Samurai 2K Aerosol : Annual Report 2022

TABLE OF CONTENTS

1. Corporate Profile
2. Letter to Shareholders

4 Operations & Financial Review

1. Employee Appreciation Day 2022
2. Board of Directors

10 Key Management

1. Corporate Social Responsibility
2. Samurai Paint Services
3. Corporate Information
4. Corporate Governance Report

45 Disclosure of Information on Directors Seeking Re-Election

51 Director's Statement

55 Independent Auditor's Report

1. Consolidated Statement of Comprehensive Income
2. Statements of Financial Position
3. Consolidated Statement of Changes in Equity
4. Statement of Changes in Equity
5. Consolidated Statement of Cash Flows
6. Notes to the Financial Statements

108 Statistics of Shareholdings

110 Notice of Annual General Meeting Proxy Form

Appendix

This Annual Report has been prepared by the Company and its contents have been reviewed by the Sponsor, for compliance with the relevant rules of the SGX-ST Listing Manual Section B: Rules of Catalist (the "Catalist Rules").

This Annual Report has not been examined or approved by SGX-ST and the SGX-ST assumes no responsibility for the contents of this Annual Report, including the accuracy, completeness or correctness of any of the information, statements or opinions made or reports contained in this Annual Report.

The contact person for the Sponsor is Mr Lance Tan, Senior Vice President, at 8 Anthony Road, #01- 01, Singapore 229957, telephone [phone].

CORPORATE PROFILE

Samurai 2K Aerosol Limited ("Samurai 2K" or the "Company", and together with its subsidiaries, the "Group") is a leading aerosol coating specialist which focuses on high performance coating solutions for the automotive refinishing and refurbishing industry. We are principally engaged in the manufacturing, distribution and marketing of our products under our own brands.

Headquartered in Malaysia, our products are manufactured in our production facility located in Johor and are distributed in countries including Malaysia, Indonesia, Thailand, Philippines, Vietnam, Cambodia, United Kingdom, United States of America, Singapore and India.

OUR BELIEF:

We Change Aerosol, Aerosol Changes

the World.

OUR VISION

To be the world's respected

innovative aerosol system provider.

OUR MISSION

To offer the most innovative aerosol systems with the best user enjoyment and to create more job opportunities for all sprayers in the world.

SAMURAI 2K AEROSOL LIMITED | ANNUAL REPORT 2022

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LETTER TO SHAREHOLDERS

"THE BIGGEST PART OF DIGITAL TRANSFORMATION IS CHANGING THE

WAY WE THINK".

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LETTER TO SHAREHOLDERS

DEAR SHAREHOLDERS,

I am honoured to present the Annual Report of Samurai 2K Aerosol Limited ("Samurai 2K" or the "Company" and its subsidiaries, the "Group") for the financial year ended 31 March 2022 ("FY2022").

RESULTS HIGHLIGHT

We are proud to announce that we have reported the highest record of revenue in FY2022. This is another remarkable year for us, despite the COVID-19 pandemic which resulted in a significant disruption to our business development progress. The Group's revenue increased marginally by RM2.4 million or 2.18% to RM113.0 million in FY2022 from RM110.6 million in FY2021. Gross profit margin decreased from 48.7% in FY2021 to 42.7% in FY2022 mainly due to increase in raw material and freight costs. The profit after tax decreased by RM4.37 million or 24.9% to RM13.12 million in FY2022 from RM17.49 million in FY2021 and was mainly due to the one-offnon-cashshare-based payment expenses of RM4.51 million, pursuant to the Group's performance share plan that aimed to promote higher performance goals, recognise exceptional achievements, and retain talents within the Group.

The Group is optimistic about the future growth of our Group's revenue, taken into consideration of the economy uncertainty as well as the raw material and freight cost hike since FY2021.

RESILIENCE

We are currently gathering all the necessary resources (ie. information technology, manpower, etc) to build a strong digital platform by integrating online and offline business transactions, to improve users' experiences and to better understand the users' behaviours, with an aim to create an omni-channel retail experience to the users.

Meanwhile, the Board emphasises on the importance of liquidity and resources to ensure resilience and agility of the business to adapt to uncertainty, changes and challenges, and continue to invest in future business development and transformations. We continue to maintain a high liquidity financial position, despite an anticipation of higher capital expenditure in FY2023, including new corporate office renovation and digital technology development costs and to reward our loyal shareholders with dividend payout consistently.

BUSINESS DEVELOPMENT

We are targeting to launch the first-ever colour mix

• match system ("Tintatek" technology) of aerosol spray paint, which allows users (especially automotive consumers) to custom fill their desired colours into the aerosol can without the use of a complicated tool or equipment, and then spray on to a desired surface. The original factory paint can be perfectly matched with the prescribed colour ratio from our very own colour databank, in which million of colours can be generated by using only 26 basic primary colours.

At the same time, we are building a spray paint service matching platform which integrates those who need the spray painting services with those who can render the said services at their doorsteps. This is incredibly an economical, convenient, and easy-to-useone-off solutions to solve most of the consumers' pain points including cost savings, repair minor scratches, hassle free door-to-door service etc.

The incorporation of Tintatek into the spray paint services is a revolutionary and disruptive innovation in the aerosol paint industry, and we work towards a digital ecosystem which eventually brings greater values and convenience to our consumers.

INVENTIONS AND INNOVATIONS

In order to sustain the competitive advantage and prevent new competitors from entry, all inventions and innovations done by our research and development team are protected and registered with the local intellectual property registrar as the Group's own patents and trademarks all around the world.

DIVIDEND

The Group intends to declare dividends consistently, on the Group's profits generated during each financial period/year, by taking into consideration the expansion plan and future investments on capital expenditure.

For FY2022, the Board of Directors has paid an interim dividend (one-tier tax exempt) of SGD0.002 per ordinary share and special dividend of SGD0.004 per ordinary share on 7 December 2021 and further recommended a final dividend (one-tier tax exempt) of SGD0.002 per ordinary share and special dividend of SGD0.004 per ordinary share, subject to shareholders' approval at the annual general meeting to be held on 27 July 2022.

DIGITAL TRANSFORMATION

The Group continuously approaches on new digital business strategies by changing the way we are doing business traditionally, to adopt change in new business models and leverage emerging technology in this new digital world. Various digital strategic approaches have been implemented to ensure wide coverage on the consumers' needs in terms of their behaviours and buying patterns, and through various digital marketing channels to attract consumers including websites, e-commerce and social media platforms.

ACKNOWLEDGEMENT AND APPRECIATIONS

On behalf of the Board, I would like to thank all our stakeholders, shareholders, bankers, customers, and suppliers for the unwavering support and trust in Samurai 2K all these years. Last but not least, thousand thanks to my dedicated staff for all the sacrifices that you have made for Samurai 2K and I strongly believe that together hand-in-hand we can achieve our goals for another excellent year to come!

ONG YOKE EN

Founder and Chief Executive Officer

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