ISR Capital : Annual Reports And Related Documents

CONTENTS

01 Vision, Mission and Core Values

01 Corporate Profile

02 Chairman's Letter to Shareholders

06 Operations Review

10 Board of Directors & Management

1. Corporate Information
2. Sustainability Report

22 Corporate Governance Statement

42 Directors' Statement

45 Independent Auditors' Report

48 Financial Statements

55 Notes to Financial Statements

118 Shareholders' Statistics and Distribution

120 Notice of Annual General Meeting

125 Additional Information on Directors Seeking Re-election

Proxy Form

CORPORATE

PROFILE

ISR Capital Limited ("ISR Capital" or the "Company", and together with its subsidiaries, the "Group"), through the reconstruction of its investment portfolio focuses on the supply chain of high-techindustries that will generate value for the Group in the long term.

In line with its objective to strengthen its earnings base, the Group is primarily involved in two strategic investments:

1. a 60% stake in a rare earth concession area located in Madagascar, Africa, and (ii) a up to 25% stake in Straits Hi- Rel Pte. Ltd., a start-up focusing on speciality testing and back-end manufacturing for high reliability integrated chips and electronic modules for end-user application in the automotive, energy (oil and gas) and industrial sectors.

Through its wholly-owned subsidiary, ISR Global Pte. Ltd., the Group holds an exploration licence for the 238km2 concession area that hosts rare earth oxides in northwestern Madagascar, Africa. This licence enables the Group to embark on trial leaching, pilot production, conducting feasibility and engineering studies, as well as environmental impact assessments concurrently. The Group is targeting to apply for a full mining licence (Permis de Exploitation) before November 2021. The Group is committed to making good progress in the operation, management and production of rare earth oxides, to bring forth stable and sustainable earnings growth.

ISR Capital is listed on the Mainboard of the Singapore Exchange Securities Trading Limited ("SGX-ST") under the stock code 5EC.

VISION

The Group strives to be a rare earth supply chain partner of choice in delivering long-term benefits for all stakeholders through our holistic management along the value chain.

MISSION

The Company aims to be an investment group that invests in a responsible manner to generate stable and sustainable income, and achieve capital growth for our shareholders.

CORE VALUES

Good Corporate Governance

The Group is committed to uphold the best practices in corporate transparency and disclosures. The Board will continuously enhance our corporate governance framework and processes through effective oversight, and observe high standards of transparency, accountability and integrity in managing the Group's business in order to create value for our stakeholders and safeguard the Group's assets.

Responsible Investing

The Group will carry out preliminary assessment on proposed investments with our investment criteria, policies and guidelines, and will engage external independent professionals to carry out extensive due diligence on the proposed investments identified. We will avoid investing in companies that are involved in known breaches of human rights, labour laws, environment or anti-corruption laws.

Prudent Risk Management
The Group takes great care in assessing and mitigating
potential risks to ensure that all investment decisions	2018
are in the best interest of our shareholders.
	ANNUAL REPORT

01

CHAIRMAN'S

LETTER TO SHAREHOLDERS

INVESTMENT PORTFOLIO

60%

Tantalum Holding (Mauritius) Ltd ("THM")

OWNS 100%

Tantalum Rare Earth Malagasy

S.A.R.L.U. ("TREM")

12.5% (up to 25%)

Straits Hi-Rel Pte. Ltd. ("SHR")

NET ASSET VALUE

S$3.46 Million

As at 31 December 2017: $6.98 million

NET ASSET VALUE PER SHARE

0.11Singapore Cent

As at 31 December 2017: 0.27 Singapore Cent

REVENUE

S$0.75 Million

As at 31 December 2017: S$0.58 million

团 集资 投 豪 威 | LIMITED CAPITAL ISR

Dear Fellow Shareholders,

The last financial year ended 31 December 2018 ("FY2018") was an eventful year as our relentless efforts in acquiring the 60% stake in the rare earth concession located in northwestern Madagascar, Africa, came to fruition.

Over the last two and a half years, we overcame adversities to reconstruct the Group's investment portfolio to focus on the supply chain of high-tech industries. Our reconstructed investment portfolio currently includes (i) a 60% stake in Tantalum Holding (Mauritius) Ltd ("THM") which in turns owns 100% of Tantalum Rare Earth Malagasy S.A.R.L.U. ("TREM"), and (ii) a up to 25% stake in Straits Hi-Rel Pte. Ltd. ("SHR").

We are committed to generate value from the reconstructed investment portfolio for our shareholders who gave us their unwavering faith and support over the years.

Our dedication to rare earth creates value

Rare earth elements are a group of 17 chemical elements used in some of the world's fastest growing industries including renewable energy, electric vehicles, telecommunications and defence. China is the world's largest producer, consumer and exporter of rare earths, controlling more than 90% of the global supply base with an established dominant position in the entire value chain. This control extends from mining to production of key intermediate products such as magnets, which are critical inputs for some of the high growth industries.

When it became evident to the Group that the 238km2 concession area in north-western Madagascar, Africa hosted rare earth oxides, we pursued relentlessly the acquisition of THM. We believed that bringing this greenfield rare earth mine to commercialisation is likely to create immense value for the Group and our shareholders.

Through rigorous due diligence including the engagement and publication of the third independent qualified report and constant dialogues over the past years, we fulfilled the requirements of all relevant authorities in the various jurisdictions. We renegotiated with the vendor of THM to reduce the purchase consideration of the 60% stake to

02

"at least seven key rare earth elements are key ingredients of the components used in the manufacture of electric vehicles, turbines, and consumer electronics."

Industry Applications of Rare Earth Elements

Consumer	Manufacturing	Medical
Electronics		Science

Technology	Renewable	Defence
	Energy

approximately S$3 million by issuing approximately 747.3 million shares at an issue price of S$0.004 per share.

Furthermore, the renewal of the exploration licence for the concession area for another three years from November 2018, enables the Group to commence work on trial leaching, pilot production, conducting feasibility and engineering studies, as well as environmental impact assessment concurrently. We aim to apply for a full mining licence (Permis de Exploitation) before November 2021 to achieve commercial production.

For the year under review

The Group consolidated the assets and liabilities of THM and its wholly-owned subsidiary, TREM in its consolidated financial statements for FY2018. Consequently, the Group's net asset value decreased from S$6.98 million as at 31 December 2017 to S$3.46 million as at 31 December 2018. Based on the issued and paid-up share capital of 2.56 billion shares and 3.16 billion shares, the net asset value per share decreased from 0.27 Singapore cent as at 31 December 2017 to 0.11 Singapore cent as at 31 December 2018, respectively.

While Group revenue increased 29.4% from S$0.58 million in FY2017 to S$0.75 million in FY2018 on the back of additional interest earned on the loans to THM and Tantalus Rare Earths AG ("TRE AG"), operating expenses and finance costs undermined the financial performance. As a result, net loss attributable to shareholders widened 47.8% from S$1.42 million in FY2017 to S$2.10 million in FY2018.

The Group will continue to review and monitor the progress of SHR since our initial investment in 2017. Any further investment into SHR will be measured against the milestone achievements stipulated in the investment agreement.

Well-positioned to benefit from increasing demand for rare earth elements

The 5G revolution is likely to quicken the pace of integrating more sophisticated high-tech devices into our daily lives. Moving upstream in the supply chain of these high-tech devices, at least seven key rare earth elements are key ingredients of the components used in the manufacture of electric vehicles, turbines, and consumer electronics.

ANNUAL REPORT 2018

03