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SUMATEC RESOURCES BERHAD (428355-D)

Level 15-2, Bangunan Faber Imperial Court

Jalan Sultan Ismail, 50250 Kuala Lumpur, Malaysia

Tel : 603-2692 4271

Fax : 603-2732 5388

SUMATEC RESOURCES BERHAD (4

28

35

5-D

) | ANNUAL REPORT 2014

SUMATEC RESOURCES BERHAD(428355-D)

ANNUALREPORT

2014

VISIONTHE leading Malaysian

Independent Oil & Gas

Operator focused on

developing proven oil

& gas assets.

MISSIONThrough innovation,

efficiency and safety

we will improve the

performance of the

Company's oil and

gas assets.

18th ANNUALGENERAL MEETINGwill be held at 10.30 am on Thursday 11 June 2015

at Bintang Ballroom, 5th Floor, Cititel Mid Valley

Mid Valley City, Lingkaran Syed Putra

59200 Kuala Lumpur

GOVERNANCEOVERVIEW

FINANCIALREVIEW

CONTENTS

OTHERINFORMATION

Code of Business

Conduct.........................02

About Us........................04

Corporate Values............05

Chairman’s Statement ...06

Chief Executive

Officer’s Review.............10

Five-Year

Financial Highlights........14

Board of Directors..........16

Board of

Directors’ Profile............18

Management

Team’s Profile................22

Corporate Information....25

Financial Calendar..........26

Corporate Structure........28

Statement on

Corporate Governance....29

Audit Committee Report...40

Statement on Risk

Management and

Internal Control..............46

Other Additional

Compliance Information...49

Statement on

Directors’ Responsibility...53

Financial Statements......55

Analysis of

Shareholdings..............133

Analysis of

Warrant Holdings..........136

List of Properties..........142

Share Price Chart.........143

Notice of Annual

General Meeting...........144

Proxy Form

SUMATEC RESOURCES BERHAD (428355-D)02 SUMATEC RESOURCES BERHAD (428355-D)02

BusinessSUMATEC will achieve high standards of efficiency by committing to:

Employees

committing to:

CODE OF BUSINESS CONDUCT

ANNUAL REPORT 2014 03ANNUAL REPORT 2014 03

Host Countries

Local Communities

committed to:

ANNUAL REPORT 2014

ABOUT

US....SUMATEC

RESOURCES

BERHAD(“SUMATEC” OR

“THE GROUP”)

WAS ESTABLISHED

IN 1979 AS A

SERVICE

PROVIDER IN THE

DOWNSTREAM

SECTOR OF THE

OIL AND GAS

INDUSTRY.

The Group, which completed its

financial and business restructuring

plan in November 2013, saw itself

entering the upstream sector via a

joint investment agreement with

Markmore Energy (Labuan) Limited

and CaspiOilGas LLP to develop the

Rakushechnoye Oil and Gas Field in

West Kazakhstan (“Rakushechnoye

Field”).

Rakushechnoye Field has a 2P Oil

and Gas reserve of 139.4 million

barrels of oil equivalent (as certified by

SRK Consulting (Australasia) Pty Ltd

in May 2014.)

In realising its vision to be a leading

Malaysian Independent Oil and Gas

operator, Sumatec will continue to

look for opportunities to acquire and

develop new and under-performing

oil and gas fields. Our target assets

will be mainly onshore, as this

reduces the capital cost of

infrastructure required. We will only

select the assets that provide

maximum return for shareholder

investment through short term

production enhancement and long

term sustainable production growth.

Sumatec Resources Berhad

(SUMATEC-1201) is listed on the

Main Market of Bursa Securities.

SUMATEC RESOURCES BERHAD (428355-D)04

ANNUAL REPORT 2014 05

CORPORATE VALUES

Safety. Efficiency. Innovation.

o Is it Safe - does it meet our HSE standards

o It will make the company more efficient and cost

effective

o The product, approach or method; proven or

leading technology should increase our ROI

Safety

o Indentify Risks & Hazards in all field operations

o Develop mitigation strategies and implement

procedures

Efficiency

Innovation


DEAR VALUED SHAREHOLDERS,

Sumatec Resources Berhad (“Sumatec” or “our Company”) has delivered a positive

performance for its full financial year following the successful completion of its

business regularisation exercise at the end of 2013.

Tan Sri Abu Talib Bin OthmanChairman

CHAIRMAN’SSTATEMENT


REVENUE INCREASED TO

RM81.1 million

NET ASSET PER SHARE IMPROVED TO

17.5 sen

CHAIRMAN’S STATEMENTCONT’D

OPERATING LANDSCAPE

FINANCIAL PERFORMANCE



Expanding Our FOOtprint in KazaKhstan

To further solidify our presence in Kazakhstan, our Company signed a Framework Agreement in July 2014, followed by a Share Purchase Agreement on 8 September 2014, with Abu Talib Abdul Rahman and Dr. Murat Safin for the proposed acquisition of 100% equity interest in Borneo Energy Oil and Gas Limited (Borneo Energy) for the initial price of USD350 million. Following from the drop in the oil price, the purchase consideration was revised down to USD290 million through a supplemental agreement signed on 9 January 2015.

Borneo Energy is a 100% beneficiary of the participating interest in Buzachi Neft LLP (“Buzachi”), an independent upstream oil and gas company involved in the exploration, production and trading of oil and natural gas. Buzachi currently has two 25-year subsoil use contracts, valid until November 2026, for the exploration and production of oil and gas in Karaturun Vostochnyi and Karaturun Morskoi fields ("Buzachi Fields") located on the Northern shore of Mangistau Oblast, Western Kazakhstan. The combined 2P certified reserves of the Buzachi Fields are 68.8 million barrels of oil.

This purchase is an important milestone that will pave the way towards Sumatec acquiring its first wholly-owned hydrocarbon asset. This is well in line with our Company’s corporate strategy of becoming a significant upstream oil and gas player in the global arena. Moreover, the additional oil produced by Buzachi will provide a source of stable and sustainable recurring income to our Company in the foreseeable future.

COrpOratE sOCial rEspOnsibility

Given that Sumatec is operating in the international arena and within a highly competitive and well-regulated industry, our Company strongly believes that sustainable business practices will lead to robust business growth.

The tenets of environment conservation and being “green” are important to our Company’s core business activities. So too are principles in relation to our employees’ health, safety and welfare.

As a progressive corporation, we aim to put in place processes or carry out initiatives that embraces the virtues of being a socially responsible corporate citizen comprehensively. As such, our commitment towards CSR will be in line with Bursa Malaysia’s framework that centres on four key pillars, namely Community, Environment, Marketplace and Workplace.

MOving FOrward

The United States Energy Information Administration (EIA) has projected that Brent crude oil price will average USD59 per barrel in 2015. The outlook could be even more positive since Brent price hit the high mark of USD68 in May 2015. 2016 is expected to see further strengthening of the oil prices to an average of USD75 per barrel.

Taking into account the price outlook in the short term, Sumatec reviewed its plans to ramp up production through workovers and side tracks in 2014 and new wells in 2015. The Company re-directed its capital expenditure to completing only workovers in 2014 and deferring all other capital outlays into 2015 with additional review prior to any further commitment of expenditure.

Construction of Beam Pump Foundation

Beam pump on well 115 operational with COG/SOGand contractors



ACKNOWLEDGEMENT

Tan Sri Abu Talib Othman

Cardwell Rig: Workover Program 2014


Christopher Layton DaltonChief Executive Officer

CHIEFEXECUTIVEOFFICER’SREVIEW

DEAR SHAREHOLDERS,As Sumatec Resources Berhad continues to chart its course as an independent upstream oil

and gas player, the Company has remained committed towards ensuring that it builds a strong

foundation in terms of operations, processes and human capital to reap success in this highly

competitive oil and gas space.

I am confident that the investments we made in strategic and operational expansion during the

year have placed us in a much better position to deliver positive long term growth to our

shareholders and stakeholders at large.


CHIEF EXECUTIVE OFFICER’S REVIEWCONT’D

A DYNAMIC INDEPENDENT UPSTREAM

OIL AND GAS COMPANY

STRENGTHENING OUR FOUNDATIONTO SECURE OUR FUTURE

Coil tubing unit conduction N2 injection for artificial lift of well.



UNLOCKING THE VALUE OF OUR ASSETS

Surface network pipeline upgrading at central processing facility.

Central Processing Facility: Master Unit



SET TO REACH GREATER HEIGHTS

Christopher Layton Dalton


FINANCIAL HIGHLIGHTS

REVENUE

(RM’000)

81,117

0

1,543

175,017

214,725

2014

2013

2012

2011

2010

PFOFIT/(LOSS) AFTER TAXATION (“PAT”)

(RM’000)

48,904

64,259

(105,448)

(66,682)

(37,904)

2014

2013

2012

2011

2010

TOTAL ASSETS

(RM’000)

681,396

453,675

551,475

684,708

828,869

2014

2013

2012

2011

2010

NET ASSETS PER SHARE

(RM)

0.18

0.14

(0.31)

0.18

0.54

2014

2013

2012

2011

2010

SHAREHOLDERS’ EQUITY

(RM’000)

610,591

426,782

(137,831)

(38,096)

16,779

2014

2013

2012

2011

2010

BASIC EARNINGS/(LOSS) PER SHARE (sen)

1.50

12.58

(46.53)

(35.90)

(22.08)

2014

2013

2012

2011

2010



FIVE-YEAR FINANCIAL HIGHLIGHTSCONT’D

2010 2011 2012 2013 2014

KEY FINANCIAL DATA

STATEMENT OF COMPREHENSIVE INCOME:

81,117

61,729

48,904

48,904

STATEMENT OF FINANCIAL POSITION:

487,577

610,591

681,396

610,561

22,635

1,384

RATIO ANALYSIS:

1.50

0.18

0.04

8

VALUATION:

714.0

Note:

NM : Not Meaningful


1. Tan Sri Abu Talib bin Othman Independent Non-Executive Chairman

2. Wan Kamaruddin bin

Dato’ Biji Sura @ Wan Abdullah Non-Independent Non-Executive Director

3. Chan Yok Peng Non-Independent Non-Executive Director

4. Mohamad bin Ismail Independent Non-Executive Director

r

1

2

3

Chan Yok Peng

4

BOARD OF DIRECTORS


5. Datuk Che Mokhtar bin Che Ali Independent Non-Executive Director

6. Datuk Mohd Nasir bin Ahmad Independent Non-Executive Director

7. Michael Lim Hee Kiang Independent Non-Executive Director

8. Dato’ Ahmad Johari bin Tun Abdul Razak Independent Non-Executive Director

e Mokhtar bin Che Alit Non-Executive Director

7. Michael Lim Hee KiIndependent Non-Exec

khtar bin Che Ali 7 Michael Lim

67

8

5

BOARD OF DIRECTORSCONT’D


From left to right.

BOARD OF DIRECTORS’ PROFILE

Tan Sri Abu Talib bin OthmanIndependent Non-Executive Director

Age 77, Malaysian

Position in the Company

Qualification

Working Experiences

Directorship in Public Companies

Wan Kamaruddin bin

Dato’ Biji Sura @ Wan AbdullahNon-Independent Non-Executive Director

Age 59, Malaysian


Qualification

Working Experiences



From left to right.

BOARD OF DIRECTORS’ PROFILECONT’D

Chan Yok PengNon-Independent Non-Executive Director

Age 63, Malaysian


Qualification

Working Experiences


Mohamad bin Ismail Independent Non-Executive Director

Age 64, Malaysian


Qualification

Working Experiences



From left to right.


Datuk Che Mokhtar bin Che Ali Independent Non-Executive Director

Age 61, Malaysian


Qualification

Working Experiences


Datuk Mohd Nasir bin AhmadIndependent Non-Executive Director

Age 61, Malaysian


Qualification

Working Experiences



From left to right.


Michael Lim Hee KiangIndependent Non-Executive Director

Age 67, Malaysian


Qualification

Working Experiences


Dato’ Ahmad Johari bin Tun Abdul Razak Independent Non-Executive Director

Age 61, Malaysian


Qualification

Working Experiences


Notes:-

and/or major shareholder nor conflict of interest in business arrangement

involving the Company.

(10) years other than traffic offences, if any.

the Annual Report


MANAGEMENT TEAMS’ PROFILE


Age 41, British


Qualifications

Working Experiences

Notes:-

shareholders nor conflict of interest in business arrangement involving the

Company.

other than traffic offences, if any.

the Company ESOS as at 31 December 2014.

Roshidah binti AbdullahChief Financial Officer


Qualifications

Working Experiences


MANAGEMENT TEAMS’ PROFILECONT’D

Zulkifly bin MohamadChief Operating Officer


Qualification

Working Experiences

Samuel Elliot HarveyOperations Director


Qualification

Working Experiences


Bakhtiyar Jexenbiyev


Qualifications

Working Experiences

MANAGEMENT TEAMS’ PROFILECONT’D

Timur Meirzhanovich UtebaevFacilities Manager


Qualification

Working Experiences

BOARD OF DIRECTORS

Tan Sri Abu Talib bin OthmanIndependent Non-Executive Chairman

Wan Kamaruddin bin

Dato’ Biji Sura @ Wan AbdullahNon-Independent Non-Executive Director

Chan Yok PengNon-Independent Non-Executive Director

Mohamad bin IsmailIndependent Non-Executive Director

Datuk Che Mokhtar bin Che AliIndependent Non-Executive Director

Datuk Mohd Nasir bin AhmadIndependent Non-Executive Director

Michael Lim Hee KiangIndependent Non-Executive Director

Dato’ Ahmad Johari bin

Tun Abdul RazakIndependent Non-Executive Director

PRINCIPAL OFFICERS


Roshidah binti AbdullahChief Financial Officer

AUDIT COMMITTEE

Michael Lim Hee KiangChairman

Mohamad bin Ismail

Datuk Mohd Nasir bin Ahmad

REMUNERATION COMMITTEE

Tan Sri Abu Talib bin OthmanChairman

Michael Lim Hee Kiang

Chan Yok Peng

NOMINATION COMMITTEE

Tan Sri Abu Talib bin OthmanChairman

Datuk Che Mokhtar bin Che Ali


ESOS COMMITTEE

Datuk Mohd Nasir bin AhmadChairman


Chan Yok Peng


INVESTMENT COMMITTEE

Datuk Che Mokhtar bin Che AliChairman

Wan Kamaruddin bin

Dato’ Biji Sura @ Wan Abdullah

Mohamad bin Ismail


QHSE RISK COMMITTEE

Mohamad bin IsmailChairman

Wan Kamaruddin bin

Dato’ Biji Sura @ Wan Abdullah


COMPANY SECRETARIES

Lim Seck Wah(MAICSA 0799845)

M. Chandrasegaran a/l S. Murugasu(MAICSA 0781031)

REGISTERED OFFICE

Level 15–2

Bangunan Faber Imperial Court

Jalan Sultan Ismail

50250 Kuala Lumpur

Tel : 603-2692 4271

Fax : 603-2732 5388

email : [email protected]

PRINCIPAL PLACE OF BUSINESS

Suite 22.02, Level 22

The Gardens North Tower

Mid Valley City, Lingkaran Syed Putra

59200 Kuala Lumpur

SHARE REGISTRAR

Mega Corporate Services Sdn Bhd

Level 15–2

Bangunan Faber Imperial Court

Jalan Sultan Ismail

50250 Kuala Lumpur

Tel : 603-2692 4271

Fax : 603-2732 5388

e-mail : [email protected]

AUDITORS

Messrs SJ Grant Thornton

Chartered Accountants

Level 11

Bangunan Sheraton Imperial Court

Jalan Sultan Ismail

50250 Kuala Lumpur

SOLICITORS

Signum Law Firm

Shearn Delamore & Co.

Chua Associates

Bahari & Bahari

PRINCIPAL BANKERS

Alliance Bank Malaysia Berhad

Al-Rajhi Banking & Investment

Corporation ( Malaysia ) Berhad

CIMB Bank Berhad

Malayan Banking Berhad

STOCK EXCHANGE LISTING

Main Market

Bursa Malaysia Securities Berhad

Stock Name : SUMATEC

Stock Code : 1201

CORPORATEINFORMATION....



GROUP STRUCTURE

FINANCIALCALENDAR

222MAY 20141st Quarter Ended 31 March 2014

ANNOUNCEMENT OF THEUNAUDITED CONSOLIDATED RESULTS:

288FEBRUARY 20144th Quarter Ended 31 Dec 2013

2727NOVEMBER 20143rd Quarter Ended 30 September 2014

244FEBRUARY 20154th Quarter Ended 31 December 2014

288AUGUST 20142nd Quarter Ended 30 June 2014


FINANCIALCALENDARCONT’D

300APRIL 2015Financial Year Ended 31 December 2014

SUBMISSION OF THEAUDITED FINANCIAL STATEMENTTO BURSA MALAYSIA:

NOTICE OF ANNUAL GENERAL MEETING AND ISSUANCE OFANNUAL REPORT:

111JUNE 201518th Annual General Meeting

200MAY 2015Financial Year Ended 31 December 2014


100% SUMATEC CORPORATION SDN BHD

80% PERLIS BIO-POWER SDN BHD

100% SUMATEC PETROLEUM DEVELOPMENT SDN BHD

100% SUMATEC OIL AND GAS LLP

100% SUMATEC DEVELOPMENT SDN BHD

SUMATEC RESOURCES BERHAD

CORPORATE STRUCTURE


STATEMENT ON CORPORATE GOVERNANCE

I. ROLES AND RESPONSIBILITIES OF THE BOARD

The responsibilities of the Board include;


STATEMENT ON CORPORATE GOVERNANCECONT’D


Matters specifically reserved for the Board include:

Code of Ethics and Conduct




Promoting Sustainability

Access to Information

Company Secretaries

Board Charter


II. BOARD STRENGTH AND EFFECTIVENESS

Composition of the Board

Audit Committee

Nomination Committee - Selection and Assessment of Directors




Appointment and Re-election of Directors

Remuneration Committee - Directors’ Remuneration

Non-Executive

Directors

(RM)

Total 656,150




Remuneration Committee - Directors’ Remuneration

Non-Executive

Directors

ESOS Committee

SUMATEC RESOURCES BERHAD EMPLOYEES’ SHARE OPTION SCHEME (“ESOS”)

As at 1 January 2014 Granted Lapsed Exercised

Balance Unexercised as

at 31 December 2014




Investment Committee

QHSE Risk Committee

III. INDEPENDENCE OF THE BOARD



IV. COMMITMENT OF DIRECTORS

Board Meetings and Attendance

Director Attendance %

Independent Non-Executive Director

Non-Independent Non-Executive Director

Non-Independent Non-Executive Director






(appointed on 10 July 2014)



IV. COMMITMENT OF DIRECTORS

Directors’ Training - Continuing Education Programmes

Director Name of Seminars / Training programmes attended



V. INTEGRITY IN FINANCIAL REPORTING

VI. RISK MANAGEMENT AND INTERNAL CONTROL

VII. WHISTLEBLOWING POLICY

VIII. TIMELY AND HIGH QUALITY DISCLOSURE



IX. RELATIONSHIP WITH SHAREHOLDERS AND INVESTORS

Shareholder participation at general meeting

Communication and engagement with shareholders

Investor and Media Relations



AUDIT COMMITTEE REPORT

1. COMPOSITION

Name Designation

2. MEETINGS

Name

Number of

Meetings Attended

%

attendance


AUDIT COMMITTEE REPORTCONT’D

3. SUMMARY OF ACTIVITIES

3. INTERNAL AUDIT FUNCTION



4. TERMS OF REFERENCE

(i) Membership

(ii) Chairman

(iii) Quorum

(iv) Meetings and Minutes



(iv) Meetings and Minutes

(v) Authority

(vi) Responsibilities and Duties

(a) Financial Reporting





(b) External Audit

(c) Internal Audit

(d) Related Party Transactions





(e) Internal Control and Risk Management

(f) Reports

(g) Employees’ Share Option Scheme (“ESOS”)

(h) Other Matters



STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL

Board Responsibility

Risk Management


STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROLCONT’D

Code of Conduct

System of Internal Control

(i) Financial Reporting and Controls

(ii) Clear and Structured Organisational Reporting Lines

(iii) Policies and Procedures

(iv) Strategic Business Planning, Budgeting and Reporting


STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROLCONT’D

System of Internal Control

(v) Closed Period Communication

(vi) Tender Award System

Assurance from Management

Conclusion

Review of This Statement


OTHER ADDITIONAL COMPLIANCE INFORMATION

MATERIAL CONTRACTS INVOLVING DIRECTORS’ AND MAJOR SHAREHOLDERS’ INTERESTS

i. RECURRENT RELATED PARTY TRANSACTIONS


OTHER ADDITIONAL COMPLIANCE INFORMATIONCONT’D


II. OTHER RELATED PARTY TRANSACTIONS



II. OTHER RELATED PARTY TRANSACTIONS

SHARE BUY-BACKS

OPTION, WARRANTS OR CONVERTIBLE LOAN SECURITIES

a. Warrants

b. Employee Share Options Scheme (“ESOS”)

DEPOSITORY RECEIPTS PROGRAMME

NON-AUDIT FEES

IMPOSITION OF SANCTIONS/PENALTIES



UPLIFTMENT OF PN17 STATUS

PROFIT ESTIMATES, FORECAST OR PROJECTIONS AND VARIATION IN RESULT

Forecast

Audited

Results Variance Explanation

RM’000 RM’000 RM’000

PROFIT GUARANTEE

STATUS OF UTILISATION OF PROCEEDS

Purpose Amount

RM’000



STATEMENT OF DIRECTORS' RESPONSIBILITYFOR PREPARATION OF FINANCIAL STATEMENTS

FINANCIALSTATEMENTS

Directors’ Report.........................................................56

Statement by Directors and Statutory Declaration........62

Independent Auditors’ Report......................................63

Statements of Financial Position................................65

Statements of Profit or Lossand Other Comprehensive Income...............................67

Statements of Changes in Equity...............................69

Statements of Cash Flows..........................................71

Notes to the Financial Statements.............................74


The Directors hereby submit their report together with the audited financial statements of the Group and of the Company

for the financial year ended 31 December 2014.

PRINCIPAL ACTIVITIES

The principal activities of the Company are that of investment holding and engaged in the upstream oil operation.

The principal activities of its subsidiary companies are disclosed in Note 4 to the Financial Statements.

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

FINANCIAL RESULTS

Group Company

RM RM

Net profit for the financial year 48,903,849 3,025,668

Attributable to:

Owners of the Company 48,903,849 3,025,668

RESERVES AND PROVISIONS

There were no material transfers to or from reserves or provisions during the financial year except for those disclosed in

the financial statements.

DIVIDENDS

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

DIRECTORS

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

Tan Sri Abu Talib bin Othman


Datuk Mohd Nasir bin Ahmad

Wan Kamaruddin bin Dato’ Biji Sura @ Wan Abdullah

Chan Yok Peng

Mohamad bin Ismail


Dato’ Ahmad Johari bin Abdul Razak (appointed on 10.7.2014)

DIRECTORS' REPORT


DIRECTORS’ INTERESTS

According to the Register of Directors’ Shareholdings, the interests and deemed interests in the shares and options over

shares of the Company of those who were Directors as at year end are as follows:-

Number of ordinary shares of RM0.14 each

At

1.1.2014 Bought Sold

At

31.12.2014

Direct interest

Wan Kamaruddin bin Dato’ Biji Sura @ Wan Abdullah 700,000 - - 700,000

Dato’ Ahmad Johari bin Abdul Razak - 60,174,900 (21,000,000) 39,174,900

Deemed interest

Chan Yok Peng * 260,155,841 5,000,000 (79,672,662) 185,483,179

Number of Warrants B

At

1.1.2014 Bought Sold

At

31.12.2014

Deemed interest

Chan Yok Peng * 83,932,271 - - 83,932,271

* deemed interest by virtue of his shareholdings in Tekad Mulia Sdn. Bhd.

Other than those disclosed above, none of the other Directors in office at the end of the financial year held any interest in

the shares and options over shares of the Company or its related corporations during the financial year.

DIRECTORS’ BENEFITS

During and at the end of the financial year, no arrangements subsisted to which the Company 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.

Since the end of the previous financial year, no Director has received or become entitled to receive any benefits (except

as disclosed in Notes 24 and 29 to the Financial Statements) 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 of which the Director has

a substantial financial interest.

ISSUE OF SHARES AND DEBENTURES

During the financial year, the Company issued:

(a) 89,000,000 ordinary shares of RM0.14 each arising from the exercise of employee share options at exercise price of

RM0.244 per share for a total cash consideration of RM21,716,000;

(b) 131,325 ordinary shares of RM0.14 each pursuant to the conversion of 131,325 warrants 2013/2028 at RM0.175 per

share for a total cash consideration of RM22,982; and

(c) 308,596,000 ordinary shares of RM0.14 each at RM0.38 per share via private placement to eligible investors for a

total cash consideration of RM117,266,480.

DIRECTORS' REPORTCONT’D


ISSUE OF SHARES AND DEBENTURES (continued)

The new ordinary shares issued during the financial year rank pari passu in all respects with the existing ordinary shares of

the Company.

There was no issuance of debentures during the financial year.

OPTIONS GRANTED OVER UNISSUED SHARES

No options were granted to any person to take up unissued share of the Company during the financial year apart from

the issue of options pursuant to the Employee Share Options Scheme (“ESOS”), Warrants 2011/2021 (“Warrants A”) and

Warrants 2013/2018 (“Warrants B”).

ESOS

The ESOS is governed by the by-laws which were approved by the shareholders at the Eighth Annual General Meeting

held on 24 June 2005. On 18 April 2007, the Company implemented ESOS after approvals were obtained from the

relevant authorities and was in force for a period of 5 years. The ESOS which originally expired on 17 April 2012, has been

extended for another 5 years to 16 April 2017.

The salient features and other terms of the ESOS are as follows:

(a) The ESOS Committee appointed by the Board of Directors to administer the ESOS, may from time to time grant

options to eligible employees of the Group to subscribe for new ordinary shares of RM0.14 each in the Company;

(b) The eligibility of a Director or employee of the Group to participate in the ESOS shall be at the discretion of the ESOS

Committee, who shall take into consideration factors such as years of service and performance track record;

(c) The total number of shares to be issued under ESOS shall not exceed in aggregate 15% of the issued and fully paid-

up share capital of the Company at any point of time during the tenure of the ESOS and out of which not more than

50% of the shares shall be allocated, in aggregate, to Directors and senior management. In addition, not more than

10% of the shares available under the ESOS shall be allocated to any individual Director or employee who, either

singly or collectively through his/her associates, holds 20% or more in the issued and paid-up share capital of the

Company;

(d) The option price shall not be at a discount of more than 10% from the 5-days weighted average market price of the

shares of the Company preceding the date of offer and shall in no event be less than the par value of the share of the

Company of RM0.14;

(e) The number of outstanding options to subscribe for shares or the option price or both may be adjusted following

any issue of additional shares by way of rights issues, bonus issues or other capitalisation issue carried out by the

Company while an option remains unexercised; and

(f) The new shares allotted upon any exercise of the option shall rank pari passu in all respects with the existing

ordinary shares of the Company except that the new shares so issued will not rank for any rights, dividends,

allotments and/or other distributions, the entitlement date of which is prior to the date of allotment of the new

ordinary shares.



OPTIONS GRANTED OVER UNISSUED SHARES (continued)

ESOS (continued)

As at 31 December 2014, the options offered to take up unissued ordinary shares of the Company of RM0.14 each and the

option prices are as follows:-

Number of option over ordinary shares of RM0.14 each

Grant date

Expiry

date

Option

price

At

1.1.2014 Granted Exercised Forfeited

At

31.12.2014

18.4.2007 16.4.2017 RM0.35 40,000 - - - 40,000

27.12.2013 16.4.2017 RM0.244 145,000,000 - (65,000,000) (15,400,000) 64,600,000

26.3.2014 16.4.2017 RM0.244 - 44,000,000 (24,000,000) - 20,000,000

During the financial year, eligible employees of the Group and the Company who have been granted with share options are

as follows:

Number of option over ordinary shares of RM0.14 each

At

1.1.2014 Granted Exercised Forfeited

At

31.12.2014

Albina Berisheva 600,000 - - - 600,000

Anelya Baitleuova 200,000 - - - 200,000

Aslan Tuleshev 800,000 - - - 800,000

Azamat Chukenov 300,000 - - - 300,000

Bakhityar R. Jexenbiyen 1,200,000 - - - 1,200,000

Chingis Nabiyev 15,000,000 - - (15,000,000) -

Christopher Layton Dalton - 44,000,000 (24,000,000) - 20,000,000

Faridah Binti Azmat 440,000 - - - 440,000

Jaafar Bin Jonid 100,000 - - - 100,000

Kaisar Kossayev 800,000 - - - 800,000

Kamala Kee Rudra 400,000 - - - 400,000

Lessya Kotovskaya 1,200,000 - - - 1,200,000

Looi Yow Cheong 600,000 - - - 600,000

Maimun Binti Ramli 400,000 - - (400,000) -

Mukanova Bayan-Slu 800,000 - - - 800,000

Norrida Binti Suli 200,000 - - - 200,000

Olzhas Saipolla 1,200,000 - - - 1,200,000

Peng Ng Leng 25,000,000 - (25,000,000) - -

Roshidah Binti Abdullah 40,000,000 - (20,000,000) - 20,000,000

Sagadiyev Bekzhan 300,000 - - - 300,000

Sam Elliot Harvey 12,000,000 - - - 12,000,000

Shobana MohanaSundram 1,200,000 - - - 1,200,000

Siti Salwa Binti Abd Hamid 400,000 - - - 400,000

Syahirah Akmal Binti Mahdom 400,000 - - - 400,000

Tubagus Reggie Rachman 1,400,000 - - - 1,400,000

Wan Ismail Bin Hamid 100,000 - - - 100,000

Zulkifly Bin Mohamad 40,000,000 - (20,000,000) - 20,000,000

145,040,000 44,000,000 (89,000,000) (15,400,000) 84,640,000



OPTIONS GRANTED OVER UNISSUED SHARES (continued)

Warrants A and Warrants B

The details and salient terms of Warrants A and Warrants B are disclosed in Note 16 to the Financial Statements.

Details of Warrants B issued to Directors are disclosed in the section of Directors’ Interests in this report.

OTHER STATUTORY INFORMATION

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

(a) to ascertain that action had been taken in relation to the writing off of bad debts and the making of allowance for

doubtful debts and satisfied themselves that all known bad debts had been written off and adequate allowance had

been made for doubtful debts; and

(b) to ensure that any current assets which were unlikely to be realised in the ordinary course of business including their

values as shown in the accounting records of the Group and of the Company have been written down to an amount

which they might be expected so to realise.

At the date of this report, the Directors are not aware of any circumstances:-

(a) which would render the amounts written off for bad debts or the amount of the allowance for doubtful debts in the

financial statements of the Group and of the Company inadequate to any substantial extent; or

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

Company misleading; or

(c) which have arisen which would render adherence to the existing method of valuation of assets or liabilities of the

Group and of the Company misleading or inappropriate; or

(d) not otherwise dealt with in this report or the financial statements which would render any amount stated in the

financial statements misleading.

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

(a) any charge on the assets of the Group and of the Company which has arisen since the end of the financial year

which secures the liability of any other person; or

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

In the opinion of the Directors:-

(a) no contingent liability or other liability has become enforceable or is likely to become enforceable within the period of

twelve months after the end of the financial year which will or may affect the ability of the Group and of the Company

to meet their obligations as and when they fall due;

(b) the results of operations of the Group and of the Company during the financial year were not substantially affected

by any item, transaction or event of a material and unusual nature; and

(c) there has not arisen in the interval between the end of the financial year and the date of this report any item,

transaction or event of a material and unusual nature likely to affect substantially the results of the operations of the

Group and of the Company for the financial year in which this report is made.



SIGNIFICANT EVENTS DURING THE FINANCIAL YEAR AND AFTER THE REPORTING DATE

Significant events during the financial year and after the reporting date are disclosed in Note 35 to the Financial

Statements.

AUDITORS

The Auditors, Messrs SJ Grant Thornton, have expressed their willingness to continue in office.

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

........................................................... )

TAN SRI ABU TALIB BIN OTHMAN )

)

)

)

)

)

) DIRECTORS

)

)

)

)

)

…………………………………...…….. )

CHAN YOK PENG )

Kuala Lumpur

23 April 2015


…………………………………………

OK PENG

mpur

..............................................

SRI ABU TALIB BIN OTHMA


STATEMENT BY DIRECTORS

In the opinion of the Directors, the financial statements set out on pages 65 to 131 are drawn up in accordance with

Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the

Companies Act, 1965 in Malaysia so as to give a true and fair view of the financial position of the Group and of the

Company as at 31 December 2014 and of their financial performance and cash flows for the financial year then ended.

In the opinion of the Directors, the supplementary information set out on page 132 has been compiled in accordance

with the Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context

of Disclosures Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, issued by the Malaysian Institute of

Accountants, and presented based on the format prescribed by Bursa Malaysia Securities Berhad.

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

.................................................................... ....................................................................

TAN SRI ABU TALIB BIN OTHMAN CHAN YOK PENG

Kuala Lumpur

23 April 2015

STATUTORY DECLARATION

I, Roshidah Binti Abdullah, being the Officer primarily responsible for the financial management of Sumatec Resources

Berhad, do solemnly and sincerely declare that to the best of my knowledge and belief, the financial statements set out on

pages 65 to 131 and the supplementary information set out on page 132 are correct and I make this solemn declaration

conscientiously believing the same to be true and by virtue of the Statutory Declarations Act, 1960.

Subscribed and solemnly declared by )

the abovenamed at Kuala Lumpur in )

the Federal Territory this day of )

23 April 2015 ) ........................................................…………......

ROSHIDAH BINTI ABDULLAH

Before me:

Commissioner for Oaths

STATEMENT BY DIRECTORS AND STATUTORY DECLARATION

ectors,

............................ ...........

CHAN YOK PENG

.............................................

SRI ABU TALIB BIN OTHMA

ROS

fore me:

ioner for Oaths

f the Statutory Declara

................................. ....................... ................................................

SHIDAH BINTI ABDULSHIDAH BIN


REPORT ON THE FINANCIAL STATEMENTS

We have audited the financial statements of Sumatec Resources Berhad, which comprise statements of financial position

as at 31 December 2014 of the Group and of the Company, statements of profit or loss and other comprehensive income,

statements of changes in equity and statements of cash flows of the Group and of the Company for the financial year then

ended, and a summary of significant accounting policies and other explanatory information, as set out on pages 65 to 131.

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 controls

as the Directors determine are 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 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 controls 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 controls. 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 of the Company

as of 31 December 2014 and of their financial performance and cash flows for the financial year then ended in accordance

with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the

Companies Act, 1965 in Malaysia.

INDEPENDENT AUDITORS' REPORTTO THE MEMBERS OF SUMATEC RESOURCES 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:-

(a) In our opinion, the accounting and other records and the registers required by the Act to be kept by the Company

and its subsidiary companies of which we have acted as auditors have been properly kept in accordance with the

provisions of the Act.

(b) We have considered the accounts and the auditors’ report of the subsidiary company of which we have not acted as

auditors, which are indicated in Note 4 to the Financial Statements.

(c) We are satisfied that the accounts of the subsidiary companies 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.

(d) The auditors’ reports on the accounts of the subsidiary companies did not contain any qualification or any adverse

comment under Section 174 (3) of the Act.

OTHER REPORTING RESPONSIBILITIES

The supplementary information set out on page 132 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.

........................................................……… ........................................................………

SJ GRANT THORNTON KHO KIM ENG

(NO. AF: 0737) (NO: 3137/10/16 (J))

CHARTERED ACCOUNTANTS CHARTERED ACCOUNTANT

Kuala Lumpur

23 April 2015

INDEPENDENT AUDITORS' REPORTTO THE MEMBERS OF SUMATEC RESOURCES BERHADCONT’D

.................................

ENG

/10/16 (J))

.................................... ....................……

RANT THORNTOTOTOTOTOTOTOTOTOTOTOOOOOTOTOOOOTTTTTTT N

AF: 0737)

RTERED ACCCCCCCOCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCCC UNTANTS

a Lumpurrrrrrrr


Group Company

Note 2014 2013 2014 2013

RM RM RM RM

ASSETS

Non-current assets

Investment in subsidiary companies 4 - - 1,004,144 38,291

Investment in associate companies 5 - - - -

Other investments 6 1 33 - -

Property, plant and equipment 7 4,788,186 367,945 3,887,590 -

Intangible asset 8 301,869,381 302,100,000 301,869,381 302,100,000

Trade receivables 9 18,123,517 - 12,710,545 -

Other receivables 10 172,369,511 127,200,000 172,369,511 127,200,000

Total non-current assets 497,150,596 429,667,978 491,841,171 429,338,291

Current assets

Trade receivables 9 62,917,200 - 10,486,200 -

Other receivables 10 97,052,383 1,187,646 96,800,618 318,184

Amount due from subsidiary companies 11 - - 13,560,293 2,001,079

Amount due from associate companies 12 5,635,497 - 5,635,497 -

Tax recoverable 25,915 79,411 - -

Fixed deposits with a licensed bank 13 230,000 230,000 - -

Cash and bank balances 1,384,057 4,835,131 934,885 4,768,550

Total current assets 167,245,052 6,332,188 127,417,493 7,087,813

Non-current assets classified as held for sale 14 17,000,000 17,674,378 17,000,000 17,000,000

Total assets 681,395,648 453,674,544 636,258,664 453,426,104

EQUITY AND LIABILITIES

EQUITY

Equity attributable to owners of the Company:

Share capital 15 487,577,346 431,895,520 487,577,346 431,895,520

Other reserves 16 329,378,434 250,183,652 329,283,223 250,183,652

Accumulated losses (206,364,492) (255,297,233) (250,351,510) (253,406,070)

610,591,288 426,781,939 566,509,059 428,673,102

Non-controlling interests (30,770) (197,720) - -

Total equity 610,560,518 426,584,219 566,509,059 428,673,102

STATEMENTS OF FINANCIAL POSITIONAS AT 31 DECEMBER 2014


Group Company

Note 2014 2013 2014 2013

RM RM RM RM

LIABILITIES

Non-current liabilities

Finance lease payables 17 - 226,258 - -

Deferred tax liabilities 18 331,000 - 331,000 -

Other payables 19 37,880,636 - 37,880,636 -

Total non-current liabilities 38,211,636 226,258 38,211,636 -

Current liabilities

Trade payables 20 194,558 - - -

Other payables 19 9,293,439 9,137,617 8,402,472 7,753,002

Tax payable 500,000 - 500,000 -

Term loans 21 22,635,497 17,000,000 22,635,497 17,000,000

Short-term borrowing 22 - 601,636 - -

Finance lease payables 17 - 124,814 - -

Total current liabilities 32,623,494 26,864,067 31,537,969 24,753,002

Total liabilities 70,835,130 27,090,325 69,749,605 24,753,002

Total equity and liabilities 681,395,648 453,674,544 636,258,664 453,426,104

STATEMENTS OF FINANCIAL POSITIONAS AT 31 DECEMBER 2014CONT’D

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


Group Company

Note 2014 2013 2014 2013

RM RM RM RM

Revenue 23 81,117,160 - 25,935,903 -

Direct cost (1,986,155) - (778,959) -

Other income 16,501,436 108,136,767 14,789,271 56,115,110

Staff costs 24 (17,284,324) (8,020,264) (9,821,625) (6,775,202)

Depreciation (388,451) (171,673) (301,726) -

Administrative expenses (8,128,314) (6,923,997) (7,067,990) (5,682,246)

Other expenses (478,953) (1,239,654) (1,872,306) (23,225,573)

Finance costs 25 (15,845,084) (8,496,289) (13,275,900) (8,281,750)

Profit before tax 53,507,315 83,284,890 7,606,668 12,150,339

Tax expenses 26 (4,603,466) (369,685) (4,581,000) -

Profit from continuing operations 48,903,849 82,915,205 3,025,668 12,150,339

Loss from discontinued operation - (18,655,752) - -

Net profit for the financial year 27 48,903,849 64,259,453 3,025,668 12,150,339

Other comprehensive income

Item that will be reclassified subsequently to

profit or loss

Foreign currency translation differences for

foreign operation 95,211 - - -

Item that will not be reclassified subsequently to

profit or loss

Realisation of revaluation reserve - 27,975 - -

Other comprehensive income for the financial

year 95,211 27,975 - -

Total comprehensive income for the financial

year 48,999,060 64,287,428 3,025,668 12,150,339

STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOMEFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2014


Group

Note 2014 2013

RM RM

Profit for the financial year attributable to:

Owners of the Company

- continuing operations 48,903,849 83,112,925

- discontinued operation - (9,514,434)

Non-controlling interests - (9,339,038)

Net profit for the financial year 48,903,849 64,259,453

Total comprehensive income for the financial year attributable to:

Owners of the Company

- continuing operations 48,999,060 83,140,900

- discontinued operation - (9,514,434)

Non-controlling interests - (9,339,038)

Total comprehensive income for the financial year 48,999,060 64,287,428

Earnings per share 28

Basic earnings per share (sen):

Profit from continuing operations 1.50 14.21

Loss from discontinued operation - (1.63)

Total 1.50 12.58

Diluted earnings per share (sen):

Profit from continuing operations 1.39 13.49

Loss from discontinued operation - (1.54)

Total 1.39 11.95


STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOMEFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2014CONT’D


Att

rib

utab

le t

o o

wne

rs o

f th

e C

om

pan

y

No

n-d

istr

ibut

able

D

istr

ibut

able

Sha

re

cap

ital

Sha

re

pre

miu

m

Rev

alua

tio

n

rese

rve

War

rant

s

rese

rve

Em

plo

yee

shar

e

op

tio

ns

rese

rve

Cap

ital

rese

rve

Fore

ign

curr

ency

tran

slat

ion

rese

rve

Acc

umul

ated

loss

esT

ota

l

No

n-

cont

rolli

ng

inte

rest

s

To

tal

equi

ty

RM

RM

RM

RM

RM

RM

RM

RM

RM

RM

RM

Gro

up

At

1 Ja

nuar

y 20

13 7

5,02

7,47

7 -

1

,286

,663

1

5,00

5,49

5 -

1

7,18

6,55

6 -

(2

46,3

36,9

40)

(137

,830

,749

) 7

0,51

9,65

3 (6

7,31

1,09

6)

Rea

lisat

ion

of r

eval

uatio

n re

serv

e -

-

(2

7,97

5) -

-

-

-

-

(2

7,97

5) -

(2

7,97

5)

Tota

l com

preh

ensi

ve in

com

e fo

r th

e

finan

cial

yea

r -

-

-

-

-

-

-

7

3,62

6,46

6 7

3,62

6,46

6 (9

,339

,038

) 6

4,28

7,42

8

Tra

nsac

tio

ns w

ith

ow

ners

:

Par

val

ue r

educ

tion

in s

hare

cap

ital

(45,

016,

486)

-

-

-

-

-

-

45,

016,

486

-

-

-

Issu

ance

of

shar

es40

1,26

2,39

7 10

0,31

5,59

9 -

-

-

-

-

-

5

01,5

77,9

96

-

501,

577,

996

Sha

re is

suan

ce e

xpen

ses

-

(14,

669,

806)

-

-

-

-

-

-

(14,

669,

806)

-

(14,

669,

806)

Exe

rcis

e of

ES

OS

621

,600

9

32,4

00

-

-

-

-

-

-

1,5

54,0

00

-

1,5

54,0

00

Con

vers

ion

of w

arra

nts

532

7

97

-

(532

) -

-

-

5

32

1,3

29

-

1,3

29

Em

ploy

ee s

hare

opt

ions

gra

nted

-

-

-

-

3,8

09,3

66

-

-

-

3,8

09,3

66

-

3,8

09,3

66

Issu

ance

of

war

rant

s -

-

-

1

27,6

03,7

77

-

-

-

(127

,603

,777

) -

-

-

Tota

l tra

nsac

tions

with

ow

ners

356

,868

,043

8

6,57

8,99

0 -

1

27,6

03,2

45

3,8

09,3

66

-

-

(82,

586,

759)

492

,272

,885

-

4

92,2

72,8

85

Aris

ing

from

dis

posa

l of

a su

bsid

iary

com

pany

-

-

(1,2

58,6

88)

-

-

-

-

-

(1,2

58,6

88)

(61,

378,

335)

(62,

637,

023)

At

31 D

ecem

ber

201

3 4

31,8

95,5

20

86,

578,

990

-

142

,608

,740

3

,809

,366

1

7,18

6,55

6 -

(2

55,2

97,2

33)

426

,781

,939

(1

97,7

20)

426

,584

,219

Oth

er c

ompr

ehen

sive

inco

me

for

the

finan

cial

yea

r -

-

-

-

-

-

9

5,21

1 -

9

5,21

1 -

9

5,21

1

Net

pro

fit f

or t

he fi

nanc

ial y

ear

-

-

-

-

-

-

-

48,

903,

849

48,

903,

849

-

48,

903,

849

Tota

l com

preh

ensi

ve in

com

e fo

r th

e

finan

cial

yea

r -

-

-

-

-

-

9

5,21

1 4

8,90

3,84

9 4

8,99

9,06

0 -

4

8,99

9,06

0

Tra

nsac

tio

ns w

ith

ow

ners

:

Priv

ate

plac

emen

t 4

3,20

3,44

0 7

4,06

3,04

1 -

-

-

-

-

-

1

17,2

66,4

81

-

117

,266

,481

Sha

re is

suan

ce e

xpen

ses

-

(10,

464,

803)

-

-

-

-

-

-

(10,

464,

803)

-

(10,

464,

803)

Exe

rcis

e of

ES

OS

12,

460,

000

9,2

56,0

00

-

-

-

-

-

-

21,

716,

000

-

21,

716,

000

Con

vers

ion

of w

arra

nts

18,

386

4,5

96

-

(28,

892)

-

-

-

28,

892

22,

982

-

22,

982

Em

ploy

ee s

hare

opt

ions

gra

nted

-

-

-

-

6,2

69,6

29

-

-

-

6,2

69,6

29

-

6,2

69,6

29

Tota

l tra

nsac

tions

with

ow

ners

55,

681,

826

72,

858,

834

-

(28,

892)

6,2

69,6

29

-

-

28,

892

134

,810

,289

-

1

34,8

10,2

89

Rea

lised

upo

n su

bsid

iary

com

pani

es

writ

ten

off

-

-

-

-

-

-

-

-

-

166

,950

1

66,9

50

Tran

sfer

red

to s

hare

pre

miu

m f

or

ES

OS

exe

rcis

ed -

5

,700

,100

-

-

(5

,700

,100

) -

-

-

-

-

-

At

31 D

ecem

ber

201

4 4

87,5

77,3

46

165

,137

,924

-

1

42,5

79,8

48

4,3

78,8

95

17,

186,

556

95,

211

(20

6,36

4,49

2) 6

10,5

91,2

88

(30

,770

) 6

10,5

60,5

18

STATEMENTS OF CHANGES IN EQUITYFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2014


Attributable to owners of the Company

Non-distributable Distributable

Share

capital

Share

premium

Warrants

reserve

Employee

share

options

reserve

Capital

reserve

Accumulated

losses

Total

equity

RM RM RM RM RM RM RM

Company

At 1 January 2013 75,027,477 - 15,005,495 - 17,186,556 (182,969,650) (75,750,122)

Total comprehensive income for the

financial year - - - - - 12,150,339 12,150,339

Transactions with owners:

Par value reduction in share capital (45,016,486) - - - - 45,016,486 -

Issuance of shares 401,262,397 100,315,599 - - - - 501,577,996

Share issuance expenses - (14,669,806) - - - - (14,669,806)

Exercise of ESOS 621,600 932,400 - - - - 1,554,000

Conversion of warrants 532 797 (532) - - 532 1,329

Employee share options granted - - - 3,809,366 - - 3,809,366

Issuance of warrants - - 127,603,777 - - (127,603,777) -

Total transactions with owners 356,868,043 86,578,990 127,603,245 3,809,366 - (82,586,759) 492,272,885

At 31 December 2013 431,895,520 86,578,990 142,608,740 3,809,366 17,186,556 (253,406,070) 428,673,102

Total comprehensive income for the

financial year - - - - - 3,025,668 3,025,668

Transactions with owners:

Private placement 43,203,440 74,063,041 - - - - 117,266,481

Share issuance expenses - (10,464,803) - - - - (10,464,803)

Exercise of ESOS 12,460,000 9,256,000 - - - - 21,716,000

Conversion of warrants 18,386 4,596 (28,892) - - 28,892 22,982

Employee share options granted - - - 6,269,629 - - 6,269,629

Total transactions with owners 55,681,826 72,858,834 (28,892) 6,269,629 - 28,892 134,810,289

Transferred to share premium for

ESOS exercised - 5,700,100 - (5,700,100) - - -

At 31 December 2014 487,577,346 165,137,924 142,579,848 4,378,895 17,186,556 (250,351,510) 566,509,059

STATEMENTS OF CHANGES IN EQUITYFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2014CONT’D



Group Company

2014 2013 2014 2013

RM RM RM RM

OPERATING ACTIVITIES

Profit before taxation

- continuing operations 53,507,315 83,284,890 7,606,668 12,150,339

- discontinued operation - (18,656,819) - -

53,507,315 64,628,071 7,606,668 12,150,339

Adjustments for:

Amortisation of intangible assets 230,619 - 230,619 -

Amount due from subsidiary companies written off - - 26,563 -

Bad debts written off 31,200 48,792 - 990,424

Depreciation 388,451 171,673 301,726 -

Gain from disposal of disposal group classified as held for

sale - (22,873,122) - -

Gain from disposal of a subsidiary company - (631,290) - -

Gain from disposal of property, plant and equipment (73,977) (10,596) - -

Impairment loss on amount due from subsidiary companies - - 14,914 22,206,329

Impairment loss on investment in a subsidiary company - - - 100

Impairment loss on property, plant and equipment

- discontinued operation - 24,149,840 - -

Loss from subsidiary companies written off 142,710 - - -

Interest expenses

- continuing operations 15,845,084 8,496,289 13,275,900 8,281,750

- discontinued operation - 14,280,155 - -

Interest income (8,242,144) (3) (8,242,144) (3)

Other investments written off 32 - - -

Property, plant and equipment written off 1,972 594,677 - 1

Reversal of provision for liquidated ascertained damages (609,137) - - -

Share options granted under ESOS 6,269,629 3,809,366 5,303,776 3,771,075

Unrealised (gain)/loss on foreign exchange (7,092,560) 2,822,993 (4,713,400) -

Waiver of amount due to associate company - (523) - -

Waiver of debts (135,858) (83,851,493) - (56,115,107)

Operating profit/ (loss) before working capital changes 60,263,336 11,634,829 13,804,622 (8,715,092)

Inventories - 1,159,813 - -

Receivables (131,641,487) (136,400,027) (74,706,276) (127,515,716)

Payables 41,622,336 12,430,057 41,189,427 5,979,664

Subsidiary company - - (6,850,016) -

Associate companies - 1,618 - -

Cash used in operations (29,755,815) (111,173,710) (26,562,243) (130,251,144)

Interest paid (21,825) (869,636) (10,023) (38,412)

Interest received 287,210 3 287,210 3

Tax (paid)/refund (3,718,970) 373,936 (3,750,000) -

Net cash used in operating activities (33,209,400) (111,669,407) (30,035,056) (130,289,553)

STATEMENTS OF CASH FLOWSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2014


Group Company

2014 2013 2014 2013

RM RM RM RM

INVESTING ACTIVITIES

Purchase of property, plant and equipment (Note A) (1,536,960) - (1,470,784) -

Purchase of intangible asset - (302,100,000) - (302,100,000)

Proceeds from disposal of subsidiary companies, net of

cash disposed (Note B) - 18,690,268 - 1,800,000

Proceeds from disposal of property, plant and and

equipment 193,183 10,600 - -

Deposit paid (96,510,000) - (96,510,000) -

Placement of fixed deposits - (230,000) - -

Advances to subsidiary companies - - (4,358,485) (5,715,082)

Net cash used in investing activities (97,853,777) (283,629,132) (102,339,269) (306,015,082)

FINANCING ACTIVITIES

Net proceeds from issuance of shares 128,540,660 442,867,751 128,540,660 442,867,751

Net repayment of borrowings (601,636) (17,806,465) - (1,800,000)

Repayment of finance lease payables (310,542) (85,355) - -

Interest paid (16,379) (9,852,371) - -

Net cash from financing activities 127,612,103 415,123,560 128,540,660 441,067,751

CASH AND CASH EQUIVALENTS

Net (decrease)/increase (3,451,074) 19,825,021 (3,833,665) 4,763,116

At beginning of financial year 4,835,131 (14,989,890) 4,768,550 5,434

At end of financial year 1,384,057 4,835,131 934,885 4,768,550

STATEMENTS OF CASH FLOWSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2014CONT’D


NOTES TO THE STATEMENTS OF CASH FLOWS:

A. PURCHASE OF PROPERTY, PLANT AND EQUIPMENT

The Group and the Company acquired property, plant and equipment with aggregate cost of RM4,255,492 (2013:

Nil) and RM4,189,316 (2013: Nil) respectively of which RM2,718,532 (2013: Nil) and RM2,718,532 (2013: Nil)

respectively were acquired by means of advances from other payables. Cash payments of RM1,536,960 (2013: Nil)

and RM1,470,784 (2013: Nil) for the Group and the Company respectively were made to purchase the property, plant

and equipment.

B. DISPOSAL OF SUBSIDIARY COMPANIES

Group

2013

RM

Assets included in disposal group classified as held for sale 549,118,557

Liabilities included in disposal group classified as held for sale (459,798,904)

Net other liabilities disposed (32,949,942)

56,369,711

Non-controlling interests (61,378,335)

Amount due from subsidiary company written off 941,712

Fair value of remaining 49% equity interest in disposal group classified as held for sale (17,000,000)

Gain from disposal of disposal group classified as held for sale 22,873,122

Gain from disposal of a subsidiary company 631,290

Proceeds from disposal 2,437,500

Less: cash and cash equivalents disposed 16,252,768

Net cash inflows from disposal of subsidiary companies 18,690,268

STATEMENTS OF CASH FLOWSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2014

CONT’D



1. GENERAL INFORMATION

The Company is a public limited liability company, incorporated and domiciled in Malaysia and is listed on the

Main Market of Bursa Malaysia Securities Berhad. The registered office of the Company is located at Level 15-2,

Bangunan Faber Imperial Court, Jalan Sultan Ismail, 50250 Kuala Lumpur. The principal place of business of the

Company is located at Suite 22.02, Level 22, The Gardens North Tower, Mid Valley City, Lingkaran Syed Putra,

59200 Kuala Lumpur.

The principal activities of the Company are that of investment holding and engaged in the upstream oil operation.

The principal activities of its subsidiary companies are disclosed in Note 4 to the Financial Statements. There have

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

The financial statements were authorised for issue by the Board of Directors in accordance with a resolution of the

Directors passed on 23 April 2015.

2. BASIS OF PREPARATION

2.1 Statement of compliance

The financial statements of the Group and of the Company have been prepared in accordance with Malaysian

Financial Reporting Standards (“MFRSs”), International Financial Reporting Standards (“IFRSs”) and the

requirements of the Companies Act, 1965 in Malaysia.

2.2 Basis of measurement

The financial statements of the Group and of the Company are prepared under the historical cost convention,

unless otherwise indicated in the summary of significant accounting policies.

Historical cost is generally based on the fair value of the consideration given in exchange for goods and

services.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly

transaction between market participants at the measurement date. The fair value measurement is based on

the presumption that the transaction to sell the asset or transfer the liability takes place either in the principal

market for the asset or liability, or in the absence of a principal market, in the most advantageous market for

the asset or liability. The principal or the most advantageous market must be accessible by the Group and the

Company.

The fair value of an asset or a liability is measured using the assumptions that market participants would use

when pricing the asset or liability, assuming that market participants act in their economic best interest.

A fair value measurement of a non-financial asset takes into account a market participant’s ability to generate

economic benefits by using the asset in its highest and best use or by selling it to another market participant

that would use the asset in its highest and best use.

The Group and the Company use valuation techniques that are appropriate in the circumstances and for

which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and

minimising the use of unobservable inputs.

NOTES TO THE FINANCIAL STATEMENTS


NOTES TO THE FINANCIAL STATEMENTSCONT’D

2. BASIS OF PREPARATION (continued)

2.3 Functional and presentation currency

The financial statements are presented in Ringgit Malaysia (“RM”) which is the Company’s functional currency

and all values are rounded to the nearest RM except stated otherwise.

2.4 Adoption of Amendments to MFRSs and IC Interpretations (“IC Int”)

Except for the changes below, the Group and the Company have consistently applied the accounting policies

set out in Note 3 to all years presented in these financial statements.

At the beginning of the current financial year, the Group and the Company adopted amendments to MFRS 132

and MFRS 136 which are mandatory for the financial periods beginning on or after 1 January 2014.

The nature and the impact of the amendments to standards which are prospectively applicable to the Group

and the Company are described below:

Amendments to MFRS 132 Offsetting Financial Assets and Financial Liabilities

The amendments to MFRS 132 clarify the requirements relating to the offset of financial assets and financial

liabilities. Specifically, the amendments clarify the meaning of “currently has a legally enforceable right of set-

off” and “simultaneous realisation and settlement”.

Amendments to MFRS 136 Recoverable Amount Disclosures for Non-Financial Assets

The amendments to MFRS 136 clarify that an entity is required to disclose the recoverable amount of an

asset or cash generating unit whenever an impairment loss has been recognised or reversed in the period.

In addition, the amendments introduced several new disclosures required to be made when the recoverable

amount of impaired assets is based on fair value less costs of disposal, including:

- Additional information about fair value measurement including the applicable level of the fair value

hierarchy and a description of any valuation techniques used and key assumptions made;

- The discount rates used if fair value less costs of disposal is measured using present value technique.

These additional disclosures are in line with the disclosure required by MFRS 13 Fair Value Measurements.

Initial application of the amendments to the standards did not have material impact to the financial statements.




2.5 Standards issued but not yet effective

The Group and the Company have not applied the following MFRSs that have been issued by the Malaysian

Accounting Standards Board (“MASB”) but are not yet effective for the Group and the Company:

Amendments to MFRSs effective 1 July 2014:

MFRS 119*# Defined Benefit Plans: Employee Contributions

Annual improvements to MFRSs, 2010-2012 cycle

Annual improvements to MFRSs, 2011-2013 cycle

MFRS effective 1 January 2016:

MFRS 14*# Regulatory Deferral Accounts

Amendments to MFRSs effective 1 January 2016:

MFRS 10* Consolidated Financial Statements: Sale or Contribution of Assets between an Investor and Joint Ventures and its Associate or Joint Venture

MFRS 10* Consolidated Financial Statements: Investment Entities – Applying the Consolidation Exception

MFRS 11*# Joint Arrangements: Accounting for Acquisitions of Interests in Joint Operations

MFRS 12* Disclosure of Interests in Other Entities

MFRS 101 Presentation of Financial Statements: Disclosure Initiative

MFRS 116*# Property, Plant and Equipment – Agriculture: Bearer Plant

MFRS 116 Property, plant and Equipment: Clarification of Acceptable Methods of Depreciation

MFRS 127 Consolidated and Separate Financial Statements: Equity Method in Separate Financial Statements

MFRS 128 Investment in Associates and Joint Ventures: Sale or Contribution of Assets between an Investor and its Associate or Joint Venture

MFRS 128 Investments in Associates and Joint Ventures: Investment Entities – Applying the Consolidation Exception

MFRS 138 Intangible Assets: Clarification of Acceptable Methods of Amortisation

MFRS 141*# Agriculture: Agriculture – Bearer Plants

Annual Improvements 2012-2014 Cycle issued in November 2014

MFRS effective 1 January 2017:

MFRS 15 Revenue from Contracts with Customers

MFRS and Amendments to MFRS effective 1 January 2018:

MFRS 9 Financial Instruments (International Financial Reporting Standards (“IFRS”) 9 issued by International Accounting Standards Board (‘IASB”) in July 2014)

Amendments to MFRS 7 Financial Instruments – Disclosure: Mandatory effective date of MFRS 9 and transitional disclosures.

* Not applicable to the Company’s operations

# Not applicable to the Group’s operations




2.5 Standards issued but not yet effective (continued)

The initial application of the above standards, amendments and interpretation are not expected to have any

financial impacts to the financial statements, except for:

MFRS 9 Financial Instruments

MFRS 9 addresses the classification, measurement and recognition of financial assets and financial liabilities.

It replaces the guidance in MFRS 139 Financial Instruments: Recognition and Measurement. MFRS 9 requires

financial assets to be classified into two measurement categories: fair value and amortised cost, determined

at initial recognition. The classification depends on the entity’s business model for managing its financial

instruments and the contractual cash flow characteristics of the instrument. Most of the requirements for

financial liabilities are retained, except for cases where the fair value option is taken, the part of a fair value

change due to an entity’s own risk is recorded in other comprehensive income rather than profit or loss, unless

this creates an accounting mismatch.

The adoption of MFRS 9 will result in a change in accounting policy. The Group and the Company are currently

examining the financial impact of adopting MFRS 9.

2.6 Significant accounting estimates and judgements

Estimates, assumptions concerning the future and judgements are made in the preparation of the financial

statements. They affect the application of the Group’s and the Company’s accounting policies and reported

amounts of assets, liabilities, income and expenses, and disclosures made. Estimates and underlying

assumptions are assessed on an on-going basis and are based on experience and relevant factors, including

expectations of future events that are believed to be reasonable under the circumstances. The actual results

may differ from the judgements, estimates and assumptions made by management, and will seldom equal the

estimated results.

2.6.1 Estimation uncertainty

Information about significant estimates and assumptions that have the most significant effect on

recognition and measurement of assets, liabilities, income and expenses are discussed below:

Useful lives of depreciable assets

Management estimates the useful lives of the property, plant and equipment to be within 5 to 50 years

and reviews the useful lives of depreciable assets at the end of each of the reporting date. As at 31

December 2014, management assesses that the useful lives represent the expected utility of the assets

to the Group and the Company. Actual results, however, may vary due to change in the expected level of

usage and technological development, which may result in adjustment to the Group’s and the Company’s

assets.

A 20% difference in the expected useful lives of the property, plant and equipment from the

management’s estimates would result in approximately 1% (2013: 1%) and 10% (2013: Nil) variance in

the Group’s and the Company’s profit for the financial year respectively.




2.6 Significant accounting estimates and judgements (continued)

2.6.1 Estimation uncertainty (continued)

Impairment of non-financial assets

An impairment loss is recognised for the amount by which the carrying amount of the asset or cash-

generating unit exceeds its recoverable amount. To determine the recoverable amount, management

estimates expected future cash flows from each asset or cash-generating unit and determines a suitable

interest rate in order to calculate the present value of those cash flows. In the process of measuring

expected future cash flows, management makes assumptions about future operating results. The actual

results may vary, and may cause significant adjustments to the Group’s and the Company’s assets within

the next financial year.

In most cases, determining the applicable discount rate involves estimating the appropriate adjustments

to market risk and to asset-specific risk factors.

Impairment of loans and receivables

The Group and the Company assess at the end of the reporting date whether there is any objective

evidence that a financial asset is impaired. To determine whether there is objective evidence of

impairment, the Group and the Company consider factors such as the probability of insolvency or

significant financial difficulties of the debtor and default or significant delay in payments.

Where there is objective evidence of impairment, the amount and timing of future cash flows are

estimated based on historical loss experience of assets with similar credit risk characteristics.

Income taxes/ deferred taxation

Significant judgement is involved in determining the Group’s and the Company’s provision for income

taxes. There are certain transactions and computations for which the ultimate tax determination is

uncertain during the ordinary course of business. The Group and the Company recognise tax liabilities

based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters

is different from the amounts that were initially recognised, such difference will impact the income tax and

deferred tax provisions in the period in which such determination is made.

Deferred tax assets are recognised for all unabsorbed business losses and unutilised capital allowances

to the extent that it is probable that taxable profit will be available against which the business 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.




2.6 Significant accounting estimates and judgements (continued)

2.6.1 Estimation uncertainty (continued)

Employee share options

The Group and the Company measure the cost of equity-settled transactions with employees by

reference to the fair value of the equity instruments at the date at which they are granted. Estimating fair

value for share-based payment transactions requires determining the most appropriate valuation model,

which is dependent on the terms and conditions of the grant. This estimate also requires determining the

most appropriate inputs to the valuation model including the expected life of the share options, volatility

and dividend yield and making assumptions about them.

The assumptions and model used for estimating fair value for share-based payment transactions,

sensitivity analysis and the carrying amounts are disclosed in Note 24 to the Financial Statements.

Fair value of financial instruments

Management uses valuation techniques in measuring the fair value of financial instruments where active

market quotes are not available. Details of the assumptions used are given in the notes regarding financial

assets and liabilities. In applying the valuation techniques, management makes maximum use of market

inputs, and uses estimates and assumptions that are, as far as possible, consistent with observable data

that market participants would use in pricing the instrument. Where applicable data is not observable,

management uses its best estimate about the assumptions that market participants would make. These

estimates may vary from the actual prices that would be achieved in an arm’s length transaction at the

end of the reporting date.

3. SIGNIFICANT ACCOUNTING POLICIES

The Group and the Company apply the significant accounting policies, as summarised below, consistently

throughout all periods presented in the financial statements.

3.1 Consolidation

3.1.1 Subsidiary companies

Subsidiary companies are entities controlled by the Group. Control exists when the Group is exposed,

or has rights, to variable returns from its involvement with the entity and has the ability to affect those

returns through its power over the entity. Potential voting rights are considered when assessing control

only when such rights are substantive. Besides, the Group considers it has de facto power over an

investee when, despite not having the majority of voting rights, it has the current ability to direct the

activities of the investee that significantly affect the investee’s return.

Investment in subsidiary companies is stated at cost less any impairment losses in the Company’s

statement of financial position, unless the investment is classified as held for sale or distribution.

Upon the disposal of investment in a subsidiary company, the difference between the net disposal

proceeds and its carrying amount is included in profit or loss.



3. SIGNIFICANT ACCOUNTING POLICIES (continued)

3.1 Consolidation (continued)

3.1.2 Basis of consolidation

The Group’s financial statements consolidate the audited financial statements of the Company and all

of its subsidiary companies, which have been prepared in accordance with the Group’s accounting

policies. Amounts reported in the financial statements of subsidiary companies have been adjusted

where necessary to ensure consistency with the accounting policies adopted by the Group. The financial

statements of the Company and its subsidiary companies are all drawn up to the same reporting date.

All intra-group balances, income and expenses and unrealised gains and losses resulting from intra-

group transactions are eliminated in full.

Subsidiary companies are consolidated from the date on which control is transferred to the Group and

are no longer consolidated from the date that control ceases.

Changes in the equity ownership interest in a subsidiary company that do not result in a loss of

control are accounted for as equity transactions. In such circumstances, the carrying amounts of the

controlling and non-controlling interests are adjusted to reflect the changes in their relative interests

in the subsidiary company. Any difference between the amount by which the non-controlling interest

is adjusted and the fair value of the consideration paid or received is recognised directly in equity and

attributed to the owners of the Company.

3.1.3 Business combinations and goodwill

Business combinations are accounted for using the acquisition method. The cost of an acquisition is

measured as the aggregate of the consideration transferred, measured at the fair value on acquisition

date and the amount of any non-controlling interest in the acquiree. For each business combination, the

Group elects whether it measures the non-controlling interest in the acquiree either at fair value or at the

proportionate share of the acquiree’s identifiable net assets. Acquisition costs incurred are expensed

and included in administrative expenses.

When the Group acquires a business, it assesses the financial assets and liabilities assumed for

appropriate classification and designation in accordance with the contractual terms, economic

circumstances and pertinent conditions as at the acquisition date.

Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred

and the amount recognised for non-controlling interest over the net identifiable assets acquired and

liabilities assumed. If this consideration is lower than the fair value of the net assets of the subsidiary

company acquired, the difference is recognised in profit or loss.

After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the

purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition

date, allocated to each of the Group’s cash-generating units that are expected to benefit from the

combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those

units.

Where goodwill forms part of a cash-generating unit and part of the operation within that unit is

disposed of, the goodwill associated with the operation disposed of is included in the carrying amount

of the operation when determining the gain or loss on disposal of the operation. Goodwill disposed of in

this circumstance is measured based on the relative values of the operation disposed of and the portion

of the cash-generating unit retained.





3.1.4 Loss of control

Upon the loss of control of a subsidiary company, the Group derecognises the assets and liabilities of

the subsidiary company, any non-controlling interests and the other components of equity related to the

subsidiary company. Any surplus or deficit arising on the loss of control is recognised in profit or loss.

If the Group retains any interest in the previous subsidiary company, then such interest is measured

at fair value at the date that control is lost. Subsequently, it is accounted for as an equity accounted

investee or as an available-for-sale financial asset depending on the level of influence retained.

3.1.5 Non-controlling interests

Non-controlling interests at the end of the reporting date, being the equity in a subsidiary company

not attributable directly or indirectly to the equity holders of the Company, are presented in the

consolidated statement of financial position and statement of changes in equity within equity, separately

from equity attributable to the owners of the Company. Non-controlling interests in the results of the

Group are presented in the consolidated statement of profit or loss and other comprehensive income

as an allocation of the profit or loss and the comprehensive income for the financial year between non-

controlling interests and the owners of the Company.

Losses applicable to the non-controlling interests in a subsidiary company are allocated to the non-

controlling interests even if that results in a deficit balance.

3.1.6 Associate companies

Associate companies are entities in which the Group has significant influence, but no control, over their

financial and operating policies.

The Group’s investment in its associate companies are accounted for using the equity method. Under

the equity method, investment in an associate company is carried in the statements of financial position

at cost plus post acquisition changes in the Group’s share of net assets of the associate company.

The share of the results of an associate company is reflected in profit or loss. In addition, any

change in other comprehensive income of those investees is presented as part of the Group’s other

comprehensive income. Where there has been a change recognised directly in the equity of an

associate company, the Group recognises and discloses its share of this change, when applicable, in

the statements of changes in equity. Unrealised gains and losses resulting from transactions between

the Group and the associate companies are eliminated to the extent of the interest in the associate

company.

When the Group’s share of losses exceeds its interest in an associate company, the carrying amount of

that interest including any long-term investment is reduced to zero, and the recognition of further losses

is discontinued except to the extent that the Group has an obligation or has made payments on behalf

of the associate company.

After application of the equity method, the Group determines whether it is necessary to recognise an

additional impairment loss on the Group’s investment in its associate companies. The Group determines

at the end of the reporting date whether there is any objective evidence that the investment in the

associate companies are impaired. If there is such evidence, the Group calculates the amount of

impairment as the difference between the recoverable amount of the investment in associate companies

and their carrying values and recognise the amount in the “share of profit of associate companies” in

profit or loss.





3.1.6 Associate companies (continued)

Upon loss of significant influence over an associate company, the Group measures and recognises

any retaining investment at its fair value. Any difference between the carrying amount of the associate

company upon loss of significant influence and the fair value of the retained investment and proceeds

from disposal is recognised in profit or loss.

In the Company’s separate financial statements, investment in associate companies is stated at cost

less impairment losses. On disposal of such investment, the difference between net disposal proceeds

and their carrying amount is included in profit or loss.

3.2 Foreign currency translations

The Group’s consolidated financial statements are presented in RM, which is also the Company’s functional

currency.

3.2.1 Foreign currency transactions and balances

Transactions in foreign currencies are initially recorded at the functional currency rates prevailing at the

date of the transaction.

Monetary assets and liabilities denominated in foreign currencies are retranslated at the functional

currency spot rate of exchange ruling at the reporting date.

All differences are taken to the profit or loss with the exception of all monetary items that forms part

of a net investment in a foreign operation. These are recognised in other comprehensive income until

the disposal of the net investment, at which time they are reclassified to profit or loss. Tax charges

and credits attributable to exchange differences on those monetary items are also recorded in other

comprehensive income.

3.2.2 Foreign operations

The assets and liabilities of operations denominated in functional currencies other than RM are

translated to RM at exchange rates at the end of the reporting date. The income and expenses of foreign

operations are translated to RM at exchange rates at the date of the transactions.

Foreign currency differences are recognised in other comprehensive income and accumulated in the

foreign currency translation reserve in equity. However, if the operation is a non-wholly-owned subsidiary

company, then the relevant proportionate share of the translation difference is allocated to the non-

controlling interests. When a foreign operation is disposed of, the cumulative amount in the foreign

currency translation reserve related to that foreign operation is reclassified to profit or loss as part of the

gain or loss on disposal.

When the Group disposes of only part of its interest in a subsidiary company that includes a foreign

operation, the relevant proportion of the cumulative amount in the foreign currency translation reserve

is reattributed to non-controlling interests. When the Group disposes of only part of its investment in an

associate company that includes a foreign operation while retaining significant influence, the relevant

proportion of such cumulative amount is reclassified to profit or loss.




3.2 Foreign currency translations (continued)

3.2.2 Foreign operations (continued)

In the consolidated financial statements, when settlement of a monetary item receivable from or payable

to a foreign operation is neither planned nor likely in the foreseeable future, foreign exchange gains and

losses arising from such a monetary item are considered to form part of a net investment in a foreign

operation and are recognised in other comprehensive income, and are presented in foreign currency

translation reserve in equity.

3.3 Property, plant and equipment

All property, plant and equipment are measured at cost less accumulated depreciation and less any impairment

losses. The cost of an item of property, plant and equipment is recognised as an asset if, and only if, it is

probable that future economic benefits associated with the item will flow to the Group and the Company and

the cost of the item can be measured reliably.

Cost includes expenditures that are directly attributable to the acquisition of the assets and any other

costs directly attributable to bring the asset to working condition for its intended use. All other repair and

maintenance costs are recognised in profit or loss as incurred.

Depreciation is recognised on the straight line method in order to write off the cost of each asset to its residual

value over the estimated useful life. The property, plant and equipment are depreciated based on the estimated

useful lives of the assets at the following annual rates:

Leasehold land and buildings 2%

Computer equipment and software 20%

Motor vehicles 20%

Office equipment, furniture and fittings 10% - 20%

Renovation 10%

Capital work-in-progress consists of computer software and renovation under installation/construction for

intended use. The amount is stated at cost. Assets under installation/construction are not depreciated until they

are completed and ready for their intended use.

The residual values, useful lives and depreciation method are reviewed for impairment when events or

changes in circumstances indicate that the carrying amount may not be recoverable, or at least annually to

ensure that the amount, method and period of depreciation are consistent with previous estimates and the

expected pattern of consumption of the future economic benefits embodied in the items of property, plant and

equipment.

Property, plant and equipment are derecognised upon disposal or when no future economic benefits are

expected from its use or disposal. Gains or losses arising on the disposal of property, plant and equipment are

determined as the difference between the disposal proceeds and the carrying amount of the assets and are

recognised in profit or loss.

3.4 Leases

The determination of whether an arrangement is, or contains, a lease is based on the substance of the

arrangement at the inception date, whether fulfillment of the arrangement is dependent on the use of a specific

asset or the arrangement conveys a right to use the asset, even if that right is not explicitly specific in an

arrangement.




3.4 Leases (continued)

3.4.1 Finance lease

Leases in terms of which the Group assumes substantially all the risks and rewards of ownership are

classified as finance lease. Upon initial recognition, the leased asset is measured at an amount equal to

the lower of its fair value and the present value of the minimum lease payments.

Minimum lease payments made under finance leases are apportioned between finance charges and

reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the

liability. Finance charges are recognised in finance costs in the profit or loss. Contingent lease payments

are accounted for by revising the minimum lease payments over the remaining term of the lease when

the lease adjustment is confirmed.

A leased asset is depreciated over the useful life of the asset. However, if there is no reasonable

certainty that the Group will obtain ownership by the end of the lease term, the asset is depreciated over

the shorter of the estimated useful life of the asset and the lease term.

3.4.2 Operating lease

Leases, where the Group does not assume substantially all the risks and rewards of ownership are

classified as operating leases and the leased assets are not recognised on the statements of financial

position.

Payments made under operating leases are recognised in profit or loss on a straight-line basis over the

term of the lease. Lease incentives received are recognised in profit or loss as an integral part of the

total lease expense, over the term of the lease. Contingent rentals are charged to profit or loss in the

reporting year in which they incurred.

3.5 Intangible assets

Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition,

intangible assets are carried at cost less accumulated amortisation and any accumulated impairment losses.

The useful life of intangible assets is assessed to be finite. Intangible assets with finite life are amortised based

on the unit of production method using total proved and probable reserves for capitalised acquisition costs

and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The

amortisation period and the amortisation method for an intangible asset with a finite useful life are reviewed at

least at each financial year end. Changes in the expected useful life or the expected pattern of consumption

of future economic benefits embodied in the asset is accounted for by changing the amortisation period or

method, as appropriate, and are treated as changes in accounting estimates. The amortisation expense on

intangible assets with finite useful life is recognised in the profit or loss in the expense category consistent with

the function of the intangible asset.

Gains or losses arising from derecognition of an intangible assets is measured as the difference between the

net disposal proceeds and the carrying amount of the asset and are recognised in the profit or loss when the

asset is derecognised.




3.6 Financial instruments

3.6.1 Initial recognition and measurement

Financial assets and financial liabilities are recognised when the Group or the Company becomes a

party to the contractual provisions of the financial instrument.

Financial assets and financial liabilities are measured initially at fair values plus transactions costs,

except for financial assets and financial liabilities carried at fair values through profit or loss, which are

measured initially at fair values. Financial assets and financial liabilities are measured subsequently as

described below.

3.6.2 Financial assets - categorisation and subsequent measurement

For the purpose of subsequent measurement, financial assets other than those designated and effective

as hedging instruments are classified into the following categories upon initial recognition:

(a) financial assets at fair value through profit or loss;

(b) held-to-maturity investments;

(c) loans and receivables; and

(d) available-for-sale financial assets.

The category determines subsequent measurement and whether any resulting income and expense is

recognised in profit or loss or in other comprehensive income.

All financial assets except for those at fair values through profit or loss are subject to review for

impairment at least at the end of the reporting date. Financial assets are impaired when there is any

objective evidence that a financial asset or a group of financial assets is impaired. Different criteria to

determine impairment are applied for each category of financial assets.

A financial asset or part of it is derecognised when the contractual rights to the cash flows from

the financial asset expire or when the rights to receive further cash flows from the asset have been

transferred to third party and substantially all the risks and rewards of ownership of the asset are also

transferred. On derecognition of a financial asset, the difference between the carrying amount and the

sum of the consideration received (including any new asset obtained less any new liability assumed) and

any cumulative gain or loss that had been recognised in equity is recognised in the profit or loss.

At the reporting date, the Group and the Company have not designated any financial assets at fair value

through profit or loss and held-to-maturity investments. The Group and the Company carry only loans

and receivables and available-for-sale financial assets on their statements of financial position.

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are

not quoted in an active market. After initial recognitions, these are measured at amortised cost using

the effective interest method, less provision for impairment. Discounting is omitted where the effect of

discounting is immaterial. Gains or losses are recognised in profit or loss when the loans and receivables

are derecognised or impaired, and through the amortisation process. The Group’s and the Company’s

cash and cash equivalents, trade and other receivables and amounts due from associate companies and

subsidiary companies fall into this category of financial instruments.

Loans and receivables are classified as current assets, except for those having maturity dates later than

12 months after the end of the reporting date which are classified as non-current.




3.6 Financial instruments (continued)

3.6.2 Financial assets - categorisation and subsequent measurement (continued)

Available-for-sale financial assets

Available-for-sale financial assets are non-derivative financial assets that are either designated to this category or do not qualify for inclusion in any of the other categories of financial assets.

Available-for-sale financial assets are measured at fair value subsequent to the initial recognition. Gains and losses are recognised in other comprehensive income and reported within the available-for-sale reserve within equity, except for impairment losses and foreign exchange differences on monetary assets, which are recognised in profit or loss. When the asset is disposed of or is determined to be impaired the cumulative gain or loss recognised in other comprehensive income is reclassified from the equity reserve to profit or loss and presented as a reclassification adjustment within other comprehensive income.

Investments in equity instruments that do not have a quoted market price in an active market and whose fair value cannot be reliably measured are measured at cost less impairment loss.

Available-for-sale financial assets are classified as non-current assets unless they are expected to be realised within 12 months after the end of the reporting date.

3.6.3 Financial liabilities - categorisation and subsequent measurement

After the initial recognition, financial liabilities are classified as:

(a) financial liabilities at fair value through profit or loss; (b) other liabilities measured at amortised cost using the effective interest method; and (c) financial guarantee contracts.

A financial liability or a part of it is derecognised when, and only when, the obligation specified in the contract is discharged or cancelled or expired. On derecognition of a financial liability, the difference between the carrying amount of the financial liability extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in profit or loss.

At the reporting date, the Group and the Company carry only other liabilities measured at amortised cost on their statements of financial position.

Other liabilities measured at amortised cost

The Group’s and the Company’s other liabilities include borrowings, trade and other payables.

Other liabilities are subsequently measured at amortised cost using the effective interest method. Borrowings are classified as current liabilities unless the Group or the Company has an unconditional right to defer settlement of the liability for at least 12 months after the end of the reporting date.

3.7 Cash and cash equivalents

Cash and cash equivalents comprise cash in hand, bank balances and highly liquid investments which are readily convertible to known amount of cash and which are subject to an insignificant risk of changes in value.

Cash and cash equivalents restricted to be used to settle a liability of 12 months or more after the end of the reporting date are classified as non-current asset.




3.8 Non-current assets or disposal group held for sale and discontinued operations

Non-current assets or disposal group comprising assets and liabilities, that are expected to be recovered primarily through sale rather than through continuing use, are classified as held for sale.

A component of the Group is classified as discontinued operation when the criteria to be classified as held for sale have been met or it has been disposed of and such a component represents a separate major line of business or geographical area of operations, is part of a single co-ordinate major line of business or geographical area of operations or is a subsidiary company acquired exclusively with a view to resale.

Classification of the asset (or disposal group) as held for sale occurs only when the asset is available for immediate sale in its present condition subject only to terms that are usual and customary and the sale must be highly probable. Management must be committed to a plan to sell the assets which are expected to qualify for recognition as a completed sale within one year from the date of classification. Action required to complete the plan should indicate that it is unlikely that significant changes to the plan will be made or the plan will be withdrawn.

Immediately before classification as held for sale (or disposal group), the assets, or components of a disposal group, are remeasured in accordance with the Group’s accounting policies. Thereafter generally the assets, or disposal group, are measured at the lower of their carrying amount and fair value less costs to sell.

Liabilities are classified as held for sale and presented as such in the statements of financial position if they are directly associated with the disposal group.

Any impairment loss on a disposal group is first allocated to goodwill, and then to remaining assets and liabilities on pro rata basis, except that no loss is allocated to inventories, financial assets, deferred tax assets, employee benefit assets and investment property, which continue to be measured in accordance with the Group’s accounting policies. Impairment losses on initial classification as held for sale and subsequent gains or losses on remeasurement are recognised in profit or loss. Gains are not recognised in excess of any cumulative impairment loss.

In the statements of profit or loss and other comprehensive income of the reporting year, and of the comparable period of the previous year, income and expenses from discontinued operations are reported separately from income and expenses from continuing operations, down to the level of profit after tax, even when the Group retains a non-controlling interest in the subsidiary after the sale. The resulting profit or loss (after tax) is reported separately in the statements of profit or loss and other comprehensive income.

Intangible assets and property, plant and equipment once classified as held for sale are not amortised or depreciated. In addition, equity accounting of equity accounted associates ceases once classified as held for sale.

3.9 Impairment of assets

3.9.1 Non-financial assets

The Group and the Company assess at each reporting date whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Group and the Company estimate the asset’s recoverable amount. An asset’s recoverable amount is the higher of an asset’s or cash-generating unit’s (CGU) fair value less costs to sell and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. Where the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of

money and the risks specific to the asset.




3.9 Impairment of assets (continued)

3.9.1 Non-financial assets (continued)

In determining fair value less costs to sell, recent market transactions are taken into account, if available.

If no such transactions can be identified, an appropriate valuation model is used. These calculations are

corroborated by valuation multiples, quoted share prices for publicly traded subsidiary companies or

other available fair value indicators.

The Group and the Company base its impairment calculation on detailed budgets and forecast

calculations which are prepared separately for each of the Group’s and the Company’s cash-generating

units to which the individual assets are allocated. These budgets and forecast calculations are generally

covering a period of five years. For longer periods, a long term growth rate is calculated and applied to

project future cash flows after the fifth year.

Impairment losses of continuing operations are recognised in the profit or loss in those expense

categories consistent with the function of the impaired asset.

For assets excluding goodwill, an assessment is made at each reporting date as to whether there is any

indication that previously recognised impairment losses may no longer exist or may have decreased.

If such indication exists, the Group and the Company estimate the asset’s or cash-generating

unit’s recoverable amount. A previously recognised impairment loss is reversed only if there has

been a change in the assumptions used to determine the asset’s recoverable amount since the last

impairment loss was recognised. The reversal is limited so that the carrying amount of the asset does

not exceed its recoverable amount, nor exceed the carrying amount that would have been determined,

net of depreciation, had no impairment loss been recognised for asset in prior years. Such reversal is

recognised in the profit or loss.

3.9.2 Financial assets

The Group and the Company assess at each reporting date whether there is any objective evidence

that a financial asset or a group of financial assets is impaired. A financial asset or a group of financial

assets is deemed to be impaired if, and only if, there is objective evidence of impairment as a result of

one or more events that has occurred after the initial recognition of the assets (an incurred “loss event”)

and that loss event has an impact on the estimated future cash flows of the financial asset or the group

of financial assets that can be reliably estimated. Evidence of impairment may include indications that

the debtors or a group of debtors is experiencing significant financial difficulty, default or delinquency

in interest or principal payments, the probability that they will enter bankruptcy or other financial

reorganisation and where observable data indicate that there is a measurable decrease in the estimated

future cash flows, such as changes in arrears or economic conditions that correlate with defaults.

Financial assets carried at amortised cost

For financial assets carried at amortised cost, the Group and the Company first assess whether

objective evidence of impairment exists individually for financial assets that are individually significant,

or collectively for financial assets that are not individually significant. If the Group and the Company

determine that no objective evidence of impairment exists for an individually assessed financial asset,

whether significant or not, it includes the asset in a group of financial assets with similar credit risk

characteristics and collectively assesses them for impairment. Assets that are individually assessed for

impairment and for which an impairment loss is, or continue to be, recognised are not included in a

collective assessment of impairment.




3.9 Impairment of assets (continued)

3.9.2 Financial assets (continued)

Financial assets carried at amortised cost (continued)

If there is objective evidence that an impairment loss has been incurred, the amount of the loss is

measured as the difference between the assets’ carrying amount and the present value of estimated

future cash flows (excluding future expected credit losses that have not yet been incurred). The present

value of the estimated future cash flows is discounted at the financial asset’s original effective interest

rate. If a loan has a variable interest rate, the discount rate for measuring any impairment loss is the

current effective interest rate.

The carrying amount of the asset is reduced through the use of an allowance account and the amount of

the loss is recognised in the profit or loss.

Interest income continues to be accrued on the reduced carrying amount and is accrued using the rate

of interest used to discount the future cash flows for the purpose of measuring the impairment loss.

The interest income is recorded as part of finance income in the profit or loss. Loans together with

the associated allowance are written off when there is no realistic prospect of future recovery and all

collateral has been realised or has been transferred to the Group and the Company. If, in a subsequent

year, the amount of the estimated impairment loss increases or decreases because of an event

occurring after the impairment was recognised, the previously recognised impairment loss is increased

or reduced by adjusting the allowance account.


For available-for-sale financial assets, the Group and the Company assess at each reporting date

whether there is objective evidence that an investment or a group of investment is impaired.

In the case of equity investments classified as available-for-sale, objective evidence would include

a significant or prolonged decline in the fair value of the investment below its cost. “Significant”

is evaluated against the original cost of the investment and “prolonged” against the period in which

the fair value has been below its original cost. Where there is evidence of impairment, the cumulative

loss - measured as the difference between the acquisition cost and the current fair value, less any

impairment loss on that investment previously recognised in the profit or loss - is removed from other

comprehensive income and recognised in the profit or loss. Impairment losses on equity investments are

not reversed through profit or loss; increases in their fair value after impairments are recognised directly

in other comprehensive income.

3.10 Equity and reserves

An equity instrument is any contract that evidences a residual interest in the assets of the Group and of the

Company after deducting all of its liabilities. Ordinary shares are equity instruments.

Share capital represents the nominal value of shares that have been issued.

Share premium includes any premium received on issue of share capital. Any transaction costs associated with

the issuing of shares are deducted from share premium, net of any related income tax benefits.




3.10 Equity and reserves (continued)

The revaluation reserve within equity comprises gains or losses due to the revaluation of property, plant and

equipment.

The warrants reserve is valued based on the closing price of the first trading day of the warrant. The issuance

of the ordinary shares upon exercise of the warrants is treated as new subscription of ordinary shares for the

consideration equivalent to the exercise price of the warrants.

Capital reserve arose from capital reduction.

Foreign currency translation differences arising on the translation of the Group’s foreign entity is included in

foreign currency translation reserve.

Accumulated losses include all current and prior years’ accumulated losses.

All transactions with owners of the Company are recorded separately within equity.

3.11 Provisions

Provisions are recognised when there is a present legal or constructive obligation that can be estimated

reliably, as a result of a past event, when it is probable that an outflow of resources embodying economic

benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the

obligation. Provisions are not recognised for future operating losses.

Any reimbursement that the Group or the Company can be virtually certain to collect from a third party with

respect to the obligation is recognised as a separate asset. However, this asset may not exceed the amount of

the related provision.

Provisions are reviewed at each reporting date and adjusted to reflect the current best estimate. If it is no

longer probable that an outflow of economic resources will be required to settle the obligation, the provisions

are reversed. Where the effect of the time of money is material, provisions are discounted using a current

pre tax rate that reflects, where appropriate, the risks specific to the liability. When discounting is used, the

increase in the provisions due to the passage of time is recognised as a finance cost.

3.12 Employee benefits

3.12.1 Short term employee benefits

Wages, salaries, bonuses and social security contributions are recognised as expenses in the financial

year in which the associated services are rendered by the employees of the Group and of the Company.

Short term accumulating compensated absences such as paid annual leave are recognised when

services are rendered by employees that increase their entitlement to future compensated absences,

and short term non-accumulating compensated absences such as sick leave are recognised when the

absences occurred.

A provision is made for the estimated liability for unutilised leave as a result of services rendered by

employees up to the end of the reporting year.




3.12 Employee benefits (continued)

3.12.2 Defined contribution plans

Defined contribution plans are post-employment benefit plans under which the Group and the Company

pay fixed contributions into independent entities of funds and will have no legal or constructive

obligation to pay further contribution if any of the funds do not hold sufficient assets to pay all employee

benefits relating to employee services in the current and preceding financial years.

Such contributions are recognised as expenses in the profit or loss as incurred. As required by law,

companies in Malaysia make such contributions to the Employees Provident Fund (“EPF”). Some of the

Group’s foreign subsidiary companies are also making contributions to their country’s statutory pension

schemes.

3.12.3 Employee Share Options Scheme

The Employee Share Options Scheme (“the Scheme”) allows the Group’s and the Company’s employees

to acquire shares of the Company. When the options are exercised, equity is increased by the amount of

the proceeds received.

The fair value of the employee services received in exchange for the grant of the share option is

recognised as an expense in the profit or loss over the vesting periods of the grant with a corresponding

increase in equity. The fair value of share options is measured at grant date, taking into account, if any,

the market vesting conditions upon which the options were granted but excluding impact of any non-

market vesting conditions. Non-market vesting conditions are included in assumptions about the number

of options that are expected to become exercisable on vesting date.

At each reporting date, the Group and the Company revise the estimates of the number of options that

are expected to become exercisable on vesting date. It recognises the impact of the revision of original

estimates, if any, in the profit or loss, and a corresponding adjustment to equity over the remaining

vesting period. The equity amount is recognised in the share option reserve until the option is exercised,

upon which it will be transferred to share premium, or until the option expires, upon which it will be

transferred directly to accumulated losses.

3.13 Revenue

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and

the Company and the revenue can be reliably measured. Revenue is measured at the fair value of consideration

received or receivable.

3.13.1 Oil and gas services

Revenue is recognised upon the performance or service rendered.

3.13.2 Rental income

Rental income is accounted for on a straight-line basis over the lease terms.

3.13.3 Interest income

Interest income is recognised as it accrues using the effective interest method in profit or loss.




3.14 Borrowing costs

Borrowings costs are expensed in the year in which they incurred. Borrowings costs consist of interest and

other costs that the Group incurred in connection with the borrowing of funds.

3.15 Tax expenses

Tax expenses comprise current and deferred taxes. Current tax and deferred tax are recognised in profit or loss

except to the extent that they relates to items recognised directly in equity or other comprehensive income.

3.15.1 Current tax

Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using

tax rates enacted or substantively enacted by the end of the reporting year, and any adjustment to tax

payable in respect of previous years.

3.15.2 Deferred tax

Deferred tax is recognised using the liability method, providing for temporary differences between the

carrying amounts of assets and liabilities in the statements of financial position and their tax bases.

Deferred tax is not recognised for the temporary differences arising from the initial recognition of

goodwill, and the initial recognition of assets or liabilities in a transaction that is not a business

combination and that does not affect the accounting or taxable profit. Deferred tax is measured at the

tax rates that are expected to be applied to the temporary differences when they reverse, based on the

laws that have been enacted or substantively enacted by the end of the reporting year.

The amount of deferred tax recognised is measured based on the expected manner of realisation or

settlement of the carrying amount of the assets and liabilities, using tax rates enacted or substantively

enacted at the reporting date.

Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax

liabilities and assets, and they relate to income taxes levied by the same tax authority on the same

taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a

net basis or their tax assets and liabilities will be realised simultaneously.

A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be

available against which the temporary difference can be utilised. Deferred tax assets are reviewed at the

reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will

be realised.

3.16 Operating segments

An operating segment is a component of the Group that engages in business activities from which it may

earn revenues and incur expenses, including revenue and expenses that relate to transactions with any of

the Group’s other components. All operating segments’ operating results are reviewed regularly by the chief

operating decision maker to make decisions about resources to be allocated to the segment and to assess its

performance, and for which discrete financial information is available.




3.17 Contingencies

Where it is not probable that an inflow or an outflow of economic benefits will be required, or the amount

cannot be estimated reliably, the asset or the obligation is not recognised in the statements of financial position

and is disclosed as a contingent asset or contingent liability, unless the probability of inflow or outflow of

economic benefits is remote. Possible obligations, whose existence will only be confirmed by the occurrence

or non-occurrence of one or more future events, are also disclosed as contingent assets or contingent liabilities

unless the probability of inflow or outflow of economic benefits is remote.

3.18 Related parties

A related party is a person or entity that is related to the Group. A related party transaction is a transfer of

resources, services or obligations between the Group and its related party, regardless of whether a price is

charged.

(a) A person or a close member of that person’s family is related to the Group if that person:

(i) has control or joint control over the Group; or

(ii) has significant influence over the Group; or

(iii) is a member of the key management personnel of the Group.

(b) An entity is related to the Group if any of the following conditions applies:

(i) the entity and the Group are members of the same group; or

(ii) one entity is an associate or joint venture of the other entity; or

(iii) both entities are joint ventures of the same third party; or

(iv) one entity is a joint venture of a third entity and the other entity is an associate of the third entity; or

(v) the entity is a post-employment benefit plan for the benefits of employees of either the Group or an

entity related to the Group; or

(vi) the entity is controlled or jointly-controlled by a person identified in (a) above; or

(vii) a person identified in (a)(i) above has significant influence over the entity or is a member of the key

management personnel of the entity.



4. INVESTMENT IN SUBSIDIARY COMPANIES

Company

2014 2013

RM RM

Investment costs:

At cost:

At 1 January 95,333,104 95,333,104

Subsidiary companies written off (253,104) -

At 31 December 95,080,000 95,333,104

Less: Impairment losses

At 1 January (95,333,104) (95,333,004)

Impairment loss recognised - (100)

Written off 253,104 -

At 31 December (95,080,000) (95,333,104)

- -

Contributions to subsidiary companies:

ESOS granted to employees of subsidiary companies 1,004,144 38,291

1,004,144 38,291

Details of the subsidiary companies are as follows:

Name of company Effective interest Principal activities

Country of

incorporation

2014 2013

% %

(a) Sumatec Corporation Sdn. Bhd. 100 100 Oil and gas field

development services

Malaysia

Held under Sumatec Corporation Sdn. Bhd.

(i) Calinex Sdn. Bhd. * - 100 Dormant Malaysia

(ii) Petroreka Sdn. Bhd. * - 100 Dormant Malaysia

(iii) Sumatec Fabricators Sdn. Bhd. * - 100 Dormant Malaysia

(iv) Sumatec Trackworks Sdn. Bhd. * - 100 Dormant Malaysia

(v) Sumatec Petroleum Development Sdn.

Bhd.

100 100 Dormant Malaysia

(vi) Sumatec Development Sdn. Bhd. 100 100 Dormant Malaysia

(vii) Vertirex Development Sdn. Bhd. * - 100 Dormant Malaysia

(viii) Sumatec Pte. Ltd. # * - 100 Dormant Singapore

(ix) Sumatec Thai Co. Ltd. # * - 74 Dormant Thailand

(x) Wailik Enterprise Sdn Bhd. # * - 70 Dormant Malaysia



4. INVESTMENT IN SUBSIDIARY COMPANIES (continued)


Country of

incorporation

2014 2013

% %

(b) Tenaga Biomass Sdn. Bhd. * - 100 Dormant Malaysia

(c) North Malaysia Terminal Sdn. Bhd. * - 100 Dormant Malaysia

(d) Perlis Bio-Power Sdn. Bhd. 80 80 Dormant Malaysia

(e) IR Oilrigs Malaysia Sdn. Bhd. * - 51 Dormant Malaysia

(f) Landfill Rehab Sdn. Bhd. # * - 100 Dormant Malaysia

(g) Sumatec Oil & Gas Limited Liability Partnership # 100 100 Oil and gas field

development services

Kazakhstan

(h) Destaman Sdn. Bhd. # * - 100 Dormant Malaysia

Held under Destaman Sdn. Bhd.

Jabat Yakin Aluminium Sdn. Bhd. # * - 60 Dormant Malaysia

# Not audited by SJ Grant Thornton

* These subsidiary companies had been struck off during the year

5. INVESTMENT IN ASSOCIATE COMPANIES

Group

2014 2013

RM RM

Unquoted shares, at cost 375,540 375,540

Less: Impairment losses (375,540) (375,540)

- -

Details of associate companies are as follows:-


Country of

incorporation

2014 2013

% %

(a) Adinin Sumatec JV Sdn. Bhd. # 50 50 Dormant Brunei

(b) ESE (Cambodia) Pte. Ltd.# 50 50 Dormant Republic of Cambodia

(c) Sumatec (Middle East) LLC # 49 49 Dormant United Arab Emirates

(d) Thai Polymix Co Ltd. # 49 49 Dormant Thailand

(e) UHP Engineering Sdn. Bhd.# 49 49 Dormant Malaysia

# Not audited by SJ Grant Thornton



6. OTHER INVESTMENTS

Group Company

2014 2013 2014 2013

RM RM RM RM


At cost:

- Unquoted shares 228,033 228,033 - -

- Unquoted bonds 2,000,000 2,000,000 2,000,000 2,000,000

Written off (2,000,032) - (2,000,000) -

228,001 2,228,033 - 2,000,000


At 1 January (2,228,000) (2,228,000) (2,000,000) (2,000,000)

Written off 2,000,000 - 2,000,000 -

At 31 December (228,000) (2,228,000) - (2,000,000)

1 33 - -

7. PROPERTY, PLANT AND EQUIPMENT

Leasehold

land Buildings

Capital

work-in-

progress

Computer

equipment

and software

Motor

vehicles

Office

equipment,

furniture

and fittings Renovation Total

Group RM RM RM RM RM RM RM RM

Cost

At 1 January 2013 735,684 230,000 - 376,805 758,036 203,811 20,930 2,325,266

Disposals - - - (7,732) - (67,200) - (74,932)

Written off - - - - (150,600) - - (150,600)

Transferred to non-

current assets held

for sale (735,684) - - - - - - (735,684)

At 31 December 2013 - 230,000 - 369,073 607,436 136,611 20,930 1,364,050

Additions - - 1,081,954 3,100,562 - 72,976 - 4,255,492

Disposals - - - (19,283) (602,358) (19,260) - (640,901)

Written off - - - (167,827) - (73,172) - (240,999)

Transferred from non-

current assets held

for sale 735,684 - - - - - - 735,684

At 31 December 2014 735,684 230,000 1,081,954 3,282,525 5,078 117,155 20,930 5,473,326



7. PROPERTY, PLANT AND EQUIPMENT (continued)

Leasehold

land Buildings

Capital

work-in-

progress

Computer

equipment

and software

Motor

vehicles

Office

equipment,

furniture

and fittings Renovation Total

Group RM RM RM RM RM RM RM RM

Accumulated

depreciation

At 1 January 2013 49,045 46,000 - 348,340 459,062 190,531 18,287 1,111,265

Charge for the

financial year 12,261 4,600 - 27,137 120,472 5,110 2,093 171,673

Disposals - - - (7,730) - (67,198) - (74,928)

Written off - - - - (150,599) - - (150,599)

Transferred to non-

current assets held

for sale (61,306) - - - - - - (61,306)

At 31 December 2013 - 50,600 - 367,747 428,935 128,443 20,380 996,105

Charge for the

financial year - 4,600 - 302,323 60,236 20,748 544 388,451

Disposals - - - (19,281) (484,093) (18,322) - (521,696)

Written off - - - (167,787) - (71,239) - (239,026)

Transferred from non-

current assets held

for sale 61,306 - - - - - - 61,306

At 31 December 2014 61,306 55,200 - 483,002 5,078 59,630 20,924 685,140

Net carrying amount

At 31 December 2014 674,378 174,800 1,081,954 2,799,523 - 57,525 6 4,788,186

At 31 December 2013 - 179,400 - 1,326 178,501 8,168 550 367,945



7. PROPERTY, PLANT AND EQUIPMENT (continued)

Capital work-

in-progress

Computer

equipment

and software

Motor

vehicles

Office

equipment,

furniture and

fittings Total

Company RM RM RM RM RM

Cost

At 1 January 2013 - - 150,600 - 150,600

Written off - - (150,600) - (150,600)

At 31 December 2013 - - - - -

Additions 1,081,954 3,100,562 - 6,800 4,189,316

At 31 December 2014 1,081,954 3,100,562 - 6,800 4,189,316

Accumulated depreciation

At 1 January 2013 - - 150,599 - 150,599

Written off - - (150,599) - (150,599)

At 31 December 2013 - - - - -

Charge for the financial year - 301,160 - 566 301,726

At 31 December 2014 - 301,160 - 566 301,726

Net carrying amount

At 31 December 2014 1,081,954 2,799,402 - 6,234 3,887,590

At 31 December 2013 - - - - -

(i) Net carrying amount of assets acquired under finance lease is:

Group

2014 2013

RM RM

Motor vehicles - 178,501

(ii) The titles to two apartment units of the Group with net carrying amount of RM174,800 (2013: RM179,400) have

yet to be issued by the relevant authorities.

(iii) The leasehold land of the Group with net carrying amount of RM674,378 (2013: Nil) is pledged to a bank as

securities for banking facility granted to a subsidiary company.



8. INTANGIBLE ASSET

Group and Company

2014 2013

RM RM

Development and extraction rights

At cost:

At 1 January 302,100,000 -

Additions - 302,100,000

At 31 December 302,100,000 302,100,000

Less: Accumulated amortisation

At 1 January - -

Amortisation for the year 230,619 -

At 31 December 230,619 -

At 31 December 301,869,381 302,100,000

On 8 March 2012, the Company entered into a joint investment agreement with Markmore Energy (Labuan) Limited

(“MELL”) and CaspiOil Gas LLP (“COG”), a wholly-owned subsidiary company of MELL, whereby the Company

acquired the rights to develop, extract and produce oil from Rakushechnoye Oil Field in Kazakhstan (“JIA”). The

development and extraction rights will be amortised based on the unit of production method using total proved and

probable oil reserves estimated to be recoverable from the existing oil and gas field based on the current subsurface

use contract.

MELL and COG are companies in which a major shareholder of the Company has control.

9. TRADE RECEIVABLES

Group Company

2014 2013 2014 2013

RM RM RM RM

Trade receivables 151,531,553 70,490,836 23,196,745 -


At 1 January (70,490,836) (70,988,826) - -

Written off - 497,990 - -

At 31 December (70,490,836) (70,490,836) - -

81,040,717 - 23,196,745 -

Less: non-current (18,123,517) - (12,710,545) -

Total 62,917,200 - 10,486,200 -



9. TRADE RECEIVABLES (continued)

Trade credit terms generally extended by the Group range between 30 to 60 days (2013: 30 to 90 days). The non-

current portion of the trade receivables represents services provided by the Group and the Company under the JIA

and the Joint Investment Agency Agreement for which payments are not due within the 12 months after the end of

the current financial year, in line with the terms of the respective agreements.

Included in the abovementioned balances of the Group and of the Company are amount owing from 2 companies

(2013: Nil) and 1 company (2013: Nil) respectively in which a major shareholder of the Company has control.

10. OTHER RECEIVABLES

Group Company

2014 2013 2014 2013

RM RM RM RM

Non-current

Performance deposit 126,651,660 127,200,000 126,651,660 127,200,000

Other receivables 45,717,851 - 45,717,851 -

172,369,511 127,200,000 172,369,511 127,200,000

Current

Deposits 96,662,913 - 96,660,363 -

Other receivables 9,858,585 10,813,669 7,958,402 8,136,331


At 1 January (9,626,023) (9,626,023) (7,818,147) (7,818,147)

Written off 156,908 - - -

At 31 December (9,469,115) (9,626,023) (7,818,147) (7,818,147)

97,052,383 1,187,646 96,800,618 318,184

269,421,894 128,387,646 269,170,129 127,518,184

Performance deposit paid under the JIA is to be set off against future royalty payable calculated based on volume of

oil produced.

Non-current other receivables of the Group and the Company represent the advances provided to COG under the

Investment Agreement signed on 2 August 2013 pursuant to the JIA, which is non-interest bearing and repayment

will commence when COG’s production reaches cumulative 2 million barrels of crude oil.

Included in deposits is an amount of RM96,510,000 (2013: Nil) being refundable deposit paid for the proposed

acquisition of 100% equity interest in Borneo Energy Oil and Gas Ltd as disclosed in Note 35(e) to the Financial

Statements.



11. AMOUNT DUE FROM SUBSIDIARY COMPANIES

Company

2014 2013

RM RM

Amount due from subsidiary companies 83,598,152 73,601,749


At 1 January (71,600,670) (49,394,341)

Impairment loss recognised (14,914) (22,206,329)

Written off 1,577,725 -

At 31 December (70,037,859) (71,600,670)

13,560,293 2,001,079

Included in the abovementioned balances is an amount of RM2,164,743 (2013: Nil) which is trade in nature,

unsecured, interest free and carries a credit period of 30 days (2013: Nil).

Also included in the abovementioned balances are advances to subsidiary company amounting to RM6,710,277

(2013: RM2,001,079) which are unsecured, bear interest at 7% (2013: 7%) per annum and repayable by 31

December 2015.

The remaining amount due from subsidiary companies of RM4,685,273 (2013: Nil) are non-trade in nature,

unsecured, interest free and repayable on demand.

12. AMOUNT DUE FROM ASSOCIATE COMPANIES

Group Company

2014 2013 2014 2013

RM RM RM RM

Amount due from associate companies 7,469,630 1,834,133 5,635,497 -

Less: Impairment losses (1,834,133) (1,834,133) - -

5,635,497 - 5,635,497 -

The amount due from associate companies is non-trade in nature, unsecured, interest free and repayable on

demand.

13. FIXED DEPOSITS WITH A LICENSED BANK

The fixed deposits are pledged to a licensed bank for banking facilities granted to a subsidiary company.



14. NON-CURRENT ASSETS CLASSIFIED AS HELD FOR SALE

Group Company

2014 2013 2014 2013

RM RM RM RM

Assets:

Property, plant and equipment - 674,378 - -

Investment in an associate company 17,000,000 17,000,000 17,000,000 17,000,000

17,000,000 17,674,378 17,000,000 17,000,000

(a) On 12 September 2013, Sumatec Corporation Sdn. Bhd. (“SCSB”), a wholly-owned subsidiary company of the

Company entered into a sale and purchase agreement with a third party for the disposal of its leasehold land

for a total cash consideration of RM3,000,000. Subsequently, the sale and purchase agreement was mutually

terminated by both parties.

On 13 October 2014, SCSB entered into a new sale and purchase agreement with another third party for the

disposal of the said leasehold land for a total cash consideration of RM3,000,000. The consent to transfer

was approved by the Land Office on 19 January 2015. On 31 March 2015, the purchaser notified SCSB of its

decision to abort the transaction and SCSB invoked its right to forfeit the 10% deposit paid by the purchaser.

Consequently, the leasehold land which was classified as held for sale in prior year has been reclassified to

property, plant and equipment.

The leasehold land is pledged to a bank as securities for banking facility granted to the subsidiary company.

(b) On 21 December 2012, the Company entered into a sale and purchase agreement with third parties to dispose

its 51% equity interest, representing 64,496,272 ordinary shares of Semua International Sdn. Bhd. (“SISB”) for

a total sales consideration of RM18,800,000, comprising its entire shipping division. The disposal is part of the

debt settlement scheme with the CLO bondholders.

The assets and liabilities of SISB Group have been presented on the statements of financial position as

disposal group classified as held for sale.

On 19 July 2013, the Company received RM1.8 million (“1st Tranche Consideration”), representing the disposal

value of 2% equity interest in SISB from the purchaser.

The 2nd Tranche Consideration of RM17 million, representing the disposal value of the remaining 49% equity

interest in SISB, together with interest thereon at the rate of 6% per annum (interest shall be payable half

yearly) shall be paid within 24 months, or earlier, from 31 January 2013, i.e. the date the last approval was

obtained from the CLO bondholders. However, the third parties are unable to fulfill the settlement obligation to

CLO bondholders during the financial year.

The Company has entered into preliminary negotiation with a potential buyer during the financial year, whereby

the Directors expect negotiation to be finalised and the sale to be completed in 2015.

The 49% equity interest in SISB is pledged to CLO bondholders as security for banking facility granted to the

Company.



15. SHARE CAPITAL

Group and Company

Number of shares Amount

Unit RM

Authorised:-

Ordinary shares of RM0.14 each

At 1 January 2013 2,142,857,143 300,000,000

Created during the financial year 5,000,000,000 700,000,000

At 31 December 2013/1 January 2014/31 December 2014 7,142,857,143 1,000,000,000

Issued and fully paid:-

Ordinary shares of RM0.35 each

At 1 January 2013 214,364,221 75,027,477

Capital reduction - (45,016,486)

Ordinary shares of RM0.14 each 214,364,221 30,010,991

Exercise of ESOS 4,440,000 621,600

Conversion of warrants 3,800 532

Issuance of shares pursuant to:

- Rights issue with warrants 2,270,612,731 317,885,782

- Issuance of shares 335,000,000 46,900,000

- Scheme of arrangements with creditors 260,547,248 36,476,615

At 31 December 2013 3,084,968,000 431,895,520

Exercise of ESOS 89,000,000 12,460,000

Conversion of warrants 131,325 18,386

Private placement 308,596,000 43,203,440

At 31 December 2014 3,482,695,325 487,577,346

The holders of the ordinary shares are entitled to receive dividends as and when declared by the Company. All

ordinary shares carry one vote per share without restrictions and rank equally with regard to the Company’s residual

assets.



16. OTHER RESERVES

Group Company

2014 2013 2014 2013

RM RM RM RM

Non-distributable:-

Share premium

At 1 January 86,578,990 - 86,578,990 -

Arising from issuance of ordinary shares 83,323,637 101,248,796 83,323,637 101,248,796

Transfer from employee share options reserve 5,700,100 - 5,700,100 -

Less: Share issuance expenses (10,464,803) (14,669,806) (10,464,803) (14,669,806)

At 31 December 165,137,924 86,578,990 165,137,924 86,578,990

Revaluation reserve

At 1 January - 1,286,663 - -

Realisation of revaluation on land and buildings - (27,975) - -

Disposal of a subsidiary company - (1,258,688) - -

At 31 December - - - -

Warrants reserve

At 1 January 142,608,740 15,005,495 142,608,740 15,005,495

Conversion of warrants (28,892) (532) (28,892) (532)

Issuance of warrants pursuant to rights issue - 127,603,777 - 127,603,777

At 31 December 142,579,848 142,608,740 142,579,848 142,608,740

Employee share options reserve

At 1 January 3,809,366 - 3,809,366 -

Employee share options 6,269,629 3,809,366 6,269,629 3,809,366

Exercise of ESOS (5,700,100) - (5,700,100) -

At 31 December 4,378,895 3,809,366 4,378,895 3,809,366

Capital reserve

At 1 January/31 December 17,186,556 17,186,556 17,186,556 17,186,556

Foreign currency translation reserve

At 1 January - - - -

Foreign currency translation 95,211 - - -

At 31 December 95,211 - - -

Total other reserves 329,378,434 250,183,652 329,283,223 250,183,652



16. OTHER RESERVES (continued)

Share premium

Share premium represents the excess of the consideration received over the nominal value of shares issued by the Company. Any transaction costs associated with the issuing of shares are deducted from share premium. It is not to be distributed by way of cash dividends and its utilisation shall be in a manner as set out in Section 60 (3) of the Companies Act, 1965.

Revaluation reserve

The revaluation reserve represents the surplus on the revaluation of certain land and buildings of the Group.

Warrants reserve

On 4 March 2011, the Company issued 107,182,110 Warrants A pursuant to the rights issue. Each Warrant A entitles the holder to subscribe for 1 new ordinary share at the exercise price of RM0.35 per share.

Warrants A were constituted under the Deed Poll dated 8 October 2010 and the Supplemental Deed Poll dated 23 February 2011 (“Deed Poll A”).

On 14 November 2013, the Company issued new shares and warrants pursuant to its rights issue with warrants exercise. Pursuant thereto, subject to adjustments in accordance with the Deed Poll A, the exercise price of the outstanding Warrants A was revised from RM0.35 to RM0.32 while an additional 11,574,887 Warrants A were listed and quoted on 21 November 2013.

None of the Warrants A were exercised during the financial year and Warrants A that remain unexercised as at 31 December 2014 are 118,753,197.

On 14 November 2013, the Company issued 567,653,083 Warrants B pursuant to the rights issue. Each Warrant B entitles the holder to subscribe for 1 new ordinary share at the exercise price of RM0.175 per share.

Warrants B were constituted under the Deed Poll dated 28 August 2013.

131,325 Warrants B were exercised during the financial year and Warrants B that remain unexercised as at 31 December 2014 are 567,521,758.

The warrants reserve arose from the allocation of fair value of Warrants A and Warrants B issued have been charged to accumulated losses.

The main features of the warrants are as follows:

(i) Each warrant entitles the registered holder at any time during the exercise period to subscribe for one new ordinary share of RM0.14 each in the Company at an exercise price of RM0.32 for Warrant A and RM0.175 for Warrant B.

(ii) The exercise price and the number of warrants are subject to adjustment in the event of alteration to the share capital of the Company in accordance with the provisions set out in the Deed Poll.

(iii) The warrants shall be exercisable at any time within the period commencing on and including the date of issue of the warrants until the last market day prior to the tenth anniversary for Warrant A and fifth anniversary for Warrant B of the respective dates of issue of the warrants.

(iv) All new ordinary shares to be issued arising from the exercise of the warrants shall rank pari passu in all respects with the then existing ordinary shares of the Company except that such new ordinary shares shall not be entitled to any dividends, rights, allotments and other distributions on or prior to the date of allotment of the

new ordinary shares arising from the exercise of the warrants.



16. OTHER RESERVES (continued)

Employee share options reserve

Employee share options reserve represents the equity-settled share options granted to employees. The reserve is

made up of the cumulative value of services received from employees recorded over the vesting period commencing

from the grant date of equity-settled share options, and is reduced by the expiry or exercise of the share options.

Capital reserve

The capital reserve arose from the capital reduction in previous financial years which was used to offset

RM104,502,558 of the Company’s accumulated losses at the date when the reduction of share capital became

effective.

The remaining credit after off-setting amounting to RM17,186,556 was credited to the capital reserve of the Group

and of the Company.

Foreign currency translation reserve

The translation reserve represents exchange difference arising from the translation of the financial statements of

foreign operations whose functional currency is different from that of the Group’s presentation currency.

These reserves are not available for distribution as dividends.

17. FINANCE LEASE PAYABLES

Group

2014 2013

RM RM

Minimum lease payments

- within 1 year - 142,908

- after 1 year but not later than 5 years - 246,568

- 389,476

Future finance charges on finance lease payables - (38,404)

- 351,072

Present value of finance lease payables

- within 1 year - 124,814

- after 1 year but not later than 5 years - 226,258

- 351,072

The interest rates ranged from 3.40% to 4.55% per annum in the previous financial year.



18. DEFERRED TAX LIABILITIES

Group and Company

2014 2013

RM RM

At 1 January - -

Transferred from profit or loss (Note 26) 331,000 -

At 31 December 331,000 -

The deferred tax liabilities as at the end of the reporting date are made up of temporary differences arising from:-

Group and Company

2014 2013

RM RM

Property, plant and equipment 157,000 -

Other 174,000 -

331,000 -

As at reporting date, the deferred tax assets not recognised in the Group’s financial statements are made up of the

temporary differences arising from:-

Group

2014 2013

RM RM

Unabsorbed tax losses 70,529,000 117,148,000

Property, plant and equipment - (24,000)

Other (2,771,000) -

67,758,000 117,124,000

The potential deferred tax assets of the Group have not been recognised in respect of these items as it is anticipated

that the tax effects of such benefits will not be reversed in the near foreseeable future.



19. OTHER PAYABLES

Group Company

2014 2013 2014 2013

RM RM RM RM

Non-current

Other payables 37,880,636 - 37,880,636 -

Current

Other payables and accruals 8,993,439 8,228,480 8,402,472 7,753,002

Deposits received 300,000 300,000 - -

Provision for liquidated ascertained damages on

projects:

At 1 January 609,137 609,137 - -

Reversed (609,137) - - -

At 31 December - 609,137 - -

9,293,439 9,137,617 8,402,472 7,753,002

47,174,075 9,137,617 46,283,108 7,753,002

Non-current payables of the Group and Company represent non-interest bearing advances, with no fixed term of

repayment provided from a company in which a major shareholder of the Company has control.

Included in other payables and accruals is an amount of RM2,394,073 (2013: Nil) being interest accrued on term

loans.

20. TRADE PAYABLES

Group

The normal trade credit terms granted by the trade payables range from 30 to 90 days (2013: 30 to 90 days).



21. TERM LOANS

Group and Company

2014 2013

RM RM

Secured:-

CLO loans

- repayable within 12 months 22,635,497 17,000,000

The CLO loans are secured by way of 49% equity interest in SISB.

Subsequent to the reporting date, the Company entered into a new settlement agreement with CLO Bondholders and

Trustee for the settlement of the term loans. The terms of the new settlement agreement are disclosed in Note 35(d)

to the Financial Statements.

The CLO loans carry interest at the rate of 6% (2013: between 8.10% and 10.13%) per annum.

22. SHORT-TERM BORROWING

Group

2014 2013

RM RM

Secured:-

Revolving credit - 601,636

The short-term borrowing of the Group were secured against first fixed legal charge over the Group’s landed

properties. The borrowing had been fully settled during the financial year.

The interest rates ranged from 8.00% to 8.60% per annum in the previous financial year.

23. REVENUE

Group Company

2014 2013 2014 2013

RM RM RM RM

Oil and gas income 81,117,160 - 23,771,160 -

Management service fee - - 2,164,743 -

81,117,160 - 25,935,903 -



24. STAFF COSTS

Group Company

2014 2013 2014 2013

RM RM RM RM

Salaries, wages and other emoluments 10,059,785 2,934,370 3,656,088 2,514,281

Executive Directors’ remuneration (Note 29) - 723,472 - -

Non-executive Directors’ meeting allowance 187,000 - 187,000 -

Directors’ fees 469,150 119,833 469,150 119,833

Defined contribution plans and social security

contributions 185,665 85,765 92,516 47,165


Other benefits 113,095 347,458 113,095 322,848

17,284,324 8,020,264 9,821,625 6,775,202

Employee Share Options Scheme

On 18 April 2007, the Company granted share options to qualified key management personnel and employees to

purchase shares in the Company under the ESOS approved by the shareholders of the Company on 24 June 2005

(“1st Tranche”). On 27 December 2013, the Company further granted share options to qualified senior management

and employees (“2nd Tranche”). Under the 2nd Tranche, holders of vested options are entitled to purchase the

Company’s shares at RM0.244 per share. Included in 2nd Tranche are share options granted to the Chief Executive

Officer of the Company (“CEO”) which were approved by shareholders on 26 March 2014.

The vesting conditions related to the grants of the 2nd Tranche ESOS options are as follows:

Employees entitled Vesting conditions

Outstanding number

of options

2014 2013

Option granted to senior

management

(“Grant I”)

Share price exceeds RM0.30 per share - 65,000,000


management and employees

(“Grant II”)

Achievement of the following:

- 3 consecutive months of production at 2,000

barrels per day; and

- Uplift from PN17

33,840,000 32,000,000


management and employees

(“Grant III”)

Achievement of the following:

- Cumulative 2 million barrels sold; and

- Profit on oil of USD35 per barrel

50,760,000 48,000,000

84,600,000 145,000,000



24. STAFF COSTS (continued)

A summary of the movements in the number of ESOS and the weighted average exercise prices (“WAEP”) is as

follow:

Group

2014 2013

Number of

share option WAEP

Number of

share option WAEP

RM RM

Outstanding at 1 January 145,040,000 0.244 5,730,000 0.350

Granted during the financial year 44,000,000 0.244 145,000,000 0.244

Forfeited during the financial year (15,400,000) 0.244 (1,250,000) 0.350

Exercised during the financial year (89,000,000) 0.244 (4,440,000) 0.350

Outstanding at 31 December 84,640,000 0.244 145,040,000 0.244

Exercisable at 31 December 40,000 65,040,000

The options outstanding at 31 December 2014 have exercise prices in the range of RM0.244 to RM0.35 (2013:

RM0.244 to RM0.35) and a weighted average contractual life of 2.3 years (2013: 3.3 years).

The fair value of services received in return for the share options granted is based on the fair value of share options

granted, measured using Lattice Trinomial and Binomial option-pricing models, with the following inputs:

Grant I to

CEO

Grant II & III

to CEO

Grant I

to senior

management

and

employees

Grant II &

III to senior

management

and

employees

RM RM RM RM

Fair value at grant date 0.0834 0.1294 0.0569 0.1294

Weighted average share price 0.30 0.30 0.271 0.271

Share price at grant date 0.30 0.30 0.280 0.280

Weighted average volatility 55% 55% 55% 55%

Expected weighted average option life 3 years 3 years 3.3 years 3.3 years

Sub-optimal exercise factor 1.30 N/A 1.30 N/A

Expected dividends 0% 0% 0% 0%

Risk-free interest rate

(based on Malaysian government bonds) 3.5% 3.5% 3.5% 3.5%



25. FINANCE COSTS

Group Company

2014 2013 2014 2013

RM RM RM RM

Finance lease interest 16,379 24,768 - -

Unwinding discount on finance assets 13,412,807 - 10,871,804 -

Term loans interest 2,404,851 8,243,338 2,394,073 8,243,338

Other charges 11,047 228,183 10,023 38,412

15,845,084 8,496,289 13,275,900 8,281,750

26. TAX EXPENSES

Group Company

2014 2013 2014 2013

RM RM RM RM

Income tax attributable to continuing operations:

- current tax 4,261,000 - 4,250,000 -

- under provision of tax in prior years 11,466 369,685 - -

- deferred tax 331,000 - 331,000 -

4,603,466 369,685 4,581,000 -

Malaysian income tax is calculated at the statutory tax rate of 25% (2013: 25%) of the estimated assessable profits

for the financial year.

A reconciliation of income tax expense applicable to profit before tax at the statutory tax rate to income tax expense

at the effective tax rate of the Group and of the Company are as follows:-

Group Company

2014 2013 2014 2013

RM RM RM RM

Profit before taxation 53,507,315 83,284,890 7,606,668 12,150,339

Tax at statutory rate of 25% 13,376,829 20,821,223 1,901,667 3,037,585

Expenses not deductible for tax purposes 7,108,258 11,664,190 6,671,149 10,991,193

Income not subject to tax (3,551,487) (25,833,743) (3,991,816) (14,028,778)

Utilisation of deferred tax assets not recognised in

prior years (12,341,600) (6,651,670) - -

Under provision in prior years 11,466 369,685 - -

Tax at effective tax rate 4,603,466 369,685 4,581,000 -



26. TAX EXPENSES (continued)

The unabsorbed tax losses of the Group amounting to RM70,529,000 (2013: RM117,148,000) can be carried forward

to offset against future taxable profits.

However, the above amounts are subject to the approval of Inland Revenue Board of Malaysia.

27. NET PROFIT FOR THE FINANCIAL YEAR

Net profit for the financial year has been determined after charging/(crediting), amongst others, the following items:-

Group Company

2014 2013 2014 2013

RM RM RM RM

Charging/(crediting):-

Auditors’ remuneration

- statutory auditors 76,000 66,500 50,000 35,000

- other external auditors 244,101 33,266 - -

- other services 244,600 81,800 234,800 65,800

Amortisation of intangible assets 230,619 - 230,619 -

Amount due from subsidiary companies written off - - 26,563 -

Bad debts written off 31,200 48,792 - 990,424

Depreciation 388,451 171,673 301,726 -

Gain from disposal of disposal group classified as held

for sale - (22,873,122) - -

Gain from disposal of property, plant and equipment (73,977) (10,596) - -

Gain from disposal of a subsidiary company - (631,290) - -

(Gain)/loss on foreign exchange:

- realised (2,424) 58,318 (2,424) -

: continuing operations (2,424) - (2,424) -

: discontinued operation - 58,318 - -

- unrealised (7,092,560) 2,822,993 (4,713,400) -

: continuing operations (7,092,560) - (4,713,400) -

: discontinued operation - 2,822,993 - -

Impairment loss on investment in a subsidiary

company - - - 100

Impairment loss on amount due from subsidiary

companies - - 14,914 22,206,329



27. NET PROFIT FOR THE FINANCIAL YEAR (continued)

Net profit for the financial year has been determined after charging/(crediting), amongst others, the following items

(continued):-

Group Company

2014 2013 2014 2013

RM RM RM RM

Charging/(crediting):- (continued)

Impairment loss on property, plant and equipment

: discontinued operation - 24,149,840 - -

Interest income

: deposit interest income (287,210) (3) (287,210) (3)

: unwinding discount on financial liabilities (7,954,934) - (7,954,934) -

Property, plant and equipment written off 1,972 594,677 - 1

: continuing operations 1,972 1 - 1


Loss from subsidiary companies written off 142,710 - - -

Other investments written off 32 - - -

Rental income (48,000) (48,000) - -

Rental of office equipment 594 - 594 -

Rental of premises 742,518 217,832 271,110 -

: continuing operations 742,518 - 271,110 -


Reversal of provision for liquidated ascertained

damages (609,137) - - -

Waiver of amount due to associate company - (523) - -

Waiver of debts (135,858) (83,851,493) - (56,115,107)



28. EARNINGS PER SHARE

Basic earnings per share

Basic earnings per ordinary share is calculated by dividing net profit for the financial year attributable to ordinary

equity holders of the Company by the weighted average number of ordinary shares in issue during the financial year.

Group

2014 2013

RM RM

Profit from continuing operations attributable to ordinary equity holders of the

Company 48,903,849 83,112,925

Loss from discontinued operation attributable to ordinary equity holders of the

Company - (9,514,434)

Profit attributable to ordinary equity holders of the Company 48,903,849 73,598,491

Weighted average number of ordinary shares in issue (unit) 3,259,336,816 584,916,319

Basic earnings per share:

From continuing operations (sen) 1.50 14.21

From discontinued operation (sen) - (1.63)

1.50 12.58

Diluted earnings per share

For the purpose of calculating diluted earnings per share, the profit for the year attributable to ordinary equity holders

of the Company and the weighted average number of ordinary shares in issue during the financial year have been

adjusted for the dilutive effects of all potential ordinary shares, i.e., share options granted to employees and warrants.

Group

2014 2013

Weighted average number of ordinary shares in issue (unit) 3,259,336,816 584,916,319

Effect of warrants and ESOS (unit) 261,034,189 31,181,270

Weighted average number of ordinary shares (diluted) (unit) 3,520,371,005 616,097,589

Diluted earnings per share:

From continuing operations (sen) 1.39 13.49

From discontinued operation (sen) - (1.54)

1.39 11.95



29. RELATED PARTY DISCLOSURES

(a) Related party transaction

Group Company

2014 2013 2014 2013

RM RM RM RM

Management service fee charged to a

subsidiary company - - 2,164,743 -

Oil and gas income charged to companies in

which a major shareholder of the Company

has control 81,117,160 - 23,771,160 -

Royalty expense charged by a company in

which a major shareholder of the Company

has control 548,340 - 548,340 -

Related party transactions have been entered into in the normal course of business under normal trade terms.

(b) Key management personnel compensation

The key management personnel compensation is as follows:

Group Company

2014 2013 2014 2013

RM RM RM RM

Executive Directors’ remuneration:

Short term employees benefits - 640,500 - -

Post-employment benefits - 82,972 - -

- 723,472 - -

Other key management personnel:

Short term employees benefits 4,859,709 2,337,916 2,729,537 2,337,916

Post-employment benefits 113,049 60,564 27,546 60,564


10,103,214 6,152,638 7,887,539 6,152,638

10,103,214 6,876,110 7,887,539 6,152,638

Other key management personnel comprise persons other than the executive Directors of the Company, having

authority and responsibility for planning, directing and controlling the activities of the Company, either directly

or indirectly.

(c) Related party balances

The details of the terms and conditions of amounts due from/to related parties are disclosed in Notes 9, 10, 11,

12 and 19 to the Financial Statements respectively.



30. CONTINGENT LIABILITIES AND CAPITAL COMMITMENTS

Contingent liabilities

Group and Company

2014 2013

RM RM

Unsecured:-

Corporate guarantee granted to associate companies held for sale

(former subsidiary companies) 271,120,931 284,573,875

* The Board of Directors are of the opinion that the likelihood of the crystalisation of the above obligations

probably will not require any outflow of resources and thus no provision is required.

Capital commitments

Group and Company

2014 2013

RM RM

Capital expenditure

Authorised and contracted for:

- Property, plant and equipment 266,559 -

31. OPERATING SEGMENT

Business segments

For management purposes, the Group is organised into business units based on their services, which comprise the

following:

(i) Oil and gas : Provision of oil and gas field development services

(ii) Engineering and construction : Engineering, procurement, construction and commissioning

(iii) Shipping (Discontinued) : Shipping chartering services

(iv) Others : Investment holding

Management monitors the operating results of its business units separately for the purpose of decisions making

about resource allocation and performance assessment. Segment performance is evaluated based on operating

profit or loss which, in certain respects as explained in the table below, is measured differently from operating profit

or loss in the consolidated financial statements.

Transfer prices between operating segments are on an arm’s length basis in a manner similar to transactions with

third parties.



31. OPERATING SEGMENT (continued)

Business segments (continued)

Note Oil and gas Others

Adjustments

and

elimination

Total as per

consolidated

financial

statements

RM RM RM RM

2014

Revenue

External revenue (i) 81,117,160 - - 81,117,160

Results

Interest income 8,242,144 - - 8,242,144

Finance cost (15,845,084) - - (15,845,084)

Depreciation and amortisation (619,070) - - (619,070)

Tax expenses (4,603,466) - - (4,603,466)

Other non-cash income/(expenses) (ii) 7,814,232 64,096 (142,710) 7,735,618

Segment profit (iii) 61,932,094 (10,427) (811,412) 61,110,255

Assets

Additions to non-current assets

(other than financial instruments) (iv) 4,255,492 - - 4,255,492

Note

Engineering

and

construction

Shipping

(Discontinued) Others

Adjustments

and

elimination

Total as per

consolidated

financial

statements

RM RM RM RM RM

2013

Revenue

External revenue (i),(v) - 80,147,924 - - 80,147,924

Results

Interest income - - 3 - 3

Finance cost (214,539) (14,280,155) (8,281,750) - (22,776,444)

Depreciation and

amortisation (171,673) - - - (171,673)

Tax (expense)/ income (369,685) 1,067 - - (368,618)

Other non-cash income/

(expenses) (ii) 29,124,988 (4,694,387) 32,918,253 22,401,868 79,750,722

Segment profit (iii) 25,778,035 (4,376,664) 20,432,089 45,571,052 87,404,512

Assets

Additions to non-current

assets (other than financial

instruments) (iv) - - 302,100,000 - 302,100,000





Segment assets/liabilities

Segment assets/liabilities information is not presented to the Board of Directors and hence, no disclosure is made on

the segment asset/liabilities.

Notes to the operating segments are as follows:-

(i) Inter-segment revenues are eliminated on consolidation.

(ii) Other material non-cash income/(expenses) consist of the following items:

Group

2014 2013

RM RM

Bad debts written off (31,200) (48,792)

Gain on disposal of disposal group classified as held for sale - 22,873,122

Gain on disposal of a subsidiary company - 631,290

(Gain)/loss on disposal of property, plant and equipment 73,977 10,596

Impairment loss on property, plant and equipment - (24,149,840)

Loss from subsidiary companies written off (142,710) -

Other investments written off (32) -

Property, plant and equipment written off (1,972) (594,677)

Provision for liquidated ascertained damages no longer required 609,137 -

Waiver of debts 135,858 83,851,493

Waiver of amount due to associate company - 523

Unrealised loss/(gain) on foreign exchange 7,092,560 (2,822,993)

7,735,618 79,750,722

(iii) The following items are added to/(deducted from) segment profit to arrive at “net profit for the year” as

presented in the statements of profit or loss and other comprehensive income:

Group

2014 2013

RM RM

Segment profit 61,110,255 87,404,512

Interest income 8,242,144 3

Finance costs (15,845,084) (22,776,444)

Taxation (4,603,466) (368,618)

48,903,849 64,259,453





Segment assets/liabilities (continued)

Notes to the operating segments are as follows:- (continued)

(iv) Additions to non-current assets (other than financial instruments) consist of:

Group

2014 2013

RM RM

Intangible assets - 302,100,000

Property, plant and equipment 4,255,492 -

4,255,492 302,100,000

(v) The revenue relating to the shipping segment is presented separately in the statement of profit or loss and

other comprehensive income within one line item, “loss from discontinued operation”.

Geographical information

The Group’s revenue and non-current assets information based on geographical location are as follows:-

Revenue Non-current assets

2014 2013 2014 2013

RM RM RM RM

Malaysia 49,659,650 65,826,644 4,739,740 367,978

Singapore - 13,220,780 - -

Labuan - 1,100,500 - -

Kazakhstan 31,457,510 - 492,410,856 429,300,000

81,117,160 80,147,924 497,150,596 429,667,978

Information about major customers

The following are major customers with revenue more than 10% of the Group’s revenue:-

Revenue Segment

2014 2013

RM RM

2 major customers 81,117,160 - Oil and gas

3 major customers - 64,056,125 Shipping (discontinued)



32. MATERIAL LITIGATIONS

Save as disclosed below, the Group is not engaged in any litigations, claims or arbitration, either as plaintiff or defendant, which has or will have material effect on the financial position of the Group, and the Directors are not aware of any proceedings, pending or threatened, against the Company and/or any of the Company’s subsidiary companies or of any facts likely to give rise to any proceedings which might materially affect the position or business of the Group:

Sumatec Corporation Sdn. Bhd. (“SCSB”) vs Greentech Chemical Sdn. Bhd. (formerly known as Himpunan Sari Sdn. Bhd.) (“GCSB”)

SCSB filed a suit against GCSB in relation to GCSB’s call on a bank guarantee which was provided by SCSB pursuant to a contract for the design, engineering, procurement, construction works, start-up works, commissioning and performance testing of a 250,000 metric ton per year Biodiesel Facilities. In the injunction proceedings, SCSB sought declarations to the effect that GCSB has no right to call on the bank guarantee provided by SCSB of RM5.77 million. SCSB was successful in obtaining the injunction pending disposal of the main suit. Subsequently, parties entered into negotiations and arbitration.

SCSB had on 18 March 2014 presented a petition to wind-up GCSB for its failure to pay RM10,299,285.90 to SCSB as at 20 June 2012 pursuant to a turnkey engineering, procurement, construction and commissioning contract to build a biodiesel plant at the Telok Kalong Industrial Estate in Terengganu. The petition was heard on 17 June 2014 where the Court ordered GCSB to be wound up. SCSB’s solicitors will file in a proof of debt in due course.

33. FINANCIAL INSTRUMENTS

Financial risk management

The Group and the Company are exposed to financial risks arising from their operations and the use of financial instruments. Financial risk management policies are established to ensure that adequate resources are available for the development of the Group’s business whilst managing its financial risks. The Group operates within clearly defined policies and procedures that are approved by the Board of Directors to ensure the effectiveness of the risk management process.

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

(a) Credit risk

Credit risk is the risk of a financial loss to the Group and the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations. It is the Group’s and the Company’s policy to enter into financial instrument with a diversity of creditworthy counterparties. The Group and the Company do not expect to incur material credit losses of its financial assets or other financial instruments.

The Group’s and the Company’s objective is to seek continual revenue growth while minimising losses incurred due to increased credit risk exposure. The Group and the Company provide services only to recognised and creditworthy third parties. It is the Group’s and the Company’s policy that all customers are subject to credit verification procedures. In addition, receivable balances are monitored on an ongoing basis to ensure that the Group’s or the Company’s exposure to bad debts is not significant.

The areas where the Group and the Company are exposed to credit risk are as follows:-

Receivables

As at the end of the reporting date, the maximum exposure to credit risk arising from receivables is limited to

the carrying amounts in the statements of financial position.



33. FINANCIAL INSTRUMENTS (continued)

Financial risk management (continued)

(a) Credit risk (continued)

Receivables (continued)

With a credit policy in place to ensure that credit risk is monitored on an on-going basis, management has

taken reasonable steps to ensure that receivables that are past due but not impaired are stated at their

realisable values. The Group uses aging analysis to monitor the credit quality of the receivables. Any

receivables having significant balances past due more than credit terms granted are deemed to have higher

credit risk, and are monitored individually.

Group

2014 2013

RM % RM %

Trade receivables by country:

Malaysia 52,431,000 65 - -

Kazakhstan 28,609,717 35 - -

81,040,717 100 - -

Company

2014 2013

RM % RM %

Trade receivable by country:

Kazakhstan 23,196,745 100 - -

The Group’s and the Company’s trade receivables have significant credit risk exposure to two (2013: Nil) and

one (2013: Nil) major customers respectively.

The ageing analysis of trade receivables is as follows:

Gross

Individually

impaired Net

RM RM RM

Group

2014

Not past due 41,717,467 - 41,717,467

Past due 1 – 60 days - - -

Past due 61 – 120 days 13,107,750 - 13,107,750

Past due 121 – 365 days 26,215,500 - 26,215,500

Past due more than 1 year 70,490,836 (70,490,836) -

151,531,553 (70,490,836) 81,040,717





(a) Credit risk (continued)

Receivables (continued)

The ageing analysis of trade receivables is as follows: (continued)

Gross

Individually

impaired Net

RM RM RM

2013

Past due more than 1 year 70,490,836 (70,490,836) -

Company

2014

Not past due 23,196,745 - 23,196,745

Trade and other receivables that are neither past due nor impaired are creditworthy receivables with good

payment records with the Group and the Company. None of the Group’s and Company’s trade and other

receivables that are neither past due nor impaired have been renegotiated during the financial year.

The Group’s trade receivables of RM39,323,250 (2013: Nil) were past due but not impaired. These customers

have no recent history of default and the Directors expect they are recoverable.

Intercompany balances

The maximum exposure to credit risk is presented by their carrying amounts in the statements of financial

position.

The Company provides unsecured advances to associate companies and subsidiary companies and monitors

the results of the associate companies and subsidiary companies regularly.

As at the end of the reporting year, there was no indication that the net carrying amounts of the amounts due

from associate companies and subsidiary companies are not recoverable.

Cash and cash equivalents

The credit risk for cash and cash equivalents is considered negligible, since the counterparties are reputable

banks with high quality external credit ratings.

Financial guarantees

The maximum exposure to credit risk amounted to RM271,120,931 (2013: RM284,573,875), which represented

the outstanding balances in banking facilities of the associate companies as at the reporting date.

The Company provides unsecured financial guarantees to banks in respect of banking facilities granted to

certain associate companies held for sale. The Company monitors on an on-going basis the results of the

associate companies and repayments made by such associate companies.





(b) Liquidity and cash flow risks

Liquidity and cash flow risks are the risks that the Group and the Company will not be able to meet its financial

obligations as they fall due, due to shortage of funds.

In managing its exposures to liquidity and cash flow risks arising principally from its various payables, loans

and borrowings, the Group and the Company maintain a level of cash and cash equivalents and bank facilities

deemed adequate by the management to ensure, as far as possible, that it will have sufficient liquidity to meet

its liabilities as and when they fall due.

The Group and the Company aim to maintain a balance of sufficient cash and deposits and flexibility in funding

by keeping diverse sources of committed and uncommitted credit facilities from various banks.

The Group’s and the Company’s non-derivative financial liabilities which have contractual maturities are

summarised below:-

Maturity

Carrying

amount

Contractual

cash flows

Less than 1

year 2 to 5 years

RM RM RM RM

Group

2014

Secured:

Borrowings 22,635,497 22,635,497 22,635,497 -

Unsecured:

Trade payables 194,558 194,558 194,558 -

Other payables 47,174,075 55,129,009 9,293,439 45,835,570

70,004,130 77,959,064 32,123,494 45,835,570

2013

Secured:

Borrowings 17,601,636 17,612,414 17,612,414 -

Finance lease payables 351,072 389,476 142,908 246,568

Unsecured:

Other payables 9,137,617 9,137,617 9,137,617 -

27,090,325 27,139,507 26,892,939 246,568





(b) Liquidity and cash flow risks (continued)

The Group’s and the Company’s non-derivative financial liabilities which have contractual maturities are

summarised below:- (continued)

Maturity

Carrying

amount

Contractual

cash flows

Less than 1

year 2 to 5 years

RM RM RM RM

Company

2014

Secured:

Borrowings 22,635,497 22,635,497 22,635,497 -

Unsecured:

Other payables 46,283,108 54,238,042 8,402,472 45,835,570

68,918,605 76,873,539 31,037,969 45,835,570

2013

Secured:

Borrowings 17,000,000 17,000,000 17,000,000 -

Unsecured:

Other payables 7,753,002 7,753,002 7,753,002 -

24,753,002 24,753,002 24,753,002 -

(c) Foreign currency risk

Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate

because of changes in foreign exchange rates.

The Group and the Company are exposed to foreign currency risk on contract revenue and costs that are

denominated in a currency other than the functional currency of the Group and of the Company.





(c) Foreign currency risk (continued)

The currency giving rise to this risk is primarily US Dollar (“USD”). The Group’s and the Company’s exposure to

foreign currency risk, based on carrying amounts as at the end of the reporting year is as follows:

Group Company

2014 2013 2014 2013

RM RM RM RM

Denominated in USD

Trade receivables 75,627,745 - 23,196,745 -

Other receivables 45,717,851 667,758 45,717,851 -

Amount due from a subsidiary company - - 8,875,020 2,001,079

Other payables (3,483,261) - (3,483,261) -

117,862,335 667,758 74,306,355 2,001,079

Foreign currency sensitivity analysis:

The following table demonstrates the sensitivity of the Group’s and the Company’s profit for the financial

year to a reasonably possible change in the USD against the functional currency of the Group, with all other

variables held constant:-

Profit for the year

Group Company

2014 2013 2014 2013

RM RM RM RM

USD/RM

- Strengthened 1% 1,178,623 6,678 743,064 20,011

- Weakened 1% (1,178,623) (6,678) (743,064) (20,011)

Exposure to foreign exchange rates varied during the financial year depending on the volume of overseas

transactions. Nonetheless, the analysis above is considered to be representative of the Group’s and the

Company’s exposure to foreign currency risk.

(d) Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of the Group’s and the Company’s financial

instruments will fluctuate because of changes in market interest rates.

The Group’s and Company’s fixed rate borrowings are exposed to a risk of change in their fair value due to

changes in interest rates. The Group’s and the Company’s variable rate borrowings are exposed to a risk of

change in cash flows due to changes in interest rates.





(d) Interest rate risk (continued)

The Group’s and the Company’s interest rate management objective is to manage the interest expenses

consistent with maintaining an acceptable level of exposure to interest rate fluctuation. In order to achieve this

objective, the Group and the Company target a mix of fixed and floating debts based on assessment of its

existing exposure and desired interest rate profile.

The interest rate profile of the Group’s and the Company’s significant interest-bearing financial instruments,

based on carrying amounts as at the reporting date were as follows:

Group Company

2014 2013 2014 2013

RM RM RM RM

Fixed rate instruments

Financial asset

Amount due from a subsidiary company - - 6,710,277 2,001,079

Financial liabilities

Borrowings 22,635,497 - 22,635,497 -

Finance lease payables - 351,072 - -

Floating rate instrument

Financial liability

Borrowings - 17,601,636 - 17,000,000

The Group and the Company do not account for any fixed rate financial assets and liabilities at fair value

through profit or loss. Therefore, a change in interest rates at the end of the reporting date would not affect

profit or loss.

The following table illustrates the sensitivity of profit to a reasonably possible change in interest rates of +/-

0.5%. These changes are considered to be reasonably possible based on observation of current market

conditions. The calculations are based on a change in the average market interest rate for each year, and

the financial instruments held at each reporting date that are sensitive to changes in interest rates. All other

variables are held constant.

Profit for the year

Group Company

+0.5% -0.5% +0.5% -0.5%

RM RM RM RM

Floating rate instrument

2014 - - - -

2013 (88,008) 88,008 (85,000) 85,000





(d) Interest rate risk (continued)

Fair values of financial instruments

The carrying amounts of financial assets of the Group and the Company at the reporting date approximate their

fair values except as set out below:-

Group

Carrying amount Fair value

RM RM

2014

Financial asset

Other investments

- Unquoted shares 1 *

2013

Financial asset

Other investments

- Unquoted shares 33 *

The carrying amounts of financial assets of the Group and the Company at the reporting date approximate their fair values due to their short term nature or that they are floating instrument that are re-priced to market interest rates on or near the reporting date or immaterial impact on discounting.

* It was not practicable to estimate the fair value of the Group’s investment in unquoted shares due to the lack of comparable quoted prices in active market. In addition, it is impracticable to use valuation technique to estimate the fair value reliably due to significant variability in the inputs of the valuation technique. The Group has no plans to dispose of its investment in unquoted shares in the near future.

Fair value hierarchy

No fair value hierarchy has been disclosed as the Group and the Company do not have financial instruments measured at fair value.

34. CAPITAL MANAGEMENT

The Group’s and the Company’s objective when managing capital is to maintain a strong capital base and safeguard the Group’s and the Company’s ability to continue as going concerns, so as to maintain investors, creditors and market confidence and to sustain future development of the business.

The Group and the Company set the amount of capital in proportion to its overall financing structure, i.e. equity and financial liabilities. The Group and the Company manage the capital structure and make adjustments to it in light of changes in economic conditions and the risk characteristics of the underlying assets. In order to maintain or adjust the capital structure, the Group and the Company may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debts.

There were no changes in the Group’s approach to capital management during the financial year.



35. SIGNIFICANT EVENTS DURING THE FINANCIAL YEAR AND AFTER THE REPORTING DATE

(a) Disposal of leasehold land

On 12 September 2013, Sumatec Corporation Sdn. Bhd. (“SCSB”), a wholly-owned subsidiary company of the

Company entered into a sale and purchase agreement with a third party for the disposal of its leasehold land

for a total cash consideration of RM3,000,000. Subsequently, the sale and purchase agreement was mutually

terminated by both parties.

On 13 October 2014, SCSB entered into a new sale and purchase agreement with another third party for the

disposal of the said leasehold land for a total cash consideration of RM3,000,000. The consent to transfer

was approved by the Land Office on 19 January 2015. On 31 March 2015, the purchaser notified SCSB of its

decision to abort the transaction and SCSB invoked its right to forfeit the 10% deposit paid by the purchaser.

(b) Proposed Private Placement

On 28 January 2014, the Company proposed to undertake a private placement of up to 308,596,000 new

ordinary shares (“Placement Shares”), representing ten percent (10%) of the issued and paid-up share capital

of the Company at that date.

The additional listing application for the Placement Shares was submitted to Bursa Malaysia Securities Berhad

on 29 January 2014.

Bursa Malaysia Securities Berhad has approved the additional listing on 21 July 2014.

The transaction was completed on 5 August 2014.

(c) Upliftment of PN17 Status

On 29 August 2014, the Company had regularised its financial condition and level of operation, complied with

paragraph 5.2 of Practice Note 17 (“PN17”) of the Main Market Listing Requirements of Bursa Securities and

ceased to trigger any of the criteria under paragraph 2.1 of PN17.

The upliftment of the Company from being classified as a PN17 company was effective on 2 September 2014.

(d) CLO Settlement Agreement

On 28 May 2013, the Company entered into a settlement agreement with Kerisma Berhad, CapOne Berhad,

Prima Uno Berhad (collectively known as “CLO Bondholders”), Malaysian Trustees Berhad (“Trustee”), Hoe

Leong Corporation Ltd (“HLCL”), Setinggi Holdings Limited (“Setinggi”) and Semua International Sdn. Bhd.

(“SISB”) in relation to the Global CLO Settlement (“CLO Settlement Agreement”).

Pursuant to the CLO Settlement Agreement, the outstanding principal amount of RM56.0 million of the debts

owing to the CLO Bondholders shall be repaid by the Company as follows:-

(i) RM18.8 million from the disposal of 51% equity interest in SISB. The details are disclosed in Note 14 to

the Financial Statements;

(ii) RM12.1 million as dividend payment, to the Trustee, pursuant to the Assignment of Dividends. The

amount had been assigned to SISB and SISB has paid RM5.9 million in prior year; and

(iii) New shares valued at RM25.1 million under the Scheme of Arrangement with Creditors, whereby each

share shall have a par value of RM0.14 and the issue price will be at RM0.175 per share, to the Trustee

for the benefit of the CLO Bondholders. The transaction had been completed in prior year.



35. SIGNIFICANT EVENTS DURING THE FINANCIAL YEAR AND AFTER THE REPORTING DATE (continued)

(d) CLO Settlement Agreement (continued)

The CLO Bondholders agreed to waive any outstanding principal amount above RM56.0 million.

During the financial year, HLCL, Setinggi and SISB were unable to fulfill the settlement obligations. The

Company then entered into another settlement agreement with CLO Bondholders on 6 March 2015

(“Settlement Agreement”) to settle the total outstanding sum as follows:

(i) An upfront amount of RM2,451,608 (which is equivalents to 10% of the outstanding amount as at 15

August 2014) to be deposited with the Trustee by 15 January 2015;

(ii) Interest accruing on RM22,635,497 calculated at 6% per annum from 16 August 2014 until 31 December

2014, amounting to RM513,484, to be paid not later than 15 March 2015;

(iii) RM22,064,476 shall be paid by 30 April 2015; and

(iv) Interest accruing on RM22,635,497 calculated at 10% per annum, for the period commencing from 1

January 2015 until 30 April 2015 for the actual number of days elapsed between 1 January 2015 until the

date of actual payment of the amount, shall be paid by 30 April 2015.

(e) Proposals

The Company had on 11 July 2014 entered into a Framework Agreement with Abu Talib Bin Abdul Rahman

and Dr Murat Safin (“Vendors”) for the purpose of pursuing the proposed acquisition of 100% of the issued and

paid up capital in Borneo Energy Oil & Gas Ltd (“BORNEO”), comprising 100 ordinary shares of USD1.00 each

from the Vendors.

On 8 September 2014, the Company executed the share purchase agreement (“SPA”) with the Vendors for

a purchase price of USD350.0 million to be satisfied by a combination of cash and ordinary shares in the

Company (“Proposed Acquisition”).

In addition, under the terms of the SPA, the Company shall acquire BORNEO and Buzachi Neft LLP free from

all indebtedness and encumbrances (including but not limited to borrowings, trade payables and tax liabilities).

In conjunction with the Proposed Acquisition, the Board of the Company proposes to undertake the following:-

(i) Proposed renounceable rights issue of up to 2,298,582,440 new ordinary shares (“Rights Shares”)

together with up to 2,298,582,440 free detachable warrants (“Rights Warrants”) at an indicative issue price

of RM0.40 per Rights Share on the basis of one (1) Rights Share for every two (2) shares held together

with one (1) Rights Warrants for every one (1) Rights Shares subscribed (“Proposed Rights Issue with

Warrants”);

(ii) Proposed increase in the authorised share capital of the Company from RM1,000,000,000 comprising

7,142,857,143 ordinary shares to RM2,000,000,000 comprising 14,285,714,286 ordinary shares

(“Proposed IASC”); and

(iii) Proposed amendments to the Memorandum and/or Articles of Association of the Company to facilitate

the Proposed IASC (“Proposed Amendments”).

The listing application for the Proposed Acquisition and Proposed Rights Issue with Warrants has been

submitted to Bursa Malaysia Securities Berhad on 17 October 2014.



35. SIGNIFICANT EVENTS DURING THE FINANCIAL YEAR AND AFTER THE REPORTING DATE (continued)

(e) Proposals (continued)

Subsequently on 9 January 2015, the Company entered into a supplemental agreement with the Vendors to

reduce the purchase price for the Proposed Acquisition by USD60,000,000 to USD290,000,000 (“Supplemental

SPA”), to be satisfied entirely via the followings:

(i) Deposit of USD30,000,000 (approximately RM96,510,000), which was paid upon signing of the SPA on 8

September 2014;

(ii) Balance of cash payment of USD180,000,000 (approximately RM630,000,000); and

(iii) The remaining USD80,000,000 (approximately RM280,000,000) to be satisfied via the issuance of

1,217,391,305 new Sumatec Shares to the Vendors at an issue price of RM0.23 per share (“Consideration

Shares”).

The revised terms for the other proposals are as follows:-

(i) The Proposed Rights Issue with Warrants will be a renounceable rights issue of up to 5,517,521,495 new

Rights Shares together with up to 2,758,760,747 Rights Warrants at an indicative issue price of RM0.20

per Rights Share on the basis of six (6) Rights Share for every five (5) ordinary shares held together with

one (1) Rights Warrant for every two (2) Rights Shares subscribed; and

(ii) The Proposed IASC from RM1,000,000,000 comprising 7,142,857,143 ordinary shares to

RM5,000,000,000 comprising 35,714,285,714 ordinary shares.

On 23 February 2015, Bursa Securities had approved the followings:-

(i) Admission to the Official List of the Main Market of Bursa Securities and the listing and quotation for up

to 2,758,760,747 Rights Warrants to be issued together with the Rights Shares pursuant to the Proposed

Rights Issue with Warrants;

(ii) Listing of and quotation for:-

- 1,217,391,305 Consideration Shares to be issued pursuant to the Proposed Acquisition;

- Up to 5,517,521,495 new Rights Shares to be issued pursuant to the Proposed Rights Issue with

Warrants;

- Up to 2,758,760,747 new Sumatec Shares to be issued pursuant to the full exercise of the Rights

Warrants;

- Up to 1,379,173 additional Warrants A pursuant to the Rights Adjustments;

- Up to 6,591,070 additional Warrants B pursuant to the Rights Adjustments; and

- Up to 7,970,243 new Sumatec Shares to be issued pursuant to the full exercise of additional

Warrants A and additional Warrants B.

On 8 April 2015, the shareholders of the Company at the Company’s Extraordinary General Meeting approved

the Proposed Acquisition, Proposed Rights Issues with Warrants, Proposed IASC and Proposed Amendments.



DISCLOSURE OF REALISED AND UNREALISED UNAPPROPRIATED PROFITS/ACCUMULATED LOSSES

With the purpose of improving transparency, Bursa Malaysia Securities Berhad had on 25 March 2010, and subsequently

on 20 December 2010, issued directive which require all listed corporations to disclose the breakdown of unappropriated

profits or accumulated losses into realised and unrealised on Group and Company basis in the annual audited financial

statements.

The breakdown of accumulated losses as at the reporting date has been prepared by the Directors in accordance with the

directive from Bursa Malaysia Securities Berhad stated above and the Guidance on Special Matter No. 1 –Determination

of Realised and Unrealised Profits or Losses in the Context of Disclosures pursuant to Bursa Malaysia Securities Berhad

Listing Requirements as required by the Malaysian Institute of Accountants are as follows:

Group

2014 2013

RM RM

Total accumulated losses of the Group

- Realised loss (288,522,885) (338,606,501)

- Unrealised gain/ (loss) 1,303,687 (609,137)

(287,219,198) (339,215,638)

Consolidation adjustments 80,854,706 83,918,405

(206,364,492) (255,297,233)

Company

2014 2013

RM RM

Total accumulated losses of the Company

- Realised loss (251,817,040) (253,406,070)

- Unrealised gain 1,465,530 -

(250,351,510) (253,406,070)

The disclosure of realised and unrealised above is solely for complying with the disclosure requirements stipulated in the

directive of Bursa Malaysia Securities Berhad and should not be applied for any other purposes.


SHAREHOLDINGS ANALYSIS BY SIZE OF SHAREHOLDINGS AS AT 10 APRIL 2015

Authorised Capital : RM5,000,000,000.00

Issued and fully paid-up capital : RM487,577,345.50

Class of shares : Ordinary shares of RM0.14 each

Voting Rights : One vote per ordinary share

Size of shareholdings

No. of

Shareholders

% of

Shareholders

No. of

Shares

% of

Shareholdings

<100 134 0.52 3,962 0.00

100 - 1,000 2,090 8.06 1,120,253 0.03

1,001 - 10,000 7,414 28.59 49,547,388 1.42

10,001 - 100,000 12,643 48.76 529,349,481 15.20

100,001 - < 5% issued shares 3,647 14.07 2,382,365,241 68.41

5% and above of issued shares 1 0.00 520,309,000 14.94

25,929 100.00 3,482,695,325 100.00

Substantial Shareholders

No. of shares held

Name

Direct

Interest %

Deemed

Interest %

Halim Bin Saad 807,040,000 23.17 46,000,000* 1.32

* Deemed interest by virtue of his substantial shareholding in Markmore Sdn Bhd

Directors’ Shareholdings

No. of shares held

Name

Direct

Interest %

Deemed

Interest %

Tan Sri Abu Talib Bin Othman - - - -

Datuk Mohd Nasir Bin Ahmad - - - -

Datuk Che Mokhtar Bin Che Ali - - - -

Michael Lim Hee Kiang - - - -

Mohamad Bin Ismail - - - -

Wan Kamaruddin Bin Dato’ Biji Sura @ Wan

Abdullah 200,000 0.01 - -

Chan Yok Peng - - 72,483,179* 2.08

Dato’ Ahmad Johari Bin Abdul Razak 39,174,900 1.12 - -

* Deemed interest by virtue of his substantial shareholding in Tekad Mulia Sdn Bhd

ANALYSIS OF SHAREHOLDINGS AS AT 10 APRIL 2015


ANALYSIS OF SHAREHOLDINGS AS AT 10 APRIL 2015CONT’D

Directors’ Options Under Employee Share Option Scheme

Name

Number of

options

offered

Number

of options

exercised Option price

Tan Sri Abu Talib Bin Othman - - -

Datuk Mohd Nasir Bin Ahmad - - -

Datuk Che Mokhtar Bin Che Ali - - -

Michael Lim Hee Kiang - - -

Mohamad Bin Ismail - - -

Wan Kamaruddin Bin Dato’ Biji Sura @ Wan Abdullah - - -

Chan Yok Peng - - -

Dato’ Ahmad Johari Bin Abdul Razak - - -

30 LARGEST SHAREHOLDERS AS AT 10 APRIL 2015

No. Shareholders Shareholdings %

1. HALIM BIN SAAD 520,309,000 14.94

2. HSBC NOMINEES (TEMPATAN) SDN BHD

-COUTTS & CO LTD SG FOR HALIM BIN SAAD

70,000,000 2.01

3. MAYBANK NOMINEES (TEMPATAN) SDN BHD

-PLEDGED SECURITIES ACCOUNT FOR HALIM BIN SAAD

70,000,000 2.01

4. MAYBANK SECURITIES NOMINEES (TEMPATAN) SDN BHD

- PLEDGED SECURITIES ACCOUNT FOR HALIM BIN SAAD (MARGIN)

50,000,000 1.44


- PLEDGED SECURITIES ACCOUNT FOR HALIM BIN SAAD

50,000,000 1.44


- PLEDGED SECURITIES ACCOUNT FOR MARKMORE SDN BHD

46,000,000 1.32

7. M & A NOMINEE (TEMPATAN) SDN BHD

- PLEDGED SECURITIES ACCOUNT FOR TEKAD MULIA SDN BHD (M&A)

42,000,000 1.21

8. CIMSEC NOMINEES (TEMPATAN) SDN BHD

- CIMB BANK FOR AHMAD JOHARI BIN TUN ABDUL RAZAK (MY1678)

39,174,900 1.12

9. SITI HANIFAH BINTI S. ABDULLAH 38,500,000 1.11

10. MORNING PARADISE SDN BHD 36,000,000 1.03


- GENTING UTAMA SDN BHD FOR HALIM BIN SAAD

27,731,000 0.80


-PLEDGED SECURITIES ACCOUNT FOR TEKAD MULIA SDN BHD

25,000,000 0.72


30 LARGEST SHAREHOLDERS AS AT 10 APRIL 2015 cont’d

No. Shareholders Shareholdings %


-PLEDGED SECURITIES ACCOUNT FOR INTER MERGER SDN. BHD.

21,000,000 0.60

14. ABDUL RASHID BIN ABDUL MANAF 20,000,000 0.57


-INSAS CREDIT & LEASING SDN BHD FOR HALIM BIN SAAD

19,000,000 0.55


-CIMB FOR VERTICAL SOURCE SDN BHD (PB)

19,000,000 0.55

17. ABD RAHMAN BIN SOLTAN 16,449,900 0.47

18. BLUE OCEAN INTERGRATED SDN BHD 16,056,000 0.46

19. M & A NOMINEE (ASING) SDN BHD

-LANTAS MODAL SDN BHD FOR DALTON CHRISTOPHER LAYTON

15,000,000 0.43

20. UPSTREAM DOWNSTREAM PROCESS & SERVICES SDN. BHD. 13,277,000 0.38

21. PM NOMINEES (TEMPATAN) SDN BHD

-PLEDGED SECURITIES ACCOUNT FOR AZMAN BIN ISMAIL (A)

13,000,000 0.37

22. PELABURAN MARA BERHAD 13,000,000 0.37

23. TAN SOH GEK 12,165,000 0.35

24. KENANGA NOMINEES (TEMPATAN) SDN BHD

-PLEDGED SECURITIES ACCOUNT FOR LOH KIM KIONG

11,190,900 0.32

25. FARAH SUMIYATI BINTI WAGIMIN 11,020,000 0.32


-PLEDGED SECURITIES ACCOUNT FOR KRIZIK (MALAYSIA) SDN BHD

(MARGIN)

11,000,000 0.32

27. AHMAD KOMAROLAILI BIN ABU 10,195,680 0.29

28. TENGKU AB MALEK BIN TENGKU MOHAMED 9,800,000 0.28

29. LEE CHONG LOO 9,500,000 0.27

30. UOB KAY HIAN NOMINEES (ASING) SDN BHD

-EXEMPT AN FOR UOB KAY HIAN PTE LTD ( A/C CLIENTS )

9,350,200 0.27

TOTAL 1,264,719,580 36.31

ANALYSIS OF SHAREHOLDINGS AS AT 10 APRIL 2015

CONT’D


ANALYSIS OF WARRANT HOLDINGS AS AT 10 APRIL 2015

SHAREHOLDINGS ANALYSIS BY SIZE OF WARRANT 2011/2021 ("WARRANTS A") HOLDINGS AS AT 10 APRIL 2015

No. Warrants in Issue : 118,753,197

Exercise Price of Warrants : RM0.32

Expiry Date of Warrants : 03/03/2021

No. of Warrant Holders : 2,970

Size of Holdings

No. of

Warrant

Holders

% of

Warrant

Holders

No. of

Warrant

Holding

% of

Warrant

Holding

<100 Warrant 428 14.41 21,291 0.02

100 - 1,000 Warrant 247 8.32 122,953 0.10

1,001 – 10,000 Warrant 886 29.83 4,422,006 3.72

10,001 – 100,000 Warrant 1,184 39.86 48,753,295 41.05

100,001 - < 5% issued Warrant 225 7.58 65,433,652 55.10

2,970 100.00 118,753,197 100.00

Directors’ Warrant 2011/2021 Holdings

No. of warrants held

Name

Direct

Interest %

Deemed

Interest %







Abdullah - - - -

Chan Yok Peng - - 59* ~

Dato’ Ahmad Johari Bin Abdul Razak - - - -

* Deemed interest by virtue of his substantial shareholding in Tekad Mulia Sdn Bhd

~ Negligible



CONT’D

30 LARGEST WARRANT 2011/2021 (“WARRANTS A”) HOLDERS AS AT 10 APRIL 2015

No. Warrant holders

Warrant

holding %

1. SOO YOKE MUN 2,600,000 2.19

2. TAN BOON HAR 2,219,131 1.87

3. YEO CHIN KIANG 1,750,000 1.47

4. TAN SOH GEK 1,730,440 1.46

5. LEE CHEE SENG 1,600,000 1.35

6. HO LI HUA 1,170,000 0.99

7. SIEW YAU WAI @ SIEW AH WHY 1,023,857 0.86


-PLEDGED SECURITIES ACCOUNT FOR SHARIMAN YUSUF BIN MOHAMED

ZAIN (REM 656)

1,000,000 0.84

9. LOK WEI SEONG 950,000 0.80

10. HISHAM BIN HUSSEIN 796,500 0.67

11. LAW CHUAN SZE 682,600 0.57


-PLEDGED SECURITIES ACCOUNT FOR NAVINDERJEET SINGH A/L

GURMITSINGH

681,800 0.57

13. SIAH BOON PAH 667,100 0.56

14. LEE TIANG HENG 650,000 0.55

15. TAN CHAI HONG 650,000 0.55

16. CITIGROUP NOMINEES (TEMPATAN) SDN BHD

-PLEDGED SECURITIES ACCOUNT FOR KHOR THING THIAM (472926)

640,000 0.54

17. LEI YAK MING 600,100 0.51

18. YAP MUN HUAT 600,000 0.51


-SHAN KAMAHL BIN MOHAMMAD

600,000 0.51

20. SJ SEC NOMINEES (TEMPATAN) SDN BHD

-PLEDGED SECURITIES ACCOUNT FOR ANG CHENG HOE (SMT)

572,000 0.48

21. LIM KAN YEN 564,332 0.48

22. KWEK SIEW WAH 560,000 0.47


ANALYSIS OF WARRANT HOLDINGS AS AT 10 APRIL 2015CONT’D

30 LARGEST WARRANT 2011/2021 (“WARRANTS A”) HOLDERS AS AT 10 APRIL 2015 cont’d

No. Warrant holders

Warrant

holding %

23. TAILAMI A/P PALANIANDY 554,000 0.47

24. AZLAN BIN YAHYA 500,000 0.42

25. AZMIR BIN OSMAN 500,000 0.42

26. SOO WENG SWAN 500,000 0.42

27. CHEW CHOONG SIAM 500,000 0.42


-PLEDGED SECURITIES ACCOUNT FOR MOHD NOOR AFANDAY BIN MOHD

JAYA (T INDAH-CL)

500,000 0.42


-PLEDGED SECURITIES ACCOUNT FOR SITI AZRINA BINTI ADANAN

500,000 0.42

30. AHMAD SUHAIMEE BIN MOHAMMED YASSIN 500,000 0.42

TOTAL 26,361,860 22.20


SHAREHOLDINGS ANALYSIS BY SIZE OF WARRANT 2013/2018 ("WARRANTS B") HOLDINGS AS AT 10 APRIL 2015

No. Warrants in Issue : 567,521,758

Exercise Price of Warrants : RM0.175

Expiry Date of Warrants : 13/11/2018

No. of Warrant Holders : 4,992

Size of Holdings

No. of

Warrant

Holders

% of

Warrant

Holders

No. of

Warrant

Holding

% of

Warrant

Holding

<100 Warrants 279 5.59 12,618 0.00

100 - 1,000 Warrants 304 6.09 132,902 0.02

1,001 – 10,000 Warrants 1,244 24.92 7,247,987 1.28

10,001 – 100,000 Warrants 2,461 49.30 102,135,758 18.00

100,001 - < 5% issued Warrant 702 14.06 273,582,622 48.21

5% and above of issued Warrant 2 0.04 184,409,871 32.49

4,992 100.00 567,521,758 100.00

Substantial Warrant 2013/2018 Holders


Name

Direct

Interest %

Deemed

Interest %

Halim Bin Saad 154,160,000 27.16 - -

Tekad Mulia Sdn Bhd 30,249,871 5.33 - -

Chan Yok Peng - - 30,249,871* 5.33

* Deemed interest by virtue of his substantial shareholdings in Tekad Mulia Sdn Bhd

Directors’ Warrant 2013/2018 Holdings


Name

Direct

Interest %

Deemed

Interest %







Abdullah - - - -

Chan Yok Peng - - 30,249,871* 5.33

Dato’ Ahmad Johari Bin Abdul Razak - - - -

* Deemed interest by virtue of his substantial shareholdings in Tekad Mulia Sdn Bhd


CONT’D


30 LARGEST WARRANT 2013/2018 (“WARRANTS B”) HOLDERS AS AT 10 APRIL 2015

No. Warrant holders

Warrant

holding %

1. HALIM BIN SAAD 154,160,000 27.16


FOR TEKAD MULIA SDN BHD

30,249,871 5.33

3. BLUE OCEAN INTERGRATED SDN BHD 15,514,000 2.73

4. BLUE OCEAN PREMIER SDN BHD 10,537,250 1.86

5. LANTAS MODAL SDN BHD 10,041,400 1.77

6. PAUZIAH BINTI MOHAMAD 7,040,300 1.24

7. LOONG DING TONG 2,800,000 0.49

8. SJ SEC NOMINEES (TEMPATAN) SDN BHD

-PLEDGED SECURITIES ACCOUNT FOR LEAN CHENG LIUNG (SMT)

2,400,000 0.42

9. WONG LAI FUN 2,150,000 0.38

10. PUBLIC NOMINEES (TEMPATAN) SDN BHD

-PLEDGED SECURITIES ACCOUNT FOR TEE KIM HEW (E-KLG/BTG)

2,070,000 0.36

11. LAU HONG SENG 2,000,000 0.35

12. LIM KING KING 2,000,000 0.35

13. LYE WEE KEN 2,000,000 0.35

14. SI THO YOKE MENG 2,000,000 0.35

15. CHAN HENG LOY 2,000,000 0.35

16. CHONG WENG SHIN 2,000,000 0.35


-PLEDGED SECURITIES ACCOUNT FOR LOH KIM KIONG

1,967,650 0.35

18. CHANG HOCK TIEW 1,700,000 0.30

19. DB (MALAYSIA) NOMINEE (ASING) SDN BHD

- EXEMPT AN FOR BANK OF SINGAPORE LIMITED

1,603,100 0.28

20. ZILAN BIN ZAINAL ABIDIN 1,508,000 0.27

21. WANG SUI SANG 1,500,000 0.26

22. YONG CHEE FOONG 1,400,000 0.25

23. RHB CAPITAL NOMINEES (TEMPATAN) SDN BHD

-PLEDGED SECURITIES ACCOUNT FOR TEO CHON SIN (MLK)

1,363,800 0.24

ANALYSIS OF WARRANT HOLDINGS AS AT 10 APRIL 2015CONT’D


30 LARGEST WARRANT 2013/2018 (“WARRANTS B”) HOLDERS AS AT 10 APRIL 2015 cont’d

No. Warrant holders

Warrant

holding %

24. WAN MOHD ZAID BIN SALLEH 1,300,000 0.23

25. RIDZA ABDOH BIN HAJI SALLEH 1,287,212 0.23

26. ANNE LOKE 1,245,100 0.22

27. RHB NOMINEES (TEMPATAN) SDN BHD

-PLEDGED SECURITIES ACCOUNT FOR LONG HENG BOCK

1,202,100 0.21

28. LEE KOK CHUAN 1,200,000 0.21

29. KHOO ENG YEOW 1,200,000 0.21

30. AFFIN HWANG INVESTMENT BANK BERHAD

-PDT (068-KGG) GOH KWONG GIAP

1,185,600 0.21

TOTAL 268,625,383 47.33


CONT’D


LIST OF PROPERTIESAS AT 31 DECEMBER 2014

LOCATION

DESCRIPTION

(EXISTING USE) TENURE

LAND

AREA

APPROXIMATE

AGE OF

BUILDING

NET BOOK

VALUE @ 31

DECEMBER

2014

RM'000

DATE

OF LAST

VALUATION

1 Parcel No.

A4/2-47 & A4/2-48 C

2nd Floor, Block A4

Lot No. PT 9332

Title No. HS (D) 41817

Mukim and District of Klang

Selangor

2 units of

apartment

(unoccupied)

Leasehold

99 years

(strata title

not issued)

Parcel No.

A4/2-47

(82.43 sq

meters)

Parcel No.

A4/2-8 C

(86.17 sq

meters)

15 years 175 28.12.2002

2 Lot 10751

Kawasan Perindustrian

Bukit Tengah

Mukim Kertih

Kemaman, Terengganu

Industrial land Leasehold

60 years

expiring on

19.08.2069

10,840

sq meters

N/A 415 3.10.2013

3 Lot 10752

Kawasan Perindustrian

Bukit Tengah

Mukim Kertih

Kemaman, Terengganu

Industrial land Leasehold

60 years

expiring on

19.08.2069

6,810

sq meters

N/A 259 3.10.2013


SHARE PRICE CHART

PRICE RM DATE

Highest 0.61 19-Aug-14

Lowest 0.17 15-Dec-14

0

100

200

300

400

500

600

700

800

0.00

0.10

0.20

0.30

0.40

0.50

0.60

0.70

Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Jan-15 Feb-15 Mar-15 Apr-15 May-15

Vo

lum

e (

Millio

ns)

Pri

ce

(R

M)

Transaction Volume (Million) Share Price (RM)


NOTICE IS HEREBY GIVEN THAT the Eighteenth Annual General Meeting (“18th AGM”) of the Company will be held at

Bintang Ballroom, Level 5, Cititel Mid Valley, Mid Valley City, Lingkaran Syed Putra, 59200 Kuala Lumpur on Thursday, 11

June 2015 at 10.30 a.m for the following purposes:-

AGENDA

AS ORDINARY BUSINESS

1. To receive the Audited Financial Statements of the Company for the financial year ended

31 December 2014 together with the Reports of the Directors and Auditors thereon.

2. To re-appoint Tan Sri Abu Talib bin Othman who retires pursuant to Section 129(6) of the

Companies Act, 1965 as Director of the Company to hold office until the conclusion of the

next Annual General Meeting of the Company.

3. To re-elect the following Directors retiring in accordance with the relevant Articles of the

Company’s Articles of Association, and being eligible, offered themselves for re-election:-

(i) Dato’ Ahmad Johari bin Abdul Razak (Article 94)

(ii) Wan Kamaruddin bin Dato’ Biji Sura @ Wan Abdullah (Article 87.1)

(iii) Datuk Che Mokhtar bin Che Ali (Article 87.1)

4. To re-appoint Messrs SJ Grant Thornton as Auditors of the Company and to authorise the

Board of Directors to fix their remuneration.

AS SPECIAL BUSINESS

To consider and, if thought fit, pass the following resolutions, with or without

modifications:-

5. Authority to Issue Shares by the Company pursuant to Section 132D of the

Companies Act, 1965

“THAT pursuant to Section 132D of the Companies Act, 1965 and subject to the approvals

from the relevant governmental and/or regulatory authorities, the Directors be and are

hereby empowered to issue shares in the Company from time to time and upon such terms

and conditions and for such purposes as the Directors may in their absolute discretion

deem fit, provided that the aggregate number of shares issued pursuant to this resolution

does not exceed ten (10) per cent of the issued share capital of the Company for the time

being AND THAT the Directors be and are hereby empowered to obtain the approval from

Bursa Malaysia Securities Berhad for the listing and quotation of the additional shares so

issued AND THAT such authority shall continue in force until the conclusion of the

next Annual General Meeting of the Company.”

NOTICE OF ANNUAL GENERAL MEETING

Please refer to Notes

Ordinary Resolution 1







6. Proposed Renewal of Existing Shareholders’ Mandate for Recurrent Related Party

Transactions of a Revenue or Trading Nature (“Proposed Renewal of Existing

Shareholders’ Mandate”)

“THAT, subject to the provisions of the Main Market Listing Requirements of Bursa

Malaysia Securities Berhad, approval be given to the Company and/or its subsidiary

companies to enter into recurrent related party transactions of a revenue or trading

nature (“Recurrent Related Party Transactions”) as set out in Section 2.3 the Circular to

Shareholders dated 20 May 2015, subject to the following:-

(a) The Recurrent Related Party Transactions are undertaken in the ordinary course of

business which are necessary for the day-to-day operations on arm’s length basis,

on normal commercial terms which are not more favourable to the related party

than those generally available to the public and are not detrimental to the minority

shareholders of the Company; and

(b) disclosure is made in the annual report of the breakdown of the aggregate value of

transactions conducted during the financial year.

That such approval shall continue in force until:-

(a) the conclusion of the next Annual General Meeting (“AGM”) of the Company in

2016 following this AGM at which the Proposed Renewal of Existing Shareholders’

Mandate is passed, at which time it will lapse unless the authority is renewed by a

resolution passed at the next AGM of the Company in 2016;

(b) The expiration of the period within which the next AGM of the Company in 2016 is

required to be held pursuant to Section 143(1) of the Companies Act, 1965 (“Act”)

(but shall not extend to such extension as may be allowed pursuant to Section 143 (2)

of the Act; or

(c) It is revoked or varied by resolution passed by shareholders of the Company in a

general meeting.

whichever is the earliest;

AND THAT the Directors of the Company be authorised to complete and do all such

acts and things (including executing all such documents as may be required) as they

may consider expedient or necessary to give effect to the Proposed Renewal of Existing

Shareholders’ Mandate”.

8. To transact any other business of which due notice shall have been given in accordance

with the Companies Act, 1965.

By Order of the Board

LIM SECK WAH (MAICSA NO. 0799845)

M. CHANDRANSEGARAN A/L S. MURUGASU (MAICSA NO.0781031)

Company Secretaries

Dated: 20 May 2015

Kuala Lumpur


NOTICE OF ANNUAL GENERAL MEETINGCONT’D


Notes:-

1. Depositors whose names appear in the Record of Depositors as at 5 June 2015 shall be regarded as members of the Company entitled to attend, speak and vote at this AGM.

2. A member entitled to attend and vote at the meeting is entitled to appoint one or more proxies. A proxy may but need not be a member of the Company and the provisions of Section 149(1)(a) and (b) of the Companies Act, 1965 shall not apply to the Company. Where a member appoints two (2) or more proxies to attend and vote at the meeting, the appointment shall be invalid unless he specifies the proportion of his shareholdings to be represented by each proxy.

3. Where a member of the Company is an authorised nominee as defined under the Securities Industry (Central Depositories) Act, 1991 (“SICDA”), it may appoint at least one (1) proxy but not more than two (2) proxies in respect of each securities account it holds which is credited with ordinary shares of the Company. The appointment of two (2) proxies in respect of any particular securities account shall be invalid unless the authorised nominee specifies the proportion of its shareholding to be represented by each proxy.

4. Where a member of the Company is an exempt authorised nominee (“EAN”) as defined under the SICDA which holds ordinary shares in the Company for multiple beneficial owner in one securities account (“omnibus account”), there is no limit to the number of proxies which EAN may appoint in respect of each omnibus account it holds. EAN is advised to list down the names of proxies and the particulars of their NRIC (both new and old) and attach it to the Form of Proxy.

5. The instrument appointing a proxy shall be in writing under the hand of the appointer or his attorney duly authorised in writing or if the appointer is a corporation, either under its common seal or under the hand of an attorney duly authorised.

6. Pursuant to paragraph 10.08(7A) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad, voting in respect of the ordinary resolutions approving the Proposed Renewal of Existing Shareholders’ Mandate and/or Proposed New Shareholders’ Mandate shall be conducted by way of poll.

7. The instrument appointing a proxy and the power of attorney or other attorney (if any), under which it is signed or notarially certified copy thereof, shall be deposited at the Registered Office of the Company at Level 15-2, Bangunan Faber Imperial Court, Jalan Sultan Ismail, 50250 Kuala Lumpur not less than forty-eight (48) hours before the time set for holding the Meeting or any adjournment thereof.

Notes to the Agenda:-

Agenda 1

This agenda item is meant for discussion only as the provisions of Section 169(1) of the Companies Act, 1965 do not require shareholders to approve annual audited financial statements and hence it is not put forward for voting.

Agenda 2

The re-appointment of Tan Sri Abu Talib bin Othman, who has attained the age of 70 years, as Director of the Company to hold office until the conclusion of the next AGM of the Company shall take effect if the proposed resolution has been passed by a majority of not less than three-fourths (3/4) of such members as being entitled to vote in person or where proxies are allowed, by proxy, at this AGM.

Agenda 3

Dato’ Ahmad Johari bin Abdul Razak being appointed to the Board on 10 July 2014, which was subsequent to the last AGM, retires under Article 94. Wan Kamaruddin bin Dato’ Biji Sura @ Wan Abdullah and Datuk Che Mokhtar bin Che Ali retire by rotation under Article 87.1. The profile of directors seeking re-election are disclosed on pages 18, 20 and 21 of the Annual Report.

Agenda 5

The proposed Resolution 6 is to seek a renewal of the general mandate from the shareholders. The resolution if duly passed, is primarily to give authority to the Board of Directors to issue and allot shares at any time in their absolute discretion and for such purposes as they consider would be in the interest of the Company without convening a general meeting. This authority, unless revoked or varied at a general meeting, will expire at the conclusion of the next AGM of the Company.

Pursuant to the shareholders mandate granted to the Directors at the 17th AGM of the Company, 308,596,000 new ordinary shares of RM0.14 each in the Company were issued at an issue price of RM0.38 per ordinary share on 4 August 2014. These shares were listed on the Bursa Malaysia Securities Berhad on 5 August 2014.

The details of utilization of the proceeds from the private placement exercise are disclosed on page 52 of this Annual Report.

The renewed authority if approved, will provide flexibility to the Company for any possible fund raising activities, including but not limited to further allotment of shares for the purpose of funding future project/investment, working capital and/or acquisitions.

Agenda 8

Details of the Recurrent Related Party Transactions under the Proposed Renewal of Shareholders’ Mandate are set out in the Circular to Shareholders dated 20 May 2015.

NOTICE OF ANNUAL GENERAL MEETINGCONT’D

SUMATEC RESOURCES BERHAD(Company No: 428355 D)

(Incorporated in Malaysia)

PROXY FORM

(Before completing this form please refer to the notes below)

I/We I/C No./Co. No./CDS A/C No.

(Full name in block letters)

of

(Full address)

being a member/members of SUMATEC RESOURCES BERHAD hereby appoint the following person(s):-

Name of proxy, NRIC No. & Address No. of shares or % of shares to be

represented by proxy

1.

2.

or failing him/her, the Chairman of the Meeting as my/our proxy to vote for me/us on my/our behalf at the Eighteenth

Annual General Meeting of the Company to be held at Bintang Ballroom, Level 5, Cititel Mid Valley, Mid Valley City,

Lingkaran Syed Putra, 59200 Kuala Lumpur on Thursday, 11 June 2015 at 10.30 am. My/our proxy/proxies is to vote as

indicated below:-

FIRST PROXY SECOND PROXY

FOR AGAINST FOR AGAINST

ORDINARY BUSINESS

ORDINARY RESOLUTION

1. To re-elect Tan Sri Abu Talib bin Othman who is retiring pursuant to

Section 129(6)

2. To re-elect Dato’ Ahmad Johari bin Abdul Razak who is retiring

pursuant to Articles 94

3. To re-elect Encik Wan Kamaruddin bin Dato’ Biji Sura @ Wan

Abdullah who is retiring pursuant to Articles 87.1

4. To re-elect Datuk Che Mokhtar bin Che Ali who is retiring pursuant

to Articles 87.1

5. To re-appoint Messrs SJ Grant Thornton as Auditors of the

Company and to authorise the Board of Directors to fix their

remuneration

SPECIAL BUSINESS

ORDINARY RESOLUTION

6. Authority to Issue Shares by the Company pursuant to Section 132D

of the Companies Act, 1965

7. Proposed Renewal of Existing Shareholders’ Mandate for Recurrent

Related Party Transactions of a Revenue or Trading Nature

(Please indicate with a “ √ ” or “X” in the space provided how you wish your vote to be cast. If no instruction as to voting is given, the

proxy will vote or abstain from voting at his/her discretion. The first named proxy shall be entitled to vote on a show of hands).

Dated this day of 2015

Signature/Common Seal

No. of ordinary shares held

Notes:-

1. Depositors whose names appear in the Record of Depositors as at 5 June 2015 shall be regarded as members of the Company entitled to attend, speak and vote at this AGM.

2. A member entitled to attend and vote at the meeting is entitled to appoint one or more proxies. A proxy may but need not a member of the Company and the provisions of Section 149(1)(a) and (b) of the Companies Act, 1965 shall not apply to the Company. Where a member appoints two (2) or more proxies to attend and vote at the meeting, the appointment shall be invalid unless he specifies the proportion of his shareholdings to be represented by each proxy.

3. Where a member of the Company is an authorised nominee as defined under the Securities Industry (Central Depositories) Act, 1991(“SICDA”), it may appoint at least one (1) proxy but not more than two (2) proxies in respect of each securities account it holds which is credited with ordinary shares of the Company. The appointment of two (2) proxies in respect of any particular securities account shall be invalid unless the authorised nominee specifies the proportion of its shareholding to be represented by each proxy.

4. Where a member of the Company is an exempt authorised nominee (“EAN”) as defined under the SICDA which holds ordinary shares in the Company for multiple beneficial owners in one securities account (“omnibus account”), there is no limit to the number of proxies which EAN may appoint in respect of each omnibus account it holds. EAN is advised to list down the names of proxies and the particulars of their NRIC (both new and old) and attach it to this Form of Proxy.

5. The instrument appointing a proxy shall be in writing under the hand of the appointer or his attorney duly authorised in writing or if the appointer is a corporation, either under its common seal or under the hand of an attorney duly authorised.

6. Pursuant to paragraph 10.08(7A) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad, voting in respect of the ordinary resolutions approving the Proposed Renewal of Existing Shareholders’ Mandate and/or Proposed New Shareholders’ Mandate shall be conducted by way of poll.

7. The instrument appointing the proxy and the power of attorney or other authority (if any) under which it is signed or notarially certified copy thereof, shall be deposited at the Registered Office of the Company at Level 15-2, Bangunan Faber Imperial Court, Jalan Sultan Ismail, 50250 Kuala Lumpur not less than forty-eight (48) hours before the time set for holding the meeting or any adjournment thereof.

Please Fold Here

Please Fold Here

AFFIXSTAMP

The Company Secretaries

SUMATEC RESOURCES BERHAD (428355-D)

Level 15-2, Bangunan Faber Imperial Court

Jalan Sultan Ismail

50250 Kuala Lumpur

Kuala Lumpur

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