BORNOIL-AnnualReport2014

CORPORATE INFORMATION 2

DIRECTORS STATEMENT 3-4

DIRECTORS PROFILE 5

STATEMENT ON CORPORATE GOVERNANCE 6-11

AUDIT COMMITTEE REPORT 12-13

AUDIT COMMITTEE REPORT -TERMS OF REFERENCE 14-16

STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL 17-19

CORPORATE SOCIAL RESPONSIBILITY (CSR) STATEMENT 20

STATEMENT ON DIRECTORS RESPONSIBILITY 21

FINANCIAL STATEMENTS 22-79

LIST OF PROPERTIES 80-81

STATEMENT OF SHAREHOLDINGS 82-83

STATEMENT OF WARRANT B (2008/2018) HOLDINGS 84-85

NOTICE OF ANNUAL GENERAL MEETING 86-88

STATEMENT ACCOMPANYING NOTICE OF 89ANNUAL GENERAL MEETING

PROXY FORM

CONTENTS

2ANNUAL REPORT 2014

BOARD OF DIRECTORS

Teo Kiew Leong (Executive Director)

John Lee Yan Hong @ John Lee (Independent Non-Executive Director)

Tan Kok Chor (Independent Non-Executive Director)

Michael Moo Kai Wah (Independent Non-Executive Director)

CORPORATE INFORMATION

AUDIT COMMITTEE

Chairman Tan Kok Chor (Independent Non-Executive Director )

MemberJohn Lee Yan Hong @ John Lee (Independent Non-Executive Director)

MemberMichael Moo Kai Wah(Independent Non-Executive Director)

COMPANY SECRETARIES Chin Siew Kim (L.S. 000982)Chin Chee Kee (MIA 3040)

REGISTERED OFFICE 1st & 2nd Floor , Victoria Point ,Jalan OKK Awang Besar ,87007 , W.P. LabuanTel : 087-410509Fax : 087-410515

REGISTRAR Labuan Corporate Services Sdn Bhd1st & 2nd Floor , Victoria Point ,Jalan OKK Awang Besar,87007 , W.P. LabuanTel : 087-410748Fax : 087-410515

AUDITORS STYL Associates (AF-1929)Chartered Accountants107-B , Jalan Aminuddin BakiTaman Tun Dr. Ismail ,60000 Kuala Lumpur

PRINCIPAL BANKERS

Alliance Bank Malaysia Berhad (88103-W)Hong Leong Bank Berhad (97141-X)HSBC Bank Malaysia Berhad (127776-V)Malayan Banking Berhad ( 3813-K)RHB Bank Berhad (6171-M)Standard Chartered Bank Malaysia Berhad (115793-P)Hong Leong Investment Bank Berhad (10209-W)

SOLICITORS

Jie Nyuk Choo & Co.J. Ambrose & PartnersS. Vanugopal & Partners

STOCK EXCHANGE LISTING

Main MarketBursa Malaysia Securities Berhad

Stock Name : BORNOIL

Stock Code : 7036

WEBSITE

www.borneo-oil.com.my

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ANNUAL REPORT 2014

Dear Shareholders,

On behalf of the Board of Directors, I have pleasure to present herewith the Annual Report of Borneo Oil Berhad and the Group for the nancial year ended 31 January, 2014.

Gold Mining Division

With the new venture into gold and related mining activities, the Board is optimistic that, barring any unforeseen circumstances, it will positively contribute to the Groups overall pro tability in the future.The Companys rationale for entering into gold mining is based on its strong belief that precious metals will eventually be a benchmark for value and collateral against pump priming activities of governments all over the world. This is on the premise that the physical gold holding in the world, based on 2013 statistic of 170,000 metric tons, represents only less than 30% of the US Federal Reserve Debt alone, which is now standing at over US$17 trillion, not taking into account the total debt of the European Union. It is thus the Companys belief that gold will become more and more a prominent feature in determining values and collaterals in the near future.The entry by the Groups mining division into gold mining is by way of an operator agreement through an exclusive sub-contract with Champmark Sdn Bhd on a 162.3 hectares mining lease situated in the Merapoh Area, Pahang and registered under Perbadanan Kemajuan Negeri Pahang in an area known as Area 4-1 under mining lease ML 08/2008. Champmark Sdn Bhd, through its holding company Federal Mining Resources Ltds consultant, Minarco Mine Consult conducted in January 2012 a mineral resources and site review which had estimated that there are both indicated and inferred resources of 4.02 tons of gold in the alluvial. As for Hard Rock Resources, the internal studies by Professor Li Sezhuan of Champmark Sdn Bhd had

estimated a potential of 30 tons of both indicated and inferred gold reserve. We are currently in the process of conducting exploration drilling under JORCs compliant standards to verify the results before deciding on the processing methods and design of the plants for the next phase in the mining operations. Apart from area 4-1,there are 6 other mining leases awaiting approval from the relevant authorities. Since the divisions entry into gold mining activity, a total of 187,255 tons of alluvial has been processed in which 43.405 kg of gold has been recovered. During this short period, the Company has experimented with various methods of recovering alluvial gold. The rst phase of plants and equipments were installed in early June 2014 and they are now in the commissioning stage. The Company had also conducted an in depth research into the recovery of gold from the existing tailings, standing at almost 900,000 tons as at June 2014. The designing of a suitable and effective process to recover more gold from the same is now in its nal stage. This new process is expected to be implemented by the end of 2014. In order to mitigate various risks inherent in the gold mining industry, the Group will among others, employ more relevant personnels experienced in this eld as well as to leverage on the technical expertise and experience of Champmark Sdn Bhds geologists by working closely with them in the area of exploration and matters related to it. The next 12 to 36 months will be an exciting time for the mining division.

DIRECTORS STATEMENT

I believe most of you would have read our recent announcements made to Bursa Malaysia Securities Berhad on the Companys

corporate proposals involving par value reduction of its existing ordinary share of RM1.00 each, private placement and diversi cation

to other core businesses. The details of the corporate proposals and their rationales were as stated in the said announcements.

As at the date of this Annual Report, the necessary application which had since been made to the relevant authorities through our

Corporate Adviser, RHB Investment Bank Berhad, is now pending their approvals. The success of which will mark the beginning

of the Companys new milestone in the corporate era which would eventually place it and the Group in a much stronger nancial

footing and overall pro tability in the future. To be able to reach this far, I would like to take this opportunity to humbly express my

heartfelt thanks to all my fellow directors and management team for their continuing efforts and commitments as well as the relevant

government agencies and authorities, bankers, suppliers, franchisees, experts, auditors, advisors and all others who have one way

or another given their support and guidances.

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DIRECTORS STATEMENT

Oil & Gas Division

In the case of our Oil, Gas & Energy related division, it had

positioned itself to focus on renewable energy, bio-fuel and

activities related to the same. In pursuing this, the division had

participated in the implementation of bio-diesel storage tanks in

anticipation of the governments move into compulsory usage

of 5% Palm Oil Methyl Ethylene (POME) on diesel which will

be on sale to all end users in all the petrol stations throughout

Malaysia. Shell Internationals subsidiary company, Shell Timur

Sdn Bhd, had recently awarded the Company with a contract for

the engineering, procurement, construction and commissioning

of 2 POME storage tanks facilities in Kuala Baram and Labuan

respectively. Should the division perform well, there is a strong

possibility that more similar contracts will be awarded to our

Company as there are plans by the government to get all the

oil majors to build storage tanks all over the country to support

its bio-diesel roll out plan by the end of 2015. In addition to

the above, the division is actively following up on an in depth

research with Frontier Bio-fractions LLC over the past few years

on its vertrolysis process which converts palm oil wastes and

biomass by-products to bio-fuel, bio-char and bio-gas. A pilot

plant is now in operation in Holyoke, Massachusetts, USA. The

division will make further studies and researches before deciding

in the very near future on the next course of action as to whether

it will enter into any role in this process.

Property & Management

While all the above divisions of the Group are actively involved

in their respective activities, our Property and Management

division performed equally well as planned during the year and

is expected to improve further in the future.

On behalf of the Board, I would like to thank once again all

those that I have mentioned above, our loyal and dedicated

employees and most of all, to all our shareholders who have

been with us throughout. It is our sincere wish that all of you will

be rewarded for your support, loyalty and patience in the near

future. We assure you that the Board and our management team

will continue with our commitments and efforts to work diligently

to further strengthen the nancial stability and pro tability of the

Company and the Group.

My sincere thanks to all of you.

Teo Kiew Leong

Executive Director

Franchise Division

The Groups Fast Food and Franchise division continued to perform remarkably well. As I had mentioned in the previous Annual

Report for the year ended 31 January, 2013, the total number of outlets then was 62, out of which 6 were overseas. But as at now,

we have a total of 72 outlets, out of which 11 are overseas while an additional 17 new outlets are in the midst of opening. Recently

we have signed up Area Franchisees for the states of Johor and Sabah in Malaysia, while overseas we have signed up for West

Kalimantan, City of Jakarta and Medan respectively in Indonesia. Under the terms of the Area Franchise agreements, the franchisees

are committed to open minimum 20 outlets under their rst term of 5 years. This continuing achievement was due largely to our

proven established business models, consistent research and innovation by our R&D team in introducing creative and quality foods

that could cater to all ages and range of customers. The good relationship and close rapport our franchising, marketing and servicing

teams have with our valued franchisees, who constantly gave their feedbacks and supports further contributed to it.

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ANNUAL REPORT 2014

DIRECTORS PROFILE

Raymond Teo Kiew Leong Executive Director

Raymond Teo Kiew Leong, aged 49, obtained his college education at Graphic Design & Photography, Regent Fine Art & Design Academy, Kuala Lumpur. He has been with the Group since 1986.

Through his commitment and dedication, he progressed to become the head of the Graphic Department. With his active involvement and contribution in restaurant development, he was subsequently promoted as the Regional General Manager in 2003, to implement the same concept in Sarawak and West Malaysia. He has worked closely with Marketing, Operations, Processing and Distribution within the Group towards achieving the Companys goals and aspirations.

In June 2005, he was appointed as a General Manager for SB Franchise Management Sdn Bhd to oversee all existing franchised restaurants and new development of Sugar Bun of franchised restaurants locally and also overseas.

He is now an Executive Director in Borneo Oil Berhad responsible for the overall running of the Groups fast food, restaurant and franchising division.

Tan Kok Chor Independent Non-Executive Director

Tan Kok Chor, aged 64, was appointed to the Board of Borneo Oil Berhad on 21st August 2001. He has more than 5 years experience in legal line which involved litigation, conveyancing and preparing legal documentation and related matters. He is also a very experienced businessman involved in property investment. He holds various directorships in several other private limited companies, incorporated in Malaysia.

Michael Moo Kai Wah Independent Non-Executive Director

Michael Moo Kai Wah, aged 62, is a NonExecutive Director appointed to the Board of Borneo Oil Berhad on 15th January 2008. He obtained his college education at the University of Hudders eld, United Kingdom in 1977 in Business Studies.

He had more than 10 years working experience in the United Kingdom and in Malaysia in accounting, tax, audit and secretarial matters. He is also actively involved in his alma mater as board treasurer for the past 9 years.

John Lee Yan Hong @ John Lee Independent Non-Executive Director

John Lee Yan Hong @ John Lee, 44, obtained his Diploma in Music Production and Engineering at the Fullsail Centre of Arts in Orlando, USA in 1993. Throughout his career, he has garnered vast experience in the music and entertainment industry. Having joined the Southern Paci c Hotel Group in 1991, he immediately made an impact on the industry by introducing creative events to assist the Parkroyal Chain of hotels. The hotel transformed and became known for its continuous party-fever events.

Having spent nearly a decade in various Asian Clubs and resorts, he then joined ASTRO as Hitz FMs Music Director/ Announcer in 1996. In 2001 he was commissioned by Warner Music Asia as a music producer.

John Lee Yan Hong @ John Lee is currently an Independent Non-Executive Director of the Company.

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6ANNUAL REPORT 2014

STATEMENT ON CORPORATE GOVERNANCE

The Board of Directors of Borneo Oil Berhad acknowledges that good corporate governance is vital to uphold business integrity and to sustain the performance and pro tability of the Groups business operations. In this context, the Board strives to ensure that the principles and best practices on structures and processes as set out in the Malaysian Code of Corporate Governance are practiced throughout the Group as a fundamental part of discharging its responsibilities to protect and enhance shareholder value and nancial performance of the Group. The Board is pleased to present to the shareholders the following statement on corporate governance and the extent of compliance with the best practices of the Malaysian Code On Corporate Governance pursuant to Paragraph 15.26 of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad throughout the nancial year ended 31 January 2014.

1.THE BOARD OF DIRECTORS

1.1 Roles and responsibilities

The Board is led and managed by experienced Directors with a wide range of expertise. The Board is responsible for the Company in achieving the highest level of business conduct. Its duties and responsibilities include, amongst others, the following :

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ANNUAL REPORT 2014


1.THE BOARD OF DIRECTORS (contd)

1.3 Board Meetings (contd)

Directors No.of meetings attended Teo Kiew Leong 1 out of 5 John Lee Yan Hong @ John Lee 5 out of 5 Tan Kok Chor 4 out of 5 Michael Moo Kai Wah 5 out of 5

The Board is satis ed with the level of time commitment given by the Directors towards ful lling their duties and responsibilities as Directors of the Company. This is evidenced by their attendance at the Board and various Board Committees meetings held during the year.

1.4 Directors Training

The Board fully supports the need for its members to further enhance their skills and knowledge on relevant new laws and regulations and changing commercial risk to keep abreast with the developments in the economy, industry, technology and the changing business environment within which the Group operates.

All the Directors have completed the Mandatory Accreditation Programme and Continuing Education Programme (CEP) as required by Bursa Malaysia Securities Berhad. The Directors are mindful that they should receive continuous training in order to broaden their perspectives and equip them with the necessary skills to effectively discharge their duties as Directors of the Company.

1.5 Supply Of Information to the Board

The Board members were presented with comprehensive information concerning the performance and nancial status of the Company at the Board Meetings. Each Director was provided with an agenda and a full set of the Board papers prior to Board Meetings. This is issued in suf cient time to enable the Directors to prepare and deliberate on the issues prior to the meeting.

Senior management members are also invited to attend Board Meetings to provide the Board with their views and explanations on certain agenda items tabled to the Board, and to clarify on issues that have been raised by the Directors.

All Directors have access to the advice and services of the Company Secretaries, who is responsible for ensuring that Board Meeting procedures are adhered to and that applicable rules and regulations are complied with. The Board is updated and advised by the Company Secretaries from time to time on new statutes and directives issued by the regulatory authorities.

Where necessary, the Directors may engage independent professionals at the Groups expense on specialized issues to enable the Board to discharge their duties with adequate knowledge on the matters being deliberated.

The proceedings and resolutions reached at each Board Meeting are recorded in the minutes of the meetings, which are kept in the Minutes Book at the Registered of ce. Besides Board Meetings, the Board also exercise controls on matters that require Boards approval through circulation of Directors Resolutions.

1.6 The Board Committees

To assist in the execution of its responsibilities, the Board has established a number of Board Committees.

a. Audit Committee

The Audit Committee reviews issues of accounting policy and presentation for external nancial reporting, monitors the work of the internal audit function and ensures an objective and professional relationship is maintained with the external auditors. The Committee has full access to the auditors both internally and externally who, in turn, have access at all times to the Chairman of the Committee. The Committee meets with the external auditors in the absence of management, at the start of each meeting except for the Company Secretaries.

The report on the Audit Committee may be found on pages 12 to 16 .

8ANNUAL REPORT 2014


1.THE BOARD OF DIRECTORS (contd)

1.6 The Board Committees (contd)

b. Nominating Committee

The Nominating Committee comprises of all 3 independent non-executive directors.

The terms of reference of the Nominating Committee are as follows:

i. To review regularly the Board structure, size and composition, and make recommendations to the Board with regard to any adjustments that are deemed necessary and to recommend Directors to Committees of the Board;

ii. To be responsible for identifying and nominating candidates for the approval of the Board to ll Board vacancies as and when they arise;

iii. To review the required mix of skills and to assess the effectiveness of the Board, Committees of the Board and contributions of Directors of the Board;

iv. To review the balance between Executive and Non-Executive Directors and to ensure at least one third (1/3) of the Board is comprised of Independent Directors in compliance with the Listing Requirements;

v. To recommend to the Board for the continuation (or not) in service of an Executive Director as an Executive or Non- Executive Director;

vi. To recommend to the Board for the continuation (or not) in service of any Director who has reached the age of 70; vii. To recommend Directors who are retiring by rotation to be put forward for re-election ; and viii. To recommend to the Board the employment of the services of such advisers as it deems necessary to ful ll its

responsibilities.

During the year, upon its assessment, the Nominating Committee was satis ed and has recommended that :

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ANNUAL REPORT 2014


1. THE BOARD OF DIRECTORS (contd)

1.7 Appointment and Re-election of the Directors (contd)

The Directors who are due for re-election and/or re-appointment at the Annual General Meeting will rst be assessed by the Nominating Committee, which will then submit its recommendation to the Board for deliberation and endorsement. Thereafter, Shareholders approval will be sought for the re-election and/or re-appointment.

1.8. Audit Committee

The objective of the Audit Committee is to assist the Board to review the adequacy and integrity of the Companys and the Groups internal control systems and management information systems. The composition, summary of activities and terms of reference of the Audit Committee can be found in the Audit Committee Report of this Annual Report.

2. DIRECTORS REMUNERATION

a. Directors Remuneration

The Board endeavours to ensure that the levels of remuneration offered for directors are suf cient to attract and retain people needed to run the Group successfully. In the case of Executive Directors, the component parts of remuneration are structured to link rewards to corporate and individual performance. In the case of Non-Executive Directors, the level of remuneration re ects the contribution and level of responsibilities undertaken by the particular non-executive concerned.

The details of Directors remuneration payable to all the Directors of the Company during the nancial year ended 31 January 2014 are as follows :-

Category of Directors Fees #Salary Bonus Bene ts-in-kind Total RM RM RM RM RM Executive Director 96,000 120,000 - - 216,000 Non-Executive Directors 130,000 - - - 130,000 Total 226,000 120,000 - - 346,000

# The salary is inclusive of statutory employers contribution to Employees Provident Fund

The number of Directors whose total remuneration falls within the following bands for the nancial year ended 31 January 2014 is as follows :

Number of Directors Executive Non-Executive Range of Remuneration Director Directors

Below RM50,000 - 3 RM50,001 to RM100,000 - - RM100,001 to RM150,000 1 - RM150,001 to RM200,000 - -

b. Directors Continuing Development

Recognising the ever increasing demands of their role, the Directors of the Company have continued to attend and participate in various programmes which they have individually or collectively considered as relevant for them to keep abreast with the changes in regulation and trends in the business practices, environment and markets.

From time to time, the Board will be updated on the companies and securities legislations and other relevant rules and regulations at the Board meetings , in order to acquaint them with the latest developments in these areas.

The Company Secretaries facilitate the participation of the Directors in the external training programmes.

The Board is responsible for the overall corporate governance of the Group, including its strategic plan, overall management and business performance, management of principal risks and controls.

It focuses mainly on the Groups responsibilities as follows:

- identifying principal risks and ensuing the implementation of appropriate systems to manage these risks.- reviewing and adopting a strategic business plan for the Group.- overseeing the conduct of the Companys business to evaluate whether the business is being properly managed.

10ANNUAL REPORT 2014


3. INVESTOR RELATIONS AND SHAREHOLDER COMMUNICATION

(i) Dialogue with Shareholders and Investors

The Board acknowledges the need for shareholders to be informed of all material business matters affecting the Company. In addition to various announcements and disclosures made to Bursa Malaysia Securities Berhad during the nancial year under review, the timely release of nancial results on a quarterly basis provides shareholders with an overview of the Groups performance and operations. The Board has maintained an effective communication policy that enables the Board to convey information with regards to the Groups performance, corporate strategy and other matters that affect shareholders interests.

The Companys website, www.borneo-oil.com.my also provide shareholders and the public quick access to corporate information, nancial statements, news and events relating to the Group.

(ii) The Annual General Meeting

The Annual General Meeting (AGM) represents the principal forum for dialogue with shareholders. Besides the usual agenda for the AGM , the Board encourages shareholders to participate through questions on the business activities of the Group. The Directors and external auditors are available to respond to questions from shareholders during the meeting.

A full explanatory statement of the effects of the proposed resolutions will accompany each item of special business as mentioned in the notice of meeting.

4. ACCOUNTABILITY AND AUDIT

(a) Financial Reporting

In presenting the annual nancial statements and quarterly announcement of results to shareholders, the Directors aim to present a balanced and understandable assessment of the Groups position and prospects.

The Directors consider that in preparing the nancial statements, the Group has used appropriate accounting policies, consistently applied and supported by reasonable and prudent judgements and estimates.

All accounting standards which the Board considers to be applicable have been followed, and the nancial statements represent a true and fair assessment of the Company and the Groups nancial position. The Board vested responsibilities on the Audit Committee to ensure that the Company maintains proper accounting records, review and assess the accuracy and adequacy of all the information to be disclosed and ensure that the nancial statements are in compliance with the Companies Act, 1965, the Main Market Listing Requirements and applicable approved accounting standards in Malaysia.

A statement by the Directors of their responsibilities for the nancial statements is incorporated within the Directors Report and Statement by Directors.

(b) Related Party Transactions The Company practices an internal compliance framework in identifying and assessing related party transactions. The Board, through the Audit Committee reviews all related party transactions. A Director who has an interest in a transaction must abstain from deliberation and voting on the relevant resolution in respect of such transaction.

(c ) Internal Control

The Directors acknowledge their responsibility for the Groups system of internal controls, which is designed to identify and manage the risks facing the business in pursuit of its objectives. The system of internal control covers management and nancial risks, organizational, operational and compliance controls to safeguard shareholders investments and the Groups assets. This system, by its nature, can only provide reasonable and not absolute assurance against misstatement or loss.

The Board undertakes ongoing reviews of the key operational and nancial risks facing the Groups businesses together with those areas relating to compliance with laws and regulations. The monitoring arrangements in place give reasonable assurance that the structure of controls and operation is appropriate to the Companys and the Groups situation and that there is an acceptable level of risk throughout the Groups businesses.

The state of internal control within the Group and reports of the results are set out in the Statement on Risk Management and Internal Control.

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ANNUAL REPORT 2014


4. ACCOUNTABILITY AND AUDIT (contd)

( d) Relationship with the Auditors

The Audit Committee and the Board have established formal and transparent arrangements with the Companys external auditors to maintain appropriate relationship in seeking professional advice and ensuring compliance with the accounting standards and statutory requirements.

The external auditors will from time to time highlight to the Audit Committee and the Board of Directors on matters that require the Boards attention.

The Audit Committee had on certain meetings , met up with the external auditors without the presence of the Executive Directors and Management during the nancial year ended 31 January 2014.

5. ADDITIONAL COMPLIANCE INFORMATION

i. Share Buy-Back

The Company had obtained its shareholders approval at the Extraordinary General Meeting to buy back shares of the Company.

Treasury shares relate to ordinary shares of the Company that are held by the Company. The amount consists of the acquisition costs of treasury shares net of proceeds received on their subsequent sale or issuance.

The Company acquired 420,000 (2013 Nil) shares in the Company through purchase from the open market during the nancial year. The total amount paid to acquire the shares was RM194,593 (2013-Nil) and this was presented as a component within shareholders equity. The average cost paid for the shares repurchased during the nancial year was RM0.46 (2013-Nil) per share, including transaction costs, and the repurchase transactions were nanced by internally generated funds. The shares repurchased are being held as treasury shares.

As at 31 January 2014 , the Company has 420,000 (2013 Nil) ordinary shares held as treasury shares.

ii. Options, Warrants or Convertible Securities

The Company has not issued any options, warrants or convertible securities during the nancial year, other than the granting/exercise of options under the Employees; Share Option Scheme as disclosed in the Directors Report.

The exercise period for the warrants 2008/2018 is ten years commencing from 29 February 2008 and expiring 28 February 2018.

iii. American Depository Receipt (ADR) or Global Depository Receipt (GDR) Programme

During the nancial year , the Group did not sponsor any ADR or GDR programme.

iv. Non-Audit Fees

The amount of Non-audit fees amounting to RM164,115.00 were paid to the external auditors for the services rendered in connection with the audit for the nancial year ended 31st January 2014.

v. Pro t Guarantees

There were no pro t guarantees given by the Group during the nancial year ended 31 January 2014.

vi. Variance in results

There were no material variances of 10% or more in the pro t after tax and minority interest between the audited and unaudited results announced for the nancial year ended 31 January 2014.

vii. Imposition of sanctions and penalties

There were no sanctions or penalties imposed on the Company and its subsidiaries, directors or management by the relevant regulatory bodies during the nancial year ended 31 January 2014.

6. COMPLIANCE TO THE CODE

The Board of Directors of Borneo Oil Group is of the opinion that the Group is in compliance with the principles of and best practices in corporate governance throughout the nancial year ended 31 January 2014.


AUDIT COMMITTEE REPORT

The Board of Directors of Borneo Oil Berhad is pleased to present the Audit Committee report for the nancial year ended 31st January 2014 in compliance with Paragraph 15.15 of the Main Market Listing Requirement.

COMPOSITIONThe Audit Committee was established in July 1999 to act as a committee for the Board of Directors. It comprises of 3 independent non-executive Directors as follows, in compliance with Paragraph 15.09(1)(a) of the Main Market Listing Requirement : Tan Kok Chor(Chairman)(Independent Non Executive Director)

John Lee Yan Hong @ John Lee(Member)(Independent Non Executive Director)

Michael Moo Kai Wah(Member)(Independent Non Executive Director)

OBJECTIVES

The principal objectives of the Audit Committee are :-

1. to assist the Board of Directors in ful lling its duciary responsibilities by ensuring that the results of internal and external audit ndings are fully considered and properly resolved.

2. to ensure compliance with Paragraph 15 , Part C of the Bursa Malaysia Securities Berhad (BURSA) Listing Requirements.3. to ensure the independence of the External Auditors , the integrity of management and the adequacy of disclosures to

shareholders.

TERMS OF REFERENCE

The Audit Committee is governed by the Terms of Reference as stipulated on pages 14 to 16 of the Annual Report. All the requirements under the Terms of Reference were fully complied with.

MEETINGS

During the nancial year under review, the Audit Committee held Four(4) meetings.The Meeting attendance record of the members are as follows :

Name of Members No. of meetings attended

Tan Kok Chor 4/4John Lee Yan Hong @ John Lee 4/4Michael Moo Kai Wah 4/4

SUMMARY OF ACTIVITIES OF THE AUDIT COMMITTEE

During the nancial year ended 31st January 2014 , the Audit Committee undertook the following activities :-

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ANNUAL REPORT 2014

AUDIT COMMITTEE REPORT

SUMMARY OF ACTIVITIES OF THE INTERNAL AUDIT FUNCTION

The internal audit function is outsourced and independent of the operations of the Group. It provides reasonable assurance that the Groups system of internal control is satisfactory and operating ef ciently. The internal auditor adopts a risk based approach towards the planning and conduct of audits that are consistent with the Groups framework in designing, implementing and monitoring of its internal control system.

Upon completion of the audits, the internal auditor is to closely monitor the implementation progress of the recommendations made in order to assure that Management has duly addressed all major risks and control issues. All audit reports on the results of work undertaken together with the recommended action plans and the implementation status were presented to the Management and the Committee.

REVIEW OF SHARE OPTION SCHEME

The Companys Employee Share Option scheme (ESOS) is governed by the by-laws approved by the shareholders at an Extraordinary General Meeting held on 28 December 2011. The ESOS was implemented on 28 February 2012 and is to be in force for a period of 5 years from the date of implementation, with extension of a further 5 years.

The total number of shares to be issued under the ESOS shall not in aggregate exceed 15% of the issued and paid up share capital of the Company at any point of time during the tenure of the ESOS. Some of the main features are disclosed and explained in the nancial statements.


AUDIT COMMITTEE REPORT-TERMS OF REFERENCE

CONSTITUTION

The Audit Committee was formed by the Board pursuant to its meeting in July 1999 .

MEMBERSHIP

The members of the Audit Committee shall be appointed by the Board from amongst their number and shall comprise no fewer than three(3) directors all of whom shall be Non-Executive Directors. The majority of the Audit Committee members shall be independent directors. An Independent Director shall be a director who ful ls the requirements as provided in the Bursa Malaysia Securities Berhad Main Market Listing Requirements.An alternate director shall not be appointed as a member of the Audit Committee.

At least one(1) member of the Audit Committee must be :

a. A member of the Malaysian Institute of Accountants (MIA) ; orb. If he/she is not a member of MIA, he/she must have at least three(3) years of working experience and ;- i. passed the examinations speci ed in Part 1 of the First Schedule of the Accountants Act 1967 ; or ii. is a member of one of the associations of accountants speci ed in Part II of the First Schedule of the Accountants Act

1967 ; andc. Ful lls such other requirements as prescribed or approved by Bursa Malaysia.

The members of the Audit Committee shall elect a Chairman from amongst their number who shall be an independent Director.

If a member of the Audit Committee resigns, dies, or for any reason ceases to be a member with the result that the number of members is reduced to below three(3) , the Board shall within three(3) months of that event appoint such number of new members as may be required to ll the vacancy.

The terms of of ce and performance of the Audit Committee and each of its members shall be reviewed by the Board periodically to ensure their duties are carried out accordingly.

MEETINGS

To form a quorum, the majority of the members present must be Independent Directors and one of whom shall be the Chairman of the Audit Committee.

The Audit Committee shall be able to convene meetings with the external and internal auditors or both without the presence of any other directors or employees whenever it deems necessary. The external and internal auditors have the right to appear and be heard at any meeting of the Audit Committee.

The Company Secretary shall be the Secretary of the Audit Committee. Minutes of the meetings shall be duly entered in the books provided thereof.

The Audit Committee normally meets four (4) times annually on a quarterly basis although additional meetings may be called at any time whenever necessary. Representatives from the internal auditors will attend the meetings, if required. Other Board members may attend the meeting upon invitation of the Audit Committee.

Each Audit Committee member receives written reports and supporting information , including operating results, comprehensive review and analysis, at least one week ahead of the Audit Committee meeting. Prior to each meeting , the members are provided with an agenda and full set of Audit Committee papers for each agenda item to be discussed at the meeting. This is issued in suf cient time to enable the members to obtain further explanations, where necessary, in order to be briefed properly before the meeting.

AUTHORITY

The Audit Committee is authorized by the Board to:-

1. investigate any activity within its terms of reference;2. seek any information it requires from any employee and all employees are directed to cooperate with any request made by

the Audit Committee;3. communicate directly with the internal and external auditors, as well as the members of the top management on a continuous

basis in order to be informed and updated with matters related to the Company;4. obtain outside legal or other independent professional advice and to secure the attendance of outsiders with relevant

experience and expertise if it considers this necessary;5. promptly report such matter to Bursa Malaysia Securities Berhad where the Audit Committee is of the view that the matter

reported by it to the Board has not been satisfactorily resolved resulting in a breach of the Listing Requirements .

15

ANNUAL REPORT 2014


AUTHORITY

The Audit Committee is authorized by the Board to:-

1. investigate any activity within its terms of reference;2. seek any information it requires from any employee and all employees are directed to cooperate with any request made by

the Audit Committee;3. communicate directly with the internal and external auditors, as well as the members of the top management on a continuous

basis in order to be informed and updated with matters related to the Company;4. obtain outside legal or other independent professional advice and to secure the attendance of outsiders with relevant

experience and expertise if it considers this necessary;5. promptly report such matter to Bursa Malaysia Securities Berhad where the Audit Committee is of the view that the matter

reported by it to the Board has not been satisfactorily resolved resulting in a breach of the Listing Requirements .

DUTIES AND FUNCTIONS

The duties and functions of the Audit Committee shall be :-

1. External Audit

i. To Consider the appointment of the external auditors, the audit fee and any question in relation to resignation or dismissal of the external auditors before making recommendation to the Board.

ii. To review and discuss with the external auditors, before the audit commences, the nature and scope of audit, and ensure coordination where more than one (1) audit rm is involved;

iii. To discuss issues, problems and reservations arising from the interim and nal audit, and any matter the auditors may wish to discuss and ;

iv. To review external auditors management letters and managements response.

2. Internal audit

i. To review the adequacy of the scope, functions, competency and resources of the internal auditors, and that it has the necessary authority to carry out its work ;

ii. To Review the internal audit programme, consider the major ndings of internal audits and Managements responses, and ensure coordination between the internal and external auditors.

iii. To review the audit reports. iv. To direct and where appropriate supervise any special project or investigation considered necessary. v. To prepare periodic reports to the Board summarizing the work performed in ful lling the Audit Committees primary

responsibilities. vi. To determine the remit of internal audit function which reports directly to the Audit Committee. The internal audit

function should be independent of the activities they audit and should be performed with impartiality, pro ciency and due professional care.

3. Financial Reporting Review

To review with the management and the external auditors the quarterly results and year end nancial statements prior to the approval by the Board, focusing particularly on :

(a) Any change in accounting policies and practices.

(b) Signi cant and unusual events.

(c) Major judgmental areas.

(d) Signi cant adjustments resulting from the audit.

(e) The going concern assumption.

(f) Compliance with accounting standards.

(g) Compliance with other legal requirements and the Main Market Listing Requirements.


DUTIES AND FUNCTIONS (Contd)

4. Related Party Transactions

To review any related party transaction and con ict of interest situation that may arise in the Company including any transaction, procedure or course of conduct that raises the questions of management integrity.

5. Risk Management

To review the adequacy and effectiveness of risk management practices and procedures as well as conducting risk pro ling reviews on the Company , on a quarterly basis.

6. Internal Control

To keep under review the effectiveness of internal control systems and the internal and/or external auditors evaluation of these systems .

7. Other Matters

a) To arrange for periodic reports from Management, the external auditors and the internal auditors to assess the impact of signi cant regulatory changes, and accounting or reporting developments proposed by accounting and other bodies, or any signi cant matter that may have a bearing on the annual examination.

b) To discuss problems and reservations arising from the internal audits, interim and nal audits, and matters whereby both the internal and external auditors may wish to discuss.

c) To review the ESOS allocation to ensure that it is in compliance with the criteria as approved by the ESOS Committee and the By-laws.

d) To consider the major ndings of internal investigation and the managements responses. e) To report to Bursa Malaysia Securities Berhad any breach of the Listing Requirements which has not been satisfactorily

resolved. f) Carrying out any other functions that may be mutually agreed upon by the Audit Committee and the Board.

REPORTING PROCEDURES

The secretary shall circulate the minutes of meetings of the Audit Committee to all members of the Board.


17

ANNUAL REPORT 2014

STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL

(Pursuant to paragraph 15.27 (b) of Bursa Malaysia Securities Main Market Listing Requirements and Practice Note No. 9 and as guided by the Statement on Internal Control : Guidance for Directors of Public Listed Companies)

The Board of Directors of Borneo Oil Berhad is pleased to provide the following statement as a group for the nancial year ended 31 January 2014 .

During the year under review , Borneo Oil Berhad and its subsidiaries (Group) continued to enhance its system of internal control and risk management in order to better quantify its compliance with the Malaysian Code on Corporate Governance and Bursa Malaysia Securities Main Market Listing Requirements.

Board Responsibility

The Board acknowledges the importance of having an effective internal control system and a well structured risk management framework to safeguard the interest of shareholders, customers, employees and as well as the Groups assets. The Board understands its overall responsibility for establishing an ef cient and effective system of internal control covering not only nancial controls but also relating to operational, compliance and risk management and for reviewing the adequacy and integrity of the system. However due to the limitations that are inherent in any system of internal control, those systems are designed to manage rather than eliminate the risk of failure to achieve business objectives, and can only provide reasonable and not absolute assurance against material misstatement or loss.

The Board has established an ongoing process for identifying, evaluating and managing the principal risks faced, or potentially exposed to, by the Group in pursuing its business objectives. The process is being continually monitored and reviewed for its adequacy and effectiveness to ensure it is in accordance with the Internal Control Guidance.

The Groups system of internal control can be summarised as follows:

1. Risk Management framework

The Board and management are proactive in identifying signi cant risks associated with its business processes. The Risk Management committee coordinate the implementation of an enterprise-wide risk management programme for the Group. Several meetings were conducted to review and re-evaluate the risk pro les identi ed by the respective business units within the Group as well as assessing the effectiveness of the controls in place to address those risks.

2. Internal Audit Function

The Board acknowledges the importance of internal audit function and has in place an internal audit unit which reports directly to the Audit Committee on a quarterly basis. The internal audit function adopts a risk-based approach in developing its audit strategy and plan which focuses on identifying principal risks affecting the achievement of the Groups business objectives, assessing the likelihood and impact of these risks, evaluating the effectiveness of the existing controls in place and formulating action plans to improve the internal control system.

During the year, scheduled internal audit visits were carried out by the internal audit unit based on the audit plan presented to and approved by the Audit Committee. On a quarterly basis, the internal auditors report to the Audit Committee on areas for improvement and will subsequently follow up to ensure that corrective actions on reported weaknesses are remedied within the required time frame by the Management of the respective subsidiaries.

As part of the ongoing process, the Internal Auditor has conducted detailed risk audits on the following areas as identi ed in the approved audit plan:

(a) Review of business planning and strategic Management,(b) Review of credit assessment , granting of credit limits and terms,(c) Policies and procedures review on inventories management,(d) Review of sales and marketing strategies and development,(e) Review of cash sales monitoring recoverability,(f) Review of human resource management,(g) Policies and procedures Review on production planning and monitoring.



2. Internal Audit Function (contd)

Key Elements of Internal Control

The Group has also put in place the following key elements of internal control :

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19

ANNUAL REPORT 2014


5. Internal Compliance

The Group monitors compliance with its internal nancial controls through management reviews and reports which are internally reviewed by key personnel. Updates of internal policies and procedures are undertaken to re ect changing risks or resolve operational de ciencies. Internal audit visits are systematically arranged over speci c periods to monitor and scrutinize compliance with procedures and assess the integrity of nancial information provided.

In addition to the risk management and internal audit function , the Board has put in place an organizational structure with clearly de ned lines of responsibility and delegation of authority , allowing internal checks and balances. The Group has also developed and made available to employees an Employee Handbook that highlights policies with respect to health and safety , training , entitlements , bene ts and serious misconduct.

In overseeing the Groups businesses, the Board continually strives for an appropriate balance between control and empowerment. Through the managements periodic review of performance and operational reports, as well as attending management meetings, the day-to-day affairs of the Group are closely monitored. Regular Board meetings are held to discuss and decide on policies and major business matters , while the management Committees discussions , brie ngs and meetings are held from time to time to :

(i) Monitor and assess the business performance ;(ii) Manage the operational controls;(iii) identify , discuss and resolve nancial and key management issues ;(iv) Review the risks and controls of the businesses ;(v) Deliberate on the investment proposals ;(vi) Discuss appropriate tax planning measure and plans ;(vii) Consider issues of corporate governance and business practices , and(viii) Review and evaluate the information technology requirements and systems support of the various subsidiaries.

The Boards conclusion

The Board consistently believe that by maintaining a balanced achievement of its business objectives and operational ef ciency, it will bring about a better and more effective performance and results of the Group. As such , the Board is of the view that the system of internal controls being instituted throughout the nancial year ended 31 January 2014 is sound and effective. Reviews of all the control procedures will be continuously carried out to ensure the ongoing effectiveness and adequacy of the systems of internal control, so as to safeguard shareholders investment and the Groups interest and assets. No major internal control weaknesses were identi ed during the year under review nor have any of the reported weaknesses resulted in any material losses or contingencies requiring disclosure in the Groups Annual Report.

The Board of Directors of Borneo Oil Berhad

Date : 23rd June 2014


CORPORATE SOCIAL RESPONSIBILITY (CSR)STATEMENT

The Board of Directors of Borneo Oil Berhad views corporate social responsibility (CSR) as an integral part of the business activities and consistent with being a responsible organization, not only just about delivering quality products and services and generating attractive economic returns to the shareholders and customers.

Caring for the community , protecting the environment and ensuring the welfare of the employees and customers are in harmony. The Directors are of the opinion that a well balanced economic growth, environmental protection and social progress can be achieved with proper efforts implemented.

In order to achieve this objective , the Directors will periodically review the Companies policies , monitor and where necessary improved on the continuous performances through its corporate social responsibility programmes in an ethically and professionally manner.

The various elements of the Corporate Social Responsibility programmes are re ected through the following policies :

Workforce

The Directors believe that dedicated and competent workforce is paramount to the key success of the business of the Group. Therefore , the Directors will continue to invest in human resource developments to ensure proper trainings are given to the employees to further enhance their skills and knowledge.

Safety and Health

The Directors are committed to provide a safer and healthier environment for the employees and customers and to minimize any preventable accidents and health hazards that may occur in any of the business premises.

Environment

The Directors are also committed to seek in the operations continuous improvements to minimize any negative impact on the environment.They are to ensure that the business activities are conducted in compliance with approved applicable environmental rules and regulations.

Community

The Directors are committed to provide continuous support to various activities as carried out by the charitable organizations throughout Malaysia.

The Directors will strive to continuously review and improve on the Corporate Social Responsibility programmes as times change to fully support the growth direction of the Group.

21

ANNUAL REPORT 2014

STATEMENT OF DIRECTORS RESPONSIBILITY IN RELATION TO THE FINANCIAL STATEMENTS

(Pursuant to Paragraph 15.27(a) of the Listing Requirements of Bursa Malaysia Securities Berhad).

The nancial statements of the Group and of the Company are properly drawn up in accordance with the Financial Reporting Standards in Malaysia and the provisions of the Companies Act, 1965 so as to give a true and fair view of the state of affairs of the Group and of the Company as at 31 January 2014 and of the results of its operations and cash ows for the year ended on that date .

The Directors consider that in preparing the nancial statements of the Group and of the Company for the nancial year ended 31 January 2014 :- S 5DDFCDF=5H95DD@=756@95DDFCJ98577CIBH=B;GH5B85F8G5B8DC@=7=9GI8;A9BHG5B89GH=A5H9GK9F9A589

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DIRECTORS REPORT 23 - 26

STATEMENT BY DIRECTORS/ STATUTORY DECLARATION 27

AUDITORS REPORT 28 - 29

STATEMENTS OF FINANCIAL POSITION 30

STATEMENTS OF COMPREHENSIVE INCOME 31

STATEMENTS OF CHANGES IN EQUITY 32 - 33

STATEMENT OF CONSOLIDATED CASH FLOWS 34 - 35

NOTES TO THE FINANCIAL STATEMENTS 36 - 79

FINANCIALCONTENTS

23

ANNUAL REPORT 2014

The Directors have pleasure in submitting their report and the audited nancial statements of the Group and of the Company for the nancial year ended 31 January 2014.

PRINCIPAL ACTIVITIES

The Companys principal activities are investment holding and provision of corporate and management services to the Group. All other operational activities of the Group are undertaken by respective subsidiaries and are disclosed in Note 6 to the nancial statements.

There have been no signi cant changes in the nature of these activities during the nancial year.

FINANCIAL RESULTS GROUP COMPANY RM RM Net loss after taxation attributable to owners of the parent 3,107,165 917,187

DIVIDENDS

No dividends have been paid or declared by the Company since the end of the previous nancial year.

The Directors do not recommend the payment of any dividend for the current year.

ISSUE OF SHARES AND DEBENTURES

During the nancial year, the Company increased its issued and paid-up ordinary share capital from RM199,194,600 to RM210,244,600 by way of the issuance of 11,050,000 ordinary shares of RM1 each through exercise of Employee Share Option Schemes (ESOS).

No debentures were issued during the nancial year.

RESERVES AND PROVISIONS

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

EMPLOYEE SHARE OPTIONS SCHEME (ESOS)

The Companys ESOS is governed by the by-laws approved by the shareholders at an Extraordinary General Meeting held on 28 December 2011. The ESOS was implemented on 28 February 2012 and is to be in force for a period of 5 years from the date of implementation, with extension of a further 5 years.

The main features of the ESOS and the movements in the share options for the year ended 31 January 2014 are disclosed in Note 17 to the nancial statements.

DIRECTORS REPORT


INFORMATION ON THE FINANCIAL STATEMENTS

Before the statements of pro t or loss and other comprehensive income and statements of nancial position of the Group and of the

Company were made out, the Directors took reasonable steps:

a. to ascertain that proper action had been taken in relation to the writing off of bad debts and the making of allowance for doubtful

debts and have satis ed themselves that all known bad debts have been written off and that adequate allowance had been

made for doubtful debts; and

b. to ensure that any current assets which were unlikely to be realised in the ordinary course of business including their values as

shown in the accounting records of the Group and of the Company have been written down to an amount which they might be

expected so to realise.

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

a. which would render the amount written off for bad debts or the amount of the allowance for doubtful debts in the nancial

statements of the Group and of the Company inadequate to any substantial extent; or

b. which would render the values attributed to current assets in the nancial statements of the Group and of the Company

misleading; or

c. 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.

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

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

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

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

a. any charge on the assets of the Group or of the Company which has arisen since the end of the nancial year which secures

the liability of any other person; or

b. any contingent liability of the Group or of the Company which has arisen since the end of the nancial year other than as

disclosed in Note 32 to the nancial statements.

DIRECTORS BENEFITS

Since the end of the previous nancial year, no Director has received or become entitled to receive any bene t (other than bene ts included in the aggregate amount of emoluments received or due and receivable by Directors as shown in the nancial statements, or the xed salary of a full-time employee of the Company) by reason of a contract made by the Company or a related corporation with the Director or with a rm of which the Director is a member, or with a company in which the Director has a substantial nancial interest except as recorded and disclosed in the notes to the nancial statements.

During and at the end of the nancial year, no arrangement subsisted to which the Company or its related companies was a party, whereby Directors of the Company might acquire bene ts by means of the acquisition of shares in, or debentures of, the Company or any other body corporate.

DIRECTORS REPORT (Contd)

25

ANNUAL REPORT 2014

DIRECTORS OF THE COMPANY

Directors who served on the Board of the Company since the date of the last report are as follows:

TEO KIEW LEONG

JOHN LEE YAN HONG @ JOHN LEE

TAN KOK CHOR

MICHAEL MOO KAI WAH

In accordance with Article 91 and 92 of the Companys Article of Association, Michael Moo Kai Wah retires at the forthcoming Annual

General Meeting and, being eligible, offers himself for re-election.

DIRECTORS INTERESTS

As recorded in the Register of Directors Shareholdings kept by the Company under Section 134 of the Company Act, 1965, none

of the current Directors had any interest in the shares of the Company at the end of the nancial year.

WARRANT B

The Companys issued new warrants via a Renounceable Rights Issue of 53,458,666 new warrants 2008/2018 on the basis of one (1) new warrant for every three (3) existing shares held were listed on the Bursa Malaysia Securities Berhad on 5 March 2008. The issue price is at RM0.05 each. The exercise price of the warrants is subject to adjustments from time to time in accordance with the conditions stipulated in the Deed Poll dated 18 January 2008.

The issue date for 53,458,666 Rights Issue of warrants was 29 February 2008. The warrants will expire on 28 February 2018. The exercise period for the warrants 2008/2018 is ten (10) years commencing from and inclusive of the date of issue of the Warrants 2008/2018. Warrants 2008/2018 which are not exercised during the exercise period shall thereafter lapse and cease to be valid.

OTHER STATUTORY INFORMATION

At the date of this report, the Directors are not aware of any circumstances not otherwise dealt with in this report or the nancial

statements which would render any amount stated in the nancial statements of the Group and of the Company misleading.

In the opinion of the Directors:

a. the results of the operations of the Group and of the Company for the nancial year were not substantially affected by any item,

transaction or event of a material and unusual nature; and

b. there has not arisen in the interval between the end of the nancial year and the date of this report, any such item, transaction

or event of a material and unusual nature likely to affect substantially the results of the operations of the Group and of the

Company for the nancial year in which this report is made.

SUBSEQUENT EVENT

The subsequent event is as disclosed in Note 36 to the nancial statements.



AUDITORS

The auditors, Messrs. STYL Associates, have indicated their willingness to continue in of ce.

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

______________________________________ ____________________________________MICHAEL MOO KAI WAH JOHN LEE YAN HONG @ JOHN LEE


27

ANNUAL REPORT 2014

STATEMENT BY DIRECTORSPursuant to Section 169(15) of the Companies Act, 1965

We, MICHAEL MOO KAI WAH and TEO KIEW LEONG, two of the Directors of BORNEO OIL BERHAD, state that, in the opinion of the Directors, the accompanying nancial statements of the Group and of the Company, together with the notes thereto, are drawn up in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia so as to give a true and fair view of the nancial position of the Group and of the Company as at 31 January 2014 and of their nancial performance and cash ows for the year then ended.

The supplementary information set out in Note 38, which is not part of the nancial statements, is prepared in all material respects, in accordance with Guidance on Special Matter No. 1 Determination of Realised and Unrealised Pro ts or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements as issued by the Malaysian Institute of Accountants and the directive of Bursa Malaysia Securities Berhad.

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

STATUTORY DECLARATIONPursuant to Section 169(16) of the Companies Act, 1965

I, MICHAEL MOO KAI WAH, the Director primarily responsible for the nancial management of BORNEO OIL BERHAD, do solemnly and sincerely declare that, to the best of my knowledge and belief, the accompanying nancial statements of the Group and of the Company, together with the notes thereto, are, in my opinion, correct and I make this solemn declaration conscientiously believing the same to be true, and by virtue of the provisions of the Statutory Declarations Act, 1960.believing the same to be true, and by virtue of the provisions of the Statutory Declarations Act, 1960.

STATEMENT BY DIRECTORS/ STATUTORY DECLARATION

20 May 2013

DATE :

TEO KIEW LEONG


Report on the Financial Statements

We have audited the nancial statements of BORNEO OIL BERHAD which comprise the statements of nancial position as at 31 January 2014 of the Group and of the Company, and the statements of pro t or loss and other comprehensive income, statements of changes in equity and statements of cash ows of the Group and of the Company for the year then ended, and a summary of signi cant accounting policies and other explanatory information.

Directors Responsibility for the Financial Statements

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

Auditors Responsibility

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

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the nancial statements. The procedures selected depend on our judgment, including the assessment of risks of material misstatement of the nancial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the Companys preparation of nancial 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 Companys 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 nancial statements.

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

Opinion

In our opinion, the nancial statements have been properly drawn up in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia so as to give a true and fair view of the nancial position of the Group and of the Company as at 31 January 2014 and of their nancial performance and cash ows for the nancial year then ended.

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 nancial statements and the auditors reports of all subsidiaries of which we have not acted as auditors, which are indicated in Note 6 to the nancial statements.

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

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

INDEPENDENT AUDITORS REPORT TO THE MEMBERS OF BORNEO OIL BERHAD (Incorporated in Malaysia)

29

ANNUAL REPORT 2014

Other Reporting Responsibilities

The supplementary information set out in Note 38 is disclosed to meet the requirement of Bursa Malaysia Securities Berhad and is not part of the nancial statements. The Directors are responsible for the preparation of the supplementary information in accordance with Guidance on Special Matter No. 1 Determination of Realised and Unrealised Pro ts or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements as issued by the Malaysian Institute of Accountants (MIA Guidance) and the directive of Bursa Malaysia Securities Berhad. In our opinion, the supplementary information is prepared, in all material respects, in accordance with the MIA Guidance and the directive of Bursa Malaysia Securities Berhad.

Other Matters

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

INDEPENDENT AUDITORS REPORT TO THE MEMBERS OF BORNEO OIL BERHAD (Incorporated in Malaysia) (Contd)

DATE: 30 APRIL 2014

APPROVED COMPANY AUDITORTREASURY APPROVAL NO.1269/6/14(J)


GROUP COMPANY 2014 2013 2014 2013ASSETS Note RM RM RM RM Non-current assets Property, plant and equipment 4 43,912,202 36,288,450 155,996 147,139Investment properties 5 135,010,471 133,725,737 - -Investment in subsidiary companies 6 - - 2 2Investment in quoted securities 7 78,303 17,502 - -Investment in golf club membership 8 64,000 - 64,000 -Prepaid lease payments 9 12,357,367 13,947,262 - -Development expenditure 10 2,650,001 1 - -Intangible assets 11 11,833 11,833 - -

Total non-current assets 194,084,177 183,990,785 219,998 147,141 Current assets Inventories 12 3,356,245 3,167,098 - -Trade receivables 13 2,082,368 1,905,391 - -Other receivables 14 11,128,967 4,642,868 722,800 460,765Amount due from subsidiary companies 15 - - 203,575,662 188,955,639Cash and cash equivalents 16 6,156,765 8,797,096 2,549,105 4,347,292

Total current assets 22,724,345 18,512,453 206,847,567 193,763,696

TOTAL ASSETS 216,808,522 202,503,238 207,067,565 193,910,837 EQUITY AND LIABILITIES Equity attributable to owners of the parent Share capital 17 210,244,600 199,194,600 210,244,600 199,194,600Reserves 18 (12,598,683) (15,474,480) (7,533,714) (8,256,308)

Shareholders equity 197,645,917 183,720,120 202,710,886 190,938,292 Non-current liabilities Long term borrowings 19 5,364,358 5,330,331 - -Deferred tax liabilities 21 31,300 27,700 - -

Total non-current liabilities 5,395,658 5,358,031 - - Current liabilities Trade payables 22 1,958,266 1,928,653 - -Other payables 23 8,243,397 7,504,580 1,669,903 384,341Amount due to subsidiary companies 15 - - 2,565,949 2,576,107Short term borrowings 19 2,841,157 3,505,306 - 12,097Provision for taxation 724,127 486,548 120,827 -

Total current liabilities 13,766,947 13,425,087 4,356,679 2,972,545 Total liabilities 19,162,605 18,783,118 4,356,679 2,972,545 TOTAL EQUITY AND LIABILITIES 216,808,522 202,503,238 207,067,565 193,910,837

The accompanying Notes form an integral part of the Financial Statements.

STATEMENTS OF FINANCIAL POSITION AS AT 31 JANUARY 2014

31

ANNUAL REPORT 2014

GROUP COMPANY 2014 2013 2014 2013 Note RM RM RM RM

Revenue 24 41,816,751 33,330,652 2,392,358 2,810,404

Cost of sales (28,843,332) (20,831,905) - -

Gross pro t 12,973,419 12,498,747 2,392,358 2,810,404

Other income 25 11,076,344 1,848,495 122,735 115,266

Administrative expenses (19,913,252) (21,567,885) (1,226,903) (3,149,527)

Finance costs (413,540) (598,116) (186) (1,983)

Pro t/(Loss) before taxation 26 3,722,971 (7,818,759) 1,288,004 (225,840)

Taxation 27 (615,806) (269,350) (370,817) 50

Pro t/(Loss) after taxation 3,107,165 (8,088,109) 917,187 (225,790)

Other comprehensive income, net of tax:Items that may be subsequently reclassi ed to pro t or loss: - Currency translation reserves (36,775) (5,041) - -

Total comprehensive income for the year 3,070,390 (8,093,150) 917,187 (225,790)

Pro t/(Loss) after taxation attributable to:

Owners of the parent 3,107,165 (8,088,109)

Total comprehensive income attributable to:Owners of the parent 3,070,390 (8,093,150)

Earnings/(Loss) per share attributable to owners of the parent- Basic (sen) 28 1.54 (4.36)- Diluted (sen) 28 1.54 (4.36)


STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

FOR THE YEAR ENDED 31 JANUARY 2014


STATEMENTS OF CHANGES IN EQUITYFOR THE YEAR ENDED 31 JANUARY 2014

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n W

arra

nts

Cap

ital

E

SO

S

Acc

umul

ated

Sha

reho

lder

s

Cap

ital

S

hare

s P

rem

ium

R

eser

ves

Res

erve

s R

eser

ves

Res

erve

s Lo

ss

Eq

uity

GR

OU

P

R

M

RM

R

M

RM

R

M

RM

R

M

RM

R

M

Bal

ance

at 1

Feb

ruar

y 20

12

165,

926,

000

- 24

,164

,992

-

2,67

2,93

3 15

,000

45

,717

(3

4,27

9,97

2)

158,

544,

670

Issu

ance

of s

hare

s 33

,268

,600

-

- -

- -

- -

33,2

68,6

00

Loss

for

the

year

-

- -

- -

- -

(8,0

88,1

09)

(8,0

88,1

09)

Oth

er c

ompr

ehen

sive

inco

me

fo

r the

yea

r

- C

urre

ncy

tran

slat

ion

rese

rves

-

- -

(5,0

41)

- -

- -

(5,0

41)

Tota

l com

preh

ensi

ve in

com

e

for

the

year

-

- -

(5,0

41)

- -

- (8

,088

,109

) (8

,093

,150

)

Bal

ance

at 3

1 Ja

nuar

y 20

13

199,

194,

600

- 24

,164

,992

(5

,041

) 2,

672,

933

15,0

00

45,7

17

(42,

368,

081)

18

3,72

0,12

0

Bal

ance

at 3

1 Ja

nuar

y 20

13

199,

194,

600

-

24,1

64,9

92

(5,0

41)

2,6

72,9

33

15,0

00

45,7

17

(42,

368,

081)

18

3,72

0,12

0

Issu

ance

of s

hare

s 11

,050

,000

-

- -

- -

- -

11,0

50,0

00

Acq

uisi

tion

of tr

easu

ry s

hare

s -

(194

,593

) -

- -

- -

- (1

94,5

93)

Pro

t fo

r th

e ye

ar

- -

- -

- -

- 3,

107,

165

3,10

7,16

5

Oth

er c

ompr

ehen

sive

inco

me

for

the

year

- C

urre

ncy

tran

slat

ion

rese

rves

-

- -

(36,

775)

-

- -

- (3

6,77

5)

Tota

l com

preh

ensi

ve in

com

e f

or th

e ye

ar

- -

- (3

6,77

5)

- -

- 3,

107,

165

3,07

0,39

0

Bal

ance

at 3

1 Ja

nuar

y 20

14

210,

244,

600

(194

,593

) 24

,164

,992

(4

1,81

6)

2,67

2,93

3 15

,000

45

,717

(3

9,26

0,91

6)

197,

645,

917

32 A

NN

UA

L R

EPO

RT

201

4

33

ANNUAL REPORT 2014

Non distributable Distributable Total Share Treasury Share ESOS Warrants Accumulated Shareholders Capital Shares Premium Reserves Reserves Loss EquityCOMPANY RM RM RM RM RM RM RM

Balance at

1 February 2012 165,926,000 - 24,164,992 45,717 2,672,933 (34,914,160) 157,895,482

Issuance of shares 33,268,600 - - - - - 33,268,600

Loss/ Total

comprehensive

income for the year - - - - - (225,790) (225,790)

Balance at 31 January 2013 199,194,600 - 24,164,992 45,717 2,672,933 (35,139,950) 190,938,292

Issuance of shares 11,050,000 - - - - - 11,050,000

Acquisition of treasury shares - (194,593) - - - - (194,593)

Pro t/Total comprehensive income for the year - - - - - 917,187 917,187

Balance at

31 January 2014 210,244,600 (194,593) 24,164,992 45,717 2,672,933 (34,222,763) 202,710,886


STATEMENTS OF CHANGES IN EQUITYFOR THE YEAR ENDED 31 JANUARY 2014 (Contd)


2014 2013 Note RM RMCASH FLOWS FROM OPERATING ACTIVITIES Pro t/(Loss) before taxation 3,722,971 (7,818,759)Adjustments for: Allowance for impairment - 2,611,083 Allowance for impairment written back (2,504,245) (469,875) Amortisation of prepaid lease rental 1,589,895 1,589,895 Depreciation 3,173,877 3,055,254 Deposits written off - 383,028 Gain on disposal of investment in quoted securities - (10,063) Gain on disposal of investment properties (1,761,199) (508,842) Impairment loss on investment in quoted shares 42,493 - Impairment loss on project development - 1,505,001 Interest expense 413,540 598,116 Interest income (64,650) (118,032) Loss/(Gain) on disposal of property, plant and equipment 235,410 (84,865) Property, plant and equipment written off 46,805 612,192 Reversal on impairment of other investment (49,801) (15,288)Operating pro t before working capital changes 4,845,096 1,328,845 Inventories (189,147) (1,287,811) Receivables (4,313,866) 2,343,154 Payables 797,431 (379,098)Net cash generated from operations 1,139,514 2,005,090 Tax paid (363,881) - Tax refund 115,284 13,957 Interest paid (413,540) (598,116) Net cash from operating activities 477,377 1,420,931 CASH FLOWS FROM INVESTING ACTIVITIESInterest received 64,650 118,032Purchase of property, plant and equipment (9,926,937) (26,390,907)Purchase of investment properties (5,892,065) (4,024,035)Development expenditure (2,650,000) -Investment in quoted shares (53,493) -Investment in golf club membership (64,000) -Acquisition of treasury shares (194,593) -Proceeds from disposal of investment in quoted securities - 264,050Proceeds from disposal of investment properties 6,538,893 1,675,647Proceeds from disposal of property, plant and equipment 209,000 401,201Net cash used in investing activities (11,968,545) (27,956,012)

CASH FLOWS FROM FINANCING ACTIVITIESProceeds from issuance of shares 11,050,000 33,268,600Repayment of nance lease payables (1,924,155) (132,572)Repayment of term loans (246,236) (3,070,964)Net cash from nancing activities 8,879,609 30,065,064

NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS (2,611,559) 3,529,983

FOREIGN CURRENCY TRANSLATION RESERVES (28,772) (5,041)

CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 8,797,096 5,272,154

CASH AND CASH EQUIVALENTS AT END OF YEAR 16 6,156,765 8,797,096


STATEMENT OF CONSOLIDATED CASH FLOWSFOR THE YEAR ENDED 31 JANUARY 2014

35

ANNUAL REPORT 2014

2014 2013 Note RM RMCASH FLOWS FROM OPERATING ACTIVITIES Pro t/(Loss) before taxation 1,288,004 (225,840)Adjustments for: Allowance for impairment 5,498 1,883,087 Allowance for impairment written back (30,000) - Depreciation 25,350 16,459 Gain on disposal of property, plant and equipment (29,999) - Interest expense 186 1,983 Interest income (62,660) (115,266)

Operating pro t before working capital changes 1,196,379 1,560,423 Receivables (466,551) 398,246 Payables 1,285,562 (466,885) Subsidiary companies (14,635,679) (32,613,336)

Net cash used in operations (12,620,289) (31,121,552) Interest paid (186) (1,983) Tax paid (28,817) - Tax refund 13,343 -

Net cash used in operating activities (12,635,949) (31,123,535) CASH FLOWS FROM INVESTING ACTIVITES Interest received 62,660 115,266Purchase of property, plant and equipment (34,208) (130,544)Investment in golf club membership (64,000) -Acquisition of treasury shares (194,593) -Proceeds from disposal of property, plant and equipment 30,000 -Net cash used in investing activities (200,141) (15,278) CASH FLOWS FROM FINANCING ACTIVITIES Repayment of nance lease payables (12,097) (37,881)Proceeds from issuance of shares 11,050,000 33,268,600

Net cash from nancing activities 11,037,903 33,230,719 NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS (1,798,187) 2,091,906 CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 4,347,292 2,255,386 CASH AND CASH EQUIVALENTS AT END OF YEAR 16 2,549,105 4,347,292


STATEMENT OF CONSOLIDATED CASH FLOWSFOR THE YEAR ENDED 31 JANUARY 2014 (Contd)


1. CORPORATE INFORMATION

The Companys principal activities are investment holding and provision of corporate and management services to the Group. All other operational activities of the Group are undertaken by respective subsidiaries and are disclosed in Note 6 to the nancial statements.

There have been no signi cant changes in the nature of these activities during the nancial year.

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

The registered of ce of the Company is located at 1st & 2nd Floor, Victoria Point, Jalan OKK Awang Besar, 87007 Wilayah Persekutuan Labuan and its principal place of business is located at Lot 180, Section 19 KTLD, Jalan Satok, 93400 Kuching, Sarawak.

The nancial statements were authorised for issue by the Board of Directors in accordance with a resolution of the Directors on 30 April 2014.

2. SIGNIFICANT ACCOUNTING POLICIES

(a) Basis of preparation

The nancial statements of the Group and of the Company have been prepared in accordance with the Malaysian Financial Reporting Standards (MFRSs), International Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia.

The nancial statements have been prepared on the historical cost basis except as disclosed in the accounting policies below.

The nancial statements are presented in Ringgit Malaysia (RM) which is the Companys functional currency.

The preparation of nancial statements in conformity with MFRSs requires the use of certain critical accounting estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the nancial statements, and the reported amounts of the revenue and expenses during the reporting period. It also requires Directors to exercise their judgment in the process of applying the Groups and the Companys accounting policies. Although these estimates and judgment are based on the Directors best knowledge of current events and actions, actual results may differ.

The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are signi cant to the nancial statements are disclosed in Note 3.

On 1 February 2013, the Group and the Company have adopted where applicable the following new and revised MFRSs and Issues Committee (IC) Interpretations, Amendments to MFRSs and IC Interpretations that have been issued by the Malaysian Accounting Standards Board (MASB):

Effective for nancial periods beginning on or after 1 July 2012: Amendments to MFRS 101 Presentation of Items of Other Comprehensive Income

Effective for nancial periods beginning on or after 1 January 2013: MFRS 3 Business Combinations (IFRS 3 Business Combinations issued by IASB in March 2014) MFRS 10 Consolidated Financ

Documents

BORNOIL-AnnualReport2014