CONTENTS. Annual Report 12

CONTENTS Corporate Structure 2 President & Chief Executive Officer s Message 3 Board Of Directors 7 Group Financial Highlights 11 Corporate Information 13 Executive Committee 14 Audit Committee Statement 14 Nomination Committee 18 Remuneration Committee 19 Notice Of Annual General Meeting 20 Statement Accompanying Notice Of Annual General Meeting 23 Corporate Governance Statement 24 Statement On Risk Management And Internal Control 33 Other Disclosures 35 Analysis Of Shareholdings 37 Particulars Of Properties 39 Financial Statements 41 Proxy Form Enclosed Annual Report 12 1

CORPORATE STRUCTURE TEXCHEM RESOURCES BHD COMPANY NO. 16318-K INDUSTRIAL DIVISION Texchem Materials Sdn. Bhd. Texchem Malaysia Sdn. Berhad New Material (Malaysia) Sdn. Bhd. PT. Texchem Indonesia Texchem Materials (Thailand) Ltd. Texchem Materials (Vietnam) Co., Ltd. Texchem Singapore Private Limited Acumen Scientific Sdn. Bhd. POLYMER ENGINEERING DIVISION Texchem-Pack Holdings (S) Ltd. Texchem-Pack (Bangi) Sdn. Bhd. Texchem Polymers Sdn. Bhd. Eye Graphic Sdn. Bhd. º Alaya Asia Sdn. Bhd. Texchem-Pack (M) Bhd. º Texchem-Pack (Johor) Sdn. Bhd. º Texchem-Pack (PP) Sdn. Bhd. º Texchem Advanced Products Incorporated Sdn. Bhd. º Texchem-Pack (Thailand) Co., Ltd. º Texchem-Pack (Vietnam) Co., Ltd. Texchem-Pack (Wuxi) Co., Ltd. º Texchem Japan, Inc. FOOD DIVISION Texchem Food Sdn. Bhd. Sea Master Trading Co. Sdn. Bhd. º Ocean Pioneer Food Sdn. Bhd. º Sea Master Food Sdn. Bhd. (formerly known as Seapack Food Sdn. Bhd.) A.S.K Andaman Limited RESTAURANT DIVISION Sushi Kin Sdn. Bhd. Miraku Sdn. Bhd. Donburi House Sdn. Bhd. Blue Mediterranean Sdn. Bhd. (formerly known as Texchem Homey Sdn. Bhd.) Sushi Ku Sdn. Bhd. ASSOCIATES Texchem Corporation Sdn. Bhd. GMMI Texchem Sdn. Bhd. (jointly controlled entity) Fumakilla Asia Sdn. Bhd. (formerly known as Technopia Sdn. Bhd.) PT. Technopia Jakarta Notes: 1) The above companies are operating subsidiaries and associated companies of Texchem Resources Bhd. Group. 2) The complete list of Texchem Resources Bhd. Group is disclosed in Note 4 to the Financial Statements of this Annual Report. 2 Texchem Resources Bhd company no. 16318-K

PRESIDENT & CHIEF EXECUTIVE OFFICER S MESSAGE Dear valued shareholders I am pleased to announce that Texchem Resources Bhd ( TRB ) continued to grow and strengthened its position in 2012, despite the challenging economic environment. The strategies implemented by the Board in 2012 were appropriate and strengthened the Group s foundations for the years ahead. Even with the sale of 70% shares in TRB s Family Care Division, TRB has successfully grown the revenues of its existing businesses, making these even more competitive with the introduction of new innovative products and enlarged customer base in its Industrial Division and Polymer Engineering Division, and new concept restaurants in its Restaurant Division. This is especially fitting as the Group will celebrate its 40 th anniversary in 2013 - testament to the Group s longterm vision of creating sustainable value. I believe that our anniversary slogan Change Through Innovation, accurately depicts the Group s advancement through four decades, as well as the years to come. Looking back on the past year, the global economic scenario for 2012 continued its lacklustre form and market sentiments could best be described as still jittery. The European sovereign debt crisis continued to deepen, affecting consumer demand; the Euro zone was also plagued by chronic high unemployment, the root causes of which can only be addressed in the medium to long term. This uncertainty has done little to improve global demand, and the unfavourable market conditions exerted pressure on TRB s operations that were exposed to international markets. In Asia, manufacturing operations were affected by escalating labour costs due to the implementation or upward revision of minimum wages that took place in China, Vietnam, Indonesia, Myanmar and Thailand, (from 2013, a minimum wage will come into effect for Malaysia).

PRESIDENT & CHIEF EXECUTIVE OFFICER S MESSAGE (CONT D) Financial performance For the financial year ended 31 December 2012, the Group achieved revenue of RM1.13 billion, representing a 4.2% increase on the performance of the previous financial year. The Group recorded a pre-tax profit of RM56.2 million, representing an improvement of 1,308% over the previous financial year. The increase in pre-tax profit was largely as a result of the disposal of 70% of the issued and paid-up share capital of Fumakilla Asia Sdn Bhd (formerly known as Technopia Sdn Bhd) and PT Technopia Jakarta; TRB received proceeds of RM130 million, and recorded an exceptional gain of RM70.3 million and impaired goodwill amounting to RM31.7 million as explained in Note 5 to the Financial Statements. The proceeds from the disposal were mainly used to pare down the Group s borrowings which greatly improved the financial position and gearing of the Group. This improved financial position will allow the Group to strengthen its core businesses. After completion of the disposal, a special dividend of 10 sen per share was paid on 26 December 2012. Industrial Division During the financial year, the Industrial Division continued to make progress by increasing its revenue by 3.3% to RM446.0 million, although profit margins narrowed due to an unfavourable product mix, higher costs and intensified market competition. The Division recorded a pre-tax profit of RM4.1 million. To mitigate the falling demand for its traditional products, the Division was successful in developing new businesses and streamlining operations including the cessation of New Material Hong Kong Ltd in October 2012. The Division s operations in Vietnam, Thailand and Indonesia continued to show improvement and offer excellent future growth prospects underpinned by these rapidly growing economies. Operations in Malaysia which is a mature market, proved to be more challenging, as many of the Division s customers were affected by the global slow down in demand, which in turn reduced demand for the Division s products. Once global demand picks up, the Division s aggressive business development activities will help to improve profit margins. Polymer Engineering (PE) Division The Polymer Engineering (PE) Division had an improved year and all of the Division s subsidiaries performed better than the previous financial period (with the exception of Texchem-Pack (Wuxi) Co Ltd). The Division posted revenue of RM176.2 million, an increase of 5.8% on FY2011. The pre-tax loss of RM8.8 million was largely attributable to impairment goodwill of RM9.0 million provided for a loss making subsidiary and the additional costs incurred in the outsourcing of some Thai operations that had been hit by the flooding in 2011. The downturn of the consumer electronic and hard disk drive (HDD) industry continued to impact the Division s performance, as subdued demand for electronic goods in Europe and the US affected the Division s business of supplying parts and packaging materials. The spike in demand for hard disk drives during Q2 2012 (after the flooding in Thailand) turned out to be short lived and demand plunged in the second half of 2012 as a result of low demand for PCs and demand shift to mobile devices. Although short term recovery is anticipated for the HDD industry, in the long run, global demand needs to improve for this segment to return to normality. As expected, the Division continued to make steady progress in the medical/life science and wafer shipper business segments, with these segments recording significant increases in revenue. Expected growth in the external drive market as well as cloud computing (which requires large storage capacities) offers the Division some future opportunities. The Division has also successfully developed its own bioplastic from agricultural waste to tap into growing global demand for greener packaging. 4 Texchem Resources Bhd company no. 16318-K

PRESIDENT & CHIEF EXECUTIVE OFFICER S MESSAGE (CONT D) Food Division With the Food Division s Myanmar operations experiencing more stable operating conditions during FY2012, the Division was able to grow its revenue by 13.6% to RM238.2 million. The Division recorded an increased pre-tax loss of RM5.4 million due to the impairment of the Division s goodwill on consolidation that amounted to RM1 million (excluding this exceptional impairment item, the Division would have recorded a lower pre-tax loss compared to FY2011). Operating conditions in Myanmar improved considerably during the financial year given the relatively strong USD and the weaker and more stable Myanmar Kyat (following post-election democratic reforms), which helped to lower operational costs and raw material costs. The relative stability of the Kyat also had a significant effect on enhancing the predictability of raw material prices. Stable energy costs, the abolishment of export tax on seafood products and the improved quality of raw materials all had a positive effect on revenue. Positive developments aside, from June to August 2012, the Myanmar government imposed a fishing ban that interrupted the supply of raw materials and crippled the Division s production output for the duration of the ban. Moving forward, the Division will continue to increase its production volume of value-added seafood products which are in high demand and command better margins. Managing operational costs effectively and broadening the Division s raw seafood supplier base, remain long term priorities as well. Restaurant Division The Restaurant Division continued its strong growth trajectory in year 2012 and expanded to 79 restaurants throughout Malaysia (up from 73 restaurants in the previous financial year). The Division recorded revenue of RM150.9 million representing a 19% increase on the previous financial year, while pre-tax profit rose by 28.3% to RM16.3 million for FY2012. As the Division s restaurants are all located in Malaysia, these were largely cushioned from external economic pressures, and benefitted from the growing local demand for a quality dining experience. The Division s focus on enhancing dining ambiance, food and service quality reaped rewards, and the Division was the Group s most profitable business unit. As of 31 December 2012, the Division operated 73 Sushi King restaurants Malaysia s largest chain of Japanese restaurants, two Miraku fine-dining restaurants, three Goku Raku Ramen restaurants and one Waku Waku contemporary Japanese restaurant. The Division has taken a two-pronged strategy towards future growth; by remaining committed to growing its existing restaurant brands and conceptualising a new, innovative restaurant brand, Blu Med (upscale Mediterranean dining). Annual Report 12 5

PRESIDENT & CHIEF EXECUTIVE OFFICER S MESSAGE (CONT D) Strategy and future prospects While the ongoing global economic downturn has undoubtedly had an impact on the Group s operations, this period has also allowed the Group to refocus and reconsolidate, resulting in a leaner, more responsive operating structure. Restructuring the Group by sharpening its portfolios has improved its financial position which will allow it to expand in its core business areas for organic growth. Texchem s tradition of continuity tied to long-term prudent management places the Group in a strong position to capitalise on future opportunities when sustained global demand eventually picks up. We expect Asia s economies to recover much faster from the crisis than the West, and we have ambitious plans for the long term growth of the Group. The Group celebrates its fortieth anniversary in 2013 with a sense of pride and achievement. In the space of only four decades, Texchem has transformed itself from a local dye distributor into a well-diversified multinational with a strong regional presence in Asia. I am confident that this long experience of analysing market opportunities and successfully transforming these into a profitable reality, bodes well for the Group s future expansion. Appreciation On behalf of the Chairman and the board of directors I would like to thank all our stakeholders for their valued support. The success of TRB is based on the outstanding dedication, passion and expertise of all our employees and I would also like to record my sincere appreciation to each and everyone of them for their continued hard work and commitment towards the continued success of the Group. Together we are ready to embark on the next era of growth. Moving ahead, I am looking forward to injecting changes through innovation, as we continue to be an exciting, vibrant and growing organization. Finally, I would like to extend my sincere gratitude to TRB s Executive Chairman, Tan Sri Fumihiko Konishi as well as my predecessor and current Deputy Chairman, Jeffrey Lee for their twenty years of mentoring. Brian Tan Guan Hooi President & Chief Executive Officer 6 Texchem Resources Bhd company no. 16318-K

BOARD OF DIRECTORS TAN SRI DATO SERI FUMIHIKO KONISHI Tan Sri Dato Seri Fumihiko Konishi, a Japanese, aged 69, is the founder of the Texchem Group of Companies. He is the Executive Chairman of Texchem Resources Bhd. ( TRB ) and has been appointed to the Board since 20 February 1974. Tan Sri Dato Seri Fumihiko Konishi obtained a Bachelor of Pharmacy Degree from Tokyo University of Pharmacy and Life Science and since 1968, has been living in Malaysia for more than 40 years. Tan Sri Dato Seri Fumihiko Konishi s entrepreneurial quality has played an important role in the growth of the Texchem Group from its small existence to a diversified manufacturing, services and trading group today. Besides being actively involved in the business, he is also instrumental in bringing in and promoting many other Japanese joint-venture groups to Penang and Malaysia. In recognition of such efforts, Tan Sri Dato Seri Fumihiko Konishi was granted permanent residency status by the Malaysian Government in 1990. In 1991, he was bestowed the Darjah Johan Negeri (D.J.N.) by the Governor of Penang; the Darjah Setia Pangkuan Negeri (D.S.P.N.) in 1994, the Darjah Gemilang Pangkuan Negeri (D.G.P.N.) in 2000 and the Darjah Kebesaran Panglima Setia Mahkota (P.S.M.) by the Supreme Ruler in 2007. In 2001, he was bestowed an honorary fellowship by the Limkokwing University College of Creative Technology (formerly known as Limkokwing Institute of Creative Technology). Tan Sri Dato Seri Fumihiko Konishi is the Chairman of the Executive Committee, a member of the Remuneration Committee and he also heads the Restaurant Division. Tan Sri Dato Seri Fumihiko Konishi also sits on the Board of Fumakilla Malaysia Berhad. Tan Sri Dato Seri Fumihiko Konishi does not have any family relationship with any Director and/or major shareholders of TRB save as disclosed in the Analysis of Shareholdings section of this Annual Report. He has personal interest via Texchem Holdings Sdn. Bhd. ( THSB ), Texchem Corporation Sdn. Bhd. ( Texcorp ), a subsidiary of THSB, and Texcorp s subsidiaries and associated companies (collectively Related Companies ) in the business arrangements involving the Related Companies with TRB and TRB s subsidiaries. He has not been convicted of any offences within the past 10 years. Tan Sri Dato Seri Fumihiko Konishi attended all Board meetings held during the financial year ended 31 December 2012. MR BRIAN TAN GUAN HOOI Mr Brian Tan Guan Hooi, a Malaysian, aged 43, is the President and Chief Executive Officer of Texchem Resources Bhd. ( TRB ). He was appointed to the Board on 1 January 2004. He holds a Bachelor of Accounting (First Class Honours) Degree from the University of Malaya in 1993. In 1998, he obtained a Masters in Business Administration (Distinction) from the University of Science, Malaysia. He is a Chartered Accountant registered with the Malaysian Institute of Accountants and a Certified Practising Accountant registered with CPA Australia. In 2011, he was awarded the Lifetime Membership Award by the Asian Academy of Management, University of Science, Malaysia for his contribution to the Graduate Business School. Prior to joining the Texchem Group, he was attached to KPMG. In 1993, he joined Texchem Corporation Sdn. Bhd. ( Texcorp ) as a Group Accountant and he moved on to assume the position of Business Manager in Fumakilla Malaysia Berhad ( FMB ) in 1995. He was transferred to the Presidential Department of Texcorp as the Assistant General Manager in 1999. In 2000, he assumed the position of Deputy Managing Director and Chief Operations Officer of FMB and was appointed as the Managing Director and Chief Executive Officer of FMB in January 2002. On 1 April 2004, he was promoted to be President and Chief Executive Officer of FMB. He has assumed the position of Deputy Chairman of FMB since his resignation as President and Chief Executive Officer of FMB on 1 January 2007. Mr Brian Tan was subsequently appointed as the Chief Executive Officer of FMB on 1 January 2011. Mr Brian Tan has been re-designated from Deputy Chairman and Chief Executive Officer to President and Chief Executive Officer of FMB on 19 November 2012. He is the Deputy Chairman of FMB since 1 April 2013. He is the President, Chief Executive Officer and Managing Director of Texchem Food Sdn. Bhd. since 1 January 2007. On 31 March 2013, Mr Brian Tan was promoted to President and Chief Executive Officer of TRB. He is also a member of the Executive Committee and the President and Chief Executive Officer of the Food Division. Mr Brian Tan also sits on the Board of FMB. He does not have any family relationship with any Director and/or major shareholder of TRB, nor any personal interest in any business arrangements involving TRB. He has not been convicted of any offences within the past 10 years. Mr Brian Tan attended four (4) out of five (5) Board meetings held during the financial year ended 31 December 2012. Annual Report 12 7

BOARD OF DIRECTORS (CONT D) MR LEE SIEW KHEE, JEFFREY Mr Lee Siew Khee, Jeffrey, a Malaysian, aged 58, is the Deputy Chairman of Texchem Resources Bhd. ( TRB ). He was appointed to the Board on 15 January 1986. He graduated from the University of Malaya in 1979 with a Bachelor of Science (Honours) Degree in Chemistry. Mr Jeffrey Lee joined TRB in 1979 and was promoted to Marketing Director in 1986. He has wide experience in the field of marketing particularly in the sales of plastics and chemicals. He was promoted to Managing Director on 1 September 1993 and thereafter promoted to President and Chief Operating Officer on 1 April 2004. Mr Jeffrey Lee relinquished his position as Chief Operating Officer when appointed as Chief Executive Officer on 1 July 2009. On 31 March 2013, he relinquished his position as President and Chief Executive Officer when appointed as the Deputy Chairman of TRB. He is also a member of the Executive Committee. He was a member of the Audit Committee until he resigned on 8 October 2007. Mr Jeffrey Lee also sits on the Boards of Texchem-Pack (M) Bhd. and Texchem-Pack Holdings (S) Ltd. He does not have any family relationship with any Director and/or major shareholder of TRB, nor any personal interest in any business arrangements involving TRB. He has not been convicted of any offences within the past 10 years. Mr Jeffrey Lee attended all Board meetings held during the financial year ended 31 December 2012. MR WONG KIN CHAI Mr Wong Kin Chai, a Malaysian, aged 53, is an Executive Director of Texchem Resources Bhd. ( TRB ). He was appointed to the Board on 1 January 2005. He holds a Bachelor of Science (Honours) Degree in Chemistry from University of Malaya. In 1994, he obtained his Masters in Business Administration from University of Malaya. Mr Wong Kin Chai joined TRB Group in 1984. Over the years, he was promoted to Deputy Managing Director, Managing Director and Chief Operating Officer of Texchem Materials Sdn. Bhd. ( Texmat ). On 1 April 2004, he was promoted to the position of President and Chief Executive Officer of Texmat. He is also a member of the Executive Committee and the President and Chief Executive Officer of the Industrial Division. Mr Wong Kin Chai does not sit on the Board of any other public companies. He does not have any family relationship with any Director and/or major shareholder of TRB, nor any personal interest in any business arrangements involving TRB. He has not been convicted of any offences within the past 10 years. Mr Wong Kin Chai attended all Board meetings held during the financial year ended 31 December 2012. 8 Texchem Resources Bhd company no. 16318-K

BOARD OF DIRECTORS (CONT D) MR YAP KEE KEONG Mr Yap Kee Keong, a Malaysian, aged 48, is an Executive Director of Texchem Resources Bhd. ( TRB ). He was appointed to the Board on 1 January 2006. He holds a Bachelor of Science (Honours) Degree in Physics from the University of Malaya and Masters of Business Administration from the University of Portsmouth, UK. Mr Yap Kee Keong joined TRB in 1988. He was appointed as a Director of Texchem- Pack (M) Bhd. ( TXPM ) in January 1999 and then promoted to Executive Vice President in July 2004. He has more than 23 years of experience in the sales, marketing and distribution of industrial raw materials and has also been actively involved in the polymer manufacturing industry specialising in the electronic and medical devices sectors. Mr Yap Kee Keong is the President and Chief Executive Officer of Texchem- Pack Holdings (S) Ltd. ( TXPH ). He was appointed to the Board of TXPH on 1 January 2005 and was re-designated from Chief Operating Officer to Chief Executive Officer on 1 July 2007. He is currently the President and Chief Executive Officer of TXPM. He is also a member of the Executive Committee and the President and Chief Executive Officer of the Polymer Engineering Division. Mr Yap Kee Keong also sits on the Boards of TXPM and TXPH. He does not have any family relationship with any Director and/or major shareholder of TRB, nor any personal interest in any business arrangements involving TRB. He has not been convicted of any offences within the past 10 years. Mr Yap Kee Keong attended all Board meetings held during the financial year ended 31 December 2012. DATO SERI NAZIR ARIFF BIN MUSHIR ARIFF Dato Seri Nazir Ariff Bin Mushir Ariff, a Malaysian, aged 66, is an Independent Non- Executive Director of Texchem Resources Bhd. ( TRB ). He was appointed to the Board on 12 March 2003. He is the Chairman of the Nomination Committee and a member of the Audit Committee and the Remuneration Committee of TRB. He is an Accountant by training, specializing in the field of Corporate Management and Corporate Strategic Management. He is a Fellow of the British Institute of Management. He attended management development programmes in United Kingdom, United States of America and Manila. He also received intensive training at the London Metals Exchange in London. Currently, Dato Seri Nazir is the Executive Chairman of Aspen Vision Development Sdn. Bhd. and the Executive Director of Escoy Holdings Berhad. He is also a Director of Penang Institute, Sogo (KL) Sdn. Bhd. and Thailand Smelting & Refining Co. Ltd. Dato Seri Nazir was a former Director of the Kuala Lumpur Commodity Exchange and Deputy Chairman/Executive Director of Ivory Properties Group Berhad. He is the Chairman of the Malaysian International Chamber of Commerce and Industry (Penang and the Northern Branch) and is involved with many voluntary organisations in the State of Penang. He is the past President of Majlis Dato Dato Pulau Pinang, past President and founder member of Penang Heritage Trust and is currently a trustee of WWF-Malaysia. He is also actively involved in the activities and projects of the Penang Services Advisory Panel, as well as the Penang International Halal Hub Committee. He does not have any family relationship with any Director and/or major shareholder of TRB, nor any personal interest in any business arrangements involving TRB. He has not been convicted of any offences within the past 10 years. Dato Seri Nazir attended all Board meetings held during the financial year ended 31 December 2012. Annual Report 12 9

BOARD OF DIRECTORS (CONT D) MR DANNY GOON SIEW CHEANG Mr Danny Goon Siew Cheang, a Malaysian, aged 61, is an Independent Non-Executive Director of Texchem Resources Bhd. ( TRB ). He was appointed to the Board on 5 March 2001. He is the Chairman of the Audit Committee and a member of the Remuneration Committee and the Nomination Committee of TRB. He is a Chartered Accountant and worked with Coopers & Lybrand s Penang and London offices from 1971 to 1979 before joining Kennedy Burkill & Company Berhad. He was its Managing Director from 1986 to 2007. Mr Goon also sits on the Board of Sungei Ara Estates Berhad, which is a non-listed public company. Mr Goon served as the Honorary Treasurer of the Penang Skills Development Centre (PSDC) from its inception in 1989 till 2006. He was the Secretary and Treasurer of the Free Industrial Zone, Penang, Companies Association (FREPENCA) from 1982 to 2005 and of the Majlis Dato Dato Negeri Pulau Pinang from 1990 to 2007. He was the founder Secretary of the Squash Rackets Association of Penang in 1979 and continues to serve on its Management Committee. He is the Chairman of the St Christopher s International School, Penang. He is also a Committee Member of the Penang and Northern Branch of the Malaysian International Chamber of Commerce and Industry (MICCI) and sits on the Boards of the Penang Philharmonic and Penang Global Tourism Sdn. Bhd. Mr Goon does not have any family relationship with any Director and/or major shareholder of TRB nor any personal interest in any business arrangement involving TRB. He has not been convicted of any offences within the past 10 years. Mr Goon attended all Board meetings held during the financial year ended 31 December 2012. CIK ZARIZANA @ IZANA BINTI ABDUL AZIZ Cik Zarizana @ Izana Binti Abdul Aziz, a Malaysian, aged 47, is an Independent Non- Executive Director of Texchem Resources Bhd. ( TRB ). She was appointed to the Board on 18 April 2012. She is the Chairman of the Remuneration Committee and a member of the Audit Committee of TRB. Cik Zarizana holds a Bachelor of Laws degree from the University of Sydney Law School, Sydney, Australia in 1990. She was called to the Malaysian Bar in April 1992. She also holds a Master of Laws from Columbia University Law School, New York, United States of America in 2010. She is a lawyer in the firm of Messrs K. Ahmad & Yong since 1992 and currently, she is a Legal Partner of Messrs K. Ahmad & Yong. Cik Zarizana served as a consultant on the proposed law in Timor Leste in 2002 and a consultant cum principal trainer of local Aceh team comprising lawyers, academics and Islamic scholars to audit laws and draft legislation from 2007 to 2008 both under the auspices of United Nations Populations Fund. She also served as a consultant on the proposed Constitutional framework for Arab Spring countries for United Nations Development Programme 2011. Cik Zarizana was a Bar Council member in the Malaysian Bar in 2009. She is also a member of Board of Governors of Methodist Girls Primary School and Methodist Girls Secondary School, Penang since 2004. Cik Zarizana does not sit on the Board of any other public companies. Cik Zarizana does not have any family relationship with any Director and/or major shareholder of TRB nor any personal interest in any business arrangement involving TRB. She has not been convicted of any offences within the past 10 years. Cik Zarizana attended two (2) out of four (4) Board meetings held after the date of her appointment to the Board during the financial year ended 31 December 2012. 10 Texchem Resources Bhd company no. 16318-K

GROUP FINANCIAL HIGHLIGHTS 2008 RM 000 2009 RM 000 2010 RM 000 2011 RM 000 2012 RM 000 Continuing and discontinuing operations Revenue 1,174,735 # 1,007,152 # 1,058,695 1,087,751 # 1,133,666 Profit (Loss) Before Tax 2,364 (5,213) 2,740 3,991 56,208* Net Profit (Loss) Attributable to Owners of the Company (1,397) (9,256) (491) (5,144) 49,368* Total Equity Attributable to Owners of the Company 168,422 156,845 146,345 142,906 185,657 No. of Ordinary Shares Issued ( 000) 124,099 124,099 124,099 124,099 124,099 Net Dividends 9,233 4,654 3,723 9,307 Gross Dividends (%) 10 5 4 10 Earnings/(Loss) Per Share (sen) (1.13) (7.46) (0.40) (4.15) 39.78 * Includes Gain on Disposal of Subsidiaries of RM70.3 million # Restated Annual Report 12 11

GROUP FINANCIAL HIGHLIGHTS (CONT D) RM 000 1,200,000 1,000,000 1,174,735 1,007,152 1,058,695 1,087,751 1,133,666 RM 000 60,000 50,000 56,208 800,000 600,000 40,000 30,000 20,000 400,000 200,000 10,000 0 2,364 2,740 3,991 0 2008 2009 2010 2011 2012-10,000 (5,213) 2008 2009 2010 2011 2012 Revenue Profit (Loss) Before Tax RM 000 50,000 49,368 40 39.78 40,000 30 30,000 20,000 20 10,000 10 0-10,000 (1,397) (9,256) (491) (5,144) 0-5 (1.13) (7.46) (0.40) (4.15) 2008 2009 2010 2011 2012 2008 2009 2010 2011 2012 Net Profit (Loss) Attributable to Owners of the Company Earnings/(Loss) Per Share (sen) 12 Texchem Resources Bhd company no. 16318-K

CORPORATE INFORMATION BOARD OF DIRECTORS Executive Chairman Tan Sri Dato Seri Fumihiko Konishi President and Chief Executive Officer Brian Tan Guan Hooi Deputy Chairman Lee Siew Khee, Jeffrey Executive Directors Wong Kin Chai Yap Kee Keong Independent Non-Executive Directors Dato Seri Nazir Ariff Bin Mushir Ariff Danny Goon Siew Cheang Zarizana @ Izana Binti Abdul Aziz EXECUTIVE COMMITTEE Chairman Tan Sri Dato Seri Fumihiko Konishi Members Brian Tan Guan Hooi Lee Siew Khee, Jeffrey Wong Kin Chai Yap Kee Keong AUDIT COMMITTEE Chairman Danny Goon Siew Cheang Members Dato Seri Nazir Ariff Bin Mushir Ariff Zarizana @ Izana Binti Abdul Aziz NOMINATION COMMITTEE Chairman Dato Seri Nazir Ariff Bin Mushir Ariff Member Danny Goon Siew Cheang REMUNERATION COMMITTEE Chairman Zarizana @ Izana Binti Abdul Aziz Members Tan Sri Dato Seri Fumihiko Konishi Dato Seri Nazir Ariff Bin Mushir Ariff Danny Goon Siew Cheang COMPANY SECRETARIES Jony Raw Lee Puay Img @ Eng Puay Img REGISTERED OFFICE Level 18, Menara Boustead Penang 39 Jalan Sultan Ahmad Shah 10050 Penang Tel: 604-2296000 Fax: 604-2291430 SHARE REGISTRAR AGRITEUM Share Registration Services Sdn. Bhd. 2 nd Floor, Wisma Penang Garden 42 Jalan Sultan Ahmad Shah 10050 Penang Tel: 604-2282321 Fax: 604-2272391 AUDITORS KPMG Chartered Accountants Penang Tel: 604-2272288 Fax: 604-2271888 PRINCIPAL BANKERS Malayan Banking Berhad HSBC Bank Malaysia Berhad CIMB Bank Berhad RHB Bank Berhad Hong Leong Bank Berhad Bank of Tokyo Mitsubishi UFJ (Malaysia) Berhad SOLICITORS Presgrave & Matthews Zaid Ibrahim & Co. AUTHORISED CAPITAL RM500,000,000 PAID-UP CAPITAL RM124,099,235 STOCK EXCHANGE LISTING Main Market of Bursa Malaysia Securities Berhad Stock name: TEXCHEM Stock code: 8702 Listing date: 17 May 1993 SUBSIDIARIES Please refer to the Corporate Structure section of this Annual Report for the list of subsidiaries of the Company. WEBSITE www.texchemgroup.com E-MAIL ADDRESS trb@texchemgroup.com Annual Report 12 13

EXECUTIVE COMMITTEE TERMS OF REFERENCE To assist the Board of Directors in decision-making by undertaking the necessary business deliberations and operational activities necessary for the day-to-day running of the organisation and to seek necessary Board approvals where applicable. AUDIT COMMITTEE STATEMENT TERMS OF REFERENCE Objective 1. The principal objective of the Audit Committee (AC) is to assist the Board in fulfilling its oversight responsibilities of the Group s financial reporting process and internal control system. Membership 2. The AC shall be appointed by the Board from among their members and shall consist of no fewer than three (3) nonexecutive directors. All AC members should be non-executive directors, with a majority of them being independent directors. All members of the AC shall be financially literate and at least one (1) member should be a member of an accountancy association or body. 3. The AC shall elect a Chairman from among their members who shall be an Independent Non-Executive Director. In the absence of the Chairman, the remaining members present shall among themselves elect a Chairman who must be an independent director to chair the meeting. 4. In the event of any vacancy in the AC resulting in the non-compliance with 2 above, the Board of Directors shall fill the vacancy within three months. Authority 5. The AC is authorised by the Board to investigate any activity within its terms of reference. It is authorised to seek any information it requires from any employee and all employees are directed to co-operate with any request made by the Committee. 6. The AC is authorised by the Board to obtain external, legal or independent professional advice and to secure the attendance of such external advisors with relevant experience if considered necessary. 7. The AC is authorised to convene meetings with the external auditors, the internal auditors or both, without the presence of other directors and employees, whenever deemed necessary. 8. The AC is authorised to have direct communication channels with the external auditors and persons carrying out the internal audit function or activity. 14 Texchem Resources Bhd company no. 16318-K

AUDIT COMMITTEE STATEMENT (CONT D) Duties 9. The duties of the AC shall be (a) to review: (i) with the external auditors, their audit plan, scope and areas of audit; (ii) with the external auditors, their evaluation of the system of internal controls and audit findings; (iii) with the external auditors, their audit report; (iv) with the external auditors, their management letters and management responses; (v) with the external auditors, the adequacy of the co-operation given by the Company s officers in the course of audit; (vi) the competency, independence and suitability of the external auditors for recommendation to the Board for reappointment, the audit fee and any matter of resignation or dismissal; (vii) the quarterly and annual financial statements and consolidated financial statements of the Company and of the Group and recommend to the Board of Directors for consideration; (viii) any related party transactions or conflict of interest situations that may arise within the Company or Group including any transaction, procedure or course of conduct that raises questions of management integrity. (b) To do the following, in relation to the internal audit function: (i) Review the adequacy of the scope, functions, competency and resources of the internal audit function, and that it has the necessary authority to carry out its work; (ii) Review the internal audit plan, programme and results of the internal audit process and, where necessary, ensure that appropriate actions are taken by management on the recommendations of the internal audit function; (iii) Review any performance appraisal or assessment of the internal audit staff; (iv) Approve any appointment or termination of senior staff members of the internal audit function; and (v) Take cognizance of resignations of internal audit staff members and provide the resigning staff members an opportunity to submit their reasons for resigning. (c) To consider any other functions as may be agreed between the AC and the Board of Directors. Attendance, Quorum and Frequency of Meeting 10. The Chairman of the AC should engage on a continuous basis with senior management, such as the Chairman, the Chief Executive Officer, the Chief Financial Officer, the Chief Audit Executive and the external auditors in order to be kept informed of matters affecting the Company. 11. The Chief Financial Officer, Chief Audit Executive, and representatives of the external auditors shall normally attend meetings. Other Board members and employees may attend meetings upon the invitation of the AC. However, the AC shall meet with the external auditors without the presence of Executive Board members at least twice a year and whenever necessary. 12. In order to form a quorum in the AC meeting, the majority of members present must be Independent Directors. 13. The Committee shall meet not less than 4 times a year. The external auditors may request for a meeting if they consider necessary. 14. Questions arising at any meeting of the AC shall be decided by a majority of votes of the members present, and in the case of equality of votes, the Chairman of the AC shall have a second or casting vote. Annual Report 12 15

AUDIT COMMITTEE STATEMENT (CONT D) Minutes 15. The Chief Audit Executive shall act as Secretary to the AC. The Minutes of each AC meeting shall be kept at the registered office and distributed to each member of the AC and also to the other members of the Board. The AC Chairman shall report on each meeting to the Board. 16. The Minutes of the AC meetings shall be signed by the Chairman of the meeting at which the proceedings were held or by the Chairman of the next succeeding meeting. AUDIT COMMITTEE REPORT Membership The composition of the Audit Committee during the year was as follows: Mr. Danny Goon Siew Cheang Chairman, Independent Non-Executive Director Dato Seri Nazir Ariff bin Mushir Ariff Independent Non-Executive Director Cik Zarizana @ Izana binti Abdul Aziz Independent Non-Executive Director (appointed on 18 April 2012) Mr. Yong Yoon Fook, Dick Independent Non-Executive Director (retired on 24 May 2012) Meetings During the year, the Audit Committee convened a total of seven (7) meetings, of which two (2) meetings were with the external auditors without the presence of management. All meetings were held with sufficient notification and with agendas being distributed to the members. Except for Cik Zarizana @ Izana binti Abdul Aziz who attended 1 out of 4 meetings, the other AC members attended all the meetings. Summary of Activities during the Financial Year During the year, the Audit Committee discharged its duties in accordance with its terms of reference as follows: a) Reviewed with the external auditors scope of work, audit plans and reporting requirements for the year, b) Reviewed the unaudited interim financial statements and the audited annual financial statements before presentation to the Board, c) Reviewed with the external auditors their evaluation of the system of internal controls, audit findings and recommendations arising from the audit, and managements responses thereon, d) Reviewed and approved the 2012 Internal Audit Plan on the audit frequency, scope of work, areas of audit focus and resources, e) Reviewed the Internal Audit Reports and monitoring of the internal control systems, f) Reviewed the Group s recurrent related party transactions for the year and noted that they were within the limits approved by the shareholders, g) Reviewed the external auditors competency, independence and suitability and recommendation to the Board for their reappointment and their audit fees, h) Reviewed the year end annual performance appraisal or assessment of the internal audit staff. 16 Texchem Resources Bhd company no. 16318-K

AUDIT COMMITTEE STATEMENT (CONT D) Internal Audit Function The Audit Committee is assisted by an in-house Internal Audit function in discharging its duties and responsibilities. The Internal Audit function is established to add value and improve the Group s operations by providing independent, objective assurance and consulting activities through audit of the Group s risk management and internal control system and operations. The Internal Audit s position, objective, independence, ethical conduct, authority, role, responsibilities and scope of work are articulated in the Internal Audit Charter which is approved by the Board. The Internal Audit function is conducted in a consistent manner and in conformity with the International Standards for the Professional Practice of Internal Auditing and Code of Ethics of the Institute of Internal Auditors Malaysia. The Internal Audit undertakes its activities based on the Annual Audit Plan that is reviewed and approved by the Audit Committee every year. The plan sets out the audit frequency, scope of work, areas of audit focus and resources. The Audit Plan includes a review of the adequacy of the risk management and internal control system, enterprise risk management, compliance with policies, procedures, law and regulation and management efficiency. A risk based approach is adopted so that high audit risk areas are audited annually to enhance risk management, control and governance processes to ensure: Effectiveness and efficiency of operations Reliability and integrity of financial and management information Proper safeguarding of assets Compliance with policies and procedures Compliance with laws and regulations The Internal Audit function provides the Audit Committee with independent and objective reports on the audit findings, recommendation for improvement and management s action. Follow-up reviews are also conducted by the Internal Audit function to ensure that matters arising from the audit are adequately addressed by management. During the year, the Internal Audit function has collaborated with the corporate management in developing a Control Self Assessment Framework which is adopted effective 1 January 2013 by the Group to ensure reliable and accurate financial reporting. In 2012, the total cost of the Internal Audit function comprising staff payroll, long service award, office rental, travelling and incidental costs amounted to approximately RM676,000 (2011: RM639,000). Annual Report 12 17

NOMINATION COMMITTEE TERMS OF REFERENCE Objective In accordance with the Malaysian Code on Corporate Governance, the Nomination Committee is set up to provide recommendations to the Board of Directors ( Board ) on the candidates for all directorships of Texchem Resources Bhd. ( TRB ) to be filled by the shareholders or the Board. Final decision on the appointment of any directors of TRB shall be made by the Board. The Nomination Committee shall be responsible in ensuring the appropriate Board balance and size, and that the Board has a required mix of responsibilities, skills and experience. An annual review of the mix of skills, experience and other core competencies of the Board shall be made by the Nomination Committee. Size and Composition The Nomination Committee shall comprise wholly of Non-Executive Directors, the majority of whom are independent. The members of the Nomination Committee shall elect a Chairman from amongst any of its members. Meetings The Nomination Committee shall meet as and when is necessary. The quorum for any meetings shall be two (2) members subject to any laws, guidelines or rules that may be imposed by Bursa Malaysia Securities Berhad and/or any other relevant authority(ies). Secretaries The Company Secretaries shall act as Secretaries to the Nomination Committee and shall be responsible for keeping minutes of meetings of the Nomination Committee and circulating them to the Nomination Committee members. Duties and Responsibilities 1) To review regularly the Board structure, size and composition and make recommendations to the Board with regard to any adjustments thereof and/or the appointment of Directors as the Nomination Committee deems necessary. 2) To consider, in making its recommendations, candidates for directorships proposed by the President/Managing Director/Chief Executive Officer of TRB and within the bounds of practicability, by any other senior executive or any other Director or shareholder of TRB as well as make recommendations to put in place the plans for succession, in particular for the Chairman/President and the Managing Director/Chief Executive Officer. 3) To assist the Board to review the required mix of skills and experience and other qualities including core competencies which Non-Executive Directors should bring to the Board and to assess the effectiveness of the Board, any other committees of the Board and the contributions of each individual Director of TRB, based on the process and procedures laid out by the Board. 4) To recommend to the Board for continuation or discontinuation in service of Directors as an Executive Director or Non- Executive Director. 5) To recommend Directors who are retiring by rotation to be put forward for re-election. 6) To recommend to the Board the Directors to fill the seats on any committees of the Board. 7) To recommend to the Board the employment of the services of such advisers as it deems necessary to fulfill the Board s responsibilities. 8) To carry out other responsibilities, functions or assignments as may be defined by the Board from time to time. 18 Texchem Resources Bhd company no. 16318-K

REMUNERATION COMMITTEE TERMS OF REFERENCE Objective In accordance with the Malaysian Code on Corporate Governance, the Remuneration Committee is set up to provide recommendations to the Board of Directors ( Board ) on the remuneration of the Executive Directors in all its forms such that the component parts of remuneration are structured to link rewards to corporate and individual performance. Executive Directors should play no part in decisions on their own remuneration while the remuneration of the Non- Executive Directors should be a matter for the Board as a whole to determine. The individuals concerned should abstain from discussion of and voting on their own remuneration. Size and Composition The Remuneration Committee shall consist wholly or mainly of Non-Executive Directors. The members of the Remuneration Committee shall elect a Chairman from amongst its members who shall be a Non-Executive Director. Meetings The Remuneration Committee shall meet as and when is necessary. The quorum for any meetings shall be two (2) Non- Executive Directors subject to any laws, guidelines or rules that may be imposed by Bursa Malaysia Securities Berhad and/ or any other relevant authority(ies). Secretaries The Company Secretaries shall act as Secretaries of the Remuneration Committee and shall be responsible for keeping minutes of meetings of the Remuneration Committee and circulating them to the Remuneration Committee members. Duties and Responsibilities 1) To determine and recommend to the Board the framework or broad policy for the remuneration, in all forms, of the Executive Directors and/or any other persons as the Remuneration Committee is designated to consider by the Board, drawing from outside advice as necessary. 2) To determine and recommend to the Board any performance related pay schemes for the Executive Directors and/or any other persons as the Remuneration Committee is designated to consider by the Board. 3) To determine the policy for and scope of service agreements for the Executive and Non-Executive Directors, termination payment and compensation commitments. 4) To produce any required reports as may be required from time to time. 5) To recommend to the Board the appointment of the services of such advisers or consultants as it deems necessary to fulfill its responsibilities. 6) To carry out other responsibilities, functions or assignments as may be defined by the Board from time to time. Annual Report 12 19

notice of annual general meeting NOTICE IS HEREBY GIVEN THAT the Thirty-Ninth Annual General Meeting ( 39 th AGM ) of the Company will be held at Pinang Ballroom, Level 3, Traders Hotel, Magazine Road, 10300 Penang on Tuesday, 28 May 2013 at 10.30 a.m. for transacting the following businesses: 1. To receive the Audited Financial Statements for the financial year ended 31 December 2012 together with the Reports of the Directors and Auditors thereon*. 2. To re-elect the following Directors who retire by rotation in accordance with Article 123 of the Company s Articles of Association and who being eligible offer themselves for re-election: (i) Mr Brian Tan Guan Hooi (ii) Mr Lee Siew Khee, Jeffrey (iii) Mr Wong Kin Chai Resolution 1 Resolution 2 Resolution 3 3. To approve the Directors fees of RM636,000 for the financial year ended 31 December 2012 (2011: RM490,000). Resolution 4 4. To re-appoint Messrs KPMG as Auditors for the ensuing year and to authorise the Directors to fix their remuneration. Resolution 5 5. SPECIAL BUSINESS To consider and if deemed fit to pass the following Ordinary Resolutions: (A) Continuing in office as Independent Non-Executive Directors (i) THAT authority be and is hereby given to Dato Seri Nazir Ariff Bin Mushir Ariff who has served as an Independent Non-Executive Director of the Company for a cumulative term of more than nine (9) years to continue to act as an Independent Non-Executive Director of the Company. Resolution 6 (ii) THAT authority be and is hereby given to Mr Danny Goon Siew Cheang who has served as an Independent Non-Executive Director of the Company for a cumulative term of more than nine (9) years to continue to act as an Independent Non-Executive Director of the Company. (B) Power to Issue Shares pursuant to Section 132D of the Companies Act, 1965 THAT subject always to the Companies Act, 1965 ( Act ), Articles of Association of the Company and approvals of the relevant regulatory authorities, where such approval is necessary, the Directors be and are hereby empowered, pursuant to Section 132D of the Act, to allot and issue shares in the Company from time to time at such price, upon such terms and conditions and for such purposes as the Directors may in their absolute discretion deem fit provided that the aggregate number of shares to be issued pursuant to this Resolution does not exceed 10% of the total issued share capital of the Company for the time being AND THAT 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 as abovementioned shall continue in force until the conclusion of the next Annual General Meeting of the Company. (C) Proposed Renewal of Shareholders Mandate for Recurrent Related Party Transactions of a Revenue or Trading Nature ( Proposed Mandate ) Resolution 7 Resolution 8 Resolution 9 THAT subject always to the Main Market Listing Requirements of Bursa Malaysia Securities Berhad ( MMLR ), approval be and is hereby given to the Company and/or its subsidiaries, pursuant to paragraph 10.09 read with Practice Note 12 of the MMLR, to renew the shareholders mandate for recurrent related party transactions of a revenue or trading nature for any of the aforesaid companies to enter into and to give effect to such transactions, all with the related parties as set out in section 2.4(B) of the Circular to the Shareholders of the Company dated 26 April 2013 ( Circular ) in relation to the Proposed Mandate, which are necessary for the Company and/or its subsidiaries day-to-day operations provided that the transactions are in the ordinary course of business and are on normal commercial terms which are not more favourable to the related parties than those generally available to the public and are not to the detriment of the minority shareholders of the Company; and provided further that the disclosure for all such transactions is made in the annual report of the Company of the aggregate value of all such transactions conducted pursuant to the shareholders mandate during the financial year where: 20 Texchem Resources Bhd company no. 16318-K

notice of annual general meeting (CONT D) (a) the consideration, value of the assets, capital outlay or costs of the aggregated transactions is equal to or exceeds RM1 million; or (b) any one of the percentage ratios of such aggregated transactions is equal to or exceeds 1%, whichever is the higher. AND THAT such approval shall continue to be in force until: (i) the conclusion of the next Annual General Meeting ( AGM ) of the Company following the 39 th AGM, at which time it will lapse, unless such authority is renewed by a resolution passed at the next AGM of the Company; (ii) the expiration of the period within which the next AGM of the Company is required to be held pursuant to Section 143(1) of the Act, (but shall not extend to such extension as may be allowed pursuant to Section 143(2) of the Act); or (iii) revoked or varied by resolution passed by the shareholders of the Company in a general meeting, whichever is the earlier. AND FURTHER THAT the Directors of the Company and/or its subsidiaries, whether solely or jointly, be and are hereby authorised to complete and do all such acts and things including executing such relevant documents as they may consider expedient or necessary to give effect to the Proposed Mandate. FURTHER NOTICE IS HEREBY GIVEN THAT for the purpose of determining a member who shall be entitled to attend this 39 th AGM, the Company shall be requesting Bursa Malaysia Depository Sdn. Bhd., in accordance with Article 73 of the Company s Articles of Association and Section 34(1) of the Securities Industry (Central Depositories) Act 1991, to issue a General Meeting Record of Depositors as at 21 May 2013. Only a depositor whose name appears on the Record of Depositors as at 21 May 2013 shall be entitled to attend the said meeting or appoint proxies to attend, speak and/or vote on his/her behalf. BY ORDER OF THE BOARD JONY RAW LEE PUAY IMG @ ENG PUAY IMG Company Secretaries Penang Date: 26 April 2013 NOTES: * This Agenda item is meant for discussion only as the provision of Section 169(1) of the Companies Act, 1965 ( Act ) does not require approval of the shareholders and hence, is not put forward for voting. 1. A Member of the Company entitled to attend and vote at the meeting may appoint up to two (2) proxies to attend and vote instead of him/her. A proxy may but need not be a Member of the Company and the provision of Section 149(1) (b) of the Act shall not apply to the Company. If a Member appoints two (2) proxies, the appointments shall be invalid unless he/she specifies the proportions of his/her holdings to be represented by each proxy. 2. To be effective:- (a) the instrument appointing a proxy; and (b) the authority (if any) under which it is executed or a copy of such authority certified notarially or in some other way approved by the Directors of the Company, must be deposited at the Registered Office of the Company at Level 18, Menara Boustead Penang, 39 Jalan Sultan Ahmad Shah, 10050 Penang, Malaysia at least forty-eight (48) hours before the time for holding the meeting. Annual Report 12 21

notice of annual general meeting (CONT D) 3. If the Proxy Form is returned without any indication as to how the proxy shall vote, the proxy will vote or abstain as he/ she thinks fit. 4. 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. 5. If the Proxy Form is returned without the name of the proxy indicated, the Proxy Form shall be invalid. 6. Where the person appointing the proxy is a corporation, the form must be either under seal or under the hand of a duly authorised officer or attorney of the corporation. 7. Explanatory notes on Special Business: (i) Ordinary Resolutions 6 and 7 Pursuant to the Malaysian Code on Corporate Governance 2012, the Board is making a recommendation to shareholders that both Dato Seri Nazir Ariff Bin Mushir Ariff and Mr Danny Goon Siew Cheang remain as Independent Non-Executive Directors based on the following justifications: The Board is of the view that Dato Seri Nazir Ariff s expertise, broad international experience and vast experience in various industries provide the Board with a diverse set of experience and expertise which enhances the skills and experience profile of the Board. The Board is confident that his length of service on the Board does not in any way interfere with his duties as an Independent Non-Executive Director of the Company. The Board believes that with Mr Goon s qualifications, expertise and extensive experience as a Chartered Accountant and his accumulative knowledge of the Group s business and operations, he has made and continues to make valuable contributions through his role as Chairman of the Audit Committee and his roles on the Remuneration and Nomination Committees. The Board is confident that Mr Danny Goon is able to carry out his duties and responsibilities independently and objectively notwithstanding his tenure on the Board. (ii) Ordinary Resolution 8 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 last Annual General Meeting ( AGM ) of the Company held on 24 May 2012 and the said mandate will lapse at the conclusion of this 39 th AGM. This Ordinary Resolution, if passed, will give the Directors of the Company from the date of this 39 th AGM, the authority to allot and issue ordinary shares from the unissued share capital of the Company up to an aggregate of not exceeding 10% of the total issued share capital of the Company for the time being pursuant to Section 132D of the Act ( Renewed Mandate ). This Renewed Mandate, unless revoked or varied at a general meeting, will expire at the conclusion of the next AGM of the Company. The Renewed Mandate will provide flexibility to the Company for any possible fund raising activities, including but not limited to further placement of shares, for the purpose of funding future investment project(s), working capital and/or acquisitions without any delay and without incurring additional expenses in convening a general meeting to approve such issue of shares. (iii) Ordinary Resolution 9 This Ordinary Resolution, if passed, will empower the Company and/or each of its subsidiaries to enter into the recurrent related party transactions of a revenue or trading nature which are necessary for the Company and/or its subsidiaries day-to-day operations provided that such transactions are being carried out in the ordinary course of business and are on normal commercial terms which are not more favourable to the related parties than those available to the public and are not to the detriment of the minority shareholders of the Company. This authority, unless revoked or varied at a general meeting of the Company, will expire at the conclusion of the next AGM of the Company. The details of this proposed Ordinary Resolution are set out in section 2.4(B) of the Circular to the Shareholders of the Company dated 26 April 2013 which is despatched together with the Company s 2012 Annual Report. 22 Texchem Resources Bhd company no. 16318-K

STATEMENT ACCOMPANYING NOTICE OF ANNUAL GENERAL MEETING (Pursuant to Paragraph 8.27(2) of Bursa Malaysia Securities Berhad s Main Market Listing Requirements) Details of individuals who are standing for election as Directors No individual is seeking election as a Director (excluding Directors standing for a re-election) at the Thirty-Ninth Annual General Meeting of the Company. Annual Report 12 23

Corporate governance statement The Board of Directors continues with its commitment to achieve and maintain the highest standards of corporate governance throughout the Group. The Board views corporate governance as synonymous with three key concepts; namely transparency, accountability as well as corporate performance. The Board is entirely committed to the maintenance of high standards of corporate governance by supporting and implementing the prescriptions of the principles and recommendations set out in the Malaysian Code on Corporate Governance 2012 ( Code ) issued by the Securities Commission Malaysia in March 2012. In addition, the Board follows global developments of internationally recognised corporate governance practices and though the Board is in compliance with many respects already, it continually reviews the Group s corporate governance processes and strives to make appropriate adjustments to reflect its position as a good corporate citizen. The key intent is to adopt the substance behind good governance and not merely the form, with the aim of ensuring Board effectiveness in enhancing shareholder value. The Board is pleased to provide the following statements, which outline the main corporate governance principles that were in place throughout the financial year, unless otherwise stated. Compliance Statement The Group has complied throughout the year ended 31 December 2012 with all the principles and recommendations of corporate governance set out in the Code save as explained below: Given the current composition of the Board, the Board does not consider it necessary to nominate a recognised Senior Independent Non-Executive Director to whom any matters of concern may be raised to the Board. In view of the check and balance mechanism in place in the Board s decision making process, the Board is comfortable with the executive role held by its Executive Chairman and does not consider it necessary for the Board to comprise a majority of Independent Directors. The Board is confident that the Independent Non-Executive Directors who have served the Board for more than nine years have retained independence of character and judgment and are able to express their views without any constraint. Principles Statement The following statement sets out how the Company has applied the principles in the Code. The principles are dealt with under the following headings: Board of Directors, Directors Remuneration, Shareholders and Accountability and Audit. A. BOARD OF DIRECTORS Board Responsibilities The Group acknowledges the pivotal role played by the Board of Directors in the stewardship of its direction and operations, and ultimately the enhancement of long-term shareholder value. To fulfil this role, the Board is responsible for the overall corporate governance of the Group, including its strategic direction, establishing goals for management and monitoring the achievement of these goals. Details of the Board s duties and responsibilities are set out in the documented and approved Board Charter. The Board has a formal schedule of matters reserved to itself for decision, which includes the acquisition and divestment policy, approval of major capital expenditure projects, consideration of significant financial matters and the review of the financial and operating performance of the Group. The schedule ensures that the governance of the Group is in the Board s hands. Board Charter The Board Charter sets out the principles governing the Board of Directors of the Company and adopts the principles of good corporate governance and practice in accordance with applicable laws, rules and regulations in Malaysia. The Board Charter was designed to achieve the following objectives: (a) To enable the Board to provide strategic guidance and effective oversight of the Management; (b) To clarify the roles and responsibilities of members of the Board and the Management to facilitate the Board and the Management s accountability to the Company and its shareholders; and (c) To ensure a balance of authority so that no single individual or group of Directors has unfettered powers. The Board will periodically review the Board Charter and make any changes it determines necessary or desirable. The Board Charter is available for reference on the Company s website at www.texchemgroup.com. 24 Texchem Resources Bhd company no. 16318-K

Corporate governance statement (CONT D) A. BOARD OF DIRECTORS (CONT D) Meetings The Board ordinarily meets at least four (4) times a year with additional meetings convened when urgent and important decisions need to be made in between the scheduled meetings. During the financial year ended 31 December 2012, the Board met on five (5) occasions; where it deliberated upon and considered various matters. The Board also receives documents on matters requiring its consideration prior to and in advance of each meeting and vide circular resolutions. The Board papers and papers accompanying circular resolutions are comprehensive and encompass both quantitative and qualitative factors so that informed decisions can be made. All proceedings from the Board meetings are minuted and signed by the Chairman of the meeting. Details of each existing Director s meeting attendance during the financial year are as follows: Meetings Attended (Out of 5) Tan Sri Dato Seri Fumihiko Konishi Executive Chairman 5/5 Brian Tan Guan Hooi President and Chief Executive Officer (1) 4/5 Lee Siew Khee, Jeffrey Deputy Chairman (2) 5/5 Wong Kin Chai Executive Director 5/5 Yap Kee Keong Executive Director 5/5 Dato Seri Nazir Ariff Bin Mushir Ariff Independent Non-Executive Director 5/5 Danny Goon Siew Cheang Independent Non-Executive Director 5/5 Zarizana @ Izana Binti Abdul Aziz Independent Non-Executive Director 2/4 (3) Yong Yoon Fook, Dick Independent Non-Executive Director 2/2 (4) (1) Appointed as President and Chief Executive Officer with effect from 31 March 2013 (2) Appointed as Deputy Chairman and relinquished the position as President and Chief Executive Officer with effect from 31 March 2013 (3) Appointed as an Independent Non-Executive Director and a member of the Audit Committee and the Remuneration Committee with effect from 18 April 2012. Appointed as Chairman of the Remuneration Committee with effect from 24 May 2012 (4) Retired as an Independent Non-Executive Director and relinquished the position as Chairman of the Nomination Committee and a member of the Remuneration Committee with effect from 24 May 2012 Board Committees The Board of Directors delegates certain responsibilities to the Board Committees, as follows: Board Committee Executive Committee Audit Committee Remuneration Committee Nomination Committee Key Functions Explained in the Executive Committee : Terms of Reference section of this Annual Report. Explained in the Audit Committee Statement : Terms of Reference section of this Annual Report. Explained in the Remuneration Committee : Terms of Reference section of this Annual Report. Explained in the Nomination Committee : Terms of Reference section of this Annual Report. All committees have written terms of reference. These committees are formed in order to enhance business and operational efficiency as well as efficacy. Prior to the establishment of the committees, part of their function was assumed by the Board as a whole. The Board retains full responsibility for the direction and control of the Company and the Group. Board Balance and Independence As at the date of this statement, the Board consists of eight (8) members; comprising three (3) independent non-executive Directors and five (5) executive Directors. A brief profile of each Director is presented in the Profile of Directors section of this Annual Report. Annual Report 12 25

Corporate governance statement (CONT D) A. BOARD OF DIRECTORS (CONT D) Board Balance and Independence (cont d) The concept of independence adopted by the Board is in tandem with the definition of an Independent Director in paragraph 1.01 of the Main Market Listing Requirements ( Listing Requirements ) of Bursa Malaysia Securities Berhad ( Bursa Securities ) and Practice Note 13 of Bursa Securities Listing Requirements. The key elements for fulfilling the criteria are the appointment of independent Directors who are not members of management (non-executive) and who are free of any relationship which could interfere with the exercise of independent judgement or the ability to act in the best interests of the Company. The Board complies with paragraph 15.02 of the Listing Requirements which requires that at least two Directors or one-third of the Board of Directors of the Company, whichever is the higher, are independent Directors. The assessment of independence of the Independent Directors is carried out upon appointment, annually and at any other time where the circumstances of a Director change such as to warrant reconsideration. The Board has conducted an assessment of the independence of the Independent Directors and is confident that they maintained their independency. Independent Non-Executive Directors, Dato Seri Nazir Ariff Bin Mushir Ariff and Mr Danny Goon Siew Cheang have each served on the Board for more than nine years. The Board took note of the recommendation of the Code on the tenure of an independent director for a cumulative term of not exceeding 9 years. The Board believes that although Dato Seri Nazir Ariff and Mr Danny Goon have each served more than 9 years on the Board, they have retained independence of character and judgement and have not formed association with management (or others) that might compromise their ability to exercise independent judgement or act in the best interests of the Group. Accordingly, the Board is making a recommendation to shareholders that both Dato Seri Nazir Ariff and Mr Danny Goon remain as Independent Non-Executive Directors based on the following justifications/aspects: The Board is of the view that Dato Seri Nazir Ariff s expertise, broad international experience and vast experience in various industries provide the Board with a diverse set of experience and expertise which enhances the skills and experience profile of the Board. The Board is confident that his length of service on the Board does not in any way interfere with his duties as an Independent Non-Executive Director of the Company. The Board believes that with Mr Goon s qualifications, expertise and extensive experience as a Chartered Accountant, he has made and continues to make valuable contribution through his role as Chairman of the Audit Committee and his roles on the Remuneration and Nomination Committees. The Board is confident that Mr Danny Goon is able to carry out his duties and responsibilities independently. The Directors, with their different backgrounds and specialisations, collectively bring with them a wide range of experience and expertise in areas such as finance, corporate affairs, legal, marketing and operations. The executive Directors are responsible for implementing the policies and decisions of the Board, overseeing the operations as well as co-ordinating the development and implementation of business and corporate strategies. The independent non-executive Directors bring to bear objective and independent judgement to the decision making of the Board and provide a capable check and balance for the executive Directors. Together with the executive Directors who have intimate knowledge of the business, the Board is constituted of individuals who are committed to business integrity and professionalism in all its activities and have a proper understanding of and competence to deal with the current and emerging business issues. The roles of Chairman and Chief Executive Officer are separated. The Chairman is responsible for running the Board and ensures that all Directors receive sufficient relevant information on financial and non-financial matters to enable them to participate actively in Board decisions whereas the Chief Executive Officer is responsible for the day to day management of the business as well as the implementation of Board policies and decisions. Tan Sri Dato Seri Fumihiko Konishi is currently the Executive Chairman of the Board. Given the scope and nature of business activities of the Group, the Board is of the view that with Tan Sri Dato Seri Fumihiko Konishi s extensive knowledge, experience, entrepreneurial quality and his being actively involved in the business, it is more effective for him to continue to guide the Board on discussions on issues and challenges faced by the Group. The Board also believes that the interests of shareholders are best served by the Executive Chairman who is sanctioned by shareholders and who will act in the best interests of shareholders as a whole. As the Executive Chairman has a significant relevant interest in the Company, he is well placed to act on behalf of shareholders and in their best interest. The Board is mindful that the Board comprises less than a majority of independent directors. However, the Board is able to exercise objective judgment on business and corporate affairs in the presence of the current Independent Directors on the Board who provide unbiased and independent view, advice and judgment. In respect of potential conflict of interest, the Board is comfortable that there is no undue risk involved as all related party transactions are disclosed and strictly dealt with in accordance with the Listing Requirements. 26 Texchem Resources Bhd company no. 16318-K

Corporate governance statement (CONT D) A. BOARD OF DIRECTORS (CONT D) Board Balance and Independence (cont d) The Code recommends the appointment of a senior independent non-executive director to whom concerns may be conveyed. As explained in the compliance statement above, the Board has not appointed any Independent Non- Executive Director to fulfil the role. The Board is confident that the current Board composition fairly reflects the interests of minority shareholders in the Company. Board Gender Diversity Policies, Targets and the Measures The Board is supportive of gender diversity in the boardroom as recommended by the Code as such diversification of gender would enlarge the pool of skills, talents, perspectives and ideas within the Board. As an initial step taken by the Board towards achieving a more gender diversified Board, the Board has set the number of women on the Board at 1 and we have achieved the target as currently there is 1 female Independent Non- Executive Director on the Board. The Nomination Committee will continue to identify suitable women candidates in its recruitment process and shall from time to time review the number of women candidates on the Board. Supply of Information The Board recognises that the decision making process is highly contingent on the quality of information furnished. As such, all Directors have unrestricted access to any information pertaining to the Company and the Group. The Chairman ensures that all Directors have full and timely access to information with Board papers distributed in advance of meetings. This ensures that Directors have sufficient time to appreciate issues to be deliberated at the Board meeting and expedites the decision making process. Every Director also has unhindered access to the advice and services of the Company Secretaries. The Board believes that the current Company Secretaries are capable of carrying out their duties to ensure the effective functioning of the Board. In the event that either of the Company Secretaries fail to fulfil his/her functions effectively, the terms of appointment permit his/her removal and the appointment of a successor by the Board as a whole. The Executive Committee, Audit Committee, Remuneration Committee and Nomination Committee play a pivotal role in channeling pertinent operational and assurance related issues to the Board. The Committees partly function as a filter to ensure that only pertinent matters are tabled at the Board level. There is also a formal procedure sanctioned by the Board of Directors, whether as a full board or in their individual capacity, for Directors to obtain independent professional advice at the Company s expense. APPOINTMENTS TO THE BOARD Nomination Committee The Nomination Committee comprised the following members and the details of attendance of each member in respect of meetings held during the financial year are as follows: Meetings Attended (Out of 2) Yong Yoon Fook, Dick Chairman, Independent Non-Executive Director 1/1 (1) Dato Seri Nazir Ariff Bin Mushir Ariff Chairman, Independent Non-Executive Director 1/1 (2) Danny Goon Siew Cheang Independent Non-Executive Director 2/2 (1) Relinquished the position as Chairman upon his retirement on 24 May 2012 (2) Appointed as a member and the Chairman with effect from 18 April 2012 and 24 May 2012 respectively Annual Report 12 27

Corporate governance statement (CONT D) A. BOARD OF DIRECTORS (CONT D) APPOINTMENTS TO THE BOARD (cont d) Nomination Committee (cont d) The Nomination Committee met twice on 18 April 2012 and 17 December 2012 during the financial year. The following Directors were invited by the Chairman of the Nomination Committee to attend the meetings: Meetings Attended Tan Sri Dato Seri Fumihiko Konishi Executive Chairman 18 April & 17 December 2012 Dato Seri Nazir Ariff Bin Mushir Ariff Independent Non-Executive Director 18 April 2012 Zarizana @ Izana Binti Abdul Aziz Independent Non-Executive Director 17 December 2012 The Board has identified Dato Seri Nazir Ariff Bin Mushir Ariff as the Independent Non-Executive Director to chair the Nomination Committee. The Nomination Committee consists entirely of non-executive Directors, all of whom are independent. The Nomination Committee is empowered by the Board and its terms of reference are to bring to the Board recommendations as to the appointment of new Directors. The Committee also keeps under review the Board structure, size and composition as well as considering the Board succession planning. The Nomination Committee systematically assesses the effectiveness of the Board, the committees of the Board and the contribution of each individual Director on an annual basis. All assessments and evaluations carried out by the Nomination Committee in the discharge of all its functions are documented. The Terms of Reference of the Nomination Committee is set out in the Nomination Committee : Terms of Reference section of this Annual Report. Appointment Process The Board through the Nomination Committee s annual appraisal believes that the current composition of the Board brings the required mix of skills, diversity of gender and core competencies required for the Board to discharge its duties effectively. New appointees will be considered and evaluated by the Nomination Committee. The Committee will then recommend the candidates to be approved and appointed by the Board. The Company Secretaries will ensure that all appointments are properly made and that legal and regulatory obligations are met. The Directors are able to devote sufficient time commitment to their roles and responsibilities as Directors of the Company and the Board is confident with the level of time commitment which would inter alia comprise attendance at: Board meetings Board Committee meetings Annual General meetings Site visits Directors Training The Board through the Nomination Committee ensures that it recruits to the Board only individuals of sufficient calibre, knowledge and experience to fulfil the duties of a Director appropriately. All Directors have attended and successfully completed the Mandatory Accreditation Programme (MAP) conducted currently by Bursatra Sdn Bhd. including Cik Zarizana @ Izana Binti Abdul Aziz who has attended the MAP on 11 and 12 July 2012. During the year under review, the Directors have attended various training programmes and seminars as set out below to enhance their knowledge and expertise: 28 Texchem Resources Bhd company no. 16318-K

Corporate governance statement (CONT D) A. BOARD OF DIRECTORS (CONT D) APPOINTMENTS TO THE BOARD (cont d) Directors Training (cont d) KPMG Tax Summit 2012 - organised by KMPG Tax Services Sdn. Bhd. Malaysian Code on Corporate Governance 2012 & Recognition and Management of Risk - jointly organised by KPMG and Boardroom Corporate Services (KL) Sdn. Bhd. Malaysian Budget 2013 Tax Changes and The Impact on Businesses - jointly organised by Malaysian Investor Relations Association and Boardroom Corporate Services (KL) Sdn. Bhd. Competition Act 2010 - organised by The Malaysian Institute of Chartered Secretaries and Administrators (MAICSA) Corporate Finance Law Conference - organised by CrimsonLogic Malaysia Sdn. Bhd. Accounting for Business Forum: - organised by Association of Chartered Certified Accountants Finance Transformation: Expert insights on shared services and outsourcing Bursa Malaysia s Half Day Governance Programme Governance, Risk Management and Compliance: - organised by Bursa Malaysia Berhad (in collaboration with the Institute of Internal Auditors Malaysia) What Directors Should Know Seminar on MFRS 10, 11 and 12 - The new MFRSs on group financial statements - organised by Ernst & Young Malaysia The Directors will continue to undergo other relevant training programmes to further enhance their skills and knowledge where relevant. Re - Election The Articles of Association provide that at least one-third of the Board is subject to retirement by rotation at each Annual General Meeting ( AGM ). The Directors to retire in each year are the Directors who have been longest in office since their appointment or re-appointment. A retiring Director is eligible for re-appointment. This provides an opportunity for shareholders to renew their mandates. The election of each Director is voted on separately. To assist shareholders in their decision, sufficient information such as personal profile and the shareholdings in the Group of each Director standing for election are furnished in a separate statement accompanying the Notice of the AGM. Directors over seventy (70) years of age are required to submit themselves for re-appointment annually in accordance with Section 129(6) of the Companies Act 1965. Sustainability Policy The Group is committed towards sustainable development and believes that sustainable corporate success requires the highest standard of corporate behavior including measuring up to public expectations on environmental and social responsibilities. As a socially responsible citizen, the Company shall approach the process of addressing higher expectations of environment, social and corporate governance responsibilities as part of how the Company normally works and thinks. A copy of the Sustainability Policy is available on the Company s website at www.texchemgroup.com. Code of Conduct The approval and adoption of the Code of Conduct formalise the standards of responsibility and obligations and promotes fair dealing, integrity and ethical conduct amongst the Company s directors and employees. A copy of the Code of Conduct is available on the Company s website at www.texchemgroup.com. Annual Report 12 29

Corporate governance statement (CONT D) B. DIRECTORS REMUNERATION Remuneration Committee The Remuneration Committee comprised the following members and the details of attendance of each individual member in respect of meetings held during the financial year are as follows: Meetings Attended (Out of 2) Zarizana @ Izana Binti Abdul Aziz Chairman, Independent Non-Executive Director n/a (1) Dato Seri Nazir Ariff Bin Mushir Ariff Independent Non-Executive Director 2/2 (2) Danny Goon Siew Cheang Independent Non-Executive Director 2/2 Tan Sri Dato Seri Fumihiko Konishi Executive Chairman of the Board 2/2 Yong Yoon Fook, Dick Independent Non-Executive Director 1/2 (3) (1) Appointed as a member and the Chairman with effect from 18 April 2012 and 24 May 2012 respectively, whilst the two (2) Remuneration Committee meetings were held before her appointment as a member and Chairman (2) Relinquished the position as Chairman with effect from 24 May 2012 but remains as a member (3) Relinquished the position as a member upon his retirement on 24 May 2012 The Remuneration Committee met two (2) times on 30 January 2012 and 28 February 2012 during the financial year. The Remuneration Committee consists mainly of non-executive Directors, the majority of whom are independent. The Remuneration Committee is responsible for inter alia recommending to the Board the remuneration framework for Directors as well as the remuneration packages of executive Directors. The Terms of Reference of the Remuneration Committee is set out in the Remuneration Committee : Terms of Reference section of this Annual Report. The executive Directors did not participate directly in any way in determining their individual remuneration. The Board as a whole determines the remuneration of non-executive Directors with individual Directors abstaining from decisions in respect of their individual remuneration. The policy practised on Directors remuneration by the Remuneration Committee is to provide the remuneration packages necessary to attract, retain and motivate Directors of the quality required to manage the business of the Company and to align the interest of the Directors with those of the shareholders. Further details of Directors remuneration are set out below and in the Notes to the Financial Statements. Details of the Directors Remuneration Details of the nature and amount of each major element of the remuneration of each Director of the Company holding office during the financial year 2012 are as follows: 1. Aggregate remuneration of Directors categorised into appropriate components: In RM 000 Fees Salaries Bonus Benefits in Kind Others Total Company - Executive Directors 460 (1) 661 81 28 239 1,469 - Non-Executive Directors 176 (1) 70 246 Subtotal 636 (1) 661 81 28 309 1,715 Subsidiaries -Executive Directors 1,353 2,220 319 107 397 4,396 -Non-Executive Directors Subtotal 1,353 2,220 319 107 397 4,396 Total 1,989 2,881 400 135 706 6,111 (1) Subject to shareholders approval at this coming Annual General Meeting. 30 Texchem Resources Bhd company no. 16318-K

Corporate governance statement (CONT D) B. DIRECTORS REMUNERATION (cont d) Details of the Directors Remuneration (cont d) 2. During the financial year the number of Directors whose remuneration falls into the following bands are:- Number of Directors Executive Non-Executive RM50,000 and below 1 (1) RM50,001 to RM100,000 3 RM800,001 to RM850,000 1 RM850,001 to RM900,000 1 RM900,001 to RM950,000 1 RM1,300,001 to RM1,350,000 1 RM1,850,001 to RM1,900,000 1 - (1) Payment of audit committee fees and meeting allowance to Mr Dick Yong. Executive Directors receive bonuses based on the achievement of specific goals related to the performance of the Group (including operational results). Independent Non-Executive Directors do not receive any performance related remuneration. C. SHAREHOLDERS The Company continues to build shareholders confidence by maintaining an active dialogue with them with the intention of giving shareholders as much as possible, a clear and complete picture of the Company s performance and position. The key element of the Company s dialogue with its shareholders is the opportunity to gather views of, and answer questions from, both individual and institutional shareholders on all issues relevant to the Company at the AGM. It is also a requirement for the Company to send the Notice of the AGM and related papers to shareholders at least twenty one (21) days before the meeting. The Notice of the AGM is also published in the Company s website, www. texchemgroup.com from the date of notice up to AGM. At the AGM, shareholders are encouraged to ask questions both about the resolutions being proposed or about the Group s operations in general. Where it is not possible to provide immediate answers, the Chairman will undertake to furnish the shareholder with a written answer after the AGM. The Chairman of the Board also addresses the shareholders on the review of the Group s operations for the financial year and outlines the prospects of the Group for the subsequent financial year. Press conferences are also held to brief members of the media on key events of the Company. In addition, throughout the year, the Company has programmes for meetings or interviews with the investment community or press. The Company also institutionalised an Investors Newsletter which is sent to the investment community and shareholders. This Investors Newsletter provides updates on the Group s results and developments of the core business divisions on a quarterly basis. The Company s website, www.texchemgroup.com provides a comprehensive avenue for information dissemination, such as dedicated sections on corporate information including financial information, company news and corporate governance. Shareholders are able to put questions to the Company through its email published in the website and the Company will reply accordingly. While the Company endeavours to provide as much information as possible to its shareholders and stakeholders, it is mindful of legal and regulatory framework governing the release of material and price-sensitive information. Such material and price-sensitive information are not released unless it has been duly announced or made public through proper channels. Annual Report 12 31

Corporate governance statement (CONT D) D. ACCOUNTABILITY AND AUDIT Financial Reporting The Board aims to provide and present a balanced and meaningful assessment of the Group s financial performance and prospects at the end of the financial year, primarily through the annual and quarterly financial statements to Bursa Securities as well as the President/Chief Executive Officer s Message in the Annual Report. The Board is assisted by the Audit Committee to oversee the Group s financial reporting processes and the quality of its financial reporting. Directors Responsibility Statement in Respect of the Preparation of the Audited Financial Statements The Board is responsible for ensuring that the financial statements give a true and fair view of the state of affairs of the Group and of the Company as at the end of the financial period and of the operations results and cash flows for the financial period then ended. In preparing the financial statements, the Directors have ensured that the applicable Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 1965 have been complied with. In preparing the financial statements, the Directors have selected and applied consistently suitable accounting policies and made reasonable and prudent judgement and estimates. The Directors also have a general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Group and to prevent and detect fraud and other irregularities. Internal Control The Board has overall responsibility for the Group s system of internal controls that provides reasonable assurance for effective and efficient operations, compliance with laws and regulations as well as adherence with internal policies and procedures. The Group has established internal controls to ensure its operations are effective and efficient as well as safeguarding of the Group s assets and shareholders interest. The inhouse Internal Audit function conducts audits and monitors compliance with policies and procedures and the effectiveness of the Group s internal control system. The Statement on Risk Management and Internal Control as set out in this Annual Report provides an overview on the state of internal controls in the Group. Relationship with External Auditors The external auditors of the Company fulfil an essential role in giving assurance to the Company s shareholders on the reliability of the Group s financial statements. The external auditors have an obligation to bring to the attention of the Board of Directors, the Audit Committee and Company s management any significant weaknesses in the Company s system of reporting, internal control and compliance with the applicable approved Financial Reporting Standards for entities other than private entities issued by the Malaysian Accounting Standards Board and regulatory requirements. The external auditors of the Company are invited to attend all Audit Committee s meetings. The Audit Committee also meets with the Group s external auditors at least twice a year without the presence of management to review the scope and adequacy of the audit process, the annual financial statements and their audit findings. During the year, the non-audit fees incurred by the Company and its subsidiaries for services rendered by the external auditors of the Company and its affiliated firms were approximately RM173,000. The key features underlying the relationship of the Audit Committee with the external auditors are as set out in the Audit Committee s terms of reference in the Audit Committee Statement of this Annual Report. A summary of the activities of the Audit Committee during the financial year is also set out in the Audit Committee Statement. 32 Texchem Resources Bhd company no. 16318-K

STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL RESPONSIBILITY The Board of Directors ( Board ) is responsible for the adequacy and effectiveness of Texchem Resources Bhd Group s (the Group ) risk management and internal control system. However, the Board recognises that the system is an ongoing process designed to manage, rather than eliminate the risk of not achieving the Group s policies, corporate goals and objectives. Therefore, the system provides only reasonable, but not absolute assurance against the occurrence of any material misstatement of management and financial information, losses or fraud. This system covers governance, enterprise risk management, strategic, organisational, financial, operational, regulatory and compliance controls. Management assists the Board in implementing the Board s policies and procedures on risk and control by: Identifying and evaluating risks Designing, executing and monitoring of suitable controls to manage these risks effectively Identifying emerging risks or changes in risks, taking action as appropriate and promptly highlighting for the Board s attention KEY RISK MANAGEMENT AND INTERNAL CONTROL PROCESSES The key processes that have been established to ensure the adequacy and effectiveness of the risk management and internal control system include the following: The Group has an organisational structure with clearly defined lines of responsibility and delegation of authority. A hierarchical reporting system is in place with appropriate authority limits, proper segregation of duties, annual budgeting, monthly reporting of variances between the actual and budgeted results for corrective action to be taken and human resource management policies. Policies and procedures to ensure compliance with risk management, internal controls and relevant laws and regulations are set out in the standard operating procedures of the individual companies. An Executive Committee ( EXCO ) was established by the Board to manage the Group s operations in accordance with the corporate objectives, strategies and the annual budget as well as the policies and business directions as approved by the Board. The EXCO executes the strategies approved by the Board and addresses issues arising from changes in the external environment and internal operating conditions. The Group has an Enterprise Risk Management ( ERM ) framework aligned with its long term strategic objectives which is embedded in the daily operations of the individual companies. To foster accountability in risk management, the individual Divisional Management headed by its Divisional President/CEO is actively involved in the identification and management of significant risks affecting its own business unit including the design and implementation of suitable risk controls and monitoring their effectiveness. A biannual review is conducted by each Divisional Management and the Chief Risk Officer in which significant risks which may inflict the Group in the ensuing 6 months are re-evaluated and new or emerging risks identified. Existing controls to manage these risks are then re-assessed and strengthened. The Chief Risk Officer who is also the Chief Financial Officer updates the Board every 6 months on the Group s risk management process, changes in risk profiles and overall effectiveness of the controls in place. The Group s Internal Audit function conducts audits of individual companies for compliance with policies and procedures and the effectiveness of their risk management and internal control systems and highlights findings of non-compliance. A risk based annual audit plan setting out the audit frequency, areas of audit focus and scope of work is approved by the Audit Committee every year. The Internal Audit function provides the Board, Audit Committee and Management with independent and objective reports on the audit findings, recommendations for improvement and management s responses and action plans. The Internal Audit also provides the Board and Audit Committee with updates on the subsequent execution of the management s action plans. Annual Report 12 33

STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL (CONT D) KEY RISK MANAGEMENT AND INTERNAL CONTROL PROCESSES (cont d) The Board has also received assurance from the Chief Executive Officer and Chief Financial Officer that the Group s risk management and internal control system is operating adequately and effectively, in all material aspects based on the risk management and internal control system adopted by the Group. This Statement was approved by the Board on 10 April 2013. CONCLUSION The Board is of the view that the risk management and internal control system in place during the year and up to the date of approval of this statement is sound and adequate to safeguard shareholders investment, the interests of customers, regulators, employees and other stakeholders and the Group s assets. 34 Texchem Resources Bhd company no. 16318-K

OTHER DISCLOSURES CORPORATE SOCIAL RESPONSIBILITY STATEMENT TRB believes that sustainable corporate success requires the highest standard of corporate behaviour including measuring up to public expectations on environmental, social and corporate governance responsibilities. By applying environmentally responsible practices, sound social policies and a good corporate governance framework, it would enable TRB Group to achieve sustainable growth and to enhance long-term value for its shareholders. In 2012, TRB continues with this commitment as a good and responsible corporate citizen. Environmental Initiative TRB Group recognises that various of its activities may have an impact on the environment. Consequently, at all plants, TRB Group continues to ensure strict compliance with the environmental laws governing plant operations and maintenance in areas relating to environmental standards, emission standards, noise level management and treatment of plant effluents and waste water. Eight of TRB Group s plants are certified with the international environmental management systems standard, ISO 14001:2004 Environmental Management System. Consumers are increasingly aware of environmental and sustainability issues and in view of such awareness, corporations are changing their products to address growing concerns of environmental pollution. It is against this backdrop that the Group has made a major breakthrough with the development of Malaysia s first thermoformable bioplastic from agricultural waste. TRB Group s new bioplastic contains between 50-70% natural materials. It also has the advantage of being able to be used with conventional moulding machines which in turn promotes the usage of such bioplastic; and may also be easily recycled for reuse. As part of TRB Group s commitment to promote environmental issues through environmental awareness education, representatives of a subsidiary within TRB Group participated in Taylor s University Engineering Fair 2012. Such participation and contribution provides undergraduates with professional feedback from practitioners in companies on their creative ability and originality of each project in applying cutting edge and breakthrough technologies, economically feasible solutions and a sustainable approach to promote a greener earth. Social Responsibility Contribution to the community is important in TRB s view as without the community, a company cannot sustain its businesses. In 2012, to foster and enhance goodwill and unity amongst the community, TRB had supported the Penang Japanese Association in conjunction with the Bon Odori and Sakura Charity Festival. Additionally, Anti Dengue Campaigns were organised in schools in various states in Malaysia in collaboration with the Ministry of Education to instil awareness amongst the younger generation on the dangers of Aedes. Additionally, a donation drive to Rumah K.I.D.S., a home set up to care for children who are orphaned, abused, neglected and underprivileged, formed part of the programme of a Treasure Hunt to instil a sense of care towards the less fortunate. TRB has generously provided donations and has jointly participated in a charity programme with a local newspaper in an effort to raise funds for a new Chinese school as an investment for the future generation and the betterment of the community. Corporate Governance Shareholders of any company are a company s lifeline since shareholders are stakeholders who believe in the company and have invested their hard-earned monies to support the company. As the TRB Group values all its shareholders who have invested into TRB, TRB takes its duties and responsibilities to them seriously. In line with this and to continuously be more transparent, since 2004, TRB has been sending newsletters to its shareholders to keep them updated on the developments of the TRB Group so that its shareholders can make informed decisions. These efforts continued in year 2012. Communication between management and employees of the TRB Group is also crucial to the TRB Group s success. For this purpose, an in-house magazine called Texview has been published on a quarterly basis since October 1989 to promote such communication. Besides informing the employees of the happenings and developments in the TRB Group, employees are free to share their creative ideas and air their views on various issues such as poems, new sport activities, various learning experiences and new self-developments. The TRB Group is committed to providing and maintaining a healthy and safe work environment for its employees. Occupational Safety and Health Campaigns are implemented to ensure continuous improvements in health and safety in the TRB Group s business operations. At the corporate head office of the TRB Group, safety system checks and drills are regularly conducted on all safety related equipment. Annual Report 12 35

OTHER DISCLOSURES (CONT D) CORPORATE SOCIAL RESPONSIBILITY STATEMENT (cont d) Our Commitment As a socially responsible citizen of the business community, TRB Group shall continue to adopt and apply environmentally responsible practices, sound social policies and good corporate governance framework with the objective of enhancing transparency in its corporate disclosure, strengthening its risk management framework and achieving long-term sustainable growth. A copy of TRB Group s Sustainability Policy is available on TRB Group s website at www.texchemgroup.com. UTILISATION OF PROCEEDS RAISED FROM CORPORATE PROPOSALS There were no proceeds raised from corporate proposals during the financial year. PARTICULARS OF MATERIAL CONTRACTS INVOLVING DIRECTORS AND MAJOR SHAREHOLDERS INTERESTS DURING THE FINANCIAL YEAR During the financial year, there were no material contracts entered into by the Company and/or its subsidiaries involving directors and major shareholders interests (not being contracts entered into in the ordinary course of business) save and except for the Share Sale Agreement dated 14 June 2012 made between Texchem Resources Bhd. ( TRB ) and Technopia Singapore Pte. Ltd. ( TSPL ), a wholly owned subsidiary of Texchem Corporation Sdn. Bhd., a major shareholder of TRB, for the acquisition by TRB of 49% equity interest comprising 36,750 shares of IDR1 million each in PT Technopia Nomos (formerly known as PT Technopia Lever) from TSPL at a total cash consideration of USD3.022 million (approximately RM9.609 million at the exchange rate of USD1=RM3.18 as at 13 June 2012). RECURRENT RELATED PARTY TRANSACTIONS OF A REVENUE OR TRADING NATURE Save as disclosed in Note 24 of the Notes to the Financial Statements as set out in this Annual Report and the Circular to Shareholders (Recurrent Related Party Transactions) dated 26 April 2013, there was no other transaction conducted pursuant to the shareholders mandate during the financial year ended 31 December 2012. SANCTIONS AND/OR PENALTIES There were no sanctions and/or penalties imposed on the Company, its subsidiaries, directors or management by the relevant regulatory bodies during the financial year. 36 Texchem Resources Bhd company no. 16318-K

ANALYSIS OF SHAREHOLDINGS As at 2 April 2013 Authorised Capital - RM500,000,000.00 Issued and Paid-up Capital - RM124,099,235.00 Class of Shares - Ordinary shares of RM1.00 each Voting Rights - On a show of hands - One vote for every shareholder - On a poll - One vote for every ordinary share held Number of Shareholders - 3,132 SHAREHOLDINGS STATISTICS Size of Holdings No. of Shareholders Total Holdings % Less than 100 176 7,813 0.006 100-1,000 272 175,826 0.142 1,001-10,000 1,984 8,131,732 6.553 10,001-100,000 632 17,355,043 13.985 100,001 to less than 5% of issued shares 65 45,436,812 36.613 5% and above of issued shares 3 52,992,009 42.701 Total 3,132 124,099,235 100 SUBSTANTIAL SHAREHOLDERS AS PER REGISTER OF SUBSTANTIAL SHAREHOLDERS No. Name No. of Shares Held in the Company Direct % Indirect % 1 Texchem Corporation Sdn. Bhd. 26,153,109 21.07 2 Texchem Holdings Sdn. Bhd. 38,940,054 31.38 26,153,109 (a) 21.07 (a) 3 Tan Sri Dato Seri Fumihiko Konishi 6,932,018 5.59 70,190,685 (b) 56.56 (b) DIRECTORS INTERESTS IN SHARES No. Name No. of Shares Held in the Company Direct % Indirect % 1 Tan Sri Dato Seri Fumihiko Konishi 6,932,018 5.59 70,190,685 (b) 56.56 (b) 2 Brian Tan Guan Hooi 6,039 0.01 3 Yap Kee Keong 8,250 0.01 Notes: (a) (b) Deemed interest by virtue of Texchem Holdings Sdn. Bhd. s direct interest in Texchem Corporation Sdn. Bhd. pursuant to Section 6A of the Companies Act, 1965 ( Act ). Deemed interest by virtue of Tan Sri Dato Seri Fumihiko Konishi s direct and/or indirect interest in Texchem Holdings Sdn. Bhd. and Texchem Corporation Sdn. Bhd. (both are major shareholders of the Company) and via persons connected with him, ie. his wife, Puan Sri Datin Seri Atsuko Konishi and his daughters, Ms Mika Konishi and Ms Mari Konishi (all are shareholders of the Company) pursuant to Sections 6A and 122A of the Act respectively. The details of the interests of the Directors who were or are Directors during the financial year ended 31 December 2012 and the period commencing from 1 January 2013 until 2 April 2013 (including the interests of the spouses and/or children of the Directors) in the Company s related corporations as at 2 April 2013 are the same as the details set out in the section on Directors Interests in the Directors Report of this Annual Report. Annual Report 12 37

ANALYSIS OF SHAREHOLDINGS (CONT D) As at 2 April 2013 THIRTY LARGEST SHAREHOLDERS No. Name Number of Shares % of Shares 1 CIMB Group Nominees (Tempatan) Sdn. Bhd. 30,000,000 24.174 Pledged Securities Account For Texchem Holdings Sdn. Bhd. (49857 PEGM) 2 HDM Nominees (Tempatan) Sdn. Bhd. 16,421,300 13.232 Pledged Securities Account For Texchem Corporation Sdn. Bhd. (M01) 3 Texchem Corporation Sdn. Bhd. 6,570,709 5.295 4 Maybank Nominees (Tempatan) Sdn. Bhd. 6,167,586 4.970 Pledged Securities Account For Texchem Holdings Sdn. Bhd. (407013500997) 5 Maybank Nominees (Asing) Sdn. Bhd. 6,059,947 4.883 Pledged Securities Account For Dato Seri Fumihiko Konishi (40701350178A) 6 HDM Nominees (Tempatan) Sdn. Bhd. 3,161,100 2.547 Pledged Securities Account For Texchem Corporation Sdn. Bhd. (M01) 7 Maybank Securities Nominees (Tempatan) Sdn. Bhd. 2,772,468 2.234 Malayan Banking Berhad For Texchem Holdings Sdn. Bhd. (25H) 8 Blood Protection (Holding) Co. Ltd. 2,339,884 1.885 9 Atsuko Konishi 2,234,694 1.801 10 Man Bin Mat 2,051,500 1.653 11 HLIB Nominees (Asing) Sdn. Bhd. 1,734,700 1.398 Pledged Securities Account For Neo Say Yong (CCTS) 12 Mika Konishi 1,431,414 1.153 13 Mari Konishi 1,431,414 1.153 14 Multi-Purpose Holdings Berhad 1,102,000 0.888 15 CIMB Group Nominees (Asing) Sdn. Bhd. 999,702 0.806 Rapro Pack Co. Ltd. (49749 HDOF) 16 Maybank Nominees (Tempatan) Sdn. Bhd. 881,600 0.710 Lay Man Wan @ Lai Mun Wan 17 Fumihiko Konishi 872,071 0.703 18 Ooi Keng Tan 847,500 0.683 19 Loh Phoy Yen Holdings Sdn. Bhd. 550,000 0.443 20 Fumakilla Limited Japan 436,194 0.351 21 Chang Eun, Ra 426,250 0.343 22 Koo Tai Ping @ Koh Kian Tee 410,800 0.331 23 United Formula Sdn. Bhd. 369,300 0.298 24 Yutaka Yamanaka 359,893 0.290 25 Lim Huck Boon 355,200 0.286 26 Thum Lai Chun 347,000 0.280 27 Tan Ng Tee @ Tan Cheng Yew 339,350 0.273 28 Alliancegroup Nominees (Tempatan) Sdn. Bhd. 310,000 0.250 Pledged Securities Account For Liu Tze Young (8027006) 29 Sing Foong Yin 300,700 0.242 30 Get Holdings Sdn. Bhd. 300,000 0.242 Total: 91,584,276 73.797 38 Texchem Resources Bhd company no. 16318-K

PARTICULARS OF PROPERTIES Held as at 31 December 2012 Location Tenure Area Description Approximate Age of Building Expiry Date Date of Acquisition/ *Revaluation Net Book Value (RM 000) Texchem Materials Sdn. Bhd. No 6 & 6A, Jalan Tampoi 7/4 Kawasan Perusahaan Tampoi 81200 Johor Bahru Johor Darul Takzim Freehold 110,462 sq ft Office & Warehouse 24 years N/A 2 September 1999 5,796 Texchem-Pack (M) Bhd. No. 1465, Mukim 11 Leasehold Lorong Perusahaan Maju 6 60 years Fasa 4, Kawasan Perindustrian Perai 13600 Perai, Penang 4 acres Office & Factory Between 11 to 20 years 29 June 2052 *1 December 1994 6,741 Texchem-Pack (PP) Sdn. Bhd. Part of Lot 1241, Phase III Bayan Lepas Free Industrial Zone 11900 Penang Leasehold 60 years 3.78 acres Office & Factory Between 13 to 33 years 27 August 2041 *26 April 1983 5,554 Texchem-Pack (Johor) Sdn. Bhd. No. 3, Jalan Mutiara 7 Taman Perindustrian Plentong 81750 Masai, Johor Darul Takzim Freehold 42,188 sq ft Office & Factory Between 16 to 17 years N/A 21 October 1998 4,255 Eye Graphic Sdn. Bhd. 5, Lorong Perusahaan Maju 11 Taman Perusahaan Pelangi 13600 Perai, Penang Freehold 1,073 sq m Office & Factory 16 years N/A 16 April 1996 972 Texchem-Pack (Bangi) Sdn. Bhd. Lot 3, Jalan P/6 Kawasan Perindustrian Bangi 43650 Bandar Baru Bangi Selangor Darul Ehsan Leasehold 99 years 0.81 ha Office, Factory & Store 21 years 29 September 2086 *7 September 2004 6,596 Texchem-Pack (Thailand) Co., Ltd. 234 Moo 2 Bangpa-in Industrial Estate Udomsorayut Road Tambol Klong-jig Amphur Bangpa-in Phranakorn Sri Ayutthaya Province 13160 Thailand Freehold 34,648 sq m Office & Factory 19 years N/A 3 May 2007 13,397 Annual Report 12 39

PARTICULARS OF PROPERTIES (CONT D) Held as at 31 December 2012 Location Tenure Area Description Approximate Age of Building Expiry Date Date of Acquisition/ *Revaluation Net Book Value (RM 000) Sea Master Trading Co. Sdn. Bhd. 47, Jalan Tembikai Taman Mutiara 14000 Bukit Mertajam, Penang Freehold 111 sq m 3-Storey Shophouse 24 years N/A 1 July 1995 455 No. 2446, Mk1 Solok Perusahaan Satu Kawasan Perindustrian Perai 13600 Perai, Penang Leasehold 60 years 1 acre Office & Factory 30 years 25 July 2042 15 July 1983 917 Plot 78(a) Perai Industrial Park Daerah Seberang Perai Tengah Penang Leasehold 60 years 8,108.26 sq ft Factory 30 years 20 September 2070 7 May 2008 100 Ocean Pioneer Food Sdn. Bhd. 31-P, Jalan Pelantar Pantai Remis 34900 Perak Darul Ridzuan Leasehold 60 years 1.23 acres Office & Factory 35 years 28 November 2054 29 November 1994 533 40 Texchem Resources Bhd company no. 16318-K

FINANCIAL STATEMENTS Directors Report 42 Consolidated Statement Of Financial Position 47 Consolidated Income Statement 48 Consolidated Statement Of Comprehensive Income 49 Consolidated Statement Of Changes In Equity 50 Consolidated Statement Of Cash Flows 52 Statement Of Financial Position 56 Income Statement 57 Statement Of Comprehensive Income 57 Statement Of Changes In Equity 58 Statement Of Cash Flows 59 Notes To The Financial Statements 61 Statement By Directors 121 Statutory Declaration 122 Independent Auditors Report 123 Annual Report 12 41

Directors report for the year ended 31 December 2012 The Directors have pleasure in submitting their report and the audited financial statements of the Group and of the Company for the year ended 31 December 2012. Principal activities The principal activity of the Company is investment holding whilst the principal activities of the subsidiaries are disclosed in Note 4 to the financial statements. There has been no significant change in the nature of these activities during the financial year. Results Profit for the year attributable to : Group RM 000 Company RM 000 Owners of the Company 49,368 1,863 Non-controlling interests (627) 48,741 1,863 Reserves and provisions There were no material transfers to or from reserves and provisions during the financial year under review except as disclosed in the financial statements. Dividends Since the end of the previous financial year, the Company paid a special interim dividend of 10% per share less 25% tax, totalling RM9,307,000 in respect of the financial year ended 31 December 2012 on 26 December 2012. The Directors do not recommend any final dividend to be paid for the financial year under review. Directors of the Company Directors who served since the date of the last report are : Tan Sri Dato Seri Fumihiko Konishi, PSM, DGPN, DSPN, DJN Brian Tan Guan Hooi Lee Siew Khee, Jeffrey Wong Kin Chai Yap Kee Keong Dato Seri Nazir Ariff Bin Mushir Ariff, DGPN, DMPN, DSPN, PKT, PJM, JP Danny Goon Siew Cheang Zarizana @ Izana Binti Abdul Aziz Yong Yoon Fook, Dick (retired on 24 May 2012) In accordance with Article 123 of the Company s Articles of Association, Mr. Brian Tan Guan Hooi, Mr. Lee Siew Khee, Jeffrey and Mr. Wong Kin Chai will retire by rotation from the Board of Directors at the forthcoming Annual General Meeting, and being eligible, offer themselves for re-election. 42 Texchem Resources Bhd company no. 16318-K

Directors report (CONT D) for the year ended 31 December 2012 Directors interests in shares The interests and deemed interests in the shares of the Company and of its related corporations (other than wholly owned subsidiaries) of those who were Directors at financial year end (including the interests of the spouses and/or children of the Directors who themselves are not Directors of the Company) as recorded in the Register of Directors Shareholdings are as follows : The Company Balance at Balance at 1.1.2012 Bought (Sold) 31.12.2012 Ordinary shares of RM1 each - Direct interest Tan Sri Dato Seri Fumihiko Konishi 6,932,018 6,932,018 Brian Tan Guan Hooi 6,039 6,039 Yap Kee Keong 8,250 8,250 - Deemed interest Tan Sri Dato Seri Fumihiko Konishi 70,102,185 (e) 88,500 (e) 70,190,685 (e) Related corporations Tan Sri Dato Seri Fumihiko Konishi - Direct interest Ocean Pioneer Food Sdn. Bhd. 1,000 (a) 1,000 (a) Brian Tan Guan Hooi - Direct interest Texchem Homey Sdn. Bhd. 1 (b) (1) (b) Ordinary shares of Kyats1,000 each Tan Sri Dato Seri Fumihiko Konishi - Direct interest Myanmar Texchem Limited 1 (c) 1 (c) Ordinary shares of USD1 each Tan Sri Dato Seri Fumihiko Konishi - Direct interest PT. Texchem Indonesia 1,000 (c) 1,000 (c) Annual Report 12 43

Directors report (CONT D) for the year ended 31 December 2012 Directors interests in shares (cont d) Balance at Balance at 1.1.2012 Bought (Sold) 31.12.2012 Related corporations (cont d) Ordinary shares of Thai Baht100 each Tan Sri Dato Seri Fumihiko Konishi - Direct interest Texchem Materials (Thailand) Ltd. 1 (c) 1 (c) Texchem-Pack (Thailand) Co., Ltd. 1 (d) 1 (d) Lee Siew Khee, Jeffrey - Direct interest Texchem Materials (Thailand) Ltd. 1 (c) 1 (c) Yap Kee Keong - Direct interest Texchem Materials (Thailand) Ltd. 1 (c) 1 (c) Texchem-Pack (Thailand) Co., Ltd. 1 (d) 1 (d) Wong Kin Chai - Direct interest Texchem Materials (Thailand) Ltd. 1 (c) 1 (c) Notes : (a) Shares held in trust for Sea Master Trading Co. Sdn. Bhd. (b) Share held in trust for Texchem Food Sdn. Bhd. (c) Share(s) held in trust for Texchem Materials Sdn. Bhd. (d) Share held in trust for Texchem-Pack (M) Bhd. (e) Deemed interest by virtue of Tan Sri Dato Seri Fumihiko Konishi s direct and/or indirect interest in Texchem Holdings Sdn. Bhd. and Texchem Corporation Sdn. Bhd. (both are major shareholders of the Company) and also via persons connected with him, i.e. his wife, Puan Sri Datin Seri Atsuko Konishi and his daughters, Ms Mika Konishi and Ms Mari Konishi (all are shareholders of the Company), pursuant to Sections 6A and 122A of the Companies Act, 1965 respectively. By virtue of Tan Sri Dato Seri Fumihiko Konishi s interests in the shares in the Company, he is also deemed to be interested in the shares in the Company s related corporations to the extent that the Company has an interest. None of the other Directors holding office at 31 December 2012 had any interest in the ordinary shares of the Company and of its related corporations during the financial year. 44 Texchem Resources Bhd company no. 16318-K

Directors report (CONT D) for the year ended 31 December 2012 Directors benefits Since the end of the previous financial year, no Director of the Company has received nor become entitled to receive any benefit (other than a benefit included in the aggregate amount of emoluments received or due and receivable by Directors as shown in the financial statements of the Company and its related corporations) 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 other than those transactions entered in the ordinary course of business between the Company and its related corporations with companies in which a Director is deemed to have a substantial financial interest as disclosed in Note 24 to the financial statements. There were no arrangements during and at the end of the financial year which had the object 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. Issue of shares and debentures There were no changes in the authorised and issued and paid-up capital of the Company and no debentures were in issue during the financial year. Options granted over unissued shares No options were granted to any person to take up unissued shares of the Company during the financial year. Other statutory information Before the statements of financial position, income statements and statements of comprehensive income of the Group and of the Company were made out, the Directors took reasonable steps to ascertain that: i) all known bad debts have been written off and adequate provision made for doubtful debts, and ii) any current assets which were unlikely to be realised in the ordinary course of business 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: i) that would render the amount written off for bad debts, or the amount of the provision for doubtful debts, in the Group and in the Company inadequate to any substantial extent, or ii) that would render the value attributed to the current assets in the financial statements of the Group and of the Company misleading, or iii) which have arisen which render adherence to the existing method of valuation of assets or liabilities of the Group and of the Company misleading or inappropriate, or iv) not otherwise dealt with in this report or the financial statements that 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: i) any charge on the assets of the Group or of the Company that has arisen since the end of the financial year and which secures the liabilities of any other person, or ii) any contingent liability in respect of the Group or of the Company that has arisen since the end of the financial year. No contingent liability or other liability of any company in the Group has become enforceable, or is likely to become enforceable within the period of twelve months after the end of the financial year which, in the opinion of the Directors, will or may substantially affect the ability of the Group and of the Company to meet their obligations as and when they fall due. Annual Report 12 45

Directors report (CONT D) for the year ended 31 December 2012 Other statutory information (cont d) In the opinion of the Directors, other than the effects on the discontinued operation and disposal of subsidiaries as disclosed in Note 21 to the financial statements, the financial performance of the Group and of the Company for the financial year ended 31 December 2012 have not been substantially affected by any item, transaction or event of a material and unusual nature nor has any such item, transaction or event occurred in the interval between the end of that financial year and the date of this report. Significant events during the financial year The details of such events are disclosed in Note 30 to the financial statements. Auditors The auditors, Messrs KPMG, have indicated their willingness to accept re-appointment. Signed on behalf of the Board of Directors in accordance with a resolution of the Directors: Tan Sri Dato Seri Fumihiko Konishi, PSM, DGPN, DSPN, DJN Brian Tan Guan Hooi Penang, Date : 10 April 2013 46 Texchem Resources Bhd company no. 16318-K

Consolidated statement of financial position as at 31 December 2012 Assets Note 31.12.2012 31.12.2011 1.1.2011 RM 000 RM 000 RM 000 Property, plant and equipment 3 141,106 182,123 193,704 Investment in associates 4 58,247 20,159 20,684 Investment in jointly controlled entity 4 277 221 Intangible assets 5 34,376 54,300 55,527 Deferred tax assets 6 1,874 3,136 2,954 Total non-current assets 235,880 259,939 272,869 Trade and other receivables 7 164,128 221,353 220,953 Inventories 8 70,650 86,643 74,536 Current tax assets 7,666 14,522 15,542 Cash and cash equivalents 9 59,423 76,518 48,912 Assets classified as held for sale 10 7,019 Total current assets 301,867 399,036 366,962 Total assets 537,747 658,975 639,831 Equity Share capital 11 124,099 124,099 124,099 Reserves 12 61,558 18,807 22,245 Total equity attributable to owners of the Company 185,657 142,906 146,344 Non-controlling interests 24,007 33,260 32,908 Total equity 209,664 176,166 179,252 Liabilities Loans and borrowings 13 15,236 64,481 47,372 Deferred tax liabilities 6 2,720 5,657 5,655 Deferred liabilities 14 3,404 3,491 4,517 Total non-current liabilities 21,360 73,629 57,544 Trade and other payables 15 129,105 157,051 143,346 Provision 16 3,452 3,126 2,863 Loans and borrowings 13 171,301 247,348 252,452 Current tax liabilities 2,865 1,655 2,513 Dividend payable 1,861 Total current liabilities 306,723 409,180 403,035 Total liabilities 328,083 482,809 460,579 Total equity and liabilities 537,747 658,975 639,831 The notes on pages 61 to 119 are an integral part of these financial statements. Annual Report 12 47

Consolidated income statement for the year ended 31 December 2012 Continuing operations Note 2012 2011 RM 000 RM 000 (Restated) Revenue 17 1,010,723 937,256 Operating profit 17 7,270 21,858 Finance costs 19 (14,490) (15,028) Share of loss of jointly controlled entity, net of tax (194) (379) Share of loss of equity accounted associates, net of tax (13,611) (525) (Loss)/Profit before tax (21,025) 5,926 Income tax expense 20 (8,120) (7,565) Loss from continuing operations (29,145) (1,639) Discontinued operation Profit/(Loss) from discontinued operation, net of tax 21 77,886 (3,566) Profit/(Loss) for the year 17.1 48,741 (5,205) Attributable to : Owners of the Company 49,368 (5,144) Non-controlling interests (627) (61) Profit/(Loss) for the year 48,741 (5,205) Basic (loss)/earnings per ordinary share (sen) : - from continuing operations 22 (22.68) (0.83) - from discontinued operations 22 62.46 (3.32) 22 39.78 (4.15) The notes on pages 61 to 119 are an integral part of these financial statements. 48 Texchem Resources Bhd company no. 16318-K

Consolidated statement of comprehensive income for the year ended 31 December 2012 2012 2011 RM 000 RM 000 (Restated) Profit/(Loss) for the year 48,741 (5,205) Other comprehensive (expense)/income, net of tax Foreign currency translation differences of foreign operations (126) 2,105 Total comprehensive income/(expense) for the year 48,615 (3,100) Total comprehensive income/(expense) attributable to : Owners of the Company 49,007 (3,396) Non-controlling interests (392) 296 Total comprehensive income/(expense) for the year 48,615 (3,100) The notes on pages 61 to 119 are an integral part of these financial statements. Annual Report 12 49

Consolidated statement of changes in equity for the year ended 31 December 2012 Share capital Share premium Attributable to owners of the Company Non-distributable Translation reserve Merger reserve Capital reserve Accumulated losses Total Noncontrolling interests RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 Total equity At 1 January 2011 124,099 25,568 (5,408) 1,092 3,814 (2,821) 146,344 32,908 179,252 Other comprehensive income/(expense) for the year - Foreign currency translation differences of foreign operations 1,748 1,748 357 2,105 Loss for the year (5,144) (5,144) (61) (5,205) Total comprehensive income/(expense) for the year 1,748 (5,144) (3,396) 296 (3,100) Dividends (170) (170) Subscription of shares in a subsidiary by noncontrolling interests 1,203 1,203 Changes in ownership interest in a subsidiary (42) (42) (977) (1,019) Total transactions with owners of the Company (42) (42) 56 14 Transfer to capital reserve 300 (300) At 31 December 2011 124,099 25,568 (3,660) 1,092 4,114 (8,307) 142,906 33,260 176,166 Note 11 Note 12 Note 12 Note 12 Note 12 Note 12 50 Texchem Resources Bhd company no. 16318-K

Consolidated statement of changes in equity (CONT D) for the year ended 31 December 2012 Share capital Share premium Attributable to owners of the Company Non-distributable Distributable Translation reserve Merger reserve Capital reserve (Accumulated losses)/ Retained earnings Total Noncontrolling interests RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 Total equity At 1 January 2012 124,099 25,568 (3,660) 1,092 4,114 (8,307) 142,906 33,260 176,166 Other comprehensive income/(expense) for the year - Foreign currency translation differences of foreign operations (361) (361) 235 (126) Profit/(Loss) for the year 49,368 49,368 (627) 48,741 Total comprehensive income/(expense) for the year (361) 49,368 49,007 (392) 48,615 Dividends (Note 23) (9,307) (9,307) (9,307) Acquisition of a subsidiary (246) (246) (246) Disposal of subsidiaries 1,715 (584) 2,166 3,297 (8,861) (5,564) Total transactions with owners of the Company 1,469 (584) (7,141) (6,256) (8,861) (15,117) Transfer to capital reserve 58 (58) At 31 December 2012 124,099 25,568 (2,552) 1,092 3,588 33,862 185,657 24,007 209,664 Note 11 Note 12 Note 12 Note 12 Note 12 Note 12 The notes on pages 61 to 119 are an integral part of these financial statements. Annual Report 12 51

Consolidated statement of cash flows for the year ended 31 December 2012 Note 2012 2011 RM 000 RM 000 Cash flows from operating activities (Loss)/Profit before tax from : - continuing operations (21,025) 5,926 - discontinued operation 21 6,887 (1,935) Adjustments for : Depreciation of property, plant and equipment 3 26,965 29,682 Provision/(Reversal) for Directors retirement/resignation benefits 14 982 (48) Property, plant and equipment written off 17.1 226 477 Assets classified as held for sale written off 17.1 834 Gain on disposal of property, plant and equipment 17.1 (382) (606) Gain on disposal of assets classified as held for sale 17.1 (7,928) Interest income 17.1 (1,434) (1,575) (Reversal of)/impairment loss on property, plant and equipment 17.1 (2,197) 11,503 Gain on liquidation of a subsidiary 17.1 (84) Gain on re measurement of retained interest in associates 17.1 (28,285) Gain on disposal of an associate 17.1 (326) Impairment loss on goodwill 17.1 31,690 1,612 Interest expense 19 16,014 16,967 Share of loss of equity accounted associates 13,611 525 Share of loss of jointly controlled entity 194 379 Operating profit before changes in working capital 42,920 55,729 Changes in working capital : Inventories (6,339) (11,374) Trade and other receivables (15,170) 1,487 Trade and other payables 17,775 11,129 Cash generated from operations 39,186 56,971 Income tax paid (7,365) (9,246) Directors retirement/resignation benefits paid 14 (610) (989) Net cash from operating activities 31,211 46,736 52 Texchem Resources Bhd company no. 16318-K

Consolidated statement of cash flows (CONT D) for the year ended 31 December 2012 Note 2012 2011 RM 000 RM 000 Cash flows from investing activities Acquisition of subsidiaries, net of cash and cash equivalents acquired A (23,490) (381) Liquidation of a subsidiary, net of cash and cash equivalents liquidated B 69 Disposal of subsidiaries, net of cash and cash equivalents disposed 21 120,988 Purchase of investment in jointly controlled entity (250) (600) Proceeds from disposal of property, plant and equipment 496 1,933 Purchase of property, plant and equipment C (36,003) (26,612) Interest received 1,434 1,575 Proceeds from disposal of assets classified as held for sale 14,480 Proceeds from disposal of an associate 7,267 Net cash from/(used in) investing activities 70,442 (9,536) Cash flows from financing activities Drawdown of term loans 9,065 6,445 Repayment of term loans (9,333) (10,608) Drawdown of syndicated term loan 55,000 Repayment of syndicated term loan (55,000) Repayment of commercial papers (30,000) (20,000) Repayment of collateralised loan obligations (35,000) Drawdown of bridging loan 30,000 20,000 Repayment of bridging loan (30,000) (20,000) Repayment of finance lease liabilities (1,990) (1,968) Dividends paid to - shareholders of the Company (9,307) (1,861) - non-controlling interests (170) Interest paid (16,014) (16,967) (Repayment)/Drawdown of borrowings (net) (6,083) 11,983 Proceeds from issuance of shares to non-controlling interests 184 Withdrawal from debt service reserve account 600 110 Net cash used in financing activities (118,062) (12,852) Net (decrease)/increase in cash and cash equivalents (16,409) 24,348 Cash and cash equivalents at 1 January 59,958 35,346 Effects of exchange differences on cash and cash equivalents 20 264 Cash and cash equivalents at 31 December D 43,569 59,958 Annual Report 12 53

Consolidated statement of cash flows (CONT D) for the year ended 31 December 2012 NOTES : A. Acquisition of subsidiaries During the financial year, the Company acquired the entire equity interest in PT Technopia Nomos (formerly known as PT Technopia Lever) for a total cash consideration of RM24,255,000. For the 2 months to 31 December 2012, the subsidiary did not contribute significantly to the revenue and profit of the Group. If the acquisition had occurred on 1 January 2012, management estimates that the consolidated revenue would have been RM1,029,043,000 and consolidated profit for the year would have been RM48,447,000. During the financial year 2011, the Company acquired two wholly owned subsidiaries, Fumakilla Asia Sdn. Bhd. (formerly known as Technopia Sdn. Bhd.) and Donburi House Sdn. Bhd. for a total cash consideration of RM381,000. The acquisitions have the following effect on the Group s assets and liabilities on acquisition date. There were no significant fair value adjustments made to the carrying amount of the net identifiable assets and liabilities relating to the acquisitions. Recognised values on acquisition 2012 2011 RM 000 RM 000 Trade and other receivables 4,307 Cash and cash equivalents 765 Trade and other payables (2,503) (4) Net identifiable assets/(liabilities) 2,569 (4) Goodwill on acquisition 21,686 385 Consideration paid, satisfied in cash 24,255 381 Less : Cash and cash equivalents acquired (765) Net cash outflow 23,490 381 B. Liquidation of a subsidiary During the financial year 2011, Texchem Food Sdn. Bhd. completed the liquidation of a subsidiary, Seapack Italia S.r.l.. The liquidation had the following effect on the Group s assets and liabilities on liquidation date. 2011 Recognised values on liquidation RM 000 Trade and other receivables 8 Cash and cash equivalents 3 Trade and other payables (23) Net identifiable liabilities (12) Gain on liquidation 84 72 Less : Cash and cash equivalents liquidated (3) Net cash inflow 69 54 Texchem Resources Bhd company no. 16318-K

Consolidated statement of cash flows (CONT D) for the year ended 31 December 2012 NOTES (cont d) : C. Purchase of property, plant and equipment During the financial year, the Group acquired property, plant and equipment with an aggregate cost of RM36,455,000 (2011 : RM30,804,000) of which RM2,770,000 (2011 : RM3,051,000) was acquired by means of finance lease, RM507,000 (2011 : RM393,000) being current year provision of restoration costs and RM1,117,000 (2011 : RM3,942,000) remained unpaid at the end of the reporting period. D. Cash and cash equivalents Cash and cash equivalents included in the consolidated statement of cash flows comprise the following consolidated statement of financial position amounts : Note 2012 2011 RM 000 RM 000 Short term deposits with licensed banks (excluding debt service reserve account) 2,531 7,648 Cash and bank balances 9 56,892 68,270 Bank overdrafts 13 (15,854) (15,960) 43,569 59,958 The notes on pages 61 to 119 are an integral part of these financial statements. Annual Report 12 55

Statement of financial position as at 31 December 2012 Assets Note 31.12.2012 31.12.2011 1.1.2011 RM 000 RM 000 RM 000 Plant and equipment 3 390 876 1,350 Investments in subsidiaries 4 154,411 248,526 246,645 Investments in associates 4 47,061 26,729 26,729 Investment in jointly controlled entity 4 100 Total non current assets 201,862 276,131 274,824 Other receivables 7 11,516 47,400 41,441 Current tax assets 4,358 3,662 6,612 Cash and cash equivalents 9 545 8,368 1,342 Total current assets 16,419 59,430 49,395 Total assets 218,281 335,561 324,219 Equity Share capital 11 124,099 124,099 124,099 Reserves 12 44,453 51,897 52,692 Total equity 168,552 175,996 176,791 Loans and borrowings 13 96 50,756 32,436 Deferred liabilities 14 919 782 970 Total non current liabilities 1,015 51,538 33,406 Other payables 15 10,153 34,348 18,983 Loans and borrowings 13 38,561 73,679 93,178 Dividend payable 1,861 Total current liabilities 48,714 108,027 114,022 Total liabilities 49,729 159,565 147,428 Total equity and liabilities 218,281 335,561 324,219 The notes on pages 61 to 119 are an integral part of these financial statements. 56 Texchem Resources Bhd company no. 16318-K

Income statement for the year ended 31 December 2012 Note 2012 2011 RM 000 RM 000 Revenue 17 23,845 12,469 Operating profit 17 9,013 9,399 Finance costs 19 (7,846) (8,523) Profit before tax 1,167 876 Income tax expense 20 696 (1,671) Profit/(Loss) for the year 17.1 1,863 (795) Statement of comprehensive income for the year ended 31 December 2012 2012 2011 RM 000 RM 000 Profit/(Loss) for the year 1,863 (795) Other comprehensive income for the year Total comprehensive income/(expense) for the year 1,863 (795) The notes on pages 61 to 119 are an integral part of these financial statements. Annual Report 12 57

Statement of changes in equity for the year ended 31 December 2012 Nondistributable Distributable Share capital Share premium Retained earnings Total equity RM 000 RM 000 RM 000 RM 000 At 1 January 2011 124,099 25,568 27,124 176,791 Loss for the year representing total comprehensive expense for the year (795) (795) At 31 December 2011 124,099 25,568 26,329 175,996 Profit for the year representing total comprehensive income for the year 1,863 1,863 Dividends (Note 23) (9,307) (9,307) At 31 December 2012 124,099 25,568 18,885 168,552 Note 11 Note 12 Note 12 The notes on pages 61 to 119 are an integral part of these financial statements. 58 Texchem Resources Bhd company no. 16318-K

Statement of cash flows for the year ended 31 December 2012 Cash flows from operating activities Note 2012 2011 RM 000 RM 000 Profit before tax from continuing operations 1,167 876 Adjustments for : Depreciation of plant and equipment 3 494 492 Provision for Directors retirement/resignation benefits 14 137 10 Interest income 17.1 (1,029) (1,055) Dividend income 17.1 (23,845) (12,469) Gain on disposal of plant and equipment 17.1 (1) Interest expense 19 7,846 8,523 Impairment loss on investments in : - Subsidiaries 17.1 55,378 - Associates 17.1 10,855 Gain on disposal of subsidiaries 17.1 (57,233) Operating loss before changes in working capital (6,231) (3,623) Changes in working capital : Other receivables (2,874) (5,366) Other payables (15,595) (586) Cash used in operations (24,700) (9,575) Dividends received 5,643 11,141 Income tax refunded 2,014 Directors retirement/resignation benefits paid 14 (198) Net cash (used in)/from operating activities (19,057) 3,382 Cash flows from investing activities Purchase of investments in subsidiaries A (28,259) (1,881) Purchase of plant and equipment (8) (18) Proceeds from disposal of investment in subsidiaries 130,002 Proceeds from disposal of investment in jointly controlled entity 100 Interest received 1,029 1,055 Proceeds from disposal of plant and equipment 1 Advances from subsidiaries 11,400 15,950 Net cash from investing activities 114,165 15,206 Annual Report 12 59

Statement of cash flows (CONT D) for the year ended 31 December 2012 Note 2012 2011 RM 000 RM 000 Cash flows from financing activities Repayment of collateralised loan obligations (35,000) (Repayment)/Drawdown of syndicated term loan (55,000) 55,000 Repayment of term loans (1,158) (1,158) Repayment of commercial papers (30,000) (20,000) Repayment of finance lease liabilities (21) (20) Drawdown of bridging loan 30,000 20,000 Repayment of bridging loan (30,000) (20,000) Dividends paid (9,307) (1,861) Interest paid (7,846) (8,523) Repayment of other borrowings (net) (500) Withdrawal from debt service reserve account 600 110 Net cash used in financing activities (103,232) (11,452) Net (decrease)/increase in cash and cash equivalents (8,124) 7,136 Cash and cash equivalents at 1 January 7,768 632 Cash and cash equivalents at 31 December B (356) 7,768 NOTES : A. Purchase of investments in subsidiaries i) The purchase of investment in subsidiaries settled by cash are as follows : 2012 2011 RM 000 RM 000 Donburi House Sdn. Bhd. 2,000 1,500 Fumakilla Asia Sdn. Bhd. (formerly known as Technopia Sdn. Bhd.) 381 PT Technopia Nomos (formerly known as PT Technopia Lever) 24,255 Texchem Homey Sdn. Bhd. 2,004 28,259 1,881 ii) The increase in the investment in Texchem Food Sdn. Bhd. of RM36,960,000 during the current financial year was by way of capitalisation of amount due from the subsidiaries to the Company. B. Cash and cash equivalents Cash and cash equivalents included in the statement of cash flows comprise the following statement of financial position amount : Note 2012 2011 RM 000 RM 000 Short term deposit with licensed bank (excluding debt service reserve account) 6,046 Cash and bank balances 9 545 1,722 Bank overdrafts 13 (901) The notes on pages 61 to 119 are an integral part of these financial statements. (356) 7,768 60 Texchem Resources Bhd company no. 16318-K

Notes to the financial statements Texchem Resources Bhd. is a public limited liability company, incorporated and domiciled in Malaysia and is listed on the Main Market of Bursa Malaysia Securities Berhad. The address of its registered office and principal place of business is as follows : Level 18, Menara Boustead Penang 39 Jalan Sultan Ahmad Shah 10050 Penang The consolidated financial statements of the Company as at and for the financial year ended 31 December 2012 comprise the Company and its subsidiaries (together referred to as the Group and individually referred to as Group entities ) and the Group s interest in associates and jointly controlled entity. The financial statements of the Company as at and for the financial year ended 31 December 2012 do not include other entities. The principal activity of the Company is investment holding whilst the principal activities of the subsidiaries are stated in Note 4 to the financial statements. These financial statements were authorised for issue by the Board of Directors on 10 April 2013. 1. Basis of preparation (a) 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 and the Companies Act, 1965 in Malaysia. These are the Group s and the Company s first financial statements prepared in accordance with MFRS and MFRS 1, First-time Adoption of Malaysian Financial Reporting Standards has been applied. In the previous years, the financial statements of the Group and the Company were prepared in accordance with Financial Reporting Standards ( FRS ). The financial impacts of transition to MFRS of the Group are disclosed in Note 32 to the financial statements. The following are accounting standards, amendments and interpretations that have been issued by the Malaysian Accounting Standards Board (MASB) but have not been adopted by the Group and the Company: MFRSs, Interpretations and amendments effective for annual periods beginning on or after 1 July 2012 Amendments to MFRS 101, Presentation of Financial Statements - Presentation of Items of Other Comprehensive Income MFRSs, Interpretations and amendments effective for annual periods beginning on or after 1 January 2013 MFRS 10, Consolidated Financial Statements MFRS 11, Joint Arrangements MFRS 12, Disclosure of Interests in Other Entities MFRS 13, Fair Value Measurement MFRS 119, Employee Benefits (2011) MFRS 127, Separate Financial Statements (2011) MFRS 128, Investments in Associates and Joint Ventures (2011) IC Interpretation 20, Stripping Costs in the Production Phase of a Surface Mine* Amendments to MFRS 7, Financial Instruments: Disclosures - Offsetting Financial Assets and Financial Liabilities Amendments to MFRS 1, First-time Adoption of Malaysian Financial Reporting Standards - Government Loans* Amendments to MFRS 1, First-time Adoption of Malaysian Financial Reporting Standards (Annual Improvements 2009-2011 Cycle) Amendments to MFRS 101, Presentation of Financial Statements (Annual Improvements 2009-2011 Cycle) Amendments to MFRS 116, Property, Plant and Equipment (Annual Improvements 2009-2011 Cycle) Amendments to MFRS 132, Financial Instruments: Presentation (Annual Improvements 2009-2011 Cycle) Amendments to MFRS 134, Interim Financial Reporting (Annual Improvements 2009-2011 Cycle) Amendments to MFRS 10, Consolidated Financial Statements: Transition Guidance Amendments to MFRS 11, Joint Arrangements: Transition Guidance Amendments to MFRS 12, Disclosure of Interests in Other Entities: Transition Guidance Annual Report 12 61

Notes to the financial statements (CONT D) 1. Basis of preparation (cont d) (a) Statement of compliance (cont d) MFRSs, Interpretations and amendments effective for annual periods beginning on or after 1 January 2014 Amendments to MFRS 10, Consolidated Financial Statements: Investment Entities Amendments to MFRS 12, Disclosure of Interests in Other Entities: Investment Entities Amendments to MFRS 127, Separate Financial Statements (2011): Investment Entities Amendments to MFRS 132, Financial Instruments Presentation - Offsetting Financial Assets and Financial Liabilities MFRSs, Interpretations and amendments effective for annual periods beginning on or after 1 January 2015 MFRS 9, Financial Instruments (2009) MFRS 9, Financial Instruments (2010) Amendments to MFRS 7, Financial Instruments: Disclosures - Mandatory Effective Date of MFRS 9 and Transition Disclosures The Group and the Company plan to apply the abovementioned standards, amendments and interpretations: from the annual period beginning on 1 January 2013 for those standards, amendments or interpretations that are effective for annual periods beginning on or after 1 July 2012 and 1 January 2013, except for those indicated with * which are not applicable to the Group and the Company. from the annual period beginning on 1 January 2014 for those standards, amendments or interpretations that are effective for annual periods beginning on or after 1 January 2014. from the annual period beginning on 1 January 2015 for those standards, amendments or interpretations that are effective for annual periods beginning on or after 1 January 2015. The initial application of the other standards, amendments and interpretations are not expected to have any material financial impact to the current and prior periods financial statements of the Group and the Company upon their first adoption. (b) Basis of measurement The financial statements have been prepared on the historical cost basis other than as disclosed in Note 2 to the financial statements and on the assumption that the Group will continue to operate as a going concern. At 31 December 2012, the current liabilities of the Group and of the Company exceeded the current assets by RM4,856,000 and RM32,295,000 respectively. The current liabilities of the Group and of the Company mainly consist of short term borrowings which are used for working capital purpose. The Management is of the opinion that the Group s banking facilities will continue to be available from its lenders and that the Group will be able to generate sufficient cash flows from its operations to meet its liabilities as and when they fall due. Additionally, the Company is in the process of negotiating with its bankers to convert RM22,500,000 of its revolving credit into long term loans. (c) Functional and presentation currency These financial statements are presented in Ringgit Malaysia (RM), which is the Company s functional currency. All information is presented in RM and has been rounded to the nearest thousand, unless otherwise stated. (d) Use of estimates and judgements The preparation of the financial statements in conformity with MFRSs requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected. There are no significant areas of estimation uncertainty and critical judgements in applying accounting policies that have significant effect on the amounts recognised in the financial statements other than those disclosed in the following notes : Note 3.2 - Impairment of property, plant and equipment; and Note 5 - Intangible assets (measurement of the recoverable amounts of cash generating units) 62 Texchem Resources Bhd company no. 16318-K

Notes to the financial statements (CONT D) 2. Significant accounting policies The accounting policies set out below have been applied consistently to the periods presented in these financial statements and in preparing the opening MFRS statements of financial position of the Group and of the Company at 1 January 2011 (the transition date to MFRS framework), unless otherwise stated. (a) Basis of consolidation (i) Subsidiaries Subsidiaries are entities, including unincorporated entities, controlled by the Company. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases. Control exists when the Company has the ability to exercise its power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, potential voting rights that presently are exercisable are taken into account. Investments in subsidiaries are measured in the Company s statement of financial position at cost less any impairment losses, unless the investment is classified as held for sale or distribution. The cost of investments includes transaction costs. (ii) Business combinations Business combinations are accounted for using the acquisition method from the acquisition date, which is the date on which control is transferred to the Group and pooling-of-interests method where applicable. Acquisitions on or after 1 January 2011 For acquisitions on or after 1 January 2011, the Group measures the cost of goodwill at the acquisition date as : the fair value of the consideration transferred; plus the recognised amount of any non-controlling interests in the acquiree; plus if the business combination is achieved in stages, the fair value of the existing equity interest in the acquiree; less the net recognised amount (generally fair value) of the identifiable assets acquired and liabilities assumed. When the excess is negative, a bargain purchase gain is recognised immediately in profit or loss. For each business combination, the Group elects whether it measures the non-controlling interests in the acquiree either at fair value or at the proportionate share of the acquiree s identifiable net assets at the acquisition date. Transaction costs, other than those associated with the issue of debt or equity securities, that the Group incurs in connection with a business combination are expensed as incurred. Acquisitions before 1 January 2011 As part of its transition to MFRS, the Group elected not to restate those business combinations that occurred before the date of transition to MFRSs, i.e. 1 January 2011. Goodwill arising from acquisitions before 1 January 2011 has been carried forward from the previous FRS framework as at the date of transition. (iii) Acquisitions of non-controlling interests The Group treats all changes in its ownership interest in a subsidiary that do not result in a loss of control as equity transactions between the Group and its non-controlling interest holders. Any difference between the Group s share of net assets before and after the change, and any consideration received or paid, is adjusted to or against Group reserves. (iv) Acquisitions from entities under common controls Business combinations arising from transfers of interests in entities that are under the control of the shareholder that controls the Group are accounted for as if the acquisition had occurred at the beginning of the earliest comparative period presented or, if later, at the date that common control was established; for this purpose, comparatives are restated. The assets and liabilities acquired are recognised at the carrying amounts recognised previously in the Group controlling shareholder s consolidated financial statements. The components of equity of the acquired entities are added to the same components within Group equity and any resulting gain/loss is recognised directly in equity. Annual Report 12 63

Notes to the financial statements (CONT D) 2. Significant accounting policies (cont d) (a) Basis of consolidation (cont d) (v) 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. (vi) Associates Associates are entities, including unincorporated entities, in which the Group has significant influence, but not control, over the financial and operating policies. Investments in associates are accounted for in the consolidated financial statements using the equity method less any impairment losses. The cost of the investment includes transaction costs. The consolidated financial statements include the Group s share of the profit or loss and other comprehensive income of the associates, after adjustments if any, to align the accounting policies with those of the Group, from the date that significant influence commences until the date that significant influence ceases. When the Group s share of losses exceeds its interest in an associate, the carrying amount of that interest including any long-term investments is reduced to zero, and the recognition of further losses is discontinued except to the extent that the Group has an obligation or has made payments on behalf of the associate. When the Group ceases to have significant influence over an associate, it is accounted for as a disposal of the entire interest in that associate, with a resulting gain or loss being recognised in profit or loss. Any retained interest in the former associate at the date when significant influence is lost is re-measured at fair value and this amount is regarded as the initial carrying amount of a financial asset. When the Group s interest in an associate decreases but does not result in a loss of significant influence, any retained interest is not re-measured. Any gain or loss arising from the decrease in interest is recognised in profit or loss. Any gains or losses previously recognised in other comprehensive income are also reclassified proportionately to profit or loss. Investments in associates are measured in the Company s statement of financial position at cost less any impairment losses. The cost of the investment includes transaction costs. (vii) Jointly-controlled entities Jointly controlled entities are accounted for in the consolidated financial statements using the equity method less any impairment losses, unless it is classified as held for sale or distribution (or included in a disposal group that is classified as held for sale or distribution). The consolidated financial statements include the Group s share of the profit or loss and other comprehensive income of the equity-accounted jointly controlled entities, after adjustments, if any, to align the accounting policies with those of the Group, from the date that joint control commences until the date that joint control ceases. When the Group s share of losses exceeds its interest in an equity- accounted jointly controlled entities, the carrying amount of that interest (including any long-term investments) 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 jointly controlled entities. Investments in jointly controlled entities are stated in the Company s statement of financial position at cost less impairment losses, unless the investment is classified as held for sale or distribution. 64 Texchem Resources Bhd company no. 16318-K

Notes to the financial statements (CONT D) 2. Significant accounting policies (cont d) (a) Basis of consolidation (cont d) (viii) 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 profit or loss and other comprehensive income as an allocation of the profit or loss and the comprehensive income for the year between non-controlling interests and owners of the Company. Losses applicable to the non-controlling interests in a subsidiary are allocated to the non-controlling interests even if doing so causes the non-controlling interests to have a deficit balance. (ix) Transactions eliminated on consolidation Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group transactions, are eliminated in preparing the consolidated financial statements. Unrealised gains arising from transactions with equity-accounted investees are eliminated against the investment to the extent of the Group s interest in the investees. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment. (b) Foreign currency (i) Foreign currency transactions Transactions in foreign currencies are translated to the respective functional currencies of Group entities at exchange rates at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies at the end of the reporting period are retranslated to the functional currency at the exchange rate at that date. Non-monetary assets and liabilities denominated in foreign currencies are not retranslated at the end of the reporting date except for those that are measured at fair value are retranslated to the functional currency at the exchange rate at the date that the fair value was determined. Foreign currency differences arising on retranslation are recognised in profit or loss. (ii) Operations denominated in functional currencies other than Ringgit Malaysia 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 combinations before 1 January 2011 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 dates of the transactions. Foreign currency differences are recognised in other comprehensive income and accumulated in the foreign currency translation reserve (FCTR) 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 FCTR 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. Annual Report 12 65

Notes to the financial statements (CONT D) 2. Significant accounting policies (cont d) (b) Foreign currency (cont d) (ii) Operations denominated in functional currencies other than Ringgit Malaysia (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 the FCTR in equity. (c) Financial instruments (i) Initial recognition and measurement A financial asset or a financial liability is recognised in the statement of financial position when, and only when, the Group or the Company becomes a party to the contractual provisions of the instrument. A financial instrument is recognised initially, at its fair value plus, in the case of a financial instrument not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition or issue of the financial instrument. (ii) Financial instrument categories and subsequent measurement The Group and the Company categorise financial instruments as follows: Financial assets (a) Loans and receivables Loans and receivables category comprises debt instruments that are not quoted in an active market. Financial assets categorised as loans and receivables are subsequently measured at amortised cost using the effective interest method. (b) Held-to-maturity investments Held-to-maturity investments category comprises debt instruments that are quoted in an active market and the Group or the Company has the positive intention and ability to hold them to maturity. Financial assets categorised as held-to-maturity investments are subsequently measured at amortised cost using the effective interest method. All financial assets, except for those measured at fair value through profit or loss, are subject to review for impairment (see Note 2(g)(i)). Financial liabilities All financial liabilities are subsequently measured at amortised cost. (iii) Financial guarantee contracts A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due in accordance with the original or modified terms of a debt instrument. Financial guarantee contracts are classified as deferred income and are amortised to profit or loss using a straight-line method over the contractual period or, when there is no specified contractual period, recognised in profit or loss upon discharge of the guarantee. When settlement of a financial guarantee contract becomes probable, an estimate of the obligation is made. If the carrying value of the financial guarantee contract is lower than the obligation, the carrying value is adjusted to the obligation amount and accounted for as a provision. 66 Texchem Resources Bhd company no. 16318-K

Notes to the financial statements (CONT D) 2. Significant accounting policies (cont d) (c) Financial instruments (cont d) (iv) Derecognition 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 profit or loss. 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. (d) Property, plant and equipment (i) Recognition and measurement Items of property, plant and equipment are measured at cost less any accumulated depreciation and any accumulated impairment losses. Cost includes expenditures that are directly attributable to the acquisition of the asset and any other costs directly attributable to bringing the asset to working condition for its intended use, and the costs of dismantling and removing the items and restoring the site on which they are located. The cost of 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. Purchased software that is integral to the functionality of the related equipment is capitalised as part of that equipment. The cost of property, plant and equipment recognised as a result of a business combination is based on fair value at acquisition date. The fair value of property is the estimated amount for which a property could be exchanged between knowledgeable willing parties in an arm s length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion. The fair value of other items of plant and equipment is based on the quoted market prices for similar items when available and replacement cost when appropriate. When significant parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment. The gain or loss on disposal of an item of property, plant and equipment is determined by comparing the proceeds from disposal with the carrying amount of property, plant and equipment and is recognised net within other income and other expenses respectively in profit or loss. (ii) Subsequent costs The cost of replacing a component of an item of property, plant and equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the component will flow to the Group or the Company, and its cost can be measured reliably. The carrying amount of the replaced component is derecognised to profit or loss. The costs of the day-to-day servicing of property, plant and equipment are recognised in profit or loss as incurred. (iii) Depreciation Depreciation is based on the cost of an asset less its residual value. Significant components of individual assets are assessed, and if a component has a useful life that is different from the remainder of that asset, then that component is depreciated separately. Annual Report 12 67

Notes to the financial statements (CONT D) 2. Significant accounting policies (cont d) (d) Property, plant and equipment (cont d) (iii) Depreciation (cont d) Depreciation is recognised in profit or loss on a straight-line basis over the estimated useful lives of each component of an item of property, plant and equipment. Leased assets are depreciated over the shorter of the lease term and their useful lives unless it is reasonably certain that the Group will obtain ownership by the end of the lease term. Freehold land is not depreciated. Property, plant and equipment under construction are not depreciated until the assets are ready for their intended use. The principal annual rates used for the current and comparative periods are as follows : % Buildings, office renovation and land improvements 2-20 Plant and machinery and other equipment 10-33 1 / 3 Furniture, fittings and equipment 10-33 1 / 3 Motor vehicles 16-20 Leasehold land are depreciated over the lease period ranging from 60 years to 99 years. Depreciation methods, useful lives and residual values are reviewed at the end of the reporting period and adjusted as appropriate. (e) Leased assets (i) 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 leases. Upon initial recognition, the leased asset is measured at an amount equal to the lower of its fair value and the present value of the minimum lease payments. Subsequent to initial recognition, the asset is accounted for in accordance with the accounting policy applicable to that asset. Minimum lease payments made under finance leases are apportioned between the finance expense and the reduction of the outstanding liability. The finance expense is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability. 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. Leasehold land which in substance is a finance lease is classified as property, plant and equipment. (ii) Operating leases Leases, where the Group or the Company does not assume substantially all the risks and rewards of ownership are classified as operating leases and, the leased assets are not recognised on the statement of financial position. Payments made under operating leases are recognised in profit or loss on a straight-line basis over the term of the lease. Lease incentives received are recognised in profit or loss as an integral part of the total lease expense, over the term of the lease. Contingent rentals are charged to profit or loss in the reporting period in which they are incurred. (f) Intangible assets (i) Goodwill Goodwill arises on business combinations is measured at cost less any accumulated impairment losses. In respect of equity-accounted investees, the carrying amount of goodwill is included in the carrying amount of the investment and an impairment loss on such an investment is not allocated to any asset, including goodwill, that forms part of the carrying amount of the equity-accounted investee. Goodwill is tested for impairment annually and whenever there is an indication that it may be impaired. 68 Texchem Resources Bhd company no. 16318-K

Notes to the financial statements (CONT D) 2. Significant accounting policies (cont d) (f) Intangible assets (cont d) (ii) Research and development Expenditure on research activities, undertaken with the prospect of gaining new scientific or technical knowledge and understanding, is recognised in profit or loss as incurred. Expenditure on development activities, whereby the application of research findings are applied to a plan or design for the production of new or substantially improved products and processes, is capitalised only if development costs can be measured reliably, the product or process is technically and commercially feasible, future economic benefits are probable and the Group intends to and has sufficient resources to complete development and to use or sell the asset. The expenditure capitalised includes the cost of materials, direct labour and overheads costs that are directly attributable to preparing the asset for its intended use. For qualifying assets, borrowing costs are capitalised in accordance with the accounting policy on borrowing costs. Other development expenditure is recognised in profit or loss as incurred. Capitalised development expenditure is measured at cost less any accumulated amortisation and any accumulated impairment losses. (g) Impairment (i) Financial assets All financial assets (except for investments in subsidiaries, associates and jointly controlled entity) are assessed at each reporting date whether there is any objective evidence of impairment as a result of one or more events having an impact on the estimated future cash flows of the asset. Losses expected as a result of future events, no matter how likely, are not recognised. For an investment in an equity instrument, a significant or prolonged decline in the fair value below its cost is an objective evidence of impairment. If any such objective evidence exists, then the financial asset s recoverable amount is estimated. An impairment loss in respect of loans and receivables and held-to-maturity investments is recognised in profit or loss and is measured as the difference between the asset s carrying amount and the present value of estimated future cash flows discounted at the asset s original effective interest rate. The carrying amount of the asset is reduced through the use of an allowance account. An impairment loss in respect of unquoted equity instrument that is carried at cost is recognised in profit or loss and is measured as the difference between the financial asset s carrying amount and the present value of estimated future cash flows discounted at the current market rate of return for a similar financial asset. If, in a subsequent period, the fair value of a debt instrument increases and the increase can be objectively related to an event occurring after the impairment loss was recognised in profit or loss, the impairment loss is reversed, to the extent that the asset s carrying amount does not exceed what the carrying amount would have been had the impairment not been recognised at the date the impairment is reversed. The amount of the reversal is recognised in profit or loss. (ii) Other assets The carrying amounts of other assets (except for inventories and deferred tax assets) are reviewed at the end of each reporting period to determine whether there is any indication of impairment. If any such indication exists, then the asset s recoverable amount is estimated. For goodwill, and intangible assets that have indefinite useful lives or that are not yet available for use, the recoverable amount is estimated each period at the same time. For the purpose of impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or cash-generating units. Subject to an operating segment ceiling test, for the purpose of goodwill impairment testing, cash-generating units to which goodwill has been allocated are aggregated so that the level at which impairment testing is performed reflects the lowest level at which goodwill is monitored for internal reporting purposes. The goodwill acquired in a business combination, for the purpose of impairment testing, is allocated to cash-generating units that are expected to benefit from the synergies of the combination. Annual Report 12 69

Notes to the financial statements (CONT D) 2. Significant accounting policies (cont d) (g) Impairment (cont d) (ii) Other assets (cont d) (h) Inventories The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell. 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 or cash-generating unit. An impairment loss is recognised if the carrying amount of an asset or its related cash-generating unit exceeds its estimated recoverable amount. Impairment losses are recognised in profit or loss. Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to the cash-generating unit (group of cash-generating units) and then to reduce the carrying amounts of the other assets in the cashgenerating unit (groups of cash-generating units) on a pro rata basis. An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognised in prior periods are assessed at the end of each reporting period for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount since the last impairment loss was recognised. An impairment loss is reversed only to the extent that the asset s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised. Reversals of impairment losses are credited to profit or loss in the financial year in which the reversals are recognised. Inventories are measured at the lower of cost and net realisable value. The cost of inventories is based on the first-in, first-out principle and includes expenditure incurred in acquiring the inventories, production or conversion costs and other costs incurred in bringing them to their existing location and condition. In the case of work-in-progress and finished goods, cost includes an appropriate share of production overheads based on normal operating capacity. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and the estimated costs necessary to make the sale. (i) Cash and cash equivalents Cash and cash equivalents consist of cash on hand, balances and deposits with banks and highly liquid investments which have an insignificant risk of changes in fair value with original maturities of three months or less, and are used by the Group and the Company in the management of their short term commitments. For the purpose of the statement of cash flows, cash and cash equivalents are presented net of bank overdrafts and pledged deposits. (j) Provisions A provision is recognised if, as a result of a past event, the Group has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The unwinding of the discount is recognised as finance cost. (i) Site restoration A provision for restoration is recognised when the Company has the obligation to return its rental premises to its original state upon expiry of the lease term. 70 Texchem Resources Bhd company no. 16318-K

Notes to the financial statements (CONT D) 2. Significant accounting policies (cont d) (j) Provisions (cont d) (ii) Contingent liabilities Where it is not probable that an outflow of economic benefits will be required, or the amount cannot be estimated reliably, the obligation is not recognised in the statements of financial position and is disclosed as a contingent liability, unless the probability of 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 liabilities unless the probability of outflow of economic benefits is remote. (k) Revenue and other income (i) Goods sold Revenue from the sale of goods in the course of ordinary activities is measured at fair value of the consideration received or receivable, net of returns and allowances, trade discount and volume rebates. Revenue is recognised when persuasive evidence exists, usually in the form of an executed sales agreement, that the significant risks and rewards of ownership have been transferred to the customer, recovery of the consideration is probable, the associated costs and possible return of goods can be estimated reliably, and there is no continuing management involvement with the goods, and the amount of revenue can be measured reliably. If it is probable that discounts will be granted and the amount can be measured reliably, then the discount is recognised as a reduction of revenue as the sales are recognised. (ii) Services Revenue from services rendered is recognised in profit or loss when services are performed and invoiced. (iii) Rental income Rental income is recognised in profit or loss on a straight-line basis over the term of the lease. Lease incentives granted are recognised as an integral part of the total rental income, over the term of the lease. Rental income from subleased property is recognised as other income. (iv) Dividend income Dividend income is recognised in profit or loss on the date that the Group s or the Company s right to receive payment is established, which in the case of quoted securities is the ex-dividend date. (v) Interest income Interest income is recognised as it accrues using the effective interest method in profit or loss except for interest income arising from temporary investment of borrowings taken specifically for the purpose of obtaining a qualifying asset which is accounted for in accordance with the accounting policy on borrowing costs. (vi) Commissions When the Group acts in the capacity of an agent rather than as the principal in a transaction, the revenue recognised is the net amount of commission made by the Group. (l) Borrowing costs Borrowing costs that are not directly attributable to the acquisition, construction or production of a qualifying asset are recognised in profit or loss using the effective interest method. Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are capitalised as part of the cost of those assets. 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. Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation. Annual Report 12 71

Notes to the financial statements (CONT D) 2. Significant accounting policies (cont d) (m) Income tax Income 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. 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 financial years. 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 following temporary differences: the initial recognition of goodwill, the initial recognition of assets or 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. 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, being a tax incentive 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. (n) Employee benefits (i) Short-term employee benefits Short-term employee benefit obligations in respect of salaries, annual bonuses, paid annual leave and sick leave are measured on an undiscounted basis and are expensed as the related service is provided. A liability is recognised for the amount expected to be paid under short-term cash bonus or profit-sharing plans if the Group has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably. (ii) State plans The Group s contribution to statutory pension funds are charged to profit or loss in the financial year to which they relate. Once the contributions have been paid, the Group has no further payment obligations. (iii) Directors retirement/resignation benefits The Group operates an unfunded defined benefit scheme for its Directors. Provision is made based on the length of service and fixed sum approved by the Board of Directors. (o) Earnings per ordinary share The Group presents basic earnings per share ( EPS ) data 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. 72 Texchem Resources Bhd company no. 16318-K

Notes to the financial statements (CONT D) 2. Significant accounting policies (cont d) (p) Operating segments An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Group s other components. An operating segment s operating results are reviewed regularly by the chief operating decision maker, which in this case is the Chief Executive Officer of the Group, to make decisions about resources to be allocated to the segment and to assess its performance, and for which discrete financial information is available. (q) Equity instruments Instruments classified as equity are measured at cost on initial recognition and are not remeasured subsequently. (i) Issue expenses Costs directly attributable to issue of instruments classified as equity are recognised as a deduction from equity. (ii) Ordinary shares Ordinary shares are classified as equity. (r) Non-current asset held for sale or distribution Non-current assets, or disposal group comprising assets and liabilities that are expected to be recovered primarily through sale or distribution to owners rather than through continuing use, are classified as held for sale or distribution. Immediately before classification as held for sale or distribution, the assets, or components of a disposal group, are remeasured in accordance with the Group s accounting policies. Thereafter generally the assets, or disposal group are measured at the lower of their carrying amount and fair value less costs to sell. Any impairment loss on a disposal group is first allocated to goodwill, and then to remaining assets and liabilities on pro rata basis, except that no loss is allocated to inventories, financial assets, deferred tax assets and employee benefit assets, which continue to be measured in accordance with the Group s accounting policies. Impairment losses on initial classification as held for sale or distribution and subsequent gains or losses on remeasurement are recognised in profit or loss. Gains are not recognised in excess of any cumulative impairment loss. Intangible assets and property, plant and equipment once classified as held for sale or distribution are not amortised or depreciated. In addition, equity accounting of equity-accounted investees ceases once classified as held for sale or distribution. (s) Discontinued operation A discontinued operation is a component of the Group s business that represents a separate major line of business or geographical area of operations that has been disposed of or is held for sale or distribution, or is a subsidiary acquired exclusively with a view to resale. Classification as a discontinued operation occurs upon disposal or when the operation meets the criteria to be classified as held for sale, if earlier. When an operation is classified as a discontinued operation, the comparative consolidated income statement and statement of comprehensive income is re-presented as if the operation had been discontinued from the start of the comparative period. Annual Report 12 73

Notes to the financial statements (CONT D) 3. Property, plant and equipment Group Cost Freehold land Leasehold land Buildings, office renovation and land improvements Plant and machinery and other equipment Furniture, fittings and equipment Motor vehicles Capital expenditurein-progress Total RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 At 1 January 2011 15,241 16,553 105,693 262,011 49,842 24,097 2,344 475,781 Additions 3,001 17,625 3,604 3,610 2,964 30,804 Disposals (1,146) (213) (815) (2,225) (4,399) Written off (24) (9,392) (2,700) (64) (12,180) Effect of movements in exchange rates (173) 729 1,288 100 91 (7) 2,028 Reclassification 67 1,183 2,673 (3,923) Transfer to assets classified as held for sale (967) (303) (304) (1,574) At 31 December 2011/1 January 2012 15,068 16,553 108,320 271,535 52,401 25,205 1,378 490,460 Additions 6,813 15,428 2,851 2,237 9,126 36,455 Disposals (5,202) (550) (1,026) (6,778) Written off (2,371) (8,962) (934) (82) (12,349) Effect of movements in exchange rates 146 (282) (1,219) (1,786) (172) (103) 153 (3,263) Reclassification 17,539 (16,715) 108 3 (935) Disposal of subsidiaries (1,854) (8,952) (45,558) (63,022) (10,616) (4,634) (158) (134,794) At 31 December 2012 13,360 7,319 83,524 191,276 43,088 21,600 9,564 369,731 74 Texchem Resources Bhd company no. 16318-K

Notes to the financial statements (CONT D) 3. Property, plant and equipment (cont d) Group Accumulated depreciation and impairment loss Freehold land Leasehold land Buildings, office renovation and land improvements Plant and machinery and other equipment Furniture, fittings and equipment Motor vehicles Capital expenditurein-progress Total RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 Accumulated depreciation 129 3,670 33,689 185,719 39,371 16,474 279,052 Accumulated impairment loss 313 2,661 51 3,025 At 1 January 2011 129 3,670 34,002 188,380 39,422 16,474 282,077 Depreciation for the year 124 251 5,205 17,219 3,975 2,908 29,682 Impairment loss 126 8,998 2,379 11,503 Disposals (160) (152) (804) (1,956) (3,072) Written off (16) (9,026) (2,598) (63) (11,703) Effect of movements in exchange rates (5) 5 206 733 55 63 1,057 Reclassification (9) 9 Transfer to assets classified as held for sale (633) (270) (304) (1,207) At 31 December 2011 Accumulated depreciation 248 3,926 38,915 193,860 39,738 17,122 293,809 Accumulated impairment loss 439 11,659 2,430 14,528 248 3,926 39,354 205,519 42,168 17,122 308,337 Annual Report 12 75

Notes to the financial statements (CONT D) 3. Property, plant and equipment (cont d) Freehold land Leasehold land Buildings, office renovation and land improvements Plant and machinery and other equipment Furniture, fittings and equipment Motor vehicles Capital expenditurein-progress Total Group RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 At 1 January 2012 Accumulated depreciation 248 3,926 38,915 193,860 39,738 17,122 293,809 Accumulated impairment loss 439 11,659 2,430 14,528 248 3,926 39,354 205,519 42,168 17,122 308,337 Depreciation for the year 134 7,046 13,445 3,570 2,770 26,965 Reversal of impairment loss (2,197) (2,197) Disposals (83) (5,050) (505) (1,026) (6,664) Written off (2,274) (8,883) (884) (82) (12,123) Effect of movements in exchange rates (358) (1,196) (151) (83) (1,788) Reclassification (248) 248 12,439 (9,899) (2,540) Disposal of subsidiaries (2,538) (16,248) (52,694) (8,983) (3,442) (83,905) At 31 December 2012 Accumulated depreciation 1,770 39,834 133,907 32,675 15,259 223,445 Accumulated impairment loss 42 5,138 5,180 Carrying amounts 1,770 39,876 139,045 32,675 15,259 228,625 At 1 January 2011 15,112 12,883 71,691 73,631 10,420 7,623 2,344 193,704 At 31 December 2011/1 January 2012 14,820 12,627 68,966 66,016 10,233 8,083 1,378 182,123 At 31 December 2012 13,360 5,549 43,648 52,231 10,413 6,341 9,564 141,106 76 Texchem Resources Bhd company no. 16318-K

Notes to the financial statements (CONT D) 3. Property, plant and equipment (cont d) Furniture, Company Office fittings and Motor renovation equipment vehicles Total RM 000 RM 000 RM 000 RM 000 Cost At 1 January 2011 3,536 347 1,660 5,543 Additions 18 18 Disposals (10) (10) At 31 December 2011/1 January 2012 3,536 355 1,660 5,551 Additions 8 8 Written off (5) (5) Disposals (6) (3) (9) At 31 December 2012 3,536 344 1,665 5,545 Accumulated depreciation At 1 January 2011 2,419 243 1,531 4,193 Depreciation for the year 393 37 62 492 Disposals (10) (10) At 31 December 2011/1 January 2012 2,812 270 1,593 4,675 Depreciation for the year 393 39 62 494 Written off (5) (5) Disposals (6) (3) (9) At 31 December 2012 3,205 298 1,652 5,155 Carrying amounts At 1 January 2011 1,117 104 129 1,350 At 31 December 2011/1 January 2012 724 85 67 876 At 31 December 2012 331 46 13 390 3.1 Assets under finance lease Included in the carrying amounts of property, plant and equipment are the following assets acquired under finance leases : Group 31.12.2012 31.12.2011 1.1.2011 RM 000 RM 000 RM 000 Plant and machinery and other equipment 1,583 794 Motor vehicles 4,109 4,216 3,572 Company Motor vehicles 2 23 45 Annual Report 12 77

Notes to the financial statements (CONT D) 3. Property, plant and equipment (cont d) 3.2 Impairment of property, plant and equipment (a) Polymer Engineering division During the financial year 2011, the Group s subsidiary in Thailand impaired RM7,413,000 of its property, plant and equipment as a result of the flood incident that affected the province in which the subsidiary was operating in. In financial year 2012, RM2,197,000 of the impairment loss was reversed after the subsidiary resumed operations and was able to determine the actual damage suffered. Additionally, the division also recorded an impairment loss of RM4,090,000 in financial year 2011 on its other plant and equipment based on management s assessment of their value in use. (b) Food division The carrying amount of property, plant and equipment of a subsidiary amounting to RM13.9 million at 31 December 2012 are assessed for impairment due to the subsidiary s historical and current year operating losses incurred. The recoverable amount of the property, plant and equipment of the above-mentioned subsidiary was estimated based on their value in use. The value in use was determined by discounting the future cash flows generated from the continuing use of the property, plant and equipment based on the subsidiary s financial budget for 2013 and approved business plan covering a period of 5 years. The financial budget and approved business plan are determined based on management s expectation of market growth, anticipated improvement in production yield and the assumption that there will not be any significant adverse changes in foreign currency exchange and increase in the operating costs caused by fluctuation in raw material and diesel price. A pre-tax discount rate of 10% was applied in determining the recoverable amount of the property, plant and equipment. The discount rate was estimated based on the division s weighted average cost of capital. Based on the impairment review performed, the management is of the opinion that the recoverable amount of the property, plant and equipment exceeded their carrying amounts. 3.3 Change in estimates During the financial year 2011, a subsidiary in the Group s Restaurant division revised the estimated useful life of certain items of plant and equipment. The effect of the change on depreciation expense in financial year 2011 and future periods is as follows : 2011 2012 2013 2014 2015 Later RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 (Decrease)/ Increase in depreciation expense (2,121) (1,100) 420 822 865 1,114 78 Texchem Resources Bhd company no. 16318-K

Notes to the financial statements (CONT D) 4. Investments Group 31.12.2012 31.12.2011 1.1.2011 RM 000 RM 000 RM 000 Associates Unquoted shares, at cost 57,916 33,807 33,807 Share of post acquisition reserves 331 (13,648) (13,123) 58,247 20,159 20,684 Jointly controlled entity Unquoted shares, at cost 950 700 100 Share of post acquisition reserves (673) (479) (100) 277 221 Held-to-maturity investments Unquoted bonds 3,500 Less : Impairment loss (3,500) 58,524 20,380 20,684 Company Subsidiaries Quoted shares, at cost 32,920 32,920 32,920 Unquoted shares, at cost 176,869 215,606 213,725 Less : Impairment loss (55,378) 154,411 248,526 246,645 Associates Unquoted shares, at cost 57,916 26,729 26,729 Less : Impairment loss (10,855) 47,061 26,729 26,729 Jointly controlled entity Unquoted shares, at cost 100 Share of post acquisition reserves 100 Held-to-maturity investments Unquoted bonds 3,500 Less : Impairment (3,500) 201,472 275,255 273,474 Market value of quoted shares 22,129 25,496 23,371 Annual Report 12 79

Notes to the financial statements (CONT D) 4. Investments (cont d) Details of the subsidiaries are as follows : Name of subsidiaries Country of incorporation Principal activities Effective ownership interest 31.12.2012 31.12.2011 1.1.2011 % % % Texchem Materials Sdn. Bhd. (1) Malaysia Trading of dyestuffs, textile auxiliaries and chemicals used in the electronics, plastics and other manufacturing industries, renting of properties and investment holding 100.00 100.00 100.00 Texchem Food Sdn. Bhd. Malaysia Investment holding and sale and marketing of marine products Sushi Kin Sdn. Bhd. (1) Malaysia Operation of a chain of retail sushi outlets 100.00 100.00 100.00 100.00 100.00 100.00 Texchem-Pack Holdings (S) Ltd. (1) Singapore Investment holding 70.48 70.48 70.48 Fumakilla Malaysia Berhad Malaysia Manufacture and sale of household insecticides and investment holding PT. Technopia Jakarta (1) Indonesia Produce and sell mosquito coils for local and export markets Technopia Vietnam Pte. Vietnam Produce and trade various Ltd. (13) kinds of household insecticides (14) 87.29 (12) 100.00 (2) 100.00 (2) (15) 100.00 Fumakilla Asia Sdn. Bhd. (formerly known as Technopia Sdn. Bhd.) Malaysia Investment holding (12) 100.00 Acumen Scientific Sdn. Bhd. (1) Malaysia Provision of chemical, microbiological and environment related analytical testing and consultancy services Texchem Japan, Inc (3) Japan Provision of services, trading, sales, marketing, research and development, designing and product development Donburi House Sdn. Bhd. (1) Malaysia Operation of a chain of retail ramen outlets 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 Texa Protection Sdn. Bhd. (1) Malaysia Dormant 100.00 100.00 80 Texchem Resources Bhd company no. 16318-K

Notes to the financial statements (CONT D) 4. Investments (cont d) Details of the subsidiaries are as follows (cont d) : Name of subsidiaries Country of incorporation Principal activities Effective ownership interest 31.12.2012 31.12.2011 1.1.2011 % % % Texchem Homey Sdn. Bhd. (1) and (8) Malaysia Dormant 100.00 Sushi Ku Sdn. Bhd. (1) and (9) Malaysia Dormant 100.00 PT Technopia Nomos (formerly known as PT Technopia (1) and (10) Lever) Indonesia Distribute, import and export of anti-mosquito and insect repellent equipment 100.00 Subsidiaries of Texchem Materials Sdn. Bhd. Texchem Singapore Private Limited (1) Singapore Dealers in chemicals, plastic resins and other products and sales commission agents 100.00 100.00 100.00 Myanmar Texchem Limited (1) Myanmar Dormant 100.00 100.00 100.00 Texchem Materials (Thailand) Thailand Trading of chemicals, Ltd. (1) dyestuffs and resins 100.00 100.00 100.00 Texchem Materials (Vietnam) Co., Ltd. (13) Vietnam Conducting import and export of chemical and plastic materials 100.00 100.00 100.00 Texchem Malaysia Sdn. Berhad (1) Malaysia Manufacture and sale of textile auxiliaries, chemicals and finishing resins 100.00 100.00 100.00 PT. Texchem Indonesia (1) Indonesia Trading in export and import of chemicals materials 100.00 100.00 100.00 Texchem Trading (Wuxi) Co., People s (1) and (7) Ltd. Republic of China Dormant 100.00 100.00 100.00 New Material (Malaysia) Sdn. Bhd. (1) Malaysia Trading and acting as agent of foreign and local electronic component parts and general merchandise 100.00 100.00 100.00 Annual Report 12 81

Notes to the financial statements (CONT D) 4. Investments (cont d) Details of the subsidiaries are as follows (cont d) : Name of subsidiaries Country of incorporation Principal activities Effective ownership interest 31.12.2012 31.12.2011 1.1.2011 % % % Subsidiaries of New Material (Malaysia) Sdn. Bhd. New Material Hong Kong Limited (1) and (11) Hong Kong Trading and acting as agent of foreign and local electronic component parts and general merchandise 100.00 100.00 100.00 Subsidiaries of Texchem Food Sdn. Bhd. A.S.K Andaman Limited (1) Myanmar Manufacture and marketing of surimi, fishmeal and other marine products 90.00 90.00 90.00 Sea Master Trading Co. Sdn. Bhd. Malaysia Manufacture, wholesale and export of seafood products and acting as sales commission agent in sales of food products 100.00 100.00 100.00 Seapack Italia S.r.l. Italy Dormant (6) 100.00 (3) Texchem Homey Sdn. Malaysia Dormant 100.00 100.00 Bhd. (1) and (8) ASKA Marine Products Sdn Bhd (1) Malaysia Dormant 100.00 100.00 100.00 Subsidiaries of Sea Master Trading Co. Sdn. Bhd. Ocean Pioneer Food Sdn. Bhd. Malaysia Manufacture, wholesale and export of seafood products 91.72 91.72 91.72 Sea Master Food Sdn. Bhd. (formerly known as Seapack Food Sdn. Bhd.) (1) Malaysia Sales and marketing of processed surimi and crab flavoured seafood products and frozen seafood products 100.00 100.00 (5) 100.00 (5) Subsidiaries of Sushi Kin Sdn. Bhd. Miraku Sdn. Bhd. (1) Malaysia Operation of a chain of Japanese restaurant 100.00 100.00 100.00 82 Texchem Resources Bhd company no. 16318-K

Notes to the financial statements (CONT D) 4. Investments (cont d) Details of the subsidiaries are as follows (cont d) : Name of subsidiaries Country of incorporation Principal activities Effective ownership interest 31.12.2012 31.12.2011 1.1.2011 % % % Subsidiaries of Texchem-Pack Holdings (S) Ltd. Texchem-Pack (M) Bhd. Malaysia Investment holding and manufacture and sale of thermoformed packaging products and embossed carrier tapes Texchem Polymers Sdn. Bhd. Malaysia Manufacture and sale of extruded plastic sheets and polymer compounds and provide consultation services 70.48 70.48 70.48 70.48 70.48 70.48 Texchem-Pack (Bangi) Sdn. Bhd. (1) Malaysia Manufacture of plastic engineering precision parts 70.48 70.48 70.48 Eye Graphic Sdn. Bhd. Malaysia Trading, design and manufacture of flexo photopolymer printing plates 70.48 70.48 70.48 Texchem-Pack (HK) Limited (1) Hong Kong Dormant 70.48 70.48 70.48 Subsidiaries of Texchem-Pack (M) Bhd. Texchem-Pack (Thailand) Co., Ltd. (1) Thailand Manufacture and sale of thermoformed packaging products, precision injection moulded trays/ parts and mould and tooling 70.48 70.48 70.48 Texchem-Pack (Johor) Sdn. Bhd. Malaysia Manufacture and sale of thermoformed packaging products 70.48 70.48 70.48 Texchem-Pack (Wuxi) Co., Ltd. (1) People s Republic of China Manufacture and sale of thermoformed packaging products and precision injection moulded trays/ parts 70.48 70.48 70.48 Texchem-Pack (KL) Sdn. Bhd. (1) Malaysia Dormant 70.48 70.48 70.48 Texchem-Pack (PP) Sdn. Bhd. Malaysia Manufacture and sale of shipping rails, profiles and precision injection moulded trays/parts 70.48 70.48 70.48 Annual Report 12 83

Notes to the financial statements (CONT D) 4. Investments (cont d) Details of the subsidiaries are as follows (cont d) : Name of subsidiaries Country of incorporation Principal activities Effective ownership interest 31.12.2012 31.12.2011 1.1.2011 % % % Subsidiaries of Texchem-Pack (M) Bhd. (cont d) Texchem-Pack (Vietnam) Co., Ltd. (13) Vietnam Manufacture and sale of thermoformed packaging parts, precision injection moulded trays/parts and provision of packaging product design services 70.48 70.48 70.48 Subsidiaries of Eye Graphic Sdn. Bhd. Eye Graphic (Vietnam) Co., Ltd. (3) and (4) Vietnam Design and manufacture of flexo photopolymer printing plates. Ceased operations since 2011 Alaya Asia Sdn. Bhd. (1) Malaysia To provide multilingual translation services, proofreading and desktop publishing for business documents, advertisements, technical documents and website 70.48 70.48 70.48 35.94 35.94 Subsidiary of Texchem-Pack (PP) Sdn. Bhd. Texchem Advanced Products Incorporated Sdn. Bhd. Malaysia Development of technology for high precision/ultra clean injection moulded products for silicon wafer handling and transportation and market development of related products 35.94 35.94 35.94 Subsidiaries of Fumakilla Asia Sdn. Bhd. (formerly known as Technopia Sdn. Bhd.) Fumakilla Malaysia Berhad Malaysia Manufacture and sale of household insecticides and investment holding Technopia Vietnam Pte. Ltd. (1) Vietnam Produce and trade various kind of household insecticides (12) 85.90 (12) 100.00 84 Texchem Resources Bhd company no. 16318-K

Notes to the financial statements (CONT D) 4. Investments (cont d) Details of the subsidiaries are as follows (cont d) : Name of subsidiaries Country of incorporation Principal activities Effective ownership interest 31.12.2012 31.12.2011 1.1.2011 % % % Subsidiaries of Fumakilla Malaysia Berhad Texchem Consumers (Thailand) Ltd. (1) Thailand Dormant (12) 85.90 87.29 Ting Tai Industries (Malaysia) Sdn. Berhad Malaysia Renting of property, plant and equipment (12) 85.90 87.29 Technopia (Thailand) Ltd. (1) Thailand Manufacture and trading of mosquito coils (12) 85.90 83.72 Texchem Consumers (Cambodia) Ltd. (1) Cambodia Dormant (12) 85.90 87.29 Blood Protection Company (Malaysia) Sdn. Bhd. Malaysia Trading of household insecticides, renting of machinery and rendering pest control services (12) 85.90 87.29 Subsidiaries of Blood Protection Company (Malaysia) Sdn. Bhd. Myanmar Texcorp Limited (1) Myanmar Agency, technical, business management consulting and advisory services (12) 85.90 87.29 Annual Report 12 85

Notes to the financial statements (CONT D) 4. Investments (cont d) Notes: (1) Not audited by KPMG (2) Shares held in trust for Texchem Resources Bhd. ( TRB ) by Texchem Corporation Sdn. Bhd. ( Texcorp ) (3) The unaudited management financial statements were consolidated in the Group financial statements as these subsidiaries were not required by the local legislation to have their financial statements audited (4) In voluntary liquidation proceedings (5) Approximately 95.92% of the total issued shares are held in trust for Sea Master Trading Co. Sdn. Bhd. by Texcorp (6) Commenced voluntary liquidation proceeding on 12 July 2011 and completed the said proceeding on 30 December 2011 (7) Commenced voluntary liquidation proceeding on 30 September 2011 (8) TRB acquired the entire equity interest of Texchem Homey Sdn. Bhd. from Texchem Food Sdn. Bhd. on 30 August 2012 (9) Incorporated on 11 September 2012 (10) Became a wholly-owned subsidiary of TRB with effect from 12 October 2012. 49% of total issued shares are held in trust by Technopia Singapore Pte. Ltd. for TRB. (11) Ceased operations on 31 December 2012 (12) Disposed on 19 November 2012 (13) Audited by other member firm of KPMG International (14) Fumakilla Asia Sdn. Bhd. (formerly known as Technopia Sdn. Bhd.) ( FASB ) acquired the entire equity interest in Fumakilla Malaysia Berhad on 3 November 2011. (15) FASB acquired the entire charter capital of Technopia Vietnam Pte. Ltd. from TRB on 10 October 2011. Details of the associates are as follows : Name of associates Country of incorporation Principal activities Effective ownership interest 31.12.2012 31.12.2011 1.1.2011 % % % Texchem Corporation Sdn. Bhd. ( Texcorp ) Malaysia Investment holding and provision of management services for Texchem Group 49.88 49.88 49.88 M.A.C. Technology (Malaysia) Sdn. Bhd. ( MAC ) (1), (2) and (3) Malaysia Manufacture of all types of mechatronics components for electronics and automobile industries, precision mould for engineering parts, hightech ceramics precision parts and ultra precision parts Fumakilla Asia Sdn. Bhd. (formerly known as Technopia Sdn. Bhd.) ( FASB ) (4) 21.14 21.14 Malaysia Investment holding 30.00 PT. Technopia Jakarta ( PTTJ ) (4) Indonesia Produce and sell mosquito coils for local and export markets 30.00 Notes (1) An associate of Texchem-Pack Holdings (S) Ltd. (2) Not audited by KPMG (3) Texchem-Pack Holdings (S) Ltd. disposed of its entire equity interest in MAC on 18 July 2012 (4) Became an associate of the Company with effect from 19 November 2012 86 Texchem Resources Bhd company no. 16318-K

Notes to the financial statements (CONT D) 4. Investments (cont d) Summary financial information for associates, not adjusted for the percentage ownership held by the Group : Revenue Profit/(Loss) Total assets Total liabilities (100%) (100%) (100%) (100%) RM 000 RM 000 RM 000 RM 000 Group 31.12.2012 Texcorp 13,295 (14,514) 34,766 21,448 FASB 135,101 3,526 128,261 40,583 PTTJ 32,337 (3,482) 26,782 20,557 31.12.2011 Texcorp 10,945 (967) 54,937 27,470 MAC 43,781 (1,257) 28,539 4,315 1.1.2011 Texcorp 18,615 2,713 57,897 29,913 MAC 53,467 (670) 33,294 7,811 Details of the jointly controlled entity are as follows : Name of jointly controlled entity Country of incorporation Principal activities Effective ownership interest 31.12.2012 31.12.2011 1.1.2011 % % % GMMI Texchem Sdn. Bhd. Malaysia Research and development, marketing, sales, trading and distribution of components of medical devices 35.24 35.24 50.00 Summary of financial information on jointly controlled entity : Group 31.12.2012 31.12.2011 1.1.2011 RM 000 RM 000 RM 000 The Group s aggregate share of their income, expenses, assets and liabilities of the jointly controlled entity is as follows : Revenue 381 127 Expenses, including finance costs (590) (607) (308) (209) (480) (308) Current assets 155 96 15 Current liabilities (202) (183) (223) Non-current liabilities (850) (600) Net liabilities (897) (687) (208) Annual Report 12 87

Notes to the financial statements (CONT D) 5. Intangible assets - Group Cost Goodwill RM 000 At 1 January 2011 55,527 Impairment loss during the year (1,612) Acquisition of a subsidiary 385 At 31 December 2011/1 January 2012 54,300 Acquisition of a subsidiary 21,686 Impairment loss during the year (Note 17) (31,690) Disposal of subsidiaries (Note 21) (9,920) At 31 December 2012 34,376 Acquisition of subsidiary During the financial year, the Company acquired the entire equity interest of PT Technopia Nomos (formerly known as PT Technopia Lever) ( PTTN ) which owns the trademark of the household insecticides products manufactured by PT Technopia Jakarta ( PTTJ ) for a total purchase consideration of RM24,255,000. In conjunction with the disposal of PTTJ to Fumakilla Limited, Japan ( FMJ ) as disclosed in Note 21 to the financial statements, the trademark will be transferred to PTTJ and/or FMJ in 2013 after which, PTTN will be dormant. As such, the goodwill arising from the acquisition of PTTN amounting to RM21,686,000 has been fully impaired. During the last financial year, the Company acquired the entire equity interest of Fumakilla Asia Sdn. Bhd. (formerly known as Technopia Sdn. Bhd.) for a total purchase consideration of RM381,000. The acquisition resulted in a goodwill of RM385,000 being recognised by the Group. Impairment testing for cash generating units ( CGU ) containing goodwill For the purpose of impairment testing, goodwill is allocated to the Group s business/ divisions which represent the lowest level within the Group at which the goodwill is monitored for internal management purposes. The aggregate carrying amounts of goodwill is allocated to the following CGUs: 31.12.2012 31.12.2011 1.1.2011 RM 000 RM 000 RM 000 Polymer engineering division - Precision injection moulded business 8,974 8,974 - Thermoformed packaging business 7,265 7,265 7,265 - Expanded polystyrene business 1,260 - Flexo photopolymer printing plates business 2,710 2,710 2,710 9,975 18,949 20,209 Industrial division 13,377 13,377 13,377 Food division 4,308 5,338 5,690 Family Care division 9,920 9,535 Restaurant division 6,716 6,716 6,716 34,376 54,300 55,527 88 Texchem Resources Bhd company no. 16318-K

Notes to the financial statements (CONT D) 5. Intangible assets - Group (cont d) Impairment testing for cash generating units ( CGU ) containing goodwill (cont d) Management has assessed the recoverable amount of goodwill based on value in use calculations determined by discounting future cash flows generated from the continuing use of the CGUs projected based on the financial budget for 2013 and projected revenue growth covering a period of 5 years. Pre-tax discount rates ranging from 10.0% to 12.5% (31.12.2011: 10.0%; 1.1.2011: 5.6%) were applied to the calculations in determining the recoverable amount of the CGUs. The values assigned to the key assumptions represent management s assessment of future trends of the various businesses or divisions and are based on both external and internal sources. Management believes that while cash flow projections are subject to inherent uncertainty, any reasonably possible changes to the key assumptions utilised in assessing recoverable amounts have been considered in determining the recoverable amount of the cash generating unit. Based on the assessments carried out, the Group has impaired the goodwill pertaining to the business or division as disclosed below. Precision injection moulded business During the financial year, the Group impaired the goodwill relating to this business of RM8.97 million as the recoverable amount of the CGU, determined based on value in use calculations, is lower than the carrying amount. The value in use calculation is determined by discounting future cash flows over a period of 5 years using a pre-tax discount rate of 12.5%. Expanded polystyrene business In financial year 2011, the Group recorded an impairment of RM1.26 million relating to the expanded polystyrene business after management ceased the operations of Texchem-Pack (KL) Sdn. Bhd. Food division During the financial year, the Group impaired the goodwill relating to Ocean Pioneer Food Sdn. Bhd., a subsidiary within the Food division of RM1.03 million as the recoverable amount of the CGU, determined based on value in use calculations, is lower than the carrying amount. The value in use calculation is determined by discounting future cash flows over a period of 5 years using a pre-tax discount rate of 10.0%. During the last financial year, the Group impaired the goodwill relating to Texchem Food Sdn. Bhd. of RM352,000. 6. Deferred tax - Group Recognised deferred tax assets and liabilities Deferred tax assets and liabilities are attributable to the following : Deferred tax assets 31.12.2012 31.12.2011 1.1.2011 RM 000 RM 000 RM 000 Tax loss carry-forwards 3,795 3,854 3,854 Other temporary differences (1,921) (718) (900) 1,874 3,136 2,954 Deferred tax liabilities Property, plant and equipment - capital allowances 3,440 5,092 4,144 - revaluation 1,231 2,814 3,325 Capital allowance carry-forwards (551) Other temporary differences (1,951) (1,698) (1,814) 2,720 5,657 5,655 Annual Report 12 89

Notes to the financial statements (CONT D) 6. Deferred tax - Group (cont d) Recognised deferred tax assets and liabilities (cont d) Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when the deferred taxes relate to the same taxation authority. Deferred tax assets are recognised to the extent that it is probable that future taxable profits will be available against which the Group can utilise the benefits therefrom. Deferred tax assets 2012 2011 RM 000 RM 000 At 1 January (3,136) (2,954) Charged/(Credited) to profit or loss 51 (182) Disposal of subsidiaries (Note 21) 1,047 Exchange difference 164 At 31 December (1,874) (3,136) Deferred tax liabilities At 1 January 5,657 5,655 (Credited)/Charged to profit or loss (745) 1 Disposal of subsidiaries (Note 21) (2,194) Exchange difference 2 1 At 31 December 2,720 5,657 Unrecognised deferred tax assets No deferred tax assets has been recognised for the following items: 31.12.2012 31.12.2011 1.1.2011 RM 000 RM 000 RM 000 Unutilised reinvestment allowance 14,941 11,060 8,858 Tax loss carry-forwards 70,941 52,257 23,628 Capital allowance carry-forwards 43,427 48,339 9,284 Other temporary differences (15,527) (20,403) (3,053) 113,782 91,253 38,717 The unutilised reinvestment allowance, tax loss carry-forwards, capital allowance carry-forwards and other temporary differences do not expire under current tax legislation. Deferred tax assets have not been recognised in respect of these items because it is not probable that future taxable profits will be available against which the Group can utilise the benefits therefrom. 90 Texchem Resources Bhd company no. 16318-K

Notes to the financial statements (CONT D) 7. Trade and other receivables Note 31.12.2012 31.12.2011 1.1.2011 RM 000 RM 000 RM 000 Group Trade Trade receivables 7.1 121,155 161,870 185,864 Associates 7.2 789 2,727 2,132 121,944 164,597 187,996 Non-trade Associates 7.2 23 2,309 931 Jointly controlled entity 7.2 53 57 Deposits 8,721 7,729 7,320 Prepayments 5,555 10,943 10,490 Other receivables 27,832 35,718 14,216 42,184 56,756 32,957 164,128 221,353 220,953 Company Non-trade Subsidiaries 7.3 2,602 33,378 30,523 Associates 7.2 6 1,842 7 Deposits 224 225 226 Prepayments 1,776 3,234 2,577 Other receivables 11 26 6 Dividend receivable from subsidiaries 6,897 8,695 8,102 11,516 47,400 41,441 7.1 Trade receivables Included in the trade receivables of the Group is RM929,000 (31.12.2011: RM2,555,000; 1.1.2011 : RM8,062,000) which earns interest at 9.35% (31.12.2011 : 7.60%; 1.1.2011 : 7.05%) per annum. 7.2 Amount due from associates and jointly controlled entity The trade amount due from associates of the Group is subject to normal trade terms. The non-trade amounts due from associates and jointly controlled entity are unsecured, interest-free and repayable on demand. 7.3 Amount due from subsidiaries Included in the amount due from subsidiaries is RM1,305,000 (31.12.2011 : RM13,148,000; 1.1.2011 : RM12,848,000) which earns interest at 6.60% (31.12.2011 : 7.60%; 1.1.2011 : 6.90%) per annum. Other than as disclosed above, the non-trade amount due from subsidiaries is unsecured, interest-free and repayable on demand. Annual Report 12 91

Notes to the financial statements (CONT D) 8. Inventories - Group 31.12.2012 31.12.2011 1.1.2011 RM 000 RM 000 RM 000 Raw materials 14,764 18,805 18,880 Work-in-progress 500 1,554 1,769 Manufactured inventories 22,828 32,631 23,239 Trading inventories 20,777 26,386 21,753 Food and beverages 11,781 7,267 8,895 70,650 86,643 74,536 The net amount of inventories written down during the current financial year amounted to RM994,000 (2011 : RM520,000). The amount of inventories written down is based on management s estimate of the inventories net realisable value after taking into consideration of the inventory holding period, selling price subsequent to the end of the reporting period and other relevant factors. 9. Cash and cash equivalents Group Note 31.12.2012 31.12.2011 1.1.2011 RM 000 RM 000 RM 000 Short term deposits with licensed banks 9.1 2,531 8,248 2,645 Cash and bank balances 56,892 68,270 46,267 59,423 76,518 48,912 Company Short term deposits with licensed banks 9.1 6,646 710 Cash and bank balances 545 1,722 632 545 8,368 1,342 9.1 Short term deposits with licensed banks Included in short term deposits with licensed banks of the Group and of the Company is RM Nil (31.12.2011 : RM600,000; 1.1.2011 : RM710,000) being amount invested in a debt service reserve account set aside solely for the payment of interest. 10. Assets classified as held for sale - Group 31.12.2012 31.12.2011 1.1.2011 RM 000 RM 000 RM 000 Leasehold land 3,033 Buildings and furniture and fittings 3,242 Plant and machinery 744 7,019 92 Texchem Resources Bhd company no. 16318-K

Notes to the financial statements (CONT D) 10. Assets classified as held for sale - Group (cont d) The movements in the assets classified as held for sale are as follows : 2012 2011 RM 000 RM 000 At 1 January 7,019 Transfer from property, plant and equipment 367 Disposal (6,552) Written off (834) At 31 December During financial year 2010, management committed to a plan to dispose of the leasehold land together with the buildings erected thereon and the plant and machinery belonging to a subsidiary. Arising from the disposal which was completed in 2011, the Group recognised a gain of RM7,928,000. 11. Share capital - Group/Company 31.12.2012 Amount RM 000 Number of shares ( 000) Ordinary shares of RM1 each : Authorised 500,000 500,000 Issued and fully paid 124,099 124,099 31.12.2011 Ordinary shares of RM1 each : Authorised 500,000 500,000 Issued and fully paid 124,099 124,099 1.1.2011 Ordinary shares of RM1 each : Authorised 500,000 500,000 Issued and fully paid 124,099 124,099 Annual Report 12 93

Notes to the financial statements (CONT D) 12. Reserves Group Note 31.12.2012 31.12.2011 1.1.2011 RM 000 RM 000 RM 000 Non-distributable : Share premium 25,568 25,568 25,568 Translation reserve 12.1 (2,552) (3,660) (5,408) Merger reserve 1,092 1,092 1,092 Capital reserve 12.2 3,588 4,114 3,814 Accumulated losses (8,307) (2,821) 27,696 18,807 22,245 Distributable : Retained earnings 33,862 61,558 18,807 22,245 Company Non-distributable : Share premium 25,568 25,568 25,568 Distributable : Retained earnings 12.3 18,885 26,329 27,124 44,453 51,897 52,692 The movements in the reserves are disclosed in the statements of changes in equity. 12.1 Translation reserve The translation reserve comprises all foreign currency differences arising from the translation of foreign operations. 12.2 Capital reserve The capital reserve represents the statutory reserve of foreign subsidiaries as required by the respective foreign legislations. 12.3 Section 108 tax credit and tax exempt income account Subject to agreement with the Inland Revenue Board, the Company has sufficient Section 108 tax credit and tax exempt income to frank/distribute its entire retained earnings at the end of the reporting period if paid out as dividends. The Finance Act, 2007 introduced a single tier company income tax system with effect from year of assessment 2008. Effective 1 January 2008, the Company is given the option to make an irrevocable election to move to a single tier system or continue to use its tax credit under Section 108 of the Income Tax Act, 1967 for the purpose of dividend distribution. The Company has not made this election. As such, the Section 108 tax credit as at 31 December 2012 will be available to the Company until such time the credit is fully utilised or upon expiry of the transitional period on 31 December 2013, whichever is earlier. 94 Texchem Resources Bhd company no. 16318-K

Notes to the financial statements (CONT D) 13. Loans and borrowings Group Unsecured 31.12.2012 31.12.2011 1.1.2011 RM 000 RM 000 RM 000 Current : Syndicated term loan 5,500 Bank overdrafts 15,854 15,960 12,856 Bankers acceptances 53,015 67,634 63,245 Revolving credit 78,070 99,096 95,211 Term loans - Fixed rate 1,492 1,015 1,706 - Variable rate 6,700 7,548 8,278 Trust receipts 4,566 12,252 7,172 Commercial papers 30,000 20,000 Collateralised loan obligations 35,000 Other borrowings 10,033 6,680 7,908 169,730 245,685 251,376 Finance lease liabilities 1,571 1,663 1,076 171,301 247,348 252,452 Unsecured Non-current : Syndicated term loan 49,500 Commercial papers 30,000 Term loans - Fixed rate 1,466 2,526 - Variable rate 12,255 10,961 12,787 12,255 61,927 45,313 Finance lease liabilities 2,981 2,554 2,059 15,236 64,481 47,372 Company Unsecured Current : Syndicated term loan 5,500 Bank overdrafts 901 Revolving credit 36,500 37,000 37,000 Term loans - Variable rate 1,158 1,158 1,158 Commercial papers 30,000 20,000 Collateralised loan obligations 35,000 38,559 73,658 93,158 Finance lease liabilities 2 21 20 38,561 73,679 93,178 Unsecured Non-current : Syndicated term loan 49,500 Commercial papers 30,000 Term loans - Variable rate 96 1,254 2,412 96 50,754 32,412 Finance lease liabilities 2 24 96 50,756 32,436 Annual Report 12 95

Notes to the financial statements (CONT D) 13. Loans and borrowings (cont d) 13.1 Covenants The commercial papers were subject to the fulfilment of the following covenants : i) The Group s Debt Service Cover Ratio should not be less than 1.4 times; and ii) The Group s Debt to Equity Ratio should not exceed 2.8 : 1 for the first three years and subsequently, 2.3 : 1 from the fourth year to the seventh year. The syndicated term loan was subject to fulfilment of the following covenants : i) The Group s Debt Service Cover Ratio ( DSCR ) should not be less than 1.20 times; ii) The Group s Debt to Equity Ratio should not exceed 2.0 : 1; and iii) Dividend to be declared and paid should not exceed the net profit after tax of the Company and subject to DSCR post dividend distribution of not less than 2.0 times. During the financial year, the Company has fully settled the commercial papers and syndicated term loan and the above covenants have been lifted as at 31 December 2012. 13.2 Finance lease liabilities Finance lease liabilities are payable as follows: 31.12.2012 31.12.2011 1.1.2011 Future minimum lease payments Interest Present value of minimum lease payments Future minimum lease payments Interest Present value of minimum lease payments Future minimum lease payments Interest Present value of minimum lease payments Group RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 Less than 1 year 1,767 196 1,571 1,854 191 1,663 1,224 148 1,076 Between 1 and 5 years 3,328 347 2,981 2,736 182 2,554 2,259 200 2,059 5,095 543 4,552 4,590 373 4,217 3,483 348 3,135 Company Less than 1 year 2 2 21 21 21 1 20 Between 1 and 5 years 2 2 24 24 2 2 23 23 45 1 44 The finance lease liabilities are secured as the rights to the assets under the finance lease that revert to the lessor in the event of default. 96 Texchem Resources Bhd company no. 16318-K

Notes to the financial statements (CONT D) 14. Deferred liabilities Directors retirement/resignation benefits Group Company 2012 2011 2012 2011 RM 000 RM 000 RM 000 RM 000 At 1 January 3,491 4,517 782 970 Provision/(Reversal) made during the year (Note 17.1) 982 (48) 137 10 Amount paid during the year (610) (989) (198) Exchange difference 10 11 Disposal of subsidiaries (Note 21) (469) At 31 December 3,404 3,491 919 782 15. Trade and other payables Group Note 31.12.2012 31.12.2011 1.1.2011 RM 000 RM 000 RM 000 Trade Trade payables 75,633 91,247 82,334 Associates 15.1 123 62 75,633 91,370 82,396 Non-trade Jointly controlled entity 15.1 28 Associates 15.1 7,451 807 2,028 Other payables 15.2 18,113 27,019 32,034 Accrued expenses 27,908 37,827 26,888 53,472 65,681 60,950 129,105 157,051 143,346 Company Non-trade Subsidiaries 15.1 2,462 26,003 16,711 Associates 15.1 6,161 15 7 Other payables 473 1,267 1,396 Accrued expenses 1,057 7,063 869 10,153 34,348 18,983 15.1 Amount due to subsidiaries, associates and jointly controlled entity The trade amounts due to associates of the Group were subject to normal trade terms. The non-trade amounts due to subsidiaries, associates and jointly controlled entity are unsecured, interestfree and payable on demand other than the amount due to certain subsidiaries of RM1,000,000 (31.12.2011 : RM25,930,000; 1.1.2011 : RM16,709,000) which are subject to fixed interest rates at 4.34% (31.12.2011 : 4.34% to 7.85%; 1.1.2011 : 4.57% to 7.55%) per annum. 15.2 Other payables Included in the other payables of the Group is RM1,735,000 (31.12.2011 : RM Nil; 1.1.2011 : RM Nil) which is subject to interest at 7.50% (31.12.2011 : Nil; 1.1.2011 : Nil) per annum. Annual Report 12 97

Notes to the financial statements (CONT D) 16. Provision - Group Provision for restoration costs 2012 2011 RM 000 RM 000 At 1 January 3,126 2,863 Provision made during the year 507 393 Utilised during the year (181) (130) 326 263 At 31 December 3,452 3,126 17. REVENUE/Operating profit Group 2012 2011 RM 000 RM 000 (Restated) Revenue - Invoiced value of goods sold less discounts and returns 1,001,487 927,823 - Commission income 3,595 3,673 - Service income 5,641 5,760 1,010,723 937,256 Cost of sales (815,393) (757,383) Gross profit 195,330 179,873 Distribution costs (108,121) (98,826) Administrative expenses (99,194) (91,950) Other expenses (10,004) (16,162) Other income 29,259 48,923 Operating profit 7,270 21,858 Company Revenue - Dividend income 23,845 12,469 Administrative expenses (6,823) (4,441) Other expenses (66,584) Other income 58,575 1,371 Operating profit 9,013 9,399 98 Texchem Resources Bhd company no. 16318-K

Notes to the financial statements (CONT D) 17.1 Profit/(Loss) For The Year Operating profit is arrived at: After charging : Group Company 2012 2011 2012 2011 RM 000 RM 000 RM 000 RM 000 Auditors remuneration - Audit fees - KPMG Malaysia - current year 174 177 36 22 - prior year 4 5 3 3 - Overseas affiliates of KPMG Malaysia 38 - Other auditors - current year 437 605 - prior year 7 2 - Non-audit fees - KPMG Malaysia 84 53 65 13 - Local affiliates of KPMG Malaysia 89 163 5 Bad debts written off 20 54 Directors emoluments Directors of the Company - fees 1,989 1,295 636 490 - others 3,987 3,834 1,051 902 Other Directors - fees 2,184 1,306 - others 12,877 11,559 Directors retirement/ resignation benefits (Note 14) 982 137 10 Property, plant and equipment - Depreciation (Note 3) 26,965 29,682 494 492 - Impairment loss (Note 3) 11,503 - Written off 226 477 Loss on foreign exchange, net 2,871 1,592 2 1 Rental of equipment and premises 25,365 24,040 61 68 Research and development expenses 900 1,038 Severance costs 981 Inventories written off 1,232 Inventories written down 994 520 Impairment loss on trade receivables 121 Impairment loss on goodwill 31,690 1,612 Asset classified as held for sale written off (Note 10) 834 Impairment loss on investments in : - Subsidiaries 55,378 - Associates 10,855 And crediting : Insurance claim 7,658 19,804 Impairment loss on trade receivables written back, net 206 Reversal of impairment loss on property, plant and equipment (Note 3) 2,197 Dividends (gross) receivable from subsidiaries 23,845 12,469 Gain on disposal of property, plant and equipment 382 606 1 Interest income 1,434 1,575 1,029 1,055 Rental income 1,092 1,661 Reversal of Directors retirement/ resignation benefits (Note 14) 48 Gain on liquidation of a subsidiary 84 Gain on disposal of assets classified as held for sale 7,928 Gain on disposal of subsidiaries 57,233 Gain on re-measurement of retained interest in associates (Note 21) 28,285 Gain on disposal of an associate 326 Annual Report 12 99

Notes to the financial statements (CONT D) 18. Employee information Group Company 2012 2011 2012 2011 RM 000 RM 000 RM 000 RM 000 Staff costs (including key management personnel) 126,633 122,949 961 853 Staff costs and Directors emoluments of the Group and of the Company include contributions to the Employees Provident Fund of RM9,257,000 (2011 : RM8,695,000) and RM158,000 (2011 : RM151,000) respectively. The estimated value of benefits received by the Directors otherwise than in cash are as follows: Group Company 2012 2011 2012 2011 RM 000 RM 000 RM 000 RM 000 Directors of the Company 135 132 28 29 Other Directors 296 287 431 419 28 29 19. Finance costs Group Company 2012 2011 2012 2011 RM 000 RM 000 RM 000 RM 000 (Restated) Interest expense : Bridging loan 1,170 523 1,170 523 Term loans 1,674 1,334 151 234 Commercial papers 433 2,191 433 2,191 Bank overdrafts 918 1,064 20 16 Collateralised loan obligations 1,867 1,867 Syndicated term loan 2,844 796 2,844 795 Other borrowings 7,451 7,253 3,228 2,897 14,490 15,028 7,846 8,523 Interest expense recognised on discontinued operation (Note 21) 1,524 1,939 16,014 16,967 7,846 8,523 20. Income tax expense Recognised in profit or loss Group Company 2012 2011 2012 2011 RM 000 RM 000 RM 000 RM 000 (Restated) Income tax expense on continuing operations 8,120 7,565 (696) 1,671 Major components of income tax expense include : Group Company 2012 2011 2012 2011 RM 000 RM 000 RM 000 RM 000 (Restated) Current income tax expense Malaysian tax - current year 7,546 5,891 88 1,699 - prior years (124) (276) (784) (28) 7,422 5,615 (696) 1,671 Foreign tax - current year 1,344 1,723 - prior years 48 1,392 1,723 Total current tax 8,814 7,338 (696) 1,671 Deferred tax expense - origination and reversal of temporary differences (742) (125) - prior years 48 352 Total deferred tax (694) 227 Total income tax expense 8,120 7,565 (696) 1,671 100 Texchem Resources Bhd company no. 16318-K

Notes to the financial statements (CONT D) 20. Income tax expense (cont d) Reconciliation of effective income tax expense Group Company 2012 2011 2012 2011 RM 000 RM 000 RM 000 RM 000 (Restated) (Loss)/Profit for the year (29,145) (1,639) 1,863 (795) Total income tax expense 8,120 7,565 (696) 1,671 (Loss)/Profit excluding tax (21,025) 5,926 1,167 876 Tax calculated using Malaysian tax rate at 25% (2011 : 25%) (5,256) 1,481 292 219 Effect of different tax rates in foreign jurisdictions * 82 1,361 Non deductible expenses 6,377 6,693 20,065 3,863 Share of loss of jointly controlled entity 48 95 Share of loss of equity accounted associates 3,403 131 Realisation of deferred tax on revaluation surplus (503) Tax exempt income (1,593) (3,810) (20,269) (2,383) Tax incentives (302) (2,599) Deferred tax assets not recognised 5,633 4,615 Other items (244) 25 (Over)/Under provision in prior years (28) 76 (784) (28) Income tax expense 8,120 7,565 (696) 1,671 * The tax rates in the foreign jurisdictions in which certain foreign subsidiaries operate are different from that of the Malaysian tax rate. 21. Discontinued operation/disposal of subsidiaries On 21 March 2012, the Company entered into a Conditional Sale and Purchase Agreement with Fumakilla Limited, Japan ( FMJ ) for the proposed disposal of 70% of the issued and paid-up share capital of Fumakilla Asia Sdn. Bhd. (formerly known as Technopia Sdn. Bhd.) ( FASB ) and PT Technopia Jakarta ( PTTJ ) for a cash consideration of USD36.0 million (equivalent to RM110,379,000) and USD6.4 million (equivalent to RM19,623,000) respectively ( Proposed Disposal ). The proposed disposal was completed on 19 November 2012. FASB and its subsidiaries and PTTJ which formed the Group s Family Care Division was not a discontinued operation or classified as held for sale as at 31 December 2011. In accordance with MFRS 5: Non-current Assets Held for Sale and Discontinued Operations, the comparative consolidated income statement and statement of comprehensive income has been re-presented to show the discontinued operation separately from continuing operations. The profit/(loss) attributable to the discontinued operation are as follows : Results of discontinued operation 2012 2011 RM 000 RM 000 Revenue 122,943 150,495 Cost of sales (79,211) (103,296) Gross profit 43,732 47,199 Distribution costs (19,474) (19,734) Administrative expenses (26,196) (32,692) Other expenses (21,686) Other income 32,035 5,231 Operating profit 8,411 4 Finance costs (1,524) (1,939) Profit/(Loss) before tax 6,887 (1,935) Income tax expense 653 (1,631) Results from operating activities, net of tax 7,540 (3,566) Gain on sale of discontinued operation 70,346 Profit/(Loss) for the year 77,886 (3,566) Annual Report 12 101

Notes to the financial statements (CONT D) 21. Discontinued operation/disposal of subsidiaries (cont d) 2012 2011 RM 000 RM 000 Included in operating profit are : Directors retirement/resignation benefits 174 Directors emoluments Director of the Company - fees 168 124 - others 475 501 Other Directors - fees 332 216 - others 1,985 1,709 Property, plant and equipment - Depreciation 4,832 6,767 - Written off 14 Impairment loss on goodwill 21,686 Loss on foreign exchange, net 833 263 Rental of equipment and premises 499 689 Research and development expenses 853 1,303 Staff costs 19,893 27,835 Gain on disposal of property, plant and equipment (62) (186) Interest income (801) (750) Rental income (499) (702) Reversal of Directors retirement/resignation benefits (77) Reversal of inventories written down (10) (125) Gain on re-measurement of retained interest in associates (28,285) Staff costs and Directors emoluments include contributions to the Employees Provident Fund of RM1,045,000 (2011: RM1,268,000). The estimated value of benefits received by the Directors otherwise in cash are as follows: 2012 2011 RM 000 RM 000 Directors of the Company 21 20 Other Directors 73 65 94 85 Cash flows from/(used in) discontinued operation Net cash from operating activities 2,946 4,338 Net cash from/(used in) investing activities 120,988 (404) Net cash (used in)/from financing activities (141) 2,287 Effect on cash flows 123,793 6,221 The profit from discontinued operation of RM77,886,000 (2011 : loss of RM3,566,000) is attributable to : 2012 2011 RM 000 RM 000 Owners of the Company 77,518 (4,119) Non-controlling interests 368 553 77,886 (3,566) Effect of disposal on financial position of the Group : 2012 RM 000 Property, plant and equipment 50,889 Inventories 22,331 Trade and other receivables 77,876 Current tax assets 6,768 Deferred tax assets 1,047 Cash and cash equivalents 9,014 Trade and other payables (46,850) Loans and borrowings (34,101) Deferred tax liabilities (2,194) Deferred liabilities (469) Non-controlling interests (8,861) Net assets disposed 75,450 102 Texchem Resources Bhd company no. 16318-K

Notes to the financial statements (CONT D) 21. Discontinued operation/disposal of subsidiaries (cont d) Effect of disposal on financial position of the Group (cont d) : 2012 RM 000 Goodwill 9,920 Transfer from foreign currency translation reserve 1,715 Transfer to investment in associates (27,429) Gain on sale of discontinued operation 70,346 54,552 Consideration received, satisfied in cash 130,002 Cash and cash equivalents disposed (9,014) Net cash inflow 120,988 Gain on sale of subsidiaries is attributable to : - Gain on disposed interest in discontinued operation 70,346 - Gain on re-measurement of retained interest in associates 28,285 98,631 22. Basic (loss)/earnings per ordinary share - Group The calculation of basic (loss)/earnings per ordinary share at 31 December 2012 and 2011 was based on the profit or loss attributable to ordinary shareholders and the weighted number of ordinary shares outstanding calculated as follows : 2012 2011 Continuing operations Discontinued operation Total Continuing operations Discontinued operation Total RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 (Loss)/Profit for the year attributable to owners (28,150) 77,518 49,368 (1,025) (4,119) (5,144) Weighted average number of ordinary shares at 31 December ( 000) 124,099 124,099 124,099 124,099 124,099 124,099 Basic (loss)/earnings per ordinary shares (sen) (22.68) 62.46 39.78 (0.83) (3.32) (4.15) 23. Dividends Dividends recognised by the Company are as follows : Sen per share (net of tax) Amount Date of payment RM 000 2012 Special interim ordinary less 25% tax 7.50 9,307 26 December 2012 Annual Report 12 103

Notes to the financial statements (CONT D) 24. Related parties Identity of related parties For the purposes of these financial statements, parties are considered to be related to the Group if the Group or the Company has the ability, directly or indirectly, to control the party or exercise significant influence over the party in making financial and operating decisions, or vice versa, or where the Group or the Company and the party are subject to common control or common significant influence. Related parties may be individuals or other entities. Related parties also include key management personnel defined as those persons having authority and responsibility for planning, directing and controlling the activities of the Group either directly or indirectly. Key management personnel includes the Directors of the Group and of the Company. The Group has related party relationship with its holding companies, significant investors, subsidiaries, associates and key management personnel. Significant related party transactions The significant related party transactions of the Group and the Company are shown below. A. Company and its subsidiaries 2012 2011 RM 000 RM 000 Company - Advances from 11,400 15,950 - Advances to 1,305 - Rental reimbursed from subsidiaries 588 582 - Interest expense 1,369 1,213 - Interest income 923 989 - Disposal of shares in subsidiaries 75,410 - Subscription of shares in subsidiaries 40,960 1,500 B. Companies in which a Director, Tan Sri Dato Seri Fumihiko Konishi is deemed to have a substantial financial interest - Texchem Holdings Sdn. Bhd. 2012 2011 RM 000 RM 000 Company - Rental expense 708 708 - Dividends paid 2,921 Group - Rental paid 855 876 C. Associates 2012 2011 RM 000 RM 000 Company - Dividends paid 1,961 - - Management fee payable 1,200 360 - Information technology costs 11 11 - Insurance premium payable 95 95 - Acquisition of subsidiaries 9,610 381 Group - Dividend paid 1,961 - Information technology costs 127 129 - Management fees payable 7,674 6,217 - Sales 16,006 32,481 - Purchases 213 423 - Security service charges payable 1,087 1,088 - Rental expense 1,489 1,241 - Insurance premium payable 3,107 2,854 - Technical fee receivable 130 257 - Royalty fee payable 1,426 181 104 Texchem Resources Bhd company no. 16318-K

Notes to the financial statements (CONT D) 24. Related parties (CONT D) Significant related party transactions (cont d) D. Key management personnel Group Company 2012 2011 2012 2011 RM 000 RM 000 RM 000 RM 000 Directors - Fees 3,428 2,216 460 340 - Remuneration 15,909 15,307 981 838 - Estimated value of benefits-in-kind 423 419 28 29 19,760 17,942 1,469 1,207 There were no transactions with the key management personnel other than the remuneration package paid to them in accordance with the terms and conditions of their appointment as above. The balances related to the above transactions are shown in Notes 7 and 15 to the financial statements. All the amounts outstanding are unsecured and are expected to be settled in cash. There was no impairment loss provided in respect of related party balances at the end of the reporting period. 25. Operating segments The Group has four reportable segments, as described below, which are the Group s strategic business units. The strategic business units offer different products and services, and are managed separately because they require different technology and marketing strategies. For each of the strategic business units, the Group s Chief Executive Officer (the chief operating decision maker) reviews internal management reports at least on a quarterly basis. The following summary describes the operations in each of the Group s reportable segments: Industrial Polymer Engineering Food Restaurant Performance is measured based on segment profit before tax, as included in the internal management reports that are reviewed by the Group s Chief Executive Officer (the chief operating decision maker). Segment profit is used to measure performance as management believes that such information is the most relevant in evaluating the results of certain segments relative to other entities that operate within these industries. Other non-reportable segment represents the investment holding activities of the Group. Segment assets The total of segment asset is measured on all assets (including goodwill) of a segment as included in the internal management reports that are reviewed by the Group s Chief Executive Officer. Segment total asset is used to measure the return of assets of each segment. Segment liabilities Segment liabilities information is neither included in the internal management reports nor provided regularly to the Chief Executive Officer. Hence, no disclosure is made on segment liability. Annual Report 12 105

Notes to the financial statements (CONT D) 25. Operating segments (cont d) 2012 Polymer Industrial Engineering Food Restaurant Others Eliminations Total RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 Revenue from external customers 445,395 176,052 231,206 150,949 7,121 1,010,723 Inter-segment revenue 585 117 6,985 160 (7,847) Total revenue 445,980 176,169 238,191 150,949 7,281 (7,847) 1,010,723 Profit/(Loss) before share of loss after tax of equity accounted associates and jointly controlled entity 4,119 (9,008) (5,402) 16,259 (13,188) (7,220) Share of loss of jointly controlled entity, net of tax (194) (194) Share of profit/(loss) of equity accounted associates, net of tax 373 (13,984) (13,611) Profit/(Loss) before tax (segment profit/(loss)) 4,119 (8,829) (5,402) 16,259 (27,172) (21,025) Included in the measure of segment profit/(loss) are : - Inventories written down 17 977 10 1,004 - (Reversal of impairment loss)/ Impairment loss on trade receivables (64) (42) (114) 14 (206) - Reversal of impairment loss on property, plant and equipment (2,197) (2,197) - Depreciation 1,515 9,149 3,708 6,500 1,261 22,133 1,468 7,887 3,594 6,500 1,285 20,734 Segment assets 132,385 168,714 96,138 64,066 76,444 537,747 - Included in the measure of segment assets are: - Investment in associates 58,247 58,247 - Investment in jointly controlled entity 277 277 - Additions to property, plant and equipment 1,133 19,712 1,729 12,020 895 35,489 106 Texchem Resources Bhd company no. 16318-K

Notes to the financial statements (CONT D) 25. Operating segments (cont d) 2011 (Restated) Polymer Industrial Engineering Food Restaurant Others Eliminations Total RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 Revenue from external customers 430,745 166,516 206,475 126,805 6,715 937,256 Inter-segment revenue 920 64 3,224 149 (4,357) Total revenue 431,665 166,580 209,699 126,805 6,864 (4,357) 937,256 Profit/(Loss) before share of loss after tax of equity accounted associates and jointly controlled entity 7,146 2,299 (4,738) 12,672 (10,549) 6,830 Share of loss of jointly controlled entity, net of tax (379) (379) Share of loss of equity accounted associates, net of tax (378) (147) (525) Profit/(Loss) before tax (segment profit/(loss)) 7,146 1,542 (4,738) 12,672 (10,696) 5,926 Included in the measure of segment profit/(loss) are : - Inventories written down/(written back) 186 467 (5) (3) 645 - Inventories written off 1,232 1,232 - Impairment loss/(reversal of impairment loss) on trade receivables 9 (1) 99 14 121 - Impairment loss on property, plant and equipment 11,503 11,503 - Depreciation 1,586 10,965 3,685 5,638 1,041 22,915 1,781 24,166 3,779 5,638 1,052 36,416 Segment assets 148,948 181,729 95,598 50,479 39,175 658,975 Included in the measure of segment assets are: - Investment in associates 6,568 13,591 20,159 - Investment in jointly controlled entity 221 221 - Additions to property, plant and equipment 2,382 13,224 1,305 7,654 3,389 27,954 Annual Report 12 107

Notes to the financial statements (CONT D) 25. Operating segments (cont d) Geographical segments In presenting information on the basis of geographical segments, segment revenue is based on geographical location of customer. Segment assets are based on the geographical location of the assets. The amounts of non-current assets do not include financial instruments (including investment in associates and jointly controlled entity) and deferred tax assets. Geographical information Revenue RM 000 Non-current assets RM 000 2012 Malaysia 493,224 109,836 Singapore 47,932 13,538 Thailand 96,170 33,750 Vietnam 66,056 1,246 China 93,493 3,168 Myanmar 18,814 13,899 Indonesia 21,243 22 Others 173,791 23 1,010,723 175,482 2011 (Restated) Malaysia 450,275 140,107 Singapore 86,223 13,332 Thailand 83,376 25,771 Vietnam 53,728 18,362 China 88,182 4,514 Myanmar 13,728 17,666 Indonesia 8,092 16,609 Others 153,652 62 937,256 236,423 26. Capital management The Group s objectives when managing capital is to maintain a strong capital base and safeguard the Group s ability to continue as a going concern, so as to maintain investor, creditor and market confidence and to sustain future development of the business. There were no changes in the Group s approach to capital management during the year. 27. Capital commitments - Group 31.12.2012 31.12.2011 1.1.2011 RM 000 RM 000 RM 000 Property, plant and equipment Approved but not contracted for 119 635 1,230 Contracted but not provided for in the financial statements - within one year 7,248 2,436 6,675 7,367 3,071 7,905 108 Texchem Resources Bhd company no. 16318-K

Notes to the financial statements (CONT D) 28. Operating leases Non-cancellable operating lease rentals are as follows : Group 31.12.2012 31.12.2011 1.1.2011 RM 000 RM 000 RM 000 Less than 1 year 21,107 19,012 16,232 Between 1 and 5 years 17,544 19,804 19,928 More than 5 years 7,517 7,558 38,651 46,333 43,718 Company Less than 1 year 2,056 2,056 2,181 Between 1 and 5 years 2,035 4,091 6,211 More than 5 years 4,091 6,147 8,392 The Group and the Company leased land, office space, warehouse, equipment and outlets under operating leases. The leases typically run for an initial period of 1 to 10 years with an option to renew. The lease payments for certain outlets by certain subsidiaries in the Group s Restaurant division are based on fixed lease rental amount or a percentage of between 8% to 15% (2011 : 6% to 13%) of the subsidiaries net turnover, whichever is higher. The lease commitment disclosed above is aggregated based on the minimum lease rental payable. 29. Financial instruments 29.1 Categories of financial instruments Trade and other receivables (excluding prepayments) and cash and bank balances are categorised as loans and receivables while trade and other payables, provision and loans and borrowings are categorised as other liabilities. 29.2 Financial risk management The Group has exposure to the following risks from its use of financial instruments: Credit risk Liquidity risk Market risk 29.3 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. The Group s exposure to credit risk arises principally from its receivables from customers and investment in debt securities. The Company s exposure to credit risk arises principally from advances to subsidiaries and financial guarantees given to banks for credit facilities granted to subsidiaries. Receivables Risk management objectives, policies and processes for managing the risk Management has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis. Normally, credit evaluations are performed on customers requiring credit over a certain amount. Annual Report 12 109

Notes to the financial statements (CONT D) 29. Financial instruments (cont d) 29.3 Credit risk (cont d) Receivables (cont d) Exposure to credit risk, credit quality and collateral As at the end of the reporting period, the maximum exposure to credit risk arising from receivables is represented by the carrying amounts in the statement of financial position. 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 ageing analysis to monitor the credit quality of the receivables. Any receivables having significant balances past due more than 120 days, which are deemed to have higher credit risk, are monitored individually. The exposure of credit risk for trade receivables as at the end of the reporting period by geographic region was: Group 31.12.2012 31.12.2011 1.1.2011 RM 000 RM 000 RM 000 Domestic 59,159 81,600 80,045 Thailand 14,448 17,845 26,709 People s Republic of China 8,593 5,256 12,797 Singapore 5,938 12,201 15,477 Vietnam 6,021 9,893 7,198 Myanmar 463 4,754 12,540 United States 12,529 20,381 19,449 Others 14,793 12,667 13,781 121,944 164,597 187,996 Impairment losses The ageing of trade receivables as at the end of the reporting period was: Group Individual Collective Gross impairment impairment Net RM 000 RM 000 RM 000 RM 000 31.12.2012 Not past due 80,570 80,570 Past due 0-30 days 29,483 (24) 29,459 Past due 31-120 days 11,669 (55) 11,614 Past due more than 120 days 603 (302) 301 122,325 (381) 121,944 31.12.2011 Not past due 105,695 105,695 Past due 0-30 days 31,022 (22) 31,000 Past due 31-120 days 22,878 (60) 22,818 Past due more than 120 days 5,595 (511) 5,084 165,190 (593) 164,597 1.1.2011 Not past due 139,641 139,641 Past due 0-30 days 25,420 (41) 25,379 Past due 31-120 days 22,868 (263) 22,605 Past due more than 120 days 737 (366) 371 188,666 (670) 187,996 110 Texchem Resources Bhd company no. 16318-K

Notes to the financial statements (CONT D) 29. Financial instruments (cont d) 29.3 Credit risk (cont d) Receivables (cont d) Impairment losses (continued) The movements in the allowance for impairment losses of trade receivables during the financial year were : Group 2012 2011 RM 000 RM 000 At 1 January 593 670 Impairment loss recognised 121 252 Impairment loss reversed (327) (131) Impairment loss written off (5) (195) Exchange difference (1) (3) At 31 December 381 593 The allowance account in respect of receivables is used to record impairment losses. Unless the Group is satisfied that recovery of the amount is possible, the amount considered irrecoverable is written off against the receivable directly. Financial guarantees Risk management objectives, policies and processes for managing the risk The Company provides unsecured financial guarantees to banks in respect of banking facilities granted to certain subsidiaries. The Company monitors on an ongoing basis the results of the subsidiaries and repayments made by the subsidiaries. Exposure to credit risk, credit quality and collateral The maximum exposure to credit risk amounted to RM81.4 million (31.12.2011 : RM85.8 million; 1.1.2011 : RM60.4 million) representing the outstanding banking facilities of the subsidiaries as at the end of the reporting period. The Group also issued a corporate guarantees to the suppliers of certain subsidiaries amounting to RM34.5 million (31.12.2011 : RM48.8 million; 1.1.2011 : RM31.9 million). As at the end of the reporting period, there was no indication that any subsidiary would default on repayment. The fair value of the financial guarantees have not been recognised since the fair value on initial recognition was not material. Inter company balances Risk management objectives, policies and processes for managing the risk The Company provides unsecured advances to subsidiaries. The Company monitors the results of the subsidiaries regularly. Exposure to credit risk, credit quality and collateral As at the end of the reporting period, the maximum exposure to credit risk is represented by their carrying amounts in the statements of financial position. Impairment losses As at the end of the reporting period, there was no indication that the advances to the subsidiaries are not recoverable. The Company does not specifically monitor the ageing of the advances to the subsidiaries. Nevertheless, these advances are not considered to be overdue and are repayable on demand. Annual Report 12 111

Notes to the financial statements (CONT D) 29. Financial instruments (cont d) 29.4 Liquidity risk Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group s exposure to liquidity risk arises principally from its various payables, loans and borrowings. In the management of liquidity risk, the Group and the Company monitor and maintain a level of cash and cash equivalents deemed adequate by management to finance the Group s and Company s operations and to mitigate any adverse effects of fluctuations in cash flows. At 31 December 2012, the current liabilities of the Group and of the Company exceeded the current assets by RM4,856,000 and RM32,295,000 respectively. The current liabilities of the Group and of the Company mainly consist of short term borrowings which are used for working capital purpose. At the date of this report, the Group has only utilised approximately 68% of its total banking facilities. Additionally, the Company is in the process of negotiating with its bankers to convert RM22,500,000 of its revolving credit into long term loans. The Management is of the opinion that the Group s banking facilities will continue to be available from its lenders and that the Group will be able to generate cash flows from its operations to meet its liabilities as and when they fall. Maturity analysis The table below summarises the maturity profile of the Group s and of the Company s financial liabilities as at the end of the reporting period based on undiscounted contractual payments: Carrying amount Contractual interest rates Contractual cash flows Under 1 year 1-2 years 2-5 years More than 5 years RM 000 % RM 000 RM 000 RM 000 RM 000 RM 000 31.12.2012 Group Non-derivative financial liabilities Bank overdrafts 15,854 6.25 8.10 15,854 15,854 Bankers acceptances 53,015 2.29 5.17 53,015 53,015 Revolving credit 78,070 2.29 5.37 78,070 78,070 Trust receipts 4,566 4.22 6.00 4,566 4,566 Term loans 20,447 4.66 7.90 22,993 8,535 7,846 6,318 294 Finance lease liabilities 4,552 2.15 5.70 5,095 1,767 2,585 743 Other borrowings 10,033 1.91 6.07 10,033 10,033 Other payables 1,735 7.50 1,735 1,735 Trade and other payables * 127,297 127,297 127,297 315,569 318,658 300,872 10,431 7,061 294 Company Non-derivative financial liabilities Bank overdrafts 901 7.60 7.85 901 901 Term loans 1,254 7.60 1,308 1,211 97 Finance lease liabilities 2 2.35 2 2 Revolving credit 36,500 4.51 5.09 36,500 36,500 Advances from subsidiaries 1,000 4.34 1,000 1,000 Other payables * 9,153 9,153 9,153 48,810 48,864 48,767 97 112 Texchem Resources Bhd company no. 16318-K

Notes to the financial statements (CONT D) 29. Financial instruments (cont d) 29.4 Liquidity risk (cont d) Maturity analysis (cont d) Carrying amount Contractual interest rates Contractual cash flows Under 1 year 1-2 years 2-5 years More than 5 years RM 000 % RM 000 RM 000 RM 000 RM 000 RM 000 31.12.2011 Group Non-derivative financial liabilities Syndicated term loan 55,000 6.00 63,168 8,800 15,180 39,188 Bank overdrafts 15,960 6.25 12.50 15,960 15,960 Bankers acceptances 67,634 2.46 5.30 67,634 67,634 Revolving credit 99,096 2.00 11.50 99,096 99,096 Trust receipts 12,252 3.65 6.00 12,252 12,252 Term loans 20,990 1.29 8.35 23,154 9,915 7,597 5,642 Commercial papers 30,000 5.74 5.98 30,582 30,582 Finance lease liabilities 4,217 2.32 5.70 4,590 1,854 1,651 1,085 Other borrowings 6,680 1.16 15.02 6,680 6,680 Trade and other payables * 156,135 156,135 156,135 467,964 479,251 408,908 24,428 45,915 Company Non-derivative financial liabilities Syndicated term loan 55,000 6.00 63,168 8,800 15,180 39,188 Term loans 2,412 5.99 7.60 2,690 1,341 1,253 96 Commercials papers 30,000 5.74 5.98 30,582 30,582 Finance lease liabilities 23 2.35 23 21 2 Revolving credit 37,000 4.55 5.09 37,000 37,000 Advances from subsidiaries 25,930 4.34 7.85 25,930 25,930 Other payables * 7,429 7,429 7,429 157,794 166,822 111,103 16,435 39,284 Annual Report 12 113

Notes to the financial statements (CONT D) 29. Financial instruments (cont d) 29.4 Liquidity risk (cont d) Maturity analysis (cont d) Carrying amount Contractual interest rates Contractual cash flows Under 1 year 1-2 years 2-5 years More than 5 years RM 000 % RM 000 RM 000 RM 000 RM 000 RM 000 1.1.2011 Group Non-derivative financial liabilities Bank overdrafts 12,856 6.00 12.23 12,856 12,856 Bankers acceptances 63,245 1.20 5.23 63,245 63,245 Revolving credit 95,211 2.00 15.20 95,211 95,211 Trust receipts 7,172 3.48 5.75 7,172 7,172 Term loans 25,297 1.29 8.05 27,674 11,051 9,089 7,534 Commercial papers 50,000 5.65 52,401 21,977 30,424 Collateralised loan obligations 35,000 6.90 36,853 36,853 Finance lease liabilities 3,135 2.32 5.70 3,483 1,224 910 1,349 Other borrowings 7,908 1.16 15.05 7,908 7,908 Trade and other payables * 142,750 142,750 142,750 442,574 449,553 400,247 40,423 8,883 Company Non-derivative financial liabilities Term loans 3,570 7.30 3,984 1,381 1,295 1,308 Collateralised loan obligations 35,000 6.90 36,853 36,853 Commercials papers 50,000 5.65 52,401 21,977 30,424 Finance lease liabilities 44 2.35 45 21 23 1 Revolving credit 37,000 4.17 4.74 37,000 37,000 Advances from subsidiaries 16,709 4.57 7.55 16,709 16,709 Other payables * 1,676 1,676 1,676 143,999 148,668 115,617 31,742 1,309 * The contractual cash flows of trade and other payables exclude accruals for interest on borrowings which have been included in the contractual cash flows of the respective financial liabilities. 29.5 Market risk Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and other prices will affect the Group s financial position or cash flows. 29.5.1 Currency risk The Group incurs foreign currency risk on sales, purchases and borrowings that are denominated in US Dollar (USD), Japanese Yen (JPY), Singapore Dollar (SGD) and Renminbi (RMB). In respect of other monetary assets and liabilities held in currencies other than RM, the Group ensures that the net exposure is kept to an acceptable level, by buying or selling foreign currencies at spot rates where necessary to address short-term imbalances. 114 Texchem Resources Bhd company no. 16318-K

Notes to the financial statements (CONT D) 29. Financial instruments (cont d) 29.5 Market risk (cont d) 29.5.1 Currency risk (cont d) Exposure to foreign currency risk The Group s exposure to foreign currency (a currency which is other than the currency of the Group entities) risk, based on carrying amounts as at the end of the reporting period was: Group RMB USD JPY SGD RM 000 RM 000 RM 000 RM 000 31.12.2012 Trade and other receivables 2,315 43,609 3,281 126 Trade and other payables (3,604) (53,104) (2,821) (676) Cash and bank balances 2,872 17,366 603 168 Loans and borrowings (11,146) Net exposure 1,583 (3,275) 1,063 (382) 31.12.2011 Trade and other receivables 2,266 60,670 2,820 317 Trade and other payables (5,564) (54,337) (6,126) (1,323) Cash and bank balances 1,959 22,669 378 178 Loans and borrowings (31,132) (805) Net exposure (1,339) (2,130) (2,928) (1,633) 1.1.2011 Trade and other receivables 3,382 58,060 1,751 262 Trade and other payables (4,115) (44,115) (5,900) (819) Cash and bank balances 2,665 13,908 96 171 Loans and borrowings (25,875) (7,670) Net exposure 1,932 1,978 (4,053) (8,056) Currency risk sensitivity analysis A 5% strengthening of the RM against the following currencies at the end of the reporting period would have increased (decreased) pre-tax profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular interest rates, remained constant and ignores any impact of forecasted sales and purchases. There is no impact to equity arising from exposure to currency risk. Profit or loss 2012 2011 RM 000 RM 000 Group RMB (79) 67 USD 164 106 JPY (53) 146 SGD 19 82 A 5% weakening of the RM against the above currencies at the end of the reporting period would have had equal but opposite effect on the above currencies to the amounts shown above, on the basis that all other variables remained constant. Annual Report 12 115

Notes to the financial statements (CONT D) 29. Financial instruments (cont d) 29.5 Market risk (cont d) 29.5.2 Interest rate risk The Group s investments in fixed rate debt securities and its fixed rate borrowings are exposed to a risk of change in their fair value due to changes in interest rates. The Group s variable rate borrowings are exposed to a risk of change in cash flows due to changes in interest rates. Investments in equity securities and short term receivables and payables are not significantly exposed to interest rate risk. Risk management objectives, policies and processes for managing the risk The Group and the Company are presently enjoying competitive interest rates which are reviewed and negotiated on a yearly basis. The Group and the Company manage their interest rate risk by having a combination of borrowings with fixed and floating rates. The Group s and the Company s surplus funds are placed as short term deposits with licensed banks. Exposure to interest rate risk The interest rate profile of the Group s and the Company s significant interest-earning and interestbearing financial instruments, based on carrying amounts as at the end of the reporting period was : 31.12.2012 31.12.2011 1.1.2011 RM 000 RM 000 RM 000 Group Fixed rate instruments Financial assets 3,460 10,803 10,707 Financial liabilities (153,463) (192,360) (215,903) (150,003) (181,557) (205,196) Floating rate instruments Financial liabilities (34,809) (119,469) (83,921) Company Fixed rate instruments Financial assets 1,305 19,794 13,558 Financial liabilities (37,502) (62,953) (88,753) (36,197) (43,159) (75,195) Floating rate instruments Financial liabilities (2,155) (87,412) (53,570) Interest rate risk sensitivity analysis (a) 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. Therefore, a change in interest rates at the end of the reporting period would not affect profit or loss. (b) Cash flow sensitivity analysis for variable rate instruments A change of 100 basis points (bp) in interest rates at the end of the reporting period would have increased (decreased) pre-tax profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular foreign currency rates, remained constant. There is no impact to entity arising from exposures to interest rate risk. 116 Texchem Resources Bhd company no. 16318-K

Notes to the financial statements (CONT D) 29. Financial instruments (cont d) 29.5 Market risk (cont d) 29.5.2 Interest rate risk (cont d) Interest rate risk sensitivity analysis (cont d) 29.6 Fair values Group Company Profit or loss Profit or loss 100 bp increase 100 bp decrease 100 bp increase 100 bp decrease RM 000 RM 000 RM 000 RM 000 2012 Floating rate instruments (349) 349 (22) 22 2011 Floating rate instruments (1,195) 1,195 (874) 874 Recognised financial instruments The carrying amounts approximate fair value due to the relatively short term nature of these financial instruments in respect of cash and cash equivalents, receivables, payables and short term borrowings. The aggregate fair values of the other financial assets and liabilities carried on the statements of financial position as at 31 December are shown below : Carrying amount Fair value RM 000 RM 000 Group Financial liabilities 31.12.2012 (Fixed rate instruments) Unsecured: Term loans 1,492 1,378 Finance lease liabilities 4,552 4,600 Financial liabilities 31.12.2011 (Fixed rate instruments) Unsecured: Term loans 2,481 2,427 Finance lease liabilities 4,217 4,226 1.1.2011 (Fixed rate instruments) Unsecured: Term loans 4,232 4,140 Finance lease liabilities 3,135 3,245 Annual Report 12 117

Notes to the financial statements (CONT D) 29. Financial instruments (cont d) 29.6 Fair values (continued) Recognised financial instruments (continued) Carrying amount Fair value RM 000 RM 000 Company Financial liabilities 31.12.2012 (Fixed rate instruments) Unsecured: Finance lease liabilities 2 2 31.12.2011 (Fixed rate instruments) Unsecured: Finance lease liabilities 23 23 1.1.2011 (Fixed rate instruments) Unsecured: Finance lease liabilities 44 43 The fair value for finance lease liabilities is determined by reference to similar lease arrangements. The fair value for non-derivative financial liabilities which is determined for disclosure purposes, is calculated based on the present value of future principal and interest cash flows, discounted at the market rate of interest at the end of the reporting period. 30. Significant events during the financial year 1. On 2 March 2012, Texchem-Pack Holdings (S) Ltd ( TXPHS ), a 70.48% subsidiary of the Company was notified by the Singapore Exchange Securities Trading Limited ( SGX-ST ) that TXPHS will be placed on the Watch-List with effect from 5 March 2012. TXPHS would be required to meet the requirements of Rule 1314 of the Listing Manual within 24 months from 5 March 2012, failing which SGX-ST would delist TXPHS or suspend trading in TXPHS s shares with a view to delisting the subsidiary. Listing Rule 1314 states that an issuer may apply for its removal from the Watch-List if it satisfies any one of the following requirements: (i) records consolidated pre-tax profit for the most recently completed financial year (based on the latest full year consolidated audited accounts, excluding exceptional or non-recurrent income and extraordinary items) and has an average daily market capitalisation of S$40 million or more over the last 120 market days on which trading was not suspended or halted for a full market day; or (ii) satisfies the SGX-ST Mainboard admission criteria, either under Listing Rule 210 (2)(a) or Listing Rule 210(2)(b). 2. On 21 March 2012, the Company entered into a conditional Sale and Purchase Agreement with Fumakilla Limited, Japan ( FMJ ) for the proposed disposal of 70% of the issued and paid-up share capital of Fumakilla Asia Sdn. Bhd. (formerly known as Technopia Sdn. Bhd.) ( FASB ) and PT Technopia Jakarta ( PTTJ ) for a total cash consideration of USD36 million (equivalent to RM110,379,000) and USD6.4 million (equivalent to RM19,623,000) respectively ( Proposed Disposal ). By way of a Put Option Agreement ( POA ) dated 21 March 2012, FMJ has granted the Company a put option on the remaining 30% shares ( Option Shares ) held by the Company in FASB and PTTJ following the completion of the Proposed Disposal. The Proposed Disposal was completed on 19 November 2012 and resulted in a gain of RM70,346,000 being recognised by the Group. Following the completion of the Proposed Disposal, FASB and PTTJ became 30% owned associates of the Company. 118 Texchem Resources Bhd company no. 16318-K

Notes to the financial statements (CONT D) 30. Significant events during the financial year (cont d) 3. On 23 March 2012, the company fully settled and redeemed the Commercial Papers of RM30 million issued under the Commercial Papers and/or Medium Term Notes Programme. 4. On 15 May 2012, TXPHS, entered into a conditional Share Sale Agreement with Daiichi Kasei Co. Ltd. ( Daiichi Kasei ) for the proposed disposal of the entire equity interest comprising 9,124,500 ordinary shares of RM1.00 each in M.A.C. Technology (Malaysia) Sdn. Bhd. ( MAC ), representing 30% of the issued and paid-up share capital of MAC to Daiichi Kasei for a total cash consideration of RM7,267,000 ( Proposed Disposal ). The Proposed Disposal was completed on 18 July 2012 and resulted in a gain of RM326,000 being recognised by the Group. 5. On 6 June 2012, the Company entered into a conditional Share and Purchase Agreement with PT Unilever Indonesia, Tbk. ( PT Unilever ) for the proposed acquisition of 51% equity interest comprising 38,250 ordinary shares of IDR1 million each in PT Technopia Nomos (formerly known as PT Technopia Lever) ( PTTN ) for a total purchase consideration of IDR38.25 billion (approximately RM14,645,000) ( Proposed Acquisition ). The Proposed Acquisition was completed on 16 July 2012. 6. On 14 June 2012, the Company entered into a Share Sale Agreement with Technopia Singapore Pte. Ltd. ( Tech(S) ), a wholly-owned subsidiary of Texchem Corporation Sdn. Bhd. ( Texcorp ), to acquire 49% equity interest comprising 36,750 shares of IDR1 million each in PTTN from Tech(S) for a total purchase consideration of USD3.022 million (approximately RM9,610,000) ( Proposed Acquisition ). The Proposed Acquisition was completed on 12 October 2012. 31. Comparative figures Pursuant to the disposal of the Group s Family Care Division as disclosed in Note 21 to the financial statements, the comparative figures in the consolidated income statement and statement of comprehensive income for the financial year ended 31 December 2011 have been restated to present the results of the discontinued operation separately from continuing operations. 32. Explanation of transition to MFRSs As stated in Note 1(a), these are the first financial statements of the Group and of the Company prepared in accordance with MFRSs. The accounting policies set out in Note 2 have been applied in preparing the financial statements of the Group and of the Company for the financial year ended 31 December 2012, the comparative information presented in these financial statements for the financial year ended 31 December 2011 and in the preparation of the opening MFRS statements of financial position at 1 January 2011 (the Group s date of transition to MFRSs). In preparing the opening consolidated statement of financial position at 1 January 2011, the Group has adjusted amounts reported previously in financial statements prepared in accordance with previous FRSs. An explanation of how the transition from previous FRSs to MFRSs has affected the Group s financial position, is set out as follows: Reconciliation of financial position Property, plant and equipment - Deemed cost exemption - previous revaluation Under FRSs, the Group had availed itself to the transitional provision when the MASB first adopted IAS 16, Property, Plant and Equipment in 1998. Certain leasehold land and buildings were revalued in 1983, 1992/93 and 1994/95 and no later valuation has been recorded for these property, plant and equipment (except in the case of impairment adjustments based on a valuation). Upon transition to MFRSs, the Group has elected to apply the optional exemption to use the previous revaluation as deemed cost under MFRSs. The revaluation reserve of RM1,532,000 and RM119,000 at 1 January 2011 and 31 December 2011 respectively was reclassified to accumulated losses. The impact arising from the change is summarised as follows: 1.1.2011 31.12.2011 RM 000 RM 000 Consolidated statement of financial position Revaluation reserve 1,532 119 Adjustment to accumulated losses 1,532 119 Annual Report 12 119

Notes to the financial statements (CONT D) 33. Supplementary financial INFORMATION on the breakdown of realised and unrealised profits or losses The breakdown of the retained earnings or accumulated losses of the Group and of the Company as at 31 December, into realised and unrealised profits, pursuant to Paragraphs 2.06 and 2.23 of Bursa Malaysia Main Market Listing Requirements, are as follows : Group Company 2012 2011 2012 2011 RM 000 RM 000 RM 000 RM 000 Total retained earnings/(accumulated losses) of the Company and its subsidiaries: - Realised 18,031 9,336 18,885 26,329 - Unrealised (3,258) (825) 14,773 8,511 18,885 26,329 Total share of retained earning/(accumulated losses) from associates and jointly controlled entity: - Realised (26,438) (19,619) - Unrealised 28,285 1,847 (19,619) 16,220 (11,108) 18,885 26,329 Less: Consolidation adjustments 17,242 2,801 Total retained earnings/(accumulated losses) 33,862 (8,307) 18,885 26,329 The determination of realised and unrealised profits is based on the Guidance of Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosures Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, issued by the Malaysian Institute of Accountants on 20 December 2010. 120 Texchem Resources Bhd company no. 16318-K

STATEMENT OF DIRECTORS pursuant to Section 169(15) of the Companies Act, 1965 In the opinion of the Directors, the financial statements set out on pages 47 to 119 are drawn up in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and 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 2012 and of their financial performance and cash flows for the financial year then ended. In the opinion of the Directors, the information set out in Note 33 on page 120 to the financial statements has been compiled in accordance with the Guidance on Special Matter No. 1 Determination of Realised and Unrealised Profits or Losses in the Context of Disclosures Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, issued by the Malaysian Institute of Accountants, and presented based on the format prescribed by Bursa Malaysia Securities Berhad. Signed on behalf of the Board of Directors in accordance with a resolution of the Directors : Tan Sri Dato Seri Fumihiko Konishi, PSM, DGPN, DSPN, DJN Brian Tan Guan Hooi Date: 10 April 2013 Annual Report 12 121

Statutory declaration pursuant to Section 169(16) of the Companies Act, 1965 I, Tan Peng Lam, the officer primarily responsible for the financial management of Texchem Resources Bhd., do solemnly and sincerely declare that the financial statements set out on pages 47 to 120 are, to the best of my knowledge and belief, correct and I make this solemn declaration conscientiously believing the same to be true, and by virtue of the provisions of the Statutory Declarations Act, 1960. Subscribed and solemnly declared by the abovenamed at Georgetown in the State of Penang on 10 April 2013. Tan Peng Lam Before me : Commissioner for Oaths 122 Texchem Resources Bhd company no. 16318-K

Independent auditors report to the members of Texchem Resources Bhd. and its subsidiaries Report on the Financial Statements We have audited the financial statements of Texchem Resources Bhd., which comprise the statements of financial position as at 31 December 2012 of the Group and of the Company, and the income statements, statements of comprehensive income, changes in equity and cash flows of the Group and of the Company for the year then ended, and a summary of significant accounting policies and other explanatory information, as set out on pages 47 to 119. Directors Responsibility for the Financial Statements The Directors of the Company are responsible for the preparation of financial statements so as to give a true and fair view in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia. The Directors are also responsible for such internal control as the Directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with approved standards on auditing in Malaysia. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on our judgement, including the assessment of risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity s preparation of financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Directors, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements give a true and fair view of the financial position of the Group and of the Company as of 31 December 2012 and of their financial performance and cash flows for the year then ended in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia. Report on Other Legal and Regulatory Requirements In accordance with the requirements of the Companies Act, 1965 in Malaysia, we also report the following: a) In our opinion, the accounting and other records and the registers required by the Act to be kept by the Company and its subsidiaries of which we have acted as auditors have been properly kept in accordance with the provisions of the Act. b) We have considered the accounts and the auditors reports of all the subsidiaries of which we have not acted as auditors, which are indicated in Note 4 to the financial statements. c) We are satisfied that the accounts of the 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 Our audit was made for the purpose of forming an opinion on the financial statements taken as a whole. The information set out in Note 33 on page 120 to the financial statements has been compiled by the Company as required by the Bursa Malaysia Securities Berhad s Listing Requirements and is not required by the Malaysian Financial Reporting Standards in Malaysia. We have extended our audit procedures to report on the process of compilation of such information. In our opinion, the information has been properly compiled, in all material respects, in accordance with the Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosures Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, issued by the Malaysian Institute of Accountants and presented based on the format prescribed by Bursa Malaysia Securities Berhad. Annual Report 12 123

Independent auditors report (CONT D) to the members of Texchem Resources Bhd. and its subsidiaries Other Matters As stated in Note 1(a) to the financial statements, Texchem Resources Bhd. adopted Malaysian Financial Reporting Standards ( MFRS ) and International Financial Reporting Standards ( IFRS ) on 1 January 2012 with a transition date of 1 January 2011. These standards were applied retrospectively by the Directors to the comparative information in these financial statements, including the statements of financial position as at 31 December 2011 and 1 January 2011, the income statements, statements of comprehensive income, changes in equity and cash flows for the year ended 31 December 2011 and related disclosures. We were not engaged to report on the comparative information that is prepared in accordance with MFRS and IFRS, and hence it is unaudited. Our responsibilities as part of our audit of the financial statements of the Group and of the Company for the year ended 31 December 2012 have, in these circumstances, included obtaining sufficient appropriate audit evidence that the opening balances as at 1 January 2012 do not contain misstatements that materially affect the financial position as of 31 December 2012 and financial performance and cash flows for the year then ended. 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. KPMG AF 0758 Chartered Accountants Ooi Kok Seng 2432/05/13 (J) Chartered Accountant Date : 10 April 2013 Penang 124 Texchem Resources Bhd company no. 16318-K

PROXY FORM I/We (full name in capital letters) NRIC No./Passport No./Company No. of (full address) being a member/members of TEXCHEM RESOURCES BHD. hereby appoint (full name and NRIC No./Passport No. in capital letters) of (full address) and/or failing him/her (full name and NRIC No./Passport No. in capital letters) of (full address) as my/our proxy/proxies to vote in my/our name(s) and on my/our behalf at the Thirty-Ninth Annual General Meeting of the Company to be held at Pinang Ballroom, Level 3, Traders Hotel, Magazine Road, 10300 Penang on Tuesday, 28 May 2013 at 10.30 a.m. and any adjournment thereof. My/Our proxy/proxies is/are to vote on either a show of hands or a poll as indicated below with an X. NO. AGENDA (1) Receipt of Audited Financial Statements and Reports ORDINARY RESOLUTIONS FOR AGAINST (2) Re-election of Directors who retire pursuant to Article 123 of the Company s Articles of Association: i) Mr Brian Tan Guan Hooi - Resolution 1 ii) Mr Lee Siew Khee, Jeffrey - Resolution 2 iii) Mr Wong Kin Chai - Resolution 3 (3) Approval of Directors fees - Resolution 4 (4) Re-appointment of Auditors and authorisation of Directors to fix their - Resolution 5 remuneration (5A) Authority be given to the following Independent Non-Executive Directors to continue to act as Independent Non-Executive Directors of the Company: i) Dato Seri Nazir Ariff Bin Mushir Ariff - Resolution 6 ii) Mr Danny Goon Siew Cheang - Resolution 7 (5B) Power to Issue Shares pursuant to Section 132D of the Companies Act, 1965 - Resolution 8 (5C) Proposed Renewal of Shareholders Mandate for Recurrent Related Party Transactions of a Revenue or Trading Nature - Resolution 9 The proportion of my/our holding to be represented by my/our proxy/proxies is/are as follows: First Proxy - % No. of shares held Second Proxy - % 100 % Signed this day of 2013 Signature or Common Seal Notes: 1) A Member of the Company entitled to attend and vote at the meeting may appoint up to two (2) proxies to attend and vote instead of him/her. A proxy may but need not be a Member of the Company and the provision of Section 149(1)(b) of the Companies Act, 1965 shall not apply to the Company. If a Member appoints two (2) proxies, the appointments shall be invalid unless he/she specifies the proportions of his/her holdings to be represented by each proxy. 2) To be effective: a) the instrument appointing a proxy; and b) the authority (if any) under which it is executed or a copy of such authority certified notarially or in some other way approved by the Directors of the Company, must be deposited at the Registered Office of the Company at Level 18, Menara Boustead Penang, 39 Jalan Sultan Ahmad Shah, 10050 Penang, Malaysia at least forty-eight (48) hours before the time for holding the meeting. 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) If the Proxy Form is returned without any indication as to how the proxy shall vote, the proxy will vote or abstain as he/she thinks fit. 5) If the Proxy Form is returned without the name of the proxy indicated, the Proxy Form shall be invalid. 6) Where the person appointing the proxy is a corporation, the form must be either under seal or under the hand of a duly authorised officer or attorney of the corporation.

fold this flap for sealing 2nd fold here Stamp TEXCHEM RESOURCES BHD COMPANY NO. 16318-K Level 18, Menara Boustead Penang 39 Jalan Sultan Ahmad Shah 10050 Penang, Malaysia Tel: 604-229 6000 Fax: 604-229 1430 1st fold here

FOR BURSA USE ONLY Ref. No Date received day month year Officer in charge Date of first contact with complainant day month year STATUS AFTER 14 DAYS Resolved Pending Details CONTACT DETAILS Customer Care Centre Bursa Malaysia Berhad Lower Ground Floor Exchange Square, Bukit Kewangan 50200 Kuala Lumpur Tel: 603 2732 0067 Fax: 603 2732 5258 BURSA MALAYSIA SECURITIES BERHAD COMPLAINT AGAINST PUBLIC LISTED COMPANY

This form is intended to facilitate the lodgement of complaints with Bursa Malaysia Securities Berhad ( Bursa ), by investors against Public Listed Companies ( PLCs ) in Malaysia. Investors are encouraged, in the first instance, to amicably settle any differences directly with the PLCs concerned. Q: When can you make a complaint? A: At anytime, preferably as soon as the problem occurs. Below are some instances when a complaint may be lodged against a PLC: Misleading / inaccurate / insufficient disclosure of information; Failure to disclose material information in financial statements or annual reports; Actions / lack of actions detrimental to the interest of shareholders; Directors of PLC; Management of PLC; Share Registrar of PLC; and Others (to specify) Q: What are the procedures to make a complaint? A: Procedure is very simple. For clarity, it is best to be in written form and directed to Bursa. You can use any of the following methods to submit your complaints: Mail the attached Complaint Form to Bursa; or Fax the Complaint Form to 603-2732 5258 Q: How will Bursa handle the complaint? A: Bursa will handle the matter promptly and in any event, will contact the complainant not later than 14 days from receipt of the complaint. DETAILS OF COMPLAINANT Name: (As per NRIC / Passport / Registration Document) NRIC / Passport / Company No.: CDS No.: Address: Telephone No.: House: Business: H/Phone: Facsimile No.: House: Business: DETAILS OF THE PLC Name: Address: DETAILS OF COMPLAINT Have you tried to resolve this complaint with the relevant PLC? Yes No If yes, kindly indicate the name of the person contacted and his / her department. TYPES OF COMPLAINT Misleading / inaccurate / insufficient disclosure of information; Failure to disclose material information in financial statements or annual reports; Actions / lack of actions detrimental to the interest of shareholders; Directors of PLC; Management of PLC; Share Registrar of PLC; and Others (to specify) If others, please specify: MY COMPLAINT IS AS FOLLOWS (please provide a detailed account of the complaint in chronological order). You may provide additional notes in a separate piece of paper. Please attach copies only of all relevant documents. Signature Date day month year