Contents. Financial Statements. Chairman s Statement. Notice of. Highlights Corporate Information. Annual General Meeting

Transcription

1 ANNUAL REPORT 09

2 2 Chairman s Statement 19 Financial Statements 4 Highlights 2009 Corporate Information 6 Notice of 56 Annual General Meeting Contents Chairman s Statement 2 Highlights Corporate Information 6 Corporate Structure 7 Profile of Directors 8 Corporate Governance Statement 10 Statement of Internal Control 14 Audit Committee Report 15 Other Disclosures 18 Financial Statements 19 Analysis of Shareholdings 54 List of Thirty Largest Shareholders 55 Notice of Annual General Meeting 56 Electronic Dividend Payment 58 Proxy Form 59

3 Chairman s Statement For the FYE 31 December 2009, the Group recorded a loss of RM5.1 million. The revenue generated was a mere RM1.4 million. This is principally attributed to the unfavorable business environment amidst a severe global economic turmoil. Results/Performance It is obvious from the financial numbers that GPRO fared poorly in year For the FYE 31 December 2009, the Group recorded a loss of RM5.1 million. The revenue generated was a mere RM1.4 million. This is principally attributed to the unfavorable business environment amidst a severe global economic turmoil. Losses would have been much higher if the overheads had not been significantly reduced earlier. On the Balance Sheet, the Group has close to zero borrowing. The rather high inventories due to over optimistic sales projections earlier are expected to bring in the necessary cash when the market recovers. Prospects The Textile and Apparel (T&A) industry is recovering from the economic downturn. Optimism among T&A players is increasing. The Group expects to generate higher revenue in year GPRO plans to focus sales and marketing efforts in China, Vietnam, Indonesia, India, Pakistan and Bangladesh for the year China s total textile and apparel exports were more than US$150 billion for year Indian textile and apparel industry targets to achieve sales of US$115 billion by year GPRO is totally committed to its business focus on T&A industry. Moving forward, the Group is adopting a new mission Always, Better Tool, Better Method, Towards Better Life for the T&A industry worldwide. GPRO will continue with its tradition of designing, developing and delivering innovative tools and methods to improve productivity, efficiency and effectiveness of production and management in the T&A industry. Directly or indirectly, the Group aims to make life better for people who work in the industry, where more than thirty-four (34) million people are employed in the T&A industry in Asia alone. Already, the GPRO brand of products such as RFID-SDT (Shop Floor Data Tracking System), IEES (Industrial Engineering Execution System), PSM (Proactive Scheduling and Monitoring System) are making inroads into the regional market and gaining recognition among the top apparel manufacturers. An entirely new product called LEAN Mover, which is a revolutionary automated material handling system employing robotic technology, will make its debut later this year. The Group expects LEAN Mover to contribute to its revenue for year 2010 onwards. The Group is optimistic of its long term prospect in the T&A industry. 2 GPRO Technologies Bhd D

4 CHAIRMAN S STATEMENT (CONTINUED) Acknowledgements I would like to thank my Board of Directors for their guidance and encouragement. I thank the management team and all staff within the Group for their dedication and commitment in working together in a very challenging time. Our valued clients, suppliers, professional colleagues and business partners, thank you for your collaboration, cooperation and support. My appreciation also goes to our shareholders which number around 2,000. Thank you for keeping faith with GPRO and supporting us in our aspirations. Together let us make a difference to the T&A industry worldwide; making life better for them who work in this industry. To this mission, GPRO is committed. Always, Better Tool, Better Method, Towards Better Life I thank God for His grace and providence; and I pray for His favour to be upon GPRO. TANG TIONG SENG Chairman GPRO Technologies Berhad D GPRO Technologies Bhd D 3

5 HIGHLIGHTS TECHNOLOGY UNIVERSITY ADDS IEES TO COURSES At the University of Technology, Ho Chi Minh City, Vietnam (HCMC UT), lecturers and students were so impressed after visiting a successful apparel factory with IEES, they integrated IEES as an option for new students in its garment technology and production course. In September 2009, with university support, GPRO consultants completed a series of IEES practitioner workshops for students and staff from The Department of Textile and Garment Technology. Smart Manufacturing RESEARCH In November 2009, GPRO pledged to support agile manufacturing research conducted at the Hong Kong Research Institute of Textiles and Apparel (HKRITA). The project is investigating smart agile manufacturing in the apparel supply chain. The project, Development of a Smart Process Flow Management Expert System for Agile Manufacturing of Apparel Supply Chain, will be conducted at the Hong Kong Polytechnic University, by the Institute of Textiles and Clothing. This collaboration between GPRO and PolyU will benefit the clothing manufacturing sector. recognition In March 2010, GPRO received the Certificate of Excellence for its entry into the Malaysia Industry Excellence Awards The annual event, organized by the Malaysian Ministry of Trade and Export, recognizes Malaysian companies for their pursuit of continuous excellence in developing Malaysian trade of products and services locally and internationally. 4 GPRO Technologies Bhd D

6 2009 GPRO IN Trade AND EXPORT publication GPRO gained international exposure for its solutions and services, when it was published in the fourth issue of What s New Malaysia, a publication by the Malaysian External Trade Development Corporation (MATRADE). It will be distributed by MATRADE at major international trade exhibitions in Asia, Europe, Middle East and be on display in its international offices. The brand In April 2010, GPRO was successfully shortlisted to embark on a series of exclusive brand strategy development workshops throughout 2010, by the Malaysian Development Corporation (MDeC). Exclusively for founders and decision makers, in a six month long series of coaching sessions with experienced brand consultants, they will learn to define their brands, values and vision, with the aim to multiply market value. The workshops will help GPRO establish long term strategies and the GPRO brand name in a competitive global market. GPRO Technologies Bhd D 5

7 Corporate Information Board of directors Tang Tiong Seng Executive Chairman Dato Professor Ar. Dr. Ilias Bin Salleh Independent Non-Executive Director Abu Salihu Hj. Mohamed Shariff Independent Non-Executive Director Wong Khai Meng Independent Non-Executive Director Audit committee Dato Professor Ar. Dr. Ilias Bin Salleh Chairman Independent Non-Executive Director Abu Salihu Hj. Mohamed Shariff Independent Non-Executive Director Wong Khai Meng Independent Non-Executive Director Company secretaries Lim Seck Wah (MAICSA NO.: ) M. Chandrasegaran A/L S. Murugasu (MAICSA NO.: ) Share Registrar Mega Corporate Services Sdn. Bhd. Level 15-2, Faber Imperial Court Jalan Sultan Ismail Kuala Lumpur Telephone : Facsimile : Auditors Messrs SJ Grant Thornton Level 11, Faber Imperial Court Jalan Sultan Ismail Kuala Lumpur Telephone : Facsimile : Stock exchange listing ACE market of Bursa Malaysia Securities Berhad GPRO Stock Code: 0045 Principal Bankers CIMB Bank Berhad Hong Leong Bank Berhad OCBC Bank (Malaysia) Berhad registered office Jalan Tujuh Taman Delima Kluang Johor Darul Takzim Malaysia Telephone : Facsimile : Website: 6 GPRO Technologies Bhd D

8 Corporate Structure as at 30 April 2010 GPRO Technologies Bhd D 7

9 tang tiong seng Executive Chairman Malaysian Citizen, Age 57 years Dato Professor AR. Dr. Ilias Bin salleh (Dato Elias Salleh) Independent Non-Executive Director Chairman of the Audit Committee Malaysian citizen, Age 62 years Tang Tiong Seng was appointed to the Board of GPRO Technologies Berhad on 6 April He started his entrepreneurial career in He graduated from the University of Malaya with a Bachelors of Science (Honours) Degree and Diploma of Education. He has more than fifteen (15) years of experience in the IT industry. Passionate about innovation, he is ambitious to transform shop floor management in apparel manufacturing. He does not hold directorships in other public companies. He is not a member of any board committee. Dato Elias Salleh was appointed to the Board of GPRO Technologies Berhad on 6 April He is the Chairman of the Audit Committee. He holds a professional Diploma in Architecture and PhD from universities in UK, and a Masters degree in Building Science from the University of Sydney. He is a professional architect who has served in various capacities in local public universities over the last thirty-seven (37) years. He had served Universiti Teknologi Malaysia (UTM) since 1973, before being seconded to Universiti Utara Malaysia (UUM) in At UTM, he had held positions of Head of Department, Deputy Dean and Dean of the Faculty of Built Environment. Subsequently, he was entrusted with the establishment and operations of the Bureau of Innovation and Consultancy and Uni-Technologies Sdn. Bhd. (a company wholly-owned by UTM) as well as the development of the Technovation Park UTM. All three (3) entities formed part of UTM s effort to foster university-industry linkages in technological innovations and commercialisation. In 1999, he was seconded to Universiti Utara Malaysia (UUM) as the Deputy Vice-Chancellor for Development. His last position in UUM before retirement in 2003 was as Deputy Vice-Chancellor for Academic Affairs. He was also instrumental in the establishment of Uniutama Management Sdn. Bhd., the universityowned company of UUM. He joined Universiti Putra Malaysia (UPM) in 2003 to assist in the development of its architectural programmes. He does not hold any directorships in other public companies. PROFILE OF DIRECTORS 8 GPRO Technologies Bhd D

10 Profile of directors ABU SALIHU HJ. MOHAMED SHARIFF Independent Non-Executive Director Member of the Audit Committee Malaysian citizen, Age 63 years Wong Khai Meng Independent Non-Executive Director Member of the Audit Committee Malaysian citizen, Age 32 years Abu Salihu was appointed to the Board of GPRO Technologies Berhad on 6 April He is a member of the Audit Committee. He graduated in Economics, Business and Administration from University of Malaya at degree and post-graduate levels. He obtained his Master of Management from the Asian Institute of Management and completed advanced management training at universities in UK and USA. He has over thirty-four (34) years of work experience in consultancy, public and private sectors and international organizations. At the Ministry of Finance, he has headed the Banking, Capital Markets and Multilateral Banks Section ( ) and retired as Director of the Treasury Housing Loans Division in He has served on the Boards of various MOF Inc. companies including Bank Pembangunan & Infrastruktur Malaysia Bhd, Malaysian Airlines System Bhd and public enterprises like Port Authorities, Utilities, Dewan Bandaraya Kuala Lumpur (DBKL) and Sarawak Economic Development Corporation (SEDC). He has also been a director in PNB controlled companies in the finance and property sectors. He was on the Court of University of Malaya and a council member of the Malaysian Institute of Management. He was an Executive Director for Malaysia, Indonesia, Brunei, and Suriname (South America) at the Islamic Development Bank (Jeddah, Saudi Arabia) ( ). Wong Khai Meng was appointed to the Board of GPRO Technologies Berhad on 14 August He obtained his Bachelor s Degree (Second Class Upper) in Accounting and Finance from University of Manchester, United Kingdom. He is a member of the Audit Committee. He is currently a Director and Chief Operating Officer (COO) with Cheng & Co. Chartered Accountants, a firm specializing in audit, taxation and other business professional services with eleven (11) offices in Malaysia and overseas. Prior to joining Cheng & Co., Mr Wong was an Assistant Finance Manager with Jaymuda Group from 2002 to He also acted as a marketing consultant to various companies. Mr Wong started his career with Commerce Trust Berhad as a Business Development and Marketing Officer. He does not hold any directorships in other public companies. He does not hold any directorships in other public companies. Note: All Directors have no conflict of interest with the Company and have no family relationship with any other Director and/or major shareholder of the Company. All Directors have not been convicted for any offences within the past ten years other than traffic offences. GPRO Technologies Bhd D 9

11 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 backgrounds 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 four (4) Meetings held during the financial year and the attendance record is as follows: Tang Tiong Seng 4/4 Dato Professor Ar. Dr. Ilias Bin Salleh 2/4 Abu Salihu Hj. Mohamed Shariff 4/4 Wong Khai Meng 2/2 (Appointed on 14 August 2009) Amiruddin Bin Azahar 2/4 (Resigned on 23 February 2010) Quek Kar Loon 3/3 (Resigned on 13 November 2009) Quek Kar Piaw 0/2 (Retired on 17 June 2009) Board Balance The Board comprises of an Executive Chairman and three (3) independent non-executive Directors. The current Board composition complies with the Listing Requirements of the Bursa Malaysia Securities Berhad for the ACE Market. The Board has within it, professionals drawn from various backgrounds; 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 8 to 9. The Board constitutes 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 Chief Executive Officer/Managing 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. 10 GPRO Technologies Bhd D

12 CORPORATE GOVERNANCE STATEMENT (CONTINUED) A. Directors (Continued) Appointments to the Board Even though no Nomination Committee has been established, the Board discharged the following responsibilities: (i) (ii) reviewed the effectiveness of the Audit Committee and the Board as a whole and the contribution of each Director; and reviewed the required mix of skills, experience and other qualities of Non-Executive Directors. Re-election of Directors In accordance with the Company s Articles of Association, one-third (1/3) of the Directors, shall retire from office, at least once in three (3) years. Retiring directors can offer themselves for re-election. Directors who are appointed by the Board during the financial year are subject to re-election by shareholders at the next Annual General Meeting held following their appointments. Directors over seventy (70) years of age are required to submit themselves for re-appointment annually in accordance with Section 129(6) of the Companies Act, For the forthcoming Annual General Meeting, the Director, Tang Tiong Seng will retire by rotation in accordance with Article 103(a) of the Company s Articles of Association and being eligible, has offered himself for re-election. The independent non-executive Director, Wong Khai Meng will retire by rotation in accordance with Article 84 of the Company s Articles of Association and being eligible, has offered himself for re-election. B. 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 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 nonexecutive concerned. Procedure The determination of the remuneration of the non-executive Directors is a matter for the Board as a whole with the Director concerned abstaining from deliberations and voting on decisions in respect of his individual remuneration. Disclosure The aggregate Directors remuneration for the financial year ended 31 December 2009 are set out below: Salaries & Allowance RM Benefits In Kind RM Directors Fees RM Bonuses RM Total RM Executive Directors - 248, ,608 Non-Executive Directors 68, ,000 Total 68, , ,608 GPRO Technologies Bhd D 11

13 CORPORATE GOVERNANCE STATEMENT (CONTINUED) B. Directors Remuneration (Continued) The number of Directors whose remuneration fall into the following bands are as follows: C. D. Range of Remuneration (RM) Executive Non-Executive Total 50,000 and below , , , , , , 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 Annual General Meeting The Annual General Meetings (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. Accountability and Audit 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 Management s Discussion in the Annual Report. In preparing the above Financial Statements, the directors have: adopted suitable accounting policies and then applied 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. Internal Control The Board of Directors has 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. 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. 12 GPRO Technologies Bhd D

14 CORPORATE GOVERNANCE STATEMENT (CONTINUED) E. 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 2009, the Group has used appropriate accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent. The Directors also consider that all applicable approved accounting standards have been followed and confirm that the financial statements have 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. F. Directors Training Description of the type of training attended by the Director for the financial year ended 31 December 2009 are as follows: Tang Tiong Seng Securities Commission/Malaysian Institute of Accountants Seminar on Financial Reporting in Turbulent Times Multimedia Development Corporation s Intellectual Property Management Seminar Mode Seminar Seminar No. of Hours/Days 4 hours 4 hours Abu Salihu Hj. Mohamed Shariff Securities Commission/Malaysian Institute of Accountants Seminar on Financial Reporting in Turbulent Times Seminar 4 hours Wong Khai Meng International Affiliations (Practitioners) Showcase Expand Your Business Horizons - Add Value to Your Current Range of Services Breakfast Talk On Improving Business Performance Through M&A Financial Statement Fraud, Prevention And Detection Effective Regulation & Sustainable Operation - The Public Practice Forum NAfMA Breakfast Talk Seminar Seminar Seminar Seminar Seminar Seminar 3 hours 8 hours 3 hours 2 hours 8 hours 2 hours All current Directors have attended and successfully completed the Mandatory Accreditation Programme conducted by Bursatra Sdn. Bhd. The Director who was unable to attend any formal training in year 2009 had a fully committed work schedule. However, he will continue to undergo other relevant training programmes to keep abreast with new regulatory developments and requirements in compliance with Bursa Malaysia Listing Requirements on Continuing Education. Throughout the year, the Directors also received updates and briefings, particularly on regulatory, industry and legal developments, including information and significant changes in business risks and procedures instituted to mitigate such risks. G. Compliance Statement The group has complied with the principles and best practices as set out in part 1 and 2 respectively of the Code except for the establishment of Remuneration and Nomination Committees. GPRO Technologies Bhd D 13

15 Statement of Internal Control Responsibility The Board has overall responsibility for the Group s system of internal controls and for reviewing its effectiveness whilst the role of management is to implement the Board s policies on risk and control. The system of internal controls is designed to manage rather than eliminate the risk of failure to achieve business objectives. In pursuing these objectives, internal controls can only provide reasonable and not absolute assurance against material misstatement or loss. Key Processes 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 Group s internal audit function was performed by an independent party for most of the financial year and subsequently undertaken internally in the last quarter. Both parties assist the Audit Committee as well as the Board of Directors in discharging their responsibilities by providing independent, objective assurance and advisory services that add value and improve the operations by: ensuring existence of processes to monitor the effectiveness and efficiency of operations and the achievement of business objectives; ensuring adequacy and effectiveness of internal control systems for safeguarding of assets and providing consistent, accurate financial and operational data; promoting risk awareness and the value and nature of an effective internal control system; ensuring compliance with laws, regulations, corporate policies and procedures; and assisting management in accomplishing its objectives by adopting a systematic and disciplined audit approach to evaluating and improving the effectiveness of risk management, control and governance processes within the companies operations. The internal audit function has focused on high priority activities determined by risk assessment and in accordance with the audit-planning memorandum approved by the Audit Committee. Please refer to the Audit Committee Report as set out on pages 15 to 17. Internal Control System 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; The Company was accredited CMMI for its product development department. Documented internal procedures and standard operating procedures have been put in place and surveillance audits are conducted twice a year to ensure that the system is adequately implemented; 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 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. 14 GPRO Technologies Bhd D

16 Audit Committee Report COMPOSITION AND DESIGNATION OF AUDIT COMMITTEE Dato Professor Ar. Dr. Ilias Bin Salleh (Independent Non-Executive Director) - Chairman Abu Salihu Hj. Mohamed Shariff (Independent Non-Executive Director) Wong Khai Meng (Independent Non-Executive Director) TERMS OF REFERENCE OF THE AUDIT COMMITTEE Constitution The Audit Committee was formed pursuant to a resolution passed by the Board of Directors on 14 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 members 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: A member of the Malaysian Institute of Accountants, or If he is not a member of the Malaysian Institute of Accountants, he must have at least three (3) years working experience and; either (i) he must have passed the examination specified in Part I of the 1st Schedule of the Accountants Act, 1967; or (ii) he must be a member of one of the associations of accountants specified in Part II of the 1st Schedule of the Accountants Act, 1967; Fulfill such other requirements as prescribed or approved by the Exchange. 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 four (4) Audit Committee meetings held during the financial year ended 31 December 2009 and the attendance record is as follows: Name Meetings attended Dato Professor Ar. Dr. Ilias Bin Salleh 2/4 Abu Salihu Hj. Mohamed Shariff 4/4 Wong Khai Meng (Appointed on 14 August 2009) 2/2 GPRO Technologies Bhd D 15

17 AUDIT COMMITTEE REPORT (CONTINUED) Terms of Reference of the Audit Committee (CONTINUED) 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); to review the quarterly interim results, half-yearly, 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 the 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. 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. 16 GPRO Technologies Bhd D

18 AUDIT COMMITTEE REPORT (CONTINUED) Terms of Reference of the Audit Committee (CONTINUED) 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 2009 in the discharge of its functions and duties: 1. Reviewed the Risk Base Audit for the year ended 31 December 2009 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 and annual 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) of the Group was performed by an independent party for most of the year and subsequently undertaken internally in the last quarter. During the financial year ended 31 December 2009, the internal audit 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 IAF 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 2009 was RM12,600. EMPLOYEES SHARE OPTION SCHEME (ESOS) The allocation of options was reviewed by the Audit Committee to ensure compliance with the allocation criteria determined by the Option Committee and in accordance with the By-Laws of the ESOS. GPRO Technologies Bhd D 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 subsidiary companies, directors or management by the relevant regulatory bodies during the financial year. NON-AUDIT FEES There were no non-audit fees paid or payable to the external auditors by the Company and its subsidiary companies during the financial year ended 31 December REVALUATION POLICY ON LANDED PROPERTIES The Company does not have a revaluation policy as the Company and its subsidiary companies do not have any landed properties. CORPORATE SOCIAL RESPONSIBILITIES The Company recognizes the importance of being a responsible corporate citizen and endeavours to discharge its corporate social responsibilities diligently in the best possible manner. To this extent, the Company has continued 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. Further to this, the Company also offers internship programmes to undergraduates from local colleges and universities so that they may gain relevant and valuable industrial experience in their respective field of studies. For the next financial year, the Company will plan and organize more CSR activities. 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. 18 GPRO Technologies Bhd D

20 Financial Statements Directors Report 20 Balance Sheets 24 Income Statements 25 Statements of Changes in Equity 26 Cash Flow Statements 27 Notes to the Financial Statements 29 Directors Statement & Statutory Declaration 52 Independent Auditors Report 53 GPRO Technologies Bhd D 19

21 Directors Report The Directors hereby submit their report together with the audited financial statements of the Group and of the Company for the financial year ended 31 December PRINCIPAL ACTIVITIES The principal activities of the Company consist of investment holding, research and development on information technology. The principal activities of its subsidiary companies are disclosed in Note 10 to the Financial Statements. There have been no significant changes in the nature of the activities of the Company and its subsidiary companies during the financial year. FINANCIAL RESULTS Group RM Company RM Net loss for the financial year 5,144,775 3,110,534 Attributable to: Equity holders of the Company 5,144,775 3,110,534 Minority Interests - - DIVIDENDS There were no dividends proposed, paid or declared by the Company since the end of the previous financial year. RESERVES AND PROVISIONS 5,144,775 3,110,534 There were no material transfers to or from reserves or provisions during the financial year except as disclosed in the Notes to the Financial Statements. SHARES AND DEBENTURES There were no shares or debentures issued during the financial year. EMPLOYEE SHARE OPTION SCHEME (ESOS) The Company s ESOS is governed by the by-laws which was approved by a members circular resolution dated 28 April The ESOS was implemented on 29 April 2004 and is to be in force for a financial period of 5 years from the date of implementation. During the financial year, extension for another 5 years from the expired date 28 April 2009 was approved by a directors circular resolution dated 24 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 options to eligible employees of the Group to subscribe for new ordinary shares of RM0.10 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; (c) 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; (d) 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 20 GPRO Technologies Bhd D

22 DIRECTORS REPORT (CONTINUED) EMPLOYEE SHARE OPTION SCHEME (ESOS) (Continued) 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 RM0.10; (e) The number of outstanding options 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 (f) 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. As at 31 December 2009, the options offered to take up unissued ordinary shares of RM0.10 each and the option prices are as follows: Number of options over ordinary shares of RM0.10 each Year of offer Option price At Granted Exercised Lapsed At RM0.40 3,994, ,994,100 INFORMATION ON THE FINANCIAL STATEMENTS 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 allowance for doubtful debts and satisfied themselves that all known bad debts had been written off and that adequate allowance 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) which would render the amounts written off for bad debts or the amount of the allowance 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 to 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 of the Company misleading or inappropriate. No contingent 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, in the opinion of the Directors, will or may affect the ability of the Group and of the Company to meet its obligations as and when they fall due. 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. GPRO Technologies Bhd D 21

23 DIRECTORS REPORT (continued) OTHER STATUTORY INFORMATION The Directors state that: At the date of this report, they are not aware of any circumstances not otherwise dealt with in this report or the financial statements which would render any amount stated in the financial statements misleading. In the opinion of the Directors: (a) (b) 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 except as disclosed in the Notes to the Financial Statements; or 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 the operations of the Group and of the Company for the current financial year in which this report is made. DIRECTORS The Directors in office since the date of the last report are: YBhg Dato Professor Dr. Ilias bin Salleh Tang Tiong Seng Abu Salihu Hj Mohamed Shariff Wong Khai Meng (Appointed on 14 August 2009) Amiruddin bin Azahar (Resigned on 23 February 2010) Quek Kar Loon (Resigned on 13 November 2009) Koh Soo Eng (Resigned on 15 May 2009) Quek Kar Piaw (Retired on 17 June 2009) Norazharuddin bin Abu Talib (Resigned on 24 February 2009) According to the Register of Directors Shareholdings, the interests of Directors in office at end of the financial year in shares of the Company and its related corporations were as follows: Interest in the Company Ordinary shares of RM0.10 each At Bought Sold At Direct Interest Tang Tiong Seng 5,737, ,737,628 Deemed Interest Tang Tiong Seng * 70,788, ,788,028 Abu Salihu A/L Mohamed Shariff ** 50, ,000 Number of options over ordinary shares of RM0.10 each At Granted Exercised At Tang Tiong Seng 1,000, ,000,000 * Deemed interest by virtue of having substantial interest in Vital Research Sdn. Bhd. and the shareholding of his spouse in the Company. ** Deemed interest by virtue of his spouse s shareholding in the Company. 22 GPRO Technologies Bhd D

24 DIRECTORS REPORT (CONTINUED) DIRECTORS (Continued) By virtue of the Directors interests in the shares of the Company, Directors having interest in the shares of the Company are also deemed interested in the shares of its related corporations to the extent that the Company has an interest under Section 6A of the Companies Act, No other Directors at the end of the financial year held interest in shares of the Company and its related corporations during the financial year. DIRECTORS BENEFITS During and at the end of the financial year, no arrangements subsisted to which the Company is a party, with the object or objects of enabling Directors of the Company to acquire benefits by means of the acquisition of shares in or debentures of the Company or any other body corporate, other than the share options granted pursuant to the ESOS 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 the Notes 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. 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 dated 26 April ) WONG KHAI MENG ) ) ) ) ) DIRECTORS ) ) )... ) TANG TIONG SENG ) Kuala Lumpur 26 April 2010 GPRO Technologies Bhd D 23

25 Balance Sheets as at 31 December 2009 Group Company Note RM RM RM RM SHARE CAPITAL 5 25,000,000 25,000,000 25,000,000 25,000,000 SHARE PREMIUM 17,381,943 17,381,943 17,381,943 17,381,943 EXCHANGE TRANSLATION RESERVE 6 39,489 41, ACCUMULATED LOSSES (29,467,625) (24,322,850) (14,711,087) (11,600,553) Shareholders equity 12,953,807 18,100,211 27,670,856 30,781,390 NON CURRENT LIABILITY Finance lease payables 7-17, ,953,807 18,117,744 27,670,856 30,781,390 NON CURRENT ASSETS PROPERTY, PLANT AND EQUIPMENT 8 486, , , ,266 DEVELOPMENT EXPENDITURE 9 8,923,717 10,830,431 8,563,881 10,380,636 INVESTMENT IN SUBSIDIARY COMPANIES ,550,003 14,550,003 TOTAL NON-CURRENT ASSETS 9,410,464 11,513,147 23,561,473 25,481,905 CURRENT ASSETS Inventories 11 3,937,882 4,214,835 2,931,549 3,135,331 Trade receivables 12 1,220,501 3,643, ,795 1,165,290 Other receivables, deposits and prepayments 1,176,786 1,516, , ,333 Amount due from subsidiary companies ,290,878 2,666,151 Tax recoverable 57,218 44,362 38,870 30,396 Fixed deposits with licensed banks 14-1,090,824-1,090,824 Cash and bank balances 30, ,783 17,048 12,129 Total current assets 6,422,696 10,674,675 6,631,101 8,851,454 LESS : CURRENT LIABILITIES Trade payables , ,972 75, ,745 Other payables and accruals 16 2,155,701 1,605,181 1,846,864 1,366,532 Amount due to Directors , , , ,776 Finance lease payables 7 17,549 18, Short term borrowings ,131 1,263, ,131 1,263,916 Total current liabilities 2,879,353 4,070,078 2,521,718 3,551,969 NET CURRENT ASSETS 3,543,343 6,604,597 4,109,383 5,299,485 12,953,807 18,117,744 27,670,856 30,781,390 The accompanying notes form an integral part of the financial statements. 24 GPRO Technologies Bhd D