GPRO TECHNOLOGIES BERHAD ( D) ANNUAL REPORT 2011 CONTENTS CHAIRMAN S STATEMENT 1 CORPORATE INFORMATION 2 PROFILE OF DIRECTORS 4

Transcription

1

2 CONTENTS CHAIAN S STATEMENT 1 CORPORATE INFOATION 2 PROFILE OF DIRECTORS 4 CORPORATE GOVERNANCE STATEMENT 6 AUDIT COMMITTEE REPORT 11 STATEMENT ON INTERNAL CONTROL 14 OTHER DISCLOSURES 15 STATEMENT BY DIRECTORS & STATUTORY DECLARATION 17 DIRECTORS REPORT 18 INDEPENDENT AUDITORS REPORT 24 STATEMENTS OF FINANCIAL POSITION 26 STATEMENTS OF COMPREHENSIVE INCOME 27 STATEMENTS OF CHANGES IN EQUITY 28 STATEMENTS OF CASH FLOWS 29 NOTES TO THE FINANCIAL STATEMENTS 31 ANALYSIS OF SHAREHOLDINGS 71 LIST OF THIRTY LARGEST SHAREHOLDERS 72 NOTICE OF ANNUAL GENERAL MEETING 73 PROXY FO 78

3 CHAIAN'S STATEMENT Results/Performance After suffering consecutive losses for the last few years, I am pleased to announce that GPRO has managed to report a profit of515, for FYE 31st December The revenue also increased significantly to 5.9 million as compared to I.l million for FYE 31st December The improved performance to the Group was mainly attributed to continued sales and marketing efforts in the marketplace. The improved economic sentiment in the garment manufacturing sector has helped the Group generate more revenue. Another factor which contributed to the increase in revenue was that the Group has begun to monetize the intellectual property developed over the last years by sales to third parties. During the financial year, the Group has realized 3.2 million in revenues from intellectual property. The Group has been maintaining a low operating overhead during the year and has no bank borrowing. Prospects The economic sentiment in the garment manufacturing has turned more optimistic with an increase in global consumer spending on garment products. This is expected to continue to improve in 2012 and beyond. On the other hand, increasing competition among the garment manufacturers and retailers is driving profit margin down across the whole supply chain. This drives the garment manufacturers to look for ways to cut costs and improve productivity. The Group believes it is positioned well to take advantage of this trend moving forward. While the Group is in the business of providing innovative technologies and solutions to the garment manufacturing industry, the Group remains positive to new opportunities. The Group is optimistic of its future and long term prospects. Acknowledgements 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 support. Christian Kwok-Leun Yau Heilesen, Chairman 1

4 CORPORATE INFOATION BOARD OF DIRECTORS Christian Kwok-Leun Yau Heilesen Executive Chairman Tang Tiong Seng Executive Director Raymond Yip Wai Man Executive Director Abu Salihu NL Mohamed Shariff Independent Non-Executive Director Cheung Ming Chi Independent Non-Executive Director Lee Chee Cheng Independent Non-Executive Director AUDIT COMMITTEE Lee Chee Cheng Chairman Independent Non-Executive Director Abu Salihu NL Mohamed Shariff Member Independent Non-Executive Director Cheung Ming Chi Member Independent Non-Executive Director COMPANY SECRETARY Leong Sue Ching (MAICSA NO: ) 2

5 CORPORATE INFOATION (CONT'D) AUDITORS Messrs SJ Grant Thornton Level 11, Sheraton Imperial Court Jalan Sultan Ismail Kuala Lumpur Tel: Fax : REGISTERED OFFICE No. 9-D, Jalan Medan Tuanku Medan Tuanku Kuala Lumpur Wilayah Persekutuan Tel : Fax : Website: SHARE REGISTRAR Mega Corporate Services Sdn Bhd Level15-2, Bangunan Faber Imperial Court Jalan Sultan Ismail Kuala Lumpur Tel : Fax : STOCK EXCHANGE LISTING ACE market of Bursa Malaysia Securities Berhad Stock Name : GPRO Stock Code :

6 PROFILE OF DIRECTORS' CHRISTIAN KWOK-LEUN YAU HEILESEN Executive Chairman Danish Citizen, Age 27years Christian Kwok-Leun Yau Heilesen was appointed to the Board of GPRO Technologies Berhad on 14 October Mr. Heilesen is an Internet entrepreneur and founded an internet and mobile value added services company in August He discovered the potential of online business when he was working part-time after school in his hometown, Copenhagen, Denmark. In 1999, Mr. Heilesen started using his own network of high traffic websites to bring traffic to Fortune 500 advertisers through affiliate programs such as Commission Junction and Websponsors. After graduating from college in 2002, Mr. Heilesen decided to leave Copenhagen and to further develop his mobile and online business opportunities in Hong Kong. Mr. Heilesen has around ten years' experience in the mobile value added service business. He does not hold any directorship in other public companies. RAYMOND YIP WAI MAN Executive Director British (Overseas) Citizen. Age 41years Raymond Yip Wai Man was appointed to the Board of GPRO Technologies Berhad on 24 November He graduated from Memorial University of Newfoundland with a Bachelor Degree in Commerce and was also admitted by the Council of the University of New South Wales and the Senate of the University of Sydney with a Master's Degree in Business Administration. He is a member of the Institute of Chartered Accountants in Australia, the Certified General Accountant's Association of Canada and the Hong Kong Institute of Certified Public Accountants. Raymond Yip began his career with Ernst & Young and has over 14 years of experience in fmancial management. As an accountant by training, he was appointed as a Chief Financial Officer with a global marketer and distributor of mobile entertainment products and services for over six years and a Financial Controller with a multinational electronics manufacturing company in Hong Kong for over two years. He does not hold any directorship in other public companies. TANG TIONG SENG Executive Director Malaysian Citizen, Age 59years Tang Tiong Seng was appointed to the Board of GPRO Technologies Berhad on 6 April He started his entrepreneurial career in He graduated form the University of Malaya with a Bachelors of Science (Honours) Degree and Diploma of Education. He has more than seventeen (17) years of experience in IT industry. Passionate about innovation, he is ambitions to transform shop floor management in apparel manufacturing. He does not hold directorship in other public companies. He is not a member of any board committee. 4

7 ABU SALIHU NL MOHAMED SHARIFF Independent Non-Executive Director Member of the Audit Committee Malaysian Citizen, Age 65 years Abu Salihu was appointed to the Board of GPRO Technologies Berhad on 6 April 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) ( ). He does not hold any directorship in other public companies. LEE CHEE CHENG Independent Non-Executive.Director Chairman l!fthe Audit Committee Malaysian Citizen, Age 42years Lee Chee Cheng was appointed to the Board of GPRO Technologies Berhad on 16 January He obtained his professional qualification in Association of Chartered Certified Accountants, United Kingdom in 1997 and is currently a member of the Malaysian Institute of Accountants. He began his career with Kassim Chan & Co., one of the big four Public Accounting firms, in 1993 and has over 17 years of working experience in audit and commercial sectors specializing in retailing and Information Communication Technology industries in Malaysia. He holds directorship in Cybertowers Berhad. CHEUNG MING Cill Independent Non-Executive.Director Member of the Audit Committee Hong Kong SAR Citizen, Age 43years Cheung Ming Chi was appointed to the Board of GPRO Technologies Berhad on 13 December He is the founder of Buz Buz Limited, a leading computer retail chain that has been established for over 25 years in Hong Kong. Buz Buz Limited offers a full range of computer hardware and software products for retail and wholesale businesses in Hong Kong. He is an experienced marketer acting as the Vice Chairman of the Hong Kong Computer Association and committee member of Golden Computer Centre Owner Committee in Hong Kong. In addition to running his retailing business, he was also responsible for organizing, fund raising and promoting the famous IT festival in Hong Kong. He does not hold any directorship in other public companies. 5

8 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 TheBoard 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 four (4) Meetings held during the financial year and the attendance record is as follows:- Name of Director Meetings attended Christian Kwok-Leun Yau Heilesen (appointed on 14 October 2011) 1/1 Tang Tiong Seng 4/4 Dato' Professor Ar. Dr. Elias@ Ilias Bin Salleh (resigned on 3 4/4 January 2012) Abu Salihu AIL Mohamed Shariff 4/4 Raymond Yip Wai Man (appointed on 24 November 2011) *N/A Wong Khai Meng (resigned on 31 January 2012) 4/4 Cheung Ming Chi (appointed on 13 December 2011) *N/A Lee Chee Cheng (appointed on 16 January 2012) *N/A Not apphcable as appomted after the fourth and last Board Meeting for the year Board Balance The Board comprises of an Executive Chairman, an Executive director 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 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 is constituted 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. 6

9 A) Directors (continued) 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. Appointment 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 reelection. Directors who are appointed by the Board during the financial year are subject to reelection 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 Directors, Christian Kwok-Leun Yau Heilesen, Raymond Yip Wai Man, Cheung Ming Chi and Lee Chee Cheng will retire by rotation in accordance with Article 84 of the Company's Articles of Association and being eligible, has offered themselves for re-election. Encik Abu Salihu AIL Mohamed Shariff who will retire in accordance with Articles 103(a) of the Company's Articles of Association, has exgressed his intention not to seek for re-election. Hence, he will retain office until the close of the 9 AGM. 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 non-executive concerned. 7

10 B) Directors' Remuneration 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 ofhis individual remuneration. Disclosure The aggregate Directors' remuneration for the financial year ended 31 December 2011 are set out below:- Directors' fees Salaries & Allowance Bonuses Benefitsin-kind Total Executive Directors - 180, ,000 Non-Executive Directors 106,000* ,000 Total 106,000* 180, ,000 Inclustve of Dtrector's fee for financtal year 2009 and 2010 patd m arrears to a Dtrector. The number ofdirectors whose remuneration fall into the following bands are as follows:- Range of Remuneration () Executive Non-Executive Total 50,000 and below , ,000-1* 1 100, , , , , , C) Shareholders Dialogue with inl'estors 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 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. 8

11 D) 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 Chairman's Statement in the Annual Report. In preparing the above Financial Statements, the directors have: 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 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 independent external auditors fill an essential role for the shareholders by enhancing the reliability of the Group's Financial Statements and giving assurance ofthat 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. E) Directors' Responsibility Statement InRespect Of Financial Statements The Directors are required to prepare the financial statements for each fmancial 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 fmancial statements for the financial year ended 31 December 2011, 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 fmancial 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. 9

12 F) Directors' Training All Directors have attended the Mandatory Accreditation Programme (''MAP") as required by Bursa Securities. Description of the type of training attended by the Director for financial year ended 31 December 2011 are as follows:- Abu Salihu AIL Mohamed Shariff (1) Healthcare Management (22 January 2011) (2) Foreign Asset Investment (17 Apri/2011) (3) Islamic Development Banking (6 July 2011) (4) Investment Seminar (24 Sept 2011) Mode Seminar Seminar Seminar Seminar No. of Hours/Days 3 hrs 2 hrs 2 hrs 3 hrs Messrs Christian Kwok-Leun Yau Heilesen and Tang Tiong Seng had not attended any training during the financial period ended 31 December 2011 due to time constraint and tight work schedule. Mr Raymond Yip Wai Man, who was appointed to the Board on 24 November 2011, Mr Cheung Ming Chi (appointed on 13 December 2011) and Mr Lee Chee Cheng (appointed on 16 January 2012) will attend other relevant training programmes as appropriate to enhance their skills and knowledge. Throughout the year, the Directors also received updates and briefings, particularly on regulatory, industry and legal developments. 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. 10

13 AUDIT COMMITTEE REPORT COMPOSffiON AND DESIGNATION OF AUDIT COMMITIEE 1. Lee Chee Cheng (appointed on 16 January 2012)-Chairman, Independent Non Executive Director 2. Abu Salihu AIL Mohamed Shariff-Member, Independent Non-Executive Director 3. Cheung Ming Chi (appointed on 13 December 2011)-Member, Independent Non Executive Director 4. Dato' Professor Ar. Dr. Ilias Bin Salleh (resigned on 3 January 2012)-Chairman, Independent Non-Executive Director 5. Wong Khai Meng (resigned on 31 January 2012)-Member, 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 14dl 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: - 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 1" 1 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. 11

14 TES OF REFERENCE OF THE AUDIT COMMITTEE (CONTINUED) There were four (4) Audit Committee meetings held during the financial year ended 31 December 2011 and the attendance record is as follows:- Meetings attended Lee Chee Cheng (appointed on 16 January 2012) N/A* Abu Salihu AIL Mohamed Shariff 4/4 Cheung Ming Chi (appointed on 13 December 2011) N/A** Dato' Professor Ar. Dr. Ilias Bin Salleh (resigned on 3 January 2012) 4/4 Wong Khai Meng (resigned on 31 January 2012) 4/4 Not applicable as appointed after the financial period ended 31 December **Not applicable as appointed after the fourth and last Audit Committee Meeting. 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-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. 12

15 TES OF REFERENCE OF THE AUDIT COMMITTEE (CONTINUED) 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 2011 in the discharge of its functions and duties:- 1. Reviewed the Risk Base Audit for the year ended 31 December 2011 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) was undertaken internally. During the financial year ended 31 December 2011, 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 2011 was 7, EMPLOYEES SHARE OPTION SCHEME ( ESOS ) There was no option offered during the financial year ending 31 st December

16 STATEMENT OF INTERNAL CONTROL Responsibility The Board has overall responsibility for the Group's system of internal control 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 control 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 undertaken internally. The internal auditor 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 ofbusiness objectives; ensuring adequacy and effectiveness of internal control systems for safeguarding of assets, 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 11 to 13. 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

17 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 CONVERTffiLE 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 SANCTIONSI 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 were no non-audit fees paid or payable to the external auditors by the Company and its subsidiary companies during the financial year ended 31st December 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. 15

18 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. CORPORATE SOCIAL RESPONSffiiLITIES 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 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. Further to this, the Company also offers staff welfare benefits such as hostel and accommodation for outstation staff. Facilities for personal staff laundry have also been provided in the office for the convenience of all staff. For the next financial year, the Company will plan and organize more CSR activities. 16

19 STATEMENT BY DIRECTORS GPRO TECHNOLOGIES BERHAD ( D) STATUTORY DECLARATION 17

20 DIRECTORS REPORT 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 PRINCIPAL ACTIVITIES The principal activities of the Company consist of investment holding, research and development on information technology. The principal activities of its subsidiaries are disclosed in Note 6 to the Financial Statements. There have been no significant changes in the nature of the activities of the Company and its subsidiaries during the financial year. FINANCIAL RESULTS Group Company Profit for the financial year 515, ,365 Attributable to:- Owners of the parent 515,878 Non-controlling interest - 515,878 DIVIDENDS There were no dividends proposed, paid or declared by the Company since the end of the previous financial year. RESERVES AND PROVISIONS There were no material transfers to or from reserves or provisions during the financial year. 18

21 DIRECTORS The Directors in office since the date of the last report are:- Tang Tiong Seng Abu Salihu Hj Mohamed Shariff Christian Kwok-Leun Yau Heilesen (appointed on ) Raymond Yip Wai Man (appointed on ) Cheung Ming Chi (appointed on ) Lee Chee Cheng (appointed on ) YBhg Dato Professor Dr. Ilias bin Salleh (resigned on ) Wong Khai Meng (resigned on ) DIRECTORS INTERESTS According to the Register of Directors Shareholdings, the interests of Directors in office at the end of the financial year in shares of the Company and its related corporations were as follows:- Number of ordinary shares of 0.10 each At At Interest in the Company Bought Sold Direct interest Tang Tiong Seng 1,500,628-1,500, Christian Kwok-Leun Yau Heilesen - 62,226,200-62,226,200 Raymond Yip Wai Man - 12,091,900-12,091,900 Deemed interest Tang Tiong Seng (i) 50,128,028-49,819, ,028 Abu Salihu Hj Mohamed Shariff (ii) 50, ,000 (i) (ii) 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 shares held by spouse in the Company. Number of ESOS options over ordinary shares of 0.10 each At At Granted Exercised Lapsed Tang Tiong Seng 1,000, ,000,000 By virtue of Mr. Tang Tiong Seng, Christian Kwok-Leun Yau Heilesen and Raymond Yip Wai Man direct and indirect interest in the shares of the Company, they are also deemed to have interest in the shares of all the subsidiaries 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. Other than those disclosed above, the Directors at the end of the financial year did not hold any interest in shares and/or option over shares of the Company and its related corporations during the financial year. 19

22 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 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 Note 19 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 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. In the previous financial year, extension for another 5 years from the expired date of 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 0.10 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 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 0.10; 20

23 EMPLOYEE SHARE OPTION SCHEME ( ESOS ) (CONT D) The salient features of the ESOS are as follows (cont d):- (e) (f) 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 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 2011, the options offered to take up unissued ordinary shares of 0.10 each and the option prices are as follows:- Number of option over ordinary shares of 0.10 each Year Option At At of offer price Granted Exercised Lapsed ,994, ,994,100 OTHER STATUTORY INFOATION Before the Statements of Comprehensive Income and Statements of Financial Position 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 that 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) 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 to current assets in the financial statements of the Group and of the Company misleading; or 21

24 OTHER STATUTORY INFOATION (CONT D) At the date of this report, the Directors are not aware of any circumstances (cont d):- (c) (d) 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; 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, in the opinion of the Directors, 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 current financial year in which this report is made. 22

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 Board of Directors. CHRISTIAN KWOK-LEUN YAU HEILESEN TANG TIONG SENG ) ) ) ) ) ) ) ) ) DIRECTORS ) ) ) ) ) ) ) ) ) Kuala Lumpur 23 April

26 INDEPENDENT AUDITORS' REPORT INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF GPRO TECHNOLOGIES BERHAD (Incorporated in Malaysia) Company No: D Report on the Financial Statements We have audited the financial statements of GPRO Technologies Berhad, which comprise the statements of financial position of the Group and of the Company as at 31 December 2011, the statements of 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 notes as enumerated in Notes 1 to 29 and set out on pages 14 to 51. Directors ' Responsibility for the Financial Statements The Directors of the Company are responsible for the preparation of financial statements that give a true and fair view in accordance with Financial Reporting Standards and the Companies Act, 1965 in Malaysia, and 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 fmancial 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 give 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. Opinion In our opinion, the financial statements have been properly drawn up in accordance with Financial Reporting Standards and 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 2011 and of their financial performance and cash flows for the financial year then ended. 24

27 Company No: D Report on Other Legal and Regulatory Requirements Inaccordance with the requirements of the Companies Act, 1965 in Malaysia, we also report the following:- (a) (b) (c) (d) In our opinion, the accounting and other records and the registers required by the Act to be kept by the Company and its subsidiaries of which we have acted as auditors have been properly kept in accordance with the provisions of the Act We have considered the financial statements and the auditors' report of the subsidiaries of which we have not acted as auditors, as disclosed in Note 6 to the Financial Statements. 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 pwposes of the preparation of the financial statements of the Group and we have received satisfactory information and explanations required by us for those purposes. The auditors' reports on the financial statements 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 as Note 30 in page 58 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. 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 pwpose. 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 April2012 HOOIKOKMUN (NO:2207/01/14(1)) CHARTERED ACCOUNTANT PARTNER 25

28 STATEMENTS OF FINANCIAL POSITION AS AT 31 DECEMBER 2011 Group Company Note ASSETS Non-current assets Property, plant and equipment 4 225, , , ,452 Development expenditure 5 4,572,411 7,639,319 4,392,493 7,369,442 Investment in subsidiaries Total non-current assets 4,797,662 7,966,553 4,596,956 7,669,896 Current assets Inventories 7 3,199,640 3,718,596 2,441,905 2,882,917 Trade receivables 8 2,827, , , ,830 Other receivables and deposits 9 982,425 1,280, , ,381 Amount due from subsidiaries ,500,000 - Tax recoverable 41,208 40,897 39,607 39,607 Cash and bank balances 47, ,871 27,480 84,779 Total current assets 7,098,255 6,067,264 4,993,745 4,117,514 Total assets 11,895,917 14,033,817 9,590,701 11,787,410 EQUITY AND LIABILITIES EQUITY Equity attributable to owners of the parent: Share capital 11 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 12 (42,391) 50, Accumulated losses (31,391,234) (31,907,112) (33,368,070) (33,757,435) Total equity 10,948,318 10,525,502 9,013,873 8,624,508 Current liabilities Trade payables 13 88, ,485 62,732 67,444 Other payables and accruals ,550 2,808, ,655 2,506,065 Amount due to Directors 15 6, ,038 6, ,038 Short term borrowings 16-21,355-21,355 Tax payable 82, Total current liabilities 947,599 3,508, ,828 3,162,902 Total liabilities 947,599 3,508, ,828 3,162,902 Total equity and liabilities 11,895,917 14,033,817 9,590,701 11,787,410 The accompanying notes form an integral part of the financial statements. 26

29 STATEMENTS OF COMPREHENSIVE INCOME FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2011 Note 2011 Group Company 2010 Revenue 17 5,945,671 1,185,689 5,414,016 1,151,261 Cost of sales and services 18 (1,581,356) (358,246) (1,561,938) (347,135) Gross profit 4,364, ,443 3,852, ,126 Other income 363, , ,405 7,210 Selling and distribution costs (115,504) (471,871) (108,705) (469,343) Administration expenses (1,230,441) (1,092,974) (1,024,211) (928,121) Other expenses (2,756,836) (1,846,468) (2,575,069) (18,446,996) Finance costs (27,124) (13,714) (27,124) (13,224) Profit/(Loss) before tax ,887 (2,439,487) 389,374 (19,046,348) Tax expense 20 (82,009) - (9) - Profit/(Loss) for the financial year 515,878 (2,439,487) 389,365 (19,046,348) Other comprehensive income:- Exchange translation differences (93,062) 11, Total comprehensive profit/(loss) for the financial year 422,816 (2,428,305) 389,365 (19,046,348) Profit/(Loss) for the financial year attributable to:- Owners of the parent 515,878 (2,439,487) Non-controlling interest ,878 (2,439,487) Total comprehensive profit/(loss) attributable to:- Owners of the parent 422,816 (2,428,305) Non-controlling interest ,816 (2,428,305) Basic profit/(loss) per share attributable to owners of the parent (sen) - Basic (0.98) The accompanying notes form an integral part of the financial statements. 27

30 STATEMENTS OF CHANGES IN EQUITY FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2011 Non-distributable Distributable Exchange Share Share translation Accumulated capital premium reserve losses Total Group Balance at 1 January ,000,000 17,381,943 39,489 (29,467,625) 12,953,807 Total comprehensive loss for the financial year ,182 (2,439,487) (2,428,305) Balance at 31 December ,000,000 17,381,943 50,671 (31,907,112) 10,525,502 Total comprehensive profit for the financial year - - (93,062) 515, ,816 Balance at 31 December ,000,000 17,381,943 (42,391) (31,391,234) 10,948,318 Company Balance at 1 January ,000,000 17,381,943 - (14,711,087) 27,670,856 Total comprehensive loss for the financial year (19,046,348) (19,046,348) Balance at 31 December ,000,000 17,381,943 - (33,757,435) 8,624,508 Total comprehensive profit for the financial year , ,365 Balance at 31 December ,000,000 17,381,943 - (33,368,070) 9,013,873 The accompanying notes form an integral part of the financial statements. 28

31 STATEMENTS OF CASH FLOWS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2011 Group Company CASH FLOWS FROM OPERATING ACTIVITIES Profit/(Loss) before tax 597,887 (2,439,487) 389,374 (19,046,348) Adjustments for:- Allowance for impairment loss 62, , ,100 16,823,601 Amortisation of development expenditure 2,086,066 1,618,215 1,996,107 1,528,256 Bad debts written off 385,413 2, , ,273 Reversal of impairment loss of subsidiary - - (4) - Depreciation 95, ,230 89,229 95,139 Interest expense 27,124 13,714 27,124 13,224 Inventories written off 295, ,632 - Loss on striking off of subsidiary Property, plant and equipment written off - 19,070-19,070 Loss/(gain) on disposal of property, plant and equipment 8,031 (102,294) 8,031 5,965 Interest income (1,210) (108) (1,210) (32) Operating profit/(loss) before working capital changes 3,557,209 (656,443) 3,166,926 (395,852) Changes in working capital:- Directors (561,587) 261,659 (561,597) 261,659 Inventories 223, , ,380 48,632 Payables (2,059,774) 656,628 (2,003,122) 651,301 Receivables (2,145,177) 72,503 (98,026) 240,045 Development expenditure 981, ,429 - Subsidiaries - - (1,704,154) (145,495) Cash (used in)/generated from operations (4,280) 555,764 (8,164) 660,290 Tax paid (320) (737) (9) (737) Tax refund - 17, Net cash (used in)/from operations (4,600) 572,085 (8,173) 659,553 CASH FLOWS FROM INVESTING ACTIVITIES Interest received 1, , Purchase of property, plant and equipment (6,811) (5,786) (6,811) (5,786) Proceeds from disposal of property, plant and equipment 5, ,011 5,544 32,749 Development expenditure incurred (587) (333,817) (587) (333,817) Investment in subsidiaries - - (3) - Net cash used in investing activities (644) (198,484) (647) (306,822) 29

32 STATEMENTS OF CASH FLOWS (CONT'D) FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2011 Group Company CASH FLOWS FROM FINANCING ACTIVITIES Interest paid (27,124) (13,714) (27,124) (13,224) Repayment of short term loan (21,355) (271,776) (21,355) (271,776) Repayment of finance lease payables - (17,549) - - Net cash used in financing activities (48,479) (303,039) (48,479) (285,000) CASH AND BANK BALANCES Net (decrease)/increase (53,723) 70,562 (57,299) 67,731 Brought forward 100,871 30,309 84,779 17,048 Carried forward 47, ,871 27,480 84,779 The accompanying notes form an integral part of the financial statements. 30

33 NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER GENERAL INFOATION The Company is a public limited liability company, incorporated and domiciled in Malaysia and is listed on the ACE Market of Bursa Malaysia Securities Berhad. The registered office and the principal place of business of the Company is located at Nos. 29, 31 and 33, Jalan Hang Tuah 4, Taman Muhibbah, Kluang, Johor Darul Takzim. The principal activities of the Company consists of investment holding, research and development on information technology. The principal activities of its subsidiaries are disclosed in Note 6 to the Financial Statements. There have been no significant changes in the nature of these activities during the financial year. The financial statements were authorised for issue by the Board of Directors in accordance with a resolution of the Directors on 23 April BAS I S OF PREPARATION (a) Statement of compliance The financial statements of the Company have been prepared in accordance with Financial Reporting Standards ( FRSs ) issued by the Malaysian Accounting Standards Board ( MASB ) and the Companies Act 1965 in Malaysia. At beginning of the current financial year, the Group and the Company adopted new and revised FRSs which are mandatory for financial periods beginning on or after 1 January 2011 as described fully in Note 2 (d) to the Financial Statements. (b) Basis of measurement The financial statements of the Group and of the Company have been prepared under the historical cost convention, unless otherwise indicated in the summary of significant accounting policies. (c) Functional and presentation currency The financial statements are presented in Ringgit Malaysia ( ) which is the Company s functional currency. 31

34 2. BAS I S OF PREPARATION (CONT D) (d) (i) Adoption of New and Revised Financial Reporting Standards ( FRSs ) The accounting policies adopted by the Group and the Company are consistent with those of the previous financial year except the following new and revised FRSs and IC Interpretations. Effective for annual financial period beginning 1 March 2010: a) Amendments to FRS Financial Instruments: Presentation. Amendments relating to classification of rights issues Effective for annual financial period beginning 1 July 2010: a) FRS 1 - First-time Adoption of Financial Reporting Standards (Revised) b) FRS 3 - Business Combinations (Revised) c) FRS Consolidated and Separate Financial Statements (Revised) d) IC Interpretation 12 - Service Concession Arrangements e) IC niterpretation 71 - Distributions of Non-cash Assets to Owners f) Amendments to FRS 2 - Share Based Payment. Amendments relating to the scope of the Standard g) Amendments to FRS 5 - Non-Current Assets Held for Sale and Discontinued Operations. Amendment relating to the inclusion of non-current assets as held for distribution to owners in the standard h) Amendments to FRS Intangible assets. Amendments relating to the revision to FRS 3 i) Amendments to IC Interpretation 9 - Reassessment of Embedded Derivatives. Amendments relating to the scope of the IC and revision to FRS 3 j) IC Interpretation 16 - Hedges of a Net Investment in a Foreign Operation Effective from 30 August 2010: a) Amendment to IC Interpretation 15 - Agreements for the Construction of Real Estate. Amendment relating to the deferment of the effective date of the IC Interpretation

35 2. BAS I S OF PREPARATION (CONT D) (d) (i) Adoption of New and Revised Financial Reporting Standards ( FRSs ) (cont d) The accounting policies adopted by the Group and the Company are consistent with those of the previous financial year except the following new and revised FRSs and IC Interpretations (cont d). Effective for annual financial period beginning 1 January 2011: a) Amendment to FRS 1 - Limited Exemption from Comparative FRS 7 Disclosures for First-time Adopters. Amendment relating to transition provisions for first-time adopters b) Amendments to FRS 1 - Additional Exemptions for First-time Adopters. Amendment relating to transition provision for first-time adopters in the industry of oil and gas c) Amendments to FRS 2 - Group Cash-settled Share-based Payment Transactions. Amendments relating to the scope and accounting for group cash-settled share-based payments transactions d) Amendments to FRS 7 - Improving Disclosures about Financial Instruments. Amendments relating to the fair value measurement using fair value hierarchy and disclosure of liquidity risk e) IC Interpretation 4 - Determining whether an Arrangement contains a Lease f) IC Interpretation 18 (*) - Transfers of Assets from Customers g) Amendments to FRS 1 - First-time Adoption of Financial Reporting Standards. Amendments relating to accounting policy changes in the year of adoption, revaluation basis as deemed cost and the use of deemed cost for operations subject to rate regulation h) Amendments to FRS 3 - Business Combinations. Amendments relating to measurement of noncontrolling interests and un-replaced and voluntarily replaced share-based payments awards i) Amendments to FRS 7 - Financial instruments: Disclosure j) Amendments to FRS Presentation of Financial Statements. Amendment relating to clarification of statement of changes in equity 33

36 2. BASIS OF PREPARATION (CONT D) (d) (i) Adoption of New and Revised Financial Reporting Standards ( FRSs ) (cont d) The accounting policies adopted by the Group and the Company are consistent with those of the previous financial year except the following new and revised FRSs and IC Interpretations (cont d). Effective for annual financial period beginning 1 January 2011 (cont d): k) Amendments to FRS The Effects of Changes in Foreign Exchange Rates. Amendment relating to transition requirements for amendments arising as a result of FRS 127 Consolidated and Separate Financial Statements l) Amendments to FRS 128 Investments in Associates. Amendment relating to transition requirements for amendments arising as a result of FRS 127 Consolidated and Separate Financial Statements m) Amendments to FRS Interests in Joint Ventures. Transition requirements for amendments arising as a result of FRS 127 Consolidated and Separate Financial Statements n) Amendments to FRS Financial Instruments : Presentation. Amendment relating to transition requirements for contingent consideration from a business combination that occurred before the effective date of the revised FRS (Consequential amendments arising from Improvements to FRSs (2010) - FRS 3) o) Amendments to FRS Interim Financial Reporting. Amendment relating to significant events and transactions p) Amendments to FRS Financial Instruments : Recognition and Measurement. Transition requirements for contingent consideration from a business combination that occurred before the effective date of the revised FRS (Consequential amendments arising from Improvements to FRSs (2010) - FRS 3) 34

37 2. BASIS OF PREPARATION (CONT D) (d) (i) Adoption of New and Revised Financial Reporting Standards ( FRSs ) (cont d) The accounting policies adopted by the Group and the Company are consistent with those of the previous financial year except the following new and revised FRSs and IC Interpretations (cont d). Effective for annual financial period beginning 1 January 2011 (cont d): q) Amendments to IC Interpretation 13 - Customer Loyalty Programmes. Amendment relating to fair value of award credits (*) During the financial year 2010, MASB approved and issued IC Interpretation 18 - Transfers of Assets from Customers and requires the interpretation to be applied prospectively to all transfers of assets from customers received on or after 1 January FRS 1, FRS 2, FRS 128, FRS 131, IC Interpretation 9, 12, 13, 15, 16, 17 and 18 are not applicable to the Group s and the Company s operations. Initial application of the above standards, amendments and interpretations did not have any material impact on the financial statements of the Group and of the Company. (e) Standards issued but not yet effective New Malaysian Accounting Standards Board ( MASB ) Approved Accounting Standards To converge with International Financial Reporting Standards ( IFRSs ) in 2012, the MASB had on 19 November 2011, issued a new MASB approved accounting framework, the Malaysian Financial Reporting Standards ( MFRSs ), which are mandatory for annual financial periods beginning on or after 1 January 2012, with the exception of entities that are within the scope of MFRS 141 Agriculture and IC Interpretation 15 Agreements for Construction of Real Estate, including its parent, significant investor and venture ( Transitioning Entities ). Transitioning Entities will be allowed to defer adoption of the new MFRSs for an additional one year. Consequently, adoption of the MFRSs by Transitioning Entities will be mandatory for annual periods beginning on or after 1 January However, the Group and the Company do not qualify as Transitioning Entities and are therefore required to adopt the MFRSs for the financial period beginning on or after 1 January The Group and the Company have not early adopted the MFRS Framework. 35

38 2. BAS IS OF PREPARATION (CONT D) (e) Standards issued but not yet effective (cont d) New Malaysian Accounting Standards Board ( MASB ) Approved Accounting Standards (cont d) In presenting its first MFRS financial statements, the Group and the Company will be required to restate the comparative financial statements to amounts reflecting the application of MFRS Framework. The majority of the adjustments required on transition will be made, retrospectively, against opening retained profits. The Group and the Company have not completed its quantification of the financial effects of the differences between Financial Reporting Standards ( FRS ) and accounting standards under the MFRS Framework and are in the process of assessing the financial effects of the differences. Accordingly, the consolidated financial performance and financial position as disclosed in these financial statements for the financial ended 31 December 2011 could be different if prepared under the MFRS Framework. The Group and the Company expect to be in a position to fully comply with the requirements of the MFRS Framework for the financial year ending 31 December (f) 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 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. 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. Estimation uncertainty The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below:- 36

39 2. BAS I S OF PREPARATION (CONT D) (f) Significant accounting estimates and judgements (cont d) Income taxes The Group is exposed to income taxes in numerous jurisdictions. Significant judgement is involved in determining the Group-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 recognised 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. Impairment of property, plant and equipment, investment in subsidiaries and development expenditure The Group and the Company carried 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 andalsotochoosea suitable discount rate in order to calculate the present value of those cash flows. Depreciation of property, plant and equipment Property, plant and equipment are depreciated on a straight-line basis over their useful life. Significant judgement is involved in estimating the useful life of these assets. Changes in the expected level of usage and technological developments could impact the economic useful life and the residual values of these assets, therefore future depreciation charges could be revised. Amortisation of development expenditure Development expenditure is amortised on the straight line basis over period of 7 years. Changes in the technological development and market demand could impact the economic useful life of the assets, therefore future amortisation charges could be revised. 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. 37

40 2. BASIS OF PREPARATION (CONT D) (f) Significant accounting estimates and judgements (cont d) Estimation uncertainty (cont d) Impairment of loans and receivable 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 considers 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. 3. SIGNIFICANT ACCOUNTING POLICIES (a) Basis of consolidation The Group 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. All intercompany transactions, balances and unrealised gains on transactions between group companies are eliminated; unrealised losses are also eliminated on consolidation unless cost cannot be recovered. The financial statements of the Company and its subsidiaries are all drawn up to the same reporting date. Acquisition of subsidiaries is accounted for using the purchase method. The cost of an acquisition is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the acquisition. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date, irrespective of the extent of any minority interest. Any excess of the cost of the business combination over the group's interest in the net fair value of the identifiable assets, liabilities and contingent liabilities represents goodwill. Any excess of the group's interest in the net fair value of the identifiable assets, liabilities and contingent liabilities over the cost of business combination is recognised as income on the date of acquisition. 38

41 3. SIGNIFICANT ACCOUNTING POLICIES (CONT D) (a) Basis of consolidation (cont d) Non-controlling interest represents the portion of profit or loss and net assets in subsidiaries not held by the Group. It is measured at the minority s share of the fair value of the subsidiaries identifiable assets and liabilities at the acquisition date and the minority s share of changes in the subsidiaries equity since then. Subsidiaries are consolidated using the acquisition method of accounting from the date on which control is transferred to the Group and are no longer consolidated from the date that control ceases. The gain or loss on disposal of a subsidiary is the difference between net disposal proceeds and the Group s share of its net assets together with any unamortised or unimpaired balance of goodwill on acquisition and exchange differences. (b) Subsidiaries A subsidiary is a company in which the Group or the Company has the power to exercise control over the financial and operating policies so as to obtain benefits therefrom. Investment in subsidiaries is stated at cost less impairment losses. Where an indication of impairment exists, the carrying amount of the subsidiaries is assessed and written down immediately to their recoverable amount. On disposal of such investments, the difference between net disposal proceeds and their carrying amounts is recognised in the profit or loss. (c) Property, plant and equipment Property, plant and equipment are stated at cost less accumulated depreciation and impairment loss. Depreciation is computed on the straight line basis so as to write off the cost of the property, plant and equipment over their estimated useful life. The annual depreciation rates used are as follows:- Electrical installation 15% Furniture and fittings 10% Machinery 10% Motor vehicles 20% Office equipment 10%-33 1/3% Computer software and equipment 20%-25% Renovation 33 1/3% Tools and equipment 10% 39

42 3. SIGNIFICANT ACCOUNTING POLICIES (CONT D) (c) Property, plant and equipment (cont d) Restoration cost relating to an item of property, plant and equipment is capitalised only if such expenditure is expected to increase the future benefits from the existing property, plant and equipment beyond its previously assessed standard of performance. 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 at an arm s length transaction between knowledgeable, willing parties, less the costs of disposal. The residual values, useful life and depreciation method are reviewed at each year end 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. An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset is included in the profit or loss in the year the asset is derecognised. (d) 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 in so far as it relates to a clearly defined project where the benefits therefrom can reasonably be 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 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. (e) Inventories Parts and components, work-in-progress and finished 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. Cost of finished goods and work-in-progress includes cost of raw materials, direct labour and overhead costs. 40

43 3. SIGNIFICANT ACCOUNTING POLICIES (CONT D) (e) Inventories (cont d) Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale. (f) Financial assets Financial assets are recognised when the Group and the Company becomes a party to the contractual provisions of the financial instruments. Financial assets are measured initially at fair value plus transactions costs, except for financial assets carried at fair value through profit or loss, which are measured initially at fair value. 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) Loans and receivables; Financial assets at fair value through profit or loss; Held to maturity investments; 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 is derecognised where the contractual right to receive cash flows from the asset has expired or when the financial assets and all substantial risks and rewards are transferred. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the period generally established by regulation or convention in the marketplace concerned. All regular way purchases and sales of financial assets are recognised or derecognised on the trade date, i.e. the date that the Group and the Company commit to purchase or sell the asset. At the reporting date, the Group and the Company carried only loans and receivables on its statement of financial position. 41

44 3. SIGNIFICANT ACCOUNTING POLICIES (CONT D) (f) Financial assets (cont d) 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. Loans and receivables are classified as current assets, except for those having maturity dates later than 12 months after the reporting date which are classified as non-current assets. (g) 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. (h) Financial liabilities Financial liabilities are recognised when the Group and the Company become a party to the contractual provision of the financial instruments. Financial liabilities are measured initially at fair value plus transaction costs, except for financial liabilities carried at fair value through profit or loss, which are measured initially at fair value. After the initial recognition, financial liability is classified as financial liability at fair value through profit or loss or other financial liabilities measured at amortised cost using the effective interest method. A financial liability is derecognised when the obligation under the liability is extinguished, discharged, cancelled or expired, or through amortisation process. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amount is recognised in profit or loss. Other financial liabilities The Group s and the Company s financial liabilities comprise borrowings, trade and other payables. 42

45 3. SIGNIFICANT ACCOUNTING POLICIES (CONT D) (h) Financial liabilities (cont d) Other financial liabilities (cont d) 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. (i) Assets acquired under lease arrangements Lease of property, plant and equipment acquired under finance lease arrangements which transfer substantially all the risks and rewards of ownership to the Group are capitalised. Depreciation policy on these assets is similar to that of the Group s property, plant and equipment depreciation policy. Outstanding obligation due under the finance lease agreements after deducting finance expenses are included as liabilities in the financial statements. Finance charges on finance lease agreements are allocated to profit or loss over the period of the respective agreements. (j) Provision for liabilities Provision for liabilities are recognised when the Group and the Company have a present obligation as a result of a past event and 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. Provisions are reviewed at each reporting date and adjusted to reflect the current best estimate. Where the effect of the time value of money is material, the amount of provisions is the present value of the expenditure expected to be required to settle the obligation. (k) Foreign currency transactions Foreign currency transactions are translated into the functional currency of the respective Group entity, using the exchange rates prevailing at the dates of the transactions (spot exchange rate). Foreign exchange gains and losses resulting from the settlement of such transactions and from the remeasurement of monetary items at year-end exchange rates, whether realised or unrealised, are recognised in profit or loss except for exchange differences arising from monetary items that form part of the Group s net investment in foreign operations, which are recognised initially in other comprehensive income and accumulated under foreign currency translation reserve in equity. Non-monetary items measured at historial cost are translated using the exchange rates at the date of the transaction (not retranslated). Non-monetary items measured at fair value are translated using the exchange rates at the date when fair value was determined. Exchange differences arising on the translation of non-monetary items in respect of which gains and losses are recognised directly in equity. Exchange differences arising from such nonmonetary items are also recognised directly in equity. 43

46 3. SIGNIFICANT ACCOUNTING POLICIES (CONT D) (k) Foreign currency transactions (cont d) In the Group s financial statements, all assets, liabilities and transactions of Group entities with a functional currency other than the (the Group s presentation currency) are translated into upon consolidation. The functional currency of the entities in the Group have remained unchanged during the reporting period. On consolidation, assets and liabilities have been translated into at the closing rate at the reporting date. Income and expenses have been translated into the Group s presentation currency at the average rate over the reporting period. Exchange differences are charged or credited to other comprehensive income and recognised in the currency translation reserve in equity. On disposal of a foreign operation the cumulative translation differences recognised in equity (the exchange translation reserve) are reclassified to profit or loss and recognised as part of the gain or loss on disposal. (l) Revenue recognition The Group recognises revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits will flow to the entity and specific criteria have been met for each of the Group s activities as describe below. The amount of revenue is not considered to be reliably measurable until all contingencies relating to the sale have been resolved. (i) (ii) (iii) Revenue from sale of GPRO systems is recognised upon performance of services. Revenue from sale of computer hardware is recognised when the Group has transferred to the buyer the significant risks and rewards of ownership of the goods. Interest income is recognised on a time proportion basis that reflect the effective yield on the asset. (m) Income tax Current tax Current tax expense is the expected amount of income taxes payable in respect of the taxable profit for the financial year and is measured using the tax rates that have been enacted by the reporting date. Current tax for current and prior periods is recognised as liability (or asset) to the extent that it is unpaid (or refundable). Deferred tax Deferred tax liabilities and assets are provided for under liability method in respect of all temporary differences at reporting date between carrying amount of an asset or liability in the statement of financial position and its tax base including unused tax losses and capital allowances. 44

47 3. SIGNIFICANT ACCOUNTING POLICIES (CONT D) (m) Income tax (cont d) Deferred tax (cont d) Deferred tax assets are recognised only to the extent that it is probable that taxable profit will be available against which deductible temporary differences can be utilised. The carrying amount of a deferred tax asset is reviewed at each reporting date. If it is no longer probable that sufficient taxable profit will be available to allow the benefit of part or that entire 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. Current and deferred tax is recognised as an expense or income in the profit or loss, except when it relates to items credited or debited directly to equity, in which case the deferred tax is also recognised directly in equity. 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 reporting date. (n) Employee benefits Short term employee benefits Wages, salaries, bonuses and social security contributions are recognised as expenses in the financial year, in which the associated services are rendered by employees of the Group and the Company. Short term accumulating compensated absences such as paid annual leave are recognised when services are rendered by 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 occurred. Defined contribution plans Defined contribution plans are post-employment benefit plans under which the Group and the Company pays fixed contributions into separate 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 recongised as an expense in the profit or loss as incurred. As required by law, the Group and the Company made such contributions to the Employees Provident Fund ( EPF ). Foreign subsidiary company is also make contribution to their respective country s statutory pension scheme. 45

48 3. SIGNIFICANT ACCOUNTING POLICIES (CONT D) (o) Impairment of non-financial assets At each reporting date, the Group and the Company review the carrying amounts of its non-financial assets to determine whether there is any indication of impairment by comparing its carrying amount with its recoverable amount. Recoverable amount is the higher of an asset s fair value less costs to sell and its value in use. For the purpose of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash generating units). 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. Where the carrying amount of an asset exceeds its recoverable amount, the asset is written down to its recoverable amount. An impairment loss is recognised as an expense in the profit or loss immediately. An assessment is made at each reporting date as to whether there is any indication that previously recognised impairment losses for an asset may no longer exist or may have decreased. If such indication exists, the recoverable amount is estimated. A previously recognised impairment loss is reversed only if there has been a change in the estimates used to determine the asset recoverable amount since the last impairment loss was recognised. That increased amount cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years. Such reversal is recognised in profit or loss. (p) Impairment of financial assets The Group and the Company assess at each reporting date whether there is any objective evidence that a financial assets is impaired. Trade and other receivables and other financial assets carried at amortised cost To determine whether there is objective evidence that an impairment loss on financial assets has been incurred, 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. For certain categories of financial assets, such as trade receivables, assets that are assessed not to be impaired individually are subsequently assessed for impairment on a collective basis based on similar risk characteristics. Objective evidence of impairment for a portfolio or receivables could include the Group s and the Company s past experience of collecting payments, an increase in the number of delayed payments in the portfolio past the average credit period and observable changes in national or local economic conditions that correlate with default on receivables. 46

49 3. SIGNIFICANT ACCOUNTING POLICIES (CONT D) (p) Impairment of financial assets (cont d) Trade and other receivables and other financial assets carried at amortised cost (cont d) If such evidence exists, the amount of impairment loss is measured as the difference between the asset s carrying amount and the present value of estimated future cash flows discounted at the financial asset s original effective interest rate. The impairment loss is recognised in profit or loss. The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade receivables, where the carrying amount is reduced through the use of an allowance account. When a trade receivable becomes uncollectible, it is written off against the allowance account. If in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed to the extent that the carrying amount of the asset does not exceed its amortised cost at the reversal date. The amount of reversal is recognised in profit or loss. (q) Equity instruments Ordinary shares are recorded at the nominal value and proceeds in excess of the nominal value of shares issued, if any, are accounted for as share premium. Both ordinary shares and shares premium are classified as equity. Dividends on ordinary shares unpaid are recognised as liabilities when declared. The transaction costs of an equity transaction which comprise only those incremental external costs directly attributable to the equity transaction are accounted for as a deduction from equity, net of tax, from the proceeds. (r) Segmental reporting Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified to makes strategic decisions. 47

50 3. SIGNIFICANT ACCOUNTING POLICIES (CONT D) (s) Related parties A party is related to an entity if:- (i) (ii) (iii) (iv) (v) (vi) (vii) directly or indirectly through one or more intermediaries, the party:- (1) controls, is controlled by, or is under common control with, the entity (this includes parents, subsidiaries and fellow subsidiaries); (2) has an interest in the entity that gives it significant influence over the entity; or (3) has joint control over the entity; the party is an associate of the entity; the party is a joint venture in which the entity is a venturer; the party is a member of the key management personnel of the entity or its parent; the party is a close member of the family of any individual referred to in (i) or (iv); the party is an entity that is controlled, jointly controlled or significantly influenced by, or for which significant voting power in such entity resides with, directly or indirectly, any individual referred to in (iv) or (v); or the party is a post-employment benefit plan for the benefit of employees of the entity, or of any entity that is a related party of the entity. Close members of the family of an individual are those family members who may be expected to influence, or be influenced by, that individual in their dealings with the entity. 48

51 4. PROPERTY, PLANT AND EQUIPMENT Computer Group Office software Tools Furniture and and and Motor Electrical Cost equipment equipment equipment fittings Renovation Machinery vehicles installation Total 49 Balance as at 1 January ,736 1,017, , , ,450 72, , ,661 3,092,026 Additions - - 1,950-3, ,786 Disposal (122,104) (316,830) - (438,934) Written off (10,542) (12,415) - (1,200) (494,386) - - (184,661) (703,204) Translation difference (3,138) (1,422) (4,560) Balance as at 31 December ,952 1,003, , ,497 9,900 72,681 71,179-1,951,114 Additions - 6, ,811 Disposal (19,881) (19,881) Translation difference 8, ,050 Balance as at 31 December ,194 1,010, , ,497 9,900 72,681 71,179-1,947,094 Accumulated depreciation Balance as at 1 January , , , , ,508 46, , ,795 2,605,279 Charge for the financial year 25,298 59,706 8,799 13,936 1,714 4,185-1, ,230 Disposal (83,390) (316,827) - (400,217) Written off (6,307) (11,631) - (930) (493,879) - - (171,387) (684,134) Translation difference (10,662) (1,616) (12,278) Balance as at 31 December , , , ,352 7,343 50,286 71,178-1,623,880 Charge for the financial year 15,582 53,662 8,799 13,916 1,279 2, ,789 Disposal (6,306) (6,306) Translation difference 7,328 1, ,480 GPRO TECHNOLOGIES BERHAD ( D) Balance as at 31 December ,344 1,006, , ,268 8,622 52,837 71,178-1,721,843 Net carrying amount 31 December ,850 4,099 59,950 78,229 1,278 19, , December ,212 51,175 68,749 92,145 2,557 22, ,234

52 4. PROPERTY, PLANT AND EQUIPMENT (CONT D) Computer Office software and Tools and Furniture and Electrical Company equipment equipment equipment fittings Renovation Machinery installation Total Cost 50 Balance as at 1 January ,555 1,003, , , ,386 72, ,661 2,534,767 Additions - - 1,950-3, ,786 Disposal (122,104) (122,104) Written off (10,542) (12,415) - (1,200) (494,385) - (184,661) (703,203) Balance as at 31 December , , , ,497 3,837 72,681-1,715,246 Additions - 6, ,811 Disposal (19,881) (19,881) Balance as at 31 December , , , ,497 3,837 72,681-1,702,176 Accumulated depreciation Balance as at 1 January , , , , ,444 46, ,795 2,087,178 Charge for the financial year 12,502 52,411 8,799 13,936 1,714 4,185 1,592 95,139 Disposal (83,390) (83,390) Written off (6,307) (11,631) - (930) (493,878) - (171,387) (684,133) Balance as at 31 December , , , ,352 1,280 50,286-1,414,794 Charge for the financial year 9,022 53,662 8,799 13,916 1,279 2,551-89,229 Disposal (6,306) (6,306) GPRO TECHNOLOGIES BERHAD ( D) Balance as at 31 December , , , ,268 2,559 52,837-1,497,717 Net carrying amount 31 December ,116 4,042 59,950 78,229 1,278 19, , December ,713 50,893 68,749 92,145 2,557 22, ,452

53 5. DEVELOPMENT EXPENDITURE Cost Group Company Brought forward 12,132,795 11,798,978 11,503,082 11,169,265 Incurred during the financial year , ,817 Disposal during the financial year (939,175) - (939,175) - Carried forward 11,194,207 12,132,795 10,564,494 11,503,082 Accumulated amortisation Brought forward 4,493,476 2,875,261 4,133,640 2,605,384 Charged for the financial year 2,086,066 1,618,215 1,996,107 1,528,256 Reversal during the financial year 42,254-42,254 - Carried forward 6,621,796 4,493,476 6,172,001 4,133,640 Net carrying amount 4,572,411 7,639,319 4,392,493 7,369, INVESTMENT IN SUBSIDIARIES Company Unquoted shares, at cost Less: Allowance for impairment loss 18,750,001 18,750,003 (18,749,997) (18,750,001) 4 2 The movement in allowance for impairment loss is as follows:- Company Brought forward 18,750,001 4,200,000 Impairment loss recognised - 14,550,001 Reversal of impairment loss (4) - Carried forward 18,749,997 18,750,001 51

54 6. INVESTMENT IN SUBSIDIARIES (CONT D) The details of the subsidiaries are as follows:- Name of company New Paradigm Technologies Sdn. Bhd. ( NPT ) GPRO Technologies Pte. Ltd. * # Geranium Limited First Podium Sdn. Bhd. Held by NPT G.PRO Technologies (Vietnam) Co. Ltd. * GPRO Technologies (Hang Zhou) Co. Ltd. * Country of incorporation Effective interest Principal activities % % Malaysia Development and marketing of computerised data collection and feedback systems for apparel/garment industry and sale of related computer hardware and software. The Republic of Singapore Providing computer systems integration services and involving in retail sale of PC hardware and accessories and PC software. Hong Kong Investment holding company. Malaysia Dormant. Vietnam Supplying software and hardware product, service of consulting and training in management of textile industry and leather foot-wear industry. The Peoples Republic of China Research, development, production, consultation, services and the technical transfer of computer software, hardware, automatic control and other related products. * Companies not audited by SJ Grant Thornton # Company has since been struck off effective March INVENTORIES Group Company At cost:- Parts and components 1,310,444 1,599, , ,134 Work-in-progress 16,414 16, Finished goods 1,747,499 1,986,643 1,759,497 1,925,783 3,074,357 3,602,587 2,441,905 2,882,917 At net realisable value:- Finished goods 125, , Total 3,199,640 3,718,596 2,441,905 2,882,917 Recognised in profit or loss:- Inventories written off 295, ,632-52

55 8. TRADE RECEIVABLES Group Company Trade receivables 5,196,468 3,238, , ,830 Less: Allowance for impairment loss (2,368,634) (2,311,692) (54,942) - Net trade receivables 2,827, , , ,830 The movement in allowance for impairment loss is as follows:- Group Company Brought forward 2,311,692 2,280, Impairment loss recognised 56,942 30,956 54,942 - Carried forward 2,368,634 2,311,692 54,942 - The normal trade credit terms granted by the Group and the Company to the trade receivables range from 30 to 90 (2010: 30 to 90) days. The foreign currency exposure profile of the trade receivables is as follows:- Group Company US Dollar 2,817, , , , OTHER RECEIVABLES AND DEPOSITS Group Company Non-trade receivables 999,781 1,162, , ,277 Deposits 74, ,193 64, ,104 1,074,017 1,365, , ,381 Less: Allowance for impairment loss Impairment loss recognised (91,592) (85,761) ,425 1,280, , ,381 53

56 9. OTHER RECEIVABLES AND DEPOSITS (CONT D) The movement in allowance for impairment loss is as follows:- Group Company Brought forward 85, Impairment loss recognised 5,831 85, Carried forward 91,592 85, AMOUNT DUE FROM SUBSIDIARIES Company Amount due from subsidiaries 3,977,758 2,273,600 Less: Allowance for impairment loss Impairment loss recognised (2,477,758) (2,273,600) The movement in allowance for impairment loss is as follows:- 1,500,000 - Company Brought forward 2,273,600 - Impairment loss recognised 204,158 2,273,600 Carried forward 2,477,758 2,273,600 The amount due from subsidiaries is unsecured, interest free and repayable on demand. 11. SHARE CAPITAL Group and Company Authorised:- 500,000,000 ordinary shares of 0.10 each 50,000,000 50,000,000 Issued and fully paid:- 250,000,000 ordinary shares of 0.10 each 25,000,000 25,000,000 54

57 12. EXCHANGE TRANSLATION RESERVE The exchange translation reserve comprises foreign exchange differences arising from the translation of financial statements of the foreign subsidiaries. 13. TRADE PAYABLES The normal trade credit terms granted by trade payables range from 30 to 90 (2010: 30 to 90) days. The foreign currency exposure profile of the trade payables is as follows:- Group Company US Dollar 31,833 49,732 6,111 45,396 Singapore Dollar - 36,355-16, OTHER PAYABLES AND ACCRUALS Group Company Non-trade payables 414, , ,051 1,372,033 Accrual of expenses 291,389 1,788, ,604 1,134,032 Amount due to shareholder 65,150 59, ,550 2,808, ,655 2,506,065 Included in the non-trade payables of the Group and Company is an amount of Nil (2010: 864,676) due to a company in which a Director has interest which is unsecured, interest free and repayable on demand. The amount due to shareholders is non-trade in nature, unsecured, interest free and repayable on demand. 15. AMOUNT DUE TO DIRECTORS Group and Company The amount due to Directors is unsecured, interest free and repayable on demand. 16. SHORT TE LOAN Group and Company Short term loan is drawn for a period of 12 months from the date of first disbursement into the Project account and bears interest rates at Nil (2010: 7.00%) per annum. 55

58 16. SHORT TE LOAN (CONT D) Group and Company (cont d) The short term loan is secured by the Deed of Assignment on all contract proceeds and to be received by the Company from the Esquel group of companies in respect of the Project. The repayment of the short term loan shall be as follows:- (a) (b) A minimum of 85% of all contract proceeds from the Esquel group of companies in relation to the project; and Notwithstanding the above, the maximum repayment period for any disbursement shall be for six (6) months from the date of each drawdown. The short term loan have been fully settled during the financial year. 17. REVENUE Group Company Sales of GPRO systems 5,838,847 1,100,301 5,313,286 1,083,765 Sales of computer hardware 101,324 69, ,730 67,496 Programming and software maintenance services 5,500 16, ,945,671 1,185,689 5,414,016 1,151, COST OF SALES AND SERVICES Group Company Cost of sales of GPRO systems 1,518, ,514 1,503, ,725 Cost of sales of computer hardware 59,012 1,783 58,418 1,410 Cost of programming and software maintenance services 3,950 9, ,581, ,246 1,561, ,135 56

59 19. 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 27,000 28,000 22,000 17,000 - other auditors 4,720 4, non statutory 5,000 5,000 5,000 5,000 Amortisation of development expenditure 2,086,066 1,618,215 1,996,107 1,528,256 Bad debts written off 385,413 2, , ,273 Depreciation 95, ,230 89,229 95,139 Directors remuneration - fees 106,000 48, ,000 48,000 - other emoluments 201, , , ,800 Impairment loss - subsidiaries ,158 16,823,601 - trade receivables 56,942 30,956 54, other receivables 5,831 85, Interest expense 27,124 13,714 27,124 13,224 Inventories written off 295, ,632 - Loss on striking off of subsidiary Property, plant and equipment written off - 19,070-19,070 Rental of hostel 1,583 11,030 1,583 11,030 Rental of office equipment 1,560 1,170 1,560 1,170 Rental of premises 30,200 35,300 30,200 35,300 Loss/(Gain) on disposal of property, plant and equipment 8,031 (102,294) 8,031 5,965 Interest income (1,210) (108) (1,210) (32) Realised foreign exchange (gain)/loss (4,022) 33,610 (4,022) 50,660 Reversal of impairment loss of subsidiary - - (4) - 57

60 19. PROFIT/(LOSS) BEFORE TAX (CONT D) The details of remuneration receivables by the Directors of the Group and of the Company during the financial year are as follows:- Group and Company Executive:- Salary 180,000 90,000 Defined contribution plan 21,600 10, , ,800 Non-Executive:- Fees 106,000 48,000 Total 307, , TAX EXPENSE There is no provision of tax for the Group and the Company as the Group and the Company has no chargeable income. A reconciliation of income tax expense applicable to loss before tax at the statutory income tax rate to income tax expense at the effective income tax rate of the Group and of the Company is as follows:- Group Company Profit/(Loss) before tax 597,887 (2,439,487) 389,374 (19,046,348) Income tax at Malaysian statutory rate of 25% 149,472 (609,872) 97,344 (4,761,587) Tax effect in respect of: Utilisation of deferred tax assets not recognised - (15,500) - - Deferred tax assets not recognised during the financial year (13,000) 176,500 15, ,750 Non-allowable expenses 710, , ,740 4,655,541 Income not subject to tax Difference of tax rate in other country (722,575) (42,441) (102,530) - (722,575) - (84,704) - Tax expense at effective tax rate 82,

61 20. TAX EXPENSE (CONT D) The unutilised tax losses and unabsorbed capital allowances which can be carried forward to offset against future taxable profit amounted to approximately 16,035,000 (2010: 16,033,000) and 483,000 (2010: 630,000) for the Group and 16,365,000 (2010: 13,363,000) and 191,000 (2010: 224,000) for the Company. However, the above amount is subject to the approval of the Inland Revenue Board of Malaysia. 21. PROFIT/(LOSS) PER SHARE (a) Basic profit/(loss) per share Basic profit/(loss) per share of the Group is based on the profit/(loss) attributable to owners of the parent and the weighted average number of ordinary shares in issue during the financial year. Group Net profit/(loss) for the financial year () 515,878 (2,439,487) Number of ordinary shares in issue 250,000, ,000,000 Basic profit/(loss) per share (sen) 0.21 (0.98) (b) Diluted profit/(loss) per share Fully diluted profit/(loss) per share is not calculated as the average market price as at 31 December 2011 is lower than the ESOS option price, therefore there will be no dilutive effect. 59

62 22. DEFERRED TAX ASSETS Deferred tax assets have not been recognised in respect of the following items due to uncertainty of its recoverability: Group 2010 Company Carrying amount of qualifying property, plant and equipment in excess of their tax base (176,000) (269,000) (176,000) (269,000) Unutilised tax losses 16,035,000 16,033,000 13,365,000 13,363,000 Unabsorbed capital allowances 483, , , ,000 16,342,000 16,394,000 13,380,000 13,318,000 The potential deferred tax assets have not been recognised in respect of these items as they may not be used to offset taxable profits of other subsidiaries in the Group and they have arisen in subsidiaries that have a recent history of losses. 23. EMPLOYEE BENEFITS EXPENSE Group Company Staff cost 575,208 1,146, , ,664 The following are included in the employee benefits expense:- Group and Company (i) Directors emoluments (other than fees) 201, ,800 (ii) Defined contribution plan 60,191 66,827 60

63 24. RELATED PARTY DISCLOSURES (a) The following transactions were carried out with related parties:- Company Sales to subsidiaries 1,500, Purchase from subsidiaries - 3,178 (b) (c) The Group and the Company have no other members of key management personnel apart from the Board of Directors. The outstanding balances arising from related party transactions as at the reporting date were disclosed in Note 10 to the Financial Statements. 25. CAPITAL COMMITMENT Capital commitment expenditure in respect of the following are not provided for in the financial statements: Approved but not contracted for:- - property, plant and equipment - 114,516 61

64 26. CATEGORIES OF FINANCIAL INSTRUMENTS The table below provides an analysis of financial instruments categorised as loans and receivables ( L&R ) and financial liabilities categories as other financial liabilities measured at amortised cost ( AC ). Group Carrying amount L&R AC 2011 Financial assets Trade receivables 2,827,834 2,827,834 - Other receivables and - deposits 982, ,425 Cash and bank balances 47,148 47,148-3,857,407 3,857,407 - Financial liabilities Trade payables 88,598-88,598 Other payables and accruals 770, ,550 Amount due to Directors 6,451-6, , ,599 Financial assets Trade receivables 926, ,691 - Other receivables and deposits 1,280,209 1,280,209 - Cash and bank balances 100, ,871-2,307,771 2,307,771 - Financial liabilities Trade payables 110, ,485 Other payables and accruals 2,808,437-2,808,437 Amount due to Directors 568, ,038 Short term borrowings 21,355-21,355 3,508,315-3,508,315 62

65 26. CATEGORIES OF FINANCIAL INSTRUMENTS (CONT D) The table below provides an analysis of financial instruments categorised as loans and receivables ( L&R ) and financial liabilities categories as other financial liabilities measured at amortised cost ( AC ) (cont d). Company Carrying amount L&R AC 2011 Financial assets Trade receivables 510, ,521 - Other receivables and deposits 474, ,232 - Amount due from subsidiaries 1,500,000 1,500,000 - Cash and bank balances 27,480 27,480-2,512,233 2,512,233 - Financial liabilities Trade payables 62,732-62,732 Other payables and accruals 507, ,655 Amount due to Directors 6,441-6, , ,828 Financial assets Trade receivables 403, ,830 - Other receivables and deposits 706, ,381 - Cash and bank balances 84,779 84,779-1,194,990 1,194,990 - Financial liabilities Trade payables 67,444-67,444 Other payables and accruals 2,506,065-2,506,065 Amount due to Directors 568, ,038 Short term borrowings 21,355-21,355 3,162,902-3,162,902 63

66 27. FINANCIAL INSTRUMENTS Risk management objectives and policies The Group and the Company are exposed to financial risks arising from its operations and the use of financial instruments. Financial risk management policy is 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 policy in respect of the major areas of treasury activity are set out as follows:- (a) 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 policy 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. Following are the areas the Group and Company is exposed to credit risk:- (i) Receivables As at the end of the reporting date, the maximum exposure to credit risk arising from receivables is limited to the carrying amounts in the statement 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. A significant portion of these receivables are regular customers that have been transacting with the Group and the Company. The Group and the Company use ageing analysis to monitor the credit quality of the receivables. Any receivables having significant balances past due more than credit terms granted are deemed to have higher credit risk, and are monitored individually. 64

67 27. FINANCIAL INSTRUMENTS (CONT D) Risk management objectives and policies (cont d) (a) Credit risk (cont d) (i) Receivables (cont d) The ageing analysis of trade receivables is as follows:- Group Gross Collectively impaired Net 2011 Not past due 2,260,281-2,260,281 Past due for more than 30 days 21,963-21,963 Past due for more than 60 days Past due for more than 90 days 177, ,347 Past due more than 120 days 2,736,619 (2,368,634) 367,985 5,196,468 (2,368,634) 2,827,834 Gross Collectively impaired Net 2010 Not past due 145, ,667 Past due for more than 30 days Past due for more than 60 days 2,750-2,750 Past due for more than 90 days 3,089,362 (2,311,692) 777,670 3,238,383 (2,311,692) 926,691 Company Gross Collectively impaired Net 2011 Not past due 260, ,001 Past due for more than 30 days 21,825-21,825 Past due for more than 60 days 6-6 Past due for more than 90 days 177, ,347 Past due more than 120 days 106,284 (54,942) 51, ,463 (54,942) 510,521 Gross Collectively impaired Net 2010 Not past due 145, ,377 Past due for more than 30 days Past due for more than 60 days 2,750-2,750 Past due for more than 90 days 62,546-62,546 Past due more than 120 days 193, , , ,830 65

68 27. FINANCIAL INSTRUMENTS (CONT D) Risk management objectives and policies (cont d) (a) Credit risk (cont d) (i) Receivables (cont d) The net carrying amount of trade receivables is considered a reasonable approximate of fair values. The maximum exposure to credit risk is the carrying value of each class of receivables mentioned above. These receivables are not secured by any collateral or credit enhancements. Trade receivables that are neither past due nor impaired are creditworthy receivables with good payment records with the Group and the Company. None of the Group s and the Company s trade receivables that are neither past due nor impaired have been renegotiated during the financial year. As at 31 December 2011, trade receivables of the Group and of the Company amounted to 567,553 and 250,520 respectively were past due but not impaired. These relate to a number of independent customers for whom there is no recent history of default. (ii) Intercompany balances The maximum exposure to credit risk is represented by their carrying amounts in the statement of financial position. The Company provides advances to subsidiaries and monitors their results regularly. As at the end of the reporting period, there was no indication that the advances to the subsidiaries are not recoverable. (b) Liquidity risk Liquidity risk is the risk that the Group and the Company will not be able to meet their financial obligations as they fall due as a result of shortage of funds. The Group s and the Company s exposure to liquidity risk arises particularly from payables and borrowings and they maintain a level of cash and cash equivalents and bank credit facilities deemed adequate by management to ensure it has sufficient liquidity to meet their obligations when they fall due. 66

69 27. FINANCIAL INSTRUMENTS (CONT D) Risk management objectives and policies (cont d) (b) Liquidity risk (cont d) The following are areas of the Group s and the Company s exposure to liquidity risk:- Group Less than 1 year 2011 Trade payables 88,598 Other payables and accruals 770,550 Amount due to Directors 6,451 Total 865,599 Less than 1 year 2010 Trade payables 110,485 Other payables and accruals 2,808,437 Amount due to Directors 568,038 Total 3,486,960 Company Less than 1 year 2011 Trade payables 62,732 Other payables and accruals 507,655 Amount due to Directors 6,441 Total 576,828 Less than 1 year 2010 Trade payables 67,444 Other payables and accruals 2,506,065 Amount due to Directors 568,038 Total 3,141,547 67

70 27. FINANCIAL INSTRUMENTS (CONT D) Risk management objectives and policies (cont d) (c) 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 currency giving rise to this risk is primarily US Dollar (USD). The following table demonstrates the sensitivity of the Group s and the Company s profit for the financial year to a reasonably possible change in the USD exchange rates against the functional currency of the Company, with all other variables held constant. Group Company Effect on profit Effect on profit USD/ - Strengthened 0.26% 23,957 4,331 - Weakened 0.26% (23,957) (4,331) 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 the Company s exposures to foreign currency risk. (d) 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 period would not affect profit or loss. Fair value of financial instruments The carrying amounts of short term receivables and payables, cash and cash equivalents and short term borrowings approximate their fair value due to the relatively short term nature of these financial instruments and insignificant impact of discounting. 68

71 28. CAPITAL MANAGEMENT The primary objective of the Group s and the Company s capital management is to ensure that it maintains a strong credit rating and financially prudent capital ratios in order to support its current business as well as future expansion so as to maximise shareholder value. The Group and the Company manage its capital structure and make adjustments to it, in light of changes in economic conditions including the interest rate movements. To maintain and adjust the capital structure, the Group and the Company may adjust dividend payment to shareholders, return capital to shareholders or issue new shares. The Group s and the Company s debt-to-equity ratio as at the reporting period under review is as follows:- Group Company Short term loan - 21,355-21,355 Total equity 10,948,318 10,525,502 9,013,873 8,624,508 Debt-to-equity ratio : :1 There were no changes in the Group s and the Company s approach to capital management during the financial year. Under the requirement of Bursa Malaysia Guidance Note 3, the Group is required to maintain a consolidated shareholders equity equal to or not less than the 25% of the issued and paid-up capital. The Group has complied with this requirement. 29. OPERATING SEGMENT (a) Business segments There is no business segment information being presented as the Group is predominantly involved in one business segment only. (b) Geographical segment Revenue and non-current assets information based on the geographical location of customers and assets respectively are as follows:- Malaysia * People s Republic of China Vietnam Hong Kong ,945, ,000,000 Revenues ,178,124 2,081 5,484 - Group Non-current assets ,776,871 20, ,939,772 26, * Company s home country 5,945,671 1,185,689 4,797,662 7,966,553 69

72 30. DISCLOSURE OF REALISED AND UNREALISED PROFITS/LOSSES With the purpose of improving transparency, Bursa Malaysia Securities Berhad has on 25 March 2010, and subsequently on 20 December 2010, issued directives which require all listed corporations to disclose the breakdown of retained earnings or 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 Disclosure 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 (48,711,900) (33,368,070) Consolidation adjustments 17,320,666 - Total Group accumulated losses as per consolidated financial statements (31,391,234) (33,868,070) The above disclosures were approved by the Board of Directors in accordance with resolution of the Directors dated 23 April

73 ANALYSIS OF SHAREHOLDINGS ANALYSIS OF SHAREHOLDINGS AS AT 25 APRIL 2012 Authorised Capital Issued and fully paid-up Capital Class of Shares Voting Rights 50,000, ,000, Ordinary shares of 0.10 each fully paid up One vote per O.lO share SIZE OF HOLDINGS No. of Shareholders No. of Shares held % Less than 100 shares 100 to 1,000 shares 1,001 to 10,000 shares 10,001 to 100,000 shares 100,001 to less than 5% oflssued Shares 5% and above oflssued Shares , ,470 3,568,950 51,353, ,710,428 62,226, , ,000, DIRECTORS' SHAREHOLDING No of Shares Held Name Direct % Indirect % Christian Kwok-Leun Yau Heilesen 62,226, ,738, Yip Wai Man Raymond 12,091, Tang Tiong Seng* , Abu Salihu AIL Mohamed 100,000** 0.04 Shariff** * Deemed interest by virtue of having substantial interest in Vital Research Sdn. Bhd. and the shareho/ding of his spouse in GPRO Technologies Berhad. ** Deemed interest by virtue of his spouse's shareholding in GPRO Technologies Berhad. SUBSTANTIAL SHAREHOLDERS AS AT 25 APRIL 2012 No of Shares Held Name Christian Kwok-Leun Yau Heilesen Direct % 62,226, Indirect 3,738,700 %

74 LIST OF THIRTY LARGEST SHAREHOLDERS LIST OF THIRTY LARGEST SHAREHOLDERS AS AT 25 APRIL 2012 NO SHAREHOLDER NO. OF SHARES OF 0.10 EACH % 1 CHRISTIAN KWOK-LEUN YAU HEILESEN 42,226, CHRISTIAN KWOK-LEUN YAU HEILESEN 20,000, YIP WAI MAN RAYMOND 12,091, GOH TEN FOOK 6,900, DOMINIC NATHAN GABRIEL 5,077, SOO CHEW SHENG 3,800, HENRICK KWOK-HANG YAU HEILESEN 3,738, SOO WING CHING 2,700, WONG CHOOK PING 2,621, SITI JUNAINAH BINTI DEWA 2,000, JADE MAJESTY INTERNATIONAL SDN. BHD. 1,935, TEOH HIN HENG 1,924, PUBLIC NOMINEES (TEMPATAN) SDN. BHD. (PLEDGED SECURITIES ACCOUNT FOR KONG SAN KONG SUN PING (E-JCL) 1,417, WOO FAY MENG 1,200, CHAN WAI PENG 1,200, BINDU FLORIKULTUR SDN. BHD. 1,200, TAN CHI SING 1,100, KOEK TIANG KUNG 1,036, LIM SIEW BOON 1,008, TAN KIAN GUAN 1,000, MAHMOOD BIN ABU BAKAR 1,000, LEE MUN PUN 1,000, MAYBANK NOMINEES (TEMPATAN) SDN. BHD. (CHIENG YU KUI) 980, CHOO TEK HAK 920, YOONG KON KEOW 900, PUBLIC NOMINEES (TEMPATAN) SDN. BHD. (PLEDGED SECURITIES ACCOUNT FOR LEE CHIN CHONG (E-TAI) 900, TAY LAI HUAT 800, LOW TIONG HUAT 800, CHIN YOK CHIN YOK LIN 800, CHIANG SIONG CHIONG SIONG CHIEW 800,

75 NOTICE OF ANNUAL GENERAL MEETING NOTICE IS HEREBY GIVEN THAT the Ninth (9th) Annual General Meeting (AGM) of GPRO Technologies Berhad ("GPRO" or ''the Company") will be held at Prime City Hotel, Venus Room (Level 6), 20 Jalan Bakawali, Kluang, Johor Darul Takzim, Malaysia, on Friday, 15 June 2012 at p.m.for the purpose of transacting the following businesses:- AGENDA 1. To receive the Audited Financial Statements of the Company for the financial year ended 31 December 2011 together with the Directors' and Auditors' reports thereon. Please refer to Note A 2. To approve the payment of Directors' remuneration for the fmancial year ended 31 December Resolution 1 3. To re-elect the following Directors who retire in accordance with Article 84 of the Company's Articles of Association and being eligible, offer themselves for re-election:- (a) Mr. Christian Kwok-Leun Yau Heilesen Resolution 2 (b) Mr. Raymond Yip Wai Man Resolution 3 (c) Mr. Cheung Ming Chi Resolution 4 (d) Mr. Lee Chee Cheng Resolution 5 Encik Abu Salihu AIL Mohamed Shariff who retires in accordance with Articles 103(a) of the Company's Articles of Association, has expressed his intention not to seek re-election. Hence, he will retain office until the close of the 9th AGM. 4. To re-appoint Messrs SJ Grant Thornton as Auditors of the Company and to authorize the Directors to ftx their remuneration. Resolution 6 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 excluding the number of ordinary shares arising from the exercise of the Employees' Share Option Scheme (ESOS), 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 73

76 the conclusion of the next Annual General Meeting of the Company. Resolution 7 6. ORDINARY RESOLUTION PROPOSED SHARE BUY-BACK THAT, subject to the Companies, Act, 1965, the Articles of Association of the Company, the requirements of Bursa Malaysia Securities Berhad ( Bursa Securities ) and the approvals of such relevant governmental and/or regulatory authorities where necessary, the Company be and is hereby authorized to purchase its own ordinary shares of 0.10 each ( GPRO Shares ) on the market of Bursa Securities at any time, upon such terms and conditions as the Directors shall in their discretion deem fit and expedient in the best interests of the Company provided that : (a) the aggregate number of GPRO Shares which may be purchased pursuant to this resolution does not exceed ten percent (10%) of the issued and paid-share capital of the Company at the time of purchase; (b) the maximum funds to be allocated by the Company for the purchase of GPRO Shares shall not exceed the total retained profits and share premium account of the Company based on the audited Financial Statements for the year ended 31 December 2011; and (c) the Proposed Share Buy-Back to be undertaken will be in compliance with Section 67A of the Companies Act, The Directors will deal with the shares purchased in the following manner:- (i) (ii) (iii) to cancel the Shares so purchased; or to retain the Shares so purchased as treasury shares for distribution as dividends to the shareholders of the Company and/or re-sell on Bursa Securities in accordance with the Listing Requirements of Bursa Securities and/or cancellation subsequently; or to retain part of the Shares so purchased as treasury shares and cancel the remainder, AND THAT such authority shall commence immediately upon the passing of this ordinary resolution and shall remain in force until the conclusion of the next Annual General Meeting of the Company, or such authority is revoked or varied by a resolution passed by the members of the Company in general meeting, whichever is the earlier, but not so as to prejudice the completion of purchase(s) by the Company before the aforesaid expiry date, and in any event in accordance with the provisions of the requirements or guidelines issued by Bursa Securities or any other relevant authorities; AND THAT the Directors of the Company be and are hereby empowered to do all acts and things as they may consider expedient or necessary to give full effect to and to implement the Proposed Share Buy-Back. Resolution 8 7. 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 74

77 By Order of the Board LEONG SUE CHING Company Secretary (MAICSA ) Johor Darul Takzim 24 May2012 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) ofthe 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 up to 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 (I) 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-D, 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 8 June 2012 and only Depositors whose names appear on such Record of Depositors shall be entitled to attend the meeting. Explanatory Notes on Special Business: Ordinary Resolution 7 The proposed Resolution 7 is a renewal of the mandate given to the Company by the shareholders at the previous Annual General Meeting held on 15 June 2012, if duly passed, is primarily to give flexibility to the Board of Directors 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 ofthe 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. 75

78 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. No shares have been issued and allotted by the Company since obtaining the said authority from its shareholders at the last Annual General Meeting held on 15 June Ordinary Resolution 8 The proposed Resolution 8, if passed, will empower the Directors to purchase the shares of up to ten percent (10%) of the issued and paid-up share capital of the Company by utilizing funds allocated up to the latest audited retained profits and the share premium account of the Company. This authority, unless revoked or varied at a general meeting, will expire at the conclusion of the next Annual General Meeting of the Company. 76

79 This page is intentionally left blank 77

80 GPRO TECHNOLOGIES BERHAD (Company No: D) (Incmporated in Malaysia) FO OF PROXY (please refer to the notes below) No. of onllnary shares beld I J/We -----:----:-:---c:-:----: I.C NoJCo.No./CDS No.: (Full nmm:: in block letters) of -= ----=-:---c (Full address) being a member/members of 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 Ninth Annual General Meeting of the Company to be held at Prime City Hotel, Venus Room (Level6), 20 Jalan Bakawali, K.luang, Johor Darul Takzim, Malaysia, on Friday, 15 June 2012 at p.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 Ordinary Resolution 5 Ordinary Resolution 6 Ordinary Resolution 7 Ordinary Resolution 8 (Please indicate with a "V'' or "X" in the space provided how you wish your vote to be cast. If no inslru.ction 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.) 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 up to 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 Compalr)' 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-D, Jalan Medan Tuanku, Medan Tuanlcu, 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 Compalr)' 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 RJ4le 7.16(2) of the Ace Market Listing Requirements of Bursa Malaysia Securities Berhad, a Record of Depositors as at 8 June 2012 and only Depositors whose names appear on such Record of Depositors shall be entitled to attend the meeting.

81 Fold this flap for sealing The fold here Affix Postage Stamp here The Company Secretary GPRO Technologies Berhadmmo No. 9-0,Jalan Medan Tuanku Medan Tuanku Kuala Lumpur Wilayah Persekutuan Malaysia First fold here

82