PROPOSED SELECTIVE CAPITAL REDUCTIONThe Directors are convening the EGM to be held at Capricorn,...

CIRCULAR DATED 27 OCTOBER 2009

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION.

If you are in any doubt as to the action you should take, you should consult your stockbroker, bank manager, solicitor, accountant or other professional adviser immediately.

If you have sold or transferred all of your shares in the capital of GP Industries Limited (the “Company”), you should immediately forward this Circular together with the Notice of Extraordinary General Meeting and the accompanying Proxy Form to the purchaser or transferee or to the bank, stockbroker or other agent through whom the sale or transfer was effected for onward transmission to the purchaser or transferee.

The Singapore Exchange Securities Trading Limited assumes no responsibility for the correctness of any of the statements made, reports contained or opinions expressed in this Circular.

GP Industries Limited(Incorporated in the Republic of Singapore)Co. Reg. No. 199502128C

CIRCULAR TO SHAREHOLDERS

in relation to the

PROPOSED SELECTIVE CAPITAL REDUCTION

Financial Adviser to the Company

BNP PARIBAS CAPITAL (SINGAPORE) LTD.(Incorporated in the Republic of Singapore)

Company Registration No. 197902035K

IMPORTANT DATES AND TIMES:

Last Date and Time for lodgement of Proxy Form : 17 November 2009 at 10.00 a.m.

Date and Time of Extraordinary General Meeting : 19 November 2009 at 10.00 a.m.

Place of Extraordinary General Meeting : Capricorn, Level 1Marina Mandarin Singapore6 Raffles Boulevard, Marina SquareSingapore 039594

CONTENTS

Page

DEFINITIONS ....................................................................................................................................... 3

INDICATIVE TIMETABLE .................................................................................................................... 6

LETTER TO SHAREHOLDERS

1. Introduction……………………………………………………………………………………. ............. 7

2. Selective Capital Reduction………………………………………………………………….............. 7

3. Gerard Family and the Tarway Loans……………………………………………………… ............. 8

4. Rationale for the Selective Capital Reduction ............................................................................ 9

5. Financial Information relating to the Selective Capital Reduction .............................................. 9

6. Conditions .................................................................................................................................. 11

7. Interests of Directors and Substantial Shareholders ................................................................. 12

8. Directors’ Recommendation ....................................................................................................... 12

9. Abstention from Voting ............................................................................................................... 12

10. Extraordinary General Meeting .................................................................................................. 12

11. Action to be taken by GPIL Shareholders .................................................................................. 12

12. Financial Adviser ........................................................................................................................ 12

13. Directors’ Responsibility Statement ............................................................................................ 13

14. Additional Information ................................................................................................................ 13

APPENDICES

1. Audited Balance Sheets and Profit and Loss Account and Pro Forma Unaudited Balance Sheets and Profit and Loss Account After the Selective Capital Reduction .............................. 14

2. Additional Information ................................................................................................................ 17

NOTICE OF EXTRAORDINARY GENERAL MEETING ...................................................................... 20

PROXY FORM

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DEFINITIONS

In this Circular, the following definitions apply throughout except where the context otherwise requires:

“ACRA” : Accounting and Corporate Regulatory Authority of Singapore

“Act” : The Companies Act, Chapter 50 of Singapore

“Agreement Date” : 9 July 2009, being the date of the Share Cancellation Agreement

“Belvedire” : Belvedire Pty Ltd

“BNP Paribas” : BNP Paribas Capital (Singapore) Ltd.

“Board” : The board of Directors of the Company

“Cancellation Monies” : Has the meaning ascribed to it in paragraph 2.2 of this Circular

“CDP” : The Central Depository (Pte) Limited

“CIHL” : CIH Limited

“Court” : The High Court of the Republic of Singapore

“Deed of Discharge” : The deed of discharge to be entered or entered into (as the case may be) by, inter alia, Belvedire and Schneider Australia to discharge and release the Relevant Shares from the Schneider Share Charge

“Directors” : The directors of the Company as at the date of this Circular

“Effective Date” : The date on which the Selective Capital Reduction Court Order (together with other documents prescribed under the Act) is lodged with ACRA

“EGM” : The extraordinary general meeting of the Company to be held on 19 November 2009 (and any adjournment thereof)

“EPS” : Earnings per share

“EWDIS” : Electrical wiring devices and installation systems

“FY” : Financial year ended or ending 31 March

“Gerard Corporation” : Gerard Corporation Pty Ltd

“Gerard Industries” : Gerard Industries (No. 3) Pty Ltd

“GPH” : Gold Peak Industries (Holdings) Limited

“GPIL” or the “Company” : GP Industries Limited

“GPIL Options” : Valid existing options granted under the GPIL Share Option Scheme

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“GPIL Share Option Scheme” : The GP Industries Limited Share Option Scheme 1999

“GPIL Shareholders” : Persons who are registered as holders of GPIL Shares in the Register of Members of GPIL or who, being Depositors, have GPIL Shares entered against their names in the Depository Register

“GPIL Shares” : Ordinary shares in the capital of the Company

“Group” : The Company and its subsidiaries

“Latest Practicable Date” : 22 October 2009, being the latest practicable date prior to the printing of this Circular

“Long Stop Date” : The date falling 12 months’ from the Agreement Date (or such later date as the parties to the Share Cancellation Agreement may in writing agree)

“Market Day” : A day on which the SGX-ST is open for trading in securities

“NTA” : Net tangible asset

“Relevant Shares” : The 55,681,443 GPIL Shares held by Belvedire, representing approximately 9.66 per cent. of the GPIL Shares in issue, which are proposed to be cancelled by way of the Selective Capital Reduction pursuant to the Share Cancellation Agreement

“Schneider Australia” : Schneider Electric Australia Holdings Pty Ltd

“Schneider Electric” : Schneider Electric SA

“Selective Capital Reduction” : The proposed selective capital reduction involving the cancellation of the Relevant Shares under Section 78G of the Act announced by the Company on 9 July 2009, details of which are set out on page 7 of this Circular

“Selective Capital Reduction Court Order”

: The order by the Court sanctioning the Selective Capital Reduction

“SGX-ST” : Singapore Exchange Securities Trading Limited

“Share Cancellation Agreement” : The share cancellation agreement dated 9 July 2009 entered into between the Company, Belvedire, Tarway and various parties representing the Gerard Family, pursuant to which the Relevant Shares will be cancelled by way of the Selective Capital Reduction and the cash distribution is to be paid to Belvedire, which will be satisfied by the Company setting off the Cancellation Monies against the principal amounts outstanding under the Tarway Loans

“Substantial Shareholder” : A person who has an interest (as defined in the Act) in not less than five per cent. of the issued voting shares of the Company

“Tarway” : Tarway Two Pty Ltd, an indirectly wholly-owned subsidiary of the Company

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“Tarway Loans” : Has the meaning ascribed to it in paragraph 3.3 of this Circular

“VWAP” : Volume weighted average price

“A$” : Australian dollars

“S$” and “cents” : Singapore dollars and cents, respectively

“%” or “per cent.” : Per centum or percentage

The terms “Depositor”, “Depository Agent” and “Depository Register” shall have the respective meanings ascribed to them in Section 130A of the Act.

Words importing the singular shall, where applicable, include the plural and vice versa, and words importing the masculine gender shall, where applicable, include the feminine and neuter genders and vice versa. Words importing persons shall include corporations.

Any reference in this Circular to any enactment is a reference to that enactment as for the time being amended or re-enacted. Any word defined under the Act or any modification thereof and used in this Circular shall, where applicable, have the meaning assigned to it under the Act or any modification thereof, as the case may be.

Any reference to a time of day and date in this Circular is made by reference to Singapore time and date respectively unless otherwise stated.

Any reference to “you” or “your” in this Circular is a reference to GPIL Shareholders, as the case may be, unless the context otherwise requires.

Any discrepancies in the tables in this Circular between the listed amounts and the totals thereof are due to rounding.

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INDICATIVE TIMETABLE

The following are the indicative dates and times for the Selective Capital Reduction:

Last Date and Time for lodgement of Proxy Forms : 17 November 2009 at 10.00 a.m.

Date and Time of EGM : 19 November 2009 at 10.00 a.m.

Expected Date for Court approval of the Selective Capital Reduction(1)

: On or about 17 December 2009

Expected Effective Date of the Selective Capital Reduction(1) : On or about 26 January 2010

Notes:

(1) The above dates are indicative only and are subject to change. Changes to the above expected dates, as well as the definitive dates, will be announced in due course by way of SGXNET announcements released on the website of the SGX-ST.

(2) All Proxy Forms must be lodged at the registered office of the Company at 97 Pioneer Road, Singapore 639579, not less than 48 hours before the time appointed for the EGM. Completion and return of a Proxy Form will not preclude a GPIL Shareholder from attending and voting in person at the EGM if he finds that he is able to do so. In such event, the relevant Proxy Forms shall be deemed to be revoked.

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GP INDUSTRIES LIMITED(Incorporated in the Republic of Singapore)

Company Registration No. 199502128C

Directors: Registered Office:

Executive DirectorsVictor Lo Chung Wing (Chairman)Leung Pak Chuen (Executive Vice Chairman)Brian Li Yiu Cheung (Managing Director)Andrew Chuang Siu LeungWong Man Kit

Independent Non-Executive DirectorsLim Ah DooPhua Bah LeeLim Hock Beng

97 Pioneer RoadSingapore 639579

27 October 2009

To: The Shareholders of GP Industries Limited

Dear Sir / Madam

PROPOSED SELECTIVE CAPITAL REDUCTION

1. INTRODUCTION

1.1 Announcement. On 9 July 2009, the Board announced (the “Announcement”) that the Company and its indirect wholly-owned subsidiary, Tarway, had entered into the Share Cancellation Agreement with Belvedire and various parties representing the Gerard Family to cancel the Relevant Shares by way of the Selective Capital Reduction, and to make a cash distribution to Belvedire which will be satisfied by the Company setting off the Cancellation Monies due to Belvedire against the principal amounts outstanding under the Tarway Loans.

A copy of the Announcement is available on the website of the SGX-ST at www.sgx.com.

1.2 EGM. The Directors are convening the EGM to be held at Capricorn, Level 1, Marina Mandarin Singapore, 6 Raffles Boulevard, Marina Square, Singapore 039594, on 19 November 2009 to seek the approval of GPIL Shareholders for the Selective Capital Reduction.

1.3 Circular. The purpose of this Circular is to provide GPIL Shareholders with relevant information relating to the Selective Capital Reduction, including the rationale and financial effects of the Selective Capital Reduction on the Group, and to seek GPIL Shareholders’ approval for the Special Resolution relating to the Selective Capital Reduction to be proposed at the EGM, notice of which is set out on page 20 of this Circular.

2. SELECTIVE CAPITAL REDUCTION

2.1 Selective Capital Reduction. The Selective Capital Reduction to cancel the Relevant Shares will be effected under Section 78G of the Act and pursuant to the Share Cancellation Agreement, the Company will cancel the Relevant Shares and make a cash distribution of S$0.328 for each Relevant Share cancelled.

2.2 Cash Distribution. The amount of cash distribution, being S$0.328 for each Relevant Share cancelled, is arrived at after negotiations between the Company and Belvedire on an arms-length basis and takes into account, inter alia, the VWAP of the GPIL Shares transacted on the SGX-ST during various reference periods. The amount of cash distribution represents:

(a) a premium of approximately 2.9 per cent. over the VWAP at which the GPIL Shares were transacted on the SGX-ST during the last one month up to and including 8 July 2009, being the last Market Day prior to the Agreement Date;

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(b) a premium of approximately 18.7 per cent. over the VWAP at which the GPIL Shares were transacted on the SGX-ST during the last three months up to and including 8 July 2009, being the last Market Day prior to the Agreement Date; and

(c) a premium of approximately 19.6 per cent. over the VWAP at which the GPIL Shares were transacted on the SGX-ST during the last six months up to and including 8 July 2009, being the last Market Day prior to the Agreement Date.

Pursuant to the Selective Capital Reduction, the issued ordinary share capital of the Company will be reduced by the 55,681,443 GPIL Shares cancelled, and pursuant to the terms of the Share Cancellation Agreement, the Company has agreed to return to Belvedire S$18,263,513.30 (the “Cancellation Monies”), being the aggregate amount of the cash distribution due to Belvedire for the Relevant Shares so cancelled. Belvedire has agreed that this shall be satisfied by the Company setting off the Cancellation Monies (converted into A$15,744,408.02 at the conversion rate of A$1.00 : S$1.16) against the principal amounts outstanding under the Tarway Loans.

2.3 Share Capital. Following the Selective Capital Reduction, the issued share capital of the Company will be reduced from approximately S$304.4 million to approximately S$286.1 million and the number of GPIL Shares in issue will be reduced from 576,601,925 to 520,920,482.

Save for the cancellation of the Relevant Shares and the return to Belvedire of the Cancellation Monies as set out above, there will not be any change to the number of GPIL Shares held by GPIL Shareholders as a result of the Selective Capital Reduction, nor will the Selective Capital Reduction involve (i) the diminution of liability in respect of any unpaid share capital, or (ii) the payment to GPIL Shareholders of any paid-up share capital (or, for the avoidance of doubt, profits) of the Company.

3. GERARD FAMILY AND THE TARWAY LOANS

3.1 Belvedire and Gerard Corporation. Belvedire is a company incorporated in Australia which is beneficially owned by various parties representing the Gerard Family. The Gerard Family are the Company’s long-standing business partners in Australia who hold 81.0 per cent. of Gerard Corporation, an investment holding company incorporated in Australia and whose principal investments include manufacturing, printing, packaging, freight forwarding, commercial property ownership and rural interests in forestry and agriculture. Gerard Corporation was incorporated following the sale, in 2003, by the Gerard Family and CIHL, a subsidiary of the Company, of their respective interests in the EWDIS business of Gerard Industries to Schneider Australia, to hold the non-EWDIS business of Gerard Industries. As at the date of this Circular, the Company, through Tarway, holds 19.0 per cent. of Gerard Corporation.

3.2 Schneider Share Charge. To cover any liability that the Gerard Family may have to warranty claims in respect of the sale of the Gerard Industries’ EWDIS business to Schneider Australia, Schneider Electric, the parent company of Schneider Australia, retained part of the cash consideration payable to the Gerard Family and 22,325,156 ordinary shares in the capital of CIHL (the “CIHL Consideration Shares”) that were charged by Belvedire in favour of, and assigned to, Schneider Australia. Pursuant to a scheme of arrangement for the privatisation of CIHL by the Company under Section 210 of the Act which came into effect on 28 September 2006, the CIHL Consideration Shares were converted into 70,681,443 GPIL Shares (including the Relevant Shares), of which 15,000,000 GPIL Shares were disposed by Belvedire in July 2007. Prior to 12 October 2009, the remaining 55,681,443 GPIL Shares, being the Relevant Shares, were charged by Belvedire in favour of, and assigned to, Schneider Australia (the “Schneider Share Charge”). Pursuant to the Deed of Discharge dated 8 October 2009, the Schneider Share Charge was discharged and the Relevant Shares were released and re-assigned to Belvedire on 12 October 2009.

3.3 Tarway Loans. Tarway was initially issued and allotted with approximately 52.4 per cent. of the issued share capital of Gerard Corporation. In 2003, Tarway disposed approximately 12.4 per cent. of the issued share capital of Gerard Corporation in favour of the Gerard Family for a consideration of approximately A$27.0 million (the “2003 Disposal”). Pursuant to the terms of a loan agreement dated 20 May 2005, Tarway agreed to lend to the Gerard Family part of the consideration for the

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2003 Disposal, amounting to approximately A$4.6 million (the “First Tarway Loan Amount”), and scheduled the final maturity date of the First Tarway Loan Amount to match the date of the release of the Schneider Share Charge.

In 2005, Tarway further disposed of approximately 21.0 per cent. of the issued share capital of Gerard Corporation in favour of the Gerard Family for approximately A$25.0 million (the “2005 Disposal”), resulting in its current shareholding of 19.0 per cent. in Gerard Corporation. Consequently, Tarway’s contribution to the shareholders’ loan to Gerard Corporation (which was made by Tarway and the Gerard Family in proportion to their respective shareholding interests in Gerard Corporation) was reduced in parallel with the reduction in Tarway’s shareholding in Gerard Corporation. Tarway was therefore repaid approximately A$22.1 million (the “Shareholders’ Loan Amount”) which was attributable to the reduction of its contribution to the shareholders’ loan to Gerard Corporation. Pursuant to the terms of another loan agreement also dated 20 May 2005, Tarway agreed to lend the Gerard Family part of the consideration for the 2005 Disposal and the Shareholders’ Loan Amount, amounting to approximately A$45.6 million (the “Second Tarway Loan Amount”, and together with the First Tarway Loan Amount, the “Tarway Loans”), and scheduled the final maturity date of the Second Tarway Loan Amount to match the date of the release of the Schneider Share Charge.

As at the Agreement Date, the aggregate principal amount outstanding under the Tarway Loans is approximately A$40.2 million (equivalent to approximately S$46.6 million at the conversion rate of A$1.00 : S$1.16).

3.4 Set-off of Cancellation Monies. Pursuant to the Share Cancellation Agreement, Belvedire and the Gerard Family have agreed that the Company’s obligation to distribute the Cancellation Monies to Belvedire shall be satisfied on the Effective Date by the Company setting off the Cancellation Monies (converted into Australian dollars as stated in paragraph 2.2 of this Circular) against the principal amounts outstanding under the Tarway Loans.

4. RATIONALE FOR THE SELECTIVE CAPITAL REDUCTION

The Company understands that the Gerard Family intends to partially repay the Tarway Loans through the realisation of the Relevant Shares. The Selective Capital Reduction will enable the Company to eliminate any possible overhang of the GPIL Shares in the market which may depress the price of the GPIL Shares in the case of a sale of the Relevant Shares on the open market by the Gerard Family. In view of the recent difficult conditions in the global financial markets which have generally depressed the price of the GPIL Shares, the Selective Capital Reduction (and consequently, the cancellation of the Relevant Shares) will also benefit GPIL Shareholders by providing an opportune time for GPIL Shareholders to increase their effective stake in the Company without making any additional cash outlay.

5. FINANCIAL INFORMATION RELATING TO THE SELECTIVE CAPITAL REDUCTION

5.1 Balance Sheet and Profit and Loss Account.

(a) The audited balance sheets of the Group and the Company as at 31 March 2009 and the audited profit and loss account of the Group for FY2009;

(b) the pro forma unaudited balance sheets of the Group and the Company as at 31 March 2009 and the pro forma unaudited profit and loss account of the Group for FY2009 after the Selective Capital Reduction; and

(c) the principal assumptions applied in preparing such pro forma unaudited financial information,

are set out in Appendix 1 of this Circular.

5.2 Assumptions relating to Pro Forma Financial Effects. The pro forma financial effects of the Selective Capital Reduction on the share capital of the Company, the NTA, the EPS and the gearing of the Group set out below have been prepared based on the audited financial statements of the Company and the Group as at 31 March 2009 and for FY2009, and are purely for illustrative

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purposes only. The information set out below assumes the cancellation of the Relevant Shares pursuant to the Selective Capital Reduction which has the effect of reducing GPIL’s issued share capital by S$18,263,513.30 and the Tarway Loans by A$15,744,408.02.

5.3 Share Capital. The effect of the Selective Capital Reduction on the issued share capital of the Company is as follows:

BeforeSelective Capital

Reduction

AfterSelective Capital

Reduction

Number of issued GPIL Shares 576,601,925 520,920,482

Amount of share capital (S$’000) 304,371 286,107(1)

Note:

(1) The reduction in the Company’s issued share capital has been derived from the amount of the Cancellation Monies.

5.4 NTA. For illustrative purposes only , assuming the Selective Capital Reduction had been effected on 31 March 2009 and using the Group’s closing conversion rate for Australian dollars to Singapore dollars as at 31 March 2009, the pro forma financial effects on the NTA of the Group as at 31 March 2009 are as follows:


Reduction


Reduction

NTA (S$’000) 398,215 381,688

NTA per GPIL Share (cents) 69.06 73.27

5.5 EPS. For illustrative purposes only and assuming the Selective Capital Reduction had been effected on 1 April 2008, the pro forma financial effects on the earnings of the Group for FY2009 are as follows:

Without adjustmentfor exceptional items

After adjustmentfor exceptional items(1)


Reduction


Reduction


Reduction


Reduction

Profit/(Loss) attributable to GPIL Shareholders (S$’000) (6,069) (7,738) 8,918 7,249

Basic earnings/(loss) per GPIL Share (cents) (1.05) (1.49)(2) 1.55 1.39(2)

Notes:

(1) Adjusted to exclude the net exceptional loss of approximately S$14,987,000 (the “Exceptional Items”).

(2) The increase in the basic loss per GPIL Share (without adjustment for the Exceptional Items) and decrease in basic earnings per GPIL Share (after adjustment for the Exceptional Items) after the pro forma completion of the Selective Capital Reduction is mainly due to lower interest income attributable to the reduction of the interest bearing amounts outstanding under the Tarway Loans (assuming the partial repayment of such loans following the Selective Capital Reduction).

5.6 Gearing. For illustrative purposes only , assuming the Selective Capital Reduction had been effected on 31 March 2009 and using the Group’s closing conversion rate for Australian dollars to Singapore dollars as at 31 March 2009, the effect of the Selective Capital Reduction on the gearing of the Group as at 31 March 2009 is as follows:

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Reduction


Reduction

Total borrowings(1) (S$’000) 208,187 208,187

Cash and cash equivalents (S$’000) 44,284 44,284

Net assets( 2) (S$’000) 405,312 388,785

Gearing(3) (times) 0.40 0.42

Notes:

(1) Total borrowings comprise bank borrowings and obligations under finance leases, both long-term and short-term.

(2) Net assets equals total assets less total liabilities .

(3) Gearing is defined as total borrowings less cash and cash equivalents, divided by net assets.

6. CONDITIONS

The Selective Capital Reduction is conditional upon, inter alia, the following:

(a) the passing of a special resolution of the GPIL Shareholders approving the Selective Capital Reduction at the EGM;

(b) the approval of the shareholders of GPH for the cancellation of the Relevant Shares by the Company pursuant to the Selective Capital Reduction, if required;

(c) the grant of the Selective Capital Reduction Court Order and such Selective Capital Reduction Court Order having become final;

(d) the registration of the Selective Capital Reduction Court Order with ACRA;

(e) no injunction or other order being issued by any court of competent jurisdiction or other legal restraint or prohibition preventing the Selective Capital Reduction or the transactions proposed in the Share Cancellation Agreement or any part thereof; and

(f) the execution of (i) the Deed of Discharge and (ii) the relevant prescribed form (“CDP Form K”) for the re-assignment of the Relevant Shares to Belvedire, and the lodgement of the duly executed CDP Form K with CDP.

The Company understands that Belvedire and Schneider Australia have entered into the Deed of Discharge on 8 October 2009, have executed the CDP Form K for, inter alia, the discharge, release and re-assignment of the Relevant Shares to Belvedire, and have lodged the CDP Form K with CDP. Accordingly, as at the Latest Practicable Date, the condition set out in paragraph 6(f) above has been satisfied.

In relation to the condition set out in paragraph 6(b) above, the Company understands that the approval of the shareholders of GPH for the cancellation of the Relevant Shares by the Company pursuant to the Selective Capital Reduction is not required under the Listing Rules of The Stock Exchange of Hong Kong Limited.

Pursuant to the Share Cancellation Agreement, if any of the conditions above is not satisfied or waived (as the case may be) by the Long Stop Date, the Share Cancellation Agreement shall terminate in accordance with the provisions therein and the proposed Selective Capital Reduction will lapse.

Subject to the above conditions being satisfied, it is currently expected that the Effective Date of the Selective Capital Reduction will take place on or about 26 January 2010.

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A further announcement will be made by the Company in the event of ( i) a material change to the expected Effective Date of the Selective Capital Reduction or ( ii) in the event the Selective Capital Reduction lapses.

7. INTERESTS OF DIRECTORS AND SUBSTANTIAL SHAREHOLDERS

The shareholding interests of the Directors and Substantial Shareholders before and after the Selective Capital Reduction are set out in Appendix 2 of this Circular. Save as disclosed above and in Appendix 2 of this Circular, none of the Directors or Substantial Shareholders has any interest, direct or indirect, in the Selective Capital Reduction.

8. DIRECTORS’ RECOMMENDATION

Having considered the terms of the Selective Capital Reduction, the Directors are of the view that the Selective Capital Reduction is in the interests of the Company and GPIL Shareholders. Accordingly, the Directors recommend that GPIL Shareholders vote in favour of the Special Resolution relating to the Selective Capital Reduction (set out in the notice of EGM on page 20 of this Circular) to be proposed at the EGM to be held on 19 November 2009.

9. ABSTENTION FROM VOTING

As the Relevant Shares to be cancelled pursuant to the Selective Capital Reduction are held by Belvedire and represent Belvedire’s entire shareholding interest in the Company, Belvedire, the Gerard Family and their associates will abstain from voting on the Special Resolution relating to the Selective Capital Reduction at the EGM and also will not accept nominations to act as proxies to attend and to vote on behalf of any GPIL Shareholder and, if necessary, to demand a poll, at the EGM, unless specific directions are given by such GPIL Shareholder.

10. EXTRAORDINARY GENERAL MEETING

The EGM, notice (the “Notice”) of which is set out on page 20 of this Circular, will be held at Capricorn, Level 1, Marina Mandarin Singapore, 6 Raffles Boulevard, Marina Square, Singapore 039594, on 19 November 2009 at 10.00 a.m. for the purpose of considering and, if thought fit, passing with or without modification, the Special Resolution set out in the Notice.

A Depositor shall not be regarded as a GPIL Shareholder entitled to attend the EGM and to speak and vote thereat unless he is shown to have GPIL Shares entered against his name in the Depository Register, as certified by CDP as at 48 hours before the EGM.

11. ACTION TO BE TAKEN BY GPIL SHAREHOLDERS

You will find enclosed with this Circular the Notice and a Proxy Form.

If you are unable to attend the EGM and you wish to appoint a proxy to attend and vote on your behalf, you should complete, sign and return the attached Proxy Form in accordance with the instructions printed thereon as soon as possible and, in any event, so as to reach the registered office of the Company at 97 Pioneer Road, Singapore 639579, not less than 48 hours before the time fixed for the EGM. Your completion and return of a Proxy Form will not prevent you from attending and voting in person at the EGM if you so wish.

12. FINANCIAL ADVISER

12.1 BNP Paribas. The Company has appointed BNP Paribas as its financial adviser in respect of the Selective Capital Reduction. BNP Paribas has given and has not withdrawn its written consent to the issue of this Circular with the inclusion of its name and all references to its name in the form and context in which they appear in this Circular.

12.2 Responsibility Statement. BNP Paribas, as financial adviser in respect of the Selective Capital Reduction, acknowledges that, to the best of its knowledge and belief, based on information provided by the Company and having made reasonable enquiries, the information given in this Circular is fair and accurate in all material respects as at the date of this Circular and that there

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are no material facts the omission of which would make any statement in this Circular misleading. Where the information relating to the Company and its subsidiaries has been extracted from publicly available sources or otherwise based on the information provided by the Company, the sole responsibility of BNP Paribas has been to ensure through reasonable enquiries that such information is accurately extracted from these sources or, as the case may be, reflected or reproduced in this Circular.

13. DIRECTORS’ RESPONSIBILITY STATEMENT

The Directors collectively and individually accept responsibility for the accuracy of the information given in this Circular and confirm, having made all reasonable enquiries, that to the best of their knowledge and belief, the facts stated and opinions expressed in this Circular are fair and accurate in all material respects as at the date of this Circular and that there are no material facts the omission of which would make any statement in this Circular misleading. Where information has been extracted and/or reproduced from published and publicly available sources, the sole responsibility of the Directors has been to ensure that such information is accurately reproduced in this Circular.

14. ADDITIONAL INFORMATION

Your attention is drawn to the additional information as set out in the Appendices of this Circular.

Yours faithfullyFor and on behalf ofthe Board of Directors ofGP INDUSTRIES LIMITED

Victor Lo Chung WingChairman

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APPENDIX 1

AUDITED BALANCE SHEETS ANDPROFIT AND LOSS ACCOUNT AND

PRO FORMA UNAUDITED BALANCE SHEETS ANDPROFIT AND LOSS ACCOUNT AFTER THE SELECTIVE CAPITAL REDUCTION

1. ASSUMPTIONS

The pro forma unaudited balance sheets of the Group and the Company and the pro forma unaudited profit and loss account of the Group have been prepared using the respective audited financial statements of the Group and the Company for FY2009 and are based on:

(a) in relation to the pro forma unaudited balance sheets of the Group and the Company, which use the Group’s closing conversion rate for Australian dollars to Singapore dollars as at 31 March 2009, the Selective Capital Reduction having been completed and become effective on 31 March 2009;

(b) in relation to the pro forma unaudited profit and loss account of the Group, the Selective Capital Reduction having been completed and become effective on 1 April 2008;

(c) the Selective Capital Reduction having been effected out of the Company’s issued share capital; and

(d) the Selective Capital Reduction resulting in lower interest income and taxation expense.

The pro forma unaudited balance sheets of the Group and the Company and the pro forma unaudited profit and loss account of the Group are for illustrative purposes only, do not reflect the actual financial position of the Group and the Company following the completion of the Selective Capital Reduction and should be read in conjunction with the audited financial statements of the Group and the Company for FY2009.

2. BALANCE SHEETS OF THE GROUP AND THE COMPANY AS AT 31 MARCH 2009

The Group The Company

AuditedPro FormaUnaudited Audited

Pro FormaUnaudited

S$’000 S$’000 S$’000 S$’000

Non-current AssetsProperty, plant and equipment 38,662 38,662 141 141Interest in subsidiaries – – 413,121 413,121Interest in associates 309,981 309,981 180,547 180,547Investment in unquoted equity shares 26,033 26,033 – –Non-current receivables 5,334 5,334 – –Other investments 21,104 21,104 – –Intangible assets 5,664 5,664 – –

406,778 406,778 593,809 593,809

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The Group The Company

AuditedPro FormaUnaudited Audited

Pro FormaUnaudited

S$’000 S$’000 S$’000 S$’000

Current AssetsInventories 49,959 49,959 – –Receivables and prepayments 163,103 146,576 460 460Dividend receivable 58 58 20,129 20,129Taxation recoverable 48 48 – –Bank balances, deposits and cash 44,284 44,284 9,392 9,392

257,452 240,925 29,981 29,981

Current LiabilitiesTrade and other payables 40,741 40,741 101,314 119,578Provisions 900 900 – –Obligations under finance leases 151 151 – –Income tax payable 7,424 7,424 1,750 1,750Amount due to ultimate holding company 293 293 9 9Bank loans and overdrafts 108,438 108,438 50,433 50,433

157,947 157,947 153,506 171,770

Net Current Assets/(Liabilities) 99,505 82,978 (123,525) (141,789)

Non-current LiabilitiesBank loans 99,365 99,365 93,868 93,868Obligations under finance leases 233 233 – –Deferred tax liabilities 1,373 1,373 79 79

100,971 100,971 93,947 93,947

Net Assets 405,312 388,785 376,337 358,073

Represented by: Issued capital 304,371 286,107 304,371 286,107Reserves 99,508 101,245 71,966 71,966

Equity attributable to equity holders of the Company

403,879 387,352 376,337 358,073

Minority interests 1,433 1,433 – –

Total Equity 405,312 388,785 376,337 358,073

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3. PROFIT AND LOSS ACCOUNT OF THE GROUP FOR FY2009

Audited Pro Forma UnauditedS$’000 S$’000

Revenue 242,363 242,363Cost of sales (177,882) (177,882)

Gross profit 64,481 64,481Other operating income 15,217 13,362Distribution costs (33,789) (33,789)Administrative expenses (41,579) (41,579)Exchange gain 4,653 4,653Other operating expenses (770) (770)

Profit from operations 8,213 6,358Finance costs (6,393) (6,393)Exceptional items (14,987) (14,987)Share of results of associates 14,550 14,550

Profit before taxation 1,383 (472)Income tax expense (7,727) (7,541)

Loss for the year (6,344) (8,013)

Attributable to:Equity holders of the Company (6,069) (7,738)Minority interests (275) (275)

(6,344) (8,013)

Weighted average number of shares used in calculating:

Basic loss per GPIL Share 576,601,925 520,920,482Diluted loss per GPIL Share 576,601,925 520,920,482

Loss per GPIL Share (cents)Basic (1.05) (1.49)Diluted (1.05) (1.49)

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APPENDIX 2

ADDITIONAL INFORMATION

1. DISCLOSURE OF INTERESTS

1.1 Directors. The interests of the Directors in GPIL Shares and GPIL Options as recorded in the Register of Directors’ Shareholdings as at Latest Practicable Date are set out below:

Direct Interest Deemed Interest Total number of GPIL Options under

the GPIL Share Option SchemeName of Director

No. ofGPIL Shares %

No. ofGPIL Shares %

Victor Lo Chung Wing(1) – – 399,715,443 69.32 2,068,000

Leung Pak Chuen 1,608,000 0.28 – – 730,000

Brian Li Yiu Cheung 1,465,000 0.25 – – 650,000

Andrew Chuang Siu Leung 45,000 0.01 – – 720,000

Wong Man Kit 72,000 0.01 – – 175,000

Lim Ah Doo 300,000 0.05 – – –

Phua Bah Lee 214,000 0.04 – – –

Lim Hock Beng 214,000 0.04 – – –

Note:

(1) Mr Victor Lo Chung Wing’s interest in the Company is by virtue of his interest in GPH. Mr Victor Lo Chung Wing is interested in 163,017,243 shares in GPH, representing 29.68 per cent. of the issued share capital of GPH (comprising a direct interest of 0.78 per cent. and a deemed interest of 28.90 per cent.).

Post-Selective Capital Reduction. Based on the interests of the Directors in GPIL Shares and GPIL Options as recorded in the Register of Directors’ Shareholdings as at the Latest Practicable Date and assuming there are no other changes to the interests of the Directors in GPIL Shares and GPIL Options, the interests of the Directors in GPIL Shares and GPIL Options after the Selective Capital Reduction are set out below:

Name of Director

Direct Interest Deemed Interest Total number of GPIL Options under

the GPIL Share Option Scheme

No. ofGPIL Shares %

No. ofGPIL Shares %

Victor Lo Chung Wing(1) – – 399,715,443 76.73 2,068,000

Leung Pak Chuen 1,608,000 0.31 – – 730,000

Brian Li Yiu Cheung 1,465,000 0.28 – – 650,000

Andrew Chuang Siu Leung 45,000 0.01 – – 720,000

Wong Man Kit 72,000 0.01 – – 175,000

Lim Ah Doo 300,000 0.06 – – –

Phua Bah Lee 214,000 0.04 – – –

Lim Hock Beng 214,000 0.04 – – –

Note:


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1.2 Substantial Shareholders. The interests of the Substantial Shareholders in GPIL Shares as recorded in the Register of Substantial Shareholders as at the Latest Practicable Date are set out below:

Direct Interest Deemed Interest Total InterestName of Substantial Shareholder

No. ofGPIL Shares %

No. ofGPIL Shares %

No. ofGPIL Shares %

GPH 399,715,443 69.32 – – 399,715,443 69.32

Victor Lo Chung Wing(1) – – 399,715,443 69.32 399,715,443 69.32

Andrew Ng Sung On(2) 378,412 0.07 399,715,443 69.32 400,093,855 69.39

Belvedire 55,681,443 9.66 – – 55,681,443 9.66

Notes:


(2) Mr Andrew Ng Sung On is interested in 158,254,389 shares in GPH, representing 28.81 per cent. of the issued share capital of GPH.

Post-Selective Capital Reduction. Based on the interests of the Substantial Shareholders in GPIL Shares as recorded in the Register of Substantial Shareholders as at the Latest Practicable Date and assuming there are no other changes to the interests of the Substantial Shareholders in GPIL Shares, the interests of the Substantial Shareholders in GPIL Shares after the Selective Capital Reduction are set out below:

Direct Interest Deemed Interest Total InterestName of Substantial Shareholder

No. ofGPIL Shares %

No. ofGPIL Shares %

No. ofGPIL Shares %

GPH 399,715,443 76.73 – – 399,715,443 76.73

Victor Lo Chung Wing(1) – – 399,715,443 76.73 399,715,443 76.73

Andrew Ng Sung On(2) 378,412 0.07 399,715,443 76.73 400,093,855 76.80

Belvedire – – – – – –

Notes:


(2) Mr Andrew Ng Sung On is interested in 158,254,389 shares in GPH, representing 28.81 per cent. of the issued share capital of GPH.

2. MATERIAL LITIGATION

As at the Latest Practicable Date, the Directors are not aware of any litigation, claims or proceedings pending or threatened against the Company or any of its subsidiaries or any facts likely to give rise to any litigation, claims or proceedings which, in the opinion of the Directors, might materially and adversely affect the financial position of the Company and its subsidiaries taken as a whole.

3. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents may be inspected at the registered office of the Company at 97 Pioneer Road, Singapore 639579 during normal business hours from the date of this Circular up to and including the date of the EGM:

(a) the Memorandum and Articles of Association of the Company;

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(b) the annual reports of the Company for FY2008 and FY2009;

(c) the Announcement;

(d) the letter of consent referred to in paragraph 12 of this Circular; and

(e) the Share Cancellation Agreement.

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NOTICE OF EXTRAORDINARY GENERAL MEETING

NOTICE IS HEREBY GIVEN that an Extraordinary General Meeting of the Members of GP Industries Limited (the “Company”) will be held at Capricorn, Level 1, Marina Mandarin Singapore, 6 Raffles Boulevard, Marina Square, Singapore 039594, on 19 November 2009 at 10.00 a.m. for the purpose of considering and, if thought fit, approving, with or without amendment, the following resolution which will be proposed as a Special Resolution:

SPECIAL RESOLUTION

Selective Capital Reduction

That, pursuant to Article 50 of the Articles of Association of the Company and subject to the approval and confirmation by the High Court of the Republic of Singapore:

(a) the issued and paid-up share capital of the Company be reduced by an amount of S$18,263,513.30 and such reduction be effected and satisfied by cancelling 55,681,443 ordinary shares in the capital of the Company (each, a “GPIL Share”) held by Belvedire Pty Ltd (“Belvedire”), and returning to Belvedire the sum of S$18,263,513.30 on the basis of S$0.328 for each GPIL Share so cancelled (the “Selective Capital Reduction”); and

(b) the Directors and each of them be and hereby authorised to complete and do all such acts and things (including executing all such documents as may be required in connection with the Selective Capital Reduction) as they or he may consider desirable, necessary or expedient to give full effect to this Special Resolution and the Selective Capital Reduction.

BY ORDER OF THE BOARD

Tan San-JuYeo Poh Noi, CarolineCompany Secretaries

27 October 2009Singapore

Notes:

1. A Member of the Company entitled to attend and vote at the Extraordinary General Meeting (the “Meeting”) is entitled to appoint a proxy to attend and vote in his/her stead. A proxy need not be a Member of the Company.

2. The instrument appointing a proxy must be deposited at the registered office of the Company at 97 Pioneer Road, Singapore 639579 not less than 48 hours before the time appointed for holding the Meeting.

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PROXY FORM

I/We,

of

being a member / members of GP Industries Limited (the “Company” or “GPIL”), hereby appoint:

Name AddressNRIC/

Passport NumberProportion of

Shareholdings (%)

and/or (delete as appropriate)

or, failing him/her, the Chairman of the Meeting as my/our proxy/proxies to attend and to vote for me/us on my/our behalf and, if necessary, to demand a poll, at the Extraordinary General Meeting of the Company to be held at Capricorn, Level 1, Marina Mandarin Singapore, 6 Raffles Boulevard, Marina Square, Singapore 039594, on 19 November 2009 at 10.00 a.m. and at any adjournment thereof.

(Please indicate with an “X” in the spaces provided whether you wish your vote(s) to be cast for or against the Special Resolution as set out in the Notice of Extraordinary General Meeting. In the absence of specific directions, the proxy/proxies will vote or abstain as he/they may think fit, as he/they will on any other matter arising at the Extraordinary General Meeting).

Special Resolution For Against

To approve the proposed Selective Capital Reduction

Dated this day of 2009.

Total number of GPIL Shares held

Signature(s) of Member(s) or Common Seal

IMPORTANT: PLEASE READ NOTES OVERLEAF

Notes:

1. Please insert the total number of ordinary shares held by you. If you have ordinary shares entered against your name in the Depository Register (as defined in Section 130A of the Companies Act, Chapter 50 of Singapore), you should insert that number of ordinary shares. If you have ordinary shares registered in your name in the Register of Members, you should insert that number of ordinary shares. If you have ordinary shares registered in your name in the Depository Register and ordinary shares registered in your name in the Register of Members, you should insert the aggregate number of ordinary shares entered against your name in the Depository Register and registered in your name in the Register of Members. If no number is inserted, the instrument appointing a proxy or proxies shall be deemed to relate to all the ordinary shares held by you.

2. A member of the Company entitled to attend and vote at a meeting of the Company is entitled to appoint one or two proxies to attend and vote in his/her stead. A proxy need not be a member of the Company.

3. Where a member appoints two proxies, the appointments shall be invalid unless he/she specifies the proportion of his/her shareholding (expressed as a percentage of the whole) to be represented by each proxy.

4. The instrument appointing a proxy or proxies must be deposited at the registered office of the Company at 97 Pioneer Road, Singapore 639579 not less than 48 hours before the time appointed for the Extraordinary General Meeting.

5. The instrument appointing a proxy or proxies must be under the hand of the appointor or of his attorney duly authorised in writing. Where the instrument appointing a proxy or proxies is executed by a corporation, it must be executed either under its seal or under the hand of an officer or attorney duly authorised. Where the instrument appointing a proxy or proxies is executed by an attorney on behalf of the appointor, the letter or power of attorney or a duly certified copy thereof must be lodged with the instrument.

6. A corporation which is a member may authorise by resolution of its directors or other governing body such person as it thinks fit to act as its representative at the Extraordinary General Meeting, in accordance with Section 179 of the Companies Act, Chapter 50 of Singapore.

7. The Company shall be entitled to reject the instrument appointing a proxy or proxies if it is incomplete, improperly completed or illegible or where the true intentions of the appointor are not ascertainable from the instructions of the appointor specified in the instrument appointing a proxy or proxies. In addition, in the case of ordinary shares entered in the Depository Register, the Company may reject any instrument appointing a proxy or proxies lodged if the member, being the appointor, is not shown to have ordinary shares entered against his name in the Depository Register as at 48 hours before the time appointed for holding the Extraordinary General Meeting, as certified by The Central Depository (Pte) Limited to the Company.

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