annual report

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2 Notice of Annual General Meeting

4 Statement Accompanying Notice ofAnnual General Meeting

5 Corporate Information

6 Directors’ Profile

8 Chairman’s Statement

9 Statement on Corporate Governance

13 Additional Compliance Information

15 Statement on Internal Control

16 Report of the Audit Committee

19 Directors’ Report and Financial Statements

48 List of Properties

49 Analysis of Shareholdings

52 Analysis of Warrantholdings

Form of Proxy

CONTENTS

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2

NOTICE OF ANNUAL GENERAL MEETING

NOTICE IS HEREBY GIVEN that the Fourteenth (14th) Annual General Meeting of GunungCapital Berhad will be held at Diamond Room, SSL Traders Hotel, No. 43, Jalan MedanPerwira Satu, Medan Perwira, 34600 Kamunting, Perak Darul Ridzuan on Friday, 19 June2009 at 11.00 a.m. for the following purposes:-

AGENDA

As Ordinary Business

1. To receive and adopt the Audited Financial Statements for the financial year ended 31December 2008 and the Reports of the Directors and Auditors thereon.

2. To approve the payment of Directors’ Fees for the financial year ended 31 December 2008.

3. To re-elect Datuk Ahmad Shalimin bin Ahmad Shaffie who retires by rotation pursuant toArticle 101 of the Company’s Articles of Association.

4. To re-elect Malik Parvez Ahmad bin Nazir Ahmad who retires by rotation pursuant to Article108 of the Company’s Articles of Association.

5. To re-appoint Messrs STYL Associates as Auditors of the Company and to authorise theDirectors to fix their remuneration.

As Special Business

To consider and if thought fit, to pass the following resolutions:-

Ordinary Resolutions

6. Authority to Issue Shares Pursuant to Section 132D of the Companies Act, 1965

“That pursuant to Section 132D of the Companies Act, 1965, and subject to the approvalsof all the relevant government/regulatory authorities, the Directors be and are herebyempowered to issue new shares in the Company at any time, upon such terms andconditions and for such purposes as the Directors may, in their absolute discretion deemfit, provided that the aggregate number of new shares to be issued does not exceed 10%of the total issued share capital of the Company for the time being, and such authority shallcontinue to be in force until the conclusion of the next Annual General Meeting of theCompany.”

7. Proposed Renewal of Shareholders’ Mandate for Recurrent Related PartyTransactions of a Revenue or Trading Nature (“Proposed Renewal of Shareholders’Mandate”)“That pursuant to Paragraph 10.09 of the Listing Requirements of Bursa MalaysiaSecurities Berhad, approval be and is hereby given to the Company’s subsidiary, GunungResources Sdn Bhd (“GRSB”) to enter into recurrent related party transactions of a revenueor trading nature as set out in Section 2.4 of the Circular to Shareholders dated 28 May2009, which are necessary for the day-to-day operations of GRSB, in the ordinary course ofbusiness and on normal commercial terms that are not more favourable to the related partythan those generally available to the public and are not detrimental to the minorityshareholders of the Company.

(Resolution 1)

(Resolution 2)

(Resolution 3)

(Resolution 4)

(Resolution 5)

(Resolution 6)

(Resolution 7)

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NOTICE OF ANNUAL GENERAL MEETING (CONT’D)

And That such approval is subject to annual renewal shall continue to be in force until:

(i) the conclusion of the next Annual General Meeting (“AGM”) of the Company, at whichtime the mandate will lapse, unless authority is renewed by a resolution passed at thenext AGM the mandate is again renewed;

(ii) the expiration of the period within which the next AGM is required to be held pursuantto Section 143(1) of the Companies Act, 1965; (“the Act”) (but shall not extend to suchextension as may be allowed pursuant to Section 143(2) of the Act); or

(iii) revoked or varied by a resolution passed by the shareholders in general meeting,whichever is earlier.

That the Directors of the Company be and are hereby authorised to do all such acts andthings (including executing any relevant documents) as they may consider expedient ornecessary or give effect to the Proposed Renewal of Shareholders’ Mandate.”

8. To transact any other business for which due notice has been given.

By Order of the Board

Jesslyn Ong Bee Fang (MAICSA 7020672)Eric Toh Chee Seong (LS 005656)Company Secretaries

Perak Darul Ridzuan28 May 2009

Notes:

1. A member of the Company, eligible to attend and vote at the meeting, is entitled to appoint a proxy or proxies to vote in his/her stead. A proxy maybut need not be a member of the Company and the provision of Section 149(1)(b) of the Companies Act 1965 shall not apply to the Company.

2. Where a member appoints two (2) or more proxies, the appointment shall be invalid unless he/she specifies the proportion of his/her shareholdingsto be represented by each proxy. Where a member of the Company is an authorised nominee as defined under the Securities Industry (CentralDepositories) Act 1991, it may appoint at least one proxy in respect of each securities account it holds with ordinary shares of the Company standingto the credit of the said securities account.

3. The Form of Proxy shall be in writing under the hand of the appointor or his/her attorney duly authorised in writing or, if the appointor is a corporation,either under its common seal or under the hand of an officer or attorney duly authorised.

4. All Forms of Proxy must be deposited at the Company's Registered Office at Lot 5911, Jalan Perusahaan Satu, Kamunting Industrial Estate, 34600Kamunting, Taiping, Perak Darul Ridzuan not less than 48 hours before the time set for holding the meeting or at any adjournment thereof.

Explanatory Notes on Special Business:

Ordinary Resolution 6 - Authority to Issue Shares Pursuant to Section 132D of the Companies Act, 1965

This resolution if passed, will give the Directors of the Company authority to issue shares for such purposes as the Directors in their absolute discretionconsider to be in the interest of the Company, without having to convene a general meeting. This authority unless revoked or varied at a general meeting,will expire at the conclusion of the next Annual General Meeting of the Company.

Ordinary Resolution 7 - Proposed Renewal of Shareholders’ Mandate

This resolution, if passed, will enable the Company’s subsidiary to enter into recurrent related party transactions which are necessary for its subsidiary day-to-day operations, in the ordinary course of business and on normal commercial terms that are not more favourable to the related party than those generallyavailable to the public and are not detrimental to the minority shareholders of the Company.

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STATEMENT ACCOMPANYING NOTICE OF ANNUAL GENERAL MEETING

Directors who are standing for re-election at the Fourteenth (14th) Annual General Meeting of Gunung Capital Berhad areas follows:

i) Datuk Ahmad Shalimin bin Ahmad Shaffie (Article 101 of the Company’s Articles of Association)

ii) Malik Parvez Ahmad bin Nazir Ahmad (Article 108 of the Company’s Articles of Association)

Pursuant to paragraph 8.28(2) of the Listing Requirements of Bursa Malaysia Securities Berhad, the details of the aboveDirectors who are seeking re-election are set out in their respective profiles which appear in the Profile of Directors onpages 6 to 7 of this Annual Report.

The details of the Directors’ securities holdings in the Company are set out in the Analysis of Shareholdings andWarrantholdings which appear on pages 49 to 53 of this Annual Report.

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CORPORATE INFORMATION

Board of Directors

Low Bok TekChairman, Non Independent & Non Executive Director

Tang Yuet Mun, PPTExecutive Director

Peter Wong Hoy KimSenior Independent & Non Executive Director

Datuk Ahmad Shalimin bin Ahmad Shaffie, DMSMIndependent & Non Executive Director

Malik Parvez Ahmad bin Nazir AhmadIndependent & Non Executive Director

Audit Committee

Datuk Ahmad Shalimin bin Ahmad Shaffie, DMSM(Chairman)

Peter Wong Hoy Kim

Malik Parvez Ahmad bin Nazir Ahmad

Nomination Committee

Datuk Ahmad Shalimin bin Ahmad Shaffie, DMSM(Chairman)

Peter Wong Hoy Kim

Remuneration Committee

Datuk Ahmad Shalimin bin Ahmad Shaffie, DMSM(Chairman)

Peter Wong Hoy Kim

Tang Yuet Mun, PPT

Company Secretaries

Eric Toh Chee Seong (LS 005656)Jesslyn Ong Bee Fang (MAICSA 7020672)

Share Registrar

Insurban Corporate Services Sdn Bhd149, Jalan Aminuddin BakiTaman Tun Dr. Ismail60000 Kuala Lumpur, MalaysiaTel: (603) 7729 5529Fax: (603) 7728 5948

Principal Banker

Malayan Banking Berhad

Registered Office

Lot 5911, Jalan Perusahaan SatuKamunting Industrial Estate34600 Kamunting, TaipingPerak Darul Ridzuan, MalaysiaTel: (605) 891 1188Fax: (605) 891 4488Website: www.gunung.com.my

Auditors

STYL Associates (AF 001929)Chartered Accountants107B, Jalan Aminuddin BakiTaman Tun Dr. Ismail60000 Kuala Lumpur, Malaysia

Stock Exchange Listing

Bursa Malaysia Securities Berhad

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6

DIRECTORS’ PROFILE

LOW BOK TEK (Aged 51, Malaysian)Chairman, Non-Independent Non-Executive Director

Mr Low Bok Tek has been the Chairman of the Company since 13 September 1996. He has assumed the position ofChief Executive Officer of the Company from 20 July 2001 to 28 June 2007. He has more than 20 years ofentrepreneurship experience in the motor vehicles industry, public transport industry and rubber latex gloves industry. Heis also presently the Executive Chairman and Chief Executive Officer of Latexx Partners Berhad. He is a Director of severalsubsidiaries of Gunung Capital Group and sits on the Boards of several private limited companies. He is deemedinterested in related party transactions as disclosed on page 14 of the Annual Report. He has a deemed interest in13,599,129 ordinary shares in the Company held by BT Capital Sdn Bhd, a major shareholder of the Company.

TANG YUET MUN, PPT (Aged 53, Malaysian)Executive Director

Mr Tang Yuet Mun was appointed to the Board on 16 November 2007 as an Independent Non-Executive Director andwas a member of the Audit Committee of the Company. He was then re-designated as an Executive Director of theCompany on 24 June 2008 and became a member of the Remuneration Committee. He is a member of the MalaysianInstitute of Accountants and an accredited Certified Financial Planner by the Financial Planning Association of Malaysia.He is also a member of the Institute of Chartered Accountants, New Zealand. He qualified as a Chartered Accountant inNew Zealand in 1984. He has worked in chartered accountancy, industrial manufacturing, commercial sector and retailindustries both in New Zealand and Malaysia and currently he is a Chartered Accountant in public practice. He does nothold any shares in the Company or in any of its subsidiaries. He does not have any family relationship with any directorand/or substantial shareholder of the Company.

Y. Bhg. DATUK AHMAD SHALIMIN BIN AHMAD SHAFFIE, DMSM(Aged 40, Malaysian)Independent Non-Executive Director

Y.Bhg Datuk Ahmad Shalimin Bin Ahmad Shaffie, DMSM was appointed to the Board on 7 November 2003. He is theChairman of the Audit Committee, Nomination Committee and Remuneration Committee of the Company. He graduatedfrom the School of Public Administration & Law, University Teknologi Mara in 1990. His experience ranges fromsecurities dealings, services, retailing to logistics. He is the President of Association of Malaysian Haulers, a member ofthe Malaysia Indonesia Business Council and Malaysia Entrepreneurs Council. His directorship in other public companiesis in Mexter Technology Berhad. He was conferred with the DMSM award which carries the title of “Datuk” by the YangDi-Pertua Negeri Melaka on 6 November 2006. He does not hold any shares in the Company or in any of its subsidiaries.He does not have any family relationship with any director and/or substantial shareholder of the Company.

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DIRECTORS’ PROFILE (CONT’D)

PETER WONG HOY KIM (Aged 68, Malaysian)Senior Independent Non-Executive Director

Mr Peter Wong Hoy Kim was appointed to the Board on 7 November 2003. He is a member of the Audit Committee,Nomination Committee and Remuneration Committee of the Company. He is an ex-Banker who was previously withHSBC Bank Malaysia Berhad for 33 years until his retirement in 1996 from the Bank’s Ipoh Branch where he was theManager. He underwent numerous training overseas in Hong Kong, U.S.A. and United Kingdom and has served in variousother capacities in the Bank including, amongst others, Deputy Manager Credit Control and Manager Regional Credit,Peninsula North. His directorship in other public companies is in Latexx Partners Berhad and he sits on the board ofseveral private limited companies. He does not hold any shares in the Company or in any of its subsidiaries. He does nothave any family relationship with any director and/or substantial shareholder of the Company.

MALIK PARVEZ AHMAD BIN NAZIR AHMAD(Aged 40, Malaysian)Independent Non-Executive Director

En Malik Parvez Ahmad bin Nazir Ahmad was appointed as an Independent Non-Executive Director of the Company on24 June 2008 and is a member of the Audit Committee. He is an accountant by profession and has over 10 yearsexperience in the profession. He graduated from the International Islamic University in 1992 with a Bachelor ofAccounting Degree. He is also a Chartered Accountant with the Malaysian Institute of Accountants. He worked in KPMGPeat Marwick from 1993 to 1997 and held the position of Senior Auditor when he left and joined Medtexx PartnersIncorporated in the United States of America as an Accountant in 1998. From 2002 to 2004, he was the FinancialController of D.B.E. Gurney Resources Berhad, a public listed company. He then became the Financial Controller ofLatexx Partners Berhad, another public listed company until 2008. Currently, he is a Non-Independent Non-ExecutiveDirector of Latexx Partners Berhad. He does not hold any shares in the Company or in any of its subsidiaries. He doesnot have any family relationship with any director and/or substantial shareholder of the Company.

None of the Directors has any conflicts of interests with the Company nor has any convictions for offences within thepast ten years other than traffic offences.

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CHAIRMAN’S STATEMENT

On behalf of the Board of Directors, I am pleased to present the Annual Report and AuditedFinancial Statements of the Company and the Group for the financial year ended 31December 2008.

FINANCIAL REVIEW

For the financial year 2008, the Group registered an after tax profit of RM146,570 on a turnover of RM49.867 millioncompared to a loss of RM2.46 million on a turnover of RM76.3 million in 2007. The volatility of costs of latex concentrateaffected tonnage sold during the year resulting in a decrease of 34.6% in revenue.

Trading margin remained the same as last year but with aggressive costs reductions, the Group reduced operational costswhich helped to produce a profit.

The Group supplies latex concentrate to manufacturers of medical examination gloves and given that this segment ofgloves is resilient to the global financial turmoil, the Board is cautiously optimistic that the year 2009 would again registerpositive results.

FUTURE OUTLOOK

The Board continues to explore opportunities to improve profitability, focusing on costs control and margin improvementand to enhance shareholder value.

CORPORATE SOCIAL RESPONSIBILITY (“CSR”)

The Group has enhanced the skill and knowledge of its employees by sending them to training programs appropriate totheir level of responsibility. It has also inculcated a sense of responsibility and ownership to the goals of the Group inpromoting awareness and adherence to national policies on safe guarding the environment and safety in the work place.

ACKNOWLEDGEMENT

On behalf of the Board, I would like to extend our sincere appreciation and thanks to shareholders, bankers, valuedcustomers, suppliers, business associates and the regulatory authorities for their continued confidence and support in us.I would also like to extend our heartfelt thanks and gratitude to the management team and staff of the Group for theirunwavering dedication and commitment to the Group.

LOW BOK TEKChairman

17 May 2009

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STATEMENT ON CORPORATE GOVERNANCE

The Board of Directors (“Board”) of Gunung Capital Berhad is pleased to disclose to the shareholders on the manner theGroup has applied the Principles and extent of compliance with the Best Practices in Corporate Governance as set out inMalaysian Code on Corporate Governance (the “Code”) pursuant to Paragraph 15.26 of the Listing Requirements ofBursa Malaysia Securities Berhad for the financial year ended 31 December 2008, unless otherwise stated.

BOARD OF DIRECTORS

Board Composition and Balance

The Board currently comprises five (5) members as follows:-

• One (1) Executive Director• One (1) Non-Independent Non-Executive Director• Three (3) Independent Non-Executive Directors

A brief description on the background of each Director is set out in the Directors' Profile on pages 6 to 7 of this AnnualReport.

The Board’s composition represents a mix of knowledge, skills and expertise relevant to the Company’s operations. Thecomposition ensures that Independent Non-Executive Directors provide an element of objectivity, independentjudgments and check and balance to the decision making process of the Board. The Independent Non-Executive Directorsalso ensure that the Group’s development plans and business strategies are fully deliberated upon and all decisions takenare in the best interest of the shareholders, employees, customers and other stakeholders of the Group. In addition, theBoard has identified a senior Independent Non-Executive Director to whom concerns or issues affecting the Group maybe conveyed.

Board Responsibility

The Board has the overall responsibility for the strategic direction and retains full and effective control over the Group.The Chairman of the Board leads discussion and strategic planning at the Board level while the Executive Director isresponsible for the day-to-day operations. Generally, the Board must ensure that the Company is being managed and itsbusiness conducted in accordance with high standards of accountability and transparency.

Supply of Information

Notices, together with the agenda of meetings were given to the Board seven (7) days before the meeting whereas boardpapers, whenever possible, were given three (3) days prior to the meetings for the Directors to study and evaluate thematters to be discussed.

All Directors have access to the advice and services of the Company Secretary and may take independent professionaladvice at the Company’s expense, in furtherance of their duties, if so required.

Board Meetings

Board meetings are held at least four (4) times a year at quarterly intervals with additional meetings convened whenurgent decisions need to be taken between the scheduled meetings. During the financial year ended 31 December 2008,five (5) meetings were held, where it discussed a variety of matters including the Group’s financial results, majorinvestments, the business plan and directions of the Group. The attendances of the respective Directors are as follows:-

Directors No. of Meetings Attended

Low Bok Tek 5/5Datuk Ahmad Shalimin bin Ahmad Shaffie 5/5Peter Wong Hoy Kim 5/5Tang Yuet Mun (re-designated as Executive Director on 24/6/2008) 5/5Gan Chong Shyan (resigned on 11/6/2008) 3/3Malik Parvez Ahmad bin Nazir Ahmad (appointed on 24/6/2008) 2/2

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STATEMENT ON CORPORATE GOVERNANCE (CONT’D)

Board Committees

The following committees have been established to assist the Board to discharge its duties and responsibilities. TheBoard has delegated certain powers and duties to these committees, which operate within the defined terms ofreference.

Audit Committee

The details are set out on pages 16 to 18 of this Annual Report.

Nomination Committee

The Nomination Committee, which consists wholly of Non-Executive Directors, and its primary function, is to proposenew nominees for the Board and assess directors on an on-going basis. The final decision as to who shall be nominatedshould be the responsibility of the full Board after considering the recommendations of the Nomination Committee.

The Nomination Committee comprises the following members:

• Datuk Ahmad Shalimin bin Ahmad Shaffie (Chairman / Independent & Non-Executive Director)• Peter Wong Hoy Kim (Member / Senior Independent & Non-Executive Director)

The Committee met three (3) times during the financial year ended 31 December 2008.

Remuneration Committee

The Remuneration Committee, which consists mainly of Non-Executive Directors, is responsible for the implementationof remuneration policy and to make recommendation to the Board on the remuneration packages of the ExecutiveDirectors. The Executive Directors do not participate in discussion and decision of their own remuneration.

The Non-Executive Directors are abstained from deliberations and voting on decision in respect of his individualremuneration package. The determination of the remuneration package for Non-Executive Directors is a matter for theBoard as a whole and subject to the approval of shareholders at the Annual General Meeting.

The Remuneration Committee comprises the following members:

• Datuk Ahmad Shalimin bin Ahmad Shaffie (Chairman / Independent & Non-Executive Director)• Peter Wong Hoy Kim (Member / Senior Independent & Non-Executive Director)• Tang Yuet Mun (Member / Executive Director)

The Committee met once during the financial year ended 31 December 2008.

Directors’ Remuneration

The details of the remuneration of the Directors of the Company for the financial year ended 31 December 2008 are asfollows:-

Salaries and Emoluments Fees Total

(RM) (RM) (RM)

Executive Directors 149,338 1,250 150,588Non Executive Directors 21,000 25,833 46,833

The number of Directors whose remuneration falls into the following bands is as follows:-

Number of DirectorsRange of Remuneration Executive Non-Executive

Below RM50,000 1 4RM100,001 – RM150,000 1 -

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STATEMENT ON CORPORATE GOVERNANCE (CONT’D)

Employee Share Option Scheme (ESOS)

An ESOS Option Committee was formed to oversee the administration as well as to ensure the proper implementationof the ESOS according to the Bye-Laws.

The ESOS has expired on 15 September 2008.

Appointment and Re-election of Directors

In accordance with the Company’s Articles of Association, all Directors who are appointed by the Board during the yearare subject to re-election by shareholders at the following Annual General Meeting.

The Company’s Articles of Association also provide that at least one-third of the remaining Directors shall retire fromoffice at the Annual General Meeting. All Directors shall retire from office at least once in every three (3) years but shallbe eligible for re-election.

Directors’ Training

The Board acknowledges the importance of continuous education to keep abreast with regulatory updates anddevelopment in the business environment. The Board has taken on the responsibility in evaluating and determining thespecific and continuous training needs of the Directors. The Directors have attended training and will continue to attendother relevant training programmes as appropriate, to further enhance their skills and knowledge.

During the financial year ended 31 December 2008, the Directors have attended the following training programmes andseminars:-

Low Bok Tek Financial Reporting Standards (FRS 101) : 15 November 2008Presentation of Financial Statements and Tax Incentives for Manufacturing Companies

Peter Wong Hoy Kim Financial Reporting Standards (FRS 101) : 15 November 2008Presentation of Financial Statements andTax Incentives for Manufacturing Companies

Datuk Ahmad Shalimin Financial Reporting Standards (FRS 101) : 15 November 2008bin Ahmad Shaffie Presentation of Financial Statements and

Tax Incentives for Manufacturing Companies

Tang Yuet Mun National Tax Conference 19 August 200820 August 2008

National Seminar on Taxation 2008 (Budget) 11 September 2008

Financial Reporting Standards (FRS 101) : 15 November 2008Presentation of Financial Statements andTax Incentives for Manufacturing Companies

Malik Parvez Ahmad Managing Bonds From A to Z 13 August 2008bin Nazir Ahmad 14 August 2008

Financial Reporting Standards (FRS 101) : 15 November 2008Presentation of Financial Statements andTax Incentives for Manufacturing Companies

Risk Management & Scoping 17 November 200818 November 2008

SHAREHOLDERS

The Board maintained an effective communication policy that enables both the Board and the management tocommunicate effectively with its shareholders, stakeholders and the public. The policy effectively interprets theoperations of the Group to the shareholders and accommodates feedback from shareholders, which are factored into theGroup’s business decision.

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STATEMENT ON CORPORATE GOVERNANCE (CONT’D)

SHAREHOLDERS (CONT’D)

The Board communicates information on the operations, activities and performance of the Group to the shareholders,stakeholders and the public through the Annual Report, circulars to shareholders, various announcements made to BursaSecurities Malaysia Berhad, which includes announcement on quarterly results; and the Company website athttp://www.gunung.com.my.

The Annual General Meeting serves as an important mean for shareholders’ communication. Notice of the Annual GeneralMeeting and Annual Reports are sent to shareholders prior to the meeting. At each Annual General Meeting, the Boardpresents the performance and progress of the Group and provides shareholders with the opportunity to raise questionspertaining to the Group. The Chairman and the Board will respond to the questions raised by the shareholders during theAnnual General Meeting.

The Board has ensured each item of special business included in the notice of meeting will be accompanied by anexplanatory statement on the effects of the proposed resolution.

ACCOUNTABILITY AND AUDIT

The Board aims to present a balanced and understandable assessment of the Group’s position and prospect through theannual financial statements and quarterly announcements of results to Bursa Securities Malaysia Berhad. The Directorsare responsible to ensure the annual financial statements are prepared in accordance with the provisions of theCompanies Act, 1965 and applicable approved accounting standards in Malaysia. The Directors also have theresponsibilities for taking steps as are reasonably available to them to safeguard the assets of the Group and prevent anyfraud or irregularities.

Internal Control

The Board acknowledges its responsibility for establishing a sound system of internal control for the Group to achieve itsobjectives within the acceptable risk profile as well as safeguarding shareholders’ interest and the Group’s assets.

Information on the Group’s internal control is presented in the Statement on Internal Control set out on page 15 of thisAnnual Report.

Relationship with Auditors

The Audit Committee supports the Board in its responsibility to oversee the financial reporting and the effectiveness ofthe internal control of the Group. The Group has always maintained a formal and transparent relationship with its externaland internal auditors through the Audit Committee. The Audit Committee acts as an independent channel ofcommunication for the auditors to convey its objective views and professional advice on the Group’s financial andoperational activities.

Key features for the relationship of the Audit Committee with both the internal and external auditors are more particularlydescribed in the Audit Committee Report set out on pages 16 to 18 of this Annual Report.

STATEMENT OF DIRECTORS’ RESPONSIBILITIES IN PREPARING THE FINANCIAL STATEMENTS

The Directors are responsible for the preparation of financial statements prepared for each financial year to give a trueand fair view of the state of affairs of the Group and the Company as at the end of each financial year and of the resultsand cash flow of the Group and the Company for the financial year then ended.

In preparing the financial statements, the Directors have:-

• adopted suitable accounting policies and apply them consistently;• made judgments and estimates that are reasonable and prudent; and• ensured that applicable approved accounting standards have been complied with.

The Directors are responsible for ensuring that proper accounting and other records are kept which disclose withreasonable accuracy at any time the financial position of the Group and the Company and that the underlying financialstatements are prepared in compliance with the provisions of the Companies Act, 1965.

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ADDITIONAL COMPLIANCE INFORMATION

The information set out below is disclosed in compliance with the Listing Requirements of Bursa Malaysia SecuritiesBerhad.

1. Utilisation of Proceeds

The Company did not raise any funds through any corporate proposal during the financial year ended 31 December2008.

2. Options, Warrants and Convertible Securities

No options in the Company were exercised during the financial year. As at the end of the financial year no warrantshave been exercised.

3. Non-Audit Fees

There was no non-audit fees paid to the external auditors for the financial year ended 31 December 2008.

4. Material Contracts Involving Directors and Major Shareholders

There were no material contracts subsisting as at 31 December 2008 or entered into since the end of the previousfinancial year, by the Company and its subsidiaries involving Directors’ and major shareholders’ interest other thanthose disclosed under notes to the account on Related Party Transactions of revenue in nature.

5. Contract Relating to Loans

During the financial year, there were no contracts relating to loans entered into by the Company involving theinterests of directors and/or major shareholders.

6. Shares Buy-Back

The Company did not carry out any shares buy-back exercise during the financial year ended 31 December 2008.

7. American Depository Receipt (“ADR”)/Global Depository Receipt (“GDR”)

The Company did not sponsor any ADR or GDR programme during the financial year ended 31 December 2008.

8. Sanctions and/or Penalties

There were no sanctions and/or penalties imposed on the Company and its subsidiaries, Directors or managementby the regulatory bodies.

9. Profit Estimate, Forecast or Projection

The Company and its subsidiaries did not release any profit estimate, forecast or projection and there was novariation in results by 10% or more between the audited and the unaudited results announced during the financialyear ended 31 December 2008.

10. Profit Guarantees

During the financial year, there were no profit guarantees given by the Company.

11. Revaluation Policy on Landed Properties

The revaluation policy on landed properties is as set out in the Financial Statements.

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ADDITIONAL COMPLIANCE INFORMATION (CONT’D)

12. Recurrent Related Party Transactions (“RRPT”) of a Revenue or Trading Nature

The Company had at the 13th Annual General Meeting held on 6 June 2008 obtained shareholders’ mandate for theCompany and/or its subsidiary companies to enter into recurrent transactions of a revenue or trading nature, whichare necessary for its day to day operations and are in the ordinary course of business, with related parties. The saidgeneral mandate took effect from 6 June 2008 until the conclusion of the forthcoming Annual General Meeting ofthe Company. The Company intends to seek a renewal of the said general mandate for recurrent related partytransactions at the forthcoming Annual General Meeting of the Company.

The aggregate value of the recurrent transactions of a revenue or trading nature conducted during the financial yearunder review between the Company and/or its subsidiary companies with related parties are set out below:-

AggregateNature of transactions Related Party Interested Party value

(RM)

Sales of latex concentrate Subsidiary of LPB • Low Bok Tek (“LBT”), RM49,867,286by a subsidiary of • Latexx Manufacturing a Director of GCB GroupGunung Capital Berhad Sdn Bhd and a Major Shareholder (“GCB”) to a subsidiary of of GCBLatexx Partners Berhad • LBT, a Director of LPB(“LPB”) Group and a Major

Shareholder of LPB• BT Capital Sdn Bhd, a party

connected to LBT which is also a Major Shareholder of both LPB and GCB.

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STATEMENT ON INTERNAL CONTROL

Pursuant to Paragraph 15.27(b) of the Bursa Securities Listing Requirements, the Board of Directors of Gunung CapitalBerhad is pleased to make a statement in the annual report on the state of the internal controls of the Group as follows:-

Directors’ Responsibilities

The Board of Directors acknowledges its responsibility for establishing and maintaining a sound system of internal control,as well as continuously reviewing its adequacy and integrity so as to safeguard shareholders’ investment and the Group’sassets. The system of internal control is designed to manage and minimise risk but cannot eliminate the risk of failure toachieve business objectives and plans. Accordingly, it can only provide reasonable and not absolute assurance againstmaterial misstatement or loss.

Key elements of the Group’s internal control include:-

Internal Control Environment

Within the Group, there are organisational structures in place for each operating unit with clearly defined levels ofauthority. Management of each operating unit has clear responsibility for identifying risk affecting their unit and the overallGroup’s business as a whole. They are also charged with instituting adequate procedures and internal controls to mitigateand monitor such risks on an ongoing basis. Internal policies and procedures are documented to formalise the operationsof the Group.

Audit Committee

The Board has empowered the Audit Committee with the duty of reviewing and monitoring the effectiveness of theGroup’s system of internal control. The Audit Committee reviews the Group’s financial reports, internal and external auditreports and the internal control system. Its independence is assured by the current composition comprising all memberswho are non-executive Independent Directors.

Internal Audit Functions

During the financial year, the Group outsourced its internal audit function to assist the Audit Committee with theexamination and evaluation of the adequacy and effectiveness of the internal control system, including controlenvironment, risk assessment process and operational control activities.

The Internal Auditor had reviewed the Group’s system of internal controls and had reported the internal audit activitiescarried out within the year, the significant risks and findings and necessary recommendations to the Audit Committee ona quarterly basis. The internal audit focuses on determining whether the controls provide reasonable assurance ofeffective and efficient operations, as to reliability and integrity of financial data and reports, and compliance withestablished policies and procedures.

Conclusion

The Board is of the view that there is no significant breakdown or weaknesses in the system of internal control of theGroup that may result in material losses incurred by the Group for the financial year ended 31 December 2008. Measuresto continually strengthen the effectiveness of the internal controls will be implemented by the Board to keep up with theever-changing external and internal factors affecting the Group’s businesses.

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REPORT OF THE AUDIT COMMITTEE

COMPOSITION OF THE AUDIT COMMITTEE

The Audit Committee of the Company comprises the following members:

Datuk Ahmad Shalimin bin Ahmad Shaffie (Chairman/Independent & Non Executive Director)

Peter Wong Hoy Kim (Member/Senior Independent & Non Executive Director)

Malik Parvez Ahmad bin Nazir Ahmad (Member/Independent & Non Executive Director)

ATTENDANCE OF AUDIT COMMITTEE MEETINGS

The details of attendance of each Audit Committee member in the Audit Committee meetings held during the financialyear ended 31 December 2008 are as follows:-

Name Attendance

Datuk Ahmad Shalimin bin Ahmad Shaffie 5/5Peter Wong Hoy Kim 5/5Tang Yuet Mun (resigned on 24/06/2008) 3/3Malik Parvez Ahmad bin Nazir Ahmad (appointed on 24/06/2008) 2/2

TERMS OF REFERENCE OF AUDIT COMMITTEE

Terms of Membership

• The Committee shall be appointed by the Board of Directors from amongst its members and must be composed ofno fewer that three (3) members.

• All the Audit Committee members must be non-executive directors, with a majority are independent directors.

• The members of Audit Committee shall elect a chairman from among their number who shall be an independentdirector.

• At least one (1) member of Audit Committee must be a member of the Malaysian Institute of Accountants (“MIA”);or if he is not a member of the MIA, he must have at least 3 years’ working experience and he must have passedthe examinations specified in Part I of the 1st Schedule of the Accountants Act 1967; or he must be a member ofone of the associations of accountants specified in Part II of the 1st Schedule of the Accountants Act 1967; or fulfilssuch other requirements prescribed or approved by the Bursa Malaysia Securities Berhad.

• In the event of any vacancy in the Committee resulting in the non-compliance with Paragraph 15.10 of the ListingRequirements of Bursa Malaysia Securities Berhad, the Board shall appoint a new member within three (3) months.

• The Board of Directors shall review the term of office and the performance of the Audit Committee and each of itsmembers at least once in every three (3) years. No alternate Director shall be appointed as a member of the AuditCommittee.

Meetings and Quorum of the Audit Committee

• The Committee shall meet at least four (4) times a year and the quorum shall be at least two (2) members, majorityof whom must be Independent Directors.

• The Chairman of the Audit Committee shall be the chairman of the meeting. If at any meeting the chairman is notpresent, the members present shall elect a chairman from among their number who shall be an independentdirector. The Chairman shall call a meeting of the Audit Committee if a request is made by any committee memberor the external auditors.

• Notice of a meeting of the Audit Committee shall be given to all members in writing via facsimile or by hand deliveryor by courier.

• The decision of the Audit Committee shall be decided by a majority of votes, the Chairman of the meeting shall havea casting vote.

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REPORT OF THE AUDIT COMMITTEE (CONT’D)

Meetings and Quorum of the Audit Committee (Cont’d)

• The Company Secretary shall act as secretary of the Audit Committee and also be responsible for keeping theminutes of meeting of the Audit Committee and circulating to each member of the committee and to the othermember of the board. All minutes of meetings shall be open to inspection by the Audit Committee and the Board ofDirectors.

• The Audit Committee may require the attendance of any management staff from the Finance/Accounts Departmentor other departments deemed necessary together with a representative or representatives from the externalauditors.

Functions of the Audit Committee

The duties and responsibilities of the Audit Committee shall include the following:-

(i) To review and discuss with the external auditor, the audit plan and the scope of the audit;

(ii) To review and discuss with the external auditor, their evolution of the system of internal controls and their auditreport;

(iii) To review the assistance given by the employees of the Company to the external auditors;

(iv) To review the external auditor’s management letter and the management’s response.

(v) To report to the Board if there is reason (supported by grounds) to believe that the external auditor is not suitablefor reappointment;

(vi) To review the quarterly and year-end financial statements, prior to the approval by the Board of Directors, focusingparticularly on:

• Changes in or implementation of major accounting policies and practices;• Significant adjustments arising from the audit;• The going concern assumption;• Significant and unusual events; and• Compliance with accounting standards and other legal requirements.

(vii) To review the adequacy of the scope, functions, competency and resources of the internal audit function, and thatit has the necessary authority to carry out its work;

(viii) To review the internal audit programme and the results of the internal audit programme, processes investigationundertaken and whether or not that appropriate action is taken on the recommendations of the internal auditfunction;

(ix) To review any related party transactions and conflict of interest situation that may arise within the Company or theGroup including any transaction, procedure or course of conduct that raises questions of management integrity;

(x) To consider the appointment, the audit fee and resignation or dismissal of the external auditors; and

(xi) To recommend the nomination of a person as external auditors.

Rights of the Audit Committee

The Audit Committee has ensured that, wherever necessary and reasonable for the performance of its duties, inaccordance with a procedure determined by the Board:-

(i) have authority to investigate any matter within its terms of reference;

(ii) have the resources which are required to perform its duties;

(iii) have full and unrestricted access to any information pertaining to the Company;

(iv) have direct communication channels with the external auditors and person(s) carrying out the internal audit functionor activity;

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REPORT OF THE AUDIT COMMITTEE (CONT’D)

Rights of the Audit Committee (Cont’d)

(v) be able to obtain independent professional or other advice; and

(vi) be able to convene meetings with the external auditors, the internal auditors or both, excluding the attendance ofother directors and employees of the Company, whenever deemed necessary.

SUMMARY OF ACTIVITIES OF THE AUDIT COMMITTEE

The activities of the Audit Committee during the financial year ended 31 December 2008 include the followings:-

• Reviewed the quarterly financial result announcements and recommended to the Board for approval;

• Reviewed the Group’s annual audited financial statements and recommended to the Board for approval;

• Assessed the Group’s financial performance;

• Reviewed with the External Auditors, the results of the annual audit and issues arising from the audits;

• Recommended the nomination of External Auditors for Board’s approval;

• Reviewed the recurrent related party transactions within the Group to ensure compliance with laws and regulationsand the renewal of shareholders’ mandate;

• Reviewed and deliberated on issues raised in the audit reports by Internal Auditors in relation to weaknesses ininternal controls;

• Ensuring that the internal audit recommendations on audit findings were implemented and addressed by theManagement;

• Reviewed the Audit Committee Report and Statement on Internal Control.

SUMMARY OF ACTIVITIES OF THE INTERNAL AUDIT FUNCTION

During the financial year, the Company outsourced its internal audit functions, which is tasked with the aim of assistingthe Audit Committee in assessing risks, recommend measures to mitigate risks, establish cost effective controls andassess proper governance process.

The internal auditor has conducted ongoing review of the adequacy and effectiveness of the system of internal control.The audit conducted including reviewing the extent of compliance with the established internal policies and proceduresgoverning the operations of the Group. Audits were carried out on all operating units within the Group and audit findingswere presented to the Audit Committee on a quarterly basis. Some internal weaknesses were identified during thefinancial year under review, all of which have been or are being addressed by the management.

STATEMENT BY THE AUDIT COMMITTEE IN RELATION TO OPTIONS ALLOCATION

The Company had implemented an Employee Share Option Scheme (“ESOS”) on 16 September 2003 for a period of fiveyears. The Committee has reviewed the allocation of share options pursuant to the ESOS is in compliance with criteriaas set out in the ESOS Bye-Laws.

During the financial year, no allocation of share options was made by the Company pursuant to the ESOS and no shareoptions were exercised by the option holders during the financial year and the ESOS has expired on 15 September 2008.

20 Directors’ Report

23 Statement by Directors

23 Statutory Declaration

24 Independent Auditors’ Report

26 Balance Sheets

27 Income Statements

28 Statements of Changes in Equity

29 Statements of Cash Flows

30 Notes to the Financial Statements

FINANCIALSTATEMENTS

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DIRECTORS’ REPORTFOR THE YEAR ENDED 31 DECEMBER 2008

The directors hereby submit their report and the audited financial statements of the Group and of the Company for thefinancial year ended 31 December 2008.

PRINCIPAL ACTIVITIES

The Company is an investment holding company and the principal activities of its subsidiary companies are listed in Note7 to the financial statements. There have been no significant changes in the nature of these activities during the financialyear.

FINANCIAL RESULTS

Group CompanyRM RM

Net profit/(loss) for the year 146,570 (533,611)

DIVIDENDS

There is no dividend proposed, declared or paid by the Company during the financial year. The directors do notrecommend the payment of any dividend in respect of the current financial year.

RESERVES AND PROVISIONS

There were no material transfers to or from reserves or provisions during the financial year other than those disclosed inthe financial statements.

ISSUE OF SHARES AND DEBENTURES

The Company has not issued any new share or debenture during the financial year.

SHARE OPTIONS

No options were granted to any person to take up unissued shares of the Company during the year apart from the issueof options granted pursuant to the Employee Share Option Scheme.

EMPLOYEE SHARE OPTION SCHEME (“ESOS”)

The Company implemented an ESOS on 16 September 2003 for a period of 5 years. The ESOS is governed by the bye-laws which were approved by the shareholders on 4 August 2003. On 18 June 2004, the Company obtained the approvalof the shareholders on the proposed amendments to the Bye-Laws of the ESOS which, amongst others, to extend theparticipation in the ESOS to Non-Executive Directors of the Company. The ESOS has expired on 15 September 2008.

Information with respect to the number of options granted under the ESOS is as follows:-

No of ShareOption

As at 1 January 2008 401,000

Less: Lapsed (401,000)

As at 31 December 2008 -

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DIRECTORS’ REPORT (CONT’D)FOR THE YEAR ENDED 31 DECEMBER 2008

DIRECTORS

The directors who served since the date of the last report are:-

Low Bok TekAhmad Shalimin Bin Ahmad ShaffiePeter Wong Hoy KimTeong Lian Aik (Appointed on 11.06.2008; Resigned on 24.06.2008)Gan Chong Shyan (Resigned on 11.06.2008)Tang Yuet Mun Malik Parvez Ahmad Bin Nazir Ahmad (Appointed on 24.06.2008)

In accordance with Article 101 of the Company's Articles of Association, Ahmad Shalimin Bin Ahmad Shaffie retires atthe forthcoming annual general meeting and being eligible, offers himself for re-election.

In accordance with Article 108 of the Company’s Articles of Association, Malik Parvez Ahmad Bin Nazir Ahmad retiresfrom the Board at the forthcoming annual general meeting and being eligible, offers himself for re-election.

DIRECTORS‘ BENEFITS

Since the end of the last financial year, no director of the Company has received or entitled to receive any benefit (otherthan the directors’ remuneration as disclosed in the financial statements) by reason of a contract made by the Companyor a related corporation with the director or with a firm of which the director is a member, or with a company in whichthe director has a substantial financial interest except for the related party transactions as disclosed in Note 23 to thefinancial statements.

Neither during nor at the end of the financial year, was the Company a party to any arrangements whose object is toenable the directors to acquire benefits by means of the acquisition of shares in, or debentures of, the Company or anyother body corporate.

DIRECTORS’ INTEREST

The shareholdings in the Company of those who were directors at the end of the financial year, as recorded in theRegister of Directors’ Shareholdings kept by the Company under Section 134 of the Companies Act, 1965 were asfollows:-

Number of ordinary shares of RM1.00 eachBalance at Balance at01.01.2008 Bought Sold 31.12.2008

Shares in the Company - Gunung Capital BerhadLow Bok Tek - indirect interest* 13,599,129 - - 13,599,129

Number of options for ordinary shares of RM1.00 eachBalance at Balance at01.01.2008 Granted Lapsed 31.12.2008

Low Bok Tek 359,000 - 359,000 -

* By virtue of Section 6A(4)(c) of the Companies Act, 1965.

By virtue of his interest in the shares of the Company, Low Bok Tek is deemed interested in the shares of all thesubsidiaries of the Company to the extent that the Company has an interest.

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DIRECTORS’ REPORT (CONT’D)FOR THE YEAR ENDED 31 DECEMBER 2008

STATUTORY INFORMATION ON THE FINANCIAL STATEMENTS

a) Before the income statements and balance sheets of the Group and of the Company were made out, the directorstook reasonable steps:

(i) to ascertain that proper action had been taken in relation to the writing off of bad debts and the making ofallowance for doubtful debts and have satisfied themselves that all known bad debts have been written off andthat adequate allowance had been made for doubtful debts; and

(ii) to ensure that any current assets, other than debts, which were unlikely to realise in the ordinary course ofbusiness, their values as shown in the accounting records of the Group and of the Company have been writtendown to an amount which they might be expected to realise.

b) At the date of this report, the directors are not aware of any circumstances:

(i) which would necessitate the writing off of bad debts or providing of allowance for doubtful debts in the financialstatements of the Group and of the Company; or

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

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

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

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

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

d) No contingent or other liability has become enforceable or is likely to become enforceable within the period of twelvemonths after the end of the financial year which, in the opinion of the directors, will or may substantially affect theability of the Group and of the Company to meet their obligations as and when they fall due.

OTHER STATUTORY INFORMATION

a) At the date of this report, the directors are not aware of any circumstances not otherwise dealt with in this reportor the financial statements of the Group and of the Company which would render any amount stated in the financialstatements misleading.

b) In the opinion of the directors,

(i) the results of the operations of the Group and of the Company during the financial year were not substantiallyaffected by any item, transaction or event of a material and unusual nature; and

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

AUDITORS

The auditors, Messrs STYL Associates, have indicated their willingness to continue in office.

Signed on behalf of the Board in accordance with a resolution of the directors,

LOW BOK TEK TANG YUET MUNDirector Director

Taiping, Perak Darul RidzuanDate : 23 April 2009

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STATEMENT BY DIRECTORS

We, Low Bok Tek and Tang Yuet Mun, being directors of Gunung Capital Berhad, do hereby state on behalf of thedirectors that in our opinion, the accompanying financial statements of the Group and of the Company as set out onpages 26 to 47 are properly drawn up in accordance with the provisions of the Companies Act, 1965 and applicableFinancial Reporting Standards in Malaysia so as to give a true and fair view of the financial position of the Group and ofthe Company as at 31 December 2008 and of the results and cash flows of the Group and of the Company for the financialyear ended on that date.

Signed on behalf of the Board in accordance with a resolution of the directors,

LOW BOK TEK TANG YUET MUNDirector Director

Taiping, Perak Darul Ridzuan Date : 23 April 2009

I, Tang Yuet Mun, I/C No. 560222-08-6133, being the director primarily responsible for the accounting records andfinancial management of Gunung Capital Berhad, do solemnly and sincerely declare that the accompanying financialstatements of the Group and of the Company as set out on pages 26 to 47, are to the best of my knowledge and belief,correct and I make this solemn declaration conscientiously believing the same to be true, and by virtue of the provisionsof the Statutory Declarations Act, 1960.

TANG YUET MUN

Subscribed and solemnly declared byTang Yuet Mun, I/C No. 560222-08-6133at Taiping, Perak Darul Ridzuan on23 April 2009

Before me:SABIR AHMAD B.BADARUDDINCOMMISSIONER FOR OATHS

STATUTORY DECLARATION

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INDEPENDENT AUDITORS’ REPORTTO THE MEMBERS OF GUNUNG CAPITAL BERHAD (Incorporated in Malaysia)

Report on the Financial Statements

We have audited the financial statements of Gunung Capital Berhad, which comprise the balance sheets as at 31December 2008 of the Group and of the Company, and the income statements, statements of changes in equity and cashflow statements of the Group and of the Company for the year then ended, and a summary of significant accountingpolicies and other explanatory notes, as set out on pages 26 to 47.

Directors’ Responsibility for the Financial Statements

The directors of the Company are responsible for the preparation and fair presentation of these financial statements inaccordance with Financial Reporting Standards and the Companies Act 1965 in Malaysia. This responsibility includes:designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financialstatements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriateaccounting policies; and making accounting estimates that are reasonable in the circumstances.

Auditors’ Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit inaccordance with approved standards on auditing in Malaysia. Those standards require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are freefrom material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financialstatements. The procedures selected depend on our judgement, including the assessment of the risks of materialmisstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we considerinternal control relevant to the Company’s preparation and fair presentation of the financial statements in order to designaudit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on theeffectiveness of the Company’s internal control. An audit also includes evaluating the appropriateness of accountingpolicies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overallpresentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the financial statements have been properly drawn up in accordance with Financial Reporting Standardsand the Companies Act 1965 in Malaysia so as to give a true and fair view of the financial position of the Group and ofthe Company as of 31 December 2008 and of their financial performance and cash flows for the year then ended.

Report on Other Legal and Regulatory Requirements

In accordance with the requirements of the Companies Act 1965 in Malaysia, we also report the following:

a) In our opinion the accounting and other records and the registers required by the Act to be kept by the Companyand its subsidiaries have been properly kept in accordance with the provisions of the Act.

b) we are satisfied that the financial statements of the subsidiaries that have been consolidated with the Company’sfinancial statements are in form and content appropriate and proper for the purposes of the preparation of thefinancial statements of the Group and we have received satisfactory information and explanations required by us forthose purposes.

STYL Associates (AF1929)

107B Jalan Aminuddin Baki, Taman Tun Dr. Ismail, 60000 Kuala LumpurTel: 03 -7727 5573 Fax: 03 -7727 0771 Email: stylaudit@gmail.com

Partners: Si Chay Beng . Tan Tin . Yeo Eng Hui Adrian . Leou Thiam Lai

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INDEPENDENT AUDITORS’ REPORT (CONT’D)TO THE MEMBERS OF GUNUNG CAPITAL BERHAD (Incorporated in Malaysia)

c) our audit reports on the financial statements of the subsidiaries did not contain any qualification or any adversecomment made under Section 174(3) of the Act.

Other Matters

This report is made solely to the members of the Company, as a body, in accordance with Section 174 of the CompaniesAct 1965 in Malaysia and for no other purpose. We do not assume responsibility to any other person for the content ofthis report.

STYL ASSOCIATES YEO ENG HUI[AF 001929] 1723/09/10/(J)Chartered Accountants Partner

Kuala LumpurDate : 23 April 2009

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BALANCE SHEETSAS AT 31 DECEMBER 2008

Group CompanyNote 2008 2007 2008 2007

RM RM RM RM

Assets

Non-current AssetsProperty, plant and equipment 4 6,969,056 7,222,196 12,876 16,795Prepaid land lease payments 5 3,068,666 3,116,093 - - Investment properties 6 4,181,051 4,186,611 - - Subsidiary companies 7 - - 17,068,530 17,068,530Other investments 8 277,678 277,678 - - Goodwill on consolidation 657,486 657,486 - -

15,153,937 15,460,064 17,081,406 17,085,325

Current Assets

Inventories 9 593,851 550,091 - - Trade receivables 10 10,300,006 14,797,632 - - Other receivables, deposits

and prepayments 11 1,951,195 4,072,925 1,083,902 2,854,100Amount owing by subsidiary companies 12 - - 1,048,366 977,063Cash and bank balances 175,340 55,800 156,526 32,202

13,020,392 19,476,448 2,288,794 3,863,365

Total assets 28,174,329 34,936,512 19,370,200 20,948,690

Equity and Liabilities

Capital and reserves

Share capital 13 50,354,000 50,354,000 50,354,000 50,354,000Accumulated losses 14 (30,529,636) (30,676,206) (31,091,977) (30,738,366)

Shareholders’ equity 19,824,364 19,677,794 19,262,023 19,615,634

Non-current liabilities

Deferred tax liabilities 15 134,032 136,134 - -

Current Liabilities

Trade payables 16 366,582 5,001,952 - - Other payables and accruals 1,217,740 1,663,663 15,000 51,566Amount owing to subsidiary companies 12 - - 93,177 1,281,490Bank borrowings 17 6,631,611 8,456,969 - -

8,215,933 15,122,584 108,177 1,333,056

Total equity and liabilities 28,174,329 34,936,512 19,370,200 20,948,690

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

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INCOME STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2008

Group CompanyNote 2008 2007 2008 2007

RM RM RM RM

Revenue 18 49,867,287 76,281,418 - - Cost of sales (48,521,483) (74,218,105) - -

Gross Profit 1,345,804 2,063,313 - - Other income 46,106 170,667 13,560 118,843Selling and distribution expenses (34,641) (58,006) - - Administrative and general expenses (788,201) (4,766,470) (365,795) (1,408,802)Finance costs 19 (420,379) (427,743) - (838)

Profit/(Loss) before taxation 20 148,689 (3,018,239) (352,235) (1,290,797)Tax (expense)/credit 21 (2,119) 559,861 (1,376) -

Net profit/(loss) for the year 146,570 (2,458,378) (353,611) (1,290,797)

Attributable to:Shareholders of the Company 146,570 (2,458,378)Minority interests - -

146,570 (2,458,378)

Earnings/(Loss) per ordinary share (sen) 22 0.29 (4.88)

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

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STATEMENTS OF CHANGES IN EQUITYFOR THE YEAR ENDED 31 DECEMBER 2008

Attributable to Equity Holders of the Company

Non-Distributable Distributable

Share Share AccumulatedCapital Premium Losses Total

Group RM RM RM RM

Balance as at 1 January 2007 50,354,000 100,411 (28,318,239) 22,136,172Net loss for the year - - (2,458,378) (2,458,378)

Balance as at 31 December 2007 50,354,000 100,411 (30,776,617) 19,677,794Net loss for the year - - 146,570 146,570

Balance as at 31 December 2008 50,354,000 100,411 (30,630,047) 19,824,364

Company

Balance as at 1 January 2007 50,354,000 100,411 (29,547,980) 20,906,431Net loss for the year - - (1,290,797) (1,290,797)

Balance as at 31 December 2007 50,354,000 100,411 (30,838,777) 19,615,634Net loss for the year - - (353,611) (353,611)

Balance as at 31 December 2008 50,354,000 100,411 (31,192,388) 19,262,023

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

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STATEMENTS OF CASH FLOWSFOR THE YEAR ENDED 31 DECEMBER 2008

Group Company2008 2007 2008 2007

RM RM RM RM

Cash Flows from Operating ActivitiesProfit/(Loss) before taxation 148,689 (3,018,239) (352,235) (1,290,797)Adjustments for:

Amortisation of long leasehold land 47,427 47,427 - - Bad debts written off - 686,770 - 809,716Depreciation of investment property 5,560 5,560 - - Depreciation of property, plant and equipment 253,140 289,688 3,919 39,783Loss on disposal of property, plant and equipment (11,559) 240,666 (11,559) 10,400Interest on bank overdraft 19,705 9,113 - -Interest on hire-purchase Finance - 838 - 838Interest on bankers acceptance 400,674 417,792 - -

Operating profit/(loss) before working capital changes 863,636 (1,320,385) (359,875) (430,060)(Increase)/Decrease in Inventories (43,760) 215,888 - - Decrease/(Increase) in trade receivables 4,497,626 (5,028,541) - - Decrease in other receivables, deposits and prepayments 2,124,466 4,856,848 1,770,196 596,869(Decrease)/Increase in trade payables (4,635,365) 713,872 - - (Decrease)/Increase in other payables and accruals (445,924) 286,006 (36,566) (1,236,912)

Cash from/(used in) Operations 2,360,679 (276,312) 1,373,755 (1,070,103)Interest paid (420,379) (427,743) - (838)Tax paid (6,962) (18,214) (1,375) -

Net Cash from/(used in)Operating Activities 1,933,338 (722,269) 1,372,380 (1,070,941)

Cash Flows from Investing ActivitiesProceeds from disposal of property, plant and equipment 11,560 283,623 11,560 40,000Purchase of property plant and equipment - (1,469,107) - - Net Cash from/(Used in) Investing Activities 11,560 (1,185,484) 11,560 40,000

Cash Flows from Financing ActivitiesRepayment of hire-purchase instalments - (32,247) - (32,247)Proceeds from bankers acceptance (1,999,000) (37,000) - - Advances from/(to) related companies - - (1,259,616) 1,081,629

Net Cash (used in)/from Financing Activities (1,999,000) (69,247) (1,259,616) 1,049,382

Net (Decrease)/Increase in Cash and Cash Equivalents (54,102) (1,977,000) 124,324 18,441Cash and Cash Equivalents brought forward (161,169) 1,815,831 32,202 13,761

Cash and Cash Equivalents carried forward (215,271) (161,169) 156,526 32,202

Cash and Cash Equivalents carried forward consists of:Cash and bank balances 175,340 55,800 156,526 32,202Bank overdraft (390,611) (216,969) - -

Cash and bank balances (215,271) (161,169) 156,526 32,202

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

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01

71

-P)

30

NOTES TO THE FINANCIAL STATEMENTS31 DECEMBER 2008

1 GENERAL

The Company is a public limited liability company, incorporated and domiciled in Malaysia and is listed on the SecondBoard of Bursa Malaysia Securities Berhad. The registered office of the Company is at Lot 5911, Jalan Perusahaan1, Kamunting Industrial Estate, 34600 Kamunting, Perak Darul Ridzuan.

The Company is an investment holding company and the principal activities of its subsidiary companies are listed inNote 7 to the financial statements. There have been no significant changes in the nature of these activities duringthe financial year.

The financial statements of the Company have been authorised by the Board of Directors for issuance on 23 April2009.

2 SIGNIFICANT ACCOUNTING POLICIES

2.1 Basis Of Preparation

The financial statements of the Group and the Company are prepared under the historical cost conventionunless otherwise indicated in the accounting policies below, and comply with applicable MASB approvedaccounting standards in Malaysia for Entities Other Than Private Entities and provisions of the Companies Act,1965.

In the current financial year, the Group and the Company have adopted the new and revised Financial ReportingStandards (“FRS”) issued by the MASB which are mandatory for financial periods beginning on or after 1 July2007 as described in Note 2.3.

The financial statements are presented in Ringgit Malaysia (RM).

2.2 Summary of Significant Accounting policies

a) Basis Of Consolidation

The consolidated financial statements incorporate the audited financial statements of the Company and itssubsidiaries made up to the same financial year. Subsidiaries are companies in which the Group has thepower to exercise control over the financial and operating policies so as to obtain benefits form theiractivities, generally accompanying a shareholding of more than one half of the voting rights.

Subsidiaries are consolidated using the purchase method of accounting. Under the purchase method,subsidiaries are fully consolidated from the date on which control is transferred to the Group and are de-consolidated from the date control ceases. The financial statements of subsidiaries are prepared for thesame reporting date as the Company, and uniform accounting policies are adopted in the financialstatements for like transactions and events in similar circumstances. All inter-company balances,transactions and resulting unrealised profits or losses are eliminated on consolidation and the consolidatedfinancial statements reflect external transactions only.

The cost of acquisition is measured as the aggregate of their fair values, at the date of exchange, of theassets given, liabilities incurred or assumed, and equity instruments issued, plus any cost directlyattributable to the acquisition. The excess of the acquisition cost over the Group’s interest in thesubsidiaries’ fair values is reflected as goodwill, which is not amortised but reviewed for impairment loss,annually or more frequently if events of changes in circumstances indicate that the carrying amount maybe impaired. The excess of the Group’s interest in the subsidiaries’ fair values over the acquisition costrepresents negative goodwill, which is recognised directly in the income statement.

Material intra-group transactions, balances and resulting unrealised gains are eliminated on consolidationand the consolidated financial statements reflect external transactions only. Unrealised losses areeliminated on consolidation unless cost cannot be recovered.

Minority interests represent the portion of profit or loss and net assets in subsidiaries that is not held bythe Group and is presented separately within equity in the consolidated balance sheet. It is measured atthe minorities’ share of the fair value of the subsidiaries’ identifiable assets and liabilities at the acquisitiondate and the minorities’ share of changes in the subsidiaries’ equity since then.

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NOTES TO THE FINANCIAL STATEMENTS (CONT’D)31 DECEMBER 2008

2 SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

2.2 Summary of Significant Accounting policies (Cont’d)

a) Basis Of Consolidation (Cont’d)

The gain or loss on disposal of a subsidiary is the difference between net disposal proceeds and theGroup’s share of its assets together with any unamortised balance of goodwill.

b) Investments in Subsidiaries

In the Company’s separate financial statements, investments in subsidiaries are stated at cost lessimpairment losses, if any. On disposal of such investments, the difference between net disposal proceedsand their carrying amounts is taken up in the income statement.

c) Property, Plant And Equipment

Property, plant and equipment are stated at cost less accumulated depreciation and any impairmentlosses. Cost includes expenditures that are directly attributable to the acquisition of the asset.

Certain land and buildings of the Group are shown at 1996 valuation less subsequent depreciation andimpairment losses. The directors have not adopted a policy of regular valuation, and have applied thetransitional provisions of Financial Reporting Standard 116, Property, Plant and Equipment which permitsthese assets to be stated at their prevailing valuations less depreciation. The valuations were determinedby independent professional valuers on the open market basis, and no later valuation were recorded.

Surpluses arising form revaluation are dealt with in the property revaluation reserve. Any deficit arising isoffset against the revaluation reserve to the extent of a previous increase for the same property. In all othercases, a decrease in carrying amount will be charged to the income statement.

Depreciation is calculated to write off the cost of the property, plant and equipment to their residual valueson the straight line method over their expected useful lives. Freehold land is not amortised. The annualrates used for other assets are as follows:

%

Buildings 2Plant and machinery 10 - 20Motor vehicles 10 - 20Furniture, fittings and equipment 10 - 15

The residual values, useful lives and depreciation method are reviewed at each financial year end to ensurethat the amount, method and period of depreciation are consistent with previous estimates and theexpected pattern of consumption of the future economic benefits embodied in the items of the property,plant and equipment.

An item of property, plant and equipment is derecognised upon disposal or when no future economicbenefits are expected from its use or disposal. Any gain or loss arising from de-recognition of the assetsis included in the income statement in the year in which the assets is derecognised.

d) Prepaid Lease Payment

Leasehold land that normally has a definite economic life and where the title is not expected to pass tothe lessee by the end of the lease term is treated as an operating lease. Payment made on entering intoor acquiring a leasehold land are accounted as prepaid lease payment and amortised over the remaininglease term.

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32

NOTES TO THE FINANCIAL STATEMENTS (CONT’D)31 DECEMBER 2008

2 SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

2.2 Summary of Significant Accounting policies (Cont’d)

e) Investment Properties

Investment properties consist of land and buildings held for capital appreciation or rental purpose and notoccupied or only an insignificant portion is occupied for use or in the operations of the Group. Investmentproperties are treated as non-current investment and are measured initially at cost, including transactioncosts. The carrying amount included the cost of replacing part of an existing investment property at thetime that cost is incurred if the recognition criteria are met and excluded the costs of day-to-day servicingof investment properties. Fair value is arrived at by reference market evidence of transaction prices forsimilar properties and is performed by independent professional valuers.

Gain or losses arising from changes in the fair values of investment properties are recognised in theincome statements in the year in which they arise.

Investment properties are derecognised when either they have been disposed or when the investmentproperty is permanently withdrawn from use and no future economic benefit is expected from its disposal.Any gains or losses on the retirement or disposal of an investment property are recognised in incomestatement in the year in which they arise.

f) Impairment loss

The carrying amounts of the Group’s assets are reviewed for impairment losses when there is anindication that the assets might be impaired. Impairment is measured by comparing the carrying amountsof the assets with their recoverable amounts. An impairment loss is charged to the income statementimmediately.

Reversal of impairment losses recognised in prior year is recorded where there is indication that theimpairment losses recognised for the assets no longer exist or have decreased. The reversal is recognisedto the extent of the asset’s carrying amount that would have been determined, net of depreciation andamortisation, had no impairment loss been recognised. The reversal is recognised in the income statementimmediately.

An impairment loss in respect of goodwill is not reversed unless the loss was caused by a specific externalevent of an exceptional nature that is not expected to recur and subsequent external events have occurredthat reverse the effect of that event.

g) Investments in Other Unquoted Shares

Investments in unquoted shares are stated at cost less impairment losses.

h) Inventories

Inventories of finished goods and raw materials are stated at the lower of cost, determined using the”weighted average” method and net realisable value. Cost of finished goods and work-in-progressincludes cost of raw materials, direct labour and an appropriate allocation of manufacturing overheads.Cost of raw materials includes the original purchase price plus cost of bringing these inventories to theirpresent locations.

i) Trade Receivables

Trade receivables are carried at anticipated realisable value. Bad debts are written off in the year in whichthey are identified. An estimate is made for doubtful debts based on a review of all outstanding amounts.

j) Payables and Provisions

Liabilities for trade and other payables are carried at cost which is the fair value of the consideration to bepaid in the future for goods and services received, whether billed or unbilled. Provisions for liabilities arerecognised when the Group and the Company have a present legal or constructive obligation as a resultof past events, when it is probable that an outflow of resources embodying economic benefits will berequired to settle the obligation, and when a reliable estimate of the amount can be made. Provisions arereviewed at each balance sheet date and adjusted to reflect the current best estimate.

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NOTES TO THE FINANCIAL STATEMENTS (CONT’D)31 DECEMBER 2008

2 SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

2.2 Summary of Significant Accounting policies (Cont’d)

k) Borrowings

Interest-bearing and non interest-bearing borrowings are recognised at cost. The carrying valuesapproximate the fair value of borrowings. Subsequent to initial recognition, interest-bearing loans andborrowing are stated at amortised cost, which is the initial cost less any principal repayments.

Borrowing costs directly attributable to the acquisition and construction of property, plant and equipmentare capitalised as part of the cost of those assets, until such time when the assets are ready for theirintended use. All other borrowing costs are charged to the income statement as an expense in the periodin which they are incurred.

l) Equity Instruments

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

m) Revenue Recognition

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Companyand the revenue can be reliably measured.

Revenue from the sale of goods and services is recognised upon delivery of goods sold and completion ofservices rendered. Dividend income is recognised on receipt basis.

n) Employee Benefits

(i) Short term benefits

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

(ii) Defined contribution plans

As required by law, companies in Malaysia make contributions to the state pension scheme, theEmployees Provident Fund (“EPF”). Such contributions are recognised as expense in the incomestatement in the year to which they relate.

(iii) Equity

The Company’s employees share options scheme (“ESOS”) allows the group’s employees to acquireordinary shares of the Company. No compensation cost or obligation is recognised. When the optionsare exercised, equity is increased by the amount of the proceeds received.

o) Income Tax

Tax on the profit or loss for the financial year comprises current and deferred tax. Income tax is recognisedin the income statement except to the extent that it relates to items recognised directly in equity, in whichcase it is recognised in equity.

Current tax expense is the expected tax payable on the taxable income for the financial year, using taxrates enacted or substantially enacted at the balance sheet date, and any adjustment to tax payable inrespect of previous financial years.

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34

NOTES TO THE FINANCIAL STATEMENTS (CONT’D)31 DECEMBER 2008

2 SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

2.2 Summary of Significant Accounting policies (Cont’d)

o) Income Tax (Cont’d)

Deferred tax is provided, using the liability method, on all material temporary differences arising betweentax bases of assets and liabilities and their carrying amounts in the financial statements. Temporarydifferences are not recognised for the initial recognition of assets or liabilities that at the time of thetransaction affects neither accounting nor taxable profit. The amount of deferred tax provided is based onthe expected manner of realisation or settlement of the carrying amounts of assets and liabilities, usingtax rates enacted or substantially enacted at the balance sheet date.

A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will beavailable against which the asset can be utilised

p) Cash And Cash Equivalents

Cash and cash equivalents consist of cash and bank balances, bank overdrafts and deposits with financialinstitutions. Cash equivalents are short-term, highly liquid investments that are readily convertible to cashwith insignificant risk of changes in value.

q) Financial Instruments

Financial instruments are recognised in the balance sheet when the Group and the Company have becomea party to the contractual provisions of the instruments.

Financial instruments are classified as liabilities or equity in accordance with the substance of thecontractual agreement. Interest, dividends, gains and losses relating to the financial instruments classifiedas liabilities, are reported as expense or income. Distributions to holders of financial instruments classifiedas equity are charged directly to equity. Financial instruments are offset when the Group and the Companyhave a legally enforceable right to offset and intends to settle either on a net basis or to realise the assetsand settle the liability simultaneously.

The accounting policies for financial instruments recognised on the balance sheet are disclosed in theindividual policy statements associated with each item.

2.3 Effects Arising from Adoption of New and Revised FRSs

(a) Standards that are effective

During the financial year, the Group and the Company has adopted the new Financial Reporting Standards(“FRS”) issued by Malaysian Accounting Standards Board (“MASB”) that are relevant to its operations andeffective for the Company’s financial year beginning on or after 1 January 2008 as follows:-

FRSs

FRS 107: Cash Flow StatementsFRS 112: Income TaxesFRS 118: RevenueFRS 134: Interim Financial ReportingFRS 137: Provisions, Contingent Liabilities and Contingent Assets

The adoption of the abovementioned new FRSs have not resulted in principal changes in accountingpolicies of the Group and of the Company and does not have any material financial effect on the results ofthe Group and of the Company for the current and prior financial years.

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NOTES TO THE FINANCIAL STATEMENTS (CONT’D)31 DECEMBER 2008

2 SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

2.3 Effects Arising from Adoption of New and Revised FRSs (Cont’d)

(b) Standards and Issues Committee (“IC”) Interpretations issued by MASB that are not yet effectiveand have not been early adopted

Effective forfinancial periods

beginning onor after

FRSs and IC

FRS 4: Insurance Contracts 1January 2010FRS 7: Financial Instruments: Disclosures 1 January 2010FRS 8: Operating Segments 1 July 2009FRS 139: Financial Instruments: Recognition and Measurement 1 January 2010IC 9: Reassessment of Embedded Derivatives 1 January 2010IC 10: Interim Financial Reporting and Impairment 1 January 2010

By virtue of exemption provided for in FRS 7 and FRS 139 respectively, the possible impact of applyingthe Standards, if any, need not be disclosed. The adoption of other FRSs and IC Interpretations in futureperiods does not have significant impact to the financial statements of the Group and the Company.

2.4 Significant Accounting Estimates and Judgements

Estimates, assumptions concerning the future and judgements are made in the preparation of the financialstatements. They affect the application of the Group’s and the Company’s accounting policies and reportedamounts of assets, liabilities, income, expenses and disclosures made. They are assessed on an on-going basisand are based on experience and relevant factors, including expectations of future events that are believed tobe reasonable under the circumstances.

Key sources of estimation uncertainty

The key assumptions concerning the future and other key sources of estimation uncertainty at the balancesheet date, that have significant risk of causing a material adjustment to the carrying amount of assets andliabilities within the next financial year are discussed below:-

Depreciation of property, plant and equipment and investment properties

Property, plant and equipment and investment properties are depreciated on a straight-line basis over theirestimated useful life. Management estimated the useful life of these assets to be within 5 to 99 years.Changes in the expected level of usage and technological developments could impact the economic useful lifeand the residual values of these assets, therefore future depreciation charges could be revised.

Impairment of property, plant and equipment, intangible assets and investment properties

The Group carries out the impairment test based on a variety of estimation including the value-in-use of thecash-generating unit (“CGU”) to which the property, plant and equipment, intangible assets and investmentproperties are allocated. Estimating the value-in-use requires the Group to make an estimate of the expectedfuture cash flows from the CGU and also to choose a suitable discount rate in order to calculate the presentvalue of those cash flows.

Recoverability of receivables

The Group makes allowances for doubtful debts based on an assessment of the recoverability of receivables.Allowances for doubtful debts are provided where event or changes in circumstances indicate that the balancesmay not be collectible. The identification of doubtful debts requires judgement and estimates. Where theestimation is different from the original estimate, such difference will impact the carrying values of thereceivables and doubtful debts expenses in the period in which such estimate has been changed.

GU

NU

NG

CA

PIT

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BE

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(33

01

71

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36

NOTES TO THE FINANCIAL STATEMENTS (CONT’D)31 DECEMBER 2008

2 SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

2.4 Significant Accounting Estimates and Judgements (Cont’d)

Net realisable values of inventories

The management reviews for slow-moving and obsolete inventories. This review requires judgement andestimates. Possible changes in these estimates could result in revision to the valuation of inventories.

3 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

The Group’s and the Company’s financial risk management policy seeks to ensure that adequate financial resourcesare available for the development of its businesses and has adopted risk management policies that seek to mitigatethese risks in a cost-effective manner.

a) Interest Rate Risk

The Group finances its operations through operating cash flows and borrowings which are principallydenominated in Ringgit Malaysia. The Group is exposed to interest rate risk mainly form its short term bankborrowings.

There is no formal hedging policy in respect of interest rate exposure. The interest rate risk is monitored on anongoing basis and the Group endeavours to keep the exposure at an acceptable level.

b) Credit Risk

Credit risk arises when sales are made on deferred credit terms. The Group’s credit risk is concentrated on asingle customer, Latexx Manufacturing Sdn. Bhd., with agreed credit term. Any late or non-payment from thecustomer may have an adverse impact on the cash flows and/or results of the Group.

c) Liquidity Risk and Cash Flow Risk

The Group and the Company practice prudent liquidity risk management to minimise the mismatch of financialassets and liabilities and to maintain sufficient credit facilities for contingent funding requirement of workingcapital.

The Group reviews its cash flow position regularly to manage its exposure to fluctuations in future cash flowsassociated with its monetary financial instruments.

d) Fair Values

The fair values of the financial assets and financial liabilities reported in the balance sheets as at 31 December2008 approximate the carrying amounts of these assets and liabilities because of the immediate or short-termmaturity of these financial instruments, except for amounts due from/to subsidiary companies.

It is not practical to estimate the fair values of subsidiaries’ balance due principally to a lack of fixed repaymentterms entered by the parties involved and without incurring excessive cost. However, the Group and theCompany do not anticipate the carrying amounts recorded at the balance sheet date to be significantly differentfrom the values that would eventually be received or settled.

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NOTES TO THE FINANCIAL STATEMENTS (CONT’D)31 DECEMBER 2008

4 PROPERTY PLANT AND EQUIPMENT

As at As at01.01.2008 Additions Disposals 31.12.2008

Group RM RM RM RM

Cost/ValuationAt Valuation:Buildings 3,156,105 - - 3,156,105

At cost:Long leasehold land and buildings 4,186,063 - - 4,186,063Plant and machinery 225,000 - - 225,000Motor vehicles 658,125 - - 658,125Furniture, fittings and equipment 1,936,003 - 12,580 1,923,423

10,161,296 - 12,580 10,148,716

As at Charge for As at01.01.2008 the year Disposals 31.12.2008

RM RM RM RMAccumulated depreciationAt Valuation:Buildings 398,590 63,340 - 461,930

At cost:Long leasehold land and buildings 793,279 68,280 - 861,559Plant and machinery 18,291 13,001 - 31,292Motor vehicles 658,120 - - 658,120Furniture, fittings and equipment 1,070,820 108,519 12,580 1,166,759

2,939,100 253,140 12,580 3,179,660

2008 2007RM RM

Net book valueAt Valuation:Buildings 2,694,175 2,757,515

At cost:Long leasehold land and buildings 3,324,504 3,392,784Plant and machinery 193,708 206,709Motor vehicles 5 5Furniture, fittings and equipment 756,664 865,183

6,969,056 7,222,196

As at As at 01.01.2008 Additions Disposals 31.12.2008

Company RM RM RM RM

CostFurniture, fittings and equipment 38,710 - - 38,710Motor vehicles 448,000 - - 448,000

486,710 - - 486,710

GU

NU

NG

CA

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38

NOTES TO THE FINANCIAL STATEMENTS (CONT’D)31 DECEMBER 2008

4 PROPERTY PLANT AND EQUIPMENT (CONT’D)

As at Charge for As at01.01.2008 the year Disposals 31.12.2008

Company RM RM RM RM

Accumulated DepreciationFurniture, fittings and equipment 21,916 3,919 - 25,835Motor vehicles 447,999 - - 447,999

469,915 3,919 - 473,834

2008 2007RM RM

Net Book ValueFurniture, fittings and equipment 12,875 16,794Motor vehicles 1 1

12,876 16,795

The revalued buildings of the Group are stated at valuation based on their existing use basis valued by independentprofessional valuers on fair market value basis.

Had the Group’s buildings which are carried at valuation been stated at cost, their net book values as at financial yearend date would have been RM2,096,758 (2007: RM2,153,427).

5 PREPAID LAND LEASE PAYMENTS

As at As at01.01.2008 Additions Disposals 31.12.2008

Group RM RM RM RM

Cost/ValuationAt valuation:Long leasehold land 2,085,395 - - 2,085,395At cost:Long leasehold land 1,897,852 - - 1,897,852

3,983,247 - - 3,983,247

Accumulated DepreciationAt valuation:Long leasehold land 693,203 28,122 - 721,325

At cost:Long leasehold land 173,951 19,305 - 193,256

867,154 47,427 - 914,581

Net Book ValueAs at 31 December 2007 3,116,093

As at 31 December 2008 3,068,666

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39

NOTES TO THE FINANCIAL STATEMENTS (CONT’D)31 DECEMBER 2008

5 PREPAID LAND LEASE PAYMENTS (CONT’D)

The revalued long leasehold lands of the Group are stated at valuation based on their existing use basis valued byindependent professional valuers on fair market value basis.

Had the Group’s long leasehold lands which are carried at valuation been stated at cost, their net book values as atthe financial year end date would have been as RM1,234,994 (2007: RM1,255,379).

The above long leasehold lands of the subsidiary are charged as securities for the banking facilities granted to thesubsidiary as disclosed in Note 17.

6 INVESTMENT PROPERTIES

As at As at01.01.2008 Additions Disposals 31.12.2008

Group RM RM RM RM

Cost/ValuationAt valuation:Freehold land and building 350,000 - - 350,000

At cost:Long leasehold land and building 3,903,332 - - 3,903,332

4,253,332 - - 4,253,332

Accumulated DepreciationAt valuation:Freehold land and building 66,721 5,560 - 72,281

At cost:Long leasehold land and building - - - -

66,721 5,560 - 72,281

Net Book ValueAs at 31 December 2007 4,186,611

As at 31 December 2008 4,181,051

The revalued freehold land and building of the Group are stated at valuation based on their existing use basis valuedby independent professional valuers on fair market value basis.

Had the Group’s freehold land and building which are carried at valuation been stated at cost, their net book valuesas at the financial year end date would have been RM309,845 (2007: RM316,245).

The above long leasehold lands of the subsidiary are charged as securities for the banking facilities granted to thesubsidiary as disclosed in Note 17.

7 SUBSIDIARY COMPANIES

Group Company2008 2007 2008 2007

RM RM RM RM

Unquoted shares, at cost - - 17,068,530 17,068,530

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NOTES TO THE FINANCIAL STATEMENTS (CONT’D)31 DECEMBER 2008

7 SUBSIDIARY COMPANIES (CONT’D)

The details of the subsidiaries are as follows:-

Country of Company’s Name Incorporation Effective Interest Principal Activities

2008 2007% %

Gunung Resources Sdn. Bhd. Malaysia 100 100 Trading of latexConcentrate

Gunung Land Sdn. Bhd. Malaysia 100 100 Property investment

Gunung Biofuel Sdn. Bhd. Malaysia 100 100 Property investment

Prominent Console Sdn. Bhd. Malaysia 100 100 Dormant

Impresif Jitu Sdn. Bhd. Malaysia 100 100 Dormant

8 OTHER INVESTMENTS

Group Company2008 2007 2008 2007

RM RM RM RM

Unquoted shares, at cost 357,678 357,678 - - Less:Impairment losses (80,000) (80,000) - -

Net balance 277,678 277,678 - -

9 INVENTORIES

Group Company2008 2007 2008 2007

RM RM RM RM

At cost:Raw materials 552,629 508,869 - - Work-in-progress 41,222 41,222 - -

593,851 550,091 - -

10 TRADE RECEIVABLES

The currency profile of trade receivables is entirely in Ringgit Malaysia.

The Group’s normal trade credit term is up to 90 days. Other credit terms are assessed and approved on a case-by-case basis. Apart from debts due from a related party, Latexx Manufacturing Sdn. Bhd., amounting to RM10,300,006(2007: RM14,797,632), the Company has no significant concentration of credit risk. The Directors, having consideredall available information, are of the opinion that these debts are realisable in full.

11 OTHER RECEIVABLES, DEPOSITS AND PREPAYMENT

Included in the other receivables is an amount of RM1,050,000 (2007: RM2,850,000) due from a former subsidiarycompany. The amount is repayable by 32 monthly instalments commencing in January 2007.

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NOTES TO THE FINANCIAL STATEMENTS (CONT’D)31 DECEMBER 2008

12 AMOUNTS OWING BY/(TO) SUBSIDIARY COMPANIES

The amounts owing by/(to) subsidiary companies, which arose mainly out of unsecured advances, are interest-freeand do not have any fixed repayment terms.

13 SHARE CAPITAL

2008 2007No. of shares Value No. of shares Value

Group and Company Units RM Units RM

a) Authorised:Ordinary shares of RM1.00 each 100,000,000 100,000,000 100,000,000 100,000,000

b) Issued and fully paid:Ordinary shares of RM1.00 each 50,354,000 50,354,000 50,354,000 50,354,000

Employee Share Option Scheme

The Company implemented on ESOS on 16 September 2003 for a period of 5 years. The ESOS is governed by thebye-laws which were approved by the shareholders on 4 August 2003. On 18 June 2004, the Company obtained theapproval of the shareholders on the proposed amendments to the Bye-Laws of the ESOS which, amongst others,to extend the participation in the ESOS to Non-Executive Directors of the Company. The ESOS has expired on 15September 2008.

Information with respect to the number of options granted under the ESOS is as follows:-

No of Share OptionNo. of shares Value

As at 1 January 401,000 629,000Add: Granted - -Less: Exercised - -Less: Lapsed (401,000) (629,000)

As at 31 December - -

14 RESERVES

Group Company2008 2007 2008 2007

RM RM RM RM

Non-distributableShare premium 100,411 100,411 100,411 100,411

DistributableAccumulated losses (30,636,047) (30,776,617) (31,195,388) (30,838,777)

Total (30,535,636) (30,676,206) (31,094,977) (30,738,366)

GU

NU

NG

CA

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42

NOTES TO THE FINANCIAL STATEMENTS (CONT’D)31 DECEMBER 2008

15 DEFERRED TAX LIABILITIES

Group Company2008 2007 2008 2007

RM RM RM RM

Balance as at 1 January 136,134 138,236 - -

Less:Cystallisation of deferred tax liabilities (2,102) (2,102) - -

As at end of the year 134,032 136,134 - -

The above deferred tax liabilities arose principally from revaluation of certain freehold and long leasehold land andbuildings of the Group.

16 TRADE PAYABLES

The currency profile of trade payables is entirely in Ringgit Malaysia. The normal credit terms granted to the Groupis 30 days.

17 BANK BORROWINGS

Group Company2008 2007 2008 2007

RM RM RM RM

Bank overdraft 390,611 216,969 - - Bankers acceptance 6,241,000 8,240,000 - -

Total 6,631,611 8,456,969 - -

The above bank overdraft and bankers acceptance are short-term bank borrowings which bear interest rates rangingfrom 5.21% to 8.75% (2007: 5.47 to 8.75%) per annum. The facilities are secured by means of the followings:

(i) legal charge over a subsidiary company’s long leasehold land and buildings; and

(ii) corporate guarantee by the Company.

18 REVENUE

The revenue of the Group and of the Company represents sales of latex concentrate during the financial year:-

Group Company2008 2007 2008 2007

RM RM RM RM

Coach building and maintenance activities - 567,107 - - Latex concentrate trading activities 49,867,287 75,714,311 - -

Total 49,867,287 76,281,418 - -

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NOTES TO THE FINANCIAL STATEMENTS (CONT’D)31 DECEMBER 2008

19 FINANCE COSTS

Group Company2008 2007 2008 2007

RM RM RM RM

Bank overdraft 19,705 9,113 - - Interest on bankers acceptance 400,674 417,792 - - Hire-purchase interest - 838 - 838

Total 420,379 427,743 - 838

20 PROFIT/(LOSS) BEFORE TAXATION

Group Company2008 2007 2008 2007

RM RM RM RM

Profit/(Loss) before taxation is stated after charging/(crediting):-

Amortisation of long leasehold land 47,427 47,427 - - Audit fee 32,900 28,700 18,000 11,500Bad debts written off - 686,770 - 809,716Depreciation of investment property 5,560 5,560 - - Depreciation of property,

plant and equipment 253,140 289,688 3,919 39,783Deposit refundables - 928,000 - - Deposit forfeited 880 - - - Directors’ remuneration

- fee 27,083 12,000 27,083 12,000- others 170,338 315,900 170,338 327,900

Rental of office - 3,000 - - (Gain)/Loss on disposal of property,

plant and equipment - 240,666 - 10,400Loss on foreign exchange - 109,878 - - Under provision of real property

gains tax in prior year - 211,750 - - Interest income - (2,070) - - Rental income (30,600) (25,200) - -

Group2008 2007

RM RM

Executive directors:- fees 1,250 - - salaries and other emoluments 149,338 313,900

150,588 313,900

Non-executive directors:- fees 25,833 12,000- salaries and other emoluments 21,000 14,000

46,833 26,000

Total 197,421 339,900

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NOTES TO THE FINANCIAL STATEMENTS (CONT’D)31 DECEMBER 2008

20 PROFIT/(LOSS) BEFORE TAXATION (CONT’D)

The number of directors of the Company whose total remuneration during the year fall within the following bands isanalysed below:

No of Directors2008 2007

Executive directors:0 - RM50,000 1 - RM50,001 - RM100,000 - - RM100,001 - RM150,000 1 1RM500,001 - RM200,000 - - RM200,001 - RM250,000 - 1RM250,001 - RM300,000 - - RM300,001 - RM350,001 - - RM350,001 - RM400,000 - -

2 2Non-executive directors:Below RM50,000 4 2

6 4

The estimated monetary value of benefit-in-kind receivable by the directors during the financial year is RM8,800(RM13,325)

21 TAX EXPENSE/(CREDIT)

Group Company2008 2007 2008 2007

RM RM RM RM

Provision for taxation based on current year’s results 6,613 5,527 - - (Over)/Under provision in prior years (2,392) (563,286) 1,376 - Crystallisation of deferred tax liabilities on

property revaluation surplus (2,102) (2,102) - -

Total 2,119 (559,861) 1,376 -

Reconciliation of income tax expense:

Group Company2008 2007 2008 2007

RM RM RM RM

Profit before taxation 148,689 (3,018,239) (352,235) (1,290,797)

Income tax at Malaysian statutory tax rate of26% (2007: 27%) 38,659 (814,724) (91,581) (348,515)

Effect of change in tax rates (33,769) 121,586 - - Capital gain not subject to tax - (1,892) - - Expenses not deductible for tax purposes 103,317 558,749 91,581 348,515Deductible temporary differences not recognised

during the year/prior years (101,594) 141,808 - -

6,613 5,527 - - (Over)/Under provision in prior year (2,392) (563,286) 1,376 - Crystallisation of deferred tax liabilities on

property revaluation surplus (2,102) (2,102) - -

Total tax (credit)/expenses 2,119 (559,861) 1,376 -

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NOTES TO THE FINANCIAL STATEMENTS (CONT’D)31 DECEMBER 2008

21 TAX EXPENSE/(CREDIT) (CONT’D)

Deferred tax assets have not been recognised in respect of the following items:

Group Company2008 2007 2008 2007

RM RM RM RM

Unutilised tax losses 15,662,352 17,403,402 830,336 870,783Unabsorbed capital allowances 1,250,130 962,443 38,692 38,692

The unutilised tax losses and unabsorbed capital allowances, which do not expire under current tax legislations, areavailable for offset against the Group’s future taxable profit deriving from the same source of the respectivecompanies in the Group.

22 EARNINGS/(LOSS) PER ORDINARY SHARE

(a) Basic Earning/(Loss) per Ordinary Share

The basic earnings/(loss) per ordinary share for the financial year has been calculated based on the Group’s netprofit/(loss) attributable to shareholders of the Company divided by the weighted average number of ordinaryshares of the Company in issue during the financial year.

Group2008 2007

RM RM

Earnings/(Loss) attributable to shareholders 146,570 (2,458,378)

Weighted average number of ordinary shares in isssue 50,354,000 50,354,000

Basic earnings/(loss) per ordinary share (Sen) 0.29 (4.88)

(b) Diluted Earnings/(Loss) per Ordinary Share

The diluted earnings/(loss) per ordinary share for the financial year are not disclosed as their effects on the basicearnings per share are anti-dilutive.

23 RELATED PARTY BALANCES AND TRANSACTIONS

In the ordinary course of business, a subsidiary company undertaken, on agreed terms and prices, revenuetransactions with a company in which there are common directors and/or major shareholders deemed connectedwith the director(s) of the Company. The material related party transactions between the Company and the entityduring the financial year are as follows:-

Group Company2008 2007 2008 2007

RM RM RM RM

Sales of latex concentrate to a related partyLatexx Manufacturing Sdn. Bhd. 49,867,287 75,714,311 - -

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NOTES TO THE FINANCIAL STATEMENTS (CONT’D)31 DECEMBER 2008

24 CONTINGENT LIABILITIES

Group Company2008 2007 2008 2007

RM RM RM RM

Unsecured:Corporate guarantee in respect of banking

facilities granted to a subsidiary company - - 9,500,000 11,750,000

25 MATERIAL LITIGATION

Gunung Resources Sdn. Bhd. (“GRSB”), a wholly owned subsidiary of the Company, was served with a Summonsand Statement of Claim on 19 September 2006 by Seal Polymer Industries Berhad (“Plaintiff”) for allegedly failingto refund a sum of deposits of RM928,000 paid by Plaintiff to GRSB together with interest pursuant to the Sales &Purchase Agreements dated 17 August 2004 for an intended purchase of one of GRSB’s leasehold property that haslapsed.

On 25 October 2007, the High Court in Taiping allowed the Plaintiff’s application for summary judgement for therefund of 10% deposit paid by Plaintiff to the Defendant together with interest/damages/costs. The Company’ssolicitors had filed an appeal to the Court of Appeal against the decision and application for stay of execution of thesummary judgement on ground that there appears to have many triable issues.

GRBS had on 16 November 2007 received a notice pursuant to Section 218 of the Companies Act, 1965 (“theNotice”) from Plaintiff’s solicitors. The Company’s solicitors had obtained an interim stay of execution of the CourtOrder dated 25 October 2007 given against GRSB as ordered by the Judge in Taiping High Court on 6 December2007 until the hearing of the stay of execution application which was fixed on 21January 2008.

On 21 January 2008, the Company’s solicitors have obtained a stay of all proceedings or execution by the Plaintiffagainst GRSB on the summary judgement dated 25 October 2007 until the decision of GRSB’s appeal at the Courtof Appeal. GRSB has instructed its solicitors to apply to court to strike out the Notice for abuse of process as it ishighly improper, irregular, void of merits and oppressive in nature and seek damages and losses suffered by GRSBfrom the Plaintiff in the relation to the issuance of the notice.

On 23 June 2008, the Plaintiff has applied to the High court Judge for the Order for Stay of Execution granted on 21January 2008 to be set aside. On 11 December 2008 GRSB’s application for stay for execution against summaryjudgement order dated 25 October 2007 was dismissed by high court judge. As the appeal in the court of appeal isstill pending, GRSB has instructed their solicitors to apply to the court of appeal for stay of execution by way of Noteof Motion. On 21 January 2009, the Court of Appeal has ordered that any winding-up-proceedings by Seal PolymerIndustries Berhad pursuant to the Taiping High Court Order dated 25.10.2007 will be stayed with immediate effectand until the disposal of the Appeal before the Court of Appeal.

The Honourable Court of Appeal has also ordered that sum of RM928,000 to be deposited into a joint account withthe Respondent’s Solicitors until the outcome of the Appeal before the Court of Appeal.

26 EMPLOYEE INFORMATION

2008 2007

Number of employees 7 7Staff costs (RM) 121,003 101,863

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NOTES TO THE FINANCIAL STATEMENTS (CONT’D)31 DECEMBER 2008

27 COMPARATIVE FIGURES

The following comparative figures in the balance sheet have been reclassified to conform with the current yearpresentation.

As Previously AsStated Restated

RM RM

Property, plant and equipment 2,109,027 7,222,196Prepaid land lease payment 8,512,541 3,116,093Investment property 3,903,332 4,186,611

28 SEGMENTAL INFORMATION – GROUP

Segmental information is not presented as the Group is primarily engaged in only one core business segment whichis trading of latex concentrate and operates principally in Malaysia.

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LIST OF PROPERTIESParticulars of Group Properties as at 31/12/2008

Approximate Net BookDescription/ Land Age of Value as at Date of Last

Location Existing Use Tenure Area Building 31/12/2008 Revaluation

GUNUNG RESOURCES SDN BHD

Lot 5911 Factory cum 99 years 6.720 13 years 6,408,478 2004Mukim of Asam Kumbang Office lease expiring acresDistrict of Larut and Matang 21 July 2069Perak Darul Ridzuan

Lot 19789 Industrial 99 years 24,282 N/A 1,895,459 2004Mukim of Asam Kumbang Land lease expiring m2District of Larut and Matang 9 May 2095Perak Darul Ridzuan

Lot PTB 2970 Shop House Freehold 1,604 19 years 277,719 1995Town of Taiping sq ftDistrict of Larut and MatangPerak Darul Ridzuan

GUNUNG LAND SDN BHD

Kamunting Industrial EstatePerak Darul Ridzuan Industrial Title has not 140,394 N/A 753,110 1995(Lot no. is not Land been issued sq ftavailable as title hasnot been issued)

GUNUNG BIOFUEL SDN BHD

Lot Nos. 1547, 1548, 1121, Agricultural Freehold 25.79 N/A 3,903,331 20031122, 1123, 1126 and 1127 Land acresMukim of JebongDistrict of Larut and MatangPerak Darul Ridzuan

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ANALYSIS OF SHAREHOLDINGSAS AT 11 MAY 2009

Authorised Share Capital : RM100,000,000Issued and Paid-up Share Capital : RM50,354,000Class of Securities : Ordinary Shares of RM1.00 eachVoting Rights : One vote for every Ordinary Share No. of Shareholders : 3,582

DISTRIBUTION OF SHAREHOLDINGS

No. of No. ofSize of Shareholdings Shareholders % Shares %

Less than 100 313 8.74 10,309 0.02100 to 1,000 922 25.74 879,507 1.751,001 to 10,000 1,827 51.00 7,735,616 15.3610,001 to 100,000 467 13.04 14,131,069 28.06100,001 to less than 5% of issued shares 52 1.45 13,998,370 27.805% and above of issued shares 1 0.03 13,599,129 27.01

Total 3,582 100.00 50,354,000 100.00

LIST OF THIRTY LARGEST SHAREHOLDERS

Name of Shareholders No. of Shares %

1. A.A. Anthony Nominees (Tempatan) Sdn Bhd 13,599,129 27.01Pledged securities account for BT Capital Sdn Bhd

2. A.A. Anthony Nominees (Tempatan) Sdn Bhd 1,791,900 3.56Pledged securities account for Teong Lian Aik

3. Tan Chai Chek 730,000 1.45

4. Tan You Loon 687,000 1.36

5. Rohayu binti Yaacob 619,900 1.23

6. A.A. Anthony Nominees (Tempatan) Sdn Bhd 532,900 1.06Pledged securities account for Lim Chong Eng

7. HDM Nominees (Tempatan) Sdn Bhd 513,100 1.02Pledged securities account for Aw Kwai Peng

8. Kenanga Nominees (Tempatan) Sdn Bhd 500,000 0.99Pledged securities account for Patrick Chiong Sui Chai

9. Zainorazua binti Zainun 500,000 0.99

10. Chan Soo Chai 450,000 0.89

11. Lim Han Seang 366,000 0.73

12. Rosni binti Rahmat 328,900 0.65

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ANALYSIS OF SHAREHOLDINGS (CONT’D)AS AT 11 MAY 2009

LIST OF THIRTY LARGEST SHAREHOLDERS (CONT’D)

Name of Shareholders No. of Shares %

13. Public Nominees (Tempatan) Sdn Bhd 300,000 0.60Pledged securities account for Tan Chia Hong @ Gan Chia Hong

14. Teoh Eng Huat 272,500 0.54

15. Low Bok Sang 253,500 0.50

16. Huam Hong Ping 250,400 0.50

17. OSK Nominees (Tempatan) Sdn Bhd 240,000 0.48Pledged securities account for Tan Chai Chek

18. Rohana binti Rahmat 231,000 0.46

19. George Lee Sang Kian 230,000 0.46

20. Ong Sze Tang 230,000 0.46

21. Tee Kok Seng 224,920 0.45

22. Lem Kim Kaw 220,200 0.44

23. Ooi Gene Hock 220,000 0.44

24. TA Nominees (Tempatan) Sdn Bhd 217,000 0.43Pledged securities account for Lim Kok Boon

25. Amsec Nominees (Tempatan) Sdn Bhd 214,800 0.43Pledged securities account for Meng Chue @ Leng Yit Hoong

26. Affin Nominees (Tempatan) Sdn Bhd 200,000 0.40Pledged securities account for Low Teck Beng

27. Amsec Nominees (Tempatan) Sdn Bhd 200,000 0.40Ambank (M) Berhad for Cheang Yoong Tat

28. Chong Fat Leong 200,000 0.40

29. Ooi Pey Wong 200,000 0.40

30. HSBC Nominees (Asing) Sdn Bhd 190,000 0.38Exempt An for Credit Suisse

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ANALYSIS OF SHAREHOLDINGS (CONT’D)AS AT 11 MAY 2009

SUBSTANTIAL SHAREHOLDERS AS AT 11 MAY 2009 (EXCLUDING BARE TRUSTEES)

Name of Shareholders Direct % Indirect %No. of Shares No. of Shares

BT Capital Sdn Bhd 13,599,129 27.01 - -Low Bok Tek - - 13,599,129 * 27.01

* Deemed to have an interest in the shares by virtue of Section 6A(4)(c) of the Companies Act, 1965

DIRECTORS’ SHAREHOLDING AS AT 11 MAY 2009

Name Direct % Indirect %No. of Shares No. of Shares

Low Bok Tek - - 13,599,129 # 27.01Malik Parvez Ahmad bin Nazir Ahmad - - - -Peter Wong Hoy Kim - - - -Tang Yuet Mun - - - -Datuk Ahmad Shalimin bin Ahmad Shaffie - - - -

# Deemed to have an interest in the shares by virtue of Section 6A(4)(c) of the Companies Act, 1965

By virtue of his interest in the shares of the Company, Mr. Low Bok Tek is deemed interested in the shares of all thesubsidiaries of the Company to the extent that the Company has an interest.

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ANALYSIS OF WARRANTHOLDINGS AS AT 11 MAY 2009

Class of Securities : Warrants 2003/2013No. of Warrants Issued : 15,999,200Exercise Price of Warrants : RM1.00Exercise Period of Warrants : From 13 October 2003 to 13 October 2013Expiry Date of Warrants : 13 October 2013Voting Rights : One vote for every Warrant in respect of a meeting of Warrantholders No. of Warrantholders : 1264

DISTRIBUTION OF WARRANTHOLDINGS

No. of No. ofSize of Warrant Holdings Warrant holders % Warrants %

Less than 100 153 12.10 7,367 0.05100 to 1,000 330 26.11 267,499 1.671,001 to 10,000 542 42.88 2,365,428 14.7810,001 to 100,000 204 16.14 6,884,409 43.03100,001 to less than 5% of issued warrants 35 2.77 6,474,497 40.475% and above of issued warrants 0 0.00 0 0.00

Total 1,264 100.00 15,999,200 100.00

LIST OF THIRTY LARGEST REGISTERED WARRANTHOLDERS

Name of Warrant Holders No. of Warrants %

1. DB (Malaysia) Nominee (Asing) Sdn Bhd 539,300 3.37Deutsche Bank AG London for RAB-Northwest Fund Limited

2. Tey Lay Yang 469,000 2.93

3. Lau Meng Hong 300,000 1.88

4. Mayban Nominees (Asing) Sdn Bhd 300,000 1.88Pledged securities account for Lim Ai Ling

5. Mayban Securities Nominees (Tempatan) Sdn Bhd 278,700 1.74Pledged securities account for Ho Yock Main

6. Ooi Weng Hooi 274,700 1.72

7. DB (Malaysia) Nominee (Asing) Sdn Bhd 269,800 1.69Deutsche Bank AG London for RAB-Northwest China Opportunities Fund Limited

8. Tan You Loon 240,300 1.50

9. Sai Yee @ Sia Say Yee 215,000 1.34

10. Ong Sze Tang 201,100 1.26

11. TA Nominees (Tempatan) Sdn Bhd 190,000 1.19Pledged securities account for Harbajan Kaur A/P Sadhu Singh

12. SJ Sec Nominees (Tempatan) Sdn Bhd 189,000 1.18Pledged securities account for Lee Siew Mooi

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ANALYSIS OF WARRANTHOLDINGS (CONT’D)AS AT 11 MAY 2009

LIST OF THIRTY LARGEST REGISTERED WARRANTHOLDERS (CONT’D)

Name of Warrant Holders No. of Warrants %

13. Mayban Nominees (Tempatan) Sdn Bhd 183,800 1.15Pledged securities account for Seshan Lim Tee Heng

14. Cimsec Nominees (Tempatan) Sdn Bhd 180,000 1.13CIMB Bank for Tan Hwa Imm

15. Koo Ann Ling 165,000 1.03

16. Lim Cheoh Tow 163,000 1.02

17. Mayban Securities Nominees (Tempatan) Sdn Bhd 153,700 0.96Pledged securities account for Moong Chiung Yau

18. Loo Sang @ Lat Sah 152,000 0.95

19. Tee Kok Seng 142,496 0.89

20. Lee Kee Por 136,000 0.85

21. Khoo Seng Miau 130,000 0.81

22. Cheah Thim Fatt 128,800 0.81

23. Low Yoke Choo 127,700 0.80

24. A.A. Anthony Nominees (Tempatan) Sdn Bhd 124,201 0.78Pledged securities account for BT Capital Sdn Bhd

25. Wong Sin Chaui 121,000 0.76

26. Chan Choong Yoo 120,000 0.75

27. Young Pey Feei 114,500 0.72

28. Thean Yin Kong 113,000 0.71

29. RHB Nominees (Tempatan) Sdn Bhd 110,400 0.69Pledged securities account for Sim Mui Khee

30. Alliancegroup Nominees (Tempatan) Sdn Bhd 110,000 0.69Pledged securities account for Lim Phiang

DIRECTORS’ WARRANTHOLDING AS AT 11 MAY 2009

Name Direct % Indirect %No. of Warrant No. of Warrant

Low Bok Tek - - 124,201 # 0.78Malik Parvez Ahmad bin Nazir Ahmad - - - -Peter Wong Hoy Kim - - - -Tang Yuet Mun - - - -Datuk Ahmad Shalimin bin Ahmad Shaffie - - - -

# Deemed to have an interest in the warrants by virtue of Section 6A(4)(c) of the Companies Act, 1965

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FORM OF PROXY

I/We,(Full Name In Block Letters)

of(Address)

being a member/members of GUNUNG CAPITAL BERHAD hereby appoint

(Full Name In Block Letters)

of(Address)

or failing him/her(Full Name In Block Letters)

of(Address)

or failing him/her, the Chairman of the meeting, as my/our proxy, to vote for me/us on my/our behalf at the 14th AnnualGeneral Meeting of the Company to be held at Diamond Room, SSL Traders Hotel, No. 43, Jalan Medan Perwira Satu,Medan Perwira, 34600 Kamunting, Perak Darul Ridzuan on Friday, 19 June 2009 at 11.00 a.m. and at any adjournmentthereof in the manner indicated below.

For Against

Resolution 1 To receive and adopt the Audited Financial Statement for the financial year ended 31 December 2008 and the Report of the Directors and Auditors thereon

Resolution 2 To approve the payment of Directors’ Fees

Resolution 3 To re-elect Datuk Ahmad Shalimin bin Ahmad Shaffie

Resolution 4 To re-elect Malik Parvez Ahmad bin Nazir Ahmad

Resolution 5 To re-appoint Messrs STYL Associates as Auditors of the Company

Resolution 6 Authority to issue shares pursuant to Section 132D of the Companies Act, 1965

Resolution 7 Proposed Renewal of Shareholders’ Mandate

(Please indicate with an ‘X’ in the spaces provided how you wish your vote to be cast. In the absence of specificdirections, your proxy may vote or abstain from voting at his/her discretion)

Signed this day of 2009.

Signature of Shareholder

Notes:-

1. A member of the Company, eligible to attend and vote at the meeting, is entitled to appoint a proxy or proxies to vote in his/her stead. A proxy maybut need not be a member of the Company and the provision of Section 149(1)(b) of the Companies Act 1965 shall not apply to the Company.

2. Where a member appoints two or more proxies, the appointment shall be invalid unless he/she specifies the proportion of his/her shareholdings tobe represented by each proxy. Where a member of the Company is an authorised nominee as defined under the Securities Industry (CentralDepositories) Act 1991, it may appoint at least one proxy in respect of each securities account it holds with ordinary shares of the Company standingto the credit of the said securities account.

3. The Form of Proxy shall be in writing under the hand of the appointor or his/her attorney duly authorised in writing or, if the appointor is a corporation,either under its common seal or under the hand of an officer or attorney duly authorised.

4. All Forms of Proxy must be deposited at the Company's Registered Office at Lot 5911, Jalan Perusahaan Satu, Kamunting Industrial Estate, 34600Kamunting, Taiping, Perak Darul Ridzuan not less than 48 hours before the time set for holding the meeting or at any adjournment thereof.

No. of Shares held

Please fold here

The Company SecretaryGUNUNG CAPITAL BERHAD (330171-P)

Lot 5911, Jalan Perusahaan Satu

Kamunting Industrial Estate

34600 Kamunting, Taiping

Perak Darul Ridzuan

Malaysia

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