G NEPTUNE BERHAD (Incorporated in Malaysia) Company No: D

Transcription

1 G NEPTUNE BERHAD (Incorporated in Malaysia) 0

2 CONTENTS EXECUTIVE DIRECTOR'S STATEMENT 2 CORPORATE INFOATION 3 PROFILE OF DIRECTORS 4-5 CORPORATE GOVERNANCE STATEMENT 6-9 AUDIT COMMITTEE REPORT STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL OTHER DISCLOSURES DIRECTORS' REPORT STATEMENT BY DIRECTORS & STATUTORY DECLARATION 21 INDEPENDENT AUDITORS' REPORT STATEMENTS OF FINANCIAL POSITION 25 STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME 26 STATEMENTS OF CHANGES IN EQUITY STATEMENTS OF CASH FLOWS NOTES TO THE FINANCIAL STATEMENTS ANALYSIS OF SHAREHOLDINGS 65 LIST OF THIRTY LARGEST SHAREHOLDERS 66 NOTICE OF ANNUAL GENERAL MEETING PROXY FO 71 1

3 EXECUTIVE DIRECTOR S STATEMENT DEAR SHAREHOLDERS, On behalf of the Board of Directors of G Neptune Berhad and its subsidiaries collectively, (the "Group"), it is my pleasure to present to you the Annual Report for financial year ended 31 December 2015 ("FY2015") was a challenging year for G Neptune. Even though business competition remained stiff with continued slow economic growth in Malaysia, there were many reasons to be optimistic on several fronts for the Group. The performance of the Group will depend substantially on the market demand, operating efficiencies and cost control measures of its various divisions. In the meantime, the Board is actively looking for new business activities which are favourable to the group. Results/Performance For the financial year ended 31 December 2015, the Group recorded a revenue of 0.48 million and pre-tax profit of 0.73 million as compared to a revenue of 2.65 million and pre-tax loss of 1.32 million for the financial year ended 31 December This was principally attributable to a one-off sale of apparel products in FY2014. Prospects The Board expects the performance of the Group for the next financial year ending 31 December 2016 to be challenging in view of the current global economic conditions. The performance of the Group will depend substantially on the market demand, operating efficiencies, cost control measures of its various divisions. In the near future, the Board would continue to focus on improving processes for efficiencies gains and effective deployment of financial resources to optimise return and at the same time to seek new revenue streams to improve existing position. The Group is optimistic of its future and long term prospects. Acknowledgement I would like to thank the Board of Directors for their guidance and encouragement. Furthermore, I would like to thank the management team and all the staff for their dedication and commitment in working together. Lastly, I would like to thank all our valued clients, suppliers, professional colleagues and business partners for your collaboration, cooperation and continued support. Khoo Yick Keung Executive Director 2

4 CORPORATE INFOATION BOARD OF DIRECTORS Khoo Yick Keung Executive Director TanSri Singadju Benui Independent Non-Executive Director Chan Lai Yi Independent Non-Executive Director Lo Yin Ling Independent Non-Executive Director Choi Wing Koon Independent Non-Executive Director AUDIT COMMITTEE Choi Wing Koon Chairman Independent Non-Executive Director Chan Lai Yi Member Independent Non-Executive Director Lo Yin Ling Member Independent Non-Executive Director NOMINATION & REMUNERATION COMMITTEE Chan Lai Yi Chairman Independent Non-Executive Director Lo Yin Ling Member Independent Non-Executive Director Khoo Yick Keung Member Executive Director AUDITORS Messrs SJ Grant Thornton (Member of Grant Thornton International Ltd.) Chartered Accountants. Level 11, Sheraton Imperial Court Jalan Sultan Ismail Kuala Lumpur Wilayah Persekutuan Tel : Fax : REGISTERED OFFICE No. 9A, Jalan Medan Tuanku Medan Tuanku Kuala Lumpur Tel : Fax : PRINCIPAL PLACE OF BUSINESS Room 12, 7/F, K.Wah Centre, 191 Java Road, North Point, Hong Kong SHARE REGISTRAR Mega Corporate Services Sdn Bhd Level 15-2, Bangunan Faber Imperial Court Jalan Sultan Ismail Kuala Lumpur Wilayah Persekutuan Tel : Fax : STOCK EXCHANGE LISTING ACE Market of Bursa Malaysia Securities Berhad Stock Name : GNB Stock Code : 0045 COMPANY SECRETARY Leong Sue Ching (MAICSA No: ) 3

5 PROFILE OF DIRECTORS KHOO YICK KEUNG Executive Director Member of the Nomination & Remuneration Committee Hong Kong Citizen, Age 45 years Mr. Khoo Yick Keung was appointed to the Board of G Neptune Berhad on 20 January He graduated from Tang King Po College. Mr. Khoo Yick Keung has developed his personal career in 1997 regarding jewelry design business. Besides jewelry design, Mr. Khoo s job scope included preparation of various business plans and developing his design business in China and some other Asia countries. Equipped with strong sense to keep up with design concepts to the latest trend and great connection network in China, in 2010, he started a jewelry export business. He is not a director of any other public companies. He has no family relationship with any director and/or major shareholder of the Company. TANSRI SINGADJU BENUI Independent Non-Executive Director Indonesia Citizen, Age 46 years Mr. Tansri Singadju Benui was appointed to the Board of G Neptune Berhad on 20 January Mr Tansri Singaju Benui was appointed as a director of PT. Wira Griya Mustika, a steel production company, in Before the appointment, he was managing different business divisions of the company. In 1991, he graduated from a college in Japan with a Diploma in Management and joined the company thereafter. As the Company was also actively trading in the U.S. markets, Mr Benui had acquired extensive knowledge in foreign markets and in dealing with vast clientele base. He is not a director of any other public companies. He has no family relationship with any director and/or major shareholder of the Company. CHAN LAI YI Independent Non-Executive Director Member of the Audit Committee Chairman of the Nomination & Remuneration Committee Hong Kong Citizen, Age 44 years Ms. Chan Lai Yi was appointed to the Board of G Neptune Berhad on 26 February Ms. Chan Lai Yi graduated from Tai Po Sam Yuk Secondary School. With excellent communication skill with clients and outgoing personality, she was appointed as a manager of a trading export company from China in During her appointment, she performed functional analysis as well as to manage and follow-up on all functional and business related support issues for regional online trading services. She is not a director of any other public companies. She has no family relationship with any director and/or major shareholder of the Company. 4

6 PROFILE OF DIRECTORS (CONT D) LO YIN LING Independent Non-Executive Director Member of the Audit Committee Member of the Nomination & Remuneration Committee Hong Kong Citizen, Age 41 years Ms. Lo Yin Ling was appointed to the Board of G Neptune Berhad on 20 February She graduated from Thames Valley University (UK) with a Bachelor of Business Administration in year Ms. Lo Yin Ling started to work in the field of customer service and human resources from year 1992 to year With nearly 20 years of customer service and operation experience, she was then appointed as Marketing and Operation Manager in Innomat Company in She assisted in organizing the marketing activities such as identifying the target group to arrange for promotion program, managing customer enquiries, preparing accounting reports, and distribution logistics. She is not a director of any other public companies. She has no family relationship with any director and/or major shareholder of the Company. CHOI WING KOON Independent Non-Executive Director Chairman of Audit Committee Hong Kong Citizen, Age 39 years Mr. Choi was appointed to the Board of G Neptune Berhad (formerly known as GPRO Technologies Bhd) on 28 May Mr. Choi Wing Koon served as Company Secretary and Financial Controller of Company Secretary and Financial Controller of Taung Gold International Limited from September 1, 2010 to April 22, He has over 14 years of experience in accounting and company secretarial field. He was an Independent Non-Executive Director of Zhidao International (Holdings) Limited from January 9, 2012 to September 15, He has been an Independent Non-Executive Director at Universe International Holdings Ltd. since December 4, Mr. Choi is a fellow member of the Association of Chartered Certified Accountants and a member of the Hong Kong Institute of Certified Public Accountants. Mr. Choi holds a Bachelor of Business Administration in Accounting awarded by the Hong Kong University of Science and Technology in 1999 and a Master Degree of Business Administration awarded by the University of Hong Kong in He is not a director of any other public companies. He has no family relationship with any director and/or major shareholder of the Company. 5

7 CORPORATE GOVERNANCE STATEMENT The Board recognizes that good corporate governance is fundamental to protect the shareholders value and financial performance of the Company. Thus the Board strives to ensure the principles of corporate governance and best practices are observed and practiced throughout the Group. A) Directors The Board The Board assumes responsibility for effective stewardship and control of the Group towards realising long term shareholders value, and has established terms of reference to assist in the discharge of this responsibility. The Board has the overall responsibility for reviewing and adopting strategic plans for the Group, overseeing the conduct of the Group s business, implementing an appropriate system of risk management and ensuring the adequacy and integrity of the Company s systems of internal control. The composition of the Board reflects a balance of Executive and Non-Executive Directors, all from diverse professional background with a wide range of business, financial and legal experiences relevant to lead the Company, and as such, are able to bring an independent judgement to bear on issue in terms of business strategies, financial and operational performance, resources and standards of conduct. The Board meets regularly on a quarterly basis and as and when required. There were 4 Meetings held during the financial year and the attendance record is as follows:- Name of Director Meetings attended Khoo Yick Keung 4/4 Tansri Singadju Benui 4/4 Chan Lai Yi 4/4 LoYin Ling 4/4 Choi Wing Koon 3/4 Board Balance The Board comprises of an Executive Director, and four (4) Independent Non-Executive directors, The current Board composition complies with the Listing Requirements of the Bursa Malaysia Securities Berhad for the ACE Market. The Board has within it, professionals drawn from various background; bringing in-depth, and diversity in experience, expertise and perspectives to the Group s business operation. The profiles of the members of the Board are set out in this Annual Report on pages 4 to 5. The Board constitutes of individuals who are committed to business integrity and professionalism in all its activities. The Board supports the highest standards of corporate governance and the development of best practices for the Group. Supply of Information Prior to Board meetings, an agenda together with the relevant documents and information are distributed to all Directors. The Executive Director and/or other relevant Board members will provide comprehensive explanation of pertinent issues and recommendations by the management. The issues would then be deliberated and discussed thoroughly by the Board prior to decision-making. Apart from the above, the Board members are updated on the Company s activities and its operations on a regular basis. All Directors have access to all information of the Company on a timely basis in an appropriate form and quality necessary to enable them to discharge their duties and responsibilities. All Directors have access to the advice and services of the Company Secretary and to obtain independent professional advice, whenever necessary, at the expense of the Company. 6

8 CORPORATE GOVERNANCE STATEMENT (CONT D) B) Board Committees The Board delegates certain functions to the Committees listed below to support and assist in discharging its fiduciary duties and responsibilities. The respective committees report to the Board on matters considered and their recommendations thereon. However, the ultimate responsibility for the final decision on all matters lies with the Board. (i) Audit Committee The details are shown in the accompanying report of the Audit Committee on pages 10 to 12. (ii) Nomination & Remuneration Committee (NRC) The NRC was formed on 27 February 2013 and is responsible for the following:- (a) identifying and recommending to the Board suitable nominees for appointment to the Board; (b) assessing the effectiveness of the Board as a whole and the performance of each existing Director; and (c) the formulation of remuneration policy such as rewards and benefits and other terms of employment of the Executive Directors. The current members of the NRC are as follows: (i) Chan Lai Yi (Chairman) (ii) Lo Yin Ling (iii) Khoo Yick Keung C) Appointment and Re-election of Directors The NRC is responsible for making recommendation for appointments to the Board. In discharging this duty, the NRC will assess the suitability of an individual to be appointed to the Board by taking into account the individual s skill, knowledge, expertise, experience, professionalism, integrity and/or other commitments. In accordance with the Company s Articles of Association, all Directors who are appointed by the Board are subject to election by the shareholders at the Annual General Meeting ( AGM ) following their appointment. The Articles of Association of the Company also provides that at least one-third (1/3) of the directors shall retire by rotation from office at each AGM and they shall be eligible for re-election at such AGM. In addition, all directors shall be subjected to retirement by rotation once every three (3) years. For the forthcoming Thirteenth (13 th ) Annual General Meeting, the Director, Mr Khoo Yick Keung, and Ms Lo Yin Ling, will retire by rotation in accordance with Articles 103(a), of the Company s Articles of Association and being eligible, has offered themselves for re-election. D) Directors Remuneration The Company has adopted the practice as recommended by the Malaysian Code on Corporate Governance to determine the remuneration for a Director so as to ensure that the Company attracts and retains the Directors needed to run the Group successfully. The Nomination & Remuneration Committee recommends to the Board the remuneration for Directors whereby the component parts of remuneration are structured so as to link rewards to corporate and individual performance, in the case of executive Directors. In the case of non-executive Directors, the level of remuneration reflects the experience and level of responsibilities undertaken by the particular non-executive concerned. 7

9 CORPORATE GOVERNANCE STATEMENT (CONT D) D) Directors Remuneration (cont d) The aggregate Directors remuneration received/receivable for the financial year ended 31 December 2015 are set out below:- Directors fees Salaries & Allowance Bonuses Benefitsin-kind Others Total Executive 192, ,095 Directors Non-Executive Directors Total 192, ,095 The number of Directors whose remuneration fall into the following bands are as follows:- Range of Remuneration () Executive Non-Executive Total 50,000 and below , , , , , , , , E) Shareholders Dialogue with investors The Company recognizes the importance of keeping the shareholders and investors informed of the Group s business and corporate developments. Such information is disseminated via the Group s annual reports, circulars to shareholders, quarterly financial results and the various announcements made from time to time. All shareholders, including private investors, have an opportunity to participate in discussions with the Board on matters relating to the Group s operation and performance at the Company s Annual General Meeting. Alternatively, they may obtain the Company s latest announcements via the Bursa Malaysia Securities Berhad s website at Annual General Meeting The Annual General Meeting (AGM) is the principal forum for dialogue with individual shareholders and investors. It is a crucial mechanism in shareholder communication for the Company. At the Company s AGM, shareholders have direct access to the Board and are given the opportunity to ask questions during the question and answer session. F) Accountability and Audit a. Financial Reporting The Board aims to provide and present a balanced and meaningful assessment of the Group s financial performance and prospects at the end of the financial year, primarily through the Financial Statements and the Executive Director s Statement in the Annual Report. In preparing the above Financial Statements, the directors had: adopted suitable accounting policies and then apply them consistently; made judgements and estimates that are prudent and reasonable; ensured applicable accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements; and prepared the financial statements on an ongoing basis. 8

10 CORPORATE GOVERNANCE STATEMENT (CONT D) F) Accountability and Audit (cont d) b. Internal Control The Board of Directors has an overall responsibility for maintaining a system of internal controls, which provides reasonable assessments of effective and efficient operations, internal controls and compliance with laws and regulations. c. Relationship with Auditors The Board maintains a transparent and formal relationship with the Group s external auditors, primarily through the Audit Committee in seeking professional advice and ensuring compliance with the relevant accounting standards. The external auditors are invited to attend the meetings of the Audit Committee and the Board whenever necessary to discuss the Group s Financial Statements. The Group s independent external auditors fill an essential role for the shareholders by enhancing the reliability of the Group s Financial Statements and giving assurance of that reliability to users of these financial statements. The external auditors have an obligation to bring any significant defects in the Group s system of control and compliance to the attention of the Management; and if necessary, to the Audit Committee and the Board. G) Directors Responsibility Statement In Respect Of Financial Statements The Directors are required to prepare the financial statements for each financial year which give a true and fair view of the state of affairs of the Group and of the Company at the end of the financial year, and of the results and cash flow of the Group and of the Company for the financial year then ended. The Directors consider that, in preparing the financial statements for the financial year ended 31 December 2015, the Group had used appropriate accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent. The Directors also considered that all applicable approved accounting standards had been followed and confirmed that the financial statements had been prepared on a going concern basis. The Directors are responsible for ensuring that the Group and the Company keep accounting records which disclose with reasonable accuracy at any time the financial position of the Group and of the Company and which enable them to ensure that the financial statements comply with the provisions of the Companies Act 1965 and applicable approved accounting standards in Malaysia. H) Directors Training All Directors have attended the Mandatory Accreditation Programme ( MAP ) as required by Bursa Securities. The Directors had not attended any training during the financial period ended 31 December 2015 due to time constraint and tight work schedule. They will attend other relevant training programmes as appropriate to enhance their skills and knowledge. Throughout the year, the Directors received updates and briefings, particularly on regulatory, industry and legal developments. I) Compliance Statement The group has complied substantially with the principles and best practices of corporate governance as set out in the Code. 9

11 AUDIT COMMITTEE REPORT COMPOSITION AND DESIGNATION OF AUDIT COMMITTEE 1. Choi Wing Koon Chairman, Independent Non-Executive Director 2. Chan Lai Yi Member, Independent Non-Executive Director 3. Lo Yin Ling 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 14 th April Membership The Audit Committee shall be appointed by the Board of Directors from among their number and shall be composed of not fewer than three (3) non-executive directors, a majority shall be Independent. A quorum shall be two (2) members present in person, both of whom shall be Independent Non-Executive Directors. The members of the Audit Committee shall elect a chairman from among their member who is an Independent Non-Executive Director. The Chairman elected shall be subjected to endorsement by the Board. At least one member of the Audit Committee must be: (i) (ii) 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; a) he must have passed the examination specified in Part I of the 1st Schedule of the Accountants Act 1967; or b) he must be a member of one of the associations of accountants specified in Part II of the 1 st Schedule of the Accountants Act 1967; c) Fulfill such other requirements as prescribed or approved by the Exchange. If a member of the Audit Committee resigns, dies or for any reason ceases to be a member with the results that the number is reduced below three (3), the Board of Directors shall, within three (3) months of that event, appoint such number of new members as may be required to make up the minimum number of three (3) members. Notice of Meeting and Attendance The agenda for Audit Committee meetings shall be circulated before each meeting to members of the Committee. The Committee may require the external auditors and any official of the Company to attend any of its meetings as it determines. The external auditors shall have the right to appear and be heard at any meeting of the Audit Committee and shall appear before the Committee when required to do so by the Committee. The Company Secretary of the Company shall be the Secretary of the Committee. There were 4 Audit Committee meetings held during the financial year ended 31 December 2015 and the attendance record is as follows:- Meetings attended Choi Wing Koon 3/4 Chan Lai Yi 4/4 Lo Yin Ling 4/4 10

12 TES OF REFERENCE OF THE AUDIT COMMITTEE (CONT D) AUDIT COMMITTEE REPORT (CONT D) 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. 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; 11

13 AUDIT COMMITTEE REPORT (CONT D) TES OF REFERENCE OF THE AUDIT COMMITTEE (CONT D) Rights and Authority of the Audit Committee (cont d) - 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 2015 in the discharge of its functions and duties:- 1. Reviewed the Risk Based Audit for the year ended 31 December 2015 to ensure adequate scope and coverage over the activities of the Group on a risk based approach, which was carried out by the Internal Auditor. 2. Reviewed the Internal Audit Reports on audits carried out by the Internal Auditor. 3. Reviewed the quarterly (unaudited) and annual (audited) financial statements to ensure inter alia that they were in compliance with the requirements of relevant authorities. Internal Audit Function The internal audit function (IAF) is outsourced to an independent professional services firm. During the financial year ended 31 December 2015, 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 2015 was 7,150. EMPLOYEES SHARE OPTION SCHEME ( ESOS ) There was no option offered during the financial year ended 31 December

14 STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL Introduction The Board is committed to maintaining a sound system of internal control in the Group and is pleased to provide the following Internal Control Statement (the Statement ), which outlines the nature and scope of risk management and internal control of the Group during the financial year ended 31 December For the purpose of disclosure, this Statement takes into account the Guidelines for Directors of Listed Issuers ( Guidelines ) issued by Bursa Malaysia Securities Berhad ( Bursa Securities ) on the issuance of Internal Control Statement pursuant to Paragraph 15.26(b) of the Ace Market Listing Requirements. Board s Responsibility The Board is responsible for the Group s internal control and risk management system to safeguard shareholders investment and the Group s assets as well as reviewing the adequacy and effectiveness of the said system. In view of the limitations inherent in any system of risk management and internal control, the system is designed to manage, rather than eliminate, the risk of failure to achieve the Group s business and corporate objectives. The system can therefore only provide reasonable, but not absolute assurance, against material misstatement or loss. Risk Management The Board confirms that there is a continuous process for identifying, evaluating and managing the significant risks faced by the Group, which has been in place for the financial year under review and up to date of approval of the annual report and financial statements. Internal Audit Function The independent internal audit function is outsourced to a professional services firm. Internal audits were carried out in accordance to the Internal Audit Plan approved by the Audit Committee. Observations from these audits were presented to the Audit Committee for its review. Further details of the activities of the internal audit function are provided in the Audit Committee Report as set out on pages 10 to 12. Internal Control The key elements of the Group s internal control system are described below: Organisation structure with clearly defined delegation of responsibilities to the Committees of the Board; Regular meetings are held at operational and management levels to identify and resolve business, financial, operational and management issues; Standard operating procedures have been put in place Regular Internal audit visits and other specific assignments, if the need arises, assigned by the Audit Committee and/or Board who monitors compliance with procedures and assesses the integrity of financial information provided; Regular information are provided by the management to the Board on financial performance and key business indicators; Monthly monitoring of results by the management through financial reports such as monthly management accounts and cash flow statements; and 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. 13

15 STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL (CONT D) Assurance provided by the Executive Director and Chief Financial Officer In line with the Guidelines, the Executive Director and Chief Financial Officer have provided assurance to the Board stating that the Group s risk management and internal control systems have operated adequately and effectively, in all material aspects, to meet the Group s objectives during the financial year under review. The Board is of the view that the risk management and internal control systems are satisfactory and have not resulted in any material losses, contingencies or uncertainties that would require disclosure in the Group s annual report. The Board continues to take pertinent measures to sustain and, where required, to improve the Group s risk management and internal control systems in meeting the Group s strategic objectives. Review of the Statement by External Auditors Pursuant to paragraph of the Ace Market Listing Requirements of Bursa Securities, the external auditors have reviewed this Statement for inclusion in the Annual Report of the Group for the year ended 31 December 2015 and reported to the Board that nothing has come to their attention that caused them to believe that the statement is inconsistent with their understanding of the processes adopted by the Board in reviewing the adequacy and integrity of the systems of risk management internal controls. The statement is made in accordance with the resolution of the Board dated 26 April

16 OTHER DISCLOSURES REQUIREMENTS PURSUANT TO THE LISTING REQUIREMENTS OF BURSA SECURITIES SHARE BUY-BACKS There were no share buy-back arrangements during the financial year. OPTIONS, WARRANTS OR CONVERTIBLE SECURITIES The Company did not issue any options, warrants or convertible securities during the financial year. DEPOSITORY RECEIPT ( DR ) The Company did not sponsor any DR programmes during the financial year. IMPOSITION OF SANCTIONS / PENALTIES There were no sanctions or penalties imposed on the Company and its subsidiary, 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 during the financial year ended 31 December VARIATION IN RESULTS There were no profit estimates, forecasts or projections issued by the Company and its subsidiary during the financial year. 15

17 OTHER DISCLOSURES REQUIREMENTS PURSUANT TO THE LISTING REQUIREMENTS OF BURSA SECURITIES (CONT D) PROFIT GUARANTEE There were no profit guarantees given by the Company and its subsidiary 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, involving the directors and substantial shareholders interests during the financial year. REVALUATION POLICY ON LANDED PROPERTIES The Company does not have a revaluation policy as the Company and its subsidiary do not have any landed properties. CORPORATE SOCIAL RESPONSIBILITIES The Company recognizes the importance of being a responsible corporate entity and endeavours to discharge its corporate social responsibilities diligently in the best possible manner. To this extent, the Company has continued in its efforts to drive a green campaign amongst its employees cognizant of its duty to minimize its impact on the environment. Company employees are consistently educated on the significance of energy conservation to reduce the resources it consumes. For the next financial year, the Company will plan and organize more CSR activities. 16

18 DIRECTOR 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 and sales of apparel and garment products. 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 Net profit for the financial year 729, ,734 RESERVES AND PROVISIONS There were no material transfers to or from reserves or provisions during the financial year. DIVIDENDS There were no dividends proposed, declared or paid by the Company since the end of the previous financial year. DIRECTORS The Directors in office since the date of the last report are:- Khoo Yick Keung TanSri Singadju Benui Lo Yin Ling Chan Lai Yi Choi Wing Koon DIRECTORS INTERESTS According to the Register of Directors Shareholdings, none of the Directors in office at the end of the financial year had any interest in the shares of the Company and its related corporations. 17

19 DIRECTORS BENEFITS During and at the end of the financial year, no arrangement subsisted to which the Company is a party, with the object or objects of enabling the Directors of the Company to acquire benefits by means of acquisition of shares in, or debentures of the Company or any other body corporate. Since the end of the previous financial year, no Director has received or become entitled to receive any benefit (other than as disclosed in Note 15 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 issuance of shares or debentures during the financial year. OTHER STATUTORY INFOATION Before the financial statements of the Group and of the Company were made out, the Directors took reasonable steps:- (a) (b) to ascertain that action had been taken in relation to the writing off of bad debts and the making of provision for doubtful debts and satisfied themselves that all known bad debts had been written off and adequate provision had been made for doubtful debts; and to ensure that any current assets which were unlikely to be realised in the ordinary course of business including their values as shown in the accounting records of the Group and of the Company have been written down to an amount which they might be expected so to realise. At the date of this report, the Directors are not aware of any circumstances:- (a) (b) (c) (d) which would render the amount written off for bad debts or the amount of the provision for doubtful debts in the financial statements of the Group and of the Company inadequate to any substantial extent; or which would render the values attributed current assets in the financial statements of the Group and of the Company misleading; or which have arisen which render adherence to the existing method of valuation of assets or liabilities of the Group and 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. 18

20 OTHER STATUTORY INFOATION (CONT D) In the opinion of the Directors:- (a) (b) (c) no contingent liability or other liability has become enforceable or is likely to become enforceable within the period of twelve months after the end of the financial year which will or may affect the ability of the Group and of the Company to meet their obligations as and when they fall due; the results of operations of the Group and of the Company during the financial year were not substantially affected by any item, transaction or event of a material and unusual nature; and there has not arisen in the interval between the end of the financial year and the date of this report any item, transaction or event of a material and unusual nature likely to affect substantially the results of operations of the Group and of the Company for the financial year in which this report is made. SIGNIFICANT EVENTS DURING THE FINANCIAL YEAR The significant events during the financial year are disclosed in Note 23 to the Financial Statements. 19

21 AUDITORS The Auditors, Messrs SJ Grant Thornton retire and are not seeking re-appointment at the forthcoming Annual General Meeting. Signed on behalf of the Board of Directors in accordance with a resolution of the Directors,... ) KHOO YICK KEUNG ) ) ) ) ) ) ) ) DIRECTORS ) ) ) ) ) ) )... ) CHAN LAI YI ) Hong Kong 26 April

22 STATEMENT BY DIRECTORS In the opinion of the Directors, the financial statements set out on pages 25 to 64 are drawn up in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia so as to give a true and fair view of the financial position of the Group and of the Company as at 31 December 2015 and of their financial performance and cash flows for the financial year then ended. In the opinion of the Directors, the information set out on page 64 has been compiled in accordance with the Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosures Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, issued by the Malaysian Institute of Accountants, and presented based on the format prescribed by Bursa Malaysia Securities Berhad. Signed on behalf of the Board of Directors in accordance with a resolution of the Directors, KHOO YICK KEUNG CHAN LAI YI Hong Kong 26 April 2016 STATUTORY DECLARATION I, Chan Ka Ki, being the Officer primarily responsible for the financial management of G Neptune Berhad, do solemnly and sincerely declare that to the best of my knowledge and belief, the financial statements set out on pages 25 to 64 and the supplementary information set out on page 64 are correct and I make this solemn declaration conscientiously believing the same to be true and by virtue of the Statutory Declarations Act, Subscribed and solemnly declared by ) the abovenamed at Kuala Lumpur in ) the Federal Territory this day of ) 26 April 2016 )... CHAN KA KI Before me: Commissioner for Oaths 21

23 INDEPENDENT AUDITORS REPORT TO THE MEMBERS OF G NEPTUNE BERHAD (Incorporated in Malaysia) Report on the Financial Statements We have audited the financial statements of G Neptune Berhad, which comprise the statements of financial position of the Group and of the Company as at 31 December 2015, statements of profit or loss and other comprehensive income, statements of changes in equity and statements of cash flows of the Group and of the Company for the financial year then ended, and a summary of significant accounting policies and other explanatory information as set out on pages 25 to 64. Directors Responsibility for the Financial Statements The Directors of the Company are responsible for the preparation of financial statements so as to give a true and fair view in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia. The Directors are also responsible for such internal control as the Directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with approved standards on auditing in Malaysia. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on our judgement, including the assessment of risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity s preparation of financial statements that gives a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Directors, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. 22

24 Report on the Financial Statements (cont d) Opinion In our opinion, the financial statements give a true and fair view of the financial position of the Group and of the Company as of 31 December 2015 and of their financial performance and cash flows for the financial year then ended in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia. Report on Other Legal and Regulatory Requirements In accordance with the requirements of the Companies Act, 1965 in Malaysia, we also report the following:- (a) (b) (c) (d) In our opinion, the accounting and other records and the registers required by the Act to be kept by the Company have been properly kept in accordance with the requirements of the Act. We have considered the accounts and the auditors report of the subsidiary of which we have not acted as auditors, which are indicated in Note 6 to the Financial Statements. We are satisfied that the financial statements of the subsidiaries that have been consolidated with the Company s financial statements are in form and content appropriate and proper for the purposes of the preparation of the financial statements of the Group and we have received satisfactory information and explanations required by us for those purposes. The auditors reports on the accounts of the subsidiary did not contain any qualification or any adverse comment made under Section 174 (3) of the Act. Other Reporting Responsibilities The supplementary information set out on page 64 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. 23

25 Other Matters This report is made solely to the members of the Company, as a body, in accordance with Section 174 of the Companies Act, 1965 in Malaysia and for no other purpose. We do not assume responsibility to any other person for the content of this report. SJ GRANT THORNTON (NO. AF: 0737) CHARTERED ACCOUNTANTS Kuala Lumpur 26 April 2016 KHO KIM ENG (NO: 3137/10/16(J)) CHARTERED ACCOUNTANT PARTNER 24

26 ASSETS Non-current assets STATEMENTS OF FINANCIAL POSITION AS AT 31 DECEMBER 2015 Group Company Note Property, plant and equipment 4-12, Development expenditure Investment in subsidiaries Total non-current assets - 12, Current assets Trade receivable 7-1,303,097-1,303,097 Other receivables 8 7,927,459 5,064,101 1,812,611 1,918,137 Amount due from subsidiaries ,154,914 3,180,056 Tax recoverable 39,607 39,607 39,607 39,607 Cash and bank balances 17, ,850 10,189 4,178 Total current assets 7,984,215 6,968,655 7,017,321 6,445,075 Total assets 7,984,215 6,981,168 7,017,322 6,445,078 EQUITY AND LIABILITIES EQUITY Equity attributable to owners of the Company Share capital 10 8,662,500 8,662,500 8,662,500 8,662,500 Reserves 11 (1,912,473) (2,503,722) (1,908,924) (2,307,658) Total equity 6,750,027 6,158,778 6,753,576 6,354,842 LIABILITIES Current liabilities Trade payables - 1, Other payables 12 1,233, , ,746 90,236 Tax payable Total liabilities 1,234, , ,746 90,236 Total equity and liabilities 7,984,215 6,981,168 7,017,322 6,445,078 The accompanying notes form an integral part of the financial statements. 25

27 STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2015 Group Company Note Revenue ,000 2,645, ,000 2,645,172 Cost of sales 14 - (537,120) - (537,120) Gross profit 480,000 2,108, ,000 2,108,052 Other income 1,387, ,009 1,173, ,771 Administration expenses (874,369) (652,910) (354,629) (245,434) Other expenses (263,378) (493,602) (900,383) (954,984) Finance costs - (8,810) - - Profit before tax ,663 1,323, ,734 1,131,405 Tax expense Net profit from continuing operations 729,663 1,323, ,734 1,131,405 Net loss from discontinued operation 6 - (231,188) - - Net profit for the financial year 729,663 1,092, ,734 1,131,405 Other comprehensive income, net of tax:- Item that will be reclassified subsequently to profit or loss Foreign currency translation differences arising from foreign subsidiary (138,414) (22,193) - - Total comprehensive income for the financial year 591,249 1,070, ,734 1,131,405 Profit for the financial year attributable to: Owners of the Company - Continuing operations 729,663 1,323,739 - Discontinued operation - (914,350) Non-controlling interests - discontinued operation - 683, ,663 1,092,551 Total comprehensive income attributable to: Owners of the Company - Continuing operations 591,249 1,301,546 - Discontinued operation - (914,350) Non-controlling interests - discontinued operation - 683, ,249 1,070,358 Basic earnings per share (sen): 17 - Profit from continuing operations Loss from discontinued operation - (0.32) The accompanying notes form an integral part of the financial statements. 26

28 Group Balance as at 1 January 2014 Transactions with owners: Share capital STATEMENTS OF CHANGES IN EQUITY FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2015 Share ESOS translation Capital Accumulated premium reserve reserve reserve losses 8,250, , ,480 (4,644,024) ESOS granted , Issuance of ordinary shares - exercise of ESOS 412, ,126 (100,375) Total transactions with owners Arising from disposal of subsidiaries - Total comprehensive income for the financial year - 412, , Balance as at 31 December ,662,500 1,130,335 - (21,902) 622,480 (4,234,635) Total comprehensive income for the financial year (138,414) - 729,663 Balances as at 31 December 2015 Attributable to equity holders of the Company Non-distributable Exchange Distributable (22,193) - 409,389 8,662,500 1,130,335 - (160,316) 622,480 (3,504,972) Noncontrolling Total interests Total 4,804,956 (817,744) 3,987, , , , , , , , , , ,162 1,070,358 6,158,778-6,158, , ,249 6,750,027-6,750,027 27

29 STATEMENTS OF CHANGES IN EQUITY FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2015 (CONT'D) Attributable to equity holders of the Company Company Balance as at 1 January 2014 Non-distributable Distributable Share Share ESOS Capital Accumulated capital premium reserve reserve losses Total 8,250, , ,480 (5,191,878) 4,256,811 Transactions with owners: ESOS granted , ,375 Issuance of ordinary shares - exercise of ESOS 412, ,126 (100,375) ,251 Total transactions with owners 412, , ,626 Total comprehensive income for the financial year ,131,405 1,131,405 Balance as at 31 December ,662,500 1,130, ,480 (4,060,473) 6,354,842 Total comprehensive income for the financial year , ,734 Balance as at 31 December ,662,500 1,130, ,480 (3,661,739) 6,753,576 The accompanying notes form an integral part of the financial statements. 28

30 STATEMENTS OF CASH FLOWS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2015 Group Company OPERATING ACTIVITIES Profit/(loss) before tax - Continuing operations 729,663 1,323, ,734 1,131,405 - Discontinued operations (Note 6) - (231,188) ,663 1,092, ,734 1,131,405 Adjustments for:- Amortisation of development expenditure - 400, ,279 Amount due from subsidiary written off - - 2,474 - Depreciation of property, plant and equipment 5,951 16, ESOS expenses - 100, ,375 Impairment loss on amount due from subsidiaries , ,734 Impairment loss on trade receivable 263, ,378 - Interest expense - 8, Investment in subsidiary written off Other receivables written off - 7,943-7,943 Property, plant and equipment written off 6,562 82, Gain on deconsolidation/disposal of subsidiaries (213,664) (147,237) - - Interest income - (3) - (2) Unrealised gain on foreign exchange (1,133,376) (177,526) (1,133,376) (173,769) Operating (loss)/profit before working capital changes (341,486) 1,384, ,741 1,914,965 Changes in working capital:- Inventories - 17, Receivables (876,622) (3,156,178) 1,145,245 (47,302) Payables 611, , ,510 (48,169) Cash (used in)/generated from operations (606,584) (1,146,323) 1,484,496 1,819,494 Tax paid - (7,884) - - Net cash (used in)/from operating activities (606,584) (1,154,207) 1,484,496 1,819,494 29

31 STATEMENTS OF CASH FLOWS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2015 (CONT'D) Group Company INVESTING ACTIVITIES Advances to subsidiaries - - (1,478,485) (3,399,660) Proceeds from disposal of subsidiaries, net of cash disposed (Note 6) - (5,997) - 3 Interest received Net cash used in investing activities - (5,994) (1,478,485) (3,399,655) FINANCING ACTIVITIES Interest paid - (8,815) - - Proceeds from issuance of ordinary shares, net of issuance expenses - 866, ,251 Net cash from financing activities - 857, ,251 CASH AND CASH EQUIVALENTS Net (decrease)/increase (606,584) (302,765) 6,011 (713,910) Effect of foreign translation differences 61,883 36, At beginning of financial year 561, ,270 4, ,088 At end of financial year 17, ,850 10,189 4,178 30

32 NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER GENERAL INFOATION The Company is a public limited liability company, incorporated and domiciled in Malaysia and listed on the ACE Market of Bursa Malaysia Securities Berhad. The registered office of the Company is located at No.9A, Jalan Medan Tuanku, Medan Tuanku, Kuala Lumpur. The principal place of business of the Company is located at Room 12, 7/F, K. Wah Centre, 191 Java Road, North Point, Hong Kong. The principal activities of the Company consist of investment holding, research and development on information technology and sales of apparel and garment products. 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. The financial statements were authorised for issue by the Board of Directors in accordance with a resolution of the Directors passed on 26 April BASIS OF PREPARATION 2.1 Statement of Compliance The financial statements of the Group and of the Company have been prepared in accordance with Malaysian Financial Reporting Standards ( MFRSs ), International Financial Reporting Standards ( IFRSs ) and the requirements of the Companies Act, 1965 in Malaysia. 2.2 Basis of Measurement The financial statements of the Group and of the Company are prepared under the historical cost convention, unless otherwise indicated in the summary of significant accounting policies. Historical cost is generally based on the fair value of the consideration given in exchange for goods and services. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either in the principal market for the asset or liability, or in the absence of a principal market, in the most advantageous market for the asset or liability. The principal or the most advantageous market must be accessible to by the Group and the Company. The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest. A fair value measurement of a non-financial market takes into account a market participant s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use. 31

33 2. BASIS OF PREPARATION (CONT D) 2.2 Basis of Measurement (cont d) The Group and the Company use valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs. All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to their fair value measurement as a whole: (a) Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities. (b) Level 2 - Valuation techniques for which the lowest level input that is significant to their fair value measurement is directly or indirectly observable. (c) Level 3 - Valuation techniques for which the lowest level input that is significant to their fair value measurement is unobservable. For assets and liabilities that are recognised in the financial statements on a recurring basis, the Group determines whether transfers have occurred between levels in the hierarchy by reassessing categorisation (based on the lowest level input that is significant to their fair value measurement as a whole) at the end of each reporting date. For the purpose of fair value disclosures, the Group has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of fair value hierarchy as explained above. 2.3 Functional and Presentation Currency The financial statements are presented in Ringgit Malaysia ( ) which is the Company s functional currency and all values are rounded to the nearest except when otherwise stated. 2.4 Adoption of Amendments to MFRSs and IC Interpretations ( IC Int ) Except for the changes below, the Group and the Company have consistently applied the accounting policies set out in Note 3 to all years presented in these financial statements. At the beginning of the current financial year, the Group and the Company adopted amendments to MFRSs and IC Int which are mandatory for the financial periods beginning on or after 1 January Initial application of the amendments to the standards and IC Int did not have material impact to the financial statements. 2.5 Standards Issued But Not Yet Effective The Group and the Company have not applied the following new standards and amendments to standards that have been issued by the Malaysian Accounting Standards Board ( MASB ) but are not yet effective for the Group and the Company: MFRS effective 1 January 2016: MFRS 14* Regulatory Deferral Accounts 32

34 2. BASIS OF PREPARATION (CONT D) The Group and the Company have not applied the following new standards and amendments to standards that have been issued by the Malaysian Accounting Standards Board ( MASB ) but are not yet effective for the Group and the Company (cont d): Amendments to MFRSs effective 1 January 2016: MFRS 10* Consolidated Financial Statements: Investment Entities Applying the Consolidation Exception MFRS 11* Joint Arrangements: Accounting for Acquisitions of Interests in Joint Operations MFRS 12* Disclosure of Interests in Other Entities: Investment Entities Applying the Consolidation Exception MFRS 101 Presentation of Financial Statements: Disclosure Initiative MFRS 116* Property, Plant and Equipment: Agriculture - Bearer Plant MFRS 116 Property, Plant and Equipment: Clarification of Acceptable Methods of Depreciation MFRS 127* Consolidated and Separate Financial Statements: Equity Method in Separate Financial Statements MFRS 128* Investments in Associates and Joint Ventures: Investment Entities Applying the Consolidation Exception MFRS 138* Intangible Assets: Clarification of Acceptable Methods of Depreciation and Amortisation MFRS 141* Agriculture Agriculture: Bearer Plants Annual Improvements Cycle issued in November 2014* MFRS and Amendments to MFRS effective 1 January 2018 : MFRS 9 Financial Instruments (International Financial Reporting Standards ( IFRS ) 9 issued by International Accounting Standards Board ( IASB ) in July 2014) MFRS 15 Revenue from Contracts with Customers Amendments to MFRS 7 Financial Instruments Disclosure: Mandatory effective date of MFRS 9 and transitional disclosures Amendments to MFRS (deferred effective date to be announced by the MASB): MFRS 10* Consolidated Financial Statements: Sale or contribution of assets between an investor and its associate or joint venture MFRS 128* Investments in Associates and Joint Ventures: Sale or Contribution of Assets between an Investor and its Associate or Joint Venture * Not applicable to the Group s and the Company s operations The initial application of the above standards, amendments and interpretation are not expected to have any financial impacts to the financial statements, except for: MFRS 9 Financial Instruments MFRS 9 replaces MFRS 139 Financial Instruments: Recognition and Measurement and all previous version of MFRS 9. The new standard introduces extensive requirements and guidance for classification and measurement of financial assets and financial liabilities which fall under the scope of MFRS 9, new expected credit loss model under the impairment of financial assets and greater flexibility has been allowed in hedge accounting transactions. Upon adoption of MFRS 9, financial assets will be measured at either fair value or amortised cost. It is also expected that the Group s and the Company s investment in unquoted shares will be measured at fair value through other comprehensive income. The adoption of MFRS 9 will result in a change in accounting policy. The Group and the Company are currently examining the financial impact of adopting MFRS 9. 33

35 2. BASIS OF PREPARATION (CONT D) 2.5 Standards Issued But Not Yet Effective (cont d) MFRS 15 Revenue from Contracts with Customers MFRS 15 presents new requirements for the recognition of revenue, replacing the guidance of MFRS 111 Construction Contracts, MFRS 118 Revenue, IC Interpretation 13 Customer Loyalty Programmes, IC Interpretation 15 Agreements for Construction of Real Estate, IC Interpretation 18 Transfers of Assets from Customers and IC Interpretation 131 Revenue Barter Transaction Involving Advertising Services. The principles in MFRS 15 provide a more structured approach to measuring and recognising revenue. It establishes a new five-step model that will apply to revenue arising from contracts with customers. Under MFRS 15, revenue is recognised at an amount that reflects the consideration to which an entity expects to be entitled in exchange for transferring goods or services to a customer. The adoption of MFRS 15 will result in a change in accounting policy. The Group and the Company are currently assessing the impact of MFRS 15 and plans to adopt the new standard on the required effective date. 2.6 Significant Accounting Estimates and Judgements Estimates, assumptions concerning the future and judgements are made in the preparation of the financial statements. They affect the application of the Group and the Company s accounting policies and reported amounts of assets, liabilities, income, expenses and disclosures made. They are assessed on an on-going basis and are based on experience and relevant factors, including expectations of future events that are believed to be reasonable under the circumstances. The actual results may differ from the judgement, estimate and assumption made by management, and will seldom equal the estimated results Estimation Uncertainty Information about significant judgement, estimates and assumptions that have the most significant effect on recognition and measurement of assets, liabilities, income and expenses are discussed below:- Income taxes The Group and the Company are exposed to income taxes in numerous jurisdictions. Significant judgement is involved in determining the Group and the Company-wide provision for income taxes. There are certain transactions and computations for which the ultimate tax determination is uncertain during the ordinary course of business. The Group and the Company recognise tax liabilities based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recognised, such difference will impact the income tax and deferred tax provisions in the period in which such determination is made. Useful lives of depreciable assets Property, plant and equipment are depreciated on a straight-line basis over their estimated useful life. Management estimates the useful lives of the property, plant and equipment to be within 3 to 10 years and reviews the useful lives of depreciable assets at each reporting date. As at 31 December 2015, management assesses that the useful lives represent the expected utility of the assets to the Group and the Company. The carrying amounts are analysed in Note 4 to the Financial Statements. Actual results, however, may vary due to change in the expected level of usage and technological developments, which resulting the adjustment to the Group s and the Company s assets. Management expects that the expected useful lives of the property, plant and equipment would not have material difference from the management s estimates and hence it would not result in material variance in the Group s and the Company s profit for the financial year. 34

36 2. BASIS OF PREPARATION (CONT D) 2.6 Significant Accounting Estimates and Judgements (cont d) Estimation Uncertainty (con d) Deferred tax assets Deferred tax assets are recognised for all deductible temporary differences, unutilised tax losses, unabsorbed capital allowances and unused tax credits to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, unutilised tax losses, unabsorbed capital allowances and unused tax credits can be utilised. Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and level of future taxable profits together with future tax planning strategies. The temporary differences for which no deferred tax assets have been recognised in the financial statements are disclosed in Note 18 to the Financial Statements. Impairment of loans and receivables The Group and the Company assess at each reporting date whether there is any objective evidence that a financial asset is impaired. To determine whether there is objective evidence of impairment, the Group and the Company consider factors such as the probability of insolvency or significant financial difficulties of the receivables and default or significant delay in payments. When there is objective evidence of impairment, the amount and timing of future cash flows are estimated based on historical loss experience for assets with similar credit risk characteristics. The carrying amounts of the loans and receivables at the reporting date are disclosed in Note 7, 8 and 9 to the Financial Statements. 3. SIGNIFICANT ACCOUNTING POLICIES The Group and the Company apply the significant accounting policies, as summarised below, consistently throughout all years presented in the financial statements. 3.1 Consolidation Subsidiaries Subsidiaries are entities, including structured entities, controlled by the Company. Control exists when the Group is exposed, or has rights, to variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Potential voting rights are considered when assessing control only when such rights are substantive. Besides, the Group considers it has de facto power over an investee when, despite not having the majority of voting rights, it has the current ability to direct the activities of the investee that significantly affect the investee s return. Investment in subsidiaries is stated at cost less any impairment losses in the Company s statement of financial position, unless the investment is held for sale or distribution. Upon the disposal of investment in a subsidiary, the difference between the net disposal proceeds and its carrying amount is included in profit or loss. 35

37 3. SIGNIFICANT ACCOUNTING POLICIES (CONT D) 3.1 Consolidation (cont d) Basis of Consolidation The Group s financial statements consolidate the audited financial statements of the Company and all of its subsidiaries, which have been prepared in accordance with the Group s accounting policies. Amounts reported in the financial statements of the subsidiaries have been adjusted where necessary to ensure consistency with the accounting policies adopted by the Group. The financial statements of the Company and its subsidiaries are all drawn up to the same reporting date. All intragroup assets and liabilities, equity income, expenses and cash flows relating to transactions between entities of the Group (profits or losses resulting from intragroup transactions that are recognised in assets, such as inventory and property, plant and equipment) are eliminated in full in preparing the consolidated financial statements. Intragroup losses may indicate an impairment that requires recognition in the consolidated financial statements. Temporary differences arising from the elimination of profits and losses resulting from intragroup transactions will be treated in accordance to Note 3.11 to the Financial Statements. Subsidiaries are consolidated from the date on which control is transferred to the Group and are no longer consolidated from the date that control ceases. Changes in the ownership interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions. In such circumstances, the carrying amounts of the controlling and non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiary. Any difference between the amount by which the non-controlling interests is adjusted and the fair value of the consideration paid or received is recognised directly in equity and attributed to owners of the Company Loss of Control Upon the loss of control of a subsidiary, the Group derecognises the assets and liabilities of the subsidiary, any non-controlling interests and the other components of equity related to the subsidiary. Any surplus or deficit arising on the loss of control is recognised in profit or loss. If the Group retains any interest in the previous subsidiary, then such interest is measured at fair value at the date that control is lost. Subsequently, it is accounted for as an equity accounted investee or as an available-for-sale financial asset depending on the level of influence retained Non-controlling Interests Non-controlling interests at the end of the reporting year, being the equity in a subsidiary not attributable directly or indirectly to the equity holders of the Company, are presented in the consolidated statement of financial position and statement of changes in equity within equity, separately from equity attributable to the owners of the Company. Non-controlling interests in the results of the Group are presented in the consolidated statement of profit or loss and other comprehensive income as an allocation of the profit or loss and the comprehensive income for the year between non-controlling interests and the owners of the Company. Losses applicable to the non-controlling interests in a subsidiary are allocated to the noncontrolling interests even if that results in a deficit balance. 36

38 3. SIGNIFICANT ACCOUNTING POLICIES (CONT D) 3.2 Foreign Currency Translations The Group s consolidated financial statements are presented in, which is also the Company s functional currency Foreign Currency Transactions and Balances Transactions in foreign currencies are initially recorded at the functional currency rates prevailing at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the functional currency spot rate of exchange ruling at the reporting date. All differences are taken to the profit or loss with the exception of all monetary items that forms part of a net investment in a foreign operation. These are recognised in other comprehensive income until the disposal of the net investment, at which time they are reclassified to profit or loss. Tax charges and credits attributable to exchange differences on those monetary items are also recorded in other comprehensive income Foreign Operations The assets and liabilities of operations denominated in functional currencies other than are translated to at exchange rates at the end of the reporting date. The income and expenses of foreign operations are translated to at exchange rates at the date of the transactions. Foreign currency differences are recognised in other comprehensive income and accumulated in the exchange translation reserve in equity. However, if the operation is a non-wholly-owned subsidiary, then the relevant proportionate share of the translation difference is allocated to the non-controlling interests. When a foreign operation is disposed of, the cumulative amount in the exchange translation reserve related to that foreign operation is reclassified to profit or loss as part of the gain or loss on disposal. When the Group disposes of only part of its interest in a subsidiary that includes a foreign operation, the relevant proportion of the cumulative amount in the exchange translation reserve is reattributed to non-controlling interests. In the consolidated financial statements, when settlement of a monetary item receivable from or payable to a foreign operation is neither planned nor likely in the foreseeable future, foreign exchange gains and losses arising from such a monetary item are considered to form part of a net investment in a foreign operation and are recognised in other comprehensive income, and are presented in exchange translation reserve in equity. 3.3 Property, Plant and Equipment and Depreciation All property, plant and equipment are measured at cost less accumulated depreciation and accumulated impairment losses, if any. The cost of an item of property, plant and equipment is recognised as an asset if, it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. Cost includes expenditures that are directly attributable to the acquisition of the assets and any other costs directly attributable to bringing the asset to working condition for its intended use, cost of replacing component parts of the assets, and the present value of the expected cost for the decommissioning of the assets after their use. All other repair and maintenance costs are recognised in profit or loss as incurred. 37

39 3. SIGNIFICANT ACCOUNTING POLICIES (CONT D) 3.3 Property, Plant and Equipment and Depreciation (cont d) Depreciation is recognised on the straight line method in order to write off the cost of each asset over its estimated useful life. Property, plant and equipment are depreciated based on the estimated useful lives of the assets as follows: Office equipment 10% Computer software and equipment 20% Furniture and fittings 10% Renovation 33.33% Property, plant and equipment are written down to recoverable amount if, in the opinion of the Directors, it is less than their carrying value. Recoverable amount is the net selling price of the property, plant and equipment i.e. the amount obtainable from the sale of an asset in an arm s length transaction between knowledgeable, willing parties, less the costs of disposal. The residual values, useful lives and depreciation method are reviewed for impairment when events or changes in circumstances indicate that the carrying amount may not be recoverable, or at least annually to ensure that the amount, method and period of depreciation are consistent with previous estimates and the expected pattern of consumption of the future economic benefits embodied in the items of property, plant and equipment. Property, plant and equipment are derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Gains or losses arising on the disposal of property, plant and equipment are determined as the difference between the disposal proceeds and the carrying amount of the assets and are recognised in profit or loss in the financial year in which the assets is derecognised. 3.4 Development Expenditure Development expenditure comprise direct cost and overhead costs incurred in the development of computerised data collection and feedback systems (GPRO and EMS system) and ERP (Enterprise Resource Planning) system for the apparel/garment industry. Development expenditure is charged to profit or loss in the year in which it is incurred, except for it relates to a clearly defined project where the benefits can be reasonably regarded as assured. Expenditure so deferred is limited to the value of the future benefit and is stated at cost. The amortisation policy for development expenditure is amortised on the straight line basis over a period of 7 years. The carrying amount of development expenditure is reviewed at least annually and written down immediately to their recoverable amount where an indication of impairment exists. 3.5 Financial Instruments Initial Recognition and Measurement Financial assets and financial liabilities are recognised when the Group or the Company becomes a party to the contractual provisions of the financial instrument. Financial assets and financial liabilities are measured initially at fair value plus transactions costs, except for financial assets and financial liabilities carried at fair value through profit or loss, which are measured initially at fair value. Financial assets and financial liabilities are measured subsequently as described below. 38

40 3. SIGNIFICANT ACCOUNTING POLICIES (CONT D) 3.5 Financial Instruments (cont d) Financial Assets - Categorisation and Subsequent Measurement For the purpose of subsequent measurement, financial assets other than those designated and effective as hedging instruments are classified into the following categories upon initial recognition: (a) (b) (c) (d) financial assets at fair value through profit or loss; held-to-maturity investments; loans and receivables; and available-for-sale financial assets. The category determines subsequent measurement and whether any resulting income and expense is recognised in profit or loss or in other comprehensive income. All financial assets except for those at fair value through profit or loss are subject to review for impairment at least at each reporting date. Financial assets are impaired when there is any objective evidence that a financial asset or a group of financial assets is impaired. Different criteria to determine impairment are applied for each category of financial assets. A financial asset or part of it is derecognised when, and only when the contractual rights to the cash flows from the financial asset expire or the financial asset is transferred to another party without retaining control or substantially all risks and rewards of the asset. On derecognition of a financial asset, the difference between the carrying amount and the sum of the consideration received (including any new asset obtained less any new liability assumed) and any cumulative gain or loss that had been recognised in equity is recognised in the profit or loss. At the reporting date, the Group and the Company carry only loans and receivables on their statements of financial position. Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. After initial recognition, these are measured at amortised cost using the effective interest method, less provision for impairment. Discounting is omitted where the effect of discounting is immaterial. Gains or losses are recognised in profit or loss when the loans and receivables are derecognised or impaired, and through the amortisation process. The Group s cash and cash equivalents, trade and most other receivables fall into this category of financial instruments. Loans and receivables are classified as current assets, except for those having maturity dates later than 12 months after the end of the reporting year which are classified as non-current Financial Liabilities - Categorisation and Subsequent Measurement After the initial recognition, financial liabilities are classified as: (a) (b) (c) financial liabilities at fair value through profit or loss; other financial liabilities measured at amortised cost; and financial guarantee contracts. A financial liability is derecognised when, and only when the obligation specified in the contracts is discharged or cancelled or expired. On derecognition of a financial liability, the difference between the carrying amount of the financial liability extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in profit and loss. 39

41 3. SIGNIFICANT ACCOUNTING POLICIES (CONT D) 3.5 Financial Instruments (cont d) Financial Liabilities - Categorisation and Subsequent Measurement (cont d) At the reporting date, the Group and the Company carry only other financial liabilities measured at amortised cost on their statements of financial position. Other financial liabilities measured at amortised cost The Group s and the Company s other financial liabilities include trade and other payables. Other financial liabilities are subsequently measured at amortised cost using the effective interest method. Other financial liabilities are classified as current liabilities unless the Group and the Company has an unconditional right to defer settlement of the liability for at least 12 months after the reporting date Offseting of Financial Instruments Financial assets and financial liabilities are offset and the net amount reported in the statement of financial position if, and only if, there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, or to realise the assets and settle the liabilities simultaneously. 3.6 Impairment of Assets Non-financial Assets The Group and the Company assess at each reporting date whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Group and the Company estimates the asset s recoverable amount. An asset s recoverable amount is the higher of an asset s or cash-generating unit s (CGU) fair value less costs to sell and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. Where the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs to sell, recent market transactions are taken into account, if available. If no such transactions can be identified, an appropriate valuation model is used. These calculations are corroborated by valuation multiples, quoted share prices for publicly traded subsidiaries or other available fair value indicators. The Group and the Company base its impairment calculation on detailed budgets and forecast calculations which are prepared separately for each of the Group s and Company s cashgenerating units to which the individual assets are allocated. These budgets and forecast calculations are generally covering a period of five years. For longer periods, a long term growth rate is calculated and applied to project future cash flows after the fifth year. Impairment losses of continuing operations, including impairment on inventories, are recognised in the profit or loss in those expense categories consistent with the function of the impaired asset. For assets excluding goodwill, an assessment is made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. If such indication exists, the Group and the Company estimate the asset s or cash-generating unit s recoverable amount. A previously recognised impairment loss is reversed only if there has been a change in the assumptions used to determine the asset s recoverable amount since the last impairment loss was recognised. 40

42 3. SIGNIFICANT ACCOUNTING POLICIES (CONT D) 3.6 Impairment of Assets (cont d) Non-financial Assets (cont d) The reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for asset in prior years. Such reversal is recognised in the profit or loss Financial Assets The Group and the Company assess at each reporting date whether there is any objective evidence that a financial assets or a group of financial assets is impaired. A financial asset or a group of financial assets is deemed to be impaired if, and only if, there is objective evidence of impairment as a result of one or more events that has occurred after the initial recognition of the asset (an incurred loss event ) and that loss event has an impact on the estimated future cash flows of the financial asset or the group of financial assets that can be reliably estimated. Evidence of impairment may include indications that the debtors or a group of debtors is experiencing significant financial difficulty, default or delinquency in interest or principal payments, the probability that they will enter bankruptcy or other financial reorganisation and where observable date indicate that there is a measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate with defaults. Financial assets carried at amortised cost For financial assets carried at amortised cost, the Group and the Company first assess whether objective evidence of impairment exists individually for financial assets that are individually significant, or collectively for financial assets that are not individually significant. If the Group and the Company determine that no objective evidence of impairment exists for an individually assessed financial asset, whether significant or not, it includes the asset in a group of financial assets with similar credit risk characteristics and collectively assesses them for impairment. Assets that are individually assessed for impairment and for which an impairment loss is, or continue to be, recognised are not included in a collective assessment of impairment. If there is objective evidence that an impairment loss has been incurred, the amount of the loss is measured as the difference between the assets carrying amount and the present value of estimated future cash flows (excluding future expected credit losses that have not yet been incurred). The carrying amount of the asset is reduced through the use of an allowance account and the amount of the loss is recognised in the profit or loss. Allowances are written off when there is no realistic prospect of future recovery. If, in a subsequent year, the amount of the estimated impairment loss increases or decreases because of an event occurring after the impairment was recognised, the previously recognised impairment loss is increased or reduced by adjusting the allowance account. If a future write-off is later recovered, the recovery is credited to the profit or loss. 3.7 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. 41

43 3. SIGNIFICANT ACCOUNTING POLICIES (CONT D) 3.8 Provisions Provisions are recognised when there is a present legal or constructive obligation that can be estimated reliably, as a result of a past event, when it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Provisions are not recognised for future operating losses. Any reimbursement that the Group or the Company can be virtually certain to collect from a third party with respect to the obligation is recognised as a separate asset. However, this asset may not exceed the amount of the related provision. Provisions are reviewed at each reporting date and adjusted to reflect the current best estimate. If it is no longer probable that an outflow of economic resources will be required to settle the obligation, the provisions are reversed. Where the effect of the time of money is material, provisions are discounted using a current pre tax rate that reflects, where appropriate, the risks specific to the liability. When discounting is used, the increase in the provisions due to the passage of time is recognised as a finance cost. 3.9 Revenue Recognition Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. Revenue is measured at the fair value of consideration received or receivable. Sales of Goods Revenue from sale of goods is recognised upon the transfer of significant risks and rewards of ownership of the goods to the customers. Revenue is not recognised to the extent where there are significant uncertainties regarding recovery of the consideration due, associated costs or the possible return of goods. Rendering of Services Revenue from maintenance of GPRO Systems is recognised upon performance of service Employees Benefits Short Term Employees Benefits Wages, salaries, bonuses and social security contributions are recognised as expenses in the financial year in which the associated services are rendered by the employees of the Group and Company. Short term accumulating compensated absences such as paid annual leave are recognised when services are rendered by the employees that increase their entitlement to future compensated absences, and short term non-accumulating compensated absences such as sick leave are recognised when the absences occur. A provision is made for the estimated liability for unutilised leave as a result of services rendered by employees up to the end of the reporting year Defined Contribution Plans Defined contribution plans are post-employment benefit plans under which the Group or the Company pays fixed contributions into independent entities of funds and will have no legal or constructive obligation to pay further contribution if any of the funds do not hold sufficient assets to pay all employee benefits relating to employee services in the current and preceding financial years. 42

44 3. SIGNIFICANT ACCOUNTING POLICIES (CONT D) 3.10 Employees Benefits (cont d) Defined Contribution Plans (cont d) Such contributions are recognised as expenses in the profit or loss as incurred. As required by law, companies in Malaysia make such contributions to the Employees Provident Fund ( EPF ). Foreign subsidiary company is also making contributions in accordance with its country s statutory pension scheme Tax Expenses Tax expenses comprise current and deferred tax. Current tax and deferred tax are recognised in profit or loss except to the extent that they relates to a business combination or items recognised directly in equity or other comprehensive income Current Tax Current tax expense is the expected amount of income tax payable in respect of the taxable profit for the financial year and is measured using the tax rates that have been enacted or substantively enacted by the reporting date. Current tax is recognised in financial position as liability (or asset) to the extent that it is unpaid (or refundable) Deferred Tax Deferred tax liabilities and assets are provided for under the liability method in respect of all temporary differences at the end of the reporting date between the carrying amount of an asset or liability in the financial position and its tax base including unutilised tax losses and unabsorbed capital allowances. Deferred tax liabilities are recognised for all temporary differences. Deferred tax assets are recognised for all deductible temporary differences, unused tax credits and unused tax losses carry forward, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carried forward unused tax credits and unused tax losses can be utilised. The carrying amount of a deferred tax asset is reviewed at each end of the reporting date. If it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised, the carrying amount of the deferred tax asset will be reduced accordingly. When it becomes probable that sufficient taxable profit will be available, such reductions will be reversed to the extent of the taxable profit. Unrecognised deferred tax assets are reassessed at each end of the reporting year and are recognised to the extent that it has become probable that future taxable profit will allow the deferred tax assets to be utilised. Deferred tax is measured at the tax rates that are expected to apply in the period when the asset is realised or the liability is settled, based on tax rates that have been enacted or substantively enacted by the end of the reporting year. Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss. Deferred tax items are recognised in correlation to the underlying transaction either in other comprehensive income or directly in equity and deferred tax arising from a business combination is adjusted against goodwill on acquisition. 43

45 3. SIGNIFICANT ACCOUNTING POLICIES (CONT D) 3.11 Tax Expenses (cont d) Deferred Tax (cont d) Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority Goods and Services Tax Goods and Services Tax ( GST ) is a consumption tax based on value-added concept. GST is imposed on goods and services at every production and distribution stage in the supply chain including importation of goods and services, at the applicable tax rate of 6%. Expenses and assets are recognised net of the amount of GST except: - Where the GST incurred in a purchase of assets or services is not recoverable from the authority, in which case the GST is recognised as part of the cost of acquisition of the assets or as part of the expense item as applicable; and - Payables that are stated with the amount of GST included. The net amount of GST payable to the taxation authority is included as part of payables in the statement of financial position Discontinued Operation A component of the Group is classified as discontinued operation when it has been disposed of and such a component represents a separate major line of business or geographical area of operation, is part of a single co-ordinate major line of business or geographical area of operation. In the consolidated statement of profit or loss and other comprehensive income of the reporting year, and of the comparable period of the previous year, income and expenses from discontinued operation are reported separately from income and expenses from continuing operation, down to the level of profit after tax, even when the Group retains a non-controlling interest in the subsidiary after the sale. The resulting profit or loss (after tax) is reported separately in Note 6 to the Financial Statements Equity Instruments An equity instrument is any contract that evidences a residual interest in the assets of the Group and of the Company after deducting all of its liabilities. Ordinary shares are equity instruments. Share capital represents the nominal value of shares that have been issued. Share premium includes any premiums received on issue of share capital. Any transaction costs associated with the issuing of shares are deducted from share premium, net of any related income tax benefits. Accumulated losses includes all current and prior years accumulated losses. All transactions with owners of the Company are recorded separately within equity. 44

46 3. SIGNIFICANT ACCOUNTING POLICIES (CONT D) 3.14 Operating Segments An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Group s other components. All operating segments operating results are reviewed regularly by the chief operating decision maker to make decision about resources to be allocated to the segment and to assess its performance and for which discrete financial information is available Contingencies A contingent liability is a possible obligation that arises from past events and whose existence will only be confirmed by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Group or the Company. It can also be a present obligation arising from past events that is not recognised because it is not probable that outflow of economic resources will be required or the amount of obligation cannot be measured reliably. A contingent liability is not recognised but is disclosed in the notes to the financial statements. When a change in the probability of an outflow occurs such that outflow is probable and can be measured reliably, they will then be recognised as a provision Related Parties A related party is a person or entity that is related to the Group. A related party transaction is a transfer of resources, services or obligations between the Group and its related party, regardless of whether a price is charged. (a) A person or a close member of that person s family is related to the Group if that person: (i) (ii) (iii) has control or joint control over the Group; has significant influence over the Group; or is a member of the key management personnel of the Group. (b) An entity is related to the Group if any of the following conditions applies: (i) (ii) (iii) (iv) (v) (vi) (vii) (viii) the entity and the Group are members of the same group; or one entity is an associate or joint venture of the other entity; or both entities are joint ventures of the same third party; or one entity is a joint venture of a third entity and the other entity is an associate of the third entity; or the entity is a post-employment benefit plan for the benefits of employees of either the Group or an entity related to the Group; or the entity is controlled or jointly-controlled by a person identified in (i) above; or a person identified in (a)(i) above which has significant influence over the entity or is a member of the key management personnel of the Group or the entity; or the entity, or any member of a group which it is a part, provides key management personnel services to the Group. 45

47 4. PROPERTY, PLANT AND EQUIPMENT Group Office equipment Computer software and equipment Furniture and fittings Renovation Total Cost At 1 January ,930 76,182 9,224 82, ,467 Written off - (36,724) (3,077) (82,131) (121,932) Disposal of subsidiaries (9,930) (18,116) - - (28,046) At 31 December ,342 6,147-27,489 Written off - (21,342) (6,147) - (27,489) At 31 December Accumulated depreciation At 1 January ,071 39,733 1,907 14,340 57,051 Charge for the financial year - 11, ,562 16,557 Written off - (19,428) (1,088) (18,902) (39,418) Disposal of subsidiaries (1,071) (18,143) - - (19,214) At 31 December ,516 1,460-14,976 Charge for the financial year - 5, ,951 Written off - (18,903) (2,024) - (20,927) At 31 December Net carrying amount At 31 December At 31 December ,826 4,687-12,513 46

48 5. DEVELOPMENT EXPENDITURE Group and Company Cost At 1 January/31 December 10,564,494 10,564,494 Accumulated amortisation At 1 January 10,564,494 10,164,215 Charge for the financial year - 400,279 At 31 December 10,564,494 10,564,494 Net carrying amount At 31 December INVESTMENT IN SUBSIDIARIES Company Unquoted shares, at cost 3 1,200,004 Less: Disposal of a subsidiary - (1,200,001) Less: Written off (2) - Less: Impairment loss Less: At 1 January - (1,199,998) Less: Reversal upon disposal of subsidiaries - 1,199,998 Less: At 31 December - - The details of the subsidiaries are as follows:- 1 3 Name of company Effective interest % % Principal activities Country of incorporation Geranium Limited* Provision of information technology solution services Hong Kong First Podium Sdn. Bhd.^ Dormant Malaysia * Companies not audited by SJ Grant Thornton Written off during the year, subsidiary wound up on 26 May

49 6. INVESTMENT IN SUBSIDIARIES (CONT D) Derecognition of subsidiaries As disclosed in Note 23 (b) the Company had written off its entire shareholdings of 2 ordinary shares representing 100% of the total equity interest of First Podium Sdn Bhd. As a result of the winding up order, the Company had effectively loss control on the subsidiary. Disposal of subsidiaries In the previous financial year, the Company had undertaken the following:- (i) (ii) On 17 June 2014, the Company disposed its entire shareholdings of 2 ordinary shares representing 100% of the total equity interest of Worldwide Cosmetic Retail (HK) Limited to a third party for a total consideration of 1. On 19 June 2014, the Company disposed its entire shareholdings of 2 ordinary shares representing 100% of the total equity interest of Worldwide Cosmetic Retail Sdn Bhd to a third party for a total consideration of 1. (iii) On 20 June 2014, the Company disposed its entire shareholdings of 255,000 ordinary shares representing 51% of the total equity interest of Maxbeauty Cosmetics Sdn Bhd to a third party for a total consideration of 1. The effects of the deconsolidation/disposal on the financial position of the Group as at the date of disposal are as follows: Group Property, plant and equipment - 8,832 Inventories - 174,017 Trade receivable - 156,201 Other receivables - 38,631 Cash and bank balances - 6,000 Trade payables - (216,318) Other payables (213,664) (447,456) Tax payable - (1,723) Net liabilities (213,664) (281,816) Less: non-controlling interests - 134,582 Proceeds from disposal - (3) Gain on deconsolidation/disposal of subsidiaries to the Group (213,664) (147,237) 48

50 6. INVESTMENT IN SUBSIDIARIES (CONT D) The net cash effect arising from disposal of subsidiaries is as follows: Group 2014 Cash consideration 3 Cash and bank balances of subsidiaries disposed (6,000) Net cash outflow from disposal of subsidiaries to the Group (5,997) Discontinued operation s statement of profit or loss and other comprehensive income The results of the disposal group are as follows: 2014 Revenue 25,401 Cost of sales (23,852) Gross profit 1,549 Other income 219,372 Selling and distribution costs (136,285) Administration expenses (255,826) Other expenses (59,993) Finance costs (5) Loss before tax (231,188) Tax expense - Net loss from discontinued operation (231,188) The loss from discontinued operation is attributable to: 2014 Owners of the Company (914,350) Non-controlling interests 683,162 Net loss from discontinued operation (231,188) Discontinued operation s statement of cash flows Cash flows generated by the disposal group are as follows: 2014 Cash flows used in operating activities (108,052) Cash flows from investing activities 3,756 Cash flows from financing activities 19,903 Net decrease (84,393) 49

51 7. TRADE RECEIVABLE Group and Company Trade receivable 263,378 1,303,097 Less: Allowance for impairment loss Less: At beginning of financial year - - Less: Impairment loss recognised (263,378) - Less: At end of financial year (263,378) - - 1,303,097 The normal trade credit terms granted by the Group and the Company to the trade receivable are 30 days (2014: 30 days). The foreign currency exposure profile of the trade receivable is as follows:- Group and Company HK Dollar - 903, OTHER RECEIVABLES Group Company Non-trade receivable - 500, ,000 Prepayments 6,660 6,660 6,660 6,660 Deposits 7,920,799 4,557,441 1,805,951 1,411,477 7,927,459 5,064,101 1,812,611 1,918,137 Included in other receivables of the Group and of the Company is an amount of 7,919,342 (2014: 4,549,741) and 1,804,494 (1,405,769) respectively being deposits made for purchases of inventories, such deposits are secured by shares pledged to the Company and its subsidiary. 9. AMOUNT DUE FROM SUBSIDIARIES Company Amount due from subsidiaries 6,152,104 3,542,717 Less: Allowance for impairment loss Less: At 1 January (362,661) (3,991,880) Less: Recognised in profit or loss (634,529) (448,734) Less: Written off upon disposal of subsidiaries - 4,077,953 At 31 December (997,190) (362,661) 5,154,914 3,180,056 Amount due from subsidiaries is non-trade in nature, unsecured, interest free and repayable on demand. 50

52 10. SHARE CAPITAL Group and Company Number of shares Amount Authorised:- Unit Ordinary shares of 0.03 each At 1 January 2014/31 December 2014/ 31 December ,000,000 15,000,000 Issued and fully paid:- Ordinary shares of 0.03 each At 1 January ,000,000 8,250,000 Issuance of shares ESOS exercised 13,750, ,500 At 31 December 2014/31 December ,750,000 8,662, RESERVES Group Company Non-distributable Share premium At 1 January 1,130, ,209 1,130, ,209 ESOS exercised - 554, ,126 At 31 December 1,130,335 1,130,335 1,130,335 1,130,335 ESOS reserve At 1 January ESOS granted - 100, ,375 ESOS exercised - (100,375) - (100,375) At 31 December Exchange translation reserve At 1 January (21,902) Foreign currency translation differences arising from foreign subsidiary (138,414) (22,193) - - At 31 December (160,316) (21,902) - - Capital reserve At 1 January/31 December 622, , , ,480 Total non-distributable reserves 1,592,499 1,730,913 1,752,815 1,752,815 Accumulated losses (3,504,972) (4,234,635) (3,661,739) (4,060,473) Total reserves (1,912,473) (2,503,722) (1,908,924) (2,307,658) 51

53 11. RESERVES (CONT D) Share premium Share premium represents the excess of the consideration received over the nominal value of shares issued by the Company. It is not to be distributed by way of cash dividends and its utilisation shall be in a manner as set out in Section 60 (3) of the Companies Act, ESOS reserve ESOS reserves represents the equity-settles share option granted to employees. The reserve is made up of the cumulative value of services received from employees recorded over the vesting period commencing from the grant date of equity-settled share option, and is reduced by the expiry or exercise of the share option. Exchange translation reserve The exchange translation reserve represents exchange difference arising from the translation of the financial statements of foreign subsidiary whose functional currency is different from that of the Group s presentation currency. Capital reserve The reduction of the issued and paid up capital of the Company performed during financial year 2013 gave rise to a credit of 17,500,000 which was utilised to partially set-off against the accumulated losses. Pursuant to Section 60(2) of the Act, the share premium account was treated as paid-up share capital of the Company. Accordingly, pursuant to Section 64(1) of the Act, the Company reduced its share premium account of 17,381,943 and the credit arising therefrom was utilised to set-off against the accumulated losses of the Company amounting to 34,259,463.The remaining credit balance amounting to 622,480 after off-setting the accumulated losses was credited to capital reserve. 12. OTHER PAYABLES Group Company Non-trade payables 1,011, , ,965 27,619 Amount due to former Directors 22, ,722 10,781 10,781 Accrual of expenses 199, , ,000 51,836 1,233, , ,746 90,236 Included in non-trade payables of the Group is an unsecured amount of 667,074 (2014: 451,549) due to a third party, bearings interest rate of Nil (2014: 8%) per annum over the three-month Hong Kong Interbank Offered Rate quoted by the banks in the Hong Kong Interbank Hong Kong Dollar Market and has no fixed term of repayment. 52

54 13. REVENUE Group and Company Maintenance of GPRO systems 480, ,000 Sales of apparel - 2,245, ,000 2,645, COST OF SALES Group and Company Cost of sales of apparel - 537, PROFIT BEFORE TAX Profit before tax has been determined after charging/(crediting), amongst others, the following items:- Group Company Auditors remuneration - statutory - auditors of the Company 48,000 44,000 46,000 40,000 - other auditors 24,054 13, non statutory 5,000 5,000 5,000 5,000 Amortisation of development expenditure - 400, ,279 Amount due from subsidiary written off - - 2,474 - Depreciation of property, plant and equipment 5,951 16, Directors fees 192,095 37, ,000 20,000 ESOS expenses - 100, ,375 Impairment loss on amount due from subsidiaries , ,734 Impairment loss on trade receivable 263, ,378 - Investment in subsidiary written off Interest expense - 8, Other receivables written off - 7,943-7,943 Property, plant and equipment written off 6,562 82, Rental of office 25,350 89,877 17,850 1,700 Rental of premises 24, , ,000 Gain on deconsolidation/disposal of subsidiaries (213,664) (147,237)

55 15. PROFIT BEFORE TAX (CONT D) Profit before tax has been determined after charging/(crediting), amongst others, the following items (cont d):- Group Company Interest income - (3) - (2) Rental income - (298) - - Realised (gain)/loss on foreign exchange (40,370) 98,028 (40,370) 98,028 Unrealised gain on foreign exchange (1,133,376) (177,526) (1,133,376) (173,769) The details of remuneration receivable by the Directors of the Group and of the Company during the financial year are as follows:- Executive:- Fees 192,095 37, ,000 20, TAX EXPENSE Malaysian income tax is calculated at the statutory tax rate of 25% (2014: 25%) of the estimated assessable profits for the financial year. There was no provision for taxation for the current year for the Group and for the Company as the Group and the Company have no chargeable income. A reconciliation of income tax expense applicable to profit before tax at the statutory tax rate to tax expenses at the effective tax rate of the Group and of the Company is as follows: Group Company Profit before tax - Continuing operations 729,663 1,323, ,734 1,131,405 - Discontinued operation - (231,188) ,663 1,092, ,734 1,131,405 Income tax at rate of 25% 182, ,138 99, ,851 Non-allowable expenses 186, , , ,451 Income not subject to tax (336,761) (49,310) (283,344) (12,500) Utilisation of deferred tax assets not recognised in prior years (72,018) (526,802) (72,018) (526,802) Difference of tax rate in other country 42,471 24, Effect of change in tax rate (3,001) - (3,001)

56 16. TAX EXPENSE (CONT D) The Group s and the Company s unutilised tax losses which can be carried forward to offset against future taxable profits amounted to approximately 7,315,000 (2014: 7,615,000). However, the above amount is subject to the approval of the Inland Revenue Board of Malaysia. 17. EARNINGS PER SHARE Basic earnings per ordinary share Basic earnings per share are calculated by dividing the profit for the financial year attributable to owners of the Company by the weighted average of ordinary shares in issue during the financial year. Profit attributable to ordinary shares: Group Profit from continuing operations attributable to ordinary equity holders of the Company 729,663 1,323,739 Loss from discontinued operation attributable to ordinary equity holders of the Company - (914,350) Net profit for the financial year attributable to ordinary equity holders of the Company 729, ,389 Weighted average number of ordinary shares in issue: Units Units Ordinary shares issued as at 1 January 288,750, ,000,000 Weighted average number of ordinary shares issued during the financial year - 11,376,712 Weighted average number of ordinary shares issued as at 31 December 288,750, ,376,712 Basic earnings per share: Sen Sen From continuing operations From discontinued operation - (0.32) Diluted earnings per ordinary share Diluted earnings per share is not applicable for the current financial year as there is no dilutive potential equity instruments that would give a diluted effect to the basic earnings per ordinary share. 55

57 18. DEFERRED TAX ASSETS NOT RECOGNISED The tax effects of temporary differences that would give rise to future benefits are generally recognised only when there is a reasonable expectation of realisation. At the end of financial year, the temporary differences for which no deferred tax assets have been recognised in the financial statements are as follows:- Group and Company Unutilised tax losses 7,315,000 7,615,000 The potential deferred tax assets are not recognised in the financial statements as the Directors opined that such amounts will not be able to be utilised in the near future. 19. EMPLOYEES BENEFITS EXPENSE Group Company Salaries, wages and emoluments 61,138 14, Defined contribution plan 3,508 1, Social security contributions Other benefits - 5,704-5,704 ESOS expenses - 100, ,375 Employees Share Option Scheme ( ESOS ) 64, , ,079 Group and Company Weighted Number of share option average exercise price At 1 January Granted during the financial year 13,750, Exercised during the financial year (13,750,000) At 31 December The fair value of scheme option granted during the previous financial year was estimated using a Black-scholes model, taking into account the terms and conditions upon which the option was granted. The fair value of share option measured at grant date and the assumptions are as follows:- 56

58 19. EMPLOYEES BENEFITS EXPENSE (CONT D) Employees Share Option Scheme ( ESOS ) (cont d) Granted on Fair value of share option () Weighted average share price () Exercise price () Expected volatility (%) Risk free rate (%) Expected average dividend yield (%) - Expected life (year) 5 The expected life of the option is based on historical data and is not necessarily indicative of exercise patterns that may occur. The expected volatility reflects the assumptions that the historical volatility over a period similar to the life of the option is indicative of future trends, which may not necessarily be the actual outcome. 20. RELATED PARTY DISCLOSURES (a) Related party balance The outstanding balance arising from related party transaction as at the reporting date is disclosed in Note 9 to the Financial Statements. (b) Key management personnel compensation The Group and the Company have no other members of key management personnel apart from the Board of Directors. 21. OPERATING SEGMENTS Business segments For the management purposes, the Group is organised into business units based on its products and services, which comprises the following: Information technology and apparel products Skincare and cosmetic products Other Investment holding, supplies software and hardware products and sales of apparel and garments products Retail and trading of skincare and cosmetic products Dormant Management monitors operating results of its business units separately for the purpose of decision making about resource allocation and performance assessment. Segment performance is evaluated based on operating profit or loss which, in certain respects as explained in the table below, is measured differently from operating profit or loss in the consolidated financial statements. 57

59 21. OPERATING SEGMENTS (CONT D) Business segments (cont d) 2015 Revenue: Note Information technology and apparel products 58 Other Adjustments/ eliminations Total as per consolidated financial statements External customer 480, ,000 Total revenue 480, ,000 Results: Amount due from subsidiary written off (2,474) - 2,474 - Depreciation of property, plant and equipment - (5,951) - (5,951) Impairment loss on amount due from subsidiaries (634,529) - 634,529 - Impairment loss on trade receivable (263,378) - - (263,378) Investment in subsidiary written off (2) Gain on deconsolidation of subsidiary , ,664 Other non-cash income/(expenses) i 1,133,376 (6,562) - 1,126,814 Segment (loss)/ profit (100,929) (20,077) 850, ,663 Assets: Segment assets 13,139,130 - (5,154,915) 7,984,215 Liabilities: Segment liabilities 7,386, ,138 (6,368,242) 1,234, Revenue: Note Information technology and apparel products Skincare and cosmetic products Others Adjustments/ eliminations Total as per consolidated financial statements External customers 2,645,172 25, ,670,573 Total revenue 2,645,172 25, ,670,573 Results: Interest income Finance costs (8,810) (5) - - (8,815) Amortisation of development expenditure (400,279) (400,279) Depreciation of property, plant and equipment - (10,607) (5,950) - (16,557) Impairment loss on amount due from subsidiaries (448,734) ,734 - Gain on disposal of subsidiary , ,237 Other non-cash (expenses) / income i 65,451 (78,757) - - (13,306) Segment profit 842,600 3,060,857 1,124,989 (3,935,895) 1,092,551 Assets: Segment assets 10,140, ,681 20,525 (3,563,740) 6,981,168 Liabilities: Segment liabilities 4,148, , ,586 (4,208,214) 822,390

60 21. OPERATING SEGMENTS (CONT D) Business segments (cont d) Notes to the nature of adjustments and eliminations to arrive at amounts reported in the consolidated financial statements. i. Other material non-cash income/(expenses) consist of the following items: Group ESOS expenses - (100,375) Other receivables written off - (7,943) Property, plant and equipment written off (6,562) (82,514) Unrealised gain on foreign exchange 1,133, ,526 Geographical segment 1,126,814 (13,306) Revenue and non-current assets information based on the geographical location of customers and assets respectively are as follows:- Group Revenue Non-current assets Malaysia - 25,401-12,513 Hong Kong 480,000 2,645, Major customer 480,000 2,670,573-12,513 The following is the major customer with revenue equal to the Group s revenue:- Group customer (2014: 1 customer) 480,000 2,645, FINANCIAL INSTRUMENTS 22.1 Financial risk management The Group and the Company are exposed to financial risks arising from their operations and the use of financial instruments. Financial risk management policies are established to ensure that adequate resources are available for the development of the Group s and the Company s business whilst managing its credit risk, liquidity risk, foreign currency risk and interest rate risk. The Group and the Company operate within clearly defined policies and procedures that are approved by the Board of Directors to ensure the effectiveness of the risk management process. 59

61 22. FINANCIAL INSTRUMENTS (CONT D) 22.1 Financial risk management (cont d) The main areas of financial risks faced by the Group and the Company and the policies in respect of the major areas of treasury activity are set out as follows: Credit risk Credit risk is the risk of a financial loss to the Group and the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations. It is the Group s and the Company s policy to enter into financial instrument with a diversity of creditworthy counterparties. The Group and the Company do not expect to incur material credit losses of its financial assets or other financial instruments. It is the Group s and the Company s policies that all customers who wish to trade on credit terms are subject to credit verification procedures. The Group and the Company do not offer credit terms without the approval of the head of credit control. The areas where the Group and the Company are exposed to credit risk are as follows:- Receivables As at the end of the reporting year, the maximum exposure to credit risk arising from receivables is limited to the carrying amount in the statements of financial position. With a credit policy in place to ensure the credit risk is monitored on an ongoing basis, management has taken reasonable steps to ensure that receivables that are neither past due nor impaired are stated at their realisable values. The Group and the Company use ageing analysis to monitor the credit quality of the receivables. The ageing analysis of trade receivable is as follows:- Group and Company Gross Individually impaired Net 2015 Past due 1 to 30 days 40,000 (40,000) - Past due more than 120 days 223,378 (223,378) - 263,378 (263,378) Not past due 1,303,097-1,303,097 The Group s and the Company s policy is to make full impairment for all trade receivables that are in dispute or where recoveries are considered to be doubtful. In respect of trade and other receivables, the Group and the Company are exposed to significant credit risk exposure to a single counterparty in which 100% (2014: 100%) of trade receivable consists of 1 customer (2014: 1 customer) and 99% (2014: 99%) of other receivables consists of 1 counterparty (2014: 2 counterparties). 60

62 22. FINANCIAL INSTRUMENTS (CONT D) 22.1 Financial risk management (cont d) Credit risk (cont d) Intercompany balances The maximum exposure to credit risk is represented by their carrying amounts in the statements of financial position. The Company provides advances to subsidiaries and monitors their results regularly. Cash and cash equivalents The credit risk for cash and cash equivalents is considered negligible, since the counterparties are reputable banks with high quality external credit ratings Liquidity risk Liquidity risk is the risk that the Group and the Company will not be able to meet its financial obligations as and when they fall due as a result of shortage of funds. In managing its exposures to liquidity risk arises principally from its various payables, the Group and the Company maintain a level of cash and cash equivalents deemed adequate by the management to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities as and when they fall due. The Group s and the Company s non-derivative financial liabilities which have contractual maturities are summarised below:- Maturity Carrying amount Contractual cash flow Less than 1 year Group 2015 Other payables 1,233,757 1,233,757 1,233, Trade payables 1,189 1,189 1,189 Other payables 820, , ,851 Company 822, , , Other payables 263, , , Other payables 90,236 90,236 90, 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 and purchases that are denominated in a currency other than the respective functional currency of the Group and the Company. The currency giving rise to this risk is primarily Hong Kong Dollar (HKD). 61

63 22. FINANCIAL INSTRUMENTS (CONT D) 22.1 Financial risk management (cont d) Foreign currency risk (cont d) Carrying amounts of the Group s and the Company s exposure to foreign currency risk are as follows:- Group and Company Financial assets Trade receivables - HKD - 903,097 Other receivables - HKD 1,804,494 1,405,769 Foreign currency sensitivity analysis The following table demonstrates the sensitivity of the Group s and the Company s net profit for the financial year to a reasonably possible change in HKD against the functional currency of the Group and of the Company, with all other variables held constant. Group and Company HKD/ 62 Increase/(decrease) in net profit for the financial year Strengthened 1.7% 30,676 - Weakened 1.7% (30,676) Strengthened 1% 23,087 - Weakened 1% (23,087) Foreign currency sensitivity analysis (cont d) Exposures to foreign exchange rate vary during the financial year depending on the volume of overseas transactions. Nonetheless, the analysis above is considered to be representative of the Group s and of the Company s exposures to foreign currency risk Interest rate risk Interest rate risk is the risk that the fair value or future cash flows of the Group s and the Company s financial instruments will fluctuate because of changes in market interest rates. The Group and the Company do not account for any fixed rate financial assets and liabilities at fair value through profit or loss. Therefore, a change in interest rates at the end of the reporting date would not affect profit or loss. The Group s variable rate borrowings are exposed to a risk of change in cash flows due to changes in interest rates. The interest rate profile of the Group s significant interest-bearing financial instrument, based on carrying amount as at the end of the reporting year is as follows:- Group Floating rate instrument Other payables - 451,549

64 22. FINANCIAL INSTRUMENTS (CONT D) 22.1 Financial risk management (cont d) Interest rate risk (cont d) The following table illustrates the sensitivity of profit to a reasonably possible change in interest rate of +/- 0.5%. These changes are considered to be reasonably possible based on observation of current market conditions. The calculations are based on a change in the average market interest rate for each year, and the financial instruments held at each reporting date that are sensitive to changes in interest rates. All other variables are held constant. Group Profit for the financial year Floating rate instrument +0.5% -0.5% 2014 (2,258) 2, Fair value of financial instruments The carrying amounts of financial assets and financial liabilities of the Group and the Company at the reporting date approximate their fair values due to their short-term nature Fair value hierarchy No fair value hierarchy is disclosed as the Group and the Company do not have financial instruments measured at fair value. 23. SIGNIFICANT EVENTS DURING THE FINANCIAL YEAR (a) (b) On 19 January 2015, the Company entered into a Distribution Agreement with a third party to grant the Company distributorship for the right to sell and distribute Louis Gianni products in Malaysia. On 5 March 2015, The High Court of Malaya granted an order to wind up First Podium Sdn Bhd, a wholly-owned subsidiary of the Company and for the appointment of the Director General of Insolvency as the provisional liquidator of the subsidiary. A copy of the winding up order was received by the Company on 26 May CAPITAL MANAGEMENT The Group s objective when managing capital is to maintain a strong capital base and safeguard the Group s ability to continue as a going concern, so as to maintain investor, creditor and market confidence and to sustain future development of the business. The Group sets the amount of capital in proportion to its overall financing structure, i.e. equity and financial liabilities. The Group manages the capital structure and makes adjustments to it in the light of changes in economic conditions and the risk characteristics of the underlying assets. In order to maintain or adjust the capital structure, the Group may issue new shares. There were no changes in the Group s approach to capital management during the financial year. 63

65 DISCLOSURE OF REALISED AND UNREALISED PROFITS/LOSSES With the purpose of improving transparency, Bursa Malaysia Securities Berhad had on 25 March 2010, and subsequently on 20 December 2010, issued directives which required all listed corporations to disclose the breakdown of retained earnings/accumulated losses into realised and unrealised on Group and Company basis in the annual audited financial statements. The breakdown of accumulated losses as at the reporting date, which has been prepared by the Directors in accordance with the directives from Bursa Malaysia Securities Berhad stated above and the Guidance on Special Matter No. 1 - Determination of Realised and Unrealised Profits or Losses in the Context of Disclosures pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants, are as follows:- Group Company Total accumulated losses of the Company and its subsidiaries - Realised (4,638,348) (4,412,161) (4,795,115) (4,234,242) - Unrealised 1,133, ,526 1,133, ,769 Total accumulated losses as per financial statements (3,504,972) (4,234,635) (3,661,739) (4,060,473) The disclosure of realised and unrealised above is solely for complying with the disclosure requirements stipulated in the directive of Bursa Malaysia Securities Berhad and should not be applied for any other purposes. 64

66 ANALYSIS OF SHAREHOLDINGS AS AT 22 MARCH 2016 Authorised Capital Issued and fully paid-up Capital Class of Shares Voting Rights 15,000, ,662, Ordinary shares of 0.03 each fully paid up One vote per 0.03 share SIZE OF HOLDINGS No. of No. of Shareholders Shares held % Less than 100 shares to 1,000 shares , ,001 to 10,000 shares 403 2,843, ,001 to 100,000 shares ,423, ,001 to less than 5% of Issued Shares ,347, % and above of Issued Shares 1 25,000, , ,750, SUBSTANTIAL SHAREHOLDERS AS AT 22 MARCH 2016 No of Shares Held Name Direct % Indirect % MAYBANK SECURITIES NOMINEES (ASING) SDN BHD (EXEMPT AN FOR MAYBANK KIM ENG SECURITIES PTE LTD) 25,000, DIRECTORS SHAREHOLDINGS AS AT 22 MARCH 2016 No of Shares Held Name Direct % of Issued Capital Indirect % of Issued Capital Khoo Yick Keung Tansri Singadju Benui Lo Yin Ling Chan Lai Yi Choi Wing Koon

67 LIST OF THIRTY LARGEST SHAREHOLDERS AS AT 22 MARCH 2016 NO SHAREHOLDER NO. OF SHARES OF 0.03 EACH % 1 MAYBANK SECURITIES NOMINEES (ASING) SDN BHD 25,000, (EXEMPT AND FOR MAYBANK KIM ENG SECURITIES PTE LTD) 2 KENANGA NOMINEES (TEMPATAN) SDN BHD (PLEDGED 12,517, SECURITIES ACCOUNT FOR WONG SU YONG) 3 WARISAN SERANTAU SDN. BHD. 8,550, LEE GEOK LIN 7,900, AFFIN HWANG NOMINEES (ASING) SDN BHD (DBS 6,875, VICKERS SECS (S) PTE LTD FOR CHRISTIAN KWOK-LEUN YAU HEILESEN) 6 RHB NOMINEES (ASING) SDN BHD (RHB SECURITIES 5,775, SINGAPORE PTE. LTD. FOR LILYANTI RUSLI (83218)) 7 TEOH HIN HENG 4,959, AFFIN HWANG NOMINEES (ASING) SDN BHD (DBS 3,875, VICKERS SECS (S) PTE LTD FOR SIU HIU KI JAMIE) 9 JF APEX NOMINEES (TEMPATAN) SDN BHD (PLEDGED 3,584, SECURITIES ACCOUNT FOR OOI SIEW LOOI (STA 2)) 10 LEE MEE LEE HONG MOOI 3,500, ENCIK MOHD FARID BIN OTHMAN 3,000, AFFIN HWANG NOMINEES (ASING) SDN BHD (DBS 3,000, VICKERS SECS (S) PTE LTD FOR CHRISTIAN KWOK-LEUN YAU HEILESEN) 13 ABDUL RAZAK BIN ISMAIL 2,333, TAN WEE JEN 2,170, LOW CHUN CHAI 2,049, CHEAH LAI PENG 2,000, TOO CHONG SIAN 2,000, MAYBANK NOMINEES (TEMPATAN) SDN BHD (ANNIE 1,892, CHONG YI LEI) 19 LIM ENG SUAN 1,876, KONG CHEE SENG 1,600, LIM BOON SENG 1,500, PUBLIC NOMINEES (TEMPATAN) SDN BHD (PLEDGED 1,417, SECURITIES ACCOUNT FOR KONG SAN KONG SUN PING(E-JCL)) 23 LOW MEE FONG 1,320, LIM KIAN LEONG 1,300, LOGANATHAN A/L NADARAJAN 1,200, MAYBANK NOMINEES (TEMPATAN) SDN BHD (PLEDGED 1,150, SECURITIES ACCOUNT FOR LIM HSIU YEN (REM 191)) 27 CHIENG YU CHAI 1,107, LYE MING ZH 1,100, CHAN LIANG MENG 1,100, TAN TUAN HONG 1,100,

68 NOTICE IS HEREBY GIVEN THAT the Thirteenth (13th) Annual General Meeting (AGM) of G Neptune Berhad ( GNB or the Company ) will be held at Hotel Sri Petaling, 30, Jalan Radin Anum, Bandar Baru Sri Petaling, Kuala Lumpur, Wilayah Persekutuan on Friday, 30 May 2016 at a.m. for the purpose of transacting the following businesses :- A G E N D A 1. To receive the Audited Financial Statements of the Company for the financial year ended 31 December 2015 together with the Directors and Auditors reports thereon. Please refer to Note A 2. To approve the payment of Directors remuneration for the financial year ended 31 December Resolution 1 3. To re-elect the following Directors who retire in accordance with Article 103(a) of the Company s Articles of Association and being eligible, offer themselves for re-election :- (a) Mr Khoo Yick Keung Resolution 2 (b) Ms Lo Yin Ling Resolution 3 4. To appoint Auditors and to authorize the Directors to fix their remuneration. Resolution 4 Notice of Nomination pursuant to Section 172(15) of the Companies Act, 1965, a copy of which is annexed hereto and marked Annexure A in the Annual Report have been received by the Company for the nomination of Messrs. Siew Boon Yeong & Associates for appointment as Auditors and of the intention to propose the following ordinary resolution :- THAT subject to their consent to act, Messrs. Siew Boon Yeong & Associates be and are hereby appointed as the Auditors of the Company in place of the retiring Auditors, Messrs. SJ Grant Thornton, to hold office until the conclusion of the next Annual General Meeting at a remuneration to be agreed between the Directors and the Auditors. As Special Business To consider and if thought fit, to pass the following resolutions with or without any modifications:- 5. ORDINARY RESOLUTION: AUTHORITY TO ALLOT AND ISSUE SHARES PURSUANT TO SECTION 132D OF THE COMPANIES ACT THAT pursuant to Section 132D of the Companies Act 1965 and subject to the approvals of the relevant governmental and/or regulatory authorities, the Directors be and are hereby empowered to issue shares in the Company from time to time and upon such terms and conditions and for such purposes as the Directors may in their absolute discretion deem fit, provided that the aggregate number of shares issued pursuant to this resolution does not exceed ten (10) per cent of the issued share capital of the Company for the time being, AND THAT the Directors be and are also hereby empowered to obtain the approval from the Bursa Malaysia Securities Berhad for the listing and quotation of the additional shares so issued AND THAT such authority shall continue in force until the conclusion of the next Annual General Meeting of the Company. Resolution 5 67

69 6. To transact any other business which may properly be transacted at an Annual General Meeting for which due notice shall have been given. By Order of the Board LEONG SUE CHING Company Secretary (MAICSA ) Kuala Lumpur, Wilayah Persekutuan 29 April 2016 Notes:- A. This Agenda item is meant for discussion only as the provision in the Company s Articles of Association do not require a formal approval of the shareholders and hence, is not put forward for voting. 1. A member of the Company who is entitled to attend and vote at this Meeting is entitled to appoint a proxy to attend and vote on a show of hands or on a poll in his/her stead. A proxy may but need not be a member of the Company and Section 149(1) (a) & (b) of the Act shall not apply. 2. In the case of a corporate member, the instrument appointing a proxy shall be either under its Common Seal or signed by its attorney or by an officer of the corporation duly authorized in that behalf. 3. A member may appoint more than two (2) proxies to attend the same meeting provided that he/she specifies the proportions of his/her shareholding to be represented by each proxy. 4. When a member of a Company is an authorized nominee as defined under the Central Depositories Act, it may appoint at least one (1) proxy in respect of each securities account it holds with ordinary shares of the Company standing to the credit of the said securities account. 5. The Form of Proxy must be deposited at the Registered Office of the Company at No. 9A, Jalan Medan Tuanku, Medan Tuanku, Kuala Lumpur, Wilayah Persekutuan not less than 48 hours before the time appointed for holding the meeting or any adjournment thereof. 6. For the purpose of determining who shall be entitled to attend the meeting, the Company shall be requesting Bursa Malaysia Depository Sdn Bhd to make available to the Company pursuant to Article 58 of the Articles of Association of the Company and Rule 7.16(2) of the Ace Market Listing Requirements of Bursa Malaysia Securities Berhad, a Record of Depositors as at 24 May 2016 and only Depositors whose names appear on such Record of Depositors shall be entitled to attend the meeting. 68

70 Explanatory Notes on Special Business: Ordinary Resolution 5 The proposed Resolution 5 is to seek for a renewal of the general authority pursuant to Section 132D of the Companies Act, 1965, if duly passed, is primarily to give flexibility to the Board of Directors from the date of the above meeting to issue and allot shares at any time in their absolute discretion and for such purposes as they consider would be in the interest of the Company without convening a general meeting. This authority, unless revoked or varied at a general meeting, will expire at the next annual general meeting of the Company. The Company continues to consider opportunities to broaden its earnings potential. If any of the expansion/diversification proposals involves the issue of new shares, the Directors, under certain circumstance when the opportunity arises, would have to convene a general meeting to approve the issue of new shares even though the number involved may be less than 10% of the issue capital. In order to avoid any delay and costs involved in convening a general meeting to approve such issue of shares, it is thus considered appropriate that the Directors be empowered to issue shares in the Company, up to any amount not exceeding in total 10% of the issued share capital of the Company for the time being, for such purposes. The renewed authority for allotment of shares will provide flexibility to the Company for the allotment of shares for the purpose of funding future investment, working capital and/or acquisitions. 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 26 June Statement Accompanying the Notice of Annual General Meeting pursuant to Paragraph 8.27(2) of the Bursa Malaysia Securities Berhad ACE Market Listing Requirements: a. The following are the Directors standing for re-election at the Thirteenth Annual General Meeting :- (i) (ii) Mr Khoo Yick Keung Ms Lo Yin Ling b. Further details of the Director seeking re-election at the Thirteenth Annual General Meeting is set out in the Profile of Directors appearing on pages 4 and 5 and details of their interests in the securities of the Company and its subsidiaries are on page 65 of the Annual Report. 69

71 Lee Gim Chuan B-30-02, Laman Scenaria Kiara, Jalan 6/38A, Kuala Lumpur ANNEXURE A Date: 27 April 2016 The Board of Directors G Neptune Berhad c/o No. 9A, Jalan Medan Tuanku, Medan Tuanku, Kuala Lumpur, Wilayah Persekutuan. Dear Sirs, Re: Notice of nomination of Messrs. Siew Boon Yeong & Associates as New Auditors I, the undersigned, being a registered shareholder of G Neptune Berhad ( the Company ), hereby nominate Messrs. Siew Boon Yeong & Associates for appointment as new Auditors of the Company in place of the retiring Auditors, Messrs. SJ Grant Thornton at the forthcoming Thirteenth Annual General Meeting, pursuant to Section 172(15) of the Companies Act, Therefore, I propose that the following resolution be considered at the forthcoming Thirteenth Annual General Meeting:- THAT subject to their consent to act, Messrs. Siew Boon Yeong & Associates be and are hereby appointed as the Auditors of the Company in place of the retiring Auditors, Messrs. SJ Grant Thornton and to hold office until the conclusion of the next Annual General Meeting at a remuneration to be agreed by the Directors and the Auditors. And I would appoint Mr Tansri Saridju Benui, passport number A as my proxy for voting. Yours faithfully, Lee Gim Chuan 70

72 FO OF PROXY (please (please refer to the notes below) G NEPTUNE BERHAD () (Incorporated in Malaysia) No. ore of completing ordinary this shares form held I/We I.C No./Co. No./CDS No.: (Full name in block letters) of (Full address) being a member/members of G NEPTUNE BERHAD 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 Thirteenth Annual General Meeting of the Company to be held at Hotel Sri Petaling, 30, Jalan Radin Anum, Bandar Baru Sri Petaling, Kuala Lumpur on Friday, 30 May 2016 at a.m. *My/our proxy/proxies *is/are to vote as indicated below:- FIRST PROXY SECOND PROXY For Against For Against Ordinary Resolution 1 Ordinary Resolution 2 Ordinary Resolution 3 Ordinary Resolution 4 Ordinary Resolution 5 (Please indicate with a or X in the space provided how you wish your vote to be cast. If no instruction as to voting is given, the proxy/proxies may vote or abstain from voting at his/her/their discretion. The first named proxy shall be entitled to vote on a show of hands.) * Delete where applicable. Dated this..... day of Notes:-.... Signature/Common Seal 1. A member of the Company who is entitled to attend and vote at this Meeting is entitled to appoint a proxy to attend and vote on a show of hands or on a poll in his/her stead. A proxy may but need not be a member of the Company and Section 149(1) (a) & (b) of the Act shall not apply. 2. In the case of a corporate member, the instrument appointing a proxy shall be either under its Common Seal or signed by its attorney or by an officer of the corporation duly authorized in that behalf. 3. A member may appoint more than two (2) proxies to attend the same meeting provided that he/she specifies the proportions of his/her shareholding to be represented by each proxy. 4. When a member of a Company is an authorized nominee as defined under the Central Depositories Act, it may appoint at least one proxy in respect of each securities account it holds with ordinary shares of the Company standing to the credit of the said securities account. 5. The Form of Proxy must be deposited at the Registered Office of the Company at No. 9A, Jalan Medan Tuanku, Medan Tuanku, Kuala Lumpur, Wilayah Persekutuan not less than 48 hours before the time appointed for holding the meeting or any adjournment thereof. 6. For the purpose of determining who shall be entitled to attend the meeting, the Company shall be requesting Bursa Malaysia Depository Sdn Bhd to make available to the Company pursuant to Article 58 of the Articles of Association of the Company and Rule 7.16(2) of the Ace Market Listing Requirements of Bursa Malaysia Securities Berhad, a Record of Depositors as at 24 May 2016 and only Depositors whose names appear on such Record of Depositors shall be entitled to attend the meeting. 71

73 Fold this flap for sealing Then fold here The Company Secretary G Neptune Berhad ( D) No. 9A, Jalan Medan Tuanku Medan Tuanku Kuala Lumpur Wilayah Persekutuan Malaysia Affix Postage Stamp here First fold here 72

74 G NEPTUNE BERHAD (Incorporated in Malaysia) 73