G NEPTUNE BERHAD (Company No: D) ANNUAL REPORT 2014 (Formerly known as GPRO TECHNOLOGIES BERHAD) CONTENTS

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2 CONTENTS EXECUTIVE DIRECTOR'S STATEMENT 2 CORPORATE INFOATION 3 PROFILE OF DIRECTORS 4-5 CORPORATE GOVERNANCE STATEMENT 6-11 AUDIT COMMITTEE REPORT STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL OTHER DISCLOSURES DIRECTORS' REPORT STATEMENT BY DIRECTORS & STATUTORY DECLARATION 25 INDEPENDENT AUDITORS' REPORT STATEMENTS OF FINANCIAL POSITION 29 STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME 30 STATEMENTS OF CHANGES IN EQUITY STATEMENTS OF CASH FLOWS NOTES TO THE FINANCIAL STATEMENTS ANALYSIS OF SHAREHOLDINGS 76 LIST OF THIRTY LARGEST SHAREHOLDERS 77 NOTICE OF ANNUAL GENERAL MEETING PROXY FO 81 1

3 EXECUTIVE DIRECTOR S STATEMENT DEAR SHAREHOLDERS, On behalf of the Board of Directors of G Neptune Berhad (formerly known as GPRO Technologies Berhad) (the "Company") and its subsidiaries collectively, (the "Group"), it is my pleasure to present to you the Annual Report for financial year ended 31 December 2014 ("FY2014") was a challenging year for G Neptune. Even though business competition remained stiff with continued slow economic growth in Malaysia, there were many reasons to be optimistic on several fronts for the Group. Among the highlights for the year 2014 include restructuring of group business by disposing the non-profit making business and subsequently, venturing into trading and distribution of garments and apparels to increase revenue and profitability of the Group. Results/Performance For the financial year ended 31 December 2014, the Group recorded a revenue of 2.67 million and pre-tax profit of million as compared to a revenue of million and pre-tax loss of million for the financial year ended 31 December This was principally attributable to a one-off sale of apparel products. In addition, there was a significant decrease in selling and distribution costs as well as administrative expenses resulting from of disposal of the non-performing cosmetic business in June Prospects The Board expects the performance of the Group for the next financial year ending 31 December 2015 to be challenging in view of the current global economic conditions. The performance of the Group will depend substantially on the market demand, operating efficiencies, cost control measures of its various divisions. In the near future, the Board would continue to focus on improving processes for efficiencies gains and effective deployment of financial resources to optimise return and at the same time to seek new revenue streams to improve existing position. The Group is optimistic of its future and long term prospects. Acknowledgement I would like to thank the Board of Directors for their guidance and encouragement. Furthermore, I would like to thank the management team and all the staff for their dedication and commitment in working together. Lastly, I would like to thank all our valued clients, suppliers, professional colleagues and business partners for your collaboration, cooperation and continuous support. Khoo Yick Keung Executive Director 2

4 CORPORATE INFOATION BOARD OF DIRECTORS Khoo Yick Keung Executive Director TanSri Singadju Benui Independent Non-Executive Director Chan Lai Yi Independent Non-Executive Director Lo Yin Ling Independent Non-Executive Director Choi Wing Koon Independent Non-Executive Director AUDIT COMMITTEE Choi Wing Koon Chairman Independent Non-Executive Director Chan Lai Yi Member Independent Non-Executive Director Lo Yin Ling Member Independent Non-Executive Director NOMINATION & REMUNERATION COMMITTEE Chan Lai Yi Chairman Independent Non-Executive Director Lo Yin Ling Member Executive Director Khoo Yick Keung Member Executive Director AUDITORS Messrs SJ Grant Thornton Level 11, Sheraton Imperial Court Jalan Sultan Ismail Kuala Lumpur Wilayah Persekutuan Tel : Fax : REGISTERED OFFICE No. 9A, Jalan Medan Tuanku Medan Tuanku Kuala Lumpur Wilayah Persekutuan Tel : Fax : Website: PRINCIPAL PLACE OF BUSINESS B-13A-18,The Scott Garden Soho, Old Klang Road, Kuala Lumpur Wilayah Persekutuan SHARE REGISTRAR Mega Corporate Services Sdn Bhd Level 15-2, Sheraton Imperial Court Jalan Sultan Ismail Kuala Lumpur Wilayah Persekutuan Tel : Fax : STOCK EXCHANGE LISTING ACE Market of Bursa Malaysia Securities Berhad Stock Name : GNB Stock Code : 0045 COMPANY SECRETARY Leong Sue Ching (MAICSA No: ) 3

5 PROFILE OF DIRECTORS KHOO YICK KEUNG Executive Director Member of the Nomination & Remuneration Committee Hong Kong Citizen, Age 44 years Mr. Khoo Yick Keung was appointed to the Board of G Neptune Berhad (formerly known as GPRO Technologies Bhd) on 20 January He graduated from Tang King Po College. Mr. Khoo Yick Keung has developed his personal career in 1997 regarding jewelry design business. Besides jewelry design, Mr. Khoo s job scope included preparation of various business plans and developing his design business in China and some other Asia countries. Equipped with strong sense to keep up with design concepts to the latest trend and great connection network in China, in 2010, he started a jewelry export business. He is not a director of any other public companies. He has no family relationship with any director and/or major shareholder of the Company. TANSRI SINGADJU BENUI Independent Non-Executive Director Indonesia Citizen, Age 45 years Mr. Tansri Singadju Benui was appointed to the Board of G Neptune Berhad (formerly known as GPRO Technologies Bhd) on 20 January Mr Tansri Singaju Benui was appointed as a director of PT. Wira Griya Mustika, a steel production company, in Before the appointment, he was managing different business divisions of the company. In 1991, he graduated from a college in Japan with a Diploma in Management and joined the company thereafter. As the Company was also actively trading in the U.S. markets, Mr Benui had acquired extensive knowledge in foreign markets and in dealing with vast clientele base. He is not a director of any other public companies. He has no family relationship with any director and/or major shareholder of the Company. CHAN LAI YI Independent Non-Executive Director Member of the Audit Committee Chairman of the Nomination & Remuneration Committee Hong Kong Citizen, Age 43 years Ms. Chan Lai Yi was appointed to the Board of G Neptune Berhad (formerly known as GPRO Technologies Bhd) on 26 February Ms. Chan Lai Yi graduated from Tai Po Sam Yuk Secondary School. With excellent communication skill with clients and out-going personality, she was appointed as a manager of a trading export company from China in During her appointment, she performed functional analysis as well as to manage and follow-up on all functional and business related support issues for regional online trading services. She is not a director of any other public companies. She has no family relationship with any director and/or major shareholder of the Company. 4

6 PROFILE OF DIRECTORS (CONT D) LO YIN LING Independent Non-Executive Director Member of the Audit Committee Member of the Nomination & Remuneration Committee Hong Kong Citizen, Age 40 years Ms. Lo Yin Ling was appointed to the Board of G Neptune Berhad (formerly known as GPRO Technologies Bhd) on 20 February She graduated from Thames Valley University (UK) with a Bachelor of Business Administration in year Ms. Lo Yin Ling started to work in the field of customer service and human resources from year 1992 to year With nearly 20 years of customer service and operation experience, she was then appointed as Marketing and Operation Manager in Innomat Company in She assisted in organizing the marketing activities such as identifying the target group to arrange for promotion program, managing customer enquiries, preparing accounting reports, and distribution logistics. She is not a director of any other public companies. She has no family relationship with any director and/or major shareholder of the Company. CHOI WING KOON Independent Non-Executive Director Chairman of the Audit Committee Hong Kong Citizen, Age 38 years Mr. Choi was appointed to the Board of G Neptune Berhad (formerly known as GPRO Technologies Bhd) on 28 May Mr. Choi Wing Koon served as Company Secretary and Financial Controller of Wing Hing International (Holdings) Limited since September 1, He also served as Company Secretary and Financial Controller of Taung Gold International Limited from September 1, 2010 to April 22, He has around 13 years of experience in company secretarial, accounting and corporate finance. He has been an Independent Non- Executive Director of Zhidao International (Holdings) Limited since January 9, He has been an Independent Non-Executive Director at Universe International Holdings Ltd. since December 4, Mr. Choi is a fellow member of the Association of Chartered Certified Accountants and a member of the Hong Kong Institute of Certified Public Accountants. Mr. Choi holds a Bachelor of Business Administration in Accounting awarded by the Hong Kong University of Science and Technology in He is not a director of any other public companies. He has no family relationship with any director and/or major shareholder of the Company. 5

7 CORPORATE GOVERNANCE STATEMENT The Board recognizes that good corporate governance is fundamental to protect the shareholders value and financial performance of the Company. Thus the Board strives to ensure the principles of corporate governance and best practices are observed and practiced throughout the Group. A) Directors The Board The Board assumes responsibility for effective stewardship and control of the Group towards realising long term shareholders value, and has established terms of reference to assist in the discharge of this responsibility. The Board has the overall responsibility for reviewing and adopting strategic plans for the Group, overseeing the conduct of the Group s business, implementing an appropriate system of risk management and ensuring the adequacy and integrity of the Company s systems of internal control. The composition of the Board reflects a balance of Executive and Non-Executive Directors, all from diverse professional background with a wide range of business, financial and legal experiences relevant to lead the Company, and as such, are able to bring an independent judgement to bear on issue in terms of business strategies, financial and operational performance, resources and standards of conduct. The Board meets regularly on a quarterly basis and as and when required. There were 4-5 Meetings held during the financial year and the attendance record is as follows:- Name of Director Meetings attended Khoo Yick Keung 5/5 Tansri Singadju Benui 4/5 Chan Lai Yi 4/4 LoYin Ling 4/4 Choi Wing Koon 3/3 Christian Kwok-Leun Yau Heilesen (resigned on 27 February 2014) 1/1 Raymond Yip Wai Man (resigned on 7 March 2014) 1/1 Cheung Ming Chi (resigned on 7 March 2014) 0/1 Lee Chee Cheng (retired on 30 June 2014) 2/4 Board Balance The Board comprises of an Executive Director, and four (4) Independent Non-Executive directors. The current Board composition complies with the Listing Requirements of the Bursa Malaysia Securities Berhad for the ACE Market. 6

8 CORPORATE GOVERNANCE STATEMENT (CONT D) A) Directors (cont d) Board Balance (cont d) The Board has within it, professionals drawn from various background; bringing in-depth, and diversity in experience, expertise and perspectives to the Group s business operation. The profiles of the members of the Board are set out in this Annual Report on pages 4 to 5. The Board constitutes of individuals who are committed to business integrity and professionalism in all its activities. The Board supports the highest standards of corporate governance and the development of best practices for the Group. Supply of Information Prior to Board meetings, an agenda together with the relevant documents and information are distributed to all Directors. The Executive Director and/or other relevant Board members will provide comprehensive explanation of pertinent issues and recommendations by the management. The issues would then be deliberated and discussed thoroughly by the Board prior to decision-making. Apart from the above, the Board members are updated on the Company s activities and its operations on a regular basis. All Directors have access to all information of the Company on a timely basis in an appropriate form and quality necessary to enable them to discharge their duties and responsibilities. All Directors have access to the advice and services of the Company Secretary and to obtain independent professional advice, whenever necessary, at the expense of the Company. B) Board Committees The Board delegates certain functions to the Committees listed below to support and assist in discharging its fiduciary duties and responsibilities. The respective committees report to the Board on matters considered and their recommendations thereon. However, the ultimate responsibility for the final decision on all matters lies with the Board. (i) Audit Committee The details are shown in the accompanying report of the Audit Committee on pages 12 to 15. 7

9 CORPORATE GOVERNANCE STATEMENT (CONT D) B) Board Committees (cont d) (ii) Nomination & Remuneration Committee (NRC) The NRC was formed on 27 February 2013 and is responsible for the following:- (a) identifying and recommending to the Board suitable nominees for appointment to the Board; (b) assessing the effectiveness of the Board as a whole and the performance of each existing Director; and (c) the formulation of remuneration policy such as rewards and benefits and other terms of employment of the Executive Directors. The current members of the NRC are as follows: (i) Chan Lai Yi (Chairman) (ii) Lo Yin Ling (iii) Khoo Yick Keung C) Appointment and Re-election of Directors The NRC is responsible for making recommendation for appointments to the Board. In discharging this duty, the NRC will assess the suitability of an individual to be appointed to the Board by taking into account the individual s skill, knowledge, expertise, experience, professionalism, integrity and/or other commitments. In accordance with the Company s Articles of Association, all Directors who are appointed by the Board are subject to election by the shareholders at the Annual General Meeting ( AGM ) following their appointment. The Articles of Association of the Company also provides that at least one-third (1/3) of the directors shall retire by rotation from office at each AGM and they shall be eligible for re-election at such AGM. In addition, all directors shall be subjected to retirement by rotation once every three (3) years. For the forthcoming Twelfth (12 th ) Annual General Meeting, the Director, Tansri Singadju Benui, will retire by rotation in accordance with Articles 84 of the Company s Articles of Association and being eligible, has offered himself for re-election. 8

10 CORPORATE GOVERNANCE STATEMENT (CONT D) D) Directors Remuneration The Company has adopted the practice as recommended by the Malaysian Code on Corporate Governance to determine the remuneration for a Director so as to ensure that the Company attracts and retains the Directors needed to run the Group successfully. The Nomination & Remuneration Committee recommends to the Board the remuneration for Directors whereby the component parts of remuneration are structured so as to link rewards to corporate and individual performance, in the case of executive Directors. In the case of non-executive Directors, the level of remuneration reflects the experience and level of responsibilities undertaken by the particular non-executive concerned. The aggregate Directors remuneration received/receivable for the financial year ended 31 December 2014 are set out below:- Directors fees Salaries & Allowance Bonuses Benefitsin-kind Others Total Executive 37,721 37,721 Directors Non-Executive Directors Total 37,721 37,721 The number of Directors whose remuneration fall into the following bands are as follows:- Range of Remuneration () Executive Non-Executive Total 50,000 and below , , , , , , , , E) Shareholders Dialogue with investors The Company recognizes the importance of keeping the shareholders and investors informed of the Group s business and corporate developments. Such information is disseminated via the Group s annual reports, circulars to shareholders, quarterly financial results and the various announcements made from time to time. All shareholders, including private investors, have an opportunity to participate in discussions with the Board on matters relating to the Group s operation and performance at the Company s Annual General Meeting. Alternatively, they may obtain the Company s latest announcements via the Bursa Malaysia Securities Berhad s website at 9

11 CORPORATE GOVERNANCE STATEMENT (CONT D) E) Shareholders (cont d) Annual General Meeting The Annual General Meeting (AGM) is the principal forum for dialogue with individual shareholders and investors. It is a crucial mechanism in shareholder communication for the Company. At the Company s AGM, shareholders have direct access to the Board and are given the opportunity to ask questions during the question and answer session. F) Accountability and Audit a. Financial Reporting The Board aims to provide and present a balanced and meaningful assessment of the Group s financial performance and prospects at the end of the financial year, primarily through the Financial Statements and the Executive Director s Statement in the Annual Report. In preparing the above Financial Statements, the directors had: adopted suitable accounting policies and then apply them consistently; made judgements and estimates that are prudent and reasonable; ensured applicable accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements; and prepared the financial statements on an ongoing basis. b. Internal Control The Board of Directors has an overall responsibility for maintaining a system of internal controls, which provides reasonable assessments of effective and efficient operations, internal controls and compliance with laws and regulations. c. Relationship with Auditors The Board maintains a transparent and formal relationship with the Group s external auditors, primarily through the Audit Committee in seeking professional advice and ensuring compliance with the relevant accounting standards. The external auditors are invited to attend the meetings of the Audit Committee and the Board whenever necessary to discuss the Group s Financial Statements. The Group s independent external auditors fill an essential role for the shareholders by enhancing the reliability of the Group s Financial Statements and giving assurance of that reliability to users of these financial statements. The external auditors have an obligation to bring any significant defects in the Group s system of control and compliance to the attention of the Management; and if necessary, to the Audit Committee and the Board. 10

12 CORPORATE GOVERNANCE STATEMENT (CONT D) G) Directors Responsibility Statement In Respect Of Financial Statements The Directors are required to prepare the financial statements for each financial year which give a true and fair view of the state of affairs of the Group and of the Company at the end of the financial year, and of the results and cash flow of the Group and of the Company for the financial year then ended. The Directors consider that, in preparing the financial statements for the financial year ended 31 December 2014, the Group had used appropriate accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent. The Directors also considered that all applicable approved accounting standards had been followed and confirmed that the financial statements had been prepared on a going concern basis. The Directors are responsible for ensuring that the Group and the Company keep accounting records which disclose with reasonable accuracy at any time the financial position of the Group and of the Company and which enable them to ensure that the financial statements comply with the provisions of the Companies Act, 1965 and applicable approved accounting standards in Malaysia. H) Directors Training All Directors have attended the Mandatory Accreditation Programme ( MAP ) as required by Bursa Securities. The Directors had not attended any training during the financial period ended 31 December 2014 due to time constraint and tight work schedule. They will attend other relevant training programmes as appropriate to enhance their skills and knowledge. Throughout the year, the Directors received updates and briefings, particularly on regulatory, industry and legal developments. I) Compliance Statement The group has complied substantially with the principles and best practices of corporate governance as set out in the Code. 11

13 AUDIT COMMITTEE REPORT COMPOSITION AND DESIGNATION OF AUDIT COMMITTEE 1. Choi Wing Koon (Appointed on 23 September 2014) Chairman, Independent Non-Executive Director 2. Chan Lai Yi (appointed on 26 April 2014) Member, Independent Non-Executive Director 3. Lo Yin Ling (appointed on 20 April 2014) Member, Independent Non-Executive Director 4. Raymond Yip Wai Man (Resigned on 7 March 2014)- Non-Independent Non-Executive Director 5. Cheung Ming Chi (Resigned on 7 March 2014)- Member, Independent Non-Executive Director 6. Lee Chee Cheng (Retired on 30 June 2014) Chairman, Independent Non-Executive Director TES OF REFERENCE OF THE AUDIT COMMITTEE Constitution The Audit Committee was formed pursuant to a resolution passed by the Board of Directors on 14 th April Membership The Audit Committee shall be appointed by the Board of Directors from among their number and shall be composed of not fewer than three (3) non-executive directors, a majority shall be Independent. A quorum shall be two (2) members present in person, both of whom shall be Independent Non-Executive Directors. The members of the Audit Committee shall elect a chairman from among their member who is an Independent Non-Executive Director. The Chairman elected shall be subjected to endorsement by the Board. At least one member of the Audit Committee must be: (i) A member of the Malaysian Institute of Accountants, or (ii) If he is not a member of the Malaysian Institute of Accountants, he must have at least three (3) years working experience and; a) he must have passed the examination specified in Part I of the 1st Schedule of the Accountants Act 1967; or b) he must be a member of one of the associations of accountants specified in Part II of the 1 st Schedule of the Accountants Act 1967; c) Fulfill such other requirements as prescribed or approved by the Exchange.. 12

14 AUDIT COMMITTEE REPORT (CONT D) TES OF REFERENCE OF THE AUDIT COMMITTEE (CONT D) If a member of the Audit Committee resigns, dies or for any reason ceases to be a member with the results that the number is reduced below three (3), the Board of Directors shall, within three (3) months of that event, appoint such number of new members as may be required to make up the minimum number of three (3) members. Notice of Meeting and Attendance The agenda for Audit Committee meetings shall be circulated before each meeting to members of the Committee. The Committee may require the external auditors and any official of the Company to attend any of its meetings as it determines. The external auditors shall have the right to appear and be heard at any meeting of the Audit Committee and shall appear before the Committee when required to do so by the Committee. The Company Secretary of the Company shall be the Secretary of the Committee. There were 4 Audit Committee meetings held during the financial year ended 31 December 2014 and the attendance record is as follows:- Meetings attended Choi Wing Koon (Appointed on 23 September 2014) 1/1 Chan Lai Yi (Appointed on 29 April 2014) 4/4 Lo Yin Ling (Appointed on 20 April 2014) 4/4 Raymond Yip (Resigned on 7 March 2014) 1/1 Cheung Ming Chi (Resigned on 7 March 2014) 0/1 Lee Chee Cheng (Retired on 30 June 2014) 3/3 Responsibilities and Duties The duties and responsibilities of the Audit Committee shall be:- - to consider the nomination of external auditors, the audit fees and any question of resignation or dismissal; - to oversee all matters pertaining to audit including the review of the audit plan and report; - to review the adequacy of existing external audit arrangements, with particular emphasis on the scope and quality of the audit; - to discuss problems and reservations arising from the interim and final results, and any matters the external auditors may wish to discuss (in the absence of management where necessary); 13

15 AUDIT COMMITTEE REPORT (CONT D) TES OF REFERENCE OF THE AUDIT COMMITTEE (CONT D) Responsibilities and Duties (cont d) The duties and responsibilities of the Audit Committee shall be (con t) - to review the quarterly interim results, half-year, annual financial statements and audit report, focusing on: any changes in accounting and operating policies and practices; significant adjustment(s) arising from the audit; adequacy of disclosure of all information in the financial statements essential to a true and fair representation of the financial affairs of the Company and its subsidiary companies; and compliance with applicable approved accounting standards and business practices. - to review any management letter sent by the external auditors to the Company and the management s response to such letter; - to discuss with the external auditors their evaluation of the quality and effectiveness of the internal control and management information systems; - to review the adequacy of the scope, functions, resources and competency of the internal audit function and that it has the necessary authority to carry out its work; - to review the internal audit programme, processes, the results of the internal audit programme, processes or investigation undertaken and whether or not appropriate action is taken on the recommendations of the internal audit function; - to review and approve the annual audit plan proposed by internal auditors; - to review the co-operation or assistance given by the Company s officers to both external and internal auditors; - to review all areas of significant financial risk and the arrangements in place to contain those risks to acceptable levels; - to review all related party transactions and potential conflict of interests situations; and - to consider other matters, act upon the Board of Directors request to investigate and report on any issues or concerns in regard to management of the Group, as defined. 14

16 AUDIT COMMITTEE REPORT (CONT D) TES OF REFERENCE OF THE AUDIT COMMITTEE (CONT D) Rights and Authority of the Audit Committee The Company must ensure that whenever necessary and reasonable for the performance of its duties, the Audit Committee shall, in accordance with the procedures to be determined by the Board and at the cost of the Company to: - investigate any matters within its terms of reference; - have adequate resources which it needs to perform its duties; - have full access to any information which it requires in the course of performing its duties; - have unrestricted access to the chief executive officer and the chief financial officer; - have direct communication channels with the external and internal auditors (if any) and convene meetings with external auditors and internal auditors or both, excluding the attendance of other directors and employees of the Company; - have access to independent professional or other advice in the performance of its duties at the cost of the Company; and - be able to invite outside professionals with relevant experience and expertise to attend its meetings, if necessary. Summary of Activities In line with the terms of reference of the Committee, the following activities were carried out by the Committee during the year ended 31 December 2014 in the discharge of its functions and duties:- 1. Reviewed the Risk Based Audit for the year ended 31 December 2014 to ensure adequate scope and coverage over the activities of the Group on a risk based approach, which was carried out by the Internal Auditor. 2. Reviewed the Internal Audit Reports on audits carried out by the Internal Auditor. 3. Reviewed the quarterly (unaudited) and annual (audited) financial statements to ensure inter alia that they were in compliance with the requirements of relevant authorities. Internal Audit Function The internal audit function (IAF) is outsourced to an independent professional services firm. During the financial year ended 31 December 2014, the internal auditor carried out its duties in accordance with the annual audit plan and also reviewed the compliance of the regulatory requirements of Bursa Malaysia Securities Berhad that were applicable to the Company. The internal audit function is conducted on a group basis to ensure consistency in the control environment and the application of policies and procedures. The total costs incurred for the IAF for the financial year 2014 was 8,000. EMPLOYEES SHARE OPTION SCHEME ( ESOS ) There was no option offered during the financial year ended 31 December

17 STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL Introduction The Board is committed to maintaining a sound system of internal control in the Group and is pleased to provide the following Internal Control Statement (the Statement ), which outlines the nature and scope of risk management and internal control of the Group during the financial year ended 31 December For the purpose of disclosure, this Statement takes into account the Guidelines for Directors of Listed Issuers ( Guidelines ) issued by Bursa Malaysia Securities Berhad ( Bursa Securities ) on the issuance of Internal Control Statement pursuant to Paragraph 15.26(b) of the Ace Market Listing Requirements. Board s Responsibility The Board is responsible for the Group s internal control and risk management system to safeguard shareholders investment and the Group s assets as well as reviewing the adequacy and effectiveness of the said system. In view of the limitations inherent in any system of risk management and internal control, the system is designed to manage, rather than eliminate, the risk of failure to achieve the Group s business and corporate objectives. The system can therefore only provide reasonable, but not absolute assurance, against material misstatement or loss. Risk Management The Board confirms that there is a continuous process for identifying, evaluating and managing the significant risks faced by the Group, which has been in place for the financial year under review and up to date of approval of the annual report and financial statements. Internal Audit Function The independent internal audit function is outsourced to a professional services firm. Internal audits were carried out in accordance to the Internal Audit Plan approved by the Audit Committee. Observations from these audits were presented to the Audit Committee for its review. Further details of the activities of the internal audit function are provided in the Audit Committee Report as set out on pages 12 to 15. Internal Control The key elements of the Group s internal control system are described below: Organisation structure with clearly defined delegation of responsibilities to the Committees of the Board; Regular meetings are held at operational and management levels to identify and resolve business, financial, operational and management issues; Standard operating procedures have been put in place; Regular Internal audit visits and other specific assignments, if the need arises, assigned by the Audit Committee and/or Board who monitors compliance with procedures and assesses the integrity of financial information provided; Regular information are provided by the management to the Board on financial performance and key business indicators; Monthly monitoring of results by the management through financial reports such as monthly management accounts and cash flow statements; and 16

18 STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL(CONT D) Internal Control (Cont d) Audit Committee holds regular meetings with management on the actions taken on internal control issues identified through reports prepared by the internal auditors, external auditors and/or management. The management will continue to take adequate measures to strengthen the control environment in which the Group operates. Assurance provided by the Executive Director In line with the Guidelines, the Executive Director has provided oral assurance to the Board stating that the Group s risk management and internal control systems have operated adequately and effectively, in all material aspects, to meet the Group s objectives during the financial year under review. The Board is of the view that the risk management and internal control systems are satisfactory and have not resulted in any material losses, contingencies or uncertainties that would require disclosure in the Group s annual report. The Board continues to take pertinent measures to sustain and, where required, to improve the Group s risk management and internal control systems in meeting the Group s strategic objectives. Pursuant to paragraph of the Ace Market Listing Requirements of Bursa Securities, the external auditors have reviewed this Statement for inclusion in the Annual Report of the Group for the year ended 31 December 2014 and reported to the Board that nothing has come to their attention that caused them to believe that the statement is inconsistent with their understanding of the processes adopted by the Board in reviewing the adequacy and integrity of the systems of risk management internal controls. 17

19 OTHER DISCLOSURES REQUIREMENTS PURSUANT TO THE LISTING REQUIREMENTS OF BURSA SECURITIES SHARE BUY-BACKS There were no share buy-back arrangements during the financial year. OPTIONS, WARRANTS OR CONVERTIBLE SECURITIES The Company did not issue any options, warrants or convertible securities during the financial year. DEPOSITORY RECEIPT ( DR ) The Company did not sponsor any DR programmes during the financial year. IMPOSITION OF SANCTIONS / PENALTIES There were no sanctions or penalties imposed on the Company and its subsidiaries, directors or management by the relevant regulatory bodies during the financial year. NON-AUDIT FEES There was a non-audit fee of 5,000 paid to the external auditors by the Company during the financial year ended 31 December 2014 for review of statement of risk management and internal control. VARIATION IN RESULTS There were no profit estimates, forecasts or projections issued by the Company and its subsidiary companies during the financial year. PROFIT GUARANTEE There were no profit guarantees given by the Company and its subsidiary companies during the financial year. MATERIAL CONTRACTS INVOLVING DIRECTORS AND SUBSTANTIAL SHAREHOLDERS INTERESTS There were no material contracts entered into by the Company and its subsidiary companies, involving the directors and substantial shareholders interests during the financial year. REVALUATION POLICY ON LANDED PROPERTIES The Company does not have a revaluation policy as the Company and its subsidiaries do not have any landed properties. 18

20 OTHER DISCLOSURES REQUIREMENTS PURSUANT TO THE LISTING REQUIREMENTS OF BURSA SECURITIES (CONT D) CORPORATE SOCIAL RESPONSIBILITIES The Company recognizes the importance of being a responsible corporate entity and endeavours to discharge its corporate social responsibilities diligently in the best possible manner. To this extent, the Company has continued in its efforts to drive a green campaign amongst its employees cognizant of its duty to minimize its impact on the environment. Company employees are consistently educated on the significance of energy conservation to reduce the resources it consumes. For the next financial year, the Company will plan and organize more CSR activities. 19

21 DIRECTORS REPORT The Directors have pleasure in submitting their report together with the audited financial statements of the Group and of the Company for the financial year ended 31 December CHANGE OF COMPANY NAME On 7 July 2014, the Company changed its name from GPRO Technologies Berhad to G Neptune Berhad. PRINCIPAL ACTIVITIES The principal activities of the Company consist of investment holding, research and development on information technology. During the financial year, the Company ventured into the business of sales of apparel and garment products. The principal activities of its subsidiaries are disclosed in Note 6 to the Financial Statements. Except for the abovementioned, there have been no other significant changes in the nature of the activities of the Company and its subsidiaries during the financial year. FINANCIAL RESULTS Group Company Net profit for the financial year:- Profit after tax from continuing operations 1,323,739 1,131,405 Loss after tax from discontinued operation (231,188) - Attributable to:- Owners of the Company 409,389 Non-controlling interests 683,162 1,092,551 1,131,405 1,092,551 RESERVES AND PROVISIONS All material transfers to or from reserves and provisions during the financial year are disclosed in the financial statements. DIVIDENDS There were no dividends proposed, declared or paid by the Company since the end of the previous financial year. 20

22 DIRECTORS The Directors in office since the date of the last report are:- Khoo Yick Keung TanSri Singadju Benui Lo Yin Ling Chan Lai Yi Choi Wing Koon (appointed on ) Lee Chee Cheng (retired on ) DIRECTORS INTERESTS According to the Register of Directors Shareholdings, none of the Directors in office at the end of the financial year had any interest in the shares of the Company and its related corporations. DIRECTORS BENEFITS During and at the end of the financial year, no arrangement subsisted to which the Company is a party, with the object or objects of enabling the Directors of the Company to acquire benefits by means of acquisition of shares in, or debentures of the Company or any other body corporate, other than the share option granted pursuant to the Employees Share Option Scheme. Since the end of the previous financial year, no Director has received or become entitled to receive any benefit (other than as disclosed in Note 18 to the Financial Statements) by reason of a contract made by the Company or related corporation with the Director or with a firm of which the Director is a member, or with a company in which the Director has a substantial financial interest. ISSUE OF SHARES AND DEBENTURES During the financial year, the Company issued 13,750,000 ordinary shares of 0.03 each for cash arising from the exercise of employees share option at an exercise price of per ordinary share. The proceeds were used for working capital purposes. The new ordinary shares issued during the financial year rank pari passu in all respect with the existing ordinary shares of the Company and are for working capital purpose. There was no issuance of debentures during the financial year. EMPLOYEES SHARE OPTION SCHEME ( ESOS ) No option were granted to any person to take up unissued shares of the Company during the financial year apart from the issuance of share option pursuant to the Employees Share Option Scheme ( ESOS ). The ESOS is governed by the By-laws which were approved by a Members Circular Resolution dated 28 April The salient features of the ESOS are as follows:- (a) (b) The ESOS Committee appointed by the Board of Directors to administer the ESOS, may from time to time grant option to eligible employees of the Group to subscribe for new ordinary shares of 0.03 each in the Company; The eligibility of a Director or employee of the Group to participate in the ESOS shall be at the discretion of the ESOS Committee, who shall take into consideration factors such as year of service and performance track record; 21

23 EMPLOYEES SHARE OPTION SCHEME ( ESOS ) (CONT D) The salient features of the ESOS are as follows (cont d):- (c) (d) (e) (f) The total number of shares to be issued under ESOS shall not exceed in aggregate 5% of the issued share capital of the Company at any point of time during the tenure of the ESOS and out of which not more than 50% of the shares shall be allocated, in aggregate, to Directors and senior management. In addition, not more than 10% of the shares available under the ESOS shall be allocated to any individual Director or employee who, either singly or collectively through his/her associates, holds 20% or more in the issued and paid-up capital of the Company; The option price for each share shall be weighted average market price as quoted in the Daily Official List issued by Bursa Malaysia Securities Berhad for the 5 market days immediately preceding the date on which the option is granted less, if the ESOS Committee shall so determine at their discretion from time to time, a discount of not more than 10% or the par value of the shares of the Company of 0.03; The number of outstanding option to subscribe for shares or the option price or both may be adjusted following any issuance of additional shares by way of right issues, bonus issues or other capitalisation issue, consolidation, subdivision or reduction of capital carried out by the Company while an option remain unexercised; and The new shares allotted upon any exercise of the option shall rank pari passu in all respects with the existing ordinary shares of the Company except that the new shares so issued will not rank for any rights, dividends, allotments and/or other distributions, the entitlement date of which is prior to the date of allotment of the new ordinary shares. The ESOS was implemented on 29 April 2004 and was in force for a financial period of 5 years from the date of implementation. Extension for another 5 years from the expired date of 28 April 2009 was approved by a Directors Circular Resolution dated 24 April The ESOS which originally expired on 28 April 2009, had been extended for another 5 years to 28 April On 28 February 2014, the Company further granted share option to qualified senior managements. As at 31 December 2014, the option offered to take up unissued ordinary shares of 0.03 each and the option prices are as follows:- Number of share option Year of Option At At offer price Granted Exercised Lapsed ,994, (3,994,100) ,750,000 (13,750,000) - - During the financial year, eligible employees of the Group who have been granted with share option are as follows:- Name Number of share option Balance at Balance at Granted Exercised Christian Kwok-Leun Yau Heilesen - 6,875,000 (6,875,000) - Jamie Siu Hiu Ki - 3,875,000 (3,875,000) - Henrick Kwok-Hang Yau Heilesen - 3,000,000 (3,000,000) ,750,000 (13,750,000) - 22

24 OTHER STATUTORY INFOATION Before the financial statements of the Group and of the Company were made out, the Directors took reasonable steps:- (a) (b) to ascertain that action had been taken in relation to the writing off of bad debts and the making of provision for doubtful debts and satisfied themselves that all known bad debts had been written off and adequate provision had been made for doubtful debts; and to ensure that any current assets which were unlikely to be realised in the ordinary course of business including their values as shown in the accounting records of the Group and of the Company have been written down to an amount which they might be expected so to realise. At the date of this report, the Directors are not aware of any circumstances:- (a) (b) (c) (d) which would render the amount written off for bad debts or the amount of the provision for doubtful debts in the financial statements of the Group and of the Company inadequate to any substantial extent; or which would render the values attributed current assets in the financial statements of the Group and of the Company misleading; or which have arisen which render adherence to the existing method of valuation of assets or liabilities of the Group and the Company misleading or inappropriate; or not otherwise dealt with in this report or the financial statements which would render any amount stated in the financial statements misleading. At the date of this report, there does not exist:- (a) (b) any charge on the assets of the Group and of the Company which has arisen since the end of the financial year which secures the liability of any other person; or any contingent liability of the Group and of the Company which has arisen since the end of the financial year. In the opinion of the Directors:- (a) (b) (c) no contingent liability or other liability has become enforceable or is likely to become enforceable within the period of twelve months after the end of the financial year which will or may affect the ability of the Group and of the Company to meet their obligations as and when they fall due; the results of operations of the Group and of the Company during the financial year were not substantially affected by any item, transaction or event of a material and unusual nature; and there has not arisen in the interval between the end of the financial year and the date of this report any item, transaction or event of a material and unusual nature likely to affect substantially the results of operations of the Group and of the Company for the financial year in which this report is made. SIGNIFICANT EVENTS DURING THE FINANCIAL YEAR AND SUBSEQUENT TO THE REPORTING DATE The significant events during the financial year and subsequent to the reporting date are disclosed in Note 26 to the Financial Statements. 23

25 AUDITORS The Auditors, Messrs SJ Grant Thornton have expressed their willingness to continue in office. Signed on behalf of the Board of Directors in accordance with a resolution of the Directors,... ) KHOO YICK KEUNG ) ) ) ) ) ) ) ) DIRECTORS ) ) ) ) ) ) )... ) CHAN LAI YI ) Hong Kong 23 April

26 STATEMENT BY DIRECTORS In the opinion of the Directors, the financial statements set out on pages 20 to 74 are drawn up in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia so as to give a true and fair view of the financial position of the Group and of the Company as at 31 December 2014 and of their financial performance and cash flows for the financial year then ended. In the opinion of the Directors, the information set out on page 75 has been compiled in accordance with the Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosures Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, issued by the Malaysian Institute of Accountants, and presented based on the format prescribed by Bursa Malaysia Securities Berhad. Signed on behalf of the Board of Directors in accordance with a resolution of Directors, KHOO YICK KEUNG CHAN LAI YI Hong Kong 23 April 2015 STATUTORY DECLARATION I, Chan Ka Ki, being the Officer primarily responsible for the financial management of G Neptune Berhad (formerly known as GPRO Technologies Berhad), do solemnly and sincerely declare that to the best of my knowledge and belief, the financial statement set out on pages 20 to 74 and the financial information set out on page 75 are correct and I make this solemn declaration conscientiously believing the same to be true and by virtue of the Statutory Declarations Act, Subscribed and solemnly declared by ) the abovenamed at Kuala Lumpur in ) the Federal Territory this day of ) 23 April 2015 )... CHAN KA KI Before me: Commissioner for Oaths 25

27 INDEPENDENT AUDITORS REPORT TO THE MEMBERS OF Report on the Financial Statements We have audited the financial statements of G Neptune Berhad (formerly known as GPRO Technologies Berhad), which comprise the statements of financial position of the Group and of the Company as at 31 December 2014, statements of profit or loss and other comprehensive income, statements of changes in equity and statements of cash flows of the Group and of the Company for the financial year then ended, and a summary of significant accounting policies and other explanatory information as set out on pages 20 to74. Directors Responsibility for the Financial Statements The Directors of the Company are responsible for the preparation of financial statements so as to give a true and fair view in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia. The Directors are also responsible for such internal control as the Directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with approved standards on auditing in Malaysia. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on our judgement, including the assessment of risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity s preparation of financial statements that gives a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Directors, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. 26

28 Report on the Financial Statements (cont d) Opinion In our opinion, the financial statements give a true and fair view of the financial position of the Group and of the Company as of 31 December 2014 and of their financial performance and cash flows for the financial year then ended in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia. Report on Other Legal and Regulatory Requirements In accordance with the requirements of the Companies Act, 1965 in Malaysia, we also report the following:- (a) In our opinion, the accounting and other records and the registers required by the Act to be kept by the Company and its subsidiary of which we have acted as auditors have been properly kept in accordance with the requirements of the Act. (b) We have considered the accounts and the auditors report of the subsidiary of which we have not acted as auditors, which are indicated in Note 6 to the Financial Statements. (c) We are satisfied that the financial statements of the subsidiaries that have been consolidated with the Company s financial statements are in form and content appropriate and proper for the purposes of the preparation of the financial statements of the Group and we have received satisfactory information and explanations required by us for those purposes. (d) The auditors reports on the accounts of the subsidiaries did not contain any qualification or any adverse comment made under Section 174 (3) of the Act. Other Reporting Responsibilities The supplementary information set out on page 75 is disclosed to meet the requirement of Bursa Malaysia Securities Berhad and is not part of the financial statements. The Directors are responsible for the preparation of the supplementary information in accordance with Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants ( MIA Guidance ) and the directive of Bursa Malaysia Securities Berhad. In our opinion, the supplementary information is prepared, in all material respects, in accordance with the MIA Guidance and the directive of Bursa Malaysia Securities Berhad. 27

29 Other Matters This report is made solely to the members of the Company, as a body, in accordance with Section 174 of the Companies Act, 1965 in Malaysia and for no other purpose. We do not assume responsibility to any other person for the content of this report. SJ GRANT THORNTON (NO. AF: 0737) CHARTERED ACCOUNTANTS Kuala Lumpur 23 April 2015 KHO KIM ENG (NO: 3137/10/16(J)) CHARTERED ACCOUNTANT PARTNER 28

30 ASSETS Non-current assets STATEMENTS OF FINANCIAL POSITION AS AT 31 DECEMBER 2014 Group Company Note Property, plant and equipment 4 12, , Development expenditure 5-400, ,279 Investment in subsidiaries Goodwill on consolidation Total non-current assets 12, , ,285 Current assets Inventories 8-191, Trade receivable 9 1,303,097 2,727,955 1,303,097 2,727,955 Other receivables 10 5,064, ,265 1,918, ,281 Amount due from subsidiaries ,180,056 - Tax recoverable 39,607 39,607 39,607 39,607 Cash and bank balances 561, ,270 4, ,088 Total current assets 6,968,655 4,296,030 6,445,075 3,994,931 Total assets 6,981,168 4,816,725 6,445,078 4,395,216 EQUITY AND LIABILITIES EQUITY Equity attributable to owners of the Company Share capital 12 8,662,500 8,250,000 8,662,500 8,250,000 Reserves 13 (2,503,722) (3,445,044) (2,307,658) (3,993,189) 6,158,778 4,804,956 6,354,842 4,256,811 Non-controlling interests - (817,744) - - Total equity 6,158,778 3,987,212 6,354,842 4,256,811 LIABILITIES Current liabilities Trade payables 14 1, , Other payables , ,667 90, ,405 Tax payable 350 9, Total liabilities 822, ,513 90, ,405 Total equity and liabilities 6,981,168 4,816,725 6,445,078 4,395,216 The accompanying notes form an integral part of the financial statements. 29

31 STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2014 Group Company Note Revenue 16 2,645,172 1,393,644 2,645,172 1,393,644 Cost of sales 17 (537,120) - (537,120) - Gross profit 2,108,052 1,393,644 2,108,052 1,393,644 Other income 371, , , ,592 Administration expenses (652,910) (1,273,583) (245,434) (343,794) Other expenses (493,602) (3,383,981) (954,984) (7,529,103) Finance costs (8,810) (29,126) - (29,126) Profit/(loss) before tax 18 1,323,739 (3,046,120) 1,131,405 (6,261,787) Tax expense Net profit/(loss) from continuing operations 1,323,739 (3,046,120) 1,131,405 (6,261,787) Net loss from discontinued operation 6 (231,188) (2,089,726) - - Net profit/(loss) for the financial year 1,092,551 (5,135,846) 1,131,405 (6,261,787) Other comprehensive (loss)/income, net of tax:- Items that will be reclassified subsequently to profit or loss Foreign currency translation differences arising from foreign subsidiaries (22,193) 5, Total comprehensive income/(loss) for the financial year 1,070,358 (5,129,921) 1,131,405 (6,261,787) Profit/(loss) for the financial year attributable to: Owners of the Company - Continuing operations 1,323,739 (3,046,120) - Discontinued operation (914,350) (1,449,938) Non-controlling interests - discontinued operation 683,162 (639,788) Total comprehensive income/(loss) attributable to: Owners of the Company 1,092,551 (5,135,846) - Continuing operations 1,301,546 (3,040,195) - Discontinued operation (914,350) (1,449,938) Non-controlling interests - discontinued operation 683,162 (639,788) 1,070,358 (5,129,921) Basic earnings/(loss) per share (sen): 20 - Profit/(loss) from continuing operations 0.46 (1.21) - Loss from discontinued operation (0.32) (0.57) 0.14 (1.78) The accompanying notes form an integral part of the financial statements. 30

32 STATEMENTS OF CHANGES IN EQUITY FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2014 Attributable to Equity Holders of the Company Group Balance as at 1 January 2013 Distributable Non-distributable Exchange Noncontrolling Share Capital Accumulated Share capital ESOS reserve translation premium reserve losses Total Total reserve interests 25,000,000 17,381,943 - (5,634) - (34,407,429) 7,968,880 (177,956) 7,790,924 Transactions with owners: Capital reduction (17,500,000) (17,381,943) ,480 34,259, Issuance of ordinary shares - private placement 750, , ,450,000-1,450,000 Share issuance expenses - (123,791) (123,791) - (123,791) Total transactions with owners (16,750,000) (16,805,734) ,480 34,259,463 1,326,209-1,326,209 Total comprehensive loss for the financial year ,925 - (4,496,058) (4,490,133) (639,788) (5,129,921) Balance as at 31 December ,250, , ,480 (4,644,024) 4,804,956 (817,744) 3,987,212 Transactions with owners: ESOS granted , , ,375 Issuance of ordinary shares - ESOS exercised 412, ,126 (100,375) , ,251 Total transactions with owners 412, , , ,626 Arising from disposal of subsidiaries Total comprehensive income for the financial year Balances as at 31 December , , (22,193) - 409, , ,162 1,070,358 8,662,500 1,130,335 - (21,902) 622,480 (4,234,635) 6,158,778-6,158,778 31

33 STATEMENTS OF CHANGES IN EQUITY FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2014 (CONT'D) Attributable to Equity Holders of the Company Non-distributable Distributable Company Share Share ESOS Capital Accumulated capital premium reserve reserve losses Total Balance as at 1 January ,000,000 17,381, (33,189,554) 9,192,389 Transactions with owners: Capital reduction (17,500,000) (17,381,943) - 622,480 34,259,463 - Issuance of ordinary shares - private placement 750, , ,450,000 Share issuance expenses - (123,791) (123,791) Total transactions with owners (16,750,000) (16,805,734) - 622,480 34,259,463 1,326,209 Total comprehensive loss for the financial year (6,261,787) (6,261,787) Balance as at 31 December ,250, , ,480 (5,191,878) 4,256,811 Transactions with owners: ESOS granted , ,375 Issuance of ordinary shares - ESOS exercised 412, ,126 (100,375) ,251 Total transactions with owners 412, , ,626 Total comprehensive income for the financial year ,131,405 1,131,405 Balance as at 31 December ,662,500 1,130, ,480 (4,060,473) 6,354,842 The accompanying notes form an integral part of the financial statements. 32

34 STATEMENTS OF CASH FLOWS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2014 Group Company OPERATING ACTIVITIES Profit/(loss) before tax - Continuing operations 1,323,739 (3,046,120) 1,131,405 (6,261,787) - Discontinued operations (Note 6) (231,188) (2,089,726) - - 1,092,551 (5,135,846) 1,131,405 (6,261,787) Adjustments for:- Amortisation of development expenditure 400,279 1,996, ,279 1,996,107 Depreciation of property, plant and equipment 16, ,482-52,273 ESOS expenses 100, ,375 - Goodwill on consolidation written off - 1,046, Impairment loss on amount due from subsidiaries ,734 3,991,880 Impairment loss on investment in subsidiaries ,199,998 Interest expense 8,815 29,126-29,126 Loss on disposal of property, plant and equipment - 28,588-28,588 Other receivables written off 7,943-7,943 - Property, plant and equipment written off 82, , Gain on disposal of subsidiaries (147,237) (7,484) - - Interest income (3) (1,617) (2) (604) Unrealised gain on foreign exchange (177,526) (206,108) (173,769) (245,142) Operating profit/(loss) before working capital changes 1,384,268 (1,773,802) 1,914, ,439 Changes in working capital:- Inventories 17, , Receivables (3,156,178) 329,637 (47,302) (1,872,109) Payables 607,671 (947,618) (48,169) 88,957 Cash (used in)/generated from operations (1,146,323) (2,208,660) 1,819,494 (992,713) Tax (paid)/refund (7,884) (689) Net cash (used in)/from operating activities (1,154,207) (2,208,486) 1,819,494 (993,402) 33

35 STATEMENTS OF CASH FLOWS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2014 (CONT'D) Group Company INVESTING ACTIVITIES Advances to subsidiaries - - (3,399,660) - Proceeds from disposal of subsidiaries, net of cash disposed (Note 6) (5,997) (259) 3 2 Interest received 3 1, Proceeds from disposal of property, plant and equipment - 171, ,000 Purchase of property, plant and equipment - (90,557) - - Net cash (used in)/from investing activities (5,994) 81,801 (3,399,655) 171,606 FINANCING ACTIVITIES Interest paid (8,815) (29,126) - (29,126) Proceeds from issuance of ordinary shares, net of issuance expenses 866,251 1,326, ,251 1,326,209 Repayments of finance lease payables - (197,998) - (197,998) Repayments to Directors - (28,339) - (28,464) Net cash from financing activities 857,436 1,070, ,251 1,070,621 CASH AND CASH EQUIVALENTS Net (decrease)/increase (302,765) (1,055,939) (713,910) 248,825 Effect of foreign translation differences 36,345 32,730-32,857 At beginning of financial year 828,270 1,851, , ,406 At end of financial year 561, ,270 4, ,088 The accompanying notes form an integral part of the financial statements. 34

36 NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER GENERAL INFOATION The Company is a public limited liability company, incorporated and domiciled in Malaysia and listed on the ACE Market of Bursa Malaysia Securities Berhad. The registered office of the Company is located at No.9A, Jalan Medan Tuanku, Medan Tuanku, Kuala Lumpur. The principal place of business of the Company is located at B-13A-18, The Scott Garden Soho, Old Klang Road, Kuala Lumpur. The principal activities of the Company consist of investment holding, research and development on information technology. During the financial year, the Company ventured into the business of sales of apparel and garment products. The principal activities of its subsidiaries are disclosed in Note 6 to the Financial Statements. Except for the abovementioned, there have been no other significant changes in the nature of the activities of the Company and its subsidiaries during the financial year. The financial statements were authorised for issue by the Board of Directors in accordance with a resolution of the Directors passed on 23 April BASIS OF PREPARATION 2.1 Statement of Compliance The financial statements of the Group and of the Company have been prepared in accordance with Malaysian Financial Reporting Standards ( MFRSs ), International Financial Reporting Standards ( IFRSs ) and the requirements of the Companies Act, 1965 in Malaysia. 2.2 Basis of Measurement The financial statements of the Group and of the Company are prepared under the historical cost convention, unless otherwise indicated in the summary of significant accounting policies. Historical cost is generally based on the fair value of the consideration given in exchange for goods and services. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either in the principal market for the asset or liability, or in the absence of a principal market, in the most advantageous market for the asset or liability. The principal or the most advantageous market must be accessible to by the Group and the Company. The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest. A fair value measurement of a non-financial market takes into account a market participant s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use. 35

37 2. BASIS OF PREPARATION (CONT D) 2.2 Basis of Measurement (cont d) The Group and the Company use valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs. All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to their fair value measurement as a whole: (a) Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities. (b) Level 2 - Valuation techniques for which the lowest level input that is significant to their fair value measurement is directly or indirectly observable. (c) Level 3 - Valuation techniques for which the lowest level input that is significant to their fair value measurement is unobservable. For assets and liabilities that are recognised in the financial statements on a recurring basis, the Group determines whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to their fair value measurement as a whole) at the end of each reporting date. For the purpose of fair value disclosures, the Group has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of fair value hierarchy as explained above. 2.3 Functional and Presentation Currency The financial statements are presented in Ringgit Malaysia ( ) which is the Company s functional currency and all values are rounded to the nearest except when otherwise stated. 2.4 Adoption of Amendments/Improvements to MFRSs and IC Interpretations ( IC Int ) Except for the changes below, the Group and the Company have consistently applied the accounting policies set out in Note 3 to all years presented in these financial statements. At the beginning of the current financial year, the Group and the Company adopted amendments to MFRSs and IC Int which are mandatory for the financial periods beginning on or after 1 January Initial application of the amendments to the standards did not have material impact to the financial statements. The nature and the impact of these amendments to standards which are prospectively applicable to the Group and the Company are described below: Amendments to MFRS 132 Offsetting Financial Assets and Financial Liabilities The amendments to MFRS 132 clarify the requirements relating to the offset of financial assets and financial liabilities. Specifically, the amendments clarify the meaning of currently has a legally enforceable right of set-off and simultaneous realisation and settlement. These amendments have no impact on the Group for the current financial year, since none of the entities in the Group has any offsetting arrangements. 36

38 2. BASIS OF PREPARATION (CONT D) 2.4 Adoption of Amendments/Improvements to MFRSs and IC Interpretations ( IC Int ) (cont d) Amendments to MFRS 136 Recoverable Amount Disclosures for Non-Financial Assets The amendments clarify that an entity is required to disclose the recoverable amount of an asset or cash generating unit whenever an impairment loss has been recognised or reversed in the period. In addition, the amendments introduced several new disclosures required to be made when the recoverable amount of impaired assets is based on fair value less costs of disposal. The amendments affected disclosures in the financial statements only and do not have material impact on the financial statements of the Group and of the Company. 2.5 Standards Issued But Not Yet Effective The Group and the Company have not applied the following MFRSs that have been issued by the Malaysian Accounting Standards Board ( MASB ) but are not yet effective for the Group and the Company: Amendments to MFRS effective 1 July 2014: MFRS 119 Employee Benefits: Defined Benefit Plans Employee Contributions Annual improvements to MFRSs Cycle, including the amendments to: MFRS 2 MFRS 3 MFRS 8 MFRS 8 MFRS 13 MFRS 116 MFRS 124 Share-based Payment: Definition of vesting condition Business Combination: Accounting for contingent consideration in a business combination Operating Segments: Aggregation of operating segments Operating Segments: Reconciliation of the total of the reportable segments assets to the entity s assets Fair Value Measurement: Short-term receivables and payables Property, Plant and Equipment and MFRS 138 Intangible Assets: Revaluation method proportionate restatement of accumulated depreciation Related Party Disclosures: Key Management Personnel Annual improvements to MFRSs Cycle, including the amendments to: MFRS 1 MFRS 3 MFRS 13 MFRS 140 First-time Adoption of Malaysian Financial Reporting Standards: Meaning of Effective MFRSs Business Combinations: Scope exceptions for joint ventures Fair Value Measurement: Scope of paragraph 52 (portfolio exception) Investment Property: Clarifying the interrelationship between MFRS 3 and MFRS140 when classifying property as investment property or owner-occupied property MFRS and Amendments to MFRSs effective 1 January 2016 MFRS 10 and 128 MFRS 10, 12 and 128 MFRS 11 MFRS 14 Consolidated Financial Statements and Investments in Associates and Joint Ventures: Sale or Contribution of Assets between an Investor and its Associate or Joint Venture Consolidated Financial Statements, Disclosure of Interests in Other Entities and Investments in Associates and Joint Ventures: Investment Entities Applying the Consolidation Exception Joint Arrangements: Accounting for Acquisitions of Interests in Joint Operations Regulatory Deferral Accounts 37

39 2. BASIS OF PREPARATION (CONT D) 2.5 Standards Issued But Not Yet Effective (cont d) The Group and the Company have not applied the following MFRSs that have been issued by the Malaysian Accounting Standards Board ( MASB ) but are not yet effective for the Group and the Company (cont d): MFRS and Amendments to MFRSs effective 1 January 2016 (cont d) MFRS 101 MFRS 116 MFRS 116 MFRS 127 MFRS 138 MFRS 141 Presentation of financial statements: Disclosure initiatives Property, Plant and Equipment : Agriculture: Bearer Plants Property, Plant and Equipment: Clarification of Acceptable Methods of Depreciation Consolidated and Separate Financial Statements: Equity Method in Separate Financial Statements Intangible Assets: Clarification of Acceptable Methods of Amortisation Agriculture: Bearer Plants Annual Improvements to MFRSs Cycle, including the amendments to: MFRS 5 MFRS 7 MFRS 119 MFRS 134 Non-current Assets Held for Sale and Discontinued Operations: Changes in methods of disposal Financial Instruments - Disclosures: Servicing contracts and applicability of the amendments to MFRS 7 to condensed interim financial statements Employee Benefits: Discount rate regional market issue Interim Financial Reporting: Disclosure of information elsewhere in the interim financial report MFRS effective 1 January 2017: MFRS 15 Revenue from Contracts with Customers MFRS and Amendments to MFRS effective 1 January 2018: MFRS 9 Amendments to MFRS 7 Financial Instruments (International Financial Reporting Standards ( IFRS ) 9 issued by International Accounting Standards Board ( IASB ) in July 2014) Financial Instruments Disclosures: Mandatory effective date of MFRS 9 and transitional discourse. MFRS 11, 14, 128 and 141 are not applicable to the Group s and the Company s operations. The initial application of the above standards and amendments are not expected to have any financial impacts to the financial statements, except for: MFRS 9 Financial Instruments MFRS 9 reflects all phases of the financial instruments project and replaces MFRS 139 Financial Instruments: Recognition and Measurement and all previous version of MFRS 9. The new standard introduces extensive requirements and guidance for classification and measurement of financial assets and financial liabilities which fall under the scope of MFRS 9, new expected credit loss model under the impairment of financial assets and greater flexibility has been allowed in hedge accounting transactions. The Group and the Company are currently examining the financial impact of adopting MFRS 9. 38

40 2. BASIS OF PREPARATION (CONT D) 2.5 Standards Issued But Not Yet Effective (cont d) The initial application of the above standards and amendments are not expected to have any financial impacts to the financial statements, except for (cont d): MFRS 15 Revenue from Contracts with Customers MFRS 15 presents new requirements for the recognition of revenue, replacing the guidance of MFRS 111 Construction Contracts, MFRS 118 Revenue, IC Int 13 Customer Loyalty Programmes, IC Int 15 Agreements for Construction of Real Estate, IC Int 18 Transfers of Assets from Customers and IC Int 131 Revenue Barter Transaction Involving Advertising Services. The principles in MFRS 15 provide a more structured approach to measuring and recognising revenue. It establishes a new five-step model that will apply to revenue arising from contracts with customers. Under MFRS 15, revenue is recognised at an amount that reflects the consideration to which an entity expects to be entitled in exchange for transferring goods or services to a customer. The Group and the Company are currently assessing the impact of adopting MFRS 15 and plan to adopt the new standard on the required effective date. 2.6 Significant Accounting Estimates and Judgements Estimates, assumptions concerning the future and judgements are made in the preparation of the financial statements. They affect the application of the Group and the Company's accounting policies and reported amounts of assets, liabilities, income, expenses and disclosures made. They are assessed on an on-going basis and are based on experience and relevant factors, including expectations of future events that are believed to be reasonable under the circumstances. The actual results may differ from the judgement, estimate and assumption made by management, and will seldom equal the estimated results Estimation Uncertainty Information about significant judgement, estimates and assumptions that have the most significant effect on recognition and measurement of assets, liabilities, income and expenses are discussed below:- Income taxes The Group and the Company are exposed to income taxes in numerous jurisdictions. Significant judgement is involved in determining the Group and the Company-wide provision for income taxes. There are certain transactions and computations for which the ultimate tax determination is uncertain during the ordinary course of business. The Group and the Company recognise tax liabilities based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recognised, such difference will impact the income tax and deferred tax provisions in the period in which such determination is made. Inventories Inventories are measured at the lower of cost and net realisable value. In estimating net realisable values, management takes into account the most reliable evidence available at the times the estimates are made. The Group s core business is subject to social preference changes which may cause selling price to change rapidly, and the Group s results to change. 39

41 2. BASIS OF PREPARATION (CONT D) 2.6 Significant Accounting Estimates and Judgements (cont d) Estimation Uncertainty (cont d) Impairment of property, plant and equipment, development expenditure, investment in subsidiaries and goodwill on consolidation The Group and the Company carry out the impairment test based on a variety of estimation including the value-in-use of the cash-generating unit to which the property, plant and equipment, investment in subsidiaries and development expenditure are allocated. Estimating the value-in-use requires the Group and the Company to make an estimate of the expected future cash flows from cash-generating unit and also to choose a suitable discount rate in order to calculate the present value of those cash flows. In most cases, determining the applicable discount rate involves estimating the appropriate adjustments to market risk and to asset-specific risk factors. The carrying amounts of property, plant and equipment, development expenditure, investment in subsidiaries and goodwill on consolidation are disclosed in Notes 4, 5, 6 and 7 to the Financial Statements. Useful lives of depreciable assets Property, plant and equipment are depreciated on a straight-line basis over their estimated useful life. Management estimates the useful lives of the property, plant and equipment to be within 3-10 years and reviews the useful lives of depreciable assets at each reporting date. As at 31 December 2014, management assesses that the useful lives represent the expected utility of the assets to the Group and the Company. The carrying amounts are analysed in Note 4 to the Financial Statements. Actual results, however, may vary due to change in the expected level of usage and technological developments, which resulting the adjustment to the Group s and the Company s assets. Management expects that the expected useful lives of the property, plant and equipment would not have material difference from the management s estimates and hence it would not result in material variance in the Group s and the Company s profit for the financial year. Deferred tax assets Deferred tax assets are recognised for all deductible temporary differences, unutilised tax losses, unabsorbed capital allowances and unused tax credits to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, unutilised tax losses, unabsorbed capital allowances and unused tax credits can be utilised. Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and level of future taxable profits together with future tax planning strategies. The temporary differences for which no deferred tax assets have been recognised in the financial statements are disclosed in Note 21 to the Financial Statements. Impairment of loans and receivables The Group and the Company assess at each reporting date whether there is any objective evidence that a financial asset is impaired. To determine whether there is objective evidence of impairment, the Group and the Company consider factors such as the probability of insolvency or significant financial difficulties of the receivables and default or significant delay in payments. When there is objective evidence of impairment, the amount and timing of future cash flows are estimated based on historical loss experience for assets with similar credit risk characteristics. 40

42 2. BASIS OF PREPARATION (CONT D) 2.6 Significant Accounting Estimates and Judgements (cont d) Estimation Uncertainty (cont d) Impairment of loans and receivables (cont d) The carrying amounts of the loans and receivables at the reporting date are disclosed in Note 9, 10 and 11 to the Financial Statements. 3. SIGNIFICANT ACCOUNTING POLICIES The Group and the Company apply the significant accounting policies, as summarised below, consistently throughout all years presented in the financial statements. 3.1 Consolidation Subsidiaries Subsidiaries are entities, including structured entities, controlled by the Company. Control exists when the Group is exposed, or has rights, to variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Potential voting rights are considered when assessing control only when such rights are substantive. Besides, the Group considers it has de facto power over an investee when, despite not having the majority of voting rights, it has the current ability to direct the activities of the investee that significantly affect the investee s return. Investment in subsidiaries is stated at cost less any impairment losses in the Company s statement of financial position, unless the investment is held for sale or distribution. Upon the disposal of investment in a subsidiary, the difference between the net disposal proceeds and its carrying amount is included in profit or loss Basis of Consolidation The Group s financial statements consolidate the audited financial statements of the Company and all of its subsidiaries, which have been prepared in accordance with the Group s accounting policies. Amounts reported in the financial statements of the subsidiaries have been adjusted where necessary to ensure consistency with the accounting policies adopted by the Group. The financial statements of the Company and its subsidiaries are all drawn up to the same reporting date. All intra-group balances, income and expenses and unrealised gains and losses resulting from intragroup transactions are eliminated in full. Subsidiaries are consolidated from the date on which control is transferred to the Group and are no longer consolidated from the date that control ceases. Changes in the ownership interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions. In such circumstances, the carrying amounts of the controlling and noncontrolling interests are adjusted to reflect the changes in their relative interests in the subsidiary. Any difference between the amount by which the non-controlling interests is adjusted and the fair value of the consideration paid or received is recognised directly in equity and attributed to owners of the Company. 41

43 3. SIGNIFICANT ACCOUNTING POLICIES (CONT D) 3.1 Consolidation (cont d) Business Combinations and Goodwill Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the aggregate of the consideration transferred, measured at acquisition date fair value and the amount of any non-controlling interests in the acquiree. For each business combination, the Group elects whether it measures the non-controlling interests in the acquiree either at fair value or at the proportionate share of the acquiree s identifiable net assets. Acquisition costs incurred are expensed and included in administrative expenses. When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date. This includes the separation of embedded derivatives in host contracts by the acquiree. If the business combination is achieved in stages, the acquisition date fair value of the acquirer s previously held equity interest in the acquiree is remeasured to fair value at the acquisition date through profit or loss. Any contingent consideration to be transferred by the acquirer will be recognised at fair value at the acquisition date. Subsequent changes in the fair value of the contingent consideration which is deemed to be an asset or liability will be recognised in accordance with MFRS 139 either in profit or loss or as a change to other comprehensive income. If the contingent consideration is classified as equity, it will not be remeasured. Subsequent settlement is accounted for within equity. In instances where the contingent consideration does not fall within the scope of MFRS 139, it is measured in accordance with the appropriate MFRS. Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred and the amount recognised for non-controlling interests over the net identifiable assets acquired and liabilities assumed. If this consideration is lower than the fair value of the net assets of the subsidiary company acquired, the difference is recognised in profit or loss. After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Group s cash-generating units that are expected to benefit from the combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those units. Where goodwill forms part of a cash-generating unit and part of the operation within that unit is disposed of, the goodwill associated with the operation disposed of is included in the carrying amount of the operation when determining the gain or loss on disposal of the operation. Goodwill disposed of in this circumstance is measured based on the relative values of the operation disposed of and the portion of the cash-generating unit retained Loss of Control Upon the loss of control of a subsidiary, the Group derecognises the assets and liabilities of the subsidiary, any non-controlling interests and the other components of equity related to the subsidiary. Any surplus or deficit arising on the loss of control is recognised in profit or loss. If the Group retains any interest in the previous subsidiary, then such interest is measured at fair value at the date that control is lost. Subsequently, it is accounted for as an equity accounted investee or as an available-for-sale financial asset depending on the level of influence retained. 42

44 3. SIGNIFICANT ACCOUNTING POLICIES (CONT D) 3.1 Consolidation (cont d) Non-controlling Interests Non-controlling interests at the end of the reporting year, being the equity in a subsidiary not attributable directly or indirectly to the equity holders of the Company, are presented in the consolidated statement of financial position and statement of changes in equity within equity, separately from equity attributable to the owners of the Company. Non-controlling interests in the results of the Group are presented in the consolidated statement of profit or loss and other comprehensive income as an allocation of the profit or loss and the comprehensive income for the year between non-controlling interests and the owners of the Company. Losses applicable to the non-controlling interests in a subsidiary are allocated to the non-controlling interests even if that results in a deficit balance. 3.2 Foreign Currency Translations The Group s consolidated financial statements are presented in, which is also the Company s functional currency Foreign Currency Transactions and Balances Transactions in foreign currencies are initially recorded at the functional currency rates prevailing at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the functional currency spot rate of exchange ruling at the reporting date. All differences are taken to the profit or loss with the exception of all monetary items that forms part of a net investment in a foreign operation. These are recognised in other comprehensive income until the disposal of the net investment, at which time they are reclassified to profit or loss. Tax charges and credits attributable to exchange differences on those monetary items are also recorded in other comprehensive income Foreign Operations The assets and liabilities of operations denominated in functional currencies other than are translated to at exchange rates at the end of the reporting date. The income and expenses of foreign operations are translated to at exchange rates at the date of the transactions. Foreign currency differences are recognised in other comprehensive income and accumulated in the exchange translation reserve in equity. However, if the operation is a non-wholly-owned subsidiary, then the relevant proportionate share of the translation difference is allocated to the non-controlling interests. When a foreign operation is disposed of, the cumulative amount in the exchange translation reserve related to that foreign operation is reclassified to profit or loss as part of the gain or loss on disposal. When the Group disposes of only part of its interest in a subsidiary that includes a foreign operation, the relevant proportion of the cumulative amount in the exchange translation reserve is reattributed to noncontrolling interests. In the consolidated financial statements, when settlement of a monetary item receivable from or payable to a foreign operation is neither planned nor likely in the foreseeable future, foreign exchange gains and losses arising from such a monetary item are considered to form part of a net investment in a foreign operation and are recognised in other comprehensive income, and are presented in exchange translation reserve in equity. 43

45 3. SIGNIFICANT ACCOUNTING POLICIES (CONT D) 3.3 Property, Plant and Equipment and Depreciation All property, plant and equipment are measured at cost less accumulated depreciation and impairment losses, if any. The cost of an item of property, plant and equipment is recognised as an asset if, it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. Cost includes expenditures that are directly attributable to the acquisition of the assets and any other costs directly attributable to bringing the asset to working condition for its intended use, cost of replacing component parts of the assets, and the present value of the expected cost for the decommissioning of the assets after their use. All other repair and maintenance costs are recognised in profit or loss as incurred. Depreciation is recognised on the straight line method in order to write off the cost of each asset over its estimated useful life. Property, plant and equipment are depreciated based on the estimated useful lives of the assets as follows: Office equipment 10% Computer software and equipment 20% Furniture and fittings 10% Renovation 33.33% Motor vehicles 20% Property, plant and equipment are written down to recoverable amount if, in the opinion of the Directors, it is less than their carrying value. Recoverable amount is the net selling price of the property, plant and equipment i.e. the amount obtainable from the sale of an asset in an arm s length transaction between knowledgeable, willing parties, less the costs of disposal. The residual values, useful lives and depreciation method are reviewed for impairment when events or changes in circumstances indicate that the carrying amount may not be recoverable, or at least annually to ensure that the amount, method and period of depreciation are consistent with previous estimates and the expected pattern of consumption of the future economic benefits embodied in the items of property, plant and equipment. Property, plant and equipment are derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Gains or losses arising on the disposal of property, plant and equipment are determined as the difference between the disposal proceeds and the carrying amount of the assets and are recognised in profit or loss. 3.4 Development Expenditure Development expenditure comprise direct cost and overhead costs incurred in the development of computerised data collection and feedback systems (GPRO and EMS system) and ERP (Enterprise Resource Planning) system for the apparel/garment industry. Development expenditure is charged to profit or loss in the year in which it is incurred, except for it relates to a clearly defined project where the benefits can be reasonably regarded as assured. Expenditure so deferred is limited to the value of the future benefit and is stated at cost. The amortisation policy for development expenditure is amortised on the straight line basis over a period of 7 years. The carrying amount of development expenditure is reviewed at least annually and written down immediately to their recoverable amount where an indication of impairment exists. 44

46 3. SIGNIFICANT ACCOUNTING POLICIES (CONT D) 3.5 Financial Instruments Initial Recognition and Measurement Financial assets and financial liabilities are recognised when the Group or the Company becomes a party to the contractual provisions of the financial instrument. Financial assets and financial liabilities are measured initially at fair value plus transactions costs, except for financial assets and financial liabilities carried at fair value through profit or loss, which are measured initially at fair value. Financial assets and financial liabilities are measured subsequently as described below Financial Assets - Categorisation and Subsequent Measurement For the purpose of subsequent measurement, financial assets other than those designated and effective as hedging instruments are classified into the following categories upon initial recognition: (a) (b) (c) (d) financial assets at fair value through profit or loss; held-to-maturity investments; loans and receivables; and available-for-sale financial assets. The category determines subsequent measurement and whether any resulting income and expense is recognised in profit or loss or in other comprehensive income. All financial assets except for those at fair value through profit or loss are subject to review for impairment at least at each reporting date. Financial assets are impaired when there is any objective evidence that a financial asset or a group of financial assets is impaired. Different criteria to determine impairment are applied for each category of financial assets. A financial asset or part of it is derecognised when, and only when the contractual rights to the cash flows from the financial asset expire or the financial asset is transferred to another party without retaining control or substantially all risks and rewards of the asset. On derecognition of a financial asset, the difference between the carrying amount and the sum of the consideration received (including any new asset obtained less any new liability assumed) and any cumulative gain or loss that had been recognised in equity is recognised in the profit or loss. At the reporting date, the Group and the Company carry only loans and receivables on their statements of financial position. Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. After initial recognition, these are measured at amortised cost using the effective interest method, less provision for impairment. Discounting is omitted where the effect of discounting is immaterial. Gains or losses are recognised in profit or loss when the loans and receivables are derecognised or impaired, and through the amortisation process. The Group's cash and cash equivalents, trade and most other receivables fall into this category of financial instruments. Loans and receivables are classified as current assets, except for those having maturity dates later than 12 months after the end of the reporting date which are classified as non-current. 45

47 3. SIGNIFICANT ACCOUNTING POLICIES (CONT D) 3.5 Financial Instruments (cont d) Financial Liabilities - Categorisation and Subsequent Measurement After the initial recognition, financial liabilities are classified as: (a) financial liabilities at fair value through profit or loss; (b) other financial liabilities measured at amortised cost; and (c) financial guarantee contracts. A financial liability is derecognised when, any only when the obligation specified in the contracts is discharged or cancelled or expires. On derecognition of a financial liability, the difference between the carrying amount of the financial liability extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in profit and loss. At the reporting date, the Group and the Company carry only other financial liabilities measured at amortised cost on their statements of financial position. Other financial liabilities measured at amortised cost The Group s and the Company s other financial liabilities include trade and other payables. Other financial liabilities are subsequently measured at amortised cost using the effective interest method. Other financial liabilities are classified as current liabilities unless the Group and the Company has an unconditional right to defer settlement of the liability for at least 12 months after the reporting date Offseting of Financial Instruments Financial assets and financial liabilities are offset and the net amount reported in the statement of financial position if, and only if, there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, or to realise the assets and settle the liabilities simultaneously. 3.6 Impairment of Assets Non-financial Assets The Group and the Company assess at each reporting date whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Group and the Company estimates the asset s recoverable amount. An asset s recoverable amount is the higher of an asset s or cash-generating unit s (CGU) fair value less costs to sell and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. Where the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs to sell, recent market transactions are taken into account, if available. If no such transactions can be identified, an appropriate valuation model is used. These calculations are corroborated by valuation multiples, quoted share prices for publicly traded subsidiaries or other available fair value indicators. 46

48 3. SIGNIFICANT ACCOUNTING POLICIES (CONT D) 3.6 Impairment of Assets (cont d) Non-financial Assets (cont d) The Group and the Company base its impairment calculation on detailed budgets and forecast calculations which are prepared separately for each of the Group s and Company s cash-generating units to which the individual assets are allocated. These budgets and forecast calculations are generally covering a period of five years. For longer periods, a long term growth rate is calculated and applied to project future cash flows after the fifth year. Impairment losses of continuing operations, including impairment on inventories, are recognised in the profit or loss in those expense categories consistent with the function of the impaired asset. For assets excluding goodwill, an assessment is made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. If such indication exists, the Group and the Company estimate the asset s or cash-generating unit s recoverable amount. A previously recognised impairment loss is reversed only if there has been a change in the assumptions used to determine the asset s recoverable amount since the last impairment loss was recognised. The reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for asset in prior years. Such reversal is recognised in the profit or loss. Goodwill is tested for impairment annually at each reporting date or more frequently when circumstances indicate that the carrying value may be impaired. Impairment is determined for goodwill by assessing the recoverable amount of each cash-generating unit (or group of cash-generating units) to which the goodwill relates. Where the recoverable amount of the cash-generating unit is less than their carrying amount, an impairment loss is recognised. Impairment losses relating to goodwill cannot be reversed in future periods Financial Assets The Group and the Company assess at each reporting date whether there is any objective evidence that a financial assets or a group of financial assets is impaired. A financial asset or a group of financial assets is deemed to be impaired if, and only if, there is objective evidence of impairment as a result of one or more events that has occurred after the initial recognition of the asset (an incurred loss event ) and that loss event has an impact on the estimated future cash flows of the financial asset or the group of financial assets that can be reliably estimated. Evidence of impairment may include indications that the debtors or a group of debtors is experiencing significant financial difficulty, default or delinquency in interest or principal payments, the probability that they will enter bankruptcy or other financial reorganisation and where observable date indicate that there is a measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate with defaults. Financial assets carried at amortised cost For financial assets carried at amortised cost, the Group and the Company first assess whether objective evidence of impairment exists individually for financial assets that are individually significant, or collectively for financial assets that are not individually significant. If the Group and the Company determine that no objective evidence of impairment exists for an individually assessed financial asset, whether significant or not, it includes the asset in a group of financial assets with similar credit risk characteristics and collectively assesses them for impairment. Assets that are individually assessed for impairment and for which an impairment loss is, or continue to be, recognised are not included in a collective assessment of impairment. 47

49 3. SIGNIFICANT ACCOUNTING POLICIES (CONT D) 3.6 Impairment of Assets (cont d) Financial Assets (cont d) Financial assets carried at amortised cost (cont d) If there is objective evidence that an impairment loss has been incurred, the amount of the loss is measured as the difference between the assets carrying amount and the present value of estimated future cash flows (excluding future expected credit losses that have not yet been incurred). The carrying amount of the asset is reduced through the use of an allowance account and the amount of the loss is recognised in the profit or loss. Allowances are written off when there is no realistic prospect of future recovery. If, in a subsequent year, the amount of the estimated impairment loss increases or decreases because of an event occurring after the impairment was recognised, the previously recognised impairment loss is increased or reduced by adjusting the allowance account. If a future write-off is later recovered, the recovery is credited to the profit or loss. Unquoted equity securities carried at cost If there is objective evidence (such as significant adverse changes in the business environment where the issuer operates, probability of insolvency or significant financial difficulties of the issuer) that an impairment loss on financial assets carried at cost has been incurred, the amount of the loss is measured as the difference between the asset s carrying amount and the present value of estimated future cash flows discounted at the current market rate of return for a similar financial asset. Such impairment losses are not reversed in subsequent periods. 3.7 Inventories Trading goods are valued at the lower of cost and net realisable value after adequate specific allowance has been made by Directors for deteriorated, obsolete and slow-moving inventories. Cost of inventories is determined on a first-in, first-out basis. Costs of trading goods include costs of purchase and other costs incurred in bringing the inventories to their present location and condition. Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs necessary to make the sale. 3.8 Cash and Cash Equivalents Cash and cash equivalents comprise cash in hand, bank balances, short-term demand deposits and highly liquid investments which are readily convertible to known amounts of cash and are subject to an insignificant risk of changes in value. 3.9 Provisions Provisions are recognised when there is a present legal or constructive obligation that can be estimated reliably, as a result of a past event, when it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Provisions are not recognised for future operating losses. Any reimbursement that the Group or the Company can be virtually certain to collect from a third party with respect to the obligation is recognised as a separate asset. However, this asset may not exceed the amount of the related provision. 48

50 3. SIGNIFICANT ACCOUNTING POLICIES (CONT D) 3.9 Provisions (cont d) Provisions are reviewed at each reporting date and adjusted to reflect the current best estimate. If it is no longer probable that an outflow of economic resources will be required to settle the obligation, the provisions are reversed. Where the effect of the time of money is material, provisions are discounted using a current pre tax rate that reflects, where appropriate, the risks specific to the liability. When discounting is used, the increase in the provisions due to the passage of time is recognised as a finance cost Revenue Recognition Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. Revenue is measured at the fair value of consideration received or receivable. Sales of Goods Revenue from sale of goods is recognised upon the transfer of significant risks and rewards of ownership of the goods to the customers. Revenue is not recognised to the extent where there are significant uncertainties regarding recovery of the consideration due, associated costs or the possible return of goods. Rendering of Services Revenue from maintenance of GPRO Systems is recognised upon performance of service. Interest Income Interest income is recognised as it accrues using the effective interest method in profit or loss Employees Benefits Short Term Employees Benefits Wages, salaries, bonuses and social security contributions are recognised as expenses in the financial year in which the associated services are rendered by the employees of the Group and Company. Short term accumulating compensated absences such as paid annual leave are recognised when services are rendered by the employees that increase their entitlement to future compensated absences, and short term non-accumulating compensated absences such as sick leave are recognised when the absences occur. A provision is made for the estimated liability for unutilised leave as a result of services rendered by employees up to the end of the reporting date Defined Contribution Plans Defined contribution plans are post-employment benefit plans under which the Group or the Company pays fixed contributions into independent entities of funds and will have no legal or constructive obligation to pay further contribution if any of the funds do not hold sufficient assets to pay all employee benefits relating to employee services in the current and preceding financial years. Such contributions are recognised as expenses in the profit or loss as incurred. As required by law, companies in Malaysia make such contributions to the Employees Provident Fund ( EPF ). Foreign subsidiary companies are also making contributions in accordance with their respective country s statutory pension scheme. 49

51 3. SIGNIFICANT ACCOUNTING POLICIES (CONT D) 3.11 Employees Benefits (cont d) Employees Share Option Schemes The Employees Share Option Scheme ( ESOS ) allows the Group s and the Company s employees to acquire shares of the Company. When the option is exercised, equity is increased by the amount of the proceeds received. The fair value of the employees services received in exchange for the grant of the share option is recognised as an expense in the profit or loss over the vesting periods of the grant with a corresponding increase in equity. The fair value of share option is measured at grant date, taking into account, if any, the market vesting conditions upon which the option was granted but excluding impact of any non-market vesting conditions. Non-market vesting conditions are included in assumptions about the number of option that is expected to become exercisable on vesting date. The equity amount is recognised in the ESOS reserve until the option is exercised, upon which it will be transferred to share premium, or until the option expires, upon which it will be transferred directly to accumulated losses Tax Expenses Tax expenses comprise current and deferred tax. Current tax and deferred tax are recognised in profit or loss except to the extent that they relates to a business combination or items recognised directly in equity or other comprehensive income Current Tax Current tax expense is the expected amount of income tax payable in respect of the taxable profit for the financial year and is measured using the tax rates that have been enacted or substantively enacted by the reporting date. Current tax is recognised in financial position as liability (or asset) to the extent that it is unpaid (or refundable) Deferred Tax Deferred tax liabilities and assets are provided for under the liability method in respect of all temporary differences at the end of the reporting date between the carrying amount of an asset or liability in the financial position and its tax base including unutilised tax losses and unabsorbed capital allowances. Deferred tax liabilities are recognised for all temporary differences. Deferred tax assets are recognised for all deductible temporary differences, unused tax credits and unused tax losses carry forward, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carried forward unused tax credits and unused tax losses can be utilised. The carrying amount of a deferred tax asset is reviewed at each end of the reporting date. If it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised, the carrying amount of the deferred tax asset will be reduced accordingly. When it becomes probable that sufficient taxable profit will be available, such reductions will be reversed to the extent of the taxable profit. Unrecognised deferred tax assets are reassessed at each end of the reporting date and are recognised to the extent that it has become probable that future taxable profit will allow the deferred tax assets to be utilised. 50

52 3. SIGNIFICANT ACCOUNTING POLICIES (CONT D) 3.12 Tax Expenses (cont d) Deferred Tax (cont d) Deferred tax is measured at the tax rates that are expected to apply in the period when the asset is realised or the liability is settled, based on tax rates that have been enacted or substantively enacted by the end of the reporting year. Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss. Deferred tax items are recognised in correlation to the underlying transaction either in other comprehensive income or directly in equity and deferred tax arising from a business combination is adjusted against goodwill on acquisition. Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority Discontinued Operation A component of the Group is classified as discontinued operation when it has been disposed of and such a component represents a separate major line of business or geographical area of operation, is part of a single co-ordinate major line of business or geographical area of operation. In the consolidated statement of profit or loss and other comprehensive income of the reporting year, and of the comparable period of the previous year, income and expenses from discontinued operation are reported separately from income and expenses from continuing operation, down to the level of profit after tax, even when the Group retains a non-controlling interest in the subsidiary after the sale. The resulting profit or loss (after tax) is reported separately in Note 6 to the Financial Statements Equity Instruments An equity instrument is any contract that evidences a residual interest in the assets of the Group and of the Company after deducting all of its liabilities. Ordinary shares are equity instruments. Share capital represents the nominal value of shares that have been issued. Share premium includes any premiums received on issue of share capital. Any transaction costs associated with the issuing of shares are deducted from share premium, net of any related income tax benefits. Accumulated losses includes all current and prior years accumulated losses. All transactions with owners of the Company are recorded separately within equity Operating Segments An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Group s other components. All operating segments operating results are reviewed regularly by the chief operating decision maker to make decision about resources to be allocated to the segment and to assess its performance and for which discrete financial information is available. 51

53 3. SIGNIFICANT ACCOUNTING POLICIES (CONT D) 3.16 Contingencies A contingent liability is a possible obligation that arises from past events and whose existence will only be confirmed by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Group or the Company. It can also be a present obligation arising from past events that is not recognised because it is not probable that outflow of economic resources will be required or the amount of obligation cannot be measured reliably. A contingent liability is not recognised but is disclosed in the notes to the financial statements. When a change in the probability of an outflow occurs such that outflow is probable and can be measured reliably, they will then be recognised as a provision Related Parties A related party is a person or entity that is related to the Group. A related party transaction is a transfer of resources, services or obligations between the Group and its related party, regardless of whether a price is charged. (i) A person or a close member of that person s family is related to the Group if that person: (1) has control or joint control over the Group; (2) has significant influence over the Group; or (3) is a member of the key management personnel of the Group. (ii) An entity is related to the Group if any of the following conditions applies: (1) the entity and the Group are members of the same group; or (2) one entity is an associate or joint venture of the other entity; or (3) both entities are joint ventures of the same third party; or (4) one entity is a joint venture of a third entity and the other entity is an associate of the third entity; or (5) the entity is a post-employment benefit plan for the benefits of employees of either the Group or an entity related to the Group; or (6) the entity is controlled or jointly-controlled by a person identified in (i) above; or (7) a person identified in (a)(i) above which has significant influence over the entity or is a member of the key management personnel of the Group or the entity. 52

54 4. PROPERTY, PLANT AND EQUIPMENT Group Office equipment Computer software and equipment Furniture and fittings Renovation Motor vehicles Total Cost At 1 January ,930 68,556 19, , , ,800 Additions - 7, ,131-90,557 Disposals (285,126) (285,126) Written off - - (11,284) (486,480) - (497,764) At 31 December ,930 76,182 9,224 82, ,467 Written off - (36,724) (3,077) (82,131) - (121,932) Disposal of subsidiaries (9,930) (18,116) (28,046) At 31 December ,342 6, ,489 Accumulated depreciation At 1 January ,071 15,797 1, ,140 33, ,677 Charge for the financial year - 23,936 2, ,770 52, ,482 Disposals (85,538) (85,538) Written off - - (2,000) (245,570) - (247,570) At 31 December ,071 39,733 1,907 14,340-57,051 Charge for the financial year - 11, ,562-16,557 Written off - (19,428) (1,088) (18,902) - (39,418) Disposal of subsidiaries (1,071) (18,143) (19,214) At 31 December ,516 1, ,976 Net carrying amount At 31 December ,826 4, ,513 At 31 December ,859 36,449 7,317 67, ,416 53

55 4. PROPERTY, PLANT AND EQUIPMENT (CONT D) Company Cost Motor vehicles At 1 January - 285,126 Disposal - (285,126) At 31 December - - Accumulated depreciation At 1 January - 33,265 Charge for the financial year - 52,273 Disposal - (85,538) At 31 December - - Net carrying amount At 31 December DEVELOPMENT EXPENDITURE Cost Group and Company At 1 January/31 December 10,564,494 10,564,494 Accumulated amortisation At 1 January 10,164,215 8,168,108 Charge for the financial year 400,279 1,996,107 At 31 December 10,564,494 10,164,215 Net carrying amount At 31 December - 400, INVESTMENT IN SUBSIDIARIES Company Unquoted shares, at cost 1,200,004 1,200,006 Less: Disposal of a subsidiary (1,200,001) (2) Impairment loss At 1 January (1,199,998) - Recognised in profit or loss - (1,199,998) Reversal upon disposal of subsidiaries 1,199,998 - At 31 December - (1,199,998)

56 6. INVESTMENT IN SUBSIDIARIES (CONT D) The details of the subsidiaries are as follows:- Name of company Effective interest % % Principal activities Country of incorporation Geranium Limited* Provision of information technology solution services Hong Kong First Podium Sdn. Bhd Dormant Malaysia Worldwide Cosmetic Retail Sdn. Bhd. ^ Maxbeauty Cosmetics Sdn. Bhd. ^ Worldwide Cosmetic Retail (HK) Limited*^ Trading of skincare and cosmetic products - 51 Retail sale of skincare and cosmetic products Provision of management and consultancy services Malaysia Malaysia Hong Kong * Companies not audited by SJ Grant Thornton ^ Disposed during the financial year Disposal of subsidiaries 2014 On 17 June 2014, the Company disposed its entire shareholdings of 2 ordinary shares representing 100% of the total equity interest of Worldwide Cosmetic Retail (HK) Limited to a third party for a total consideration of 1. On 19 June 2014, the Company disposed its entire shareholdings of 2 ordinary shares representing 100% of the total equity interest of Worldwide Cosmetic Retail Sdn Bhd to a third party for a total consideration of 1. On 20 June 2014, the Company disposed its entire shareholdings of 255,000 ordinary shares representing 51% of the total equity interest of Maxbeauty Cosmetics Sdn Bhd to a third party for a total consideration of 1. The aforesaid sales of shares were completed during the respective financial year On 30 December 2013, the Company disposed its entire shareholdings of 2 ordinary shares representing 100% of the total equity interest of Temasek Sunview Sdn Bhd to a third party for a total consideration of 2. The aforesaid sales of shares were completed during the respective financial year. 55

57 6. INVESTMENT IN SUBSIDIARIES (CONT D) Disposal of subsidiaries (cont d) The effects of the disposal on the financial position of the Group as at the date of disposal are as follows: Group Property, plant and equipment 8,832 - Inventories 174,017 - Trade receivable 156,201 - Other receivables 38,631 - Cash and bank balances 6, Trade payables (216,318) - Other payables (447,456) (7,743) Tax payable (1,723) - Net liabilities (281,816) (7,482) Less: non-controlling interests 134,582 - Proceeds from disposal (3) (2) Gain on disposal of subsidiaries to the Group (147,237) (7,484) The net cash effect arising from disposal of subsidiaries is as follows: Group Cash consideration 3 2 Cash and bank balances of subsidiaries disposed (6,000) (261) Net cash outflow from disposal of subsidiaries to the Group (5,997) (259) Discontinued operation s statement of profit or loss and other comprehensive income The results of the disposal group are as follows: Revenue 25, ,000 Cost of sales (23,852) (252,329) Gross profit 1, ,671 Other income 219,372 4,801 Selling and distribution costs (136,285) (626,681) Administration expenses (255,826) (1,650,517) Other expenses (59,993) - Finance costs (5) - Loss before tax (231,188) (2,089,726) Tax expense - - Net loss from discontinued operation (231,188) (2,089,726) 56

58 6. INVESTMENT IN SUBSIDIARIES (CONT D) The loss from discontinued operation is attributable to: Owners of the Company (914,350) (1,449,938) Non-controlling interests 683,162 (639,788) Net loss from discontinued operation (231,188) (2,089,726) Discontinued operation s statement of cash flows Cash flows generated by the disposal group are as follows: Cash flows used in operating activities (108,052) (1,179,671) Cash flows from/(used in) investing activities 3,756 (309,223) Cash flows from financing activities 19,903 1,421,510 Net decrease (84,393) (67,384) 7. GOODWILL ON CONSOLIDATION Group At 1 January - 1,046,756 Written off - (1,046,756) At 31 December INVENTORIES Group Trading goods - 191,933 Recognised in profit or loss Group and Company Inventories recognised as cost of sales (537,120) - 9. TRADE RECEIVABLE Group and Company Trade receivable 1,303,097 2,727,955 57

59 9. TRADE RECEIVABLE (CONT D) The normal trade credit terms granted by the Group and the Company to the trade receivable are 120 days (2013: 60 to 120 days). The foreign currency exposure profile of the trade receivable is as follows:- Group and Company HK Dollar 903,097 1,273,200 US Dollar - 1,454, OTHER RECEIVABLES Group Company Non-trade receivable 500, , , ,000 Prepayments 6,660-6,660 - Deposits 4,557,441 8,265 1,411,477 9,281 5,064, ,265 1,918, ,281 Included in other receivables of the Group and of the Company is an amount of 4,549,741 (2013: Nil) and 1,405,769 (2013: Nil) respectively being deposits made for purchases of inventories. 11. AMOUNT DUE FROM SUBSIDIARIES Company Amount due from subsidiaries 3,542,717 3,991,880 Less: Impairment loss At 1 January (3,991,880) - Recognised in profit or loss (448,734) (3,991,880) Written off upon disposal of subsidiaries 4,077,953 - At 31 December (362,661) (3,991,880) 3,180,056 - Amount due from subsidiaries are non-trade in nature, unsecured, interest free and repayable on demand. 58

60 12. SHARE CAPITAL Group and Company Number of shares Amount Authorised:- Unit Ordinary shares of 0.03 / 0.10 each At 1 January ,000,000 50,000,000 Capital reduction during the financial year - (35,000,000) At 31 December 2013/ 1 January 2014/ 31 December ,000,000 15,000,000 Issued and fully paid:- Ordinary shares of 0.03 / 0.10 each At 1 January ,000,000 25,000,000 Capital reduction during the financial year - (17,500,000) Issuance of shares private placement 25,000, ,000 At 31 December 2013/ 1 January ,000,000 8,250,000 Issuance of shares ESOS exercised 13,750, ,500 At 31 December ,750,000 8,662,500 In the previous financial year, the Company had undertaken the following:- (i) (ii) Reduction of the issued and paid- up share capital of the Group and of the Company involving the cancellation of 0.07 par value of the each existing share of Private placement of 25,000,000 new ordinary shares of 0.03 each representing 10% of the issued and paid-up share capital of the Group and of the Company. The new ordinary shares issued rank pari passu in all respects with the existing ordinary shares of the Company. 13. RESERVES Non-distributable Share premium Group Company At 1 January 576,209 17,381, ,209 17,381,943 Arising from private placement at premium - 700, ,000 ESOS exercised 554, ,126 - Capital reduction - (17,381,943) - (17,381,943) Share issuance expenses - (123,791) - (123,791) At 31 December 1,130, ,209 1,130, ,209 59

61 13. RESERVES (CONT D) Group Company ESOS reserve At 1 January ESOS granted 100, ,375 - ESOS exercised (100,375) - (100,375) - At 31 December Exchange translation reserve At 1 January 291 (5,634) - - Foreign currency translation differences arising from foreign subsidiaries (22,193) 5, At 31 December (21,902) Capital reserve At 1 January 622, ,480 - Capital reduction - 622, ,480 At 31 December 622, , , ,480 Total non-distributable reserves 1,730,913 1,198,980 1,752,815 1,198,689 Accumulated losses (4,234,635) (4,644,024) (4,060,473) (5,191,878) Total reserves (2,503,722) (3,445,044) (2,307,658) (3,993,189) Share premium Share premium represents the excess of the consideration received over the nominal value of shares issued by the Company. It is not to be distributed by way of cash dividends and its utilisation shall be in a manner as set out in Section 60 (3) of the Companies Act, In prior year, share premium arose from the issuance of 25,000,000 new ordinary share of 0.03 each at an issue price of per share. ESOS reserve ESOS reserve represents the equity-settled share option granted to employees. The reserve is made up of the cumulative value of services received from employees recorded over the vesting period commencing from the grant date of equity-settled share option, and is reduced by the expiry or exercise of the share option. Exchange translation reserve The exchange translation reserve represents exchange difference arising from the translation of the financial statements of foreign subsidiaries whose functional currencies are different from that of the Group s presentation currency. 60

62 13. RESERVES (CONT D) Capital reserve The reduction of the issued and paid up capital of the Company performed during financial year 2013 gave rise to a credit of 17,500,000 which was utilised to partially set-off against the accumulated losses. Pursuant to Section 60(2) of the Act, the share premium account was treated as paid-up share capital of the Company. Accordingly, pursuant to section 64(1) of the Act, the Company reduced its share premium account of 17,381,943 and the credit arising therefrom was utilised to set-off against the accumulated losses of the Company amounting to 34,259,463. The remaining credit balance amounting to 622,480 after off-setting the accumulated losses was credited to capital reserve. 14. TRADE PAYABLES The normal trade credit terms granted by trade payables range from 30 to 90 days (2013: 30 to 90 days). The foreign currency exposure profile of the trade payables is as follows:- Group HK Dollar - 12, OTHER PAYABLES Group Company Non-trade payables 574, ,917 27,619 59,624 Amount due to former Directors 129, ,783 10,781 10,781 Accrual of expenses 116, ,967 51,836 68, , ,667 90, ,405 Included in non-trade payables of the Group is an unsecured amount of 451,549 (2013: Nil) due to a third party, bearing interest rate of 8% (2013: Nil) per annum and has no fixed term of repayment. 16. REVENUE Group and Company Maintenance of GPRO systems 400,000 1,393,644 Sales of apparel 2,245,172-2,645,172 1,393,644 61

63 17. COST OF SALES Group and Company Cost of sales of apparel 537, PROFIT/(LOSS) BEFORE TAX Profit/(loss) before tax has been determined after charging/(crediting), amongst others, the following items:- Group Company Auditors remuneration - statutory - auditors of the Company 44,000 39,000 40,000 28,000 - other auditors 13,022 23, non statutory 5,000 5,000 5,000 5,000 Amortisation of development expenditure 400,279 1,996, ,279 1,996,107 Depreciation of property, plant and equipment 16, ,482-52,273 Directors fees 37, ,052 20,000 80,000 ESOS expenses 100, ,375 - Goodwill on consolidation written off - 1,046, Impairment loss on amount due from subsidiaries ,734 3,991,880 Impairment loss on investment in subsidiaries ,199,998 Interest expense 8,815 29,126-29,126 Loss on disposal of property, plant and equipment - 28,588-28,588 Other receivables written off 7,943-7,943 - Property, plant and equipment written off 82, , Rental of office 89,877-1,700 - Rental of premises 133,242-2,000 - Gain on disposal of subsidiaries (147,237) (7,484) - - Interest income (3) (1,617) (2) (604) Rental income (298) Realised loss/(gain) on foreign exchange 98,028 (56,259) 98,028 (54,583) Unrealised gain on foreign exchange (177,526) (206,108) (173,769) (245,142) 62

64 18. PROFIT/(LOSS) BEFORE TAX (CONT D) The details of remuneration receivable by the Directors of the Group and of the Company during the financial year are as follows:- Group Company Executive:- Fees 37, ,052 20,000 - Non-Executive:- Fees - 80,000-80,000 Total 37, ,052 20,000 80, TAX EXPENSE Malaysian income tax is calculated at the statutory tax rate of 25% (2013: 25%) of the estimated assessable profits for the financial year. There was no provision for taxation for the current year for the Group and for the Company as the Group and the Company have no chargeable income. A reconciliation of income tax expense applicable to profit/(loss) before tax at the statutory tax rate to tax expenses at the effective tax rate of the Group and of the Company is as follows: Group Company Profit/(loss) before tax - Continuing operations 1,323,739 (3,046,120) 1,131,405 (6,261,787) - Discontinued operation (231,188) (2,089,726) - - 1,092,551 (5,135,846) 1,131,405 (6,261,787) Income tax at rate of 25% 273,138 (1,283,962) 282,851 (1,565,447) Non-allowable expenses 278,426 1,329, ,451 1,980,983 Income not subject to tax (49,310) (57,786) (12,500) (61,286) Utilisation of deferred tax assets not recognised in prior years (526,802) (37,846) (526,802) (354,250) Difference of tax rate in other country 24,548 49, The Group s unutilised tax losses and unabsorbed capital allowances which can be carried forward to offset against future taxable profits amounted to approximately 7,528,000 (2013: 12,026,000) and Nil (2013: 73,000). The Company s unutilised tax losses which can be carried forward to offset against future taxable profits amounted to approximately 7,528,000 (2013: 9,707,000). However, the above amount is subject to the approval of the Inland Revenue Board of Malaysia 63

65 20. EARNINGS/(LOSS) PER SHARE Basic earnings/(loss) per ordinary share Basic earnings/(loss) per share are calculated by dividing the profit/(loss) for the financial year attributable to owners of the Company by the weighted average of ordinary shares in issue during the financial year. Profit/(loss) attributable to ordinary shares: Group Profit/(loss) from continuing operations attributable to ordinary equity holders of the Company 1,323,739 (3,046,120) Loss from discontinued operation attributable to ordinary equity holders of the Company (914,350) (1,449,938) Net profit/(loss) for the financial year attributable to ordinary equity holders of the Company 409,389 (4,496,058) Weighted average number of ordinary shares in issue: Units Units Ordinary shares issued as at 1 January 275,000, ,000,000 Weighted average number of ordinary shares issued during the financial year 11,376,712 2,739,726 Weighted average number of ordinary shares issued as at 31 December (unit) 286,376, ,739,726 Basic earnings/(loss) per share: Sen Sen From continuing operations 0.46 (1.21) From discontinued operation (0.32) (0.57) Diluted earnings per ordinary share 0.14 (1.78) Diluted earnings per share is not applicable for the current financial year as all the ESOS granted had either elapsed or fully exercised as at 31 December As such, there are no dilutive potential equity instruments that would give a diluted effect to the basic earnings per share. Fully diluted earnings per share is not calculated as the average market price as at 31 December 2013 is lower than the ESOS option price, therefore there will be no dilutive effect. 64

66 21. DEFERRED TAX ASSETS NOT RECOGNISED The tax effects of temporary differences that would give rise to future benefits are generally recognised only when there is a reasonable expectation of realisation. At the end of financial year, the temporary differences for which no deferred tax assets have been recognised in the financial statements are as follows:- Group Company Carrying amount of qualifying property, plant and equipment in excess of their tax base - (21,000) - - Unutilised tax losses 7,528,000 12,026,000 7,528,000 9,707,000 Unabsorbed capital allowances - 73, Other (178,000) (206,000) (174,000) (245,000) 7,350,000 11,872,000 7,354,000 9,462,000 The potential deferred tax assets are not recognised in the financial statements as the Directors opined that such amounts will not be able to be utilised in the near future. 22. EMPLOYEES BENEFITS EXPENSE Group Company Salaries, wages and emoluments 14, , Defined contribution plan 1,750 42, Social security contributions 195 2, Other benefits 5,704 23,689 5,704 16,693 ESOS expenses 100, ,375 - Employees Share Option Scheme ( ESOS ) 122, , ,079 16,693 Group and Company Weighted Number of share option average exercise price At 1 January Granted during the financial year 13,750, Exercised during the financial year (13,750,000) At 31 December

67 22. EMPLOYEES BENEFITS EXPENSE (CONT D) Employees Share Option Scheme (ESOS) (cont d) The fair value of scheme option granted during the financial year was estimated using a Black-scholes model, taking into account the terms and conditions upon which the option was granted. The fair value of share option measured at grant date and the assumptions are as follows:- Granted on Fair value of share option () Weighted average share price () Exercise price () Expected volatility (%) Risk free rate (%) Expected average dividend yield (%) - Expected life (year) 5 The expected life of the option is based on historical data and is not necessarily indicative of exercise patterns that may occur. The expected volatility reflects the assumptions that the historical volatility over a period similar to the life of the option is indicative of future trends, which may not necessarily be the actual outcome. 23. RELATED PARTY DISCLOSURES (a) Related party transaction Company Sales to subsidiaries - 227,137 (b) Related party balance The outstanding balance arising from related party transaction as at the reporting date is disclosed in Note 11 to the Financial Statements. (c) Key management personnel compensation The Group and the Company have no other members of key management personnel apart from the Board of Directors. 24. OPERATING SEGMENTS Business segments For the management purposes, the Group is organised into business units based on its products and services, which comprises the following: Information technology and apparel products Skincare and cosmetic products (Discontinued) Others Investment holding, supplies software and hardware products and sales of apparel and garments products Retail and trading of skincare and cosmetic products Dormant 66

68 24. OPERATING SEGMENTS (CONT D) Business segments (cont d) Management monitors operating results of its business units separately for the purpose of decisions making about resource allocation and performance assessment. Segment performance is evaluated based on operating profit or loss which, in certain respects as explained in the table below, is measured differently from operating profit or loss in the consolidated financial statements. Transfer prices between operating segments are on negotiable term in a manner similar to transactions with third parties Revenue: Note Information technology and apparel products Skincare and cosmetic products (Discontinued) 67 Others Elimination Total as per consolidated financial statements External customers 2,645,172 25, ,670,573 Total revenue 2,645,172 25, ,670,573 Results: Interest income Finance costs (8,810) (5) - - (8,815) Amortisation of development expenditure (400,279) (400,279) Depreciation of property, plant and equipment - (10,607) (5,950) - (16,557) Impairment loss on amount due from subsidiaries (448,734) ,734 - Gain on disposal of subsidiary , ,237 Other non-cash (expenses) / income ii 65,451 (78,757) - - (13,306) Segment profit 842,600 3,060,857 1,124,989 (3,935,895) 1,092,551 Assets: Segment assets 10,140, ,681 20,525 (3,563,740) 6,981,168 Liabilities: Segment liabilities 4,148, , ,586 (4,208,214) 822, Revenue: External customers 1,393, , ,828,644 Inter-segment i - 227,137 - (227,137) - Total revenue 1,393, ,137 - (227,137) 1,828,644 Results: Interest income ,012-1,617 Finance costs (29,126) (29,126) Amortisation of development expenditure (1,996,107) (1,996,107) Depreciation of property, plant and equipment (64,993) (161,489) - - (226,482) Impairment loss of subsidiaries - (1,199,998) - 1,199,998 -

69 24. OPERATING SEGMENTS (CONT D) Business segments (cont d) 2013 (cont d) Note Information technology and apparel products Skincare and cosmetic products (Discontinued) Others Elimination Total as per consolidated financial statements Gain on disposal of subsidiary ,484 7,484 Other non-cash expenses ii (867,126) (252,304) - - (1,119,430) Segment loss (2,872,730) (2,149,914) (113,202) - (5,135,846) Assets: Additions to non-current assets iii 1,499 89, ,557 Segment assets 4,422, ,626 10,341-4,816,725 Liabilities: Segment liabilities 296, ,175 62, ,513 The amounts relating to the skincare and cosmetic products segment have been excluded to arrive at the amounts shown in the consolidated statement of profit or loss and other comprehensive income as they are presented separately in the statement of profit or loss and other comprehensive income within one line item, net loss from discontinued operation. Notes to the nature of adjustments and eliminations to arrive at amounts reported in the consolidated financial statements: i. Inter-segment revenues are eliminated on consolidation. ii. Other material non-cash (expenses)/income consist of the following items: Group ESOS expenses (100,375) - Goodwill on consolidation written off - (1,046,756) Loss on disposal of property, plant and equipment - (28,588) Other receivables written off (7,943) - Property, plant and equipment written off (82,514) (250,194) Unrealised gain on foreign exchange 177, ,108 (13,306) (1,119,430) iii. Additions to non-current assets consist of: Group Property, plant and equipment - 90,557 68

70 24. OPERATING SEGMENTS (CONT D) Geographical segment Revenue and non-current assets information based on the geographical location of customers and assets respectively are as follows:- Group Revenue Non-current assets Malaysia (discontinued) 25, ,000 12, ,695 Hong Kong 2,645,172 1,393, Major customer 2,670,573 1,828,644 12, ,695 The following is the major customer with revenue equal or more than 10% of the Group s revenue:- Group customer (2013: 1 customer) 2,645,172 1,393, FINANCIAL INSTRUMENTS Financial risk management The Group and the Company are exposed to financial risks arising from their operations and the use of financial instruments. Financial risk management policies are established to ensure that adequate resources are available for the development of the Group s and the Company s business whilst managing its credit risk, liquidity risk, foreign currency risk and interest rate risk. The Group and the Company operate within clearly defined policies and procedures that are approved by the Board of Directors to ensure the effectiveness of the risk management process. The main areas of financial risks faced by the Group and the Company and the policies in respect of the major areas of treasury activity are set out as follows: Credit risk Credit risk is the risk of a financial loss to the Group and the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations. It is the Group s and the Company s policy to enter into financial instrument with a diversity of creditworthy counterparties. The Group and the Company do not expect to incur material credit losses of its financial assets or other financial instruments. It is the Group s and the Company s policies that all customers who wish to trade on credit terms are subject to credit verification procedures. The Group and the Company do not offer credit terms without the approval of the head of credit control. The areas where the Group and the Company are exposed to credit risk are as follows:- 69

71 25. FINANCIAL INSTRUMENTS (CONT D) Financial risk management (cont d) The main areas of financial risks faced by the Group and the Company and the policies in respect of the major areas of treasury activity are set out as follows (cont d): Credit risk (cont d) Receivables As at the end of the reporting date, the maximum exposure to credit risk arising from receivables is limited to the carrying amount in the statements of financial position. With a credit policy in place to ensure the credit risk is monitored on an ongoing basis, management has taken reasonable steps to ensure that receivables that are neither past due nor impaired are stated at their realisable values. The Group and the Company use ageing analysis to monitor the credit quality of the receivables. The ageing analysis of trade receivable is as follows:- Group and Company Not past due 1,303,097 2,727,955 In respect of trade and other receivables, the Group and the Company are exposed to significant credit risk exposure to a single counterparty in which 100% (2013: 100%) of trade receivable consists of 1 customer (2013: 1 customer) and 99% (2013: 98%) of other receivables consists of 2 counterparties (2013: 1 counterparty). Based on historical information about customer s default rate, management considers the credit quality of trade receivable that is not past due or impaired to be good. Intercompany balances The maximum exposure to credit risk is represented by their carrying amounts in the statements of financial position. The Company provides advances to subsidiaries and monitors their results regularly. As at the end of the reporting date, there was no indication that the advances to the subsidiaries are not recoverable. Cash and cash equivalents The credit risk for cash and cash equivalents is considered negligible, since the counterparties are reputable banks with high quality external credit ratings Liquidity risk Liquidity risk is the risk that the Group and the Company will not be able to meet its financial obligations as and when they fall due as a result of shortage of funds. In managing its exposures to liquidity risk arises principally from its various payables, the Group and the Company maintain a level of cash and cash equivalents deemed adequate by the management to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities as and when they fall due. 70

72 25. FINANCIAL INSTRUMENTS (CONT D) 25.1 Financial risk management (cont d) Liquidity risk (cont d) The Group s and the Company s non-derivative financial liabilities which have contractual maturities are summarised below:- Current Carrying amount Contractual cash flow Less than 1 year Group 2014 Trade payables 1,189 1,189 1,189 Other payables 820, , , , , , Trade payables 231, , ,889 Other payables 587, , ,667 Company 819, , , Other payables 90,236 90,236 90, Other payables 138, , , Foreign currency risk Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates.the Group and the Company are exposed to foreign currency risk on sales, purchases and investments that are denominated in a currency other than the respective functional currencies of the Group and the Company. The currencies giving rise to this risk are primarily United States Dollar (USD) and Hong Kong Dollar (HKD). Carrying amounts of the Group s and the Company s exposure to foreign currency risk are as follows:- Group Company Financial assets Trade receivables - USD - 1,454,755-1,454,755 - HKD 903,097 1,273, ,097 1,273,200 Cash and bank balances - HKD - 38, Financial liability Trade payables - HKD - (12,859)

73 25. FINANCIAL INSTRUMENTS (CONT D) 25.1 Financial risk management (cont d) Foreign currency risk (cont d) Foreign currency sensitivity analysis The following table demonstrates the sensitivity of the Group s and the Company s net profit/(loss) for the financial year to a reasonably possible change in USD and HKD against the functional currency of the Group and of the Company, with all other variables held constant. Group Company Increase/(decrease) in net profit/(loss) for the financial year USD/ Strengthened 1% 14,548 14,548 - Weakened 1% (14,548) (14,548) HKD/ Strengthened 1% 9,031 9,031 - Weakened 1% (9,031) (9,031) Strengthened 1% 12,993 12,742 - Weakened 1% (12,993) (12,742) Exposures to foreign exchange rates vary during the financial year depending on the volume of overseas transactions. Nonetheless, the analysis above is considered to be representative of the Group s and of the Company s exposures to foreign currency risk Interest rate risk Interest rate risk is the risk that the fair value or future cash flows of the Group s and the Company s financial instruments will fluctuate because of changes in market interest rates. The Group and the Company do not account for any fixed rate financial assets and liabilities at fair value through profit or loss. Therefore, a change in interest rates at the end of the reporting date would not affect profit or loss. The Group s variable rate borrowings are exposed to a risk of change in cash flows due to changes in interest rates. The interest rate profile of the Group s significant interest-bearing financial instrument, based on carrying amount as at the end of the reporting year is as follows:- Group Floating rate instrument Other payables 451,549 - The following table illustrates the sensitivity of profit to a reasonably possible change in interest rate of +/- 0.5%. These changes are considered to be reasonably possible based on observation of current market conditions. The calculations are based on a change in the average market interest rate for each year, and the financial instruments held at each reporting date that are sensitive to changes in interest rates. All other variables are held constant. 72

74 25. FINANCIAL INSTRUMENTS (CONT D) 25.1 Financial risk management (cont d) Interest rate risk (contd ) Group Profit for the financial year Floating rate instrument +0.5% -0.5% 2014 (2,258) 2, Fair value of financial instruments The carrying amounts of financial assets and financial liabilities of the Group and the Company at the reporting date approximate their fair values due to their short-term nature Fair value hierarchy No fair value hierarchy is disclosed as the Group and the Company do not have financial instruments measured at fair value. 26. SIGNIFICANT EVENTS DURING THE FINANCIAL YEAR AND SUBSEQUENT TO THE REPORTING DATE Significant events during the financial year (a) (b) On 5 March 2014, the Company issued 13,750,000 ordinary shares of 0.03 each arising from the exercise of employees share option at an exercise price of per ordinary share. On 17 June 2014, the Company disposed its entire shareholdings of 2 ordinary shares representing 100% of the total equity interest of Worldwide Cosmetic Retail (HK) Limited to a third party for a total consideration of 1. On 19 June 2014, the Company disposed its entire shareholdings of 2 ordinary shares representing 100% of the total equity interest of Worldwide Cosmetic Retail Sdn Bhd to a third party for a total consideration of 1. On 20 June 2014, the Company disposed its entire shareholdings of 255,000 ordinary shares representing 51% of the total equity interest of Maxbeauty Cosmetics Sdn Bhd to a third party for a total consideration of 1. The aforesaid sales of shares were completed during the financial year. (c) On 15 December 2014, The High Court of Malaya had issued a winding-up petition against a subsidiary company, First Podium Sdn Bhd, pending court hearing Significant event subsequent to the reporting date (a) On 19 January 2015, the Company entered into a Distribution Agreement with a third party to grant the Company distributorship for the right to sell and distribute Louis Gianni products in Malaysia. 73

75 27. CAPITAL MANAGEMENT The Group s objective when managing capital is to maintain a strong capital base and safeguard the Group s ability to continue as a going concern, so as to maintain investor, creditor and market confidence and to sustain future development of the business. The Group sets the amount of capital in proportion to its overall financing structure, i.e. equity and financial liabilities. The Group manages the capital structure and makes adjustments to it in the light of changes in economic conditions and the risk characteristics of the underlying assets. In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debts. There were no changes in the Group s approach to capital management during the financial year. 74

76 DISCLOSURE OF REALISED AND UNREALISED PROFITS/LOSSES With the purpose of improving transparency, Bursa Malaysia Securities Berhad had on 25 March 2010, and subsequently on 20 December 2010, issued directives which required all listed corporations to disclose the breakdown of retained earnings/accumulated losses into realised and unrealised on Group and Company basis in the annual audited financial statements. The breakdown of accumulated losses as at the reporting date, which has been prepared by the Directors in accordance with the directives from Bursa Malaysia Securities Berhad stated above and the Guidance on Special Matter No. 1 - Determination of Realised and Unrealised Profits or Losses in the Context of Disclosures pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants, are as follows:- Group Company Total accumulated losses of the Company and its subsidiaries - Realised (4,412,161) (4,969,426) (4,234,242) (5,437,020) - Unrealised 177, , , ,142 Consolidation adjustments - 119, Total accumulated losses as per financial statements (4,234,635) (4,644,024) (4,060,473) (5,191,878) The disclosure of realised and unrealised above is solely for complying with the disclosure requirements stipulated in the directive of Bursa Malaysia Securities Berhad and should not be applied for any other purposes. 75

77 ANALYSIS OF SHAREHOLDINGS AS AT 21 APRIL 2015 Authorised Capital Issued and fully paid-up Capital Class of Shares Voting Rights 15,000, ,662, Ordinary shares of 0.03 each fully paid up One vote per 0.03 share SIZE OF HOLDINGS No. of No. of Shareholders Shares held % Less than 100 shares to 1,000 shares , ,001 to 10,000 shares 418 2,968, ,001 to 100,000 shares 1,121 58,119, ,001 to less than 5% of Issued Shares ,525, % and above of Issued Shares 1 25,000, , ,750, SUBSTANTIAL SHAREHOLDER AS AT 12 MAY 2014 No of Shares Held Name Direct % Indirect % MAYBANK SECURITIES NOMINEES (ASING) SDN BHD (EXEMPT AN FOR MAYBANK KIM ENG SECURITIES PTE LTD) 25,000,

78 LIST OF THIRTY LARGEST SHAREHOLDERS AS AT 21 APRIL 2015 NO SHAREHOLDER NO. OF SHARES OF 0.03 EACH % 1 MAYBANK SECURITIES NOMINEES (ASING) SDN BHD (EXEMPT AN 25,000, FOR MAYBANK KIM ENG SECURITIES PTE LTD) 2 WARISAN SERANTAU SDN BHD 6,903, AFFIN HWANG NOMINEES (ASING) SDN BHD (DBS VICKERS SECS 6,875, (S) PTE LTD FOR CHRISTIAN KWOK-LEUN YAU HEILESEN) 4 RHB NOMINEES (ASING) SDN BHD (RHB SECURITIES SINGAPORE 5,775, PTE LTD FOR LILYANTI RUSLI) 5 TEOH HIN HENG 4,959, AFFIN HWANG NOMINEES (ASING) SDN BHD (DBS VICKERS SECS 3,875, (S) PTE LTD FOR SIU HIU KI JAMIE) 7 JF APEX NOMINEES TEMPATAN SDN BHD (PLEDGED SECURITIES 3,584, ACCOUNT FOR OOI SIEW LOOI) 8 LEE MEE LEE HONG MOOI 3,500, ENCIK MOHD FARID BIN OTHMAN 3,000, AFFIN HWANG NOMINEES (ASING) SDN BHD (DBS VICKERS SECS 3,000, (S) PTE LTD FOR HENRICK-HANG YAU HEILESEN) 11 TAN WEE JEN 2,170, LOW CHUN CHAI 2,049, CHEAH LAI PENG 2,000, CIMSEC NOMINEES (ASING) SDN BHD (EXEMPT AN FOR CIMB 1,920, SECURITIES (SINGAPORE) PTE LTD 15 PUBLIC NOMINEES (TEMPATAN) SDN BHD (PLEDGED SECURITIES 1,750, ACCOUNT FOR SEONG YIN FATT) 16 KONG CHEE SENG 1,600, LIM BOON SENG 1,500, TAN TJIN MING 1,500, PUBLIC NOMINEES (TEMPATAN) SDN BHD (PLEDGED SECURITIES 1,417, ACCOUNT FOR KONG SAN KONG SUN PING) 20 LOW MEE FONG 1,320, LIM KIAN LEONG 1,300, MAYBANK SECURITIES NOMINEES (TEMPATAN) SDN BHD 1,150, (PLEDGED SECURITIES ACCOUNT FOR LIM HSIU YEN) 23 CHIENG YU CHAI 1,107, LYE MING ZH 1,100, CHAN LIANG MENG 1,100, MAYBANK NOMINEES (TEMPATAN) SDN BHD (ONG KEH AUN) 1,100, TAN TUAN HONG 1,100, KOEK TIANG KUNG 1,036, KUAR LEONG CHEE 1,000, TAN SING TIAM 1,000,

79 NOTICE IS HEREBY GIVEN THAT the Twelfth (12th) Annual General Meeting (AGM) of G Neptune Berhad (Formerly known as GPRO Technologies Berhad) ( GNB or the Company ) will be held at Hotel Sri Petaling, 30, Jalan Radin Anum, Bandar Baru Sri Petaling, Kuala Lumpur, Wilayah Persekutuan on Friday, 26 June 2015 at a.m. for the purpose of transacting the following businesses :- A G E N D A 1. To receive the Audited Financial Statements of the Company for the financial year ended 31 December 2014 together with the Directors and Auditors reports thereon. Please refer to Note A 2. To approve the payment of Directors remuneration for the financial year ended 31 December Resolution 1 3. To re-elect Mr. Tansri Singadju Benui who retires in accordance with Article 84 of the Company s Articles of Association and being eligible, offers himself for re-election. Resolution 2 4. To re-appoint Messrs SJ Grant Thornton as Auditors of the Company and to authorize the Directors to fix their remuneration. Resolution 3 As Special Business To consider and if thought fit, to pass the following resolutions with or without any modifications:- 5. ORDINARY RESOLUTION: AUTHORITY TO ALLOT AND ISSUE SHARES PURSUANT TO SECTION 132D OF THE COMPANIES ACT THAT pursuant to Section 132D of the Companies Act 1965 and subject to the approvals of the relevant governmental and/or regulatory authorities, the Directors be and are hereby empowered to issue shares in the Company from time to time and 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 issued pursuant to this resolution does not exceed ten (10) per cent of the issued share capital of the Company for the time being, AND THAT the Directors be and are also hereby empowered to obtain the approval from the Bursa Malaysia Securities Berhad for the listing and quotation of the additional shares so issued AND THAT such authority shall continue in force until the conclusion of the next Annual General Meeting of the Company. Resolution 4 6. To transact any other business which may properly be transacted at an Annual General Meeting for which due notice shall have been given. By Order of the Board LEONG SUE CHING Company Secretary (MAICSA ) Kuala Lumpur, Wilayah Persekutuan 27 May

80 Notes:- A. This Agenda item is meant for discussion only as the provision in the Company s Articles of Association do not require a formal approval of the shareholders and hence, is not put forward for voting. 1. A member of the Company who is entitled to attend and vote at this Meeting is entitled to appoint a proxy to attend and vote on a show of hands or on a poll in his/her stead. A proxy may but need not be a member of the Company and Section 149(1) (a) & (b) of the Act shall not apply. 2. In the case of a corporate member, the instrument appointing a proxy shall be either under its Common Seal or signed by its attorney or by an officer of the corporation duly authorized in that behalf. 3. A member may appoint more than two (2) proxies to attend the same meeting provided that he/she specifies the proportions of his/her shareholding to be represented by each proxy. 4. When a member of a Company is an authorized nominee as defined under the Central Depositories Act, it may appoint at least one (1) proxy in respect of each securities account it holds with ordinary shares of the Company standing to the credit of the said securities account. 5. The Form of Proxy must be deposited at the Registered Office of the Company at No. 9A, Jalan Medan Tuanku, Medan Tuanku, Kuala Lumpur, Wilayah Persekutuan not less than 48 hours before the time appointed for holding the meeting or any adjournment thereof. 6. For the purpose of determining who shall be entitled to attend the meeting, the Company shall be requesting Bursa Malaysia Depository Sdn Bhd to make available to the Company pursuant to Article 58 of the Articles of Association of the Company and Rule 7.16(2) of the Ace Market Listing Requirements of Bursa Malaysia Securities Berhad, a Record of Depositors as at 22 June 2015 and only Depositors whose names appear on such Record of Depositors shall be entitled to attend the meeting. 79

81 Explanatory Notes on Special Business: Ordinary Resolution 4 The proposed Resolution 4 is to seek for a renewal of the general authority pursuant to Section 132D of the Companies Act, 1965, if duly passed, is primarily to give flexibility to the Board of Directors from the date of the above meeting to issue and allot shares at any time in their absolute discretion and for such purposes as they consider would be in the interest of the Company without convening a general meeting. This authority, unless revoked or varied at a general meeting, will expire at the next annual general meeting of the Company. The Company continues to consider opportunities to broaden its earnings potential. If any of the expansion/diversification proposals involves the issue of new shares, the Directors, under certain circumstance when the opportunity arises, would have to convene a general meeting to approve the issue of new shares even though the number involved may be less than 10% of the issue capital. In order to avoid any delay and costs involved in convening a general meeting to approve such issue of shares, it is thus considered appropriate that the Directors be empowered to issue shares in the Company, up to any amount not exceeding in total 10% of the issued share capital of the Company for the time being, for such purposes. The renewed authority for allotment of shares will provide flexibility to the Company for the allotment of shares for the purpose of funding future investment, working capital and/or acquisitions. The Company had on 28 February 2014 issued 13,750,000 new Ordinary Shares of 0.03 each through the exercise of the Employees Share Option Scheme ( ESOS ) pursuant to the mandate granted to the Directors at the last Annual General Meeting held on 30 June

82 No. of ordinary shares held FO OF PROXY (please refer to the notes below) I/We I.C No./Co. No./CDS No.: (Full name in block letters) of (Full address) being a member/members of G NEPTUNE BERHAD (formerly known as GPRO TECHNOLOGIES BERHAD) hereby appoint the following person(s):- 1. Name of proxy, NRIC No. & Address No. of shares to be represented by proxy 2. or failing *him/her, *the Chairman of the Meeting as *my/our proxy to vote for *me/us on *my/our behalf at the Twelfth Annual General Meeting of the Company to be held at Hotel Sri Petaling, 30, Jalan Radin Anum, Bandar Baru Sri Petaling, Kuala Lumpur on Friday, 26 June 2015 at a.m. *My/our proxy/proxies *is/are to vote as indicated below:- FIRST PROXY SECOND PROXY For Against For Against Ordinary Resolution 1 Ordinary Resolution 2 Ordinary Resolution 3 Ordinary Resolution 4 (Please indicate with a or X in the space provided how you wish your vote to be cast. If no instruction as to voting is given, the proxy/proxies may vote or abstain from voting at his/her/their discretion. The first named proxy shall be entitled to vote on a show of hands.) * Delete where applicable. Dated this..... day of Signature/Common Seal Notes:- 1. A member of the Company who is entitled to attend and vote at this Meeting is entitled to appoint a proxy to attend and vote on a show of hands or on a poll in his/her stead. A proxy may but need not be a member of the Company and Section 149(1) (a) & (b) of the Act shall not apply. 2. In the case of a corporate member, the instrument appointing a proxy shall be either under its Common Seal or signed by its attorney or by an officer of the corporation duly authorized in that behalf. 3. A member may appoint more than two (2) proxies to attend the same meeting provided that he/she specifies the proportions of his/her shareholding to be represented by each proxy. 4. When a member of a Company is an authorized nominee as defined under the Central Depositories Act, it may appoint at least one proxy in respect of each securities account it holds with ordinary shares of the Company standing to the credit of the said securities account. 5. The Form of Proxy must be deposited at the Registered Office of the Company at No. 9-A, Jalan Medan Tuanku, Medan Tuanku, Kuala Lumpur, Wilayah Persekutuan not less than 48 hours before the time appointed for holding the meeting or any adjournment thereof. 6. For the purpose of determining who shall be entitled to attend the meeting, the Company shall be requesting Bursa Malaysia Depository Sdn Bhd to make available to the Company pursuant to Article 58 of the Articles of Association of the Company and Rule 7.16(2) of the Ace Market Listing Requirements of Bursa Malaysia Securities Berhad, a Record of Depositors as at 22 June 2015 and only Depositors whose names appear on such Record of Depositors shall be entitled to attend the meeting. 81

83 Fold this flap for sealing Then fold here The Company Secretary G Neptune Berhad ( D) No. 9A, Jalan Medan Tuanku Medan Tuanku Kuala Lumpur Wilayah Persekutuan Malaysia Affix Postage Stamp here First fold here 82

84 83