VISDYN

AM

ICS H

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S BER

HA

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NN

UA

L REPO

RT 2010

ANNUAL REPORT2010

VERSATILE

INNOVA

TIVE

SIMPLICITY

Lot 3844, Jalan TU 52Kawasan Perindustrian Tasik UtamaAyer Keroh, 75450 Melaka, MalaysiaTel: 606-2323 023Fax: 606-2323 600

Our Vision

Our Mission

To be semiconductor industry’s top choice of equipment solution provider through value innovation, best-in-class performance, excellent service & support, cost effectiveness, environmental friendliness and partnership with customers, peers, suppliers & employees.

• Strive to meet or exceed expectation of customers, peer partners, suppliers, employees & investors• Identify and employ/partner with the best talents in the market• Unleash the best potential of partners & employees• Contribute to local & global communities in education & long term economy sustainability

02 Awards&Recognition

03 CorporateStructure

04 CorporateInformation

05 FinancialHighlights

06 Chairman’sStatement

09 SignificantEventsoftheyear

10 BoardofDirectors

15 CorporateGovernanceStatement

23 AuditCommitteeReport

Contents

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27 StatementofInternalControl

29 FinancialStatements

69 ListofLandedProperties

70 AnalysisofShareholdings

72 NoticeofAnnualGeneralMeeting

73 StatementAccompanyingNoticeofAnnual GeneralMeeting

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Awards & Recognition

WE ARE RECIPIENT OF ...

SMB Emerging Business Award

Golden Bull Award

Anugerah Kecemerlangan Industri - Keluaran Inovatif from Ministry of International Trade and Industry

Melaka Achievement Award - Melaka Chief Minister Award

Quality Certified ISO 9001

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Corporate Structure

T-Series G-Series

To test, inspect and transfer of semiconductor at high speed

To inspect an object automatically at high speed

BACK-END SEMICONDUCTOR EQUIPMENT

OEM VISION INSPECTION SYSTEM

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Corporate Information

BOARD OF DIRECTORS

Datuk Azzat Bin KamaludinChairman / Non-Executive Independent Director

Choy Ngee HoeExecutive Director / CEO

Lee Chong LengExecutive Director / CTO

Ong Hui PengExecutive Director / Machine Software Department Manager

Vincent LohNon-Executive Independent Director

Wang Choon SeangNon-Executive Independent Director

COMPANIES SECRETARIES

Ng Lai Yee (MAICSA 7031768)Peggy Chek Hong Kim (MIA 23475)

REGISTERED OFFICE

10th Floor Menara Hap Seng,No. 1 & 3 Jalan P. Ramlee50250 Kuala Lumpur, MalaysiaTel : 03-23824288Fax : 03-23824170

CORPORATE HEAD OFFICE

Lot 3844, Jalan TU 52,Kawasan Perindustrian Tasik Utama,Ayer Keroh,75450 Melaka, MalaysiaTel : 06-2323023Fax : 06-2323600

PRINCIPAL BANKERS

United Overseas Bank Malaysia BerhadPublic Bank BerhadHSBC Bank Malaysia Berhad

AUDITORS

Wong Weng Foo & Co (AF 0829)41, Damai Complex Jalan Dato Haji Eusoff50400 Kuala LumpurTel : 03-4042 4280Fax : 03-4041 3141

SHARE REGISTRAR

Symphony Share Registrars Sdn Bhd Level 6, Symphony House,Block D13, Pusat Dagangan Dana 1,Jalan PJU 1A/46,47301 Petaling Jaya, Selangor. General Line : 03-7841 8000General Fax : 03-7841 8008

STOCK EXCHANGE LISTING

ACE Market of Bursa SecuritiesStock name : VISStock code : 0120

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Financial Highlights

2006 2007 2008 2009 2010 RM’000 RM’000 RM’000 RM’000 RM’000

TURNOVER 6,309 9,612 9,311 3,210 19,683

GROSSPROFIT 3,4810 4,787 4,328 1,965 9,476

DEPRECIATION (150)0 (255) (409) (708) (782)

AMORTIZATIONOFDEVELOPMENTEXPENDITURE (44) (183) (197) (159) (40)

INTERESTEXPENSE (26) (21) (27) (51) (142)

PROFIT/(LOSS)BEFORETAXATION 2380 252 (1,491) (961) 2,250

TAXATION 26 43 (2) (16) (29)

PRE-ACQUISITIONPROFITS - - - - -

PROFIT/(LOSS)AFTERTAXATION 2650 295 (1,493) (978) 2,221

NO.OFORDINARYSHARESINISSUE(‘000) 66,852 66,998 67,088 67,088 67,088

BASICEPS(sen)* 0.50 0.4 (2.2) (1.5) 3.31

NETTANGIBLEASSETSPERSHARE(sen)** 21.70 21.90 20.05 19.40 23.38

R&DSPENDING(‘000) 1,389 1,408 735 853 792

INVENTORY 3,328 5,560 5,826 5,132 7,485

RECEIVABLES 4,820 3,562 2,219 2,001 8,815

NETINCREASEIN/(DECREASE)CASHAND

CASHEQUIVALENTS 6,532 (3,078) (2,417) 9 265

NOTES * The basic Earnings Per Share (EPS) is arrived at by dividing the Group’s profit attributable to shareholders (before pre-acquisition profit

but after taxation) by the weighted average number of ordinary shares in issue during the year. ** The Net Tangible Assets (NTA) Per Share is arrived at by dividing net tangible assets value attributable to ordinary shares by the number

of ordinary shares in issue. 0 Restated in financial year ended 31 October 2007

0

2,500

7,500

5,000

15,000

12,500

10,000

17,500

20,000

238

(1,491)(961)

1,408

735

20.05

21.9

(1.5)

0.5

Turnover (RM’000)

19,683

0

2,000

4,000

6,000

8,000

10,000

Gross Profit (RM’000)

9,476

-3,000

-2,000

-1,000

0

1,000

2,000

3,000

Profit Before Taxation (RM’000)

2,250

-3.0

-2.0

-1.0

0

1.0

2.0

3.0

4.0

5.0

Basic EPS (sen)

3.31

0

5

10

15

20

25

Net Tangible Assets Per Share (sen)

23.38

0

300

600

900

1,200

1,500

R&D Spending (RM’000)

792

2006 2007 2008 2009 2010 2006 2007 2008 2009 2010 2006 2007 2008 2009 2010

2006 2007 2008 2009 2010 2006 2007 2008 2009 2010 2006 2007 2008 2009 2010

6,309

9,612 9,311

3,210

19,683

3,481

4,787

1,965

9,476

4,328

252

2,250

(2.2)

0.4

3.31

19.4021.7

23.38

1,389

853792

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Chairman’s Statement

On behalf of the Board of

Directors, I am honoured

and pleased to present the

annual report and audited

financial statements of

VisDynamics Holdings Berhad

for the financial year ended 31

October 2010.

OUR INDUSTRY

We began financial year 2010 on a cautious note, mindful that although the financial crisis was subsiding due in part to stimulus packages implemented by governments worldwide, the spectre of a double-dip was still lurking in the background.

Fortunately, after a worldwide economic recession, the semiconductor market rallied in 2010 with worldwide revenue reaching a landmark $300.3 billion in 2010, up 31.5 percent from 2009, according to results by Gartner, Inc.

In 2010, the semiconductor market rebounded from a 10 percent revenue decline in 2009. Overall semiconductor industry revenue grew $71.9 billion in 2010 – the largest single dollar increase for the semiconductor industry in any one year. Only three times in the past – 1988, 1995 and 2000 – has the semiconductor industry revenue grown by more than 30 percent in any one year. This year, the industry topped $300 billion, long regarded as a benchmark achievement for the industry.

PERFORMANCE REVIEW

The Group posted a higher revenue of RM 19.7 million in the current financial year, an increase of RM 16.5 million or 516% from the previous corresponding financial year of RM 3.2 million due to strong demand and recovery from the semiconductors and electronics industries.

In terms of product group basis, semiconductor back-end equipment, both gravity and tray, contributed 94% of our total revenue generated during FY 2010. The balance was made up of vision inspection system, upgrading projects and spares and services. In terms of geographical coverage, about 79% of our sales went to Asia whilst the rest went to United States of America.

On the back of this revenue, the Group posted a profit before taxation of RM 2.2 million in the current financial year as compared to a loss before taxation for the previous corresponding financial year 2009 of RM 961k.

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Chairman’s Statement (cont’d)

PROSPECTS

As the semiconductor industry completes one of its most successful year in 2010, the market is positioned for continued, albeit slower, growth in 2011, according to the outlook by Gartner, Inc. The worldwide semiconductor revenue is forecast to total $314 billion in 2011, up 4.6 percent from 2010’s revenue.

2010 recorded the strongest growth ever for the semiconductor equipment industry, a nice rebound from the worst ever year in 2009.

Gartner predicted that there will be a softer 2011, where equipment purchases will focus more on capacity than technology equipment.

While these developments are useful as a guide for our sales projections, our share of the ATE market is miniscule. Hence, our sales performance may be quite different from the market as a whole.

After a remarkable performance during the financial year 2010, and barring any unforeseen circumstances, the Board expects the company performance to remain strong and satisfactory.

DIVIDEND

I am pleased to report that the Board of Directors is recommending a tax exempt final dividend of 0.5 sen per ordinary share of RM0.10 each in respect of the financial year ended 31 October 2010, which is subject to approval from shareholders of the Company at its forthcoming Annual General Meeting.

CORPORATE SOCIAL RESPONSIBILITY

OUR GREEN BUILDING

Our plant is designed in an environmental friendly manner with efficient utilization of the energy and resources. Rain water will be collected and utilized for toilets instead of using treated water. The building is also designed to reduce the consumption of electricity. There are also facilities to assist physically challenged members of our society in the navigation and use of our building. In addition, plants and trees were planted to beautify the surroundings and also to create a conducive environment.

TRAINING & CAREER OPPORTUNITIES

It is our practice to offer internships to a number of undergraduates who are required to fulfil their practical training requirements. Apart from learning technical skills, these undergraduates had the opportunity to gain an insight of our corporate culture, our processes and our operations. These young people may well be attracted to join us upon graduation.

CONTINUOUS EDUCATION

In addition, we have also put in place a scholarship programme for existing staff who are interested in furthering their education.

Apart from the abovementioned, we are currently collaborating with the local universities to research on some technology enhancement.

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COMMUNITY

In an effort to instil a sense of caring and social responsibility among individuals for the underprivileged, VisDynamics made an annual visit and gave both monetary and non-monetary contribution to the Handicapped & Mentally Retarded Children Love Centre.

During the year under review, VisDynamics also contributed to SJKC Padang Gajah school fundraising activities. RECYCLE, DONATE & SAVE THE EARTH

As part of conservation, VisDynamics practice recycling. Recycling bins are placed to collect and segregate metal, paper, plastic and wires. Every third week of the month, the recyclables will be donated and sent to Tzu Chi Melaka, a non-profit charity organization.

CORPORATE GOVERNANCE

The Group is committed to achieving and maintaining good standards of corporate governance. The Board views good corporate governance as going beyond the duty of care that it owes to shareholders. We believe that, all things being equal, good governance will translate into lower cost of capital for the Group, and a premium for shareholders in the long term.

APPRECIATION

On behalf of the Board, I wish to acknowledge the retirement of En. Khairil Anuar bin Abdullah and also the demise of Dato’ Nordin bin Baharuddin from the Board during the financial year and wish to express our gratitude for their invaluable contribution to the Group during their tenure as Independent Non-Executive Directors. At the same time, I am pleased to welcome Mr. Vincent Loh and Mr. Wang Choon Seang who joined the Board as Independent Non-Executive Directors.

I wish to express our utmost gratitude to the staff and management team for their unwavering dedication and sterling commitment. Our sincere appreciation goes all to our valued shareholders, customers, suppliers, business associates, financiers, analysts, media and the government authorities for their continued support and confidence in the Company.

To my fellow colleagues on the Board, I would also like to thank them for their guidance and active participation in the Board and look forward for their continued support and counsel.

Chairman’s Statement (cont’d)

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Significant Events of the year

Annual Dinner

Christmas

Ramadhan

Durian fair

Chinese New Year

Handicapped & Mentally Retarded Love Centre

In-House Wealth Management Seminar

Recycle, Donate & Save the Earth