GROWING STRONGER - MalaysiaStock.Biz

Tadm

ax Reso

urces Berhad

(Com

pany No. 8184-W

) ANNUAL REPORT 2016

Tadmax Resources Berhad(Company No. 8184-W)

No. 2D, Jalan SS 6/6, Kelana Jaya,47301 Petaling Jaya,

Selangor Darul Ehsan, Malaysia.Tel : 03-7803 7008Fax : 03-7803 7327


ANNUAL REPORT 2016

Moving AheadGROWING STRONGER

Table ofContents002 Board of Directors

003 Corporate Information

004 Corporate Structure

005 Chairman's Statement

008 Management Discussion & Analysis

018 Profile of Directors

022 Profile of Key Senior Management

024 Statement on Corporate Governance

036 Audit and Risk Management Committee Report

040 Statement on Risk Management and Internal Control

044 Additional Compliance Information

046 Statement of Directors' Responsibilities

047 Financial Statements and Reports

129 List of Properties

131 Analysis of Shareholdings

133 Notice of AGM

Insert Form of Proxy

047Financial

Statements

TADMAX RESOURCES BERHADANNUAL REPORT 2016

002

Board of Directors

Sitting (from left to right):

Datuk Aldillan bin AnuarTan Sri Datuk Dr Abdul Samad bin Haji AliasDatuk Seri Anuar bin Adam

Standing (from left to right):

Derek John FernandezTan Peng KoonDato’ Samsudin bin Abu HassanDatuk Noel John A/L M SubramaniamDato’ Che Abdullah @ Rashidi bin Che OmarDatuk Gan Seong Liam

Tan Sri Datuk Dr Abdul Samad bin Haji Alias

Chairman, Independent Non-Executive Director

Datuk Seri Anuar bin AdamManaging Director

Datuk Aldillan bin AnuarDeputy Managing Director

Dato’ Che Abdullah @ Rashidi bin Che Omar

Executive Director

Datuk Gan Seong LiamExecutive Director

Datuk Noel John A/L M SubramaniamExecutive Director

Dato’ Samsudin bin Abu HassanIndependent Non-Executive Director

Tan Peng KoonIndependent Non-Executive Director

Derek John FernandezIndependent Non-Executive Director

SHARE REGISTRARShareWorks Sdn BhdNo. 2-1, Jalan Sri Hartamas 8Sri Hartamas50480 Kuala LumpurTel: +603 6201 1120Fax: +603 6201 3121

AUDITORSSJ Grant Thornton (AF 0737)Level 11, Sheraton Imperial CourtJalan Sultan Ismail50250 Kuala LumpurTel: +603 2692 4022Fax: +603 2691 5229

PRINCIPAL BANKERSUnited Overseas Bank (Malaysia) BhdMalaysia Building Society BerhadHong Leong Bank BerhadMalayan Banking BerhadAlliance Bank Malaysia Berhad

SOLICITORSFernandez & Selvarajah12B, 2nd & 3rd FloorJalan Yong Shook Lin46200 Petaling JayaSelangor Darul EhsanTel: +603 7954 0866/0867Fax: +603 7954 0593

STOCK EXCHANGE LISTINGMain Market of Bursa Malaysia

Securities Berhad

BOARD OF DIRECTORS

AUDIT AND RISK MANAGEMENT COMMITTEEDerek John FernandezChairman

Tan Peng KoonMember

Dato’ Samsudin bin Abu HassanMember

NOMINATION AND REMUNERATION COMMITTEETan Sri Datuk Dr Abdul Samad

bin Haji AliasChairman

Tan Peng KoonMember

Derek John FernandezMember

COMPANY SECRETARIESChew Mei Ling MAICSA 7019175Pow Tuck Weng MIA 8046

REGISTERED OFFICENo. 2D, Jalan SS 6/6Kelana Jaya47301 Petaling JayaSelangor Darul EhsanTel: +603 7803 7008/ 5008Fax: +603 7803 7327Website: www.tadmax.com.my


003

Corporate Information


004

100%

100%

100%

70%

100%

100%

WAWASAN METROBINA SDN BHD

GANGGARAKDEVELOPMENTSDN BHD

TADMAX BUILDERSSDN BHD

TADMAXBUILDERS(LABUAN)SDN BHD

TADMAX PERMAISDN BHD

TADMAX COASTALSDN BHD

TADMAX PROPERTIESSDN BHD

100% PLATINUM FRIGATESDN BHD

100%

100%

100%

100%

TADMAX ENERGYSDN BHD

TADMAX INDAHPOWER SDN BHD(formerly known as Kirana Abadi Sdn Bhd)

TADMAX PMCSDN BHD

100%

100% TADMAX CONCRETE(LABUAN) SDN BHD

ARUS GLOBALSDN BHD

100% SUFFOLK PTE LTD(SINGAPORE)

PT TRIMEGAHKARYA UTAMA(INDONESIA)

100% WEALTH GATE PTE LTD (SINGAPORE)

PT MANUNGGALSUKSES MANDIRI(INDONESIA)


PROPERTY DEVELOPMENT & CONSTRUCTION & INVESTMENT

ENERGY / POWER

INDUSTRIAL SUPPLIES

TIMBER / PLANTATION

OTHERS

90%

90%

Corporate Structure


005

Chairman’s Statement

Dear Shareholders,

On behalf of the Board of Directors of Tadmax Resources Berhad, I have the pleasure of presenting to you the Annual Report and Audited Financial Statements of the Group and the Company for the financial year ended 31 December 2016.

IN REwARDING OUR SHAREHOLDERS, during the financial year under review, the Company issued bonus shares on the basis of one (1) bonus share for every ten (10) existing shares held. This correspondingly increased the total issued shares of the Company from 445,231,746 to 489,707,094 shares.

The theme of our 2016 Annual Report “Moving Ahead Growing Stronger” reflects the good progress of the Group in the current financial year with a solid platform for near-term to medium-term growth contributed by the Property Development and Construction business segment whilst the Energy business segment provide the platform for the medium-term to long-term growth of the Group.


The Property Development and Construction business segment recorded almost a threefold increase in revenue

The Industrial Supplies business segment recorded a healthy profit before tax

In expanding the Group’s earning base, the Company recently received a conditional Letter of Award from the Government of Malaysia, through the Energy Commission (“EC”), for the development of a new 1,000-1,200Mw combined cycle gas-fired power plant


006

RESULT CORPORATEGOvERNANCE

CUSTOMERSATISFACTION

During the financial year under review, the Group achieved consolidated revenue of RM42 million, a growth of more than three fold over the preceding financial year. Approximately two-thirds of the consolidated revenue for the current financial year under review was contributed by the Property business segment whilst the remainder came from the Industrial Supplies business segment.

The Group places great importance on corporate integrity, business ethics and good governance. With the objective of practising good corporate governance, the Group has formed the Audit and Risk Management Committee and Nomination and Remuneration Committee. The Group is committed to maintaining corporate transparency and disseminates information about new developments through various channels, including press releases, its corporate website, results briefings and participation in investor conferences.

Chairman’s Statement(cont’d)

The Group is committed to building quality and affordable projects. In keeping with its mission to enhance customer satisfaction, the Group will, wherever possible, ensure that attractive design concepts and features are also environmentally friendly for its developments. The Management conducts regular reviews of its businesses and services so that improvements can be made on a continuous basis.

Mizumi Residences launched in Q1 2017


007

Chairman’s Statement(cont’d)

CORPORATE SOCIAL RESPONSIBILITY

Under the Group’s Corporate Social Responsibility (CSR) objective to balance shareholders’ value, enhance the welfare of its employees, optimise impact on the community and minimize negative influences to the environment in which it operates, the Group has undertaken the following:-

Affordable Homes

As part of the Group’s CSR, the Group has continued to work with the Federal and Local Government in attaining its aspirations of making available affordable-cost apartments to low and middle income earners. Besides the existing affordable-cost apartments being built in Ganggarak at Labuan Federal Territory, the Group has committed to also develop 1,520 affordable-cost apartments in Taman Metropolitan, Kepong, Wilayah Persekutuan Kuala Lumpur.

Employees welfare

The Group acknowledges the need to provide a healthy and balanced lifestyle for its employees. We integrate health, safety and environmental (HSE) considerations into all aspects of our business operations and processes as far as applicable and provide regular training and reviews to ensure the safety and overall well-being of our people. The Group makes it a point to organize regular gathering of employees for the purposes of encouraging interaction, improving cohesiveness and forging better relationships amongst one another.

Last but not least, the Group invests in the development of its human capital by providing Continuous Professional Development Programmes to improve knowledge, professional conduct and to provide the latest developments in the employee’s respective disciplines. In-house training were arranged and conducted every quarter during the current financial year.

Commitment to Customers

In view of our commitment to provide only the best for our customers, quality remains the main thrust of all our products and delivery of services.

We will actively promote the values behind our CSR strategy to ensure it is embedded in the spirit of our business and enhance value creation in our society and community at large.

PROSPECTS

The prospects for the Group will be supported by the overall growth in demand for residential properties, where the shrinking size of households, combined with continued growth in incomes and population, as well as rapid urbanisation, are expected to remain as important drivers of the overall demand for residential properties, especially in major urban areas. We expect prices of residential properties in “good locations” would still hold and the demand for affordable homes would increase in 2017.

The prospects of the Group are expected to improve in terms of revenue with the subscription and acquisition of 100% equity interest in Wawasan Metro Bina Sdn Bhd (“WMB”) during the financial year.

The Company is presently undertaking a Proposed Rights Issue with Warrants which will provide the Group with additional cash flow for the Group’s working capital requirements.

Based on the above, the Group is confident of achieving improved financial performance in the coming financial year ending 31 December 2017.

DIRECTORATE

There were several changes to the Board since the last Annual General Meeting. Y Bhg Dato’ Faizal bin Abdullah who has been in the Group since 26 May 1999, had resigned from the Board on 1 August 2016 to pursue his personal interests. I would like to express our sincere appreciation for his invaluable contributions and guidance to the Group

during his term of office. I would like to take this opportunity to welcome Y Bhg Datuk Gan Seong Liam who joined the Board on 12 August 2016 and the appointment of Y Bhg Datuk Aldillan bin Anuar as the Deputy Managing Director of the Group since 23 February 2017. I am sure we will benefit from the experience and expertise that each of them brings to the Group.

TRIBUTE

I wish to thank both our business partners and vendors for their commitment and cooperation as well as our valued customers, principals, contractors, agents, associates, suppliers, distributors and shareholders for their continued support and confidence in us.

I would like to express the Board’s appreciation to the Management and staff for their unwavering resolve, hard work and commitment towards the advancement of Tadmax Resources Berhad and the Group. I would also like to take this opportunity to thank my fellow directors for their dedication and commitment over the past twelve months.

Tan Sri Datuk Dr Abdul Samadbin Haji Alias Chairman30 March 2017

Ready-mixed concrete plant in Ganggarak, Federal Territory of Labuan


008

THE following management discussion and analysis is a review of the business and operations, current financial year financial results and conditions, risks and uncertainties and outlook for Tadmax Resources Berhad Group (“TRB”, the "Group", the “Company”) and should be read in conjunction with the Company’s audited financial statements and the accompanying notes for the financial year ended 31 December 2016. This management discussion and analysis also provides analysis for the operating performance of the Group’s business segments, as well as a discussion of the cash flow, impact of risk and outlook of the businesses and operations.

TRB’s STRATEGIC DIRECTION

The Group is steadfast in its aim to maximise shareholders’ value through the long-term sustainable growth of its businesses. With property the core of its operations, the Group strives to strengthen its property business in Malaysia.

We will continue to provide innovative property concepts, enhance property quality, and upgrade asset management levels. Meanwhile, we seek to improve overall asset performance and to maximise value by evaluating and strategically adjusting our mix of properties to be available for sale and investment from time to time. To satisfy our needs for medium-term and long-term developments and to generate reasonable returns for shareholders, we also seek to acquire strategic landed assets in Malaysia at opportunistic times and reasonable prices by adhering to a criteria which is based on development potential vis-à-vis acquisition costs.

Through a pool of professional talents specialising in different business areas including investment, operations, finance and risk management, the Group will further enhance its operational efficiency and effectiveness, and strengthen its risk management capacity to deal with unforeseen market changes. We continue to exercise prudence in seeking ways to strengthen our financial capabilities. By adhering to our fundamental financial policy of maintaining a healthy debt equity ratio and our policy of seeking access to diversified sources of fundings, we strive to maintain strong liquidity and sufficient financial resources to flexibly respond to acquisition and investment opportunities as they arise, and gather momentum for growth on a long-term and sustainable basis.

In carrying out the Group’s strategic direction, TRB’s Management defines its role as having five fundamental responsibilities:

1. To support the development and execution of a sound and strategic plan for each of its operating businesses.

2. To regularly monitor the development and execution of business plans within each operating businesses.

3. To ensure TRB is well governed as a public listed company.

4. To prudently manage its capital in order to augment the growth in its core operating businesses.

5. To identify profitable operating businesses with a view to complement and/or expand its existing businesses and/or expand its earnings base.

Management Discussion & Analysis

An artist impression of Mizumi Residences at Kepong


009

• In enabling the Group to leverage on its 60 acres landin Pulau Indah, Selangor Darul Ehsan (“the Land”) for subsequent identified use, on 24 June 2016, the Company and the purchaser have mutually and amicably agreed to terminate the sale and purchase agreement (“SPA”) on the disposal of 100% shareholdings in a wholly owned subsidiary of the Company, Kirana Abadi Sdn Bhd (now renamed as Tadmax Indah Power Sdn Bhd), represented by two ordinary shares of RM1.00 each, who in turn owns the Land. The termination of the SPA discharges each other from the further performance of any of the terms and conditions of the SPA through the execution of a Mutual Termination Agreement (“Mutual Termination”). The execution of the Mutual Termination led to the SPA becoming null and void and neither party shall have any claims whatsoever, directly or indirectly against the other in respect of the SPA and any monies received by TRB shall be refunded to the purchaser, free of interest.

• On 24 June 2016, the Group entered into a sale andpurchase agreement for the en bloc sale of Block C, Phase II housing development known as Ganggarak Permai located in the Federal Territory of Labuan comprising 260 units of affordable residential apartments complete with common facilities for a total disposal consideration of RM49,999,976. Block C consists of two (2) layout types and sizes, each measuring 800 sq ft and 850 sq ft per unit. The terms of the sale and purchase agreement mandates the delivery of vacant possession within thirty six (36) months from the date of the sale and purchase agreement. Together with this en bloc disposal, the Group has cumulatively sold 780 parcels or representing half of all the available affordable residential apartments in Ganggarak Permai since its maiden launch in April 2015.

• In expanding the Group’s earning base, the Companyrecently received a conditional Letter of Award from the Government of Malaysia, through the Energy Commission (“EC”), for the development of a new 1,000MW - 1,200MW combined cycle gas-fired power plant (“the CCGT Project”) which will be situated on land located in Pulau Indah, Selangor Darul Ehsan. The conditional Letter of Award dated 2 August 2016 is subject to various conditions precedents including finalising the terms of the agreements and approvals relating to the CCGT Project with relevant government agencies. On 14 October 2016, the EC had approved the Company’s application to increase the capacity of the CCGT Project from 1,000MW to 1,000MW - 1,200MW. The development of this project will be undertaken by a SPV company, Tadmax Indah Power Sdn Bhd (formerly known as Kirana Abadi Sdn Bhd).

2016 CORPORATE EvENTS HIGHLIGHTS

• In expanding the Group’s existing business in propertydevelopment, on 17 March 2016, the Company announced an agreement to subscribe for 55% equity interest in Wawasan Metro Bina Sdn Bhd, a property development company to undertake residential development in Kepong, Wilayah Persekutuan Kuala Lumpur (“Proposed Development”). The acquisition outlay was at a subscription price of RM550,000 in cash. With the objective of strengthening its foothold in the property development business, TRB has chosen to obtain complete control of WMB’s operations. TRB, on 22 July 2016 acquired the remaining 45% equity interest for a total purchase price of RM42 million. The purchase price was arrived at after taking into account among other things the issued development order for the Proposed Development of 1,520 units of affordable apartments and another 1,512 units of condominium; the Gross Development Value of close to RM1.0 billion of the Proposed Development; the ability for the construction of the Proposed Development to commence immediately and the location of the Proposed Development (a location where similar property development projects are still unable to fulfill the current market’s demands). Since end February 2017, the Company has launched the sale of two out of the three blocks of condominiums under the name “Mizumi Residences” following the receipt of the advertising permit and developer’s license.

The condominium units comprising 901 square feet, 932 square feet, and 1,027 square feet in built up area per unit are available for sale from RM388,000 per unit onwards. All units are designed with living and dining areas with three rooms and at least two bathrooms with full facilities and is expected to be completed latest by year end of year 2021. As of the date of this annual report approximately 80% of the available units have been booked for the two blocks. The immediate surroundings of the Proposed Development comprise mainly residential and recreational developments and is located next to the 95-hectare Kepong Metropolitan Park, a popular recreational park for the local residents to roam.

• In rewarding TRB’s shareholders for their continuoussupport and loyalty to the Group, on 27 April 2016, the Company announced the proposal to undertake the issuance of 44,475,744 bonus shares to be credited as fully paid-up, on the basis of one bonus shares for every ten existing TRB’s shares held. Bursa Malaysia Securities Berhad had through its letter of 3 May 2016 approved the listing of and quotation for the 44,475,744 bonus shares on the Main Market of Bursa Malaysia Securities Berhad to be issued pursuant to the proposed bonus issue whilst our shareholders approved the same at the Extraordinary General Meeting held on 24 May 2016. 44,475,348 new ordinary shares of RM0.50 each were issued, listed and quoted on the Main Market of Bursa Malaysia Securities Berhad on 10 June 2016.

Management Discussion & Analysis(cont’d)

An artist impression of Ganggarak Permai


010

2016 CORPORATE EvENTS HIGHLIGHTS (CONT’D)

• In recognition of the efforts and to reward TRBGroup’s employees, on 22 September 2016, the Company offered 8,906,000 share options to eligible and selected employees and directors through the Company’s Employees’ Share Option Scheme (“ESOS”) of which directors were offered 5,600,000 share options. 8,796,000 share options were accepted by the employees and directors. The vesting periods on the options offered were maximum 50% options exercisable in the 1st year from the date of offer and the balance unexercised to be exercised in the 2nd year ie. after the 1st anniversary. Arising from this ESOS options offered, the Company and Group recognized an employee benefit expense of RM351,840 in both the Income Statement of the Company and the Group in the current financial year.

• InmeetingtheGroup’sfundingrequirementsspecificallyfor its CCGT Project and the property development project in Ganggarak, Federal Territory of Labuan, on 15 November 2016, the Company proposed to undertake a private placement in accordance with section 132D of the Companies Act, 1965, entailing the issuance of up to 49,850,300 new ordinary shares held in TRB (“TRB Share(s)”) (“Placement Shares”), representing approximately 10% of the issued and paid-up share capital of the Company assuming all Treasury Shares held are resold and the full exercise of all of the outstanding 8,796,000 ESOS options at an issue price to be determined and announced at a later date (“Proposed Private Placement”). Bursa Malaysia Securities Berhad had through its letter dated 5 December 2016, approved the listing of and quotation for up to 49,850,300 new TRB Shares, subject to compliance with the relevant provisions of the Listing Requirements. At an indicative issue price of RM0.40, the total gross proceeds from Placement Shares would amount to approximately RM19.6 million.

At the date of the release of this Annual Report, the Proposed Private Placement is pending the identification of placee(s) to subscribe for the Placement Shares.

• To further augment the Company’s cash position andprovide the opportunity for existing shareholders to further increase their equity participation in the Company and benefit from any potential capital appreciation arising thereof, the Company has decided to raise additional capital of between RM50 million to RM87.7 million. The Company, thus on 7 December 2016 announced a proposal to undertake a renounceable rights issue of up to 219,341,357 new ordinary shares of in TRB (“Rights Shares”) together with up to 383,847,374 free detachable warrants (“Warrants”) on the basis of two (2) Rights Shares for every five (5) TRB Shares held together with seven (7) Warrants for every four (4) Rights Shares subscribed on an entitlement date and at an issue price to be determined later (“Proposed Rights Issue with Warrants”). The Company proposed to utilize the proceeds towards part payment of the

total purchase price for the 45% equity interest in WMB, working capital for its new property development project in Taman Metropolitan, Kepong in Wilayah Persekutuan Kuala Lumpur, repayment of bank borrowings and future investment in the acquisition of land for its Property Development business segment in line with TRB’s strategic directions.

The Proposed Rights Issue with Warrants is conditional upon the following being obtained:

(a) Bursa Malaysia Securities Berhad (“Bursa Securities”) for the admission of the Warrants to the Official List of Bursa Securities, listing of and quotation for the Rights Shares and Warrants to be issued pursuant to the Proposed Rights Issue with Warrants; and listing of and quotation for the new TRB Shares to be issued pursuant to the exercise of the Warrants on the Main Market of Bursa Securities. Bursa Securities had granted its approval vide its letter dated 30 March 2017; and

(b) Approval of the shareholders of TRB for the Proposed Rights Issue with Warrants at an Extraordinary General Meeting to be convened.

Barring any unforeseen circumstances and subject to receipt of all relevant approvals, the Proposed Rights Issue with Warrants is expected to be completed in the third quarter of 2017.

KEY BUSINESS SEGMENTS REvIEw

At present, TRB’s key businesses include property development and construction related activities complemented by industrial supplies. For the current financial year, the Group’s financial results are segmented into four separate operating business segments as summarized below :

a) Property Development and Constructionb) Industrial Suppliesc) Timber and Palm Oil Plantationd) Investment Holding & Others

Segmental Revenue Breakdown

Business Segments

Financial Year 31

December 2016

(RM'000)

Financial Year 31

December 2015

(RM'000)Growth

%Property Development & Construction 29,080 7,742 276%Industrial Supplies 13,282 5,437 144%Total Revenue 42,362 13,179 221%

There was no Revenue from Timber and Palm Oil Plantation business segment as the Group has yet to undertake any activity on its assets.



011

KEY BUSINESS SEGMENTS REvIEw (CONT’D)

Segmental Operating (Loss) / Profit Breakdown

Business Segments

Financial Year 31

December 2016

(RM'000)

Financial Year 31

December 2015

(RM'000)

ChangesInc/(Dec)

%Property Development & Construction (3,478) (3,056) 13.8%Industrial Supplies 1,213 (177) (785%)Timber & Palm Oil Plantation - (9) (100%)Investment Holding & Others (9,874) 71,312 (113.8%)Total Operating (Loss) / Profit (12,139) 68,070 (117.8%)

Property Development and Construction

The Property Development and Construction business segment recorded almost a threefold increase in revenue at RM29 million for FY2016 from RM7.7 million in the preceding year. The strong growth was due to higher revenue arising from higher percentage completion achieved from the on-going property development project namely Ganggarak Permai at Federal Territory of Labuan. During the current financial year, Phase 1 of the project which was launched in April 2015 comprising 520 units of affordable apartments achieved 36.4% completion (31 December 2015 : 10.6%) whilst Phase 2A of the project which was sold in June 2016 and comprising 260 units of affordable apartments achieved 12.2% (31 December 2015 : nil %).

The newly acquired property development company, Wawasan Metro Bina Sdn Bhd which owns the project at Taman Metropolitan, Kepong in Wilayah Persekutuan Kuala Lumpur received its development order on 12 July 2016 approving the proposed residential development of 3 blocks of affordable apartments consisting of 1,520 units (Phase 1) and 3 blocks of condominiums consisting of 1,512 units (Phase 2) on a land parcel situated at H.S.(D) 120080 Lot PT 26890, Jalan Metro Perdana Barat, Taman Metropolitan, Kepong, Mukim Batu, Daerah Kuala Lumpur, Wilayah Persekutuan Kuala Lumpur. The estimated gross development value of the Project is approximately RM981 million and the estimated gross development cost is approximately RM735 million. In arranging for the bridging financing and the launching of condominiums under Phase 2, named “Mizumi Residences”, expenditures of approximately RM2.78 million were incurred during the financial year. The expenditure encompasses substantially the cost of arranging financing of approximately RM1.5 million followed by marketing cost of approximately RM0.6 million and staff cost of another RM0.5 mlllion. In financing the construction of Mizumi Residences, Wawasan Metro Bina Sdn Bhd has secured RM170 million banking facility from United Overseas Bank (Malaysia) Bhd. With the receipt of the advertising permit and developer’s license in February 2017, Phase 2 of the project was duly launched at the end February 2017.

The high expenditure incurred by Wawasan Metro Bina Sdn Bhd as mentioned in the preceding paragraph has resulted in the higher loss of RM3.48 million vis-à-vis RM3.06 million reported in the preceding year.

Industrial Supplies

The Industrial Supplies business segment is principally involved in the production and supply of ready-mixed concrete is located at Ganggarak in Federal Territory of Labuan and commenced business sometime in July 2015. The internal service function was originally established to support its Property Development and Construction business segment located in Federal Territory of Labuan but has now grown to provide supplies to third parties with its excess capacity. The plant comprises two lines and has a monthly production capacity in excess of 3,000 cubic metres. In addition, the Industrial Supplies business segment also undertakes the supply of building and other related materials where its portion of revenue was reported at RM2.2 million (31 December 2015 : RM2.8 million).

Ready-mixed concrete was supplied to the Group’s property development project in Federal Territory of Labuan and also to third parties. The latter contributes approximately 40% of overall sales of ready-mixed concrete. During the current financial year, revenue increased by 144% to register at RM13.28 million vis-a-vis RM5.44 million in the preceding year. The substantial increase was contributed by a full year revenue recorded in the current financial year (vis-à-vis six months revenue in the preceding year) and further augmented by higher average monthly off-take of approximately 2,300 metric tonne achieved in current financial year vis-à-vis approximately 1,300 metric tonne in the preceding financial year.


Ganggarak Permai - Construction Work-in-Progress (Phase 2A)


012

KEY BUSINESS SEGMENTS REvIEw (CONT’D)

Industrial Supplies (cont’d)

The Industrial Supplies business segment recorded a healthy profit before tax of RM1.21 million in the current financial year as compared to a loss of RM177,000 reported in the preceding financial year. The significant improvement in the profitability by approximately 8 times was significantly contributed by higher revenue, improved gross margin from 17% to 24% in the current financial year arising from the changes in the design mix for different grades of concrete which led to lower production costs and also the sourcing of raw materials from various sources at relatively lower prices. Furthermore, during the initial commencement of business operation, the business incurred higher operating costs in the preceding year in relation to the revenue generated.

Investment Holding & Others

An operating loss of RM9.87 million was recorded in the current financial year by the Investment Holding and Others business segment vis-a-vis an operating profit of RM71.3 million in the preceding financial year. For the current year, the main expenditure incurred were salaries and related staff costs, making up approximately 35% of the operating losses followed by depreciation and amortization, making up approximately 26% of the operating losses, corporate exercise expenditure and expenses in relation to the procurement of bank borrowings, making up approximately 9% of the operating losses and the remainder representing other general and administrative expenditures. The preceding year recorded an operating profit of RM71.3 million mainly due to the recognition of a non recurring profit on disposal of subsidiaries of RM147.6 million, set off by write off of goodwill of RM67.8 million and the remaining representing administration expenses of approximately RM8.5 million, which amount substantially comprised salaries and related staff costs, depreciation and amortization.

PRESENT CHALLENGES

The present challenges faced by the Group’s business segments are summarized below:-

• Property Development and Construction businesssegment

Ganggarak Permai

The property development project in Ganggarak, Federal Territory of Labuan has been facing continuous challenges since inception. The challenges include unpredictable weather, restrictions imposed on supplies of raw materials by the relevant authorities and difficulties in securing construction labourers due to the tight rules laid down by the relevant authorities in the recruitment of foreign labourers.

Despite being the first project of affordable housing for the Rakyat, the above challenges persist to date. The Management is managing the project to the best of its ability under the current constraints and is constantly liaising with the authorities in endeavoring to address the matters. This inevitably may lead to delays by the appointed contractor in delivering the project in accordance to the executed construction timeline and

such delays would result in the payment of liquidated ascertained damages (“LAD”) to the Group. In turn, the delay by the appointed contractor will result in the corresponding delay in the handling over of vacant possession to the end purchasers. The quantum of the LAD payable to end purchasers is not ascertainable at this stage but the Group’s exposure to this LAD payable to the end purchasers is adequately covered by the LAD payable by the appointed contractor.

Mizumi Residences

The launch of various property development projects within and outside Klang Valley has resulted in increased competition. It poses a challenge to the Group in the aspects of marketing and sales of its property development project in Taman Metropolitan, Kepong, Wilayah Persekutuan Kuala Lumpur. From the purchasers perspective, they will have more choices to choose from. Other challenges faced are the securing of end financing by end purchasers with the tightening of lending rules imposed by Bank Negara Malaysia.

The Group however, believes that these challenges will be mitigated by the Group offering competitive pricing of its condominium and further supported by the Project’s favourable location which is in the heart of Kepong, Wilayah Persekutuan Kuala Lumpur and next to the 95-hectare Kepong Metropolitan Park, a popular recreational park for the local residents.

• Energybusinesssegment

The challenges presently faced include the identification of qualified technical joint venture partners, negotiating with various agencies including the Energy Commission on tariff rates and securing all the required approvals from various government agencies for the implementation of the CCGT Project. There is also a need to appoint the appropriate engineering, procurement, construction and commissioning (“EPCC”) contractors and the evaluation of the most efficient equipment supplies.

To mitigate all the identified risks, the Group has and will be engaging and employing a team of professionals with vast experience particularly in the Energy business segment. Furthermore, all the necessary insurance coverage precautions will be taken to mitigate any unexpected delays while the contractors would be required to provide all the necessary undertakings to mitigate the risks involved in project delivery.


Ganggarak Permai - Construction Work-in-Progress (Phase 1 )


013

FINANCIAL REvIEw

(I) REvIEw OF 2016 FINANCIAL RESULTS AND SEGMENTAL PERFORMANCE

The summary of the consolidated operating performance for the financial year is given below:

ParticularsFinancial Year 31

December 2016(RM'000)

% ofRevenue

Financial Year 31 December 2015

(RM'000)% of

Revenue

ChangesInc/(Dec)

%Revenue 42,362 13,179 221%Cost of Sales (38,127) (12,222) 212%Gross Profit 4,235 10% 957 7% 343%Other Income 1,056 587 80%Total Income 5,291 1,544 243%Expenses:Sales & Marketing Expenses (788) 2% (752) 6% 5%Personnel Expenses (5,963) 14% (5,833) 44% 2%General & Administrative Expenses (6,779) 16% (3,698) 28% 83%Operating Loss before Depreciation, Amortization and Finance Cost (8,239) (8,739) (6%)Depreciation & Amortisation (3,900) 9% (3,010) 23% 30%Finance Cost (982) 2% (356) 3% 176%Operating Loss Before Non-Recurring Items (13,121) (12,105) 8%Non Recurring Items:Net Gain on Disposal of Subsidiaries - 147,653Goodwill Written Off - (67,834)(Loss)/Profit Before Tax (13,121) 67,714 (119%)Tax Expense (917) (448)(Loss)/Profit After Tax (14,038) 67,266 (121%)


For the year ended 31 December 2016, consolidated revenue increased by 221% to RM42.3 million, from RM13.2 million in the preceding financial year. Revenue from the Property Development & Construction business segment increased by RM21.3 million or 276% whilst Industrial Supplies business segment revenue increased by RM7.8 million or 144%. The reasons of the increase are explained hereinabove in the preceding section under Key Business Review.

Gross profit margin registered a respectable increase from 7% to 10%, contributed mainly by the improved gross profit margin of the Industrial Supplies business segment which improved from 17% to 24% due to the changes in the design mix for different grades of concrete and the sourcing of raw materials from various sources at relatively lower prices leading to lower production cost.

During the financial year, other income increased by 80% to RM1.06 million contributed by higher interest income earned of RM0.13 million, late interest charged and forfeiture of booking deposits on property purchasers

totalling RM0.16 million and recovery of expenses incurred from a contractor of RM0.17 million.

General & Administrative expenses for the current financial year totalled RM6.8 million as compared to RM3.7 million for the preceding corresponding year. The increase was contributed firstly by its newly acquired property development company, Wawasan Metro Bina Sdn Bhd which incurred general and administrative expenditures of approximately RM0.3 million (31 December 2015 : RM nil), secondly by higher general and administrative expenses incurred by the Group’s Industrial Supplies business segment of approximately RM1.1 million as the current financial year was a full year operation vis-à-vis the six months operation in the preceding financial year and thirdly by expenses incurred in relation to the arranging of bank borrowings of approximately RM2.0 million, set off by the lower legal and professional fees incurred in the current financial year of RM0.6 million by its Property Development business segment in Ganggarak, Federal Territory of Labuan.


014

FINANCIAL REvIEw (CONT’D)

(I) REvIEw OF 2016 FINANCIAL RESULTS AND SEGMENTAL PERFORMANCE (CONT’D)

The three largest expenditure items for the financial year ended 31 December 2016 comprised of management fees for the Industrial Supplies business segment of RM1.1 million, expenses incurred in relation to the arranging of bank borrowings of approximately RM2.0 million and corporate exercise expenses cum professional fees of approximately RM1.1 million. These items comprised of approximately 47% of the total general and administrative expenses of the Group.

Depreciation and amortization in the current financial year was higher vis-à-vis the preceding year mainly due to the commencement of the amortization of the Group’s leasehold land located at Pulau Indah, Selangor Darul Ehsan of approximately RM0.6 million in the current financial year (31 December 2015 : RM nil) and the remainder RM0.3 million was contributed by the capital expenditure additions during the financial year of approximately RM2.0 million.

The non-recurring items are profit on disposal of subsidiaries of RM147.6 million set-off by goodwill written off of RM67.8 million as reported in the preceding financial year.

(II) FINANCIAL CONDITIONS - LIQUIDITY INDICATORS AND CAPITAL RESOURCES

The following table provides a summary of the Group’s financial indicators and capital resources for the financial year ended 31 December 2016 in comparison with the preceding financial year ended 31 December 2015:

Financial Year 2016 (RM’000)

2015(RM’000)

Total Assets 475,247 391,482Working Capital 48,540 57,689Acid-Test Ratio (44,417) 25,156Total Liabilities 196,908 99,000Shareholders’ Fund 250,430 264,303

Total Assets

Total Assets have increased by approximately 21% contributed mainly by the inclusion of a leasehold land located in Taman Metropolitan, Kepong, Wilayah Persekutuan Kuala Lumpur measuring approximately 40,819.5 square metres amounting to RM87.4 million which includes the development costs incurred up to 31 December 2016.

One major item in the Total Assets is the Timber Concession Rights which carries a value of RM218 million in which the Group is presently negotiating with a prospective purchaser to dispose off the Timber Concession Rights along with the land.

working Capital

Working Capital is calculated by taking the Group’s current assets less current liabilities. Working Capital is an indicator of both the Group’s efficiency and its short term financial health. The Group’s Working Capital is fairly healthy despite declining by approximately RM9 million or 16% due mainly to the procurement and utilization of bank borrowings of RM20 million obtained by the Group since March 2016 with the short term objective of financing the Group’s investment and for working capital requirements.

Acid-Test Ratio

Acid-Test Ratio is an indicator whether the Group has sufficient short-term assets to cover its immediate liabilities. This ratio shows a significant decline from positive to negative as at end of the current financial year. On the face of it, this indicates unfavourable signs in relation to the financial health of the Group. However, further analysis of the reasons below for the decline and the actions taken should address any causes for concern. The reasons for the decline was mainly attributable to the significant increase in the current liabilities as at end of the current financial year vis-à-vis the end of the preceding financial year by approximately RM70 million. This increase was attributed to the increased Trade Payables of approximately RM13 million, increased Other Payables of approximately RM35 million and lastly increased Bank Borrowings of approximately RM24 million.

Higher Trade Payables are contributed mainly by the

increased activities of the property development and construction business segment with a small proportion contributed by the Industrial Supplies business segment. The increase in Other Payables was due mainly to a sum of RM34 million, representing the balance purchase consideration payable to the Vendors of Wawasan Metro Bina Sdn Bhd in relation to the Company’s acquisition of the remaining 45% equity interests in Wawasan Metro Bina Sdn Bhd for RM42 million inked in July 2016. Lastly, the increased Bank Borrowings was to finance the Group’s investment and working capital requirements and also includes the bridging facility for its property development business segment of approximately RM5.5 million.

The Company has taken early pro-active steps to address the above negative Acid-Test Ratio by undertaking the Proposed Private Placement and Proposed Rights Issue with Warrants. Both the above corporate exercises will enable the Group to raise long term funds of between RM70 million (on minimum scenario basis) to RM107 million (on a maximum scenario basis), both based on the issue of shares of TRB at an indicative issue price of RM0.40 per share. For further details, kindly refer to the “2016 Corporate Events Highlights” hereinabove.

Furthermore, the Group is also looking into monetizing one of its excess property investments in financing its working capital needs and/or augment its cash flow to meet future investment needs.



015

FINANCIAL REvIEw (CONT’D)

(II) FINANCIAL CONDITIONS - LIQUIDITY INDICATORS AND CAPITAL RESOURCES (CONT’D)

Total Liabilities

Total Liabilities have increased by 99% or approximately RM98 million vis-à-vis the preceding financial year contributed mainly by RM34 million, representing the balance purchase consideration payable to the Vendors of Wawasan Metro Bina Sdn Bhd, secondly, higher deferred tax of approximately RM12.6 million arising mainly from the recognition of deferred tax of approximately RM13.1 million associated with the leasehold land in Taman Metropolitan, Kepong, Wilayah Persekutuan Kuala Lumpur and thirdly increased bank borrowing of approximately RM39.6 million which was applied towards financing the Group’s investment and working capital requirements and also includes the bridging facility and term loan in financing the Group’s property development and construction business segment.

Share Capital Structure

At 31 December 2016, shareholders’ equity was approximately RM250 million as compared to RM264 million at 31 December 2015. The reduction by approximately RM14 million was the direct result of a net loss registered in the current financial year as explained hereinabove in the preceding section under Financial Review.

On 27 April 2016 the Company announced the proposed bonus issue which entailed the issuance of 44,475,744 bonus shares to be credited as fully paid-up, on the basis of one (1) bonus share for every ten (10) existing shares of the Company held by the shareholders of the Company. Bursa Malaysia Securities Berhad had through its letter of 3 May 2016 approved the listing of and quotation for the 44,475,744 bonus shares on the Main Market of Bursa Malaysia Securities Berhad. The issue of the bonus shares were approved by the Company’s shareholders’ at the Extraordinary General Meeting which was convened on 24 May 2016. On 9 June 2016, the bonus issue amounting to 44,475,348 new ordinary shares of RM0.50 each (“Bonus Shares”) were credited as fully paid up and were listed and quoted on the Main Market of Bursa Malaysia Securities Berhad with effect from 10 June 2016.

The Bonus Shares issued resulted in the decrease in the retained profits by an amount of approximately RM22.24 million but set-off by share capital increase of the same amount.

At an Extraordinary General Meeting held on 11 April 2013, the Company’s shareholders had approved TRB’s Employees’ Share Option Scheme (“ESOS”) in granting of options to eligible and selected employees and directors of the Company and Group to subscribe for new ordinary shares in the Company. The ESOS was implemented on 14 November 2013.

On 22 September 2016, a total of 8,906,000 ESOS options (of which Directors portion was 5,600,000 ESOS options) were offered to 43 eligible and selected employees at the exercise price of RM0.50 each where the vesting period is maximum 50% ESOS options exercisable in the 1st year of the date of offer and the balance unexercised eligible to be exercised in the 2nd year of the date of offer ie. after the 1st anniversary. Of the ESOS options offered, 41 eligible and selected employees accepted the ESOS options amounting to 8,796,000 ESOS options (of which Directors portion was 5,600,000 ESOS options).

CAPITAL EXPENDITURES AND OFF-BALANCE SHEET ARRANGEMENTS

During the current financial year, capital expenditures incurred amounted to approximately RM2.0 million of which RM1.1 million was incurred by the Group’s Industrial Supplies business segment for the setting up of a second line of a batching plant and purchase of mixers trucks. The capital expenditures were financed by hire purchase facility of approximately RM1.0 million whilst the remainder from internally generated funds.

The Company has no off-balance sheet arrangements as at 31 December 2016 or as of the date of this report.

RISKS AND UNCERTAINTIES

The Group’s businesses, financial conditions, results of operations and growth prospects are subject to risks and uncertainties, directly or indirectly in the environment it operates. Besides the general inherent risk of changes in general economics and business conditions, unfavourable changes in local government policies, risk of weather conditions, changes in cost of labour and constraints in labour supply, the risk factors set out below are those that could result in the Group’s businesses, financial conditions, results of operations or growth prospects differing from expected results. Such factors are by no means exhaustive or comprehensive, and there may be other risks in addition to those shown below which are not known to the Group.

• New Business ventures

To balance and mitigate the inherent risks associated with the cyclical nature of property development, or generally, the Group is committed to balancing, strengthening and expanding its business portfolio through diversification. The Group will explore ways to create new sources of revenue by making ventures into new business sectors which provides steady cash flows and revenues.

• Substantial Capital Requirements and Liquidity

Substantial additional funds for the establishment of the Group’s current and planned operations and businesses are required. Whilst no assurances can be given that the Group will be able to fully raise the additional funding that may be required for such activities, the Company is confident of meeting its commitments through other identifiable means.



016

RISKS AND UNCERTAINTIES (CONT’D)

• Regulatory Requirements The current or future operations of the Group requires

permits from various governmental authorities, and such operations are and will be governed by laws and regulations governing energy, development, production, taxes, labour standards, land use, environmental protection, site safety and other matters.

• Highly Competitive Markets

The Group’s principal business operations face increased competition across the markets in which they operate. New market entrants and intensified price competition among existing market players could affect the Group’s businesses and results of operations.

Competition risks faced by the Group include:

a) an increasing number of developers undertaking property investments and development in the Group’s targeted markets, which may affect the market share and returns of the Group; and

b) Significant competition and pricing pressure from

other developers.

The above are being mitigated by the Group’s plan to acquire land banks at much sought after locations and after undertaking the necessary market studies. On pricing, the Group is committed to price its products competitively.

HEAD OFFICE AND SUPPORTING FUNCTIONS

As the Group’s businesses becomes more diversified and systematised, accompanying risks become increasingly varied. Further challenged by increasing operating costs and shortage of resources, the Management has identified automation through information technology as one of the key measures to support the growing operating environment.

A series of Information Technology enhancement exercises were carried out during the financial year to increase the level of operating efficiency. IT resources were consolidated to be managed centrally to gain significant investment savings and to improve service levels. Remote operation centres such as Federal Territory of Labuan and Kepong, Wilayah Persekutuan Kuala Lumpur now operate via servers in the Head Office without incurring additional hardware, licensing or other overheads. These services can also be scaled to serve future expanding projects in other locations.

Robust networking, access controls, system recoveries and support mechanisms were introduced to increase accessibility, security and integrity of the systems. This is realised via the introduction of new servers, networking and backup equipment, with supplementary supporting structures introduced.

In line with the initiative of better governance, systematic work processes were incorporated into policies and procedures to reduce errors, uphold consistency and ensure integrity.

The Management team foresees that more initiatives on Information Technology and automation will continue to be progressively implemented to support the growing business operation and will contribute greatly in optimizing resource usage, ensure integrity and most importantly, increase competitiveness.

DIvIDEND POLICY

At this point in time, the Company does not have any dividend policy but the Board intends to establish a Dividend Policy in the near term. On this subject, the Board is committed to a policy of providing consistent dividend streams to shareholders whilst ensuring that the strong Financial Position of the Group is maintained and further to also retain flexibility to meet its businesses financial needs.

FORwARD-LOOKING STATEMENTS

Forward-looking statements are based on current expectations of future events. Shareholders and investors should realise that unknown risks or uncertainties could materialize.

OUTLOOK BY BUSINESS SEGMENTS

• Property Development and Construction

The Group’s products comprise condominiums and affordable homes with greater focus on the recently launched affordable condominiums and apartments in Kepong, Wilayah Persekutuan Kuala Lumpur. For condominiums, the net selling price starts from RM388,000 onwards or equivalent to approximately RM420 per square feet onwards which the Group believes is competitively priced and expected to be favourably received. Furthermore, its strategic location close to or integrated with transport hubs such as Mass Rapid Transit (“MRT”), KTM Commuter Station, LRT and/or highways at established townships are also very much in demand by purchasers. Hence, the results of its recent property development launch of Mizumi Residences in Taman Metropolitan, Kepong, Wilayah Persekutuan Kuala Lumpur has proven to be a successful strategy adopted by the Group.


Mizumi Residences - Sales gallery


017

OUTLOOK BY BUSINESS SEGMENTS (CONT’D)

• Property Development and Construction (cont’d)

As of the date of this Annual Report, approximately 80% of the available units have been booked for the two blocks that have been made available to the market.

Based on the above favourable take up rate supported

by the overall growth in the demand for residential properties, where the shrinking size of households, combined with continued growth in incomes and population, as well as rapid urbanisation, are expected to remain as important drivers of the overall demand for residential properties, especially in major urban areas, the prospects of the Group are expected to improve in terms of revenue with the launch of the Mizumi Residences.

• Industrial Supplies

On the backdrop of the expected reduction in the off take of ready-mixed cement for the Group’s property development project in Ganggarak, Federal Territory of Labuan as the construction project is now in its final stages of construction, the Group expects the revenue from the Industrial Supplies business segment to be lower in year 2017 as compared to the revenue achieved in the current financial year. There is however a likelihood, that a higher revenue will be achieved in year 2017 in the event the Group decides to launch the development of the other blocks of affordable apartment under phase 2B and phase 3 in the coming financial year or pick-up in the construction activities in the Federal Territory of Labuan.

• Energy

The Energy business segment will not contribute to the near term profitability of the Group as it takes approximately five years before commercial operation commences. In the coming financial year 2017, the Group has targeted to complete a detailed feasibility study which would include environmental and social impact assessments and power system studies. Other works include the appointment of relevant professionals in carrying out among others geotechnical, topographical, bathymetric and hydrologic studies.

The total estimated cost for the above including the detailed feasibility study for the CCGT Project submission is approximately RM27.0 million. The award of the CCGT Project by the Energy Commission would entail engineering and design works, civil works, electrical and mechanical supply and installation and the commissioning of the plants, of which the works to be carried out can only be reasonably determined upon the completion of the detailed feasibility study. The financial close for the development of the CCGT Project can only be reasonably determined upon the completion of various condition precedents such as the detailed feasibility study, obtaining the approval in-principle


from the Selangor State Government on local authority matters, the Department of Environment Malaysia, Port Klang Authority and entering into agreements with the relevant utility providers, such as single buyer, a government entity that prepares the power purchase agreement on behalf of TNB, Petronas Gas Berhad for the gas supply and transmission works agreement with TNB Transmission. Only upon obtaining these conditions precedent, would the Company obtain a Letter of Award from the Energy Commission .

The above mentioned estimated cost of RM27.0 million will be partly funded by a portion of the proceeds expected to be received from the Proposed Private Placement (a sum of up to RM12.50 million has been earmarked) whilst the remainder is expected to be funded by a combination of bank borrowings and/or internally generated funds.

• Overall Based on the above, the Group is confident of achieving

improvement in its financial performance in the coming financial year ending 31 December 2017 vis-à-vis the results of the current financial year, mainly from the anticipated positive contribution from the Group’s new development project in Taman Metropolitan, Kepong known as MIZUMI RESIDENCES which is presently close to completing earthworks at site and to be followed by piling works.

Meanwhile, the contribution from the Industrial Supplies business segment is expected to complement the Property business segment.

At the same time, the Group is weighing its options in extracting the best value from its approximately 80,000 hectares of land located at the forest area in District of Jair, Regency of Boven Digoel in Papua, Indonesia.

Combined cycle power plant


018

Profile of Directors

TAN SRI DATUK DR ABDUL SAMAD BIN HAJI ALIASIndependent Non-Executive Chairman

Tan Sri Datuk Dr Abdul Samad bin Haji Alias, Malaysian, male, aged 74, was appointed to the Board on 15 May 2014 as an Independent Non-Executive Director. He assumed the position of Chairman on 19 June 2014. 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 is also the Chairman of the Nomination and Remuneration Committee.

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 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.

He does not have any family relationship with any directors and/or major shareholder of TRB nor any conflict of interest in any business arrangement involving the Company. He has had no convictions for any offences (excluding traffic offences, if any) within the past five (5) years.

DATUK SERI ANUAR BIN ADAMManaging Director

Datuk Seri Anuar bin Adam, Malaysian, male, aged 72, was appointed to the Board on 30 October 2014 as Managing Director and is the largest substantial shareholder of TRB.

Upon graduation from school, Datuk Seri Anuar bin Adam pursued a career in the army. He started his own business in 1975 as the Managing Director of Kelengkapan (M) Sdn Bhd and Satupadu Sdn Bhd whose principal activities were trading and manufacturing of automobile components. In 1982, Ingeback (M) Sdn Bhd was formed, a company specializing in systems buildings or IBS. The company has a varied track record from construction of stadiums, school complexes and most notably, 12,000 residential units. In 1988, he ventured into property development, initially building 3,000 units of houses (low and medium types). In 1992, he initiated and completed the Meru Valley Resort, a 27-hole golf course with a clubhouse, bungalows, townhouses and apartments over 500 acres of land in Jelapang, Ipoh. He has taken his skills and experience to Seychelles, Sri Lanka, Uruguay and Kazakhstan. In early 2000, he ventured into Pakistan, introducing them the technology of prefab housing and lifestyle housing development concept. The projects accomplished are the development of the Royal Palm Golf Course Lahore, the first professionally designed golf course in Pakistan and the DA Country & Golf Club, Karachi, the first and only night lighted golf course in Pakistan. Other projects in Pakistan are the Jacaranda Family Club (300,000 sq ft), Islamabad and the Mangla View Resort (324 acres). In 2009, seeking a change in business environment, he exited Pakistan to pursue opportunities closer to home.

To date, he is heading the Group with investments both locally and regionally.

He does not have any family relationship with any directors and/or major shareholder of TRB except with his son, Datuk Aldillan bin Anuar, nor any conflict of interest in any business arrangement involving the Company. He has had no convictions for any offences (excluding traffic offences, if any) within the past five (5) years.


019

DATUK ALDILLAN BIN ANUARDeputy Managing Director

Datuk Aldillan bin Anuar, Malaysian, male, aged 41, was appointed to the Board on 12 February 2014 as an Executive Director. Datuk Aldillan is the son of Datuk Seri Anuar bin Adam who is the major shareholder of the Company. On 23 February 2017, he was redesignated as Deputy Managing Director.

Datuk Aldillan graduated with a Bachelors of Structural Engineering with Architecture from the University of Manchester, United Kingdom in 1998. 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 8,000 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.

Datuk Aldillan is the son of Datuk Seri Anuar bin Adam, the Managing Director and a major shareholder of the Company, he does not have any family relationship with any directors and/or major shareholder of TRB nor any conflict of interest in any business arrangement involving the Company. He has had no convictions for any offences (excluding traffic offences, if any) within the past five (5) years.

DATO’ CHE ABDULLAH @ RASHIDI BIN CHE OMARExecutive Director (Plantation)

Dato’ Che Abdullah @ Rashidi bin Che Omar, Malaysian, male, aged 68, was appointed to the Board on 22 June 2011 as an Independent Non-Executive Director. On 28 February 2012, he was redesignated as Executive Director (Plantation). He is also 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 1993. 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 2009.

Dato’ Rashidi is currently on the Board of Loh & Loh Corporation Berhad and New Britain Palm Oil Limited.


Profile of Directors(cont’d)


020

DATUK NOEL JOHN A/L M SUBRAMANIAMExecutive Director

Datuk Noel John A/L M Subramaniam, Malaysian, male, aged 69, was appointed to the Board on 12 February 2014 as a Non Independent & Non-Executive Director. On 30 October 2014, he was redesignated as Executive Director and ceased to be a member of the Audit Committee from the same date.

Datuk Noel John has over 30 years experience in the financial and corporate fields. He has served previously as Board Member and Audit Member of a financial services company and as the Managing Director and Audit Member of a Construction Group. Prior to the above, he was with the Government of Singapore Administrative Service and the Monetary Authority of Singapore, 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 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 of the Company, having served as Director and currently as Advisor. Datuk 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 has served as an Executive Committee member of the Malaysian Economic Association and also as the Chairman of the Finance Committee and later Vice-President of the Royal Selangor Club. He has also served on the Finance Committee of the Subang National Golf Club.


DATUK GAN SEONG LIAMExecutive Director (Property Development)

Datuk Gan Seong Liam, Malaysian, male, aged 60, was appointed to the Board on 12 August 2016 as an Executive Director. Datuk Gan graduated in 1979 with 1st Class Honours in Civil Engineering from the University of Manchester, United Kingdom. He started his career as building engineer in PWD, Negeri Sembilan and also worked in Design and Research Department in PWD, Kuala Lumpur.

Datuk Gan has ventured into property development since 1985 and owns a Class A contracting company. Datuk Gan was the Executive Director of Ganz Technologies Berhad, a rubber glove company listed in KLSE 2nd Board from 1994 to 2001.

Datuk Gan is the Managing Director of one of the Group’s Property Development company, Wawasan Metro Bina Sdn Bhd, with a current development project of Condominium at Kepong namely Mizumi Residences with a total GDV of approximately RM 1 billion. Wawasan Metro Bina Sdn Bhd is a 100% subsidiary of Tadmax Resources Berhad.




021

DATO’ SAMSUDIN BIN ABU HASSAN Independent Non-Executive Director

Dato’ Samsudin bin Abu Hassan, Malaysian, male, aged 61 was appointed to the Board on 25 August 2015 as an Independent Non-Executive Director. He is a Fellow Member of the Chartered Institute of Management Accountants (FCMA) (U.K.) (CIMA) and Chartered Global Management Accountant, USA (CGMA). He is a member of the Audit and Risk Management Committee and ESOS Committee.

Dato’ Samsudin has vast all-round experience in corporate finance, investment banking especially Mergers & Acquisition’s, stock / equity markets in various industries and investments both in Malaysia and overseas for the past 30 years.

Dato’ Samsudin has been Director / CEO / Chairman of many public listed companies in Malaysia and overseas covering various industry sectors throughout his career of more than 35 years. Industry sectors where he was involved in include Trading, Retail, Manufacturing, Property Development, Hotel & Resorts, Engineering Services, Oil & Gas, Power Generation, Mining, Banking & Financial Services, etc.


DEREK JOHN FERNANDEZ Independent Non-Executive Director

Derek John Fernandez, Malaysian, male, aged 52 was appointed to the Board on 26 March 2014. 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 1991. He was a legal assistant in Fernandez and Co from 1989 -1991 as well as a lecturer in Sunway College from 1991-1994 and a Partner of K. Nadarajah and Partners from 1994-1996.

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.

He is Chairman of the Audit and Risk Management Committee and also a member of the Nomination and Remuneration Committee.


Notes to Profile of Directors:1) The details of Directors’ shareholdings in the Company are set out on page 131 of this

Annual Report.2) The number of board meetings attended by the Directors of the Company are set out

on page 31 of this Annual Report.

TAN PENG KOON Independent Non-Executive Director

Tan Peng Koon, Malaysian, male, aged 46, was appointed to the Board on 10 February 2012 as an Independent Non-Executive Director. He is a member of the Audit and Risk Management Committee, a member of the Nomination and 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 2006. 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.




022

DATUK SERI ANUAR BIN ADAMManaging Director

For his profile, kindly refer to the Profile of Directors on page 18 of the 2016 Annual Report.

DATUK ALDILLAN BIN ANUARDeputy Managing Director


DATO’ CHE ABDULLAH @ RASHIDI BIN CHE OMAR Executive Director, Plantation


DATUK NOEL JOHN A/L M SUBRAMANIAM Executive Director


DATUK GAN SEONG LIAM Executive Director, Property Development


DATUK SYED AZMI BIN SYED OTHMAN Managing Director, Energy

Datuk Syed Azmi bin Syed Othman, Malaysian, male, aged 60, graduated from Monash University, Australia with a Bachelor of Engineering. An experienced individual in project management and construction engineering, he started his career with Pernas Construction Sdn Bhd in January 1980 as a Trainee Engineer. During his 11-year tenure with Pernas Construction Sdn Bhd, he has assumed various positions in the company, which included Site Engineer, Site Manager, Senior Engineer, Project Manager, Project Coordinator as well as Senior Manager. He moved on to join UEM as a Senior Manager in October 1990, where he was involved in the construction of Shah Alam Stadium. He then left to join PLUS as its General Manager (Project Division) in February 1993 where he was responsible for project implementation of the North South Expressway.

Upon completion of the North South Expressway, he returned to UEM in March 1994 to manage the National Sports Complex project with a development value of about RM1.10 billion as its Project Director. His role in the project included the development, construction and completion of the sports complex for the Commonwealth Games in 1998 and the accompanying games village known as Vista Komanwel with a development value of about RM400 million.

Profile of Key Senior Management

In February 1999, he joined Kualiti Alam Sdn Bhd, a subsidiary of UEM as Managing Director where he was responsible for all of the company’s business and operation matters which included an Integrated Disposal of Hazardous Waste Plant located in Bukit Nenas in Negeri Sembilan. He then left and joined Infra Expert Development Sdn Bhd in January 2004 as Managing Director for Infra Expert Development Sdn Bhd. His role in the company was to manage the business and operation of the development of low and medium cost houses in Taman Nusantara in Johor, a project with a development value of approximately RM800 million. In June 2006, he joined Maxcorp Properties Pvt Ltd based in Islamabad, Pakistan as its Deputy Chief Executive Officer, where he was responsible for business development and development of the company’s project in the country. In January 2007, he returned to Malaysia and was appointed as a Director of Maxcorp Development Sdn Bhd until December 2010. He thereafter became the Chief Executive Officer of Straits Consulting Engineers Sdn Bhd, an independent consulting engineer company before joining the Group in September 2016.

GEORGE MATHEWManaging Director, Tadmax PMC(Project Management, Energy Business)

Mr. George, Malaysian, male, aged 67, is the Managing Director of Tadmax PMC Sdn Bhd joined the Group in January 2017. He holds a Bachelor’s Degree in Electrical Engineering from the University of Southern Illinois, USA and a Master’s Degree in Business Administration from Ohio University, USA. He is a Professional Engineer registered with the Board of Engineers, Malaysia and a Competent Electrical Engineer registered with Suruhanjaya Tenaga as well as a First Grade Steam Engineer registered with DOSH, Malaysia.

He is a highly-experienced professional who has worked across a wide spectrum of power generation projects in an Owner’s Engineer, PMC and EPCM environment. He has served over 30 years with the Malaysian National Power Company, Tenaga Nasional Berhad in various capabilities ranging from Operations, Project Management, Construction and Commissioning. Mr. George has extensive experience in working with coal fired thermal power plants, combined cycle and waste to energy power plants. Additionally, he has gained considerable experience in the field of Engineering Consultancy working with International Consultants such as Worley Parsons and Poyry Energy.


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ALMIRAN BIN ANUARChief Operating Officer, Property Development cum Group Corporate Affairs and Legal Head

Mr. Almiran bin Anuar, Malaysian, male, aged 36, joined the Group in 2012. He holds a Bachelor of Law (Honours) degree from the University of Buckingham, United Kingdom. He is a Barrister - at Law of the Honourable Society of Gray’s Inn. In 2003 he returned to Malaysia and completed his pupillage in the legal firm with Zaid Ibrahim & Co.

He joined the Maxcorp group in 2004 and was later appointed as a Director and he was a part of the legal arm of the group and assists in all corporate matters. From year 2016, he took up the post of Chief Operating Officer in managing the Group’s property development project in Taman Metropolitan, Kepong.

Mr. Almiran is the son of Datuk Seri Anuar bin Adam, the Managing Director and a major shareholder of the Company and the brother of Datuk Aldillan bin Anuar, the Deputy Managing Director of the Company.

NG KIN YUENGeneral Manager, Projects & Business Development

Mr. Ng Kin Yuan, Malaysian, male, aged 57, has over 20 years of experience in the property development industry joined the Group in June 2013. He started his career as a Quantity Surveyor in a professional Quantity Surveying Consulting firm. He moved on to work as a Project Manager for a number of reputable property developers such as Bolton Bhd (a Malaysian public listed company) and Resorts World Bhd (which owns Genting Highland Resort, Malaysia). He was involved in a wide range of projects ranging from housing, condominium and intelligent office buildings to leisure development for both conventional and fast track systems.

He holds a diploma in Building Technology and is also an associate member of the Malaysian Institute of Surveyors and Royal Institute of Chartered Surveyors.

SIOW YOON CHINProject Director, Property Construction

Mr. Siow Yoon Chin, Malaysian, male, aged 54, has been in the construction industry since 1988. Prior to joining the Group in June 2014, he has worked for notable Consultants, listed and construction companies, where he was involved in design and construction. He was also responsible for the design, construction completion, testing, commissioning and maintenance of the redevelopment of golf course projects which also included new convention centre, sea view chalets, clubhouse etc in Karachi, Pakistan estimated at USD 42 million.

He holds a bachelor in Civil Engineering, Monash University in Melbourne. He is a member of the Institute of Engineers Malaysia and a Professional Engineer on the Board of Engineers Malaysia.

ABDUL MALIK BIN MOHAMED HUSSAINGeneral Manager, Timber and Plantation cum Property Development

Mr. Abdul Malik bin Mohamed Hussain, Malaysian, male, aged 56, joined the Group in March 2012. He began his career in the banking industry where he served with Public Bank (5th largest listed company in Malaysia) for 18 years. His final appointment before leaving was as Assistant General Manager of Public Bank Sri Lanka Branch. His responsibilities include loans, credit control and fund management.

Since then, he has expanded his role and has been involved in several property-related projects, most notable amongst which was the 600 acre township development called Bandar Nusajaya valued at USD200 Million. He is an Associate Member of the Malaysian Institute of Management.

POW TUCK WENGHead, Corporate Finance

Mr. Pow Tuck Weng, Malaysian, male, aged 50, is the Head, Corporate Finance of Tadmax Resources Berhad. He commenced his career from 1989 at internationally affiliated Accounting firms before joining Cold Storage (Malaysia) Berhad (a company listed on the Main Board of Kuala Lumpur Stock Exchange) in August 1991 as Assistant Management Accountant and was subsequently promoted as Head of Finance cum Company Secretary in 1995 and as the General Manager of Finance and Corporate Planning cum Company Secretary the following year prior to his resignation in 1999.

Thereafter until December 2000, he was the Chief Financial Officer cum Company Secretary of CCM Bioscience Berhad, a company listed on the Second Board of the Kuala Lumpur Stock Exchange. From year 2001 to 2002, he was the Chief Executive Officer of a privately owned company which distributes TV programmes produced or distributed by the Hong Kong TVB Group. From year 2003 until 2012, he was a Corporate Consultant attached with a privately owned company prior to joining Tadmax Resources Berhad in December 2012. He is a Fellow of the Association of Chartered Certified Accountants and a member of the Malaysian Institute of Accountants.

Notes to Profile of Key Senior Management:

1) Save as disclosed, none of the Key Senior Management hold any directorship in public companies and public listed companies.

2) Save as disclosed, none of the Key Senior Management has any conflict of interests with the Company and has any family relationship with any Director and/or major shareholder of the Company.

3) Other than traffic offences, if any, none of the Key Senior Management has been convicted for offences within the past 5 years.

Profile of Key Senior Management(cont’d)


024

THE Statement on Corporate Governance by the Board of Directors has been set out in accordance with the Main Market Listing Requirements of Bursa Malaysia Securities Berhad (“Bursa Securities”) (“Listing Requirements of Bursa Securities”).

The Board recognises the importance of practising high standards of corporate governance throughout the Group as a fundamental part of discharging its responsibilities to protect and enhance shareholders value and the financial performance of the Group.

The Board is pleased to report on the manner in which the Group has applied the Principles and Recommendations of the Malaysia Code on Corporate Governance 2012 (“the 2012 Code”) and the governance standards in accordance with the Listing Requirements of Bursa Securities during the financial year ended 31 December 2016. There are 8 principles and 26 recommendations.

PRINCIPLE 1 – ESTABLISH CLEAR ROLES AND RESPONSIBILITIES

1.1 Clear Functions of the Board and Management

The Board leads the Group and plays a strategic role in overseeing the Group’s corporate objective, directions and long term goals of the business. The Board is responsible for oversight and overall management of the Company.

To ensure the effective discharge of its functions and responsibilities, the Board has delegated specific responsibilities to the Audit and Risk Management Committee, and Nomination and Remuneration Committee. Each of the Committees is entrusted with specific responsibilities to oversee the Company’s affairs, in accordance with their respective written Terms of Reference. The Chairman of the respective Committees reports the outcome of their meetings to the Board. Minutes of all Board Committee meetings are circulated to the Board members so that they are kept abreast of proceedings and matters discussed at Board Committee meetings. The Board is guided by the Board Charter, Schedule of Matters Reserved and Limits of Authority, which clearly define the matters that are specifically reserved for the Board. The Board Committees are guided by the clearly defined Terms of Reference. The Board Charter, Schedule of Matters Reserved and Terms of Reference of the Board Committees can be found on the Company’s website at www.tadmax.com.my. Meanwhile, the day-to-day management of the Company is delegated to the Managing Director and relevant Limits of Authority. This formal structure of delegation is further cascaded by the Managing Director to the Senior Management team within the Group. However, the Managing Director and the Senior Management team remain accountable to the Board for the authority that is delegated, as well as for the performance of the Company and the Group.

Independent Non-Executive Directors provide unbiased and independent views in ensuring that the strategies proposed by the Management are fully deliberated and examined objectively, taking into perspective the long term interest of shareholders, other stakeholders and communities at large. Where required, external advisers are appointed to assist and/or guide the Board (either as a full Board or in their individual capacities) in making informed decisions.

The Executive Directors take on primary responsibilities for implementing the Group’s business plans and managing the business activities. The Management is responsible for managing the day-to-day running of the Group’s business activities in accordance with the direction and delegation of the Board. Management meets regularly to discuss and resolve operational issues. The Managing Director with the assistance of the head of the respective business segments briefs the Board on business operations during the board meetings.

1.2 Board’s Roles and Responsibilities

The Board is led by the Chairman and is supported by experienced Board members with a wide range of expertise, who play an important role in the stewardship of the direction and operations of the Group.

The Board is primarily responsible for the strategic direction of the Group. It delegates to and monitors the implementation of these directions by the Management.

The responsibilities of the Board include, inter-alia, the following:

• Reviewstheannualbusinessplanandbudgetsandregularlymonitorstheirprogressthroughouttheyearthroughmonthly financial management reports, progress reports on operations and using appropriate financial indicators;

• OverseetheconductoftheGroup’sbusinessestoevaluatewhetherthebusinessesarebeingproperlymanaged;• Identifyingprincipalrisksofthebusinessandensuringtheimplementationofappropriatesystemstomanagethese

risks;• Reviewingtheadequacyandthe integrityof theGroup’ssystemof internalcontrol, riskmanagementframework

and management information systems, including systems for compliance with applicable laws, regulations, rules, directives and guidelines;

• PlanningforthesuccessionofBoardandKeySeniorManagement.

Statement on Corporate Governance


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PRINCIPLE 1 – ESTABLISH CLEAR ROLES AND RESPONSIBILITIES (CONT’D)

1.2 Board’s Roles and Responsibilities (cont’d)

The Board reserves full decision-making powers, amongst others, on the following matters (save to the extent that the Board resolves that determination and/or approval of any such matter shall be delegated to the Committees of the Board or Management):

• Materialacquisitionsanddisposalsofundertakingsandpropertiesnotintheordinarycourseofbusiness;• Materialinvestmentsincapitalprojects;• Annualbudgets(includingmajorcapitalcommitments);• Materialcorporateorfinancialexercise/restructuring;• DeclarationofdividendandDirectors’fees;and• Annualandquarterlyresults.

1.3 Formalised Ethical Standards Through Code of Conduct 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. The Corporate Code of Conduct can be found on the Company’s website at www.tadmax.com.my and was recently reviewed by the Board at its meeting in February 2017.

1.4 Sustainability of Business The Board is mindful of the importance of building a sustainable business and is committed to the promotion of best practice

principles in this regard. The Board recognises that enhancing sustainability is a long-term commitment and therefore takes into consideration the environmental, social and governance impact when developing the corporate strategy.

1.5 Access to Information and Advice To ensure effective conduct of Board meetings, a structured formal agenda and Board meeting papers relating to the

agenda including progress reports on operations, periodic financial management reports, quarterly results of the Group and the Company, financial and corporate proposals, business strategy matters, minutes of the Board Committees, Directors’ Circular Resolutions and funding requirements are circulated to all Directors at least seven days prior to each Board meeting. The Directors are thus given sufficient time to peruse the matters that will be tabled at the Board meetings to enable them to request for additional materials and conduct independent evaluation/analysis, where necessary and to participate in the deliberations of the issues to be raised and to make informed decisions.

At the Board meetings, the Managing Director and Executive Directors explain in detail significant issues arising and reply to queries raised by Board members whilst the Group Accountant presents the financials of the Group. Where necessary, members of Senior Management and external advisers are invited to attend Board meetings to furnish additional insights and professional views on specific items to be tabled for the Board’s consideration.

Minutes of the Board and Board Committee meetings are circulated to Directors for their perusal prior to confirmation of the minutes at the following Board and Board Committee meetings respectively. The Directors may request for further clarification or raise comments or corrections on the minutes prior to confirmation of the minutes at the respective Board and Board Committee meetings as the correct records of the proceedings. All matters arising from Board and Board Committee meetings are immediately attended to by the Management and the Board is updated on the progress and/or outcome of the matters at the next meeting or via email circulation if deemed urgent.

In exercising the Directors’ duties, the Board has access to all information within the Company, the advice and services of the Company Secretary and independent professional advice where necessary, at the Company’s expense.

In addition to the quarterly reports, the Board makes public releases through Bursa Securities and is kept informed of various requirements and updates issued by various regulatory authorities.

Statement on Corporate Governance(cont’d)


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PRINCIPLE 1 – ESTABLISH CLEAR ROLES AND RESPONSIBILITIES (CONT’D)

1.6 Qualified and Competent Company Secretaries

The Company has appointed two qualified Secretaries for the Group, one of them is a member of the Malaysia Institute of Chartered Secretaries and Administrators whilst the other is a member of the Malaysian Institute of Accountants. They play a supportive role by ensuring adherence to the Company’s Constitution, Board’s policies and procedures, advise on corporate governance issues and compliance with the relevant regulatory requirements, listing requirements, codes or guidance and legislations from time to time. Both secretaries are accessible to the Board at all times. The secretaries also advise the Directors of their obligations to disclose their interests in securities, disclosure of any conflict of interests and remind Directors on the prohibition in dealing in the Company’s securities during the close periods.

1.7 Board Charter and Schedule of Matters Reserved

The Company has in place a Board Charter and Schedule of Matters Reserved 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 and Schedule of Matters Reserved can be found on the Company’s website at www.tadmax.com.my. The Board Charter and Schedule of Matters Reserved were recently reviewed by the Board at its meeting in February 2017.

1.8 Whistle Blowing Policy

The Group has in place a Whistle Blowing Policy to enable employees to report genuine matters of serious concerns without fear of recrimination and to facilitate prompt action being taken, where appropriate. The Whistle Blowing Policy can be found on the Company’s website at www.tadmax.com.my.

Any concern should first be raised with the immediate superior or another senior manager within the same department provided that the concern does not involve the immediate superior and/or senior manager. Alternatively, employees may choose to immediately report to the Nominated Person who presently is the Chairman of the Board or the second Nominated Person, who presently is the Chairman of the Audit and Risk Management Committee. The Group’s policy is to protect and support whistle blowers who report genuine matters of concern.

PRINCIPLE 2: STRENGTHEN COMPOSITION

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 nine (9) directors, five (5) of them are the Executive Directors, and the remaining four (4) 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 ensures that independent views and objectivity are brought into the Board’s deliberation and decision making processes.

2.1 The Nomination and Remuneration Committee (“NRC”)

The objective of the NRC is to assist the Board to implement procedures for selection of directors and assessing the effectiveness of the Board, Board Committees and contributions and performance of individual directors. Further, the NRC is to establish a framework on remuneration of the Board members and Senior Management and recommending the remuneration packages, in line with the business strategy, responsibilities and expertise, and long-term objectives of the Group.

The role of the NRC is to assist the Board in ensuring that the Board comprises individuals with the requisite skills, knowledge, professional expertise and character. The NRC also reviews the Board’s succession planning as well as the training and development needs of the Board.

The terms of reference of the NRC can be found on the Company’s website at www.tadmax.com.my. The Terms of Reference was recently reviewed by the Board at its meeting in February 2017.

The NRC is also delegated with responsibility to evaluate and recommend to the Board all elements of the remuneration packages of all the Executive Directors and Senior Management.



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PRINCIPLE 2: STRENGTHEN COMPOSITION (CONT’D)

2.1 The Nomination and Remuneration Committee (“NRC”) (cont’d)

The Nomination and Remuneration Committee comprises the following Independent Non-Executive Directors:-

Chairman Tan Sri Datuk Dr Abdul Samad bin Haji Alias

Members Tan Peng Koon Derek John Fernandez

2.2 Develop, Maintain and Review Criteria for Recruitment and Annual Assessment of Directors

Appointment of New Directors

The Board does not set specific criteria for the assessment and selection of a candidate for appointment as director. Consideration would be taken on the need to meet the regulatory requirements as prescribed in the Companies Act 2016 and the Listing Requirements, experience, integrity, wisdom, independence of the candidate, ability to make analytical inquires, ability to work as a team to support the Board, possession of the required skill, qualification and expertise that would add value to the Board, understanding of the business environment and the willingness to devote adequate time and commitment to attend to the duties/functions of the Board.

The NRC is responsible to recommend candidates to the Board to fill vacancies arising from resignation, retirement or other reasons or if there is a need to appoint additional directors with the required skills or professions to the Board in order to close the competency gap in the Board. The potential candidates may be proposed by existing Directors, Senior Management, shareholders or third party referrals.

Upon receipt of the proposal, the NRC is tasked to conduct an assessment and evaluation on the proposed candidate.

The nomination and election process of Board members are as follows:-

i. The assessment/evaluation process may include among others, a review of the candidate’s resume, curriculum vitae and qualification. The NRC would also assess the candidate’s character, integrity, competence, wisdom, independence, ability to make independent and analytical inquiries, ability to work as a team to support the Board, understanding of the business environment and the willingness to devote adequate time and commitment to attend to the duties/functions of the Board. The candidate’s conflict of interests with the Group, if any, will also be enquired as part of the assessment.

ii. Upon completion of the assessment and evaluation of the proposed candidate, the NRC would make its recommendation to the Board. Based on the recommendation of the NRC , the Board would evaluate and decide on the appointment of the proposed candidate.

Annual Assessment of Existing Directors

The Board undertakes an annual performance assessment with the objective of improving the Board’s effectiveness and overall governance, identifying areas of strength and weakness and areas for improvement. The assessment also provides an opportunity for the individual Director to furnish his/her objective opinion of the Board and Board Committees, review the performance of Management in supporting the Board and also the Board’s succession plan. The annual performance assessment is undertaken vide a questionnaire developed for this purpose. The areas covered includes its roles & responsibilities, structure, succession planning, competency & composition, ethics, diligence, processes, dynamics, oversight functions, leadership & management relations, management of stakeholder relations, evaluation of management’s support and performance of Board Committees. The results will then be reviewed by the NRC and thereafter tabled to the Board for notation and/or decision. During the last financial year, the summary of the results of the annual performance assessment were tabled to the Board at its meeting on 15 November 2016 and some gaps were identified and the Board will be taking the necessary action to address the identified gaps. The Board having evaluated the recommendations of the NRC is satisfied that the Board and Board Committees are effective as a whole.



028


2.2 Develop, Maintain and Review Criteria for Recruitment and Annual Assessment of Directors (cont’d)

Re-Election of Directors

The Company’s Constitution 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 be eligible for re-election. The re-election of each Director is voted on separately.

Under the new Companies Act, 2016, Directors over the age of seventy years are no longer required to submit themselves for re-appointment annually at every Annual General Meeting. However, as Directors over the age of seventy years would hold office until the conclusion of the forthcoming 48th Annual General Meeting as resolved in the last Annual General Meeting, they will submit themselves for re-appointment at the forthcoming 48th Annual General Meeting.

The Director who is subject to re-election and/or re-appointment at Annual General Meeting shall be assessed by the NRC before recommendation is made to the Board and shareholders for the re-election and/or re-appointment.

One (1) meeting was held on 30 March 2017 to consider the re-election and re-appointment of individual directors at the 48th Annual General Meeting and at the recommendation of the NRC, the Board was satisfied that the Directors have performed well and discharged their duties and responsibilities satisfactorily and recommend to the shareholders’ to vote in favour of the relevant resolutions with regards to the re-election and re-appointment of the individual directors at the 48th Annual General Meeting.

Gender, Ethnic and Age Group Diversity Policy

The Company does not have a policy on gender, ethnicity and age group for candidates to be appointed on the Board. The selection criteria for appointment is based on skills, experience and knowledge as the Group provides equal opportunity to candidates based on merit. Nevertheless, the Board will strive towards introducing female Board members.

2.3 Remuneration Policies and Procedures

An Executive Director is remunerated based on the Group’s performance and individual performance whilst the remuneration of the Non-Executive Directors are determined in accordance with their experience and the level of responsibilities assumed.

All Non-Executive Directors are paid Director’s Fees for serving as Chairman and Directors on both the Board and Board Committees. The Company also reimburses reasonable expenses incurred by these Directors in the course of their duties. They are paid a meeting allowance for attendance at each Board and its Audit and Risk Management Committee meetings. The Directors’ fees are subject to approval at the Annual General Meeting by shareholders.

The NRC is responsible for reviewing and recommending the remuneration packages of its Board members and Senior Management. This was undertaken by the NRC during the financial year with the objective of aligning remuneration packages as close as possible with industry practices.



029


2.3 Remuneration Policies and Procedures (cont’d)

During the financial year, the number of Directors whose income falls within the following bands is set out as follows:

Received from the Company

Remuneration BandsNumber of Directors

Executive Non-ExecutiveRM50,000 and below - 3RM50,001 – RM100,000 1 1RM100,001 – RM200,000 1 -RM200,001 – RM300,000 2 -

Excluded the Directors who resigned during the financial year

Received from the Group

Remuneration BandsNumber of Directors

Executive Non-ExecutiveRM50,000 and below 1 3RM50,001 – RM100,000 1 1RM100,001 – RM200,000 1 -RM200,001 – RM300,000 2 -


During the financial year, the aggregate remuneration paid or payable to all Directors of the Company are further categorised into the following components:

Executive Directors (Received from the Company)

Salaries and other

emoluments (RM)

Bonuses (RM)

Allowances(RM)

Benefit-in-kind

(RM)

EPF and SOCSO

(RM)Total (RM)

Executive Directors 644,000 - - 45,550 45,240 734,790Non-Executive Directors 192,000 - 10,500 15,000 - 217,500


Executive Directors (Received from the Group)

Salaries and other

emoluments (RM)

Bonuses (RM)

Allowances(RM)

Benefit-in-kind

(RM)

EPF and SOCSO

(RM)Total (RM)

Executive Directors 712,000 - - 45,550 51,000 808,550Non-Executive Directors 192,000 - 10,500 15,000 - 217,500




030

PRINCIPLE 3 – REINFORCE INDEPENDENCE OF THE BOARD

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 Non-Executive Director and this is stipulated in the Board Charter.

The Board had identified Tan Sri Datuk Dr Abdul Samad bin Haji Alias as the Senior Independent Non-Executive Director to provide other Directors, shareholders, investors or public with an alternative to convey their concerns and seek clarifications from the Board. Any such concerns may be directed to the Company’s registered office addressed to the Senior Independent Non-Executive Director or vide email to [email protected] .

In order to uphold the independence of Independent Directors, the NRC had during the financial year undertook an annual assessment of independence of its Independent Directors by completing a questionaire declaring matters having bearing on their independence in order to ensure that Independent Directors continue to bring independent and objective judgment to Board deliberations. The Directors independence includes their independence 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.

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 unless clearly justified may continue to serve on the Board subject to his re-designation as a Non-Independent Director. None of the current Independent Directors have served as a Director for more than nine (9) years.

One (1) meeting was held on 30 March 2017 to evaluate the independence of independent directors and the Board (excluding the Independent Directors) was satisfied that the Independent Directors have continued to provide independent viewpoint, impartial advise and constructive feedback during Board meetings. All the Independent Directors acted independently of Management and are not involved, directly or indirectly, in any business dealings with the Company and/or the Group. Further, the Independent Directors are not involved in any other relationship with the Group. The Board was therefore satisfied that the Independent Directors continued to be independent.

PRINCIPLE 4 – FOSTER COMMITMENT OF DIRECTORS

4.1 Time Commitment

The underlying factors of Directors’ commitment to the Group are devotion of time and continuous improvement of knowledge and skill sets.

At a meeting of the NRC in March 2017, the NRC expressed satisfaction 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 2016. In compliance with the Main Market Listing Requirements of Bursa Securities, all the Directors do not hold directorships more than that prescribed under the Listing Requirements.

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 business segments, governance matters and other business development and corporate proposal matters. Board papers are circulated to the Board members at least seven days 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. Where the situation warrants and supported with sufficient information for decision making, the Board’s approval are sought via Directors’ Circular Resolution where all Directors’ approval are required for the resolution to take effect.

All Directors have unrestricted access to timely and accurate information within the Group and to the advice and services of the Company Secretaries, who are responsible to the Board in ensuring procedures are followed. In addition, subject to the Board’s approval, Directors may also seek independent professional advice, if necessary, at the expense of the Company.



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PRINCIPLE 4 – FOSTER COMMITMENT OF DIRECTORS (CONT’D)

4.1 Time Commitment (cont’d)

During the financial year, seven (7) Board meetings were held. The attendance record of each Director is as follows:

DirectorsNumber of Board

Meetings attended 1. Tan Sri Datuk Dr Abdul Samad bin Haji Alias 7/72. Datuk Seri Anuar bin Adam 7/73. Dato’ Faizal bin Abdullah (Resigned on 1 August 2016) 4/44. Dato’ Che Abdullah @ Rashidi bin Che Omar 6/75. Tan Peng Koon 4/76. Datuk Noel John A/L M Subramaniam 7/77. Datuk Aldillan bin Anuar 7/78. Derek John Fernandez 6/79. Dato’ Samsudin bin Abu Hassan 6/710. Datuk Gan Seong Liam (Appointed 12 August 2016) 2/2

4.2 Directors’ Training

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 deliberations for effective discharge of their duties. The training attended by Directors during the financial year are as below:

Directors Training attended unless indicated otherwiseTan Sri Datuk Dr Abdul Samad bin

Haji Alias• Cooking The Books: Financial Fraud-Things To Look Out For• Risk Management: A Methodology; How Risk Management may be applied to

Tadmax• Common Mistakes That Boards Make• The New and Revised Auditor Reporting Standards: Implications to Financial

Institutions• FIDE FORUM Annual Dialogue with the Governor of Bank Negara Malaysia and

Directors’ Register• Directors and Officers Liability Insurance• Avoiding Financial Myopia (Board Leadership Series)• Effective Board Evaluation (Board Leadership Series)• FinTech: Business Opportunity or Disruptor?• Securities Commission - FIDE FORUM Dialogue: FinTech’s Impact on Financial

Institutions• Strategy to Leverage Technology for Business Solutions

Datuk Seri Anuar bin Adam • Cooking The Books: Financial Fraud-Things To Look Out For• Risk Management: A Methodology; How Risk Management may be applied to

TadmaxDato’ Che Abdullah @ Rashidi bin

Che Omar• Cooking The Books: Financial Fraud-Things To Look Out For• Risk Management: A Methodology; How Risk Management may be applied to

TadmaxDatuk Gan Seong Liam • Mandatory Accreditation ProgrammeDato’ Samsudin bin Abu Hassan • Cooking The Books: Financial Fraud-Things To Look Out For

• Risk Management: A Methodology; How Risk Management may be applied to Tadmax

• Common Mistakes That Boards MakeTan Peng Koon • Common Mistakes That Boards Make



032

PRINCIPLE 4 – FOSTER COMMITMENT OF DIRECTORS (CONT’D)

4.2 Directors’ Training (cont’d)

Directors Training attended unless indicated otherwiseDatuk Noel John A/L M

Subramaniam• Cooking The Books: Financial Fraud-Things To Look Out For• Risk Management: A Methodology; How Risk Management may be applied to

Tadmax• Common Mistakes That Boards Make

Datuk Aldillan bin Anuar • Cooking The Books: Financial Fraud-Things To Look Out For• Risk Management: A Methodology; How Risk Management may be applied to

Tadmax• Common Mistakes That Boards Make

Derek John Fernandez • Cooking The Books: Financial Fraud-Things To Look Out For

The NRC assists the Board in the assessment of the training needs of the Director during the financial year and arrange for training at regular intervals. The NRC was of the opinion that the training attended were adequate to assist the Directors in performing their duties effectively.

PRINCIPLE 5 – UPHOLD INTEGRITY IN FINANCIAL REPORTING

5.1 Compliance with Applicable Financial Reporting Standards

The Board is committed to providing a balanced, clear and understandable assessment of the financial position, performance and prospects of Tadmax Group in the disclosures made to the shareholders and the regulatory authorities.

The Board takes responsibility to ensure that the financial statements of the Company present a balanced and meaningful assessment of the Group’s position and prospects and to ensure that the financial statements are drawn up in accordance with the provisions of the Companies Act and applicable accounting standards in Malaysia.

The Board, assisted by the Audit and Risk Management Committee, oversees the Group’s financial reporting process and

the information for disclosure to ensure accuracy, adequacy and completeness. The Audit and Risk Management Committee is in turn assisted by the External Auditors during certain Audit and Risk Management Committee meetings held during the financial year in updating the Audit and Risk Management Committee on the changes in major accounting policies and its subsequent implementation. At Audit and Risk Management Committee meetings, the Audit and Risk Management Committee reviews and considers various matters including significant qualitative aspects of the accounting practices, including accounting policies, accounting estimates and disclosures in financial statements and related party transactions. These are subsequently reported to the Board by the Audit and Risk Management Committee with their decision and/or recommendations for final concurrence and/or decision. All minutes of Audit and Risk Management Committee meetings are also tabled to the Board for notation and/or review.

During the financial year, the Audit and Risk Management Committee met with the Internal Auditors twice. The Internal

Auditors presented its reports and at one of the meeting, met the Internal Auditors in the absence of the Management.

Similarly, during the financial year, the Audit and Risk Management Committee also met with the External Auditors twice who presented among others its Audit Plan and Scope, Audit Review Memorandum and Audit Report, updates on changes in accounting policies affecting the Group and financial statements of the Company and Group. At both the meetings with the External Auditors, the Audit and Risk Management Committee had a private session with the External Auditors in the absence of the Management to facilitate a frank and open discussion on the Group as a whole, enquiries on knowledge of any actual, suspected or alleged fraud that are not reported, enquiries on any actual or potential instances of breach or non-compliance with laws and regulations that are not reported, and the level of co-operation received by the External Auditors from the Management. The outcome on the private session in the absence of the Management was favourable in the interests of the Group. The Audit and Risk Management Committee also meets with the External Auditors additionally whenever it deems necessary. In addition, the External Auditors are invited to attend the Annual General Meeting of the Company and are available to answer shareholders’ questions on the conduct of the statutory audit and the preparation and content of the Annual Report.



033

PRINCIPLE 5 – UPHOLD INTEGRITY IN FINANCIAL REPORTING (CONT’D)

5.2 Assessment of Suitability and Independence of External Auditors

As part of the Audit and Risk Management Committee review processes, the Audit and Risk Management Committee has for the current reporting year 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 that they not aware of any matters that impairs their professional independence; and

ii. The 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.

The Audit and Risk Management Committee undertakes an annual assessment of the suitability and independence of the External Auditors for the ensuing year. Based on the experience, audit approach and performance of the External Auditors, the sufficiency of resources allocated in the conduct of the interim and final audit, the relatively low non-audit services undertaken by the External Auditors during the financial year and after deliberation with the External Auditors in the absence of the Management, the Audit and Risk Management Committee has recommended the re-appointment of SJ Grant Thornton as External Auditors in the ensuing year.

PRINCIPLE 6: RECOGNISE AND MANAGE RISKS

6.1 Risk Management Process The Group adopts a risk management framework that aims to ensure that all key risks are appropriately identified and

managed through appropriate risk management structure. The Management assists the Board in implementing the process of identifying, evaluating and managing significant risks that accompanies the respective areas of business and in establishing suitable internal controls to control and mitigate such risks.

The Board delegates the oversight of risk management and internal control to the Risk Management Committee and Audit and Risk Management Committee respectively.

The Risk Management Committee (chaired by the Executive Director) is a management committee that oversees the operational risks of the Group. The Audit and Risk Management Committee, with the assistance of the Risk Management Committee, performs regular risk management assessments and where appropriate through the Internal Auditor, reviews the internal control processes, and evaluates the adequacy and effectiveness of the risk management and internal control system.

The Group has an embedded process for the identification, evaluation and reporting of the major business risks within the Group. The responsibility for managing risk resides at all levels within the Group where the risk management process contains both bottom-up and top-down elements to support the identification, evaluation and management of risks.

The Group’s day-to-day operational risks (such as those relating to property development and construction, production, health and safety, quality, marketing and statutory compliance) are mainly managed at the business unit level and guided by approved standard operating procedures. Operational risks that cut across the organisation (such as those relating to new project investment, finance, integrated systems, human resource and reputation) are coordinated centrally at the group level.

Policies and procedures have been laid down for the regular review and management of these risks. Regular reviews of the most significant areas of risk are undertaken to ensure that key control objectives remain in place.

All Business Segments units will update the risk registers on a periodic basis, where new risks are identified and its corresponding mitigating measures are recorded accordingly. These risks are rated according to the impact and likelihood of risk events, and these ratings are continuously re-appraised in response to changes in the business environment. The risk registers are submitted to the Management Risk Committee for further review and deliberation.

Due to the nature of operations, project operation risks are identified on an on-going basis by the Business Segment units and reported immediately to the right channel and appropriate actions will be taken to manage and mitigate the project risks in a timely manner.



034

PRINCIPLE 6: RECOGNISE AND MANAGE RISKS (CONT’D)

6.1 Risk Management Process (cont’d) Risk Governance

Report on the significant business risks identified together with the corresponding mitigating factors and action plans taken to mitigate the risks are presented to the Board. The Group’s risk management and internal control extends to all aspects of its activities. The Board is dedicated to ensure that the Group’s corporate strategies are set in congruence with its risk profile and degree of tolerance. The Risk Management Committee will also provide guidance and feedback on any shortcoming in the risk management system and ensure the appropriate mitigating controls are put in place.

As the Group is operating in a competitive and challenging business environment, the effectiveness of the risk management and internal control system may vary from time to time and therefore the relevant processes and practices will be adjusted to add value to the existing framework.

6.2 Internal Audit Function

In accordance with the provision in the Code and the Listing Requirements of Bursa Securities, the Board has outsourced the internal audit function to a professional internal audit service provider firm, namely GTC Consulting Sdn Bhd, who reports directly to the Audit and Risk Management Committee. The Internal Auditors have carried out the internal audits of the Group in accordance with the audit plan and highlighted all important issues to the Audit and Risk Management Committee through the issuance of internal audit reports. All relevant Internal Auditors Reports were discussed at the Senior Management level and then disseminated for follow up action plan as committed by the Senior Management to complete the necessary preventive and corrective actions. The Audit and Risk Management Committee will then elevate the internal audit reports for the Board’s attention at the next available opportunity.

The Internal Audit is guided by international standards and professional best practices of Internal Audit to achieve high quality reports. The scope of internal audit is high level Management Control Review based on COSO framework. The five interrelated components comprise Control Environment, Risk Assessment, Control Activities, Information and Communication and Continuous Monitoring. The Internal Audit reports are prepared by adopting the Exception Method of reporting.

Functionally, the Internal Auditors reports to the Audit and Risk Management 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 40 to 43.

PRINCIPLE 7: ENSURE TIMELY AND HIGH QUALITY DISCLOSURE

Corporate Disclosure and Communication Channel

The Board is aware that communication with shareholders and investors are important for enhancing their understanding of and confidence in the Group’s business and activities. The Board recognises that timely and equitable dissemination of relevant information shall be provided to shareholders and investors through public announcements made to Bursa Securities and the importance of information technology for effective dissemination of information.

The Group’s quarterly financial results, annual audited accounts, annual reports and other announcements are published via the website of Bursa Securities within the stipulated timeframe. The Company also maintains its website at www.tadmax.com.my containing corporate information for the general public. The Company’s website has become a key communication channel for the Company to further enhance shareholder and investor communication.



035

PRINCIPLE 8: STRENGTHEN RELATIONSHIP BETWEEN COMPANY AND SHAREHOLDERS

8.1 Encourage Shareholder Participation at General Meeting

The Board places great importance of being transparent and accountable to its investors and as such, has maintained an active and constructive communication policy that enables the Board and the Management to communicate effectively and on a timely basis with its investors, stakeholders and the public generally. The information about the Group can be accessed through the Company’s website at www.tadmax.com.my

Annual General Meeting

The Annual General Meeting (“AGM”) is the principal forum for dialogue with shareholders. Notice of the AGM and Annual Report are sent out to shareholders at least twenty-one (21) days before the date of the meeting. At the meeting, Management makes a presentation on the year’s financial results and business activities. Items of special business included in the notice of AGM will be accompanied by a full explanation of the effects of a proposed resolution.

At each AGM, the Board encourages shareholders to participate in the question and answer session whereby the Directors are available to discuss aspects of the Group’s performance and its business activities. The Chairman, Managing Director and other Directors are available to respond to shareholders’ questions during the meeting. A summary of key matters raised and discussed by the shareholders at the AGM will be disclosed and made available in the Company’s website at www.tadmax.com.my within 2 weeks of conclusion of the AGM.

8.2 Mandatory Poll Voting

Effective 1 July 2016, any resolution set out in the notice of any general meeting, or in any notice of resolution which may be properly moved and is intended to be moved at any general meeting, is voted by poll.

In line with the recent amendments to the Main Market Listing Requirements of Bursa Securities under Paragraph 8.29A(1), the Company will implement poll voting for all the resolutions set out in the Notice of AGM at the AGM. In addition, the Company will appoint at least one independent scrutineer to validate the votes cast at the AGM.

8.3 Effective Communication and Proactive Engagement

The Board acknowledges the need for shareholders and investors to be informed of all material business matters affecting the Company. They are kept well informed of developments and performances of the Company through timely announcements and disclosures made to the Bursa Securities, including the release of financial results on a quarterly basis.

The Company’s Annual Report which contains all the necessary disclosures is released within four (4) months after the financial year end. The announcements and disclosures made to Bursa Securities, including the Annual Report, are also accessible from the Company’s website.

Shareholders and members of the public may access the Company’s website at www.tadmax.com.my and Bursa Securities’s website at www.bursamalaysia.com to obtain the latest information on the Group.

The Statement is made in accordance with a resolution of the Board dated 30 March 2017.



036

Audit and Risk Management Committee Report

COMPOSITION OF AUDIT AND RISK MANAGEMENT COMMITTEE

The current Audit and Risk Management Committee comprises the following Directors:

ChairmanDerek John Fernandez Independent Non-Executive Director MembersTan Peng Koon Independent Non-Executive DirectorDato’ Samsudin bin Abu Hassan Independent Non-Executive Director

MEETINGS

During the financial year ended 31 December 2016, the Audit and Risk Management Committee held a total of five meetings. The meetings were attended by the members and Senior Management also attended these meetings upon invitation by 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 and Risk Management Committee members are as follows:-

DirectorsNumber of meetings

attendedDerek John Fernandez 3/5Tan Peng Koon 4/5Dato’ Samsudin bin Abu Hassan 5/5Datuk Sulaiman bin Daud (resigned on 11 March 2016) 1/1

1. TERMS OF REFERENCE

The Terms of Reference of the Audit and Risk Management Committee can be found under the “Corporate Governance” section on the Company’s website at www.tadmax.com.my

2. COMPOSITION

The members of the Audit and Risk Management 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 and Risk Management Committee:-

(a) must be a member of the Malaysian Institute of Accountants (MIA); or

(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 and Risk Management Committee.

3. CHAIRMAN

The Chairman of the Audit and Risk Management 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.


037

Audit and Risk Management Committee Report(cont’d)

COMPOSITION OF AUDIT AND RISK MANAGEMENT COMMITTEE (CONT’D)

4. SECRETARY

The Company Secretary shall be the Secretary of the Audit and Risk Management Committee.

5. QUORUM

The quorum of the meeting of the Audit and Risk Management 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 and Risk Management Committee.

SUMMARY OF WORKS OF THE AUDIT AND RISK MANAGEMENT COMMITTEE

The Audit and Risk Management Committee carried out the following work during the financial year ended 31 December 2016 in the discharge of its functions and duties:-

1. Financial Reporting

In complying with Bursa Malaysia Securities Berhad’s requirements on financial reporting, the Audit and Risk Management Committee reviewed the audited financial statements for the financial year ended 31 December 2016 at the Audit and Risk Management Committee meeting held on 6 March 2017 and reviewed the quarterly reports for the financial year under review at its meetings held on 16 May 2016, 18 August 2016, 15 November 2016 and 16 February 2017. The reviews are to ensure that the Group’s financial statements are prepared in accordance to applicable accounting standards in Malaysia and presents a true and fair view of the Group’s financial performance and positions.

The annual audited financial statements for financial year ended (“FYE”) 31 December 2016 had been reviewed and discussed with External Auditors on 6 March 2017 and was put forward to the Board of Directors for approval on 30 March 2017. The audited financial statements are in compliance with its accounting policies, the accounting standard and Listing Requirements of Bursa Malaysia Securities Berhad.

2. External Audit

(a) Reviewed with the External Auditors:-

• Theauditplanforthefinancialyearended31December2016outlining,amongstothers,theirauditobjectives,statutory responsibilities, audit approach, scope of work, areas of audit emphasis, development in laws and regulations affecting financial reporting including the enhanced auditors’ report which was effective for audits of financial statements for periods ending on or after 15 December 2016 and the responsibilities of directors and management. No new Malaysian Financial Reporting Standards (“MFRS”) or amendments to MFRS which were effective for financial year beginning on or after 1 January 2016 and having material impact to the financial statements were identified;

• Theauditresultsreportontheauditofthefinancialstatementsforfinancialyearended31December2016including Key Audit Matters and going concern findings, setting out their comments and conclusions on the significant and key auditing and accounting issues highlighted, including Management’s judgements, estimates and/or assessments made, and adequateness of disclosures in the financial statements;

• Other information other than financial statements and the auditors’ report included in this Annual Reportincluding but not limited to the Management Discussion and Analysis and Statement on Corporate Governance; and

• ThemanagementletterissuedbytheExternalAuditorsandtheManagement’sresponse.


038

SUMMARY OF WORKS OF THE AUDIT AND RISK MANAGEMENT COMMITTEE (CONT’D)

2. External Audit (cont’d)

(b) Assessed and reviewed the performance, independence and annual assessment of the suitability for re-appointment of the Auditors for recommendation to the Board on the re-appointment of SJ Grant Thornton as External Auditors for the forthcoming financial year ending 31 December 2017. Based on the experience, audit approach and performance of the External Auditors, the sufficiency of resources allocated in the conduct of the interim and final audit, the relatively low non-audit services undertaken by the External Auditors during the financial year and after deliberation with the External Auditors in the absence of the Management, the Audit and Risk Management Committee recommended to the Board the re-appointment of SJ Grant Thornton as External Auditors in the ensuing year.

(c) Reviewed the audit fees proposed by the External Auditors and recommended the same to the Board of Directors for approval.

(d) Had discussions with the External Auditors twice during the financial year, namely 29 February 2016 and 18 August 2016, without the presence of Management, to discuss matters concerning the audit for the financial years ended 31 December 2015 and 2016. No areas of concern were raised that needed the attention of the Board of Directors and that the External Auditors’ had received full support and good co-operation from Management and employees of the Company during the course of the audit.

3. Internal Audit

(a) Reviewed with the Internal Auditors:-

• Thereportonthequalityassessmentreviewinrelationtotheadequacyoftheinternalauditfunctionsamongothers in identifying weaknesses in internal control, towards detection and prevention of fraud and monitoring compliance including an assessment of the adequacy and independence of the Company’s internal audit function. Steps have been taken and will be taken over time in addressing the areas for improvements and shortcomings. For example, the quality assessment review sought for the establishment of an Audit Charter which includes the embedded minimum requirement to undertake quality assessment review once in every five years. The Audit Charter has since been established and was approved by the Audit and Risk Management Committee during the financial year.

The Internal Audit is guided by international standards and professional best practices of Internal Audit to achieve high quality reports. The scope of internal audit is high level Management Control Review based on COSO framework. The five interrelated components comprise Control Environment, Risk Assessment, Control Activities, Information and Communication and Continuous Monitoring. The Internal Audit reports are prepared by adopting the Exception Method of reporting.

• TheinternalauditreportsonthePropertyDevelopmentandConstructionbusinesssegmentandtheIndustrialSupply business segment in Labuan Federal Territory (including follow-up review reports) on their findings and recommendations, Management’s responses and/or actions taken thereto, and ensured that material findings were satisfactorily addressed by Management.

• Internalauditresourcing,withfocusonensuringthatthefunctionhastherightcalibreofresourceinplaceandhas the necessary authority in carrying out its work.

(b) Had discussions with the Internal Auditors during the financial year, namely 15 November 2016, without the presence of Management, to discuss matters concerning the audit for the financial years ended 31 December 2016. No areas of concern were raised that needed the attention of the Board of Directors and that the Internal Auditors’ had received full support and good co-operation from Management and employees of the Company during the course of the audit.

4. Risk Management

(a) Reviewed the enterprise Risk Management and operation to ensure that the Group’s business activities and risk management capabilities are progressively developed and enhanced on an ongoing basis so as to proactively manage the key risk areas that arise with the developments in the internal and external operating environment;

(b) Reviewed the report and progress on action plans including new policies and procedures developed as part of the risk mitigation strategies/action plan to deal with the gaps identified by the Information Technology (IT) Environment Assessment earlier the financial year which is part of the enterprise risk management activity.



039

SUMMARY OF WORKS OF THE AUDIT AND RISK MANAGEMENT COMMITTEE (CONT’D)

5. Malaysian Code on Corporate Governance

Reviewed the extend of the Group’s compliance with the provision set out under the Malaysian Code on Corporate Governance based on the Bursa Malaysia Securities Berhad’s review of corporate governance disclosure as disseminated to all listed issuer in December 2016. The Audit and Risk Management Committee took cognisance of the feedback from Bursa Malaysia Securities Berhad’s review and the areas for improvements and further approved the Management’s action plan in enhancing the adequacy of the Company’s corporate governance practices and disclosures.

6. Related Party Transactions of a Revenue or Trading Nature (“RPT”)

Reviewed on a quarterly basis, the RPT entered into by the Company and/or its subsidiaries with related parties to ensure that the Group’s internal policies and procedures governing RPT are adhered to, the terms of the shareholder mandate are not contravened, and where required, releasing the requisite announcement in compliance to the the Main Market Listing Requirements of Bursa Malaysia Securities Berhad.

7. Allocation under the Employees’ Share Option Scheme (“ESOS”)

Pursuant to the Listing Requirement, the Audit and Risk Management Committee of the Company has during its meeting held on 16 February 2017 verified and is satisfied with the compliance to the criterias and disclosure for allocation of ESOS options granted to the employees of the Group as at 31 December 2016.

8. Annual Report

Reviewed the Audit and Risk Management Committee Report, and Statement on Risk Management and Internal Control before recommending these to the Board of Directors for approval for inclusion in 2016 Annual Report.

9. Reporting to the Board

The secretary is responsible in keeping the minutes of the meetings of the Audit and Risk Management Committee and circulating them to the Audit and Risk Management Committee and thereafter to the other members of the Board. The Chairman of the Audit and Risk Management Committee reports key issues identified and discussed by the Audit and Risk Management Committee and of the decisions and recommendations made by the Audit and Risk Management Committee to the Board at each following meeting of the Board. All significant matters reserved would be tabled to the Board for approval.

SUMMARY OF WORKS 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 and Risk Management Committee on matters of control and audit and assist the Audit and Risk Management Committee in discharging its duties and responsibilities on the reviews of the internal control systems of the Group.

The summary of works of the internal audit function which were tabled and reviewed by the Audit and Risk Management Committee are indicated under section 4 of the above “Summary of works of the Audit and Risk Management Committee ”. The internal audit plan was not presented in the present financial year as the Internal Auditors has applied the 2-year audit plan development and approved in the preceding financial year.

The internal audit fee incurred for the financial year ended 31 December 2016 was RM37,050.



040

Statement on Risk Management and Internal Control

THE Board of Directors (“The Board”) is pleased to present this Statement of Risk Management and Internal Control (“Statement”) pursuant to paragraph 15.26(b) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad (“Bursa Malaysia”) which requires the directors of public listed companies to include in its Annual Report a “statement about the state of internal control of the listed issuer as a group”.

RESPONSIBILITY OF THE BOARD

The Board affirms its overall responsibility and is committed to maintain a sound risk management and internal control system within the Group; and regularly review its adequacy and integrity in safeguarding shareholders’ investment and the Group’s assets.

The system of risk management and internal control covers not only financial aspect but also operational and compliance aspect of the Group. Due to the limitations that are inherent in any system of internal control, such systems are designed to manage, rather than eliminate the risk of failure to achieve business objectives. Accordingly such systems can only provide reasonable but not absolute assurances against material misstatement or loss.

The Board is assisted by Senior Management in implementing the Board approved policies and procedures on risk and control by identifying and analysing risk information; designing, operating suitable internal controls to manage and control these risks; and monitoring effectiveness of risk management and control activities.

The Board confirms that there is an on-going process for identifying, evaluating and managing significant risks faced by the Group. This includes examining principal business risks in critical areas and identifying measures to mitigate, avoid and eliminate these risks. The Audit and Risk Management Committee and the Board reviews this process with guidance from "Statement on Risk Management and Internal Control: Guidelines for Directors of Listed Issuers".

The associated companies are not material to the Group and therefore have not been dealt with as part of the Group for the purpose of applying the guidance from "Statement on Risk Management and Internal Control: Guidelines For Directors of Listed Issuers".

RISK MANAGEMENT FRAMEWORK

The Board supports the guidelines as spelt out in the Statement on Risk Management and Internal Control: Guidance for Directors of Listed Issuers and confirms that there is an on-going process of identifying, evaluating and managing all significant risks faced by the Group. The Audit and Risk Management Committee continuously reviews the adequacy and effectiveness of the risk management processes that are in place within the Group.

The Board believes that the function of sound system of internal control and risk management policies is built on a clear understanding and appreciation of the Group’s risk management framework with the following key elements:• Effective and efficient risk management activities contribute to good corporate governance and are integral to the

achievement of business objectives;• Riskmanagementshouldbeembedded intoday-to-daymanagementprocessesand isextensivelyapplied indecision-

making and strategic planning;• Riskmanagementprocessesappliedshouldaimtotakeadvantageofopportunities,manageuncertaintiesandminimize

threats; and• Regularreportingandmonitoringactivitiesemphasizetheaccountabilityandresponsibilityformanagingrisk.

PLANNING, MONITORING AND REPORTING

The annual budgetary exercise is undertaken requiring all divisions and/or operating business segments to prepare business plans and budgets for each financial year. For the year 2017 budgets, these were presented and deliberated at Management levels between the third to fourth quarter of year 2016 and elevated to the Board for deliberation and approval during its meeting in November 2016.

The Board was given sufficient and timely information concerning both performance and risk levels for purpose of monitoring and assessing the Management’s performance in achieving strategies and objectives. The Group’s business plan and comparison of actual vs. budgeted performance for the financial year under review (with emphasis on significant variances) was deliberated by the Board at least on a quarterly basis. During the middle of year 2016, a forecast of the performance of the Group was prepared by the Management to apprise the Board of the likely financial results of the Group for the entire financial year 2016 vis-à-vis the 2016 budget which was prepared during the second half of year 2015.


041

Statement on Risk Management and Internal Control(cont’d)

PLANNING, MONITORING AND REPORTING (CONT’D)

The Group’s Management team on a monthly basis monitors and reviews financial and operating results, including monitoring and reporting of performance against the operating plans and approved budgets. The Management team then formulates and communicates action plans to address areas of concern.

The preparation of quarterly and annual results and the state of affairs of the Group is reviewed and approved by the Board before release of the same to the regulators whilst the full year financial statements are audited by the External Auditors before their issuance to the regulators and shareholders.

POLICIES

The clear and documented internal policy is in place to ensure compliance with the internal control and relevant laws and regulations.

The policies are being review at least once in every two years or as and when the circumstances warrants to ensure that these documentations remain current and relevant.

INTERNAL AUDIT FUNCTION

The Audit and Risk Management Committee evaluates the internal audit function to assess its effectiveness in discharge of its responsibilities. The Group’s internal audit function is outsourced to a professional services firm to assist the Board and Audit and Risk Management Committee in providing independent assessment on the adequacy, efficiency and effectiveness of the Group’s internal control systems. The Group internal audit function reports directly to the Audit and Risk Management Committee.

During the financial year ended 31 December 2016, risk-based approach internal audits were carried out in accordance to the internal audit plan that has been reviewed and approved by the Audit and Risk Management Committee in the previous financial year. Observations from these audits are presented, together with Management’s response and proposed action plans, to the Audit and Risk Management Committee for its review. Further details of the activities of the internal audit function are provided in the Audit and Risk Management Committee Report.

RISK MANAGEMENT AND INTERNAL CONTROL

The Group has continuously embedded the risk management process in identifying, evaluating and managing 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.

The process encompasses assessments and evaluations at business unit process level before being examined from a Group perspective.

KEY RISK MANAGEMENT AND INTERNAL CONTROL PROCESSES

The key elements of the Group’s internal control system are as follows:

(i) The Group has a defined organization structure and each function and/or operating business segments is led by a head of department. Line of accountability, responsibility, approval, authorization and control procedures have been laid down and communicated throughout the Group;

(ii) The Audit and Risk Management Committee comprises Non-Executive Directors of the Board, with a majority being independent. 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. Informal discussion sessions are held at least once during each financial year with both the External and Internal Auditors without the presence of Management;

(iii) Clearly documented standard operating policies and procedures to ensure compliance with internal controls, laws and regulations, which are subjected to regular reviews and improvement, have been communicated to all levels;

(iv) Clearly defined levels of authority for day-to-day business aspects of the Group covering procurement, payments, investments, acquisition and disposal of assets have been disseminated to all employees;


042

KEY RISK MANAGEMENT AND INTERNAL CONTROL PROCESSES (CONT’D)

The key elements of the Group’s internal control system are as follows (cont’d):

(v) There is an annual budgeting and target setting process being formulated for each operating business segment. The budget has been presented to the Board for review and approval and the Management will be guided by the approved budget in managing and monitoring their respective operating unit;

(vi) Key result areas and key performance indicators are established and aligned with the strategic business objectives and goals and are monitored on an ongoing basis;

(vii) Group’s policies and procedures, which set out guidelines and expected standards for the Group’s operations are reviewed regularly and updated to maintain effectiveness at all time;

(viii) Regular and comprehensive financial information is provided to the Audit and Risk Management Committee for quarterly and ad-hoc reviews and thereafter, present to the Board for approval;

(ix) The Group has delegated certain authority levels for tenders, capital expenditure projects, acquisitions and disposals of businesses and other significant transactions to the Executive Directors. The approval of capital and revenue proposals above certain limits is reserved for decision by the Board. Other investment decisions are delegated for approval in accordance with authority limits. Comprehensive appraisal and monitoring procedures are applied to all major investment decisions;

(x) The Group conducts regular meetings of the Senior Management which comprises Executive Directors and divisional heads. The purpose of these meetings is to deliberate and decide on matters requiring decision and reporting on progress of works and resolve on urgent company matters. Decisions are then communicated to all relevant staff levels in a timely manner. From these meetings, the Management is able to identify significant operational and financial risks of the business units concerned;

(xi) Board meetings are held at least once in a quarter with a formal agenda on matters for discussion. The Board is kept updated on the Group’s activities and operations on a timely and regular basis;

(xii) Regular in-house training by external parties were conducted in the Company’s premises in keeping Directors and Management abreast with the current thinking on risk management and internal controls; and

(xiii) Introduction of a Whistle-Blowing Policy during the financial year and followed by its implemented during the financial year 2017 in providing avenues for whistle-blowing.

REVIEW OF ENTIRE CONTROLS OVER INFORMATION TECHNOLOGY

As part of its risk assessment reviews, during the financial year, the Group has identified and carried out a comprehensive review of controls over its Information Technology (“IT”) in enhancing the integrity of the Group’s system’s financial data. Having proper control in the IT environment is critical towards ensuring integrity of financial information collection, classification, allocation and reporting.

The exercise entails the design and implementation of an effective system of IT internal controls over financial reporting in a cost beneficial way. The Group has also commissioned an assessment of the IT system environment in identifying the risks and areas of shortcoming and was followed by steps to be taken to address the areas identified. As a consequence, a series of IT resources consolidation and enhancement exercises were carried out with the objectives of cost effectiveness as well as to achieve an IT services environment that have efficient and robust access controls, backups, security and support mechanism. Critical documentations comprising Policies and Procedures were prepared and has been implemented progressively in establishing the necessary controls over IT.

The policies and/or procedures comprises among others :-

• PoliciesandProceduresonSystembackupsandrecovery• PolicyonUserAccessAdministration• PoliciesandProceduresonITSupport• PolicyonPassword• PolicyonITAccess• PolicyonBackup• PolicyonSoftwareInstallation



043

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 and implementing strategies to mitigate those risks, maintaining a sound system of risk management and internal control; and monitoring and reporting to the Board of material control deficiencies and changes in risks that could significantly affect the Group achievement of its objective and performance.

Before producing this Statement, the Board has obtained assurance from the Managing Director and Head, Corporate Finance that, to the best of their knowledge, the Group’s risk management and internal control system is operating adequately and effectively, in all material aspects.

BOARD ASSURANCE AND LIMITATION

For the financial year under review, the Board is satisfied that the existing level of risk management and internal control system is sufficiently effective to enable the Group to achieve its business objectives and there were no material losses resulting from material control deficiency that would require separate disclosure in the Annual Report. Nonetheless, the Board recognizes that the internal control system should be continuously improved in line with the evolving business development. It should also be noted that all risk management and internal control system could only manage rather than eliminate risks of failure to achieve business objectives. Therefore, the Group’s risk management and internal control system can only provide reasonable, but not absolute assurance against material misstatements, frauds, losses or other significantly adverse consequences.

REVIEW OF STATEMENT BY EXTERNAL AUDITORS

The External Auditors have reviewed this Statement on Internal Control for inclusion in this Annual Report for the financial year ended 31 December 2016 and have reported to the Board that nothing has come to their attention that causes them to believe this Statement is inconsistent with their understanding of the process the Board has adopted, in the review of the adequacy and integrity of the systems of internal control of the Group.

CONCLUSION

The Board is satisfied with the adequacy and effectiveness of the Group’s Risk Management and Internal Control system. The Board has received assurance from the Managing Director and Head, Corporate Finance that the Group’s Risk Management and Internal Control system operated adequately and effectively in all material aspects, based on the risk management and internal control system of the Group.

During the financial year, the internal audit function performed various internal audit activities in accordance to the plan to ascertain the adequacy of the internal control systems and make recommendations for improvement where weaknesses exist.

The Audit and Risk Management Committee and the Board shall work closely with Internal and External Auditors to continuously improve the risk management and internal controls of the Group in terms of its integrity and adequacy. The Group’s risk management and system of internal controls will continue to be reviewed, added to or updated in line with the changes in the operating environment to ensure its continuing effectiveness.

This Statement on Risk Management and Internal Control is made in accordance with the minutes of the Directors’ meeting held on 30 March 2017.



044

UTILISATION OF PROCEEDS

During the financial year ended 31 December 2016, there were no proceeds received by the Company from any corporate proposals.

AUDIT AND NON-AUDIT FEES

The amount of audit and non-audit fees incurred for services rendered to the Company and the Group by the Company’s External Auditors, Messrs SJ Grant Thornton for the financial year ended 31 December 2016 are as follows :-

Company GroupRM’000 RM’000

Audit fees 53 117 Non-audit fees 33 33

VARIATION IN RESULTS

There was no variation of 10% or more between the audited results for the financial year ended 31 December 2016 and the unaudited results previously announced.

There were no profit estimates, forecast or projection announced by the Company during the financial year.

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 2016 or entered into since the end of the previous financial year ended 31 December 2015 except as announced to Bursa Malaysia Securities Berhad and disclosed in this Annual Report.

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.

INSURANCE AND INDEMNITY – DISCLOSURE UNDER SECTION 289 OF THE COMPANIES ACT 2016

The Company has taken up a Directors and Officers (D&O) Liability Insurance for the benefit of all the Directors. The D&O insurance covers the defense costs and legal representation expenses of the Directors in respect of actions against them for liabilities arising from their actions in their capacity as Director of the Company and/or its subsidiaries. It does not indemnify a Director if he is proven to have acted fraudulently or dishonestly or for any intentional breach of the law.

EMPLOYEES’ SHARE OPTION SCHEME (“ESOS”)

Detailed information of the ESOS of the Company is set out in the sections of Directors’ Interests and Options Granted Over Unissued Shares in the Directors’ Report and also in Note 18 to the financial statements of this Annual Report.

In accordance with Appendix 9C Part A Section 27(a) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad, the total number of shares granted and accepted, vested and outstanding pursuant to the Company’s ESOS since its commencement until the end of the current financial year ended 31 December 2016 are as follows :-

Total number of option shares granted : 8,796,000 (a)

Total number of option shares exercised : NilTotal number of option shares vested : NilTotal number of option shares outstanding : 8,796,000

Additional Compliance Information


045

EMPLOYEES’ SHARE OPTION SCHEME (“ESOS”) (CONT’D)

(a) Excluding those shares granted to employees due to non-acceptance of the offer, resignation and termination of employment in accordance with the By-Laws governing the ESOS.

The option shares granted to the Company’s Directors including Managing Director are set out in the section of Directors’ Interests in the Directors’ Report to the financial statements of this Annual Report.

The details of shares granted under the ESOS to the Company’s Directors and Senior Management since the commencement of the ESOS and during the financial year ended 31 December 2016 are as follows:-

(a) The maximum allocation to the Company’s Directors are as below:-• Chairman - 2,000,000 option shares• Managing Director - 3,000,000 option shares• Executive Director - 2,000,000 option shares• Non-Executive Director 1,000,000 option shares

(b) There is no maximum allocation applicable to Senior Management except to En Almiran bin Anuar (the son of Datuk Seri Anuar bin Adam, the Managing Director and a major shareholder of the Company) whose maximum allocation is 500,000 option shares. However, section 4.1 of the By-Laws stipulated that not more than ten percent (10%) of the shares available under the ESOS at the point in time when an Offer is made be granted to any individual selected person who, either singly or collectively through persons connected with him, holds twenty per cent (20%) or more in the issued and paid-up share capital of the Company and that not more than sixty percent (60%) of the shares available under the ESOS shall be allocated in aggregate to the Directors and Senior Management of the Group.

(c) The actual percentage granted to the Company’s Directors and Senior Management is 63.7% and 15.0% respectively.

Additional Compliance Information(cont’d)


046

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:

• adoptedsuitableaccountingpoliciesandappliedthemconsistently;

• madejudgementsandestimatesthatarereasonableandprudent;and

• prepared financial statements on a going concern basis as the Directors have a reasonable expectation, having madeenquiries, 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, 1965.

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 30 March 2017.

Statement of Directors’ ResponsibilityPursuant to Paragraph 15.26(a) of the Listing Requirements of Bursa Malaysia Securities Berhad


047

Financial Statements and Reports048-052 Directors’ Report

053 Statement by Directors and Statutory Declaration

054-057 Independent Auditors’ Report

058-059 Statements of Financial Position

060 Statements of Comprehensive Income

061-062 Statements of Changes in Equity

063-065 Statements of Cash Flows

066-127 Notes to Financial Statements

128 Supplementary Information on the Disclosure of Realised and Unrealised Profits/(Losses)


048

The Directors hereby submit their report together with the audited financial statements of the Group and of the Company for the financial year ended 31 December 2016.

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 its subsidiaries are disclosed in Note 6 to the financial statements.

There have been no significant changes in the nature of principal activities of the Company and its subsidiaries during the financial year.

FINANCIAL RESULTS

Group CompanyRM’000 RM’000

Net loss for the financial year 14,038 6,682

Attributable to: Owners of the Company 13,768 6,682 Non-controlling interests 270 -

14,038 6,682

RESERVES AND PROVISIONS

All material transfer to or from reserves or provision during the financial year are disclosed in the financial statements.

DIVIDENDS

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

DIRECTORS

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

Tan Sri Datuk Dr. Abdul Samad bin Haji Alias (Chairman) Datuk Seri Anuar bin Adam Datuk Aldillan bin AnuarDato’ Che Abdullah @ Rashidi bin Che OmarDatuk Noel John A/L M Subramaniam Dato’ Samsudin bin Abu HassanTan Peng KoonDerek John Fernandez Datuk Gan Seong Liam (Appointed on 12 August 2016)Dato’ Faizal bin Abdullah (Resigned on 1 August 2016)

Directors’ Report


049

DIRECTORS’ INTERESTS

According to the Register of Directors’ Shareholdings, the interests and deemed interests in the shares of the Company and its related corporations (other than wholly-owned subsidiaries) of those who were Directors at year end are as follows:-

Number of ordinary shares of RM0.50 eachAt 1 January

2016/Date of appointment Bought Sold

Bonus Issue

At 31December

2016

Interests in the Company

Direct interestsTan Sri Datuk Dr. Abdul Samad

bin Haji Alias 65,000 - - 6,500 71,500Datuk Seri Anuar bin Adam 116,556,665 18,003,600 - 13,436,026 147,996,291Datuk Noel John A/L M

Subramaniam 250,000 810,000 - 35,000 1,095,000Dato’ Samsudin bin Abu Hassan 616,000 - - 61,600 677,600Datuk Gan Seong Liam 17,272,870 - - - 17,272,870

Indirect interestsDatuk Gan Seong Liam (*) 952,600 725,400 - - 1,678,000Dato’ Samsudin bin Abu

Hassan (*) - 515,000 - - 515,000Datuk Aldillan bin Anuar (**) 116,556,665 18,003,600 - 13,436,026 147,996,291

(*) deemed interests by virtue of shares held by children.(**) deemed interests by virtue of shares held by father.

Number of options over ordinary shares of RM0.50 eachAt 1

January2016 Granted Exercised

At 31December

2016

Interests in the Company

Direct interestsTan Sri Datuk Dr. Abdul Samad bin Haji Alias - 800,000 - 800,000Datuk Seri Anuar bin Adam - 1,200,000 - 1,200,000Datuk Aldillan bin Anuar - 800,000 - 800,000Dato’ Che Abdullah @ Rashidi bin Che Omar - 800,000 - 800,000Datuk Noel John A/L M Subramaniam - 800,000 - 800,000Dato’ Samsudin bin Abu Hassan - 400,000 - 400,000Tan Peng Koon - 400,000 - 400,000Derek John Fernandez - 400,000 - 400,000

By virtue of his interests in the shares of the Company, Datuk Seri Anuar bin Adam is also deemed interested in the shares of all the subsidiaries during the financial year to the extent that the Company has an interest under Section 6A of the Companies Act 1965.

None of the other Directors in office at the end of the financial year had any interest in the shares of the Company or its related corporations during the financial year.

Directors’ Report(cont’d)


050


DIRECTORS’ BENEFITS

During and at the end of the financial year, no arrangements subsisted to which the Company is a party, with the object or objects of enabling Directors of the Company to acquire benefits by means of the acquisition of shares in, or debentures of, the Company or any other body corporate.

Since the end of the previous financial year, no Director has received or become entitled to receive any benefits (other than as disclosed in Notes 27 and 30 to the financial statements) by reason of a contract made by the Company or a related corporation with the Director or with a firm of which the Director is a member, or with a company in which the Director has a substantial financial interest.

ISSUE OF SHARES AND DEBENTURES

During the financial year, the Company issued 44,475,348 bonus shares of RM0.50 each on the basis of one bonus share for every ten existing shares held.

There were no debentures issue during the financial year.

TREASURY SHARES

There were no repurchase and resale of treasury shares during the financial year.

At 31 December 2016, the total number of treasury shares held by the Company is 474,300 units with a total cost of RM154,720.

OPTIONS GRANTED OVER UNISSUED SHARES

No options were granted to any person to take up unissued shares of the Company during the financial year apart from the issue of options pursuant to the Employees’ Share Option Scheme (“ESOS”).

At an extraordinary general meeting held on 11 April 2013, the Company’s shareholders approved the establishment of an ESOS of not more than 10% of the issued share capital of the Company to eligible Directors and employees of the Group.

The salient features and other terms of the ESOS are disclosed in the Note 18 to the financial statements.

As at 31 December 2016, the options offered to take up unissued ordinary shares of RM0.50 each and the exercise prices are as follows:

Number of options over shares of RM0.50 each

Date of offer Exercise priceAt 1 January

2016 GrantedAt 31 December

2016

22 September 2016 0.50 - 8,796,000 8,796,000

The Company has been granted exemption by the Companies Commission of Malaysia from having to disclose on this report the names of option holders, other than Directors, who have been granted for options during the financial year and details of their holdings as required by Section 169(11) of the Companies Act, 1965. This information has been separately filed with the Companies Commission of Malaysia.

Details of options granted to Directors are disclosed in the section of Directors’ Interests in this report.


051

OTHER STATUTORY INFORMATION

Before the Statements of Financial Position and Statements of Comprehensive Income of the Group and of the Company were made out, the Directors took reasonable steps:-

(a) to ascertain that action had been taken in relation to the writing off of bad debts and the making of provision for doubtful debts and satisfied themselves that there were no bad debts to be written off and no provision for doubtful debts was required; and

(b) to ensure that any current assets which were unlikely to be realised in the ordinary course of business including their values as shown in the accounting records of the Group and of the Company have been written down to an amount which they might be expected so to realise.

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

(a) which would render it necessary to write off any bad debts or to make any provision for doubtful debts in the financial statements of the Group and of the Company; or

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

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

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

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

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

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

In the opinion of the Directors:-

(a) no contingent liability or other liability has become enforceable or is likely to become enforceable within the period of twelve months after the end of the financial year which will or may affect the ability of the Group and of the Company to meet their obligations as and when they fall due;

(b) the results of operations of the Group and of the Company during the financial year were not substantially affected by any item, transaction or event of a material and unusual nature; and

(c) there has not arisen in the interval between the end of the financial year and the date of this report any item, transaction or event of a material and unusual nature likely to affect substantially the results of the operations of the Group and of the Company for the current financial year in which this report is made.

SIGNIFICANT EVENTS DURING AND AFTER THE FINANCIAL YEAR

The significant events during and after the financial year are disclosed in Note 35 to the financial statements.



052

AUDITORS

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

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

...................................................................... )DATUK SERI ANUAR BIN ADAM ) ) ) ) ) ) DIRECTORS ) ) ) ) ) )...................................................................... )DEREK JOHN FERNANDEZ )

Kuala Lumpur

30 March 2017



053

In the opinion of the Directors, the financial statements set out on pages 58 to 127 are drawn up in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act 1965 in Malaysia so as to give a true and fair view of the financial position of the Group and of the Company as at 31 December 2016 and of their financial performance and cash flows for the financial year then ended.

In the opinion of the Directors, the information set out on page 128 had been compiled 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.

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

........................................................................................ ........................................................................................ DATUK SERI ANUAR BIN ADAM DEREK JOHN FERNANDEZ

Kuala Lumpur

30 March 2017

Statutory Declaration

We, Datuk Seri Anuar Bin Adam, 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 58 to 127 and the financial information set out on page 128 are correct and we make this solemn declaration conscientiously believing the same to be true and by virtue of Statutory Declarations Act 1960.

Subscribed and solemnly declared by )the abovenamed at Kuala Lumpur in )the Federal Territory this day of )30 March 2017 ) ........................................................................................ ) DATUK SERI ANUAR BIN ADAM )Before me: ) ) ) ) ........................................................................................ POW TUCK WENGS.ARULSAMY (W.490)Commissioner for Oaths

Statement by Directors


054

Independent Auditors’ ReportTo the members of Tadmax Resources Berhad (Incorporated in Malaysia)

REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS

Opinion

We have audited the financial statements of Tadmax Resources Berhad, which comprise the Statements of Financial Position as at 31 December 2016 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 notes to the financial statements, including a summary of significant accounting policies, as set out on pages 58 to 127.

In our opinion, the accompanying financial statements give a true and fair view of the financial position of the Group and of the Company as of 31 December 2016, and of their financial performance and cash flows for the financial year then ended in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act 1965 in Malaysia.

Basis of Opinion

We conducted our audit in accordance with approved standards on auditing in Malaysia and International Standards on Auditing. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Financial Statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Independence and Other Ethical Responsibilities

We are independent of the Group and of the Company in accordance with the By-Laws (on Professional Ethics, Conduct and Practice) of the Malaysian Institute of Accountants (“By-Laws”) and the International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (“IESBA Code”), and we have fulfilled our other ethical responsibilities in accordance with the By-Laws and the IESBA Code.

Key Audit Matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the Group and of the Company for the current year. These matters were addressed in the context of our audit of the financial statements of the Group and of the Company as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Revenue recognition for development properties

There are significant accounting judgements including determining the stage of completion, the timing of revenue recognition and the calculation under the percentage-of-completion method, made by management in applying the Group’s revenue recognition policies to long-term contracts entered into by the Group. As explained above we focused on this area and our testing was designed to ensure we appropriately addressed the risk of material misstatement.

Referring to Note 25 to the financial statements, total revenue from property development activities was approximately RM29 million which represents 69% of the Group’s revenue for the year ended 31 December 2016. Significant estimate is required in determining the percentage of completion which is determined by the proportion of property development costs incurred for work performed up to the reporting period over the estimated total property development costs. There has been no change in this estimate from the prior year.

We performed a range of audit procedures which included obtaining a sample of contracts, reviewing for change orders, reviewing expert certificates, retrospectively reviewing estimated profit and costs to complete and enquiring of key personnel regarding adjustments for job costing and potential contract losses.

As a result of our audit procedures, we believe that revenue has been appropriately recognised in relation to properties development and that the judgements made by management in recognising revenue, margin and provisioning on loss-making contracts, if any, are reasonable.


055

REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS (CONT’D)

Key Audit Matters (cont’d)

Impairment on Non-current Assets

The Group has significant balances of non-current assets, those are prepaid land lease payments with cultivation rights amounting to approximately RM59 million and timber concession rights amounting to RM218 million. There is a risk that the future plan of these assets may lead to their carrying values not being recoverable in full. There are inherent uncertainties in estimating the value of assets through discounted cash flows when impairment testing is performed. These uncertainties arise principally in the inputs used in forecasting future cash flows and also the management’s plans in future, for example expected changes in base lending rate and the disposal price of the subsidiaries.

Determination of whether an impairment charge for such assets was necessary involved significant judgements by the Directors about the future results and plans for the development of the assets through discounted cash flows.

The Company is proposing to dispose of its subsidiaries which included the prepaid land lease payments with cultivation rights and timber concession rights as disclosed in Note 35 to the financial statements. We have considered and tested the appropriateness of the management’s assessment on the recoverable amount of the assets at fair value less cost of disposal, net of tax. We did not identify any material differences or material impairment issues.

Information Other than the Financial Statements and Auditors’ Report Thereon

The directors of the Company are responsible for the other information. The other information comprise the information included in the annual report, but does not include the financial statements of the Group and of the Company and our auditors’ report thereon.

Our opinion on the financial statements of the Group and of the Company does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements of the Group and of the Company, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements of the Group and of the Company or our knowledge obtained in the audit or otherwise appears to be materially misstated.

If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of the Directors for the Financial Statements

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

In preparing the financial statements of the Group and of the Company, the directors are responsible for assessing the Group’s and the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or the Company or to cease operations, or have no realistic alternative but to do so.


(cont’d)


056

Independent Auditors’ ReportTo the members of Tadmax Resources Berhad (Incorporated in Malaysia)(cont’d)


Auditors’ Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements of the Group and of the Company as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with approved standards on auditing in Malaysia and International Standards on Auditing will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with approved standards on auditing in Malaysia and International Standards on Auditing, we exercise professional judgement and maintain professional scepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the financial statements of the Group and of the Company,whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtainanunderstandingofinternalcontrolrelevanttotheauditinordertodesignauditproceduresthatareappropriateinthe circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s and the Company’s internal control.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and relateddisclosures made by the directors.

• Concludeontheappropriatenessofthedirectors’useofthegoingconcernbasisofaccountingand,basedontheauditevidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s or the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the financial statements of the Group and of the Company or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause the Group or the Company to cease to continue as a going concern.

• Evaluate theoverallpresentation,structureandcontentof the financialstatementsof theGroupandof theCompany,including the disclosures, and whether the financial statements of the Group and of the Company represent the underlying transactions and events in a manner that achieves fair presentation.

• Obtainsufficientappropriateauditevidenceregardingthefinancialinformationoftheentitiesorbusinessactivitieswithinthe Group to express an opinion on the financial statements of the Group. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide the directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with the directors, we determine those matters that were of most significance in the audit of the financial statements of the Group and of the Company for the current year and are therefore the key audit matters. We describe these matters in our auditors’ report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.


057


Report on Other Legal and Regulatory Requirements

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

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

(b) We have considered the accounts and the auditors’ reports of all the subsidiaries of which we have not acted as auditors, which are indicated in Note 6 to the financial statements.

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

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

OTHER REPORTING RESPONSIBILITIES

The supplementary information set out on page 128 is disclosed to meet the requirement of Bursa Malaysia Securities Berhad and is not part of the financial statements. The directors are responsible for the preparation of the supplementary information in accordance with Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants (“MIA Guidance”) and the directive of Bursa Malaysia Securities Berhad. In our opinion, the supplementary information is prepared, in all material respects, in accordance with the MIA Guidance and the directive of Bursa Malaysia Securities Berhad.

OTHER MATTERS

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

SJ GRANT THORNTON SUNG FONG FUI(NO. AF: 0737) (NO: 2971/08/17(J))CHARTERED ACCOUNTANTS CHARTERED ACCOUNTANT Kuala Lumpur

30 March 2017


(cont’d)


058

Group CompanyNote 2016 2015 2016 2015

RM’000 RM’000 RM’000 RM’000

ASSETSNon-current assets Property, plant and equipment 4 41,251 15,218 6,381 6,769 Prepaid land lease payments 5 (a) 2,259 2,352 - - Prepaid land lease payments with

cultivation rights 5 (b) 59,143 61,114 - - Investment in subsidiaries 6 - - 308,135 263,585 Investment in joint venture 7 14 14 14 14 Other investments 8 50 100 50 100 Timber concession rights 9 218,000 218,000 - - Land and development expenditure 10 8,165 7,630 - - Deferred tax assets 11 589 1,713 - -

Total non-current assets 329,471 306,141 314,580 270,468

Current assets Inventories 12 1,049 721 - - Land and development expenditure 10 90,841 30,727 - - Trade receivables 13 8,019 13,380 - 6,850 Other receivables, deposits and

prepayments 14 35,159 33,783 21,476 21,400 Amount due from subsidiaries 15 - - 4,183 2,207 Tax recoverable 1,067 1,085 1,067 1,067 Cash and bank balances 16 9,641 5,645 1,006 3,913

Total current assets 145,776 85,341 27,732 35,437

TOTAL ASSETS 475,247 391,482 342,312 305,905

Statements of Financial Positionas at 31 December 2016


059


RM’000 RM’000 RM’000 RM’000

EQUITY AND LIABILITIESEquity attributable to owners of the

Company Share capital 17 244,854 222,616 244,854 222,616 Share premium 1,367 1,367 1,367 1,367 Treasury shares 17 (155) (155) (155) (155) Reserves 18 4,364 40,475 38,229 66,797

Shareholders’ funds 250,430 264,303 284,295 290,625 Non-controlling interests 27,909 28,179 - -

Total equity 278,339 292,482 284,295 290,625

LIABILITIESNon-current liabilities Deferred tax liabilities 11 82,999 70,364 21 21 Hire purchase liabilities 19 998 984 191 294 Bank borrowings 20 15,675 - - -

Total non-current liabilities 99,672 71,348 212 315

Current liabilities Trade payables 21 18,079 5,482 - 2,164 Other payables, deposits and accruals 22 49,095 17,735 45,214 11,074 Amount due to customers on contract 23 788 748 - - Amount due to subsidiary 15 - - 5,729 - Amount due to directors 24 2,792 1,546 1,792 1,546 Hire purchase liabilities 19 869 641 70 181 Bank borrowings 20 25,457 1,500 5,000 - Tax payables 156 - - -

Total current liabilities 97,236 27,652 57,805 14,965

Total liabilities 196,908 99,000 58,017 15,280

TOTAL EQUITY AND LIABILITIES 475,247 391,482 342,312 305,905

Statements of Financial Positionas at 31 December 2016

(cont’d)

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


060

Statements of Comprehensive Income for the Financial Year Ended 31 December 2016



RM’000 RM’000 RM’000 RM’000

Revenue 25 42,362 13,179 943 2,282

Cost of sales (38,127) (12,222) (873) (2,237)

Gross profit 4,235 957 70 45

Other income 1,056 148,240 418 156,360

Administration expenses (17,430) (81,127) (6,611) (82,087)

Operating (loss)/profit (12,139) 68,070 (6,123) 74,318

Finance costs 26 (982) (356) (559) (293)

(Loss)/Profit before tax 27 (13,121) 67,714 (6,682) 74,025

Taxation 28 (917) (448) - -

Net (loss)/profit for the financial year (14,038) 67,266 (6,682) 74,025

Other comprehensive (loss)/income for the financial year, net of tax:

Items that are or may be reclassified subsequently to profit or loss, net of tax

- Realisation of merger reserve - - - 142,500 - Foreign currency translation (457) (82) - -

Other comprehensive (loss)/income for the financial year (457) (82) - 142,500

Total comprehensive (loss)/income for the financial year (14,495) 67,184 (6,682) 216,525

(Loss)/Profit for the financial year attributable to:

Owners of the Company (13,768) 67,525 (6,682) 74,025 Non-controlling interests (270) (259) - -

(14,038) 67,266 (6,682) 74,025

Total comprehensive (loss)/income attributable to:

Owners of the Company (14,225) 67,443 (6,682) 216,525 Non-controlling interests (270) (259) - -

(14,495) 67,184 (6,682) 216,525

GroupNote 2016 2015

RM RM

Basic/Diluted (loss)/earnings per ordinary share (sen) 29 (2.99) 14.32


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Statements of Changes in Equity for the Financial Year Ended 31 December 2016


062

Statements of Changes in Equity for the Financial Year Ended 31 December 2016(cont’d)

<---------------------------- Attributable to owners of the Company ----------------------------><---------------------- Non-distributable ---------------------->

(Accumulated

Losses)/Share Share Treasury Other Retained

Company Capital Premium Shares Reserve Profits Total RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Balance as at 1 January 2015 222,616 1,367 (155) 142,500 (149,728) 216,600

Net profit for the financial year - - - - 74,025 74,025

Realisation of merger reserve - - - (142,500) 142,500 -

Total comprehensive profit for the financial year - - - (142,500) 216,525 74,025

Balance as at 31 December 2015 222,616 1,367 (155) - 66,797 290,625

Net loss for the financial year - - - - (6,682) (6,682)

Employees’ share option scheme (“ESOS”) - - - 352 - 352

Total comprehensive loss for the financial year - - - 352 (6,682) (6,330)

Bonus shares issued 22,238 - - - (22,238) -

Balance as at 31 December 2016 244,854 1,367 (155) 352 37,877 284,295



063

Group Company2016 2015 2016 2015

RM’000 RM’000 RM’000 RM’000

CASH FLOWS FROM OPERATING ACTIVITIES(Loss)/Profit for the financial year (13,121) 67,714 (6,682) 74,025

Adjustments for:Amortisation of prepaid land lease payments 93 93 - - Amortisation of prepaid land lease payments with

cultivation rights 1,971 1,972 - - Depreciation of property, plant and equipment 2,036 1,040 517 545 (Gain)/Loss on disposal of property, plant and

equipment (56) 18 (56) 18 Gain on disposal of subsidiaries - (147,653) - (155,298)Goodwill written off - 67,834 - - Gain on recognition of financial assets - (38) - (38)Impairment loss on investment in subsidiaries - - - 1,237 Interest expense 982 356 559 293 Interest income (305) (175) (200) (152)Property, plant and equipment written off 47 7 - 7 Unrealised gain on foreign exchange (149) (36) (149) (36)Loss on waiver of debt from subsidiaries - - - 73,774 Share options granted under ESOS 352 - 352 -

Operating loss before working capital changes (8,150) (8,868) (5,659) (5,625)

Changes in working capital:Inventories (328) (721) - - Contract customers 40 4,224 - - Land and development expenditure (31,207) (2,181) - - Receivables 4,487 (27,609) 6,775 (5,568)Payables 43,353 (22,044) 32,124 (22,373)

Cash generated from/(used in) operations 8,195 (57,199) 33,240 (33,566)

Interest received 305 175 200 152 Interest paid (1,849) (356) (559) (293)Tax (paid)/refund (67) (756) - 1,070

Net cash from/(used in) operating activities 6,584 (58,136) 32,881 (32,637)

Statements of Cash Flows for the Financial Year Ended 31 December 2016


064


RM’000 RM’000 RM’000 RM’000

Net cash from/(used in) operating activitiesbrought forward 6,584 (58,136) 32,881 (32,637)

CASH FLOWS FROM INVESTING ACTIVITIESAcquisition of property, plant and

equipment A (1,041) (1,987) (285) (487)Disposal/(Acquisition) of other

investments 50 (50) 50 (100)Acquisition of subsidiaries, net of cash and

cash equivalents 6 (41,982) - - - Proceeds from disposal of subsidiaries, net

of cash and cash equivalents 6 - 287,682 - 287,972 Proceeds from disposal of property, plant

and equipment 212 132 212 132 Fixed deposit pledged as security - (30) - - Repayment from/(Advance to) subsidiaries - - 3,752 (25,233)Investment in subsidiaries - subscription

of shares - - (44,550) (2,400)

Net cash (used in)/from investing activities (42,761) 285,747 (40,821) 259,884

CASH FLOWS FROM FINANCING ACTIVITIESAdvance from/(Repayment to) directors 1,783 (7,276) 247 (7,196)Repayment of hire purchase liabilities (749) (453) (214) (161)Drawndown/(Repayment) of bank

borrowings 39,632 (216,440) 5,000 (217,940)

Net cash from/(used in) financing activities 40,666 (224,169) 5,033 (225,297)

CASH AND CASH EQUIVALENTSNet changes 4,489 3,442 (2,907) 1,950 Effect of translation differences on cash

and cash equivalents (493) (251) - - Brought forward 5,615 2,424 3,913 1,963

Carried forward B 9,611 5,615 1,006 3,913

Statements of Cash Flowsfor the Financial Year Ended 31 December 2016(cont’d)


065

NOTES TO THE STATEMENTS OF CASH FLOWS

A. ACQUISITION OF PROPERTY, PLANT AND EQUIPMENT

Group Company2016 2015 2016 2015

RM’000 RM’000 RM’000 RM’000

Acquisition of property, plant and equipment 2,031 3,480 285 597 Financed by hire purchase arrangements (990) (1,493) - (110)

Acquisition by cash 1,041 1,987 285 487

B. CASH AND CASH EQUIVALENTS

Cash and cash equivalents included in the Statements of Cash Flows comprise the following:-

Group Company2016 2015 2016 2015

RM’000 RM’000 RM’000 RM’000

Deposits placed with licensed banks 30 3,642 - 3,612 Cash and bank balances 9,611 2,003 1,006 301

9,641 5,645 1,006 3,913 Less: Deposit pledged with bank as security

for bank facilities (30) (30) - -

9,611 5,615 1,006 3,913

Statements of Cash Flowsfor the Financial Year Ended 31 December 2016

(cont’d)



066

1. GENERAL INFORMATION

The Company is a public limited liability company, incorporated and domiciled in Malaysia and is listed on the Main Market of Bursa Malaysia Securities Berhad. The registered office and principal place of business of the Company are both located at No. 2D, Jalan SS 6/6, Kelana Jaya, 47301 Petaling Jaya, Selangor Darul Ehsan.

The principal activities of the Company are that of investment holding, provision of management services and construction related activities. The principal activities of its subsidiaries are disclosed in Note 6 to the financial statements. There have been no significant changes in the nature of these activities of the Company and its subsidiaries during the financial year.

The financial statements were authorised for issue by the Board of Directors in accordance with a resolution of the directors passed on 30 March 2017.

2. BASIS OF PREPARATION

2.1 Statement of Compliance

The financial statements of the Group and of the Company have been prepared in accordance with Malaysian Financial Reporting Standards (“MFRS”), International Financial Reporting Standards (“IFRS”) and the Companies Act 1965 in Malaysia.

2.2 Basis of Measurement

The financial statements of the Group and the Company are prepared under the historical cost convention, unless otherwise indicated in the summary of significant accounting policies.

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

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either in the principal market for the asset or liability, or in the absence of a principal market, in the most advantageous market for the asset or liability. The principal or the most advantageous market must be accessible to by the Group and the Company.

The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.

A fair value measurement of a non-financial market takes into account a market participant’s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.

The Group and the Company use valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.

All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to their fair value measurement as a whole:

- Level 1 – Quoted (unadjusted) market prices in active markets for identical assets or liabilities.- Level 2 – Valuation techniques for which the lowest level input that is significant to their fair value measurement

is directly or indirectly observable.- Level 3 - Valuation techniques for which the lowest level input that is significant to their fair value measurement

is unobservable.

For assets and liabilities that are recognised in the financial statements on a recurring basis, the Group determines whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to their fair value measurement as a whole) at the end of each reporting period.

Notes to the Financial Statements31 DECEMBER 2016


067

Notes to the Financial Statements31 December 2016

(cont’d)

2. BASIS OF PREPARATION (CONT’D)

2.2 Basis of Measurement (cont’d)

The Group has established control framework in respect to the measurement of fair values of financial instruments. This includes a valuation team that has overall responsibility for overseeing all significant fair value measurements, including Level 3 fair values, and reports directly to the Board of Directors. The valuation team regularly reviews significant unobservable inputs and valuation adjustments.

For the purpose of fair value disclosures, the Group and the Company has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of fair value hierarchy as explained above.

2.3 Functional and Presentation Currency

The financial statements are presented in Ringgit Malaysia (“RM”) which is the Group’s functional currency and all values are rounded to the nearest thousand RM’000 except when otherwise stated.

2.4 Adoption of Amendments/Improvement to MFRSs

The Group and the Company have consistently applied the accounting policies set out in Note 3 to all periods presented in these financial statements, except for the changes below.

At the beginning of the current financial year, the Group and the Company adopted amendments/improvement to MFRSs which are mandatory effective for the financial periods beginning on or after 1 January 2016.

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

2.5 Standards Issued But Not Yet Effective

The Group and the Company have not applied the following new standards and amendments to standards that have been issued by the Malaysian Accounting Standards Board (“MASB”) but are not yet effective for the Group and the Company:

Amendments to MFRS effective 1 January 2017:

Amendments to MFRS 107 Statement of Cash Flows: Disclosure InitiativesAmendments to MFRS 112 Income Taxes: Recognition of Deferred Tax Assets for Unrealised LossesAmendments to MFRS 12 Disclosure of Interests in Other Entities (under Annual Improvements to MFRS

Standards 2014-2016 Cycle)

MFRS, Amendments to MFRS and IC Interpretation effective 1 January 2018:

Amendments to MFRS 2 Share-based Payment: Classification and Measurement of Share-based Payment Transactions

MFRS 9 Financial Instruments (IFRS 9 issued by IASB in July 2014)MFRS 15 Revenue from Contracts with CustomersAmendments to MFRS 4 Insurance Contracts: Applying MFRS 9 Financial Instruments with MFRS 4 Insurance

Contracts)Amendments to MFRS 140 Investment Property: Transfers of Investment PropertyAnnual Improvements to MFRS Standards 2014-2016 Cycle (except for Amendments to MFRS 12 Disclosure of Interests in Other Entities)IC Interpretation 22 Foreign Currency Transactions and Advance Consideration


068

Notes to the Financial Statements31 December 2016(cont’d)


2.5 Standards Issued But Not Yet Effective (cont’d)

MFRS effective 1 January 2019:

MFRS 116 Leases

Amendments to MFRSs - effective date deferred indefinitely

Amendments to MFRS 10 Consolidated Financial Statements and MFRS 128 Investments in Associates and Joint Ventures – Sale or Contribution of Assets between an Investor and its Associate or Joint Venture

The initial application of the above standards, amendments and interpretation are not expected to have any financial impacts to the financial statements, except for:

MFRS 9 Financial Instruments

MFRS 9 replaces MFRS 139 Financial Instruments: Recognition and Measurement and all previous version of MFRS 9. MFRS 9 is effective for annual periods beginning on or after 1 January 2018, with early application permitted. Except for hedge accounting, retrospective application is required but providing comparative information is not compulsory. For hedge accounting, the requirements are generally applied prospectively, with some limited exceptions.

The Group plans to adopt the new standards on the required effective date. During 2016, the Group has performed a high-level impact assessment of all three aspects of MFRS 9. This preliminary assessment is based on currently available information and may subject to changes arising from further detailed analyses or additional reasonable and supportable information being made available to the Group in the future. Overall, the Group expects no significant impact on its statement of financial position and equity except of applying the impairment requirements of MFRS 9.

(i) Classification and measurement of financial assets

MFRS 9 contains a new classification and measurement approach for financial assets that reflects the business model in which assets are managed and their cash flow characteristics.

MFRS 9 contains three principal classification categories for financial assets: measured at amortised cost, fair value through other comprehensive income (FVOCI) and fair value through profit or loss (FVTPL). Under MFRS 9, derivative embedded in contracts where the host is a financial asset in the scope of the standard are never bifurcated. Instead, the hybrid financial instruments as a whole is assessed for classification.

Based on the preliminary assessment, the Group does not expect a significant impact on its statement of financial position or equity on applying the classification and measurement requirements of MFRS 9. Listed securities, debentures and equity instruments currently held as available-for-sale with gains and losses recorded in OCI will be measured at fair value through profit or loss instead, which will increase volatility in recorded profit or loss. The AFS reserve currently presented as accumulated OCI will be reclassified to opening retained earnings. Debt securities are expected to be measured at fair value through OCI under MFRS 9 as the Group expects not only to hold the assets to collect contractual cash flows but also to sell a significant amount on a relatively frequent basis.

Loans as well as trade receivables are held to collect contractual cash flows and are expected to give rise to cash flows representing solely payments of principal and interest. Thus, the Group expects that these will continue to be measured at amortised cost under MFRS 9. However, the Group will analyse the contractual cash flow characteristics of those instruments in more detail before concluding whether all those instruments meet the criteria for amortised cost measurement under MFRS 9.


069


(cont’d)



The initial application of the above standards, amendments and interpretation are not expected to have any financial impacts to the financial statements, except for (cont’d):

MFRS 9 Financial Instruments (cont’d)

(ii) Impairment of financial assets

MFRS 9 replaces the ‘incurred loss’ model in MFRS 139 with a forward-looking ‘expected credit loss’ (ECL) model. This will require considerable judgement as to how changes in economic factors affect ECLs, which will be determined on a probability-weighted basis.

The new impairment model will apply to financial assets measured at amortised cost or FVOCI, except for investments in equity instruments, and to contract assets.

Under IFRS 9, loss allowances will be measured on either of the following bases:

- 12-month ECLs. These are ECLs that result from possible default events within the 12 months after the reporting date; and

- lifetime ECLs. These are ECLs that result from all possible default events over the expected life of a financial instrument.

Lifetime ECL measurement applies if the credit risk of a financial asset at the reporting date has increased significantly since initial recognition and 12-month ECL measurement applies if it has not. An entity may determine that a financial asset’s credit risk has not increased significantly if the asset has low credit risk at the reporting date. However, lifetime ECL measurement always applies for trade receivables and contract assets without a significant financing component; an entity may choose to apply this policy also for trade receivables and contract assets with a significant financing component.

MFRS 9 requires the Group to record expected credit losses on all of its debt securities, loans and trade receivables, either on a 12-month or lifetime basis. The Group expects to apply the simplified approach and record lifetime expected losses on all trade receivables. The Group expects a significant impact on its equity due to unsecured nature of its loans and receivables, but it will need to perform a more detailed analysis which considers all reasonable and supportable information, including forward-looking elements to determine the extent of the impact.

(iii) Classification of financial liabilities

MFRS 9 largely retains the existing requirements in MFRS 139 for the classification of financial liabilities.

However, under MFRS 139 all fair value changes of liabilities designated as at FVTPL are recognised in profit or loss, whereas under MFRS 9 these fair value changes are generally presented as follows:

- the amount of change in the fair value that is attributable to changes in the credit risk of the liability is presented in OCI; and

- the remaining amount of change in the fair value is presented in profit or loss.

The Group has not designated any financial liabilities at FVTPL and the Group has no current intention to do so. The Group’s preliminary assessment did not indicate any material impact if MFRS 9’s requirements regarding the classification of financial liabilities is applied.

(iv) Disclosures

MFRS 9 will require extensive new disclosures, in particular about hedge accounting, credit risk and expected credit losses. The Group’s preliminary assessment included an analysis to identify data gaps against current processes and the Group plans to implement the system and controls changes that it believes will be necessary to capture the required data.


070





MFRS 9 Financial Instruments (cont’d)

(v) Transition

Changes in accounting policies resulting from the adoption of MFRS 9 will generally be applied retrospectively, except as described below:

- The Group plans to take advantage of the exemption allowing it not to restate comparative information for prior periods with respect to classification and measurement (including impairment) changes. Differences in the carrying amounts of financial assets and financial liabilities resulting from the adoption of MFRS 9 generally will be recognised in retained earnings and reserves as at 1 January 2018.

- New hedge accounting requirements should be applied prospectively.

MFRS 15 Revenue from Contracts with Customers

MFRS 15 establishes a five-step model to account for revenue arising from contracts with customers. Under MFRS 15, revenue is recognised at an amount that reflects the consideration to which an entity expects to be entitled for transferring goods or services to a customer.

The new revenue standard will supersede all current revenue recognition requirements under MFRS, including MFRS 111 Construction Contracts, MFRS 118 Revenue, IC Interpretation 13 Customer Loyalty Programmes, IC Interpretation 15 Agreements for Construction of Real Estate, IC Interpretation 18 Transfers of Assets from Customers and IC Interpretation 131 Revenue – Barter Transaction Involving Advertising Services.

Either a full retrospective application or a modified retrospective application is required for annual periods beginning on or after 1 January 2018, with early adoption permitted. The Group plans to adopt the new standard on the required effective date using the full retrospective method.

The Group has completed an initial assessment of the potential impact of the adoption of MFRS 15 on its consolidated financial statements, which is subject to changes arising from a more detailed ongoing analysis. Furthermore, the Group is considering the clarifications issued by MASB on 16 June 2016 and will monitor any further developments.

(i) Sale of goods

Contracts with customers in which the sale of construction material are generally expected to be the only performance obligation are not expected to have any impact on the Group’s profit or loss. The Group expects the revenue recognition to occur at a point in time when control of the asset is transferred to the customer, generally on delivery of the goods.

In preparing to MFRS 15, the Group considers variable consideration of the sales transaction. Some contracts with customers provide a right of return, trade discounts or volume rebates. Currently, the Group recognises revenue from the sale of goods measured at the fair value of the consideration received or receivable, net of returns and allowances, trade discounts and volume rebates. If revenue cannot be reliably measured, the Group defers revenue recognition until the uncertainty is resolved. Such provisions give rise to variable consideration under MFRS 15, and will be required to be estimated at contract inception.

MFRS 15 requires the estimated variable consideration to be constrained to prevent over-recognition of revenue. The Group continues to assess individual contracts to determine the estimated variable consideration and related constraint. The Group expects that application of the constraint may result in more revenue being deferred than is under current MFRS.


071


(cont’d)




MFRS 15 Revenue from Contracts with Customers (cont’d)

(ii) Property development and construction

The revenue arising from property development and construction are assessed as fulfilled the criteria of sales over the time under the MFRS 15. The revenue currently includes the initial amount agreed in the contract plus any variations in contract work, claims and incentive payments, to the extent that it is probable that they will result in revenue and can be measured reliably. When a claim or variation is recognised, the measured of contract progress or contract price is revised and the cumulative percentage of completion is reassessed at each reporting date.

Under MFRS 15, claims and variations will be included in the contract accounting when they are approved.

The Group has performed an initial assessment on contracts of property development and constructions and does not expect that there will be significant impact on its consolidated financial statements.

(iii) Presentation and disclosure requirements

MFRS 15 provides presentation and disclosure requirements, which are more detailed than under current MFRS. The presentation requirements represent a significant change from current practice and significantly increases the volume of disclosures required in Group’s financial statements. Many of the disclosure requirements in MFRS 15 are completely new. The Group is in the progress of developing of appropriate systems, internal controls, policies and procedures necessary to collect and disclose the required information.

MFRS 16 Leases

MFRS 16 replaces MFRS 117 Leases, IC Interpretation 4 Determining whether an Arrangement contains a Lease, SIC-15 Operating Leases-Incentives and SIC-27 Evaluating the Substance of Transactions Involving the Legal Form of a Lease. MFRS 16 sets out the principles for the recognition, measurement, presentation and disclosure of leases and requires lessees to account for all leases under a single on-balance sheet model similar to the accounting for finance leases under MFRS 117. The standard includes two recognition exemptions for lessees – leases of ’low-value’ assets (e.g., personal computers) and short-term leases (i.e., leases with a lease term of 12 months or less). At the commencement date of a lease, a lessee will recognise a liability to make lease payments (i.e., the lease liability) and an asset representing the right to use the underlying asset during the lease term (i.e., the right-of-use asset). Lessees will be required to separately recognise the interest expense on the lease liability and the depreciation expense on the right-of-use asset.

Lessees will be also required to remeasure the lease liability upon the occurrence of certain events (e.g., a change in the lease term, a change in future lease payments resulting from a change in an index or rate used to determine those payments). The lessee will generally recognise the amount of the remeasurement of the lease liability as an adjustment to the right-of-use asset.

Lessor accounting under MFRS 16 is substantially unchanged from today’s accounting under MFRS 117. Lessors will continue to classify all leases using the same classification principle as in MFRS 117 and distinguish between two types of leases: operating and finance leases.

MFRS 16 also requires lessees and lessors to make more extensive disclosures than under MFRS 117.

MFRS 16 is effective for annual periods beginning on or after 1 January 2019. Early application is permitted, but not before an entity applies MFRS 15. A lessee can choose to apply the standard using either a full retrospective or a modified retrospective approach. The standard’s transition provisions permit certain reliefs.

In 2017, the Company plans to assess the potential effect of MFRS 16 on its consolidated financial statements.


072



2.6 Significant Accounting Estimates and Judgements

Estimates, assumptions concerning the future and judgements are made in the preparation of the financial statements. They affect the application of the Group’s and the Company’s accounting policies and reported amounts of assets, liabilities, income and expenses, and disclosures made. Estimates and underlying assumptions are assessed on an on-going basis and are based on experience and relevant factors, including expectations of future events that are believed to be reasonable under the circumstances. The actual result may differ from the judgements, estimates and assumptions made by management, and will seldom equal the estimated results.

2.6.1 Estimation Uncertainty

Information about significant judgements, estimates and assumptions that have the most significant effect on recognition and measurement of assets, liabilities, income and expenses are discussed below:-

Useful lives of depreciable assets

Management estimates the useful lives of the property, plant and equipment to be within 5 to 50 years and reviews the useful lives of depreciable assets at end of each reporting period. At 31 December 2016 management assesses that the useful lives represent the expected utility of the assets to the Group. Actual results, however, may vary due to change in the expected level of usage and technological developments, which resulting the adjustment to the Group’s assets.

The carrying amount of the Group’s property, plant and equipment at the end of the reporting period is disclosed in Note 4 to the financial statements.

Deferred tax assets

Deferred tax assets are recognised for all deductible temporary differences to the extent that it is probable that taxable profit will be available against which all the deductible temporary differences 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.

The carrying value of deferred tax assets of the Group at 31 December 2016 was RM589,000 (2015: RM1,713,000) as disclosed in Note 11 to the financial statements.

Income taxes

Significant judgement is involved in determining the Group’s and the Company’s provision for income taxes. There are certain transactions and computations for which the ultimate tax determination is uncertain during the ordinary course of business. The Group and the Company recognise tax liabilities based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recognised, such difference will impact the income tax and deferred tax provisions in the period in which such determination is made.

Property development

The Group recognises property development revenue and expenses in profit or loss by using the “percentage of completion” method. The percentage of completion is determined by the proportion of property development costs incurred for work performed up to the reporting period over the estimated total property development costs.

Significant estimate is required in determining the percentage of completion, the extent of the property development costs incurred, the estimated total property development revenue and costs, as well as the recoverability of the development projects. In making the judgements, the Group evaluates based on past experience and by relying on the work of specialists.


073


(cont’d)


2.6 Significant Accounting Estimates and Judgements (cont’d)

2.6.1 Estimation Uncertainty (cont’d)

Timber concession rights

The Group assesses the carrying amount of its timber concession rights at each reporting date whether there is any 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.

The impairment test has been performed and the assumptions made are disclosed in Note 9 to the financial statements.

3. SIGNIFICANT ACCOUNTING POLICIES

The Group and the Company apply the significant accounting policies, as summarised below, consistently throughout all periods presented in the financial statements.

3.1 Consolidation

3.1.1 Subsidiaries

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

Investment in subsidiaries is stated at cost less any impairment losses in the Company’s financial position, unless the investment is classified as held for sale or distribution.

Upon the disposal of investment in a subsidiary, the difference between the net disposal proceeds and its carrying amount is included in profit or loss.

3.1.2 Basis of Consolidation

The Group financial statements consolidate the audited financial statements of the Company and all of its subsidiaries, which have been prepared in accordance with the Group’s accounting policies. Amounts reported in the financial statements of subsidiaries have been adjusted where necessary to ensure consistency with the accounting policies adopted by the Group. The financial statements of the Company and its subsidiaries are all drawn up to the same reporting date.

All intragroup assets and liabilities, equity, income, expenses and cash flows relating to transactions between entities of the Group (profits or losses resulting from intragroup transactions that are recognised in asset, such as inventory and property, plant and equipment) are eliminated in full in preparing the consolidated financial statements. Intragroup losses may indicate an impairment that requires recognition in the consolidated financial statements. Temporary differences arising from the elimination of profits and losses resulting from intragroup transactions will be treated in accordance to Note 3.3 of the financial statements.

Subsidiaries are consolidated from the date on which control is transferred to the Group and are no longer

consolidated from the date that control ceases.


074


3. SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

3.1 Consolidation (cont’d)

3.1.2 Basis of Consolidation (cont’d)

Changes in the Company owners’ ownership interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions. In such circumstances, the carrying amounts of the controlling and non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiary. Any difference between the amount by which the non-controlling interest is adjusted and the fair value of the consideration paid or received is recognised directly in equity and attributed to owners of the parent.

3.1.3 Business Combination and Goodwill

Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the aggregate of the consideration transferred, measured at acquisition date fair value and the amount of any non-controlling interest in the acquiree. For each business combination, the Group elects whether it measures the non-controlling interest in the acquiree either at fair value or at the proportionate share of the acquiree’s identifiable net assets. Acquisition costs incurred are expensed and included in administrative expenses.

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

classification and designation in accordance with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date. This includes the separation of embedded derivatives in host contracts by the acquiree.

If the business combination is achieved in stages, the acquisition date fair value of the acquirer’s previously held equity interest in the acquiree is remeasured to fair value at the acquisition date through profit or loss.

Any contingent consideration to be transferred by the acquirer will be recognised at fair value at the acquisition date. Subsequent changes in the fair value of the contingent consideration which is deemed to be an asset or liability will be recognised in accordance with MFRS 139 either in profit or loss or as a change to other comprehensive income. If the contingent consideration is classified as equity, it will not be remeasured. Subsequent settlement is accounted for within equity. In instances where the contingent consideration does not fall within the scope of MFRS 139, it is measured in accordance with the appropriate MFRS.

Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred and the amount recognised for non-controlling interest over the net identifiable assets acquired and liabilities assumed. If this consideration is lower than the fair value of the net assets of the subsidiary acquired, the difference is recognised in profit or loss.

After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Group’s cash-generating units that are expected to benefit from the combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those units.

Where goodwill forms part of a cash-generating unit and part of the operation within that unit is disposed of, the goodwill associated with the operation disposed of is included in the carrying amount of the operation when determining the gain or loss on disposal of the operation. Goodwill disposed of in this circumstance is measured based on the relative values of the operation disposed of and the portion of the cash-generating unit retained.

3.1.4 Loss of Control

Upon the loss of control of a subsidiary, 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.


075


(cont’d)



3.1.5 Non-controlling Interests

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 comprehensive income as an allocation of the profit or loss and the comprehensive income for the year between non-controlling interests and the owners of the Company.

Losses applicable to the non-controlling interests in a subsidiary are allocated to the non-controlling interests even if that results in a deficit balance.

3.1.6 Joint Arrangements

A joint venture is a type of joint arrangement whereby the parties have joint control of the arrangement and have rights to the net assets of the joint venture. Joint control is contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require unanimous consent of the parties sharing control.

The Group’s investments in its joint venture are accounted for using the equity method when the joint arrangements are active and in operation. Under the equity method, investment in a joint venture is carried in the statement of financial position at cost plus post acquisition changes in the Group’s share of net assets of the joint venture since the acquisition date. Goodwill relating to the joint venture is included in the carrying amount of the investment and is neither amortised nor individually tested for impairment.

The share of the result of a joint venture is reflected in profit or loss. Any change in other comprehensive income of those investees is presented as part of the Group’s other comprehensive income. In addition, where there has been a change recognised directly in the equity of a joint venture, the Group recognises its share of any changes and discloses this, when applicable, in the statement of changes in equity. Unrealised gains and losses resulting from transactions between the Group and the joint venture are eliminated to the extent of the interest in the joint venture.

The aggregate of the Group’s share of profit or loss of a joint venture is shown on the face of the statement of comprehensive income outside operating profit and represents profit or loss after tax and non-controlling interests in the subsidiaries of the joint venture.

When the Group’s share of losses exceeds its interest in a joint venture, the carrying amount of that interest including any long-term investment is reduced to zero, and the recognition of further losses is discontinued except to the extent that the Group has an obligation or has made payments on behalf of the joint venture.

The financial statements of the joint venture are prepared as of the same reporting period as the Company. Where necessary, adjustments are made to bring the accounting policies of the joint venture in line with those of the Group.

After application of the equity method, the Group determines whether it is necessary to recognise an additional impairment loss on the Group’s investments in its joint venture. The Group determines at end of each reporting period whether there is any objective evidence that the investments in the joint venture is impaired. If there is such evidence, the Group calculates the amount of impairment as the difference between the recoverable amount of the joint venture and their carrying value, then recognises the amount in the “share of profit of investments accounted for using the equity method” in profit or loss.

Upon loss of significant influence over the joint control in the joint venture, the Group measures and recognises any retained investment at its fair value. Any difference between the carrying amount of the joint venture upon loss of significant influence or joint control and the fair value of the retained investment and proceeds from disposal is recognised in profit or loss.


076




3.1.6 Joint Arrangements (cont’d)

In the Company’s separate financial statements, investments in a joint venture are stated at cost less impairment losses. On disposal of such investments, the difference between net disposal proceeds and its carrying amounts is included in profit or loss.

3.2 Foreign Currency Translation

The Group’s consolidation financial statements are presented in RM, which is also the parent company’s functional currency.

3.2.1 Foreign Currency Translation and Balances Transactions in foreign currencies are initially recorded at the functional currency rates prevailing at the date of

the transaction.

Monetary assets and liabilities denominated in foreign currencies are retranslated at the functional currency spot rate of exchange ruling at the reporting date.

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

investment in a foreign operation. These are recognised in other comprehensive income until the disposal of the net investment, at which time they are reclassified to profit or loss. Tax charges and credits attributable to exchange differences on those monetary items are also recorded in other comprehensive income.

Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates as at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value is determined. The gain or loss arising in translation of non-monetary items is recognised in line with the gain or loss of the item that gave rise to the translation difference (translation differences on items whose gain or loss is recognised in other comprehensive income or profit or loss is also recognised in other comprehensive income or profit or loss respectively).

3.2.2 Foreign Operations

The assets and liabilities of operations denominated in functional currencies other than RM, including goodwill and fair value adjustments arising on acquisition, are translated to RM at exchange rates at the end of the reporting period, except for goodwill and fair value adjustments arising from business combination before 1 January 2011 (the date when the Group and the Company first adopted MFRSs) which are treated as assets and liabilities of the Company. The income and expenses of foreign operations are translated to RM at exchange rates at the date of the transactions.

Foreign currency differences are recognised in other comprehensive income and accumulated in the foreign currency translation reserve in equity. However, if the operation is a non-wholly-owned subsidiary, then the relevant proportionate share of the translation difference is allocated to the non-controlling interests. When a foreign operation is disposed of such that control, significant influence or joint control is lost, the cumulative amount in the foreign currency translation reserve related to that foreign operation is reclassified to profit or loss as part of the profit or loss on disposal.

When the Group disposes of only part of its interest in a subsidiary that includes a foreign operation, the relevant proportion of the cumulative amount is reattributed to non-controlling interests. When the Group disposes of only part of its investment in an associate or joint venture that includes a foreign operation while retaining significant influence or joint control, the relevant proportion of the cumulative amount is reclassified to profit or loss.


077


(cont’d)


3.2 Foreign Currency Translation (cont’d)

3.2.2 Foreign Operations (cont’d)

In the consolidated financial statements, when settlement of a monetary item receivable from or payable to a foreign operation is neither planned nor likely in the foreseeable future, foreign exchange gains and losses arising from such a monetary item are considered to form part of a net investment in a foreign operation and are recognised in other comprehensive income, and are presented in foreign currency translation reserve in equity.

3.3 Tax Expense

Tax expense comprises current and deferred tax. Current tax and deferred tax are recognised in profit or loss except to the extent that it relates to a business combination or items recognised directly in equity or other comprehensive income.

3.3.1 Current Tax

Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantively enacted by the end of the reporting period, and any adjustment to tax payable in respect of previous years. Current tax is recognised in the statement of financial position as a liability (or an asset) to the extent that it is unpaid (or refundable).

3.3.2 Deferred Tax

Deferred tax is recognised using the liability method, providing for temporary differences between the carrying amounts of assets and liabilities in the statement of financial position and their tax bases. Deferred tax is not recognised for the temporary differences arising from the initial recognition of goodwill, the initial recognition of assets and liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss. Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the end of the reporting period.

The amount of deferred tax recognised is measured based on the expected manner of realisation or settlement of the carrying amount of the assets and liabilities, using tax rates enacted or substantively enacted at the reporting date.

Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realised simultaneously.

A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which the temporary difference can be utilised. Deferred tax assets are reviewed at the end of each reporting period and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.

Unutilised reinvestment allowance and investment tax allowance, being tax incentives that is not a tax base of an asset, is recognised as a deferred tax asset to the extent that it is probable that the future taxable profits will be available against the unutilised tax incentive can be utilised.

3.3.3 Goods and Services Tax

Goods and Services Tax (“GST”) is a consumption tax based on value-added concept. GST is imposed on goods and services at every production and distribution stage in the supply chain including importation of goods and services, at the applicable tax rate of 6%. Input GST that the Company paid on purchases of business inputs can be deducted from output GST.


078



3.3 Tax Expense (cont’d)

3.3.3 Goods and Services Tax (cont’d)

Revenues, expenses and assets are recognised net of the amount of GST except:

- Where the GST incurred in a purchase of assets or services is not recoverable from the authority, in which case the GST is recognised as part of the cost of acquisition of the assets or as part of the expense item as applicable;

- Receivables and payables that are stated with the amount of GST included; and

- Sales of residential property which are exempted from GST.

The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the statements of financial position.

3.4 Property, Plant and Equipment

Property, plant and equipment are initially stated at cost. The cost of an item of property, plant and equipment is recognised as an asset if, and only if, it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably.

Cost includes expenditures that are directly attributable to the acquisition of the assets and any other costs directly attributable to bringing the assets to working condition for its intended use, cost of replacing component parts of the assets and the present value of the expected costs for the decommissioning of the assets after their use.

The cost of self-constructed 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. All other repair and maintenance costs are recognised in profit or loss as incurred.

Depreciation is recognised on the straight line method in order to write off the cost of each asset over its estimated useful life. Freehold land with an infinite life is not depreciated. Other property, plant and equipment are depreciated based on the estimated useful lives of the assets as follows:-

Leasehold land 1%Freehold buildings 2% Warehouse 20%Plant and machinery 20%Office renovation 20%Motor vehicles 20%Furniture, fittings and office equipment, computer equipment, telecommunication

and electrical equipment10% to 20%

Capital work-in-progress consists of computer equipment for intended use as administrative facility. It’s not depreciated until it is completed and ready for their intended use.

The residual values, useful lives and depreciation method are reviewed for impairment when events or changes in circumstances indicate that the carrying amount may not be recoverable, or at least annually to ensure that the amount, method and period of depreciation are consistent with previous estimates and the expected pattern of consumption of the future economic benefits embodied in the items of property, plant and equipment.

Property, plant and equipment are derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Gains or losses arising on the disposal of property, plant and equipment are determined as the difference between the disposal proceeds and the carrying amount of the assets and are recognised in profit or loss in the financial year in which the asset is derecognised.


079


(cont’d)


3.5 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 will start amortising upon commencement of timber extraction operation. The amortisation method is using percentage of the volume of timber extracted compared to the total estimated volume of timber available for extraction.

3.6 Prepaid Land Lease

3.6.1 Prepaid Land Lease Payments

Leasehold land with lease period below 50 years at inception is classified as prepaid land lease and the cost is amortised over the remaining lease period of 28 years.

3.6.2 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 tenure of the land lease, being 35 years from the date of acquisition.

3.7 Financial Instruments

3.7.1 Initial Recognition and Measurement

Financial assets and financial liabilities are recognised when the Group or the Company becomes a party to the contractual provisions of the financial instrument.

Financial assets and financial liabilities are measured initially at fair value plus transactions costs, except for financial assets and financial liabilities carried at fair value through profit or loss, which are measured initially at fair value.

Financial assets and financial liabilities are measured subsequently as described below.

3.7.2 Financial Assets - Categorisation and Subsequent Measurement

For the purpose of subsequent measurement, financial assets other than those designated and effective as hedging instruments are classified into the following categories upon initial recognition:-

(a) financial assets at fair value through profit or loss; (b) held to maturity investments; (c) loans and receivables; and(d) available-for-sale financial assets.

The category determines subsequent measurement and whether any resulting income and expense is recognised in profit or loss or in other comprehensive income.

All financial assets except for those at fair value through profit or loss are subject to review for impairment at least at end of each reporting period. Financial assets are impaired when there is any objective evidence that a financial asset or a group of financial assets is impaired. Different criteria to determine impairment are applied for each category of financial assets.

A financial asset or part of it is derecognised when, and only when the contractual rights to the cash flows from the financial asset expire or the financial asset is transferred to another party without retaining control or substantially all risks and rewards of the asset. On derecognition of a financial asset, the difference between the carrying amount and the sum of the consideration received (including any new asset obtained less any new liability assumed) and any cumulative gain or loss that had been recognised in equity is recognised in the profit or loss.

As at the reporting date, the Group and the Company carried only loan and receivables on their statements of financial position.


080



3.7 Financial Instruments (cont’d)

3.7.2 Financial Assets - Categorisation and Subsequent Measurement (cont’d)

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. After initial recognition, these are measured at amortised cost using the effective interest method, less provision for impairment. Discounting is omitted where the effect of discounting is immaterial. Gains or losses are recognised in profit or loss when the loans and receivables are derecognised or impaired, and through the amortisation process. The Group’s cash and cash equivalents, trade and other receivables fall into this category of financial instruments.

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

3.7.3 Financial Liabilities – Categorisation and Subsequent Measurement

After the initial recognition, financial liability is classified as financial liability at fair value through profit or loss, other financial liabilities measured at amortised cost using the effective interest method or financial guarantee contracts measured.

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

Other Financial Liabilities Measured at Amortised Cost

The Group’s other financial liabilities include borrowings, trade, other payables, amount due to directors and hire purchase liabilities.

Other financial liabilities are subsequently measured at amortised cost using the effective interest method.

3.7.4 Offsetting of Financial Instruments

Financial assets and financial liabilities are offset and the net amount reported in the statement of financial position if, and only if, there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, or to realise the assets and settle the liabilities simultaneously.

3.8 Impairment of Assets

3.8.1 Non-financial Assets

The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Group estimates the asset’s recoverable amount. An asset’s recoverable amount is the higher of an asset’s or cash-generating unit’s (CGU) fair value less costs to sell and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. Where the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs to sell, recent market transactions are taken into account, if available. If no such transactions can be identified, an appropriate valuation model is used.


081


(cont’d)


3.8 Impairment of Assets (cont’d)

3.8.1 Non-financial Assets (cont’d)

An assessment is made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. If such indication exists, the Group estimates the asset’s or CGU’s recoverable amount. A previously recognised impairment loss is reversed only if there has been a change in the assumptions used to determine the asset’s recoverable amount since the last impairment loss was recognised. The reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for asset in prior years. Such reversal is recognised in the profit or loss unless the asset is carried at a revalued amount, in which case the reversal is treated as a revaluation increase.

Goodwill is tested for impairment annually as at the end of each reporting period, and when circumstances indicate that the carrying value may be impaired. Impairment is determined for goodwill by assessing the recoverable amount of each CGU (or group of CGU) to which the goodwill relates. Where the recoverable amount of the CGU is less than their carrying amount, an impairment loss is recognised. Impairment losses relating to goodwill cannot be reversed in future periods.

3.8.2 Financial Assets

The Group assesses at each reporting date whether there is any objective evidence that a financial asset or a group of financial assets is impaired. A financial asset or a group of financial assets is deemed to be impaired if, and only if, there is objective evidence of impairment as a result of one or more events that has occurred after the initial recognition of the asset (an incurred “loss event”) and that loss event has an impact on the estimated future cash flows of the financial asset or the group of financial assets that can be reliably estimated. Evidence of impairment may include indications that the debtors or a group of debtors is experiencing significant financial difficulty, default or delinquency in interest or principal payments, the probability that they will enter bankruptcy or other financial reorganisation and where observable data indicate that there is a measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate with defaults.

Financial assets carried at amortised cost

For financial assets carried at amortised cost, the Group first assesses whether objective evidence of impairment exists individually for financial assets that are individually significant, or collectively for financial assets that are not individually significant.

If the Group determines that no objective evidence of impairment exists for an individually assessed financial asset, whether significant or not, it includes the asset in a group of financial assets with similar credit risk characteristics and collectively assesses them for impairment. Assets that are individually assessed for impairment and for which an impairment loss is, or continue to be, recognised are not included in a collective assessment of impairment.

If there is objective evidence that an impairment loss has been incurred, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future expected credit losses that have not yet been incurred). The present value of the estimated future cash flows is discounted at the financial asset’s original effective interest rate. If a loan has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate.

The carrying amount of the asset is reduced through the use of an allowance account and the amount of the loss is recognised in the profit or loss. Interest income continues to be accrued on the reduced carrying amount and is accrued using the rate of interest used to discount the future cash flows for the purpose of measuring the impairment loss. The interest income is recorded as part of finance income in the profit or loss. Loans together with the associated allowance are written off when there is no realistic prospect of future recovery and all collateral has been realised or has been transferred to the Group. If, in a subsequent year, the amount of the estimated impairment loss increases or decreases because of an event occurring after the impairment was recognised, the previously recognised impairment loss is increased or reduced by adjusting the allowance account. If a future write-off is later recovered, the recovery is credited to finance costs in the profit or loss.


082



3.9 Inventories

Inventories comprises raw materials and consumables are stated at the lower of cost and net realisable value.

Cost of raw material and consumables are determined on a weighted average basis.

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

3.10 Leases

The determination of whether an arrangement is, or contains, a lease is based on the substance of the arrangement at the inception date, whether fulfilment of the arrangement is dependent on the use of a specific asset or asset or the arrangement conveys a right to use the asset, even if that right is not explicitly specific in an arrangement.

3.10.1 Finance Lease

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.

Minimum lease payments made under finance leases are apportioned between finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are recognised in finance costs in the profit or loss. Contingent lease payments are accounted for by revising the minimum lease payments over the remaining term of the lease when the lease adjustment is confirmed.

A leased asset is depreciated over the useful life of the asset. However, if there is no reasonable certainty that the Group will obtain ownership by the end of the lease term, the asset is depreciated over the shorter of the estimated useful life of the asset and the lease term.

Leasehold land which in substance is a finance lease is classified as a property, plant and equipment.

3.10.2 Operating Lease

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.

Payments made under operating leases are recognised in profit or loss on a straight-line basis over the term of the lease. Lease incentives received are recognised in profit or loss as an integral part of the total lease expense, over the term of the lease. Contingent rentals are charged to profit or loss in the reporting period in which they are incurred.

3.11 Borrowing Costs

Borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset are capitalised as part of the cost of the assets during the period of time that is necessary to complete and prepare the asset for its intended use or sale.

The capitalisation of borrowing costs as part of the cost of a qualifying asset commences when expenditure for the asset is being incurred, borrowing costs are being incurred and activities that are necessary to prepare the asset for its intended use or sale are in progress. Capitalisation of borrowing costs is suspended or ceases when substantially all the activities necessary to prepare the qualifying asset for its intended use or sale are interrupted or completed.


083


(cont’d)


3.11 Borrowing Costs (cont’d)

All other borrowing costs are expensed in the period in which they are incurred. Borrowing costs consist of interest and other costs that the Group and the Company incurred in connection with the borrowing of funds.

3.12 Cash and Cash Equivalents

Cash and cash equivalents comprise cash in hand, bank balances, short-term demand deposits, bank overdraft and highly liquid investments which are readily convertible to known amount of cash and which are subject to insignificant risk of changes in value. For the purpose of statements of cash flow, cash and cash equivalents are presented net of pledged deposit.

Bank overdrafts are shown in current liabilities in the statements of financial position.

3.13 Revenue Recognition

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. Revenue is measured at the fair value of consideration received or receivable.

(i) Trading

Revenue from sale of goods is recognised upon the transfer of significant risk and rewards of ownership of the goods to the customer. Revenue is not recognised to the extent where there are significant uncertainties regarding recovery of the consideration due, associated costs or the possible return of goods.

(ii) Construction Revenue

Revenue from construction contracts is accounted for in accordance to the accounting policies as described in Note 3.14 and Note 3.15 to the financial statements.

(iii) Development Properties

Revenue from sales of development properties is accounted for by using the stage of completion method in respect of all properties that have been sold and is accounted for in accordance to the accounting policies as described in Note 3.15. The stage of completion is determined by reference to the property development cost incurred to date bear to the total estimated costs where the outcome of the projects can be estimated reliably. Where foreseeable losses on development projects are anticipated, full allowance for losses including cost to be incurred over the defects liability period is made in the profit or loss.

(iv) Rental Income

Rental income is accounted for on a straight-line basis over the lease term. The aggregate costs of incentives provided to losses are recognised as a reduction of rental income over the lease term on a straight-line basis.

3.14 Construction Contracts

Construction contracts are contract specifically negotiated for the construction of an asset or a combination of assets that are closely interrelated or interdependent in terms of their design, technology and function or their ultimate purpose or use.

When the outcome of a construction contract can be estimated reliably, contract revenue and contract costs are recognised over the period of contract as revenue and expenses respectively by reference to the percentage of completion of the contract activity at the end of the reporting period. The Group uses the percentage of completion method to determine the appropriate amount of revenue and costs to be recognised in a period of the contract by reference to the proportion that contract costs incurred for work performed to date bear to the estimated total contract cost.


084



3.14 Construction Contracts (cont’d)

When the outcome of a construction contract cannot be estimated reliably, contract revenue is recognised only to the extent of contract costs incurred that is probably recoverable and contract costs are recognised as expenses in the period in which they are incurred.

Irrespective whether the outcome of a construction contract can be estimated reliably, when it is probable that contract costs will exceed total contract revenue, the expected loss is recognised as an expense immediately.

Contract revenue comprises the initial amount of revenue agreed in the contract and variations in contract work, claims and incentive payments to the extent that it is probably that they will result in revenue and they are capable of being reliably measured.

The aggregate of the costs incurred and the profit/loss recognised on each contract is compared against the progress billings up to the year end. Where costs incurred and recognised profits (less recognised losses) exceed progress billings, the balance is shown as amounts due from customers on contracts under current assets. Where progress billings exceed costs incurred plus recognised profits (less recognised losses), the balance is shown as amounts due to customers on contracts under current liabilities.

3.15 Property Development Costs Property development costs 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. 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.

When the outcome of a development activity can be estimated reliably, property development revenue and expenses are recognised in the profit or loss by using the percentage of completion method. The percentage of completion is determined by reference to the proportion that property development costs incurred for work performed to date bear to the estimated total property development costs.

When the outcome of a development activity cannot be estimated reliably, property development revenue is recognised only to the extent of property development costs incurred that is probable will be recoverable, and property development costs on development units sold are recognised as an expense in the period in which they are incurred.

Irrespective of whether the outcome of a property development activity can be estimated reliably, when it is probable that total property development costs (including expected defect liability expenditure) will exceed total property development revenue, any expected loss on a development project, including costs to be incurred over the defects liability period, is recognised as an expense immediately.

Property development costs not recognised as an expense are recognised as an asset and are stated at the lower of cost and net realisable value.

The excess of revenue recognised in the profit or loss over billings to purchasers is classified as accrued billings within trade receivables and the excess of billings to purchasers over revenue recognised in the profit or loss is classified as progress billings within other payables.

3.16 Employee Benefits

3.16.1 Short-term Employee Benefits

Wages, salaries, bonuses and social security contributions are recognised as an expense in the financial year in which the associated services are rendered by employees of the Group. Short term accumulating compensated absences such as paid annual leave are recognised when services are rendered by employees that increase their entitlement to future compensated absences, and short term non-accumulating compensated absences such as sick leave are recognised when the absences occur.


085


(cont’d)


3.16 Employee Benefits (cont’d)

3.16.2 Defined Contribution Plan

Defined contribution plans are post-employment benefit plans under which the Group pays fixed contributions into independent entities of funds and will have no legal or constructive obligation to pay further contribution if any of the funds do not hold sufficient assets to pay all employee benefits relating to employee services in the current and preceding financial years.

Such contributions are recognised as an expense in the profit or loss as incurred. As required by law, companies in Malaysia make such contributions to the Employees Provident Fund (“EPF”).

3.17 Operating Segment

An operating segment is a component of the Group that in business activities from which it may earn revenues and incur expenses, including revenue and expenses, that relates to transactions with any of the Group’s other components. All operating segments’ operating results are reviewed regularly by the client operating decision maker to make decisions about resources to be allocated to the segment and to assess as performance and for which discrete financial information is available.

3.18 Earnings Per Share

The Group presents basic and diluted earnings per share (“EPS”) for its ordinary shares. Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by 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 share outstanding adjusted for own shares held for the effects of all dilutive ordinary shares, which comprise share options granted to employees.

3.19 Equity and Reserves

An equity instrument is any contract that evidences a residual interest in the assets of the Group and the Company after deducting all of its liabilities. Ordinary shares are equity instruments. Share capital represents the nominal value of shares that have been issued.

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

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

Retained earnings include all current and prior period retained profits.

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

3.20 Treasury Shares

When issued shares of the Company are repurchased, the nominal value of the shares repurchased should be cancelled by a debit to the share capital account. An amount equivalent to the nominal value of the shares repurchased should be transferred to the capital redemption reserve.

The consideration paid, including directly attributable costs and premium or discount arising from the shares repurchased should be adjusted directly to the share premium or any other distributable reserve.

The shares cancelled and the adjustments made to share premium or reserve should be shown as a movement in equity.


086



3.21 Provisions

Provisions are recognised when there is a present legal or constructive obligation that can be estimated reliably, as a result of a past event, when it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Provisions are not recognised for future operating losses.

Any reimbursement that the Group can be virtually certain to collect from a third party with respect to the obligation is recognised as a separate asset. However, this asset may not exceed the amount of the related provision.

Provisions are reviewed at end of each reporting period and adjusted to reflect the current best estimate. If it is no longer probable that an outflow of economic resources will be required to settle the obligation, the provision is reversed. Where the effect of the time value of money is material, provision is discounted using a current pre-tax rate that reflects, where appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.

3.22 Contingencies

Where it is not probable that an inflow or an outflow of economic benefits will be required, or the amount cannot be estimated reliably, the asset or the obligation is not recognised in the statements of financial position and is disclosed as a contingent asset or contingent liability, unless the probability of inflow or outflow of economic benefits is remote. Possible obligations, whose existence will only be confirmed by the occurrence or non-occurrence of one or more future events, are also disclosed as contingent assets or contingent liabilities unless the probability of inflow or outflow of economic benefits is remote.

3.23 Related parties

A related party is a person or entity that is related to the Group. A related party transaction is a transfer of resources, services or obligations between the Group and its related party, regardless of whether a price is charged.

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

(i) has control or joint control over the Group;(ii) has significant influence over the Group; or(iii) is a member of the key management personnel of the ultimate holding company of the Group, or the

Group.

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

(i) the entity and the Group are members of the same group.(ii) one entity is an associate or joint venture of the other entity.(iii) both entities are joint ventures of the same third party.(iv) one entity is a joint venture of a third entity and the other entity is an associate of the third entity.(v) the entity is a post-employment benefit plan for the benefits of employees of either the Group or an

entity related to the Group.(vi) the entity is controlled or jointly-controlled by a person identified in (a) above.(vii) a person identified in (a)(i) above has significant influence over the Group or is a member of the key

management personnel of the ultimate holding company or the Group.(viii) The entity or any member of a group of which it is a part, provides key management personnel services

to the Group or to the parent of the Group.


087


(cont’d)

4.

PROP

ERTY

, PLA

NT

AND

EQUI

PMEN

T

Grou

pLe

aseh

old

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RM’0

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RM’0

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RM’0

00RM

’000

RM’0

00RM

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00

Cost

At 1

Janu

ary

2015

-11

,622

--

-1,

862

254

476

412

514

,343

Addi

tions

--

946

506

201,

721

123

164

--

3,48

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At 3

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946

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303,

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392

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4-

17,6

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--

234

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321

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--

--

--

(85)

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At 3

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26,2

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946

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264

3,85

741

096

810

-45

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Accu

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dep

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At 1

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2015

-31

7-

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543

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955

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--

--

--

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--

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At 3

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-54

995

515

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620

947

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387

Depr

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year

648

340

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127

687

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(86)

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190

152

321,

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162

568

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4,01

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s

At 3

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25,5

9211

,171

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354

232

2,49

124

840

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851

455

252,

344

183

285

2-

15,2

18


088


4.

PROP

ERTY

, PLA

NT

AND

EQUI

PMEN

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Mot

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’000

RM’0

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Cost

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ary

2015

5,59

61,

787

6745

34

-7,

907

Addi

tions

-46

189

461

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spos

als

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561

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7

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ated

dep

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atio

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2015

5653

635

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280

904

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Net

carr

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At 3

1 De

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016

5,31

681

310

610

57

346,

381

At 3

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5,42

81,

155

109

743

-6,

769


089


(cont’d)

4. PROPERTY, PLANT AND EQUIPMENT (CONT’D)

Assets held under hire purchase arrangements

Net carrying amounts of property, plant and equipment held under hire purchase arrangements are as follows:-

Group Company2016 2015 2016 2015

RM’000 RM’000 RM’000 RM’000

Plant and machinery and motor vehicles 1,484 1,632 289 553

5. PREPAID LAND LEASE PAYMENTS

(a) Prepaid land lease payments

Group2016 2015

RM’000 RM’000

CostAt 1 January/31 December 2,600 2,600

Less: Accumulated amortisationAt 1 January 248 155Amortisation for the financial year 93 93

At 31 December 341 248

Net carrying amountsAt 31 December 2,259 2,352

The leasehold industrial land was last valued at RM2,600,000 on 26 April 2012 by Azmi & Co Sdn. Bhd., an independent firm of professional valuer registered with Board of Valuers, Ministry of Finance, using the comparison method by reference to recent market transactions.

The leased term will be expired by 17 May 2041. The leasehold land is amortised over the period of 28 years.

(b) Prepaid land lease payments with cultivation rights

Group2016 2015

RM’000 RM’000

CostAt 1 January/31 December 69,000 69,000

Less: Accumulated AmortisationAt 1 January 7,886 5,914Amortisation for the financial year 1,971 1,972

At 31 December 9,857 7,886



090


5. PREPAID LAND LEASE PAYMENTS (CONT’D)

(b) Prepaid land lease payments with cultivation rights (cont’d)

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 lands with a combined land area of 80,000 hectares, located in Indonesia.

The fair value of acquisition of leasehold agriculture lands worth RM69,000,000 was based on a valuation report prepared by an independent valuer, namely Azmi & Co (Shah Alam) Sdn. Bhd. dated 15 November 2011.

6. INVESTMENT IN SUBSIDIARIES

Company2016 2015

RM’000 RM’000

CostUnquoted sharesAt 1 January 270,912 490,382Additions 42,550 -Subscription of shares 2,000 2,400Disposals - (221,870)

At 31 December 315,462 270,912

Less: Accumulated impairment lossAt 1 January 7,327 95,393Impairment loss for the financial year - 1,237Disposals - (89,303)

At 31 December 7,327 7,327



091


(cont’d)

6. INVESTMENT IN SUBSIDIARIES (CONT’D)

The details of the subsidiaries are as follows:-

Name of CompanyCountry of

IncorporationEffective ownership and

voting interest Principal Activities2016 2015

% %

Direct subsidiaries:Arus Global Sdn. Bhd. Malaysia 100 100 Engage in quarry operation, dormant

during the financial year

Tadmax Indah Power Sdn. Bhd. (f.k.a Kirana Abadi Sdn. Bhd.)

Malaysia 100 100 Property investment, dormant during the financial year

Platinum Frigate Sdn. Bhd. Malaysia 100 100 Dormant

Tadmax Builders Sdn. Bhd. Malaysia 100 100 General contractor

Tadmax Properties Sdn. Bhd. Malaysia 100 100 Properties investment

Tadmax Energy Sdn. Bhd. Malaysia 100 100 Dormant

Ganggarak Development Sdn. Bhd.

Malaysia 100 100 Property development

Tadmax Concrete (Labuan) Sdn. Bhd.

Malaysia 100 100 Producing construction material

Wawasan Metro Bina Sdn. Bhd.

Malaysia 100 - Property development

Tadmax PMC Sdn. Bhd. Malaysia 100 - Dormant

Tadmax Coastal Sdn. Bhd. Malaysia 100 - Dormant

Tadmax Permai Sdn. Bhd. Malaysia 70 70 Dormant

Suffolk Pte Ltd* Singapore 100 100 Investment holding

Wealth Gate Pte Ltd* Singapore 100 100 Investment holding

Indirect subsidiariesPT Trimegah Karya Utama* Indonesia 90 90 Engaged in timber, oil palm plantation and

palm oil trading

PT Manunggal Sukses Mandiri*

Indonesia 90 90 Engaged in timber, oil palm plantation and palm oil trading

Tadmax Builders (Labuan) Sdn. Bhd.

Malaysia 100 100 Dormant

* Not audited by SJ Grant Thornton.


092


6. INVESTMENT IN SUBSIDIARIES (CONT’D) Acquisition of subsidiaries

2016

(1) On 12 January 2016, the Company subscribed two shares, representing 100% equity interest in Tadmax Coastal Sdn. Bhd. for RM2.

(2) On 17 March 2016, the Company subscribed 550,000 shares, representing 55% equity interest in Wawasan Metro Bina Sdn. Bhd. Subsequently, the Company acquired 450,000 shares, representing remaining 45% equity interest for a consideration of RM42,000,000.

(3) On 26 August 2016, the Company subscribed two shares, representing 100% equity interest in Tadmax PMC Sdn. Bhd. for RM2.

Consideration transferred, assets recognised and liabilities assumed

The following summarises the major classes of consideration transferred, and the recognised amounts of assets acquired and liabilities assumed at the acquisition date:

• Fairvalueofconsiderationtransferred

RM’000

Cash consideration 42,550Less: Fair value of equity interest in Wawasan Metro Bina Sdn. Bhd. held by the Group

immediately before the acquisition (550)

Total consideration transferred 42,000

• Fairvalueofidentifiableassetsacquiredandliabilitiesassumed

RM’000

Property, plant and equipment 4Other deposits 500Cash and cash equivalents 568Land and development expenditure 54,815Deferred tax liabilities (13,121)Other payable (216)

Total identifiable assets and liabilities 42,550

Net cash outflow arising from acquisition of subsidiary

RM’000

Purchase consideration settled in cash 42,550Cash and cash equivalents acquired (568)

41,982


093


(cont’d)


Acquisition of subsidiaries (cont’d)

2015

(1) On 17 April 2015, the Company’s wholly owned subsidiary, Tadmax Builders Sdn. Bhd. incorporated a wholly owned subsidiary known as Tadmax Builders (Labuan) Sdn. Bhd. with an issued and paid up capital of RM2.

(2) On 8 June 2015, the Company acquired two shares, representing 100% equity interests in Tadmax Concrete (Labuan) Sdn. Bhd. for RM2.

(3) On 5 August 2015, the Company incorporated a subsidiary known as Tadmax Permai Sdn. Bhd. with an issued and paid-up share capital of RM100 comprising 100 ordinary shares of RM1.00 each where the Company holds seventy shares, representing 70% equity interests.

Disposal of Subsidiaries

2015

(a) On 20 February 2014, the Company entered into a Sale and Purchase Agreement to dispose its entire equity interest in Tadmax Power Sdn. Bhd. and the final purchase consideration on completion was RM302,365,668. The disposal was completed during the financial year ended 31 December 2015.

The effect of the disposal on the financial position of the Group is as below:-

2015RM’000

Inventories 138,390Other receivables, deposit and prepayment 308Other payables (625)

138,073Gain on disposal of subsidiary 147,649Tax, expenses payable and waiver of balance due to the Company 16,644

Total consideration received 302,366

Cash consideration received 302,366Less: Tax and expenses paid (16,644)

Net cash inflow from disposal 285,722

The analysis of the results of the disposed subsidiary is as below:-

2015RM’000

Administrative expenses (7)

Loss for the financial year (7)


094



Disposal of Subsidiaries (cont’d)

2015 (cont’d)

(b) On 28 September 2015, the Company entered into a Sale and Purchase Agreement to dispose its entire equity interest in Usama Industries Sdn. Bhd. for a consideration of RM1,989,000. The disposal was completed during the financial year ended 31 December 2015.

The effect of the disposal on the financial position of the Group is as below:-

2015RM’000

Other receivables, deposit and prepayment 4,386Cash and cash equivalents 29Other payables (2,430)

1,985Gain on disposal of subsidiary 4

Total consideration received 1,989

Cash consideration received 1,989Less: Cash and cash equivalents (29)

Net cash inflow from disposal 1,960

The analysis of the results of the disposed subsidiary is as below:-

2015RM’000

Administrative expenses (9)

Loss for the financial year (9)

7. INVESTMENT IN JOINT VENTURE

Group and Company

The Group and Company have 14% (2015: 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.


095


(cont’d)

8. OTHER INVESTMENTS

The other investments represent the following:-

Group Company2016 2015 2016 2015

RM’000 RM’000 RM’000 RM’000

Corporate golf membership - 50 - 50Investment in quoted unit trust in Malaysia 50 50 50 50

50 100 50 100

9. TIMBER CONCESSION RIGHTS

Group2016 2015

RM’000 RM’000

Cost/Carrying amountsAt 1 January/ 31 December 218,000 218,000

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 of acquisition was based on a valuation report prepared by an independent valuer, Azmi & Co (Shah Alam) Sdn. Bhd., dated 15 November 2011.

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.

The recoverable amounts of the cash-generating units are determined using higher of fair value less costs of disposal and 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 expected selling price or 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:-

2016

(a) A third party who has expressed keen interests to acquire the assets which is above the Groups’ net carrying value. (b) The Company is in the stage of negotiating the terms and conditions (“Formal Agreement”) and targets to execute the

Formal Agreement in June 2017.


096


9. TIMBER CONCESSION RIGHTS (CONT’D)

The key assumptions used in the determination of the recoverable amounts are as follows (cont’d):-

2015

(a) The Group expects to commence the palm oil planting of 10,000 hectars of land from the second half of 2016 and the directors estimate that the 10,000 hectars of land will be planted with palm oil for the next 7 years after the commencement of operation.

(b) Cash flows were projected based on the planting of palm oil for the concession period. Estimated planting of palm oil had been based on the plan proposed to an interested buyer.

(c) The selling price used is a pre-agreed amount by the interested buyer.

(d) A pre-tax rate of 15% was applied in determining the recoverable amount of the land. The discount rate was estimated based on the average cost of capital, adjusted further upwards to reflect the agriculture industry and country risk.

(e) The expected net present value of the cashflow projection over a period of 7 years from the commencement of operation is USD2,063,000.

The values assigned to the above key assumptions represents management’s assessment of future trends in the industry and are based on both external sources and internal sources 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.

10. LAND AND DEVELOPMENT EXPENDITURE

Land and development expenditure consists of the following:-

Group2016 2015

RM’000 RM’000

At beginning of financial year- Long term leasehold land at cost 33,013 33,013- Development costs 5,344 3,163

38,357 36,176


097


(cont’d)

10. LAND AND DEVELOPMENT EXPENDITURE (CONT’D)

Land and development expenditure consists of the following (cont’d):-

Group2016 2015

RM’000 RM’000

Cost incurred during the financial year- Long term leasehold land at cost 21,822 -- Development costs 101,247 9,787

123,069 9,787

Total 161,426 45,963

Cost recognised in the profit or loss- current financial year (36,180) (7,606)Transfer to property, plant and equipment (26,240) -

(62,420) (7,606)

99,006 38,357Presented as:Land and development expenditure- Non-current 8,165 7,630- Current 90,841 30,727

99,006 38,357

The land with the carrying amount of RM 26,500,000 (2015: RM7,000,000) has been pledged as security for banking facilities granted to the Group as disclosed in Note 20 to the financial statements.

Included in Development costs incurred during the financial year are:-

Group2016 2015

RM’000 RM’000

Interest Expense 867 12Development Rights 54,815 -


098


11. DEFERRED TAX (ASSETS)/LIABILITIES

Group Company2016 2015 2016 2015

RM’000 RM’000 RM’000 RM’000

Deferred tax assets (589) (1,713) - -Deferred tax liabilities 82,999 70,364 21 21

82,410 68,651 21 21

At 1 January 68,651 67,773 21 21Recognised in the profit or loss 677 448 - -Attributable to fair value adjustment on land

and development expenditure/prepaid land lease payments 13,121 624 - -

Effect of foreign currency (39) (194) - -

At 31 December 82,410 68,651 21 21

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 Company2016 2015 2016 2015

RM’000 RM’000 RM’000 RM’000

At 1 January (1,713) (2,519) - -Recognised in profit or loss 1,163 1,000 - -Effects of foreign currency (39) (194) - -

At 31 December (589) (1,713) - -

Deferred tax liabilities

Timber concession

rights

Land lease with

cultivation rights

Property, plant and

equipmentLand lease payments

Land and development

expenditure TotalRM’000 RM’000 RM’000 RM’000 RM’000 RM’000

2016GroupAt 1 January 54,500 15,278 21 565 - 70,364Recognised in profit or loss - (493) 29 (22) - (486)Attributable to fair value

adjustment - - - - 13,121 13,121

At 31 December 54,500 14,785 50 543 13,121 82,999

CompanyAt 1 January/31 December - - 21 - - 21


099


(cont’d)

11. DEFERRED TAX (ASSETS)/LIABILITIES (CONT’D)

Deferred tax liabilities (cont’d)

Timber concession rights

Land lease with cultivation rights

Property, plant and equipment

Land lease payments Total

RM’000 RM’000 RM’000 RM’000 RM’000

2015GroupAt 1 January 54,500 15,771 21 - 70,292Recognised in profit or loss - (493) - (59) (552)Attributable to fair value

adjustment - - - 624 624

At 31 December 54,500 15,278 21 565 70,364

CompanyAt 1 January/31 December - - 21 - 21

This deferred tax liabilities arose 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. These deferred tax liabilities have arisen as a result of the temporary timing difference which has arisen from their fair valuation.

12. INVENTORIES

Group2016 2015

RM’000 RM’000

Consumables 44 57Raw materials 1,005 664

1,049 721

13. TRADE RECEIVABLES

Group Company2016 2015 2016 2015

RM’000 RM’000 RM’000 RM’000

Trade receivables 8,019 13,380 - 6,850

Trade receivables are non-interest bearing and are generally on 30 to 60 days (2015: 30 to 60 days) term. Other credit terms are assessed and approved on a case-by-case basis.


100


14. OTHER RECEIVABLES, DEPOSITS AND PREPAYMENTS

Group Company2016 2015 2016 2015

RM’000 RM’000 RM’000 RM’000

Other receivables (Note a) 16,937 16,527 11,456 11,397Staff loans 1 6 1 6Less: Impairment loss (5,000) (5,000) (5,000) (5,000)

11,938 11,533 6,457 6,403Deposits (Note b) 15,087 15,001 14,965 14,962Prepayments (Note c) 6,707 7,249 54 35Progress billing 1,427 - - -

Total 35,159 33,783 21,476 21,400

(a) Included in other receivables of the Group and of the Company are:-

(i) An amount of RM5,000,000 (2015: RM5,000,000) was due from a third party as a result of disposal of a subsidiary, Chongqing Liangshan Wijaya Food Limited.

According to the 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. As this amount was not received in the previous year, an impairment loss was provided for in the previous year.

(ii) An amount of RM6,362,000 (2015: RM6,362,000) was due from 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 is required.

(b) Included in the deposits of the Group and of the Company is an amount of RM14,963,000 (2015: RM14,963,000) paid to a contractor in Indonesia as deposit of appointing a company for undertaking development works on the oil palm land in Indonesia.

(c) Included in the prepayment of the Group is an amount of RM6,382,000 (2015: RM7,002,000) paid to a subcontractor, representing mobilisation advance pursuant to the terms of the contract works for the Group’s property development project.

15. AMOUNT DUE FROM/(TO) SUBSIDIARIES

The amount due from/(to) subsidiaries is non-trade in nature, unsecured, interest bearing of 9% per annum and repayable on demand.


101


(cont’d)

16. CASH AND BANK BALANCES

Group Company2016 2015 2016 2015

RM’000 RM’000 RM’000 RM’000

Cash and bank balances 9,611 2,003 1,006 301Deposits placed with licensed banks 30 3,642 - 3,612

9,641 5,645 1,006 3,913

Included in cash and bank balances are the following:-

(i) Deposit amounting to RM30,000 (2015: RM30,000) of the Group is registered under the name of an employee of a subsidiary who holds in trust on behalf of the subsidiary and the amount is pledged to the bank as security for banking facilities granted to the subsidiary.

(ii) An amount of RM5,888,196 (2015: RM1,079,000) is cash held under Section 7A of the Housing Development (Control and Licensing) Act 1966 which is restricted from general use.

The effective interest rates for the fixed deposits are at 2.20% - 3.40% (2015: 2.20% - 3.40%) per annum.

17. SHARE CAPITAL

Group and CompanyNumber of ordinary

shares of RM0.50 each Amount2016 2015 2016 2015’000 ’000 RM’000 RM’000

Authorised:At 1 January/31 December 1,200,000 1,200,000 600,000 600,000

Issued and fully paid:At 1 January 445,232 445,232 222,616 222,616Bonus issued during the financial year 44,475 - 22,238 -

At 31 December 489,707 445,232 244,854 222,616

During the financial year, the Company issued 44,475,348 bonus shares of RM0.50 each on the basic of one bonus share for every ten existing shares held.

Treasury shares

There has been no repurchase and resale of treasury shares during the financial year.

At 31 December 2016, the total number of treasury shares held by the Company is 474,300 (2015: 474,300) units with a total cost of RM154,720 (2015: RM154,720).


102


18. RESERVES

Group Company2016 2015 2016 2015

RM’000 RM’000 RM’000 RM’000

Non-distributableEmployees’ share option reserve 352 - 352 -Foreign currency translation reserve 409 866 - -

761 866 352 -DistributableRetained profits 3,603 39,609 37,877 66,797

4,364 40,475 38,229 66,797

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 operation whose functional currencies are different from that of the Group’s presentation currency.

Employees’ share option reserve

Employees’ share option reserve represents the equity-settled share options granted to employees. The reserve is made up of the cumulative value of services received from employees recorded over the vesting period commencing from the grant date of equity-settled share options, and is reduced by the expiry or exercise of the share options.

At an extraordinary general meeting held on 11 April 2013, the Company’s shareholders approved the establishment of an Employees’ Share Option Scheme (“ESOS”) of not more than 10% of the issued share capital of the Company to eligible Directors and employees of the Group.

The salient features of the ESOS scheme are, inter alia, as follows:

(a) Eligible employees per By-Laws are those employees (including directors) of the Group who amongst others, employed on a full time basis, has attained the age of eighteen years and is on the payroll of either the Company or any of its subsidiaries, which are not dormant, and his employment has been confirmed. In the case of a director or an employee (who is the chief executive or a major shareholder of the Company) and persons connected with him, the specific allocation under the ESOS is subject to approval by the shareholders of the Company at a general meeting.

(b) The aggregate number of shares to be issued under the ESOS shall not exceed 10% of the total issued and paid-up ordinary share capital of the Company at any point in time during the existence of the ESOS.

(c) An option holder may, in a particular year, exercise up to such maximum number of shares in such manner and subject to such conditions as stipulated in the offer document issued by the ESOS Committee.

(d) The unexercised option granted to eligible employees per By-Laws will lapse when they are no longer in employment of the Group unless approved by the ESOS Committee at its discretion pursuant to the By-Laws.


103


(cont’d)

18. RESERVES (CONT’D)

Employees’ share option reserve (cont’d)

A summary of the movement in the number ESOS and the weighted average exercise prices is as follow:

2016

Number ofshare option

Weightedaverage

exercise price RM

Granted during the financial year 8,796,000 0.50

None of the shares options were exercised during the financial year.

The fair value of services received in return for share options granted is based on the fair value of share options granted, measured using a Black-Scholes Model, with the following inputs:

Group2016

Fair value at grant date (RM) 0.08

Share price at grant date (RM) 0.39Expected weighted average option life (month) 24Weighted average volatility 53.22%Risk-free interest rate (based on Malaysian government bonds) 3.58%

19. HIRE PURCHASE LIABILITIES

Group Company2016 2015 2016 2015

RM’000 RM’000 RM’000 RM’000

Future minimum lease payments- within 1 year 967 723 81 201- more than 1 year but not later than 5 years 1,058 1,006 207 289- more than 5 years 7 42 - 31

2,032 1,771 288 521Less: Interest-in-suspense (165) (146) (27) (46)

1,867 1,625 261 475

Present value of minimum lease payments- within 1 year 869 641 70 181- more than 1 year but not later than 5 years 992 807 191 294- more than 5 years 6 177 - -

1,867 1,625 261 475

Hire purchase liabilities bear interest rates ranging from 2.35% to 4.00% (2015: 2.35% to 4.00%) per annum.


104


20. BANK BORROWINGS

Details of the Group’s and the Company’s bank borrowings as at the financial year end are as follows:-

Group Company2016 2015 2016 2015

RM’000 RM’000 RM’000 RM’000

Bridging loan (a) 5,457 1,500 - -Term loan (b) 15,675 - - -Term loans (c) 20,000 - 5,000 -

Total 41,132 1,500 5,000 -

The loans bear interest rates of 7.06% - 8.50% per annum (2015: 8.35%).

Bridging loan (a) is secured by way of:-

(a) First legal charge over a subsidiary’s land;(b) Debenture over a subsidiary’s fixed and floating assets both present and future;(c) Power of attorney by a subsidiary in favor of the financial institution over the development project;(d) Corporate Guarantee by the Company; and (e) Personal guarantee from a Director of the Group.

The bridging loan (a) is to be fully repaid by the 36th month from the date of first disbursement of the loan.

Term loan (b) is secured by way of:-

(a) First legal charge over a subsidiary’s long term leasehold land;(b) Debenture over a subsidiary’s fixed and floating assets both present and future;(c) Power of attorney by a subsidiary in favor of a Bank over the development project;(d) Corporate guarantee of RM170,000,000 by holding company, Tadmax Resources Berhad; and(e) Personal guarantee by the two Directors of the Group.

The term loan (b) is to be fully repaid by the 49th month from the date of first disbursement of the loan.

Term loans (c) is secured by way of:-

(a) First legal charge against a subsidiary’s leasehold land;(b) First legal charge against the 550,000 units issued and paid up capital in a subsidiary;(c) Power of attorney by a subsidiary in favor of a financial institution over the 550,000 units shares; and(d) Joint and several personal guarantees by the certain individual and a Director of the Group

The term loans (c) is repayable by 30 April 2017 of a sum of RM5.0 million and the remainder RM15.0 million by 31 December 2017.

21. TRADE PAYABLES

Trade payables are generally unsecured and non-interest bearing. The normal trade credit terms granted to the Group are 30 days (2015: 30 days).


105


(cont’d)

22. OTHER PAYABLES, DEPOSITS AND ACCRUALS

Group Company2016 2015 2016 2015

RM’000 RM’000 RM’000 RM’000

Other payables (a) 43,616 8,709 40,650 6,227Deposits (b) 67 5,205 3 4,706Accruals 5,412 571 4,561 141Progress billings - 3,250 - -

49,095 17,735 45,214 11,074

(a) Included in other payables of the Group and of the Company are:-

(i) An amount of RM4,444,000 (2015: RM4,544,000) payable to Inland Revenue Board Malaysia for disposal of a subsidiary. The amount is non-trade in nature and unsecured.

(ii) An amount of RM34,000,000 (2015: RMNil) payable to three companies, being balance consideration of acquiring Wawasan Metro Bina Sdn. Bhd.. The amount is non-trade in nature, unsecured, interest free and due payable by 30 June 2017.

(b) Included in deposits of the Group and of the Company is an amount of RMNil (2015: RM4,704,000) being deposit received on the proposed sale of a wholly owned subsidiary company. On 24 June 2016, the parties entered into a Mutual Termination Agreement resulting in the earlier agreement becoming null and void and the deposit received shall be refunded to the purchaser free of interest.

23. AMOUNT DUE TO CUSTOMERS ON CONTRACT

Group2016 2015

RM’000 RM’000

Aggregate costs incurred to date 33,033 8,287Add: Attributable profits on contract works 934 232

33,967 8,519Less: Progress billings (34,755) (9,267)

(788) (748)

24. AMOUNT DUE TO DIRECTORS

Group and Company

The amount due to directors are 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.


106


25. REVENUE

Group Company2016 2015 2016 2015

RM’000 RM’000 RM’000 RM’000

Industrial supplies 13,282 5,437 943 2,282Sales of development properties 29,046 7,740 - -Rental income 34 2 - -

42,362 13,179 943 2,282

26. FINANCE COSTS

Group Company2016 2015 2016 2015

RM’000 RM’000 RM’000 RM’000

Interest on hire purchase 98 86 18 23Interest on bank borrowings 884 270 325 270Interest on advances from subsidiary - - 216 -

982 356 559 293


107


(cont’d)

27. (LOSS)/PROFIT BEFORE TAX

(Loss)/Profit before tax is determined after charging/(crediting) amongst others, the following:-

Group Company2016

RM’0002015

RM’0002016

RM’0002015

RM’000

Auditors’ remuneration - current year 117 100 53 50 - others 30 10 - - - other auditors 32 28 - - - under provision in prior year 1 6 - 5Amortisation of prepaid land lease payments 93 93 - -Amortisation of prepaid land lease payments

with cultivation right 1,971 1,972 - -Depreciation of property, plant and equipment 2,036 1,040 517 545Directors’ remuneration (Note 30) 1,505 2,316 1,375 2,035Goodwill written off - 67,834 - -Impairment loss on investment in subsidiaries - - - 1,237Loss on waiver of debt from subsidiaries - - - 73,774Property, plant and equipment written off 47 7 - 7Realised foreign exchange gain (132) (157) - -Rental of permits 23 7 - -Rental of motor vehicles 10 11 - -Rental of equipment 19 37 - -Rental of premises 189 60 - -Gain on disposal of subsidiaries - (147,653) - (155,298)Rental income- equipment (56) (156) - -- premises (14) (7) (14) (7)(Gain)/Loss on disposal of property, plant and

equipment (56) 18 (56) 18Gain on recognition of financial assets - (38) - (38)Interest income (305) (175) (200) (152)Unrealised foreign exchange gain (149) (36) (149) (36)

28. TAXATION

Group2016 2015

RM’000 RM’000

Income tax- current year 240 -

Deferred tax- current year (Note 11) 677 448

917 448

Malaysian income tax is calculated at the statutory rate of 24% (2015: 25%) of the estimated assessable profit for the year.


108


28. TAXATION (CONT’D)

The reconciliation of income tax expense applicable to (loss)/profit before taxation at the statutory income tax rate to income tax expense at the effective tax rate of the Group and the Company are as follows:-

Group Company2016 2015 2016 2015

RM’000 RM’000 RM’000 RM’000

(Loss)/Profit before tax from continuing operations (13,121) 67,714 (6,682) 74,025

Taxation at applicable tax rate of 24% (2015: 25%) (3,149) 16,929 (1,604) 18,506

Tax effects arising from- non-taxable income (66) (57,374) (52) (38,900)- non-deductible expenditure 1,474 38,848 557 19,122- derecognise of prior year’s deferred tax asset 1,187 - - -- deferred tax assets not recognised in the

financial statements 1,502 2,045 1,099 1,272- utilisation of previously unrecognised

deferred tax asset (31) - - -

917 448 - -

Deferred tax assets have not been recognised for the following items:-

Group Company2016 2015 2016 2015

RM’000 RM’000 RM’000 RM’000

Deductible temporary differences (571) (749) (202) (322)Unutilised tax losses 1,927 1,879 17,646 13,233Unabsorbed capital allowances 21,314 15,408 285 239

22,670 16,538 17,729 13,150

The potential deferred tax assets of the Group and the Company are not provided for in the financial statements as it is anticipated that the tax effects of such benefits will not reversed in the foreseeable future.

29. (LOSS)/EARNINGS PER ORDINARY SHARE

(a) Basic (loss)/earnings per ordinary share (sen)

The basic (loss)/earnings per share is calculated by dividing the Group’s net profit/(loss) attributable to owners of the Company by the weighted average number of ordinary shares in issue during the financial year.

Group 2016 2015

RM’000 RM’000

(Loss)/Profit for the financial year (14,038) 67,266

Weighted average number of ordinary shares in issue (‘000) 469,790 469,790

Basic (loss)/earnings per ordinary share (sen) - continuing operations (2.99) 14.32

The comparative basic earnings per share have been restated to take into account the effect of the bonus shares issued during the financial year.


109


(cont’d)

29. (LOSS)/EARNINGS PER ORDINARY SHARE (CONT’D)

(b) Diluted (loss)/earnings per ordinary share

Diluted (loss)/earnings per ordinary share is not applicable as the unexercised options are anti-dilutive in nature. This is due to the average market share price of the Company is below the exercise price of options.

30. EMPLOYEE BENEFITS EXPENSE

Group Company2016 2015 2016 2015

RM’000 RM’000 RM’000 RM’000

Salaries, bonuses and allowances 4,564 5,157 2,371 3,408Defined contribution plans 490 518 250 309Social security contributions (“SOCSO”) 32 23 15 12Other benefits 953 219 827 224

6,039 5,917 3,463 3,953

Included in the employee benefits expense are directors’ remuneration and key management personnel’s remuneration as below:-

Group Company2016 2015 2016 2015

RM’000 RM’000 RM’000 RM’000

Executive Director Salaries 1,011 1,775 889 1,520 Defined contribution plan and SOSCO 87 158 79 132 Benefits in kind 77 84 77 84 Others 100 - 100 -

1,275 2,017 1,144 1,736

Non-executive Director Fees and allowances 215 299 215 299 Benefits in kind 15 - 15 -

1,505 2,316 1,375 2,035

Key management personnel other than Directors

Salaries, bonuses and other emoluments 1,374 1,305 622 714 Defined contribution plan and SOCSO 166 152 88 90

1,540 1,457 710 804


110


31. 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 have related party relationship with its related companies, Directors and key management personnel as follows:

Related parties RelationshipFernandez & Selvarajah Company with one or more common directorsMaxcorp Development Sdn. Bhd. Company with one or more common directorsKhidmas Capital Sdn. Bhd. Company with one or more common directorsHBG Security Service Sdn. Bhd. Company with one or more common directors

(b) Transactions with related parties

Related party transactions of the Group and the Company during the financial year are as follows: -

Group and Company2016

RM’0002015

RM’000

Fees paid to related parties 87 128Accommodation fees paid to related parties 23 -

(c) Key management personnel compensation

The remuneration of key management personnel and the Directors’ remuneration are disclosed in Notes 27 and 30 to the financial statements.

32. OPERATING SEGMENT

For management purposes, the Group is categorised into business units based on their products and services, and has reportable operating segments as follows:-

(i) Timber(ii) Investment holding(iii) Property development and construction related(iv) Industrial supplies(v) Others (Dormant group entities)

Except as indicated above, no operating segments have been aggregated to form the above reportable operating segments.


111


(cont’d)

32. OPERATING SEGMENT (CONT’D)

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 Managing Director (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.


112


32.

OPER

ATIN

G SE

GMEN

T (C

ONT’

D)

2016

Tim

ber

Inve

stm

ent

hold

ing

Prop

erty

de

velo

pmen

t an

d co

nstr

uctio

n re

late

dIn

dust

rial

supp

lies

Othe

rsEl

imin

atio

n/

Adju

stm

ents

Cons

olid

ated

RM’0

00RM

’000

RM’0

00RM

’000

RM’0

00RM

’000

RM’0

00

Grou

p

Reve

nue

Exte

rnal

sal

es-

-29

,080

13,2

82-

-42

,362

Inte

r seg

men

t - C

ontr

act r

even

ue (a

)-

-25

,448

--

(25,

448)

-

--

54,5

2813

,282

-(2

5,44

8)42

,362

Prof

it/(L

oss)

from

ope

ratio

ns (b

)-

(7,2

71)

(3,4

78)

1,21

3(1

00)

(2,5

03)

(12,

139)

Fina

nce

cost

s-

(563

)(7

32)

(77)

-39

0(9

82)

Taxa

tion

--

-(2

69)

(1,1

63)

515

(917

)

Net p

rofit

/(los

s) fo

r the

fina

ncia

l yea

r-

(7,8

34)

(4,2

10)

867

(1,2

63)

(1,5

98)

(14,

038)

Othe

r inf

orm

atio

nDe

prec

iatio

n-

1,28

813

260

97

-2,

036

Amor

tisat

ion

of p

repa

id la

nd le

ase

paym

ents

--

--

-93

93Am

ortis

atio

n of

pre

paid

land

leas

e pa

ymen

ts

with

culti

vatio

n rig

hts

--

--

-1,

971

1,97

1Pr

oper

ty, p

lant

and

equ

ipm

ent w

ritte

n of

f-

--

47-

-47

Asse

ts a

nd li

abili

ties

Segm

ent a

sset

s (c)

292,

103

101,

813

89,8

586,

562

104

(18,

880)

471,

560

Addi

tions

to n

on-c

urre

nt a

sset

s-

464

462

1,10

5-

-2,

031

Othe

r seg

men

ts a

sset

s-

1,06

7-

-58

9-

1,65

6

Cons

olid

ated

tota

l ass

ets

292,

103

103,

344

90,3

207,

667

693

(18,

880)

475,

247

Segm

ent l

iabi

litie

s (d

)-

58,5

7473

,003

5,16

15,

101

(28,

088)

113,

751

Othe

r seg

men

t lia

bilit

ies

82,9

4921

-18

52

-83

,157

Cons

olid

ated

tota

l liab

ilitie

s82

,949

58,5

9573

,003

5,34

65,

103

(28,

088)

196,

908


113


(cont’d)

32.

OPER

ATIN

G SE

GMEN

T (C

ONT’

D)

2015

Tim

ber

Inve

stm

ent

hold

ing

Prop

erty

de

velo

pmen

t an

d co

nstr

uctio

n re

late

dIn

dust

rial

supp

lies

Othe

rsEl

imin

atio

n/ A

djus

tmen

tsCo

nsol

idat

edRM

’000

RM’0

00RM

’000

RM’0

00RM

’000

RM’0

00RM

’000

Grou

p

Reve

nue

Exte

rnal

sal

es-

-7,

742

5,43

7-

-13

,179

Inte

r seg

men

t - C

ontr

act r

even

ue (a

)-

-3,

816

--

(3,8

16)

-

--

11,5

585,

437

-(3

,816

)13

,179

Segm

ent r

esul

tsPr

ofit/

(Los

s) fr

om o

pera

tions

(b)

(9)

128,

133

15,1

821,

229

(157

)(7

6,30

8)68

,070

Less

: wai

ver o

f deb

ts-

19,6

52(1

8,23

8)(1

,406

)(8

)-

-

Prof

it/(L

oss)

from

ope

ratio

ns- e

xclu

ding

deb

t wai

ver

(9)

147,

785

(3,0

56)

(177

)(1

65)

(76,

308)

68,0

70Fi

nanc

e co

sts

-(2

93)

(4)

(59)

--

(356

)Ta

xatio

n-

--

-(1

,000

)55

2(4

48)

Net p

rofit

/(los

s) fo

r the

fina

ncia

l yea

r(9

)14

7,49

2(3

,060

)(2

36)

(1,1

65)

(75,

756)

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114



Nature of adjustments and eliminations to arrive at amounts reported in the consolidated financial statements

(a) Inter-segment transactions are eliminated on consolidation.(b) Profit/(Loss) from other segment transactions are eliminated on consolidation.(c) The following items are (deducted from)/added into segments assets to arrive at total assets reported in the

consolidated statement of financial position:-

Group 2016 2015

RM’000 RM’000

Trade receivables (12,385) (4,894)Other receivables, deposits and prepayment 5,059 5,121Prepaid land lease payments 2,259 2,352Prepaid land lease payments with cultivation rights 59,143 61,114Investment in subsidiaries (308,135) (263,585)Timber concession rights 218,000 218,000Amount due from subsidiaries (15,705) (7,691)Property, plant and equipment (21,787) (48,579)Land and development expenditure 54,671 26,240

(18,880) (11,922)

(d) The following items are deducted from segment liabilities to arrive at total liabilities reported in consolidated statement of financial position:-

Group 2016 2015

RM’000 RM’000

Other payables (4,000) -Amount owing to subsidiaries/holding (23,283) (8,469)Amount owing to fellow subsidiaries (805) (4,055)

(28,088) (12,524)

Geographical information

GroupRevenue Non-Current Assets Total Assets

2016 2015 2016 2015 2016 2015RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Malaysia 42,362 13,179 51,739 25,314 197,411 110,651Singapore - - - - 4 4Indonesia - - 277,732 280,827 277,832 280,827

42,362 13,179 329,471 306,141 475,247 391,482

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.


115


(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 are as follow:-

Group2016 2015

RM’000 RM’000

Industrial supplies – Customer A 6,813 2,282

33. FINANCIAL INSTRUMENTS

33.1 Categories of Financial Instruments

The table below provides an analysis of financial assets categorized as loans and receivables (“L&R”) and financial liabilities categorised as other liabilities measured at amortised cost (“AC”) :-

L&R AC TotalRM’000 RM’000 RM’000

2016GroupFinancial assetsTrade receivables 8,019 - 8,019Other receivables and deposits 27,025 - 27,025Cash and bank balances 9,641 - 9,641

44,685 - 44,685

Financial liabilitiesTrade payables - 18,079 18,079Other payables, deposits and accruals - 49,095 49,095Amount due to directors - 2,792 2,792Hire purchase liabilities - 1,867 1,867Bank borrowings - 41,132 41,132

- 112,965 112,965

CompanyFinancial assetsOther receivables and deposits 21,422 - 21,422Cash and bank balances 1,006 - 1,006Amount due from subsidiaries 4,183 - 4,183

26,611 - 26,611


116


33. FINANCIAL INSTRUMENTS (CONT’D)

33.1 Categories of Financial Instruments (cont’d)

The table below provides an analysis of financial assets categorized as loans and receivables (“L&R”) and financial liabilities categorised as other liabilities measured at amortised cost (“AC”) (cont’d):-


2016 (cont’d)Company (cont’d)Financial liabilitiesOther payables, deposits and accruals - 45,214 45,214Amount due to subsidiary - 5,729 5,729Amount due to directors - 1,792 1,792Hire purchase liabilities - 261 261Bank borrowing - 5,000 5,000

- 57,996 57,996

2015GroupFinancial assetsTrade receivables 13,380 - 13,380Other receivables and deposits 26,534 - 26,534Cash and bank balances 5,645 - 5,645

45,559 - 45,559

Financial liabilitiesTrade payables - 5,482 5,482Other payables, deposits and accruals - 14,485 14,485Amount due to directors - 1,546 1,546Hire purchase liabilities - 1,625 1,625Bank borrowing - 1,500 1,500

- 24,638 24,638

CompanyFinancial assetsTrade receivables 6,850 - 6,850Other receivables and deposits 21,365 - 21,365Cash and bank balances 3,913 - 3,913Amount due from subsidiaries 2,207 - 2,207

34,335 - 34,335


117


(cont’d)


33.1 Categories of Financial Instruments (cont’d)

The table below provides an analysis of financial assets categorized as loans and receivables (“L&R”) and financial liabilities categorised as other liabilities measured at amortised cost (“AC”) (cont’d):-


2015 (cont’d)Company (cont’d)Financial liabilitiesTrade payables - 2,164 2,164Other payables, deposits and accruals - 11,074 11,074Amount due to directors - 1,546 1,546Hire purchase liabilities - 475 475

- 15,259 15,259

33.2 Financial Risk Management

The Group and Company are exposed to financial risks arising from their operations and the use of financial instruments. Financial risk management policy is established to ensure that adequate resources are available for the development of the Group’s and the Company’s business whilst managing its credit risk, liquidity risk, foreign currency risk and interest rate risk. The Group operates within clearly defined policies and procedures that are approved by the Board of Directors to ensure the effectiveness of the risk management process.

The main areas of financial risks faced by the Group, the Company and the policy in respect of the major areas of treasury activity are set out as follows:-

(i) Credit risk

Credit risk is the risk of a financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations. It is the Group’s policy to enter into financial instrument with a diversity of creditworthy counterparties. The Group does not expect to incur material credit losses of its financial assets or other financial instruments.

Concentration of credit risk exists when changes in economic, industry and geographical factors similarly affect the group of counterparties whose aggregate credit exposure is significant in relation to the Group’s total credit exposure. The Group’s portfolio of financial instrument is broadly diversified along industry, product and geographical lines, and transactions are entered into with diverse creditworthy counterparties, thereby mitigate any significant concentration of credit risk.

It is the Group’s policy that all customers who wish to trade on credit terms are subject to credit verification procedures. The Group does not offer credit terms without the approval of the head of credit control.

Following are the areas where the Group and the Company are exposed to credit risk:-

(a) Receivables

As at the end of the reporting period, the maximum exposure to credit risk arising from receivables is limited to the carrying amounts in the statement of financial position.

With a credit policy in place to ensure the credit risk is monitored on an on-going basis, management has taken reasonable steps to ensure that receivables that are neither past due nor impaired are stated at their realisable values. A significant portion of these receivables are regular customers that have been transacting with the Group. The Group uses aging analysis to monitor the credit quality of the receivables. Any receivables having significant balances past due more than credit terms granted are deemed to have higher credit risk, and are monitored individually.


118



33.2 Financial Risk Management (cont’d)

The main areas of financial risks faced by the Group, the Company and the policy in respect of the major areas of treasury activity are set out as follows (cont’d):-

(i) Credit risk (cont’d)

(a) Receivables (cont’d)

Trade receivables that are neither past due nor impaired are creditworthy debtors with good payment records with the Group.

As at 31 December 2016, trade receivables of RM3,562,000 (2015: RM5,390,000) and RMNil (2015: RM5,283,000) of the Group and of the Company respectively were past due but not impaired. These relate to a number of independent customers from whom there is no recent history of default.

The ageing analysis of the trade receivables and the trade-related inter-company transactions is as follow:-

Group2016

GrossIndividually

impaired NetRM’000 RM’000 RM’000

Not past due 4,457 - 4,457Past due 1 to 30 days 898 - 898Past due 31 to 60 days 2,369 - 2,369Past due 61 to 90 days 27 - 27Past due 91 to 120 days 268 - 268Past due more than 121 days - - -

8,019 - 8,019

2015

GrossIndividually


Not past due 7,990 - 7,990Past due 1 to 30 days 719 - 719Past due 31 to 60 days 240 - 240Past due 61 to 90 days - - -Past due 91 to 120 days - - -Past due more than 121 days 4,431 - 4,431

13,380 - 13,380

The net carrying amount of receivables is considered a reasonable approximate of fair value. The maximum exposure to credit risk is the carrying value of each class of receivables mentioned above. Trade receivables that are individually determined to be impaired at the end of the reporting period relate to debtors that are in significant financial difficulties and have defaulted on payments. These receivables are not secured by any collateral or credit enhancements.


119


(cont’d)





(a) Receivables (cont’d)

The ageing analysis of the trade receivables and the trade-related inter-company transactions is as follow (cont’d):-

Company2015

GrossIndividually


Not past due 1,567 - 1,567Past due 1 to 30 days 640 - 640Past due 31 to 60 days 212 - 212Past due 61 to 90 days - - -Past due 91 to 120 days - - -Past due more than 121 days 4,431 - 4,431

6,850 - 6,850

As at reporting date, approximately 13% and Nil (2015: 29% and 57%) of trade receivables were due from one major customer of the Group and the Company respectively.

(b) Cash and cash equivalents

The exposure of credit risk for cash and cash equivalent is considered negligible, since the counterparties are reputable banks with high quality external credit ratings.

(c) Investments and other financial assets

At the end of the reporting period, the Group and the Company have investments in listed security. The maximum exposure to credit risk is represented by the carrying amounts in the statement of financial position.

Investments are allowed only in liquid securities and only with counterparties that have a credit rating equal to or better than the Group. Transactions involving derivative financial instruments are with approved financial institutions.

In view of the sound credit rating of counterparties, management does not expect any counterparty to fail to meet its obligations.

(d) Financial guarantees

The maximum exposure to credit risk and the outstanding banking facility amounted to RM200,000,000 (2015: RM30,000,000) and RM41,123,000 (2015: RM1,500,000) respectively, represented by the outstanding banking facilities of the Group as at the end of the reporting period.


120






(d) Financial guarantees (cont’d)

The Company provides unsecured financial guarantees to banks in respect of banking facilities granted to certain subsidiaries. The Company monitors on an on-going basis the results of the subsidiaries and repayments made by the subsidiaries. As at the end of the reporting period, there was no indication that any subsidiary would default on repayment.

Financial guarantees have not been recognised since the fair value on initial recognition was not material.

(ii) Liquidity risk Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due to

shortage of funds.

In managing its exposure to liquidity risk arises principally from its various payables, loans and borrowings, the Group maintains a level of cash and cash equivalents and banking 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.

The Group aims at maintaining a balance of sufficient cash and deposits and flexibility in funding by keeping sources of committed and uncommitted credit facilities from various banks.

The summary of the maturity profile based on the contractual undiscounted repayment obligations is as follow:-

Carrying amounts

Total contractual cash flows

Within1 year

1 to2 years

2 to5 years

More than5 years

RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

2016GroupFinancial liabilities:Trade payables 18,079 18,079 18,079 - - -Other payables, deposits and accruals 49,095 49,095 49,095 - - -Amount due to directors 2,792 2,792 2,792 - - -Hire purchase liabilities 1,867 2,032 967 601 457 7Bank borrowings 41,132 41,132 25,457 - 15,675 -

112,965 113,130 96,390 601 16,132 7

CompanyFinancial liabilities:Other payables, deposits and accruals 45,214 45,214 45,214 - - -Amount due to directors 1,792 1,792 1,792 - - -Amount due to subsidiary 5,729 5,729 5,729 - - -Hire purchase liabilities 261 288 81 69 138 -Bank borrowings 5,000 5,000 5,000 - - -Financial guarantee - 29,845 14,170 - 15,675 -

57,996 87,868 71,986 69 15,813 -


121


(cont’d)




(ii) Liquidity risk (cont’d)

The summary of the maturity profile based on the contractual undiscounted repayment obligations is as follow (cont’d):-

Carrying amounts

Total contractual cash flows

Within 1 year

1 to 2 years

2 to 5 years

More than 5 years

RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

2015GroupFinancial liabilities:Trade payables 5,482 5,482 5,482 - - -Other payables, deposits and accruals 14,485 14,485 14,485 - - -Amount due to directors 1,546 1,546 1,546 - - -Hire purchase liabilities 1,625 1,771 723 637 369 42Bank borrowings 1,500 1,500 1,500 - - -

24,638 24,784 23,736 637 369 42

CompanyFinancial liabilities:Trade payables 2,164 2,164 2,164 - - -Other payables, deposits and accruals 11,074 11,074 11,074 - - -Amount due to directors 1,546 1,546 1,546 - - -Hire purchase liabilities 475 521 201 112 177 31Financial guarantee - 1,500 1,500 - - -

15,259 16,805 16,485 112 177 31

(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.

To mitigate the Group’s exposure to foreign currency risk, the Group is exposed to foreign currency risk on sales and purchases that are denominated in a currency other than the respective functional currencies of Group entities. The currencies giving rise to this risk is primarily Singapore Dollar (SGD), United States Dollar (USD) and Indonesia Rupiah (RP).


122





(iii) Foreign currency risk (cont’d)

The Group’s exposure to foreign currency risk, based on carrying amounts as at the end of the reporting period was:-

SGDRM’000

USDRM’000

RPRM’000

2016 2015 2016 2015 2016 2015

GroupFinancial assetsCash and bank balances 20 26 91 125 9 68Other receivables 4 4 14,960 14,960 90 84

Financial liabilitiesOther payables (33) (33) - - (2,563) (2,388)Bank borrowings - - - - - -

(9) (3) 15,051 15,085 (2,464) (2,236)

CompanyFinancial assetsCash and bank balances 20 8 91 125 - -Other receivables - - 14,960 14,960 - -

Financial liabilitiesOther payable - - - - - -Bank borrowings - - - - - -

20 8 15,051 15,085 - -

The following table demonstrates the sensitivity of the Group’s profit for the financial year to a reasonably possible change in the SGD, USD and RP exchange rates against the respective functional currencies of the Group entities, with all other variables held constant.

Group2016 2015

Loss forthe year Equity


RM’000 RM’000 RM’000 RM’000

USD/RMStrengthened 1% (150) (150) (150) (150)Weakened 1% 150 150 150 150

RP/RMStrengthened 1% (25) (25) (22) (22)Weakened 1% 25 25 22 22


123


(cont’d)




(iii) Foreign currency risk (cont’d)

Company2016 2015



RM’000 RM’000 RM’000 RM’000

USD/RMStrengthened 1% (150) (150) (150) (150)Weakened 1% 150 150 150 150

Exposures to foreign exchange rates vary during the financial year depending on the volume of overseas transactions. Nonetheless, the analysis above is considered to be representative of the Group’s and the Company’s exposures to foreign currency risk.

(iv) Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of the Group’s and the Company’s financial instruments will fluctuate because of changes in market interest rates.

The Group and the Company manage 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.

The interest rate profile of the Group’s and the Company’s significant interest-bearing financial instruments, based on carrying amount as at the end of the reporting period was:-

Group and Company2016 2015

RM’000 RM’000

Fixed rate instrumentsFinancial assetDeposits placed with licensed banks 30 3,642

Financial liabilityHire purchase liabilities (1,867) (1,625)

(1,837) 2,017

Floating rate instrumentsFinancial liabilityBank borrowings (41,132) (1,500)


124





(iv) Interest rate risk (cont’d)

The interest rate profile of the Group’s and the Company’s significant interest-bearing financial instruments, based on carrying amount as at the end of the reporting period was (cont’d):-

Fair value sensitivity analysis for 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.

Cash flow sensitivity analysis for variable rate instruments:

A change in 100 basis point (bp) in interest rates at the end of the reporting period would have increase/(decreased) profit for the year and equity by the amounts shown below. This analysis assumes that all other variables, in particular foreign currency rates, remain constant.

Loss for the financial year Equity+100bp -100bp +100bp -100bpRM’000 RM’000 RM’000 RM’000

2016 (4) 4 (4) 42015 -* -* -* -*

* Less than RM1,000

Fair value of financial instruments

The carrying amounts of cash and cash equivalents, short term receivables and payables and short term borrowings reasonably approximate their fair value due to the relatively short term nature of these financial instruments.

It was not practicable to estimate the fair value of the Group’s investment in unquoted shares due to the lack of comparable quoted prices in an active market and the fair value cannot be reliably measured.


125


(cont’d)




(iv) Interest rate risk (cont’d)

Fair value of financial instruments (cont’d)

The table below analyse financial instruments carried at fair value and those not carried at fair value for which fair value is disclosed, together with their values and carrying amounts shown in the statement of financial position.

Fair value of financial

instruments carried at fair

value Level 1

RM’000

Fair value of financial

instruments not carried at

fair value Level 3

RM’000

Carrying amount RM’000

2016GroupFinancial assetQuoted shares 48 - 50

Financial liabilitiesHire purchase liabilities - (1,867) (1,867)Bank borrowings - (41,132) (41,132)

Company Financial assetQuoted shares 48 - 50

Financial liabilityHire purchase liabilities - (261) (261)

2015GroupFinancial assetQuoted shares 45 - 50

Financial liabilitiesHire purchase liabilities - (1,625) (1,625)Bank borrowings - (1,500) (1,500)

Company Financial assetQuoted shares 45 - 50

Financial liabilityHire purchase liabilities - (475) (475)


126


34. 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 debts on an on-going basis.

There were no changes in the Group’s approach to capital management during the financial year.

Group Company2016 2015 2016 2015

RM’000 RM’000 RM’000 RM’000

Total liabilities 196,908 99,000 58,017 15,280Less: Cash and cash equivalents (9,641) (5,645) (1,006) (3,913)

Net debt 187,267 93,355 57,011 11,367

Total equity 250,430 264,303 284,295 290,625

Gearing ratio 75% 35% 20% 4%

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.

35. SIGNIFICANT EVENTS DURING AND AFTER THE FINANCIAL YEAR

(i) On 17 March 2016, the Company announced the proposal to subscribe for 550,000 ordinary shares of RM 1 each of Wawasan Metro Bina Sdn Bhd (“WMB”) for a total subscription price of RM550,000 resulting in a 55% equity interest in WMB.

On 22 July 2016, the Company announced the proposal to acquire the remaining 45% equity interest of WMB for a cash consideration of RM42,000,000.

The acquisition was completed during the year.

(ii) As approved by the shareholders at the Extraordinary General Meeting held on 24 May 2016, bonus issue of 44,475,348 new ordinary shares of RM0.50 each in the Company on the basic of one bonus share for every ten existing shares held were issued, listed and quoted on the Main Market of Bursa Malaysia Securities Berhad on 10 June 2016.

(iii) On 2 August 2016, the Company was awarded by the Government of Malaysia, through the Energy Commission

(“EC”) for the development of a new 1,000MW combined cycle gas-fired power plant (“the CCGT Project”) which will be situated on the Land located at Pulau Indah, Selangor Darul Ehsan.

The Letter of Award was subjected to various conditions including finalising the terms of the agreement relating to the CCGT Project with relevant parties and further subject to changes arising from negotiations prior to submission to EC.

On 14 October 2016, the EC had approved the Company’s application to increase the capacity of the CCGT Project to 1,000MW - 1,200MW.


127


(cont’d)

35. SIGNIFICANT EVENTS DURING AND AFTER THE FINANCIAL YEAR (CONT’D)

(iv) On 15 November 2016, the Company proposed to undertake the proposed private placement in accordance with section 132D of the Companies Act, 1965, entailing the issuance of up to 49,850,300 new ordinary shares of the Company (“Placement Shares”), representing approximately 10% of the issued share capital of the Company. At the date of this report, the proposed private placement is pending the identification of placee(s) to subscribe for the Placement Shares.

(v) On 7 December 2016, the Company announced a proposal to undertake a renounceable rights issue of up to 219,341,357 new ordinary shares of in TRB (“Rights Shares”) together with up to 383,847,374 free detachable warrants (“Warrants”) on the basis of two (2) Rights Shares for every five (5) existing TRB Share together with seven (7) Warrants for every four (4) Rights Shares subscribed at an entitlement date and at an issue price to be determined later.

The Proposed Rights Issue with Warrants was approved by Bursa Malaysia Securities Berhad vide its letter dated 30 March 2017 and is conditional upon the approval from the shareholders of the Company.

(vi) The Company is presently negotiating with a third party who has expressed keen interests to acquire the entire issued and paid-up share capital of Suffolk Pte Ltd (“SPL”) and Wealth Gate Pte Ltd (“WPL”), wholly-owned subsidiaries of the Company. The disposal consideration being negotiated presently is above the Group’s net carrying value of the assets.

The proposed disposal include SPL, WPL and its subsidiaries, PT Trimegah Karya Utama and PT Manunggal Sukses Mandiri which consists of prepaid land lease payments with cultivation rights and timber concession rights.

The Company is in the stage of negotiating the terms and conditions (“Formal Agreement”) and targets to execute the Formal Agreement in June 2017.


128


SUPPLEMENTARY INFORMATION

DISCLOSURE OF REALISED AND UNREALISED PROFITS/(LOSSES)

Bursa Malaysia Securities Berhad had on 25 March 2010 and 20 December 2010, issued directives requiring all listed corporations to disclose the breakdown of unappropriated profits or accumulated losses into realised and unrealised on Group and Company basis, as the case may be, in quarterly reports and annual audited financial statements.

The breakdown of unappropriated profits or accumulated losses as at the reporting date that has been prepared by the Directors in accordance with the directives from Bursa Malaysia Securities Berhad stated above and Guidance on Special Matter No. 1 issued on 20 December 2010 by the Malaysian Institute of Accountants are as follows:-

2016 2015Group Company Group Company

RM’000 RM’000 RM’000 RM’000

Total retained profits- Realised 3,189 37,728 38,692 66,761-Unrealised 414 149 917 36

3,603 37,877 39,609 66,797

The disclosure of realised and unrealised profit or losses above is solely for complying with the disclosure requirements stipulated in the directive of Bursa Malaysia Securities Berhad and should not be applied for any other purposes.


129

Address / LocationLand Area /

Build Up AreaExisting

Use TenureAge of

Building

Net Carrying Value #

(RM’000)

Date of Acquisition(a) / Revaluation(b)

HS(D) 154505 PT 146972 in Mukim Klang, Daerah Klang, Negeri Selangor Darul Ehsan

Land area measuring

approximately 245,453 sq.

metres

Vacant 99 years lease expiring on 24 March 2096

N/A 25,593 2 November 2015(a)

(Valuation not reflected in

Accounts but for the purposes of assessing the need for impairment)

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-13-09 & A-13-10,Taragon Kelana Commercial Centre, Kelana Jaya,Selangor Darul Ehsan

Total area measuring

approximately 12,157 sq. ft.

Vacant Freehold Approximately 4 years

5,524 30 November 2011(a)

Kawasan Industri Batu Kapur Keramat Pulai with legal description as HS(D) No. 199746 Lot No. PT 23013, Mukim of Sungai Raya, Kinta, Perak Darul Ridzuan

Land area measuring

approximately 8.094 hectares

Quarry land 28 years expiring 17 May 2041

N/A 1,717 29 April2013(a)

Two units of five-storey shop offices held under HS(D) 78018 PT 3645 & HS(D) 78017 No. PT 3644 both in Mukim Damansara, Daerah Petaling & Negeri Selangor.No. 2D, Jalan SS 6/6, Kelana Jaya, 47301 Petaling Jaya, Selangor Darul Ehsan

Total land area measuring

approximately 372 sq. metres.

Total built up is approximately 20,000 sq. ft.

Office Freehold Approximately 22 years

5,316 8 July2014(a)

Title No. PN 7599, Lot 7298, Kampung Ganggarak, Wilayah Persekutuan Labuan

Land area measuring

approximately 16.82 hectares

Mixed development

land

99 years expiring 30

October 2098

N/A 7,000 10 September 2014(a)

Title No. HS(D) 120080 PT 26890, Mukim Batu, Kuala Lumpur, Wilayah Persekutuan

Land area measuring

approximately 40,819.5 sq.

metres

Residential 99 years expiring 1 July

2114

N/A 61,050 6 September 2016(a)

List of Propertiesas at 31 December 2016


130

Address / LocationLand Area /

Build Up AreaExisting

Use TenureAge of

Building

Net Carrying Value #

(RM’000)

Date of Acquisition(a) / Revaluation(b)

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 22,179 23 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 22,179 23 December 2011(a)

# - net of deferred tax

List of Propertiesas at 31 December 2016(cont’d)


131

Analysis of Shareholdingsas at 31 March 2017

Class of Equity Security

Issued share capital : RM244,853,547 comprising 489,707,094 shares Class of shares : Ordinary sharesVoting rights : One vote per ordinary share

Distribution of Shareholdings

HoldingsNo. of

ShareholdersNo. of

Shares %*

Less than 100 338 16,778 0.00100 to 1,000 196 106,570 0.021,001 to 10,000 3,718 13,179,996 2.7010,001 to 100,000 1,769 57,764,017 11.81100,001 to less than 5% of issued shares 382 270,169,142 55.225% and above of issued shares 1 147,996,291 30.25Total 6,404 489,232,794* 100.00

Directors’ Shareholdings

Direct Interest Indirect InterestName No. of Shares held %* No. of Shares held %* ESOS Options

Tan Sri Datuk Dr Abdul Samad bin Haji Alias 71,500 0.01 - - 800,000Datuk Seri Anuar bin Adam 147,996,291 30.25 - - 1,200,000Datuk Aldillan bin Anuar - - 147,996,291 30.25 ^ 800,000Dato’ Che Abdullah @ Rashidi bin Che Omar - - - - 800,000Datuk Noel John A/L M Subramaniam 1,300,000 0.27 - - 800,000Datuk Gan Seong Liam 18,000,870 3.68 2,000,000 0.41^ -Dato’ Samsudin bin Abu Hassan 677,600 0.14 515,000 0.11^ 400,000Tan Peng Koon - - - - 400,000Derek John Fernandez - - - - 400,000

Substantial Shareholders

Direct Interest Indirect Interest

NameNo. of

Shares held %*No. of

Shares held %*

Datuk Seri Anuar bin Adam 147,996,291 30.25 - -Datuk Seri Chiau Beng Teik 25,000,000 5.11 - -


132

THIRTY (30) LARGEST SHAREHOLDERS

No. NAME OF SHAREHOLDER SHARES %*

1 KENANGA NOMINEES (TEMPATAN) SDN BHD PLEDGED SECURITIES ACCOUNT FOR ANUAR BIN ADAM 147,996,291 30.25

2 RHB NOMINEES (TEMPATAN) SDN BHD OSK CAPITAL SDN BHD FOR CHEN CHEE MIN 22,105,076 4.52

3 RHB NOMINEES (TEMPATAN) SDN BHD OSK CAPITAL SDN BHD FOR TIONG KING SING 17,811,086 3.64

4 KENANGA NOMINEES (TEMPATAN) SDN BHD PLEDGED SECURITIES ACCOUNT FOR KOK BOON KIAT 15,704,720 3.21

5 RHB CAPITAL NOMINEES (TEMPATAN) SDN BHD GAN SEONG LIAM 13,763,870 2.81

6 KENANGA NOMINEES (TEMPATAN) SDN BHD PLEDGED SECURITIES ACCOUNT FOR RAJA ABDULLAH BIN RAJA BAHARUDIN 10,374,000 2.12

7 MAYBANK NOMINEES (TEMPATAN) SDN BHD PLEDGED SECURITIES ACCOUNT FOR CHIAU BENG TEIK 10,000,000 2.04

8 RHB NOMINEES (TEMPATAN) SDN BHD PLEDGED SECURITIES ACCOUNT FOR CHIAU BENG TEIK 10,000,000 2.04

9 AMANAHRAYA TRUSTEES BERHAD PMB DANA AL-AIMAN 8,280,000 1.69

10 UOB KAY HIAN NOMINEES (ASING) SDN BHD EXEMPT AN FOR UOB KAY HIAN PTE LTD ( A/C CLIENTS ) 8,205,336 1.68

11 HLB NOMINEES (TEMPATAN) SDN BHD PLEDGED SECURITIES ACCOUNT FOR CHIAU BENG TEIK 5,000,000 1.02

12 MAYBANK SECURITIES NOMINEES (TEMPATAN) SDN BHD PLEDGED SECURITIES ACCOUNT FOR ZULKIFLI BIN ISMAIL (MARGIN) 4,000,000 0.82

13 CHIA MAY FONG 3,623,360 0.74 14 ALLIANCEGROUP NOMINEES (TEMPATAN) SDN BHD

PLEDGED SECURITIES ACCOUNT FOR GAN SEONG LIAM (7001349) 3,509,000 0.72 15 CIMB GROUP NOMINEES (TEMPATAN) SDN BHD

CIMB ISLAMIC TRUSTEE BERHAD FOR PMB SHARIAH TNB EMPLOYEES FUND 3,390,000 0.69 16 TEO GEOK KIAM 3,200,000 0.65 17 ONG KOW WHA 2,902,190 0.59 18 TAN TEONG HOCK 2,792,340 0.57 19 AMANAHRAYA TRUSTEES BERHAD

PMB SHARIAH TACTICAL FUND 2,790,000 0.57 20 RHB NOMINEES (TEMPATAN) SDN BHD

PLEDGED SECURITIES ACCOUNT FOR MOHD SHAFEI BIN ABDULLAH 2,750,000 0.56 21 KOK BOON KIAT 2,052,200 0.42 22 RHB CAPITAL NOMINEES (TEMPATAN) SDN BHD

GAN KUOK CHYUAN 2,000,000 0.41 23 KENANGA NOMINEES (TEMPATAN) SDN BHD

PLEDGED SECURITIES ACCOUNT FOR FAIZAL BIN ABDULLAH 1,700,000 0.35 24 JF APEX NOMINEES (TEMPATAN) SDN BHD

PLEDGED SECURITIES ACCOUNT FOR HEW TIEN SHOONG (MARGIN) 1,697,500 0.35 25 RHB CAPITAL NOMINEES (TEMPATAN) SDN BHD

PLEDGED SECURITIES ACCOUNT FOR CHAN KAM FUT 1,603,000 0.33 26 RHB NOMINEES (TEMPATAN) SDN BHD

PLEDGED SECURITIES ACCOUNT FOR ONG KENG TEONG 1,600,000 0.33 27 RHB NOMINEES (TEMPATAN) SDN BHD

PLEDGED SECURITIES ACCOUNT FOR LEONG POH SENG 1,530,500 0.31 28 AMANAHRAYA TRUSTEES BERHAD

PMB DANA BESTARI 1,350,000 0.28 29 NOEL JOHN A/L M SUBRAMANIAM 1,300,000 0.27 30 AFFIN HWANG NOMINEES (ASING) SDN. BHD.

EXEMPT AN FOR DBS VICKERS SECURITIES (SINGAPORE) PTE LTD (CLIENTS) 1,287,880 0.26 314,318,349 64.25

Note : * Excluding 474,300 treasury shares ^ Deemed interested by virtue of his family’s interest pursuant to Section 8 of the Companies Act, 2016.

Analysis of Shareholdingsas at 31 March 2017(cont’d)


133

NOTICE IS HEREBY GIVEN THAT the Forty-Eighth (48th) Annual General Meeting of Tadmax Resources Berhad (“Tadmax” or “the Company”) will be held at Room KL1, KL Seafood Market, Restoran 1, Aras 5, Ruang Letak Kereta Bertingkat, Seksyen 59, Jalan Cenderawasih, Taman Tasik Perdana, 50480 Kuala Lumpur on Tuesday, 16 May 2017 at 11.00 a.m. for the following purposes: AGENDAAs Ordinary Business

1. To receive the Audited Financial Statements for the financial year ended 31 December 2016 together with the Reports of the Directors’ and Auditors thereon.

Please refer to Note (b)

2. To approve Directors Fee of RM203,774 for the financial year ended 31 December 2016. Resolution 1

3. To approve an amount of RM26,250 as benefits payable to Non-Executive Directors for the financial year ended 31 December 2016. Resolution 2

4. To re-elect the following Directors who retire as Directors of the Company pursuant to the Article 90 of the Company’s Constitution:

(i) Datuk Noel John A/L M Subramaniam Resolution 3(ii) Derek John Fernandez Resolution 4(iii) Datuk Aldillan bin Anuar Resolution 5

5. To re-elect the following Director who retires pursuant to the Article 95 of the Company’s Constitution:

(i) Datuk Gan Seong Liam Resolution 6

6. To re-appoint the following Directors who are over the age of 70 years as Directors of the Company:

(i) Tan Sri Datuk Dr Abdul Samad bin Haji Alias Resolution 7(ii) Datuk Seri Anuar bin Adam Resolution 8

7. To re-appoint Messrs SJ Grant Thornton as Auditors of the Company for the ensuing year and to authorise the Directors to fix their remuneration. Resolution 9

8. Authority to Allot and Issue Shares pursuant to Sections 75 and 76 of the Companies Act, 2016

"THAT subject to Sections 75 and 76 of the Companies Act, 2016 and the approvals of the relevant governmental/regulatory authorities, the Directors be and are hereby empowered to issue and allot shares in the Company, at any time to such persons and upon such terms and conditions and for such purposes as the Directors may, in their absolute discretion, deem fit, provided that the aggregate number of shares issued pursuant to this resolution does not exceed ten per centum of the number of issued shares of the Company for the time being and the Directors be and are also empowered to obtain the approval for the listing of and quotation for the additional shares so issued on Bursa Malaysia Securities Berhad; AND THAT such authority shall commence immediately upon the passing of this resolution and continue to be in force until the conclusion of the next Annual General Meeting of the Company in accordance with Section 76 of the Companies Act, 2016.” Resolution 10

9. Proposed Share Buy-Back by the Company

“THAT subject to the rules, regulations and orders made pursuant to the Companies Act, 2016 (“the Act”), provisions of the Constitution 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 such amount of ordinary shares in the Company (“Tadmax Shares”) as may be determined by the Directors from time to time through Bursa Securities (“Proposed Share Buy-Back”) subject to the following:-

Notice of Annual General Meeting


134

Notice of Annual General Meeting(cont’d)

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 shares of the Company;

b. the maximum funds to be allocated by the Company for the purpose of purchasing Tadmax Shares shall not exceed the retained profits 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

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.” Resolution 11

10. Proposed Grant of Share Options to Datuk Gan Seong Liam

“THAT approval be and is hereby given to the Board at any time, and from time to time throughout the duration of the Employees’ Share Option Scheme (ESOS), to offer and grant option or options to Datuk Gan Seong Liam, an Executive Director of the Company, to subscribe for or purchase up to 2,000,000 ordinary shares in the Company under the Tadmax’s ESOS, provided always that, the Director do not participate in the deliberation or discussion of his own allocation and that the allocation to a director or employee (an Eligible Person), who either singly or collectively, through persons connected to the Eligible Person, holds 20% or more of the issued shares of Tadmax must not exceed 10% of the new shares available under the ESOS, in accordance with the Main Market Listing Requirements of Bursa Securities, or any prevailing guidelines issued by Bursa Securities or any other relevant authorities, as amended from time to time, and subject always to such terms and conditions and/or any adjustments which may be made in accordance with the provisions of the Bye-Laws.” Resolution 12

11. To transact any other matter for which due notice shall have been given in accordance with the Company’s Constitution and the Companies Act, 2016.

By Order of the Board

POW TUCK WENG (MIA 8046)CHEW MEI LING (MAICSA 7019175)Company Secretaries

Date: 21 April 2017Petaling Jaya


135

NOTES:

(a) Only members whose names appear in the Record of Depositors as at 9 May 2017 will be entitled to attend and vote at the meeting.

(b) This Agenda item is meant for discussion only, as the provision of Section 340(1)(a) of the Companies Act, 2016 does not require a formal approval of the shareholders for the Audited Financial Statements. Hence, this Agenda item is not put forward for voting.

(c) 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. There shall be no restriction as to the qualification of the proxy. 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.

(d) 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.

(e) 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, 47301 Petaling Jaya, Selangor Darul Ehsan not less than forty-eight hours before the time set for holding the meeting or any adjournment thereof.

(g) The Directors who have served as Independent Non-Executive Directors of the Company have been assessed by the Nomination and Remuneration Committee and affirmed by the Board.

Explanatory Notes on Special Business

Resolution 2 – Benefits Payable to Non-Executive Directors

The benefits comprise allowances and benefits in kind payable to Non-Executive Directors, details of which are as follows :-

(a) Meeting allowance • Boardmembers–RM500permeeting• AuditandRiskManagementCommitteeMembers-RM250permeeting

(b) Company Car• ChairmanoftheBoard–RM15,000perannum

Resolution 10 - Authority to Allot and Issue Shares

Resolution 10, 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 shares 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 47th Annual General Meeting held on 24 May 2016 and which will lapse at the conclusion of the 48th Annual General Meeting.

Resolution 11 – Proposed Share Buy-Back by the Company

Resolution 11, if passed, will empower the Company to purchase and/or hold up to ten percent (10%) of the issued shares 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 21 April 2017 which is dispatched together with the Company’s 2016 Annual Report.



136

Explanatory Notes on Special Business (cont’d)

Resolution 12 - Proposed Grant of Share Options to Datuk Gan Seong Liam

Resolution 12, if passed, will give the Directors of the Company, from the date of the above Annual General Meeting, authority to grant option or options to Datuk Gan Seong Liam, an Executive Director of the Company, to subscribe for or purchase such number of ordinary shares in the Company under the ESOS as they shall deem fit, subject always to such terms and conditions of the ESOS By-Laws and that the Directors of the Company will be given authority to allot and issue new Tadmax Shares to Datuk Gan Seong Liam from time to time pursuant to the exercise of such options.

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:-

The profile of the Directors who are standing for re-election and re-appointment (as per Resolutions 3, 4, 5, 6, 7 and 8 are stated on pages 18 to 21 of the 2016 Annual Report.

Details of any interest in the securities of Tadmax and its subsidiaries held by the Directors are stated on page 131 of the 2016 Annual Report.

Personal Data Notice

The Personal Data Protection Act 2010 (“Act”) which regulates the processing of personal data in commercial transactions, applies to ShareWorks Sdn Bhd, the share registrar of Tadmax Resources Berhad.

The personal data processed by ShareWorks Sdn Bhd may include your name, contact details, mailing address and any other personal data derived from any documentations.

ShareWorks Sdn Bhd may use or disclose your personal data to any person engaged for the purposes of issuing the above notice of meeting and convening the meeting.

Subject to the requirement under the Act, if you would like to make any enquiries on your personal data, please contact our share registrar at:

Address : ShareWorks Sdn Bhd No. 2-1, Jalan Hartamas 8 Sri Hartamas 50480 Kuala Lumpur Tel No : +603 6201 1120Fax No : +603 6201 3121


TADMAX RESOURCES BERHAD (8184-W)

FORM OF PROXYCDS account no.

I/We (name as per NRIC /Passport, in capital letters)

NRIC No. /Passport No./Company No. (new) (old)

of (full address)

being a member(s) of TADMAX RESOURCES BERHAD, hereby appoint

(name of proxy as per NRIC/Passport, in capital letters)

NRIC No./Passport No. (new) (old) 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-Eighth (48th) Annual General Meeting of the Company to be held at Room KL1, KL Seafood Market, Restoran 1, Aras 5, Ruang Letak Kereta Bertingkat, Seksyen 59, Jalan Cenderawasih, Taman Tasik Perdana, 50480 Kuala Lumpur on Tuesday, 16 May 2017 at 11.00 a.m. and at any adjournment thereof, in the manner indicated below:-

NO RESOLUTIONS FOR AGAINST1. To approve Directors’ Fee for the financial year ended 31 December 20162. To approve the payment of benefits to Non-Executive Directors for the financial year ended 31

December 2016 3. To re-elect the retiring Director, Datuk Noel John A/L M Subramaniam4. To re-elect the retiring Director, Derek John Fernandez5. To re-elect the retiring Director, Datuk Aldillan bin Anuar6. To re-elect the retiring Director, Datuk Gan Seong Liam 7. To re-appoint Tan Sri Datuk Dr Abdul Samad bin Haji Alias8. To re-appoint Datuk Seri Anuar bin Adam9. To re-appoint Messrs SJ Grant Thornton as Auditors of the Company and to authorize the Directors

to fix their remuneration10. Authority to allot and issue shares pursuant to Sections 75 and 76 of the Companies Act, 201611. Proposed Share Buy-Back by the Company12. To approve the Proposed Grant of Share Options to Datuk Gan Seong Liam

(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/her discretion.)

Signature/Common Seal

Number of shares held:

Date:

Notes :

1. Only members whose names appear in the Record of Depositors as at 9 May 2017 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. There shall be no restriction as to the qualification of the proxy. 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, 47301 Petaling Jaya, Selangor Darul Ehsan not less than forty-eight hours before the time set for holding the meeting or any adjournment thereof.

The Company Secretary

TADMAX RESOURCES BERHADNo. 2D, Jalan SS 6/6, Kelana Jaya

47301 Petaling JayaSelangor Darul Ehsan

AFFIXSTAMP

1st fold here

Then fold here

Fold this flap for sealing


022

Tadm

ax Reso

urces Berhad

(Com

pany No. 8184-W

) ANNUAL REPORT 2016


No. 2D, Jalan SS 6/6, Kelana Jaya,47301 Petaling Jaya,

Selangor Darul Ehsan, Malaysia.Tel : 03-7803 7008Fax : 03-7803 7327


ANNUAL REPORT 2016

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