GPRO Annual Report 2004 - GPRO Technologies€¦ · • GPRO lists on the MESDAQ with a premium of 0.48 sen Oct - Dec • Malaysian fund managers & investors visit GPRO's operations

NOTICE OF ANNUAL GENERAL MEETING 2

CORPORATE INFORMATION 3

CORPORATE HIGHLIGHTS 4

CORPORATE STRUCTURE 6

PROFILE OF DIRECTORS 7

CHAIRMAN'S STATEMENT 9

STATEMENT ON CORPORATE GOVERNANCE 11

AUDIT COMMITTEE REPORT 14

STATEMENT ON INTERNAL CONTROL 16

FINANCIAL STATEMENTS 17

ANALYSIS OF SHAREHOLDINGS 47

PROXY FORM

Content

NOTICE IS HEREBY GIVEN THAT the Second Annual General Meeting of the Company will be held at Anggerik Room Hotel Equatorial, Jalan Sultan Ismail, 50250 Kuala Lumpur on Wednesday, 22 June 2005 at 3.00 p.m. for the purpose of transacting the following businesses :-

A G E N D A

1. To receive and adopt the Audited Financial Statements of the Company for the financial year ended 31 December 2004 together with the Directors' and Auditors' reports thereon.

2. To approve the payment of Directors' fees for Non-Executive Directors for the financial year ended 31 December 2004.

3. To re-elect the following Directors who are retiring in accordance with Article 84 of the Company's Articles of Association and being eligible, have offered themselves for re-election :-

(i) Tang Tiong Seng (ii) Quek Kar Loon (iii) Quek Kar Piaw (iv) Norazharuddin Bin Abu Talib (v) Koh Soo Eng (vi) Dato' Professor Dr. Elias @ Ilias Bin Salleh (vii) Abu Salihu Hj. Mohamed Shariff

4. To re-appoint Messrs Shamsir Jasani Grant Thornton as Auditors of the Company and to authorize the Directors to fix their remuneration.

As Special Business

To consider and if thought fit, to pass the following ordinary resolution with or without any modifications:-

5. AUTHORITY TO ALLOT AND ISSUE SHARES PURSUANT TO SECTION 132D OF THE COMPANIES ACT 1965.

"That, subject always to the Companies Act, 1965, the Articles of Association of the Company and the approvals of the relevant governmental/regulatory authorities, the directors be and are hereby empowered, pursuant to Section 132D of the Companies Act, 1965, to issue shares in the Company from time to time and upon such terms and conditions and for such purposes as the directors may deem fit provided that the aggregate number of shares issued pursuant to this resolution does not exceed 10% of the issued capital of the Company for the time being excluding the number of ordinary shares arising from the exercise of the Employees' Share Option Scheme (ESOS), and that such authority shall continue in force until the conclusion of the next Annual General Meeting of the Company."

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

LIM SECK WAH (MAICSA 0799845)M. CHANDRASEGARAN A/L S. MURUGASU (MAICSA 0781031)Company SecretariesKuala Lumpur

Resolution 1

Resolution 2

Resolution 3Resolution 4Resolution 5Resolution 6Resolution 7Resolution 8Resolution 9

Resolution 10

Resolution 11

NOTICE OF ANNUAL GENERAL MEETING

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Notes:-

1. A member of the Company who is entitled to attend and vote at this Meeting is entitled to appoint a proxy to attend and vote on a show of hands or on a poll in his/her stead. A proxy may but need not be a member of the Company and Section 149(1)(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. Where a member appoints two (2) or more proxies the appointments shall be invalid unless he specifies the proportions of his 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 Level 15-2, Faber Imperial Court, Jalan Sultan Ismail, 50250 Kuala Lumpur not less than 48 hours before the time appointed for holding the meeting or any adjournment thereof.

Explanatory Notes on Special Business :

Ordinary Resolution 11

The proposed Resolution 11, if passed, would enable the Directors to issue up to a maximum of 10% of the issued and paid up share capital of the Company as at the date of this Annual General Meeting for such purposes as the Directors consider would be in the best interest of the Company. This authority unless revoked or varied by the Company at a general meeting will expire at the next annual general meeting.

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CORPORATE INFORMATION

COMPANY SECRETARIES

Lim Seck Wah(MAICSA NO: 0799845)

M. Chandrasegaran A/L S. Murugasu(MAICSA NO: 0781031)

AUDITORS

Messrs Shamsir Jasani Grant ThorntonLevel 11-1, Faber Imperial CourtJalan Sultan Ismail 50250 Kuala LumpurTel : 03-2692 4022Fax : 03-2691 5229

REGISTERED OFFICE

Level 15-2, Faber Imperial CourtJalan Sultan Ismail50250 Kuala LumpurTel : 03-2692 4271Fax : 03-2732 5388

SHARE REGISTRAR

Mega Corporate Services Sdn Bhd Level 15-2, Faber Imperial CourtJalan Sultan Ismail50250 Kuala Lumpur Tel :03-26924271Fax : 03-27325388

STOCK EXCHANGE LISTING

MESDAQ market of the Bursa MalaysiaSecurities Berhad

BOARD OF DIRECTORS

Tang Tiong Seng Executive Chairman

Quek Kar Loon Chief Executive Officer / Managing Director Quek Kar PiawChief Operating Officer / Executive Director

Norazharuddin Bin Abu Talib Non-Independent Non-Executive Director

Koh Soo EngNon-Independent Non-Executive Director

Dato' Professor Dr. Elias @ Ilias Bin Salleh Independent Non-Executive Director

Abu Salihu Hj. Mohamed Shariff Independent Non-Executive Director

AUDIT COMMITTEE

Dato' Professor Dr. Elias @ Ilias Bin SallehChairmanIndependent Non-Executive Director

Abu Salihu Hj. Mohamed ShariffIndependent Non-Executive Director

Koh Soo Eng + Non-Independent Non-Executive Director + A member of the Institute of Chartered Accountants in England and Wales and Malaysian Institutes of Accountants.

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Corporate Highlights

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GPRO's Highlights for 2004

Jan - March

• Arrival of Chief Technology Officer, Tumin Chook from the US.

• Participated in regional Asia Apparel Machinery & Accessories Exhibition in Singapore

• Awarded Export Excellence Award (for Merchandise) by Malaysia International Trade and Industry

July - Sept

• Contract signed with Martin Emprex, supplier for Marks and Spencer

• GPRO conducts Handover Ceremony for its G.PRO System to Sinotex (Lanka) Ltd IT team

• GPRO continues recruitment drive for staff and engineers

April - June

• GPRO signs underwriting ceremony enroute to its listing on the MESDAQ Market

• Nhabe Garment Company begins its pilot phase implementation

• GPRO lists on the MESDAQ with a premium of 0.48 sen

Oct - Dec

• Malaysian fund managers & investors visit GPRO's operations in China

• GPRO signs historic agreement with VINA TEX Corporation, an association of state-owned garment manufacturers in Vietnam

• GPRO launches its G.PRO IEES System, a software and training module

GPRO'S Highlights for 2004

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Corporate Highlights (CONT'D)

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GPRO's Highlights for 2004

GPRO has become a market leader in developing of technologies for the Garment industry. With over 40 international companies using its systems, GPRO is at the forefront of breakthrough innovation all over the world.

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CORPORATE STRUCTURE

MISSIONNNNSI NNIMIS"To be the leading technology-basedcompany providing innovative IT solutions and technologies to the textile & apparel industry worldwide"

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DIRECTORS' PROFILE

Tang Tiong Seng Executive Chairman

Tang Tiong Seng, aged 52, is the Executive Chairman of GPRO. Mr. Tang graduated from the University of Malaya with Bachelors of Science Degree (Second Class Upper Honour) in 1977. He has more than 15 years' experience in the computer and software development industry. Prior to venturing into the software development market, he was a teacher in a secondary school in Kluang, Johor between 1978 and 1987. He ventured into the business of trading in computer hardware in 1988. In 1990, he pioneered the setting up of a software house, I.T. Centre Sdn Bhd, which is now dormant. Recognising the huge potential of the IT industry for the textile and apparel manufacturing industry, Mr. Tang founded NPT in 1995. Together with Quek Kar Loon, he built NPT and brought it for listing on the MESDAQ under GPRO Technologies Bhd.

Quek Kar LoonChief Executive Officer / Managing Director

Quek Kar Loon, aged 41, is an Executive Director and the Chief Executive Officer of GPRO. He graduated with a Bachelors of Science, majoring in Computer Science from the University of Alberta, Canada in 1986. He obtained a Master in Business Administration (MBA) from Florida International University, USA in 1988. Mr Quek has more than 12 years' experience in the computer and software development industry. In late 1990, he pioneered I.T. Centre Sdn Bhd, a software house. Recognising the huge potential of the IT industry for the textile and apparel manufacturing industry, Mr. Quek founded NPT in 1995. Mr. Quek is responsible for the strategic planning and management of the Group. In addition, he is involved in the overall R&D strategies of the Group.

Quek Kar PiawExecutive Director/Chief Operating Officer

Quek Kar Piaw, aged 43, is an Executive Director of GPRO. He is responsible for the overall business operations of the group. He obtained his Bachelors Degree (B.Sc) from the University of Alberta, Canada in 1985. He obtained his MBA in 1987 and a Master of Science (Management Information Systems) in 1988 from Florida International University, USA. Mr Quek is currently a member of the Chartered Institute of Marketing (UK), Singapore Institute of Management, Singapore Computer Society and Production Operation Management Society (USA). His vast experience in the IT industry includes as the MIS Unit Manager for Maxtor Singapore Pte. Ltd. Between 1988 and 1989, and the Section Head/Senior Lecturer of Quantitative Methods and IT section in the School of Business, Singapore Polytechnic from 1989 to 1999. Mr Quek pioneered the setting up of CIMNET in 2000, the IT training arm of the Chartered Institute of Marketing (UK) for the Asia Pacific Region.

Norazharuddin Abu TalibNon-Executive Director Norazharuddin Abu Talib, aged 43, is the Chief Executive Officer of Malaysia Venture Capital Management Bhd (MAVCAP). He joined the company as Senior Vice President of Agency Ventures in June 2001. Prior to joining MAVCAP, he was the General Manager of PDX.com Sdn Bhd, an Internet Gateway Provider. He spent nine years of professional experience in venture capital during his tenure with BI Walden Management Sdn Bhd (Walden International Investment Group), serving as Vice President. En. Norazharuddin Abu Talib started his career as a corporate banker with Citibank N.A., Kuala Lumpur. He graduated from Southern Illinois University at Edwardsville, Illinois, USA with a BSBA in Production and Operational Management and holds an MBA specializing in Investment.

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DIRECTORS' PROFILE (CONT'D)

Koh Soo EngNon-Independent Non-Executive Director

Koh Soo Eng, aged 44, is a Non-Executive Director of GPRO. He graduated with a professional accounting degree from Institute of Chartered Accountants in England, United Kingdom in 1988 and is a member of Institute of Chartered Accountants in England and Malaysian Institutes of Accountants. He was an Assistant Manager in Price WaterhouseCoopers, Singapore between 1988 and 1990. Subsequently, he joined Soi Yong Berhad as the Assistant General Manager in Finance and Administration between 1990 and 1994. He has been servicing various firms as the Financial Consultants from 1994 to 2000. He joined the Group in 2000 and subsequently left in 2004.

Abu Salihu Hj. Mohamed ShariffIndependent Non-Executive Director

Abu Salihu Hj. Mohamed Shariff, aged 58, is a non-Executive Director of G-PRO Technologies Bhd. Beginning 2004. He graduated in Economics, Business and Administration from the University of Malaya at degree and post-graduate levels. He obtained his Master of Management from the Asian Institute of Management and completed advanced management training at Universities in UK and USA. He has over 34 years' of work experience in consultancy, public and private sectors and international organizations. At the Ministry of Finance he has headed the Banking, Capital Markets and Multilateral Banks Section (1995-1999) and retired as Director of the Treasury Housing Loans Division in 2003. He has served on the Boards of various MOF Inc. companies including Bank Pembangunan & Infrastruktur Malaysia Bhd, Malaysian Airline System Bhd and public enterprise like Port Authorities, Utilities, DBKL, and SEDC's. He has also been a director in PNB controlled companies in the finance and property sectors. He was on the Court of University of Malaya and the council of Malaysia Institute of Management. Since 2003 he is Executive Director for Malaysia, Indonesia, Brunei, and Suriname (South America) at the Islamic Development Bank (Jeddah, Saudi Arabia). He is also a member of the Audit Committee.

Dato' Professor Dr. Elias@Ilias bin Salleh ("Dato' Elias Salleh")Independent Non-Executive Director

Dato' Elias Salleh, aged 57, is an Independent Director of GPRO. He is a professional architect who has served various capacities in local public universities over the last thirty (30) years. He had served Universiti Teknologi Malaysia (UTM) since 1973, before being seconded to Universiti Utara Malaysia (UUM) in 1999. At UTM, he has held positions of Head of Department, Deputy Dean and Dean of the Faculty of Built Environment. Subsequently, he was entrusted with the establishment and operations of the Bureau of Innovation and Consultancy and Uni-technlogies Sdn Bhd (a company wholly-owned by UTM) as well as the development of the Technovation Park UTM. All three (3) entities formed part of UTM's effort to foster university-industry linkages in technological innovations and commercialisation. His last position in UUM before retirement in 2003 was as Deputy Vice-Chancellor for academic affairs, prior to which he was responsible for the development of the university. He was also instrumental in the establishment of Uniutama Management Sdn Bhd, the university-company of UUM. He is currently assisting the development of architectural programmes in University Putra Malaysia.

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CHAIRMAN STATEMENT

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Dear Shareholder,

In it s 1st year after the IPO (June 2, 2004), our company has made significant growth in a number of areas including human resource strength, market penetration and product development.

Net profits are up 54% to RM 4.9 million and revenues increased by 46.2% to RM 13.6 million.

To put things in perspective, 2004 was the year of building and consolidating resources and infrastructure. Much effort was devoted to equipping people, putting necessary internal structures in place, building external structures and strengthening our financial position. And I must say that you as a shareholder have contributed toward this effort too.

We have a stronger foundation as a company now. We have grown. We are stronger. Perhaps, we can liken our company to a young seedling with its radicle (root) and plumule (shoot): young, vibrant, and full of growth potential.

We are indeed in this stage of growth. We want to grow the company to a stage when it can exploit the vast global market potential in the textile and apparel industry. This is our aspiration. GPRO is going to be the leading innovative solution and technology provider for the textile and apparel industry in the world.

Financial Performance in 2004

As touched upon earlier, our revenues were up by 46.2% to RM 13.6 million. Profit after taxation (PAT) rose by 54% to RM 4.9 million bringing our net tangible assets to RM 13.9 per share. Our full year earnings per share (EPS) was 1.78 sen per share.

New Business InitiativesPlanning for future growth and challenges, GPRO forged ahead last year with a number of strategic initiatives. We want to make sure that while striving to achieve results for the short term, we are also laying strong foundations for future business to ensure sustainable growth.

At least two R&D programmes were put on accelerated mode since mid-2004. These were the RFID Version of the G.PRO System and the G.PRO IEES (Industrial Engineering Execution System) projects. We want to see a faster time-to-market cycle. I am glad to announce that these two products are now in the market.

Our second office in China was set up in Guangzhou at the end of 2004. With this new office and the existing one in Hangzhou, we are gearing up our capability to exploit the vast market in the Pearl River Delta (PRD) and the Yangtze River Delta (YRD), two of China's fastest growing economic zones.

To ensure a high standard of corporate governance, we have appointed an out-sourced Internal Auditor.

As a step to enhance our communication and customer service efficiency and effectiveness, we have upgraded our in-house IT infra-structure and introduced the CSR (Customer Service Request) System. Also, a System Engineering Team (SET) was set up to provide technical support to the Project Engineering Team (PET). These initiatives have since resulted in better internal communication and more efficient customer services support.

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CHAIRMAN STATEMENT (CONT'D)

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On the whole, we are optimistic of our business outlook. We expect our Vietnam and China markets to fare pretty well. With our increased activities in Indonesia, Sri Lanka and Thailand, we are confident of seeing greater contributions from these three countries. India, Bangladesh and Pakistan being new markets to us, will unlikely make significant contributions to our revenues until the year 2006.

New products such as the G.PRO IEES System and RFID Version of the G.PRO System are expected to contribute to both our revenue and profits in 2005.

The young seedling is deepening its roots and spreading its leaves. Soon, it will grow taller, wider and stronger. Before long, it will become a mature plant and start flowering and fruiting. Yes, it is a process. It takes time and nurturing. It takes effort and commitment.

What I can promise is that the GPRO Team is totally committed to grow the company.

AcknowledgementsOur future will continue to be driven by the collective effort of the GPRO Team. The support of our Board of Directors, the dedication of our Management team, and the hard work put in by our staff have made all the difference.

The success of 2004 would also not have been possible without the collaboration and co-operation of our valued clients, suppliers, professional colleagues and business partners. We thank you for your support, and look forward to building stronger relationships in the years to come.

My appreciation also goes to our new and existing shareholders. Thank you for keeping faith with GPRO and supporting us in our aspirations. This has only been the first year since our listing on Bursa Malaysian, and we look forward to exciting times ahead!

Thank You.

JORDAN TANGExecutive ChairmanGPRO Technologies Bhd

The Way ForwardMoving forward, there are a few priorities to focus on. Among them is to maximize resource utilization. Every headcount has to be competent and effective in his or her duties. The staff performance appraisal and reward system is currently under review. The aim is to move towards a performance and incentive-based wage scheme. Every programme is to make either long-term or short-term economic sense. Certain R&D projects will be further accelerated.

Every effort is being put in to deepen our roots in each of the existing markets. We want to get entrenched into the market in China, Vietnam, Indonesia, Thailand and Sri Lanka. We will initiate marketing activities in India, Bangladesh and Pakistan.

Prospects for 2005The textile and apparel industry has entered into a quota-free era. This new regime will bring with it some uncertainties and shake-ups in the short and medium terms. For certain, the textile and apparel business will become more competitive and challenging. Yet, at the same time, the market will continue to grow amidst all these uncertainties.

GPRO is constantly on the look out for patterns, observing changes and shifts. We are mindful that as a company totally dedicated to this industry, we need to respond accordingly.

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STATEMENT OF CORPORATE GOVERNANCE

Meetings attended

Tang Tiong Seng 3/3

Quek Kar Loon 3/3

Quek Kar Piaw 2/3

Norazharuddin Bin Abu Talib 3/3

Koh Soo Eng 2/3

Dato’ Professor Dr Elias @ Ilias Bin Salleh 3/3

Abu Salihu Hj. Mohamed Shariff 3/3

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The Board recognizes that good corporate governance is fundamental to protecting the shareholder 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

• Composition

The Board, led by an Executive Chairman, has seven members, comprising two independent non-executive directors, two non-independent non-executive directors and three executive directors. The current Board composition complies with the Listing Requirements of the Bursa Malaysia Securities Berhad for Mesdaq Market.

• Re-election of Directors

In accordance with the Company's Articles of Association, one-third (1/3) of the Directors, except the Managing Director, shall retire from office, at least once in three (3) years. Retiring directors can offer themselves for re- election. Directors who are appointed by the Board during the financial year are subject to re-election by shareholders at the next Annual General Meeting held following their appointments. Directors over seventy (70) years of age are required to submit themselves for re-appointment annually in accordance with Section 129(6) of the Companies Act, 1965.

For the forthcoming Annual General Meeting, all the Directors will retire by rotation and being eligible, offer themselves for re-election.

• Duties and Responsibilities

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 7 to 8.

Together with the Chairman who has intimate knowledge of the Company's business, the Board is constituted of individuals who are committed to business integrity and professionalism in all its activities. The Board supports the highest standards of corporate governance and the development of best practices for the group.

• Meetings

The Board meets regularly on a quarterly basis and as and when required. There were three (3) Meetings held during the financial year and the attendance record is as follows:-

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STATEMENT OF CORPORATE GOVERNANCE (CONT'D)

B) Range of Remuneration

Executive RM 184,800 Non-Executive RM 42,000

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Salaries and other emoluments

C) Accountability and Audit

• Financial Reporting

The Board aims to provide and present a balanced and meaningful assessment of the Group's financial performance and prospects at the end of the financial year, primarily through the Financial statements and the Chairman's Statement in the Annual Report.

In preparing the above Financial statements, the directors have: • adopted suitable accounting policies and then apply them consistently; • made judgements and estimates that are prudent and reasonable; • ensured applicable accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements; and • prepared the financial statements on an ongoing basis.

• Internal Control

The Board of Directors has overall responsibility for maintaining a system of internal controls, which provides reasonable assessments of effective and efficient operations, internal controls and compliance with laws and regulations.

• External Audit

The Group independent external auditors fill an essential role for the shareholders by enhancing the reliability of the Group's financial statements and giving assurance 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.

D) Shareholders

• Relations with Shareholders and 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 www.bursamalaysia.com.

• Annual General Meeting

The Annual General Meetings (AGM) is the principal forum for dialogue with individual shareholders and investors. It is a crucial mechanism in shareholder communication with 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.

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STATEMENT OF CORPORATE GOVERNANCE (CONT'D)

E) Directors' Responsibility Statement In Respect Of Financial Statements

The Directors are required to prepare the financial statements for each financial year which give a true and fair view of the state of affairs of the Group and of the Company at the end of the financial year, and of the results and cash flow of the Group and of the Company for the financial year then ended.

The Directors consider that, in preparing the financial statements for the financial year ended 31 December 2004, the Group has used appropriate accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent. The Directors also consider that all applicable approved accounting standards have been followed and confirm that the financial statements have been prepared on a going concern basis.

The Directors are responsible for ensuring that the Group and the Company keep accounting records which disclose with reasonable accuracy at any time the financial position of the Group and of the Company and which enable them to ensure that the financial statements comply with the provisions of the Companies Act, 1965 and applicable approved accounting standards in Malaysia.

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The Management Team of GPRO Technologies BerhadFrom left to right (back): Quek Kar Piaw, Chief Operating Officer; Lee Huay Teng, Corporate Affairs and HR Manager; David Kam,

Group Business Development Director; Jordan Tang, Executive Chairman; Kee Tiam Yong, Manager, Consulting Services; Quek Kar Loon,Chief Executive Officer; Sim Kwang Wee, Product Development Senior Manager; Tan Siok Kee, Finance & Admin Manager;

Tracey Yim Yoke Foong, Marketing Manager; Chook Tu Min, Chief Technology Officer.

AUDIT COMMITTEE

Meetings attended

Dato’ Professor Dr. Elias @ Ilias Bin Salleh 3/3

Abu Salihu Hj. Mohamed Shariff 3/3

Koh Soo Eng 2/3

Authority

The Audit Committee is authorized to investigate any activity of the Company within its terms of reference and all employees shall be directed to co-operate with any request made by the committee. The Committee shall be empowered to retain persons having special competence as necessary to assist the Committee in fulfilling its responsibilities.

Duties and Responsibilities

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;

COMPOSITION AND DESIGNATION OF AUDIT COMMITTEE

Chairman1. Dato' Professor Dr Elias @ Ilias Bin Salleh (Independent Non-Executive Director)

Members2. Abu Salihu Hj. Mohamed Shariff (Independent Non-Executive Director)

3. Koh Soo Eng (Non-Independent Non-Executive Director)

TERMS OF REFERENCE OF THE AUDIT COMMITTEE

Constitution

The Audit Committee was formed pursuant to a resolution passed by the Board of Directors on 14th April 2004.

Membership

The Audit Committee shall be appointed by the Board of Directors from among their number and shall be composed of not fewer than 3 members of whom a majority shall be Independent Non-Executive Directors. A quorum shall be 2 members.

The members of the Audit Committee shall elect a chairman from among their member who is not an executive director or employees of the Company or any related corporation. The Chairman elected shall be subjected to endorsement by the Board.

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 3, the Board of Directors shall, within 3 months of that event, appoint such number of new members as may be required to make up the minimum number of 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 determined. 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 three Audit Committee meetings held during the financial year ended 31 December 2004 and the attendance record is as follows:-

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AUDIT COMMITTEE (CONT'D)

Authority (Cont'd)

- to review the adequacy of existing external audit arrangements, with particular emphasis on the scope and quality of the audit;

- to discuss with the external auditors their evaluation of the quality and effectiveness of the internal control and management information systems;

- to review the effectiveness of the internal audit function;

- 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.

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 2004 in the discharge of its functions and duties:-

1. Reviewed the Risk Base Audit for the year ended 31 December 2004 to ensure adequate scope and coverage over the activities of the Group on a risk based approach, which was carried out by the Internal Auditor.

2. Reviewed the Internal Audit Reports on audits carried out by the Internal Auditor.

3. Reviewed the quarterly and annual financial statements to ensure inter alia that they were in compliance with the requirements of relevant authorities.

Internal Audit Function

The internal audit function of the Group is carried out and supervised by the Internal Auditor. During the financial year ended 31 December 2004, the internal audit carried out its duties in accordance with the annual audit plan and also reviewed the compliance of the regulatory requirements of Bursa Malaysia Securities Berhad that were applicable to the Company. The internal audit function is conducted on a group basis to ensure consistency in the control environment and the application of policies and procedures.

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STATEMENT ON INTERNAL CONTROL

Responsibility

The Board has overall responsibility for the Group's system of internal control and for reviewing its effectiveness whilst the role of management is to implement the Board's policies on risk and control.

The system of internal control is designed to manage rather than eliminate the risk of failure to achieve business objectives.

In pursuing these objectives, internal controls can only provide reasonable and not absolute assurance against material misstatement or loss.

Key Processes

The Board confirms that there is a continuous process for identifying, evaluating and managing the significant risks faced by the Group, which has been in place for the financial year under review and up to date of approval of the annual report and financial statements.

Internal Audit Function

The Group had outsourced its an external professional consultancy firm to an independent party who assists the Audit Committee as well as the Board of Directors in discharging their responsibilities by providing an independent, objective assurance and advisory services that add value and improve the operations by:

• ensuring existence of processes to monitor the effectiveness and efficiency of operations and the achievement of business objectives; • ensuring adequacy and effectiveness of internal control systems for safeguarding of assets, providing consistent, accurate financial and operational data; • promoting risk awareness and the value and nature of an effective internal control system; • ensuring compliance with laws, regulations, corporate policies and procedures; and • assisting management in accomplishing its objectives by adopting a systematic and disciplined audit approach to evaluating and improving the effectiveness of risk management, control and governance processes within the companies' operations.

The internal audit function has focused on high priority activities determined by risk assessment and in accordance with the audit planning memorandum approved by the Audit Committee. Please refer to the Audit Committee Report as set out on pages 14 to 15.

Internal Control System

The key elements of the Group's internal control system are described below:

• Organisation structure with clearly defined delegation of responsibilities to the Board. • Regular meetings are held at operational and management levels to identify and resolve business, financial, operational and management issues; • Documented standard operating procedures have been put in place for relevant departments; • 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; 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.

There are no material losses incurred during the financial year as a result of weaknesses in internal control. The management will continue to take adequate measures to strengthen the control environment in which the Group operates.

Statement made in accordance with the resolution of the Board of Directors dated 20 April 2005.

Annual Report 2004.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

Financial StatementDIRECTORS' REPORT 18

STATEMENT BY DIRECTORS / STATUTORY DECLARATION 22

AUDITORS' REPORT 23

BALANCE SHEETS 24

INCOME STATEMENTS 25

STATEMENTS OF CHANGES IN EQUITY 26

CASH FLOW STATEMENTS 27

NOTES TO THE FINANCIAL STATEMENTS 29

GPRO Technologies Berhad

(Company Number: 622237D)

A n n u a l R e p o r t 2 0 0 4

The Directors hereby submit their report together with the audited financial statements of the Group and of the Company forthe year ended 31 December 2004.

PRINCIPAL ACTIVITIES

The principal activities of the Company consist of investment holding, research and development on information technology. The principal activities of its subsidiary companies are disclosed in Note 10 to the financial statements.

There have been no significant changes in the nature of these activities during the year.

FINANCIAL RESULTS

Group CompanyRM RM

Net profit/(loss) after taxation 4,743,121 (68,240)Minority interest 132,443 -

4,875,564 (68,240)Pre-acquisition profit (1,727,000) -

Net profit/(loss) for the year 3,148,564 (68,240)

DIVIDENDS

There were no dividends proposed, declared or paid by the Company since the end of the previous year.

RESERVES AND PROVISIONS

There were no material transfers to or from reserves or provisions during the year.

SHARES AND DEBENTURES

During the year, the following shares of RM0.10 each were issued:-

Date of issue Class of share Number Purpose of issue

5 April 2004 Ordinary 187,499,980 In exchange for 1,318,000 ordinary shares of RM1 each and 352,500 ordinary "A" shares of RM1 each representing the entire issued and paid up capital of New Paradigm Technologies Sdn. Bhd.

26 May 2004 Ordinary 62,500,000 Public issue by way of public offer.

On 7 March 2004, the authorised share capital of the Company was increased from RM1,000,000 to RM50,000,000 by thecreation of an additional 490,000,000 ordinary shares of RM0.10 each.

There were no debentures issued during the year.

EMPLOYEE SHARE OPTION SCHEME ("ESOS")

The Company's ESOS is governed by the by-laws which was approved by a members' circular resolution dated 28 April2004. The ESOS was implemented on 29 April 2004 and is to be in force for a period of 5 years from the date of implementation.

DIRECTORS' REPORT

18



A n n u a l R e p o r t 2 0 0 4

DIRECTORS' REPORT (Cont’d)

19

EMPLOYEE SHARE OPTION SCHEME ("ESOS") (Cont’d)

The salient features of the ESOS are as follows:-

(a) The ESOS Committee appointed by the Board of Directors to administer the ESOS, may from time to time grant options to eligible employees of the Group to subscribe for new ordinary shares of RM0.10 each in the Company;

(b) The eligible of a Director or employee of the Group to participate in the ESOS shall be at the discretion of the ESOS Committee, who shall take into consideration factors such as year of service and performance track record;

(c) The total number of shares to be issued under ESOS shall not exceed in aggregate 5% of the issued share capital of the Company at any point of time during the tenure of the ESOS and out of which not more than 50% of the shares shall be allocated, in aggregate, to Directors and senior management. In addition, not more than 10% of the shares available under the ESOS shall be allocated to any individual Director or employee who, either singly or collectively through his/her associates, holds 20% or more in the issued and paid-up capital of the Company;

(d) The option price for each share shall be weighted average of the market price as quoted in the Daily Official List issued by Bursa Malaysia Securities Berhad for the 5 market days immediately preceding the date on which the option is granted less, if the ESOS Committee shall so determine a their discretion from time to time, a discount of not more than 10% or the par value of the shares of the Company of RM0.10;

(e) The number of outstanding options to subscribe for shares or the option price or both may be adjusted following any issue of additional shares by way of right issues, bonus issues or other capitalisation issue, consolidation, subdivision or reduction of capital carried out by the Company while an option remain unexercised; and

(f) The new shares allotted upon any exercise of the option shall rank pari passu in all respects with the existing ordinary shares of the Company except that the new shares so issued will not rank for any rights, dividends, allotments and/or other distributions, the entitlement date of which is prior to the date of allotment of the new ordinary shares.

As at 31 December 2004, the options offered to take up unissued ordinary shares of RM0.10 each and the option prices areas follows:-

Number of option over ordinary shares of RM 0.10 eachYear Option At At

of offer price 1.1.2004 Granted Exercised 31.12.2004

2004 RM0.40 - 7,245,400 - 7,245,400

INFORMATION ON THE FINANCIAL STATEMENTS

Before the financial statements of the Group and of the Company were made out, the Directors took reasonable steps:-

(a) 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 adequate provision had been made for doubtful debts and there are no bad debts to be written off; and

(b) 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) which would render it necessary to write off any 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

(b) which would render the values attributed to current assets in the financial statements of the Group and of the Company misleading; or



A n n u a l R e p o r t 2 0 0 4


20

INFORMATION ON THE FINANCIAL STATEMENTS (Cont’d)

(c) which have arisen which render adherence to the existing method of valuation of assets or liabilities of the Group and of the Company misleading or inappropriate.

No contingent or other liability has become enforceable or is likely to become enforceable within the period of twelve months after the end of the year which, in the opinion of the Directors, will or may affect the ability of the Group and of the Company to meet its obligations as and when they fall due.

At the date of this report, there does not exist:-

(a) any charge on the assets of the Group and of the Company which has arisen since the end of the year which secures the liability of any other person; or

(b) any contingent liability of the Group and of the Company which has arisen since the end of the year.

OTHER STATUTORY INFORMATION

The Directors state that:-

At the date of this report, they are not aware of any circumstances not otherwise dealt with in this report or the financialstatements which would render any amount stated in the financial statements misleading.

In their opinion:-

(a) the results of the Group's and of the Company's operations during the year were not substantially affected by any item, transaction or event of a material and unusual nature except as disclosed in the Notes to the financial statements; or

(b) there has not arisen in the interval between the end of the year and the date of this report any item, transaction or event of a material and unusual nature likely to affect substantially the results of the operations of the Group and of the Company for the year in which this report is made.

DIRECTORS

The Directors in office since the date of the last report are:-

Tang Tiong Seng (appointed on 6.4.2004)Quek Kar Loon (appointed on 6.4.2004)Quek Kar Piaw (appointed on 6.4.2004)Koh Soo Eng (appointed on 6.4.2004)Norazharuddin bin Abu Talib (appointed on 6.4.2004)YBhg Dato' Professor Dr. Elias @ Ilias bin Salleh (appointed on 6.4.2004)Abu Salihu Hj Mohamed Shariff (appointed on 6.4.2004)Kam Teck Ee (resigned on 7.4.2004)Tan Siok Kee (resigned on 7.4.2004)

According to the Register of Directors' Shareholdings, the interests of Directors in office at end of the year in shares of theCompany and its related corporations were as follows:-

Ordinary shares of RM0.10 eachAt At

Interest in the Company 1.1.2004 Bought Sold 31.12.2004

Direct interestTang Tiong Seng - 15,939,528 - 15,939,528Quek Kar Loon - 15,939,528 - 15,939,528Quek Kar Piaw - 1,379,362 - 1,379,362Koh Soo Eng - 758,724 (758,700) 24

Deemed interest (i)Tang Tiong Seng - 75,573,828 3,900,000) 71,673,828Quek Kar Loon - 75,573,828 (3,900,000) 71,673,828Quek Kar Piaw - 75,573,828 (3,900,000) 71,673,828



A n n u a l R e p o r t 2 0 0 4


21

DIRECTORS (Cont’d)

Option over ordinary shares of RM0.10 eachAt At

Interest in the Company 1.1.2004 Granted Exercised 31.12.2004

Tang Tiong Seng - 1,000,000 - 1,000,000Quek Kar Loon - 1,000,000 - 1,000,000Quek Kar Piaw - 1,000,000 - 1,000,000

(i) Deemed interest by virtue of their substantial shareholdings in Vital Research Sdn. Bhd..

By virtue of the Directors' interests in the shares of the Company, Directors having interest in the shares of the Company arealso deemed interested in the shares of its related corporations to the extent that the Company has an interest under Section6A of the Companies Act, 1965.

No other Directors held any shares or had any interest in shares of the Company and its related corporations during the year.

DIRECTORS' BENEFITS

During and at the end of the year, no arrangements subsisted to which the Company is a party, with the object or objects ofenabling Directors of the Company to acquire benefits by means of the acquisition of shares in or debentures of the Companyor any other body corporate, other than the share option granted pursuant to the ESOS scheme.

Since the end of the previous year, no Director has received or become entitled to receive any benefit (except as disclosedin the Notes to the financial statements) by reason of a contract made by the Company or related corporation with theDirector or with a firm of which the Director is a member, or with a company in which the Director has a substantialfinancial interest.

SIGNIFICANT EVENTS DURING THE YEAR

Significant events during the year are disclosed in Note 23 to the financial statements.

AUDITORS

Messrs Shamsir Jasani Grant Thornton have expressed their willingness to continue in office.

Signed on behalf of the Board of Directors in accordance with a resolution of the Board of Directors dated 20 April 2005.

.............................................................. )TANG TIONG SENG )

)) DIRECTORS)))))

.............................................................. )QUEK KAR PIAW )

Kuala Lumpur20 April 2005



A n n u a l R e p o r t 2 0 0 4

STATEMENT BY DIRECTORS/STATUTORY DECLARATION

22

STATEMENT BY DIRECTORS

In the opinion of the Directors, the financial statements set out on pages 24 to 46 are drawn up in accordance with the provisions of Companies Act, 1965 and the applicable approved accounting standards in Malaysia so as to give a true andfair view of the state of affairs of the Group and of the Company as at 31 December 2004, results of the operations and cashflows of the Group and of the Company for the year then ended.

Signed on behalf of the Board of Directors in accordance with a resolution of the Board of Directors dated 20 April 2005.

............................................................... ............................................................... TANG TIONG SENG QUEK KAR PIAW


STATUTORY DECLARATION

I, Tang Tiong Seng, the Director primarily responsible for the financial management of GPRO Technologies Berhad., dosolemnly and sincerely declare that to the best of my knowledge and belief, the financial statements set out on pages 24 to46 are correct and I make this solemn declaration conscientiously believing the same to be true and by virtue of the provisions of the Statutory Declarations Act, 1960.

Subscribed and solemnly declared by )the abovenamed at Kuala Lumpur in )the Federal Territory this day of )20 April 2005 ) ...................................................................

TANG TIONG SENG

Before me:

Commissioner for OathsT. Thandonee RajagopalNo. W228



A n n u a l R e p o r t 2 0 0 4

REPORT OF THE AUDITORS TO THE MEMBERS OF GPRO TECHNOLOGIES BERHAD (Incorporated in Malaysia)

23

We have audited the financial statements set out on pages 24 to 46 of GPRO Technologies Berhad.

These financial statements are the responsibility of the Company's Directors.

It is our responsibility to form an independent opinion, based on our audit, on these financial statements and to report ouropinion to you, as a body, in accordance with Section 174 of the Companies Act, 1965 and for no other purpose. We donot assume responsibility towards any other person for the content of this report.

We conducted our audit in accordance with applicable Approved Standards on Auditing in Malaysia. These standardsrequire that we plan and perform the audit to obtain all the information and explanations, which we consider necessary toprovide us with sufficient evidence to give reasonable assurance that the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence relevant to the amounts and disclosures in the financial statements. An audit includes an assessment of the accounting principles used and significant estimates made bythe Directors as well as evaluating the overall financial statements presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion:

a) the financial statements have been properly drawn up in accordance with the provisions of the Companies Act, 1965 and applicable approved accounting standards in Malaysia so as to give a true and fair view of:-

(i) the state of affairs of the Group and of the Company as at 31 December 2004 and of the results and cash flows of the Group and of the Company for the year ended on that date; and

(ii) the matters required by Section 169 of the Companies Act, 1965 to be dealt with in the financial statements of the Group and of the Company;

and

b) the accounting and other records and the registers required by the Companies Act, 1965 to be kept by the Company and by the subsidiary companies of which we have acted as auditors have been properly kept in accordance with the provisions of the said Act.

We have considered the financial statements and the auditors' reports of the subsidiary companies of which we have notacted as auditors, as indicated in Note 10 to the Financial Statements.

We are satisfied that the financial statements of the subsidiary companies that have been consolidated with the Company'sfinancial statements are in form and content appropriate and proper for the purposes of the preparation of the consolidatedfinancial statements and we have received satisfactory information and explanations as required by us for those purposes.

The auditors' report on the financial statements of the subsidiary companies were not subject to any qualification and inrespect of subsidiary companies incorporated in Malaysia, did not include any comment (or any adverse comment) madeunder Section 174(3) of the Act.

SHAMSIR JASANI GRANT THORNTON(NO. AF : 0737)

CHARTERED ACCOUNTANTS

DATO' N.K. JASANICHARTERED ACCOUNTANT

(NO: 708/03/06(J/PH) )PARTNER




A n n u a l R e p o r t 2 0 0 4

BALANCE SHEETS AS AT 31 DECEMBER 2004

24

Group CompanyNote 2004 2004 2003

RM RM RM

SHARE CAPITAL 5 25,000,000 25,000,000 2 SHARE PREMIUM 17,381,943 17,381,943 - EXCHANGE TRANSLATION RESERVE 6 11,455 - - UNAPPROPRIATED PROFIT/

(ACCUMULATED LOSS) 3,138,724 (78,080) (9,840)

Total shareholders' equity 45,532,122 42,303,863 (9,838)

Finance payables 7 88,707 - -

45,620,829 42,303,863 (9,838)

Represented by :-PROPERTY, PLANT AND EQUIPMENT 8 1,192,274 34,030 - RESEARCH AND DEVELOPMENT

EXPENDITURE 9 6,285,653 1,353,614 - INVESTMENT IN SUBSIDIARY COMPANIES 10 - 18,749,998 - GOODWILL ON CONSOLIDATION 11 4,455,952 - -

CURRENT ASSETSInventories 12 1,521,585 - - Trade receivables 13 12,652,867 - - Other receivables, deposits and prepayments 1,448,388 50,848 - Amount due from subsidiary company 14 - 2,290,214 - Tax recoverable 31,765 31,765 - Deferred expenditure 3(w) - - 219,049 Fixed deposits with licensed banks 19,801,500 19,801,500 - Cash and bank balances 241,834 75,671 2

Total current assets 35,697,939 22,249,998 219,051

LESS : CURRENT LIABILITIESTrade payables 1,124,826 - - Other payables and accruals 773,822 83,777 1,088 Amount due to subsidiary company 14 - - 227,801 Finance payables 7 91,123 - - Amount due to Directors 15 21,218 - -

Total current liabilities 2,010,989 83,777 228,889

NET CURRENT ASSETS / (LIABILITIES) 33,686,950 22,166,221 (9,838)

45,620,829 42,303,863 (9,838)

The accompanying notes form an integral part of the financial statements.



A n n u a l R e p o r t 2 0 0 4

INCOME STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2004

25

Group Company1.1.2004 18.7.2003

to toNote 2004 31.12.2004 31.12.2003

RM RM RM

Revenue 16 13,621,666 - -

Cost of sales and services (2,464,524) - -

Gross profit 11,157,142 - -

Other operating income 244,026 220,482 -

Selling and distribution cost (1,567,368) - -

Administration expenses (3,885,052) (280,366) (9,840)

Other operating expenses (1,167,432) (8,356) -

Profit/(loss) from operations 4,781,316 (68,240) (9,840)

Finance cost (38,195) - -

Profit/(loss) before taxation 17 4,743,121 (68,240) (9,840)

Taxation 18 - - -

Net profit/(loss) for after taxation 4,743,121 (68,240) (9,840)

Minority interests 132,443 - -

Profit after taxation and minority interests 4,875,564 (68,240) (9,840)

Pre-acquisition profit (1,727,000) - -

Net profit/(loss) for the year/period 3,148,564 (68,240) (9,840)

Earnings per share (sen)- Basic 19(a) 1.78 - Diluted 19(b) 1.76




A n n u a l R e p o r t 2 0 0 4

STATEMENTS OF CHANGES IN EQUITYFOR THE YEAR ENDED 31 DECEMBER 2004

26

Non-distributable Distributable (Accumulated

Exchange loss)/Share Share translation unappropriated

capital premium reserve profit TotalRM RM RM RM RM

Group

Balance at 1 January 2004 2 - - (9,840) (9,838)

Issuance of ordinary shares 24,999,998 18,750,000 - - 43,749,998

Listing expenses - (1,368,057) - - (1,368,057)

Foreign exchange differences,representing net profits notrecognised in income statements - - 11,455 - 11,455

Net profit for the year - - - 3,148,564 3,148,564

Balance at 31 December 2004 25,000,000 17,381,943 11,455 3,138,724 45,532,122

Company

At date of incorporation 2 - - - 2

Net loss for the period - - - (9,840) (9,840)

Balance at 31 December 2003 2 - - (9,840) (9,838)

Issuance of ordinary shares 24,999,998 18,750,000 - - 43,749,998

Listing expenses - (1,368,057) - - (1,368,057)

Net loss for the year - - - (68,240) (68,240)

Balance at 31 December 2004 25,000,000 17,381,943 - (78,080) 42,303,863




A n n u a l R e p o r t 2 0 0 4

CASH FLOW STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2004

27

Group Company1.1.2004 18.7.2003

to toNote 2004 31.12.2004 31.12.2003

RM RM RM

CASH FLOWS FROM OPERATING ACTIVITIESProfit/(loss) before taxation after

pre-acquisition profit 3,016,121 (68,240) (9,840)

Adjustments for:-Depreciation 325,632 8,356 - Amortisation of research and development

expenditure 416,902 - - Amortisation of goodwill 173,609 - - Loss on disposal of property, plant and equipment 304 - - Interest expenses 28,068 - - Interest income (164,511) (157,622) -

Operating profit/(loss) before working capital changes 3,796,125 (217,506) (9,840)

Changes in working capital :-Directors (228,498) - - Inventories (808,911) - - Payables (610,888) (145,112) 1,088 Receivables (4,381,102) (50,848) - Subsdiary company - (2,290,214) 227,801

Net cash (used in)/generated from operating activities (2,233,274) (2,703,680) 219,049

Interest income 164,511 157,622 - Interest paid (28,068) - - Tax paid (31,765) (31,765) -

Net cash (used in)/generated from operating activities (2,128,596) (2,577,823) 219,049

CASH FLOWS FROM INVESTING ACTIVITIESPurchase of property, plant and equipment (642,845) (42,386) - Net cash from acquisition of subsidiary

companies 10 (iii) 689,000 - - Deferred expenditure paid - - (219,049)Proceeds from disposal of property, plant and

equipment 2,500 - - Research and development expenditure incurred (1,861,219) (1,353,614) -

Net cash used in investing activities (1,812,564) (1,396,000) (219,049)



A n n u a l R e p o r t 2 0 0 4

CASH FLOW STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2004 (Cont’d)

28

Group Company1.1.2004 18.7.2003

to toNote 2004 31.12.2004 31.12.2003

RM RM RM

CASH FLOWS FROM FINANCING ACTIVITIESRepayment of finance payables (79,949) - - Issuance of ordinary shares 25,000,000 25,000,000 2 Issuance of ordinary shares by subsidiary

company to minority shareholder 213,449 - - Listing expenses (1,149,008) (1,149,008) -

Net cash generated from financing activities 23,984,492 23,850,992 2

CASH AND CASH EQUIVALENTSNet changes 20,043,332 19,877,169 2 At beginning of year/period 2 2 -

At end of year/period A 20,043,334 19,877,171 2

NOTES TO CASH FLOW STATEMENTS

A. Cash and cash equivalents comprise of:-

Group Company1.1.2004 18.7.2003

to to2004 31.12.2004 31.12.2003

RM RM RM

Fixed deposits with licensed banks 19,801,500 19,801,500 - Cash and bank balances 241,834 75,671 2

20,043,334 19,877,171 2




A n n u a l R e p o r t 2 0 0 4

NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2004

29

1. BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS

The financial statements of the Group and of the Company have been prepared in accordance with the provisions of the Companies Act, 1965 and applicable approved accounting standards in Malaysia.

2. FINANCIAL RISK MANAGEMENT POLICIES AND OBJECTIVES

The Group's financial risk management policy seeks to ensure that adequate financial resources are available for the development of the Group's businesses whilst managing its risks. The Group operates within guidelines approved by the Board and the Group's policy is not to engage in speculative transactions.

The main areas of financial risks faced by the Group and the policy in respect of the major areas of treasury activity are set out as follows:-

(a) Foreign currency risk

The Group is exposed to foreign currency risk as a result of its normal trading activities, where the currency denomination differs from the local currency, Ringgit Malaysia (RM). The Group's policy is to minimise the exposure to foreign currency risk by monitoring and approving requisition which involves foreign currencies.

(b) Interest rate risk

The Group had no material interest rate risk and substantial long term interest-bearing assets and liabilities as at 31 December 2004 except for finance payables.

The investments in financial assets are mainly short term in nature and they are not held for speculative purposes but have been mostly placed in fixed deposits. The deposits placements at balance sheet date are short term and therefore its exposure to the effects of future changes in the prevailing level of interests is limited.

(c) Credit risk

Credit risk is the potential for loss arising from failure of a debtor or counterparty to meet their contractual obligations.

The credit risk is controlled by the application of credit approvals, limits and monitoring procedures. An internal credit review is conducted to evaluate for any significant credit risk.

(d) Liquidity and cash flow risks

To manage liquidity and cash flow risks, the Group relies on its management of working capital to ensure that the cash flows within the operating cycle are sustainable.

3. SIGNIFICANT ACCOUNTING POLICIES

(a) Accounting convention

The financial statements of the Group and of the Company have been prepared under the historical cost convention, unless otherwise indicated in the other significant accounting policies.

(b) Basis of consolidation

The consolidated financial statements included the financial statements of the Company and all its subsidiary companies.



A n n u a l R e p o r t 2 0 0 4

NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2004 (Cont’d)

30

3. SIGNIFICANT ACCOUNTING POLICIES (Cont’d)

(b) Basis of consolidation (Cont’d)

Subsidiary companies are consolidated using the acquisition method of accounting. Under the acquisition method of accounting, the results of subsidiary companies acquired or disposed during the year are included in the consolidated income statements from the effective date of acquisition or up to the effective date of disposal, as appropriate.

The assets and liabilities of a subsidiary company are measured at their fair values at the date of acquisition and these values are reflected in the consolidated balance sheets. The difference between the cost of an acquisition and the fair value of the Group's share of the net assets of the acquired subsidiary company at the date of acquisition is included in the consolidated balance sheet as goodwill or reserves arising on consolidation.

All significant inter group transactions, balances are eliminated on consolidation and the consolidated financial statements reflect external transactions only.

The gain or loss on disposal of a subsidiary company is the difference between net disposal proceeds and the Group's share of its net assets together with any unamortised balance of goodwill and exchange differences which were not previously recognised in the consolidated income statements.

c) Goodwill

Goodwill represents the excess of the cost of acquisition over the Group's interest in the fair value of the identifiable assets and liabilities of a subsidiary company at the date of acquisition.

Goodwill is stated at cost less accumulated amortisation and impairment loss. Goodwill is amortised on a straight-line basis over its estimated useful life of 20 years. The policy for the recognition and measurement of impairment loss is in accordance with Note 3 (u).

(d) Subsidiary companies

Subsidiary companies are those companies in which the Group has a long term interest of more than 50% of the equity capital and in which the Group has power to exercise control over the financial and operating policies so as to obtain benefits from its activities.

Investment in subsidiary companies are stated at cost less impairment loss. The policy for recognition and measurement of impairment loss is in accordance with Note 3(u). On disposal of such investments, the difference between net disposal proceeds and their carrying amounts is recognised in the income statement.

(e) Minority interest

Minority interest is measured at the minorities' share of the post acquisition fair values of the identifiable assets and liabilities of the acquiree.

(f) Property, plant and equipment and depreciation

Property, plant and equipment are stated at cost less accumulated depreciation and impairment loss. Depreciation is computed on the straight line basis to write off the cost of property, plant and equipment over their estimated economic lives.



A n n u a l R e p o r t 2 0 0 4


31


(f) Property, plant and equipment and depreciation (Cont’d)

The annual depreciation rates used are as follows :-

Electrical installation 15%Furniture and fittings 10%Machinery 10%Motor vehicles 20%Office equipment 10%-33 1/3%Computer software and equipment 25%Renovation 33 1/3%Tools and equipment 10%

The policy for recognition and measurement of impairment loss is in accordance with Note 3(u).

(g) Receivables

Trade and other receivables are carried at anticipated realisable value. All known bad debts are written off and specific provision is made for debts which are considered doubtful of collection.

(h) Income tax

Income tax on the profit or loss for the year comprises current and deferred tax. Current tax is the expected amount of income taxes payable in respect of the taxable profit for the year and is measured using the tax rates that have been enacted at the balance sheet date.

Deferred tax is provided for, using the liability method, on temporary differences at the balance sheet date between the tax bases of assets and liabilities and their carrying amounts in the financial statements. In principle, deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets are recognised for all deductible temporary differences, unused tax losses and unused tax credits to the extent that it is probable that the taxable profit will be available against which the deductible temporary differences, unused tax losses and unused tax credits can be utilised. Deferred tax is not recognised if the temporary differences arise from goodwill or negative goodwill or from the initial recognition of an asset or liability in a transaction which is not a business combination and at the time of the transaction, affects neither accounting profit nor taxable profit.

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 at the balance sheet date. Deferred tax is recognised in the income statement, except when it arises from a transaction which is recognised directly in equity, in which case the deferred tax is also charged or credited directly in equity, or when it arises from a business combination that is an acquisition, in which case the deferred tax is included in the resulting goodwill or negative goodwill.

(i) Research and development expenditure

Research and development expenditure comprises of 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.

Research and development expenditure is charged to income statement in the year in which it is incurred, except in so far as it relates to a clearly defined project where the benefits therefrom can reasonably be regarded as assured. Expenditure so deferred is limited to the value of the future benefit and is stated at cost. The deferred expenditure is amortised by reference to the number of units sale of the related product over the total estimated unit sale for a period of 5 years.



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(j) Inventories

Parts and components, work in progress and finished goods are valued at the lower of cost and net realisable value. Cost is determined on a first-in, first-out basis. Cost of finished goods and work in progress includes cost of raw materials and direct labour.

(k) Property, plant and equipment acquired under hire purchase arrangements

The cost of property, plant and equipment acquired under hire purchase arrangements are capitalised. The depreciation policy on these property, plant and equipment is similar to that of the Company's property, plant and equipment depreciation policy. Outstanding obligation due under the hire purchase agreements after deducting finance expenses are included as liabilities in the financial statements. Finance charges on hire purchase agreements are allocated to income statement over the period of the respective agreements.

(l) Payables

Trade and other payables are stated at cost which is the fair value of the consideration to be paid in the future for goods and services received.

(m) Provision for liabilities

Provision for liabilities are recognised when the Company has a present obligation 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. Provisions are reviewed at each balance sheet date and adjusted to reflect the current best estimate. Where the effect of the time value of money is material, the amount of provisions is the present value of the expenditure expected to be required to settle the obligation.

(n) Cash and cash equivalents

Cash comprise of cash on hand and demand deposits. Cash equivalents are short term and highly liquid investments which are readily convertible to known amounts of cash and are subject to an insignificant risk of changes in value.

(o) Foreign currencies

(i) Foreign currency transactions

Foreign currency transactions are initially converted into Ringgit Malaysia at rates of exchange ruling at the transaction dates. At each balance sheet date, foreign currency monetary items are translated into Ringgit Malaysia at exchange rates ruling at the date. Non-monetary items which are carried at historical cost are translated using the historical rate as of the date of acquisition and non monetary items which are carried at fair value are translated using the exchange rate that existed when the values were determined.

All exchange rate differences are taken to the income statement.

(ii) Foreign entities

Financial statements of foreign consolidated subsidiary company are translated at year end exchange rate with respect to the assets and liabilities, and at exchange rates at the dates of the transactions with respect to the income statement. All resulting translation differences are included in the foreign exchange reserve in shareholders' equity.

Goodwill and fair value adjustments arising on the acquisition of a foreign entitiy are treated as assets and liabilities of the Company and translated at the exchange rate ruling at the date of transactions.



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(o) Foreign currencies (Cont’d)

(ii) Foreign entities (Cont’d)

The principal exchange rates for every unit of foreign currency ruling at balance sheet date used are as follows:-

2004 2003RM RM

100 Vietnam Dong 0.02 0.021 US Dollar 3.80 3.801 Singapore Dollar 2.33 45.92100 China Yuan Renminbi 45.92 45.91

(p) Revenue recognition

(i) Revenue from sale of GPRO systems is recognised upon performance of services.

(ii) Revenue from sale of computer hardware is recognised when the Group has transferred to the buyer the significant risks and rewards of ownership of the goods.

(iii) Interest income is recognised on a time proportion basis that reflect the effective yield on the asset.

(q) Equity instruments

Ordinary shares are classified as equity. Dividends on ordinary shares are recognised in equity in the period in which they are declared.

The transaction costs of an equity transaction are accounted for as a deduction from equity, net of tax. Equity transaction costs comprise only those incremental external costs directly attributable to the equity transaction which would otherwise have been avoided.

(r) Segmental results

Segment revenues and expenses are those directly attributable to the segments and include any joint revenue and expenses where a reasonable basis of allocation exists. Segment assets include all assets used by a segment and consist principally of cash, receivables, intangibles and property, plant and equipment, net of provision and accumulated depreciation and amortisation. While most such assets can be directly attributed to the segments on a reasonable basis. Segment assets and liabilities do not include income tax assets, income tax liabilities and deferred income taxes.

(s) Intersegment transfer

Segment revenues, expenses and result include transfer between segments. The prices charged on intersegment transactions are the same as those charged for similar goods to parties outside of the economic entity at an arm's length transactions. These transfer are eliminated on consolidation.

(t) Financial instruments

Financial instruments carried on the balance sheet include cash and bank balances, receivables and payables. The particular recognition methods adopted are disclosed in the individual accounting policy statements associated with each item.



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(t) Financial instruments (Cont’d)

Financial instruments are classified as liabilities or equity in accordance with the substance of the contractual arrangement. Interest, dividends, gains and losses relating to a financial instrument classified as liability are reported as expense or income. Distributions to holders of financial instruments classified as equity are charged directly to equity. Financial instruments are offset when the Company has a legally enforceable right to set off the recognised amounts and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.

(u) Impairment of assets

The carrying values of assets are reviewed for impairment when there is an indication that the assets might be impaired. Impairment is measured by comparing the carrying values of the assets with their recoverable amounts. The recoverable amount is the higher of net realisable value and value in use, which is measured by reference to discounted future cash flows. Recoverable amounts are estimated for individual assets, or if it is not possible, for the cash-generating unit.

An impairment loss is charged to the income statement immediately.

Subsequent increase in the recoverable amount of an asset is treated as reversal of the previous impairment loss and is recognised to the extent of the carrying amount of the asset that would have determined (net of amortisation and depreciation) had no impairment loss been recognised. The reversal is recognised in the income statements immediately.

(v) Employee benefits

(i) Short term benefits

Wages, salaries, bonuses and social security contributions are recognised as an expense in the year, in which the associated services are rendered by employees of the Group. Short term accumulating compensated absences such as paid annual leave are recognised when services are rendered by employees that increase their entitlement to future compensated absences, and short term non-accumulating compensated absences such as sick leave are recognised when the absences occur.

(ii) Defined contribution plans

Obligation for contributions to defined contribution plan such as Employees Provident Fund ("EPF") are recognised as an expense in the income statement as incurred.

(iii) Equity compensation benefits

The Employee Share Option Scheme ("ESOS") allows the Group's employees to acquire shares of the Company. No compensation cost or obligation is recognised. When the options are exercised, equity is increased by the amount of the proceeds received.

(w) Deferred expenditure

All expenses incurred for the Initial Public Offering exercise of the Company on the MESDAQ Market of Bursa Malaysia Securities Berhad have been deferred and capitalised as deferred expenditure. Deferred Initial Public Offering exercise expenditure will be written off against share premium upon completion of the Initial Public Offering exercise. If the Initial Public Offering is unsuccessful, the deferred expenditure will be written off immediately.



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(w) Deferred expenditure (Cont’d)

During the year, the deferred expenditure has been written off against the share premium upon the successful listing of the Company on the MESDAQ Market of Bursa Malaysia Securities Berhad.

4. PRINCIPAL ACTIVITIES AND GENERAL INFORMATION

The principal activities of the Company consists of investment holding, research and development on information technology. The principal activities of its subsidiary companies are disclosed in Note 10 to the financial statements.

There have been no significant changes in the nature of these activities during the year.

The Company is a public limited liability company, incorporated and domiciled in Malaysia. The Company is listed on the MESDAQ Market of Bursa Malaysia Securities Berhad.

The registered office of the Company is located at Level 15-2, Faber Imperial Court, Jalan Sultan Ismail, 50250 Kuala Lumpur. The principal place of business of the Company is located at 18-36, Jalan Tujuh, Taman Delima, 86000 Kluang, Johor Darul Takzim.

The financial statements were authorised for issue by the Board of Directors in accordance with a resolution of the Directors on 20 April 2005.

5. SHARE CAPITALGroup and Company

2004 2003RM RM

Authorised:Ordinary shares of RM0.10 eachAt beginning of year/date of incorporation, at RM0.10/RM1.00 1,000,000 1,000,000

Upon subdivision of share, at RM0.10 each - 1,000,000

Addition during the year 49,000,000 -

At end of year/period, at RM0.10 each 50,000,000 1,000,000

Issued and fully paid:At beginning of year/date of incorporation, at RM0.10/RM1.00 each 2 2

Upon subdivision of share, at RM0.10 each - 2

Issued during the year:Acquisition of subsidiary companies 18,749,998 -Initial public offering 6,250,000 -

At end of year/period, at RM0.10 each 25,000,000 2



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6. EXCHANGE TRANSLATION RESERVE

Group

2004RM

Non distributable:-At beginning of year -Foreign exchange difference, representing net profits not

recognised in income statements 11,455

At end of year 11,455

The exchange translation reserve comprise all exchange differences arising from the translation of financial statements of foreign subsidiary companies.

7. FINANCE PAYABLES

Group

2004RM

Payable within 1 year 103,835Payable after 1 year but not later than 5 years 96,811

200,646Less: Interest in suspense (20,816)

179,830Present value of finance payables- within 1 year 91,123- after 1 year but not later than 5 years 88,707

179,830



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8. PROPERTY, PLANT AND EQUIPMENT

Computersoftware Tools Furniture

Group Office and and and Motor Electrical Totalequipment equipment equipment fittings Renovation Machinery vehicles installation 2004

Cost RM RM RM RM RM RM RM RM RM

Additions through acquisition ofsubsidiary companies 196,020 635,062 147,904 159,125 377,724 15,820 428,429 159,738 2,119,822

Additions 120,804 303,547 29,080 89,548 81,787 2,622 - 15,457 642,845Disposals - (5,384) - - - - - - (5,384)Translation

difference (342) - - - - - - - (342)

At end of year 316,482 933,225 176,984 248,673 459,511 18,442 428,429 175,195 2,756,941

Accumulated depreciation

Additional through acquisition ofsubsidiary companies 62,648 423,986 44,675 46,980 340,102 7,579 248,167 67,748 1,241,885

Charged for the year 30,261 142,332 14,001 19,222 33,812 1,449 64,265 20,290 325,632

Disposals - (2,580) - - - - - - (2,580)Translation

difference (270) - - - - - - - (270)

At end of year 92,639 563,738 58,676 66,202 373,914 9,028 312,432 88,038 1,564,667

Net book value2004 223,843 369,487 118,308 182,471 85,597 9,414 115,997 87,157 1,192,274



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8. PROPERTY, PLANT AND EQUIPMENT (Cont’d)

Computer FurnitureOffice software and and Total

Company equipment equipment fittings 2004RM RM RM RM

Cost

Additions and at end of year 4,546 27,450 10,390 42,386

Accumulated depreciation

Charged for the year and at end of year 454 6,863 1,039 8,356

Net book value2004 4,092 20,587 9,351 34,030

Net book value of property, plant and equipment acquired under the hire purchase arrangements are as follows:-

Group

2004RM

Motor vehicles 115,998Computer software and equipment 24,781

140,779

9. RESEARCH AND DEVELOPMENT EXPENDITURE

Group Company

2004 2004 2003RM RM RM

At beginning of year - - -Additions through acquisition

of subsidiary companies 4,841,336 - -Incurred during the year 1,861,219 1,353,614 -

6,702,555 1,353,614 -Less: Amortisation during the year (416,902) - -

At end of year 6,285,653 1,353,614 -

Included in research and development expenditure incurred during the year of the Group and of the Company are Directors' emoluments amounting to RM317,520 and RM181,440 (2003: Nil).



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10. INVESTMENT IN SUBSIDIARY COMPANIES

Company

2004 2003RM RM

Unquoted shares, in Malaysia- at cost 18,749,998 -

The details of the subsidiary companies are as follows:-

CountryName of incorporation Effective interest Principal activities

2004 2003

New Paradigm Technologies Malaysia 100% - Development and marketingSdn. Bhd. ("NPT") of computerised data collection

and feedback systems for apparel/garment industry and sale of related computer hardware and software.

Held by NPTG.PRO Technologies (Vietnam) Vietnam 60% - Supplying software and hardware

Co. Ltd. * product, service of consulting and training in management of textile industry and leather foot-wear industry.

GPRO Technologies The Peoples' 100% - R e s e a r c h , d e v e l o p m e n t , (Hang Zhou) Republic of China production, consultation, Co. Ltd. * services and the technical

transfer of computer software, hardware, automatic control and other related products.

* Companies not audited by Shamsir Jasani Grant Thornton.

On 5 April 2004, the Company acquired entire issued and paid up share capital of New Paradigm Technologies Sdn. Bhd. comprising 1,318,000 ordinary shares of RM1 each and 352,500 ordinary "A" shares of RM1 each for a purchase consideration of RM18,749,998 satisfied by the issuance of 187,499,980 new ordinary shares of RM0.10 each of the Company at an issue price of RM0.10 each.

(i) The acquisition had the following effects on the Group's financial results for the year:-

2004RM

Revenue 10,072,800Profit from operations 3,346,277Net profit for the year 3,390,413



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10. INVESTMENT IN SUBSIDIARY COMPANIES (Cont’d)

(ii) The acquisition had the following effects on the financial position of the Group as at the end of the year.

2004RM

Goodwill on consolidation 219,756Property, plant and equipment 1,158,244Research and development expenditure 4,932,039Inventories 1,521,585Trade receivables 12,652,867Other receivables, deposits and prepayments 1,397,540Cash and bank balances 166,163Trade payables (1,124,826)Other payables and accruals (614,309)Finance payables (179,830)Amount due to a corporate shareholder (75,736)Amount due to Directors (21,218)Amount due to holding company (2,290,214)

Net assets as at year end 17,742,061Less: Inter-company balances eliminations (2,290,214)

Increase in Group's net assets 15,451,847

(iii) The fair values of the assets acquired and liabilities assumed from the acquisition of the subsidiary companies were as follows:-

Group

2004RM

Property, plant and equipment 877,937Research and development expenditure 4,841,336Inventories 712,674Trade receivables 8,555,166Other receivables, deposits and prepayments 1,166,982Fixed deposits with licensed banks 600,000Cash and bank balances 89,000Trade payables (562,597)Other payables and accruals (1,618,668)Finance payables (259,779)Amount due to Directors (249,716)

Fair value of total net assets 14,152,335Less: Minority interest (31,898)

Group's share of net assets 14,120,437Goodwill on acquisition 4,629,561

Cost of acquisition 18,749,998

Cost of acquisition satisfied by issuance of ordinary shares 18,749,998

Total cash inflow arising on acquisition:Cash and cash equivalents of subsidiary companies acquired 689,000



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11. GOODWILL ON CONSOLIDATION

Group

2004RM

At beginning of year -Arising from acquisition of subsidiary companies 4,629,561Less: Accumulated amortisation (173,609)

At end of year 4,455,952

12. INVENTORIES

Group

2004RM

At cost:-Parts and components 486,171Work in progress 177,384Finished goods 858,030

1,521,585

13. TRADE RECEIVABLES

Group

2004RM

Trade receivables 12,914,709Less : Provision for doubtful debts (261,842)

12,652,867

14. AMOUNT DUE FROM/TO SUBSIDIARY COMPANY

Company

The amount due from/to subsidiary company is unsecured, interest free and has no fixed term of repayment.

15. AMOUNT DUE TO DIRECTORS

Group

The amount due to Directors is unsecured, interest free and has no fixed term of repayment.



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16. REVENUE

Group

2004RM

Sales of GPRO systems 13,146,542Sales of computer hardware 85,869Programming and software maintenance services 389,255

13,621,666

17. PROFIT/ (LOSS) BEFORE TAXATION

Profit/ (loss) before taxation has been determined after charging/(crediting) amongst other items the following :-

Group Company1.1.2004 18.7.2003

to to2004 31.12.2004 31.12.2003

RM RM RM

Audit fee - current year 25,948 10,000 500- underprovision in prior year 3,500 - -

Amortisation of goodwill 173,609 - -Amortisation of research and development expenditure 416,902 - -Depreciation 325,632 8,356 -Directors' remuneration- fees 42,000 42,000 -- other emoluments 184,800 - -Finance payables interest 21,168 - -Interest on loan from third party 6,900 - -Loss on disposal of property, plant and equipment 304 - -Rental of plant and machinery 114,627 - -Realised foreign exchange loss 6,890 195 -Rental of premises 292,578 107,819 -Rental income (62,860) (62,860) -Interest from fixed deposits (164,511) (157,622) -

18. TAXATION

There were no provisions for taxation as the Company has no chargeable income and the taxes of its subsidiary companies were exempted under the tax structure of the respective jurisdictions.

The Company has obtained the Multimedia Super Corridor status on 15 August 2003 and applied for the pioneer status and is currently waiting for the result of its application.

A reconciliation of income tax expense to profit/(loss) before taxation at the statutory income tax rate to income tax expense at the effective tax rate of the Group and of the Company is as follows:-



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18. TAXATION (Cont’d)

Group Company

2004 2004 2003RM RM RM

Profit/(loss) before taxation 4,743,121 (68,240) (9,840)

Income tax at Malaysian statutory rate of 28% 1,328,073 (19,107) (2,755)

Tax effect in respect of :

Non-allowable expenses 260,605 19,107 2,755Income not subject to tax (1,588,678) - -

Tax expense for the year - - -

Unutilised tax losses carried forward subject to agreement of the tax authorities 3,876,000 48,000 -

Unabsorbed capital allowances carried forward subject to agreement of the tax authorities 21,000 21,000 -

Included in the Group's unutilised tax losses was an amount of RM3,828,000 from a subsidiary company for pre pioneer period.

19. EARNING PER SHARE

(a) Basic earnings per share

Basic earnings per share of the Group is based on the net profit attributable to shareholders of RM3,148,564 and the weighted average number of ordinary shares in issue during the year of 177,083,338.

2004

Net profit for the year (RM) 3,148,564

Weighted average number of ordinary shares in issue 177,083,338

Basic earnings per share (sen) 1.78

(b) Diluted earnings per share

For the purpose of calculating diluted earnings per share, the weighted average number of ordinary shares in issue during the year has been adjusted for the dilutive effects of all potential ordinary shares, i.e. share options granted to employees.

2004

Net profit for the year (RM) 3,148,564

Weighted average number of ordinary shares in issue 177,083,338Effect of dilution :

Share options 1,499,048Adjusted weighted average number of ordinary

share in issue and issuable 178,582,386

Diluted earnings per share (sen) 1.76



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20. EMPLOYEES INFORMATION

Group Company1.1.2004 18.7.2003

to to2004 31.12.2004 31.12.2003

RM RM RM

(a) Staff cost:-- charged to administration expenses 2,364,076 20,400 -

- charged to production costs 30,677 - -

- charged to research and development expenditure 2,088,120 1,114,402 -

4,482,873 1,134,802 -

(b) The number of employees (including Executive Directors) of the Group and of the Company at the end of the year were 169 and 68 (2003: Nil) respectively.

21. SEGMENT REPORTING

No segment information is presented as the Group operates predominantly in one business segment and the contribution by its foreign subsidiary companies is not significant.

22. FINANCIAL INSTRUMENTS

(a) Interest rate risk

The interest rate risk that financial instruments' values will fluctuate as a result of changes in market interest rates and the effective interest rates on classes of financial assets and financial liabilities are as follows :-

Effective Less than 1 to interest rate

1 year 5 years Total during the yearRM RM RM

Group

2004Financial assets

Fixed deposits with licensed banks 19,801,500 - 19,801,500 2.7% - 3.0%

Financial liability

Finance payables 91,123 88,707 179,830 4.6% - 4.8%

Company

2004Financial assets

Fixed deposits with licensed banks 19,801,500 - 19,801,500 2.7% - 3.0%



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22. FINANCIAL INSTRUMENTS (Cont’d)

(b) Credit risk

The maximum credit risk associated with recognised financial assets is the carrying amount shown in the balance sheet.

As at the balance sheet date, the Group has no significant concentration of credit risk except for trade receivables due from six customers which represent approximately 86% of the Group's trade receivables. Subsequent to balance sheet date, the Group collected approximately 8% of the debts due from the said debtors.

(c) Fair values

The carrying amounts of financial assets and liabilities of the Group at the balance sheet date approximated their fair values.

23. SIGNIFICANT EVENTS DURING THE YEAR

The Company has submitted and obtained approvals from the Securities Commission and the Bursa Malaysia Securities Berhad on 8 March 2004 and 9 March 2004 respectively for the listing and quotation of its entire issued and paid-up share capital ("listing exercise"). As part of the listing exercise, the Company undertook the following scheme:-

(i) On 5 April 2004, the Company acquired the entire issued and fully paid up share capital of New Paradigm Technologies Sdn Bhd ("NPT") comprising 1,318,000 ordinary shares of RM1 each and 352,500 ordinary "A" shares of RM1 each in NPT for a total purchase for a purchase consideration of RM18,749,998 satisfied by the issuance of 187,499,980 new ordinary shares of RM0.10 each of the Company at an issue price of RM0.10 each. Consequently, NPT has become a wholly owned subsidiary company of the Company.

(ii) On 23 March 2004, NPT declared a tax exempt dividend of 59 sen per NPT share amounting to RM985,595 for the year ended 31 December 2003 to the existing shareholders of NPT. The dividends were paid on 19 April 2004.

(iii) On 29 April 2004, the Company implemented an Employee Share Option Scheme ("ESOS") involving up to 5% of the Company's issued and paid-up share capital at any time during the existence of the ESOS, to be issued pursuant to the options to be granted under the ESOS to eligible employees of the Group.

(iv) On 26 May 2004, the Company implemented a Public Issue by way of public offer through the issuance of 62,500,000 new ordinary shares at an issue price of RM0.40 per share to individuals, companies, societies, co-operatives and institutions.

(v) On 2 June 2004, the Company was admitted to the Official List of the MESDAQ Market of Bursa Malaysia Securities Berhad. Accordingly, the Company's entire issued and fully paid-up share capital comprising 250,000,000 ordinary shares are listed on the MESDAQ Market of Bursa Malaysia Securities Berhad.



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24. COMPARATIVE INFORMATION

The presentation and classification of items in the current year financial statements have been consistent with the previous year except that certain comparative amounts have been adjusted as a result of the acquisition of New Paradigm Technologies Sdn. Bhd. ("NPT"). Following the acquisition, NPT became a wholly owned subsidiary company of the Company.

The following balance sheet and cash flow comparative figures have been reclassified to conform with current year's presentation

As Company As previously

restated reportedRM RM

Balance sheets Other payables and accruals 1,088 228,889Amount due to subsidiary company 227,801 -

Cash flow statementsCash flow from operating activitiesChanges in working capital:Payables 1,088 228,889Subsidiary company 227,801 -

There are no comparative figures for the Group as this is the first set of the Group financial statements being prepared.



A n n u a l R e p o r t 2 0 0 4

Authorised Capital RM50,000,000.00Issued and fully paid-up Capital RM25,000,000.00Class of Shares Ordinary shares of RM0.10 each fully paid upVoting Rights One vote per RM0.10 share

SIZE OF HOLDINGSNo of No of

Shareholders Shares held %

Less than 100 shares 4 94 0.00100 to 999 shares 13 5,314 0.001,000 to 4,999 shares 211 361,850 0.145,000 to 10,000 shares 117 902,500 0.3610,001 to 100,000 shares 158 5,074,458 2.03100,001 to 1,000,000 shares 45 14,566,962 5.83Above 1,000,000 shares 33 229,088,822 91.64

581 250,000,000 100.00

DIRECTORS' SHAREHOLDING

No of Shares HeldName Direct % Indirect %

Tang Tiong Seng 15,939,528 6.38 71,673,828* 28.67Quek Kar Loon 15,939,528 6.38 71,673,828* 28.67Quek Kar Piaw 1,379,362 0.55 - -Koh Soo Eng 24 - - -

* Deemed interest by virtue of having substantial interest in Vital Research Sdn Bhd.

SUBSTANTIAL SHAREHOLDERS OF GPRO AS AT 29 APRIL 2005

No of Shares HeldName Direct % Indirect %

Vital Research Sdn Bhd 71,673,828 28.67 - -Malaysia Venture Capital Management Berhad 33,565,246 13.42 - -Tang Tiong Seng 15,939,528 6.38 71,673,828 28.67Quek Kar Loon 15,939,528 6.38 71,673,828 28.67Allianz Life Insurance Malaysia Berhad 26,850,400 10.74 - -Allianz General Insurance Malaysia Berhad 428,400 - 26,850,400(1) 10.74Allianz Aktiengesellschaft - - 26,850,400(2) 10.74

(1) Deemed interest by virtue of being the holding company of Allianz Life Insurance Malaysia Berhad(2) Deemed interest by virtue of being the holding company of Allianz General Insurance Malaysia Berhad

ANALYSIS OF SHAREHOLDINGSAS AT 29 APRIL 2005

47



A n n u a l R e p o r t 2 0 0 4

TWENTY LARGEST SHAREHOLDERS

NO OF SHARES NO SHAREHOLDER OF RM0.10 EACH %

1 VITAL RESEARCH SDN. BHD. 71,673,828 28.67

2 MALAYSIA VENTURE CAPITAL MANAGEMENT BERHAD 33,565,246 13.43

3 ALLIANZ LIFE INSURANCE MALAYSIA BERHAD 26,850,400 10.74

4 QUEK KAR LOON 14,439,528 5.78

5 KENANGA NOMINEES (TEMPATAN) SDN BHDKENANGA CAPITAL SDN BHD FOR TANG TIONG SENG 8,000,000 3.20

6 TANG TIONG SENG 7,939,528 3.18

7 AMANAH RAYA NOMINEES (TEMPATAN) SDN BHDPUBLIC GROWTH FUND 7,500,000 3.00

8 UNIVERSAL TRUSTEE (MALAYSIA) BERHADSBB EMERGING COMPANIES GROWTH FUND 5,279,800 2.11

9 UNIVERSAL TRUSTEE (MALAYSIA) BERHADSBB DANA AL-AZAM 5,161,500 2.06

10 HSBC NOMINEES (TEMPATAN) SDN BHDHSBC (M) TRUSTEE BHD FOR HWANG-DBS SELECT SMALL CAPS FUND (4579) 5,000,000 2.00

11 BINDU FLORIKULTUR SDN BHD 4,658,800 1.86

12 CITICORP NOMINEES (ASING) SDN BHDAMERICAN INTERNATIONAL ASSURANCE COMPANY LIMITED (AIA EQUITY FD) 4,598,000 1.84

13 BHLB TRUSTEE BERHADTA SMALL CAP FUND 4,573,100 1.83

14 QUEK CHEE HIANG @ QUEK SUAN HIANG 3,962,092 1.58

15 BHLB TRUSTEE BERHADPRUGROWTH FUND 3,106,600 1.24

16 AMANAH RAYA NOMINEES (TEMPATAN) SDN BHDPUBLIC EQUITY FUND 2,900,000 1.16

17 CITICORP NOMINEES (ASING) SDN BHDAMERICAN INTERNATIONAL ASSURANCE COMPANY LIMITED (AIA MANAGED FD) 2,000,000 0.80

18 CARTABAN NOMINEES (ASING) SDN BHD STATE STREET LONDON FUNG U8T8 FOR AIG SOUTHEAST ASIA SMALL COMPANIES FUND PLC 1,864,500 0.75

19 BHLB TRUSTEE BERHADTA COMET FUND 1,859,500 0.74

20 AMANAH RAYA NOMINEES (TEMPATAN) SDN BHDPUBLIC SMALLCAP FUND 1,818,500 0.73

ANALYSIS OF SHAREHOLDINGSAS AT 29 APRIL 2005 (Cont’d)

48

GPRO TECHNOLOGIES BERHAD(Company No: 622237 D)(Incorporated in Malaysia)

I/We...................................................................................................... I.C No./Co.No./CDS No.: .......................................... (Full name in block letters)of .............................................................................................................................................................................................

(Full address)being a member/members of GPRO TECHNOLOGIES BERHAD hereby appoint the following person(s):-

or failing him/her, the Chairman of the Meeting as my/our proxy to vote for me/us and my/our behalf at the Second Annual General Meeting of the Company to be held at Anggerik Room, Hotel Equatorial, Jalan Sultan Ismail, 50250 Kuala Lumpur on Wednesday, 22 June 2005 at 3.00 p.m. My/our proxy/proxies is/are to vote as indicated below:-

(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 will vote or abstain from voting at his/her discretion).

Dated this …....….. day of ……………..…… 2005 …………………………. Signature/Common Seal

Notes :-

1. A member of the Company who is entitled to attend and vote at this Meeting is entitled to appoint a proxy to attend and vote on a show of hands or on a poll in his/her stead. A proxy may but need not be a member of the Company and Section 149(1)(6) 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. Where a member appoints two (2) or more proxies the appointments shall be invalid unless he specifies the proportions of his 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 Level 15-2, Faber Imperial Court, Jalan Sultan Ismail, 50250 Kuala Lumpur not less than 48 hours before the time appointed for holding the meeting or any adjournment thereof.

FORM OF PROXY (please refer to the notes below)

No. of shares to beName of proxy, NRIC No. & Address represented by proxy

1. ............................................................................................................................................................ ..................................

2. ........................................................................................................................................................... ..................................

No. of ordinary shares held

FIRST PROXY SECOND PROXYFor Against For Against












FOLD THIS FLAP FOR SEALING

FOLD HERE

FOLD HERE

GPRO Technologies Berhad(Company Number: 622237D) Level 15-2, Faber Imperial CourtJalan Sultan Ismail50250 Kuala Lumpur

STAMP

Notes

Notes

Documents

GPRO Annual Report 2004 - GPRO Technologies€¦ · • GPRO lists on the MESDAQ with a premium of 0.48 sen Oct - Dec • Malaysian fund managers & investors visit GPRO's operations