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annual report 2013

JAYA TIASA HOLDINGS BERHAD Company Number : 3751-V

No.1-9, Pusat Sur ia Permata, Lorong Upper Lanang 10A,

96000 Sibu, Sarawak.

T : 084 213 255 F : 084 213 855 E : inquiry@jayat iasa.net

www.jayat iasa.net

JAYA

TIASA

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RT 2013

JAYAarCov_4k_FINAL.indd 1 10/23/13 11:16 AM

tabl

e of

C

ON

TE

NT

S Financial Highlights_2

Corporate Information_4

Directors’ Profile_5

Key Information_10

Corporate Structure_11

Chairman’s Statement_12

Corporate Social Responsibility_18

Statement on Corporate Governance_23

Statement on Risk Management and Internal Control_34

Audit Committee Report_37

Directors’ Responsibility Statement_41

Financial Statements_42

Analysis of Shareholdings_125

Properties owned by the Group_128

Notice of Annual General Meeting_131

Proxy Form

annual report 2013JAYA TIASA HOLDINGS BERHAD2

2013 2012 2011 2010 2009RM’000 RM’000 RM’000 RM’000 RM’000

2013 2012 2011 2010RM’000 RM’000 RM’000 RM’000

Revenue

Pro�t Before Taxation

Pro�t After Taxation

Pro�t Attributableto Equity Holders

EBITDA

Equity Attributable toEquity Holders

Net Earnings Per share (sen)

Net Assets Per Share Attributableto Equity Holders (RM)

Net Tangible Assets Per Share (RM)

Return on Equity (%)

Return on Total Assets (%)

Timber Operations and Reforestation

Oil Palm Operations

33,470

(2,097)

(104)

31,269

73,799

150,848

227

224,874

39,530

105,293

61,219

206,042

24,849

17,156

(1,969)

40,036

Others

Gross Dividend (sen)

1,054,098

31,269

22,271

21,138

141,533

1,708,483

2.18

1.76

1.66

1.2

0.7

1.0

32

1,183,684

224,874

170,666

168,739

356,331

1,393,248

20.23

4.97

4.56

12.1

6.4

5.2

38

870,912

206,042

152,706

151,436

304,940

1,248,232

18.20

4.68

4.16

12.1

6.6

6.0

37

746,001

40,036

25,075

24,372

129,554

1,104,037

2.93

4.14

3.53

2.2

1.1

2.0

41

756,530

22,854

14,596

13,882

103,669

1,077,411

1.67

4.04

3.37

1.3

0.7

–

41Gearing Ratio (%)

FINANCIAL STATISTICSPERFORMANCE

PROFIT/(LOSS) BEFORE TAX BYBUSINESS SEGMENTS

CORPORATE RATIOS

FINANCIALHIGHLIGHTS

annual report 2013JAYA TIASA HOLDINGS BERHAD 3

1.67 2.

93

18.2

0 20.2

3

2.18

0.00

5.00

10.00

15.00

20.00

25.00

2009 2010 2011 2012 2013

0

500

1,000

1,500

2,000

2,500

3,000

2008 2009 2010 2011 2012

Earnings Per Share(Sen)

Total Assets(RM million)

757

746 87

1

1,18

4

1,05

4-

200

400

600

800

1,000

1,200

1,400

2009 2010 2011 2012 2013

1,07

7

1,10

4 1,24

8

1,39

3

-

200

400

600

800

1,000

1,200

1,400

1,800

1,600

2009 2010 2011 2012 2013

Revenue(RM million)

Equity Attributable to Equity Holders(RM million)

75%

24.9%

0.1%

70.2%

29.7%

0.1%

Breakdown of Revenue by Segment2013: RM1,054 million2012: RM1,184 million

FY 2013 FY 2012

Timber Operations Oil Palm Operations Others

1,70

8

2,09

3

2,15

7

2,30

0 2,63

6 2,96

1

FINANCIAL HIGHLIGHTS (cont’d)


COMPANY SECRETARY

Ms Ngu Ung Huong MAICSA 7010077

AUDITORS

Ernst & YoungChartered AccountantsRoom 300-303, 3rd FloorWisma Bukit Mata KuchingJalan Tunku Abdul Rahman93100 KuchingTel : 082-243233Fax : 082-421287

SHARE REGISTRAR

Symphony Share Registrars Sdn BhdLevel 6, Symphony HousePusat Dagangan Dana 1Jalan PJU 1A/4647301 Petaling JayaSelangor Darul Ehsan, MalaysiaTel : 03-7841 8000Fax : 03-7841 8151/52

CORPORATEINFORMATION

PRINCIPAL BANKERS

AmBank BerhadCIMB Bank BerhadHong Leong Bank Berhad OCBC Bank (Malaysia) BerhadRHB Bank Berhad

REGISTERED OFFICE

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

WEBSITEwww.jayatiasa.net

STOCK EXCHANGE LISTING

Main Market Bursa Malaysia Securities BerhadStock Name: JTIASAStock Code: 4383

BOARD OF DIRECTORS

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

DATO’ SRI TIONG CHIONG HOODeputy Executive Chairman

DATO’ WONG SIE YOUNGChief Executive Officer

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

MR JOHN LEONG CHUNG LOONGIndependent Non-Executive Director

DATO’ WONG LEE YUNIndependent Non-Executive Director

DATUK TALIB BIN HAJI JAMALIndependent Non-Executive Director


Gen (Rtd) Tan Sri Abdul Rahman Bin Abdul Hamid, aged 74, was appointed to the Board on 27 March 1995. He serves as chairman of the Board and the Audit Committee.

He is a graduate of 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 in the Malaysian Armed Forces.

Presently, he is the Chairman of DVM Technology Bhd, an ICT company listed on the ACE Market and AXA Affin Life Insurance Berhad, a joint-venture company of Lembaga Tabung Angkatan Tentera. He is also 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 shareholder of the Company.

Gen (Rtd) Tan Sri Abdul Rahman Bin Abdul HamidIndependent Non-Executive Chairman

Dato’ Sri Tiong Chiong HooDeputy Executive Chairman

DIRECTORS’PROFILE

Dato’ Sri Tiong Chiong Hoo, aged 53, was appointed Executive Director on 27 March 1995. He was re-designated as Managing Director on 26 April 1995 and subsequently as Deputy Executive Chairman on 1 January 2013.

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

Dato’ Sri is a businessman with extensive experience and in-depth knowledge in timber and plantation industries. He is responsible for developing the Group’s corporate/business strategy and attaining the long-term growth objectives.

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 brother Mr Tiong Chiong Hee are also members of the Board.


DIRECTORS’ PROFILE (cont’d)

Dato’ Wong Sie Young, aged 54, was appointed Chief Executive Officer on 1 January 2013. He is the Chairman of the Risk Management Committee.

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

Dato’ Wong actively oversees the operations of the Company and the Group. He has been working with the Group for 25 years during which time he has acquired extensive experience in the running of the Group’s operations. He joined the Group in 1987 and has been involved in the designing and setting up of all the timber processing plants. When the Group began diversifying into the oil palm business in 2002, he was entrusted to oversee the construction projects at the oil palm estates and was involved in the designing and construction of all the palm oil mills.

He has no family relationship with any Director and/or major shareholder of the Company.

Dato’ Sri Dr Tiong Ik King, aged 63, joined the Board on 27 March 1995. He is a member of the Remuneration Committee and the Nomination Committee.

Dato’ Sri Dr Tiong graduated with a 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 also serves on the Board of Media Chinese International Limited.

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.

Dato’ Wong Sie Young Chief Executive Officer

Dato’ Sri Dr Tiong Ik KingNon-Independent Non-Executive Director



Mdm Tiong Choon, aged 44, was appointed to the Board on 3 May 1999.

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

Currently, she also serves on the Board of Media Chinese International Limited.

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 brother Mr Tiong Chiong Hee are also members of the Board.

Mr Tiong Chiong Hee, aged 39, 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, cousin brother Dato’ Sri Tiong Chiong Hoo and cousin sister Mdm Tiong Choon are also members of the Board.

Mdm Tiong ChoonNon-Independent Non-Executive Director

Mr Tiong Chiong HeeNon-Independent Non-Executive Director



Mr John Leong Chung Loong, aged 66, was appointed to the Board on 28 March 2002. He serves as the Chairman of the Remuneration Committee and is a member of the Audit Committee and Nomination Committee.

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 Director and/or major shareholder of the Company.

Dato’ Wong Lee Yun, aged 60, was appointed to the Board on 21 June 2007. She is a member of the Audit Committee.

She is a Certified Public Accountant by profession.

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

Currently, she is a Shareholder cum Executive Director of MyBiz Solutions Sdn Bhd, a company providing Total Spend Management solutions to major corporations in Malaysia. In addition, she holds directorship in several private limited companies.

She has no family relationship with any Director and/or major shareholder of the Company.

Mr John Leong Chung Loong Independent Non-Executive Director

Dato’ Wong Lee YunIndependent Non-Executive Director


None of the Directors has:

• Anyconvictionforoffenceswithinthepast10yearsotherthantrafficoffences.• EnteredintoanytransactionwhetherdirectlyorindirectlywhichhasaconflictofinterestwiththeCompany.

All the Directors of the Company are Malaysians.

Datuk Talib Bin Haji Jamal, aged 61, was appointed to the Board on 12 November 2007. He is the Chairman of the Nomination Committee and is a member of the Audit Committee and Remuneration Committee.

Datuk Talib holds a Master of Science in Mechanical Engineering from Cranfield Institute of Technology, England, United Kingdom.

Datuk Talib has served in various senior capacities and positions in the Police Diraja Malaysia for more than 30 years. He was the Commissioner of Police, Sarawak from 2004 until his retirement in November 2007. He was the Director of Police Cooperatives for 10 years and the Director of Bank Kerjasama Rakyat for 2 years.

Datuk Talib has no family relationship with any Director and/or major shareholder of the Company.

Datuk Talib Bin Haji JamalIndependent Non-Executive Director



Timber Products

Jaya Tiasa Plywood Sdn Bhd

Rimbunan Hijau Plywood Sdn Bhd

Jaya Tiasa Timber Products Sdn Bhd

Total Annual Production Capacity

Plywood 180,000 120,000 120,000 420,000M3

Rotary Veneer 324,000 _ _ 324,000M3

Sawntimber 72,000 26,400 14,400 112,800M3

Blockboard _ 12,000 _ 12,000M3

Film-Overlay Plywood _ 6,000 _ 6,000M3

Sliced-Veneer _ _ 6,000,000 6,000,000M2

Crude Palm Oil

JT Oil Palm Development Sdn Bhd

486,000MT

Maujaya Sdn Bhd 324,000MT

KEYINFORMATION

Forest Concessions

Gross Area: 713,211 hectares (1,760,535 acres)

Extraction Quota: 94,500m3 monthly

Main Species: Meranti, Kapor, Keruing, Selangan Batu, Jelutong, Melapi, Mersawa,

Nyatoh, Arau, Penyau, Bindang and MLH (mixed light hardwood).

Oil Palm Plantation

Total Land Area: 83,480 hectares

Estimated Plantable Area: 70,900 hectares

Planted Area*: 63,574 hectares

Matured Area*: 55,438 hectares

Reforestation

Total Land Area: 235,859 hectares

Estimated Plantable Area: 141,308 hectares

Planted Area*: 30,978 hectares

ANNUAL PRODUCTION CAPACITY

Notes: * As at 30 September 2013 M3 – cubic metre M2 – square metre MT – metric tonnes


Timber Division

Jaya TiasaPlywoodSdn Bhd

100%

Jaya TiasaTimber Products

Sdn Bhd

100%

Rimbunan HijauPlywoodSdn Bhd

100%

JarasSdn Bhd

100%

SericahayaSdn Bhd

88.9%

CuriahSdn Bhd

88.9%

Jaya TiasaForest Plantation

Sdn Bhd

100%

Oil Palm Division

SimalauPlantationSdn Bhd

100%

HariyamaSdn Bhd

100%

Eastern EdenSdn Bhd

100%

Poh ZhenSdn Bhd

100%

Erajaya SynergySdn Bhd

100%

JT Oil PalmDevelopment

Sdn Bhd

100%

MaujayaSdn Bhd

100%

MaxiwealthHoldingsSdn Bhd

100%

Research and Development

Jaya TiasaR&D Sdn Bhd

100%

Marke�ng and Trading

Hak JayaSdn Bhd

100%

Kunari TimberSdn Bhd

100%

Mafrica TradingSdn Bhd

40%

GuanacoSdn Bhd

100%

Private Flight Opera�ons

Jaya TiasaAviation Sdn Bhd

100%

Non-Trading or Dormant

Atlantic TimberHoldings Limited

100%

Paci�c TimberHoldings Limited

100%

EasternTimber Ltd

100%

Jaya TiasaAquaculture

Sdn Bhd

100%

MantanSdn Bhd

100%

MultiGreenview

Sdn Bhd

100%

Atlantic EvergreenHoldings

100%

Western TimberResources Limited

100%

CORPORATESTRUCTURE


Dear fellow shareholders,

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 2013.

CHAIRMAN’SSTATEMENT

GLOBAL ECONOMY OVERVIEW

Looking back, 2012 has been a weak year for economic growth in most developed countries. In US, an earlier fiscal cliff was merely averted but not resolved as the concerns about the debt ceiling quagmire again threatens to rile global markets. Unemployment rate albeit improving is still high, and the housing start has been slow. Europe, on the other hand, remains vulnerable and was trapped in vicious cycle of high unemployment, financial fragility, heightened sovereign risks, fiscal austerity and low growth. Fiscal and monetary policies has had mixed success so far in calming financial markets and even less so in strengthening economic growth and job creation.

In Asia, China’s economic growth slowed for a few consecutive quarters amid a transition that has seen the country’s new leadership seeking to rebalance its economy. This had had a negative impact on housing and construction activities. IndiafaredevenworseandhassufferedthebruntofeconomicchallengeswithhighinflationandasharplyweakerRupeeas growth slowed to 5.0% in the fiscal year ended March 2013 from 6.5% in the previous year. Fortunately, these factors have not dented India’s demand for timber.

While emerging economies have benefited from the US Federal Reserve’s quantitative easing, expectation of tapering by the US government is having the opposite effect recently. It is apparent the global economy has yet to shake off the fallout of the 2008-2009 financial crises. According to IMF, global economy growth dropped to 3.1 % in 2012 as compared to 3.9% theyearbefore,andthetrendwillprobablycontinue.GeopoliticalinstabilitysuchastheArabSpringandtheSyriaconflictadded to worries about the global economy over the past year. Such uncertainties may continue to affect global trade and foreigndirectinvestments.Theflickerofhopeinaglobalrecoverymaybedimmedfurtherbyconsumerdeleveragingandflaggingdemandinemergingmarkets.

On the domestic front, Malaysia has so far held up relatively well as political risk subsided after the General Election 2013. GDP growth was registered at 5.6% in 2012 and at 4.2% in 1H13, owing much to government’s commitment on the implementation of projects under the Economic Transformation Program (ETP). Ringgit was stable throughout the past year. As highlighted in ITTO report, the recent weakening in RM against USD favors the timber industry.


CHAIRMAN’S STATEMENT (cont’d)

Log Export by Destination 2013

62%

1%

19%

3%

7%

8%

TaiwanChina/Hong longIndia

JapanAseanKorea

GROUP PERFORMANCE REVIEW

In FY2013, demand for our timber products was sustained as total exports sales increased by 7% in US Dollar. Logs contributed 38% of the total Group’s revenue in US Dollar, and this is followed by plywood division at 30%.

While the performance from timber sector has remained stable, our palm oil business encountered major headwinds as FFB and CPO prices fell sharply in the past year. Even though the matured hectares expanded by 28% YoY to 48,005 hectares and FFB production increased by 31% YoY to 664,633 MT, our Oil Palm Sector suffered a pre-tax loss. The average selling price per MT was RM423 and RM2,280 for FFB and CPO respectively, a 28% and 23% YoY contraction from the previous RM590 and RM2,975.

FFB yield was not at the optimum level as more young trees enter maturity. We expect the harvest yields to improve and we will continue to put in the necessary efforts to improve efficiency and productivity. Also, our CPO mill capacity has been increased to 150MT per hour with an additional CPO mill now commissioned at the end of FY2013.

CPO price has stayed in the range of RM2,200-2,400 per MT since the beginning of 2013, and there has been little sign of sustained price upward trend in spite of the normalized CPO inventory in the country. Mixed views from the recent Palm Oil Convention 2013 showed there is no general consensus on how the industry will fare in the year ahead. A growing supply from Indonesia due to an aggressive expansion in cultivation, a moderate growth in oleo-chemical demands, and subdued demand from bio fuels all contributed to a bearish sentiment and a clouded outlook.

FINANCIAL PERFORMANCE

The Group recorded RM1.05 billions in revenue, a 4% slight increase over the annualized revenue of RM1.01 billions in the previous year. Lower selling prices together with higher operating costs for oil palm led to an erosion in profit after tax to RM22.3 million from the annualized profit after tax of RM146.3 millions attained in the preceding year, an 85% decrease. As a result, earning per share was down to 2.18 sen. Shareholders’ funds improved to RM1,708 million compared to RM1,393 million achieved in the preceding Financial Year, largely due to the issuance of shares. Net tangible assets per share stood at RM1.66 for the Year Ended 30 June 2013.

DIVIDEND

As part of our commitment to enhancing shareholder value, the Board of Directors stayed true to its dividend policy of paying 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. Notwithstanding the weaker result, the Board of Directors has recommended a gross dividend of 1 sen per share representing about 43% of after tax profit in respect of the Financial Year Ended 30 June 2013 for approval by the shareholders at the forthcoming Annual General Meeting to be held on 28 November 2013.

REVIEW OF OPERATIONS

Logging

The logging division contributed about 38% of the total Group’s revenue. Apart from the unfavorable weather conditions as well as the impoundment of the Bakun hydroelectric dam which continued to impede the transportation of logs for processing mills and exports, scarcity of log supply had made our logging operation a bigger challenge. As a result, our log production reduced by 7% in terms of volume compared to the last Financial Year. Average export price for logs stabilized at USD220 per m3 largely due to the tightening log supply and the continuing sustained demand from India and Taiwan.



Plywood Export by Destination 2013

28%

6%

7% 1%

27%

15%

16%KoreaTaiwanOthers

JapanMiddle East

China / Hong KongUSA

100,000

0

200,000

300,000

400,000

500,000

600,000

800,000

700,000

670,

339

696,

607

Log Sales(m3)

2012 2013

200,000

0

400,000

2012 2013

600,000

800,000

1,000,000

1,200,000

1,400,000

Log Production(m3)

1,14

4,62

9

1,05

9,71

0

India remained the largest log export market for the group with sales accounting for 62% of the Group’s total log export sales in US Dollars. In spite of the economic slowdown and the sharp depreciation of Indian Rupee against USD, heavy dependence on imports in view of the inadequate domestic supply helped sustained demand, especially for Sarawak logs. India is expected to continue to be a key market for the Group’s logs.

Taiwan was our second largest export market after India, amounting to 19% of total logs sales in US Dollars. As forecasted, demand from Taiwan has been on a decline due to continuing shutdown of sawmills. Nonetheless, during the financial year under review, total sales volume to Taiwan was satisfactory.

Logging Outlook and Strategy

Jaya Tiasa has one of the largest timber assets among Malaysian listed companies, and accounted for more than 10% of the logs produced in Sarawak in 2012. With higher export quota, our export sales should increase in the coming financial year as we foresee the market demand for tropical logs to remain robust despite an expected slower global growth, with prices that are likely to be sustained due to supply constraint.

In particular, demand for logs in India is expected to continue to be maintained, driven by their need for affordable timber for building and renovation. Its economy and construction activities are still growing since late-2012, albeit at a slower pace.

To better manage our forest, we will select good quality species with high market value for harvesting. We will export all available logs within the permitted quota 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.

Plywood

In FY2013, the plywood division contributed about 30% to the total revenue of the Group. Plywood export volumes increased by 9% YoY, while the average selling prices fell by 6%. During the year, Taiwan and Korea emerged as our two largest export destinations, accounting to 28% and 27% respectively of total plywood exports of the group in US Dollar. Other major exports markets were China / Hong Kong, Japan, the US and the Middle East.

The market for imported plywood has been challenging ever since the economy downturn. To maximize our revenue and profit as well as to maintain our existing markets, we had earlier made a strategic decision to produce more high value products.



20,000

0

40,000

2012 2013

60,000

80,000

100,000

140,000

120,000

160,000

200,000

180,000

Plywood Sales(m3)

163,

203

183,

098

20,000

0

40,000

2012 2013

60,000

80,000

100,000

140,000

120,000

160,000

180,000

Plywood Production(m3)

164,

548

140,

662

The anti-dumping duty ranging from 5% to 38% imposed by South Korean Government in March 2011 for two years has not affected our sales to the country. The plywood sales volume to South Korea was in fact the highest among our markets, while total export value increased by 8% from the previous year.

Taiwan became our leading market for plywood in US Dollar accounting for 28% of the Group’s total sales. Despite the structural change in consumption pattern in Taiwan, we managed to fend off our competitors by selling good quality product with various sizes tailored to the market demand.

Plywood Outlook and Strategy

Demand for plywood is expected to improve gradually in line with economic recovery in our key markets, particularly in Japan.TheaggressivepolicyeasingtoreflatetheJapaneseeconomyhasledtohighergovernmentspending,monetaryeasing and structural reforms. Tokyo’s winning bid to host the 2020 Olympics will certainly have positive impact on Japan’s economy. The announced increase in Japan’s consumption tax from 5% currently to 8% by 2014 is anticipated to bring forward housing demand. June housing starts in Japan totaled 83,704 were up by over 15% compared to June 2012. This is an encouraging note for plywood business as it will have a positive effect on the potential plywood demand as well as its selling price.

In tandem with this renewed optimism, the group is adopting a dynamic strategic approach in an increasingly competitive global environment, taking into account the scarcity of resources, the volatility of foreign exchange rates and volatile crude oil prices. The group will strengthen its current measures to maintain and enhance its competitive edge, and 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 margins. Barring any unforeseen circumstances, the division is projected to have better earnings and profits for the next financial year.


508,701

664,633

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

Planted Area - Mature (ha) Planted Area - Immature (ha)FFB Production (MT)

37,4

19 58,5

45 48,0

05

62,7

45

2012 2013

Oil Palm Planted Area/FFB Production

Palm Oil (MT) Palm Kernel (MT)

46,708

7,573

59,860

9,606

0

10,000

20,000

30,000

40,000

50,000

60,000

31022102

Mill Production

Percentage of Prime Age over Planted Ha (62,745 Ha)

0

5000

10000

15000

20000

30000

25000

27874%

7%

12%

24%

40%

4195

7720

14918

25255

FY11 FY12 FY13 FY14 FY15


24%

64%

12%

Palm Age Profile As At 30 June 2013

Prime Mature Young Mature Immature

Oil Palm

As highlighted earlier, the division’s profit for the year under review has been disappointing. Revenue for the year was RM263 million, a 13% decrease in value despite 31% increase in production volume. The loss before tax of RM2.1 millions was due to lower selling price and higher operating cost stemmed from a larger young mature area which has lower FFB Yields.

As at 30 June 2013, the group’s estimated plantable areas stood at 70,900 hectares (Ha) spreading over 10 plantations in Sarawak, of which 89% (or 62,745 Ha) are fully planted. With 77% of planted area (or 48,005 Ha) having matured, our FFB production for the year had increased by 31% to 664,633 metric tones (MT) from the previous year’s 508,701 MT annualized amount. The average age of the tree is relatively young with only 12% of planted area (7,720 Ha) are in their prime.

The group’s palm oil mill produced approximately 60,000 MT of CPO and 9,600 MT of palm kernel (PK). Jaya Tiasa currently has two mills in operation with total processing capacity of 150MT per hour. In line with expected rapid growth in crop production in the years ahead, we target additional two mills at an estimated cost of RM165 million, both of which are strategically located near the plantations. Upon full operation, the mills are expected to contribute significantly to profitability. One of them is currently under construction and is scheduled to be completed in April 2014, while the other one is already in the planning stage.

Oil Palm Outlook and Strategy

As at 30 June 2013, the weighted average of our palm age stood at 5.6 years. As shown in the chart, 40% of our planted hectare will enter into prime age in two years time. This is 2.27 times more than the current 7,720 hectare which is at prime age. Thus, we expect our FFB yield (MT) per hectare to significantly improve and consequently reducing our cost of production. Labor shortage continues to be an issue nationwide. In order to cope with this challenging operating environment, we have increased mechanization so we can redeploy limited resources.

With regard to our CPO mill operation, we constantly seek external consultations and send our staffs for training regularly in our attempt to improve productivity and operating efficiency. Also, the additional mills which are strategically located will enable us to achieve higher efficiency and profitability in the vertical integration of the supply chain. We foresee better operating result in the next financial year.

We remain optimistic about the long term prospects for the palm oil industry despite current weakness in CPO price. We will endeavor to lower our cost of production, enhance our harvesting yield and improve productivity so that we are poised to reap the profits in the event CPO prices start to trend upwards.



Reforestation

We are currently managing a total of 235,859 Ha of reforestation areas. With fast-growing tree species such as Eucalyptus Deglupta (Kamarere), Eucalyptus Pellita and Kelampayan planted across the plantation areas, the group’s forest planted area has been expanding and will continue to trend up steadily.

Reforestation outlook and strategy

We perceive planted forest as an investment for the future viability of the group and in keeping with the world’s move towards conservation of natural forests. The division is not expected to contribute to earnings in the short term given that the planted forest has a gestation period of 12 to 15 years before it can be ready for commercial harvesting. The challenge of the group is to improvise silvicultural practices and place greater emphasis on stringent quality control over new plantings and its maintenance so as to improve the survival rate and optimum growth of planted trees.

GOING FORWARD

Recent reports by the World Bank and the International Monetary Fund paint a gloomy picture for the global economy. Economists in both multilateral institutions have cut the forecast for growth in most parts of the world. According to the United Nations in its latest issue of the World Economic Situation and Prospects 2013 (WESP), the global economy is expected to grow 2.4% in 2013 and 3.2% in 2014.

In order to remain focused in our objectives to maintain performance and create maximum returns for shareholders, the Group has undertaken various measures to counter the challenges brought about by the uncertainties of the current economic crisis. These, among others, include being selective in our log cutting, producing more high value timber products, increase use of mechanization, and better integration in our supply chain.

Prices for timber products and logs are expected to remain firm in view of the potentially restricted supply of logs, still robust demand from importing countries and anticipated higher demand from Japan driven by its brighter economy outlook. We are optimistic that FY2014 will continue to be a profitable year for the timber segment.

Our palm trees have a relatively young age profile. FFB yield will improve significantly as more trees enter into its prime age. Additional CPO mills will boost our CPO production while ensuring better vertical integration in our palm oil business. In view of this advantage, we believe contribution from palm oil segment will trend upward in the next financial year.

With all these measures and advantages, the Group plans for a steady long-term growth and will ensure we are well prepared in the wake of market recovery.

APPRECIATION

On behalf of the board, I wish to thank my fellow board members, dedicated management team and employees for your commitment throughout the year. My special thanks to our customers, business associates, the regulatory authorities, financiers and members of the community for your support in the midst of these turbulent times. Lastly, I wish to express my sincere gratitude to our valued shareholders. Thank you for your trust and confidence in us, and we look forward to performing our best in return to your investment in Jaya Tiasa.

GEN (RTD) TAN SRI ABDUL RAHMAN BIN ABDUL HAMIDChairman


CORPORATE SOCIAL RESPONSIBILITY

Jaya Tiasa recognizes that without being socially and environmentally responsible, it is impossible to have economically sustainable operations in the long term. Corporate Social Responsibility (CSR) and sustainability are important aspects of long-term business success. During the year under review, we continue to maintain our commitment to CSR and sustainability issues by embedding our approach more fully into the day-to-day management of the business. We continue taking responsibility towards stakeholders, protecting the environment, and being a good employer, business partner, and member of the community. Our approach to CSR is primarily conducted in four areas, the so-called pillars: Environment, Workplace, Community and Marketplace.

ENVIRONMENT

Our operations will be permeated by a fully integrated approach, including efficient use of raw materials and energy, protection of the environment, and compliance with the environmental laws and regulations. Because our business activities are closely related to natural resources, we endeavour to never strive for financial success at the expense of future generation. This means that we take responsibility for identifying and minimising the impact on the environment at every step of the process. We have a system in place to ensure that all operations reach the highest environmental standards.

Sustainable Forest Management

In line with our efforts to reduce the impact of harvesting operations on the environment, we implement Reduce Impact Logging (RIL) techniques throughout the life cycle of the operations in order to reduce soil disturbance, and minimise damage to residual stands and effects on wildlife.

Improved Forest Productivity

As we are well aware of the dire consequences of global warming, preserving the environment has always been our top agenda. The establishment of well-managed forest plantations of the Group aims to conserve biodiversity, protect the environment, and provide sustainable raw material for downstream wood processing in a balanced way. Forests play an important role in moderating climate change. By regenerating forests through reforestation, we hope to contribute towards reducing the effect of global warming. An ongoing forest plantation project of the Group is being carried out in Kapit, Sarawak and we are currently developing a total area of more than 235,000 ha.

Good Agricultural Practice

The Group’s oil palm division continues to monitor procedures and systems to ensure that good agronomic practices are prevalent throughout the plantation. Several practices adopted by the Group include a zero burning technique in land clearing and good agricultural practices in water management, manuring and weeding. In controlling pests, our biological and Integrated Pest Management (IPM) practice which involves light traps and planting of beneficial plants, has vastly reduced dependency on the usage of chemical pesticides.

Annual Dinner Badminton competition

CORPORATESOCIAL RESPONSIBILITY


Blood DonationReceiving Blood Donation Winning Award Christmas Celebration

CORPORATE SOCIAL RESPONSIBILITY (cont’d)

Staff training Staff Welfare

Recycle And Reuse By-Products

By-products from our palm oil mill, such as Mesocarp fibre and palm kernel shells, are also utilised as feedstock for power generation in our palm oil mill. Empty fruit bunches (EFB) are recycled for application in the fields as mulch, whereas palm oil mill effluents (POME) are biologically treated before it is discharged to the watercourse. In addition, we have installed a composting plant at our existing CPO mill to turn oil mill wastes composed mainly of EFB and POME into bio-organic fertilizers.

WORKPLACE

To meet future challenges and remain competitive, we strive to be an attractive employer with the ability to recruit, develop, and retain the best people. Competent employees with great dedication to drive change and go beyond what is required to deliver on Group strategy and performance objectives are crucial to the continued growth of our business. We seek to develop our employees through training and education, respect individual integrity and human rights, offer fair pay and advancement opportunities, and maintain a safe and motivating working environment. As at 30 June, 2013, the Group has a workforce of around 3,850 employees with a diverse mix of backgrounds, experience and expertise across its operations.

Government’s Transformation Programme

We fully support the government’s Transformation Programme (GTP) to raise the living standard of low income households and to achieve the high income nation status by the year 2020. As such, we have successfully implemented the Minimum Wage Order 2012 in January 2013. However, in order to mitigate the higher labour cost following the said implementation, various programmes and innovations have been implemented to increase work efficiency and productivity.


Skills Development

The Group aims to provide a supportive working environment in which all employees receive training relevant to their work to enable them to effectively perform their duties as well as prepare them for career progression. Apart from in-house training, our employees are encouraged to attend the Group’s sponsored external seminars and workshops to keep them updated with the latest developments in the respective subjects and profession. Field training is also organized frequently to upgrade the technical and functional skills of workers at the operating units. The Training and Development Department (TDD) has been active all year round with adequate fund allocated to ensure the Group has people with the required knowledge and skills in key roles to meet the Group’s business goal. We upgraded our Training Center during the year to provide our staff with better training environment and facility. With TDD, each employee’s need for professional development and further training is determined to help employees fulfill their career aspirations in the Group.

Performance Oriented Culture

We make every effort to create a working environment that stimulates employee engagement and nurtures a high performing culture. Regular performance appraisals and evaluations are carried out to enable due rewards for high performers and promote motivation and performance upgrading for the rest. We review compensation and benefits on a regular basis to ensure that our remuneration packages are competitive in the marketplace. In addition to a fixed base salary, we offer both short- and long-term incentives to further motivate staff at every level, and the success of our approach is reflected in the low staff turnover rate.

Work-Life Balance And Healthy Living

Our corporate mantra to be “an employer of choice” is evident in our drive to develop and maintain a balanced, healthy, and conducive work environment for continuous learning and personal growth. Through the Group’s sports and recreation club, we regularly organise recreational events and sports activities aimed at promoting rapport and fostering closer teamwork among employees as well as to encourage work-life balance and healthy living. These include educational trips to the Group’s operations, annual dinners, festive gatherings, sporting competitions, and vacation trips to some of our local tourist attractions. To generate health awareness among staffs, the Group coordinates with different bodies to give different types of health screening services at special rate for our employees. In addition, we invest in workforce welfare by providing quality environment and accompanying facilities and building of quarters, playgrounds, recreational and medical facilities, which cater to the estate and mill workers.

Health And Safety At Work

Occupational safety in the workplace continues to be a non-negotiable priority of the Group. During the year under review, we maintained our commitment to enforce workplace health and safety excellence not just for our employees but also for our contractors, customers and visitors. We are working continuously to reduce the number of work-related accidents and injuries and to prioritize preventive efforts, particularly in the areas where the challenge is greatest. To achieve our goal, a series of in-house training programmes on safety and health have been conducted with the assistance of external experts. Emergency exercises including fire-fighting drills are practised. We ensure that appropriate resources and support are accessible to maintain high standards of safety and cultivate a positive safety culture and awareness. Our Safety & Health Department was active throughout the year under review by conducting frequent quality audits and safety checks at individual sites to ensure that all safety requirements and precautions were strictly observed.


Gawai CelebrationDonation to Police Job Fair



COMMUNITY

We support communities in many ways. We contribute significant funding and other resources towards enhancing the social well-being of the community through supporting initiatives related to health care, arts and culture, sports, community development, the underprivileged, disability groups, and more.

Giving Back To The Society

We encourage our employees to participate in community and charitable activities. Over the last 12 months, our efforts included charity drives for the autistic society, refuge centre, kidney foundation, and other local society care centres. We also donated to the local police station and battalion in our efforts to help the local police force in their crime prevention efforts. As a highlight to show our support for the benefit of the local community, we donated RM100,000 for the over 700 affected fire victims of Kampung Dato. In addition to this area of focus, our blood donation drives are conducted yearly to meet the continuous need for blood supplies at hospitals and blood banks. Our contributions were not unnoticed as we were proudly awarded as one of the winners for the 4th running year in two categories – Blood Donation Competition 2012 (Group B) and Most Outstanding Performance of Blood Donation 2012 (Group E) organized by the Malaysian Red Crescent, Sibu Chapter.

Supporting Local Communities

The Group strongly believes that its business success can only be sustained when local communities grow and prosper together with the Group. The Group continues to support the local communities associated with its operations, and FY2013 was no exception. We have established a symbiotic relationship with the local communities and make every endeavour to bring about mutual benefits. We have been consistently rendering support by means of monetary terms and in-kind to ensure that the basic needs and expectations of the surrounding communities are attended to. As a highlight, we helped to upgrade the feeder road to Kampung Long Busang covering a total distance of 10km. A group of community leaders from the Kampung later paid a visit to our Group’s Headquarter to personally record their appreciations for our assistances rendered.

Sarawak Grand Timber & SMEs Expo 2013Rumah Long Busang Leader Visit Staff Orientation

Donation to Refuge Centre Donation to Kampung Dato Fire Victim



MARKETPLACE

We places great importance on high standards of quality in our products and business conduct and is conscious of safeguarding environmental and social values. We are committed to cultivate the best practices in complying with all laws and regulations, and the standards of all certification for the markets we serve.

Environmentally Responsible Products

It is our ongoing policy to ensure that its products and its sources comply with all regulatory criteria and adhere strictly to sustainable forestry and plantation practices. Research shows that competitiveness is strengthened as consumers increasingly choose products they perceive as “ethical” and “environmental-friendly.” We have established strong customer loyalty as we strive to ensure that our manufacturing products are of the highest quality that meets the stringent quality assurance and control, product safety standards, and environmental requirements. A reflection of the Group’s commitment towards this is manifested in its efforts to achieve green certification for its products which include:

•CEMarking

The CE marking certifies that our plywood product has met European Union health, safety, and environmental requirements, which ensure consumer safety. CE marking now provides product access to 27 countries with a population close to 500 million.

• JapaneseAgriculturalStandards(JAS)certification

The quality of our plywood product meets the specific standards requirements of JAS for use in Japan. The JAS certification issued by the Japanese Ministry of Agriculture, Forestry and Fisheries is based on the law concerning standardization and proper labeling of Agricultural and Forestry products for acceptance into Japan.

•CaliforniaAirResourcesBoard(CARB)certification

This certification verifies that our composite wood products (hardwood plywood) are in compliance with strict formaldehyde emission standards as stipulated in the California Code of Regulations.

•WoodPackagingMaterialTreatmentProviderscertification

Our wood packaging material has been awarded the certification that aims to reduce the spread of timber pests associated with solid timber packing material. It is issued by the Sarawak Department Agriculture Plant Protection and Quarantine Branch in accordance with International Standards for Phytosanitary Measures, Publication No.15 (ISPM 15) standards.

In the financial year 2013, we continued our sustainability journey by passing the surveillance audits for the above certification. The group is committed to work towards continuous improvement in the quality of its products and services through implementation of feedback from our customers, suppliers, and employees together with internal and external audits. We believe that we have an obligation to go beyond certification and compliance and invest in continued improvements.

Highest Principles Of Integrity

Our investor relations programme aims to establish and maintain open communications with shareholders and investors so as to provide timely information and ensure the best possible transparency. We keep the investment communities well-versed with our key business activities, strategies, and performance through annual general meetings, analyst and press briefings, and road shows. In addition, our corporate website at www.jayatiasa.net provides the latest financial results, statutory announcements, corporate news, and a wide range of information on the Group.

CSR and sustainability are about continuous improvement and we must ensure that this mindset is embedded across the Group. As we progress towards our long-term sustainability goals, the commitments we have made for sustainable operation will continue to benefit the communities in which we operate, both environmentally and socially.


STATEMENT ONCORPORATE GOVERNANCE

INTRODUCTION

The Board of Directors (“the Board”) of Jaya Tiasa Holdings Berhad (“JTH” or the “Company”) is committed to ensuring that the highest standard of corporate governance is practiced throughout the Group as a fundamental part of discharging its responsibilities in managing the business and affairs of the Group to create long-term and sustainable growth in shareholder value.

The Company has in the financial year ended 30 June 2013 complied with the Principles and Recommendations of the Malaysian Code on Corporate Governance 2012 (“the Code”), save for the Recommendation that the tenure of an independent director should not exceed a cumulative term of 9 years.

Pursuant to the Main Market Listing Requirements of Bursa Malaysia Securities Berhad (“Listing Requirements”), the Board is pleased to present the following statement on the application by the Group of the Principles and Recommendations set out in the Code.

1. BOARD OF DIRECTORS

1.1 Roles and Responsibilities

The Board is responsible for the proper stewardship of the Company and its subsidiaries (collectively “Group”). The Board is to ensure the maximization of shareholders’ value and safeguarding the stakeholders’ interests including securing sustainable long-term financial results and increasing shareholder value, with proper social and environmental considerations.

The Board has the following major responsibilities, which facilitate the discharge of the Board’s stewardship and fiduciary functions in the pursuit of the best interest of the Group:

a. Adopting and reviewing a strategic plan for the Group;

b. Overseeing the conduct of the Group’s business to evaluate whether the business is being properly managed and sustained;

c. Ensuring that effective Risk Management (“RM”) framework is in place and aligned with the Group’s business objectives;

d. Succession planning including training and induction programs;

e. Developing and implementing an investor relations programme for the Company; and

f. Reviewing the adequacy and integrity of the Group’s internal control system.

1.2 Functions Reserved for the Board

There is a schedule of significant matters reserved for the collective decision of the Board, including the approval of financial results, annual corporate and business plans, dividend policy, acquisition and disposal of undertakings and properties of a substantial value as well as major investments and strategic decisions.

1.3 Directors’ Code of Ethics and Board Charter

The Directors observe a code of conduct in accordance with the Code of Ethics established by the Companies Commission of Malaysia, which forms an integral part of the Company’s Board Charter.

The Board Charter sets out the roles and responsibilities of the Board and Board Committees, division of responsibilities between the Board, Management, Chairman, CEO and Board Committees as well as processes and procedures for meetings. It serves as a reference and primary induction document providing prospective and existing Board Members insights into their fiduciary and leadership functions.

JayaTiasa AR2013 (Acc).indd 23 10/28/2013 2:13:53 PM


1.4 Size, Composition and Diversity

As at the date of this statement, the Board has nine (9) members. Two (2) are Executive Directors and seven (7) Non-Executive Directors. Four (4) Directors or 44% of the Board members are Independent Non-Executive Directors.

On 1st January 2013, Dato’ Wong Sie Young was appointed as the Chief Executive Officer (CEO) of the Company. Dato’ Wong has been with the Group for 25 years during which time he has acquired extensive experience in the running of the Group’s operations. Simultaneously with Dato’ Wong’s appointment, the ex Managing Director Dato’ Sri Tiong Chiong Hoo was re-designated as Deputy Executive Chairman. The re-organisation is to enable Dato’ Sri Tiong Chiong Hoo to delegate the day-to-day operations to the new CEO and focus his time towards developing the Group’s corporate/business strategy and attaining the long-term growth objective. This is also in line with the Group’s long term plan and policy to develop professional talent that will provide adequate support for growth and continuity. The nine (9) members of the Board are persons of high calibre and integrity, and they possess the appropriate skills, knowledge, experience and core competencies to address key issues relating to the business and affairs of the Group. The Board collectively has sufficient knowledge and expertise to enable effective governance and oversight.

The Group promotes corporate culture that embraces gender diversity when determining composition of employees at all level from a diverse pool of qualified candidates. Although the Board does not endorse quotas, it does commit to having an increasing representation of women in senior positions in the Group and on the Board. The Board through the Nomination Committee will review the proportion of the female to male board members during recruitment and annual assessment of the Directors’ performance taking into consideration the appropriate skills, experience and characteristics required of the Board Members, in the context of the needs of the Group.

Currently, there are two (2) female Directors, namely Mdm Tiong Choon and Dato’ Wong Lee Yun.

The Board has reviewed the size of the Board, and is of the opinion that its current size and composition is appropriate and constitutes an effective Board which is conducive to effective discussion and decision making and that the Board has an appropriate number of Independent Directors. The Board is also satisfied that the current Board composition fairly reflects the interest of the minority shareholders in the Company.

A brief profile of each Director is presented on pages 5 to 9.

1.5 Strategies Promoting Sustainability

Promoting sustainability and enhancing shareholder value are embedded in our business model that takes into account market place, work place, environment and community, details of which are set out in the Corporate Social Responsibility Statement on pages 18 to 22 of this annual report.

1.6 Access to Information and Advice

The Directors have unrestricted access to all information pertaining to the Group’s business and affairs whether as a full Board or in their individual capacity in furtherance of their duties.

The agenda for each Board Meeting together with a full set of board papers are forwarded to each Director for their perusal well in advance of the date of the Board Meeting to facilitate informed decision making.

The Senior Management Staff are invited to attend the Board and Committee Meetings to report on matters relating to their respective areas of responsibility and also to provide detail or clarification on issue(s) that may be raised by any Director.

All the Directors have direct access to the advice and services of the Company Secretary whether as a full Board or in their individual capacity. The Directors also have the liberty to seek external professional advice if so required by them at the Company’s expense.

1.7 Company Secretary

The Secretary is responsible for ensuring that Board procedures are followed, that the applicable rules and regulations for the conduct of the affairs of the Board are complied with and for all matters associated with the maintenance of the Board or otherwise required for its efficient operation.

STATEMENT ON CORPORATE GOVERNANCE (cont’d)



1.8 Board Committees The Board has established three (3) Committees, namely, Audit Committee, Nomination Committee and

Remuneration Committee to assist the Board in the execution of its duties and responsibilities. The functions and terms of reference of the committees as well as authority delegated by the Board to these Committees are clearly defined and, where applicable, complied with the recommendations of the Code.

The Chairman of the respective Board Committees reports to the Board the outcome of the Committee meetings including salient matters which require the Board’s attention or direction.

a. Audit Committee

The Audit Committee’s principal function is to assist the Board in meeting its responsibilities in ensuring a sound and effective system of internal control and for meeting its external financial reporting obligations.

It has four (4) members, all of whom are independent non-executive directors.

The composition, terms of reference and summary of the Audit Committee and internal audit activities are presented on pages 37 to 40.

b. Nomination Committee

The Nomination Committee is made up entirely of Non-Executive Directors, of whom two-third (2/3) are independent.

The following Directors are members of the Nomination Committee:-

Chairman - Datuk Talib Bin Haji Jamal (Independent Non-Executive Director) Members - Mr John Leong Chung Loong (Independent Non-Executive Director) - Dato’ Sri Dr. Tiong Ik King (Non-Independent Non-Executive Director)

The key terms of reference of the Nomination Committee are: -

o to consider, evaluate and recommend to the Board any new Board appointment;

o to recommend to the Board, Directors to fill the seats on Board Committees;

o to review annually and recommend to the Board with regard to the structure, size, balance and composition (including gender diversity) of the Board and Committees including the required mix of skills and experience, core competencies which non-executive directors should bring to the Board and other qualities to function effectively and efficiently;

o to evaluate on an annual basis, the effectiveness of the Board as a whole, the Board Committees and each Director’s ability to contribute to the effectiveness of the Board and the relevant Board Committees;

o to recommend to the Board whether Directors who are retiring should be put forward for re-election/re-appointment at annual general meetings; and

o to assess independence of Independent Directors.

The Nomination Committee upon its annual review carried out, is satisfied that the size and composition of the Board is optimum and conducive to effective discussion and decision making. There is appropriate mix of skills, experience and core competencies in the composition of the Board and that the Board has an appropriate number of Independent Directors. The Nomination Committee is also satisfied that all the members of the Board are suitably qualified to hold their positions as Directors of the Company in view of their respective academic and professional qualifications, experience, core competencies and qualities.

The Committee met twice during the financial year ended 30 June 2013 and were attended by all the members.




c. Remuneration Committee

The Remuneration Committee is made up entirely of Non-Executive Directors, of whom two-third (2/3) are independent.

The following Directors are members of the Remuneration Committee:-

Chairman - Mr John Leong Chung Loong (Independent Non-Executive Director) Members - Datuk Talib Bin Haji Jamal (Independent Non-Executive Director) - Dato’ Sri Dr. Tiong Ik King (Non-Independent Non-Executive Director)

The key term of reference of the Remuneration Committee is to recommend to the Board the framework, remuneration package and performance related pay schemes for Executive Directors.

Remuneration packages of both Executive Directors and Non-Executive Directors are a matter to be decided by the Board as a whole with the Director concerned abstaining from deliberations and voting on decisions in respect of his/her individual remuneration.

The Remuneration Committee met twice during the financial year ended 30 June 2013 and recommended to the Board the remuneration package for the Deputy Executive Chairman and Chief Executive Officer in all its form. The meeting was attended by all the members.

1.9 Appointments to the Board

There is in place a formal and transparent procedure for the appointment of new Directors to the Board. The Nomination Committee is responsible for evaluating and recommending to the Board suitable candidates for appointment as new Directors of the company. The Nomination Committee also recommends to the Board, directors for re-election and re-appointment by shareholders at the Annual General Meeting. The Company Secretary will ensure that all appointments are properly made and that legal and regulatory obligations are met.

1.10 Re-appointment and Re-election of Directors

Pursuant to Section 129(6) of the Companies Act, 1965, Directors over seventy (70) years of age are required to retire at every annual general meeting and submit themselves for re-appointment to hold office until the next annual general meeting.

The Company’s Articles of Association requires all Directors appointed by the Board to retire from office and submit themselves for re-election by shareholders at the next Annual General Meeting after their appointment. All Directors are required to retire from office and submit themselves for re-election by rotation at the Annual General Meeting at least once in every three (3) years.

2. DIRECTORS’ REMUNERATION

The Board will determine the level of remuneration of Board Members, taking into consideration the recommendations of the Remuneration Committee.

The Level and make-up of remuneration should be sufficient to attract and retain the Board members needed to run the Company successfully.

Non-executive Board members are paid a basic fee as ordinary remuneration and they will also be paid additional remuneration based on their responsibilities in the Board and Board committees as well as for their attendances at meetings. The fee which is subject to the approval of the shareholders shall be fixed in sum and not by a commission or on percentage of profits/turnover.

Executive Director(s) are paid as employees of the Company in accordance with their contract of employment with the Company.




The Directors have the benefit of the Directors and Officers (D&O) Insurance in respect of liabilities arising from their acts committed in their capacity as D&O of the Company. However, the said insurance policy does not indemnify a Director or officer if he/she is proven to have acted fraudulently, dishonestly, maliciously or in willful breach of any statute or regulation. The premium of the D&O policy is borne by the Company.

During the financial year ended 30 June 2013, the remuneration of the Executive Directors and Non-Executive Directors are as follows:-

Other Benefit Salary Fees Bonus Emoluments EPF in kind Total RM RM RM RM RM RM RM

Executive Directors

Dato’ Sri Tiong Chiong Hoo 570,000 55,000 1,040,000 7,500 209,300 15,500 1,897,300

Dato’ Wong Sie Young(Appointed on 1 January 2013) 150,000 27,500 3,000 19,500 200,000

Non-Executive Directors

Gen (Rtd) Tan Sri Abdul Rahman Bin Abdul Hamid 66,500 54,000 3,120 13,325 136,945

Dato’ Sri Dr Tiong Ik King 59,000 7,500 66,500

Tiong Choon 55,000 6,000 61,000

Tiong Chiong Hee 55,000 4,500 59,500

John Leong Chung Loong 65,500 7,500 73,000

Dato’ Wong Lee Yun 58,500 126,000 184,500

Datuk Talib Bin Haji Jamal 65,500 7,500 73,000

Total 720,000 507,500 1,040,000 223,500 231,920 28,825 2,751,745

Executive Non-ExecutiveDirectors’ remuneration Directors Directors

RM50,001 to RM100,000 – 5RM100,001 to RM150,000 – 1RM150,001 to RM200,000 1 1RM1,850,000 to RM1,900,000 1 –

3. BOARD INDEPENDENCE

3.1 Independence of Directors

The presence of Independent Directors facilitates the exercise of independent evaluation in Board deliberations and decision-making, and thus provides check and balance in the Board.

The Nomination Committee and the Board have upon their annual assessment, concluded that all the four (4) Independent Non-Executive Directors remain independent and they continue to fulfill the definition of independence as set out in the Bursa Malaysia Main Market Listing Requirements.

All the four (4) Independent Non-Executive Directors have provided their respective annual confirmation of independence to the Nomination Committee and the Board.




Recommendation 3.2 of the Code states that the tenure of an independent director should not exceed a cumulative term of 9 years. However, The Nomination Committee and Board have determined at the annual assessment that Gen (Rtd) Tan Sri Abdul Rahman Bin Abdul Hamid, who has served on the Board for 17 years and John Leong Chung Loong for 11 years, remain objective and independent in expressing their views and in participating in deliberations and decision making of the Board and Board Committees. Their length of service on the Board does not in any way interfere with their exercise of independent judgement and ability to act in the best interests of the Company. Approval has been obtained from shareholders at last year AGM to retain them as Independent Directors. Shareholders’ approval will again be sought at the forthcoming AGM to retain them as Independent Directors of the Company in accordance with Recommendation 3.3 of the Code.

3.2 Positions of Chairman and CEO

There is a clear division of responsibility between the Chairman and the CEO to ensure a balance of power and authority. The positions of the Chairman and the CEO are separately held by two persons. The Chairman, Gen (Rtd) Tan Sri Abdul Rahman Bin Abdul Hamid, an Independent Non-Executive Director, is primarily responsible for ensuring Board effectiveness and conduct. He ensures that each of the agenda items is adequately reviewed and thoroughly deliberated within a reasonable timeframe and that Directors are given the chance to freely express their views. He has never held any executive position in the Group. The CEO is accountable to the Board for the achievement of the Company’s goals and for the observance of the management authorities. He heads the management of the Company and the Group.

3.3 Senior Independent Non-Executive Director

The Board has identified Gen (Rtd) Tan Sri Abdul Rahman Bin Abdul Hamid (email address: [email protected]) as the Senior Independent Non-Executive Director to whom concerns of shareholders, management and others may be conveyed.

4. FOSTER COMMITMENT

4.1 Time Commitment

To ensure that the Directors have the time to focus and fulfill their roles and responsibilities effectively, the new director is required to commit sufficient time to attend to the Company’s meetings before accepting his/her appointment to the Board. The existing Directors are required to notify the Chairman before accepting any new Directorship on other listed company and to indicate the time expected to be spent on the new appointment.

All the Directors are required to submit to the Company an update on their total number of directorships held by them in listed company(ies) every six (6) months for monitoring purpose.

The Board is satisfied with the level of time commitment given by the Directors towards fulfilling their roles and responsibilities as Directors of the Company. This is reflected by their attendance at Board meetings.

The Board holds scheduled meetings regularly, with additional meetings convened as and when necessary. The annual meeting calendar providing scheduled dates for meetings of the Board, Board Committees and shareholders is prepared and circulated to Directors at the beginning of each year so that the Directors can plan accordingly and fit the year’s meetings into their respective schedules. The calendar also includes closed period for dealings in Company’s shares by Directors and principal officers.

A total of five (5) Board of Directors Meetings were held in the financial year ended 30 June 2013. Details of the attendance of each Director are as follows:-

Name of Directors Meeting Attendance

Gen (Rtd) Tan Sri Abdul Rahman Bin Abdul Hamid (Independent Non-Executive Chairman) 4/5Dato’ Sri Tiong Chiong Hoo (Deputy Executive Chairman) 5/5Dato’ Wong Sie Young1 (Chief Executive Officer) 2/2 1

Dato’ Sri Dr Tiong Ik King (Non-Independent Non-Executive Director) 5/5Mdm Tiong Choon (Non-Independent Non-Executive Director) 4/5Mr Tiong Chiong Hee (Non-Independent Non-Executive Director) 3/5Mr John Leong Chung Loong (Independent Non-Executive Director) 5/5Dato’ Wong Lee Yun (Independent Non-Executive Director) 4/5Datuk Talib Bin Haji Jamal (Independent Non-Executive Director) 5/5




Note:1 Appointed on 1 January 2013

4.2 Directors’ Training

All the Directors have attended the Mandatory Accreditation Programme (MAP) and are encouraged to attend continuous education programmes to update their skills and knowledge and to keep abreast with the latest developments on a variety of areas relevant to the Group’s business.

The conferences, seminars and training programmes attended by each individual Director during the financial year are as follows:-

Director Course Title Date of Attendance

Gen (Rtd) Tan Sri Abdul Rahman Bin Abdul Hamid

Bursa Malaysia’s Half Day Governance Programme

3 October 2012

Asean Corporate Governance Scorecard - The Way Forward

21 November 2012

Leveraging on the Companies Act 1965 towards Ach iev ing H igh Corpora te Performance: Corporate Ethics and Human Capital Management

11 December 2012

Chairman Power Breakfast on “30% Women at Top Decision Making Positions in the Corporate Sector by 2016”

13 December 2012

Forensic Accounting For Non-Executive Directors

23 January 2013

Bursa – Nominating Committee Program 15 May 2013

Special Dialogue and Presentation Session on Asean Corporate Governance Scorecard 2013

19 June 2013

Dato’ Sri Tiong Chiong Hoo

Fraud Identification and Modus Operandi 24 October 2012

The Malaysian Code on Corporate Governance 2012 – Its Implications & Challenges to Directors of Listed Issuers

24 October 2012

Dato’ Wong Sie Young Mandatory Accreditation Programme 9 & 10 January 2013

Understanding the Governance Framework for Boardroom Excellence – MCCG 2012 & Amended Listing Requirements

9 April 2013

Dato’ Sri Dr Tiong Ik KingHot Topics for Directors – Price Sensitive Information & Others

29 November 2012

Tiong Choon



24 October 2012

Understanding the Governance Framework for Boardroom Excellence-MCCG 2012 & Amended Listing Requirement Together with its Practical Implications

9 April 2013

Islamic Finance Conference 2013 18 June 2013

Tiong Chiong Hee

Corporate Frauds – Detection & Prevention 15 January 2013

Understanding the Governance Framework for Boardroom Excellence- MCCG 2012 & Amended Listing Requirement Together with its Practical Implications

9 April 2013




Director Course Title Date of Attendance

John Leong Chung Loong

Financial Instruments – MFRS/FRS 132, 139, 7, 9 and 13

26 & 27 September 2012



24 October 2012

Dato’ Wong Lee Yun

Cradle Growth Fund-MVCPA Valuation Clinic 28 August 2012

CIMB Market Outlook Talk 15 January 2013

Invest Malaysia 2013 Conference 13 & 14 June 2013

Datuk Talib Bin Haji Jamal



24 October 2012

5. FINANCIAL REPORTING

5.1 Compliance with Applicable Financial Reporting Standard

In presenting the annual audited financial statements and quarterly financial results to the shareholders, investors and Regulatory Authorities, the Board aims to present a balanced and understandable assessment of the Group’s financial performance, position and prospects.

The Board, assisted by the Audit Committee, oversees the integrity and reliability of the Group’s financial statements. The Audit Committee members, who are financially literate meet on quarterly basis to review the financial statements prior to recommending them for the Board’s approval and issuance to stakeholders. The Audit Committee also ensures that these financial statements comply with applicable accounting standards and regulatory requirements.

The Directors’ Responsibility Statement in preparing the annual audited financial statements of the Group and

the Company is set out on page 41 of this annual report.

5.2 Suitability and Independence of External Auditors

The Audit Committee assesses the external auditors’ suitability and independence annually based on the criteria set out in the Auditor Independence Policy and recommends their appointment to the Board.

The Audit Committee has reviewed the non-audit services provided by the external auditors and their affiliated firm during the financial year and the fees paid for such services.

Written assurance has been obtained from the external auditors confirming independence in accordance with the By-laws (on Professional Ethics, Conduct and Practice) of the Malaysian Institute of Accountants.

The Audit Committee is satisfied with the external auditors’ audit independence and their technical competency.

6. RISK RECOGNITION AND MANAGEMENT

6.1 Risk Management and Internal Control

The ultimate responsibility for ensuring a sound system of risk management and internal control lies with the Board. The Group’s system of risk management and internal control is designed to manage rather than eliminate the risk of failure to achieve the Group’s business objectives as well as to safeguard shareholders’ investments and the Group’s assets.

The Statement on Risk Management and Internal Control, which provides an overview on the state of risk management and internal control within the Group, is set out on pages 34 to 36 of this annual report.




6.2 Internal Audit Function

The Company has in place an internal audit function which is independent of the activities it audits. The head of the Internal Audit reports directly to the Audit Committee. Details of the activities of the Internal Audit Function are set out in the Audit Committee Report of this Annual Report.

7. CORPORATE DISCLOSURE

7.1 Corporate Disclosure Policies and Procedures

The Company is committed to the promotion of investor confidence by ensuring that material information concerning the Company are disclosed to the investing public timely and take reasonable steps to ensure that those who invest in its securities enjoy equal access to such information.

To safeguard effective dissemination of information, the Company has formalised an internal Corporate Disclosure Policy and Procedure (CDPP) which sets out roles and responsibilities of directors, management, employees and all other relevant persons in the handling and disclosure of material information to shareholders and market participants. It also serves to ensure that communication to the investing public about the Company are made in accordance with the continuous disclosure obligations imposed by the Bursa Malaysia Main Market Listing Requirements and other securities law.

Communications with its shareholders, stakeholders and the investing public are made through the annual

general meeting, annual report, quarterly financial reports and various announcements made via Bursa Malaysia. The Company views briefings with investors, analysts and media as important parts of a pro-active investors relation strategy. Regular briefing to fund managers, research houses/analysts and media are held which allow the Management to convey information about the Group’s performance, corporate strategy and other matters affecting shareholders’ interest.

7.2 Leverage on Information Technology

The Company’s website at www.jayatiasa.net provides easy access to information pertaining to the Company and activities of the Group and is kept up-to-date. It also stores all other corporate and financial information that had been made public, such as quarterly announcements of the financial results, annual reports, announcements and disclosures made pursuant to the disclosure requirements of Bursa Malaysia Listing Requirements. All presentations to analysts and media are also made available to the public via the Company’s website.

To make it easier to obtain news releases and notifications, all shareholders and interested investors may sign up to the e-mail alert service via the website.

8. RELATIONSHIP BETWEEN COMPANY AND SHAREHOLDERS

8.1 Shareholder Participation at Annual General Meeting

The Company’s Annual General Meeting (AGM) serves as a principal avenue for communication with shareholders. It also provides a useful forum for shareholders to be engaged directly with Directors and Senior Management. The Company sends out the Notice of the AGM and Annual Report to shareholders at least 21 days before the date of the meeting. Items of special business included in the Notice of the AGM are accompanied by explanatory notes and Circular to Shareholders to facilitate full understanding and evaluation of the issues involved.

To further promote participation of members through proxies, the Company will be seeking shareholders’ approval at its 53rd AGM to amend its Article of Association to include the rights of proxies to speak at general meetings in line with Paragraph 7.21A(2) of the Listing Requirements.




8.2 Poll Voting

At the 52nd AGM of the Company held on 28 November 2012, no substantive resolutions were put forth for shareholders’ approval, other than resolutions pertaining to the adoption of the audited financial statements for the financial period ended 30 June 2012, payment of final dividend, re-appointment/re-election of Directors, payment of Directors’ fees, re-appointment of external auditors, proposed share buy back authority and proposed shareholders’ mandate for recurrent related party transaction. As such, the resolutions put forth for shareholders’ approval at the 52nd AGM were voted on by a show of hands.

8.3 Communication and Proactive Engagement

At the 52nd AGM, a total of 6 out of 8 Directors were present in person to engage directly with the shareholders. The proceedings of the AGM included a Q&A session during which the Chairman invited shareholders to raise questions pertaining to the Company’s accounts and other items for adoption at the meeting, before putting each resolution to vote. The Directors, Management and external auditors were in attendance to respond to the shareholders’ queries. The Chairman and the then Managing Director also shared with the shareholders the Company’s responses to questions submitted in advance of the AGM by the Minority Shareholder Watchdog Group.

9. ADDITIONAL COMPLIANCE INFORMATION

The following information is provided in compliance with Bursa Malaysia Main Market Listing Requirements.

9.1 Depository Receipts Programme

The Company did not sponsor any Depository Receipts programmes during the financial year ended 30 June 2013.

9.2 Sanctions and/or Penalties

There were no sanctions and/or penalties imposed on the Company or its subsidiaries, directors or management by any relevant authority during the financial year ended 30 June 2013.

9.3 Variation in Results

The audited results for the financial year ended 30 June 2013 did not differ by 10% or more from the announced unaudited results. There were no profit estimates, forecasts or projections issued by the Group during the financial year ended 30 June 2013.

9.4 Profit Guarantees

There were no profit guarantees given by the Company and its subsidiaries during the financial year ended 30 June 2013.

9.5 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 which involved directors and major shareholders, either still subsisting at the end of the financial year ended 30 June 2013 or entered into since the end of the previous financial year.

9.6 Utilisation of Proceeds Raised from Corporate Proposals

The proceeds raised from the corporate placement in year 2012 have been used for the repayment of bank borrowings, construction of palm oil mills and working capital/acquisitions, as intended.

9.7 Options or Convertible Securities

No options or convertible securities were issued by the Company during the financial year ended 30 June 2013.




9.8 Non-audit fees

The non-audit fees paid to the external auditors and their affiliated company by the Group for the financial year ended 30 June 2013 amounted to RM132,700.

9.9 Share Buy-backs

During the financial year ended 30 June 2013, a total of 5,720,000 of the Company’s own shares were purchased and retained as treasury shares. The monthly breakdown of shares bought back is set out below:-

Month No. of Price Average Total Shares Highest Lowest Cost Cost RM RM RM RM

August 2012 566,100 2.53 2.40 2.41 1,363,489September 2012 3,904,700 2.49 2.39 2.43 9,500,116October 2012 705,100 2.36 2.21 2.29 1,615,861November 2012 543,100 2.24 2.10 2.20 1,192,868March 2013 1,000 1.89 1.89 1.93 1,933

A total of 2,233,988 treasury shares were resold on 20 July 2012, details of which is set out below:-

Month No. of Price Average Total Shares Highest Lowest Price Consideration received RM RM RM RM

July 2012 2,233,988 8.63 8.47 8.49 18,960,968

As at the financial year ended 30 June 2013, a total of 5,720,000 shares were retained as treasury shares.

9.10 Recurrent Related Party Transactions of A Revenue or Trading Nature

Related party transactions are disclosed in Note 34 on pages 110 to 115 of this annual report.

This statement is made in accordance with a resolution of the Board of Directors dated 22 October 2013.




Introduction

Pursuant to paragraph 15.26(b) of Bursa Malaysia Securities Berhad and the Malaysian Code on Corporate Governance 2012, the Board of Directors is pleased to present its Statement on Risk Management and Internal Control, which has been prepared by taking into consideration the Statement on Risk Management and Internal Control - Guidance for Directors of Public Listed Companies issued by the Task Force on Internal Control with the support and endorsement of the Bursa Malaysia Securities Berhad.

Board’s Responsibility

The Board recognizes the importance of sound internal controls and risk management practices for good corporate governance. The Group adopts a risk-based approach to establish a sound system of internal control. The Board in discharging its stewardship responsibility for the Group affirms its responsibility for reviewing the adequacy and effectiveness of risk management and internal control system, to provide reasonable assurance that risks are being managed within the Group’s risk appetite.

The Group’s system of risk management and internal control covers governance, financial, operational and compliance controls. Notwithstanding, it should be noted that the system by its nature is designed to manage rather than eliminate the risk of failure to achieve the Group’s business objectives. Accordingly, such system can only provide a reasonable but not absolute assurance against material misstatement, loss or fraud.

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

Risk Management

The Board subscribes to the fact that an effective risk management practice is vital to the success of the Group’s businesses. In view of this, there is a formal process to identify, evaluate, monitor and manage key risks faced by the Group that may impede the achievement of the Group’s business objectives.

The Board has formed a Risk Management Committee (“RMC”) to assist in oversight of the overall risk management where the latter is headed by the Group’s Chief Executive Officer and comprises members from amongst the senior management within the Group. The RMC meets periodically to address the business strategies and key risks within the Group, taking into consideration the critical assumptions underlying the strategies regarding such matters as market competition, economic trends, regulation, technological innovation, etc. It reviews and discusses the resilience of the Group in responding to the risk events as well as the performance of the Group’s operations. The RMC provides updates on the risk management activities as well as the results of the Annual Risk Assessment workshop to the Board.

The Risk Management Department acts as a support for the RMC in addressing, analyzing and reporting of the risks identified and as a facilitator in the risk assessment process. It evaluates the risk management policies and procedures, and initiates improvements by maintaining awareness of global trends and regulatory development in risk management that may have significant impact to the Group.

Risk owners and co-owners have been identified to manage the risks in the daily business operations and to ensure that the Group’s risk profiles are updated accordingly. The risk profiles are then compiled and tabled to the RMC for deliberation on a periodic basis.

Moving forward, the Group shall continue to carry out on-going processes and/or relevant initiatives to ensure consistent application, effective functioning of the Risk Management Framework, continued relevance of the Group’s risk profiles being maintained, and implementation of the management action plan. This on-going process has been in place for the whole financial year under review and up to the date of approval of this statement for inclusion in the annual report.

STATEMENT ON RiSk MANAGEMENTANd iNTERNAl CONTROl



Control Environment and Activities

The Group has established a conducive control environment in respect of the overall attitude, awareness and actions of the Board and management regarding the internal control system and its importance.

The key elements that the Board has established in reviewing the adequacy and integrity of the system of internal controls, are as follows:

• TheGrouphasinplaceanorganizationstructurethatsupportsbusinessandoperationalrequirements,withclearlydefined reporting lines and accountability.

• AppropriateauthoritylimitsareestablishedwithintheGroupforapprovingcapitalexpenditureandmattersrelatedto financial, treasury, operations and personnel, therefore minimizing the risk of unauthorized transactions.

• Annualbudgetsarepreparedtomonitoractualversusbudgetedandpriorperiod’sperformancewithmajorvariancesbeing reviewed and management actions taken as necessary. The budgets are reviewed half yearly or on a need basis.

• Thequarterlyandannualfinancialstatementscontainingkeyfinancialresultsaswellasoperationalperformanceresults of the Group are prepared and reported to the directors at the board meetings.

• Periodicbriefingswithanalystsareconductedtoapprisetheshareholders,stakeholdersandgeneralpublicoftheGroup’s performance whilst promoting transparency and open discussions.

• AChiefExecutiveOfficerhasbeenappointedtobeinvolvedintheday-to-daybusinessoperationsoftheGroup.Scheduled meetings are held with senior management to identify, discuss and resolve business and operational issues.

• Meetingsonmanagementaccountsresultsagainstpriorperiodsareconductedbi-monthlywithmajorvariancesbeing investigated and corrective actions taken, where necessary.

• MonthlymanagementmeetingsareconvenedattheGroupleveltoshareinformation,discussfinancialandbusinessdevelopment, progress and performance monitoring as well as to decide upon operational matters. The proceedings of these meetings are documented in the minutes for further action and reference.

• Documentedoperatingpoliciesandproceduresaremadeavailabletoguidestaffintheirday-to-dayworkprocesses.These policies and procedures are subject to regular review and improvement to reflect changing risks or to resolve operational deficiencies.

• TheGrouphasanupgradedcomprehensiveinformationsystemthatenablestransactionstobecaptured,compiledand reported in a timely and accurate manner. The system is highly automated and provides management with reliable data, analysis, variations, exceptions and other inputs relevant to the Group’s operating performance.

• TheGrouphasahumanresourcefunctiontoretainandrecruitstaffwiththerightskills,experienceandqualificationsto fulfill the Group’s corporate and operational needs.

• TheGroupemphasizeshumanresourcetraininganddevelopmentasitrecognizesthevalueofitsstaffincontributingto its growth. Appropriate training programs are identified and scheduled to ensure staff are adequately trained and competent in discharging their responsibilities.

• Asfortheoccupationalsafetyandhealth,theGrouphasinputinplacetherelevantguidelinesamongothers,settingup safety & health committees and appointment of full time safety and health practitioners at operating level to address the safety and health issues which may arise from time to time.

• Theuseoftheintranetasaneffectivemeansofcommunicationsandknowledgesharing. • Regularsitevisitsbythemanagementteamtogaugefirst-handknowledgeontheeffectivenessofstrategiesbeing

implemented.

STATEMENT ON RiSk MANAGEMENT ANd iNTERNAl CONTROl (cont’d)



Internal Audit

The internal audit function of the Group is carried out by an in-house Internal Audit Department (“IAD”) which reports directly to the Audit Committee. The IAD adopts a risk-based approach in preparing audit strategy and plan. This approach includes focusing the internal audit work on the significant risks as well as any emerging risks identified across the Group. The IAD reviews the adequacy and effectiveness of the Group’s system of risk management and internal control to mitigate the risks of the Group covering mainly operational, financial and compliance risks.

The internal audit plan is reviewed and approved annually by the Audit Committee. The Audit Committee reviews the key audit findings and the related recommendations reported by the IAD on a periodic basis. The Group’s management is responsible for ensuring that any corrective actions recommended are timely taken.

Board Review

The Board is of the view that the Group’s system of risk management and internal control is sound and effective. The monitoring, reviewing and reporting arrangements in place give reasonable assurance that the structure and operation of controls are appropriate for the Group’s operations and that risks are at an acceptable level throughout the Group’s businesses.

The Group will continue to review and update the adequacy and effectiveness of its risk management and internal control system to be in line with changes in the operating environment.

The statement is made in accordance with a resolution of the Board of Directors dated 22 October 2013.

STATEMENT ON RiSk MANAGEMENT ANd iNTERNAl CONTROl (cont’d)



MEMBERS

The Audit Committee has four (4) Independent Non-Executive Directors, namely, - Gen (Rtd) Tan Sri Abdul Rahman Bin Abdul Hamid (Chairman)- John Leong Chung Loong- Dato’ Wong Lee Yun- Datuk Talib Bin Haji Jamal

TERMS OF REFERENCE

1 Size and Composition

a. The Audit Committee shall be appointed by the Board of Directors from among their number and shall comprise of not less than three (3) members which fulfils the following requirements: -

i. all the Audit Committee members must be non-executive directors, with a majority of them being independent directors; and

ii. at least one (1) member:

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

(bb) if he is not a member of MIA, he must have at least three (3) years’ working experience and: -

• hemusthavepassedtheexaminationsspecifiedinPartIofthe1stScheduleoftheAccountantsAct, 1967; or

• hemustbeamemberofoneoftheassociationsofaccountantsspecifiedinPartIIofthe1stSchedule of the Accountants Act, 1967.

(cc) fulfils such other requirements as prescribed or approved by Bursa Malaysia Securities Berhad.

iii. No alternate director shall be appointed as member of the Audit Committee.

b. The Chairman of the Audit Committee shall be appointed by the Board from among their independent directors.

c. The term of office of each member shall be subject to review every three (3) years.

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

2 Authority and Rights

The Committee wherever necessary and reasonable for the performance of its duties, shall in accordance with the procedure determined by the Board and at the cost of the Company:-

• haveauthoritytoinvestigateanymatterwithinitsTermsofReference;• havetheresourceswhicharerequiredtoperformitsduties;• havefullandunrestrictedaccesstoanyinformationrelevanttoitsactivities;• havedirectcommunicationchannelswiththeexternalauditorsandperson(s)carryingouttheinternalaudit

function or activity;• beabletoobtainexternallegalorotherindependentprofessionaladviceifitconsidersthisnecessary;and• beabletoconvenemeetingswiththeexternalauditors,theinternalauditorsorboth,excludingtheattendance

of other directors and employees of the Company, whenever deemed necessary.

AudiT COMMiTTEEREPORT



3 Functions and Duties

The Committee shall, amongst others, discharge the following duties:

a. to assess the adequacy and effectiveness of the risk management framework, internal control and governance systems.

b. to review the quarterly and financial results of the Group, prior to the approval by the Board of Directors, focusing on, amongst others:-

• financialdisclosures;• changesinaccountingpoliciesandpractices;and• compliancewithaccountingstandardsandotherlegalandregulatoryrequirements;

c. to review with the external auditors:-

• thenatureandscopeofauditpriortothecommencementofaudit;• theirevaluationofthesystemofinternalcontrols,auditreportandtheassistancegivenbytheemployees

of the Company to the auditors; and• theyearendfinancialstatementsbeforesubmissiontotheBoard,focusingparticularlyon:-

- any changes in accounting policies and practices;- significant adjustments arising from the audit;- significant and unusual events;- the going concern assumption;- compliance with Accounting Standards and other legal and regulatory requirements;- to meet with the external auditors separately without the presence of the Management on any

issues from the audit.

d. to review with the internal auditors:-

• theadequacyofthescope,functions,competencyandresourcesoftheinternalauditfunctionsandthat it has the necessary authority to carry out its work; and

• the internal audit findings and investigation andwhether or not appropriate action is takenon therecommendations of the internal auditors;

e. to review any related party transactions and conflict of interest situations that may arise within the Company or Group.

f. to consider the appointment, resignation or dismissal of external auditors and the audit fees.

g. to promptly report to the Bursa Malaysia Securities Berhad where the Audit Committee is of the view that a matter reported by it to the Board has not been satisfactorily resolved resulting in a breach of Bursa Malaysia Securities Berhad Listing Requirements.

h. To consider and examine any other matters as the Audit Committee consider appropriate or as instructed by the Board of Directors.

4 Meetings and Attendance

a. The Committee shall meet not less than four (4) times in a year. Additional meetings may be called at any time if so requested by any Committee member, management or the internal or external auditors.

b. A quorum shall consist of a majority of members present who must be independent directors.

c. Other Directors and employees may attend any particular Audit Committee meeting only at the Committee’s invitation, specific to the relevant meeting.

d. The Company Secretary shall be the secretary of the Committee.

AudiT COMMiTTEE REPORT (cont’d)



e. Procedures in relation to giving of notice, adjournment of meeting and attendance by means of video or teleconference shall be governed by the relevant provisions contained in the Articles of Association of the Company.

f. The Committee may deal with matter by way of circular resolutions in lieu of convening a formal meeting for exceptional circumstances.

g. The Committee, through its Chairman, shall report to the Board at the next Board of Directors’ meeting after each Committee meeting.

h. The Audit Committee met Five (5) times during the financial year ended 30 June 2013. Details of the attendance of the members are as follows:

Meeting Percentage ofMembers Attendance Attendance (%)

Gen (Rtd) Tan Sri Abdul Rahman Bin Abdul Hamid 4/5 80 Mr John Leong Chung Loong 5/5 100 Dato’ Wong Lee Yun 2/5 40 Datuk Talib Bin Haji Jamal 5/5 100

SUMMARY OF ACTIVITIES OF THE AUDIT COMMITTEE

The Audit Committee’s activities during the financial year included the following:-

a. Reviewed the quarterly financial statements and the annual audited financial statements before recommending the same to the Board for approval;

b. Reviewed the annual audit plan proposed by the Internal Auditors to ensure the adequacy of the scope and coverage of work;

c. Reviewed the Group’s internal audit reports on the status and progress of internal audit assignments, audit recommendations made and management response to these recommendations;

d. Reviewed the recurrent related party transactions entered into by the Group and ensure that the transactions were undertaken on normal commercial terms not detrimental to the minority shareholders;

e. Reviewed the Audit Committee Report and the Statement on Internal Control prior to publishing the same in the Annual Report;

f. Appraised the performance and effectiveness of External Auditors and made recommendation to the Board for their re-appointment;

g. Met with the External Auditors twice a year and:-

• reviewedtheExternalAuditors’auditplan,areaofauditemphasisandfeesforthestatutoryaudit;• consideredthereportbytheExternalAuditorsonregulatoryaswellasaccountingdevelopmentsandtheir

impact on the Group; and• reviewedtheresultsoftheannualauditandsignificantauditissuesarisingtherefromtogetherwithmanagement’s

responses to the findings.

h. Met with the External Auditors without the presence of management to facilitate discussion of additional matters relating to audit findings and the management responses arising from their audit.




INTERNAL AUDIT FUNCTION AND ITS ACTIVITIES

The Group has an internal audit function which is carried out by the Group’s Internal Audit Department. Its principal activity is to conduct internal audit reviews and performs checks and compliance tests of the Group’s systems of internal controls, including financial, operational and information technology controls and risk management. The Group’s Internal Audit Department is independent of its activities and reports directly to the Audit Committee (AC) which reviews and approves its annual Audit Plan. During the financial period under review, the Group’s Internal Audit Department undertook various audit assignments in accordance with the annual audit plan and also conducted ad-hoc reviews on areas of concern identified by Management and the AC. The Group’s Internal Audit Department applies the Standards for the Professional Practice of Internal Auditing of the Institute of Internal Auditors. The costs incurred by the internal audit function in respect of the financial year ended 30 June 2013 were RM817,932.

Its main audit activities were as follows:

a. Reviewed the soundness, adequacy and application of accounting, financial, operational and compliance controls and promoted control awareness in the group;

b. Ascertained the extent of compliance with established policies, procedures and statutory requirements;

c. Ascertained the extent to which the Company’s and Group’s resources are accounted for and safeguarded from losses of all kinds;

d. Determined the reliability and usefulness of data and information generated for management reporting purposes;

e. Carried out environmental, safety and health audits on the Company and the Group;

f. Identified opportunities to improve the operations of and processes in the Company and the Group;

g. Carried out analyses to determine the efficiency of businesses carried out by the Group;

h. Reviewed related party transactions that had arisen within the Company and Group;

i. Attended the bi-annual physical inventories of finished goods, raw materials and spare parts; and

j. Performed follow-up audits on the implementation of audit recommendations and action plans agreed upon by management.

This Report is made in accordance with a resolution of the Board of Directors dated 22 October 2013.




In preparing the annual financial statements of the Group and the Company, the Directors are responsible for ensuring that these financial statements have been prepared to give a true and fair view of the financial position of the Group and the Company at the end of the financial year and the results and cash flows of the Group and the Company are in accordance with the Financial Reporting Standards and the provisions of the Companies Act, 1965 in Malaysia as well as the Listing Requirements of Bursa Malaysia Securities Berhad.

In preparing the financial statements for the year ended 30 June 2013, the Directors have:

a) applied the appropriate and relevant accounting policies on a consistent basis;

b) made judgments and estimates that are reasonable and prudent;

c) prepared the annual audited financial statements on a going concern basis; and

d) ensured that proper accounting records are kept which disclose with reasonable accuracy, the financial position of the Group and the Company and which enable them to ensure that the financial statements comply with the Companies Act, 1965 and Financial Reporting Standards in Malaysia.

The Directors have overall responsibilities for taking reasonable steps to safeguard the assets of the Group and to prevent and detect fraud and other irregularities.

This Statement is made in accordance with a resolution of the Board of Directors dated 22 October 2013.

diRECTORS’RESPONSiBiliTY STATEMENT


Directors’ Report_38

Statement by Directors and Statutory Declaration_42

Independent Auditors’ Report_43

Statements of Comprehensive Income

Statements of Financial Position_45

Statements of Changes in Equity_46

50 Statements of Cash Flows_48

Notes to the Financial Statements_52

Supplementary Information_120

financial

StatementsDirectors’ Report_ 43

Statement by Directors and Statutory Declaration_ 47

Independent Auditors’ Report_ 48

Statements of Comprehensive Income_ 50

Statements of Financial Position_ 51

Statements of Changes in Equity_ 53

Statements of Cash Flows_ 55

Notes to the Financial Statements_ 57

Supplementary Information_ 124



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 2013.

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 19 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

Profit net of tax 22,271 82,057

Profit attributable to: Owners of the parent 21,138 82,057Non-controlling interests 1,133 –

22,271 82,057

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 amounts of dividends paid/distributed by the Company since 30 June 2012 were as follows:

In respect of the financial period ended 30 June 2012 as reported in the directors’ report of that year:

RM’000Paid a first and final dividend of 5.15% less 25% taxation, on 967,998,797 ordinary shares, declared on 28 November 2012 and paid on 14 December 2012 37,389

At the forthcoming Annual General Meeting, a first and final single-tier dividend in respect of the financial year ended 30 June 2013 of 1 sen on 967,997,797 ordinary share in issue (net of treasury shares) at book closure date amounting to a dividend payable of RM9,679,978 will be proposed for shareholders’ approval. The financial statements for the current financial year do not reflect this proposed dividend. Such dividend, if approved by the shareholders, will be accounted for in equity as an appropriation of retained earnings in the financial year ending 30 June 2014.



DIRECTORS

The names of the directors of the Company in office since the date of the last report and at the date of this report are:

General (Rtd) Tan Sri Abdul Rahman Bin Abdul Hamid ChairmanDato’ Sri Tiong Chiong Hoo Deputy Executive ChairmanDato’ Wong Sie Young Chief Executive Officer (appointed on 1 January 2013)Dato’ Sri Dr. Tiong Ik King Tiong ChoonTiong Chiong HeeJohn Leong Chung Loong Dato’ Wong Lee YunDatuk Talib Bin Haji Jamal

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 period, 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 in Note 10 to the financial statements) 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 34 to the financial statements.

REMUNERATION COMMITTEE

The Remuneration Committee carries out the annual review and proposes the remuneration packages of the Executive Directors of the Company, subject to the approval of the Board.

The members of the Remuneration Committee comprising a majority of the Independent Non-Executive Directors of the Company, who have served since the date of the last report, are:

John Leong Chung LoongDato’ Sri Dr. Tiong Ik KingDatuk Talib Bin Haji Jamal

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:

No. of ordinary shares of RM1 each As at 1 July 2012/ As at date of appointment Acquired Sold 30 June 2013Name of director

Dato’ Sri Tiong Chiong Hoo- Direct 1,117,812 2,235,624 * – 3,353,436 - Indirect – 750,000 ** – 750,000Dato’ Wong Sie Young - Direct 453,975 – – 453,975 Dato’ Sri Dr. Tiong Ik King - Direct 113,930 227,860 * – 341,790Tiong Choon - Indirect 492,476 1,134,952 *** – 1,627,428

diRECTORS’ REPORT (cont’d)



DIRECTORS’ INTERESTS (cont’d)

* Bonus Issue of 2 for 1** Deemed interested by virtue of his substantial shareholdings in Hoojin Holding Sdn. Bhd.*** Deemed interested through her spouse, Ko Yeu Ying (984,952 acquired through bonus issue and 150,000 acquired

through open market) 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.

ISSUE OF SHARES

During the financial year, the Company increased its issued and paid-up ordinary share capital from RM282,528,499 to RM973,717,797 by way of:

(i) the issuance of 42,044,100 ordinary shares of RM1 each through a private placement at an issue price of RM7.90 per ordinary share for cash, representing 15% of the issued and paid-up capital of the Company, for additional working capital purposes. The share issue costs of RM5,948,775 have been included in the share premium account.

(ii) the issuance of 649,145,198 new ordinary shares of RM1 each pursuant to the Bonus Issue on the basis of two (2) bonus shares for every one (1) existing share held in the Company.

The holders of ordinary shares are entitled to receive dividends as and when declared by the Company. All ordinary shares carry one vote per share without restrictions and rank equally with regard to the Company’s residual assets.

SHARE BUY-BACKS

During the financial year, the Company repurchased a total of 5,720,000 of its issued ordinary shares from the open market for a total cost of RM13,674,266. The average cost paid for the shares repurchased during the year was RM2.39 per share.

The shares repurchased are held as treasury shares in accordance with Section 67A of the Companies Act, 1965. Of the total 973,717,797 (2012: 282,528,499) issued and fully paid ordinary shares as at 30 June 2013, 5,720,000 (2012: 2,233,988) are held as treasury shares by the Company. As at 30 June 2013, the number of outstanding ordinary shares in issue after the set-off is therefore 967,997,797 (2012: 280,294,511) ordinary shares of RM1 each.

Subsequent to the reporting date and up to the date of this report, the Company repurchased an additional 1,000 shares for a total cost of RM2,084. The average cost paid for the shares repurchased during the period was RM2.08 per share.

MOVEMENTS ON SHARE BUY-BACKS

Number Total Average price of shares cost per share RM’000 RM

At 30 June 2012 2,233,988 7,170 3.21

Disposed subsequent to 30 June 2012 (2,233,988) (7,170) 3.21

Repurchased during the year ended 30 June 2013 5,720,000 13,674 2.39

At 30 June 2013 5,720,000 13,674 2.39

Repurchased subsequent to 30 June 2013 1,000 2 2.08 At the date of this report 5,721,000 13,676 2.39

The directors of the Company are committed to enhancing the value of the Company to its shareholders and believe that the share buy-backs plan can be applied in the best interests of the Company and its shareholders. The repurchase transactions were financed by internally generated funds.




OTHER STATUTORY INFORMATION

(a) Before the statements of comprehensive income and statements of financial position of the Group and of 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 or 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 or of the Company which has arisen since the end of the financial year.

(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 or 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 or 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.

Signed on behalf of the Board in accordance with a resolution of the directors dated 22 October 2013.

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




We, General (Rtd) Tan Sri Abdul Rahman Bin Abdul Hamid 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 50 to 123 are drawn up in accordance with Financial Reporting Standards and the Companies Act, 1965 in Malaysia so as to give a true and fair view of the financial position of the Group and of the Company as at 30 June 2013 and of their financial performance and cash flows for the year then ended.

The information set out in Note 41 to the financial statements has been prepared in accordance with the Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants.

Signed on behalf of the Board in accordance with a resolution of the directors dated 22 October 2013.

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

STATuTORYdEClARATiON

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

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 50 to 124 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 22 October 2013. Hii Khing Siew

Before me,

STATEMENTBY diRECTORS

pursuant to Section 169(15) of the Companies Act, 1965



REPORT ON THE FINANCIAL STATEMENTS

We have audited the financial statements of Jaya Tiasa Holdings Berhad, which comprise the statements of financial position as at 30 June 2013 of the Group and of the Company, and the statements of comprehensive income, statements of changes in equity and statements of cash flows of the Group and of the Company for the year then ended, and a summary of significant accounting policies and other explanatory information, as set out on pages 50 to 123.

Directors’ responsibility for the financial statements

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

Auditors’ responsibility

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

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on our judgment, including the assessment of risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity’s preparation of financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial statements.

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

Opinion

In our opinion, the financial statements give a true and fair view of the financial position of the Group and of the Company as at 30 June 2013 and of their financial performance and cash flows for the year then ended in accordance with Financial Reporting Standards and the requirements of the Companies Act 1965 in Malaysia.

REPORT ON OTHER LEGAL AND REGULATORY REqUIREMENTS

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

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

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

(c) The auditors’ reports on the financial statements of the subsidiaries were not subject to any qualification and did not include any comment required to be made under Section 174(3) of the Act.

iNdEPENdENTAudiTORS’ REPORTto the Members of Jaya Tiasa Holdings Berhad



OTHER MATTERS

The supplementary information set out in Note 41 on page 124 is disclosed to meet the requirement of Bursa Malaysia Securities Berhad and is not part of the financial statements. The directors are responsible for the preparation of the supplementary information in accordance with Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants (“MIA Guidance”) and the directive of Bursa Malaysia Securities Berhad. In our opinion, the supplementary information is prepared, in all material respects, in accordance with the MIA Guidance and the directive of Bursa Malaysia Securities Berhad.

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

ERNST & YOUNG YONG VOON KARAF: 0039 1769/04/14 (J/PH)Chartered Accountants Chartered Accountant

Kuching, MalaysiaDate: 22 October 2013

iNdEPENdENT AudiTORS’ REPORT (cont’d)to the Members of Jaya Tiasa Holdings Berhad



STATEMENTS OF COMPREhENSiVE iNCOMEFor the financial year ended 30 June 2013

Group Company 01.07.2012 01.05.2011 01.07.2012 01.05.2011 to to to to Note 30.06.2013 30.06.2012 30.06.2013 30.06.2012 RM’000 RM’000 RM’000 RM’000

Revenue 4 1,054,098 1,183,684 428,401 466,270

Cost of sales 5 (868,482) (816,103) (394,728) (414,920)

Gross profit 185,616 367,581 33,673 51,350

Other items of income Other income 6 32,374 75,188 114,001 283,034

Other items of expense Selling expenses (96,514) (99,196) (25,986) (25,004) Administrative expenses (57,420) (87,636) (34,174) (90,087) Other expenses (8,785) (952) – – Finance costs 7 (24,002) (30,111) (7,934) (11,052)

Profit before tax 8 31,269 224,874 79,580 208,241

Income tax expense 11 (8,998) (54,208) 2,477 (216)

Profit net of tax 22,271 170,666 82,057 208,025

Other comprehensive income: Foreign currency translation, net of tax (2) (11,489) – –

Total comprehensive income for the year/period 22,269 159,177 82,057 208,025

Profit attributable to: Owners of the parent 21,138 168,739 82,057 208,025 Non-controlling interests 1,133 1,927 – –

22,271 170,666 82,057 208,025

Total comprehensive income attributable to: Owners of the parent 21,136 157,250 82,057 208,025 Non-controlling interests 1,133 1,927 – –

22,269 159,177 82,057 208,025

Earnings per share attributable to owners of the parent: Sen per share Sen per share Basic, for profit for the year/period 12 2.18 20.23

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



STATEMENTS OF FiNANCiAl POSiTiON

As at 30 June 2013

Group Company Note 2013 2012 2013 2012 RM’000 RM’000 RM’000 RM’000

ASSETS

Non-current assetsProperty, plant and equipment 13 879,713 790,886 289,740 283,022Land use rights 14 59,220 60,465 27 28Investment properties 15 – – – –Biological assets 16 1,367,926 1,201,966 - –Goodwill on consolidation 17 62,337 62,337 - –Other intangible assets 18 35,658 53,292 31,473 47,339Investments in subsidiaries 19 – – 713,676 708,676Investment in associate 20 – – – –Deferred tax assets 21 12,186 13,150 – –

2,417,040 2,182,096 1,034,916 1,039,065

Current assetsInventories 22 146,595 197,879 35,551 63,181Trade and other receivables 23 169,067 197,959 653,637 379,859 Other current assets 24 16,547 25,099 7,513 10,257Investment securities 25 124,741 – 124,741 –Derivative assets 26 5,726 2,375 3,667 2,375Cash and bank balances 27 81,037 30,921 55,405 2,526

543,713 454,233 880,514 458,198

TOTAL ASSETS 2,960,753 2,636,329 1,915,430 1,497,263

EqUITY AND LIABILITIES

Current liabilitiesLoans and borrowings 28 455,536 380,446 187,764 180,878 Trade and other payables 29 274,164 231,308 465,771 406,043Income tax payable 1,161 2,335 – –Derivative liabilities 26 155 5,983 79 –

731,016 620,072 653,614 586,921

Net current (liabilities)/assets (187,303) (165,839) 226,900 (128,723)

Non-current liabilitiesLoans and borrowings 28 411,208 508,015 8,524 30,989Deferred tax liabilities 21 98,051 104,132 12,326 14,543

509,259 612,147 20,850 45,532

TOTAL LIABILITIES 1,240,275 1,232,219 674,464 632,453

Net assets 1,720,478 1,404,110 1,240,966 864,810




Equity attributable to owners of the parentShare capital 30 973,718 282,529 973,718 282,529Share premium 30 – 239,178 – 239,178Treasury shares 30 (13,674) (7,170) (13,674) (7,170)Other reserves 31 (2,801) (2,799) 3,684 3,684Retained earnings 32 751,240 881,510 277,238 346,589

1,708,483 1,393,248 1,240,966 864,810Non-controlling interests 11,995 10,862 – –

TOTAL EqUITY 1,720,478 1,404,110 1,240,966 864,810

TOTAL EqUITY AND LIABILITIES 2,960,753 2,636,329 1,915,430 1,497,263


STATEMENTS OF FiNANCiAl POSiTiON (cont’d) As at 30 June 2013



STATEMENTS OFChANGES iN EquiTY

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STATEMENTS OF CHANGES iN EquiTy (cont’d) For the financial year ended 30 June 2013




Operating activitiesProfit before tax 31,269 224,874 79,580 208,241

Adjustments for: Amortisation of land use rights 8 553 672 1 1 Amortisation of other intangible assets 8 18,188 21,198 16,422 19,137 Bad debts written off 8 – 1,041 – – Depreciation of property, plant and equipment 8 69,901 82,013 27,137 32,800 Dividend income from investment securities 8 (4,777) – (4,777) – Fair value loss on investment securities 8 36 – 36 – (Gain)/loss on disposal of subsidiaries 8 – (28,769) – 36 Gross dividend income 8 – – (100,000) (230,000) Impairment loss on trade and other receivables 8 9,225 2,722 709 1,184 Interest expense 8 21,622 27,574 7,402 10,473 Interest income 8 (59) (142) – – (Gain)/loss on disposal of property, plant and equipment 8 (216) 694 (420) 410 Net unrealised foreign exchange (gain)/ loss 8 (757) 9,214 (324) 3,885 Net fair value gain/(loss) on derivatives 8 (9,838) 9,830 (1,424) (929) Property, plant and equipment written off 8 4 – – – Reversal of allowance for impairment of trade and other receivables 8 (1,450) (1,611) (1,184) (218) Reversal of fair value loss/(gain) on derivatives (net) 8 659 (4,957) 211 (7,623)

Total adjustments 103,091 119,479 (56,211) (170,844)

Operating cash flows before changes in working capital 134,360 344,353 23,369 37,397

Changes in working capital Decrease/(increase) in inventories 52,018 (85,870) 27,630 (30,258) Decrease/(increase) in receivables 21,550 870 (273,303) 45,757 (Increase)/decrease in prepayments (2,570) (606) (2,661) 5 Increase/(decrease) in payables 42,856 73,557 59,728 (210,183)

Total changes in working capital 113,854 (12,049) (188,606) (194,679)

Cash flows from/(used in) operations 248,214 332,304 (165,237) (157,282)

Interest received 59 142 – –Interest paid (45,626) (48,394) (7,402) (10,473)Income taxes paid, net of refund (4,167) (45,967) 5,665 (11,789)

Net cash flows from/(used in) operating activities 198,480 238,085 (166,974) (179,544)

STATEMENTS OFCASh FlOwS





Investing activitiesAcquisition of property, plant and equipment (excluding interest charge capitalised) 13 (159,161) (146,198) (30,095) (17,456)Acquisition of land use rights 14 (2) (21) – –Acquisition of biological assets (excluding amortisation, depreciation, (gain)/loss on disposal of property, plant and equipment and interest charge capitalised) 16 (139,421) (158,553) – –Acquisition of other intangible assets 18 (554) (95) (556) (95)Acquisition of additional shares in a subsidiary – – (5,000) (100)Dividend income of investment securities 4,777 – 4,777 –Dividends received from subsidiaries – – 100,000 230,000Net cash inflow on disposal of subsidiaries 19 – 2,520 – –Proceeds from disposal of property, plant and equipment 5,338 4,305 2,200 990Proceeds from disposal of biological assets 412 88 – –Acquisition of investment securities (124,777) – (124,777) –

Net cash flows (used in)/from investing activities (413,388) (297,954) (53,451) 213,339

Financing activitiesProceeds from resale of treasury shares 30 18,962 – 18,962 –Acquisition of treasury shares 30 (13,674) (221) (13,674) (221)Proceeds from private placement net of expenses 30 326,200 – 326,200 –Dividends paid on ordinary shares 39 (37,389) (12,013) (37,389) (12,013)Repayment of finance lease payables (31,915) (30,950) (29,267) (27,940)Proceeds from bankers’ acceptances 30,653 19,972 13,324 4,798(Repayment of)/proceeds from revolving credit (10,000) 55,697 (10,000) 10,000Proceeds from term loans 38,596 65,118 – –Repayment of term loans (87,499) (57,000) – (9,602)

Net cash flows from/(used in) financing activities 233,934 40,603 268,156 (34,978) Net increase/(decrease) in cash and cash equivalents 19,026 (19,266) 47,731 (1,183)

Effects of exchange rate changes (2) (8,564) – –

Cash and cash equivalents at the beginning of the year/period (12,329) 15,501 (8,183) (7,000)

Cash and cash equivalents at the end of the year/period 27 6,695 (12,329) 39,548 (8,183)

STATEMENTS OF CASH FlOwS (cont’d) For the financial year ended 30 June 2013




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 19 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. 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 Financial Reporting Standards (“FRS”) and the Companies Act, 1965 in Malaysia. At the beginning of the current financial year, the Group and the Company adopted new and revised FRS which are mandatory for financial periods beginning on or after 1 July 2012 as described fully in Note 2.3.

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

The financial statements are presented in Ringgit Malaysia (“RM”).

2.2 Changes in accounting policies

The accounting policies adopted are consistent with those of the previous financial period except as follows:

On 1 July 2012, the Group adopted the following amended FRS standard mandatory for annual financial periods beginning on or after 1 July 2012:

• AmendmentstoFRS101:PresentationofItemsofOtherComprehensiveIncome

The adoption of the above amended FRS did not have any material impact on the accounting policies, financial performance and position of the Group, except as discussed below:

Amendments to FRS 101, Presentation of Items of Other Comprehensive Income

The amendments to FRS 101 changed the grouping of items presented in Other Comprehensive Income. Items that could be reclassified (or “recycled”) to profit or loss at a future point in time has been presented separately from items that will never be reclassified. The amendment affects presentation only and has no impact on the Group’s financial position and performance.

2.3 Amendments/standards issued but not yet effective

The amendments/standards issued but not yet effective up to the date of issuance of the Group’s financial statements are listed below. The Group intends to adopt these amendments/standards, if applicable, when they become effective.

FRS effective for annual periods beginning on or after 1 January 2013

• AmendmentstoFRS1,First-TimeAdoptionofFinancialReportingStandards-GovernmentLoans• AmendmentstoFRS7,FinancialInstruments:Disclosures-OffsettingFinancialAssetsandFinancial

Liabilities• FRS10,ConsolidatedFinancialStatements• FRS11,JointArrangements

NOTES TO ThEFiNANCiAl STATEMENTS




NOTES TO THE FiNANCiAl STATEMENTSFor the financial year ended 30 June 2013

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

2.3 Amendments/standards issued but not yet effective (cont’d)

FRS effective for annual periods beginning on or after 1 January 2013 (cont’d)

• FRS12,DisclosureofInterestsinOtherEntities• AmendmentstoFRS10,FRS11andFRS12,ConsolidatedFinancialStatements,JointArrangements

and Disclosure of Interests in Other Entities: Transition Guidance• FRS13,FairValueMeasurement• FRS119,EmployeeBenefits• FRS127,SeparateFinancialStatements• FRS128,InvestmentsinAssociatesandJointVentures• AmendmentstoFRS1,FRS101,FRS116,FRS132andFRS134,(ImprovementstoFRSs(2012))• AmendmenttoICInterpretation2,Members’SharesinCo-operativeEntitiesandSimilarInstruments

(Improvements to FRSs (2012))• ICInterpretation20,StrippingCostsintheProductionPhaseofaSurfaceMine


• AmendmentstoFRS132,OffsettingFinancialAssetsandFinancialLiabilities• AmendmentstoFRS10,FRS12andFRS127,InvestmentEntities• AmendmentstoFRS136,RecoverableAmountDisclosuresforNon-FinancialAssets• AmendmentstoFRS139,NovationofDerivativesandContinuationofHedgeAccounting• ICInterpretation21,Levies


• FRS9,FinancialInstruments(IFRS9issuedbyIASBinNovember2009)• FRS9,FinancialInstruments(IFRS9issuedbyIASBinOctober2010)

The directors expect that the adoption of the amendments/standards above will have no material impact on the financial statements of the Group in the period of initial application. The nature of the impending changes in accounting policies on adoption of applicable amendments/standards are described below:

Annual periods beginning on or after 1 January 2013

• FRS10,ConsolidatedFinancialStatements FRS 10 replaces part of FRS 127, Consolidated and Separate Financial Statements that deals with

consolidated financial statements and IC Interpretation 112 Consolidation - Special Purpose Entities.

Under FRS 10, an investor controls an investee when (a) the investor has power over an investee, (b) the investor has exposure, or rights, to variable returns from its involvement with the investee, and (c) the investor has ability to use its power over the investee to affect the amount of the investor’s returns. Under FRS 127 Consolidated and Separate Financial Statements, control was defined as the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities.

FRS 10 includes detailed guidance to explain when an investor has control over the investee. FRS 10 requires the investor to take into account all relevant facts and circumstances.

The application of this new standard is expected to have no impact on the financial statements of the Group.






Annual periods beginning on or after 1 January 2013 (cont’d)

• FRS11,JointArrangements

FRS 11 replaces FRS 131 Interests in Joint Ventures and IC Interpretation 113 Jointly-Controlled Entities - Non-monetary Contributions by Venturers.

The classification of joint arrangements under FRS 11 is determined based on the rights and obligations of the parties to the joint arrangements by considering the structure, the legal form, the contractual terms agreed by the parties to the arrangement and when relevant, other facts and circumstances. Under FRS 11, joint arrangements are classified as either joint operations or joint ventures.

A joint operation is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the assets, and obligations for the liabilities, relating to the arrangement. A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the arrangement.

FRS 11 removes the option to account for jointly controlled entities (“JCE”) using proportionate consolidation. Instead, JCE that meet the definition of a joint venture must be accounted for using the equity method.

The adoption of this standard is expected to have no impact on the financial statements of the Group.

• FRS12,DisclosuresofInterestsinOtherEntities

FRS 12 includes all disclosure requirements for interests in subsidiaries, joint arrangements, associates and structured entities. A number of new disclosures are required. This standard affects disclosures only and has no impact on the Group’s financial position or performance.

• FRS13,FairValueMeasurement

FRS 13 establishes a single source of guidance under FRS for all fair value measurements. FRS 13 does not change when an entity is required to use fair value, but rather provides guidance on how to measure fair value under FRS when fair value is required or permitted.

The adoption of FRS 13 will affect some of the fair value of certain assets and liabilities and thus affecting the profit and equity of the Group.

• FRS127,SeparateFinancialStatements

As a consequence of the new FRS 10 and FRS 12, FRS 127 is limited to accounting for subsidiaries, jointly controlled entities and associates in separate financial statements.

• FRS128,InvestmentsinAssociatesandJointVentures

As a consequence of the new FRS 11 and FRS 12, FRS 128 is renamed as FRS 128 Investments in Associates and Joint Ventures. This new standard describes the application of the equity method to investments in joint ventures in addition to associates.

• AmendmentstoFRS7,Disclosures-OffsettingFinancialAssetsandFinancialLiabilities

The amendments require additional information to be disclosed to enable users of financial statements to evaluate the effect or potential effect of netting arrangements, including rights of set-off associated with the entity’s recognised financial assets and recognised financial liabilities, on the entity’s financial position. The amendment affects disclosure only and has no impact on the Group’s financial position or performance.







• AmendmentstoFRS132,OffsettingFinancialAssetsandFinancialLiabilities

The amendments to FRS 132 clarified that a legally enforceable right to set off is a right of set of that must not be contingent on a future event; and must be legally enforceable in the normal course of business, the event of default and the event of insolvency or bankruptcy of the entity and all of the counterparties. The amendments further clarified that an entity will meet the net settlement criterion as provided in FRS 132 if the entity can settle amounts in a manner that the outcome is, in effect, equivalent to net settlement.

• AmendmentstoFRS136,RecoverableAmountDisclosuresforNon-FinancialAssets

The amendments to FRS 136 clarifies that recoverable amount (determined based on fair value less costs of disposal) is required to be disclosed only when an impairment loss is recognised or reversed. In addition, there are new disclosure requirements about fair value measurement when impairment or reversal of impairment is recognised.

The amendments to FRS 136 are to be applied retrospectively for annual periods beginning on or after 1 January 2014.

The amendments affect disclosures only and have no impact on the Group’s financial position or performance.

• ICInterpretation21,Levies

The Interpretation clarifies that an entity should recognise a liability to pay a levy when it is within the scope of FRS 137 Provisions, Contingent Liabilities and Contingent Assets. It also explains that the obligating event that gives rise to a liability to pay a levy is the activity described in the relevant legislation that triggers the payment of the levy. For example, if the activity that triggers the payment of the levy is the generation of revenue in the current period and the calculation of that levy is based on the revenue that was generated in the previous period, the obligating event for that levy is the generation of revenue in the current period. The generation of revenue in the previous period is necessary, but not sufficient, to create a present obligation.

The Interpretation also clarifies that the liability to pay a levy is recognised progressively if the obligating event occurs over a period of time. If an obligation to pay a levy is triggered when a minimum threshold is reached, the liability to pay a levy is recognised when that minimum activity threshold is reached.

The Interpretation is to be applied retrospectively for annual periods beginning on or after 1 January 2014.

The Group is currently assessing the impact that this standard will have on the financial position and performance of the Group.


• FRS9,FinancialInstruments:ClassificationandMeasurement

FRS 9 reflects the first phase of the work on the replacement of FRS 139 Financial Instruments: Recognition and Measurement and applies to classification and measurement of financial assets and financial liabilities as defined in FRS 139 Financial Instruments: Recognition and Measurement. The adoption of the first phase of FRS 9 will have an effect on the classification and measurement of the Group’s financial assets. The Group will quantify the effect in conjunction with the other phases, when the final standard including all phases is issued.






Malaysian Financial Reporting Standards

On 19 November 2011, the Malaysian Accounting Standards Board (MASB) issued a new MASB approved accounting framework, the Malaysian Financial Reporting Standards (MFRS Framework).

The MFRS Framework is to be applied by all Entities Other Than Private Entities for annual periods beginning on or after 1 January 2012, with the exception of entities that are within the scope of MFRS 141 Agriculture (MFRS 141) and IC Interpretation 15 Agreements for Construction of Real Estate (IC 15), including its parent, significant investor and venturer (herein called ‘Transitioning Entities’).

Transitioning Entities will be allowed to defer adoption of the new MFRS Framework for an additional three years. Consequently, adoption of the MFRS Framework by Transitioning Entities will be mandatory for annual periods beginning on or after 1 January 2015.

The Group falls within the scope definition of Transitioning Entities and accordingly, will be required to prepare financial statements using the MFRS Framework in its first MFRS financial statements for the year ending 30 June 2016. In presenting its first MFRS financial statements, the Group will be required to restate the comparative financial statements to amounts reflecting the application of MFRS Framework. The majority of the adjustments required on transition will be made, retrospectively, against opening retained profits.

At the date of these financial statements, the Group has not completed its quantification of the financial effects of the differences between Financial Reporting Standards and accounting standards under the MFRS Framework due to the ongoing assessment by the project team. Accordingly, the financial performance and financial position as disclosed in these financial statements for the year ended 30 June 2013 could be different if prepared under the MFRS Framework.

The Group considers that it is achieving its scheduled milestones and expects to be in a position to fully comply with the requirements of the MFRS Framework for the financial year ending 30 June 2016.

2.4 Basis of consolidation

The consolidated financial statements comprise the financial statements of the Company and its subsidiaries as at the reporting date. 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 to like transactions and events in similar circumstances.

All intra-group balances, income and expenses and unrealised gains and losses resulting from intra-group transactions are eliminated in full.

Acquisitions of subsidiaries are accounted for by applying the purchase method. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. Adjustments to those fair values relating to previously held interests are treated as a revaluation and recognised in other comprehensive income.

The cost of a business combination is measured as the aggregate of the fair values, at the date of exchange, of the assets given, liabilities incurred or assumed, and equity instruments issued, plus any costs directly attributable to the business combination. Any excess of the cost of business combination over the Group’s share in the net fair value of the acquired subsidiary’s identifiable assets, liabilities and contingent liabilities is recorded as goodwill in the statement of financial position. The accounting policy for goodwill is set out in Note 2.8(a). Any excess of the Group’s share in the net fair value of the acquired subsidiary’s identifiable assets, liabilities and contingent liabilities over the cost of business combination is recognised as income in profit or loss on the date of acquisition. When the Group acquires a business, embedded derivatives separated from the host contract by the acquiree are reassessed on acquisition unless the business combination results in a change in the terms of the contract that significantly modifies the cash flows that would otherwise be required under the contract.





2.4 Basis of consolidation (cont’d)

Subsidiaries are consolidated from the date of acquisition, being the date on which the Group obtains control, and continue to be consolidated until the date that such control ceases.

Business combinations involving entities under common control are accounted for by applying the pooling of interest method. The assets and liabilities of the combining entities are reflected at the carrying amounts reported in the consolidated financial statements of the controlling holding company. Any difference between the consideration paid and the share capital of the “acquired” entity is reflected within equity as merger reserve. The statement of comprehensive income reflects the results of the combining entities for the full year, irrespective of when the combination takes place. Comparatives are presented as if the entities have always been combined since the date the entities had come under common control.

2.5 Transactions with non-controlling interests

Non-controlling interests represent the portion of profit or loss and net assets in subsidiaries not held by the Group and are presented separately in profit or loss of the Group and within equity in the consolidated statements of financial position, separately from parent shareholder’s equity. Transactions with non-controlling interests are accounted for using the entity concept method, whereby, transactions with non-controlling interests are accounted for as transactions with owners. On acquisition of non-controlling interests, the difference between the consideration and book value of the share of the net assets acquired is recognised directly in equity. Gain or loss on disposal to non-controlling interests is recognised directly in equity.

2.6 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.





2.6 Foreign currencyn (cont’d)

(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.

2.7 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 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 recognises 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.

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 lease periodAircraft, watercraft, motor vehicles, plant and machinery 5 - 20 yearsRoads and bridges 10 yearsOffice 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.





2.8 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 2.6.

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.

(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.





2.8 Intangible assets (cont’d)

(b) Other intangible assets (cont’d)

(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.

2.9 Biological assets

Plantation expenditure incurred on land clearing, upkeep of immature oil palms, administrative expenses and interest incurred during the pre-cropping period are capitalised under biological assets and are not amortised. Upon maturity, all subsequent maintenance expenditure is charged to the statement of comprehensive income. Replanting expenditure incurred on similar crops on formerly developed areas is chargeable to the profit or loss in the financial year in which it is incurred.

2.10 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.

2.11 Subsidiaries

A subsidiary is an entity over which the Group has the power to govern the financial and operating policies so as to obtain benefits from its activities.

In the Company’s separate financial statements, investments in subsidiaries are accounted for at cost less impairment losses.

2.12 Associates

An associate is an entity, not being a subsidiary or a joint venture, in which the Group has significant influence. An associate is equity accounted for from the date the Group obtains significant influence until the date the Group ceases to have significant influence over the associate.

The Group’s investments in associates are accounted for using the equity method. Under the equity method, the investments in associates are measured in the statement of financial position at cost plus post-acquisition changes in the Group’s share of net assets of the associates. Goodwill relating to associates is included in the carrying amount of the investments. Any excess of the Group’s share of the net fair value of the associate’s identifiable assets, liabilities and contingent liabilities over the cost of the investments are excluded from the carrying amount of the investments and are instead included as income in the determination of the Group’s share of the associate’s profit or loss for the period in which the investments are acquired.

When the Group’s share of losses in an associate equals or exceeds its interest in the associate, the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the associate.





2.12 Associates (cont’d)

After application of the equity method, the Group determines whether it is necessary to recognise an additional impairment loss on the Group’s investments in its associates. The Group determines at each reporting date whether there is any objective evidence that the investments in associates are impaired. If this is the case, the Group calculates the amount of impairment as the difference between the recoverable amount of the associates and their carrying value and recognises the amount in profit or loss.

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

In the Company’s separate financial statements, investments in associates are stated 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.

2.13 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.

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.

2.14 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 and loans and receivables.





2.14 Financial assets (cont’d)

(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.

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.

2.15 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.





2.15 Impairment of financial assets (cont’d)

Trade and other receivables and other financial assets carried at amortised cost (cont’d)

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.

2.16 Derivative financial instruments

The Group and the Company use derivative financial instruments such as cross currency swaps, commodity futures and forward currency contracts to hedge its foreign currency and commodity price risks. Such derivative financial instruments are initially recognised at fair value on the date in which a derivative contract is entered into and are subsequently re-measured at fair value. Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative.

2.17 Cash and cash equivalents

Cash and cash equivalents comprise cash at bank and on hand, demand deposits, and short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. These also include bank overdrafts that form an integral part of the Group’s cash management.

2.18 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.

2.19 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.





2.20 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 financial liabilities include trade and 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.

2.21 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 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.





2.22 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.

2.23 Employee benefits

Defined contribution plans

The Group participates in the national pension schemes as defined by the laws of the countries in which it has operations. The Malaysian companies in the Group make 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 or capitalised as biological assets as appropriate.

2.24 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 2.25(d).

2.25 Revenue Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and

the revenue can be reliably measured. Revenue is measured at the fair value of consideration received or receivable.





2.25 Revenue (cont’d)

(a) Sale of goods

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

(b) Revenue from services

Revenue from services rendered is recognised net of service taxes and discounts as and when the services are performed.

(c) Interest income

Interest income is recognised on an accrual basis using the effective interest method. (d) Rental income

Rental income is accounted for on a straight-line basis over the lease terms.

(e) Dividend income

Dividend income is recognised when the Group’s right to receive payment is established.

(f) Management fees

Management fees are recognised when services are rendered.

2.26 Income 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

- 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.





2.26 Income taxes (cont’d)

(b) Deferred tax (cont’d)

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 tax

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

- where the sales tax incurred in a purchase of assets or services is not recoverable from the taxation authority, in which case the sales tax is 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 sales tax included.

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

2.27 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 38, including the factors used to identify the reportable segments and the measurement basis of segment information.





2.28 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.

2.29 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.

2.30 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.

3. SIGNIFICANT ACCOUNTING JUDGMENTS AND ESTIMATES

The preparation of the Group’s financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and 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) Useful lives of plant and equipment

The cost of plant and equipment is depreciated on a straight-line basis over the assets’ estimated economic useful lives. Management estimates the useful lives of these plant and equipment to be within 5 to 20 years. These are common life expectancies applied in the industry. Changes in the expected level of usage and technological developments could impact the economic useful lives and the residual values of these assets, therefore, future depreciation charges could be revised. The carrying amounts of the Group’s and Company’s plant and equipment at the reporting date are disclosed in Note 13. A 5% difference in the expected useful lives of these assets from management’s estimates would result in approximately 20.39% (2012: 1.31%) and 0.01% (2012: 0.45%) of variance in the Group and Company’s profit for the year, respectively.




3. SIGNIFICANT ACCOUNTING JUDGMENTS AND ESTIMATES (CONT’D)

Key sources of estimation uncertainty (cont’d)

(b) Impairment of goodwill

Goodwill is tested for impairment annually and at other times when such indicators exist. This requires an estimation of the value in use of the cash-generating units to which goodwill is allocated.

When value in use calculation is undertaken, management must estimate the expected future cash flows from the asset or cash-generating unit and choose a suitable discount rate in order to calculate the present value of those cash flows. Further details of the carrying value, the key assumptions applied in the impairment assessment of goodwill and sensitivity analysis to changes in the assumptions are given in Note 17.

(c) Impairment of loans and receivables

The Group assesses at each reporting date whether there is any objective evidence that a financial asset is impaired. To determine whether there is objective evidence of impairment, the Group considers factors such as the probability of insolvency or significant financial difficulties of the debtor and default or significant delay in payments.

Where there is objective evidence of impairment, the amount and timing of future cash flows are estimated based on historical loss experience for assets with similar credit risk characteristics. The carrying amount of the Group’s loans and receivable at the reporting date is disclosed in Note 23.

(d) Deferred tax assets

Deferred tax assets are recognised for all unused tax losses to the extent that it is probable that taxable profit will be available against which the losses can be utilised. Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based on the likely timing and level of future taxable profits together with future tax planning strategies.

Assumptions about generation of future taxable profits depend on management’s estimates of future cash flows. These depend on estimates of future production and sales volume, operating costs, capital expenditure, dividends and other capital management transactions. Judgement is also required about application of income tax legislation. These judgements and assumptions are subject to risks and uncertainty, hence there is a possibility that changes in circumstances will alter expectations, which may impact the amount of deferred tax assets recognised in the statements of financial position and the amount of unrecognised tax losses and unrecognised temporary differences.

The carrying value of deferred tax assets of the Group at 30 June 2013 was RM12 million (2012: RM13 million)

and the unrecognised tax losses and capital allowances of the Group was RM5 million (2012: RM4 million) as disclosed in Note 21.

4. REVENUE

Group Company 01.07.2012 01.05.2011 01.07.2012 01.05.2011 to to to to 30.06.2013 30.06.2012 30.06.2013 30.06.2012 RM’000 RM’000 RM’000 RM’000

Sale of timber and related products 790,311 830,572 428,401 466,270Sale of crude palm oil, palm kernel and fresh fruit bunches 262,893 352,095 – –Others 894 1,017 – –

1,054,098 1,183,684 428,401 466,270




5. COST OF SALES Group Company 01.07.2012 01.05.2011 01.07.2012 01.05.2011 to to to to 30.06.2013 30.06.2012 30.06.2013 30.06.2012 RM’000 RM’000 RM’000 RM’000

Cost of timber and related products 639,200 646,115 394,728 414,920Cost of crude palm oil, palm kernel and fresh fruit bunches 219,113 162,473 – –Others 10,169 7,515 – –

868,482 816,103 394,728 414,920

6. OTHER INCOME Group Company 01.07.2012 01.05.2011 01.07.2012 01.05.2011 to to to to 30.06.2013 30.06.2012 30.06.2013 30.06.2012 RM’000 RM’000 RM’000 RM’000

Freight and handling income 15 15 – –Foreign exchange gain - realised 5,042 17,168 – 483 - unrealised 2,958 1,562 2,849 14Gain on disposal of property, plant and equipment 432 741 432 34Gain on disposal of subsidiaries – 28,769 – –Gross dividend income (Note 8) – – 100,000 230,000Dividend income from investment securities (Note 8) 4,777 – 4,777 –Interest income (Note 8) 59 142 – –Logpond facilities income 886 959 – –Power supply income 512 722 – –Rental income (Note 8) 956 188 58 71Fair value gain on derivatives 12,457 2,741 3,697 2,601Realised gain on futures contracts (Note 8) – 10,482 – –Reversal of allowance for impairment of: - trade receivables (Note 23(a)) 470 1,407 204 121 - other receivables (Note 23(d)) 980 204 980 40,337Reversal of fair value loss on derivatives 470 8,059 – 8,059Others 2,360 2,029 1,004 1,314

32,374 75,188 114,001 283,034




7. FINANCE COSTS Group Company 01.07.2012 01.05.2011 01.07.2012 01.05.2011 to to to to 30.06.2013 30.06.2012 30.06.2013 30.06.2012 RM’000 RM’000 RM’000 RM’000

Interest expense on:Bank loans and bank overdrafts 42,779 44,264 4,962 6,815Finance leases 2,847 4,130 2,440 3,658

45,626 48,394 7,402 10,473 Less: Interest expense capitalised in biological assets (Note 16) (22,567) (20,820) – – Interest expense capitalised in property, plant and equipment (Note 13) (1,437) – – –

Interest expense (Note 8) 21,622 27,574 7,402 10,473

Add: Other charges Bank charges 1,015 1,099 230 305 Commitment fee 1,370 1,442 302 274

2,385 2,541 532 579

24,007 30,115 7,934 11,052 Less: Bank charges and commitment fee capitalised in biological assets (Note 16) (5) (4) – –

24,002 30,111 7,934 11,052

8. PROFIT BEFORE TAx

The following items have been included in arriving at profit before tax:


Amortisation of land use rights (Note 14) 553 672 1 1Amortisation of other intangible assets (Note 18) 18,188 21,198 16,422 19,137Auditors’ remuneration 739 517 232 236 Statutory audit - current year 531 335 160 88 - under provision in previous period/years 196 47 72 13 Other services 12 135 – 135

Bad debts written off – 1,041 – –Depreciation of property, plant and equipment (Note 13) 69,901 82,013 27,137 32,800Dividend income from investment securities (Note 6) (4,777) – (4,777) –Employee benefits expense (Note 9) 94,330 89,485 19,393 20,072




8. PROFIT BEFORE TAx (CONT’D)


(Gain)/loss on disposal of subsidiaries (Note 19) – (28,769) – 36Gross dividend income (Note 6) – – (100,000) (230,000)Fair value loss on investment securities 36 – 36 –Hiring charges 4,850 3,704 3,156 3,550Impairment loss on: - trade receivables (Note 23(a)) 1,290 806 13 203 - other receivables (Note 23(d)) 7,935 1,916 696 981Interest expense (Note 7) 21,622 27,574 7,402 10,473Interest income (Note 6) (59) (142) – –(Gain)/loss on disposal of property, plant and equipment (216) 694 (420) 410Management fees expense 12 25 12 25Net fair value (gain)/loss on derivatives (9,838) 9,830 (1,424) (929)Net foreign exchange (gain)/loss - realised (1,621) (2,546) 3 8,602 - unrealised (757) 9,214 (324) 3,885Non-executive directors’ remuneration (Note 10) 764 701 688 589Realised gain on futures contracts (Note 6) – (10,482) – –Rental expense 1,619 718 380 405Rental income (Note 6) (956) (188) (58) (71)Reversal of allowance for impairment of trade and other receivables (1,450) (1,611) (1,184) (218)Reversal of fair value gain on derivatives (net) 659 (4,957) 211 (7,623)Property, plant and equipment written off 4 – – –

9. EMPLOYEE BENEFITS ExPENSE


Salaries, wages, allowances and bonus 91,276 85,760 16,768 16,638Social security contributions 735 668 136 160Contributions to defined contribution plan 6,510 6,417 1,815 1,865Other benefits 2,130 3,492 674 1,409

Total employee benefits expenses (including executive director) 100,651 96,337 19,393 20,072Less: Employee benefits expense capitalised in: - biological assets (Note 16) (6,157) (6,774) – – - work-in-progress (Note 22) (164) (78) – –

Total employee benefits expense (Note 8) 94,330 89,485 19,393 20,072

Included in employee benefits expense of the Group and of the Company are executive directors’ remuneration amounting to RM2,138,833 (2012: RM1,946,050) as further disclosed in Note 10.




10. DIRECTORS’ REMUNERATION

The details of remuneration receivable by directors of the Company and its subsidiaries during the year/period are as follows:


Executive: Salaries and other emoluments 1,769 1,690 1,769 1,690 Fees - current year 83 50 83 50 - under provision in prior period 58 – 58 – Defined contribution plan 229 206 229 206

Total executive directors’ remuneration (excluding benefit-in-kind) (Note 9) 2,139 1,946 2,139 1,946Estimated money value of benefit-in-kind 16 16 16 16

Total executive directors’ remuneration (including benefit-in-kind) 2,155 1,962 2,155 1,962

Non-Executive: Fees - current year 521 502 425 390 - under provision in prior period 15 – 15 – Other emoluments 225 199 225 199 Defined contribution plan 3 – 3 –

Total non-executive directors’ remuneration (excluding benefit- in-kind) (Note 8) 764 701 668 589Estimated money value of benefit-in-kind 13 13 13 13

Total non-executive directors’ remuneration (including benefit-in-kind) 777 714 681 602

Total directors’ remuneration 2,932 2,676 2,836 2,564




10. DIRECTORS’ REMUNERATION (CONT’D)

The number of directors of the Company whose total remuneration during the financial year/period fell within the following bands is analysed below:

2013 2012Number of Directors

Executive director: RM150,001 - RM200,000 1 – RM1,000,001 - RM1,050,000 – 1 RM1,850,000 - RM1,900,000 1 –

Non-executive directors: RM0 - RM50,000 – 2 RM50,001 - RM100,000 5 4 RM100,001 - RM150,000 1 1 RM150,001 - RM200,000 1 –

11. INCOME TAx ExPENSE

The major components of income tax expense for the year ended 30 June 2013 and period ended 30 June 2012 are:


Statements of comprehensive income:Current income tax: Malaysian income tax 14,260 27,445 – 855 Over provision in respect of previous period/years (145) (2,127) (260) (289)

14,115 25,318 (260) 566

Deferred income tax (Note 21): Origination and reversal of temporary differences (6,986) 27,026 (2,406) 602 Under/(over) provision in respect of previous period/years 1,869 1,864 189 (952)

(5,117) 28,890 (2,217) (350)

Income tax expense recognised in profit or loss 8,998 54,208 (2,477) 216




11. INCOME TAx ExPENSE (CONT’D)

The reconciliations between tax expense and the product of accounting profit multiplied by the applicable corporate tax rate for the financial year ended 30 June 2013 and period ended 30 June 2012 are as follows:


Accounting profit before tax 31,269 224,874 79,580 208,241

Tax at Malaysian statutory tax rate of 25% (2012: 25%) 7,817 56,218 19,895 52,060Adjustments:Non-deductible expenses 4,808 3,489 3,893 6,897Expenses qualified for double deduction (3,169) (4,856) – –Income not subject to tax (2,267) (543) (26,194) (57,500)Benefits from previously unrecognised unabsorbed capital allowances, reinvestment allowances and unused tax losses (18) (47) – –Deferred tax assets not recognised in respect of current year’s/previous period’s unabsorbed capital allowances and unused tax losses 103 210 – –Over provision of income tax in respect of previous period/years (145) (2,127) (260) (289)Under/(over) provision of deferred tax in respect of previous period/years 1,869 1,864 189 (952)

Income tax expense recognised in profit or loss 8,998 54,208 (2,477) 216

Income tax is calculated at the Malaysian statutory tax rate of 25% (2012: 25%) of the estimated assessable profit for the year/period.

Taxation for other jurisdictions is calculated at the rates prevailing in the respective jurisdictions.




12. EARNINGS PER SHARE

Basic earnings per share amounts are calculated by dividing profit for the year/period, net of tax, attributable to owners of the parent by the weighted average number of ordinary shares outstanding during the financial year/period, excluding treasury shares held by the Company.

The following table reflects the profit and share data used in the computation of basic earnings per share for the year ended 30 June 2013 and period ended 30 June 2012:

Group 01.07.2012 01.05.2011 to to 30.06.2013 30.06.2012 RM’000 RM’000

Profit net of tax attributable to owners of parent 21,138 168,739

Weighted average number of ordinary shares in issues 277,865 268,870Issue of new ordinary shares pursuant to private placement 42,044 –Bonus issue during the year 649,145 565,057

969,054 833,927

Basic earnings per share (sen) 2.18 20.23

During the financial year, the Company completed a placement of 42,044,100 new ordinary shares of RM1 each and undertook a bonus issue of 649,145,198 new ordinary shares.

As bonus shares are issued to existing sharesholders for no consideration, there is accordingly no increase in resources and are therefore deemed to have been in issue at the beginning of the earliest period presented. As such, the earnings per share has been recomputed as if the enlarged share capital as a result of the bonus issue relating to ordinary shares in issue as the reporting date was in existence throughout the current and comparative periods.

There are no dilutive potential ordinary shares. As such, the dilutive earnings per share of the Group is equivalent to basic earnings per share.




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13. PROPERTY, PLANT AND EqUIPMENT (CONT’D)

(i) Acquisitions of property, plant and equipment during the financial year/period were by the following means:


Cash 160,598 146,198 30,095 17,456 Finance leases 7,680 48,163 5,540 47,372

168,278 194,361 35,635 64,828

(ii) Net carrying amounts of property, plant and equipment held under finance leases are as follows:

Group Company 2013 2012 2013 2012 RM’000 RM’000 RM’000 RM’000

Motor vehicles 94,304 95,059 87,576 87,914

Leased assets are pledged as security for the related finance lease liabilities (Note 28).

(iii) Included in property, plant and equipment are the following costs incurred during the financial year/period:

01.07.2012 01.05.2011 to to 30.06.2013 30.06.2012 RM’000 RM’000

Interest expense (Note 7) 1,437 –

14. LAND USE RIGHTS

Group Company RM’000 RM’000 RM’000 RM’000

Cost At 1 July 2012/1 May 2011 63,640 63,580 36 36

Additions 2 21 – –Reclassified from property, plant and equipment (Note 13) 16 25 – –Reclassified from biological assets (Note 16) – 14 – –

At 30 June 2013/2012 63,658 63,640 36 36




14. LAND USE RIGHTS (CONT’D)


Accumulated amortisation At 1 July 2012/1 May 2011 3,175 1,656 8 7

Amortisation for the year/period 1,263 1,519 1 1 Recognised in profit or loss (Note 8) 553 672 1 1Capitalised in biological assets (Note 16) 710 847 – –

At 30 June 2013/2012 4,438 3,175 9 8

Net carrying amount 59,220 60,465 27 28

Amount to be amortised:- Not later than one year 1,296 1,090 1 1- Later than one year but not later than five years 6,102 6,109 5 5 - Later than five years 51,822 53,266 21 22

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 1 to 60 years (2012: 1 to 30 years) and 23 years (2012: 24 years), respectively.

15. INVESTMENT PROPERTIES

Group/Company RM’000 RM’000

At 1 July 2012/1 May 2011 – 3,292Reclassified to property, plant and equipment (Note 13) – (3,292)

At 30 June 2013/2012 – –




16. BIOLOGICAL ASSETS

Oil palm plantation Reforestation development (Tree planting) expenditure expenditure Total RM’000 RM’000 RM’000

Group

Cost

At 1 May 2011 1,002,579 14,297 1,016,876Additions 177,109 8,127 185,236Disposals (88) – (88)Reclassified to property, plant and equipment (Note 13) (44) – (44)Reclassified to land use rights (Note 14) (14) – (14)

At 30 June 2012 and 1 July 2012 1,179,542 22,424 1,201,966Additions 156,287 10,083 166,370Disposals (410) – (410)

At 30 June 2013 1,335,419 32,507 1,367,926

Included in biological assets are the following costs incurred during the financial year/period:

Group 01.07.2012 01.05.2011 to to 30.06.2013 30.06.2012 RM’000 RM’000

Amortisation of land use rights (Note 14) 710 847Depreciation of property, plant and equipment (Note 13) 3,674 4,992Employee benefits expenses (Note 9) 6,157 6,774Interest expense (Note 7) 22,567 20,820 (Gain)/loss on disposal of property, plant and equipment (2) 24Bank charges and commitment fees (Note 7) 5 4




17. GOODWILL ON CONSOLIDATION

Group 2013 2012 RM’000 RM’000

Cost

At 30 June 62,337 62,337

The carrying amount of goodwill allocated to the Group’s cash-generating units (“CGU”) is as follows:

Group 2013 2012 RM’000 RM’000

Manufacturing 62,337 62,337

Key assumptions used in value-in-use calculations:

The recoverable amount of a CGU is determined based on value-in-use calculations using cash flow projections based on financial budgets approved by management covering a five-year period. The assumptions used for value-in-use calculations are:

Gross Margin Discount Rates As at As at As at As at 2013 2012 2013 2012

Rimbunan Hijau Plywood Sdn. Bhd. 30% 33% 9.40% 8.69%

The following describes each key assumption on which management has based its cash flow projections to undertake impairment testing of goodwill:

(i) Budgeted gross margin

The basis used to determine the value assigned to the budgeted gross margins is the average gross margin achieved in the year immediately before the budgeted year due to the expected change in the business operations.

(ii) Discount rates

The discount rates used are pre-tax and reflect specific risks relating to the segment.

The Group believes that any reasonable possible change in the above key assumptions applied is not likely to materially cause the recoverable amount to be lower than its carrying amount.




18. OTHER INTANGIBLE ASSETS

Prepaid Computer timber rights software Total RM’000 RM’000 RM’000 Group

Cost

At 1 May 2011 298,447 3,718 302,165Additions – 95 95

At 30 June 2012 and 1 July 2012 298,447 3,813 302,260Additions – 554 554

At 30 June 2013 298,447 4,367 302,814

Accumulated amortisation At 1 May 2011 224,300 3,470 227,770Amortisation for the period (Note 8) 21,137 61 21,198

At 30 June 2012 and 1 July 2012 245,437 3,531 248,968Amortisation for the year (Note 8) 18,118 70 18,188

At 30 June 2013 263,555 3,601 267,156

Net carrying amount

At 30 June 2012 53,010 282 53,292

At 30 June 2013 34,892 766 35,658




18. OTHER INTANGIBLE ASSETS (CONT’D)

Prepaid Computer timber rights software Total RM’000 RM’000 RM’000

Company

Cost

At 1 May 2011 247,724 3,715 251,439Additions – 95 95

At 30 June 2012 and 1 July 2012 247,724 3,810 251,534Additions – 556 556

At 30 June 2013 247,724 4,366 252,090

Accumulated amortisation

At 1 May 2011 181,589 3,469 185,058Amortisation for the period (Note 8) 19,076 61 19,137

At 30 June 2012 and 1 July 2012 200,665 3,530 204,195Amortisation for the year (Note 8) 16,351 71 16,422

At 30 June 2013 217,016 3,601 220,617

Net carrying amount

At 30 June 2012 47,059 280 47,339

At 30 June 2013 30,708 765 31,473

In 1998, the Company acquired nine timber licensee companies and the rights to two timber licences. Apart from one licence which expired during the financial year, all the other licences will expire in the year 2015.




19. INVESTMENTS IN SUBSIDIARIES

Company 2013 2012 RM’000 RM’000

Unquoted shares, at cost 713,695 708,695Impairment losses (19) (19)

713,676 708,676

Details of the subsidiaries are as follows:

Proportion of Country of ownership interestName of subsidiaries incorporation Principal activities 2013 2012 % %

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 of 100 100 birds’ nests

Hak Jaya Sdn. Bhd. Malaysia Marketing of timber logs 100 100

Hariyama Sdn. Bhd. Malaysia Development of oil palm 100 100 plantations and its related activities

Jaras Sdn. Bhd. Malaysia Extraction, purchase and 100 100 sale of logs

Jaya Tiasa Aquaculture Malaysia Dormant 100 100 Sdn. Bhd.

Jaya Tiasa Aviation Malaysia Provision of air transportation 100 100 Sdn. Bhd. services

Jaya Tiasa Forest Sdn. Bhd. Malaysia Development and maintenance 100 100 of planted forests and forest plantation contractor




19. INVESTMENTS IN SUBSIDIARIES (CONT’D)


Direct subsidiaries of the Company (cont’d)

Jaya Tiasa R&D Sdn. Bhd. Malaysia Research and development 100 100 and sale of seeds

Jaya Tiasa Plywood Malaysia Manufacturing and sale of sawn 100 100 Sdn. Bhd. timber, blockboard and veneer as well as plywood contract manufacturing

Jaya Tiasa Timber Malaysia Manufacturing and sale of sawn 100 100 Products Sdn. Bhd. timber, plywood and veneer

JT Oil Palm Development Malaysia Palm oil processing and 100 100 Sdn. Bhd. its related activities

Kunari Timber Sdn. Bhd. Malaysia Marketing of timber logs 100 100

Mantan Sdn. Bhd. Malaysia Dormant 100 100

Maujaya Sdn. Bhd. Malaysia Palm oil processing and 100 100 its related activities

Maxiwealth Holdings Malaysia Palm oil processing and 100 100 Sdn. Bhd. its related activities

Multi Greenview Sdn.Bhd. Malaysia Dormant 100 100

Poh Zhen Sdn. Bhd. Malaysia Development of oil palm 100 100 plantations and its related activities

Rimbunan Hijau Plywood Malaysia Manufacturing and sale of sawn 100 100 Sdn. Bhd. timber, blockboard and veneer as well as plywood contract manufacturing

Sericahaya Sdn. Bhd. Malaysia Extraction and sale of logs 88.91 88.91

Simalau Plantation Malaysia Development of oil palm 100 100 Sdn. Bhd. plantations and its related activities

Atlantic Evergreen Cayman Islands Investment holding 100 100 Holdings

Atlantic Timber Cayman Islands Investment holding 100 100 Holdings Limited

Pacific Timber Cayman Islands Investment holding 100 100 Holdings Limited




19. INVESTMENTS IN SUBSIDIARIES (CONT’D)


Subsidiary of Atlantic Evergreen Holdings

Western Timber Resources Cayman Islands Investment holding 100 100 Limited

During the previous financial period, the Group disposed of its 100% equity interest in Selvaplac Verde Ltda. and

Eastern Green Company Inc. on 28 December 2011 and 28 June 2012 for cash consideration of RM2,670,244 and USD1, respectively.

The disposals had the following effects on the financial position of the Group as at the end of the previous period:

Up to disposal date RM’000

Property, plant and equipment (Note 13) 979Other receivables 2,650Cash and bank balances 150Trade payables and other payables (26,953)

Identifiable net liabilities (23,174)Transfer from foreign exchange reserve (Note 31) (2,925)

(26,099)Total disposal proceeds (2,670)

Gain on disposal of subsidiaries (Note 8) (28,769)

Disposal proceeds settled by:Cash 2,670

Cash inflow arising on disposals:Cash consideration 2,670Cash and cash equivalents of subsidiaries disposed (150)

Net cash inflow on disposal of subsidiaries 2,520




20. INVESTMENT IN ASSOCIATE


Unquoted shares, at cost 2,000 2,000 2,000 2,000Redeemable non-cumulative preference shares, at cost 2,400 2,400 2,400 2,400

4,400 4,400 4,400 4,400Less: Accumulated impairment losses (2,400) (2,400) (4,400) (4,400)

2,000 2,000 – –Share of post acquisition losses (2,000) (2,000) – –

– – – –

Details of the associate are as follows:

Proportion of ownership interest Country of As at As atName of associate incorporation Principal activities 2013 2012 % %

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 2013 2012 RM’000 RM’000

Assets and liabilities:Total assets 49 7,594

Total liabilities 2,601 2,602

Group 01.07.2012 01.05.2011 to to 30.06.2013 30.06.2012 RM’000 RM’000

Results:Loss for the year/period 7,543 3




20. INVESTMENT IN ASSOCIATE (CONT’D)

The Group’s interest in the associate is analysed as follows:

Group 2013 2012 RM’000 RM’000

Group’s share of net tangible assets (335) (335)Premium on acquisition 335 335

– –

21. DEFERRED TAx

As at Recognised in As at Reclassi- Recognised in As at 1 May 2011 profit or loss 30 June 2012 fication profit or loss 30 June 2013 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000Group

Deferred tax liabilities:

Property, plant and equipment (47,109) 1,478 (45,631) – (3,597) (49,228)Biological assets (237,875) (45,013) (282,888) – (39,388) (322,276)

(284,984) (43,535) (328,519) – (42,985) (371,504)

Deferred tax assets:

Unused tax losses and unabsorbed capital allowances 217,816 15,078 232,894 (4,338) 48,331 276,887Property, plant and equipment 4,410 (428) 3,982 4,338 156 8,476Others 666 (5) 661 – (385) 276

222,892 14,645 237,537 – 48,102 285,639

(62,092) (28,890) (90,982) – 5,117 (85,865)

As at Recognised in As at Recognised in As at 1 May 2011 profit or loss 30 June 2012 profit or loss 30 June 2013 RM’000 RM’000 RM’000 RM’000 RM’000

Company

Deferred tax liability:

Property, plant and equipment (14,893) 350 (14,543) (4,210) (18,753)


Unused tax losses and unabsorbed capital allowances – – – 6,427 6,427

(14,893) 350 (14,543) 2,217 (12,326)




21. DEFERRED TAx (CONT’D)



Presented after appropriate offsetting as follows:Deferred tax assets 12,186 13,150 – –Deferred tax liabilities (98,051) (104,132) (12,326) (14,543)

(85,865) (90,982) (12,326) (14,543)

Deferred tax assets have not been recognised in respect of the following items:

Group 2013 2012 RM’000 RM’000

Unused tax losses 5,011 4,682Unabsorbed capital allowances 47 40

5,058 4,722

As at 30 June 2013, the deferred tax assets are not recognised as it is not probable that future taxable profit will be available against which the unused tax losses and unabsorbed capital allowances can be utilised. The availability of the unused tax losses and unabsorbed capital allowances for offsetting against future taxable profits of the Group is subject to the provisions of the Income Tax Act 1967.

22. INVENTORIES


Cost

Blockboard/sawn timber 722 792 – –Crude palm oil 8,722 7,979 – –Fresh fruit bunches 268 398 – –General stores 24,210 26,078 1,926 1,589Logs 49,640 84,516 33,625 61,592 Palm kernel 946 920 – –Plywood 34,097 54,653 – –Seeds 207 217 – –Veneer 21,756 14,039 – –Work-in-progress 4,342 6,555 – –Others 2 25 – –

144,912 196,172 35,551 63,181

At net realisable value

Fancy plywood 4 4 – –Sawn timber 1,679 1,703 – –

1,683 1,707 – –

146,595 197,879 35,551 63,181




22. INVENTORIES (CONT’D)

Included in work-in-progress are the following expenses incurred and capitalised during the financial year/period: Group 01.07.2012 01.05.2011 to to 30.06.2013 30.06.2012 RM’000 RM’000

Depreciation of property, plant and equipment (Note 13) 734 52Employee benefits expense (Note 9) 164 78

23. TRADE AND OTHER RECEIVABLES


Trade receivables

Third parties 108,394 114,029 7,462 17,789Amount due from subsidiaries – – – 33,336

108,394 114,029 7,462 51,125Less: Allowance for impairment Third parties (4,251) (3,431) (853) (1,044)

Trade receivables, net 104,143 110,598 6,609 50,081

Other receivables

Sundry receivables 71,144 88,070 36,266 54,847Amount due from subsidiaries – – 611,389 275,842Amount due from associate 2,600 2,600 2,600 2,600

73,744 90,670 650,255 333,289

Less: Allowance for impairment Sundry receivables (8,050) (2,015) (697) (981) Amount due from associate (2,600) (2,600) (2,600) (2,600)

(10,650) (4,615) (3,297) (3,581)

Other receivables, net 63,094 86,055 646,958 329,708Refundable deposits 1,830 1,306 70 70

64,924 87,361 647,028 329,778

Total trade and other receivables 169,067 197,959 653,637 379,859

Add: Cash and bank balances (Note 27) 81,037 30,921 55,405 2,526

Total loans and receivables 250,104 228,880 709,042 382,385




23. TRADE AND OTHER RECEIVABLES (CONT’D)

(a) Trade receivables

The Group’s primary exposure to credit risk arises through its trade receivables. The Group’s trading terms with its customers are mainly on credit. The credit period is generally for a period of one month. Other credit terms are assessed and approved on a case-by-case basis. Each customer has a maximum credit limit. The Group seeks to maintain strict control over its outstanding receivables and has a credit control department to minimise credit risk. Overdue balances are reviewed regularly by senior management. In view of the aforementioned and the fact that the Group’s trade receivables relate to a large number of diversified customers, there is no significant concentration of credit risk. Trade receivables are non-interest bearing.

Ageing analysis of trade receivables

The ageing analysis of the Group’s and of the Company’s trade receivables is as follows:


Neither past due nor impaired 55,423 32,772 5,048 5,493

1 to 30 days past due not impaired 4,385 25,265 502 90331 to 60 days past due not impaired 86 156 45 561 to 90 days past due not impaired 54 346 54 191 to 120 days past due not impaired 130 146 74 3More than 121 days past due not impaired 610 6,908 242 34,205

5,265 32,821 917 35,117Impaired 47,706 48,436 1,497 10,514

108,394 114,029 7,462 51,124

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 RM5,265,000 (2012: RM32,821,000) and RM917,000 (2012: RM35,117,000), respectively that are past due at the reporting date but not impaired.




23. TRADE AND OTHER RECEIVABLES (CONT’D)

(a) Trade receivables (cont’d)

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 2013 2012 2013 2012 RM’000 RM’000 RM’000 RM’000

Trade receivables 47,706 48,436 1,497 10,514Less: Allowance for impairment (4,251) (3,431) (853) (1,044)

43,455 45,005 644 9,470

Movement in allowance accounts:


At 1 July 2012/1 May 2011 3,431 4,032 1,044 962 Charge for the year/period (Note 8) 1,290 806 13 203Reversal of impairment loss (Note 6) (470) (1,407) (204) (121)

At 30 June 2013/2012 4,251 3,431 853 1,044

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 are unsecured, non-interest bearing and are repayable on demand.

(c) Amount due from associate

The amount due from associate is unsecured, non-interest bearing and is repayable on demand.

(d) Other receivables

Other receivables that are impaired

Movement in allowance accounts: Group Company RM’000 RM’000 RM’000 RM’000

At 1 July 2012/1 May 2011 4,615 2,903 3,581 42,937 Charge for the year/period (Note 8) 7,935 1,916 696 981Reversal of impairment loss (Note 6) (980) (204) (980) (40,337)Written off (920) – – –

At 30 June 2013/2012 10,650 4,615 3,297 3,581




24. OTHER CURRENT ASSETS


Tax recoverable 11,106 22,228 4,676 10,081Prepayments 5,441 2,871 2,837 176

16,547 25,099 7,513 10,257

25. INVESTMENT SECURITIES


Current

Fair value through profit and loss

Unit trusts (quoted in Malaysia) - At carrying amount 124,741 – 124,741 –

- At market value 124,741 – 124,741 –

26. DERIVATIVES

2013 2012 RM’000 RM’000

Contract/ Contract/ Notional Notional Amount Assets Liabilities Amount Assets LiabilitiesGroup Non-hedging derivatives:Cross currency swaps 50,000 2,332 – 50,000 2,164 –Forward currency contracts 403,553 3,394 (155) 337,722 211 (5,983)

Total held for trading financial assets/(liabilities) 453,553 5,726 (155) 387,722 2,375 (5,983)

Company Non-hedging derivatives:Cross currency swaps 50,000 2,332 – 50,000 2,164 –Forward currency contracts 161,402 1,335 (79) 23,870 211 –

Total held for trading financial assets/(liabilities) 211,402 3,667 (79) 73,870 2,375 –




26. DERIVATIVES (CONT’D)

The Group uses cross currency swaps, forward currency contracts and commodity futures contracts to manage some of the transaction exposure. These contracts are not designated as cash flow nor fair value hedges and are entered into for periods consistent with currency transaction exposure and fair value changes exposure. Such derivatives do not qualify for hedge accounting.

(i) Cross currency swaps

Cross currency swaps are used to hedge the risk of currency fluctuation arising from a floating rate bank loan of RM50 million which was swapped to an US Dollar denominated equivalent. This involved swapping an existing bank facility of the Group/Company which bore interest at Ringgit Malaysia 3 months KLIBOR + 0.75% to US Dollar 3 months LIBOR to +0.85%.

(ii) Forward currency contracts

Forward currency contracts are used to hedge the Group and the Company’s sales and purchases denominated in USD for which firm commitments existed at the reporting date.

(iii) Commodity futures contracts

The Group sells crude palm oil (“CPO”) on an ongoing basis. In view the volatility of CPO prices, the Group has entered into a number of commodity futures contracts based on firm commitments and highly probable forecasted CPO sales to reduce the volatility of cash flows.

During the financial year, the Group and the Company recognised a loss of RM155,000 (2012: RM5,983,000) and a loss of RM79,000 (2012: Nil), respectively arising from fair value changes of derivative liabilities. The fair value changes are attributable to changes in foreign exchange and commodity spot and forward rates. The methods and assumptions applied in determining the fair values of derivatives are disclosed in Note 35.

27. CASH AND BANK BALANCES


Cash at banks and on hand 81,037 29,387 55,405 2,526Short term deposits with licensed banks – 1,534 – –

Cash and bank balances 81,037 30,921 55,405 2,526

Short-term deposits in 2012 were placed for approximately one month depending on the immediate cash requirements of the Group and earn interest at the respective short-term deposit rates. The weighted average effective interest rate as at 30 June 2012 of the Group was 2.75% per annum.

Short term cash and bank balances with licensed banks of the Group in 2012 amounting to RM1,533,812 were pledged to banks as security for bankers’ guarantees granted and hence, were not available for general use.

Included in cash and bank balances of the Group in 2012 was an amount of RM4,755,155 being deposit placed with an investment bank for Malaysian Derivatives Exchange (MDEX) of Futures Crude Palm Oil (MDEX FCPO).




27. CASH AND BANK BALANCES (CONT’D)

For the purpose of the statements of cash flows, cash and cash equivalents comprise the following as at the reporting date:


Cash and short term deposits 81,037 30,921 55,405 2,526 Bank overdrafts (Note 28) (74,342) (43,250) (15,857) (10,709)

Cash and cash equivalents 6,695 (12,329) 39,548 (8,183)

28. LOANS AND BORROWINGS


Current

Secured:Obligations under finance leases (Note 33(d)) 29,224 30,932 27,624 28,886

Unsecured:Bank overdrafts (Note 27) 74,342 43,250 15,857 10,709Bankers’ acceptances 85,758 54,408 35,948 22,624Bill purchase – 697 – –Revolving credit 85,000 95,000 40,000 50,000Term loans 112,877 87,500 – –USD denominated revolving credit 15,810 15,885 15,810 15,885USD denominated term loans 52,525 52,774 52,525 52,774

426,312 349,514 160,140 151,992

455,536 380,446 187,764 180,878

Non-current

Secured:Obligations under finance leases (Note 33(d)) 9,610 32,137 8,524 30,989

Unsecured:Term loans 401,598 475,878 – –

411,208 508,015 8,524 30,989

Total loans and borrowings (Note 29) 866,744 888,461 196,288 211,867




28. LOANS AND BORROWINGS (CONT’D)

The remaining maturities of the loans and borrowings as at 30 June 2013 and 30 June 2012 are as follows:


Maturity period of borrowings: Repayable within one year 455,536 380,446 187,764 180,878One year to five years 395,008 460,767 8,524 30,989Over five years 16,200 47,248 – –

866,744 888,461 196,288 211,867

The interest rates of the Group and of the Company are as follows:

Group Company 2013 2012 2013 2012 % % % %

Bank overdrafts 7.10 - 7.85 7.10 - 7.85 7.10 - 7.60 7.10 - 7.60Bankers’ acceptances 3.44 - 7.60 3.44 - 7.60 4.01 - 4.21 7.60Bill purchase – 1.50 – –Revolving credit 1.85 - 4.69 1.85 - 4.69 1.80 - 4.67 1.85 - 4.69Term loans 3.94 - 6.10 3.94 - 5.85 3.95 3.94

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 5.49% to 6.27% (2012: 2.90% to 3.35%) per annum and 5.49% to 6.27% (2012: 2.90% to 3.35%) per annum, respectively.

29. TRADE AND OTHER PAYABLES


Trade payables Third parties 241,922 197,371 59,721 63,247Amount due to subsidiaries – – 179,350 293,848

241,922 197,371 239,071 357,095

Other payables Accruals 18,250 22,684 2,281 2,491Sundry payables 13,992 11,253 7,054 6,097Amount due to subsidiaries – – 217,365 40,360

32,242 33,937 226,700 48,948

Total trade and other payables 274,164 231,308 465,771 406,043

Add: Loans and borrowings (Note 28) 866,744 888,461 196,288 211,867

Total financial liabilities carried at amortised cost 1,140,908 1,119,769 662,059 617,910




29. TRADE AND OTHER PAYABLES (CONT’D)

(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 (2012: 30 to 180 days).

(b) Amount due to subsidiaries

The amount due to subsidiaries are unsecured, non-interest bearing and are repayable on demand.

30. SHARE CAPITAL, SHARE PREMIUM AND TREASURY SHARES

Group and Company Number of Ordinary Shares of RM1 Each Amount Share Total Share capital share capital (Issued capital (Issued and Treasury and fully Share and share Treasury fully paid) shares paid) premium premium shares ’000 ’000 RM’000 RM’000 RM’000 RM’000

At 1 May 2011 282,529 (15,544) 282,529 282,010 564,539 (49,781)Acquisition of treasury shares – (37) – – – (221)Distribution of treasury shares – 13,347 – (42,832) (42,832) 42,832

At 30 June 2012 and 1 July 2012 282,529 (2,234) 282,529 239,178 521,707 (7,170) Resale of treasure shares – 2,234 – – – 7,170Issue of new ordinary shares pursuant to private placement 42,044 – 42,044 290,104 332,148 –Private placement expenses – – – (5,948) (5,948) –Bonus issue 649,145 – 649,145 (523,334) 125,811 –Acquisition of treasury shares – (5,720) – – – (13,674)

At 30 June 2013 973,718 (5,720) 973,718 – 973,718 (13,674)

Number of Ordinary Shares of RM1 Each Amount ’000 ’000 RM’000 RM’000

Authorised

At 1 July 2012/1 May 2011 and 30 June 2013/2012 1,000,000 1,000,000 1,000,000 1,000,000




30. SHARE CAPITAL, SHARE PREMIUM AND TREASURY SHARES (CONT’D)

(a) Share capital

The holders of ordinary shares (except treasury shares) are entitled to receive dividends as and when declared by the Company. All ordinary shares carry one vote per share without restrictions and rank equally with regard to the Company’s residual assets.

Issue of shares

During the financial year, the Company increased its issued and paid-up ordinary share capital from RM282,528,499 to RM973,717,797 by way of:

(i) the issuance of 42,044,100 ordinary shares of RM1 each through a private placement at an issue price of RM7.90 per ordinary share for cash, representing 15% of the issued and paid-up capital of the Company, for additional working capital purposes. The share issue costs of RM5,948,775 have been included in the share premium account.

(ii) the issuance of 649,145,198 new ordinary shares of RM1 each pursuant to the Bonus Issue on the basis of two (2) bonus shares for every one (1) existing share held in the Company.

The holders of ordinary shares are entitled to receive dividends as and when declared by the Company. All ordinary shares carry one vote per share without restrictions and rank equally with regard to the Company’s residual assets.

(b) 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.

The Company acquired 5,720,000 (2012: 36,500) shares in the Company through purchases on Bursa Malaysia Securities Berhad during the financial year. The total amount paid to acquire the shares was RM13,674,266 (2012: RM220,451) and this was presented as a component within shareholders’ equity. The average cost paid for the shares repurchased during the financial year was RM2.39 (2012: RM6.04) per share.

Of the total 973,717,797 (2012: 282,528,499) issued and fully paid ordinary shares as at 30 June 2013, 5,720,000

(2012: 2,233,988) are held as treasury shares by the Company. As at 30 June 2013, the number of outstanding ordinary shares in issue after the set-off is therefore 967,997,797 (2012: 280,294,511) ordinary shares of RM1 each.

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 67A of the Companies Act, 1965.

Subsequent to the reporting date and up to the date of this report, the Company repurchased an additional 1,000 shares for a total cost of RM2,084. The average cost paid for the shares repurchased during the period was RM2.08 per share.




30. SHARE CAPITAL, SHARE PREMIUM AND TREASURY SHARES (CONT’D)

(b) Treasury shares (cont’d)

Movements on share buy-backs

Number Total Average price of shares cost per share RM’000 RM

At 1 July 2012 2,233,988 7,170 3.21

Disposed subsequent to 30 June 2012 (2,233,988) (7,170) 3.21Repurchased during the year ended 30 June 2013 5,720,000 13,674 2.39

At 30 June 2013 5,720,000 13,674 2.39

Repurchased subsequent to 30 June 2013 1,000 2 2.08

At the date of this report 5,721,000 13,676 2.39

31. OTHER RESERVES Foreign Capital currency redemption translation reserve reserve Total RM’000 RM’000 RM’000Group

At 1 July 2012/1 May 2011 3,684 5,006 8,690 Other comprehensive income:Foreign currency translation – (8,564) (8,564)Arising from disposal of foreign subsidiaries (Note 19) – (2,925) (2,925)

At 30 June 2013/2012 3,684 (6,483) (2,799) Other comprehensive income:Foreign currency translation – (2) (2)

At 30 June 2013 3,684 (6,485) (2,801)

Company

At 1 July 2012/1 May 2011 and 30 June 2013/2012 3,684 – 3,684

Capital redemption reserve

This relates to the nominal amount of shares arising from the Company’s repurchase of its own shares in 1998.

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.




32. RETAINED EARNINGS

Prior to the year of assessment 2008, Malaysian companies adopted the full imputation system. In accordance with the Finance Act 2007 which was gazetted on 28 December 2007, companies shall not be entitled to deduct tax on dividend paid, credited or distributed to its shareholders, and such dividends will be exempted from tax in the hands of the shareholders (“single tier system”). However, there is a transitional period of six years, expiring on 31 December 2013, to allow companies to pay franked dividends to their shareholders under limited circumstances. Companies also have an irrevocable option to disregard and opt to pay dividends under the single tier system. The change in the tax legislation also provides for to be locked-in as at 31 December 2007 in accordance with Section 39 of the Finance Act 2007.

The Company did not elect for the irrevocable option to disregard the 108 balance. Accordingly, during the transitional period, the Company may utilise the credit as at 31 December 2007 to distribute cash dividend payments to ordinary shareholdings as defined under the Finance Act 2007.

The Company has tax exempt profits available for distribution of approximately RM425 million (2012: RM325 million) as at 30 June 2013, subject to agreement of the Inland Revenue Board.

As at 30 June 2013, the Company has sufficient credit in the 108 balance to pay franked dividends amounting to RM146 million out of its retained earnings. If the balance of the retained earnings of RM131 million were to be distributed as dividends, the Company may distribute such dividends under the single tier system.

33. COMMITMENTS

(a) Capital commitments

Capital expenditures as at the reporting date are as follows:

Group 2013 2012 RM’000 RM’000Capital expenditureApproved and contracted for:Property, plant and equipment 112,681 77,496Biological assets 106,920 183,825

219,601 261,321

(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 logpond, 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:


Not later than 1 year 59 59 – –Later than 1 year and not later than 5 years 236 236 – –Later than 5 years 1,063 1,122 – –

1,358 1,417 – –




33. COMMITMENTS (CONT’D)

(c) Operating lease commitments - as lessor

The Group has entered into non-cancellable operating lease agreements on building, residential house, machinery and equipment. The Group is required to give one to three months notice for the termination of those agreements. These leases have no renewal option, purchase option and escalation clauses and there are no restrictions placed upon the Group arising from leases.

The future minimum lease payments receivable under non-cancellable operating leases at the reporting date are as follows:


Not later than 1 year 115 125 30 40Later than 1 year and not later than 5 years – 25 – 25

The lease payments recognised in profit or loss during the financial year/period is disclosed in Note 8.

(d) Finance lease commitments

The Group has finance leases for certain items of property, plant and equipment (Note 13). These leases do not have terms of renewal, but have purchase options at nominal values at the end of the lease term. Finance leases are effectively secured as the rights to the leased assets revert to the lessor in the event of default.

Future minimum lease payments under finance leases together with the present value of the net minimum lease payments are as follows:


Minimum lease payments:Not later than 1 year 30,540 33,644 28,838 31,475Later than 1 year but not later than 2 years 8,047 27,864 7,009 26,937Later than 2 years but not later than 5 years 1,879 5,370 1,798 5,107

Total minimum lease payments 40,466 66,878 37,645 63,519Less: Amounts representing finance charges (1,632) (3,809) (1,497) (3,644)

Present value of minimum lease payment 38,834 63,069 36,148 59,875

Present value of payments: Not later than 1 year 29,224 30,932 27,624 28,886Later than 1 year but not later than 2 years 7,783 26,858 6,778 25,967Later than 2 years but not later than 5 years 1,827 5,279 1,746 5,022

Present value of minimum lease payments 38,834 63,069 36,148 59,875Less: Amount due within 12 months (Note 28) (29,224) (30,932) (27,624) (28,886)

Amount due after 12 months (Note 28) 9,610 32,137 8,524 30,989




34. RELATED PARTY TRANSACTIONS

During the financial year/period, the Group and the Company had, in the normal course of business transacted on normal commercial terms the following transactions:

(a) Sales and purchases of goods and services


Sale of timber products to- Rimbunan Hijau General Trading Sdn. Bhd. (i) 27 36 – –- Subsidiaries – – 343,713 370,129- Subur Group (ii) 6,994 20,055 – –Power supplied to- Perpuluhan Jaya Sdn. Bhd. (iii) 350 529 – –- Subur Group (ii) 132 193 – –Sale of fresh fruit bunches to- R.H. Selangau Palm Oil Mill Sdn. Bhd. (iv) 111 18,438 – –- Palmgroup Palm Oil Mill Sdn. Bhd. (v) 11,406 28,114 – –Contract income received from- R.H. Forest Corporation Sdn. Bhd. (vi) 1,007 2,194 – –- Tapak Megah Sdn. Bhd. (vii) 8,566 10,099 8,566 –Logpond facilities income received from Subur Group (ii) 886 959 – –Helicopter chartering services provided to- Rejang Heights Sdn Bhd. (viii) 109 1,006 – –- R.H. Forest Corporation Sdn. Bhd. (vi) 121 898 – –- Subur Group (ii) 533 410 – –- Tiong Toh Siong & Sons Sdn. Bhd. (ix) – 85 – –- Wealth Houses Development Sdn. Bhd. (x) – 538 – –Rental expense paid to subsidiary – – – 112Charter fee paid to subsidiary – – – 3,550Purchase of timber products from- Subsidiaries – – 21,187 19,666- Binamewah Sdn. Bhd. (xi) 20,562 21,497 20,562 21,497- Perpuluhan Jaya Sdn. Bhd. (iii) 84 138 – 3- R.H. Forest Corporation Sdn. Bhd. (vi) 2,572 2,591 2,572 2,591- Subur Group (ii) – 2 – 2Purchase of raw materials from Petanak Enterprises Sdn. Bhd. (xii) 21,726 29,291 – –Purchase of machineries, spare parts, fuel and lubricants from- All-Round Tyres Sdn. Bhd. (xiii) 15 10 – –- Rejang Green Agriculture Supplies Sdn. Bhd. (xiv) – 5 – –- Rimbunan Hijau Auto Services Sdn. Bhd. (xv) – 1,170 – –- Rimbunan Hijau General Trading Sdn. Bhd. (i) 1,654 1,550 737 337




34. RELATED PARTY TRANSACTIONS (CONT’D)

(a) Sales and purchases of goods and services (cont’d)


Purchase of air tickets from R.H. Tours and Travel Agency Sdn. Bhd. (xvi) 178 200 66 92Purchase of power from Subur Group (ii) 50 70 51 70Logpond/office rental paid to Tiong Toh Siong & Sons Sdn. Bhd. (ix) 180 210 180 210Hotel accommodation paid to Regalia Ritz Enterprise Sdn. Bhd. (xvii) 98 28 91 25Premium paid to- Rejang Heights Sdn. Bhd. (viii) 1,296 – – –- R.H. Forest Corporation Sdn. Bhd. (vi) 1,266 – – –- Wealth Houses Development Sdn. Bhd. (x) 509 – – –Purchase of motor vehicles from Rimbunan Hijau Auto Services Sdn. Bhd. (xv) 792 288 – –

Information regarding outstanding balances arising from transactions with subsidiaries as at 30 June 2013 is

disclosed in Note 23 and 29.

Details of the relationships of related parties, which have transacted with the Group and the Company are as follows:

(i) Rimbunan Hijau General Trading Sdn. Bhd. (“RHGT”)

The following major shareholders of the Company have substantial interests in RHGT:

• TanSriDatukSirDiongHiewKing@TiongHiewKing(“TanSriTHK”)(adirectorofRHGT)-directinterest 2.46% and indirect interest 72.11%.

• TiongTohSiongHoldingsSdn.Bhd.(“TTSH”)-directinterest49.4%.• TeckSingLikEnterpriseSdn.Bhd.(“TSLE”)-indirectinterest59.2%.

(ii) Subur Group

Subur Group includes Subur Tiasa Holdings Bhd. (“STSB”) and its wholly-owned subsidiaries, namely, Subur Tiasa Plywood Sdn. Bhd., Subur Tiasa Particleboard Sdn. Bhd., Homet Raya Sdn. Bhd. and Trimogreen Sdn. Bhd.

The following major shareholders of the Company have substantial interests in STSB:

• TanSriTHK-directinterest0.59%andindirectinterest37.84%.• TTSH-directinterest32.93%andindirectinterest1.86%.• TSLE-directinterest2.49%andindirectinterest35.35%.

Dato’ Tiong Ing, one of the daughters of Tan Sri THK is the Managing Director of Subur Group.






(iii) Perpuluhan Jaya Sdn. Bhd. (“PJSB”)

The following major shareholders of the Company have substantial interests in PJSB:

• TanSriTHK-directinterest3.2%andindirectinterest82%.• TTSH-directinterest60%.• TSLE-directinterest21.2%.

(iv) R.H. Selangau Palm Oil Mill Sdn. Bhd. (“RHS”)

The following major shareholders of the Company have substantial interests in RHS:

• TanSriTHK(adirectorofRHS)-directinterest1.64%andindirectinterest87.87%.• TTSH-directinterest24.59%.• TSLE-directinterest29.67%.

(v) Palmgroup Palm Oil Mill Sdn. Bhd. (“PPOM”)

A director of the Company, Tiong Chiong Hee, is a Managing Director of PPOM and has indirect interest of 100%.

Datuk Tiong Thai King, father of Tiong Chiong Hee, is also a director of PPOM and has indirect interest of 100%.

(vi) R.H. Forest Corporation Sdn. Bhd. (“RHFC”)

A major shareholder of the Company, Tan Sri THK, is a director of RHFC. He has direct interests of 0.5% and indirect interest of 99.5% in RHFC.

TTSH and TSLE, major shareholders of the Company, have direct interests of 30% each in RHFC.

(vii) Tapak Megah Sdn. Bhd. (“TMSB”)

Dato’ Sri Dr Tiong Ik King, a director of the Company, has direct interest of 7% in TMSB.

Datuk Tiong Thai King, father of Tiong Chiong Hee, is also a director of TMSB and has direct interest of 7%.

The major shareholders of the Company, namely Tan Sri THK, TTSH and TSLE have direct interests of 6%, 41% and 13%, respectively, in TMSB.

(viii) Rejang Heights Sdn. Bhd. (“RHSB”)

A major shareholder of the Company, Tan Sri THK, is a director of RHSB. He has direct interests of 1% and indirect interest of 99% in RHSB.

(ix) Tiong Toh Siong & Sons Sdn. Bhd. (“TTSS”) A director of the Company, Tiong Choon, is a director of TTSS.

Tan Sri THK, a major shareholder of the Company, is a director of TTSS and has indirect interest of 100%.






(x) Wealth Houses Development Sdn. Bhd. (“WHD”)

Tan Sri THK, a major shareholder of the Company, is a director of WHD and has indirect interest of 85%.

A major shareholder of the Company, TTSH, holds direct interest of 25% in WHD. (xi) Binamewah Sdn. Bhd. (“BSB”)

Dato’ Sri Dr Tiong Ik King, a director of the Company, has direct interest of 7% in BSB.

Tiong Chiong Hee, a director of the Company, has indirect interest of 7% in BSB.

Datuk Tiong Thai King, father of Tiong Chiong Hee, is also a director of BSB and has indirect interest of 7%.

The major shareholders of the Company, namely Tan Sri THK, TTSH and TSLE have direct interests of 6%, 41% and 13%, respectively, in BSB.

(xii) Petanak Enterprises Sdn Bhd (“PESB”)

The major shareholders of the Company, namely Tan Sri THK and TTSH have indirect interests of 51% each in PESB.

Dato’ Tiong Ing and Tiong Chiong Ong, one of the daughters and sons of Tan Sri THK are directors of PESB.

(xiii) All-Round Tyres Sdn. Bhd. (“ART”)

Tan Sri THK, a major shareholder of the Company, is a director of ART and has direct interest of 2% and indirect interest of 94%.

(xiv) Rejang Green Agriculture Supplies Sdn. Bhd. (“RGA”)

A major shareholder of the Company, Tan Sri THK, is a director of RGA and has indirect interest of 100%. (xv) Rimbunan Hijau Auto Services Sdn. Bhd. (“RHAS”)

The directors of the Company, Dato’ Sri Dr Tiong Ik King and Tiong Chiong Hee, have direct interest of 10% and indirect interest of 30%, respectively, in RHAS.

The following major shareholders of the Company have substantial interests in RHAS:

• TanSriTHK-indirectinterest50%• TSLE-directinterest10%andindirectinterest40%.

(xvi) R.H. Tours and Travel Agency Sdn. Bhd. (“RHTT”)

A director of the Company, Tiong Choon, is a common director of RHTT.

Tan Sri THK, a major shareholder of the Company, is a director of RHTT and has direct interest of 11.8% and indirect interest of 78.9%.

A major shareholder of the Company, TTSH, holds direct interest of 42.8% in RHTT.






(xvii) Regalia Ritz Enterprise Sdn. Bhd. (“RRE”)

A director of the Company, Tiong Choon and Tan Sri THK (major shareholder of the Company and father to Tiong Choon) are directors of RRE.

A major shareholder of the Company, TTSH, holds the entire equity interest in RRE.

Information regarding outstanding balances arising from transactions with related parties as at 30 June 2013 are as follows:

Related parties Nature of transactions Outstanding balances

(i) Rimbunan Hijau General Trading Sdn. Bhd.

Purchase of spare parts, fuel and lubricants, chemicals and servicing and maintenance, sale of timber products

2013: RM391,088(2012: Nil)

(ii) Subur Tiasa Holdings Bhd. Towage and freight charges receivedContract to supply of transportation servicesGeneral tradingContract for the supply of logpond facilities

2013: Nil(2012: Nil)

(ii) Subur Tiasa Plywood Sdn. Bhd. Sale of timber products 2013: RM136,828(2012: RM1,987,609)

(ii) Subur Tiasa Particleboard Sdn. Bhd.

Sale of timber products 2013: Nil(2012 Nil)

(ii) Homet Raya Sdn. Bhd. Sale of power supply 2013: RM27,821(2012: RM844,352)

(ii) Trimogreen Sdn. Bhd. Purchase of timber products 2013: Nil(2012: Nil)

(iii) Perpuluhan Jaya Sdn. Bhd. Sale of power supplyPurchase and sale of timber products

2013: RM412,300(2012: RM438,120)

(iv) R.H. Selangau Palm Oil Mill Sdn. Bhd.

Sale of fresh fruit bunches 2013: Nil(2012: Nil)

(v) Palmgroup Palm Oil Mill Sdn. Bhd.

Sale of fresh fruit bunches 2013: RM718,705(2012: RM498,471)

(vi) R.H. Forest Corporation Sdn. Bhd.

Contract income receivedSupply of transportation servicesPurchase of timber productsPremium paid

2013: RM3,132,667(2012: RM2,497,480)

(vii) Tapak Megah Sdn. Bhd. Log extraction contract fees received 2013: RM3,545,485(2012: RM3,748,865)

(viii) Rejang Heights Sdn. Bhd. Premium paid on fresh fruit bunches of oil palm produced and harvested and transportation services

2013: Nil(2012: Nil)






Related parties Nature of transactions Outstanding balances

(ix) Tiong Toh Siong & Sons Sdn. Bhd.

Purchase of machineries, spare parts, fuel and lubricants, logpond/office rental

2013: Nil(2012: Nil)

(x) Wealth Houses Development Sdn. Bhd.

Premium paid on fresh fruit bunches of oil palm produced and harvested

2013: Nil(2012: Nil)

(x) Wealth Houses Development Sdn. Bhd.

Premium paid on fresh fruit bunches of oil palm produced and harvested

2013: Nil(2012: Nil)

(xi) Binamewah Sdn. Bhd. Log purchase 2013: Nil (2012: Nil)

(xii) Petanak Enterprises Sdn. Bhd. Purchase of raw materials 2013: Nil(2012: Nil)

(xiii) All-Round Tyres Sdn. Bhd. Purchase of machineries, spare parts, fuel and lubricants

2013: Nil(2012: Nil)

(xiv) Rejang Green Agriculture Supplies Sdn. Bhd.

Purchase of chemicals 2013: Nil(2012: Nil)

(xv) Rimbunan Hijau Auto Services Sdn. Bhd.

Purchase of motor vehicles and spare parts

2013: Nil(2012: Nil)

(xvi) RH Tours & Travel Agency Sdn. Bhd.

Purchase of air tickets 2013: Nil(2012: Nil)

(xvii) Regalia Ritz Enterprise Sdn. Bhd.

Hotel accommodation, annual dinner 2013: Nil(2012: Nil)

(b) Compensation of key management personnel

The remuneration of directors and other members of key management during the year/period was as follows:


Short-term employee benefits 7,178 6,350 2,513 2,446Post-employment benefits: Defined contribution plan 752 728 285 277

7,930 7,078 2,798 2,723

Included in total key management personnel are:Directors’ remuneration 2,139 1,946 2,139 1,946




35. FAIR VALUE OF FINANCIAL INSTRUMENTS

(a) 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:

(i) Cash and bank deposits, 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) Amounts due from/to related companies

The carrying values of the amounts due from/to related companies approximate their fair values due to the short term nature.

(iv) 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.

(v) Derivatives

The fair values of cross currency swaps, forward currency contracts and commodity futures contracts are the amounts that would be payable or receivable on termination of the outstanding position arising and are determined by reference to the difference between the contracted rate and forward exchange rates or commodity prices quoted at the reporting date for contracts with similar maturity profiles.

(vi) 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.

(b) Fair value hierarchy

The Group classifies 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).




35. FAIR VALUE OF FINANCIAL INSTRUMENTS (CONT’D)

(b) Fair value hierarchy (cont’d)

The following table shows an analysis of financial instruments carried at fair values by level of fair value hierarchy:

Level 1 Level 2 Level 3 Total RM’000 RM’000 RM’000 RM’000Group

As at 30 June 2013

Financial assets:Investment securities (Note 25) 124,741 – – 124,741Derivatives (Note 26) - Forward currency contracts – 3,394 – 3,394- Cross currency swap – 2,332 – 2,332

124,741 5,726 – 130,467

Financial liabilities:Derivatives (Note 26) - Forward currency contracts – 155 – 155

As at 30 June 2012

Financial assets:Derivatives (Note 26) - Forward currency contracts – 211 – 211- Cross currency swap – 2,164 – 2,164

– 2,375 – 2,375

Financial liabilities:Derivatives (Note 26) - Forward currency contracts – 5,983 – 5,983

Company

As at 30 June 2013

Financial assets:Investment securities (Note 25) 124,741 – – 124,741Derivatives (Note 26)- Forward currency contracts – 1,335 – 1,335- Cross currency swap – 2,332 – 2,332

124,741 3,667 – 128,408

Financial liabilities:Derivatives (Note 26) - Forward currency contracts – 79 – 79

As at 30 June 2012

Financial assets:Derivatives (Note 26)- Forward currency contracts – 211 – 211- Cross currency swap – 2,164 – 2,164

– 2,375 – 2,375

There have been no transfers between Level 1 and Level 2 during the financial year.




36. 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 and commodity 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.

During the year, the Group and the Company entered into cross currency swaps and 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 and 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 and the Company’s exposure to credit risk arises primarily from trade and other receivables.

The Group and the Company manage their credit risk by trading only with recognised and creditworthy third parties. In addition, receivable balances are monitored on an ongoing basis and the Group and the Company’s exposure to bad debts is not significant. Since the Group and the Company trade only with recognised and creditworthy third parties, there is no requirement for collateral.

Exposure to credit risk

At the reporting date, the Group 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 including derivatives with positive fair values.

(ii) A nominal amount of RM945,281,255 (2012: RM899,702,683) relating to corporate guarantees provided by the Company to banks on subsidiaries’ loans and borrowings.

Financial assets that are either past due or impaired

Information regarding financial assets that are either past due or impaired and ageing analysis is disclosed in Note 23. Management believes that no additional credit risk beyond that provided for is inherent in the Group and the Company’s trade and other receivables.

(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 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.

The Group always maintains sufficient cash and cash equivalents, and has available funding through a diverse source of committed and uncommitted credit facilities from various banks.




36. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONT’D)

(b) Liquidity risk (cont’d)

Analysis of financial instruments by remaining contractual maturities

The table below summarises the maturity profile of the Group 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’000As at 30 June 2013

GroupFinancial liabilities:Trade and other payables, excluding financial guarantees 274,164 – – 274,164Loans and borrowings 484,438 443,866 16,917 945,221Derivatives - Forward currency contracts 155 – – 155

Total undiscounted financial liabilities 758,757 443,866 16,917 1,219,540

Company

Financial liabilities:Trade and other payables, excluding financial guarantees* 465,771 – – 465,771Loans and borrowings 188,977 8,807 – 197,784Derivatives - Forward currency contracts 79 – – 79

Total undiscounted financial liabilities 654,827 8,807 – 663,634

As at 30 June 2012

GroupFinancial liabilities:Trade and other payables, excluding financial guarantees 231,308 – – 231,308Loans and borrowings 413,281 511,915 61,368 986,564Derivatives - Forward currency swap 5,983 – – 5,983

Total undiscounted financial liabilities 650,572 511,915 61,368 1,223,855

CompanyFinancial liabilities:Trade and other payables, excluding financial guarantees* 406,043 – – 406,043Loans and borrowings 183,467 32,044 – 215,511

Total undiscounted financial liabilities 589,510 32,044 – 621,554

* At the reporting date, the counterparties to the financial guarantees do not have a right to demand cash as the defaults have not occurred. Accordingly, financial guarantees under the scope of FRS 139 are not included in the above maturity profile analysis.




36. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONT’D)

(c) Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of the Group 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 and the Company’s income and operating cash flows are substantially independent of changes in market interest rates.

The Group 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 profit net of tax by approximately RM771,711 (2012: RM1,065,798), 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 and the Company’s profit net of tax to a reasonably possible 5% strengthening of the USD exchange rates against the functional currency of the Group and of the Company, with all other variables held constant.

Group Company Profit net of tax Profit net of tax 2013 2012 2013 2012 RM’000 RM’000 RM’000 RM’000

United States Dollars 2,166 2,640 593 794

A 5% weakening of the above foreign currencies against the underlying functional currencies at the reporting date would have had the equal but opposite effect on the above currencies to the amounts shown above, on the basis that all other variables remain constant.




37. CAPITAL MANAGEMENT

The primary objective of the Group and the Company’s capital management is to ensure that it maintains healthy capital ratios to support its business and maximise shareholder value. No changes were made in the objective, policies and processes during the year ended 30 June 2013 and period ended 30 June 2012.

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.

The Group and the Company are in compliance with all externally imposed capital requirements in respect of certain external borrowings for the financial year ended 30 June 2013 and period ended 30 June 2012.


Loans and borrowings 28 866,744 888,461 196,288 211,867 Less: Cash and bank balances 27 (81,037) (30,921) (55,405) (2,526) Net debt 785,707 857,540 140,883 209,341 Equity attributable to owners of the parent 1,708,483 1,393,248 1,240,966 864,810 Capital and net debt 2,494,190 2,250,788 1,381,849 1,074,151

Gearing ratio 32% 38% 10% 19%

38. 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. Logs Trading - extraction and sales of logs and development and maintenance of planted forests;

ii. Manufacturing - manufacturing and trading of sawn timber, plywood, veneer, blockboard and laminated wood;

iii. Oil Palm - development of oil palm plantation and its related activities; and

iv. Others - mainly comprise the provision of air transportation 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.




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38. SEGMENT INFORMATION (CONT’D)

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 Additions to non-current assets consist of: 2013 2012 RM’000 RM’000

Property, plant and equipment 168,278 194,361 Biological assets 166,370 185,236 334,648 379,597

C The following items are added to/(deducted from) segment assets to arrive at total assets reported in the consolidated statement of financial position:

2013 2012 RM’000 RM’000

Deferred tax assets 12,186 13,150 Tax recoverable 11,106 22,228 Inter-segment assets (612,531) (964,681)

(589,239) (929,303)

D The following items are added to/(deducted from) segment liabilities to arrive at total liabilities reported in the consolidated statement of financial position:

2013 2012 RM’000 RM’000

Deferred tax liabilities 98,051 104,132 Income tax payable 1,161 2,335 Loans and borrowings 866,744 888,461 Inter-segment liabilities (969,755) (999,210)

(3,799) (4,282)

39. DIVIDENDS Group and Company

01.07.2012 01.05.2011 to to 30.06.2013 30.06.2012

RM’000 RM’000 Recognised during the financial year/period: Dividends on ordinary shares:First and final dividend for 2012: 5.15 sen (2011: 4.5 sen) less 25% taxation, per share 37,389 12,013

At the forthcoming Annual General Meeting, a first and final single-tier dividend in respect of the financial year ended 30 June 2013 of 1 sen on 967,997,797 ordinary share in issue (net of treasury shares) at book closure date amounting to a dividend payable of RM9,679,978 will be proposed for shareholders’ approval. The financial statements for the current financial year do not reflect this proposed dividend. Such dividend, if approved by the shareholders, will be accounted for in equity as an appropriation of retained earnings in the financial year ending 30 June 2014.

40. AUTHORISATION OF FINANCIAL STATEMENTS FOR ISSUE

The financial statements were authorised for issue in accordance with a resolution of the directors on 22 October 2013.



41. SUPPLEMENTARY INFORMATION - BREAKDOWN OF RETAINED PROFITS INTO REALISED AND UNREALISED

The breakdown of the retained profits of the Group and of the Company as at 30 June 2013 and 30 June 2012 into realised and unrealised profits is presented in accordance with the directive issued by Bursa Malaysia Securities Berhad dated 25 March 2010 and prepared in accordance with Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants.


Total retained profits of the Company and its subsidiaries: - Realised 1,055,440 1,175,895 263,201 332,857 - Unrealised (96,424) (91,029) 14,037 13,732Less: Consolidation adjustments (207,776) (203,356) – –

Retained profits as per financial statements 751,240 881,510 277,238 346,589

SuPPlEMENTARY iNFORMATiON



Authorised share capital : RM1,000,000,000Issued and fully paid-up share capital : RM973,717,797Class of share : Ordinary share of RM1-00 eachVoting Rights : 1 vote per ordinary share held

DISTRIBUTION OF SHAREHOLDINGS

No. of No. ofSize of Shareholdings Holders % Shares Held %

Less than 100 119 2.74 4,289 0.00100 - 1,000 508 11.71 317,158 0.031,001 - 10,000 2,474 57.05 11,883,241 1.2310,001 - 100,000 978 22.55 29,322,397 3.03100,001 - 48,399,838 (less than 5% of issued shares) 254 5.86 691,887,040 71.4848,399,839 (5% and above of issued shares) 4 0.09 234,582,672 24.23

TOTAL 4,337 100.00 967,996,797* 100.00

* Excluding a total of 5,721,000 shares bought-back by the Company and retained as treasury shares.

TOP 30 SECURITIES ACCOUNT HOLDERS(Without aggregating the securities from different securities accounts belonging to the same Depositor)

No. Name No. of Shares Held % 1 Tiong Toh Siong Holdings Sdn Bhd 67,443,165 6.972 RHB Capital Nominees (Asing) Sdn Bhd RHB Bank (L) Ltd for Genine Chain Limited 66,080,164 6.833 Asanas Sdn Bhd 50,659,343 5.234 EB Nominees (Tempatan) Sendirian Berhad Pledged Securities Account for Amanas Sdn Bhd 50,400,000 5.215 RHB Capital Nominees (Tempatan) Sdn Bhd Pledged Securities Account for Tiong Toh Siong Holdings Sdn Bhd 42,997,500 4.446 Insan Anggun Sdn Bhd 42,504,700 4.397 HSBC Nominees (Asing) Sdn Bhd Gold Palace Profits Limited 37,272,750 3.858 CIMSEC Nominees (Tempatan) Sdn Bhd The Bank of Tokyo-Mitsubishi UFJ Ltd Singapore for Asanas Sdn Bhd 36,700,000 3.799 Malaysia Nominees (Tempatan) Sendirian Berhad Pledged Securities Account for Tiong Toh Siong Holdings Sdn Bhd 33,250,000 3.4310 Citigroup Nominees (Tempatan) Sdn Bhd Employees Provident Fund Board 28,500,000 2.9411 Nustinas Sdn Bhd 27,162,843 2.8112 AMSEC Nominees (Asing) Sdn Bhd AMFRASER Securities Pte. Ltd. For Genine Chain Limited 24,975,000 2.5813 CIMB Group Nominees (Tempatan) Sdn Bhd Pledged Securities Account for Tiong Toh Siong Holdings Sdn Bhd 24,500,000 2.5314 Maybank Nominees (Tempatan) Sdn Bhd Maybank Trustees Berhad for Public Ittikal Fund 20,994,300 2.1715 HSBC Nominees (Asing) Sdn Bhd Double Universal Limited 20,405,097 2.1116 Malaysia Nominees (Tempatan) Sendirian Berhad Great Eastern Life Assurance (Malaysia) Berhad 17,800,000 1.84

ANAlYSiS OF ShAREhOldiNGSAS AT 10 OCTOBER 2013



17 Maybank Nominees (Asing) Sdn Bhd DBS Bank for Bloomswick Ltd 16,790,250 1.7318 Malaysia Nominees (Tempatan) Sdn Bhd OCBC Labuan for Tiong Toh Siong Holdings Sdn Bhd 16,000,000 1.6519 HLIB Nominees (Tempatan) Sdn Bhd Pledged Securities Account for Koon Yew Yin 14,852,435 1.5320 AMSEC Nominees (Tempatan) Sdn Bhd Pledged Securities Account – AmBank (M) Berhad for Tiong Toh Siong Holdings Sdn Bhd 14,000,000 1.4521 HSBC Nominees (Asing) Sdn Bhd Exempt An for JPMorgan Chase Bank, National Association (JPMINTL BK LTD) 10,717,873 1.1122 Pertumbuhan Abadi Asia Sdn Bhd 10,488,411 1.0823 Huang Tiong Sii 8,998,290 0.9324 Cartaban Nominees (Asing) Sdn Bhd Exempt An for Credit Agricole (Suisse) SA, Singapore (Trust Account) 8,922,255 0.9225 Diong Hiew King @ Tiong Hiew King 8,871,408 0.9226 Tiong Toh Siong Enterprises Sdn Bhd 8,449,008 0.8727 Kenanga Nominees (Tempatan) Sdn Bhd Pledged Securities Account for Tiong Thai King 7,806,335 0.8128 Zaman Pemimpin Sdn Bhd 7,448,811 0.7729 Suria Kilat Sdn Bhd 6,255,134 0.6530 Kenanga Nominees (Tempatan) Sdn Bhd Pledged Securities Account for Koon Yew Yin 5,767,800 0.60

SUBSTANTIAL SHAREHOLDERS BASED ON THE REGISTER OF SUBSTANTIAL SHAREHOLDERS

Direct Indirect No. of No. ofName Shares Held % Shares Held %

Tiong Toh Siong Holdings Sdn Bhd 206,815,665 21.37 2,918,451 (a) 0.30Genine Chain Limited 91,055,164 9.41 87,359,343 (b) 9.02Asanas Sdn Bhd 87,359,343 9.02 Amanas Sdn Bhd 50,479,961 5.21 Double Universal Limited 20,405,097 2.11 120,147,504 (c) 12.41Tan Sri Datuk Sir Tiong Hiew King 8,871,408 0.92 229,941,615 (d) 23.75Teck Sing Lik Enterprise Sdn Bhd 1,270,080 0.13 218,183,124 (e) 22.54Ho Cheung Choi 178,414,507 (f) 18.43Chang Meng 178,414,507 (f) 18.43Ho Sau Ling, Ella 140,552,601 (g) 14.52Wong Hon Meng 140,552,601 (g) 14.52

Notes:-

a. Deemed interested by virtue of its substantial shareholdings in Tiong Toh Siong & Sons Sdn Bhd and Kuntum Enterprises Sdn Bhd.

b. Deemed interested by virtue of its substantial shareholding in Asanas Sdn Bhd.c. Deemed interested by virtue of its substantial shareholdings in Insan Anggun Sdn Bhd, Nustinas Sdn Bhd and

Amanas Sdn Bhd.d. Deemed interested by virtue of his substantial shareholdings in Teck Sing Lik Enterprise Sdn Bhd, Tiong Toh Siong

Holdings Sdn Bhd, Tiong Toh Siong Enterprises Sdn Bhd, Tiong Toh Siong & Sons Sdn Bhd, Pertumbuhan Abadi Asia Sdn Bhd and Kuntum Enterprises Sdn Bhd.

e. Deemed interested by virtue of its substantial shareholdings in Tiong Toh Siong Holdings Sdn Bhd, Tiong Toh Siong Enterprises Sdn Bhd, Tiong Toh Siong & Sons Sdn Bhd and Kuntum Enterprises Sdn Bhd.

f. Deemed interested by virtue of their substantial shareholdings in Genine Chain Limited. g. Deemed interested by virtue of their substantial shareholdings in Double Universal Limited.

ANAlySiS OF SHAREHOldiNGS (cont’d)AS AT 10 OCTOBER 2013



DIRECTORS’ SHAREHOLDINGS BASED ON THE REGISTER OF DIRECTORS’ SHAREHOLDING

Shares held in the Company

Direct Indirect No. of No. ofName Shares Held % Shares Held %

Gen (Rtd) Tan Sri Abdul Rahman Bin Abdul Hamid – – – –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 – – 1,627,428** 0.17Mr Tiong Chiong Hee – – – –Mr John Leong Chung Loong – – – –Dato’ Wong Lee Yun – – – –Datuk Talib Bin Haji Jamal – – – –

Notes:

* Deemed interested by virtue of his substantial shareholdings in Hoojin Holding Sdn Bhd.

** Deemed interested in shares held by her spouse.

Shares held in Subsidiary Company

None of the Directors holds any shares in subsidiary Company.

ANAlySiS OF SHAREHOldiNGS (cont’d)AS AT 10 OCTOBER 2013



MALAYSIA

Description Tenure Existing use Land Area Approximate Net Book Date of age of Value as at Acquisition building 30-Jun-13 (RM’000)

Tanjung Ensurai, Sibu Engkilo L.D. Blk 8 Leasehold land Factory, warehouse 112,256 26 years 1,445 19-Jun-96Lot 804 expiring on 05.09.2062 and staff quarter sq metres

Sibu O.T.838 Leasehold land 1-Jan-97 expiring on 31.12.2024

Sibu Grant No. 2383 Leasehold land 31-Mar-93 expiring on 31.12.2018

Engkilo L.D.Blk 8 Leasehold land Factory, warehouse 157,746 21 years 5,137 31-Mar-93Lot 803 expiring on 05.09.2062 and staff quarter sq metres

Sibu O.T 655 and 837 Leasehold land expiring on 31.12.2024

Engkilo L.D Blk 8 Leasehold land Vacant 8,966 – 19 24-Mar-04Lot 819 expiring on 31.12.2911 Agricultre land sq metres

Sibu O.T.12262 Leasehold land Vacant 16,183 – 118 26-Jul-00 expiring on 13.06.2027 Agricultre land sq metres

Putai, Kapit Concession land Factory, warehouse 21 years 13,855 – and staff quarter

Sibu Town Sibu Town District Pending issuance of Building 103,943 10 years 16,375 30-Apr-05Blk 10 Lots 650 & 520 Land Title sq metres (Sub 120-132)

Lot 851 Blk 10 Leasehold Building 125 1 year 1,240 7-Sep-11Sibu Town District expiring on 07.09.2071 sq metres

Lot 3372 Blk 19 Leasehold land Building 494.8 1 year 576 8-Nov-11Seduan Land District expiring on 17.10.2098 sq metres

Salim, Sibu Seduan L.D. Blk 10 Leasehold land warehouse 19,981 15 years 1,944 14-Nov-95Lot 1393 expiring on 31.12.2915 sq metres

LOT 920 & 1373, Block 16, Leasehold Agriculture land 1.12 hactares 2 years 2,740 14-Mar-08Seduan Land District expiring on 31.12.2915 210 31-May-08

Ulu Oya Raod, Sibu

Seduan L.D. Blk 10 Leasehold land semi-detached 430.2 17 years 92 19-Oct-99Lot 1161 expiring on 07.08.2054 residential house sq metres

PROPERTiESOwNEd BY ThE GROuP




Tanjung Manis, Sarikei

Sare L.D. Blk 3, Rented land Factory, warehouse 209,756 15 years 53 –Lot 25 exipiring on 22.09.2052 and staff quarter sq metres 14,367 Sare L.D. Blk 3, Lot 71, Freehold land Vacant 40,961 – 307 19-Jan-9886 and 87 Agriculture land sq metres Sare L.D. Blk 3 Leasehold land Vacant 15,699.50 – 1,536 1-Sep-02Lot 138 expiring on 19.06.2062 Industrial land sq metres Sare L.D. Blk 3, Lot 135, Freehold land Vacant 46,578 – 327 1-Sep-03136,137 and 52 Agriculture land sq metres Sare L.D. Blk 3, Freehold land Vacant 230,747 – Lot 53,54,56,57, Agriculture land sq metres 623 14-Nov-9658,59,60 and 61

Sungei Terus, Niah, Miri

Lot 161, Suai Land Provisional leasehold Oil Palm Estate 23,629,286 – 1,511 30-Apr-01District expiring on 6.12.2060 sq metres Building & Quarter 1,683

Lot 934, Niah Land Provisional leasehold Oil Palm Estate 26,369,203 – 1,652 30-Apr-01District expiring on 6.12.2060 sq metres Building & Quarter 5,336

Pulau Bruit, Daro, Mukah

Lot 5 Block 11 Bruit LD Provisional leasehold Oil Palm Estate 100,002,946 – 6,166 9-Dec-04Lot 6 Block 11 Bruit LD expiring on 18.05.2064 sq metres Lot 8 Block 11 Bruit LD Building & Quarter 8,583

Lot 92 Block 6 Bruit LD Provisional leasehold Vacant 50,001,473 – 3,087 9-Dec-04Lot 93 Block 6 Bruit LD expiring on 18.05.2064 Agriculture land sq metres Lot 96 Block 6 Bruit LD Building & Quarter 342 Lot 98 Block 6 Bruit LD

Retus, Mukah

Lot 1, Block 362 Leasehold land Oil Palm Estate 72,331,816 – 2,203 28-Aug-03Oya-Dalat District expiring on 23.2.2063 sq metres Building & Quarter 6,194

Lot 9, Block 362 Leasehold land Oil Palm Estate 34,547,957 – 4,623 28-Aug-03Oya-Darat District expiring on 23.2.2063 sq metres Building & Quarter 5,211

OT 30632 Pulau Bruit Provisional leasehold Vacant 16.17 acres – 32 1-May-07Land District expiring on 30.10.2038 Agriculture land

PROPERTiES OwNEd By THE GROuP (cont’d)




Sungai Pantak, Batang lgan, Sibu

Lot 3418, Pasai-Siong Leasehold land Vacant 33,791 – 78 28-Jun-04Land District expiring on 31.012.2068 Agriculture land sq metres

Sungai Buloh, Oya Lot 113, Block 7 Leasehold land Vacant 8,660 – 27 12-Aug-05Oya-Dalat Land District expiring on 11.04.2036 Agriculture land sq metres

Kuching

Lot 269, Salat Land District Leasehold land U 1901 9,150 7 years 830 10-Sep-05Kasuma Resort Condo Condominium sq feet

Lot 9961, Block 16 Three-Storey Shophouse Office 167.4 6 years 1,643 1-Apr-08Kuching Central Land sq meters District

Lot 22, 26 & 27 BUNGALOW LOTS Vacant 57,896 – 4,296 15-May-06Borneo Highland sq feet Total 114,457

PROPERTiES OwNEd By THE GROuP (cont’d)



NOTICE IS HEREBY GIVEN that the Fifty-Third 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 2013 at 9.00 a.m. for the following purposes:-

AGENDA

AS ORDINARY BUSINESS

1 To receive the Audited Financial Statements for the financial year ended 30 June 2013 together with the Reports of the Directors and Auditors thereon.

2 To declare a first and final single-tier dividend of 1% for the financial year ended 30 June 2013.

3 To re-elect the following Directors who retire by rotation pursuant to Article 78 of the Company’s Articles of Association:-

i. Dato’ Wong Lee Yun

ii. Datuk Talib Bin Haji Jamal

4 To re-elect Dato’ Wong Sie Young who retires pursuant to Article 82 of the Company’s Articles of Association.

5 To consider and if thought fit, pass the following resolution:-

“THAT Gen (Rtd) Tan Sri Abdul Rahman Bin Abdul Hamid, retiring pursuant to Section 129(6) of the Companies Act, 1965, be and is hereby re-appointed a Director of the Company to hold office until the next Annual General Meeting.”

6 To approve the payment of Directors’ fees for the financial year ended 30 June 2013.

7 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/special resolutions:- 8 Continuation in office as Independent Non-Executive Director pursuant to Recommendation

3.3 of the Malaysian Code on Corporate Governance 2012

(a) “THAT subject to the passing of Ordinary Resolution No. 5, approval be and is hereby given to Gen (Rtd) Tan Sri Abdul Rahman Bin Abdul Hamid who has served as an Independent Non-Executive Director of the Company for a cumulative term of more than nine (9) years, to continue to act as an Independent Non-Executive Director of the Company.”

(b) “THAT approval be and is hereby given to Mr 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 act as an Independent Non-Executive Director of the Company.”

9 Proposed Renewal of Authority for the Company to Purchase its Own Shares (“Proposed Share Buy-Back”)

“THAT subject to the Companies Act, 1965 (“Act”), the Memorandum and Articles of Association of the Company, the Main Market Listing Requirements of Bursa Malaysia Securities Berhad (“Bursa Malaysia”) and any other relevant authorities, the Directors be and are hereby authorised to utilise an amount not exceeding the total retained profits and share premium reserves of the Company at the time of purchase to purchase such number of ordinary shares of the Company provided that the ordinary shares so purchased shall [in aggregate with the treasury shares as defined under section 67A of the Act then still held by the Company] not exceed ten per centum (10%) of the total issued and paid-up share capital of the Company;

NOTiCE OFANNuAl GENERAl MEETiNG

Ordinary Resolution 1

OrdinaryResolution 2

OrdinaryResolution 3Ordinary Resolution 4Ordinary Resolution 5


Ordinary Resolution 7Ordinary Resolution 8






AND THAT such authority shall commence upon the passing of this resolution until the conclusion of the next Annual General Meeting of the Company unless earlier revoked or varied by an ordinary resolution of the shareholders of the Company in general meeting;

AND THAT authority be and is hereby given to the Directors to decide in their absolute discretion to either retain the ordinary shares purchased by the Company pursuant to the Proposed Share Buy-Back as treasury shares subsequently to be distributed as share dividends or resold on Bursa Malaysia, or to cancel the shares so purchased, or a combination of both AND FURTHER THAT the Directors be and are hereby authorised to act and to take all steps and do all things as they may deem necessary or expedient in order to implement, finalise and give full effect to the Proposed Share Buy-Back with full power to assent to any conditions, modifications, variations and amendments as may be imposed by the relevant authorities.”

10 Proposed 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 any of the recurrent related party transactions of a revenue or trading nature as set out in Section 2.2 of Part B of the Circular to Shareholders dated 6 November 2013 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;

AND THAT such mandate shall commence upon the passing of this resolution until the conclusion of the next Annual General Meeting of the Company unless earlier revoked or varied by an ordinary resolution of the shareholders of the Company in general meeting;

AND THAT the Directors of the Company be authorised to complete and do all such acts

and things as they may consider expedient or necessary to give full effect to the transactions authorised by this resolution.”

11 Proposed Amendments to the Articles of Association of the Company

“THAT the proposed amendments to the Articles of Association of the Company as set out in Appendix A attached to this Annual Report be and are hereby approved AND THAT the Directors be and are hereby authorised to carry out all the necessary steps to give effect to the amendments.”

12 To transact any other business of which due notice shall have been given in accordance with

the Company’s Articles of Association and the Companies Act, 1965.

NOTICE OF DIVIDEND ENTITLEMENT AND PAYMENT

NOTICE IS HEREBY GIVEN THAT the first and final single-tier dividend of 1% for the financial year ended 30 June 2013, if approved at the Fifty-Third Annual General Meeting, will be paid on 13 December 2013 to Depositors whose names appear in the Record of Depositors on 2 December 2013.

A Depositor shall qualify for entitlement only in respect of:-

a) Securities deposited into the Depositor’s securities account before 12.30 p.m. on 28 November 2013 in respect of securities exempted from mandatory deposit;

b) Securities transferred into the Depositor’s securities account before 4.00 p.m. on 2 December 2013 in respect of transfers; and

c) Securities bought on Bursa Malaysia Securities Berhad on a cum entitlement basis according to the Rules of Bursa Securities.


Special Resolution

NOTiCE OF ANNuAl GENERAl MEETiNG (cont’d)



By Order of the BoardJAYA TIASA HOLDINGS BERHAD

NGU UNG HUONG (MAICSA 7010077)Company Secretary

Sibu, Sarawak6 November 2013

NOTES ON APPOINTMENT OF PROxY

1. In respect of deposited securities, only members whose names appear in the Record of Depositors on 22 November 2013 shall be entitled to attend, speak and vote at this 53rd 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 and the provision of Section 149(1)(b) of the Companies Act, 1965 shall not apply to the Company.

3. (i) A member shall not be entitled to appoint more than 2 proxies to attend and vote at this 53rd AGM provided that where a member is an authorized 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.

(ii) 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.

4. A member who is an exempt authorized nominee which holds ordinary shares in the omnibus account may appoint any no of proxies in respect of the omnibus account it holds.

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 or at any adjournment thereof.

6. If the appointer is a corporation, the proxy form must be executed under its common seal or under the hand of its attorney. If the proxy form is executed by an attorney, supporting documents has to be produced on the day of the Annual General Meeting for verification by the Company Secretary.

ExPLANATORY NOTES ON SPECIAL BUSINESS

(a) Continuation in offices as Independent Directors

Ordinary Resolutions No. 9 and 10

Recommendation 3.3 of the Malaysian Code on Corporate Governance 2012 (“MCCG 2012”) recommends that shareholders’ approval must be sought in the event that the Company intends to retain the independent directors who have served in that capacity for more than 9 years. The Nomination Committee and Board have determined at the annual assessment that Gen (Rtd) Tan Sri Abdul Rahman Bin Abdul Hamid and Mr John Leong Chung Loong who had served on the Board for more than 9 years, remain objective and independent in expressing their views and in participating in deliberations and decision making of the Board and Board Committees. Their length of service on the Board does not in any way interfere with their exercise of independent judgement and ability to act in the best interests of the Company. The Proposed Ordinary Resolutions No. 9 and 10, if passed, will enable the Company to retain Gen (Rtd) Tan Sri Abdul Rahman Bin Abdul Hamid and Mr John Leong Chung Loong as independent directors.




(b) Proposed Renewal of Authority for the Company to Purchase its Own Shares

The Proposed Ordinary Resolution No. 11 if passed, will authorise the Company to purchase up to 10% of the issued and paid-up share capital of the Company through Bursa Malaysia Securities Berhad.

(c) Proposed Shareholders’ Mandate for Recurrent Related Party Transactions

The Proposed Ordinary Resolution No. 12 if passed, will enable the Company and/or its subsidiaries to enter into recurrent related party transactions involving the interests of Related Parties, which are of a revenue or trading nature necessary for the Group’s day-to-day operations and the transactions being carried out are in the ordinary course of business on terms not to the detriment of the minority shareholders of the Company.

(d) Please refer to the Circular to Shareholders dated 6 November 2013 which is circulated together with this Annual Report for further information on the Proposed Share Buy-Back and the Proposed Shareholders’ Mandate for Recurrent Related Party Transactions.

(e) Amendments to the Articles of Association of the Company

On 22 September 2011, Bursa Securities had introduced certain amendments in Chapter 7 of the Listing Requirements which took effect from 3 January 2012 and to which listed issuers must seek Shareholders’ approval for the amendments at a general meeting by 31 December 2013. As such, a listed issuer is required to amend its Articles of Association to:

(i) allow a member who is an exempt authorized nominee to appoint multiple proxies for each omnibus account it holds [Paragraph 7.21 of the Listing Requirements];

(ii) expressly disallow any restriction on a proxy’s qualification [Paragraph 7.21A(1) of the Listing Requirements];(iii) accord proxies the same rights as members to speak at the general meeting [Paragraph 7.21A(2) of the Listing

Requirements];

The Proposed Special Resolution if passed, will update the Articles of Association of the Company in line with the amended provisions of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad.

STATEMENT ACCOMPANYING NOTICE OF ANNUAL GENERAL MEETING

The Directors standing for re-election pursuant to Article 78 of the Company’s Articles of Association are:- (a) Dato’ Wong Lee Yun (b) Datuk Talib Bin Haji Jamal

The Director standing for re-election pursuant to Article 82 of the Company’s Articles of Association is Dato’ Wong Sie Young.

The Director standing for re-appointment pursuant to Section 129(6) of the Companies Act, 1965, is Gen (Rtd) Tan Sri Abdul Rahman Bin Abdul Hamid.

The Directors seeking for continuation in offices as independent directors pursuant to MCCG 2012 are Gen (Rtd) Tan Sri Abdul Rahman Bin Abdul Hamid and Mr John Leong Chung Loong.

The profiles of the above Directors are set out in the section entitled ‘Directors’ Profile’ on pages 5 to 9. Their shareholdings in the Company are set out in the section entitled ‘Analysis of Shareholdings’ on pages 125 to 127 of this annual report.




APPENdix A

PROPOSED AMENDMENTS TO THE COMPANY’S ARTICLES OF ASSOCIATION

Existing Provision Proposed Amendments

Article 2 InterpretationsNew Provisions

Words

Exempt Authorised Nominee

Meaning

an authorised nominee defined under the Securities Industry (Central Depositories) Act 1991 (“SICDA”) which is exempted from compliance with the provisions of subsection 25A(1) of SICDA

Omnibus Account Securities Account in which ordinary shares in the Company are held for multiple beneficial owners in one securit ies account

Share Issuance Scheme

A scheme involving a new issuance of shares to the employees

Article 4A Issue of shares to directorsExcept in the case of an issue of shares on a pro rate basis to shareholders, no director shall participate in an issue of shares whether or not pursuant to an employees share scheme of the Company unless the shareholders in general meeting have approved of the specific allotment to be made to such director.

Issue of shares to directorsExcept in the case of an issue of shares on a pro rate basis to shareholders, no director shall participate in a Share Issuance Scheme unless the shareholders in general meeting have approved of the specific allotment to be made to such director.

Article 70 Proxy need not be a memberA proxy may but need not be a member of the Company and need not be an advocate, an approved company auditor or person appointed by the Companies Commission of Malaysia.

Appointment and qualification of proxyA member entitled to attend and vote at a meeting of the Company, or at a meeting of any class of members of the Company, shall be entitled to appoint any person as his proxy to attend and vote at the meeting. A proxy may but need not be a member of the Company. There shall be no restriction as to the qualification of the proxy.

Article 70A Appointment of at least one proxyA member may appoint more than one (1) proxy to attend at the same meeting. Where a member appoints two (2) or more proxies, he shall specify the proportion of his shareholdings to be represented by each proxy. Where a member of the Company is an authorised nominee as defined under the Securities Industry (Central Depositories) Act 1991, it may appoint at least one proxy in respect of each securities account it holds with ordinary shares of the Company standing to the credit of the said securities account.

Appointment of at least one proxyA member may appoint up to two (2) proxies to attend at the same meeting. Where a member appoints two (2) or more proxies, he shall specify the proportion of his shareholdings to be represented by each proxy. Where a member of the Company is an authorised nominee as defined under the Securities Industry (Central Depositories) Act 1991, it may appoint up to two (2) proxies in respect of each securities account it holds with ordinary shares of the Company standing to the credit of the said securities account.

Article 70B New provision Appointment of multiple proxiesWhere a member of the Company is an Exempt Authorised Nominee which holds ordinary shares in the Omnibus Account, there is no limit to the number of proxies which the Exempt Authorized Nominee may appoint in respect of each Omnibus Account it holds.

Article 70C New provision Rights of proxy to speakA proxy appointed to attend and vote at a meeting of the Company shall have the same rights as the member to speak at the meeting.


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JAYA TIASA HOLDINGS BERHADCompany No. 3751-V

(Incorporated in Malaysia under the Companies Act, 1965)

I / We (full name as per NRIC/ company name in block capitals) ..........................................................................................

................................................................................................................................................................................................

*NRIC/Company No. (New NRIC No.) ................................................ (Old NRIC No.) ...........................................................

CDS Account No. ...................................................................................................................................................................

of (full address) .......................................................................................................................................................................being a member / members of JAYA TIASA HOLDINGS BERHAD hereby appoint (full name as per NRIC in block capitals)

......................................................................................................................NRIC No ...........................................................

of ...........................................................................................................................................................................................or failing him/her, the Chairman of the meeting as my/our proxy/proxies to vote for me/us and on my/our behalf at the Fifty-Third 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 2013 at 9.00 a.m. and at any adjournment thereof.

My/Our proxy is to vote as indicated below:

No. Ordinary Resolutions For Against

1. Adoption of the Audited Financial Statements for the financial year ended 30 June 2013 together with the Reports of the Directors and Auditors thereon.

2. Declaration of a first and final single-tier dividend of 1% per ordinary share for the financial year ended 30 June 2013.

3. Re-election of Dato’ Wong Lee Yun as Director.

4. Re-election of Datuk Talib Bin Haji Jamal as Director.

5. Re-election of Dato’ Wong Sie Young as Director.

6. Re-appointment of Gen (Rtd) Tan Sri Abdul Rahman Bin Abdul Hamid as Director.

7. Approval of Directors’ Fees for the financial period ended 30 June 2013.

8. Re-appointment of Auditors.

9. Continuation in office of Gen (Rtd) Tan Sri Abdul Rahman Bin Abdul Hamid as Independent Director.

10. Continuation in office of Mr John Leong Chung Loong as Independent Director.

11. Proposed Authority for the Company to purchase its own shares.

12. Proposed Shareholders’ Mandate for Recurrent Related Party Transaction.

Special Resolution

Proposed Amendments to the Articles of Association of the Company.

The proportion of my/our holding to be represented by my/our proxies are as follows:-

Number of shares held

First proxy

Second proxy

Total

Dated this __________________ day of _______________ 2013

Notes

1. In respect of deposited securities, only members whose names appear in the Record of Depositors on 22 November 2013 shall be entitled to attend, speak and vote at this 53rd 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 and the provision of Section 149(1)(b) of the Companies Act, 1965 shall not apply to the Company.

3. (i) A member shall not be entitled to appoint more than 2 proxies to attend and vote at this 53rd AGM provided that where a member is an authorized 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.

(ii) 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.

4. A member who is an exempt authorized nominee which holds ordinary shares in the omnibus account may appoint any no of proxies in respect of the omnibus account it holds.

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 or at any adjournment thereof.

6. If the appointer is a corporation, the proxy form must be executed under its common seal or under the hand of its attorney. If the proxy form is executed by an attorney, supporting documents has to be produced on the day of the Annual General Meeting for verification by the Company Secretary.

FORM OF PROxY

✄

Signature / Common Seal of Member


STAMP

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The Secretary JAYA TIASA HOLDINGS BERHADNo.1-9, Pusat Suria Permata,Lorong Upper Lanang 10A,96000 Sibu, Sarawak,Malaysia.


annual report 2013

JAYA TIASA HOLDINGS BERHAD Company Number : 3751-V

No.1-9, Pusat Sur ia Permata, Lorong Upper Lanang 10A,

96000 Sibu, Sarawak.

T : 084 213 255 F : 084 213 855 E : inquiry@jayat iasa.net

www.jayat iasa.net

JAYA

TIASA

HO

LDIN

GS B

ERH

AD

AN

NU

AL REPO

RT 2013

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