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A N N U A L R E P O R T2014

SCOPE INDUSTRIES BERHAD (591376-D)

(Incorporated In Malaysia)

6th Floor, Menara Hap Seng, Jalan P. Ramlee, 50250 Kuala Lumpur.Tel : (60)3 2022 1376 Fax : (60)3 2026 0916Email : [email protected], [email protected] Website : www.scope.com.my

CONTENTSCorporate Information 02

History, Principal Activities and Group Structure 03

Chairman's Statement 04

Statement on Corporate Social Responsibility 05

Directors' Profiles 06 - 07

Corporate Governance Statement 08 - 15

Statement on Risk Management and Internal Control 16

Audit Committee's Report 17 - 19

Directors' Report 20 - 22

Directors' Statement and Statutory Declaration 23

Independent Auditors' Report to the Members of Scope Industries Berhad

24 - 25

Statements of Financial Position 26

Statements of Comprehensive Income 27

Consolidated Statement of Changes in Equity 28

Statement of Changes in Equity 29

Statements of Cash Flows 30 - 31

Notes to the Financial Statements 32 - 73

Supplementary Information 74

Notice of Annual General Meeting 75 - 77

Statement AccompanyingNotice of Annual General Meeting

78

List of Properties 79

Analysis of Shareholdings 80 - 81

Analysis of Warrant Holdings 82 - 83

Proxy Form

02SCOPE INDUSTRIES BERHAD (591376-D)

CORPORATE INFORMATION

DIRECTORS

Dato’ Philip Chan Hon Keong : Independent Non-Executive Chairman

Lim Chiow Hoo : Managing Director

Lee Min Huat : Executive Director

Chew Kong Yoon : Executive Director

Tan Poh Heng : Independent Non-Executive Director

Yong Loong Chen : Independent Non-Executive Director

Lim Ee Tatt : Non-Independent Non-Executive Director

COMPANY SECRETARIES

Chee Wai Hong (BC/C/1470)Foo Li Ling (MAICSA 7019557)

AUDIT COMMITTEE

Tan Poh Heng (Chairman)Dato’ Philip Chan Hon Keong Yong Loong Chen

NOMINATION COMMITTEE

Dato’ Philip Chan Hon Keong (Chairman)Tan Poh Heng Yong Loong Chen

REMUNERATION COMMITTEE

Tan Poh Heng (Chairman)Dato’ Philip Chan Hon Keong Lee Min Huat

REGISTERED OFFICE

51-13-A Menara BHL BankJalan Sultan Ahmad Shah10050 Penang Tel : 04-228 9700Fax : 04-227 9800

BUSINESS ADDRESS

6th Floor, Menara Hap SengJalan P. Ramlee50250 Kuala LumpurTel : 03-2022 1376Fax : 03-2026 0916

SHARE REGISTRAR

Symphony Share Registrars Sdn. Bhd.Level 6, Symphony HouseBlock D13, Pusat Dagangan Dana 1Jalan PJU 1A/4647301 Petaling JayaSelangorTel : 03-7841 8000Fax : 03-7841 8008

AUDITORS

Grant ThorntonChartered Accountants51-8-A Menara BHL BankJalan Sultan Ahmad Shah10050 Penang Tel: 04-228 7828Fax: 04-227 9828

PRINCIPAL BANKERS

AmBank (M) BerhadHong Leong Bank BerhadHSBC Bank Malaysia Berhad

STOCK EXCHANGE LISTING

ACE Market of Bursa Malaysia Securities BerhadStock Name for Ordinary Shares : SCOPE (Stock Code: 0028)Stock Name for Warrants : SCOPE-WA (Stock Code: 0028WA)Website : http://www.scope.com.my

03ANNUAL REPORT 2014

Scope Industries Berhad (“Scope”) was incorporated in Malaysia on 2 September 2002 under the Companies Act, 1965 as a public limited company under its present name. Scope is principally an investment holding company with three (3) wholly-owned subsidiaries, namely Scope Manufacturers (M) Sdn. Bhd. (“SMSB”), Benua Mutiara Sdn. Bhd. (“BMSB”) and Scope Sales & Services Sdn. Bhd. (“SSSSB”). Besides that, Scope has a seventy percent (70%) owned subsidiary namely Pioneer Glow Sdn Bhd (“PGSB”).

The core business of Scope Group are trading and manufacturing of electronic components and products as well as oil palm plantation business.

The current group structure is as follows:-

The principal activities of its subsidiaries are as follow:-

CompaniesDate and Place of Incorporation

Issued and Paid-upShare Capital Principal activitiesRM

Subsidiaries

Scope Manufacturers (M)Sdn. Bhd. (SMSB)

20 November 1991Malaysia

3,220,000 Manufacturing and assembling of electronic components and products.

Benua Mutiara Sdn. Bhd. (BMSB) 28 September 1990Malaysia

500,000 Cultivation of oil palm.

Scope Sales & Services Sdn. Bhd. (SSSSB)

18 December 2002Malaysia

2 Investment holding and trading of electrical products.

Pioneer Glow Sdn. Bhd. (PGSB)

20 August 1997Malaysia

10,600,000 Cultivation of oil palm.

HISTORY, PRINCIPAL ACTIVITIES AND GROUP STRUCTURE

SCOPEINDUSTRIES

BERHAD

SMSB100%

BMSB100%

PGSB70%

SSSSB100%


CHAIRMAN’S STATEMENT

On behalf of the Board of Directors, I am pleased to present to you the Annual Report and Audited Financial Statements of the Group and the Company for the financial year ended 30 June 2014.

INDUSTRY TRENDS AND DEVELOPMENT

The Malaysian economy continued to record strong expansion of 6.4% during the second quarter of 2014 (Q1 2014: 6.2%). This was underpinned by strong external demand and resilient domestic activity. On the supply side, the services and manufacturing sectors remained the key drivers of growth at 6% and 7.3%, respectively (Q1 2014: 6.6%; 6.8%). The agriculture sector increased 7.1% (Q1 2014: 2.3%) on account of higher production in the palm oil, forestry, other agriculture and fishing subsectors.

However, the global economy is projected to expand further at a moderate pace in 2014 supported by broad-based but uneven recovery among advanced economies while emerging economies are expected to grow more slowly. Challenges to the global outlook include persistently high unemployment, sluggish productivity, high public sector budget deficit and debt, as well as fragilities in the financial sector and high household debt.

(Source : Malaysian Economic Report 2nd Quarter 2014)

OPERATION REVIEW

Group performance

Revenue for the financial year ended 30 June 2014 was approximately RM22.60 million, which represents a decrease of 10.43% over the preceding year. Despite of decline in revenue, the gross profit has increased from RM0.82 million in the preceding year to RM1.12 million for the year to date. The group continues to work on a lean and efficient operating structure with strong emphasis on prudent management. As a result, the Group managed to reduce the loss after taxation from RM4.04 million for the preceding year to RM2.87 million for the year to date.

Manufacturing division

The manufacturing division recorded revenue of RM12.84 million and net loss of RM1.79 million which represents a corresponding decrease of 39.39% in revenue and decrease of 158.58% in net profit. The loss recorded in manufacturing division was mainly due to the utilisation of fixed factory overheads following the lower revenue reported. Despite of net loss of RM1.79 million, the manufacturing division generated positive cash flow of RM2.23 million for the financial year ended 30 June 2014.

Plantation division

The plantation division posted 152.57% marginally higher revenue for the financial year ended 30 June 2014 of RM9.61 million as compared to RM3.81 million earned in the preceding year. Consequently, the plantation division reported lower net loss of RM0.27 million as compared to net loss of RM4.92 million in the preceding year. The improvement in the result of in the plantation division was primarily due to increase in average fresh fruit bunches (“FFB”) selling prices coupled with higher production of FFB.

The total production of FFB was 18,606 metric tonnes (“MT”) for the financial year ended 30 June 2014, which represents a corresponding increase of 96.06% in production of FFB as compared to preceding year.

PROSPECT

Manufacturing division

The market environment remains challenging and the management is continuously monitoring the manufacturing operational cost and efficiency to improve the profitability for this division. Barring any unforeseen circumstances, the performance of the manufacturing division remains challenging and the Board hopes that this division will register a better performance in the next financial year.

Plantation division

The selling prices of FFB are expected to remain weak in the second half of year 2014 and this would have a corresponding effect on the financial performance for the financial year ending 30 June 2015. The Board anticipates another challenging year for plantation division.

Group

Overall, the Group will proactively search for potential expansion, merger and acquisition opportunities especially in oil palm plantation industry in order to realize our long-term business expansion strategy, and to further enhance our revenue sources and profitability to fetch long-term premium value and returns to our stakeholders in the years ahead.

DIVIDEND

No dividend has been recommended for the financial year ended 30 June 2014.

DIRECTORATE

The Board is pleased to extend a warm welcome to Mr. Chew Kong Yoon as an Executive Director and Mr. Lim Ee Tatt as a Non-Independent Non-Executive Director.

APPRECIATION

On behalf of the Boards of Directors, I wish to convey my gratitude to our shareholders, affiliates, partners and esteemed customers for their support and confidence in our Group. I would like to extend my heartfelt gratitude to all of our employees for your patience, dedication, hard work and the spirit of excellence that you have all exhibited. These attributes will definitely help the Group to ride through the future challenges amidst the expected difficult business environment in the year ahead.

Last but not least, my sincere thanks to my Board Members for your expert guidance and insight. I look forward to your support and commitment to secure the future growth of the Group.

Dato’ Philip Chan Hon KeongChairman


Scope Group’s Corporate Social Responsibility (CSR) principle emphasises on achieving commercial success in a balanced and responsible manner by addressing the interests of all stakeholders. The Group not only increases the stakeholder value through its core business but also bearing in mind of its responsibilities for the betterment of the community and the environment.

This simple guiding principle ensures that CSR, as we see it, is part and parcel of how we do business. The key initiatives currently undertaken by the Group are :-

Stakeholder Relations• We are committed to timely and meaningful dialogues with all stakeholders, including shareholders, customers, employees,

regulators, etc.

Employees • The Group recognises that its employees are important assets. It takes good care of the welfare of its employees and employs

them under fair and equitable terms besides offering equal opportunity for career advancement based on performance and academic qualification.

• Training on industrial safety is frequently conducted to ensure high level of awareness on safety requirement at all levels. The Company has conducted the following safety training for its employees :- Firefighting and emergency response by Bomba- First aid and CPR courses by Ahli Persekutuan Antarabangsa Persatuan-persatuan Palang Merah dan Bulan Sabit Merah

• During the year, the Company has organized the following programmes for its employees :- Eye care programme inclusive of free eye consultant, free eye test, free spectacles services and obtained a special

discount from the merchandises - Employees were provided special discount rate of up to 60% on the healthcare services by BP Healthcare Group.- Health check on “TIBI” and “Malaria” conducted by “Jabatan Kesihatan Daerah Kerian” for employees in January 2014.

Community• Strengthening our contribution to the community in our township and helping to foster better community care and goodwill

with a target in place to employ 50% of local workforce.

• We have been conducting industrial training programmes to students from various universities and polytechnics for a period of 3 months with objective of equipping the students with the necessary working skills and knowledge.

• In December 2013, in line with the theme of “Save a Life Campaign”, the Company organized a blood donation campaign at its premises for the blood bank of Parit Buntar General Hospital. The objective of this campaign is to impart a sense of responsibility among employees in saving lives and also helping people live longer. The campaign received a very good response from our employees.

Environment• The Group is committed to environmental awareness and preservation throughout our business. Waste and sludge from

production are treated before being discharged.

• Employees are encouraged to reduce the use of paper, recycle any recyclable items and reduce wastages. Efforts have also been made to conserve energy by ensuring that all lights and air-conditioning are operating only when there is a need.

STATEMENT ON CORPORATE SOCIAL RESPONSIBILITY (CSR)


DATO’ PHILIP CHAN HON KEONG

Dato’ Philip Chan Hon Keong, a Malaysian, aged 49, was appointed as an Independent Non-Executive Chairman of Scope on 17 April 2006. He graduated with a Bachelor of Economics and a Bachelor of Laws from The University of Sydney in 1989. Upon admission to the Malaysian Bar in June 1990, he practiced in Messrs Azalina, Chan & Chia and was a partner of the firm until 2000. He then joined Messrs Skrine as a partner in the Corporate Division in January 2001. Currently, he is the co-head of the Banking and Property Unit in Messrs Skrine. In addition to his directorship in Scope, he currently sits on the board of several private limited companies and two public companies, JF Technology Berhad and Eksons Corporation Berhad.

Dato’ Philip Chan Hon Keong is the Chairman of the Nomination Committee and a member of the Audit Committee and Remuneration Committee. He has no any family relationship with any Director or major shareholders of the Company.

LIM CHIOW HOO

Lim Chiow Hoo, a Malaysian, aged 51, was appointed as the Managing Director of Scope on 15 July 2003. He is a businessman by profession and is the founder of the Group. After completing his Higher School Certificate, he started his career as a Treasurer at Hup Hin Chan Rice Mill Sdn. Bhd. from 1984 to 1990. In 1990, he became a sole-proprietor when he set up his business of assembling PCB for office equipments. In 1991, he founded SMSB and his business in the sole proprietorship was subsequently transferred to SMSB. SMSB’s operations expanded to include the assembly of PCB for telecommunication products. Being the founder, he is directly involved in the growth and development of SMSB since its inception in 1991. Under his stewardship, SMSB’s operations have since expanded to include the assembly of PCB for various electronic products with specialisation in audio and telecommunication equipments.

Backed by more than 10 years of experience in the electronics industry, Mr. Lim Chiow Hoo possesses in-depth knowledge on the overall operations of SMSB. His functional roles in the Group include the overall management of sales and marketing of the Group.

He has no any family relationship with any Director or major shareholders of the Company.

LEE MIN HUAT

Lee Min Huat, a Malaysian, aged 57, was appointed as the Executive Director of Scope on 15 July 2003. He graduated with a Diploma in Aircraft Maintenance Engineering from Confederation College, Canada in 1979. Upon graduation, he worked as a Manager at Kalayaan Sdn. Bhd., a property developer, from 1980 to 1984. For the past 20 years, he has been involved in property development and commodity trading. In addition to his directorship in Scope, he currently holds directorships in other private limited companies. He is currently responsible for the formulation of corporate strategies, plans for the Group and oversee the Group finance and operations.

Mr. Lee Min Huat is a member of the Remuneration Committee. He has no any family relationship with any Director or major shareholders of the Company.

CHEW KONG YOON

Chew Kong Yoon, a Malaysian, aged 72, was appointed as the Executive Director of Scope on 20 February 2014. He obtained his Diploma of the Associate of Incorporated Society of Planters in 1966, Diploma in Management (MIM) in 1977 and Bachelor of Business in Accounting (Australia) in 1992.

He started his career as a cadet planter in 1961 with Ko Rubber Plantation in Johor. In 1966, he joined Seafield Amalgamated Rubber Co. as a Senior Assistant Manager and later Sime Darby Berhad as an Estate Manager. He was promoted to Planting Adviser in 1980.

Mr. Chew joined Dynamic Management Sdn Bhd, the plantation subsidiary of IOI Corporation Berhad, in 1983 as an Executive Director acquiring established plantations and developing oil palm plantations from initial purchase of jungle land, establishment of palm oil mills and marketing of produce. He retired from IOI Corporation Berhad in 1997 as a Plantation Director (Sabah Division) and started his own plantation management advisory. He also undertakes project feasibility studies in Malaysia, Indonesia, Papua New Guinea and the Philippines.

He has no any family relationship with any Director or major shareholders of the Company.

DIRECTORS’ PROFILE


LIM EE TATT

Lim Ee Tatt, a Malaysian, aged 44, was appointed as the Non-Independent Non-Executive Director of Scope on2 December 2013. Mr. Lim is a graduate of University of South Australia where he holds a bachelor's degree in Mechanical Engineer majoring in Thermodynamics. He furthered his studies in business and management where he completed a post graduate diploma in Business Administration at the same university. He is also a member of the Australian Institute of Engineers.

Mr. Lim Ee Tatt has worked as an engineer in Australia and Malaysia where he has acquired his expertise in solid materials handling. He has successfully designed and delivered automated systems for bulk transportation, and handling from powdered chemicals to refined sugar for various manufacturers in Malaysia and the Philippines. After a stint of 5 years in his working career as an engineer, Mr. Lim entered the business in oil palm development and investment with Wah Len Enterprise Sdn Bhd in which he is a major shareholder. Under his leadership and management, the Company grew its core plantation business from a modest 500 acres to 4,500 acres over a spread of 15 years. Currently, he holds the position as Managing Director of the Wah Len Enterprise Sdn Bhd, as well as directorships in other private limited companies.

Mr. Lim Ee Tatt is the Managing Director and major shareholder of Wah Len Enterprise Sdn Bhd, which is a major shareholder of the Company. Save for disclosed relationship, he has no any family relationship with any Director or major shareholders of the Company.

TAN POH HENG

Tan Poh Heng, a Malaysian, aged 57 was appointed as the Independent Non-Executive Director of Scope on13 May 2008. After completing his High School Certificate in 1977, he joined Messrs Price Waterhouse & Co. as an Audit Assistant in May 1978 until March 1983 when he completed his professional examination and qualified as an accountant. In the same year he was admitted as a member of the Malaysian Institute of Certified Public Accountants and later a member of the Malaysian Institute of Accountants in year 1987. On April 1983, Mr. Tan Poh Heng joined Messrs Peat, Marwick, Mitchell & Co. as a Qualified Assistant and was subsequently promoted as an Audit Supervisor in January 1985. He left Messrs Peat, Marwick, Mitchell & Co. in August 1985 to join South Island Garment Sdn. Bhd. as a Chief Accountant. Mr. Tan left South Island Garment Sdn. Bhd. in March 2002 when he held the position of Senior General Manager and was subsequently employed by Messrs JB Lau & Associates (now known as Grant Thornton) in June 2002 as the Senior Audit Manager, a position he held until September 2003. He re-joined the workforce in December 2004 as the Chief Financial Officer of GPS Tech Solutions Sdn. Bhd., an associated company of a public listed entity, Magni-Tech Industries Berhad, a position he held until his retirement in August 2012. Currently he is Financial Controller of Panther Precision Tools Sdn Bhd.

Mr. Tan Poh Heng is also the Chairman of the Audit Committee and Remuneration Committee and a member of the Nomination Committee. He has no any family relationship with any Director or major shareholders of the Company.

YONG LOONG CHEN

Yong Loong Chen, a Malaysian, aged 48, was appointed as the Independent Non-Executive Director of Scope on1 December 2008. He is a Chartered Accountant by profession as well as a member of the Malaysian Institute of Certified Public Accountants and also member of the Malaysian Institute of Accountants. He joined Messrs KMPG Peat Marwick as audit senior in year 1990 until 1994. Subsequently, he was attached with Paul Chuah & Co as Audit Manager from year 1994 to 1995. From year 1995 to 2010, he was a dealer representative with Affin Investment Bank Berhad. Currently he is the Chairman and Executive Director of Cittasukha Berhad.

Mr. Yong Loong Chen is a member of the Audit Committee and a member of the Nomination Committee. He has no any family relationship with any Director or major shareholders of the Company.

Notes :

1. All the Directors do not have any conflict of interest with the Company and they also had not been convicted of any offence within the past ten (10) years, other than traffic offences, if any.

2. The Directors’ shareholdings are as disclosed in page 80 of this Annual Report.

DIRECTORS’ PROFILE (cont’d)


The Board of Directors of Scope recognises that exercise of good corporate governance in conducting the business and affairs of the Company with integrity, transparency and professionalism are key components for the Company’s continued progress and success. These will not only safeguard and enhance shareholders’ investment and value but will at the same time ensure that the interests of other stakeholders are protected.

The Board is pleased to report on the application of the principles of the Malaysian Code on Corporate Governance 2012(“MCCG 2012” or “Code”) and extent of compliance with the Recommendations of the MCCG 2012 as required under MCCG 2012 during the financial year ended 30 June 2014.

A. BOARD OF DIRECTORS

1. Board Composition and Balance

Scope is led and managed by the Board who has a wide range of competencies and experiences ranging from the accounting, business, engineering and law. Presently, the Board has seven (7) Directors comprising three (3) Executive Directors, one (1) Non-Independent Non-Executive Director and three (3) Independent Non-Executive Directors. The Chairman of the Board is an Independent Non-Executive Director. The number of Independent Directors is in compliance with the Listing Requirements of Bursa Malaysia Securities Berhad (“Bursa Securities”) for the ACE Market which requires the Board to have at least two (2) Independent Directors or 1/3 of the Board of Directors, whichever is the higher, to be Independent Directors. The Nomination Committee and the Board assesses the independence of the Independent Non-Executive Directors annually, taking into account the individual Director’s ability to exercise independent judgement at all times and to contribute to the effective functioning of the Board. The tenure of all the Independent Non-Executive Directors do not exceed a cumulative term of nine (9) years as recommended by the MCCG 2012. The Nomination Committee and the Board had reviewed and assessed their Independent Non-Executive Directors during the financial year and is satisfied with the level of independence demonstrated by the present Independent Non-Executive Directors. The profiles of the Directors are presented on page 6 and 7 of this Annual Report.

2. Duties and Responsibilities of the Board

The Group acknowledges the pivotal role played by the Board of Directors in the stewardships of its direction and operations. To fulfil this role, the Board is responsible for the following :

• Reviewing and adopting strategic plans for the Group which will enhance the future growth of the Group while addressing sustainability of the Group’s business;

• Overseeing the conduct of the Group’s businesses to evaluate whether the business are being properly managed;• Identifying principal risks of the business and ensuring the implementation of appropriate systems to manage these

risks;• Reviewing the adequacy and integrity of the Group’s internal control systems and management information systems;• To consider and implement plans for effective appointments to senior management positions and Board members

which includes appropriate and adequate training and ensuring orderly succession of senior management.

The role of the Independent Non-Executive Chairman, Managing Director and Executive Director are distinct and separate to ensure that there is a balance of power and authority. The Independent Non-Executive Chairman is responsible for the leadership, effectiveness, conduct and governance of the Board.

The Managing Director and Executive Director have overall responsibility for the day-to-day management of the business and implementation of the Board’s policies and decisions. The Managing Director and Executive Director are responsible to ensure due execution of strategic goals, effective operations within the Group, and to explain, clarify and inform the Board on key matters pertaining to the Group.

All decisions of the Board are made based on decision of the majority and no single Board member can make any decision on behalf of the Board, unless duly authorised by the Board. As such, no single individual or a group of individuals dominates the decision-making process.

The Board has overall responsibility for the proper conduct of the Group’s and the Board Charter adopted by the Board clearly sets out the respective roles and responsibilities of the Board to ensure accountability. The Board Charter will be periodically reviewed and updated to take into consideration the needs of the Group as well as any development in rules and regulations that may have an impact on the discharge of the Board’s duties and responsibilities.

CORPORATE GOVERNANCE STATEMENT


A. BOARD OF DIRECTORS (cont'd)

3. Functions of the Board and Management

The Board is responsible for the overall corporate governance of the Group, including the strategic direction, risk management and establishes the vision and strategic objectives of the Group for development which includes management development, succession planning and policies to ensure all procedures within the Group are to be carried out in a systematic and orderly manner to ease the decision-making process.

The Senior Management carries out the role of managing the business of the Group under the direction and delegations of the Managing Director and Executive Director.

4. Code of Ethics

The Directors observed the code in accordance with the Company Directors’ Code of Ethics established by the Companies Commission of Malaysia.

5. Code of Conduct

In order to enhance the standard of corporate governance and behaviour, the Board adopted the code of conduct during the financial year which set out standards of business and ethical conduct to all Directors and employees in the conduct of their business.

6. Appointments of Directors

The Board has established the Nomination Committee for the purpose of making recommendations on suitable candidates for appointment to the Board and for assessing Directors on an ongoing basis. Candidates recommended must be approved and appointed by the Board. The Nomination Committee is responsible for recommending the right candidates with the required skills, experience and attributes to the Board for appointment.

Further details on the Nomination Committee are set out on page 11 and 12 of this Annual Report.

7. Re-election of Directors

Any Director appointed during the year is required under the Company’s Articles of Association, to retire and is eligible to seek re-election by shareholders at the forthcoming Annual General Meeting (“AGM”). The Articles of Association of the Company also requires that Directors shall retire from office at least once every three years at the forthcoming AGM and shall be eligible for re-election.

Directors over seventy (70) years of age are required to submit themselves for re-appointment annually in accordance with Section 129(6) of the Companies Act, 1965.

The Director who is seeking for re-election or re-appointment at the forthcoming Twelfth AGM is set out in the Notice of the AGM on page 75 in this Annual Report.

8. Board Meetings

Board Meetings are held every quarter and additional meetings are held as and when necessary. Besides Board meetings, the Board also exercises control on matters that require Board’s approval through Directors’ Circular Resolutions. Key matters reserved for Board’s approval include quarterly results, financial statements, major acquisitions and disposals, major capital expenditure, corporate proposal on fund raising and any other significant business direction.

CORPORATE GOVERNANCE STATEMENT (cont’d)



8. Board Meetings (cont'd)

The Board met four (4) times for the financial year ended 30 June 2014. The Board is satisfied with the time commitment given by the Directors of the Company in discharging their duties for financial year ended 30 June 2014 as evidenced by the attendance record of the Directors at the Board meeting. The composition of the Board and the individual Directors’ attendance of meetings during the financial year ended 30 June 2014 were as follows :-

Attendance

Dato’ Philip Chan Hon Keong Independent Non-Executive Chairman 3/4

Mr. Lim Chiow Hoo Managing Director 4/4

Mr. Lee Min Huat Executive Director 4/4

Mr. Chew Kong Yoon(appointed on 20 February 2014)

Executive Director 2/2

Mr. Lim Ee Tatt(appointed on 2 December 2013)

Non-Independent Non-Executive Director 2/2

Mr. Tan Poh Heng Independent Non-Executive Director 4/4

Mr. Yong Loong Chen Independent Non-Executive Director 4/4

The Company Secretary ensures there is a quorum for all meetings and that such meetings are convened in accordance with the Articles of Association of the Company. The minutes prepared by the Company Secretary record the proceedings of all meetings including pertinent issues, the substance of inquiries and responses, members’ suggestions and the decisions made. This reflects the fulfilment of the Board’s fiduciary duties and the significant oversight role performed by the respective Board Committees.

9. Internal Corporate Disclosure Policies and Procedures

Along with good corporate governance practices, the Company is committed to providing the investors and public with comprehensive, accurate and material information on a timely basis.

In line with this commitment and in order to enhance transparency and accountability, the Board has adopted an Internal Corporate Disclosure Policies and Procedures to facilitate the handling and disclosure of material information in a timely and accurate manner.

10. Sustainability

The Group identified the environment conservation and social contribution as key elements in formulation of its objectives and strategies. The Group recognise the need to safeguarding and developing the workforce, strengthening stakeholders’ relationship and protecting the interest of shareholders. A corporate social responsibility statement is also set out in the relevant section of this Annual Report.

11. Board Gender, Ethnicity and Age Diversity Policy

Under Rule 15.08A of ACE Market Listing Requirement, the Company in the disclosure of its policy on board composition in the annual report, to include not only the policy on gender diversity, but also diversity in ethnicity and age. Currently, the Company does not have the said policy and the Board will work out the gender, ethnicity and age policy to be adopted by the Company.

12. Supply and Access to Information

The Board members have full and unrestricted access to information on the Group’s business and affairs in discharging their duties. Prior to the meetings, all Directors are provided with sufficient and timely reports and supporting documents which are circulated in advance of each meeting to ensure sufficient time is given to understand the key issues and contents.

In order to assist them in their decision making, the Board is supported by suitably qualified and competent company secretaries and has full access to the advice and service of the Company Secretaries, who is responsible to ensure that the Board meeting procedures are followed and the applicable statutory and regulatory requirements are complied with. Where necessary, the Directors may obtain independent professional advice at the Company’s expense on specific issues to enable the Board to discharge their duties on the matters being deliberated.




13. Directors’ Training

All the Directors of Scope have attended and successfully completed the Mandatory Accreditation Programme as required by the Bursa Securities. In addition, the Directors are encouraged to attend other relevant training programmes, courses and seminars relevant in enhancing the Directors in discharging their duties.

During the year, the Directors have also attended and participated at other seminars and conferences for the continuing enhancement of their knowledge and to keep abreast of developments in the market place. Among the training programmes attended by the Directors are as listed :

No. Name of Director Seminar/Training Course Attended No of days

1. Dato’ Philip Chan Hon Keong • APLMA – Malaysia Loan Documentation Training (12 November 2013)

• Proposed Changes in Companies Act 1965 (27 February 2014)

1 day

1 day

2. Mr. Lim Chiow Hoo • Malaysian Budget 2014 (6 November 2013) Half day

3. Mr. Lee Min Huat • GST Awareness Seminar (12 December 2013) Half day

4. Mr. Chew Kong Yoon • Mandatory Accreditation Programme for Directors of Public Listed Companies (4 & 5 September 2013).

2 days

5. Mr. Lim Ee Tatt • GST Awareness Seminar (12 December 2013) Half day

6. Mr. Tan Poh Heng • Malaysian Budget 2014 (6 November 2013)

• GST Seminar (5 March 2014)

• Unclaimed Money Act 1965 (27 March 2014)

• Forex & Economics Outlook (23 May 2014)

Half day

1 day

1 day

1 day

7. Mr. Yong Loong Chen • An Update On TPPA (5 September 2013)

• Road Construction and Maintenance in Malaysia (10 April 2014)

• Nominating Committee Programme (16 June 2014)

• Prospects for Private Healthcare in Malaysia (19 June 2014)

Half day

Half day

1 day

Half day

B. COMMITTEES OF THE BOARD

To assist the Board in the discharge of their duties effectively, the Board has delegated specific functions to certain committees, namely Nomination Committee, Remuneration Committee and Audit Committee. Each committee will operate within its clearly defined terms of reference. The Chairman of the various committees will report to the Board on the outcome of the committee meetings.

1. Audit Committee

The terms of reference of the Company’s Audit Committee and its activities during the financial year are set out under the Audit Committee Report on pages 17 to 19 of this Annual Report.

2. Nomination Comittee

The Nomination Committee which was formed on 19 November 2003 comprises of the following members and the individual Directors’ attendance of meetings during the financial year ended 30 June 2014 were as follows :-

Attendance

Dato’ Philip Chan Hon Keong (Chairman) Independent Non-Executive Chairman 2/2

Mr. Tan Poh Heng Independent Non-Executive Director 2/2

Mr. Yong Loong Chen Independent Non-Executive Director 2/2



B. COMMITTEES OF THE BOARD (cont'd)

2. Nomination Comittee (cont'd)

The duties and responsibilities of the Nomination Committee are guided by its terms of reference. The main responsibilities of the Nomination Committee included the following :-

• Nominate the right candidates with the required skills, knowledge and experience for recommendation to and appointment by the Board.

• Regularly review the structure, size and composition (including the skills, knowledge and experience) required of the Board compared to its current position and make recommendations to the Board with regard to any changes.

• Review and recommend the membership of the Audit and Remuneration Committees, in consultation with the chairmen of those committees.

• Assess the effectiveness of the Board and the contribution of individual directors and his independence where applicable.

• To develop, maintain and review the criteria to be used in the recruitment process and annual assessment of directors.

The Nomination Committee has developed criteria to assess the effectiveness of the Board, the Board committees and individual Director. The evaluation on the Board’s effectiveness is divided into four sections on the following key areas :-

• Adding value• Conformance• Stakeholder Relationship• Performance management

The process also assess the competencies of each Director in the areas of integrity and ethics, governance, strategic perspective, business acumen, judgement and decision making, teamwork, communication and leadership.

The Nomination Committee also undertakes annual assessment of the independence of its independent directors based on required mix skills, criteria of independence as per requirements of ACE Market Listing Requirements, meeting attendance, ability to ensure effective checks and balances on the Board’s decision making process, constructively challenge business propositions and contributes to the development of business strategy and direction of the Company, ensures that adequate systems and controls to safeguard the interests of the Company are in place and continuous updating of knowledge and enhancing of skills through attendance of business related trainings.

When considering new appointment, the Nomination Committee shall evaluate the balance of skills, knowledge and experience on the board, and, in the light of this evaluation prepare a description of the role and capabilities required for a particular appointment. In identifying suitable candidates the Committee shall consider candidates from a wide range of backgrounds and consider candidates on merit and against objective criteria, taking care that appointees have enough time available to devote to the position.

The Nomination Committee and the Board does not set any target on gender diversity. Currently, the Company will provide equal opportunity to candidates with merit.

The Nomination Committee meets at least once a year and as and when necessary. The Nomination Committee had met twice during the financial year and to activities of the Nomination Committee is summarised as follows :-

(a) Reviewed and assessed the effectiveness of the Board, the committees of the Board and the contribution of each individual director, including Independent Non-Executive Directors.

(b) Reviewed and recommended to the Board on the nomination of Mr Lim Ee Tatt as Non-Independent Non-Executive Director and Mr Chew Kong Yoon as Executive Director.

(c) Reviewed and recommended the re-election of Directors who were retiring and seeking for re-election at Eleventh Annual General Meeting.

(d) Reviewed and assessed the Independent Non-Executive Directors.



B. COMMITTEES OF THE BOARD (cont'd)

3. Remuneration Committee

The Remuneration Committee which was formed on 19 November 2003 comprises of the following members and the individual Directors’ attendance of meetings during the financial year ended 30 June 2014 were as follows :-

Attendance

Mr. Tan Poh Heng (Chairman) Independent Non-Executive Director 1/1

Dato’ Philip Chan Hon Keong Independent Non-Executive Chairman 1/1

Mr. Lee Min Huat Executive Director 1/1

The Remuneration Committee is governed by its terms of reference and its primary function is to be responsible for recommending to the Board from time to time, the remuneration framework and package of the Executive Directors in all forms to commensurate with the respective contributions of the Executive Directors. The Executive Directors are to abstain from deliberations and voting on the decision in respect of their own remuneration packages. The Board as a whole decides on the remuneration of the Non-Executive Directors, including the Non-Executive Chairman. The individual concerned should abstain from deliberations of their own remuneration packages. Directors’ fees are subject to shareholders’ approval at the forthcoming AGM.

3.1 Remuneration

The Directors are satisfied with the current levels of remuneration, which are in line with the responsibilities expected by the Company. In general, the remuneration is structured so as to link reward to corporate and individual performance, as in the case of the Executive Directors and senior management. As for the Non-Executive Directors, the level of remuneration reflects the experience, expertise and level of responsibilities undertaken by the particular Non-Executive Directors concerned.

The details of the nature and amount of remuneration paid or payable to the Directors of the Company for the financial year ended 30 June 2014 are as follows :

Executive Non-Executive Total

RM

Salaries & bonuses 475,580 - 475,580

Fees 38,000 48,000 86,000

EPF 51,174 - 51,174

Allowance 5,000 6,500 11,500

569,754 54,500 624,254

The number of Directors whose remuneration falls into the following bands for the financial year ended 30 June 2014 are as follows :

Number of DirectorsRange of Remuneration Executive Non-Executive

Below RM50,000 1 4

RM50,001 to RM100,000 - -

RM100,001 to RM150,000 - -

RM150,001 to RM200,000 - -

RM200,001 to RM250,000 - -

RM250,001 to RM300,000 2 -



C. SHAREHOLDERS

The Board recognises the value of investor relations and endeavours to maintain constant and effective communication with shareholders through timely and comprehensive announcements.

The AGM is the principal forum dialogue with all shareholders. The participation of shareholders and investors, both individual and institutional, at general meetings is encouraged whilst requests for briefings from the press and investment analysts are usually met as a matter of course.

The Chairman of the general meeting would inform the shareholders on their right to demand for a poll vote at the commencement of the general meeting and would conduct poll voting if demanded by shareholders.

Notice of Annual General Meeting and the annual report are sent to shareholders at least 21 days before the date of the meeting.

Information of the Group is also accessible through the Company’s website (http://www.scope.com.my) which is updated on a regular basis. Information available in the website includes among others the Group Annual Report, quarterly financial announcements, major and significant announcements, press release and latest corporate developments of the Group.

D. ACCOUNTABILITY AND AUDIT

1. Financial Reporting

The Board has a responsibility to present a true and fair assessment of the Group’s position and prospects primarily through the quarterly reports to the Bursa Securities and the Annual Report to shareholders. The Audit Committee assists the Board in scrutinising information for disclosure to ensure accuracy and adequacy.

2. Statement of Directors’ Responsibility for Annual Audited Financial Statements

The Directors are responsible for the preparation of financial statements each financial year in accordance with the requirements of the Companies Act, 1965 and Financial Reporting Standards in Malaysia. Central to those requirements is the need to ensure that these financial statements present a true and fair view of the state of affairs of the Group and the Company, the results, cash flows and statement of changes in equity. In the preparation of these financial statements for the year under review, appropriate accounting policies have been selected and they have been applied in a consistent manner.

The Directors have the general responsibility of taking such steps as are reasonably open to them to safeguard the assets of the Group and to prevent and detect fraud and other irregularities.

3. Internal Control

The Group’s Statement on Risk Management And Internal Control is laid out on page16 of this Annual Report.

4. Relationship with the Auditors

The role of the Audit Committee in relation to the External Auditors may be found in the Report of the Audit Committee set out in pages 17 to 19. The Group has always maintained a close and transparent relationship with its auditors in seeking professional advice and ensuring compliance with the appropriate accounting standards.

5. Statement on the Compliance with the best practices of the Code The Board is satisfied that in financial year 2014, save for the above relevant explanations, the Group is in substantial compliance with the principles and recommendations of the Code.



E. OTHER INFORMATION

1. Share Buybacks

During the financial year, the Company did not enter into any share buyback transactions.

2. Options, Warrants or Convertible Securities

During the financial year ended 30 June 2014, there were 5,000,000 new ordinary shares of RM0.10 each issued pursuant to the exercise of warrants.

Save as disclosed above, there were no issuance of convertible securities during the financial year.

3. Depository Receipt (DR)

During the financial year, the Company did not sponsor any DR programme.

4. Imposition of Sanctions and/or Penalties

There was no public imposition of sanctions and/or penalties imposed on the Company and its subsidiaries, directors or management by the regulatory bodies during the financial year.

5. Profit Guarantee

The Company did not receive any profit guarantee from any parties during the financial year.

6. Material Contracts

There were no material contracts entered into by the Company and its subsidiaries involving Directors’ and major shareholders’ interests either still subsisting as at 30 June 2014 or entered into since the end of the previous financial year.

7. Recurrent Related Party Transactions of a Revenue or Trading Nature

There was no recurrent related party transaction of a revenue or trading nature during the financial year ended 30 June 2014.

8. Variation in Results

There were no material variations between the audited results for the financial year ended 30 June 2014 and the unaudited results released for the financial quarter ended 30 June 2014.

9. Utilisation of Proceeds

During the financial year ended 30 June 2014, there were no proceed raised by the Company from any corporate exercise.

10. Non-Audit Fees

During the financial year, there was no non-audit fees paid to the external auditors of the Group or a company affiliated to the auditors’ firm.



The Board is committed to nurture and preserve throughout the Group a sound system of risk management and internal controls in accordance with the Statement on Risk Management and Internal Control: Guidance for Directors of Listed Issuers issued by the Institute of Internal Auditors Malaysia and as adopted by Bursa Malaysia Securities Berhad.

Board Responsibility

The Board has overall responsibility for internal control and risk management, and for reviewing the adequacy and integrity of those systems. The Board fully understands its responsibility to maintain a sound system of internal control to safeguard the interest of shareholders. The systems in place are designed to manage rather than eliminate the risk of failure to achieve business objectives, and can only provide reasonable but not absolute assurance against material misstatement or loss.

Risk Management

The Board recognises the importance of establishing a structured risk management framework to sustain and enhance good corporate governance practices. The Board has a structured Risk Management framework that undertakes the Group’s desires to identify, evaluate and manage significant business risks. The framework includes examining of business risks, assessing impact and likelihood of risks and taking management action plans to mitigate and minimise risks exposure.

Key Elements of the Group’s Risk Management and Internal Control System

The Board maintains an organisational structure with clearly defined levels of responsibility and authority and appropriate reporting procedures. The following outlines the main elements of the Group’s control system :-

(a) Supplying comprehensive financial and management reports to the Audit Committee and the Board on a quarterly basis for review.

(b) Stringent recruitment policy is set to ensure only capable and competent staff are employed which in turn ensure each operating unit is functioning effectively.

(c) The Group’s performance is monitored through management and operational meeting attended by senior management. The Managing Director and Executive Directors are involved in the day to day operations of the Group.

Internal Audit Function

During the financial year, the Group has appointed an independent internal audit service provider to carry out internal audit reviews on assessing the adequacy and integrity of the internal control systems of the business units within the Group. The internal audit team highlights to the executive and operational management on areas for improvement and subsequently reviews the extent to which its recommendations have been implemented. The reports are submitted to the Audit Committee, who reviews the findings with management at its quarterly meetings. In addition, the management’s response to the control recommendations on deficiencies found during the internal audits in order to provide an added assurances that control procedures are in place, and being followed.

The cost incurred for the internal audit function in respect of the financial year ended 30 June 2014 was RM10,000.

Conclusion

The Board has received assurance from the Managing Director and the Financial Controller 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.

Overall, the Board and Management are satisfied that the process of identifying, evaluating and managing significant risks that may affect achievement of the Group’s business objectives are in place. There are continuing efforts to strengthen the internal control environment taking into consideration the recommendations from the internal auditors.

STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL


MEMBERS POSITION

Mr. Tan Poh Heng Chairman (Independent Non-Executive Director)

Dato’ Philip Chan Hon Keong Member (Independent Non-Executive Chairman)

Mr. Yong Loong Chen Member (Independent Non-Executive Director)

The Terms of Reference of the Committee are as follows : -

1. MEMBERSHIP

The Board should establish an audit committee of at least three directors, a majority of whom must be independent Non-Executive Directors with written terms of reference which deal clearly with its authority and duties. All members of the Committee should be Non-Executive Directors of the Company and all members of the Committee should be financially literate. At least one member of the Committee :-

• must be member of the Malaysian Institute of Accountants; or

• if he is not a member of the Malaysian Institute of Accountants, he must have at least 3 years of working experience and- he must have passed the examinations specified in Part I of the 1st Schedule of the Accountants Act, 1967; or- he must be a member of one of the associations of accountants specified in Part II of the 1st Schedules of the

Accountants Act, 1967; or- fulfills such other requirements as prescribed or approved by the Exchange.

The members of the Committee shall elect the Chairman from among their number who shall be an Independent Non-executive Director. The alternate director shall not be a member of the Audit Committee.

If a Member of the Committee for any reason ceases to be a Member of the Committee with the result that the number of Member is reduced below (3), the Board shall within three (3) months of that event, appoint such number of new Member as may be required to make up the minimum number of three (3) Members.

2. ATTENDANCE AT MEETINGS

The Financial Controller, representatives of the internal auditor and external auditors will be invited to some of the Audit Committee Meetings. Other board members and employees may attend any particular Audit Committee meeting only at the Audit committee’s invitation, specific to the relevant meeting. At least twice a year, the Committee shall meet with external auditors without the presence of the Executive Directors. The Company Secretary shall be the secretary of the Committee.

3. FREQUENCY AT MEETINGS

Meetings will be held not less than four times a year. Additional meetings may be held at the discretion of the Committee or at the request of external auditors. The external auditors may request a meeting if they consider that one is necessary. The quorum for any meeting shall be two and the majority members of the Committee present must be Independent Non-Executive Directors.

The Chairman of the Audit Committee should engage on a continuous basis with senior management, such as the Chairman, the Managing Director, the Financial Controller, the head of the internal audit and the external auditors in order to be kept informed of matters affecting the Company.

4. RETIREMENT AND RESIGNATION

In the event of any vacancy in an audit committee resulting in the non-compliance of sub-Rule 15.09(1) of the ACE Market Listing Requirements of Bursa Malaysia Securities Berhad, a listed company must fill the vacancy within 3 months.

AUDIT COMMITTEE’S REPORT


5. AUTHORITY

The Committee is authorised by the Board to investigate any activity within its terms of reference, the resources it needs to do so and full access to information pertaining to the Company. The Committee should have direct communication channels with the external auditors and person(s) carrying out the internal audit function or activity and be able to obtain external professional advice and to invite outsiders with relevant experience to attend, if necessary. The Committee should be able to convene meetings with the external auditors, the internal auditors or both, excluding the attendance of other directors and employees of the listed company, whenever deemed necessary. It is authorised to seek any information it requires from any employee and all employees are directed to co-operate with any request made by the Committee.

6. DUTIES AND RESPONSIBILITIES

The duties and responsibilities of the Committee shall include :-

(a) to consider the appointment/nomination/suitability of the external auditors, their audit fees and any question of their resignation or dismissal and to recommend to the Board.

(b) to discuss with the external auditors before the audit commences, the nature and scope of their audit, their evaluation of the system of internal accounting controls and to ensure co-ordination where more than one audit firm is involved.

(c) to discuss problems and reservations arising from the interim and final audits, and any matters the external auditors may wish to discuss (in the absence of management where necessary).

(d) to keep under review the effectiveness of internal control system and, in particular, review external auditors’ management letter and management’s response.

(e) to do the following, in relation to the internal audit function

• review the adequacy of the scope, functions, competency and resources of the internal audit functions, and to ensure that it has the necessary authority to carry out its work;

• review the internal audit programme, processes, the results of the internal audit programme, processes or investigation undertaken and, where necessary, ensure that appropriate actions are taken on the recommendations of the internal audit function;

• review any appraisal or assessment of the performance of members of the internal audit function;• approve any appointment or termination of senior members of the internal audit function; and• take cognizance of resignations of internal audit staff members and provide the resigning staff member an

opportunity to submit his reasons for resigning.

(f ) to review the quarterly results and year-end financial statements of the Company and the Group, prior to the approval by the Board, whilst ensuring that they are prepared in a timely and accurate manner, focusing particularly on :-

• public announcements of results and dividend payment;• any changes in or implementation of major accounting policies and practices;• major judgmental areas;• significant adjustments resulting from the audit;• the going-concern assumption;• compliance with accounting standards; • compliance with Bursa Securities and legal requirements; and• significant and unusual events.

(g) to consider/review any related party transactions and conflict of interest situation that may arise within the Company or Group, including any transaction, procedure or course of conduct that raises questions of management integrity.

(h) to consider the major findings of internal investigations and management’s response and ensure co-ordination between the internal and external auditors.

(i) to review and verify the allocation of share options granted to employees pursuant to the Employees share option scheme, transactions, procedure or course of conduct that raises questions of management integrity.

(j) to review with the external auditor, his audit report.

(k) to review with the external auditor the assistance given by the employees of the Company.

(l) to review with the Board of Directors of the Company whether there is reason (supported by grounds) to believe that the Company’s external auditors is not suitable for re-appointment.

AUDIT COMMITTEE’S REPORT (cont’d)


6. DUTIES AND RESPONSIBILITIES (cont'd)

(m) to consider/carry out such other functions and consider other topics, as may be agreed upon by the Board.

7. REPORTING PROCEDURES

The Company Secretary shall circulate the minutes of meetings of the Committee to all members of the Board.

ATTENDANCE AT MEETINGS

A total of four (4) Audit Committee meetings were held during the financial year ended 30 June 2014. The details of attendance of the Committee members are as follows :

Name of Committee Member Attendance

Mr. Tan Poh Heng (Chairman) 4/4

Dato’ Philip Chan Hon Keong 3/4

Mr. Yong Loong Chen 4/4

ACTIVITIES OF THE COMMITTEE

During the financial year in discharging its functions and duties, the Committee has considered, reviewed, discussed and approved the following :

a. The audited financial statements for the financial year ended 30 June 2013 and made recommendations to the Board for approval;

b. The financial results for the quarters ended 30 June 2013, 30 September 2013, 31 December 2013 and 31 March 2014;

c. Audit reports prepared by the Internal Auditors, considered their material findings and assess the Management’s responses and actions thereto;

d. The nature and scope of audit plan for the financial year ended 30 June 2014 before the commencement of audit together with the External Auditors;

e. Recommendation on the re-appointment of External Auditors and their fees;

f. Dialogue session with External Auditors, without the presence of Executive Directors and Management; and

g. The audit exit memorandum prepared by External Auditors.

INTERNAL AUDIT FUNCTION

The Group has engaged an external independent professional services firm to carry out its internal audit functions. The internal auditors report directly to the Audit Committee and assist the Board in monitoring and reviewing the effectiveness of the risk management, internal control and governance process within the Group.

The Audit Committee approved the internal audit plan presented by the external consultant. The internal audit plan is derived based on the risk-based assessment of all units and operations of the Group. The internal audit reports highlight any deficiencies or findings which were discussed with the management and relevant action plans agreed to be implemented. Significant findings are presented in Audit Committee Meetings for consideration and reported to the Board and audit review is also conducted to determine whether the recommendations made by internal auditor are implemented.

Further details on the internal audit function and its activities are set out in the Statement on Risk Management and Internal Control on page 16 of this Annual Report.

The Board is of the view that there is no significant breakdown or weakness in the systems of internal controls of the Group that may result in material losses incurred by the Group for the financial year ended 30 June 2014.

AUDIT COMMITTEE’S REPORT (cont’d)


The directors hereby submit their report together with the audited financial statements of the Group and of the Company for the financial year ended 30 June 2014.

PRINCIPAL ACTIVITIES

The principal activity of the Company is investment holding. The principal activities of the subsidiaries are disclosed in Note 6 to the financial statements.

There have been no significant changes in the nature of these activities during the financial year.

RESULTS

GROUP COMPANYRM RM

(Loss)/Profit after taxation for the year (2,865,872) 924,818

Attributable to:

Equity holders of the Company (2,536,941) 924,818Non-controlling interests (328,931) -

(2,865,872) 924,818

In the opinion of the directors, the results of the operations of the Group and of the Company for the financial year ended30 June 2014 have not been substantially affected by any item, transaction or event of a material and unusual nature nor has any such item, transaction or event occurred in the interval between the end of that financial year and the date of this report.

DIVIDENDS

No dividend have been declared or paid by the Company since the end of the previous financial year.

The directors do not recommend any dividend payment for the financial year.

RESERVES AND PROVISIONS

All material transfers to or from reserves or provisions during the financial year are disclosed in the notes to the financial statements.

SHARE CAPITAL AND DEBENTURE

Share Capital

During the financial year, the Company increased its issued and paid-up share capital from RM50,048,443 to RM50,548,443 by the issuance of 5,000,000 new ordinary shares of RM0.10 each pursuant to the exercise of 5,000,000 units of warrants of RM0.15 each.

The new ordinary shares issued ranked pari passu with the existing shares in all respects.

Warrants

The movement of the warrants during the financial year is as follows :

Number of unitsAt 1.7.13 (Exercised) At 30.6.14

Warrants 2012/2020 118,596,361 (5,000,000) 113,596,361

The salient features of the warrants are disclosed in Note 15.2 to the financial statements.

Other than the foregoing, the Company did not issue any other share or debenture and did not grant any option to anyone to take up unissued shares of the Company during the financial year.

DIRECTORS’ REPORTFOR THE FINANCIAL YEAR ENDED 30 JUNE 2014


DIRECTORS

The directors who served since the date of the last report are as follows :

Dato’ Philip Chan Hon Keong Lim Chiow Hoo Lee Min Huat Tan Poh Heng Yong Loong Chen Lim Ee Tatt (appointed on 2.12.13) Chew Kong Yoon (appointed on 20.2.14)

DIRECTORS’ INTERESTS IN SHARES

According to the register of directors’ shareholdings, the interests of directors in office at the end of the financial year in shares and warrants of the Company and its related corporations during the financial year are as follows :

Number of ordinary shares of RM0.10 eachBalance at 1.7.13 Bought Sold Balance at 30.6.14

The Company

Direct Interest :Dato’ Philip Chan Hon Keong 775,000 - (200,000) 575,000

Lim Chiow Hoo 53,449,330 8,000,000 - 61,449,330

Lee Min Huat 57,701,860 550,000 - 58,251,860

Chew Kong Yoon 60,854,896* - - 60,854,896

Tan Poh Heng 250,000 - - 250,000

Lim Ee Tatt 13,000* - - 13,000

Deemed InterestLim Ee Tatt 81,200,000* 6,700,000 - 87,900,000

Number of warrantsBalance at 1.7.13 Bought Exercised Balance at 30.6.14

Direct Interest :Dato’ Philip Chan Hon Keong 25,000 - - 25,000

Lim Chiow Hoo 10,649,866 - - 10,649,866

Lee Min Huat 11,540,372 - - 11,540,372

Chew Kong Yoon 2,560,000* - - 2,560,000

Tan Poh Heng 100,000 - - 100,000

Lim Ee Tatt 700,000* - - 700,000

Deemed InterestLim Ee Tatt 10,000,000* - (5,000,000) 5,000,000

Other than as disclosed above, none of the other directors in office at the end of the financial year had any interest in ordinary shares and warrants of the Company and of its related corporations during the financial year.

* Balance at date of appointment.

DIRECTORS’ REPORT (cont’d)FOR THE FINANCIAL YEAR ENDED 30 JUNE 2014


DIRECTORS’ BENEFITS

Since the end of the previous financial year, no director of the Company has received or become entitled to receive any benefit (other than a benefit included in the aggregate amount of emoluments received or due and receivable by the directors as shown in the financial statements) by reason of a contract made by the Company or a related corporation with a director or with a firm of which the director is a member or with a company in which the director has a substantial financial interest, other than those related party transactions disclosed in the notes to the financial statements.

During and at the end of the financial year, no arrangements subsisted to which the Company is a party, with the objects of enabling directors of the Company to acquire benefits by means of the acquisition of shares in or debentures of the Company or any other body corporate.

OTHER STATUTORY INFORMATION

Before the financial statements 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 allowance for doubtful debts and satisfied themselves that all known bad debts had been written off and that adequate allowance 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 to realise.

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

(i) that would render the amount written off for bad debts or the amount of the allowance for doubtful debts in the Group and in the Company inadequate to any substantial extent, and

(ii) that would render the value attributed to the current assets in the financial statements of the Group and of the Company misleading, and

(iii) that would render any amount stated in the financial statements of the Group and of the Company misleading, and

(iv) which have arisen which render adherence to the existing methods of valuation of assets or liabilities of the Group and of the Company misleading or inappropriate.

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

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

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

No contingent liability or other liability of the Group and of the Company has become enforceable, or is likely to become enforceable, within the period of twelve months after the end of the financial year which, in the opinion of the directors, will or may substantially affect the ability of the Group and of the Company to meet their obligations as and when they fall due.

SUBSEQUENT EVENT

Details of event after reporting period are disclosed in Note 33 to the financial statements.

AUDITORS

The auditors, Grant Thornton, have expressed their willingness to continue in office.

Signed in accordance with a resolution of the Board of Directors :

___________________________ ___________________________Lim Chiow Hoo Lee Min HuatManaging Director Executive Director

Penang,

Date : 18 September 2014

DIRECTORS’ REPORT (cont’d)FOR THE FINANCIAL YEAR ENDED 30 JUNE 2014


In the opinion of the Directors, the financial statements set out on pages 26 to 73 are properly 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 2014 and of their financial performance and cash flows for the financial year then ended.

In the opinion of the Directors, the information set out on page 74 to the financial statements has been complied in accordance with the Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosures Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, issued by the Malaysian Institute of Accountants, and presented based on the format prescribed by Bursa Malaysia Securities Berhad.

Signed in accordance with a resolution of the Board of Directors :

___________________________ ___________________________Lim Chiow Hoo Lee Min Huat


I, Low Soo Kim, the officer primarily responsible for the financial management of Scope Industries Berhad do solemnly and sincerely declare that the financial statements set out on pages 26 to 73 and the supplementary information set out on page 74 are to the best of my knowledge and belief, correct and I make this solemn declaration conscientiously believing the same to be true and by virtue of the provisions of the Statutory Declarations Act, 1960.

Subscribed and solemnly declared by )the abovenamed at Penang, this 18th )day of September 2014. ) ___________________________ Low Soo Kim

Before me,

___________________________Goh Suan BeeNo. P125Commissioner for Oaths

DIRECTORS’ STATEMENT

STATUTORY DECLARATION


Report on the Financial Statements

We have audited the financial statements of Scope Industries Berhad, which comprise the statements of financial position as at 30 June 2014 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 financial year then ended, and a summary of significant accounting policies and other explanatory notes, as set out on pages 26 to 73.

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 or error.

Auditors’ Responsibility

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

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on our judgement, including the assessment of risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity’s preparation of the 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 2014 and of their financial performance and cash flows for the financial 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 accounts of the subsidiaries that have been consolidated with the Company’s financial statements are in form and content appropriate and proper for the purposes of the preparation of the financial statements of the Group and we have received satisfactory information and explanations required by us for those purposes, and

(c) The auditors’ reports on the accounts of the subsidiaries did not contain any qualification or any adverse comment made under Section 174(3) of the Act.

INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OFSCOPE INDUSTRIES BERHAD


Other Reporting Responsibilities

The supplementary information set out on page 74 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.

Other Matters

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

Grant Thornton Yap Soon HinNo. AF : 0042 No. 947/03/15 (J)Chartered Accountants Chartered Accountant

Penang


INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OFSCOPE INDUSTRIES BERHAD (cont’d)


GROUP COMPANY2014 2013 2014 2013

NOTE RM RM RM RM

ASSETSNon-current assetsProperty, plant and equipment 4 86,013,258 89,188,362 29,600 31,571 Biological assets 5 9,401,471 8,161,910 - - Investment in subsidiaries 6 - - 65,790,182 65,790,182 Other investments 7 626,014 536,883 626,014 536,883 Goodwill 8 34,965,796 34,965,796 - -

131,006,539 132,852,951 66,445,796 66,358,636

Current assetsInventories 9 1,332,627 1,993,008 - - Trade receivables 10 1,784,722 2,373,132 - - Other receivables, deposits and prepayments 11 429,138 433,852 63,812 29,312 Amount due from subsidiaries 12 - - 26,947,017 24,426,899 Tax recoverable 98,060 55,073 13,865 2,762 Cash and cash equivalents 13 4,586,445 4,781,844 4,006,910 3,775,296

8,230,992 9,636,909 31,031,604 28,234,269

TOTAL ASSETS 139,237,531 142,489,860 97,477,400 94,592,905

EQUITY AND LIABILITIESEquity attributable to equity holders of the

CompanyShare capital 14 50,548,443 50,048,443 50,548,443 50,048,443 Reserves 15 60,653,447 60,095,152 32,651,066 32,092,771 (Accumulated losses)/Retained profits 16 (8,035,332) (5,498,391) 2,545,783 1,620,965

103,166,558 104,645,204 85,745,292 83,762,179 Non-controlling interests 6,451,358 6,780,289 - - Total equity 109,617,916 111,425,493 85,745,292 83,762,179

Non-current liabilitiesFinance lease liabilities 17 460,900 726,778 - - Deferred tax liabilities 18 15,203,082 15,434,063 - - Other payable 19 8,143,505 10,612,862 8,143,505 10,612,862

23,807,487 26,773,703 8,143,505 10,612,862

Current liabilitiesTrade payables 20 1,164,842 2,716,782 - - Other payables and accruals 19 3,630,313 712,914 3,088,603 217,864 Amount due to a subsidiary 12 - - 500,000 - Finance lease liabilities 17 773,829 751,688 - - Provision for taxation 243,144 109,280 - -

5,812,128 4,290,664 3,588,603 217,864 Total liabilities 29,619,615 31,064,367 11,732,108 10,830,726

TOTAL EQUITY AND LIABILITIES 139,237,531 142,489,860 97,477,400 94,592,905

STATEMENTS OF FINANCIAL POSITIONAS AT 30 JUNE 2014

The notes set out on pages 32 to 73 form an integral part of these financial statements.


GROUP COMPANY2014 2013 2014 2013

NOTE RM RM RM RM

Revenue 21 22,602,706 25,234,452 2,100,540 3,089,258

Cost of sales (21,478,779) (24,412,089) - -

Gross profit 1,123,927 822,363 2,100,540 3,089,258

Other income 90,109 112,681 17,474 - Administrative expenses (3,306,257) (4,627,867) (413,916) (2,623,720)

Operating (loss)/profit (2,092,221) (3,692,823) 1,704,098 465,538

Finance costs (610,134) (94,243) (530,643) -

(Loss)/Profit before taxation 22 (2,702,355) (3,787,066) 1,173,455 465,538

Taxation 23 (163,517) (250,956) (248,637) (420,767)

(Loss)/Profit for the year (2,865,872) (4,038,022) 924,818 44,771

Other comprehensive income, net of tax :Items that will be reclassified subsequently

to profit or loss : Available-for-sale financial assets

- Gain on fair value changes 246,131 103,679 246,131 103,679 - Transfer to profit or loss upon disposal 62,164 400,806 62,164 400,806

Other comprehensive income for the year 308,295 504,485 308,295 504,485

Total comprehensive (loss)/income forthe year (2,557,577) (3,533,537) 1,233,113 549,256

Net (loss)/profit attributable to :Equity holders of the Company (2,536,941) (2,561,158) 924,818 44,771 Non-controlling interests (328,931) (1,476,864) - -

(2,865,872) (4,038,022) 924,818 44,771

Total comprehensive (loss)/income attributable to :

Equity holders of the Company (2,228,646) (2,056,673) 1,233,113 549,256 Non-controlling interests (328,931) (1,476,864) - -

(2,557,577) (3,533,537) 1,233,113 549,256

Loss per share attributable to equity holders of the Company (sen)- Basic 24 (0.51) (0.67)- Diluted 24 (0.45) (0.57)


STATEMENTS OF COMPREHENSIVE INCOMEFOR THE FINANCIAL YEAR ENDED 30 JUNE 2014


CONSOLIDATED STATEMENT OF CHANGES IN EQUITYFOR THE FINANCIAL YEAR ENDED 30 JUNE 2014

Att

ribu

tabl

e to

Equ

ity

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ders

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NO

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RMRM

RMRM

RMRM

RMRM

RM

2014

Bala

nce

at b

egin

ning

50,0

48,4

43

32,0

99,8

56

4,2

34,8

78

(4,2

34,8

78)

(7,0

85)

28,

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381

(5,4

98,3

91)

104

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6

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1

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32

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4

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381

(8,0

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103

,166

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6

,451

,358

1

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17,9

16

2013

Bala

nce

at b

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29,

498,

182

10,

214,

464

- -

(511

,570

) -

(2,9

37,2

33)

36,

263,

843

- 3

6,26

3,84

3

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20,

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21,

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392

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- 2

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70,

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- 7

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8,03

4

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- -

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20,

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21,

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4,2

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(4,2

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- 2

8,00

2,38

1 -

70,

438,

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8,2

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78,

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187

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The

note

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on

page

s 32

to 7

3 fo

rm a

n in

tegr

al p

art o

f the

se fi

nanc

ial s

tate

men

ts.


Non-distributable DistributableShare Share Warrants Discount on Fair Value Retained Total

Capital Premium Reserve Shares Reserve Profits EquityNOTE RM RM RM RM RM RM RM

2014

Balance at beginning 50,048,443 32,099,856 4,234,878 (4,234,878) (7,085) 1,620,965 83,762,179

Transactions with owners :

Issuance of shares pursuant to exercise of warrants 15 500,000 250,000 (178,542) 178,542 - - 750,000

Total comprehensive income for the year - - - - 308,295 924,818 1,233,113

Balance at end 50,548,443 32,349,856 4,056,336 (4,056,336) 301,210 2,545,783 85,745,292

2013

Balance at beginning 29,498,182 10,214,464 - - (511,570) 1,576,194 40,777,270

Transactions with owners :

Issuance of shares 15 20,550,261 21,885,392 - - - - 42,435,653

Issuance of warrants 15 - - 4,234,878 (4,234,878) - - - Total transactions with

owners 20,550,261 21,885,392 4,234,878 (4,234,878) - - 42,435,653

Total comprehensive income for the year - - - - 504,485 44,771 549,256

Balance at end 50,048,443 32,099,856 4,234,878 (4,234,878) (7,085) 1,620,965 83,762,179

STATEMENT OF CHANGES IN EQUITYFOR THE FINANCIAL YEAR ENDED 30 JUNE 2014



GROUP COMPANY2014 2013 2014 2013

RM RM RM RM

CASH FLOWS FROM OPERATING ACTIVITIES(Loss)/Profit before taxation (2,702,355) (3,787,066) 1,173,455 465,538 Adjustments for:

Allowance for slow moving inventories 174,244 1,997 - - Amortisation of biological assets 617,098 466,230 - - Depreciation 4,863,042 4,502,413 3,547 3,508 Dividend income (33,809) (30,025) (1,999,809) (2,928,025)(Gain)/Loss on disposal of other investments (7,744) 321,564 (7,744) 321,564 Impairment loss on investment in a subsidiary - - - 295,000 Interest expense 610,134 94,243 530,643 - Interest income (111,599) (185,402) (100,731) (161,233)Loss on disposal of investment in an associate - 34,042 - - Loss/(Gain) on disposal of property, plant and

equipment 7,113 (13,292) - - Property, plant and equipment written off 18,635 1,325 - - Unrealised gain on foreign exchange (811) (1,214) - -

Operating profit/(loss) before working capital changes 3,433,948 1,404,815 (400,639) (2,003,648)

Decrease/(Increase) in inventories 486,137 (446,672) - - Decrease/(Increase) in receivables 593,124 (72,970) (34,500) 1,996,068 (Decrease)/Increase in payables (1,633,730) 1,616,156 (129,261) 142,437

Cash generated from/(used in) operations 2,879,479 2,501,329 (564,400) 134,857 Dividend received 33,809 30,025 1,758,309 2,525,525 Income tax paid (376,407) (368,583) (18,240) (33,017)Income tax refund 72,786 - - - Interest paid (79,491) (94,243) - -

Net cash from operating activities 2,530,176 2,068,528 1,175,669 2,627,365

CASH FLOWS FROM INVESTING ACTIVITIESInterest received 111,599 185,402 100,731 161,233 Proceeds from disposal of investment in an associate - 1,620,055 - - Proceeds from disposal of other investments 226,908 860,242 226,908 860,242 Proceeds from disposal of property, plant and

equipment 28,400 35,600 - - Purchase of other investments - (324,804) - (324,804)Purchase of investment in subsidiaries - - - (3,290,000)

(1) Net cash outflow on acquisition of subsidiaries - (3,195,112) - - Purchase of biological assets (1,856,659) (1,346,738) - -

(2) Purchase of property, plant and equipment (1,191,229) (1,278,332) (1,576) (18,908)Withdrawal of fixed deposits 72,638 - - - Net cash (used in)/from investing activities (2,608,343) (3,443,687) 326,063 (2,612,237)

Balance carried forward (78,167) (1,375,159) 1,501,732 15,128

STATEMENTS OF CASH FLOWSFOR THE FINANCIAL YEAR ENDED 30 JUNE 2014



GROUP COMPANY2014 2013 2014 2013

RM RM RM RM

Balance brought forward (78,167) (1,375,159) 1,501,732 15,128

CASH FLOWS FROM FINANCING ACTIVITIESAdvance to subsidiaries' account - - (2,020,118) (2,245,737)Payment of finance lease (794,594) (933,476) - - Proceeds from issuance of shares 750,000 - 750,000 - Repayment to a director - (300) - - Repayment of term loans - (111,104) - - Net cash used in financing activities (44,594) (1,044,880) (1,270,118) (2,245,737)

NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS (122,761) (2,420,039) 231,614 (2,230,609)

CASH AND CASH EQUIVALENTS AT BEGINNING 4,709,206 7,129,245 3,775,296 6,005,905

CASH AND CASH EQUIVALENTS AT END 4,586,445 4,709,206 4,006,910 3,775,296

Represented by: Short term money market deposit with a licensed bank - 500,000 - - Fixed deposits with licensed banks 2,754,860 3,005,148 2,754,860 3,005,148 Cash and bank balances 1,831,585 1,204,058 1,252,050 770,148

4,586,445 4,709,206 4,006,910 3,775,296

Pioneer Glow Benua MutiaraSdn. Bhd. Sdn. Bhd. Total

RM RM RM

2013

(1) Cash flows on acquisition of subsidiariesAdjusted net assets of acquired subsidiaries (Note 6) 27,523,844 20,972,193 48,496,037 Add : Goodwill (Note 8) 32,136,954 2,828,842 34,965,796 Less : Non-controlling interests (8,257,153) - (8,257,153)Total consideration paid 51,403,645 23,801,035 75,204,680 Add : Deed of assignment (Note 6) 9,136,217 - 9,136,217 Less : Cash and cash equivalents (52,774) (42,114) (94,888) Deferred consideration (Note 19) (10,612,862) - (10,612,862) Satisfied by way of issuance of the Company's shares (Note 6) (46,637,000) (23,801,035) (70,438,035)

Net cash outflow on acquisition of subsidiaries 3,237,226 (42,114) 3,195,112

GROUP COMPANY2014 2013 2014 2013

RM RM RM RM

(2) Purchase of property, plant and equipmentTotal acquisition cost 1,742,086 2,449,532 1,576 18,908 Acquired under finance lease (550,857) (1,171,200) - -

Total cash acquisition 1,191,229 1,278,332 1,576 18,908

STATEMENTS OF CASH FLOWS (cont’d)FOR THE FINANCIAL YEAR ENDED 30 JUNE 2014



1. CORPORATE INFORMATION

General

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

The registered office of the Company is located at 51-13-A, Menara BHL Bank, Jalan Sultan Ahmad Shah, 10050 Penang.

The principal place of business of the Company is located at 6th Floor, Menara Hap Seng, Jalan P. Ramlee, 50250 Kuala Lumpur.

The financial statements were authorised for issue by the Board of Directors in accordance with a resolution of the directors on 18 September 2014.

Principal Activities

The principal activity of the Company is investment holding. The principal activities of the subsidiaries are disclosed inNote 6 to the financial statements.

There have been no significant changes in the nature of these activities during the financial year.

2. BASIS OF PREPARATION

2.1 Statement of Compliance

The financial statements of the Group and of the Company have been prepared in accordance with applicable Financial Reporting Standards (“FRSs”) and the Companies Act, 1965 in Malaysia.

2.2 Basis of Measurement

The financial statements of the Group and of the Company are prepared under the historical cost convention, except for certain assets that are measured at fair values at the end of each reporting period as indicated in the summary of significant accounting policies.

Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either in the principal market for the asset or liability, or in the absence of a principal market, in the most advantageous market for the asset or liability. The principal or the most advantageous market must be accessible to by the Group and the Company.

The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.

A fair value measurement of a non-financial asset takes into account a market participant’s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.

The Group and the Company use valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.

All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to their fair value measurement as a whole :

- Level 1 Quoted (unadjusted) market prices in active markets for identical assets or liabilities.- Level 2 Valuation techniques for which the lowest level input that is significant to their fair value measurement is

directly or indirectly observable.- Level 3 Valuation techniques for which the lowest level input that is significant to their fair value measurement is

unobservable.

NOTES TO THE FINANCIAL STATEMENTS30 JUNE 2014


2. BASIS OF PREPARATION (cont'd)

2.3 Functional and Presentation Currency

The financial statements are presented in Ringgit Malaysia (“RM”), which is also the Group’s and the Company’s functional currency.

2.4 Adoption of FRSs, Amendments/Improvements to FRSs and IC Interpretations

The accounting policies adopted by the Group and the Company are consistent with those of the previous financial year except for the adoption of the following FRSs, amendments/improvements to FRSs, IC Int and amendments to IC Int that are mandatory for the current financial year :

Effective for financial periods beginning on or after 1 January 2013FRS 10 Consolidated Financial StatementsFRS 11 Joint ArrangementsFRS 12 Disclosure of Interests in Other EntitiesFRS 13 Fair Value MeasurementFRS 119 Employee BenefitsFRS 127 Separate Financial StatementsFRS 128 Investments in Associates and Joint VenturesAmendments to FRS 1 Government LoansAmendments to FRS 7 Disclosures - Offsetting Financial Assets and LiabilitiesAmendments to FRS 11 Joint Arrangements: Transition GuidanceAmendments to FRS 12 Disclosure of Interests in Other Entities: Transition GuidanceIC Interpretation 20 Stripping Cost in the Production of a Surface MineImprovements to FRSs issued in 2012

Initial application of the above standards, amendments and interpretations did not have any material impact on the financial statements of the Group and of the Company except for the following :

(i) FRS 10 Consolidated Financial Statements and FRS 127 Separate Financial Statements

The effects of adopting FRS 10 Consolidated Financial Statements and FRS 127 Separate Financial Statements are discussed in Note 3.1 to the financial statements.

(ii) FRS 13 Fair Value Measurement

The Group and the Company have applied FRS 13 for the first time in the current period. FRS 13 established a single source of guidance and disclosure for fair value measurements. The scope of FRS 13 is broad. The fair value measurement requirements of FRS 13 apply to both financial instrument items and non-financial instrument items for which other FRSs require or permit fair value measurements and disclosures about fair value measurements, except for share-based payment transactions that are within the scope of FRS 2 Share-based Payment, leasing transaction that are within the scope of FRS 117 Leases, and measurements that have some similarities to fair value but are not fair value (e.g. net realisable value for the purposes of measuring inventories or value in use for impairment assessment purposes).

FRS 13 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction in the principal (or most advantageous) market at the measurement date under current market conditions. Fair value under FRS 13 is an exit price regardless of whether that price is directly observable or estimated using another valuation technique. Also, FRS 13 includes extensive disclosure requirements.

FRS 13 requires prospective application from 1 July 2013. In addition, specific transition provisions were given to entities such that they need not apply the disclosure requirements set out in the FRS 13 in comparative information provided for periods before the initial application of the FRS13. In accordance with these transitional provisions, the Group and the Company have not made any new disclosures required by FRS 13 for the comparative period. Other than the additional disclosures, the application of FRS 13 did not have any material impact on the amounts recognised in the Group’s and the Company’s financial statements.

NOTES TO THE FINANCIAL STATEMENTS (cont’d)30 JUNE 2014



2.5 Standards Issued But Not Yet Effective

2.5.1 New Malaysian Financial Reporting Standards Board (“MASB”) Approved Accounting 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 period beginning on or after 1 January 2012, with the exception of entities that are within the scope of MFRS 141 Agriculture and IC Interpretation 15 Agreements for Construction of Real Estate, including its parent, significant investor and venturer (“Transitioning Entities”).

Transitioning Entities will be allowed to defer adoption of the new MFRS Framework. Consequently, adoption of the MFRS Framework by Transitioning Entities will be mandatory for annual periods beginning on or after 1 January 2017.

The Company and certain subsidiaries fall within the definition of Transitioning Entities and have opted to defer the adoption of MFRS Framework. However for subsidiaries which financial statements are prepared in accordance with MFRSs were converted to FRSs for the purpose of the preparation of the Group financial statements.

In presenting its first MFRS financial statements i.e. financial statements for the financial year ending 30 June 2018, the Group and the Company will be required to restate the comparative financial statements to amounts reflecting the application of the MFRS Framework. The majority of the adjustments required on transition will be made, retrospectively, against opening retained profits.

The Group and the Company have not completed their quantification of the financial effects of the differences between FRSs and accounting standards under the MFRS Framework and are in the process of assessing the financial effects of the differences. Accordingly, the financial performance and financial position as disclosed in these financial statements for the financial year ended 30 June 2014 could be different if prepared under the MFRS Framework.

The Group and the Company expect to be in a position to fully comply with the requirements of the MFRS Framework for the financial year ending 30 June 2018.

2.5.2 FRSs and Amendments to FRSs Issued But Not Yet Effective

The following are accounting standards and amendments that have been issued by the MASB but have not been adopted by the Group and the Company :

Amendments to FRSs and IC Int effective for financial periods beginning on or after 1 January 2014FRS 10, FRS 12 and FRS 127 Consolidated Financial Statement, Disclosure of Interests in Other

Entities and Separated Financial Statements: Investment EntitiesFRS 132FRS 136FRS 139

Offsetting Financial Assets and LiabilitiesRecoverable Amount Disclosures for Non Financial AssetsNovation of Derivatives and Continuation Hedge Accounting

IC Int 21 Levies

Effective for financial periods beginning on or after 1 July 2014Amendments to FRS 119 Defined Benefit Plans: Employee ContributionsAnnual improvements to FRSs 2010-2012 Cycle

Annual improvements to FRSs 2011-2013 Cycle

Effective for financial period beginning on or after 1 January 2016FRS 14 Regulatory Deferral Accounts Amendments to FRS 116 and FRS 138 Classification of Acceptable Methods of Depreciation and

AmortisationAmendments to FRS 11 Accounting for Acquisition of Interest in Joint Operations




2.5 Standards Issued But Not Yet Effective (cont'd)

2.5.2 FRSs and Amendments to FRSs Issued But Not Yet Effective (cont'd)

Effective date yet to be confirmedAmendments to FRS 7 Financial Instrument: Disclosures - Mandatory Date of FRS 9 and

Transition DisclosuresFRS 9 Financial Instruments (2009,2010)FRS 9 Hedge Accounting and Amendments to FRS 9, FRS 7 and FRS 139

Unless otherwise described below, the new FRSs and Amendments to FRSs above are expected to have no significant impact on the financial statements of the Group and of the Company upon its initial application except for the changes in presentation and disclosures of financial information arising from the adoption of certain FRSs and Amendments to FRSs above.

FRS 9 Financial Instruments

FRS 9 addresses the classification, measurement and recognition of financial assets and financial liabilities. It replaces the guidance in FRS 139 Financial Instruments: Recognition and Measurement. FRS 9 requires financial assets to be classified into two measurement categories: fair value and amortised cost, determined at initial recognition. The classification depends on the entity’s business model for managing its financial instruments and the contractual cash flow characteristics of the instrument. Most of the requirements for financial liabilities are retained, except for cases where the fair value option is taken, the part of a fair value change due to an entity’s own risk is recorded in other comprehensive income rather than profit or loss, unless this creates an accounting mismatch.

The adoption of FRS 9 will result in a change in accounting policy. The Group and the Company are currently examining the financial impact of adopting FRS 9.

The Group’s and the Company’s financial statements for annual period beginning on 1 July 2017 will be prepared in accordance with the MFRSs issued by MASB and IFRSs. As a result, the Group and the Company will not be adopting FRSs, Interpretations and amendments that are effective for annual periods beginning on or after1 July 2017.

2.6 Significant Accounting Estimates and Judgements

The preparation of financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised and in any future periods affected.

2.6.1 Judgements made in applying accounting policies

There are no significant areas of critical judgement in applying accounting policies that have any significant effect on the amount recognised in the financial statements, other than the following :

Classification of leasehold land

In applying the classification of leases in FRS 117, management considers the leases of leasehold land as finance lease arrangements. The lease transaction is not always conclusive, and management uses judgement in determining whether the lease is a finance lease arrangement that transfers substantially all the risks and rewards incidental to ownership, in accordance with FRS 117 Leases.




2.6 Significant Accounting Estimates and Judgements (cont'd)

2.6.2 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 :

(i) Useful lives of depreciable assets

Plant and machinery are depreciated on a straight line basis over their estimated useful lives. Management estimates that the useful life of the plant and machinery is 10 years. Changes in the expected level of usage and technological developments could impact the economic useful lives and residual values of the plant and equipment. Therefore the future depreciation charges could be revised.

(ii) Useful lives of biological assets

The costs of oil palm plantation development expenditure are amortised on a straight line basis over the assets’ estimated economic useful lives of 20 to 25 years. The useful lives are within the commercial life span of oil palm trees. Technological developments could impact the productivity of the produce which could ultimately impact the economic useful lives and residual value of the biological assets. Therefore the future amortisation charges could be revised.

(iii) Impairment of plant and equipment and biological assets

The Group and the Company perform an impairment review as and when there are impairment indicators to ensure that the carrying value of the plant and equipment and biological assets does not exceed its recoverable amount. The recoverable amount represents the present value of the estimated future cash flows expected to arise from continuing operations. Therefore, in arriving at the recoverable amount, management exercises judgement in estimating the future cash flows, growth rate and discount rate.

(iv) Impairment of goodwill

An impairment loss is recognised for the amount by which the asset’s or cash-generating unit’s carrying amount exceeds its recoverable amount. To determine the recoverable amount, management estimates expected future cash flows from each cash-generating unit and determines a suitable interest rate in order to calculate the present value of those cash flows. During the process of measuring expected future cash flows, management makes assumptions about future operating results. These assumptions relate to future events and circumstances. The actual results may vary, and may cause significant adjustments to the Group’s assets within the next financial year.

In most cases, determining the applicable discount rate involves estimating the appropriate adjustment to market risk and the appropriate adjustment to asset-specific risk factors.

Details of the carrying value, key assumptions applied in the impairment assessment and sensitivity analysis to changes in the assumptions are disclosed in Note 8 to the financial statements.

(v) Inventories

The management reviews for damage, obsolete and slow-moving inventories. These reviews require judgement and estimates. Possible changes in these estimates could result in revisions to the valuations of inventories.

(vi) Impairment of receivables

The Group assesses at the end of each reporting period whether there is any objective evidence that a receivable 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 of assets with similar credit risk characteristics.



3. SIGNIFICANT ACCOUNTING POLICIES

3.1 Basis of Consolidation

(i) Subsidiaries

Subsidiaries are entities, including unincorporated entities, controlled by the Company.

The Company adopted FRS 10, Consolidated Financial Statements in the current financial year. This resulted in changes to the following policies :

• Control exists when the Company is exposed, or has rights, to variable returns through its power over the entity. In the previous financial years, control exists when the Company has the ability to exercise its power to govern the financial and operating policies of an entity so as to obtain benefits from its activities.

• Potential voting rights are considered when assessing control only when such rights are substantive. In the previous financial years, potential voting rights are considered when assessing control when such rights are presently exercisable.

• The Company considers it has de facto power over an investee when, despite not having the majority of voting rights, it has the current ability to direct the activities of the investee that significantly affect the investee’s return. In the previous financial years, the Company did not consider de facto power in its assessment of control.

The change in accounting policy has been made retrospectively and in accordance with the transitional provision of FRS 10. However, the adoption of FRS 10 has no significant impact to the financial statements of the Company for the current financial year.

Investment in subsidiaries is measured in the Company’s statement of financial position at cost less any impairment losses, unless the investment is classified as held for sale or distribution. The cost of investments includes transaction costs.

Upon disposal of investment in subsidiaries, the difference between the net disposal proceeds and their carrying amount is included in profit or loss.

(ii) Business combination

Business combinations are accounted for using the acquisition method from the acquisition date which is the date on which control is transferred to the Group.

Acquisition on or after 1 July 2011

For acquisitions on or after 1 July 2011, the Group measures the cost of goodwill at the acquisition date as :

• the fair value of the consideration transferred, plus• the recognised amount of any non-controlling interest in the acquiree, plus• if the business combination is achieved in stages, the fair value of the existing equity interest in the

acquiree, less• the net recognised amount at fair value of the identifiable assets acquired and liabilities assumed

When the excess is negative, a bargain purchase gain is recognised in profit or loss.

For each business combination, the Group elects whether to recognise non-controlling interest in the acquiree at fair value, or at the proportionate share of the acquiree’s identifiable net assets at the acquisition date.

Transaction costs, other than those associated with the issue of debt or equity securities, that the Group incurs in connection with a business combination are expensed as incurred.

(iii) Acquisitions of non-controlling interests

The Group treats all changes in its ownership interest in a subsidiary that do not result in a loss of control as equity transactions between the Group and its non-controlling interest holders. Any difference between the Group’s share of net assets before and after the change, and any consideration received or paid, is adjusted to or against Group reserve.



3. SIGNIFICANT ACCOUNTING POLICIES (cont'd)

3.1 Basis of Consolidation (cont'd)

(iv) Loss of control

Upon the loss of control of a subsidiary, the Group derecognises the assets and liabilities of the subsidiary, any non-controlling interests and the other components of equity related to the subsidiary. Any surplus or deficit arising on the loss of control is recognised in profit or loss. If the Group retains any interest in the previous subsidiary, then such interest is measured at fair value at the date that control is lost. Subsequently it is accounted for as an equity accounted investee or as an available-for -sale financial asset depending on the level of influence retained.

(v) Non-controlling interests

Non-controlling interests at the end of the reporting period, being the equity in a subsidiary not attributable directly or indirectly to the equity holders of the Company, are presented in the consolidated statement of financial position and statement of changes in equity within equity, separately from equity attributable to the owners of the Company. Non-controlling interests in the results of the Group is presented in the consolidated statement of comprehensive income as an allocation of the profit or loss and the comprehensive income for the year between non-controlling interests and the owners of the Company.

Losses applicable to the non-controlling interests in a subsidiary are allocated to the non-controlling interests even if doing so causes the non-controlling interests to have a deficit balance.

(vi) Transactions eliminated on consolidation

Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group transactions, are eliminated in preparing the consolidated financial statements.

3.2 Property, Plant and Equipment

Property, plant and equipment are initially stated at cost less accumulated depreciation and accumulated impairment losses.

Property, plant and equipment are depreciated on the straight line method to write off the cost of each asset to its residual value over its estimated useful life at the following annual rates:

Long leasehold land Amortised over lease period of 67 to 87 years Short leasehold land Amortised over lease period of 30 to 40 years Buildings 2% -10% Plant and machinery 10% Renovation and electrical installation 10% Air conditioners 10% Office equipment, furniture and fittings 10% Motor vehicles 10% - 20%

Long leasehold land refers to land with remaining lease period in excess of fifty years whilst short leasehold land refers to land with remaining lease period of less than fifty years determined as at the end of the reporting period.

Depreciation on capital expenditure in progress commences when the assets are ready for their intended use.

The residual value, useful life and depreciation method are reviewed at the end of each reporting period to ensure that the amount, method and period of depreciation are consistent with previous estimates and the expected pattern of consumption of the future economic benefits embodied in the items of property, plant and equipment.

Upon the disposal of an item of property, plant and equipment, the difference between the net disposal proceeds and its carrying amount is recognised in profit or loss.




3.3 Biological assets

Biological assets are stated at cost less any accumulated amortisation and any accumulated impairment losses. Biological assets comprise plantation development expenditure.

New planting expenditure which include land clearing, planting, field upkeep, and maintenance of oil palm plantings to maturity are capitalised under plantation development expenditure. Upon maturity, all subsequent maintenance expenditure is charged to profit and loss. The oil palm is considered matured after 3 years from the month of planting.

Plantation development expenditure is amortised on a straight line basis over 20 to 25 years being the current expected useful life of oil palm trees. The useful lives of oil palms would be subjected to review in the future and may be adjusted as considered appropriate. Amortisation commences upon maturity of the oil palm plantings.

3.4 Leases

Finance lease

In accordance with FRS 117 Leases, the economic ownership of a leased asset is transferred to the lessee if the lessee bears substantially all the risks and rewards related to the ownership of the leased asset. The related asset is then recognised at the inception of the lease at the fair value of the leased asset or, if lower, the present value of the lease payments plus incidental payments, if any. A corresponding amount is recognised as a finance leasing liability, irrespective of whether some of these lease payments are payable up-front at the date of inception of the lease. Leases of land and buildings are classified separately and are split into a land and a building element, in accordance with the relative fair values of the leasehold interests at the date the asset is recognised initially.

Depreciation methods and useful lives for assets held under finance lease agreements correspond to those applied to comparable assets which are legally owned by the Group. The corresponding finance leasing liability is reduced by lease payments less finance charges, which are expensed as part of finance costs. The interest element of leasing payments represents a constant proportion of the capital balance outstanding and is charged to profit or loss over the period of the lease.

Operating Leases

All other leases are treated as operating leases. Payments on operating lease agreements are recognised as an expense on a straight-line basis over the lease term. Associated costs, such as maintenance and insurance, are expensed as incurred.

3.5 Intangible Assets

Goodwill

Goodwill acquired in a business combination is initially measured at cost being the excess of the cost of business combination over the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities.

Goodwill is stated at cost less accumulated impairment losses. Goodwill is not amortised but instead, it is reviewed for impairment, annually or more frequently if events or changes in circumstances indicate that the carrying value may be impaired.

3.6 Impairment of Non-Financial Assets

The Group and the Company assess at the end of each reporting period whether there is an indication that an asset may be impaired.

For the purpose of impairment testing, recoverable amount (i.e. the higher of the fair value less cost to sell and value-in-use) is determined on an individual asset basis unless the asset does not generate cash flows that are largely independent of those from other assets. If this is the case, the recoverable amount is determined for the cash-generating units (“CGU”) to which the asset belongs.

If the recoverable amount of the asset (or CGU) is estimated to be less than its carrying amount, the carrying amount of the asset (or CGU) is reduced to its recoverable amount.




3.6 Impairment of Non-Financial Assets (cont'd)

The difference between the carrying amount and recoverable amount is recognised as an impairment loss in the profit or loss except for assets that were previously revalued where the revaluation surplus was taken to other comprehensive income. In this case the impairment loss is also recognised in other comprehensive income up to the amount of any previous revaluation surplus.

An impairment loss for an asset is reversed if, and 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. The carrying amount of this asset is increased to its revised recoverable amount, provided that this amount does not exceed the carrying amount that would have been determined (net of any accumulated amortisation or depreciation) had no impairment loss been recognised for the asset in prior years. A reversal of impairment loss for an asset is recognised in profit or loss unless the asset is measured at revalued amount, in which case the reversal is treated as a revaluation increase.

3.7 Inventories

Inventories are stated at the lower of cost and net realisable value.

Costs of all inventories are determined on the first-in, first-out basis.

The cost of inventories includes expenditure incurred in acquiring the inventories and other costs incurred in bringing them to their existing location and condition. In the case of finished goods and work-in-progress, cost includes direct labour and attributable production overheads.

Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale.

3.8 Financial Instruments

3.8.1 Initial recognition and measurement

A financial asset or a financial liability is recognised in the statement of financial position when, and only when, the Group and the Company become a party to the contractual provisions of the instrument.

A financial instrument is recognised initially, at its fair value plus, in the case of a financial instrument not at fair value through profit or loss, transactions costs that are directly attributable to the acquisition or issue of the financial instrument.

An embedded derivative is recognised separately from the host contract and accounted for as a derivative if, and only if, it is not closely related to the economic characteristics and risks of the host contract and the host contract is not categorised at fair value through profit or loss. The host contract, in the event an embedded derivative is recognised separately, is accounted for in accordance with policy applicable to the nature of the host contract.

3.8.2 Financial instrument categories and subsequent measurement

The Group and the Company categorise financial instruments as follows:

Financial assets

(i) Loans and receivables

Loans and receivables category comprises debt instruments that are not quoted in an active market.

Financial assets categorised as loans and receivables are subsequently measured at amortised cost using the effective interest method.

Loans and receivables are classified as current assets, except for those having maturity dates later than 12 months after the end of the reporting period which are classified as non-current.




3.8 Financial Instruments (cont'd)

3.8.2 Financial instrument categories and subsequent measurement (cont'd)

Financial assets (cont'd)

(ii) Available-for-sale financial assets

Available-for-sale category comprises investment in equity and debt securities instruments that are not held for trading.

Investments in equity instruments that do not have a quoted market price in an active market and whose fair value cannot be reliably measured are measured at cost. Other financial assets categorised as available-for-sale are subsequently measured at their fair values with the gain or loss recognised in other comprehensive income, except for impairment losses, foreign exchange gains and losses arising from monetary items and gains and losses of hedged items attributable to hedge risks of fair value hedges which are recognised in profit or loss. On derecognition, the cumulative gain or loss recognised in other comprehensive income is reclassified from equity into profit or loss. Interest calculated for a debt instrument using the effective interest method is recognised in profit or loss.

All financial assets, except for those measured at fair value through profit or loss, are subject to review for impairment.

Financial liabilities

All financial liabilities are subsequently measured at amortised cost.

Financial liabilities are classified as current liabilities, except for those having maturity dates later than 12 months after the end of the reporting period which are classified as non-current.

3.8.3 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 classified as deferred income and are amortised to profit or loss using a straight-line method over the contractual period or, when there is no specified contractual period, recognised in profit or loss upon discharge of the guarantee. When settlement of a financial guarantee contract becomes probable, an estimate of the obligation is made. If the carrying value of the financial guarantee contract is lower than the obligation, the carrying value is adjusted to the obligation amount and accounted for as a provision.

3.8.4 Derecognition

A financial asset or part of it is derecognised, when and only when the contractual rights to the cash flows from the financial asset expire or the financial asset is transferred to another party without retaining control or substantially all risks and rewards of the asset. On derecognition of a financial asset, the difference between the carrying amount and the sum of the consideration received (including any new asset obtained less any new liability assumed) and any cumulative gain or loss that had been recognised in equity is recognised in the profit or loss.

A financial liability or a part of it is derecognised when, and only when, the obligation specified in the contract is discharged or cancelled or expired. On derecognition of a financial liability, the difference between the carrying amount of the financial liability extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in profit or loss.




3.9 Impairment of Financial Assets

All financial assets (except for financial assets categorised as fair value through profit or loss) are assessed at the end of each reporting period whether there is any objective evidence of impairment as a result of one or more events having an impact on the estimated future cash flows of the asset. Losses expected as a result of future events, no matter how likely, are not recognised. For an investment in an equity instrument, a significant or prolonged decline in the fair value below its cost is an objective evidence of impairment.

An impairment loss in respect of loans and receivables and held-to-maturity investments is recognised in profit or loss and is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the asset’s original effective interest rate. The carrying amount of the asset is reduced through the use of an allowance account.

An impairment loss in respect of available-for-sale financial assets is recognised in profit or loss and is measured as the difference between the asset’s acquisition cost (net of any principal repayment and amortisation) and the asset’s current fair value, less any impairment loss previously recognised. Where a decline in the fair value of an available-for-sale financial asset has been recognised in other comprehensive income, the cumulative loss in other comprehensive income is reclassified from equity to profit or loss.

An impairment loss in respect of unquoted equity instrument that is carried at cost is recognised in profit or loss and is measured as the difference between the financial asset’s carrying amount and the present value of estimated future cash flows discounted at the current market rate of return for a similar financial asset.

Impairment losses recognised in profit or loss for an investment in an equity instrument classified as available-for-sale is not reversed through profit or loss.

If, in a subsequent period, the fair value of a debt instrument increases and the increase can be objectively related to an event occurring after the impairment loss was recognised in profit or loss, the impairment loss is reversed, to the extent that the asset’s carrying amount does not exceed what the carrying amount would have been had the impairment not been recognised at the date the impairment is reversed. The amount of the reversal is recognised in profit or loss.

3.10 Cash and Cash Equivalents

Cash comprises cash in hand, cash at bank and demand deposits. Cash equivalents are short term and highly liquid investments that are readily convertible to known amount of cash and which are subject to an insignificant risk of changes in value, against which bank overdraft balances, if any, are deducted.

3.11 Provisions

Provisions are recognised when the Group has a present obligation as a result of a past event and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate of the amount can be made. Provisions are reviewed at the end of each reporting period and adjusted to reflect the current best estimate. Where the effect of the time value of money is material, the amount of a provision is the present value of the expenditure expected to be required to settle the obligation.

3.12 Borrowing Costs

Borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset are capitalised during the period of time that is necessary to complete and prepare the asset for its intended use or sale. 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.

Other borrowing costs are expensed in the period in which they are incurred. Borrowing costs consist of interest and other costs that the Company incurred in connection with the borrowing of funds.




3.13 Income Recognition

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and to the Company and when the revenue can be reliably measured on the following bases:

Sale of goods

Revenue from sale of goods in the course of ordinary activities is measured at fair value of the consideration received or receivable, net of discount and returns. Revenue is recognised when the significant risks and rewards of ownership have been transferred to the customer.

Dividend income

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

Interest income

Interest income is recognised on an accrual basis using the effective interest method.

3.14 Employee Benefits

Short term benefits

Wages, salaries, bonuses and social security contributions are recognised as an expense in the year in which the associated services are rendered by employees of the Group. Short term accumulating compensated absences such as paid annual leave are recognised when services are rendered by employees that increase their entitlement to future compensated absences, and short term non-accumulating compensated absences such as sick leave are recognised when the absences occur.

Defined contribution plans

As required by law, companies in Malaysia make contributions to the national pension scheme, the Employees Provident Fund (“EPF”). Such contributions are recognised as an expense as incurred.

3.15 Income Tax

Income tax expense comprises current and deferred tax. Current tax and deferred tax are recognised in profit or loss except to the extent that it relates to a business combination or items recognised directly in equity or other comprehensive income.

Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantively enacted by the end of the reporting period, and any adjustment to tax payable in respect of previous years.

Deferred tax is recognised using the liability method, providing for temporary differences between the carrying amounts of assets and liabilities in the statement of financial position and their tax bases. Deferred tax is not recognised for the following temporary differences: the initial recognition of goodwill, the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss. Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the end of the reporting period.

Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realised simultaneously.




3.15 Income Tax (cont'd)

A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which the temporary difference can be utilised. Deferred tax assets are reviewed at the end of each reporting period and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.

Unutilised reinvestment allowance and investment tax allowance, being tax incentives that is not a tax base of an asset, is recognised as a deferred tax asset to the extent that it is probable that the future taxable profits will be available against the unutilised tax incentive can be utilised.

3.16 Foreign Currency Transactions

Transactions in foreign currencies are translated to the respective functional currencies of Group entities at exchange rates at the dates of the transactions.

Monetary assets and liabilities denominated in foreign currencies at the end of the reporting period are retranslated to the functional currency at the exchange rate at that date.

Non-monetary assets and liabilities denominated in foreign currencies at the end of the reporting period, except for those that are measured at fair value are retranslated to the functional currency at the exchange rate at the date that the fair value was determined.

Foreign currency differences arising on retranslation are recognised in profit or loss, except for differences arising on the retranslation of available-for-sale equity instruments or a financial instrument designated as a hedge or currency risk, which are recognised in other comprehensive income.

3.17 Equity instruments

3.17.1 Warrants

Warrants are classified as equity instruments and its value is allocated based on the Black-Scholes model upon issuance. The issuance of the ordinary shares upon exercise of warrants is treated as new subscription of ordinary shares for the consideration equivalent to the exercise price of the warrants.

Upon exercise of warrants, the proceeds are credited to share capital and share premium. The warrants reserve in relation to the unexercised warrants at the expiry of the warrants will be reversed.

3.17.2 Share Capital

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.

Share capital represents the nominal value of shares that have been issued. Dividends on ordinary shares are accounted for in shareholder’s equity as an appropriation of unappropriated profits and recognised as a liability in the period in which they are declared.

Share premium includes any premiums received upon issuance of share capital. Any transaction costs associated with the issuing shares are deducted from share premium, net of any related income tax benefits.




3.18 Segment Reporting

An operating segment is a component of the Group that engages in business activities from which it may earn revenue and incur expenses, including revenue and expenses that relate to transactions with any of the Group’s other components. An operating segment’s operating results are reviewed regularly by the chief operating decision maker, who in this case are the Executive Directors of the Group, to make decisions about resources to be allocated to the segment and assess its performance, and for which discrete financial information is available.

3.19 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 and of the Company.

Contingent liabilities and assets are not recognised in the statements of financial position of the Group and of the Company.



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4. PROPERTY, PLANT AND EQUIPMENT (cont'd)

RenovationAir

conditioners

Officeequipment,

furniture andfittings Total

RM RM RM RM

COMPANY

2014

At costBalance at beginning 16,551 300 18,228 35,079 Additions - - 1,576 1,576

Balance at end 16,551 300 19,804 36,655

Accumulated depreciationBalance at beginning 1,655 30 1,823 3,508 Current charge 1,655 30 1,862 3,547

Balance at end 3,310 60 3,685 7,055

Carrying amount 13,241 240 16,119 29,600

2013

At costBalance at beginning 16,171 - - 16,171 Additions 380 300 18,228 18,908

Balance at end 16,551 300 18,228 35,079

Accumulated depreciationCurrent charge 1,655 30 1,823 3,508

Carrying amount 14,896 270 16,405 31,571

GROUP

(i) The carrying amount of property, plant and equipment acquired under finance lease liabilities are as follows :

2014 2013RM RM

Plant and machinery 334,374 37,125Motor vehicles 1,719,601 1,988,238

2,053,975 2,025,363

The leased assets are pledged as security for the related finance lease liability (Note 17).



5. BIOLOGICAL ASSETS

GROUP2014 2013

RM RM

At costBalance at beginning 8,628,140 -Arising from acquisition of subsidiaries - 7,281,402Additions 1,856,659 1,346,738

Balance at end 10,484,799 8,628,140

AmortisationBalance at beginning 466,230 -Current charge 617,098 466,230

Balance at end 1,083,328 466,230

Carrying amount 9,401,471 8,161,910

Biological assets represent plantation development expenditure.

6. INVESTMENT IN SUBSIDIARIES

COMPANY2014 2013

RM RM

Unquoted shares, at cost 65,790,182 71,790,182

Less : Accumulated impairment loss Balance at beginning 6,000,000 5,705,000 Additions - 295,000 Strike off during the year (6,000,000) -

Balance at end - (6,000,000)

65,790,182 65,790,182

Details of the subsidiaries which are all incorporated in Malaysia are as follows :

Name of Company Effective Equity Interest Principal Activities2014 2013

DirectScope Manufacturers (M) Sdn. Bhd. 100% 100% Manufacturing and assembling of electronic

components and products.

Scope Sales & Services Sdn. Bhd. 100% 100% Investment holding and trading of electrical products.

Trans Industry Sdn. Bhd. - 100% Strike off during the year.

Pioneer Glow Sdn. Bhd. 70% 70% Cultivation of oil palm.

Benua Mutiara Sdn. Bhd. 100% 100% Cultivation of oil palm.



6. INVESTMENT IN SUBSIDIARIES (cont'd)

2013

(i) Pioneer Glow Sdn. Bhd. (“Pioneer”)

On 19 July 2012, the Company acquired 7,420,000 ordinary shares of RM1 each in Pioneer, representing 70% of the issued and paid-up share capital of Pioneer, for a total purchase consideration of RM28,700,000 satisfied in the following manner :

No. Consideration RM

1. Cash 2,000,0002. Issuance of 89,400,000 new shares in the Company at an issue price of RM0.15 per share

(“Consideration Shares”) together with 59,600,000 warrants in the Company (“Consideration Warrants”) 13,410,000

3. Deferred cash payment over a period of 5 years 13,290,000

28,700,000

The above proposals were approved by the shareholders in an extraordinary general meeting of the Company held on 28 June 2012 and the issuance of the Consideration Shares and Consideration Warrants were completed, listed and quoted on the ACE Market of Bursa Malaysia Securities Berhad on 23 July 2012.

The fair value of the purchase consideration is derived based on the following :

RM

Cash consideration 3,290,000Deferred cash consideration (1) 10,612,862Satisfied by way of issuance of Company’s shares (2) 46,637,000Deed of assignment (3) (9,136,217)

Total fair value of consideration transferred 51,403,645

(1) Refer to Note 19 to the financial statements for details of the deferred cash consideration.

(2) For the purpose of computing the fair value of the purchase consideration, a fair value of RM0.365 per share and RM0.235 per warrant (being the published price of the shares at the date of exchange to the vendor on 23 July 2012) is allocated to the Consideration Shares and Consideration Warrants.

(3) Under the terms of the sale and purchase agreement, a deed of assignment is executed whereby the debts owing by Pioneer to the vendor is assigned to the Company.

The following are the carrying amount of the assets and liabilities which is also the fair value on acquisition date :

RM

AssetsProperty, plant and equipment 42,572,472Biological assets 6,436,675Inventories 35,835Receivables 375,104Cash and cash equivalents 52,774

49,472,860




2013 (cont'd)

(i) Pioneer Glow Sdn. Bhd. (“Pioneer”) (cont'd)

The following are the carrying amount of the assets and liabilities which is also the fair value on acquisition date : (cont'd)

RM

LiabilitiesBorrowings 933,385Deferred tax liabilities 9,117,000Payables 762,114Amount due to a director 300Amount due to holding company 11,136,217

21,949,016

Net identifiable assets 27,523,844

Goodwill arising from acquisition :

RM

Total fair value of consideration transferred 51,403,645Non-controlling interests 8,257,153Recognised amount at fair value of net identifiable assets acquired (27,523,844)

Goodwill (Note 8) 32,136,954

(ii) Benua Mutiara Sdn. Bhd. (“Benua”)

On 20 June 2013, the Company acquired 500,000 ordinary shares of RM1 each in Benua, representing 100% of the issued and paid-up share capital of Benua, for a total purchase consideration of RM29,025,653 satisfied by issuance of 116,102,612 new ordinary shares in the Company at an issue price of RM0.25 per share (“Consideration Shares”).

The issuance of Consideration Shares were completed, listed and quoted on the ACE Market of Bursa Malaysia Securities Berhad on 1 July 2013.

Total fair value of consideration transferred

The Company issued 116,102,612 new ordinary shares of RM0.10 each to the vendor at an issue price of RM0.25. For the purpose of computing the fair value of purchase consideration, a fair value of RM0.205 per share (being the published price of the shares at the date of exchange to the vendor on 1 July 2013) is allocated to the 116,102,612 ordinary shares issued.

The following are the carrying amount of the assets and liabilities which is also the fair value on acquisition date :

RM

AssetsProperty, plant and equipment 26,386,601Biological assets 844,727Receivables 208,477Tax recoverable 55,073Cash and cash equivalents 114,752

27,609,630




2013 (cont'd)

(ii) Benua Mutiara Sdn. Bhd. (“Benua”) (cont'd)

The following are the carrying amount of the assets and liabilities which is also the fair value on acquisition date : (cont'd)

RM

LiabilitiesBorrowings 26,081Deferred tax liabilities 6,428,928Payables 182,428

6,637,437

Net identifiable assets 20,972,193

Goodwill arising from acquisition :

RM

Total fair value of consideration transferred 23,801,035Recognised amount at fair value of net identifiable assets acquired (20,972,193)

Goodwill (Note 8) 2,828,842

7. OTHER INVESTMENTS

GROUP AND COMPANY2014 2013

RM RM

Available-for-sale financial assetsShares quoted in MalaysiaBalance at beginning 157,000 889,400Fair value adjustment 62,164 449,406Disposals (219,164) (1,181,806)

Balance at end - 157,000# Shares quoted outside Malaysia

Balance at beginning 379,883 -Additions - 324,804Fair value adjustment 246,131 55,079

Balance at end 626,014 379,883

626,014 536,883

Market value of shares quoted :In Malaysia - 157,000Outside Malaysia 626,014 379,883

626,014 536,883

Analysis by currencies :Ringgit Malaysia - 157,000Vietnamese Dong 626,014 379,883

626,014 536,883

# The quoted shares outside Malaysia represent investment of 110,850 shares in Dien Quang Joint Stock Company (“DQC”) quoted on the Ho Chi Minh Stock Exchange.



7. OTHER INVESTMENTS (cont'd)

Under a supplemental agreement entered on 20 June 2014 between a subsidiary of SSSSB and DQC, the aforementioned quoted shares shall not in any way be transferred or disposed off within a period of 5 years from the date of the original agreement entered between both parties on 21 February 2013. After the expiry of the said 5 years period, DQC shall have the rights of first refusal to buy back the said shares in the event the Company wishes to dispose of the same, at the prevailing market value. In the event DQC does not buy back the said shares from the Company within a period of 7 days when offered, the Company shall be at liberty to sell the said shares to any third party provided that the disposal price must not be lower than the price offered to DQC.

8. GOODWILL

GROUP2014 2013

RM RM

Balance at beginning 34,965,796 -Arising from acquisition of subsidiaries- Pioneer Glow Sdn. Bhd.(Note 6) - 32,136,954- Benua Mutiara Sdn. Bhd.(Note 6) - 2,828,842

Balance at end 34,965,796 34,965,796

Goodwill on consolidation arose from the acquisition of certain subsidiaries and has been allocated to its plantation operation as the cash-generating unit (“CGU”).

For annual impairment testing purposes, the recoverable amount of the CGU is determined based on its value-in-use, which applies a discounted cash flow model using cash flow projections based on financial budget and projections approved by management.

No impairment loss was required for the goodwill as its recoverable amount is in excess of its carrying amount.

The key assumptions on which the management has based on for the computation of value-in-use are as follows:

(i) Cash flow projections and growth rate

Management uses fifteen (15) year cash flow projections to derive the expected cash flows. The projection was determined based on past-experience, actual operating results and projected production of fresh fruit bunches (“FFB”) over the 15 year period. The 15 year projection used by the management is justified considering the expected life cycle of an oil palm tree of between 20 to 25 years.

Selling price of FFB was estimated to be between RM450 to RM550 (2013: RM480 to RM600) per metric tonne over the 15 year period. The estimated selling price was derived based on past historical market price and management’s assessment of future trends in the industry.

(ii) Discount rate

The discount rate of 5.35% (2013: 5.00%) is applied to the cash flow projections. The discount rate was estimated based on the Group’s effective borrowings rate.

Sensitivity analysis to changes in assumptions

A 10% decrease in the future planned revenues would require an impairment loss on goodwill by approximately RM200,801. A 1% increase in the discount rate would not result in any impairment.



9. INVENTORIES

GROUP2014 2013

RM RM

Raw materials 1,216,722 1,806,000Less : Allowance for slow moving inventories

Balance at beginning (11,343) (30,172) Current year (188,853) (2,312) Written off - 21,141

Balance at end (200,196) (11,343)

1,016,526 1,794,657

Work-in-progress 768 -

Finished goods 120,793 154,416Less : Allowance for slow moving inventories

Balance at beginning (31,663) (31,978) Reversal 14,609 315

Balance at end (17,054) (31,663)

103,739 122,753Consumables 211,594 75,598

1,332,627 1,993,008

Recognised in profit or loss :

Allowance for slow moving inventories 174,244 1,997Inventories recognised as cost of sales 12,973,204 16,288,357

10. TRADE RECEIVABLES

GROUP

The trade receivables are non-interest bearing and are generally on 30 to 60 days (2013: 30 to 60 days) credit terms. They are recognised at their original invoice amounts which represent their fair values on initial recognition.



11. OTHER RECEIVABLES, DEPOSITS AND PREPAYMENTS

GROUP COMPANY2014 2013 2014 2013

RM RM RM RM

Other receivables 135,856 117,583 41,930 8,425Refundable deposits 187,102 181,107 21,882 20,887Non-refundable deposits - 39,800 - -Prepayments 106,180 95,362 - -

429,138 433,852 63,812 29,312

Analysis by currencies :Ringgit Malaysia 387,208 421,703 21,882 20,887US Dollar - 3,724 - -Vietnamese Dong 41,930 8,425 41,930 8,425

429,138 433,852 63,812 29,312

12. AMOUNT DUE FROM/TO SUBSIDIARIES

COMPANY

The amount due from/to subsidiaries is non-trade related, unsecured, non-interest bearing and is repayable on demand.

13. CASH AND CASH EQUIVALENTS

GROUP COMPANY2014 2013 2014 2013

RM RM RM RM

Short term money market deposits with a licensed bank - 500,000 - -

Fixed deposits with licensed banks 2,754,860 3,077,786 2,754,860 3,005,148Cash and bank balances 1,831,585 1,204,058 1,252,050 770,148

4,586,445 4,781,844 4,006,910 3,775,296

Analysis by currencies:Ringgit Malaysia 4,177,743 4,308,987 3,609,755 3,319,795US Dollar 406,788 17,692 395,241 336Vietnamese Dong 1,914 455,165 1,914 455,165

4,586,445 4,781,844 4,006,910 3,775,296

Included in the fixed deposits is an amount of RM Nil (2013: RM72,638) which are held on lien for banking facilities extended to a subsidiary.



13. CASH AND CASH EQUIVALENTS (cont'd)

The effective interest rates per annum and maturities as at the end of the reporting period are as follows :

GROUP COMPANY2014 2013 2014 2013

RM RM RM RM

Short term money market deposits witha licensed bank- % per annum - 2.05 to 2.10 - -- Days - 7 to 12 - -

Fixed deposits with licensed banks- % per annum 3.15 to 3.20 3.00 to 3.15 3.15 to 3.20 3.15- Days 31 to 49 30 to 90 31 to 49 30 to 32

14. SHARE CAPITAL

Number of ordinaryshares of RM0.10 each Amount

2014 2013 2014 2013RM RM RM RM

Authorised :Balance at beginning 2,000,000,000 500,000,000 2,000,000,000 500,000,000Creation - 1,500,000,000 - 1,500,000,000

Balance at end 2,000,000,000 2,000,000,000 2,000,000,000 2,000,000,000

Issued and fully paid :Balance at beginning 500,484,430 294,981,818 50,048,443 29,498,182Issued pursuant to exercise of warrants 5,000,000 - 500,000 -Issued pursuant to acquisition of subsidiaries - 205,502,612 - 20,550,261

Balance at end 505,484,430 500,484,430 50,548,443 50,048,443

15. RESERVES

GROUP COMPANY2014 2013 2014 2013

RM RM RM RM

Non-distributable :Share premium (Note 15.1) 32,349,856 32,099,856 32,349,856 32,099,856Warrant reserve (Note 15.2) 4,056,336 4,234,878 4,056,336 4,234,878Discount on shares (Note 15.2) (4,056,336) (4,234,878) (4,056,336) (4,234,878)Fair value reserve (Note 15.3) 301,210 (7,085) 301,210 (7,085)Capital reserve (Note 15.4) 28,002,381 28,002,381 - -

60,653,447 60,095,152 32,651,066 32,092,771



15. RESERVES (cont'd)

15.1 Share premium

2014 2013RM RM

Balance at beginning 32,099,856 10,214,464Add : Issue of 89,400,000 ordinary shares at a premium of 0.05 sen per share - 4,470,000

Issue of 116,102,612 ordinary shares at a premium of 0.15 sen per share - 17,415,392 Issuance of 5,000,000 ordinary shares at a premium 0.05 sen per share 250,000 -

Balance at end 32,349,856 32,099,856

15.2 Warrants reserve and Discount on shares

The warrants reserve is in respect of the allocated fair value of the 118,596,361 warrants issued during the last financial year in the following manner :

(i) Issuance of 89,400,000 new ordinary shares of RM0.10 each at issue price of RM0.15 per share together with free 59,600,000 warrants for acquisition of a subsidiary.

(ii) Issuance of 58,996,361 free warrants on the basis of two free warrants for every ten ordinary shares of RM0.10 each held by the existing shareholders of the Company.

The fair value allocated to the warrants reserve is derived by adjusting the proceeds of the above issuance to the fair value of the shares and warrants on a proportionate basis. The discount on shares is a reserve account that is created to preserve the par value of the ordinary shares.

Each warrant entitles the registered holder to subscribe for one new ordinary share in the Company at any time on or after 23 July 2012 up to the date of expiry on 22 July 2020, at an exercise price of RM0.15 per share or such adjusted price in accordance with the provisions in the Deed Poll date 13 June 2012.

(iii) During the financial year ended 30 June 2014, 5,000,000 units of warrants were exercised and converted to ordinary shares. As a result, RM178,542 was reversed from warrant reserve and discount on shares accounts respectively.

(iv) As at the end of the reporting period, 113,596,361 warrants remained unexercised.

15.3 Fair value reserve

2014 2013RM RM

Fair value reserveBalance at beginning (7,085) (511,570)Gain on fair value changes 246,131 103,679Transfer of fair value loss to profit or loss upon disposal 62,164 400,806

Balance at end 301,210 (7,085)

Fair value adjustment reserve represents the cumulative fair value changes, net of tax, of available-for-sale financial assets until they are disposed of or impaired.

15.4 Capital reserve

Capital reserve relates to fair value adjustment to the shares issued for the acquisition of subsidiaries.



16. RETAINED PROFITS

The Company may distribute dividends out of its entire retained profits as at 30 June 2014 under the single tier system.

17. FINANCE LEASE LIABILITIES

GROUP2014 2013

RM RM

Non-current liabilities 460,900 726,778

Current liabilities 773,829 751,688

Total 1,234,729 1,478,466

A summary of the effective interest rates and the maturities of the borrowings are as follows :

Averageeffectiveinterest

rate per annum TotalWithin

one year

More thanone year

and less thantwo years

More thantwo years

and less thanfive years

(%) RM RM RM RM

2014Finance lease liabilities 2.68 to 3.65 1,234,729 773,829 413,187 47,713

2013Finance lease liabilities 2.68 to 6.78 1,478,466 751,688 726,778 -

18. DEFERRED TAX LIABILITIES

GROUP2014 2013

RM RM

Revaluation surplusBalance at beginning 15,176,020 -Arising from acquisition of subsidiaries - 15,287,885Recognised in profit or loss (199,103) (111,865)

Balance at end 14,976,917 15,176,020

Excess of capital and agricultural allowances over depreciation/amortisationBalance at beginning 258,043 -Arising from acquisition of subsidiaries - 259,789Recognised in profit or loss (28,000) (1,746)Over provision in prior year (3,878) -

Balance at end 226,165 258,043

15,203,082 15,434,063



19. OTHER PAYABLES AND ACCRUALS

GROUP COMPANY2014 2013 2014 2013

RM RM RM RM

Non-current liabilitiesOther payableDeferred cash considerationLater than 1 year but not less than 2 years 2,892,825 2,469,357 2,892,825 2,469,357Later than 2 years but not less than 5 years 5,250,680 8,143,505 5,250,680 8,143,505

8,143,505 10,612,862 8,143,505 10,612,862

Current liabilitiesOther payables 3,061,936 327,784 3,000,002 139,677Accruals 568,377 385,130 88,601 78,187

3,630,313 712,914 3,088,603 217,864

GROUP AND COMPANY

Deferred cash consideration arose as part of the purchase consideration to satisfy the acquisition of a subsidiary in the prior financial year ended 30 June 2013. It is measured and recorded at the present value of the consideration determined as at the end of the reporting period.

The deferred cash consideration shall be paid to the vendors subsequent to the completion date of the sale and purchase agreement (“SPA”) which was determined to be 23 July 2012 in the following manner :

Payment timeframe(from completion date of SPA)

Deferred CashConsideration

PresentValue

RM RM

At the end of 24 months 3,000,000 2,469,357At the end of 36 months 3,450,000 2,892,825At the end of 48 months 3,300,000 2,714,966At the end of 60 months 3,150,000 2,535,714

Total *12,900,000 10,612,862

* Inclusive of interest payment of 5% per annum on the outstanding deferred cash consideration after the first repayment in accordance with the terms and conditions of the SPA.

20. TRADE PAYABLES

GROUP2014 2013

RM RM

Analysis by currencies :Ringgit Malaysia 1,114,823 2,665,657US Dollar 50,019 9,654Singapore Dollar - 41,471

1,164,842 2,716,782

The trade payables are non-interest bearing and are normally settled on 30 to 90 days (2013: 30 to 90 days) credit terms.



21. REVENUE

GROUP COMPANY2014 2013 2014 2013

RM RM RM RM

Gross dividend income from subsidiaries - - 1,966,000 2,898,000Gross dividend income from investments quoted

in Malaysia - 21,600 - 21,600Gross dividend income from investments quoted

outside Malaysia 33,809 8,425 33,809 8,425Interest income 100,731 161,233 100,731 161,233Invoiced value of goods sold less returns and

discounts 22,468,166 25,043,194 - -

22,602,706 25,234,452 2,100,540 3,089,258

22. (LOSS)/PROFIT BEFORE TAXATION

This is arrived at :

GROUP COMPANY2014 2013 2014 2013

RM RM RM RM

After charging :

Allowance for slow moving inventories 188,853 1,997 - -Amortisation of biological assets 617,098 466,230 - -Auditors’ remuneration- Statutory audit 51,000 42,200 14,000 14,000

- Under/(Over) provision in prior year 5,000 - (1,000) -- Other services 2,000 63,000 2,000 63,000Depreciation 4,863,042 4,502,413 3,547 3,508

(i) Directors’ remuneration for non-executive directors 54,500 46,500 49,500 46,500

(ii) Interest expense 610,134 94,243 530,643 -Impairment loss on investment in a subsidiary - - - 295,000Loss on disposal of investment in an associate - 34,042 - -Loss on disposal of other investments - 321,564 - 321,564Loss on disposal of property, plant and

equipment 7,113 1,220 - -Property, plant and equipment written off 18,635 1,325 - -Realised loss on foreign exchange 4,868 922 - 922Rental of machinery 105,940 33,337 - -Rental of premises 107,384 102,486 - 65,911

(iii) Staff costs 6,836,002 7,090,191 33,000 31,000



22. (LOSS)/PROFIT BEFORE TAXATION (cont'd)

This is arrived at :

GROUP COMPANY2014 2013 2014 2013

RM RM RM RM

And crediting :

Gain on disposal of property, plant and equipment - 14,512 - -

Gain on disposal of other investments 7,744 - 7,744 -Gross dividend income from

- a subsidiary - - 1,966,000 2,898,000- investments quoted in Malaysia - 21,600 - 21,600- investments quoted outside Malaysia 33,809 8,425 33,809 8,425

Interest income 111,599 185,402 100,731 161,233Realised gain on foreign exchange 9,730 15,089 9,730 -Reversal of allowance for slow moving

inventories 14,609 - - -Unrealised gain on foreign exchange 811 1,214 - -

(i) Directors’ remuneration for non-executive directors of the Company

Directors’ emoluments 6,500 10,500 6,500 10,500Directors’ fee 48,000 36,000 43,000 36,000

54,500 46,500 49,500 46,500

(ii) Interest expenseBank overdrafts - 78 - -Hire purchase 79,491 93,319 - -Term loan - 846 - -Interest on deferred cash consideration 530,643 - 530,643 -

610,134 94,243 530,643 -

(iii) Staff costs- Fee, salaries, allowance, bonus and wages 6,333,635 6,641,660 33,000 31,000- EPF 449,177 391,127 - -- SOCSO 53,190 57,404 - -

6,836,002 7,090,191 33,000 31,000



22. (LOSS)/PROFIT BEFORE TAXATION (cont'd)

Directors’ remuneration

Included in the staff costs of the Group and of the Company is directors’ emoluments as shown below :

GROUP COMPANY2014 2013 2014 2013

RM RM RM RM

Executive directors of the Company :- Salary and allowance 480,580 450,580 5,000 7,000- EPF 51,174 44,352 - -

531,754 494,932 5,000 7,000Directors’ fee 38,000 34,000 28,000 24,000

569,754 528,932 33,000 31,000Executive directors of subsidiaries :- Salary and allowance 209,700 84,800 - -- EPF 10,212 8,856 - -

219,912 93,656 - -Directors’ fee 10,000 15,000 - -

229,912 108,656 - -

Total executive directors’ remuneration 799,666 637,588 33,000 31,000

23. TAXATION

GROUP COMPANY2014 2013 2014 2013

RM RM RM RM

Malaysian income tax :Based on results for the financial year- Current tax (408,640) (384,000) (252,000) (416,500)- Deferred tax

Relating to origination and reversal of temporary differences 29,240 - - -

Crystallisation of revaluation reserve 199,103 111,865 - -Changes in tax rate (1,240) - - -

227,103 111,865 - -

(181,537) (272,135) (252,000) (416,500)

Over/(Under) provision in prior year- Current tax 14,142 21,179 3,363 (4,267)- Deferred tax 3,878 - - -

18,020 21,179 3,363 (4,267)

(163,517) (250,956) (248,637) (420,767)



23. TAXATION (cont'd)

The reconciliation of tax expense of the Group and of the Company is as follows :

GROUP COMPANY2014 2013 2014 2013

RM RM RM RM

(Loss)/Profit before taxation (2,702,355) (3,787,066) 1,173,455 465,538

Income tax at Malaysian statutory tax rate of 25% 675,589 946,767 (293,364) (116,385)Income not subject to tax 9,846 8,216 259,643 330,216Expenses not deductible for tax purposes (305,359) (505,383) (218,279) (630,331)Deferred tax assets not recognised (569,690) (781,223) - -Utilisation of unabsorbed tax losses and capital

allowances 25 3,685 - -Current year unabsorbed reinvestment allowance 9,292 55,803 - -Changes in tax rate * (1,240) - - -

(181,537) (272,135) (252,000) (416,500)Over/(Under) provision in prior years 18,020 21,179 3,363 (4,267)

(163,517) (250,956) (248,637) (420,767)

* The corporate tax rate will be reduced to 24% from the year of assessment 2016 as announced in the Malaysian Budget 2014. Consequently, deferred tax assets and liabilities are measured using this tax rate.

GROUP

The net deferred tax (assets)/liabilities which have not been recognised are represented by temporary differences arising from :

2014 2013RM RM

Property, plant and equipment (342,531) (244,149)Biological assets (40,216) 34,381Unabsorbed tax losses 25 (993,234)Unabsorbed capital and agricultural allowances (205,184) (358,740)Unabsorbed reinvestment allowance 18,241 784,204

(569,665) (777,538)

The amount and future availability of unabsorbed tax losses, capital allowances and reinvestment allowance for which the related tax effects have not been accounted for at the end of the reporting period are as follows :

2014 2013RM RM

Unabsorbed tax losses 9,942,600 9,943,500Unabsorbed capital and agricultural allowances 13,130,000 12,309,000Unabsorbed reinvestment allowance 16,297,400 16,370,400

The unabsorbed tax losses, capital and agricultural allowances and reinvestment allowance are available to be carried forward for set-off against assessable income of a nature and amount sufficient for them to be utilised.



24. LOSS PER SHARE

GROUP

(a) Basic loss per share

Basic loss per share is calculated by dividing the loss attributable to owners of the parent by the weighted average number of ordinary shares in issue during the financial year as follows :

2014 2013RM RM

Loss for the year attributable to equity holders of the Company (RM) (2,536,941) (2,561,158)

Weighted average number of ordinary shares of RM 0.10 eachIssued shares at 1 July 500,484,430 276,111,681Effect of shares issued pursuant to acquisition of subsidiaries - 107,360,353Effect of shares issued pursuant to exercise of warrants 95,890 -

Weighted average number of shares at 30 June 500,580,320 383,472,034

Basic loss per share (sen) (0.51) (0.67)

(b) Diluted loss per share

The calculation of diluted loss per share was based on loss attributed to equity holders of the Company and on the weighted average number of shares outstanding after adjustment for the effects of all dilutive potential ordinary shares as follows :

2014 2013RM RM

Loss for the year attributable to equity holders of the Company (RM) (2,536,941) (2,561,158)

Weighted average number of ordinary shares as above 500,580,320 383,472,034Effects on conversion of warrants 63,282,282 68,045,410

563,862,602 451,517,444

Diluted loss per share (sen) (0.45) (0.57)

25. FINANCIAL GUARANTEE (UNSECURED)

COMPANY2014 2013

RM RM

Corporate guarantee extended by the Company to financial institutions for credit facilities granted to the subsidiaries as at the end of the reporting period are as follows :

- Limit 2,343,857 19,550,000

- Utilised 336,672 -

The corporate guarantee does not have a determinable effect on the terms of the credit facilities due to the financial institutions requiring parent guarantee as a pre-condition for approving the credit facilities granted to the subsidiaries. The actual terms of the credit facilities are likely to be the best indicator of “at market” terms and hence the fair value of the credit facilities are equal to the credit facilities amount received by the subsidiaries. As such, there is no value on the corporate guarantee to be recognised in the financial statements.



26. SEGMENTAL INFORMATION

Segmental information is presented in respect of the Group’s business segments. The business segment is based on the Group’s management and internal reporting structure.

Business Segment

For management purposes, the Group is organised into manufacturing, plantation, trading and investment holding divisions. Inter-segment pricing is determined based on negotiated terms.

By business segments

Investment2014 Manufacturing Plantation Trading holding Elimination Total

RM RM RM RM RM Note RM

Revenue from external customers 12,836,783 9,610,219 21,164 134,540 - 22,602,706

Inter-segment revenue - - 2,123 1,966,000 (1,968,123) A -

Total revenue 12,836,783 9,610,219 23,287 2,100,540 (1,968,123) 22,602,706

Segment results (1,781,976) (57,753) 665 1,603,367 (1,968,123) (2,203,820)Interest expense (420) (79,071) - (530,643) - (610,134)Interest income 2,514 8,354 - 100,731 - 111,599

(Loss)/Profit before taxation (1,779,882) (128,470) 665 1,173,455 (1,968,123) (2,702,355)Taxation (13,221) (143,159) - (248,637) 241,500 (163,517)

(Loss)/Profit for the year (1,793,103) (271,629) 665 924,818 (1,726,623) (2,865,872)

AssetsSegment assets 18,673,355 80,590,669 103,780 92,956,625 (57,771,403) 134,553,026 Tax recoverable 97,945 - - 13,865 (13,750) 98,060 Cash and cash equivalents 302,394 275,374 1,767 4,006,910 - 4,586,445

Total assets 19,073,694 80,866,043 105,547 96,977,400 (57,785,153) 139,237,531

LiabilitiesSegment liabilities 6,178,500 37,111,810 317,652 11,232,107 (26,698,327) 28,141,742 Finance lease liabilities 273,857 960,872 - - - 1,234,729 Provision for taxation - 243,144 - - - 243,144

Total liabilities 6,452,357 38,315,826 317,652 11,232,107 (26,698,327) 29,619,615

Other informationCapital expenditure 404,125 3,193,044 - 1,576 - B 3,598,745 Amortisation of biological

assets - 617,098 - - - 617,098 Depreciation 3,177,940 1,681,555 - 3,547 - 4,863,042 Non-cash expenses other

than depreciation 194,330 4,851 - (7,744) - C 191,437



26. SEGMENTAL INFORMATION (cont'd)

Business Segment (cont'd)

By business segments

Investment2013 Manufacturing Plantation Trading holding Elimination Total

RM RM RM RM RM Note RM

Revenue from external customers 21,178,945 3,805,004 59,245 191,258 - 25,234,452

Inter-segment revenue - - 35,685 2,898,000 (2,933,685) A -

Total revenue 21,178,945 3,805,004 94,930 3,089,258 (2,933,685) 25,234,452

Segment results 3,402,537 (4,961,865) (20,202) 304,305 (2,603,000) (3,878,225)Interest expense (12,175) (82,068) - - - (94,243)Interest income 14,980 9,189 - 161,233 - 185,402

Profit/(Loss) before taxation 3,405,342 (5,034,744) (20,202) 465,538 (2,603,000) (3,787,066)Taxation (344,554) 111,865 - (420,767) 402,500 (250,956)

Profit/(Loss) for the year 3,060,788 (4,922,879) (20,202) 44,771 (2,200,500) (4,038,022)

AssetsSegment assets 22,881,316 79,085,404 123,219 90,814,847 (55,251,843) 137,652,943 Tax recoverable - 55,073 - - - 55,073 Cash and cash equivalents 564,658 437,281 4,609 3,775,296 - 4,781,844

Total assets 23,445,974 79,577,758 127,828 94,590,143 (55,251,843) 142,489,860

LiabilitiesSegment liabilities 8,208,741 34,526,134 338,475 10,830,726 (24,427,455) 29,476,621 Borrowings - 1,478,466 - - - 1,478,466 Provision for taxation 98,292 - - 10,988 - 109,280

Total liabilities 8,307,033 36,004,600 338,475 10,841,714 (24,427,455) 31,064,367

Other informationCapital expenditure 141,299 3,636,621 - 18,908 (558) B 3,796,270 Amortisation of biological

assets - 466,230 - - - 466,230 Depreciation 3,095,386 1,403,519 - 3,508 - 4,502,413 Non-cash expenses/

(income) other than depreciation 296,207 (14,512) (258,837) 616,564 (295,000) C 344,422



26. SEGMENTAL INFORMATION (cont'd)

Notes to segment information:

A Inter-segment revenue are eliminated on consolidation.

B Additions to non-current assets consist of :

2014 2013RM RM

Property, plant and equipment 1,742,085 2,449,532Biological assets 1,856,659 1,346,738

3,598,744 3,796,270

C Other material non-cash expenses consist of the following items :

2014 2013RM RM

Allowance for slow moving inventories 174,244 1,997Loss/(Gain) on disposal of property, plant and equipment 7,113 (13,292)Loss on disposal of investment in an associate - 34,042(Gain)/Loss on disposal of other investments (7,744) 321,564Property, plant and equipment written off 18,635 1,325Unrealised gain on foreign exchange (811) (1,214)

191,437 344,422

Geographical segments

Revenue and non-current assets information based on the geographical location of customers are as follows :

Revenue2014 2013

RM RM

Malaysia 22,602,706 25,141,489Singapore - 92,963

22,602,706 25,234,452

The Group’s non-current assets are maintained entirely in Malaysia.

Information about major customer

The following are major customers with revenue equal or more than 10% of the Group’s total revenue :

Revenue2014 2013

RM RM Segments

- Customer A 10,869,896 17,641,962 Manufacturing - Customer B 8,971,467 - Plantation

19,841,363 17,641,962



27. RELATED PARTY DISCLOSURES

(i) Related party transactions

COMPANY2014 2013

RM RM

Gross dividend income from subsidiaries 1,966,000 2,898,000

(ii) Compensation of key management personnel

The Group and the Company have no other members of key management personnel apart from the Board of Directors which compensation has been disclosed in Note 22.

Key management personnel are those persons including directors having authority and responsibility for planning, directing and controlling the activities of the Group and of the Company, directly or indirectly.

28. CAPITAL COMMITMENT

GROUP2014 2013

RM RM

Contracted but not provided for :- Acquisition of property, plant and equipment 205,100 164,150

29. CATEGORIES OF FINANCIAL INSTRUMENTS

The table below provides an analysis of financial instruments categorised as loans and receivables (“L&R”), available-for-sale financial assets (“AFS”) and financial liabilities measured at amortised cost (“FL”).

Carryingamount L&R AFS FL

RM RM RM RM

GROUP2014Financial assetsOther investments 626,014 - 626,014 -Trade receivables 1,784,722 1,784,722 - -Other receivables and refundable deposits 322,958 322,958 - -Cash and cash equivalents 4,586,445 4,586,445 - -

7,320,139 6,694,125 626,014 -

Financial liabilitiesBorrowings 1,234,729 - - 1,234,729Trade payables 1,164,842 - - 1,164,842Other payables and accruals 11,773,818 - - 11,773,818

14,173,389 - - 14,173,389



29. CATEGORIES OF FINANCIAL INSTRUMENTS (cont'd)

Carryingamount L&R AFS FL

RM RM RM RM

2013Financial assetsOther investments 536,883 - 536,883 -Trade receivables 2,373,132 2,373,132 - -Other receivables and refundable deposits 298,690 298,690 - -Cash and cash equivalents 4,781,844 4,781,844 - -

7,990,549 7,453,666 536,883 -

Financial liabilitiesBorrowings 1,478,466 - - 1,478,466Trade payables 2,716,782 - - 2,716,782Other payables and accruals 11,325,776 - - 11,325,776

15,521,024 - - 15,521,024

COMPANY2014Financial assetsOther investments 626,014 - 626,014 -

Other receivables and refundable deposits 63,812 63,812 - -

Amount due from subsidiaries 26,947,017 26,947,017 - -

Cash and cash equivalents 4,006,910 4,006,910 - -

31,643,753 31,017,739 626,014 -


Other payables and accruals 11,232,108 - - 11,232,108

Amount due to a subsidiary 500,000 - - 500,000

11,732,108 - - 11,732,108

2013

Financial assets

Other investments 536,883 - 536,883 -

Other receivables and refundable deposits 29,312 29,312 - -

Amount due from subsidiaries 24,426,899 24,426,899 - -

Cash and cash equivalents 3,775,296 3,775,296 - -

28,768,390 28,231,507 536,883 -


Other payables and accruals 10,830,726 - - 10,830,726



30. FINANCIAL RISK MANAGEMENT

The Group and the Company are exposed to a variety of financial risks arising from their operations and the use of financial instruments. The key financial risks include credit risk, liquidity risk, interest rate risk and foreign currency exchange risk. The Group operates within clearly defined guidelines that are approved by the Board and the Group’s policy is not to engage in speculative activities.

30.1 Credit risk

Credit risk refers to the risk that the counterparty will default on its contractual obligations resulting in financial loss to the Group and to the Company. The Group’s exposure to credit risk arises principally from its trade receivables whilst the Company’s exposure to credit risk arises principally from advances to its subsidiaries and financial guarantees provided to financial institutions in respect of credit facilities granted to the subsidiaries.

30.1.1 Trade receivables

The Group extends to existing customers credit terms that range between 30 to 60 days. In deciding whether credit terms shall be extended, the Group will take into consideration factors such as the relationship with the customer, its payment history and credit worthiness. The Group subjects new customers to credit verification procedures. In addition, debt monitoring procedures are performed on an on-going basis with the result that the Group’s exposure to bad debts is not significant.

The maximum exposure to credit risk arising from trade receivables is represented by their carrying amount in the statement of financial position.

The ageing of trade receivables of the Group is as follows :

2014 2013RM RM

Not past due 1,733,613 2,346,828

1 to 30 days past due 51,109 25,45931 to 60 days past due - -61 to 90 days past due - -Past due more than 91 days - 845

51,109 26,304

1,784,722 2,373,132

Trade receivables that are neither past due nor impaired are creditworthy customers with good payment record with the Group. None of the Group’s trade receivables that are neither past due nor impaired have been renegotiated during the financial year.

The Group has trade receivables amounting to RM51,109 (2013: RM26,304) that are past due as at the end of the reporting period but not impaired as the management is of the view that these past due amounts will be collected in due course.

The Group has concentration of credit risk on 3 customers (2013: 1 customer) which represent 86% (2013: 75%) of total trade receivables.

30.1.2 Intercompany balances

The Company obtains and provides advances to its subsidiaries and monitors the result of the subsidiaries regularly.

The maximum exposure to credit risk is represented by their carrying amount in the statement of financial position.

As at the end of the reporting period, there was no indication that the advances to its subsidiaries are not recoverable. The Company does not specifically monitor the ageing of the advances to its subsidiaries.



30. FINANCIAL RISK MANAGEMENT (cont'd)

30.1 Credit risk (cont'd)

30.1.3 Financial guarantees

The Company provides unsecured corporate guarantee to financial institutions in respect of credit facilities granted to the subsidiaries.

The maximum exposure to credit risk is disclosed in Note 25, representing the outstanding credit facilities of the subsidiaries as at the end of the reporting period. The Company monitors on an ongoing basis the results of the subsidiaries and repayments made by the subsidiaries.

30.2 Liquidity risk

Liquidity risk is the risk that the Group will not be able to meet its financial obligations as and when they fall due. The Group actively manages its debt maturity profile, operating cash flows and availability of funding so as to ensure that all repayment and funding needs are met. As part of its overall prudent liquidity management, the Group maintains sufficient level of cash and cash equivalents to meet its working capital requirements.

The table below summarises the maturity profile of the Group’s and the Company’s financial liabilities as at the end of the reporting period based on the undiscounted contractual payments:

Carryingamount

Contractualcash flows

Withinone year

More thanone yearand less

thantwo years

More thantwo years

and lessthan

five yearsRM RM RM RM RM

GROUP2014Interest bearing

borrowings 1,234,729 1,303,155 829,105 425,544 48,506

Trade payables 1,164,842 1,164,842 1,164,842 - -

Other payables and accruals 11,773,818 13,530,313 3,630,313 3,450,000 6,450,000

14,173,389 15,998,310 5,624,260 3,875,544 6,498,506

2013

Interest bearing borrowings 1,478,466 1,581,894 822,467 759,427 -

Trade payables 2,716,782 2,716,782 2,716,782 - -

Other payables and accruals 11,325,776 13,612,914 712,914 3,000,000 9,900,000

15,521,024 17,911,590 4,252,163 3,759,427 9,900,000




30.2 Liquidity risk (cont'd)

Carryingamount

Contractualcash flows

Withinone year

More thanone yearand less

thantwo years

More thantwo years

and lessthan

five yearsRM RM RM RM RM

COMPANY2014Other payables and

accruals 11,232,108 12,988,603 3,088,603 3,450,000 6,450,000

Intercompany balance 500,000 500,000 500,000 - -

11,732,108 13,488,603 3,588,603 3,450,000 6,450,000

2013

Other payables and accruals 10,830,726 13,117,864 217,864 3,000,000 9,900,000

30.3 Interest rate risk

The Group’s and the Company’s fixed rate deposits, borrowings and deferred cash consideration are exposed to a risk of change in their fair value due to changes in interest rates. The Group does not have any floating rate borrowings.

The interest rate profile of the Group’s and the Company’s interest-bearing financial instruments based on the carrying amount as at the end of the reporting period is as follows :

GROUP COMPANY2014 2013 2014 2013

RM RM RM RM

Fixed rate instrumentsFinancial assets 2,754,860 3,577,786 2,754,860 3,005,148Financial liabilities 12,378,234 12,091,328 11,143,505 10,612,862

Fair value sensitivity analysis for fixed rate instruments

The Group and the Company do not account for any fixed rate financial assets and financial liabilities at fair value through profit or loss, and the Group and the Company do not designate derivatives as hedging instruments under a fair value hedge accounting model. Therefore, a change in interest rates at the end of the reporting period would not affect profit or loss.

30.4 Foreign currency risk

The Group is exposed to foreign currency risk on sales and purchases that are denominated in currencies other than the functional currency of the Group entities. The Group also holds cash and bank balances denominated in foreign currency for working capital purposes. The currencies giving rise to this risk is US Dollar (“USD”), Singapore Dollar (“SGD”) and Vietnamese Dong (“VND”).




30.4 Foreign currency risk (cont'd)

The Group’s exposure to foreign currency risk, based on carrying amounts as at the end of the reporting period is as follows :

2014 2013USD VND USD VND SGD

RM RM RM RM RM

GROUPOther receivables - 41,930 3,724 8,425 -Cash and bank balances 406,788 1,914 17,692 455,165 -Trade payables (50,019) - (9,654) - (41,471)

Net exposure 356,769 43,844 11,762 463,590 (41,471)

COMPANYOther receivables - 41,930 - 8,425 -Cash and bank balances 395,241 1,914 336 455,165 -

Net exposure 395,241 43,844 336 463,590 -

Sensitivity analysis for foreign currency risk

Below demonstrates the sensitivity to a reasonably possible change in the foreign currencies exchange rates (against Ringgit Malaysia), with all other variables held constant, of the Group’s and the Company’s results. A 10% strengthening of the RM against the following currencies at the end of the reporting period would have increased loss before taxation by the amount shown below and a corresponding decrease would have an equal but opposite effect.

GROUP2014 2013

RM RM

USD (35,677) (1,176)VND (4,384) (46,359)SGD - 4,147

Increase in loss before taxation (40,061) (43,388)

COMPANY2014 2013

RM RM

USD (39,524) (34)VND (4,384) (46,359)

Decrease in profit before taxation (43,908) (46,393)

31. CAPITAL MANAGEMENT

The primary objective of the Group’s capital management policy remains unchanged and is to maintain a strong capital base to support its businesses and maximise shareholders’ value.

The Group manages its capital structure and makes adjustments to it in the light of changes in economic conditions or expansion of the Group. The Group may adjust the capital structure by issuing new shares, returning capital to shareholders or adjusting the amount of dividends to be paid to shareholders or sell assets to reduce debts. The Group is not subject to any externally imposed capital requirements by its lenders.



32. FAIR VALUE OF FINANCIAL INSTRUMENTS

GROUP AND COMPANY

The carrying amounts of financial assets (other than investments in quoted equity instruments) and financial liabilities of the Group and of the Company approximation their fair values, either due to their short-term nature or that they are floating rate instruments that are re-priced to market interest rates on or near the end of the reporting period.

The fair value of investments in quoted equity instruments is its quoted market price at 30 June 2014. The fair value of the investments is disclosed in Note 7.

32.1 Fair value hierarchy

The table below analyses financial instruments that are measured subsequent to initial recognition at fair value, grouped into Levels 1 to 3 based on the degree to which the fair value is observable (refer to Note 2.2 to the financial statements for definition of Level 1 to 3 fair value hierarchy).

Level 1 Level 2 Level 3 TotalRM RM RM RM

2014Available-for-sale financial assetsInvestment in quoted equity instruments 626,014 - - 626,014

2013Available-for-sale financial assetsInvestment in quoted equity instruments 536,883 - - 536,883

The investment in quoted equity investments which are quoted in an active market are carried at fair value by reference to their quoted closing bid price at the end of the reporting period.

33. SUBSEQUENT EVENT

Matang Holdings Berhad (“Matang”)

On 19 November 2012, the Company announced the following :

(a) the Company entered into a business merger agreement (“BMA”) with Matang Holdings Berhad (“Matang”) for the transfer of the entire business and undertakings, including all assets and liabilities of Matang to the Company for a total consideration of RM145,000,000 (“Proposed Merger”).

(b) Proposed exemption under Para 16 PN9 of the Malaysian Code on Takeover and Mergers, 2010 to Matang and Parties Acting in concert with Matang from the obligation to extend a take-over offer for all the remaining ordinary shares of the Company of RM0.10 each not already held by them pursuant to the Proposed Merger; and

(c) Proposed change of name from Scope Industries Berhad to Matang Scope Berhad.

The Company and Matang had mutually agreed on 17 August 2013 to extend the time period of the BMA dated 19 November 2012 for a further period of 9 months from 19 August 2013.

On 8 September 2014, the Company announced that the conditions precedent of the BMA dated 19 November 2012 have not been fulfilled on 18 May 2014 (i.e. being the extended cut-off date) and accordingly the timeframe to fulfill such conditions have lapsed. Pursuant thereto, the Company notified Matang of the termination of the BMA with no further claims against each other.



34. SUPPLEMENTARY INFORMATION DISCLOSED PURSUANT TO BURSA MALAYSIA SECURITIES BERHAD LISTING REQUIREMENTS

With the purpose of improving transparency, Bursa Malaysia Securities Berhad has on 25 March 2010, and subsequently on 20 December 2010, issued directives which require all listed corporations to disclose the breakdown of unappropriated profits or accumulated losses into realised and unrealised on group and company basis in the annual audited financial statements.

The breakdown of (accumulated losses)/retained profits as at the end of the reporting period has been prepared by the directors in accordance with the directives from Bursa Malaysia Securities Berhad stated above and 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 are as follows :

GROUP COMPANY2014 2013 2014 2013

RM RM RM RM

Total (accumulated losses)/retained profits of the Company and its subsidiaries:- Realised (4,683,313) (2,405,564) 2,545,783 1,620,965- Unrealised (225,354) (256,839) - -

(4,908,667) (2,662,403) 2,545,783 1,620,965

Less : Consolidation adjustments (3,126,665) (2,835,988) - -

Total (accumulated losses)/retained profits as per statements of financial position (8,035,332) (5,498,391) 2,545,783 1,620,965

SUPPLEMENTARY INFORMATION30 JUNE 2014


NOTICE IS HEREBY GIVEN THAT the Twelfth Annual General Meeting of the Company will be held at Bamboo Room, Scope Manufacturers (M) Sdn. Bhd., Lot 6181 Jalan Perusahaan 2, Kawasan Perindustrian Parit Buntar, 34200 Parit Buntar, Perak on Tuesday, 18 November 2014 at 10:30 am for the following purposes :-

AGENDA

AS ORDINARY BUSINESS :

1. To receive the Audited Financial Statements of the Company for the financial year ended 30 June 2014 together with the Reports of the Directors and Auditors thereon.

2. To approve the payment of Directors’ fee of RM71,000 for the financial year ended 30 June 2014. Resolution 1

3. To re-elect Mr Lee Min Huat as a Director who retires in accordance with Article 127 of the Company’s Articles of Association. Resolution 2

4. To re-elect Mr Lim Ee Tatt as a Director who retires in accordance with Article 132 of the Company’s Articles of Association. Resolution 3

5. To pass the following resolution pursuant to Section 129 of the Companies Act, 1965 as ordinary resolution :

“THAT Mr Chew Kong Yoon who is over the age of seventy years and retiring in accordance with Section 129 of the Companies Act, 1965, be hereby re-appointed as Director of the Company and to hold office until the conclusion of the next Annual General Meeting.” Resolution 4

6. To re-appoint Messrs Grant Thornton as Auditors of the Company for the ensuing year and to authorise the Directors to fix their remuneration. Resolution 5

AS SPECIAL BUSINESS :

7. To consider and if thought fit, to pass with or without modifications the following resolutions :-

(i) ORDINARY RESOLUTIONAUTHORITY TO ISSUE SHARES“That pursuant to Section 132D of the Companies Act, 1965, and subject to the approvals of the relevant Governmental and/or regulatory authorities, the Directors be and are hereby empowered to issue shares in the Company, at such time and upon such terms and conditions and for such purposes as the Directors may, in their absolute discretion deem fit, provided that the aggregate number of shares issued pursuant to this resolution in any one financial year does not exceed 10% of the issued share capital of the Company for the time being and that the Directors be and are also empowered to obtain the approval from Bursa Malaysia Securities Berhad for the listing of and quotation for the additional shares so issued and that such authority shall continue to be in force until the conclusion of the next Annual General Meeting of the Company.” Resolution 6

(ii) ORDINARY RESOLUTIONPROPOSED SHARE BUY-BACK OF UP TO TEN PERCENT (10%) OF THE ISSUED AND PAID-UP SHARE CAPITAL OF THE COMPANY (“PROPOSED SHARE BUY-BACK AUTHORITY”)“That subject to the Companies Act, 1965 (“the Act”), rules, regulations and orders made pursuant to the Act, provisions of the Company’s Memorandum and Articles of Association, the ACE Market Listing Requirements of Bursa Malaysia Securities Berhad (“Bursa Securities”) and the approvals of all relevant governmental and/or regulatory authorities, the Directors of the Company be and are hereby authorised to make purchases of ordinary shares comprised in the Company’s issued and paid up ordinary share capital, such purchases to be made through Bursa Securities upon such terms and conditions as the Directors may deem fit in the interest of the Company provided that :-

NOTICE OF ANNUAL GENERAL MEETING


(ii) ORDINARY RESOLUTIONPROPOSED SHARE BUY-BACK OF UP TO TEN PERCENT (10%) OF THE ISSUED AND PAID-UP SHARE CAPITAL OF THE COMPANY (“PROPOSED SHARE BUY-BACK AUTHORITY”) (cont'd)(i) the aggregate number of ordinary shares of RM0.10 each in Scope Industries Berhad (“Scope

Shares”) which may be purchased or held by the Company shall not exceed ten per centum (10%) of its issued and paid-up ordinary share capital of the Company, subject to a restriction that the issued and paid-up ordinary share capital of Scope does not fall below the minimum share capital requirements of the Listing Requirements of Bursa Securities (“Listing Requirements”) applicable to a company listed on the ACE Market of Bursa Securities and that the listed issuer continues to maintain a shareholding spread that is in compliance with the requirements of the Listing Requirements after the share purchase;

(ii) the maximum funds to be allocated by the Company for the purpose of purchasing the Scope Shares under the Proposed Share Buy-Back Authority shall not exceed the total amount of retained profit and/or share premium available for effecting the Proposed Share Buy-Back Authority. Based on the audited financial statements of the Company for the financial year ended 30 June 2014, the retained profits and share premium account of the Company were RM2,545,783 and RM32,349,856 respectively. The Company will only purchase its own shares wholly out of retained profits and/or the share premium account as required under Rule 12.10 of the ACE Market Listing Requirements of Bursa Securities;

(iii) the authority conferred by this resolution to facilitate the Proposed Share Buy-Back Authority will commence immediately upon passing of this ordinary resolution and will continue to be in force until :-

(a) the conclusion of the next annual general meeting (“AGM”) of the Company following the general meeting at which such resolution was passed at which time the said authority will lapse unless by ordinary resolution passed at that meeting, the authority is renewed, either unconditionally or subject to conditions; or

(b) the expiration of the period within which the next AGM after that date is required by law to be held; or

(c) revoked or varied by ordinary resolution passed by the shareholders of the Company in a general meeting;

whichever occurs first, but not so as to prejudice the completion of purchase(s) by the Company of the Scope Shares before the aforesaid expiry date and, made in any event, in accordance with the provisions of the guidelines issued by Bursa Securities and any prevailing laws, rules, regulations, orders, guidelines and requirements issued by any relevant authorities; and

(iv) upon completion of the purchase(s) of the Scope Shares by the Company, the Directors of the Company be and are hereby authorised to cancel up to all the Scope Shares so purchased or to retain the Scope Shares so purchased as treasury shares, of which may be distributed as dividends to shareholders, and/or resold on Bursa Securities, and/or subsequently cancelled or to be retained part of the Scope Shares so purchased as treasury shares and cancel the remainder and in any other manner as prescribed by the Act, rules, regulations and orders made pursuant to the Act and the requirements of Bursa Securities and any other relevant authority for the time being in force;

And That the Directors of the Company be and are hereby authorised to take all such steps as are necessary or expedient to implement, finalise, complete or to effect the Proposed Share Buy-Back Authority with full powers to assent to any conditions, modifications, resolutions, variations and/or amendments (if any) as may be imposed by the relevant authorities and to do all such acts and things as the said Directors may deem fit and expedient in the best interest of the Company to give effect to and to complete the purchase of the Scope Shares.” Resolution 7

8. To transact any other business of which due notices shall have been given in accordance with the Companies Act, 1965.

NOTICE OF ANNUAL GENERAL MEETING (cont’d)


By Order of the Board,

CHEE WAI HONG (BC/C/1470)FOO LI LING (MAICSA 7019557)Company Secretaries

Penang

Date : 27 October 2014

Notes :

1. A proxy may but need not be a member of the Company and the provisions of Section 149(1)(b) of the Companies Act, 1965 shall not apply to the Company.

2. The proxy form must be duly completed and deposited at the Registered Office of the Company, 51-13-A Menara BHL Bank, Jalan Sultan Ahmad Shah, 10050 Penang not less than forty-eight (48) hours before the time for holding the meeting.

3. A member shall be entitled to appoint more than one (1) proxy to attend and vote at the same meeting.

4. Where a member appoints two (2) or more proxies, the appointments shall be invalid unless he specifies the proportions of his holdings to be represented by each proxy.

5. If the appointor is a corporation, this form must be executed under its Common Seal or under the hand of its attorney.

6. Where a member of the Company is an authorised nominee as defined under the Securities Industry (Central Depositories) Act 1991 (“Central Depositories Act”), 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.

7. Where a member of the Company is an exempt authorised nominee as defined under the Central Depositories Act which holds ordinary shares in the Company for multiple beneficial owners in one securities account (“Omnibus Account”), there shall be no limit to the number of proxies which the Exempt Authorised Nominee may appoint in respect of each Omnibus Account it holds.

8. For purpose of determining who shall be entitled to attend this meeting, the Company shall be requesting Bursa Malaysia Depository Sdn Bhd to make available to the Company pursuant to Article 77 of the Articles of Association of the Company and Rule 7.16(2) of the ACE Market Listing Requirements of Bursa Malaysia Securities Berhad, a Record of Depositors (“ROD”) as at 12 November 2014 and only a Depositor whose name appears on such ROD shall be entitled to attend, speak and vote at this meeting or appoint proxy to attend and/or speak and/or vote in his/her behalf.

Explanatory Notes on Special Business

Resolution 6 – Authority to issue sharesThe Ordinary Resolution proposed under item 7(i) above, if passed, primarily to renew the mandate to give authority to the Board of Directors of the Company to issue and allot shares in the Company up to an amount not exceeding 10% of the total issued capital of the Company for the time being for such purposes as the Directors consider would be in the best interest of the Company without convening a general meeting. This would avoid any delay and costs in convening a general meeting to specifically approve such an issue of shares. This authority, unless revoked or varied by the shareholders of the Company in general meeting, will expire at the conclusion of the next Annual General Meeting.

As at the date of this Notice, the Company has not issued any new shares pursuant to Section 132D of the Companies Act, 1965 under the general authority which was approved at the Eleventh Annual General Meeting held on 21 November 2013 and which will lapse at the conclusion of the Twelfth Annual General Meeting to be held on 18 November 2014. A renewal of this authority is being sought at the Twelfth Annual General Meeting under proposed Resolution 6.

This authority if granted will provide flexibility to the Company for any possible fund raising activities, including but not limited to further placing of shares, for purpose of funding future investment project(s), working capital, acquisition(s) and/or settlement of banking facility(ies).

Resolution 7 – Proposed Share Buy-Back AuthorityThe Ordinary Resolution proposed under item 7(ii) above, if passed, will give the Directors of the Company authority to purchase its own shares up to ten per centum (10%) of the issued and paid up capital of the Company. In order to avoid any delay and costs involved in convening a general meeting, it is thus appropriate to seek shareholders’ approval. This authority, unless revoked or varied by the shareholders of the Company in general meeting, will expire at the conclusion of the next Annual General Meeting.

Further information on the Proposed Share Buy Back Authority is set out in the Circular to Shareholders dated 27 October 2014, which is dispatched together with the Company’s Annual Report 2014.

NOTICE OF ANNUAL GENERAL MEETING (cont’d)


As at date of this notice, there are no individuals who are standing for election as Directors (excluding the above Directors who are standing for re-election) at this forthcoming Annual General Meeting.

STATEMENT ACCOMPANYING NOTICE OF ANNUAL GENERAL MEETING(Pursuant to Rule 8.29(2) of the Listing Requirements of Bursa Malaysia Securities Berhad)


RegisteredOwner / Location

Date of

Acquisition Description TenureAge of

buildingLandArea

Built upArea

ExistingUse

Audited Net

Carrying Amount

as at 30 June

2014 (Years) RM '000

1 Scope Manufacturers(M) Sdn. Bhd. HS(D) 8228PT 4149, Lot 6181Jalan Perusahaan 2Kawasan Perindustrian Parit Buntar34200 Parit BuntarPerak, Malaysia

27.2.1998 Industrial Land

& Building

Leaseholdfor 60 years(expiring on16.02.2049)

14 65,340 Sq. ft

58,040 Sq. ft

Double storeyoffice withannexed singlestorey factorybuilding for use asoffice and factory

4,020

2 Scope Manufacturers(M) Sdn. Bhd.HS(D) 2841,PT 1803, Lot 6181Jalan Perusahaan 2Kawasan Perindustrian Parit Buntar34200 Parit BuntarPerak, Malaysia

14.11.2002 Industrial Land

& Building


8 87,120 Sq. ft

66,000 Sq. ft

Double storeyoffice withannexed singlestorey factorybuilding for use ashead office and factory

5,955

3 Pioneer Glow Sdn. Bhd. Title No. CL 095331801District of Kinabatangan (Tongod)Locality of Sungai Milian Sabah

19.7.2012 Plantation land


N/A 3,496.47 acres

N/A Plantation land

40,006

4 Pioneer Glow Sdn. Bhd. Title No. CL 095331801District of Kinabatangan (Tongod)Locality of Sungai Milian Sabah

19.7.2012 Estate building


- - - Estate office,warehouse,workshop andlabour quarters

986

5 Benua Mutiara Sdn. Bhd.Title No. CL 095311167District of Kinabatangan Locality of Segaliud-LokanOff KM 83Sandakan-LahadDatu HighwaySabah

20.6.2013 Plantation land


N/A 793.2 acres

N/A Plantation land

25,687

76,654

LIST OF PROPERTIES


ANALYSIS OF SHAREHOLDINGSAS AT 1 OCTOBER 2014

A. Authorised Share Capital : RM200,000,000.00Issued and fully paid-up Share Capital : RM50,548,443.20Class of Shares : Ordinary Shares of RM0.10 eachVoting Rights : On show of hands – One vote for one person

On a poll – One vote for one ordinary share

B. ANALYSIS BY SIZE OF SHAREHOLDINGS

Size of holdings No. of holders % No. of shares %

1 – 99 12 0.92 453 0.00100 – 1,000 242 18.59 214,700 0.041,001–10,000 425 32.64 2,580,165 0.5110,001 – 100,000 444 34.10 17,601,400 3.48100,001 – 25,274,220 (*) 174 13.37 215,430,910 42.6225,274,221 and above (**) 5 0.38 269,656,802 53.35Total 1,302 100.00 505,484,430 100.00

Remark : * - Less than 5% of Issued Holdings ** - 5% and above of Issued Holdings

C. SUBSTANTIAL SHAREHOLDERS

Name Number of Ordinary Shares of RM0.10 eachDirect % Indirect %

Lim Chiow Hoo 61,449,330 12.16 - -Lee Min Huat 58,251,860 11.52 - -Chew Kong Yoon 78,854,896 15.60 - -Wah Len Enterprise Sdn Bhd 87,900,000 17.39 - -Dato’ Lim Chee Wah - - 87,900,000* 17.39Lim Ee Tatt 13,000 0.00 87,900,000* 17.39Lim Ee Keong - - 87,900,000* 17.39Lim Saw Khim - - 87,900,000* 17.39Agriculturists Incorporated Development Sdn Bhd 30,400,716 6.01 - -Han Siew King - - 30,400,716# 6.01Han Kim Leng - - 30,400,716# 6.01

Notes:

* Deemed interested by virtue of his/her shareholdings of not less than 15% in Wah Len Enterprise Sdn Bhd pursuant to Section 6A of the Companies Act, 1965.

# Deemed interested by virtue of his shareholdings of not less than 15% in Agriculturists Incorporated Development Sdn Bhd pursuant to section 6A of the Companies Act, 1965.

D. DIRECTORS’ SHAREHOLDINGS

Name Number of Ordinary Shares of RM0.10 eachDirect % Indirect %

Lim Chiow Hoo 61,449,330 12.16 - -Lee Min Huat 58,251,860 11.52 - -Chew Kong Yoon 78,854,896 15.60 - -Lim Ee Tatt 13,000 0.00 87,900,000* 17.39Dato’ Philip Chan Hon Keong 575,000 0.11 - -Tan Poh Heng 250,000 0.05 - -Yong Loong Chen - - - -

Notes :

* Deemed interested by virtue of his/her shareholdings of not less than 15% in Wah Len Enterprise Sdn Bhd pursuant to Section 6A of the Companies Act, 1965.


ANALYSIS OF SHAREHOLDINGS (cont’d)AS AT 1 OCTOBER 2014

E. THIRTY LARGEST SHAREHOLDERS

Name of Shareholders No. of Shares % of total issued

capital

1. Wah Len Enterprise Sdn Bhd 87,900,000 17.39

2. Chew Kong Yoon 66,854,896 13.23

3. Lee Min Huat 43,251,860 8.56

4. Lim Chiow Hoo 41,249,330 8.16

5. Agriculturists Incorporated Development Sdn. Bhd. 30,400,716 6.01

6. Public Nominees (Tempatan) Sdn Bhd Pledged Securities Account For Leong Kok Vui (E-TWU/LDU)

20,319,700 4.02

7. Lim Chiow Hoo 20,200,000 4.00

8. Siew Lee Ying @ Siew Lee Yong 15,294,810 3.03

9. Lee Min Huat 15,000,000 2.97

10. HLIB Nominees (Tempatan) Sdn Bhd Pledged Securities Account For Chew Kong Yoon

10,000,000 1.98

11. Yap Pei Pei 9,055,900 1.79

12. Lee Tack Chong 8,500,000 1.68

13. Lok Huey Ming 7,849,500 1.55

14. Public Nominees (Tempatan) Sdn Bhd Pledged Securities Account For Benua Dutamas Sdn Bhd (E-TWU)

7,796,000 1.54

15. AIBB Nominees (Tempatan) Sdn Bhd Pledged Securities Account For Tan Siew Booy ( D18 )

7,708,200 1.52

16. Khor It Kwang 5,000,000 0.99

17. Lim Jyh Torng 4,289,000 0.85

18. Lim Seng Chong 3,876,000 0.77

19. Ong Lai Choon 3,310,900 0.65

20. Gan Sook Peng 3,074,900 0.61

21. Lee Meow Lim @ Lee Meow Yee 3,000,000 0.59

22. Mohammed Ab Halim Bin Ab Rahman 2,700,000 0.53

23. Wong Lee Peng 2,140,000 0.42

24. Lee Choon Guek 2,120,000 0.42

25. Christina Lay-See Cheah 2,010,000 0.40

26. Chin Soo Kim 2,000,000 0.40

27. Getaria Realty Sdn Bhd 2,000,000 0.40

28. Tan Eng Kim 1,946,500 0.39

29. Tan Eng Siang 1,900,000 0.38

30. Lee Tack Chong 1,800,000 0.36


ANALYSIS OF WARRANT HOLDINGSAS AT 1 OCTOBER 2014

A. Number of outstanding Warrants 2012/2020 (“Warrants”) : 113,596,361

Exercise Price Per Warrant : RM0.15 each

B. ANALYSIS BY SIZE OF WARRANT HOLDINGS

Size of holdings No. of holders % No. of Warrants %

1 – 99 33 3.64 723 0.00

100 – 1,000 464 51.16 208,305 0.18

1,001 – 10,000 240 26.46 872,200 0.77

10,001 – 100,000 115 12.68 4,471,680 3.94

100,001 – 5,679,817 (*) 48 5.29 42,461,000 37.38

5,679,818 and above (**) 7 0.77 65,582,453 57.73

Total 907 100.00 113,596,361 100.00

Remark : * - Less than 5% of Issued Warrants ** - 5% and above of Issued Warrants

C. DIRECTORS’ WARRANT HOLDINGS

Name Number of Warrants

Direct % Indirect %

Lim Chiow Hoo 10,649,866 9.38 - -

Lee Min Huat 11,540,372 10.16 - -

Chew Kong Yoon 2,560,000 2.25 - -

Lim Ee Tatt 700,000 0.62 5,000,000 4.40

Dato’ Philip Chan Hon Keong 25,000 0.02 - -

Tan Poh Heng 100,000 0.09 - -

Yong Loong Chen - - - -


ANALYSIS OF WARRANT HOLDINGS (cont’d)AS AT 1 OCTOBER 2014

D. THIRTY LARGEST WARRANT HOLDERS

Name of Warrant holders No. of Warrants% of total issued

Warrants

1. Yap Wah On @ Yup Hong 11,265,600 9.92

2. Tong Moi Chai 10,000,000 8.80

3. Gan Sook Peng 9,840,000 8.66

4. Siew Lee Ying @ Siew Lee Yong 9,798,382 8.63

5. Ngan Mee Ling 9,488,233 8.35

6. Lee Min Huat 8,540,372 7.52

7. Lim Chiow Hoo 6,649,866 5.85

8. Wah Len Enterprise Sdn Bhd 5,000,000 4.40

9. Lee Tack Chong 4,700,000 4.14

10. Lim Chiow Hoo 4,000,000 3.52

11. Cartaban Nominees (Asing) Sdn Bhd Standard Chartered Bank Singapore For BMO Spore Branch Foreign Client

3,025,400 2.66

12. Lee Min Huat 3,000,000 2.64

13. AIBB Nominees (Tempatan) Sdn Bhd Pledged Securities Account For Tan Siew Booy ( D18 )

2,244,000 1.98

14. Yap Pei Pei 1,621,000 1.43

15. HLIB Nominees (Tempatan) Sdn Bhd Pledged Securities Account For Chew Kong Yoon

1,600,000 1.41

16. Lok Huey Ming 1,284,200 1.13

17. Wong Lee Peng 1,151,700 1.01

18. Tee Ah Leck 1,110,300 0.98

19. Chew Kong Yoon 960,000 0.85

20. Lee Meow Lim @ Lee Meow Yee 820,000 0.72

21. HLIB Nominees (Tempatan) Sdn Bhd Pledged Securities Account For Chan Swee Booi

793,500 0.70

22. Lim Seng Chong 785,000 0.69

23. Ong Lai Choon 767,300 0.68

24. RHB Nominees (Tempatan) Sdn Bhd Pledged Securities Account For Wong Lee Peng

741,500 0.65

25. Lim Ee Tatt 700,000 0.62

26. Mohammed Ab Halim Bin Ab Rahman 600,000 0.53

27. Wong Jee Yai 479,000 0.42

28. Lee Tack Chong 450,000 0.40

29. Lee Choon Guek 420,000 0.37

30. Christina Lay-See Cheah 400,000 0.35


This page is intentionally left blank.

*I / We ____________________________________________________________________ of _______________________________ (Full Name in Block Letters)

____________________________________________________________________________ being a *Member/Members of Scope (Full Address)

Industries Berhad hereby appoint * the Chairman of the meeting or ___________________________________________________ (Full Name in Block Letters)

of _________________________________________________________________________________________________________ (Full Address)

or failing him/her, _____________________________________________________________ of ____________________________ (Full Name in Block Letters)

___________________________________________________________________________________ as *my/our proxy/proxies to (Full Address)

attend and vote for *me/ us and on *my/ our behalf at the Twelfth Annual General Meeting of the Company to be held at Bamboo Room, Scope Manufacturers (M) Sdn. Bhd., Lot 6181 Jalan Perusahaan 2, Kawasan Perindustrian Parit Buntar, 34200 Parit Buntar, Perak on Tuesday, 18 November 2014 at 10:30 am, and at any adjournment thereof to vote as indicated below :

No. ofResolution Resolutions For Against

1 Approval of payment of Directors’ fees for the financial year ended 30 June 2014

2 Re-election of Mr Lee Min Huat as Director

3 Re-election of Mr Lim Ee Tatt as Director

4 Re-appointment of Mr Chew Kong Yoon as Director

5 Re-appointment of Messrs Grant Thornton as Auditors and to authorise the Directors to fix Auditor’s remuneration.

6 Authority under Section 132D of the Companies Act, 1965 for the Directors to issue shares

7 Proposed Share Buy-Back Authority

(Please indicate with an “X” in the spaces provided above to how you wish your vote to be cast. If you do not do so, the proxy will vote or abstain from voting at his/ her discretion)

The proportion of my holdings to be represented by my *proxy/ proxies are as follows:-

First named Proxy %

Second named Proxy %

100 %

In case of a vote taken by a show of hands, the First Proxy shall vote on *my/ our behalf.

As witness my hand this ________ day of _______________ 2014.___________________________________

Signature of Member(s)/ Common Seal * Strike out whichever is not desired

Notes :

1. A proxy may but need not be a member of the Company and the provisions of Section 149(1)(b) of the Companies Act, 1965 shall not apply to the Company.

2. The proxy form must be duly completed and deposited at the Registered Office of the Company, 51-13-A Menara BHL Bank, Jalan Sultan Ahmad Shah, 10050 Penang not less than forty-eight (48) hours before the time for holding the meeting.

3. A member shall be entitled to appoint more than one (1) proxy to attend and vote at the same meeting.

4. Where a member appoints two (2) or more proxies, the appointments shall be invalid unless he specifies the proportions of his holdings to be represented by each proxy.

5. If the appointor is a corporation, this form must be executed under its Common Seal or under the hand of its attorney.

6. Where a member of the Company is an authorised nominee as defined under the Securities Industry (Central Depositories) Act 1991 (“Central Depositories Act”), 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.

7. Where a member of the Company is an exempt authorised nominee as defined under the Central Depositories Act which holds ordinary shares in the Company for multiple beneficial owners in one securities account (“Omnibus Account”), there shall be no limit to the number of proxies which the Exempt Authorised Nominee may appoint in respect of each Omnibus Account it holds.

8. For purpose of determining who shall be entitled to attend this meeting, the Company shall be requesting Bursa Malaysia Depository Sdn Bhd to make available to the Company pursuant to Article 77 of the Articles of Association of the Company and Paragraph 7.16(2) of the ACE Market Listing Requirements of Bursa Malaysia Securities Berhad, a Record of Depositors (“ROD”) as at 12 November 2014 and only a Depositor whose name appears on such ROD shall be entitled to attend, speak and vote at this meeting or appoint proxy to attend and/or speak and/or vote in his/her behalf.

PROXY FORM

No. of ordinary shares held

SCOPE INDUSTRIES BERHAD (591376-D) ANNUAL REPORT 2014

SCOPE INDUSTRIES BERHAD(Company No.: 591376-D)(Incorporated in Malaysia)

Please fold across the line and close

Please fold across the line and close

The Company SecretariesSCOPE INDUSTRIES BERHAD (591376-D)

51-13-A Menara BHL BankJalan Sultan Ahmad Shah

10050 Penang

Affix Stamp

We Care, We Share

A N N U A L R E P O R T2014

SCOPE INDUSTRIES BERHAD (591376-D)

(Incorporated In Malaysia)

6th Floor, Menara Hap Seng, Jalan P. Ramlee, 50250 Kuala Lumpur.Tel : (60)3 2022 1376 Fax : (60)3 2026 0916Email : [email protected], [email protected] Website : www.scope.com.my

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