Annual Report 2013 - t7global.com.my · Having obtained various Petronas licences for various...

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Suite 5-1, Level 5, Wisma UOA Damansara II,No. 6, Changkat Semantan,Damansara Heights, 50490 Kuala Lumpur.Tel: +60-3-2087 7000 Fax: +60-3-2087 7040www.tanjungoffshore.com.my

TANJUNG OFFSHORE BERHAD(Company No.: 662315-U)

Annual Report 2013

CONTENTS 2 CORPORATE INFORMATION

5 CORPORATE STRUCTURE

6 TANJUNG OFFSHORE BERHAD

7 TANJUNG OFFSHORE SERVICES SDN BHD

9 TANJUNG MAINTENANCE SERVICES SDN BHD

8 GAS GENERATORS (M) SDN BHD

10 TANJUNG NEWENERGY SERVICES SDN BHD

TANJUNG PETROCONSULT SDN BHD

TANJUNG CSI SDN BHD

12 FIVE (5) YEARS GROUP FINANCIAL HIGHLIGHTS

14 NOTICE OF ANNUAL GENERAL MEETING

16 DIRECTORS’ PROFILE

19 MANAGING DIRECTOR’S REVIEW

23 AUDIT COMMITTEE REPORT

26 STATEMENT ON RISK MANAGEMENT

27 STATEMENT ON INTERNAL CONTROL

28 STATEMENT OF CORPORATE GOVERNANCE

34 OTHER INFORMATION

44 FINANCIAL STATEMENTS

107 LIST OF PROPERTIES OWNED BY THE GROUP

109 ANALYSIS OF SHAREHOLDINGS / WARRANTHOLDINGS

• FORM OF PROXY

TANJUNG OFFSHORE BERHAD (662315-U)

ANNUAL REPORT 2013

2

Dato’ Harzani Bin Azmi

(Managing Director)

Muhammad Sabri Bin Ab Ghani

(Executive Director)

Tan Wee Koh

(Executive Director)

Dato‘ Dr. (H) Ab Wahab Bin Haji Ibrahim

(Independent Non-Executive Director)

George William Warren Jr


Shahrizal Hisham Bin Abdul Halim


(Appointed on 9 May 2014)

CORPORATE INFORMATION

BOARD OF DIRECTORSName / Designation


ANNUAL REPORT 2013

3

AUDIT COMMITTEE

Chairman

Dato‘ Dr. (H) Ab Wahab Bin Haji Ibrahim

Independent Non-Executive Director

Member

George William Warren Jr




(Appointed on 9 May 2014)

COMPANY SECRETARIES

Kang Shew Meng (MAICSA 0778565)

Seow Fei San (MAICSA 7009732)

REGISTERED OFFICE

802, 8th Floor, Block C

Kelana Square, 17 Jalan SS7/26

47301 Petaling Jaya

Selangor Darul Ehsan

Tel : 03-7803 1126

Fax : 03-7806 1387

HEAD/ MANAGEMENT OFFICE

Suite 5-1, Level 5,

Wisma UOA Damansara II

No. 6, Changkat Semantan

Damansara Heights

50490 Kuala Lumpur

AUDITORS / REPORTING ACCOUNTANTS

AljeffriDean (Firm No.: AF 1366)

Chartered Accountants

2-5-13, 5th Floor, Menara KLH

(Business Centre)

No. 2, Jalan Kasipillay

51200 Kuala Lumpur

Tel : 03-2381 1170

LEGAL ADVISORS

Mah – Kamariyah & Philip Koh

3A07, Block B, Phileo Damansara II

15 Jalan 16/11, Off Jalan Damansara

46350 Petaling Jaya

Selangor

Tel: 03-7956 8686

Zul Rafique & Partners

D3-3-8, Solaris Dutamas

No. 1, Jalan Dutamas 1

50480 Kuala Lumpur

Tel: 03-6209 8228

Chambers of Krish Maniam & Co

No. 14, Jalan Medan Setia 2

Plaza Damansara

Damansara Heights

50490 Kuala Lumpur

Tel: 03-2095 5551

PRINCIPAL BANKERS

Malayan Banking Berhad

(Company No. 3813-K)

Setapak Business Centre

2nd Floor, Maybank Setapak

343 Jalan Pahang

53000 Kuala Lumpur

Tel : 03-4022 0784

Standard Chartered Bank (M) Berhad

(Company No. 115793-P)

Level 13, Menara Standard Chartered

30 Jalan Sultan Ismail

50250 Kuala Lumpur

Tel: 03-2117 7810

AmInvestment Bank Berhad

(Company No. 23742-V)

Level 15, Bangunan AmBank Group

55 Jalan Raja Chulan

50200 Kuala Lumpur

Tel: 03-2078 2633

REGISTRAR

Tricor Investor Services Sdn. Bhd.

(Company No. 118401-V)

Level 17, The Gardens North Tower

Mid Valley City

Lingkaran Syed Putra

59200 Kuala Lumpur

Tel : 03-2264 3883

Fax: 03-2282 1886

STOCK EXCHANGE LISTING

Main Market of Bursa Malaysia

Securities Berhad

STOCK INFORMATION

Stock Name: TGOFFS, TGOFFS-WA

Stock Code: 7228, 7228-WA

Bloomberg Code: TOFF MK



ANNUAL REPORT 2013

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TANJUNG OFFSHORE BERHADTANJUNG OFFSHORE SERVICES SDN BHDTANJUNG NEWENERGY SERVICES SDN BHDKuala Lumpur (Head Offi ce)Suite 5-1 , Level 5Wisma UOA Damansara IINo. 6 Changkat SemantanDamansara Heights50490 Kuala Lumpur.Tel : 03-2087 7000Fax : 03-2087 7040 / 7041

TANJUNG OFFSHORE SERVICES SDN BHDPasir Gudang (Operation Office)No 38A, Jalan 9/17 Perjiranan 9,81700, Pasir Gudang, Johor Darul Takzim.Tel : +607 255 2886Fax : +607 255 2986Email: [email protected]

TANJUNG OFFSHORE SERVICES SDN BHDNo 399, Lot 405A Parkcity Commercial Square,Phase 5, Jalan Kembar Budin,97000 Bintulu, SarawakTel : 086-337698

GAS GENERATORS (M) SDN BHDLot 993, Off Jalan Balakong, Balakong, Seri Kembangan,43300 Selangor.Tel : +603 8961 3390Fax : +603 8962 3390Email: [email protected]

TANJUNG MAINTENANCE SERVICES SDN BHDKemaman (Operation/Maintenance Centre)Lot D1 & D2, Kawasan MIEL Teluk Kalung,24007 Kemaman,Terengganu Darul Iman,Malaysia.Tel : +609 863 5390 Fax : +609 863 5387Email: [email protected] : www.tanjungmaintenance.com.my

TANJUNG MAINTENANCE SERVICES SDN BHDKemaman Supply Base CentreWarehouse No 3, Door 1,2,3,7 & 8,Kemaman Supply Base, Phase 1,24007 Kemaman, Terengganu Darul Iman, Malaysia.Tel : +609 862 3360/ 62Fax : +609 862 3361Email: [email protected]

TANJUNG MAINTENANCE SERVICES SDN BHDLot 1591, Block 26 (P.O. Box 107)Kidurong Light Estate,Jalan Tanjung Kidurong,97000 Bintulu, Sarawak, Malaysia.Tel : +6086 255 103Fax : +6086 254 103

TANJUNG MAINTENANCE SERVICES SDN BHDTANJUNG OFFSHORE SERVICES SDN BHDMiri (Operation/Maintenance Center)Lot MCLD, 1315, Jalan Primula,Piasau Industrial Estate,Miri, Sarawak, Malaysia.Tel : +6085 661 330Fax : +6085 661 320Email : [email protected] : [email protected]

TANJUNG MAINTENANCE SERVICES SDN BHD (TMS)Labuan (Operation/Maintenance Centre)SK 0467, Kampung Sungai Kling,Off Jalan Rancha Rancha,87008 Wilayah Persekutuan Labuan.(TMS) Tel : +6087 414 481 Fax : +6087 413 234Email : [email protected]


ANNUAL REPORT 2013

5

GROUP CORPORATE STRUCTURE

The principal subsidiaries of Tanjung as at todate are as follows: -

Company Date And Place Of Incorporation/

Acquisition

Issued And Fully Paid-Up Share

Capital

Effective Equity

Interest

Principal Activity

(RM) (%)

TOS 28.04.1983Malaysia

7,500,000 100.00 Integrated service provider to the oil and gas and related industries.

GASTEC 05.01.2009Malaysia

4,791,437 100.00 Manufacturing and trading of all types of machinery, equipment and generators used for welding, cutting, cooking and other commercial applications.

UGG 22.11.1996Malaysia

2,000,000 100.00 Selling and letting of gas generators.

TPC 17.10.1991Malaysia

11,200,000 100.00 Provision of engineering and professional manpower services to the oil and gas and related industries.

TMS 24.05.1996Malaysia

4,000,000 100.00 Provision of maintenance services to the oil and gas and related industries.

TNE 07.03.1997Malaysia

350,000 100.00 Provision of project management services to the engineering and energy industries.

THMS 02.05.2014Malaysia

100 51.00 Oilfield development and provision of integrated services to the oil and gas industry

TOR 11.04.2013Malaysia

2 100.00 Supply and trading of commodities in the Asia Pasific region.

TCSI 03.11.2006Malaysia

6,000,000 100.00 Supply, design, confi gure, integrate, test, install and commission distributed control systems, programmable logic controllers, supervisory control and data acquisitions, safety shutdown systems, fi re gas systems, fi re addressable systems, liquid and gas analyser systems, control valves, instrumentation and electrical heat tracing systems and to train and supply manpower for after sales services.

TOS : Tanjung Offshore Services Sdn BhdGASTEC : Gas Generators (Malaysia) Sdn BhdUGG : Universal Gas Generators Sdn. BhdTPC : Tanjung Petroconsult Sdn BhdTMS : Tanjung Maintenance Services Sdn Bhd

100% UGG

TANJUNG OFFSHORE BERHAD

100% TPC

100% TNE100% TOS

100% GASTEC

100% TMS

100% TCSI

100% THMS

100% TOR

TNE : Tanjung NewEnergy Services Sdn BhdTHMS : Tanjung HMS Petroleum Sdn BhdTOR : Tanjung Offshore Resources Sdn BhdTCSI : Tanjung CSI Sdn Bhd


ANNUAL REPORT 2013

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TANJUNG OFFSHORE BERHAD

Tanjung Offshore Berhad (Tanjung) was incorporated in Malaysia on 11 August 2004 and its shares are currently listed on the Main Market of Bursa Malaysia Securities Berhad. Tanjung is principally an investment holding company, whilst its subsidiaries and associated companies are principally involved in the provision of engineering equipment packages, equipment maintenance services and spares to the oil and gas and related industries in Malaysia and the region.

Tanjung’s main operating subsidiary, Tanjung Offshore Services Sdn Bhd (TOS) commenced operations in March 1990. TOS is involved in providing comprehensive services to the oil and gas industry and holds various exclusive agencies for a wide range of engineering equipment and parts in Malaysia.

In 2013, Tanjung acquired the remaining 49% equity in Gas Generators (M) Sdn Bhd (Gastec) resulting in Gastec becoming a wholly owned subsidiary of Tanjung. Gastec is principally involved in the manufacturing and marketing of gas generators in both the industrial and offshore oil and gas markets.

In May 1996, Tanjung Maintenance Services Sdn Bhd (TMS) was incorporated to provide complete maintenance support services to the oil and gas industry such as manpower, maintenance and repair works for offshore oil and gas platforms and onshore plants.

Various other subsidiaries and associated companies were set up to further enhance the provision of integrated support services to the oil majors such as Tanjung NewEnergy Services Sdn Bhd (TNE), Tanjung Petroconsult Sdn Bhd (TPC) and Tanjung CSI Sdn Bhd.

Tanjung Group is actively involved in both the upstream and downstream markets within the oil and gas industry and participates in all stages of the life cycle of the Production Sharing Contracts as follows:-

EXPLORATIONSurface GeochemistrySeismic activitiesDrilling services

DEVELOPMENTHookup & commissioningDrilling servicesStructure & constructionEngineering Equipment

PRODUCTIONFlow of oil & gas to onshore plantsPower generationSystems applicationEngineering equipmentMaintenance services

MAINTENANCERetrofittingStructural strength & corrosion assessmentEngineering equipment maintenance

ABANDONMENTDismantling of structuresDecommissioning of machinery & equipmentPollution control exercise and assessment


ANNUAL REPORT 2013

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TANJUNG OFFSHORE SERVICES SDN BHD

Tanjung Offshore Services Sdn Bhd (TOS) is a wholly owned subsidiary of Tanjung Offshore Berhad (Tanjung). TOS commenced business in mid 1990s and has since grown into a reputable integrated service provider for the oil and gas industry. With years of experience in the oil & gas industry, TOS offers services such as customised engineered equipment packages, drilling & platform services, project management of contracts, spares and parts for equipment and other related services. TOS is one of the main operating companies within the Tanjung Group of companies which offers a diverse range of product and services to the oil majors.

Having obtained various Petronas licences for various categories of products and services, TOS is also the exclusive agent in Malaysia for various world-renowned Original Equipment Manufacturers (OEM) such as pumps, control systems, switchgears, instrumentations and valves that are widely used in the upstream and downstream activities of the oil and gas industry.

TOS has a full package of supplies and services which entails the initial engineering design layout, project management & planning, implementation, installation, commissioning followed by scheduled maintenance, troubleshooting and reliable after-sales services. TOS identifi es the requirement of each client, and assist in the front-end engineering design (FEED). Throughout this phase, constant and comprehensive technical discussions with our prospective clients as part of our value added services in developing innovative ideas in the exploration, production, maintenance and abandonment stages of fi elds’ development.

Together with our clients, we continue to closely monitor the progress of projects undertaken to ensure various process methods are in compliance to the approved design and specifi cations. TOS is continuously increasing its range of products and services to meet the stringent requirements of the industry.

Maintenance services

Engineering equipment

Gas generation packages

Drilling services


ANNUAL REPORT 2013

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GAS GENERATORS (M) SDN BHD UNIVERSAL GAS GENERATORS SDN BHD

In 2013, Tanjung Offshore Berhad acquired the remaining 49% equity interest in Gas Generators (Malaysia) Sdn Bhd (Gastec) and its subsidiaries (Gastec Group), thus making it a wholly owned subsidiary of Tanjung. Gastec Group is principally involved in the manufacturing and marketing of gas generators in both the industrial and offshore oil and gas markets.

Nitrogen is an inert gas used primarily for purging of tanks and pipelines to enhance overall plant safety. The generator produces nitrogen from compressed air thereby eliminating the cost and hazard associated with transporting of nitrogen gas cylinders offshore.

Gastec Group has operations in the ASEAN region with active presence in Kuala Lumpur, Bangkok, Jakarta and Manila.

The Gastec Group also design and manufactures nitrogen gas generators for on-site gas production facilities on long term “built, operate and transfer” and “built, operate and own” contracts to both industrial and oil and gas industries.


ANNUAL REPORT 2013

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TANJUNG MAINTENANCE SERVICES SDN BHD

Tanjung Maintenance Service Sdn Bhd (TMS) was incorporated in 1996 to provide complete maintenance services to the oil and gas operators in Malaysia and the region. As of todate, TMS is operating from fi ve (5) main workshop/maintenance centres situated in Teluk Kalung and Kemaman Supply Base (both in Terengganu), Labuan, Miri and Bintulu. TMS currently employ 200 staff of various experiences and expertise. Our maintenance centres provide a “one stop” maintenance services to various upstream oil and gas operators such as Petronas Carigali Sdn Bhd, Sarawak Shell Berhad, Exxon Mobil Exploration and Production Malaysia Inc.,Talisman Malaysia Limited, Nippon Oil Ltd and Newfield Sarawak Malaysia Inc. and others.

Our maintenance workshops also provide various maintenance services to downstream petrochemical and power plants situated in Paka and Gebeng in Terengganu and Bintulu in Sarawak. These customers include Petronas Dagangan Sdn Bhd, Petronas Penapisan (Terengganu) Sdn Bhd, Petronas Gas Berhad, BASF Petronas Chemicals Sdn Bhd, Petlin Malaysia Sdn Bhd and BP Chemical (M) Sdn Bhd.

Our complete maintenance services at our maintenance workshops include:-

• Services, repair, overhaul& test various typesof rotatingequipmentincluding diesel engines

• Services,repair,retrofit&testalltypesofvalves&actuators• Fabricationofparts,pipingworksandmachining;• Metalcoatingormetalspray;• Rotordynamicbalancing;• On-linegreasingorlubrication;• ConditionBasedMonitoring(CBM)suchasvibrationmonitoring;• Wellheadmaintenance&services;• AssetIntegrityManagementSystemincludingReliability,Availability&

MaintainabilityStudyandAssetPerformanceManagement;• Scheduleoilsampling(SOS)andthermography;• Service,repair,overhaulandtestofturbomachinery.

We are one of the few local service providers which have set up complete workshops in all the main oil and gas hubs in both Peninsular and East Malaysia. We are also ISO 9001 certifi ed and have trained our human capital and invested in the latest technologies to enable us to move towards niche and knowledge based maintenance technologies. In doing so, we aim to be at the forefront of the total solutions provider concept for maintenance services in the Malaysia and the region.


ANNUAL REPORT 2013

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TANJUNG NEWENERGY SERVICES SDN BHDTANJUNG PETROCONSULT SDN BHD

TANJUNG CSI SDN BHD

Tanjung NewEnergy Services Sdn Bhd (TNE) and Tanjung Petroconsult Sdn Bhd were established to provide a wide range of energy related products and services which are cost effi cient solutions to the oil majors. Our power generation systems are also environmentally friendly through better use and management of energy resources.

Our main engineering products are as follows:-

• CentrifugalPumps;

• NitrogenGasGenerator;

• DynamicPositionSystem;

• CCTVSurveillanceSystemforOilandGas;

• UmbilicalSubseaCables;

• SolarPowerPanels;and

• SelfPrimingMarinePumps.

TNE and TPC has total commitment to engineering excellence, fitness for purpose, design and an uncompromising approach to quality. TNE and TPC recognize the benefits of an effective quality assurance programme in promoting and achieving high standards of service and minimizing costs and delay to project programmes.

Tanjung CSI Sdn Bhd (Tanjung CSI) is a wholly-owned subsidiary of Tanjung Offshore Berhad. In the area of industrial field instrumentation and automation, Tanjung CSI represents and provide services amongst others as follows:

• Process&safetyautomation,measurement,analytical,actuationinstrumentationsandwetgasmeteringsystem;

• Fire&gasintegratedsecuritysystemsandfielddetectors;

• Gasanalyzersformoisture,H2SandCOmeasurements;

• Liquid&gasmeteringsolutionsforcustodytransfer/allocationandpipelinedetectionsystemorPLDS;

• PQE–powerqualityconsultancyservices;

• MultiphaseFlowMeteringSolutions;and

• Rotatingmachineriesengineeringsolutionsfocusesonsupplyinghighqualityandinnovativecontrolsolutionsforturbinesandcompressors.

To be the preferred service provider to the oil majors in Malaysia and the region.

To support the oil and gas industry as a “one stop solutions provider” through:-

• ProvidingQualityProducts&Services;

• OptimisingResources;

• NewTechnologies;

• EnhancingTechnicalCompetencies;and

• FullCompliancetoHealth,SafetyandEnvironmentalregulations.

OUR VISION

MISSION AND PHILOSOPHY


ANNUAL REPORT 2013

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FIVE (5) YEARS GROUP FINANCIAL HIGHLIGHTS

2009 2010 2011 2012 2013RM’000 RM’000 RM’000 RM’000 RM’000

Revenue 649,657 541,807 334,437* 263,707* 327,791

EBITDA 49,036 76,690 (47,869)* (20,752)* 16,148

Net Profit / (Loss) before tax 4,775 8,014 (56,168) (25,718) 12,739

Net Profit / (Loss) after tax 3,616 7,588 (55,396) (11,585) 10,909

Pre - tax Margin / (Loss) (%) 0.74 1.48 (16.79) (9.75) 3.89

Net Margin / (Loss) (%) 0.56 1.40 (16.56) (4.39) 3.33

Basic Earnings / (Loss) per share (sen) 1.25 2.55 (19.14) (3.99) 3.52

* Excludes discontinued operations.

650,000 -

600,000 -

550,000 -

500,000 -

450,000 -

400,000 -

350,000 -

300,000 -

250,000 -

200,000 -

150,000 -

100,000 -

0 -

541,807

2010

334,437

2011

263,707

2012 2013

327,791

2009

649,657

Revenue (RM’000)

60 -

50 -

40 -

30 -

20 -

10 -

0 -

-10 -

-20 -

-30 -

-40 -

-50 -

-60 -

2009

3,616

2013201220112010

7,588

(55,396)

(11,585)

10,909

Net Profit / (Loss) After Tax (RM’000)


ANNUAL REPORT 2013

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FIVE (5) YEARS GROUP FINANCIAL HIGHLIGHTS

Revenue Breakdown for the year ended 2012

Shareholders’ funds

2009 = 322,083,4522010 = 373,185,8282011 = 323,287,4452012 = 166,275,5812013 = 184,547,505

Share price performance of Tanjung versus the KLCI between 5 May 2013 and 5 May 2014.

2013

2012

2011

2010

2009

(million) 0 -

50 -

100

-

150

-

200

-

250

-

300

-

350

-

400

-

322,083,452

373,185,828

323,287,445

166,275,581

184,547,505

53.20%RM174.70mil

35.47%RM116.27mil

11.32%RM36.82mil

Engineering Equipment Services

Products & Services

Maintenance Services

Tanjung Offshore (RHS) KLCI (LHS)

1600

1700

1800

1900

0.20

0.40

0.60

0.80

May-13 July-13 October-13 January-14 March-14


ANNUAL REPORT 2013

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NOTICE OF ANNUAL GENERAL MEETING

NOTICE IS HEREBY GIVEN THAT the Tenth Annual General Meeting of the Company will be held at Kenanga Room, Kelab Darul Ehsan, Taman Tun Abdul Razak, Jalan Kerja Air Lama, 68000 Ampang Jaya, Selangor Darul Ehsan on Friday, 20 June 2014 at 10:00 a.m. to transact the following businesses:-

AGENDA

1. To receive the Audited Financial Statements for the financial year ended 31 December 2013 and the Reports of Directors and Auditors thereon.

Resolution 1

2. To approve the payment of Directors’ fees for the financial year ended 31 December 2013. Resolution 2

3. To re-elect the following Directors retiring in accordance with Article 103 of the Company’s Articles of Association:-

(i) Dato’ Harzani bin Azmi Resolution 3(ii) George William Warren Jr Resolution 4

4. To re-elect Shahrizal Hisham Bin Abdul Halim retiring in accordance with Article 109 of the Company’s Articles of Association:-

Resolution 5

5. To appoint Messrs. AljeffriDean as Auditors of the Company and authorise the Directors to determine their remuneration.

Resolution 6

6. As Special Business to consider and if thought fit, to pass the following Ordinary Resolution, with or without modifications:-

ORDINARY RESOLUTIONAUTHORITY TO ISSUE SHARES

“THAT pursuant to Section 132D of the Companies Act, 1965, the Directors be and are hereby authorised to issue shares in the Company at any time until the conclusion of the next Annual General Meeting and under such terms and conditions and for such purposes as the Directors may, in their absolute discretion, deem fit provided that the aggregate number of shares to be issued does not exceed 10 per centum of the issue share capital of the Company for the time being, subject always to the approval of all relevant regulatory bodies being obtained for such issue and allotment.”

Resolution 7

7. To transact any other business of which due notice shall have been given.

BY ORDER OF THE BOARD

SEOW FEI SANKANG SHEW MENGSecretaries

Petaling Jaya27 May 2014


ANNUAL REPORT 2013

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Notes:

1. Only depositors whose names appear on the Record of Depositors as at 13 June 2014 shall be entitled to attend, speak and vote at the said meeting or appoint proxies to attend, speak and vote on his/her behalf.

2. A member entitled to attend and vote at the meeting shall not be entitled to appoint more than two (2) proxies to attend and

vote in his/her stead. A proxy may but need not be a member of the Company and the provisions of Section 149(1)(b) of the Companies Act, 1965 shall not apply.

3. Where a member appoints two (2) proxies, the appointment shall be invalid unless he/she specifies the proportions of his/her shareholding to be represented by each proxy.

4. Where a Member is an authorised nominee as defined under the Central Depositories Act, it may appoint one (1) proxy in respect of each Securities Account it holds with ordinary shares of the Company standing to the credit of the said Securities Account.

5. Where a Member of the Company is an Exempt Authorised Nominee which holds ordinary shares in the Company for multiple beneficial owners in one securities account known as an omnibus account, there is no limit to the number of proxies which the Exempt Authorised Nominee may appoint in respect of each omnibus account its holds.

6. The instrument appointing a proxy shall be in writing under the hand of the appointer or of his/her attorney duly authorised in writing or, if the appointer is a corporation, either under its Common Seal or under the hand of its officer or attorney duly authorised.

7. The instrument appointing a proxy and the power of attorney or other authority (if any), under which it is signed or a notarially certified copy thereof, must be deposited at the Company’s Share Registrar’s Office at Tricor Investor Services Sdn. Bhd., Level 17, The Gardens North Tower, Mid Valley City, Lingkaran Syed Putra, 59200 Kuala Lumpur, not less than forty eight hours (48) hours before the time appointed for holding the meeting or any adjournment thereof.

Explanatory notes on Special Business:

Resolution 7 - Authority to Issue Shares

At last year’s Ninth Annual General Meeting held on 23 May 2013, authority was given to Directors to allot and issue no more than 10% of the issued share capital of the Company. As at the date of this notice, no new shares in the Company were issued pursuant to the authority granted, accordingly the mandate will lapse at the conclusion of the Tenth Annual General Meeting. As such, the Board would like to seek for a renewal of the mandate.

The proposed Resolution 6, if passed, will give the Directors of the Company, from the date of the above Annual General Meeting, authority to allot and issue shares from the unissued capital of the Company for such purposes as the Directors may deem fit and in the interest of the Company. The authority will provide flexibility to the Company for any possible fund raising activities, including but not limited to further placing of shares for purpose of funding future investment project(s), working capital and/or acquisitions.

The authority, unless revoked or varied by the Company in general meeting, will expire at the conclusion of the next Annual General Meeting of the Company.

NOTICE OF ANNUAL GENERAL MEETING


ANNUAL REPORT 2013

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Dato’ Harzani bin Azmi (“Dato’ Harzani”)

A Malaysian, aged 47, is the Group Managing Director of Tanjung. He was appointed to the Board of Directors of Tanjung on 23 April 2012.

Dato’ Harzani has over 25 years of experience in the oil and gas industry both domestically and internationally. He has been instrumental in the setting up of Proserv Far East Pte Ltd for the Asia Pacific region, a Norwegian based company which is involved in the production technology and services for the energy industry worldwide.

HewastheVicePresidentofOrientalTradingCo.Ltd,basedinDoha,Qatarthatspecializes in the provision of engineering and project management services via hisclosebusinessrelationshipwiththeQatarroyalfamily.HehasmanagedandcoordinatedoilandgasprojectsvaluedatmorethanRM1.0billioninQatar.

Dato’ Harzani was the President/Director for WT Petrotech USA, Inc based in the United States and Indonesia which specializes in oil and gas production, process, wellhead and safety controls including pneumatic, hydraulic, eletro-hydraulic, PLC-based and solar powered system. He was also the Vice President/Director of Bumi Wangsa Sdn Bhd and Rimaco (M) Sdn Bhd.

Dato’ Harzani has revamped the business and organizational structure of Tanjung in the past two (2) years in seeking new markets for new growth.

Tan Wee Koh (“Mr Eric”)

A Malaysian, aged 46, is the Executive Director of Tanjung. He was appointed to the Board of Directors of Tanjung on 23 April 2012. Eric is also the founder and chief executive officer of Gas Generators (Malaysia) Sdn Bhd (Gastec), a subsidiary of Tanjung which specializes in the design and manufacture of gas processing equipment for the oil and gas industry. He has been with Tanjung Group since January 2009.

Mr Eric holds a bachelor degree in Mechanical Engineering from the University of Melbourne and has over 19 years sales and marketing as well as project management experience in the oil and gas industry. With his new appointment to the Board of Tanjung, he shall be principally responsible for the overall operations and engineering packages division of Tanjung.

Muhammad Sabri Bin Ab. Ghani (“En Sabri”)

A Malaysian, aged 41, is the Executive Director of Tanjung. He was appointed to the Board of Directors of Tanjung on 21 March 2013. En Sabri is currently the Group Vice President of Business Development. He also holds directorships in various subsidiaries within the Tanjung Group.

He has more than 17 years of experience in the field of project management activities especially in the oil & gas and energy industry. He joined the Tanjung Group in 1996 as a Project Engineer and was subsequently promoted to various positions within the Group. He specializes in application engineering and turbomachinery packages especially in gas compression for offshore application. En Sabri is a graduate from the School of Mechanical and Offshore Engineering, The Robert Gordon University Aberdeen, Scotland and holds a Degree in Mechanical and Offshore Engineering. He also holds a Diploma in Petroleum Engineering from University Technology Malaysia. He is a registered graduate mechanical engineer with Board of Engineers Malaysia (BEM) since 1996.

DIRECTORS’ PROFILE


ANNUAL REPORT 2013

17


Dato’ Dr. (H) Ab Wahab Bin Haji Ibrahim (“Dato’ Ab Wahab”)

A Malaysian, aged 62 is an Independent Non-Executive Director and the Chairman of the AC of Tanjung. He was appointed to the Board of Directors of Tanjung on 9 March 2005 and also serves as a member of the NC and RC. He is a Chartered Accountant and also a member of the Malaysian Institute of Accountants. He holds a Diploma and Advanced Diploma in Accounting from University Technology Mara and his experience spans over 27 years in the area of finance and accounting. He began his career in the Corporate Finance Division at PETRONAS in 1978 and later assumed the role of Finance Manager for PETRONAS Gas Berhad (“PGB”), a subsidiary of PETRONAS. He was also appointed as Joint Company Secretary and was a member of the Management Committee for PGB.

Following the successful implementation of the listing of PETRONAS Gas Berhad, he was further reassigned as Head of the Finance and IT Division of OGP Technical Services Sdn. Bhd., another subsidiary of PETRONAS in 1996, a position he held until 2004. In 2007, he obtained his Master of Business Administration (Management Studies) from University of Rockhampton and in the same year was honoured with the Honorary Doctorate Degree in Public Service by the Irish International University, Ireland. He is also an independent non-executive Director of Uzma Berhad and Alam Maritim Resources Berhad. He also serves as the Chairman of Alam Maritim Resources Berhad’s Audit Committee.

George William Warren Jr. (“George Warren”)

An American, aged 44, was appointed as Independent Non-Executive Director of Tanjung on 28 August 2007 and is a member of the AC. He holds a Bachelor of Science Degree in Accounting (Graduating with Beta Alpha Psi Accounting Honours) from the Louisiana State University, United States. In 1993, after graduation, he joined Wegmann Dazet & Co., a professional corporation of certified public accountants in New Orleans, Louisiana, where he was both a Senior Auditor and a Forensic Auditor. In 1997, he was appointed as the Managing Director of BWB Controls, Inc., Louisiana, a worldwide manufacturer of pneumatic, hydraulic and electric surface safety equipment engineered specifically for the oil and gas industry. In 2006, he became a Director in Mezco Fabrication, L.L.C., at Carencro, Louisiana , a manufacturer of precision sheet metal parts utilising laser cutting technology for the oil and gas industry, a position he holds until present day.


Aged 46, is a Malaysian and is the Independent Non-Executive Director of Tanjung Offshore Berhad. En Shahrizal was appointed to the Board of Directors of Tanjung on 9 May 2014. He was also appointed as a member of AC of Tanjung on the same day.

En Shahrizal holds a Bachelor of Law (Honours) from The University of Wolverhampton (United Kingdom). He began his legal practice with Messrs Sri Ram, Advocate & Solicitors and has more than 15 years experience in the legal fraternity. He is currently a Partner in Lawrence Hisham & Co., a legal firm based in Kuala Lumpur.

Prior to embarking on legal practice, he was attached to D&C Sakura Merchant Bankers Berhad as an officer in the Corporate Banking Department from 1993 to 1995. En Shahrizal specializes in company and corporate matters and is currently actively involved in legal advice and corporate consulting works with several large companies with businesses in the oil & gas and telecommunication industries, some of which are listed on Bursa Malaysia Securities Berhad. He is also the Executive Director of Bio Osmo Berhad.


ANNUAL REPORT 2013

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Attendance of Board of Directors Meeting

The Directors’ attendance of Board of Directors Meeting can be found in the Statement of Corporate Governance of this Annual Report.

Family relationship with any director and/or major shareholder

None of the Directors has any family relationship with any director and/or major shareholder of the Company.

Conflict of interest

None of the Directors has any conflict of interest with the Company.

Conviction of Offence

None of the Directors has been convicted of any offence within the past ten (10) years other than traffic offences.


ANNUAL REPORT 2013

19

MANAGING DIRECTOR’S REVIEW

Dato’ Harzani bin Azmi Managing Director


ANNUAL REPORT 2013

20

DearShareholders,On behalf of the Board of Directors of Tanjung Offshore Berhad (“Board”) (“Tanjung” or “Company”) and its subsidiaries (“Tanjung Group” or “Group”), I hereby present to our valued shareholders, Tanjung’s annual report and the audited financial statements of Tanjung Group for the financial year ended (FYE) 2013.

Financial Performance

For the FYE 2013, Tanjung registered a total revenue of RM327.79 million and a profit after taxation of approximately RM10.91 million. Total revenue for the year registered an increase of approximately 24.30% as compared to total revenue of RM263.71 million registered in FYE 2012. Net profit after tax of RM10.91 registered in the current financial year as compared to a net loss after tax of RM11.59 million in FYE 2012, reflects a major turnaround in the Group’s profitability. This is also a result of our business rationalization exercise undertaken since early FYE 2012. Since then, we have ceased operations of non profitable entities and business divisions within the Group and undertaken a review of strategic business directions in search of new growth.


650,000 -

600,000 -

550,000 -

500,000 -

450,000 -

400,000 -

350,000 -

300,000 -

250,000 -

200,000 -

150,000 -

100,000 -

0 -

541,807

2010

334,437

2011

263,707

2012 2013

327,791

2009

649,656

60 -

50 -

40 -

30 -

20 -

10 -

0 -

-10 -

-20 -

-30 -

-40 -

-50 -

-60 -

2009

31,448

2013201220112010

7,588

(55,396)

(11,585)

10,909

As at 31 December 2013, the Group’s shareholders funds stood at RM184.55 million as compared to RM166.28 million as at FYE 2012. The increases in the Group’s shareholders’ funds are mainly due to the completion of a private share placement exercise and the turnaround in profitability during the current financial year under review.

Engineering Equipment Services

In FYE 2013, the Group acquired the remaining shares in Gas Generators (M) Sdn Bhd to become a wholly owned subsidiary within the Group. We believe that engineering equipment division have big potential in both domestic and international markets given our niche gas generation products and packages which caters for the oil and gas, power generation and healthcare industries.

During the year, this division generated total sales of approximately RM116.27 million and we have invested in the latest equipment and software within a new workshop in Balakong, Kuala Lumpur.


We are currently operating five (5) workshops for both the upstream and downstream sectors of the oil and gas industry in Malaysia. These workshops are located in (2 workshops) Kemaman, Terengganu, one (1) each in Miri, Bintulu and Labuan. We have revamped the business model and operations for our workshops through active collaboration and joint ventures with principals and business partners so as to reduce our operational costs.

Revenue (RM’000) Net Profit / (Loss) After Tax (RM’000)


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21

Maintenance Services (con’t)

During the year, the Group registered total revenue of RM36.82 million and we aim to increase our market share from new and existing clients in both Peninsular and East Malaysia such as Petronas Dagangan Sdn. Bhd., Petronas (Penapisan) Terengganu Sdn. Bhd., Petronas Gas Berhad, BASF Petronas Chemicals Sdn. Bhd., BP Chemical Sdn. Bhd., ExxonMobil Exploration and Production Malaysia Inc, Bhd, Petlin Malaysia Sdn. Bhd., Nippon Oil Exploration Malaysia Ltd and and Murphy Sarawak Oil Co. Notwithstanding our wider client base, the profitability margins from this division has not been encouraging and we continuously review our operations to ensure better efficiencies in the near future.

Products&Services

Our Products & Services division has made encouraging improvements with total sales of RM174.70 million registered in FYE 2013. We have added new principals and products to further enhance our services on a principal-agency partnerships with reputable products and brand name within the industry.

Other Investment

During the year, we have also announced the acquisition of the entire shares in Wavenet Investments Limited in the United Kingdom (UK) (Wavenet) for a cash consideration of £6.70 million. Wavenet owns a 100% shareholding in Sparkling Light Investments Limited (UK) (Sparkling), which in turn owns a block of eight (8) storey office building in the central business district (CBD) of Birmingham, UK (Property).

The aforesaid property acquisition in the UK, will enable Tanjung to diversify its income stream from the oil and gas industry. With the acquisition of the property, Tanjung is expected to benefit from potential recurring rentals income and capital appreciation of the Property in the near future. The acquisition of the Property can also be a hedge against the volatility of the Ringgit and enable Tanjung to participate in the potential capital appreciation of the robust property market amidst a recovering economy in the UK.

Outlook for the Oil and Gas Industry

We remain optimistic on the prospects of the oil and gas industry in Malaysia as our government had announced various plans to boost the industry under its Economic Transformation Programme with investments up to RM75 billion over the next 15 to 20 years. These investments are expected to spur various activities within the industry and we expect oil majors to actively enhance their exploration, development, production and maintenance operations in the near future.

Corporate Social Responsibility

During the year we continued with our corporate social responsibility programmes to promote:

AwarenessofHealth,SafetyandEnvironmental(HSE)performances;DevelopmentofStaff;andCommunity Services.

In ensuring that all staff within Tanjung Group are aware and perform their tasks in accordance to health, safety and environmental requirements, we always strive to eliminate any potential risks of injury or hazards at our workplaces and offices through various seminars conducted by professionals to promote HSE work ethics at all times. Various operational processes are reviewed and updated regularly so as to ensure the safety of personnel at all levels of operations in our core business divisions. All HSE regulations and procedures have been communicated to all staff, business associates and visitors to all our offices, workshops, operation centres and vessels.

The Tanjung Group has also financially supported various community services and activities at “Persatuan Kanak-Kanak Istimewa Ampang” to lend our support to the childcare centre that provides support and guidance to children with special needs and care.

Dividend

No dividend were declared for the financial year ended 31 December 2013 as the Board of Directors has decided to conserve our cash position for future expansion.

Corporate Governance

The Board believes in the maintenance of the highest standards of corporate governance practices within the Group as a fundamental part of discharging our responsibilities to protect and maximize shareholders’ value and enhancing the continued business prosperity of the Group. The measures implemented have been highlighted in the Corporate Governance Report in this annual report.



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22

Investor Relations

During the year, we have conducted analyst briefings so as to establish proactive and timely communication linkages with the investment community such as institutional investors, fund managers, analysts and media on our financial performance and business operations. Our Company’s website is also updated on a regular basis to reflect the latest developments and improving public awareness of the Group at the same time.

Appreciation

On behalf of the Board, I wish to extend my gratitude and appreciation to our management and staff for their continuous commitment and dedication in achieving our long term plans.

We would also like to take this opportunity to thank our stakeholders who believe in the long term prospects of the Group, oil majors, in particular PETRONAS, for their continuous support over the years, our business associates and principals for successful collaborations in executing our projects.

Lastly, my special thanks also to my colleagues on the Board of Tanjung for their invaluable support and guidance throughout the year.

Our People

We have also invested substantially in human capital, which is also one of the important aspects of the Group. In line with our business rationalization exercise, we have also recruited and retained capable and competent personnel via various training programmes at all levels within the Group. During the year, we have sent various engineering teams for complete technical training at our principals’ centres, both local and overseas for in-depth exposures on the latest technological advances in the oil and gas industry.

Outlook for the Future

During the year, we have completed our business rationalization exercise so that we are more efficient and effective in our business operations. We remain positive on the long term fundamentals and opportunities within the industry and our new management team is looking forward for a better year and to register new revenue growth and a turnaround in our profitability.

………………………………….DATO’ HARZANI BIN AZMIManaging Director27 May 2014



ANNUAL REPORT 2013

23

The primary objective of the Audit Committee is to assist the Board of Directors in discharging its statutory duties and responsibilities relating to accounting and reporting practices and to ensure the adequacy and effectiveness of the Group’s internal control measures.

The members of the Audit Committee and their respective designations who have served during the financial year ended 31 December 2013 are as follows:-

Member Designation

Dato‘ Dr. (H) Ab Wahab Bin Haji Ibrahim Chairman (Independent Non-Executive Director)

Encik Edwanee Cheah Bin Abdullah(Resigned on 28 August 2013)

Member (Independent Non-Executive Director)

Mr. George William Warren Jr Member(Independent Non-Executive Director)

Encik Syed Yasir Arafat bin Syed Abd Kadir(Resigned on 27 February 2013)

Member(Independent Non-Executive Director)

Datuk Seri Syed Ali Bin Tan Sri Syed Abbas Alhabshee(Appointed on 21 March 2013 and resigned on 31 August 2013)

Member(Independent Non-Executive Director)

SUMMARY OF THE TERMS OF REFERENCE OF THE AUDIT COMMITTEE

• Membership

The Audit Committee must fulfill the following requirements:- a) TheAuditCommitteemustbecomposedofnotlessthanthree(3)members; b) Amajorityofthemembersmustbeindependentdirectorsandallmembersmustbenon-executive;and c) At least one member of the Audit Committee must fulfil the requirements as prescribed or approved by the Exchange. d) The Chairman shall be an Independent, Non-Executive Director. No alternate director is appointed as a member of the

AuditCommittee; e) In the event that any vacancy in the Audit Committee results in the non-compliance of the above requirements, the

Companymustfillthevacancywithinthree(3)months;and f) The Company Secretary shall act as Secretary to the Audit Committee.

• TermsofReference

a) The Audit Committee shall provide assistance to the Board of Directors in fulfilling its fiduciary responsibilities relating tothecorporateaccountingandpracticesoftheCompanyanditssubsidiaries;

b) The Audit Committee shall be granted the authority to investigate any activity of the Company and its subsidiaries, and allemployeesshallbedirectedtoco-operateasrequestedbymembersoftheCommittee;

c) The Audit Committee shall be empowered to retain persons having special competence as necessary to assist the Committeeinfulfillingitsresponsibilities;

d) The Audit Committee shall provide assistance to the Board in fulfilling its fiduciary responsibilities particularly relating to businessethics,policiesandfinancialmanagementcontrol;

e) The Audit Committee shall maintain a direct line of communication between the Board, External Auditors, Internal AuditorsandManagementthroughregularlyscheduledmeetings;

f) The Audit Committee shall provide greater emphasis on the audit functions by increasing the objectivity and independence ofExternalandInternalAuditorsandprovidingaforumfordiscussionthatisindependentoftheManagement;

g) The Audit Committee may invite any person to the meeting to assist the Audit Committee in decision-making process andthattheAuditCommitteemaymeetexclusivelyasandwhennecessary;and

h) Serious allegations that have financial implications against any employee of the Company shall be referred to the Audit Committee for investigation to be conducted.

AUDIT COMMITTEE REPORT


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24

SUMMARY OF THE TERMS OF REFERENCE OF THE AUDIT COMMITTEE (con’t)

• Authority

The Audit Committee shall have the following authority as empowered by the Board of Directors:- a) Theauthoritytoinvestigateanymatterwithinitstermsofreference; b) Theresourceswhicharerequiredtoperformitsduties; c) Full, free and unrestricted access to any information, records, properties and personnel of the Company and any other

subsidiaries(ifany)orsistercompanies; d) Direct communication channels with the External Auditors and person(s) carrying out the internal audit function or

activity(ifany); e) Abletoobtainindependentprofessionalorotheradvice;and f) Able to convene meetings with the External Auditors and Internal Auditors together with other independent non-

executive members of the Board, excluding the attendance of any Executive Directors, at least once a year or whenever deemed necessary.

• Meetings

a) The Audit Committee shall meet at least four (4) times in a year to discuss any matters raised by the Auditors in dischargingtheirfunctions.ThequorumforameetingoftheAuditCommitteeshallbetwo(2);and

b) At least once a year, the whole Board shall meet with the External Auditors without the presence of any executive Board member/Managing Director or Senior Management.

• Dutiesandresponsibilities

The duties and responsibilities of the Audit Committee with the following groups will be as follows:- i) ToobtainsatisfactoryresponsefromManagementonreportsissuedbyExternalandInternalAuditors; ii) TooverseethefunctionoftheInternalAuditDepartment; iii) To review arrangements established by Management for compliance with any regulatory or other external reporting

requirements,by-lawsandregulationsrelatedtotheCompany’soperations; iv) To consider the appointment of the External Auditor, the audit fee and any questions of resignation or dismissal, to

discuss with the External Auditor before the audit commences, the nature and scope of the audit, and ensure co-ordination where more than one audit firm is involved, their audit report and evaluation of the system of the internal controlsandreviewthequarterlyandyear-endfinancialstatementsoftheCompany;

v) To discuss problems and reservations arising from the external audits, and any matter the auditor may wish to discuss andtooverseetheinternalauditfunction;and

vi) To consider any related party transactions that may arise within the Company including any transaction, procedure or course of conduct that raises questions of Management’s integrity.

During the financial year ended 31 December 2013, the Audit Committee held a total of five (5) meetings, the details of attendance of which are as follows:-

Member No. of meetings attended

Dato‘ Dr. (H) Ab Wahab Bin Haji Ibrahim 5 of 5


4 of 4

Mr. George William Warren Jr 5 of 5

Encik Syed Yasir Arafat bin Syed Abd Kadir(Resigned on 27 February 2013)

1 of 1

Datuk Seri Syed Ali Bin Tan Sri Syed Abbas Alhabshee(Appointed on 21 March 2013 and resigned on 31 August 2013)

2 of 2



ANNUAL REPORT 2013

25

SUMMARY OF ACTIVITIES DURING THE FINANCIAL YEAR

During the financial year ended 31 December 2013, the activities of the Audit Committee included the following:-

• Reviewingoftheexternalauditors’scopeofworkandtheirauditplan.• Reviewing with the external and internal auditors on the results of their audit, the audit report and internal control

recommendations in respect of improvements in internal control procedures noted in the course of their audit.• ReviewingandapprovingtheannualauditplanoftheInternalAuditDepartment,includingthescopeofworkforthefinancial

year. Reviewing the annual report and the audited financial statements of the Company and the Group prior to submission to the Board for their consideration and approval. The review was to ensure that the audited financial statements were drawn up in accordance with the provisions of the Companies Act, 1965 and the applicable approved accounting standards issued by the Malaysian Accounting Standards Board (“MASB”).

• Reviewing the Company’s compliance with the Listing Requirements of the Bursa Malaysia Securities Berhad (“BursaSecurities”) (“Listing Requirements”) and the applicable approved accounting standards issued by MASB.

• ReviewingofthequarterlyunauditedfinancialstatementsanditsexplanatorynotesthereonandrecommendingtotheBoardfor Directors’ approval.

• Reviewing the riskmanagementpolicyand framework foradoptionby theGroup,prior tosubmission to theBoard forconsideration and approval.

• ReviewingtheAuditCommitteeReportandStatementonRiskManagementandInternalControlpriortotheirinclusioninthe Company’s Annual Report.

• MeetingwiththeExternalAuditorswithoutthepresenceoftheManagementandExecutiveDirectors.

OPTIONS FOR SHARE ISSUANCE SCHEME

On 7 February 2013, the new Share Issuance Scheme for Executive Directors and employees of Tanjung Group (SIS Scheme) was established. The details of the SIS Scheme are as follows:-

No. of SIS Options Granted up to 30 April 2014

No. of SIS exercised as at

30 April 2014Cancelled as at

30 April 2014

No. of Outstanding Options as at 30 April 2014

Date of expiryOf SIS Scheme

54,758,000 11,335,700 1,495,800 41,926,500 7 May 2016

The Audit Committee had reviewed and verified that the allocation of share option during the year is in compliance with the criteria and conditions of the SIS Bye Laws.The breakdown of the SIS allocations as at 30 April 2014 are as follows:

Position No of SIS granted Percentage (%)

Executive Directors 10,780,000 19.69%Senior Management (Senior Manager and Above) 22,293,000 40.71%Other employees 21,685,000 39.60%

Total 54,758,000 100.00%

No share option were granted to non-executive directors.

INTERNAL AUDIT FUNCTION

The Group has appointed an external internal audit professional firm in March 2013 to perform the internal audit function of the Group. The internal audit firm reports directly to the Audit Committee and administratively to the Managing Director. The activities of the internal audit firm are guided by the Internal Audit Charter that provides its independence in evaluating and reporting on the adequacy, integrity and effectiveness of the overall internal control system, risk management and corporate governance in the Group using a systematic and disciplined approach. The reviews and control improvement initiatives conducted by the internal audit firm during the year were defined in an annual audit plan approved by the Audit Committee. The audit plan encompassed the issuance of internal audit charter, documented terms of reference for the Board and Board Committees, director’s code of ethics, service provider code of conduct and fraud prevention manual.

Other initiatives undertaken by the internal audit professional firm in FYE 2013, include the review of risk management policies in key subsidiaries and operational review of project management within the Group. The corresponding reports of the audit reviews performed were presented to the Audit Committee and forwarded to the Management for attention and corrective actions. The Management is responsible for ensuring that the recommended corrective actions are taken within the required timeframe.

During the year, various management and reporting meetings were held to ensure that the internal audit policies are implemented in accordance to the Internal Audit Charter and communicated effectively throughout all divisions within the Group.



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26

Introduction

Paragraph 15.26(b) of Listing Requirements requires the Board of Directors of public listed companies to include a statement on Risk Management and Internal Control in the Company as a Group. The Malaysian Code on Corporate Governance 2012 (“Code”) prescribes that the Board of Directors should maintain a sound system of internal control to safeguard shareholders’ investment and the company’s assets. Accordingly, the Board is pleased to provide the following statement on Risk Management and Internal Control of the Group for the financial year under review.

Board Responsibilities

The Board of Directors is committed to maintain and effective system of internal controls and risk management practices in the maintenance of good corporate governance. The system of internal control is designed to identify and manage the principal risks facing the Group in pursuit of its objectives. The system covers control relating to financial, operational, risk management and compliance with applicable rules and regulations.

The responsibilities of the Board in relation to the system extend to all subsidiaries of the Group. In view of the limitations inherent in any system of internal control, the Group’s system of internal control can only manage rather than eliminate the risk of failure to achieve corporate objectives and therefore can only provide reasonable and not absolute assurance against material misstatement, loss and fraud. The Group continues to take measures of the adequacy and integrity of the system of internal control.

Risk Management

The Board has established an ongoing process of identification, evaluation and management of significant risks pertinent to the achievement of the Group’s objectives. The Management assists the Board in the implementation of the policies and procedures on risks and controls by identifying and assessing the risks faced, and in the design, operation and monitoring of suitable internal controls to mitigate and control these risks.

A dedicated management team was established to identify, evaluate, monitor and manage all key risks faced by the Group. The framework is designed to achieve these objectives:-

• Communicatethevision,role,directionandprioritiestostaffandotherstakeholders;• Identify,evaluate,monitorandcontrolallkeyrisksinaneffectiveandefficientmanner;• Enablesystematicriskreviewandreportingofkeyrisks,existingcontrolmeasuresandanyproposedactionplans;and• Createarisk-awarecultureandbuildnecessaryknowledgeforriskmanagementateverylevelofmanagement.

Risks which have significant impact to the Group, either in financial or non-financial terms, are escalated to the respective team heads of division for prompt deliberation and action, where required. The Board of Directors is consulted and updated on status of projects deemed high risks.

Engagement sessions were carried out with personnel at all levels to further inculcate a risk awareness culture, improve information sharing and obtain feedback or consultation with the Board of Directors for continuous improvement purposes. The Group will continue to develop and improve its risk management practices, which are consistent with good corporate governance. In this regard, the Board has received assurance from the Managing Director and the Chief Financial Officer that the Group’s risk management and internal control system is operating adequately and effectively, in all material aspects, based on the risk management framework adopted by the Group.

STATEMENT ON RISK MANAGEMENT


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27

System of Internal Control

TheGroupmaintainsasystemofinternalcontrolthatservestosafeguarditsassets;identifyandmanagerisk;ensurecompliancewithstatutoryandregulatoryrequirements;andtoensureoperationalresultsarecloselymonitoredandsubstantialvariancesarepromptly explained.

Whilst the Board maintains control and direction over appropriate strategic, financial, organisational and compliance issues, it has delegated the implementation of the system of internal controls to the executive management, led by the Managing Director. The Managing Director, who is empowered to manage the business of the Group, has primary operational responsibility for the system of internal controls.

In addition, the Board has established an Executive Committee (EXCO) to provide assistance in the management of the Group. Comprising of the Managing Director and the Executive Director, the members meet regularly to consider, resolve and manage strategic and business issues faced.

The Board convenes meetings on quarterly basis in order to maintain full and effective supervision. The Managing Director, being the principal channel of communication between the Board and the management, will lead the presentation of Board papers and provide comprehensive explanation on main issues. In arriving at any decisions based on recommendations by management and the Audit Committee, a thorough deliberation and discussion by the Board is a prerequisite.

The salient features of the Group’s system of internal control include, inter alia :-

An organisational structure with clearly defined lines of responsibility and relevant authority has been set up for the Group.

The Group’s management with the assistance of a centralised human resource function sets the policies for recruitment, training and appraisal of the employees within the Group.

Policies and procedures which sets out the compliance standards for daily operations for the respective business units of theGroup;

The Risk Management Policy and Framework developed during the year, to help ensure that risks are managed effectively, efficiently and coherently across the Group. Reviews of risks are undertaken for major business proposals and transactions where key risks affecting the Group are identified, analysed, prioritised and managed in a consistent manner.

Approved Limits of Authority are imposed on the Management in respect of the day-to-day operations, investment decisions, acquisition and disposal of assets as a control to minimise any risk of abuse of authority.

The Group’s management meets monthly to review the operational and financial performance of the businesses in the Group and its subsidiaries, and to discuss key business, operational and management issues.

The Board of Directors receives and reviews quarterly performance reports on the Group and its subsidiaries from the management, and discuss on significant business and risk issues.

The Group’s management and internal auditors have conducted reviews on the system of internal control to ensure compliance with the established policies and procedures of the Group. Weaknesses are properly communicated to management and prompt corrective actions have been taken.

Established system of performance appraisal to monitor and maintain good performance standards from employees.

Organisational Structure

The Board has implemented a divisional structure for the Group. Clearly defined lines of responsibility and authority limits at various management levels provide a documented and auditable trail of accountability. In addition, the Group has various support functions comprising secretarial, administration, legal, human resource, procurement, project management, finance, corporate finance and information system which are centralized. This enhances the Group’s ability to achieve its strategic and operational objectives and minimize risks.

Whistle-Blowing

The Group has a whistle-blowing policy and procedure to provide opportunity for employees, directors and others to raise their concerns of any malpractice within the Group. The objective of the policy and procedure is to provide and facilitate a mechanism for any whistleblower to report concern about any suspected and/or known misconduct, wrongdoings, corruption, fraud, waste and/or any abuse of power.

This will enable each case/issue can be investigated and for appropriate action to be taken to ensure that the matter is resolved effectively and within the Company wherever possible.

Conclusion

The Board is of the view that the system of internal control and risk management that had been implemented within the Group is sound and effective. The internal control procedures will be reviewed continuously in order to improve and strengthen the system to ensure ongoing adequacy, integrity and effectiveness so as to safeguard the Group’s assets and shareholders’ investments.

STATEMENT ON INTERNAL CONTROL


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28

The Board of Directors (“Board”) recognises the importance of good corporate governance and is committed to the establishment and implementation of a proper framework and controls that are in line with the principles and best practices as recommended by the Code.

The Board will continuously evaluate the status of the Group’s corporate governance practices and procedures with a view to adopt and implement the Best Practices of the Code wherever applicable in the best interests of the shareholders of the Company. The Board has generally applied the Principles and Best Practices of the Code.

The Board is pleased to report herein the manner in which the Company has applied the Principles of the Code and the extent to which it has complied with the Best Practices of the Code.

DIRECTORS

1. Board Responsibilities

The Board is fully aware of its role and has adopted the specific responsibilities that are listed in the Code, which facilitates the discharge of the Board’s stewardship responsibilities via the establishment of a Board Charter which is made available at the corporate website at www.tanjungoffshore.com.my.

a. Board Balance

The Board of Directors consists of six (6) members comprising three (3) executive directors, and three (3) independent non-executive directors. The Board has complied with Paragraph 15.02 of the Listing Requirements that at least two or one-third of the Board, whichever is the higher are independent directors. The Board considers its current size adequate given the existing scope and nature of the Group’s business operations.

The Board is responsible for implementing the policies and decisions of the Board, overseeing the operations and developing the business and corporate strategies of the Group. The Board also monitors the performance of the Group and ensures that a proper internal control system is in place. The presence of independent non-executive directors is to provide independent and unbiased views of financial and business inputs for the interest of the Group.

The Board has conducted an assessment on the two (2) Independent Directors and one of them, Dato Dr. (H) Ab Wahab Bin Haji Ibrahim, has served the Company for more than nine (9) years. The Board holds the view that the ability of an Independent Director to exercise independence is not a function of his length of service as an independent director. The suitability and ability of an Independent Director to carry out his roles and responsibilities effectively is very much a function of his caliber, qualifications, experience and personal qualities. With his in-depth knowledge of the Group’s business operations and activities, the Independent Non-Executive Director can continue to provide check and balance, bring independent judgement and contribute objectively to the Group’s conduct of business despite his length of service with the Group. As such, the Board concluded that Dato’ Dr. (H) Ab Wahab Bin Haji Ibrahim, who has served the Board for more than nine (9) years, is able and suitable to continue to serve the Board as Independent Non-Executive Director.

The Company has also formalised a set of ethical standards through a code of conduct, which is subject to periodical

review, to ensure Directors practise ethical, businesslike and lawful conduct, including proper use of authority and appropriate decorum when acting as Board members.

b. Board Committees

The Board has established board committees to assist the Board in discharging their duties. These committees are as follows:-

• AuditCommittee • NominationCommittee • RemunerationCommittee • ShareOptionCommittee

Audit Committee

The composition of the Audit Committee is in compliance with relevant regulatory requirements.

STATEMENT OF CORPORATE GOVERNANCE


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DIRECTORS (con’t)

1. Board Responsibilities (con’t)

b. Board Committees (con’t)

Nomination Committee

The Board has established a nomination process of board members to facilitate and provide a guide for the Nomination Committee to review the Board composition and balance as well as to consider the Board’s succession planning and to identify, evaluate, select and recommend to the Board the candidate for new appointment of Directors. The Nomination Committee meets as and when required. The decision on new appointment shall be the responsibility of the Board after considering the recommendation of the Nomination Committee.

The members of the Nomination Committee are as follows:-

Member Designation

Dato Dr. (H) Ab Wahab Bin Haji Ibrahim Chairman (Independent Non-Executive Chairman)

Syed Yasir Arafat bin Syed Abd Kadir(Resigned on27 February 2013)


Datuk Seri Syed Ali Bin Tan Sri Syed Abbas Alhabshee(Resigned on 31 August 2013)




The Board considers that the current mix of skills and experience of its members are sufficient for the discharge of its duties and responsibilities effectively.

The director who is subject to re-election and/or re-appointment at next Annual General Meeting is assessed by the Nomination Committee before recommendation is made to the Board and shareholders for re-election and/or re-appointment. Appropriate assessment and recommendation by the Nomination Committee is based on the yearly assessment conducted.

As all members of the Nomination Committee are Independent Directors, the assessment of the NC is conducted by the Board as a whole.

The summary of activities of the NC during the financial year are as follows:

1. Discuss the Company’s Directors’ retirement by rotation. 2. Review the effectiveness of the Board, the committees and assessment of the contribution of each Directors. 3. Recommend the appointment of additional Executive Directors. 4. Recommend the appointment of additional member of Audit Committee.

Remuneration Committee

The Board has established a remuneration policy and procedure to facilitate the Remuneration Committee to review, consider and recommend to the Board the levels and elements of remuneration of Directors with executive functions and the senior management. The Board as a whole determines the allowances of the Non-Executive Directors and the Non-Executive Chairman after considering the recommendation of Remuneration Committee. The Remuneration Committee meets as and when required.

The members of Remuneration Committee are as follows:-

Member Designation

Dato Dr. (H) Ab Wahab Bin Haji Ibrahim Chairman (Independent Non-Executive Chairman)

Syed Yasir Arafat bin Syed Abd Kadir(Resigned on 27 February 2013)


Datuk Seri Syed Ali Bin Tan Sri Syed Abbas Alhabshee(Resigned on 31 August 2013)






ANNUAL REPORT 2013

30

DIRECTORS (con’t)

1. Board Responsibilities (con’t)

b. Board Committees (con’t)

Share Issuance Scheme Committee

The Share Issuance Scheme Committee (SIS Committee) was established on 2 August 2005. As at todate, the SIS Committee comprises the following members:-

The SIS Committee shall be vested with such powers and duties as are conferred upon it by the Board including the powers:-

toadministertheSISSchemeandtograntshareoptionsinaccordancetotheBye-Laws;

• to recommend to the Board to establish, amend, and revoke Bye-Laws, rules and regulations to facilitate theimplementationoftheSISScheme;

• toconstrueandinterprettheprovisionshereofinthebestinterestoftheCompany;and

• generally, to exercise such powers and perform such acts as are deemed necessary or expedient to promote the best interest of the Company.

Subject to the foregoing, the SIS Committee shall exercise its discretion in such manner as it deems fit.

c. Board Meetings

The Board meets at least four (4) times a year with additional meetings held as and when urgent issues warrant matters to be attended.

The Directors are provided before each Board Meeting, with the appropriate information relating to the matters to be discussed and where necessary, additional information is provided during the Board meeting on significant issues that arise or when specifically requested by a Director. The Directors whether as a full board or in their individual capacity also have access to the services of the Company Secretary and management staff. Where considered necessary, the Board may also engage the services of professionals on specialized issues in furtherance of their duties.

During the financial year under review, six (6) Board Meetings were held and the Directors’ attendances at the Board Meetings were as follows:-

Attendance

Datuk Seri Syed Ali Bin Tan Sri Syed Abbas Alhabshee 4/4 (Chairman, Independent Non-Executive Director) (Resigned on 31 August 2013)

Dato‘ Dr. (H) Ab Wahab Bin Haji Ibrahim 6/6 (Independent Non-Executive Director)

Dato’ Harzani Bin Azmi 4/6 (Managing Director)

Tan Wee Koh 6/6 (Executive Director)

Syed Yasir Arafat bin Syed Abd Kadir 1/1 (Independent Non-Executive Director) (Resigned on 27 February 2013) En Edwanee Cheah Bin Abdullah 3/3 (Independent Non-Executive Director) (Resigned as Director on 28 August 2013)

Mr. George William Warren Jr 6/6 (Independent Non-Executive Director)

Encik Muhammad Sabri Bin Ab Ghani 4/4 (Executive Director)


Dato’ Harzani bin Azmi Chairman (Managing Director)

Tan Wee Koh Member (Executive Director)


ANNUAL REPORT 2013

31

DIRECTORS (con’t)

Supply of Information

The Board recognises that the decision making process is highly dependent on the quality of information furnished. As such, the Board members have full and unrestricted access to all information concerning the Group’s affairs. Prior to the Board meetings, all Board members are provided with the agenda and board papers containing information relevant to the business of the meeting to enable them to obtain further explanations, where necessary, in order to be properly briefed before the meetings. The Board papers including information on major financial, operational and corporate matters of the Group. The Board members also have access to the advice and services of the Company Secretary, senior management and independent professional advisers including the external auditors.

Along with good governance practices and in order to enhance transparency and accountability, the Board has established and put in place the following policies and procedures which full details of the policies and procedures are made available at the Company’s website at www.tanjungoffshore.com.my:

- Board Charter- Code of Conduct- Shareholder’s Right relating to General Meeting- Corporate Social Responsibility Policy

Appointment and Re-election

In accordance with Article 103 of the Company’s Articles of Association, at least one-third of the Directors for the time being shall retire from office and be subject to retirement by rotation at each Annual General Meeting (“AGM”). The article also provides that all Directors shall retire once in every three (3) years in compliance with the Code. Directors who are appointed before the next AGM will retire and be subject to re-election by shareholders at the next AGM.

Directors’ Training

The Board of Directors are mindful that they should receive appropriate continuous training and during the financial year, they have attended presentations and briefings in order to keep abreast with developments in the industry, market place and with new statutory and regulatory requirements.

During the financial year ended 31 December 2013, the Directors were briefed and updated at the scheduled quarterly meetings with any relevant amendments to the Main Market Listing Requirements received from Bursa Securities and other relevant topics which are useful to them in discharging their duties effectively.

Some of the courses attended by certain Directors are as follows:

5thAnnualCorporateGovernancesummit; AuditCommitteeConference2013PoweringforEffectiveness; EffectiveCorporateMergers&AcquisitionsFromCompletitytoExecutionExcellence; Directors’TrainingProgramme;and Transfer Pricing.

DIRECTORS’ REMUNERATION

The determination of remuneration packages of the Directors are matters for the Board as a whole. The remuneration of the Directors is structured to attract, retain and motivate them in order to run the Group successfully.

The Board reviews the remuneration of the Directors annually whereby the respective Executive Directors are abstained from discussions and decisions on their own remuneration.

The aggregate remuneration of the Directors for the financial year ended 31 December 2013 is as follows:-

*Two (2) of the Non-Executive Directors have resigned during the financial year 2013


Executive Directors Non-Executive Directors TotalBasic salary 1,194,000 200,000 1,394,000BonusesFees Total 1,194,000 200,000 1,394,000

Remuneration Band (RM) Executive Directors Non-Executive Directors

0 - 50,000 3 4*50,001 - 100,000 - -100,001 - 150,000 - -150,001 – 200,000 - -200,001 – 250,000 - -


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32

CORPORATE DISCLOSURE

The Board has, based on the recommendation of the Code, adopted a Corporate Disclosure Policy to ensure accurate, clear, timely and complete disclosure of material information necessary for informed investing and take reasonable steps to ensure that all who invest in the Company’s securities enjoy equal access to such information to avoid an individual or selective disclosure.

The Policy applies to all Directors, management, officers and employees of the Group.

RELATIONSHIP WITH SHAREHOLDERS

The Group recognises the importance of effective communication with its shareholders and investors to keep them informed of the major development of the group. As such, a shareholder communications policy has been implemented for the purpose. Information is disseminated through the following channels :-

• AnnualReport;• Circularstoshareholders;• VariousdisclosuresandannouncementtoBursaSecurities;and• Company’swebsiteatwww.tanjungoffshore.com.my

The main forum for dialogue with shareholders remains at the Annual General Meeting which encourages the shareholders to raise questions pertaining to the operations and financials of the Group.

The shareholders are informed of their rights to demand for poll prior to the commencement of each general meeting.

CORPORATE SOCIAL RESPONSIBILITY

The Company is consistent in its Corporate Social Responsibility (CSR) agenda, and is committed to employing responsible practices with regard to the development and improvement of its employees, the environment as well as in our local communities.

The Company employees are the greatest assets of the Group. As much as the Company commits to give back to the society, the Company also commits significant resources in nurturing human talents, technical skills upgrading, career development programs and lifelong learning. The Company aims to instill good civic values so that the employees too can act as ambassadors in advancing the worthy causes.

A CSR policy is established to ensure the Company’s business operations are conducted according to best industry standards and practices. Integrity is a core element of the Company’s business and operational competency model. A key feature of this is that all business interactions will be discharged in a socially responsible manner. The goal is to behave ethically and with integrity in the communities where the Company operates directly and indirectly, and to respect cultural, national and religious diversity.

The CSR policy is to be assessed, reviewed and updated annually, with the assistance and advice from the Company Secretary, in accordance with the needs of the Company and as and when there are changes to the regulations that may have an impact on the Board in discharging its responsibilities. Any change and or updates to the policy shall be recommended to the Board for approval.

ACCOUNTABILITY AND AUDIT

1. Financial Reporting

The Board is responsible to present a balanced, clear and comprehensive assessment of the Group’s financial performance and prospects through the quarterly and annual financial statements to shareholders. The Board and the Audit Committee have to ensure that the financial statements are drawn up in accordance with the provisions of the Companies Act, 1965 and applicable approved accounting standards in Malaysia. In presenting the financial statements, the Board has reviewed and ensured that appropriate accounting policies have been used, consistently applied and supported by reasonable judgments and estimates.

2. Internal Control

The Board has overall responsibility for maintaining a sound and effective system of internal control of the Group, covering not only financial controls but also controls relating to operations, compliance and risk management to safeguard shareholders investments and the Group’s assets. The Board also recognises that the system of internal control has inherent limitations and is aware that such a system can only provide reasonable and not absolute assurance against material misstatements, loss or fraud. The internal control system of the Group is supported by an established organisational structure with well-defined authority and responsibility lines, and which comprises of appropriate financial, operational and compliance controls.

3. Relationship with Auditors

The Board, via the Audit Committee, has established a formal and transparent arrangement for maintaining an appropriate relationship with its auditors, both external and internal.



ANNUAL REPORT 2013

33

ACCOUNTABILITY AND AUDIT

4. Statement of Directors’ Responsibility

The Directors are required by the Companies Act, 1965 to prepare financial statements for each financial year, which give a true and fair view of the state of affairs of the Group and the Company and of the results and cash flow of the Group and the Company for the financial year then ended.

In preparing the financial statements for the FYE 2013, the Directors have:- • adoptedtheappropriateaccountingpoliciesandappliedthemconsistently; • madejudgmentsandestimatesthatarereasonableandprudent; • ensureapplicableapprovedaccountingstandardshavebeenfollowed,andanymaterialdepartureshavebeen

disclosedandexplainedinthefinancialstatements;and • ensurethefinancialstatementshavebeenpreparedonagoingconcernbasis.

The Directors are responsible for keeping proper accounting records of the Group and Company, which disclose with reasonable accuracy the financial position of the Group and the Company, and which will enable them to ensure the financial statements have complied with the provisions of the Companies Act, 1965 and the applicable approved accounting standards in Malaysia.

The Directors have the general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Group and to prevent and detect fraud and other irregularities.

5. Gender Diversity

The Board endeavours to appoint at least one woman participation on the Board of Directors of Tanjung and shall review any potential candidate wherever reasonably possible.The Nomination Committee shall oversee this procedure in addition to the board recruitment, board performance evaluation and succession planning processes. We shall always aim to provide a suitable working environment that is free from harassment and discrimination in order to attract and retain women participation in the Board.

6. Compliance Statement The above statements are clear reflections of the conscious efforts of the Board and Management to strengthen the Company’s governance process. The Board believes this to be an ongoing process and shall continue to strive for full adoption of the Best Practices of the Code in the near future.

At the moment, the Company does not have any female director on the Board. However, if there is any vacancy arises, the Company may invite female candidate if she has the expertise and experience in the related industry to meet the Company’s gender diversity policy. This report is made in accordance with a resolution of the Board of Directors dated 28 April 2014.



ANNUAL REPORT 2013

34

Other Disclosure Requirements

a) Share Buybacks

The Company had not renewed the share buy-back mandate since the Eight Annual General Meeting, therefore no share buy-back carried out for the financial year under review.

b)Options,WarrantsorConvertibleSecurities

The details of the movement of Share Issuance Scheme for the financial year ended 31 December 2013 are as follows:-

No. of SIS Options No. of SIS No. of SIS OptionsGranted up to exercised as at Outstanding as at Date of expiry31 Dec 2013 31 December 2013 Cancelled 31 December 2013 Of SIS Scheme

45,018,000 8,403,800 370,000 36,244,200 7 May 2016

As at 31 December 2013, the number of outstanding Warrant A are as follows:-

Conversion price Outstanding as at Expiry Date 31 Dec 2013

Warrant A RM0.50 29,981,990 7 July 2016

c) Depository Receipt (“DR”) Programme

During the financial year under review, the Company did not sponsor any DR Programme. d) Imposition of Sanctions/Penalties

There were no public sanctions and/or penalties imposed on the Company or its subsidiaries, Directors or management by the relevant regulatory bodies during the financial year under review.

e) Non-Audit Fees

No non-audit fees were paid to the external auditors during the financial year under review. f) Variation in Results

There was no material variation between the audited results for the financial year ended 31 December 2013 and the unaudited results previously announced.

g) Material Contracts

To the best of the Board’s knowledge, there are no material contracts involving the Group with any of the major shareholders or Directors in office during the year under review.

h) Contracts Relating to Loans

No contract relating to loans was executed by the Company during the year under review. i) Profit guarantees

No profit guarantees were provided by the Company or its subsidiaries during the year under review. j) Recurrent Related Party Transactions (“RRPT”)

No RRPT were transacted during the year under review.

OTHER INFORMATION

FINANCIALCoNteNts36 Directors’ report

40 Statement by directors

41 Statutory declaration

42 Independent auditors’ report

44 Statements of financial position

45 Statements of profit or loss

46 Statements of comprehensive income

47 Statement of changes in equity

49 Statements of cash flows

51 Notes to the financial statements


ANNUAL REPORT 2013

36

DIRECTORS’ REPORTFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2013

The directors hereby submit their report together with the audited financial statements of the Group and the Company for the financial year ended 31 December 2013.

PRINCIPAL ACTIVITIES

The Company is principally engaged in investment holding. The principal activities of the subsidiaries are described in Note 7 to the Financial Statements. There have been no significant changes in the nature of the activities during the current financial year.

RESULTS

Net profit/(loss) for the financial year

GROUPRM

COMPANYRM

14,032,633 (2,822,167)

Less: Attributable to non-controlling interests (3,123,470) -

Profit/(Loss) for the financial year attributable to owners of the Company 10,909,163 (2,822,167)

In the opinion of the directors, the results of the operations of the Group and the Company during the financial year have not been substantially affected by any item, transaction or event of a material or unusual nature.

DIVIDENDS

There were no dividend paid or declared since the end of the previous financial year ended and the directors do not recommend any final dividend in respect of the current financial year.

RESERVES AND PROVISIONS

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

ISSUANCE OF SHARES

During the financial year, the Company has issued the following ordinary shares:

No. of Shares Issued Issue Price Purposes

29,816,000 RM0.57 Private placement

8,403,800 RM0.50 Exercise of Share Issuance Scheme

34,399,729 RM0.52 Exercise of Warrant B

The new ordinary shares issued during the current financial year rank pari passu in all respects with the existing ordinary shares held in the Company, other than those disclosed in the following section on unexercised options granted to executive directors and employees of the Group and the Company.


ANNUAL REPORT 2013

37


UNEXERCISED OPTIONS GRANTED

i) Share Issuance Scheme (“SIS”)

The SIS is governed by the By-Laws approved by the shareholders at an Extraordinary General Meeting held on 07 February 2013 and is to be in force for a period of 3 years. The SIS has been effective on 12 July 2013. The salient features, terms and details of the SIS are disclosed in Note 28 to the Financial Statements.

According to Section 169(11) of the Companies Act, 1965, the Company is required to disclose the name of persons to whom any options has been granted during the current financial year. Pursuant to Section 169A of the Companies Act, 1965, the Company has applied to the Companies Commission of Malaysia from having to disclose the name of employees other than director of the Company who have been granted options.

As at 31 December 2013, there were 36,244,200 unissued ordinary shares pursuant to the SIS options granted under the SIS scheme, at RM0.50 per share.

ii) Issuance of Warrants

The subscription price of Warrant A 2006/2016 and Warrant B 2008/2013 are RM0.50 and RM0.52 respectively. The Warrant B 2008/2013 has been expired on 11 October 2013.

The details of the issuance of Warrants are disclosed in Note 29 to the Financial Statements.

As at 31 December 2013, there is a total of 29,981,990 (2012: 29,981,990) outstanding Warrant A 2006/2016 warrants.

As at 31 December 2013, there is a total of Nil (2012: 40,776,929) outstanding Warrant B 2008/2013 warrants.

DIRECTORS

The directors who held office since the date of the last report are:

Dato’ Dr. (H) Ab Wahab bin Haji IbrahimGeorge William Warren Jr.Dato’ Harzani bin AzmiTan Wee KohMuhammad Sabri bin Ab GhaniDatuk Seri Syed Ali bin Tan Sri Syed Abbas Alhabshee (Resigned w.e.f 31.08.2013)Edwanee Cheah bin Abdullah (Resigned w.e.f 28.08.2013)

Dato’ Harzani bin Azmi and George William Warren Jr. are the directors who will retire in accordance with Article 103 of the Company’s Articles of Association and being eligible to offer themselves for re- election.

DIRECTORS’ BENEFITS

During and at the end of the financial year, no arrangements subsisted to which the Company or its subsidiaries is a party, with the object or objects of enabling directors of the Company to acquire benefits by means of the acquisition of shares in, or debentures of, the Company or any other body corporate, other than those arising from the shares awarded under SIS.

Since the end of the previous financial year, no director has received or become entitled to receive a benefit (other than a benefit included in the aggregate amount of emoluments received or due and receivable by the directors shown in the financial statements or the fixed salary of a full-time employee of the Company) by reason of a contract made by the Company or a related corporation with the director or with a firm of which the director is a member, or with a company in which the director has a substantial financial interest.


ANNUAL REPORT 2013

38


DIRECTORS’ INTERESTS

According to the Register of Directors’ Shareholdings, the interests of directors in office at the end of the financial year in the ordinary shares of the Company during the financial year are as follows:

Number of Ordinary Shares of RM0.50 eachAt

01.01.2013 Bought SoldAt

31.12.2013

Direct Interests:

Dato’ Dr. (H) Ab Wahab bin Haji Ibrahim 128,100 - - 128,100

George William Warren Jr. 929,480 - - 929,480

Tan Wee Koh - 500,000 (398,700) 101,300

Muhammad Sabri bin Ab Ghani - 70 - 70

Number of Ordinary Shares of RM0.50 each Granted under the SISAt

01.01.2013Granted Vested At

31.12.2013

Tan Wee Koh - 4,390,000 (500,000) 3,890,000

Muhammad Sabri bin Ab Ghani - 4,390,000 - 4,390,000

Number of Warrants over Ordinary Shares of RM0.50 eachAt

01.01.2013 Bought SoldAt

31.12.2013

Direct Interests:

George William Warren Jr. 99 - - 99

None of the other directors in office at the end of the financial year held any shares or debentures in the Company or in any related corporations during the financial year ended 31 December 2013.

OTHER STATUTORY INFORMATION

Before the financial statements of the Group and the Company were prepared, the directors took reasonable steps:

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

(b) to ensure that any current assets which were unlikely to be realised at their book values in the ordinary course of business have been written down to their estimated realisable values.

As of the date of this report, the directors are not aware of any circumstances:

(a) which would render the amount written off for bad debts or the amount of the allowance for doubtful debts inadequate to any substantial extent in the financial statements of the Group and the Company; or

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

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

(d) not otherwise dealt with in this report or financial statements which would render any amount stated in the financial statements of the Group and the Company misleading.


ANNUAL REPORT 2013

39


OTHER STATUTORY INFORMATION (continued)

As of the date of this report, there does not exist:

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

(b) any contingent liability of the Group or the Company which has arisen since the end of the financial year other than those disclosed in Note 36 to the Financial Statements.

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

In the opinion of the directors, no item, transaction or event of a material or unusual nature has arisen in the interval between the end of the financial year and the date of this report which is likely to affect substantially the results of the operations of the Group and the Company for the current financial year.

SIGNIFICANT EVENTS AND EVENTS AFTER THE REPORTING PERIOD

Details of the significant events and events after the reporting period is set out in Note 41 and Note 42 to the Financial Statements respectively.

AUDITORS

The retiring auditors, Messrs. AljeffriDean, have indicated their willingness to be re-appointed in accordance with Section 172(2) of the Companies Act, 1965.

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

..………..........................................Dato’ Harzani bin Azmi

..………..........................................Muhammad Sabri bin Ab Ghani

Kuala Lumpur, 23 April 2014


ANNUAL REPORT 2013

40

STATEMENT BY DIRECTORSPURSUANT TO SECTION 169(15) OF THE COMPANIES ACT, 1965

The directors of Tanjung Offshore Berhad state that, in their opinion, the financial statements set out in pages 11 to 85 are drawn up in accordance with the Malaysian Financial Reporting Standards, International Financial Reporting Standards and the provisions of the Companies Act, 1965 in Malaysia so as to give a true and fair view of the financial positions of the Group and the Company as at 31 December 2013 and of their financial performance and the cash flows of the Group and the Company for the financial year ended on that date.

In the opinion of the directors, the information set out in Note 45 to the Financial Statements has been compiled in accordance with the Guidance on Special Matter No.1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosures pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants, and the directive of Bursa Malaysia Securities Berhad.

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

..……….......................................... ..………..........................................Dato’ Harzani bin Azmi Muhammad Sabri bin Ab Ghani

Kuala Lumpur,23 April 2014


ANNUAL REPORT 2013

41

STATUTORY DECLARATION PURSUANT TO SECTION 169(16) OF THE COMPANIES ACT, 1965

I, Norwahida binti Ja’afar, the officer primarily responsible for the financial management of Tanjung Offshore Berhad, do solemnly and sincerely declare that the financial statements set out in page 11 to 85 are, in my opinion, correct and I make this solemn declaration conscientiously believing the same to be true, and by virtue of the provisions of the Statutory Declarations Act, 1960.

Subscribed and solemnly declared by )

By Norwahida binti Ja’afar )

At Wilayah Persekutuan Kuala Lumpur )

On 23 April 2014 )

Before me,

…………………………..Commissioner for Oaths


ANNUAL REPORT 2013

42

INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF TANJUNG OFFSHORE BERHAD

Report on the Financial Statements

We have audited the financial statements of Tanjung Offshore Berhad, which comprise statements of financial position as at 31 December 2013 of the Group and of the Company, statements of profit or loss and statements of comprehensive income, statements of changes in equity and statements of cash flows of the Group and the Company for the year then ended, and a summary of significant accounting policies and other explanatory information.

Directors’ Responsibility for the Financial Statements

The directors of the Company are responsible for the preparation of financial statements so as to give a true and fair view in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia. The directors are also responsible for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ Responsibility

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

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on our judgement, including the assessment of risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity’s preparation of financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial statements.

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

Opinion

In our opinion, the financial statements give a true and fair view of the financial position of the Group and the Company as of 31 December 2013 and of their financial performance and cash flows for the year then ended in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia.


ANNUAL REPORT 2013

43

INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF TANJUNG OFFSHORE BERHAD

Report on Other Legal and Regulatory Requirements

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

In our opinion, the accounting and other records and the registers required by the Act to be kept by the Company and its subsidiaries of which we have acted as auditors have been properly kept in accordance with the provisions of the Act.

We have considered the financial statements and the auditors’ reports of all the subsidiaries of which we have not acted as auditors, which are indicated in Note 7 to the Financial Statements.

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

The audit reports on the financial statements of the subsidiaries did not contain any qualification or any adverse comment made under Section 174(3) of the Act.

Other Reporting Responsibilities

The supplementary information set out in Note 45 is disclosed to meet the requirement of Bursa Malaysia Securities Berhad and is not part of the financial statements. The directors are responsible for the preparation of the supplementary information in accordance with Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants (“MIA Guidance”) and the directive of Bursa Malaysia Securities Berhad. In our opinion, the supplementary information is prepared, in all material respects, in accordance with the MIA Guidance and the directive of Bursa Malaysia Securities Berhad.

Other Matters

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

AljeffriDean Mohd Neezal NoordinAF 1366 No. 2162/06/15(J)Chartered Accountants Chartered Accountant

Kuala Lumpur, 23 April 2014


ANNUAL REPORT 2013

44

STATEMENTS OF FINANCIAL POSITIONAS AT 31 DECEMBER 2013

See accompanying notes to the financial statements.

GROUP COMPANY

NOTE2013

RM2012

RM2013

RM2012

RMNON-CURRENT ASSETSProperty, plant and equipment 5 29,775,899 51,836,192 - -Intangible assets 6 3,515,910 3,479,545 - -Subsidiary companies 7 - - 57,931,424 23,100,006Associate companies 8 173,575 4,513,140 - 1,419,334Deferred tax assets 9 - 761,109 - -

33,465,384 60,589,986 57,931,424 24,519,340

CURRENT ASSETSInventories 10 13,817,414 58,506,168 - -Trade receivables 11 70,715,322 126,269,332 - -Other receivables, deposits and

prepayments 12 29,438,652 29,376,066 466,185 2,779,642Amount owing by subsidiary

companies 7 - - 60,400,621 12,852,773Short term investment 13 14,005,172 - 14,005,172 -Cash and cash equivalents 14 113,731,065 162,778,313 77,300,943 130,009,310

241,707,625 376,929,879 152,172,921 145,641,725

Assets of disposal group classified as held for sale and discontinued operations 15 2,482,951 8,019,816 - -

TOTAL ASSETS 277,655,960 445,539,681 210,104,345 170,161,065

NON-CURRENT LIABILITYLong term borrowings 16 4,429,961 989,984 - -

4,429,961 989,984 - -

CURRENT LIABILITIESTrade payables 17 47,397,325 145,448,341 - -Other payables and accruals 18 25,760,993 65,359,415 353,077 1,526,207Amount owing to subsidiary

companies 7 - - 9,720,929 -Short term borrowings 19 3,986,045 48,754,856 - 4,776,539Provision for taxation 986,638 1,062,630 636,638 460,001

78,131,001 260,625,242 10,710,644 6,762,747

Liabilities directly associated with the assets of disposal group classified as held for sale and discontinued operations 15 10,547,493 17,648,874 - -

TOTAL LIABILITIES 93,108,455 279,264,100 10,710,644 6,762,747

EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE COMPANY

Share capital 20 182,964,995 146,655,230 182,964,995 146,655,230Treasury shares 21 (4,396,520) (4,396,520) (4,396,520) (4,396,520)Reserves 22 5,979,030 14,592,520 20,825,226 21,139,608

184,547,505 156,851,230 199,393,701 163,398,318Non-controlling interests - 9,424,351 - -

TOTAL EQUITY 184,547,505 166,275,581 199,393,701 163,398,318

TOTAL LIABILITIES AND EQUITY 277,655,960 445,539,681 210,104,345 170,161,065


ANNUAL REPORT 2013

45

STATEMENTS OF PROFIT OR LOSSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2013


GROUP COMPANY

NOTE2013

RM2012

RM2013

RM2012

RMContinuing OperationsRevenue 3(q),23 327,791,352 263,706,772 3,292,676 1,978,895Cost of sales (279,950,663) (224,750,852) - -

Gross profit 47,840,689 38,955,920 3,292,676 1,978,895Other income 1,280,027 296,037 865,472 210,000,000Operating expenses (32,972,383) (60,003,572) (4,311,243) (63,406,897)

Profit/(Loss) from operations 16,148,333 (20,751,615) (153,095) 148,571,998Finance costs 24 (1,943,474) (4,645,890) (122,895) (365,057)Share of loss from associate companies (1,466,049) (320,229) - -

Profit/(Loss) before taxation 25 12,738,810 (25,717,734) (275,990) 148,206,941Taxation 26 (5,608,078) (698,752) (2,546,177) (534,736)

Profit/(Loss) for the year after tax 7,130,732 (26,416,486) (2,822,167) 147,672,205

Discontinued OperationsProfit for the year after tax 15 6,901,901 17,410,171 - -

Net profit/(loss) for the year 14,032,633 (9,006,315) (2,822,167) 147,672,205

Net profit/(loss) for the year attributable to:

Equity holders of the Company 10,909,163 (11,585,079) (2,822,167) 147,672,205Non-controlling interests 3,123,470 2,578,764 - -

14,032,633 (9,006,315) (2,822,167) 147,672,205

Earnings/(Losses) per share attributable to equity holders of the Company (Sen):

Basic 27Continuing operations 1.29 (9.98)Discontinued operations 2.23 5.99

3.52 (3.99)

DilutedContinuing operations 1.26 (9.98)Discontinued operations 2.17 5.99

3.43 (3.99)


ANNUAL REPORT 2013

46

STATEMENTS OF COMPREHENSIVE INCOMEFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2013

GROUP COMPANY2013

RM2012

RM2013

RM2012

RM

Net profit/(loss) for the year 14,032,633 (9,006,315) (2,822,167) 147,672,205

Other comprehensive (loss)/income:Items that will be subsequently reclassified to profit or lossExchange differences on translating of foreign

operations (280,367) 513,627 - -Revaluation of short term investment- Net fair value changes in short term investment 125,233 - 125,233 -- Reclassification adjustments (120,737) - (120,737) -

Item that will not be subsequently reclassified to profit or loss

Deficit on revaluation of vessels - (21,104,763) - -

(275,871) (20,591,136) 4,496 -

Total comprehensive income/(loss) for the year 13,756,762 (29,597,451) (2,817,671) 147,672,205

Total comprehensive income/(loss) for the year attributable to:

Equity holders of the Company 10,633,292 (32,176,215) (2,817,671) 147,672,205Non-controlling interests 3,123,470 2,578,764 - -

13,756,762 (29,597,451) (2,817,671) 147,672,205


ANNUAL REPORT 2013

47

STATEMENTS OF CHANGES IN EQUITY FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2013

See

acco

mpa

nying

not

es to

the

finan

cial s

tate

men

ts.

Attr

ibut

able

to E

quity

Hol

ders

of t

he C

ompa

ny

N

on D

istrib

utab

le

Dist

ribut

able

GROU

PNO

TE

Shar

e Ca

pita

lRM

Trea

sury

Sh

ares RM

Shar

e Pr

emiu

m RM

Capi

tal

Rese

rve

RM

Em

ploy

ee

Shar

e Op

tion

Rese

rve

RM

Equi

ty-

Settl

ed

Empl

oyee

Be

nefit

s Re

serv

eRM

Inve

stm

ent

Reva

luat

ion

Rese

rve

RM

Fore

ign

Curre

ncy

Tran

slatio

n Re

serv

eRM

Reva

luat

ion

Rese

rve

RM

Accu

mul

ated

Lo

sses RM

Tota

lRM

Non-

Cont

rollin

g In

tere

sts

RMTo

tal E

quity RM

Balan

ce a

s at 0

1.01

.201

214

6,27

5,82

1(4

,396

,520

)66

,436

,812

2,15

6,69

21,

106,

949

--

(535

,093

)84

,881

,527

20,6

04,3

8731

6,53

0,57

56,

756,

870

323,

287,

445

Issua

nce

of o

rdina

ry sh

ares

pu

rsua

nt to

ESO

S79

,000

-35

,560

--

--

--

114,

560

-11

4,56

0

War

rant

s exe

rcise

dur

ing th

e ye

ar29

300,

409

-21

1,25

1(1

44,3

16)

--

--

--

367,

344

-36

7,34

4

Reali

satio

n of

reva

luatio

n re

serve

--

--

--

-(7

60,8

85)

760,

885

--

-

Disp

osal

of ve

ssels

--

--

--

--

(2,8

99,2

48)

2,89

9,24

8-

--

Disp

osal

of su

bsidi

ary c

ompa

ny-

--

--

--

-(6

0,11

6,63

1)60

,116

,631

--

-

Acqu

isitio

n of

a su

bsidi

ary

com

pany

from

non

-con

trollin

g int

eres

t-

--

160,

775

--

--

--

160,

775

(241

,775

)(8

1,00

0)

Effec

t on

wind

ing u

p su

bsidi

ary

com

pany

--

--

--

-(1

79,3

60)

--

(179

,360

)33

0,49

215

1,13

2

Divid

end

paid

30-

--

--

--

-(1

27,9

66,4

49)

(127

,966

,449

) -

(127

,966

,449

)

Tota

l com

preh

ensiv

e los

s for

th

e ye

ar-

--

--

--

513,

627

(21,

104,

763)

(11,

585,

079)

(32,

176,

215)

2,57

8,76

4(2

9,59

7,45

1)

Balan

ce a

s at 3

1.12

.201

214

6,65

5,23

0(4

,396

,520

)66

,683

,623

2,17

3,15

11,

106,

949

--

(200

,826

)-

(55,

170,

377)

156,

851,

230

9,42

4,35

116

6,27

5,58

1

Priva

te p

lacem

ent,

net o

f tra

nsac

tion

costs

14,9

08,0

00-

1,28

5,98

6-

--

--

--

16,1

93,9

86-

16,1

93,9

86

Issua

nce

of o

rdina

ry sh

ares

pu

rsua

nt to

SIS

284,

201,

900

--

--

--

--

-4,

201,

900

-4,

201,

900

Reco

gnitio

n of

shar

e-ba

sed

paym

ents

28-

--

--

531,

416

--

--

531,

416

-53

1,41

6

War

rant

s exe

rcise

dur

ing th

e ye

ar29

17,1

99,8

65-

687,

995

--

--

--

-17

,887

,860

-17

,887

,860

Effec

t on

term

inatio

n of

ESO

S-

--

-(1

,106

,949

)-

--

-1,

106,

949

--

-

Acqu

isitio

n of

a su

bsidi

ary

com

pany

from

non

-con

trollin

g int

eres

t-

--

(21,

752,

179)

--

--

--

(21,

752,

179)

(12,

547,

821)

(34,

300,

000)

Tota

l com

preh

ensiv

e inc

ome

for

the

year

--

--

--

4,49

6(2

80,3

67)

-10

,909

,163

10,6

33,2

923,

123,

470

13,7

56,7

62

Balan

ce a

s at 3

1.12

.201

318

2,96

4,99

5(4

,396

,520

)68

,657

,604

(19,

579,

028)

-53

1,41

64,

496

(481

,193

)-

(43,

154,

265)

184,

547,

505

-18

4,54

7,50

5


ANNUAL REPORT 2013

48

STATEMENT OF CHANGES IN EQUITY FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2013

Att

ribut

able

to E

quity

Hol

ders

of t

he C

ompa

ny

Non

Dis

trib

utab

le

Dis

trib

utab

le

CO

MP

AN

YN

OTE

Shar

e C

apita

lR

M

Trea

sury

Sh

ares RM

Shar

e P

rem

ium

RM

Cap

ital

Res

erve RM

Empl

oyee

Sh

are

Opt

ion

Res

erve

RM

Equi

ty-

Sett

led

Empl

oyee

B

enefi

ts

Res

erve

R

M

Inve

stm

ent

Rev

alua

tion

Res

erve RM

Acc

umul

ated

Lo

sses RM

Tota

lEq

uity

RM

Bal

ance

as

at 0

1.01

.201

214

6,27

5,82

1(4

,396

,520

)66

,473

,712

2,11

9,77

836

4,72

5-

-(6

7,58

9,95

8)14

3,24

7,55

8

Issu

ance

of o

rdin

ary

shar

es

purs

uant

to E

SOS

79,0

00-

35,5

60-

--

--

114,

560

War

rant

s ex

erci

se d

urin

g th

e ye

ar29

300,

409

-17

4,35

1(1

44,3

16)

--

--

330,

444

Divi

dend

pai

d30

--

--

--

-(1

27,9

66,4

49)

(127

,966

,449

)

Tota

l com

preh

ensi

ve

inco

me

for t

he y

ear

--

--

--

-14

7,67

2,20

514

7,67

2,20

5

Bal

ance

as

at 3

1.12

.201

214

6,65

5,23

0(4

,396

,520

)66

,683

,623

1,97

5,46

236

4,72

5-

-(4

7,88

4,20

2)16

3,39

8,31

8

Priva

te p

lace

men

t, ne

t of

trans

actio

n co

sts

14,9

08,0

00-

1,28

3,87

8-

--

--

16,1

91,8

78

Issu

ance

of o

rdin

ary

shar

es

purs

uant

to

SIS

284,

201,

900

--

--

--

-4,

201,

900

Rec

ogni

tion

of s

hare

-bas

ed

paym

ents

28-

--

--

531,

416

--

531,

416

War

rant

s ex

erci

se d

urin

g th

e ye

ar29

17,1

99,8

65-

687,

995

--

--

-17

,887

,860

Effe

ct o

n te

rmin

atio

n of

ES

OS

--

--

(364

,725

)-

-36

4,72

5 -

Tota

l com

preh

ensi

ve lo

ss

for t

he y

ear

--

--

-4,

496

(2,8

22,1

67)

(2,8

17,6

71)

Bal

ance

as

at 3

1.12

.201

318

2,96

4,99

5(4

,396

,520

)68

,655

,496

1,97

5,46

2-

531,

416

4,49

6(5

0,34

1,64

4)19

9,39

3,70

1

See

acco

mpa

nyin

g no

tes

to th

e fin

anci

al s

tate

men

ts.


ANNUAL REPORT 2013

49

STATEMENTS OF CASH FLOWS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2013

GROUP COMPANY

NOTE2013

RM2012

RM2013

RM2012

RMCASH FLOW FROM OPERATING ACTIVITIESProfit/(Loss) before taxation- From continuing operations 12,738,810 (25,717,734) (275,990) 148,206,941- From subsidiary held for sale and discontinued

operation 15 6,915,459 24,130,581 - -

19,654,269 (1,587,153) (275,990) 148,206,941Adjustments for:Amortisation of intangible assets 264,903 241,660 - -Allowance for doubtful debts, impairment and

written off, net off recovered 1,991,584 4,069,437 - 58,601,106Depreciation of property, plant and equipment 20,007,727 46,796,127 - -Loss on disposal and written off of property,

plant and equipment 31,971 2,885,845 - -Loss on disposal of a subsidiary company 33 - 5,478,490 - -Interest expense 1,943,474 22,492,341 122,895 365,057Loss on disposal of associate company 2,868,773 - 1,419,333 -Provision for damages 1,641,437 - - -Loss on foreign exchange 1,801,281 8,576,626 - -SIS expenses 531,416 - -Net effect of winding up of a subsidiary company 40 - 2,914,479 - 2,732,567Revaluation deficit - 12,664,754 - -Gain on disposal of intangible assets - (2,242,684) - -Gain on disposal of inventories - (114,103) - -Gain on disposal of a subsidiary company - - - (210,000,000)Gain on disposal of property, plant and

equipment (79,162) (391,123) - -Gain on foreign exchange (1,628,639) (7,735,353) - -Gain on redemption of short term investment (120,737) - (120,737) -Gain on disposal of associate company (9,911) - - -Share of loss from associate company 1,466,049 320,229 - -Interest income (3,425,570) (2,022,670) (3,292,676) (1,978,895)Reversal of provision (3,660,058) (2,410,020) (739,348) -

Operating profit/(loss) before changes in working capital 43,278,807 89,936,882 (2,886,523) (2,073,224)

Decrease/(Increase) in inventories 46,564,097 (37,512,485) - -Decrease in receivables 46,080,457 53,324,589 134,441 159,440Balances with subsidiary companies - - (37,826,919) 83,289,375(Decrease)/Increase in payables (134,833,458) 50,792,747 (433,782) 565,373

Cash generated from/(used in) operations 1,089,903 156,541,733 (41,012,783) 81,940,964Tax refund 5,356,532 1,499,792 42,500 -Tax paid (2,576,210) (1,895,998) (233,024) (293,103)

Net cash generated from/(used in) operating activities 3,870,225 156,145,527 (41,203,307) 81,647,861



ANNUAL REPORT 2013

50

STATEMENTS OF CASH FLOWS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2013

GROUP COMPANY

NOTE2013

RM2012

RM2013

RM2012

RM

CASH FLOW FROM INVESTING ACTIVITIES

Purchase of property, plant and equipment 31 (918,048) (52,461,907) - -

Proceeds from disposal of property, plant and equipment 119,065 2,171,418 - -

Net cash inflow from disposal of a subsidiary company 33 - 210,480,856 - 220,000,000

Net cash outflow from winding up of a subsidiary company - (538,718) - -

Proceed from disposal of associate company 44,654 - 1 -

Proceed from disposal of intangible assets - 2,242,684 - -

Additional investment in subsidiary companies - - - (52,000,000)

Additional investment in associate company (30,000) - - -

Increase in development costs (301,268) (575,315) - -

Acquisition of a subsidiary company - - (2) -

Acquisition of a subsidiary company from non-controlling shareholder (34,300,000) (81,000) (34,300,000) -

Purchase of short term investment (122,000,000) - (122,000,000) -

Proceed from redemption of short term investment 108,120,062 - 108,120,062 -

Interest received 3,425,570 2,022,670 3,292,676 1,978,895

Net cash (used in)/generated from investing activities (45,839,965) 163,260,688 (44,887,263) 169,978,895

CASH FLOW FROM FINANCING ACTIVITIES

Issuance of shares 38,283,745 481,904 38,281,637 445,004

Net term loan and other borrowings (25,393,969) (12,365,089) - -

Repayment of hire purchase and finance lease (1,709,730) (2,460,559) - -

Interest paid (1,943,474) (22,492,341) (122,895) (365,057)

Dividend paid 30 - (127,966,449) - (127,966,449)

(Increase)/Decrease in cash and cash equivalents pledged as security (4,103,648) (1,591,839) 1,182,602 (1,568,191)

Net cash generated from/(used in) financing activities 5,132,924 (166,394,373) 39,341,344 (129,454,693)

Net (decrease)/increase in cash and cash equivalents (36,836,816) 153,011,842 (46,749,226) 122,172,063

Cash and cash equivalents at beginning of the year 140,014,536 (12,969,696) 122,564,580 392,517

Effects on exchange rate changes on cash and cash equivalents 291,155 (27,610) - -

Cash and cash equivalents at end of the year 34 103,468,875 140,014,536 75,815,354 122,564,580



ANNUAL REPORT 2013

51

NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2013

1. GENERAL INFORMATION

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

The registered office is located at 802, 8th Floor, Block C, Kelana Square, 17 Jalan SS7/26, 47301 Petaling Jaya, Selangor Darul Ehsan.

The principal place of business is located at Suite 5-1, Level 5, Menara UOA Damansara II, No.6 Changkat Semantan, Damansara Heights, 50490 Kuala Lumpur.

The Company is principally engaged in investment holding. The principal activities of the subsidiaries are described in Note 7 to the Financial Statements. There have been no significant changes in the nature of the activities during the current financial year.

The functional currency of the Company is Ringgit Malaysia (“RM”) as the sales and purchases are mainly denominated in RM, receipts from operations are usually retained in RM and funds from financing activities are mainly generated in RM.

For the purpose of the consolidated financial statements, the financial statements of each entity within the Group are expressed in RM, which is the functional currency of the Company, and the presentation currency for the consolidated financial statements.

2. ADOPTION OF NEW AND REVISED MALAYSIAN FINANCIAL REPORTING STANDARDS AND INTERPRETATIONS

The accounting policies adopted by the Group and by the Company are consistent with those adopted in the previous year except as discussed below:

MFRSs that do not have significant impacts on these financial statements

The following new and revised MFRSs issued by the Malaysian Accounting Standards Board (‘MASB’) have been adopted which are effective for financial periods beginning on or after 01 January 2013:

MFRS 3 Business Combinations MFRS 10 Consolidated Financial Statements MFRS 11 Joint Arrangements MFRS 12 Disclosure of Interests in Other Entities MFRS 13 Fair Value Measurement MFRS 119 Employee Benefits (revised) MFRS 127 Consolidated and Separate Financial Statements (revised) Amendments to MFRS 7 Financial Instruments: Disclosures – Offsetting Financial Assets and Financial Liabilities Amendments to MFRS 10 Consolidated Financial Statements: Transition Guidance Amendments to MFRS 11 Joint Arrangements: Transition Guidance Amendments to MFRS 12 Disclosure of Interests in Other Entities: Transition Guidance Amendments to MFRS 101 Presentation of Items of Other Comprehensive Income Annual Improvements to IC Interpretations

and MFRSs 2009 – 2011 Cycle

The adoption of the above pronouncements did not have any impact on the financial statements of the Group and the Company, except for the following:

MFRS 12 is a disclosure standard and is applicable to entities that have interests in subsidiaries, joint arrangements, associates and/or unconsolidated structured entities. In general, the disclosure requirements in MFRS 12 are more extensive than those in the current standards. The adoption of this standard affects disclosures in the financial statements only and has no financial impact on the Group’s and the Company’s financial statements.


ANNUAL REPORT 2013

52


2. ADOPTION OF NEW AND REVISED MALAYSIAN FINANCIAL REPORTING STANDARDS AND INTERPRETATIONS (continued)

The amendments to MFRS 101 retain the option to present profit or loss and other comprehensive income in either a single statement or in two separate but consecutive statements. However, the amendments to MFRS 101 require additional disclosures to be made in the other comprehensive income section such that items of other comprehensive income are grouped into two categories:

(a) items that will not be reclassified subsequently to profit or loss; and

(b) items that will be reclassified subsequently to profit or loss when specific conditions are met. Income tax on items of other comprehensive income is required to be allocated on the same basis. The adoption of this amendment affects the presentation in the financial statements only and has no financial impact on the Group’s and the Company’s financial statements.

MFRSs that have been issued but are not yet effective

The Group and the Company have not adopted the following MFRSs that have been issued by the MASB but are not yet effective:

Amendments to MFRS 9 Mandatory Effective Date of MFRS 9 and Transition Disclosures Amendments to MFRS 10 Consolidated Financial Statements: Investment Entities Amendments to MFRS 12 Disclosure of Interests in Other Entities: Investment Entities Amendments to MFRS 127 Consolidated and Separate Financial Statements: Investment Entities Amendments to MFRS 132 Financial Instruments: Presentation – Offsetting Financial Assets and Financial Liabilities

The Group and the Company will adopt the above pronouncements when they become effective for financial periods beginning on or after 01 January 2014 except for Amendments to MFRS 9 which become effective for financial periods beginning on or after 01 January 2015. These pronouncements are not expected to have any effect to the financial statements of the Group and the Company upon their initial application, except as described below:

MFRS 9 requires all recognised financial assets that are within the scope of MFRS 139 Financial Instruments: Recognition and Measurement to be subsequently measured at amortised cost or fair value. Specifically, debt investments that are held within a business model whose objective is to collect the contractual cash flows, and that have contractual cash flows that are solely payments of principal and interest on the principal outstanding are generally measured at amortised cost at the end of subsequent accounting periods. All other debt investments and equity investments are measured at their fair values at the end of subsequent accounting periods.

The most significant effect of MFRS 9 regarding the classification and measurement of financial liabilities relates to the accounting for changes in the fair value of a financial liability (designated as at ‘fair value through profit or loss’) attributable to changes in the credit risk of that liability. Specifically, under MFRS 9, for financial liabilities that are designated as at ‘fair value through profit or loss’, the amount of change in the fair value of the financial liability that is attributable to changes in the credit risk of that liability is presented in other comprehensive income, unless the recognition of the effects of changes in the liability’s credit risk in other comprehensive income would create or enlarge an accounting mismatch in profit or loss. Changes in fair value attributable to a financial liability’s credit risk are not subsequently reclassified to profit or loss.

3. SIGNIFICANT ACCOUNTING POLICIES

The financial statements have been prepared in accordance with the Malaysian Financial Reporting Standards (“MFRSs”), International Financial Reporting Standards (“IFRSs”) and the provisions of the Companies Act, 1965.


ANNUAL REPORT 2013

53


3. SIGNIFICANT ACCOUNTING POLICIES (continued) (a) Basis of Preparation

The financial statements have been prepared on the historical cost basis unless otherwise indicated in the other section of accounting policies.

The principal accounting policies adopted are set out below.

(b) Basis of Consolidation

The consolidated financial statements incorporate the financial statements of the Company and all subsidiaries. Subsidiaries are entities controlled by the Company. The Group adopted MFRS 10 Consolidated Financial Statements in the current financial year. This resulted in changes in the following policies:

(a) Control exists when the Group is exposed, or has rights, to variable return from its involvement with the entity and has the ability to affect those returns through its power over the entity. In the previous financial years, control exists when the Group has the ability to exercise its power to govern the financial and operating policies of an entity so as to obtain benefits from its activities.

(b) Potential voting rights are considered when assessing control only when such rights are substantive. In the previous financial years, potential voting rights are considered when assessing control when such rights are presently exercisable.

(c) The Group considers its de facto power over an investee when, despite not having the majority of voting rights, it has the current ability to direct the activities of the investee that significantly affect the investee’s return. In the previous financial years, the Group did not consider de facto power in its assessment of control.

The change in accounting policy has been made retrospectively and in accordance with the transitional provision of MFRS 10. The adoption of MFRS 10 has no significant impact to the financial statements of the Group.

Investment in subsidiaries is accounted for in the Company’s separate financial statements at cost. If an investment in a subsidiary is classified as held for sale, that investment is accounted for in accordance with MFRS 5 Non-current Assets Held for Sale and Discontinued Operations.

The results of a subsidiary are included in the consolidated financial statements from the acquisition date until the date on which the Company ceases to control the subsidiary. Any difference between the fair value of the consideration received from the loss of control of a subsidiary and the carrying amount as at the date when control is lost, including the cumulative amount of any translation difference that relate to the subsidiary formerly recognised in other comprehensive income, is reclassified to consolidated profit or loss as a gain or loss.

Consolidated financial statements are prepared using uniform accounting policies for like transactions and other events in similar circumstances.

Non-controlling interests are presented in the consolidated statement of financial position within equity, separately from the equity attributable to owners of the Company. Non- controlling interests in the profit or loss of the Group are also separately disclosed.

Changes in the Company’s ownership interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions. Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received are recognised directly in equity and attributable to the owners of the Company.

All intragroup balances, transactions, income and expenses are eliminated in full.

(c) Business Combinations

Business combinations are accounted for by applying the acquisition method. The consideration transferred in a business combination is measured at fair value, which is calculated as the sum of the acquisition-date fair values of the assets transferred by the Group, the liabilities incurred by the Group to former owners of the acquiree and the equity interests issued by the Group in exchange for control of the acquiree. Acquisition- related costs are generally recognised in profit or loss as incurred.

At the acquisition date, the Group allocates the cost of a business combination by recognising the acquiree’s identifiable assets, liabilities and contingent liabilities that satisfy the recognition criteria in MFRS 3 Business Combinations at their fair values, except for non-current assets and disposal groups that are classified as held for sale in accordance with MFRS 5 Non-current Assets Held for Sale and Discontinued Operations, which are recognised at fair value less costs to sell.


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3. SIGNIFICANT ACCOUNTING POLICIES (continued)

(d) Property, Plant and Equipment

The cost of an item of property, plant and equipment is recognised as an asset when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. After recognition as an asset, items of property, plant and equipment are carried at cost less accumulated depreciation and any accumulated impairment losses. Depreciation is provided on a straight-line basis so as to write off the depreciable amount of the following assets over their estimated useful lives, as follows:

Percentage (%) Freehold land and building 2 Leasehold land and building Over 80 months - 50 years Furniture and fittings 10 Renovation 10 Workshop tools 20 Office equipments 10 – 33 1/3 Motor vehicles 20 – 25 Equipment 10 – 50 Plant and machinery 10 – 33 1/3

Depreciation of an asset under construction begins when it is ready for its intended use. The residual values and useful lives of depreciable assets, if significant, are reviewed at the end of each reporting period.

The carrying amounts of items of property, plant and equipment are derecognised on disposal or when no future economic benefits are expected from their use. Any gain or loss arising from the derecognition of items of property, plant and equipment, determined as the difference between the net disposal proceeds, if any, and the carrying amounts of the item, is included in profit or loss. Neither the sale proceeds nor any gain on derecognition is classified as revenue.

(e) Goodwill

Goodwill arising on the acquisition of a subsidiary or a proportionately consolidated jointly-controlled entity, being the excess of the aggregate of the consideration transferred, the amount of any non-controlling interest in the acquiree, and the acquirer’s previously held equity interest in the acquiree over the net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed. After initial recognition, goodwill is measured at cost less any accumulated impairment losses.

Goodwill is not amortised but is reviewed for impairment at least annually. For the purpose of impairment testing, goodwill is allocated at the acquisition date to each of the Group’s cash-generating units that are expected to benefit from the synergies of the combination. A cash-generating unit to which goodwill has been allocated is tested for impairment annually, and whenever there is an indication that the unit may be impaired, by comparing the carrying amount of the unit, including the goodwill, with the recoverable amount of the unit. An impairment loss is recognised for a cash-generating unit when the recoverable amount of the unit is less than the carrying amount of the unit. Any impairment loss recognised is first allocated to reduce the carrying amount of any goodwill allocated to the unit and then, to the other assets of the unit within the scope of MFRS 136 Impairment of Assets pro rata on the basis of the carrying amount of each applicable asset in the unit. Any impairment loss recognised for goodwill is not reversed.

Goodwill arising on the acquisition of investments in associates is included within the carrying amount of the investments and is assessed for impairment as part of the investment.

If, after reassessment, the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities recognised exceeds the cost of the business combination, the excess is recognised immediately in profit or loss.

On disposal of a subsidiary or a proportionately consolidated jointly-controlled entity, the attributable amount of goodwill is included in the determination of the gain or loss on disposal.


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(f) Other Intangible Assets

Intangible assets are recognised when it is probable that future economic benefits that are attributable to the assets will flow to the Group and the cost of the assets can be measured reliably.

Internally Generated Intangible Assets

Costs associated with internally generated intangible assets arising from research activities are recognised in profit or loss in the period in which the expenditure is incurred.

An internally generated intangible asset arising from development activities is recognised only when all of the following conditions are demonstrated:

- the technical feasibility of completing the intangible asset so that it will be available for use or sale. - the intention to complete the intangible asset and thereafter use it or sell it. - the ability to either use or sell the intangible asset. - how the intangible asset will generate probable future economic benefits. - the availability of adequate technical, financial and other resources to complete the development and thereafter to

use or sell the intangible asset. - the ability to measure reliably the expenditure attributable to the intangible asset during its development phrase. Other development expenditure is recognised in profit or loss as and when it is incurred.

After initial recognition, internally generated intangible assets are carried at cost less any accumulated amortisation and accumulated impairment losses. Internally generated gas generator development costs are amortised on a straight-line basis over their estimated useful lives of 15 years. The amortisation period and method are reviewed at least at the end of each reporting period.

The carrying amounts of intangible assets are derecognised on disposal or when no future economic benefits are expected from their use. Any gain or loss arising from the derecognition of an intangible asset, determined as the difference between the net disposal proceeds, if any, and the carrying amounts of the asset, is recognised in profit or loss. Neither the sale proceeds nor any gain on derecognition is classified as revenue.

(g) Investment in Associates

An associate is an entity over which the Group has significant influence and that is neither a subsidiary nor an interest in a joint venture. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies.

Investment in associates is accounted for in the Company’s separate financial statements at cost. If an associate is classified as held for sale, the investment is accounted for in accordance with MFRS 5 Non-current Assets Held for Sale and Discontinued Operations.

Investment in associates are accounted for in the Group’s consolidated financial statements using the equity method until the date the Group ceases to have significant influence over the associates or the investment is classified as held for sale in accordance with MFRS 5 Non-current Assets Held for Sale and Discontinued Operations.

Under the equity method, investment in associates are initially recognised at cost and thereafter, the carrying amount is increased or decreased to recognise the Group’s share of the profit or loss of the investees after the date of acquisition. Losses of associates in excess of the Group’s interest in the associates, include any long-term interests that form part of the Group’s net investment in the associates, are not recognised.

Profits or losses on transactions entered into between the Group and associates are eliminated to the extent of the Group’s interest in the associates.


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(g) Investment in Associates (continued)

On acquisition of an investment in an associate, any excess of the cost of the investment over the Group’s share of the net fair value of the associate’s identifiable assets, liabilities and contingent liabilities is included in the carrying amount of the investment. If, after reassessment, the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities recognised exceeds the cost of the business combination, the excess is included as income in the determination of the Group’s share of the associates’ profit or loss in the period in which the investment is acquired.

(h) Impairment of Assets Other Than Goodwill and Financial Assets

At the end of each reporting period, the Group assesses whether there is any indication that an asset may be impaired. If any such indication exists, the recoverable amount of the asset is estimated. Irrespective of whether there is any indication of impairment, the Group test an intangible asset with an indefinite useful life or an intangible asset not yet available for use for impairment annually by comparing the carrying amount with its recoverable amount. When there is an indication that an asset may be impaired but it is not possible to estimate the recoverable amount of the individual asset, the Group determines the recoverable amount of the cash-generating unit to which the asset belongs.

The recoverable amount of an asset and a cash-generating unit is the higher of the fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.

If the recoverable amount of an asset or a cash-generating unit is less than the carrying amount, an impairment loss is recognised to reduce the carrying amount to its recoverable amount. An impairment loss for a cash-generating unit is firstly allocated to reduce the carrying amount of any goodwill allocated to the cash-generating unit, and then, to the other assets of the unit within the scope of MFRS 136 Impairment of Assets pro rata on the basis of the carrying amount of each appropriate asset in the unit. An impairment loss is recognised immediately in profit or loss.

An impairment loss recognised in prior periods for an individual asset or the appropriate assets of a cash-generating unit is reversed when there has been a change in the estimates used to determine the asset’s recoverable amount. An impairment loss is reversed to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation, if no impairment loss had been recognised in prior periods. A reversal of an impairment loss is recognised immediately in profit or loss.

(i) Non-current Assets Held for Sale

Non-current assets and disposal groups are classified as held for sale if there has been a change in management intentions in respect of the future use of the asset or disposal group, and hence the carrying amount will be recovered principally through a sale transaction rather than through continuing use.

On initial classification as held for sale, non-current assets and disposal groups are measured at the lower of their carrying amount and fair value less costs to sell. Immediately before the initial classification as held for sale, the carrying amount of non- current assets and disposal groups is measured in accordance with the applicable MFRSs.

An impairment loss is recognised for any initial or subsequent write-down of the assets and disposal groups to fair value less costs to sell. Any subsequent increase in fair value less costs to sell is recognised as a gain in profit or loss, to the extent of the cumulative impairment loss that had previously been recognised.

(j) Foreign Currencies

Foreign Currency Transactions

Transactions in foreign currencies are initially recorded in the functional currency by applying to the foreign currency amount the spot exchange rates between the functional currency and the foreign currency at the date of the transactions. At the end of each reporting period, foreign currency monetary items are translated using the closing rate. Non-monetary items that are measured at historical cost in a foreign currency are translated using the exchange rates at the date of the transactions. Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined.


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(j) Foreign Currencies (continued)

Foreign Currency Transactions (continued)

Exchange differences are recognised in profit or loss in the period in which they arise except when a gain or loss on a non-monetary item is recognised in other comprehensive income. If so, any exchange differences relating to that gain or loss is recognised in other comprehensive income.

Exchange Differences on Net Investment in Foreign Operations

Exchange differences arising on monetary items that forms part of the Company’s net investment in foreign operations are recognised in the profit or loss in the separate financial statements of the Company. In the consolidated financial statements, such exchange differences are recognised initially in other comprehensive income and accumulated in equity under the heading of foreign currency translation reserves. On the disposal of a foreign operation, the cumulative amounts of the exchange differences relating to the foreign operation, recognised in other comprehensive income and accumulated in the separate component of equity, are reclassified from equity to profit or loss when the gain or loss on disposal is recognised.

Foreign Operations

Assets and liabilities of foreign operations, including goodwill arising on the acquisition and any fair value adjustments, are translated into Ringgit Malaysia at the closing rate at the end of the reporting period. Income and expenses are translated at exchange rates approximating the exchange rates at the date of the transactions. All resulting exchange differences are recognised in other comprehensive income and accumulated in equity under the heading of foreign currency translation reserve. On disposal of the foreign operations, the cumulative amounts of the exchange differences relating to the foreign operations, recognised in other comprehensive income and accumulated in the separate component of equity, are reclassified from equity to profit or loss when the gain or loss on disposal is recognised.

(k) Inventories

Inventories are measured at the lower of cost and net realisable value. Cost of inventories comprises all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition. Cost of inventories is assigned by using the First-in First-out method.

Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale.

(l) Share-based Payments

The Group operates an equity-settled share-based payments scheme to allow the employees of the Group to acquire ordinary shares of the Company. The grant by the Company of options over its equity instruments to the employees of subsidiary undertakings in the Group is treated as a capital contribution in the subsidiaries’ financial statements. The fair value of employee services received, measured by reference to the grant date fair value, is recognised over the vesting period as an increase to investment in subsidiary undertakings, with a corresponding credit to equity-settled employee benefits reserve in the Company’s financial statements.

The fair value determined at the grant date is recognised as expense in profit or loss in accordance with MFRS 2 Share-based Payment over the periods during which the employees become unconditionally entitled to the options, based on the Group’s estimate of the ordinary shares that will eventually vest, and adjusted for the effect of non market- based vesting conditions. At the end of each reporting period, the Group revises the estimates of the number of options that are expected to become exercisable, and recognises the impact of the revision of the original estimates.


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(m) Provisions

A provision is recognised when the Group and the Company have a present legal or constructive obligation as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. The risks and uncertainties are taken into account in reaching the best estimate of a provision. When the effect of the time value of money is material, the amount recognised in respect of the provision is the present value of the expenditure expected to be required to settle the obligation.

(n) Leases – as lessee

Finance Leases

Leases of assets are classified as finance lease where substantially all the risks and benefits incidental to the ownership of the assets, but not the legal ownership, are transferred to the Group. The Group initially recognise finance leases as assets and liabilities in the statements of financial position at amounts equal to the fair value of the leased assets or, if lower, the present value of the minimum lease payments at the inception of the leases. Any initial direct costs are added to the amount recognised as an asset.

Minimum lease payments are apportioned between the finance charge and the reduction of the outstanding liability. A finance charge is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability. Finance charges are recognised in profit or loss unless they are attributable to qualifying assets, in which case they are capitalised in accordance with the accounting policy for borrowing costs. Contingent rents are charged as an expense in profit or loss in the period in which they are incurred. The depreciation policy for depreciable leased assets is consistent with that of depreciable assets that are owned. If there is no reasonable certainty that the Group will obtained ownership by the end of the lease term, the leased assets are depreciated over the shorter of the lease terms and their useful lives.

Operating Leases

All other leases are classified as operating leases. Lease payments under operating leases are recognised as expense in profit or loss on a straight-line basis over the lease term.

(o) Financial Assets

Financial assets are recognised in the statements of financial position when the Group and the Company become a party to the contractual provisions of the instrument. Regular way purchases and sales of financial assets are recognised and derecognised using trade date accounting.

On initial recognition, financial assets are measured at fair value, plus transaction costs for financial assets not at ‘fair value through profit or loss’.

Effective interest method is a method of calculating the amortised cost of financial assets and of allocating the interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimate future cash receipts through the expected life of the financial assets or a shorter period to the net carrying amount of the financial assets.

After initial recognition, financial assets are classified into one of four categories: financial assets at ‘fair value through profit or loss’, ‘held-to-maturity’ investments, loans and receivables and ‘available-for-sale’ financial assets. The Group and the Company did not have any financial assets other than loans and receivables and ‘available-for-sale’ financial assets.


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(o) Financial Assets (continued)

Loans and Receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market.

After initial recognition, loans and receivables are measured at amortised cost using the effective interest method less any accumulated impairment losses. Gains or losses are recognised in profit or loss when loans and receivables are derecognised or impaired.

‘Available-for-Sale’

Investment in quoted equity and debt instruments that are traded in active market and certain unquoted equity instruments (when the fair value can be determined using a valuation technique) are classified as ‘available-for-sale’ financial assets. ‘Available-for- sale’ financial assets are measured at fair value.

Gains or losses on ‘available-for-sale’ financial assets are recognised in other comprehensive income, except for impairment losses and foreign exchange gains or losses, until the ‘available-for-sale’ financial assets are derecognised. At that time, the cumulative gains or losses previously recognised in other comprehensive income are reclassified from equity to profit or loss as a reclassification adjustment.

Interest calculated using the effective interest method is recognised in profit or loss. Dividends on ‘available-for-sale’ equity instruments are recognised in profit or loss when the Group’s and the Company’s right to receive payment is established.

Impairment of Financial Assets

At the end of each reporting period, the Group and the Company assess whether there is any objective evidence that financial assets held are impaired. Financial assets are impaired if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the financial assets which have an impact on the estimated future cash flows of the financial assets that can be reliably measured.

For other financial assets, objective evidence could include: - significant financial difficulty of the issuer; or - a breach of contract; or - the lender granting to the borrower a concession that the lender would not otherwise consider; or - it becoming probable that the borrower will enter bankruptcy or other financial reorganisation; or - observable data indicating that there is a measurable decrease in the estimated future cash flows from the financial

assets since the initial recognition of those assets.

For certain categories of financial assets, such as trade receivables, if it is determined that no objective evidence of impairment exists for an individually assessed financial asset, whether significant or not, the assets are included in a group with similar credit risk characteristics and collectively assessed for impairment.

The carrying amounts of the financial assets are reduced directly, except for the carrying amounts of trade receivables which are reduced through the use of an allowance account. Any impairment loss is recognised in profit or loss immediately. If, in later periods, the amount of any impairment loss decreases, the previously recognised impairment losses are reversed directly, except for the amounts related to trade receivables which are reversed to write back the amount previously provided in the allowance account. The reversal is recognised in profit or loss immediately.

If there is objective evidence that impairment losses have been incurred on financial assets carried at cost, the amount of any impairment loss is measured as the differences between the carrying amounts of the financial assets and the present value of their estimated future cash flows discounted at the current market rate of return for a similar financial assets. Such impairment losses are not reversed.


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(o) Financial Assets (continued)

For ‘available-for-sale’ financial assets, if a decline in fair value has been recognised in other comprehensive income and there is objective evidence that the assets are impaired, the cumulative losses that have been recognised are reclassified to profit or loss.

Impairment losses recognised in profit or loss for an investment in an equity instrument classified as ‘available-for-sale’ financial assets are not reversed through profit or loss.

If the fair value of a debt instrument classified as an ‘available-for-sale’ financial asset subsequently increases, and the increase can be objectively related to an event occurring after the impairment losses were recognised in profit or loss, the impairment losses are reversed and recognised in profit or loss.

Derecognition of Financial Assets

Financial assets are derecognised when the contractual rights to the cash flows from the financial assets expire or the Group and the Company transfer the financial assets and the transfers qualify for derecognition.

On derecognition of financial assets in their entirety, the differences between the carrying amounts and the sum of the consideration received and any cumulative gains or losses that have been recognised in other comprehensive income are recognised in profit or loss.

(p) Financial Liabilities and Equity Instruments Issued by the Company

Classification of Liabilities and Equity

On initial recognition, financial liabilities and equity instruments are classified in accordance with the substance of the contractual arrangement.

Interests, dividends, losses and gains relating to a financial instrument that is classified as a financial liability is recognised as income or expense in profit or loss. Distributions to holders of an equity instrument are debited directly to equity, net of any related income tax benefit. Transaction costs of an equity instrument are accounted for as a deduction from equity, net of any related income tax benefit.

Equity Instruments

Equity instruments are any contracts that evidence a residual interest in the assets of the Company after deducting all of its liabilities. Equity instruments issued by the Company are recognised at the proceeds received, net of direct issue costs.

Treasury Shares

When the Company reacquires its own equity instruments (‘treasury shares’), these treasury shares are deducted from equity. No gains or losses are recognised in profit or loss on the purchase, sale, issue and cancellation of these treasury shares. Considerations paid or received are recognised directly in equity.

Financial Liabilities

Financial liabilities are recognised on the statements of financial position when the Group and the Company become a party to the contractual provisions of the instrument.

On initial recognition, financial liabilities are measured at fair value, less transaction costs for financial liabilities not at ‘fair value through profit or loss’.

After initial recognition, financial liabilities are either classified as at ‘fair value through profit or loss’ or amortised cost using the effective interest method. The Group and the Company did not have any financial liabilities other than financial liabilities at amortised cost using the effective interest method.


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(p) Financial Liabilities and Equity Instruments Issued by the Company

Financial Liabilities at Amortised Cost using the Effective Interest Method

Effective interest method is a method of calculating the amortised cost of financial liabilities and allocating the interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimate future cash payments through the expected life of the financial liabilities or a shorter period to the net carrying amount of the financial liabilities.

After initial recognition, financial liabilities other than financial liabilities at ‘fair value through profit or loss’ are measured at amortised cost using the effective interest method. Gains or losses are recognised in profit or loss when the financial liabilities are derecognised or impaired.

Derecognition of Financial Liabilities

Financial liabilities are derecognised when the obligation specified in the contract is discharged, cancelled or expires.

Any difference between the carrying amounts of financial liabilities derecognised and the consideration paid is recognised in profit or loss.

(q) Revenue

Revenue is measured at the fair value of the consideration received or receivable, net of discounts and indirect taxes applicable to the revenue.

Revenue is recognised in the profit or loss based on the following:

Rendering of Services

Revenue from rendering of services is recognised by reference to the stage of completion of the transaction at the end of the reporting period when the outcome of the transaction can be estimated reliably. Upfront payments for which there are subsequent deliverables are initially reported as deferred revenue and are recognised as revenue only when the deliverables are completed and accepted by the customers. Cost incurred for work performed for which performance milestones have yet to be achieved is initially recorded as deferred cost and recognised as cost of sales only when the deliverables are completed and accepted by customers.

Sales of Goods

- Revenue from sales of goods is recognised when the following conditions are satisfied: - the Group has transferred to the buyer the significant risks and rewards of ownership of the goods; - the Group retains neither continuing managerial involvement to the degree usually associated with ownership nor

effective control over the goods sold; - the amount of revenue can be measured reliably; - it is probable that the economic benefits associated with the transaction will flow to the Group; and - the costs incurred and to the incurred in respect of the transaction can be measured reliably.

Interest Revenue

Interest revenue is recognised on an accrued on a time basis.

Dividend Revenue

Dividend revenue is recognised when the shareholder’s rights to receive payment is established.


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(r) Employee Benefits

Short-term Employment Benefits

Short-term employment benefits, such as wages, salaries, bonuses, allowances and social security contributions, are recognised as expense when the employees have rendered services to the Group.

The expected cost of accumulating compensated absences are recognised when the employees render services that increase their entitlement to future compensated absences. The expected cost of non-accumulating compensated absences, such as sick and medical leaves, are recognised when the absences occur.

The expected cost of accumulating compensated absences are measured as the additional amount expected to be paid as a result of the unused entitlement that has accumulated at the end of the reporting period.

The expected cost of bonus payments are recognised when the Group and the Company have a present legal or constructive obligation to make such payments as a result of past events and a reliable estimate of the obligation can be made. A present obligation exists when the Group and the Company have no realistic alternative but to make the payments.

Defined Contribution Plan

Contributions payable to the defined contribution plan are recognised as expense when the employees have rendered services to the Group and the Company.

Termination Benefits

Termination benefits are recognised as a liability and an expense when the Group is demonstrably committed to either terminate the employment of the employees before the normal retirement date, or provide termination benefits as a result of an offer made for voluntary redundancy. The Group is demonstrably committed to a termination when the Group has a detailed formal plan for the termination and are without realistic possibility of withdrawal.

Termination benefits in relation to the offer made to encourage voluntary redundancy are measured based on the number of employees expected to accept the offer.

(s) Borrowing Costs

Borrowing costs that are directly attributable to the acquisition, construction or production of qualifying assets are capitalised as part of the cost of the assets when the Group incurs the expenditure for the assets, incur borrowing costs and undertake activities that are necessary to prepare the assets for the intended use or sale.

Capitalisation of borrowing costs is suspended during extended periods in which active development is suspended and ceased when substantially all the activities necessary to prepare the qualifying assets for the intended use or sale are complete.

Other borrowing costs are recognised as expense in profit or loss when they are incurred.

(t) Income Tax

Tax expense is the aggregate amount included in the determination of profit or loss for the period in respect of current tax and deferred tax. Current tax and deferred tax are charged or credited directly to other comprehensive income or equity if the tax relates to items that are credited or charged directly to other comprehensive income or equity. Current tax for current and prior periods is recognised as a liability to the extent unpaid. If the amount already paid in respect of the current and prior periods exceeds the amount due for those periods, the excess is recognised as an asset.

Current tax assets and liabilities for the current and prior periods are measured at the amounts expected to be paid or recovered, using the tax rates that have been enacted or substantially enacted by the end of the reporting period. Current tax assets and liabilities are offset only when the Group and the Company have a legally enforceable right to set off the recognised amounts and intend either to settle on a net basis, or to realise the asset and settle the liability simultaneously.


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(t) Income Tax (continued)

Deferred tax is provided in full on temporary differences which are the differences between the carrying amounts in the financial statements and the corresponding tax base of an asset or liability at the end of the reporting period. Deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets are recognised for all deductible temporary differences to the extent that it is probable that future taxable profit will be available against which the deductible temporary differences can be utilised. Deferred tax liabilities and assets are not recognised if the temporary differences arise from initial recognition of goodwill and the initial recognition of assets or liabilities that is not a business combination and at the time of the transaction, affected neither accounting profit nor taxable profit.

Deferred tax liabilities and assets reflect the tax consequences that would follow from the manner in which the Group and the Company expect to recover or settle the carrying amounts of their assets and liabilities and are measured at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled, based on tax rates that have been enacted or substantially enacted by the end of the reporting period.

The carrying amounts of the deferred tax assets are reviewed at the end of each reporting period, and they are reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow the benefit or part of the deferred tax assets to be utilised. The reduction is reversed to the extent that it becomes probable that sufficient taxable profit will be available.

Deferred tax assets and liabilities are offset when the Group and the Company have a legally enforceable right to set off current tax assets and liabilities, and the deferred tax assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities which intend either to settle current tax liabilities and assets on a net basis or to realise the assets and settle the liabilities simultaneously, in each future period in which significant amounts of deferred tax liabilities or assets are expected to be settled or recovered.

(u) Cash and Cash Equivalents

Cash and cash equivalents in statements of cash flows comprise cash and bank balances, highly liquid investments that are readily convertible to a known amount of cash and which are subject to an insignificant risk of changes in value, net of bank overdrafts.

(v) Segmental Reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision maker, who is responsible for allocating resources and assessing performance of the operating segment, has been identified as the board of directors that makes strategic decisions.

Segment reporting is presented for enhanced assessment of the Group’s and the Company’s risks and returns. Business segments provide products or services that are subject to risk and returns that are different from those of other business segments. Geographical segments provide products or services within a particular economic environment that is subject to risks and returns that are different from those components operating in other economic environments.

Segment revenue, results, assets and liabilities are those amounts resulting from the operating activities of a segment that are directly attributable to the segment and the relevant portion that can be allocated on a reasonable basis to the segment. Segment revenue, results, assets and liabilities are determined after elimination of intragroup balances and intragroup transactions as part of the consolidation process.

(w) Financial Guarantee Contracts

A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due.

Financial guarantee contracts are recognised initially as a liability at fair value, net of transaction costs. Subsequent to initial recognition, financial guarantee contracts are recognised as income in the profit or loss over the period of the guarantee. If the debtor fails to make payment relating to financial guarantee contract when it is due and the Group, as the issuer, is required to reimburse the holder for the associated loss, the liability is measured at the higher of the best estimate of the expenditure required to settle the present obligation at the reporting date and the amount initially recognised less cumulative amortisation.


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(x) Offsetting Financial Instruments

Financial assets and liabilities are offset and the net amount presented in the statements of financial position when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis, or realise the asset and settle the liability simultaneuosly.

(y) Contingent Liabilities

The Group does not recognise contingent liabilities, but discloses its existence in the financial statements. A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Group or a present obligation that is not recognised because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in the extremely rare case where there is a liability that cannot be recognised because it cannot be measured reliably.

4. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

Critical Judgements in Applying the Accounting Policies

The judgements, apart from those involving estimations described below, that the management has made in the process of applying the accounting policies and that have the most significant effect on the amounts recognised in the financial statements are as follows:

Revenue Recognition

The Group is a party to the contractual agreements, which can involve upfront and milestone payments that may occur over several years. These agreements may also involve certain future obligations. Revenue is only recognised when, in management’s judgement, the significant risks and rewards of ownership have been transferred or when the obligation has been fulfilled.

Deferred Tax Assets

Deferred tax assets are recognised for all unused tax losses and unabsorbed capital allowances to the extent that it is probable that future taxable profits will be available against which the tax losses and capital allowances can be utilised. Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and level of future taxable profits together with future tax planning strategies.

Key Sources of Estimation Uncertainty

The key assumptions concerning the future, and other key sources of estimation uncertainty at the end of the reporting period, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are as follows:

Allowance for Doubtful Debts

At the end of the reporting period, the allowance for doubtful debts of RM10,058,317 (2012: RM9,561,275) is representing 12% (2012: 7%) from the total trade receivables. The estimates allowance is based on the historical default rate. Hence, should the actual default rate becomes higher than the estimated default rate, the Group may be required to charge additional allowance for doubtful debt to the profit or loss within the next financial year.

Useful Lives of Property, Plant and Equipment

Property, plant and equipment are depreciated on a straight-line basis over their estimated useful lives. The management exercises their judgement in estimating the useful lives of the depreciable assets. The Group assesses annually the useful lives of the property, plant and equipment and if the expectation differs from the original estimate, such difference will impact the depreciation in the period in which such estimate has been charged.


ANNUAL REPORT 2013

65


4. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY (continued)

Share-based Payments to Employees

The cost of providing the share-based payments to the employees is charged to the profit or loss over the vesting period. The cost is based on the fair value of the options and the number of the options expected to vest. The fair value of the options is determined using Black-Scholes-Merton option pricing model.

Amortisation of Intangible Assets

The development costs of gas generators are amortised on a straight line basis over their useful lives of 15 years. The Group assesses annually the useful lives of the intangible assets and if the expectation differs from the original estimate, such difference will impact the amortisation expenses in the period in which such estimate has been charged.


ANNUAL REPORT 2013

66


5.

PR

OP

ER

TY

, PLA

NT

AN

D E

QU

IPM

EN

T

GR

OU

PAt

31

Dec

embe

r 201

3Ve

ssel

sR

M

Free

hold

la

nd a

nd

build

ing

RM

Leas

ehol

d la

nd a

nd

build

ing

RM

Furn

iture

an

d fit

tings RM

Ren

ovat

ion

RM

Wor

ksho

p to

ols

RM

Offi

ce

equi

pmen

tsR

M

Mot

or

vehi

cles RM

Equi

pmen

tR

M

Plan

t and

m

achi

nery

RM

Yard

und

er

cons

truc

tion

RM

Tota

lR

M

Cos

t

Begi

nnin

g of

the

year

50,0

005,

097,

248

2,55

7,91

772

5,24

74,

004,

189

3,37

3,38

79,

907,

462

4,16

1,67

845

,250

,412

23,6

68,8

0622

7,22

099

,023

,566

Addi

tions

--

-38

4,21

457

,748

-17

8,43

685

,000

-5,

212,

650

-5,

918,

048

Disp

osal

--

--

--

(206

,913

)(1

42,9

29)

--

-(3

49,8

42)

Reve

rsal

--

--

--

--

(7,8

98,7

40)

--

(7,8

98,7

40)

Recl

assifi

catio

n fro

m/(t

o)(5

0,00

0)-

--

--

--

-50

,000

--

End

of th

e ye

ar-

5,09

7,24

82,

557,

917

1,10

9,46

14,

061,

937

3,37

3,38

79,

878,

985

4,10

3,74

937

,351

,672

28,9

31,4

5622

7,22

096

,693

,032

Accu

mul

ated

D

epre

ciat

ion

Begi

nnin

g of

the

year

49,7

9485

3,56

928

5,74

539

2,32

41,

640,

502

1,93

4,48

15,

920,

588

3,80

8,82

520

,739

,781

11,5

61,7

65-

47,1

87,3

74

Cha

rge

for t

he y

ear

-13

6,59

546

,643

90,4

0260

2,48

836

9,39

11,

041,

830

149,

232

15,0

55,5

902,

515,

556

-20

,007

,727

Disp

osal

--

--

--

(135

,039

)(1

42,9

29)

--

-(2

77,9

68)

Recl

assifi

catio

n fro

m/(t

o)(4

9,79

4)-

--

--

--

-49

,794

--

End

of th

e ye

ar-

990,

164

332,

388

482,

726

2,24

2,99

02,

303,

872

6,82

7,37

93,

815,

128

35,7

95,3

7114

,127

,115

-66

,917

,133

Net

Car

ryin

g Am

ount

-4,

107,

084

2,22

5,52

962

6,73

51,

818,

947

1,06

9,51

53,

051,

606

288,

621

1,55

6,30

114

,804

,341

227,

220

29,7

75,8

99


ANNUAL REPORT 2013

67


5.

PR

OP

ER

TY

, PLA

NT

AN

D E

QU

IPM

EN

T (c

ont

inue

d)

GROU

PAt

31

Dece

mbe

r 201

2Ve

ssel

sRM

Dryd

ocki

ng

cost RM

Free

hold

la

nd a

nd

build

ing

RM

Leas

ehol

d la

nd a

nd

build

ing

RM

Furn

iture

an

d fit

tings RM

Reno

vatio

nRM

Wor

ksho

p to

ols

RM

Offic

e eq

uipm

ents RM

Mot

or

vehi

cles RM

Equi

pmen

t un

der

com

miss

ioni

ng RMEq

uipm

ent

RM

Plan

t and

m

achi

nery RM

Yard

un

der

cons

truct

ion

RMTo

tal

RM

Cost

or V

alua

tion

Begin

ning

of th

e ye

ar

At c

ost

54,6

62,0

075,

783,

228

5,09

7,24

82,

557,

917

2,65

1,11

16,

383,

754

3,27

6,06

312

,413

,588

5,60

8,38

535

,275

,810

-23

,369

,714

-15

7,07

8,82

5

At va

luatio

n82

,500

,000

--

--

--

--

--

--

82,5

00,0

00

Addit

ions

--

--

11,9

1048

6,45

197

,324

417,

890

--

15,9

57,0

101,

918,

757

227,

220

19,1

16,5

62

Disp

osal/

Writ

ten

off

(81,

472,

085)

(5,7

83,2

28)

--

(1,9

37,3

30)

(2,8

49,0

19)

-(2

,827

,289

)(1

,444

,341

)(5

,982

,408

)-

(1,6

19,6

65)

-(1

03,9

15,3

65)

Reva

luatio

n d

eficit

(55,

639,

922)

--

--

--

--

--

--

(55,

639,

922)

Recla

ssific

ation

from

/(to

)-

--

--

--

--

(29,

293,

402)

29,2

93,4

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--

Wind

ing u

p of

a

subs

idiar

y com

pany

(N

ote

40)

--

--

(386

)(1

4,92

4)-

(84,

914)

(2,0

57)

--

--

(102

,281

)

Exch

ange

diffe

renc

es-

--

-(5

8)(2

,073

)-

(11,

813)

(309

)-

--

-(1

4,25

3)

End

of th

e ye

ar50

,000

-5,

097,

248

2,55

7,91

772

5,24

74,

004,

189

3,37

3,38

79,

907,

462

4,16

1,67

8-

45,2

50,4

1223

,668

,806

227,

220

99,0

23,5

66

Accu

mul

ated

De

prec

iatio

n

Begin

ning

of th

e ye

ar20

,540

,268

1,15

6,85

475

1,97

423

6,18

51,

394,

685

2,96

4,99

01,

573,

051

6,13

1,06

44,

460,

237

149,

560

-9,

513,

889

-48

,872

,757

Char

ge fo

r the

year

2,67

9,72

148

1,93

510

1,59

549

,560

193,

070

628,

502

361,

430

1,42

6,91

241

9,13

314

9,56

020

,739

,781

2,43

1,85

3-

29,6

63,0

52

Disp

osal/

Writ

ten

off

(2,0

13,7

11)

(924

,864

)-

-(1

,195

,283

)(1

,948

,715

)-

(1,5

76,0

55)

(1,0

69,6

82)

(299

,120

)-

(383

,977

)-

(9,4

11,4

07)

Reva

luatio

n d

eficit

(21,

870,

409)

--

--

--

--

--

--

(21,

870,

409)

Recla

ssific

ation

fro

m/

(to)

713,

925

(713

,925

)-

--

--

--

--

-- -

Wind

ing u

p of

a

subs

idiar

y com

pany

(N

ote

40)

--

--

(129

)(3

,720

)-

(54,

103)

(750

)-

--

-(5

8,70

2)

Exch

ange

diffe

renc

es-

--

-(1

9)(5

55)

-(7

,230

)(1

13)

--

--

(7,9

17)

End

of th

e ye

ar49

,794

-85

3,56

928

5,74

539

2,32

41,

640,

502

1,93

4,48

15,

920,

588

3,80

8,82

5-

20,7

39,7

8111

,561

,765

-47

,187

,374

Net C

arry

ing

Amou

nt20

6-

4,24

3,67

92,

272,

172

332,

923

2,36

3,68

71,

438,

906

3,98

6,87

435

2,85

3-

24,5

10,6

3112

,107

,041

227,

220

51,8

36,1

92


ANNUAL REPORT 2013

68


5. PROPERTY, PLANT AND EQUIPMENT (continued)

Included in the property, plant and equipment are motor vehicles, office equipments and plant and machinery which is acquired by means of hire purchase and lease arrangements with a net carrying amount of RM160,712 (2012: RM422,646), RM1,835,825 (2012: RM547,329) and RM5,768,924 (2012: RM388,923) respectively.

Certain plant and machinery have been pledged to secure against the Group’s term loan as disclosed in Note 16 to the Financial Statements.

Freehold and leasehold land and building have been pledged to secure against the Group’s bank overdraft as disclosed in Note 19 to the Financial Statements.

6. INTANGIBLE ASSETS

GROUP

Development Costs

RM

Goodwill on Consolidation

RMTotal

RM

CostBalance as at 01.01.2012 3,236,302 350,688 3,586,990Additions 575,315 - 575,315Written off - (11,435) (11,435)

Balance as at 31.12.2012 3,811,617 339,253 4,150,870Additions 301,268 - 301,268

Balance as at 31.12.2013 4,112,885 339,253 4,452,138

Accumulated Amortisation/ImpairmentBalance as at 01.01.2012 429,665 - 429,665Amortised during the year 241,660 - 241,660

Balance as at 31.12.2012 671,325 - 671,325Amortised during the year 264,903 - 264,903

Balance as at 31.12.2013 936,228 - 936,228

Net Carrying AmountAs at 31 December 2013 3,176,657 339,253 3,515,910

As at 31 December 2012 3,140,292 339,253 3,479,545

(a) The development costs incurred in developing gas generator are amortised on a straight line basis over their useful lives of 15 years.

(b) Goodwill acquired in the business combinations is, from the acquisition date, allocated to the cash-generating units (‘CGU’) that are expected to benefit from the synergies of the combination, as follows:

2013 2012RM RM

Engineered packages/Product and Services 339,253 339,253

The recoverable amounts of the cash-generating units are determined based on the computation of their value in use.


ANNUAL REPORT 2013

69


6. INTANGIBLE ASSETS (continued)

The key assumptions used in the computation of value in use are discount rate, growth rate and projected cash flows from use and disposal at the end of the useful life.

Discount rate is determined based on the pre-tax rate that reflect current market assessment of the time value of money and risks specific to the assets.

The projected cash flows from use are derived from the most recent financial budgets approved by management for the next five years and extrapolated cash flows for the following years based on estimated growth rates. The projected growth rates do not exceed the industrial average growth rates.

The estimate of net cash flows for the disposal of the assets at the end of its useful life is the present value of the amount that the Group expects to obtain from the disposal of the assets in an arm’s length transaction between knowledgeable, willing parties, after deducting the estimated costs of disposal.

The key assumptions used for determining the value in use, which are determined based on management’s past experience and expectation of the future development, are as follows:

% Profit margin 12 Growth rate 5 Discount rate 6

7. SUBSIDIARY COMPANIES

COMPANY

2013 2012RM RM

Unquoted shares, at cost 152,968,394 118,668,392Less: Accumulated impairment losses (95,568,386) (95,568,386)

57,400,008 23,100,006SIS granted to employees of the subsidiary companies 531,416 -

57,931,424 23,100,006

Details of the Company’s subsidiaries as at 31 December 2013 are as follows:

Group Effective Interest

Country of Incorporation

Principal Activities

2013 2012% %

Held by the Company:

Tanjung Offshore Services Sdn. Bhd.

100 100 Malaysia Integrated service provider to the oil and gas and related industries.

Tanjung CSI Sdn. Bhd. 100 100 Malaysia Design, engineering, training, installation and commissioning for plant automation and safety system, flow metering solutions, control valves, field instrumentations, control solutions for turbines and compressors and after sales activities for onshore and offshore services.


ANNUAL REPORT 2013

70





2013 2012% %

Gas Generators (Malaysia) Sdn. Bhd.

100 51 Malaysia Manufacturing and supply of gas generators to both industrial and oil and gas industry.

**Tanjung Maintenance Services Sdn. Bhd.

100 100 Malaysia Provision of maintenance services to the oil and gas and related industries.

Tanjung Offshore Marine Services Sdn. Bhd.

100 100 Malaysia Ownership and leasing offshore vessels to local and international oil industry major.

Tanjung Citech Sdn. Bhd. 100 100 Malaysia Manufacturing and marketing of waste heat recovery units for the offshore oil and gas industry.

Tanjung Offshore Resources Sdn. Bhd.

100 - Malaysia Dormant

*Tanjung Citech UK Limited 100 100 England and Wales

Holding company.

*PT Tanjung Offshore Nusantara 80 80 Indonesia In the process of voluntarily winding up.

Held by Tanjung Offshore Services Sdn. Bhd.:

Tanjung PetroConsult Sdn. Bhd. 100 100 Malaysia Provision of engineering and professional manpower services to the oil and gas and related industries.

Held by Tanjung Offshore Services Sdn. Bhd.:

Tanjung NewEnergy Services Sdn. Bhd.

100 100 Malaysia Provision of project management services to the engineering and energy industries.

Held by Tanjung Citech UK Limited:

*Citech Energy Recovery Systems UK Limited

100 100 England and Wales

Manufacture of waste heat recovery units for the oil and gas industry (ceased operations).

Held by Gas Generators (Malaysia) Sdn. Bhd.:

Universal Gas Generators (M) Sdn. Bhd.

100 100 Malaysia Selling and letting of gas generator equipment.

* The financial statements of these companies are not audited by AljeffriDean.

** In the previous financial year, Tanjung Maintenance Services Sdn. Bhd. was directly held by Tanjung Offshore Services Sdn. Bhd. Due to the internal restructuring, Tanjung Maintenance Services Sdn. Bhd. is now directly held by the Company.

The amount owing by/(to) subsidiary companies are unsecured, interest free and are repayable on demand.


ANNUAL REPORT 2013

71


7. SUBSIDIARY COMPANIES (continued)

The Group’s subsidiary companies that have non-controlling interest (“NCI”) are as follows:

Summarised financial information on the significant subsidiary companies, Gas Generators (Malaysia) Sdn. Bhd. and its subsidiary company that have NCI before intra group elimination is as follows:

(a) Summarised statement of profit or loss

Gas Generators (Malaysia) Sdn. Bhd. and its subsidiary company

2013RM

2012RM

Revenue 95,449,666 34,939,914

Profit before taxation 6,689,231 5,300,570Taxation (314,804) (3,430)

Net profit for the year 6,374,427 5,297,140

Profit for the year allocated to NCI 3,123,470 2,595,598

(b) Summarised statement of financial position


2013RM

2012RM

Total assets -* 80,319,323Total liabilities -* (61,085,954)

Net assets -* 19,233,369

(c) Summarised statement of cash flow


2013RM

2012RM

Cash flow from operating activities -* 3,249,288Cash flow from investing activities -* (406,701)Cash flow from financing activities -* 3,152,599

* As disclosed in Note 41 to the Financial Statements, Gas Generators (Malaysia) Sdn. Bhd. has became a wholly-owned subsidiary of the Company on 21 October 2013. Therefore, there is no amount presented.


ANNUAL REPORT 2013

72


8. ASSOCIATE COMPANIES

GROUP COMPANY2013

RM2012

RM2013

RM2012

RMUnquoted shares, at cost 184,499 1,608,575 - 1,419,334Share of attributable post acquisition (losses)/profits after

taxation (10,924) 2,904,565 - -

173,575 4,513,140 - 1,419,334

The associate companies have no significant contingent liability to which the Group is exposed, nor has the Group any significant contingent liability in relation to its interest in the associate companies.

Details of the Group’s associate companies as at 31 December 2013 are as follows:




2013 2012

% %

Held by the Company:

* Cendor MOPU Producer Ltd - 20 Malaysia (Wilayah Persekutuan,

Labuan)

To own, lease, sub-lease, maintain, operate and manage the Mobile Offshore Production Unit to carry out oil and gas operations.

Held by Gas Generators (M) Sdn. Bhd.:

*Universal Hydrogen Generators (M) Sdn. Bhd.

49.50 49.50 Malaysia Commission agent for the fabrication and supply of industrial equipment.

*PT. Gas Generators Indonesia 35 35 Indonesia Commission agent for the fabrication and supply of industrial equipment.

*^”Universal Gas Generators (Thailand) Limited

50 35 Thailand Commission agent for the fabrication and supply of industrial equipment.

*Gas Generators Philippines Inc. - 35 Philippines Commission agent for the fabrication and supply of industrial equipment.

* The financial statements of these companies are not audited by AljeffriDean. ^ The share certificate is registered in the name of trustee. ” Deemed as associate as only significant influence is exercised by the Group.

Summarised statement of profit or loss of the significant associate company is as follows:

Cendor MOPU Producer Ltd2013

RM2012

RM

Revenue 26,921,358 34,942,900

Net loss for the year (7,330,245) (1,601,147)

Share of results (1,466,049) (320,229)

Summarised statement of financial position of the significant associate company is as follows:


ANNUAL REPORT 2013

73


8. ASSOCIATE COMPANIES (continued)

Cendor MOPU Producer Ltd2013

RM2012

RM

Total assets - 23,728,545Total liabilities - (2,054,430)

Net assets - 21,674,115

Group’s share of associates’ net assets - 4,334,823

Certain of other associate companies are not presented as the amounts are not material.

9. DEFERRED TAX

The amounts of deferred tax assets and liabilities, after appropriate offsetting, are included in the statements of financial position, as follows:

2013 2012GROUP RM RM

Deferred tax liabilities (2,665,594) (2,974,429)

Net position - 761,109

The following are the movements of deferred tax assets and liabilities (before offsetting):

GROUP 2013

Beginning of the year

RM

Recognised in the profit

or loss(Note 26)

RM

Exchange differences

RM

Winding up of a subsidiary

company(Note 40)

RM

End of the yearRM

Deferred Tax AssetsUnused tax losses and unabsorbed

capital allowances 2,974,429 (308,835) - - 2,665,594Exercise of options pursuant to ESOS 761,109 (761,109) - - -

3,735,538 (1,069,944) - - 2,665,594

Deferred Tax LiabilitiesProperty, plant and equipment 2,974,429 (308,835) - - 2,665,594

Net Position 761,109 (761,109) - - -

2012Deferred Tax AssetsUnused tax losses and unabsorbed

capital allowances 10,369,310 (6,788,613) (75,006) (531,262) 2,974,429Other 16,595 - - (16,595) -Exercise of options pursuant to ESOS 761,109 - - - 761,109

11,147,014 (6,788,613) (75,006) (547,857) 3,735,538

Deferred Tax LiabilitiesProperty, plant and equipment 9,563,352 (6,588,613) - (310) 2,974,429

Net Position 1,583,662 (200,000) (75,006) (547,547) 761,109


ANNUAL REPORT 2013

74


10. INVENTORIES


At cost:

Work-in-progress 12,088,031 56,667,353

Raw materials 2,079,404 2,184,716

Finished goods - 4,120

14,167,435 58,856,189

Less: Allowance for impairment losses (350,021) (350,021)

13,817,414 58,506,168

11. TRADE RECEIVABLES

2013 2012GROUP RM RMTrade receivables 80,773,639 135,830,607Less: Allowance for doubtful debts (10,058,317) (9,561,275)

70,715,322 126,269,332

The credit term of trade receivables are ranging from 30 days to 60 days.

Included in the Group’s trade receivables are accrued revenue amounting to RM12,888,899 (2012: RM31,056,292) which represent 16% (2012: 23%) from the total trade receivables.

Included also in the Group’s trade receivables are amount owing by associate and related companies amounting to RM2,008,032 (2012: RM1,886,984).

As at 31 December 2013, the trade receivables ageing are as follows:

2013 2012GROUP RM RMNeither past due nor impaired 42,573,377 82,050,59601 to 30 days past due but not impaired 1,312,415 8,102,41131 to 60 days past due but not impaired 26,829,530 36,116,325

70,715,322 126,269,332Impaired 10,058,317 9,561,275

80,773,639 135,830,607

Trade receivables that are neither past due nor impaired

Trade receivables that were neither past due nor impaired relate to customers for whom there were no default. None of the Group’s trade receivables that are neither past due nor impaired have been renegotiated during the current financial year.

Trade receivables that are past due but not impaired

Trade receivables that were past due but not impaired relate to customers that have good track record with the Group. Based on past experience and no adverse information to date, the directors of the Group are of the opinion that no allowance for impairment is necessary in respect of these balances as there has not been a significant change in the credit quality and the balances are still considered fully recoverable.


ANNUAL REPORT 2013

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11. TRADE RECEIVABLES (continued)

Trade receivables that are impaired

All impaired trade receivables are individually determined. The reconciliation of the allowance account is as follows:

GROUP2013

RM2012

RMBeginning of the year 9,561,275 6,129,164Additional allowance recognised 2,515,235 3,681,049Amounts recovered and reversed (1,626,229) (248,938)Amounts written off (391,964) -

End of the year 10,058,317 9,561,275

12. OTHER RECEIVABLES, DEPOSITS AND PREPAYMENTS

GROUP COMPANY2013 2012 2013 2012

RM RM RM RM

Other receivables 2,255,724 9,077,533 233,161 2,779,642Deposits 2,064,360 334,563 - -Prepayments 30,517,284 24,260,109 233,024 -

34,837,368 33,672,205 466,185 2,779,642Less: Allowance for doubtful debts (5,398,716) (4,296,139) - -

29,438,652 29,376,066 466,185 2,779,642

13. SHORT TERM INVESTMENT

Short term investment consist of unquoted unit trust are measured at mark to market based on the net asset value at each reporting date. The time weighted rates of returns of this investment at the reporting date in the range of 3.00 % to 3.10%.

14. CASH AND CASH EQUIVALENTS

GROUP COMPANY2013 2012 2013 2012

RM RM RM RM

Cash and bank balances 22,517,737 32,815,994 5,304,255 829,589Fixed deposits with licensed banks 91,213,328 129,962,319 71,996,688 129,179,721

113,731,065 162,778,313 77,300,943 130,009,310

The Group’s and the Company’s cash and cash equivalents amounting to RM7,536,417 (2012: RM3,432,769) and RM1,485,589 (2012: RM2,668,191) respectively have been pledged to licensed banks for bank facilities granted to the Group and the Company.

15. HELD FOR SALE AND DISCONTINUED OPERATIONS

On 23 April 2012, the Company entered into a conditional agreement for the purchase and sale of shares with Kota Bayu Ekuiti Sdn. Bhd. for the disposal by the Company of 10,000,000 ordinary shares of RM1 each in Tanjung Kapal Services Sdn. Bhd. (“TKS”), representing the entire equity interest in TKS, for a cash consideration of RM220,000,000. The disposal of the subsidiary was completed on 20 July 2012. The details of the net assets of TKS at the date of disposal are disclosed in Note 33 to the Financial Statements.


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15. HELD FOR SALE AND DISCONTINUED OPERATIONS (continued)

On 10 February 2012, the Company announced that its wholly-owned subsidiary, Citech Energy Recovery Systems UK Limited, a company incorporated in the United Kingdom, has commenced the cessation of business operations with immediate effect.

Since the fair value of the disposal group less costs to sell exceeded the net carrying amount of the relevant assets and liabilities, no impairment loss was recognised.

The assets and liabilities classified as held for sale and discontinued operations are as follows:

GROUP2013

RM2012

RM

Assets classified as held for sale and discontinued operations:Inventories 1,658,423 3,533,766Trade receivables 309,745 1,283,517Other receivables, deposits and prepayments 461,785 529,635Cash and cash equivalents 52,998 2,672,898

2,482,951 8,019,816

Liabilities directly associated with assets classified as held for sale and discontinued operations:

Trade payables 3,130,630 3,808,964Other payables and accruals 7,416,863 13,839,910

10,547,493 17,648,874

The results of the held for sale and discontinued operations are as follows:


Revenue 998,283 83,390,769Cost of sales - (39,636,720)

Gross profit 998,283 43,754,049Other income 6,097,047 2,719,666

Operating expenses (179,871) (4,496,683)Profit from operations 6,915,459 41,977,032Finance costs - (17,846,451)

Profit before taxation 6,915,459 24,130,581Taxation (13,558) (1,241,920)

Profit from held for sale and discontinued operations 6,901,901 22,888,661Loss on disposal of a subsidiary company - (5,478,490)

Profit for the year after tax 6,901,901 17,410,171


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15. HELD FOR SALE AND DISCONTINUED OPERATIONS (continued)

Profit from operations are derived at after:


a) Other losses and expensesStatutory audit 119,280 61,692Allowance for doubtful debts, impairment and written off, net off recovered - (112,564)Depreciation of property, plant and equipment - 17,133,075Loss on foreign exchange - 362,410Rental expenses (1,958) 91,946

b) Other gains and incomeGain on disposal of property, plant and equipment - 168,249Gain on foreign exchange 194 30,890Gain on disposal of inventories - 114,103Gain on disposal of intangible assets - 2,242,684Interest income - 19,720Reversal of provision 2,920,710 2,410,020

c) Employee benefit expensesStaff costs:- Short term benefits - 17,104,760- EPF contributions - 1,809,689

Net cash flows attributable to held for sale and discontinued operations are as follows:


Cash flows from operating activities (2,619,901) 80,234,696Cash flows from investing activities - (102,569,592)Cash flows from financing activities - 16,465,861

16. LONG TERM BORROWINGS


Total outstanding term loan 301,476 636,990Less: Repayable within 12 months (Note 19) (90,360) (380,596)

211,116 256,394Hire purchase and finance lease payables (Note 35) 4,218,845 733,590

4,429,961 989,984

Term Loan 1 The purpose of this term loan is to finance the property held under PN 4125, Lot No. 3801, Mukim Teluk Kalong, District of

Kemaman, Terengganu Darul Iman. The term loan is repayable within 10 years and secured by letter of undertaking, notice of assignment, fixed deposit and corporate guarantee from the Company.

Term Loan 2 The purpose of this term loan is to finance the construction of gas generators. The term loan is repayable within 7 years and

secured against a fixed charge on the equipment (Note 5 to the Financial Statements) and corporate guarantees by Gas Generators (Malaysia) Sdn. Bhd. During the current financial year, the said term loan has been fully settled.


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17. TRADE PAYABLES


Ringgit Malaysia 35,139,974 104,905,700Other currencies 12,257,351 40,542,641

47,397,325 145,448,341

The normal trade credit terms granted to the Group range from 30 to 45 days. The Group has in place a sound financial risk management procedure to ensure that all amounts payable are paid within the credit periods.

Included in the Group’s trade payables are accrued cost amounting to RM17,212,658 (2012: RM38,258,147) which represent 36% (2012: 26%) from the total trade payables.

Included also in the Group’s trade payables are amount owing to associate and related companies amounting to RMNil (2012: RM52,292,839).

18. OTHER PAYABLES AND ACCRUALS

GROUP COMPANY2013 2012 2013 2012

RM RM RM RM

Other payables 9,293,007 43,300,772 - -Provision 1,754,649 1,098,630 15,000 454,457Accruals 14,713,337 20,960,013 338,077 1,071,750

25,760,993 65,359,415 353,077 1,526,207

19. SHORT TERM BORROWINGS

GROUP COMPANY2013 2012 2013 2012

RM RM RM RM

Short term loan (Note 16) 90,360 380,596 - -Revolving credit - 25,058,455 - -Bank overdraft 2,778,771 22,003,906 - 4,776,539Hire purchase and finance lease payables (Note 35) 1,116,914 1,311,899 - -

3,986,045 48,754,856 - 4,776,539

Revolving Credit The purpose of this revolving credit is for working capital requirement. The said facility is secured by corporate guarantee

from the Company.

Bank Overdraft The purpose of this bank overdraft is for working capital requirement. The bank overdraft is secured against the freehold

and leasehold land and building of the subsidiary companies (Note 5 to the Financial Statements), pledged of fixed deposits (Note 14 to the Financial Statements) and corporate guarantee from the Company.

At the end of the reporting period, there are no defaults in payment of borrowings nor breaches of facility agreement terms.

The effective interest rates are disclosed in Note 39 to the Financial Statements.


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20. SHARE CAPITAL

Number of Shares Amounts2013 2012 2013 2012

GROUP AND COMPANY UNIT UNIT UNIT UNIT

Authorised Share Capital Ordinary Shares of RM0.50 each:Beginning/End of the year 400,000,000 400,000,000 200,000,000 200,000,000

Issued and Fully Paid Share CapitalOrdinary Shares of RM0.50 each:Beginning of the year 293,310,460 292,551,642 146,655,230 146,275,821Private placement 29,816,000 - 14,908,000 -Issuance of ordinary shares pursuant to ESOS - 158,000 - 79,000Issuance of ordinary shares pursuant to SIS

(Note 28)8,403,800

- 4,201,900 -Warrants exercise during the year (Note 29) 34,399,729 600,818 17,199,865 300,409

End of the year 365,929,989 293,310,460 182,964,995 146,655,230

During the current financial year, the Company has issued the following ordinary shares:

No. of Shares Issued Issue Price Purposes

29,816,000 RM0.57 Private placement8,403,800 RM0.50 Exercise of Share Issuance Scheme34,399,729 RM0.52 Exercise of Warrant B

The new ordinary shares issued rank pari passu in respect of the distribution of dividends and repayment of capital with the existing ordinary shares.

At the end of the reporting period, 2,477,500 (2012: 2,477,500) ordinary shares are held by the Company as treasury shares (Note 21 to the Financial Statements), and number of outstanding ordinary shares issued and fully paid (excluding treasury shares) is 363,452,489 (2012: 290,832,960) units.

Capital Management The primary objective of the management of the Group’s and the Company’s capital structure is to optimise the balance

between debts and equity to achieve a low cost of capital and maximise the return to stakeholders.

The capital structure of the Group and the Company consists of debts (comprising hire purchase and finance lease, bank overdrafts and other borrowings) and equity (comprising issued ordinary shares, accumulated losses and other reserves). The Group and the Company monitor their capital using a gearing ratio, based on net debts divided by total capital. The target gearing ratio is to maintain it at below 20%. The directors review the capital structure on a quarterly basis, and consider the cost of capital and the risks associated with each class of capital.


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During the current financial year, no significant changes were made in the objectives, policies or processes for managing capital. The gearing ratio at the end of the reporting period was as follows:

20. SHARE CAPITAL (continued)

GROUP COMPANY2013 2012 2013 2012

RM RM RM RMTerm loan (Note 16) 301,476 636,990 - -Revolving credit - 25,058,455 - -Bank overdraft 2,778,771 22,003,906 - 4,776,539Hire purchase and finance lease payables

(Note 35) 5,335,759 2,045,489 - -

8,416,006 49,744,840 - 4,776,539Less: Cash and cash equivalents (Note 14) (113,731,065) (162,778,313) (77,300,943) (130,009,310)

Net debts (105,315,059) (113,033,473) (77,300,943) (125,232,771)Equity attributable to equity holders of the

Company 184,547,505 156,851,230 199,393,701 163,398,318

Total capital 79,232,446 43,817,757 122,092,758 38,165,547

Gearing ratio (%) - Net debts over total capital NA NA NA NA

Under the requirement of Bursa Malaysia Practice Note No. 17/2005, the Company is required to maintain a consolidated shareholders’ equity equal to or not less than the 25% of the issued and paid up capital (excluding treasury shares) and such shareholders’ equity is not less than RM40,000,000. The Company has complied with this requirement.

21. TREASURY SHARES

There was no share buy-back during the current financial year. The ordinary shares repurchased are being held as treasury shares in accordance with the requirement of Section 67A of the Companies Act, 1965. The treasury shares may be distributed as ‘share dividends’ to the shareholders.

22. RESERVES

GROUP COMPANY2013

RM2012

RM2013

RM2012

RM

Non-distributable: Share premium 68,657,604 66,683,623 68,655,496 66,683,623Capital reserves (19,579,028) 2,173,151 1,975,462 1,975,462Employee Share Option reserveEquity-settled employee benefits reserve - 531,416

1,106,949- - 531,416

364,725-

Investment revaluation reserve 4,496 - 4,496 -Foreign currency translation reserve (481,193) (200,826) - -

49,133,295 69,762,897 71,166,870 69,023,810

Distributable: Accumulated losses (43,154,265) (55,170,377) (50,341,644) (47,884,202)

5,979,030 14,592,520 20,825,226 21,139,608

Share Premium The share premium arose from the issues of ordinary shares in excess of the par value.

Capital Reserve The capital reserves represent the value of warrants capitalised for the issuance of serial payment bond with detachable

warrants. Upon the exercise of the warrants, the value of these warrants will be credited to share premium. Capital reserves also include all the changes in the Group’s ownership interest in a subsidiary company that do not result in a loss of control.


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22. RESERVES (continued)

Equity-Settled Employee Benefits Reserve The reserve represents the cumulative value of employee services for the issue of SIS. If the share option is exercised, the

amount from the equity-settled employee benefits reserves is transferred to share premium. If the share option expires, the amount from the equity-settled employee benefits reserves is transferred to accumulated losses. The details of the SIS are disclosed in Note 28 to the Financial Statements.

Investment Revaluation Reserve The investment revaluation reserve arose from the changes in the value of investment recognised when they are revalued.

Foreign Currency Translation Reserve The foreign currency translation reserve arose from the exchange differences on the translation of foreign operations.

Accumulated Losses The Company has elected to discontinue utilising its tax credit under Section 108 of the Income Tax Act, 1967 since

previous financial year. Accordingly, tax on the Company’s profits is a final tax, and dividends distributed to shareholders will be exempted from tax.

23. REVENUE

GROUP COMPANY2013 2012 2013 2012

RM RM RM RMRendering of services 199,099,309 235,903,721 - -Sales of goods 125,399,367 25,824,156 - -Interest revenue 3,292,676 1,978,895 3,292,676 1,978,895

327,791,352 263,706,772 3,292,676 1,978,895

24. FINANCE COSTS

GROUP COMPANY2013

RM2012

RM2013

RM2012

RMHire purchase interest 166,563 119,141 - -Finance lease interest 63,508 39,907 - -Overdraft interest 429,086 1,265,541 107,646 365,057Term loan interest 778,026 2,109,932 - -Interest on bill payable 254,143 148,105 - -Revolving credit interest 87,337 914,747 - -Commitment fee 164,811 48,517 15,249 -

1,943,474 4,645,890 122,895 365,057


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25. PROFIT/(LOSS) BEFORE TAXATION

GROUP COMPANY2013

RM2012

RM2013

RM2012

RM

a) Other losses and expensesStatutory audit- current year 93,173 128,851 20,000 15,000- over provision in previous year - (2,500) - (2,500)- other related services 18,000 11,004 18,000 11,004Amortisation of intangible assets 264,903 241,660 - -Allowance for doubtful debts, impairmentand written off, net off recovered 1,991,584 4,182,001 - 58,601,106Depreciation of property, plant and equipment 20,007,727 29,663,052 - -Loss on disposal and written offof property, plant and equipment 31,971 2,885,845 - -Loss on disposal of associate company 2,868,773 - 1,419,333 -Loss on foreign exchange 9,126,563 8,214,216 6,739 -Net effect of winding up of a subsidiary company - 2,914,479 - 2,732,567Provision for damages 1,641,437 - - -Revaluation deficit - 12,664,754 - -Rental expenses 1,290,062 928,716 - -

b) Other gains and incomeGain on disposal of property, plant and equipment 79,162 222,874 - -Gain on foreign exchange 8,182,254 7,704,463 5,387 -Gain on disposal of a subsidiary company - - - 210,000,000Gain on redemption of short term investment 120,737 - 120,737 -Gain on disposal of associate company 9,911 - - -Interest income 3,425,570 2,002,950 3,292,676 1,978,895Rental income 30,000 79,700 - -Reversal of provision 739,348 - 739,348 -

c) Employee benefit expensesStaff costs:- Short term benefits 14,005,827 19,353,839 215,000 212,000- SIS expenses 531,416 - - -- Termination benefits 256,235 2,019,531 - -- EPF contributions 1,452,192 2,087,066 - -

Key management personnel are defined as those persons having authority and responsibility for planning, directing and controlling the activities of the Group directly or indirectly. There are no other key management personnel except for the directors of the Company.


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Employee benefit expenses including the following remuneration paid to the directors, who are the key management personnel, of the Group and the Company:

25. PROFIT/(LOSS) BEFORE TAXATION (continued)

GROUP COMPANY2013

RM2012

RM2013

RM2012

RMNon-Executive- Fee 215,000 212,000 215,000 212,000

215,000 212,000 215,000 212,000

Executive- Remuneration 1,176,000 1,056,915 - -

1,176,000 1,056,915 - -

Total directors’ fee and remuneration 1,391,000 1,268,915 215,000 212,000

Remuneration band:

Number of Directors 2013 2012 Non-Executive Directors: RM0 - 2 RM1 - RM50,000 - - RM50,001 - RM100,000 *4 4

Executive Directors: RM100,001 - RM200,000 - - RM200,001 and above 3 3

*Two of the directors have resigned from the Company during the current financial year.

26. TAXATION

GROUP COMPANY2013

RM2012

RM2013

RM2012

RMCorporate taxationCurrent year provision

1,563,574 814,345 657,203 460,000

Under/(Over) provision in previous year 3,283,395 (315,593) 1,888,974 74,736

4,846,969 498,752 2,546,177 534,736

Deferred taxDeferred tax relating to the origination and

reversal of temporary differences (Note 9) 761,109 200,000 - -

5,608,078 698,752 2,546,177 534,736


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26. TAXATION (continued)

The income tax expense is reconciled to the accounting profit at the applicable tax rates as follows:

GROUP COMPANY2013

RM2012

RM2013

RM2012

RM

Profit/(Loss) before taxation 12,738,810 (25,717,734) (275,990) 148,206,941

Taxation at Malaysian statutory tax rate at 25%Tax effect on expenses that are not deductible for tax purposes

3,184,703

7,656,658

(6,429,434)

5,784,419

(68,998)

942,569

37,051,735

15,908,265Deferred tax assets not recognisedUtilisation of unused tax losses and unabsorbed capital allowances

804,749

(8,649,806)

1,715,079

-

-

-

-

-Income not subject to tax (671,621) (55,719) (216,368) (52,500,000)Under/(Over) provision in previous year 3,283,395 (315,593) 1,888,974 74,736

5,608,078 698,752 2,546,177 534,736

The Malaysian statutory tax rate will be reduced to 24% from the current year’s rate of 25%, effective from Year of Assessment 2016.

Deferred tax assets are not recognised for the following temporary differences by certain subsidiaries:

GROUP2013

RM2012

RM

Unused tax losses 42,227,479 40,453,747Unabsorbed capital allowances 30,442,008 46,381,979

72,669,487 86,835,726

Deferred tax assets are not recognised for the above temporary differences as it is not probable that future taxable profit will be available against which the deductible temporary differences and unused tax losses can be utilised by the subsidiaries. However, the unused tax losses and unabsorbed capital allowances may be carried forward indefinitely. At the end of each reporting period, the subsidiaries reassess the unrecognised deferred tax assets, previously unrecognised deferred tax assets are recognised to the extent that it has become probable that future taxable profit will allow the deferred tax assets to be recovered.

27. EARNINGS/(LOSSES) PER SHARE

The amounts used in calculating basic and diluted earnings/(losses) per share attributable to the ordinary equity holders of the Company are as follows:

Profit/(Loss) From continuing and discontinued operations

GROUP2013

RM2012

RM

Earnings/(Losses) used for the computation of basic/diluted- Profit/(Loss) attributable to equity holders of the Company 10,909,163 (11,585,079)


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27. EARNINGS/(LOSSES) PER SHARE (continued)

From continuing operations


Profit/(Loss) attributable to equity holders of the Company 10,909,163 (11,585,079)Adjustment for profit from discontinued operations (6,901,901) (17,410,171)

Profit/(Loss) used for the computation of basic/diluted from continuing operations 4,007,262 (28,995,250)

Weighted Average Number of Ordinary Shares From continuing and discontinued operations

2013 2012GROUP UNIT UNIT

Weighted average number of ordinary shares after deducting treasury shares 309,872,510 290,413,535

Weighted average number of ordinary shares used for the computation of basic 309,872,510 290,413,535Effects of dilutive potential ordinary shares:- SIS 7,478,962 -- Warrants* - -

Weighted average number of ordinary shares used for the computation of diluted 317,351,472 290,413,535

* The amount is not presented as the computation would result in anti-dilutive.

28. SHARE ISSUANCE SCHEME (“SIS”)

The SIS is governed by the By-Laws approved by the shareholders at an Extraordinary General Meeting held on 07 February 2013 and is to be in force for a period of 3 years. The SIS has been effective on 12 July 2013.

The salient features of the By-Laws of SIS are as follows:

(a) The maximum number of Options which may be allotted pursuant to the SIS (“Options”) shall not exceed 15% of the total issued and paid-up share capital of the Company (excluding Treasury Shares) at any point in time during the duration of the SIS.

(b) Executive directors and employees of the Group and the Company will be eligible to participate in the SIS provided that they fulfill the conditions for eligibility stipulated in the rules, terms and conditions contained in the By-Laws (“Eligible Persons”).

(c) The maximum number of Options that may be offered and allotted to an Eligible Persons shall be determined by the SIS Committee taking into consideration inter-alia, the Eligible Persons’ designation, job description, responsibilities and seniority.

(d) The exercise price of the Options issued pursuant to SIS shall be as follows:

(i) at a discount of not more than 10% from the volume-weighted average market price of the shares as shown in the daily official list issued by Bursa Malaysia Securities Berhad (“Bursa Securities”) for the 5 market days immediately preceding the date of offer; and

(ii) the par value of the shares.

(e) The new shares to be allotted and issued upon any exercise of the Options will, upon such allotment and issuance, rank pari passu in all respects with the existing and issued shares except that the new shares so issued will not be entitled to any dividends, rights, allotments and/or any other distributions which may be declared, made or paid to shareholders prior to the date of allotment of the new shares. The new shares will be subjected to all provisions of the Articles of Association in relation to their transfer, transmission or otherwise. The Options shall not carry any right to vote at a general meeting of the Company.


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28. SHARE ISSUANCE SCHEME (“SIS”) (continued)

(f) Options are exercisable, in whole or in part (provided that an Option is exercised in part in respect of 1,000 shares or any multiple thereof) as follows:

Percentage of Options Exercisable from Acceptance Date

Number of Options Granted 1st year 2nd year 3rd year20,000 and below 50% 50% -20,001 to 50,000 33% 33% 34%Above 50,000 33% 33% 34%

Movements of the number and the related weighted average exercise prices of SIS are as follows:

2013Number of Share

Options UNITWeighted Average Exercise Price RM

Beginning of the year - -Granted 45,018,000 0.50Cancelled (370,000) 0.50Exercised (8,403,800) 0.50

End of the year 36,244,200 0.50

Exercisable at end of the year 6,330,040

The SIS outstanding at the end of the reporting period has the following weighted average exercise prices and remaining contractual life:

Exercise PriceRM

Number of Outstanding SIS

2013

12 July 2016 0.50 36,244,200

The fair value of the services received for SIS is measured by reference to the fair value of the equity instruments granted. The estimated fair values of the SIS granted on the grant date are RM0.09.

The fair values of the Options are estimates on the date of grant using the Black-Scholes-Merton option pricing model with the following assumption:

Weighted average share price RM0.65Options exercise price RM0.50Expected dividend yield 6%Risk-free annual interest rate 3%Expected volatility 5%Expected Options life 3 years

The expected volatility is based on the historical volatility, calculated based on the weighted average expected life of the SIS.

There is no market conditions associated with the SIS granted. Vesting conditions, including service and performance conditions, are not considered in the fair value measurement at grant date.


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29. WARRANTS

On 30 November 2005, the Company issued a RM150,000,000 nominal value up to eight (8) years 4.5% per annum serial fixed rate bonds with detachable warrants to the primary subscribers.

On 03 March 2006, the primary subscribers were allotted a total of 18,514,600 warrants to the shareholders at an offer price of RM0.24 per warrant on the basis of one (1) warrant for every five (5) ordinary shares held on entitlement date.

On 29 August 2006, the Company completed the listing of an additional 9,257,000 warrants arising from the bonus issue exercise which was implemented in accordance to the Deed Poll dated 13 January 2006 on the basis of one (1) new warrant for every two (2) warrants held on entitlement date.

On 13 June 2007, the Company completed the listing of an additional 10,095,104 warrants arising from the bonus issue exercise on the basis of two (2) new warrants for every five (5) existing warrants.

On 14 August 2012, the subscription price of Warrant A 2006/2016 has been adjusted from RM0.55 to RM0.50 pursuant to the special dividend of RM0.44 per ordinary share of RM0.50 each.

On 14 August 2012, the subscription price of Warrant B 2008/2013 has been adjusted from RM1.20 to RM0.52 pursuant to the special dividend of RM0.44 per ordinary share of RM0.50 each.

On 11 October 2013, the subscription right of the holders of Warrant B 2008/2013 has expired. Unexercised Warrants 2008/2013 will lapse and become null and void and shall cease to be exercisable thereafter.

As at 31 December 2013, there is a total of 29,981,990 (2012: 29,981,990) outstanding Warrant A 2006/2016 warrants.

As at 31 December 2013, there is a total of Nil (2012: 40,776,929) outstanding Warrant B 2008/2013 warrants.

30. DIVIDENDS PAID IN THE PREVIOUS YEAR

On 23 July 2012, the directors declared a 88% single tier special dividend (total dividend of RM127,966,449) in respect of the previous financial year. The dividend was paid to the shareholders on 18 September 2012. The dividend per share was RM0.44.

The directors do not recommend a final dividend in respect of the current financial year.

31. PURCHASE OF PROPERTY, PLANT AND EQUIPMENT

GROUP2013

RM2012

RM

Construction and commissioning of new vessels - 27,594,850Purchase of other property, plant and equipment 5,918,048 24,867,057

5,918,048 52,461,907Less: Financed by hire purchase and finance lease arrangement (5,000,000) -

Cash purchase of property, plant and equipment 918,048 52,461,907

32. ACQUISITION FROM NON-CONTROLLING SHAREHOLDER

As disclosed in Note 41 to the Financial Statements, the Company had on 21 October 2013 completed the share sale transaction in connection with the acquisition of the remaining 49% equity interest in Gas Generators (Malaysia) Sdn. Bhd., comprising 2,347,804 ordinary shares of RM1 each for a total cash consideration of RM34,300,000. With the completion of the said acquisition, Gas Generators (Malaysia) Sdn. Bhd. became a wholly-owned subsidiary of the Company.

On the date of acquisition, the differences between the amount by which the non-controlling interest is adjusted and the consideration paid are recognised directly in equity.


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33. DISPOSAL OF A SUBSIDIARY COMPANY IN THE PREVIOUS YEAR

On 23 April 2012, the Company entered into a conditional agreement for the purchase and sale of shares with Kota Bayu Ekuiti Sdn. Bhd. for the disposal by the Company of 10,000,000 ordinary shares of RM1 each in Tanjung Kapal Services Sdn. Bhd. (“TKS”), representing the entire equity interest in TKS, for a cash consideration of RM220,000,000. The disposal of the subsidiary company was completed on 20 July 2012.

The net assets of TKS at the date of disposal and at 31 December 2011 were as follows:

GROUP20.07.2012

RM31.12.2011

RM

Property, plant and equipment 737,512,557 572,942,785Deferred tax assets 3,756,750 4,952,000Trade and other receivables 44,865,586 155,859,163Cash and cash equivalents 9,519,144 812,770Trade and other payables (80,729,756) (53,931,174)Hire purchase and finance lease payables (109,088) (227,493)Term loan (489,242,520) (472,639,290)Provision for taxation (94,183) (94,183)

Net assets 225,478,490 207,674,578

Loss on disposal of a subsidiary company (5,478,490)

Total consideration 220,000,000Cash and cash equivalents disposed off (9,519,144)

Net cash inflow from disposal of a subsidiary company 210,480,856

34. STATEMENTS OF CASH FLOW - CASH AND CASH EQUIVALENTS

GROUP COMPANY2013

RM2012

RM2013

RM2012

RMCash and cash equivalents (Note 14) 113,731,065 162,778,313 77,300,943 130,009,310Bank overdraft (Note 19) (2,778,771) (22,003,906) - (4,776,539)Cash and cash equivalents from subsidiary

company classified as held for sale and discontinued operations (Note 15) 52,998 2,672,898 - -

111,005,292 143,447,305 77,300,943 125,232,771

Less: Cash and cash equivalents pledged as security (Note 14) (7,536,417) (3,432,769) (1,485,589) (2,668,191)

103,468,875 140,014,536 75,815,354 122,564,580


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35. HIRE PURCHASE AND FINANCE LEASE PAYABLES

GROUP2013

RM2012

RMClassified as:Non-current liability 4,218,845 733,590Current liability 1,116,914 1,311,899

5,335,759 2,045,489

Future minimum hire purchase and finance lease paymentsNot later than 1 year 1,125,806 1,571,672Later than 1 year and not later than 5 years 5,329,280 878,803

6,455,086 2,450,475Less: Future finance charges (1,119,327) (404,986)

Present value of hire purchase and finance lease payables 5,335,759 2,045,489

Present value of hire purchase and finance lease payables is analysed as follows:Not later than 1 year 1,116,914 1,311,899Later than 1 year and not later than 5 years 4,218,845 733,590

5,335,759 2,045,489

The Group obtains the above facilities to finance the acquisition of certain motor vehicles, office equipments and plant and machinery. Implicit interest rates are fixed at the date of the agreements, and the amount of the payments is fixed throughout the period. The Group has the option to purchase the assets at the end of the agreements.

36. CONTINGENT LIABILITIES

As at 31 December 2013, the Company has the contingent liabilities as follows:

2013 2012 RM RM Aggregate of corporate guarantees pursuant to

banking facilities granted to the Group 23,634,653 42,922,812

The corporate guarantee does not have a determinable effect on the terms of the banking facilities due to the bank requiring parent guarantee as a pre-condition for approving the banking facilities granted to the Group. The actual terms of the banking facilities are likely to be the best indicator of “at market” terms and hence the fair value of the banking facilities are equal to the banking facilities amount received by the Group. As such, there is no value on the corporate guarantees to be recognised in the financial statements.

37. RELATED PARTY TRANSACTIONS


With associate companySales to associate company 679,089 8,599,777Purchase from associate company (28,865,337) (32,301,556)

With related companiesSale to related companies 7,388,602 2,788,347Purchase from related companies (116,003) (172,904,221)

The directors are of the opinion that all the transactions above have been entered into in the normal course of business and have been established on terms and conditions that are not materially different from that obtainable in transactions with unrelated parties.


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38. OPERATING SEGMENTS

General Information

The information reported to the Group’s chief operating decision maker to make decisions about resources to be allocated and for assessing their performance is based on the nature of the products and services of the Group. The Group’s operating segments are as follows:

(a) Products and services;(b) Maintenance services – maintenance activities; and(c) Engineered packages – engineering activities

Measurement of Reportable Segments

Segment information is prepared in conformity with the accounting policies adopted for preparing and presenting the consolidated financial statements. Transactions between reportable segments are measured on the basis that is similar to those external customers.

Segment results are profit earned or loss incurred by each segment without allocation of finance costs, share of loss from associates and income tax expense. There are no significant changes from prior financial year in the measurement methods used to determine reported segment results.

All the Group’s assets are allocated to reportable segments other than assets used centrally for the Group, investment in associates and current and deferred tax assets. Jointly used assets are allocated on the basis of the revenues earned by individual segments.

All the Group’s liabilities are allocated to reportable segments other than liabilities incurred centrally for the Group, current and deferred tax liabilities. Jointly incurred liabilities are allocated in proportion to the segment assets.

Geographical Information

The operating segments are not presented by geographical segment as all the foreign operations have been discontinued and in the process of winding up.

GROUP2013

Products and Services

RM


RM

Engineered Packages

RM

Total Continuing Operations

RM

Total Discontinued

OperationsRM

Total Operations

RM

Segment Revenue and Results

Segment RevenueRevenue from all customers 174,696,815 36,819,614 116,274,923 327,791,352 998,283 328,789,635

Segment ResultsSegment profit or loss 16,616,458 (4,773,561) 4,305,436 16,148,333 6,915,459 23,063,792

Finance costs (1,943,474) - (1,943,474)

Share of loss from associate companies (1,466,049) - (1,466,049)

Taxation (5,608,078) (13,558) (5,621,636)

Net profit for the year 7,130,732 6,901,901 14,032,633

Segment Assets and Liabilities

AssetsSegment assets 205,699,829 28,339,613 40,959,992 274,999,434 2,482,951 277,482,385

Associate companies 173,575

Total Group’s assets 277,655,960

LiabilitiesSegment liabilities 46,816,462 20,427,563 14,330,299 81,574,324 10,547,493 92,121,817

Provision for taxation 986,638

Total Group’s liabilities 93,108,455


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38. OPERATING SEGMENTS (continued)

GROUP2012

Products and Services

RM


RM

Engineered Packages

RM

Total Continuing Operations

RM

Total Discontinued

OperationsRM

Total Operations

RM

Segment Revenue and ResultsSegment RevenueRevenue from all customers 178,798,064 58,040,407 26,868,301 263,706,772 83,390,769 347,097,541

Segment ResultsSegment profit or loss (29,274,414) 3,062,994 5,459,805 (20,751,615) 36,498,542 15,746,927

Finance costs (4,645,890) (17,846,451) (22,492,341)

Share of loss from associate companies (320,229) - (320,229)

Taxation (698,752) (1,241,920) (1,940,672)

Net (loss)/profit for the year (26,416,486) 17,410,171 (9,006,315)

Segment Assets and Liabilities

AssetsSegment assets 319,704,359 39,260,884 73,280,373 32,245,616 8,019,816 440,265,432

Associate companies 4,513,140

Deferred tax assets 761,109

Total Group’s assets 445,539,681

LiabilitiesSegment liabilities 176,390,455 26,089,934 58,072,207 260,552,596 17,648,874 278,201,470

Provision for taxation 1,062,630

Total Group’s liabilities 279,264,100


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39. FINANCIAL INSTRUMENTS

39.1 Classification of financial instruments

Financial assets and financial liabilities are measured on an ongoing basis either at fair value or at amortised cost. The principal accounting policies in Note 3 to the Financial Statements describe how the classes of financial instruments are measured, and how income and expense, including fair value gains or losses, are recognised. The following table analyses the financial assets and liabilities in the statements of financial position by the class of financial instruments to which they are assigned, and therefore by the measurement basis:

GROUP2013

Loans and Receivables

RM

Available-For-Sale RM

Financial Liabilities at

Amortised Cost RM

TotalRM

Financial AssetsTrade receivables 70,715,322 - - 70,715,322Other receivables, deposits and

prepayments 29,438,652 - - 29,438,652Short term investment - 14,005,172 - 14,005,172Cash and cash equivalents 113,731,065 - - 113,731,065

213,885,039 14,005,172 - 227,890,211

Financial LiabilitiesLong term borrowings - - 4,429,961 4,429,961Trade payables - - 47,397,325 47,397,325Other payables and accruals - - 25,760,993 25,760,993Short term borrowings - - 3,986,045 3,986,045

- - 81,574,324 81,574,324

2012Financial AssetsTrade receivables 126,269,332 - - 126,269,332Other receivables, deposits and

prepayments 29,376,066 - - 29,376,066Cash and cash equivalents 162,778,313 - - 162,778,313

318,423,711 - - 318,423,711

Financial LiabilitiesLong term borrowings - - 989,984 989,984Trade payables - - 145,448,341 145,448,341Other payables and accruals - - 65,359,415 65,359,415Short term borrowings - - 48,754,856 48,754,856

- - 260,552,596 260,552,596


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39. FINANCIAL INSTRUMENTS (continued)

39.2 Financial risk management objective and policies

The Group is mainly exposed to credit risk, liquidity risk and market risk (including foreign currency risk, interest rate risk and equity price risk). The Group has formal risk management policies and guidelines, as approved by the Board of Directors, which set out its overall business strategies, its tolerance for risks and its general risk management philosophy. Such policies are monitored and undertaken by the Managing Director.

39.2.1 Credit risk

Credit risk refers to the risk that a counter party will default on its contractual obligations resulting in financial loss to the Group.

The carrying amounts of the financial assets recorded on the statements of financial position at the end of the reporting period represent the Group’s maximum exposure to credit risk in relation to financial assets. No financial assets carry a significant exposure to credit risk other than those disclosed in the notes.

The Group does not hold any collateral and thus, the credit exposure is continuously monitored by the directors.

Included in the Group’s trade receivables are a group of debtors that represented 49% (2012: 45%) of total trade receivables. There are no concentrations of credit risk for other financial assets.

39.2.2 Liquidity risk

The Group’s funding requirements and liquidity risk are managed with the objective of meeting business obligations on a timely basis. The Group monitors its cash flows and ensures that sufficient funding is in place to meet the obligations as and when they fall due.

The following table analyses the remaining contractual maturity for non-derivative financial liabilities. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Group can be required to pay.

GROUP 2013

Weighted Average Effective

Interest Rate %

Not Later than 1

Year or on Demand

RM

Later than 1 Year

RMTotal

RMTrade payables - 47,397,325 - 47,397,325Term loan 8.25 90,360 211,116 301,476Bank overdraft 7.85 to 8.10 2,778,771 - 2,778,771Hire purchase and finance lease payables 2.78 to 9.79 1,116,914 4,218,845 5,335,759

51,383,370 4,429,961 55,813,331

2012Trade payables - 145,448,341 - 145,448,341Term loan 8.60 380,596 256,394 636,990Revolving credit 3.46 to 7.12 25,058,455 - 25,058,455Bank overdraft 7.60 to 8.35 22,003,906 - 22,003,906Hire purchase and finance lease payables 2.78 to 9.79 1,311,899 733,590 2,045,489

194,203,197 989,984 195,193,181


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39.2 Financial risk management objective and policies (continued)

39.2.3 Market risk

Foreign currency risk

The Group incurs foreign currency risk on transactions that are denominated in foreign currencies. The currencies giving rise to this risk are primarily the Great Britain Pound (“GBP”), United States Dollar (“USD”), Australia Dollar (“AUD”), Singapore Dollar (“SGD”) and EURO. The Group has not entered into any derivative instruments for hedging or trading purposes as the net exposure to foreign currency risk is not significant. The carrying amounts of the Group’s foreign currency denominated financial assets and financial liabilities at the end of the reporting period are as follows:

Financial Assets2013

GBPRM

USDRM

AUDRM

SGDRM

EURORM

TotalRM

Trade receivables 292,156 22,986,477 682,881 169,438 105,194 24,236,146Cash and cash equivalents 1,135,539 13,371,028 14,296 - 194,809 14,715,672

1,427,695 36,357,505 697,177 169,438 300,003 38,951,818

2012Trade receivables - 25,449,795 702,813 306,695 83,927 26,543,230Cash and cash equivalents - 7,293,918 537,933 - 1,938,388 9,770,239

- 32,743,713 1,240,746 306,695 2,022,315 36,313,469

Financial Liabilities2013Trade payables 88,872 11,967,779 2,666 1,984 196,050 12,257,351

2012Trade payables 1,450,431 26,448,841 - 31,056 12,171,099 40,101,427Bank overdrafts - 150,520 - - - 150,520

1,450,431 26,599,361 - 31,056 12,171,099 40,251,947

Certain of the other foreign currencies are not presented as the amounts are not material.

Foreign currency risk sensitivity

A 10% strengthening of Ringgit Malaysia against the following foreign currencies at the end of the reporting period would increase/(decrease) the profit before tax and other comprehensive income/decrease/(increase) the loss before tax and other comprehensive income by the amounts shown below. This analysis assumes that all other variables remain unchanged.

2013GBPRM

USDRM

AUDRM

SGDRM

EURORM

TotalRM

Profit before tax (133,882) (2,438,973) (69,451) (16,745) (10,395) (2,669,446)Other comprehensive income (804,594) - - - - (804,594)

(938,476) (2,438,973) (69,451) (16,745) (10,395) (3,474,040)

2012Loss before tax 145,043 (614,435) (124,075) (27,564) 1,014,878 393,847Other comprehensive income 1,350,971 - - - - 1,350,971

1,496,014 (614,435) (124,075) (27,564) 1,014,878 1,744,818

A 10% weakening of Ringgit Malaysia against the above foreign currencies at the end of the reporting period would have had the equal but opposite effect on the above currencies to the amounts shown above, on the basis that all other variables remain unchanged.


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39.2.3 Market risk

Interest rate risk

The Group obtains financing through leasing arrangement, bank borrowings and other financial liabilities. The Group’s policy is to obtain the borrowings with the most favourable interest rates in the market.

The Group constantly monitors its interest rate risk and does not utilise interest swap contracts or other derivative instruments for trading or speculative purposes. At the end of the reporting period, there were no such arrangements, interest rate swap contracts or other derivative instruments outstanding.

The carrying amounts of the Group’s financial instruments that are exposed to interest rate risk are as follows:

Weighted Average Effective

Interest Rate

2013 2012

Fixed RateFloating

Rate Fixed RateFloating

Rate% RM RM RM RM

Financial AssetsShort term investment 3.00 to 3.10 - 14,005,172 - -- Fixed deposits with

licensed banks 2.80 to 3.17 91,213,328 - 129,962,319 -

91,213,328 14,005,172 129,962,319 -

Financial LiabilitiesTerm loan 8.25 to 8.60 - 301,476 - 636,990Revolving credit 3.46 to 7.12 - - - 25,058,455Bank overdraft 7.60 to 8.35 - 2,778,771 - 22,003,906Hire purchase and finance

lease payables 2.78 to 9.79 5,335,759 - 2,045,489 -

5,335,759 3,080,247 2,045,489 47,699,351

Financial instruments subject to floating interest rates are repriced regularly. Financial instruments at fixed rates are fixed until the maturity of the instruments. The other financial instruments of the Group that are not included in the abovementioned table are not subject to interest rate risks.

Interest rate risk sensitivity

An increase in market interest rates by 1% on financial assets and liabilities of the Group which have variable interest rates at the end of the reporting period would increase the profit before tax approximately by RM110,000 (2012: Increase the loss before tax approximately by RM470,000). This analysis assumes that all other variables remain unchanged. A decrease in market interest rates by 1% on financial assets and liabilities of the Group which have variable interest rates at the end of the reporting period would have had the equal but opposite effect on the amounts shown above, on the basis that all other variables remain unchanged.


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39.2.3 Market risk

Equity price risk

Equity price risk is the risk that the value of an equity instrument will fluctuate as a result of changes in market prices. The Group and the Company are exposed to equity price risk through the Company’s holding of fund in Maybank Enhanced Cash Fund.

If the unit prices for quoted ‘available-for-sale’ financial assets increased by 10%, with all other variables being held constant, the Group’s ‘available-for-sale’ financial assets reserves at the end of the reporting period would increase approximately by RM1,400,000 (2012: RMNil) respectively.

If the unit prices for quoted ‘available-for-sale’ financial assets decreased by 10%, with all other variables being held constant, it would have the equal but opposite effect on the amounts shown above.

39.3 Fair value of financial assets and financial liabilities

The carrying amounts of financial assets and financial liabilities, as reported in the financial statements, approximate their respective fair values.

39.4 Fair value of financial instruments carried at amortised cost and cost

The carrying amounts of the financial assets and financial liabilities are recognised at their fair values, except for the financial assets and financial liabilities which are recognised at cost and amortised cost after initial recognition. However, the directors are of the opinion that the carrying amounts do not materially different from their fair values.

Valuation techniques and significant assumptions used in determining fair value of financial assets and financial liabilities recognised at amortised cost or cost after initial recognition are as follows:

Financial assets and liabilities with published price in active markets

The fair values of financial assets and financial liabilities traded on active markets are determined with reference to their quoted market price.

Trade and other receivables, fixed deposits, cash and bank balances, bank overdrafts and trade and other payables

The carrying amounts approximate the fair values due to their short-term nature.

Non-current borrowings

Non-current borrowings are determined by discounting the relevant cash flows using the current interest rates for similar instruments at the end of the reporting period and their carrying amounts are expected to approximate fair values.


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40. WINDING UP OF A SUBSIDIARY COMPANY IN THE PREVIOUS YEAR

On 26 February 2013, the Company announced a voluntarily winding-up of PT Tanjung Offshore Nusantara, its 80% owned subsidiary company incorporated in Indonesia. The net effect of the said winding up had been reflected in the previous year and had the following effect on the financial position of the Group:

RMProperty, plant and equipment 43,600Deferred tax assets 547,547Inventories 52,628Trade and other receivables 2,309,266Cash and bank balances 538,718Trade and other payables (715,631)Provision for taxation (12,781)

Net assets 2,763,347Non-controlling interest 330,492Transfer from foreign currency translation reserve (179,360)

Net effect of winding up of a subsidiary company 2,914,479

41. SIGNIFICANT EVENTS DURING THE CURRENT FINANCIAL YEAR

On 21 October 2013, the Company completed the share sale transaction in connection with the acquisition of the remaining 49% equity interest in Gas Generators (Malaysia) Sdn. Bhd., comprising 2,347,804 ordinary shares of RM1 each for a total cash consideration of RM34,300,000. With the completion of the said acquisition, Gas Generators (Malaysia) Sdn. Bhd. became a wholly-owned subsidiary of the Company.

On 10 October 2013, the Company completed the share sale transaction in connection with the disposal of all its equity interest in the associate company, Cendor MOPU Producer Ltd, comprising 392,000 ordinary shares of USD1 each for a total cash consideration of RM1.

On 02 May 2013, the Company set up a new wholly owned subsidiary company, Tanjung Offshore Resources Sdn. Bhd. for a total cash consideration of RM2.

42. EVENTS AFTER THE REPORTING PERIOD

On 21 March 2014, the Company had entered into a sale and purchase agreement with Cross Space Securities Limited to acquire the entire shares in its wholly-owned subsidiary, Wavenet Investments Limited (UK) for a cash consideration of £6,700,000 or approximately RM37,185,000 (based on exchange rate of £1: RM5.55).

On 21 February 2014, Gas Generators (Malaysia) Sdn Bhd, a wholly owned subsidiary of the Company has incorporated a wholly owned subsidiary company in Labuan named Gas Generators International Ltd.

43. OPERATING LEASE COMMITMENTS

The Group has lease commitments in respect of rented premises which are classified as operating leases. A summary of the non-cancellable long-term commitments is as follows:

GROUP2013

RM2012

RM

Within 1 year 1,571,376 1,686,264Later than 1 year 1,689,768 3,190,344


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44. AUTHORISATION FOR ISSUE OF THE FINANCIAL STATEMENTS

The financial statements of the Company were authorised for issue by the Board of Directors on 23 April 2014.

45. SUPPLEMENTARY INFORMATION – BREAKDOWN OF ACCUMULATED LOSSES INTO REALISED AND UNREALISED

The breakdown of the accumulated losses of the Group and of the Company as at 31 December 2013 into realised and unrealised losses is presented in accordance with the directive issued by Bursa Malaysia Securities Berhad dated 25 March 2010 and prepared in accordance with Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants.

GROUP COMPANY2013

RM2012

RM2013

RM2012

RMTotal accumulated losses:- Realised (43,154,265) (55,931,486) (50,341,644) (47,884,202)- Unrealised - 761,109 - -

(43,154,265) (55,170,377) (50,341,644) (47,884,202)


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LIST OF PROPERTIES

As at todate, a summary of the land and buildings owned by Tanjung Offshore Services Sdn Bhd (“TOS”) and Tanjung Maintenance Services Sdn Bhd (“TMS”) is set out below:-

No Title Identification / Postal Address

Description And Existing Use /

Ownership Approximate Age of Building / Tenure / Date of

Expiry of Lease

Land Area / (Built-Up Area)

Net Book Value As At

31 December 2013

(sq. ft.) (RM)

1. GRN 38601 Lot No. 25929 Mukim of Setapak, District and State of Wilayah Persekutuan /No. 8-3, Jalan Puncak Setiawangsa 4,54200 Kuala Lumpur; and

GRN 38600 Lot No. 25930 Mukim of Setapak, District and State of Wilayah Persekutuan / No. 10, Jalan Puncak Setiawangsa 4, Taman Setiawangsa, 54200 Kuala Lumpur

GRN 38599 Lot No. 25931 Mukim of Setapak, District and State of Wilayah Persekutuan /No. 12, Jalan Puncak Setiawangsa 4,54200 Kuala Lumpur; and



3-storey shopoffices used as the head office for Tanjung Group

Owned by TOS

Age of building : 11 years/ Tenure : Freehold



Age of building : 11 years Tenure : Freehold

Age of building : 11 years Tenure : Freehold

1,760 / (4,634)

1,760 / (4,634)

1,760 / (4,634)

1,760 / (4,634)

1,760 / (4,634)

526,363.65

608,000.00

1,060,671.37

1,044,000.00

915,525.00

2. PN 4114, Lot No. 3790 (formerly known as HS(D) 2670, PT 4199), Mukim of Teluk Kalung, District of Kemaman, State of Terengganu / Lot D1 Kawasan MIELTeluk Kalung24007 KemamanTerengganu Darul Iman

A factory lot used as the Group’s Kemaman Operation Centre providing complete maintenance services

Owned by TOS

Age of building : 3 years Tenure : 60-year leasehold

expiring 22.8.2057

21,427 / (8,626) 732,685.89


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LIST OF PROPERTIES

As as todate, a summary of the land and buildings owned by Tanjung Offshore Services Sdn Bhd (“TOS”) and Tanjung Maintenance Services Sdn Bhd (“TMS”) is set out below:-

No Title Identification / Postal Address

Description And Existing Use /

Ownership

Approximate Age of Building / Tenure /

Date of Expiry of Lease

Land Area / (Built-Up Area)

in sq. ft.

Net Book Value As At 31

December 2013RM

3. PN 4115, Lot No. 3791 (formerly known as HS(D) 2671, PT 4200), Mukim of Teluk Kalung, District of Kemaman, State of Terengganu / Lot D2 Kawasan MIELTeluk Kalung24007 KemamanTerengganu

A factory lot used as the Group’s Kemaman

Operation Centre providing complete

maintenance services.

Owned by TOS

Age of building : 2.5 years/ Tenure : 60-

year leasehold expiring 22.8.2057

16,017 / (8,626)

691,981.11

4. PN 4125, Lot No 3801 (Formerly known as HSD) 2681, PT 4200), Mukim of Teluk Kalong District of Kemaman, State of Terengganu. Lot D12, Kawasan MIEL, Teluk Kalung, 24007 Kemaman, Terengganu.

A factory lot used as the Group’s Kemaman

Operation Centre providing complete

maintenance services.

Owned by TMS

Age of building : 4years. Tenure : 60 years

leasehold Expiring : 23.08.2057

20,355/(8,626)

622,440.04


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ANALYSIS OF SHAREHOLDINGS AS AT 5 MAY 2014

Authorised Capital : RM200,000,000.00Issued And Fully Paid-up Capital : RM184,431,193.00Class of Shares : Ordinary shares of 50 sen each fully paidVoting Rights : One vote per 50 sen share

DISTRIBUTION OF SHAREHOLDINGS

Size of holdingNo. of

Shareholders% of

Shareholders No. of Shares% of Issued

Share Capital

1 - 99 99 1.637 3,029 0.00100 - 1,000 411 6.796 332,867 0.091,001 - 10,000 3,016 49.875 17,996,675 4.9110,001 - 100,000 2,141 35.405 75,015,320 20.47100,001 - 18,319,243 (*) 379 6.267 243,750,895 66.5218,319,244 AND ABOVE (**) 1 0.016 29,286,100 7.99

Total 6,047 100.000 366,384,886 100.00

* - Less than 5% of issued shares** - 5% And above of issued sharesTotal issued shares = 368,862,386Treasury shares = 2,477,500Adjusted capital after netting Treasury shares = 366,384,886

THE 30 LARGEST SHAREHOLDERS

NameNo. of

Shares% of Issued

Share Capital

1 LEMBAGA TABUNG HAJI 29,286,100 7.992 TAN KEAN SOON 17,889,600 4.883 MOHAMED JALALUDDIN BIN MOHD ISMAIL 14,000,000 3.824 SOLPIEE BIN SAHMAT 14,000,000 3.825 NORLIYAH BINTI JAAFAR 9,185,100 2.506 LAW LEE HONG 8,944,800 2.447 NOR ZACHY FERNANDEZ BIN ZAHARI FERNANDEZ 8,000,000 2.188 OMAR BIN KHALID 6,169,427 1.689 NG BOO KEAN @ NG BEH KIAN 5,267,900 1.4310 LIM GAIK BWAY @ LIM CHIEW AH 4,679,200 1.2711 MAYBANK SECURITIES NOMINEES (TEMPATAN) SDN BHDPLEDGED SECURITIES

ACCOUNT FOR MOHD HANIFF BIN ABD AZIZ 3,575,200 0.9712 CIMSEC NOMINEES (TEMPATAN) SDN BHDCIMB BANK FOR KOH KIN LIP 3,000,000 0.8113 NIK NORZRUL THANI BIN N.HASSAN THANI 2,981,600 0.8114 AMSEC NOMINEES (TEMPATAN) SDN BHDAMTRUSTEE BERHAD FOR APEX DANA

AL-SOFI-I 2,935,700 0.8015 CITIGROUP NOMINEES (ASING) SDN BHDCBNY FOR DFA EMERGING MARKETS

SMALL CAP SERIES 2,906,700 0.7916 ABDULLAH BIN HASHIM 2,723,110 0.7417 CITIGROUP NOMINEES (ASING) SDN BHDCBNY FOR DIMENSIONAL EMERGING

MARKETS VALUE FUND 2,462,600 0.6718 YIP WAN YIN 2,200,000 0.6019 AMSEC NOMINEES (TEMPATAN) SDN BHDAMTRUSTEE BERHAD FOR APEX DANA

AL-FAIZ-I 2,169,300 0.59


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ANALYSIS OF SHAREHOLDINGS AS AT 5 MAY 2014

NameNo. of

Shares% of Issued

Share Capital

20 RHB NOMINEES (TEMPATAN) SDN BHDPLEDGED SECURITIES ACCOUNT FOR BAILEY KHO CHUNG SIANG 2,000,000 0.54

21 GAN SEONG LIAM 1,800,000 0.4922 TAN KAY BOON 1,705,700 0.4623 SYED ABDILLAH BIN SYED ABAS 1,527,700 0.4124 CHEE SAU FOONG 1,525,000 0.4125 MAYBANK NOMINEES (TEMPATAN) SDN BHDPLEDGED SECURITIES ACCOUNT

FOR CHAI KOH HIUNG 1,500,000 0.4026 MAYBANK SECURITIES NOMINEES (TEMPATAN) SDN BHDPLEDGED SECURITIES

ACCOUNT FOR SMB RESOURCES SDN BHD 1,500,000 0.4027 TA NOMINEES (TEMPATAN) SDN BHDPLEDGED SECURITIES ACCOUNT FOR

WONG TAK MING 1,500,000 0.4028 MALACCA EQUITY NOMINEES (TEMPATAN) SDN BHDEXEMPT AN FOR PHILLIP

CAPITAL MANAGEMENT SDN BHD (EPF) 1,455,300 0.3929 TAN BOON HAR 1,450,000 0.3930 LOW BEY TEE 1,374,000 0.37

Total 368,862,386 43.59

THE 30 LARGEST SHAREHOLDERS (continued)

SUBSTANTIAL SHAREHOLDERS AS AT 5 MAY 2014

Name No. of Shareholders %

LEMBAGA TABUNG HAJI 29,286,100 7.993

DIRECTORS’ SHAREHOLDINGS AS AT 5 MAY 2014

NAME Shareholdings %

Dato’ Harzani Bin Azmi 0 0.00Muhammad Sabri bin Ab Ghani 70 0.00Tan Wee Koh 1,101,300 0.30Dato’ Dr. (H) Ab Wahab bin Ibrahim 1,000 0.00George William Warren Jr 929,480 0.25

2,031,850 0.55

DIRECTORS’ SHARE OPTIONS HOLDINGS AS AT 5 MAY 2014

Name No. of share options held

Dato’ Harzani bin Azmi -Muhammad Sabri bin Ab Ghani 5,890,000Tan Wee Koh 4,890,000Dato’ Dr. (H) Ab Wahab bin Ibrahim -George William Warren Jr -


ANNUAL REPORT 2013

103

ANALYSIS OF WARRANTHOLDINGS WARRANT A (2006/2016) AS AT 5 MAY 2014

Size of holdingNo. of

Warrantholders% of

Warrantholders No. of Warrants% of Issued

Warrants

1 - 99 81 13.455 3,584 0.01100 - 1,000 77 12.790 39,719 0.131,001 - 10,000 179 29.734 1,065,058 3.5510,001 - 100,000 218 36.212 8,394,186 27.99100,001 - 1,499,098 (*) 46 7.641 14,635,235 48.811,499,099 AND ABOVE (**) 1 0.166 5,844,208 19.49

Total 602 100.000 29,981,990 100.00

* - Less than 5% of issued shares** - 5% And above of issued shares

THE 30 LARGEST WARRANTHOLDERS

NameNo. of

Warrants% of Issued

Warrants

1 ABDULLAH BIN HASHIM 5,844,208 19.492 LEE GEOK THYE (HOLDINGS) SDN BHD 1,390,000 4.633 TAN BOON HAR 1,274,500 4.254 RAHMANDIN @ RAHMANUDIN BIN MD SHAMSUDIN 937,039 3.125 TAN BOON HAR 800,000 2.666 SYED ELYAS BIN SYED ABDILLAH 750,399 2.507 MAYBANK NOMINEES (TEMPATAN) SDN BHDPLEDGED SECURITIES ACCOUNT

FOR CHAI KOH HIUNG 750,000 2.508 MAYBANK NOMINEES (TEMPATAN) SDN BHDMOHAMED ADZMAN

BIN MOHAMED SURA 680,500 2.269 TAY HOCK TIAM 500,000 1.6610 LIM GAIK BWAY @ LIM CHIEW AH 471,300 1.5711 LEUNG KIT MAN 380,000 1.2612 RUSLI BIN HARUN 350,000 1.1613 TENG POK SANG @ TENG FOOK SANG 329,900 1.1014 LAW KIM CHU 325,000 1.0815 JONATHAN LEE SZE SENG 300,700 1.0016 HLIB NOMINEES (TEMPATAN) SDN BHDHONG LEONG BANK BHD FOR LIM

CHEOON KIAT 296,400 0.9817 LEE YEOW TENG 281,000 0.9318 SYED ARIFFIN BIN SYED HUSSAIN ALHABSHEE 259,000 0.8619 AHMAD RASIDI BIN OSMAN 235,000 0.7820 YIELDFORCE SDN BHD 220,000 0.7321 CHOONG BIH SING 200,500 0.6622 ALLIANCEGROUP NOMINEES (TEMPATAN) SDN BHDPLEDGED SECURITIES

ACCOUNT FOR AZHAR BIN NOORDIN 200,000 0.6623 HLB NOMINEES (TEMPATAN) SDN BHDPLEDGED SECURITIES ACCOUNT FOR HIU

WOONG CHOONG 200,000 0.6624 ISMET BIN OMAR 200,000 0.6625 TAN HOOI MENG 200,000 0.66


ANNUAL REPORT 2013

104

ANALYSIS OF WARRANTHOLDINGS WARRANT A (2006/2016) AS AT 5 MAY 2014

NameNo. of

Warrants% of Issued

Warrants

26 TEO AI KHEN 200,000 0.6627 HENG POH SUAN 185,000 0.6128 SYED HASSAN BIN SYED ALWI 179,199 0.5929 RHB CAPITAL NOMINEES (TEMPATAN) SDN BHDPLEDGED SECURITIES

ACCOUNT FOR LEE POH KWEE 170,000 0.5630 SOO HENG CHIN 165,300 0.55

Total

THE 30 LARGEST WARRANTHOLDERS (continued)

SUBSTANTIAL WARRANTHOLDERS AS AT 5 MAY 2014

Name No. of Warrants %

ABDULLAH BIN HASHIM 29,286,100 19.49TAN BOON HAR 2,074,500 6.91

DIRECTORS’ WARRANTHOLDING AS AT 5 MAY 2014

No. of Warrants held

NAME Direct % Indirect %

Dato’ Harzani bin Azmi - - - -Muhammad Sabri bin Ab Ghani - - - -Tan Wee Koh - - - -Dato’ Dr. (H) Ab Wahab bin Haji Ibrahim - - - -George William Warren Jr 99 - - -

TANJUNG OFFSHORE BERHAD (662315-U) (Incorporated in Malaysia under the Companies Act, 1965)

FORM OF PROXY

I/We.....................................................................................................................................................................................NRIC

No./Company No..............................................................of........................................................................................................

................................................................................................................being a Member/Members of Tanjung Offshore Berhad

(“Company”), hereby appoint ........................................................................................................................................................

of..........................................................................................................................................................................or failing him/

her, ....................................................................................of.......................................................................................................

.....................................................................................as my/our proxy to vote for me/us and on my/our behalf at Tenth Annual

General Meeting of the Company to be held at Kenanga Room, Kelab Darul Ehsan, Taman Tun Abdul Razak, Jalan Kerja Air

Lama, 68000 Ampang Jaya, Selangor Darul Ehsan on Friday, 20 June 2014 at 10:00 a.m. and at any adjournment thereof in the

manner as indicated below:-

RESOLUTION FOR AGAINST

Resolution No. 1

Resolution No. 2

Resolution No. 3

Resolution No. 4

Resolution No. 5

Resolution No. 6

Resolution No. 7

(Please indicate with an “X” in the spaces provided on how you wish your vote to be cast. In the absence of specific direction, your proxy will vote or abstain as he / she thinks fit)

Signed this day of 2014. No. of Shares Held

................................................................. Signature of Shareholder or Common Seal

Notes:1. Only depositors whose names appear on the Record of Depositors as at 13 June 2014 shall be entitled to attend, speak and vote at the said

meeting or appoint proxies to attend, speak and vote on his/her behalf. 2. A member entitled to attend and vote at the meeting shall not be entitled to appoint more than two (2) proxies to attend and vote in his/her

stead. A proxy may but need not be a member of the Company and the provisions of Section 149(1)(b) of the Companies Act, 1965 shall not apply.

3. Where a member appoints two (2) proxies, the appointment shall be invalid unless he/she specifies the proportions of his/her shareholding to be represented by each proxy.

4. Where a Member is an authorised nominee as defined under the Central Depositories Act, it may appoint one (1) proxy in respect of each Securities Account it holds with ordinary shares of the Company standing to the credit of the said Securities Account.

5. Where a Member of the Company is an Exempt Authorised Nominee which holds ordinary shares in the Company for multiple beneficial owners in one securities account known as an omnibus account, there is no limit to the number of proxies which the Exempt Authorised Nominee may appoint in respect of each omnibus account its holds.

6. The instrument appointing a proxy shall be in writing under the hand of the appointer or of his/her attorney duly authorised in writing or, if the appointer is a corporation, either under its Common Seal or under the hand of its officer or attorney duly authorised.

7. The instrument appointing a proxy and the power of attorney or other authority (if any), under which it is signed or a notarially certified copy thereof, must be deposited at the Company’s Share Registrar’s Office at Tricor Investor Services Sdn. Bhd., Level 17, The Gardens North Tower, Mid Valley City, Lingkaran Syed Putra, 59200 Kuala Lumpur, not less than forty eight hours (48) hours before the time appointed for holding the meeting or any adjournment thereof.

TANJUNG OFFSHORE BERHAD(Company No.: 662315-U)

802, 8th Floor, Block CKelana Square, 17 Jalan SS7/2647301 Petaling JayaSelangor Darul Ehsan

FOLD THIS FLAP FOR SEALING

FOLD HERE

FOLD HERE

STAMP

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