TADMAX RESOURCES BERHAD. Building the FUTURE. ... stability through GROWTH

Transcription

1 TADMAX RESOURCES BERHAD Building the FUTURE... stability through GROWTH ANNUAL REPORT 2013

2 Contents 02 Corporate Information 03 Corporate Structure 04 Chairman s Statement 09 Profile of Directors 14 Statement on Corporate Governance 20 Audit Committee Report 24 Statement on Risk Management and Internal Control 26 Additional Compliance Information 28 Statement of Directors Responsibility 29 Financial Statements and Reports 114 List of Properties 115 Analysis of Shareholdings 117 Notice of Annual General Meeting 121 Annexure A Insert Form of Proxy

3 TADMAX RESOURCES BERHAD (8184-W) Annual Report Corporate Information BOARD OF DIRECTORS Datuk Sulaiman bin Daud Acting Chairman/Independent Non-Executive Director Dato Faizal bin Abdullah Managing Director/Group Chief Executive Officer Dato Che Rashidi bin Che Omar Executive Director Aldillan bin Anuar Executive Director Dato Pahlawan Mohammed Shukor bin Hj Abdullah Independent Non-Executive Director Tan Sri Datuk Dr Abdul Samad bin Haji Alias Independent Non-Executive Director Tan Chee Siang Independent Non-Executive Director Tan Peng Koon Independent Non-Executive Director Noel John A/L M Subramaniam Non-Independent Non-Executive Director Derek John Fernandez Independent Non-Executive Director AUDIT COMMITTEE Datuk Sulaiman bin Daud Chairman/Independent Non-Executive Director Tan Chee Siang Independent Non-Executive Director Tan Peng Koon Independent Non-Executive Director Noel John A/L M Subramaniam Non-Independent Non-Executive Director COMPANY SECRETARIES Chew Mei Ling MAICSA Pow Tuck Weng MIA 8046 REGISTERED OFFICE No. 2D, Jalan SS 6/6 Kelana Jaya Petaling Jaya Selangor Darul Ehsan Tel: /7799 Fax: Website: SHARE REGISTRAR ShareWorks Sdn Bhd No. 2-1, Jalan Sri Hartamas 8 Sri Hartamas Kuala Lumpur Tel: Fax: AUDITORS Baker Tilly Monteiro Heng Chartered Accountants Baker Tilly MH Tower Level 10, Tower 1, Avenue 5 Bangsar South City Kuala Lumpur Tel: Fax: PRINCIPAL BANKERS Hong Leong Bank Berhad CIMB Bank Berhad SOLICITORS Tang & Company 10E, Jalan Kampong Datu (1st Floor) Sibu, Sarawak Salleh & Co B4-3-1 to 5, Solaris Dutamas No. 1, Jalan Dutamas Kuala Lumpur Kumar Partnership Suite , 12th Floor Wisma E & C No. 2, Lorong Dungun Kiri Damansara Heights Kuala Lumpur STOCK EXCHANGE LISTING Main Market of Bursa Malaysia Securities Berhad

4 Annual Report 2013 TADMAX RESOURCES BERHAD (8184-W) 3 Corporate Structure as at 5 May 2014 TADMAX RESOURCES BERHAD (8184-W) 100% Tadmax Power Sdn Bhd ( T) (formerly known as Wijaya Baru Development Sdn Bhd) 100% Tadmax Properties Sdn Bhd ( V) (formerly known as WBG Assets Sdn Bhd) 100% Usama Industries Sdn Bhd (42831 P) 100% Arus Global Sdn Bhd ( V) 100% Tadmax Builders Sdn Bhd ( X) 100% Kirana Abadi Sdn Bhd ( P) 100% Platinum Frigate Sdn Bhd ( M) 100% Suffolk Pte Ltd (Singapore) 100% Wealth Gate Pte Ltd (Singapore) 14% Tulen Jayamas Sdn Bhd ( H) 90% PT Trimegah Karya Utama (Indonesia) 90% PT Manunggal Sukses Mandiri (Indonesia) 99.80% PT Tulen Jayamas Timber Industries (Indonesia)

5 TADMAX RESOURCES BERHAD (8184-W) Annual Report Chairman s Statement On behalf of the Board of Directors of Tadmax Resources Berhad, I am pleased to present the Annual Report and the Financial Statements of the Group and the Company for the financial year ended 31 December Economic And Industry Review It is heartening to note that the Malaysian economy has been making commendable progress since the launch of the national transformation agenda in 2010 and is on track to become a high-income and developed nation by Despite increasingly volatile and challenging global economic environment, the domestic economy has remained resilient and expanded consistent with better growth prospects in the US, Japan and China during the second half of the year. The 2013 Budget has further strengthened the transformation agenda through various means including setting up the Fiscal Policy Committee in June 2013, to strengthen public finances as well as ensuring fiscal sustainability and long-term macroeconomic stability of the nation. The 2014 Budget further restated the Malaysian Government s commitment to lower the Federal Government deficit, budgeted reduction in subsidy expenditure and also saw the introduction of the long-mooted Goods and Service Tax to be effective from April 2015, at an initial rate of 6%. Against this backdrop, Tadmax has during the financial year undertook assets rationalisation and restructuring with a view of strengthening its financial position whilst at the same time continuously on the lookout for business opportunities to enable the Group to expand and/or broaden its revenue base. Business Review Timber Division The timber extraction business of this division which owns a total area of approximately 80,000 hectares in the forest area in District of Jair, Regency of Boven Digoel, Papua Indonesia has yet to take off despite having received an approval-in-principle in January 2013 for the Izin Pemanfataan Kayu (or the IPK License) issued by the Provincial Head, Office of Forestry of The Ministry of Forestry, Republic of Indonesia to undertake timber extraction. The commencement of the extraction of timber since then hinged on the establishment, construction and commencement of commercial production of an Integrated Timber Complex ( ITC ) which will be undertaken by the Group s 14% Joint Venture Company, Tulen Jayamas Sdn Bhd. The establishment of an ITC under the Joint Venture Company has received all the requisite approvals during the 3rd quarter of 2013 and construction of the ITC is presently underway whilst commercial production is scheduled to commence sometime in the 1st Quarter of The extraction of timber on a step up basis will commence a few months prior to the commencement of commercial production of the ITC. Property Division The property division generated a total revenue of RM12.9 million directly to the Group during the financial year, contributed from construction activities undertaken mainly by its subsidiary company, Tadmax Builders Sdn Bhd. The corresponding contribution in relation to the total revenue recognized amounted to RM0.5 million. Meanwhile, the Group s 45% associated company, Wijaya Baru Sdn Bhd which the Group disposed off on 30 October 2013 contributed a total gross revenue of RM4.1 million up to the date of disposal. However, the Group s share of losses was RM10.3 million, which was contributed mainly by the impairment of long overdue receivables. The Board of Tadmax had then decided to dispose off Wijaya Baru Sdn Bhd mainly in view of the fact that there were no construction contracts in hand and also considering that the Group does not have controlling interest over the associated company. Pertaining to the Group s land bank of hectares (approximately 379 acres) located in Pulau Indah, Port Klang, Selangor Darul Ehsan, as reported in the last financial year s Annual Report, the Group had on 9 April 2013 entered into an agreement to dispose off 60 acres of its land in Pulau Indah for a total cash consideration of RM48.3 million. The Group expects to make a net gain after taxation of approximately RM13 million from the disposal whilst the net cash contribution from the disposal

6 Annual Report 2013 TADMAX RESOURCES BERHAD (8184-W) 5 Chairman s Statement (cont d) Property Division (cont d) to the Group is approximately RM40 million. However, completion has been delayed as the conditions precedent are yet to be fulfilled. In addition the parties had subsequently discovered that it is expedient and speedier to undertake the process of partitioning pursuant to section 140 of the National Land Code in order to procure a separate title of the 60 acres land instead of undergoing the process of sub-division of the Master Land. The Group envisages that this disposal would be completed in the 3rd quarter of Subsequent to the financial year, the Group had on 20 February 2014 entered into a Share Sale Agreement to dispose off Tadmax Power Sdn Bhd (formerly known as Wijaya Baru Development Sdn Bhd) who in turns owns the remainder land in Pulau Indah of approximately 310 acres to Ivory Merge Sdn Bhd for a total cash consideration of RM317,334,600. The satisfaction of the conditions precedent is expected by the 3rd quarter of 2014 whilst the satisfaction of the conditions subsequent is expected by the 2nd quarter of Industrial Supplies Division The industrial supplies division recorded a total revenue of RM3.5 million directly to the Group during the financial year, contributed mainly by the Rock Supply Agreement executed in May The revenue was below expectation as the business was severely hampered by the delay in the site readiness to accept delivery and was subsequently thereafter affected by the monsoon period from October 2013 to February 2014 as the operations was located at the east coast state of Peninsular Malaysia. Other Divisions The licensed money lending division and agricultural cultivation & trading division, both contributed RM0.7 million of revenue to the Group from the beginning of the financial year until the date of disposal of the respective companies vide share sale agreements dated 31 May 2013 and 29 April 2013 respectively. Financial Review The Group registered revenue of RM17.1 million and loss after tax of RM47.4 million in 2013 as compared to revenue of RM0.5 million and loss after tax of RM33.3 million respectively in Despite the higher revenue for the financial year ended 2013, losses after tax were higher by RM14.1 million, attributed mainly by recognition of unrealised foreign exchange losses of RM11.0 million in 2013 brought about by the Group s foreign exchange currency denominated bank borrowing vis-à-vis a unrealised foreign exchange gain of RM6.7 million in Further, in the current financial year, share of losses in associated company was at RM10.3 million vis-à-vis of last financial year of RM4.2 million, an increase in share of losses by RM6.1 million. For comparison purposes, if we exclude the above unrealized foreign currency losses or gain and share of losses in associated company, we would report a reduced loss after tax of RM26.1 million in 2013 vis-à-vis loss after tax of RM35.8 million. Going forward the Group expects to further improve its financial performance. Overall, shareholders return, represented by loss per share for 2013 was 12.9 sen whilst total assets of the Group was at of RM572.6 million, while shareholders funds attributable to equity holders was RM176.7 million. Net assets per share stood at RM0.47 as at 31 December Corporate Events As mentioned in the earlier paragraph, during the financial year, the Group carried out assets rationalisation and restructuring with a view of strengthening its financial position and the following Corporate Events ensued during the financial year:- (a) On 22 January 2013, the Group disposed off its remainder 50% of its equity interest in Tadmax Energy Sdn Bhd, a dormant company, comprising one ordinary share of RM1.00 each for a total cash consideration of RM1/-. The disposal was completed on date of sale.

7 TADMAX RESOURCES BERHAD (8184-W) Annual Report Chairman s Statement (cont d) Corporate Events (cont d) (b) On 9 April 2013, the Group had entered into a Sale and Purchase Agreement ( Initial SPA ) to dispose off a leasehold land ( the Land ) located at Pulau Indah, Port Klang, Selangor Darul Ehsan measuring approximately 60 acres to a third party for a total cash consideration of RM48,351,600/-. On 28th April 2014, the Group had entered into the variation to the Initial SPA which entails the agreement for the sale and purchase ( Varied SPA ) of 100% shareholdings in Kirana Abadi Sdn. Bhd. represented by two (2) ordinary shares of RM1/- each ( the Sale Shares ), who in turn owns the Land, in view of the changes to the method of securing the issue document of title through insertion of co-owners followed by land partitioning instead of undertaking sub-division of the Master Title at the agreed sales consideration as per Initial SPA. The completion of the sale is pending the satisfaction of conditions precedent as stipulated in the Varied SPA. (c) (d) (e) (f) (g) (h) On 29 April 2013, the Company acquired 100% equity interest in Arus Global Sdn. Bhd. from its associate company, Wijaya Baru Sdn. Bhd. for a total cash consideration of RM3,000,000/-. The acquisition was completed on date of agreement. On 29 April 2013, the Group entered into a Share Sale Agreement to dispose a wholly owned subsidiary, Chongqing Liangshan Wijaya Food Limited for a consideration of RM20,000,000/-. The disposal was completed on date of sale. On 31 May 2013, the Group entered into a Share Sale Agreement to dispose a wholly owned subsidiary, Venture Credit Sdn Bhd for a consideration of RM200,000/-. The Share Sale Agreement was completed on 11 July On 31 July 2013, the Company incorporated a wholly owned subsidiary company, Tadmax Builders Sdn Bhd. Construction activities were undertaken since August On 15 August 2013, the Company acquired two wholly owned subsidiary companies, Kirana Abadi Sdn Bhd and Platinum Frigate Sdn Bhd. On 30 October 2013, the Group entered into a share sale agreement ( SSA ) to dispose off 45% equity interest in Wijaya Baru Sdn Bhd for a total sale consideration of RM20,000,000/- and the SSA was duly completed on the date of execution of the SSA. Corporate Proposals During the Extraordinary General Meeting held on 11th April 2013, the below mentioned proposals were approved by the Company s shareholders:- (i) (ii) (iii) (iv) A proposed par value reduction via the cancellation of RM0.50 of the par value of every existing ordinary share of RM1.00 each in the issued and paid up share capital of the Company pursuant to Section 64 of the Companies Act, 1965 in Malaysia. A proposed partial settlement of debt owing to a director of the Company, namely Dato Faizal bin Abdullah via the issuance of new ordinary shares of RM0.50 each in the Company at an indicative issue price of RM0.50 per settlement share. A proposed establishment of an Employees Share Option Scheme of up to 10% of the issued and paid up share capital of the Company. Proposed amendments to the Memorandum and Articles of Association of the Company arising from (i) and (iii). This was followed by the application to the High Court of Malaya to secure the Court s sanction on the proposed Par Value Reduction which was obtained by the Company during the court hearing on 10 July Subsequent to the lodgement of the sealed order, the Company received a copy of the certificate of Lodgement of Order from the Companies Commission of Malaysia on 18 July 2013, the effective date of the Par Value Reduction.

8 Annual Report 2013 TADMAX RESOURCES BERHAD (8184-W) 7 Chairman s Statement (cont d) Corporate Proposals (cont d) In relation to the proposed partial settlement of debt owing to a director of the Company, namely Dato Faizal bin Abdullah via the issuance of new ordinary shares of RM0.50 each in the Company at an indicative issue price of RM0.50 per settlement share, 10,000,000 shares of RM0.50 each were issued and allotted at RM0.50 each on 16 August 2013 and the settlement shares were granted listing and quotation on the Main Market of Bursa Malaysia Securities Berhad on 19 August Lastly, in relation to the proposed establishment of an Employees Share Option Scheme of up to 10% of the issued and paid up share capital of the Company, the implementation of the same was in effect from 14 November There were no options granted under the Scheme during the financial year. Subsequent Events Subsequent to the financial year, on 20 February 2014, the Company entered into a share sale agreement with Ivory Merge Sdn Bhd to dispose off the entire issued and paid-up share capital of Tadmax Power Sdn Bhd ( TPSB ), a wholly-owned subsidiary of the Company, for a total disposal consideration of RM317,334,600 to be satisfied entirely in cash ( Proposed Disposal ). TPSB is the beneficial and registered owner of approximately 310 acres out of the total land area measuring approximately 379 acres of a piece of vacant leasehold land bearing the master title No. PN 7375 Lot 72779, located in Pulau Indah, Klang, Selangor Darul Ehsan. Based on Completion Accounts of TPSB of RM million, the Proposed Disposal will give rise to a post-tax gain on disposal of approximately RM million to the Group or a gain of approximately 36.6 sen per Tadmax Share. The completion of the Proposed Disposal is subject to the fulfilment of conditions precedent, among others the procurement of the approval of the shareholders of the Company at an extraordinary general meeting to be convened. The satisfaction of the conditions precedent is expected by the 3rd quarter of 2014 whilst the satisfaction of the conditions subsequent is expected by the 2nd quarter of Corporate Social Responsibility The objective under the Group s Corporate Social Responsibility (CSR) is to balance shareholders value, welfare of employees, impact on community and minimize negative influence to the environment in which it operates. Towards this end, the Group continues to focus and strengthen its CSR initiatives it has undertaken as follows: Skills Development Employees are the most valuable asset in helping the Group attain its objectives. We believe in empowering people and instilling a culture that values honesty, integrity and transparency alongside innovation and continuous improvement. On the job briefings and training are conducted as part of the work culture of the Group. In addition, some employees were sent for external courses to enhance their skill development. Workers Welfare The Group acknowledges the need to provide a healthy and balanced lifestyle for its employees. During the financial year, regular staff gatherings were organised through its sports club to foster better working relationship. We integrate health, safety and environment (HSE) considerations into all aspects of our business operations and processes as far as practicable and provide constant training and monitoring to ensure the safety and overall well-being of our people. Measurable approach is applied to continually improve our HSE culture and performance.

9 TADMAX RESOURCES BERHAD (8184-W) Annual Report Chairman s Statement (cont d) Commitment to Customers In view of our commitment to providing only the best for our customers, quality remains the main thrust of all our products and delivery of services. We will actively promote our CSR strategy to ensure it is embedded within the business and enhance value creation in the society and community in which it operates. Future Outlook The Proposed Disposal (under Subsequent Events hereinabove) forms part of the Company s restructuring plan to strengthen the Group s financial position and working capital requirements, which was initiated when the Company completed its par value reduction exercise during the financial year on 18 July 2013, to reduce its accumulated losses and to facilitate the subsequent capitalisation exercise on 19 August Part of the above restructuring plan includes the disposal of non-core subsidiaries and assets of the Tadmax Group. The Company had completed a few corporate exercises during the financial year. The Group intends to utilise the proceeds from the Proposed Disposal mainly for repayment of borrowings, strengthening its working capital requirements and as cash reserves for future strategic acquisitions to complement its existing businesses. Pursuant to the improved financial position as highlighted above, the Tadmax Group would be in a position to initiate timber extraction on its RM218.0 million timber concession rights in Irian Jaya, Indonesia, subject to the establishment, construction and commencement of commercial production of an ITC and thereafter start realising revenue stream from its timber business segment. With the significant reduction in gearing levels, Tadmax would have the flexibility to manage its capital requirements more effectively and provide a platform for the Group to expand its property business segment comprising property development and construction, via land banking for future property development and participating in property related construction contracts. With the above forthcoming events, the Board of Directors is hopeful that these would turnaround the Group performance by financial year 2014 and also deliver long term sustainable shareholder value. Directorate There were changes to the Board since the last Annual General Meeting, your Chairman, Y Bhg Dato Seri Abdul Azim bin Mohd Zabidi resigned on 24 March 2014 whilst Y B Tan Sri Prof. Drs. Da i Bactiar resigned as director on 27 February Y Bhg Dato Pahlawan Mohammed Shukor bin Hj Abdullah and Mr Tan Chee Siang have both expressed their desire not to seek re-election at the upcoming Annual General Meeting of the Company. On behalf of the Board, I would like to express our sincere appreciation to them for their valuable contributions and guidance to the Group during their term of office. The Board welcomes Y B Tan Sri Datuk Dr Abdul Samad bin Haji Alias who joined the Board on 15 May 2014, Mr Noel John A/L M Subramaniam and En Aldillan bin Anuar who both joined the Board on 12 February 2014 and Mr Derek John Fernandez who joined the Board on 26 March Tribute I would like to thank all our staff for their dedication and hard work during a challenging financial year. I also wish to thank our valued customers, shareholders, business partners and relevant authorities for their continuous support and confidence in the Group. Lastly, I wish to thank my fellow Board members for their wise counsel, insights and active participation in all Board deliberations and policy decisions. DATUK SULAIMAN BIN DAUD Chairman, Acting

10 Annual Report 2013 TADMAX RESOURCES BERHAD (8184-W) 9 Profile of Directors DATUK SULAIMAN BIN DAUD Acting Chairman/Independent Non-Executive Director Datuk Sulaiman bin Daud, a Malaysian, aged 67, was appointed to the Board on 9th January 2012 as an Independent Non-Executive Director. He is Chairman of the Audit Committee, a member of the Nomination Committee and also a member of the ESOS Committee. He holds a Diploma in Agriculture from University Putra Malaysia and a Master of Business Administration, IMC Buckingham, United Kingdom and is a graduate of the Stanford-Insead Advanced Management Programme (AMP) in Fountainbleau, France. Datuk Sulaiman had an illustrious career with Malaysian Tobacco Company Berhad where he ascended the corporate ladder to be its Deputy Chief Executive and Executive Director. He previously served as the Chairman of Bank Pertanian Malaysia Berhad for four terms from 1998 to He has been a Director of Malaysia National Insurance and Chairman of Ranhill Power Berhad. He is currently the Chairman of Malaysia Packaging Industry Berhad and a Director of Konsortium Transnasional Berhad and Silverlake Axis Limited in Singapore. He also sits on the Board of several other private limited companies. He has served as a Board Member of University Putra Malaysia, UMS Link Agro Based Sdn Bhd and also UMS Link Holdings Sdn Bhd, the business arm of University Malaysia Sabah. He spends a considerable part of his time now seeking and developing business opportunities in Asean, China and the Middle East. DATO FAIZAL BIN ABDULLAH Managing Director/ Group Chief Executive Officer Dato Faizal bin Abdullah, a Malaysian, aged 43, was appointed to the Board on 26th May 1999, as the Group Deputy Chief Executive Officer on 30th October 2000 and Group Chief Executive Officer on 23rd June He assumed the position of Managing Director on 28th February He is a member of the Remuneration Committee. He holds an Advance Diploma in International Management Studies, United Kingdom. He is also a Member of the Institute of Commercial Management, United Kingdom. Dato Faizal is also a member of Harvard Business School Alumni Club of Malaysia. Dato Faizal began his career as a Personal Assistant to Y. Bhg. Tan Sri Dato Sri Onn bin Haji Ismail and progressed himself in the construction and property development business prior to joining the Company. He has served in various divisions in the Company including managing the Company s business in relation to timber extraction and logging activities in Sarawak for more than 10 years during which he gained extensive experience and knowledge in the timber-related operations, upstream as well as downstream activities. He also sits on the Board of several other private limited companies.

11 TADMAX RESOURCES BERHAD (8184-W) Annual Report Profile of Directors (cont d) DATO CHE RASHIDI BIN CHE OMAR Executive Director (Plantation) Dato Che Rashidi bin Che Omar, a Malaysian, aged 65, was appointed to the Board on 22nd June 2011 as an Independent Non-Executive Director. On 28th February 2012, he was redesignated as Executive Director (Plantation). He is a member of the ESOS Committee. Dato Rashidi graduated with a Diploma in Plantation Management from Universiti Teknologi Mara. He began his career with FELDA as a Cadet Planter in 1968 and left as a Manager. In 1974, he joined Kuala Lumpur Kepong Berhad as Assistant Manager and left as Senior Manager. In 1989, he joined Austral Enterprise Berhad as a Senior Manager. In 1990, he joined Tradewinds (M) Berhad as a Manager in the Plantation Division and was subsequently promoted to General Manager in In 1996, he was seconded to Tradewinds Plantation Services Sdn Bhd and promoted to the position of Senior General Manager. In 1999, he became the Executive Director of Tradewinds Plantation Services Sdn Bhd. In 2002, he joined Lembaga Tabung Haji as its Plantation Director. He was the Managing Director of TH Plantations Berhad from 2003 to Dato Rashidi is currently the Chairman of Consolidated Fertiliser Corporation Sdn Bhd and PT TH Indo Plantations. He also sits on the board of various companies namely Loh & Loh Corporation Berhad, TH Pelita Gedong Sdn Bhd, TH Pelita Sadong Sdn Bhd, TH Pelita Simunjan Sdn Bhd, Sime Darby Plantation Sdn Bhd, SRC International Sdn Bhd, PT Minamas Gemilang and PT Synergy Oil Nusantara. DATO PAHLAWAN MOHAMMED SHUKOR BIN HJ ABDULLAH Independent Non-Executive Director Dato Pahlawan Mohammed Shukor bin Hj Abdullah, a Malaysian, aged 76, was appointed to the Board on 5th September 1997 as an Independent Non- Executive Director. He is Chairman of the Nomination Committee. He is a graduate of the Royal Military College, Port Dickson and Defence Services Staff College, India. He also attended the Advanced Management Programme at the Australian Administrative Staff College, Moondah, Melbourne, Australia. Dato Pahlawan Mohammed Shukor is a retired General in the Malaysian Armed Forces and has an illustrious military career of 36 years. His earlier appointments including attachment to the 9th Battalion, The Royal Australian Regiment, Brisbane and the Defence Department, Canberra, Australia. He was the Security Forces Commander, Rejang Area Security Command (RASCOM), Sibu, Sarawak and Director of Army Training, Ministry of Defence. He sits on the Board of several other private limited companies.

12 Annual Report 2013 TADMAX RESOURCES BERHAD (8184-W) 11 Profile of Directors (cont d) TAN SRI DATUK DR ABDUL SAMAD BIN HAJI ALIAS Independent Non-Executive Director Tan Sri Datuk Dr Abdul Samad bin Haji Alias, a Malaysian, aged 71, was appointed to the Board on 15th May 2014 as an Independent Non-Executive Director. He is a professional accountant with a Bachelor s Degree in Commerce from the University of Western Australia and is a Fellow of the Institute of Chartered Accountants, Australia, a member of the Malaysian Institute of Accountants (MIA), as well as member of the Malaysian Institute of Certified Public Accountants ( MICPA ). He was the President of MICPA from 1999 to 2002 and had served as a member of the Malaysian Accounting Standards Board and Financial Reporting Foundation. From September 2000 to August 2005, he was the President of the Malaysian Institute of Accountants. He was also the first Malaysian to be elected to the 22-member board of the International Federation of Accountants. Currently, Tan Sri Datuk Dr Abdul Samad bin Haji Alias sits on the Board of TH Plantations Berhad. He is also the Chairman and director of Malaysia Venture Capital Management Berhad, and Malaysia Deposit Insurance Corporation. Tan Sri Datuk Dr Abdul Samad bin Haji Alias is a director and 14% shareholder in Gabungan Tiasa Sdn. Bhd., a company connected to a major shareholder of the Company. Notwithstanding the above, Tan Sri Datuk Dr Abdul Samad bin Haji Alias has declared that he is independent of the Company s management and free from any business or other relationship which could interfere with the exercise of independent judgement or the ability to act in the best interest of the Company. TAN CHEE SIANG Independent Non-Executive Director Tan Chee Siang, a Malaysian, aged 47, was appointed to the Board on 24th May 2000 as an Independent Non-Executive Director. He is a member of the Audit Committee, a member of the Nomination Committee and also the Chairman of the Remuneration Committee. He holds a Bachelor of Laws degree LL.B. (Hons) from the University of London and Master of Laws (LL.M.) degree from the University of Malaya. He was called to the Malaysian Bar in He was a practising lawyer from 1994 to Thereafter, he joined Wijaya Baru Holdings Sdn Bhd as its Head of Legal Department until 1997 when he became a partner of a legal firm, Messrs Tan, Chu & Partners. In year 2010, the legal firm merged with Messrs Stanley Isaacs and practising under the firm name of Messrs Isaacs, Tan & Chu. He sits on the Board of several other private limited companies.

13 TADMAX RESOURCES BERHAD (8184-W) Annual Report Profile of Directors (cont d) TAN PENG KOON Independent Non-Executive Director Tan Peng Koon, a Malaysian, aged 43, was appointed to the Board on 10th February 2012 as an Independent Non-Executive Director. He is a member of the Audit Committee, a member of the Remuneration Committee and also the Chairman of the ESOS Committee. He holds a Bachelor of Economics (Accounting) from Flinders University South Australia and is a Member of the CPA Australia. Mr Tan began his financial service industry career with RHB Bank Berhad, before moving to KAF Discount Berhad as a Manager in the area of Capital Markets. He later joined Phileo Allied Capital Partners Sdn Bhd, in the Corporate Finance division as a Manager. From there he ventured into his own private corporate consultancy firm before joining Mulpha Capital Holdings Sdn Bhd. He was a Director of Mulpha International Berhad from 2004 to He became the Vice Chairman of Fiscalab Holdings Sdn Bhd since 2006 and Chairman of Sungei Wang Group Sdn Bhd from 2008 onwards. He also sits on the Board of several other private limited companies. NOEL JOHN A/L M SUBRAMANIAM Non-Independent & Non-Executive Director Noel John A/L M Subramaniam, a Malaysian, aged 66, was appointed to the Board on 12th February 2014 as a Non Independent & Non Executive Director. He is a member of the Audit Committee. Mr Noel John has had over 30 years experience in the financial and corporate fields. He has served as a Board Member and Audit Member of PICA (M) Corporation Berhad a financial services company, as well as the Managing Director of Seloga Holdings Berhad, a construction group. Among the positions he held has been with the Government of Singapore Administrative Service and the Monetary Authority of Singapore, the World Bank/IFC initiated Malaysian Industrial Development Finance Berhad (where he was involved in business and project development, economic research and project financing), TA Securities Berhad (as Senior VP of the International Desk involved with foreign Fund Managers) and the public listed MBf Group (a financial services and construction group). He has been involved, since 1999, with Maxcorp Development Sdn. Bhd., the parent company of the Maxcorp Group which is controlled by a major shareholder, having served as Director and currently as Advisor. Mr. Noel had his tertiary education at the University of Malaya, National University of Singapore and the Asian Institute of Management, Philippines. He holds a Class II Upper Honours Degree majoring in Economics and a Master s Degree in Management. He is also a member of the Malaysian Institute of Directors and has served as an Executive Committee member of the Malaysian Economic Association. He has also been the Chairman of the Finance Committee and later Vice-President of the Royal Selangor Club.

14 Annual Report 2013 TADMAX RESOURCES BERHAD (8184-W) 13 Profile of Directors (cont d) ALDILLAN BIN ANUAR Executive Director Aldillan bin Anuar, a Malaysian, aged 38, was appointed to the Board on 12th February 2014 as an Executive Director. Mr. Aldillan is the son of En Anuar bin Adam who is a major shareholder of the Company. Mr. Aldillan graduated with a Bachelors of Structural Engineering with Architecture from the University of Manchester, United Kingdom in Upon completing his degree, he joined Halcrow, an international and multi disciplinary engineering consultancy firm based in England. In 1999, upon his return to Malaysia, he joined their family owned business, Maxcorp Group of Companies, which are principally involved in construction, project management and property development businesses focused on Leisure, Resort and Housing. He was a key member in the initial planning and of 8000 units low cost housing project in the state of Johor, Malaysia. From 2003 to 2008, he was based in Pakistan overseeing implementation of the Group s property projects with a GDV of RM 700 million in various parts of Pakistan. Currently, he is the Managing Director of Maxcorp Development Sdn Bhd, overseeing the planning and strategy of the groups various projects in Malaysia and Indonesia. DEREK JOHN FERNANDEZ Independent Non-Executive Director Mr. Derek John Fernandez, a Malaysian, aged 49 was appointed to the Board on 26th March A lawyer by profession, his academic qualifications include B.Sc. and LLB (Hons) from Monash University, Australia. He was admitted as a Barrister and Solicitor of the Supreme Court of Victoria, Australia in 1989 and then an Advocate and Solicitor of the High Court of Malaya in He was a legal assistant in Fernandez and Co from as well as a lecturer in Sunway College from and a Partner of K. Nadarajah and Partners from Currently, he is the Managing Partner in Fernandez & Selvarajah (Advocates & Solicitors). He was also a member of the Bar Council s sub committee on corporate and banking matters. Notes to Profile of Directors: 1) The details of Directors shareholdings in the Company are set out on page 115 of this Annual Report. 2) Save as disclosed above, none of the Directors has any family relationship with any director and/or major shareholder of the Company, any conflict of interest with the Company and any conviction for offences within the past ten years. 3) The number of board meetings attended by the Directors of the Company are set out on page 17 of this Annual Report.

15 TADMAX RESOURCES BERHAD (8184-W) Annual Report Statement on Corporate Governance The Securities Commission of Malaysia released the latest Malaysian Code on Corporate Governance ( the 2012 Code ) in March The key focus of the 2012 Code is to strengthen the board structure and composition. There are 8 principles and 26 recommendations. The Board had conducted a review of its current practices and proceedings against the principles and recommendations of the 2012 Code. The result of this review was used by the Board as a basis in describing its applications of the principles and recommendations in the 2012 Code and the actions the Board would take to strengthen its present governance practices. Board of Directors The responsibilities of the Board broadly covers the formulation of corporate policies and strategies for the Group which will enhance the future growth, overseeing and evaluating the conduct of the Group s businesses, identifying principal risks of the business and ensuring the implementation of appropriate systems to manage these risks, overseeing the management succession plan, implementation of shareholders communication program and policy and reviewing the adequacy and integrity of the Group s internal control system and management information system. Similar with the previous code, the 2012 Code continues to emphasize the importance of right board composition in bringing value to the board deliberation and transparency of policies and procedures in selection and evaluation of board members. During the financial year until the date of this Annual Report, the Board continues to be led and controlled by board members with professional and business experience. The Board has ten (10) directors, three (3) of them are the Executive Directors, one (1) Director is a Non-Independent Non-Executive Director and the remaining six (6) Directors are Independent Non-Executive Directors. The Board reviews the composition of the board members annually and ensures that the current composition of the board functions competently. The presence of the independent non-executive directors constituting a majority of the board size, ensures that independent views and objectivity are brought into the Board s deliberation and decision making processes. The Board has delegated specific responsibilities to the respective committees of the Board namely the Audit Committee, Nomination Committee and Remuneration Committee, in order to enhance business and corporate efficiency and effectiveness. The Board s Committees will deliberate and examine issues within the established terms of reference and report to the Board on significant matters that require the Board s attention. In order to ensure that the selection and evaluation of board members are done objectively, the Nomination Committee members are solely made up of independent board members and the Committee is chaired by a senior independent non-executive director. The Nomination Committee comprises the following directors:- Chairman Dato Pahlawan Mohammed Shukor bin Hj Abdullah Members Datuk Sulaiman bin Daud Tan Chee Siang Functionally, the Nomination Committee is responsible for reviewing and making recommendation of any appointments to the Board based on the size of the Board, the mix of skills and experience and other qualities a director should bring to the Board. New nominations are assessed and recommended to the full Board for appointment. One (1) meeting was held during the financial year to consider the re-election and re-appointment of directors at the 44th Annual General Meeting and evaluation of independence of the independent directors.

16 Annual Report 2013 TADMAX RESOURCES BERHAD (8184-W) 15 Statement on Corporate Governance (cont d) Board of Directors (cont d) The Board has in place a Corporate code of conduct which sets out the Company s principles and to provide guidance to stakeholders on ethical behaviours that stakeholders could expect from the Group, responsibilities, implementation of a communication channel and procedures to provide employees with a mechanism to monitor the compliance of the code of conduct. There is a continuous process to strengthen the roles and responsibilities including defining its business sustainability policy and ensuring its current business decision making process incorporate the elements of Environment, Social and Governance ( ESG ) within its value chain in the business processes. Board Charter The Company has in place a Board Charter that sets out, among others, the responsibilities, authorities, procedures, evaluations and structures of the Board and Board Committees, as well as the relationship between the Board with its management and shareholders. More information on the Board Charter can be found on the Company s website at Gender Diversity Policy The Company currently does not have a policy on boardroom diversity, including gender diversity. Steps will be taken to ensure that a policy on boardroom diversity, including gender diversity is drawn up in line with Recommendation 2.2 of the Code which would include establishing objectives to attain 20% participation of women on its Board by Appointments To The Board The Nomination Committee is empowered to recommend to the Board appointment of new directors and changes to Board Committees. The decision on appointment rests on the Board as a whole after considering the recommendation by the Nomination Committee. Re-Election Of Directors The Articles of Association provide that at least one third of the Board is subject to retirement by rotation at each Annual General Meeting whereby each retiring director shall be those who have been longest in office since their last re-election. Consequently, each Director shall retire from office at least once in every three years but shall eligible for re-election. The election of each director is voted on separately. Directors over the age of seventy years are required to submit themselves for re-appointment annually in accordance with Section 129(6) of the Companies Act, Directors Remuneration An executive director is remunerated based on the Group s performance whilst the remuneration of the non-executive directors is determined in accordance with their experience and the level of responsibilities assumed. The Remuneration Committee comprises the following Directors:- Chairman Tan Chee Siang Members Dato Faizal bin Abdullah Tan Peng Koon

17 TADMAX RESOURCES BERHAD (8184-W) Annual Report Statement on Corporate Governance (cont d) Directors Remuneration (cont d) During the financial year, the number of Directors whose income falls within the following bands is set out as follows: Remuneration Bands Executive Directors Non-Executive RM50,000 and below 5 RM50,001 RM100,000 1 RM200,001 RM300,000 1 RM600,001 RM750,000 1 During the financial year, the aggregate remuneration paid or payable to all Directors of the Company are further categorised into the following components: Salaries and Benefit- EPF and other emoluments Bonuses in-kind SOCSO Total (RM) (RM) (RM) (RM) (RM) Executive Directors 870,000 14,250 72, ,250 Non-Executive Directors 270, ,000 Board Independence Independence is important for ensuring objectivity and fairness in the board s decision making. The roles and responsibilities of the Chairman and Managing Director continue to be separated. The Chairman of the Board is an independent director and this is stipulated in the Board Charter. The Board had identified Dato Pahlawan Mohammed Shukor bin Hj Abdullah as the Senior Independent Director to provide shareholders with an alternative channel to convey their concerns and seek clarifications from the Board. Any such concerns may be directed to the Company s registered office. In order to uphold the independence of independent directors, the Board undertakes an annual assessment of independence of its independent directors by focusing on events that would at least maintain if not enhance the ability of independent directors to continue bringing independent and objective judgment to the board deliberation and the regulatory definition of independent directors. The 2012 Code recommends that the tenure of an independent director should not exceed nine (9) years cumulatively. Upon completion of the nine (9) years, an independent director may continue to serve on the board subject to his re-designation as a non-independent director. Dato Pahlawan Mohammed Shukor bin Hj Abdullah and Tan Chee Siang, who have both exceeded the tenure of 9 years as independent directors, have expressed their desire not to seek reappointment/ re-election at the upcoming Annual General Meeting ( AGM ) of the Company. Board Commitment The underlying factors of Directors commitment to the Group are devotion of time and continuous improvement of knowledge and skill sets. The Board is satisfied with the level of time commitment given by the Directors towards fulfilling their roles and responsibilities as Directors of the Company during the financial year ended 31 December In compliance with the Main Market Listing Requirements of Bursa Malaysia Securities Berhad, all the Directors do not hold directorships more than that prescribed under the Listing Requirements.

18 Annual Report 2013 TADMAX RESOURCES BERHAD (8184-W) 17 Statement on Corporate Governance (cont d) Board Commitment (cont d) The Board meets at least every quarter and on other occasions, as and when necessary, to inter-alia approve quarterly financial results, statutory financial statements, the Annual Report, business plans and budgets as well as to review the performance of the Company and its operating subsidiaries, governance matters and other business development matters. Board papers are circulated to the Board members prior to the Board meetings so as to provide the Directors with relevant and timely information to enable them to have proper deliberation on issues raised during Board meetings. All Directors have unrestricted access to timely and accurate information within the Group and to the advice and services of the Company Secretary, who is responsible to the Board in ensuring procedures are followed. In addition, subject to Board s approval, Directors may also seek independent professional advice, if necessary, at the expense of the Company. During the financial year, five (5) Board meetings were held. The attendance record of each Director is as follows: Board of Directors Number of Board Meetings attended 1. Dato Seri Abdul Azim bin Mohd Zabidi 4/5 2. Dato Faizal bin Abdullah 5/5 3. Dato Che Rashidi bin Che Omar 5/5 4. Tan Sri Prof. Drs. Da i Bachtiar 3/5 5. Dato Pahlawan Mohammed Shukor bin Hj Abdullah 5/5 6. Datuk Sulaiman bin Daud 5/5 7. Tan Chee Siang 5/5 8. Tan Peng Koon 5/5 The Directors recognise the need to attend training to update their knowledge, keep abreast of new developments and enhance their skills to sustain their active participation in Board deliberation for effective discharge of their duties. The training attended by Directors during the financial year are as below: Directors Dato Seri Abdul Azim bin Mohd Zabidi Dato Faizal bin Abdullah Dato Che Rashidi bin Che Omar Dato Pahlawan Mohammed Shukor bin Hj Abdullah Datuk Sulaiman bin Daud Training attended Corporate Compliance : Focusing on Directors Duties, Liabilities and Expectations Directors Effectiveness and Responsibility on New Guidelines Investing in Vietnam Opportunities and Challenges Failed Business : Deriving Sound Strategic Insights Failed Business : Deriving Sound Strategic Insights Navigating the Global Economic Fragility : Implications on Malaysian Business SID-IIAS : Improving Board Oversight Through Leading Practices EBL Module 4 : Financial Literacy & Governance Sharpening the Audit Committee Governance Challenges & Internal Audit Function Value Creation Culture Evaluation & Implementing Overseas Investment Strategies From Evolving Challenges to Sustainable Performance Effective Corporate Mergers & Acquisitions From Complexity to Execution Excellence Advocacy Sessions on Corporate Disclosure for Directors of Listed Issuers SID Directors Conference 2013

19 TADMAX RESOURCES BERHAD (8184-W) Annual Report Statement on Corporate Governance (cont d) Board Commitment (cont d) Directors Mr Tan Chee Siang Mr Tan Peng Koon Training attended Navigating the Global Economic Fragility : Implications on Malaysian Business Investment Planning in the Current Economic Climate Anti-Money Laundering (AML) for Financial Professionals The Nomination Committee assists the Board in the assessment of the training needs of each director during each financial year. Company Secretary The Company has appointed qualified named secretaries for the Group who possesses the requisite qualifications and they play a supportive role by ensuring adherence to the Company s constitution, Board policies and procedures and compliance with the relevant regulatory requirements, codes or guidance and legislations from time to time. Supply Of Information Prior to Board meetings, an agenda together with the relevant documents and information are distributed to all Directors. The Senior Management and/or other relevant Board members will provide comprehensive explanation of pertinent issues and recommendations. The issues would then be deliberated and discussed thoroughly by the Board prior to decision-making. Apart from the above, the Board members are supplied with information and reports on financial, operational, corporate regulatory, business development and audit matters by way of board reports or upon specific request to enable them to discharge their duties and responsibilities. All Directors are notified of amendments to Bursa Malaysia Securities Berhad s Listing Requirements. All Directors have access to the management and auditors for independent views and advice. In furtherance of their duties, the Directors may seek independent professional advice if necessary, at the expense of the Company. Financial Reporting The Board is responsible to ensure that the quarterly financial reporting of the Company presents a true and fair view and assessment of the Group s financial position, performance and prospects. The Board ensures that the Group s financial statements are drawn up in accordance with the provisions of the Companies Act 1965 and applicable approved accounting standards. The Board is assisted by the Audit Committee in reviewing and scrutinising the information in terms of the overall accuracy, adequacy and completeness of disclosure and ensuring the Group s financial statements comply with applicable financial reporting standards. As part of the Audit Committee s review processes, the Audit Committee has obtained written assurance from: i. The External Auditors confirming that they are, and have been, independent throughout the conduct of the audit engagement in accordance with the terms of all relevant professional and regulatory requirements; and ii. Managing Director and Head, Corporate Finance confirming that the preparation of the financial statements, all relevant approved accounting standards and policies have been adopted, applied and followed in the financial statement with reasonable and prudent judgments and estimates. Annually, the Audit Committee also reviews the appointment, performance and remuneration of the External Auditors before recommending them to the shareholders for re-appointment in the AGM. The Audit Committee would convene meeting with the External Auditors and Internal Auditors in the absence of the Executive Directors and employees of the Group to discuss on issues and reservations, if any, which the External Auditors or Internal Auditors may wish to highlight to the Audit Committee.

20 Annual Report 2013 TADMAX RESOURCES BERHAD (8184-W) 19 Statement on Corporate Governance (cont d) Risk Management The Board acknowledges that risk management is an integral part of good management practice. In order to strengthen the present risk management and internal control systems in the Group, the Board would work with the management in: i. Approving the Group s policy and framework in Risk Management; ii. Determining the board risk appetite; iii. Ensuring the risk management framework is embedded into key functions in the Group; iv. Identifying principal risks, emerging and changes of risks impacting the Group s objectives and strategies; and v. Reviewing risk management actions and management risk report and assessing the effectiveness of the risk management and internal control system in managing risks in accordance with the Group s risk appetite and policies. The Board has established an internal audit function which is currently outsourced to a professional firm. Functionally, the internal auditors report to the Audit Committee directly and they are responsible for conducting regular reviews and appraisals of the effectiveness of the governance, risk management and internal controls processes within the Group. Further details of the Group s state of risk management and internal control systems are reported in the Statement on Risk Management and Internal Control on pages 24 to 25. Corporate Disclosure Corporate disclosure and information are important for investors and shareholders. The Board is advised by the management, the Company Secretary and the External and Internal Auditors on the contents and timing of disclosure requirements of the Bursa Malaysia Listing Requirements on the financial results and various announcements. The management is invited to attend the Board and Audit Committee meetings and to provide explanation to the Board on the operations of the Group. The Board leverages on its corporate website to communicate, disseminate and add depth to the governance reporting. The principal governance information such as charter and board committees terms of reference, are separately published in the website to avoid dilution of issues in the annual report. Shareholders Right The Board recognises the need for transparency and accountability to the Company s shareholders and regular communication with its shareholders, stakeholders and investors on the performance and major developments in the Group. This is achieved through releases of quarterly financial results, circulars, Annual Reports, corporate announcement and press releases. In addition to the various announcements made during the period, information on the Company is available on the Company s website at The Company would respond to meetings with institutional shareholders, analysts and members of the press to convey information regarding the Group s performance and strategic direction as and when required. General meetings are an important avenue through which shareholders can exercise their rights. Shareholders participation in general meetings is encouraged. Shareholders are reminded that they have the right to demand a poll vote at general meetings. Also, effective 1st June 2013, poll voting is mandated for related party transactions that require specific shareholders approval. Statement On Compliance With Best Practices Of The Code Save for the recommendations to establish a policy formalizing the approach to boardroom diversity, formalizing the risk management policy and framework as well as defining its sustainability policy, the Board having considered the rationale for the deviation, considers that the group has substantially complied with the Best Practices as set out in the Code for the financial year ended 31 December The Statement is made in accordance with a resolution of the Board dated 29 April 2014.

21 TADMAX RESOURCES BERHAD (8184-W) Annual Report Audit Committee Report COMPOSITION OF AUDIT COMMITTEE The current Audit Committee comprises the following Directors: Chairman Datuk Sulaiman bin Daud Independent Non-Executive Director Members Tan Chee Siang Tan Peng Koon Noel John A/L M Subramaniam (Appointed on 13 February 2014) Independent Non-Executive Director Independent Non-Executive Director Non-Independent Non-Executive Director MEETINGS During the financial year ended 31 December 2013, the Audit Committee held a total of five meetings. The meetings were attended by the members and senior management, who attended on the invitation of the Chairman of the Committee. The Group s Internal and External Auditors also attended some of the meetings during the financial year. The record of attendance of the Audit Committee members are as follows:- Directors Number of meetings attended Datuk Sulaiman bin Daud 5/5 Tan Chee Siang 5/5 Tan Peng Koon 5/5 TERMS OF REFERENCE 1. Objectives The principal objective of the Audit Committee is to assist the Board in its responsibilities relating to the accounting and reporting practices of the Company and the Group. In addition, the Audit Committee shall:- evaluate the quality of the audits performed by the internal and external auditors; ensure financial statements comply with applicable financial reporting standards; oversee compliance with the laws and regulations and ensure observance of a proper code of conduct; and have policies and procedures to assess the suitability and independence of external auditors. 2. Composition The members of the Audit Committee shall be appointed by the Board from amongst the Non-Executive Directors and shall consist of not less than three members, the majority of whom are Independent Directors. At least one member of the Audit Committee:- (a) must be a member of the Malaysian Institute of Accountants (MIA); or

22 Audit Committee Report (cont d) Annual Report 2013 TADMAX RESOURCES BERHAD (8184-W) 21 Audit Committee Report (cont d) 2. Composition (cont d) (b) if he is not a member of MIA, he must have at least three years of working experience and:- (i) he must have passed the examination specified in Part I of the First Schedule of the Accountants Act, 1967; or (ii) he must be a member of one of the associations of accountants specified in Part II of the First Schedule of the Accountants Act, 1967; or (c) fulfils such other requirements as prescribed or approved by the Exchange. No alternate Director shall be appointed as a member of the Audit Committee. 3. Chairman The Chairman of the Audit Committee must be an Independent Non-Executive Director. In the absence of the Chairman, the members shall elect any one of the members present at the meeting to be the Chairman of the meeting. 4. Secretary The Company Secretary shall be the Secretary of the Audit Committee. 5. Quorum The quorum of the meeting of the Audit Committee shall be at least two members, a majority of whom must be Independent Directors. 6. Meeting Procedure At least four meetings shall be convened during a year. The meetings shall be scheduled regularly by the Secretary and due notice shall be distributed to the members before the meeting together with the agenda and supporting papers. The minutes of the meeting shall be recorded for reference and inspection purposes. The Executive Directors, Accountants, representatives of the internal and external auditors may be present in any meeting upon the invitation of the Audit Committee. 7. Authority The Audit Committee shall have the authority to do the following:- (a) to carry out its function within its terms of reference. All employees of the Group shall be directed to co-operate as requested by the Audit Committee; (b) have full and unlimited/unrestricted access to all information, documents and resources which are required to perform its duties; (c) be able to obtain, at the expense of the Company, any other independent professional advice, if required; (d) be able to convene meetings with external auditors, internal auditors or both, excluding the attendance of the Executive Directors and employees of the Company, whenever deemed necessary; (e) be able to make relevant reports when necessary to the relevant authorities if any breach of the rules, regulations and/or Listing Requirements of the Bursa Malaysia Securities Berhad has occurred; and (f) have direct communication channels with the external auditors and person(s) carrying out the internal audit function.

23 TADMAX RESOURCES BERHAD (8184-W) Annual Report Audit Committee Report (cont d) Audit Committee Report (cont d) 8. Functions The Audit Committee shall discharge the following duties and responsibilities and report the same to the Board:- (a) to review with the external auditors:- the audit plans; its evaluation of the system of internal controls; the audit report; the assistance given by the employees and the management of the Company and the Group to the external auditors; and the management letter of the external auditors and the management s response. (b) to review with the internal auditors:- the adequacy of the scope, functions, competency and resources of the internal audit function and that it has the necessary authority to carry out its work; and the internal audit programmes, processes, the results of the internal audit programmes, processes or investigation undertaken and whether or not appropriate action is taken on the recommendations of the internal audit function. (c) to review the quarterly unaudited financial results and audited financial statements, prior to the approval of the Board, particularly focusing on:- changes in or implementation of major accounting policies; significant and unusual events; and compliance with approved accounting standards and other legal requirements. (d) to monitor any related party transaction and conflict of interest situation that may arise within the Group including any transaction, procedure or course of conduct that raises questions of management integrity; (e) to consider the appointment, resignation or dismissal of the external auditors of the Company; (f) to review and monitor the suitability and independence and evaluate the performance of the external auditors for re-appointment; (g) to establish policies governing the circumstances under which contracts for the provision of non-audit services can be entered into and procedures that must be followed by the external auditors; (h) to obtain written assurance from the external auditors confirming that they are, and have been, independent throughout the conduct of the audit engagement in accordance with the terms of all relevant professional and regulatory requirements; and (i) to review and report such other matters as may be delegated by the Board from time to time. 9. Retirement and Resignation In the event of any vacancy in the Audit Committee resulting in non-compliance in respect of composition of Audit Committee, the Company must fill the vacancy within three months.

24 Audit Committee Report (cont d) Annual Report 2013 TADMAX RESOURCES BERHAD (8184-W) 23 Audit Committee Report (cont d) 10. Term of Office At least once in every three years, the Board must review the term of office, performance of the Audit Committee and each of its members to determine whether the Audit Committee and its members carried out their duties in accordance with their terms of reference. 11. Reporting The Audit Committee shall report to the Board either formally in writing or verbally, as it considers appropriate, on its terms of reference at least once a year, but more frequently as it wishes. The Audit Committee shall report to the Board any specific matters, as requested by the Board, for investigation. SUMMARY OF ACTIVITIES OF THE AUDIT COMMITTEE During the financial year ended 31 December 2013, the Audit Committee carried out its duties as set out in the terms of reference. In particular, its functions covered, amongst others, the following:- (a) (b) (c) (d) (e) (f) (g) (h) reviewed the quarterly unaudited financial results and audited financial statements of the Company and the Group prior to recommending them to the Board for approval and ensured that it was prepared in accordance with the provisions of the Companies Act, 1965 and the applicable approved accounting standards; reviewed and discussed the external auditors nature and scope of the audit plan, system of internal controls, audit report and any significant audit findings encountered and the accounting issues arising from the audit; reviewed the performance of the external auditors and discussed the re-appointment of external auditors before tabling to the shareholders for approval at the Annual General Meeting; reviewed the business operations of the Group; reviewed the Company s compliance with the Listing Requirements of the Bursa Malaysia Securities Berhad, accounting standards and other relevant legal and regulatory requirements; reviewed the adequacy of the scope, functions and resources of the internal audit function and the internal audit plan; reviewed the scope of the internal audit programme, the internal audit findings, recommendations and corrective actions taken and the Statement on Risk Management and Internal Control for inclusion in the Annual Report; and further, the Audit Committee assessed the suitability and independence of External Auditors by obtaining affirmation from the External Auditors that it maintained its independence in accordance with its internal requirements and with the provisions of the Bye-Laws on Professional Independence of the MIA. SUMMARY OF ACTIVITIES OF THE INTERNAL AUDIT FUNCTION The Board has outsourced its internal audit function to a professional firm to conduct reviews on the systems on internal control in the key operation activities of the Group. Functionally, the Internal Auditors directly report to the Audit Committee on matters of control and audit and assist the Audit Committee in discharging its duties and responsibilities on the reviews of the internal control systems of the Group. During the financial year, the Internal Auditors conducted reviews on purchasing and payment. The internal audit reports were issued to the respective operations management, incorporating audit recommendations and management responses in respect of audit findings on the areas for improvement. These reports were tabled at the Audit Committee for their assessment of the effectiveness of the systems of internal control in the Group. The internal audit fee incurred for the financial year ended 31 December 2013 was RM9,400/-.

25 TADMAX RESOURCES BERHAD (8184-W) Annual Report Statement on Risk Management and Internal Control BOARD S RESPONSIBILITIES, ASSURANCE AND LIMITATIONS The Board of Directors ( Board ) of Tadmax Resources Berhad recognises the importance of a sound system of risk management and internal control as a platform to good corporate governance and affirms their overall responsibility for the Group s systems of risk management and internal controls. For the purposes of this statement, associate company is not dealt with as part of the Group, and therefore not covered by this statement. The Board has established an ongoing risk management process to identify, evaluate, and manage significant risks faced by the Group in order to effectively mitigate such risks that may impede the achievement of the Group s business and corporate objectives. These are reviewed on a periodic basis to ensure its continued effectiveness, adequacy and integrity. The Board is further satisfied with the existing level of the system of internal control and that there were no material losses resulted from significant control problem that would require separate disclosure in the Annual Report. Nonetheless, the Board recognises that the systems of internal control should be continuously improved in line with the evolving business development. It should also be noted that all systems of risk management and internal control could only manage rather than eliminate risks of failure to achieve business objectives. Therefore, these systems of risk management and internal control in the Group can only provide reasonable but not absolute assurance against material misstatements, frauds, losses or other significantly adverse consequences. MANAGEMENT RESPONSIBILITIES AND ASSURANCE In accordance to the Bursa s Guidelines, management is responsible to the Board for identifying risks relevant to the business of the Group s objectives and strategies implementing, maintaining sound systems of risk management and internal control and monitoring and reporting to the Board of significant control deficiencies and changes in risks that could significantly affect the Group achievement of its objective and performance. Management is accountable for implementing the Board s framework, policies and procedures on risk and internal control. The Board has received assurance from the Group Managing Director and the Group Head of Corporate Finance who are primarily responsible for the management of the financial affairs of the Group that, to the best of their knowledge, the Group s risk management and internal control systems are operating adequately and effectively in all material aspects to meet the Group s objectives for the year under review and date of approval of this Statement on Risk Management and Internal Control for inclusion in the annual report. RISK MANAGEMENT AND INTERNAL CONTROL SYSTEM The Group has embedded the risk management processes into day-to-day operations in order to continuously identify, evaluate and manage significant risks faced by the organization as part of its operating and business processes. Functionally, these processes also form the responsibility of all Executive Directors and the management team members.

26 Annual Report 2013 TADMAX RESOURCES BERHAD (8184-W) Statement on Risk Management and Internal Control (cont d) 25 Statement on Risk Management and Internal Control (cont d) RISK MANAGEMENT AND INTERNAL CONTROL SYSTEM (cont d) The key elements of the Group s internal control system are as follows: (i) The Group has a defined organisation structure and each function is overseen by a head of department. Lines of accountability, responsibility, approval, authorisation and control procedures have been laid down and communicated throughout the Group; (ii) The Audit Committee comprises non-executive members of the Board, with a majority being independent Directors. The Committee has full and unrestricted access to any information pertaining to the Group and has direct communication channels with the External and Internal Auditors. The primary objectives of the Audit Committee are to assist the Board in monitoring the Group s management of its business and financial risks and the determination of appropriate internal controls to manage these risks; (iii) There is an annual budgeting and target setting process being formulated for each operating unit. The budget has been presented to the Board for review and approval and the management will be guided by the approved budget in managing their respective operating units; (iv) The Group s management team regularly reviews the financial results including cashflow for all businesses within the Group as well as the operational and financial performance of the Group; (v) The Group s Policies and Procedures are subject to periodical review and update to ensure effectiveness, align with evolving business and operational needs and enhancement of internal control; (vi) Regular and comprehensive financial information is provided to the Audit Committee for quarterly and ad-hoc reviews and thereafter, presented to the Board for approval including discussion on matters raised by Management and Internal Audit; (vii) The Group has outsourced its internal audit function to a professional firm to provide the Board with assurance regarding the adequacy and effectiveness of the risk management and internal control system; and (viii) All material business and investment activities are subject to review by the Board. REVIEW OF STATEMENT ON INTERNAL CONTROL BY EXTERNAL AUDITORS As required by Paragraph of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad, the External Auditors have reviewed this Statement on Risk Management and Internal Control. Their review has performed in accordance with the Recommended Practice Guide 5 ( RPG 5 ) (Revised) issued by the Malaysian Institute of Accountants. Based on their review, the External Auditors have reported to the Board that nothing come to their attention that causes them to believe, on the basis of the procedures performed and evidences obtained, that the statement intended to be included in the annual report is not prepared, in all material respects, in accordance with the disclosures required by paragraph 41 and 42 of the Statement on Risk Management and Internal Control: Guidelines for Directors of Listed Issuer to be set out, nor is factually inaccurate.

27 TADMAX RESOURCES BERHAD (8184-W) Annual Report Additional Compliance Information UTILISATION OF PROCEEDS During the financial year ended 31 December 2013, there were no proceeds received by the Company from any corporate proposals. SHARE BUY-BACK The Company did not carry out any share buy-backs, resale of treasury shares or cancellation of shares during the financial year ended 31 December OPTIONS, WARRANTS OR CONVERTIBLE SECURITIES There were no options, warrants or convertible securities issued by the Company during the financial year ended 31 December AMERICAN DEPOSITORY RECEIPT OR GLOBAL DEPOSITORY RECEIPT PROGRAMME The Company did not sponsor any American Depository Receipt or Global Depository Receipt programme during the financial year ended 31 December SANCTIONS AND/OR PENALTIES There were no sanctions and/or penalties imposed on the Company and its subsidiaries, Directors or management by the relevant regulatory bodies during the financial year. NON-AUDIT FEES The amount of non-audit fees incurred for services rendered to the Company or its subsidiaries by the Company s external auditors for the financial year ended 31 December 2013 amounted to RM39,000. VARIATION IN RESULTS There was no variation of 10% or more between the audited results for the financial year ended 31 December 2013 and the unaudited results previously announced. There were no profit estimates, forecast or projection announced by the Company during the financial year. PROFIT GUARANTEE The Company did not give/receive any profit guarantees during the financial year.

28 Additional Compliance Information (cont d) Annual Report 2013 TADMAX RESOURCES BERHAD (8184-W) 27 Additional Compliance Information (cont d) MATERIAL CONTRACTS INVOLVING DIRECTORS AND MAJOR SHAREHOLDERS INTEREST There were no material contracts (not being contracts entered into in the ordinary course of business) entered into by the Company and its subsidiaries involving the interests of the Directors and major shareholders, either still subsisting as at 31 December 2013 or entered into since the end of the previous financial year ended 31 December RECURRENT RELATED PARTY TRANSACTIONS OF A REVENUE OR TRADING NATURE There were no recurrent related party transactions of a revenue or trading nature, which requires Shareholders Mandate during the financial year. EMPLOYEES SHARE OPTION SCHEME An Employees Share Option Scheme of up to 10% of the issued and paid up share capital of the Company was approved by the shareholders of the Company during the Extraordinary General Meeting held on 11th April 2013 and was implemented with effect from 14 November As at end of the financial year, no option has been granted.

29 TADMAX RESOURCES BERHAD (8184-W) Annual Report Statement of Directors Responsibility Pursuant to Paragraph 15.26(a) of the Listing Requirements of Bursa Malaysia Securities Berhad The Directors are required by the Companies Act, 1965 to prepare financial statements for each financial year which have been made out in accordance with the applicable MFRS, International Financial Reporting Standards, the provision of the Companies Act, 1965 and the Main Market Listing Requirements of Bursa Malaysia Securities Berhad. The Directors are responsible to ensure that the financial statements give a true and fair view of the state of affairs of the Group and of the Company at the end of the financial year and of the results and cash flows of the Group and of the Company for the financial year. In preparing the financial statements the Directors have: adopted suitable accounting policies and applied them consistently; made judgements and estimates that are reasonable and prudent; and prepared financial statements on a going concern basis as the Directors have a reasonable expectation, having made enquiries, that the Group and the Company have adequate resources to continue operations for the foreseeable future. The Directors acknowledge the responsibility for ensuring that the Company keeps accounting records which disclose with reasonable accuracy the financial position of the Group and of the Company and which enable them to ensure that the financial statements comply with the Companies Act, The Directors have overall responsibilities for taking such steps as are reasonably open to them to safeguard the assets of the Group, to prevent and detect fraud and other irregularities. Additionally, the Directors have relied on the systems of risk management and internal control to ensure that the information generated for the preparation of the financial statements from the underlying accounting records is accurate and reliable. This statement is made in accordance with a resolution of the Board dated 29 April 2014.

30 Financial Statements and Reports Directors Report Financial Statements Statements of Financial Position Statements of Comprehensive Income 36 Statements of Changes in Equity Statements of Cash Flows Notes to the Financial Statements Supplementary Information on the Disclosure of Realised and Unrealised Profits or Losses 110 Statement by Directors 111 Statutory Declaration 111 Independent Auditors Report

31 TADMAX RESOURCES BERHAD (8184-W) Annual Report Directors Report DIRECTORS REPORT The directors hereby submit their report together with the audited financial statements of the Group and of the Company for the financial year ended 31st December PRINCIPAL ACTIVITIES The principal activities of the Company are that of investment holding, the provision of management services and construction related activities. The principal activities of the subsidiaries are set out in Note 5 to the financial statements. There have been no significant changes to the nature of these principal activities during the financial year. RESULTS The results of operations of the Group and of the Company for the financial year are as follows: Group Company Net loss for the financial year RM 000 RM 000 Net loss from continuing operations (46,973) (46,002) Net loss from discontinued operations (433) (47,406) (46,002) Net loss attributable to: Owners of the Company (47,206) (46,002) Non-controlling interests (200) (47,406) (46,002) DIVIDENDS No dividends were paid or declared by the Company since the end of the previous financial year. The directors do not recommend the payment of any dividends in respect of the financial year ended 31st December RESERVES AND PROVISIONS There were no material transfers to or from reserves and provisions during the financial year other than those disclosed in the Statements of Changes in Equity. BAD AND DOUBTFUL DEBTS Before the statements of comprehensive income and statements of financial position of the Group and of the Company were made out, the directors took reasonable steps to ascertain that action had been taken in relation to the writing off of bad debts and the making of allowance for doubtful debts, and had satisfied themselves that all known bad debts had been written off and that adequate allowance had been made for doubtful debts. At the date of this report, the directors are not aware of any circumstances that would render the amount written off for bad debts or the amount of the allowance for doubtful debts in the financial statements of the Group and of the Company inadequate to any substantial extent.

32 Annual Report 2013 TADMAX RESOURCES BERHAD (8184-W) 31 Directors Report (cont d) CURRENT ASSETS Before the statements of comprehensive income and statements of financial position of the Group and of the Company were made out, the directors took reasonable steps to ensure that any current assets, other than debts, which were unlikely to be realised in the ordinary course of business, their values as shown in the accounting records of the Group and of the Company had been written down to an amount that might be expected to be realised. At the date of this report, the directors are not aware of any circumstances that would render the values attributed to the current assets in the financial statements of the Group and of the Company misleading. VALUATION METHODS At the date of this report, the directors are not aware of any circumstances which have arisen which render adherence to the existing method of valuation of assets or liabilities of the Group and of the Company misleading or inappropriate. CONTINGENT AND OTHER LIABILITIES At the date of this report, there does not exist:- (i) Any charge on the assets of the Group and of the Company that have arisen since the end of the financial year which secures the liabilities of any other person, or (ii) Any contingent liabilities in respect of the Group and of the Company that have arisen since the end of the financial year. In the opinion of the directors, no contingent liabilities or other liabilities of the Group and of the Company have become enforceable, or are likely to become enforceable within the period of twelve months after the end of the financial year which will or may substantially affect the ability of the Group and of the Company to meet their obligations as and when they fall due. CHANGE OF CIRCUMSTANCES At the date of this report, the directors are not aware of any circumstances, not otherwise dealt with in this report or the financial statements of the Group and of the Company that would render any amount stated in the financial statements misleading. ITEMS OF AN UNUSUAL NATURE In the opinion of the directors, the results of the operations of the Group and of the Company for the financial year were not, substantially affected by any item, transaction or event of a material and unusual nature. No item, transaction or event of a material and 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 of the Company for the financial year in which this report is made. ISSUE OF SHARES AND DEBENTURES During the financial year, the Company has:- (i) Reduced its issued and paid-up capital from RM363,231,746/- to RM181,615,873/- by a capital reduction exercise pursuant to Section 64 of the Companies Act, 1965 in Malaysia via the cancellation of RM0.50 of the par value of every existing issued and paid-up ordinary shares of RM1/- each in the Company;

33 TADMAX RESOURCES BERHAD (8184-W) Annual Report Directors Report (cont d) ISSUE OF SHARES AND DEBENTURES (cont t) (ii) Increased its issued and paid-up ordinary share capital from RM181,615,873/- to RM186,615,873/- upon the completion of capital reduction by way of the issuance of 10,000,000 ordinary shares of RM0.50 each through capitalisation of debt owing to a director of the Company, Dato Faizal bin Abdullah. The new ordinary shares issued during the financial year rank pari passu in all respects with the existing ordinary shares of the Company. The Company has not issued any debentures during the financial year. TREASURY SHARES There were no repurchase and resale of treasury shares during the financial year. At 31st December 2013, the total number of treasury shares held by the Company is 474,300 (2012: 474,300) units with a total cost of RM154,720/- (2012: RM154,720/-). DIRECTORS The directors in office since the date of the last report are:- Dato Faizal bin Abdullah Dato Che Rashidi bin Che Omar Dato Pahlawan Mohammed Shukor bin Hj Abdullah Datuk Sulaiman bin Daud Tan Chee Siang Tan Peng Koon Aldillan bin Anuar - Appointed on 12th February 2014 Noel John A/L M Subramaniam - Appointed on 12th February 2014 Derek John Fernandez - Appointed on 26th March 2014 Tan Sri Prof. Drs. Da i Bachtiar - Resigned on 27th February 2014 Dato Seri Abdul Azim bin Mohd Zabidi - Resigned on 24th March 2014 DIRECTORS INTERESTS According to the Register of Directors Shareholdings kept by the Company under Section 134 of the Companies Act, 1965 in Malaysia, the interests of those directors who held office at the end of the financial year in shares in the Company during the financial year ended 31st December 2013 are as follows:- Before Capital Reduction Number of ordinary shares of RM1/- each At At Acquired Disposed Direct Dato Faizal bin Abdullah 1,068,600 1,068,600

34 Annual Report 2013 TADMAX RESOURCES BERHAD (8184-W) 33 Directors Report (cont d) DIRECTORS INTERESTS (cont t) After Capital Reduction Number of ordinary shares of RM0.50 each At At Acquired Disposed Direct Dato Faizal bin Abdullah 1,068,600 16,735,000 17,803,600 By virtue of the interest in the shares of the Company, Dato Faizal bin Abdullah is also deemed interested in the shares of all the Company s subsidiaries to the extent that the Company has an interest. Other than as disclosed above, none of the other directors in office at the end of the financial year had any interest in shares in the Company and its subsidiary companies during the financial year. DIRECTORS BENEFITS Since the end of the previous financial year, no director of the Company has received or become entitled to receive a benefit (other than benefits included in the aggregate amount of emoluments received or due and receivable by the directors shown in the financial statements) by reason of a contract made by the Company or a related corporation with the director or with a firm of which the director is a member, or with a company in which the director has a substantial financial interest. Neither during nor at the end of the financial year was the Company or any of its related corporations a party to any arrangement, whose object was to enable the directors to acquire benefits by means of the acquisition of shares in, or debentures of, the Company or any other body corporate. SIGNIFICANT EVENTS Significant events that have occurred during and after the financial year are disclosed in Note 38 to the financial statements. AUDITORS The auditors, Messrs Baker Tilly Monteiro Heng, have expressed their willingness to continue in office. On behalf of the Board, DATO FAIZAL BIN ABDULLAH Director DATUK SULAIMAN BIN DAUD Director Petaling Jaya Date: 29th April 2014

35 TADMAX RESOURCES BERHAD (8184-W) Annual Report Statements of Financial Position as at 31st December 2013 Group Company Note RM 000 RM 000 RM 000 RM 000 ASSETS Non-current assets Property, plant and equipment 3 6,484 14, Prepaid land lease payments 4(a) 2,538 4,255 Prepaid land lease payments with cultivation rights 4(b) 65,057 67,029 Investment in subsidiaries 5 562, ,744 Investment in an associate 6 34,010 34,239 Investment in joint venture Other investment Timber concession rights 9 218, ,000 Deferred tax assets 10 2,619 3,000 Goodwill 11 67,210 66,810 Other receivables 12 2,662 4,619 2,662 4,619 Total non-current assets 364, , , ,321 Current assets Inventories , ,860 Amount due from customers on contracts 14 5 Trade receivables 15 14,985 6,213 4,765 Other receivables, deposits and prepayments 12 24,112 10,303 23,958 9,628 Tax recoverable 2,993 2,960 2,993 2,880 Fixed deposits placed with licensed banks Cash and bank balances , ,989 33,050 13,055 Assets classified as held for sale 17 37,460 Total current assets 207, ,449 33,050 13,055 TOTAL ASSETS 572, , , ,376

36 Annual Report 2013 TADMAX RESOURCES BERHAD (8184-W) 35 Statements of Financial Position as at 31st December 2013 (cont d) Group Company Note RM 000 RM 000 RM 000 RM 000 EQUITY AND LIABILITIES Equity attributable to owners of the Company Share capital , , , ,232 Share premium 1,367 1,367 1,367 1,367 Treasury shares 18 (155) (155) (155) (155) Reserves 20 (11,103) (147,172) 4,693 (130,921) Shareholders funds 176, , , ,523 Non-controlling interests 28,643 28,843 Total equity 205, , , ,523 Non-current liabilities Deferred tax liabilities 10 70,785 71, Hire purchase liabilities Bank borrowings , , , ,303 Total non-current liabilities 207, , , ,728 Current liabilities Trade payables 23 14,373 4,366 Other payables, deposits and accruals 24 10,384 7,409 3,157 4,371 Amount owing to subsidiaries , ,060 Amount owing to a director 26 41,919 69,426 41,889 69,396 Hire purchase liabilities Bank borrowings 22 88,860 37,188 88,860 37,188 Tax payables 4,239 4, , , , ,125 Liabilities classified as held for sale 17 17,783 Total current liabilities 159, , , ,125 Total liabilities 367, , , ,853 TOTAL EQUITY AND LIABILITIES 572, , , ,376 The accompanying notes form an integral part of these financial statements.

37 TADMAX RESOURCES BERHAD (8184-W) Annual Report Statements of Comprehensive Income for the financial year ended 31st December 2013 Group Company Note Continuing Operations RM 000 RM 000 RM 000 RM 000 REVENUE 27 16, ,134 3,960 COST OF SALES 28 (15,677) (5,171) GROSS PROFIT ,963 3,960 Other operating income 2,900 6,667 1,268 6,664 Administrative expenses (29,085) (21,637) (40,125) (76,023) OPERATING LOSS 29 (25,349) (14,474) (32,894) (65,399) Finance costs 30 (12,084) (12,761) (12,084) (12,761) Share of results of associate (10,288) (4,172) Loss before tax (47,721) (31,407) (44,978) (78,160) Taxation (1,024) (929) Net loss from continuing operations (46,973) (30,928) (46,002) (79,089) Discontinued Operations Net loss from discontinued operation 17 (433) (2,354) Net loss for the financial year (47,406) (33,282) (46,002) (79,089) Other comprehensive loss for the financial year, net of tax: Item that are or may be reclassified subsequently to profit or loss, net of tax - Foreign currency translation 1,659 (1,659) - Realisation of foreign exchange translation reserve arising from disposal of assets held for sale (1,911) (252) (1,659) Total comprehensive loss for the financial year (47,658) (34,941) (46,002) (79,089) Net loss attributable to: Owners of the Company (47,206) (32,918) (46,002) (79,089) Non-controlling interests (200) (364) (47,406) (33,282) (46,002) (79,089) Total comprehensive loss attributable to: Owners of the Company (47,458) (34,577) (46,002) (79,089) Non-controlling interests (200) (364) Loss per ordinary share (cents) 32 -basic for loss from continuing operations (12.60) (9.75) -basic for loss from discontinued operations (0.12) (0.74) -diluted (12.72) (10.49) (47,658) (34,941) (46,002) (79,089) The accompanying notes form an integral part of these financial statements.

38 Annual Report 2013 TADMAX RESOURCES BERHAD (8184-W) 37 Statements of Changes in Equity for the financial year ended 31st December 2013 Attributable to owners of the Company Non - Distributable Treasury ICULS ICULS Non- Share Share Treasury (equity (equity Other Accumulated controlling Capital Premium Shares component) component) Reserve Losses Total Interests Total Group Note RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 At 1st January ,901 1,104 (155) 74,720 (455) 2,987 (115,582) 250,520 28, ,030 Total comprehensive loss for the year (1,659) (32,918) (34,577) (364) (34,941) Conversion of ICULS 19 75, (74,720) 455 1,329 1,329 Subscription of shares by non-controlling interest At 31st December ,232 1,367 (155) 1,328 (148,500) 217,272 28, ,115 Total comprehensive loss for the year 1,659 (47,206) (45,547) (200) (45,747) Realisation of foreign exchange translation reserve arising from disposal of assets held for sale 17 (1,911) 1,911 Capital reduction 18 (181,616) 181,616 Issuance of shares 18 5,000 5,000 5,000 At 31st December ,616 1,367 (155) 1,076 (12,179) 176,725 28, ,368

39 TADMAX RESOURCES BERHAD (8184-W) Annual Report Statements of Changes in Equity for the financial year ended 31st December 2013 (cont d) Attributable to owners of the Company Non - Distributable Treasury ICULS ICULS Share Share Treasury (equity (equity Other Accumulated Capital Premium Shares component) component) Reserve Losses Total Company Note RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 At 1st January ,901 1,104 (155) 74,720 (455) 142,500 (194,332) 311,283 Total comprehensive loss for the financial year (79,089) (79,089) Conversion of ICULS 19 75, (74,720) 455 1,329 At 31st December ,232 1,367 (155) 142,500 (273,421) 233,523 Total comprehensive loss for the financial year (46,002) (46,002) Capital reduction 18 (181,616) 181,616 Issuance of shares 18 5,000 5,000 At 31st December ,616 1,367 (155) 142,500 (137,807) 192,521 The accompanying notes form an integral part of these financial statements.

40 Annual Report 2013 TADMAX RESOURCES BERHAD (8184-W) 39 Statements of Cash Flows for the financial year ended 31st December 2013 Group Company RM 000 RM 000 RM 000 RM 000 CASH FLOWS FROM OPERATING ACTIVITIES: Loss before tax from continuing operations (47,721) (31,407) (44,978) (78,160) Loss before tax from discontinued operations (433) (2,354) Loss before taxation (48,154) (33,761) (44,978) (78,160) Adjustments for: Amortisation of financial assets and financial liabilities - Continuing operations Discontinued operations 552 Amortisation of prepaid land lease payments - Continuing operations Discontinued operations Amortisation of prepaid land lease payments with cultivation rights 1,972 1,971 Depreciation - Continuing operations Discontinued operations 600 Dividend income (4,549) (2,700) Gain on disposal of discontinued operation (1,187) Gain on disposal of prepaid land lease payments (245) Gain on disposal of property, plant and equipment (255) (Gain)/loss on disposal of subsidiaries (200) 2,417 (Gain)/loss on recognition of financial assets (985) 1,587 (985) 1,587 Impairment loss on - associate 57,500 - subsidiary companies 4,067 6,852 - leasehold building 4,654 - receivables Interest expense - Continuing operations 12,084 12,761 12,084 12,761 - Discontinued operations 3 Interest income (20) (40) (19) (38) Loss on disposal of an associate 3,722 14,239 Property, plant and equipment written off 2 Unrealised loss/(gain) on foreign exchange - Continuing operations 12,092 (6,607) 11,043 (6,601) - Discontinued operations 426 Share of net results of associate 10,288 4,172 Operating loss before working capital changes carried forward (10,455) (12,840) (6,484) (8,612)

41 TADMAX RESOURCES BERHAD (8184-W) Annual Report Statements of Cash Flows for the financial year ended 31st December 2013 (cont d) Group Company RM 000 RM 000 RM 000 RM 000 Operating loss before working capital changes brought forward (10,455) (12,840) (6,484) (8,612) Changes in working capital: Inventories (542) (602) Contract customer (5) Receivables (14,639) 8,744 (10,596) 4,470 Payables 16,842 1,621 2,646 (234) Cash used in operations (8,799) (3,077) (14,434) (4,376) Interest received Interest paid (11,578) (14,632) (11,578) (14,629) Net of tax paid (46) (1,947) (1,137) (675) Net Operating Cash Flows (20,403) (19,616) (27,130) (19,642) CASH FLOWS FROM INVESTING ACTIVITIES: Additional investment in an associate company (225) (225) Dividend income 4,549 2,700 Fixed deposits pledged as security Investment in joint venture (14) (14) Investment in subsidiaries (Note 5) (1,000) Purchase of property, plant and equipment (Note A) (15) (4,266) (13) (152) Net cash inflow from disposal of subsidiaries (Note 5) Net cash outflow from disposal of assets held for sales (Note 17) (77) Proceeds on disposal of prepaid land lease payments 4,500 Proceeds on disposal of property, plant and equipment 7,500 Proceeds on disposal of an associate 2,943 2,943 Advance from/(repayment to) subsidiaries 17,209 (4,022) Net Investing Cash Flows 15,071 (3,828) 23,888 (1,713) CASH FLOWS FROM FINANCING ACTIVITIES: Advances from/(repayment to) a director 6,550 (428) 6,550 (458) Direct attributable borrowing costs 4,618 4,618 Repayment of hire purchase liabilities (111) (70) (111) (70) Repayment of term loan (7,910) (1,500) (7,910) (1,500) Term loan drawn down 5,500 19,000 5,500 19,000 Net Financing Cash Flows 4,029 21,620 4,029 21,590

42 Annual Report 2013 TADMAX RESOURCES BERHAD (8184-W) 41 Statements of Cash Flows for the financial year ended 31st December 2013 (cont d) Group Company RM 000 RM 000 RM 000 RM 000 NET CHANGE IN CASH AND CASH EQUIVALENTS (1,303) (1,824) EFFECT OF FOREIGN EXCHANGE RATE CHANGES 2,090 2,130 CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE FINANCIAL YEAR CASH AND CASH EQUIVALENTS AT THE END OF THE FINANCIAL YEAR 1, , ANALYSIS OF CASH AND CASH EQUIVALENTS: Continuing operations Fixed deposits with licensed banks Cash and bank balances , , Less : Fixed deposits held as security value (20) Add : Cash and cash equivalents from discontinued operations 41 1, , A: Purchase of property, plant and equipment Group Company RM 000 RM 000 RM 000 RM 000 Purchase of property, plant and equipment 15 4, Financed by hire purchase arrangements (585) (585) 15 4, The accompanying notes form an integral part of these financial statements.

43 TADMAX RESOURCES BERHAD (8184-W) Annual Report Notes to the Financial Statements 1. CORPORATE INFORMATION The principal activities of the Company are that of investment holding, the provision of management services and construction related activities. The principal activities of the subsidiaries are described in Note 5 to the financial statements. There have been no significant changes to the nature of these principal activities during the financial year. The Company is a public limited liability company, incorporated and domiciled in Malaysia and is listed on the Main Market of Bursa Malaysia Securities Berhad. The registered office and the principal place of business of the Company are located at No. 2D, Jalan SS 6/6, Kelana Jaya, Petaling Jaya, Selangor Darul Ehsan. The financial statements are expressed in Ringgit Malaysia (RM) and all values are rounded to the nearest thousand (RM 000) except when otherwise indicated. The financial statements were authorised for issue by the Board of Directors in accordance with a resolution of the Directors on 29th April SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 2.1 Basis of Preparation The financial statements of the Group and of the Company have been prepared in accordance with the Malaysian Financial Reporting Standards ( MFRSs ), International Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia. The financial statements of the Group and of the Company have been prepared under the historical cost basis, except as disclosed in the significant accounting policies in Note 2.3. The preparation of financial statements in conformity with MFRSs requires the use of certain critical accounting estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amounts of the revenue and expenses during the reported period. It also requires Directors to exercise their judgment in the process of applying the Group s and the Company s accounting policies. Although these estimates and judgment are based on the Directors best knowledge of current events and actions, actual results may differ. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in Note New and Revised MFRSs, Amendments/Improvements to MFRSs, New IC Interpretations ( IC Int ) and Amendments to IC Int (a) Adoption of New and Revised MFRSs, Amendments/Improvements to MFRSs, New IC Int and Amendments to IC Int The Group and the Company had adopted the following new and revised MFRSs, amendments/improvements to MFRSs, new IC Int and amendments to IC Int that are mandatory for the current financial year:- New MFRSs MFRS 10 MFRS 11 MFRS 12 MFRS 13 Consolidated Financial Statements Joint Arrangements Disclosure of Interests in Other Entities Fair Value Measurement

44 Annual Report 2013 TADMAX RESOURCES BERHAD (8184-W) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont d) 2.2 New and Revised MFRSs, Amendments/Improvements to MFRSs, New IC Interpretations ( IC Int ) and Amendments to IC Int (cont d) (a) Adoption of New and Revised MFRSs, Amendments/Improvements to MFRSs, New IC Int and Amendments to IC Int (cont d) Revised MFRSs MFRS 119 Employee Benefits MFRS 127 Separate Financial Statements MFRS 128 Investments in Associates and Joint Ventures Amendments/Improvements to MFRSs MFRS 1 First-time Adoption of Malaysian Financial Reporting Standards MFRS 7 Financial Instruments: Disclosures MFRS 10 Consolidated Financial Statements MFRS 11 Joint Arrangements MFRS 12 Disclosure of Interests in Other Entities MFRS 101 Presentation of Financial Statements MFRS 116 Property, Plant and Equipment MFRS 132 Financial Instruments: Presentation MFRS 134 Interim Financial Reporting New IC Int IC Int 20 Stripping Costs in the Production Phase of a Surface Mine Amendments to IC Int IC Int 2 Members Shares in Co-operative Entities & Similar Instruments The adoption of the above new and revised MFRSs, amendments/improvements to MFRSs, new IC Int and amendments to IC Int do not have any effect on the financial statements of the Group and of the Company except for those as discussed below:- MFRS 10 Consolidated Financial Statements and MFRS 127 Separate Financial Statements (Revised) MFRS 10 replaces the consolidation part of the former MFRS 127 Consolidated and Separate Financial Statements. The revised MFRS 127 will deal only with accounting for investment in subsidiaries, jointly controlled entities and associates in the separate financial statements of an investor and require the entity to account for such investments either at cost, or in accordance with MFRS 139 Financial Instruments: Recognition and Measurement. MFRS 10 brings about convergence between MFRS 127 and IC Int 12 Consolidation-Special Purpose Entities, which interprets the requirements of MFRS 10 in relation to special purpose entities. MFRS 10 introduces a new single control model to identify a parent-subsidiary relationship by specifying that an investor controls an investee when the investor is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. It provides guidance on situations when control is difficult to assess such as those involving potential voting rights, or in circumstances involving agency relationships, or where the investor has control over specific assets of the entity, or where the investee entity is designed in such a manner where voting rights are not the dominant factor in determining control. The Group adopted MFRS 10 in the current financial year. The adoption of MFRS 10 has no significant impact to the financial statements of the Group.

45 TADMAX RESOURCES BERHAD (8184-W) Annual Report SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont d) 2.2 New and Revised MFRSs, Amendments/Improvements to MFRSs, New IC Interpretations ( IC Int ) and Amendments to IC Int (cont d) (a) Adoption of New and Revised MFRSs, Amendments/Improvements to MFRSs, New IC Int and Amendments to IC Int (cont d) MFRS 11 Joint Arrangements MFRS 11 supersedes the former MFRS 131 Interests in Joint Ventures. Under MFRS 11, an entity accounts for its interest in a jointly controlled entity based on the type of joint arrangement, as determined based on an assessment of its rights and obligations arising from the arrangement. There are two types of joint arrangement namely joint venture or joint operation as specified in this new standard. A joint venture recognises its interest in the joint venture as an investment and account for its using the equity method. The proportionate consolidation method is disallowed in such joint arrangement. A joint operator accounts for the assets, liabilities, revenue and expenses related to its interest directly. The Group adopted MFRS 11 in the current financial year. The adoption of MFRS 11 has no significant impact to the financial statements of the Group. MFRS 12 Disclosures of Interests in Other Entities MFRS 12 is a single disclosure standard for interests in subsidiaries, jointly controlled entities, associates and unconsolidated structured entities. The disclosure requirements in this MFRS are aimed at providing standardised and comparable information that enable users of financial statements to evaluate the nature of, and risks associated with, the entity s interests in other entities, and the effects of those interests on its financial position, financial performance and cash flows. The requirements in MFRS 12 are more comprehensive than the previously existing disclosure requirements for subsidiaries. MFRS 13 Fair Value Measurement MFRS 13 defines fair value and sets out a framework for measuring fair value, and the disclosure requirements about fair value. This standard is intended to address the inconsistencies in the requirements for measuring fair value across different accounting standards. As defined in this standard, fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. As a result of the guidance in MFRS 13, the Group reassessed its policies for measuring fair values, in particular, its valuation inputs such as non-performance risk for fair values measurement of liabilities. Application of MFRS 13 has not materially impacted the fair value measurements of the Group. MFRS 13 requires more extensive disclosures. Additional disclosures where required, are provided in the individual notes relating to the assets and liabilities whose fair values were determined. Amendments to MFRS 101 Presentation of Financial Statements The amendments to MFRS 101 introduce a grouping of items presented in other comprehensive income. Items that will be reclassified to profit or loss at future point in time have to be presented separately from items that will not be reclassified. These amendments also clarify the difference between voluntary additional comparative information and the minimum required comparative information. An entity must include comparative information in the related notes to the financial statements when it voluntarily provides comparative information beyond the minimum required comparative period. The amendments clarify that the opening statement of financial position presented as a result of retrospective restatement or reclassification of items in financial statements does not have to be accompanied by comparative information in the related notes. As a result, the Group has not included comparative information in respect of the opening statement of financial position as at 1st January 2012.

46 Annual Report 2013 TADMAX RESOURCES BERHAD (8184-W) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont d) 2.2 New and Revised MFRSs, Amendments/Improvements to MFRSs, New IC Interpretations ( IC Int ) and Amendments to IC Int (cont d) (a) Adoption of New and Revised MFRSs, Amendments/Improvements to MFRSs, New IC Int and Amendments to IC Int (cont d) Amendments to MFRS 101 Presentation of Financial Statements (cont d) The amendments also introduce new terminology, whose use is not mandatory, for the statement of comprehensive income and income statement. Under the amendments, the statement of comprehensive income is renamed as the statement of profit or loss and other comprehensive income. The above amendments affect presentation only and have no impact on the Group s financial position or performance. MFRS 128 Investments in Associates and Joint Ventures (Revised) MFRS 128 (Revised) incorporates the requirements for accounting for joint ventures into the same accounting standard as that for accounting for investments in associates, as the equity method was applicable for both investments in joint ventures and associates. However, the revised standard exempts the investor from applying equity accounting where the investment in the associate or joint venture is held indirectly via venture capital organisations or mutual funds, unit trusts and similar entities. In such cases, the entity shall measure the investment at fair value through profit or loss, in accordance with MFRS 139 Financial Instruments: Recognition and Measurement. Amendments to MFRS 7 Financial Instruments: Disclosures Amendments to MFRS 7 addresses disclosures to include information that will enable users of an entity s financial statements to evaluate the effect or potential effect of netting arrangements, including rights of set-off associated with the entity s recognised financial assets and recognised financial liabilities, on the entity s financial position. Amendment to MFRS 116 Property, Plant and Equipment Amendment to MFRS 116 clarifies that items such as spare parts, stand-by equipment and servicing equipment are recognised as property, plant and equipment when they meet the definition of property, plant and equipment. Otherwise, such items are classified as inventory. Amendments to MFRS 10 Consolidated Financial Statements, MFRS 11 Joint Arrangements and MFRS 12 Disclosure of Interests in Other Entities Amendments to MFRS 10 clarifies that the date of initial application is the beginning of the annual reporting period for which this MFRS is applied for the first time. Consequently, an entity is not required to make adjustments to the previous accounting if the consolidation conclusion reached upon the application of MFRS 10 is the same as previous accounting or the entity had disposed of its interests in investees during a comparative period. When applying MFRS 10, these amendments also limit the requirement to present quantitative information required by Paragraph 28(f) of MFRS 108 Accounting Policies, Changes in Accounting Estimates and Errors to the annual period immediately preceding the date of initial application. A similar relief is also provided in MFRS 11 and MFRS 12. Additionally, entities would no longer be required to provide disclosures for unconsolidated structured entities in periods prior to the first annual period that MFRS 12 is applied.

47 TADMAX RESOURCES BERHAD (8184-W) Annual Report SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont d) 2.2 New and Revised MFRSs, Amendments/Improvements to MFRSs, New IC Interpretations ( IC Int ) and Amendments to IC Int (cont d) (a) Adoption of New and Revised MFRSs, Amendments/Improvements to MFRSs, New IC Int and Amendments to IC Int (cont d) Amendments to MFRS 10 Consolidated Financial Statements, MFRS 11 Joint Arrangements and MFRS 12 Disclosure of Interests in Other Entities (cont d) If, upon applying MFRS 10, an entity conclude that it shall consolidate an investee that was not previously consolidated and that control was obtained before the effective date of the revised versions of these standards issued by the Malaysian Accounting Standards Board in November 2011, these amendments also clarify that an entity can apply the earlier versions of MFRS 3 Business Combinations and MFRS 127. These amendments are not expected to have any significant impact on the financial results and position of the Group and the Company. Amendment to MFRS 132 Financial Instruments: Presentation Amendment to MFRS 132 clarifies that income tax relating to distributions to holders of an equity instrument and to transaction costs of an equity transaction shall be accounted for in accordance with MFRS 112 Income Taxes. (b) New MFRS, Amendments/Improvements to MFRSs and New IC Int that are issued, but not yet effective and have not been early adopted The Group and the Company have not adopted the following new MFRS, amendments/improvements to MFRSs and new IC Int that have been issued by the Malaysian Accounting Standards Board ( MASB ) as at the date of authorisation of these financial statements but are not yet effective for the Group and the Company:- Effective for financial periods beginning on or after New MFRS MFRS 9 Financial Instruments To be announced by the MASB Amendments/Improvements to MFRSs MFRS 1 First-time Adoption of Malaysian Financial Reporting Standards 1st July 2014 MFRS 2 Share-based Payment 1st July 2014 MFRS 3 Business Combinations 1st July 2014 MFRS 7 Financial Instruments: Disclosures Applies when MFRS 9 is applied MFRS 8 Operating Segments 1st July 2014 MFRS 9 Financial Instruments To be announced by the MASB MFRS 10 Consolidated Financial Statements 1st January 2014 MFRS 12 Disclosure of Interests in Other Entities 1st January 2014 MFRS 13 Fair Value Measurement 1st July 2014 MFRS 116 Property, Plant and Equipment 1st July 2014 MFRS 119 Employee Benefits 1st July 2014 MFRS 124 Related Party Disclosures 1st July 2014 MFRS 127 Separate Financial Statements 1st January 2014 MFRS 132 Financial Instruments: Presentation 1st January 2014 MFRS 136 Impairment of Assets 1st January 2014

48 Annual Report 2013 TADMAX RESOURCES BERHAD (8184-W) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont d) 2.2 New and Revised MFRSs, Amendments/Improvements to MFRSs, New IC Interpretations ( IC Int ) and Amendments to IC Int (cont d) (b) New MFRS, Amendments/Improvements to MFRSs and New IC Int that are issued, but not yet effective and have not been early adopted (cont d) Effective for financial periods beginning on or after Amendments/Improvements to MFRSs (cont d) MFRS 138 Intangible Assets 1st July 2014 MFRS 139 Financial Instruments: Recognition and Measurement 1st January 2014 MFRS 139 Financial Instruments: Recognition and Measurement Applies when MFRS 9 is applied MFRS 140 Investment Property 1st July 2014 New IC Int IC Int 21 Levies 1st January 2014 A brief discussion on the above significant new MFRS, amendments/improvements to MFRSs and new IC Int are summarised below. Due to the complexity of these new standards, the financial effects of their adoption are currently still being assessed by the Group and the Company. MFRS 9 Financial Instruments MFRS 9 specifies how an entity should classify and measure financial assets and financial liabilities. This standard requires all financial assets to be classified based on how an entity manages its financial assets (its business model) and the contractual cash flow characteristics of the financial asset. Financial assets are to be initially measured at fair value. Subsequent to initial recognition, depending on the business model under which these assets are acquired, they will be measured at either fair value or at amortised cost. In respect of the financial liabilities, the requirements are generally similar to the former MFRS 139. However, this standard requires that for financial liabilities designated as at fair value through profit or loss, changes in fair value attributable to the credit risk of that liability are to be presented in other comprehensive income, whereas the remaining amount of the change in fair value will be presented in the profit or loss. MFRS 9 Financial Instruments (Hedge Accounting and amendments to MFRS 9, MFRS 7 and MFRS 139) The new hedge accounting model represents a substantial overhaul of hedge accounting that will enable entities to better reflect their risk management activities in their financial statements. The most significant improvements apply to those that hedge non-financial risk, and they are expected to be of particular interest to non-financial institutions. As a result of these changes, users of the financial statements will be provided with better information about risk management and about the effect of hedge accounting on the financial statements. The MFRS 9 hedge accounting model, if adopted, applies prospectively with limited exceptions. As part of the Amendments, an entity is now allowed to change the accounting for liabilities that it has elected to measure at fair value, before applying any of the other requirements in MFRS 9. This change in accounting would mean that gains caused by a worsening in the entity s own credit risk on such liabilities are no longer recognised in profit or loss. The Amendments will facilitate earlier application of this long-awaited improvement to financial reporting. The Amendments also remove the mandatory effective date from MFRS 9.

49 TADMAX RESOURCES BERHAD (8184-W) Annual Report SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont d) 2.2 New and Revised MFRSs, Amendments/Improvements to MFRSs, New IC Interpretations ( IC Int ) and Amendments to IC Int (cont d) (b) New MFRS, Amendments/Improvements to MFRSs and New IC Int that are issued, but not yet effective and have not been early adopted (cont d) Amendments to MFRS 3 Business Combinations Amendments to MFRS 3 clarifies that when contingent consideration meets the definition of financial instrument, its classification as a liability or equity is determined by reference to MFRS 132 Financial Instruments: Presentation. It also clarifies that contingent consideration that is classified as an asset or a liability shall be subsequently measured at fair value at each reporting date and changes in fair value shall be recognised in profit or loss. In addition, amendments to MFRS 3 clarifies that MFRS 3 excludes from its scope the accounting for the formation of all types of joint arrangements (as defined in MFRS 11 Joint Arrangements) in the financial statements of the joint arrangement itself. Amendments to MFRS 8 Operating Segments Amendments to MFRS 8 require an entity to disclose the judgements made by management in applying the aggregation criteria to operating segments. This includes a brief description of the operating segments that have been aggregated and the economic indicators that have been assessed in determining that the aggregated operating segments share similar economic characteristics. The Amendments also clarifies that an entity shall provide reconciliations of the total of the reportable segments assets to the entity s assets if the segment assets are reported regularly to the chief operating decision maker. Amendments to MFRS 10 Consolidated Financial Statements, MFRS 12 Disclosure of Interests in Other Entities and MFRS 127 Separate Financial Statements Amendments to MFRS 10 introduce an exception to the principle that all subsidiaries shall be consolidated. The amendments define an investment entity and require a parent that is an investment entity to measure its investment in particular subsidiaries at fair value through profit or loss in accordance with MFRS 139 Financial Instruments: Recognition and Measurement instead of consolidating those subsidiaries in its consolidated financial statements. Consequently, new disclosure requirements related to investment entities are introduced in amendments to MFRS 12 and MFRS 127. In addition, amendments to MFRS 127 also clarifies that if a parent is required, in accordance with paragraph 31 of MFRS 10, to measure its investment in a subsidiary at fair value through profit or loss in accordance with MFRS 139, it shall also account for its investment in that subsidiary in the same way in its separate financial statements. Amendments to MFRS 13 Fair Value Measurement Amendments to MFRS 13 relates to the IASB s Basis for Conclusions which is not an integral part of the Standard. The Basis for Conclusions clarifies that when IASB issued IFRS 13, it did not remove the practical ability to measure short-term receivables and payables with no stated interest rate at invoice amounts without discounting, if the effect of discounting is immaterial. The Amendments also clarifies that the scope of the portfolio exception of MFRS 13 includes all contracts accounted for within the scope of MFRS 139 Financial Instruments: Recognition and Measurement or MFRS 9 Financial Instruments, regardless of whether they meet the definition of financial assets or financial liabilities as defined in MFRS 132 Financial Instruments: Presentation.

50 Annual Report 2013 TADMAX RESOURCES BERHAD (8184-W) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont d) 2.2 New and Revised MFRSs, Amendments/Improvements to MFRSs, New IC Interpretations ( IC Int ) and Amendments to IC Int (cont d) (b) New MFRS, Amendments/Improvements to MFRSs and New IC Int that are issued, but not yet effective and have not been early adopted (cont d) Amendments to MFRS 116 Property, Plant and Equipment and MFRS 138 Intangible Assets Amendments to MFRS 116 and MFRS 138 clarify the accounting for the accumulated depreciation/amortisation when an asset is revalued. It clarifies that: the gross carrying amount is adjusted in a manner that is consistent with the revaluation of the carrying amount of the asset; and the accumulated depreciation/amortisation is calculated as the difference between the gross carrying amount and the carrying amount of the asset after taking into account accumulated impairment losses. Amendments to MFRS 124 Related Party Disclosures Amendments to MFRS 124 clarifies that an entity providing key management personnel services to the reporting entity or to the parent of the reporting entity is a related party of the reporting entity. Amendments to MFRS 132 Financial Instruments: Presentation Amendments to MFRS 132 do not change the current offsetting model in MFRS 132. The amendments clarify the meaning of currently has a legally enforceable right of set-off, that the right of set-off must be available today (not contingent on a future event) and legally enforceable for all counterparties in the normal course of business. The amendments clarify that some gross settlement mechanisms with features that are effectively equivalent to net settlement will satisfy the MFRS 132 offsetting criteria. Amendments to MFRS 136 Impairment of Assets Amendments to MFRS 136 clarifies that disclosure of the recoverable amount (based on fair value less costs of disposal) of an asset or cash generating unit is required to be disclosed only when an impairment loss is recognised or reversed. In addition, there are new disclosure requirements about fair value measurement when impairment or reversal of impairment is recognised. Amendments to MFRS 139 Financial Instruments: Recognition and Measurement Amendments to MFRS 139 provides relief from discontinuing hedge accounting in a situation where a derivative, which has been designated as a hedging instrument, is novated to effect clearing with a central counterparty as a result of laws or regulation, if specific conditions are met. As a result of the amendments, continuation of hedge accounting is permitted if as a consequence of laws or regulations, the parties to hedging instrument agree to have one or more clearing counterparties replace their original counterparty and the changes to the terms arising from the novation are consistent with the terms that would have existed if the novated derivative were originally cleared with the central counterparty.

51 TADMAX RESOURCES BERHAD (8184-W) Annual Report SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont d) 2.3 Significant Accounting Policies Subsidiaries and Basis of Consolidation Subsidiaries are entities, including structured entities, controlled by the Company. The financial statements of subsidiaries are included in the consolidated financial statements from the date the control commences until the date that control ceases. The Group adopted MFRS 10 Consolidated Financial Statements in the current financial year. This resulted in changes to the following policies: Control exists when the Group is exposed, or has rights, to variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. In the previous years, control exists when the Group has the ability to exercise its power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. Potential voting rights are considered when assessing control only when such rights are substantive. In the previous financial years, potential voting rights are considered when assessing control when such rights are presently exercisable. 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. In the previous financial years, the Group did not consider de facto power in its assessment of the control. The adoption of MFRS 10 has no significant impact to the financial statements of the Group. Investments in subsidiaries are measured in the Company s statement of financial position at cost less any impairment losses, unless the investment is classified as held for sale or distribution. The cost of investments includes transaction costs. Transaction costs, other than those associated with the issue of debt or equity securities, that the Group incurs in connection with a business combination are expensed as incurred. Subsidiaries are consolidated from the date of acquisition, being the date on which the Group obtains control, and continue to be consolidated until the date such control ceases. The consolidated financial statements comprise the financial statements of the Company and its subsidiaries as at the end of the reporting period. The financial statements of the subsidiaries used in the preparation of the consolidated financial statements are prepared for the same reporting date as the Company. Consistent accounting policies are applied to like transactions and events in similar circumstances. All intra-group balances and transactions, and any unrealised income and expenses arising from intra-group transactions are eliminated in full. The Group treats all changes in ownership interest in a subsidiary that do not result in a loss of control as equity transactions between the Group and its non-controlling interest holders. Any difference between the Group s share of net assets before and after the change, and any consideration received or paid, is adjusted to or against Group reserves.

52 Annual Report 2013 TADMAX RESOURCES BERHAD (8184-W) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont d) 2.3 Significant Accounting Policies (cont d) Subsidiaries and Basis of Consolidation (cont d) Upon the loss of control of a subsidiary, the Group derecognises the assets and liabilities of the subsidiary, any non-controlling interests and the other components of equity related to the subsidiary. Any surplus or deficit arising on the loss of control is recognised in profit or loss. If the Group retains any interest in the previous subsidiary, then such interest is measured at fair value at the date that control is lost. Subsequently, it is accounted for as an equity accounted investee or as an available-for-sale financial asset depending on the level of influence retained. Non-controlling interests at the end of the reporting period, being the equity in a subsidiary not attributable directly or indirectly to the equity holders of the Company, are presented in the consolidated statement of financial position and statement of changes in equity within equity, separately from equity attributable to the owners of the Company. Non-controlling interests in the results of the Group is presented in the consolidated statement of profit or loss and other comprehensive income as an allocation of the profit or loss and the comprehensive income for the year between non-controlling interests and owners of the Company. Losses applicable to the non-controlling interests in a subsidiary are allocated to the non-controlling interests even if doing so causes the non-controlling interests to have a deficit balance Goodwill i. Acquisition before 1st January 2006 Goodwill arising on acquisition represents the excess of the cost of the acquisition over the Group s interest in the fair values of the net identifiable assets and liabilities. ii. Acquisition between 1st January 2006 and 1st January 2011 Goodwill arising on acquisition represents the excess of the cost of the acquisition over the Group s interest in the recognised amount (generally fair value) of the identifiable assets, liabilities and contingent liabilities of the acquiree. When the excess was negative, a bargain purchase gain was recognised immediately in profit or loss. iii. Acquisition on or after 1st January 2011 For acquisitions on or after 1st January 2011, the Group measures the cost of goodwill at the acquisition date as: the fair value of the consideration transferred; plus the recognised amount of any non-controlling interests in the acquire; plus if the business combination is achieved in stages, the fair value of the existing equity interest in the acquiree; less the net recognised amount (generally fair value) of the identifiable assets acquired and liabilities assumed. When the excess is negative, a bargain purchase gain is recognised immediately in profit or loss.

53 TADMAX RESOURCES BERHAD (8184-W) Annual Report SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont d) 2.3 Significant Accounting Policies (cont d) Associates Associates are those companies in which the Group has long term equity interests and where it exercises significant influence over the financial and operating policies. Investments in associates are accounted for in the consolidated financial statements using the equity method of accounting based on the audited or management financial statements of the associates. Under the equity method of accounting, the Group share of post-acquisition profit or losses and other comprehensive income of associates during the financial year are included in the consolidated profit or loss. The Group s interest in an associate is carried in the consolidated statement of financial position at cost plus the Group s share of post-acquisition profit or loss and other comprehensive income and other reserves as well as goodwill on acquisition. Equity accounting is discontinued when the carrying amount of the investment in associate reached zero, unless the Group has incurred obligations or guaranteed obligations in respect of the associate. Any excess of the cost of an acquisition over the fair value of the Group s share of the acquired company at the date of acquisition represents goodwill or premium arising from an acquisition. Goodwill on acquisition is included in the carrying amount of the investment and will be reviewed at each reporting date and will be written down for impairment when it is considered necessary. Any excess of the fair value of the Group s share of net assets of the acquired company over the cost of acquisition is excluded from the carrying amount of the investment and is instead included as income in the determination of investor s share of the associate s profit or loss in the period in which the investment is acquired. Unrealised gains on transactions between the Group and the associate are eliminated to the extent of the Group s interest in the companies. Unrealised losses are eliminated unless cost cannot be recovered. When the Group ceases to have significant influence over an associate, any retained interest in the former associate at the date when significant influence is lost is measured at fair value and this amount is regarded as the initial carrying amount of a financial asset. The difference between the fair value of any retained interest plus proceeds from the interest disposed of and the carrying amount of the investment at the date when equity method is discontinued is recognised in profit or loss. When the Group s interest in an associate decreases but does not result in a loss of significant influence, any retained interest is not re-measured. Any gain or loss arising from the decrease in interest is recognised in profit or loss. Any gains or losses previously recognised in other comprehensive income are also reclassified proportionately to the profit or loss if that gain or loss would be required to be reclassified to profit or loss on the disposal of the related assets and liabilities Joint Arrangements Joint arrangement are arrangements of which the Group has the joint control, established by contracts required unanimous consent for decisions about the activities that significantly affect the arrangements returns. The Group adopted MFRS 11, Joint Arrangements in the current financial year. As a result, joint arrangements are classified and accounted for as follows: A joint arrangement is classified as joint operation when the Group or the Company has rights to the assets and obligations for the liabilities relating to an arrangement. The Group and the Company account for each of its share of the assets, liabilities and transactions, including its share of those held or incurred jointly with the other investors, in relation to the joint operation.

54 Annual Report 2013 TADMAX RESOURCES BERHAD (8184-W) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont d) 2.3 Significant Accounting Policies (cont d) Joint Arrangements (cont d) A joint arrangement is classified as joint venture when the Group has rights only to the net assets of the arrangements. The Group accounted for its interest in joint venture using the equity method. In the previous financial year, joint arrangements were classified and accounted for as follows: For joint controlled entity, the Group accounted for its interest using the equity method. For joint controlled assets or joint controlled operation, the Group and the Company accounted for each its share of the assets, liabilities and transactions, including its share of those held or incurred jointly with the other investors. The change in accounting policy has been made retrospectively and in accordance with the transitional provision of MFRS 11. The adoption of MFRS 11 has no significant impact to the financial statements of the Group Investments Investments in subsidiaries, associates, joint venture and other investments are stated at cost less impairment losses, if any. On disposal of an investment, the difference between net disposal proceeds and its carrying amount is recognised in the profit or loss Property, Plant and Equipment (i) Recognition and measurement Items of property, plant and equipment are measured at cost less any accumulated depreciation and any accumulated impairment losses. Cost includes expenditures that are directly attributable to the acquisition of the asset and any other costs directly attributable to bringing the asset to working condition for its intended use, and the costs of dismantling and removing the items and restoring the site on which they are located. The cost of selfconstructed assets also includes the cost of materials and direct labour. For qualifying assets, borrowing costs are capitalised in accordance with the accounting policy on borrowing costs. Cost also may include transfer from equity of any gain or loss on qualifying cash flow hedges of foreign currency purchases of property, plant and equipment. The cost of property, plant and equipment recognised as a result of a business combination is based on fair value at acquisition date. The fair value of property is the estimated amount for which a property could be exchanged between knowledgeable willing parties in an arm s length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion. The fair value of other items of plant and equipment is based on the quoted market prices for similar items when available and replacement cost when appropriate. When significant parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment. The gain or loss on disposal of an item of property, plant and equipment is determined by comparing the proceeds from disposal with the carrying amount of property, plant and equipment and is recognised net within other income and other expenses respectively in profit or loss.

55 TADMAX RESOURCES BERHAD (8184-W) Annual Report SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont d) 2.3 Significant Accounting Policies (cont d) Property, Plant and Equipment (cont d) (ii) Subsequent costs The cost of replacing a component of an item of property, plant and equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the component will flow to the Group or the Company, and its cost can be measured reliably. The carrying amount of the replaced component is derecognised to profit or loss. The costs of the day-to-day servicing of property, plant and equipment is recognised in profit or loss as incurred. (iii) Depreciation Depreciation is based on the cost of an asset less its residual value. Significant components of individual assets are assessed, and if a component has a useful life that is different from the remainder of that asset, then that component is depreciated separately. Depreciation is recognised in profit or loss on a straight-line basis over the estimated useful lives of each component of an item of property, plant and equipment. Leased assets are depreciated over the shorter of the lease term and their useful lives unless it is reasonably certain that the Group will obtain ownership by the end of lease term. Freehold land is not depreciated. Property, plant and equipment under construction are not depreciated until the assets are ready for their intended use. The estimated useful lives for the current and comparative period as follow: Buildings 2% Plant and machinery 10% Staff quarters 20% Motor vehicles 20% Furniture and fittings, office equipment, computer equipment, telecommunication and electrical equipment 10% - 20% Depreciation methods, useful lives and residual values are reviewed at the end of the reporting period, and adjusted as appropriate Timber Concession Rights Timber concession rights for the Group are stated at the fair value of the timber concession rights as at the date of acquisition of the subsidiary, inclusive of development expenditure. The timber concession rights are amortised annually using percentage of the volume of timber extracted compared to the total estimated volume of timber available for extraction Prepaid Land Lease Payments with Cultivation Rights Prepaid land lease payments with cultivation rights are stated at fair value as at the date of acquisition of the subsidiary. The prepaid land lease payments with cultivation rights are amortised annually on a straight line basis over the tenure of the land lease, being 35 years, from the date at which use of the land commences.

56 Annual Report 2013 TADMAX RESOURCES BERHAD (8184-W) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont d) 2.3 Significant Accounting Policies (cont d) Inventories Inventories are valued at the lower of cost and net realisable value. (i) Cost is determined on the weighted average basis. Net realisable value is the estimated selling price in the ordinary course of business less the estimated cost of completion and applicable variable selling expenses. In arriving at net realisable value, due allowance is made for all obsolete and slow moving items. (ii) Land held for future development Land held for development comprise costs associated with the acquisition of land and all costs that are directly attributable to development activities or that can be allocated on a reasonable basis to such activities Provisions for Liabilities Provisions for liabilities are recognised when the Group has a present obligation as a result of a past event and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate of the amount can be made. Provisions are reviewed at each reporting date and adjusted to reflect the current best estimate. Where the effect of the time value of money is material, the amount of a provision is the present value of the expenditure expected to be required to settle the obligation. If it is no longer probable that an outflow of resources embodying economic benefits will be required to settle the obligation, the provision is reversed to the profit or loss Share Capital Ordinary shares are recorded at the nominal value and the consideration in excess of nominal value of shares issued, if any, is accounted for as share premium. Both ordinary shares and share premium are classified as equity. Dividends on ordinary shares are recognised as liabilities when proposed or declared before the reporting date. A dividend proposed or declared after the reporting date, but before the financial statements are authorised for issue, is not recognised as a liability at the reporting date. Costs incurred directly attributable to the issuance of the shares are accounted for as a deduction from share premium, if any, otherwise they are charged to the profit or loss. Equity transaction costs comprise only those incremental external costs directly attributable to the equity transaction which would otherwise have been avoided Irredeemable Convertible Unsecured Loan Stock ( ICULS ) ICULS with fixed coupon rates are regarded as compound instruments consisting predominantly of an equity component and the remainder, a liability component.

57 TADMAX RESOURCES BERHAD (8184-W) Annual Report SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont d) 2.3 Significant Accounting Policies (cont d) Treasury ICULS ICULS repurchased held as treasury ICULS are accounted for on the cost method and presented as a deduction from equity and liability components according to the original allocation to separate the components when the ICULS were issued Treasury Shares Shares repurchased held as treasury shares are accounted for on the cost method and presented as a deduction from equity. Should such shares be cancelled, their nominal amounts will be eliminated, and the differences between their cost and nominal amounts will be taken to reserves as appropriate. When such shares are subsequently sold, any consideration received, net of any directly attributable incremental external cost and the related tax effects, is recognised in equity Land Use Rights Land use rights are initially measured at cost. Following initial recognition, land use rights are measured at cost less accumulated amortisation and accumulated impairment losses. The land use rights are amortised over their lease terms Foreign Currency Translation The individual financial statements of each entity in the Group are measured using the currency of the primary economic environment in which the entity operates ( the functional currency ). The financial statements are presented in Ringgit Malaysia ( RM ), which is the Company s functional currency and presentation currency. Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the profit or loss. Non-monetary items which are measured at fair values denominated in foreign currencies are translated at the foreign exchange rate ruling at the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated. When a gain or loss on a non-monetary item is recognised directly in equity, any corresponding exchange gain or loss is recognised directly in equity. When a gain or loss on a non-monetary item is recognised in the profit or loss, any corresponding exchange gain or loss is recognised in the profit or loss. The results and financial position of all the group entities (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows:- Assets and liabilities for each statement of financial position presented are translated at the closing rate at the date of that statement of financial position; Income and expenses for each profit or loss are translated at average exchange rates (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the rate on the dates); and All resulting exchange differences are recognised as a separate component of equity.

58 Annual Report 2013 TADMAX RESOURCES BERHAD (8184-W) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont d) 2.3 Significant Accounting Policies (cont d) Foreign Currency Translation (cont d) On consolidation, exchange differences arising from the translation of the net investment in foreign operations are taken to other comprehensive income. When a foreign operation is partially disposed of or sold, exchange differences that were recorded in equity are recognised in the profit or loss as part of the gain or loss on sale. Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate. The principal closing rates used in translation of foreign currency amounts are as follows: Foreign currency RM RM 1 US Dollar Chinese Renminbi N/A Singapore Dollar Indonesian Rupiah Leases I. Finance leases Leases in terms of which the Group or the Company assumes substantially all the risks and rewards of ownership are classified as finance lease. Upon initial recognition, the leased asset is measured at an amount equal to the lower of its fair value and the present value of the minimum lease payments. Subsequent to the initial recognition, the asset is accounted for in accordance with the accounting policy applicable to that asset. Minimum lease payments made under finance leases are apportioned between the finance expense and the reduction of the outstanding liability. The finance expense is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of liability. Leasehold land which in substance is a finance lease is classified as property, plant and equipment, or as investment property if held to earn rental income or for capital appreciation or for both. ii. Operating leases Leases, where the Group or the Company does not assume substantially all the risks and rewards of ownership are classified as operating leases and except for property interest held under operating lease, the leased assets are not recognised on the statement of financial position. Property interest held under an operating lease, which is held to earn rental income or for capital appreciation or both, is classified as investment property and measured using fair value model. Payments made under operating leases are recognised in profit or loss on a straight-line basis over the term of the lease. Lease incentives received are recognised in profit or loss as an integral part of the total lease expense, over the term of the lease. Leasehold land which is substance is an operating lease is classified as prepaid lease payments.

59 TADMAX RESOURCES BERHAD (8184-W) Annual Report SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont d) 2.3 Significant Accounting Policies (cont d) Revenue Recognition Revenue is recognised when it is probable that the economic benefits associated with the transaction will flow to the enterprise and the amount of the revenue can be measured reliably. (i) Revenue from trading Revenue from sales of goods is recognised upon delivery of products and services upon customers acceptance. (ii) Construction contracts Contract revenue includes the initial amount agreed in the contract plus any variations in contract work, claims and incentive payments, to the extent that is probable that they will result in revenue and can be measured reliably. As soon as the outcome of a construction contract can be estimated reliably, contract revenue and contract cost are recognised in profit or loss in proportion to the stage of completion of the contract. Contract expenses are recognised as incurred unless they create an asset related to future contract activity. The stage of completion is assessed by reference to the proportion that contract costs incurred for work performed to-date bear to the estimated total contract costs. When the outcome of a construction cost cannot be estimated reliably, contract revenue is recognised only to the extent of contract costs incurred that are likely to be recoverable. An expected loss on a contract is recognised immediately in profit or loss. (iii) Revenue from management services Revenue from services rendered is recognised net of service taxes and discounts as and when the services are performed. (iv) Dividend income Dividend income is recognised when the right to receive payment is established. (v) Interest income Interest income is recognised on an accrual basis Employee Benefits (i) Short term employee benefits Wages, salaries, social security contributions, bonuses and non-monetary benefits are accrued in the period in which the associated services are rendered by the employees. (ii) Post-employment benefits The Group contributes to the Employees Provident Fund, the national defined contribution plan. The contributions are charged to the profit or loss in the period to which they are related. Once the contributions have been paid, the Group has no further payment obligations.

60 Annual Report 2013 TADMAX RESOURCES BERHAD (8184-W) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont d) 2.3 Significant Accounting Policies (cont d) Interest-Bearing Borrowings Interest bearing bank loans and overdrafts are recorded at the amount of the proceeds received, net of transaction costs. Borrowing costs directly attributable to the acquisition and construction of development properties are capitalised as part of cost of those assets, until such time as the assets are ready for their intended used or sale. All other borrowing costs are charged to the profit or loss as an expense in the period in which they are incurred Taxation The tax expense on the profit or loss represents the aggregate amount of current tax and deferred tax. Current tax is the expected amount of income taxes payable in respect of the taxable profit for the year and is measured using the tax rates that have been enacted at the reporting date. Deferred tax is provided for, using the liability method, on temporary differences at the reporting date arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. In principle, deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets are recognised for all deductible temporary differences, unused tax losses and unused tax credits to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, unused tax losses and unused tax credits can be utilised. Deferred tax is not recognised if the temporary difference arises from goodwill or negative goodwill or from the initial recognition of an asset or liability in a transaction which is not a business combination and at the time of the transaction, affects neither accounting profit nor taxable profit. Deferred tax is measured at the tax rates that are expected to apply in the period when the asset is realised or the liability is settled, based on tax rates that have been enacted or substantively enacted at the reporting date. Deferred tax is recognised in the profit or loss, except when it arises from a transaction which is recognised directly in equity, in which case the deferred tax is also charged or credited directly in equity, or when it arises from a business combination that is an acquisition, in which case the deferred tax is included in the resulting goodwill or negative goodwill Financial Assets Financial assets are recognised in the statement of financial position when, and only when, the Group or the Company become a party to the contractual provisions of the financial instrument. When financial assets are recognised initially, they are measured at fair value, plus, in the case of financial assets not at fair value through profit or loss, directly attributable transaction costs. The Group and the Company determine the classification of their financial assets at initial recognition, and the categories include financial assets at fair value through profit or loss, loans and receivables, held-to-maturity investments and available-for-sale financial assets. (i) Financial Assets at Fair Value through Profit or Loss Financial assets are classified as financial assets at fair value through profit or loss if they are held for trading or are designated as such upon initial recognition. Financial assets held for trading are derivatives (including separated embedded derivatives) or financial assets acquired principally for the purpose of selling in the near future.

61 TADMAX RESOURCES BERHAD (8184-W) Annual Report SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont d) 2.3 Significant Accounting Policies (cont d) Financial Assets (cont d) (i) Financial Assets at Fair Value through Profit or Loss (cont d) Subsequent to initial recognition, financial assets at fair value through profit or loss are measured at fair value. Any gains or losses arising from changes in fair value are recognised in profit or loss. Net gains and losses on financial assets at fair value through profit or loss do not include exchange differences, interest and dividend income. Exchange differences, interest and dividend income on financial assets at fair value through profit or loss are recognised separately in profit or loss as part of other losses or other income. Financial assets at fair value through profit or loss could be presented as current or non-current. Financial assets that are held primarily for trading purposes are presented as current whereas financial assets that are not held primarily for trading purposes are presented as current or non-current based on the settlement date. (ii) Loan and Receivables Financial assets with fixed or determinable payments that are not quoted in an active market are classified as loans and receivables. Subsequent to initial recognition, loans and receivables are measured at amortised cost using the effective interest method. Gains and losses are recognised in profit or loss when the loans and receivables are de-recognised or impaired, and through the amortisation process. Loans and receivables are classified as current assets, except for those having maturity dates later than 12 months after the reporting date which are classified as non-current. (iii) Held-to-Maturity Investments Financial assets with fixed or determinable payments and fixed maturity are classified as held to maturity when the Group and the Company have the positive intention and ability to hold the investment to maturity. Subsequent to initial recognition, held-to-maturity investments are measured at amortised cost using the effective interest method. Gains and losses are recognised in profit or loss when the held-to-maturity investments are de-recognised or impaired, and through the amortisation process. Held-to-maturity investments are classified as non-current assets, except for those having maturity within 12 months after the reporting date which are classified as current. (iv) Available-for-Sale Financial Assets Available-for-sale are financial assets that are designated as available for sale or are not classified in any of the three preceding categories. After initial recognition, available-for-sale financial assets are measured at fair value. Any gains or losses from changes in fair value of the financial assets are recognised in other comprehensive income, except for impairment losses, foreign exchange gains and losses on monetary instruments and interest calculated using the effective interest method, which are recognised in profit or loss. The cumulative gain or loss previously recognised in other comprehensive income is reclassified from equity to profit or loss as a reclassification adjustment when the financial asset is de-recognised. Interest income calculated

62 Annual Report 2013 TADMAX RESOURCES BERHAD (8184-W) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont d) 2.3 Significant Accounting Policies (cont d) Financial Assets (cont d) (iv) Available-for-Sale Financial Assets (cont d) 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 and the Company s right to receive payment is established. Investments in equity instruments whose fair value cannot be reliably measured are measured at cost less impairment loss. Available-for-sale financial assets are classified as non-current assets unless they are expected to be realised within 12 months after the reporting date. A financial asset is derecognised when the contractual right to receive cash flows from the asset has expired. On de-recognition of a financial asset in its entirety, the difference between the carrying amount and the sum of the consideration received and any cumulative gain or loss that had been recognised in other comprehensive income is recognised in profit or loss. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the period generally established by regulation or convention in the marketplace concerned. All regular way purchases and sales of financial assets are recognised and de-recognised on the trade date i.e. the date that the Company commits to purchase or sell the asset Financial Liabilities Financial liabilities are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability. Financial liabilities are recognised in the statement of financial position when, and only when, the Group and the Company become a party to the contractual provisions of the financial instrument. Financial liabilities are classified as either financial liabilities at fair value through profit or loss or other financial liabilities. (i) Financial Liabilities at Fair Value Through Profit or Loss Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss. Financial liabilities held for trading include derivatives entered into by the Group and the Company that do not meet the hedge accounting criteria. Derivative liabilities are initially measured at fair value and subsequently stated at fair value, with any resulted gains or losses recognised in profit or loss. Net gains or losses on derivatives include exchange differences. The Group and the Company have not designated any financial liabilities as fair value through profit or loss. (ii) Other Financial Liabilities The Group s and the Company s other financial liabilities include trade and other payables, loans and borrowings. Trade and other payables are recognised initially at fair value plus directly attributable transaction costs and are subsequently measured at amortised cost using the effective interest method.

63 TADMAX RESOURCES BERHAD (8184-W) Annual Report Significant Accounting Policies (cont d) Financial Liabilities (cont d) (ii) Other Financial Liabilities (cont d) Loans and borrowings are recognised initially at fair value, net of transaction costs incurred, and subsequently measured at amortised cost using the effective interest method. Borrowings are classified as current liabilities unless the Group has an unconditional right to defer the settlement of the liability for at least 12 months after the reporting date. For other financial liabilities, gains and losses are recognised in profit or loss when the liabilities are derecognised, and through the amortisation process. A financial liability is derecognised when the obligation under the liability is extinguished. When an existing financial liability is replaced by another from the same lender on modified terms, such an exchange or modification is treated as a de-recognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in profit or loss Impairment of Assets (i) Impairment of Financial Assets All financial assets (except for financial assets categorised as fair value through profit or loss, investment in subsidiaries and associates) are assessed at each reporting date whether there is any objective evidence of impairment as a result of one or more events having an impact on the estimated future cash flows of the asset. Losses expected as a result of future events, no matter how likely, are not recognised. For an equity instrument, a significant or prolonged decline in the fair value below its cost is an objective evidence of impairment. An impairment loss in respect of loans and receivables and held-to-maturity investments is recognised in profit or loss and is measured as the difference between the asset s carrying amount and the present value of estimated future cash flows discounted at the asset s original effective interest rate. The carrying amount of the asset is reduced through the use of an allowance account. An impairment loss in respect of available-for-sale financial assets is recognised in the profit or loss and is measured as the difference between the asset s acquisition cost (net of any principal repayment and amortisation) and the asset s current fair value, less any impairment loss previously recognised. Where a decline in the fair value of an available-for-sale financial asset has been recognised in the other comprehensive income, the cumulative loss in other comprehensive income is reclassified from equity and recognised to profit or loss. An impairment loss in respect of unquoted equity instrument that is carried at cost is recognised in profit or loss and is measured as the difference between the asset s carrying amount and the present value of estimated future cash flows discounted at the current market rate of return for a similar financial asset. Impairment losses recognised in profit or loss for an investment in an equity instrument is not reversed through the profit or loss. If, in a subsequent period, the fair value of a debt instrument increases and the increase can be objectively related to an event occurring after the impairment loss was recognised in profit or loss, the impairment loss is reversed, to the extent that the asset s carrying amount does not exceed what the carrying amount would have been had the impairment not been recognised at the date the impairment is reversed. The amount of the reversal is recognised in the profit or loss.

64 Annual Report 2013 TADMAX RESOURCES BERHAD (8184-W) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont d) 2.3 Significant Accounting Policies (cont d) Impairment of Assets (cont d) (ii) Impairment of Non-financial Assets The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any such indication exists, or when an annual impairment assessment for an asset is required, the Group makes an estimate of the asset s recoverable amount. An asset s recoverable amount is the higher of an asset s or Cash Generating Unit ( CGU ) s fair value less cost to sell and its 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 risk specific to the asset. Where the carrying amounts of an asset exceed its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. Impairment losses recognised in respect of a CGU or groups of CGUs are allocated first to reduce the carrying amount of any goodwill allocated to those units or groups of units and then, to reduce the carrying amount of the other assets in the unit or groups of units on a pro-rata basis. An impairment loss is recognised in the profit or loss in the period in which it arises. Impairment loss on goodwill is not reversed in a subsequent period. An impairment loss for an asset other than goodwill is reversed if, and only if, there has been a change in the estimates used to determine the asset s recoverable amount since the last impairment was recognised. The carrying amount of an asset other than goodwill is increased to its revised recoverable amount, provided that this amount does not exceed its carrying amount that would have been determined (net of amortisation or depreciation) had no impairment loss been recognised for the asset in prior years. A reversal of impairment loss for an asset other than goodwill is recognised in the profit or loss Non-current Asset Held for Sale or Distribution Non-current assets, or disposal group comprising assets and liabilities that are expected to be recovered primarily through sale or distribution rather than through continuing use, are classified as held for sale or distribution. Immediately before classification as held for sale or distribution, the assets, or components of a disposal group, are remeasured in accordance with the Group s accounting policies. Thereafter generally the assets, or disposal group are measured at the lower of their carrying amount and fair value less costs to sell. Any impairment loss on a disposal group is first allocated to goodwill, and then to remaining assets and liabilities on pro rata basis, except that no loss is allocated to inventories, financial assets, deferred tax assets, employee benefit assets and investment property, which continue to be measured in accordance with the Group s accounting policies. Impairment losses on initial classification as held for sale or distribution and subsequent gains or losses on remeasurement are recognised in profit or loss. Gains are not recognised in excess of any cumulative impairment loss. Intangible assets and property, plant and equipment once classified as held for sale or distribution are not amortised or depreciated. In addition, equity accounting of equity accounted investees ceases once classified as held for sale or distribution.

65 TADMAX RESOURCES BERHAD (8184-W) Annual Report SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont d) 2.3 Significant Accounting Policies (cont d) Discontinued Operations A discontinued operation is a component of the Group s business that represents a separate major line of business or geographical area of operations that has been disposed of or is held for sale or distribution, or is subsidiary acquired exclusively with a view to resale. Classification as a discontinued operation occurs upon disposal or when the operation meets the criteria to be classified as held for sale, if earlier. When an operation is classified discontinued operation, the comparative statement of profit or loss and other comprehensive income is re-presented as if the operation had been discontinued from the start to the comparative period Segmental Information For management purposes, the Group is organised into operating segments based on their products and services which are reviewed regularly by the chief operating decision maker, which is the Managing Director of the Group, to make decisions about resources to be allocated to the segment and assess its performance, and for which discrete financial information is available Cash and Cash Equivalents Cash and cash equivalents, for the purpose of the statements of cash flows, comprise cash in hand, bank balances and other short term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value Earnings per Ordinary Shares The Group presents basic and diluted earnings per share data for its ordinary shares ( EPS ). Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding during the period, adjusted for own shares held. Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding, adjusted for own shares held, for the effects of all dilutive potential ordinary shares, which comprise convertible notes and share options granted to employees Contingent Liabilities A contingent liability is a possible obligation that arises from past event and whose existence will only be confirmed by the occurrence of one or more uncertain future events not wholly within the control of the Group and the Company. It can also be a present obligation arising from past events that is not recognised because it is not probable that outflow of economic resources will be required or the amount of obligation cannot be measured reliably. A contingent liability is not recognised but is disclosed in the notes to the financial statements. When a change in the probability of an outflow occurs so that the outflow is probable, it will then be recognised as a provision.

66 Annual Report 2013 TADMAX RESOURCES BERHAD (8184-W) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont d) 2.3 Significant Accounting Policies (cont d) Fair value measurements From 1st January 2013, the Group adopted MFRS 13 Fair Value Measurement which prescribed that fair value of an asset or a liability, except for share-based payment and lease transactions, is determined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The measurement assumes that the transaction to sell the asset or transfer the liability takes place either in the principal market or in the absence of a principal market, in the most advantageous market. For non-financial asset, the fair value measurement takes into account a market participant s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use. In accordance with the transitional provision of MFRS 13, the Group applied the new fair value measurement guidance prospectively, and has not provided any comparative fair value information for new disclosure. The adoption of MFRS 13 has not significantly affected the measurements of the Group s assets or liabilities other than the additional disclosures Construction work-in-progress Construction work-in-progress represents the gross unbilled amount expected to be collected from customers for contract work performed to date. It is measured at cost plus profit recognised to date less progress billings and recognised losses. Cost includes all expenditure related directly to specific projects and an allocation of fixed and variable overheads incurred in the Group s contract activities based on normal operating capacity. Construction work-in-progress is presented as part of trade and other receivables as amount due from contract customers in the statement of financial position for all contracts in which costs incurred plus recognised profits exceed progress billings. If progress billings exceed costs incurred plus recognised profits, then the difference is presented as amount due to contract customers which is part of the deferred income in the statement of financial position. 2.4 Significant Accounting Judgements and Estimates Key Sources of Estimation The key assumption concerning the future and other key sources of estimation uncertainty as at the reporting date, 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 stated below:- (i) Impairment of property, plant and equipment and prepaid land lease payments The Group assesses impairment of assets whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable i.e. the carrying amount of the asset is more than the recoverable amount. The recoverable amount is measured at the higher of the fair value less cost to sell for that asset and its value-in-use. The value-in-use is the net present value of the projected future cash flow derived from that asset discounted at an appropriate discount rate. Projected future cash flows are based on the Group s estimates calculated based on historical, sector and industry trends, general market and economic conditions, changes in technology and other available information.

67 TADMAX RESOURCES BERHAD (8184-W) Annual Report SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont d) 2.4 Significant Accounting Judgements and Estimates (cont d) Key Sources of Estimation (cont d) (ii) Goodwill on consolidation Goodwill is tested for impairment annually and at other times when such indicators exist. This requires management to estimate the expected future cash flows of the cash-generating unit to which goodwill is allocated and to apply a suitable discount rate in order to determine the present value of those cash flows. The future cash flows are most sensitive to budgeted gross margins, growth rates estimated and discount rate used. If the expectation is different from the estimation, such difference will impact the carrying value of goodwill. (iii) Timber concession rights The Group assesses the carrying amount of its timber concession rights at each reporting date whether there is an indication that an asset may be impaired. If such indication exists, or when an annual impairment assessment for an asset is required, the Group makes an estimate of the timber concession rights amount based on the value-in-use calculation using the cash flow projection based on the financial budget approved by the management. (iv) Depreciation of property, plant and equipment Property, plant and equipment are depreciated on a straight line basis over their estimated useful lives. Management estimates the useful lives of the property, plant and equipment to be 5 to 50 years. Changes in the expected level of usage and technological developments could impact the economic useful lives and residual values of the property, plant and equipment. Therefore the future depreciation charges could be revised. (v) 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 taxable profit will be available against which the 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. (vi) Income taxes The Group is subject to income taxes in numerous jurisdictions. Significant judgement is required in determining the capital allowances and deductibility of certain expenses during the estimation of the provision for income taxes. There are many transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the income tax and deferred income tax provisions in the period in which such determination is made. (vii) Net realisable values of inventories Reviews are made periodically by management on damaged, obsolete and slow-moving inventories. These reviews require judgement and estimates. Possible changes in these estimates could result in revisions to the valuation of inventories.

68 Annual Report 2013 TADMAX RESOURCES BERHAD (8184-W) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont d) 2.4 Significant Accounting Judgements and Estimates (cont d) Key Sources of Estimation (cont d) (viii) Recoverability of receivables The Group makes allowance for impairment of receivables based on an assessment of the recoverability of receivables. Impairment is applied to receivables where events or changes in circumstances indicate that the carrying amounts may not be recoverable. Management specifically analysed historical bad debts, customer concentrations, customer creditworthiness, current economic trends and changes in customer payment terms when making a judgement to evaluate the adequacy of the impairment of receivables. Where the expectation is different from the original estimate, such difference will impact the carrying value of receivables. (ix) Impairment to investment in subsidiaries, associate, joint venture and other investments The Group tests the value of the investment in subsidiaries, associate, joint venture and other investments for impairment annually, in accordance with its accounting policy. More regular reviews are performed if events indicate that this is necessary. Management determined the recoverable amount of the investment in the subsidiaries, associate and joint venture based on the individual values in use of assets and the probability of the realisation of these assets. The present value of the future cash flows to be generated by the asset is the asset s value in use, and it is assumed to be the same as the net worth of the asset as at the reporting date. An impairment loss is recognised immediately in the profit or loss if the recoverable amount is less than the carrying amount Critical Judgments made in Applying Accounting Policies In the process of applying the Group s accounting policies, the directors are of the opinion that there are no instances of application of judgment which are expected to have a significant effect on the amounts recognised in the financial statements, except for the matter described below:- Classification between operating lease and finance lease for leasehold land The Group has developed certain criteria based on MFRS 117 Leases in making judgment whether a leasehold land should classified either as operating lease or finance lease. Finance lease is a lease that transfers substantially all the risks and rewards incidental to ownership of an asset and operating lease is a lease that does not transfer substantially all the risks and rewards incidental to ownership. If the leasehold land meets the criteria of the finance lease, the lease will be classified as property, plant and equipment if it is for own use. Judgements are made on the individual leasehold land to determine whether the leasehold land qualifies as operating lease or finance lease. The Group has classified the lease period less than 50 years as operating leases as they did not meet the criteria of a finance lease under MFRS 117.

69 TADMAX RESOURCES BERHAD (8184-W) Annual Report PROPERTY, PLANT AND EQUIPMENT Furniture, Tele- GROUP Fittings communication Plant and Staff Motor and Office Computer and Electrical Buildings Machinery Quarters Vehicles Equipment Equipment Equipment Total 2013 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 Cost At 1st January ,542 4, ,781 Additions Disposals (53,516) (53,516) Write off (4,535) (100) (6) (79) (143) (6) (4,869) Foreign exchange differences (30) (30) At 31st December , ,381 Accumulated Depreciation and Impairment Losses At 1st January 2013 Accumulated depreciation 741 3, ,427 Accumulated impairment losses 45, ,261 46,291 4, ,688 Depreciation for the financial year Disposals (46,271) (46,271) Impairment loss Write off (4,535) (100) (4) (79) (143) (6) (4,867) Foreign exchange differences (11) (11) At 31st December Analysed as: Accumulated depreciation Accumulated impairment losses At 31st December Net Carrying Amount At 31st December , ,484

70 Annual Report 2013 TADMAX RESOURCES BERHAD (8184-W) PROPERTY, PLANT AND EQUIPMENT (cont d) Furniture, Tele- GROUP Fittings communication Capital Factory Plant and Staff Motor and Office Computer and Electrical Work-in- Work-in Buildings Machinery Quarters Vehicles Equipment Equipment Equipment Progress Progress Total 2012 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 Cost At 1st January ,516 5, ,084 15,070 77,367 Additions ,942 4,851 Disposals Transfer 18,743 1,638 (6,026) (14,355) Foreign exchange differences (1,565) (38) (1) (2) (461) (2,067) Transfer to assets held for sale (Note 17) (11,152) (2,838) (56) (70) (254) (14,370) At 31st December ,542 4, ,781 Accumulated Depreciation and Impairment Losses At 1st January 2012 Accumulated depreciation 360 3, ,877 Accumulated impairment losses 40, ,607 41,256 4, ,484 Depreciation for the financial year ,185 Disposals Impairment loss 4,654 4,654 Foreign exchange differences (1) (1) (2) Transfer to assets held for sale (Note 17) (351) (250) (12) (20) (633) At 31st December ,291 4, ,688 Analysed as: Accumulated depreciation 741 3, ,427 Accumulated impairment losses 45, ,261 At 31st December ,291 4, ,688 Net Carrying Amount At 31st December , ,093

71 TADMAX RESOURCES BERHAD (8184-W) Annual Report PROPERTY, PLANT AND EQUIPMENT (cont d) Tele- Furniture, communication Motor Fittings and Computer and Electrical Company Vehicles Equipment Equipment Equipment Total RM 000 RM 000 RM 000 RM 000 RM Cost At 1st January ,339 Additions Disposals Write off (3) (21) (111) (6) (141) At 31st December ,211 Accumulated Depreciation At 1st January Depreciation for the financial year Disposals Write off (3) (21) (111) (6) (141) At 31st December Net Carrying Amount 31st December Cost At 1st January Additions Disposals At 31st December ,339 Accumulated Depreciation At 1st January Depreciation for the financial year Disposals At 31st December Net Carrying Amount 31st December Assets held under finance lease Net carrying amount of property, plant and equipment held under hire purchase arrangements are as follows:- Group Company RM 000 RM 000 RM 000 RM 000 Motor vehicles

72 Annual Report 2013 TADMAX RESOURCES BERHAD (8184-W) PROPERTY, PLANT AND EQUIPMENT (cont d) Assets pledged as securities. Freehold building of the Group with a total net carrying amount of RM5,885,000/- (2012: Nil) has been charged to a financial institution to secure a term loan facility granted to the Company Buildings Included in the total carrying amount of buildings are:- Group RM 000 RM 000 Freehold 5,885 6,005 Leasehold 7,246 5,885 13, PREPAID LAND LEASE PAYMENTS (a) Prepaid land lease payments Group Cost RM 000 RM 000 At 1st January 6,409 8,848 Foreign exchange difference (75) Transfer to assets held for sale (Note 17) (2,364) Additions 2,600 Disposals (6,409) At 31st December 2,600 6,409 Accumulated amortisation At 1st January 2,154 2,292 Amortisation for the financial year Foreign exchange difference (8) Transfer to assets held for sale (Note 17) (288) Disposals (2,154) At 31st December 62 2,154 Net carrying amount At 31st December 2,538 4,255 The leasehold land is amortised over the period of 28 years. The prepaid land lease payments with the carrying amount of Nil (2012: RM4,255,000/-) has been pledged as security for banking facilities granted to the Group.

73 TADMAX RESOURCES BERHAD (8184-W) Annual Report PREPAID LAND LEASE PAYMENTS (cont d) (b) Prepaid land lease payments with cultivation rights Cost Group RM 000 RM 000 At 1st January 69,000 69,000 Additions At 31st December 69,000 69,000 Accumulated amortisation At 1st January 1,971 Amortisation for the financial year 1,972 1,971 At 31st December 3,943 1,971 Net carrying amount At 31st December 65,057 67,029 These prepaid land lease payments with cultivation rights were acquired in 2011 as a result of the acquisition of subsidiaries. It represents the fair value of two parcels of leasehold agricultural land with a combined land area of 80,000 hectares, located in Indonesia. The fair value of RM69,000,000/- was based on a valuation report prepared by an independent valuer, namely Azmi & Co (Shah Alam) Sdn. Bhd. dated 15th November INVESTMENT IN SUBSIDIARIES Company RM 000 RM 000 Unquoted shares At cost At 1st January 781, ,491 Additions 4,000 Disposals (24,881) At 31st December 760, ,491 Accumulated impairment loss At 1st January 195, ,895 Impairment loss for the financial year 4,067 6,852 Disposals (1,707) At 31st December 198, ,747 Carrying amount At 31st December 562, ,744

74 Annual Report 2013 TADMAX RESOURCES BERHAD (8184-W) INVESTMENT IN SUBSIDIARIES (cont d) The details of the subsidiaries are as follows:- Effective ownership Country of and voting interest Name of Company Incorporation Principal Activities % % Direct subsidiaries: Arus Global Sdn. Bhd. Malaysia 100 Engage in quarry operation, dormant during the financial year Kirana Abadi Sdn. Bhd. Malaysia 100 Property investment, dormant during the financial year Platinum Frigate Sdn. Bhd. Malaysia 100 Dormant Tadmax Builders Sdn. Bhd. Malaysia 100 General contractor Tadmax Power Sdn. Bhd. (formerly known as Wijaya Baru Development Sdn. Bhd.) Malaysia Property development Tadmax Properties Sdn. Bhd. Malaysia Property investment (formerly known as WBG Assets Sdn. Bhd.) Usama Industries Sdn. Bhd. Malaysia Extraction and trading of timber logs, dormant during the financial year Venture Credit Sdn. Bhd. Malaysia 100 Licensed financiers, advances and money lender Chongqing Liangshan Wijaya China 100 Agricultural cultivation, Food Limited and trading Suffolk Pte Ltd * Singapore Investment holding Wealth Gate Pte Ltd * Singapore Investment holding Indirect subsidiary - held by Suffolk Pte Ltd: PT Trimegah Karya Utama * Indonesia Engaged in timber, oil palm plantation and palm oil trading Indirect subsidiary - held by Wealth Gate Pte Ltd: PT Manunggal Sukses Mandiri * Indonesia Engaged in timber, oil palm plantation and palm * Audited by firms other than Baker Tilly Monteiro Heng. oil trading

75 TADMAX RESOURCES BERHAD (8184-W) Annual Report INVESTMENT IN SUBSIDIARIES (cont d) Disposals of subsidiaries i. On 29th April 2013, the Company had entered into a Sale and Purchase Agreement to dispose its entire equity interest in Chongqing Liangshan Wijaya Food Limited ( CLWFL ) for a consideration of RM20,000,000/-. (Note 17) ii. On 31st May 2013, the Company had entered into a Sale and Purchase Agreement to dispose Venture Credit Sdn. Bhd. for a consideration of RM200,000/-. The effect of the disposal on the financial position and results of the Group is as below:- RM 000 Receivebles 6,337 Other payables (6,337) Total net assets Gain on disposal of subsidiaries 200 Total consideration received 200 Acquisition of subsidiaries i. On 29th April 2013, the Company had acquired 23,002 ordinary shares of RM1/- each comprising 100% of the issued and paid-up capital of Arus Global Sdn. Bhd. from its former associate company, Wijaya Baru Sdn. Bhd. for a consideration of RM3,000,000/-. ii. On 15th August 2013, the Company had acquired 2 ordinary shares of RM1/- each fully paid-up capital of both Kirana Abadi Sdn. Bhd. ( KASB ) and Platinum Frigate Sdn. Bhd. ( PFSB ) for a total consideration of RM2/- for each company and these became wholly owned subsidiaries of the Company. The fair values of the assets acquired and the liabilities assumed at the effective date of acquisition are as follows:- RM 000 Prepaid land lease payments 2,600 Total net assets 2,600 Goodwill on acquisition 400 Consideration paid, satisfied in cash 3,000 Less: Consideration settled by novation of similar amount due from the Purchaser of Chongqing Liangshan Wijaya Food Limited (Note 17) (3,000) Net cash outflow Incorporation of new subsidiaries On 31st July 2013, the Company had incorporated a wholly-owned subsidiary known as Tadmax Builders Sdn. Bhd. of which comprising 2 issued and paid-up capital of RM1/- each. On 25th November 2013, the Company had subscribed additional 999,998 new ordinary share of RM1/- each in Tadmax Builders Sdn. Bhd. for a total cash consideration of RM999,998/-. Non-controlling interests in subsidiaries The non-controlling interests in subsidiaries in respect of the non-wholly owned subsidiaries are individually not material to the Group.

76 Annual Report 2013 TADMAX RESOURCES BERHAD (8184-W) INVESTMENT IN AN ASSOCIATE Group Company RM 000 RM 000 RM 000 RM 000 Unquoted shares, at cost 141, ,773 Add: Additions Share of post acquisition reserve 25,021 Less: Goodwill on acquisition written off (99,050) Impairment losses (33,959) (107,759) 34,010 34,239 Represented by: Share of tangible assets 34,010 Goodwill on acquisition, net 34,010 Details of the associate are as follows:- Country of Effective ownership Incorporation and voting interest Principal Activities Name of Associate % % Wijaya Baru Sdn. Bhd. * Malaysia 45 General contractors Subsidiaries of Wijaya Baru Sdn. Bhd. Chongqing Wijaya Construction Co. Ltd. China 45 Dormant Arus Global Sdn. Bhd. Malaysia 45 Dormant * On 30th October 2013, the Company has disposed off the entire 2,475,000 issued and paid-up capital of RM1/- comprising 45% equity interest in Wijaya Baru Sdn. Bhd. for a consideration of RM20,000,000/- represented by cash consideration of RM2,943,000/- and RM17,057,000/- by way of novation of amount due to a director, Dato Faizal bin Abdullah. The summarised financial information of the associate is as follows:- i. Summarised statement of financial position Group 2012 RM 000 Assets and liabilities Current assets 73,512 Non-current assets 32,881 Total assets 106,393 Current liabilities (14,811) Non-current liabilities (16,003) Total liabilities (30,814) Net assets 75,579

77 TADMAX RESOURCES BERHAD (8184-W) Annual Report INVESTMENT IN AN ASSOCIATE (cont d) ii. Summarised statement of comprehensive income Results Group 2012 RM 000 Revenue 45,196 Loss for the financial year (6,457) Total comprehensive loss for the financial year (6,457) iii. Other information Group 2012 RM 000 Dividend received 2, INVESTMENT IN JOINT VENTURE Group and Company The Group has 14% (2012: 14%) equity interest in a jointly controlled entity, Tulen Jayamas Sdn. Bhd. This joint venture is incorporated in Malaysia and is in the business of timber logs extraction, manufacturing and trading of processed timber logs. The investment in this jointly controlled entity had not been accounted for in the consolidated financial statements using equity accounting as it remains inactive during the financial year. 8. OTHER INVESTMENT Group The other investment represents the cost of a corporate golf membership. 9. TIMBER CONCESSION RIGHTS Group RM 000 RM 000 Cost At 1st January/31st December 218, ,000 Accumulated amortisation At 1st January/31st December Carrying amount At 31st December 218, ,000 The timber concession rights were acquired in 2011 as a result of the acquisition of new subsidiaries. It represents the fair value of extractable and merchantable timber on the leasehold agricultural land located in Indonesia. This fair value was based on a valuation report prepared by an independent valuer, being Azmi & Co. (Shah Alam) Sdn. Bhd., dated 15th November The timber concession rights will be amortised annually from the date at which timber extraction activities have commenced based on the percentage of the volume of timber extracted compared to the total estimated volume of timber available for extraction.

78 Annual Report 2013 TADMAX RESOURCES BERHAD (8184-W) DEFERRED TAX (ASSETS)/LIABILITIES Presented after appropriate offsetting as follows: Group Company RM 000 RM 000 RM 000 RM 000 Deferred tax assets (2,619) (3,000) Deferred tax liabilities 70,785 71, ,166 68, At 1st January 68,296 67, (829) Recognised in the profit or loss (130) Attributable to conversion of ICULS Others 285 At 31st December 68,166 68, The components and movements of deferred tax assets and liabilities of the Group and of the Company during the financial year prior to offsetting are as follows: Deferred tax assets Group Company RM 000 RM 000 RM 000 RM 000 At 1st January (3,000) (3,894) (850) Recognised in the profit or loss (169) Attributable to the conversion of ICULS Others 285 Effects of movements on exchange rate 550 At 31st December (2,619) (3,000) Deferred tax liabilities Land lease Timber with Property, concession cultivation plant and 2013 rights rights equipment Total Group RM 000 RM 000 RM 000 RM 000 At 1st January 54,500 16, ,296 Recognised in the profit or loss (493) (18) (511) At 31st December 54,500 16, ,785 Company At 1st January/31st December 21 21

79 TADMAX RESOURCES BERHAD (8184-W) Annual Report DEFERRED TAX (ASSETS)/LIABILITIES (cont d) Deferred tax liabilities Land lease Timber with Property, concession cultivation plant and 2012 rights rights equipment Total Group RM 000 RM 000 RM 000 RM 000 At 1st January 54,500 17, ,789 Recognised in the profit or loss (493) (493) At 31st December 54,500 16, ,296 Company At 1st January/31st December Note: (a) This deferred tax liabilities are from the initial fair value recognition of timber concession rights and prepaid land lease payments with cultivation rights in respect of the acquisition of two subsidiaries. This deferred tax liabilities have arisen as a result of the temporary timing difference which has arisen from their fair valuation. 11. GOODWILL Group RM 000 RM 000 At 1st January 66,810 66,810 Addition arising from acquisition of a subsidiary 400 At 31st December 67,210 66,810 Impairment testing of goodwill The carrying amounts of goodwill allocated to the cash generating units are as follows: Group RM 000 RM 000 Timber extraction (Note a) 66,810 66,810 Others (Note b) 400 At 31st December 67,210 66,810 (a) Timber extraction The Group has assessed the recoverable amounts of goodwill allocated and determined that no additional impairment is required. The recoverable amounts of the cash-generating units are determined using the value-in-use approach approved by management, and this is derived from the present value of the future cash flows from the operating segment computed based on the projections of financial information covering a period of 6 years. The key assumptions used in the determination of the recoverable amounts are as follows:- (i) The Group expects to commence the extraction of timber few months prior to the construction of the Integrated Timber Extraction Complex ( ITC ). The directors estimate that the forested areas will be felled over the next 6 years after the commencement of operation.

80 Annual Report 2013 TADMAX RESOURCES BERHAD (8184-W) GOODWILL (cont d) (a) Timber extraction (cont d) (ii) Cash flows were projected based on the estimated annual log production volume of the timber and log prices for the concession period. Estimated annual log production volume had been based on a Forest Assessment Report prepared by an independent forester for the purpose of estimating the available timber resources. (iii) The lower average of the 5 years log prices reported by ITTO (International Tropical Timber Organisation) was used in the estimation to derive the achievable and long term sustainable timber price. (iv) A pre-tax discount rate of 18% (2012: 18%) was applied in determining the recoverable amount of the unit. The discount rate was estimated based on the average cost of capital, adjusted further upwards to reflect the timber industry and country risk. (v) The expected net present value of the cash flow projection over a period of 6 years from the commencement of operation is RM237.1 million (2012: RM254.3 million). The values assigned to the above key assumptions represent management s assessment of future trends in the industry and are based on both external sources and internal source of information. Based on the sensitivity analysis performed, management believes that no reasonably possible change in base case key assumptions would cause the carrying values of the cash generating unit to exceed its recoverable amounts. (b) Others The recoverable amount of this CGU is determined based on the fair value less costs to sell. 12. OTHER RECEIVABLES, DEPOSITS AND PREPAYMENTS Group Company RM 000 RM 000 RM 000 RM 000 Non-current Other receivables (Note a) 2,662 4,575 2,662 4,575 Staff loan (Note c) ,662 4,619 2,662 4,619 Current Other receivables (Note a and b) 19,393 12,107 19,378 9,141 Deposits (Note d) 4,515 18,915 4, Prepayments Transfer to assets held for sale (Note 17) (21,153) 24,112 10,303 23,958 9,628 (a) Included in other receivables of the Group is an amount of RM9,896,000/- (2012: RM13,713,240/-) due from a third party for the balance of the purchase consideration pursuant to the disposal of a subsidiary in previous financial years. The amount is repayable by 30 monthly instalments until 31st March 2015 of which RM9 million is held as collateral to a financial institution as disclosed in Note 22 to the financial statements. Hence, the directors are of the view that the amount is recoverable, and no impairment of the amount is required.

81 TADMAX RESOURCES BERHAD (8184-W) Annual Report OTHER RECEIVABLES, DEPOSITS AND PREPAYMENTS (cont d) (b) Included in the other receivables of the Group is/are:- (i) amounts of RM5,000,000/- (2012: Nil) and RM735,000/- (2012: Nil) due from a third party as a result of disposal of a subsidiary, Chongqing Liangshan Wijaya Food Limited and an associate company, Wijaya Baru Sdn. Bhd. respectively. According to share sales agreement, the amount of RM5,000,000/- is a retention sum receivable by June 2014 upon delivery and installation of rice cooking plant. (Note 17) (ii) an amount of RM6,362,000/- (2012: Nil) due from a receivable of Venture Credit Sdn. Bhd., a former subsidiary. The amount is secured over a land with a market value exceeding the outstanding balance. The directors are of the view that the amount is recoverable, and no impairment of the amount is required. (c) The Group and the Company had granted an interest-free loan to an employee. The maturity of the staff loan as at 31st December is as follows:- Group and Company RM 000 RM 000 On demand or within one year 47 More than 1 year and less than 2 years 44 More than 2 years and less than 5 years 5 years or more (d) Included in the deposits of the Group are:- (i) (ii) a deposit of Nil (2012: RM17,465,000/-) paid by Chongqing Liangshan Wijaya Food Limited, a former subsidiary, for the acquisition of an instant rice cooking and packing plant. a deposit of RM2,208,000/- paid to Capital Castle Sdn. Bhd., a company with a common director then for acquisition of two pieces of freehold land together with 2 units of 5-storey shop office. 13. INVENTORIES Group At cost RM 000 RM 000 Raw materials 371 Finished goods 82 Land and development expenditure 164, ,860 Transfer to assets held for sale (Note17) (453) 164, ,860 Land and development expenditure consist of the following:- Group Current assets RM 000 RM 000 Land 135, ,575 Development expenditure 28,825 29, , ,860 The land and development expenditure with the carrying amount of RM164,402,000/- (2012: RM163,860,000/-) has been pledged as security for banking facilities granted to the Group as disclosed in Note 22 to the financial statements.

82 Annual Report 2013 TADMAX RESOURCES BERHAD (8184-W) AMOUNT DUE FROM CUSTOMERS ON CONTRACTS Group Company RM 000 RM 000 RM 000 RM 000 Aggregate costs incurred to date 12,456 1,950 Attributable profits on contract works ,924 2,100 Progress billings (12,919) (2,100) 5 Retention sum on contracts, included under trade receivables 1, TRADE RECEIVABLES Group Company RM 000 RM 000 RM 000 RM 000 Trade receivables 14,985 12,147 4,765 Less: Allowance for impairment loss (5,934) 14,985 6,213 4,765 The Group s and the Company s normal credit terms are 30 to 60 days (2012: 30 days). Other credit terms are assessed and approved on a case-by-case basis. Ageing analysis of trade receivables The ageing analysis of the Group s and Company s trade receivables is as follows:- Group Company RM 000 RM 000 RM 000 RM 000 Neither past due nor impaired 12,624 4,304 1 to 30 days past due not impaired to 60 days past due not impaired 2, to 90 days past due not impaired 91 to 120 days past due not impaired More than 121 days past due not impaired 6,213 2,361 6, Impaired 5,934 14,985 12,147 4,765 Receivables that are neither past due nor impaired There has been no renegotiation of the Group s trade receivables that are neither past due nor impaired during the financial year. Receivables that are past due but not impaired The Group and Company have trade receivables amounting to RM2,361,000/- and RM461,000/- (2012: RM6,213,000/- and Nil) that are past due at the reporting date but not impaired.

83 TADMAX RESOURCES BERHAD (8184-W) Annual Report TRADE RECEIVABLES (cont d) The Group s and the Company s trade receivables comprise:- i. Receivable arising from rendering of construction services to companies with a good collection track record with the Group and the Company. These receivables include the retention sums which are to be settled in accordance with the terms of respective contracts, and ii. Receivables from other external parties with no history of default. The directors of the Group and the Company are in the opinion that no impairment is required. Receivables that are impaired Trade receivables that are individually determined to be impaired at the reporting date relate to debtors that have defaulted on payments. This receivable is secured by collateral. Group Individually impaired RM 000 RM 000 Trade receivables 5,934 Less: Allowance for impairment (5,934) Movement in impairment account: Group RM 000 RM 000 At 1st January 5,934 5,934 Write off (5,934) At 31st December 5, FIXED DEPOSITS PLACED WITH LICENSED BANKS Group Included in the Group s fixed deposits placed with licensed banks is a principal amount of Nil (2012: RM20,000/-) pledged to the bank for a banking facility granted to a subsidiary. The effective interest rate for the fixed deposits is at 2.2% (2012: 3.01%) per annum. 17. ASSETS AND LIABILITIES CLASSIFIED AS HELD FOR SALE AND DISCONTINUED OPERATIONS (i) During the financial year ended 31st December 2012, the net assets of RM19,677,000/- related to Chongqing Liangshan Wijaya Food Limited ( CLWFL ) have been presented in the statements of financial position as Assets classified as held for sale and Liabilities classified as held for sale and its related results are represented separately in the statements of comprehensive income under Discontinued Operations. The investment of the Group in CLWFL were expected to be recovered primarily through sale or distribution rather than through continuing use. (ii) On 29th April 2013, the Company had entered into a Share Sale Agreement ( the Agreement ) to dispose 24,381,691 ordinary shares of RM1/- each, equivalent to RMB52,640,702/- in CLWFL representing 100% of the total issued and paid up capital in CLWFL for a total consideration of RM20,000,000/-. The disposal was completed during the financial year.

84 Annual Report 2013 TADMAX RESOURCES BERHAD (8184-W) ASSETS AND LIABILITIES CLASSIFIED AS HELD FOR SALE AND DISCONTINUED OPERATIONS (cont d) (iii) The consideration pursuant to the Agreement is payable to the Group in the following manner: (a) (b) RM1/- of cash deposit; RM11,999,999/- by way of novation of amount due to a director, to Dato Faizal bin Abdullah via the execution of a Deed of Novation; (c) RM3,000,000/- upon execution of Tadmax Resources Berhad s Deed of Novation (Note 5); (d) RM5,000,000/- of retention sum upon delivery and installation of rice cooking plant. Statement of comprehensive income disclosures The results of CLWFL are as follows:- Group RM 000 RM 000 Revenue 575 1,932 Cost of sales (846) (2,563) Gross loss (271) (631) Other operating income 1 Administrative expenses (162) (1,721) Finance cost (3) Loss before tax of discontinued operation (433) (2,354) Income tax Loss after tax of discontinued operation (433) (2,354) The loss after tax of discontinued operation of RM433,000/- (2012: RM2,354,000/-) is attributable entirely to the owners of the Company. The following amounts have been included in arriving at loss before income tax expense of the discontinued operations:- Group RM 000 RM 000 After charging: Audit fees - current year 11 Amortisation of financial liabilities 552 Amortisation of prepaid land lease payments Depreciation 600 Unrealised foreign exchange loss 426 Interest expenses 3 Staff costs: - salaries, bonuses and allowances others 41 After crediting: Interest income 1

85 TADMAX RESOURCES BERHAD (8184-W) Annual Report ASSETS AND LIABILITIES CLASSIFIED AS HELD FOR SALE AND DISCONTINUED OPERATIONS (cont d) Group 2013 RM 000 Property Plant & Equipment 13,616 Prepaid Lease Payment 2,074 Inventories 453 Receivables 20,647 Cash and cash equivalents 77 Total assets 36,867 Payables (including long term) (18,054) Total net assets 18,813 Gain on disposal of discontinued operation 1,187 Total consideration received 20,000 Less: Retention sum receivable by 30th June 2014 (5,000) Novate of amount due to a director, Dato Faizal bin Abdullah (12,000) Novate of similar amount due to the Purchaser of Chongqing Liangshan Wijaya Food Limited (Note 5) (3,000) Total cash consideration received Cash and cash equivalent from discontinued operation (77) Disposal of discontinued operation, net of cash and cash equivalents disposed (77) 18. SHARE CAPITAL Group and Company Number Number of shares of shares 000 RM RM 000 Authorised: Ordinary shares of RM0.50 (2012: RM1/-) each 1,200, , , ,000 Issued and fully paid: Ordinary shares of RM0.50 (2012: RM1/-) each At 1st January 363, , , ,901 ICULS converted 75,331 75,331 Capital reduction of RM0.50 each (181,616) Issuance during the financial year 10,000 5,000 At 31st December 373, , , ,232

86 Annual Report 2013 TADMAX RESOURCES BERHAD (8184-W) SHARE CAPITAL (cont d) During the financial year ended 31st December 2012, a total of 94,163,392 units of ICULS were converted into 75,330,690 new ordinary shares. These new ordinary shares rank pari passu with the existing ordinary shares of the Company. The Directors of the Company proposed to implement a capital reduction of issued and paid-up capital of the Company via the cancellation of RM0.50 of the par value of each unit of ordinary share. At an Extraordinary General Meeting ( EGM ) held on 11th April 2013, the shareholders of the Company have approved the proposal. On 10th July 2013, the High Court of Malaya ( The Court ) had granted order-in-terms in respect of the application by the Company for the Proposal. On 18th July 2013, the sealed order of the Court confirming the capital reduction had been lodged with the Companies Commission of Malaysia. Accordingly, the capital reduction will take immediate effect, whereby the par value of each ordinary share in the Company will be reduced from RM1/- to RM0.50 per ordinary share. On 16th August 2013, 10,000,000 ordinary shares of RM0.50 each of the Company were allotted to a director, Dato Faizal bin Abdullah at RM0.50 each pursuant to the partial settlement of debt owing to Dato Faizal bin Abdullah as approved by shareholders of the Company at the Extraordinary General Meeting held on 11th April Those new ordinary shares rank pari passu with the existing ordinary shares of the Company. TREASURY SHARES There has been no repurchase and resale of treasury shares during the financial year. At 31st December 2013, the total number of treasury shares held by the Company is 474,300 (2012: 474,300) units with a total cost of RM154,720/- (2012: RM154,720/-). 19. IRREDEEMABLE CONVERTIBLE UNSECURED LOAN STOCKS 2007/2012 ( ICULS ) Group and Company Equity Liability Component Component Total RM 000 RM 000 RM 000 Nominal value At 1st January ,720 29, ,127 Treasury ICULS (455) (171) (626) ICULS converted to shares (74,265) (1,391) (75,656) At 31st December ,845 27,845 Expense recognised in profit or loss: At 1st January ,745 7,745 Recognised during the financial year - ICULS interest At 31st December ,524 8,524

87 TADMAX RESOURCES BERHAD (8184-W) Annual Report IRREDEEMABLE CONVERTIBLE UNSECURED LOAN STOCKS 2007/2012 ( ICULS ) (cont d) Interest paid / accrued Group and Company Equity Liability Component Component Total RM 000 RM 000 RM 000 At 1st January 2012 (32,352) (32,352) Paid / accrued during the financial year (4,017) (4,017) At 31st December 2012 (36,369) (36,369) At 31st December 2012 ICULS Treasury ICULS (171) (171) At 31st December 2013 ICULS Treasury ICULS 20. RESERVES Non Distributable Group Company RM 000 RM 000 RM 000 RM 000 Merger reserve 142, ,500 Foreign currency translation reserve 1,076 1,328 Distributable 1,076 1, , ,500 Accumulated losses (12,179) (148,500) (137,807) (273,421) (11,103) (147,172) 4,693 (130,921) Merger reserve The merger reserve amounting to RM142.5 million arose in the year 2001 to reflect the effect of changes in accounting policies for the accounting of the costs of investment in a subsidiary. Foreign currency translation reserve The foreign currency translation reserve is used to record foreign currency exchange differences arising from the translation of the financial statements of foreign operations whose functional currencies are different from that of the Group s presentation currency.

88 Annual Report 2013 TADMAX RESOURCES BERHAD (8184-W) HIRE PURCHASE LIABILITIES Minimum hire purchase payments: Group and Company RM 000 RM not later than one year later than one year but not later than five years later than five years Less: Future interest charges (32) (53) Present value of hire purchase liabilities Represented by: Current: - not later than one year Non current: - later than one year but not later than five years later than five years Hire purchase liabilities bear effective interest rates ranging from 3.73% to 4.09% (2012: 3.82% to 4.18%) per annum. 22. BANK BORROWINGS Details of the Group s and the Company s bank borrowings as at the financial year end are as follows: Group and Company RM 000 RM 000 Within the next twelve months 88,860 37,188 After the next twelve months (included under long term loan) - not later than two years 62,890 50,218 - later than two years but not later than five years 73, ,085 - more than five years 136, , , ,491 Term Loan (a) - Exim Bank Malaysia 209, ,962 Term Loan (b) - TA Capital Sdn. Bhd. 11,989 13,500 Term Loan (c) - OSK Capital Sdn. Bhd. 3,500 4,029 Total outstanding 225, ,491 The term loans bear interest rates ranging from 5.09% to 9.5% (2012: 5.24% to 9.5%).

89 TADMAX RESOURCES BERHAD (8184-W) Annual Report BANK BORROWINGS (cont d) Term Loan (a) is secured as follows: - (a) (b) (c) (d) (e) (f) (g) (h) (i) (j) (k) (l) First legal charge against a subsidiary s land held for development; Third party fiduciary contract against timber revenue proceeds; Third party fiduciary contract against palm oil revenue proceeds; Third party fiduciary security, debenture or its equivalent against any assets acquired by PT Trimegah Karya Utama and PT Manunggal Sukses Mandiri; Pledge of Escrow accounts for deposit of timber proceeds to be controlled and operated by Exim Bank under a power of attorney to be granted to Exim Bank; Cash collateral agreement for Debt Service Reserve Account ( DSRA ); Individual guarantee agreement by Dato Faizal bin Abdullah and Encik Anuar bin Adam; Political risk insurance to cover nationalisation and expropriation, transfer restriction and civil disturbance; Power of attorney to execute fiduciary security and a letter of undertaking for PT Trimegah Karya Utama and PT Manunggal Sukses Mandiri to ensure they provide a list of assets to be secured; Pledge of shares and power of attorney in Suffolk Pte Ltd, Wealth Gate Pte Ltd, PT Trimegah Karya Utama and PT Manunggal Sukses Mandiri; Fiduciary contract or its equivalent over the dividends of Suffolk Pte Ltd, Wealth Gate Pte Ltd, PT Trimegah Karya Utama and PT Manunggal Sukses Mandiri, in favour of the Lender; Other further securities as may be imposed by the lender at its discretion. Term Loan (b) is secured as follows:- (a) (b) Third party legal charge against a third party s property; After two (2) years loan tenure on the expiry of the due date pursuant to the terms of the loan agreement, the Group to assign to the bank, the balance of RM9 million proceeds receivable arising from the sale of a former subsidiary, Wijaya International Medical Centre Sdn. Bhd. to the Purchaser, Beacon GB Sdn. Bhd.. Term Loan (c) is secured as follows:- (a) (b) Third party first legal charge against a subsidiary s freehold building; Joint and several guarantees by Dato Faizal bin Abdullah and Encik Anuar bin Adam. 23. TRADE PAYABLES Trade payables are generally unsecured and non-interest bearing. The normal trade credit terms granted to the Group are 30 days. 24. OTHER PAYABLES, DEPOSITS AND ACCRUALS Group Company RM 000 RM 000 RM 000 RM 000 Non-current Other payables 9,891 Transfer to liabilities held for sale (Note 17) (9,891)

90 Annual Report 2013 TADMAX RESOURCES BERHAD (8184-W) OTHER PAYABLES, DEPOSITS AND ACCRUALS (cont d) Group Company RM 000 RM 000 RM 000 RM 000 Current Other payables 3,714 14,905 1,292 4,167 Deposits 4,704 Accruals 1, , ,384 15,205 3,157 4,371 Transfer to liabilities held for sale (Note 17) (7,796) 10,384 7,409 3,157 4,371 (a) Included in other payables of the Group is:- (i) (ii) (iii) an amount of RM712,000/- (2012: RM1,245,000/-) payable to companies with a common director previously. The amounts are non-trade in nature, unsecured, interest free, and repayable on demand. an amount of RM220,000/- (2012: RM13,947,000/-) payable to the former associate company. The amounts are non-trade in nature, unsecured, interest free and is repayable on demand. an amount of RM283,000/- (2012: RM3,583,000/-) due to a major shareholder of the Company. The amount is non-trade in nature, unsecured, interest free, and repayable on demand. (b) The amount of RM4,704,000/- (2012: Nil) is a deposit received from the disposal of a piece of a 60 acres leasehold land of the Group located at Pulau Indah, Port Klang, Selangor Darul Ehsan. 25. AMOUNT OWING TO SUBSIDIARIES Company The amounts owing to subsidiaries are unsecured, interest free and repayable on demand. 26. AMOUNT OWING TO A DIRECTOR Group and Company The amount owing to a director is non-trade in nature, unsecured, interest free and is not repayable until the Group and the Company have sufficient funds, or alternative arrangements, to effect a repayment or settlement proposal. The movement in director s account is as follows:- Group Company RM 000 RM 000 At the beginning of the financial year 69,426 69,396 Novation of amounts from disposal of discontinued operations (29,057) (29,057) and an associate company Capitalisation of debt by way of shares issuance (5,000) (5,000) Net advance during the year 6,550 6,550 At the end of the financial year 41,919 41,889

91 TADMAX RESOURCES BERHAD (8184-W) Annual Report REVENUE Revenue of the Group and the Company consists of the following:- Group Company RM 000 RM 000 RM 000 RM 000 Management fee from subsidiaries 1,020 1,260 Dividend income 4,549 2,700 Industrial supplies 3,465 3,465 Contract revenue 12,924 2,100 Interest income , ,134 3, COST OF SALES Group Company RM 000 RM 000 RM 000 RM 000 Contract cost 12,456 1,950 Purchases 3,221 3,221 15,677 5, OPERATING LOSS Operating loss has been arrived at:- Group Company After charging:- RM 000 RM 000 RM 000 RM 000 Amortisation of financial assets and liabilities Amortisation of prepaid land lease payments Amortisation of prepaid land lease payments with cultivation right 1,972 1,971 Audit fees - current year prior years (15) (16) Depreciation of property, plant and equipment 358 1, Directors remuneration 1,203 1,101 1,124 1,071 (Gain)/loss on recognition of financial assets (985) 1,587 (985) 1,587 Impairment loss on:- - investment in associate 57,500 - investment in subsidiaries 4,067 6,852 - leasehold building 4,654 - receivables Loss on disposal of an associate 3,722 14,239 Loss on disposal of subsidiaries 2,417 Property, plant and equipment written off 2 Rental of premises Staff cost:- - salaries, bonuses and allowances 1,938 1,945 1,745 1,367 - Employees Provident Fund and SOCSO others Unrealised foreign exchange loss 12, ,043

92 Annual Report 2013 TADMAX RESOURCES BERHAD (8184-W) OPERATING LOSS (cont d) Group Company RM 000 RM 000 RM 000 RM 000 And crediting:- Dividend from an associate 2,700 Dividend from a subsidiary 4,549 Gain on disposal of discountined operation 1,187 Gain on disposal of property, plant and equipment 255 Gain on disposal of prepaid lease payments 245 Gain on disposal of a subsidiary 200 Interest income Realised foreign exchange gain 6 6 Unrealised foreign exchange gain 6,607 6, FINANCE COSTS Group and Company RM 000 RM 000 Interest on hire purchase Interest on ICULS 1,867 Interest on term loan 12,063 10,876 12,084 12, TAXATION Group Company Income tax RM 000 RM 000 RM 000 RM current year (45) 554 (1,137) (120) - prior years Deferred tax - current year 662 (568) (809) - prior years (1,024) (929) The income tax is calculated at the Malaysian statutory rate of 25% (2012: 25%) of the estimated assessable profit for the year. The reconciliation of income tax expense applicable to loss before taxation at the statutory income tax rate to income tax expense at the effective income tax rate of the Group and the Company are as follows:- Group Company RM 000 RM 000 RM 000 RM 000 Loss before tax from continuing operations (47,721) (31,407) (44,978) (78,160) Loss before tax fromdiscontinued operations (433) (2,354) (48,154) (33,761) (44,978) (78,160)

93 TADMAX RESOURCES BERHAD (8184-W) Annual Report TAXATION (cont d) Group Company RM 000 RM 000 RM 000 RM 000 Taxation at applicable tax rate of 25% 12,039 8,440 11,244 19,540 Tax effects arising from - non-taxable income non-deductible expenditure (10,018) (6,249) (10,354) (19,660) - effects of share of results of associated companies (1,044) - effects of deferred tax assets 662 (809) (809) - deferred tax assets not recognised in different tax rate (524) (88) - deferred tax assets not recognised in the financial statements (1,635) (454) (1,939) - overaccrual in prior years (1,024) (929) Deferred tax assets have not been recognised for the following items:- Group Company RM 000 RM 000 RM 000 RM 000 Deductible temporary differences 40,636 40,837 (31) (83) Unutilised tax losses 11,813 2,975 8, ,449 43,812 8, Potential deferred tax assets not recognised at 24% (2012: 25%) 12,588 10,953 2, LOSS PER ORDINARY SHARE (a) Basic Loss Per Ordinary Share The basic loss per share is calculated by dividing the Group s net loss attributable to owners of the Company by the weighted average number of ordinary shares in issue during the financial year. Group RM 000 RM 000 Loss from continuing operations (46,973) (30,928) Loss from discontinued operations (433) (2,354) Loss for the financial year (47,406) (33,282) Weighted average number of ordinary shares on issue ( 000) 372, ,319 Basic loss per share (cents) from continuing operations (12.60) (9.75) Basic loss per share (cents) discontinued operations (0.12) (0.74) (12.72) (10.49) (b) Diluted Loss Per Ordinary Share The basic diluted loss per share is calculated by dividing the Group net loss attributable to owners of the Company by the weighted average number of ordinary shares in issue during the financial year, adjusted for the dilutive effects of all potential ordinary shares.

94 Annual Report 2013 TADMAX RESOURCES BERHAD (8184-W) RELATED PARTY DISCLOSURES (a) Identification of related parties A related party is an entity or person that directly or indirectly through one or more intermediary controls, is controlled by, or is under common or joint control with the Group and the Company or that have an interest in the Group and the Company that give it significant influence over the Group s and the Company s financial and operating policies. It also includes members of the key management personnel or close members of the family of any individual referred to herein and others who have the ability to control, jointly control or significantly influence for which significant voting power in the Group and the Company reside with, directly or indirectly. Key management personnel are defined as those persons having authority and responsibility for planning, directing and controlling the activities of the Group either directly or indirectly. The key management personnel includes all the Directors of the Group, and certain members of senior management of the Group. The Group and the Company has related party relationship with its related companies, Directors and key management personnel as follows: Related Parties Capital Castle Sdn. Bhd. Dato Faizal Bin Abdullah Isaacs, Tan & Chu, Advocates & Solicitors ( ITC ) Micro Credit Sdn. Bhd. Tadmax Power Sdn. Bhd. (Formerly known as Wijaya Baru Development Sdn. Bhd.) Tadmax Properties Sdn. Bhd. (Formerly known as WBG Assets Sdn. Bhd.) Usama Industries Sdn. Bhd. Venture Credit Sdn. Bhd. Wijaya Baru Aviation Sdn. Bhd. Wijaya Baru Sdn. Bhd. Relationship Company with one or more common directors previously Director of the Company A legal firm in which a director is a member Company with one or more common directors previously Subsidiary Subsidiary Subsidiary Former subsidiary Company with one or more common directors previously Former associate/company with one or more common directors previously (b) Transactions with related parties Significant related party transactions other than those disclosed elsewhere in the financial statements are as follows: Group Company RM 000 RM 000 RM 000 RM 000 Management fee received from subsidiaries 1,020 1,260 Legal fee charged by ITC to Tadmax Properties Sdn. Bhd. 26 Loan interest charged by Micro Credit Sdn. Bhd. 51 Dividend receivable from Wijaya Baru Sdn. Bhd. 2,700 Dividend receivable from Usama 4,549 Industries Sdn. Bhd. Rental paid to Wijaya Baru Sdn. Bhd Aviation services rendered from Wijaya Baru Aviation Sdn. Bhd. 44

95 TADMAX RESOURCES BERHAD (8184-W) Annual Report RELATED PARTY DISCLOSURES (cont d) (c) Key Management Personnel Compensation Salaries Group Company RM 000 RM 000 RM 000 RM Executive Directors Non-Executive Directors The details of directors remuneration during the financial year are as follows:- Allowances:- - Executive Directors Non-Executive Directors ,143 1,101 1,110 1,071 Details of directors emoluments of the Group received/receivable for the financial year in bands of RM50,000/- are as follows:- Number of Directors 2013 Non Non- Executive Executive Executive Executive Director Director Director Director Ranges of remuneration (RM) RM50,000 and below 5 5 RM50,001 RM100, RM200,001 RM250, RM250,001 RM300,000 RM600,001 RM750, The details of other key management personnel s remuneration during the financial year are as follows:- Group Company RM 000 RM 000 RM 000 RM salaries, bonus and other emoluments 1, , Employer s Provident Fund and SOCSO , , CAPITAL COMMITMENTS Group RM 000 RM 000 Approved and contracted for: Instant rice cooking plant 30,412 Property, plant and equipment 3,192 3,192 30,412

96 Annual Report 2013 TADMAX RESOURCES BERHAD (8184-W) MATERIAL LITIGATION (1) Civil Suit No: II at the High Court of Kuching, and Appeal to the Court of Appeal by the Plaintiff, Suit No. Q Usama Industries Sdn. Bhd. ( UISB ) vs Jati Bahagia Sdn. Bhd. ( JBSB ) UISB, a wholly owned subsidiary of the Company had filed a suit against JBSB, the purchaser of all merchantable timber felled and extracted from licensed areas, for a sum of RM21,814,790/- with interest, being the underpaid premium due and owing from the sale of logs under clause 3.4 of the Deed of Variation No. 2 from August 1999 to August However, due to the time barred, the claim has been reduced to RM17,820,140/-. All interlocutory matters are concluded and the case was heard on 27th and 28th April Both parties counsels were asked to give their written submission and the court had fixed on 15th June 2009 for a decision. The court had on 15th June 2009 dismissed UISB s case and UISB had filed the Notice of Appeal on 16th June On 2nd July 2009, UISB s solicitor attended a session on clarification of the court order to clarify the issue in the counterclaim by JBSB. Subsequently, the written judgement was received by UISB on 22nd August 2009 to dismiss UISB s claim as well as JBSB s counterclaim with each party to bear their own costs. JBSB had filed a Cross of Appeal ( COA ) on 17th August The Appeal was heard on 16th and 17th April 2012 and the Appeal was adjourned to 20th April 2012 for judgement. The judgement was then entered for the Plaintiff in the sum of RM17,820,140/-. On 9th August 2012, UISB has been informed that JBSB has been dissolved by the Registrar of Company under Section 308 of the Companies Act, 1965 in Malaysia. UISB made an Application to Court under Section 307 therein for a declaration that the dissolutions is void and on 22nd October 2012, the High Court granted the application for JBSB to be reinstated, a copy of which order has been given to the Registrar. No execution proceeds can be taken against JBSB as it is insolvent. UISB s legal counsel is also preparing a fresh application to take legal action against the directors and key personnel (or controllers) of JBSB who had been involved in the logging business pertaining to our civil suits against them for recovery of the judgement sum plus interest. In April 2014, the High Court allows this case to be consolidated with Case 5 (Civil Suit No: 22-12/4-2013) due to similarity of the facts. The outcome of the above legal case has no adverse financial impact to the Group. (2) Civil Suit No: at the High Court in Sabah and Sarawak at Miri (Formerly under Civil Suit No: S at the High Court in Sabah and Sarawak at Sibu) Usama Industries Sdn. Bhd. ( UISB ) vs Victor L.F. Wong trading as Victor Wong & Chiew Advocates and Solicitors and Victor Wong & Chiew Advocates and Solicitors (a firm) ( Defendants ) UISB filed a suit against the Defendants for professional negligence claiming special damages in the sum of RM27,440,000/- as well as general damages and interest. This is due to the fact that Victor L.F. Wong had caused two cases, being Civil suits III/I and I to lapse by not serving the summons thereby causing the two cases to be statue barred. The Sibu High Court had ordered the case to be transferred to the Miri High Court. Judgement in Default of Defence was filed on 11th November 2009 and was entered against the Defendants for negligence with damages to be assessed. The Defendants had filed an Application to set aside the judgement in Default and the case was heard before the Deputy Registrar High Court in Miri on 15th April The court was to make a ruling on 29th April 2010.

97 TADMAX RESOURCES BERHAD (8184-W) Annual Report MATERIAL LITIGATION (cont d) (2) Civil Suit No: at the High Court in Sabah and Sarawak at Miri (Formerly under Civil Suit No: S at the High Court in Sabah and Sarawak at Sibu) Usama Industries Sdn. Bhd. ( UISB ) vs Victor L.F. Wong trading as Victor Wong & Chiew Advocates and Solicitors and Victor Wong & Chiew Advocates and Solicitors (a firm) ( Defendants ) (cont d) On 29th April 2010, the High Court allowed the application of the Defendants to set aside the judgement in default and ordered the defendants to file in the defence within two weeks from 5th May The Defendants had filed their defence and counter-claim. Our solicitors had to file its Reply and Defence to the counter-claim by 21st May The case was fixed for hearing on 7th July 2010 and later adjourned to reschedule to 22nd September On a video conference fixed on 11th February 2011, the Court granted the adjournment and also would wish to know if there is any possibility of settlement outside the court. The Chief Justice had earlier attempted to mediate for a settlement but aborted the effort. The hearing of the full trial date which was fixed on 15th to 18th February 2011 had been postponed. The Court had fixed the hearing dates as 7th to 10th February On 8th and 9th February 2012 the High Court had dismissed UISB s case and awarded costs of RM70,000/- against UISB and since the Defendant withdrew the counter claim, the Court has awarded costs of RM15,000/- in favour of UISB. The commitment of the court fee has been fulfilled and paid by UISB. The directors and the Company s solicitors are of the view that based on the numerous evidences available so far, there is a good case against the Defendants. As a result, UISB is in the progress of appealing to Court of Appeal and is awaiting for a hearing date to be fixed. The High Court had fixed a hearing date on 27th August 2013 in Kuching, where the Court of Appeal ruled that the trial judge was not wrong in his direction, the appeal by UISB was dismissed with the Court Awarding costs of RM10,000/- against UISB in favour of the Respondent. UISB s solicitor are of the view that no further grounds to appeal further. (3) Civil Suit No: at the High Court in Sabah and Sarawak at Sibu Usama Industries Sdn. Bhd. ( UISB ) vs Jati Bahagia Sdn. Bhd. ( JBSB ) UISB filed a Writ of Summons and Statement of Claim ( Writs ) on 17th August 2009 which has been served on the advocates of JBSB on 2nd September This suit arose due to the breach of the Deed of Variation No. 2 dated 15th October 1998 by JBSB. Despite repeated protests and demands, JBSB refused to pay UISB a premium for the logs purchased based on market price of Meranti timber of standard quality and above but continued to pay UISB a premium based on the arbitrary price set up by JBSB on Meranti timber which has no reference to the market price of Meranti in an open market at all. UISB claims against JBSB for: (i) (ii) (iii) (iv) The sum of RM15,570,644/- being the amount of underpaid premium due and owing from the sale of logs under the Deed of Variation No. 2 from August 2006 to July Interest at the rate of 8% per annum from the date of the Writs until judgement and thereafter interests at the rate of 8% per annum from the date of the judgement until full payment. Such further and other relief as the Court deems fit and proper. Costs. Summons had been served and the case came up for case management on 19th April The case was originally fixed for hearing on the 27th September 2010 and our lawyer had applied for an adjournment.

98 Annual Report 2013 TADMAX RESOURCES BERHAD (8184-W) MATERIAL LITIGATION (cont d) (3) Civil Suit No: at the High Court in Sabah and Sarawak at Sibu Usama Industries Sdn. Bhd. ( UISB ) vs Jati Bahagia Sdn. Bhd. ( JBSB ) (cont d) The case came up for mention on the 22nd November 2010 during which time the court ordered the party to come out with agreed facts and issues. The court adjourned the case until the hearing and the disposal of the Appeal in Case 1 above (Civil Suit No: II and Civil Appeal No: Q ). In UISB s solicitor opinion, the outcome of this case will largely depend on the result of the appeal in Case 1 above (Civil Appeal No. Q ). In April 2014, the High Court allows this case to be consolidated with Case 5 (Civil Suit No: 22-12/4-2013) due to similarity of the facts. The outcome of the above legal case has no adverse financial impact to the Group. (4) Civil Suit No: SB of 2011 at the High Court in Sabah and Sarawak at Sibu Usama Industries Sdn Bhd ( UISB ) vs Jati Bahagia Sdn. Bhd. ( JBSB ) UISB, a wholly-owned subsidiary of the Company had filed a Writ of Summons and Statement of Claim both dated 9th May 2011 against JBSB which were duly served on JBSB s solicitors on 23rd May The suit arose due to the breach of the Deed of Variation No.2 dated 15th October 1998 by JBSB. Despite repeated protests and demands, JBSB refused to pay UISB premiums for the logs felled, extracted and purchased based on the market price of Meranti timber of SQ grade and above but continued to pay UISB a premium based on the arbitrary price set up by JBSB on Meranti timber based on the individual private sale or by private treaties between the two private individuals. UISB claims against JBSB for:- (i) (ii) (iii) (iv) The sum of RM4,322,627/- being the amount of underpaid premium due and owning from the sale of logs under the Deed of Variation No.2 from August 2009 to June Interest at the rate of 8% per annum from the date of the Writs until Judgement and thereafter interests at the rate 8% per annum from the date of the Judgement until full payment. Such further and other relief as the Court deems fit and proper. Costs. The High Court has adjourned this case until the hearing and the disposal of the Court of Appeal Civil Appeal No.Q as the facts of this case are similar to the Civil Appeal. The High Court also allows this case to be consolidated with Case 3 (Civil Suit No: ) above due to similarity of the facts. The final case arrangement was on 14th January 2013 where the counsel for JBSB was absent. In UISB s solicitor opinion that the outcome of this case will largely depend on the result of the Appeal in Case 1 above (Civil Appeal No: Q ). In April 2014, the High Court allows this case to be consolidated with Case 5 (Civil Suit No: 22-12/4-2013) due to similarity of the facts. The outcome of the above legal case has no adverse financial impact to the Group.

99 TADMAX RESOURCES BERHAD (8184-W) Annual Report MATERIAL LITIGATION (cont d) (5) Civil Suit No: 22-12/ at the High Court in Sabah and Sarawak at Sibu Usama Industries Sdn. Bhd. ( UISB ) vs Jati Bahagia Sdn. Bhd. ( JBSB ), Datuk Wong Kie Nai, Wong Kie Yik, Lau Puong Ying, Habsah Binti Abdul Rahman, Audrey Wong Haw Ing, Patrick Wong Haw Yeong, Wong Hou Liang, Mimi Wong Haw Wai, Annie Wong Haw Bing, Loh Leh Loh Leh Pong ( the Defendant ) UISB filed a Writ of Summons and Statement of Claim ( Writs ) on 8th April 2013, which was subsequently served on the advocates of Jati Bahagia Sdn Bhd and the individuals named as above in their personal capacity, representing the owners, managers and controllers of JBSB. This suit arose due to the inability of UISB to enforce judgment entered in its favour on 27th March 2013 in the 3 suits described above (relating to underpaid premium for logs felled) due to the insolvency of JBSB. Based on Court of Appeal of Suit No: Q (sum of RM17,178,821/-), suit no (sum of RM15,570,644/-) and suit no SB (RM4,322,627/-), UISB is now seek to claim the full combined sum of RM37,072,092/- inclusive of interest at the rate of 8% against the Defendant on the grounds that controllers of JBSB being known parties carrying out the business of JBSB with the intention to defraud its creditors. The High Court have postponed fixing a date and proceedings are currently still in the interlocutory and discovery stage as both parties requested for an extension to compile the necessary documentation. The High Courts have fixed a date for the trial to be heard on 7th April However, UISB s solicitor had on behalf requested the High Court to postpone have the hearing date to May The outcome of the above legal case has no adverse financial impact to the Group. 36. SEGMENTAL ANALYSIS For management purposes, the Group is organised into business units based on their products and services, and has reportable operating segments as follows:- (i) (ii) (iii) (iv) (v) (vi) (vii) Timber Investment holding Property development and construction related Licenced money lending Agricultural cultivation and trading (Discontinued operations) Industrial supplies Others (dormant group entities) Except as indicated above, no operating segments have been aggregated to form the above reportable operating segments. Measurement of Reportable Segments Performance is measured based on segment profit before tax, interest, depreciation and amortisation, as included in the integral management reports that are reviewed by the Group s Chief Executive Officer (the chief operating decision maker). Segment profit is used to measure performance as management believes that such information is the most relevant in evaluating the results of certain segments relative to other entities that operates within these industries. Segment assets The total of segment asset is measured based on all assets of a segment other than current and deferred tax assets. Segment liabilities The total of segment liability is measured based on all liabilities of a segment other than current and deferred tax liabilities. Segment capital expenditure Segment capital expenditure is the total cost incurred during the financial year to acquire property, plant and equipment.

100 Annual Report 2013 TADMAX RESOURCES BERHAD (8184-W) SEGMENTAL ANALYSIS (cont d) Property development and Licenced Investment construction Industrial money Elimination/ Discontinued Total Group Timber holding related supplies lending Others Adjustments Consolidated operations operations 2013 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 Revenue External sales 12,924 3, , ,088 Inter segment Management fee 1,020 (1,020) (a) Dividend 4,549 (4,549) (a) 5,569 12,924 3, (5,569) 16, ,088 Segment results Profit /(loss) from operations 456 (16,660) (6,820) (10,237) 4 (7,624) 15,532 (b) (25,349) (433) (25,782) Finance costs (12,084) (12,084) (12,084) Share of results of associate (10,288) (10,288) (10,288) Taxation (44) (2) Net loss for the financial year 474 (38,426) (6,864) (10,237) 2 (7,454) 15,532 (46,973) (433) (47,406) Assets and liabilities Segment assets 6, , , ,401 3,363 (351,750) (c) 566, ,965 Additions to non-current assets Other segment assets 1, ,619 5,612 5,612 Consolidated total assets 6, , , ,336 5,984 (351,750) 572, ,592 Segment liabilities ,346 91, ,417 6,691 (71,288) (d) 362, ,963 Other segment liabilities 4, ,261 4,261 Consolidated total liabilities 4, ,357 91, ,424 6,691 (71,288) 367, ,224 Other information Depreciation Amortisation of prepaid land lease payments 62 (e) Amortisation of prepaid land lease payments with cultivation rights 1,972 (e) 1,972 1,972

101 TADMAX RESOURCES BERHAD (8184-W) Annual Report SEGMENTAL ANALYSIS (cont d) Property development and Licenced Agricultural Investment construction money cultivation Elimination/ Discontinued Total Group Timber holding related lending and trading Others Adjustments Consolidated operations operations 2012 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 Revenue External sales ,932 2,428 Inter segment Management fee 1,260 (1,260) (a) Dividend 2,700 (2,700) (a) 3, (3,960) 496 1,932 2,428 Segment results Profit/(loss) from operations (5,728) (386) (4,215) (5,937) (b) (14,474) (2,354) (16,828) Finance costs (12,761) (12,761) (12,761) Share of results of associate (4,172) (4,172) (4,172) Taxation Net loss for the financial year (5,728) (16,840) (4,215) (5,937) (30,928) (2,354) (33,282) Assets and liabilities Segment assets 11, , ,394 6,237 8,217 (182,718) (c) 551,050 37, ,510 Investment in an associate 91,514 (57,504) (c) 34,010 34,010 Additions non-current assets ,942 4, ,851 Other segments assets 5,960 5,960 5,960 Consolidated total assets 11, , ,394 6,237 18,119 (240,222) 595,870 37, ,331 Segment liabilities 2, ,852 (127,464) 5,705 12,241 (4,334) (d) 293,840 17, ,623 Other segments liabilities 75,591 (d) 75,591 75,591 Consolidated total liabilities 2, ,852 (127,464) 5,705 12,241 71, ,431 17, ,214 Other information Depreciation ,185 Amortisation of prepaid land lease payments Amortisation of financial assets and liabilities Amortisation of prepaid land lease payments with cultivation rights 1,971 (e) 1,971 1,971 Impairment loss on prepaid land lease payments 4,654 4,654 4,654

102 Annual Report 2013 TADMAX RESOURCES BERHAD (8184-W) SEGMENTAL ANALYSIS (cont d) Notes Nature of adjustments and eliminations to arrive at amounts reported in the consolidated financial statements (a) (b) (c) Inter-segment transactions are eliminated on consolidation. Profit/(loss) from other segment transactions are eliminated on consolidation. The following items are deducted from segments assets to arrive at total assets reported in the consolidated statement of financial position:- Group RM 000 RM 000 Prepaid land lease payments 2,538 Prepaid land lease payments with cultivation rights 65,057 67,029 Investment in subsidiaries (562,503) (591,833) Investment in an associate (228) Timber concession rights 218, ,000 Amount due from subsidiaries (142,052) Goodwill 67,210 66,810 (351,750) (240,222) (d) The following items are added to/(deducted from) segment liabilities to arrive at total liabilities reported in consolidated statement of financial position:- Group RM 000 RM 000 Deferred tax liabilities 70,764 71,257 Amount due to subsidiaries (142,052) (71,288) 71,257 (e) The amortisation of assets are added to other information. Geographical information Group Revenue Non-Current Assets Total Assets RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 Malaysia 16, , ,012 People s Republic of China 575 1,932 15,813 37,460 Singapore 9 Indonesia , ,269 17,088 2, , ,750 The non-current assets and total assets disclosed above exclude deferred tax assets, tax recoverable and financial instruments as per the provisions of MFRS 8.

103 TADMAX RESOURCES BERHAD (8184-W) Annual Report SEGMENTAL ANALYSIS (cont d) Information about major customers Details of transactions with major external customers, being those whose revenue amounts to ten percent or more of the Group s revenue, should be disclosed. A group of entities known to a reporting entity to be under common control shall be considered as a single customer, and a government and entities known to the reporting entity to be under the control of that government shall be considered a single customer. Revenue from major customers amounted to RM15,695,790/- (2012: RM496,000/-) derived from property development and industrial supplies. In 2012, the revenue derived from interest on money lending. 37. FINANCIAL INSTRUMENTS (a) Classification of Financial Instruments 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: Financial liabilities Available Loans at amortised 2013 for sales and receivables cost Total Group RM 000 RM 000 RM 000 RM 000 Financial assets Trade and other receivables 37,040 37,040 Amount due from customers on contracts 5 5 Fixed deposits placed with licensed banks Cash and bank balances ,506 38,506 Financial liabilities Trade and other payables 18,087 18,087 Amount owing to a director 41,919 41,919 Hire purchase liabilities Bank borrowings 225, , , ,530 Company Financial assets Trade and other receivables 26,805 26,805 Fixed deposits placed with licensed banks Cash and bank balances ,139 28,139

104 Annual Report 2013 TADMAX RESOURCES BERHAD (8184-W) FINANCIAL INSTRUMENTS (cont d) (a) Classification of Financial Instruments (cont d) Financial liabilities Available Loans at amortised 2013 for sales and receivables cost Total Company RM 000 RM 000 RM 000 RM 000 Financial liabilities Trade and other payables 5,658 5,658 Amount owing to subsidiaries 131, ,272 Amount owing to a director 41,889 41,889 Hire purchase liabilities Bank borrowings 225, , , , Group Financial assets Trade and other receivables 20,591 20,591 Fixed deposits placed with licensed banks Cash and bank balances ,244 21,244 Financial liabilities Other payables 7,109 7,109 Amount owing to a director 69,426 69,426 Hire purchase liabilities Bank borrowings 216, , , , Company Financial assets Other receivables 13,716 13,716 Cash and bank balances ,263 14,263 Financial liabilities Other payables 4,167 4,167 Amount owing to subsidiaries 114, ,060 Amount owing to a director 69,396 69,396 Hire purchase liabilities Bank borrowings 216, , , ,628

105 TADMAX RESOURCES BERHAD (8184-W) Annual Report FINANCIAL INSTRUMENTS (cont d) (b) Financial Risk Management The Group seeks to manage effectively various risks, namely credit, liquidity, foreign currency and interest rate risks to which the Group and the Company are exposed to in their daily operations. (i) Credit risk Credit risk is the risk of loss that may arise on outstanding financial instruments should a counterparty default on its obligations. The Group and the Company s exposure to credit risk arise primarily from trade and other receivables. Trade and other receivables presented in the statements of financial position are net of allowances for impairment losses, estimated by management based on prior experience and the current economic environment. The Group and the Company s objective is to seek continual revenue growth while minimising losses incurred due to increased credit risk exposure. The Group and the Company trade only with recognised and creditworthy third parties. It is the Group and the Company s policy that all customers who wish to trade on credit terms are subject to credit verification procedures. The exposure to credit risk is monitored by the management on an on-going basis and the management do not expect any counterparty would fail to meet its obligations. The carrying amounts of the financial assets recorded in the statements of financial position at the end of the reporting period represent the Group and the Company 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 to the financial statements. As at the reporting date, the Group and the Company have a significant concentration of credit risk in the form of outstanding balances arising from the amount due from 3 (2012: 1) customers representing approximately 95% (2012: 100%) of the total trade receivables. (ii) Liquidity risk Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group s exposure to liquidity risk arises principally from its various payables, loans and borrowings. The Group maintains a level of cash and cash equivalents and bank facilities deemed adequate by the management to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when they fall due. It is not expected that the cash flows included in the maturity analysis could occur significantly earlier, or at significantly different amounts.

106 Annual Report 2013 TADMAX RESOURCES BERHAD (8184-W) FINANCIAL INSTRUMENTS (cont d) (b) Financial Risk Management (cont d) (ii) Liquidity risk (cont d) Maturity analysis The table below summarise the maturity profile of the Group s and the Company s financial liabilities as at the end of the reporting period based on undiscounted contractual payments: Contractual undiscounted cash flows On Demand Carrying or Within amount Year 1-5 Years > 5 Years Total Group RM 000 RM 000 RM 000 RM 000 RM 000 Financial liabilities: Trade and other payables 18,087 18,087 18,087 Amount owing to a director 41,919 41,919 41,919 Hire purchase liabilities Bank borrowings 225,121 88, , ,276 Company Financial liabilities: 285, , , ,717 Trade and other payables 5,658 5,658 5,658 Amount owing to subsidiaries 131, , ,272 Amount owing to a director 41,889 41,889 41,889 Hire purchase liabilities Bank borrowings 225,121 88, , , , , , , Group Financial liabilities: Other payables 7,109 7,109 7,109 Amount owing to a director 69,426 69,426 69,426 Hire purchase liabilities Bank borrowings 216,491 41, , , , , , ,742 Company Financial liabilities: Other payables 4,167 4,167 4,167 Amount owing to subsidiaries 114, , ,060 Amount owing to a director 69,396 69,396 69,396 Hire purchase liabilities Bank borrowings 216,491 41, , , , , , ,830

107 TADMAX RESOURCES BERHAD (8184-W) Annual Report FINANCIAL INSTRUMENTS (cont d) (b) Financial Risk Management (cont d) (iii) Foreign currency risk Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Group has transactional currency exposures arising from sales and purchases that are denominated in a currency other than the respective functional currencies of the Group s entities, primarily Ringgit Malaysia ( RM ). The foreign currencies in which these transactions are denominated are mainly United States Dollar and Renminbi. Exposure to foreign currency The following table details the Group s and the Company s exposure at the reporting date to currency risk arising from recognised financial assets and liabilities denominated in a currency other than the functional currency of the Group and of the Company. For presentation purposes, the amounts of the exposure are shown in Ringgit Malaysia (RM 000), translated using the spot rate at the year-end date: USD Rupiah Group Financial assets Cash and bank balances Other receivables 60 Financial liabilities Other payables (2,060) (1,393) Bank borrowings (209,632) (198,592) (209,596) (198,479) (1,999) (1,279) Company Financial assets Cash and bank balances Financial liabilities Bank borrowings (209,632) (198,592) (209,606) (198,479) 10 Sensitivity analysis The following table indicates the approximate change in the Group s and the Company s loss after tax and accumulated losses in response to reasonable possible changes in the foreign exchange rates to which the Group and the Company have significant exposure at the reporting date, assuming all other variable risk variables remained constant. Other components of the equity would not be affected by changes in the foreign exchange rate:- Increase / (Decrease) RM Strengthen (1%) RM Weaken (1%) RM 000 RM 000 RM 000 RM 000 Group Net loss and equity US Dollar (2,096) (1,985) 2,096 1,985 Rupiah (20) (13) 20 13

108 Annual Report 2013 TADMAX RESOURCES BERHAD (8184-W) FINANCIAL INSTRUMENTS (cont d) (b) Financial Risk Management (cont d) (iii) Foreign currency risk (cont d) Increase / (Decrease) RM Strengthen (1%) RM Weaken (1%) Company Net loss and equity US Dollar RM 000 (2,096) RM 000 (1,985) RM 000 2,096 RM 000 1,985 The sensitivity analysis assumes that the change in foreign exchange rates had been applied to re-measure those financial instruments held by the Group and the Company which expose the Group and the Company to foreign currency risk at the reporting date. The same analysis is performed for 2011 and (iv) Interest rate risk Interest rate risk is the risk that the fair value or future cash flows of the Group s financial instruments will fluctuate because of changes in market interest rates. The Group manages the net exposure to interest rate risks by maintaining sufficient lines of credit to obtain acceptable lending costs and by monitoring the exposure to such risks on an ongoing basis. The Management does not enter into interest rate hedging transactions as the cost of such instruments outweighs the potential risk of interest rate fluctuation. Exposure to interest rate risk The interest rate profile of the Group s significant interest-bearing financial instruments based on carrying amount as at the end of the reporting period was: Interest rate Group and Company % % RM 000 RM 000 Fixed rate instruments Financial assets 2.2% 3.01% Financial liabilities 3.73% to 4.09% 3.82% to 4.18% (403) (514) 97 (484) Floating rate instruments Financial liabilities 5.09% to 9.24% 5.24% to 9.5% (225,121) (216,491) Interest rate risk sensitivity analysis Fixed rate instruments The Group does not account for any fixed rate financial assets and liabilities at fair value through profit or loss, and the Group does not designate derivatives as hedging instruments under a fair value hedge accounting model. Therefore, a change in interest rates at the end of the reporting period would not affect profit or loss. Floating rate instruments At the reporting date, if interest rates had been 1% lower/higher, with all other variables held constant, the Group s profit net of tax would have been RM2,251,000/- (2012: RM2,165,000/-) higher/lower, arising mainly as a result of lower/higher interest expense on floating rate loans and borrowings. The assumed movement in basis points for interest rate sensitivity analysis is based on the currently observable market environment.

109 TADMAX RESOURCES BERHAD (8184-W) Annual Report SIGNIFICANT EVENTS DURING AND AFTER THE FINANCIAL YEAR (i) (ii) On 6th March 2013, the Group has disposed of an industrial land with two open-sided industrial buildings to a third party for a total consideration of RM12,000,000/-. On 9th April 2013, the Group had entered into a Sale and Purchase Agreement ( Initial SPA ) to dispose off a leasehold land ( the Land ) located at Pulau Indah, Port Klang, Selangor Darul Ehsan measuring approximately 60 acres to a third party for a total cash consideration of RM48,351,600/-. On 28th April 2014, the Group had entered into the variation to the Initial SPA which entails the agreement for the sale and purchase ( Varied SPA ) of 100% shareholdings in Kirana Abadi Sdn. Bhd. represented by two (2) ordinary shares of RM1/- each ( the Sale Shares ), who in turn owns the Land, in view of the changes to the method of securing the issue document of title through insertion of co-owners followed by land partitioning instead of undertaking sub-division of the Master Title at the agreed sales consideration as per Initial SPA. The completion of the sale is pending the satisfaction of conditions precedent as stipulated in the Varied SPA. (iii) (iv) (v) (vi) (vii) On 29th April 2013, the Company had entered into a Share Sale Agreement ( SSA ) to dispose its entire equity interest in Chongqing Liangshan Wijaya Food Limited ( CLWFL ) for a consideration of RM20,000,000/-. (Note 17) On 29th April 2013, the Company had acquired 23,002 ordinary shares of RM1/- each representing 100% of the issued and paid-up capital of Arus Global Sdn. Bhd. from its former associate company, Wijaya Baru Sdn. Bhd. for a consideration of RM3,000,000/-. On 30th May 2013, the Company entered into a Sale and Purchase Agreement to acquire two units of five-storey shop offices situated at Kelana Jaya, Selangor Darul Ehsan from Capital Castle Sdn. Bhd., a company with a common director then for a consideration of RM5,400,000/-. The said acquisition is pending completion upon full payment of purchase consideration. On 31st May 2013, the Company had entered into a Sale and Purchase Agreement to dispose Venture Credit Sdn. Bhd. for a consideration of RM200,000/-. The Directors of the Company have proposed to implement a capital reduction of the issued and paid-up capital of the Company ( the Proposal ) via the cancellation of RM0.50 of the par value of each unit of ordinary share. At an Extraordinary General Meeting held on 11th April 2013, the shareholders of the Company have approved the Proposal. On 10th July 2013, the High Court of Malaya ( The Court ) had granted order-in-terms in respect of the application by the Company for the Proposal. On 18th July 2013, the sealed order of the Court confirming the capital reduction has been lodged with the Companies Commission of Malaysia. Accordingly, the capital reduction took immediate effect, whereby the par value of each ordinary share in the Company will be reduced from RM1/- to RM0.50 per ordinary share. (viii) On 31st July 2013, the Company incorporated a wholly-owned subsidiary known as Tadmax Builders Sdn. Bhd. of which comprising 2 issued and paid-up capital of RM1/- each. On 25th November 2013, the Company subscribed additional 999,998 new ordinary share of RM1/- each in Tadmax Builders Sdn. Bhd. for a total cash consideration of RM999,998/-. (ix) On 15th August 2013, the Company had acquired 2 ordinary shares of RM1/- each fully paid-up capital of both Kirana Abadi Sdn. Bhd. ( KASB ) and Platinum Frigate Sdn. Bhd. ( PFSB ) for a total consideration of RM2/- for each company and these became wholly owned subsidiaries of the Company.

110 Annual Report 2013 TADMAX RESOURCES BERHAD (8184-W) SIGNIFICANT EVENTS DURING AND AFTER THE FINANCIAL YEAR (cont d) (x) (xi) (xii) On 16th August 2013, 10,000,000 ordinary shares of RM0.50 each of the Company were allotted to Dato Faizal bin Abdullah at RM0.50 each pursuant to the partial settlement of debt owing to Dato Faizal bin Abdullah as approved by the shareholders of the Company at the Extraordinary General Meeting held on 11th April On 30th October 2013, the Company disposed off its entire 2,475,000 issued and paid-up capital of RM1/- comprising 45% equity interest in Wijaya Baru Sdn. Bhd. for a consideration of RM20,000,000/- represented by cash consideration of RM2,943,000/- and RM17,057,000/- by way of novation of the amount due to a director, Dato Faizal bin Abdullah. On 20th February 2014, the Company had announced the proposal to dispose off the entire issued and paid-up share capital of Tadmax Power Sdn. Bhd. ( TPSB ), a wholly-owned subsidiary of the Company, Tadmax Resources Berhad for a total disposal consideration of RM317,334,600/- to be satisfied entirely in cash ( Proposed Disposal ). The Circular to shareholders has been issued on 21st April 2014 to seek the approval of the shareholders of the Company at an extraordinary meeting scheduled to be held on 15th May TPSB is the beneficial and registered owner of approximately 310 acres out of the total land area measuring approximately 379 acres of a piece of vacant leasehold land located at Pulau Indah, Klang, Selangor Darul Ehsan. 39. CAPITAL MANAGEMENT The primary objective of the Group s capital management is to ensure that it maintains a strong capital base and safeguards the Group s ability to continue as a going concern, so as to maintain investor, creditor and market confidence and to sustain the future development of the business. The Group manages its capital structure by monitoring the capital and net debt on an on-going basis. There were no changes in the Group s approach to capital management during the financial year. Group Company RM 000 RM 000 RM 000 RM 000 Total liabilities 367, , , ,853 Less: Cash and bank balances (1,461) (694) (834) (547) Net debt 365, , , ,306 Total equity attibutable to the owner of the Company 176, , , ,523 Capital and net debts 542, , , ,829 Gearing ratio 67% 64% 68% 63% The Group is also required to comply with the disclosure and necessary capital requirements as prescribed in the Main Market Listing Requirements of Bursa Malaysia Securities Berhad.

111 TADMAX RESOURCES BERHAD (8184-W) Annual Report Supplementary Information - Disclosure of Realised and Unrealised Profits or Losses The breakdown of the accumulated losses of the Group and of the Company as at 31st December, into realised and unrealised profits, pursuant to Paragraphs 2.06 and 2.23 of the Bursa Malaysia Main Market Listing Requirements, are as follows: Group Company Group Company RM 000 RM 000 RM 000 RM 000 Total accumulated losses of Tadmax Resources Berhad -Realised (218) (126,764) (170,511) (279,992) -Unrealised (11,961) (11,043) (3,010) 6,571 (12,179) (137,807) (173,521) (273,421) Total share of retained profits from an associate -Realised 31,891 -Unrealised (6,870) 25,021 Total accumulated losses (12,179) (137,807) (148,500) (273,421) The determination of realised and unrealised profits or loss is based on the Guidance on Special Matter No.1, Determination of Realised and Unrealised Profits and Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, issued by the Malaysian Institute of Accountants on 20th December The disclosure of realised and unrealised profits or losses above is solely for complying with the disclosure requirements stipulated in the directive of Bursa Malaysia and should not be applied for any other purposes.

112 Annual Report 2013 TADMAX RESOURCES BERHAD (8184-W) 111 Statement by Directors We, DATO FAIZAL BIN ABDULLAH and DATUK SULAIMAN BIN DAUD, being two of the directors of Tadmax Resources Berhad, do hereby state that in the opinion of the directors, the financial statements set out on pages 34 to 109 are properly drawn up in accordance with the Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of Companies Act, 1965 in Malaysia, so as to give a true and fair view of the financial positions of the Group and of the Company as at 31st December 2013 and of the results and cash flows of the Group and of the Company for the financial year ended on that date. The supplementary information set out on page 110 has been prepared in accordance with the 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, issued by the Malaysian Institute of Accountants and presented based on the format prescribed by Bursa Malaysia Securities Berhad. On behalf of the Board, DATO FAIZAL BIN ABDULLAH Director DATUK SULAIMAN BIN DAUD Director Petaling Jaya Date: 29th April 2014 Statutory Declaration We, DATO FAIZAL BIN ABDULLAH, being the director and POW TUCK WENG, being the officer primarily responsible for the financial management of Tadmax Resources Berhad, do solemnly and sincerely declare that to the best of our knowledge and belief, the financial statements set out on pages 34 to 109 and the supplementary information set out on page 110 are correct, and we make this solemn declaration conscientiously believing the same to be true, and by virtue of the provisions of the Statutory Declarations Act, l960. DATO FAIZAL BIN ABDULLAH POW TUCK WENG Subscribed and solemnly declared by the abovenamed at Petaling Jaya in the Selangor Darul Ehsan on 29th April Before me, R. LAKSHMANAN Commissioner for Oaths License No.: B396

113 TADMAX RESOURCES BERHAD (8184-W) Annual Report Independent Auditors Report to the Members of Tadmax Resources Berhad We have audited the financial statements of Tadmax Resources Berhad, which comprise the statements of financial position as at 31st December 2013 of the Group and of the Company, and the statements of comprehensive income, statements of changes in equity and statements of cash flows of the Group and of the Company for the financial year then ended, and a summary of significant accounting policies and other explanatory information, as set out on pages 34 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 the Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia. The directors are also responsible for such internal controls as the directors determine are necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors Responsibility Our responsibility is to express an opinion on these financial statements based on 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 controls relevant to the Company 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 Company s internal controls. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements give a true and fair view of the financial position of the Group and of the Company as at 31st December 2013 and of their financial performance and cash flows for the financial year then ended in accordance with the Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia.

114 Annual Report 2013 TADMAX RESOURCES BERHAD (8184-W) 113 Independent Auditors Report (cont d) 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 Companies Act, 1965 in Malaysia to be kept by the Company and its subsidiaries of which we have acted as auditors have been properly kept in accordance with the provision of the Companies Act, 1965 in Malaysia. 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 5 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 a form and content appropriate and proper for the purposes of the preparation of the financial statements of the Group and we have received satisfactory information and explanations required by us for those purposes. d) The 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 Companies Act, 1965 in Malaysia. Other Reporting Responsibilities The supplementary information set out in page 110 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 the 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 contents of this report. Baker Tilly Monteiro HENG No. AF 0117 Chartered Accountants Ng Boon Hiang No. 2916/03/16 (J) Chartered Accountant Kuala Lumpur Date: 29th April 2014

115 TADMAX RESOURCES BERHAD (8184-W) Annual Report List Of Properties as at 31 December 2013 Address / Location Land Area / Build Up Area Existing Use Tenure Age of Building Carrying Value (RM 000) Date of Acquisition(a) / Revaluation(b) Title No. Pajakan Negeri 7375 Lot No in Mukim Klang, Daerah Klang, Negeri Selangor Darul Ehsan Land area measuring approximately hectares Vacant 99 years lease expiring on 24 March 2096 N/A 164,402 1 March 2005(a) Parcel Nos. A-13-01, A-13-02, A-13-03, A-13-03A, A-13-05, A-13-06, A-13-07, A-13-08, A & A-13-10, Taragon Kelana Commercial Centre, Kelana Jaya, Selangor Total area measuring approximately 12,157 sq. ft. Office Suites Freehold Approximately 1 year 5, November 2011(a) Distirk KI dan Jair, Kabupaten Boven Digoel, Provinsi Papua, Indonesia (PT. Manunggal Sukses Mandiri) Land area measuring approximately 40,000 hectares Timber Logging and Oil Palm Cultivation 35 years of Land Use Right expiring from the date of issue of Certificate of Rights to Cultivate (pending issuance) N/A 32, December 2011(a) Distirk KI dan Jair, Kabupaten Boven Digoel, Provinsi Papua, Indonesia (PT. Trimegah Karya Utama) Land area measuring approximately 40,000 hectares Timber Logging and Oil Palm Cultivation 35 years of Land Use Right expiring from the date of issue of Certificate of Rights to Cultivate (pending issuance) N/A 32, December 2011(a) Kawasan Industri Batu Kapur Keramat Pulai with legal description as HS(D) No Lot No. PT 23013, Mukim of Sungai Raya, Kinta, Perak Darul Ridzuan. Land area measuring approximately hectares Quarry land 28 years expiring 17 May 2041 N/A 2, April 2013(a)

116 Annual Report 2013 TADMAX RESOURCES BERHAD (8184-W) 115 Analysis of Shareholdings as at 5 May 2014 Class of Equity Security Authorised share capital Issued & fully paid-up capital Class of shares Voting rights : RM600,000,000 : RM186,615,873 : Ordinary shares of RM0.50 each : One vote per ordinary share Distribution of Shareholdings No. of No. of Holdings Shareholders Shares %* Less than , to 1,000 1,322 1,254, ,001 to 10,000 2,991 13,758, ,001 to 100,000 1,273 45,848, ,001 to less than 5% of issued shares ,246, % and above of issued shares 3 167,634, Total 6, ,757,446* Directors Shareholdings Direct Interest Indirect Interest No. of No. of Name Shares held %* Shares held %* Dato Faizal bin Abdullah 17,803, Dato Che Rashidi bin Che Omar Dato Pahlawan Mohammed Shukor bin Hj Abdullah Datuk Sulaiman bin Daud Tan Chee Siang Tan Peng Koon Aldillan bin Anuar 109,301, ^ Noel John A/L M Subramaniam 250, Derek John Fernandez * Tan Sri Datuk Dr Abdul Samad bin Haji Alias was appointed as a director of the Company on 15 May He has a direct interest of 65,000 ordinary shares in the Company, representing 0.02% of the total issued and paid-up capital of the Company. Substantial Shareholders Direct Interest Indirect Interest No. of No. of Name Shares held %* Shares held %* Anuar bin Adam 109,301, Chen Chee Min 38,839, Dato Seri Tiong King Sing 20,055,

117 TADMAX RESOURCES BERHAD (8184-W) Annual Report Analysis of Shareholdings (cont d) Thirty (30) Largest Shareholders No. Name Shareholdings %* 1 Kenanga Nominees (Tempatan) Sdn Bhd Pledged Securities Account For Anuar Bin Adam 109,301, RHB Nominees (Tempatan) Sdn Bhd OSK Capital Sdn Bhd For Chen Chee Min 38,277, RHB Nominees (Tempatan) Sdn Bhd OSK Capital Sdn Bhd For Tiong King Sing 20,055, RHB Nominees (Tempatan) Sdn Bhd Pledged Securities Account For Faizal Bin Abdullah 17,803, HDM Nominees (Asing) Sdn Bhd UOB Kay Hian Pte Ltd For Zulkifli Bin Baharudin 7,296, JF Apex Nominees (Tempatan) Sdn Bhd Pledged Securities Account For Hew Tien Shoong 7,243, RHB Capital Nominees (Tempatan) Sdn Bhd Pledged Securities Account For Tengku Adnan Bin Tengku Mansor 7,086, Kenanga Nominees (Tempatan) Sdn Bhd Pledged Securities Account For Kok Boon Kiat 5,987, Chia May Fong 5,384, Lee Ngee Moi 5,002, HDM Nominees (Tempatan) Sdn Bhd Pledged Securities Account For Seow Kah Heng 4,060, Norlin Syahida Binti Ab.Halim 2,800, Raja Mohd Nazri Bin Raja Abd Malek 2,500, Tan Teong Hock 1,942, Ong Kow Wha 1,904, Mohd Hazem Bin Abd Mohamed 1,880, DB (Malaysia) Nominee (Tempatan) Sendirian Berhad RHB Trustees Berhad For Kenanga Asia Pacific Total Return Fund 1,600, RHB Nominees (Tempatan) Sdn Bhd Pledged Securities Account For Leong Poh Seng 1,255, Lim Chin Lim Chai 1,101, Maybank Nominees (Tempatan) Sdn Bhd Teh Hock Chai 1,096, Maybank Nominees (Asing) Sdn Bhd Wong Kim Sen 1,070, Yeo Chong Yee 1,050, Alliancegroup Nominees (Tempatan) Sdn Bhd Pledged Securities Account For Ng Yoke Yen 1,049, Lim Yu Jin 1,000, Stephen Bin Abok 980, Lim Kok Han 980, TA Nominees (Tempatan) Sdn Bhd Pledged Securities Account For Oh Kim Sun 900, RHB Capital Nominees (Tempatan) Sdn Bhd Gan Kuok Chyuan 866, Ong Kee Chau 850, Citigroup Nominees (Asing) Sdn Bhd Merrill Lynch International 800, Total 253,123, Note : * Exclude 474,300 treasury shares ^ Deemed interested by virtue of his family s interest pursuant to Section 6A of the Companies Act, 1965.

118 Annual Report 2013 TADMAX RESOURCES BERHAD (8184-W) 117 Notice of Annual General Meeting NOTICE IS HEREBY GIVEN THAT the Forty-Fifth (45th) Annual General Meeting of Tadmax Resources Berhad ( Tadmax or the Company ) will be held at Inspire Room, OWG, No. 10, Jalan Pelukis U1/46, Section U1, Temasya Industrial Park, Glenmarie, Shah Alam, Selangor Darul Ehsan on Thursday, 19 June 2014 at a.m. for the following purposes: As Ordinary Business AGENDA 1. To receive the Audited Financial Statements for the financial year ended 31 December 2013 together with the Reports of the Directors and Auditors thereon. Please refer to Note (b) 2. To approve Directors Fee of RM270, for the financial year ended 31 December Resolution 1 3. To re-elect the following Director who retires pursuant to the Article 90 of the Company s Articles of Association. (i) Dato Che Abdullah@Rashidi bin Che Omar Resolution 2 Mr Tan Chee Siang who retires in accordance with Article 90 of the Company s Articles of Association, has expressed his intention not to seek re-election. Hence, he will retain office until the close of the 45th Annual General Meeting. 4. To re-elect the following Directors who retire pursuant to the Article 95 of the Company s Articles of Association. (i) Encik Aldillan bin Anuar Resolution 3 (ii) Mr Noel John A/L M Subramaniam Resolution 4 (iii) Mr Derek John Fernandez Resolution 5 5. To appoint Messrs Grant Thornton as Auditors of the Company for the ensuing year and to authorise the Directors to fix their remuneration: Resolution 6 Notice of Nomination pursuant to Section 172(11) of the Companies Act, 1965, a copy of which is annexed hereto and marked Annexure A, has been received by the Company nominating Messrs Grant Thornton for appointment as Auditors of the Company in place of the retiring Auditors, Messrs Baker Tilly Monteiro Heng and of the intention to move the following motion to be passed as an Ordinary Resolution of the Company: THAT Messrs Grant Thornton be and is hereby appointed Auditors of the Company in place of the retiring Auditors, Messrs Baker Tilly Monteiro Heng, and that they are to hold office until the conclusion of the next Annual General Meeting of the Company at a remuneration to be determined by the Directors.

119 TADMAX RESOURCES BERHAD (8184-W) Annual Report Notice of Annual General Meeting (cont d) As Special Business To consider and if thought fit, to pass the following resolutions with or without modifications :- 6. To consider and if thought fit, to pass the following Ordinary Resolution in accordance with Section 129 (6) of the Companies Act, 1965: THAT the following Director retiring pursuant to Section 129 (2) of the Companies Act, 1965 be and is hereby re-appointed as a Director of the Company to hold office until the next Annual General Meeting:- (i) Tan Sri Datuk Dr Abdul Samad bin Haji Alias Resolution 7 Dato Pahlawan Mohammed Shukor bin Hj Abdullah who retires in accordance with Section 129 (2) of the Companies Act, 1965, has expressed his intention not to seek re-election. Hence, he will retain office until the conclusion of the 45th Annual General Meeting. 7. Authority to Allot and Issue Shares pursuant to Section 132D of the Companies Act, 1965 Resolution 8 THAT pursuant to Section 132D of the Companies Act, 1965, the Directors be and are hereby authorised to issue shares in the Company at any time until the conclusion of the next Annual General Meeting and upon such terms and conditions and for such purposes as the Directors may, in their absolute discretion, deem fit provided that the aggregate number of shares to be issued does not exceed ten per centum of the issued share capital of the Company for the time being, subject always to the approvals of all the relevant regulatory authorities being obtained for such issue and allotment. 8. Proposed Share Buy-Back by the Company Resolution 9 THAT subject to the rules, regulations and orders made pursuant to the Companies Act, 1965 ( the Act ), provisions of the Memorandum and Articles of Association of the Company and the Listing Requirements of Bursa Malaysia Securities Berhad ( Bursa Securities ) and any other relevant authorities, the Board be and is hereby authorized to purchase the Company s issued and paid-up ordinary shares of RM0.50 each ( Tadmax Shares ) through Bursa Securities ( Proposed Share Buy- Back ) subject to the following:- a. the maximum number of Tadmax Shares which may be purchased and/or held as treasury shares by the Company at any point in time pursuant to the Proposed Share Buy-Back shall not exceed ten percent (10%) of the total issued and paid-up share capital of the Company; b. the maximum funds to be allocated by the Company for the purpose of purchasing the Tadmax Shares shall not exceed the aggregate of the retained profits and/or the share premium account of the Company; c. the authority conferred by this resolution will be effective immediately upon the passing of this Resolution and will expire at the conclusion of the next Annual General Meeting of the Company, unless earlier revoked or varied by an ordinary resolution of the shareholders of the Company at a general meeting or the expiration of the period within which the next Annual General Meeting is required by law to be held, whichever is the earlier, but not so as to prejudice the completion of purchase(s) by the Company before the aforesaid expiry date and, in any event, in accordance with the provisions of the Listing Requirements of Bursa Securities or any other relevant authorities; and

120 Annual Report 2013 TADMAX RESOURCES BERHAD (8184-W) 119 Notice of Annual General Meeting (cont d) d. upon completion of the purchase(s) of the Tadmax Shares by the Company, the Board be and is hereby authorized to retain the Tadmax Shares so purchased as treasury shares, of which may be distributed as dividends to shareholders and/or re-sold on Bursa Securities and/or subsequently cancelled and in other manner as prescribed by the Act, rules, regulations and orders made pursuant to the Act and the requirements of Bursa Securities and any other relevant authorities for the time being in force. AND THAT the Board be and is hereby authorized to take all such steps as are necessary or expedient to implement or to effect the purchase(s) of the Tadmax Shares with full power to assent to any condition, modification, variation and/or amendment as may be imposed by the relevant authorities and to take all such steps as they may deem necessary or expedient in order to implement, finalise and give full effect in relation thereto. 9. To transact any other matter for which due notice shall have been given in accordance with the Company s Articles of Association and the Companies Act, By Order of the Board POW TUCK WENG (MIA 8046) CHEW MEI LING (MAICSA ) Company Secretaries Petaling Jaya 26 May 2014 NOTES: (a) (b) (c) (d) (e) Only members whose names appear in the Record of Depositors as at 13 June 2014 will be entitled to attend and vote at the meeting. This Agenda item is meant for discussion only, as the provision of Section 169 of the Companies Act, 1965 does not require a formal approval of the shareholders for the Audited Financial Statements. Hence, this Agenda item is not put forward for voting. A member entitled to attend and vote at this meeting is entitled to appoint at least one proxy to attend and vote in his stead. A proxy may but need not be a member of the Company and the provision of Section 149(1)(b) of the Companies Act, 1965 shall not apply. Where a member appoints more than one proxy, the appointment shall be invalid unless he specifies the proportion of his shareholdings to be represented by each proxy. 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 ( omnibus account ), there is no limit to the number of proxies which the Exempt Authorised Nominee may appoint in respect of each omnibus account it holds. The instrument appointing a proxy shall be in writing under the hand of the appointer or of his attorney duly authorised in writing or, if the appointer is a corporation, under its common seal, or the hand of its attorney duly authorised. (f) The instrument appointing a proxy must be deposited at the registered office of the Company at No. 2D, Jalan SS 6/6, Kelana Jaya, Petaling Jaya, Selangor Darul Ehsan not less than forty-eight hours before the time set for holding the meeting or any adjournment thereof.

121 TADMAX RESOURCES BERHAD (8184-W) Annual Report Notice of Annual General Meeting (cont d) Explanatory Notes on Special Business Resolution 7 - Director seeking re-appointment pursuant to Section 129(6) of the Companies Act, 1965 The re-appointment of Tan Sri Datuk Dr Abdul Samad bin Haji Alias, who is over the age of 70 years to hold office until the conclusion of the next Annual General Meeting of the Company shall take effect if the proposed Resolution 7 is passed by a majority of not less than three-fourths (3/4) of members entitled to vote in person or by proxy at the 45th Annual General Meeting. Resolution 8 - Authority to Allot and Issue Shares Resolution 8, if passed, will empower the Directors of the Company to allot and issue shares in the Company up to an aggregate amount not exceeding ten per centum of the issued share capital of the Company for the time being for such purposes as they consider would be in the interest of the Company. This authority unless revoked or varied at a general meeting will expire at the next annual general meeting. This renewed mandate will provide flexibility to the Company for the allotment of shares for the purpose of funding working capital, future expansion, investment and/or acquisition(s). As at the date of this notice, no new shares in the Company were issued pursuant to the mandate granted to the Directors at the Forty-fourth Annual General Meeting held on 20 June 2013 and which will lapse at the conclusion of the 45th Annual General Meeting. Resolution 9 Proposed Share Buy-Back by the Company Resolution 9, if passed, will empower the Company to purchase and/or hold up to ten percent (10%) of the issued and paid-up share capital of the Company. This authority will, unless revoked or varied by the Company at a general meeting, expire at the next Annual General Meeting. For further information, please refer to the Circular to Shareholders dated 26 May 2014 which is dispatched together with the Company s 2013 Annual Report. Statement Accompanying Notice of Annual General Meeting Additional information pursuant to paragraph 8.27(2) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad is set out below:- 1) The profile of the Directors who are standing for re-election and re-appointment (as per Resolutions 2, 3, 4, 5 and 7 are stated on pages 10 to 13 of the 2013 Annual Report. 2) Details of any interest in the securities of Tadmax and its subsidiaries held by the Directors are stated on page 115 of the 2013 Annual Report.

122 Annual Report 2013 TADMAX RESOURCES BERHAD (8184-W) Annexure A 121

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124 Form of Proxy TADMAX RESOURCES BERHAD (8184-W) (Incorporated in Malaysia) I/We NRIC / Passport / Company No. of (full address) being a member(s) of TADMAX RESOURCES BERHAD, hereby appoint (name of proxy as per NRIC / Passport, in capital letters) NRIC / Passport No. of (full address) or failing him/her, the Chairman of the Meeting as my/our proxy to vote for me/us on my/our behalf at the Forty- Fifth (45th) Annual General Meeting of the Company to be held at Inspire Room, OWG, No. 10, Jalan Pelukis U1/46, Section U1, Temasya Industrial Park, Glenmarie, Shah Alam, Selangor Darul Ehsan, on Thursday, 19 June 2014 at a.m. and at any adjournment thereof, in the manner indicated below:- No RESOLUTIONS FOR AGAINST 1. To approve Directors Fee for the financial year ended 31 December To re-elect the retiring Director, Dato Che Rashidi bin Che Omar 3. To re-elect the retiring Director, Encik Aldillan bin Anuar 4. To re-elect the retiring Director, Mr Noel John A/L M Subramaniam 5. To re-elect the retiring Director, Mr Derek John Fernandez 6. To appoint Messrs Grant Thornton as Auditors of the Company and to authorize the Directors to fix their remuneration 7. To re-appoint Tan Sri Datuk Dr Abdul Samad bin Haji Alias retiring pursuant to Section 129 (2) of the Companies Act, Authority to allot and issue shares pursuant to Section 132D of the Companies Act, Proposed Share Buy-Back by the Company (Please indicate with an X in the spaces provided how you wish your vote to be cast. If you do not do so, the proxy will vote or abstain from voting at his discretion.) Signature(s) of Member(s) Number of shares held: Date: Notes : 1. Only members whose names appear in the Record of Depositors as at 13 June 2014 will be entitled to attend and vote at the meeting. 2. A member entitled to attend and vote at this meeting is entitled to appoint at least one proxy to attend and vote in his stead. A proxy may but need not be a member of the Company and the provision of Section 149(1)(b) of the Companies Act, 1965 shall not apply. Where a member appoints more than one proxy, the appointment shall be invalid unless he specifies the proportion of his shareholdings to be represented by each proxy. 3. Where a member of the Company is an Exempt Authorised Nominee which holds ordinary shares in the Company for multiple beneficial owners in one securities account ( omnibus account ), there is no limit to the number of proxies which the Exempt Authorised Nominee may appoint in respect of each omnibus account it holds. 4. The instrument appointing a proxy shall be in writing under the hand of the appointer or of his attorney duly authorised in writing or, if the appointer is a corporation, under its common seal, or the hand of its attorney duly authorised. 5. The instrument appointing a proxy must be deposited at the registered office of the Company at No. 2D, Jalan SS 6/6, Kelana Jaya, Petaling Jaya, Selangor Darul Ehsan not less than forty-eight hours before the time set for holding the meeting or any adjournment thereof.

125 Fold this flap for sealing Then fold here AFFIX STAMP The Company Secretary TADMAX RESOURCES BERHAD (8184-W) No. 2D, Jalan SS 6/6, Kelana Jaya Petaling Jaya Selangor Darul Ehsan, Malaysia 1st fold here

126 Tadmax Resources Berhad Annual Report 2013 TADMAX RESOURCES BERHAD No. 2D, Jalan SS 6/6, Kelana Jaya Petaling Jaya Selangor Darul Ehsan, Malaysia Tel : / Fax :