VISION - listed companyjayatiasa.listedcompany.com/misc/ar2019.pdf · International Limited (a listed company in both Hong Kong and Malaysia) and RH Petrogas Limited (a listed company

VISIONTo be Malaysia’s preferred producer of renewable and sustainable quality oil palm and wood based products.

MISSIONTo create a strong, viable corporate entity, a first choice employer, continuously improving by harnessing our resources of people, processes and technology contributing to the nation’s development.

CORE VALUESAt Jaya Tiasa, we are guided by a set of core values in everything we do. These values form an integral part of our culture, and are the key drivers towards delivering long-term success:

• Integrity

We uphold professionalism, accountability, transparency and honesty always.

• Diligence

We seek better way of doing everything, embrace change in adapting our business model to the market or environment and walk extra miles to get the desired results.

• Team Spirit

We work and collaborate in unity, believing and trusting each other in pursuing our goals. We motivate achievement of our goals through recognition of every contribution towards the Company’s success.

• Building Relationship

We cultivate and maintain mutually beneficial relationship with our stakeholders.

CONTENTSVISION, MISSION & CORE VALUES

STEWARDSHIP

2 Corporate Information3 Directors’ Profile7 Key Management Profile9 Corporate Structure

BUSINESS REVIEW & HIGHLIGHTS

10 Financial Highlights12 Chairman’s Statement14 Management Discussion and Analysis

SUSTAINABILITY AND GOVERNANCE

20 Sustainability Statement38 Corporate Governance Overview Statement44 Statement on Risk Management and Internal Control 47 Audit Committee Report50 Additional Compliance Information

FINANCIAL STATEMENTS & OTHERS

51 Financial Statements161 Disclosure on Recurrent Related Party Transactions162 Properties Owned by the Group163 Analysis of Shareholdings166 Notice of Annual General Meeting

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59th

The Auditorium, Ground Floor, No.62, Lorong Upper Lanang 10A, 96000 Sibu, Sarawak

Thursday28 November 20199.00 a.m.

JAYA TIASA HOLDINGS BERHADANNUAL GENERAL MEETING

2 J A Y A T I A S A H O L D I N G S B E R H A D | A N N U A L R E P O R T 2 0 1 9

CORPORATE INFORMATION

GEN TAN SRI ABDUL RAHMAN BIN ABDUL HAMID (RTD) Independent Non-Executive Chairman

DATO’ SRI TIONG CHIONG HOODeputy Executive Chairman

DATO’ WONG SIE YOUNGChief Executive Officer

Dato’ Wong Lee Yun (Chairperson)

Gen Tan Sri Abdul Rahman Bin Abdul Hamid (Rtd)

John Leong Chung Loong

BOARD OF DIRECTORS

AUDIT COMMITTEE

Dato’ Wong Lee Yun (Chairperson)


Mdm Tiong Choon

NOMINATING COMMITTEE

John Leong Chung Loong (Chairman)

Dato’ Wong Lee Yun

Mr Tiong Chiong Hee

REMUNERATIONCOMMITTEE

Ngu Ung HuongFCIS (CS) (CGP)

COMPANY SECRETARY

No.1-9, Pusat Suria PermataLorong Upper Lanang 10A96000 Sibu, SarawakTel: 084-213255Fax: 084-213855Email: [email protected]

REGISTERED ADDRESS/PRINCIPAL PLACE OF BUSINESS

Boardroom Share Registrars Sdn Bhd11th Floor, Menara Symphony No. 5, Jalan Prof. Khoo Kay KimSeksyen 13, 46200 Petaling JayaSelangor Darul Ehsan.Tel: 03-7890 4700Fax: 03-7890 4670Email: [email protected]

SHARE REGISTRAR

Ernst & Young (AF: 0039)Chartered Accountants

AUDITORS

Listed on Main Market of Bursa Malaysia Securities BerhadStock Name : JTIASAStock Code : 4383

LISTING

www.jayatiasa.net

WEBSITE

DATO’ SRI DR TIONG IK KINGNon-Independent Non-Executive Director

MDM TIONG CHOONNon-Independent Non-Executive Director

MR TIONG CHIONG HEENon-Independent Non-Executive Director

JOHN LEONG CHUNG LOONGIndependent Non-Executive Director

DATO’ WONG LEE YUNIndependent Non-Executive Director

3J A Y A T I A S A H O L D I N G S B E R H A D | A N N U A L R E P O R T 2 0 1 9

DIRECTORS’ PROFILE

GEN TAN SRI ABDUL RAHMAN BIN ABDUL HAMID (RTD)Independent Non-Executive ChairmanAged 81, Malaysian, Male

Board Committee : Audit Committee - Member

Gen Tan Sri Abdul Rahman Bin Abdul Hamid (Rtd) was appointed to the Board on 27 March 1995 and has been serving as the Chairman of the Board since then.

He graduated from the Royal Military College, Malaysia and Army Staff College, Camberlay, United Kingdom.

Tan Sri was the Chief of the Malaysian Army and Defence Force between 1992 and 1994 and was the Acting Governor of Penang in 1994. From 1958 to 1994, he served in various capacities and appointments

covering field command, defence planning, training and development staff, and foreign services including serving 2 years as Defence Attache in the Embassy of Malaysia in the Philippines.

Presently, he is the Chairman and Director of a few other multinational and private companies incorporated in Malaysia.

Tan Sri has no family relationship with any Director and/or major shareholders of the Company.

DATO’ SRI TIONG CHIONG HOODeputy Executive ChairmanAged 59, Malaysian, Male

Dato’ Sri Tiong Chiong Hoo was appointed as the Executive Director on 27 March 1995, re-designated as the Managing Director and Deputy Executive Chairman on 26 April 1995 and 1 January 2013 respectively.

He holds a Bachelor of Law and Bachelor of Economics degrees from Monash University, Australia and is a registered barrister.

Dato’ Sri is responsible for developing the corporate/business strategy and attaining the long-term growth objectives of the Group. His relevant

experience and knowledge in timber and plantation industries gained over time and familiarity with markets of our products have enabled him to address strategic issues and risks relating to the Group’s businesses. His long standing experience with the regulatory authorities’ policies are invaluable to the group.

He is the son of Tan Sri Datuk Sir Tiong Hiew King, a major shareholder of the Company. His uncle, Dato’ Sri Dr Tiong Ik King, sister, Mdm Tiong Choon, and cousin, Mr Tiong Chiong Hee are also members of the Board.



DATO’ WONG SIE YOUNGChief Executive OfficerAged 60, Malaysian, Male

Dato’ Wong Sie Young was appointed as the Chief Executive Officer (CEO) on 1 January 2013.

He graduated with a Bachelor of Science in Electrical Engineering degree from University of Arkansas, USA in 1984.

Dato’ Wong manages the daily business operations and ensures effective implementation of the strategic plans and policies established by the Board. Prior to his appointment as CEO, he has served in various senior positions within the Group for more than 25

years during which he has acquired extensive experience in the running of the Group’s operations. He has been involved in the designing and setting up of all the timber processing plants, the construction projects at the oil palm estates and the designing and construction of all the palm oil mills. He is well equipped to manage the Group due to his familiarity and in-depth knowledge of the many facets of the Group’s operations.

He has no family relationship with any Directors and/or major shareholders of the Company.

DATO’ SRI DR TIONG IK KINGNon-Independent Non-Executive DirectorAged 69, Malaysian, Male

Dato’ Sri Dr Tiong Ik King joined the Board on 27 March 1995.

Dato’ Sri Dr Tiong graduated with an M.B.B.S degree from the National University of Singapore in 1975 and subsequently obtained his M.R.C.P. from the Royal College of Physicians, UK in 1977.

Dato’ Sri Dr Tiong has extensive experience in many industries including media and publishing, information technology, timber, plantation and manufacturing industries.

Currently, he is the Non-Executive Chairman of both Media Chinese International Limited (a listed company in both Hong Kong and Malaysia) and RH Petrogas Limited (a listed company in Singapore). He is a Trustee of Yayasan Sin Chew, a foundation that carries out charitable activities.

Dato’ Sri Dr Tiong is the brother of Tan Sri Datuk Sir Tiong Hiew King, a major shareholder of the Company. His nephews, Dato’ Sri Tiong Chiong Hoo and Mr Tiong Chiong Hee and his niece, Mdm Tiong Choon are also members of the Board.



MDM TIONG CHOONNon-Independent Non-Executive DirectorAged 50, Malaysian, Female

Board Committee: Nominating Committee - Member

Mdm Tiong Choon was appointed to the Board on 3 May 1999.

She holds a Bachelor of Economics degree from Monash University, Australia. She has been with Rimbunan Hijau Group since 1991 and has served in various managerial and senior positions in plantation and hospitality sectors.

Currently, she is an Executive Director of Media Chinese International Limited, a listed company in both

Hong Kong and Malaysia and the Chairman of One Media Group Limited, a company listed in Hong Kong Stock Exchange. She also serves on the Board of Sin Chew Media Corporation Berhad.

She is the daughter of Tan Sri Datuk Sir Tiong Hiew King, a major shareholder of the Company. Her uncle, Dato’ Sri Dr Tiong Ik King, brother, Dato’ Sri Tiong Chiong Hoo and cousin, Mr Tiong Chiong Hee are also members of the Board.

Mr Tiong Chiong Hee was appointed to the Board on 14 May 1999.

He holds a Bachelor of Commerce degree from University of Melbourne, Australia.

He is the Managing Director of Mafrica Corporation Sdn Bhd, a company with operations in logging (both in Malaysia

and Overseas), oil palm plantations and aquaculture prawn farming since 1997.

He is the nephew of Tan Sri Datuk Sir Tiong Hiew King, a major shareholder of the Company. His uncle, Dato’ Sri Dr Tiong Ik King, cousins, Dato’ Sri Tiong Chiong Hoo and Mdm Tiong Choon are also members of the Board.

MR TIONG CHIONG HEENon-Independent Non-Executive DirectorAged 46, Malaysian, Male

Board Committee : Remuneration Committee - Member



JOHN LEONG CHUNG LOONGIndependent Non-Executive DirectorAged 72, Malaysian, Male

Board Committee : Audit Committee - Member Nominating Committee - Member Remuneration Committee - Chairman

Mr John Leong Chung Loong was appointed to the Board on 28 March 2002.

He holds a Bachelor of Economics degree majoring in Accounting from Sydney University, NSW, Australia.

He is an Approved Company Auditor and a member of several professional bodies, including the Australian Society of Certified Practising Accountants, Malaysian Institute of Accountants, Malaysian Institute

of Certified Public Accountants and Malaysian Institute of Taxation (Associate). He started his career as an Accountant in Tractors Malaysia Berhad, Sandakan Branch in 1972 and left in 1973 to join John Liaw & Co as an audit manager. He was a Partner of Liaw, Leong, Wong & Co from 1986 to 1997 and a Partner of Ernst & Young from 1997 to 2001.

He has no family relationship with any Directors and/or major shareholders of the Company.

DATO’ WONG LEE YUNIndependent Non-Executive DirectorAged 66, Malaysian, Female

Board Committee : Audit Committee - Chairperson Nominating Committee - Chairperson Remuneration Committee - Member

Dato’ Wong Lee Yun was appointed to the Board on 21 June 2007.

She is a Certified Public Accountant by profession.

She has extensive experience in investment banking, finance and strategic planning for large investment projects, acquisition of strategic businesses, fund raising and investor relations. She was a Corporate Finance Manager at Permata Chartered Merchant Bank and Vice President at Chase Manhattan Bank. From 1991 to 1996, she was the Director of

Finance and Strategy for the Renong Group of Companies. She became the Chief Executive of Jaya Tiasa Holdings Berhad from 1997 to 2000. She was also a Director of Sin Chew Media Corporation Bhd from 2004 to early 2008. She is the chairman for Malaysia for TC Capital, a regional investment bank based in Singapore. She actively invests in businesses and holds directorships in several private limited companies which she founded.

She has no family relationship with any Directors and/or major shareholders of the Company.

None of the Directors:• has been convicted for any offences within the past 5 years other than traffic offences and there was no public sanction

or penalty imposed on any of them by the relevant regulatory bodies during the financial year.• has been involved in situation that will create a conflict of interest with the Company.


KEY MANAGEMENT PROFILE

Dato’ Wong Pack graduated with a Bachelor of Economics degree from Monash University in 1984. He is also a member of the Institute of Approved Company Secretaries.

Dato’ Wong Pack worked in the banking sector prior to joining Jaya Tiasa Holdings Berhad in August 1989. He served as a Factory Operations Manager before his appointment as Chief Operations Officer, Wood Manufacturing Operations of the Group on 1 June 2001.

Thomas Hii is a Chartered Accountant and holds a Master of Business Administration (Finance) from University of Leicester, UK. He is also an ASEAN Chartered Professional Accountant, CPA Australia and Fellow of the Chartered Tax Institute Malaysia.

Thomas Hii was trained in an international audit firm prior to joining Jaya Tiasa Holdings Berhad in 1995, and was responsible for the setting up of the internal audit department. Thereafter, he had served in various capacities and functions in the Group, including financial reporting, corporate taxation and finance, risk management and investor relations before his appointment as Chief Financial Officer on 1 January 2011.

Dr Peter Lim Kim Huan was appointed as Chief Operations Officer, Plantation Operations of the Group on 29 May 2017.

Dr Peter Lim holds a Bachelor degree in the Agricultural Science from University of Malaya, a Master’s degree in Soil Science and a Doctorate degree in Agricultural Sciences from the State University of Ghent, Belgium.

He started his career as a Lecturer in the Agricultural Faculty, University of Malaya. Since 1982, he worked in the oil palm plantation industry in several big companies in Malaysia and Indonesia. He has more than 35 years of experience in oil palm operations, agronomy and sustainability.

DATO’ WONG PACK

Chief Operations Officer,Wood Manufacturing Operations

Aged 59, Malaysian, Male

THOMAS HII KHING SIEW

Chief Financial OfficerAged 54, Malaysian, Male

DR PETER LIM KIM HUAN

Chief Operations Officer, Plantation Operations



Mr Teoh Kheng Hock was appointed as Chief Operations Officer, Oil Milling Operations of the Group on 6 October 2016.

Mr Teoh Kheng Hock graduated with a Diploma in Rubber Research Institute of Malaysia and a Diploma in Palm Oil Milling Technology and Management from the Palm Oil Research Institute of Malaysia. He had also obtained a 1st Grade Steam Engineer in year 2003.

He started his career in rubber and latex industry from 1985 to 1996. Subsequently, he joined the palm oil mill industry and held various senior positions in several big companies in Kuala Lumpur and Sabah. He has more than 20 years of experience in palm oil milling operations.

Jenny Wong Nang Hung graduated with a Bachelor of Science degree in Computer Science from University of New South Wales in 1986.

Prior to joining Jaya Tiasa Holdings Berhad in March 1999, Jenny Wong worked in two other companies in various capacities including Head of Computer Department and Deputy Registrar. She served in various senior positions in the Group, from a System Analyst Manager to an Assistant General Manager in the Managing Director’s Office before her appointment as General Manager in the Chief Executive Officer’s Office on 1 January 2015.

None of the Key Senior Management:

• holds any directorship in public company and listed issuer.

• has family relationship with any director and/or major shareholder of the Company .

• has been convicted for any offences within the past 5 years other than traffic offences and there was no public sanction or penalty imposed on any of them by the relevant regulatory bodies during the financial year.

• has been involved in situation that will create a conflict of interest with the Company.

KEY MANAGEMENT PROFILE

MR TEOH KHENG HOCK

Chief Operations Officer, Oil Milling Operations


JENNY WONG NANG HUNG

General Manager, Forest PlanningAged 55, Malaysian, Female


CORPORATE STRUCTURE

Timber OthersOil Palm

100% Hariyama Sdn Bhd (Plantation & Oil Mill)

100% JT Oil Palm Development Sdn Bhd

100% Maxiwealth Holdings Sdn Bhd

100% Maujaya Sdn Bhd

Oil Mill

100% Eastern Eden Sdn Bhd

100% Erajaya Synergy Sdn Bhd

100% Poh Zhen Sdn Bhd

100% Simalau Plantation Sdn Bhd

Oil Palm Plantation

Note:

Non-operating or dormant companies are not included.

100% Jaya Tiasa Timber Products Sdn Bhd

100% Hak Jaya Sdn Bhd

Marketing

100% Jaya Tiasa Forest Plantation Sdn Bhd

Reforestation

88.9% Curiah Sdn Bhd

100% Mantan Sdn Bhd

Logging

100% Jaya Tiasa Plywood Sdn Bhd

Wood Manufacturing

100% Jaya Tiasa R&D Sdn Bhd

Production of Coconut Seedlings

100% Rimbunan Hijau Plywood Sdn Bhd

Fabrication & Workshop Services

100% Jaya Tiasa Aviation Sdn Bhd

Private Flight Operation

100% Multi Greenview Sdn Bhd

Investment

100% Kunari Timber Sdn Bhd

Management of Logistic Services

100% Guanaco Sdn Bhd

Bird Nest


FINANCIAL HIGHLIGHTS

FINANCIAL STATISTICS 2019RM’000

2018RM’000

2017RM’000

2016RM’000

2015RM’000

PERFORMANCE

Revenue 637,744 841,689 980,829 1,023,367 1,032,209

Profit Before Taxation (191,012) (79,686) 50,039 82,232 52,567

Profit After Taxation (265,264) (69,834) 14,559 56,995 34,445

Profit Attributable to Equity Holders (266,037) (71,080) 12,123 54,162 31,635

EBITDA 42,872 145,486 212,343 229,647 186,541

Equity Attributable to Equity Holders 1,170,044 1,459,220 1,528,840 1,814,259 1,769,069

CORPORATE RATIOS

Net Earnings Per Share (sen) (27.48) (7.34) 1.25 5.60 3.27

Net Assets Per Share Attributable to Equity Holders (RM) 1.21 1.51 1.58 1.87 1.83

Net Tangible Assets Per Share (RM) 1.21 1.51 1.58 1.81 1.76

Return on Equity (%) (22.7) (4.9) 0.8 3.0 1.8

Return on Total Assets (%) (11.1) (2.7) 0.4 1.7 1.0

Gross Dividend (sen) - 0.5 0.5 1.3 1.0

Gearing Ratio (%) 45 39 40 36 34

PROFIT/(LOSS) BEFORE TAX BY BUSINESS SEGMENTS 2019RM’000

2018RM’000

2017RM’000

2016RM’000

2015RM’000

Timber Operations and Reforestation (58,901) (30,351) (56,054) 97,808 74,642

Oil Palm Operations (126,835) (11,767) 104,827 (17,173) (21,495)

Others (5,276) (37,568) 1,266 1,597 (580)

(191,012) (79,686) 50,039 82,232 52,567


FINANCIAL HIGHLIGHTS

Breakdown of Revenue by Segment

20182019

Timer Operations28.25%

Others0.05%

Oil Palm Operations71.71%

Oil Palm Operations65.76%

Others0.04%

Timer Operations34.21%

Revenue(RM million)

638

842

981

1,023

1,0322015

2016

2017

2018

2019

Earnings Per Share(Sen)

2015

2016

2017

2018

2019 (27.48)

(7.34)

1.25

5.60

3.27

Equity Attributable to Equity Holders(RM million)

1,170

1,459

1,529

1,814

1,7692015

2016

2017

2018

2019

Total Assets(RM million)

2,406

2,608

2,821

3,215

3,0872015

2016

2017

2018

2019


CHAIRMAN’S STATEMENT

ECONOMY OVERVIEW

FY2019 was a flagging economic year for the oil palm and timber business, plagued by disconcerting developments both internationally and locally.

Sustainability issues and negative perceptions in the global markets hampered the local industries affecting production and sales. Spillover repercussions from the ongoing trade wars between the major economies saw weaker demands and lower pricing for both of the oil palm and timber products.

The European Commission proposed anti-palm oil use in the production of biodiesel by 2021 saw Crude Palm Oil (CPO) plummeting to a decade-low price of RM1,770 per metric tonne towards the end of 2018.

Another hike in the timber premium in January 2019 after a hefty jump in July 2017 pushed up further the production cost. The timber business was further inhibited by a lower export quota and reduced production inventory following on-going Sustainable Forest Management Certification (SFMC) implementation.

High labour intensive oil palm and timber industries were gravely affected by the imposition of higher minimum wages in January 2019, shifting of levy payment from the workers to the employers together with a 6% service tax on foreign workers recruitment fee and a 10% withholding tax, all of which contributed to an increased production cost but with depressing selling prices for palm oil.

The combination of reduced volume in production and high costs exacerbated losses in the timber division at a time when selling prices were lower.

FINANCIAL REVIEW

We closed the year with revenue of RM637.7 million, a 24% drop from previous year’s RM841.7 million. There was a Net

On behalf of the Board of Directors of Jaya Tiasa Holdings Berhad, I am pleased to present to you the Annual Report and Audited Financial Statement of the Group for the Financial Year Ended 30 June 2019.

Loss of RM265.3 million down from the previous Net Loss of RM69.8 million. The reason for the widening loss were due to 23% lower CPO selling price, significant lower sales volume for our timber products, and the derecognition and reversal of deferred tax assets on unabsorbed tax losses in loss making subsidiaries amounting to RM80 million recognized during the year. Loss per share was 27.48 sen compared to 7.34 sen in the previous year. Shareholder funds decreased to RM1,170 million compared to RM1,459 million achieved during the preceding financial year. Net tangible assets per share stood at RM1.21 for the year ended 30 June 2019.

PERFORMANCE REVIEW

Several unpredictable global developments had affected the FY2019 results. Although the FFB and CPO production increased respectively by 2% and 16% with OER at an average of 18.1%, the division recorded a loss before tax of RM126.8 million from the previous RM45.0 million profit before tax mainly due to the weakened commodity pricing compared to the previous year. The average FFB selling price was RM379 per MT, a sharp 23% decrease, while the CPO price decreased by 23% to RM1,935 per MT.

Following selective logging and ongoing SFMC implementation, there was a 26% contraction of the log production volume resulting in the reduction of the plywood and veneer production volume by 16% and 28% respectively. The stagnant global demand especially from China with spillover effect to other countries resulted in lower sales volume for logs, plywood and veneer by 45%, 39% and 29% respectively. This translated to the division’s loss of RM58.9 million in this reporting year as compared to RM30.4 million loss last year.

Further details on the Group’s financial performance and Certification can be found in the Management Discussion & Analysis section on pages 14 - 19.


CHAIRMAN’S STATEMENT

DIVIDEND

Our dividend policy is to pay out not less than 20% of its net profit, subject to not compromising the Group’s ability to support its pursuit for long term growth. In view of the unsatisfactory financial performance, the Board does not recommend payment of dividend for the Financial Year Ended 30 June 2019.

SUSTAINABILITY

The Board will continue to uphold our commitment to promote sustainability by embedding the principles more fully in approaching the day-to-day management of the business. We will ensure on-going efforts to protect the environment and be conscientious toward our stakeholders as a good employer, business partner and member of the community. An overview of our sustainability initiatives are covered under the “Sustainability Statement” section in this annual report starting from pages 20 - 37.

GOING FORWARD

With ensuing uncertainties in both the local and global arena, we expect our business environment to become more challenging in the year ahead. Under such prevailing economic situation, the ability to maximize the available

resources and control the costs of production becomes paramount.

Our FFB production and CPO mill utilization are expected to improve as more palms are reaching their prime production age. Despite some forecasted slight improvement in the commodity prices by analysts, the oil palm business will remain challenging with greater efforts needed to impose more stringent cost control and ensure satisfactory production growth in this segment in the next financial year.

The Group will also rein in efforts to optimise its timber operations and implement strategic cost rationalisation measures to strengthen the performance of this division. With selective extraction of timber to concentrate on harvesting profitable species and sizes, we envisage improvement in the production volume in this division in the coming year.

APPRECIATION

On behalf of the Board, we would like to convey our gratitude to our staff for their dedication and commitment especially in this challenging economic time. We look to all our stakeholders to lend us their unwavering support and thank them for their trust as we leverage on all opportunities and overcome all challenges to ensure a strong and sustainable future for all.

GEN TAN SRI ABDUL RAHMAN BIN ABDUL HAMID (RTD)Chairman


MANAGEMENT DISCUSSION AND ANALYSIS

Dear Shareholders, the aim of the Management Discussion and Analysis (MD&A) is to provide shareholders with an overview of the business operations of the Group, the financial review for the financial year ended 30 June 2019 and the Group’s expectations on the business going into 2020.

OVERVIEW OF BUSINESS & OPERATIONS

Jaya Tiasa Group began as a downstream wood processing company in 1987. During the years when our timber operations were able to sustain the group, we diversified into palm oil business in 2002. That diversification served us well and today we are one of Malaysia’s preferred producers of renewable and sustainable quality oil palm and wood based products.

Our total land bank for oil palm plantations is over 83 thousands hectares in the state of Sarawak, Malaysia. As at 30 June 2019, the Group’s planted areas at 69,589 hectares (Ha) spreading over 10 plantations in Sarawak have all matured. Four (4) CPO mills are in operation, all strategically located and are able to process 1,782,000MT per annum of FFB. Our main timber products include logs, veneer, and plywood which are both sold locally and delivered to several major markets in the world. Most of our customers are loyal clients who have established long-term relationship and trust in us, a criterion which we believe is essential to maintain our track record.

Overall, the export demand for plywood and veneer are slowing down amidst the challenging economy following the ongoing trade war between the economic giants and competition in supply from other regions. Japan was our key export market for our timber products in the last financial year. Our other important markets for our timber products include Taiwan, Korea, China / Hong Kong, and India.

We have rationalized our downstream wood processing activities following a decrease in logs supply by downsizing plywood production capacity from the previous 420,000m3 to 180,000m3 per annum since year 2017. By matching our factory operations to the curtailed available resources, we aim to operate our factories at the optimal production level for long-term sustainability.

In terms of sustainable development, we engage in good environmental practices to help protect our environment and wildlife. In view of that, we are currently managing a total area of 120,395 Ha for reforestation.

3% 2%

27%

16%

15%

8%

8%

20%

KEYMARKETS

Japan

China/Hong Kong

Australia

Taiwan

India

Asean

Korea

Middle East



OBJECTIVES AND STRATEGIES

Most of our CPO mills and estates have obtained Malaysia Sustainable Palm Oil (MSPO) certification apart from Hariyama CPO mill which is pending issuance of the certificate and the estates in Pulau Bruit which are pending approval. We address the environmental, social and economic aspects of the oil palm production, and ensure that the best practices are followed consistently in order to achieve our vision of producing sustainable quality oil palm products.

In line with our vision of producing renewable and sustainable wood-based products, we have enhanced our Forest Management Plan (FMP) to gear towards sustainable forest management. This is founded on three (3) pillars, namely environmentally responsible, socially compatible and economically viable. The refined FMP has incorporated the latest scientific and research findings. These findings shall form the basis of developing standard operating procedures and will be systematically executed by our competent staffs at all levels. We strongly believe sustainable forest management is the only way forward for forest resource sustainability.

Our manufacturing processes are governed by strict protocol, and we adhere to international standards and guidelines to ensure our products are best in class. The CE marking certifies that our wood products have met the European Union health, safety, and environmental requirements, which ensure consumer safety. The other recognition is the Japanese Agricultural Standards (JAS) certification.

We are committed to replanting the forest as an investment for the future viability of the Group and supporting the world’s move towards the conservation of natural forests. With fast-growing tree species such as Eucalyptus Deglupta (Kamarere), Eucalyptus Pellita, Albizia falcataria (Batai) and Kelampayan planted across the plantation areas and with the revised planting programs in place, the Group’s forest planted area is expected to continue to expand steadily.

REVIEW OF FINANCIAL RESULTS The Group’s revenue of RM637.7 million was 24% lower than RM841.7 million reported in the previous year mainly attributed to the following:

Oil Palm• 17% decrease in revenue due to 23% lower of FFB and CPO price despite 2% and 16% increase in FFB and CPO

production respectively.

Timber• 37% decrease in revenue was caused by reduction of sales volume. Sales volume in the logging division dropped

by 45% while plywood division dropped by 39%. The reductions were due to 26% and 16% decrease in production volume respectively.

Loss before tax widened to RM191.0 million for the current year from RM79.7 million restated in the previous financial year. This is mainly due to operating loss suffered in the oil palm segment. Despite an increase in FFB production, the revenue generated from the oil palm segment dropped by RM96.2 million from the previous year’s RM553.5 million to current year’s RM457.3 million, a direct consequence of the weak CPO price and increased production cost from an increase in the direct and indirect labour cost.

Selling and distribution cost reduced by 30% in line with the lower sales volume from the timber divisions. Finance cost increased by 3% to RM55 million while total interest bearing loans and borrowings reduced by RM9.9 million. Our cash flow from Operating Activities decreased by 57% to RM67.2 million.

LPF Gross Area (Ha) Plantable Area (Ha) Planted to date (Ha)

LPF0023 42,573 24,114 11,815

LPF0024 58,897 32,419 15,308

LPF0028 18,925 8,473 8,473

Total 120,395 65,006 35,596


REVIEW OF OPERATING ACTIVITIES

OIL PALMOil palm division contributed 72% of the Group’s revenue. The division recorded a loss before tax of RM126.8 million which is 66% of the Group’s total. Weak CPO price and increased labour cost largely affected our performance in this segment. The average FFB price was RM379 per MT, a decrease of 23% while CPO price averaged at RM1,935 per MT, a 23% decrease.

FFB production for the year increased by 2% to 1,095,575 metric tonnes (MT) from the previous year’s 1,069,340 MT. Nonetheless, we expect to improve our FFB yield of 15.7MT per hectare.

The Group’s palm oil mills produced 202,076 MT of CPO and 39,710 MT of palm kernel (PK). Mills’ utilization rate will continue to improve in line with the gradual increment of our FFB production. With better quality of FFB input from more matured trees, we expect the production volume and Oil Extraction Rate (OER) to improve further while imposing stringent control over operational efficiency to ensure better performance in the next financial year.

During the reporting year, we had taken various initiatives such as targeted spending per hectare for each estate to improve cost effectiveness. We also underwent internal organization restructuring to ensure better productivity from our workforce. These measures have enabled the division to reduce the cost of production of FFB resulting in lower operating losses from the palm oil division in the last quarter. We will continue to initiate more measures to reduce the overall cost of production further in the coming financial year. Also, we will consider hedging in order to lock in future price should the right opportunity arises.

We remain optimistic about the long term prospects of the palm oil industry despite the current low CPO price. By enhancing our yield and reducing our cost, we are poised to reap better profits in the event the CPO prices start to trend upwards.

Average Selling Price (RM/MT) OER / KER (%)

FY19 FY18 FY19 FY18

CPO 1,935 2,504 18.1% 18.0%

PK 1,342 2,096 3.6% 3.3%

FFB 379 495

CPO Mills Capacity (MT per annum)

FY2019 FY2018

FFB Input (MT) Utilization % FFB Input (MT) Utilization %

Wealth Houses CPO Mill 486,000 314,684 65% 277,061 57%

Daro Jaya CPO Mill 324,000 259,026 80% 248,761 77%

Lassa CPO Mill 648,000 347,196 54% 282,083 44%

Hariyama CPO Mill 324,000 194,245 60% 162,978 50%

Total 1,782,000 1,115,152 970,883



Log production decreased by 26% following selective harvesting of profitable species and sizes and amidst ongoing Sustainable Forest Management Certification implementation. We encountered operation challenges such as appointment of new contractor, mobilization of machineries and transportation of timbers during transitional period which affected log production.

During the year, India continues to be our largest log export destination with 43% of export sales. The rest of the market was shared by Taiwan, Japan and other Asean countries.

We will continue to prioritise the export of logs in the coming financial year as the USD against MYR is expected to remain strong in the near future which is favorable to our export sales in terms of currency exchange.

90,00080,00070,00060,00050,00040,00030,00020,00010,000

0FY 2018 FY 2019

PLYWOOD SALES

77,164

47,340

FY 2018 FY 2019

VENEER SALES

140,000120,000100,000

80,00060,00040,00020,000

0

13,345

9,445

37%

11%

9%

43%LOG KEY MEMBER

India

Taiwan

Japan

Asean

350,000300,000250,000200,000150,000100,000

50,0000

FY 2018 FY 2019

LOG PRODUCTION

314,193

232,792

FY 2018 FY 2019

LOG SALES

140,000120,000100,000

80,00060,00040,00020,000

0

130,108

71,894

LOGGINGSales of logs contributed about 8% of the total Group’s revenue. The average export price for logs dropped by 21% to USD217 per m3. Weaker demand from our key market segments, reduced production output and an increase in labour cost impacted performance. Log price is expected to remain weak impacted by ongoing trade wars between the economic giants.

To better manage our forest, we will continue to select profitable species and log sizes for harvesting and maintain vigilant controls on the cost of production. Increased attention will also be given to logistical planning to ensure that logs extracted are delivered within the shortest time frame possible to preserve their freshness and maintain their quality for premium prices.

WOOD MANUFACTURINGThe division contributed about 20% to the total revenue of the Group. Plywood sales volumes decreased by 39% YoY, while the average selling prices increased by 2%. For Veneer, sales volume decreased by 29% and the average selling prices decreased by 3%.

The production volume for plywood and veneer decreased primarily due to log supply constraint. This coupled with the rising cost of operation resulted in the increase in our unit cost of production.



No of Seedlings Areas (Ha)LPF0023 EP/AF 422,976 959.1LPF0024 EP/AF 1,439,472 2,988.9LPF0028 EP/AF - -

1,862,448 3,948.0

Japan

China/Hong Kong

Australia

Taiwan

India

Asean

Korea

Middle East

4% 2%

35%

16% 17%

14%

12%

PLYWOOD KEY MARKETS

Korea

China/Hong Kong

Taiwan

Australia

VENEER KEY MARKETS

53%31%

14%

2%

During the year, Japan was our largest export destination, accounting for 35% of the total plywood exports of the Group, followed by China and Taiwan. Other markets include Korea, Middle East, Australia and other Asean countries.

The market for plywood and veneer has been challenging ever since the economic downturn. To maximize our revenue and to retain our existing markets, we maintained our strategy in producing more high value products mix. The downsizing of our plywood manufacturing facility was in response to market conditions and limited timber resources.

Our focus will be on large importing countries such as South Korea, Japan, and China / Hong Kong. The Group will adopt a dynamic strategic approach in an increasingly competitive global environment, taking into account the decreasing resources, the volatility of foreign exchange rates and crude oil prices. The Group will strengthen its current measures to maintain and enhance its competitive edge. These include harnessing its existing production technology towards improving operational efficiency and product quality, and being innovative in producing more value-added products for niche markets to enhance performance.

REFORESTATIONThe Group has planted 35,596 hectare of forest plantation. During the financial year, the progress of tree planting and maintenance works were carried out according to our planned work schedules. A total of 1,862,448 seedlings were planted under the Industrial Tree Planting Method and the new chemical weed control regime. The average survival rate of the E. Pellita seedlings at one month is above 90%.

The division is not expected to contribute to earnings in the short term given that the planted forest has a gestation period of 11 to 14 years before it can be ready for commercial harvesting. The challenge of the Group is to improvise silvicultural practices, better wood properties, pest and disease control and recruitment of field workers. We place great emphasis on stringent quality control over new plantings and their maintenance so as to improve the survival rate and optimum growth of planted trees.



ANTICIPATED OR KNOWN RISK

The increase in labour costs following an increase in the minimum wages and other indirect labour costs and shortage of manpower are our main challenges in our oil palm business. Extreme weather caused by global warming is another risk that will impact the productivity of the palm trees. To mitigate this, we will use better water management to ensure our trees get adequate water supply throughout the year.

Global demand are slowing down, and with increased competition from other regions, our logging business will be affected. The ongoing trade war will affect timber price and demand. Production has dropped as we are undertaking Sustainable Forest Certification. To mitigate this risk, we will select species and log sizes with higher value for harvesting and maintain vigilant controls on the cost of production.

Liquidity risk caused by the European Union ban on the use of our palm oil for biodiesel production together with prolonged low CPO price despite recent uptrend will impact our Group’s cash flow and ultimately affect our day-to-day operations. To mitigate this, we will monitor all divisions within the organization and restructure to increase productivity together with ongoing cost control measures.

FORWARD LOOKING

CPO Price has started to gradually trend upwards since July 2019 with the B20 biodiesel implementation drive by the government. FFB yield will continue to rise with the maturity of the trees. CPO production will be boosted as a result while expanding vertical integration should contribute positively to the oil palm division in the next financial year. In the face of such challenges facing both our core business, we recognize the necessity to adapt to the ever changing business environment.

The timber business will remain subdued with regards to export log price due to ongoing trade wars which will ultimately impact the performance of the company.

DATO’ WONG SIE YOUNGChief Executive Officer



SUSTAINABILITY STATEMENT

Managing Sustainability

The Jaya Tiasa Group remains committed to its vision of being Malaysia’s preferred producer of renewable and sustainable quality oil palm and wood based products. A testament to this is the several initiatives established to manage our commitment towards sustainability.

To achieve its vision, the Group strives to achieve the following:

Scope of Sustainability Statement

The scope of this Sustainability Statement encompasses Jaya Tiasa’s oil palm plantations and palm oil mill operations and focuses on the things that are most material to both our organization and stakeholders for the financial year ended 30th June 2019.

Corporate Governance

Effective governance and robust risk management policies and procedures combined with our core values are keys to achieving long term success. The Board of Directors receives and approves a formal Sustainability Report at least once a year before it is released to the shareholders and public. In relation to Jaya Tiasa’s overall sustainability objectives, targets and priorities, the Board of Directors has delegated the responsibility to the Sustainability Committee headed by the Group’s Chief Executive Officer to formulate sustainability strategies, policies and goals, discuss sustainability issues and review sustainability performance. In addition, the Sustainability Statement Team collates all information and responses collected from the Sustainability Committee and stakeholders, and prepares a Sustainability Statement.

Economic Corporate Governance • Practice sustainable, responsible and ethical businesses • Comply with all laws, regulations and guidelines • Practice fair, responsible and honest engagement with stakeholders.

Environmental Environmental • Undertake the best agricultural practices to reduce the Stewardship direct and indirect environmental impacts of our operations • Commit to utilize natural resources prudently • Setup waste and effluent management plan

Social Workplace • Encourage work-life balance with emphasis on the health, safety and well-being of employees • Continuously develop and train employees • Human resource management

Community Care • Improve the quality of life of surrounding communities through the offering of job opportunities, financial aid in kind or money and humanitarian efforts • Conduct charitable activities and donation drives



Sustainability Governance Management Structure

Regulatory Compliance and Ethical Business Conduct

At Jaya Tiasa, it is our utmost priority that we practise and uphold high standards of corporate conduct. We strive to ensure that all business and operational affairs are carried out ethically, with integrity, and accountability, and in full compliance with the laws and regulations.

The signing of the Corporate Integrity Pledge (CIP) with MACC echoed our commitment towards creating a business environment that upholds the Anti-corruption Principles in the conduct of our business. Our employees are reminded that any form of fraud, corruption, and unethical behavior will not be tolerated under any circumstances.

Our whistle-blowing mechanism enables all employees and stakeholders to report any irregularities, grievances and concerns without fear of reprisal.

For the Financial Year ended 30 June 2019, the Group was not subject to any of the following incidents:

- Non-compliance with laws and regulations in the social and economic area;- Non-compliance with environmental laws and regulations; and- Non-compliance with the financial standards and frameworks.

- Approves sustainability strategies - Performs ultimate supervision of sustainability performance- Ensures business strategy considers sustainability

- Formulates sustainability strategies, policies and goals- Discusses sustainability issues- Supervises sustainability performance- Develops and oversees implementation of strategies

Board of Directors

Group SustainabilityCommittee

- Maintain sustainability performance- Stakeholders engagement- Raise awareness among employees- Help management ensure that sustainability standards are consistent across the Group

Business and Functional Operations

- Prepares Sustainability Report- Considers input from all business units

GroupSustainability

Statement Team



Targets & Achievements

Address by Specific Page Objectives Targets Status of Targets Material Sustainability Matter Reference

Target 1: Economics

FFB Yield per Hectare 18.2 Continuous Product Quality, Economic 28(MT/HA) Improvement Performance

Oil Extraction Rate:

• Crude Oil Extraction 18.95% Continuous Product Quality, Economic 28 Improvement Performance

• Palm Kernel Extraction 3.72% Continuous Product Quality, 28 Improvement Economic Performance

• Planted Forest for FYE2019 3,000 Ha Achieved Economic Performance 28


Target 3: Community

Improve life of smallholders Continuous Ongoing Poverty free / Good health & 35& local communities Improvement well-being


Target 2: Environmental

No new development carried All Ongoing GHG emissions, discharge and 29out on peatlands Plantations waste management

Installation of Biomass All Achieved GHG emissions, discharge and 31boilers for energy generation CPO mills waste management

Measurement of GHG All Ongoing GHG emissions, discharge and 31emissions per year for the Operations waste managementGroup

Assessment of Flora and All Ongoing Biodiversity and conservation 31Fauna Biodiversity Plantations

Management of effluent Within Ongoing GHG emissions, and waste 30discharge requirement Management (<50mg/L)

Set up methane capture plant All CPO Ongoing GHG emissions, discharge and 31in all CPO mills mills waste management

No land development through All Ongoing GHG emissions, discharge and 29open burning Plantations waste management


Targets & Achievements


Target 4: Employees

No child labour No breaches Achieved Human & Workers Rights 33 of laws and regulations

No forced labour No breaches Achieved Human & Workers Rights 33 of laws and regulations

No work related fatalities Zero fatality Achieved Occupational Safety & Health 36

Reduce work related lost time Improved Continuous Occupational Safety & Health 37 awareness Improvement


Target 5: Certification

Achieve MSPO certification By 3 mills certified Certification 28for all 4 CPO mills December 1 mill awaiting 2019 issuance of certificate

Achieve MSPO certification By 7 plantations Certification 28for all plantations December certified 2019 3 plantations ongoing

Attain Forest Management By 2022 1 FMU certified Certification 29Certification 3 FMU ongoing

Attain Sarawak Timber By 2020 Ongoing for LPF Legality Verification 29Legality Verification System for all forest plantation



Materiality Matrix

For the current year’s Sustainability Statement, we relied on information from various internal sources for our materiality risk assessment. The Sustainability Committee has reviewed key Economic, Environment and Social (EES) issues for potential financial, operational and reputational impacts that these issues may have on the Group.

From the evaluation of the Group’s Sustainability Risk and Opportunities, we have identified numerous key material issues that are of high concern to stakeholders and of high significance for our Group in year 2019. These material issues have been prioritized through our materiality assessment process and mapped onto our materiality matrix. Material issues identified are then assessed to establish if proper policies and procedures are implemented to manage and monitor these issues.

SUMMARY OF MATERIALITY MATTERS

Jaya Tiasa Materiality Matrix 2019

4

14 11

15

1 2

3

98

1310

12

57

Economic Performance

1. Product Quality2. Economic Performance3. Certification

4. Peatland Management & Fire Prevention

5. Water Management & Safeguarding

6. Effluent & Waste Management

7. Carbon Footprint8. Biodiversity Protection9. Pesticide, Chemical and

Fertilizer Usage

Environmental Stewardship

10. Human & Workers Rights11. Recruitment, Retention &

Development12. Fair Pay & Performance

Oriented13. Diversity & Equal

Opportunity14. Social Care & Workers

Welfare15. Safety & Health

Workforce and Community



Engagement with Stakeholders

The stakeholder groups which have significant influence and impact on the Group’s businesses are carefully identified and engaged at various platforms and intervals throughout the year. We prioritize honest and open communications with our internal and external stakeholders to fully understand their sustainability concerns and issues with a view to ensuring that their key interests are aligned with those of the Group.

Overview of Stakeholder Engagement Conducted in FYE 2019

StakeholderGroup Methods Frequency OutcomesAreas of interest

Address by Materiality

Matters

Shareholdersand Investors

LocalCommunities

Workers

Employees

• MSPO certification • Future plans• Progress and compliance with sustainability standards• Pollution• Deforestation• Pesticide and chemical usage

• Opportunity for employment• Complaints and grievances• Smallholders• Community development• Waste management

• Occupational health & safety• Working conditions, facilities, safety and training• Wages / remuneration• Complaints and grievances• Employee social and welfare care

• Job satisfaction and development• Remuneration• Health and safety• Communication of company’s policies and practices

• 1 / 3• 2• 1 / 8

• 6 / 7• 4• 9

• 2

• 10

• 2 • 14

• 5 / 6

• 15

• 11

• 12• 10

• 14

• 11

• 12• 15• 1 / 13

• Every 3 months• Once a year• Periodic• Once a year

• As and when necessary

• Periodic

• Once a year

• Periodic

• Periodic

• Daily• Periodic• Periodic

• Once a year• As required• As required

• Periodic

• Periodic

• Positive reputation and a better understanding of Jaya Tiasa’s sustainability status, progress and initiatives• Good relationship with shareholders

• Employment for qualified and eligible locals• Improved road access• Contributions to the community and local schools• Better social relation with Group

• Better understanding of company policies• Safer working environment• Improved awareness of health & safety issues

• Employee retention• Better understanding of the company’s policies and values

• Quarterly meeting• Annual general meeting• Company website• Engagement survey

• Grievances and complaints channel• Formal and informal meetings• Social impact assessments

• Community programs

• Management meeting• Morning roll-call• Regular training• Notices

• Annual appraisals• Training sessions• Workshop for discussions• Sports and recreation club• Company intranet, newsletters



StakeholderGroup Methods Frequency OutcomesAreas of interest

Address by Materiality

Matters

Government and regulatory authorities

Suppliers / Smallholders

Customers

Certification bodies

• Compliance with legal requirements• Support government transformation policies and initiatives• Occupational Safety and Health

• Compliance with sustainability requirements• Product quality• On time delivery

• Quality of products• Compliance with sustainability standards• Supply chain and traceability of product• Deforestation

• Occupational safety and health• Human and consumer rights• Social and environment impact

• 4 / 6 / 7

• 2 / 3

• 15

• 1 / 3

• 1• 1

• 1• 3

• 3

• 4 / 8

• 15

• 10

• 6 / 9 / 14

• Formal dialogues and meetings

• Annual reports• Site Visits• Engagement survey

• Formal and informal meetings• Dialogues and appraisals

• Networking sessions• One on one meetings• Annual reports• Company website• Visit to estates and mills

• Engagement surveys and dialogues• Site visits and inspection• Constructive partnership

• As and when necessary• Once a year• Periodic• Periodic

• Periodic

• Periodic

• Periodic

• Periodic

• Once a year• Periodic• Periodic

• Periodic

• Once a year

• Periodic

• Supportive of the Government’s policies and initiatives• Protection of the environment • Positive reputation amongst investors

• Sustainable production• On time delivery of materials

• Positive reputation • Customer retention• Increased market share

• Increase market share• Compliance with policies • Audit and certification• Knowledge sharing



How our Material Issues Relate to the UN Sustainable Development Goals (SDGs)

The United Nations (UN) adopted 17 Sustainable Development Goals (SDGs) with the aim to call for actions to end poverty, protect the planet, tackle climate change, improve health and education, reduce inequality and ensure that all people enjoy peace and prosperity. With our strong commitment towards sustainable development, we have performed a review and evaluation on how our diverse businesses can contribute to SDGs and have since prioritized eight SDGs that are considered most relevant to the Group and incorporated them into our Sustainability Framework.

Economic

Environmental

Social

• SDG 8 - Decent work and economic growth

• SDG 12 - Responsible consumption and production

• SDG 6 - Clean water and sanitation

• SDG 13 - Climate action

• SDG 15 - Life on land

• SDG 1 - No poverty

• SDG 3 - Good health and well-being

• SDG 10 - Reduced inequalities

SDGs Relevant to our Material Issues



Lassa CPO MillSupply base: - Lassa Estate - Kabang Estate

Daro Jaya CPO MillSupply base: - Daro Jaya Estate - Sawai Estate - Lepah Estate

Wealth Houses CPO MillSupply base: - Wealth House Estate - Lepah Estate - Eastern Eden Estate - Poh Zhen Estate

Hariyama CPO MillSupply base: - Hariyama Estate

Simalau Plantation

MSPO - Certified

MSPO - CertifiedMSPO - Certified

MSPO - Certified

MSPO - CertifiedMSPO - CertifiedMSPO - Certified

MSPO - Certified

MSPO - Stage 2 Audit CompletedMSPO - Certified MSPO - Stage 2 Audit CompletedMSPO - Stage 2 Audit Completed

MSPO - Awaiting certificate issuance

MSPO - Certified

MSPO - Certified

MSPO Certification StatusName of Mill / Estate

ECONOMIC

1) Product Quality (SDGs-12 Responsible Consumption and Production) It is the policy of the Jaya Tiasa Group to produce quality palm oil and timber related products to the satisfaction of our

valued customers.

Our quality focus starts from every aspect of our best agricultural practices and milling activities right until our products are delivered to the satisfaction of our valued customers. We continued to invest in the latest technology and high-end machineries to ensure higher efficiency and continue to produce high quality products for our customers. In each of our mills, we have fully equipped laboratory to monitor the quality of our finished products.

2) Economic Performance (SDGs -8 Decent Work and Economic Growth) In the reporting year, our employees (through their various services in the Group) were recipients of RM122 million

in employee benefits. The Government collected RM3.88 million through taxes and cesses while the Sarawak State Government managed to collect RM18.7 million in the form of Sarawak Sales Tax imposed based on the Crude Palm Oil prices.

From the total revenue of RM637.7 million, 24% or RM152 million was channeled to the purchase of motor vehicles, machineries, fertilizers, utilities and office supplies to meet the needs of the overall business. Inevitably, this has helped the local economy both directly and indirectly. The Group also actively purchased FFB from surrounding plantations and smallholders to the tune of RM32.2 million during the year.

3) Certification (SDGs -12 Responsible Consumption and Production) Most of the Group’s plantations and mills have undergone the MSPO certification and shall be fully certified before the

stipulated time frame.

i) Malaysian Sustainable Palm Oil (MSPO) MSPO is a national sustainability scheme created by the Malaysian government and developed for oil palm

plantations, smallholders and downstream facilities. The requirements for MSPO standards include: -• the production of safe, high quality oil palm fruits;• the protection of the environment;• the safeguarding of social and economic conditions of owners;• support the surrounding community;• enforce workplace health and safety excellence; and• the implementation of best practices.



ii) Forest Management Certification Forest Management Certification (FMC) is an internationally recognized system to verify responsible forest

management. The Sarawak State Government has made it mandatory for all long-term forest timber licenses to obtain FMC by 2022. Pursuant to this policy, the Certification Unit is established towards managing and obtaining the certification for all of our timber license areas.

iii) Sarawak Timber Legal Verification System (STLVS) STLVS covers licensing, harvesting, transporting, manufacturing and trading of logs and timber products in accordance

with the laws, regulations and procedures pertaining to forestry and trade in Sarawak by 2020. As of 2019, the Group’s preparation for this is ongoing for our LPF (License for Planted Forest).

ENVIRONMENT

As our business is closely associated with natural resources, we recognized the importance of practicing responsible stewardship of the environment. To this end, environmental protection measures and considerations have long been embedded in our manufacturing processes and day-to-day operations.

4) Peatland Management and Fire Prevention (SDGs – 13 Climate Action) In view of the frailty and the importance of peatland when it comes to carbon storage and its other multiple benefits

such as biodiversity maintenance, carbon water storage and regulation, the Group has taken the stance to strictly prohibit the clearance and development of peatlands for new plantations regardless of depth.

To conserve and for better management of water and drainage in the peatland , a series of weirs and water gates were constructed across the collection drains to regulate the water level in the field and significantly reduce carbon emission. To comply with the MSPO standards, the water level in the collection drain is maintained at a range of 35cm to 60cm and at 30cm to 50cm for groundwater table in the field.

DeforestationThe Group ensures that our agricultural operations comply with the following:-• No planting on land with high biodiversity value;• No planting on protected and forest reserve land;• No new development on peatland regardless of depth; and• No development in high carbon stock forest. For the Financial Year ended 2019, the Group did not clear any land for new development. Fire and haze prevention

The impacts of fire can be catastrophic, including commercial loss, loss of life, air pollution and loss of biodiversity. Fires possess long-term commercial risk and the potential losses to the Group are high. Wider risks of fire include threats to climate change goals and could easily derail the Group from achieving economic and environmental sustainability.

Zero Burning Policy In compliance with environmentally friendly practices as well as the principles and criteria set out in the MSPO

standards, the Group adheres to a strict zero burning policy and is enforced without exception.

Monitoring During the dry seasons, employees in all our plantations are directed to vigilantly look out for any fire breakouts in

the surrounding vicinity. Employees are continuously trained (extensive mock fire drills are conducted regularly) on how to control and manage fires. We have set up weather stations throughout the plantations to gather micro-climate information for regular fire safety risk assessment and ensure that adequate fire safety measures are put in place. Our continuous efforts have proven to be fruitful as there were no fire related incidents for two consecutive years.

T/3236 (Bahau-Kahei FMU)

T/3371 (Baleh-Balui FMU)

T/3370 (Penuan-Lebuwai FMU)

T/3372 (Menggiong-Entulu FMU)

FMC – Certified

FMC – Preparing for Stage 1 Audit

FMC – Preparing for Stage 1 Audit

FMC – Pending Forest Management Plan Approval

Status as at 30.06.2019Forest Management Unit (FMU)



5) Water Management and Safeguarding (SDGs -6 Clean Water and Sanitation)

The Group’s water management strategies centers on the optimization of water usage, increasing the number of water sources, the reduction of water consumption and the identification of water pollution sources.

In accordance with the water management strategies, the following measures were put in place: -• The installation of water gates to control and maintain water levels for palm tree irrigations. In addition, water

level was maintained at an optimum level in anticipation of a potential shortfall of rain and to counter the risk of fire;

• The establishment of ponds and water catchment to store rain water;• The fitting of worker’s housing with water tanks to harvest and store rain water;• The setting up of a plant to treat water for milling usage and daily consumption;• The strict prohibition of the discharge of chemicals, solid wastes and used lubricants into the waterways;• The practice of water sampling twice a year to monitor water quality in line with EIA measures and to ascertain

it is potable (safe for drinking) and other daily usages;• The maintenance of buffer zones along the natural waterways where spraying and manuring operations are

strictly prohibited; and• The maintenance of strict water efficiency in milling.

6) Effluent and Waste Management (SDGs -6 Clean Water and Sanitation, 13 Climate Action)

Effluent Management Palm Oil Mill Effluent (POME) is the waste water discharged from the processing of FFB. POME has high acidity, high

biological oxygen demand (BOD) and high levels of organic matters which can pollute the waterways if left untreated. By using the aerobic and anaerobic ponding system, the treated water can be discharged safely into the environment. In 2019, 100% of the POME discharge from our mills was treated to meet local regulatory requirements (<50mg/L) prior to discharge.

There is no incident where our POME discharge is over the limit and harming the waterways.

Waste Management The Group strictly observes the best practices in the handling and managing of waste at our sites. We take full precaution

in disposing all waste products including domestic waste, agricultural waste, biomass or byproducts generated by our oil palm plantations or oil palm milling sectors.

Biomass fuels such as press fiber and palm kernel shell are burnt in boiler to generate electricity (Note 7). Recycling of nutrient rich biomass such as Empty Fruit Bunch (EFB) and POME sludge is a common practice within The Group. These EFB and sludge can be further processed to become bio-fertilizers thus reducing the need to acquire expensive agrochemicals which in turn save costs.

Another useful byproduct of EFB is bunch ash. As peat soil is highly deficient in potassium (K), external application of high amounts of K is required. Using bunch ash as a source of K is more advantageous and preferable since it helps to neutralize soil acidity (Gurmit et al. Mohd Tayeb, 2002).

Mill water consumption rate

MT

wat

er/M

TFFB

pro

cess

ed

Financial Year2019 2018

1.35

1.33

1.31

1.29

1.27

1.25



By-products generated and recycled from milling operations:

Scheduled wastes generated from the operations and biohazard wastes from the clinic are stored, labelled and disposed of by licensed contractors in adherence to the government regulations.

7) Carbon Footprint (SDGs -13 Climate Action)

EFB compost

Bunch Ash

Press Fiber

Palm Kernel Shell

7,356

8,390

144,980

7,243

Organic fertilizer

Organic fertilizer

Biomass fuel for boiler

Biomass fuel for boiler

By-products Total Quantity Generated and Recycled (MT) Method of recycling

Greenhouse Gas Management Our biggest source of emissions comes from POME. The discharged

water produced methane gas which has 21 times more Global Warming Potential compared to other gases. To reduce methane gas emissions, Jaya Tiasa has a biogas plant constructed in the mills. These biogas plants help to trap the methane gas.

In view of the scarce human resource especially for the physical demanding field tasks, Jaya Tiasa has tested and implemented in-field mechanization. While mechanization improved the process efficiency (e.g. harvesting, loading and unloading of FFB), it increases the carbon trails.

Energy Consumption To be sustainable, our management is committed to energy conservation and the reduction of fossil fuel usage.

We recycle oil palm and oil mill by-products such as press fiber and palm kernel shells for use as biomass fuel in the mills boiler. For FY2019, the boilers in our mills generated 24.6 million KWh of electricity. That is equivalent to electricity generated from burning 7.38 million liters of diesels. The use of these biomass fuels significantly reduces the consumption of non-renewable fossil fuels and generates greater cost savings as they are cheaper.

8) Biodiversity Protection (SDGs -15 Life on Land) Often global discourse on palm oil and logging activities is tied to heavy biodiversity loss as well as significant changes

in land composition and ecosystems. To mitigate such discourse, we have the responsibility to uphold and practice sustainable business operation to prevent any undue risks on the environment for the benefit of the present and future generations.

Electric generate from Boiler

KWh

Financial Year

25,000,000

24,000,000

23,000,000

22,000,000

21,000,000

20,000,000

20182019

Mill boiler with Press Fiber as bio-fuel.



The Group had engaged the services of third parties to conduct flora and fauna biodiversity assessment in our plantation estate. We managed to fully assess all of our estates covering a total landbank of 83,483 ha and with buffer zones of 11,335 ha. The findings from the assessment will help to determine the most effective length and in-depth research required for an effective HCV monitoring and management. The Group imposed a policy of “zero tolerance” towards killing, harming any of the endangered/protected species listed under the IUCN and Protected Animals from Wild Life Protection Ordinance, 1998.

Summary of International Union for Conservation of Nature (IUCN) List of Threatened Species in Jaya Tiasa’s areas of operation:

Totally Protected Wildlife of Sarawak Protected Wildlife of Sarawak

HCV management We are still in the progress of identifying the HCV areas within all of our oil palm estates.

9) Pesticides, Chemical and Fertilizer Usage (SDGs -13 Climate Action, 15 Life on Land)

In order to minimise the impact of our operations to the natural environment, it is essential to cut back on the reliance on fertilizers, pesticides and herbicides.

Biological insecticides and pheromones As part of our integrated pest management practices, we use biological insecticides and pheromones in place of

chemical pesticides to control the population of pests. Biological insecticide such as DiPel is effective against more than thirty different kinds of pests and it has minimal effect on the environment, animals and humans, and is biodegradable. Pheromones traps proved to be an efficient and effective way to trap Rhinoceros beetles.

Mammals Critically Endangered 1 Endangered 1 Vulnerable 5 Near Threatened 1 Least Concern 3 Not Assessed by IUCN 2

Amphibian Least Concern 8

Reptiles Least Concern 6

Birds Endangered 1 Vulnerable 2 Near Threatened 5 Least Concern 50 Not Assessed by IUCN 17

Fish Least Concern 11 Date Deficient 1 Not Assessed by IUCN 5

Plants Critically Endangered 5 Endangered 3 Vulnerable 5 Least Concern 6 Not Assessed by IUCN 155

Black Hornbill - Vulnerable

Sunda Pangolin - Critically Endangered



Natural predator Beneficial plants such as Cassia cobanesis, Turnera subulata and Antigonon leptopus are planted to provide both

shelter and supplementary food such as nectar to Sycanus, a type of insect that hunts the leaf-eating caterpillars and bagworms. Surveillance and monitoring of pest outbreak is key to minimise the impact financially and environmentally from excessive use of pesticides. Pesticide will only be used when and as deemed necessary against damaging outbreak.

Soil Enrichment and Fertilizer Reduction By recycling plant biomass as discussed in the waste management section earlier, the zero burning technique improves

soil organic matter, moisture retention and soil fertility. This reduces the overall requirement for inorganic fertilizers and decreases the risk of water pollution through the leaching or surface washing of nutrients.

SOCIAL

At Jaya Tiasa, we believe our employees are our greatest asset. The health of our employees is directly linked to their productivity and satisfaction at work. We believe clear engagement with employees coupled with career development opportunities will improve personal performance, business productivity and product quality. We recognise the potential in each employee and the benefits of a diverse workforce.

10) Human and Workers’ Rights (SDGs – 3 Good Health & Well-Being, 10 Reduced Inequalities) The Group is committed to ensuring the dignity and rights of our workers are respected in line with the Malaysian

Labour Law and United Nations’ guiding principles on human rights. These commitments are outlined below:

• Practice of nondiscrimination during recruitment, employment, dismissal or promotion regardless of gender, race, religion, marital status and political affiliation;

• Strict prohibition of any form of harsh and inhumane treatment, including sexual harassment, sexual abuse, corporal punishment, mental and physical coercion;

• Strengthening of mutual cooperation between worker and employer;• Encourage open discussion and recognition;• Improvement of workers’ health and safety levels;• Respect the rights of the community in accordance with the UN Declaration on the Rights of Indigenous Peoples.

Social Impact Assessments are conducted on local communities that are directly or indirectly affected by our business operations;

• Practice of zero tolerance on the use of child or forced labor, slavery or human trafficking in any of our operation sites and facilities;

• Adherence to our core values by our contractors and suppliers;• The passports of workers will be made available upon request and no workers will be retained against their will.

No incidences of forced or child labour have been found or reported.

11) Recruitment, Retention and Development (SDGs – 10 Reduced Inequalities)

To meet future challenges and remain competitive, we strive to be an attractive employer with the ability to retain the best people. With the competition for talents growing more intense, the following safeguarding measures were put in place:

• The conduct of road shows and placements of advertisements in local newspapers to encourage the local communities to be part of the Group;

• New recruits are given orientation and training;• Employment and development of employees are based on individual skills, talent, experience and the behavioral

attributes of a person;• Remuneration pay package is tailored according to employee’s level of performance;• Same career progression opportunity for everyone who is competent and contribute to the success of the Group;• Apart from attending the in-house trainings, our employees are also encouraged to attend the Group’s sponsored

external seminars and workshops to stay up-to-date with the latest developments and trends happening in their respective line of work.



Field training is also frequently organized to upgrade the technical and functional skills of workers at the operating units.

Foreign workers To mitigate the shortage of labour force, we recruit foreign workers (mainly from Indonesia) to take over those

physically demanding works.

• All workers are covered under the purview of “Workers Minimum Standards of Housing and Amenities Act 1990”;• All levy fees, visa applications and transportation costs are borne by us to reduce their financial burden;• Only foreign workers with valid work permits are hired; and all statutory payments and just wages are made in a

timely manner; and• All foreign workers are covered under FWCS or SKKPHA.

12) Fair Pay and Performance Oriented Culture (SDGs – 1 No Poverty, 10 Reduced Inequalities)

We have been compliant with the National Minimum Wages Order since it was first introduced by the Malaysian government in 2012. We ensure that all employees are adequately compensated for their work and that wage payments are made in a timely manner and are clearly acknowledged by the workers. In addition to the typical employee benefits, we also provide annual bonus, medical and insurance coverage and EPF to eligible employees. Regular performance appraisals and evaluations are carried out to ensure high performing employees are rewarded and also, to promote motivation and performance upgrading for the rest.

At the sites, benefits such as housing, utilities, medical and sports facilities and access to education for the workers’ children are provided for.

Examples of seminar/workshop related to sustainability certification, environmental protection awareness, safety and health and good agricultural practices.

-

No. of trainings

Total participants involved

Total no. of training hours

FY2019

635

16,821

36,445

FY2018

490

11,285

43,539

Date

17.07.2018

10-13.12.2018

29.01.2019

24.04.2019

22.06.2019

Workshop/Seminar

Fire Drill & Rescue Training

Jelajah MSPO

Harvesting, Prunning, FFB loader & Safety

Biodiversity Ecological Management Training

SIA Survey Analysis: Complaints & Grievances

No of participants

163

40

108

110

50

New Employee Orientation 2019 Professional Presence & Grooming Training



Two of our subsidiary companies were selected as the Best Employer for Oil Palm Industry and Timber Industry categories by KWSP - Enforcement Department.

Our Mill won the Regional Competition organized by PIBG SK Semop

SPARC Annual Bowling Competition

13) Diversity and Equal Opportunity (SDGs – 10 Reduced Inequalities)

Diversity brings strength and cultural understanding to an organization. In accordance with our Code of Conduct, equal employment opportunity is given to every employee regardless of religion, ethnicity, gender and other discriminatory factors. We value, respect and leverage the unique contributions of people with diverse backgrounds, experiences and perspectives to provide exceptional services to an equally diverse community.

There was no incident of discrimination and corrective action taken for the year.

14) Social Care and Workers Welfare (SDGs – 1 No Poverty, 3 Good Health & Well-Being)

Continuous improvement of the health and well-being of our employees are certainly one of our top priorities. Through our Sports and Recreation Club (SPARC), recreational events and sports activities are regularly organized throughout the year for our employees with the aim of promoting and fostering teamwork and rapport among employees as well as encouraging work-life balance and healthy living. We encourage all our employees to participate in these recreational events and sports activities which include the annual dinner, festive gatherings, sports competitions, donation drives and more.

In addition, the welfare of our estate and mill workforce is provided for with quality quarters, playgrounds, recreational and medical facilities among others.

Workforce by Gender

Female

Male

Total

FY2019

25%

75%

100%

FY2018

25%

75%

100%

Workforce by Categories

Management

Executive

Non-Executive

Total

FY2019

1%

5%

94%

100%

FY2018

1%

4%

95%

100%



Inter-Group Table Tennis Competition SPARC Kuching Trip

Lassa CPO Mill Stakeholder meeting Lepah Estate Stakeholder meeting

Donation to Indonesia Red Crescent for Lombok Disaster Fund.

Blood Donation Drive 2019

Community Well being The Group continues to support the local communities associated with our operations through the offering of job

opportunities, fair pay and minimizing all environmental and social impacts. Our employees are also encouraged to take part in community and charitable activities. Over the last 12 months, our efforts included charity drives for local schools and society care centers. In addition to this area of focus, our blood donation drives are conducted yearly to replenish the blood supplies of the local hospitals and blood banks.

The Group has also contributed funding and other resources towards enhancing the social well-being of the community through supporting initiatives related to educations, health care, arts and culture, sports, community development, the underprivileged, disability groups and more.

15) Safety and Health (SDGs – 3 Good Health & Well-Being)

Occupational Safety and Health (OSH) is our utmost priority. The Group has a specific Health, Safety and Environment department set up to oversee all matters concerning employees’ safety and health. To safeguard the health, well-being and safety of our employees, the following precautions and measures were established:

• Promotion of a safe working culture through the conduct of safety briefings and safety awareness campaigns for both employees and contractors;

• Personal Protective Equipment (PPE) is provided for those working in environments exposed to hazards and risks. Full compliance with the use of PPE is mandatory and strictly monitored;

• Implementation of standardized health and safety program and policies across all the Group’s operations. These programs and policies are continuously reviewed, monitored and fully implemented.

• All of our foreign workers are covered by the insurance policy “Foreign Workers Compensation Scheme” that covers work related injuries and fatalities;



• Regular safety education programs are conducted to enable employees to understand the requirements of the Occupational Safety and Health Administration (OSHA) and to boost safety and health awareness;

• All our CPO mills have clinics where workers can receive free healthcare;• Medical and physical checkups are regularly conducted for employees exposed to dangerous chemicals, pesticides

and high noise levels;• Regular inspections of the employees’ housing and welfare facilities are carried out to ensure that sanitation,

health and drainage standards are maintained according to the Group’s policy.

MOVING FORWARD

Jaya Tiasa will continue to uphold our commitment towards sustainability in our policies and business practices. All stakeholders will be adequately addressed to ensure everyone mutually benefited from the sustainability initiatives implemented.

(Safety signs setup throughout the sites)

Action on Accidents The Group devotes continuous efforts in accident prevention by conducting “Hazard Identification, Risk Assessment

and Risk Control (HIRARC)” on all our operations. With HIRARC, we are able to identify, assess/measure and minimize the hazards and risks of any workplace and its activities.

Every accident is formally investigated to determine the root cause and to prevent the recurrence of such incidents. The details and conclusion of the investigation are included in the Accident Investigation Report (AIR).

For the FY2019, there were no reported workplace fatalities within The Group.

2019 2018 20162017 2015

90

80

70

60

50

40

30

20

10

0

No of accidents

Average No of days lost per accident



This Statement provides an overview of the Company’s application of the three (3) Principles of corporate governance set out in the Malaysian Code on Corporate Governance (“MCCG”):

• Board Leadership and Effectiveness• Effective Audit and Risk Management• Integrity in Corporate Reporting and Meaningful

Relationship with Stakeholders

The details on how the Company has applied each of the Practices under the respective Principles during the financial year ended 30 June 2019 are disclosed in the Company’s Corporate Governance Report 2019 (“CG Report”) which can be downloaded from the Company’s website at www.jayatiasa.net.

This Statement, which is prepared in accordance with the Main Market Listing Requirements of Bursa Malaysia Securities Berhad (“Bursa Securities”), should be read together with the CG Report.

PRINCIPLE A - BOARD LEADERSHIP AND EFFECTIVENESS

I. BOARD RESPONSIBILITIES

The Board is responsible for long-term growth and delivery of sustainable value to its stakeholders. It sets the strategic direction of the Group and provides effective leadership through oversight of Management and monitoring the business performance in the Group.

Details of the roles and responsibilities of the Board are set out in the Board Charter which serves as a guide and primary induction document providing prospective and existing Board Members insights into their responsibilities in discharging their fiduciary and leadership functions. In addition, the Board Charter outlines powers that the Board reserves for itself and those that are delegated to the Management, and responsibilities of Board Committees, Board Chairman and individual Directors to enhance accountability. It is periodically reviewed by the Board to be in line with regulatory changes and is published on the Company’s website at www.jayatiasa.net.

CORPORATE GOVERNANCE OVERVIEW STATEMENT

The key responsibilities of the Board include:

i. Reviewing and adopting a strategic plan;ii. Overseeing the conduct of the Group’s

businesses;iii. Ensuring effective risk management and internal

control; andiv. Reviewing and approving key matters such as

financial results, investments and divestments, acquisitions and disposals, and major capital expenditures.

The Board has established Board Committees, namely, the Audit Committee, Nominating Committee and Remuneration Committee in fulfilling its ongoing oversight and stewardship role. The Board Committees have the authority to examine specific issues within their respective terms of reference approved by the Board. The Chairman of the respective Board Committees reports to the Board with their recommendations. The ultimate responsibility for decision making, however, lies with the Board.

There is a formal schedule of matters reserved for the Board’s decision to ensure the direction and control of the Company are in its hands. Key matters reserved for the Board include, inter-alia, approval of annual budget, quarterly and annual financial statements for announcement, investment and divestment, as well as monitoring of the Group’s financial and operating performance.

As the leader of the management, the Deputy Executive Chairman, who is supported by the Chief Executive Officer (“CEO”), Chief Financial Officer (“CFO”) and other Senior Management Personnel, develops the corporate and business strategies for the achievement of the Group’s goals. The CEO, who leads the Senior Management Team, Risk Management Committee and Sustainability Committee, is responsible for the effective implementation of the Group’s strategic plan and policies established by the Board, and oversees the day-to-day operations and business of the Group.

The Board of Directors (“the Board”) of the Company believes in embracing high standards of corporate governance in order to safeguard the interest of stakeholders and enhance shareholder value.

The Board considers transparency, accountability, integrity and sustainability as the four pillars of good governance. As such, the Board embeds in the Group a culture based on established core values and ethical conduct, as key driver towards delivering long-term success.



The Independent Non-Executive Directors (“INEDs”) are responsible for providing unbiased and independent judgement to the Board and ensure effective check and balance in the Board decision making process. Gen Tan Sri Abdul Rahman Bin Abdul Hamid (Rtd) has been identified by the Board to whom concerns of fellow Directors, shareholders and other stakeholders may be conveyed.

The Board has established a Code of Conduct and Ethics setting out core areas of ethical conduct expected from the Directors and employees in the performance of their duties to engender good corporate behaviour. The Code of Conduct is available on the Company’s website at www.jayatiasa.net. The Whistle Blowing Policy adopted by the Board seeks to foster an environment where integrity and ethical behaviour are maintained and any illegality, improper conduct and/or wrong doing in the Group may be exposed.

All the Directors have direct access to the advice and services of the Company Secretary to enable them to discharge their duties effectively. The Company Secretary, qualified in accordance with the Companies Act 2016, ensures adherence to the Board policies and procedures, and updates the Board on regulatory and statutory requirements relating to Directors’ duties and responsibilities.

The Directors allocate sufficient time to attend Board and Committee meetings to deliberate on matters under their purview. All Board and Committee members are provided with requisite notices, agenda and meeting materials at least five (5) working days prior to meeting. A total of 5 Board of Directors Meetings were held during the financial year. The attendances of each Director are as follows: -

Name of Directors Meeting Attendance

Gen Tan Sri Abdul Rahman Bin Abdul Hamid (Rtd) 5/5 Dato’ Sri Tiong Chiong Hoo 5/5 Dato’ Wong Sie Young 5/5 Dato’ Sri Dr Tiong Ik King 5/5 Mdm Tiong Choon 5/5 Mr Tiong Chiong Hee 4/5 Mr John Leong Chung Loong 5/5 Dato’ Wong Lee Yun 5/5

The Members of the Board received continuous training on areas relevant to their duties and responsibilities and to keep themselves abreast of the latest changes to the statutory and regulatory requirements.

All the Directors had completed the Mandatory Accreditation Programme as prescribed by the Listing Requirements of Bursa Securities. The training programmes, briefing and conferences attended by the Directors during the financial year are as follows: -

Director

Gen Tan Sri Abdul Rahman Bin Abdul Hamid (Rtd)

Dato’ Sri Tiong Chiong Hoo

Dato’ Wong Sie Young

Dato’ Sri Dr Tiong Ik King

Title of Programmes/Seminar/Courses/Forum

• Malaysia Anti-Corruption Commission (Amendment) Act 2018, Impact on Malaysian Financial Reporting Standards, Anti-Money Laundering and Anti-Terrorism Financing Act 2001



• 2019 Budget and Tax Conference


• Forbes Global CEO Conference


Director

Tiong Choon

Tiong Chiong Hee


Dato’ Wong Lee Yun

Title of Programmes/Seminar/Courses/Forum

• 中國橋商投資企業協會戰略管理與現代管理專題研修班 (China Overseas Chinese Investment Enterprise Association Strategic

Management and Modern Management Special Seminar)



• POC 2019 Palm & Lauric Oils Price Outlook Conference & Exhibition - Manage Uncertainties Harvest Global Opportunities

• Malaysian Institute of Accountants, GST Changes From 6% to 0% - Transitional Process & Planning


• Malaysian Institute of Accountants, Sales & Services Tax: Implementation of SST and Transitional from GST

• Ernst & Young, 2019 Budget and Tax Conference

• Lembaga Hasil Dalam Negeri Malaysia, Seminar Percukaian Kebangsaan 2018

• Malaysian Institute of Accountants, Accounting for Financial Instruments in Accordance with MPERS


• JP Morgan - 2019 Outlook

• CIMB Corporate Day

• Bank of Singapore - 2019 Market Outlook

• Citi Roundtable 2019

II. BOARD COMPOSITION

The Company is led by an experienced Board with diverse background and expertise in areas such as entrepreneurship, legal, economics, finance, accounting, audit and engineering which are vital for the continuous progress and success of the Group.

Currently, the Board has 8 members comprising 2 Executive Directors and 6 Non-Executive Directors, of whom 3 are INEDs. This composition fulfills the requirements set out in the Listing Requirements of Bursa Securities, which stipulates that at least 2 Directors or 1/3 of the Board, whichever is higher, must be Independent. The profile of the Directors are set out on pages 3 to 6 of the Annual Report.


The Nominating Committee (NC) is entrusted to identify and nominate suitable candidate for Board appointment and assesses annually the effectiveness of the Board and Board Committees, the performance of Directors, Board diversity, and other qualities of the Board including core-competencies which the INEDs should bring to the Board. The Board has the ultimate responsibility of making the final decision on appointment of new Directors.

Based on the annual assessment conducted on 27 August 2019, the NC concluded that the Board, Board Committees and individual Directors have the relevant skill sets, and have effectively discharged their stewardship responsibilities to meet the needs of the Company. Accordingly, the Board recommended the re-election of the retiring Directors for re-appointment at the forthcoming Annual General Meeting (“AGM”).


Based on the current Board size, the NC indicated a need to identify potential candidates for the appointment of one additional INED to gradually meet MCCG’s Practice 4.1 of having at least 50% independent Directors on the Board.

The NC also assessed the independence of INEDs for the financial year 2019 and concluded that all the INEDs has satisfied the independence criteria set out in the Listing Requirements of Bursa Securities, and they are able to continue to demonstrate their independent judgement and objectivity on matters that are brought to the Board.

The Board, based on the assessment and recommendation of NC is of the opinion that the independence of all the INEDs remain unimpaired and their judgements over business dealings of the Company have not been influenced by the interest of other Directors and substantial shareholders. Therefore, the Board will seek shareholders’ approval at the forthcoming AGM for the continuance of Gen Tan Sri Abdul Rahman Bin Abdul Hamid (Rtd), Mr. John Leong Chung Loong and Dato’ Wong Lee Yun (with tenure of more than 9 years) as INEDs for the ensuing financial year based on justifications set out in the Notes to the Notice of the AGM.

A summary of key activities of the NC during the financial year 2019 are as follows:- • reviewed Board size and composition based

on mix of skills, experience, knowledge and diversity;

• assessed the effectiveness of the Board as a whole and the Board Committees;

• evaluated the performance of individual Directors;

• assessed the independence of INEDs;

• reviewed and recommended the re-election of Directors who are due for retirement by rotation, and continuation in office as INEDs who have served for a cumulative term of more than 9 years; and

• reviewed the proposed policies and procedures for the remuneration of Directors and Senior Management.

The Board has formalised a Board Diversity Policy as set out in Appendix B of the Board Charter which is published on the Company’s website. The Board strongly advocates corporate culture that embraces diversity when determining its composition taking into accounts the skills and industry experience,


knowledge, gender, and other qualities of Directors, in the context of the needs and goals of the Company. The differences in the qualities of Directors will be balanced appropriately, whenever possible, in determining the optimum composition of the Board.

Currently the Board consists of eight (8) members, comprising six (6) male Directors and two (2) women Directors. This Board composition is in line with the target set in the Board Diversity Policy.

III. REMUNERATION

REMUNERATION COMMITTEE

The key responsibility of Remuneration Committee (“RC”) is reviewing and recommending to the Board the framework and remuneration packages including performance related pay scheme for Executive Directors. Its terms of reference had been expanded to include reviewing and recommending policy and procedures on remuneration of Board and Senior Management.

POLICIES AND PROCEDURES

The Board has, on 29 August 2018, formalised the Policies and Procedures on Remuneration for the Directors and Senior Management in accordance with Practice 6.1 of MCCG. This is in line with the objective to attract, reward, motivate and retain valuable Directors and Senior Management who lead the Group towards realizing its corporate strategies and long-term success.

DIRECTORS’ REMUNERATION

The remuneration of Executive Directors is linked to the performance, experience, skill set and extent of responsibility. In the case of Non-Executive Directors, their remuneration shall commensurate with their responsibilities, including their involvement in and contribution to the Board and Board Committees, and attendance at meetings.

As a matter of good practice, the Directors abstained from deliberation on his own remuneration at Board Meetings.

Total remuneration received by the Directors of the Company for the financial year ended 30 June 2019 is RM3,092,078. Details a of the remuneration for each of the Directors on a named basis are disclosed under Practice 7.1 of the CG Report uploaded on the Company’s website at www.jayatiasa.net. None of the Directors of the Company received any remuneration from any subsidiary within the Group during the financial year.


PRINCIPLE B - EFFECTIVE AUDIT AND RISK MANAGEMENT

I. AUDIT COMMITTEE

The Board has established an Audit Committee (“AC”) to assist in discharging its duties on financial reporting. The AC consists of three (3) members, all of whom are Independent Non-Executive Directors. The composition of the AC, its roles and responsibilities and summary of activities carried out during the financial year are set out in the AC report of this Annual Report.

The key responsibility of the AC is to assist the Board in overseeing the integrity and reliability of the financial statements and ensuring that they comply with the Malaysian Financial Reporting Standards, International Financial Reporting Standards and the provisions of the Companies Act, 2016. Such financial statements include the quarterly financial statements announced to Bursa Securities and the annual audited financial statements.

The Terms of Reference of the AC has been amended to include the requirement for a former key audit partner to observe a cooling-off period of at least 2 years before being appointed as a member of the AC.

The Board is cognizant of its role in upholding the integrity in financial reporting of the Company. The AC, which assists the Board in overseeing the financial reporting process, has adopted the Auditor Independence Policy setting out criteria in assessing the suitability and independence of the External Auditors including the type of non-audit services that could be provided by the External Auditors and the need to obtain the AC approval for non-audit services exceeding the threshold level.

II. RISK MANAGEMENT AND INTERNAL CONTROL

The Board affirms its responsibility for the Group’s system of risk management and internal control which includes the establishment of an appropriate internal control environment and risk management framework as well as reviewing its adequacy and effectiveness. This is to safeguard shareholders’ investments and the Group’s assets.

The details on the Risk Management Framework and its associated initiatives undertaken during the financial year are set up in the Statement on Risk Management and Internal Control of this Annual Report.

Internal Audit Function

The Company has in place an in-house internal audit department (“IAD”) which reports directly to the AC.

The primary function of the IAD is to assist the AC in discharging its oversight role in assuring the adequacy and integrity of the Group’s system of internal control. The AC approves the annual audit plan. The internal audit function adopts a risk-based approach in executing the internal audit plan that focuses on major business units and operations within the Group.

Details of the work of the Internal Audit Function are set out in the AC Report of this Annual Report.

PRINCIPLE C - INTEGRITY IN COPRORATE REPORTING AND MEANINGFUL RELATIONSHIP WITH STAKEHOLDERS

I. COMMUNICATION WITH STAKEHOLDERS

The Board is committed to being transparent and accountable to the Company’s stakeholders by ensuring that material information concerning the Company is disclosed to them timely. Communication and engagement with stakeholders include:

• quarterly announcement on financial results to Bursa Securities;

• other company announcements and circulars to shareholders whenever necessary;

• annual report and General Meetings;

• ongoing engagement and communication with investors and investment communities; and

• the Group’s website at www.jayatiasa.net where stakeholders can access corporate information, annual report, financial information, company announcements and share prices of the Company. To effectively address any issues, the Group has dedicated an electronic mail address at [email protected] where stakeholders can direct their queries and concerns.

The Company has in place the Corporate Disclosure Policies and Procedures which provides guidance for disclosure of material information in accordance with the Listing Requirements of Bursa Securities and sets out the roles and responsibilities of Directors, management, employees and other relevant persons in the handling and disclosure of material information to shareholders, regulators and stakeholders.

The Company’s Investor Relations (“IR”) Function undertakes ongoing engagement and communication with investors and investment communities. IR Reports containing IR activities and investors’ concerns are presented to the Board for deliberations to enable the Company to understand stakeholders’ concerns and to take those concerns into account when making decisions.



II. CONDUCT OF GENERAL MEETINGS

The Annual General Meeting (“AGM”), which is the principal forum for shareholder dialogue, allows shareholders to review the Group’s performance via the Company’s Annual Report and pose questions to the Board for clarification.

The notice to shareholders is given at least 28 days in advance of the AGM. Hence, the Notice of the AGM held last year was issued on 30 October 2018, being 28 clear days in advance of the AGM held on 28 November 2018.

Shareholders are encouraged to participate in the proceedings and question and answer session of the AGM before putting each resolution to vote.

At the last AGM, the Chairman also shared with the shareholders at the meeting responses to questions submitted in advance by the Minority Shareholder Watchdog Group.

The full Board of Directors, the CFO and Chief Operating Officers attend the AGM to address matters brought up by shareholders. A scrutineer was appointed to validate the votes cast at the AGM. All resolutions proposed were duly passed and the outcome of the AGM was announced to Bursa Securities on the same day of the meeting. A summary of key matters discussed at the AGM was made available on the Company’s website.

This Statement was approved by the Board on 17 October 2019.



STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL

Board’s Responsibility

The Board affirms its responsibility for the Group’s system of risk management and internal control which includes the establishment of an appropriate internal control environment and risk management framework as well as reviewing its adequacy and effectiveness to safeguard shareholders’ investments and the Group’s assets.

The system in place is designed to manage rather than eliminate the risk of failure to achieve the Group’s business objectives by providing reasonable assurances against material misstatement or loss.

The Board has received assurance from the Group Chief Executive Officer and the Chief Financial Officer that the Group’s risk management and internal control system is operating adequately and effectively, in all material aspects.

Risk Management Framework

In an increasing complex and dynamic business environment, proactive management of the overall business risks is a prerequisite in ensuring that the Group achieves its business objectives. Risk management activities are regarded as an integral part of the Group’s business practices and not in isolation. The Group plans and executes activities to ensure that the risks inherent in its business are identified and effectively managed to achieve an appropriate balance between realizing opportunities for gains while minimizing losses to the Group.

The Group has a Risk Management Framework (“RM Framework”) which sets out the risk management governance, guidelines, processes and control responsibilities and underpins the Group Risk Management Policy (“RM Policy”). It seeks to ensure that there is a consistency to the methods used in managing risks throughout the Group and that risk management efforts are aligned with the Group’s business objectives. It also outlines enhanced and explicit requirements for managing risks and assists in understanding the impact of uncertainties inherent in business decisions.

The Board is assisted by the Risk Management Committee (“RMC”) which is chaired by the Group Chief Executive Officer and comprises representatives from key senior management. The function of the RMC is to drive risk management activities guided by the Group RM Policy and RM Framework to ensure effective identification of emerging risks and management of identified risks through implementation of appropriate controls and risk treatment strategies.

The RMC meets periodically and works closely with the Risk Management Department (“RMD”) to ensure effective and consistent adoption of risk management practices. The RMD meets with the risk owners made up of managers or heads from the divisional units to identify and evaluate the risks related to their business objectives or budgets against which performance is measured and to establish the risk profiles of the Group during the risk assessment sessions. The level of risk tolerance of the Group is expressed through the use of a risk consequence and likelihood matrix. Once the level of risk tolerance is determined, the risk owner is required to identify and implement the risk treatment strategies covering management actions with target timeline for implementation. The risk owners are to monitor and timely update their risk profiles on an on-going basis. The update of the risk profiles includes changes to operational, financial and compliance risks and the identification of emerging risks arising from changing business conditions as well as the adequacy and effectiveness of the related controls.

The RMC reviews periodically both the Group top and divisional risk profiles to ensure that the overall risks impacting the Group are adequately identified and managed within an acceptable risk appetite. Mitigation measures in addressing major risk factors or challenges pertaining to plantation manpower supply and climate change effect on the oil palm yield as well as volatile palm oil market during the financial year include process fine-tuning and mechanization to raise productivity, improvement in water management and to exercise more stringent cost control to stay competitive. At the same time, the Group has successfully obtained Malaysian Sustainable Palm Oil (“MSPO”) certifications for most estates and mills

Pursuant to Paragraph 15.26 (b) of the Listing Requirements and the Malaysian Code on Corporate Governance (“MCCG”) with regards to the Group’s state of internal control, the Board of Directors (“Board”) is pleased to present below the Group’s Statement on Risk Management and Internal Control during the financial year under review and up to the date of approval of this statement, prepared in accordance with the Statement on Risk Management and Internal Control: Guidelines for Directors of Listed Issuers issued by the Institute of Internal Auditors Malaysia and adopted by Bursa Malaysia Securities Berhad and taking into consideration the recommendations of the MCCG.



and is committed to be fully certified to improve trade and market opportunities. The RMC presented the risk management report to the Board twice a year whereas the risk assessment result is presented on an annual basis. As part of the Board’s efforts to ensure risk management and internal control processes are adequate and effective, risk mitigation strategies and internal controls are subject to periodic review by the internal audit with areas for improvement.

Key Elements of the Group’s Internal Control

An effective check and balance control environment is fundamental for ensuring a sound internal control system in the Group. The Board and Management are committed to maintain an effective internal control environment by continuously enhancing the design of internal control systems to ensure that they are relevant and effective to promote operational agility while ensuring corporate governance and compliance to regulatory guidelines. The key elements and/or features of our Group’s internal control system established for maintaining strong corporate governance are as follows:

• The Group’s reporting structure incorporating checks and balances is aligned to the business requirements.

• Authority limits are in place for approving capital expenditure and matters on financial, treasury, operations and personnel, minimizing potential risk exposures.

• Documented policies and procedures are also in place subject to review every now and then to ensure that it maintains its effectiveness to support the Group’s business activities.

• Annual budgets are prepared by the Group’s operations. Analysis and reporting of variances against budget are presented in the Group’s management meetings which act as a monitoring mechanism.

• Quarterly and annual financial statements containing key financial results as well as operational performance results of the Group are prepared and reported to the Board.

• The Group’s financial covenants and cash flow position are prepared and reported regularly to the management as a monitoring mechanism.

• Periodic company briefings with analysts are conducted to apprise the shareholders, stakeholders and general public of the Group’s performance while promoting transparency and open discussion.

• The Group Chief Executive Officer meets with the management and operations personnel regularly to resolve key operational, financial, personnel and other management issues including risks and controls in order to enhance the performance and profitability of the Group’s businesses.

• Meetings on management accounts results against prior periods are conducted every two months with significant variances explained and appropriate actions taken, where necessary.

• Management meetings are held monthly between the Group Chief Executive Officer and senior management to deliberate on Group strategies and policies, operational and financial performance and other key issues.

• The Group has a comprehensive information system that enables the production of timely, reliable and relevant data to enhance management in decision making.

• Guidelines on employment, performance appraisal, training and retention of employees are in place to ensure the Group’s ability to operate in an effective and efficient manner.

• The Group has established the safety & health committees at the operating level to address and ensure compliance with occupational safety and health policies and procedures as required by the various authorities.

• The Group undertakes adequate insurance coverage on both its employees and assets to ensure both are sufficiently insured against any untoward incidents that could result in material losses.

• The Intranet Portal is used as an effective dissemination tool to share up-to-date information on development and happenings.

• The Group has in place the KPI reporting to drive awareness of shared management responsibility on their contribution towards enhancing the operating performance in achieving the business objectives.

• Internal audit function includes performing regular reviews of business processes to assess the effectiveness of the internal control system and to highlight significant risks impacting the Group with recommendations for improvement.

• Senior management team conducts regular visits to the Group’s operations for better understanding to facilitate cognizance in decision-making capability.


Internal Audit

The Group has established an Internal Audit Department (“IAD”), which reports independently to the Audit Committee (“AC”) to provide the Board with adequate assurance it requires regarding the adequacy and effectiveness of risk management, internal control and governance processes.

The IAD adopts a risk-based approach in executing the annual audit plan that focuses on major business units and/or operations within the Group. The annual audit plan is reviewed and approved by the AC. The IAD reports directly to the AC on the outcome of its appraisal of the operational activities. Significant audit findings are presented and deliberated by the AC on a quarterly basis or as appropriate. The IAD also monitors the implementation of audit recommendations through follow up audits to obtain assurance that all major risks and controls measures identified have been reasonably addressed by the management in an effective and timely manner.

Board Review

The Board is of the view that the risk management and internal control system in place throughout the year under review and up to the date of approval of this Statement is sound and sufficient to safeguard the interests of the Group’s stakeholders, their investments and the Group’s assets. While the risks faced by the Group are within acceptable levels in the past, increased vigilance is being implemented in view of the challenging business environment.

The Board is not aware of any material losses or fraud during the year under review as a result of weaknesses in internal control. The management is continuously taking necessary measures to improve and strengthen the risk management and internal control system of the Group.

Review of the Statement by External Auditors

Pursuant to Paragraph 15.23 of the Listing Requirements, the external auditors have reviewed the Statement on Risk Management and Internal Control pursuant to the scope set out in Audit and Assurance Practice Guide, Guidance for Auditors on Engagements to Report on the Statement on Risk Management and Internal Control (“AAPG 3”) included in the Annual Report issued by the Malaysian Institute of Accountants (“MIA”) for inclusion in the annual report of the Group for the year ended 30 June 2019 and reported to the Board that nothing has come to their attention that causes them to believe that the statement intended to be included in the annual report of the Group, in all material respects: has not been prepared in accordance with the disclosures required by paragraphs 41 and 42 of the Statement on Risk Management and Internal Control: Guidelines for Directors of Listed Issuers, or is factually inaccurate.

AAPG 3 does not require the external auditors to consider whether the Directors’ Statement on Risk Management and Internal Control covers all risks and controls, or to form an opinion on the adequacy and effectiveness of the Group’s risk management and internal control system including the assessment and opinion by the Directors and management thereon. The report from the external auditors was made solely for and directed solely to the Board in connection with their compliance with the Listing Requirements of Bursa Malaysia Securities Berhad and for no other purposes or parties. The external auditors do not assume responsibility to any person other than the Board in respect of any aspect of this report. The statement was approved by the Board on 17 October 2019.



AUDIT COMMITTEE REPORT

COMPOSITION AND MEETINGS

The current composition of AC and the attendance of its members at the 5 meetings held during the financial year are as follows:

Name Dato’ Wong Lee Yun Chairperson/ Independent Non- Executive DirectorDesignation ChairpersonMeeting Attendance 5/5 Name Gen Tan Sri Abdul Rahman Bin Abdul Hamid (Rtd) Senior Independent Non- Executive DirectorDesignation MemberMeeting Attendance 5/5

Name Mr John Leong Chung Loong Independent Non-Executive DirectorDesignation MemberMeeting Attendance 5/5

The AC meetings were convened with proper notices and agenda and these are distributed to all members of the AC at least five (5) working days prior to meeting.

The Chief Executive Officer (“CEO”), Chief Financial Officer (“CFO”) and Head of Internal Audit attend the AC meetings upon invitation of the AC to facilitate discussion of matters on the agenda.

The Head of the internal audit presents his Internal Audit Reports quarterly to the AC for review and discussion at the AC meetings. Representatives of the External Auditors attend the meeting to consider the audit plan and final audited financial statements and such other meeting as determined by the AC.

The AC Chairperson reports the AC’s key findings and conclusions to the Board after each meeting.

For the year under review, the performance of the individual AC member was assessed through self-evaluation, the outcome of which was reviewed by the Nominating Committee. Having considered the recommendation made by the Nominating Committee and based on the outcome of the evaluation, the Board was satisfied that all the AC members are able to discharge their duties and responsibilities in accordance with the Terms of Reference of the AC.

In line with the Main Market Listing Requirements (“Listing Requirements”) of Bursa Malaysia Securities Berhad (“Bursa Securities”), details of the terms of reference of AC are available on the Company’s website at www.jayatiasa.net.

SUMMARY OF ACTIVITIES CARRIED OUT BY THE AC

During the financial year under review, the AC worked closely with the management, internal auditors and external auditors to carry out its duties as required under its Terms of Reference.

Details of activities carried out by the AC during the financial year under review and up to the date of this report are summarized below:

Financial Reporting

(a) Reviewed all the unaudited quarterly financial results of the Group, focusing on significant matters, which included going concern assumption, and ensured the disclosures were in compliance with the Malaysian Financial Reporting Standards (“MFRS”) and Listing Requirements before recommending the same to the Board for approval for release to Bursa Securities;

In reviewing the unaudited quarterly financial statements, the AC has:

• looked at the reasons for significant fluctuations in the quarterly and year-to-date financial performance of the Company and the Group, including key income and operating expenses and the impact of financial performance on financial debt covenants;

• focused on profits contribution by business segments and their respective challenges; and

• enquired into high unit production cost and variations in production figures for both the timber and oil palm divisions from those budgeted, and discussed management’s actions to address the challenges on resources including labour and logs production volume.

(b) Reviewed the impact of changes in accounting policies and adoption of new accounting standards, together with significant matters highlighted in the financial statement; and

The Board of Directors of Jaya Tiasa Holdings Berhad is pleased to present the Audit Committee (“AC”) Report for the financial year ended 30 June 2019.


(c) Reviewed the annual audited financial statements of the Company and the Group with the external auditors, with particular focus on the following, before recommending them to the Board for approval:

• significant matters highlighted including financial reporting issues, significant judgements made by the Management, significant and unusual events or transactions, and how these matters are addressed; and

• compliance with the applicable approved accounting/auditing standards in Malaysia and other legal and regulatory requirements.

The AC, based on its review and discussions with Management and external auditors, considered that the financial statements are fairly presented in conformity with the relevant accounting standards in all material aspects for the financial year ended 30 June 2019.

External Audit

(a) Reviewed the external auditors’ Audit Plan for the Group, which outlined the responsibilities and scope of work for the financial year ended 30 June 2019 and external auditors’ fees;

(b) Discussed and reviewed with the external auditors, the results of their examination and their reports in relation to the audit and accounting issues arising from their audit;

(c) Reviewed the nature of, and fees for, non-audit services provided by the external auditors in accordance with the Auditors Independence Policy. Having reviewed the provision of non-audit services by the external auditors for the financial year ended 30 June 2019, the AC was satisfied that such non-audit services was not likely to create any conflict, compromise or impair the independence and objectivity of the external auditors. Details of non-audit fees incurred by the Company and Group for the financial year ended 30 June 2019 are stated in the Additional Compliance Information on Page 50 of this Annual Report; and

(d) Assessed the suitability and independence of the external auditors by evaluating the criteria including quality of audit services, audit fees and auditors’ independence as set out in the Auditors Independence Policy. Assessment was based on feedback obtained via assessment questionnaires completed by CFO tabled at the AC meeting. The external auditors have also confirmed their professional independence in accordance with the By-Laws (on Professional Ethics, Conduct and Practice) of the Malaysian Institute of Accountants via their written letter to the AC. The AC was satisfied that the external auditors were able to meet the audit requirements and statutory obligation of the Company and also their professional independence as external auditors of

the Company. Following this assessment, the AC has recommended the re-appointment of Messrs. Ernst & Young as external auditors of the Company for the ensuing financial year at the forthcoming Annual General Meeting (“AGM”). The Board accepted the AC’s recommendation for EY’s re-appointment as the external auditors at the forthcoming AGM in November 2019.

Internal Audit

(a) Reviewed and approved the Annual Internal Audit Plan to ensure adequacy of scope and coverage of auditable areas with significant and high risks;

(b) Reviewed internal audit reports presented by the Head of IAD addressing internal controls over operations, financial, compliance and information technology processes relating to the Group based on the approved Annual Internal Audit Plan; and

(c) Discussed and reviewed the major findings, areas requiring improvements and significant internal audit matters raised by internal auditors and Management’s response, including follow-up actions. Where appropriate, internal audit findings were raised at Board meetings for further discussion of Management responses and their adequacy.

Related Party Transactions

(a) Reviewed the Recurrent Related Party Transactions (“RRPTs”) semi-annually to ensure that all RRPTs entered into by the Group (in relation to the nature, value and terms) were undertaken within the shareholders’ mandate;

(b) Reviewed and recommended improvement to the “Review Procedures” for existing RRPT; and

(c) In the case of new related party transactions (RPTs) entered into by the Group, the AC evaluated these transactions to ensure that they were undertaken at arm’s length, on normal commercial terms of the Group and on terms which were not more favourable to the related parties than those generally available to the public and to comply with the Listing Requirements of Bursa Securities.

Others (a) Reviewed the following to ensure compliance

with the relevant regulatory requirements prior to recommending them to the Board for approval:

• Circular to Shareholders in relation to Shareholders’ Mandate for RRPTs;

• Audit Committee Report; and • Statement on Risk Management and Internal

Control.



SUMMARY OF WORKS OF THE INTERNAL AUDIT FUNCTION

The Group has in place an in-house internal audit department (“IAD”), which provides the Board, through the Audit Committee, with independent assurance on the adequacy and operating effectiveness of the Group’s system of internal controls. The IAD is guided by the International Professional Practices Framework (“IPPF”) issued by the Institute of Internal Auditors. The IAD, which is independent of the activities it audits, reports directly to the AC.

Audit Scope and Coverage

The IAD adopts a risk based auditing approach, prioritizing audit assignments based on the Group’s key business operations, risk management and past audit findings. The key audit findings with recommendations and status of previous audits’ recommendations were presented to head office senior management and operation unit management in the audit closing meeting. During the Financial Year, the IAD issued 24 audit reports. The Head of the IAD presents quarterly his key audit findings to the Audit Committee at the Audit Committee meeting.

The IAD executes audit assignments based on approved audit plan and performs the following tasks in accordance with its overall strategy:

• Verify the existence of assets and recommend proper safeguards for their protection and usage;

• Evaluate the adequacy of the system of internal controls;

• Recommend improvements in controls;• Assess compliance with the Group policies and

procedures;• Assess compliance with government obligations;• Review management action plans to ascertain

whether the operations are being carried out as planned; and

• Investigate reported occurrences of irregularities and wastages.

Key Areas Audited during the Financial Year

• Recurrent Related Party Transactions• Oil Palm Plantation Operations • Timber Logging Operations• Wood Manufacturing Operations• Crude Palm Oil (“CPO”) Mill Operations • Asset Management• Inventory Management• Workshop Operations• Oil Palm Estate and CPO mill workers Payroll• Plant Repair and Maintenance costs• IT related system• Human Resource Management

IAD Team and Spending

The IAD team has a total of 13 auditors as at 30 June 2019. None of the IAD members have any conflicts of interests with the companies within the Group.

During the financial year, all the internal audit activities were performed in-house and the total cost incurred was RM566,061 for the financial year ended 30 June 2019.

This report was approved by the Board on 17 October 2019.



ADDITIONAL COMPLIANCE INFORMATION

The information set out below is disclosed in compliance with Appendix 9C of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad:

i) Directors’ Responsibility Statement for Preparing the Annual Financial Statements

TheDirectorsarerequiredbytheCompaniesAct2016(“Act”)topreparefinancialstatementsforeachfinancialyearwhichgiveatrueandfairviewofthefinancialpositionoftheGroupandoftheCompanyasattheendofthefinancialyearandoftheirfinancialperformanceandcashflowsforthefinancialyearthenended.

Inpreparingthefinancialstatementsforthefinancialyearended30June2019,theDirectorshave:

a) applied the appropriate accounting policies on a consistent basis; b) made judgments and estimates that are reasonable and prudent; c) preparedtheannualfinancialstatementsonagoingconcernbasis;and d) ensured that applicable approved Malaysian Financial Reporting Standards and International Financial

Reporting Standards and provisions in the Act are complied with. TheDirectorsare responsible forensuring that theGroupand theCompanykeepaccounting recordswhich

discloses,withreasonableaccuracy,thefinancialpositionoftheGroupandtheCompanywhichenablesthemtoensurethatthefinancialstatementscomplywiththeAct.

TheDirectorshaveoverallresponsibilitiesfortakingreasonablestepstosafeguardtheassetsoftheGroupandto prevent and detect fraud and other irregularities.

ii) Audit and Non-Audit Fees

The amount of audit and non-audit fees incurred for services rendered by the Auditors of the Company, Messrs. Ernst&Young(EY)andtheiraffiliates,totheCompanyandtheGrouprespectivelyforthefinancialyearended30June2019wereasfollows:

Group Company FY 2019 FY 2019 RM RM Statutory audit fee - EY Malaysia 762,000 210,000

Non-audit fees* - EY Malaysia 15,000 15,000 - AffiliatesofEYMalaysia 151,900 16,500

Total 166,900 31,500

% of non-audit fee 22% 15% *Note: Thenon-auditfeescomprisedmainlyfeespaidtoEY’saffiliatesfortaxcomplianceandadvisoryfees.

iii) Utilisation of Proceeds Raised from Corporate Proposals

Therewasnofundraisingcorporateproposalduringthefinancialyear.

iv) Material Contracts

There were no material contracts (not being contracts entered into in the ordinary course of business) entered into by the Company or its subsidiaries involving the interests of directors, chief executive who is not a director ormajorshareholdersduringthefinancialyear.


FINANCIALSTATEMENTS52 Directors’ Report

56 Statement by Directors

56 Statutory Declaration

57 Independent Auditors’ Report

61 Statements of Profit or Loss and Other Comprehensive Income

63 Statements of Financial Position

65 Statements of Changes in Equity

67 Statements of Cash Flows

69 Notes to the Financial Statements


DIRECTORS’ REPORT

The directors have pleasure in presenting their report together with the audited financial statements of the Group and of the Company for the financial year ended 30 June 2019.

Principal activities

The principal activities of the Company are investment holding, provision of management services, extraction and sale of logs.

The principal activities of the subsidiaries extend to the development of oil palm plantations and its related activities. Details of principal activities of subsidiaries are set out in Note 18 to the financial statements.

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

Results Group Company RM’000 RM’000

Loss net of tax (265,263) (218,119) (Loss)/profit attributable to: Owners of the parent (266,036) (218,119)Non-controlling interests 773 - (265,263) (218,119)

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

In the opinion of the directors, the results of the operations of the Group and of the Company during the financial year were not substantially affected by any item, transaction or event of a material and unusual nature.

Dividends

The amount of dividends paid/distributed by the Company since 30 June 2018 was as follows:

In respect of the financial year ended 30 June 2018 as reported in the directors’ report of that year:

RM’000First and final single-tier dividend of 0.5 sen per ordinary share on 967,990,797 ordinary shares, declared on 28 November 2018 and paid on 19 December 2018 4,840

Directors

The names of the directors of the Group and of the Company in office since the beginning of the financial year to the date of this report are:

General Tan Sri Abdul Rahman Bin Abdul Hamid (Rtd) ChairmanDato’ Sri Tiong Chiong Hoo Deputy Executive Chairman, also a director of all the companies in the GroupDato’ Wong Sie Young Chief Executive OfficerDato’ Sri Dr. Tiong Ik King Tiong Choon (also a director of certain subsidiaries)Tiong Chiong Hee (also a director of certain subsidiaries)John Leong Chung Loong Dato’ Wong Lee Yun


DIRECTORS’ REPORT

Directors (contd.)

The names of the directors of the Company’s subsidiaries in office since the beginning of the financial year to the date of this report (not including those directors listed above) are:

Tan Sri Datuk Sir Diong Hiew King @ Tiong Hiew KingDatuk Tiong Thai KingNayun Ak SanupSim Kui HockTan Yoke SengClara Tiong Siew Ee

Directors’ benefits

Neither at the end of the financial year, nor at any time during that year, did there subsist any arrangement to which the Company was a party, whereby the directors might acquire benefits by means of the acquisition of shares in or debentures of the Company or any other body corporate.

Since the end of the previous financial year, no director has received or become entitled to receive a benefit (other than benefits included in the aggregate amount of emoluments received or due and receivable by the directors or the fixed salary of a full-time employee of the Company as shown below) by reason of a contract made by the Company or a related corporation with any director or with a firm of which he is a member, or with a company in which he has a substantial financial interest, except as disclosed in Note 32 to the financial statements.

Directors’ remunerations

Included in the analysis below is remuneration for directors of the Company and its subsidiaries in accordance with the requirements of Companies Act 2016.

Group Company 2019 2018 2019 2018 RM’000 RM’000 RM’000 RM’000Executive:

Salaries and other emoluments 2,076 2,737 2,076 2,737Contributions to defined contribution plans 260 307 260 307 Total executive directors’ remuneration (excluding benefits-in-kind) 2,336 3,044 2,336 3,044Estimated money value of benefits-in-kind 23 23 23 23 Total executive directors’ remuneration (including benefits-in-kind) 2,359 3,067 2,359 3,067

Non-executive:

Fees 517 565 469 469Other emoluments 251 267 251 267 Total non-executive directors’ remuneration (excluding benefits-in-kind) 768 832 720 736Estimated money value of benefits-in-kind 13 13 13 13 Total non-executive directors’ remuneration (including benefits-in-kind) 781 845 733 749 Insurance effected to indemnify directors* 11 11 11 11 Total directors’ remuneration 3,151 3,923 3,103 3,827

* The Company maintains a liability insurance for the directors of the Group. The total amount of sum insured for directors of the Group for the financial year amounted to RM10,000,000.


Directors’ interests

According to the register of directors’ shareholdings, the interests of directors in office at the end of the financial year in shares in the Company during the financial year were as follows:

Number of ordinary shares As at 1 July 2018 and 30 June 2019Name of director

Dato’ Sri Tiong Chiong Hoo- Direct 3,353,436 - Indirect 750,000Dato’ Wong Sie Young - Direct 453,975 Dato’ Sri Dr. Tiong Ik King - Direct 341,790Tiong Choon- Indirect 1,352,428

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

Other statutory information

(a) Before the statements of profit or loss and other comprehensive income and statements of financial position of the Group and the Company were made out, the directors took reasonable steps:

(i) to ascertain that proper action had been taken in relation to the writing off of bad debts and the making of provision for doubtful debts and satisfied themselves that all known bad debts had been written off and that adequate provision had been made for doubtful debts; and

(ii) to ensure that any current assets which were unlikely to realise their value as shown in the accounting records in the ordinary course of business had been written down to an amount which they might be expected so to realise.

(b) At the date of this report, the directors are not aware of any circumstances which would render:

(i) the amount written off for bad debts or the amount of the provision for doubtful debts in the financial statements of the Group and of the Company inadequate to any substantial extent; and

(ii) the values attributed to the current assets in the financial statements of the Group and of the Company misleading.

(c) At the date of this report, the directors are not aware of any circumstances which have arisen which would render adherence to the existing method of valuation of assets or liabilities of the Group and of the Company misleading or inappropriate.

(d) At the date of this report, the directors are not aware of any circumstances not otherwise dealt with in this report or financial statements of the Group and of the Company which would render any amount stated in the financial statements misleading.

(e) As at the date of this report, there does not exist:

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

(ii) any contingent liability of the Group and of the Company which has arisen since the end of the financial year.

DIRECTORS’ REPORT


DIRECTORS’ REPORT

Other statutory information (contd.)

(f) In the opinion of the directors:

(i) 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 financial year which will or may affect the ability of the Group and of the Company to meet their obligations when they fall due; and

(ii) no item, transaction or event of a material and unusual nature has arisen in the interval between the end of the financial year and the date of this report which is likely to affect substantially the results of the operations of the Group and of the Company for the financial year in which this report is made.

Auditors

The auditors, Ernst & Young, have expressed their willingness to continue in office.

Auditors’ remuneration are disclosed in Note 8 to the financial statements.

To the extent permitted by law, the Company has agreed to indemnify its auditors, Ernst & Young, as part of the terms of its audit engagement against claims by third parties arising from the audit for an unspecified amount. No payment has been made to indemnify Ernst & Young during or since the financial year.

Signed on behalf of the Board in accordance with a resolution of the directors dated 21 October 2019

General Tan Sri Abdul Rahman Dato’ Sri Tiong Chiong Hoo Bin Abdul Hamid (Rtd)


STATEMENT BY DIRECTORSpursuant to Section 251(2) of the Companies Act 2016

STATUTORY DECLARATIONpursuant to Section 251(1)(b) of the Companies Act 2016

We, General Tan Sri Abdul Rahman Bin Abdul Hamid (Rtd) and Dato’ Sri Tiong Chiong Hoo, being two of the directors of Jaya Tiasa Holdings Berhad, do hereby state that, in the opinion of the directors, the accompanying financial statements set out on pages 61 to 160 are drawn up in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act 2016 in Malaysia so as to give a true and fair view of the financial position of the Group and of the Company as at 30 June 2019 and of their financial performance and cash flows for the year then ended.

Signed on behalf of the Board in accordance with a resolution of the directors dated 21 October 2019

General Tan Sri Abdul Rahman Dato’ Sri Tiong Chiong Hoo Bin Abdul Hamid (Rtd)

I, Hii Khing Siew, being the officer primarily responsible for the financial management of Jaya Tiasa Holdings Berhad, do solemnly and sincerely declare that the accompanying financial statements set out on pages 61 to 160 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.

Subscribed and solemnly declared bythe abovenamed Hii Khing Siew atSibu in the State of Sarawak on 21 October 2019 Hii Khing Siew (MIA 8414) Before me

Belinda Hii Tai KingCommissioner for Oaths


INDEPENDENT AUDITORS’ REPORT to the Members of Jaya Tiasa Holdings Berhad

Report on the audit of the financial statements

Opinion

We have audited the financial statements of Jaya Tiasa Holdings Berhad, which comprise the statements of financial position as at 30 June 2019 of the Group and of the Company, and statements of profit or loss and other comprehensive income, statements of changes in equity and statements of cash flows of the Group and of the Company for the year then ended, and notes to the financial statements, including a summary of significant accounting policies, as set out on pages 61 to 160.

In our opinion, the accompanying financial statements give a true and fair view of the financial position of the Group and of the Company as at 30 June 2019, and of their financial performance and their 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 2016 in Malaysia.

Basis for opinion

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

Independence and other ethical responsibilities

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

Key audit matters

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

We have fulfilled the responsibilities described in the Auditors’ responsibilities for the audit of the financial statements section of our report, including in relation to these matters. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the financial statements. The results of our audit procedures, including the procedures performed to address the matters below, provide the basis of our audit opinion on the accompanying financial statements.

Impairment assessment of bearer plants (oil palm plantations)

The Group is engaged in oil palm plantation activities. The carrying amount of its plantations stood at RM1.08 billion as at 30 June 2019 which accounted for some 45% of the Group’s total assets.

The Group assesses annually whether there are any indications that the carrying amount of the plantations may be impaired. Current year losses incurred by certain plantations was identified as an indicator of impairment. The carrying amount of the loss making plantations stood at some RM1.04 billion as at 30 June 2019 which accounted for 96% of the Group’s total plantations.

The estimated recoverable amount of the Group’s plantations was determined based on the higher of the assets’ value-in-use (“VIU”) and fair value less costs of disposal (“FV”). Where the recoverable amount is lower than the carrying value of the plantations, the carrying value of the assets are reduced to their estimated recoverable amount and the difference is regarded as an impairment loss.

The Group regards each plantation as a separate cash-generating unit (“CGU”). VIU is the present value of the future cash flows expected to be derived from the CGU. The FV represents an estimate of the amount expected to be received in the event the plantation is sold on a willing buyer and willing seller basis.


Report on the audit of the financial statements (contd.)

Key audit matters (contd.)

Impairment assessment of bearer plants (oil palm plantations) (contd.)

Based on the outcome of the impairment assessment, the recoverable amount of the plantations exceeded their carrying amount and therefore were not impaired.

The impairment assessment of the plantations is significant to our audit due to the magnitude in value and the use of significant judgement and estimates in determining the recoverable amount of the CGUs. The assumptions used include estimates of future yields, prices, operating costs, growth rates and discount rate. Our audit procedures included evaluating management’s definition of a CGU and assessing the assumptions and estimates made by the management in determining the net cash inflows generated by the CGUs by comparing with past actual outcomes and current market information. We also assessed the discount rate used by reference to the current market assessments of the time value of money and the risks specific to the asset. We also considered the sensitivity analysis of key assumptions, particularly, the discount rate used, yields, operating costs and crude palm oil prices.

Impairment review of property, plant and equipment (“PPE”)

The Group is required to perform impairment test of PPE whenever there is an indication that the PPE may be impaired by comparing the carrying amount with its recoverable amount.

Certain subsidiaries of the Group are principally engaged in the manufacture and sale of sawn timber, veneer and plywood. However, one of the subsidiaries has been incurring continuing losses and another subsidiary operated at breakeven level during the last few financial years. The shortage of logs has led to the slowdown in operating activities and these are indications that the PPE of these companies may be impaired. The carrying amount of the PPE of the subsidiaries amounted to RM59.5 million.

Accordingly, the Group has determined the recoverable amount of these PPE based on the VIU. The VIU was based on the discounted future net cash inflows estimated to be generated by the PPE. The carrying amount of these PPE is significant to the audit due to the quantum and the estimation involved in determining their recoverable amounts, and hence has been identified as a key audit matter.

As part of the audit, we have assessed the reasonableness of the key assumptions used particularly the prices and, estimated operating costs and assessed the appropriateness of the discount rate used which included an assessment of the specific inputs to the discount rate, including the risk-free rate, equity risk premium, beta and cost of debt. We also considered the sensitivity analysis of key assumptions, particularly the discount rate used, operating costs and selling prices.

The abovementioned impairment review did not give rise to an impairment loss of PPE for the year ended 30 June 2019.

Valuation of biological assets – Planted Forest

The fair value of the Group’s planted forest prior to harvest amounted to RM59 million. The planted forest was measured at cost on initial recognition and subsequently at fair value less costs to sell at the end of each reporting period.

The valuation model adopted by the Group considers the present value of the net cash flows expected to be generated from the sale of the planted forest. To arrive at the fair value less cost to sell of the planted forest, the management considered the sales prices, volume, costs, discount rate, the conversion factor used to convert hectares of land under afforestation to cubic metre of standing timber and the conditions of the planted forest by engaging a third party to perform aerial survey. The carrying amount of the planted forest is significant to the audit as it requires the exercise of significant judgment in the evaluation of the Group’s process over the estimates made for valuation of the planted forest.

As part of the audit, we have obtained an understanding of the methodology adopted by the management in estimating the fair value less cost to sell of the planted forest and assessed whether such methodology is consistent with those used in the industry and we have evaluated management’s assumptions on the sales prices, expected volumes of trees to be harvested, costs and the discount rate used.

We also focused on the adequacy of the disclosures concerning those key assumptions to which the valuation of the fair value of planted forest is most sensitive.




Key audit matters (contd.)

Impairment assessment of cost of investment in subsidiaries

In performing review of the Group’s CGU relating to the oil palm plantations business and timber manufacturing business, management also assessed the recoverable amounts of the Company’s investment in these subsidiaries. The Company estimated the recoverable amount of the investments in subsidiaries based on estimated future cashflows and applied a discount rate to arrive at the recoverable amount. Where the recoverable amount is lower than the carrying value of the subject investments, the carrying value is reduced to the estimated recoverable amount and the difference accounted for as an impairment loss.

As part of the audit, we have assessed the reasonableness of the key assumptions used by the management to estimate the recoverable amounts of the investments which include estimated revenue and operating costs and assessed the appropriateness of the discount rate used which include an assessment of the specific inputs to the discount rate, including the risk-free rate, equity risk premium, beta and cost of debt. We also considered the sensitivity analysis of key assumptions, particularly the discount rate used.

The abovementioned impairment review gave rise to an impairment loss of RM215 million for the year ended 30 June 2019 as disclosed in Note 8 and 18 to the financial statements.

Responsibilities of the directors for the financial statements

The directors of the Company are responsible for the preparation of financial statements of the Group and of the Company that give a true and fair view in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act 2016 in Malaysia. The directors are also responsible for such internal control as the directors determine is necessary to enable the preparation of financial statements of the Group and of the Company that are free from material misstatement, whether due to fraud or error.

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

Auditors’ responsibilities for the audit of the financial statements

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

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

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

• Obtain an understanding of internal control relevant to the audit 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 Group’s and the Company’s internal control.

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





Auditors’ responsibilities for the audit of the financial statements (contd.)

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

• Evaluate the overall presentation, structure and content of the financial statements of the Group and of the Company, including the disclosures, and whether the financial statements of the Group and of the Company represent the underlying transactions and events in a manner that achieves fair presentation.

• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the financial statements of the Group. We are responsible for the direction, supervision and performance of the Group audit. We remain solely responsible for our audit opinion.

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

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

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

Other matters

1. As stated in Note 2.1 to the financial statements, Jaya Tiasa Holdings Berhad adopted Malaysian Financial Reporting Standards on 1 July 2018 with a transition date of 1 July 2017. These standards were applied retrospectively by the directors to the comparative information in these financial statements, including the statements of financial position as at 30 June 2018 and 1 July 2018, and the statement of profit or loss and other comprehensive income, statement of changes in equity and statement of cash flows for the year ended 30 June 2018 and related disclosures. Our responsibilities as part of our audit of the financial statements of the Group and of the Company for the year ended 30 June 2019 have, in these circumstances, included obtaining sufficient appropriate audit evidence that the opening balances as at 1 July 2018 do not contain misstatements that materially affect the financial position as of 30 June 2019 and financial performance and cash flows for the year then ended.

2. This report is made solely to the members of the Company, as a body, in accordance with Section 266 of the Companies Act 2016 in Malaysia and for no other purpose. We do not assume responsibility to any other person for the content of this report.

ERNST & YOUNG AU YONG SWEE YINAF: 0039 No. 03101/02/2020 JChartered Accountants Chartered Accountant

Kuching, Malaysia.Date: 21 October 2019



STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOMEFor the financial year ended 30 June 2019

Group Company Note 2019 2018 2019 2018 RM’000 RM’000 RM’000 RM’000

Revenue 4 637,744 841,689 80,956 134,027

Cost of sales 5 (711,884) (767,341) (84,914) (133,543) Gross (loss)/profit (74,140) 74,348 (3,958) 484

Other items of income Other income 6 10,306 11,169 35,861 157,648

Other items of expense Selling expenses (25,290) (35,994) (2,121) (4,102) Administrative expenses (37,893) (38,310) (20,423) (20,255) Other expenses (8,986) (37,266) (215,047) (51,623) Finance costs 7 (55,008) (53,633) (12,197) (17,761) (Loss)/profit before tax 8 (191,011) (79,686) (217,885) 64,391

Income tax expense 11 (74,252) 9,852 (234) 4,103 (Loss)/profit net of tax (265,263) (69,834) (218,119) 68,494

Other comprehensive income:

Other comprehensive income that will not be reclassified to profit or loss in subsequent periods: Net loss on equity instrument designated as fair value through other comprehensive income (13,300) - - - Other comprehensive income that will be reclassified to profit or loss in subsequent periods: Foreign currency translation, net of tax 1 - - - Net gain on equity instrument designated as available-for-sale financial assets - 6,300 - -

1 6,300 - - Total comprehensive (loss)/income for the year (278,562) (63,534) (218,119) 68,494

(Loss)/profit attributable to: Owners of the parent (266,036) (71,080) (218,119) 68,494 Non-controlling interests 773 1,246 - - (265,263) (69,834) (218,119) 68,494


Group Company Note 2019 2018 2019 2018 RM’000 RM’000 RM’000 RM’000Total comprehensive income attributable to: Owners of the parent (279,335) (64,780) (218,119) 68,494 Non-controlling interests 773 1,246 - - (278,562) (63,534) (218,119) 68,494

2019 2018Loss per share attributable to owners of the parent (sen per share): Basic, for loss for the year 12 (27.48) (7.34) Diluted, for loss for the year 12 (27.48) (7.34)

STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOMEFor the financial year ended 30 June 2019

The accompanying accounting policies and explanatory notes form an integral part of the financial statements.


STATEMENTS OF FINANCIAL POSITIONAs at 30 June 2019

Grou

p Co

mpa

ny

As

at

As a

t

Not

e 20

19

2018

1.

7.20

17

2019

20

18

1.7.

2017

RM’0

00

RM’0

00

RM’0

00

RM’0

00

RM’0

00

RM’0

00AS

SETS

Non

-cur

rent

ass

ets

Prop

erty

, pla

nt a

nd e

quip

men

t 13

2,

142,

499

2,27

8,01

3 2,

392,

493

124,

118

129,

623

155,

979

Land

use

righ

ts

14

17

35

40

17

19

21Bi

olog

ical a

sset

s 15

59

,469

46

,491

32

,760

-

- -

Good

will

on

cons

olid

ation

16

-

- -

- -

-O

ther

inta

ngib

le a

sset

s 17

95

0 1,

117

610

704

841

588

Inve

stm

ents

in su

bsid

iarie

s 18

-

- -

1,53

8,17

8 1,

728,

225

1,72

8,55

1In

vest

men

t in

asso

ciat

e 19

-

- -

- -

-In

vest

men

t sec

uriti

es

24

26,6

00

44,9

00

68,7

00

- 5,

000

5,00

0De

ferr

ed ta

x as

sets

20

-

34,9

30

33,1

78

- -

-

2,22

9,53

5 2,

405,

486

2,52

7,78

1 1,

663,

017

1,86

3,70

8

1,89

0,13

9

Curr

ent a

sset

sIn

vent

orie

s 21

10

1,65

2 10

6,91

1

139,

649

22,3

13

7,46

9 11

,484

Biol

ogica

l ass

ets

15

7,61

9 9,

450

13,5

32

- -

-Tr

ade

and

othe

r rec

eiva

bles

22

39

,976

49

,216

59

,584

34

2,30

0 48

8,18

4 42

2,29

7O

ther

cur

rent

ass

ets

23

17,2

57

16,8

98

14,6

63

3,36

7 2,

122

1,17

3De

rivati

ve a

sset

s 25

31

6 -

252

- -

252

Cash

and

ban

k ba

lanc

es

26

9,19

2 19

,953

65

,234

2,

021

5,77

9 12

,205

17

6,01

2 20

2,42

8 29

2,91

4 37

0,00

1 50

3,55

4

447,

411

TO

TAL

ASSE

TS

2,

405,

547

2,60

7,91

4 2,

820,

695

2,03

3,01

8 2,

367,

262

2,3

37,5

50


Grou

p Co

mpa

ny

As

at

As a

t

Not

e 20

19

2018

1.

7.20

17

2019

20

18

1.7.

2017

RM’0

00

RM’0

00

RM’0

00

RM’0

00

RM’0

00

RM’0

00EQ

UIT

Y AN

D LI

ABIL

ITIE

S

Curr

ent l

iabi

lities

Loan

s and

bor

row

ings

27

67

2,00

1 38

5,98

8 48

7,47

9 76

,109

78

,774

15

3,17

1Tr

ade

and

othe

r pay

able

s 28

20

1,41

6 13

5,52

6 13

6,19

5 58

,011

15

5,67

3

115,

993

Inco

me

tax

paya

ble

63

7 99

4 4,

968

- -

2,38

4De

rivati

ve li

abili

ties

25

- -

304

- -

-

874,

054

522,

508

628,

946

134,

120

234,

447

27

1,54

8

Net

curr

ent (

liabi

lities

)/as

sets

(698

,042

) (3

20,0

80)

(3

36,0

32)

235,

881

269,

107

175,

863

N

on-c

urre

nt li

abili

ties

Loan

s and

bor

row

ings

27

28

4,15

1 58

0,04

1

58

9,35

8 8,

631

2,04

7

12,3

22Tr

ade

and

othe

r pay

able

s 28

-

- -

177,

576

142,

927

12

4,87

2De

ferr

ed ta

x lia

biliti

es

20

78,4

68

46,5

89

62,2

41

6,94

7 12

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17

,285

36

2,61

9 62

6,63

0 65

1,59

9 19

3,15

4 15

7,63

8

154,

479

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TAL

LIAB

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1,

236,

673

1,14

9,13

8 1,

280,

545

327,

274

392,

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42

6,02

7

Net

ass

ets

1,

168,

874

1,45

8,77

6 1,

540,

150

1,70

5,74

4 1,

975,

177

1,

911,

523

Eq

uity

att

ribut

able

to o

wne

rs o

f the

par

ent

Shar

e ca

pita

l 29

97

7,40

2 97

7,40

2 97

7,40

2 97

7,40

2 97

7,40

2 97

7,40

2Tr

easu

ry sh

ares

29

(1

3,68

7)

(13,

687)

(1

3,68

7)

(13,

687)

(1

3,68

7)

(13,

687)

Oth

er re

serv

es

30

(43,

399)

-

(6,3

00)

- -

-Re

tain

ed e

arni

ngs

24

9,72

9 49

5,50

5 57

1,42

5 74

2,02

9 1,

011,

462

947,

808

1,

170,

045

1,45

9,22

0 1,

528,

840

1,70

5,74

4 1,

975,

177

1,91

1,52

3N

on-c

ontr

ollin

g in

tere

sts

(1

,171

) (4

44)

11,

310

- -

-

TOTA

L EQ

UIT

Y

1,16

8,87

4 1,

458,

776

1,54

0,15

0 1,

705,

744

1,97

5,17

7

1,91

1,52

3

TOTA

L EQ

UIT

Y AN

D LI

ABIL

ITIE

S

2,40

5,54

7 2,

607,

914

2,82

0,69

5 2,

033,

018

2,36

7,26

2

2,33

7,55

0

The

acco

mpa

nyin

g ac

coun

ting

polic

ies a

nd e

xpla

nato

ry n

otes

form

an

inte

gral

par

t of t

he fi

nanc

ial s

tate

men

ts.

STATEMENTS OF FINANCIAL POSITIONAs at 30 June 2019


Att

ribut

able

to o

wne

rs o

f the

par

ent

Eq

uity

att

ribut

able

to

Non

-

To

tal

owne

rs o

f the

Sh

are

Tr

easu

ry

Oth

er

Reta

ined

co

ntro

lling

equi

ty

pare

nt, t

otal

ca

pita

l sh

ares

re

serv

es

earn

ings

in

tere

sts

N

ote

(Not

e 29

) (N

ote

29)

(Not

e 30

)

RM

’000

RM

’000

RM

’000

RM

’000

RM

’000

RM

’000

RM

’000

Grou

p

Ope

ning

bal

ance

at 1

July

201

8 2.

3 1,

453,

776

1,45

4,22

0 97

7,40

2 (1

3,68

7)

(30,

100)

52

0,60

5 (4

44)

(Los

s)/p

rofit

for t

he y

ear

(2

65,2

63)

(266

,036

) -

- -

(266

,036

) 77

3O

ther

com

preh

ensiv

e in

com

e

(13,

299)

(1

3,29

9)

- -

(13,

299)

-

-

To

tal c

ompr

ehen

sive

inco

me

(2

78,5

62)

(279

,335

) -

- (1

3,29

9)

(266

,036

) 77

3Tr

ansa

ction

s with

ow

ners

Divi

dend

s on

ordi

nary

shar

es

40

(4,8

40)

(4,8

40)

- -

- (4

,840

) -

Divi

dend

s pai

d to

non

-con

trol

ling

in

tere

sts i

n su

bsid

iarie

s

(1,5

00)

- -

- -

- (1

,500

) To

tal t

rans

actio

ns w

ith o

wne

rs

(6

,340

) (4

,840

) -

- -

(4,8

40)

(1,5

00)

Cl

osin

g ba

lanc

e at

30

June

201

9

1,16

8,87

4 1,

170,

045

977,

402

(13,

687)

(4

3,39

9)

249,

729

(1,1

71)

Ope

ning

bal

ance

at 1

July

201

7 2.

3 1,

540,

150

1,52

8,84

0 97

7,40

2 (1

3,68

7)

(6,3

00)

571,

425

11,3

10

(Los

s)/p

rofit

for t

he y

ear

(6

9,83

4)

(71,

080)

-

- -

(71,

080)

1,

246

Oth

er co

mpr

ehen

sive

inco

me

6,

300

6,30

0 -

- 6,

300

- -

Tota

l com

preh

ensiv

e in

com

e

(63,

534)

(6

4,78

0)

- -

6,30

0 (7

1,08

0)

1,24

6

Tran

sacti

ons w

ith o

wne

rs

Divi

dend

s on

ordi

nary

shar

es

40

(4,8

40)

(4,8

40)

- -

- (4

,840

) -

Divi

dend

s pai

d to

non

-con

trol

ling

in

tere

sts i

n su

bsid

iarie

s

(13,

000)

-

- -

- -

(13,

000)

Tota

l tra

nsac

tions

with

ow

ners

(17,

840)

(4

,840

) -

- -

(4,8

40)

(13,

000)

Cl

osin

g ba

lanc

e at

30

June

201

8

1,45

8,77

6 1,

459,

220

977,

402

(13,

687)

-

495,

505

(444

)

The

acco

mpa

nyin

g ac

coun

ting

polic

ies a

nd e

xpla

nato

ry n

otes

form

an

inte

gral

par

t of t

he fi

nanc

ial s

tate

men

ts.

STATEMENTS OF CHANGES IN EQUITYFor the financial year ended 30 June 2019


STATEMENTS OF CHANGES IN EQUITYFor the financial year ended 30 June 2019

Total Share Treasury Retained equity capital shares earnings Note (Note 29) (Note 29) RM’000 RM’000 RM’000 RM’000Company

Opening balance at 1 July 2018 2.3 1,928,703 977,402 (13,687) 964,988

Profit net of tax, representing total comprehensive income for the year (218,119) - - (218,119)

Transactions with owners Dividends on ordinary shares 40 (4,840) - - (4,840) Closing balance at 30 June 2019 1,705,744 977,402 (13,687) 742,029

Opening balance at 1 July 2017 1,911,523 977,402 (13,687) 947,808

Profit net of tax, representing total comprehensive income for the year 68,494 - - 68,494

Transactions with owners Dividends on ordinary shares 40 (4,840) - - (4,840) Closing balance at 30 June 2018 1,975,177 977,402 (13,687) 1,011,462



STATEMENTS OF CASH FLOWSFor the financial year ended 30 June 2019

Group Company Note 2019 2018 2019 2018 RM’000 RM’000 RM’000 RM’000Operating activities

(Loss)/profit before tax (191,011) (79,686) (217,885) 64,391

Adjustments for: Amortisation of land use rights 8 3 5 2 2 Amortisation of other intangible assets 8 167 137 137 115 Bad debts written off 8 1,323 - - - Depreciation of property, plant and equipment 8 179,971 173,667 24,233 19,607 Change in fair value of biological assets 8 8,986 7,166 - - Net fair value (gain)/loss on derivatives 8 (316) (52) - 252 Gross dividend income from subsidiaries 8 - - (12,500) (130,382) Impairment loss, net of reversal on: - available-for-sale financial assets 8 - 30,100 - - - investment in subsidiaries 8 - - 215,047 30,326 - trade and other receivables 8 104 - 2,774 21,297 Interest expense 8 53,743 51,363 11,991 17,271 Interest income 8 (114) (246) (15,015) (17,116) Net (gain)/loss on disposal of property, plant and equipment 8 496 (273) 1,648 (1,384) Net unrealised foreign exchange (gain)/loss 8 (342) 537 (292) 446 Property, plant and equipment written off 8 571 1,041 - - Provision for obsolete inventories 8 502 - - -

Total adjustments 245,094 263,445 222,477 (59,566) Operating cash flows before changes in working capital 54,083 183,759 4,592 4,825

Changes in working capital Decrease/(increase) in inventories 4,757 32,738 (14,844) 4,015 Decrease in receivables 7,813 10,406 119,683 11,474 Decrease in prepayments 837 1,527 429 319 Increase/(decrease) in payables 58,263 (669) (94,277) 57,735

Total changes in working capital 71,670 44,002 10,991 73,543 Cash flows from operations 125,753 227,761 15,583 78,368

Interest received 114 246 15,015 17,116Interest paid (57,259) (55,943) (11,991) (17,271)Income taxes paid, net of refund (1,369) (15,288) (1,362) (2,446) Net cash flows from operating activities 67,239 156,776 17,245 75,767


Group Company Note 2019 2018 2019 2018 RM’000 RM’000 RM’000 RM’000Investing activities

Acquisition of property, plant and equipment (excluding interest charge capitalised) 13 (37,190) (66,341) (10,765) (3,599)Acquisition of biological assets (excluding depreciation and interest charge capitalised) 15 (16,871) (13,924) - -Acquisition of other intangible assets 17 - (520) (244)Proceeds from disposal of property, plant and equipment 8,036 14,896 4,965 11,608 Net cash flows (used in)/from investing activities (46,025) (65,889) (5,800) 7,765 Financing activities

Dividends paid on ordinary shares 40 (4,840) (4,840) (4,840) (4,840)Dividends paid to non-controlling interest in subsidiaries (1,500) (13,000) - -Repayment of finance lease payables (13,384) (24,220) (1,556) (1,748) Repayment of bankers’ acceptances, net 41,684 (27,528) - (9,300)Repayment of revolving credit, net (30,507) (83,235) (1,506) (64,735)(Repayment of)/proceeds from term loans (62,543) 54,207 (12,000) (10,000) Net cash flows used in financing activities (71,090) (98,616) (19,902) (90,623) Net decrease in cash and cash equivalents (49,876) (7,729) (8,457) (7,091)

Effects of exchange rate changes 68 (173) 18 (44)

Cash and cash equivalents at the beginning of the year (81,694) (73,792) (10,588) (3,453) Cash and cash equivalents at the end of the year 26 (131,502) (81,694) (19,027) (10,588)


STATEMENTS OF CASH FLOWSFor the financial year ended 30 June 2019


NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 30 June 2019

1. Corporate information

The Company is a public limited liability company, incorporated and domiciled in Malaysia, and is listed on the Main Market of Bursa Malaysia Securities Berhad. The registered office of the Company is located at No. 1 - 9, Pusat Suria Permata, Lorong Upper Lanang 10A, 96000 Sibu, Sarawak, Malaysia.

The principal activities of the Company are investment holding, provision of management services, extraction and sale of logs. The principal activities of the subsidiaries extend to the development of oil palm plantations and its related activities. Details of principal activities of subsidiaries are set out in Note 18 to the financial statements. There have been no significant changes in the nature of the principal activities of the Group and of the Company during the financial year.

2. Basis of preparation and summary of significant accounting policies

2.1 Basis of preparation

The financial statements of the Group and of the Company have been prepared in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards (“MFRS” or “IFRSs”) and the Companies Act 2016 in Malaysia.

For the period up to and including year ended 30 June 2018, the financial statements of the Group and of the Company were prepared in accordance with Financial Reporting Standards (“FRS”). 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 preparing their opening MFRS Statements of Financial Position as at 1 July 2017 (which is also the date of transition), the Group and the Company have adjusted the amounts previously reported in the financial statements prepared in accordance with FRS. An explanation of how the transition from FRS to MFRS has affected the Group’s and the Company’s financial position, financial performance and cash flows is set out in Note 2.3. These notes include reconciliations of equity and total comprehensive income for comparative periods and of equity at the date of transition reported under FRS to those reported for those periods and at the date of transition under MFRS.

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

The financial statements are presented in Ringgit Malaysia (“RM”), which is also the functional currency of the Company. All values are rounded to the nearest thousand (“RM’000”) except when otherwise indicated.

2.2 Pronouncements issued but not yet effective

The Standards and Interpretations (collectively referred to as pronouncements) that are issued but not yet effective up to the date of issuance of the Group’s and the Company’s financial statements are disclosed below. The Group and the Company intend to adopt these pronouncements, if applicable, when they become effective.

Effective for annual periods beginning Description on or after

Annual improvements to MFRS Standards 2015-2017 Cycle: (i) Amendments to MFRS 3: Business Combinations 1 January 2019 (ii) Amendments to MFRS 11: Joint Arrangements 1 January 2019 (iii) Amendments to MFRS 112: Income Taxes 1 January 2019 (iv) Amendments to MFRS 123: Borrowing Costs 1 January 2019 IC Interpretation 23: Uncertainty over Income Tax Treatment 1 January 2019 MFRS 16: Leases 1 January 2019 Amendments to MFRS 128: Long-term Interests in Associates and Joint Ventures 1 January 2019 Amendments to MFRS 9: Prepayment Features with Negative Compensation 1 January 2019 Amendment to MFRS 119: Employee Benefits 1 January 2019 Plan Amendment, Curtailment or Settlement Amendments to MFRS 3: Definition of a Business 1 January 2020 Amendments to MFRS 101 and MFRS 108: Definition of Material 1 January 2020 Revised Conceptual Framework for Financial Reporting 1 January 2020 MFRS 17: Insurance Contracts 1 January 2021 Amendments to MFRS 10 and MFRS 128: Sale or Contribution of Assets between an Investor and its Associate or Joint Venture Deferred


2. Basis of preparation and summary of significant accounting policies (contd.)

2.2 Pronouncements issued but not yet effective (contd.) The directors expect that adoption of the above pronouncements will have no impact on the financial statements

in the period of initial application except as follows:

MFRS 16 Leases

MFRS 16 will replace MFRS 117 Leases, IC Interpretation 4 Determining whether an Arrangement contains a Lease, IC Interpretation 115 Operating Lease-Incentives and IC Interpretation 127 Evaluating the Substance of Transactions Involving the Legal Form of a Lease. MFRS 16 sets out the principles for the recognition, measurement, presentation and disclosure of leases and requires lessees to account for all leases under a single on-balance sheet model.

At the commencement date of a lease, a lessee will recognise a liability to make lease payments and an asset representing the right to use the underlying asset during the lease term. Lessees will be required to recognise interest expense on the lease liability and the depreciation expense on the right-of-use asset.

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

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

The standard will affect primarily the accounting for the Group’s and the Company’s operating leases. The Group and the Company have not completed the assessment of the effects arising from the adoption of MFRS 16 and it is therefore not practicable at this juncture to estimate the amount of right-to-use assets and liabilities that will have to be recognised on adoption of MFRS 16 and how this may affect the Group’s and the Company’s profit or loss and classification of cash flows going forward.

2.3 Malaysian Financial Reporting Standards (MFRS Framework)

Application of MFRS 1

The audited financial statements of the Group and of the Company for the year ended 30 June 2018 were prepared in accordance with FRS. Except for certain differences, the requirements under FRS and MFRS are similar. The significant accounting policies adopted in preparing these financial statements are consistent with those of the audited financial statements for the year ended 30 June 2018 except as discussed below.

The following transition exemptions were applied by the Group and the Company:

(a) Business combination

MFRS 1 provides the option to apply MFRS 3 Business Combinations, prospectively from the date of transition or from a specific date prior to the date of transition. This provides relief from full retrospective application of MFRS 3 which would require restatement of all business combinations prior to the date of transition.

Acquisition before date of transition

The Group has elected to apply MFRS 3 prospectively from the date of transition. In respect of acquisitions prior to the date of transition:

(i) The classification of former business combinations under FRS is maintained;

(ii) There is no re-measurement of original fair values determined at the time of business combination (date of acquisition); and

(iii) The carrying amount of goodwill recognised under FRS is not adjusted.




2.3 Malaysian Financial Reporting Standards (MFRS Framework) (contd.)

Application of MFRS 1 (contd.)

(b) Estimates

The estimates at 1 July 2017 and at 30 June 2018 were consistent with those made for the same dates in accordance with FRS. The estimates used by the Group and the Company to present these amounts in accordance with MFRS reflect conditions at 1 July 2017, the date of transition to MFRS and as of 30 June 2018.

(c) Cumulative translation differences

The cumulative translation differences for all foreign operations are deemed to be zero at the date of transition to MFRS, 1 July 2017. The entire balance of RM6,441,000 for the Group in the exchange translation reserve at the date of transition has been transferred to retained earnings.

The transition from FRS to MFRS has not had a material impact on the financial statements of the Company as at 1 July 2017. Hence, no reconciliations of equity as at 1 July 2017 and total comprehensive income for year ended 30 June 2018 were prepared for the Company.

The reconciliations of equity and total comprehensive income for comparative periods and of equity at the date of transition reported under FRS to those reported for those periods and at the date of transition under MFRS are provided below:

(i) Reconciliation of equity as at 1 July 2017

FRS MFRS As at Re- As at Note 1.7.2017 measurements 1.7.2017 RM’000 RM’000 RM’000 Group

ASSETS

Non-current assets Property, plant and equipment (a) 1,171,915 1,220,578 2,392,493 Land use rights 40 - 40 Biological assets (a) 1,639,812 (1,607,052) 32,760 Goodwill on consolidation - - - Other intangible assets 610 - 610 Investment in associate - - - Investment securities 68,700 - 68,700 Deferred tax assets (b) 22,492 10,686 33,178 2,903,569 (375,788) 2,527,781 Current assets Inventories 139,649 - 139,649 Biological assets (a) - 13,532 13,532 Trade and other receivables 59,584 - 59,584 Other current assets 14,663 - 14,663 Derivative assets 252 - 252 Cash and bank balances 65,234 - 65,234 279,382 13,532 292,914 TOTAL ASSETS 3,182,951 (362,256) 2,820,695





The reconciliations of equity and total comprehensive income for comparative periods and of equity at the date of transition reported under FRS to those reported for those periods and at the date of transition under MFRS are provided below: (contd.)

(i) Reconciliation of equity as at 1 July 2017 (contd.)

FRS MFRS As at Re- As at Note 1.7.2017 measurements 1.7.2017 RM’000 RM’000 RM’000 Group (contd.)

EQUITY AND LIABILITIES

Current liabilities Loans and borrowings 487,479 - 487,479 Trade and other payables 136,195 - 136,195 Income tax payable 4,968 - 4,968 Derivative liabilities 304 - 304 628,946 - 628,946 Net current liabilities (349,564) 13,532 (336,032) Non-current liabilities Loans and borrowings 589,358 - 589,358 Deferred tax liabilities (b) 146,534 (84,293) 62,241 735,892 (84,293) 651,599 TOTAL LIABILITIES 1,364,838 (84,293) 1,280,545 Net assets 1,818,113 (277,963) 1,540,150

Equity attributable to owners of the parent Share capital 977,402 - 977,402 Treasury shares (13,687) - (13,687) Other reserves (c) (12,741) 6,441 (6,300) Retained earnings 855,829 (284,404) 571,425 1,806,803 (277,963) 1,528,840 Non-controlling interests 11,310 - 11,310 TOTAL EQUITY 1,818,113 (277,963) 1,540,150 TOTAL EQUITY AND LIABILITIES 3,182,951 (362,256) 2,820,695



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(ii) Reconciliation of equity as at 30 June 2018 (contd.)

MFRS Effect of As at As at adoption of 1.7.2018, Note 30.6.2018 MFRS 9 as restated RM’000 RM’000 RM’000 Company

ASSETS

Non-current assets Property, plant and equipment 129,623 - 129,623 Land use rights 19 - 19 Other intangible assets 841 - 841 Investment in subsidiaries 1,728,225 - 1,728,225 Investment in associate - - - Investment securities (d) 5,000 (5,000) - 1,863,708 (5,000) 1,858,708 Current assets Inventories 7,469 - 7,469 Trade and other receivables (d) 488,184 (41,474) 446,710 Other current assets 2,122 - 2,122 Cash and bank balances 5,779 - 5,779 503,554 (41,474) 462,080 TOTAL ASSETS 2,367,262 (46,474) 2,320,788

EQUITY AND LIABILITIES

Current liabilities Loans and borrowings 78,774 - 78,774 Trade and other payables 155,673 - 155,673 234,447 - 234,447 Net current assets 269,107 (41,474) 227,633 Non-current liabilities Loans and borrowings 2,047 - 2,047 Trade and other payables 142,927 - 142,927 Deferred tax liabilities 12,664 - 12,664 157,638 - 157,638 TOTAL LIABILITIES 392,085 - 392,085 Net assets 1,975,177 (46,474) 1,928,703 Equity attributable to owners of the parent Share capital 977,402 - 977,402 Treasury shares (13,687) - (13,687) Retained earnings 1,011,462 (46,474) 964,988 TOTAL EQUITY 1,975,177 (46,474) 1,928,703 TOTAL EQUITY AND LIABILITIES 2,367,262 (46,474) 2,320,788






(iii) Reconciliation of total comprehensive income for the year ended 30 June 2018

FRS MFRS for the year for the year ended Re- ended 30.6.2018 measurements 30.6.2018 RM’000 RM’000 RM’000 Group

Revenue 841,689 - 841,689 Cost of sales (714,696) (52,645) (767,341) Gross profit 126,993 (52,645) 74,348

Other items of income Other income 11,169 - 11,169

Other items of expense Selling expenses (35,994) - (35,994) Administrative expenses (38,310) - (38,310) Other expenses (30,100) (7,166) (37,266) Finance costs (53,633) - (53,633) Loss before tax (19,875) (59,811) (79,686)

Income tax expense (6,682) 16,534 9,852 Loss net of tax (26,557) (43,277) (69,834)

Other comprehensive income:

Other comprehensive income that will be reclassified to profit or loss in subsequent periods: Net changes on available-for-sale financial assets (“AFS”) - Cumulative loss reclassified to profit or loss 6,300 - 6,300 Total comprehensive income for the year (20,257) (43,277) (63,534)

Loss attributable to: Owners of the parent (27,803) (43,277) (71,080) Non-controlling interests 1,246 - 1,246 (26,557) (43,277) (69,834) Total comprehensive income attributable to: Owners of the parent (21,503) (43,277) (64,780) Non-controlling interests 1,246 - 1,246 (20,257) (43,277) (63,534)






(iv) Reconciliation of statement of cash flows for the year ended 30 June 2018

FRS MFRS As at Re- As at Note 30.6.2018 measurements 30.6.2018 RM’000 RM’000 RM’000

Net cash flows: - operating activities 156,099 677 156,776 - investing activities (65,212) (677) (65,889) - financing activities (98,616) - (98,616) Net decrease in cash and cash equivalents (7,729) (7,729)

Notes to the reconciliation of equity as at 1 July 2017 and 30 June 2018 and total comprehensive income for the year ended 30 June 2018:

(a) Bearer plants and biological assets

Upon adoption of MFRS 141, bearer plants are within the scope of MFRS 116: Property, plant and equipment and are measured using the cost model and depreciated over the life of the bearer plants. Under FRS, bearer plants were measured using the capital maintenance method and were not depreciated.

Produce growing on bearer plants (fresh fruit bunches prior to harvest) are within the scope of MFRS 141: Agriculture and are measured at fair value less costs to sell with the changes in fair value recognised in profit or loss. As the produce will be harvested within a year from the reporting date, they are classified as current assets. Under FRS, produce growing on bearer plants were not recognised.

Upon adoption of MFRS 141, trees in planted forests are measured at fair value less costs to sell with the changes in fair value recognised in profit or loss. Under FRS, trees in planted forests were measured at the lower of cost and net realisable value.

The impact arising from the change is summarised as follows:

Group 30 June 2018 1 July 2017 RM’000 RM’000

Non-current assets Property, plant and equipment 1,188,277 1,220,578 Biological assets (1,630,480) (1,607,052) Deferred tax assets 12,123 10,686 Current asset Biological assets 9,450 13,532 Non-current liability Deferred tax liability (99,390) (84,293) Statement of comprehensive income Cost of sales - Depreciation of property, plant and equipment (52,645) - Other expenses - Net changes in fair value of biological assets (7,166) -





Notes to the reconciliation of equity as at 1 July 2017 and 30 June 2018 and total comprehensive income for the year ended 30 June 2018: (contd.)

(b) Deferred tax assets/liabilities The various transitional adjustments lead to different temporary differences. According to the accounting

policies in Note 2.23, deferred tax adjustments are recognised in correlation to the underlying transactions either in retained earnings or a separate component of equity.

(c) Cumulative translation differences

The cumulative translation differences for all foreign operations are deemed to be zero at the date of transition to MFRS, 1 July 2017. The entire balance of RM6,441,000 for the Group in the exchange translation reserve at the date of transition has been transferred to retained earnings.

(d) Financial instruments

On 1 July 2018, the Group and the Company adopted MFRS 9 which is effective for annual periods beginning on or after 1 January 2018. The Group and the Company have elected the exemption in MFRS 1 which allows the Group and the Company not to restate comparative information in the year of initial application. The Group and the Company continue to apply FRS 139: Financial Instruments: Recognition and Measurement and FRS 7: Financial Instruments: Disclosures for the comparative information. Any adjustments to align the carrying amounts of financial assets and financial liabilities under the previous FRS 139 with MFRS 9 are recognised in retained earnings as at 1 July 2018.

Classification and measurement of financial instruments

Under MFRS 9, debt instruments are subsequently measured at fair value through profit or loss, amortised cost or fair value through OCI. The classification is based on two criteria: the Group’s and the Company’s business model for managing the assets; and whether the instruments’ contractual cash flows represent ‘solely payments of principal and interest’ on the principal amount outstanding.

The classification and measurement requirements of MFRS 9 did not have a significant impact on the Group and the Company. The Group and the Company continued measuring at fair value all financial assets previously held at fair value under FRS 139. The following are the changes in the classification of the Group’s and the Company’s financial assets:

- Trade receivables and other non-current financial assets previously classified as loans and receivables are held to collect contractual cash flows and give rise to cash flows representing solely payments of principal and interest. These are now classified and measured as debt instruments at amortised cost.

- Equity investments in non-listed companies classified as Available for-sale (“AFS”) financial assets as at 30 June 2018 are classified and measured as Equity Instruments designated as fair value through profit or loss beginning 1 July 2018.

- Listed equity investments classified as AFS financial assets as at 30 June 2018 are classified and measured at fair value through OCI with no recycling beginning 1 July 2018. The Group elected to classify irrevocably its non-listed equity investments under this category at the date of initial application as it intends to hold this investment for the foreseeable future.

As a result of the change in classification of the Group’s equity investment, a fair value change of RM5 million related to the equity investments in non-listed companies was classified to retained earnings. The impairment loss of RM30.1 million related to the listed equity investment was classified from retained earnings to fair value reserve.






(d) Financial instruments (contd.)

Classification and measurement of financial instruments (contd.)

There are no changes in the classification and measurement for the Group’s and the Company’s financial liabilities.

In summary, upon the adoption of MFRS 9, the Group and the Company had the following required or elected reclassifications as at 1 July 2018:

MFRS 9 measurement category Fair value Fair value through other through comprehensive Amortised profit income cost or loss RM’000 RM’000 RM’000 RM’000 Group

FRS 139 measurements

Loans and receivables Trade and other receivables 49,216 - 49,216 - Cash and bank balances 19,953 - 19,953 - Available for-sale through other comprehensive income Investment securities - unquoted shares 5,000 - - - Investment securities - quoted shares 39,900 39,900 - -

MFRS 9 measurement category Fair value through Amortised profit cost or loss RM’000 RM’000 RM’000 Company

FRS 139 measurements

Loans and receivables Trade and other receivables 488,184 446,710 - Cash and bank balances 5,779 5,779 - Available-for-sale through other comprehensive income Investment securities - unquoted shares 5,000 - -






(d) Financial instruments (contd.)

Classification and measurement of financial instruments (contd.)

Impairment

The adoption of MFRS 9 has changed the Group’s and the Company’s accounting for impairment losses for financial assets by replacing FRS 139’s incurred loss approach with a forward-looking expected credit loss (“ECL”) approach. MFRS 9 requires the Group and the Company to recognise an allowance for ECLs for all debt instruments not held at fair value through profit or loss and contract assets. However, there is no impact on the loss allowances of the Group arising from this change from FRS to MFRS. The Company recognised a loss allowance of RM41 million upon the adoption of MFRS 9.

(e) Revenue from contracts with customers

MFRS 15 requires that revenue be recognised at an amount that reflects the consideration to which an entity expects to be entitled in exchange for transferring goods or services to a customer.

MFRS 15 specifies the accounting for the incremental costs of obtaining a contract and the costs directly related to fulfilling a contract.

Under FRS, the bundled sales of goods and transportation services are accounted for as one deliverable and revenue is recognised upon shipment. Under MFRS 15, the sales of goods and the rendering of transportation services are separate performance obligations.

There were no changes identified with respect to the timing of revenue recognition in relation to sales of goods, as control transfers to customers at the point of shipment, which is consistent with the point in time when risks and rewards passed under FRS.

However, there is a change in the amount and timing of revenue recognised for goods sold under Freight on Board (FOB) or Cost and Freight (CNF) incoterms where the Group and the Company provides transportation services. This is because these services are now considered as separate performance obligations which are satisfied at a different point in time from the goods. Therefore, some of the transaction price that was previously all allocated to the goods under FRS is now required to be allocated to these new performance obligations under MFRS 15 and recognised as revenue over time. The adoption of the new MFRS 15 has not resulted in any material impact to the financial statements of the Group and the Company.

2.4 Basis of consolidation

The consolidated financial statements comprise the financial statements of the Company and its subsidiaries. The financial statements of the subsidiaries used in the preparation of the consolidated financial statements are prepared for the same reporting date as the Company. Consistent accounting policies are applied for like transactions and events in similar circumstances.

Subsidiaries are consolidated when the Company obtains control over the subsidiary and ceases when the Company loses control of the subsidiary. All intra-group balances, income and expenses and unrealised gains and losses resulting from intra-group transactions are eliminated in full.

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




2.4 Basis of consolidation (contd.)

Changes in the Group’s ownership interests in subsidiaries that do not result in the Group losing control over the subsidiaries are accounted for as equity transactions. The carrying amounts of the Group’s interests and the non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiaries. The resulting difference is recognised directly in equity and attributed to owners of the Company.

When the Group loses control of a subsidiary, a gain or loss calculated as the difference between (i) the aggregate of the fair value of the consideration received and the fair value of any retained interest and (ii) the previous carrying amount of the assets and liabilities of the subsidiary and any non-controlling interests, is recognised in profit or loss. The subsidiary’s cumulative gain or loss which has been recognised in other comprehensive income and accumulated in equity are reclassified to profit or loss or where applicable, transferred directly to retained earnings. The fair value of any investment retained in the former subsidiary at the date control is lost is regarded as the cost on initial recognition of the investment.

Business combinations

Acquisitions of subsidiaries are accounted for using the acquisition method. The cost of an acquisition is measured as the aggregate of the consideration transferred, measured at acquisition date fair value and the amount of any non-controlling interests in the acquiree. The Group elects on a transaction-by-transaction basis whether to measure the non-controlling interests in the acquiree either at fair value or at the proportionate share of the acquiree’s identifiable net assets. Transaction costs incurred are expensed and included in administrative expenses.

Any contingent consideration to be transferred by the acquirer will be recognised at fair value at the acquisition date. Contingent consideration classified as equity is not remeasured and its subsequent settlement is accounted for within equity. Contingent consideration classified as an asset or liability that is a financial instrument and within the scope of MFRS 9 Financial Instruments, is measured at fair value with the changes in fair value recognised in the statement of profit or loss in accordance with MFRS 9. Other contingent consideration that is not within the scope of MFRS 9 is measured at fair value at each reporting date with changes in fair value recognised in profit or loss.

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

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

2.5 Subsidiaries

A subsidiary is an entity over which the Group has all the following:

(i) Power over the investee (i.e existing rights that give it the current ability to direct the relevant activities of the investee);

(ii) Exposure, or rights, to variable returns from its investment with the investee; and (iii) The ability to use its power over the investee to affect its returns.

In the Company’s separate financial statements, investments in subsidiaries are accounted for at cost less impairment losses. On disposal of such investments, the difference between net disposal proceeds and their carrying amounts is included in profit or loss.




2.6 Investments in associates

An associate is an entity over which the Group has significant influence. Significant influence is the power to participate in the financial and operating policy decisions of the investee, but is not control or joint control over those policies.

The considerations made in determining significant influence are similar to those necessary to determine control over subsidiaries. The Group’s investment in its associate are accounted for using the equity method.

Under the equity method, the investment in an associate is initially recognised at cost.

The carrying amount of the investment is adjusted to recognise changes in the Group’s share of net assets of the associate since the acquisition date. Goodwill relating to the associate is included in the carrying amount of the investment and is not tested for impairment separately.

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

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

The financial statements of the associate are prepared for the same reporting period as the Group. When necessary, adjustments are made to bring the accounting policies in line with those of the Group.

After application of the equity method, the Group determines whether it is necessary to recognise an impairment loss on its investment in its associate. At each reporting date, the Group determines whether there is objective evidence that the investment in the associate is impaired. If there is such evidence, the Group calculates the amount of impairment as the difference between the recoverable amount of the associate and its carrying value, and then recognises the loss within ‘Share of profit of an associate in the statement of profit or loss.’

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

2.7 Transactions with non-controlling interests

Non-controlling interests represent the equity in subsidiaries not attributable, directly or indirectly, to owners of the Company, and is presented separately in the consolidated statement of profit or loss and other comprehensive income and within the equity in the consolidated statement of financial position, separately from equity attributable to owners of the Company.

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




2.8 Foreign currency

(a) Functional and presentation currency

The individual financial statements of each entity in the Group are measured using the currency of the primary economic environment in which the entity operates (“the functional currency”). The consolidated financial statements are presented in Ringgit Malaysia (RM), which is also the Company’s functional currency.

(b) Foreign currency transactions

Transactions in foreign currencies are measured in the respective functional currencies of the Company and its subsidiaries and are recorded on initial recognition in the functional currencies at exchange rates approximating those ruling at the transaction dates. Monetary assets and liabilities denominated in foreign currencies are translated at the rate of exchange ruling at the reporting date. Non-monetary items denominated in foreign currencies that are measured at historical cost are translated using the exchange rates as at the dates of the initial transactions. Non-monetary items denominated in foreign currencies measured at fair value are translated using the exchange rates at the date when the fair value was determined.

Exchange differences arising on the settlement of monetary items or on translating monetary items at the reporting date are recognised in profit or loss except for exchange differences arising on monetary items that form part of the Group’s net investment in foreign operations, which are recognised initially in other comprehensive income and accumulated under foreign currency translation reserve in equity. The foreign currency translation reserve is reclassified from equity to profit or loss of the Group on disposal of the foreign operation.

Exchange differences arising on the translation of non-monetary items carried at fair value are included in profit or loss for the period except for the differences arising on the translation of non-monetary items in respect of which gains and losses are recognised directly in equity. Exchange differences arising from such non-monetary items are also recognised directly in equity.

(c) Foreign operations

The assets and liabilities of foreign operations are translated into RM at the rates of exchange ruling at the reporting date and income and expenses are translated at exchange rates at the dates of the transactions. The exchange differences arising on the translation are taken directly to other comprehensive income. On disposal of a foreign operation, the cumulative amount recognised in other comprehensive income and accumulated in equity under foreign currency translation reserve relating to that particular foreign operation is recognised in the profit or loss.

Goodwill and fair value adjustments arising on the acquisition of foreign operations are treated as assets and liabilities of the foreign operations and are recorded in the functional currency of the foreign operations and translated at the closing rate at the reporting date.

2.9 Property, plant and equipment

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

Subsequent to recognition, property, plant and equipment, except for freehold land, are measured at cost less accumulated depreciation and accumulated impairment losses. When significant parts of property, plant and equipment are required to be replaced in intervals, the Group and the Company recognise such parts as individual assets with specific useful lives and depreciation, respectively. Likewise, when a major inspection is performed, its cost is recognised in the carrying amount of the plant and equipment as a replacement if the recognition criteria are satisfied. All other repair and maintenance costs are recognised in profit or loss as incurred.




2.9 Property, plant and equipment (contd.)

Bearer plants of oil palms consist of accumulated plantation development costs incurred from land clearing to the point of maturity of the crop cultivated. Capitalisation of plantation development and other operating costs ceases upon the point of maturity, which is approximately 3 years. When a bearer crop has reached the end of its useful life and is replanted, the carrying amount of the old bearer plants are derecognised, and the costs of the new bearer plants are treated as a replacement of the old bearer plants and capitalised.

The bearer plants are amortised over 25 years.

Freehold land has an unlimited useful life and therefore is not depreciated. Leasehold land is amortised over its remaining lease term. Depreciation is computed on a straight-line basis over the estimated useful lives of the assets as follows:

Factories, buildings and quarters 10 - 50 years or over remaining land lease period Aircraft, watercraft, motor vehicles, plant and machinery 5 - 20 years Roads and bridges 10 years Office renovation, furniture, fittings and equipment 10 years

Capital work-in-progress are not depreciated as these assets are not yet available for use.

The carrying values of property, plant and equipment are reviewed for impairment when events or changes in circumstances indicate that the carrying value may not be recoverable.

The residual value, useful life and depreciation method are reviewed at each financial year-end, and adjusted prospectively, if appropriate.

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss on derecognition of the asset is included in the profit or loss in the year the asset is derecognised.

2.10 Intangible assets

(a) Goodwill

Goodwill is initially measured at cost. Following initial recognition, goodwill is measured at cost less accumulated impairment losses.

For the purpose of impairment testing, goodwill acquired is allocated, from the acquisition date, to each of the Group’s cash-generating units that are expected to benefit from the synergies of the combination.

The cash-generating unit to which goodwill has been allocated is tested for impairment annually and whenever there is an indication that the cash-generating unit may be impaired, by comparing the carrying amount of the cash-generating unit, including the allocated goodwill, with the recoverable amount of the cash-generating unit. Where the recoverable amount of the cash-generating unit is less than the carrying amount, an impairment loss is recognised in the profit or loss. Impairment losses recognised for goodwill are not reversed in subsequent periods.

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

Goodwill and fair value adjustments arising on the acquisition of foreign operations on or after 1 May 2006 are treated as assets and liabilities of the foreign operations and are recorded in the functional currency of the foreign operations and translated in accordance with the accounting policy set out in Note 2.8.

Goodwill and fair value adjustments which arose on acquisitions of foreign operations before 1 May 2006 are deemed to be assets and liabilities of the Company and are recorded in RM at the rates prevailing at the date of acquisition.




2.10 Intangible assets (contd.)

(b) Other intangible assets

Intangible assets acquired separately are measured initially at cost. The cost of intangible assets acquired in a business combination is their fair value as at the date of acquisition. Following initial acquisition, intangible assets are measured at cost less any accumulated amortisation and accumulated impairment losses.

Intangible assets with finite useful lives are amortised over the estimated useful lives and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method are reviewed at least at each financial year-end. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset is accounted for by changing the amortisation period or method, as appropriate, and are treated as changes in accounting estimates. The amortisation expense on intangible assets with finite lives is recognised in profit or loss.

Intangible assets with indefinite useful lives or not yet available for use are tested for impairment annually,

or more frequently if the events and circumstances indicate that the carrying value may be impaired either individually or at the cash-generating unit level. Such intangible assets are not amortised. The useful life of an intangible asset with an indefinite useful life is reviewed annually to determine whether the useful life assessment continues to be supportable. If not, the change in useful life from indefinite to finite is made on a prospective basis.

Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in profit or loss when the asset is derecognised.

(i) Computer software

The useful life of computer software is amortised on a straight-line basis over the estimated economic useful life of ten years.

(ii) Prepaid timber rights

Rights in timber licences are stated at cost and are amortised on a straight-line basis over the remaining tenure of the respective licence periods. The policy for the recognition and measurement of impairment losses is in accordance with Note 2.13.

2.11 Biological assets

Biological assets comprise fresh fruit bunches (“FFB”) prior to harvest and planted forest.

(a) FFB prior to harvest

FFB prior to harvest (plantation produce growing on bearer plants) are classified as current assets as they are expected to be harvested and sold or used for production on a date not more than two (2) weeks after the reporting date.

FFB prior to harvest is measured at fair value less costs to sell. Any gains or losses arising from changes in the fair value less costs to sell are recognised in profit or loss.

(b) Planted forest (forestry assets)

Forestry assets are measured at fair value, calculated by applying the expected selling price, less costs to harvest and deliver, to the estimated volume to timber on hand at each reporting date. The estimated volume of timber on hand is determined based on the maturity profile of the area under afforestation, the species, the geographic location and other environmental considerations and excludes future growth. The product of these is then adjusted to present value by applying applicable per-tax weighted average cost of capital of the business unit.



2. Basis of preparation and summary of significant accounting policies (contd.) 2.11 Biological assets (contd.)

(b) Planted forest (forestry assets) (contd.)

Changes in fair value are recognised in the statement of profit or loss within other net operating expenses. At point of felling, the carrying value of forestry assets is transferred to inventories.

Directly attributable costs incurred during the year of biological growth and investments in standing timber are capitalised and presented within cash flows from investing activities.

2.12 Land use rights

Land use rights are initially measured at cost. Following initial recognition, land use rights are measured at cost less accumulated amortisation and accumulated impairment losses. The land use rights are amortised over their lease terms.

2.13 Impairment of non-financial assets

The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any such indication exists, or when an annual impairment assessment for an asset is required, the Group makes an estimate of the asset’s recoverable amount.

An asset’s recoverable amount is the higher of an asset’s fair value less costs to sell and its value in use. For the purpose of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units (“CGU”)).

In assessing value in use, the estimated future cash flows expected to be generated by the asset 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. Where the carrying amount of an asset exceeds its recoverable amount, the asset is written down to its recoverable amount. Impairment losses recognised in respect of a CGU or groups of CGUs are allocated first to reduce the carrying amount of any goodwill allocated to those units or groups of units and then, to reduce the carrying amount of the other assets in the unit or groups of units on a pro-rata basis.

Impairment losses are recognised in profit or loss except for assets that are previously revalued where the revaluation was taken to other comprehensive income. In this case the impairment is also recognised in other comprehensive income up to the amount of any previous revaluation.

An assessment is made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. A previously recognised impairment loss is reversed only if there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognised. If that is the case, the carrying amount of the asset is increased to its recoverable amount. That increase cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised previously. Such reversal is recognised in profit or loss unless the asset is measured at revalued amount, in which case the reversal is treated as a revaluation increase. Impairment loss on goodwill is not reversed in a subsequent period.




2.14 Financial instruments

A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.

Current financial year

(i) Financial assets

Initial recognition and measurement

Financial assets are classified, at initial recognition, as subsequently measured at amortised cost, fair value through other comprehensive income (“OCI”) and fair value through profit or loss.

The classification of financial assets at initial recognition depends on the financial asset’s contractual cash flow characteristics and the Group’s and the Company’s business model for managing them. With the exception of trade receivables that do not contain a significant financing component or for which the Group and the Company have applied the practical expedient, the Group and the Company initially measure a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs.

In order for a financial asset to be classified and measured at amortised cost or fair value through OCI, it needs to give rise to cash flows that are ‘solely payments of principal and interest (“SPPI”)’ on the principal amount outstanding. This assessment is referred to as the SPPI test and is performed at an instrument level.

The Group’s and the Company’s business model for managing financial assets refers to how it manages their financial assets in order to generate cash flows. The business model determines whether cash flows will result from collecting contractual cash flows, selling the financial assets, or both.

Subsequent measurement

For purposes of subsequent measurement, financial assets are classified in four categories:

• Financial assets at amortised cost (debt instruments) • Financial assets at fair value through OCI with recycling of cumulative gains and losses (debt

instruments) • Financial assets designated at fair value through OCI with no recycling of cumulative gains and

losses upon derecognition (equity instruments) • Financial assets at fair value through profit or loss

Financial assets at amortised cost (debt instruments) This category is the most relevant to the Group and the Company. The Group and the Company measure

financial assets at amortised cost if both of the following conditions are met:

• The financial asset is held within a business model with the objective to hold financial assets in order to collect contractual cash flows; and

• The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Financial assets at amortised cost are subsequently measured using the effective interest rate (“EIR”) method and are subject to impairment. Gains and losses are recognised in profit or loss when the asset is derecognised, modified or impaired.

The Group’s and the Company’s financial assets at amortised cost include trade and other receivables and cash and bank balances.




2.14 Financial instruments (contd.)

Current financial year (contd.)

(i) Financial assets (contd.)

Financial assets at fair value through OCI (debt instruments)

The Group and the Company measure debt instruments at fair value through OCI if both of the following conditions are met:

• The financial asset is held within a business model with the objective of both holding to collect contractual cash flows and selling; and

• The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

For debt instruments at fair value through OCI, interest income, foreign exchange revaluation and impairment losses or reversals are recognised in the statement of profit or loss and computed in the same manner as for financial assets measured at amortised cost. The remaining fair value changes are recognised in OCI. Upon derecognition, the cumulative fair value change recognised in OCI is recycled to profit or loss.

Financial assets designated at fair value through OCI (equity instruments)

Upon initial recognition, the Group and the Company can elect to classify irrevocably their equity investments as equity instruments designated at fair value through OCI when they meet the definition of equity under MFRS 132 Financial Instruments: Presentation and are not held for trading. The classification is determined on an instrument-by-instrument basis.

Gains and losses on these financial assets are never recycled to profit or loss. Dividends are recognised as other income in the statement of profit or loss when the right of payment has been established, except when the Group and the Company benefit from such proceeds as a recovery of part of the cost of the financial asset, in which case, such gains are recorded in OCI. Equity instruments designated at fair value through OCI are not subject to impairment assessment.

The Group’s financial assets designated at fair value through other comprehensive income include quoted equity instruments.

Financial assets at fair value through profit or loss

Financial assets at fair value through profit or loss include financial assets held for trading, financial assets designated upon initial recognition at fair value through profit or loss, or financial assets mandatorily required to be measured at fair value. Financial assets are classified as held for trading if they are acquired for the purpose of selling or repurchasing in the near term. Derivatives, including separated embedded derivatives, are also classified as held for trading unless they are designated as effective hedging instruments. Financial assets with cash flows that are not solely payments of principal and interest are classified and measured at fair value through profit or loss, irrespective of the business model. Notwithstanding the criteria for debt instruments to be classified at amortised cost or at fair value through OCI, as described above, debt instruments may be designated at fair value through profit or loss on initial recognition if doing so eliminates, or significantly reduces, an accounting mismatch.

Financial assets at fair value through profit or loss are carried in the statement of financial position at fair value with net changes in fair value recognised in the statement of profit or loss.

This category includes derivative instruments and listed equity investments which the Group and the Company had not irrevocably elected to classify at fair value through OCI. Dividends on listed equity investments are also recognised as other income in the statement of profit or loss when the right of payment has been established.






(i) Financial assets (contd.) Financial assets at fair value through profit or loss (contd.)

A derivative embedded in a hybrid contract, with a financial liability or non-financial host, is separated from the host and accounted for as a separate derivative if: the economic characteristics and risks are not closely related to the host; a separate instrument with the same terms as the embedded derivative would meet the definition of a derivative; and the hybrid contract is not measured at fair value through profit or loss. Embedded derivatives are measured at fair value with changes in fair value recognised in profit or loss. Reassessment only occurs if there is either a change in the terms of the contract that significantly modifies the cash flows that would otherwise be required or a reclassification of a financial asset out of the fair value through profit or loss category.

A derivative embedded within a hybrid contract containing a financial asset host is not accounted for separately. The financial asset host together with the embedded derivative is required to be classified in its entirety as a financial asset at fair value through profit or loss.

Derecognition

A financial asset (or, where applicable, a part of a financial asset or part of a Group and a Company of similar financial assets) is primarily derecognised (i.e., removed from the Group’s and the Company’s statement of financial position) when:

• The rights to receive cash flows from the asset have expired; or • The Group and the Company have transferred their rights to receive cash flows from the asset

or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a ‘pass-through’ arrangement; and either (a) the Group and the Company have transferred substantially all the risks and rewards of the asset, or (b) the Group and the Company have neither transferred nor retained substantially all the risks and rewards of the asset, but have transferred control of the asset.

When the Group and the Company have transferred their rights to receive cash flows from an asset or have entered into a pass-through arrangement, they evaluate if, and to what extent, they have retained the risks and rewards of ownership. When they have neither transferred nor retained substantially all of the risks and rewards of the asset, nor transferred control of the asset, the Group and the Company continue to recognise the transferred asset to the extent of their continuing involvement. In that case, the Group and the Company also recognise an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Group and the Company have retained.

Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the Group and the Company could be required to repay.

Previous financial year

(i) Financial assets

Financial assets are recognised in the statements of financial position when, and only when, the Group and the Company become a party to the contractual provisions of the financial instrument.

When financial assets are recognised initially, they are measured at fair value, plus, in the case of financial assets not at fair value through profit or loss, directly attributable transaction costs.

The Group and the Company determine the classification of their financial assets at initial recognition, and the categories include financial assets at fair value through profit or loss, loans and receivables, held-to-maturity investments and available-for-sale financial assets.





Previous financial year (contd.)


(a) Financial assets at fair value through profit or loss Financial assets are classified as financial assets at fair value through profit or loss if they are held

for trading or are designated as such upon initial recognition. Financial assets held for trading are derivatives (including separated embedded derivatives) or financial assets acquired principally for the purpose of selling in the near term.

Subsequent to initial recognition, financial assets at fair value through profit or loss are measured

at fair value. Any gains or losses arising from changes in fair value are recognised in profit or loss. Net gains or net losses on financial assets at fair value through profit or loss do not include exchange differences, interest and dividend income. Exchange differences, interest and dividend income on financial assets at fair value through profit or loss are recognised separately in profit or loss as part of other losses or other income.

Financial assets at fair value through profit or loss could be presented as current or non-current. Financial assets that are held primarily for trading purposes are presented as current whereas financial assets that are not held primarily for trading purposes are presented as current or non-current based on the settlement date.

(b) Loans and receivables

Financial assets with fixed or determinable payments that are not quoted in an active market are classified as loans and receivables.

Subsequent to initial recognition, loans and receivables are measured at amortised cost using the effective interest method. Gains and losses are recognised in profit or loss when the loans and receivables are derecognised or impaired, and through the amortisation process.

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

(c) Held-to-maturity investments

Financial assets with fixed or determinable payments and fixed maturity are classified as held-to-maturity when the Group has the positive intention and ability to hold the investment to maturity.

Subsequent to initial recognition, held-to-maturity investments are measured at amortised cost

using the effective interest method. Gains and losses are recognised in profit or loss when the held-to-maturity investments are derecognised or impaired, and through the amortisation process.

Held-to-maturity investments are classified as non-current assets, except for those having maturity within 12 months after the reporting date which are classified as current.

(d) Available-for-sale financial assets

Available-for-sale financial assets are financial assets that are designated as available for sale or are not classified in any of the three preceding categories.





Previous financial year (contd.)


(d) Available-for-sale financial assets (contd.)

After initial recognition, available-for-sale financial assets are measured at fair value. Any gains or losses from changes in fair value of the financial asset are recognised in other comprehensive income, except that impairment losses, foreign exchange gains and losses on monetary instruments and interest calculated using the effective interest method are recognised in profit or loss. The cumulative gain or loss previously recognised in other comprehensive income is reclassified from equity to profit or loss as a reclassification adjustment when the financial asset is derecognised. Interest income calculated using the effective interest method is recognised in profit or loss. Dividends on an available-for-sale equity instrument are recognised in profit or loss when the Group and the Company’s right to receive payment is established.

Investments in equity instruments whose fair value cannot be reliably measured are measured at cost less impairment loss.

Available-for-sale financial assets are classified as non-current assets unless they are expected to be realised within 12 months after the reporting date.

A financial asset is derecognised where the contractual right to receive cash flows from the asset has expired. On derecognition of a financial asset in its entirety, the difference between the carrying amount and the sum of the consideration received and any cumulative gain or loss that had been recognised in other comprehensive income is recognised in profit or loss.

Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the period generally established by regulation or convention in the marketplace concerned. All regular way purchases and sales of financial assets are recognised or derecognised on the trade date i.e., the date that the Group and the Company commit to purchase or sell the asset.


(ii) Impairment of financial assets

The Group and the Company recognise an allowance for expected credit losses (“ECLs”) for all debt instruments not held at fair value through profit or loss. ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that the Group and the Company expect to receive, discounted at the original effective interest rate. The expected cash flows will include cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms.

ECLs are recognised in two stages. For credit exposures for which there has not been a significant increase in credit risk since initial recognition, ECLs are provided for credit losses that result from default events that are possible within the next 12-months (a 12-month ECL). For those credit exposures for which there has been a significant increase in credit risk since initial recognition, a loss allowance is required for credit losses expected over the remaining life of the exposure, irrespective of the timing of the default (a lifetime ECL).

For trade receivables and contract assets, the Group and the Company apply a simplified approach in calculating ECLs. Therefore, the Group and the Company do not track changes in credit risk, but instead recognise a loss allowance based on lifetime ECLs at each reporting date.






(ii) Impairment of financial assets (contd.)

For debt instruments at fair value through OCI, the Group and the Company apply the low credit risk simplification. At every reporting date, the Group and the Company evaluate whether the debt instrument is considered to have low credit risk using all reasonable and supportable information that is available without undue cost or effort. In making that evaluation, the Group and the Company reassess the internal credit rating of the debt instrument. In addition, the Group and the Company consider that there have been a significant increase in credit risk when contractual payments are more than 180 days past due.

The Group and the Company consider a financial asset in default when contractual payments are 180 days past due. However, in certain cases, the Group and the Company may also consider a financial asset to be in default when internal or external information indicates that the Group and the Company are unlikely to receive the outstanding contractual amounts in full before taking into account any credit enhancements held by the Group and the Company. A financial asset is written off when there is no reasonable expectation of recovering the contractual cash flows.


(ii) Impairment of financial assets

The Group and the Company assess at each reporting date whether there is any objective evidence that a financial asset is impaired.

Trade and other receivables and other financial assets carried at amortised cost

To determine whether there is objective evidence that an impairment loss on financial assets has been incurred, the Group and the Company consider factors such as the probability of insolvency or significant financial difficulties of the debtor and default or significant delay in payments. For certain categories of financial assets, such as trade receivables, assets that are assessed not to be impaired individually are subsequently assessed for impairment on a collective basis based on similar risk characteristics. Objective evidence of impairment for a portfolio of receivables could include the Group’s and the Company’s past experience of collecting payments, an increase in the number of delayed payments in the portfolio past the average credit period and observable changes in national or local economic conditions that correlate with default on receivables.

If any such evidence exists, the amount of impairment loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the financial asset’s original effective interest rate. The impairment loss is recognised in profit or loss.

The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade receivables, where the carrying amount is reduced through the use of an allowance account. When a trade receivable becomes uncollectible, it is written off against the allowance account.

If in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed to the extent that the carrying amount of the asset does not exceed its amortised cost at the reversal date. The amount of reversal is recognised in profit or loss.






(iii) Financial liabilities

Initial recognition and measurement

Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, or at amortised cost.

All financial liabilities are recognised initially at fair value and, in the case of those measured subsequently at amortised cost, net of directly attributable transaction costs.

The Group’s and the Company’s financial liabilities include trade and other payables and loans and borrowings including bank overdrafts.

Subsequent measurement

The measurement of financial liabilities depends on their classification, as described below:

Financial liabilities at fair value through profit or loss

Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss.

Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the near term. This category also includes derivative financial instruments entered into by the Group and the Company that are not designated as hedging instruments in hedge relationships.

Gains or losses on liabilities held for trading are recognised in profit or loss.

Financial liabilities designated upon initial recognition at fair value through profit or loss are designated only if the criteria in MFRS 9 are satisfied. The Group and the Company have not designated any financial liability as at fair value through profit or loss.

Financial liabilities at amortised cost

After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the effective interest rate (“EIR”) method. Gains and losses are recognised in profit or loss when the liabilities are derecognised.

Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance costs in profit or loss.

This category generally applies to interest-bearing loans and borrowings.

Derecognition

A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in profit or loss.






(iii) Financial liabilities

Financial liabilities are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability.

Financial liabilities, within the scope of FRS 139, are recognised in the statements of financial position when, and only when, the Group and the Company become a party to the contractual provisions of the financial instrument. Financial liabilities are classified as either financial liabilities at fair value through profit or loss or other financial liabilities.

(a) Financial liabilities at fair value through profit or loss

Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss.

Financial liabilities held for trading include derivatives entered into by the Group and the Company that do not meet the hedge accounting criteria. Derivative liabilities are initially measured at fair value and subsequently stated at fair value, with any resultant gains or losses recognised in profit or loss. Net gains or losses on derivatives include exchange differences.

(b) Other financial liabilities

The Group’s and the Company’s other financial liabilities include trade payables, other payables and loans and borrowings.

Trade and other payables are recognised initially at fair value plus directly attributable transaction costs and subsequently measured at amortised cost using the effective interest method.

Loans and borrowings are recognised initially at fair value, net of transaction costs incurred, and subsequently measured at amortised cost using the effective interest method. Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the reporting date.

For other financial liabilities, gains and losses are recognised in profit or loss when the liabilities are derecognised, and through the amortisation process.

A financial liability is derecognised when the obligation under the liability is extinguished. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in profit or loss.

(iv) Offsetting of financial instruments

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

2.15 Cash and cash equivalents

Cash and cash equivalents comprise cash at bank and on hand and demand short-term deposit with maturity of three months or less. These also include bank overdrafts that form an integral part of the Group’s cash management.




2.16 Inventories

Inventories are stated at lower of cost and net realisable value. Costs incurred in bringing the inventories to their present location and conditions are accounted for as follows:

- Raw materials: purchase costs on weighted average cost formula.

- Finished goods and work-in-progress: cost of raw materials, direct labour, an appropriate proportion of fixed and variable factory overheads and all costs attributable to nursery and tree planting expenditure that can be allocated on a reasonable basis to such activities.

- Processed inventories: cost of raw materials, direct labour and an appropriate proportion of fixed and variable production overheads.

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

2.17 Provisions

Provisions are recognised when the Group and the Company have a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of economic resources will be required to settle the obligation and the amount of the obligation can be estimated reliably.

Provisions are reviewed at each reporting date and adjusted to reflect the current best estimate. If it is no longer probable that an outflow of economic resources will be required to settle the obligation, the provision is reversed. If the effect of the time value of money is material, provisions are discounted using a current pre tax rate that reflects, where appropriate, the risk specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.

2.18 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.


Financial guarantees issued are initially measured at fair value, net of transaction costs. Subsequently, they are measured at the higher of the amount of the loss allowance; and the amount initially recognised less, when appropriate, the cumulative amount of income recognised in accordance with MFRS 15.


Financial guarantee contracts are recognised initially as a liability at fair value, net of transaction costs. Subsequent to initial recognition, financial guarantee contracts are recognised as income in profit or loss over the period of the guarantee. If the debtor fails to make payment relating to financial guarantee contract when it is due and the Group, as the issuer, is required to reimburse the holder for the associated loss, the liability is measured at the higher of the best estimate of the expenditure required to settle the present obligation at the reporting date and the amount initially recognised less cumulative amortisation.

2.19 Borrowing costs

Borrowing costs are capitalised as part of the cost of a qualifying asset if they are directly attributable to the acquisition, construction or production of that asset. Capitalisation of borrowing costs commences when the activities to prepare the asset for its intended use or sale are in progress and the expenditures and borrowing costs are incurred. Borrowing costs are capitalised until the assets are substantially completed for their intended use or sale.

All other borrowing costs are recognised in profit or loss in the period they are incurred. Borrowing costs consist of interest and other costs that the Group and the Company incurred in connection with the borrowing of funds.




2.20 Employee benefits

(i) Defined contribution plans

The Group participates in the national pension scheme as defined by the laws of the country in which it has operations. The Group makes contributions to the Employees’ Provident Fund in Malaysia, a defined contribution pension scheme. Contributions to defined contribution pension schemes are recognised as an expense in the period in which the related service is performed.

(ii) Short term benefits

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

2.21 Leases

(a) As lessee

Finance leases, which transfer to the Group substantially all the risks and rewards incidental to ownership of the leased item, are capitalised at the inception of the lease at the fair value of the leased asset or, if lower, at the present value of the minimum lease payments. Any initial direct costs are also added to the amount capitalised. Lease payments are apportioned between the finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged to profit or loss. Contingent rents, if any, are charged as expenses in the periods in which they are incurred.

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

Operating lease payments are recognised as an expense in profit or loss on a straight-line basis over the lease term. The aggregate benefit of incentives provided by the lessor is recognised as a reduction of rental expense over the lease term on a straight-line basis.

(b) As lessor

Leases where the Group retains substantially all the risks and rewards of ownership of the asset are classified as operating leases. Initial direct costs incurred in negotiating an operating lease are added to the carrying amount of the leased asset and recognised over the lease term on the same bases as rental income. The accounting policy for rental income is set out in Note 2.22(c).

2.22 Revenue from contracts with customers

Revenue from contracts with customers is recognised when control of the goods or services are transferred to the customer at an amount that reflects the consideration to which the Group and the Company expect to be entitled in exchange for those goods or services. The Group and the Company have generally concluded that they are the principal in their revenue arrangements because they typically control the goods or services before transferring them to customer.

(a) Sale of goods

Revenue from sale of goods is measured based on the consideration specified in a contract with a customer in exchange for transferring goods to a customer, excluding amounts collected on behalf of third parties. The Group and the Company recognise revenue when (or as) it transfers control over a product to customer. An asset is transferred when (or as) the customer obtains control over the asset.




2.22 Revenue from contracts with customers (contd.)

(a) Sale of goods (contd.)

The Group and the Company transfer control of a good at a point in time unless one of the following over time criteria is met:

• the customer simultaneously receives and consumes the benefits provided as the Group and the Company perform;

• the Group’s and the Company’s performance creates or enhances an asset that the customer controls as the asset is created or enhanced; or

• the Group’s and the Company’s performance does not create an asset with an alternative use and the Group has an enforceable right to payment for performance completed to-date.

(b) Services rendered

Revenue from services is recognised when the Group and the Company transfer control upon performance of services over time to customers where the customer simultaneously receives and consumes the benefits provided as the Group and the Company perform.

(c) Other revenue

Revenue from other sources are recognised as follows:

(i) Interest income is recognised on an accrual basis using the effective interest method.

(ii) Rental income is accounted for on a straight-line basis over the lease terms.

(iii) Dividend income is recognised when the Group’s and the Company’s right to receive payment is established.

(iv) Management fees are recognised when services are rendered.

2.23 Taxes

(a) Current tax

Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the reporting date.

Current taxes are recognised in profit or loss except to the extent that the tax relates to items recognised outside profit or loss, either in other comprehensive income or directly in equity.

(b) Deferred tax

Deferred tax is provided using the liability method on temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

Deferred tax liabilities are recognised for all temporary differences, except:

- where the deferred tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and



2. Basis of preparation and summary of significant accounting policies (contd.) 2.23 Taxes (contd.)

(b) Deferred tax (contd.)

Deferred tax liabilities are recognised for all temporary differences, except: (contd.)

- in respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.

Deferred tax assets are recognised for all deductible temporary differences, carry forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilised except:

- Where the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and

- In respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, deferred tax assets are recognised only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised.

The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are reassessed at each reporting date and are recognised to the extent that it has become probable that future taxable profit will allow the deferred tax assets to be utilised.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted at the reporting date.

Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss. Deferred tax items are recognised in correlation to the underlying transaction either in other comprehensive income or directly in equity and deferred tax arising from a business combination is adjusted against goodwill on acquisition.

Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.

(c) Sales and Service Tax (“SST”) and Goods and Service Tax (“GST”)

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

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

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

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




2.24 Segment reporting

For management purposes, the Group is organised into operating segments based on their products and services which are independently managed by the respective segment managers responsible for the performance of the respective segments under their charge. The segment managers report directly to the management of the Company who regularly review the segment results in order to allocate resources to the segments and to assess the segment performance. Additional disclosures on each of these segments are shown in Note 39, including the factors used to identify the reportable segments and the measurement basis of segment information.

2.25 Share capital and share issuance expenses An equity instrument is any contract that evidences a residual interest in the assets of the Group and the

Company after deducting all of its liabilities. Ordinary shares are equity instruments.

Ordinary shares are recorded at the proceeds received, net of directly attributable incremental transaction costs. Ordinary shares are classified as equity. Dividends on ordinary shares are recognised in equity in the period in which they are declared.

2.26 Treasury shares

When shares of the Company, that have not been cancelled, recognised as equity are reacquired, the amount of consideration paid is recognised in equity. Reacquired shares are classified as treasury shares and presented as a deduction from total equity. No gain or loss is recognised in profit or loss on the purchase, sale, issue or cancellation of treasury shares. When treasury shares are reissued by resale, the difference between the sales consideration and the carrying amount is recognised in equity.

2.27 Contingencies

A contingent liability or asset is a possible obligation or asset that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of uncertain future events not wholly within the control of the Group.

Contingent liabilities and assets are not recognised in the statements of financial position of the Group and the Company.

2.28 Fair value measurements

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:

• In the principal market for the asset or liability, or

• In the absence of a principal market, in the most advantageous market for the asset or liability.

The principal or the most advantageous market must be accessible to by the Group. The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.

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

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




2.28 Fair value measurements (contd.)

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

Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities.

Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable.

Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.

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

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

3. Significant accounting judgements and estimates

The preparation of the Group’s and the Company’s financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets, liabilities and the disclosure of contingent liabilities at the reporting date. However, uncertainty about these assumptions and estimates could result in outcomes that could require a material adjustment to the carrying amount of the asset or liability affected in the future.

Key sources of estimation uncertainty

The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.

(a) Impairment assessment of property, plant and equipment

Impairment exists when the carrying value of any assets exceeds its recoverable amount, which is the higher of its fair value less costs to sell and its value-in-use (“VIU”).

The Group reassesses whether there are indicators of impairment for its property, plant and equipment at each reporting date. During the current financial year, the Group carried out the impairment tests on the property, plant and equipment of certain subsidiaries based on VIU.

The impairment assessment of the plant, property and equipment involved significant judgement and estimates in determining the recoverable amount of the property, plant and equipment. The assumptions used include estimates of selling prices, operating costs and discount rate.

The carrying amount of the property, plant and equipment of the subsidiaries included in the property, plant and equipment of the Group as at 30 June 2019 was RM59.6 million (2018: RM67.2 million).



3. Significant accounting judgements and estimates (contd.)

(b) Impairment assessment of bearer plants (oil palm plantations)

The carrying amount of the Group’s plantations stands at RM1.08 billion (2018: RM1.08 billion) which represents 45% (2018: 42%) of the Group’s total assets.

The Group assesses annually whether there are any indicators that the carrying amount of the plantations may be impaired. During the current financial year, losses incurred by certain plantations was identified as an indicator of impairment.

The estimated recoverable amount is determined based on the higher of an asset’s VIU and fair value less costs of disposal (“FV”). Where the carrying amount is higher than the recoverable value of the biological assets, the carrying value of the asset is reduced to its estimated recoverable amount and the difference is regarded as an impairment loss.

The Group regards each plantation as a separate CGU. VIU is the present value of the future cash flows expected to be derived from the CGU. The FV represents an estimate of the amount to be received in the event the plantation is sold on a willing buyer and a willing seller basis.

(c) Planted forest (forestry assets)

Plantations are stated at fair value less estimated cost to sell at the harvesting stage and is a Level 3 measure in terms of the fair value measurement hierarchy as established by MFRS 13 Fair Value Measurement. The Group uses the income approach in determining fair value as it believes that this method yields the most appropriate valuation.

In arriving at plantation fair values, the key assumptions used are estimated prices, cost of delivery, discount rates, and volume and growth estimations. All changes in fair value are recognised in the period in which they arise.

The impact of changes in estimated prices, discount rates and, volume and growth assumptions may have on the calculated fair value and other key financial information on plantations is disclosed in Note 15.

• Estimated prices less costs of delivery

The Group uses current average price of smaller size logs to estimate the fair value of all immature timber and mature timber that is to be felled in more than 12 months from the reporting date.

The fair value is derived by using the prices as explained above and reduced by the estimated costs of delivery. Costs of delivery include all costs associated with getting the harvested agricultural produce to the market, including harvesting, loading, transport and allocated fixed overheads.

• Discount rate

The discount rate used is the applicable pre-tax weighted average cost of capital of the business unit.

• Volume and growth estimations and cost assumptions

The Group focuses on good husbandry techniques which include ensuring that the rotation of plantations is met with adequate planting activities for future harvesting. The age threshold used for quantifying immature timber is dependent on the rotation period of the specific timber genus which varies between 11 and 14 years.

Trees are generally felled at the optimum age when ready for intended use. At the time the tree is felled, it is taken out of plantations and accounted for under inventory and reported as a depletion cost (felling).

The Group has projected growth estimation over a period of 11 to 14 years per rotation. In deriving this estimate, the Group established a long-term sample plot network which is representative of the species and sites on which trees are grown and the measured date from these permanent sample plots were used is input into the Group’s growth estimation.

The Group directly manages plantations established on land that is leased from a related party.



3. Significant accounting judgements and estimates (contd.)

(d) Impairment assessment of investment in subsidiaries

In performing impairment review over certain of the Company’s subsidiaries, the Company also carried out the impairment test on the cost of investment in those subsidiaries. The Company estimates the recoverable amount of the investment based on estimated future cash flow and discounting them at an appropriate rate. Further details of the impairment losses are disclosed in Note 18.

4. Revenue Group Company 2019 2018 2019 2018 RM’000 RM’000 RM’000 RM’000

Major product lines: Sale of crude palm oil, palm kernel and fresh fruit bunches 457,299 553,467 - - Sale of timber and related products 179,960 287,925 80,956 134,027 Others 485 297 - - 637,744 841,689 80,956 134,027

Revenue from contracts with customers: - recognised at a point of time 637,744 841,689 80,956 134,027

There are no unfulfilled performance obligations, whether unsatisfied or partly satisfied, to be recognised over the subsequent periods.

5. Cost of sales Group Company 2019 2018 2019 2018 RM’000 RM’000 RM’000 RM’000

Cost of crude palm oil, palm kernel and fresh fruit bunches 516,665 500,656 - - Cost of timber and related products 189,652 259,023 84,914 133,543 Others 5,567 7,662 - - 711,884 767,341 84,914 133,543

6. Other income Group Company 2019 2018 2019 2018 RM’000 RM’000 RM’000 RM’000

Fair value gain on derivatives 316 304 - - Freight and handling income 1,951 1,581 1,144 1,178 Foreign exchange gain - realised - 2,296 - 2,134 - unrealised 342 18 292 - Gain on disposal of property, plant and equipment 1,650 1,790 - 1,384 Gross dividend income from subsidiaries (Note 8) - - 12,500 130,382 Commission income 25 25 25 25 Interest income (Note 8) 114 246 15,015 17,116 Rental income (Note 8) 1,120 1,158 317 364 Reversal of impairment loss no longer required - - 2,774 - Road maintenance fee income - - 3,000 3,000 Others 4,788 3,751 794 2,065 10,306 11,169 35,861 157,648



7. Finance costs Group Company 2019 2018 2019 2018 RM’000 RM’000 RM’000 RM’000 Interest expense on: Bank loans and bank overdrafts 56,299 54,455 5,098 6,942 Finance leases 960 1,488 234 51 Amount due to subsidiaries - - 6,659 10,278 57,259 55,943 11,991 17,271 Less: Interest expense capitalised in property, plant and equipment (Note 13) (1,488) (2,996) - - Less: Interest expense capitalised in biological assets (Note 15) (2,028) (1,584) - - Interest expense (Note 8) 53,743 51,363 11,991 17,271

Add: Other charges Bank charges 754 925 99 116 Commitment fee 511 1,345 107 374 1,265 2,270 206 490 55,008 53,633 12,197 17,761

8. (Loss)/profit before tax

The following amounts have been included in arriving at (loss)/profit before tax:

Group Company 2019 2018 2019 2018 RM’000 RM’000 RM’000 RM’000

Amortisation of land use rights (Note 14) 3 5 2 2 Amortisation of other intangible assets (Note 17) 167 137 137 115 Auditors’ remuneration 794 829 225 235 Statutory audit - current year 762 788 210 210 - under provision in previous years 17 26 - 10 Other services 15 15 15 15

Bad debts written off 1,323 - - - Depreciation of property, plant and equipment (Note 13) 179,971 173,667 24,233 19,607 Employee benefits expense (Note 9) 121,977 125,665 15,154 16,375 Change in fair value of biological assets (Note 15) 8,986 7,166 - - Net fair value (gain)/loss on derivatives (Note 25) (316) (52) - 252 Gross dividend income from subsidiaries (Note 6) - - (12,500) (130,382) Hiring charges 16 - 300 714 Impairment loss, net of reversal, on: - available-for-sale financial assets - 30,100 - - - investment in subsidiaries - - 215,047 30,326 - trade and other receivables (Note 22) 104 - (2,774) 21,297 Interest expense (Note 7) 53,743 51,363 11,991 17,271 Interest income (Note 6) (114) (246) (15,015) (17,116) Net loss/(gain) on disposal of property, plant and equipment 496 (273) 1,648 (1,384) Net foreign exchange loss/(gain) - realised 1,334 (299) 970 (2,134) - unrealised (342) 536 (292) 446 Non-executive directors’ remuneration (Note 10) 768 832 720 736 Property, plant and equipment written off 571 1,041 - - Provision for obsolete inventories (Note 21) 502 - - - Rental expense 327 349 369 331 Rental income (Note 6) (1,120) (1,158) (317) (364)



9. Employee benefits expense


Salaries, wages, allowances and bonus 111,894 118,663 13,293 14,283 Social security contributions 1,322 1,220 148 145 Contributions to defined contribution plan 9,975 10,396 1,524 1,672 Employment insurance scheme contributions 129 64 16 8 Other benefits 523 477 173 267 Total employee benefits expense (including executive directors) 123,843 130,820 15,154 16,375 Less: Employee benefits expense capitalised in: - biological assets (Note 15) (1,866) (5,155) - - Total employee benefits expense (Note 8) 121,977 125,665 15,154 16,375

Included in employee benefits expense of the Group and of the Company are executive directors’ remuneration amounting to RM2,336,000 (2018: RM3,044,000) as further disclosed in Note 10.

10. Directors’ remuneration

The details of remuneration receivable by directors of the Group and the Company during the year are as follows:

Group Company 2019 2018 2019 2018 RM’000 RM’000 RM’000 RM’000 Directors of the Company

Executive: Salaries and other emoluments 2,076 2,737 2,076 2,737 Contributions to defined contribution plans 260 307 260 307 Total executive directors’ remuneration 2,336 3,044 2,336 3,044

Non-executive: Fees 469 469 469 469 Other emoluments 251 267 251 267 Total non-executive directors’ remuneration (Note 8) 720 736 720 736 Total directors’ remuneration 3,056 3,780 3,056 3,780 Estimated money value of benefits-in-kind 36 36 36 36 Total directors’ remuneration including benefits-in-kind 3,092 3,816 3,092 3,816

Other directors Non-executive: Fees 48 96 - - Total directors’ remuneration (Note 8) 48 96 - - Total directors’ remuneration (Note 32(b)) 3,140 3,912 3,092 3,816



11. Income tax expense

The major components of income tax expense for the year ended 30 June 2019 and 2018 are:

Group Company 2019 2018 2019 2018 RM’000 RM’000 RM’000 RM’000 Statements of profit or loss and other comprehensive income:

Current income tax: Malaysian income tax 6,051 12,842 882 1,306 Under/(over) provision in respect of previous years 1,392 (5,290) 5,069 (788) 7,443 7,552 5,951 518

Deferred income tax (Note 20): Origination and reversal of temporary differences 55,054 (22,482) (5,089) (4,346) Under/(over) provision in respect of previous years 11,755 5,078 (628) (275) 66,809 (17,404) (5,717) (4,621)

Income tax expense recognised in profit or loss 74,252 (9,852) 234 (4,103)

The reconciliations between tax expense and the product of accounting (loss)/profit multiplied by the applicable corporate tax rate for the year ended 30 June 2019 and 2018 are as follows:


Accounting (loss)/profit before tax (191,011) (79,686) (217,885) 64,391 Tax at Malaysian statutory tax rate of 24% (2018: 24%) (45,843) (19,125) (52,292) 15,454

Adjustments: Non-deductible expenses 2,913 9,316 51,085 12,798 Income not subject to tax (1,117) (24) (3,000) (31,292) Benefits from previously unrecognised unabsorbed capital allowances and unused tax losses (991) (1,280) - - Deferred tax assets not recognised in respect of current year’s unabsorbed capital allowances and unused tax losses 106,143 1,473 - - Under/(over) provision of income tax in respect of previous years 1,392 (5,290) 5,069 (788) Under/(over) provision of deferred tax in respect of previous years 11,755 5,078 (628) (275) Income tax expense recognised in profit or loss 74,252 (9,852) 234 (4,103)

Current income tax is calculated at the Malaysian statutory tax rate of 24% (2018: 24%) of the estimated assessable profit for the year.




12. Loss per share

Basic loss per share

Basic loss per share amounts are calculated by dividing the loss for the year, net of tax, attributable to owners of the parent by the weighted average number of ordinary shares outstanding during the financial year, excluding treasury shares held by the Company.

The following table reflects the loss and share data used in the computation of basic loss per share for the years ended 30 June 2019 and 2018:

Group 2019 2018 Loss net of tax attributable to owners of the parent (RM’000) (266,036) (71,080)

Weighted average number of ordinary shares in issue (’000) 967,991 967,991

Basic loss per share (sen) (27.48) (7.34)

There are no dilutive potential ordinary shares. As such, the diluted loss per share of the Group is equivalent to basic loss per share.



13.

Prop

erty

, pla

nt a

nd e

quip

men

t

Airc

raft,

wat

ercr

aft,

O

ffice

Fa

ctor

ies,

mot

or

re

nova

tion,

build

ings

ve

hicle

s, Ro

ads

furn

iture

, Ca

pita

l

Fr

eeho

ld

Leas

ehol

d Be

arer

an

d pl

ant a

nd

and

fitting

s and

w

ork-

in-

land

la

nd

pla

nts

quar

ters

m

achi

nery

br

idge

s eq

uipm

ent

prog

ress

To

tal

RM’0

00

RM’0

00

RM’0

00

RM’0

00

RM’0

00

RM’0

00

RM’0

00

RM’0

00

RM’0

00

Grou

p

Co

st

At

1 Ju

ly 2

017

8,38

9 91

,756

1,

327,

887

621,

211

1,26

3,56

4 34

1,50

9 46

,794

21

3,37

7 3,

914,

487

Ad

ditio

ns

- -

- 8,

863

22,3

26

5,06

3 2,

823

37,2

07

76,2

82

Disp

osal

s/w

ritten

off

- -

- (6

44)

(48,

305)

-

(707

) (1

,957

) (5

1,61

3)

Recla

ssifi

catio

ns

- -

55,8

77

53,6

95

(1,3

54)

8,26

4 1,

337

(117

,819

) -

Re

class

ified

to in

tang

ible

ass

ets (

Note

17)

-

- -

- -

- -

(124

) (1

24)

Re

class

ified

to b

iolo

gica

l ass

ets (

Note

15)

-

- -

- -

- -

(26)

(2

6)

At 3

0 Ju

ne 2

018

and

1 Ju

ly 2

018

8,38

9 91

,756

1,

383,

764

683,

125

1,23

6,23

1 35

4,83

6 50

,247

13

0,65

8 3,

939,

006

Ad

ditio

ns

- 1,

202

- 3,

165

26,1

92

4,36

8 2,

373

17,4

79

54,7

79

Disp

osal

s/w

ritten

off

- -

- (1

,165

) (3

8,82

8)

(115

,127

) (6

64)

(844

) (1

56,6

28)

Re

class

ifica

tions

-

6 56

,009

12

,728

14

,844

11

,269

34

6 (9

5,20

2)

-

Recla

ssifi

ed fr

om la

nd u

se ri

ght (

Note

14)

-

87

- -

- -

- -

87

At 3

0 Ju

ne 2

019

8,38

9 93

,051

1,

439,

773

697,

853

1,23

8,43

9 25

5,34

6 52

,302

52

,091

3,

837,

244

Ac

cum

ulat

ed d

epre

ciatio

n

At

1 Ju

ly 2

017

- 15

,169

24

7,22

7 25

4,51

2 76

5,27

7 20

7,85

4 31

,955

-

1,52

1,99

4

Depr

ecia

tion

char

ge fo

r the

year

-

1,74

8 52

,754

38

,856

64

,258

14

,922

2,

410

- 17

4,94

8

Re

cogn

ised

in p

rofit

or l

oss (

Note

8)

- 1,

061

52,7

54

38,6

80

63,8

67

14,9

18

2,38

7 -

173,

667

Ca

pita

lised

in b

iolo

gica

l ass

ets (

Note

15)

-

687

- 17

6 39

1 4

23

- 1,

281

Di

spos

als/

writt

en o

ff -

- -

(506

) (3

4,84

0)

- (6

03)

- (3

5,94

9)

Recla

ssifi

catio

n

- -

- 10

9 -

- (1

09)

- -

At

30

June

201

8 -

16,9

17

299,

981

292,

971

794,

695

222,

776

33,6

53

- 1,

660,

993



13.

Prop

erty

, pla

nt a

nd e

quip

men

t (co

ntd.

)

Ai

rcra

ft,

w

ater

craft

,

Offi

ce

Fact

orie

s, m

otor

reno

vatio

n,

build

ings

ve

hicle

s, Ro

ads

furn

iture

, Ca

pita

l

Fr

eeho

ld

Leas

ehol

d Be

arer

an

d pl

ant a

nd

and

fitting

s and

w

ork-

in-

land

la

nd

pla

nts

quar

ters

m

achi

nery

br

idge

s eq

uipm

ent

prog

ress

To

tal

RM’0

00

RM’0

00

RM’0

00

RM’0

00

RM’0

00

RM’0

00

RM’0

00

RM’0

00

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p (c

ontd

.)

Ac

cum

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ed d

epre

ciatio

n (c

ontd

.)

At 3

0 Ju

ne 2

018

and

1 Ju

ly 2

018

- 16

,917

29

9,98

1 29

2,97

1 79

4,69

5 22

2,77

6 33

,653

-

1,66

0,99

3

Depr

ecia

tion

char

ge fo

r the

year

-

1,75

3 56

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39

,798

58

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22

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2,

619

- 18

1,20

5

Reco

gnise

d in

pro

fit o

r los

s (No

te 8

) -

1,06

6 56

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39

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58

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22

,084

2,

607

- 17

9,97

1

Capi

talis

ed in

bio

logi

cal a

sset

s (No

te 1

5)

- 68

7 -

233

298

4 12

-

1,23

4

Di

spos

als/

writt

en o

ff -

- -

(950

) (3

1,07

0)

(115

,127

) (3

78)

- (1

47,5

25)

Re

class

ified

from

land

use

righ

t (No

te 1

4)

- 72

-

- -

- -

- 72

At

30

June

201

9 -

18,7

42

356,

563

331,

819

821,

990

129,

737

35,8

94

- 1,

694,

745

Ne

t car

ryin

g am

ount

At

30

June

201

8 8,

389

74,8

39

1,08

3,78

3 39

0,15

4 44

1,53

6 13

2,06

0 16

,594

13

0,65

8 2,

278,

013

At

30

June

201

9 8,

389

74,3

09

1,08

3,21

0 36

6,03

4 41

6,44

9 12

5,60

9 16

,408

52

,091

2,

142,

499


13.

Prop

erty

, pla

nt a

nd e

quip

men

t (co

ntd.

)

Ai

rcra

ft,

w

ater

craft

,

Offi

ce

Fact

orie

s, m

otor

reno

vatio

n,

build

ings

ve

hicle

s, Ro

ads

furn

iture

, Ca

pita

l

Fr

eeho

ld

and

plan

t and

an

d fitti

ngs a

nd

wor

k-in

-

la

nd

qua

rter

s m

achi

nery

br

idge

s eq

uipm

ent

prog

ress

To

tal

RM’0

00

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00

RM’0

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RM’0

00

RM’0

00

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00

RM’0

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Com

pany

Co

st

At

1 Ju

ly 2

017

3,86

5 16

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23

2,25

0 17

0,90

4 16

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4,

068

443,

536

Ad

ditio

ns

- 9

629

23

433

2,50

5 3,

599

Di

spos

als/

writt

en o

ff

- (1

0)

(30,

915)

-

(258

) (1

,696

) (3

2,87

9)

Recla

ssifi

ed to

inta

ngib

le a

sset

s (No

te 1

7)

- -

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(1

24)

(124

)

Recla

ssifi

catio

ns

- 34

18

7 1,

901

337

(2,4

59)

-

At

30

June

201

8 an

d 1

July

201

8

3,

865

16,1

20

202,

151

172,

828

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74

2,29

4 41

4,13

2

Addi

tions

-

181

20,2

05

1,67

6 22

5 3,

054

25,3

41

Disp

osal

s/w

ritten

off

-

(27)

(2

6,53

9)

(113

,050

) (5

8)

(399

) (1

40,0

73)

Re

class

ifica

tions

-

1,11

0 14

8 -

32

(1,2

90)

-

At 3

0 Ju

ne 2

019

3,

865

17,3

84

195,

965

61,4

54

17,0

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3,65

9 29

9,40

0

Ac

cum

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ed d

epre

ciatio

n

At

1 Ju

ly 2

017

- 7,

261

130,

832

134,

524

14,9

40

- 28

7,55

7

Depr

ecia

tion

char

ge fo

r the

year

(Not

e 8)

-

584

12,8

08

5,90

0 31

5 -

19,6

07

Disp

osal

s/w

ritten

off

- -

(22,

405)

-

(250

) -

(22,

655)

At

30

June

201

8 an

d 1

July

201

8

-

7,84

5 12

1,23

5 14

0,42

4 15

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-

284,

509

De

prec

iatio

n ch

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for t

he ye

ar (N

ote

8)

- 56

4 11

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11

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33

9 -

24,2

33

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osal

s/w

ritten

off

- -

(20,

359)

(1

13,0

50)

(51)

-

(133

,460

)

At 3

0 Ju

ne 2

019

- 8,

409

112,

469

39,1

11

15,2

93

- 17

5,28

2

Net c

arry

ing

amou

nt

At

30

June

201

8

3,

865

8,27

5 80

,916

32

,404

1,

869

2,29

4 12

9,62

3

At

30

June

201

9

3,

865

8,97

5 83

,496

22

,343

1,

780

3,65

9 12

4,11

8



13.

Prop

erty

, pla

nt a

nd e

quip

men

t (co

ntd.

)

(i)

Ac

quisi

tions

of p

rope

rty,

plan

t and

equ

ipm

ent d

urin

g th

e fin

ancia

l yea

r wer

e by

the

follo

win

g m

eans

:

Gr

oup

Com

pany

As

at

As a

t

2019

20

18

1.7.

2017

20

19

2018

1.

7.20

17

RM’0

00

RM’0

00

RM’0

00

RM’0

00

RM’0

00

RM’0

00

Cash

38

,678

69

,337

10

5,40

3 10

,765

3,

599

3,

905

Fina

nce

leas

es (N

ote

35)

16,1

01

6,94

5

19

,632

14

,576

-

795

54

,779

76

,282

125,

035

25,3

41

3,59

9

4,70

0

(ii

) Ne

t car

ryin

g am

ount

s of p

rope

rty,

plan

t and

equ

ipm

ent h

eld

unde

r fina

nce

leas

es a

re a

s fol

low

s:

Gr

oup

Com

pany

As

at

As a

t

2019

20

18

1.7.

2017

20

19

2018

1.

7.20

17

RM’0

00

RM’0

00

RM’0

00

RM’0

00

RM’0

00

RM’0

00

M

otor

vehi

cles

76,2

64

68,9

52

57

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16

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81

2

7,49

0

Leas

ed a

sset

s are

ple

dged

as s

ecur

ity fo

r the

rela

ted

finan

ce le

ase

liabi

lities

(Not

e 27

).



13. Property, plant and equipment (contd.)

(iii) Included in property, plant and equipment are the following costs incurred during the financial year:

Group 2019 2018 RM’000 RM’000 Interest expense (Note 7) 1,488 2,996

The interest expense capitalised include borrowing costs arising from term loans borrowed specifically for the purpose of the development of bearer plants.

(iv) The leasehold land on which certain of the bearer plants expenditure was incurred is registered in the name of related companies.

14. Land use rights Group Company 2019 2018 2019 2018 RM’000 RM’000 RM’000 RM’000

Cost At 1 July 123 123 36 36 Reclassified to property, plant and equipment (Note 13) (87) - - - At 30 June 36 123 36 36

Accumulated amortisation

At 1 July 88 83 17 15 Amortisation for the year (Note 8) 3 5 2 2 Reclassified to property, plant and equipment (Note 13) (72) - - - At 30 June 19 88 19 17

Net carrying amount

At 30 June 17 35 17 19

Amount to be amortised: - Not later than one year 2 5 2 2 - Later than one year but not later than five years 8 19 8 8 - Later than five years 7 11 7 9

The Group and the Company have land use rights over state-owned land in Malaysia. The land use rights of the Group and the Company have a remaining tenure of 17 years (2018: 7 to 18 years) and 17 years (2018: 18 years), respectively.



15.

Biol

ogic

al a

sset

s

Pl

ante

d fo

rest

FF

B pr

ior t

o ha

rves

t (fo

rest

ry a

sset

s)

Tota

l

RM’0

00

RM’0

00

RM’0

00

RM’0

00

RM’0

00

RM’0

00

Grou

p

Fa

ir va

lue

At

1 Ju

ly 2

018/

2017

9,

450

13,5

32

46,4

91

32,7

60

55,9

41

46,2

92

Capi

talis

ed e

xpen

ditu

re

- -

20,1

33

16,7

89

20,1

33

16,7

89

Chan

ges i

n fa

ir va

lue

(Not

e 8)

(1

,831

) (4

,082

) (7

,155

) (3

,084

) (8

,986

) (7

,166

)

Recl

assifi

ed fr

om p

rope

rty,

plan

t and

equ

ipm

ent (

Not

e 13

) -

- -

26

- 26

At

30

June

201

9/20

18

7,61

9 9,

450

59,4

69

46,4

91

67,0

88

55,9

41

N

on-c

urre

nt

At 3

0 Ju

ne 2

019/

2018

-

- 59

,469

46

,491

59

,469

46

,491

At

1 Ju

ly 2

018/

2017

-

- 46

,491

32

,760

46

,491

32

,760

Cu

rren

t

At 3

0 Ju

ne 2

019/

2018

7,

619

9,45

0 -

- 7,

619

9,45

0

At

1 Ju

ly 2

018/

2017

9,

450

13,5

32

- -

9,45

0 13

,532




15. Biological assets (contd.) FFB Planted forest prior to harvest (forestry assets) MT’000 MT’000 M3’000 M3’000 2019 2018 2019 2018 Group

Physical quantities:

At 30 June 64 49 2,431 1,624

Production/sold during the year 1,096 1,069 - -

Included in planted forest are the following expenses incurred and capitalised during the year: 2019 2018 RM’000 RM’000

Depreciation of property, plant and equipment (Note 13) 1,234 1,281 Interest expense (Note 7) 2,028 1,584 Employee benefits expense (Note 9) 1,866 5,155

The average interest capitalisation rate used was 4% (2018: 4%).

The leasehold land on which the planted forest expenditure was incurred is registered in the name of a related company.

(i) Fresh fruit bunches (“FFB”) prior to harvest

To arrive at the fair value of FFB prior to harvest, the management considers the oil content of the unripe FFB. It is assumed that the net cash flow generated from FFB exceeding 15 days prior to harvest to be negligible and is accordingly excluded from valuation. The fair value of FFB prior to harvest is computed based on the market approach and takes into consideration the market prices of harvested FFB, adjusted to the estimated oil content of unharvested FFB less harvesting, transport and other costs to sell.

Harvested FFB is transferred to inventories at fair value less costs to sell when harvested.

The change in fair value of the biological assets in each accounting period is recognised in profit or loss.

The Group’s biological assets were fair valued within the Level 3 of the fair value hierarchy. Fair value assessments have been completed consistently using the same valuation techniques.

The following table shows the valuation techniques used in measuring Level 3 fair values, as well as the significant unobservable inputs used.

Significant unobservable inputs Inter-relationship between key unobservable inputs and fair value measurement

Estimated FFB prices

Estimated production volume

Estimated harvest and transportation costs

The estimated fair value would increase/(decrease) if:

- the estimated FFB prices were higher/(lower);

- the estimated production volume were higher/ (lower); or

- the estimated harvest and transportation costs were lower/(higher).



15. Biological assets (contd.) (ii) Planted forest (forestry assets)

In total, the Group has 67,007 hectares (2018: 67,007 hectares) leased land available for forestry activities, all of which is located in Malaysia. 39,897 hectares (2018: 35,949 hectares) are under afforestation which forms the basis of the valuation set out above.

Mature forestry assets are those plantations that are harvestable, while immature forestry assets have not yet reached the desired stage of growth. Timber is harvested according to a rotation plan, once trees reach maturity. This period ranges from 11 to 14 years for both years presented, depending on species, climate and location.

The following assumptions have a significant impact on the valuation of the Group’s forestry assets:

• The net selling price, which is defined as the selling price less the costs of transport, harvesting, extraction and loading. The net selling price is based on management’s estimates and is influenced by the species, maturity profile and location of timber. In 2019, the net selling price used is RM250 per cubic metre (2018: RM250 per cubic metre).

• The conversion factor is used to convert hectares of land under afforestation to cubic metre of standing timber, which is dependent on the species and the plot planting spacing. In 2019, the conversion factors ranged from 89 to 242 (2018: 136 to 242).

• The discount rate of 14.5% (2018: 14.5%) based on a pre-tax yield adjusted for the risks associated with forestry assets.

The Group’s forestry assets were fair valued within Level 3 of the fair value hierarchy consistent with prior years. Fair value assessments have been consistently applied using the same valuation techniques and calculated on the basis of future expected net cash flows arising on the Group’s owned forestry assets, discounted based on a pre tax weighted average cost of capital.

The following table shows the valuation techniques used in measuring Level 3 fair values, as well as the significant unobservable inputs used.

Significant unobservable inputs Inter-relationship between key unobservable inputs and fair value measurement

- Estimated logs transfer price- Estimated yields per hectare- Estimated harvest and

transportation costs- Pre-tax risk-adjusted discount rate

The estimated fair value would increase/(decrease) if:- the estimated logs transfer price were higher (lower);- the estimated yields per hectare were higher (lower);- the estimated harvest and transportation costs were lower/

(higher); or- the risk-adjusted discount rates were lower/(higher).


16. Goodwill on consolidation Group RM’000 RM’000 Cost

At 30 June 2019/2018 62,337 62,337 Accumulated impairment loss

At 1 July 2018/2017 and at 30 June 2019/2018 62,337 62,337 Net carrying amount

At 30 June 2019/2018 - -

The goodwill arose from the acquisition of a subsidiary previously engaged in the manufacturing of timber of products.

17. Other intangible assets Prepaid Computer timber rights software Total RM’000 RM’000 RM’000 Group

Cost

At 1 July 2017 298,447 4,625 303,072 Additions - 520 520 Reclassified from property, plant and equipment (Note 13) - 124 124 30 June 2018 298,447 5,269 303,716

At 1 July 2018 and 30 June 2019 298,447 5,269 303,716

Accumulated amortisation

At 1 July 2017 298,447 4,015 302,462 Amortisation for the year (Note 8) - 137 137 At 30 June 2018 and 1 July 2018 298,447 4,152 302,599 Amortisation for the year (Note 8) - 167 167 At 30 June 2019 298,447 4,319 302,766

Net carrying amount

At 30 June 2018 - 1,117 1,117

At 30 June 2019 - 950 950



17. Other intangible assets (contd.) Prepaid Computer timber rights software Total RM’000 RM’000 RM’000 Company

Cost

At 1 July 2017 247,724 4,592 252,316 Additions - 244 244 Reclassified from property, plant and equipment (Note 13) - 124 124 At 30 June 2018 247,724 4,960 252,684

At 1 July 2018 and 30 June 2019 247,724 4,960 252,684 Accumulated amortisation

At 1 July 2017 247,724 4,004 251,728 Amortisation for the year (Note 8) - 115 115 At 30 June 2018 and 1 July 2018 247,724 4,119 251,843 Amortisation for the year (Note 8) - 137 137 At 30 June 2019 247,724 4,256 251,980

Net carrying amount

At 30 June 2018 - 841 841

At 30 June 2019 - 704 704

In line with the State Government’s directive to attain mandatory Forest Management Certification, the Group had embarked on their certification exercise in prior year. On 30 April 2018, the Group obtained approval from the relevant authority for the re-delineation of the boundary of licences to remove over-lapping zones and to amalgamate their former licences into four forest management units (“FMUs”). The audit of the FMUs are still in progress at the reporting date.

18. Investments in subsidiaries Company As at 2019 2018 1.7.2017

RM’000 RM’000 RM’000

Unquoted shares, at cost 1,868,270 1,843,270 1,813,270 Less: Accumulated impairment losses (330,092) (115,045) (84,719) 1,538,178 1,728,225 1,728,551



18. Investments in subsidiaries (contd.)

Details of the subsidiaries are as follows:

Proportion of Country of ownership interest Name of subsidiaries incorporation Principal activities 2019 2018 % %

Direct subsidiaries of the Company

Curiah Sdn. Bhd. Malaysia Extraction and sale of logs 88.91 88.91

Eastern Eden Sdn. Bhd. Malaysia Development of oil palm 100 100 plantations and its related activities

Eastern Timber Ltd. Federal Dormant 100 100 Territory of Labuan, Malaysia

Erajaya Synergy Sdn. Bhd. Malaysia Development of oil palm 100 100 plantations and its related activities

Guanaco Sdn. Bhd. Malaysia Cultivation and trading 100 100 of birds’ nests

Hak Jaya Sdn. Bhd. Malaysia Marketing of timber logs 100 100 Hariyama Sdn. Bhd. Malaysia Development of oil palm 100 100 plantations, palm oil processing and its related activities

Jaras Sdn. Bhd. Malaysia Dormant 100 100

Jaya Tiasa Aviation Sdn. Bhd. Malaysia Provision of air transportation 100 100 services

Jaya Tiasa Forest Malaysia Development and maintenance 100 100 Plantation Sdn. Bhd. of planted forests and forest plantation contractor

Jaya Tiasa R&D Sdn. Bhd. Malaysia Production of coconut 100 100 seedlings

Jaya Tiasa Plywood Sdn. Bhd. Malaysia Manufacturing and sale of 100 100 sawn timber, blockboard and veneer as well as plywood manufacturing

Jaya Tiasa Timber Malaysia Sale of plywood 100 100 Products Sdn. Bhd. JT Logging Sdn. Bhd. Malaysia Dormant 100 100 JT Oil Palm Development Malaysia Palm oil processing and its 100 100 Sdn. Bhd. related activities

Kunari Timber Sdn. Bhd. Malaysia Dormant 100 100

Mantan Sdn. Bhd. Malaysia Logging contractor 100 100



18. Investments in subsidiaries (contd.)

Proportion of Country of ownership interest Name of subsidiaries incorporation Principal activities 2019 2018 % % Direct subsidiaries of the Company (contd.) Maujaya Sdn. Bhd. Malaysia Palm oil processing and 100 100 its related activities

Maxiwealth Holdings Sdn. Bhd. Malaysia Palm oil processing and 100 100 its related activities

Multi Greenview Sdn. Bhd. Malaysia Investment holding 100 100

Poh Zhen Sdn. Bhd. Malaysia Development of oil 100 100 palm plantations and its related activities

Rimbunan Hijau Plywood Malaysia Fabrication and 100 100 Sdn. Bhd. workshop services

Sericahaya Sdn. Bhd. Malaysia Dormant 88.91 88.91

Simalau Plantation Sdn. Bhd. Malaysia Development of oil palm 100 100 plantations and its related activities Atlantic Evergreen Holdings Cayman Islands Dormant 100 100

Atlantic Timber Holdings Limited Cayman Islands Dormant 100 100

Pacific Timber Holdings Limited Cayman Islands Dormant 100 100

Subsidiary of Atlantic Evergreen Holdings

Western Timber Resources Limited Cayman Islands Dormant 100 100

(i) Increase in paid-up capital of subsidiaries

During the year, the Company subscribed for 25 million new ordinary shares amounting to RM25,000,000 in Jaya Tiasa Plywood Sdn. Bhd. by way of settlement of advances rendered.

(ii) Non-controlling interests

None of the subsidiaries with non-controlling interests are material to the Group. Accordingly, the disclosure requirements of MFRS 12, Disclosure of Interests in Other Entities, are not presented.

(iii) Impairment of investment in subsidiaries

During the current financial year, the Company conducted a review of the recoverable amount of certain of the Company’s subsidiaries where the carrying amount of investments exceeded the Company’s share of net assets in the respective subsidiaries at the reporting date.

The review gave rise to the recognition of an impairment loss on investment in subsidiaries of RM215 million (2018: RM30.3 million) as disclosed in Note 8, based on recoverable amount of RM129 million (2018: RM39.7 million). The property, plant and equipment of certain of the subsidiaries, however, were not impaired because the estimated recoverable amount was higher than the carrying amount of the property, plant and equipment.



19.

In

vest

men

t in

asso

ciate

Gr

oup

Com

pany

As

at

As a

t

2019

20

18

1.7.

2017

20

19

2018

1.

7.20

17

RM’0

00

RM’0

00

RM’0

00

RM’0

00

RM’0

00

RM’0

00

Unqu

oted

shar

es, a

t cos

t 2

,000

2,

000

2,00

0

2,00

0 2

,000

2,

000

Rede

emab

le n

on-c

umul

ative

pre

fere

nce

shar

es, a

t cos

t 2

,400

2,

400

2,

400

2,

400

2,40

0 2,

400

4,

400

4,40

0 4

,400

4,

400

4,4

00

4,40

0

Le

ss: A

ccum

ulat

ed im

pairm

ent l

osse

s (2

,400

) (2

,400

) (2

,400

) (4

,400

) (4

,400

) (4

,400

)

2

,000

2

,000

2,

000

- -

-

Sh

are

of p

ost-a

cqui

sition

loss

es

(2,0

00)

(2,0

00)

(2,0

00)

- -

-

-

- -

- -

-



19. Investment in associate (contd.)

Details of the associate are as follows: Proportion of ownership interest As at As at Country of Principal 2019 2018 Name of associate incorporation activities % %

Mafrica Trading Sdn. Bhd.* Malaysia Dormant 40 40

* Audited by a firm of auditors other than Ernst & Young

The summarised financial information of the associate are as follows:

Group As at 2019 2018 1.7.2017 RM’000 RM’000 RM’000 Assets and liabilities

Current assets 37 39 4

Current liabilities 2,601 2,601 2,601

Group As at 2019 2018 1.7.2017 % % % Equity

Proportion of the Group’s ownership 40 40 40

Carrying amount of investment - - -

Group As at 2019 2018 1.7.2017 RM’000 RM’000 RM’000 Results

Loss for the year 2 2 2

The Group’s interest in the associate is analysed as follows:

Group’s share of net tangible assets (335) (335) (335) Premium on acquisition 335 335 335 - - -

The associate is not material to the Group. Accordingly, the disclosure requirements of MFRS 12, Disclosure of Interests in Other Entities, are not presented.



20.

Defe

rred

tax

As a

t Re

cogn

ised

in

As a

t Re

cogn

ised

in

As a

t

1

July

201

7

profi

t or l

oss

30 Ju

ne 2

018

profi

t or l

oss

30 Ju

ne 2

019

(N

ote

11)

(N

ote

11)

RM’0

00

RM’0

00

RM’0

00

RM’0

00

RM’0

00

Gr

oup

De

ferr

ed ta

x lia

biliti

es:

Pr

oper

ty, p

lant

and

equ

ipm

ent

(3

78,2

53)

(277

) (3

78,5

30)

13,8

36

(364

,694

)

Biol

ogica

l ass

ets

(6

,720

) (3

,156

) (9

,876

) (2

,963

) (1

2,83

9)

Deriv

ative

ass

et

7

3 (7

3)

- (3

8)

(38)

In

tang

ible

ass

ets

(1

) (1

) (2

) -

(2)

O

ther

s

(60)

60

-

- -

(384

,961

) (3

,447

) (3

88,4

08)

10,8

35

(377

,573

)

Defe

rred

tax

asse

ts:

Un

used

tax

loss

es a

nd u

nabs

orbe

d ca

pita

l allo

wan

ces

3

47,4

01

20,8

31

368,

232

(76,

469)

29

1,76

3

Prop

erty

, pla

nt a

nd e

quip

men

t

8,4

97

20

8,51

7 (1

,175

) 7,

342

355

,898

20

,851

37

6,74

9 (7

7,64

4)

299,

105

(29,

063)

17

,404

(1

1,65

9)

(66,

809)

(7

8,46

8)

Co

mpa

ny

De

ferr

ed ta

x lia

biliti

es:

Pr

oper

ty, p

lant

and

equ

ipm

ent

(1

7,22

4)

4,56

0 (1

2,66

4)

5,71

7 (6

,947

)

Deriv

ative

ass

et

(6

1)

61

- -

-

(1

7,28

5)

4,62

1 (1

2,66

4)

5,71

7 (6

,947

)

Gr

oup

Com

pany

As

at

As a

t

2019

20

18

1.7.

2017

20

19

2018

1.

7.20

17

RM’0

00

RM’0

00

RM’0

00

RM’0

00

RM’0

00

RM’0

00

Defe

rred

tax

(liab

ilitie

s)/a

sset

s:

Pr

esen

ted

after

app

ropr

iate

offs

etting

as f

ollo

ws:

De

ferr

ed ta

x as

sets

29

9,10

5 37

6,74

9 35

5,89

8 -

- -

De

ferr

ed ta

x lia

biliti

es

(377

,573

) (3

88,4

08)

(384

,961

) (6

,947

) (1

2,66

4)

(1

7,28

5)

(78,

468)

(1

1,65

9)

(2

9,06

3)

(6,9

47)

(12,

664)

(17,

285)



20. Deferred tax (contd.)

Deferred tax assets have not been recognised in respect of the following items:

Group As at 2019 2018 1.7.2017 RM’000 RM’000 RM’000

Unused tax losses 407,768 11,282 13,472 Unabsorbed capital allowances 53,057 9,353 5,152 Other temporary differences 47,818 49,876 51,083 508,643 70,511 69,707

At the reporting date, the Group has unused tax losses, unabsorbed capital allowances and other temporary differences as shown above that are available for offset against future taxable profits of the Group, for which no deferred tax asset is recognised because it is not probable that future taxable profits will be available against which the Group can use the benefits therefrom.

Pursuant to Section 44(5F) of the Income Tax Act 1967 (“the Act”), effective from year of assessment (“YA”) 2019, the unutilised business losses from YA 2019 can only be carried forward until YA 2026. For unutilised business losses accumulated prior to and up to YA 2018, such unabsorbed losses can only be carried forward until YA 2025, pursuant to the transitional provision provided in the Act.



21.

Inve

ntor

ies

Gr

oup

Com

pany

As

at

As a

t

2019

20

18

1.7.

2017

20

19

2018

1.

7.20

17

RM’0

00

RM’0

00

RM’0

00

RM’0

00

RM’0

00

RM’0

00

At co

st

Cr

ude

palm

oil

8,60

0 2,

084

4,46

3 -

- -

Fr

esh

frui

t bun

ches

1,

005

487

1,00

9 -

- -

Ge

nera

l sto

res

30,3

03

45,8

54

49,9

05

1,24

9 2,

093

1,78

0

Logs

29,5

76

12,2

73

20,7

54

21,0

64

5,37

6 9,

704

Pa

lm k

erne

l -

1,00

9 2,

012

- -

-

Plyw

ood

1,52

1 14

,403

28

,436

-

- -

Ra

w n

ests

18

-

- -

- -

Sa

wn

timbe

r 98

25

2 16

1 -

- -

Ve

neer

-

14,6

24

16,7

68

- -

-

Wor

k-in

-pro

gres

s 4,

254

2,73

0 1,

743

- -

-

75,3

75

93,7

16

125,

251

22,3

13

7,46

9

11,

484

At

net

real

isab

le v

alue

Cr

ude

palm

oil

2,

462

12,5

15

14,

223

- -

-

Palm

ker

nel

1,23

1 68

0

- -

- -

Pl

ywoo

d

13

,310

-

- -

- -

Sa

wn

timbe

r -

- 1

75

- -

-

Vene

er

9,27

4 -

- -

- -

26

,277

13

,195

1

4,39

8 -

- -

10

1,65

2 10

6,91

1

139,

649

22,3

13

7,46

9

11,4

84

Du

ring

the

finan

cial

yea

r, th

e am

ount

of i

nven

torie

s re

cogn

ised

as a

n ex

pens

e in

cos

t of

sal

es o

f the

Gro

up a

nd C

ompa

ny w

ere

RM48

0,83

4,00

0 (2

018:

RM

551,

222,

000)

and

RM

50,2

36,0

00 (2

018:

RM

70,7

31,0

00) r

espe

ctive

ly.



22.

Trad

e an

d ot

her r

ecei

vabl

es

Grou

p Co

mpa

ny

As a

t

As

at

20

19

2018

1.

7.20

17

2019

20

18

1.7.

2017

RM’0

00

RM’0

00

RM’0

00

RM’0

00

RM’0

00

RM’0

00

Trad

e re

ceiv

able

s

Third

par

ties

21,2

14

34,7

89

48

,487

2,

787

2,27

2 7,

511

Am

ount

due

from

subs

idia

ries

-

- -

1,23

9 -

1,24

9

Less

: Allo

wan

ce fo

r exp

ecte

d cr

edit

loss

es

Third

par

ties

- (1

43)

(4

07)

- -

-

Trad

e re

ceiv

able

s, ne

t 21

,214

34

,646

48,0

80

4,02

6 2,

272

8,76

0

Oth

er re

ceiv

able

s

Sund

ry re

ceiv

able

s 19

,116

15

,114

12

,060

9,

026

3,40

9

1,33

5

Amou

nt d

ue fr

om su

bsid

iarie

s -

- -

389,

437

503,

986

41

2,38

0

Amou

nt d

ue fr

om a

ssoc

iate

2

,600

2,

600

2,

600

2,60

0 2,

600

2,

600

21,7

16

17,7

14

14,6

60

401,

063

509,

995

416,

315

Le

ss: A

llow

ance

for e

xpec

ted

cred

it lo

sses

Sund

ry re

ceiv

able

s (1

,374

) (1

,270

) (1

,270

) (1

04)

- -

Amou

nt d

ue fr

om a

ssoc

iate

(2

,600

) (2

,600

) (2

,600

) (2

,600

) (2

,600

) (2

,600

)

Am

ount

due

from

subs

idia

ries

- -

- (6

0,16

5)

(21,

569)

(2

72)

(3,9

74)

(3,8

70)

(3,8

70)

(62,

869)

(2

4,16

9)

(2,8

72)

O

ther

rece

ivab

les,

net

17,7

42

13,8

44

10

,790

33

8,19

4 48

5,82

6

41

3,44

3

Refu

ndab

le d

epos

its

1,02

0 72

6

71

4 80

86

94

18

,762

14

,570

11,5

04

338,

274

485,

912

413,

537

To

tal t

rade

and

oth

er re

ceiv

able

s 39

,976

49

,216

59

,584

34

2,30

0 48

8,18

4

42

2,29

7



22.

Trad

e an

d ot

her r

ecei

vabl

es (c

ontd

.)

(a

) Tr

ade

rece

ivab

les

The

Grou

p’s

prim

ary

expo

sure

to c

redi

t risk

aris

es th

roug

h its

trad

e re

ceiv

able

s. T

he G

roup

’s tr

adin

g te

rms

with

its

cust

omer

s ar

e m

ainl

y on

cre

dit.

The

cred

it pe

riod

is ge

nera

lly fo

r a p

erio

d of

30

days

(30

June

201

8: 3

0 da

ys a

nd 1

July

201

7: 3

0 da

ys).

Oth

er c

redi

t ter

ms a

re a

sses

sed

and

appr

oved

on

a ca

se-b

y-ca

se b

asis.

Eac

h cu

stom

er

has

a m

axim

um c

redi

t lim

it. T

he G

roup

see

ks t

o m

aint

ain

stric

t co

ntro

l ove

r its

out

stan

ding

rec

eiva

bles

and

has

a c

redi

t co

ntro

l dep

artm

ent

to m

inim

ise c

redi

t ris

k.

Ove

rdue

bal

ance

s are

revi

ewed

regu

larly

by

seni

or m

anag

emen

t. In

vie

w o

f the

afo

rem

entio

ned

and

the

fact

that

the

Grou

p’s t

rade

rece

ivab

les r

elat

e to

a la

rge

num

ber

of d

iver

sified

cus

tom

ers,

ther

e is

no si

gnifi

cant

conc

entr

ation

of c

redi

t risk

. Tra

de re

ceiv

able

s are

non

-inte

rest

bea

ring.

Agei

ng a

naly

sis o

f tra

de re

ceiv

able

s

The

agei

ng a

naly

sis o

f the

Gro

up’s

and

of th

e Co

mpa

ny’s

trad

e re

ceiv

able

s is a

s fol

low

s:

Gr

oup

Com

pany

As a

t

As

at

2019

20

18

1.7.

2017

20

19

2018

1.

7.20

17

RM

’000

RM

’000

RM

’000

RM

’000

RM

’000

RM

’000

Nei

ther

pas

t due

nor

impa

ired

15,6

82

29,5

34

40,1

77

3,27

8 1,

631

5,11

7

1 to

30

days

pas

t due

not

impa

ired

4,73

5 5,

026

5,

966

637

556

1,76

8

31

to 6

0 da

ys p

ast d

ue n

ot im

paire

d 57

30

1,

817

38

29

1,78

2

61

to 9

0 da

ys p

ast d

ue n

ot im

paire

d 14

1 -

120

73

- 93

91 to

120

day

s pas

t due

not

impa

ired

147

56

- -

56

-

m

ore

than

121

day

s pas

t due

not

impa

ired

452

- -

- -

-

5,53

2 5,

112

7,

903

748

641

3,64

3

Im

paire

d -

143

40

7 -

- -

21,2

14

34,

789

48,4

87

4,02

6 2,

272

8,

760



22. Trade and other receivables (contd.)

(a) Trade receivables (contd.)

Receivables that are neither past due nor impaired

Trade and other receivables that are neither past due nor impaired are creditworthy debtors with good payment records with the Group and the Company.

None of the Group’s and the Company’s trade receivables that are neither past due nor impaired have been renegotiated during the financial year.

Receivables that are past due but not impaired

The Group and the Company have trade receivables amounting to RM5,532,000 (30 June 2018: RM5,112,000 and 1 July 2017: RM7,903,000) and RM748,000 (30 June 2018: RM641,000 and 1 July 2017: RM3,643,000), respectively, that are past due at the reporting date but not impaired.

Receivables that are impaired

The Group’s and the Company’s trade receivables that are impaired at the reporting date and the movement of the allowance accounts used to record the impairment are as follows:

Individually impaired Group Company 2019 2018 2019 2018 RM’000 RM’000 RM’000 RM’000 Trade receivables - 143 - - Less: Allowance for expected credit losses - (143) - - - - - -

Movement in allowance accounts: RM’000 RM’000 RM’000 RM’000 At 1 July 2018/2017 143 407 - - Written off (143) (264) - - At 30 June 2019/2018 - 143 - -

Trade receivables that are individually determined to be impaired at the reporting date relate to debtors that are in significant financial difficulties and have defaulted on payments or debtors that have usually settled their debts beyond the prescribed credit terms. These receivables are not secured by any collateral or credit enhancements.

(b) Amount due from subsidiaries

The amount due from subsidiaries under other receivables earns interest at the rate of 4% (2018: 4%) per annum.

(c) Amount due from associate

The amount due from associate is unsecured, non-interest bearing and is repayable on demand.



22. Trade and other receivables (contd.)

(d) Other receivables

Other receivables that are impaired

Movement in allowance accounts: Group Company 2019 2018 2019 2018 RM’000 RM’000 RM’000 RM’000 At 1 July 2018/2017 3,870 3,870 24,169 2,872 Effect of adoption of MFRS 9 - - 41,474 - At 1 July 2018, restated 3,870 3,870 65,643 2,872 Add/(Less): Expected credit losses, net of reversal (Note 8) 104 - (2,774) 21,297 At 30 June 2019/2018 3,974 3,870 62,869 24,169



23.

Oth

er cu

rren

t ass

ets

Gr

oup

Com

pany

As a

t

As

at

2019

20

18

1.7.

2017

20

19

2018

1.

7.20

17

RM

’000

RM

’000

RM

’000

RM

’000

RM

’000

RM

’000

Pr

epay

men

ts

2,88

3 3,

720

5,24

7 42

5 8

54

-

Tax

reco

vera

ble

14,3

74

13,1

78

9,41

6 2,

942

1,26

8 1,

173

17,2

57

16,8

98

14,6

63

3,36

7 2,

122

1,17

3

24.

Inve

stm

ent s

ecur

ities

Grou

p Co

mpa

ny

As

at

As a

t

20

19

2018

1.

7.20

17

2019

20

18

1.7.

2017

RM’0

00

RM’0

00

RM’0

00

RM’0

00

RM’0

00

RM’0

00

N

on-c

urre

nt

Fi

nanc

ial a

sset

s thr

ough

oth

er co

mpr

ehen

sive

inco

me

with

out r

e-cy

clin

g

Eq

uity

inst

rum

ents

(quo

ted

in M

alay

sia)

26,6

00

- -

- -

-

Avai

labl

e-fo

r-sal

e fin

anci

al a

sset

s

Eq

uity

inst

rum

ents

(unq

uote

d in

Mal

aysia

), at

cost

-

5,00

0 5,

000

- 5,

000

5,00

0

Equi

ty in

stru

men

ts (q

uote

d in

Mal

aysia

), at

fair

valu

e -

39,9

00

63,7

00

- -

-

-

44,9

00

68,7

00

- 5,

000

5,00

0

To

tal i

nves

tmen

t sec

uriti

es

26,6

00

44,9

00

68,7

00

- 5,

000

5,00

0



25.

Deriv

ative

s

20

19

2018

As

at 1

.7.2

017

Cont

ract

/ Fa

ir va

lue

thro

ugh

Cont

ract

/ Fa

ir va

lue

thro

ugh

Cont

ract

/ Fa

ir va

lue

thro

ugh

notio

nal

profi

t or l

oss

notio

nal

profi

t or l

oss

notio

nal

profi

t or l

oss

amou

nt

Asse

ts

Liab

ilitie

s am

ount

As

sets

Li

abili

ties

amou

nt

Asse

ts

Liab

ilitie

s

RM

’000

RM

’000

RM

’000

RM

’000

RM

’000

RM

’000

RM

’000

RM

’000

RM

’000

Gr

oup

N

on-h

edgi

ng d

eriv

ative

s:

Forw

ard

curr

ency

cont

ract

s 10

,648

31

6 -

- -

- 62

,184

25

2 30

4

Com

pany

N

on-h

edgi

ng d

eriv

ative

s:

Forw

ard

curr

ency

cont

ract

s -

- -

- -

- 11

,730

25

2 -

Th

e Gr

oup

uses

forw

ard

curr

ency

con

trac

ts to

man

age

som

e of

the

tran

sacti

on e

xpos

ure.

The

se c

ontr

acts

are

not

des

igna

ted

as c

ash

flow

nor

fair

valu

e he

dges

and

are

ent

ered

in

to fo

r per

iods

cons

isten

t with

cur

renc

y tr

ansa

ction

exp

osur

e an

d fa

ir va

lue

chan

ges e

xpos

ure.

Suc

h de

rivati

ves d

o no

t qua

lify

for h

edge

acc

ounti

ng.

Fo

rwar

d cu

rren

cy co

ntra

cts

Fo

rwar

d cu

rren

cy co

ntra

cts a

re u

sed

to h

edge

the

Grou

p’s a

nd th

e Co

mpa

ny’s

sale

s den

omin

ated

in U

SD fo

r whi

ch fi

rm co

mm

itmen

ts e

xist

ed a

t the

repo

rting

dat

e.

Th

e Gr

oup

and

the

Com

pany

reco

gnise

d a

gain

of R

M31

6,00

0 (2

018:

gai

n of

RM

52,0

00) a

nd a

loss

of N

il (2

018:

loss

of R

M25

2,00

0), r

espe

ctive

ly, a

risin

g fro

m fa

ir va

lue

chan

ges o

f de

rivati

ves a

sset

. The

fair

valu

e ch

ange

s are

attr

ibut

able

to c

hang

es in

fore

ign

exch

ange

and

forw

ard

rate

s. Th

e m

etho

ds a

nd a

ssum

ption

s app

lied

in d

eter

min

ing

the

fair

valu

es

of d

eriv

ative

s are

disc

lose

d in

Not

e 33

.

26.

Cash

and

ban

k ba

lanc

es

Grou

p Co

mpa

ny

As

at

As a

t

20

19

2018

1.

7.20

17

2019

20

18

1.7.

2017

RM’0

00

RM’0

00

RM’0

00

RM’0

00

RM’0

00

RM’0

00

Ca

sh a

t ban

ks a

nd o

n ha

nd

9,19

2 19

,953

65,2

34

2,02

1 5,

779

12

,205



26.

Cash

and

ban

k ba

lanc

es (c

ontd

.)

Fo

r the

pur

pose

of t

he st

atem

ents

of c

ash

flow

s, ca

sh a

nd ca

sh e

quiv

alen

ts co

mpr

ise th

e fo

llow

ing

as a

t the

repo

rting

dat

e:

Gr

oup

Com

pany

As a

t

As

at

2019

20

18

1.7.

2017

20

19

2018

1.

7.20

17

RM

’000

RM

’000

RM

’000

RM

’000

RM

’000

RM

’000

Ca

sh a

t ban

ks a

nd o

n ha

nd

9,19

2 19

,953

65,2

34

2,02

1 5,

779

12

,205

Ba

nk o

verd

rafts

(Not

e 27

) (1

40,6

94)

(101

,647

) (1

39,0

26)

(21,

048)

(1

6,36

7)

(15,

658)

Ca

sh a

nd ca

sh e

quiv

alen

ts

(131

,502

) (8

1,69

4)

(7

3,79

2)

(19,

027)

(1

0,58

8)

(3

,453

)

27.

Loan

s and

bor

row

ings

Gr

oup

Com

pany

As a

t

As

at

2019

20

18

1.7.

2017

20

19

2018

1.

7.20

17

RM

’000

RM

’000

RM

’000

RM

’000

RM

’000

RM

’000

Cu

rren

t

Se

cure

d:

Obl

igati

ons u

nder

fina

nce

leas

es (N

ote

31(c

)) 11

,012

11

,981

22,8

32

4,71

1 27

5

1,74

8

Un

secu

red:

Ba

nk o

verd

rafts

(Not

e 26

) 14

0,69

4 10

1,64

7 13

9,02

6 21

,048

16

,367

15

,658

Ba

nker

s’ ac

cept

ance

s 55

,369

13

,685

41

,213

-

- 9,

300

Re

volv

ing

cred

it 39

2,50

0 18

8,00

0 22

3,50

0 40

,000

40

,000

95

,000

Te

rm lo

ans

62

,076

58

,543

39

,443

-

10,0

00

10,0

00

USD

deno

min

ated

revo

lvin

g cr

edit

10,3

50

12,1

32

21,4

65

10,3

50

12,1

32

21,4

65

66

0,98

9 37

4,00

7

464,

647

71,3

98

78,4

99

151,

423

672,

001

385,

988

487,

479

76,1

09

78,7

74

153,

171



27.

Loan

s and

bor

row

ings

(con

td.)

Gr

oup

Com

pany

As a

t

As

at

2019

20

18

1.7.

2017

20

19

2018

1.

7.20

17

RM

’000

RM

’000

RM

’000

RM

’000

RM

’000

RM

’000

N

on-c

urre

nt

Se

cure

d:

Obl

igati

ons u

nder

fina

nce

leas

es (N

ote

31(c

)) 10

,551

6,

865

13,2

89

8,63

1 47

32

2

Uns

ecur

ed:

Re

volv

ing

cred

it -

233,

500

2

71,5

00

- -

-

Term

loan

s

273,

600

339,

676

304,

569

- 2,

000

12,0

00

27

3,60

0 57

3,17

6

576,

069

- 2,

000

12

,000

284,

151

580,

041

589,

358

8,63

1 2,

047

12

,322

To

tal l

oans

and

bor

row

ings

95

6,15

2 96

6,02

9

1,

076,

837

84,7

40

80,8

21

165,

493

Th

e in

tere

st ra

tes o

f the

Gro

up a

nd o

f the

Com

pany

are

as f

ollo

ws:

Gr

oup

Com

pany

As a

t

As

at

2019

20

18

1.7.

2017

20

19

2018

1.

7.20

17

%

%

%

%

%

%

Ba

nk o

verd

rafts

7.

20 -

7.95

7.

00 -

8.50

7.

15 -

7.95

7.

20 -

7.95

7.

45 -

8.04

7.

15 -

7.95

Ba

nker

s’ ac

cept

ance

s 3.

78 -

4.90

3.

92 -

4.92

3.

52 -

4.73

-

- 4.

20 -

4.65

Re

volv

ing

cred

it 3.

90 -

6.00

2.

59 -

7.00

2.

59 -

6.00

3.

90 -

4.99

3.

08 -

5.33

2.

59 -

5.54

Te

rm lo

ans

4.

97 -

6.00

4.

53 -

6.00

4.

53 -

6.00

-

6.00

4.

53 -

6.00



27. Loans and borrowings (contd.)

Obligations under finance leases

These obligations are secured by a charge over the leased assets (Note 13). The interest rates implicit in the leases of the Group and the Company are 5.50% (30 June 2018: 5.50% and 1 July 2017: 5.50%) per annum and 5.45% (2018: 4.94%) per annum, respectively.

Other borrowings

Certain unsecured borrowings of the Group and of the Company amounting to RM133,882,776 (30 June 2018: RM130,700,244 and 1 July 2017: RM320,289,000) and RM59,606,776 (2018: RM59,506,244), respectively are covered by a negative pledge over the assets of the Company and respective subsidiaries.

Certain unsecured borrowings of the Company amounting to RM1,038,560 (30 June 2018: RM2,076,033 and 1 July 2017: RM9,593,164) are covered by corporate guarantees provided by one of the subsidiaries.

The remaining unsecured borrowings of the Group are covered by corporate guarantees provided by the Company.

Loan covenants - Revolving credit

As at the end of the reporting period, certain covenants relating to a revolving credit facility with a carrying amount of RM244 million was not complied with by the Group. On 9 October 2019, the Group obtained indulgence from the said banker to vary the compliance conditions. As the indulgence was received subsequent to the financial year-end, the long-term portion amounting to RM182 million has been presented as current liabilities in the financial statements as the Group did not have an unconditional right to defer settlement of the outstanding amount as at 30 June 2019.



28.

Trad

e an

d ot

her p

ayab

les

Gr

oup

Com

pany

As a

t

As

at

2019

20

18

1.7.

2017

20

19

2018

1.

7.20

17

RM

’000

RM

’000

RM

’000

RM

’000

RM

’000

RM

’000

Cu

rren

t

Tr

ade

paya

bles

Th

ird p

artie

s 15

2,60

6 10

7,89

4

100,

257

14,7

46

15,7

54

19

,360

Am

ount

due

to su

bsid

iarie

s -

- -

15,7

81

975

1,

576

152,

606

107,

894

10

0,25

7 30

,527

16

,729

20

,936

O

ther

pay

able

s

Accr

uals

25,1

38

12,5

40

17

,807

14

,446

1,

730

2,

620

De

posit

rece

ived

70

60

-

70

60

-

Sund

ry p

ayab

les

23,6

02

15,0

32

18

,131

3,

991

1,99

1

2,43

8

Amou

nt d

ue to

subs

idia

ries

- -

- 8,

977

135,

163

89

,999

48,8

10

27,6

32

35,9

38

27,4

84

138,

944

95

,057

201,

416

135,

526

136,

195

58,0

11

155,

673

11

5,99

3

Non

-cur

rent

O

ther

pay

able

s

Amou

nt d

ue to

subs

idia

ries

- -

- 17

7,57

6 14

2,92

7 12

4,87

2

Tota

l tra

de a

nd o

ther

pay

able

s 20

1,41

6 13

5,52

6 13

6,19

5

235,

587

298,

600

240,

865




28. Trade and other payables (contd.) (a) Trade payables

Trade payables are non-interest bearing and the normal trade credit terms granted to the Group and the Company range from 30 to 180 days (30 June 2018: 30 to 180 days and 1 July 2017: 30 to 180 days).

(b) Amount due to subsidiaries (current)

The amount due to subsidiaries under other payables bears interest at the rate of 4% (30 June 2018: 4% and 1 July 2017: 4%) per annum. The amount is repayable on demand.

(c) Amount due to subsidiaries (non-current)

The amount due to subsidiaries under other payables bears interest at the rate of 4% (30 June 2018: 4% and 1 July 2017: 2018: 4%) per annum.

29. Share capital and treasury shares

Group and Company Number of Ordinary Shares Amount Share capital Share capital (Issued and Treasury (Issued and Treasury fully paid) shares fully paid) shares ’000 ’000 RM’000 RM’000

At 1 July 2018 and 30 June 2019 973,718 (5,727) 977,402 (13,687)

At 1 July 2017 and 30 June 2018 973,718 (5,727) 977,402 (13,687)

Treasury shares

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 the proceeds received on their subsequent sale or issuance.

Of the total 973,717,797 (2018: 973,717,797) issued and fully paid ordinary shares as at 30 June 2019, 5,727,000 (2018: 5,727,000) are held as treasury shares by the Company. As at 30 June 2019, the number of outstanding ordinary shares in issue after the set-off is therefore 967,990,797 (2018: 967,990,797) ordinary shares.

The directors of the Company are committed to enhancing the value of the Company for its shareholders and believe that the repurchase plan can be applied in the best interests of the Company and its shareholders. The repurchase transactions were financed by internally generated funds. The shares repurchased are held as treasury shares in accordance with Section 127 of the Companies Act 2016.


30. Other reserves Foreign Fair value currency adjustment translation reserve reserve Total RM’000 RM’000 RM’000 Group

At 1 July 2017 (6,300) - (6,300) Other comprehensive income: Cumulative loss for available-for-sale financial assets transferred to profit or loss 6,300 - 6,300 At 30 June 2018 - - - Effect of adoption of MFRS 9 (30,100) - (30,100) At 30 June 2018, restated (30,100) - (30,100)

Other comprehensive income: Fair value changes for fair value through other comprehensive income financial assets (13,300) 1 (13,299) At 30 June 2019 (43,400) 1 (43,399)

(a) Fair value adjustment reserve

Fair value adjustment reserve represents the cumulative fair value changes of fair value through other comprehensive income financial assets until they are disposed.

(b) Foreign currency translation reserve

The foreign currency translation reserve is used to record exchange differences arising from the translation of the financial statements of foreign operations whose functional currencies are different from that of the Group’s presentation currency. It is also used to record the exchange differences arising from monetary items which form part of the Group’s net investment in foreign operations.



31. Commitments (a) Capital commitments Capital expenditure as at the reporting date are as follows: Group Company 2019 2018 2019 2018 RM’000 RM’000 RM’000 RM’000 Capital expenditure

Approved and contracted for: Property, plant and equipment 9,972 7,215 - -

(b) Operating lease commitments - as lessee In addition to land use rights disclosed in Note 14, the Group has entered into operating lease agreements for

the lease of log pond, residential house, land and building. These leases have an average life of between 1 and 30 years with no renewal or purchase option and escalation clauses and there are no restrictions placed upon the Group by entering into these leases.

The future minimum rental payments under non-cancellable operating leases (excluding land use rights) at the reporting date are as follows:

Group

2019 2018 RM’000 RM’000 Not later than 1 year 9 9 Later than 1 year and not later than 5 years 34 37 Later than 5 years 52 64 95 110



31.

Com

mitm

ents

(con

td.)

(c

) Fi

nanc

e le

ase

com

mitm

ents

The

Grou

p ha

s fin

ance

leas

es fo

r ce

rtai

n ite

ms

of p

rope

rty,

plan

t and

equ

ipm

ent (

Not

e 13

). Th

ese

leas

es d

o no

t hav

e te

rms

of re

new

al, b

ut h

ave

purc

hase

opti

ons

at

nom

inal

val

ues a

t the

end

of t

he le

ase

term

. Fin

ance

leas

es a

re e

ffecti

vely

secu

red

as th

e rig

hts t

o th

e le

ased

ass

ets r

ever

t to

the

less

or in

the

even

t of d

efau

lt.

Futu

re m

inim

um le

ase

paym

ents

und

er fi

nanc

e le

ases

toge

ther

with

the

pres

ent v

alue

of t

he n

et m

inim

um le

ase

paym

ents

are

as f

ollo

ws:

Gr

oup

Com

pany

As a

t

As

at

2019

20

18

1.7.

2017

20

19

2018

1.

7.20

17

RM

’000

RM

’000

RM

’000

RM

’000

RM

’000

RM

’000

Min

imum

leas

e pa

ymen

ts:

Not

late

r tha

n 1

year

11

,880

12

,677

24

,125

5,

325

286

1,80

0

La

ter t

han

1 ye

ar b

ut n

ot la

ter t

han

2 ye

ars

10,7

17

6,06

2

10,2

63

9,05

1 48

28

6

La

ter t

han

2 ye

ars b

ut n

ot la

ter t

han

5 ye

ars

310

1,01

4

3,53

8 -

- 48

Tota

l min

imum

leas

e pa

ymen

ts

22,9

07

19,7

53

37

,926

14

,376

33

4

2,13

4

Le

ss: A

mou

nts r

epre

senti

ng fi

nanc

e ch

arge

s (1

,344

) (9

07)

(1

,805

) (1

,034

) (1

2)

(64)

Pres

ent v

alue

of m

inim

um le

ase

paym

ent

21,5

63

18,8

46

36

,121

13

,342

32

2

2,07

0

Pres

ent v

alue

of p

aym

ents

:

Not

late

r tha

n 1

year

11

,012

11

,981

22,8

32

4,71

1 27

5

1,74

8

La

ter t

han

1 ye

ar b

ut n

ot la

ter t

han

2 ye

ars

10,2

46

5,86

9

9,81

9 8,

631

47

27

6

La

ter t

han

2 ye

ars b

ut n

ot la

ter t

han

5 ye

ars

305

996

3,

470

- -

46

Pr

esen

t val

ue o

f min

imum

leas

e pa

ymen

ts

21,5

63

18,8

46

36

,121

13

,342

32

2 2,

070

Less

: Am

ount

due

with

in 1

2 m

onth

s (N

ote

27)

(11,

012)

(1

1,98

1)

(2

2,83

2)

(4,7

11)

(275

) (1

,748

)

Am

ount

due

afte

r 12

mon

ths (

Not

e 27

) 10

,551

6,

865

13,2

89

8,63

1 47

32

2



32. Related party transactions

In addition to the related party information disclosed elsewhere in the financial statements, the following transaction between the Group and the Company with the related parties took place at terms agreed between parties during the financial year:

(a) Sales and purchases of goods and services Group Company 2019 2018 2019 2018 RM’000 RM’000 RM’000 RM’000 Sale of timber products to: - Subsidiaries - - 55,632 79,329 - Subur Group (i) - 2,774 - - - Rimbunan Hijau General Trading Sdn. Bhd. (ii) 18 - - - Sale of fresh fruit bunches to: - R.H. Selangau Palm Oil Mill Sdn. Bhd. (iii) - 2,210 - - Sale of crude palm oil to: - Borneo Edible Oils Sdn. Bhd. (iv) 378,997 314,810 - - Contract income received from: - Tapak Megah Sdn. Bhd. (v) 1,222 1,512 1,222 1,512 Contract fees paid to subsidiaries - - 1,596 1,971 Hiring charges paid to subsidiaries - - 300 714 Towage and freight charges paid to: - Subur Group (i) 172 142 - - - Oriental Evermore Group (vi) 5,021 8,361 1,711 3,623 Purchase of timber products from: - Subsidiaries - - 45,690 65,258 - Binamewah Sdn. Bhd. (vii) 3,214 3,947 3,214 3,947 - Subur Group (i) - 531 - - Purchase of raw materials from Petanak Enterprises Sdn. Bhd. (viii) 9,785 13,032 - - Purchase of spare parts, fuel and lubricants, chemicals and servicing of machineries: - Rimbunan Hijau General Trading Sdn. Bhd. (ii) 5,244 5,489 278 97 - Oriental Evermore Group (vi) 48 251 - - - Kejuruteraan Utama Sentiasa Sdn. Bhd. (ix) 1,518 - 1,518 - Log pond/office/warehouse rental paid to subsidiaries - - 96 96 Hotel accommodation and purchase of food and beverages paid to Regalia Ritz Enterprise Sdn. Bhd. (x) 14 66 117 65 Land rental paid to: - Rejang Heights Sdn. Bhd. (xi) 1,966 2,104 - - - R.H. Forest Corporation Sdn. Bhd. (xii) 3,622 3,599 - - - Wealth Houses Development Sdn. Bhd. (xiii) 556 558 - - Purchase of motor vehicles and spare parts from: - Rimbunan Hijau Auto Services Sdn. Bhd. (xiv) 1,546 758 1,302 - - Kejuruteraan Utama Sentiasa Sdn. Bhd. (ix) - 143 - -



32. Related party transactions (contd.)

(a) Sales and purchases of goods and services (contd.) Group Company 2019 2018 2019 2018 RM’000 RM’000 RM’000 RM’000

Technical and advisory fee paid to: - RH Development (Sarawak) Sdn. Bhd. (xv) 364 837 - 24 Construction fee paid to: - Oriental Evermore Group (vi) 5,365 - - - Interest income received from subsidiaries - - 15,012 17,097 Interest expense paid to subsidiaries - - 6,659 10,278 Commission paid to subsidiaries - - 90 126 Purchase of plywood from subsidiaries - - 32 6 Fabrication and repair expense paid to subsidiaries - - 8 188 Road maintenance fees received from subsidiaries - - 3,000 3,000 Details of the relationships of related parties, which have transacted with the Group and the Company are as

follows:

(i) Subur Group

Subur Group includes Subur Tiasa Holdings Bhd. (“STHB”) and its wholly-owned subsidiaries, Subur Tiasa Plywood Sdn. Bhd. and Trimogreen Sdn. Bhd.

The following major shareholder of the Company has substantial interests in STHB:

• Tan Sri Datuk Sir Diong Hiew King @ Tiong Hiew King (“Tan Sri THK”) - direct interest 0.59% and indirect interest 37.84%.

Dato’ Tiong Ing, daughter of Tan Sri THK, is the Managing Director of STHB.

(ii) Rimbunan Hijau General Trading Sdn. Bhd. (“RHGT”)

The following major shareholder of the Company has substantial interests in RHGT:

• Tan Sri THK (a director of RHGT) - direct interest 2.5% and indirect interest 73%.

Datuk Tiong Thai King (“Datuk TTK”) a director of certain subsidiaries, is also a director of RHGT. He holds indirect interest of 2.46% in RHGT.

(iii) R.H. Selangau Palm Oil Mill Sdn. Bhd. (“RHS”)

The following major shareholder of the Company has substantial interests in RHS:

• Tan Sri THK (a director of RHS) - direct interest 2% and indirect interest 90.3%.

(iv) Borneo Edible Oils Sdn. Bhd. (“BEO”)

Tan Sri THK, a major shareholder of the Company, is also a director of BEO. He holds indirect interest of 90% in BEO.

Tiong Chiong Hee (“TCH”), a director of the Company, holds indirect interest of 10% in BEO.

Datuk TTK, a director of certain subsidiaries, is also a director of BEO and holds indirect interest of 10% in BEO.



32. Related party transactions (contd.) (a) Sales and purchases of goods and services (contd.)

Details of the relationships of related parties, which have transacted with the Group and the Company are as follows: (contd.)

(v) Tapak Megah Sdn. Bhd. (“TMSB”)

Tan Sri THK, a major shareholder of the Company, has direct interest of 6% and indirect interest of 56% in TMSB.

Datuk TTK, a director of certain subsidiaries is also a director of TMSB and holds direct interest of 7% in TMSB.

Dato’ Sri Dr. Tiong Ik King (“Dato’ Sri Dr. TIK”), a director of the Company, holds direct interest of 7% in TMSB.

(vi) Oriental Evermore Group

Oriental Evermore Group includes Oriental Evermore Sdn. Bhd. (“OESB”) and its wholly-owned subsidiaries namely, Empayar Semarak Sdn. Bhd., Globular Sdn. Bhd., Trans-Allied Sdn. Bhd. And Moverstar (M) Sdn. Bhd.

Dato’ Sri TCH, a director of the Company, holds indirect interest of 68.05% in OESB.

Clara Tiong Siew Ee, daughter of a director of the Company, Dato’ Sri TCH, is a director of Oriental Evermore Group. She holds direct interest of 1.75% and indirect interest of 68.05% in OESB.

(vii) Binamewah Sdn. Bhd. (“BSB”)

Dato’ Sri Dr. TIK, a director of the Company, holds direct interest of 7% in BSB.

Datuk TTK, a director of certain subsidiaries is also a director of BSB and has indirect interest of 7%.

A major shareholder of the Company, Tan Sri THK, holds direct interest of 6% and indirect interest of 56% in BSB.

(viii) Petanak Enterprises Sdn. Bhd. (“PESB”)

Tan Sri THK, a major shareholder of the Company, hold indirect interests of 51% in PESB.

(ix) Kejuruteraan Utama Sentiasa Sdn. Bhd. (“KUSB”)

Tan Sri THK a major shareholder of the Company holds indirect interest of 100% in KUSB.

Datuk TTK, a director of certain subsidiaries, is also a director of KUSB.

(x) Regalia Ritz Enterprise Sdn. Bhd. (“RRE”)

Tan Sri THK, a major shareholder of the Company, is a director of RRE and has indirect interest of 100% in RRE.

TC, a director of the Company is also common director in RRE.

Datuk TTK, a director of certain subsidiaries, is also a director of RRE.

32. Related party transactions (contd.) (a) Sales and purchases of goods and services (contd.)



Details of the relationships of related parties, which have transacted with the Group and the Company are as follows: (contd.)

(xi) Rejang Heights Sdn. Bhd. (“RHSB”)

A major shareholder of the Company, Tan Sri THK, is a director of RHSB. He has direct interest of 1% and indirect interest of 99% in RHSB.

TC, a director of the Company, is also common director in RHSB.

(xii) R.H. Forest Corporation Sdn. Bhd. (“RHFC”)

A major shareholder of the Company, Tan Sri THK, is also a director of RHFC. He has direct interests of 0.5% and indirect interest of 99.5% in RHFC.

TC, a director of the Company, is also a director of RHFC.

(xiii) Wealth Houses Development Sdn. Bhd. (“WHD”)

Tan Sri THK, a major shareholder of the Company, a director of WHD, holds indirect interest of 85% in WHD.

Datuk TTK, a director of certain subsidiaries, is also a director of WHD.

(xiv) Rimbunan Hijau Auto Services Sdn. Bhd. (“RHAS”)

The following major shareholders/directors of the Company have substantial interests in RHAS:

Tan Sri THK, a major shareholder of the Company, holds indirect interest of 50% in RHAS.

Dato’ Sri Dr. TIK, a director of the Company, holds direct interest of 10% in RHAS.

Datuk TTK, a director of certain subsidiaries, is also a common director in RHAS, holds indirect interest of 30% in RHAS.

(xv) RH Development (Sarawak) Sdn. Bhd. (“RHDS”)

Tan Sri THK, a major shareholder of the Company, is also a common director in RHDS and hold indirect interest of 100%.



32.

Rela

ted

part

y tr

ansa

ction

s (co

ntd.

)

(a

) Sa

les a

nd p

urch

ases

of g

oods

and

serv

ices

(con

td.)

Info

rmati

on re

gard

ing

outs

tand

ing

bala

nces

aris

ing

from

tran

sacti

ons w

ith re

late

d pa

rties

as a

t 30

June

201

9 ar

e as

follo

ws:

Out

stan

ding

bal

ance

s

Rela

ted

parti

es

Nat

ure

of tr

ansa

ction

sG

roup

’000

Com

pany

’000

(i) (a

)Su

bur T

iasa

Hol

ding

s Bhd

.To

wag

e an

d fr

eigh

t ser

vice

s inc

ome

Cont

ract

to su

pply

of t

rans

port

ation

serv

ices

Cont

ract

for t

he su

pply

of l

ogpo

nd fa

ciliti

es

2019

: (RM

1,40

8)20

18: (

RM1,

246)

20

19: (

RM1,

228)

2018

: (RM

1,24

6)

(i) (b

)Su

bur T

iasa

Ply

woo

d Sd

n. B

hd.

Sale

of ti

mbe

r pro

duct

s20

19: N

il20

18: N

il20

19: N

il20

18: N

il

(i) (c

)Tr

imog

reen

Sdn

. Bhd

.Pu

rcha

se o

f tim

ber p

rodu

cts

2019

: Nil

2018

: (RM

57)

2019

: Nil

2018

: Nil

(ii)

Rim

buna

n Hi

jau

Gene

ral T

radi

ng S

dn. B

hd.

Purc

hase

of s

pare

par

ts, f

uel a

nd lu

bric

ants

, ch

emic

als a

nd se

rvic

ing

of m

achi

nerie

s20

19: (

RM3,

959)

2018

: (RM

1,57

3)20

19: (

RM57

0)20

18: (

RM20

)

(iii)

R.H.

Sel

anga

u Pa

lm O

il M

ill S

dn. B

hd.

Sale

of f

resh

frui

t bun

ches

2019

: Nil

2018

: Nil

2019

: Nil

2018

: Nil

(iv)

Born

eo E

dibl

e O

ils S

dn. B

hd.

Sale

of c

rude

pal

m o

il20

19: R

M8,

348

2018

: RM

21,2

8920

19: N

il20

18: N

il

(v)

Tapa

k M

egah

Sdn

. Bhd

.Co

ntra

ct in

com

e

2019

: Nil

2018

: Nil

2019

: Nil

2018

: Nil

(vi)

(a)

Orie

ntal

Eve

rmor

e Sd

n. B

hd.

Tow

age

and

frei

ght c

harg

es

2019

: (RM

964)

2018

: (RM

372)

2019

: (RM

317)

2018

: (RM

447)

(vi)

(b)

Glob

ular

Sdn

. Bhd

.To

wag

e an

d fr

eigh

t cha

rges

2019

: (RM

277)

2018

: (RM

360)

2019

: (RM

128)

2018

: (RM

360)

(vi)

(c)

Empa

yar S

emar

ak S

dn. B

hd.

Tow

age

and

frei

ght c

harg

es20

19: (

RM1,

205)

2018

: (RM

669)

2019

: (RM

209)

2018

: (RM

273)

(vi)

(d)

Tran

s-Al

lied

Sdn.

Bhd

.To

wag

e an

d fr

eigh

t cha

rges

2019

: (RM

247)

2018

: (RM

57)

2019

: Nil

2018

: (RM

6)



Out

stan

ding

bal

ance

s

Rela

ted

parti

es

Nat

ure

of tr

ansa

ction

sG

roup

’000

Com

pany

’000

(vi)

(e)

Mov

erst

ar (M

) Sdn

. Bhd

.Co

nstr

uctio

n fe

es20

19: (

RM3,

598)

2018

: Nil

2019

: (RM

58)

2018

: N

il

(viii

)Pe

tana

k En

terp

rises

Sdn

. Bhd

.Pu

rcha

se o

f raw

mat

eria

ls20

19: (

RM6,

842)

2018

: (RM

3,34

2)20

19: N

il20

18: N

il

(ix)

Keju

rute

raan

Uta

ma

Senti

asa

Sdn.

Bhd

.Pu

rcha

se o

f spa

re p

arts

, fue

l and

lubr

ican

ts,

chem

ical

s and

serv

icin

g of

mac

hine

ries

2019

: (RM

100)

2018

: (RM

503)

2019

: Nil

2018

: Nil

(x)

Rega

lia R

itz E

nter

prise

Sdn

. Bhd

.Ho

tel a

ccom

mod

ation

incu

rred

2019

: (RM

120)

2018

: Nil

2019

: (RM

119)

2018

: Nil

(xi)

Reja

ng H

eigh

ts S

dn. B

hd.

Land

rent

al in

curr

ed20

19: (

RM98

2)20

18: (

RM57

1)20

19: N

il20

18: N

il

(xii)

R.H.

For

est C

orpo

ratio

n Sd

n. B

hd.

Purc

hase

of ti

mbe

r pro

duct

sLa

nd re

ntal

incu

rred

2019

: (RM

981)

2018

: RM

1,54

020

19: N

il20

18: N

il

(xiii

)W

ealth

Hou

ses D

evel

opm

ent S

dn. B

hd.

Land

rent

al in

curr

ed20

19: (

RM31

7)20

18: (

RM22

0)20

19: N

il20

18: N

il

(xiv

)Ri

mbu

nan

Hija

u Au

to S

ervi

ces S

dn. B

hd.

Purc

hase

of m

otor

veh

icle

s and

spar

e pa

rts

2019

: (RM

1,10

1)20

18: (

RM65

9)20

19: (

RM45

2)20

18: (

RM24

0)

(xv)

RH D

evel

opm

ent (

Sara

wak

) Sdn

. Bhd

.Te

chni

cal a

nd a

dviso

ry fe

e in

curr

ed20

19: (

RM53

7)20

18: (

RM3,

598)

2019

: (RM

537)

2018

: (RM

3,59

8)

32.

Rela

ted

part

y tr

ansa

ction

s (co

ntd.

)

(a

) Sa

les a

nd p

urch

ases

of g

oods

and

serv

ices

(con

td.)

Info

rmati

on re

gard

ing

outs

tand

ing

bala

nces

aris

ing

from

tran

sacti

ons w

ith re

late

d pa

rties

as a

t 30

June

201

9 ar

e as

follo

ws:

(con

td.)

* B

rack

ets d

enot

e ba

lanc

es p

ayab

le to

rela

ted

parti

es.



32. Related party transactions (contd.)

(b) Compensation of key management personnel

The remuneration of directors and other members of key management during the year were as follows:


Short-term employee benefits 4,648 5,520 3,618 4,412 Post-employment benefits: Defined contribution plan 411 502 355 417 5,059 6,022 3,973 4,829

Included in total key management personnel are:

Directors’ remuneration (Note 10) 3,140 3,912 3,092 3,816

33. Fair value of financial instruments

(a) Fair value of financial instruments by classes that are not carried at fair value and whose carrying amounts are not reasonable approximation of fair value

2019 2018 As at 1.7.2017 Carrying Fair Carrying Fair Carrying Fair amount value amount value amount value RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 Financial liabilities:

Group Loans and borrowings (Note 27): - Non-current obligations under finance leases 10,551 10,546 6,865 6,973 13,289 13,262

Financial liabilities:

Company Loans and borrowings (Note 27): - Non-current obligations under finance leases 8,631 8,626 47 71 322 323

(b) Determination of fair value

The following are classes of financial instruments that are not carried at fair value and whose carrying amounts are reasonable approximation of fair value:

Note

Trade and other receivables 22 Cash and bank balances 26 Loans and borrowings (current and non-current, except non-current obligations under finance leases) 27 Trade and other payables 28



33. Fair value of financial instruments (contd.)

(b) Determination of fair value (contd.)

(i) Cash and bank balances, other receivables and other payables The carrying amounts of these balances approximate their fair values due to the short term nature.

(ii) Trade receivables and trade payables

The carrying amounts of trade receivables and trade payables approximate their fair values because they are subject to normal trade credit terms.

(iii) Loans and borrowings

The carrying values of bank borrowings and term loans approximate their fair values as they bear interest rates which approximate the current incremental borrowing rates for similar types of lending and borrowing arrangements.

(iv) Loans and borrowings (non-current obligations under finance leases)

The fair values of these financial instruments are estimated by discounting expected future cash flows at market incremental lending rate for similar types of lending, borrowing or leasing arrangements at the reporting date.

(v) Financial guarantees

Fair value is determined based on the probability weighted discounted cash flow method. The probability has been estimated and assigned for the following key assumptions:

- The likelihood of the guaranteed party defaulting within the guaranteed period;

- The exposure on the portion that is not expected to be recovered due to the guaranteed party’s default;

- The estimated loss exposure if the party guaranteed were to default.

34. Fair value of measurement

Fair value hierarchy

The Group and the Company classify fair value measurement using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. The fair value hierarchy has the following levels:

Level 1 - Quoted prices in active markets for identical assets or liabilities;

Level 2 - Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly; and

Level 3 - Inputs for the asset or liability that are not based on observable market data (unobservable inputs).



34.

Fair

valu

e of

mea

sure

men

t (co

ntd.

)

Fa

ir va

lue

hier

arch

y (c

ontd

.)

Th

e fo

llow

ing

tabl

e pr

ovid

es th

e fa

ir va

lue

mea

sure

men

t hie

rarc

hy o

f the

Gro

up’s

and

the

Com

pany

’s as

sets

and

liab

ilitie

s:

Q

uanti

tativ

e di

sclo

sure

s fai

r val

ue m

easu

rem

ent h

iera

rchy

for a

sset

s and

liab

ilitie

s as a

t 30

June

201

9

Da

te o

f Le

vel 1

Le

vel 2

Le

vel 3

To

tal

valu

ation

RM

’000

RM

’000

RM

’000

RM

’000

Gr

oup

As

sets

mea

sure

d at

fair

valu

e

Inve

stm

ent s

ecur

ities

(Not

e 24

)

- E

quity

inve

stm

ents

quo

ted

in M

alay

sia

30

June

201

9 26

,600

-

- 26

,600

De

rivati

ves (

Not

e 25

)

- F

orw

ard

curr

ency

cont

ract

s

30 Ju

ne 2

019

- 31

6 -

316

Bi

olog

ical a

sset

s (N

ote

15)

30

June

201

9 -

- 67

,088

67

,088

26

,600

31

6 67

,088

94

,004

Liab

ilitie

s for

whi

ch fa

ir va

lues

are

dis

clos

ed

Loan

s and

bor

row

ings

(Not

e 33

(a))

-

Non

-cur

rent

obl

igati

ons u

nder

fina

nce

leas

e

30 Ju

ne 2

019

- 10

,546

-

10,5

46

Q

uanti

tativ

e di

sclo

sure

s fai

r val

ue m

easu

rem

ent h

iera

rchy

for a

sset

s and

liab

ilitie

s as a

t 30

June

201

8

Da

te o

f Le

vel 1

Le

vel 2

Le

vel 3

To

tal

valu

ation

RM

’000

RM

’000

RM

’000

RM

’000

Gr

oup

As

sets

mea

sure

d at

fair

valu

e

Inve

stm

ent s

ecur

ities

(Not

e 24

)

- E

quity

inve

stm

ents

quo

ted

in M

alay

sia

30

June

201

8 3

9,90

0 -

- 39

,900

Bi

olog

ical a

sset

s (N

ote

15)

30

June

201

8 -

- 55

,941

55

,941

39

,900

-

55,9

41

95,8

41

Li

abili

ties f

or w

hich

fair

valu

es a

re d

iscl

osed

Lo

ans a

nd b

orro

win

gs (N

ote

33 (a

))

- N

on-c

urre

nt o

blig

ation

s und

er fi

nanc

e le

ase

30

June

201

8 -

6,97

3 -

6,97

3



34.

Fair

valu

e of

mea

sure

men

t (co

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ote

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))

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34.

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ntd.

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elow

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ly 2

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36.

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ncia

l ass

ets a

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lities

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p Co

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at

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2017

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8



37. Financial risk management objectives and policies

The Group and the Company are exposed to financial risks arising from their operations and the use of financial instruments. The Group’s overall risk management strategy seeks to minimise potential adverse effects of financial performance of the Group. The key financial risks include credit risk, liquidity risk, interest rate risk, foreign currency risk, market price risk and equity price risk.

Financial risk management policies are reviewed and approved by the Board of Directors and executed by the management of the respective operating units. The Group Risk Management Committee provides independent oversight to the effectiveness of the risk management process.

The Group and the Company utilise forward currency contracts. Control and monitoring procedures include, amongst others, setting of trading limits and the manner and timing of management reporting. Such derivative trading is also under the close supervision of an executive director. These control procedures are periodically reviewed and enhanced where necessary in response to changes in market conditions. The Group and the Company do not apply hedge accounting.

The following sections provide details regarding the Group’s and the Company’s exposure to the above-mentioned financial risks and the objectives, policies and processes for the management of these risks.

(a) Credit risk

Credit risk is the risk of loss that may arise on outstanding financial instruments should a counterparty default on its obligations. At the reporting date, the Group’s exposure to credit risk arises primarily from trade and other receivables.

The Group manages its credit risk by trading only with recognised and creditworthy third parties. In addition, receivable balances are monitored on an ongoing basis and the Group’s exposure to bad debts is not significant. Since the Group trades only with recognised and creditworthy third parties, there is no requirement for collateral.

Impairment reviews are performed regularly and at the reporting date using the simplified approach. Generally, trade receivables are provided for expected credit loss when past due for more than 180 days.

Exposure to credit risk

At the reporting date, the Group’s and the Company’s maximum exposure to credit risk is represented by:

(i) the carrying amount of each class of financial assets recognised in the statements of financial position; and

(ii) a nominal amount of RM1,241,815,000 (2018: RM1,255,315,000) and RM10,462,300 (2018: RM10,401,300) relating to corporate guarantees provided by the Company to banks and financial institutions for the subsidiaries’ loans and borrowings and suppliers of the subsidiaries, respectively.

Credit risk concentration profile

The Group determines concentration of credit risk by monitoring the country of its trade receivables on an ongoing basis. The credit risk concentration profile of the Group’s trade receivables at the reporting date are as follows:

Group 2019 2018 RM’000 % of total RM’000 % of total

By country: China 256 1 878 2 India 3,517 17 - - Korea 356 2 4,495 13 Malaysia 15,858 75 28,001 81 Japan 62 - - - Taiwan 1,165 5 1,272 4 21,214 100 34,646 100



37. Financial risk management objectives and policies (contd.)

(b) Liquidity risk

Liquidity risk is the risk that the Group or the Company will not be able to meet their financial obligations due to shortage of funds. The Group’s and the Company’s exposure to liquidity risk arises primarily from mismatches of the maturities of financial assets and liabilities. The Group adopts a prudent approach to managing its liquidity risk.

Analysis of financial instruments by remaining contractual maturities

The table below summarises the maturity profile of the Group’s and the Company’s liabilities at the reporting date based on contractual undiscounted repayment obligations.

On demand or One to Over five within one year five years years Total RM’000 RM’000 RM’000 RM’000 As at 30 June 2019

Group

Financial liabilities: Trade and other payables 201,416 - - 201,416 Loans and borrowings 730,438 282,176 36,688 1,049,302 Total undiscounted financial liabilities 931,854 282,176 36,688 1,250,718

Company

Financial liabilities: Trade and other payables 58,369 184,679 - 243,048 Loans and borrowings 78,749 9,052 - 87,801 Financial guarantee contracts* 1,252,277 - - 1,252,277 Total undiscounted financial liabilities 1,389,395 193,731 - 1,583,126 As at 30 June 2018

Group

Financial liabilities: Trade and other payables 135,526 - - 135,526 Loans and borrowings 431,274 562,355 100,549 1,094,178 Total undiscounted financial liabilities 566,800 562,355 100,549 1,229,704

Company

Financial liabilities: Trade and other payables 161,119 148,644 - 309,763 Loans and borrowings 80,940 2,049 - 82,989 Financial guarantee contracts* 1,265,716 - - 1,265,716 Total undiscounted financial liabilities 1,507,775 150,693 - 1,658,468 * Based on the maximum amount that can be called under the financial guarantee contracts.




(c) Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of the Group’s and the Company’s financial instruments will fluctuate because of changes in market interest rates.

As the Group and the Company have no significant interest-bearing financial assets, the Group’s and the Company’s income and operating cash flows are substantially independent of changes in market interest rates.

The Group’s and the Company’s interest rate risk arises primarily from interest-bearing borrowings. Borrowings at floating rates expose the Group and the Company to cash flow interest rate risk. Borrowings obtained at fixed rates expose the Group and the Company to fair value interest rate risk.

Interest on financial instruments at fixed rates are fixed until the maturity of the instruments. The other financial instruments of the Group and of the Company that are not shown above are not subject to interest rate risks.

The Group’s policy is to manage interest cost using a mix of fixed and floating rate borrowings.

Sensitivity analysis for interest rate risk

At the reporting date, it is estimated that a 20 basis points increase in interest rate, with all other variables held constant, would decrease the Group’s and the Company’s (loss)/profit net of tax by approximately RM1,709,929 and RM145,344 (2018: RM1,280,787 and RM186,737) respectively, arising mainly as a result of higher interest expense on net floating borrowing position. A decrease in interest rate would have had the equal but opposite effect on the aforesaid amount, on the basis that all other variables remain constant.

(d) Foreign currency risk

Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates.

The Group and the Company have exposure to foreign exchange risk as a result of transactions denominated in foreign currencies, arising from normal trading activities. It is the Group’s policy to hedge these risks where the exposures are certain and cost-efficient.

The currency giving rise to this risk is primarily United States Dollars (USD). Exposure to foreign currency risk is monitored on an on-going basis to ensure that the exposure is at an acceptable level.

The Group and the Company use forward currency contracts to minimise the currency exposures arising from sales and purchases after a firm commitment has been entered. It is the Group’s policy not to enter into forward contracts until firm commitment is in place.

Sensitivity analysis for foreign currency risk

The following table demonstrates the sensitivity of the Group’s and the Company’s (loss)/profit net of tax to a reasonably possible strengthening/weakening of the United States Dollars (“USD”) exchange rates against the functional currency of the Group and of the Company, with all other variables held constant.

Group Company Loss net of tax (Loss)/profit net of tax 2019 2018 2019 2018 RM’000 RM’000 RM’000 RM’000 USD - Strengthen 5% (2018: 5%) 738 816 388 454 USD - Weaken 5% (2018: 5%) (738) (816) (388) (454)




(e) Market price risk

The Group is exposed to market price risk from its operations. The market price of logs, wood processing products, plantation produce, crude palm oil and palm kernel is determined by the supply, pricing and demand. These factors can result in fluctuations in the market price.

(f) Equity price risk

The Group’s listed equity securities are susceptible to market price risk arising from uncertainties about future values of the investment securities. The Group manages the equity price risk through diversification and by placing limits on individual and total equity instruments. Reports on the equity portfolio are submitted to the Group’s senior management on a regular basis. The Board of Directors reviews and approves all equity investment decisions.

At the reporting date, the exposure to listed equity securities at fair value was RM26,600,000 (2018: RM39,900,000). A decrease of 5% on the FTSE Bursa Malaysia KLCI could have an impact of approximately RM1,330,000 (2018: RM1,995,000) on the income or equity attributable to the Group, depending on whether the decline is significant or prolonged. An increase of 5% in the value of the listed securities would only impact equity, but would not have an effect on profit or loss.

38. Capital management

The primary objective of the Group’s and the Company’s capital management is to ensure that they maintain healthy capital ratios to support their businesses and maximise shareholder value. No changes were made in the objective, policies and processes during the year ended 30 June 2019 and 2018.

The Group reviews its capital structure and makes adjustments to reflect economic conditions, business strategies and future commitments on a continuous basis.

The Group monitors capital using a gearing ratio which is net debt divided by total equity attributable to owners of the parent plus net debt. The Group includes within net debt, loans and borrowings, less cash and bank balances.

Group Company Note 2019 2018 2019 2018 RM’000 RM’000 RM’000 RM’000

Loans and borrowings 27 956,152 966,029 84,740 80,821 Less: Cash and bank balances 26 (9,192) (19,953) (2,021) (5,779)

Net debt 946,960 946,076 82,719 75,042

Equity attributable to owners of the parent 1,170,045 1,459,220 1,705,744 1,975,177

Capital and net debt 2,117,005 2,405,296 1,788,463 2,050,219

Gearing ratio 45% 39% 5% 4%



39. Segment information

For management purposes, the Group is organised into business units based on their products and services, and has four reportable operating segments as follows:

i. Oil Palm - development of oil palm plantations;

ii. Oil Mill - palm oil processing;

iii. Logs Trading - extraction and sales of logs and development of planted forests;

iv. Manufacturing - manufacturing and trading of sawn timber, plywood, veneer, blockboard and laminated wood; and

v. Others - mainly comprises the provision of air transportation services, fabrication and workshop services, and investment holding.

Except as indicated above, no operating segment has been aggregated to form the above reportable operating segments.

Segmental operating results are reviewed on a regular basis by the Group’s key management personnel in order to make decisions about resource allocation and performance assessment. Segment performance is evaluated based on profit or loss before tax.

Transfer prices between operating segments are on an arm’s length basis in a manner similar to transactions with third parties.

Segment analysis by geographical locations has not been presented as the Group’s operations are predominantly conducted in Malaysia.



39.

Segm

ent i

nfor

mati

on (c

ontd

.)

Adju

stmen

ts

Pe

r con

solid

ated

Oi

l Pal

m

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ill

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ing

Man

ufac

turin

g Ot

hers

an

d el

imin

ation

s No

tes

finan

cial s

tate

men

ts

2019

20

18

2019

20

18

2019

20

18

2019

20

18

2019

20

18

2019

20

18

20

19

2018

RM

’000

RM

’000

RM

’000

RM

’000

RM

’000

RM

’000

RM

’000

RM

’000

RM

’000

RM

’000

RM

’000

RM

’000

RM’0

00

RM’0

00

Re

venu

e:

Ex

tern

al cu

stom

ers

31,1

66

63,5

09

426,

133

489,

958

52,7

90

87,7

33

127

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20

0,19

2

485

297

- -

63

7,74

4 84

1,68

9

Inte

r-seg

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t 25

7,32

3 31

2,34

8 2,

885

2,06

2 63

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85

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137

4,49

5

8,35

0 6,

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(331

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A

-

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To

tal r

even

ue

288,

489

375,

857

429,

018

492,

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115,

828

173,

467

12

7,30

7 20

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7

8,83

5 7,

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63

7,74

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712

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1,79

9 14

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114

246

Di

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22,0

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118,

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95,7

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loss

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fit

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114

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6 1,

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59

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7 33

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E

1,23

6,67

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149,

138



39. Segment information (contd.)

Notes: Nature of adjustments and eliminations to arrive at amounts reported in the consolidated financial statements.

A Inter-segment revenues are eliminated on consolidation.

B Other material non-cash expenses consist of the following items presented in the respective notes to the financial statements.

Note 2019 2018 RM’000 RM’000

Impairment loss on available-for-sale financial assets 8 - 30,100 Property, plant and equipment written off 8 571 1,041

571 31,141 C Additions to non-current assets consist of: 2019 2018

RM’000 RM’000

Property, plant and equipment 54,779 76,282 Biological assets 20,133 16,789

74,912 93,071

D The following items are added to/(deducted from) segment assets to arrive at total assets reported in the consolidated statement of financial position:

2019 2018

RM’000 RM’000

Deferred tax assets - 34,930 Tax recoverable 14,374 13,178 Inter-segment assets (2,623,959) (3,218,736)

(2,609,585) (3,170,628)

E The following items are added to/(deducted from) segment liabilities to arrive at total liabilities reported in the consolidated statement of financial position:

2019 2018

RM’000 RM’000

Deferred tax liabilities 78,468 46,589 Income tax payable 637 994 Loans and borrowings 956,152 966,029 Inter-segment liabilities (1,592,061) (1,658,463)

(556,804) (644,851)

Revenue from one major customer amount to RM378,997,085 (2018: RM314,810,182), arising from sales by the oil mill segment.



40. Dividends Group and Company 2019 2018

RM’000 RM’000

Recognised during the financial year:

Dividends on ordinary shares: First and final single-tier dividend for 2018: 0.5 sen 4,840 - First and final single-tier dividend for 2017: 0.5 sen - 4,840

41. Authorisation of financial statements for issue

The financial statements were authorised for issue by the Board in accordance with a resolution of the directors on 21 October 2019



DISCLOSURE ON RECURRENT RELATED PARTY TRANSACTIONS

At the Annual General Meeting held on 28 November 2018, the Company obtained a shareholders’ mandate for the Group to enter into recurrent related party transactions of a revenue or trading nature.

In accordance with Practice Note 12 of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad, the details of the recurrent related party transactions conducted during the financial year ended 30 June 2019 (FY 2019) pursuant to the shareholders’ mandate are as follows:

Transacting Related Parties

Nature of Transactions entered into by the Company and/or its subsidiaries (Group)

Amount Transacted

During FY2019RM’000

Binamewah Sdn Bhd1 Purchase of logs by the Group 3,214

Petanak Enterprises Sdn Bhd1 Purchase of raw materials (glue) by the Group 9,785

Subur Group1 & 4 Logpond handling charges payable by the Group 172

Sale of veneer by the Group -

Purchase of sawn timber by the Group -

Tapak Megah Sdn Bhd1 Logging contract fee receivable by the Group 1,222

R. H. Development (Sarawak) Sdn Bhd1

Reforestation planning and advisory fee payable by the Group 364

R H Selangau Palm Oil Mill Sdn Bhd1 Sale of fresh fruit bunches by the Group -

R.H. Forest Corporation Sdn Bhd1 Land rental payable by the Group 3,622

Rejang Height Sdn Bhd1 Land rental payable by the Group 1,966

Wealth Houses Development Sdn Bhd1

Land rental payable by the Group 556

Rimbunan Hijau General Trading Sdn Bhd1

Purchase of lubricant and spare parts by the Group 5,244

Borneo Edible Oils Sdn Bhd1 Sale of crude palm oil by the Group 378,997

Oriental Group2, 3 & 5 Freight service charges payable by the Group 5,021

Construction cost on quarter, storage building and other assets 5,365

Rimbunan Hijau Auto Services Sdn Bhd1

Purchase of motor vehicles (pick-up and van) for operational use by the Group

1,546

Notes:

Relationship of Related Parties with the Company 1 The major shareholder of the Company, Tan Sri Datuk Sir Tiong Hiew King and/or person(s) connected with him has

substantial interest in the Transacting Related Parties. 2 Dato’ Sri Tiong Chiong Hoo, the Deputy Executive Chairman of the Company, the son of Tan Sri Datuk Sir Tiong Hiew King,

has substantial interest in the Transacting Related Parties. 3 Clara Tiong Siew Ee, a director of a subsidiary company, the daughter of the Deputy Executive Chairman of the Company,

has substantial interest in the Transacting Related Parties. 4 Subur Group comprises Subur Tiasa Holdings Berhad and its wholly-owned subsidiary, Subur Tiasa Plywood Sdn Bhd. 5 Oriental Group comprises Oriental Evermore Sdn Bhd and its wholly-owned subsidiaries, Empayar Semarak Sdn Bhd,

Globular Sdn Bhd, Trans-Allied Sdn Bhd and Moverstar (M) Sdn Bhd.


TOP 10 LIST OF PROPERTIESOWNED BY THE GROUP IN MALAYSIAAs at 30 September 2019

Description Tenure Existing use Area Approximate Net Book Date of age of Value Acquisition building (RM'000)

Pulau Bruit

Bruit Land District Rented land Oil Palm Estate 52,880 11 years 198,515 - Building and Quarter hectares

Oya-Dalat District

Lot 9, Block 362 Leasehold land Oil Palm Estate 34,547,957 11 years 71,302 28/Aug/2003Oya-Dalat District expiring on 23.2.2063 Building and Quarter sq metres

Pulau Bruit

Lot 317 and 318, Block 15 Provisional leasehold CPO Mill 74.8447 9 years 24,937 01/Jan/2014Bruit Land District expiring on 18.05.2064 Building and Quarter hectares

Sibu Airport

JTA Hangar, airside area Rented land Hangar 4105 sq meter 7 years 17,653 -

Pulau Bruit

Lot 5, 6, 14, 15 Provisional leasehold Oil Palm Estate 100,002,946 7 years 15,125 09/Dec/2004Block 11, Bruit Land District expiring on 18.05.2064 Building and Quarter sq metres

Sibu Town

Sibu Town District Leasehold land Building 103,943 16 years 14,405 30/Apr/2005Block 10, Lots 790~802 expiring on 06.09.2071 sq metres

Pulau Bruit,

Lot 92, 93, 96, 98 Provisional leasehold Oil Palm Estate, 50,001,473 9 years 9,960 09/Dec/2004Block 6, Bruit Land District expiring on 18.05.2064 Building and Quarter sq metres

Putai, Kapit

Concession land Concession land Factory, warehouse 86,404 27 years 8,690 - and staff quarter sq metres

Retus, Mukah

Lot 1, Block 6 Leasehold land Oil Palm Estate 72,331,816 12 years 8,327 28/Aug/2003Retus Land District expiring on 23.2.2063 Building and Quarter sq metres

Sibu

Lot 920 and 1373, Block 16, Leasehold land Warehouse 1.12 7 years 3,311 14/Mar/2008Seduan Land District expiring on 31.12.2915 hectares


ANALYSIS OF SHAREHOLDINGSAs at 30 September 2019

Total Number of Issued Shares : 973,717,797*Class of shares : Ordinary shares Voting Right : One vote for each share held

*inclusive of 5,727,000 shares bought-back by the Company and retained as treasury shares as at 30 September 2019.

DISTRIBUTION OF SHAREHOLDINGS

Size of Shareholdings No. of Shareholders

% ofShareholders

No. ofIssued Shares

% ofIssued Shares

Less than 100 133 1.61 4,768 0.00

100 – 1,000 626 7.56 412,440 0.04

1,001 – 10,000 4,235 51.18 23,373,453 2.41

10,001 – 100,000 2,740 33.12 92,535,404 9.56

100,001 to less than 5% of issued shares(1) 536 6.48 514,680,599 53.17

5% and above of issued shares 4 0.05 336,984,133 34.82

TOTAL 8,274 100.00 967,990,797 100.00

(1) excluding 5,727,000 treasury shares

DIRECTORS’ SHAREHOLDINGS(As per Register of Directors’ Shareholdings)

Shares held in the Company

Notes:

* Deemed interested in shares held by Hoojin Holding Sdn Bhd by virtue of Section 8(4) of the Companies Act 2016 (“the Act”).

** Deemed interested in shares held by her spouse by virtue of Section 59(11)(c) of the Act.

Shares held in Subsidiary Company

None of the Directors holds any shares in subsidiary Company.

Name

Direct Interest Deemed Interest No. of Issued Shares

% of Issued Shares

No. of Issued Shares

% of Issued Shares

Gen Tan Sri Abdul Rahman Bin Abdul Hamid (Rtd) - - - -Dato’ Sri Tiong Chiong Hoo 3,353,436 0.34 750,000* 0.08Dato’ Wong Sie Young 453,975 0.05 - -Dato’ Sri Dr Tiong Ik King 341,790 0.04 - -Mdm Tiong Choon - - 1,352,428** 0.14Mr Tiong Chiong Hee - - - -Mr John Leong Chung Loong - - - -Dato’ Wong Lee Yun - - - -



SUBSTANTIAL SHAREHOLDERS(As per Register of Substantial Shareholders)

Name

Direct Interest Deemed Interest No. of Issued Shares

% of Issued Shares

No. of Issued Shares

% of Issued Shares

Tiong Toh Siong Holdings Sdn Bhd 206,755,565 21.36 2,918,451 (a) 0.30Genine Chain Limited 91,055,164 9.41Amanas Sdn Bhd 50,479,961 5.21Tiong Toh Siong Enterprises Sdn Bhd 50,449,008 5.21Tan Sri Datuk Sir Tiong Hiew King 8,871,408 0.92 283,257,149 (b) 29.26Teck Sing Lik Enterprise Sdn Bhd 1,270,080 0.13 50,449,008 (c) 5.21Ho Cheung Choi 91,055,164 (d) 9.41Chang Meng 91,055,164 (d) 9.41Lu Mee Bing 50,479,961 (e) 5.21Salmiah Binti Sani 50,479,961 (e) 5.21

Notes: - a. Deemed interested in shares held by Tiong Toh Siong & Sons Sdn Bhd and Kuntum Enterprises Sdn Bhd by virtue of

Section 8(4) of the Act.b. Deemed interested in shares held by Tiong Toh Siong Holdings Sdn Bhd, Tiong Toh Siong & Sons Sdn Bhd, Kuntum

Enterprises Sdn Bhd, Tiong Toh Siong Enterprises Sdn Bhd, Teck Sing Lik Enterprise Sdn Bhd and Pertumbuhan Abadi Asia Sdn Bhd by virtue of Section 8(4) of the Act.

c. Deemed interested in shares held by Tiong Toh Siong Enterprises Sdn Bhd by virtue of Section 8(4) of the Act.d. Deemed interested in shares held by Genine Chain Limited by virtue of Section 8(4) of the Act.e. Deemed interested in shares held by Amanas Sdn Bhd by virtue of Section 8(4) of the Act.

TOP 30 SECURITIES ACCOUNT HOLDERS (Without aggregating the securities from different securities accounts belonging to the same Depositor)

No. Name No. of % of Issued Issued

Shares Shares 1 Malaysia Nominees (Tempatan) Sendirian Berhad 145,000,000 14.98 Pledged Securities Account For Tiong Toh Siong Holdings Sdn Bhd

2 AMSEC Nominees (Asing) Sdn Bhd 91,055,164 9.41 KGI Securities (Singapore) Pte. Ltd. for Genine Chain Limited

3 Amanas Sdn. Bhd. 50,479,961 5.21

4 Tiong Toh Siong Enterprises Sdn Bhd 50,449,008 5.21

5 Asanas Sdn Bhd 47,259,343 4.88

6 Tiong Toh Siong Holdings Sdn Bhd 43,755,565 4.52

7 UOB Kay Hian Nominees (Asing) Sdn Bhd 37,272,750 3.85 Exempt An For UOB Kay Hian (Hong Kong) Limited (A/C Clients)

8 Zaman Pemimpin Sdn Bhd 26,448,811 2.73

9 Nustinas Sdn. Bhd. 22,279,843 2.30

10 Pertumbuhan Abadi Asia Sdn. Bhd. 21,864,045 2.26

11 Insan Anggun Sdn Bhd 18,935,000 1.96

12 RHB Capital Nominees (Tempatan) Sdn Bhd 18,000,000 1.86 Pledged Securities Account For Tiong Toh Siong Holdings Sdn Bhd


Top 30 Securities Account Holders (Cont’d)

No. Name No. of % of Issued Issued

Shares Shares

13 CIMB Group Nominees (Asing) Sdn. Bhd. 16,790,250 1.73 Exempt An For DBS Bank Ltd (SFS-PB)

14 Roseate Garland Sdn Bhd 10,978,631 1.13

15 Pertubuhan Keselamatan Sosial 10,274,800 1.06

16 Diong Hiew King @ Tiong Hiew King 8,871,408 0.92

17 Olive Lim Swee Lian 8,764,200 0.91

18 Citigroup Nominees (Tempatan) Sdn Bhd 6,448,000 0.67 Employees Provident Fund Board (PHEIM)

19 Huang Tiong Sii 5,323,900 0.55

20 Citigroup Nominees (Asing) Sdn Bhd 5,212,733 0.54 CBNY For Dimensional Emerging Markets Value Fund

21 Kenanga Nominees (Tempatan) Sdn Bhd 4,908,935 0.51 Pledged Securities Account For Tiong Thai King

22 Citigroup Nominees (Asing) Sdn Bhd 4,826,938 0.50 CBNY For Emerging Market Core Equity Portfolio DFA Investment Dimensions Group Inc

23 Wong Souk Ming 4,082,200 0.42

24 Huang Poh Bing 4,006,400 0.41

25 CGS-CIMB Nominees (Tempatan) Sdn Bhd 3,335,896 0.34 Pledged Securities Account for Tiong Chiong Ong

26 CIMB Group Nominees (Tempatan) Sdn Bhd 3,307,500 0.34 Exempt An For DBS Bank Ltd (SFS-PB)

27 Azerina Mohd Arip @ Gertie Chong Soke Hoon 3,256,725 0.34

28 HLB Nominees (Tempatan) Sdn Bhd 3,176,485 0.33 Pledged Securities Account for Chiat Moh Sdn Bhd

29 Alliancegroup Nominees (Tempatan) Sdn Bhd 2,950,800 0.30 Pledged Securities Account for Chong Yiew On

30 Wong Kieh Nguk 2,839,364 0.29



NOTICE OF ANNUAL GENERAL MEETING

NOTICE IS HEREBY GIVEN that the 59th Annual General Meeting of the Company will be held at the Auditorium, Ground Floor, No. 62, Lorong Upper Lanang 10A, 96000 Sibu, Sarawak on Thursday, 28 November 2019 at 9.00 a.m. to transact the following business:-

As Ordinary Business

1 To receive the Audited Financial Statements for the financial year ended 30 June 2019 together with the Reports of the Directors and Auditors thereon.

2 To re-elect the following Directors retiring by rotation pursuant to Article 78 of the

Company’s Articles of Association:- i. Dato’ Wong Sie Young ii. Dato‘ Wong Lee Yun 3 To approve the payment of Directors’ fees amounting to RM505,400 for the financial

year ended 30 June 2019. 4 To approve the payment of Directors’ benefits not exceeding RM300,000 in aggregate

during the period from 29 November 2019 until the next Annual General Meeting of the Company.

5 To re-appoint Messrs Ernst & Young as Auditors of the Company and to authorise the

Directors to fix their remuneration. As Special Business To consider and if thought fit, pass the following Ordinary Resolutions:- 6 Continuing in office as Independent Non-Executive Directors

(a) “THAT approval be and is hereby given for Gen Tan Sri Abdul Rahman Bin Abdul Hamid (Rtd) 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 be designated as an Independent Non-Executive Director of the Company.”

(b) “THAT approval be and is hereby given for John Leong Chung Loong 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 be designated as an Independent Non-Executive Director of the Company.”

(c) “THAT approval be and is hereby given for Dato’ Wong Lee Yun 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 be designated as an Independent Non-Executive Director of the Company.”

7 Proposed Renewal of Shareholders’ Mandate for Recurrent Related Party Transactions

“THAT approval be and is hereby given to the Company and/or its subsidiary companies to enter into recurrent related party transactions of a revenue or trading nature as set out in Section 2.2 of Part A of the Circular to Shareholders dated 30 October 2019 with specific classes of Related Parties which are necessary for the day-to-day operations and in the ordinary course of business on terms 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 THAT such mandate shall commence upon the passing of this resolution until:

(i) the conclusion of the next Annual General Meeting (“AGM”) of the Company at which time such authority will lapse, unless by an ordinary resolution passed at a general meeting of the Company, the authority of the Shareholders’ Mandate is renewed; or

(Please refer to Explanatory Note 1)

Ordinary Resolution 1Ordinary Resolution 2

Ordinary Resolution 3










Special Resolution

(ii) the expiration of the period within which the next AGM of the Company is required by laws to be held; or

(iii) revoked or varied by an ordinary resolution passed by the shareholders in a general meeting;

whichever occurs first.

THAT the Directors of the Company be authorised to do all such acts and things (including executing all such documents as may be required) as they may consider expedient or necessary to give effect to the Shareholders’ Mandate.”

8 Proposed Renewal of Authority for the Company to Purchase its Own Shares

“THAT subject to the Companies Act 2016, the Memorandum and Articles of Association of the Company, the Main Market Listing Requirements of Bursa Malaysia Securities Berhad and any other relevant authorities, approval be and is hereby given to the Company to utilise an amount not exceeding the total retained profits of the Company for the time being, to purchase such number of ordinary shares of the Company provided that at the time of purchase, the aggregate number of shares which may be purchased and or held by the Company as treasury shares shall not exceed ten percent (10%) of the total number of issued shares of the Company, and to either retain and hold the shares purchased as treasury shares (which may subsequently be distributed as share dividends, resold, transferred or cancelled) or to cancel the shares so purchased or a combination of both.

AND THAT such authority shall commence upon the passing of this resolution until:

(i) the conclusion of the next Annual General Meeting (“AGM”) of the Company at which time such authority will lapse, unless by an ordinary resolution passed at a general meeting of the Company, the authority of the Shareholders’ Mandate is renewed; or

(ii) the expiration of the period within which the next AGM of the Company is required by laws to be held; or

(iii) revoked or varied by an ordinary resolution passed by the shareholders in a general meeting;

whichever occurs first.

THAT the Directors of the Company be authorised to do all such acts and things (including executing all such documents as may be required) as they may consider expedient or necessary to give effect to the Proposed Share Buy-Back.”

To consider and if thought fit, pass the following Special Resolution:- 9 Proposed Adoption of the new Constitution of the Company

“THAT the existing Memorandum and Articles of Association of the Company be replaced in its entirety with a new Constitution as set out in Appendix III of the Company’s Circular to Shareholders dated 30 October 2019.”

10 To transact any other business of the Company of which due notice shall have been

received.

By Order of the Board

NGU UNG HUONG MAICSA 7010077Company Secretary

Sibu, Sarawak30 October 2019


NOTES ON APPOINTMENT OF PROXY

1. In respect of deposited securities, only members whose names appear in the Record of Depositors on 21 November 2019 shall be entitled to attend the meeting or appoint proxy(ies) to attend, vote and speak on his/her behalf.

2. A member of the Company entitled to attend, speak and vote at the meeting is also entitled to appoint a proxy to attend, speak and vote in his/her stead. A proxy may but need not be a member of the Company.

3. A member shall not be entitled to appoint more than 2 proxies to attend and vote at this 59th AGM.

Where a member is an authorised nominee as defined in accordance with the provisions of the Securities Industry (Central Depositories) Act, 1991, it may appoint up to 2 proxies in respect of each Securities Account it holds with ordinary shares in the Company standing to the credit of the said Securities Account.

Where a member appoints 2 proxies, the appointment shall be invalid unless he specifies the proportions of his shareholdings to be represented by each proxy.

Where a member of the Company is an exempt authorised nominee who holds ordinary share in the Company for multiple beneficial owners in one securities account (omnibus account), there is no limit to the number of proxies which the exempt authorised nominee may appoint in respect of each omnibus account it holds.

4. The instrument appointing a proxy shall be signed by the appointor or by his attorney duly authorised in writing or if the appointor is a corporation, either under its common seal or under the hand of an officer or attorney of the corporation duly authorised.

5. The instrument appointing a proxy must be deposited at the Company’s Registered Office at No.1-9, Pusat Suria Permata, Lorong Upper Lanang 10A, 96000 Sibu, Sarawak not less than forty-eight (48) hours before the time for holding the meeting.

6. Pursuant to Paragraph 8.29A(1) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad, all resolutions set out in this Notice will be put to vote by poll.

EXPLANATORY NOTES ON ORDINARY BUSINESS

1. Audited Financial Statements

Agenda 1 on the Audited Financial Statements is for discussion only and no voting is required under Section 340(1)(a) of the Companies Act, 2016.

2. Directors’ Fees and Benefits

Ordinary Resolutions No. 3 and 4

Section 230(1) of the Companies Act 2016 requires the fees and any benefits payable to the Directors of public company or a listed company and its subsidiaries to be approved at a general meeting.

The Executive Directors are remunerated with salary, benefits and other emoluments by virtue of their contract of service which do not require shareholders’ approval.

The Company pays Directors fees and benefits to the Non-Executive Directors (“NEDs”). The current benefits payable includes meeting allowances and monthly fixed allowances.

The Board recommends that shareholders approve the payment of Directors’ fees of RM505,400 to the NEDs of the Company for the financial year ended 30 June 2019.

The Board also recommends that shareholders approve an aggregate amount not exceeding RM300,000 for the payment of benefits to the NEDs of the Company during the course of the period from 29 November 2019 until the next Annual General Meeting of the Company.



EXPLANATORY NOTES ON SPECIAL BUSINESS

1. Continuing in office as Independent Director

Ordinary Resolutions No. 6, 7 and 8

The Board has via the Nominating Committee conducted performance evaluation and assessment of Gen Tan Sri Abdul Rahman Bin Abdul Hamid (Rtd), John Leong Chung Loong and Dato’ Wong Lee Yun who has served as Independent Non-Executive Directors of the Company for a cumulative term of more than nine (9) years and recommended them to continue to be designated as Independent Non-Executive Directors based on the following justifications:

• they meet the criteria of “independence” as prescribed under the definition of independence in the Main Market Listing Requirements of Bursa Malaysia Securities Berhad and, therefore, are able to bring independent and objective judgement to the Board on matters deliberated. They have always discharged their duties diligently taking into consideration the interest of the Company when making Board decision;

• as Independent Directors, they have always challenged management constructively, thus providing effective management oversight;

• their invaluable knowledge, relevant experience and understanding of the Group’s operations gained over their long-term service with the Company enable them to provide the Board and Board Committees with pertinent and a diverse skill set; and

• they have demonstrated their commitment towards meeting the needs of the Company with good attendance records and participated actively at the Board and Board Committee Meetings during the financial year.

2. Proposed Renewal of Recurrent Related Party Transactions (RRPT), Renewal of Share Buy-Back Authority and Adoption of New Constitution

Ordinary Resolutions 9 and 10, and Special Resolution

Please refer to the Circular to Shareholders dated 30 October 2019 despatched together with the Company’s 2019 Annual Report for information on the following:

• Part A of the Circular on Ordinary Resolution 9 for the Proposed Renewal of Shareholders’ Mandate for RRPT;

• Part B of the Circular on Ordinary Resolution 10 for the Proposed Renewal of Share Buy-back Authority; and • Part C of the Circular on Special Resolution for the Proposed Adoption of New Constitution.



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*I/We __________________________________________________ NRIC/ Passport/ Company No. _________________________ (Full name in block and as per NRIC / Passport)

Tel/Hp No. _____________________________ of __________________________________________________________________being a member of Jaya Tiasa Holdings Berhad, hereby appoint:-

PROXY FORMJAYA TIASA HOLDINGS BERHAD (3751-V)Incorporated in Malaysia

and / or failing him (delete as appropriate)

Full Name (in Block and as per NRIC/ Passport) NRIC/ Passport No.

Address

Full Name (in Block and as per NRIC/ Passport) NRIC/ Passport No.

Address

or failing him, the Chairman of the meeting as my/our proxy/proxies to vote for me/us and on my/our behalf at the 59th Annual General Meeting of the Company to be held at the Auditorium, Ground Floor, No.62, Lorong Upper Lanang 10A, 96000 Sibu, Sarawak on Thursday, 28 November 2019 at 9.00 a.m. and at any adjournment thereof.

My/our proxy is to vote as indicated below. If there is no specific indication given as to voting, the proxy will vote or abstain at his discretion.

The proportion of my/our holding to be represented by my/our proxies are as follows: -

Ordinary Resolutions For Against

1. Re-election of Dato’ Wong Sie Young as Director.

2. Re-election of Dato’ Wong Lee Yun as Director.

3. Approval of payment of Directors’ Fees.

4. Approval of payment of Directors’ Benefits.

5. Re-appointment of Auditors.

6. Continuing in office of Gen Tan Sri Abdul Rahman Bin Abdul Hamid (Rtd) as Independent Director.

7. Continuing in office of Mr John Leong Chung Loong as Independent Director.

8. Continuing in office of Dato’ Wong Lee Yun as Independent Director.

9. Proposed Renewal of Shareholders’ Mandate for Recurrent Related Party Transactions.

10. Proposed Renewal of Authority for the Company to purchase its own shares.

Special Resolution

Proposed Adoption of New Constitution of the Company.

No. of shares held Percentage (%)First proxySecond proxyTotal

____________________________________Dated this ___________________ day of ________________________ 2019 Signature / Common Seal of Member

Notes :1. In respect of deposited securities, only members whose names appear in the Record of Depositors on 21 November 2019 shall be entitled to attend, speak and vote at this 59th AGM.2. A member of the Company entitled to attend, speak and vote at the meeting is also entitled to appoint a proxy to attend, speak and vote in his/her stead. A proxy may but need not be a

member of the Company.3. A member shall not be entitled to appoint more than 2 proxies to attend and vote at this 59th AGM. Where a member is an authorised nominee as defined in accordance with the provisions of the Securities Industry (Central Depositories) Act, 1991, it may appoint up to 2 proxies in respect

of each Securities Account it holds with ordinary shares in the Company standing to the credit of the said Securities Account. Where a member appoints 2 proxies, the appointment shall be invalid unless he specifies the proportions of his shareholdings to be represented by each proxy. Where a member of the Company is an exempt authorised nominee which holds ordinary share in the Company for multiple beneficial owners in one securities account (omnibus account),

there is no limit to the number of proxies which the exempt authorised nominee may appoint in respect of each omnibus account it holds.4. The instrument appointing a proxy shall be signed by the appointor or by his attorney duly authorised in writing or if the appointor is a corporation, either under its common seal or under

the hand of an officer or attorney of the corporation duly authorised.5. The instrument appointing a proxy must be deposited at the Company’s Registered Office at No.1-9, Pusat Suria Permata, Lorong Upper Lanang 10A, 96000 Sibu, Sarawak not less than

forty-eight (48) hours before the time for holding the meeting.6. Pursuant to Paragraph 8.29A(1) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad, all resolutions set out in this Notice will be put to vote by poll.

No. of shares held CDS Account No.

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The Company SecretaryJAYA TIASA HOLDINGS BERHADNo. 1-9, Pusat Suria Permata,Lorong Upper Lanang 10A,96000 Sibu, SarawakMalaysia

STAMP

JAYA TIASA HOLDINGS BERHAD(Company No. 3751-V)

No.1-9, Pusat Suria Permata, Lorong Upper Lanang 10A, 96000 Sibu, SarawakTel : 084-213 255 Fax : 084-213 855

Email : [email protected] : www.jayatiasa.net

VISION - listed companyjayatiasa.listedcompany.com/misc/ar2019.pdf · International Limited (a listed company in both Hong Kong and Malaysia) and RH Petrogas Limited (a listed company

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