amounts recognised in the financial statements other than those disclosed in thefollowing notes:

• Note 4 - measurement of the recoverable amounts of cash-generating units• Note 6 - valuation of investment properties• Note 9 - recognition of unutilised tax losses and capital allowances

2. SIGNIFICANT ACCOUNTING POLICIES

The accounting policies set out below have been applied consistently to the periods presented in these financialstatements, and have been applied consistently by Group entities, unless otherwise stated. Certain comparative amountshave been reclassified to conform to the current year's presentation (see note 32).

(a) Basis of consolidation

(i) Subsidiaries

Subsidiaries are entities, including unincorporated entities, controlled by the Group. Control exists when theGroup has the ability to exercise its power to govern the financial and operating policies of an entity so as toobtain benefits from its activities. In assessing control, potential voting rights that presently are exercisable aretaken 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 theconsolidated financial statements from the date that control commences until the date that control ceases.

Investments in subsidiaries are stated in the Company's balance sheet at cost less any impairment losses, unlessthe investment is classified as held for sale.




2. SIGNIFICANT ACCOUNTING POLICIES (Cont’d)

(a) Basis of consolidation (Cont’d)

(ii) Associates

Associates are entities, including unincorporated entities, in which the Group has significant influence, but notcontrol, over the financial and operating policies.

Associates are accounted for in the consolidated financial statements using the equity method unless it isclassified as held for sale (or included in a disposal group that is classified as held for sale). The consolidatedfinancial statements include the Group's share of the profit or loss of the equity accounted associates, afteradjustments, if any, to align the accounting policies with those of the Group, from the date that significantinfluence 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 ofthat interest (including any long-term investments) is reduced to nil and the recognition of further losses isdiscontinued except to the extent that the Group has an obligation or has made payments on behalf of theinvestee.

Investments in associates are stated in the Company's balance sheet at cost less any impairment losses, unlessthe investment is classified as held for sale (or included in a disposal group that is classified as held for sale).

(iii) Transactions eliminated on consolidation

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

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

(b) Foreign currency

(i) Foreign currency transactions

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

Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are retranslated tothe functional currency of Group entities at the exchange rate at that date. Non-monetary assets and liabilitiesdenominated in foreign currencies that are measured at fair value are retranslated to the functional currencyat the exchange rate at the date that the fair value was determined. Foreign currency differences arising onretranslation are recognised in the income statements.




(b) Foreign currency (Cont’d)

(ii) Operations denominated in functional currencies other than Ringgit Malaysia (RM)

The assets and liabilities of operations in functional currencies other than RM, including goodwill and fair valueadjustments arising on acquisition, are translated to RM at exchange rates at the balance sheet date.

The income and expenses of foreign operations are translated to RM at exchange rates at the dates of thetransactions.

Foreign currency differences are recognised in translation reserve. On disposal, accumulated translationdifferences are recognised in the consolidated income statement as part of the gain or loss on sale.

(c) Property, plant and equipment

(i) Recognition and measurement

Items of property, plant and equipment are stated at cost less accumulated depreciation and any impairmentlosses.

Cost includes expenditures that are directly attributable to the acquisition of the asset and any other costsdirectly attributable to bringing the asset to working condition for its intended use, and the costs ofdismantling 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. Purchased software that is integral tothe functionality of the related equipment is capitalised as part of that equipment.

The cost of property, plant and equipment recognised as a result of a business combination is based on fairvalue at acquisition date.

When significant parts of an item of property, plant and equipment have different useful lives, they areaccounted 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 theproceeds from disposal with the carrying amount of property, plant and equipment and are recognised netwithin "other income" or "other expenses" respectively in the income statements.





(c) Property, plant and equipment (Cont’d)

(ii) Subsequent costs

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

(iii) Depreciation

Depreciation is recognised in the income statement on a straight-line basis over the estimated useful lives ofeach part of an item of property, plant and equipment. Leased assets are depreciated over the shorter of thelease term and their useful lives unless it is reasonably certain that the Group will obtain ownership by the endof the lease term. Freehold land is not depreciated. Property, plant and equipment under construction are notdepreciated until the assets are ready for their intended use.

The estimated useful lives for the current and comparative periods are as follows:

Buildings 50 yearsMotor vehicles 5 yearsOffice equipment and fittings 5 - 10 yearsTools and equipment 6 - 7 yearsRenovation 5 - 10 years

The depreciable amount is determined after deducting the residual value.

Depreciation methods, useful lives and residual values are reassessed at the balance sheet date.

(d) Leased assets

(i) Finance lease

Leases in terms of which the Group assumes substantially all the risks and rewards of ownership are classifiedas finance leases. Upon initial recognition the leased asset is measured at an amount equal to the lower of itsfair value and the present value of the minimum lease payments. Subsequent to initial recognition, the asset isaccounted for in accordance with the accounting policy applicable to that asset.

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




(d) Leased assets (Cont’d)

(ii) Operating lease

For property interest held under operating lease, the leased assets are not recognised on the Group's balancesheet. Property interest held under an operating lease, which is held to earn rental income or for capitalappreciation or both, is classified as investment property.

Payments made under operating leases are recognised in the income statement on a straight-line basis over theterm of the lease. Lease incentives received are recognised as an integral part of the total lease expense, overthe term of the lease.

(e) Intangible assets

(i) Goodwill

Goodwill arises on business combinations and is measured at cost less any accumulated impairment losses.

For acquisitions prior to 1 January 2006, goodwill represents the excess of the cost of the acquisition over theGroup's interest in the fair values of the net identifiable assets and liabilities.

With the adoption of FRS 3 beginning 1 January 2006, goodwill represents the excess of the cost of theacquisition over the Group's interest in the net fair value of the identifiable assets and liabilities of the acquiree.

Any excess of the Group's interest in the net fair value of the acquiree's identifiable assets, liabilities andcontingent liabilities over the cost of acquisition is recognised immediately in the income statement.

Goodwill is allocated to cash-generating units and is tested annually for impairment or more frequently ifevents or changes in circumstances indicate that it might be impaired.

In respect of equity accounted investees, the carrying amount of goodwill is included in the carrying amountof the investment. The entire carrying amount of the investment is tested for impairment when there isobjective evidence of impairment.

(ii) Development cost

Expenditure on development activities, whereby research findings are applied to a plan or design for theproduction of new or substantially improved products and processes, is capitalised if the product or process istechnically and commercially feasible and the Company has sufficient resources to complete development.

The expenditure capitalised includes the cost of materials, direct labour and an appropriate proportion ofoverheads. Other development expenditure is recognised in the income statements as an expense as incurred.Capitalised development expenditure is stated at cost less any accumulated amortisation and any accumulatedimpairment losses.





(e) Intangible assets (Cont’d)

(iii) Amortisation

Goodwill is tested for impairment annually and whenever there is an indication that they may be impaired.

Development cost are amortised from the date that they are available for use. Amortisation of developmentcost is charged to the income statements on a straight-line basis over the estimated useful lives of intangibleassets.

The estimated useful live is as follows:

• capitalised development costs 10 years

(f) Investment properties

(i) Investment property carried at fair value

Investment properties are properties which are owned or held under a leasehold interest to earn rental incomeor for capital appreciation or for both. These include land held for a currently undetermined future use.Properties that are occupied by the companies in the Group are accounted for as owner-occupied rather thanas investment properties.

Investment properties are measured initially at cost and subsequently at fair value with any change thereinrecognised in the income statements.

(ii) Determination of fair value

The Directors estimate the fair values of the Group's investment properties without involvement ofindependent valuers. The fair values are based on market values, being the estimated amount for which aproperty could be exchanged on the date of the valuation between a willing buyer and a willing seller in anarm's length transaction after proper marketing wherein the parties had each acted knowledgeably, prudentlyand without compulsion.

Significant assumptions in arriving at the fair value of investment properties are disclosed in note 6.

(g) Investment in equity securities

Investment in equity securities are recognised initially at fair value plus attributable transaction costs.

Subsequent to initial recognition, all current investments are carried at the lower of cost and market value,determined on an aggregate portfolio basis by category of investment.




(h) Receivables

Receivables are initially recognised at their cost when the contractual right to receive cash or another financial assetfrom another entity is established.

Subsequent to initial recognition, receivables are stated at cost less allowance for doubtful debts.

Receivables are not held for the purpose of trading.

(i) Inventories

Inventories are measured at the lower of cost and net realisable value. The cost of inventories is based on the first-in first-out principle and includes expenditure incurred in acquiring the inventories and bringing them to theirexisting location and condition.

Raw materials and consumables are stated at the lower of cost and net realisable value determined on the weightedaverage cost method. Net realisable value is the estimated selling price in the ordinary course of business, less theestimated costs of completion and the estimated costs necessary to make the sale.

The fair value of inventories acquired in a business combination is determined based on its estimated selling pricein the ordinary course of business less the estimated costs of completion and sale, and a reasonable profit marginbased on the effort required to complete and sell the inventories.

(j) Cash and cash equivalents

Cash and cash equivalents consist of cash on hand, balances and deposits with banks and highly liquid investmentswhich have an insignificant risk of changes in value.

(k) Impairment of assets

The carrying amounts of assets except for inventories, deferred tax assets, investment property and financial assets(other than investments in subsidiaries and associates) are reviewed at each reporting date to determine whetherthere is any indication of impairment.

If any such indication exists then the asset's recoverable amount is estimated. For goodwill and intangible assets thathave indefinite useful lives or that are not yet available for use, recoverable amount is estimated at each reportingdate.

The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value lesscosts to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using apre-tax discount rate that reflects current market assessments of the time value of money and the risks specific tothe asset. For the purpose of impairment testing, assets are grouped together into the smallest group of assets thatgenerates cash inflows from continuing use that are largely independent of the cash inflows of other assets orgroups of assets (the "cash-generating unit"). Goodwill acquired in a business combination, for the purpose ofimpairment testing, is allocated to cash-generating units that are expected to benefit from the synergies of thecombination.





(k) Impairment of assets (Cont’d)

An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds itsrecoverable amount. A cash-generating unit is the smallest identifiable asset group that generates cash flows thatlargely are independent from other assets and groups. Impairment losses are recognised in the income statement.Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying amountof any goodwill allocated to the units and then to reduce the carrying amount of the other assets in the unit (groupsof units) on a pro rata basis.

An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognisedin prior periods are assessed at each reporting date for any indications that the loss has decreased or no longerexists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverableamount. An impairment loss is reversed only to the extent that the asset's carrying amount does not exceed thecarrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss hadbeen recognised. Reversals of impairment losses are credited to the income statement in the year in which thereversals are recognised.

(l) Loans and borrowings

Loans and borrowings are stated at amortised cost with any difference between cost and redemption value beingrecognised in the income statement over the period of the loans and borrowings using the effective interestmethod.

(m) Employee benefits

Short term employee benefits

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

The Group's contributions to the statutory pension funds are charged to the income statements in the year to whichthey relate. Once the contributions have been paid, the Group has no further payment obligations.

(n) Provisions

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

(o) Contingent liabilities

Where it is not probable that an outflow of economic benefits will be required, or the amount cannot be estimatedreliably, the obligation is disclosed as a contingent liability, unless the probability of outflow of economic benefitsis remote. Possible obligations, whose existence will only be confirmed by the occurrence or non-occurrence of oneor more future events are also disclosed as contingent liabilities unless the probability of an outflow of economicbenefits is remote.




(o) Contingent liabilities (Cont’d)

Where the Company enters into financial guarantee contracts to guarantee the indebtedness of other companieswithin its group, the Company considers these to be insurance arrangements, and accounts for them as such. In thisrespect, the Company treats the guarantee contract as a contingent liability until such time as it becomes probablethat the Company will be required to make a payment under the guarantee.

(p) Payables

Payables are measured initially and subsequently at cost. Payables are recognised when there is a contractualobligation to deliver cash or another financial asset to another entity.

(q) Revenue recognition

(i) Goods sold

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

(ii) Service

Revenue from services rendered is recognised in the income statement in proportion to the stage of completionof the transaction at the balance sheet date. The stage of completion is assessed by reference to servicesperformed to date as a percentage of total services to be performed.

(iii) Rental income

Rental income from the rental of investment properties is recognised in the income statement on a straight linebasis over the terms of the lease. Lease incentives granted are recognised as an integral part of the total rentalincome, over the term of the lease.

(iv) Dividend income

Dividend income is recognised when the right to receive payment is established.

(r) Deferred revenue

Deferred revenue represents cash received from customers for services not yet rendered as at year end.

(s) Interest income and borrowing costs

Interest income is recognised as it accrues, using the effective interest method.

All borrowing costs are recognised in the income statement using the effective interest method, in the period inwhich they are incurred.





(t) Tax expense

Tax expense comprises current and deferred tax. Tax expense is recognised in the income statement except to theextent that it relates to items recognised directly in equity, in which case it is recognised in equity.

Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantivelyenacted at the balance sheet date, and any adjustment to tax payable in respect of previous years.

Deferred tax is recognised using the balance sheet method, providing for temporary differences between thecarrying amounts of assets and liabilities for reporting purposes and the amounts used for taxation purposes.Deferred tax is not recognised for the following temporary differences: the initial recognition of goodwill, the initialrecognition of assets or liabilities in a transaction that is not a business combination and that affects neitheraccounting nor taxable profit (tax loss). Deferred tax is measured at the tax rates that are expected to be applied tothe temporary differences when they reverse, based on the laws that have been enacted or substantively enactedby the balance sheet date.

Deferred tax liability is recognised for all taxable temporary differences.

A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available againstwhich temporary difference can be utilised. Deferred tax assets are reviewed at each reporting date and are reducedto the extent that it is no longer probable that the related tax benefit will be realised. Additional taxes that arisefrom the distribution of dividends are recognised at the same time as the liability to pay the related dividend isrecognised.

(u) Earnings per share

The Group presents basic earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated by dividing theprofit attributable to ordinary shareholders of the Group by the weighted average number of ordinary sharesoutstanding during the year.

(v) Segment reporting

A segment is a distinguishable component of the Group that is engaged either in providing products or services(business segment), or in providing products or services within a particular economic environment (geographicalsegment), which is subject to risks and rewards that are different from those of other segments.



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4. INTANGIBLE ASSETS

DevelopmentGoodwill cost Total

Group RM'000 RM'000 RM'000

Cost

At 1 April 2007 3,477 – 3,477Arising on business combination (Note 28) 91 – 91Acquisition of products' formula – 248 248

At 31 March 2008 3,568 248 3,816

Amortisation

At 1 April 2007 – – –Amortisation for the year – 25 25

At 31 March 2008 – 25 25

Carrying amounts

At 1 April 2007 3,477 – 3,477

At 31 March 2008 3,568 223 3,791

Goodwill is tested annually for impairment, including in the year of its initial recognition, as well as when there areindicators of impairment. Impairment losses are recognised when the carrying amount of the cash generating unit towhich the goodwill has been allocated exceeds its recoverable amount. Impairment loss is recognised in the incomestatement and subsequent reversal is not allowed.

Impairment testing for cash-generating units containing goodwill

For the purpose of impairment testing, goodwill is allocated to the newly acquired groups of companies ("the Units") atwhich the goodwill is monitored for internal management purposes.

The aggregate carrying amounts of goodwill allocated to each cash generating unit are as follows:

RM'000

Singapore product distribution 1,769Singapore professional services and sales 1,061Hong Kong professional services and sales 647Information communication technology 91

3,568



4. INTANGIBLE ASSETS (Cont’d)

The recoverable amount for the goodwill is based on value in use calculations using cash flows projections based onfinancial budgets approved by the Board of Directors covering a five-year period.

Value in use was determined by discounting the future cash flows to be generated from the operations of the cashgenerating units and was based on the following key assumptions.

– There will be no material changes in the structure and principal activities of the respective subsidiary companies.

– There will not be any significant increase in labour costs, adverse changes in economic conditions or other abnormalfactors, which will adversely affect the operations of the respective companies.

– Statutory income tax rate - the rate for Singapore and Hong Kong are 18% and 17.5% respectively. There will be nomaterial changes in the present legislation or regulations, rates of duties, levies and taxes affecting the Units'activities.

– Financial year ended March 2009 budget was used as a base and an incremental revenue growth of 10% year-on-year subsequent to year 2009 has been projected.

– Discount rate of 8% was applied on the projected cash flows in determining the recoverable amounts of the Units.

5. PREPAID LEASE PAYMENTS

Unexpired periodNote more than 50 years

Group RM'000

Cost / Valuation

At 1 April 2006 –Transfer from property, plant and equipment 3 880

At 31 March 2007, restated / 31 March 2008 880

Amortisation

At 1 April 2006 –Amortisation for the year 9

At 31 March 2007, restated 9Amortisation for the year 18

At 31 March 2008 27

Carrying amounts

At 31 March 2007 871

At 31 March 2008 853




6. INVESTMENT PROPERTIES

GroupNote 2008 2007

RM'000 RM'000

Fair value:

At 1 April 4,801 –Transfer from property, plant and equipment 3 – 5,148Refund from property developer of investment property – (85)Disposals – (179)Change in fair value (87) (83)

At 31 March 4,714 4,801

The Directors estimate the fair values of the Group's investment properties.

Investment properties comprise a number of commercial properties that are leased to third parties. One of the leasescontains an initial non cancellable period of 3 years. Subsequent renewals are negotiated with the lessee. No contingentrents are charged.

The estimated fair values of the investment properties are arrived at based on the Directors’ estimation of the fair valuesof the investment properties. Such fair values are arrived at based on comparisons with prices of similar properties in thesame location or adjacent locations. Location differences may significantly affect the estimates of fair values.

7. INVESTMENTS IN SUBSIDIARIES

Company2008 2007

RM'000 RM'000

At cost:Unquoted shares 8,319 6,925Less: Impairment losses (200) (200)

8,119 6,725



7. INVESTMENTS IN SUBSIDIARIES (Cont’d)

Details of the subsidiaries are as follows:

EffectiveCountry of ownership

Name of subsidiary incorporation Principal activities interest2008 2007

% %

Dermal Esthetica Sdn. Bhd. Malaysia Importing and distributing of skin care 100 100products and beauty equipment

Leonard Drake (M) Sdn. Bhd. Malaysia Operating of skin care centers, 100 100providing skin care services and retailing of skin care products

AsterSpring Franchise Malaysia Operating of skin care centers, 100 100International Sdn. Bhd. providing skin care services and

retailing of skin care products

Lexwel International Sdn. Bhd. Malaysia Direct selling of personal health care 100 100and skin care products

EIG Pharma Asia Sdn. Bhd. Malaysia Trading of fast moving consumer goods 100 100

Esthetics Concept Sdn. Bhd. Malaysia Retailing of skincare & wellness products 100 100and letting of property

Clinelle (M) Sdn. Bhd. Malaysia Development and distribution of skin 100 100care and wellness products

Beuxstar Sdn. Bhd. Malaysia Agent for trade marks and patents 100 100application

Esthetics and Wellness Malaysia Offering education and training in 100 100International Sdn. Bhd. beauty and wellness

Klientec International Sdn. Bhd. Malaysia Information communication technology 100 –

Averine (Malaysia) Sdn. Bhd. Malaysia Dormant 100 100

Head To Toe Skin Care Centre Malaysia Dormant 100 100(KL) Sdn. Bhd.

Leonard Drake Fitness (M) Malaysia Dormant 100 100Sdn. Bhd.




7. INVESTMENTS IN SUBSIDIARIES (Cont’d)

Details of the subsidiaries are as follows: (Cont’d)

EffectiveCountry of ownership

Name of subsidiary incorporation Principal activities interest2008 2007

% %

Airellis International Sdn. Bhd. Malaysia Dormant 100 100

EIG (Thailand) Co. Ltd.* Thailand Investment holding 100 100

EIG Global (HK) Ltd* Hong Kong Distribution of skin care and wellness 100 100(Formerly known as productsEsthetics International(HK) Ltd)

Leonard Drake (HK) Ltd.* Hong Kong Operating of skin care centers, providing 100 100skin care services and retailing of skincare products

Lexwel International Pte. Ltd.* Hong Kong Dormant 100 100

EIG Global Pte. Ltd.* Singapore Investment holding 100 100

Ina Gail Pte. Ltd.* Singapore Distribution of skin care and wellness 100 100products

Leonard Drake (S) Pte. Ltd.* Singapore Operating of skin care centers, 100 100providing skin care services and retailing of skin care products

Lexwel International (S) Singapore Direct selling of personal health care 100 100Pte.Limited.* and skin care products

EIG Global Australia Pty. Ltd.* Australia Dormant 100 –

* Not audited by KPMG



8. INVESTMENTS IN ASSOCIATES

Group Company2008 2007 2008 2007

RM'000 RM'000 RM'000 RM'000

At cost:Unquoted shares 4,273 2,939 – –Share of losses in associates (1,825) (1,905) – –

2,448 1,034 – –

Represented by Group's share of net assets 2,448 1,034 – –

Summary financial information on associates:

Effectiveownership Profit/ Total Total

interest Revenues (Loss) assets liabilities(100%) (100%) (100%) (100%)

% RM'000 RM'000 RM'000 RM'000

2008Dermal Wellness International Co. Ltd

and its subsidiaries 49.9 6,929 160 7,500 3,141

2007Dermal Wellness International Co. Ltd

and its subsidiaries 49.9 2,092 (526) 7,772 5,719

The associates, all incorporated in Thailand, are:

Effective ownershipName interest Principal activities

2008 2007

Dermal Wellness International Co. Ltd 49.9% 49.9% Investment holding and its subsidiaries

Dermal Concept Co. Ltd. and its subsidiary 49.9% 49.9% Distribution of skin care products,cosmetics and beauty equipment

Leonard Drake (Thai) Co. Ltd. 49.9% 49.9% Operating of skin care centers, providingskin care services and retailing of skin care products




9. DEFERRED TAX ASSETS AND LIABILITIES

Recognised deferred tax assets and liabilities

Deferred tax assets and liabilities are attributable to the following:

Assets Liabilities NetGroup 2008 2007 2008 2007 2008 2007

RM'000 RM'000 RM'000 RM'000 RM'000 RM'000

Property, plant and equipment – – (1,075) (963) (1,075) (963) Provisions 90 85 – – 90 85Unutilised tax losses 781 542 – – 781 542

Tax assets/(liabilities) 871 627 (1,075) (963) (204) (336) Set off of tax (90) (115) 90 115 – –

Net tax assets/(liabilities) 781 512 (985) (848) (204) (336)

Unrecognised deferred tax assets

Deferred tax assets have not been recognised in respect of the following items:

Group2008 2007

RM'000 RM'000

Deductible temporary differences (64) –Unutilised tax losses (4,237) (4,209)

(4,301) (4,209)

Deferred tax assets of RM1,075,000 (2007: RM1,094,000) were not recognised in respect of these items because it was notprobable that future taxable profit will be available against which the Group can utilise the benefits therefrom.

Movement in temporary differences during the year

Recognised Recognisedin income Acquired in income

At statement in business At statement At1.4.2006 (note 19) combinations 31.3.2007 (note 19) 31.3.2008RM'000 RM'000 RM'000 RM'000 RM'000 RM'000

Property, plant and equipment (994) 136 (105) (963) (112) (1,075)Provisions 72 13 – 85 5 90Tax loss carry-forward 642 (381) 281 542 239 781

(280) (232) 176 (336) 132 (204)



10. OTHER INVESTMENT

Group2008 2007

RM'000 RM'000

Investment

At cost:Quoted shares in Malaysia 554 592

Market value:Quoted shares in Malaysia 554 642

11. RECEIVABLES, DEPOSITS AND PREPAYMENTS


RM'000 RM'000 RM'000 RM'000

Current

Trade

Trade receivables a 28,124 23,938 – –Amount due from associate b 1,147 2,346 – –

Non-trade

Other receivables c 128 578 – –Deposits c 6,279 5,715 2 2Prepayments c 1,119 1,501 20 –

36,797 34,078 22 2

Non-Current

Non-trade

Amount due from a subsidiary d – – 71,213 64,355

36,797 34,078 71,235 64,357




11. RECEIVABLES, DEPOSITS AND PREPAYMENTS (Cont’d)

Note a

Analysis of foreign currency exposure for significant trade receivables

Significant trade receivables outstanding at year end that are not in Ringgit Malaysia are as follows:

GroupForeign 2008 2007currency RM'000 RM'000

U.S. Dollar 840 2,965Singapore Dollar 5,778 3,556Hong Kong Dollar 8,418 6,052

Note b

The amount due from associate of the Group is subject to interest ranging from 6% to 7% (2007: 7% to 10%) per annumin respect of RM999,000 (2007: RM1,719,000).

Note c

Analysis of foreign currency exposure for significant non-trade receivables, deposits and prepayments

Significant non-trade receivables, deposits and prepayments outstanding at year end that are not in Ringgit Malaysia areas follows:


U.S. Dollar – 148Singapore Dollar 2,017 1,783Hong Kong Dollar 810 1,395

Note d

The amount due from a subsidiary is non-trade in nature, unsecured, interest free and has no fixed term of repayment.



12. INVENTORIES

Group2008 2007

RM'000 RM'000

At cost: Raw materials and consumables 4,924 4,253Goods in transit 10,634 742 Finished goods 31,506 29,453

47,064 34,448

Inventories recognised as cost of sales amounted to RM47,781,519 (2007: RM43,262,399).

13. CASH AND CASH EQUIVALENTS

Group Company2008 2007 2008 2007

RM'000 RM'000 RM'000 RM'000

Deposits placed with licensed banks 3,400 1,740 61 28 Cash and bank balances 9,548 11,884 – –

12,948 13,624 61 28

14. CAPITAL AND RESERVES

Share capitalGroup and Company

Number of Number ofAmount shares Amount shares

2008 2008 2007 2007RM'000 ‘000 RM'000 ‘000

Authorised:Ordinary shares of RM0.50 each 100,000 200,000 100,000 200,000

Issued:1 April 60,000 120,000 60,000 120,000Ordinary shares of RM0.50 each- private placement 6,000 12,000 – –

31 March 66,000 132,000 60,000 120,000




14. CAPITAL AND RESERVES (Cont’d)

Translation reserve

The translation reserve comprises all foreign currency differences arising from the translation of the financial statementsof foreign operations.

Section 108 tax credit

Subject to agreement by the Inland Revenue Board, the Company has sufficient Section 108 tax credit and tax exemptincome to frank all its distributable retained earnings at 31 March 2008 if paid out as dividends.

The Malaysian Budget 2008 introduced a single tier company income tax system with effect from year of assessment2008. As such, the Section 108 tax credit as at 31 December 2007 will be available to the Company until such time thecredit is fully utilised or upon expiry of the six-year transitional period on 31 December 2013, whichever is earlier.

15. PAYABLES AND ACCRUALS


RM'000 RM'000 RM'000 RM'000

TradeTrade payables a 13,222 9,840 – –

Non-tradeAmount due to a subsidiary b – – 81 –Other payables c 2,405 6,526 – 3,437Dividend payable 2,442 – 2,442 –Accrued expenses 7,421 4,427 87 97

12,268 10,953 2,610 3,534

25,490 20,793 2,610 3,534

Note a

Analysis of foreign currency exposure for significant trade payables

Significant trade payables outstanding at year end that are not in Ringgit Malaysia are as follows:


U.S. Dollar 13,085 9,799Singapore Dollar 137 41



15. PAYABLES AND ACCRUALS (Cont’d)

Note b

The amount due to a subsidiary is non-trade in nature, unsecured, interest free and has no fixed term of repayment.

Note c

Analysis of foreign currency exposure for significant non-trade payables

Significant non-trade payables outstanding at year end that are not in Ringgit Malaysia are as follows:


Hong Kong Dollar 571 1,568Singapore Dollar 381 1,416

16. BORROWINGS

Group2008 2007

RM'000 RM'000

Non Current

Hire purchase liabilities 83 107

Current

Hire purchase liabilities 26 27

Hire purchase liabilities

Hire purchase liabilities are payable as follows:

Minimum Minimumlease lease

payments Interest Principal payments Interest Principal2008 2008 2008 2007 2007 2007

Group RM'000 RM'000 RM'000 RM'000 RM'000 RM'000

Less than one year 30 4 26 32 5 27Between one and five years 98 15 83 126 19 107

128 19 109 158 24 134

Hire purchase liabilities are subject to fixed interest rates of 2.5% (2007: 2.5%) per annum.




17. REVENUE

Group Company2008 2007 2008 2007

RM'000 RM'000 RM'000 RM'000

Product distribution 89,520 75,024 – –Professional services and sales 77,459 49,561 – –Rental income from investment properties 173 75 – –Dividends – – 9,500 6,300

167,152 124,660 9,500 6,300

18. OPERATING PROFIT

Group Company2008 2007 2008 2007

RM'000 RM'000 RM'000 RM'000

Operating profit is arrived at after charging:

Auditors' remuneration:- Audit services

Auditors of the Company 110 76 25 22Other auditors 89 26 – –

Amortisation of development cost 25 – – –Amortisation of prepaid lease payments 18 9 – –Change in fair value of investment properties 87 83 – –Depreciation on property, plant and equipment 7,089 5,048 – –Direct operating expenses of investment properties:

- Generated rental income 36 32 – –Interest expense on:

- Other borrowings 24 42 – –Unrealised foreign exchange loss 365 393 – –Inventories written off 240 633 – –Receivables written off 455 88 – –Rental of premises 15,000 8,461 – –Other investment written off 46 – – –Property, plant and equipment written off 230 128 – –Directors

- Fees 63 75 63 75- Remuneration 1,664 1,871 – –

Personnel expenses (including key management personnel)- Wages, salaries and others 47,159 31,858 – –- Contribution to defined contribution plans 2,948 2,721 – –

Realised loss on foreign exchange – – 167 –

The estimated monetary value of Directors’ benefits in kind is RM55,000 (2007: RM52,000)



18. OPERATING PROFIT (Cont’d)

Group Company2008 2007 2008 2007

RM'000 RM'000 RM'000 RM'000

and after crediting:

Dividend income from:- subsidiaries (unquoted) – – 9,500 6,300

Gain on disposal of property, plant and equipment 23 2,671 – –Rental income from investment properties 372 277 – –Realised gain on foreign exchange 186 333 – –Negative goodwill arising from acquisition of subsidiary – 129 – –

19. TAX EXPENSE

Group Company2008 2007 2008 2007

RM'000 RM'000 RM'000 RM'000

Income tax - current 5,271 4,110 2,399 783- prior years 263 – – –

5,534 4,110 2,399 783Deferred taxOrigination and reversal of temporary differences (132) 232 – –

5,402 4,342 2,399 783

Reconciliation of effective tax expense

Profit before tax 21,175 18,101 8,896 5,871

Tax calculated using Malaysian tax rates of 26% (2007: 27%) 5,506 4,887 2,313 1,585Effect of using different tax rate for chargeable income

of up to RM500,000 for certain subsidiaries* 2 (105) – –Effect of different tax rates in foreign jurisdiction (758) (380) – –Non-deductible expenses 547 529 86 89Tax exempt income (139) (798) – (891) Change in unrecognised deferred tax assets (19) 209 – –

5,139 4,342 2,399 783Under provision in prior years 263 – – –

5,402 4,342 2,399 783




19. TAX EXPENSE (Cont’d)

* With effect from year of assessment 2004, companies with a paid up capital of RM2.5 million and below at thebeginning of the basis period for a year of assessment are subject to corporate tax at 20% on chargeable income upto RM500,000.

20. EARNINGS PER SHARE

Basic earnings per share

The calculation of basic earnings per share was based on the profit attributable to ordinary shareholders ofRM15,773,000 (2007: RM13,759,000) and the weighted average number of ordinary shares outstanding during the yearof 129,115,000 (2007: 120,000,000).

21. DIVIDENDS

Dividends recognised in the current year by the Company are:

Sen Totalper share amount Date of

2008 (net of tax) RM'000 payment

Interim 2008 ordinary 1.9 2,442 25 April 2008Final 2007 ordinary 2.5 3,300 10 September 2007

Total amount 5,742

2007

Interim 2007 ordinary 1.8 2,190 9 April 2007Final 2006 ordinary 2.5 3,000 8 September 2006

Total amount 5,190

A final dividend in respect of the year ended 31 March 2008 of 7% less 26% tax amounting to RM3,418,800 based on theenlarged issued and paid-up capital of 132,000,000 ordinary shares of RM0.50 each have been proposed by the Directorsfor shareholders' approval at the forthcoming Annual General Meeting. Consistent with the treatment adopted in priorperiods, the financial statements for the current financial year do not recognise this proposed dividend as a liability. Suchdividend, if approved by the shareholders, will be deducted from shareholders' funds as an appropriation of retainedearnings in the financial year ending 31 March 2009.



22. SEGMENT REPORTING

Segment information is presented in respect of the Group's business and geographical segments. The primary format,business segments, is based on the Group’s management and internal reporting structure. Inter-segment pricing isdetermined based on negotiated terms.

Segment results, assets and liabilities include items directly attributable to a segment as well as those that can beallocated on a reasonable basis. Unallocated items comprise mainly on loans and borrowings, head office expenses andtax assets and liabilities.

Segment capital expenditure is the total cost incurred during the year to acquire property, plant and equipment, andintangible assets other than goodwill.

Business segments

The Group comprises the following main segments:

Professional services and sales The professional services rendered in respect of skincare and wellness programsand sales of related products

Product distribution The distribution of skincare and wellness products and beauty equipment

Others Investment holding

Geographical segments

The professional services and sales segment and the product distribution segment of the Group are also operated inSingapore and Hong Kong apart from its home country, Malaysia.

The other business segments are only operated in Malaysia and Singapore.

In presenting information on the basis of geographical segments, segment revenue is based on the geographical locationof customers. Segment assets and capital expenditure are based on the geographical location of assets.




22.

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22. SEGMENTAL INFORMATION (Cont’d)

Malaysia Oversea* ConsolidatedGeographical segments RM'000 RM'000 RM'000

2008

Revenue from external customers by location of customers 81,426 85,726 167,152

Segment assets by location of assets 105,809 51,967 157,776

Capital expenditure by location of assets 9,630 4,362 13,992

2007

Revenue from external customers by location of customers 75,789 48,871 124,660

Segment assets by location of assets 97,645 39,410 137,055

Capital expenditure by location of assets 7,692 1,516 9,208

* These primarily related to Singapore, Hong Kong, Thailand, Vietnam, Indonesia, Philippines and Taiwan.

23. FINANCIAL INSTRUMENTS

Financial risk management objectives and policies

Exposure to credit, interest rate, liquidity and currency risks arises in the normal course of the Group's business. TheGroup's policies for managing each of these risks are summarised below.

Credit risk

The Group's exposure to credit risk arises mainly through its receivables and deposit placements. Management has aninformal credit policy in place and exposure to credit risk is monitored on an ongoing basis through the review ofreceivables ageing. Deposits are placed only with licensed financial institutions.

At balance sheet date, there were no significant concentrations of credit risk other than the amount due from asubsidiary of RM71,213,000 (2007: RM64,355,000). The maximum exposure to credit risk is represented by the carryingamount of each financial asset in the balance sheet.



23. FINANCIAL INSTRUMENTS (Cont’d)

Interest rate risk

The Group's income and operating cash flows are substantially independent of changes in market interest rates. Interestrate exposure arises mainly from the Group's deposits placed with licensed banks and these are placed on short termmaturities not exceeding twelve months.

Effective interest rates and repricing analysis

In respect of interest-earning financial assets, the following table indicates their average effective interest rates at thebalance sheet date and the periods in which they mature, or if earlier, reprice.

2008 2007Effective Effectiveinterest Within 1-5 interest Within 1-5

rate Total 1 year years rate Total 1 year years% RM'000 RM'000 RM'000 % RM'000 RM'000 RM'000

Group

Financial assets

Deposits placed withlicensed banks 2.1 3,400 3,400 – 2.2 1,740 1,740 –

Amount due fromassociate 6.5 999 – 999 8.5 1,719 1,199 520

Foreign currency risk

The Group is exposed to foreign currency risk as a result of the foreign currency transactions entered into and financialinstruments maintained by subsidiaries in currencies other than in their functional currency. The currencies giving rise tothis risk are primarily U.S. Dollars, Singapore Dollars and Swiss Franc. The Group does not engage in foreign currencyhedging on its foreign currency exposures but the management monitors these exposures on an ongoing basis.

The Group is also exposed to foreign currency risk in respect of its investments in foreign subsidiaries. The Group doesnot hedge this exposure by having foreign currency borrowings but keeps this policy under review and will take thenecessary action to minimise the exposure of the risk.




23. FINANCIAL INSTRUMENTS (Cont’d)

Liquidity risk

The Group monitors and maintains a level of cash and cash equivalents and bank facilities deemed adequate bymanagement to finance the Group's operations and to mitigate the effects of fluctuation in cash flows.

Fair values

In respect of cash and cash equivalents, trade and other receivables and trade and other payables, the carrying amountsapproximate fair values due to the relatively short term nature of these financial instruments.

24. OPERATING LEASE

Leases as lessee

The Group had commitments under non-cancellable operating lease in respect of certain rented premises by subsidiariesas follows:

Group2008 2007

RM'000 RM'000

Less than one year 7,100 5,105Between one and five years 9,812 4,340

16,912 9,445

The Group leases a number of premises under operating leases. These leases typically run for an initial period of one tothree years, with an option to renew the leases.

Leases as lessor

The Group leases out its investment properties under operating leases (see note 6). The future minimum lease paymentsunder non-cancellable leases are as follow:

Group2008 2007

RM'000 RM'000

Less than one year 99 184Between one and five years – 99

99 283



25. CAPITAL COMMITMENTS

Group2008 2007

RM'000 RM'000

Capital expenditure commitmentsProperty, plant and equipment

Contracted but not provided for and payable:Within one year 4,250 –

26. CONTINGENCIES

The Directors are of the opinion that provisions are not required in respect of these as it is not probable that a futuresacrifice of economic benefits will be required or the amount is not capable of reliable measurement.

Company2008 2007

RM'000 RM'000

Guarantees given to financial institutions for facilities granted to subsidiaries 23,500 28,500

The facilities utilised by a subsidiary at the end of the year only amounted to RM10,574,000 (2007: RM11,701,000).

27. RELATED PARTIES

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

Key management personnel are defined as those persons having authority and responsibility for planning, directing andcontrolling the activities of the Group either directly or indirectly. The key management personnel include all theDirectors of the Company and Directors of subsidiaries within the Group.

Controlling related party relationships are as follow:

(a) its subsidiaries as disclosed in note 7.

(b) the substantial shareholders of the Company, Lim Yee Soon and Melissa M Chen who are also the Directors of theCompany.




27. RELATED PARTIES (Cont’d)

Transactions with related parties

Significant transactions with related parties other than those disclosed elsewhere in the financial statements:

Group2008 2007

RM'000 RM'000

Dermal Concept Co. Ltd., ThailandSales 1,383 2,603Interest income 119 207

These transactions have been entered into in the normal course of business and have been established under negotiatedterms.

Transactions with a company in which certain Director have financial interest:

Group Company2008 2007 2008 2007

RM'000 RM'000 RM'000 RM'000

Consultancy fee paid to Providence Business Advisory Services Sdn. Bhd., a company in which Mr Chieng Ing Huong has interest 153 126 153 126

The Directors of the Company are of the opinion that all the above transactions have been entered into in the normalcourse of business and have been established under commercial terms.

28. ACQUISITIONS OF SUBSIDIARIES

Business combination

During the year, the Group acquired 100% equity interest in Klientec International Sdn Bhd for a cash consideration ofRM125,000 with effect from 1 November 2007. In the five months to 31 March 2008, the subsidiary contributed profitafter tax of RM41,000. If the acquisition had occurred on 1 April 2007, management estimates that consolidated revenuewould have been RM167,297,000 and the consolidated profit after tax for the year would have been RM15,815,000.



28. ACQUISITIONS OF SUBSIDIARIES (Cont’d)

The acquisition had the following effect on the Group's assets and liabilities on the acquisition date:

Fair valuerecognised

onNote acquisition

RM'000

Property, plant and equipment 6Receivables, deposits and prepayments 134Cash and cash equivalents 126Payables and accruals (232)

Net identifiable assets and liabilities 34

Goodwill on acquisition 4 91

Consideration paid, satisfied in cash 125 Cash acquired (126)

Net cash inflow (1)

The fair value of the acquired subsidiary at the date of acquisition is equivalent to the identifiable assets and liabilitiesof the acquiree.

The goodwill recognised on the acquisition is mainly attributable to the synergies expected to be achieved from theacquired technology in marketing automation solution that is complimentary to the marketing activities of the Group’sexisting core business activities.

29. SIGNIFICANT EVENTS

During the financial year, the Company undertook the following:

(i) The Company implemented a private placement of new ordinary shares of RM0.50 each representing not more than10% of the issued and paid-up share capital.

The private placement shares were granted listing and quotation on the Main Board of Bursa Malaysia SecuritiesBerhad on 28 June 2007. The net proceeds raised from the private placement of RM8,570,000 were utilised forworking capital requirements of the Group.

(ii) The Company had on 7 June 2007 incorporated EIG Global Australia Pty. Ltd. (EIG Australia) as a wholly-ownedsubsidiary in Australia. The proposed business activity of EIG Australia is investment holding. EIG Australia has yetto commence operations.




29. SIGNIFICANT EVENTS (Cont’d)

(iii) On 6 July 2007, the Company had, through its subsidiary, EIG (Thailand) Co. Ltd., subscribed for additional paid upcapital of 1,650,000 new ordinary shares of Baht 10 per share in Dermal Wellness International Co. Ltd. (DWI) for aconsideration of Baht 11,800,000 or RM1,333,400. After the above additional share subscription, DWI remained asa 49.9% owned associate of the Company.

(iv) The Company had on 7 December 2007 completed the acquisition of 100% equity interest in Klientec InternationalSdn Bhd (KlienTec) for a cash consideration of RM125,000. KlienTec is principally engaged in the business ofinformation communication technology that focuses on developing marketing automation solution with internettools and technology, web-based application development, interactive multimedia and website development.

KlienTec has been awarded MSC Malaysia-status by Multimedia Development Corporation on 7 June 2006 andgranted Pioneer Status under the Promotion of Investments Act, 1986 on 30 June 2006.

30. SUBSEQUENT EVENT

(i) On 30 June 2008, Ina Gail Pte. Ltd., a wholly owned subsidiary of the Company had disposed of the quoted sharesin Malaysia under other investment at a loss of approximately RM40,000.

31. CHANGES IN ACCOUNTING POLICIES

The accounting policies set out in Note 2 have been applied in preparing the financial statements for the year ended 31March 2008.

Prior to 1 January 2007, leasehold properties held for own use were classified as property, plant and equipment and wasstated at cost or valuation less accumulated depreciation and any accumulated impairment losses. The adoption of FRS117, Leases does not impact the prior year financial statements, other than the reclassification of the leasehold propertiespreviously under property, plant and equipment to prepaid lease payments as disclosed in Note 32.



32. COMPARATIVE FIGURES

During the financial year, certain comparative figures have been reclassified as a result of the adoption of FRS 117, Leasesas stated in Note 31:

Aspreviously

As restated reported Balance sheet RM'000 RM'000

Non-current assets

Property, plant and equipment 45,164 46,035Prepaid lease payments 871 –

Income statements

Depreciation of property, plant and equipment 5,048 5,057Amortisation of prepaid lease payments 9 –

Cash flow statements

Depreciation of property, plant and equipment 5,048 5,057Amortisation of prepaid lease payments 9 –

Analysis of ShareholdingsAs at 30 June 2008



Authorised Share Capital : RM100,000,000Issued & Paid-Up Capital : RM66,000,000Class of Shares : Ordinary Shares of RM0.50 eachVoting Rights : One Vote per Ordinary Share

DISTRIBUTION OF SHAREHOLDINGSas at 30 June 2008

Size of Shareholdings No. of Shareholders % No. of Shares %

Less than 100 9 0.86 302 0.00100 to 1,000 266 25.36 215,000 0.171,001 to 10,000 579 55.19 2,591,598 1.9610,001 to 100,000 153 14.58 4,294,800 3.25100,001 to 6,599,999 37 3.53 30,314,100 22.976,600,000 and above 5 0.48 94,584,200 71.65

1,049 100.00 132,000,000 100.00

SUBSTANTIAL SHAREHOLDERS AS PER REGISTER OF SUBSTANTIAL SHAREHOLDERSas at 30 June 2008

Name of Shareholders No. of Shares heldDirect % Indirect %

1. Lim Yee Soon 32,377,500 24.53 – –2. Melissa M Chen 26,858,200 20.35 – –3. Providence Capital Sdn Bhd 13,690,300 10.37 – –4. Chieng Ing Huong – – 13,690,300* 10.375. Kan Kok Chee 13,258,200 10.04 – –6. Gambir Capital Sdn Bhd 8,400,000 6.36 – –7. Lim Chang Ching – – 8,400,000** 6.36

* Deemed interested through Providence Capital Sdn Bhd** Deemed interested through Gambir Capital Sdn Bhd

DIRECTORS' SHAREHOLDINGS AS PER REGISTER OF DIRECTORS' SHAREHOLDINGSas at 30 June 2008

Name of Shareholders No. of Shares heldDirect % Indirect %

1. Lim Yee Soon 32,377,500 24.53 – –2. Melissa M Chen 26,858,200 20.35 – –3. Chieng Ing Huong – – 13,690,300* 10.374. Lim Chang Ching – – 8,400,000** 6.36

* Deemed interested through Providence Capital Sdn Bhd** Deemed interested through Gambir Capital Sdn Bhd



LIST OF THIRTY LARGEST SHAREHOLDERS as at 30 June 2008

Name of Shareholders No. of Shares %

1. Lim Yee Soon 32,377,500 24.532. Melissa M Chen 26,858,200 20.353. Providence Capital Sdn Bhd 13,690,300 10.374. Kan Kok Chee 13,258,200 10.045. Gambir Capital Sdn Bhd 8,400,000 6.366. Er Kok Leong @ Er Chai Tuan 4,521,200 3.437. HSBC Nominees (Asing) Sdn Bhd 3,212,400 2.43

- Exempt An for Credit Suisse (SG BR-TST-ASING)8. Teh Lip Kim 3,087,500 2.349. Malaysia Nominees (Tempatan) Sdn Bhd 2,450,000 1.86

- Great Eastern Life Assurance (Malaysia) Berhad (Non Par 1)10. Teh Wan Sang & Sons Sdn Bhd 2,000,000 1.5211. Malaysia Nominees (Tempatan) Sdn Bhd 1,667,000 1.26

- Great Eastern Life Assurance (Malaysia) Berhad (LPF)12. Malaysia Nominees (Tempatan) Sdn Bhd 1,423,300 1.08

- Great Eastern Life Assurance (Malaysia) Berhad (LSF)13. JF Apex Nominees (Tempatan) Sdn Bhd 1,250,000 0.95

- Pledged Securities Account for Teo Kwee Hock14. CIMSEC Nominees (Asing) Sdn Bhd 1,100,000 0.83

- Exempt An for CIMB-GK Securities Pte Ltd (Retail Clients)15. Nonadiah binti Abdullah 960,000 0.7316. Abdul Hamid bin Sh Mohamed 900,000 0.6817. Malaysia Nominees (Tempatan) Sdn Bhd 832,400 0.63

- Great Eastern Life Assurance (Malaysia) Berhad (LBF)18. Ina Gail Pte Ltd 769,000 0.5819. AIBB Nominees (Tempatan) Sdn Bhd 759,600 0.58

- Pledged Securities Account for Wong Yee Hui20. Hans Peter Holst 636,000 0.4821. Cheong Shih Ian 626,300 0.4722. HLB Nominees (Tempatan) Sdn Bhd 482,800 0.37

- Pledged Securities Account for On Boon Kai23. JF Apex Nominees (Tempatan) Sdn Bhd 424,900 0.32

- Pledged Securities Account for Teo Siew Lai 24. Choy Foong Chee 332,100 0.2525. Dermalogica Inc 250,000 0.1926. Lim Yee Kheong 245,000 0.1927. Melina Tan Mei Ling 200,600 0.1528. Teh Joo Heng 200,000 0.1529. Beh Eng Par 191,000 0.1430. OSK Nominees (Tempatan) Sdn Bhd 189,000 0.14

- Pledged Securities Account for Cash Deluxe (M) Sdn Bhd

List of Properties



The properties of the EIG Group as at 31 March 2008 are as follow:

Built up Net bookarea of Age of value as at

Description/ Land Area building building 31.03.08Location Existing use (sq. m.) (sq. m.) (years) Tenure (RM)

Dermal Esthetica Sdn Bhd

Lot 11, Jalan Astaka U8/88 Industrial and 13,313.72 7,412.49 2 Freehold LandBukit Jelutong, Seksyen U8 office building - 10,031,86840150 Shah Alam BuildingSelangor Darul Ehsan - 13,536,196

H.S.(D) 142705 PT 17650Mukim of DamansaraDistrict of Petaling, Selangor

D’Village Condominium Condominium unit N/A 151.24 13 Freehold 296,300(Villa Putra), Unit 33B-19-1 with 3 bedroomsJalan Tun Ismail & 2 bathroomsKuala Lumpur - Tenanted

Master title held under:GRN 41990 Lot No. 46Bandar Kuala LumpurWilayah Persekutuan

Lot No. LG47 Retail Lot N/A 54.19 7.5 Freehold 615,881The Summit Subang USJ - TenantedPersiaran Kewajipan, USJ 147600 UEP Subang JayaSelangor Darul Ehsan

Master title held under:H.S.(D) 118886, PT 5Pekan Subang JayaDistrict of PetalingSelangor

Lot No. G30 Retail Lot N/A 54.19 7.5 Freehold 615,881The Summit Subang USJ - TenantedPersiaran Kewajipan, USJ 147600 UEP Subang JayaSelangor Darul Ehsan

Master title held under:H.S.(D) 118886, PT 5Pekan Subang JayaDistrict of PetalingSelangor

As at 31 March 2008





Dermal Esthetica Sdn Bhd (Cont’d)

No. 130, Jalan Batu Unjur 1 Intermediate 138.98 557.4 8 Freehold 490,251Bayu Perdana, 41300 Klang 4 storey terraceSelangor Darul Ehsan shopoffice

H.S.(D) 44076 No.P.T. 41324 Ground, 1st &Mukim of Klang 2nd Floor District of Klang, Selangor - Tenanted

3rd Floor- Occupied by owner

No. 132, Jalan Batu Unjur 1 Intermediate 138.98 557.4 8 Freehold 490,251Bayu Perdana, 41300 Klang 4 storey terrace Selangor Darul Ehsan shop office

H.S.(D) 44075 No. PT 41323 Ground, 1st & Mukim of Klang 2nd FloorDistrict of Klang, Selangor - Tenanted

3rd Floor - Occupied by owner

GF-15, Ground Floor Retail lot N/A 43.01 1.5 99 years lease 426,280Queensbay Mall Penang - Occupied by owner expiring in

01.12.2095

H.S.(D) 10015 PT 4671 Mukim 12, District ofBarat Daya, Pulau Pinang

GF-12B, Ground Floor Retail lot N/A 43.38 1.5 99 years lease 426,280Queensbay Mall Penang - Occupied by owner expiring in

01.12.2095

H.S.(D) 10015 PT 4671 Mukim 12, District ofBarat Daya, Pulau Pinang

List of Properties (Cont’d)





Esthetics Concept Sdn Bhd

GF-05, Ground Floor Retail lot N/A 61.04 1.5 99 years lease 643,546Queensbay Mall Penang - tenanted expiring in

01.12.2095H.S.(D) 10015 PT 4671Mukim 12, District ofBarat Daya, Pulau Pinang

Unit C-6-6 Condominium with N/A 131.45 8 99 years lease 268,203Palmville Resort Condominium 4 bedrooms & expiring inBandar Sunway 2 bathrooms 01.04.2097Petaling Jaya - TenantedSelangor Darul Ehsan

Master title held under:PN 8617 Lot 38159 & PN 8619Lot 44, Bandar SunwayDistrict of Petaling, Selangor

Asterspring FranchiseInternational Sdn Bhd

No 26-R, Jalan Masjid Negeri Double Storey 440.53 438.55 – Freehold 1,295,90011600 Penang Semi Detached

Corner House - Under renovation /

construction

Individual title No. GERAN 17897Lot No. 593, Sek 5Mukim of Bandar George TownDistrict of Timur LautState of Pulau Pinang

The above properties are located in Malaysia and have not been revalued and do not have any breach of land useconditions.

As at 31 March 2008

I/We,

of

being a member/members of ESTHETICS INTERNATIONAL GROUP BERHAD hereby appoint

of

or failing him,

of

or failing him, the Chairman of the Meeting as my/our proxy to vote for me/us on my/our behalf at the Eleventh AnnualGeneral Meeting of the Company to be held at the Auditorium, Lot 11, Jalan Astaka U8/88, Bukit Jelutong, Seksyen U8, 40150Shah Alam, Selangor Darul Ehsan, Malaysia on Wednesday, 20 August 2008 at 9.30 a.m. and at any adjournment thereof inrespect of my/our shareholdings in the manner indicated below:

No. Resolution For Against

Ordinary Resolution 1 To receive and adopt the Audited Financial Statements for the financialyear ended 31 March 2008 together with the Directors’ and Auditors’Reports thereon

Ordinary Resolution 2 Declaration of a final dividend of 7% less 26% tax in respect of thefinancial year ended 31 March 2008

Ordinary Resolution 3 Re-election of Ms Melissa M Chen as Director

Ordinary Resolution 4 Re-election of Encik Johan Zainuddin Bin Dzulkifli as Director

Ordinary Resolution 5 Re-election of Dr Chu Siew Mun as Director

Ordinary Resolution 6 Approval of payment of Directors’ fees for the financial year ended31 March 2008

Ordinary Resolution 7 To appoint Messrs Horwath as Auditors of the Company

Ordinary Resolution 8 Authority under Section 132D of the Companies Act, 1965 for theDirectors to issue shares

(Please indicate with an “X” in the spaces provided whether you wish your votes to be cast for or against the resolutions. In the absence of specificdirections, your proxy will vote or abstain as he thinks fit).

Dated this day of 2008 Signature of Member/Common Seal

NOTES:

1. A member of the Company entitled to attend and vote at the meeting is entitled to appoint a proxy or proxies to attend and vote in his stead. A proxy maybut need not be a member of the Company and the provision of Section 149 (1) (b) of the Companies Act, 1965 shall not apply.

2. Where a member appoints more than one (1) proxy, the appointment shall be invalid unless he specifies the proportion of his holdings to be represented byeach proxy.

3. The instrument appointing a proxy shall be in writing under the hand of the appointor or of his attorney duly authorised in writing or, if the appointor is acorporation, either under its Common Seal or under the hand of the attorney.

4. The instrument appointing a proxy must be deposited at the Registered Office of the Company at Lot 11, Jalan Astaka U8/88, Bukit Jelutong, Seksyen U8,40150 Shah Alam, Selangor Darul Ehsan, Malaysia not less than 48 hours before the time set for holding the meeting or any adjournment thereof.

EXPLANATORY NOTE TO THE SPECIAL BUSINESS

5. Authority under Section 132D of the Companies Act, 1965 for the Directors to issue sharesOrdinary Resolution 8, if passed, will empower the Directors to allot and issue shares in the Company up to an amount not exceeding in total ten percentum(10%) of the issued Share Capital of the Company for such purposes as the Directors consider would be in the interest of the Company. This authority, unlessrevoked or varied by the Company at a general meeting, will expire at the next Annual General Meeting.

Proxy Form

EESSTTHHEETTIICCSS IINNTTEERRNNAATTIIOONNAALL GGRROOUUPP BBEERRHHAADD(408061-P) (Incorporated in Malaysia)

No. of shares

The Company Secretary

ESTHETICS INTERNATIONAL GROUP BERHAD (408061-P)

Lot 11, Jalan Astaka U8/88

Bukit Jelutong, Seksyen U8

40150 Shah Alam

Selangor Darul Ehsan

Malaysia

AFFIXSTAMP

First fold here

Then fold here

CORPORATE OFFICE

Esthetics International Group BerhadLot 11, Jalan Astaka U8/88Bukit Jelutong, Seksyen U840150 Shah AlamSelangor Darul Ehsan, MalaysiaTel : +603 7809 6688Fax : +603 7809 6699

SINGAPORE OFFICE

EIG Global Pte. Ltd.70 Bendemeer Road# 02-08 LuzerneSingapore 339940Tel : +65 6271 4733Fax : +65 6227 6112

HONG KONG OFFICE

EIG Global (HK) Ltd.3/F, Kaiseng Commercial Centre4-6 Hankow RoadTsim Sha Tsui, KowloonHong KongTel : +852 2881 6169Fax : +852 2881 7612

Group Directory

THAILAND OFFICE

EIG (Thailand) Co. Ltd.217/2, Asoke TowerSukhumvit 21 Road (Soi Asoke)North Klongtoey, WattanaBangkok 10110ThailandTel : +662 2600 140Fax : +662 2600 141

esthetics international group...bukit jelutong, seksyen u8 40150 shah alam selangor darul ehsan...

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