evergreen fibreboard berhadevergreengroup.com.my/data/568/uploads/1file__10610094342.pdf · to...

EVERGREEN FIBREBOARD BERHAD (217120-W)

Plo 22,Parit Raja Industrial Estate86400 Parit Raja,Batu Pahat

Johor,Malaysia.Tel: 6(07) 454 1933Fax: 6(07) 454 2933




www.evergreengroup.com.my

2 0 0 9ANNUAL REPORT


Leading G

lobal MDF Produc

er Groups

2008

(MDF Year Book) P&M Kaindi

Sonae Indus

tria

Ernst Kaindl

Grupo Nueva

EVERGREEN

Finsa

Flakeboard

Yildiz Entegr

e

Arauco, Chile

Dong Wha

Fantoni

EVERG

REEN

FIBR

EBO

AR

D B

ERH

AD

(217120-W)

AN

NU

AL R

EPOR

T 2009

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A N N U A L R E P O R T 2 0 0 9

(INCORPORATED IN MALAYSIA) COMPANY NO. 217120-W

2 NoticeofAnnualGeneralMeeting

6 AppendixA

10 StatementsAccompanyingNoticeofAnnualGeneralMeeting

11 CorporateStructure

12 CorporateInformations

13 Mission&Vision

14 ProfileofDirectors

17 Chairman’sStatement

20 AuditCommitteeReport

24 StatementonCorporateGovernance

31 StatementonInternalControl

33 OtherComplianceInformation

35 Directors’Report

38 StatementByDirectors

38 StatutoryDeclaration

39 IndependentAuditors’Report

40 IncomeStatements

41 BalanceSheets

42 ConsolidatedStatementofChangesInEquity

44 CompanyStatementofChangesInEquity

45 CashFlowStatements

47 NotestotheFinancialStatements

89 ListofProperties

96 StatementofShareholdings

98 SubstantialShareholders

Enclosed FormofProxy

ContentsPage

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Notice of Annual General Meeting

1. ToreceivetheAuditedFinancialStatementsfor thefinancialyearended31December2009togetherwiththeDirectors’andAuditors’Reportthereon.

2. Toapprovethepaymentofatax-exemptfinaldividendof4senpershareinrespectoffinancial

yearended31December2009.

3. To approve the payment of Directors’ Fees of RM126,000 for the financial year ending 31December2010.

4. Tore-electthefollowingDirectorswhoretireduringtheyearinaccordancewithArticle101of

theCompany’sArticlesofAssociation:- (I)MrKuoJenChiu (II)MrJonathanLawNgeeSong 5. Tore-electEnWanAzharBinWanAhmadwhoisretiringinaccordancewithArticle106ofthe

Company’sArticlesofAssociation. 6. Toconsider,andifthoughtfit,topassthefollowingresolution:- “THAT,pursuanttoSection129(6)oftheCompaniesAct,1965,MrKuoWenChibeandis

herebyre-appointedasDirectoroftheCompanytoholdofficeuntiltheconclusionofthenextAnnualGeneralMeeting.”

7. Tore-appointMessrsErnst&YoungwhoretireasAuditorsoftheCompanyandauthorisethe

Directorstofixtheirremuneration.

8. Toconsiderand,ifthoughtfit,topassthefollowingresolutions:- ORDINARY RESOLUTION 1

AUTHORITY TO ALLOT SHARES - SECTION 132D “THATpursuanttoSection132DoftheCompaniesAct,1965andsubjecttotheapprovalofthe

relevantauthorities,theDirectorsbeandareherebyempoweredtoissuesharesintheCompanyfromtimetotimeanduponsuchtermsandconditionsandforsuchpurposesastheDirectorsmay,intheirabsolutediscretion,deemfitprovidedthattheaggregatenumberofsharesissuedpursuanttothisresolutiondoesnotexceed10%oftheissuedsharecapitaloftheCompanyforthetimebeingandthattheDirectorsbeandalsoempoweredtoobtainapprovalforthelistingofandquotationfortheadditionalsharessoissuedontheBursaMalaysiaSecuritiesBerhadandthatsuchauthorityshallcontinueinforceuntiltheconclusionofthenextAnnualGeneralMeetingoftheCompany.”

NOTICE IS HEREBY GIVEN THATtheNineteenthAnnualGeneralMeetingofEvergreenFibreboardBerhadwillbeheldatKayanganSuites,PulaiSpringsResort,20KM,JalanPontianLama,81110Pulai,JohorDarulTakzimMalaysiaonMonday,17May2010at9.00a.m.forthefollowingpurposes:-

Agenda

ORDINARY BUSINESS

RESOLUTION 1

RESOLUTION 2

RESOLUTION 3

RESOLUTION 4

RESOLUTION 5

RESOLUTION 6

RESOLUTION 7

RESOLUTION 8

RESOLUTION 9

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Notice of Annual General Meeting (Cont’d)

ORDINARY RESOLUTION 2

PROPOSED RENEWAL OF SHAREHOLDERS’ MANDATE FOR RECURRENT RELATED PARTY TRANSACTIONS OF A REVENUE OR TRADING NATURE

(“Proposed Renewal of Shareholders’ Mandate”)

“THAT, subject always to the provisions of the Companies Act, 1965 (“the Act”), theMemorandum&ArticlesofAssociationoftheCompany,theListingRequirementsofBursaMalaysia Securities Berhad or any other regulatory authorities, approval be and is herebygiven for the Company and its subsidiaries (“EFB Group”) to enter into recurrent relatedparty transactionsof a revenueor tradingnature in theordinary courseof businesswhicharenecessaryfortheday-to-dayoperationsoftheEFBGroupasspecifiedinsection2.1.2oftheCompany’sCirculartoShareholdersdated26April2010(“Circular”)ontermsnotmorefavourabletotherelatedpartiesthanthosegenerallyavailabletothepublicandarenottothedetrimentoftheminorityshareholdersandthatauthorityconferredbythisresolutionshalltakeeffect immediatelyupon thepassingof this resolutionand theshareholders’mandateshallcontinuetobeinforceuntil:-

(a) theconclusionofthenextAnnualGeneralMeeting(“AGM”)oftheCompanyfollowingthisAGM,atwhichtheordinaryresolutionfortheProposedRenewalofShareholders’Mandate was passed, at which time it will lapse, unless by a resolution passed at ageneralmeeting,theauthorityisrenewed;

(b) theexpirationoftheperiodwithinwhichthenextAGMafterthatdateisrequiredtobeheldpursuanttoSection143(1)oftheAct,(butshallnotextendtosuchextensionasmaybeallowedpursuanttoSection143(2)oftheAct);or

(c) revokedorvariedbyresolutionpassedbytheshareholdersingeneralmeeting;

whicheveristheearlier;

AND THAT authoritybeandisherebygiventotheDirectorsoftheEFBGrouptocompleteanddoallsuchactsandthings(includingexecutingsuchdocumentsasmayberequired)togiveeffecttosuchtransactionsasauthorisedbythisOrdinaryResolution.

AND THATtheestimatesgivenontherecurrentrelatedpartytransactionsspecifiedinsection2.1.2oftheCircularbeingprovisionalinnature,theDirectorsand/oranyofthembeandareherebyauthorisedtoagreetotheactualamountoramountsthereofprovidedalwaysthatsuchamountoramountscomplywiththereviewproceduressetoutinsection2.1.4oftheCircular.”

ORDINARY RESOLUTION 3

PROPOSED SHAREHOLDERS’ MANDATE FOR NEW RECURRENT RELATED PARTY TRANSACTIONS OF A REVENUE OR TRADING NATURE

(“Proposed New Shareholders’ Mandate”)

“THAT,subjectalwaystotheprovisionsoftheAct,theMemorandum&ArticlesofAssociationoftheCompany,theListingRequirementsofBursaMalaysiaSecuritiesBerhadoranyotherregulatoryauthorities,approvalbeandisherebygivenforEFBGrouptoenterintonewrecurrentrelatedparty transactionsofarevenueor tradingnature in theordinarycourseofbusinesswhicharenecessary for theday-to-dayoperationsof theEFBGroupasspecified insection2.1.2oftheCompany’sCirculartoShareholdersdated26April2010(“Circular”)ontermsnot

RESOLUTION 10

RESOLUTION 11

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morefavourabletotherelatedpartiesthanthosegenerallyavailabletothepublicandarenottothedetrimentoftheminorityshareholdersandthatauthorityconferredbythisresolutionshalltakeeffectimmediatelyuponthepassingofthisresolutionandtheshareholders’mandateshallcontinuetobeinforceuntil:-

(a) theconclusionofthenextAGMoftheCompanyfollowingthisAGM,atwhichtheordinaryresolutionfortheProposedNewShareholders’Mandatewaspassed,atwhichtimeitwilllapse,unlessbyaresolutionpassedatageneralmeeting,theauthorityisrenewed;

(b) theexpirationoftheperiodwithinwhichthenextAGMafterthatdateisrequiredtobeheldpursuanttoSection143(1)oftheAct,(butshallnotextendtosuchextensionasmaybeallowedpursuanttoSection143(2)oftheAct);or

(c) revokedorvariedbyresolutionpassedbytheshareholdersingeneralmeeting;

whicheveristheearlier;

AND THATauthoritybeandisherebygiventotheDirectorsoftheEFBGrouptocompleteanddoallsuchactsandthings(includingexecutingsuchdocumentsasmayberequired)togiveeffecttosuchtransactionsasauthorisedbythisOrdinaryResolution.

AND THATtheestimatesgivenontherecurrentrelatedpartytransactionsspecifiedinsection2.1.2oftheCircularbeingprovisionalinnature,theDirectorsand/oranyofthembeandareherebyauthorisedtoagreetotheactualamountoramountsthereofprovidedalwaysthatsuchamountoramountscomplywiththereviewproceduressetoutinsection2.1.4oftheCircular.”

SPECIAL RESOLUTION

AMENDMENTS TO ARTICLES OF ASSOCIATION

“THAT the proposed alterations, modifications, amendments or deletions to the Articles ofAssociationoftheCompanyascontainedinAppendixAbeherebyapproved.”

9. TotransactanyotherbusinessappropriatetoanAnnualGeneralMeeting.

BY ORDER OF THE BOARD

LEONG SIEW FOONGMAICSA NO. 7007572Company Secretary

JohorBahru26April2010

RESOLUTION 12

NOTES: -

1. AmemberentitledtoattendandvoteattheMeetingisentitledtoappointaproxyorproxiestoattendandvoteinhisstead.TheproxyneednotbeaMemberoftheCompanyandSection149(1)(b)oftheCompaniesAct,1965shallnotapply.

2. Amembershallbeentitledtoappointmorethanoneproxy(subjectalwaystoamaximumoftwo(2)proxiesateach

meeting)toattendandvoteatthesamemeeting.


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3. Whereamemberappointsmorethanone(1)proxy(subjectalwaystoamaximumoftwo(2)proxiesateachmeeting)theappointmentshallbeinvalidunlesshespecifiestheproportionsofhisholdingstoberepresentedbyeachproxy.

4. WhereamemberisanauthorisednomineeasdefinedundertheSecuritiesIndustry(CentralDepositories)Act,1991itmayappointatleastoneproxyinrespectofeachSecuritiesAccountitholdswithordinarysharesoftheCompanystandingtothecreditofthesaidSecuritiesAccount.

5. Theinstrumentappointingaproxyshallbeinwritingunderthehandoftheappointerorhisattorneydulyauthorisedinwritingorifsuchappointerisacorporationunderitscommonsealorthehandofitsattorney.

6. The instrument appointing a proxy must be deposited at the Registered Office of the Company, Symphony

CorporatehouseSdnBhdatSuite6.1A,Level6,MenaraPelangi,JalanKuning,TamanPelangi,80400JohorBahru,Johornot less than forty-eight (48)hoursbefore the timeappointed forholding theMeetingoranyadjournmentthereof.

EXPLANATORY NOTES ON SPECIAL BUSINESS: -

(i) Ordinary Resolution 1 TheOrdinaryResolution1,ifpassed,isprimarilytogiveflexibilitytotheBoardofDirectorstoissueandallotshares

atanytimeintheirabsolutediscretionwithoutconveningageneralmeeting.Thisisarenewalofageneralmandate.TheCompanydidnotutilisethemandategrantedintheprecedingyear’sAnnualGeneralMeeting.

Thisauthoritywill,unlessrevokedorvariedbytheCompanyingeneralmeeting,willexpireatthenextAnnualGeneral

Meeting.

(ii) Ordinary Resolution 2 and 3 PleaserefertoCirculartoShareholdersdated26April2010.

(iii) Special Resolution ThisResolutionistoamendtheCompany’sArticlesofAssociationinlinewiththeamendmentsintheMainMarket

ListingRequirementsofBursaMalaysiaSecuritiesBerhad.

NOTICE OF DIVIDEND ENTITLEMENT AND PAYMENT DATE

NOTICE IS ALSO HEREBY GIVEN THATatax-exemptfinaldividendof4senpershareinrespectofthefinancialyearended31December2009,ifapproved,willbepaidon16August2010.

Theentitlementdateshallbefixedon5August2010andaDepositorshallqualifyforentitlementonlyinrespectof:-

a) SharestransferredintotheDepositor’sSecuritiesAccountbefore4.00p.m.on5August2010inrespectofordinarytransfer;and

b) SharesboughtontheBursaMalaysiaSecuritiesBerhadonacumentitlementbasisaccordingtotheRulesoftheBursaMalaysiaSecuritiesBerhad.

BY ORDER OF THE BOARD

LEONG SIEW FOONGMAICSA NO. 7007572Company Secretary

JohorBahru26April2010


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Appendix A

Article No. Existing Provision New Provision

Article2InterpretationWORDSListingRequirements

Article6(2)PreferenceShares

Article32TransmissionofSecuritiesfromforeignRegister

MEANINGSThe Listing Requirements of the Exchangeincludinganyamendments thereto thatmaybemadefromtimetotime

Preference shareholder shall have thesame rights as ordinary shareholders asregards the receiving of notices, reportsand audited accounts and the attending ofgeneralmeetingsoftheCompany.Preferenceshareholdersshallonlyhavetherighttovoteatanymeetingconvened for thepurposeofreducingthecapitaloronaproposaltowinduptheCompanyorduringthewindingupoftheCompanyorsanctioningasaleofwholeof the Company’s undertaking or where theproposition to be submitted to the meetingdirectly affects their rights and privileges orwhenthedividendorpartofthedividendonthe preference shares is more than six (6)monthsinarrears.

Where(ifapplicable)–

(a) thesecuritiesoftheCompanyarelistedonanApprovedMarketPlace;and

(b) the Company is exempted fromcompliance with Section 14 of theCentral Depositories Act or Section29 of the Securities Industry (CentralDepositories) (Amendment)Act,1998,asthecasemaybeundertheRulesofDepositoryinrespectofsuchsecurities,

the Company shall, upon request of asecurities holder, permit a transmission ofsecuritiesheldbysuchsecuritiesholderfromthe register of holders maintained by theRegistrarof theCompany in the jurisdictionof the Approved Market Place (hereinafterreferredtoas“theForeignRegister”),totheregisterofholdersmaintainedbytheRegistrarof the Company in Malaysia (hereinafterreferred to as “the Malaysian Register”)subjecttothefollowingconditions:-

MEANINGSBursa Malaysia Securities Berhad MainMarket Listing Requirements including anyamendmentstotheListingRequirementsthatmaybemadefromtimetotime.

Preference shareholder shall have the samerights as ordinary shareholders as regardsthereceivingofnotices,reportsandauditedfinancial statements and the attending ofgeneralmeetingsoftheCompany.Preferenceshareholdersshallonlyhavetherighttovoteatanymeetingconvened for thepurposeofreducingthecapitaloronaproposaltowinduptheCompanyorduringthewindingupoftheCompanyorsanctioningasaleofwholeof the Company’s undertaking or where theproposition to be submitted to the meetingdirectly affects their rights and privileges orwhenthedividendorpartofthedividendonthe preference shares is more than six (6)monthsinarrears.

Where:-

(a) thesecuritiesoftheCompanyarelistedonanotherstockexchange;and

(b) the Company is exempted fromcompliance with section 14 of theCentral Depositories Act or section29 of the Securities Industry (CentralDepositories) (Amendment)Act,1998,asthecasemaybe,undertheRulesofDepositoryinrespectofsuchsecurities,

the Company shall, upon request of asecurities holder, permit a transmission ofsecuritiesheldbysuchsecuritiesholderfromthe register of holders maintained by theregistrar of the Company in the jurisdictionof the other stock exchange to the registerofholdersmaintainedbytheregistraroftheCompanyinMalaysiaandviceversaprovidedthatthereshallbenochangeintheownershipofsuchsecurities.

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Appendix A (Cont’d)


Article49(2)Sharestobeofferedtomembersbeforeissue

Article58Noticeofgeneralmeetings

(i) there shall be no change in theownershipofsuchsecurities;and

(ii) the transmission shall be executed bycausing such securities to be crediteddirectly into the securities account ofsuchsecuritiesholder.

For the avoidance of doubt, where therequirements of subparagraphs (a) and (b)above are fulfilled, the Company shall notallowanytransmissionofsecuritiesfromtheMalaysianRegisterintotheForeignRegister

Notwithstanding the foregoing and subjectto the Act, the Company may apply toany Exchange for waiver of convening anextraordinary general meeting to obtainshareholders approval for further issue ofshares (other than bonus or rights issue)where the aggregate issues of which in anyone financial year do not exceed ten percentum (10%) of the issued capital andwhere in accordance with the provisions ofSection132DoftheAct,thereisstillineffectaresolutionapprovingtheissueofsharesbytheCompany.

Thenoticesconveningmeetingsshallspecifytheplace,dayandhourof themeeting,andshall be given to all Members and Auditorsother than such as are not under theprovisionsoftheseArticlesentitledtoreceivesuchnoticefromtheCompanyatleast14daysbeforethemeetingoratleast21daysbeforethe meeting where any special resolutionis to be proposed or where it is an annualgeneral meeting. Any notice of a meetingcalled to consider special business shall beaccompanied by a statement regarding theeffect of any proposed resolution in respectof such special business. The accidentalomissiontogivenoticetoorthenon-receiptofanoticebyanypersonentitledtheretoshallnotinvalidatetheproceedingsatthegeneralmeeting. In addition, the aforesaid noticeshallbegivenbyadvertisementinatleastone(1) nationally circulated Bahasa Malaysia orEnglishdailynewspaperandinwritingtoeachStockExchangeuponwhichtheCompanyislisted.

Notwithstanding the foregoing and subjectto the Act, the Company may apply toany Exchange for waiver of convening anextraordinary general meeting to obtainshareholders approval for further issue ofshares (other than bonus or rights issue)where the aggregate issues of which in anyone financial year do not exceed ten percentum(10%)oftheissuedcapital(excludingtreasury shares) and where in accordancewiththeprovisionsofSection132DoftheAct,there is still in effect a resolution approvingtheissueofsharesbytheCompany.

Thenoticesconveningmeetingsshallspecifytheplace,dayandhourof themeeting,andshall be given to all Members and Auditorsother than such as are not under theprovisionsoftheseArticlesentitledtoreceivesuchnoticefromtheCompanyatleast14daysbeforethemeetingoratleast21daysbeforethe meeting where any special resolutionis to be proposed or where it is an annualgeneral meeting. Any notice of a meetingcalled to consider special business shall beaccompanied by a statement regarding theeffect of any proposed resolution in respectof such special business. The accidentalomissiontogivenoticetoorthenon-receiptof a notice by any person entitled theretoshall not invalidate the proceedings at thegeneral meeting. In addition, the aforesaidnotice must be given by advertisement inat least one (1) nationally circulated BahasaMalaysia or English daily newspaper and inwriting to eachStockExchangeuponwhichtheCompanyislisted.

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Article59(f)

Article79NumberofDirectors

Article93(2)(a)

Article93(2)(c)

TheCompanyshallalsorequesttheDepositoryinaccordancewiththeRulesofDepositorytoissueaRecordofDepositors,asatadatenotlessthanthree(3)marketdaysorsuchotherperiod may be prescribed under the ListingRequirementsorbytheExchangefromtimetotimebeforethegeneralmeeting(hereinafterreferredtoas“theGeneralMeetingRecordofDepositors”).

Untilotherwiserecommendedbytheboardofdirectors and confirmed by the Company ingeneralmeetingthenumberofDirectorsshallnotbe less than two (2)andnotmore thannine(9),allofwhomshallbenaturalpersons.The first directors are Kuo Wen Chi, KuoJen Chang, Chuan Chai Chen and Boh WeeEng thedirectorsasat thedateof adoptionof these Articles are Mohd Alkaf Bin MohdKahar,KuoWenChi,KuoJenChang,KuoJenChiu,MaryHeneriettaLimKimNeo,KuoHueiChenandYongKokFong.

carry into effect any proposal or executeany transaction for the acquisition of anundertaking or property of a substantialvalue,orthedisposalofasubstantialportionoforacontrollinginterest intheCompany’sundertakingorproperty.

enter into any arrangement or transactionwithaDirectoroftheCompanyoritsholdingCompany or with a person connected withsuch a director to acquire from or disposeto such a Director or person any non-cashassetsoftherequisitevalue.

TheCompanyshallalsorequesttheDepositoryinaccordancewiththeRulesofDepositorytoissueaRecordofDepositors,asatadatenotlessthanthree(3)marketdaysorsuchotherperiod may be prescribed under the ListingRequirementsorbytheExchangefromtimetotimebeforethegeneralmeeting(“GeneralMeetingRecordofDepositors”).

Until otherwise recommended by the boardof directors and confirmedby theCompanyin general meeting the number of Directorsshallnotbe less than two(2)andnotmorethannine(9).ThefirstdirectorsareKuoWenChi, Kuo Jen Chang, Chuan Chai Chen andBohWeeEngthedirectorsasat thedateofadoptionoftheseArticlesareMohdAlkafBinMohdKahar,KuoWenChi,KuoJenChang,KuoJenChiu,MaryHeneriettaLimKimNeo,KuoHueiChenandYongKokFong.

carry into effect any proposal or executeany transaction for the acquisition of anundertaking or property of a substantialvalue,orthedisposalofasubstantialportionoforacontrollinginterest intheCompany’sundertakingorproperty.

subject to Section 132E of the Act, carryinto effect or enter into any arrangement ortransactionwith theCompanyor itsholdingCompanytoacquirefromordisposetosucha director or person connected with such aDirectoranysharesornon-cashassetsoftherequisitevalue.

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NopersonnotbeingaretiringDirectorshallbeeligibleforelectiontotheofficeofDirectorat any annual general meeting unless someMemberintendingtoproposehimhas,atleasteleven(11)cleardaysbeforethemeeting,leftat the Office a notice in writing duly signedby the nominee, giving his consent to thenominationandsignifyinghiscandidatureforthe office, or the intention of such Membertoproposehim,PROVIDEDTHATinthecaseof a person recommended by the Directorsfor election, nine (9) clear days’ noticeonlyshall be necessary, and notice of each andeverycandidatureofelectiontotheBoardofDirectorsshallbeservedontheMembersatleast seven (7)daysprior to themeeting atwhichtheelectionistotakeplace.

OnthevoluntaryliquidationoftheCompany,no commission or fee shall be paid to aliquidatorunlessitshallhavebeenapprovedby Members. The amount of such paymentshallbenotifiedtoallMembersatleastseven(7) days prior to the meeting at which thecommissionorfeeistobeconsidered.

NopersonnotbeingaretiringDirectorshallbeeligibleforelectiontotheofficeofDirectorat any annual general meeting unless someMemberintendingtoproposehimhas,atleasteleven(11)cleardaysbeforethemeeting,leftat the Office a notice in writing duly signedby the nominee, giving his consent to thenominationandsignifyinghiscandidatureforthe office, or the intention of such Membertoproposehim,PROVIDEDTHATinthecaseof a person recommended by the Directorsfor election, nine (9) clear days’ noticeonlyshall be necessary, and notice of each andevery candidature of election to the BoardofDirectorsshallbeservedontheMembersatleastseven(7)daysbeforethemeetingatwhichtheelectionistotakeplace.

OnthevoluntaryliquidationoftheCompany,no commission or fee shall be paid to aliquidatorunlessitshallhavebeenapprovedby Members. The amount of such paymentshallbenotifiedtoallMembersatleastseven(7) days before the meeting at which thecommissionorfeeistobeconsidered.

Article103Personseligibleforelection

Article145(3)RemunerationofLiquidator

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Statements Accompanying Notice Of Annual General Meeting

PursuanttoParagraph8.27(2)oftheMainMarketListingRequirementsofBursaMalaysiaSecuritiesBerhad,appendedhereunderare:

DETAILS OF INDIVIDUAL WHO IS STANDING FOR ELECTION AS DIRECTOR

EN WAN AZHAR BIN WAN AHMAD,Malaysiacitizen,aged38,isanIndependentNon-ExecutiveDirectoroftheCompany.HebecameamemberoftheBoardofDirectorson31March2010.HeisthememberofAuditCommittee,RemunerationCommitteeandNominationCommittee.

In1995,hegraduatedfromTheUniversityofSheffield,UnitedKingdomwithaBachelor(Hons)inAccountingandFinancialManagement.

Upon graduation, he worked in Ernst & Young as an audit assistant before joining several private sectors in differentindustriesnamelyinvestmentbanking,manufacturingandserviceprovider.

Currently,heisemployedasaFinanceManagerinMSCManagementServicesSdn.Bhd.

Hedoesnothaveanydirectorshipinotherpubliccompany,familyrelationshipwithanydirectorsand/ormajorshareholderoftheCompanyandhasnoconflictofinterestwiththeCompany.HedoesnothaveanysecuritiesholdingsintheCompanyandsubsidiaries.

Hehasnotbeenconvictedofanyoffenceswithinthepasttenyearsotherthantrafficoffences.

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Corporate Structure

Abbreviations : Malaysia : ATP - AllGreenTimberProductsSdnBhd DTI - DawaTimberIndustries(M)SdnBhd EAC - EvergreenAdhesive&ChemicalsSdnBhd EDP - EvergreenDécorProducts(M)SdnBhd EFN - EvergreenFibreboard(Nilai)SdnBhd EJB - EvergreenFibreboard(JB)SdnBhd EHR - EvergreenHeveaResourcesSdnBhd

Thailand : DKC - DyneaKrabiCo.,Ltd ECO - ECOGenerationCo.,Ltd GRE - GREENergyCo.,Ltd SFC - SiamFibreboardCo.,Ltd Indonesia : PTH - PTHijauLestariRayaFibreboard Singapore : EEW - EvergreenEcoWoodPteLtd

SINGAPORE MALAYSIA THAILAND INDONESIA

EEW DKC ECO GRE SFC PTH

ATP DTI EAC EDP EFN EJB EHR

100% 25% 99.94% 99.99% 100% 51%

100% 44.67% 100% 100% 100% 100% 100%

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Corporate Informations

BOARD OF DIRECTORS

MrJonathanLawNgeeSong MrKuoWenChi MrKuoJenChang MrKuoJenChiu MsMaryHeneriettaLimKimNeo MrYongKokFong EnWanAzharBinWanAhmad

AUDIT COMMITTEE REMUNERATION COMMITTEE NOMINATION COMMITTEE MrJonathanLawNgeeSong MrJonathanLawNgeeSong MrJonathanLawNgeeSong MrYongKokFong MrYongKokFong MrYongKokFong EnWanAzharBinWanAhmad EnWanAzharBinWanAhmad EnWanAzharBinWanAhmad

COMPANY SECRETARY EXTERNAL AUDITORS INTERNAL AUDITORS MsLeongSiewFoong(F) Ernst&Young KPMGCharteredAccountants MAICSANo.7007572 CharteredAccountants Level14,MenaraAnsar, Suite11.2,Level11, 65,JalanTrus, MenaraPelangi, 80000JohorBahru,Johor. JalanKuning,TamanPelangi, Tel:+607-2242870 80400JohorBahru,Johor. Fax:+607-2248055 Tel:+607-3341740 Fax:+607-3341749

REGISTERED OFFICE SHARE REGISTRAR SOLICITORS Suite6.1A,Level6, SymphonyShareRegistrarsSdn.Bhd. NikSaghir&Ismail MenaraPelangi, Level6,SymphonyHouse, ArasG2&MezzanineFloor, JalanKuning,TamanPelangi, PusatDaganganDana, PlazaPermata,No.6, 80400JohorBahru,Johor. 1,JalanPJU1A/46, JalanKampar,50400KualaLumpur. Tel:+607-3323536 47301PetalingJaya,Selangor. Tel:+603-40432888 Fax:+607-3324536 Tel:+603-74818000 Fax:+603-40438800 Fax:+603-74818151 Keah&Choo No:29-13B,JalanRahmat, PRINCIPAL BANKERS STOCK EXCHANGE 83000BatuPahat,Johor. AmInvestmentBankBerhad MainMarketofthe Tel:+607-4349007 BangkokBankPublicCo.,Ltd BursaMalaysiaSecuritiesBerhad Fax:+607-4320588 CitibankBerhad StockCode:5101 CIMBBankBerhad EONBankBerhad HSBCBankMalaysiaBerhad RHBBankBerhad OCBCBank(Malaysia)Berhad TheBankofNovaScotiaBerhadUnitedOverseasBank(Thai)PublicCoLtd

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Evergreen’s Vision and Mission

VISION

TobeaworldclassintegratedWood-BasedPanelproducerblendingadvancetechnologywithinnovativethinking.

MISSION

Toproduceenvironmentally–friendlyqualityMediumDensityFibreboard,Particleboardandrelatedproductsthroughawell-managedafforestationprogram.

VALUES

• INTEGRITY–Transparencywithethicalstandardsinourbusinessdealingsatalltimes

• PRODUCTIVITY–AchieveSuperiorresultsthroughhighperformanceculture

• QUALITY–Pursueforthehighestqualitystandardsinourproductsandservices

• TEAMWORK–Ourpeople’scollectiveworkforceisourgreatestcompetitiveadvantage

• CUSTOMERS–Servingefficientlyandcompetentlytoexceedexpectations.

• COST EFFICIENT – A business mindset that continuously identify cost-effective and value-added initiative thatcontributestotheprofitabilityoftheorganization.

QUALITY POLICY

• MeetingCustomerStatedRequirements

• DiligentlycarryoutourjobaccordingtoourQualityManagementSystem

• FormulateourQualityManagementSystemstoachievecontinualimprovement

SAFETY AND HEALTH POLICY

• EducatingemployeesthroughregularSafety&HealthAwarenessTrainingsandBriefings.

• EnforcementtoensureemployeescarryouttheirjobsinasafemannerwithPersonalProtectiveEquipmentprovidedasthereisnoworkorserviceassumetobemoreimportantthanone’ssafety&Health.

• Engineeringcontrolthroughperiodicauditsandassessmentsondepartmenttoensureasafeworkplace.

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Profile of Directors

MR JONATHAN LAW NGEE SONG,Malaysiacitizen,aged44,isanIndependentNon-ExecutiveDirectoroftheCompany.HebecameamemberoftheBoardofDirectorson8January2007.Hewasre-designatedasIndependentNon-ExecutiveChairmanon22February2010.Currently,heistheChairmanofAuditCommittee,RemunerationCommitteeandNominationCommittee.HeattendedallofthefiveBoardMeetingsheldduringthefinancialyearended31December2009.

HegraduatedfromAustralianNationalUniversityin1989withaBachelorofCommerceandBachelorofLawswhileadmittedasAdvocateandSolicitor,HighCourtofMalaya.

Sincegraduation,hehasbeenpracticingaslegalassistantinAllen&Gledhill(1991to1995)andsubsequentlypromotedaspartner(1995to1996)ofthefirm.HehasbeenapartnerofMessrsNik,Saghir&Ismailsincethen.

Hedoesnothaveanydirectorshipinotherpubliccompany,familyrelationshipwithanydirectorsand/ormajorshareholderoftheCompanyandhasnoconflictofinterestwiththeCompany.


MR KUO WEN CHI,Singaporecitizen,aged76,istheExecutiveDeputyChairmanoftheGroupandbecameamemberoftheBoardofDirectorson15May1991.HeisthefounderoftheEvergreenGroupofcompaniesandwasappointedasNon-ExecutiveDeputyChairmanon15April2004.Subsequently,hewasre-designatedasExecutiveDeputyChairmanon16March2006.HeattendedfouroutofatotalfiveBoardMeetingsheldduringthefinancialyearended31December2009.

Hiscareerstartedin1949asaProductionSupervisoratLinShanHaoPlywoodCoLtdinTaiwan.Hebroughtawealthofexperience inthewood-based industrywhenhemovedtoSingapore in1972toestablishhisownbusinesswiththeincorporationofEvergreenTimberProductsCo.PteLtd (ETP).Hewas thenappointed theManagingDirectorandwasresponsiblefortheoverallmanagementofETP.In1977,heventuredintoMalaysiatoestablishtheEvergreenGroupofCompaniesandwasthemaindrivingforcebehindthegrowthanddevelopmentoftheGroup.HiscurrentresponsibilitiesincludestrategicbusinessplanninganddevelopingstrategicdirectionsforEvergreenGroup.

HeisthehusbandofHsuMeiLan,fatherofKuoJenChang,KuoJenChiuandKuoHueiChenandgrandfatherofJustin,HenryandJeffreyKuo.

HedoesnothaveanydirectorshipinotherpubliccompanyandhasnoconflictofinterestwiththeCompany.


MR KUO JEN CHANG,Singaporecitizen,aged47,istheChiefExecutiveOfficeroftheGroupandhebecameamemberoftheBoardofDirectorson15May1991.HewasappointedasManagingDirectorintheGroupon15April2004.Subsequently,hewasre-designatedasChiefExecutiveOfficerintheGroupon15May2007.HeattendedfouroutofatotalfiveBoardMeetingsheldduringthefinancialyearended31December2009.

HeobtainedhisBachelorDegreeinElectronicEngineeringfromtheUniversityofWisconsin,UnitedStatesin1986.

His career started in 1987 when he joined ETP in Singapore as Procurement Manager responsible for sourcing andnegotiationsofmachineryfortheupgradingandexpansionofthecompany.In1989,hewasappointedDirectorofEvergreenDécorProducts(M)SdnBhd(EDP),asubsidiarycompanyoftheCompany.HewasoverseeingtheentireoperationsoftheCompanyupuntil1992.InthecapacityofChiefExecutiveOfficer,heisresponsiblefortheGroup’sentireoperationset-up.

HeisthesonofKuoWenChiandHsuMeiLan,brotherofKuoJenChiuandKuoHueiChenanduncletoJustin,HenryandJeffreyKuo.



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Profile of Directors (Con’t)

MR KUO JEN CHIU,Singaporecitizen,aged44,istheChiefOperatingOfficeroftheGroupandhebecameamemberoftheBoardofDirectorson15May1991.HewasappointedasExecutiveDirectoron15April2004andwasre-designatedChiefOperatingOfficeron3April2007.HeattendedfouroutofatotalfiveBoardMeetingsheldduringthefinancialyearended31December2009.

HeobtainedhisDegreeinComputerSciencefromtheUniversityofWisconsin,UnitedStatesin1987.Hiscareerstartedin1990asaMarketingManagerwithETPinSingapore.InthecapacityofChiefOperatingOfficer,heoverseestheFinancial,ProductionandMarketingDepartmentsoftheEvergreenGroupandhisresponsibilitiesincludeidentifyingopportunitiesanddevelopingnewmarkets.

HeisthesonofKuoWenChiandHsuMeiLan,brotherofKuoJenChangandKuoHueiChenanduncletoJustin,HenryandJeffreyKuo.



MS MARY HENERIETTA LIM KIM NEO,Malaysiacitizen,aged46,istheExecutiveDirectoroftheGroupandshebecameamemberoftheBoardofDirectorson15December1995.ShewasappointedasExecutiveDirectoron15April2004.SheattendedallofthefiveBoardMeetingsheldduringthefinancialyearended31December2009.

SheiscurrentlypursuingherMastersofBusinessAdministrationfromtheUniversityofPreston,UnitedStatesofAmerica.Her career started in 1984 as a Human Resources/Administrative Office with KS Liew LT and Partners, a consultingengineeringfirmtooverseethecompany’sday-to-daymatterswiththegovernmentauthoritiesandhumanresourceissuesof thecompany. In1992,she left for themanufacturing industryand joinedEFBasaHumanResources/AdministrativeExecutivetooverseethewholeHumanResourceandAdministrativeDepartment.Subsequentlyin1995,shewaspromotedto Human Resources and Administrative Manager and was also appointed as a Director. In her capacity of ExecutiveDirector,sheoverseestheGeneralAdministrationofEvergreenGroup.

Shedoesnothaveanydirectorshipinotherpubliccompany,familyrelationshipwithanydirectorsand/ormajorshareholderoftheCompanyandhasnoconflictofinterestwiththeCompany.

Shehasnotbeenconvictedofanyoffenceswithinthepasttenyearsotherthantrafficoffences.

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Profile of Directors (Con’t)

MR YONG KOK FONG,Malaysiacitizen,aged34,isanIndependentNon-ExecutiveDirectoroftheCompany.HebecameamemberoftheBoardofDirectorson1June2004.HeisthememberofAuditCommittee,RemunerationCommitteeandNominationCommittee.HeattendedallofthefiveBoardMeetingsheldduringthefinancialyearended31December2009.HegraduatedwithaDiplomainAccountingfromtheLondonChamberofCommerceandIndustryin1995andcompletedhisAssociationofCharteredCertifiedAccountants(ACCA)examinationsinFebruary1999.HeobtainedaMasterofScienceinAccountingandFinancefromUniversityofGloucestershire,UnitedKingdomin2009.

HehasbeenamemberofACCAsinceJuly2002.HeisalsoaCharteredAccountantwithMalaysianInstituteofAccountantssinceSeptember2002,amemberoftheMalaysianInstituteofTaxationsinceMay2003,amemberwithTheInstituteofCertifiedPublicAccountantsofSingaporesinceJune2005andamemberwithTheMalaysianInstituteofCertifiedPublicAccountantssinceDecember2007.

Currently,heisattachedwithanaccountingfirmwhereheisinvolvedinadvisoryandassuranceservices.

FromMay2004toDecember2006,hewasaChiefFinancialOfficerofacompany,listedonSGX-SESDAQ.Hewasresponsiblefortheoverallfinancialplanningandmanagementfunctionsofthegroup,includingtheoverviewoffinancialreportsandensuringcompliancewiththeMalaysiaandSingaporestatutoryrequirements.

FromJuly2003 toMay2004,heservedas theChiefFinancialOfficerofanothercompany listedon theSGX-SESDAQ,wherehewasresponsibleforthecompany’soverallfinancialplanningandmanagementfunctions.FromOctober2002toJune2003,hewastheGroupFinancialControllerofaprivatelimitedcompany.BetweenMarch1999andOctober2002,hewaswithaninternationalaccountingfirm,Ernst&Young,carryingoutstatutoryauditonprivatelimitedandpubliclimitedcompanies.


Hehasnotbeenconvictedofanyoffenceswithinthepasttenyearsotherthantrafficoffences

EN WAN AZHAR BIN WAN AHMAD,Malaysiacitizen,aged38,isanIndependentNon-ExecutiveDirectoroftheCompany.HebecameamemberoftheBoardofDirectorson31March2010.HeisthememberofAuditCommittee,RemunerationCommitteeandNominationCommittee.

In1995,hegraduatedfromTheUniversityofSheffield,UnitedKingdomwithaBachelor(Hons)inAccountingandFinancialManagement.

Upon graduation, he worked in Ernst & Young as an audit assistant before joining several private sectors in differentindustriesnamelyinvestmentbanking,manufacturingandserviceprovider.

Currently,heisemployedasaFinanceManagerinMSCManagementServicesSdn.Bhd.



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Chairman’s Statement

“Dear Shareholders,

OnbehalfoftheBoardofDirectors,IampleasedtopresenttoyouannualreportofEvergreenFibreboardBerhadforthefinancialyearended31December2009.Thiseditionmarksthe4thyearofEvergreenbeenlistedontheMainMarketofBursaMalaysiaSecuritiesBerhadsinceourlistingin2005.

Overview

Thefinancialyear2009hasbeenverychallengingfortheGroup.HavingtostarttheyearwithconcernsontheeconomicdownturnfromtheglobalfinancialcrisiswasachallengetoourGroup.However,thegradualrecoveryinglobaldemandinthesecondhalfofthefinancialyearandtheeffectivecostssavingsmeasurestakenenablingtheGrouptoberesilientandendedwithasatisfactoryfinancialperformancedespitethechallengingyear.

Corporate Development

Due to the spill over of theglobal financial crisis coupledwith theuncertaintiesof theglobalmarkets, ourGrouphadrefrained from any corporate exercise involving heavy capital commitments and set our focus on increasing technicalefficiencyandproductivitybyoptimizingcostandmanagingourfinancesastutely.

Performance and Financial Review

Fortheyearended31December2009,ourGroupachievedaturnoverofRM772million,whichishigherthantheprecedingfinancial year. The growth was mainly attributed to production from our newly acquired Nilai plant under EvergreenFibreboard(Nilai)SdnBhdandthecommencedoperationofthethirdlineatSiamFibreboardCo,Ltd.

OurGroup’sprofitbeforetaxofRM80.7millionrepresentsagrowthof26.4%fromthatoftheperiodended31December2008.TheincreasewasduetotheadditionalcapacityfromourNilaiplantaswellasourthirdlineinThailandandthegradualrecoveryofglobaldemandandeffectivecostssavingsmeasuretakenbytheGroup.

As at 31 December 2009, our Group’s earnings and net tangible assets per share stood at of 16.56 sen and RM1.37respectively.

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Chairman’s Statement (Con’t)

Prospects

Basedonthecurrentglobaleconomicsituation,whereitappearsthatthereisagradualincreaseinglobaldemandandmorecountriesappear tograduallyemerge fromrecessionresulting fromthefinancialcrisis,ourGroupmaintainsapositiveoutlookandcautiouslyexpectsamuchbetterperformanceinyear2010.

Dividend

InlinewithourdividendpolicywhichalignsourdividendpaymenttobebasedonourprofitperformanceandaftertakingintoconsiderationtheGroup’sfutureprospects,expansionplanandcashflowrequirements,theBoardrecommendsforatax-exemptfinaldividendof4senpershareforfinancialyearended31December2009.

Appreciation

Firstandforemost,onbehalfoftheBoard,IwouldliketoexpressourutmostsincereappreciationandgratitudetoourformerChairman,EncikMohdAlkafbinMohdKahar.Duringhistenure,ourGrouphastransformedintothelargestMDFproducerinMalaysiaandisnowtheworld’sTop10MDFproducer,basedonproductionvolume.

TheBoardalsowishtoexpressitssincereappreciationandgratitudetoallourshareholders,investmentanalyst,bankers,fundmanagersandregulatoryauthoritiesfortheirassistanceandourcustomers,suppliers,businesspartnersandfriendswhohavegivenuscontinuoussupport.Lastbutnotleast,ourappreciationtothemanagementandemployeesfortheirdedicationandcommitmentthroughoutthischallengingyear.

Jonathan Law Ngee SongChairman

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Corporate Statements

20 AuditCommitteeReport

24 StatementonCorporateGovernance

31 StatementonInternalControl

33 OtherComplianceInformation

Page

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Chairman• MrJonathanLawNgeeSong – IndependentNon-ExecutiveDirector*EnMohdAlkafBinMohdKahar – IndependentNon-ExecutiveDirector

Committee Members MrYongKokFong – IndependentNon-ExecutiveDirector#EnWanAzharBinWanAhmad – IndependentNon-ExecutiveDirector

•AppointedasChairmanwitheffectfrom22February2010.*Resignedwitheffectfrom1January2010.#Appointedwitheffectfrom31March2010.

TERMS OF REFERENCE OF AUDIT COMMITTEE

TheAuditCommitteewasestablishedon31January2005andthetermsofreferenceoftheAuditCommitteeshallbeasfollows:

1) Composition of Members

TheCommitteeshallbeappointedbytheBoardfromamongstitsDirectorsexcludingalternatedirectorswhichfulfilsthefollowingrequirements:-

(1) theauditcommitteemustbecomposedofnofewerthanthree(3)membersofwhomamajorityoftheauditcommitteemustbeindependentdirectors;

(2) allmembersoftheauditcommitteeshallbenon-executivedirectorsandfinanciallyliterate;and(3) atleastonememberoftheauditcommittee:

(a) mustbeamemberoftheMalaysianInstituteofAccountants;or(b) ifheisnotamemberoftheMalaysianInstituteofAccountants,hemusthaveatleast3years’workingexperience

and:(aa) hemusthavepassedtheexaminationsspecified inPart1of the1stScheduleof theAccountantsAct,

1967;or(bb)hemustbeamemberofoneoftheassociationsofaccountantsspecifiedinPartIIofthe1stScheduleof

theAccountantsAct,1967.(c) fulfils suchother requirements asprescribedor approvedby theBursaMalaysiaSecuritiesBerhad (“Bursa

Securities”)

ThemembersoftheCommitteeshallelectachairmanfromamongtheirnumberwhoshallbeanindependentdirector.

TheBoardshall,withinthree(3)monthsofavacancyoccurringintheCommitteewhichresultinthenumberofmembersreducedtobelowthree(3),appointsuchnumberofnewmembersasmayberequiredtomakeuptheminimumnumberofthree(3)members.

TheBoardshallreviewthetermofofficeandperformanceoftheCommitteeandeachofitsmembersatleastonceeverythreeyears.

RIGHTSTheCommitteeshall:(1) haveexplicitauthoritytoinvestigateanymatterwithinitstermsofreference;(2) havetheresourceswhicharerequiredtoperformitsduties;(3) havefullandunrestrictedaccesstoanyinformationpertainingtotheCompany;(4) havedirectcommunicationchannelswiththeexternalauditorsandperson(s)carryingouttheinternalauditfunction

oractivity(ifany);(5) beabletoobtainindependentprofessionalorotheradvice;(6) beabletoconvenemeetingswiththeexternalauditors,theinternalauditorsorboth,excludingtheattendanceofother

directorsandemployeesoftheCompany,wheneverdeemednecessary;(7) beabletoseekco-operationofallemployeesoftheCompany;and(8) reportpromptlytotheBursaSecuritiesofmatterswhichresultinabreachoftheListingRequirements.

inaccordancewiththeproceduredeterminedbytheBoard.

Audit Committee Report

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FUNCTIONSThefunctionsoftheCommitteeshallincludingthefollowing:(1) ToreviewthefollowingandreportthesametotheBoard:

(a) withtheexternalauditor,theauditplan;(b) withtheexternalauditor,hisevaluationofthesystemofinternalcontrols;(c) withtheexternalauditor,hisauditreport;(d) theassistancegivenbytheemployeesoftheCompanytotheexternalauditor;(e) thequarterlyresultsandyearendfinancialstatements,priortotheapprovalbytheBoard,focusingparticularly

on:(i) changesinorimplementationofmajoraccountingpolicychanges;(ii) significantandunusualevents;(iii) goingconcernassumptions;and(iv) compliancewithaccountingstandardsandotherlegalrequirements;

(f) anyrelatedpartytransactionandintercompanytransactionsandconflictof interestsituationthatmayarisewithintheCompanyorGroupincludinganytransaction,procedureorcourseofconductthatraisesquestionsofmanagementintegrity;

(g) anyletterofresignationincludingthewrittenexplanationsoftheresignationfromtheexternalauditorsoftheCompany;

(h) whetherthereisreason(supportedbygrounds)tobelievethattheCompany’sexternalauditorisnotsuitableforre-appointment;and

(i) anysignificantauditfindings,reservation,difficultiesencounteredormaterialweaknessreportedbytheexternalandinternalauditors.

(2) Todothefollowing,inrelationtotheinternalauditfunction:-(a) reviewtheadequacyofthescope,functions,competencyandresourcesoftheinternalauditfunctionsandthat

ithasthenecessaryauthoritytocarryoutitswork;(b) reviewtheinternalauditprogrammeandresultsoftheinternalauditprocessand,wherenecessary,ensurethat

appropriateactionsaretakenontherecommendationsoftheinternalauditfunction;(c) reviewanyappraisalorassessmentoftheperformanceofmembersoftheinternalauditfunction;(d) approveanyappointmentorterminationofseniorstaffmembersoftheinternalauditfunction;and(e) take cognizance of resignations of internal audit staff members and provide the resigning staff member an

opportunitytosubmithisreasonsforresigning.

(3) Torecommendthenominationofapersonorpersonsasexternalauditorsandauditors’remuneration.

(4) To carryout other function thatmaybemutually agreeduponby theCommittee and theBoardwhichwouldbebeneficialtotheCompanyandensuretheeffectivedischargeoftheCompany’sdutiesandresponsibilities.

(5) Toverifythecriteriaforallocationofoptionspursuanttoashareschemeforemployee.

(6) Tobecontinuousengagewith theseniormanagement,externalauditorsand internalauditors inorder tobekeptinformedofthemattersaffectingtheCompany.

MEETINGS(1) MeetingsoftheCommitteeshallbeheldnotlessthanfour(4)timesayear.(2) The Chairman shall convene a meeting of the Committee if requested to do so in writing by any member, the

management,ortheinternalorexternalauditorstoconsideranymatterswithinthescopeandresponsibilitiesoftheCommittee.

(3) Ameetingmaybeconvenedusingtelephoneand/orthecontemporaneouslinkingtogetherbytelephoneorsuchotherelectroniccommunicationmediaofanumberoftheCommitteemembersbeingnotlessthanthequorumshallbedeemedtoconstituteameetingoftheCommitteewhereverintheworldtheyare,aslongas(a) thequorumofCommitteeismet;(b) atthecommencementofthemeetingeachCommitteememberacknowledgeshispresencethereoftoallthe

othermemberstakingpartandsuchparticipationshallbedeemedtobehispresenceinperson;

Audit Committee Report (Con’t)

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(c) eachoftheCommitteememberstakingpartisabletobeheardandheareachoftheothermemberssubjectashereinaftermentionedthroughoutthemeeting;and

(d) theCommitteememberspresentatthecommencementofthemeetingdonotleavethemeetingbydisconnectingthe telephone, but the meeting shall be deemed to have been conducted validly notwithstanding that thetelephoneorelectroniccommunicationmediaisaccidentallydisconnectedduringthemeetingandprovidedthatnodiscussionsordecisionsshouldbemadeinrespectofmattersbythemembersduringthedisconnectionandthatifthetelephoneorelectroniccommunicationmediacannotbere-connectedatall,themeetingshallthenbeadjourned.

(4) TheexternalauditorsmayrequestameetingiftheyconsiderthatoneisnecessaryandshallhavetherighttoappearandbeheardatanymeetingoftheCommittee.

(5) Writtennoticeof themeeting togetherwith theagendashallbegiven to themembersof theCommittee,externalauditorandanyotherpersoninvitedtoattendthemeeting,whereapplicable.

(6) TheHeadof FinanceDepartment, theHeadof InternalAudit (wheresucha functionexists) shallnormally attendmeetings. Other Board members, employees, any professionals or outsiders and a representative of the externalauditorswithrelevantexperienceorexpertisemayattendanyparticularmeetingonlyattheCommittee’sinvitation.

(7) Atleasttwiceayear,theCommitteeshallmeetwiththeexternalauditorswithoutExecutiveBoardmemberspresent.(8) ThequorumforameetingoftheCommitteeshallbetwo(2)ProvidedAlwaysthatthemajorityofmemberspresent

mustbeindependentdirectors.(9) AnydecisionoftheCommitteeshallbebysimplemajority.(10) TheCommitteeshallrecorditsconclusionsindischargingitsdutiesandresponsibilities.(11) TheCompanySecretaryshallbetheSecretaryoftheCommittee.(12) TheSecretaryisresponsibleforsendingoutnoticesofthemeetingsandpreparingandkeepingminutesofmeetings.

REPORTING PROCEDURESTheMinutesoftheCommitteemeetingshallbeextendedtoallthemembersoftheBoardofDirectors.

ATTENDANCE OF AUDIT COMMITTEE MEETINGSDetailsofattendanceatAuditCommitteeMeetingsheldinthefinancialyearended31December2009asfollows:

No. Name of Audit Committee Members Number of Meetings Attended 1 EnMohdAlkafBinMohdKahar 5 2 MrYongKokFong 5 3 MrJonathanLawNgeeSong 5

Atotalof5AuditCommitteeMeetingswereheldduringthefinancialyearended31December2009.

ACTIVITIES OF AUDIT COMMITTEE

TheAuditCommitteehasdischargeditsdutiesassetoutintheTermsofReferenceandtheareasreviewedareasfollows:-

a) ReviewallquarterlyfinancialstatementandannualfinancialstatementsoftheCompanybeforerecommendingthesamefortheBoard’sapproval;

b) Reviewtheannualreportstoensureadherencetolegalandregulatoryreportingrequirements;c) Reviewanddeliberateontheexternalauditorsreportandrecommendationregardinginternalcontrolandfinancial

mattersbasedonobservationsmadeinthecourseofaudit;d) Deliberateontheemergingfinancialreportingissuespursuanttotheintroductionofnewaccountingstandardsand

additionalstatutory/regulatorydisclosurerequirements;


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e) Approve InternalAuditor’sAnnualAuditPlan for theyear, reviewanddeliberateon the InternalAuditReportandrecommendationforimprovementtothesignificantriskareasbasedpresentationbytheInternalAuditManager.

f) Reviewtherelatedpartytransactionsthatarerequiredtobetransactedatarm’slengthbasisandarenotdertrimentaltotheminorityshareholder’sinterest;

g) Reviewthemeasurestakentofortifytheexistingriskassessmentandmanagementprocesses;andh) Deliberatethebestpracticeformeetingthemarketexpectationsandprotectingshareholders’interest.

ACTIVITIES OF INTERNAL AUDIT

TheCompany’sin-houseInternalAuditUnitsfunctionissupportedbyaprofessionalservicefirmwithaprincipalobjectivetoundertakeregularreviewsofthesystemsofcontrols,proceduresandoperationssoastoprovidereasonableassurancethattheinternalcontrolsystemissound,adequateandsatisfactory.TheInternalAuditUnitreportsdirectlytotheAuditCommitteeanditsrole istoprovideanindependentreportonthestateof internalcontrolswithintheGroup.TheAuditCommitteereviewsandapprovestheinternalauditplanoftheGroupsubmittedbytheInternalAuditHead.

Areas audited during the financial year were all plants and subsidiaries within the Group except Indonesia and newlyacquiredEvergreenFibreboard(Nilai)SdnBhdwhichwillcommencein2ndquarterof2010.Reportswerealsoissuedtotherespectiveoperationsmanagement,incorporatingauditrecommendationsandmanagementresponseswithregardtotheauditfindingsontheweaknessesinthesystemsandcontrolsoftheGroup.TheInternalAuditUnitshallfollowupwithManagementontheimplementationoftheagreedrecommendations.

ThecostincurredinmaintainingtheInternalAuditFunctionforthefinancialyearended31December2009wasRM24,000.


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Statement on Corporate Governance

The Board of Directors recognizes the importance of their role in good corporate governance and are committed to maintain a high standard of corporate governance via upholding its fundamental duty to safeguard the Group’s assets as to enhance its shareholders’ value.

The Board acknowledges that the support, trust and confidence of shareholders, customers and business associates are significantly relied upon and therefore it has applied the Principles of Malaysian Code of Corporate Governance and Best Practices in Corporate Governance. The Board further acknowledges the recommended best practices of the Code and except where specifically identified, the Board has generally complied with the best practices set out in the Code.

1. BOARDOFDIRECTORS

(a)BoardCompositionandAttendance

Evergreen Group is led and managed by experienced Directors who have vast expertise in the wood-based panel industry, business, finance, management, marketing and law. Their skills and experience are what is needed to lead the Group meet its objective.

Overall responsibility of the Board is to ensure proper management of the Group’s business including the adequacy and integrity of its internal control system whilst ensuring a communication policy is formulated for the benefit of investor /shareholder relation.

Currently, the Board comprises seven (7) members made up of four (4) Executive Directors and three (3) Independent Non-Executive Directors. Composition reflects a balance within executive directors and non-executive directors and complies with Main Market Listing Requirements of Bursa Securities which requires at least one-third (1/3) of the Board to be Independent Directors.

Separate roles are played by the Chairman and the Chief Executive Officer who are not family members.

Senior Independent Non-Executive Director identified by the Board is Mr Yong Kok Fong as to whom shareholders’ concerns may be conveyed or where it could be inappropriate for the concerns to be dealt with by the Executive Directors.

It is the Company’s practice that newly appointed Director is given briefing on the history of the Company, operations, financial control system and a plant visit to enable them to have a good understanding of the Company’s operation.

Profiles of each Director are set out on pages 14 to 16 of this Annual Report.

The Board meets quarterly to review the Company’s performances and additional meetings will be called as and when needed. For the financial year ended 31 December 2009, five (5) Board meetings were held and the attendance of the Board is as follows:-

No.DirectorsandDesignation Attendance1. • Mr Jonathan Law Ngee Song - Chairman (Independent Non-Executive Director) 5/52. * En Mohd Alkaf Bin Mohd Kahar - Chairman (Independent Non-Executive Director) 5/53. Mr Kuo Wen Chi - Deputy Chairman (Non-Independent Executive Director) 4/54. Mr Kuo Jen Chang - Chief Executive Officer (Non-Independent Executive Director) 4/55. Mr Kuo Jen Chiu - Chief Operating Officer (Non-Independent Executive Director) 4/56. Ms Mary Henerietta Lim Kim Neo (Non-Independent Executive Director) 5/57. Mr Yong Kok Fong (Independent Non-Executive Director) 5/58. # En Wan Azhar Bin Wan Ahmad (Independent Non-Executive Director) N/A

• Appointed as Chairman with effect from 22 Frebruary 2010.* Resigned with effect from 1 January 2010.# Appointed with effect from 31 March 2010.

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Statement on Corporate Governance (Cont’t)

(b) Duties and Responsibilities

Eachmemberhasadistinctduty,responsibilityandauthority.TheChairmanisresponsiblefortheorderlyconductoftheBoardMeetingsandworkingsoftheBoard.

The Chief Executive Officer is responsible for the Group’s entire directions and operation set-up while the ChiefOperatingOfficer is responsible for identifyingopportunitiesanddevelopingnewmarkets.ExecutiveDirectorsarecontrolledbytheBoardandareresponsibleforimplementingpolicies,makingoperationaldecisionsandmonitoringday-to-daybusinessoperationsoftheGroup.

Non-ExecutiveDirectorsareessentialastheyprovideunbiased,independentviewandadviceaswellassafeguardinterestofthepublicandminorityshareholders.TheydeliberateanddiscussonManagement’sproposalswithintheBoardandwiththeirexpertise,theyprovideadviceandguidanceonpoliciesanddecisionmaking.

Noneof the IndependentNon-ExecutiveDirectorsare involved in theday-to-day runningandmanagementof theGroup’sbusinessoperations.

(c) Re-election

InaccordancewiththeCompany’sArticlesofAssociation,onethird(1/3)of theBoardofDirectorsshallretirebyrotationateachAGMprovidedthatallDirectorsshallretirefromofficeatleastonceinthree(3)years.TheDirectorsretiringfromofficeshallbeeligibleforre-electionbytheshareholders.AnypersonappointedbytheBoardeithertofillacasualvacancyorasanadditiontotheexistingDirectorshallholdofficeonlyuntilthenextAnnualGeneralMeetingandshallthenbeeligibleforre-election.

Directorsstandingforre-electionattheforthcomingAGMareMrJonathanLawNgeeSongandMrKuoJenChiuinaccordancewithArticle101whilstEnWanAzharBinWanAhmadinaccordancewithArticle106oftheCompany’sArticlesofAssociation.

InaccordancewithSection129(6)oftheCompaniesAct,1965,Directorsoverseventyyearsofagearerequiredtosubmitthemselvesforre-appointmentannually.TheDeputyChairman,MrKuoWenChi,isdueforre-appointmentpursuanttoSection129(6)oftheCompaniesAct,1965attheforthcomingAGM.

(d) Meeting and Supply of Information to the Board

Prior to each Board meeting, all Directors will receive a full set of Board papers with due notice of issues to bediscussed, in a timely manner. Relevant Directors will provide explanation to pertinent issues when necessary.CompanySecretaryattendsallboardmeetingswherebyallproceedingsandconclusionfromtheBoardMeetingsareminutedandsignedbytheChairmaninaccordancewiththeprovisionofSection156oftheCompanyAct,1965.

The Board as a whole are kept updated by the Executive Directors on a regular basis and are accessible to the

Company’sfinancialperformanceactivitiesandoperations.AllDirectorshaveaccesstotheadviceandservicesoftheCompanySecretarieswhoareresponsibleforensuringthattheBoard’sproceduresarefollowed.

Directorsinprinciplehasbeengiventheauthority,whetherasafullboardorintheirindividualcapacity,toaccesstoallinformationwithintheCompanyandtotakeindependentadvicewherenecessary,inthefurtheranceoftheirdutiesandattheCompany’sexpenses.

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(e) Directors’ Training

AllDirectors,exceptforEnWanAzharBinWanAhmadwhohadbeenappointedon31March2010,havecompletedtheMandatoryAccreditationProgrammeandContinuingEducationProgrammeprescribedbyBursaSecurities.Forthe financial year ended 31 December 2009, the following Directors have attended seminars to keep themselvesabreastwithrelevantchangeswhilstdischargingtheirduties:-

Seminar/ Training Directors (conducted by) Date

MrJonathanLawNgeeSong 1. Directors’DutiesandResponsibilities 21May2009

MrKuoJenChang 1. Directors’DutiesandResponsibilities 21May2009

MrKuoJenChiu 1. CorporateComplianceForum 15April2009

MsMaryHeneriettaLimKimNeo 1. LeadershipTraining 1August2009&

MrYongKokFong 1. PublicPracticeProgramme 17August2009& (MalaysianInstituteofAccountants) 18August2009

2. 2010BudgetSeminar 5November2009 (CharteredTaxInstituteofMalaysia)

(f) Board Committees InaccordancewithBestPracticesoftheCode,theBoardhasdelegatedcertainfunctiontoseveralBoardCommittees

toassistintheexecutionofitsresponsibilitieswhichoperateswithinclearlydefinedtermsofreference.TheBoardCommitteeincludestheAuditCommittee,theNominationCommitteeandtheRemunerationCommittee.TheChairmanoftherespectiveCommitteesreportstotheBoardontheoutcomeofeachCommittee’sMeetingsandproceedingsareincorporatedintheminutesofBoardMeeting.

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AUDIT COMMITTEE

TheAuditCommitteewasestablishedon31January2005andischairedbyEnMohdAlkafBinMohdKahar-IndependentNon-ExecutiveDirectorwhohasresignedon1January2010.Subsequently,MrJonathanLawNgeeSongwasappointedasChairmanofAuditCommitteeon22February2010.Currently,othermembersoftheAuditCommitteeareMrYongKokFongandEnWanAzharBinWanAhmadwhoworkswithinthetermsofreference.AllmembersintheAuditCommitteeareNon-ExecutiveIndependentDirectorsandarefinanciallyliterateandMrYongKokFongisamemberoftheMalaysianInstituteofAccountant.

PriortoeachAuditCommitteemeeting,allDirectors,whoaremembersofAuditCommittee,aregivenafullsetofAuditCommitteepaperswithduenoticeofissuestobediscussed,inatimelymanner.AllmeetingsareattendedbytheCompanySecretarywhereby all proceedings and conclusion from theAuditCommitteeMeetings areminuted and signedby theChairman.

TheCommitteemeetsonaquarterlybasiswithoutthepresenceoftheExecutiveDirectors.Forthefinancialyearended31December2009,five(5)AuditCommitteemeetingswereheldandtwo(2)ofthesemeetingswereattendedbytheHeadofInternalAudit.ChiefExecutiveOfficer,ChiefOperatingOfficer,ExecutiveDirectorandGroupFinancialControllerattendthesemeetinguponinvitationbytheChairmanforupdatingmattersthataffectstheCompany.

The Committee in carrying out its duties and responsibilities has in principle full, free and unrestricted access to theCompany’s records,propertiesandpersonnel.TheCommittee in thecourseof investigationofanymatter ispermittedtousetheservicesofprofessionalfirm,seekindependentprofessionaladviceorrequestattendanceofanoutsiderwithrelevantexperienceattheexpenseofthecompany.

TermsofreferenceandsummaryofdutiesoftheAuditCommitteeareclearlysetoutonpages20to23oftheAnnualReport.

NOMINATION COMMITTEE

TheNominationCommitteewassetupon24May2005andexclusivelycomprisedIndependentNon-ExecutiveDirectors.Currently,themembersoftheNominationCommitteeareasfollows:-

Chairman MrJonathanLawNgeeSong(AppointedasChairmanwitheffectfrom22February2010)EnMohdAlkafBinMohdKahar(resignedwitheffectfrom1January2010)

Members MrYongKokFongEnWanAzharBinWanAhmad(Appointedwitheffectfrom31March2010)TheroleoftheNominationCommitteeistoensurethattheBoardofDirectorsbringscharactertotheBoardwhichshouldcomprisemixresponsibilities,skillandexperience.TheNominationCommitteewillalsoassisttheBoardinreviewingonanannualbasisanappropriatebalanceandsizeofnon-executiveparticipation,establishingproceduresandprocessestowardsanannualassessmentontheeffectivenessoftheBoardasawhole,theCommitteeoftheBoardandthecontributionofeachindividualDirectorincludingIndependentNon-ExecutiveDirectorsaswellastheChiefExecutiveOfficer.Suchassessmenthasbeenproperlydocumentedandrecorded.

In carrying out its duties and responsibilities, the Nomination Committee have in principle full, free and unrestrictedaccesstotheCompany’srecords,propertiesandpersonnel.TheNominationCommitteeispermittedtousetheservicesofprofessionalrecruitmentfirmtosourcefortherightcandidatefordirectorshiporseekindependentprofessionaladviceattheexpenseoftheCompany.

Duringthefinancialyear,alltheCommitteemembersattendedthemeetingheldon23February2009.


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REMUNERATION COMMITTEE

TheRemunerationCommitteewassetupon24May2005andhastwo(2)members,purelyIndependentNon-ExecutiveDirectors.Currently,themembersoftheRemunerationCommitteeareasfollows:-

ChairmanMrJonathanLawNgeeSong(AppointedasChairmanwitheffectfrom22February2010)EnMohdAlkafBinMohdKahar(resignedwitheffectfrom1January2010)

Members MrYongKokFongEnWanAzharBinWanAhmad(Appointedwitheffectfrom31March2010)The roleof theRemunerationCommittee is to reviewandassess theappropriate remunerationof eachDirectorwhichshouldreflecttheirresponsibility,commitmentandcontributiontowardstheCompany.

Incarryingout itsdutiesand responsibilities, theRemunerationCommitteehave inprinciple full, freeandunrestrictedaccesstotheCompany’srecordsandpersonnel.

TheBoardultimatelydecidestheremunerationofeachDirectorincludingNon-ExecutiveChairman.Directors’feeswouldbeendorsedbytheBoardforapprovalbyshareholdersintheforthcomingAnnualGeneralMeeting.Directors’remunerationisdeterminedbasedontheirexperiencesandlevelofresponsibilitiesundertaken.

Althoughthereisnoformaldirectors’remunerationframeworkforexecutivedirectorsbeingputinplace,theBoardconsiderstheirremunerationiswithinthereasonablelevelbasedontheperformanceoftheGroup.

IndividualDirectorsdonotparticipateindiscussionanddecisionoftheirownremuneration.

Directors’remunerationoftheCompanyduringthefinancialyearisbroadlycategorisedintothefollowingbands:


DetailsofindividualDirectors’RemunerationarenotdisclosedinthisreportastheBoardhasconsideredthattheDirectors’RemunerationbybandbetweenExecutiveandNon-ExecutiveDirectorssatisfiestheaccountabilityandtransparencyaspectsoftheCode.

Number of DirectorsRange Of Remuneration Executive Non-ExecutiveBelowRM50,000 - 2RM50,001-RM100,000 - 1RM250,001-RM300,000 1 -RM750,001-RM800,000 1 - RM950,001-RM1,000,000 1 - RM1,000,001-RM1,150,000 1 -

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2. RELATION WITH SHAREHOLDERS

• Dialogue between companies and investors

TheCompanystrictlyadherestothedisclosurerequirementsofBursaSecuritiesandrecognizestheimportanceoftimelyandequaldisseminationofinformationtoshareholdersandstakeholders.

Our website (www.evergreengroup.com.my) is available for access of information by shareholders and thepublic.Informationpostedonthewebsiteisupdatedperiodically.

• Annual General Meeting (“AGM”)

TheAGMistheprincipalforumfordialoguewithshareholders.ShareholdersarenotifiedofthemeetingandprovidedwithacopyoftheCompany’sAnnualReportatleast21dayspriordateofmeeting,providingseparateresolutionstobeproposedattheAnnualGeneralMeetingforeachdistinctissue,wherenecessary.

Boardmembersareavailabletorespondtoallqueriesandundertaketoprovidesufficientclarificationonissuesandconcernsraisedbytheshareholders.Theexternalauditorsarealsopresenttoprovidetheirprofessionalandindependentclarificationonqueriesraisedbyshareholders.StatusofallresolutionsproposedattheAGMisannouncedtoBursaSecuritiesattheendofthemeetingday.ProceedingsoftheAGMareproperlyminuted.

3. ACCOUNTABILITY AND AUDIT

(i) Financial Reporting

TheBoardtakesresponsibilityinensuringthatthefinancialstatementsoftheGroupandtheCompanygivesatrueandfairviewofthestateofaffairsoftheGroupandCompany.TheBoardisresponsibleforensuringthatthefinancialstatementsaredrawnupinaccordancewiththeprovisionsoftheCompaniesAct,1965,theListingRequirementsofBursaSecurities,theStandardsapprovedbytheMalaysiaAccountingStandardsBoardandotherstatutoryandregulatoryrequirements.

TheGroup’squarterlyinterimfinancialreportsandtheannualfinancialstatementsarereviewedbytheAuditCommitteeandapprovedbytheBoardpriortobeingreleasedtoBursaSecuritieswithinthestipulatedtimeframe.

(ii) Internal Control

The Board acknowledges its overall responsibilities in ensuring that a sound system of internal control ismaintainedthroughouttheGroupandtheneedtoreviewitseffectivenessregularlytosafeguardtheGroup’sassets.TheBoardrecognizesthatriskscannotbetotallyeliminatedandthesystemofinternalcontrolinstitutedcanonlyhelpminimizeandmanagerisks.Shareholdersmustknowthattheinternalcontrolsystem,bynature,canonlyprovidereasonablebutnotabsoluteassuranceagainstloss.

AStatementofInternalControlisseparatelysetoutinpages31to32ofthisAnnualReport.

(iii) Relationship with the Auditors

TheCompanyhasestablishedatransparentrelationshipwithitsexternalauditors.TheAuditCommitteeactsasanindependentchannelofcommunicationfortheauditorstoconveytheirobjectivesviewsandprofessionaladviceontheGroup’sfinancialandoperationalactivities.


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TheAuditCommitteerecommendstheappointmentoftheexternalauditorsandtheirremunerationtotheBoardforapproval.TheappointmentoftheexternalauditorsissubjecttotheapprovaloftheshareholdersattheAGM.Theexternalauditorshaveanobligationtobringanysignificantmattersrelatingtothefinancialauditof theGrouptotheAuditCommittee.TheyareinvitedtoattendtheAuditCommitteemeetingwhennecessary.

CORPORATE SOCIAL RESPONSIBILITY

CorporateSocialResponsibility(“CSR”)inourGroupisdemonstratedbycreatingtheimportanceofbusinessethicsforasustainablegrowth.CSRispracticedthrough:-

• Certificationoncertainsourceofrawmaterials• Properstorageanddisposalofschedulewaste• Recyclingofwasteforrecyclablematerials• EmissionCertificationonFinishProducts• Plantingoftreesinthesurroundingpremises• ProvidingmonetarysupporttoUniversityStudentsforResearchandDevelopmentproject• ProvidingWorkOpportunitiesforPensioners• ProvidingIndustrialTrainingsforUniversityStudents• DonationofFurnituretoruralschools


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TheBoardiscommittedtoestablishandmaintainasound,efficientandeffectivesystemofinternalcontrolinfinancial,operationalandriskmanagementthroughouttheGroup.ThefollowingstatementoutlinesthenatureandscopeofinternalcontrolwithintheGroup.

BOARD’S RESPONSIBILITY

TheBoardisultimatelyresponsiblefortheGroup’ssystemofinternalcontrolwhichistoestablishanappropriatecontrolenvironmentandframeworkaswellasreviewingitsadequacyandintegrity.Duetothelimitationsthatareinherentinanysystemofinternalcontrol,thissystemisdesignedtomanage,ratherthaneliminatetheriskoffailure.Hence,thesystemofinternalcontrolcanonlyprovidereasonableandnotabsoluteassuranceagainstmaterialmisstatement,lossorfraud.

ENTERPRISE RISK MANAGEMENT FRAMEWORK

The Board believes that the ability to manage its risks is paramount to achieving sustained profitability and enhancedshareholders’value.Inlinewithbestpractices,theBoardhasputinplaceanEnterpriseRiskManagement(ERM)framework,developedwithinitsriskappetite.TheERMFrameworksetsouttheGroup’sunderlyingapproachtoriskmanagementandisoverseenbytheBoard.

TheBoardisassistedbyaRiskManagementCommittee(RMC),whichcomprisesExecutiveDirectorsandSeniorManagementof theGroup. TheRMC is responsible for implementing theGroup’s riskmanagementpolicy and to identify, evaluate,reviewandmanagethesignificantrisksthataffectthebusinessesandoperationsonanon-goingbasis.Besides,theRMCalsoreviewstheeffectivenessandadequacyof thecontrolsandactionsthathavebeencarriedoutbytheManagementinmitigatingtherisks.HighlightsonsignificantrisksandrecommendactionstotheAuditCommitteeforthepurposeofstrengtheningtheriskmanagementandinternalcontrolsystemsarecarriedoutbyManagement.

For the year ending 31 December 2009, internal audit issues were discussed in monthly management meetings forcorrectiveactionstobetakentorectifytheissues.TherewereothermajorriskissuewithintheriskappetiteoftheGroupandmanagementmaintainstheexistingriskprofile.

INTERNAL AUDIT FUNCTION

TheBoardrecognizestheincreasingimportanceofmaintainingasoundsystemofinternalcontrolinordertosafeguardtheshareholders’investmentandtheGroup’sassets.TheinternalauditfunctionisjointlyundertakenbytheCompany’sexternalprofessionaladvisor,KPMG,togetherwithitsin-houseinternalauditor.TheobjectivesoftheinternalauditfunctionaretoprovideindependentandobjectiveassuranceaswellasotherconsultativeactivitiesdesignedtoaddvalueandimprovetheGroup’soperations.TheprimaryrolesandresponsibilitiesoftheinternalauditfunctionaretoassisttheAuditCommitteeindischarging its responsibilities to review the adequacyand the integrityof theGroup’s internal control systemsandmanagementinformationsystems,includingsystemsforcompliancewithapplicablelaws,regulations,rules,directivesandguidelines.

TheAuditCommitteehasapprovedarisk-basedinternalauditplan.Quarterlyinternalaudits/follow-upshavebeencarriedoutandreportsontheauditfindingshavebeensubmittedtotheAuditCommitteeforitsreviewonaquarterlybasis.

Statement on Internal Control

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OTHER RISK AND CONTROL PROCESSES

Apartfromriskmanagementandtheinternalaudit,theBoardhasputinplacethefollowinginternalcontrolelements:-

• Anorganizationalstructurewithformallydefinedlinesofresponsibilityanddelegationofauthority.

• AFinancialKeyPerformanceIndicator(KPI)SystemisusedinGrouptomonitorthecosteffectivenessofallDepartmentandSubsidiariesperformance.

• FormalizedqualitymanualsinrelationtoISO9001:2000forEvergreenFibreboardBerhad,AllgreenTimberProductsSdnBhd,EvergreenFibreboard(JB)SdnBhd,andEvergreenFibreboard(Nilai)SdnBhd.Thesemanualsprovideclearguidancetotheemployeescarryingouttheirresponsibilities.

• SiamFibreboardCompanyLimitedwasawardedISO9001:2000inAugust2008

• In overseeing the Group’s financial performance, business development, corporate matters, management anddepartmentalissues,theExecutiveDirectorsattendmanagementmeetingsandreviewmonthlymanagementaccountsandoperationalreports.

• QuarterlyfinancialinformationwithvariancemanagementreportisprovidedandpresentedtotheAuditCommitteeandtheBoardfordeliberation.

• CloseandactiveinvolvementoftheExecutiveDirectorsintheday-to-daybusinessoperationsoftheGroup.

• ImplementationofCorporatepolicyonsuccessionplanning.

• ImplementationofCorporatepolicyonfraudmanagementandcodeofconduct.

• EstablishmentofaCost-downCommitteetomanageandmaintaincosteffectiveproduction.

WEAKNESSES IN INTERNAL CONTROLS THAT RESULT IN MATERIAL LOSSES

TherewerenomaterialinternalcontrolfailureswhichresultedinmateriallossesduringthefinancialyearintheGroupandtheBoardcontinuestotakenecessarymeasurestoenhancetheGroup’sSystemofInternalControl.

Statement on Internal Control (Cont’t)

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Other Compliance Information

(a) Conflict of Interest NoneoftheDirectorsand/ormajorshareholdersofEvergreenFibreboardBerhadhaveanypersonalinterestinany

businessarrangementinvolvingtheCompany.

(b) Material Contracts Noneof theDirectorsandmajorshareholderhasanymaterialcontractwith theCompanyand/or itssubsidiaries

duringthefinancialyear.

(c) Sanctions and/or Penalties Imposed Therewereno sanctions and/or penaltieson theCompany and its subsidiaries,DirectorsorManagementby the

relevantbodies.

(d) Share Buybacks TherewerenosharebuybackbytheCompanyduringthefinancialyear.

(e) Exercise of Options, Warrants or Convertible Securities Therewerenooptions,warrantsorconvertiblesecuritiesissuedduringthefinancialyear.

(f) Utilisation of Proceeds Therewasnoutilisationofproceedsraisedfromanycorporateproposalduringthefinancialyear.

(g) Depository Receipts Programmes TheCompanydidnotsponsoranyDepositoryReceiptsProgrammesduringthefinancialyear.

(h) Non-Audit Fees Theamountofnon-auditfeesforservicesprovidedbytheexternalauditorstotheGroupandtheCompanyforthe

financialyearamountedtoRM45,494.

(i) Profit Estimate, Forecast or Projection During thefinancial year, therewasnoProfitEstimate, ForecastorProjectiongivenby theCompany.Therewas

nomajorvariancebetweentheresultsforthefinancialyearandtheunauditedresultspreviouslyannouncedbytheCompany.

(j) Profit Guarantee TherewasnoprofitguaranteegivenbytheCompanyduringthefinancialyear.

(k) Contracts Relating to Loan TherewerenocontractsrelatingtoloanbytheCompanyanditssubsidiariesduringthefinancialyear.

(I) Revaluation Policy TherewerenorevaluationsperformedonallpropertiesoftheGroupduringthefinancialyear.

(m) Recurrent Related Party Transactions Thedetailsoftheshareholders’mandatearereflectedintheCirculartoShareholdersdated26April2010.

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Page

35 Directors’Report

38 StatementByDirectors

38 StatutoryDeclaration

39 IndependentAuditors’Report

40 IncomeStatements

41 BalanceSheets

42 ConsolidatedStatementOfChangesInEquity

44 CompanyStatementOfChangesInEquity

45 CashFlowStatements

47 NotesToTheFinancialStatements

Contents

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Directors’ Report

The directors have pleasure in presenting their report together with the audited financial statements of the Group and of the Company for the financial year ended 31 December 2009. PRINCIPAL ACTIVITIES The principal activities of the Company are the manufacturing of medium density fibreboard and wooden furniture (knock-down). The principal activities of the subsidiaries are as disclosed in Note 15 to the financial statements. There have been no significant changes in the nature of the Group’s activities during the financial year.

RESULTS Group Company RM RM Profit for the year 80,993,318 29,737,509

Attributable to: Equity holders of the Company 84,950,042 29,737,509 Minority interests (3,956,724) -

80,993,318 29,737,509

There were no material transfers to or from reserves or provisions during the financial year other than as disclosed in the statements of changes in equity. In the opinion of the directors, the results of the operations of the Group and of the Company during the financial year were not substantially affected by any item, transaction or event of a material and unusual nature. DIVIDENDS At the forthcoming Annual General Meeting, a final dividend in respect of the financial year ended 31 December 2009, of 4.0 sen on 513,000,000 ordinary shares, amounting to a dividend payable of RM20,520,000 will be proposed for shareholders’ approval. The financial statements for the current financial year do not reflect this proposed dividend. Such dividend, if approved by the shareholders, will be accounted for in equity as an appropriation of retained earnings in the financial year ending 31 December 2010.

DIRECTORS The names of the directors of the Company in office since the date of the last report and at the date of this report are : Kuo Wen Chi Kuo Jen Chang Kuo Jen Chiu Law Ngee Song Mary Henerietta Lim Kim Neo Yong Kok Fong Mohd Alkaf bin Mohd Kahar (resigned on 1 January 2010)

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Directors’ Report (Cont’d)

DIRECTORS’ BENEFITS Neither at the end of the financial year, nor at any time during that year, did there subsist any arrangement to which the Company was a party, whereby the directors might acquire benefits by means of the acquisition of shares in or debentures of the Company or any other body corporate. Since the end of the previous financial year, no director has received or become entitled to receive a benefit (other than benefits included in the aggregate amount of emoluments received or due and receivable by the directors or the fixed salary of a full-time employee of the Company or of a related corporation as shown in Note 7 to the financial statements) by reason of a contract made by the Company or a related corporation with any director or with a firm of which he is a member, or with a company in which he has substantial financial interests. DIRECTORS’ INTERESTS According to the register of directors’ shareholdings, the interests of directors in office at the end of the financial year in shares in the Company and its related corporations during the financial year were as follows : Number of ordinary shares of RM0.25 each 1 January 31 December 2009 Acquired Disposed 2009 The Company Direct Interest : Kuo Wen Chi 1,804,531 - - 1,804,531 Kuo Jen Chiu 10,000,000 - - 10,000,000 Mary Henerietta Lim Kim Neo 450,027 - (50,000) 400,027 Mohd Alkaf bin Mohd Kahar 7,900,065 - (100,000) 7,800,065 Yong Kok Fong 115,000 - - 115,000 Indirect Interest : Kuo Wen Chi 201,019,724 - - 201,019,724 Kuo Jen Chang 202,824,255 - - 202,824,255 Kuo Jen Chiu 192,824,255 - - 192,824,255 Mary Henerietta Lim Kim Neo 27 - (27) - Kuo Wen Chi, Kuo Jen Chang and Kuo Jen Chiu by virtue of their interests in the Company are deemed interested in shares of all the Company’s subsidiaries to the extent the Company has an interest. OTHER STATUTORY INFORMATION (a) Before the income statements and balance sheets of the Group and the Company were made out, the directors took

reasonable steps :

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

(ii) to ensure that any current assets which were unlikely to realise their values as shown in the accounting records

in the ordinary course of business had been written down to an amount which they might be expected so to realise.

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

(i) the amount written off for bad debts or the amount of the provision for doubtful debts in financial statements of

the Group and the Company inadequate to any substantial extent; and (ii) the values attributed to the current assets in the financial statements of the Group and of the Company misleading.

(c) At the date of this report, the directors are not aware of any circumstances which have arisen which render adherence

to the existing method of valuation of assets or liabilities of the Group and of the Company misleading or inappropriate.

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

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

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

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

(f) In the opinion of the directors :

(i) no contingent or other liability has become enforceable or is likely to become enforceable within the period of twelve months after the end of the financial year which will or may affect the ability of the Group or of the Company to meet its obligations as and when they fall due; and

(ii) no item, transaction or event of a material and unusual nature has arisen in the interval between the end of the

financial year and the date of this report which is likely to affect substantially the results of the operations of the Group or of the Company for the financial year in which this report is made.

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

Signed on behalf of the Board in accordance with a resolution of the directors dated 30 March 2010. Kuo Jen Chiu Kuo Jen Chang

Directors’ Report (Cont’d)

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Statement By DirectorsPursuant to Section 169(15) of the Companies Act, 1965

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

We, Kuo Jen Chiu and Kuo Jen Chang, being two of the directors of Evergreen Fibreboard Berhad, do hereby state that, in the opinion of the directors, the accompanying financial statements set out on pages 40 to 87 are drawn up in accordance with applicable Financial Reporting Standards in Malaysia and the provisions of the Companies Act, 1965 so as to give a true and fair view of the financial position of the Group and of the Company as at 31 December 2009 and of the results and the cash flows of the Group and of the Company for the year then ended. Signed on behalf of the Board in accordance with a resolution of the directors dated 30 March 2010. Kuo Jen Chiu Kuo Jen Chang

I, Kuo Jen Chiu, being the director primarily responsible for the financial management of Evergreen Fibreboard Berhad, do solemnly and sincerely declare that the financial statements set out on pages 40 to 87 are in my opinion correct, and I make this solemn declaration conscientiously believing the same to be true and by virtue of the provisions of the Statutory Declarations Act, 1960. Subscribed and solemnly declared ) by the abovenamed Kuo Jen Chiu at ) Johor Bahru in the State of Johor ) Darul Ta’zim on 30 March 2010 ) Kuo Jen Chiu Before me,

No. J075Hj. Bahari Hj. MahadiPesuruhjaya Sumpah Malaysia

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Independent Auditors’ ReportTo The Members Of Evergreen Fibreboard Berhad (Incorporated In Malaysia)

Report on the financial statements We have audited the financial statements of Evergreen Fibreboard Berhad, which comprise the balance sheets as at 31 December 2009 of the Group and of the Company, and the income statements, statements of changes in equity and cash flow statements of the Group and of the Company for the year then ended, and a summary of significant accounting policies and other explanatory notes, as set out on pages 40 to 87. Directors’ responsibility for the financial statements The directors of the Company are responsible for the preparation and fair presentation of these financial statements in accordance with Financial Reporting Standards and the Companies Act, 1965 in Malaysia. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. 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 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 and fair presentation of the financial statements 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 the 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 have been 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 31 December 2009 and of their financial performance and cash flows for the year then ended. Report on other legal and regulatory requirements In accordance with the requirements of the Companies Act, 1965 in Malaysia, we also report the following: (a) In our opinion, the accounting and other records and the registers required by the Act to be kept by the Company and its

subsidiaries of which we have acted as auditors have been properly kept in accordance with the provisions of the Act. (b) We have considered the financial statements and the auditors’ report of all the subsidiaries of which we have not acted as

auditors, which are indicated in Note 15 to the financial statements, being financial statements that have been included in the consolidated financial statements.

(c) We are satisfied that the financial statements of the subsidiaries that have been consolidated with the financial statements of

the Company are in form and content appropriate and proper for the purposes of the preparation of the consolidated financial statements and we have received satisfactory information and explanations required by us for those purposes.

(d) The auditors’ reports on the financial statements of the subsidiaries were not subject to any qualification material to the

consolidated financial statements and did not include any comment required to be made under Section 174(3) of the Act. 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. Ernst & Young Wun Mow Sang AF 0039 1821/12/10(J) Chartered Accountants Chartered Accountant Johor Bahru, Malaysia Date: 30 March 2010

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Income statementsFor the year ended 31 December 2009

Group Company Note 2009 2008 2009 2008 RM RM RM RM Revenue 3 771,513,588 730,524,085 233,364,051 281,490,326 Cost of sales 4 (562,068,686) (532,732,026) (171,319,188) (206,713,822)

Gross profit 209,444,902 197,792,059 62,044,863 74,776,504 Other operating income 7,274,974 14,291,194 8,852,830 3,835,740 Selling and administrative expenses (120,097,707) (136,897,849) (41,005,812) (44,588,930)

Profit from operations 5 96,622,169 75,185,404 29,891,881 34,023,314 Finance costs 8 (17,759,423) (13,017,404) (1,789,381) (1,595,683)Share of profit of associates 1,889,435 1,694,175 - -

Profit before tax 80,752,181 63,862,175 28,102,500 32,427,631 Income tax expense 9 241,137 5,301,339 1,635,009 (217,710)

Profit for the year 80,993,318 69,163,514 29,737,509 32,209,921

Attributable to: Equity holders of the Company 84,950,042 76,710,556 29,737,509 32,209,921 Minority interests (3,956,724) (7,547,042) - - 80,993,318 69,163,514 29,737,509 32,209,921

Earnings per share attributable to equity holders of the Company (sen): Basic, for profit for the year 10 16.56 15.69

Diluted, for profit for the year 10 16.56 15.69

The accompanying notes form an integral part of the financial statements.

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Balance SheetAs At 31 December 2009

Group Company Note 2009 2008 2009 2008 RM RM RM RM Restated Restated Assets Non-current assets Property, plant and equipment 12 885,043,959 902,913,516 96,982,857 102,785,284 Prepaid land lease payments 13 14,597,290 14,825,854 8,621,494 8,768,307 Goodwill 14 18,438,016 18,438,016 - - Investment in subsidiaries 15 - - 275,279,588 186,424,588 Interests in associates 16 22,590,578 20,635,849 13,296,297 13,231,003 940,669,843 956,813,235 394,180,236 311,209,182 Current assets Inventories 17 112,130,971 136,764,962 40,740,370 48,014,246 Trade receivables 18 56,984,544 43,583,380 13,154,077 16,893,360 Other receivables 19 28,186,642 32,630,450 72,655,312 155,192,716 Cash and bank balances 20 113,059,398 76,408,057 54,844,902 32,665,256 310,361,555 289,386,849 181,394,661 252,765,578 Total assets 1,251,031,398 1,246,200,084 575,574,897 563,974,760 Equity and liabilitiesEquity attributable to equity holders of the Company Share capital 27 128,250,000 128,250,000 128,250,000 128,250,000 Share premium 28 113,129,400 113,129,400 113,129,400 113,129,400 Foreign exchange reserve 29 4,504,230 (3,563,717) - - Retained earnings 30 457,847,597 372,897,555 243,700,280 213,962,771 703,731,227 610,713,238 485,079,680 455,342,171 Minority interests 1,635,972 5,592,696 - - Total equity 705,367,199 616,305,934 485,079,680 455,342,171 Non-current liabilities Borrowings 21 310,253,453 214,801,297 17,982,465 102,466 Deferred tax liabilities 26 4,509,317 7,573,317 14,707,418 16,364,466 Retirement benefit obligations 23 319,208 257,060 - - 315,081,978 222,631,674 32,689,883 16,466,932 Current liabilities Borrowings 21 102,391,688 255,025,490 13,944,469 45,167,690 Trade payables 24 46,995,958 56,195,990 15,435,594 13,556,567 Other payables 25 78,464,013 95,149,229 28,425,271 32,861,536 Current tax payable 2,730,562 891,767 - 579,864 230,582,221 407,262,476 57,805,334 92,165,657 Total liabilities 545,664,199 629,894,150 90,495,217 108,632,589 Total equity and liabilities 1,251,031,398 1,246,200,084 575,574,897 563,974,760


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Consolidated Statement Of Changes In EquityFor the year ended 31 December 2009


Attributable to Equity Holders of the Company Minority Total Non Interests Equity Distributable Distributable Foreign Share Share Exchange Retained Note Capital Premium Reserve Earnings Total (Note 27) (Note 28) (Note 29) (Note 30) RM RM RM RM RM RM RM At 1 January 2009 128,250,000 113,129,400 (3,563,717) 372,897,555 610,713,238 5,592,696 616,305,934 Foreign currency translation - - 8,067,947 - 8,067,947 - 8,067,947 Net income recognised directly in equity - - 8,067,947 - 8,067,947 - 8,067,947

Profit for the year - - - 84,950,042 84,950,042 (3,956,724) 80,993,318 Total recognised income and expense for the year - - 8,067,947 84,950,042 93,017,989 (3,956,724) 89,061,265 At 31 December 2009 128,250,000 113,129,400 4,504,230 457,847,597 703,731,227 1,635,972 705,367,199

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Attributable to Equity Holders of the Company Minority Total Non Interests Equity Distributable Distributable Foreign Share Share Exchange Retained Note Capital Premium Reserve Earnings Total (Note 27) (Note 28) (Note 29) (Note 30) RM RM RM RM RM RM RM At 1 January 2008 120,000,000 78,149,400 16,732,142 317,786,999 532,668,541 6,686,405 539,354,946 Foreign currency translation - - (20,295,859) - (20,295,859) - (20,295,859) Net income recognised directly in equity - - (20,295,859) - (20,295,859) - (20,295,859)

Profit for the year - - - 76,710,556 76,710,556 (7,547,042) 69,163,514 Total recognised income and expense for the year - - (20,295,859) 76,710,556 56,414,697 (7,547,042) 48,867,655

Issue of shares to a minority shareholder of a subsidiary - - - - - 6,453,333 6,453,333

Dividends paid 11 - - - (21,600,000) (21,600,000) - (21,600,000)Issue of ordinary shares 8,250,000 34,980,000 - - 43,230,000 - 43,230,000 At 31 December 2008 128,250,000 113,129,400 (3,563,717) 372,897,555 610,713,238 5,592,696 616,305,934


Consolidated Statement Of Changes In Equity (Cont’d)For the year ended 31 December 2009

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Company Statement Of Changes In EquityFor the year ended 31 December 2009

Non Distributable Distributable Share Share Retained Total Note Capital Premium Earnings Equity (Note 27) (Note 28) (Note 30) RM RM RM RM At 1 January 2008 120,000,000 78,149,400 203,352,850 401,502,250 Profit for the year - - 32,209,921 32,209,921 Dividends paid 11 - - (21,600,000) (21,600,000)Issue of ordinary shares 8,250,000 34,980,000 - 43,230,000

At 31 December 2008 128,250,000 113,129,400 213,962,771 455,342,171

At 1 January 2009 128,250,000 113,129,400 213,962,771 455,342,171 Profit for the year - - 29,737,509 29,737,509

At 31 December 2009 128,250,000 113,129,400 243,700,280 485,079,680

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Cash flow statementsFor the year ended 31 December 2009

Group Company 2009 2008 2009 2008 RM RM RM RM Restated Restated Cash flows from operating activities Profit before tax 80,752,181 63,862,175 28,102,500 32,427,631 Adjustments for : Amortisation of prepaid lease payments 338,338 236,856 185,594 184,948 Depreciation 59,056,436 39,814,234 8,562,328 8,945,876 Interest expense 17,759,423 13,017,404 1,789,381 1,595,683 Interest income (1,690,792) (3,769,266) (722,449) (1,846,598)Gain on disposal of property, plant and equipment (363,623) (121,224) (351,834) (61,558)Property, plant and equipment written off 205,301 704,326 - 13,640 Provision for doubtful debt written back - (60,352) - (60,352)Impairment loss on investment in subsidiary - - 10,145,000 - Bad debts written off 54,306 - 54,306 - Provision for retirement benefits obligations 134,069 42,228 - - Unrealised (gain)/loss on foreign exchange (13,671,753) 8,891,165 (1,576,131) (34,327)Share of profit of associates (1,889,435) (1,694,175) - -

Operating profit before working capital changes 140,684,451 120,923,371 46,188,695 41,164,943 Decrease/(Increase) in inventories 24,633,991 (22,587,727) 7,273,876 (2,987,769)Decrease/(Increase) in trade and other receivables 5,547,381 56,874,208 88,518,018 (58,123,646)Decrease in trade and other payables (25,885,248) (15,683,043) (2,557,238) (3,912,944)

Cash generated from/ (used in) operations 144,980,575 139,526,809 139,423,351 (23,859,416)Payment of retirement benefit obligations (71,921) (4,946) - - Interest paid (17,759,423) (13,017,404) (1,789,381) (1,595,683)Tax paid (1,925,003) (6,654,459) (1,386,703) (3,670,663)

Net cash generated from/ (used in) operating activities 125,224,228 119,850,000 136,247,267 (29,125,762)

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Cash flow statements (Cont’d)For the year ended 31 December 2009


Group Company 2009 2008 2009 2008 RM RM RM RM Restated Restated Cash flows from investing activities Acquisition of subsidiary - - - (39,432,954)Acquisition of business - (160,786,082) - - Additional investment in subsidiaries - - (99,000,000) - Interest received 1,690,792 3,769,266 722,449 1,846,598 Payment of prepaid lease payments (38,781) (42,500) (38,781) - Purchase of property, plant and equipment (19,026,278) (248,355,876) (2,162,077) (7,070,199)Proceeds from disposal of property, plant and equipment 585,322 921,914 382,070 599,482 Additional cost relating to investment in subsidiaries - (216,218) - - Issue of shares to a minority shareholder of subsidiary - 6,453,333 - -

Net cash used in investing activities (16,788,945) (398,256,163) (100,096,339) (44,057,073)

Cash flows from financing activities Drawdown of term loan 99,011,301 277,532,071 8,300,000 10,000,000 Repayment of hire purchase creditors (797,989) (155,525) (221,282) (226,455)Repayment of term loans (165,576,291) (43,833,654) (22,050,000) - Proceeds from ordinary shares issued - - - 43,230,000 Dividends paid - (21,600,000) - (21,600,000)

Net cash (used in)/generated from financing activities (67,362,979) 211,942,892 (13,971,282) 31,403,545

Net increase/(decrease)in cash and cash equivalents 41,072,304 (66,463,271) 22,179,646 (41,779,290)Effects of foreign exchange rate changes (4,420,963) 1,271,729 - - Cash and cash equivalents at beginning of year 76,408,057 141,599,599 32,665,256 74,444,546

Cash and cash equivalents at end of year (Note 20) 113,059,398 76,408,057 54,844,902 32,665,256

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Notes to the financial statements31 December 2009

1. Corporate information The principal activities of the Company are the manufacturing of medium density fibreboard and wooden furniture

(knock-down). The principal activities of the subsidiaries are as disclosed in Note 15. There have been no significant changes in the nature of the principal activities during the financial year.

The Company is a public listed company, incorporated and domiciled in Malaysia and is listed on the Main Market of Bursa Malaysia Securities Berhad. The registered office of the Company is located at Suite 6.1A, Level 6, Menara Pelangi, Jalan Kuning, Taman Pelangi, 80400 Johor Bahru, Johor Darul Ta’zim.

The principal place of business is located at PLO 22, Parit Raja Industrial Estate, 86400 Batu Pahat, Johor Darul Ta’zim.

The financial statements were authorised for issue by the Board of Directors in accordance with a resolution of the directors on 30 March 2010.

2. Significant accounting policies

2.1 Basis of preparation The financial statements of the Group and of the Company have been prepared under the historical cost

convention and comply with the provisions of Companies Act, 1965 and applicable Financial Reporting Standards in Malaysia.

2.2 Summary of significant accounting policies

(a) Subsidiaries and basis of consolidation

(i) Subsidiaries Subsidiaries are entities over which the Group has the ability to control the financial and operating

policies so as to obtain benefits from their activities. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group has such power over another entity.

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

(ii) Basis of consolidation The consolidated financial statements comprise the financial statements of the Company and its

subsidiaries as at the balance sheet date. The financial statements of the subsidiaries are prepared for the same reporting date as the Company.

Subsidiaries are consolidated from the date of acquisition, being the date on which the Group obtains control, and continue to be consolidated until the date that such control ceases. In preparing the consolidated financial statements, intragroup balances, transactions and unrealised gains and losses are eliminated in full. Uniform accounting policies are adopted in the consolidated financial statements for like transactions and events in similar circumstances.

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Notes to the financial statements (Cont’d)31 December 2009

Acquisitions of subsidiaries are accounted for using the purchase method. The purchase method of accounting involves allocating the cost of the acquisition to the fair value of the assets acquired and liabilities and contingent liabilities assumed at the date of the acquisition. The cost of an acquisition is measured as the aggregate of the fair values, at the date of exchange, of the assets given, liabilities incurred or assumed, and equity instruments issued, plus any costs directly attributable to the acquisition.

Any excess of the cost of the acquisition over the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities represent goodwill. Any excess of the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities over the cost of acquisition is recognised immediately in profit and loss.

Minority interests represent the portion of profit or loss and net assets in subsidiaries not held by the Group. It is measured at the minorities’ share of the fair value of the subsidiaries’ identifiable assets and liabilities at the acquisition date and the minorities’ share of changes in the subsidiaries’ equity since then.

(b) Associates Associates are entities in which the Group has significant influence and that is neither a subsidiary nor an

interest in a joint venture. Significant influence is the power to participate in the financial and operating policy decisions of the investee but not in control or joint control over those policies.

Investments in associates are accounted for in the consolidated financial statements using the equity

method of accounting. Under the equity method, the investment in associate is carried in the consolidated balance sheet at cost adjusted for post-acquisition changes in the Group’s share of net assets of the associate. The Group’s share of the net profit or loss of the associate is recognised in the consolidated profit or loss. Where there has been a change recognised directly in the equity of the associate, the Group recognises its share of such changes. In applying the equity method, unrealised gains and losses on transactions between the Group and the associate are eliminated to the extent of the Group’s interest in the associate. After application of the equity method, the Group determines whether it is necessary to recognise any additional impairment loss with respect to the Group’s net investment in the associate. The associate is equity accounted for from the date the Group obtains significant influence until the date the Group ceases to have significant influence over the associate.

Goodwill relating to an associate is included in the carrying amount of the investment and is not amortised.

Any excess of the Group’s share of the net fair value of the associate’s identifiable assets, liabilities and contingent liabilities over the cost of the investment is excluded from the carrying amount of the investment and is instead included as income in the determination of the Group’s share of the associate’s profit or loss in the period in which the investment is acquired.

When the Group’s share of losses in an associate equals or exceeds its interest in the associate, including any long-term interests that, in substance, form part of the Group’s net investment in the associate, the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the associate.

The most recent available audited financial statements of the associates are used by the Group in applying the equity method. Uniform accounting policies are adopted for like transactions and events in similar circumstances.

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In the Company’s separate financial statements, investments in associates are stated at cost less impairment losses.

On disposal of such investments, the difference between net disposal proceeds and their carrying amounts is included in profit or loss.

(c) 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. Following the initial recognition, goodwill is measured at cost less any 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. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.

(d) Property, plant and equipment and depreciation All items of property, plant and equipment are initially recorded at cost. Subsequent costs are included in

the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to the income statement during the financial period in which they are incurred.

Subsequent to recognition, property, plant and equipment except for freehold land are stated at cost less accumulated depreciation and any accumulated impairment losses.

Freehold land has an unlimited useful life and therefore is not depreciated. Construction-in-progress are also not depreciated as these assets are not available for use. Depreciation of other property, plant and equipment is provided for on a straight-line basis to write off the cost of each asset to its residual value over the estimated useful life, at the following annual rates :

Buildings 20 - 60 years Plant and machineries 5 - 20 years Other assets 5 - 20 years The residual values, useful life and depreciation method are reviewed at each financial year-end 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.

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. The difference between the net disposal proceeds, if any and the net carrying amount is recognised in profit or loss.

(e) Impairment of non-financial assets The carrying amounts of assets, other than inventories and deferred tax assets, are reviewed at each

balance sheet date to determine whether there is any indication of impairment. If any such indication exists, the asset’s recoverable amount is estimated to determine the amount of impairment loss.

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For goodwill, the recoverable amount is estimated at each balance sheet date or more frequently when indicators of impairment are identified.

For the purpose of impairment testing of these assets, recoverable amount 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, recoverable amount is determined for the cash-generating unit (CGU) to which the asset belongs to. Goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Group’s CGUs, or groups of CGUs, that are expected to benefit from the synergies of the combination, irrespective of whether other assets or liabilities of the Group are assigned to those units or groups of units.

An asset’s recoverable amount is the higher of an asset’s or CGU’s fair value less costs to sell and its value

in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Where the carrying amount of an asset exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. Impairment losses recognised in respect of a CGU or groups of CGUs are allocated first to reduce the carrying amount of any goodwill allocated to those units or groups of units and then, to reduce the carrying amount of the other assets in the unit or groups of units on a pro-rata basis.

An impairment loss is recognised in profit or loss in the period in which it arises.

Impairment loss on goodwill is not reversed in a subsequent period. An impairment loss for an asset other than goodwill 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 an asset other than goodwill is increased to its revised recoverable amount, provided that this amount does not exceed the carrying amount that would have been determined (net of amortisation or depreciation) had no impairment loss been recognised for the asset in prior years. A reversal of impairment loss for an asset other than goodwill is recognised in profit or loss.

(f) Inventories Inventories are stated at the lower of cost (determined on a first-in, first-out basis) and net realisable

value. The cost of raw materials and spare parts comprises cost of purchases and incidentals incurred in bringing the inventories to their present location and condition. The cost of finished goods and work-in-progress includes direct materials, direct labour, other direct costs and appropriate proportion of production overheads based on normal operating capacity. Net realisable value represents 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.

(g) Financial instruments Financial instruments are recognised in the balance sheet when the Group has become a party to the

contractual provisions of the instrument.

Financial instruments are classified as liabilities or equity in accordance with the substance of the contractual arrangement. Interest, dividends, gains and losses relating to a financial instrument classified as a liability, are reported as expense or income. Distributions to holders of financial instruments classified as equity are recognised directly in equity. Financial instruments are offset when the Group has a legally enforceable right to offset and intends to settle either on a net basis or to realise the asset and settle the liability simultaneously.

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(i) Cash and cash equivalents For the purposes of the cash flow statements, cash and cash equivalents include cash on hand and

at bank, deposits at call and short term highly liquid investments which have an insignificant risk of changes in value.

(ii) Marketable securities Marketable securities are carried at the lower of cost and market value, determined on an aggregate

basis. Cost is determined on the weighted average basis while market value is determined based on quoted market values. Increases or decreases in the carrying amount of marketable securities are recognised in profit or loss. On disposal of marketable securities, the difference between net disposal proceeds and the carrying amount is recognised in profit or loss.

(iii) Trade receivables Trade receivables are carried at anticipated realisable values. Bad debts are written off when

identified. An estimate is made for doubtful debts based on a review of all outstanding amounts as at the balance sheet date.

(iv) Trade payables Trade payables are stated at the fair value of the consideration to be paid in the future for goods and

services received. (v) Interest bearing loans and borrowings All loans and borrowings are initially recognised at the fair value of the consideration received less

directly attributable transaction costs. After initial recognition, interest bearing loans and borrowings are subsequently measured at amortised cost using the effective interest method.

(vi) Equity instruments Ordinary shares are classified as equity. Dividends on ordinary shares are recognised in equity in the

period in which they are declared.

The transaction costs of an equity transaction are accounted for as a deduction from equity, net of tax. Equity transaction costs comprise only those incremental external costs directly attributable to the equity transaction which would otherwise have been avoided.

(h) Leases

(i) Classification A lease is recognised as a finance lease if it transfers substantially to the Group all the risks and

rewards incident to ownership. Leases of land and buildings are classified as operating or finance leases in the same way as leases of other assets and the land and buildings elements of a lease of land and buildings are considered separately for the purposes of lease classification. All leases that do not transfer substantially all the risks and rewards are classified as operating leases.

(ii) Finance leases - the Group as Lessee Assets acquired by way of hire purchase or finance leases are stated at an amount equal to the lower

of their fair values and the present value of the minimum lease payments at the inception of the leases, less accumulated depreciation and impairment losses. The corresponding liability is included in the balance sheet as borrowings. In calculating the present value of the minimum lease payments, the discount factor used is the interest rate implicit in the lease, when it is practicable to determine; otherwise, the Company’s incremental borrowing rate is used. Any initial direct costs are also added to the carrying amount of such assets.

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Lease payments are apportioned between the finance costs and the reduction of the outstanding liability. Finance costs, which represent the difference between the total leasing commitments and the fair value of the assets acquired, are charged to the income statement over the term of the relevant lease so as to produce a constant periodic rate of charge on the remaining balance of the obligations for each accounting period.

The depreciation policy for leased assets is consistent with that for depreciable property, plant and equipment as described in Note 2(d).

(iii) Operating Leases - the Group as Lessee Operating lease payments are recognised as an expense on a straight-line basis over the term of

the relevant lease. The aggregate benefit of incentives provided by the lessor is recognised as a reduction of rental expense over the lease term on a straight-line basis.

In the case of a lease of land and buildings, the minimum lease payments or the up-front payments made are allocated, whenever necessary, between the land and the buildings elements in proportion to the relative fair values for leasehold interests in the land element and buildings element of the lease at the inception of the lease. The up-front payment represents prepaid lease payments and are amortised on a straight-line basis over the lease term.

(i) Borrowing costs Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets,

which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale. Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation.

All other borrowing costs are recognised in profit or loss in the period in which they are incurred. (j) Income tax Income tax on the profit or loss for the year comprises current and deferred tax. Current tax is the expected

amount of income taxes payable in respect of the taxable profit for the year and is measured using the tax rates that have been enacted at the balance sheet date.

Deferred tax is provided for, using the liability method. In principle, deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets are recognised for all deductible temporary differences, unused tax losses and unused tax credits to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, unused tax losses and unused tax credits can be utilised. Deferred tax is not recognised if the temporary difference arises from goodwill or from the initial recognition of an asset or liability in a transaction which is not a business combination and at the time of the transaction, affects neither accounting profit nor taxable profit.

Deferred tax is measured at the tax rates that are expected to apply in the period when the asset is realised

or the liability is settled, based on tax rates that have been enacted or substantively enacted at the balance sheet date. Deferred tax is recognised as income or an expense and included in the profit or loss for the period, except when it arises from a transaction which is recognised directly in equity, in which case the deferred tax is also recognised directly in equity, or when it arises from a business combination that is an acquisition, in which case the deferred tax is included in the resulting goodwill or the amount of any excess of the acquirer’s interest in the net fair value of the acquiree’s identifiable assets, liabilities and contingent liabilities over the cost of the combination.

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(k) 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 each balance sheet date and adjusted to reflect the current best estimate. Where the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, where appropriate, the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognised as finance cost.

(l) Employee benefit

(i) 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 increased their entitlement to future compensated absences, and short term non-accumulating compensated absences such as sick leave are recognised when the absences occur.

(ii) Defined contribution plans As required by law, companies in Malaysia make contributions to the state pension scheme, the

Employees Provident Fund (“EPF”). Such contributions are recognised as an expense in the income statement as incurred.

(m) Foreign currencies

(i) Functional and presentation currency The individual financial statements of each entity in the Group are measured using the currency

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

(ii) Foreign Currency Transactions In preparing the financial statements of the individual entities, transactions in currencies other than

the entity’s functional currency (foreign currencies) are recorded in the functional currencies using the exchange rates prevailing at the dates of the transactions. At each balance sheet date, monetary items denominated in foreign currencies are translated at the rates prevailing on the balance sheet date. Non-monetary items carried at fair value that are denominated in foreign currencies are translated at the rates prevailing on the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not translated.

Exchange differences arising on the settlement of monetary items, and on the translation of monetary

items, are included in profit or loss for the period except for exchange differences arising on monetary items that form part of the Group’s net investment in foreign operation. Exchange differences arising on monetary items that form part of the Group’s net investment in foreign operation, where that monetary items is denominated in either the functional currency of the reporting entity or the foreign operation, are initially taken directly to the foreign exchange reserve within equity until the disposal of the foreign operations, at which time they are recognised in profit or loss. Exchange differences arising on monetary items that form part of the Group’s net investment in foreign operation, where that monetary item is denominated in a currency other than the functional currency of either the reporting entity or the foreign operation, are recognised in profit or loss for the period. Exchange differences arising on monetary items that form part of the Company’s net investment in foreign operation, regardless of the currency of the monetary item, are recognised in profit or loss in the Company’s financial statements or the individual financial statements of the foreign operation, as appropriate.

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(iii) Foreign operations The results and financial position of foreign operations that have a functional currency different from

the presentation currency (RM) of the consolidated financial statements are translated in RM as follows :

- Assets and liabilities for each balance sheet presented are translated at the closing rate

prevailing at the balance sheet date; - Income and expenses for each income statement are translated at average exchange rates for

the year, which approximates the exchange rates at the dates of the transactions; and - All resulting exchange differences are taken to the foreign exchange reserve within equity.

Goodwill and fair value adjustments arising on the acquisition of foreign operations on or after 1

January 2006 are treated as assets and liabilities of the foreign operations and are recorded in the functional currency of the foreign operations and translated at the closing rate at the balance sheet date. Goodwill and fair value adjustments which arose on the acquisition of foreign subsidiaries before 1 January 2006 are deemed to be assets and liabilities of the parent company and are recorded in RM at the rates prevailing at the date of acquisition.

(n) Revenue recognition Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and

the Company and the amount can be reliably measured. The following specific recognition criteria must also be met before revenue is recognised :

(i) Sale of goods Revenue is recognised net of sales taxes and upon transfer of significant risks and rewards of

ownership to the buyer. (ii) Interest income Interest is recognised on an accrual basis using the effective interest method. (iii) Dividend income Dividend income is recognised when the right to receive payment is established.

2.3 Standards and interpretations issued but not yet effective At the date of authorisation of these financial statements, the following new FRSs and Interpretations, and

amendments to certain Standards and Interpretations were issued but not yet effective and have not been applied by the Group and the Company, which are:

Effective for financial periods beginning on or after 1 July 2009 FRS 8: Operating Segments

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Effective for financial periods beginning on or after 1 January 2010 FRS 4: Insurance Contracts FRS 7: Financial Instruments: Disclosures FRS 101: Presentation of Financial Statements (revised) FRS 123: Borrowing Costs FRS 139: Financial Instruments: Recognition and Measurement Amendments to FRS 1: First-time Adoption of Financial Reporting Standards and FRS 127:

Consolidated and Separate Financial Statements: Cost of an Investment in a Subsidiary, Jointly Controlled Entity or Associate

Amendments to FRS 2: Share-based Payment – Vesting Conditions and Cancellations Amendments to FRS 132: Financial Instruments: Presentation Amendments to FRS 139: Financial Instruments: Recognition and Measurement, FRS 7: Financial Instruments: Disclosures and IC Interpretation 9: Reassessment of Embedded Derivatives Amendments to FRSs ‘Improvements to FRSs (2009)’ IC Interpretation 9: Reassessment of Embedded Derivatives IC Interpretation 10: Interim Financial Reporting and Impairment IC Interpretation 11: FRS 2 – Group and Treasury Share Transactions IC Interpretation 13: Customer Loyalty Programmes

IC Interpretation 14: FRS 119 – The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction

TR i – 3: Presentation of Financial Statements of Islamic Financial Institutions Effective for financial periods beginning on or after 1 July 2010 FRS 1: First-time Adoption of Financial Reporting Standards FRS 3: Business Combinations (revised) FRS 127: Consolidated and Separate Financial Statements (amended) Amendments to FRS 2: Share-based Payment Amendments to FRS 5: Non-current Assets Held for Sale and Discontinued Operations Amendments to FRS138: Intangible Assets Amendments to IC Interpretation 9: Reassessment of Embedded Derivatives IC Interpretation 12: Service Concession Arrangements IC Interpretation I5: Agreements for the Construction of Real Estate IC Interpretation 16: Hedges of a Net Investment in a Foreign Operation IC Interpretation 17: Distributions of Non-cash Assets to Owners

The Group and the Company plan to adopt the above pronouncements when they become effective in the respective financial year. Unless otherwise described below, these pronouncements are expected to have no significant impact to the financial statements of the Group and the Company upon their initial application:

(i) FRS 3: Business Combinations (revised) and FRS 127: Consolidated and Separate Financial Statements

(amended) FRS 3 (revised) introduces a number of changes to the accounting for business combinations occurring on or

after 1 July 2010. These include changes that affect the valuation of non-controlling interest, the accounting for transaction costs, the initial recognition and subsequent measurement of a contingent consideration and business combinations achieved in stages. These changes will impact the amount of goodwill recognised, the reported results in the period that an acquisition occurs and future reported results.

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FRS 127 (amended) requires that a change in the ownership interest of a subsidiary (without loss of control) is accounted for as a transaction with owners in their capacity as owners and to be recorded in equity. Therefore, such transaction will no longer give rise to goodwill, nor will it give rise to a gain or loss. Furthermore, the amended Standard changes the accounting for losses incurred by the subsidiary as well as loss of control of a subsidiary.

The changes by FRS 3 (revised) and FRS127 (amended) will be applied prospectively and only affect future

acquisition or loss of control of subsidiaries and transactions with non-controlling interests.

(ii) FRS 101: Presentation of Financial Statements (revised) The revised FRS 101 separates owner and non-owner changes in equity. Therefore, the consolidated statement of

changes in equity will now include only details of transactions with owners. All non-owner changes in equity are presented as a single line labelled as total comprehensive income. The Standard also introduces the statement of comprehensive income: presenting all items of income and expense recognised in the income statement, together with all other items of recognised income and expense, either in one single statement, or in two linked statements. The Group is currently evaluating the format to adopt. In addition, a statement of financial position is required at the beginning of the earliest comparative period following a change in accounting policy, the correction of an error or the reclassification of items in the financial statements. This revised FRS does not have any impact on the financial position and results of the Group and the Company.

(iii) FRS 123: Borrowing Costs This Standard supersedes FRS 1232004: Borrowing Costs that removes the option of expensing borrowing

costs and requires capitalisation of such costs that are directly attributable to the acquisition, construction or production of a qualifying asset as part of the cost of that asset. Other borrowing costs are recognised as an expense. The Group’s current accounting policy is to expense the borrowing costs in the period which they are incurred. In accordance with the transitional provisions of the Standard, the Group will apply the change in accounting policy prospectively for which the commencement date for capitalisation of borrowing cost on qualifying assets is on or after the financial period 1 January 2010.

(iv) FRS 139: Financial Instruments: Recognition and Measurement, FRS 7: Financial Instruments: Disclosures and

Amendments to FRS 139: Financial Instruments: Recognition and Measurement, FRS 7: Financial Instruments: Disclosures

The new Standard on FRS 139: Financial Instruments: Recognition and Measurement establishes principles

for recognising and measuring financial assets, financial liabilities and some contracts to buy and sell non-financial items. Requirements for presenting information about financial instruments are in FRS 132: Financial Instruments: Presentation and the requirements for disclosing information about financial instruments are in FRS 7: Financial Instruments: Disclosures.

FRS 7: Financial Instruments: Disclosures is a new Standard that requires new disclosures in relation to financial

instruments. The Standard is considered to result in increased disclosures, both quantitative and qualitative of the Group’s and Company’s exposure to risks, enhanced disclosure regarding components of the Group’s and Company’s financial position and performance, and possible changes to the way of presenting certain items in the financial statements.

In accordance with the respective transitional provisions, the Group and the Company are exempted from

disclosing the possible impact to the financial statements upon the initial application.

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(v) Amendments to FRSs ‘Improvements to FRSs (2009)’

- FRS 117 Leases: Clarifies on the classification of leases of land and buildings. The Group is still assessing the potential implication as a result of the reclassification of its unexpired land leases as operating or finance leases. For those land element held under operating leases that are required to be reclassified as finance leases, the Group shall recognise a corresponding asset and liability in the financial statements which will be applied retrospectively upon initial application. However, in accordance with the transitional provision, the Group is permitted to reassess lease classification on the basis of the facts and circumstances existing on the date it adopts the amendments; and recognise the asset and liability related to a land lease newly classified as a finance lease at their fair values on that date; any difference between those fair values is recognised in retained earnings. The Group is currently in the process of assessing the impact of this amendment.

2.4 Significant accounting estimates and judgements

Key sources of estimation uncertainty The key assumption concerning the future and other key sources of estimation uncertainty at the balance sheet

date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below :

(a) Harvesting of rubber wood The Group recognises costs of harvesting of rubber wood by using the stage of completion method. The

stage of completion is determined by the proportion of the rubber wood being harvested and transported to date to the estimated total harvesting quantity.

Significant judgement is required in determining the stage of completion, the extent of the rubber wood

cost incurred and the estimated total harvesting quantity. In making the judgement, the Group evaluates based on past experience and by relying on the work of specialists.

(b) Deferred tax assets Deferred tax assets are recognised for all unused tax losses and unabsorbed capital allowances to the

extent that it is probable that taxable profit will be available against which the losses and capital allowances can be utilised. Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and level of future taxable profits together with future tax planning strategies. The total carrying value of recognised tax losses, capital allowances and investment tax allowance of the Group was RM201,688,000 (2008: RM163,848,000) and unrecognised tax losses and reinvestment allowance of the Group was RM9,910,000 (2008 : RM12,620,000). Further details are disclosed in Note 26.

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(c) Income tax provision Judgment is involved in determining the Group’s provision for income taxes as there are certain transactions

and computations for which the ultimate tax determination is uncertain during the ordinary course of business. The Group recognises liabilities for expected tax issues based on estimates of whether additional taxes will be due. Where the final outcome of these matters is different from the amounts that were initially recognised, such differences will impact the income tax and deferred tax provision in the period in which such determination is made.

(d) Impairment of goodwill The Group determines whether goodwill is impaired at least on an annual basis. This requires an estimation

of the value-in-use of the cash generating units (“CGU”) to which goodwill is allocated. Estimating a value-in-use amount requires management to make an estimate of the expected future cash flows from the CGU and also to choose a suitable discount rate in order to calculate the present value of those cash flows. The carrying amount of goodwill as at 31 December 2009 was RM18,438,016 (2008:RM18,438,016). Further details are disclosed in Note 14.

(e) Depreciation of plant and machinery The cost of plant and machinery for the manufacture of medium density fibreboard is depreciated on a

straight-line basis over the assets’ useful lives. Management estimates the useful lives of these plant and machinery to be within 5 to 20 years. These are common life expectancies applied in the fibreboard industry. Changes in the expected level of usage and technological developments could impact the economic useful lives and the residual values of these assets, therefore future depreciation charges could be revised. A 3% difference in the average useful lives of these assets from management’s estimates would result in approximately 1.8% variance in profit for the year.

3. Revenue Revenue of the Group and Company represents principally invoiced value of goods sold less returns and discounts.

4. Cost of sales Cost of sales represents cost of inventories sold.

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5. Profit from operations Profit from operations is stated after charging/(crediting) : Group Company 2009 2008 2009 2008 RM RM RM RM Amortisation of prepaid lease payments (Note 13) 338,338 236,856 185,594 184,948 Audit fee - statutory audit 252,946 226,658 60,000 60,000 - prior year 26,778 23,108 - - - other services 45,494 60,446 16,000 16,000 Depreciation (Note 12) 59,056,436 39,814,234 8,562,328 8,945,876 Dividend income - - (11,600,000) - Hostel rental 417,107 413,431 165,704 258,194 Interest income (1,690,792) (3,769,266) (722,449) (1,846,598) Loss/(gain) on foreign exchange - realised 8,770,783 (3,868,839) 5,659,720 (1,344,303) - unrealised (13,671,753) 8,891,165 (1,576,131) (34,327) Gain on disposal of property, plant and equipment (363,623) (121,224) (351,834) (61,558) (Reversal of)/Waiver of amount due from a subsidiary - - (1,730,743) 4,235,954 Waiver of interest - - 1,874,882 - Bad debts written off 54,306 - 54,306 - Property, plant and equipment written off 205,301 704,326 - 13,640 Insurance compensation (326,319) (9,827,928) (15,759) - Impairment loss on investment in subsidiary (Note 15) - - 10,145,000 - Provision for doubtful debts written back - (60,352) - (60,352) Provision for retirement benefit obligations (Note 23) 134,069 42,228 - - Rental of equipment 1,082,916 2,802,300 375,287 434,036 Rental of land 228,094 123,131 14,000 42,000 Staff costs (Note 6) 64,089,277 65,252,540 25,474,975 33,194,480

6. Staff costs Group Company 2009 2008 2009 2008 RM RM RM RM Wages and salaries 57,403,484 58,419,610 23,024,811 30,356,478 Defined contribution plan 4,433,515 4,093,040 2,098,293 2,402,696 Social security contribution 481,486 459,523 248,690 278,729 Other staff related expenses 1,770,792 2,280,367 103,181 156,577 64,089,277 65,252,540 25,474,975 33,194,480

Included in staff costs of the Group and of the Company are executive directors’ remuneration amounting to RM3,298,062 (2008 : RM4,037,115) and RM3,298,062 (2008 : RM3,697,115) respectively as further disclosed in Note 7.

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7. Directors’ remuneration Group Company 2009 2008 2009 2008 Directors of the Company RM RM RM RM Executive: Salaries and emoluments 3,277,517 3,996,291 3,277,517 3,656,291 Bonus 20,545 40,824 20,545 40,824 Benefits-in-kind 65,600 59,000 65,600 59,000 3,363,662 4,096,115 3,363,662 3,756,115 Non-executive: Fee 130,000 130,000 130,000 130,000 Allowances and emoluments 40,700 24,715 40,700 24,715 Total 3,534,362 4,250,830 3,534,362 3,910,830

Analysis (excluding benefits-in-kind) : Total executive directors’ remuneration excluding benefits-in-kind 3,298,062 4,037,115 3,298,062 3,697,115 Total non-executive directors remuneration excluding benefits-in-kind 170,700 154,715 170,700 154,715 The number of directors of the Company whose total remuneration during the financial year fell within the following

bands is analysed below : Number of Directors 2009 2008 Executive directors : Below RM300,000 1 - RM300,001 - RM350,000 - 1 RM750,001 - RM800,000 1 - RM950,001 - RM1,000,000 - 1 RM1,000,001 - RM1,150,000 1 1 RM1,150,001 - RM1,350,000 1 - RM1,350,001 - RM1,400,000 - 1 Non-executive directors : Below RM50,000 2 2 RM50,001 - RM100,000 1 1

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8. Finance costs Group Company 2009 2008 2009 2008 RM RM RM RM Trade facilities interest 1,721,715 20,495 417,452 17,301 Hire purchase interest 139,365 163,298 26,770 28,193 Term loan interest 15,898,343 12,833,611 1,345,159 1,550,189 17,759,423 13,017,404 1,789,381 1,595,683

9. Income tax expense Group Company 2009 2008 2009 2008 RM RM RM RM Current income tax: Malaysia income tax 2,868,296 2,286,887 2,036,180 2,112,598 Foreign tax 2,007,335 1,908,637 - - 4,875,631 4,195,524 2,036,180 2,112,598 Overprovision in prior years Malaysia income tax (2,014,141) (213,464) (2,014,141) (213,464) 2,861,490 3,982,060 22,039 1,899,134 Deferred tax (Note 26) : Relating to origination and reversal of temporary differences 1,285,080 (9,298,557) (2,608,990) (1,667,582) (Over)/under provision in prior years (4,387,707) 15,158 951,942 (13,842) (3,102,627) (9,283,399) (1,657,048) (1,681,424) Total income tax expense (241,137) (5,301,339) (1,635,009) 217,710

Domestic income tax is calculated at the Malaysian statutory tax rate of 25% (2008: 26%) of the estimated assessable profit for the year. The computation of deferred tax as at 31 December 2009 has reflected these changes.

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A reconciliation of income tax expense applicable to profit before tax at the statutory income tax rate to income tax expense at the effective income tax rate of the Group and of the Company is as follows:

Group Company 2009 2008 2009 2008 RM RM RM RM Profit before tax 80,752,181 63,862,175 28,102,500 32,427,631

Taxation at Malaysian statutory tax rate of 25% (2008 :26%) 20,188,045 16,604,166 7,025,625 8,431,184 Effect of different tax rates in other countries 914,001 (3,092,062) - - Effect of changes in tax rates on opening balance of deferred tax (666,016) (885,183) (666,016) (694,605) Effect of changes in tax rates (1,807,955) 271,708 - 40,579 Income not subject to tax (6,002,135) (668,615) (2,900,000) - Income not subject to tax due to pioneer status (6,154,510) (4,024,084) (4,353,771) (4,024,084) Expenses not deductible for tax purposes 3,616,081 2,742,537 2,837,169 1,056,836 Deferred tax assets not recognised during the year 2,648,731 6,238,063 - - Deferred tax assets recognised on investment tax allowances (310,219) - - - Deferred tax assets recognised on unutilised business losses (671,102) - - - Utilisation of previous year unrecognised business losses and unabsorbed capital allowances (24,366) - - - Utilisation of prior year investment tax allowances - (13,182,338) - - Expenses eligible for double deduction (5,097,485) (8,666,739) (2,515,817) (4,364,894) Overprovision of taxation in prior year (2,014,141) (213,464) (2,014,141) (213,464) (Over)/under provision of deferred tax in prior year (4,387,707) 15,158 951,942 (13,842) Effect of share of results of associates (472,359) (440,486) - - Income tax expense for the year (241,137) (5,301,339) (1,635,009) 217,710

10. Earnings per share Earnings per ordinary share is calculated by dividing the net profit for the year by the weighted average number of

ordinary shares in issue during the financial year as follows: 2009 2008 Profit attributable to ordinary equity holders of the Company (RM) 84,950,042 76,710,556 Weighted average number of ordinary shares in issue 513,000,000 489,016,393 Basic earnings per share (Sen) 16.56 15.69 Diluted earnings per share (Sen) 16.56 15.69

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11. Dividends Dividends in respect Dividends recognised of year in year 2009 2008 2009 2008 RM RM RM RM Recognised during the year First interim dividend for 2007 : 2.5 sen on 480,000,000 ordinary shares - 12,000,000 - - Final dividend for 2007 : 4.5 sen on 480,000,000 ordinary shares - 21,600,000 - 21,600,000 - 33,600,000 - 21,600,000

12. Property, plant and equipment Freehold land and Plant and Other Construction buildings machineries assets* in progress Total Group RM RM RM RM RM At 31 December 2009 Cost At beginning of the year 171,321,163 714,170,228 33,242,885 203,469,353 1,122,203,629 Additions 757,632 6,147,519 1,609,325 11,225,963 19,740,439 Disposals - (200,530) (1,447,659) - (1,648,189) Written off - (215,670) (209,000) - (424,670) Reclassification 18,564,467 195,308,997 1,664,692 (215,538,156) - Exchange differences 1,604,523 16,740,628 652,761 5,408,137 24,406,049 At end of the year 192,247,785 931,951,172 35,513,004 4,565,297 1,164,277,258 Accumulated depreciation At beginning of the year 15,181,689 188,651,159 15,457,265 - 219,290,113 Charge for the year (Note 5) 4,999,338 49,332,922 4,724,176 - 59,056,436 Disposals - (69,431) (1,357,059) - (1,426,490) Written off - (10,369) (209,000) - (219,369) Exchange differences 219,136 2,091,983 221,490 - 2,532,609 At end of the year 20,400,163 239,996,264 18,836,872 - 279,233,299 Net carrying amount At 31 December 2009 171,847,622 691,954,908 16,676,132 4,565,297 885,043,959

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Freehold land and Plant and Other Construction buildings machineries assets* in progress Total Group RM RM RM RM RM At 31 December 2008 Cost At beginning of the year 105,420,622 486,863,696 24,887,444 84,965,552 702,137,314 Acquisition of subsidiaries 43,294,262 165,370,000 606,025 - 209,270,287 Additions 9,535,427 33,288,562 6,841,936 198,689,951 248,355,876 Disposals (125,945) (617,134) (808,716) - (1,551,795) Written off - (1,016,521) - - (1,016,521) Reclassification 16,325,521 53,080,854 2,875,031 (72,281,406) - Exchange differences (3,128,724) (22,799,229) (1,158,835) (7,904,744) (34,991,532) At end of the year 171,321,163 714,170,228 33,242,885 203,469,353 1,122,203,629 Accumulated depreciation At beginning of the year 12,299,819 159,696,315 12,740,125 - 184,736,259 Charge for the year (Note 5) 3,318,030 32,756,452 3,739,752 - 39,814,234 Disposals (1,017) (90,744) (659,344) - (751,105) Written off - (312,195) - - (312,195) Exchange differences (435,143) (3,398,669) (363,268) - (4,197,080) At end of the year 15,181,689 188,651,159 15,457,265 - 219,290,113 Net carrying amount At 31 December 2008 156,139,474 525,519,069 17,785,620 203,469,353 902,913,516

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Freehold land and Plant and Other buildings machineries assets* Total Company RM RM RM RM At 31 December 2009 Cost At beginning of the year 34,310,067 182,458,953 8,872,319 225,641,339 Additions - 1,676,418 1,113,719 2,790,137 Disposals - - (1,073,974) (1,073,974) Written off - - (209,000) (209,000) At end of the year 34,310,067 184,135,371 8,703,064 227,148,502 Accumulated depreciation At beginning of the year 5,149,518 110,386,604 7,319,933 122,856,055 Charge for the year (Note 5) 508,892 7,232,971 820,465 8,562,328 Disposals - - (1,043,738) (1,043,738) Written off - - (209,000) (209,000) At end of the year 5,658,410 117,619,575 6,887,660 130,165,645 Net carrying amount At 31 December 2009 28,651,657 66,515,796 1,815,404 96,982,857 At 31 December 2008 Cost At beginning of the year 31,251,733 179,298,118 9,097,705 219,647,556 Additions 3,058,334 3,765,831 246,034 7,070,199 Disposals - (563,561) (471,420) (1,034,981) Written off - (41,435) - (41,435) At end of the year 34,310,067 182,458,953 8,872,319 225,641,339 Accumulated depreciation At beginning of the year 4,640,668 103,110,686 6,683,677 114,435,031 Charge for the year (Note 5) 508,850 7,356,781 1,080,245 8,945,876 Disposals - (53,068) (443,989) (497,057) Written off - (27,795) - (27,795) At end of the year 5,149,518 110,386,604 7,319,933 122,856,055 Net carrying amount At 31 December 2008 29,160,549 72,072,349 1,552,386 102,785,284

* Other assets comprise motor vehicles, signboard, furniture and fittings, office equipment, air conditioners, computers and telecommunication systems.

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(a) During the financial year, the Group and the Company acquired property, plant and equipment at aggregate costs of RM19,740,439 (2008 : RM457,578,736) and RM2,790,137 (2008 : RM 7,070,199) respectively of which RM714,161 (2008 : RMNil) and RM628,060 (2008 : RMNil) respectively were acquired by means of hire purchase arrangements.

Net carrying amounts of property, plant and equipment held under hire purchase are as follows : Group Company 2009 2008 2009 2008 RM RM RM RM Motor vehicles 9,695,423 9,170,606 1,044,811 220,573

(b) Net carrying amounts of property, plant and equipment pledged for banking facilities are as follows :

Group 2009 2008 RM RM Freehold land and buildings 55,811,362 39,003,527 Plant and machineries 269,803,991 120,875,149

325,615,353 159,878,676

(c) Net carrying amounts of property, plant and equipment registered in the name of a director holding in trust on behalf of the Group and the Company are as follows :

Group and Company 2009 2008 RM RM Motor vehicles 576,751 39,349

(d) Net carrying amounts of freehold land still in the process of transfer of land title are as follows:

Group 2009 2008 RM RM Freehold land 3,894,154 3,894,154

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13. Prepaid land lease payments

Group Company 2009 2008 2009 2008 RM RM RM RM At 1 January 14,825,854 10,386,703 8,768,307 8,953,255 Additions 38,781 42,500 38,781 - Acquisition of business - 4,705,738 - - Amortisation for the year (Note 5) (338,338) (236,856) (185,594) (184,948) Exchange differences 70,993 (72,231) - - At 31 December 14,597,290 14,825,854 8,621,494 8,768,307

As at year end, the title to the leasehold land with an aggregate carrying value of RM4,537,676 (2008 : RM4,672,126) is in the process of being tranferred to the Group.

14. Goodwill Group 2009 2008 RM RM Cost At beginning of year 18,438,016 13,531,016 Acquisition of business - 4,690,782 Addition - 216,218

At end of year 18,438,016 18,438,016

Impairment tests for goodwill Goodwill has been allocated to the Group’s CGUs identified according to the country of operation as follows: Group 2009 2008 RM RM Indonesia Operations 295,328 295,328 Thailand Operations 5,425,476 5,425,476 Malaysia Operations 12,717,212 12,717,212

18,438,016 18,438,016

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Key assumptions used in value-in-use calculations The recoverable amount of a CGU is determined based on value-in-use calculations using cash flow projections

based on financial budgets approved by management covering a five-year period. Cash flows beyond the five-year period are based on the cash flows forecasted in the preceding years. The key assumptions used for value-in-use calculations are :

Gross Margin Discount Rate

Indonesia Operations 25% 10% Thailand Operations 25% 10% Malaysia Operations 24% 10% The following describes each key assumption on which management has based its cash flow projections to undertake

impairment testing of goodwill:

(i) Budgeted gross margin The basis used to determine the value assigned to the budgeted gross margins is the average gross margins

achieved in the year immediately before the budgeted year, adjusted for projected market conditions and machine capability.

(ii) Discount rate The discount rate used is based on the pre-tax weighted average cost of capital and an appropriate risk premium.

(iii) Growth rate No growth rate was projected in the value-in-use calculations.

Sensitivity to changes in assumptions Management believes that no reasonably possible change in any of the above key assumptions would cause the

carrying values of the units to materially exceed their recoverable amounts. 15. Investment in subsidiaries

Company 2009 2008 RM RM Unquoted shares, at cost 285,424,588 186,424,588 Less : Impairment losses (Note 5) (10,145,000) -

275,279,588 186,424,588

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Details of the subsidiaries are as follows: Effective Country of equity interest Name of subsidiaries incorporation 2009 2008 Principal activities Allgreen Timber Products Malaysia 100% 100% Manufacture of particleboard Sdn. Bhd.* Siam Fibreboard Thailand 100% 100% Manufacture of medium density Company Limited** fibreboard GRE Energy Co. Ltd** Thailand 99.99% 99.99% Cogeneration of electricity ECO Generation Co. Ltd.** Thailand 99.94% 99.94% Cogeneration of electricity PT Hijau Lestari Raya Indonesia 51% 51% Manufacture of medium density Fibreboard*** fibreboard, glue and resin

Evergreen Fibreboard (JB) Malaysia 100% 100% Manufacture of medium density Sdn. Bhd.* fibreboard

Evergreen Hevea Malaysia 100% 100% Trading and managing of Resources Sdn. Bhd.* plantation Evergreen Adhesive & Malaysia 100% 100% Manufacture of urea formaldehyde Chemicals Sdn. Bhd.* concentrate and adhesive products Evergreen Fibreboard Malaysia 100% 100% Manufacture of medium density (Nilai) Sdn. Bhd.* fibreboard

Evergreen Eco Wood Singapore 100% 100% Manufacturing, trading and sales of Pte. Ltd.** wood product

Evergreen Decor Products Malaysia 100% 100% Dormant (M) Sdn. Bhd.* * Audited by Ernst & Young, Malaysia ** Audited by firms other than Ernst & Young *** Audited by member firm of Ernst & Young Global

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16. Interests in associates

Group Company 2009 2008 2009 2008 RM RM RM RM Unquoted shares, at cost 12,290,503 12,290,503 12,290,503 12,290,503 Loan to an associate 1,005,794 940,500 1,005,794 940,500 Share of post-acquisition reserves 9,294,281 7,404,846 - - 22,590,578 20,635,849 13,296,297 13,231,003

The loan to an associate is unsecured, bears interest at 3% per annum and is not expected to be repaid within the next 12 months.

Details of the associates are as follows : Equity interest Country of held (%) Name of associates incorporation 2009 2008 Principal activities Dawa Timber Industries Malaysia 44.67 44.67 Manufacturing of fancy plywood. Sdn. Bhd. Dynea Krabi Co. Ltd. Thailand 25.00 25.0 Manufacturing of panel board resins, impregnated papers and industrial resins. The summarised financial information of the associates are as follows: 2009 2008 RM RM Assets and liabilities Current assets 55,839,000 51,803,000 Non-current assets 41,860,000 42,627,000

Total assets 97,699,000 94,430,000

Current liabilities 26,022,000 31,028,000 Non-current liabilities 4,279,000 5,251,000

Total liabilities 30,301,000 36,279,000

Results Revenue 117,035,000 423,995,000 Profit for the year 8,294,000 5,667,000

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17. Inventories

Group Company 2009 2008 2009 2008 RM RM RM RM At cost : Raw materials 18,868,890 20,985,996 11,119,731 12,026,068 Work in progress 6,375,145 4,729,472 32,213 34,498 Finished goods 24,207,153 49,078,625 6,717,930 14,216,853 Factory supplies 1,388,097 880,866 - - Packing materials 699,304 978,837 77,995 24,096 Spare parts 60,592,382 60,111,166 22,792,501 21,712,731 112,130,971 136,764,962 40,740,370 48,014,246

18. Trade receivables

Group Company 2009 2008 2009 2008 RM RM RM RM Restated Restated Third parties 52,948,610 41,219,653 12,062,136 13,798,871 Subsidiaries - - 723,032 2,329,994 Associates 4,035,934 2,363,727 368,909 764,495 56,984,544 43,583,380 13,154,077 16,893,360

The Group’s primary exposure to credit risk arises through its trade receivables. The Group’s trading terms with its customers are mainly on credit for local customers and payment in advance for overseas customers. The normal credit term ranges from 15 to 90 days. Other credit terms are assessed and approved on a case-by-case basis. Each customer has a maximum credit limit. The Group seeks to maintain strict control over its outstanding receivables and overdue balances are reviewed regularly by senior management. In view of the aforementioned and the fact that the Group’s trade receivables relate to a large number of diversified customers, there is no significant concentration of credit risk. Trade receivables are non-interest bearing.

Amounts due from subsidiaries and associates are unsecured, non-interest bearing, have no fixed terms of repayment and are to be settled in cash.

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19. Other receivables

Group Company 2009 2008 2009 2008 RM RM RM RM Restated Restated Subsidiaries - - 67,063,210 151,871,313 Associate 190,295 78,056 26,636 - Sundry receivables 4,478,210 4,947,626 1,223,615 1,572,665 Deposits and prepayments 4,917,872 4,890,166 1,953,976 1,748,738 Advance payments to suppliers 16,418,336 21,400,779 1,603,075 - Insurance compensation receivable 1,233,580 395,349 - - Tax recoverable 948,349 918,474 784,800 - 28,186,642 32,630,450 72,655,312 155,192,716

The amount due from subsidiaries and associate, which arose mainly from advances and transfer of assets and liabilities pursuant to a restructuring exercise in previous years, is unsecured, non-interest bearing, repayable on demand and are to be settled in cash.

20. Cash and bank balances

Group Company 2009 2008 2009 2008 RM RM RM RM Restated Restated Cash on hand and at banks 68,228,500 39,597,891 31,051,050 4,678,235 Deposits with licensed banks 44,830,898 36,810,166 23,793,852 27,987,021 Cash and bank balances 113,059,398 76,408,057 54,844,902 32,665,256

Included in the cash at bank is cash held in trust by a third party amounting to RM579,049 (2008: RM859,955)

Other information on financial risks of cash and cash equivalents are disclosed in Note 35.

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21. Borrowings Group Company 2009 2008 2009 2008 RM RM RM RM Short term borrowings Secured: Trade facilities - 85,188,153 - - Term loans 37,845,363 18,036,000 - - Hire purchase and finance lease liabilities (Note 22) 712,538 717,261 194,469 167,690 38,557,901 103,941,414 194,469 167,690 Unsecured: Trade facilities 5,000,000 10,000,000 5,000,000 10,000,000 Term loans 58,833,787 141,084,076 8,750,000 35,000,000 63,833,787 151,084,076 13,750,000 45,000,000 102,391,688 255,025,490 13,944,469 45,167,690

Long term borrowings Secured: Term loans 114,650,185 56,702,662 - - Hire purchase and finance lease liabilities (Note 22) 1,289,436 1,305,635 482,465 102,466 115,939,621 58,008,297 482,465 102,466 Unsecured: Term loans 194,313,832 156,793,000 17,500,000 - 194,313,832 156,793,000 17,500,000 - 310,253,453 214,801,297 17,982,465 102,466

Total borrowings Trade facilities 5,000,000 95,188,153 5,000,000 10,000,000 Term loans 405,643,167 372,615,738 26,250,000 35,000,000 Hire purchase and finance lease liabilities 2,001,974 2,022,896 676,934 270,156 412,645,141 469,826,787 31,926,934 45,270,156

Maturity of borrowings (excluding hire purchase and finance lease): Within one year 101,679,150 254,308,229 13,750,000 45,000,000 More than 1 year and less than 2 years 88,134,530 43,698,458 8,750,000 - More than 2 years and less than 5 years 161,075,772 123,872,229 8,750,000 - More than 5 years 59,753,715 45,924,975 - - 410,643,167 467,803,891 31,250,000 45,000,000

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The borrowings are secured by the following :

(i) Debentures over fixed and floating charges over the present and future assets of certain subsidiaries. (ii) Legal charge over the freehold land, buildings and plant and machineries of certain subsidiaries as disclosed in

Note 12.

(iii) Priority and Security Sharing Agreement.

(iv) Corporate guarantee by the Company. Other information on financial risks of borrowings are disclosed in Note 35.

22. Hire purchase and finance lease liabilities Group Company 2009 2008 2009 2008 RM RM RM RM Future minimum lease payments: Not later than 1 year 805,304 745,993 212,325 189,349 Later than 1 year and not later than 2 years 723,891 731,912 188,315 67,185 Later than 2 years and not later than 5 years 446,484 808,175 123,623 54,189 Later than 5 years 244,864 - 244,865 - 2,220,543 2,286,080 769,128 310,723 Less: Future finance charges (218,569) (263,184) (92,194) (40,567) Present value of finance lease liabilities 2,001,974 2,022,896 676,934 270,156

Analysis of present value of finance lease liabilities: Not later than 1 year 712,538 717,261 194,469 167,690 Later than 1 year and not later than 2 years 667,977 499,844 174,040 56,933 Later than 2 years and not later than 5 years 428,949 805,791 115,915 45,533 Later than 5 years 192,510 - 192,510 - 2,001,974 2,022,896 676,934 270,156

Analysed as: Due within 12 months (Note 21) 712,538 717,261 194,469 167,690 Due after 12 months (Note 21) 1,289,436 1,305,635 482,465 102,466 2,001,974 2,022,896 676,934 270,156

Other information on financial risks of hire purchase and finance lease liabilities are disclosed in Note 35.

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23. Retirement benefit obligations Group 2009 2008 RM RM At 1 January 2009 257,060 - Acquisition of business - 219,778 Recognised in the income statement (Note 5) 134,069 42,228 Contribution paid (71,921) (4,946)

At 31 December 2009 319,208 257,060

24. Trade payables Group Company 2009 2008 2009 2008 RM RM RM RM Restated Restated Third parties 39,637,146 51,953,013 5,381,824 7,072,435 Subsidiaries - - 10,053,770 6,479,053 Associate 7,358,812 4,242,977 - 5,079 46,995,958 56,195,990 15,435,594 13,556,567 Trade payables are non-interest bearing and the normal credit terms granted to the Group range from 7 to 90 days. 25. Other payables Group Company 2009 2008 2009 2008 RM RM RM RM Restated Restated Amount due to subsidiaries - - 9,368,328 20,951,558 Sundry payables 27,468,329 50,137,758 14,524,537 6,145,909 Amount due to minority shareholder 33,571,110 29,083,456 - - Advances and accruals 17,424,574 15,928,015 4,532,406 5,764,069 78,464,013 95,149,229 28,425,271 32,861,536 The amount due to subsidiaries, which arose mainly from advances and transfer of assets and liabilities pursuant to a

restructuring exercise in previous years, is unsecured, non-interest bearing, repayable on demand and is to be settled in cash.

Affiliated companies are those companies in which minority shareholders have interests.

The amount due to minority shareholder, which arose mainly from acquisition of assets and advances, is unsecured, non-interest bearing, repayable on demand and is to be settled in cash.

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26. Deferred tax liabilities

Group Company 2009 2008 2009 2008 RM RM RM RM At 1 January 7,573,317 16,875,890 16,364,466 18,045,890 Recognised in the income statement (Note 9) (3,102,627) (9,283,399) (1,657,048) (1,681,424) Exchange difference 38,627 (19,174) - - At 31 December 4,509,317 7,573,317 14,707,418 16,364,466

Presented after appropriate offsetting as follows: Deferred tax assets (50,422,066) (42,600,386) (1,052,335) - Deferred tax liabilities 54,931,383 50,173,703 15,759,753 16,364,466 4,509,317 7,573,317 14,707,418 16,364,466

The components and movements of deferred tax liabilities and assets during the financial year prior to offsetting are as follows:

Deferred tax liabilities: Property, plant and equipment Group Company RM RM At 1 January 2009 50,173,703 16,364,466 Recognised in the income statement 4,757,680 (604,713)

At 31 December 2009 54,931,383 15,759,753

At 1 January 2008 30,185,666 18,045,890 Recognised in the income statement 19,988,037 (1,681,424)

At 31 December 2008 50,173,703 16,364,466

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Deferred tax assets of the Group: Unutilised Unabsorbed Unutilised investment capital tax tax allowances losses allowance Total RM RM RM RM At 1 January 2009 (27,266,886) (2,658,250) (12,675,250) (42,600,386) Recognised in the income statement (2,885,680) - (4,936,000) (7,821,680) At 31 December 2009 (30,152,566) (2,658,250) (17,611,250) (50,422,066)

At 1 January 2008 (9,406,868) (3,902,908) - (13,309,776) Recognised in the income statement (17,860,018) 1,244,658 (12,675,250) (29,290,610) At 31 December 2009 (27,266,886) (2,658,250) (12,675,250) (42,600,386)

Deferred tax assets of the Company: Unabsorbed capital allowances Total RM RM At 1 January 2009 - - Recognised in the income statement (1,052,335) (1,052,335)

At 31 December 2009 (1,052,335) (1,052,335)

Deferred tax assets have not been recognised in respect of the following items: Group 2009 2008 RM RM Unutilised tax losses 3,256,000 6,203,000 Unabsorbed reinvestment allowance 6,654,000 6,417,000

9,910,000 12,620,000

The unutilised tax losses and unabsorbed reinvestment allowance of the Group are available indefinitely for offsetting against future taxable profits of the respective entities within the Group, subject to guidelines issued by the tax authority.

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27. Share capital Group and Company Number of ordinary shares of RM0.25 each Amount 2009 2008 2009 2008 Authorised RM RM At 1 January/31 December 1,200,000,000 1,200,000,000 300,000,000 300,000,000

Issued and fully paid At 1 January 513,000,000 480,000,000 128,250,000 120,000,000 Issued during the year - 33,000,000 - 8,250,000 At 31 December 513,000,000 513,000,000 128,250,000 128,250,000

28. Share premium The share premium which is non-distributable represents the premium arising from the issue of shares. Movements

in the share premium account are shown in the statement of changes in equity. 29. Foreign exchange reserve The foreign currency translation reserve is used to record exchange differences arising from the translation of

the financial statements of foreign operations whose functional currencies are different from that of the Group’s presentation currency.

30. Retained earnings Prior to the year of assessment 2008, Malaysian companies adopted the full imputation system. In accordance with

the Finance Act 2007 which was gazetted on 28 December 2007, companies shall not be entitled to deduct tax on dividend paid, credited or distributed to its shareholders, and such dividends will be exempted from tax in the hands of the shareholders (“single tier system”). However, there is a transitional period of six years, expiring on 31 December 2013, to allow companies to pay franked dividends to their shareholders under limited circumstances. Companies also have an irrecoverable option to disregard the 108 balance and opt to pay dividends under the single tier system. The change in the tax legislation also provides for the 108 balance to be locked-in as at 31 December 2007 in accordance with Section 39 of the Finance Act 2007.

The Company did not elect for the irrevocable option to disregard the 108 balance. Accordingly, during the transitional period, the Company may utilise the credit in the 108 balance as at 31 December 2009 to distribute cash dividend payments to ordinary shareholdings as defined under the Finance Act 2007. As at 31 December 2009, the Company has sufficient credit in the 108 balance and tax exempt profits to pay franked dividends amounting to RM158,582,000 (2008 : RM143,379,000 ) out of its retained earnings. If the balance of the retained earnings of RM87,655,000 (2008 : RM70,584,000) were to be distributed as dividends, the Company may distribute such dividends under the single tier system.

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31. Capital commitments Group Company 2009 2008 2009 2008 RM RM RM RM Capital expenditure Approved but not contracted for 1,230,000 6,574,685 - 664,866 Approved and contracted for 3,534,348 1,855,243 - 1,855,243 4,764,348 8,429,928 - 2,520,109

32. Contingent liabilities Group Company 2009 2008 2009 2008 RM RM RM RM Unsecured: Corporate guarantees to banks for credit facilities granted to certain subsidiaries - - 216,018,000 233,793,000 Shareholder guarantees to bank for credit facilities granted to overseas subsidiaries - - 163,875,361 167,878,916 Corporate guarantee to a third party for a loan granted to a Thailand associate 1,005,794 940,500 1,005,794 940,500 1,005,794 940,500 380,899,155 402,612,416

33. Related party transactions Group Company 2009 2008 2009 2008 RM RM RM RM Associates: Sale of products 17,151,447 13,003,348 3,607,774 2,564,053 Purchase of products 28,417,879 47,276,915 107,327 780,761 Subsidiaries: Sale of products and rendering of services - - 523,672 5,064,141 Sales of property, plant and equipment - - - 513,082 Sale of spare parts - - 244,949 193,116 Purchase of products - - 43,500,696 43,601,803 Purchase of spare parts - - 13,718 11,690 Purchase of property, plant and equipment - - 1,607 -

The directors are of the opinion that all the transactions above have been entered into in the normal course of business and have been established on terms and conditions that are mutually agreed upon.

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34. Restatement of comparatives During the financial year, the Group and the Company has reclassified certain amounts from trade receivables, trade

payables and marketable securities to other receivables, other payables and cash and bank balances respectively which gives a fairer presentation of the financial statements. The following comparative amounts as at 31 December 2008 have been restated as follows:

Previously stated Adjustment Restated RM RM RM Group Trade receivables 43,036,039 547,341 43,583,380 Other receivables 33,177,791 (547,341) 32,630,450

Trade payables 62,216,703 (6,020,713) 56,195,990 Other payables 89,128,516 6,020,713 95,149,229

Marketable securities 703,058 (703,058) - Cash and bank balances 75,704,999 703,058 76,408,057

Company Trade receivables 16,346,019 547,341 16,893,360 Other receivables 155,740,057 (547,341) 155,192,716

Trade payables 19,577,280 (6,020,713) 13,556,567 Other payables 26,840,823 6,020,713 32,861,536

Marketable securities 703,058 (703,058) - Cash and bank balances 31,962,198 703,058 32,665,256

35. Financial instruments

(a) Financial risk management objectives and policies The Group’s financial risk management policy seeks to ensure that adequate financial resources are available for

the development of the Group’s businesses whilst managing its interest rate risks (both fair value and cash flow), foreign exchange risk, liquidity risk and credit risk. The Board reviews and agrees policies for managing each of these risks and they are summarised below. It is, and has been throughout the year under review, the Group’s policy that no trading in derivative financial instruments shall be undertaken.

(b) Interest rate risk Cash flow interest rate risk is the risk that the future cash flows of a financial instrument will fluctuate because

of changes in market interest rates. Fair value interest rate risk is the risk that the value of a financial instrument will fluctuate due to changes in market interest rates. As the Group has no significant interest-bearing financial assets, the Group’s income and operating cash flows are substantially independent of changes in market interest rates. The Group’s interest-bearing financial assets are mainly short term in nature and have been mostly placed in fixed deposits and short term deposits.

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The Group’s interest rate risk arises primarily from interest-bearing borrowings. Borrowings at floating rates expose the Group to cash flow interest rate risk. Borrowings obtained at fixed rates expose the Group to fair value interest rate risk. The Group manages its interest rate exposure by maintaining a mix of fixed and floating rate borrowings.

The following tables set out the carrying amounts, the interest rates as at the balance sheet date and the remaining maturities of the Group’s and the Company’s financial instruments that are exposed to interest rate risk :

More Interest Within 1 1 - 2 2 - 5 Than 5 Note Rate Year Years Years Years Total % RM RM RM RM RM At 31 December 2009 Group Fixed rate Deposits with licensed banks 20 1.4 to 2.6 44,830,898 - - - 44,830,898 Hire purchase and finance lease liabilities 22 1.1 to 5.0 712,538 667,977 428,949 192,510 2,001,974 Floating rate Trade facilities 21 2.7 to 3.9 5,000,000 - - - 5,000,000 Term loans 21 2.0 to 5.9 96,679,150 88,134,530 161,075,772 59,753,715 405,643,167 Company Fixed rate Deposits with licensed banks 20 1.6 to 2.6 23,793,852 - - - 23,793,852 Hire purchase and finance lease liabilities 22 2.2 to 3.3 194,469 174,040 115,915 192,510 676,934 Floating rate Trade facilities 21 2.7 to 3.9 5,000,000 - - - 5,000,000 Term loans 21 2.7 8,750,000 8,750,000 8,750,000 - 26,250,000

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More Interest Within 1 1 - 2 2 - 5 Than 5 Note Rate Year Years Years Years Total % RM RM RM RM RM At 31 December 2008 Group Fixed rate Deposits with licensed banks 20 2.0 to 4.4 36,810,166 - - - 36,810,166 Hire purchase and finance lease liabilities 22 1.1 to 5.0 717,261 499,844 805,791 - 2,022,896 Floating rate Trade facilities 21 3.7 to 5.0 95,188,153 - - - 95,188,153 Term loans 21 4.0 to 6.0 159,120,076 43,698,458 123,872,229 45,924,975 372,615,738 Company Fixed rate Deposits with licensed banks 20 2.6 to 4.4 27,987,021 - - - 27,987,021 Hire purchase and finance lease liabilities 22 2.2 to 3.2 167,690 56,933 45,533 - 270,156 Floating rate Trade facilities 21 3.7 to 3.8 10,000,000 - - - 10,000,000 Term loans 21 4.5 35,000,000 - - - 35,000,000

(c) Foreign exchange risk The Group is exposed to transactional currency risk primarily through sales and purchases that are denominated

in a currency other than the functional currency of the operations to which they relate. The currency giving rise to this risk is primarily United States Dollars (USD) and Euro. Foreign exchange exposures in transactional currencies other than functional currencies of the operating entities are kept to an acceptable level. Material foreign currency transaction exposures are hedged, mainly with derivative financial instruments such as forward foreign exchange contracts.

The Group maintains a natural hedge, whenever possible, by borrowing in the currency of the country in which the property or investment is located or by borrowing in currencies that match the future revenue stream to be generated from its investments.

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The net unhedged financial assets and financial liabilities of the Group companies that are not denominated in their functional currencies are as follows :

Net Financial Assets/(Liabilities) Held in Non-Functional Currencies Ringgit United States Euro Other Malaysia Dollars Currencies* Total RM RM RM RM RM Functional Currency of Group Companies

At 31 December 2009 Ringgit Malaysia - (6,298,175) (226,063) (1,093,276) (7,617,515) Thai Baht (83,249) 150,617 (4,747) (6,346) 56,275 Indonesian Rupiah (31,500) (12,362,467) (124,330) (2,783) (12,521,080) (114,749) (18,510,026) (355,140) (1,102,405) (20,082,320) At 31 December 2008 Ringgit Malaysia - 4,514,752 (306,548) (434,837) 3,773,367 Thai Baht (5,216,634) 1,273,342 (9,439,197) 17,315 (13,365,174) Indonesian Rupiah - (29,084,076) - - (29,084,076) Singapore Dollar - (28,756) - - (28,756) (5,216,634) (23,324,737) (9,745,745) (417,522) (38,704,638) * Other currencies consist of Singapore Dollars, Swiss Franc, Swedish Krona and Japanese Yen.

As at balance sheet date, the Group and the Company had entered into forward foreign exchange contracts with the following notional amounts and maturities:

Group Company Maturities Within 1 Year Forwards used to hedge anticipated sales: RM RM Currency At 31 December 2009 United States Dollar 19,253,199 - At 31 December 2008 United States Dollar 56,014,116 42,654,020

(d) Liquidity risk The Group manages its debt maturity profile, operating cash flows and the availability of funding so as to ensure

that refinancing, repayment and funding needs are met. As part of its overall liquidity management, the Group maintains sufficient levels of cash or cash convertible investments to meet its working capital requirements. In addition, the Group strives to maintain available banking facilities at a reasonable level to its overall debt position. As far as possible, the Group raises committed funding from both capital markets and financial institutions and balances its portfolio with some short term funding so as to achieve overall cost effectiveness.

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(e) Credit risk The Group’s credit risk is primarily attributable to trade receivables. The Group trades only with recognised

and creditworthy third parties. It is the Group’s policy that all customers who wish to trade on credit terms are subject to credit verification procedures. In addition, receivable balances are monitored on an ongoing basis and the Group’s exposure to bad debts is not significant.

The credit risk of the Group’s other financial assets, which comprise cash and cash equivalents and marketable securities, arises from default of the counterparty, with a maximum exposure equal to the carrying amount of these financial assets.

The Group does not have any significant exposure to any individual customer or counterparty nor does it have any major concentration of credit risk related to any financial assets.

(f) Fair values The carrying amounts of financial assets/(liabilities) of the Group and of the Company at the balance sheet date

approximated their fair values except for the followings: Group Company Carrying Carrying amount Fair value amount Fair value RM RM RM RM At 31 December 2009 Forward foreign exchange contracts - (2,000) - -

At 31 December 2008 Forward foreign exchange contracts - 3,303,000 - 2,842,000

The fair value of a forward foreign exchange contract is the amount that would be payable or receivable on termination of the outstanding position arising and is determined by reference to the difference between the contracted rate and spot exchange rate as at the balance sheet date.

36. Segment information The primary segment reporting format is determined to be geographical segments as the Group’s risks and rates of

return are affected predominantly by the local economic environment in which it operates. Segmental reporting by business has not been presented as the Group’s operations are within similar activities.

Geographical segments: The Group is organised into three major geographical segments:

(i) Malaysia- manufacture of medium density fibreboard, wooden furniture (knock down), particleboard, glue, resin, as well as trading and managing of plantation.

(ii) Thailand - production and distribution of medium density fibreboard.

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(iii) Indonesia - manufacture of medium density fibreboard, glue and resin. (iv) Singapore - manufacturing, trading and sales of wood products.

The directors are of the opinion that all inter-segment transactions have been entered in the normal course of

business and have been established on terms and conditions that are not materially different from those obtainable in transactions with unrelated parties.

Malaysia Thailand Indonesia Singapore Elimination Consolidated 2009 RM RM RM RM RM RM Revenue External sales 502,842,551 258,619,771 9,615,100 436,166 - 771,513,588 Inter-company sales 99,615,544 34,863,466 478,490 19,055 (134,976,555) - Total revenue 602,458,095 293,483,237 10,093,590 455,221 (134,976,555) 771,513,588 Results Segment results 78,393,686 27,783,973 (6,534,455) (1,258,627) (1,762,408) 96,622,169 Finance costs (9,925,617) (6,612,640) (1,221,166) - - (17,759,423) Share of profit of associates 956,833 1,538,046 - - (605,444) 1,889,435 Profit before tax 69,424,902 22,709,379 (7,755,621) (1,258,627) (2,367,852) 80,752,181 Taxation 2,567,436 (2,007,335) (318,964) - - 241,137 Profit for the year 71,992,338 20,702,044 (8,074,585) (1,258,627) (2,367,852) 80,993,318 Assets Segment assets 1,081,549,506 429,129,118 86,689,037 950,466 (369,877,307) 1,228,440,820 Interests in associates 12,332,062 10,258,516 - - - 22,590,578 Consolidated total assets 1,251,031,398 Liabilities Segment liabilities 357,339,572 202,362,998 83,617,094 2,298,178 (99,953,643) 545,664,199 Consolidated total liabilities 545,664,199 Other Information Amortisation of prepaid lease payments 338,338 - - - - 338,338 Capital expenditures 10,134,826 8,595,428 1,047,767 1,199 - 19,779,220 Depreciation 27,740,185 26,722,648 4,494,783 98,820 - 59,056,436

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Malaysia Thailand Indonesia Singapore Elimination Consolidated 2008 RM RM RM RM RM RM Revenue External sales 455,967,300 249,400,720 25,146,879 9,186 - 730,524,085 Inter-company sales 83,896,886 20,772,805 - - (104,669,691) - Total revenue 539,864,186 270,173,525 25,146,879 9,186 (104,669,691) 730,524,085 Results Segment results 63,112,430 25,958,387 (13,780,270) (81,952) (23,191) 75,185,404 Finance costs (7,719,300) (3,818,885) (1,479,219) - - (13,017,404) Share of profit of associates 551,906 1,142,269 - - - 1,694,175 Profit before tax 55,945,036 23,281,771 (15,259,489) (81,952) (23,191) 63,862,175 Taxation 7,352,979 (1,908,637) (143,003) - - 5,301,339 Profit for the year 63,298,015 21,373,134 (15,402,492) (81,952) (23,191) 69,163,514 Assets Segment assets 938,791,197 411,822,564 89,035,184 954,511 (215,039,221) 1,225,564,235 Interests in associates 11,701,383 8,934,466 - - - 20,635,849 Consolidated total assets 1,246,200,084 Liabilities Segment liabilities 518,893,604 214,576,970 78,938,231 1,036,458 (183,551,113) 629,894,150 Consolidated total liabilities 629,894,150 Other Information Amortisation of prepaid lease payments 236,856 - - - - 236,856 Capital expenditures 272,557,919 178,846,048 10,095,354 875,080 - 462,374,401 Depreciation 19,628,958 16,869,088 3,316,188 - - 39,814,234

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The following table provides an analysis of the Group’s revenue by geographical segment: 2009 2008 RM RM

Revenue from sales to external customers by location of the customers United States 44,017,476 29,523,701 Africa 25,761,256 39,702,948 Europe 25,033,128 30,961,992 Far East Asia 78,580,696 96,565,418 Mediterranean 23,216,933 30,343,754 Middle East 180,770,331 189,935,582 South Asia 56,193,935 46,307,236 South East Asia 337,939,833 263,233,716 Other Countries - 3,949,738

771,513,588 730,524,085

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Other Information

Page

89 ListofProperties

96 StatementofShareholdings

98 SubstantialShareholders

Enclosed FormofProxy

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List Of PropertiesAs at 31 December 2009

NET BOOK VALUE YEAR OFNO LOCATION TENURE LAND AREA USAGE AS AT 31 DEC 2009 ACQUISITION RM

1 PTD 10321 HS(D) 26363 LEASEHOLD 2.49 ACRES INDUSTRIAL / 4,242,238 24/07/2003 MUKIM OF SRI GADING, 60 YEARS SINGLE STOREY DICTRICT OF BATU PAHAT, EXPIRING ON WAREHOUSE, JOHOR 10/09/2050 STORAGE AREA WITH THE GUARD HOUSE ADDRESS : PLO 3, LOCATED ALONG JALAN PADI KEDAH, PARIT RAJA INDUSTRIAL AREA, 86400 PARIT RAJA, BATU PAHAT, JOHOR.

2 PTD 7203 HS(D) 20908 LEASEHOLD 0.5 ACRE INDUSTRIAL / 462,669 24/07/2003 MUKIM OF SRI GADING, 60 YEARS FUTURE DICTRICT OF BATU PAHAT, EXPIRING ON DEVELOPMENT JOHOR 11/07/2046 ADDRESS : PLO 2, LOCATED ALONG JALAN PADI KEDAH, PARIT RAJA INDUSTRIAL AREA, 86400 PARIT RAJA, BATU PAHAT, JOHOR.

3 PTD 7205 HS(D) 21589 LEASEHOLD 1.0 ACRE INDUSTRIAL / 941,629 24/07/2003 MUKIM OF SRI GADING, 60 YEARS WAREHOUSE / DICTRICT OF BATU PAHAT, EXPIRING ON PRODUCTION AREA JOHOR 03/09/2047 AND STORAGE AREA ADDRESS : PLO 6, LOCATED ALONG JALAN PADI KEDAH, PARIT RAJA INDUSTRIAL AREA, 86400 PARIT RAJA, BATU PAHAT, JOHOR.

4 PTD 5844 HS(D) 17718 60 YEARS 1.0 ACRE INDUSTRIAL / 941,582 24/07/2003 MUKIM OF SRI GADING, EXPIRING ON WAREHOUSE / DICTRICT OF BATU PAHAT, 26/02/2043 PRODUCTION AREA JOHOR AND STORAGE AREA ADDRESS : PLO 4, LOCATED ALONG JALAN PADI KEDAH, PARIT RAJA INDUSTRIAL AREA, 86400 PARIT RAJA, BATU PAHAT, JOHOR.

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List Of Properties (Cont’d)As at 31 December 2009


5 PTD 10331 HS(D) 27436 LEASEHOLD 2.0 ACRES INDUSTRIAL / 4,306,802 02/07/2002 MUKIM OF SRI GADING, 60 YEARS MAIN OFFICE, DICTRICT OF BATU PAHAT, EXPIRING ON ADMINISTRATION JOHOR 01/04/2051 PRODUCTION AREA AND WAREHOUSE ADDRESS : PLO 17, PARIT RAJA INDUSTRIAL AREA, 86400 PARIT RAJA, BATU PAHAT, JOHOR.

6 PTD 11229 HS(D) 32362 LEASEHOLD 1.2 ACRES INDUSTRIAL / 1,419,031 02/07/2002 MUKIM OF SRI GADING, 60 YEARS PRODUCTION AREA/ DICTRICT OF BATU PAHAT, EXPIRING ON CANTEEN / JOHOR 21/03/2055 TRAINING ROOM AND WAREHOUSE ADDRESS : PLO 27, PARIT RAJA INDUSTRIAL AREA, 86400 PARIT RAJA, BATU PAHAT, JOHOR.

7 PTD 11600 HS(D) 37267 LEASEHOLD 2.52 ACRES INDUSTRIAL / 2,193,058 12/12/2000 MUKIM OF SRI GADING, 60 YEARS PRODUCTION DICTRICT OF BATU PAHAT, EXPIRING ON JOHOR 13/06/2056

ADDRESS : PLO 28, PARIT RAJA INDUSTRIAL AREA, 86400 PARIT RAJA, BATU PAHAT, JOHOR.

8 PTD 10628 HS(D) 30018 LEASEHOLD 3.83 ACRES INDUSTRIAL / 4,365,956 19/11/2002 MUKIM OF SRI GADING, 60 YEARS WAREHOUSE DICTRICT OF BATU PAHAT, EXPIRING ON JOHOR 02/11/2053 ADDRESS : PLO 18, PARIT RAJA INDUSTRIAL AREA, 86400 PARIT RAJA, BATU PAHAT, JOHOR.

9 PTD 11215 HS(D) 32156 LEASEHOLD 2.00 ACRES INDUSTRIAL / 3,056,320 07/01/1995 MUKIM OF SRI GADING, 60 YEARS PRODUCTION AND DICTRICT OF BATU PAHAT, EXPIRING ON CONCRETE LOG POND JOHOR 06/01/2055 ADDRESS : PLO 21, PARIT RAJA INDUSTRIAL AREA, 86400 PARIT RAJA, BATU PAHAT, JOHOR.

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10 PTD 10545 HS(D) 29660 LEASEHOLD 7.85 ACRES INDUSTRIAL / 8,289,702 09/09/1993 MUKIM OF SRI GADING, 60 YEARS PRODUCTION DICTRICT OF BATU PAHAT, EXPIRING ON AREA JOHOR 08/09/2053 ADDRESS : PLO 22, PARIT RAJA INDUSTRIAL AREA, 86400 PARIT RAJA, BATU PAHAT, JOHOR.

11 PTD 10330 HS(D) 27434 LEASEHOLD 2.5 ACRES INDUSTRIAL / 1,421,173 22/09/2003 MUKIM OF SRI GADING, 60 YEARS USE AS LOG DICTRICT OF BATU PAHAT, EXPIRING ON YARD AND JOHOR 01/04/2051 PARKING SITE ADDRESS : PLO 23, PARIT RAJA INDUSTRIAL AREA, 86400 PARIT RAJA, BATU PAHAT, JOHOR.

12 PTD 8605 HSM 4381 & PTD FREEHOLD 143.066 SQ. M RESIDENTIAL / 118,857 20/03/1996 8606, HSM 4382 HOSTEL MUKIM OF SRI GADING, DICTRICT OF BATU PAHAT, JOHOR

ADDRESS : NO.9 & 10, JALAN BINA 7, TAMAN PARIT RAJA, 86400 PARIT RAJA, BATU PAHAT, JOHOR.

13 PTD 7183 HS(D) 19744 60 YEARS 0.50 ACRES INDUSTRIAL / 744,358 30/06/2003 MUKIM OF SRI GADING, EXPIRING ON WAREHOUSE DICTRICT OF BATU PAHAT, 31/07/2045 JOHOR ADDRESS : NO.7, JALAN PADI SIAM, PARIT RAJA INDUSTRIAL AREA, 86400 PARIT RAJA, BATU PAHAT, JOHOR.

14 PTD 18043 FREEHOLD 6.25 ACRES LOG YARD AREA 4,783,447 30/08/2006 MUKIM OF SRI GADING, DICTRICT OF BATU PAHAT

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15 LOT NO 51613, PN6656 LEASEHOLD 4.99 ACRES INDUSTRIAL / 5,135,851 13/02/1990 (PREVIOUSLY PTD 90024, 60 YEARS PRODUCTION / HS(D) 162773) EXPIRING ON OFFICE BUILDING / MUKIM OF PLENTONG, 20/05/2050 WAREHOUSE DICTRICT OF JOHOR BAHRU, JOHOR

ADDRESS : PLO 416, JALAN SUASA, PASIR GUDANG INDUSTRIAL AREA, 81700 PASIR GUDANG, JOHOR.

16 PTD 64788, HS(D) 69683, LEASEHOLD 1,540 SQ. FT BUILDING 244,935 05/09/2005 PTD 64789 HS(D) 69684, 99 YEARS X 2 UNITS (RESIDENTIAL) MUKIM OF PLENTONG, EXPIRING ON DICTRICT OF JOHOR BAHRU, 06/05/2082 JOHOR ADDRESS : NO 13 & 15, JALAN 10/9, PERJIRANAN 10, TAMAN AIR BIRU, 81700 PASIR GUDANG, JOHOR.

17 PLO 202,MUKIM OF POGOH, FREEHOLD 12.04 ACRES INDUSTRIAL / 11,594,794 02/01/2005 DICTRICT OF SEGAMAT, JOHOR OFFICE AND PRODUCTION BUILDING ADDRESS : PLO 202, SEGAMAT INDUSTRIAL AREA II, 85000 SEGAMAT, JOHOR.

18 PLO 203,MUKIM OF POGOH, FREEHOLD 10.906 ACRES INDUSTRIAL 2,632,260 18/01/2006 DICTRICT OF SEGAMAT, JOHOR LAND AND BUILDING ADDRESS : PLO 203, SEGAMAT INDUSTRIAL AREA II, 85000 SEGAMAT, JOHOR.

19 LOT NO 4, TITLE NO 152116 FREEHOLD 11.59 ACRES OFFICE, 6,840,854 27/05/2004 ADMINISTRATION PRODUCTION AREA AND WAREHOUSE ADDRESS : 417/112-113, STA INDUSTRIAL PARK, MOO 1, KANJANAVANICH ROAD, SUB- DISTRICT PATHONG, DISTRICT OF HAATYAI. 90230 SONGKHLA, THAILAND


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20 LOT NO 5, TITLE NO 152117 FREEHOLD 11.21 ACRES OFFICE 5,851,590 27/05/2004 ADMINISTRATION, PRODUCTION AREA AND WAREHOUSE ADDRESS : 417/112-113, STA INDUSTRIAL PARK, MOO 1, KANJANAVANICH ROAD, SUB- DISTRICT PATHONG, DISTRICT OF HAATYAI. 90230 SONGKHLA, THAILAND

21 LOT NO 6, TITLE NO 152118 FREEHOLD 0.84 ACRES LOG YARD AREA 218,478 27/05/2004 ADDRESS : 417/112-113, STA INDUSTRIAL PARK, MOO 1, KANJANAVANICH ROAD, SUB- DISTRICT PATHONG, DISTRICT OF HAATYAI. 90230 SONGKHLA, THAILAND

22 LOT NO 8, TITLE NO 152120 FREEHOLD 7.72 ACRES LOG YARD AREA 934,124 27/05/2004 ADDRESS : 417/112-113, STA INDUSTRIAL PARK, MOO 1, KANJANAVANICH ROAD, SUB- DISTRICT PATHONG, DISTRICT OF HAATYAI. 90230 SONGKHLA, THAILAND

23 LOT NO 11, TITLE NO 152123 FREEHOLD 7.25 ACRES INDUSTRIAL / 5,990,469 22/08/2006 TRAILER PARKING, CAR PARK ADDRESS : 417/112-113, STA INDUSTRIAL PARK, MOO 1, KANJANAVANICH ROAD, SUB- DISTRICT PATHONG, DISTRICT OF HAATYAI. 90230 SONGKHLA, THAILAND

24 LOT NO 1, TITLE NO 152121 FREEHOLD 9.257 ACRES LAND AND 16,819,633.00 25/05/2007 IMPROVEMENT PRODUCTION AREA AND WAREHOUSE ADDRESS : 417/117, STA INDUSTRIAL PARK, MOO 1, KANJANAVANICH ROAD, SUB- DISTRICT PATHONG, DISTRICT OF HAATYAI. 90230 SONGKHLA, THAILAND


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25 HS(D) 234508, FREEHOLD 9.998 ACRES INDUSTRIAL / 20,601,212 20/12/2006 LOT NO :MLO 6219 OFFICE AND MUKIM OF PLENTONG PRODUCTION BUILDING ADDRESS : 11 1/2 MILES, JALAN MASAI, 81750 MASAI, JOHOR

26 ADDRESS : GM 302 LOT NO:942, FREEHOLD 1.046 ACRES ARGICULTURE 30,807 20/12/2006 MUKIM CHAAH BAHRU, LAND DAERAH BATU PAHAT, JOHOR.

27 ADDRESS : GM 1262 LOT NO:301, FREEHOLD 4.388 ACRES ARGICULTURE 129,193 20/12/2006 MUKIM CHAAH BAHRU, LAND DAERAH BATU PAHAT, JOHOR.

28 ADDRESS : H.S.(D) :215998 FREEHOLD 2.96 ACRES INDUSTRIAL 2,866,089 17/06/2009 PTD75288 LAND MUKIM PLENTONG DAERAH JOHOR BAHRU, JOHOR.

29 LOT NO 11, TITLE NO 152124 FREEHOLD 9.6 ACRES INDUSTRIAL / 8,010,408 28/08/2007 PRODUCTION AREA ADDRESS : 417/112-113, STA INDUSTRIAL PARK, MOO 1, KANJANAVANICH ROAD, SUB- DISTRICT PATHONG, DISTRICT OF HAATYAI. 90230 SONGKHLA, THAILAND




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32 HAK GUNA BANGUNAN NO.01 LEASEHOLD 3.72 ACRES EMPTY LAND 117,222 10/08/2007 SUMATERA SELATAN, MUSI BANYUASIN, BANYUASIN 1, PEMATANG PALAS, ADDRESS : NO. 1, PEMATANG, INDONESIA. PALAS -13 AUG 1996 (22542/1996)

33 HAK GUNA BANGUNAN NO.02 LEASEHOLD 4.164 ACRES FACTORY 1,244,273 10/08/2007 SUMATERA SELATAN, BUILDING / BOILER MUSI BANYUASIN, BANYUASIN 1, PEMATANG PALAS, ADDRESS : NO. 2, PEMATANG, INDONESIA. PALAS -13 AUG 1996 (22543/1996)

34 HAK GUNA BANGUNAN NO.03 LEASEHOLD 3.333 ACRES OFFICE BUILDING 460,802 10/08/2007 SUMATERA SELATAN, MUSI BANYUASIN, BANYUASIN 1, PEMATANG PALAS, ADDRESS : NO. 3, PEMATANG, INDONESIA. PALAS -12 AUG 1996 (22541/1996)

35 HAK GUNA BANGUNAN LEASEHOLD 4.934 ACRES GLUE PLANT 333,232 10/08/2007 NO.35/PRAJEN SUMATERA SELATAN, BANYUASIN, BANYUASIN 1, PRAJEN (dh. SUNGAI RENGAS) ADDRESS : 14/SEI RENGAS, INDONESIA. PALAS -15 NOV 1982 (2190/1982)

36 LOT 5776 LEASEHOLD 37.98 ACRES OFFICE 46,757,802 09/2008 60 YEARS ADMINISTRATION, EXPIRING ON PRODUCTION AREA 2043 AND WAREHOUSE ADDRESS : LOT 5776, NILAI INDUSTRIAL ESTATE, 71800 NILAI, NEGERI SEMBILAN, DARUL KHUSUS


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Statement Of Shareholdings

as at 1 April 2010Authorised capital : RM300,000,000 divided into 1,200,000,000 ordinary shares of RM0.25 eachIssued and fully paid-up capital : RM128,250,000 divided into 513,000,000 ordinary shares of RM0.25 eachClass of shares : Ordinary shares of RM0.25 eachVoting rights : One vote per share

ANALYSIS OF SHAREHOLDINGSHoldings Number of Holders Number of Shares Percentage of SharesLess than 100 15 475 0.00100 - 1,000 580 540,800 0.111,001 - 10,000 1,577 7,799,527 1.5210,001- 100,000 525 17,596,743 3.43100,001 to less than 5% of issued shares 187 249,826,084 48.705% and above of issued shares 4 237,236,371 46.24 2,888 513,000,000 100.00

THIRTY LARGEST SHAREHOLDERS Shareholders Number of Shares Percentage of Shares

1. DB (MALAYSIA) NOMINEE (ASING) SDN BHD 94,903,910 18.50 EXEMPT AN FOR DEUTSCHE BANK AG HONG KONG 2. CITIGROUP NOMINEES (ASING) SDN BHD 72,746,761 14.18 EXEMPT AN FOR UBS AG HONG KONG 3. LEMBAGA TABUNG HAJI 36,585,700 7.13 4. HLG NOMINEE (ASING) SDN BHD 33,000,000 6.43 HONG LEONG FUND MANAGEMENT SDN BHD FOR HIMB TRADING LIMITED 5. KUO HUEI CHEN 21,684,527 4.23 6. ALLIANCEGROUP NOMINEES (TEMPATAN) SDN BHD PHEIM ASSET MANAGEMENT SDN BHD FOR EMPLOYEES PROVIDENT FUND 16,493,000 3.22 7. HSBC NOMINEES (ASING) SDN BHD EXEMPT AN FOR JPMORGAN CHASE BANK, NATIONAL ASSOCIATION 13,623,600 2.66 8. HSBC NOMINEES (ASING) SDN BHD EXEMPT AN FOR CREDIT SUISSE 13,126,800 2.56 9. KUO SZE CHENG @ HENRY S KUO 10,795,955 2.10 10. KUO SZE HORNG @ KUO, JEFFREY S 10,785,955 2.10

11. KUO SZE LIANG @ KUO, JUSTIN S 10,785,955 2.10

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Statement Of Shareholdings (Cont’d)

Shareholders Number of Shares Percentage of Shares

12. KUO JEN CHIU 10,000,000 1.95 13. KE-ZAN NOMINEES (ASING) SDN BHD KIM ENG SECURITIES PTE LTD FOR EXQUISITE HOLDINGS LTD 8,500,000 1.66 14. HSBC NOMINEES (ASING) SDN BHD EXEMPT AN FOR CREDIT SUISSE 8,288,300 1.62 15. MOHD ALKAF BIN MOHD KAHAR 7,160,065 1.40 16. EVAWORLD SDN BHD 5,943,027 1.16 17. CESFIELD DEVELOPMENT SDN BHD 5,360,027 1.04 18. TM ASIA LIFE MALAYSIA BHD AS BENEFICIAL OWNER 5,298,000 1.03 19. SBB NOMINEES (TEMPATAN) SDN BHD EMPLOYEES PROVIDENT FUND BOARD 5,088,800 0.99 20. HSBC NOMINEES (TEMPATAN) SDN BHD NOMURA ASSET MGMT MALAYSIA FOR EMPLOYEES PROVIDENT FUND 5,000,000 0.97 21. AMSEC NOMINEES (ASING) SDN BHD KIM ENG SECURITIES PTE LTD FOR MGF CAPITAL LIMITED 4,868,300 0.95 22. INTER-PACIFIC EQUITY NOMINEES (ASING) SDN BHD KIM ENG SECURITIES PTE LTD FOR LOH YIH 3,131,000 0.61 23. LIM CHIAN PENG 3,108,100 0.61 24. NG PAIK PHENG 2,582,600 0.50 25. ALLIANCEGROUP NOMINEES (TEMPATAN) SDN BHD PLEDGED SECURITIES ACCOUNT FOR WONG YEE HUI 2,450,300 0.48 26. INDY PROPERTIES LIMITED 2,175,000 0.42 27. HLB NOMINEES (TEMPATAN) SDN BHD PLEDGED SECURITIES ACCOUNT FOR NG YOKE YEN 2,059,100 0.40 28. UNIVERSAL TRUSTEE (MALAYSIA) BERHAD CIMB ISLAMIC SMALL CAP FUND 1,921,500 0.37 29. OSK NOMINEES (ASING) SDN BERHAD DMG & PARTNERS SECURITIES PTE LTD FOR MGF CAPITAL LTD 1,869,000 0.36 30. CHONG CHANG CHOONG 1,834,400 0.36

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Substantial Shareholders

List Of Directors’ Shareholdings As At 1 April 2010

According to the Register required to be kept under Section 69L of the Companies Act, 1965, the following are the substantial shareholders of the Company: -

Direct Interest Deemed Interest Substantial Shareholders Number of % of Number of % of Shares Shares Shares Shares 1. KUO WEN CHI 1,804,531 0.35 201,019,724 (1) 39.192. KUO JEN CHANG 0 0.00 202,824,255 (2) 39.543. KUO JEN CHIU 10,000,000 1.95 192,824,255 (3) 37.594. KUO HUEI CHEN 23,369,053 4.56 179,455,202 (4) 34.985. HSU MEI LAN 0 0.00 202,824,255 (1) 39.546. KUO SZE CHENG @ HENRY S KUO 10,795,955 2.10 21,571,910 (5) 4.217. KUO SZE LIANG @ KUO, JUSTIN S 10,785,955 2.10 21,581,910 (5) 4.218. KUO SZE HORNG @ KUO, JEFFREY S 10,785,955 2.10 21,581,910 (5) 4.219. LEMBAGA TABUNG HAJI 36,585,700 7.13 0 0.0010. EMPLOYEES PROVIDENT FUND 26,581,800 5.18 0 0.0011. HIMB TRADING LIMITED 33,000,000 6.43 0 0.0012. DAVOS INVESTMENT HOLDINGS PRIVATE LIMITED 0 0.00 33,000,000 (6) 6.4313. KWEK LENG KEE 0 0.00 33,000,000 (6) 6.4314. QUEK LENG CHYE 0 0.00 33,000,000 (6) 3.4315. HONG REALTY (PRIVATE) LIMITED 0 0.00 33,000,000 (6) 6.4316. HONG LEONG INVESTMENT HOLDINGS PTE LTD 0 0.00 33,000,000 (6) 6.4317. KWEK HOLDINGS PTE LTD 0 0.00 33,000,000 (6) 6.4318. KWEK LENG BENG 0 0.00 33,000,000 (6) 6.4319. HUME INDUSTRIES (MALAYSIA) BERHAD 0 0.00 33,000,000 (6) 6.4320. HONG LEONG COMPANY (MALAYSIA) BERHAD 0 0.00 33,000,000 (6) 6.4321. HL HOLDINGS SDN BHD 0 0.00 33,000,000 (6) 6.4322. TAN SRI QUEK LENG CHAN 0 0.00 33,000,000 (6) 6.43 Notes:(1) Deemed interested by virtue of the shareholdings of his children in EFB.(2) Deemed interested by virtue of his indirect shareholdings in DB (Malaysia) Nominee (Asing) Sdn Bhd and the

shareholdings of his/her father and siblings in EFB.(3) Deemed interested by virtue of his indirect shareholdings in Citigroup Nominees (Asing) Sdn Bhd and the shareholding

of his father and siblings in EFB.(4) Deemed interested by virtue of the shareholdings of her father and siblings in EFB.(5) Deemed interested by virtue of the shareholdings of his siblings in EFB.(6) Deemed interested by virtue of the shareholdings of HIMB Trading Limited.

Direct Interest Deemed Interest Directors Number of % of Number of % of Shares Shares Shares Shares 1. MR JONATHAN LAW NGEE SONG 0 0.00 0 0.002. MR KUO WEN CHI 1,804,531 0.35 201,019,724 (1) 39.193. MR KUO JEN CHANG 0 0.00 202,824,255 (2) 39.544. MR KUO JEN CHIU 10,000,000 1.95 192,824,255 (3) 37.595. MS MARY HENERIETTA LIM KIM NEO 250,000 0.05 0 0.006. MR YONG KOK FONG 115,000 0.02 0 0.007. EN WAN AZHAR BIN WAN AHMAD 0 0.00 0 0.00

Notes:(1) Deemed interested by virtue of the shareholdings of his children in EFB.(2) Deemed interested by virtue of his indirect shareholdings in DB (Malaysia) Nominee (Asing) Sdn Bhd and the

shareholdings of his father and siblings in EFB.(3) Deemed interested by virtue of his indirect shareholdings in Citigroup Nominees (Asing) Sdn Bhd and the shareholding

of his father and siblings in EFB.

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F O R M O F P R O X Y

Please indicate with a cross (X) in the space whether you wish your votes to be cast for or against the resolution. In the absence of such specific directions, your proxy will vote or abstain as he thinks fit

As witness my hand this............................day of............................2010 .......................................... Signature of Member(s)NOTES:1. A member entitled to attend and vote at the Meeting is entitled to appoint a proxy or proxies to attend and vote in his stead. The proxy need not be a Member of the Company and

Section 149(1)(b) of the Companies Act, 1965 shall not apply.2. A member shall be entitled to appoint more than one proxy (subject always to a maximum of two (2) proxies at each meeting) to attend and vote at the same meeting.3. Where a member appoints more than one (1) proxy (subject always to a maximum of two (2) proxies at each meeting) the appointment shall be invalid unless he specifies the

proportions of his holdings to be represented by each proxy.4. Where a member is an authorised nominee as defined under the Securities Industry (Central Depositories) Act, 1991 it may appoint at least one proxy in respect of each Securities

Account it holds with ordinary shares of the Company standing to the credit of the said Securities Account. 5. The instrument appointing a proxy shall be in writing under the hand of the appointer or his attorney duly authorised in writing or if such appointer is a corporation under its common

seal or the hand of its attorney.6. The instrument appointing a proxy must be deposited at the Registered Office of the Company, Symphony Corporatehouse Sdn Bhd at Suite 6.1A, Level 6, Menara Pelangi, Jalan

Kuning, Taman Pelangi, 80400 Johor Bahru, Johor not less than forty-eight (48) hours before the time appointed for holding the Meeting or any adjournment thereof.

CDS ACCOUNT NO. NO. OF SHARES HELD

I/We..............................................................................................................................................................................................................

of...................................................................................................................................................................................................................

being a member/members of EVERGREEN FIBREBOARD BERHAD, hereby appoint (1) Mr/Ms

..................................................................................................................................................(NRIC No. ..................................................)

of...................................................................................................................................................................................................................

or failing whom,........................................................................................................................(NRIC No. ..................................................)

of...................................................................................................................................................................................................................

(the next name and address should be completed where it is desired to appoint two proxies)

*(2) Mr/Ms. ..............................................................................................................................(NRIC No. ..................................................)

of...................................................................................................................................................................................................................

or failing whom,........................................................................................................................(NRIC No. ..................................................)

of...................................................................................................................................................................................................................

as my/our proxy to vote for *me/us and on *my/our behalf at the Nineteenth Annual General Meeting of the Company to be held at Kayangan Suites, Pulai Springs Resort, 20KM, Jalan Pontian Lama, 81110 Pulai, Johor Darul Takzim, Malaysia on Monday, 17 May 2010 at 9.00 a.m. and, at every adjournment thereof *for/against the resolutions to be proposed thereat.

The proportion of *my/our proxies are as follows:(This paragraph should be completed only when two proxies are appointed)

First Proxy (1) % Second Proxy (2) %

1

23

456

7

8

910

11

12

To receive the Audited Financial Statements for the year ended 31 December 2009 together with the Reports of the Directors and Auditors. To approve the payment of tax exempt final dividend. To approve the payment of Directors’ Fees of RM126,000 for the financial year ending 31 December 2010. To re-elect the following Directors retiring in accordance with Article 101 of the Company’s Articles of Association: - (I) Mr Kuo Jen Chiu (II) Mr Jonathan Law Ngee Song To re-elect En Wan Azhar Bin Wan Ahmad who is retiring in accordance with Article 106 of the Company’s Articles of Association. To re-appoint Mr Kuo Wen Chi as Director pursuant to Section 129 (6) of the Companies Act, 1965. To re-appoint Messrs Ernst & Young as Auditors of the Company for the ensuing year and to authorise the Board of Directors to fix their remuneration. To authorise the allotment of shares pursuant to Section 132D. To approve the proposed renewal of shareholders’ mandate for recurrent related party transactions. To approve the proposed new shareholders’ mandate for recurrent related party transactions. To approve the amendments to the Articles of Association.

*My/Our proxy is to vote as indicated below: -

Agenda Resolution For Against

Please fold here

Please fold here

The SecretaryEVERGREEN FIBREBOARD BERHAD

(Company No: 217120-W)Suite 6.1A, Level 6,

Menara Pelangi, Jalan Kuning, Taman Pelangi,80400 Johor Bahru, Johor.

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