GUNUNG CAPITAL BERHAD ( P) (Incorporated In Malaysia) ANNUAL REPORT annual report

Transcription

1 GUNUNG CAPITAL BERHAD ( P) (Incorporated In Malaysia) ANNUAL REPORT 2008 annual report

2 2 Notice of Annual General Meeting 4 Statement Accompanying Notice of Annual General Meeting 5 Corporate Information 6 Directors Profile 8 Chairman s Statement 9 Statement on Corporate Governance 13 Additional Compliance Information 15 Statement on Internal Control 16 Report of the Audit Committee 19 Directors Report and Financial Statements 48 List of Properties 49 Analysis of Shareholdings 52 Analysis of Warrantholdings Form of Proxy CONTENTS

3 NOTICE OF ANNUAL GENERAL MEETING 2 GUNUNG CAPITAL BERHAD ( P) NOTICE IS HEREBY GIVEN that the Fourteenth (14th) Annual General Meeting of Gunung Capital Berhad will be held at Diamond Room, SSL Traders Hotel, No. 43, Jalan Medan Perwira Satu, Medan Perwira, Kamunting, Perak Darul Ridzuan on Friday, 19 June 2009 at a.m. for the following purposes:- AGENDA As Ordinary Business 1. To receive and adopt the Audited Financial Statements for the financial year ended 31 December 2008 and the Reports of the Directors and Auditors thereon. (Resolution 1) 2. To approve the payment of Directors Fees for the financial year ended 31 December To re-elect Datuk Ahmad Shalimin bin Ahmad Shaffie who retires by rotation pursuant to Article 101 of the Company s Articles of Association. 4. To re-elect Malik Parvez Ahmad bin Nazir Ahmad who retires by rotation pursuant to Article 108 of the Company s Articles of Association. 5. To re-appoint Messrs STYL Associates as Auditors of the Company and to authorise the Directors to fix their remuneration. (Resolution 2) (Resolution 3) (Resolution 4) (Resolution 5) As Special Business To consider and if thought fit, to pass the following resolutions:- Ordinary Resolutions 6. Authority to Issue Shares Pursuant to Section 132D of the Companies Act, 1965 That pursuant to Section 132D of the Companies Act, 1965, and subject to the approvals of all the relevant government/regulatory authorities, the Directors be and are hereby empowered to issue new shares in the Company at any time, 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 new shares to be issued does not exceed 10% of the total issued share capital of the Company for the time being, and such authority shall continue to be in force until the conclusion of the next Annual General Meeting of the Company. 7. Proposed Renewal of Shareholders Mandate for Recurrent Related Party Transactions of a Revenue or Trading Nature ( Proposed Renewal of Shareholders Mandate ) That pursuant to Paragraph of the Listing Requirements of Bursa Malaysia Securities Berhad, approval be and is hereby given to the Company s subsidiary, Gunung Resources Sdn Bhd ( GRSB ) to enter into recurrent related party transactions of a revenue or trading nature as set out in Section 2.4 of the Circular to Shareholders dated 28 May 2009, which are necessary for the day-to-day operations of GRSB, in the ordinary course of business and on normal commercial terms that are not more favourable to the related party than those generally available to the public and are not detrimental to the minority shareholders of the Company. (Resolution 6) (Resolution 7)

4 NOTICE OF ANNUAL GENERAL MEETING (CONT D) 3 And That such approval is subject to annual renewal shall continue to be in force until: (i) (ii) the conclusion of the next Annual General Meeting ( AGM ) of the Company, at which time the mandate will lapse, unless authority is renewed by a resolution passed at the next AGM the mandate is again renewed; the expiration of the period within which the next AGM is required to be held pursuant to Section 143(1) of the Companies Act, 1965; ( the Act ) (but shall not extend to such extension as may be allowed pursuant to Section 143(2) of the Act); or ANNUAL REPORT 2008 (iii) revoked or varied by a resolution passed by the shareholders in general meeting, whichever is earlier. That the Directors of the Company be and are hereby authorised to do all such acts and things (including executing any relevant documents) as they may consider expedient or necessary or give effect to the Proposed Renewal of Shareholders Mandate. 8. To transact any other business for which due notice has been given. By Order of the Board Jesslyn Ong Bee Fang (MAICSA ) Eric Toh Chee Seong (LS ) Company Secretaries Perak Darul Ridzuan 28 May 2009 Notes: 1. A member of the Company, eligible to attend and vote at the meeting, is entitled to appoint a proxy or proxies to vote in his/her stead. A proxy may but need not be a member of the Company and the provision of Section 149(1)(b) of the Companies Act 1965 shall not apply to the Company. 2. Where a member appoints two (2) or more proxies, the appointment shall be invalid unless he/she specifies the proportion of his/her shareholdings to be represented by each proxy. Where a member of the Company is an authorised nominee as defined under the Securities Industry (Central Depositories) Act 1991, it may appoint at least one proxy in respect of each securities account it holds with ordinary shares of the Company standing to the credit of the said securities account. 3. The Form of Proxy shall be in writing under the hand of the appointor or his/her attorney duly authorised in writing or, if the appointor is a corporation, either under its common seal or under the hand of an officer or attorney duly authorised. 4. All Forms of Proxy must be deposited at the Company's Registered Office at Lot 5911, Jalan Perusahaan Satu, Kamunting Industrial Estate, Kamunting, Taiping, Perak Darul Ridzuan not less than 48 hours before the time set for holding the meeting or at any adjournment thereof. Explanatory Notes on Special Business: Ordinary Resolution 6 - Authority to Issue Shares Pursuant to Section 132D of the Companies Act, 1965 This resolution if passed, will give the Directors of the Company authority to issue shares for such purposes as the Directors in their absolute discretion consider to be in the interest of the Company, without having to convene a general meeting. This authority unless revoked or varied at a general meeting, will expire at the conclusion of the next Annual General Meeting of the Company. Ordinary Resolution 7 - Proposed Renewal of Shareholders Mandate This resolution, if passed, will enable the Company s subsidiary to enter into recurrent related party transactions which are necessary for its subsidiary dayto-day operations, in the ordinary course of business and on normal commercial terms that are not more favourable to the related party than those generally available to the public and are not detrimental to the minority shareholders of the Company.

5 STATEMENT ACCOMPANYING NOTICE OF ANNUAL GENERAL MEETING 4 GUNUNG CAPITAL BERHAD ( P) Directors who are standing for re-election at the Fourteenth (14th) Annual General Meeting of Gunung Capital Berhad are as follows: i) Datuk Ahmad Shalimin bin Ahmad Shaffie (Article 101 of the Company s Articles of Association) ii) Malik Parvez Ahmad bin Nazir Ahmad (Article 108 of the Company s Articles of Association) Pursuant to paragraph 8.28(2) of the Listing Requirements of Bursa Malaysia Securities Berhad, the details of the above Directors who are seeking re-election are set out in their respective profiles which appear in the Profile of Directors on pages 6 to 7 of this Annual Report. The details of the Directors securities holdings in the Company are set out in the Analysis of Shareholdings and Warrantholdings which appear on pages 49 to 53 of this Annual Report.

6 CORPORATE INFORMATION 5 Board of Directors Low Bok Tek Chairman, Non Independent & Non Executive Director Tang Yuet Mun, PPT Executive Director Peter Wong Hoy Kim Senior Independent & Non Executive Director ANNUAL REPORT 2008 Datuk Ahmad Shalimin bin Ahmad Shaffie, DMSM Independent & Non Executive Director Malik Parvez Ahmad bin Nazir Ahmad Independent & Non Executive Director Audit Committee Datuk Ahmad Shalimin bin Ahmad Shaffie, DMSM (Chairman) Peter Wong Hoy Kim Malik Parvez Ahmad bin Nazir Ahmad Nomination Committee Datuk Ahmad Shalimin bin Ahmad Shaffie, DMSM (Chairman) Peter Wong Hoy Kim Principal Banker Malayan Banking Berhad Registered Office Lot 5911, Jalan Perusahaan Satu Kamunting Industrial Estate Kamunting, Taiping Perak Darul Ridzuan, Malaysia Tel: (605) Fax: (605) Website: Remuneration Committee Datuk Ahmad Shalimin bin Ahmad Shaffie, DMSM (Chairman) Peter Wong Hoy Kim Tang Yuet Mun, PPT Auditors STYL Associates (AF ) Chartered Accountants 107B, Jalan Aminuddin Baki Taman Tun Dr. Ismail Kuala Lumpur, Malaysia Company Secretaries Eric Toh Chee Seong (LS ) Jesslyn Ong Bee Fang (MAICSA ) Stock Exchange Listing Bursa Malaysia Securities Berhad Share Registrar Insurban Corporate Services Sdn Bhd 149, Jalan Aminuddin Baki Taman Tun Dr. Ismail Kuala Lumpur, Malaysia Tel: (603) Fax: (603)

7 DIRECTORS PROFILE 6 GUNUNG CAPITAL BERHAD ( P) LOW BOK TEK (Aged 51, Malaysian) Chairman, Non-Independent Non-Executive Director Mr Low Bok Tek has been the Chairman of the Company since 13 September He has assumed the position of Chief Executive Officer of the Company from 20 July 2001 to 28 June He has more than 20 years of entrepreneurship experience in the motor vehicles industry, public transport industry and rubber latex gloves industry. He is also presently the Executive Chairman and Chief Executive Officer of Latexx Partners Berhad. He is a Director of several subsidiaries of Gunung Capital Group and sits on the Boards of several private limited companies. He is deemed interested in related party transactions as disclosed on page 14 of the Annual Report. He has a deemed interest in 13,599,129 ordinary shares in the Company held by BT Capital Sdn Bhd, a major shareholder of the Company. TANG YUET MUN, PPT (Aged 53, Malaysian) Executive Director Mr Tang Yuet Mun was appointed to the Board on 16 November 2007 as an Independent Non-Executive Director and was a member of the Audit Committee of the Company. He was then re-designated as an Executive Director of the Company on 24 June 2008 and became a member of the Remuneration Committee. He is a member of the Malaysian Institute of Accountants and an accredited Certified Financial Planner by the Financial Planning Association of Malaysia. He is also a member of the Institute of Chartered Accountants, New Zealand. He qualified as a Chartered Accountant in New Zealand in He has worked in chartered accountancy, industrial manufacturing, commercial sector and retail industries both in New Zealand and Malaysia and currently he is a Chartered Accountant in public practice. He does not hold any shares in the Company or in any of its subsidiaries. He does not have any family relationship with any director and/or substantial shareholder of the Company. Y. Bhg. DATUK AHMAD SHALIMIN BIN AHMAD SHAFFIE, DMSM (Aged 40, Malaysian) Independent Non-Executive Director Y.Bhg Datuk Ahmad Shalimin Bin Ahmad Shaffie, DMSM was appointed to the Board on 7 November He is the Chairman of the Audit Committee, Nomination Committee and Remuneration Committee of the Company. He graduated from the School of Public Administration & Law, University Teknologi Mara in His experience ranges from securities dealings, services, retailing to logistics. He is the President of Association of Malaysian Haulers, a member of the Malaysia Indonesia Business Council and Malaysia Entrepreneurs Council. His directorship in other public companies is in Mexter Technology Berhad. He was conferred with the DMSM award which carries the title of Datuk by the Yang Di-Pertua Negeri Melaka on 6 November He does not hold any shares in the Company or in any of its subsidiaries. He does not have any family relationship with any director and/or substantial shareholder of the Company.

8 DIRECTORS PROFILE (CONT D) 7 PETER WONG HOY KIM (Aged 68, Malaysian) Senior Independent Non-Executive Director Mr Peter Wong Hoy Kim was appointed to the Board on 7 November He is a member of the Audit Committee, Nomination Committee and Remuneration Committee of the Company. He is an ex-banker who was previously with HSBC Bank Malaysia Berhad for 33 years until his retirement in 1996 from the Bank s Ipoh Branch where he was the Manager. He underwent numerous training overseas in Hong Kong, U.S.A. and United Kingdom and has served in various other capacities in the Bank including, amongst others, Deputy Manager Credit Control and Manager Regional Credit, Peninsula North. His directorship in other public companies is in Latexx Partners Berhad and he sits on the board of several private limited companies. He does not hold any shares in the Company or in any of its subsidiaries. He does not have any family relationship with any director and/or substantial shareholder of the Company. ANNUAL REPORT 2008 MALIK PARVEZ AHMAD BIN NAZIR AHMAD (Aged 40, Malaysian) Independent Non-Executive Director En Malik Parvez Ahmad bin Nazir Ahmad was appointed as an Independent Non-Executive Director of the Company on 24 June 2008 and is a member of the Audit Committee. He is an accountant by profession and has over 10 years experience in the profession. He graduated from the International Islamic University in 1992 with a Bachelor of Accounting Degree. He is also a Chartered Accountant with the Malaysian Institute of Accountants. He worked in KPMG Peat Marwick from 1993 to 1997 and held the position of Senior Auditor when he left and joined Medtexx Partners Incorporated in the United States of America as an Accountant in From 2002 to 2004, he was the Financial Controller of D.B.E. Gurney Resources Berhad, a public listed company. He then became the Financial Controller of Latexx Partners Berhad, another public listed company until Currently, he is a Non-Independent Non-Executive Director of Latexx Partners Berhad. He does not hold any shares in the Company or in any of its subsidiaries. He does not have any family relationship with any director and/or substantial shareholder of the Company. None of the Directors has any conflicts of interests with the Company nor has any convictions for offences within the past ten years other than traffic offences.

9 CHAIRMAN S STATEMENT 8 GUNUNG CAPITAL BERHAD ( P) On behalf of the Board of Directors, I am pleased to present the Annual Report and Audited Financial Statements of the Company and the Group for the financial year ended 31 December FINANCIAL REVIEW For the financial year 2008, the Group registered an after tax profit of RM146,570 on a turnover of RM million compared to a loss of RM2.46 million on a turnover of RM76.3 million in The volatility of costs of latex concentrate affected tonnage sold during the year resulting in a decrease of 34.6% in revenue. Trading margin remained the same as last year but with aggressive costs reductions, the Group reduced operational costs which helped to produce a profit. The Group supplies latex concentrate to manufacturers of medical examination gloves and given that this segment of gloves is resilient to the global financial turmoil, the Board is cautiously optimistic that the year 2009 would again register positive results. FUTURE OUTLOOK The Board continues to explore opportunities to improve profitability, focusing on costs control and margin improvement and to enhance shareholder value. CORPORATE SOCIAL RESPONSIBILITY ( CSR ) The Group has enhanced the skill and knowledge of its employees by sending them to training programs appropriate to their level of responsibility. It has also inculcated a sense of responsibility and ownership to the goals of the Group in promoting awareness and adherence to national policies on safe guarding the environment and safety in the work place. ACKNOWLEDGEMENT On behalf of the Board, I would like to extend our sincere appreciation and thanks to shareholders, bankers, valued customers, suppliers, business associates and the regulatory authorities for their continued confidence and support in us. I would also like to extend our heartfelt thanks and gratitude to the management team and staff of the Group for their unwavering dedication and commitment to the Group. LOW BOK TEK Chairman 17 May 2009

10 STATEMENT ON CORPORATE GOVERNANCE 9 The Board of Directors ( Board ) of Gunung Capital Berhad is pleased to disclose to the shareholders on the manner the Group has applied the Principles and extent of compliance with the Best Practices in Corporate Governance as set out in Malaysian Code on Corporate Governance (the Code ) pursuant to Paragraph of the Listing Requirements of Bursa Malaysia Securities Berhad for the financial year ended 31 December 2008, unless otherwise stated. BOARD OF DIRECTORS ANNUAL REPORT 2008 Board Composition and Balance The Board currently comprises five (5) members as follows:- One (1) Executive Director One (1) Non-Independent Non-Executive Director Three (3) Independent Non-Executive Directors A brief description on the background of each Director is set out in the Directors' Profile on pages 6 to 7 of this Annual Report. The Board s composition represents a mix of knowledge, skills and expertise relevant to the Company s operations. The composition ensures that Independent Non-Executive Directors provide an element of objectivity, independent judgments and check and balance to the decision making process of the Board. The Independent Non-Executive Directors also ensure that the Group s development plans and business strategies are fully deliberated upon and all decisions taken are in the best interest of the shareholders, employees, customers and other stakeholders of the Group. In addition, the Board has identified a senior Independent Non-Executive Director to whom concerns or issues affecting the Group may be conveyed. Board Responsibility The Board has the overall responsibility for the strategic direction and retains full and effective control over the Group. The Chairman of the Board leads discussion and strategic planning at the Board level while the Executive Director is responsible for the day-to-day operations. Generally, the Board must ensure that the Company is being managed and its business conducted in accordance with high standards of accountability and transparency. Supply of Information Notices, together with the agenda of meetings were given to the Board seven (7) days before the meeting whereas board papers, whenever possible, were given three (3) days prior to the meetings for the Directors to study and evaluate the matters to be discussed. All Directors have access to the advice and services of the Company Secretary and may take independent professional advice at the Company s expense, in furtherance of their duties, if so required. Board Meetings Board meetings are held at least four (4) times a year at quarterly intervals with additional meetings convened when urgent decisions need to be taken between the scheduled meetings. During the financial year ended 31 December 2008, five (5) meetings were held, where it discussed a variety of matters including the Group s financial results, major investments, the business plan and directions of the Group. The attendances of the respective Directors are as follows:- Directors No. of Meetings Attended Low Bok Tek 5/5 Datuk Ahmad Shalimin bin Ahmad Shaffie 5/5 Peter Wong Hoy Kim 5/5 Tang Yuet Mun (re-designated as Executive Director on 24/6/2008) 5/5 Gan Chong Shyan (resigned on 11/6/2008) 3/3 Malik Parvez Ahmad bin Nazir Ahmad (appointed on 24/6/2008) 2/2

11 STATEMENT ON CORPORATE GOVERNANCE (CONT D) 10 Board Committees GUNUNG CAPITAL BERHAD ( P) The following committees have been established to assist the Board to discharge its duties and responsibilities. The Board has delegated certain powers and duties to these committees, which operate within the defined terms of reference. Audit Committee The details are set out on pages 16 to 18 of this Annual Report. Nomination Committee The Nomination Committee, which consists wholly of Non-Executive Directors, and its primary function, is to propose new nominees for the Board and assess directors on an on-going basis. The final decision as to who shall be nominated should be the responsibility of the full Board after considering the recommendations of the Nomination Committee. The Nomination Committee comprises the following members: Datuk Ahmad Shalimin bin Ahmad Shaffie (Chairman / Independent & Non-Executive Director) Peter Wong Hoy Kim (Member / Senior Independent & Non-Executive Director) The Committee met three (3) times during the financial year ended 31 December Remuneration Committee The Remuneration Committee, which consists mainly of Non-Executive Directors, is responsible for the implementation of remuneration policy and to make recommendation to the Board on the remuneration packages of the Executive Directors. The Executive Directors do not participate in discussion and decision of their own remuneration. The Non-Executive Directors are abstained from deliberations and voting on decision in respect of his individual remuneration package. The determination of the remuneration package for Non-Executive Directors is a matter for the Board as a whole and subject to the approval of shareholders at the Annual General Meeting. The Remuneration Committee comprises the following members: Datuk Ahmad Shalimin bin Ahmad Shaffie (Chairman / Independent & Non-Executive Director) Peter Wong Hoy Kim (Member / Senior Independent & Non-Executive Director) Tang Yuet Mun (Member / Executive Director) The Committee met once during the financial year ended 31 December Directors Remuneration The details of the remuneration of the Directors of the Company for the financial year ended 31 December 2008 are as follows:- Salaries and Emoluments Fees Total (RM) (RM) (RM) Executive Directors 149,338 1, ,588 Non Executive Directors 21,000 25,833 46,833 The number of Directors whose remuneration falls into the following bands is as follows:- Number of Directors Range of Remuneration Executive Non-Executive Below RM50, RM100,001 RM150,

12 STATEMENT ON CORPORATE GOVERNANCE (CONT D) 11 Employee Share Option Scheme (ESOS) An ESOS Option Committee was formed to oversee the administration as well as to ensure the proper implementation of the ESOS according to the Bye-Laws. The ESOS has expired on 15 September Appointment and Re-election of Directors ANNUAL REPORT 2008 In accordance with the Company s Articles of Association, all Directors who are appointed by the Board during the year are subject to re-election by shareholders at the following Annual General Meeting. The Company s Articles of Association also provide that at least one-third of the remaining Directors shall retire from office at the Annual General Meeting. All Directors shall retire from office at least once in every three (3) years but shall be eligible for re-election. Directors Training The Board acknowledges the importance of continuous education to keep abreast with regulatory updates and development in the business environment. The Board has taken on the responsibility in evaluating and determining the specific and continuous training needs of the Directors. The Directors have attended training and will continue to attend other relevant training programmes as appropriate, to further enhance their skills and knowledge. During the financial year ended 31 December 2008, the Directors have attended the following training programmes and seminars:- Low Bok Tek Financial Reporting Standards (FRS 101) : 15 November 2008 Presentation of Financial Statements and Tax Incentives for Manufacturing Companies Peter Wong Hoy Kim Financial Reporting Standards (FRS 101) : 15 November 2008 Presentation of Financial Statements and Tax Incentives for Manufacturing Companies Datuk Ahmad Shalimin Financial Reporting Standards (FRS 101) : 15 November 2008 bin Ahmad Shaffie Presentation of Financial Statements and Tax Incentives for Manufacturing Companies Tang Yuet Mun National Tax Conference 19 August August 2008 National Seminar on Taxation 2008 (Budget) 11 September 2008 Financial Reporting Standards (FRS 101) : 15 November 2008 Presentation of Financial Statements and Tax Incentives for Manufacturing Companies Malik Parvez Ahmad Managing Bonds From A to Z 13 August 2008 bin Nazir Ahmad 14 August 2008 Financial Reporting Standards (FRS 101) : 15 November 2008 Presentation of Financial Statements and Tax Incentives for Manufacturing Companies Risk Management & Scoping 17 November November 2008 SHAREHOLDERS The Board maintained an effective communication policy that enables both the Board and the management to communicate effectively with its shareholders, stakeholders and the public. The policy effectively interprets the operations of the Group to the shareholders and accommodates feedback from shareholders, which are factored into the Group s business decision.

13 STATEMENT ON CORPORATE GOVERNANCE (CONT D) 12 SHAREHOLDERS (CONT D) GUNUNG CAPITAL BERHAD ( P) The Board communicates information on the operations, activities and performance of the Group to the shareholders, stakeholders and the public through the Annual Report, circulars to shareholders, various announcements made to Bursa Securities Malaysia Berhad, which includes announcement on quarterly results; and the Company website at The Annual General Meeting serves as an important mean for shareholders communication. Notice of the Annual General Meeting and Annual Reports are sent to shareholders prior to the meeting. At each Annual General Meeting, the Board presents the performance and progress of the Group and provides shareholders with the opportunity to raise questions pertaining to the Group. The Chairman and the Board will respond to the questions raised by the shareholders during the Annual General Meeting. The Board has ensured each item of special business included in the notice of meeting will be accompanied by an explanatory statement on the effects of the proposed resolution. ACCOUNTABILITY AND AUDIT The Board aims to present a balanced and understandable assessment of the Group s position and prospect through the annual financial statements and quarterly announcements of results to Bursa Securities Malaysia Berhad. The Directors are responsible to ensure the annual financial statements are prepared in accordance with the provisions of the Companies Act, 1965 and applicable approved accounting standards in Malaysia. The Directors also have the responsibilities for taking steps as are reasonably available to them to safeguard the assets of the Group and prevent any fraud or irregularities. Internal Control The Board acknowledges its responsibility for establishing a sound system of internal control for the Group to achieve its objectives within the acceptable risk profile as well as safeguarding shareholders interest and the Group s assets. Information on the Group s internal control is presented in the Statement on Internal Control set out on page 15 of this Annual Report. Relationship with Auditors The Audit Committee supports the Board in its responsibility to oversee the financial reporting and the effectiveness of the internal control of the Group. The Group has always maintained a formal and transparent relationship with its external and internal auditors through the Audit Committee. The Audit Committee acts as an independent channel of communication for the auditors to convey its objective views and professional advice on the Group s financial and operational activities. Key features for the relationship of the Audit Committee with both the internal and external auditors are more particularly described in the Audit Committee Report set out on pages 16 to 18 of this Annual Report. STATEMENT OF DIRECTORS RESPONSIBILITIES IN PREPARING THE FINANCIAL STATEMENTS The Directors are responsible for the preparation of financial statements prepared for each financial year to give a true and fair view of the state of affairs of the Group and the Company as at the end of each financial year and of the results and cash flow of the Group and the Company for the financial year then ended. In preparing the financial statements, the Directors have:- adopted suitable accounting policies and apply them consistently; made judgments and estimates that are reasonable and prudent; and ensured that applicable approved accounting standards have been complied with. The Directors are responsible for ensuring that proper accounting and other records are kept which disclose with reasonable accuracy at any time the financial position of the Group and the Company and that the underlying financial statements are prepared in compliance with the provisions of the Companies Act, 1965.

14 ADDITIONAL COMPLIANCE INFORMATION 13 The information set out below is disclosed in compliance with the Listing Requirements of Bursa Malaysia Securities Berhad. 1. Utilisation of Proceeds The Company did not raise any funds through any corporate proposal during the financial year ended 31 December ANNUAL REPORT Options, Warrants and Convertible Securities No options in the Company were exercised during the financial year. As at the end of the financial year no warrants have been exercised. 3. Non-Audit Fees There was no non-audit fees paid to the external auditors for the financial year ended 31 December Material Contracts Involving Directors and Major Shareholders There were no material contracts subsisting as at 31 December 2008 or entered into since the end of the previous financial year, by the Company and its subsidiaries involving Directors and major shareholders interest other than those disclosed under notes to the account on Related Party Transactions of revenue in nature. 5. Contract Relating to Loans During the financial year, there were no contracts relating to loans entered into by the Company involving the interests of directors and/or major shareholders. 6. Shares Buy-Back The Company did not carry out any shares buy-back exercise during the financial year ended 31 December American Depository Receipt ( ADR )/Global Depository Receipt ( GDR ) The Company did not sponsor any ADR or GDR programme during the financial year ended 31 December Sanctions and/or Penalties There were no sanctions and/or penalties imposed on the Company and its subsidiaries, Directors or management by the regulatory bodies. 9. Profit Estimate, Forecast or Projection The Company and its subsidiaries did not release any profit estimate, forecast or projection and there was no variation in results by 10% or more between the audited and the unaudited results announced during the financial year ended 31 December Profit Guarantees During the financial year, there were no profit guarantees given by the Company. 11. Revaluation Policy on Landed Properties The revaluation policy on landed properties is as set out in the Financial Statements.

15 ADDITIONAL COMPLIANCE INFORMATION (CONT D) Recurrent Related Party Transactions ( RRPT ) of a Revenue or Trading Nature GUNUNG CAPITAL BERHAD ( P) The Company had at the 13th Annual General Meeting held on 6 June 2008 obtained shareholders mandate for the Company and/or its subsidiary companies to enter into recurrent transactions of a revenue or trading nature, which are necessary for its day to day operations and are in the ordinary course of business, with related parties. The said general mandate took effect from 6 June 2008 until the conclusion of the forthcoming Annual General Meeting of the Company. The Company intends to seek a renewal of the said general mandate for recurrent related party transactions at the forthcoming Annual General Meeting of the Company. The aggregate value of the recurrent transactions of a revenue or trading nature conducted during the financial year under review between the Company and/or its subsidiary companies with related parties are set out below:- Aggregate Nature of transactions Related Party Interested Party value (RM) Sales of latex concentrate Subsidiary of LPB Low Bok Tek ( LBT ), RM49,867,286 by a subsidiary of Latexx Manufacturing a Director of GCB Group Gunung Capital Berhad Sdn Bhd and a Major Shareholder ( GCB ) to a subsidiary of of GCB Latexx Partners Berhad LBT, a Director of LPB ( LPB ) Group and a Major Shareholder of LPB BT Capital Sdn Bhd, a party connected to LBT which is also a Major Shareholder of both LPB and GCB.

16 STATEMENT ON INTERNAL CONTROL 15 Pursuant to Paragraph 15.27(b) of the Bursa Securities Listing Requirements, the Board of Directors of Gunung Capital Berhad is pleased to make a statement in the annual report on the state of the internal controls of the Group as follows:- Directors Responsibilities The Board of Directors acknowledges its responsibility for establishing and maintaining a sound system of internal control, as well as continuously reviewing its adequacy and integrity so as to safeguard shareholders investment and the Group s assets. The system of internal control is designed to manage and minimise risk but cannot eliminate the risk of failure to achieve business objectives and plans. Accordingly, it can only provide reasonable and not absolute assurance against material misstatement or loss. ANNUAL REPORT 2008 Key elements of the Group s internal control include:- Internal Control Environment Within the Group, there are organisational structures in place for each operating unit with clearly defined levels of authority. Management of each operating unit has clear responsibility for identifying risk affecting their unit and the overall Group s business as a whole. They are also charged with instituting adequate procedures and internal controls to mitigate and monitor such risks on an ongoing basis. Internal policies and procedures are documented to formalise the operations of the Group. Audit Committee The Board has empowered the Audit Committee with the duty of reviewing and monitoring the effectiveness of the Group s system of internal control. The Audit Committee reviews the Group s financial reports, internal and external audit reports and the internal control system. Its independence is assured by the current composition comprising all members who are non-executive Independent Directors. Internal Audit Functions During the financial year, the Group outsourced its internal audit function to assist the Audit Committee with the examination and evaluation of the adequacy and effectiveness of the internal control system, including control environment, risk assessment process and operational control activities. The Internal Auditor had reviewed the Group s system of internal controls and had reported the internal audit activities carried out within the year, the significant risks and findings and necessary recommendations to the Audit Committee on a quarterly basis. The internal audit focuses on determining whether the controls provide reasonable assurance of effective and efficient operations, as to reliability and integrity of financial data and reports, and compliance with established policies and procedures. Conclusion The Board is of the view that there is no significant breakdown or weaknesses in the system of internal control of the Group that may result in material losses incurred by the Group for the financial year ended 31 December Measures to continually strengthen the effectiveness of the internal controls will be implemented by the Board to keep up with the ever-changing external and internal factors affecting the Group s businesses.

17 REPORT OF THE AUDIT COMMITTEE 16 COMPOSITION OF THE AUDIT COMMITTEE GUNUNG CAPITAL BERHAD ( P) The Audit Committee of the Company comprises the following members: Datuk Ahmad Shalimin bin Ahmad Shaffie (Chairman/Independent & Non Executive Director) Peter Wong Hoy Kim (Member/Senior Independent & Non Executive Director) Malik Parvez Ahmad bin Nazir Ahmad (Member/Independent & Non Executive Director) ATTENDANCE OF AUDIT COMMITTEE MEETINGS The details of attendance of each Audit Committee member in the Audit Committee meetings held during the financial year ended 31 December 2008 are as follows:- Name Attendance Datuk Ahmad Shalimin bin Ahmad Shaffie 5/5 Peter Wong Hoy Kim 5/5 Tang Yuet Mun (resigned on 24/06/2008) 3/3 Malik Parvez Ahmad bin Nazir Ahmad (appointed on 24/06/2008) 2/2 TERMS OF REFERENCE OF AUDIT COMMITTEE Terms of Membership The Committee shall be appointed by the Board of Directors from amongst its members and must be composed of no fewer that three (3) members. All the Audit Committee members must be non-executive directors, with a majority are independent directors. The members of Audit Committee shall elect a chairman from among their number who shall be an independent director. At least one (1) member of Audit Committee must be a member of the Malaysian Institute of Accountants ( MIA ); or if he is not a member of the MIA, he must have at least 3 years working experience and he must have passed the examinations specified in Part I of the 1st Schedule of the Accountants Act 1967; or he must be a member of one of the associations of accountants specified in Part II of the 1st Schedule of the Accountants Act 1967; or fulfils such other requirements prescribed or approved by the Bursa Malaysia Securities Berhad. In the event of any vacancy in the Committee resulting in the non-compliance with Paragraph of the Listing Requirements of Bursa Malaysia Securities Berhad, the Board shall appoint a new member within three (3) months. The Board of Directors shall review the term of office and the performance of the Audit Committee and each of its members at least once in every three (3) years. No alternate Director shall be appointed as a member of the Audit Committee. Meetings and Quorum of the Audit Committee The Committee shall meet at least four (4) times a year and the quorum shall be at least two (2) members, majority of whom must be Independent Directors. The Chairman of the Audit Committee shall be the chairman of the meeting. If at any meeting the chairman is not present, the members present shall elect a chairman from among their number who shall be an independent director. The Chairman shall call a meeting of the Audit Committee if a request is made by any committee member or the external auditors. Notice of a meeting of the Audit Committee shall be given to all members in writing via facsimile or by hand delivery or by courier. The decision of the Audit Committee shall be decided by a majority of votes, the Chairman of the meeting shall have a casting vote.

18 REPORT OF THE AUDIT COMMITTEE (CONT D) 17 Meetings and Quorum of the Audit Committee (Cont d) The Company Secretary shall act as secretary of the Audit Committee and also be responsible for keeping the minutes of meeting of the Audit Committee and circulating to each member of the committee and to the other member of the board. All minutes of meetings shall be open to inspection by the Audit Committee and the Board of Directors. The Audit Committee may require the attendance of any management staff from the Finance/Accounts Department or other departments deemed necessary together with a representative or representatives from the external auditors. ANNUAL REPORT 2008 Functions of the Audit Committee The duties and responsibilities of the Audit Committee shall include the following:- (i) (ii) (iii) (iv) (v) (vi) To review and discuss with the external auditor, the audit plan and the scope of the audit; To review and discuss with the external auditor, their evolution of the system of internal controls and their audit report; To review the assistance given by the employees of the Company to the external auditors; To review the external auditor s management letter and the management s response. To report to the Board if there is reason (supported by grounds) to believe that the external auditor is not suitable for reappointment; To review the quarterly and year-end financial statements, prior to the approval by the Board of Directors, focusing particularly on: Changes in or implementation of major accounting policies and practices; Significant adjustments arising from the audit; The going concern assumption; Significant and unusual events; and Compliance with accounting standards and other legal requirements. (vii) To review the adequacy of the scope, functions, competency and resources of the internal audit function, and that it has the necessary authority to carry out its work; (viii) To review the internal audit programme and the results of the internal audit programme, processes investigation undertaken and whether or not that appropriate action is taken on the recommendations of the internal audit function; (ix) (x) (xi) To review any related party transactions and conflict of interest situation that may arise within the Company or the Group including any transaction, procedure or course of conduct that raises questions of management integrity; To consider the appointment, the audit fee and resignation or dismissal of the external auditors; and To recommend the nomination of a person as external auditors. Rights of the Audit Committee The Audit Committee has ensured that, wherever necessary and reasonable for the performance of its duties, in accordance with a procedure determined by the Board:- (i) (ii) (iii) have authority to investigate any matter within its terms of reference; have the resources which are required to perform its duties; have full and unrestricted access to any information pertaining to the Company; (iv) have direct communication channels with the external auditors and person(s) carrying out the internal audit function or activity;

19 REPORT OF THE AUDIT COMMITTEE (CONT D) 18 Rights of the Audit Committee (Cont d) GUNUNG CAPITAL BERHAD ( P) (v) be able to obtain independent professional or other advice; and (vi) be able to convene meetings with the external auditors, the internal auditors or both, excluding the attendance of other directors and employees of the Company, whenever deemed necessary. SUMMARY OF ACTIVITIES OF THE AUDIT COMMITTEE The activities of the Audit Committee during the financial year ended 31 December 2008 include the followings:- Reviewed the quarterly financial result announcements and recommended to the Board for approval; Reviewed the Group s annual audited financial statements and recommended to the Board for approval; Assessed the Group s financial performance; Reviewed with the External Auditors, the results of the annual audit and issues arising from the audits; Recommended the nomination of External Auditors for Board s approval; Reviewed the recurrent related party transactions within the Group to ensure compliance with laws and regulations and the renewal of shareholders mandate; Reviewed and deliberated on issues raised in the audit reports by Internal Auditors in relation to weaknesses in internal controls; Ensuring that the internal audit recommendations on audit findings were implemented and addressed by the Management; Reviewed the Audit Committee Report and Statement on Internal Control. SUMMARY OF ACTIVITIES OF THE INTERNAL AUDIT FUNCTION During the financial year, the Company outsourced its internal audit functions, which is tasked with the aim of assisting the Audit Committee in assessing risks, recommend measures to mitigate risks, establish cost effective controls and assess proper governance process. The internal auditor has conducted ongoing review of the adequacy and effectiveness of the system of internal control. The audit conducted including reviewing the extent of compliance with the established internal policies and procedures governing the operations of the Group. Audits were carried out on all operating units within the Group and audit findings were presented to the Audit Committee on a quarterly basis. Some internal weaknesses were identified during the financial year under review, all of which have been or are being addressed by the management. STATEMENT BY THE AUDIT COMMITTEE IN RELATION TO OPTIONS ALLOCATION The Company had implemented an Employee Share Option Scheme ( ESOS ) on 16 September 2003 for a period of five years. The Committee has reviewed the allocation of share options pursuant to the ESOS is in compliance with criteria as set out in the ESOS Bye-Laws. During the financial year, no allocation of share options was made by the Company pursuant to the ESOS and no share options were exercised by the option holders during the financial year and the ESOS has expired on 15 September 2008.

20 20 Directors Report 23 Statement by Directors 23 Statutory Declaration 24 Independent Auditors Report 26 Balance Sheets 27 Income Statements 28 Statements of Changes in Equity 29 Statements of Cash Flows 30 Notes to the Financial Statements FINANCIAL STATEMENTS

21 DIRECTORS REPORT FOR THE YEAR ENDED 31 DECEMBER GUNUNG CAPITAL BERHAD ( P) The directors hereby submit their report and the audited financial statements of the Group and of the Company for the financial year ended 31 December PRINCIPAL ACTIVITIES The Company is an investment holding company and the principal activities of its subsidiary companies are listed in Note 7 to the financial statements. There have been no significant changes in the nature of these activities during the financial year. FINANCIAL RESULTS Group RM Company RM Net profit/(loss) for the year 146,570 (533,611) DIVIDENDS There is no dividend proposed, declared or paid by the Company during the financial year. The directors do not recommend the payment of any dividend in respect of the current financial year. RESERVES AND PROVISIONS There were no material transfers to or from reserves or provisions during the financial year other than those disclosed in the financial statements. ISSUE OF SHARES AND DEBENTURES The Company has not issued any new share or debenture during the financial year. SHARE OPTIONS No options were granted to any person to take up unissued shares of the Company during the year apart from the issue of options granted pursuant to the Employee Share Option Scheme. EMPLOYEE SHARE OPTION SCHEME ( ESOS ) The Company implemented an ESOS on 16 September 2003 for a period of 5 years. The ESOS is governed by the byelaws which were approved by the shareholders on 4 August On 18 June 2004, the Company obtained the approval of the shareholders on the proposed amendments to the Bye-Laws of the ESOS which, amongst others, to extend the participation in the ESOS to Non-Executive Directors of the Company. The ESOS has expired on 15 September Information with respect to the number of options granted under the ESOS is as follows:- No of Share Option As at 1 January ,000 Less: Lapsed (401,000) As at 31 December

22 DIRECTORS REPORT (CONT D) FOR THE YEAR ENDED 31 DECEMBER DIRECTORS The directors who served since the date of the last report are:- Low Bok Tek Ahmad Shalimin Bin Ahmad Shaffie Peter Wong Hoy Kim Teong Lian Aik (Appointed on ; Resigned on ) Gan Chong Shyan (Resigned on ) Tang Yuet Mun Malik Parvez Ahmad Bin Nazir Ahmad (Appointed on ) ANNUAL REPORT 2008 In accordance with Article 101 of the Company's Articles of Association, Ahmad Shalimin Bin Ahmad Shaffie retires at the forthcoming annual general meeting and being eligible, offers himself for re-election. In accordance with Article 108 of the Company s Articles of Association, Malik Parvez Ahmad Bin Nazir Ahmad retires from the Board at the forthcoming annual general meeting and being eligible, offers himself for re-election. DIRECTORS BENEFITS Since the end of the last financial year, no director of the Company has received or entitled to receive any benefit (other than the directors remuneration as disclosed in the financial statements) by reason of a contract made by the Company or a 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 except for the related party transactions as disclosed in Note 23 to the financial statements. Neither during nor at the end of the financial year, was the Company a party to any arrangements whose object is to enable the directors to acquire benefits by means of the acquisition of shares in, or debentures of, the Company or any other body corporate. DIRECTORS INTEREST The shareholdings in the Company of those who were directors at the end of the financial year, as recorded in the Register of Directors Shareholdings kept by the Company under Section 134 of the Companies Act, 1965 were as follows:- Number of ordinary shares of RM1.00 each Balance at Balance at Bought Sold Shares in the Company - Gunung Capital Berhad Low Bok Tek - indirect interest* 13,599, ,599,129 Number of options for ordinary shares of RM1.00 each Balance at Balance at Granted Lapsed Low Bok Tek 359, ,000 - * By virtue of Section 6A(4)(c) of the Companies Act, By virtue of his interest in the shares of the Company, Low Bok Tek is deemed interested in the shares of all the subsidiaries of the Company to the extent that the Company has an interest.

23 DIRECTORS REPORT (CONT D) FOR THE YEAR ENDED 31 DECEMBER STATUTORY INFORMATION ON THE FINANCIAL STATEMENTS GUNUNG CAPITAL BERHAD ( P) a) Before the income statements and balance sheets of the Group and of the Company were made out, the directors took reasonable steps: (i) (ii) to ascertain that proper action had been taken in relation to the writing off of bad debts and the making of allowance for doubtful debts and have satisfied themselves that all known bad debts have been written off and that adequate allowance had been made for doubtful debts; and to ensure that any current assets, other than debts, which were unlikely to realise in the ordinary course of business, 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 to realise. b) At the date of this report, the directors are not aware of any circumstances: (i) (ii) which would necessitate the writing off of bad debts or providing of allowance for doubtful debts in the financial statements of the Group and of the Company; or which would render the values attributed to current assets in the financial statements of the Group and of the Company misleading; or (iii) 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. c) At the date of this report, there does not exist: (i) (ii) 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. d) No contingent or other liability has become enforceable or is likely to become enforceable within the period of twelve months after the end of the financial year which, in the opinion of the directors, will or may substantially affect the ability of the Group and of the Company to meet their obligations as and when they fall due. OTHER STATUTORY INFORMATION a) At the date of this report, the directors are not aware of any circumstances not otherwise dealt with in this report or the financial statements of the Group and of the Company which would render any amount stated in the financial statements misleading. b) In the opinion of the directors, (i) (ii) the results of the 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 the operations of the Group and of the Company for the financial year in which this report is made. AUDITORS The auditors, Messrs STYL Associates, have indicated their willingness to continue in office. Signed on behalf of the Board in accordance with a resolution of the directors, LOW BOK TEK Director TANG YUET MUN Director Taiping, Perak Darul Ridzuan Date : 23 April 2009