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TANJUNG OFFSHORE BERHAD (Company No.: 662315-U) annual report 2014

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Page 1: Tanjung Offshore Berhad Cover STATEMENT OF CORPORATE GOVERNANCE 37 OTHER INFORMATION 38 FINANCIAL STATEMENTS 111 LIST OF PROPERTIES OWNED BY THE GROUP 113 ANALYSIS OF SHAREHOLDINGS

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

annual report 2014

Page 2: Tanjung Offshore Berhad Cover STATEMENT OF CORPORATE GOVERNANCE 37 OTHER INFORMATION 38 FINANCIAL STATEMENTS 111 LIST OF PROPERTIES OWNED BY THE GROUP 113 ANALYSIS OF SHAREHOLDINGS

contentsannual report 2014

2 CORPORATE INFORMATION5 CORPORATE STRUCTURE6 TANJUNG OFFSHORE BERHAD7 TANJUNG OFFSHORE SERVICES SDN BHD8 GAS GENERATORS (M) SDN BHD UNIVERSAL GAS GENERATORS SDN BHD9 TANJUNG NEWENERGY SERVICES SDN BHD TANJUNG PETROCONSULT SDN BHD TANJUNG CSI SDN BHD10 MANAGEMENT TEAM11 VISION, MISSION & PHILOSOPHY12 FIVE (5) YEARS GROUP FINANCIAL HIGHLIGHTS14 NOTICE OF ANNUAL GENERAL MEETING16 DIRECTORS’ PROFILE20 CHAIRMAN’S STATEMENT23 AUDIT COMMITTEE REPORT27 STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL29 STATEMENT OF CORPORATE GOVERNANCE37 OTHER INFORMATION38 FINANCIAL STATEMENTS111 LIST OF PROPERTIES OWNED BY THE GROUP113 ANALYSIS OF SHAREHOLDINGS116 ANALYSIS OF WARRANT• FORM OF PROXY

Page 3: Tanjung Offshore Berhad Cover STATEMENT OF CORPORATE GOVERNANCE 37 OTHER INFORMATION 38 FINANCIAL STATEMENTS 111 LIST OF PROPERTIES OWNED BY THE GROUP 113 ANALYSIS OF SHAREHOLDINGS

TANJUNG OFFSHORE BERHAD (662315-U)

ANNUAL REPORT 20142

Board Of Directors

Standing From Left

Datuk Dr Nik Norzrul Thani bin N. Hassan Thani(Non Independent Non-Executive Director)

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

Dato’ Maheran binti Mohd Salleh(Independent Non-Executive Director)

Rahmandin @ Rahmanudin bin Md. Shamsudin(Executive Director/Group Chief Executive Officer)

Datuk Mohd Hafarizam bin Harun(Independent Non Executive/Chairman)

Tan Sri Datuk Tan Kean Soon(Executive Director/ Executive Deputy Chairman)

Tan Sam Eng(Independent Non-Executive Director)

Datuk Suraj Singh Gill(Independent Non-Executive Director)

Datuk Syed Hussian bin Syed Junid(Independent Non Executive Director)

CORPORATE INFORMATION

Page 4: Tanjung Offshore Berhad Cover STATEMENT OF CORPORATE GOVERNANCE 37 OTHER INFORMATION 38 FINANCIAL STATEMENTS 111 LIST OF PROPERTIES OWNED BY THE GROUP 113 ANALYSIS OF SHAREHOLDINGS

3TANJUNG OFFSHORE BERHAD (662315-U)

ANNUAL REPORT 2014

CORPORATE INFORMATION

AUDIT COMMITTEE

ChairmanDato’ Dr. (H) Ab Wahab Bin Haji Ibrahim

MemberDatuk Dr. Nik Norzrul bin N. Hassan ThaniDatuk Syed Hussian bin Syed JunidTan Sam Eng

NOMINATING COMMITTEE

ChairpersonDato’ Maheran binti Mohd Salleh

MemberDatuk Syed Hussian bin Syed JunidDatuk Suraj Singh Gill

REMUNERATION COMMITTEE

ChairmanDatuk Mohd Hafarizam bin Harun

MemberTan Sri Datuk Tan Kean SoonDato’ Ab Wahab bin Haji Ibrahim

SHARE ISSUANCE SCHEME COMMITTEE

Member Tan Sri Datuk Tan Kean SoonRahmandin @ Rahmanudin bin Md Shamsudin

COMPANY SECRETARIES

Kang Shew Meng (MAICSA 0778565)Seow Fei San (MAICSA7009732)

REGISTERED OFFICE

802, 8th Floor, Block CKelana Square, 17 Jalan SS7/2647301 Petaling JayaSelangor Darul EhsanTel : 03-7803 1126Fax : 03-7806 1387

HEAD / MANAGEMENT OFFICE

Suite 5-1, Level 5, Wisma UOA Damansara IINo. 6, Changkat SemantanDamansara Heights50490 Kuala Lumpur

AUDITORS / REPORTING ACCOUNTANTS

AljeffriDean (Firm No.: AF 1366)Chartered Accountants2-5-13, 5th Floor, Menara KLH(Business Centre)No. 2, Jalan Kasipillay51200 Kuala LumpurTel : 03-2381 1170

PRINCIPAL BANKERS

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

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

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 SecuritiesBerhad

STOCK INFORMATION

Stock Name: TGOFFS, TGOFFS-WAStock Code: 7228, 7228-WA, Bloomberg Code: TOFF MK

Page 5: Tanjung Offshore Berhad Cover STATEMENT OF CORPORATE GOVERNANCE 37 OTHER INFORMATION 38 FINANCIAL STATEMENTS 111 LIST OF PROPERTIES OWNED BY THE GROUP 113 ANALYSIS OF SHAREHOLDINGS

TANJUNG OFFSHORE BERHAD (662315-U)

ANNUAL REPORT 20144

CORPORATE INFORMATION

TANJUNG OFFSHORE BERHAD

TANJUNG OFFSHORE SERVICES SDN BHD

TANJUNG NEWENERGY SERVICES SDN BHD

Kuala Lumpur (Head Office)Suite 5-1 , Level 5Wisma UOA Damansara IINo. 6 Changkat SemantanDamansara Heights50490 Kuala Lumpur.Tel : 03-2087 7000Fax : 03-2087 7040 / 7041

TANJUNG OFFSHORE SERVICES SDN BHD

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

TANJUNG OFFSHORE SERVICES SDN BHD

No 399, Lot 405A Parkcity Commercial Square,Phase 5, Jalan Kembar Budin,97000 Bintulu, SarawakTel : 086-337698

GAS GENERATORS (M) SDN BHD

Lot 993, Off Jalan Balakong, Balakong, Seri Kembangan,43300 Selangor.Tel : +603 8961 3390Fax : +603 8962 3390Email : [email protected]

Page 6: Tanjung Offshore Berhad Cover STATEMENT OF CORPORATE GOVERNANCE 37 OTHER INFORMATION 38 FINANCIAL STATEMENTS 111 LIST OF PROPERTIES OWNED BY THE GROUP 113 ANALYSIS OF SHAREHOLDINGS

5TANJUNG OFFSHORE BERHAD (662315-U)

ANNUAL REPORT 2014

GROUP CORPORATE STRUCTURE

TANJUNG OFFSHORE MARINESERVICES SDN BHD

100%

TANJUNG PETROCONSULTSDN BHD

100%

TANJUNG NEWENERGY SERVICESSDN BHD

100%

7 NEWMARKET STREETHOLDINGS LIMITED(Formerly known asWavenet Investments Limited)

100%

TANJUNG DRILLTECHSDN BHD

51%

FIRCROFT TANJUNGSDN BHD

51%

TANJUNG HMS PETROLEUMSDN BHD

51%

TANJUNG CSI SDN BHD

100%

TANJUNG OFFSHORE RESOURCESSDN BHD

100%

7 NEWMARKET STREET LIMITED(Formerly known asSparkling Light Investments Limited)

100%

TANJUNG CITECH UK LIMITED

100%

TANJUNG CITECHSDN BHD

100%

CITECH ENERGY RECOVERYSYSTEMS UK LIMITED

100%

GAS GENERATORS (MALAYSIA)SDN BHD

100%

UNIVERSAL GAS GENERATORS (M)SDN BHD

100%

GAS GENERATORSINTERNATIONAL LTD

100%

TANJUNG OFFSHORE SERVICESSDN BHD

100%

Page 7: Tanjung Offshore Berhad Cover STATEMENT OF CORPORATE GOVERNANCE 37 OTHER INFORMATION 38 FINANCIAL STATEMENTS 111 LIST OF PROPERTIES OWNED BY THE GROUP 113 ANALYSIS OF SHAREHOLDINGS

TANJUNG OFFSHORE BERHAD (662315-U)

ANNUAL REPORT 20146

TANJUNG OFFSHORE BERHAD

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

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

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

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

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

EXPLORATIONSurface GeochemistrySeismic activitiesDrilling services

DEVELOPMENTHookup & commissioningDrilling servicesStructure & constructionEngineering Equipment

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

MAINTENANCERetrofittingStructural strength & corrosion assessmentEngineering equipment maintenance

ABANDONMENTDismantling of structuresDecommissioning of machinery & equipmentPollution control exercise and assessment

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7TANJUNG OFFSHORE BERHAD (662315-U)

ANNUAL REPORT 2014

TANJUNG OFFSHORE SERVICES SDN BHD

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

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

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

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

Maintenance services

Engineering equipment

Gas generation packages

Drilling services

Page 9: Tanjung Offshore Berhad Cover STATEMENT OF CORPORATE GOVERNANCE 37 OTHER INFORMATION 38 FINANCIAL STATEMENTS 111 LIST OF PROPERTIES OWNED BY THE GROUP 113 ANALYSIS OF SHAREHOLDINGS

TANJUNG OFFSHORE BERHAD (662315-U)

ANNUAL REPORT 20148

GAS GENERATORS (M) SDN BHDUNIVERSAL GAS GENERATORS SDN BHD

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

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

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

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

Page 10: Tanjung Offshore Berhad Cover STATEMENT OF CORPORATE GOVERNANCE 37 OTHER INFORMATION 38 FINANCIAL STATEMENTS 111 LIST OF PROPERTIES OWNED BY THE GROUP 113 ANALYSIS OF SHAREHOLDINGS

9TANJUNG OFFSHORE BERHAD (662315-U)

ANNUAL REPORT 2014

TANJUNG NEW ENERGY SERVICES SDN BHDTANJUNG PETROCONSULT SDN BHD

TANJUNG CSI SDN BHD

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

Our main engineering products are as follows:-

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

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

• Process & safety automation, measurement, analytical, actuation instrumentations and wet gas metering system;

• Fire & gas integrated security systems and field detectors;

• Gas analyzers for moisture, H2S and CO measurements;

• Liquid & gas metering solutions for custody transfer/allocation and pipe line detection system or PLDS;

• PQE – power quality consultancy services;

• Multiphase Flow Metering Solutions; and

• Rotating machineries engineering solutions focuses on supplying high quality and innovative control solutions for turbines and compressors.

Page 11: Tanjung Offshore Berhad Cover STATEMENT OF CORPORATE GOVERNANCE 37 OTHER INFORMATION 38 FINANCIAL STATEMENTS 111 LIST OF PROPERTIES OWNED BY THE GROUP 113 ANALYSIS OF SHAREHOLDINGS

TANJUNG OFFSHORE BERHAD (662315-U)

ANNUAL REPORT 201410

MANAGEMENT TEAM

Page 12: Tanjung Offshore Berhad Cover STATEMENT OF CORPORATE GOVERNANCE 37 OTHER INFORMATION 38 FINANCIAL STATEMENTS 111 LIST OF PROPERTIES OWNED BY THE GROUP 113 ANALYSIS OF SHAREHOLDINGS

11TANJUNG OFFSHORE BERHAD (662315-U)

ANNUAL REPORT 2014

MISSION &PHILOSOPHY

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

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

•ProvidingQualityProducts & Services;•OptimisingResources;•NewTechnologies;•EnhancingTechnical

Competencies; and•FullCompliancetoHealth,Safety and Environmental regulations.

Page 13: Tanjung Offshore Berhad Cover STATEMENT OF CORPORATE GOVERNANCE 37 OTHER INFORMATION 38 FINANCIAL STATEMENTS 111 LIST OF PROPERTIES OWNED BY THE GROUP 113 ANALYSIS OF SHAREHOLDINGS

TANJUNG OFFSHORE BERHAD (662315-U)

ANNUAL REPORT 201412

FIVE (5) YEARS GROUP FINANCIAL HIGHLIGHTS

Group2010

RM’0002011

RM’0002012

RM’0002013

RM’0002014

RM’000

Revenue 541,807 334,437* 263,707* 327,791 107,345*

EBITDA 76,690 (47,869)* (20,752)* 16,148 6,604*

Net Profit / (Loss) before tax 8,014 (56,168) (25,718) 12,739 205*

Net Profit / (Loss) after tax 7,588 (55,396) (11,585) 10,909 1,061*

Pre - tax Margin / (Loss) (%) 1.48 (16.79) (9.75) 3.89 0.19

Net Margin / (Loss) (%) 1.40 (16.56) (4.39) 3.33 0.99

Basic Earnings / (Loss) per share (sen) 2.55 (19.14) (3.99) 3.52 0.28

* Excludes discontinued operations.

(11,585)

(55,396)

1,061

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 -

Revenue (RM’000)

60 -

50 -

40 -

30 -

20 -

10 -

0 -

-10 -

-20 -

-30 -

-40 -

-50 -

-60 -

10,909

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

541,807

334,437263,707

327,791

107,345

‘10 ‘11 ‘12 ‘13 ‘14 ‘10 ‘11 ‘12 ‘13 ‘14

7,588

Page 14: Tanjung Offshore Berhad Cover STATEMENT OF CORPORATE GOVERNANCE 37 OTHER INFORMATION 38 FINANCIAL STATEMENTS 111 LIST OF PROPERTIES OWNED BY THE GROUP 113 ANALYSIS OF SHAREHOLDINGS

13TANJUNG OFFSHORE BERHAD (662315-U)

ANNUAL REPORT 2014

FIVE (5) YEARS GROUP FINANCIAL HIGHLIGHTS

Revenue Breakdown for the year ended 2012

Products & Services46.29%RM49.69mil

EngineeringEquipment Services31.16%RM33.45mil

MaintenanceServices

22.55%RM24.20mil

RM49.69mil

Engineering

(million) 0 -

50 -

100

-

150

-

200

-

250

-

300

-

350

-

400

-

‘10

‘11

‘12

‘13

‘14

373,185,828

323,287,445

166,275,581

184,547,505

190,578,092

SHAREHOLDERS’ FUNDS

2010 = 373,185,8282011 = 323,287,4452012 = 166,275,5812013 = 184,547,5052014=190,578,052

REVENUE BREAKDOWN FOR THE YEAR ENDED 2014

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TANJUNG OFFSHORE BERHAD (662315-U)

ANNUAL REPORT 201414

NOTICE IS HEREBY GIVEN THAT the Eleventh Annual General Meeting of the Company will be held at Kristal Ballroom 1, 1st Floor, West Wing, PJ Hilton, No. 2, Jalan Barat, 46200 Petaling Jaya, Selangor Darul Ehsan on 25 June 2015 at 10.00 a.m. to transact the following businesses:-

AGENDA

1. To receive the Audited Financial Statements for the financial year ended 31 December 2014 and the Reports of Directors and Auditors thereon.

Resolution 1

2. To re-elect the following Directors retiring in accordance with Article 109 of the Company’s Articles of Association:-

i) Tan Sri Datuk Tan Kean Soon Resolution 2

ii) Rahmandin @ Rahmanudin bin Md. Shamsudin Resolution 3

iii) Datuk Mohd Hafarizam bin Harun Resolution 4

iv) Datuk Dr. Nik Norzrul bin N. Hassan Thani Resolution 5

v) Dato’ Maheran bte Mohd Salleh Resolution 6

vi) Tan Sam Eng Resolution 7

vii) Datuk Syed Hussian bin Syed Junid Resolution 8

viii) Datuk Suraj Singh Gill Resolution 9

3. To appoint Messrs. AljeffriDean as Auditors of the Company and authorize the Directors to deter-mine their remuneration.

Resolution 10

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

ORDINARY RESOLUTIONAUTHORITY TO ISSUE SHARES

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

Resolution 11

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

BY ORDER OF THE BOARD

SEOW FEI SANKANG SHEW MENGSecretaries

29 May 2015Petaling Jaya

NOTICE OF ANNUAL GENERAL MEETING

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15TANJUNG OFFSHORE BERHAD (662315-U)

ANNUAL REPORT 2014

NOTES:

1. Only depositors whose names appear on the Record of Depositors as at 19 June 2015 shall be entitled to attend, speak and vote at the said meeting or appoint proxies to attend, speak and vote on his/her behalf.

2. A member entitled to attend and vote at the meeting shall not be entitled to appoint more than two (2) proxies to attend and vote in his/her stead. A proxy may but need not be a member of the Company and the provisions of Section 149(1) (b) of the Companies Act, 1965 shall not apply.

3. Whereamemberappointstwo(2)proxies,theappointmentshallbeinvalidunlesshe/shespecifiestheproportionsofhis/her shareholding to be represented by each proxy.

4. WhereaMemberisanauthorizednomineeasdefinedundertheCentralDepositoriesAct,itmayappointone(1)proxyin respect of each Securities Account it holds with ordinary shares of the Company standing to the credit of the said Securities Account.

5. Where a Member of the Company is an Exempt Authorized Nominee which holds ordinary shares in the Company for multiplebeneficialownersinonesecuritiesaccountknownasanomnibusaccount,thereisnolimittothenumberofproxies which the Exempt Authorized Nominee may appoint in respect of each omnibus account its holds.

6. The instrument appointing a proxy shall be in writing under the hand of the appointer or of his/her attorney duly authorized inwritingor,iftheappointerisacorporation,eitherunderitsCommonSealorunderthehandofitsofficerorattorneyduly authorized.

7. The instrument appointing a proxy and the power of attorney or other authority (if any), under which it is signed or a notariallycertifiedcopythereof,mustbedepositedattheCompany’sShareRegistrar’sOfficeatTricorInvestorServicesSdn. Bhd., Level 17, The Gardens North Tower, Mid Valley City, Lingkaran Syed Putra, 59200 Kuala Lumpur, not less than forty eight hours (48) hours before the time appointed for holding the meeting or any adjournment thereof.

Explanatory notes on Special Business:

RESOLUTION 11 - AUTHORITY TO ISSUE SHARES

Atlastyear’sTenthAnnualGeneralMeetingheldon20June2014,authoritywasgiventoDirectorstoallotandissuenomore than 10% of the issued share capital of the Company. As at the date of this notice, no new shares in the Company were issued pursuant to the authority granted, accordingly the mandate will lapse at the conclusion of the Eleventh Annual General Meeting. As such, the Board would like to seek for a renewal of the mandate.

The proposed Resolution 11, if passed, will give the Directors of the Company, from the date of the above Annual General Meeting, authority to allot and issue shares from the unissued capital of the Company for such purposes as the Directors may deemfitandintheinterestoftheCompany.TheauthoritywillprovideflexibilitytotheCompanyforanypossiblefundraisingactivities, including but not limited to further placing of shares for purpose of funding future investment project(s), working capital and/or acquisitions.

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

NOTICE OF ANNUAL GENERAL MEETING

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TANJUNG OFFSHORE BERHAD (662315-U)

ANNUAL REPORT 201416

DIRECTORS’ PROFILE

1. Datuk Mohd Hafarizam bin Harun2. Tan Sri Datuk Tan Kean Soon3. Rahmandin @ Rahmanudin bin Md. Shamsudin 4. Dato’ Dr. (H) Ab Wahab Bin Haji Ibrahim5. Dato’ Maheran binti Mohd Salleh

6. Datuk Syed Hussian bin Syed Junid7. Datuk Suraj Singh Gill8. Tan Sam Eng9. Datuk Dr Nik Norzrul Thani bin N. Hassan Thani

1 2 3

4 5 6

7 8 9

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17TANJUNG OFFSHORE BERHAD (662315-U)

ANNUAL REPORT 2014

DIRECTORS’ PROFILE

DATUK MOHD HAFARIzAM BIN HARUN(“DATUK HAFARIzAM”)

Malaysian•aged42Appointed on 23 March 2015Chairman

Datuk Hafarizam is the chairman of the Remuneration Committee. Datuk Mohd Hafarizam is a lawyer by profession. He holds an LLM in Law in Development from University of Warwick, United Kingdom and LLB (Honors) from International Islamic University of Malaysia. He was admitted as an Advocate & Solicitor of the High Court of Malaya in 1997.

He began his career as a Legal Assistant at Messrs Rashid & Lee in 1993 and moved to Senior Associate at Messrs Shahrizat Rashid & Lee in 2004. He is currently the Managing Partner at Messrs Hafarizam Wan & Aisha Mubarak. Datuk Hafarizam also sits on the Board of Felda Holdings Berhad and Felda Global Ventures Sugar Sdn Bhd, a wholly-owned subsidiary of Felda Global Ventures Holdings Berhad. He also sits on the Boards of KUB Berhad and on boards of several subsidiary companies within KUB Berhad.

RAHMANDIN @ RAHMANUDIN BIN MD. SHAMSUDIN(“EN RAHMAN”)

Malaysian•aged59Appointed on 12 February 2015Executive Director & Chief Executive Officer

En Rahman is a member of the Share Issuance Scheme (SIS) Committee. He holds a Bachelor of Economics (Hons) from the Loughborough University of Technology, United Kingdom.

He started his career in the banking industry as Credit Officer for Malayan Banking Berhad in 1977, responsible mainly for loan processing, documentation and disbursement. In 1982, he joined Esso Production (M) Inc., Kuala Lumpur as Management Accountant responsible for the internal control & audit of the company. During the course of his service with Esso Production (M) Inc., he had also worked as Purchasing Analyst responsible for the procurement of products and services for the company in the upstream Oil & Gas sector. Since then he has ventured into businesses providing services to the hospitality, education and oil and gas industries. En Rahman have also previously ventured into the construction industry specialising in marine engineering works. Given his good business acumen and corporate experiences, his services shall be invaluable to Tanjung Offshore Berhad and its subsidiaries (“Group”) in driving the Group to achieve new heights and consolidating the workforce and members of the Board of Directors in the near term. 

TAN SRI DATUK TAN KEAN SOON(“TAN SRI TAN”)

Malaysian•aged50Appointed on 23 June 2014Executive Director & Executive Deputy Chairman

Tan Sri is a member of the Remuneration Committee and SIS Committee. Tan Sri Tan also holds directorships in various subsidiaries within the Tanjung Group.

He has more than 30 years of experience leading various projects within the upstream and downstream sectors of the oil and gas industry. He is also Chairman, advisor, Chief Executive Officer and directors of local and foreign oil and gas companies.

Tan Sri Tan holds a Master in Business Administration. He is the Chairman of Malaysian Chinese Oil & Gas Alliance, a member of Malaysian Oil & Gas Services Council since 2008 and Malaysian Petroleum Club since 2008.

DATO’ DR. (H) AB WAHAB BIN HAJI IBRAHIM(“DATO’ AB WAHAB”)

Malaysian•aged63Appointed on 9 March 2005Independent Non-Executive Director

Dato’ Ab Wahab is the chairman of the Audit Committee and member of Remuneration Committee. He is a Chartered Accountant and also a member of the Malaysian Institute of Accountants. He holds a Diploma and Advanced Diploma in Accounting from University Technology Mara and his experience spans over 27 years in the area of finance and accounting. He began his career in the Corporate Finance Division at PETRONAS in 1978 and later assumed the role of Finance Manager for PETRONAS Gas Berhad (“PGB”), a subsidiary of PETRONAS. He was also appointed as Joint Company Secretary and was a member of the Management Committee for PGB.

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

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TANJUNG OFFSHORE BERHAD (662315-U)

ANNUAL REPORT 201418

DIRECTORS’ PROFILE

DATO’ MAHERAN BINTI MOHD SALLEH(“DATO’ MAHERAN”)

Malaysian•aged42Appointed on 23 March 2015Independent Non Executive Director

Dato’ Maheran is the chairperson of the Nominating Committee. Dato’ Maheran has more than 20 years of local and global experience in corporate affairs and public relations. Dato’ Maheran was one of the senior management in charge of Corporate Affairs in Standard Chartered Bank and also for Standard Chartered’s Saadiq. She was responsible for the formulation and implementation of SCB Saadiq’s local CA governance and strategies and was the instrumental person in positioning Standard Chartered Bank Malaysia as the primary conventional and Islamic financial institution in Malaysia. Prior to that, she was the Economic Editor with the Radio and Television Malaysia (RTM) and Media Prima Berhad (TV3), focusing in broadcasting, journalism and presenting.  Dato’ Maheran currently sits on the Boards of non-listed companies as Executive Director, such as LeMana Holdings Sdn Bhd, LeMana Petrol Sdn Bhd and Perlombongan Anak Sungai, among others. She develops and leads various strategic interests focusing in mining-related, downstream oil and gas activities and finance. She is one of the leading Bumiputra female mining developer and pioneering the involvement of female to be competing in a male-dominated environment.

Dato’ Maheran holds an LLB (Hons) from University of Buckingham, UK. She dedicates her intervals commendably in associating with various non-government organizations and also has a keen interest in strategically influencing to future of Bumiputra talent development whereby she holds a position as a life member in few organizations, such as PENIAGAWATI (Malaysia based Women Entrepreneur Association), Arab Business Club Dubai UAE and Malaysia National Press Association. 

DATUK SYED HUSSIAN BIN SYED JUNID(“DATUK SYED HUSSIAN”)

Malaysian•aged54Appointed on 31 March 2015Independent Non Executive Director

Datuk Syed Hussian is a member of the Audit Committee and Nominating Committee. He started his career with The American Malaysian Insurance Sdn Bhd as a Trainee Executive in 1982. In 1986, he was promoted as the Penang Branch Manager. Later in 1989, he was promoted as the Regional Manager covering Penang, Perlis, Kedah and Perak. He is currently the Senior Director of Business Operations & Sales Support for Asia at Western Digital Sdn Bhd, a company involved in the manufacture of hard-disc drives.

Datuk Syed Hussian is also an Independent Non Executive Director of AWC Berhad. He also serves on the boards of various other private limited companies. Datuk Syed Hussian holds a Diploma in Insurance from The Association for Overseas Scholarship Tokyo in 1988 and a Certificate in Insurance from Institute Teknologi MARA in 1982.

DATUK SURAJ SINGH GILL(“DATUK SURAJ”)

Malaysian•aged43Appointed on 31 March 2015Independent Non Executive Director

Datuk Suraj is a member of Nominating Committee. Datuk Suraj read law at the University of Leicester, England and graduated with an LL.B (Hons) Degree in 1994. He received his Certificate in Legal Practice from the Legal Profession Qualifying Board, Malaysia in 1995 and was called to the Malaysian Bar and admitted as an Advocate & Solicitor of the High Court of Malaya in 1997.

Datuk Suraj commenced his legal career as a Corporate Lawyer in 1997 with Messrs Rashid & Lee. In the year 2000, Datuk Suraj co-founded Deol & Gill, a mid-sized full service law firm in Kuala Lumpur. Datuk Suraj advises public listed companies, government linked corporations and multinational corporations.

TAN SAM ENG(“MS TAN”)

Malaysian•aged62Appointed on 23 March 2015Independent Non Executive Director

Ms Tan is a member of the Audit Committee. Ms. Tan is a Chartered Accountant and a Chartered Secretary. She is a member of the Malaysian Institute of Accountants (MIA), a Fellow Member of the Association of Chartered Certified Accountants (ACCA), a Fellow Member of the Malaysian Institute of Chartered Secretaries and Administrators (MAICSA) and also a Member of the Chartered Tax Institute of Malaysia (MIT).

Ms. Tan has more than 30 years of professional experience and was involved in all aspects of financial practice such as auditing, taxation and corporate finance & advisory works. Her auditing experience covers practically the whole spectrum of Malaysian business environment including insurance, property development, engineering, communications, transportation, plantations, manufacturing and trading.

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19TANJUNG OFFSHORE BERHAD (662315-U)

ANNUAL REPORT 2014

Attendance of Board of Directors Meeting

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

Familyrelationshipwithanydirectorand/ormajorshareholder

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.

Conflict of interest

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

Conviction of Offence

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

DIRECTORS’ PROFILE

DATUK DR. NIK NORzRUL THANI BIN NIK HASSAN THANI (“DATUK DR. NIK”)

Malaysian•aged55Appointed on 23 March 2015Non Independent Non Executive Director

Datuk Dr. Nik is a member of the Audit Committee. Datuk Dr. Nik holds a Ph.D. in Law from the School of Oriental and African Studies, University of London and a Masters in Law from Queen Mary College, University of London. He read law at the University of Buckingham, United Kingdom.

Datuk Dr. Nik also holds a Post-Graduate Diploma in Syariah Law and Practice (with Distinction) from the International Islamic University of Malaysia. He is a Barrister of Lincoln’s Inn and an Advocate & Solicitor of the High Court of Malaya. He was called to the Bar of England and Wales in 1985 and to the Malaysian Bar in 1986. He was at one time a Visiting Fulbright Scholar at Harvard Law School and a Chevening Fellow at the Oxford Centre of Islamic Studies. He was also formerly the Acting Dean/Deputy Dean of the Faculty of Laws, International Islamic University Malaysia. Datuk Dr. Nik is a director of UWM Holdings Berhad, Manulife Holdings Berhad, Al Rajhi Banking & Investment Corporation (M) Berhad, MSIG Insurance (M) Bhd and several non-listed companies. Currently, Datuk Dr. Nik is a practising lawyer with Zaid Ibrahim & Co. Prior to joining Zaid Ibrahim & Co., Datuk Dr. Nik was with Baker & McKenzie (International Lawyers), Singapore.

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TANJUNG OFFSHORE BERHAD (662315-U)

ANNUAL REPORT 201420

DearShareholders,The lastyearmusthavebeenworrying foryouasTanjungOffshorewent througha tumultuousperiod thatsawdirectorsbeingsuspended, resignationsandreinstatementsofboardmembers,cappedby investigationsby theauthorities and the Malaysian Anti-Corruption Commission.

Meanwhile, minority shareholders were increasingly concerned about the company’s wellbeing, to the point of reporting what they believed were wrongdoings to the police. All this took place against a backdrop of declining oil prices and the oil and gas industry experiencing unparalleled volatility, making the last year extremely challenging for the Tanjung Group. The year 2014 ended with significant uncertainties. Recently a former executive director of Tanjung Offshore was arrested by MACC while three other former directors were questioned extensively as part of a widening investigation into several questionable deals undertaken by the company over the previous few years. The current board is cooperating fully with the authorities. To put the company back on track to profitability and greater transparency, a new board of directors was reconstituted in April and resulting from this board change, I have been appointed chairman. Since my appointment, I am pleased to report to you that the company has moved forward in a positive manner.  FORENSIC AUDIT To help us understand TOB’s corporate weaknesses, we have engaged special auditor Ferrier Hodgson MH Sdn Bhd (“Ferrier Hodgson”) to conduct a forensic audit especially in relation to several contentious transactions.

These forensic audit results point to shortcuts taken and a sequence of shortcomings which gave way to corporate weaknesses.

CHAIRMAN’S STATEMENT

DATUK MOHD HAFARIZAM BIN HARUNIndependent Non Executive Chairman

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21TANJUNG OFFSHORE BERHAD (662315-U)

ANNUAL REPORT 2014

(11,585)

(55,396)

1,061

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 -

Revenue (RM’000)

60 -

50 -

40 -

30 -

20 -

10 -

0 -

-10 -

-20 -

-30 -

-40 -

-50 -

-60 -

10,909

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

541,807

334,437263,707

327,791

107,345

‘10 ‘11 ‘12 ‘13 ‘14 ‘10 ‘11 ‘12 ‘13 ‘14

7,588

CHAIRMAN’S STATEMENT

IMPLEMENTING GREATER CORPORATE GOVERNANCE Arising from these shortcomings, we have strengthened corporate governance by ensuring processes and procedures that fall in line with best practices.  We are implementing the recommendations, establishing a powerful safety and operational risk function, and enhancing risk management through the restructuring of Tanjung Group. We are also conducting a thorough review of Tanjung Group’s standard operating procedures, guidelines and internal systems to put right any shortcomings. There is much to be done and the board is working closely with the executive management team to ensure the successful implementation of a refocused strategy recommended to us by Ferrier Hodgson and our internal auditor. The Board will maintain close oversight of matters related to corporate governance, especially to ensure the right checks and balances are in place across Tanjung Group. WORKING WITH THE AUTHORITIES The Tanjung Group is also working closely with the authorities to purge the company of any wrongdoings and to set us back on the right footing. FINANCIAL PERFORMANCE

For the FYE 2014, Tanjung Group registered total revenue of RM107.22 million and a profit after taxation of approximately RM1.06million. Total revenue for the year registered a decrease of approximately 67.29% as compared to total revenue of RM327.79 million registered in FYE 2013.  In line with the decrease in revenue, total net profit after tax for the year registered a decrease from RM14.03 million in FYE 2013 to RM1.06 million registered in FYE 2014.  The reduction in revenue and profitability is mainly due to the completion of large engineering packages in FYE 2013 and the disposal of the Group’s maintenance division in FYE 2014.

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TANJUNG OFFSHORE BERHAD (662315-U)

ANNUAL REPORT 201422

CHAIRMAN’S STATEMENT

As at 31 December 2014, the Group’s shareholders funds stood at RM190.58 million as compared to RM184.55 million as at FYE 2013.  The increases in the Group’s shareholders’ funds are mainly due to the conversion of share options and the profits generated during the FYE 2014. COMPANY PROSPECT We recognize the current decline in commodity prices, though we are of the view that the lower price levels are not sustainable in the long term. Looking ahead, we believe that a growing population and rising levels of prosperity will create strong demand and an increase in energy consumption. Tanjung Group is able to help meet the world’s growing need for energy, but we can only do this if we have the trust of our shareholders. We expect to commit significant improvements in both effectiveness and efficiency in the near-term and will continue to seek out technologies that allow us to keep costs low. PRODUCTS & SERVICES During the year, our main operating subsidiary, Tanjung Offshore Services SdnBhd (“TOS”) registered total revenue of RM49.78 million.  Total revenue declined at TOS as compared to FYE 2013 due to completion of various contracts in FYE 2013.  TOS remains committed to spearhead new projects within the oil and gas industry and is looking to add new principals and products to further enhance our services via reputable principals and products within the industry. ENgiNEERiNgEQuiPMENTSERviCES In FYE 2014, the Group registered total revenue of RM33.45 million from the engineering equipment division which are mainly derived from its wholly owned subsidiary, Gas Generators (M) SdnBhd (“Gastec”). Notwithstanding the reduction in revenue due to the completion of certain engineering contracts which were trading in nature in FYE 2013, Gastec has maintained its profitability given its focus on international markets with niche gas generation products and packages which caters for the oil and gas, power generation and healthcare industries.  MAINTENANCE SERVICES The maintenance division registered total revenue of RM24.20 million via Tanjung Maintenance Services SdnBhd (“TMS”).  During the year, we have disposed off TMS as profitability has not been encouraging in recent years. OUR PEOPLE We continue to invest and maintain our human capital, which is an important aspect of the Group.  We continue to provide various training programmes at all levels within the Group. During the year, we have sent various engineering teams for complete technical training at our principals’ centers, both local and overseas for in-depth exposures on the latest technological advances in the oil and gas industry. CONCLUSION While I am unable to paint a rosy picture of the company, I am happy to say that improvements are already being instituted and are beginning to take root. In the meantime, I am deeply grateful to all shareholders for their support, as you have been steadfast through one of the most testing periods in Tanjung’s long history. The lessons learnt today will never be forgotten.

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23TANJUNG OFFSHORE BERHAD (662315-U)

ANNUAL REPORT 2014

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 financial year ended 31 December 2014 are as follows:-

Member Designation

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

Datuk Dr. Nik Norzrul bin N. Hassan Thani(Appointed on 31 March 2015)

Member (Non Independent Non-Executive Director)

Datuk Syed Hussian bin Syed Junid(Appointed on 31 March 2015)

Member (Independent Non-Executive Director)

Tan Sam Eng(Appointed on 31 March 2015)

Member(Independent Non-Executive Director)

George William Warren Jr(Ceasedofficeon23March2015)

Member(Independent Non-Executive Director)

Shahrizal Hisham bin Abdul Halim(Ceasedofficeon31March2015)

Member(Independent Non-Executive Director)

SUMMARY OF THE TERMS OF REFERENCE OF THE AUDIT COMMITTEE

• Membership

The Audit Committee must fulfill the following requirements:-(a) The Audit Committee must be composed of not less than three (3) members;

(b) A majority of the members must be independent directors and all members must be non-executive; and

(c) At least one member of the Audit Committee must fulfill the requirements as prescribed or approved by the Exchange.

(d) The Chairman shall be an Independent, Non-Executive Director. No alternate director is appointed as a member of the Audit Committee;

(e) In the event that any vacancy in the Audit Committee results in the non-compliance of the above requirements, the Company must fill the vacancy within three (3) months; and

(f) The Company Secretary shall act as Secretary to the Audit Committee.

• TermsofReference

(a) The Audit Committee shall be granted the authority to investigate any activity of the Company and its subsidiaries, and all employees shall be directed to co-operate as requested by members of the Committee;

(b) The Audit Committee shall be empowered to retain persons having special competence as necessary to assist the Committee in fulfilling its responsibilities;

(c) The Audit Committee shall provide assistance to the Board in fulfilling its fiduciary responsibilities particularly relating to business ethics, policies and financial management control;

(d) The Audit Committee shall maintain a direct line of communication between the Board, External Auditors, Internal Auditors and Management through regularly scheduled meetings;

AUDIT COMMITTEE REPORT

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TANJUNG OFFSHORE BERHAD (662315-U)

ANNUAL REPORT 201424

AUDIT COMMITTEE REPORT

SUMMARY OF THE TERMS OF REFERENCE OF THE AUDIT COMMITTEE (cont’d)

• TermsofReference(cont’d)

(e) The Audit Committee shall provide greater emphasis on the audit functions by increasing the objectivity and independence of External and Internal Auditors and providing a forum for discussion that is independent of the Management;

(f) The Audit Committee may invite any person to the meeting to assist the Audit Committee in decision-making process and that the Audit Committee may meet exclusively as and when necessary; and

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

• Authority

The Audit Committee shall have the following authority as empowered by the Board of Directors:-

(a) The authority to investigate any matter within its terms of reference;

(b) The resources which are required to perform its duties;

(c) Full, free and unrestricted access to any information, records, properties and personnel of the Company and any other subsidiaries (if any) or sister companies;

(d) Direct communication channels with the External Auditors and person(s) carrying out the internal audit function or activity (if any);

(e) Able to obtain independent professional or other advice; and

(f) Able to convene meetings with the External Auditors and Internal Auditors together with other independent non-executive members of the Board, excluding the attendance of any Executive Directors, at least once a year or whenever deemed necessary.

• Meetings

(a) The Audit Committee shall meet at least four (4) times in a year to discuss any matters raised by the Auditors in discharging their functions. The quorum for a meeting of the Audit Committee shall be two (2); and

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

• Dutiesandresponsibilities

The duties and responsibilities of the Audit Committee will be as follows:-

(i) To obtain satisfactory response from Management on reports issued by External and Internal Auditors;

(ii) To oversee the function of the Internal Audit Department;

(iii) To review arrangements established by Management for compliance with any regulatory or other external reporting requirements, by-laws and regulations related to the Company’s operations;

(iv) To consider the appointment of the External Auditor, the audit fee and any questions of resignation or dismissal, to discuss with the External Auditor before the audit commences, the nature and scope of the audit, and ensure co-ordination where more than one audit firm is involved, their audit report and evaluation of the system of the internal controls and review the quarterly and year-end financial statements of the Company;

(v) To discuss problems and reservations arising from the external audits, and any matter the auditor may wish to discuss and to oversee the internal audit function; and

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

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25TANJUNG OFFSHORE BERHAD (662315-U)

ANNUAL REPORT 2014

AUDIT COMMITTEE REPORT

SUMMARY OF THE TERMS OF REFERENCE OF THE AUDIT COMMITTEE (cont’d)

• Dutiesandresponsibilities(cont’d)

During the financial year ended 31 December 2014, the Audit Committee held a total of four (4) meetings, the details of attendance of which are as follows:-

Member No. of meetings attended

Dato’ Dr. (H) Ab Wahab Bin Haji Ibrahim 4 of 4

Datuk Dr. Nik Norzrul bin N. Hassan Thani (Appointed on 31 March 2015)

-

Datuk Syed Hussian bin Syed Junid(Appointed on 31 March 2015)

-

Tan Sam Eng(Appointed on 31 March 2015)

-

George William Warren Jr(Ceasedofficeon31March2015)

4 of 4

Shahrizal Hisham bin Abdul Halim(Appointedon9May2014andceasedofficeon31March2015)

3 of 3

SUMMARY OF ACTIVITIES DURING THE FINANCIAL YEAR

During the financial year ended 31 December 2014, 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 and internal auditors on the results of their audit, the audit report and internal control recommendations in respect of improvements in internal control procedures noted in the course of their audit.

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

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

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

• Reviewing and approving the Internal Audit Charter.

• Reviewing the risk management policy and framework for adoption by the Group, prior to submission to the Board for consideration and approval.

• Reviewing the Audit Committee Report and Statement on Risk Management and Internal Control prior to their inclusion in the Company’s Annual Report.

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

• In January 2015, an Independent Committee comprising members of the Audit Committee was formed to investigate various allegations against the Tanjung Group. In relation to this, the Independent Committee has also appointed Messrs Ferrier Hodgson to perform a special audit on the allegations.

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TANJUNG OFFSHORE BERHAD (662315-U)

ANNUAL REPORT 201426

AUDIT COMMITTEE REPORT

OPTIONS FOR SHARE ISSUANCE SCHEME(SIS)

As at 30 April 2015, the status of the SIS is as follows:-

No. of SISOptions Granted up to 30 April 2015

No. of SISexercised as at

30 April 2015 Cancelled

No. of SIS OptionsOutstanding as at

30 April 2015Date of expiry

Of SIS Scheme

55,688,000 24,009,100 2,112,900 29,566,000 7 May 2016

The Audit Committee has reviewed and verified that the allocation of share option during the year is in compliance with the criteria and conditions of the SIS Byelaws.

The breakdown of the SIS allocations in the financial ended 31 December 2014 are as follows:-

PositionNo of

SIS GrantedNo. of SIS Exercised

No. of SISCancelled

No. of SISOptions

Outstanding

Executive Directors 5,000,000 1,660,000 - 3,340,000

Senior Management(Manager and Above) 4,580,000 429,000 - 4,151,000

Other employees 1,090,000 240,300 120,000 729,700

Total 10,670,000 2,329,300 120,000 8,220,700

No share options were granted to any non-executive directors.

INTERNAL AUDIT FUNCTION

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

Other initiatives undertaken by the internal audit professional firm in FYE 2014 include the review of risk management policies in key subsidiaries and operational review of project management within the Group. The corresponding reports of the audit reviews performed were presented to the Audit Committee and forwarded to the Management for attention and corrective actions. The Management is responsible for ensuring that the recommended corrective actions are taken within the required timeframe. The cost incurred in relation to the internal audit function during the year was RM100, 000.00.

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

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27TANJUNG OFFSHORE BERHAD (662315-U)

ANNUAL REPORT 2014

INTRODUCTION

Pursuant to paragraph 15.26(b) of the Bursa Malaysia Securities Berhad Main Market Listing Requirements, and as guided by the Statement on Risk Management and the state of Internal Control: Guidelines for Directors of Listed Issuers (“the Guidelines”), the Board of Directors (“the Board”) of Tanjung Offshore Berhad (“the Company”) is pleased to present the statement on the state of the internal controls of the Group for the financial year ended 31 December 2014.

BOARD RESPONSIBILITIES

The Board is responsible for the Group’s internal control and risk management system to safeguard shareholders’ investment and the Group’s assets as well as reviewing the adequacy and effectiveness of the said system.

In view of the limitations inherent in any system of risk management and internal control, these systems are designed to manage, rather than eliminate, the risk of failure to achieve the Group’s business and corporate objectives. These systems can therefore only provide reasonable, but not absolute assurance, against material misstatement or loss.

RISK MANAGEMENT

Risk Management is regarded by the Board to be an integral part of the business operations. The Board maintains an on-going commitment to enhance the Group’s control environment and processes. The key risks relating to the Group’s operations and strategic and business plans are addressed at Management’s meetings. Significant risks identified by the Management are to be brought to the attention of the Board at their scheduled meetings.

The abovementioned practices/initiatives put in place by the Board serve as the on-going practice used to identify, evaluate and manage significant risks during the financial year under review. In view of the recent weaknesses on the Group’s corporate governance and internal control systems that have come to the Board’s attention, the Board is in the process of addressing these weaknesses noted so as to improve the effectiveness and efficiency of the risk management function and the internal control systems of the Group.

SYSTEM 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.

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

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

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

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

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

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

STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL

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TANJUNG OFFSHORE BERHAD (662315-U)

ANNUAL REPORT 201428

STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL

WHISTLE-BLOWING

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

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

CONCLUSION

The Group Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”) are fully aware of the issues highlighted to the Board arising from the weaknesses in the corporate governance and internal control systems of the Group. Together with the Board, the CEO and the CFO are in the process of improving the adequacy, effectiveness and efficiency of the corporate governance practices and the systems of internal control in the Group to continue to safeguard the interest of the shareholders’ investment and the Group’s assets.

The Board is of the view that the risk management and internal control systems of the Group require continuous pertinent efforts from the Board to improve its adequacy, effectiveness and efficiency in meeting the Group’s strategic objectives.

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29TANJUNG OFFSHORE BERHAD (662315-U)

ANNUAL REPORT 2014

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

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

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

DIRECTORS

1. Board Responsibilities

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

a. Board Balance

The Board of Directors consists of nine (9) members comprising two (2) executive directors, and six (6) independent non-executive directors and one (1) non independent non-executive director. The Board has complied with Paragraph 15.02 of the Listing Requirements that at least two or one-third of the Board, whichever is the higher is independent directors. The Board considers its current size adequate given the existing scope and nature of the Group’s business operations.

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

The Board has conducted an assessment on Directors, except for those appointed recently.

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

The Company has also formalized a set of ethical standards through a code of conduct, which is subject to periodical review, to ensure Directors practice ethical, businesslike and lawful conduct, including proper use of authority and appropriate decorum when acting as Board members.

b. Board Committees

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

• Audit Committee• Nominating Committee• Remuneration Committee• Share Issuance Scheme Committee

STATEMENT OF CORPORATE GOVERNANCE

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TANJUNG OFFSHORE BERHAD (662315-U)

ANNUAL REPORT 201430

STATEMENT OF CORPORATE GOVERNANCE

DIRECTORS (cont’d)

1. Board Responsibilities (cont’d)

Audit Committee

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

Nominating Committee

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

The members of the Nominating Committee are as follows:-

Member Designation

Dato’ Maheran binti Mohd Salleh Chairperson

Datuk Syed Hussian bin Syed Junid Member

Datuk Suraj Singh Gill Member

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

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

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

The activities carried out by the Nominating Committee during the financial year and up to the date of this Annual Report are reviewing and assessing the suitability of directors and candidates for appointment as directors.

Remuneration Committee

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

The members of Remuneration Committee are as follows:-

Member Designation

Datuk Mohd Hafarizam bin Harun Chairperson

Tan Sri Datuk Tan Kean Soon Member

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

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31TANJUNG OFFSHORE BERHAD (662315-U)

ANNUAL REPORT 2014

STATEMENT OF CORPORATE GOVERNANCE

DIRECTORS (cont’d)

1. Board Responsibilities (cont’d)

Share Issuance SchemeCommittee

As at to date, SIS Committee comprises the following members:-

Member Designation

Tan Sri Datuk Tan Kean Soon Member

Rahmandin @ Rahmanudin bin Md Shamsudin Member

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

• To administer the Share Issuance Scheme (“SIS”) and to grant share options in accordance to the Bye-Laws;

• To recommend to the Board to establish, amend, and revoke Bye-Laws, rules and regulations to facilitate the implementation of the SIS 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 SIS Committee shall exercise its discretion in such manner as it deems fit.

As at 30 April 2015, the status of the SIS is as follows:-

No. of SISOptions Granted

up to 30 April 2015

No. of SISexercised as at

30 April 2015 Cancelled

No. of SIS OptionsOutstanding as at

30 April 2015Date of expiry

Of SIS Scheme

55,688,000 24,009,100 2,112,900 29,566,000 7 May 2016

c. Board Meetings

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

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

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TANJUNG OFFSHORE BERHAD (662315-U)

ANNUAL REPORT 201432

STATEMENT OF CORPORATE GOVERNANCE

DIRECTORS (cont’d)

1. Board Responsibilities (cont’d)

c. BoardMeetings(cont’d)

During the financial year under review, nine (9) Board Meetings were held and the Directors’ attendances at the Board Meetings were as follows:-

Attendance

Datuk Mohd Hafarizam bin Harun(IndependentNonExecutiveChairman)Appointed on 23 March 2015

-

Rahmandin @ Rahmanudin bin Md. Shamsudin(Executive Director/Chief Executive Director)Appointed on 12 February 2015

-

Tan Sri Datuk Tan Kean Soon(Executive Director/Executive Deputy Chairman)Appointed on 23 June 2014

5/5

Dato’ Dr. (H) Ab Wahab Bin Haji Ibrahim(IndependentNon-ExecutiveDirector)

9/9

Dato’ Maheran binti Mohd Salleh(IndependentNon-ExecutiveDirector)(Appointed on 23 March 2015)

-

Datuk Syed Hussian bin Syed Junid (IndependentNonExecutiveDirector)(Appointed on 31 March 2015)

-

Datuk Suraj Singh Gill (IndependentNon-ExecutiveDirector)(Appointed on 31 March 2015)

-

Tan Sam Eng (IndependentNon-ExecutiveDirector)(Appointed on 23 March 2015)

-

Datuk Dr Nik Norzrul Thani bin N. Hassan Thani(NonIndependentNon-ExecutiveDirector)(Appointed on 23 March 2015)

-

Dato’ Harzani bin Azmi(Managing Director)(Resigned on 19 June 2014)

4/4

Tan Wee Koh(Executive Director)(Resigned on 31 March 2015)

9/9

George William Warren Jr(IndependentNon-ExecutiveDirector)(Resigned on 23 March 2015)

8/9

Muhammad Sabri bin Ab Ghani(Executive Director)(Resigned on 23 March 2015)

9/9

Sharizal Hisham bin Abdul Halim(IndependentNon-ExecutiveDirector)(Resigned on 31 March 2015)

8/8

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33TANJUNG OFFSHORE BERHAD (662315-U)

ANNUAL REPORT 2014

STATEMENT OF CORPORATE GOVERNANCE

DIRECTORS (cont’d)

1. Board Responsibilities (cont’d)

Supply of Information

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

Along with good governance practices and in order to enhance transparency and accountability, the Board has established and put in place the following policies and procedures which are made available at the office of the Company. These include the:-

- Code of Conduct- Shareholder’s Right relating to General Meeting

Further information of the Group’s operations are also made available at the Company’s website at www.tanjungoffshore.com.my.

Appointment and Re-election

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

Directors’ Training

Directors have completed the Mandatory Accreditation Program. The Company does not have a formal training program for new Director but they receive briefings and updates on the Group’s businesses, operations, risk management, internal control, finance and relevant legislation, rules and regulations. The briefings and updates aims at communication to the newly appointed Directors, the Company’s vision and mission, its philosophy and nature of the business, current issues within the Group, the corporate strategy and the expectation of the Company concerning input of the Director.

The Directors are encouraged to attend various external and internal professional courses, briefings, and seminars relevant to the Group to keep themselves abreast with latest development in the industry, regulatory updates or changes and to enhance their skills and knowledge.

The Board acknowledged that the Directors through varied experiences and qualifications provided the desired contribution and support to the functions of the Board. Directors’ training is an on-going process as Directors recognize the need to continually develop and refresh their knowledge and skills, and to update themselves on market development.

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TANJUNG OFFSHORE BERHAD (662315-U)

ANNUAL REPORT 201434

STATEMENT OF CORPORATE GOVERNANCE

DIRECTORS’ REMUNERATION

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

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

The aggregate remuneration of the Directors for the financial year ended 31 December 2014 is as follows:-

Remuneration Per year Executive Directors Non-Executive Directors Total

Basic salary 1,400,240 - 1,400,240

Bonuses - - -

Fees - 135,000 135,000

Total 1,400,240 135,000 1,535,240

Remuneration Band (RM) per year Executive Directors Non-Executive Directors

0 - 50,000 - -

50,001 - 100,000 - 4

100,001 - 150,000 - -

150,001 – 200,000 - -

200,001 – 250,000 - -

> 250,000 3* -

*One of the directors has resigned during the current financial year.

CORPORATE DISCLOSURE

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

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

RELATIONSHIP WITH SHAREHOLDERS

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

• Annual Report;• Circulars to shareholders;• Various disclosures and announcement to Bursa Securities Malaysia Berhad; 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 financials of the Group.

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

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35TANJUNG OFFSHORE BERHAD (662315-U)

ANNUAL REPORT 2014

STATEMENT OF CORPORATE GOVERNANCE

CORPORATE SOCIAL RESPONSIBILITY

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

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

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

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

ACCOUNTABILITY AND AUDIT

1. Financial Reporting

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

2. Internal Control

The Board has overall responsibility for maintaining a sound and effective system of internal control of the Group, covering not only financial controls but also controls relating to operations, compliance and risk management to safeguard shareholders investments and the Group’s assets. The Board also recognizes 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 organizational structure with well-defined authority and responsibility lines, and which comprises of appropriate financial, operational and compliance controls.

3. RelationshipwithAuditors

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 financial statements for each financial year, which give a true and fair view of the state of affairs of the Group and the Company and of the results and cash flow of the Group and the Company for the financial year then ended.

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TANJUNG OFFSHORE BERHAD (662315-U)

ANNUAL REPORT 201436

STATEMENT OF CORPORATE GOVERNANCE

ACCOUNTABILITY AND AUDIT (cont’d)

4. Statement of Directors’ Responsibility (cont’d)

In preparing the financial statements for the FYE 2014, 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 financial statements; and • ensure the financial 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 financial position of the Group and the Company, and which will enable them to ensure the financial statements have complied with the provisions of the Companies Act, 1965 and the applicable approved accounting standards in Malaysia.

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

5. Gender Diversity

To date, the Board has appointed two women to the Board of Directors of Tanjung and they are Dato’ Maheran binti Mohd Salleh (IndependentNonExecutiveDirector) and Ms Tan Sam Eng (IndependentNonExecutiveDirector).

The Nominating Committee shall oversee the procedure in addition to the board recruitment, board performance evaluation and succession planning processes. We shall always aim to provide a suitable working environment that is free from harassment and discrimination in order to attract and retain women participation in the Board, and also to have diversity in ethnicity and age on board as well as workforce.

6. Compliance Statement

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

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37TANJUNG OFFSHORE BERHAD (662315-U)

ANNUAL REPORT 2014

OTHERDiSClOSuREREQuiREMENTS

a) Share Buybacks

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

b) Options,WarrantsorConvertibleSecurities

As at 30 April 2015, the share option movements are as detailed below:-

No of Share Options granted as at30 April 2015

Share Options Exercisedas at

30 April 2015

Share Options Cancelledas at

30 April 2015

No of Share Options outstanding as at

30 April 2015

55,688,000 24,009,100 2,112,900 29,566,000

As at 31 December 2014, the number of outstanding Warrant A are as follows:-

Conversion price Outstanding as at

30 April 2015 Expiry Date

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

c) Depository Receipt (“DR”) Programme

During the financial year under review, the Company did not sponsor any DR Program.

d) Imposition of Sanctions/Penalties

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

e) Non-Audit Fees

The Board has engaged Messrs Ferrier Hodgson to perform a special audit on certain transactions undertaken by the Company in the financial year ended 31 December 2014. Save as disclosed above, there were no other non-audit fees paid to the external auditors during the financial year under review.

f) Variation in Results

There was no material variation between the audited results for the financial year ended 31 December 2014 and the unaudited results previously announced.

g) Material Contracts

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

h) Contracts Relating to Loans

No contract relating to loans was executed by the Company during the year under review.

i) Profit guarantees

No profit guarantees were provided by the Company or its subsidiaries during the year under review.

j) Related Party Transactions (“RPT”)

No RPT were transacted during the year under review.

OTHER INFORMATION

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FINANCIALCoNteNts39 Directors’ report

44 Statement by directors

45 Statutory declaration

46 Independent auditors’ report

48 Statements of financial position

50 Statements of profit or loss

51 Statements of comprehensive income

52 Statement of changes in equity

54 Statements of cash flows

56 Notes to the financial statements

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39TANJUNG OFFSHORE BERHAD (662315-U)

ANNUAL REPORT 2014

REPORT OF THE DIRECTORSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2014

The directors hereby submit their report together with the audited financial statements of the Group and the Company for the financial year ended 31 December 2014.

PRINCIPAL ACTIVITIES

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

RESULTS

GROUP COMPANY RM RMNet profit for the year 1,060,793 3,787,003

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

DIVIDENDS

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

RESERVES AND PROVISIONS

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

ISSUANCE OF SHARES

During the financial year, the Company has increased its authorised share capital from RM200,000,000 comprising of 400,000,000 ordinary shares of RM0.50 each to RM300,000,000 comprising of 600,000,000 ordinary shares of RM0.50 each by the creation of additional 200,000,000 new ordinary shares of RM0.50 each.

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

No. of Shares Issued Issue Price Purposes

8,592,598 RM0.50 Exercise of Share Issuance Scheme

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

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TANJUNG OFFSHORE BERHAD (662315-U)

ANNUAL REPORT 201440

REPORT OF THE DIRECTORSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2014

UNEXERCISED OPTIONS GRANTED

i) Share Issuance Scheme (“SIS”)

The SIS is governed by the By-Laws approved by the shareholders at an Extraordinary General Meeting held on 07 February 2013 and is to be in force for a period of 3 years. The SIS has been effective on 12 July 2013. The salient features, terms and details of the SIS are disclosed in Note 29 to the Financial Statements.

The Company has been granted exemption by the Companies Commission of Malaysia from having to disclose the names of holders to whom options have been granted to subscribe for less than 320,000 ordinary shares of RM0.50 each. The names of option holders granted options to subscribe for 320,000 or more ordinary shares of RM0.50 each during the financial year, other than directors whose details are disclosed in the section on Directors’ Interests, are as follows:

Name of employee Granted in 2014

Muhamad Azarudin bin Abdullah 1,000,000Norwahida binti Ja’afar 1,000,000Supian bin Zaharin 1,000,000Tan Seow Hoe 1,000,000Rohafizah binti Ismail 500,000Syed Elyas bin Syed Abdillah 500,000

As at 31 December 2014, there were 37,196,300 (2013: 36,244,200) unissued ordinary shares pursuant to the SIS options granted under the SIS scheme, at RM0.50 per share.

ii) Issuance of Warrants

The subscription price of Warrant A 2006/2016 is RM0.50.

The details of the issuance of Warrants are disclosed in Note 30 to the Financial Statements.

As at 31 December 2014, there is a total of 29,981,990 (2013: 29,981,990) outstanding Warrant A 2006/2016 warrants.

DIRECTORS

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

Dato’ Dr. (H) Ab Wahab bin Haji IbrahimTan Sri Datuk Tan Kean Soon (Appointed w.e.f 23 June 2014)Rahmandin @ Rahmanudin bin Md. Shamsudin (Appointed w.e.f 12 February 2015) Datuk Mohd Hafarizam bin Harun (Appointed w.e.f 23 March 2015)Tan Sam Eng (Appointed w.e.f 23 March 2015)Dato’ Maheran binti Mohd Salleh (Appointed w.e.f 23 March 2015)Datuk Dr. Nik Norzrul Thani bin N. Hassan Thani (Appointed w.e.f 23 March 2015)Datuk Syed Hussian bin Syed Junid (Appointed w.e.f 31 March 2015)Datuk Suraj Singh Gill (Appointed w.e.f 31 March 2015) Shahrizal Hisham bin Abdul Halim (Appointed w.e.f 09 May 2014 and resigned w.e.f 31 March 2015) Tan Wee Koh (Resigned w.e.f 31 March 2015)George William Warren Jr. (Resigned w.e.f 23 March 2015)Muhammad Sabri bin Ab Ghani (Resigned w.e.f 23 March 2015)Dato’ Harzani bin Azmi (Resigned w.e.f 19 June 2014)

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41TANJUNG OFFSHORE BERHAD (662315-U)

ANNUAL REPORT 2014

REPORT OF THE DIRECTORSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2014

DIRECTORS’ BENEFITS

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

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

DIRECTORS’ INTERESTS

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

Number of Ordinary Shares of RM0.50 each At At 01.01.2014 Bought Sold 31.12.2014Direct Interests:Dato’ Dr. (H) Ab Wahab bin Haji Ibrahim 128,100 - (128,100) -George William Warren Jr. 929,480 - - 929,480Tan Wee Koh 101,300 1,000,000 - 1,101,300Muhammad Sabri bin Ab Ghani 70 - - 70Tan Sri Datuk Tan Kean Soon - 17,889,600 - 17,889,600

Indirect Interests:Tan Sri Datuk Tan Kean Soon* - 4,050,000 - 4,050,000

Number of Ordinary Shares of RM0.50 each Granted under the SIS At At 01.01.2014 Granted Vested 31.12.2014

Tan Wee Koh 3,890,000 2,000,000 (1,000,000) 4,890,000Muhammad Sabri bin Ab Ghani 4,390,000 1,500,000 - 5,890,000

Number of Warrants over Ordinary Shares of RM0.50 each At At 01.01.2014 Bought Sold 31.12.2014Direct Interests:George William Warren Jr. 99 - - 99

* Acquired through spouse and children.

None of the other directors in office at the end of the financial year held any shares or debentures in the Company or in any related corporations during the financial year ended 31 December 2014.

Page 43: Tanjung Offshore Berhad Cover STATEMENT OF CORPORATE GOVERNANCE 37 OTHER INFORMATION 38 FINANCIAL STATEMENTS 111 LIST OF PROPERTIES OWNED BY THE GROUP 113 ANALYSIS OF SHAREHOLDINGS

TANJUNG OFFSHORE BERHAD (662315-U)

ANNUAL REPORT 201442

REPORT OF THE DIRECTORSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2014

OTHER STATUTORY INFORMATION

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

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

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

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

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

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

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

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

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

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

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

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

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

SIGNIFICANT EVENTS DURING THE CURRENT FINANCIAL YEAR

Detail of the significant events is set out in Note 41 to the Financial Statements.

Page 44: Tanjung Offshore Berhad Cover STATEMENT OF CORPORATE GOVERNANCE 37 OTHER INFORMATION 38 FINANCIAL STATEMENTS 111 LIST OF PROPERTIES OWNED BY THE GROUP 113 ANALYSIS OF SHAREHOLDINGS

43TANJUNG OFFSHORE BERHAD (662315-U)

ANNUAL REPORT 2014

REPORT OF THE DIRECTORSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2014

AUDITORS

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

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

……………………………………Tan Sri Datuk Tan Kean Soon

…………………………………………………………..Rahmandin @ Rahmanudin bin Md. Shamsudin

Kuala Lumpur, 23 April 2015

Page 45: Tanjung Offshore Berhad Cover STATEMENT OF CORPORATE GOVERNANCE 37 OTHER INFORMATION 38 FINANCIAL STATEMENTS 111 LIST OF PROPERTIES OWNED BY THE GROUP 113 ANALYSIS OF SHAREHOLDINGS

TANJUNG OFFSHORE BERHAD (662315-U)

ANNUAL REPORT 201444

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

The directors of Tanjung Offshore Berhad state that, in their opinion, the financial statements set out in pages 48 to 109 are drawn up in accordance with the Malaysian Financial Reporting Standards, International Financial Reporting Standards and the provisions of the Companies Act, 1965 in Malaysia so as to give a true and fair view of the financial positions of the Group and the Company as at 31 December 2014 and of their financial performance and the cash flows of the Group and the Company for the financial year ended on that date.

In the opinion of the directors, the information set out in Note 44 to the Financial Statements has been compiled in accordance with the Guidance on Special Matter No.1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosures pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants, and the directive of Bursa Malaysia Securities Berhad.

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

………………………………………………………….. …………………………………… Rahmandin @ Rahmanudin bin Md. Shamsudin Tan Sri Datuk Tan Kean Soon

Kuala Lumpur, 23 April 2015

Page 46: Tanjung Offshore Berhad Cover STATEMENT OF CORPORATE GOVERNANCE 37 OTHER INFORMATION 38 FINANCIAL STATEMENTS 111 LIST OF PROPERTIES OWNED BY THE GROUP 113 ANALYSIS OF SHAREHOLDINGS

45TANJUNG OFFSHORE BERHAD (662315-U)

ANNUAL REPORT 2014

STATuTORY DECLARATIONPuRSuANT TO SECTION 169 (16) OF THE COMPANIES ACT, 1965

I, Norwahida binti Ja’afar, the officer primarily responsible for the financial management of Tanjung Offshore Berhad, do solemnly and sincerely declare that the financial statements set out in page 48 to 109 are, in my opinion, correct and I make this solemn declaration conscientiously believing the same to be true, and by virtue of the provisions of the Statutory Declarations Act, 1960.

Subscribed and solemnly declared by ) By Norwahida binti Ja’afar ) At Wilayah Persekutuan Kuala Lumpur ) On 23 April 2015 )

Before me,

………………………………………………………….. Commissioner for OathsAgong Sia (W460)

Page 47: Tanjung Offshore Berhad Cover STATEMENT OF CORPORATE GOVERNANCE 37 OTHER INFORMATION 38 FINANCIAL STATEMENTS 111 LIST OF PROPERTIES OWNED BY THE GROUP 113 ANALYSIS OF SHAREHOLDINGS

TANJUNG OFFSHORE BERHAD (662315-U)

ANNUAL REPORT 201446

INDEPENDENT AuDITORS’ REPORT TO THE MEMBERS OF TANJuNG OFFSHORE BERHAD

(INCORPORATED IN MALAYSIA)

Report on the Financial Statements

We have audited the financial statements of Tanjung Offshore Berhad, which comprise statements of financial position as at 31 December 2014 of the Group and of the Company, statements of profit or loss and statements of comprehensive income, statements of changes in equity and statements of cash flows of the Group and the Company for the year then ended, and a summary of significant accounting policies and other explanatory information, as set out on pages 48 to 109.

Directors’ Responsibility for the Financial Statements

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

Auditors’ Responsibility

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

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

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

Opinion

In our opinion, the financial statements give a true and fair view of the financial position of the Group and the Company as of 31 December 2014 and of their financial performance and cash flows for the year then ended in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia.

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 of which we have acted as auditors have been properly kept in accordance with the provisions of the Act.

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

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

Page 48: Tanjung Offshore Berhad Cover STATEMENT OF CORPORATE GOVERNANCE 37 OTHER INFORMATION 38 FINANCIAL STATEMENTS 111 LIST OF PROPERTIES OWNED BY THE GROUP 113 ANALYSIS OF SHAREHOLDINGS

47TANJUNG OFFSHORE BERHAD (662315-U)

ANNUAL REPORT 2014

INDEPENDENT AuDITORS’ REPORT TO THE MEMBERS OF TANJuNG OFFSHORE BERHAD

(INCORPORATED IN MALAYSIA)

Report on Other Legal and Regulatory Requirements (continued)

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

Other Reporting Responsibilities

The supplementary information set out in Note 44 is disclosed to meet the requirement of Bursa Malaysia Securities Berhad and is not part of the financial statements. The directors are responsible for the preparation of the supplementary information in accordance with Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants (“MIA Guidance”) and the directive of Bursa Malaysia Securities Berhad. In our opinion, the supplementary information is prepared, in all material respects, in accordance with the MIA Guidance and the directive of Bursa Malaysia Securities Berhad.

Other Matters

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

…………….. ………………………..AljeffriDean Zuhairi DziaruddinAF 1366 No. 3145/06/16(J)Chartered Accountants Chartered Accountant

Kuala Lumpur, 23 April 2015

Page 49: Tanjung Offshore Berhad Cover STATEMENT OF CORPORATE GOVERNANCE 37 OTHER INFORMATION 38 FINANCIAL STATEMENTS 111 LIST OF PROPERTIES OWNED BY THE GROUP 113 ANALYSIS OF SHAREHOLDINGS

TANJUNG OFFSHORE BERHAD (662315-U)

ANNUAL REPORT 201448

STATEMENTS OF FINANCIAL POSITION AS AT 31 DECEMBER 2014

GROUP COMPANY NOTE 2014 2013 2014 2013 RM RM RM RM

NON-CURRENT ASSETSProperty, plant and equipment 5 15,562,577 29,775,899 - -Intangible assets 6 3,242,638 3,515,910 - -Subsidiary companies 7 - - 95,364,167 57,931,424Associate companies 8 1,285 173,575 - -Joint venture 9 331,582 - - -Investment property 10 36,439,960 - - -Other investments 11 489,897 - - -Other receivables, deposits and prepayments 12 6,480,000 - 6,480,000 - 62,547,939 33,465,384 101,844,167 57,931,424

CURRENT ASSETS Inventories 13 1,416,507 13,817,414 - -Trade receivables 14 39,984,602 70,715,322 - -Other receivables, deposits and prepayments 12 59,636,034 29,438,652 3,873,613 466,185Amount owing by subsidiary companies 7 - - 97,989,251 60,400,621Amount owing by associate companies 8 100,380 - - -Amount owing by joint venture 9 2,538,796 - - -Other investments 11 20,226,182 14,005,172 18,926,182 14,005,172Cash and cash equivalents 15 52,363,234 113,731,065 11,474,941 77,300,943 176,265,735 241,707,625 132,263,987 152,172,921

Assets of disposal group classified as held for sale and discontinued operations 16 - 2,482,951 - - TOTAL ASSETS 238,813,674 277,655,960 234,108,154 210,104,345

NON-CURRENT LIABILITYLong term borrowings 17 3,499,067 4,429,961 - - 3,499,067 4,429,961 - -

See accompanying notes to the financial statements.

Page 50: Tanjung Offshore Berhad Cover STATEMENT OF CORPORATE GOVERNANCE 37 OTHER INFORMATION 38 FINANCIAL STATEMENTS 111 LIST OF PROPERTIES OWNED BY THE GROUP 113 ANALYSIS OF SHAREHOLDINGS

49TANJUNG OFFSHORE BERHAD (662315-U)

ANNUAL REPORT 2014

STATEMENTS OF FINANCIAL POSITION AS AT 31 DECEMBER 2014

GROUP COMPANY NOTE 2014 2013 2014 2013 RM RM RM RM

CURRENT LIABILITIESTrade payables 18 31,644,958 47,397,325 - -Other payables, provisions and accruals 19 10,216,745 25,760,993 967,339 353,077Amount owing to subsidiary companies 7 - - 24,739,678 9,720,929Short term borrowings 20 713,102 3,986,045 - -Provision for taxation 2,161,750 986,638 98,446 636,638 44,736,555 78,131,001 25,805,463 10,710,644

Liabilities directly associated with the assets of disposal group classified as held for sale and discontinued operations 16 - 10,547,493 - -

TOTAL LIABILITIES 48,235,622 93,108,455 25,805,463 10,710,644

EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE COMPANY Share capital 21 187,261,294 182,964,995 187,261,294 182,964,995Treasury shares 22 (4,396,520) (4,396,520) (4,396,520) (4,396,520)Reserves 23 7,713,278 5,979,030 25,437,917 20,825,226

TOTAL EQUITY 190,578,052 184,547,505 208,302,691 199,393,701

TOTAL LIABILITIES AND EQUITY 238,813,674 277,655,960 234,108,154 210,104,345

See accompanying notes to the financial statements.

Page 51: Tanjung Offshore Berhad Cover STATEMENT OF CORPORATE GOVERNANCE 37 OTHER INFORMATION 38 FINANCIAL STATEMENTS 111 LIST OF PROPERTIES OWNED BY THE GROUP 113 ANALYSIS OF SHAREHOLDINGS

TANJUNG OFFSHORE BERHAD (662315-U)

ANNUAL REPORT 201450

STATEMENTS OF PROFIT OR LOSSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2014

GROUP COMPANY NOTE 2014 2013 2014 2013 RM RM RM RM

Continuing OperationsRevenue 3(q), 24 107,344,762 327,791,352 1,555,799 3,292,676Cost of sales (84,069,876) (279,950,663) - -

Gross profit 23,274,886 47,840,689 1,555,799 3,292,676Other income 1,373,078 1,280,027 8,835,942 865,472Operating expenses (24,197,255) (32,972,383) (6,364,429) (4,311,243)

Profit/(Loss) from operations 450,709 16,148,333 4,027,312 (153,095)Finance costs 25 (322,610) (1,943,474) (25,281) (122,895)Share of profit of joint venture 76,582 - - - Share of loss of associate companies - (1,466,049) - -

Profit/(Loss) before zakat and taxation 26 204,681 12,738,810 4,002,031 (275,990)Zakat and taxation 27 (2,916,756) (5,608,078) (215,028) (2,546,177) (Loss)/Profit for the year after tax (2,712,075) 7,130,732 3,787,003 (2,822,167)

Discontinued OperationsProfit for the year after tax 16 3,772,868 6,901,901 - - Net profit/(loss) for the year 1,060,793 14,032,633 3,787,003 (2,822,167)

1,060,793 14,032,633 3,787,003 (2,822,167) Net profit/(loss) for the year attributable to:

Equity holders of the Company 1,060,793 10,909,163 3,787,003 (2,822,167)Non-controlling interests - 3,123,470 - -

1,060,793 14,032,633 3,787,003 (2,822,167) Earnings/(Losses) per share attributable to equity holders of the Company (Sen): 28

Basic- Continuing operations (0.74) 1.29- Discontinued operations 1.02 2.23

0.28 3.52

Diluted- Continuing operations (0.74) 1.26- Discontinued operations 1.02 2.17 0.28 3.43

See accompanying notes to the financial statements.

Page 52: Tanjung Offshore Berhad Cover STATEMENT OF CORPORATE GOVERNANCE 37 OTHER INFORMATION 38 FINANCIAL STATEMENTS 111 LIST OF PROPERTIES OWNED BY THE GROUP 113 ANALYSIS OF SHAREHOLDINGS

51TANJUNG OFFSHORE BERHAD (662315-U)

ANNUAL REPORT 2014

STATEMENTS OF OTHER COMPREHENSIVE INCOME FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2014

GROUP COMPANY 2014 2013 2014 2013 RM RM RM RM

Net profit/(loss) for the year 1,060,793 14,032,633 3,787,003 (2,822,167) Other comprehensive (loss)/income:Items that will be subsequently reclassified to profit or loss

Exchange differences on translating of foreign operations (152,233) (280,367) - -

Revaluation of short term investment - Net fair value changes in short term investment 15,895 125,233 15,895 125,233- Reclassification adjustments 1,993 (120,737) 1,993 (120,737) (134,345) (275,871) 17,888 4,496

Total comprehensive income/(loss) for the year 926,448 13,756,762 3,804,891 (2,817,671)

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

Equity holders of the Company 926,448 10,633,292 3,804,891 (2,817,671)Non-controlling interests - 3,123,470 - -

926,448 13,756,762 3,804,891 (2,817,671)

See accompanying notes to the financial statements.

Page 53: Tanjung Offshore Berhad Cover STATEMENT OF CORPORATE GOVERNANCE 37 OTHER INFORMATION 38 FINANCIAL STATEMENTS 111 LIST OF PROPERTIES OWNED BY THE GROUP 113 ANALYSIS OF SHAREHOLDINGS

TANJUNG OFFSHORE BERHAD (662315-U)

ANNUAL REPORT 201452

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

GR

OU

P

Attr

ibut

able

to E

quity

Hol

ders

of t

he C

ompa

ny

Non

Dis

trib

utab

le

Dis

trib

utab

le

Equi

ty-

Em

ploy

ee

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ed

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reig

n

Sh

are

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oyee

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vest

men

t C

urre

ncy

Non

-

Sh

are

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sury

Sh

are

Cap

ital

Opt

ion

Ben

efits

R

eval

uatio

n Tr

ansl

atio

n Ac

cum

ulat

ed

C

ontr

ollin

g To

tal

NO

TE

Cap

ital

Shar

es

Prem

ium

R

eser

ve

Res

erve

R

eser

ve

Res

erve

R

eser

ve

Loss

es

Tota

l In

tere

sts

Equi

ty

R

M

RM

R

M

RM

R

M

RM

R

M

RM

R

M

RM

R

M

RM

Balan

ce as

at 01

.01.20

13

14

6,655

,230

(4,39

6,520

) 66

,683,6

23

2,173

,151

1,106

,949

- -

(200,8

26)

(55,17

0,377

) 15

6,851

,230

9,424

,351

166,2

75,58

1Pr

ivate

plac

emen

t, ne

t of t

rans

actio

n cos

ts

14,90

8,000

-

1,285

,986

- -

- -

- -

16,19

3,986

-

16,19

3,986

Issua

nce o

f ord

inary

shar

es p

ursu

ant t

o SI

S 29

4,2

01,90

0 -

- -

- -

- -

- 4,2

01,90

0 -

4,201

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Reco

gnitio

n of s

hare

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ed p

aym

ents

29

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- -

- 53

1,416

-

- -

531,4

16

- 53

1,416

War

rant

s exe

rcise

dur

ing th

e yea

r 30

17

,199,8

65

- 68

7,995

-

- -

- -

- 17

,887,8

60

- 17

,887,8

60Ef

fect o

n ter

mina

tion o

f ESO

S

- -

- -

(1,10

6,949

) -

- -

1,106

,949

- -

-Ac

quisi

tion o

f a su

bsidi

ary c

ompa

ny fr

om

n

on-c

ontro

lling

inter

est

-

- -

(21,75

2,179

) -

- -

- -

(21,75

2,179

) (12

,547,8

21)

(34,30

0,000

)To

tal c

ompr

ehen

sive i

ncom

e for

the y

ear

-

- -

- -

- 4,4

96

(280,3

67)

10,90

9,163

10

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92

3,123

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13,75

6,762

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ce as

at 31

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13

18

2,964

,995

(4,39

6,520

) 68

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04

(19,57

9,028

) -

531,4

16

4,496

(48

1,193

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65)

184,5

47,50

5 -

184,5

47,50

5Iss

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e of o

rdina

ry sh

ares

pur

suan

t to

SIS

29

4,296

,299

- 81

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- -

(81,19

7) -

- -

4,296

,299

- 4,2

96,29

9Re

cogn

ition o

f sha

re-b

ased

pay

men

ts 29

-

- -

- -

807,8

00

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- 80

7,800

-

807,8

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fect o

n can

cella

tion o

f SIS

- -

- -

- (13

,341)

- -

13,34

1 -

-Di

spos

al of

subs

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y com

pany

- -

- -

- (16

4,057

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- 16

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- 17

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1,060

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48

- 92

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ce as

at 31

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18

7,261

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(4,39

6,520

) 68

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01

(19,57

9,028

) -

1,080

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4 (63

3,426

) (41

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78,05

2 -

190,5

78,05

2 Se

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Page 54: Tanjung Offshore Berhad Cover STATEMENT OF CORPORATE GOVERNANCE 37 OTHER INFORMATION 38 FINANCIAL STATEMENTS 111 LIST OF PROPERTIES OWNED BY THE GROUP 113 ANALYSIS OF SHAREHOLDINGS

53TANJUNG OFFSHORE BERHAD (662315-U)

ANNUAL REPORT 2014

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

CO

MPA

NY

Att

ribu

tabl

e to

Equ

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olde

rs o

f the

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quity

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nce

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t 01.

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0 (4

,396

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) 66

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975,

462

364,

725

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(47,

884,

202)

16

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8Pr

ivate

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cem

ent,

net o

f tra

nsac

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29

14

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-

1,28

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8 -

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16,1

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78 c

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suan

ce o

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y sh

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pur

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t t

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S

4,20

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4,20

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cogn

ition

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ed p

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29

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531,

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531,

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War

rant

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17,1

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17,8

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fect

on

term

inat

ion

of E

SOS

-

- -

- (3

64,7

25)

- -

364,

725

-To

tal c

ompr

ehen

sive

loss

for t

he y

ear

-

- -

- -

- 4,

496

(2,8

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(2,8

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Bala

nce

as a

t 31.

12.2

013

29

182,

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Page 55: Tanjung Offshore Berhad Cover STATEMENT OF CORPORATE GOVERNANCE 37 OTHER INFORMATION 38 FINANCIAL STATEMENTS 111 LIST OF PROPERTIES OWNED BY THE GROUP 113 ANALYSIS OF SHAREHOLDINGS

TANJUNG OFFSHORE BERHAD (662315-U)

ANNUAL REPORT 201454

STATEMENTS OF CASH FLOWFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2014

GROUP COMPANY NOTE 2014 2013 2014 2013 RM RM RM RMCASH FLOW FROM OPERATING ACTIVITIESProfit/(Loss) before zakat and taxation- From continuing operations 204,681 12,738,810 4,002,031 (275,990)- From subsidiary held for sale and discontinued operation 16 3,772,868 6,915,459 - - 3,977,549 19,654,269 4,002,031 (275,990)

Adjustments for: Amortisation of intangible assets 273,272 264,903 - -Allowance for doubtful debts, impairment and written off, net off recovered 530,685 1,991,584 - -Bad debt written off 4,588 - - -Depreciation of property, plant and equipment 5,880,290 20,007,727 - -Interest expense 322,610 1,943,474 25,281 122,8Impairment loss on investment in associate 125,359 - - -Loss on disposal of associate company 46,931 2,858,862 - 1,419,333Provision for damages - 1,641,437 - -Unrealised (gain)/loss on foreign exchange (245,522) 172,642 178,005 -SIS expenses 807,800 531,416 - -

Written off of amount owing by subsidiary companies disposal - - 1,254,019 - Gain on of a subsidiary company (359,501) - (8,835,942) - Loss/(Gain) on disposal of property, plant and equipment 37,886 (47,191) - -(Gain)/Loss on redemption of other investment (47,607) (120,737) 1,993 (120,737) Share of profit of joint venture (76,582) - - - Share of loss of associate company - 1,466,049 - -Interest income (1,936,949) (3,425,570) (1,555,799) (3,292,676)Reversal of provision (3,537,521) (3,660,058) - (739,348)Operating profit/(loss) before changes in working capital 5,803,288 43,278,807 (4,930,412) (2,886,523)

Decrease in inventories 12,023,492 46,564,097 - -Decrease in receivables 589,156 46,080,457 103,403 134,441Balances with subsidiary companies - - (24,001,905) (37,826,919)Balances with related companies (2,675,723) - (1,700,343) -Balances with associate companies (100,380) - - -Balances with joint venture (2,538,796) - - -(Decrease)/Increase in payables (10,337,353) (134,833,458) 614,262 (433,782) Cash generated from/(used in) operations 2,763,684 1,089,903 (29,914,995) (41,012,783)Zakat paid (270,000) - (270,000) -Tax refund 1,355,624 5,356,532 - 42,500Tax paid (2,271,055) (2,576,210) (673,708) (233,024)

Refurbishment cost incurred (26,106,240) - - - Net cash (used in)/generated from operating activities (24,527,987) 3,870,225 (30,858,703) (41,203,307)

See accompanying notes to the financial statements.

Page 56: Tanjung Offshore Berhad Cover STATEMENT OF CORPORATE GOVERNANCE 37 OTHER INFORMATION 38 FINANCIAL STATEMENTS 111 LIST OF PROPERTIES OWNED BY THE GROUP 113 ANALYSIS OF SHAREHOLDINGS

55TANJUNG OFFSHORE BERHAD (662315-U)

ANNUAL REPORT 2014

STATEMENTS OF CASH FLOWFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2014

GROUP COMPANY NOTE 2014 2013 2014 2013 RM RM RM RM CASH FLOW FROM INVESTING ACTIVITIESPurchase of property, plant and equipment 31 (271,892) (918,048) - -Proceeds from disposal of property, plant and equipment 880,288 119,065 - - Net cash inflow from disposal of a subsidiary company 32 4,136,430 - 900,000 - Net cash on acquisition of a subsidiary company 33 (36,789,000) - (36,789,000) (2) Proceed from disposal of associate company - 44,654 - 1 Additional investment in associate company - (30,000) - - Incorporation of joint venture (255,000) - - -Increase in development costs - (301,268) - -Acquisition of a subsidiary company from non-controlling shareholder - (34,300,000) - (34,300,000)Purchase of other investment (11,300,000) (122,000,000) (9,500,000) (122,000,000)Proceed from redemption of other investment 5,000,000 108,120,062 5,000,000 108,120,062Interest received 1,591,537 3,425,570 1,150,682 3,292,676

Net cash used in investing activities (37,007,637) (45,839,965) (39,238,318) (44,887,263)

CASH FLOW FROM FINANCING ACTIVITIES Issuance of shares 4,296,299 38,283,745 4,296,299 38,281,637Net term loan and other borrowings (60,243) (25,393,969) - -Repayment of hire purchase and finance lease (728,830) (1,709,730) - -Interest paid (613,823) (1,943,474) (25,281) (122,895)Decrease/(Increase) in cash and cash equivalents pledged as security 5,326,756 (4,103,648) (724,071) 1,182,602Net cash generated from financing activities 8,220,159 5,132,924 3,546,947 39,341,344

Net decrease in cash and cash equivalents (53,315,465) (36,836,816) (66,550,074) (46,749,226)Cash and cash equivalents at beginning of the year 103,468,875 140,014,536 75,815,354 122,564,580Effects on exchange rate changes on cash and cash equivalents 163 291,155 - -Cash and cash equivalents at end of the year 34 50,153,573 103,468,875 9,265,280 75,815,354

See accompanying notes to the financial statements.

Page 57: Tanjung Offshore Berhad Cover STATEMENT OF CORPORATE GOVERNANCE 37 OTHER INFORMATION 38 FINANCIAL STATEMENTS 111 LIST OF PROPERTIES OWNED BY THE GROUP 113 ANALYSIS OF SHAREHOLDINGS

TANJUNG OFFSHORE BERHAD (662315-U)

ANNUAL REPORT 201456

NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2014

1. GENERAL INFORMATION

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

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

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

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

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

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

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

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

MFRSs that do not have significant impacts on these financial statementsThe following new and revised MFRSs issued by the Malaysian Accounting Standards Board (‘MASB’) have been adopted which are effective for financial periods beginning on or after 01 January 2014:

Amendments to MFRS 10 Consolidated Financial Statements: Investment Entities Amendments to MFRS 12 Disclosure of Interests in Other Entities: Investment EntitiesAmendments to MFRS 127 Consolidated and Separate Financial Statements: Investment Entities Amendments to MFRS 132 Financial Instruments: Presentation – Offsetting Financial Assets and Financial LiabilitiesAmendments to MFRS 136 Impairment of Assets - Recoverable Amount Disclosures for Non- Financial Assets

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

Effective for annual period beginning on or after 01 July 2014Amendments to MFRS 2 Share-based payment (Annual Improvements to MFRSs 2010 - 2012 Cycle)Amendments to MFRS 3 Business Combinations (Annual Improvements to MFRSs 2010 - 2012 Cycle)Amendments to MFRS 3 Business Combinations (Annual Improvements to MFRSs 2011 - 2013 Cycle)Amendments to MFRS 8 Operating Segments (Annual Improvements to MFRSs 2010 - 2012 Cycle)Amendments to MFRS 13 Fair Value Measurement (Annual Improvements to MFRSs 2011 - 2013 Cycle)Amendments to MFRS 116 Property, Plant and Equipment (Annual Improvements to MFRSs 2010 - 2012 Cycle)Amendments to MFRS 119 Employee Benefits (Defined Benefit Plans: Employee Contributions) Amendments to MFRS 124 Related Party Disclosures (Annual Improvements to MFRSs 2010 - 2012 Cycle)Amendments to MFRS 138 Intangible Assets (Annual Improvements to MFRSs 2010 - 2012 Cycle)Amendments to MFRS 140 Investment Property (Annual Improvements to MFRSs 2011 - 2013 Cycle)

Page 58: Tanjung Offshore Berhad Cover STATEMENT OF CORPORATE GOVERNANCE 37 OTHER INFORMATION 38 FINANCIAL STATEMENTS 111 LIST OF PROPERTIES OWNED BY THE GROUP 113 ANALYSIS OF SHAREHOLDINGS

57TANJUNG OFFSHORE BERHAD (662315-U)

ANNUAL REPORT 2014

NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2014

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

Effective for annual period beginning on or after 01 January 2016Amendments to MFRS 5 Non-current Assets Held for Sale and Discontinued Operations (Annual Improvements to MFRSs 2012 - 2014 Cycle)Amendments to MFRS 7 Financial Instruments: Disclosures (Annual Improvements to MFRSs 2012 - 2014 Cycle)Amendments to MFRS 10 Consolidated Financial Statements - Sale or Contribution of Assets between an Investor and its Associate or Joint VentureAmendments to MFRS 10 Consolidated Financial Statements - Investment Entities: Applying the Consolidation ExceptionAmendments to MFRS 11 Joint Arrangements - Accounting for Acquisitions of Interests in Joint OperationsAmendments to MFRS 12 Disclosures of Interest in Other Entities - Investment Entities: Applying the Consolidation ExceptionAmendments to MFRS 101 Presentation of Financial Statements - Disclosure Initiative Amendments to MFRS 116 Property, Plant and Equipment - Clarification of Acceptable Methods of Depreciation and AmortisationAmendments to MFRS 119 Employee Benefits (Annual Improvements to MFRSs 2012 - 2014 Cycle)

Amendments to MFRS 127 Consolidated and Separate Financial Statements - Equity Method in Separate Financial StatementsAmendments to MFRS 128 Investment in Associates - Sale or Contribution of Assets between an Investor and its Associate or Joint VentureAmendments to MFRS 128 Investments in Associates - Investment Entities: Applying the Consolidation ExceptionAmendments to MFRS 134 Interim Financial Reporting (Annual Improvements to MFRSs 2012 - 2014 Cycle)Amendments to MFRS 138 Intangible Assets - Clarification of Acceptable Methods of Depreciation and Amortisation

Effective for annual period beginning on or after 01 January 2017MFRS 15 Revenue from Contracts with Customers

Effective for annual period beginning on or after 01 January 2018MFRS 9 Financial Instruments

These pronouncements are not expected to have any effect to the financial statements of the Group and the Company upon their initial application, except as described below:

MFRS 9 Financial InstrumentsIn November 2014, MASB issued the final version of MFRS 9 Financial Instruments which reflects all phases of the financial instruments project and replaces MFRS 139 Financial Instruments: Recognition and Measurement and all previous versions of MFRS 9. The standard introduces new requirements for classification and measurement, impairment and hedge accounting. MFRS 9 is effective for annual periods beginning on or after 01 January 2018, with early application permitted. Retrospective application is required, but comparative information is not compulsory. The adoption of MFRS 9 will have an effect on the classification and measurement of the Group’s financial assets, but no impact on the classification and measurement of the Group’s financial liabilities.

MFRS 15 Revenue from Contracts with CustomersThe core principle of MFRS 15 is that an entity should recognise revenue which depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Under MFRS 15, an entity recognises revenue when (or as) a performance obligation is satisfied. Either a full or modified retrospective application is required for annual periods beginning on or after 01 January 2017 with early adoption permitted. The Group is currently assessing the impact of MFRS 15 and plans to adopt the new standard on the stipulated effective date. MFRS 15 establishes a new five- step models that will apply to revenue arising from contracts with customers. MFRS 15 will supersede the current revenue recognition guidance including MFRS 118 Revenue, MFRS 111 Construction Contracts and the related interpretations when it becomes effective.

Page 59: Tanjung Offshore Berhad Cover STATEMENT OF CORPORATE GOVERNANCE 37 OTHER INFORMATION 38 FINANCIAL STATEMENTS 111 LIST OF PROPERTIES OWNED BY THE GROUP 113 ANALYSIS OF SHAREHOLDINGS

TANJUNG OFFSHORE BERHAD (662315-U)

ANNUAL REPORT 201458

NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2014

3. SIGNIFICANT ACCOUNTING POLICIES

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

(a) Basis of Preparation

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

The principal accounting policies adopted are set out below.

(b) Basis of Consolidation

The consolidated financial statements incorporate the financial statements of the Company and all subsidiaries. Subsidiaries are entities controlled by the Company. The Group controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Potential voting rights are considered when assessing control only when such rights are substantive. The Group considers it has de facto power over an investee when, despite not having the majority of voting rights, it has the current ability to direct the activities of the investee that significantly affect the investee’s return.

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

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

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

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

All intragroup balances, transactions, income and expenses are eliminated in full. (c) Business Combinations

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

Page 60: Tanjung Offshore Berhad Cover STATEMENT OF CORPORATE GOVERNANCE 37 OTHER INFORMATION 38 FINANCIAL STATEMENTS 111 LIST OF PROPERTIES OWNED BY THE GROUP 113 ANALYSIS OF SHAREHOLDINGS

59TANJUNG OFFSHORE BERHAD (662315-U)

ANNUAL REPORT 2014

NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2014

3. SIGNIFICANT ACCOUNTING POLICIES (continued)

(c) Business Combinations (continued)

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

(d) Property, Plant and Equipment

The cost of an item of property, plant and equipment is recognised as an asset when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. After recognition as an asset, items of property, plant and equipment are carried at cost less accumulated depreciation and any accumulated impairment losses. Depreciation is provided on a straight-line basis so as to write off the depreciable amount of the following assets over their estimated useful lives, as follows: Percentage (%)Freehold land and building 2Leasehold land and building Over 80 months - 50 yearsFurniture and fittings 10Renovation 10Workshop tools 20Office equipment 10 – 33 1/3Motor vehicles 20 – 25Equipment 10 – 50Plant and machinery 10 – 33 1/3

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

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

(e) Goodwill

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

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

Page 61: Tanjung Offshore Berhad Cover STATEMENT OF CORPORATE GOVERNANCE 37 OTHER INFORMATION 38 FINANCIAL STATEMENTS 111 LIST OF PROPERTIES OWNED BY THE GROUP 113 ANALYSIS OF SHAREHOLDINGS

TANJUNG OFFSHORE BERHAD (662315-U)

ANNUAL REPORT 201460

NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2014

3. SIGNIFICANT ACCOUNTING POLICIES (continued)

(e) Goodwill (continued)

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

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

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

(f) Other Intangible Assets

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

Internally Generated Intangible Assets

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

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

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

- the availability of adequate technical, financial and other resources to complete the development and thereafter to use or sell the intangible asset.

- the ability to measure reliably the expenditure attributable to the intangible asset during its development phrase.

Other development expenditure is recognised in profit or loss as and when it is incurred.

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

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

(g) Investment in Associates

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

Page 62: Tanjung Offshore Berhad Cover STATEMENT OF CORPORATE GOVERNANCE 37 OTHER INFORMATION 38 FINANCIAL STATEMENTS 111 LIST OF PROPERTIES OWNED BY THE GROUP 113 ANALYSIS OF SHAREHOLDINGS

61TANJUNG OFFSHORE BERHAD (662315-U)

ANNUAL REPORT 2014

NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2014

3. SIGNIFICANT ACCOUNTING POLICIES (continued)

(g) Investment in Associates (continued)

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

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

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

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

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

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

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

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

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

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

Page 63: Tanjung Offshore Berhad Cover STATEMENT OF CORPORATE GOVERNANCE 37 OTHER INFORMATION 38 FINANCIAL STATEMENTS 111 LIST OF PROPERTIES OWNED BY THE GROUP 113 ANALYSIS OF SHAREHOLDINGS

TANJUNG OFFSHORE BERHAD (662315-U)

ANNUAL REPORT 201462

NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2014

3. SIGNIFICANT ACCOUNTING POLICIES (continued)

(i) Non-current Assets Held for Sale

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

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

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

(j) Foreign Currencies

Foreign Currency Transactions

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

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

Exchange Differences on Net Investment in Foreign Operations

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

Foreign Operations

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

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63TANJUNG OFFSHORE BERHAD (662315-U)

ANNUAL REPORT 2014

NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2014

3. SIGNIFICANT ACCOUNTING POLICIES (continued)

(k) Inventories

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

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

(l) Share-based Payments

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

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

(m) Provisions

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

(n) Leases – as lessee Finance Leases

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

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

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TANJUNG OFFSHORE BERHAD (662315-U)

ANNUAL REPORT 201464

NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2014

3. SIGNIFICANT ACCOUNTING POLICIES (continued)

(n) Leases – as lessee Finance Leases

Operating Leases

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

(o) Financial Assets

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

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

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

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

Loans and Receivables

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

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

‘Available-for-Sale’

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

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

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

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65TANJUNG OFFSHORE BERHAD (662315-U)

ANNUAL REPORT 2014

NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2014

3. SIGNIFICANT ACCOUNTING POLICIES (continued)

(o) Financial Assets (continued)

‘Held-to-Maturity’

‘Held-to-maturity’ investments are non-derivative financial assets with fixed or determinable payments and fixed maturity that the Group and the Company have the positive intention and ability to hold to maturity.

After initial recognition, ‘held-to-maturity’ investments are measured at amortised cost using the effective interest method less any accumulated impairment losses. Gains or losses are recognised in profit or loss when ‘held-to-maturity’ investments are derecognised or impaired.

Impairment of Financial Assets

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

For other financial assets, objective evidence could include:- significant financial difficulty of the issuer; or- a breach of contract; or- the lender granting to the borrower a concession that the lender would not otherwise consider; or- it becoming probable that the borrower will enter bankruptcy or other financial reorganisation; or

- observable data indicating that there is a measurable decrease in the estimated future cash flows from the financial assets since the initial recognition of those assets.

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

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

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

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

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

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

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TANJUNG OFFSHORE BERHAD (662315-U)

ANNUAL REPORT 201466

NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2014

3. SIGNIFICANT ACCOUNTING POLICIES (continued)

(o) Financial Assets (continued)

Derecognition of Financial Assets

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

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

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

Classification of Liabilities and Equity

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

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

Equity Instruments

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

Treasury Shares

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

Financial Liabilities

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

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

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

Financial Liabilities at Amortised Cost using the Effective Interest Method

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

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67TANJUNG OFFSHORE BERHAD (662315-U)

ANNUAL REPORT 2014

NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2014

3. SIGNIFICANT ACCOUNTING POLICIES (continued)

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

Financial Liabilities at Amortised Cost using the Effective Interest Method

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

Derecognition of Financial Liabilities

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

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

(q) Revenue

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

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

Rendering of Services

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

Sales of Goods

Revenue from sales of goods is recognised when the following conditions are satisfied:- the Group has transferred to the buyer the significant risks and rewards of ownership of the goods;

- the Group retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold;

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

Interest Revenue

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

Dividend Revenue

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

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TANJUNG OFFSHORE BERHAD (662315-U)

ANNUAL REPORT 201468

NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2014

3. SIGNIFICANT ACCOUNTING POLICIES (continued)

(r) Employee Benefits

Short-term Employment Benefits

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

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

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

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

Defined Contribution Plan

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

Termination Benefits

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

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

(s) Borrowing Costs

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

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

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

(t) Zakat and Income Tax

The Group and the Company recognise its obligation towards the payment of zakat in the statements of profit or loss.

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69TANJUNG OFFSHORE BERHAD (662315-U)

ANNUAL REPORT 2014

NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2014

3. SIGNIFICANT ACCOUNTING POLICIES (continued)

(t) Zakat and Income Tax (continued)

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

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

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

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

The carrying amounts of the deferred tax assets are reviewed at the end of each reporting period, and they are reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow the benefit or part of the deferred tax assets to be utilised. The reduction is reversed to the extent that it becomes probable that sufficient taxable profit will be available. Deferred tax assets and liabilities are offset when the Group and the Company have a legally enforceable right to set off current tax assets and liabilities, and the deferred tax assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities which intend either to settle current tax liabilities and assets on a net basis or to realise the assets and settle the liabilities simultaneously, in each future period in which significant amounts of deferred tax liabilities or assets are expected to be settled or recovered.

(u) Cash and Cash Equivalents

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

(v) Segmental Reporting

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

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TANJUNG OFFSHORE BERHAD (662315-U)

ANNUAL REPORT 201470

NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2014

3. SIGNIFICANT ACCOUNTING POLICIES (continued)

(v) Segmental Reporting

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

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

(w) Financial Guarantee Contracts

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

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

(x) Offsetting Financial Instruments

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

(y) Contingent Liabilities

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

(z) Joint Arrangements

Joint arrangements are arrangements of which the Group has joint control, established by contracts requiring unanimous consent for decisions about the activities that significantly affect the arrangements’ returns. Joint arrangements are classified as either joint operation or joint venture. A joint arrangement is classified as a joint operation when the Group or the Company has rights to the assets and obligations for the liabilities relating to an arrangement. Whilst, a joint arrangement is classified as a joint venture when the Group has rights only to the net assets of the arrangements.

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71TANJUNG OFFSHORE BERHAD (662315-U)

ANNUAL REPORT 2014

NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2014

3. SIGNIFICANT ACCOUNTING POLICIES (continued)

(z) Joint Arrangements (continued)

Joint Ventures

Investment in joint ventures is accounted for in the consolidated financial statements using the equity method of accounting. Under the equity method, the investment in joint ventures is carried in the statements of financial position at cost adjusted for post- acquisition changes in the Group’s share of net assets of the joint ventures. The Group’s share of profit or loss of joint ventures is recognised in the statements of profit or loss. Where there has been a change recognised directly in the equity of the joint ventures, the Group recognises its share of such changes. In applying the equity method, unrealised gains or losses on transactions between the Group and the joint ventures are eliminated to the extent of the Group’s interest in the joint ventures. After application of the equity method, the Group determines whether it is necessary to recognise any additional impairment loss with respect to the Group’s net investment in the joint ventures. The Group determines at each reporting date whether there is any objective evidence that the investment in the joint ventures is impaired. If this is the case, the Group calculates the amount of impairment as the difference between the recoverable amount of the joint venture and its carrying value and recognises the amount in statements of profit or loss. The joint ventures are equity accounted for from the date the Group obtains joint control until the date the Group ceases to have joint control over the joint ventures.

Goodwill relating to a joint venture is included in the carrying amount of the investment and is not amortised. Any excess of the Group’s share of the net fair value of the joint ventures’ identifiable assets, liabilities and contingent liabilities over the cost of the investments is excluded from the carrying amount of the investment and is instead included as income in the determination of the Group’s share of the joint ventures’ profit or loss in the year in which the investments are acquired.

When the Group’s share of losses in joint ventures equals or exceeds its interest in the joint ventures, including any long-term interests that, in substance, form part of the Group’s net investment in the joint ventures, the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the joint ventures.

The most recent available audited financial statements of the joint ventures are used by the Group in applying the equity method. Where the dates of the audited financial statements used are not coterminous with those of the Group, the share of results is arrived at from the last audited financial statements available and management financial statements to the end of the accounting year. Uniform accounting policies are adopted for like transactions and events in similar circumstances.

On disposal of such investment, the difference between net disposal proceeds and their carrying amounts is included in income statement.

Joint Operations

A joint operation is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the assets, and obligations for the liabilities, relating to the arrangement. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require the unanimous consent of the parties sharing control.

The Group as a joint operator recognises in relation to its interest in a joint operation:(a) its assets, including its share of any assets held jointly;(b) its liabilities, including its share of any liabilities incurred jointly;(c) its revenue from the sale of its share of the output arising from the joint operation;(d) its share of the revenue from the sale of the output by the joint operation;(e) its expenses, including its share of any expenses incurred jointly.

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TANJUNG OFFSHORE BERHAD (662315-U)

ANNUAL REPORT 201472

NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2014

3. SIGNIFICANT ACCOUNTING POLICIES (continued)

(z) Joint Arrangements (continued) Joint Operations

The Group accounts for the assets, liabilities, revenues and expenses relating to its interest in a joint operation in accordance with the MFRSs applicable to the particular assets, liabilities, revenues and expenses.

Profits or losses resulting from transactions between the Group and its joint operation are recognised in the Group’s financial statements only to the extent of unrelated investors’ interests in the joint operation.

(aa) Investment Property

Investment property which is held to earn rentals or for capital appreciation or both, including property that is being constructed or developed for future use as investment property, is measured initially at its cost. Transaction costs are included in the initial measurement.

After initial recognition as investment property, investment property is carried at cost less accumulated depreciation and any accumulated impairment losses.

Depreciation of an investment property begins when it is ready for its intended use.

An investment property is derecognised on disposal or when the investment property is permanently withdrawn from use and no future economic benefits are expected from its disposal. Any gain or loss arising from derecognition, determined as the difference between any net disposal proceeds and the carrying amounts of the investment property, and is recognised in statements of profit or loss.

4. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

Critical Judgements in Applying the Accounting Policies

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

Revenue Recognition

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

Deferred Tax Assets

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

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73TANJUNG OFFSHORE BERHAD (662315-U)

ANNUAL REPORT 2014

NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2014

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

Key Sources of Estimation Uncertainty

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

Allowance for Doubtful Debts

At the end of the reporting period, the allowance for doubtful debts of RM6,441,978 (2013: RM10,058,317) is representing 14% (2013: 12%) from the total trade receivables. The estimates allowance is based on the historical default rate. Hence, should the actual default rate becomes higher than the estimated default rate, the Group may be required to charge additional allowance for doubtful debt to the profit or loss within the next financial year.

Useful Lives of Property, Plant and Equipment

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

Share-based Payments to Employees

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

Amortisation of Intangible Assets

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

Page 75: Tanjung Offshore Berhad Cover STATEMENT OF CORPORATE GOVERNANCE 37 OTHER INFORMATION 38 FINANCIAL STATEMENTS 111 LIST OF PROPERTIES OWNED BY THE GROUP 113 ANALYSIS OF SHAREHOLDINGS

TANJUNG OFFSHORE BERHAD (662315-U)

ANNUAL REPORT 201474

NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2014

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Page 76: Tanjung Offshore Berhad Cover STATEMENT OF CORPORATE GOVERNANCE 37 OTHER INFORMATION 38 FINANCIAL STATEMENTS 111 LIST OF PROPERTIES OWNED BY THE GROUP 113 ANALYSIS OF SHAREHOLDINGS

75TANJUNG OFFSHORE BERHAD (662315-U)

ANNUAL REPORT 2014

NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2014

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Page 77: Tanjung Offshore Berhad Cover STATEMENT OF CORPORATE GOVERNANCE 37 OTHER INFORMATION 38 FINANCIAL STATEMENTS 111 LIST OF PROPERTIES OWNED BY THE GROUP 113 ANALYSIS OF SHAREHOLDINGS

TANJUNG OFFSHORE BERHAD (662315-U)

ANNUAL REPORT 201476

NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2014

5. PROPERTY, PLANT AND EQUIPMENT (continued)

(a) Included in the property, plant and equipment are motor vehicles, office equipment and plant and machinery which is acquired by means of hire purchase and lease arrangements with a net carrying amount of RM8,817 (2013: RM160,712), RMNil (2013: RM1,835,825) and RM4,338,454 (2013: RM5,768,924) respectively.

(b) Included in the office equipment are computer software and hardware with a net carrying amounts of RM955,862 and RM60,694 (2013: RM1,303,553 and RM125,384) respectively.

(c) Certain plant and machinery have been pledged to secure against the Group’s term loan as disclosed in Note 17 to the Financial Statements.

(d) Freehold and leasehold land and building have been pledged to secure against the Group’s bank overdraft as disclosed in Note 20 to the Financial Statements.

6. INTANGIBLE ASSETS

GROUP Development Goodwill on Costs Consolidation Total

Cost RM RM RM Balance as at 01.01.2013 3,811,617 339,253 4,150,870 Additions 301,268 - 301,268

Balance as at 31.12.2013/Balance as at 31.12.2014 4,112,885 339,253 4,452,138 Accumulated Amortisation Balance as at 01.01.2013 671,325 - 671,325 Amortised during the year 264,903 - 264,903 Balance as at 31.12.2013 936,228 - 936,228 Amortised during the year 273,272 - 273,272

Balance as at 31.12.2014 1,209,500 - 1,209,500 Net Carrying Amount As at 31 December 2014 2,903,385 339,253 3,242,638

As at 31 December 2013 3,176,657 339,253 3,515,910

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

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

2014 2013 RM RM

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

Page 78: Tanjung Offshore Berhad Cover STATEMENT OF CORPORATE GOVERNANCE 37 OTHER INFORMATION 38 FINANCIAL STATEMENTS 111 LIST OF PROPERTIES OWNED BY THE GROUP 113 ANALYSIS OF SHAREHOLDINGS

77TANJUNG OFFSHORE BERHAD (662315-U)

ANNUAL REPORT 2014

NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2014

6. INTANGIBLE ASSETS (continued)

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

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

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

The projected cash flows from use are derived from the most recent financial budgets approved by management.

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

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

Profit margin 30Discount rate 7

7. SUBSIDIARY COMPANIES

COMPANY 2014 2013 RM RM

Unquoted shares, at cost 189,757,394 152,968,394Less: Accumulated impairment losses (95,568,386) (95,568,386) 94,189,008 57,400,008SIS granted to employees of the subsidiary companies 1,175,159 531,416 95,364,167 57,931,424

Details of the Company’s subsidiaries as at 31 December 2014 are as follows:

Group Effective Country of Interest Incorporation Principal Activities 2014 2013 % %

Held by the Company:Tanjung Offshore Services Sdn. Bhd. 100 100 Malaysia Integrated service provider to the oil and gas and related industries.

Page 79: Tanjung Offshore Berhad Cover STATEMENT OF CORPORATE GOVERNANCE 37 OTHER INFORMATION 38 FINANCIAL STATEMENTS 111 LIST OF PROPERTIES OWNED BY THE GROUP 113 ANALYSIS OF SHAREHOLDINGS

TANJUNG OFFSHORE BERHAD (662315-U)

ANNUAL REPORT 201478

NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2014

7. SUBSIDIARY COMPANIES (continued)

Group Effective Country of Interest Incorporation Principal Activities 2014 2013 % %

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

Gas Generators (Malaysia) Sdn. Bhd. 100 100 Malaysia Manufacturing and supply of gas generators to both industrial and oil and gas industry.

Held by the Company:^7 New Market Street 100 - British Virgin Investment holding Holdings Limited (Formerly Islands known as Wavenet Investments Limited)

Tanjung Offshore Marine Services 100 100 Malaysia Ownership and leasing offshore vessels to local Sdn. Bhd. and international oil industry major.

Tanjung Citech Sdn. Bhd. 100 100 Malaysia Dormant.

Tanjung Offshore Resources Sdn. Bhd. 100 100 Malaysia Mineral trading

*Tanjung Citech UK Limited 100 100 England Dormant. and Wales

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

*Tanjung HMS Petroleum Sdn. Bhd. 51 - Malaysia Oilfield development and provision of integrated services to the oil and gas industry.

Tanjung Maintenance Services - 100 Malaysia Provision of maintenance services to the oil Sdn. Bhd. and gas and related industries.

Held by Tanjung Offshore Services Sdn. Bhd.:Tanjung PetroConsult Sdn. Bhd. 100 100 Malaysia Provision for engineering and professional manpower services to the oil and gas and related industries.

Tanjung NewEnergy Services 100 100 Malaysia Provision of project management services to Sdn. Bhd the engineering and energy industries.

Page 80: Tanjung Offshore Berhad Cover STATEMENT OF CORPORATE GOVERNANCE 37 OTHER INFORMATION 38 FINANCIAL STATEMENTS 111 LIST OF PROPERTIES OWNED BY THE GROUP 113 ANALYSIS OF SHAREHOLDINGS

79TANJUNG OFFSHORE BERHAD (662315-U)

ANNUAL REPORT 2014

NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2014

7. SUBSIDIARY COMPANIES (continued)

Group Effective Country of Interest Incorporation Principal Activities 2014 2013 % %

Held by Tanjung Citech UK Limited:*Citech Energy Recovery 100 100 England Dormant. Systems UK Limited and Wales

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

*Gas Generators International Ltd 100 - Malaysia Marketing gas generator packages. (Wilayah Persekutuan Labuan)

Held by 7 New Market Street Holdings Limited (Formerly known as Wavenet Investments Limited):^7 New Market Street Limited 100 - British Acquire, develop and realisation of real estate. (Formerly known as Sparkling Virgin Islands Light Investments Limited)

* The financial statements of these companies are not audited by AljeffriDean.^ These companies are not required by their local laws to appoint statutory auditors.

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

None of the Group’s subsidiary companies that have non-controlling interest are material to the Group. Therefore the summarised financial information is not presented.

8. ASSOCIATE COMPANIES

GROUP 2014 2013 RM RM

Unquoted shares, at cost 134,999 184,499Share of attributable post acquisition losses after taxation (8,355) (10,924) 126,644 173,575Less: Accumulated impairment losses (125,359) - 1,285 173,575

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

Page 81: Tanjung Offshore Berhad Cover STATEMENT OF CORPORATE GOVERNANCE 37 OTHER INFORMATION 38 FINANCIAL STATEMENTS 111 LIST OF PROPERTIES OWNED BY THE GROUP 113 ANALYSIS OF SHAREHOLDINGS

TANJUNG OFFSHORE BERHAD (662315-U)

ANNUAL REPORT 201480

NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2014

8. ASSOCIATE COMPANIES (continued)

Details of the Group’s associate companies as at 31 December 2014 are as follows:

Group Effective Country of Interest Incorporation Principal Activities 2014 2013 % %Held by Gas Generators (M) - 49.50 Malaysia Commission agent for the fabrication and Sdn. Bhd.: supply of industrial equipment.*Universal Hydrogen Generators (M) Sdn. Bhd.

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

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

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

None of the Group’s associate companies are material to the Group. Therefore the summarised financial information is not presented.

9. JOINT VENTURE

GROUP 2014 2013 RM RM

Unquoted shares, at cost 255,000 -Share of attributable post acquisition profit after taxation 76,582 - 331,582 -

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

Details of the Group’s joint ventures as at 31 December 2014 are as follows:

Group Effective Country of Interest Incorporation Principal Activities 2014 2013 % %Held by Tanjung Offshore Services Sdn. Bhd.:Fircroft Tanjung Sdn. Bhd. 51 - Malaysia Supply manpower for the oil and gas industry and petrochemicals industry.

Tanjung Drilltec Sdn. Bhd. 51 - Malaysia Dormant

Page 82: Tanjung Offshore Berhad Cover STATEMENT OF CORPORATE GOVERNANCE 37 OTHER INFORMATION 38 FINANCIAL STATEMENTS 111 LIST OF PROPERTIES OWNED BY THE GROUP 113 ANALYSIS OF SHAREHOLDINGS

81TANJUNG OFFSHORE BERHAD (662315-U)

ANNUAL REPORT 2014

NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2014

9. JOINT VENTURE (continued)

The above joint arrangements are structured via separate entity and provide the Group with the rights to the net assets of the entity under the arrangements. Therefore this entity is classified as joint ventures of the Group. This joint venture has the same reporting period as the Group. No quoted market prices are available for the shares of the Group’s joint venture as this entity is a private company.

The amount owing by joint venture is unsecured, subject to interest rate at 8.60% per annum and is repayable on demand.

Summarised statement of profit or loss of the joint venture is as follows:

2014 2013 RM RM

Revenue 5,079,973 -

Net profit for the period 153,163 -

Share of results 76,582 -

Summarised statement of financial position of the joint venture is as follows:

2014 2013 RM RM

Total assets 2,502,777 -Total liabilities (1,849,610) -

Net assets 653,167 - Group’s share of joint venture’s net assets 326,584 -

10. INVESTMENT PROPERTY

Investment property under refurbishmentGROUP 2014 2013 RM RM

CostBeginning of the year - -Acquisition of a subsidiary company differences 36,789,000 - Exchange (349,040) -

End of the year 36,439,960 -

The fair value of the investment property upon completion were estimated at £12,000,000 or approximately RM65,300,000 (based on exchange rate of £1: RM5.44) based on the valuation done by the independent valuer.

Page 83: Tanjung Offshore Berhad Cover STATEMENT OF CORPORATE GOVERNANCE 37 OTHER INFORMATION 38 FINANCIAL STATEMENTS 111 LIST OF PROPERTIES OWNED BY THE GROUP 113 ANALYSIS OF SHAREHOLDINGS

TANJUNG OFFSHORE BERHAD (662315-U)

ANNUAL REPORT 201482

NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2014

10. INVESTMENT PROPERTY (continued)

As disclosed in Note 41 to the Financial Statements, the Company acquired the entire shares in 7 New Market Street Holdings Limited (Formerly known as Wavenet Investments Limited) (“7NMSH”). 7NMSH owns a 100% shareholding in 7 New Market Street Limited (Formerly known as Sparkling Light Investments Limited) which in turn owns an office building in Birmingham, United Kingdom. During the current financial year, the Company decided to refurbish the office building into a residential property. As at the date of this report, the refurbishment works still in progress.

The rental income earned from the investment property amounted to RMNil. Direct operating expenses that generated rental income during the year amounted to RMNil.

11. OTHER INVESTMENTS GROUP COMPANY 2014 2013 2014 2013 RM RM RM RM

Held-to-maturity investmentStructured products 6,300,000 - 5,000,000 -

Available-for-sale investment Money market 13,926,182 14,005,172 13,926,182 14,005,172Quoted share 489,897 - - -

14,416,079 14,005,172 13,926,182 14,005,172

20,716,079 14,005,172 18,926,182 14,005,172

Analyse as follows: Non-current 489,897 - - -Current 20,226,182 14,005,172 18,926,182 14,005,172

20,716,079 14,005,172 18,926,182 14,005,172

No impairment losses have been financial year. recognised in respect of the other financial assets during the

12. OTHER RECEIVABLES, DEPOSITS AND PREPAYMENTS

GROUP COMPANY 2014 2013 2014 2013 RM RM RM RM

Other receivables 3,077,796 2,255,724 1,830,101 233,161Deposits 175,702 2,064,360 - -Prepayments 26,433,014 25,852,843 423,512 233,024Refurbishment cost 26,106,240 - - -Chromite sand’s project 7,621,998 4,664,441 - -Proceeds from disposal of a subsidiary company 8,100,000 - 8,100,000 - 71,514,750 34,837,368 10,353,613 466,185Less: Allowance for doubtful debts (5,398,716) (5,398,716) - - 66,116,034 29,438,652 10,353,613 466,185

Page 84: Tanjung Offshore Berhad Cover STATEMENT OF CORPORATE GOVERNANCE 37 OTHER INFORMATION 38 FINANCIAL STATEMENTS 111 LIST OF PROPERTIES OWNED BY THE GROUP 113 ANALYSIS OF SHAREHOLDINGS

83TANJUNG OFFSHORE BERHAD (662315-U)

ANNUAL REPORT 2014

NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2014

12. OTHER RECEIVABLES, DEPOSITS AND PREPAYMENTS (continued)

GROUP COMPANY 2014 2013 2014 2013 RM RM RM RM

Analyse as follows: Non-current 6,480,000 - 6,480,000 -Current 59,636,034 29,438,652 3,873,613 466,185 66,116,034 29,438,652 10,353,613 466,185

Other receivables

Included in the Group’s and in the Company’s other receivables are amount owing by related company amounting to RM2,675,723 and RM1,700,343 (2013: RMNil and RMNil) respectively. The amount owing is unsecured, interest free and repayable on demand.

Refurbishment cost

As disclosed in Note 41 to the Financial Statements, 7 New Market Street Limited (Formerly known as Sparkling Light Investments Limited) (“7NMS”), the wholly-owned subsidiary of the Company entered into a Development Agreement to perform a refurbishment work on the newly acquired office building for a total cost of £4,800,000 or equivalent to RM26,106,240 (based on average exchange rate of £1: RM5.42). The refurbishment cost will be capitalised as part of the investment property based on the stage of completion.

Chromite sand’s project

This represents advances given for the purpose of washing and trading of chromite tailings in the Philippines. This amount will be charged out to the statements of profit or loss upon issuance the sale invoice.

Proceeds from disposal of a subsidiary company

As disclosed in Note 41 to the Financial Statements, the Company entered into an agreement for the disposal of its entire equity interest in Tanjung Maintenance Services Sdn. Bhd. via a management buy-out for a total consideration of RM9,000,000. A deposit of RM900,000 has been paid by the purchasers upon signing the agreement and the remaining consideration of RM8,100,000 will be paid via five equal yearly installments of RM1,620,000 per year until full settlement.

13. INVENTORIES

GROUP 2014 2013 RM RMAt cost: Work-in-progress 1,416,507 12,022,412Raw materials 350,021 2,140,903Finished goods - 4,120

1,766,528 14,167,435Less: Allowance for impairment losses (350,021) (350,021)

1,416,507 13,817,414

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TANJUNG OFFSHORE BERHAD (662315-U)

ANNUAL REPORT 201484

NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2014

14. TRADE RECEIVABLES

GROUP 2014 2013 RM RM

Trade receivables 46,426,580 80,773,639Less: Allowance for doubtful debts (6,441,978) (10,058,317) 39,984,602 70,715,322

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

Included in the Group’s trade receivables are accrued revenue amounting to RM6,449,148 (2013: RM12,888,899).

Included also in the Group’s trade receivables are amount owing by associate and related companies totalling to RM1,254,726 (2013: RM2,008,032).

As at 31 December 2014, the trade receivables ageing are as follows:

GROUP 2014 2013 RM RM

Neither past due nor impaired 15,952,022 42,573,37701 to 30 days past due but not impaired 4,149,259 1,312,41531 to 60 days past due but not impaired 906,928 5,454,826More than 61 days past due but not impaired 18,976,393 21,374,704

39,984,602 70,715,322Impaired 6,441,978 10,058,317

46,426,580 80,773,639

Trade receivables that are neither past due nor impaired

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

Trade receivables that are past due but not impaired

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

Trade receivables that are impaired

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

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85TANJUNG OFFSHORE BERHAD (662315-U)

ANNUAL REPORT 2014

NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2014

14. TRADE RECEIVABLES (continued)

Trade receivables that are impaired (continued)

GROUP 2014 2013 RM RM

Beginning of the year 10,058,317 9,561,275Disposal of a subsidiary company (4,147,024) -Additional allowance recognised 602,668 2,515,235Amounts recovered and reversed (71,983) (1,626,229)Amounts written off - (391,964)

End of the year 6,441,978 10,058,317

15. CASH AND CASH EQUIVALENTS GROUP COMPANY 2014 2013 2014 2013 RM RM RM RM

Cash and bank balances 11,468,020 22,517,737 8,024,941 5,304,255Fixed deposits with licensed banks 40,895,214 91,213,328 3,450,000 71,996,688

52,363,234 113,731,065 11,474,941 77,300,943

The Group’s and the Company’s cash and cash equivalents amounting to RM2,209,661 (2013: RM7,536,417) and RM2,209,661 (2013: RM1,485,589) respectively have been pledged to licensed banks for bank facilities granted to the Group and the Company.

16. HELD FOR SALE AND DISCONTINUED OPERATIONS

On 10 February 2012, the Company announced that its wholly-owned subsidiary, Citech Energy Recovery Systems UK Limited (“CiTech”), a company incorporated in the United Kingdom, has commenced the cessation of business operations with immediate effect. In the previous financial year, the assets and liabilities of CiTech has been classified as held for sale. During the current financial year, the assets and liabilities which previously being presented separately in the statements of financial position has been reclassified as CiTech will be remain dormant.

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

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

GROUP 2014 2013 RM RMAssets classified as held for sale and discontinued operations:Inventories - 1,658,423Trade receivables - 309,745Other receivables, deposits and prepayments - 461,785Cash and cash equivalents - 52,998 - 2,482,951

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TANJUNG OFFSHORE BERHAD (662315-U)

ANNUAL REPORT 201486

NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2014

16. HELD FOR SALE AND DISCONTINUED OPERATIONS (continued)

GROUP 2014 2013 RM RMLiabilities directly associated with assets classified as held for sale and discontinued operations:Trade payables - 3,130,630Other payables and accruals - 7,416,863

- 10,547,493

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

GROUP 2014 2013 RM RM

Revenue 217,049 998,283Cost of sales 167,973 -

Gross profit 385,022 998,283Other income - 6,097,047Operating expenses 3,387,846 (179,871)

Profit before taxation 3,772,868 6,915,459Taxation - (13,558)

Profit for the year after tax 3,772,868 6,901,901 Profit before taxation are derived at after:

a) Other losses and expensesStatutory audit 27,255 119,280Bad debts written off 4,588 - Rental expenses - (1,958)

b) Other gains and incomeGain on foreign exchange 118,197 194Reversal of provision 3,537,521 2,920,710

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

GROUP 2014 2013 RM RM

Net cash used in operating activities 53,323 2,619,901

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87TANJUNG OFFSHORE BERHAD (662315-U)

ANNUAL REPORT 2014

NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2014

17. LONG TERM BORROWINGS

GROUP 2014 2013 RM RM

Total outstanding term loan - 301,476Less: Repayable within 12 months (Note 20) - (90,360)

- 211,116Hire purchase and finance lease payables (Note 37) 3,499,067 4,218,845

3,499,067 4,429,961

Term Loan 1

The purpose of this term loan is to finance the property held under PN 4125, Lot No. 3801, Mukim Teluk Kalong, District of Kemaman, Terengganu Darul Iman. The term loan is repayable within 10 years and secured by letter of undertaking, notice of assignment, fixed deposit and corporate guarantee from the Company.

18. TRADE PAYABLES

GROUP 2014 2013 RM RM

Ringgit Malaysia 20,697,645 35,139,974Other currencies 10,947,313 12,257,351

31,644,958 47,397,325

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

Included in the Group’s trade payables are accrued cost amounting to RM18,338,683 (2013: RM17,212,658).

Included also in the Group’s trade payables are amount owing to associate and related companies totalling to RM3,369,007 (2013: RMNil).

19. OTHER PAYABLES, PROVISIONS AND ACCRUALS

GROUP COMPANY 2014 2013 2014 2013 RM RM RM RM

Other payables 3,687,726 9,293,007 580,939 - Provisions 6,120,710 1,754,649 279,150 15,000 Accruals 408,309 14,713,337 107,250 338,077 10,216,745 25,760,993 967,339 353,077

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TANJUNG OFFSHORE BERHAD (662315-U)

ANNUAL REPORT 201488

NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2014

20. SHORT TERM BORROWINGS

GROUP 2014 2013 RM RM

Short term loan (Note 17) - 90,360 Bank overdraft - 2,778,771 Hire purchase and finance lease payables (Note 37) 713,102 1,116,914

713,102 3,986,045

Bank OverdraftThe purpose of this bank overdraft is for working capital requirement. The bank overdraft is secured against the freehold and leasehold land and building of the subsidiary companies (Note 5 to the Financial Statements), pledged of fixed deposits (Note 15 to the Financial Statements) and corporate guarantee from the Company.

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

The effective interest rates are disclosed in Note 40 to the Financial Statements.

21. SHARE CAPITAL

GROUP AND COMPANY Number of Shares Amounts 2014 2013 2014 2013 UNIT UNIT RM RM Authorised Share Capital Ordinary Shares of RM0.50 each:

Beginning of the year 400,000,000 400,000,000 200,000,000 200,000,000Created during the year 200,000,000 - 100,000,000 - End of the year 600,000,000 400,000,000 300,000,000 200,000,000

Issued and Fully Paid Share Capital Ordinary Shares of RM0.50 each: Beginning of the year 365,929,989 293,310,460 182,964,995 146,655,230Private placement - 29,816,000 - 14,908,000Issuance of ordinary shares pursuant to SIS (Note 29) 8,592,598 8,403,800 4,296,299 4,201,900Warrants exercise during the year (Note 30) - 34,399,729 - 17,199,865

End of the year 374,522,587 365,929,989 187,261,294 182,964,995

During the financial year, the Company has increased its authorised share capital from RM200,000,000 comprising of 400,000,000 ordinary shares of RM0.50 each to RM300,000,000 comprising of 600,000,000 ordinary shares of RM0.50 each by the creation of additional 200,000,000 new ordinary shares of RM0.50 each.

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89TANJUNG OFFSHORE BERHAD (662315-U)

ANNUAL REPORT 2014

NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2014

21. SHARE CAPITAL (continued)

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

No. of Shares Issued Issue Price Purposes

8,592,598 RM0.50 Exercise of Share Issuance Scheme

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

At the end of the reporting period, 2,477,500 (2013: 2,477,500) ordinary shares are held by the Company as treasury shares (Note 22 to the Financial Statements), and number of outstanding ordinary shares issued and fully paid (excluding treasury shares) is 372,045,087 (2013: 363,452,489) units.

Capital Management

The primary objective of the management of the Group’s and the Company’s capital structure is to optimise the balance between debts and equity to achieve a low cost of capital and maximise the return to stakeholders.

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

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

GROUP COMPANY 2014 2013 2014 2013 RM RM RM RM

Term loan (Note 17) - 301,476 - -Bank overdraft - 2,778,771 - -Hire purchase and finance lease payables (Note 37) 4,212,169 5,335,759 - - 4,212,169 8,416,006 - -Less: Cash and cash equivalents (Note 15) (52,363,234) (113,731,065) (11,474,941) (77,300,943)

Net debts (48,151,065) (105,315,059) (11,474,941) (77,300,943)Equity attributable to equity holders of the Company 190,578,052 184,547,505 208,302,691 199,393,701

Total capital 142,426,987 79,232,446 196,827,750 122,092,758

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

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

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TANJUNG OFFSHORE BERHAD (662315-U)

ANNUAL REPORT 201490

NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2014

22. TREASURY SHARES

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

23. RESERVES GROUP COMPANY 2014 2013 2014 2013 RM RM RM RM

Non-distributable: Share premium 68,738,801 68,657,604 68,736,693 68,655,496Capital reserves (19,579,028) (19,579,028) 1,975,462 1,975,462Equity-settled employee benefits reserve 1,080,621 531,416 1,080,621 531,416Investment revaluation reserve 22,384 4,496 22,384 4,496Foreign currency translation reserve (633,426) (481,193) - -

49,629,352 49,133,295 71,815,160 71,166,870

Distributable: Accumulated losses (41,916,074) (43,154,265) (46,377,243) (50,341,644) 7,713,278 5,979,030 25,437,917 20,825,226

Share Premium

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

Capital Reserve

The capital reserves represent the value of warrants capitalised for the issuance of serial payment bond with detachable warrants. Upon the exercise of the warrants, the value of these warrants will be credited to share premium. Capital reserves also include all the changes in the Group’s ownership interest in a subsidiary company that do not result in a loss of control.

Equity-Settled Employee Benefits Reserve

The reserve represents the cumulative value of employee services for the issue of SIS. If the share option is exercised, the amount from the equity-settled employee benefits reserves is transferred to share premium. If the share option expires, the amount from the equity-settled employee benefits reserves is transferred to accumulated losses. The details of the SIS are disclosed in Note 29 to the Financial Statements.

Investment Revaluation Reserve

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

Foreign Currency Translation Reserve

The foreign currency translation reserve arose from the exchange differences on the translation of foreign operations.

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91TANJUNG OFFSHORE BERHAD (662315-U)

ANNUAL REPORT 2014

NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2014

23. RESERVES (continued)

Accumulated Losses

The Company has elected to discontinue utilising its tax credit under Section 108 of the Income Tax Act, 1967 since previous financial year. Accordingly, tax on the Company’s profits is a final tax, and dividends distributed to shareholders will be exempted from tax.

24. REVENUE GROUP COMPANY 2014 2013 2014 2013 RM RM RM RM

Rendering of services 76,598,277 199,099,309 - -Sales of goods 29,190,686 125,399,367 - -Interest revenue 1,555,799 3,292,676 1,555,799 3,292,676 107,344,762 327,791,352 1,555,799 3,292,676

25. FINANCE COSTS GROUP COMPANY 2014 2013 2014 2013 RM RM RM RM

Hire purchase interest 68,287 166,563 - -Finance lease interest 5,597 63,508 - -Overdraft interest 103,961 429,086 322 107,646Term loan interest - 778,026 - -Interest on bill payable 22,389 254,143 - -Revolving credit interest - 87,337 - -Commitment fee 122,376 164,811 24,959 15,249 322,610 1,943,474 25,281 122,895

26. PROFIT/(LOSS) BEFORE ZAKAT AND TAXATION

GROUP COMPANY 2014 2013 2014 2013 RM RM RM RM

a) Other losses and expensesStatutory audit - Current year 96,261 93,173 20,000 20,000- Other related services 18,000 18,000 18,000 18,000Amortisation of intangible assets 273,272 264,903 - -Allowance for doubtful debts, impairment and written off, net off recovered 530,685 1,991,584 - -Depreciation of property, plant and equipment 5,880,290 20,007,727 - -Impairment loss on investment in associate 125,359 - - -Loss on disposal and written off of property, plant and equipment 37,886 - - -

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TANJUNG OFFSHORE BERHAD (662315-U)

ANNUAL REPORT 201492

NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2014

26. PROFIT/(LOSS) BEFORE ZAKAT AND TAXATION (continued)

GROUP COMPANY 2014 2013 2014 2013 RM RM RM RM

a) Other losses and expenses (continued) Loss on disposal of associate company 46,931 2,858,862 - 1,419,333Loss on redemption of other investment - - 1,993 -Loss on foreign exchange - 944,309 - 1,352Provision for damages - 1,641,437 - -Rental expenses 1,649,768 1,290,062 - -Written off of amount owing by subsidiary companies - - 1,254,019 -

b) Other gains and income Gain on disposal of property, plant and equipment - 47,191 - -Gain on foreign exchange 1,105,507 - 320,637 -Gain on disposal of a subsidiary company 359,501 - 8,835,942 -Gain on redemption of other investment 47,607 120,737 - 120,737Interest income 1,936,949 3,425,570 1,555,799 3,292,676Rental income - 30,000 - -Reversal of provision - 739,348 - 739,348

c) Employee benefit expensesStaff costs (including directors’ remuneration and fees):- Short term benefits 14,302,222 14,005,827 1,042,105 215,000- SIS expenses 807,800 531,416 - -- Termination benefits - 256,235 - -- EPF contributions 1,574,306 1,452,192 74,615 -

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

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

GROUP COMPANY 2014 2013 2014 2013 RM RM RM RM

Non-Executive- Current year fee 192,000 215,000 192,000 215,000- Overprovision in previous year fee (57,000) - (57,000) - 135,000 215,000 135,000 215,000Executive- Remuneration 1,400,240 1,176,000 981,720 -

1,400,240 1,176,000 981,720 -

Total directors’ fee and remuneration 1,535,240 1,391,000 1,116,720 215,000

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93TANJUNG OFFSHORE BERHAD (662315-U)

ANNUAL REPORT 2014

NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2014

26. PROFIT/(LOSS) BEFORE ZAKAT AND TAXATION (continued)

Remuneration band: Number of Directors 2014 2013Non-Executive Directors:RM0 - -RM1 - RM50,000 - -RM50,001 - RM100,000 4 4

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

* One of the directors has resigned during the current financial year.

27. ZAKAT AND TAXATION GROUP COMPANY 2014 2013 2014 2013 RM RM RM RM

Zakat 270,000 - 270,000 -

Corporate taxation Current year provision 2,965,702 1,563,574 401,119 657,203(Over)/Under provision in previous year (318,946) 3,283,395 (456,091) 1,888,974 2,646,756 4,846,969 (54,972) 2,546,177Deferred tax (Note 35)Deferred tax relating to the origination and reversal of temporary differences - 761,109 - -

2,916,756 5,608,078 215,028 2,546,177

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

GROUP COMPANY 2014 2013 2014 2013 RM RM RM RM

Profit/(Loss) before zakat and taxation 204,681 12,738,810 4,002,031 (275,990)

Taxation at Malaysian statutory tax rate at 25% 51,170 3,184,703 1,000,508 (68,998)Zakat 270,000 - 270,000 -Tax effect on expenses that are not deductible for tax purposes 3,923,536 7,656,658 1,955,563 942,569Deferred tax assets not recognised 172,728 804,749 - -Effect on Group’s relief - - (265,807) -Utilisation of unused tax losses and unabsorbed capital allowances (283,544) (8,649,806) - -Income not subject to tax (898,188) (671,621) (2,289,145) (216,368)(Over)/Under provision in previous year (318,946) 3,283,395 (456,091) 1,888,974 2,916,756 5,608,078 215,028 2,546,177

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TANJUNG OFFSHORE BERHAD (662315-U)

ANNUAL REPORT 201494

NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2014

27. ZAKAT AND TAXATION (continued)

The Malaysian statutory tax rate will be reduced to 24% from the current year’s rate of 25%, effective from Year of Assessment 2016.Deferred tax assets are not recognised for the following temporary differences by certain subsidiaries:

GROUP 2014 2013 RM RM

Unused tax losses 39,566,959 42,227,479Unabsorbed capital allowances 25,343,139 30,442,008 64,910,098 72,669,487

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

28. EARNINGS PER SHARE

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

ProfitFrom continuing and discontinued operations

GROUP 2014 2013 RM RMEarnings used for the computation of basic/diluted - Profit attributable to equity holders of the Company 1,060,793 10,909,163

From continuing operations

GROUP 2014 2013 RM RM

Profit attributable to equity holders of the Company 1,060,793 10,909,163Adjustment for profit from discontinued operations (3,772,868) (6,901,901)(Loss)/Profit used for the computation of basic/diluted from continuing operations (2,712,075) 4,007,262

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95TANJUNG OFFSHORE BERHAD (662315-U)

ANNUAL REPORT 2014

NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2014

28. EARNINGS PER SHARE (continued)

Weighted Average Number of Ordinary Shares

From continuing and discontinued operations

GROUP 2014 2013 UNIT UNIT

Weighted average number of ordinary shares after deducting treasury shares 368,858,910 309,872,510

Weighted average number of ordinary shares used for the computation of basic 368,858,910 309,872,510

Effects of dilutive potential ordinary shares:- SIS* - 7,478,962- Warrants* - - Weighted average number of ordinary shares used for the computation of diluted 368,858,910 317,351,472 * The amount is not presented as the computation would result in anti-dilutive.

29. SHARE ISSUANCE SCHEME (“SIS”)

The SIS is governed by the By-Laws approved by the shareholders at an Extraordinary General Meeting held on 07 February 2013 and is to be in force for a period of 3 years. The SIS has been effective on 12 July 2013. The salient features of the By-Laws of SIS are as follows:

(a) The maximum number of Options which may be allotted pursuant to the SIS (“Options”) shall not exceed 15% of the total issued and paid-up share capital of the Company (excluding Treasury Shares) at any point in time during the duration of the SIS.

(b) Executive directors and employees of the Group and the Company will be eligible to participate in the SIS provided that they fulfill the conditions for eligibility stipulated in the rules, terms and conditions contained in the By-Laws (“Eligible Persons”).

(c) The maximum number of Options that may be offered and allotted to an Eligible Persons shall be determined by the SIS Committee taking into consideration inter-alia, the Eligible Persons’ designation, job description, responsibilities and seniority.

(d) The exercise price of the Options issued pursuant to SIS shall be as follows:

i) at a discount of not more than 10% from the volume-weighted average market price of the shares as shown in the daily official list issued by Bursa Malaysia Securities Berhad (“Bursa Securities”) for the 5 market days immediately preceding the date of offer; and

ii) the par value of the shares.

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

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TANJUNG OFFSHORE BERHAD (662315-U)

ANNUAL REPORT 201496

NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2014

29. SHARE ISSUANCE SCHEME (“SIS”) (continued)

(f) Options are exercisable, in whole or in part (provided that an Option is exercised in part in respect of 1,000 shares or any multiple thereof) as follows: Percentage of Options ExercisableNumber of Options Granted from Acceptance Date 1st year 2nd year 3rd year

20,000 and below 50% 50% -20,001 to 50,000 33% 33% 34%Above 50,000 33% 33% 34%

Movements of the number and the related weighted average exercise prices of SIS are as follows:

2014 2013 Weighted Weighted Number of Average Number of Average Share Options Exercise Price Share Options Exercise Price UNIT RM UNIT RM

Beginning of the year 36,244,200 0.50 - -Granted 10,670,000 0.50 45,018,000 0.50Cancelled (1,125,302) 0.50 (370,000) 0.50Exercised (8,592,598) 0.50 (8,403,800) 0.50

End of the year 37,196,300 0.50 36,244,200 0.50 Exercisable at the end of the year 27,155,012 6,330,040

The SIS outstanding at the end of the reporting period has the following weighted average exercise prices and remaining contractual life: 2014 2013 Number of Number of Oustanding Exercise Oustanding Exercise SIS Price SIS Price UNIT RM UNIT RM

07 May 2016 36,365,300 0.50 36,244,200 0.5011 June 2017 831,000 0.50 - 0.50

The fair value of the services received for SIS is measured by reference to the fair value of the equity instruments granted. The estimated fair values of the SIS granted on the grant date are RM0.09.

The fair values of the Options are estimates on the date of grant using the Black-Scholes-Merton option pricing model with the following assumption:

Weighted average share price RM0.65Options exercise price RM0.50Expected dividend yield 6%Risk-free annual interest rate 3%Expected volatility 5%Expected Options life 3 years

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97TANJUNG OFFSHORE BERHAD (662315-U)

ANNUAL REPORT 2014

NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2014

29. SHARE ISSUANCE SCHEME (“SIS”) (continued)

The expected volatility is based on the historical volatility, calculated based on the weighted average expected life of the SIS.

There is no market conditions associated with the SIS granted. Vesting conditions, including service and performance conditions, are not considered in the fair value measurement at grant date.

Included in the total number of outstanding SIS are outstanding SIS from the disposed subsidiary company totaling to 8,972,000 unit.

30. WARRANTS

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

On 03 March 2006, the primary subscribers were allotted a total of 18,514,600 warrants to the shareholders at an offer price of RM0.24 per warrant on the basis of one (1) warrant for every five(5) ordinary shares held on entitlement date.

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

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

On 14 August 2012, the subscription price of Warrant A 2006/2016 has been adjusted from RM0.55 to RM0.50 pursuant to the special dividend of RM0.44 per ordinary share of RM0.50 each.

On 14 August 2012, the subscription price of Warrant B 2008/2013 has been adjusted from RM1.20 to RM0.52 pursuant to the special dividend of RM0.44 per ordinary share of RM0.50 each.

On 11 October 2013, the subscription right of the holders of Warrant B 2008/2013 has expired. Unexercised Warrants 2008/2013 will lapse and become null and void and shall cease to be exercisable thereafter.

As at 31 December 2014, there is a total of 29,981,990 (2013: 29,981,990) outstanding Warrant A 2006/2016 warrants.

31. PURCHASE OF PROPERTY, PLANT AND EQUIPMENT

GROUP 2014 2013 RM RM

Purchase of other property, plant and equipment 271,892 5,918,048Less: Financed by hire purchase and finance lease arrangement - (5,000,000)

Cash purchase of property, plant and equipment 271,892 918,048

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TANJUNG OFFSHORE BERHAD (662315-U)

ANNUAL REPORT 201498

NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2014

32. DISPOSAL OF A SUBSIDIARY COMPANY

As disclosed in Note 41 to the Financial Statements, the Company entered into an agreement for the disposal of its entire equity interest in Tanjung Maintenance Services Sdn. Bhd. (“TMS”) via a management buy-out for a total consideration of RM9,000,000. A deposit of 10% or equivalent to RM900,000 has been paid by the purchasers upon signing the said agreement and the remaining of the consideration will be paid via five equal yearly installments of RM1,620,000 per year until full settlement.

The net assets of TMS at the date of disposal and at 31 December 2013 were as follows:

GROUP 29.08.2014 31.12.2013 RM RM

Property, plant and equipment 7,686,750 9,457,946Inventories 2,035,838 3,510,316Trade and other receivables 30,468,355 18,705,127Cash and cash equivalents (including bank overdraft) (3,236,430) (2,027,290)Trade and other payables (27,969,234) (19,834,491)Hire purchase and finance lease payables (103,547) (364,115)Term loan (241,233) (301,476)

Net assets 8,640,499 9,146,017Gain on disposal of a subsidiary company 359,501 Total consideration 9,000,000 Unsettled consideration (8,100,000) Deposit received 900,000 Cash and cash equivalents disposed off 3,236,430

Net cash inflow from disposal of a subsidiary company 4,136,430

33. ACQUISITION OF A SUBSIDIARY COMPANY

As disclosed in Note 41 to the Financial Statements, the Company entered into a sale and purchase agreement for the acquisition of entire shares in 7 New Market Street Holdings Limited (Formerly known as Wavenet Investments Limited) (“7NMSH”) for a cash consideration of £6,700,000 or equivalent to RM36,789,000 (based on average exchange rate of £1: RM5.49). 7NMSH owns a 100% shareholding in 7 New Market Street Limited (Formerly known as Sparkling Light Investments Limited) which in turn owns an office building in Birmingham, United Kingdom. The acquisition has been completed on 09 May 2014.

During the eight months period to 31 December 2014, 7NMSH and its subsidiary company have not contributed significant amount to the Group’s result.

If the acquisition had been completed on 01 January 2014, the total Group’s result would have not been affected significantly.

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99TANJUNG OFFSHORE BERHAD (662315-U)

ANNUAL REPORT 2014

NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2014

33. ACQUISITION OF A SUBSIDIARY COMPANY (continued)

The net assets acquired in the transactions were as follows:

Carrying FairGROUP amount value RM RM

Investment property 36,789,000 36,789,000 36,789,000Goodwill on consolidation - Purchase consideration 36,789,000Cash and cash equivalents acquired - Net cash on acquisition of a subsidiary company 36,789,000

34. STATEMENTS OF CASH FLOW - CASH AND CASH EQUIVALENTS

GROUP COMPANY 2014 2013 2014 2013 RM RM RM RM

Cash and cash equivalents (Note 15) 52,363,234 113,731,065 11,474,941 77,300,943Bank overdraft (Note 20) - (2,778,771) - -Cash and cash equivalents from subsidiary company classified as held for sale and discontinued operations (Note 16) - 52,998 - -

52,363,234 111,005,292 11,474,941 77,300,943

Less: Cash and cash equivalents pledged as security (Note 15) (2,209,661) (7,536,417) (2,209,661) (1,485,589) 50,153,573 103,468,875 9,265,280 75,815,354

35. DEFERRED TAXATION

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

GROUP 2014 2013 RM RM

Deferred tax assets 2,268,402 2,665,594Deferred tax liabilities (2,268,402) (2,665,594)

Net position - -

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TANJUNG OFFSHORE BERHAD (662315-U)

ANNUAL REPORT 2014100

NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2014

35. DEFERRED TAXATION (continued)

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

Disposal of a Recognised inGROUP Beginning of the subsidiary the profit End of the2014 year company or loss year RM RM RM RM (Note 27)

Deferred Tax AssetsUnused tax losses and unabsorbed capital allowances 2,665,594 (1,460,910) 1,063,718 2,268,402

Deferred Tax LiabilitiesProperty, plant and equipment 2,665,594 (1,460,910) 1,063,718 2,268,402

Net Position - - - 2013

Deferred Tax AssetsUnused tax losses and unabsorbed capital allowances 2,974,429 - (308,835) 2,665,594Exercise of options pursuant to ESOS 761,109 - (761,109) - 3,735,538 - (1,069,944) 2,665,594 Deferred Tax LiabilitiesProperty, plant and equipment 2,974,429 - (308,835) 2,665,594 Net Position 761,109 - (761,109) -

36. CONTINGENT LIABILITIES

As at 31 December 2014, the Company has the contingent liabilities as follows:

COMPANY 2014 2013 RM RMAggregate of corporate guarantees pursuant to banking facilities granted to the Group 30,222,531 23,634,653

The corporate guarantee does not have a determinable effect on the terms of the banking facilities due to the bank requiring parent guarantee as a pre-condition for approving the banking facilities granted to the Group. The actual terms of the banking facilities are likely to be the best indicator of “at market” terms and hence the fair value of the banking facilities are equal to the banking facilities amount received by the Group. As such, there is no value on the corporate guarantees to be recognised in the financial statements.

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101TANJUNG OFFSHORE BERHAD (662315-U)

ANNUAL REPORT 2014

NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2014

37. HIRE PURCHASE AND FINANCE LEASE PAYABLES

GROUP 2014 2013 RM RM Classified as:Non-current liability 3,499,067 4,218,845Current liability 713,102 1,116,914 4,212,169 5,335,759 Future minimum hire purchase and finance lease paymentsNot later than 1 year 964,796 1,125,806Later than 1 year and not later than 5 years 3,987,814 5,329,280 4,952,610 6,455,086Less: Future finance charges (740,441) (1,119,327) Present value of hire purchase and finance lease payables 4,212,169 5,335,759

Present value of hire purchase and finance lease payables is analysed as follows:Not later than 1 year 713,102 1,116,914Later than 1 year and not later than 5 years 3,499,067 4,218,845 4,212,169 5,335,759

The Group obtains the above facilities to finance the acquisition of certain motor vehicles, office equipments and plant and machinery. Implicit interest rates are fixed at the date of the agreements, and the amount of the payments is fixed throughout the period. The Group has the option to purchase the assets at the end of the agreements.

38. RELATED PARTY TRANSACTIONS

GROUP 2014 2013 RM RMWith associate companySales to associate company - 679,089Purchase from associate company - (28,865,337) With joint ventureSales to associate company - -Purchase from associate company (915,432) -

With related companiesSale to related companies 5,264,824 7,388,602Purchase from related companies (2,063,248) (116,003)

The directors are of the opinion that all the transactions above have been entered into in the normal course of business and have been established on terms and conditions that are not materially different from that obtainable in transactions with unrelated parties.

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TANJUNG OFFSHORE BERHAD (662315-U)

ANNUAL REPORT 2014102

NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2014

39. OPERATING SEGMENTS

General Information

The information reported to the Group’s chief operating decision maker to make decisions about resources to be allocated and for assessing their performance is based on the nature of the products and services of the Group. The Group’s operating segments are as follows:

(a) Products and services;(b) Maintenance services – maintenance activities; and(c) Engineered packages – engineering activities

Measurement of Reportable Segments

Segment information is prepared in conformity with the accounting policies adopted for preparing and presenting the consolidated financial statements. Transactions between reportable segments are measured on the basis that is similar to those external customers.

Segment results are profit earned or loss incurred by each segment without allocation of finance costs, share of loss from associates and income tax expense. There are no significant changes from prior financial year in the measurement methods used to determine reported segment results.

All the Group’s assets are allocated to reportable segments other than assets used centrally for the Group, associate companies, joint venture and current and deferred tax assets. Jointly used assets are allocated on the basis of the revenues earned by individual segments.

All the Group’s liabilities are allocated to reportable segments other than liabilities incurred centrally for the Group, current and deferred tax liabilities. Jointly incurred liabilities are allocated in proportion to the segment assets.

Geographical Information

The operating segments are not presented by geographical segment as all the foreign operations have been discontinued and in the process of winding up. The newly acquired foreign operations have not commenced its business.

Total TotalGROUP Products and Maintenance Engineered Continuing Discontinued Total2014 Services Services Packages Operations Operations Operations RM RM RM RM RM RM

Segment Revenue and Results

Segment RevenueRevenue from all customers 49,690,731 24,200,200 33,453,831 107,344,762 217,049 107,561,811Segment ResultsSegment profit or loss (9,031,824) 844,149 8,638,384 450,709 3,772,868 4,223,577Finance costs (322,610) - (322,610)Share of profit of joint venture 76,582 - 76,582Zakat and taxation (2,916,756) - (2,916,756)

Net (loss)/profit for the year (2,712,075) 3,772,868 1,060,793

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103TANJUNG OFFSHORE BERHAD (662315-U)

ANNUAL REPORT 2014

NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2014

39. OPERATING SEGMENTS (continued)

Total TotalGROUP Products and Maintenance Engineered Continuing Discontinued Total2014 Services Services Packages Operations Operations Operations RM RM RM RM RM RM

Segment Assets and Liabilities AssetsSegment assets 190,877,144 - 47,603,663 238,480,807 - 238,480,807Associate companies 1,285Joint venture 331,582

Total Group’s assets 238,813,674

LiabilitiesSegment liabilities 32,808,174 - 13,265,698 46,073,872 - 46,073,872Provision for taxation 2,161,750

Total Group’s liabilities 48,235,622

Total TotalGROUP Products and Maintenance Engineered Continuing Discontinued Total2013 Services Services Packages Operations Operations Operations RM RM RM RM RM RM

Segment Revenue and Results Segment RevenueRevenue from all customers 172,831,554 36,819,614 118,140,184 327,791,352 998,283 328,789,635

Segment ResultsSegment profit or loss 11,653,319 (4,773,561) 9,268,575 16,148,333 6,915,459 23,063,792Finance costs (1,943,474) - (1,943,474)Share of loss from associate companies (1,466,049) - (1,466,049)Zakat and taxation (5,608,078) (13,558) (5,621,636)

Net profit for the year 7,130,732 6,901,901 14,032,633

Segment Assets and Liabilities

AssetsSegment assets 202,417,401 28,339,613 44,242,420 274,999,434 2,482,951 277,482,385Associate companies 173,575

Total Group’s assets 277,655,960

LiabilitiesSegment liabilities 44,291,612 20,427,563 16,855,149 81,574,324 10,547,493 92,121,817Provision for taxation 986,638

Total Group’s liabilities 93,108,455

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TANJUNG OFFSHORE BERHAD (662315-U)

ANNUAL REPORT 2014104

NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2014

40. FINANCIAL INSTRUMENTS

Classification of financial instruments

Financial assets and financial liabilities are measured on an ongoing basis either at fair value or at amortised cost. The principal accounting policies in Note 3 to the Financial Statements describe how the classes of financial instruments are measured, and how income and expense, including fair value gains or losses, are recognised. The following table analyses the financial assets and liabilities in the statements of financial position by the class of financial instruments to which they are assigned, and therefore by the measurement basis:

FinancialGROUP Loans and Available- Held-to- Liabilities at2014 Receivables For-Sale Maturity Amortised Cost Total RM RM RM RM RM

Financial AssetsTrade receivables 39,984,602 - - - 39,984,602Other receivables, deposits and prepayments 66,116,034 - - - 66,116,034Amount owing by associate companies 100,380 - - - 100,380Amount owing by joint venture 2,538,796 - - - 2,538,796Other investments - 14,416,079 6,300,000 - 20,716,079Cash and cash equivalents 52,363,234 - - - 52,363,234 161,103,046 14,416,079 6,300,000 - 181,819,125

Financial LiabilitiesLong term borrowings - - - 3,499,067 3,499,067Trade payables - - - 31,644,958 31,644,958Other payables, provisions and accruals - - - 10,216,745 10,216,745Short term borrowings - - - 713,102 713,102 - - - 46,073,872 46,073,872

2013 Financial AssetsTrade receivables 70,715,322 - - - 70,715,322Other receivables, deposits and prepayments 29,438,652 - - - 29,438,652Other investments - 14,005,172 - - 14,005,172Cash and cash equivalents 113,731,065 - - - 113,731,065 213,885,039 14,005,172 - - 227,890,211

Financial LiabilitiesLong term borrowings - - - 4,429,961 4,429,961Trade payables - - - 47,397,325 47,397,325Other payables, provisions and accruals - - - 25,760,993 25,760,993Short term borrowings - - - 3,986,045 3,986,045

- - - 81,574,324 81,574,324

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105TANJUNG OFFSHORE BERHAD (662315-U)

ANNUAL REPORT 2014

NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2014

40. FINANCIAL INSTRUMENTS (continued)

Financial risk management objective and policies

The Group is mainly exposed to credit risk, liquidity risk and market risk (including foreign currency risk, interest rate risk and equity price risk). The Group has formal risk management policies and guidelines, as approved by the Board of Directors, which set out its overall business strategies, its tolerance for risks and its general risk management philosophy. Such policies are monitored and undertaken by the Managing Director.

Credit risk

Credit risk refers to the risk that a counter party will default on its contractual obligations resulting in financial loss to the Group.

The carrying amounts of the financial assets recorded on the statements of financial position at the end of the reporting period represent the Group’s maximum exposure to credit risk in relation to financial assets. No financial assets carry a significant exposure to credit risk other than those disclosed in the notes.

The Group does not hold any collateral and thus, the credit exposure is continuously monitored by the directors.

Included in the Group’s trade receivables are a group of debtors that represented 40% (2013: 49%) of total trade receivables. There are no concentrations of credit risk for other financial assets.

Liquidity risk

The Group’s funding requirements and liquidity risk are managed with the objective of meeting business obligations on a timely basis. The Group monitors its cash flows and ensures that sufficient funding is in place to meet the obligations as and when they fall due.

The following table analyses the remaining contractual maturity for non-derivative financial liabilities. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Group can be required to pay.

Weighted Average Not Later thanGROUP Effective 1 Year or on Later2014 Interest Rate Demand than 1 Year Total RM RM RM RM Trade payables - 31,644,958 - 31,644,958Hire purchase and finance lease payables 2.78 to 9.79 713,102 3,499,067 4,212,169 32,358,060 3,499,067 35,857,127

2013 Trade payables - 47,397,325 - 47,397,325Term loan 8.25 90,360 211,116 301,476Bank overdraft 7.85 to 8.10 2,778,771 - 2,778,771Hire purchase and finance lease payables 2.78 to 9.79 1,116,914 4,218,845 5,335,759 51,383,370 4,429,961 55,813,331

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TANJUNG OFFSHORE BERHAD (662315-U)

ANNUAL REPORT 2014106

NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2014

40. FINANCIAL INSTRUMENTS (continued) Market risk

Foreign currency risk

The Group incurs foreign currency risk on transactions that are denominated in foreign currencies. The currencies giving rise to this risk are primarily the Great Britain Pound (“GBP”), United States Dollar (“USD”), Australia Dollar (“AUD”), Singapore Dollar (“SGD”) and EURO. The Group has not entered into any derivative instruments for hedging or trading purposes as the net exposure to foreign currency risk is not significant. The carrying amounts of the Group’s foreign currency denominated financial assets and financial liabilities at the end of the reporting period are as follows:

Financial Assets

2014 GBP USD AUD SGD EURO Total RM RM RM RM RM RM

Trade receivables 344,277 15,002,562 - 124,276 3,102,129 18,573,244Cash and cash equivalents 491,203 25,706,943 892,539 - 3,854,151 30,944,836 835,480 40,709,505 892,539 124,276 6,956,280 49,518,080

2013

Trade receivables 292,156 22,986,477 682,881 169,438 105,194 24,236,146Cash and cash equivalents 1,135,539 13,371,028 14,296 - 194,809 14,715,672 1,427,695 36,357,505 697,177 169,438 300,003 38,951,818

Financial Liabilities

2014 GBP USD AUD SGD EURO Total RM RM RM RM RM RM

Trade payables 598,378 9,984,468 - - 364,467 10,947,313

2013

Trade payables 88,872 11,967,779 2,666 1,984 196,050 12,257,351

Certain of the other foreign currencies are not presented as the amounts are not material.

Foreign currency risk sensitivity

A 10% strengthening of Ringgit Malaysia against the following foreign currencies at the end of the reporting period would increase/(decrease) the profit before tax and other comprehensive income by the amounts shown below. This analysis assumes that all other variables remain unchanged.

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107TANJUNG OFFSHORE BERHAD (662315-U)

ANNUAL REPORT 2014

NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2014

40. FINANCIAL INSTRUMENTS (continued)

2014 GBP USD AUD SGD EURO Total RM RM RM RM RM RM

Profit before tax (23,710) (3,072,504) (89,254) (12,428) (659,181) (3,857,077)Other comprehensive income (186,210) - - - - (186,210)

(209,920) (3,072,504) (89,254) (12,428) (659,181) (4,043,287)

2013 Profit before tax (133,882) (2,438,973) (69,451) (16,745) (10,395) (2,669,446)Other comprehensive income (804,594) - - - - (804,594) (938,476) (2,438,973) (69,451) (16,745) (10,395) (3,474,040)

A 10% weakening of Ringgit Malaysia against the above foreign currencies at the end of the reporting period would have had the equal but opposite effect on the above currencies to the amounts shown above, on the basis that all other variables remain unchanged.

Interest rate risk

The Group obtains financing through leasing arrangement, bank borrowings and other financial liabilities. The Group’s policy is to obtain the borrowings with the most favourable interest rates in the market.

The Group constantly monitors its interest rate risk and does not utilise interest swap contracts or other derivative instruments for trading or speculative purposes. At the end of the reporting period, there were no such arrangements, interest rate swap contracts or other derivative instruments outstanding.

The carrying amounts of the Group’s financial instruments that are exposed to interest rate risk are as follows:

Weighted Average 2014 2013 Effective Fixed Floating Fixed Floating Interest Rate Rate Rate Rate Rate % RM RM RM RMFinancial Assets

Other investments 3.00 to 3.10 20,226,182 - 14,005,172 -Fixed deposits with licensed banks 2.80 to 3.17 40,895,214 - 91,213,328 - 61,121,396 - 105,218,500 - Financial Liabilities

Term loan 8.25 - - - 301,476Bank overdraft 7.60 to 8.35 - - - 2,778,771Hire purchase and finance lease payables 2.78 to 9.79 4,212,169 - 5,335,759 - 4,212,169 - 5,335,759 3,080,247

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TANJUNG OFFSHORE BERHAD (662315-U)

ANNUAL REPORT 2014108

NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2014

40. FINANCIAL INSTRUMENTS (continued)

Financial instruments subject to floating interest rates are repriced regularly. Financial instruments at fixed rates are fixed until the maturity of the instruments. The other financial instruments of the Group that are not included in the abovementioned table are not subject to interest rate risks.

Interest rate risk sensitivity

An increase in market interest rates by 1% on financial assets and liabilities of the Group which have variable interest rates at the end of the reporting period would decrease the profit before tax approximately by RMNil (2013: RM31,000). This analysis assumes that all other variables remain unchanged. A decrease in market interest rates by 1% on financial assets and liabilities of the Group which have variable interest rates at the end of the reporting period would have had the equal but opposite effect on the amounts shown above, on the basis that all other variables remain unchanged.

Equity price risk

Equity price risk is the risk that the value of an equity instrument will fluctuate as a result of changes in market prices. The Group and the Company are exposed to equity price risk through the Company’s holding of fund in Maybank Enhanced Cash Fund.

If the unit prices for quoted ‘available-for-sale’ financial assets increased by 10%, with all other variables being held constant, the Group’s ‘available-for-sale’ financial assets reserves at the end of the reporting period would increase approximately by RM1,440,000 (2013: RM1,400,000) respectively.

If the unit prices for quoted ‘available-for-sale’ financial assets decreased by 10%, with all other variables being held constant, it would have the equal but opposite effect on the amounts shown above.

Fair value of financial assets and financial liabilities

The carrying amounts of financial assets and financial liabilities, as reported in the financial statements, approximate their respective fair values.

Determination of fair value

The carrying amounts of the financial assets and financial liabilities are recognised at their fair values, except for the financial assets and financial liabilities which are recognised at cost and amortised cost after initial recognition. However, the directors are of the opinion that the carrying amounts do not materially different from their fair values.

Valuation techniques and significant assumptions used in determining fair value of financial assets and financial liabilities recognised at amortised cost or cost after initial recognition are as follows:

Financial assets and liabilities with published price in active markets

The fair values of financial assets and financial liabilities traded on active markets are determined with reference to their quoted market price.

Trade and other receivables, fixed deposits, cash and bank balances, bank overdrafts and trade and other payablesThe carrying amounts approximate the fair values due to their short-term nature.

Non-current borrowings

Non-current borrowings are determined by discounting the relevant cash flows using the current interest rates for similar instruments at the end of the reporting period and their carrying amounts are expected to approximate fair values.

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109TANJUNG OFFSHORE BERHAD (662315-U)

ANNUAL REPORT 2014

NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2014

41. SIGNIFICANT EVENTS DURING THE CURRENT FINANCIAL YEAR

On 21 March 2014, the Company entered into a sale and purchase agreement with Cross Space Securities Limited, a company incorporated in British Virgin Islands to acquire the entire shares in its wholly-owned subsidiary, 7 New Market Street Holdings Limited (Formerly known as Wavenet Investments Limited) (“7NMSH”) for a cash consideration of £6,700,000 or equivalent to RM36,789,000 (based on average exchange rate of £1: RM5.49). 7NMSH owns a 100% shareholding in 7 New Market Street Limited (Formerly known as Sparkling Light Investments Limited) which in turn owns an office building in Birmingham, United Kingdom. Both newly acquired companies are incorporated in British Virgin Islands. The acquisition has been completed on 09 May 2014.

On 23 May 2014, the Company entered into an Option Agreement with H.B. Properties PLC in the United Kingdom (“HBP”) for the Company to require HBP to purchase all shares in 7 New Market Street Holdings Limited (Formerly known as Wavenet Investments Limited) (“7NMSH”), which directly owns 7 New Market Street Limited (Formerly known as Sparkling Light Investments Limited), the owner of the office building in Birmingham, United Kingdom for a cash consideration of £7,000,000. The said agreement will expire in 30 months from the agreement date. During the option period, the Company shall not transfer, dispose of, charge, pledge or encumber in any ways its interest in 7NMSH.

On 26 May 2014, 7 New Market Street Limited (Formerly known as Sparkling Light Investments Limited) (“7NMS”), the wholly-owned subsidiary of the Company entered into Development Agreement with Cross Space Securities Limited (“CSSL”), a company incorporated in British Virgin Islands for the appointment of CSSL as developer to perform a refurbishment work on the newly acquired office building for a total cost of £4,800,000 or equivalent to RM26,106,240 (based on average exchange rate of £1: RM5.42). 7NMS will not be obliged or liable to pay CSSL any amount in respect of development cost amounting to more than £4,800,000 and 7NMS’s liability under this agreement shall be limited to £4,800,000.

41. SIGNIFICANT EVENTS DURING THE CURRENT FINANCIAL YEAR…CONT’D.

On 29 August 2014, the Company entered into an agreement for the Sale and Purchase of the entire share capital in Tanjung Maintenance Services Sdn. Bhd. (“TMS”) with Zulkifli Bin Ahmad and Encik Syed Elyas Bin Syed Abdullah (“the purchasers”), to dispose of its entire equity interest in TMS via a management buy-out for a total consideration of RM9,000,000. A deposit of 10% or equivalent to RM900,000 will be paid by the purchasers upon signing the said agreement and the remaining of the consideration will be paid via five equal yearly installments of RM1,620,000 per year until full settlement.

42. OPERATING LEASE COMMITMENTS

The Group has lease commitments in respect of rented premises which are classified as operating leases. A summary of the non-cancellable long-term commitments is as follows:

GROUP 2014 2013 RM RM

Within 1 year 762,048 1,571,376Later than 1 year - 1,689,768

43. AUTHORISATION FOR ISSUE OF THE FINANCIAL STATEMENTS

The financial statements of the Company were authorised for issue by the Board of Directors on 23 April 2015.

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TANJUNG OFFSHORE BERHAD (662315-U)

ANNUAL REPORT 2014110

NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2014

44. SUPPLEMENTARY INFORMATION – BREAKDOWN OF ACCUMULATED LOSSES INTO REALISED AND UNREALISED

The breakdown of the accumulated losses of the Group and of the Company as at 31 December 2014 into realised and unrealised losses is presented in accordance with the directive issued by Bursa Malaysia Securities Berhad dated 25 March 2010 and prepared in accordance with Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants.

GROUP COMPANY 2014 2013 2014 2013 RM RM RM RM

Total accumulated losses:- Realised (41,916,074) (43,154,265) (46,377,243) (50,341,644)- Unrealised - - - -

(41,916,074) (43,154,265) (46,377,243) (50,341,644)

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111TANJUNG OFFSHORE BERHAD (662315-U)

ANNUAL REPORT 2014

LIST OF PROPERTIES

As at todate, a summary of the land and buildings owned by Tanjung Offshore Services Sdn Bhd (“TOS”)is set out below:-

Title Identification / Postal Address

Description And Existing Use /

Ownership

Approximate Age of Building / Tenure / Date of

Expiry of LeaseLand Area /

(Built-Up Area)

Net Book Value As At

31 December 2014

(sq. ft.) (RM)

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. 25930Mukim 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

GRN 38598 Lot No. 25932 Mukim of Setapak, District and State of Wilayah Persekutuan / No. 14, Jalan Puncak Setiawangsa 4, Taman Setiawangsa, 54200 Kuala Lumpur

3-storey shopoffices owned by TOS

Age of building : 11 years/ Tenure : Freehold

Age of building : 11 years/ Tenure : Freehold

Age of building : 11 years Tenure : Freehold

Age of building : 11 years Tenure : Freehold

1,760 / (4,634)

1,760 / (4,634)

1,760 / (4,634)

1,760 / (4,634)

509,919.54

592,000.08

1,036,288.06

1,020,000

PN 4114, Lot No. 3790 (formerly known as HS(D) 2670, PT 4199), Mukim of Teluk Kalung, District of Kemaman, State of Terengganu / Lot D1 Kawasan MIELTeluk Kalung24007 KemamanTerengganu Darul Iman

A factory lot used as the Group’s Kemaman Operation Centre providing complete maintenance services

Age of building : 3 years Tenure : 60-year leasehold

expiring 22.8.2057

21,427 / (8,626) 714,685.89

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TANJUNG OFFSHORE BERHAD (662315-U)

ANNUAL REPORT 2014112

LIST OF PROPERTIES

Title Identification / Postal Address

Description And Existing Use /

Ownership

Approximate Age of Building / Tenure / Date of

Expiry of LeaseLand Area /

(Built-Up Area)

Net Book Value As At

31 December 2014

(sq. ft.) (RM)

PN 4115, Lot No. 3791 (formerly known as HS(D) 2671, PT 4200), Mukim of Teluk Kalung, District of Kemaman, State of Terengganu / Lot D2 Kawasan MIELTeluk Kalung24007 KemamanTerengganu

A factory lot used as the Group’s Kemaman Operation Centre providing complete maintenance services.

Age of building : 2.5 years/ Tenure : 60-year leasehold

expiring 22.8.2057

16,017 / (8,626) 674,981.03

HM Land Registry, WM230856, SP 0687, Section S, Britannia House, 7 New Market Street (50 Great Charles Street) Queensway, West Midlands, Birmingham B3 2LT

8 storey of commercial office building with ground floor commercial space and 18 car parking spaces

Tenure: Freehold 52,088 36,789,000

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113TANJUNG OFFSHORE BERHAD (662315-U)

ANNUAL REPORT 2014

ANALYSIS OF SHAREHOLDINGS

As at 30 April 2015

Authorised Capital : RM300, 000,000.00Issued And Fully Paid-up Capital : RM190, 767,893.00Class of Shares : Ordinary shares of 50 sen each fully paidVoting Rights : One vote per 50 sen share

DISTRIBUTION OF SHAREHOLDINGS

No. of % of No. of % of IssuedSize of holding Shareholders Shareholders Shares Share Capital Less than 100 99 1.834 3,071 0.000100 to 1,000 512 9.488 362,985 0.0951,001 to 10,000 2,635 48.832 15,447,185 4.07510,001 to 100,000 1,829 33.895 63,643,006 16.789100,001 to less than 5% of issued shares 318 5.893 204,643,039 53.9875% and above of issued shares 3 0.055 94,959,000 25.051

Total 5,396 100.000 379,058,286 100.000

Total issued shares as at 30 April 2015 : 381,535,786 Treasury shares as at 30 April 2015 : 2,477,500**‘Adjusted’ capital after netting treasury shares as at 30 April 2015 : 379,058,286

THIRTY LARGEST SHAREHOLDERS No. of % of Name Shares Issued Share Capital**

1 RAHMANDIN @ RAHMANUDIN BIN MD SHAMSUDIN 37,183,900 9.812 LEMBAGA TABUNG HAJI 30,739,000 8.1093 TAN KEAN SOON 28,220,000 7.4444 ANUGERAH BAKTI SUPPLIES SDN BHD 15,485,700 4.0855 ABYSSINA RESOURCES (M) SDN BHD 13,134,800 3.4656 NORLIYAH BINTI JAAFAR 9,755,100 2.5737 ALLIANCEGROUP NOMINEES (TEMPATAN) SDN BHD PLEDGED SECURITIES ACCOUNT FOR CAROL VUN ON NEI (8078831) 5,918,300 1.5618 NORHAFIZAH BT MOHD NORDIN 5,900,000 1.5569 AMSEC NOMINEES (TEMPATAN) SDN BHD AMTRUSTEE BERHAD FOR APEX DANA AL-SOFI-I (UT-APEX-SOFI) 5,286,900 1.39410 PUBLIC NOMINEES (TEMPATAN) SDN BHD PLEDGED SECURITIES ACCOUNT FOR JESSIE TANG (E-KKU) 4,915,000 1.29611 NIK NORZRUL THANI BIN N.HASSAN THANI 4,460,000 1.17612 TAN WEE KOH 4,440,200 1.17113 NG BOO KEAN @ NG BEH KIAN 4,149,700 1.09414 CITIGROUP NOMINEES (ASING) SDN BHD CBNY FOR DIMENSIONAL EMERGING MARKETS VALUE FUND 4,056,100 1.07015 AMSEC NOMINEES (TEMPATAN) SDN BHD AMTRUSTEE BERHAD FOR APEX DANA AL-FAIZ-I (UT-APEX-FAIZ) 3,825,300 1.009

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TANJUNG OFFSHORE BERHAD (662315-U)

ANNUAL REPORT 2014114

ANALYSIS OF SHAREHOLDINGS

THIRTY LARGEST SHAREHOLDERS (continued)

No. of % of Name Shares Issued Share Capital** 16 LIM GAIK BWAY @ LIM CHIEW AH 3,236,200 0.85317 HLB NOMINEES (TEMPATAN) SDN BHD PLEDGED SECURITIES ACCOUNT FOR TAN CHING LING 2,987,000 0.78818 CITIGROUP NOMINEES (ASING) SDN BHD CBNY FOR DFA EMERGING MARKETS SMALL CAP SERIES 2,775,700 0.73219 RHB NOMINEES (TEMPATAN) SDN BHD OSK CAPITAL SDN BHD FOR NORWAHIDA BINTI JA’AFAR 2,504,000 0.66020 YIP WAN YIN 2,460,000 0.64821 ALLIANCEGROUP NOMINEES (TEMPATAN) SDN BHD PLEDGED SECURITIES ACCOUNT FOR KONG KOK KEONG (6000418) 2,128,500 0.56122 MAYBANK NOMINEES (TEMPATAN) SDN BHD PLEDGED SECURITIES ACCOUNT FOR TEOH PEK WEI 2,017,100 0.53223 TAN BOON HAR 1,650,000 0.43524 CARTABAN NOMINEES (ASING) SDN BHD EXEMPT AN FOR KGI ASIA LTD 1,534,800 0.40425 SYED ABDILLAH BIN SYED ABAS 1,527,700 0.40326 TAY HOCK TIAM 1,508,800 0.39827 TAN ENG HEONG 1,450,000 0.38228 MALACCA EQUITY NOMINEES (TEMPATAN) SDN BHD EXEMPT AN FOR PHILLIP CAPITAL MANAGEMENT SDN BHD (EPF) 1,444,900 0.38129 CIMB GROUP NOMINEES (TEMPATAN) SDN BHD CIMB COMMERCE TRUSTEE BERHAD FOR APEX DANA ASLAH (50143 TR01) 1,393,500 0.36730 LOW BEY TEE 1,374,000 0.362

TOTAL 206,278,300 54.418

SUBSTANTIAL SHAREHOLDERS AS AT 30 APRIL 2015(as per Register of Substantial Shareholders)

No. of Shares heldName Direct **% Indirect %

RAHMANDIN @ RAHMANUDIN BIN MD SHAMSUDIN 37,183,900 9.81 - -LEMBAGATABUNG HAJI 30,739,000 8.11 - -TAN SRI DATUK TAN KEAN SOON 28,220,000 7.44 - -

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115TANJUNG OFFSHORE BERHAD (662315-U)

ANNUAL REPORT 2014

ANALYSIS OF SHAREHOLDINGS

DIRECTORS’ SHAREHOLDINGS AS AT 30 APRIL 2015(as per Register of Directors’ Shareholdings)

No. of Shares heldName Direct **% Indirect %

DATUK MOHD HAFARIZAM BIN HARUN - - - -TAN SRI DATUK TAN KEAN SOON 28,220,000 7.44 597,000(A) 0.16RAHMANDIN @ RAHMANUDIN BIN MD. SHAMSUDIN 37,183,900 9.81 - -DATO’ DR. (H) AB WAHAB BIN IBRAHIM - - - -DATUK DR. NIK NORZRUL BIN N. HASSAN THANI 4,460,000 1.18 4,190,000(B) 1.11DATO’ MAHERAN BTE MOHD SALLEH - - 4,190,000(B) 1.11MS TAN SAM ENG - - - -DATUK SYED HUSSIAN SYED JUNID 70,000 0.02 - -DATUK SURAJ SINGH GILL - - - -

** based on ‘Adjusted’ capital after netting treasury shares(a) Deemed interest by virtue of his spouse and children’s interests pursuant to Section 134(12) of the Companies Act, 1965(b) Deemed interest by virtue of his / her interests in Abyssina Resources (M) Sdn. Bhd. pursuant to Section 6A of the

Companies Act, 1965

DIRECTORS’ OPTIONS HOLDINGS AS AT 30 APRIL 2015(as per Register of Directors’ Options Holdings)

No. of Options heldName Direct % Indirect %

DATO’ DR. (H) AB WAHAB BIN IBRAHIM - - - - EDWANEE CHEAH BIN ABDULLAH - - - - GEORGE WILLIAM WARREN JR - - - -DATUK SERI SYED ALI BIN TAN SRI SYED ABBAS ALHABSHEE - - - -HARZANI BIN AZMI - - - -TAN WEE KOH - - - -ENCIK MUHAMMAD SABRI BIN AB GHANI - - - -

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TANJUNG OFFSHORE BERHAD (662315-U)

ANNUAL REPORT 2014116

ANALYSIS OF WARRANTS A (2006/2016)

ANALYSIS BY SIZE OF WARRANT HOLDINGS : A (2006/2016) AS AT 30 APRIL 2015

Size of holding No. of % of No. of % of Issued Holders Holders Warrants Warrants

Less than 100 82 13.509 3,751 0.012100 to 1,000 73 12.026 36,986 0.1231,001 to 10,000 165 27.182 990,942 3.30510,001 to 100,000 233 38.385 9,170,768 30.587100,001 to less than 5% of issued shares 53 8.731 17,662,435 58.9105% and above of issued warrants 1 0.164 2,117,108 7.061

Total 607 100.000 29,981,990 100.000

THIRTY LARGEST WARRANT A HOLDERS

No. of % of Name Warrants Issued Warrants

1 ABDULLAH BIN HASHIM 2,117,108 7.0612 LEE GEOK THYE (HOLDINGS) SDN BHD 1,390,000 4.6363 TAN BOON HAR 1,274,500 4.2504 RAHMANDIN @ RAHMANUDIN BIN MD SHAMSUDIN 937,039 3.1255 LEUNG KIT MAN 909,700 3.0346 TAY HOCK TIAM 811,000 2.7047 SYEDELYAS BIN SYED ABDILLAH 750,339 2.5028 NG CHEET HONG 749,700 2.5009 TAN BOON HAR 610,000 2.03410 MAYBANK NOMINEES (TEMPATAN) SDN BHD 505,500 1.686 MOHAMED ADZMAN BIN MOHAMED SURA 11 LIM GAIK BWAY @ LIM CHIE WAH 431,300 1.43812 CHOWSENGKITT 425,800 1,42013 HLIB NOMINEES (TEMPATAN SDN BHD) 423,900 1.413 HONG LEONG BANK BHD FOR LIM CHE OON KIAT 14 KENANGA NOMINEES (TEMPATAN) SDN BHD 408,800 1.363 PLEDGED SECURITIES ACCOUNT FOR TEY BOON HUAT 15 CHIM LUAN GENG 405,400 1.35216 HLIB NOMINEES (TEMPATAN) SDN BHD 403,000 1.344 PLEDGED SECURITIES ACCOUNT FOR TEDDY HO PANG HIN (CCTS) 17 RUSLI BIN HARUN 350,000 1.16718 AHMAD RASIDI BIN OSMAN 334,000 1.11419 POON YIN KWOON 310,800 1.03620 JONATHAN LEE SZE SENG 300,700 1.00221 AZMAN BIN HUSSIN 300,000 1.00022 CHIM LUANG ENG 275,700 0.91923 LIEW YUEH MING 270,000 0.90024 SYED ARIFFIN BIN SYED HUSSAIN ALHABSHEE 259,000 0.863

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117TANJUNG OFFSHORE BERHAD (662315-U)

ANNUAL REPORT 2014

ANALYSIS OF WARRANTS A (2006/2016)

THIRTY LARGEST WARRANT A HOLDERS (continued)

No. of % of Name Warrants Issued Warrants

25 YIELDFORCE SDN BHD 257,000 0.85726 CHIN SOOTH CHAIN 255,600 0.85227 NORLIYAH BINTI JAAFAR 250,000 0.83328 HLB NOMINEES (TEMPATAN) SDN BHD 200,000 0.667 PLEDGED SECURITIES ACCOUNT FOR HIU WOONG CHOONG 29 ISMET BIN OMAR 200,000 0.66730 TAN HOOI MENG 200,000 0.667

16,315,946 54.419

WARRANT HOLDINGS WITH 5% AND ABOVE

No. of Warrants A heldName Direct % Indirect %

ABDULLAH BIN HASHIM 2,117,108 7.061 - -

DIRECTORS’ WARRANTS A HOLDINGS AS AT 30 APRIL 2015(as per Register of Directors’ Warrants Holdings)

No. of Warrent heldName Direct % Indirect %

DATUK MOHD HAFARIZAM BIN HARUN - - - -TAN SRI DATUK TAN KEAN SOON - - - RAHMANDIN @ RAHMANUDIN BIN MD. SHAMSUDIN 937,039 3.125 - -DATO’ DR. (H) AB WAHAB BIN IBRAHIM - - - -DATUK DR. NIK NORZRUL BIN N. HASSAN THANI - - - -DATO’ MAHERAN BTE MOHD SALLEH - - - -MS TAN SAM ENG - - - -DATUK SYED HUSSIAN SYED JUNID - - - -DATUK SURAJ SINGH GILL - - - -

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(Please indicate with an “X” in the spaces provided on how you wish your vote to be cast. In the absence of specific direction, your proxy will vote or abstain as he / she thinks fit)

Signed this day of 2015. No. of Shares Held

.................................................................... Signature of Shareholder or Common Seal

Notes:-

1. Only depositors whose names appear on the Record of Depositors as at 19 June 2015 shall be entitled to attend, speak and vote at the said meeting or appoint proxies to attend, speak and vote on his/her behalf.

2. A member entitled to attend and vote at the meeting shall not be entitled to appoint more than two (2) proxies to attend and vote in his/her stead. A proxy may but need not be a member of the Company and the provisions of Section 149(1)(b) of the Companies Act, 1965 shall not apply.

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

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

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

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

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

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 Eleventh Annual General Meeting of the Company to be held at Kristal Ballroom 1, 1st Floor West Wing PJ Hilton No. 2, Jalan Barat, Seksyen 52, 46200 Petaling Jaya, Selangor on Thursday, 25 June 2015 at 10.00 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 AGAINSTORDINARY RESOLUTION

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

Resolution No. 10

Resolution No. 11

Page 121: Tanjung Offshore Berhad Cover STATEMENT OF CORPORATE GOVERNANCE 37 OTHER INFORMATION 38 FINANCIAL STATEMENTS 111 LIST OF PROPERTIES OWNED BY THE GROUP 113 ANALYSIS OF SHAREHOLDINGS

TANJUNG OFFSHORE BERHAD(Company No.: 662315-U)Level 17, The Gardens North TowerMid Valley CityLingkaran Syed Putra59200 Kuala Lumpur

FOLD THIS FLAP FOR SEALING

FOLD HERE

FOLD HERE

STAMP

Page 122: Tanjung Offshore Berhad Cover STATEMENT OF CORPORATE GOVERNANCE 37 OTHER INFORMATION 38 FINANCIAL STATEMENTS 111 LIST OF PROPERTIES OWNED BY THE GROUP 113 ANALYSIS OF SHAREHOLDINGS

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