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ANNUAL REPORT2010

TANJUNG OFFSHORE BERHAD(662315-U)

TAN

JUN

G O

FFSHO

RE B

ERH

AD

(662315-U)

Annual R

eport 20

10

No. 8-3, Jalan Puncak Setiawangsa 4, Taman Setiawangsa, 54200 Kuala Lumpur.Tel: +60-3-4252 3888 Fax: +60-3-4252 2202

www.tanjungoffshore.com.my

2 CORPORATE INFORMATION

6 CORPORATE STRUCTURE

8 TANJUNG OFFSHORE BERHAD

10 TANJUNG OFFSHORE SERVICES SDN BHD

11 TANJUNG KAPAL SERVICES SDN BHD

12 TANJUNG MAINTENANCE SERVICES SDN BHD

13 TANJUNG NEWENERGY SERVICES SDN BHD

14 TANJUNG PETROCONSULT SDN BHD

15 TANJUNG CSI SDN BHD

16 PT TANJUNG OFFSHORE NUSANTARA

17 CENDOR MOPU PRODUCER LIMITED

18 TANJUNG CITECH UK LIMITED

CITECH ENERGY RECOVERY SYSTEMS UK LIMITED

TANJUNG CITECH SDN BHD

19 GAS GENERATORS (MALAYSIA) SDN BHD

UNIVERSAL GAS GENERATORS SDN BHD

22 CORPORATE HISTORY AND MILESTONES

24 FIVE (5) YEARS GROUP FINANCIAL HIGHLIGHTS

26 NOTICE OF ANNUAL GENERAL MEETING

28 DIRECTORS’ PROFILE

34 CHAIRMAN’S STATEMENT

40 MANAGING DIRECTOR’S REVIEW

44 AUDIT COMMITTEE REPORT

47 STATEMENT ON INTERNAL CONTROL

48 STATEMENT OF CORPORATE GOVERNANCE

53 OTHER DISCLOSURE REQUIREMENTS

55 FINANCIAL STATEMENTS

113 LIST OF PROPERTIES OWNED BY THE GROUP

115 ANALYSIS OF SHAREHOLDINGS / WARRANTHOLDINGS

FORM OF PROXY

CONTENTS

TANJUNG OFFSHORE BERHAD (662315-U)

ANNUAL REPORT 2010

2

CORPORATE INFORMATION

BOARD OF DIRECTORS

Datuk Wira Syed Ali Bin Tan Sri Syed Abbas Alhabshee (Independent Non-Executive Chairman)

Haji Omar Bin Khalid (Managing Director)

Haji Hamidon Bin Md Khayon (Executive Director)

Za’aba Bin Sedek (Executive Director)

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

Edwanee Cheah Bin Abdullah (Independent Non-Executive Director)

George William Warren Jr (Independent Non-Executive Director)

Dato’ Abdul Rahman Bin Ahmad (Non-Independent Non-Executive Director)

Syed Yasir Arafat Bin Syed Abd Kadir (Non-Independent Non-Executive Director)


ANNUAL REPORT 2010

3

AUDIT COMMITTEE

ChairmanDato’ Dr. (H) Ab Wahab Bin Haji Ibrahim(Independent Non-Executive Director)

MemberEdwanee Cheah Bin Abdullah (Independent Non-Executive Director)

George William Warren Jr(Independent Non-Executive Director)

Dato’ Abdul Rahman Bin Ahmad(Non-Independent Non-Executive Director)

COMPANY SECRETARIES

Kang Shew Meng (MAICSA 0778565)Seow Fei San (MAICSA 7009732)

312, 3rd Floor, Block CKelana Square, 17 Jalan SS7/2647301 Petaling JayaSelangor Darul Ehsan

REGISTERED OFFICE

312, 3rd Floor, Block CKelana Square, 17 Jalan SS7/2647301 Petaling JayaSelangor Darul EhsanTel : 03-7803 1126Fax : 03-7806 1387

HEAD/ MANAGEMENT OFFICE

No. 8-3, Jalan Puncak Setiawangsa 4Taman Setiawangsa54200 Kuala LumpurTel : 03-4252 3888Website : http://www.tanjungoffshore.com.my

AUDITORS / REPORTING ACCOUNTANTS

AljeffriDean (Firm No.: AF 1366)Chartered Accountant2-5-13, 5th Floor, Menara KLH(Business Centre)No. 2, Jalan Kasipillay51200 Kuala LumpurTel : 03-2381 1170

LEGAL ADVISORS

Shearn Delamore & Co7th Floor, Wisma Hamzah-Kwong HingNo. 1, Leboh Ampang50100 Kuala LumpurTel: 03-2070 0644

Nashir, Johal & Co.A-901-3, Level 9, Kelana Brem Tower 1Jalan SS7/15 (Jalan Stadium)47301 Kelana JayaSelangorTel: 03-7492 0766

Masturah & CoSuite 1B-2, First FloorWisma Dang WangiNo. 38, Jalan Dang Wangi50100 Kuala LumpurTel: 03-2694 5671

Mah – Kamariyah & Philip KohNo. 3, Persiaran HampshireOff Jalan Ampang50450 Kuala LumpurTel: 03-2163 0208

PRINCIPAL BANKERS

Malayan Banking Berhad (Company No. 3813-K)Setapak Business Centre2nd Floor, Maybank Setapak343 Jalan Pahang53000 Kuala LumpurTel : 03-4022 0784

Standard Chartered Bank Malaysia Berhad (Company No. 115793-P)Level 13, Menara Standard Chartered30 Jalan Sultan Ismail50250 Kuala LumpurTel: 03-2117 7810

AmInvestment Bank Berhad(Company No. 23742-V)Level 15, Bangunan AmBank Group55 Jalan Raja Chulan50200 Kuala LumpurTel: 03-2078 2633


PRINCIPAL BANKERS

AmIslamic Bank Berhad (Company No. 295576-U)Level 15, Menara DionJalan Sultan Ismail50250 Kuala LumpurTel: 03-2026 3939

Bank Pembangunan Malaysia Berhad(Company No. 16562-K)Bandar Wawasan, 1016Jalan Sultan IsmailPeti Surat 1078850724Kuala LumpurTel: 03-2611 3888

REGISTRAR

Tricor Investor Services Sdn. Bhd.(Company No. 118401-V)Level 17, The Gardens North TowerMid Valley City Lingkaran Syed Putra59200 Kuala LumpurTel : 03-2264 3883Fax: 03-2282 1886

STOCK EXCHANGE LISTING

Main Market of Bursa Malaysia Securities Berhad

STOCK INFORMATION

Stock Name: TGOFFS, TGOFFS-WA, TGOFFS-WB

Stock Code: 7228, 7228-WA, 7228-WB

Bloomberg Code: TOFF MK


ANNUAL REPORT 2010

4

TANJUNG OFFSHORE BERHADTANJUNG OFFSHORE SERVICES SDN BHDTANJUNG KAPAL SERVICES SDN BHDTANJUNG PETROCONSULT SDN BHDTANJUNG NEWENERGY SERVICES SDN BHDTANJUNG CITECH SDN BHDKuala Lumpur (Head Offi ce)No. 8, Jalan Puncak Setiawangsa 4,Taman Setiawangsa, 54200 Kuala Lumpur.Tel : +603 4252 3888, Fax : +603 4251 5211www.tanjungoffshore.com.my

TANJUNG CSI SDN BHDKuala Lumpur (Operation Centre)No. 9-8 Jalan 15/155B,Esplanade Commercial Park,Bukit Jalil, 57000 Kuala Lumpur.Tel : +603 8994 9330Fax : +603 8994 9959 (Sales & Engineering Division)Fax : +603 8994 9969 (Contracts & Administration Division)Email : [email protected]

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

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

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

GAS GENERATORS (M) SDN BHDLot 5189, Unit 2, Sg Ramal,Off Tanming Jaya,43300 Balakong,Selangor, Malaysia.Tel : +603 8961 3390Fax : +603 8962 3390Email : [email protected]

TANJUNG KAPAL SERVICES SDN BHDKemaman Offi ceLot 13837, Jalan Penghiburan,24000 Kemaman,Terengganu Darul Iman, Malaysia.Tel : +609 850 2744 Fax : +609 850 2744Email: [email protected]

Labuan Offi ceLot 6875 Bestari WarehouseJalan Patau Patau87000 Wilayah Persekutuan LabuanTel : +6087 410387 Fax : +6087 410424Email: [email protected]

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

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

TANJUNG NEWENERGY SERVICES SDN BHDPerak-Manjung (Operation Offi ce)No 150-150A Jalan PM/2,Pusat Bandar Sri Manjung,32040 Sri Manjung, Perak Darul Ridzuan.Tel : +605 669 8494 Fax : +605 668 1360Email : [email protected]

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

PT TANJUNG OFFSHORE NUSANTARANo. 214, Outer Ring Road, Bogor Utara,Taman Yasmin, Sektor - 6,Kota Bogor,16132 Indonesia.Tel : +62-251-754-2333Fax : +62-251-754-2555Email : [email protected]

TANJUNG CITECH UK LIMITEDCITECH ENERGY RECOVERY SYSTEMS UK LIMITEDGround Floor, Salisbury House,Saxon Way, Priory Park West,Hessle HU139PB, United Kingdom.Tel : + 44 (0) 14 8271 9746Fax : + 44 (0) 14 8262 9742Email: [email protected]



ANNUAL REPORT 2010

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5

ManjungManjung

Kuala LumpurKuala Lumpur

KemamanKemaman

P. GudangP. Gudang

MiriMiri

LabuanLabuanManjung

Kuala Lumpur

Kemaman

P. Gudang

Miri

Bintulu

Labuan

UNITEDKINGDOM

MALAYSIA

INDONESIA


ANNUAL REPORT 2010


ANNUAL REPORT 2010

6

TANJUNG OFFSHORE BERHAD

CORPORATE STRUCTURE

51%

GASTEC

100%

TC-UK

100%

TCSB

100%

TKS

100%

TCSI

100%

TOS

100%

TOMS

80%

PTTON

20%

CMPL

100%

TPC

92.86%

TNE

100%

TMS

100%

CERS-UK

TOS: Tanjung Offshore Services Sdn Bhd

TPC: Tanjung Petroconsult Sdn Bhd

TMS: Tanjung Maintenance Services Sdn Bhd

TNE: Tanjung NewEnergy Services Sdn Bhd

TKS: Tanjung Kapal Services Sdn Bhd

TOMS: Tanjung Offshore Marine Services Sdn Bhd

TCSI: Tanjung CSI Sdn Bhd

GASTEC: Gas Generators (Malaysia) Sdn Bhd

UGG: Universal Gas Generators Sdn. Bhd.

TCSB: Tanjung Citech Sdn Bhd

TC-UK: Tanjung Citech UK Limited

CERS-UK: Citech Energy Recovery Systems Ltd

PTTON: PT Tanjung Offshore Nusantara

CMPL: Cendor Mopu Producer Ltd

51%

UGG


ANNUAL REPORT 2010

A

The details of the subsidiaries and associated company of Tanjung as at 26 April 2011 are as follows: -

Principal Activity

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

Provision of engineering and professional manpower services to the oil and gas and related industries.

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

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

Ownership of vessel and provision of ship management services to the oil and gas and related industries

Ownership and leasing offshore vessels to local and international oil industry majors.

Design, manufacture and supply of all types of cathodic protection equipment, parts and related services for the onshore and offshore services.

Manufacturing and marketing of waste heat recovery units for the offshore oil and gas industry.

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

Selling and letting of gas generators.

Ownership of “CiBAS Technology patent and all Intellectual Property Rights.

Manufacture of waste heat recovery units for the oil and gas industry.

Integrated service provider to the oil and gas and related industries in Indonesia.

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

Effective Equity Interest(%)

100.00

100.00

100.00

92.86

100.00

100.00

100.00

100.00

51.00

51.00

100.00

100.00

80.00

20.00

Company

TOS

TPC

TMS

TNE

TKS

TOMS

TCSI

TCSB

GASTEC

UGG

TC-UK

CERS-UK

PTTON

CMPL

Issued And Fully Paid-Up Share Capital(RM)

7,500,000

11,200,000

4,000,000

350,000

10,000,000

2

6,000,000

RM2

RM4,791,437

RM2,000,000

£6,600,000.0

£6,700,000.0

USD150,000.0

USD1,960,000

CORPORATE STRUCTURE

Indonesia

Associated Companies

United Kingdom

Date And Place Of Incorporation/Acquisition

28.04.1983Malaysia

17.10.1991Malaysia

24.05.1996Malaysia

07.03.1997Malaysia

17.09.1994Malaysia

01.11.2006Malaysia

03.11.2006Malaysia

06.03.2009Malaysia

05.01.2009Malaysia

05.01.2009Malaysia

22.08.2008United Kingdom

22.08.2008United Kingdom

16.01.2008Indonesia

07.11.2005Malaysia


ANNUAL REPORT 2010

8



ANNUAL REPORT 2010

9

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

Tanjung’s main operating subsidiary, Tanjung Offshore Services Sdn Bhd (TOS) commenced operations in March 1990. TOS is involved in providing comprehensive services to the oil and gas industry and holds various exclusive agencies for a wide range of engineering equipment and parts in Malaysia. Tanjung commenced its marine support services in 1994 via the setting up of a Marine Vessel Department within TOS and the formation of Tanjung Kapal Services Sdn Bhd (TKS), a ship ownership and management company.

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

Thereafter, various other subsidiaries and associated companies were set up and acquired to further enhance the provision of integrated support services to the oil majors such as Tanjung NewEnergy Services Sdn Bhd (TNE), Tanjung Petroconsult Sdn Bhd (TPC), Tanjung CSI Sdn Bhd, Tanjung Citech UK Limited, Citech Energy Recovery Systems UK Limited, Tanjung Citech Sdn Bhd, PT Tanjung Offshore Nusantara, Gas Generators (Malaysia) Sdn Bhd and Cendor Mopu Producer Limited.

As of todate, the Tanjung Group is a reputable integrated oil and gas service provider within the Malaysian oil and gas industry and has been expanding its services within the domestic and international markets. Tanjung Group is actively involved in both the upstream and downstream markets within the oil and gas industry and participates in all stages of the life cycle of the Production Sharing Contracts as follows:-

EXPLORATION Surface GeochemistrySeismic activities Vessel servicesDrilling services

DEVELOPMENTHookup & commissioningDrilling servicesStructure & constructionVessel servicesEngineering Equipment

PRODUCTIONFlow of oil & gas to onshore plantsPower generationSystems application Vessel servicesEngineering equipmentMaintenance services

MAINTENANCERetrofi ttingStructural strength & corrosion assessmentVessel servicesEngineering equipment maintenance

ABANDONMENTDismantling of structuresDecommissioning of machinery & equipmentTransportation of physical parts and equipmentPollution control exercise and assessmentVessel services


9


ANNUAL REPORT 2010

10

TANJUNG OFFSHORE SERVICES SDN BHD

Tanjung Offshore Services Sdn Bhd (TOS) is a wholly owned subsidiary of

Tanjung Offshore Berhad (Tanjung). TOS commenced business in mid 1990s and

has since grown into a reputable integrated service provider for the oil and gas

industry. With years of experience in the oil & gas industry, TOS offers services

such as customised engineered equipment, offshore support vessel services,

drilling services, project management of contracts, spares and parts for equipment

and other related services. TOS is one of the main operating companies within

the Tanjung Group of companies which offers a diverse range of product and

services to the oil majors.

Having obtained various Petronas licences for various categories of products and

services, TOS is also the exclusive agent in Malaysia for various world-renowned

Original Equipment Manufacturers (OEM) such as centrifugal pumps, control

systems, switchgears, instrumentations and control valves that are widely used

in the upstream and downstream activities of the oil and gas industry.

TOS has a full package of supplies and services which entails the initial engineering

design layout, project management & planning, implementation, installation,

commissioning followed by scheduled maintenance, troubleshooting and reliable

after-sales services. TOS identifi es the requirement of each client, and assist in

the front-end engineering design (FEED). Throughout this phase, constant and

comprehensive technical discussions with our prospective clients as part of our

value added services in developing innovative ideas in the exploration, production,

maintenance and abandonment stages of fi elds’ development.

Together with our clients, we continue to closely monitor the progress of projects

undertaken to ensure various process methods are in compliance to the approved

design and specifi cations. TOS is continuously increasing its range of products

and services to meet the stringent requirements of the industry.

Platform services

Engineering equipment

Maintenance services

Drilling services Well intervention services Offshore support vessels


ANNUAL REPORT 2010

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TANJUNG KAPAL SERVICES SDN BHD

Tanjung Kapal Services Sdn Bhd (TKS) a wholly-owned subsidiary of Tanjung Offshore Berhad (Tanjung) was incorporated on 17 September 1994. Its principal activity is to provide offshore support vessels and related marine services to the oil and gas industry.

Its business activities can be categorised as follows :

1. Vessel ownership;2. Vessel management/operator;3. Vessel agency and forwarding activities;4. Vessel brokering; and5. Marine services consultancy.

In accordance with ISM requirements, TKS obtained its Document of Compliance (DOC) from the Malaysian Marine Department in 2006.

For her vessels, TKS posses Safety Management Certifi cate (SMC) granted by American Bureau of Shipping (ABS) and Bureau Veritas (BV).

In accordance with ISM requirements, TKS obtained its full Document of Compliance from the Malaysian Marine Department in 2006. At the same time, TKS also obtained the Safety Management Certifi cate (SMC) for its vessels from American Bureau of Shipping (ABS).

As of April 2011, TKS owns and operate thirteen (13) offshore support vessels which consist of eight (8) units of Anchor Handling Tug Supply vessels (AHTS), four (4) units of Straight Supply vessels (SSV) and one (1) unit of Tug Utility Vessel (TUV). Apart from that, TKS also manages three (3) units of vessels owned by Tanjung Offshore Services Sdn. Bhd.

TKS organizational structure consists of Six Departments namely :

1. Marine Operations;2. Technical Services;3. Health, Safety, Security and Environment;4. Support Services5. Vessel Agency and Forwarding; and6. Finance and Accounts.

TKS has its headquarters at Tanjung Group’s main offi ce in Kuala Lumpur. TKS also have operation branches and support offi ces at Kemaman in Terengganu as well as in Labuan.

MV Tanjung Dawai MV Tanjung Puteri 2 MV Tanjung Pinang 1

MV Tanjung Dahan 1

MV Tanjung Biru 1

MV Tanjung Pinang 1


ANNUAL REPORT 2010

12

TANJUNG MAINTENANCE SERVICES SDN BHD

Tanjung Maintenance Service Sdn Bhd (TMS) was incorporated on 24 May 1996 to provide complete maintenance services to the oil and gas operators in Malaysia and the region. As of todate, TMS is operating from fi ve (5) main workshop/maintenance centres situated in Teluk Kalung and Kemaman Supply Base (both in Terengganu), Labuan, Miri and Bintulu. TMS currently employ 220 staff of various experiences and expertise. Our maintenance centres provide a “one stop” maintenance services to various upstream oil and gas operators such as Petronas Carigali Sdn Bhd, Sarawak Shell Berhad, Exxon Mobil Exploration and Production Malaysia Inc.,Talisman Malaysia Limited, Nippon Oil Ltd and Newfi eld Sarawak Malaysia Inc. and others.

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

Our complete maintenance services at our maintenance workshops include:-

• Services, repair, overhaul & test various types of rotating equipment including diesel engines

• Services, repair, retrofi t & test all types of valves & actuators• Fabrication of parts, piping works and machining;• Metal coating or metal spray;• Specialized HP High Velocity Oxy Fuel (HVOF) and other types of coating;• Rotor dynamic balancing;• On-line greasing or lubrication;• Condition Based Monitoring (CBM) such as vibration monitoring• Wellhead maintenance & services including Data Management System• Asset Integrity Management System including Reliability, Availability &

Maintainability Study and Asset Performance Management• Schedule oil sampling (SOS) and thermography;• Service, repair, overhaul and test of turbo machinery.

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

Overhaul & machining services

Valve on-site services

Gear box services

Gas turbine overhauling Repair of pump casing Welding & cutting services


ANNUAL REPORT 2010

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TANJUNG NEWENERGY SERVICES SDN BHD

Tanjung NewEnergy Services Sdn Bhd (TNE) was established on 7 March 1997 to provide a wide range of energy related products and services which are cost effi cient solutions to the oil majors. Our power generation systems are also environmentally friendly through better use and management of energy resources.

Our main engineering products are as follows:-

• Centrifugal Pumps;

• Nitrogen Gas Generator;

• Dynamic Position System;

• CCTV Surveillance System for Oil and Gas;

• Umbilical Subsea Cables;

• Solar Power Panels; and

• Self Priming Marine Pumps.

TNE has a total commitment to engineering excellence, fi tness for purpose, design and an uncompromising approach to quality. TNE recognizes the benefi ts of an effective quality assurance programme in promoting and achieving high standards of service and minimizing costs and delay to project programmes.


ANNUAL REPORT 2010

14

TANJUNG PETROCONSULT SDN BHD

Tanjung Petroconsult Sdn Bhd (TPC), which is a subsidiary of Tanjung Offshore Services Sdn Bhd known as one of the major Malaysian Contractor, has been providing its varied expertise in engineering, procurement and construction/commissioning for offshore and onshore oil & gas processing and production systems for major local oil & gas clients including PETRONAS, SHELL, EXXONMOBIL, MURPHY OIL and etc.

TPC has since 2003 established its core competency through its proven project management methodology and professional and qualifi ed manpower. TPC methodology encompasses its effective project management system covering key areas such as Planning & Control, Construction & Commissioning, Quality Assurance and HSE requirements which is the backbone of the delivery process in meeting the expectations of its clients.

As one of the TANJUNG group of companies, it will be capable of executing the other multi functional requirements in respect of procurement, including logistic support, supply chain management and project fi nancing.

Throughout the participation in varied projects, TPC has established the value added network connections capable of market penetration in the oil & gas sectors worldwide, assuring clients of meeting the required level of supply of resources and materials & equipment. It has established the recognition of its global capabilities in providing procurement scope services that has involved suppliers networks from China, India, Australia, Europe and UK. It has nurtured its strength in project alliance for the international oil & gas sector through its global reputation on ventures with known international Companies from UK, France and Australia.

TPC approach from the onset of its projects execution has relied on the principles of Total Quality Management through rigorous induction program and subsequent close monitoring of its performances in compliances with the QA/QC requirements. As for TPC’s ongoing commitment for quality, TPC is confi dent of attaining the ISO 9001:2008 Certifi cation.

TPC core business activities are:

EPC Division• Project Management Scope• Detailed engineering for both onshore and offshore plant/facilities• Plant Design and Management system (PDMS), BOCAD and As-Built• Procurement management scope• Construction engineering (fabrication requirements) including generation of

shop and construction drawing• Fabrication / Construction• Process equipment skids design and supply• Hook-up and Commissioning (HUC)• Plant/Facilities Modifi cation/Revamp/Retrofi t

Environmental & Positional Survey Division• 3D laser scanning and transportation of scanned data into 3D basic

infrastructure• 3D As Built for onshore and offshore• Dimensional Control for onshore and offshore• Conversion of scanned data into 3D Modeling• Remodeling of facilities data into 3D CAD format into PDMS and PDS• Remodeling or modeling of existing data for CAD


ANNUAL REPORT 2010

15

TANJUNG CSI SDN BHD

Tanjung CSI Sdn Bhd (Tanjung CSI) is a wholly-owned subsidiary of Tanjung Offshore Berhad.

A spin-off from the Control & Instrumentation Department (CID) of Tanjung Offshore Services Sdn Bhd (TOS), Tanjung CSI began operations as a full company beginning 1 January 2008.

Tanjung CSI’s core activities are in providing Instrumentation, Detectors, Valves, Analyzers, Metering Systems, Process Control & Safety integrated system solutions and services, primarily to the Oil & Gas sector.

Our customers include leaders in the Malaysian Oil & Gas Industry, with Petronas being our key client as well as international players with projects in countries such as Vietnam, Indonesia, North Africa, Nigeria, Qatar, China and Turkmenistan.

In the area of industrial fi eld instrumentation and automation, Tanjung CSI represents and provide services amongst others as follows:• Process & safety automation, measurement, analytical, actuation instrumentations and wet gas

metering system;• Fire & gas integrated security systems and fi eld detectors;• Gas analyzers for moisture, H2S and CO measurements;• Severn Glocon – control valves;• Severn Unival – choke valves;• Liquid & gas metering solutions for custody transfer/allocation and pipe line detection system or

PLDS;• PQE – power quality consultancy services;• Brodie – PD meters, variable area fl ow meters and a full range of fl ow accessories;• Multiphase Flow Metering Solutions; and• Rotating machineries engineering solutions focuses on supplying high quality and innovative control

solutions for turbines and compressors.

Tanjung CSI is also a certifi ed channel partner and system integrator for ABB Control & Safety systems, such as the Industrial IT 800 xA, Freelance, PlantguardTM and TriguardTM system product lines. Complementing ABB in the area of Fire and Gas system solution with Fire & Safety, which produce industry renowned SIL2 Addressable Fire and Gas systems and fi eld devices. Our scope of capabilities include the full suite of engineering services, beginning from design, system confi guration, system integration, testing, staging, training all the way up to system commissioning at site, as well providing post implementation services.

Our range of capabilities also extends to include fi eld instrumentation, and associated services, such as calibration, repair services, valves and positioned assembly works, as well as hybrid and gas analyzer sampling system design and fabrication.

Tanjung CSI also extends its services in the area of electrical power distribution and stability by performing and providing quality control and consultation to ensure that the electrical power supply of a site is regulated appropriately.

Tanjung CSI’s goal is to be recognized as a premier industrial control, safety and instrumentation solution provider for the Malaysian Oil & Gas industry.


ANNUAL REPORT 2010

16

PT TANJUNG OFFSHORE NUSANTARA

PT Tanjung Offshore Nusantara (PTTON) was incorporated in Indonesia on 16 January 2008. Tanjung Offshore Berhad (Tanjung) holds 80% in the equity of PTTON while the remaining 20% equity is held by PT Expet Kontrol Nusantara.

PTTON commenced full operations in February 2008. Tanjung hopes to penetrate into the vast oil and gas industry in Indonesia which offer vast potential for our integrated services. Through PTTON, we hope to replicate our “one stop” solution service provider business model in Indonesia.

PTTON’s core business activities include:-

• Provision of Engineering Equipment and Services;

• Provision of Offshore Support Vessels Services.

• Provision of Drilling and Production Platform Services.

• Provision of Maintenance Services.

• Provision of Engineering and Professional Manpower services.


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CENDOR MOPU PRODUCER LIMITED

Cendor MOPU Producer Limited (CMPL) was incorporated on 7 November 2005. Tanjung Offshore Berhad (Tanjung) owns a 20% equity in CMPL while the remaining 80% equity is held by Global Process Systems Sdn Bhd. CMPL’s principal activity is to own, lease, sub-lease, maintain, operate, manage the Mobile Offshore Production Unit (MOPU) to perform production operations within Malaysian waters.

CMPL is the fi rst Malaysian company that introduced the concept and viability of MOPU in extracting oil from marginal fi elds in Malaysian waters. The MOPU is a jack up drilling rig which has been converted into an oil production platform which is designed to operate on a stand alone basis at a designated location.

Since its inception, CMPL has been managing one (1) unit of MOPU which is currently contracted to Petrofac (Malaysia PM-304) Limited. As of to date, the MOPU is operating at Cendor oilfi eld which is situated off the coast of Terengganu.

Given the successful launch of the MOPU, Tanjung will continue to explore new ideas and concepts that facilitate the extraction of oil from fi elds in Malaysia and the region.


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TANJUNG CITECH UK LIMITEDCITECH ENERGY RECOVERY SYSTEMS UK LIMITEDTANJUNG CITECH SDN BHD

Tanjung Citech UK Limited

Tanjung Citech UK Limited (TCUK) was incorporated on 22 August 2008 as a wholly owned subsidiary of Tanjung Offshore Berhad. TCUK owns all intellectual property rights and patent for the “CiBAS Technology” in the manufacturing of Waste Heat Recovery Units (WHRU) for the oil and gas industry for the next twelve (12) years.

The revolutionary CiBAS Technology design ensures maximum effi ciency in heat transfer, maximizing cost savings and minimized emissions in compliance with the Kyoto Protocol. The new WHRUs have less space requirements and are also lighter in weight.

Citech Energy Recovery Systems UK Limited

Citech Energy Recovery Systems UK Limited (CERS) was incorporated on 22 August 2008 as a subsidiary of TCUK. CERS is the operating company that manufactures the WHRUs commonly used at the offshore platforms to reclaim heat from the exhaust of gas turbines which provide the power / electricity required to operate the platforms.

CERS is currently operating from Hull, United Kingdom and we have a range of international clients in the United States, Russia and the European region.

Tanjung Citech Sdn Bhd

Tanjung Citech Sdn Bhd (TCSB) was incorporated on 6 March 2009 as a subsidiary of Tanjung Offshore Berhad. TCSB is principally in the manufacturing and marketing of waste heat recovery units for the oil and gas industry in the Asia Pacifi c region.

TCSB is based in Kuala Lumpur, Malaysia and is actively pursuing new markets within the Asia Pacifi c region with technical support from CERS in Hull, United Kingdom.


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GAS GENERATORS (M) SDN BHDUNIVERSAL GAS GENERATORS SDN BHD

On 5 January 2009, Tanjung Offshore Berhad acquired as a 51% equity interest in Gas Generators ( Malaysia) Sdn Bhd (Gastec) and its subsidiaries (Gastec Group). Gastec Group is principally involved in the manufacturing and marketing of gas generators in both the industrial and offshore oil and gas markets.

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

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

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


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OUR VISIONTo be the preferred integrated service provider

to the oil majors in Malaysia and the region.


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MISSION AND PHILOSOPHY

• Providing Quality Products & Services;

• Optimising Resources;

• New Technologies;

• Enhancing Technical Competencies; and

• Full Compliance to Health, Safety and Environmental regulations.

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


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22

CORPORATE HISTORY AND MILESTONES

IPO on Bursa Malaysia Delivery of fi rst AHTS vessel, MV Tanjung Huma

MOPU on location at Cendor fi eld The ‘208’ Jack up rig

22

1990 First commenced drilling operations, on exclusive agency agreement with the incorporation of Tanjung Offshore Services Sdn Bhd (“TOS”).

1993 TOS secured various exclusive agencies for engineering equipment such as gas turbines, gas compressors, control valves and pumps for offshore platforms.

1994 Tanjung Kapal Services Sdn Bhd (“TKS”) was incorporated to provide ship management services for leased vessels from third parties.

1996 Tanjung Maintenance Services Sdn Bhd (“TMS”) was set up to provide complete maintenance services to both offshore and onshore oil and gas operators through its operation centre in Kemaman, Terengganu.

2004 Tanjung NewEnergy Services Sdn Bhd commenced business to provide project management services to the engineering and energy industries in Manjung, Perak.

1991 Tanjung Petroconsult Sdn Bhd was incorporated to provide engineering and professional manpower services in Pasir Gudang, Johor.

27 May 2005 The entire 84 million ordinary shares of RM0.50 each in Tanjung Offshore Berhad (Tanjung) were listed on the Second Board of Bursa Malaysia Securities Berhad (“Bursa Securities”).

June 2005 TOS secured the fi rst Mobile Offshore Production Unit contract from Petrofac (Malaysia PM-304) Limited for the development of Cendor oilfi eld off the coast of Terengganu.

December 2005 TOS took delivery of an Anchor Handling Tug and Supply vessel (AHTS), MV Tanjung Huma and a Utility Vessel, MV Tanjung Manis.

January 2006 TMS secured a long term contract from Petronas Carigali Sdn Bhd (PCSB) for the provision of maintenance services for mechanical rotating equipment at all offshore platforms operated by PCSB in East Malaysia for total contract value of RM80 million for a period of fi ve (5) years.

January 2006 A private placement of new ordinary shares of RM0.50 each of up to ten percent (10%) of the issued and paid-up share capital of Tanjung was completed.

July 2006 TKS took delivery of two (2) units of straight supply vessels, MV Tanjung Pinang 1 and MV Tanjung Pinang 2.

August 2006 The issuance of new shares and ten (10) year warrants 2006/2016 (“Warrants”) arising from the Bonus Issue on the basis of one (1) new ordinary share for every two (2) existing ordinary shares held were completed and listed on the Second Board of Bursa Securities.

8 September 2006 The listing and quotation of the entire enlarged issued and paid-up share capital and outstanding Warrants of Tanjung were transferred from the Second Board to the Main Board of Bursa Securities.

March 2007 TOS secured a contract from Murphy Sarawak Oil Co. Ltd. (“Murphy Oil”) for the provision of a jack-up drilling rig, namely “THE 208” for Murphy Oil’s 2007/2010 development drilling programmes in Malaysian waters.

March 2007 TKS took delivery of another two (2) units of straight supply vessels, MV Tanjung Pinang 3 and MV Tanjung Pinang 4.

June 2007 The issuance of new shares and ten (10) year warrants 2006/2016 (“Warrants”) arising from the Bonus Issue on the basis of two (2) new ordinary share for every fi ve (5) existing ordinary shares held were completed and listed on the Main Board of Bursa Securities.


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CORPORATE HISTORY AND MILESTONES

Waste heat recovery units at Citech MV Tanjung Gaya, Tanjung’s fi rst well testing vessel

Launch of MV Tanjung Biru 1 Launch of MV Tanjung Dahan 1

23

July 2007 TOS secured a contract from Murphy Oil for the provision of a Self Elevating Relocatable Facility for the SK309/311 Phase One Gas Development Project for a duration of two (2) primary years.

August 2007 TKS took delivery of one (1) unit of AHTS, MV Tanjung Dawai

September 2007 TOS secured its fi rst well testing vessel contract from Carigali-PTTEPI Operating Company Sdn Bhd (CPOC).

October 2007 TOS secured its maiden contract from Truong San Joint Operating Company, Vietnam for the provision of a straight supply vessel, MV Tanjung Pinang 3.

January 2008 PT. Tanjung Offshore Nusantara was incorporated as a subsidiary of Tanjung Offshore Berhad to provide integrated support services to the oil and gas and related industries in Indonesia.

July 2008 TKS took delivery of Tanjung’s eighth (8th) vessel, namely MV Tanjung Puteri 1, an AHTS vessel.

August 2008 Tanjung Offshore Berhad acquired the business and assets of Citech Limited and Citech Energy Systems Limited. The acquisition was completed via the incorporation of two new subsidiaries, namely Tanjung Citech UK Limited (TCUK) and Citech Energy Recovery Systems UK Limited (CERS). TCUK holds all patents and Intellectual Property Rights associated with the revolutionary “CiBAS Technology” in the manufacturing of Waste Heat Recovery Units (WHRUs) for the oil and gas and related industries. CERS is the operating subsidiary which is involved in the manufacturing and marketing the WHRUs in Hull, United Kingdom.

September 2008 TKS took delivery of Tanjung’s ninth (9th) vessel, namely MV Tanjung Puteri 2, an AHTS vessel.

October 2008 Tanjung Offshore Berhad completed the renounceable Rights Issue with free new Warrants exercise that raised approximately RM62.0 million which will be utilised for future expansions in marine assets and offshore support vessels in the oil and gas industry.

December 2008 TKS took delivery of Tanjung’s tenth (10th) vessel, namely MV Tanjung Gaya, a Tug & Utility vessel.

Jan 2009 Tanjung Offshore Berhad acquired a 51% equity interest in Gas Generators (M) Sdn Berhad (GASTEC), which is principally involved in the manufacturing and marketing of gas generators in both the industrial and offshore oil and gas market.

February 2009 TOS took delivery of Tanjung’s eleventh (11th) vessel, MV Tanjung Gelang, a well testing vessel which has been contracted to Carigali-PTTEPI Operating Company Sdn Bhd.

November 2009 TOS took delivery of MV Tanjung Sari, an AHTS vessel which has since been contracted to Petronas Carigali Sdn Bhd on long term charter.

October 2009 TOS took delivery of MV Tanjung Biru 1, an AHTS vessel which has since been contracted to Petronas Carigali Sdn Bhd on long term charter.

December 2009 TOS took delivery of MV Tanjung Biru 2, an AHTS vessel which has since been contracted to Petronas Carigali Sdn Bhd on long term charter.

March 2010 TOS took delivery of MV Tanjung Dahan 1, an AHTS vessel which has since been contracted to Petronas Carigali Sdn Bhd on long term charter.

April 2010 TOS took delivery of MV Tanjung Dahan 2, an AHTS vessel which has since been contracted to Petronas Carigali Sdn Bhd on long term charter.

July 2010 Tanjung Offshore Berhad completed a private placement of 26.0 million new shares to E-Cap (Internal) One Sdn Bhd, a wholly owned subsidiary of Ekuinas Capital Sdn Bhd.


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FIVE (5) YEARS GROUP FINANCIAL HIGHLIGHTS

Revenue (RM’000) Net Profi t After Tax (RM’000)

650,000 -

600,000 -

550,000 -

500,000 -

450,000 -

400,000 -

350,000 -

300,000 -

250,000 -

200,000 -

150,000 -

100,000 -

0 -2006 2007 2008 2009 2010

293,254

422,871

574,273

649,656 35,000 -

30,000 -

25,000 -

20,000 -

15,000 -

10,000 -

5,000 -

0 -2006 2007 2008 2009 2010

18,280

23,229

31,448

3,616

541,807

7,588

2006 2007 2008 2009 2010 RM’000 RM’000 RM’000 RM’000 RM’000

Revenue 293,254 422,871 574,273 649,656 541,807

EBITDA 23,015 44,457 47,438 21,510 38,368

Net Profi t before tax 17,510 24,305 34,225 4,774 8,014

Net Profi t after tax 18,280 23,229 31,448 3,616 7,588

Pre - tax Margin 5.97 5.75 5.95 0.73 1.48

Net Margin 6.23 5.49 5.47 0.56 1.40

Net Earnings per share (sen) 13.12 11.49 14.63 1.25 2.55


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25

38.30%248.85m

30.14%195.77m

24.67%160.27m 6.89%

44.76m

38.08%206.35m

26.71%144.73m

8.48%45.94m

26.73%144.79m

1200

1300

1400

1500

1600

0.60

0.80

1.00

1.20

1.40

1.60

1.80

2.00

Jan-00 Jun-10 Aug-10 Nov-10 Jan-11 Mar-11

Tanjung Offshore KLCI

Revenue Breakdown for the year ended 2010 Revenue Breakdown for the year ended 2009Drilling and ProductionPlatform Services

Engineering EquipmentServices

Maintenance Services

Offshore Support VesselServices

Drilling and ProductionPlatform Services

Engineering EquipmentServices

Maintenance Services

Offshore Support VesselServices

Shareholders’ funds

2006 = 112,672,7152007 = 136,636,8812008 = 322,265,0512009 = 322,083,4522010 = 373,185,828

FIVE (5) YEARS GROUP FINANCIAL HIGHLIGHTS

Share price performance of Tanjung versus the KLCI between 20 April 2010 and 11 April 2011.

2010

2009

2008

2007

2006

0 -

50

-

10

0 -

15

0 -

20

0 -

25

0 -

30

0 -

35

0 -

40

0 -

112,672,715

136,636,881

322,265,051

322,083,452

(million)

373,185,828


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26

NOTICE IS HEREBY GIVEN THAT the Seventh Annual General Meeting of the Company will be held at Kenanga Room, Kelab Darul Ehsan, Taman Tun Abdul Razak, Jalan Kerja Air Lama, 68000 Ampang Jaya, Selangor Darul Ehsan on Thursday, 19 May 2011 at 11.00 a.m. to transact the following businesses: -

AGENDA

1. To receive the Audited Financial Statements for the fi nancial year ended 31 December 2010 and the Reports of Directors and Auditors thereon.

2. To approve the payment of Directors’ fees for the fi nancial year ended 31 December 2010. 3. To re-elect the following Directors retiring in accordance with Article 103 of the Company’s Articles of

Association:-

(i) Encik Edwanee Cheah Bin Abdullah (ii) Mr. George William Warren Jr 4. To re-elect the following Directors retiring in accordance with Article 109 of the Company’s Articles of

Association:-

(i) Dato’ Abdul Rahman Bin Ahmad (ii) Tuan Syed Yasir Arafat Bin Syed Abd Kadir

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

6. As Special Business to consider and if thought fi t, to pass the following Ordinary Resolutions, with or without modifi cations:-

ORDINARY RESOLUTION I AUTHORITY TO ISSUE SHARES “THAT pursuant to Section 132D of the Companies Act, 1965, the Directors be and are hereby authorised

to issue shares in the Company at any time until the conclusion of the next Annual General Meeting and under such terms and conditions and for such purposes as the Directors may, in their absolute discretion, deem fi t provided that the aggregate number of shares to be issued does not exceed 10 per centum of the issue share capital of the Company for the time being, subject always to the approval of all relevant regulatory bodies being obtained for such issue and allotment.”

ORDINARY RESOLUTION II PROPOSED RENEWAL OF SHARE BUY-BACK AUTHORITY

“THAT subject to the Companies Act, 1965 (“Act”), provisions of the Company’s Memorandum and Articles of Association and the requirements of Bursa Malaysia Securities Berhad (“Bursa Securities”) and any other relevant authorities, and other relevant approvals, the Directors of the Company be and are hereby authorised to purchase the Company’s ordinary shares of RM0.50 each (“Shares”) through Bursa Securities, subject to the following:-

(a) The maximum number of Shares which may be purchased by the Company shall not exceed ten per centum (10%) of the issued and paid-up ordinary share capital of the Company at any point in time;

(b) The maximum fund to be allocated by the Company for the purpose of purchasing its shares shall not exceed the retained profi ts and share premium accounts of the Company;

(c) The authority conferred by this resolution will be effective upon passing of this resolution and will continue in force until:-

(i) the conclusion of the next Annual General Meeting (“AGM”) of the Company following the AGM, at which this resolution was passed, at which time the said authority will lapse, unless by an ordinary resolution passed at that meeting, the authority is renewed, either unconditionally or subject to conditions; or

(ii) the expiration of the period within which the next AGM of the Company after that date is required to be held pursuant to Section 143(1) of the Act (but shall not extend to such extensions as may

Resolution 1

Resolution 2

Resolution 3Resolution 4

Resolution 5Resolution 6

Resolution 7

Resolution 8

Resolution 9

NOTICE OF ANNUAL GENERAL MEETING


ANNUAL REPORT 2010

27

be allowed pursuant to Section 143(2) of the Act); or (iii) revoked or varied by an ordinary resolution passed by the shareholders in a general meeting; whichever occurs fi rst;

(d) Upon completion of the purchase(s) of the Shares by the Company, the Shares shall be dealt with in the following manner:-

(i) cancel the Shares so purchased; (ii) retain the Shares so purchased as Treasury Shares; (iii) distribute the Treasury Shares as dividends to shareholders; (iv) resell the Treasury Shares on Bursa Securities in accordance with the relevant rules of Bursa

Securities; and (v) any combination of the above (i), (ii), (iii) and (iv).

THAT the Directors of the Company be and are hereby authorised to take all such steps and enter into all agreements, arrangements and guarantees with any party or parties as are necessary to implement, fi nalise and give full effect to the aforesaid purchase with full powers to assent to any conditions, modifi cations, revaluations, variations and/or amendments (if any) as may be imposed by the relevant authorities from time to time to implement or to effect the purchase of its own shares.”

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

BY ORDER OF THE BOARD

SEOW FEI SANKANG SHEW MENGSecretaries

Selangor Darul Ehsan26 April 2011

NOTES:1. A member entitled to attend and vote at the meeting shall not be entitled to appoint more than two (2) proxies to attend and vote in his/her

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

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

3. Where a member is an authorised nominee as defi ned under the Securities Industry (Central Depositories) Act, 1991, it may appoint at least one (1) proxy in respect of each Securities Account it holds with ordinary shares of the Company standing to the credit of the said Securities Account.

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

5. The instrument appointing a proxy and the power of attorney or other authority (if any), under which it is signed or a notarially certifi ed copy thereof, must be deposited at the Registered Offi ce of the Company at 312, 3rd Floor, Block C, Kelana Square, 17 Jalan SS7/26, 47301 Petaling Jaya, Selangor Darul Ehsan not less than forty eight hours (48) hours before the time appointed for holding the Seventh Annual General Meeting or any adjournment thereof.

Explanatory notes on Special Business:

Ordinary Resolution 8 - Authority to Issue Shares

The proposed Resolution 8, if passed, will give the Directors of the Company, from the date of the above Annual General Meeting, authority to issue and allot shares from the unissued capital of the Company for such purposes as the Directors may deem fi t and in the interest of the Company. The authority, unless revoked or varied by the Company in general meeting, will expire at the conclusion of the next Annual General Meeting of the Company.

As at the date of this notice, no new shares in the Company were issued pursuant to the authority granted to the Directors at the Sixth Annual General Meeting held on 31 May 2010 and which will lapse at the conclusion of the Seventh Annual General Meeting.

The authority will provide fl exibility to the Company for any possible fund raising activities, including but not limited to further placing of shares for purpose of funding future investment project(s), working capital and/or acquisitions.

Ordinary Resolution 9 – Proposed Renewal of Share Buy-Back Authority

The proposed Ordinary Resolution 9, if passed, will empower the Directors of the Company to continue to purchase the Company’s shares up to ten percent (10%) of the issued and paid-up share capital of the Company (“Proposed Share Buy-Back”) by utilizing the funds allocated which shall not exceed the total retained earnings and share premium account of the Company. Further information on the Proposed Renewal of the Share Buy-Back Authority is set out in the Statement to Shareholders dated 26 April 2011 which is despatched together with Company’s Annual Report 2010.

NOTICE OF ANNUAL GENERAL MEETING


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28

DIRECTORS’ PROFILE

A Malaysian, aged 49 is the Independent Non-Executive Chairman of Tanjung Offshore Berhad (“Tanjung”). He was appointed to

the Board of Directors of Tanjung on 9 March 2005. He was awarded a Professional Diploma in Leadership and Management by

the New Zealand Institute of Management, New Zealand in 2003.

He ventured into business in the early 1980s and held directorships in several private and public corporations involved in a diverse

range of businesses. He also holds directorships in C.I. Holdings Berhad, UZMA Berhad and Asia Media Group Bhd. He is also

the Chairman of Composites Technology Research Malaysia Sdn. Bhd., a company which is controlled by the Ministry of Finance.

He is also the Chairman of Yayasan Pendidikan Cheras, Kuala Lumpur.

Datuk Wira Syed Ali also serves as the Chairman of the Nomination Committee (“NC”) and Remuneration Committee (“RC”) of

Tanjung.

Datuk Wira Syed Ali Bin Tan Sri Syed Abbas Alhabshee (“Datuk Wira Syed Ali”)Independent Non-Executive Chairman


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29


A Malaysian, aged 56 is the Managing Director of Tanjung and he is one of the co-founders of Tanjung since its inception in 1990. He obtained a Diploma in Accountancy from Institut Teknologi Mara (now known as Universiti Teknologi Mara) and thereafter joined Arthur Young & Co. as an Auditor in 1975. He obtained a Bachelor of Business Administration (Finance) from Eastern Michigan University, USA in 1984. He later moved on to Kompleks Kewangan (M) Berhad where he was a Finance Manager until 1990.

Through the support of his associates in the oil and gas industry and his knowledge of the maritime industry, Haji Omar co-founded the Tanjung Group in early 1990. It also marks his successful venture into the Malaysian oil and gas support service industry. Through his experience and his commitment in the operations of the Group, he is able to maintain a close rapport with the suppliers/principals as well as having a sound understanding of the requirements and regulations set by the relevant authorities and PETRONAS.

Under his stewardship in the early 1990s, the Tanjung Group together with Odjfell Drilling & Consulting Co. secured the Group’s maiden drilling contract for exploratory and development of oilfi elds in East Malaysia. In mid 1990s, he assisted the Tanjung Group in procuring various exclusive agencies for a range of engineering equipment from principals worldwide which translated into larger contracts from the oil and gas majors. Since then, the Tanjung Group has grown organically from an agency based drilling company into an integrated service provider within the industry, focusing on the provision of engineering equipment, offshore support vessels, drilling and platform services and maintenance services in the region and internationally. Through his active and prudent leadership, the Tanjung Group has won numerous awards and accreditations for various safety and growth achievements.

He led the Tanjung Group for an Initial Public Offering (IPO) which shares were successfully listed on Bursa Malaysia Securities Berhad on 27 May 2005. In 2009, he was also awarded the prestigious “Masterclass SME CEO of the Year 2009” of Malaysia Business Leadership Awards by the Kuala Lumpur Malays Chamber of Commerce.

Haji Omar is a trustee member of the Yayasan Pendidikan Cheras, Kuala Lumpur. He also serves as the Chairman of the Employees’ Share Option Scheme (“ESOS”) Committee and a member of the RC of Tanjung.

Haji Omar Bin Khalid (“Haji Omar”)Managing Director


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Haji Hamidon Bin Md Khayon (“Haji Hamidon”), a Malaysian, aged 41, is the Business Development Director of Tanjung and has been with Tanjung Group since 1995. He was appointed as Executive Director of Tanjung on 9 March 2005. He also sits on the Board of Directors of various subsidiaries within the Tanjung Group to oversee various project proposals and execution of contracts within the Group. He maintains a close rapport with the oil majors to propose new ideas and projects that meet the requirements and regulations of the industry.

Haji Hamidon started his career as a Drilling Fluid Engineer in 1993 with BW Promud Sdn. Bhd., for area of operations predominantly in Malaysia. Later he joined Antah Baroid Sdn. Bhd. as a Drilling Fluids Specialist Sales and Services in 1994 for area operations within ASEAN countries. He joined Tanjung in April 1995 as a Project Sales Engineer to oversee marketing strategies and various projects and was subsequently promoted to lead the Business Development Section in 1997. He is a graduate from Colorado School of Mines, USA and holds a Bachelor Degree of Engineering in Petroleum Engineering. He is currently a member of Malaysia Oil and Gas Engineering Consultants. Haji Hamidon also serves as a member of the ESOS Committee of Tanjung.

Za’aba Bin Sedek, a Malaysian, aged 47, is the Director of Operations of Tanjung. He was appointed as Executive Director of Tanjung on 1 October 2008. He also sits on the Board of Directors of various subsidiaries within the Tanjung Group. In 2009, he was appointed as the Chief Executive Offi cer of our subsidiary in the United Kingdom, Citech Energy Recovery Systems UK Limited (CERS UK). He is involved in the overall strategic planning of the direction of CERS UK as well as handling the day to day technical and commercial matters of various contracts within CERS UK.

He joined Tanjung in 1990 and assumed various positions within the Tanjung Group throughout the years. He is also an executive member of the Management Committee and the Chairman of the bi-annual Oil and Gas Asia exhibition team for Tanjung Group. He is also the management representative for Occupational, Health & Safety Assessment Series (OHSAS) and ISO 9001:2008 for Quality Management Systems implemented within the Tanjung Group.

Dato’ Dr. (H) Ab Wahab Bin Haji Ibrahim (“Dato’ Ab Wahab”), a Malaysian, aged 59 is an Independent Non-Executive Director and the Chairman of the Audit Committee of Tanjung. He was appointed to the Board of Directors of Tanjung on 9 March 2005. He is a Chartered Accountant and also a member of the Malaysian Institute of Accountants. He holds a Diploma and Advanced Diploma in Accounting from University Technology Mara and his experience spans over 27 years in the area of fi nance and accounting.

He began his career in the Corporate Finance Division at PETRONAS in 1978 and later assumed the role of Finance Manager for PETRONAS Gas Berhad (“PGB”), a subsidiary of PETRONAS. He was also appointed as Joint Company Secretary and was a member of the Management Committee for PGB. Following the successful implementation of the listing of PETRONAS Gas Berhad, he was further reassigned as Head of the Finance and IT Division of Oil, Gas and Petrochemical Technical Services Sdn. Bhd., another subsidiary of PETRONAS in 1996, a position he held until 2004.

Dato’ Ab Wahab was awarded a Honorary Doctorate from Irish International University, Ireland in 2007. He is also an Independent-Non Executive Director of Alam Maritim Resources Berhad and also serves as the Chairman of its Audit Committee. Dato’ Ab Wahab also serves as a member of the NC and RC of Tanjung.


ANNUAL REPORT 2010

31


Dato’ Abdul Rahman Bin Ahmad (“Dato’ Abdul Rahman”), a Malaysian, aged 41, is the Non-Independent Non-Executive Director of Tanjung. He was appointed to the Board of Directors of Tanjung on 29 July 2010. He holds a Masters of Arts in Economics from Cambridge University in the United Kingdom and is a member of the Institute of Chartered Accountants, England & Wales.

He was previously employed at Arthur Andersen, London as an Assistant Manager from 1992 to 1996, and later served as Special Assistant to the Executive Chairman of Trenergy (M) Berhad / Turnaround Managers Inc. (M) Sdn. Bhd. from 1996 until 1999. He subsequently joined Danaharta, the national asset management company, as Unit Head in 1999 and a year later, went on to become an Executive Director of SSR Associates Sdn. Bhd. until August 2001.

Dato’ Abdul Rahman also held the posts of Chief Executive Offi cer of Malaysian Resources Corporation Berhad, a leading Malaysian conglomerate involved in property, construction and infrastructure, as well as Executive Director of Sistem Televisyen Malaysia Berhad between the years 2001 and 2003. Soon after that, he assumed the position of Group Managing Director and Chief Executive Offi cer of Media Prima Berhad, the leading integrated media investment group in Malaysia, from 2003 until August 2009.

Dato’ Abdul Rahman is also currently a Director and Chief Executive Offi cer of Ekuiti Nasional Berhad (since 1 September 2009) and an independent Director of Malaysian Resources Corporation Berhad. Dato’ Abdul Rahman is a member of the Audit Committee (“AC”) and Nomination Committee of Tanjung.

Tuan Syed Yasir Arafat Bin Syed Abd Kadir (“Tuan Syed Yasir Arafat”), a Malaysian, aged 39, is the Non-Independent Non-Executive Director of Tanjung. He was appointed to the Board of Directors of Tanjung on 29 July 2010. He graduated from the University of Essex, United Kingdom with a Bachelor of Arts (Hons) degree in Accounting and Financial Management. Tuan Syed Yasir Arafat is also an Executive Committee (“EXCO”) member of Tanjung.

He was previously the Country Manager (ING Wholesale Banking) at ING Corporate Advisory (Malaysia) Sdn. Bhd. from 2001 until October 2009, specialising in areas of equity and equity-linked fund raising, debt fund raising and fi nancial advisory for some of Malaysia’s leading companies in banking, plantations, automotive, telecommunications and property, amongst others.

Prior to that, Tuan Syed Yasir Arafat was attached to United Overseas Bank (Malaysia) Berhad as Deputy Manager in the Investment Banking Division between years 2000 and 2001, following a year at Danaharta, the national asset management company between years 1998 and 1999. He had also gained vast experience in project fi nance, debt syndications and debt origination through his earlier appointments as an Executive at Commerce International Merchant Bankers Berhad from 1996 to 1998 and at Aseambankers Malaysia Berhad from 1994 to 1996.

Tuan Syed Yasir Arafat is also currently Managing Partner, Investment, at Ekuiti Nasional Berhad (since 1 November 2009) and a non-independent non-executive Director of Konsortium Logistik Berhad.


ANNUAL REPORT 2010

32


Attendance of Board of Directors Meeting

The Directors’ attendance of Board of Directors Meeting can be found in the Statement of Corporate Governance on page 50 of the Annual Report.

Family relationship with any director and/or major shareholderNone of the Directors has any family relationship with any director and/or major shareholder of the Company.

Confl ict of interestNone of the Directors has any confl ict of interest with the Company.

Conviction of OffenceNone of the Directors has been convicted of any offence within the past ten (10) years other than traffi c offences.

Edwanee Cheah Bin Abdullah (“Encik Edwanee”), a Malaysian, aged 60 is the Independent Non-Executive Director of Tanjung. He was appointed to the Board of Directors of Tanjung on 9 March 2005. He holds a Masters in Business and Administration (Technology) from Deakin University and is a Member of the Association of Professional Engineers, Scientists and Managers, Australia. His strong technical background is complemented by a wide and diverse business experience. He has over 30 years of international experience in the energy sector and has served various business units of the Royal Dutch Shell Group (Shell Group) in Europe, USA, Africa, Middle East and Asia and has a good standing on the international projects community. Through his exposure and knowledge in energy sector he is now a professional in managing large oil and gas development projects and has successfully delivered several projects of value over USD1 billion. His area of expertise is in strategic planning, commercial deal making, and in leading large groups of technical and commercial resources. As of todate, he is still an active oil and gas consultant for various multinational corporations and Malaysian contractors. Encik Edwanee also serves as a member of the AC, NC and RC of Tanjung.

George William Warren Jr. (“George Warren”), an American, aged 41, was appointed as Independent Non-Executive Director of Tanjung on 28 August 2007. He holds a Bachelor of Science Degree in Accounting (Graduating with Beta Alpha Psi Accounting Honours) from the Louisiana State University, United States. In 1993, after graduation, he joined Wegmann Dazet & Co., a professional corporation of certifi ed public accountants in New Orleans, Louisiana, where he was both a Senior Auditor and a Forensic Auditor. In 1997, he was appointed as the Managing Director of BWB Controls, Inc., Louisiana, a worldwide manufacturer of pneumatic, hydraulic and electric surface safety equipment engineered specifi cally for the oil and gas industry. In 2006, he became a Director in Mezco Fabrication, L.L.C., at Carencro, Los Angeles, a manufacturer of precision sheet metal parts utilising laser cutting technology for the oil and gas industry, a position he holds until present day. Mr. George Warren also serves as a member of the AC of Tanjung.


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DIRECTORS’ PROFILEContinuous Growth

As long as we continuously As long as we continuously

innovate and strive to meet theinnovate and strive to meet the

oil majors’ demands and requirements, oil majors’ demands and requirements,

we believe that we can capitalise we believe that we can capitalise

on many opportunities on many opportunities

within the industry within the industry

for continuous growth for continuous growth

in the years to comein the years to come


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34

CHAIRMAN’S STATEMENT

DATUK WIRA SYED ALI BINTAN SRI SYED ABBAS ALHABSHEEIndependent Non-Executive Chairman


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35

Financial Performance

For the FYE 2010, Tanjung registered a total revenue of RM541.81 million and profi t after taxation of RM7.59 million. Overall revenue experienced a decrease of 16.60% as compared to FYE 2009 which registered total revenue of RM649.66 million. Notwithstanding the reduction in overall revenue, total profi t for the Group increased by approximately 110% to RM7.59 million as compared to RM3.62 million in FYE 2009.

The decrease in revenue is mainly attributed by a general slowdown within the oil and gas industry as oil majors continue to reassess their exploration, development, production and maintenance operations on the back of volatile oil prices. During this challenging period, we have remained resilient and continue to capitalise on niche markets through our range of products and services within Malaysia and regional markets.

As at 31 December 2010, the Group’s shareholders funds stood at RM373.18 million as compared to RM322.08 million as at FYE 2009.

Revenue (RM’000) Profi t After Tax (RM’000)


2006 2007 2008 2009 2010

293,254

422,871

574,273

649,656

2006 2007 2008 2009 2010

18,280

23,229

31,448

3,616

541,807

7,588

Dear Shareholders,On behalf of the Board of Directors of Tanjung Offshore Berhad (“Board”) (“Tanjung” or “Company”) and its subsidiaries (“Tanjung Group” or “Group”), I hereby present to our valued shareholders, Tanjung’s annual report and the audited fi nancial statements of Tanjung Group for the fi nancial year ended (FYE) 2010.


ANNUAL REPORT 2010

36


Outlook for the Oil and Gas Industry

In 2010, the Malaysian government has also announced various plans to boost the oil and gas sector under its Economic Transformation Programme with investments up to RM75 billion over the next 15 to 20 years. These investments are expected to spur various activities within the industry and we expect the oil majors to actively enhance their exploration, development, production and maintenance operations in the near future. We also expect our national oil company, PETRONAS to boost domestic oil recovery to 40% from the current 26% over the next fi ve years under its enhanced oil recovery programme.

Against this backdrop, we will continue to innovate by adopting new ideas and approaches in delivering our products and services within the industry. Through our core business divisions, we will actively penetrate new niche markets through the introduction of new technologies, active regional networking and effective execution of strategic plans. We remain confi dent and optimistic in the long term fundamentals of Tanjung within the industry.

Corporate Social Responsibility

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

• Awareness of Health, Safety and Environmental (HSE) performances;• Development of Staff; and• Community Services.

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

Throughout the year, we have organised various in-house training as well as technical courses to promote staff development. We believe in growing our own talent and continuously upgrading our talent pool of workforce. Our aim is to attract, train and retain the right people so that they have the ability and drive to deliver competitive advantage and superior competence.


ANNUAL REPORT 2010

37


Corporate Social Responsibility (cont’d)

The Tanjung Group has also supported various community services and activities at “Yayasan Pendidikan Cheras” which was established to support the education needs of children from low income groups in Kuala Lumpur. We have provided various scholarships, incentives and support programmes to reward and support able students from the lower income group to further their studies at higher institutions of learning. We have also sponsored practical training courses as part of the overall graduate programmes at local universities such as Universiti Teknologi Mara, International Islamic University Malaysia, Universiti Kuala Lumpur, Universiti Malaya, Universiti Utara Malaysia and Universiti Tenaga Nasional. These practical training programmes involved hands-on training at our maintenance workshops and formal seminars and discussions at our offi ces for various engineering disciplines within the in oil and gas industry.

Through these practical training programmes, we are also able to offer employment to local graduates who have passed our formal selection criteria. We believe in supporting these programmes which will provide mutual benefi ts to the career developmentof local graduates and Tanjung Group on a long term basis.

Dividends

No dividend were declared for the fi nancial year ended 31 December 2010 as the Board of Directors has decided to retain the profi ts earned during the year under review.

Corporate Governance

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

Investor Relations

During the year, we have organised various site visits to our workshops, new vessel launches and analysts briefi ngs as well as participating in investor road shows. This is to establish proactive and timely communication linkages with the investment community such as institutional investors, fund managers, analysts and media on our fi nancial performance and business operations. Our Company’s website is also updated on a regular basis to refl ect the latest developments and improving public awareness of the Group at the same time.

Appreciation

On 29 July 2010, we welcomed Dato’ Abdul Rahman Bin Ahmad and Tuan Syed Yasir Arafat Bin Syed Abd Kadir in joining our Board as representatives from Ekuiti Nasional Berhad (EKUINAS), which have made a strategic investment in Tanjung. Given their vast experience in previous appointments, I believe they can contribute positively to the Group as we continue to create value for all our stakeholders in the near future.

On behalf of the Board, I wish to extend my gratitude and appreciation to our management and staff for their continuous commitment and dedication in reinforcing our position as one of the leading oil and gas service providers in Malaysia.

We would also like to take this opportunity to thank our valued institutional and individual shareholders for your confi dence and believe in the long term prospects of the Group, the oil majors, in particular PETRONAS, for their continuous support over the years, our business associates and principals for the successful collaboration in various business operations, our bankers and government authorities for their vital role in our strategic planning and execution of projects.

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

.....................................................................DATUK WIRA SYED ALI BIN TAN SRI SYED ABBAS ALHABSHEEIndependent Non-Executive Chairman18 April 2011


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ANNUAL REPORT 2010

39

HEALTH,SAFETYENVIRONMENTPOLICY

&


ANNUAL REPORT 2010

40

MANAGING DIRECTOR’S REVIEW

HAJI OMAR BIN KHALIDManaging Director


ANNUAL REPORT 2010

41


On behalf of the Board of Directors (“Board”) of Tanjung Offshore Berhad (“Tanjung” or “Company”) and its subsidiaries (“Tanjung Group” or “Group”), I am pleased to inform that the Group’s performance has remained resilient in another challenging fi nancial year. The price volatility of oil has created uncertainties in the industry which resulted in oil majors reassessing their investments and spending in exploration, development and production activities. Despite this, we continue to maintain our profi tability during the year under review.

During the FYE 2010, the Group registered a total revenue of RM541.81 million refl ecting a decrease of 16.60% as compared to that recorded in the previous FYE 2009 of RM649.66 million. Total profi t after taxation for the year increased by 110% to RM7.59 million as compared to RM3.62 million in FYE 2009. Total revenue was lower for the Group due to a reduction in revenue from engineering equipment division due to weaker demand within the industry. Notwithstanding, Tanjung has registered an increase in net profi t due to a turnaround in the business operations namely our subsidiary in the United Kingdom, Citech Energy Recovery Systems UK Limited (“Citech”) and overall cost monitoring measures implemented during the year.

Engineering Equipment Services

In FYE 2010, the engineering equipment division registered a total revenue of RM206.35 million which represented a decrease of 17% as compared to RM248.85 million registered in FYE 2009. This is mainly due to a weaker demand for engineering equipment within the industry during the year under review.

With continuous improvements from operations and cost reductions measures implemented in Citech Energy Recovery Systems UK Ltd (CERS) as well as others within the Group, we will register a higher revenue and profi tability growth for this division for FYE 2011 given the better economic outlook and prospects within the industry.

Engineering equipment contracts secured during the year comprises mainly of glycol regeneration packages, waste heat recovery packages, produced water system packages, chemical injection, switchgear packages and nitrogen generators. Most of these contracts are secured from various oil majors operating in Malaysian waters for development, production, maintenance and rejuvenation of the oil and gas fi elds.

MV Tanjung Gelang - well testing vessel in operation.


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Offshore Support Vessels Services

As of todate, the Group is operating sixteen (16) units of wholly-owned offshore support vessels which are chartered out to oil majors operating in Malaysian waters. Most of these vessels are on long term contracts and we are confi dent that the demand for these vessels will remain robust on the back of higher oil prices and continuous development and production of new and existing development programmes for various oil and gas Production Sharing Contracts (PSCs), spearheaded by PETRONAS together with other oil majors operating in this region.

In FYE 2010, the offshore support vessels services division registered a total revenue of RM144.73 million which represented a decrease of 9.69% as compared to RM160.27 million recorded in FYE 2009.

Maintenance services

We are the one stop quality maintenance services provider for both the upstream and downstream sector of the oil and gas industry through fi ve (5) main workshops of which two (2) are located in Kemaman, Terengganu, one (1) each in Miri, Bintulu and Labuan. We have trained our human capital and invested in the latest technologies to enable us to move towards niche and knowledge based maintenance technologies. These services include servicing and repair, overhaul and test for rotating equipment, fabrication of parts and machining, metal coating, rotor dynamic balancing, condition based monitoring and testing facilities for various types of engineering equipment. For the maintenance division, the Group registered an increase in revenue of RM45.94 million in FYE 2010 as compared to RM44.76 million in FYE 2009. We aim to further improve our market share in this sector of the industry, networking with prospective and existing clients in both Peninsular and East Malaysia.

Drilling and Production Platform Services

We represent our principal, Hercules Inc, on an exclusive agency agreement to provide the charter of a jack-up drilling rig, “THE 208”, to Murphy Oil on a long term contract since FYE 2008.

We are also jointly operate the Mobile Offshore Production Unit (“MOPU”) at the Cendor oilfi eld for Petrofac (Malaysia PM-304) Limited on long term contract since FYE 2006. The contract has been extended to FYE 2013.

In FYE 2010, drilling and production platform services generated RM144.79 million in revenue and it represented a decrease of 26% as compared to RM195.77 million in FYE 2008. The reduction in revenue is mainly due to maintenance and general upkeep of the rig during the year.


ANNUAL REPORT 2010

43


Our People

As of todate, the Group employs a total of 600 employees comprising senior management, professional engineers and marine offi cers at all levels of responsibilities within the Group. We have also invested substantially in human capital, which is also one of the important assets of the Group. In line with our expansions and growth programme, we have also recruited and provided various training programmes at all levels within the Group. During the year, we have sent various engineering teams for comprehensive technical training at our principals’ centres, both local and overseas for in-depth exposures on the latest technological in the oil and gas industry.

We have sponsored various batches of students at Akademi Laut Malaysia (ALAM) where successful marine students are employed with Tanjung Group. Through these sponsorship programmes, we are able to attract local marine talents and providing a qualifi ed workforce for Tanjung Group’s future marine expansions.

Equipped with the latest technical knowledge and hands on experiences, our engineers of multiple disciplines would be able to offer quality services to the oil majors, in the shortest time frame especially for urgent on-site projects or during unforeseen emergencies.

Outlook for the Future

We are still upbeat on the prospects of both the upstream and downstream sectors of the oil and gas industry in Malaysia. In recent months, we have experienced an uptrend in oil prices amidst a global economic recovery and political tensions in the Middle East which is expected to spur capital spending and investments by the oil majors. We remain positive on the long term fundamentals and opportunities within the industry through our capital investments in the offshore support vessels, equipment facilities and human capital.

In 2010, the Malaysian government has embarked on the Economic Transformation Programme (ETP) to help Malaysia achieve a developed nation status. One of the key areas identifi ed under the ETP is the development of the oil and gas sector with estimated investments of up to RM75 billion over the next 15 to 20 years. These investments are expected to spur various activities within the domestic oil and gas industry. Based on these developments, we believe that there are various niche opportunities for the Group to participate to meet the requirements of the oil majors.

During the year, we have also completed a ten percent (10%) private placement of shares to Ekuiti Nasional Berhad (EKUINAS) and we have received invaluable assistance and support from EKUINAS in strengthening the fi nancial management and business operations of the Group. We look forward to continue working as a team in enhancing returns to the Group and all stakeholders in the near future.

Overall, we foresee another fruitful year ahead for the Group on the back of foreseeable growth in demand for our integrated services and streamlining of business operations within the Group. We have to continue to position ourselves and remain resilient in the midst of a fast changing business environment. We will remain focused in the oil and gas industry and maintain our relevance in becoming the preferred integrated oil and gas service provider in Malaysia and the region.

.....................................................................HAJI OMAR BIN KHALIDManaging Director18 April 2011


ANNUAL REPORT 2010

44

AUDIT COMMITTEE REPORT

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

COMPOSITION OF THE AUDIT COMMITTEE

The members of the Audit Committee and their respective designations who have served during the fi nancial year ended 31 December 2010 are as follows:-

Member Designation

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

Datuk Wira Syed Ali Bin Tan Sri Syed Abbas Alhabshee* Member (Independent Non-Executive Chairman)

Dato’ Abdul Rahman Bin Ahmad** Member (Non-Independent Non-Executive Director)

Encik Edwanee Cheah Bin Abdullah Member (Independent Non-Executive Director)

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

* Resigned as member of the Audit Committee on 24 November 2010** Appointed as member of the Audit Committee on 24 November 2010

TERMS OF REFERENCE

• Membership

The Committee shall be appointed by the Directors from among them and shall consist of not less than three (3) in numbers of whom a majority shall not be:-

(a) Executive Directors of the Company or any relevant corporation. (b) Spouse, parent, brother, sister, son or adopted son, daughter or adopted daughter of an executive director of the

Company or of any related corporation; or (c) Spouse of brother, sister, son or adopted son, daughter or adopted daughter of an executive director or of any related

corporation, or (d) Any person having a relationship which, in the opinion of the Board of Directors, would interfere with the exercise of the

independent judgement in carrying out the functions of the committee.

The members of the Committee shall elect a Chairman from among their number who is not an executive director or employee of the Company or any related corporation. If a member of the Committee resigns, dies or for any other reason ceases to be a member with the result that the number of members is reduced to two (2), the Board of Directors shall within three (3) months of that event, appoint such number of new members as may be required to make up the minimum number of three (3) members.

• Authority The Committee is authorised by the Board to investigate any activity within its terms of reference. It is authorised to seek

any information it requires from any employees and all employees are directed to co-operate with any request made by the Committee. The Committee shall also have the authority to consult independent experts where they consider it necessary to carry out their duties.

• Meetings

The Committee shall meet at least four (4) times a year and such meetings as the Chairman shall decide in order to fulfi l its duties. The Secretary of the Committee shall be responsible, in conjunction with the Chairman, for drawing up the agenda and circulating to the Committee prior to each meeting. The Secretary will also be responsible for keeping the minutes of the meetings of the Committee, and circulating them to committee members and to other members of the Board of Directors.

• Quorum

The quorum for an Audit Committee meeting shall consist of two (2) members and a majority of the members present shall be independent directors.


ANNUAL REPORT 2010

45


• Functions

The following are the main functions of the Audit Committee collectively:-

1. Review the audit plan with the external auditors; 2. Review with the external auditors his evaluation of the system of internal controls; 3. Review the audit report with the external auditors; 4. Review the assistance given by the company’s offi cer to the auditors; 5. Review the scope and result of the internal procedures; 6. Review the balance sheet and profi t and loss account; 7. Review any related party transactions that may arise within the Company or the Group; 8. To consider the nomination of a person or person as auditors; and 9. To perform any other work that is required or empowered to do so by statutory legislation or guidelines as

prepared by the relevant Government authorities.

During the fi nancial year ended 31 December 2010, the Audit Committee held a total of fi ve (5) meetings, the details of attendance of which are as follows:-

Member No. of meetings attended

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

Datuk Wira Syed Ali Bin Tan Sri Syed Abbas Alhabshee* 4 of 5

Dato’ Abdul Rahman Bin Ahmad** -

Encik Edwanee Cheah Bin Abdullah 5 of 5

Mr. George William Warren Jr 2 of 5

* Resigned as member of the Audit Committee on 24 November 2010** Appointed as member of the Audit Committee on 24 November 2010

SUMMARY OF ACTIVITIES OF THE AUDIT COMMITTEE

During the fi nancial year ended 31 December 2010, the activities of the Audit Committee included the following:-

• Reviewing of the external auditors’ scope of work and their audit plan.• Reviewing with the external auditors on the results of their audit, the audit report and internal control

recommendations in respect of improvements in internal control procedures noted in the course of their audit.• Reviewing and approving the internal audit and controls plan presented by the external auditors.• Reviewing the annual report and the audited fi nancial statements of the Company and the Group prior to

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

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

• Reviewing of the quarterly unaudited fi nancial statements and its explanatory notes thereon and recommending to the Board for Directors’ approval.

• Reviewing of the Company’s status of compliance with the Malaysian Code on Corporate Governance for the purpose of issuing of a Corporate Governance Statement pursuant to the requirement of paragraph 15.26 of the Listing Requirements of Bursa Securities.

• Reviewed the Group’s key operational and business risks area and the policies in place to address and minimize such risks.

• Meeting with the External Auditors without the presence of the Management and Executive Directors.

ALLOCATION OF EMPLOYEES’ SHARE OPTION SCHEME OPTIONS

The Audit Committee had reviewed and verifi ed that the allocation of options during the year under the Company’s ESOS is in compliance with the allocation criteria determined by the ESOS Committee and in accordance with the Bye-Laws of the ESOS.


ANNUAL REPORT 2010

46

INTERNAL AUDIT FUNCTION

The Audit Committee is aware of the importance of independent and adequately resourced internal audit function for the effectiveness of internal control system. The principal responsibilities of the internal audit function are as follows:-

• Evaluate the effectiveness of the internal control systems so as to provide reasonable assurance that such systems continue to operate in compliance with the existing control and risk assurance systems effectively.

• Review, appraise and to ensure compliance with the Group’s established policies and procedures as well as the relevant statutory requirements.

• Highlight major weakness in control procedures and make recommendation for improvements to the Audit Committee.

The internal audit function of the Group adopts a risk based approach to monitor and implement an effective internal control system for the Group. The monitoring process forms the basis for continuous improvement to the risk management process of the Group in meeting its overall objectives.

The Group had outsourced its internal audit function to a professional services fi rm, which was tasked with the aim of assisting the Committee to discharge its duties and responsibilities. The cost incurred in relation to the internal audit function during the fi nancial year was RM35,200.00.

In line with best practices of the listing requirements of Bursa Malaysia, the Group has set up an in-house internal audit department to review and evaluate the internal control procedures of the Group for the fi nancial year ending 2011 onwards.



ANNUAL REPORT 2010

47

STATEMENT ON INTERNAL CONTROL

Introduction

Paragraph 15.27(b) of Listing Requirements of Bursa Securities Malaysia Berhad (“Bursa Securities”) requires the Board of Directors of public listed companies to include a statement in the Annual Report on the state of internal controls in the Company as a Group. The Board is pleased to provide the following statement on internal control of the Group for the fi nancial year under review prepared in accordance with the “Statement on Internal Control - Guidance for Directors of Public Listed Companies” issued by the Institute of Internal Auditors Malaysia and adopted by Bursa Securities.

Board Responsibilities

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

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

The Group continues to take measures of the adequacy and integrity of the system of internal control. The ongoing process of identifi cation, evaluation and management of signifi cant risk has been in place during the fi nancial year under review. This process is reviewed on a regular basis by the Audit Committee and the Board of Directors. The key features of the internal control system are outlined below.

Systems of Internal Control

The Group maintains a system of internal control that serves to safeguard its assets; identify and manage risk; ensure compliance with statutory and regulatory requirements; and to ensure operational results are closely monitored and substantial variances are promptly explained.

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

• An organisational structure with clearly defi ned lines of responsibility and relevant authority has been set up for the Group. • The Group’s management with the assistance of a centralised human resource function sets the policies for recruitment,

training and appraisal of the employees within the Group. • Policies and procedures which sets out the compliance standards for daily operations for the respective business units of

the Group; • The Board of Directors evaluates risks involved and seeks appropriate experts’ advice in considering business proposals and

operational issues so as to make an effective decision in the best interest of the Group. • The Group’s management sets clearly defi ned authorisation procedures which are clearly documented and implemented so

as to exercise strict control on compliance therewith by all levels of employees. • The Group’s management meets monthly to review the operational and fi nancial performance of the businesses in the Group

and its subsidiaries, and to discuss key business, operational and management issues. • The Board of Directors receives and reviews quarterly performance reports on the Group and its subsidiaries from the

management, and discuss on signifi cant business and risk issues. • The Group’s management and internal auditors have conducted reviews on the system of internal control to ensure compliance

with the established policies and procedures of the Group. Weaknesses are properly communicated to management and prompt corrective actions have been taken.

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

Conclusion

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

This statement is made in accordance with a resolution of the Board of Directors dated 18 April 2011.


ANNUAL REPORT 2010

48

STATEMENT OF CORPORATE GOVERNANCE

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

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

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

DIRECTORS

1. Board Responsibilities

The Board is fully aware of its role and has adopted the specifi c responsibilities that are listed in the Code, which facilitates the discharge of the Board’s stewardship responsibilities.

a. Board Balance

The Board of Directors consists of nine (9) members comprising three (3) executive directors, and six (6) non-executive directors. Four (4) of the nine (9) Directors are independent Directors. The Board has complied with Paragraph 15.02 of the Listing Requirements of Bursa Malaysia Securities Berhad that at least two or one-third of the Board, whichever is the higher are independent directors. The Board considers its current size adequate given the existing scope and nature of the Group’s business operations.

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

b. Board Committees

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

• Audit Committee • Nomination Committee • Remuneration Committee • ESOS Committee

Audit Committee

The composition of the Audit Committee is in compliance with relevant regulatory requirements. The report of the Audit Committee is on pages 44 to 46.

Nomination Committee

The Nomination Committee is responsible for reviewing the Board composition and balance as well as considering the Board’s succession planning and making recommendation for new appointment of Directors. The Nomination Committee meets as and when required. The decision on new appointment shall be the responsibility of the Board after considering the recommendation of the Nomination Committee.


ANNUAL REPORT 2010

49

The members of the Nomination Committee are as follows:-

Member Designation Datuk Wira Syed Ali Bin Tan Sri Syed Abbas Alhabshee Chairman (Independent Non-Executive Chairman)

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


Dato’ Abdul Rahman Bin Ahmad * Member (Non Independent Non Executive Director)

* Appointed as member of the Nomination Committee on 24 November 2010

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

Remuneration Committee

The Remuneration Committee recommends to the Board the levels and elements of remuneration of Directors with executive functions and the senior management. The Board as a whole determines the allowances of the Non-Executive Directors and the Non-Executive Chairman after considering the recommendation of Remuneration Committee. The Remuneration Committee meets as and when required.

The members of Remuneration Committee are as follows:-

Member Designation Datuk Wira Syed Ali Bin Tan Sri Syed Abbas Alhabshee Chairman (Independent Non-Executive Chairman)

Haji Omar Bin Khalid Member (Managing Director)

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


Employees Share Option Scheme Committee

The ESOS Committee was established on 2 August 2005. The ESOS Committee comprises one (1) Executive Director and the Managing Director. The members of the ESOS Committee are :-

Haji Omar Bin Khalid Chairman (Managing Director) Haji Hamidon bin Md Khayon Member (Executive Director)

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

• to administer the ESOS and to grant Options in accordance with the Bye-Laws;

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

• to construe and interpret the provisions hereof in the best interest of the Company; and

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

Subject to the foregoing, the ESOS Committee shall exercise its discretion in such manner as it deems fi t.

As at the fi nancial year ended 31 December 2010, a total of 4,820,400 ESOS options allocated to the employees of the Group remains unexercised. None of the allocation of ESOS options was made available to the Non-Executive Directors of the Group.



ANNUAL REPORT 2010

50


c. Board Meetings

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

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

During the fi nancial year under review, fi ve (5) Board Meetings were held and the Directors’ attendances at the Board Meetings were as follows:-

Attendance Datuk Wira Syed Ali Bin Tan Sri Syed Abbas Alhabshee 4/5 (Chairman, Independent Non-Executive Director)

Haji Omar Bin Khalid 5/5 (Managing Director)

Dato’ Dr. (H) Ab Wahab Bin Haji Ibrahim 5/5 (Independent Non-Executive Director)

Haji Hamidon Bin Md Khayon 5/5 (Executive Director)

Encik Za’aba Bin Sedek 5/5 (Executive Director)

Dato‘ Abdul Rahman Bin Ahmad* 2/2 (Non-Independent Non-Executive Director)

Tuan Syed Yasir Arafat Bin Syed Abd Kadir* 2/2 (Non-Independent Non-Executive Director)

Encik Edwanee Cheah Bin Abdullah 5/5 (Independent Non-Executive Director)

Mr. George William Warren Jr 3/5 (Independent Non-Executive Director)

* Appointed as Director on 29 July 2010

Supply of Information

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

Appointment and Re-election

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


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51


Directors’ Training

All Directors have attended and successfully completed the Mandatory Accreditation Programme conducted by Bursatra Sdn. Bhd. within the stipulated timeframe required in the Main Market Listing Requirements of Bursa Securities. The Board of Directors are mindful that they should receive appropriate continuous training and during the fi nancial year, they have attended presentations and briefi ngs in order to keep abreast with developments in the industry, market place and with new statutory and regulatory requirements.

During the fi nancial year ended 31 December 2010, the Directors attended in house training programmes on “Financial Reporting Standards 139” conducted by the Company’s external auditors. The Directors are also briefed and updated at the scheduled quarterly meetings with any relevant amendments to the Main Market Listing Requirements received from Bursa Securities and other relevant topics which are useful to them in discharging their duties effectively.

DIRECTORS’ REMUNERATION

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

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

The aggregate remuneration of the Directors for the fi nancial year ended 31 December 2010 is as follows :-

Executive Directors Non-Executive Directors Total (RM)

Basic salary RM1,296,000 - RM1,270,068

Bonuses - - -

Fees - RM192,000 RM192,000

Total RM1,296,000 RM192,000 RM1,462,068

Remuneration Band (RM) Executive Directors Non-Executive Directors

0 - 2

1 - 50,000 - 4

50,001 - 100,000 1* -

100,001 - 150,000 - -

150,001 – 200,000 - -

200,001 – 250,000 3 -

* Haji Abdullah Hashim resigned as Director of the Company with effect from 31 March 2010.


ANNUAL REPORT 2010

52


RELATIONSHIP WITH SHAREHOLDERS

The Group recognises the importance of effective communication with its shareholders and investors to keep them informed of the major development of the group. Such information is disseminated through the following channels :-

• Annual Report;• Circulars to shareholders;• Various disclosures and announcement to Bursa Securities; and• Company’s website at www.tanjungoffshore.com.my

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

ACCOUNTABILITY AND AUDIT

1. Financial Reporting The Board is responsible to present a balanced, clear and comprehensive assessment of the Group’s fi nancial

performance and prospects through the quarterly and annual fi nancial statements to shareholders. The Board and the Audit Committee have to ensure that the fi nancial statements are drawn up in accordance with the provisions of the Companies Act, 1965 and applicable approved accounting standards in Malaysia. In presenting the fi nancial statements, the Board has reviewed and ensuredthat appropriate accounting policies have been used, consistently applied and supported by reasonable judgments and estimates.

2. Internal Control The Board has overall responsibility for maintaining a sound and effective system of internal control of the Group,

covering not only fi nancial controls but also controls relating to operations, compliance and risk management to safeguard shareholders investments and the Group’s assets. The Board also recognises that the system of internal control has inherent limitations and is aware that such a system can only provide reasonable and not absolute assurance against material misstatements, loss or fraud.

The internal control system of the Group is supported by an established organisational structure with well-defi ned authority and responsibility lines, and which comprises of appropriate fi nancial, operational and compliance controls.

3. Relationship with Auditors The Board, via the Audit Committee, has established a formal and transparent arrangement for maintaining an

appropriate relationship with its auditors, both external and internal. 4. Statement of Directors’ Responsibility The Directors are required by the Companies Act, 1965 to prepare fi nancial statements for each fi nancial year,

which give a true and fair view of the state of affairs of the Group and the Company and of the results and cash fl ow of the Group and the Company for the fi nancial year then ended.

In preparing the fi nancial statements for the FYE 2010, the Directors have:- • adopted the appropriate accounting policies and applied them consistently; • made judgments and estimates that are reasonable and prudent; • ensure applicable approved accounting standards have been followed, and any material departures have

been disclosed and explained in the fi nancial statements; and • ensure the fi nancial statements have been prepared on a going concern basis.

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

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

5. Compliance Statement Throughout the FYE 2010, the Group has complied with all the Best Practices of Corporate Governance set out

in Part 2 of the Malaysian Code on Corporate Governance.


ANNUAL REPORT 2010

53

OTHER DISCLOSURE REQUIREMENTS

a) Share Buybacks The Company had at the Sixth Annual General Meeting held on 31 May 2010, obtained the approval of the shareholders in

relation to the share buy-back authority, whereby the Directors are authorised to purchase and/or hold at any point in time up to 10% of the issued and paid-up share capital of Tanjung.

The breakdown of purchases made under the share buy-back exercise during the year FYE 2010 is as follows:-

Month No of shares Highest Lowest Average Total purchased price paid price paid price paid consideration

(RM) (RM) (RM) paid (RM)

March 100 1.05 1.05 1.05 105

August 100 1.76 1.76 1.76 176

Total 200 281

As at 31 December 2010, all the purchased shares were retained as Treasury shares and there was no resale or cancellation of these purchased shares.

b) Options, Warrants or Convertible Securities The details of the movement of ESOS Options for the fi nancial year ended 31 December 2010 are as follows:-

No of ESOS Options ESOS Options ESOS Options No of ESOS Options granted as at Exercised Cancelled outstanding as at 31 Dec 2010 31 Dec 2010

24,876,390 18,822,590 1,233,400 4,820,400 The abovementioned ESOS Scheme will expire on 2 August 2015.

As at 31 March 2011, the number of outstanding Warrants are as follows:-

Conversion price Outstanding as at Expiry Date 31 March 2011 Warrants A RM0.55 30,582,807 7 July 2016

Warrants B RM1.20 40,777,429 11 October 2013

c) American Depository Receipt (“ADR”) or Global Depository Receipt (“GDR”) Programme.

During the fi nancial year under review, the Company did not sponsor any ADR or GDR Programme.

d) Imposition of Sanctions/Penalties

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

e) Non-Audit Fees

There were no non-audit fees paid to the external auditors during the fi nancial year under review.


ANNUAL REPORT 2010

54

f) Variation in Results

There was no material variation between the audited results for the fi nancial year ended 31 December 2010 and the unaudited results previously announced.

g) Material Contracts To the best of the Board’s knowledge, there are no material contracts involving the Group with any of the major shareholders

or Directors in offi ce during the year under review.

h) Contracts Relating to Loans No contract relating to loans was executed by the Company during the year under review.

i) Revaluation of Landed Properties No revaluation was performed on any of the Group’s landed properties during the year under review.

j) Profi t guarantees No profi t guarantees were provided by the Company or its subsidiaries during the year under review.

k) Recurrent Related Party Transactions (“RRPT”) No RRPT were transacted during the year under review.

l) Utilisation of Proceeds from Private Placement Total proceeds of RM33.80 million raised from the private placement of 26.0 million new shares to E-Cap (Internal) One Sdn

Bhd, a wholly owned subsidiary of Ekuinas Capital Sdn Bhd was fully utilised for repayment of bank borrowings and working capital purposes during the year.

OTHER DISCLOSURE REQUIREMENTS

56 Directors’ report

62 Statement by Directors

63 Statutory declaration

64 Report of the auditors

66 Statements of Financial Position

67 Income statement

68 Statements of Comprehensive Income

69 Statement of changes in equity

71 Cash flow statement

73 Notes to the financial statements

Financial Statements


ANNUAL REPORT 2010

56

DIRECTORS’ REPORTFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2010

The directors are pleased to submit their report and the audited fi nancial statements of Tanjung Offshore Berhad (“Tanjung” or “Company”) and its subsidiaries (“Tanjung Group” or “Group”) for the fi nancial year ended 31 December 2010.

PRINCIPAL ACTIVITIES

The Company is principally engaged in investment holding. The principal activities of the subsidiary and associate companies are set out in Notes 7 and 8 to the fi nancial statements respectively. There have been no signifi cant changes in the nature of these principal activities of the Group and of the Company during the current fi nancial year.

RESULTS GROUP COMPANY RM RM Net profi t/(loss) for the year 7,588,411 (1,742,199)

RESERVES AND PROVISIONS

All material transfer to or from reserves and provisions during the current fi nancial year have been disclosed in the statement of changes in equity.

DIVIDEND

No dividend has been paid, declared or proposed by the Company since the end of the previous fi nancial year.

The directors do not recommend any fi nal dividend in respect of the current fi nancial year.

TREASURY SHARES

During the current fi nancial year, the Company purchased 300 of its issued ordinary shares from the open market at an average price of RM1.21 per share. The total consideration paid for the purchase was RM363 including transaction costs. The shares purchased are being held as treasury shares in accordance with Section 67A of the Companies Act, 1965.

BAD AND DOUBTFUL DEBTS

Before the statements of comprehensive income and the statements of fi nancial position of the Group and of the Company were made out, the directors took reasonable steps to ascertain that proper action had been taken in relation to the writing off of bad debts and the making of provision for doubtful debts and satisfi ed themselves that all known bad debts had been written off and adequate provision has been made for doubtful debts.

At the date of this report, the directors are not aware of any circumstances which would render the amount written off for bad debts or the provision for doubtful debts inadequate to any substantial event.

ITEMS OF A MATERIAL AND UNUSUAL NATURE

The results of the operations of the Group and of the Company for the fi nancial year ended 31 December 2010 were not, in the opinion of the directors, substantially affected by any item, transaction or event of a material and unusual nature.

There has not arisen in the interval between the end of the fi nancial year and the date of this report any item, transaction or event of a material and unusual nature likely, in the opinion of the directors, to affect substantially the results of the operations of the Group and of the Company for the current fi nancial year.


ANNUAL REPORT 2010

57


CURRENT ASSETS

Before the statements of comprehensive income and the statements of fi nancial position of the Group and of the Company were

made out, the directors have taken reasonable steps to ensure that any current assets which were unlikely to realise in the ordinary

course of business their values as shown in the accounting records of the Group and of the Company had been written down to an

amount which they might be expected to realise.

At the date of this report, the directors are not aware of any circumstances that would render the values attributed to the current

assets in the fi nancial statements of the Group and of the Company misleading.

VALUATION OF ASSETS AND LIABILITIES

As at the date of this report, the directors are not aware of any circumstances, which have arisen which render adherence to the

existing methods of valuation of assets and liabilities of the Group and of the Company misleading or inappropriate.

CONTINGENT AND OTHER LIABILITIES

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

i) any charge on the assets of the Company which has arisen since the end of the fi nancial year which secures the liabilities of

any other person; or

ii) any contingent liabilities in respect of the Company which has arisen since the end of the fi nancial year, other than as disclosed

in Note 31 to the fi nancial statements.

No contingent or other liabilities has become enforceable, or is likely to become enforceable within the period of twelve months after

the end of the fi nancial year which, in the opinion of the directors, will or may substantially affect the ability of the Group and of the

Company to meet their obligations as and when they fall due.

DIRECTORS AND THEIR SHAREHOLDINGS

The directors in offi ce since the date of the last report and at the date of this report are as follows:

Datuk Wira Syed Ali bin Tan Sri Syed Abbas Alhabshee

Haji Omar bin Khalid

Haji Hamidon bin Md Khayon

Dato’ Dr. (H) Ab Wahab bin Haji Ibrahim

Edwanee Cheah bin Abdullah

George William Warren Jr.

Za’aba bin Sedek

Dato’ Abdul Rahman bin Ahmad (Appointed w.e.f. 29 July 2010)

Syed Yasir Arafat bin Syed Abd Kadir (Appointed w.e.f. 29 July 2010)


ANNUAL REPORT 2010

58


DIRECTORS AND THEIR SHAREHOLDINGS (continued)

In accordance with the Register of Directors’ Shareholding, the interests of directors in offi ce at the end of the fi nancial year in shares, options and warrants over ordinary shares in the Company were as follows:-

Number of Ordinary Shares of RM0.50 each Balance as at Balance as at 01.01.2010 Acquired Sold 31.12.2010Direct Interest: Datuk Wira Syed Ali bin Tan Sri Syed Abbas Alhabshee 420,000 - - 420,000Haji Omar bin Khalid 102,574,322 1,194,400 (5,500,000) 98,268,722Haji Hamidon bin Md Khayon 47,000 732,800 (729,800) 50,000Dato’ Dr. (H) Ab Wahab bin Haji Ibrahim 128,100 - - 128,100Edwanee Cheah bin Abdullah 1,166,724 - (620,000) 546,724George William Warren Jr. 879,480 50,000 - 929,480Za’aba bin Sedek 47,870 83,000 (122,000) 8,870 Indirect Interest: Haji Omar bin Khalid *100,800 67,000 - 167,800

Number of ESOS Options over Ordinary Shares of RM0.50 each Balance as at Balance as at 01.01.2010 Acquired Exercise 31.12.2010Direct Interest: Haji Omar bin Khalid 1,791,400 - (1,194,400) 597,000Haji Hamidon bin Md Khayon 1,344,000 - (732,800) 611,200Za’aba bin Sedek 752,000 - (83,000) 669,000 Indirect Interest: Haji Omar bin Khalid *67,000 - - 67,000

Number of Warrants over Ordinary Shares of RM0.50 each Balance as at Balance as at 01.01.2010 Acquired Sold 31.12.2010Direct Interest: Datuk Wira Syed Ali bin Tan Sri Syed Abbas Alhabshee 89,599 - - 89,599Haji Omar bin Khalid 35,467,007 - - 35,467,007Edwanee Cheah bin Abdullah 363,769 - - 363,769George William Warren Jr. 303,379 - - 303,379 Indirect Interest: Haji Omar bin Khalid *34,719 - - 34,719

*Deemed interest by virtue of Section 134 of the Companies Act, 1965.


ANNUAL REPORT 2010

59


DIRECTORS AND THEIR SHAREHOLDINGS (continued)

By virtue of his interest in the shares of the Company, Haji Omar bin Khalid is also deemed to have interest in the shares of the subsidiary companies to the extent that the Company has an interest during the current fi nancial year.

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

Dato’ Abdul Rahman bin Ahmad and Syed Yasir Arafat bin Syed Abd Kadir are the directors who will retire in accordance with Article 109 of the Company’s Articles of Association and being eligible to offer themselves for re-election.

DIRECTORS’ BENEFITS

Since the end of the previous fi nancial year, none of the directors of the Company has received or become entitled to receive any benefi t (other than a benefi t included in the aggregate amount of emoluments received or due and receivable by directors as shown in Note 32 to the fi nancial statements) by reason of a contract made by the Company or a related corporation with any director or with a fi rm of which the director is a member, or with a company in which the director has a substantial fi nancial interest.

Neither at the end of the fi nancial year, nor at any time during the current fi nancial year, did there subsist any arrangement to which the Company was a party, whereby the directors might acquire benefi ts by means of the acquisition of shares in or debentures of the Company or any other body corporate, other than those arising from the share options granted under the Employees’ Share Option Scheme (“ESOS Scheme”).

ISSUANCE OF NEW ORDINARY SHARES

The Company has increased its issued and paid-up share capital from RM125,650,347 to RM145,891,671 pursuant to the following corporate exercises:

i) Issuance of new ordinary shares arising from the exercise of ESOS options amounting to 9,018,300 new ordinary shares of RM0.50 each at exercise prices ranging from RM0.68 to RM1.75 per share.

ii) Issuance of additional 5,264,346 units of new ordinary shares of RM0.50 each arising from the exercise of Warrants A at exercise prices of RM0.55 per share.

iii) Issuance of additional 200,000 units of new ordinary shares of RM0.50 each arising from the exercise of Warrants B at exercise prices of RM1.20 per share.

iv) Issuance of additional 26,000,000 unit of new ordinary shares of RM0.50 each arising from the private placement exercise at a placement price of RM1.30 per share.

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

UNEXERCISED OPTIONS GRANTED

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

The Company’s Employees’ Share Option Scheme is governed by the Bye-Law approved by the shareholders at an Extraordinary General Meeting held on 02 August 2005 and is to be in force for a period of fi ve (5) years until 01 August 2010. The ESOS which was effective on 02 August 2005 has been extended to 01 August 2015.


ANNUAL REPORT 2010

60


UNEXERCISED OPTIONS GRANTED (continued)

i) Employees’ Share Option Scheme (“ESOS”) (continued)

The principal features of the Bye-Law of ESOS are as follows:

a) The maximum number of options which may be allotted pursuant to the ESOS (“Options”) as approved by the Securities Commission (“SC”) shall not exceed ten percent (10%) of the total issued and paid-up share capital of the Company at any point in time during the duration of the ESOS.

b) Executive directors and employees of the Group and of the Company will be eligible to participate in the ESOS provided that they fulfi ll the conditions for eligibility stipulated in the rules, terms and conditions contained in the Bye-Law (“Eligible Employees”).

c) The maximum number of new shares that may be offered and allotted to an Eligible Employee shall be determined by the ESOS Committee taking into consideration inter-alia, the Eligible Employee’s designation, job description, responsibilities and seniority.

d) The subscription price of the options issued pursuant to ESOS shall be the higher of the following:

i) at a discount of not more than ten percent (10%) from the weighted average market price of the shares as shown in the daily offi cial list issued by Bursa Malaysia Securities Berhad (“Bursa Securities”) for the fi ve (5) market days immediately preceding the date of offer; or

ii) the par value of the shares.

e) The new shares to be allotted and issued upon any exercise of the options will, upon such allotment and issuance, rank pari passu in all respects with the existing and issued shares except that the new shares so issued will not be entitled to any dividends, rights, allotments and/or any other distributions which may be declared, made or paid to shareholders prior to the date of allotment of the new shares. The new shares will be subjected to all provisions of the Articles in relation to their transfer, transmission or otherwise. The options shall not carry any right to vote at a general meeting of the Company.

As at 31 December 2010, there were 4,820,400 (2009:14,075,900) unissued ordinary shares pursuant to the ESOS options granted under the ESOS Scheme, at RM0.68 to RM2.35 per share (2009: RM0.68 to RM2.35 per share) respectively.

According to Section 169(11) of the Companies Act, 1965, the Company is required to disclose the name of persons to whom any option has been granted during the current fi nancial year. Pursuant to Section 169A of the Companies Act, 1965, the Company has applied and has been granted exemption by the Companies Commission of Malaysia from having to disclose the name of employees who have been granted options to subscribe for less than 500,000 ordinary shares of RM0.50 each.

During the current fi nancial year, none of the employees of the Company has been granted ESOS options above 500,000 ordinary shares of RM0.50 each.

Details of the share options granted to directors are disclosed in the section on directors and their shareholdings in this report.

Details of the share option granted and exercised under the ESOS during the current fi nancial year are set out in Note 17 to the fi nancial statements.

ii) Issuance of Warrants

On 30 November 2005, the Company issued a RM150,000,000 nominal value up to eight (8) years 4.5% per annum serial fi xed rate bonds with detachable warrants to the primary subscribers.

On 3 March 2006, the primary subscribers were allotted a total of 18,514,600 warrants to the shareholders at an offer price of RM0.24 per warrant on the basis of one (1) warrant for every fi ve (5) ordinary shares held on entitlement date.


ANNUAL REPORT 2010

61


UNEXERCISED OPTIONS GRANTED (continued)

ii) Issuance of Warrants (continued)

On 29 August 2006, the Company completed the listing of an additional 9,257,000 warrants arising from the bonus issue exercise which was implemented in accordance to the Deed Poll dated 13 January 2006 on the basis of one (1) new warrant for every two (2) warrants held on entitlement date.

On 13 June 2007, the Company completed the listing of an additional 10,095,104 warrants arising from the bonus issue exercise on the basis of two (2) new warrants for every fi ve (5) existing warrants.

During the fi nancial year ended 31 December 2010, the Company issued an additional 5,264,346 units of new ordinary shares of RM0.50 each arising from the exercise of Warrants A at an exercise price of RM0.55 per share.

During the fi nancial year ended 31 December 2010, the Company issued an additional 200,000 units of new ordinary shares of RM0.50 each arising from the exercise of Warrants B at an exercise price of RM1.20 per share.

As at 31 December 2010, there is a total of 30,619,707 outstanding Warrant A 2006/2016 warrants.

As at 31 December 2010, there is a total of 40,777,929 outstanding Warrant B 2008/2013 warrants.

SIGNIFICANT AND SUBSEQUENT EVENTS

Details of the signifi cant and subsequent events are set out in Note 35 and Note 36 to the fi nancial statements respectively.

CHANGE OF CIRCUMSTANCES

At the date of this report, the directors are not aware of any circumstances, not otherwise dealt with in this report or the fi nancial statements of the Group and of the Company that would render any amount stated in the respective fi nancial statements misleading.

AUDITORS

The auditors, AljeffriDean, have indicated their willingness to continue in offi ce.

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

.….……………………..…………Datuk Wira Syed Ali bin Tan Sri Syed Abbas Alhabshee Independent Non-Executive Chairman

………………………………….. Haji Omar bin KhalidManaging Director Kuala Lumpur,

Date: 18 April 2011


ANNUAL REPORT 2010

62

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

We, Datuk Wira Syed Ali bin Tan Sri Syed Abbas Alhabshee and Haji Omar bin Khalid, being the directors of Tanjung Offshore Berhad, state that in our opinion the fi nancial statements set out on pages 66 to 112 are properly drawn up in accordance with the applicable approved accounting standards for entities other than private entities issued by the Malaysian Accounting Standards Board and the provisions of the Companies Act, 1965 so as to give a true and fair view of the state of affairs of the Group and of the Company as at 31 December 2010 and of the results and the cash fl ows for the fi nancial year ended on that date.

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

..………..........................................Datuk Wira Syed Ali bin Tan Sri Syed Abbas Alhabshee Independent Non-Executive Chairman

…..………………......……........ Haji Omar bin Khalid Managing Director

Kuala Lumpur, Date: 18 April 2011


ANNUAL REPORT 2010

63

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

I, Haji Omar bin Khalid being the director primarily responsible for the fi nancial management of Tanjung Offshore Berhad, do solemnly and sincerely declare that the fi nancial statements set out on pages 66 to 112 are to the best of my knowledge and belief correct, and I make this solemn declaration conscientiously believing the same to be true and by virtue of the provisions of the Statutory Declarations Act, 1960.

Subscribed and solemnly declared )

by Haji Omar bin Khalid )

at Wilayah Persekutuan Kuala Lumpur )

on this day of 18 April 2011 ) ….…….………………….

Before me,

…………………………Commissioner of Oaths

AGONG SIA W460


ANNUAL REPORT 2010

64

INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF TANJUNG OFFSHORE BERHAD

Report on the Financial Statements

We have audited the fi nancial statements of Tanjung Offshore Berhad which comprise the statements of fi nancial position of the

Group and of the Company as at 31 December 2010, and the statements of comprehensive income, statement of changes in equity

and statements of cash fl ows for the year then ended, and a summary of signifi cant accounting policies and other explanatory notes,

as set out on pages 66 to 112.

Directors’ Responsibility for the Financial Statements

The directors of the Company are responsible for the preparation and fair presentation of these fi nancial statements in accordance

with the applicable approved accounting standards for entities other than private entities and the Companies Act, 1965 in Malaysia,

and for such internal control as the directors determine are necessary to enable the preparation of fi nancial statements that are free

from material misstatement, whether due to fraud or error.

Auditors’ Responsibility

Our responsibility is to express an opinion on these fi nancial statements based on our audit. We conducted our audit in accordance

with approved standards on auditing in Malaysia. Those standards require that we comply with ethical requirements and plan and

perform the audit to obtain reasonable assurance whether the fi nancial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the fi nancial statements. The

procedures selected depend on our judgment, including the assessment of risks of material misstatement of the fi nancial statements,

whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the Company’s preparation

and fair presentation of the fi nancial statements 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 Company’s internal control. An audit also includes evaluating

the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as

evaluating the overall presentation of the fi nancial statements.

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

Opinion

In our opinion, the fi nancial statements have been properly drawn up in accordance with the applicable approved accounting

standards for entities other than private entities and the Companies Act, 1965 in Malaysia so as to give a true and fair view of the

fi nancial position of the Group and of the Company as of 31 December 2010 and of its fi nancial performance and cash fl ows for the

year then ended.


ANNUAL REPORT 2010

65

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 subsidiaries have been properly kept in accordance with the provisions of the Act.

b) We have considered the fi nancial statements and the auditors’ reports of all the subsidiaries of which we have not acted as auditors, which are indicated in Note 7 to the fi nancial statements.

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

d) The audit reports on the fi nancial statements of the subsidiaries did not contain any qualifi cation or any adverse comment made under Section 174(3) of the Act.

Other Reporting Responsibilities

The supplementary information set out in Note 38 to the fi nancial statements is disclosed to meet the requirement of Bursa Malaysia Securities Berhad. The directors are responsible for the preparation of the supplementary information in accordance with the Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profi ts or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants (“MIA Guidance”) and the directive of Bursa Malaysia Securities Berhad. In our opinion, the supplementary information is prepared, in all material respects, in accordance with the MIA Guidance and the directive of Bursa Malaysia Securities Berhad.

Other Matters

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

AljeffriDean T. Nagarajan KMNAF 1366 No.: 824/04/12 (J)Chartered Accountants (Malaysia)

Kuala Lumpur,

Date: 18 April 2011

INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF TANJUNG OFFSHORE BERHAD


ANNUAL REPORT 2010

66

STATEMENTS OF FINANCIAL POSITIONAS AT 31 DECEMBER 2010

GROUP COMPANY NOTE 2010 2009 2010 2009 RM RM RM RMNON-CURRENT ASSETS Property, plant and equipment 5 760,470,271 765,020,390 - - Intangible assets 6 8,937,601 10,741,672 - - Subsidiary companies 7 - - 74,668,392 48,961,560 Amount owing by subsidiary companies 7 - - 163,433,398 152,721,989 Associate companies 8 6,119,288 3,565,139 1,419,334 1,419,334 Deferred tax assets 9 8,313,084 8,170,175 - - CURRENT ASSETS Inventories 10 15,341,543 9,351,170 - - Trade receivables 11 188,195,427 215,819,589 - - Other receivables, deposits and prepayments 12 42,039,100 37,670,112 4,407,557 3,778,271 Amount owing by subsidiary companies 7 - - 162,276,760 191,722,140 Cash and cash equivalents 13 54,942,781 38,269,363 39,225,407 26,521,210 300,518,851 301,110,234 205,909,724 222,021,621 CURRENT LIABILITIES Trade payables 14 113,549,849 126,829,282 - - Other payables and accruals 15 30,416,994 32,068,677 8,448,310 10,430,116 Short term borrowings 16 127,819,422 104,396,265 45,001,572 20,000,000 Provision for taxation 170,586 807,564 - 4,000 271,956,851 264,101,788 53,449,882 30,434,116 NET CURRENT ASSETS 28,562,000 37,008,446 152,459,842 191,587,505 812,402,244 824,505,822 391,980,966 394,690,388

EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT Share capital 17 145,891,671 125,650,347 145,891,671 125,650,347 Treasury shares 18 (4,396,194) (4,395,831) (4,396,194) (4,395,831)Reserves 19 225,675,471 195,588,996 69,859,156 47,809,539 367,170,948 316,843,512 211,354,633 169,064,055 Minority interest 6,014,880 5,239,940 - - TOTAL EQUITY 373,185,828 322,083,452 211,354,633 169,064,055 NON-CURRENT LIABILITIES Deferred tax liabilities 9 - 86,435 - - Long term borrowings 20 358,618,916 396,738,435 100,028,833 120,028,833 Serial fi xed rate bond 21 80,597,500 105,597,500 80,597,500 105,597,500 439,216,416 502,422,370 180,626,333 225,626,333 812,402,244 824,505,822 391,980,966 394,690,388

See accompanying notes to the fi nancial statements.


ANNUAL REPORT 2010

67

INCOME STATEMENTSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2010

GROUP COMPANY NOTE 2010 2009 2010 2009 RM RM RM RM Revenue 3(v) 541,807,434 649,656,702 227,649 14,105,791 Cost of sales (402,388,748) (533,358,085) - - Gross profi t 139,418,686 116,298,617 227,649 14,105,791 Other income 3,486,489 2,172,174 - - Operating expenses (104,536,451) (96,960,386) (1,737,906) (1,203,274) Profi t/(Loss) from operations 22 38,368,724 21,510,405 (1,510,257) 12,902,517 Finance costs 23 (33,403,289) (19,433,768) (201,942) (201,942) Share of profi t of associate 3,048,760 2,697,947 - - Profi t/(Loss) before taxation 8,014,195 4,774,584 (1,712,199) 12,700,575 Taxation 24 (425,784) (1,158,170) (30,000) (145,923) Net profi t/(loss) for the year 7,588,411 3,616,414 (1,742,199) 12,554,652 Profi t/(Loss) attributable to: Equity holders of the parent 6,813,471 3,075,694 (1,742,199) 12,554,652 Minority interest 774,940 540,720 - - 7,588,411 3,616,414 (1,742,199) 12,554,652 Earnings per share attributable to equity holders of the parent (sen): - Basic 25(a) 2.55 1.25 - Diluted 25(b) 2.41 1.23



ANNUAL REPORT 2010

68

STATEMENTS OF COMPREHENSIVE INCOMEFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2010

GROUP COMPANY 2010 2009 2010 2009 RM RM RM RM Net profi t/(loss) for the year 7,588,411 3,616,414 (1,742,199) 12,554,652 Other comprehensive income: Exchange differences on translating foreign operations (518,826) (380,427) - - Other comprehensive income (518,826) (380,427) - - Total comprehensive income/(loss) for the year 7,069,585 3,235,987 (1,742,199) 12,554,652 Total comprehensive income/(loss) attributable to: Equity holders of the parent 6,294,645 2,695,267 (1,742,199) 12,554,652 Minority interest 774,940 540,720 - - 7,069,585 3,235,987 (1,742,199) 12,554,652


ANNUAL REPORT 2010

69

STATEMENTS OF CHANGES IN EQUITY FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2010

GR

OU

P

Attr

ibut

able

to E

quity

Hol

ders

of t

he P

aren

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on D

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le

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are

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tion

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To

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N

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l Sh

ares

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ium

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ve

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ve

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rofi t

To

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Inte

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R

M

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R

M

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M

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R

M

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R

M

Bal

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as

at 0

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9

123

,294

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(4

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) 4

0,06

9,77

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3,4

33,3

97

1,3

64,2

84

(3,8

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3

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3

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8

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-

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9

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9

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R

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247

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247

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sha

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18

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(45,

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of s

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s in

fore

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entit

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-

-

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4,5

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4,5

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sha

res

in m

inor

ity in

tere

st

-

-

-

-

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(178

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) (1

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Rea

lisat

ion

of re

valu

atio

n re

serv

e

-

-

-

-

-

-

(5,7

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5,7

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nses

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c

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rate

exe

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s

-

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(284

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(284

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tal c

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26

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-

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(10,

989,

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-

(10,

989,

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Bal

ance

as

at 3

1.12

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9

125

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,395

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0,70

4,46

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3,4

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97

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7,60

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316

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t

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ase

of s

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18

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63)

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Rea

lisat

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of re

valu

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serv

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-

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(5,7

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See

acco

mpa

nyin

g no

tes

to th

e fi n

anci

al s

tate

men

ts.


ANNUAL REPORT 2010

70

STATEMENT OF CHANGES IN EQUITY FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2010

CO

MPA

NY

N

on D

istr

ibut

able

D

istr

ibut

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re

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re O

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ccum

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l

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M

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R

M

Bal

ance

as

at 0

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9

123

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(4

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) 4

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9,77

0

3,4

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97

622

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1

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36

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ares

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tion

durin

g th

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ar

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9

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23

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3

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arra

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exer

cise

dur

ing

the

year

17

8

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-

5,1

96

(4,3

00)

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9,8

56

Rec

ogni

tion

of e

quity

- s

ettle

d em

ploy

ee s

hare

opt

ion

-

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-

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2

47,3

11

-

2

47,3

11

Rep

urch

ase

of s

hare

s 18

-

(45,

190)

-

-

-

-

(4

5,19

0)Ex

pens

es in

curre

d on

cor

pora

te e

xerc

ises

-

-

(284

,023

) -

-

-

(284

,023

)To

tal c

ompr

ehen

sive

inco

me

for t

he y

ear

-

-

-

-

-

12,

554,

652

1

2,55

4,65

2 D

ivid

end

paid

to s

hare

hold

er

26

-

-

-

-

-

(1

0,98

9,90

8)

(10,

989,

908)

Bal

ance

as

at 3

1.12

.200

9

125

,650

,347

(4

,395

,831

) 4

0,70

4,46

6

3,4

29,0

97

869

,371

2

,806

,605

1

69,0

64,0

55

ESO

S sh

ares

sub

scrip

tion

durin

g th

e ye

ar

17

4,5

09,1

50

-

2

,588

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-

-

-

7,0

97,7

49

War

rant

s ex

erci

se d

urin

g th

e ye

ar

17

2,7

32,1

74

-

1

,666

,660

(1

,263

,443

) -

-

3

,135

,391

Pr

ivat

e pl

acem

ent

17

13,

000,

000

-

20,

800,

000

-

-

-

33,

800,

000

Rep

urch

ase

of s

hare

s 18

-

(363

) -

-

-

-

(3

63)

Tota

l com

preh

ensi

ve lo

ss fo

r the

yea

r

-

-

-

-

-

(1

,742

,199

) (1

,742

,199

)

Bal

ance

as

at 3

1.12

.201

0

145

,891

,671

(4

,396

,194

) 6

5,75

9,72

5

2,1

65,6

54

869

,371

1

,064

,406

2

11,3

54,6

33

See

acco

mpa

nyin

g no

tes

to th

e fi n

anci

al s

tate

men

ts.


ANNUAL REPORT 2010

71

STATEMENTS OF CASH FLOWS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2010

GROUP COMPANY NOTE 2010 2009 2010 2009 RM RM RM RMCASH FLOW FROM OPERATING ACTIVITIES Profi t before /(loss) taxation 8,014,195 4,774,584 (1,712,199) 12,700,575 Adjustments for: Amortisation of Bonds issuance cost 201,942 201,942 201,942 201,942 Amortisation of intangible assets 857,879 660,800 - - Bad debt written off 2,800,052 5,336 - - Dividend from subsidiary company - - - (13,675,000)Depreciation of property, plant and equipment 37,261,015 26,663,160 - - Loss on disposal of property, plant and equipment 7,148 26,519 - - Gain on disposal of property, plant and equipment (293,666) (109,178) - - Provision for doubtful debt 2,404,110 - - - Loss on foreign exchange 6,978,985 714,977 - - Gain on foreign exchange (6,797,099) (686,045) - - ESOS expenses - 247,311 - 247,311 Share of profi t of associated company (3,048,760) (2,697,947) - - Interest expense 33,403,041 19,222,826 - - Interest income (322,013) (439,736) (227,649) (430,791) Operating profi t/(loss) before changes in working capital 81,466,829 48,584,549 (1,737,905) (955,963) (Increase)/Decrease in inventories (6,577,789) 8,945,422 - - Decrease/(Increase) in receivables 18,184,077 13,084,164 (529,911) 13,765 Balances with subsidiary companies - - 18,733,971 21,347,846 (Decrease)/Increase in payables (13,876,276) (19,840,357) (2,183,748) 2,555,168 Cash generated from operations 79,196,841 50,773,778 14,282,407 22,960,816 Tax paid (2,883,420) (3,368,427) (133,375) (318,309) Net cash generated from operating activities 76,313,421 47,405,351 14,149,032 22,642,507



ANNUAL REPORT 2010

72

STATEMENTS OF CASH FLOWS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2010

GROUP COMPANY NOTE 2010 2009 2010 2009 RM RM RM RMCASH FLOWS FROM INVESTING ACTIVITIES Purchase of property, plant and equipment 27 (31,034,611) (195,008,725) - - Proceeds from disposal of property, plant and equipment 357,288 127,173 - - Investment in subsidiary companies - (3,375,523) (25,706,832) (42,121,702)Purchase of intangible assets 6 - (86,988) - - Dividend from subsidiary company - - - 13,675,000 Interest received 322,013 439,736 227,649 430,791 Net cash used in investing activities (30,355,310) (197,904,327) (25,479,183) (28,015,911) CASH FLOW FROM FINANCING ACTIVITIES Issuance of shares 44,033,150 3,269,978 44,033,140 3,269,978 Repurchase of shares 18 (363) (45,190) (363) (45,190)Expenses incurred on corporate exercise - (284,023) - (284,023)Net bank borrowings 16,204,102 152,392,071 - - Repayment of hire purchase and fi nance lease (2,671,637) (1,092,085) - - Repayment of serial fi xed rate bond (20,000,000) (20,000,000) (20,000,000) (20,000,000)Repayment of term loan (23,916,196) - - - Interest paid (33,403,041) (19,222,826) - - Decrease in fi xed deposits pledged as security 530,451 5,280,921 2,433,953 2,891,152 Dividend paid 26 - (10,989,908) - (10,989,908) Net cash generated from/(used in) fi nancing activities (19,223,534) 109,308,938 26,466,729 (25,157,991) Net (decrease)/increase in cash and cash equivalents 26,734,576 (41,190,038) 15,136,578 (30,531,395)Cash and cash equivalents at beginning of the year (9,393,130) 32,984,982 24,087,257 54,618,652 Effects on exchange rate changes on cash and cash equivalents 1,806,124 (1,188,074) - - Cash and cash equivalents at end of the year 28 19,147,570 (9,393,130) 39,223,835 24,087,257



ANNUAL REPORT 2010

73

NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2010

1. CORPORATE INFORMATION

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

Bursa Malaysia Securities Berhad. The registered offi ce of the Company is located at 312, 3rd Floor, Block C, Kelana Square,

17, Jalan SS7/26, 47301 Petaling Jaya, Selangor Darul Ehsan.

The Company is principally engaged in investment holding. The principal activities of the subsidiaries and associated companies

are set out in Notes 7 and 8 to the fi nancial statements respectively. There have been no signifi cant changes in the nature of

these principal activities of the Group and of the Company during the current fi nancial year.

The fi nancial statements were authorised for issuance by the Board of Directors of the Company on 18 April 2011.

2. BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS

The fi nancial statements of the Group and of the Company have been prepared on a historical cost convention unless otherwise

indicated in the other section of accounting policies, are drawn up in accordance with the applicable Malaysian Accounting

Standards Board (“MASB”) approved accounting standards for entities other than private entities in Malaysia and in compliance

with the provisions of the Companies Act, 1965.

3. SIGNIFICANT ACCOUNTING POLICIES

The accounting policies have been applied consistently by the Group and by the Company to all periods presented in these

fi nancial statements.

a) Effects Adopting New/Amendments and Interpretations

On 01 January 2010, the Group and the Company adopted the following new and amended FRS mandatory for annual

fi nancial periods beginning on or after 01 January 2010:

FRSs, Amendments to FRSs and Interpretations Effective Date

FRS 7: Financial Instruments: Disclosures 01 January 2010

FRS 8: Operating Segments 01 January 2010

FRS 101: Presentation of Financial Statements (Revised 2009) 01 January 2010

FRS 123: Borrowing Costs 01 January 2010

FRS 127: Consolidated and Separate Financial Statements: Cost of an Investment in a Subsidiary,

Jointly Controlled Entity or Associate 01 January 2010

FRS 139: Financial Instruments: Recognition and Measurement 01 January 2010

Amendments to FRS 1: First-time Adoption of Financial Reporting Standards 01 January 2010

Amendments to FRS 2: Share-based Payment - Vesting Conditions and Cancellations 01 January 2010

Amendments to FRS 132: Financial Instruments: Presentation 01 January 2010

Amendments to FRS 139: Financial Instruments: Recognition and Measurement 01 January 2010

IC Interpretation 9: Reassessment of Embedded Derivatives 01 January 2010

IC Interpretation 10: Interim Financial Reporting and Impairment 01 January 2010

IC Interpretation 11: FRS 2 - Group and Treasury Share Transactions 01 January 2010

Improvement to FRSs (2009) 01 January 2010


ANNUAL REPORT 2010

74


3. SIGNIFICANT ACCOUNTING POLICIES (continued)

a) Effects Adopting New/Amendments and Interpretations (continued)

The adoption of the relevant FRSs/Amendments/Interpretations did not have any effect on the fi nancial performance or position of the Group and the Company except for those discussed below:

FRS 7 Financial Instruments: Disclosures

Prior to 01 January 2010, information about fi nancial instruments was disclosed in accordance with the requirements of FRS 132 Financial Instruments: Disclosure and Presentation. FRS 7 introduces new disclosures to improve the information about fi nancial instruments. It requires the disclosure of qualitative and quantitative information about exposure to risks arising from fi nancial instruments, including specifi ed minimum disclosures about credit risk, liquidity risk and market risk, including sensitivity analysis to market risk.

The Group and the Company has applied FRS 7 prospectively in accordance with the transitional provisions. Hence, the new disclosures have not been applied to the comparatives. The new disclosures are included throughout the Group’s and the Company’s fi nancial statements for the year ended 31 December 2010.

FRS 101 Presentation of Financial Statements (Revised 2009)

The revised FRS 101 introduces changes in the presentation and disclosures of fi nancial statements. The revised Standard separates owner and non-owner changes in equity. The statements of changes in equity includes only details of transactions with owners, with all non-owner changes in equity presented as a single line. The Standard also introduces the statement of comprehensive income, with all items of income and expense recognised in profi t or loss, together with all other items of recognised income and expense recognised directly in equity, either in one single statement, or in two linked statements. The Group and the Company has elected to present this statement as two linked statements.

In addition, a statements of fi nancial position is required at the beginning of the earliest comparative period following a change in accounting policy, the correction of an error or the classifi cation of items in the fi nancial statements.

The revised FRS 101 also requires the Group and the Company to make new disclosures to enable users of the fi nancial statements to evaluate the Group and the Company’s objectives, policies and processes for managing capital.

The revised FRS 101 was adopted retrospectively by the Group and by the Company.

FRS 139 Financial Instruments: Recognition and Measurement

FRS 139 establishes principles for recognising and measuring fi nancial assets, fi nancial liabilities and some contracts to buy and sell non-fi nancial items. The Group and the Company have adopted FRS 139 prospectively on 1 January 2010 in accordance with the transitional provisions. There were no any material effects arising from the adoption of this Standards.

b) New Amendments Not Yet Effective

The Group and the Company has not applied the following standards and amendments that are relevant to its operations which have been issued but are not yet effective. However adoption of those relevant FRSs and Amendments did not have any effect on the fi nancial performance or position of the Group and the Company.

FRSs and Amendments Effective Date

Amendments to FRS 3: Business Combination 01 January 2011Amendments to FRS 7: Improving Disclosures about Financial Instruments 01 January 2011Amendments to FRS 101: Presentation of Financial Statements 01 January 2011Amendments to FRS 138: Intangible Assets 01 July 2010Amendments to FRS 124: Related Party Disclosures 01 January 2012Amendments to FRS 132: Classifi cation of Rights Issues 01 March 2010FRS 3: Business Combinations (Revised) 01 January 2011FRS 127: Consolidated and Separate Financial Statements (Revised) 01 July 2010Amendments to FRS 2: Share-based Payment 01 January 2011Amendments to IC Interpretation 9: Reassessment of Embedded Derivatives 01 July 2010


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c) Functional and Presentation Currency

The individual fi nancial statements of each entity in the Group are measured using the currency of the primary economic

environment in which the entity operates (“the functional currency”). The consolidated fi nancial statements are presented

in Ringgit Malaysia (RM), which is also the Company’s functional currency.

d) Basis of Consolidation

The consolidated fi nancial statements include the audited fi nancial statements of the Company and all of its subsidiary

companies made up to the end of the fi nancial year. The results of the subsidiary companies acquired are included in the

consolidated fi nancial statements from the date of acquisition. All signifi cant inter-company transactions and balances are

eliminated on consolidation.

Subsidiary companies are consolidated using the acquisition method of accounting from the date control is transferred to

the Group and are no longer consolidated from the date control ceases.

Minority interests are measured at their shares of the net assets of the subsidiary companies.

Goodwill on acquisition, being the difference between the cost of acquisition and the underlying net asset value of the

subsidiary companies at the date of acquisition.

Goodwill is stated at cost less impairment losses. The policy for the recognition and measurement of impairment losses

are in accordance with Note 3(j) to the fi nancial statements.

Negative goodwill represents the excess of the Group’s interest in the fair value of the identifi able assets and liabilities

of a subsidiary at the date of acquisition over the cost of acquisition. Negative goodwill is recognised immediately in the

statements of comprehensive income.

e) Subsidiary Companies

Subsidiary companies are those companies in which the Group has long term equity interest of more than 50% or has

power to exercise control over the fi nancial and operating policies as to obtain benefi t from its activities.

Investment in subsidiary companies which is eliminated on consolidation is stated in the Company’s fi nancial statements

at cost less impairment losses. The policy for the recognition and measurement of impairment losses are in accordance

with Note 3(j) to the fi nancial statements.

f) Associate Company

An associate company is defi ned as an investment where the Group holds for long-term purposes between 20% to 50%

of the issued equity share capital of the investee’s company, and exercises signifi cant infl uence but not control, over the

investee’s company management.

Investment in associate company is accounted for in the consolidated fi nancial statements using the equity method of

accounting based on the management fi nancial statements of the investee’s company made up to the end of the fi nancial

year.


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g) Property, Plant and Equipment

All items of property, plant and equipment are initially recorded at cost. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probably that future economic benefi ts associated with the item will fl ow to the Group and the Company and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to the statements of comprehensive income during the current fi nancial year in which they are incurred.

Subsequent to recognition, property, plant and equipment are stated at cost or valuation less accumulated depreciation and any accumulated impairment losses.

Revaluations are made at least once in every fi ve years based on a valuation by an independent valuer on an open market value basis. Any revaluation increase is credited to equity as revaluation surplus, except to the extent that it reverses a revaluation decrease for the same asset previously recognised as an expense, in which case the increase is recognised in the statements of comprehensive income to the extent of the decrease previously recognised. A revaluation decrease is fi rst offset against unutilised previously recognised revaluation surplus in respect of the same asset and the balance thereafter recognised as an expense.

Depreciation of property, plant and equipment is provided for on a straight-line basis to write off the cost of each asset to its residual value over the estimated useful life as follows:

Percentage (%)Vessels 5Drydocking cost 20Freehold land and building 2Leasehold land and building Over 80 months or 50 yearsFurniture and fi ttings 10Renovation 10Workshop tools 20Offi ce equipments 10 – 33 1/3Motor vehicles 20 – 25Machinery 10 – 33 1/3

Depreciation of vessels and equipments under commissioning commences when the vessels and equipments are delivered and ready for their intended use.

Drydocking costs represent major inspection and overhaul costs and are depreciated to refl ect the consumption of benefi ts, which are to be replaced or restored by the subsequent drydocking generally every fi ve years. The Group and the Company has included these drydocking costs as a separate components of the vessels costs in accordance with FRS 116: Property, Plant and Equipment.

The residual values, useful life and depreciation method are reviewed at each fi nancial year end 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 benefi ts embodied in the items of property, plant and equipment.

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefi ts are expected from its use or disposal. The difference between the net disposal proceeds, if any and the net carrying amount is recognised in the statements of comprehensive income and the unutilised portion of the revaluation surplus on that item is take directly to accumulated profi t.


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h) Intangible Assets

Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets required in a business combination as their fair values as at the date of acquisition. Following initial recognition, intangible assets are carried at cost less any accumulated amortisation and impairment losses. The useful life of intangible assets is assessed to be either fi nite or indefi nite. Intangible assets with fi nite lives are amortised on straight-line basis over the estimated economic useful lives and assessed for impairment whenever there is an indication that the intangible assets may be impaired. The amortisation period and the amortisation method for an intangible asset with a fi nite useful life are reviewed at least at each statement of fi nancial position date.

Intangible assets with indefi nite useful lives are not amortised but tested for impairment annually or more frequently if the events or changes in circumstances indicate that the carrying amount may be impaired either individually or at the cash-generating unit level. The useful life of an intangible asset with an indefi nite life is also reviewed annually to determine whether the useful life assessment continues to be supportable.

i) Impairment of Financial Assets

The Group and the Company assesses at each reporting date whether there is any objective evidence that a fi nancial assets is impaired.

Trade and other receivables and other fi nancial assets carried at amortised cost

To determine whether there is objective evidence that an impairment loss on fi nancial assets has been incurred, the Group and the Company considers factors such as the probability of insolvency or signifi cant fi nancial diffi culties of the debtor and default or signifi cant delay in payments. For certain categories of fi nancial assets, such as trade receivables, assets that are assessed not to be impaired individually are subsequently assessed for impairment on a collective basis based on similar risk characteristics. Objective evidence of impairment for a portfolio of receivables could include the Group’s and the Company’s past experience of collecting payments, an increase in the number of delayed payments in the portfolio past the average credit period and observable changes in national or local economic conditions that correlate with default on receivables.

If any such evidence exists, the amount of impairment loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash fl ows discounted at the fi nancial asset’s original effective interest rate. The impairment loss is recognised in the statements of comprehensive income.

The carrying amount of the fi nancial asset is reduced by the impairment loss directly for all fi nancial assets with the exception of trade and other receivables, where the carrying amount is reduced through the use of a provision account. When a trade and other receivables become uncollectible, it is written off against the provision account.

If in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed to the extent that the carrying amount of the asset does not exceed its amortised cost at the reversal date. The amount of reversal is recognised in the statements of comprehensive income.

j) Impairment of Non-Financial Assets

At each statements of fi nancial position date, the Group and the Company reviews the carrying amounts of its assets to determine whether there is any indication of impairment. If any such indication exists, impairment is measured by comparing the carrying amounts of the assets with their recoverable amount. Recoverable amount is the higher of net selling price and value in use, which is measured by reference to discounted future cash fl ows.


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j) Impairment of Non-Financial Assets (continued)

Impairment losses are recognised as an expense in the statements of comprehensive income immediately, unless the assets are carried at a revalued amount. Any impairment losses of revalued assets are treated as a revaluation decrease to the extent of any unutilised previously recognised revaluation surplus for the same assets. Reversal of impairment losses recognised in prior years are recorded when the impairment losses recognised for the assets no longer exist or have decreased.

k) Plant and Equipment Acquired Under Hire Purchase Arrangements

Plant and equipment acquired under hire purchase arrangements are being capitalised and the corresponding obligations treated as liabilities in the fi nancial statements.

Finance costs are allocated to the statements of comprehensive income to give a constant periodic rate of interest on the remaining hire purchase payables.

Plant and equipment acquired under hire purchase arrangements are depreciated over their expected useful lives on the same basis as owned assets.

l) Leased Assets

Leased of assets where substantially all the risks and benefi ts incidental to the ownership of the asset, but not the legal ownership, are transferred to the Group are classifi ed as fi nance leases. Finance leases are capitalised, recording an asset and liability equal to the present value of the minimum lease payments, including any guaranteed residual values.

Leased of assets are depreciated on straight-line basis over the term of the lease estimated useful lives where it is likely that the Group will obtain ownership of the asset. Lease payment is allocated between the reduction of the lease liability and the lease interest expense for the year.

Leased payments for operating leases, where substantially all the risks and benefi ts remain with the lessor, are charged as an expense in the year in which they are incurred.

m) Financial Assets

Financial assets are recognised in the statements of fi nancial position when, and only when, the Group and the Company become a party to the contractual provisions of the fi nancial instrument.

When fi nancial assets are recognised initially, they are measured at fair value, plus, in the case of fi nancial assets not at fair value through profi t or loss, directly attributable transaction costs.

The Group and the Company determine the classifi cation of their fi nancial assets at initial recognition, and the categories include fi nancial assets at fair value through profi t or loss, loans and receivables, held-to-maturity investments and available-for-sale fi nancial assets.

i. Financial assets at fair value through profi t or loss

Financial assets are classifi ed as fi nancial assets at fair value through profi t or loss if they are held for trading or are designated as such upon initial recognition. Financial assets held for trading are derivatives (including separated embedded derivatives) or fi nancial assets acquired principally for the purpose of selling in the near term.

Subsequent to initial recognition, fi nancial assets at fair value through profi t or loss are measured at fair value. Any gains or losses arising from changes in fair value are recognised in the statements of comprehensive income. Net gains or net losses on fi nancial assets at fair value through profi t or loss do not include exchange differences, interest and dividend income. Exchange differences, interest and dividend income on fi nancial assets at fair value through profi t or loss are recognised separately in the statements of comprehensive income as part of other losses or other income.


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m) Financial Assets (continued)

i. Financial assets at fair value through profi t or loss (continued)

Financial assets at fair value through profi t or loss could be presented as current or non-current. A fi nancial asset that is held primarily for trading purposes are presented as current whereas fi nancial assets that is not held primarily for trading purposes are presented as current or non-current based on the settlement date.

The Group and the Company did not have any fi nancial assets at fair value through profi t or loss during the year ended 31 December 2010.

ii. Loans and receivables

Financial assets with fi xed or determinable payments that are not quoted in an active market are classifi ed as loans and receivables.

Subsequent to initial recognition, loans and receivables are measured at amortised cost using the effective interest method. Gains and losses are recognised in the statements of comprehensive income when the loans and receivables are recognised or impaired, and through the recognised process.

Loans and receivables are classifi ed as current assets, except for those having maturity dates later than 12 months after the reporting date which are classifi ed as non-current.

iii. Held-to-maturity investments

Financial assets with fi xed or determinable payments and fi xed maturity are classifi ed as held-to-maturity when the Group and the Company has the positive intention and ability to hold the investment to maturity.

Subsequent to initial recognition, held-to-maturity investments are measured at amortised cost using the effective interest method. Gains and losses are recognised in the statements of comprehensive income when the held-to-maturity investments are recognised or impaired, and through the recognized process.

Held-to-maturity investments are classifi ed as non-current assets, except for those having maturity within 12 months after the reporting date which are classifi ed as current.

The Group and the Company did not have any held-to-maturity investments during the year ended 31 December 2010.

iv. Available-for-sale fi nancial assets

Available-for-sale fi nancial assets are fi nancial assets that are designated as available-for-sale or are not classifi ed in any of the three preceding categories.

After initial recognition, available-for-sale fi nancial assets are measured at fair value. Any gains or losses from changes in fair value of the fi nancial asset are recognised in other comprehensive income, except that impairment losses, foreign exchange gains and losses on monetary instruments and interest calculated using the effective interest method are recognised in the statements of comprehensive income. The cumulative gain or loss previously recognised in other comprehensive income is reclassifi ed from equity to the statements of comprehensive income as a reclassifi cation adjustment when the fi nancial asset is derecognised. Interest income calculated using the effective interest method is recognised in the statements of comprehensive income. Dividends on an available-for-sale equity instrument are recognised in the statements of comprehensive income when the Group and the Company’s right to receive payment is established.


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m) Financial Assets (continued)

iv. Available-for-sale fi nancial assets (continued)

Investments in equity instruments whose fair value cannot be reliably measured are measured at cost less impairment loss.

Available-for-sale fi nancial assets are classifi ed as non-current assets unless they are expected to be recognised within 12 months after the reporting date.

The Group and the Company did not have any available-for-sale fi nancial assets during the year ended 31 December 2010.

A fi nancial asset is recognised where the contractual right to receive cash fl ows from the asset has expired. On derecognition of a fi nancial asset in its entirety, the difference between the carrying amount and the sum of the consideration received and any cumulative gain or loss that had been recognised in other comprehensive income is recognised in the income statements.

Regular ways of purchases or sales are purchases or sales of fi nancial assets that require delivery of assets within the period generally established by regulation or convention in the market place concerned. All regular way purchases and sales of fi nancial assets are recognised or derecognised on the trade date i.e., the date that the Group and the Company commits to purchase or sell the asset.

n) Financial Liabilities

Financial liabilities are classifi ed according to the substance of the contractual arrangements entered into and the defi nitions of a fi nancial liability.

Financial liabilities, within the scope of FRS 139, are recognised in the statements of fi nancial position when, and only when, the Group and the Company become a party to the contractual provisions of the fi nancial instrument. Financial liabilities are classifi ed as either fi nancial liabilities at fair value through profi t or loss or other fi nancial liabilities.

i. Financial liabilities at fair value through profi t or loss

Financial liabilities at fair value through profi t or loss include fi nancial liabilities held for trading and fi nancial liabilities designated upon initial recognition as at fair value through profi t or loss.

Financial liabilities held for trading include derivatives entered into by the Group and the Company that do not meet the hedge accounting criteria. Derivative liabilities are initially measured at fair value and subsequently stated at fair value, with any resultant gains or losses recognised in the statements of comprehensive income. Net gains or losses on derivatives include exchange differences.

The Group and the Company did not have any fi nancial liabilities at fair value through profi t or loss during the year ended 31 December 2010.

ii. Other fi nancial liabilities

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

Trade and other payables are recognised initially at fair value plus directly attributable transaction costs and subsequently measured at amortised cost using the effective interest method.


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n) Financial Liabilities (continued)

ii. Other fi nancial liabilities (continued)

Loans and borrowings are recognised initially at fair value, net of transaction costs incurred, and subsequently

measured at amortised cost using the effective interest method. Borrowings are classifi ed as current liabilities.

For other fi nancial liabilities, gains and losses are recognised in the statements of comprehensive income when the

liabilities are derecognised, and through the recognition process.

A fi nancial liability is derecognised when the obligation under the liability is extinguished. When an existing fi nancial

liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability

are substantially modifi ed, such an exchange or modifi cation is treated as a derecognition of the original liability and

the recognition of a new liability, and the difference in the respective carrying amount is recognised in the statements

of comprehensive income.

o) Income Taxes

Income tax on the profi t or loss for the fi nancial year comprises current and deferred tax. Current tax is the expected

amount of income taxes payable in respect of the taxable profi t for the year and is measured using the tax rates that had

been enacted at the statement of fi nancial position date.

Deferred tax is provided for, using the liability method, on temporary differences at the statements of fi nancial position date

between the tax bases of assets and liabilities and their carrying amounts in the fi nancial statements. Deferred tax liabilities

are recognised for all taxable temporary differences and deferred tax assets are recognised for all deductible temporary

differences, unused tax losses and unused tax credits to the extent that it is probable that future taxable profi t will be

available against which the deductible temporary differences, unused tax losses and unused tax credits can be utilised.

Deferred tax is measured at the tax rates that are expected to apply in the period when the asset is realised or the liability

is settled, based on tax rates that have been enacted or substantively enacted at the statements of fi nancial position date.

Deferred tax is recognised in the statements of comprehensive income, except when it arises from a transaction which is

recognised directly in equity, which case the deferred tax is also charged or credited directly in equity.

p) Employee Benefi ts

i) Short term benefi ts

Wages, salaries, bonuses, paid annual leave, allowances and social security contributions are recognised as an

expense in the year in which the associated services are rendered by employees of the Group and 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 compensation absences. Short term non-accumulating

compensated absences such as sick and medical leave are recognised when the absences occur.

ii) Defi ned contribution plans

The Group and the Company makes statutory contributions to the Employee Provident Fund (“EPF”), a defi ned

contribution plan. Obligations for contributions to defi ned contribution plan are recognised as an expense in the

statements of comprehensive income as incurred.


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p) Employee Benefi ts (continued)

iii) Employee Share Option Scheme

For the equity-settled share-based compensation transactions, the fair value of the employee services received in exchange for the grant of the options is recognised as an expense. The total amount to be expensed on a straight-line basis over the vesting period is determined by reference to the fair value of the options granted excluding the effect of non-market vesting conditions. Non-market vesting conditions are included in assumptions about the number of options that are expected to become exercisable. Fair value is measured using the Black-Scholes pricing model. The expected life used in the model has been adjusted, based on management’s best estimate, for the effects of non-transferability, exercise restrictions and behavioural considerations. At each statements of fi nancial date, the Group revises its estimates of the numbers of options that are expected to become exercisable. It recognised the impact of the revision of original estimates, if any, in the statements of comprehensive income, with a corresponding adjustment to equity. The proceeds received net of any directly attributable transaction costs are credited to share capital when the options are exercised.

q) Cash and Cash Equivalents

Cash and cash equivalents comprise of cash in hand and bank balances, demand deposits and deposits with licensed bank net off bank overdraft, which are readily convertible to known amounts of cash and subject to insignifi cant risk of change in value.

r) Borrowing Costs

Borrowing costs incurred that are directly attributable to the construction of property, plant and equipment are recognised as part of the cost of those assets during the period of time that is required to complete and prepare the assets for their intended use.

All other borrowing costs are recognised as an expense in the year in which they are incurred.

s) Serial Payment Bond

The Group and the Company issued RM150,000,000 nominal value of up to 8 years serial fi xed rate bonds with up to 18,514,600 detachable warrants in the fi nancial year ended 2006. The Group and the Company recognised separately the component of a liability and equity instruments as disclosed in Note 21 to the fi nancial statements.

t) Share Capital

An equity instrument is any contract that evidences a residual interest in the assets of the Group and the Company after deducting all of its liabilities. Ordinary shares are equity instruments. Ordinary shares are recorded at the proceeds received, net of directly attributable incremental transaction costs. Ordinary shares are classifi ed as equity. Dividends on ordinary shares are recognised in equity in the period in which they are declared.

u) Treasury Shares

A purchase by the Company of its own equity shares is accounted for under the treasury share method. Under this method, the shares repurchased and held as treasury shares is measured and carried at the cost of repurchase (including any directly attributable incremental external costs, net of tax) on initial recognition and subsequently. On presentation in the statements of fi nancial position, the carrying amount of the treasury shares is offset against equity.

Where treasury shares are distributed as share dividends, the cost of the treasury shares is applied in the reduction of the share premium account or the distributable reserves, or both. Where treasury shares are reissued by re-sale in the open market, the difference between the sales consideration and the carrying amount of the treasury shares is shown as the movement in equity. As treasury shares, the rights attached as to voting, dividends and participation in other distribution are suspended.


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v) Revenue Recognition

i) Income from contracts/projects

Income from contracts/projects of the Group and of the Company is recognised in the statements of comprehensive

income on percentage of completion method.

ii) Income from chartering and hiring of vessel

Income from chartering and hiring of vessel is accrued by reference to the agreement entered into.

iii) Income from service charges

Income from service charges is recognised on an accrual basis.

iv) Income from selling of trading

Income from selling of trading is recognised upon delivery of goods and customers’ acceptance.

v) Income from interest

Income from interest is recognised on an accrual basis.

vi) Dividend income

Dividend income is recognised when the right to receive payment is established.

w) Inventories

Inventories comprising turbine compressor spare parts, work-in-progress, raw materials, fi nished goods and long term

contract balances which is stated at the lower of cost (fi rst-in, fi rst-out basis) and net realisable value.

Cost of turbine compressor spare parts comprises the original cost of purchase plus cost of bringing the inventories to

its location.

Cost of work-in-progress and long term contract balances includes direct materials, direct labour and an appropriate

portion of fi xed and variable overhead.

Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion

and the estimated costs necessary to make the sale.

x) Provisions for Liabilities

Provisions are recognised when the Group and the Company have a present legal or constructive obligation as a result of

past events, it is probable that the Group and the Company will be required to settle the obligation, and a reliable estimate

of the amount can be made. Provisions are measured at the directors’ best estimate of the expenditure required to settle

the obligation at the statements of fi nancial position date.


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y) Development Costs

Development costs incurred for the development of gas generators are capitalised and are subject to an ongoing assessments of recoverability based on anticipated future revenues and changes in technologies. The cost that are capitalised included purchase price, direct labour and related overhead. Development costs initially recognised as an expense are not recognised as an asset in the subsequent period.

Development costs are set off in accordance to the policy on the government grants. Where the development cost are not fully recovered from the grant, the excess of the cost are written off immediately to the statements of comprehensive income.

z) Foreign Currency

i) Foreign currency transactions

In preparing the fi nancial statements of the individual entities, transaction in currencies other than the entity’s functional currency are recorded in the functional currencies using the exchange rates prevailing at the dates of the transactions. At each statements of fi nancial position date, monetary items denominated in foreign currencies are retranslated at the rates prevailing on the statements of fi nancial position date. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing on the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.

Exchange differences arising on the settlement of monetary items, and on the translation of monetary items, are included in the statements of comprehensive income for the period except for exchange differences arising on monetary items that form part of the Group’s net investment in foreign operation are initially taken directly to the foreign currency translation reserve within equity until the disposal of the foreign operations, at which time they are recognised in the statements of comprehensive income.

Exchange differences arising on monetary items that form part of the Company’s net investment in foreign operation, regardless of the currency of the monetary item, are recognised in the statements of comprehensive income in the Company’s fi nancial statements or individual fi nancial statements of the foreign operation, as appropriate.

ii) Foreign operations

The results and fi nancial position of foreign operations that have a functional currency different from the presentation currency of the consolidated fi nancial statements are translated into Ringgit Malaysia (RM) as follows:

i) Assets and liabilities for each statements of fi nancial position presented are translated at the closing rate prevailing at the statements of fi nancial position date;

ii) Income and expenses for each statements of comprehensive income are translated at average exchange rates for the year, which approximates the exchange rates at the dates of transactions; and

iii) All resulting exchange differences are taken to the foreign currency translation reserve within equity.

Goodwill and fair value adjustments arising on the acquisition of foreign operations are treated as assets and liabilities of the foreign operations and are recorded in the functional currency of the foreign operations and translated at the closing rate at the statements of fi nancial position date.


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z) Foreign Currency (continued)

ii) Foreign operations (continued)

The principal closing rates used in the translation of foreign currency amounts are as follows:

31.12.2010 31.12.2009 RM RM

1 United States Dollar (USD) 3.0835 3.42451 Great Britain Pounds (GBP) 4.7819 5.53111 Rupiah (Rp) 0.0003 0.0003

aa) Segmental Reporting

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

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

Segment revenue, expense, assets and liabilities are those amounts resulting from the operating activities of a segment that are directly attributable to the segment and the relevant portion that can be allocated on a reasonable basis to the segment. Segment revenue, expense, assets and liabilities are determined before intragroup balances and intragroup transactions are eliminated as part of the consolidation process, except to the extent that such intragroup balances and transactions are between group enterprises within a single segment.

ab) Signifi cant Accounting Estimates and Judgements

Estimates, assumptions concerning the future and judgements are made in the preparation of the fi nancial statements. They affect the application of the Group’s and the Company’s accounting policies, reported amounts of assets, liabilities, income and expenses and disclosure made. They are assessed on an on-going basis and are based on historical experience and other relevant factors, including expectations of future events that are believed to be reasonable under the circumstances.

The key assumptions concerning the future and other key sources of estimation or uncertainty at the statements of fi nancial position date, that have a signifi cant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next fi nancial year are discussed below:

i. Useful lives and residual value of property, plant and equipment

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


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ab) Signifi cant Accounting Estimates and Judgements (continued) ii. Deferred tax assets

Deferred tax assets are recognised for all unabsorbed capital allowances to the extent that it is probable that future taxable profi ts will be available against which the capital allowances can be utilised. Signifi cant 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 profi ts together with future tax planning strategies. The total carrying amounts of unabsorbed capital allowances are disclosed in Note 9 to the fi nancial statements.

iii. Share-based payments to employees

The cost of providing the share-based payments to the employees is charged to the statements of comprehensive income over the vesting period. The cost is based on the fair value of the options and the number of the options expected to vest. The fair value of the options is determined using Black Scholes pricing model.

iv. Amortisation of intangible assets

The goodwill of patent and purchases are amortised on a straight line basis over their useful lives over 17 years and 10 years respectively. The Group assesses annually the useful lives of the intangible assets and if the expectation differs from the original estimate, such difference will impact the amortisation expenses in the period in which such estimate has been charged.

ac) Financial Guarantee Contracts

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

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

4. FINANCIAL AND CAPITAL RISK MANAGEMENT OBJECTIVE AND POLICIES

The operation of the Group and the Company is subject to a variety of fi nancial risks. The Group’s and the Company’s overall fi nancial risk management objective is to ensure that the Group and the Company creates value for its shareholders.

Financial Risk Management

i) Credit risk

The Group’s main exposure to credit risk is in respect of its trade and other receivables. The Group manages the exposure to credit risk by performing credit evaluation on the major customers and outstanding debts are being monitored and pursued for full recovery.

ii) Liquidity and cash fl ow risk

The Group and the Company actively manages its debts maturity profi le, operating cash fl ows and availability of funding so as to ensure that all repayment and funding needs are met.

iii) Interest rate risk

The Group and the Company have cash and bank balances and deposits placed with licensed banks. The Group and the Company manages its interest rate risks by placing such balances on varying maturities and interest rate terms.

The Group and the Company are also exposed to interest rate risk through the impact of rate charges on its borrowings. To mitigate the interest rate risk, the management of the Group and the Company consistently monitors the interest rate exposure against the existing/potential income from operations.


ANNUAL REPORT 2010

87


4. FINANCIAL AND CAPITAL RISK MANAGEMENT OBJECTIVE AND POLICIES (continued)

Financial Risk Management (continued)

iv) Foreign currency exchange risk

The Group and the Company imports a wide range of engineering equipment and spare parts for its business operations

from various countries, subjecting its purchase costs to foreign exchange fl uctuations. In this aspect, the Group and

the Company mitigates its exposure to foreign exchange fl uctuations through back-to-back purchase and selling

arrangements between its customers and the foreign suppliers. As a result, the Group’s and the Company’s purchase

costs and currencies transacted are matched to the revenues generated from the sale of the Group’s products, thus

forming a natural hedge.

Capital Risk Management

The Group’s and the Company’s objectives when managing capital are to safeguard the Group’s and the Company’s ability to

continue as a going concern in order to provide returns for shareholders and benefi ts for other stakeholders and to maintain

an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure, the Group and

the Company may return capital to shareholders, issue new shares or sell assets to reduce debt. Consistent with others in the

industry, the Group and the Company monitors capital on the basis of the gearing ratio. This ratio is calculated as net debt

divided by total capital. Net debt is calculated as total borrowings (including current and non-current borrowings as shown

in the statements of fi nancial position) less cash and cash equivalents. Total capital is calculated as ‘equity’ as shown in the

statements of fi nancial position plus net debt.

The Group’s and the Company’s gearing ratios at 31 December 2010 and 2009 were as follow:

GROUP COMPANY 2010 2009 2010 2009 RM RM RM RM

Short term borrowings (Bank overdraft

and revolving credit only) 52,600,953 62,252,646 1,572 -

Long term borrowings (Note 20) 402,571,257 411,968,485 120,028,833 120,028,833

Serial fi xed rate Bond (Note 21) 105,597,500 125,597,500 105,597,500 125,597,500

Hire purchase and fi nance lease payables (Note 29) 6,266,128 6,913,569 - -

567,035,838 606,732,200 225,627,905 245,626,333

Less: Cash and cash equivalents (Note 13) (54,942,781) (38,269,363) (39,225,407) (26,521,210)

Net debt 512,093,057 568,462,837 186,402,498 219,105,123

Total equity 367,362,948 316,843,512 211,546,633 169,064,055

Total capital 879,456,005 885,306,349 397,949,131 388,169,178

Gearing ratio (%) 58.23 64.21 46.84 56.45


ANNUAL REPORT 2010

88


5.

PR

OP

ER

TY,

PLA

NT

AN

D E

QU

IPM

EN

T

Bla

stin

g an

d Eq

uipm

ent

Ve

ssel

s un

der

Dry

dock

ing

Free

hold

land

Lea

seho

ld la

nd

Furn

iture

and

Wor

ksho

p O

ffi ce

M

otor

pa

intin

g un

der

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els

com

miss

ioni

ng

cost

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d bu

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g an

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g fi t

tings

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enov

atio

n to

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ts

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eq

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ent

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sion

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hine

ry

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l

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M

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M

RM

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t 31

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r 201

0

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t or V

alua

tion

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ning

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ear

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tion

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3

760,

470,

271


ANNUAL REPORT 2010

89


5.

PR

OP

ER

TY,

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NT

AN

D E

QU

IPM

EN

T (c

ont

inue

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9

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al/W

ritte

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) (4

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4)Tr

ansf

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o)/fr

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R

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326

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1

9,77

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7

478

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n

334

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3

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5

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8,7

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1

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631

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1

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9

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1

1,7

09,0

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67

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67,9

54

18,

144,

438

Cha

rge

for t

he y

ear

2

1,56

8,49

7

-

131

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1

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64

238

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7

29,2

93

156

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1

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9

55,1

42

136

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-

1

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2

6,66

3,16

0 Ac

quisi

tion

of a

sub

sidia

ry

-

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com

pany

-

-

-

-

46,

050

-

-

8

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213

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-

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3

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tes

-

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46

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7,0

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46

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-

548

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2

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14

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-

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4

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Net

Boo

k Va

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At

cos

t

3

20,1

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09

92,

698,

977

5

,405

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2

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1

,705

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5

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5

73,1

98

7,4

31,7

17

1,4

91,3

46

806

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2

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1

2,90

4,80

5

454

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At

val

uatio

n

310

,937

,625

-

-

-

-

-

-

-

-

-

-

-

3

10,9

37,6

25

6

31,0

41,4

34

92,

698,

977

5

,405

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2

,769

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1

,705

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5

,264

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5

73,1

98

7,4

31,7

17

1,4

91,3

46

806

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2

,927

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1

2,90

4,80

5

765

,020

,390


ANNUAL REPORT 2010

90


5. PROPERTY, PLANT AND EQUIPMENT (continued)

a) Included in the property, plant and equipment are motor vehicles and offi ce equipment which is acquired by means of hire purchase and lease arrangements with a net book value of RM1,379,273 (2009: RM854,809) and RM1,099,148 (2009: RM840,445) respectively.

b) Borrowing costs amounting to RM1,471,529 (2009: RM3,515,940) from various fi nancier entered into for new vessels under construction and commissioning were capitalised.

c) Freehold and leasehold land and building have been pledged to secure the Group’s bank overdraft as disclosed in Note 16 to the fi nancial statements.

d) Certain vessels have been pledged to secure the relevant borrowings from the banks and Bonds Programme as disclosed in Notes 20 and 21 to the fi nancial statements respectively.

e) On 17 July 2008, an independent professional valuer, Matthews Daniel International Pte. Ltd. has revalued seven (7) vessels within the Group on an open market value basis. Had the revalued vessels been carried at historical cost, the net book value of the vessels that would have been included in the fi nancial statements of the Group as at 31 December 2010 would have been recorded as follows:

2010 2009 RM RM Vessels 200,365,708 211,697,376

6. INTANGIBLE ASSETS

GROUP Goodwill of patent and Development Goodwill on purchases Costs Consolidation Total RM RM RM RMCost Beginning of the year 8,065,870 3,236,302 350,688 11,652,860 Effect on movements in exchange rates (844,748) - - (844,748) 7,221,123 3,236,302 350,688 10,808,113

Accumulated Amortisation Beginning of the year 911,188 - - 911,188 Amortised during the year 643,046 214,833 - 857,879 Effect on movements in exchange rates 101,445 - - 101,445 End of the year 1,655,679 214,833 - 1,870,512 Net book value As at 31 December 2010 5,565,444 3,021,469 350,688 8,937,601 As at 31 December 2009 7,154,682 3,236,302 350,688 10,741,672


ANNUAL REPORT 2010

91


6. INTANGIBLE ASSETS (continued)

a. The goodwill of patent and purchases are amortised on a straight line basis over their useful lives over 17 years and 10 years respectively.

b. Goodwill is allocated to the Group’s cash-generating units (“CGU”) identifi ed according to business segment. The recoverable amount of a CGU is determined based on value in use and was determined by discounting the future cash fl ows generated from the continuing use of the unit and was based on the following key assumptions:

a) The cash fl ow projections were approved by the management covering a seven year period.

b) The subsidiary will continue its operation indefi nitely.

c) The gross profi t margin was based on past performance and its expectations of market development.

d) The growth rate used is based on expected growth rates for sales.

e) The discount rate used is pretax and refl ect specifi c risks relating to the relevant segments.

There is no impairment loss for the fi nancial year recognised because the value in use exceeded the carrying amount (including the goodwill allocated) of each CGU at statement of fi nancial position date.

7. SUBSIDIARY COMPANIES

COMPANY 2010 2009 RM RM Unquoted shares, at cost 74,668,392 48,961,560 The details of the subsidiary companies are as follows:

Group Effective Country of Subsidiary Companies Interest Incorporation Principal Activities 2010 2009 % % Held by the Company: Tanjung Offshore Services Sdn. Bhd. 100 100 Malaysia Integrated service provider to the oil and gas and related industries.

Tanjung Kapal Services Sdn. Bhd. 100 100 Malaysia Ownership of vessel and provision of ship management services to the oil and gas related industries. Tanjung Offshore Marine Services Sdn. Bhd. 100 100 Malaysia Ownership and leasing offshore vessels to local and international oil industry major.

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


ANNUAL REPORT 2010

92


7. SUBSIDIARY COMPANIES (continued)

Group Effective Country of Subsidiary Companies Interest Incorporation Principal Activities 2010 2009 % %

* PT Tanjung Offshore Nusantara 80 80 Indonesia Integrated service provider to the oil and gas

and related industries in Indonesia.

* Tanjung Citech UK Limited 100 100 England Ownership of CiBAS technology patent

and Wales and all Intellectual Property Rights.

Gas Generators (Malaysia) Sdn. Bhd. 51 51 Malaysia Manufacturing and supply of gas

generators to both industrial and oil and gas

industry.

Tanjung Citech Sdn. Bhd. 100 100 Malaysia Manufacturing and marketing of waste heat

recovery units for the offshore oil and gas

industry.

Held by Tanjung Offshore Services Sdn. Bhd.:

Tanjung Maintenance Services Sdn. Bhd. 100 100 Malaysia Provision of maintenance services to the oil

and gas and related industries.

Tanjung PetroConsult Sdn. Bhd. 100 100 Malaysia Provision of engineering and professional

manpower services to the oil and gas and

related industries.

Tanjung NewEnergy Services Sdn. Bhd. 92.86 92.86 Malaysia Provision of project management services to

the engineering and energy industries.

Held by Tanjung Citech UK Limited:

* Citech Energy Recovery Systems 100 100 England Manufacture of waste heat recovery units for

UK Limited and Wales the oil and gas industry.

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

Universal Gas Generators (M) Sdn. Bhd. 100 100 Malaysia Selling and letting of gas generator equipment.

* The fi nancial statements of these companies are not audited by AljeffriDean


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7. SUBSIDIARY COMPANIES (continued)

a) Amount Owing By Subsidiary Companies

COMPANY 2010 2009 RM RM

Non-current assets Amount owing by subsidiary companies (Note i) 163,433,398 152,721,989 Current assets Amount owing by subsidiary companies (Note ii) 162,276,760 191,722,140

Note i:

The amount owing by subsidiary companies are unsecured, subject to interest at 4.50% - 6.35% (2009: 4.50%-6.35%) per annum and are repayable after twelve (12) months.

Note ii:

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

8. ASSOCIATE COMPANIES


Unquoted shares, at cost 1,546,784 1,546,784 1,419,334 1,419,334 Share of attributable post acquisition profi t after taxation 4,572,504 2,018,355 - - 6,119,288 3,565,139 1,419,334 1,419,334 Represented by: Share of net tangible assets 6,119,288 3,565,139 1,419,334 1,419,334

The details of the associate companies are as follows:

Group Effective Country ofAssociate Companies Interest Incorporation Principal Activities 2010 2009 % % Held by the Company: * Cendor Mopu Producer Ltd 20 20 Malaysia To own, lease, sub-lease, maintain, (Wilayah operate and manage the Mobile Offshore Persekutuan, Production Unit to carry out oil and gas Labuan) operations.


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8. ASSOCIATE COMPANIES (continued)

Group Effective Country ofAssociate Companies Interest Incorporation Principal Activities 2010 2009 % %

Held by Tanjung Offshore Services Sdn. Bhd.:

* Hercules Tanjung Asia Sdn. Bhd. 50 50 Malaysia Provision of drilling services.

(Wilayah

Persekutuan,

Labuan)

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

* Universal Hydrogen Generators (M) Sdn. Bhd. 49.50 49.50 Malaysia Commission agent for the fabrication

and supply of industrial equipment.

* PT. Gas Generators Indonesia 35 35 Indonesia Commission agent for the fabrication


* Universal Gas Generators (Thailand) Limited 35 35 Thailand Commission agent for the fabrication


* Gas Generators Philippines Inc. 35 35 Philippines Commission agent for the fabrication


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

The Group’s share of revenue and profi t of associates is as follows:

2010 2009 RM RM

Revenue 38,437,215 42,028,686

Net profi t for the year 2,555,806 2,109,257

2010 2009 RM RM

Non-current assets 113,103,861 180,784,831

Current assets 38,466,044 33,002,060

Current liabilities (145,450,617) (210,221,752)

Net tangible assets 6,119,288 3,565,139


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9. DEFERRED TAX ASSETS

GROUP 2010 2009 RM RMProperty, plant and equipment: Beginning of the year 8,083,740 6,607,227 Acquisition of subsidiary company - 71,600 Recognised in the income statements (Note 24) 229,344 1,404,913 End of the year 8,313,084 8,083,740

The deferred tax, determined before appropriate offsetting as follows:

2010 2009 RM RM Deferred tax assets 8,313,084 8,170,175 Deferred tax liabilities - (86,435) 8,313,084 8,083,740

The deferred tax assets, determined after appropriate offsetting as follows: 2010 2009 RM RM Unabsorbed capital allowances 54,189,510 24,442,136 Accelerated capital allowances (46,723,879) (17,205,850)Exercise of options pursuant to Employee Share Option Scheme 847,454 847,454 8,313,084 8,083,740

10. INVENTORIES

GROUP 2010 2009 RM RMAt cost: Turbine compressor spare parts 2,361,623 1,532,082 Work-in-progress 4,634,280 2,890,524 Raw material 58,714 442,076 Finished goods 4,120 513,643 Long term contract balances 8,282,806 3,972,845 15,341,543 9,351,170


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11. TRADE RECEIVABLES The currency exposure profi le of trade receivables are as follows:-

GROUP 2010 2009 RM RM Ringgit Malaysia 123,299,204 197,086,884 Other foreign currencies 64,896,223 18,732,705 End of the year 188,195,427 215,819,589

The credit term of trade receivables are ranging from 30 to 120 days.

As at 31 December 2010 the trade receivables ageing are as follows: GROUP 2010 RM Neither past due nor impaired 117,019,750Two to six months past due but not impaired 14,529,841More than six months past due but not impaired 54,241,726 185,791,317Impaired 2,404,110

188,195,427

Trade receivables that are neither past due nor impaired

Trade receivables that were neither past due nor impaired relate to customers for whom there were no default.

None of the Group’s trade receivables that are neither past due nor impaired have been renegotiated during the fi nancial year.

Trade receivables that are past due but not impaired

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

Trade receivables that are impaired

Movement in provision for doubtful debt: GROUP 2010 RM Beginning of the year -Current year charge 2,404,110

End of the year 2,404,110


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12. OTHER RECEIVABLES, DEPOSITS AND PREPAYMENTS


Deposits 1,518,075 1,620,546 - -

Prepayments 29,891,890 23,191,575 - -

Others 10,629,135 12,857,991 4,407,557 3,778,271

End of the year 42,039,100 37,670,112 4,407,557 3,778,271

13. CASH AND CASH EQUIVALENTS


Cash and cash balances 17,038,754 31,293,432 4,199,905 23,077,860

Fixed deposits with licensed banks 37,904,027 6,975,931 35,025,502 3,443,350

54,942,781 38,269,363 39,225,407 26,521,210

Included in the Group and the Company’s fi xed deposits with licensed banks amounting to RM8,082,182 (2009: RM6,975,931),

the use of which is restricted for the purpose of fi nancing the capital expenditure.

Included also in the Group and the Company’s fi xed deposits with licensed banks amounting to RM1,903,502 (2009:

RM2,433,953) and RMNil (2009: RM2,433,953) respectively are pledged as security for the other banking facilities.

14. TRADE PAYABLES

The currency exposure profi le of trade payables are as follows:-

GROUP 2010 2009 RM RM

Ringgit Malaysia 85,315,357 120,590,543

Other foreign currency 28,234,492 6,238,739

End of the year 113,549,849 126,829,282

The credit term of trade payables are ranging from 30 to 45 days.


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15. OTHER PAYABLES AND ACCRUALS


Other payables 10,459,194 13,914,204 6,370,824 6,714,965

Provision 695,370 2,975,634 245,339 311,223

Accruals 19,262,430 15,178,839 1,832,147 3,403,928

End of the year 30,416,994 32,068,677 8,448,310 10,430,116

16. SHORT TERM BORROWINGS


Short term loan (Note 20) 48,511,095 20,019,585 20,000,000 -

Revolving credit 18,709,244 17,024,106 - -

Bank overdraft 33,891,709 45,228,540 1,572 -

Hire and fi nance lease payables (Note 29) 1,707,374 2,124,034 - -

Serial fi xed rate bond (Note 21) 25,000,000 20,000,000 25,000,000 20,000,000

127,819,422 104,396,265 45,001,572 20,000,000

Revolving Credit

Revolving credit known as Murabahah Tawarruq is payable to Kuwait Finance House (Malaysia) Berhad (“KFHMB”) and was

obtained for Group’s working capital requirement in purchasing of equipment, payment for salary and general working capital.

The Murabahah Tawarruq profi t margin is at 0.50% + KFHMB’s Cost of Fund at the date of each drawdown and is repayable within

three (3), six (6) and twelve (12) months from drawdown. Interest incurred during the current fi nancial year was RM1,490,076

(2009 : RM1,280,558). The said facility is secured by corporate guarantee from the Company for RM25,000,000.

Bank Overdraft

The bank overdraft of the Group is secured by the freehold and leasehold land and building of the subsidiary companies (Note

5), pledged of fi xed deposits (Note 13) and corporate guarantee by the Company for RM13,650,000.

The effective interest rate is at 8.75% (2009: 8.75%) per annum and the Islamic overdraft profi t rate is at 3.00% - 7.75% (2009:

3.00% - 7.75%) per annum.


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17. SHARE CAPITAL GROUP AND COMPANY 2010 2009 RM RM

Ordinary shares of RM0.50 each Authorised: Beginning/End of the year 200,000,000 200,000,000 Issued and fully paid-up: Beginning of the year 125,650,347 123,294,789 ESOS shares subscription during the year (Note i) 4,509,150 2,346,598 Warrants exercise during the year (Note ii) 2,732,174 8,960 Private placement 13,000,000 - End of the year 145,891,671 125,650,347

Note i:

The Company’s ESOS came into effect on 02 August 2005. The ESOS shall be in force for a period of 5 years until 01 August 2010. In 2010, the ESOS was renewed for a further period of fi ve (5) years up to 1 August 2015.

The principal features of the Bye-Law of ESOS are as follows:

a) The maximum number of options which may be allotted pursuant to the ESOS (“Options”) as approved by the Securities Commission (“SC”) shall not exceed ten percent (10%) of the total issued and paid-up share capital of the Company at any point in time during the duration of the ESOS.

b) Executive directors and employees of the Group and of the Company will be eligible to participate in the ESOS provided that they fulfi ll the conditions for eligibility stipulated in the rules, terms and conditions contained in the Bye-Law (“Eligible Employees”).

c) The maximum number of new shares that may be offered and allotted to an Eligible Employee shall be determined by the ESOS Committee taking into consideration inter-alia, the Eligible Employee’s designation, job description, responsibilities and seniority.

d) The subscription price of the options issued pursuant to ESOS shall be the higher of the following:

i) at a discount of not more than ten percent (10%) from the weighted average market price of the shares as shown in the daily offi cial list issued by Bursa Malaysia Securities Berhad (“Bursa Securities”) for the fi ve (5) market days immediately preceding the date of offer; or

ii) the par value of the shares.

e) The new shares to be allotted and issued upon any exercise of the options will, upon such allotment and issuance, rank pari passu in all respects with the existing and issued shares except that the new shares so issued will not be entitled to any dividends, rights, allotments and/or any other distributions which may be declared, made or paid to shareholders prior to the date of allotment of the new shares. The new shares will be subjected to all provisions of the Articles in relation to their transfer, transmission or otherwise. The options shall not carry any right to vote at a general meeting of the Company.


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17. SHARE CAPITAL (continued)

Note i: (continued)

f) Options are exercisable, in whole or in part (provided that an option is exercised in part in respect of 1,000 shares or any multiple thereof) as follows: Percentage of Options ExercisableNumber of Options from Acceptance DateGranted 1st year 2nd year 3rd year 4th year 5th year 20,000 and below 50% 50% - - -20,001 to 50,000 20% 20% 20% 20% 20%Above 50,000 10% 15% 20% 25% 30%

Details of the options granted under the scheme to take up unissued ordinary shares of the Group are as follows:

Number of ESOSCommencement of Options Outstanding Exercise Price (s) per ESOS at 31.12.2010 Share Expiry Date 02 August 2005 4,820,400 Range from RM0.68 to RM2.35 01 August 2015

The fair values of the options are estimates on the date of grant using the Black Scholes option pricing model with the following assumption used for grants:

Weighted average share price RM1.85Weighted average exercise price RM1.62Dividend yield expected 6.00%Risk-free annual interest rate 3.37%Volatility expected 8.23%Expected life of option 5 years

Note ii:

On 30 November 2005, the Company issued a RM150,000,000 nominal value up to eight (8) years 4.5% per annum serial fi xed rate bonds with detachable warrants to the primary subscribers.

On 3 March 2006, the primary subscribers were allotted a total of 18,514,600 warrants to the shareholders at an offer price of RM0.24 per warrant on the basis of one (1) warrant for every fi ve (5) ordinary shares held on entitlement date.

On 29 August 2006, the Company completed the listing of an additional 9,257,000 warrants arising from the bonus issue exercise which was implemented in accordance to the Deed Poll dated 13 January 2006 on the basis of one (1) new warrant for every two (2) warrants held on entitlement date.

On 13 June 2007, the Company completed the listing of an additional 10,095,104 warrants arising from the bonus issue exercise on the basis of two (2) new warrants for every fi ve (5) existing warrants.

During the fi nancial year ended 31 December 2010, the Company issued an additional 5,264,346 units of new ordinary shares of RM0.50 each arising from the exercise of Warrants A at an exercise price of RM0.55 per share.

During the fi nancial year ended 31 December 2010, the Company issued an additional 200,000 units of new ordinary shares of RM0.50 each arising from the exercise of Warrants B at an exercise price of RM1.20 per share.

As at 31 December 2010, there is a total of 30,619,707 outstanding Warrant A 2006/2016 warrants.

As at 31 December 2010, there is a total of 40,777,929 outstanding Warrant B 2008/2013 warrants.


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18. TREASURY SHARES

During the current fi nancial year, the Company purchased 300 of its issued ordinary shares from the open market at an average price of RM1.21 per share. The total consideration paid for the purchase was RM363 including transaction costs. The shares purchased are being held as treasury shares in accordance with Section 67A of the Companies Act, 1965. As at 31 December 2010, the number of outstanding ordinary shares in issue after taking the treasury shares into consideration is 289,306,040 ordinary shares of RM0.50 each.

Details relating to the repurchase during the current fi nancial year are as follows:

Total shares repurchased (units) 300Total consideration (RM) 363Highest price (RM) 1.76Lowest price (RM) 1.05Average price (RM) 1.21

19. RESERVES


Non-distributable: Share premium 65,759,725 40,704,466 65,759,725 40,704,466 Capital reserves 2,165,668 3,429,097 2,165,654 3,429,097 Employee Share Option Reserves 1,611,595 1,611,595 869,371 869,371 Foreign currency translation reserve (4,742,984) (4,224,158) - - Revaluation reserve 90,673,783 96,466,039 - - 155,467,787 137,987,039 68,794,750 45,002,934 Distributable: Accumulated profi t (Note 38) 70,207,684 57,601,957 1,064,406 2,806,605

225,675,471 195,588,996 69,859,156 47,809,539

i) Share Premium

The share premium represents premiums received on the initial issuing of the share capital. Any transaction costs associated with the issuing of the shares are deducted from the share premium.

ii) Capital Reserves

Capital reserves represent the value of warrants capitalised for the issuance of serial payment bond with detachable warrants (Note 21) and value of warrants arising from the rights issue on the basis of one (1) rights share together with one (1) free warrant for every fi ve (5) existing ordinary shares. Upon the exercise of the warrants, the value of these warrants will be credited to share premium.

iii) Employee Share Option Reserve

The Employee Share Option Reserve represents the value of services provided under share-based payments.


ANNUAL REPORT 2010

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19. RESERVES (continued)

iv) Foreign Currency Translation Reserve

The foreign currency translation reserve is used to record exchange differences arising from the translation of the fi nancial statements of foreign operations whose functional currencies are different from that of the Group’s presentation currency. It is also used to record the exchange differences arising from monetary items which part of the Group’s net investment in foreign operations, where the monetary item is denominated in either the functional currency of the reporting entity or the foreign operation.

v) Revaluation Reserve

The revaluation reserve relates to the revaluation on the seven (7) units of Group’s vessels.

20. LONG TERM BORROWINGS


Term Financing - 1 (Note i) 28,105,196 34,391,049 - - Bai Istisna’ (BIS 1) (Note ii) 29,201,992 30,800,346 - - Bai Istina’ (BIS 2) (Note iii) 33,479,489 38,340,326 - - Bai Istina’ (BIS 3) (Note iv) 33,617,312 37,784,848 - - Term loan (Note v) 2,397,598 1,124,916 - - Islamic Medium Term Notes Programme (“IMTN”) (Note vi) 120,603,000 120,603,000 120,028,833 120,028,833 Ijarah (IJA 1) (Note vii) 40,212,000 40,212,000 - - Ijarah (IJA 2) (Note viii) 40,212,000 40,212,000 - - Ijarah (IJA 3) (Note ix) 34,583,335 30,500,000 - - Ijarah (IJA 4) (Note x) 40,159,335 38,000,000 - - Total 402,571,257 411,968,485 120,028,833 120,028,833 Less: Repayable within 12 months (Note 16) (48,511,095) (20,019,585) (20,000,000) - 354,060,162 391,948,900 100,028,833 120,028,833 Hire purchase and fi nance lease payable (Note 29) 4,558,754 4,789,535 - - 358,618,916 396,738,435 100,028,833 120,028,833

Note i - Term Financing - i

The purpose of this term loan is to fi nance the construction of one (1) unit Anchor Handling Tug Supply Vessel (AHTS) or known as MV Tanjung Dawai for total consideration of RM45,750,000. The loan is repayable within eight (8) years with the profi t rate of 3.00% per annum.

Note ii - Bai Istisna’ (BIS 1)

The purpose of this term loan is to fi nance the construction cost of one (1) new unit of 60-M Anchor Handling Tug Supply Vessel or known as MV Tanjung Sari. The loan is repayable by 114 monthly installments with the profi t rate of 4.75% per annum.


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20. LONG TERM BORROWINGS (continued)

Note iii - Bai Istisna’ (BIS 2) The purpose of this term loan is to fi nance the construction cost of one (1) new unit of 60-M Anchor Handling Tug Supply Vessel or known as MV Tanjung Puteri 1. The loan is repayable by 114 monthly installments with the profi t rate of 4.75% per annum.

Note iv - Bai Istisna’ (BIS 3)

The term loan which consist two (2) funds are to fi nance the construction costs of one (1) new unit of 60-M Anchor Handling Tug Supply Vessel or known as MV Tanjung Puteri 2. The loan is repayable by 114 monthly installments with profi t rate of 4.75% and 7.75% per annum respectively.

All the facilities mentioned in Note i to iv are secured by the respective vessels under fi nancing, corporate guarantees of the Company, assignment of shipbuilding contracts and future earnings of the respective vessels.

Note v – Term Loan

The term loan is to fi nance the property held under PN 4125, Lot No. 3801, Mukim Teluk Kalong, District of Kemaman, Terengganu Darul Iman.

The term loan interest rate for the fi rst 12 months is 3.28% per annum and repayable within ten (10) years. The said facility is secured by letter of undertaking, notice of assignment, fi xed deposit and corporate guarantee from the Company.

Note vi - IMTN

On 12 December 2007, the Company announced its proposed issue of, offer for subscription or purchase of, or invitation to subscribe for or purchase of up to RM400,000,000 nominal value IMTN. On 16 June 2009, the Company obtained the consent from its bondholders to reduce the existing IMTN Programme from RM400.0 million to RM200.0 million. As at to date, the Company has issued RM120,028,833 of IMTN.

The IMTN was utilised by the Company to fi nance the construction of offshore support vessels.

The repayment of IMTN with profi t rate is payable semi annually in arrears with the fi rst profi t payment commencing six (6) months from the issue date of the respective IMTN and with the last profi t payment of the respective IMTN to be made on the respective maturity date. The IMTN is secured by:

i) Charge and assignment over the designated accounts;

ii) Assignment of rights, title and interest in all the construction contracts of the new vessels which are to be commissioned for construction from the proceeds of the IMTN;

iii) Assignment of residual rights (if any) pursuant to the construction contracts after the completion of the new vessels;

iv) Assignment of all insurances and charter contracts in respect of the new vessels; and

v) Charge over the new vessels.

Note vii - Ijarah (IJA 1)

The purpose of this term loan was to fi nance the construction of one unit of 60-M Anchor Handling Tug Supply Vessel, MV Tanjung Biru 1. The loan is repayable by 96 monthly installments with the profi t rate of 3.70% per annum.


ANNUAL REPORT 2010

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20. LONG TERM BORROWINGS (continued)

Note viii - Ijarah (IJA 2)

The purpose of this term loan was to fi nance the construction of one unit of 60-M Anchor Handling Tug Supply Vessel, MV Tanjung Biru 2. The loan is repayable by 96 monthly installments with the profi t rate of 3.70% per annum.

Note ix - Ijarah (IJA 3)

The purpose of this term loan was to fi nance the construction of one unit of 60-M Anchor Handling Tug Supply Vessel, MV Tanjung Dahan 1. The loan is repayable by 108 monthly installments with the profi t rate of 3.70% per annum.

Note x - Ijarah (IJA 3)

The purpose of this term loan was to fi nance eighty two percent (82%) of the construction of one unit of 60-M Anchor Handling Tug Supply Vessel, MV Tanjung Dahan 2. The loan is repayable by 108 monthly installments with the profi t rate of 3.70% per annum.

All the facilities mentioned in Note vii to x are secured by the respective vessels under fi nancing, corporate guarantees of the Company, assignment of shipbuilding contracts and future earnings of the respective vessels.

21. SERIAL FIXED RATE BOND

GROUP AND COMPANY 2010 2009 RM RM Nominal value of the Bonds issue 150,000,000 150,000,000 Equity instrument - detachable warrants (4,402,500) (4,402,500) Proceeds of the bond issue 145,597,500 145,597,500 Less : Repayment (40,000,000) (20,000,000)Less: Repayable within 12 months (Note 16) (25,000,000) (20,000,000) 80,597,500 105,597,500

On 25 January 2006, the Company issued RM150,000,000 nominal value of up to 8 years 4.5% per annum serial fi xed rate Bonds (“the Bonds”) with 18,514,600 detachable Warrants (“the Warrants”) to the Primary Subscriber structured on a “Bought Deal” basis, which was constituted by a Trust Deed dated 13 January 2006, comprising 6 series as follows:

Series No. Nominal Values Tenure (RM) (from Issue Date) 1 20,000,000 3 years 2 20,000,000 4 years 3 25,000,000 5 years 4 25,000,000 6 years 5 30,000,000 7 years 6 30,000,000 8 years

The Bonds are secured by, inter alia, a fi rst party legal charge over the escrow account and the debt service reserve account and a third party fi rst fi xed charge over the three (3) new Straight Supply Vessels namely MV Tanjung Pinang 1, MV Tanjung Pinang 2 and MV Tanjung Pinang 3.


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21. SERIAL FIXED RATE BOND (continued)

The principal terms of the Warrants are as follows:

a) 18,514,600 detachable Warrants at an issue price of RM0.24 each. As at 31 December 2010, there are a total of

30,619,707 outstanding warrants after taking into account the bonus issue exercises and various conversions into shares

of the Company;

b) During the fi nancial year ended 31 December 2008, the exercise price has been adjusted to RM0.55 pursuant to the

Company’s rights issue with detachable warrants which is payable in full in respect of each share upon exercise of the

Warrants or any such price adjusted in accordance with the terms and conditions set out in the Deed Poll governing the

Warrants; and

c) The Warrants may be exercised in ten (10) years from the date of issue of the Warrants. Unexercised Warrants after the

exercised year will thereafter lapse and cease to be valid.

22. PROFIT/(LOSS) FROM OPERATIONS

Profi t/(loss) from operations is arrived at:


After charging:

Directors’ remuneration (Note 32) 2,404,000 3,753,500 1,566,000 1,346,068

Statutory audit

- current year 127,818 133,518 15,000 15,000

- under provision in previous year 4,000 6,000 - -

- audit related services 22,175 22,175 22,175 22,175

Amortisation of intangible assets 857,879 660,800 - -

Bad debt written off 2,800,052 5,336 - -

Depreciation of property, plant and equipment 37,261,015 26,663,160 - -

Provision for doubtful debts 2,404,110 - - -

Loss on disposal of property, plant and equipment 7,148 26,519 - -

Loss on foreign exchange 6,978,985 714,977 - -

Offi ce rental 2,806,150 2,701,614 - -

Staff costs:

- Short term benefi ts 25,465,631 24,866,159 - -

- EPF contributions 2,672,809 2,757,365 - -

- ESOS expenses - 247,311 - 247,311

And crediting:

Gain on disposal of property, plant and equipment 293,666 109,178 - -

Gain on foreign exchange 6,797,099 686,045 - -

Rental income 142,800 727,736 - -

Interest income received 322,013 439,736 227,649 430,791


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23. FINANCE COSTS GROUP COMPANY 2010 2009 2010 2009 RM RM RM RM

Hire purchase payable 242,693 252,055 - - Leasing interest 146,610 84,730 - - Overdraft interest 1,468,112 1,176,716 - - Term loan interest 16,680,226 7,527,692 - - Interest on Bonds 13,092,002 8,806,273 - - Interest on bill payable 12,723 17,596 - - Revolving credit interest 1,490,076 1,280,558 - - Commitment fee 68,905 86,206 - - Amortisation of Bonds issuance cost 201,942 201,942 201,942 201,942

33,403,289 19,433,768 201,942 201,942

24. TAXATION GROUP COMPANY 2010 2009 2010 2009 RM RM RM RM

Current year provision 200,850 1,386,453 30,000 145,923 (Over)/Under provision in previous year (38,676) 587,940 - - 162,174 1,974,393 30,000 145,923 Deferred tax relating to the origination and reversal of temporary differences (Note 9) (229,344) (1,404,913) - - (67,170) 569,480 30,000 145,923 Share of taxation of associate company 492,954 588,690 - - Tax expense for the year 425,784 1,158,170 30,000 145,923

A reconciliation of income tax expense applicable to profi t/(loss) before taxation at the statutory income tax rate to income tax expense at the effective income tax rate of the Group and of the Company is as follow:


Profi t/(Loss) before taxation 8,014,195 4,774,584 (1,712,199) 12,700,575 Taxation at Malaysian statutory tax rate of 25% (2009: 25%) 2,003,549 1,193,646 (428,050) 3,175,144 Tax effect on expenses that are not deductible for tax purposes 5,013,372 13,723,103 514,962 389,529 Utilisation of capital allowances (13,850,939) (11,516,459) - - Recognition of deferred tax assets 8,075,488 - - - Income not subject to tax (1,269,963) (3,418,750) (56,912) (3,418,750)(Over)/Under provision in previous year (38,676) 587,940 - - (67,169) 569,480 30,000 145,923 Share of taxation of associate company 492,954 588,690 - - Income tax expense for the year 425,784 1,158,170 30,000 145,923


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25. EARNINGS PER SHARE

a) Basic

The basic earnings per share is calculated by dividing the Group’s net profi t attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares in issue during the current fi nancial year, excluding ordinary shares purchased by the Company and held as treasury shares.

2010 2009 RM RM

Net profi t attributable to ordinary equity holders of the parent 6,813,471 3,075,694 Weighted average number of ordinary shares (unit) 267,088,718 245,525,478

SEN SEN Basic earnings per share 2.55 1.25

b) Diluted

For the diluted earnings per share calculation, the weighted average numbers of ordinary shares in issue during the current fi nancial year have been adjusted for the dilutive effects of potential ordinary shares in respect of warrants and share options granted to the employees.

2010 2009 RM RM Net profi t attributable to ordinary equity holders of the parent 6,813,471 3,075,694 Weighted average number of ordinary shares (unit) 267,088,718 245,525,478 ESOS: Number of unissued shares (unit)* 3,172,300 - Warrants: Number of unexercised warrants (unit) 30,619,707 35,884,000 Diluted weighted average number of ordinary shares (unit) 282,538,634 250,082,000

SEN SEN

Dilluted earnings per share 2.41 1.23

* The diluted earnings per ordinary share is not presented as the computation would result in anti-dilutive earnings per ordinary share.


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26. DIVIDEND

2010 2009 Gross Gross dividend Dividend net dividend Dividend net per share of tax pers hare of tax RM RM RM RM Final dividend in respect of the fi nancial year ended 31 December 2008 - - 0.02 3,663,302Interim dividend in respect of the fi nancial year ended 31 December 2009 - - 0.04 7,326,606 - 10,989,908

The directors do not recommend any fi nal dividend in respect of the current fi nancial year.

27. PURCHASE OF PROPERTY, PLANT AND EQUIPMENT

During the current fi nancial year, the Group made the following cash payments to purchase property, plant and equipment: GROUP 2010 2009 RM RM

Construction and commissioning of new vessels 16,296,805 21,671,760 Purchase of other property, plant and equipment 16,762,002 173,716,868 Financed by hire purchase arrangement (2,024,196) (379,903) Cash payments on purchase of property, plant and equipment 31,034,611 195,008,725

28. STATEMENTS OF CASH FLOW – CASH AND CASH EQUIVALENTS

Cash and cash equivalents included in the cash fl ow statement comprises the following balance sheet amounts:


Cash and cash equivalents (Note 13) 54,942,781 38,269,363 39,225,407 26,521,210 Bank overdraft (Note 16) (33,891,709) (45,228,540) (1,572) - 21,051,072 (6,959,177) 39,223,835 26,521,210 Fixed deposits pledged as security (Note 13) (1,903,502) (2,433,953) - (2,433,953) 19,147,570 (9,393,130) 39,223,835 24,087,257


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29. HIRE PURCHASE AND FINANCE LEASE PAYABLES

GROUP 2010 2009 RM RMMinimum payment: - Not later than 1 year 2,367,367 2,475,585 - Later than 1 year and not later than 5 years 5,134,014 5,721,113 7,501,381 8,196,698 Future fi nance charges (1,235,253) (1,283,129) 6,266,128 6,913,569 Principal portion payables: - Not later than 1 year (Note 16) 1,707,374 2,124,034 - Later than 1 year and not later than 5 years (Note 20) 4,558,754 4,789,535 6,266,128 6,913,569 Effective interest rate 2.78% - 9.79% 2.78% - 9.79%

30. CAPITAL COMMITMENTS

GROUP

As at 31 December 2010, the Group has the following capital commitments:

2010 2009 RM RMApproved and contracted for: Commissioning of three (3) units of Offshore Support Vessels (2009: seven (3) units) - 19,080,000

31. CONTINGENT LIABILITIES

COMPANY

As at 31 December 2010, the Company has the contingent liabilities as follows:

2010 2009 RM RM Aggregate of corporate guarantees pursuant to banking facilities granted by a fi nancial institutions to the Group 550,000,000 258,000,000


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32. DIRECTORS’ REMUNERATION

The directors’ remuneration during the current fi nancial year is as follows:


Non-Executive - Fee 270,000 76,000 270,000 76,000 270,000 76,000 270,000 76,000 Executive - Other emoluments 2,134,000 3,677,500 1,296,000 1,270,068 2,134,000 3,677,500 1,296,000 1,270,068 Total directors’ remuneration 2,404,000 3,753,500 1,566,000 1,346,068

Remuneration band: COMPANY Number of Directors 2010 2009 RM RMNon-Executive Directors: RM0 2 - RM1 - RM50,000 4 4 Exeutive Directors: RM50,001 - RM100,000 1* - RM100,001 - RM200,000 - 3 RM200,001 - RM250,000 3 1

* One of the Executive Directors, Haji Abdullah bin Hashim has resigned from the Company with effect from 31 March 2010.

33. FAIR VALUES OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES

Method and assumption used by the management to determine fair values of each class of fi nancial instruments for which it is practicable to estimate that value are as follows:

i) Cash and cash equivalents and short term borrowings

The carrying amounts approximate fair values due to the relatively short-term maturity of these fi nancial instruments.

ii) Receivables and payables, including balances with related parties

The carrying amounts of trade and other receivables, trade and other payables approximate their respective fair values because these are subject to normal trade credit terms and/or are repayable on demand.

iii) Non-current amount owing by subsidiary company

No disclosure of fair values are made for amount owing by subsidiary company as it is not practicable to determine their fair value with suffi cient reliability since these balances has no fi xed repayment terms.


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33. FAIR VALUES OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES

iv) IMTN, Term loan and hire purchase payables

The carrying amounts as disclosed in Note 20 to the fi nancial statements approximate the fair values, which is determined using discounted cash fl ow analysis.

34. SEGMENTAL REPORTING

i) Business Segment

The segmental information is not presented by business segment as there are no other signifi cant business segments other than the provision of integrated services to the oil and gas related industries.

ii) Geographical Segment The segment results for the fi nancial year ended 31 December 2010 are as follows:

United Malaysia Indonesia Kingdom Elimination Total RM RM RM RM RM

Revenue 336,228,015 5,366,136 31,102,874 169,110,408 541,807,434 Results Segment result 10,236,691 (445,622) (5,017,633) - 4,965,435 Share of profi t from associate 3,048,760 Taxation (425,784) Net profi t for the year 7,588,411 Minority interest (774,940) Profi t attributable to equity holders of the parent 6,813,471

35. SIGNIFICANT EVENTS

i) On 29 July 2010, the Company has completed a private placement of 26,000,000 new shares to E-Cap (Internal) One Sdn. Bhd., a wholly owned subsidiary of Ekuinas Capital Sdn. Bhd.

ii) On 03 August 2010, Tanjung Kapal Services (“TKS”) has been served a Notice of Claim from Newfi eld Peninsula Malaysia Inc (“Newfi eld”) for damages to pipeline allegedly caused by one of the vessels owned by the Company at the East Belumut Field, PM 323, offshore Malaysia. The initial claim amount has been suggested to be approximately USD15.90 million and includes mainly costs associated with the repair and cleans up of the alleged damage of pipeline. The insurers of the vessel concerned are currently investigating the alleged claims by Newfi eld and such investigations are currently on-going. However, the Company has in place extensive insurance covering legal liability.


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36. SUBSEQUENT EVENTS

i) On 18 March 2011, Tanjung Offshore Services Sdn Bhd (“TOS”) and Hercules International Drilling Ltd has signed a Sales and Purchase Agreement for disposal of 51% investment in Hercules Tanjung Asia (“HTA”), an associate company. The divestment was completed on 31 March 2011, for a cash consideration of RM127,449.

ii) On 01 February 2011 , Cendor Mopu Producer Limited (“CMPL”) an associate company to Tanjung Offshore Berhad (“TOB”) won a favourable judgement by The Supreme Court of the United Kingdom, on the appeal against Syarikat Takaful Malaysia Berhad, the insurer of Global Process System Inc (“GPS”) on the case of the loss incurred on the oil rig’s legs amounted to USD13,538,988.67, out of which USD7,901,876.41 is the claim recovery for the oil rig’s legs. The settlement of USD7,901,876.41 was made to CMPL in March 2011. The remaining settlement is yet to be fi nalised. GPS is the holding company of CMPL.

37. KEY MANAGEMENT PERSONNEL

Key management personnel are defi ned as those persons having authority and responsibility for planning, directing and controlling the activities of the Company directly or indirectly, including any director of the Company. There are no other key management personnel except for the directors of the Company whose remuneration is disclosed in Note 32 to the fi nancial statements.

38. SUPPLEMENTARY INFORMATION – BREAKDOWN OF RETAINED PROFITS INTO REALISED AND UNREALISED

The breakdown of the retained earnings of the Group and of the Company as at 31 December 2010 into realised and unrealised profi ts is presented in accordance with the directive issued by Bursa Malaysia Securities Berhad dated 25 March 2010 and prepared in accordance with Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profi ts or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants.

GROUP COMPANY 2010 2010 RM RM Total accumulated profi ts :- Realised 61,894,600 1,064,406- Unrealised 8,313,084 -

Total accumulated profi ts as per fi nancial statements 70,207,684 1,064,406


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113

LIST OF PROPERTIES OWNED BY THE GROUP

As as todate, a summary of the land and buildings owned by Tanjung Offshore Services Sdn Bhd (“TOS”), Tanjung Maintenance Services Sdn Bhd (“TMS”) and Tanjung Kapal Services Sdn Bhd is set out below:-

No

1.

2.

Title Identifi cation / Postal Address

GRN 38601 Lot No. 25929 Mukim of Setapak, District and State of Wilayah Persekutuan /No. 8-3, Jalan Puncak Setiawangsa 4,54200 Kuala Lumpur; and

GRN 38600 Lot No. 25930 Mukim of Setapak, District and State of Wilayah Persekutuan / No. 10, Jalan Puncak Setiawangsa 4, Taman Setiawangsa, 54200 Kuala Lumpur

GRN 38599 Lot No. 25931 Mukim of Setapak, District and State of Wilayah Persekutuan /No. 12, Jalan Puncak Setiawangsa 4,54200 Kuala Lumpur; and



PN 4114, Lot No. 3790 (formerly known as HS(D) 2670, PT 4199), Mukim of Teluk Kalung, District of Kemaman, State of Terengganu / Lot D1 Kawasan MIELTeluk Kalung24007 KemamanTerengganu Darul Iman

Description And Existing Use /

Ownership

3-storey shopoffi ces used as the head offi ce for Tanjung Group /

Owned by TOS

A factory lot used as the Group’s Kemaman Operation Centre providing complete maintenance services /

Owned by TOS

Approximate Age of Building / Tenure / Date of Expiry of Lease

Age of building : approximately 11 years / Tenure : Freehold





Age of building :approximately 3 years / Tenure: 60-year leasehold expiring 22.8.2057

Land Area / (Built-Up Area)

(sq. ft.)

1,760 / (4,634)

1,760 / (4,634)

1,760 / (4,634)

1,760 / (4,634)

1,760 / (4,634)

21,427 / (8,626)

Net Book Value As At 31.12.2010

442,240.80

656,000

1,133,821.13

1,116,000

977,829.25

786,685.89


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114

LIST OF PROPERTIES OWNED BY THE GROUP

As as todate, a summary of the land and buildings owned by Tanjung Offshore Services Sdn Bhd (“TOS”), Tanjung Maintenance Services Sdn Bhd (“TMS”) and Tanjung Kapal Services Sdn Bhd is set out below:-

No

3.

4.

5.

Title Identifi cation / Postal Address

PN 4115, Lot No. 3791 (formerly known as HS(D) 2671, PT 4200), Mukim of Teluk Kalung, District of Kemaman, State of Terengganu / Lot D2 Kawasan MIELTeluk Kalung24007 KemamanTerengganu Darul Iman

PN 4125, Lot No 3801(Formerly known as HSD) 2681, PT 4200),Mukim of Teluk KalongDistrict of Kemaman, State of Terengganu.Lot D12, Kawasan MIEL, Teluk Kalung,24007 Kemaman, Terengganu.

GM 9928 Lot 13837(Formerly known as HS (M)12316 PT 13837)Mukim of Cukai, District of Kemaman, State of Terengganu.Lot 07730, Taman Greenlast, Jalan Penghiburan, Cukai, Kemaman, Terengganu

Description And Existing Use /

Ownership

A factory lot used as the Group’s Kemaman Operation Centre providing complete maintenance services. /

Owned by TOS

A factory lot used as the Group’s Kemaman Operation Centre providing complete maintenance services. /

Owned by TMS

3-storey shopoffi ce used as offi ce/branch for marine operations in Kemaman.

Owned by TKS

Approximate Age of Building / Tenure / Date of Expiry of Lease

Age of building :approximately 2.5 years / Tenure : 60-year leasehold expiring 22.8.2057

Age of building : Aproximately 4 yrs 10 mths.Tenure : 60 years leaseholdExpiring : 23.08.2057

Age of building : 2 year Tenure : Freehold

Land Area / (Built-Up Area)

(sq. ft.)

16,017 / (8,626)

20,355/(8,626)

2,335 (7,008)

Net Book Value As At 31.12.2010

742,981.11

666,120

825,046.71


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115

ANALYSIS OF SHAREHOLDINGS

ANALYSIS OF SHAREHOLDINGS AS AT 31 MARCH 2011

Authorised Share Capital - RM200,000,000.00

Issued and Paid-up Share Capital - RM145,966,620.00

Class of Shares - Ordinary Share of RM0.50 each

Voting Rights - One vote per share

ANALYSIS BY SIZE OF SHAREHOLDINGS AS AT 31 MARCH 2011

NO.OF NO. OF SIZE OF SHAREHOLDINGS SHAREHOLDERS % SHARES %

1 - 99 93 3.28 2,942 0.00 100 - 1000 395 13.96 332,784 0.141,001 - 10,000 1,676 59.24 7,389,228 2.5510,001 - 100,000 54 19.12 17,561,255 6.06100,001 - 12,562,123 121 4.27 72,676,609 25.1012,562,124 AND ABOVE 3 0.10 191,493,022 66.15

T O T A L 2,829 100.00 289,455,840 100.00

REGISTER OF SUBSTANTIAL SHAREHOLDERS AS AT 31 MARCH 2011 SHARES HELD PERCENTAGE

1 HAJI OMAR BIN KHALID 98,268,722 33.95 2 CIMSEC NOMINEES (TEMPATAN) SDN BHD 70,000,000 24.18 CIMB BANK BHD FOR E-CAP (INTERNAL) ONE SDN BHD 3 LEMBAGA TABUNG HAJI 24,802,600 8.56

193,071,332 66.69

TOTAL ISSUED SHARES AS AT 31/03/2011 : 291,933,240TREASURY SHARES AS AT 31/03/2011 : 2,477,400 ‘ADJUSTED’ CAPITAL AFTER NETTING TREASURY SHARES AS AT 31/03/2011 : 289,455,840


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116


TANJUNG OFFSHORE BERHADLIST OF DIRECTORS’ HOLDINGS AS AT 31 MARCH 2011

No. of No. of No. of Name of Director Shares % Warrants A % Warrants B % 1. Datuk Wira Syed Ali Bin Tan Sri Syed Abbas Alhabshee 420,000 0.15 89,599 0.29 - - 2. Haji Omar Bin Khalid 98,268,722 33.95 18,435,270 60.21 17,031,737 41.77 3. Haji Hamidon Bin Md Khayon 50,000 0.02 - - - - 4. Dato’ Dr. (H) Ab Wahab Bin Haji Ibrahim 1,000 0.00 - - - - 5. Edwanee Cheah Bin Abdullah 546,724 0.19 136,415 0.45 227,354 0.56 6. George William Warren Jr 929,480 0.32 156,799 0.51 146,580 0.36 7. Za’aba Bin Sedek 8,870 0.00 - - - - 8. Dato’ Abdul Rahman Bin Ahmad - - - - - - 9. Syed Yasir Arafat Bin Syed Abd Kadir - - - - - - Total 100,224,796 34.63 18,818,083 61.46 17,405,671 42.69


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117


THE 30 LARGEST SECURITIES ACCOUNT HOLDERS AS AT 31 MARCH 2011

HOLDER NAME SHARES HELD PERCENTAGE

1 OMAR BIN KHALID 96,690,422 33.404

2 CIMSEC NOMINEES (TEMPATAN) SDN BHD 70,000,000 24.183 CIMB BANK BHD FOR E-CAP (INTERNAL) ONE SDN BHD

3 LEMBAGA TABUNG HAJI 24,802,600 8.568

4 ABDULLAH BIN HASHIM 11,630,410 4.018

5 RAHMANDIN @ RAHMANUDIN BIN MD SHAMSUDIN 5,639,120 1.948

6 AMANAHRAYA TRUSTEES BERHAD 4,593,344 1.586 PUBLIC ISLAMIC OPPORTUNITIES FUND

7 AMANAHRAYA TRUSTEES BERHAD 4,272,800 1.476 PUBLIC ISLAMIC SELECT TREASURES FUND

8 CITIGROUP NOMINEES (TEMPATAN) SDN BHD 2,002,600 0.691 EMPLOYEES PROVIDENT FUND BOARD (PHEIM)

9 MALAYSIA NOMINEES (TEMPATAN) SENDIRIAN BERHAD 1,889,504 0.652 GREAT EASTERN LIFE ASSURANCE (MALAYSIA) BERHAD

10 EB NOMINEES (TEMPATAN) SENDIRIAN BERHAD 1,863,400 0.643 PLEDGED SECURITIES ACCOUNT FOR ABDULLAH BIN HASHIM 11 OMAR BIN KHALID 1,578,300 0.545

12 CITIGROUP NOMINEES (TEMPATAN) SDN BHD 1,348,700 0.465 EMPLOYEES PROVIDENT FUND BOARD (HDBS) 13 HLG NOMINEE (TEMPATAN) SDN BHD 1,327,800 0.458 PB TRUSTEE SERVICES BERHAD FOR HONG LEONG GROWTH FUND

14 SYED ELYAS BIN SYED ABDILLAH 1,245,800 0.430

15 HSBC NOMINEES (TEMPATAN) SDN BHD 1,040,000 0.359 HSBC (M) TRUSTEE BHD FOR HWANGDBS AIIMAN GROWTH FUND

16 WARREN STEPHEN ORLANDO JR 1,003,200 0.346

17 DB (MALAYSIA) NOMINEE (TEMPATAN) SENDIRIAN BERHAD 940,000 0.324 DEUTSCHE TRUSTEES MALAYSIA BERHAD FOR PRUSMALL-CAP FUND


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THE 30 LARGEST SECURITIES ACCOUNT HOLDERS AS AT 31 MARCH 2011 (continued)


18 GEORGE WILLIAM WARREN JR 929,480 0.321

19 HSBC NOMINEES (ASING) SDN BHD 887,400 0.306 EXEMPT AN FOR JPMORGAN CHASE BANK, NATIONAL ASSOCIATION (NORGES BK LEND)

20 AMSEC NOMINEES (TEMPATAN) SDN BHD 874,500 0.302 AMTRUSTEE BERHAD FOR HONG LEONG STRATEGIC FUND

21 SYED ISMAIL BIN SYED ABDILLAH 814,200 0.281

22 AMSEC NOMINEES (TEMPATAN) SDN BHD 795,800 0.274 AMTRUSTEE BERHAD FOR HONG LEONG PENNY STOCK FUND

23 HLG NOMINEE (TEMPATAN) SDN BHD 780,000 0.269 HONG LEONG BANK BHD FOR TIONG TOH CHIONG

24 MAYBAN NOMINEES (TEMPATAN) SDN BHD 773,300 0.267 MAYBAN TRUSTEES BERHAD FOR MAAKL-HDBS FLEXI FUND

25 LOW GEIK CHENG 756,200 0.261

26 AMANAHRAYA TRUSTEES BERHAD 752,800 0.260 PUBLIC SELECT ALPHA - 30 FUND

27 NOORSIAH BINTI MOHAMED SHAMSUDDIN 732,000 0.252

28 LEE OOI CHONG 665,000 0.229

29 CIMB TRUSTEE BERHAD 659,000 0.227 AMANAH SAHAM DARUL IMAN 30 HUI SIEW MAY 656,672 0.226

241,944,352 83.585

TOTAL ISSUED SHARES AS AT 31/03/2011 : 291,933,240TREASURY SHARES AS AT 31/03/2011 : 2,477,400‘ADJUSTED’ CAPITAL AFTER NETTING TREASURY SHARES AS AT 31/03/2011 : 289,455,840


ANNUAL REPORT 2010

119

ANALYSIS OF WARRANTHOLDINGS (WARRANT A 2006/2016)

ANALYSIS BY SIZE OF WARRANTHOLDINGS (WARRANT A 2006/2016) AS AT 31 MARCH 2011

NO.OF NO. OF SIZE OF WARRANTHOLDINGS WARRANTHOLDERS % WARRANT %

1 - 99 55 14.39 2,651 0.00 100 - 1000 93 24.34 48,482 0.151,001 - 10,000 155 40.57 641,634 2.09 10,001 - 100,000 64 16.75 1,958,146 6.40100,001 - 1,794,201 13 3.40 3,657,116 11.95 1,794,202 AND ABOVE 2 0.52 24,274,778 79.37

T O T A L 382 100.00 30,582,807 100.00

WARRANTHOLDINGS WITH 5.0 % AND ABOVE


1 OMAR BIN KHALID 18,435,270 60.28

2 ABDULLAH BIN HASHIM 5,839,508 19.09 24,274,778 79.37


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THE 30 LARGEST WARRANTHOLDERS AS AT 31 MARCH 2011

HOLDER NAME WARRANT HELD PERCENTAGE

1 OMAR BIN KHALID 18,435,270 60.279


3 RAHMANDIN @ RAHMANUDIN BIN MD SHAMSUDIN 937,039 3.063 4 SYED ELYAS BIN SYED ABDILLAH 750,399 2.453

5 CIMSEC NOMINEES (TEMPATAN) SDN BHD 308,116 1.007 CIMB BANK FOR TEH SWEE HENG

6 CIMSEC NOMINEES (TEMPATAN) SDN BHD 300,000 0.980 CIMB BANK FOR LIM CHA BOH @ LIM LAI YOKE

7 PUBLIC NOMINEES (TEMPATAN) SDN BHD 208,700 0.682 PLEDGED SECURITIES ACCOUNT FOR AU KWAN SENG

8 SYED HASSAN BIN SYED ALWI 179,199 0.585 9 RHB CAPITAL NOMINEES (TEMPATAN) SDN BHD 170,000 0.555 PLEDGED SECURITIES ACCOUNT FOR LEE POH KWEE

10 NG KEK CHONG 159,999 0.523

11 GEORGE WILLIAM WARREN JR 156,799 0.512 12 MAYBAN NOMINEES (TEMPATAN) SDN BHD 138,100 0.451 PLEDGED SECURITIES ACCOUNT FOR CHAI KOH HIUNG

13 EDWANEE CHEAH BIN ABDULLAH 136,415 0.446 14 CHEN BOON HEOW 111,999 0.366 15 MOHD SHAZLI BIN MOHAMED 100,351 0.328

16 HLB NOMINEES (TEMPATAN) SDN BHD 100,000 0.326 PLEDGED SECURITIES ACCOUNT FOR HIU WOONG CHOONG 17 PEH AH CHUAN 100,000 0.326

18 LEE ME LAY 98,858 0.323

19 SYED ALI BIN ABBAS ALHABSHEE 89,599 0.292

20 PUBLIC NOMINEES (TEMPATAN) SDN BHD 86,800 0.283 PLEDGED SECURITIES ACCOUNT FOR AU KWAN SENG

21 BEH ENG PAR 85,400 0.279


ANNUAL REPORT 2010

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THE 30 LARGEST WARRANTHOLDERS AS AT 31 MARCH 2011 (continued)


22 RHB CAPITAL NOMINEES (TEMPATAN) SDN BHD 74,000 0.241 PLEDGED SECURITIES ACCOUNT FOR TAN KENG AIK

23 EVELYN LAU SIE JIONG 57,663 0.188

24 LIM CHA BOH @ LIM LAI YOKE 51,509 0.168

25 GURUBACHAN SINGH @ GURUBACHAN SINGH JOHAL A/L AMAR SINGH 44,799 0.146

26 SYED OSMAN BIN SYED OMAR 44,799 0.146

27 EDMUND GOH CHZE JIN 42,666 0.139

28 INDAR KAUR A/P DAN SINGH 42,500 0.138

29 TA NOMINEES (TEMPATAN) SDN BHD 40,799 0.133 PLEDGED SECURITIES ACCOUNT FOR BASARIAH BINTI HASHIM

30 ABDUL SHUKOR BIN MOHD SALIH 34,047 0.111

28,925,333 94.580


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122

ANALYSIS OF WARRANTHOLDINGS (WARRANT B 2008/2013)

ANALYSIS BY SIZE OF WARRANTHOLDINGS AS AT 31 MARCH 2011

NO.OF NO. OF SIZE OF WARRANTHOLDINGS WARRANTHOLDERS % WARRANT %

1 - 99 24 3.145 604 0.001 100 - 1000 232 30.406 131,453 0.395 1,001 - 10,000 245 32.110 1,241,670 3.485 10,001 - 100,000 223 29.226 7,920,396 16.572 100,001 - 2,048,895 37 4.849 9,753,8344 27.087 2,048,896 AND ABOVE 2 0.262 21,729,472 52.457

T O T A L 763 100.000 40,777,429 100.000

WARRANTHOLDERS WITH HOLDINGS 5.0 % AND ABOVE


1 OMAR BIN KHALID 17,031,737 41.77



ANNUAL REPORT 2010

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THE 30 LARGEST WARRANTHOLDERS AS AT 31 MARCH 2011


1 OMAR BIN KHALID 17,031,737 41.767


3 RAHMANDIN @ RAHMANUDIN BIN MD SHAMSUDIN 890,320 2.183

4 TANG BOON HENG 847,500 2.078

5 MAYBAN NOMINEES (TEMPATAN) SDN BHD 634,600 1.556 PLEDGED SECURITIES ACCOUNT FOR CHONG SOO LIM

6 MAYBAN NOMINEES (TEMPATAN) SDN BHD 530,600 1.301 PLEDGED SECURITIES ACCOUNT FOR KEK LIAN LYE

7 RHB CAPITAL NOMINEES (TEMPATAN) SDN BHD 530,000 1.299 PLEDGED SECURITIES ACCOUNT FOR LEE POH KWEE

8 SI THO YOKE MENG 497,400 1.219

9 MAYBAN SECURITIES NOMINEES (TEMPATAN) SDN BHD 421,900 1.034 PLEDGED SECURITIES ACCOUNT FOR HENG POH SUAN

10 PUBLIC NOMINEES (TEMPATAN) SDN BHD 409,000 1.003 PLEDGED SECURITIES ACCOUNT FOR LIM GIM LEONG

11 ECML NOMINEES (TEMPATAN) SDN. BHD 336,500 0.825 PLEDG ED SECURITIES ACCOUNT FOR YEW SAN HO

12 EB NOMINEES (TEMPATAN) SENDIRIAN BERHAD 311,400 0.763 PLEDGED SECURITIES ACCOUNT FOR ABDULLAH BIN HASHIM

13 RAJENDRAN A/L KARUPPIAH 300,000 0.735

14 CIMSEC NOMINEES (TEMPATAN) SDN BHD 280,000 0.686 CIMB BANK FOR TEH SWEE HENG (MM1118) 15 OSK NOMINEES (TEMPATAN) SDN BERHAD 250,000 0.613 KIM ENG SECURITIES PTE. LTD. FOR WONG YUE JEEN

16 EDWANEE CHEAH BIN ABDULLAH 227,354 0.557

17 HENG POH SUAN 218,700 0.536


ANNUAL REPORT 2010

124


THE 30 LARGEST WARRANTHOLDERS AS AT 31 MARCH 2011 (continued)


18 EE LI CHEN 204,000 0.500

19 RHB CAPITAL NOMINEES (TEMPATAN) SDN BHD 200,000 0.490 PLEDGED SECURITIES ACCOUNT FOR CHIA SEOW HWA

20 LEE YEW HIN 168,700 0.413

21 WARREN STEPHEN ORLANDO JR 167,200 0.410

22 CIMSEC NOMINEES (TEMPATAN) SDN BHD 164,200 0.402 CIMB BANK FOR LEN BOOK LEARN

23 BEH ENG PAR 150,000 0.367

24 NG KEK CHONG 150,000 0.367 25 RAJENDRAN A/L KARUPPIAH 150,000 0.367

26 GEORGE WILLIAM WARREN JR 146,580 0.359

27 CIMSEC NOMINEES (TEMPATAN) SDN BHD 145,100 0.355 CIMB BANK FOR TAN TENG TENG

28 LIM HOCK SOON 143,200 0.351

29 LIM KONG YOW 135,000 0.331

30 TOH BOK PIEW 127,000 0.311

30,465,726 74.712

(Please indicate with an “X” in the spaces provided on how you wish your vote to be cast. In the absence of specifi c direction, your proxy will vote or abstain as he / she thinks fi t)

Signed this day of 2011. No. of Shares Held

.................................................................... Signature of Shareholder or Common Seal

Notes:-

1. A member entitled to attend and vote at the meeting shall not be entitled to appoint more than two (2) proxies to attend and vote in his/her stead. A proxy may but need not be a member of the Company and the provisions of Section 149(1)(b) of the Companies Act, 1965 shall not apply.

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

3. Where a Member is an authorised nominee as defi ned under the Securities Industry (Central Depositories) Act, 1991, it may appoint at least one (1) proxy in respect of each Securities Account it holds with ordinary shares of the Company standing to the credit of the said Securities Account.

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

5. The instrument appointing a proxy and the power of attorney or other authority (if any), under which it is signed or a notarially certifi ed copy thereof, must be deposited at the Registered Offi ce of the Company at 312, 3rd Floor, Block C, Kelana Square, 17 Jalan SS7/26, 47301 Petaling Jaya, Selangor Darul Ehsan not less than forty eight hours (48) hours before the time appointed for holding the Seventh Annual General Meeting or any adjournment thereof.

I/We ........................................................................................................................................................................................................

NRIC No./Company No.................................................................. of ....................................................................................................

........................................................................................................................... being a Member/Members of Tanjung Offshore Berhad

(“the Company”), hereby appoint .............................................................................................................................................................

of ................................................................................................................................................................................. or failing him/her

................................................................................................................. of ..........................................................................................

......................................................................................as my/our proxy to vote for me/us and on my/our behalf at the Seventh Annual General Meeting of the Company to be held at Kenanga Room, Kelab Darul Ehsan, Taman Tun Abdul Razak, Jalan Kerja Air Lama, 68000 Ampang Jaya, Selangor Darul Ehsan on Thursday, 19 May 2011 at 11:00 a.m. and at any adjournment thereof in the manner as indicated below:-

TANJUNG OFFSHORE BERHAD (662315-U) (Incorporated in Malaysia under the Companies Act, 1965)

FORM OF PROXY

FOR AGAINSTRESOLUTION

Resolution No. 1

Resolution No. 2

Resolution No. 3

Resolution No. 4

Resolution No. 5

Resolution No. 6

Resolution No. 7

Resolution No. 8

Resolution No. 9

NO.

1.

2.

3.

4.

5.

6.

7.

8.

9.

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

312, 3rd Floor, Block CKelana Square, 17 Jalan SS7/2647301 Petaling JayaSelangor Darul Ehsan

FOLD THIS FLAP FOR SEALING

FOLD HERE

FOLD HERE

STAMP

tanjung ar 2010 cover ok 11 tanjung kapal services sdn bhd ... dato’ dr. (h) ... peti surat 10788...

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