ANNUAL REPORT - Malaysiastock.biz Dato’ Dr. Abu Talib Bin Bachik has wide experiences in ... of...

2015ANNUAL REPORT

TABLE OF CONTENTS

4 Corporate Information5 Corporate Structure6 Profile of Directors8 Chairman’s Statement

10 Statement of Corporate Governance18 Audit Committee Report22 Statement on Risk Management & Internal Control24 Statement of Internal Audit Function24 Directors’ Responsibility Statement

25 Corporate Social Responsibility Statement27 Financial Statements

119 Additional Compliance Disclosures120 Related Party Transactions121 List of Properties Held122 Analysis of Shareholdings124 Notice of Annual General Meeting128 Statement Accompanying the Notice of Annual

General Meeting129 Appendix I Proxy Form

VENUE:Advena Room, 3rd Floor

GRANDIS HOTELS AND RESORTSSuria Sabah Shopping Mall

1A, Jalan Tun Fuad Stephens88000 Kota Kinabalu, Sabah

timE & datE:Friday

3 June 2016

11:00 a.m.

61st

A N N U A L GENERAL MEETING

4 Annual Report 2015 | JAVA BERHAD

CORPORATEINFORMATION

AUDIT COMMITTEEHedzir Bin AminudinChairman

YBM Tunku Mahmood Bin TunkuMohammed D.K. PSIMember

Dato’ Dr. Abu Talib Bin BachikMember

COMPANY SECRETARYLim Siew Ting(MAICSA 7029466)

REGISTERED OFFICESuite 2.02, Level 2Wisma E & CNo. 2, Lorong Dungun KiriDamansara Heights50490 Kuala LumpurMalaysiaTel : 03-2092 3535Fax : 03-2093 5571

BUSINESS OFFICESuite M.02, Mezzanine FloorWisma E & CNo. 2, Lorong Dungun KiriDamansara Heights50490 Kuala LumpurMalaysiaTel : 03-2092 3535Fax : 03-2093 9690

SHARE REGISTRARBoardroom Corporate Services (KL) Sdn BhdLot 6.05, Level 6, KPMG Tower8 First Avenue, Bandar Utama47800 Petaling JayaSelangor Darul EhsanMalaysiaTel : 03-7720 1188Fax : 03-7720 1111

SOLICITORSKumar PartnershipNg & CoVin Partnership

PRINCIPAL BANKERSHong Leong Bank BerhadAlliance Bank Malaysia Berhad

AUDITORSMessrs. Baker Tilly Monteiro Heng

STOCK EXCHANGE LISTINGMain Board of Bursa Malaysia Securities Berhad(Listed since 29 December 1973)Stock Name : JAVAStock Code : 2747ISIN Code : MYL2747OO003

WEBSITEwww.javaberhad.com.my

BOARD OF DIRECTORS

Dato’ Dr. Abu Talib Bin BachikChairman/IndependentNon-Executive Director

Sy Choon YenExecutive Director

YBM Tunku Mahmood Bin TunkuMohammed D.K. PSIIndependent Non-Executive Director

Hedzir Bin AminudinIndependent Non-Executive Director

5Annual Report 2015 | JAVA BERHAD

CORPORATESTRUCTURE

as at 31 December 2015

100%KEY HEIGHTS

SDN BHD(592628-M)

100%WINCOHASIL

SDN BHD(542521-A)

100%PINAWANTAI

SDN BHD(68640-M)

100%JAVA TIMBER

SDN BHD(53469-A)

100%KUMPULAN

KINABATANAGAN TIMBER SDN BHD

(74040-X)

100%BIZKAYA

SDN BHD(541934-D)

100%JAVA

INDUSTRIES SDN BHD(269014-D)

100%JAVA

PLANTATIONS SDN BHD(210695-H)

80%LADANG BUNGA

TANJONG SDN BHD(389827-K)

100%JAVA WOODS

SDN BHD(29775-T)

100%JAVA TRADING

SDN BHD(136741-A)

100%JAVA

RESOURCES SDN BHD(276278-W)


PROFILE OFDIRECTORS

Dato’ Dr. Abu Talib Bin Bachik, aged 68, a Malaysian citizen, was appointed an Independent Non-Executive Director of the Company in March 2009 and Chairman of the Board on 4 November 2010. He is a member of the Audit Committee. He holds a Diploma in Agriculture from the College of Agriculture Malaysia (now known as University Putra Malaysia), a BSc and MSc in Agronomy from the Louisiana State University, USA, and a Doctor in Agriculture Science from the University of Gent, Belgium.

Dato’ Dr. Abu Talib Bin Bachik has wide experiences in Administration and Management, including Marketing, Business Development, Communications and Public Relations, when he was at the Multimedia Development Corporation (MDeC) promoting the development of the Multimedia Super Corridor (MSC) from 1999 to 2008.

Prior to joining MDeC, he was a Research Scientist in the Rubber Research Institute of Malaysia (RRIM) (now part of the Malaysian Rubber Board (MRB)). He was an experienced researcher and scientist in Agronomy and Soil Chemistry who has authored about 50 technical, scientific and research papers. From 1971 in the RRIM, he held various administrative and management positions. In 1997, he was appointed the Deputy Director General (Development) of the Malaysian Rubber Board and held the position until he opted for early retirement in 1999 when he joined MDeC. He is also currently a Director of Urun Plantations Sdn Bhd and SHC Tubau Plantation Sdn Bhd, subsidiaries of Sin Heng Chan (Malaya) Berhad, a public company listed on the Main Market of Bursa Malaysia Securities Berhad, and a member of the Board of Directors of the Malaysian Rubber Board.

DATO’ DR. ABU TALIB BIN BACHIK

Dip. Agric. (Mal); BSc., MSc (LSU-USA); Dr. Agric. Sc. (Ghent Univ., Belgium)Chairman/Independent Non-Executive Director

SY CHOON YEN

LLB (Hons), Barrister-at-Law, JPExecutive Director

Mr. Sy Choon Yen, aged 48, a Malaysian citizen, joined the Board as an Executive Director in March 2005. He is a member of the ESOS Committee of the Company. He graduated with a Bachelors Degree in Law (Hons) from Manchester University, England. He is a Barrister-at-Law of England and Wales and an Advocate & Solicitor of the High Court of Malaya. He was conferred as a Justice of Peace by the Governor of the State of Melaka in October 2005.

Mr. Sy Choon Yen served as the Chief Executive Director of Kumpulan Kinabatangan Timber Sdn Bhd and Pinawantai Sdn Bhd from the year 2000 and was appointed as an Executive Director of Key Heights Sdn Bhd and its subsidiaries in November 2002. He also serves on the board of all the subsidiaries of the Company and several other private companies including Urun Plantations Sdn Bhd, SHC Tubau Plantation Sdn Bhd and SHC Technopalm Plantation Services Sdn Bhd, which are subsidiaries of Sin Heng Chan (Malaya) Berhad, a public company listed on the Main Market of Bursa Malaysia Securities Berhad.


Notes to Directors’ Profile:-

1. NONE OF THE DIRECTORS HAS:- • AnyfamilyrelationshipwithanyDirectorand/ormajorshareholdersoftheCompany • AnyconflictofinterestwiththeCompany • Anyconvictionforoffenceswithinthepastten(10)years

2. ATTENDANCES AT BOARD MEETINGS The details of the Directors’ attendance at Board Meetings are set out on pages 12 and 128 of this Annual Report.

3. SHAREHOLDINGS The details of the Directors’ interest in the securities of the Company are set out on page 123 of this Annual Report.

YBM Tunku Mahmood Bin Tunku Mohammed D.K. PSI, aged 71, a Malaysian citizen, was appointed as Director of the Company in January 2005. He is a Member of the Audit Committee and ESOS Committee as well as the Chairman of Nomination Committee and Remuneration Committee of the Company. He is also the Senior Independent Non-Executive Director.

YBM Tunku Mahmood Bin Tunku Mohammed D.K. PSI served the military for many years. He is a businessman and currently runs a holiday resort in Johor. He is currently a Director of Sin Heng Chan (Malaya) Berhad, a public company listed on the Main Market of Bursa Malaysia Securities Berhad, and also serves on the board of several other private companies. In 2012, YBM Tunku Mahmood Bin Tunku Mohammed D.K. PSI was appointed as “Jumaah Majlis Diraja Johor”. He was nominated as a Member of The Royal Court of Johor.

YBM TUNKU MAHMOOD BIN TUNKU MOHAMMED D.K. PSI

Independent Non-Executive Director

Encik Hedzir Bin Aminudin, aged 62, a Malaysian citizen, was appointed an Independent Non-Executive Director of the Company in November 2015. He is the Chairman of the Audit Committee and a member of the Nomination Committee and Remuneration Committee. He is also the Chairman of the ESOS Committee.

Encik Hedzir Bin Aminudin is presently a Director of SPR Energy (M) Sdn Bhd since 2011. He joined SPR Energy upon his retirement from KLCC Property Holdings Bhd (“KLCCP”). He has served for 17 years in various senior management positions within the KLCCP Group such as General Manager Finance of Putrajaya Holdings Sdn Bhd as well as KLCCP’s Head of Corporate Finance and Risk Management. Prior to joining KLCCP, he was a General Manager Operations of Kelanamas Industries Berhad, Head of Treasury of Malaysian Mining Corporation Bhd and Treasury Accountant of Malaysia Airlines Bhd.

Encik Hedzir Bin Aminudin is a member of the Malaysian Institute of Accountants and qualified Accountant with Turpin Stead & Sopers, Accountancy Tutors, London.

HEDZIR BIN AMINUDIN

Malaysian Institute of Accountants - MemberIndependent Non-Executive Director

PROFILE OFDIRECTORS


CHAIRMAN’SSTATEMENT

On behalf of the Board of Directors, I am pleased to present the Annual Report and the Audited Financial Statements of Java Berhad (“the Company”) and its group of companies (“JAVA” or “the Group”) for the financial period ended from 1 July 2014 to 31 December 2015, following to a change in the financial year end from 30 June to 31 December on 21 August 2015.

REVIEW OF OPERATIONS

Cessation of the Timber Operations

The shortage in the supply of timber logs is the biggest single issue affecting the timber industry in Sabah arising from the stringent enforcement on logging activities, restriction in awarding natural forest concession rights and the implementation of the Reduce Impact Logging guidelines to preserve the natural forest due to the mounting pressure from environmental groups. Consequently, the Group had over the past few months in 2015 gradually scaled down the production of its timber products and had focused on the production of work-in-progress inventories to fulfil the necessary sales orders. The Group has considered the option of importing raw materials from outside the country to address the shortage of raw materials but it was also not viable due to the


limited volume of import as a result of high logistic cost and depreciation of the Ringgit Malaysia.

In view that the timber operations had sustained losses for the past few years with little signs of recovery, the Board had decided to cease the timber operations after considering that the continuation of the timber operations would result in further losses due to the adverse market conditions of the timber industry. The Board took cognisance of the fact that the timber operations would not be expected to turnaround in the near future as the said timber operations have been hampered by high manufacturing cost primarily due to the lack of economies of scale as a result of shortage in the supply of timber logs.

Hence, the Company has on 14 December 2015 announced the proposed cessation of the timber operations of its subsidiaries, namely Java Industries Sdn Bhd, Java Timber Sdn Bhd, Java Woods Sdn Bhd and Java Resources Sdn Bhd, which were completed on 8 January 2016.

With the cessation of the timber operations, the Company is able to curb on its losses and focus on restructuring its business and source for new profitable business ventures.

Plantation

During the financial period under review, the oil palm production of Fresh Fruit Bunches (“FFB”) for the financial year ended 30 June 2014 was 2,839mt whilst the production of FFB for the 18 months financial period ended 31 December 2015 was 4,063mt. The increase in the overall FFB production was the result of improvements in individual harvester productivity due to tighter management supervision of harvesting activities despite the estate being affected by the recent floods in late December 2014.The Group has intensified efforts during the financial year to improve the workers’ welfare at the estate in order to remain competitive in attracting workers to the

estate whilst it undertake recruitment efforts to address the shortage of harvesters and field workers. The Group continues to carry out efforts to engage with local community to provide them with various jobs with the intention of improving their livelihood and to also complement with our existing workforce.

FINANCIAL PERFORMANCE

The Group closed the financial year with total gross revenue of RM18.90 million, which is significantly lower as compared to RM40.21 million in FY2014. As a result, the Group had recorded a higher loss after tax of RM54.62 million as compared to RM35.01 million loss after tax recorded in the preceding year. The lower revenue and higher loss after tax was due to the write down of the obsolete inventories and impairment of the receivables subsequent to the slowdown and cessation of the timber operations during the financial period ended 31 December 2015, and also due to the additional six (6) months results with the change in our financial period ended 30 June to 31 December.

The net assets value per ordinary share stood at RM0.18 with basic loss of 31.13 sen per share for the financial year.

PROSPECTS

Pursuant to the completion of the cessation of timber operations, the Company has triggered Paragraph 8.03A of the Main Market Listing Requirements (“MMLR”) of Bursa Malaysia Securities Berhad, whereby a listed issuer has suspended or ceased all of its business or major business, and the Company is deemed to be an affected listed issuer under Practice Note 17 of the MMLR (“PN17”) as the shareholders equity of the Company is 25% or less of the issued and paid-up capital of the Company and such shareholders’ equity is less than RM40 million based on the Company’s unaudited management accounts.

The Company, being an affected listed issuer under PN17, is required to comply

with the obligations as set out under PN17 of the MMLR to regularise its conditions so that the Company can maintain its listing status on the Main Market of Bursa Securities.

Hence, the Board are currently working on a proposed regularisation plan, which would result in a change in business direction of the Company, to regularise its financial condition and would make the requisite announcement once the regularisation plan has been finalised. The Board hopes that the proposed regularisation plan would enable the Company to move into new profitable business ventures to turnaround the Group’s financial position.

ACKNOWLEDGEMENT

On behalf of the Board of Directors, I wish to express our sincere gratitude and appreciation to all our valued shareholders, customers, business partners, bankers, auditors and government authorities for their invaluable support and confidence towards the Group. We look forward to having your continued support and loyalty.

We are indebted to the management and staff of the Group for their hard work, dedication, loyalty and contribution towards the Group despite the uncertainties and challenges. I am also grateful for the unwavering support and contributions made by my fellow Board of Directors during the year.

I wish to thank our outgoing Independent Non-Executive Director, Encik Mohd Zulkhairis Bin Mohd Zain, who has resigned on 27 November 2015. His invaluable contribution to the Group throughout the 11 years would always be remembered and appreciated.

Thank you.

DATO’ DR. ABU TALIB BIN BACHIKChairman

CHAIRMAN’SSTATEMENT


STATEMENT OFCORPORATE GOVERNANCE

The Corporate Governance Framework of the Java Berhad Group (“Group”) has been formulated to promote:-

• Integrity, transparencyandprofessionalismwith theobjectiveofsafeguarding theshareholders’ investmentandultimately enhancing the shareholders’ interest; • Providinganoperatingautonomy,inthevariouscorebusinessoperationsoftheGroupsteeredtowardsachievingthebusiness objectives while maintaining adequate check and balance; and• EthicalbusinessconductbasedontheGroup’scorevaluesandbusinessprinciples.

BOARD OF DIRECTORS

Role of the Board of Directors

The Board assumes responsibility for stewardship of the Company and its subsidiaries and is primarily responsible for the protection and enhancement of long-term value and returns for the shareholders, and supervising its affairs to ensure its success within a framework of acceptable risks and effective control and in compliance with the relevant laws, regulations, guidelines and directives which governs the Group. The Board regularly reviews the performance of the Group and individual businesses, key controls, corporate governance standards and adequacy of human resources to ensure that the necessary financial and resources are available to meet the Group’s objectives. In addition, the Board is directly responsible for decision making in respect of the following matters:-

(a) appointment of directors and key managerial personnels;(b) announcements including approval and releases of financial results and annual reports;(c) formulating and reviewing strategic plans, including both medium-term and long-term, and key policies of the Group;(d) approves the annual budget and carries out period review of the progress made against the respective business targets;(e) identify and manage principal risks;(f) oversight of the Group’s business operations and financial performance;(g) ensuring that the operating infrastructure, systems of control, system of risk management, financial and operational controls, are in place and properly implemented;(h) approves significant investments and capital expenditures; and(i) corporate policies in keeping with good corporate governance and business practices.

Board Composition and Balance

The strength of the Board lies in the composition of its members, who has a wide range of expertise, extensive experience and diverse background in business, finance and technical knowledge.

As at 31 December 2015, the Board consists of four (4) directors of whom three (3) are independent. The composition of Independent Non-Executive directors is higher than the minimum prescribed in the Code and Listing Requirements. The list of directors is as follows:-

Executive DirectorSy Choon Yen - Executive Director

Independent Non-Executive DirectorsDato’ Dr. Abu Talib Bin Bachik - ChairmanYBM Tunku Mahmood Bin Tunku Mohammed D.K. PSIMohd Zulkhairis Bin Mohd Zain (Resigned on 27 November 2015)Hedzir Bin Aminudin (Appointed on 27 November 2015)

The composition of the Board is reviewed by the Nomination Committee to ensure that the current Board size is appropriate and effective, taking into account the nature and scope of the Company’s operations.



The Board comprises persons who as a group provide the relevant core competencies and mix of skills in the areas of financial, technical and business to meet the Company’s requirements. The directors’ objective judgment on corporate affairs, collective experience and knowledge are invaluable to the Group. Profiles of the members of the Board are set out on pages 6 and 7 of this Annual Report.

The roles of the Non-Executive Chairman and the Executive Director have been distinguished, with a clear division of their responsibilities to ensure that there is a balance of power and authority. The Chairman is responsible for ensuring Board effectiveness and conduct. The Executive Director is responsible for providing leadership and advancing relationships with regulators and stakeholders, as well as having overall responsibility over the operating units, organisational effectiveness, formulation of strategies and implementation of Board policies and decisions.

Independence of Directors

TheIndependentNon-ExecutiveDirectorsplayapivotalroleincorporateaccountability,whichisreflectedintheirmembershipofthe various Board committees and their attendance of meetings as set out in this report. The Independent Non-Executive Directors provide unbiased views and impartiality to the Board’s deliberations and decision-making process. In addition, the Independent Non-Executive Directors ensure that matters and issues brought to the Board are fully discussed and examined, taking into account the interest of all stakeholders in the Group. The Independent Non-Executive Directors engage with the Management and with both the external as well as the internal auditors to address matters concerning the management and oversight of the Company’s business and operations.

All the Independent Non-Executive Directors do not engage in the day-to-day management of the Company and do not participate inanybusinessdealingsandarenotinvolvedinanyotherrelationshipwiththeCompany.Ifsuchconflictweretoarise,theDirectorswill abstain from all deliberation and decision-making process for good governance, this is to ensure that the Independent Non-ExecutiveDirectorsremainfreeofconflictofinterestsituationsandfacilitatethemtocarryouttheirrolesandresponsibilitiesasIndependent Directors effectively.

The Board noted that YBM Tunku Mahmood has been appointed as Independent Non-Executive Director of the Company have served for a cumulative period of more than nine (9) years as at the date of the Sixty-First (61st) AGM. Pursuant to Recommendation 3.2 of MCCG and not withstanding their long tenure in office, the Board based on the review, is unanimous in its opinion that YBM Tunku Mahmood’s independence have not been compromised or impaired in any way. Accordingly, the Board strongly recommends retaining YBM Tunku Mahmood as Independent Non-Executive Director will be tabling this recommendation as Ordinary Resolutions to shareholders for approval at the forthcoming AGM.

Directors’ Code of Ethics

The Directors observe a code of ethics in accordance with the code of conduct expected of Directors as set out in the Company Directors’ Code of Ethics established by the Group. The Group recognises that all Directors are equally and collectively accountable for the proper stewardship of the Group’s affairs. The Group maintains a directors’ and officers’ liability insurance policy to cover against liabilities arising from holding office as directors.

Board Meetings

Board meetings for the ensuing financial year are scheduled in advance to facilitate the Directors to plan ahead and organise the next year’s Board meetings into their respective schedules.

The Board meets at least every quarter and on other occasions, as and when necessary, to inter-alia approve quarterly financial results, business plans and budgets as well as to review the performance of the Company and its operating subsidiaries, governance matters and other business development activities. Special Board meetings are held when necessary, to deliberate on


major transactions and ad-hoc matters that require the Board’s urgent attention and decisions. Senior management and external advisors are invited to attend the Board and Board Committee meetings to advise on relevant agenda items to enable the board and its committees to arrive at a considered decision.

The Chairman of the Audit Committee would inform the Directors at Board meetings, of any salient matters noted by the Audit Committee and which require the Board’s notice or direction. The Board meetings are chaired by Dato’ Dr. Abu Talib Bin Bachik, the Chairman/Independent Non-Executive Director, who has the responsibility of ensuring that each of the agenda item is adequately reviewed and thoroughly deliberated within a reasonable timeframe.

The financial year of the Company has changed from 30 June to 31 December. Hence, the Board has met eight (8) times during the financial period from 1 July 2014 to 31 December 2015. The meeting attendance of the individual Directors are as follows:-

DirectorsAttendance/No. of

Meetings HeldPercentage of

Attendance

Dato’ Dr. Abu Talib Bin Bachik 8/8 100%

Sy Choon Yen 8/8 100%

YBM Tunku Mahmood Bin Tunku Mohammed D.K. PSI 8/8 100%

Mohd Zulkhairis Bin Mohd Zain (Resigned on 27 November 2015) 7/8 87.5%

Hedzir Bin Aminudin (Appointed on 27 November 2015) 1/8 12.5%

Supply of Information

The proceedings of the Board meetings are conducted in accordance to a structured agenda to facilitate productive and meaningful deliberations. Confidential papers or urgent proposals are presented and tabled at the Board meetings under supplemental agenda. In 2015, an e-meeting paperless system was introduced to enable discussion of Board materials electronically, which provides Directors with secured access to meeting papers directly on their iPads. The system allows Directors to easy access to board materials, even while travelling, providing greater convenience, better security, cost and time savings and a positive impact on the environment.

The Board, whether as a group or individually may seek any clarification or further details that they need from the Management or the Company Secretary on matters pertaining to the Company’s and the Group’s operating or business concerns. In addition to quantitative information, the Directors are also provided with updates on other areas such as market developments, customer and risk management. The Chief Operating Officer and Senior Management Officers are invited to attend the Board meetings to report to the Board on matters relating to their areas of responsibility, and also to brief and provide details to the Directors on recommendations submitted for the Board’s consideration. The Chief Accountant also attends Board meetings by invitation to brief the Board on financial guidelines, new accounting standards and matters relating to the financial portfolio.

Pursuant to the Group’s Policy and Procedures for Directors to take Independent Advice, the Directors are at liberty to seek independent professional advice should the need arise in discharging their duties. The cost of securing such professional services will be borne by the Company.

Conflict of Interest

A Director, who has interest, either direct or indirect, in any proposal or transactions being considered, declares his interest and abstainsfromparticipatingindiscussionsandanydecision-makingonthatproposal.Theminutesofmeetingwillreflectassuch.



Appointment and Re-election

In compliance with the Code, the Nomination Committee has the responsibility of recommending new candidates for appointment as Directors to the Board based on the required mix of skills, expertise, experience and other qualities of individuals concerned to constitute an effective board as well as Board Committees.

In accordance with the Company’s Articles of Association, one third of Directors shall retire from office and be eligible for re-election at each Annual General Meeting. Re-appointments are not automatic and all Directors shall retire from office at least once in every three (3) years but shall be eligible for re-election by shareholders in the Annual General Meeting.

Pursuant to the Listing Requirements, each member of the Board holds not more than five (5) directorships in public listed companies. This ensures that the Board’s commitment, resources and time are focused on the affairs of the Group to enable them to discharge their duties effectively.

The ability of a Director to serve effectively as an Independent Director is very much a function of his calibre, qualification, experience and personal qualities, and has no compelling relationship to his tenure as an Independent Director.

Directors’ Training

All the Directors have attended the Mandatory Accreditation Programme conducted by Bursa Malaysia Training Sdn Bhd, the training and education arm of Bursa Malaysia Securites Berhad.

The Executive Director had been with the Company for several years and was familiar with his duties and responsibilities as Director. The newly appointed Directors will be given briefings and orientation by the Executive Director and top management of the Company on the business activities of the Group and its strategic directions, as well as their duties and responsibilities as Directors.

The Directors keeps up-to-date with market developments and related issues through Board luncheon discussion meetings with the Chief Operating Officers and other Senior Management Officers. These interactions provide the platforms for dissemination of emergent strategic directions and ideas which enhance the knowledge and relevant of the Directors. The Directors are regularly updated on new statutory and regulatory requirements as well as the impact and implication to the Group and Directors in carrying out their duties and responsibilities. In addition, the Directors also receive briefings and updates on the Group’s businesses and operations, risk management activities and technology initiatives on a regular basis. An appropriate budget is in place for Directors’ training and all the Directors are kept informed of available training programmes on a regular basis. The Company provides internal programmes and other external programmes for its Directors during the financial year. The programmes attended by the Directors are:-

• AseanPowerPlantsManagementForum2015• GSTMasterClass:Hands-onPracticalGSTComplianceSessions

Company Secretary

The Directors have ready and unrestricted access to the advice and services of the Company Secretary to enable them to discharge their duties effectively. The Company Secretary informed the Board on the proposed contents and timing of the material announcements to be made to Bursa Malaysia and also serves notice to Directors on the closed period for trading in Java Berhad’s shares in accordance with the closed-periods stated in Chapter 14 of the Bursa Securities Main Market Listing Requirements.

The Company Secretary attends and ensures that all Board meetings are properly convened, and that an accurate and proper record of the proceedings and resolutions passed are taken and maintained in the statutory register at the registered office of the Company.



Board Committees

To ensure the effective discharge of the Board’s fiduciary duties, the Board has delegated specific responsibilities to the following Board Committees. The Board Committees will deliberate in greater detail and examine the issues within their terms of reference as set out by the Board in compliance with the Code. The functions and terms of reference of Board Committees are reviewed from time to time to ensure that they are relevant and up-to-date.

(i) Audit Committee

Composition of the Audit Committee, its terms of reference and a summary of its activities are set out on pages 18 to 21 of this Annual Report.

(ii) Nomination Committee

The Nomination Committee is comprised entirely of the Independent Non-Executive Directors. The members are:-

• YBMTunkuMahmoodBinTunkuMohammedD.K.PSI -Chairman • HedzirBinAminudin(Appointedon27November2015) -Member • MohdZulkhairisBinMohdZain(Resignedon27November2015) -Member

Among the primary duties of the Nomination Committee includes assessing and reviewing the composition of the Board to ensure that it has an appropriate balance of skills and experience among the Board members, as well as recommending to the Board, candidates for all directorships and on Board Committees.

The Nomination Committee reviews the criteria for evaluating the Board’s performance. The performance criteria for the Board evaluation includes an evaluation of the size and composition of the Board, the Board’s access to information, accountability, Board’s processes and Board’s performance in relation to discharging its principal responsibilities, communication with management and standards of conduct of the Directors. Each Director assesses the Board’s performance as a whole by providing feedback to the Nomination Committee. The Nomination Committee, when reviewing the Board’s performance, will take note of the feedback received from the Directors and act on their comments accordingly.

For the year under review, the Nomination Committee held one (1) meeting, which was attended by all members of the Committee.

(iii) Remuneration Committee

The Remuneration Committee is comprised entirely of Independent Non-Executive Directors. The members are:-

• YBMTunkuMahmoodBinTunkuMohammedD.K.PSI -Chairman • HedzirBinAminudin(Appointedon27November2015) -Member • MohdZulkhairisBinMohdZain(Resignedon27November2015) -Member

The Remuneration Committee is entrusted with responsibilities to set the policy framework and to make recommendations to the Board on the components of remuneration packages, general employment terms and other benefits for the Executive Directors and key Senior Management Officers so as to attract, retain and motivate individuals of high caliber and quality to serve the Group.

The Remuneration Committee held a meeting during the financial year, which was attended by all members.



(iv) Employee Share Option Scheme (“ESOS”) Committee

The Committee is primarily responsible for administering the Company’s ESOS Scheme in accordance with the approved bye-laws and regulations, including selection of eligible employees and options allocations. It also reviews the guidelines and bye-laws relating to the schemes and advised the Board accordingly.

The members of the ESOS Committee are:-

• HedzirBinAminudin(Appointedon27November2015) -Chairman • YBMTunkuMahmoodBinTunkuMohammedD.K.PSI -Member • SyChoonYen -Member • MohdZulkhairisBinMohdZain(Resignedon27November2015) -Chairman

DIRECTORS’ REMUNERATION

Level and Mix of Remuneration

In setting remuneration packages, the Remuneration Committee takes this consideration the pay and employment conditions within the industry and in comparable companies. As part of the review, the Remuneration Committee ensures that the performance related elements and remuneration form a significant part of the total remuneration package of Executive Directors and is designed to align the Directors’ interest with those of shareholder and link rewards to corporate and individual performance. The Remuneration Committee also reviews all matters concerning the remuneration of Non-Executive Directors to ensure that the remuneration commensurate with the contributions and responsibilities of the Directors. The Company submits the quantum of Directors’ fees of each year to the shareholders for approval at each Annual General Meeting.

Disclosure on Remuneration

Remuneration of Non-Executive Directors is determined by the Board as a whole. Individual Directors do not participate in determining their own remuneration package. The Board, based on the sum to be authorised by the Company’s shareholders, determines fees payable to Non-Executive Directors. Non-Executive Directors are also entitled to meeting allowances and reimbursement of expenses incurred in the course of their duties as Directors.

The aggregate remuneration of Directors for the financial period ended 31 December 2015 is categorised as follows:-

SalariesRM’000

Other Emoluments

RM’000Fees

RM’000Total

RM’000

Executive Director 558 - 25 583

Non-Executive Directors - 243 75 318



The analysis of remuneration of Directors for the financial period ended 31 December 2015 is as follows:-

Range of Remuneration

No. of Directors

Executive Non-Executive

Below RM50,000 - -

RM50,001 to RM100,000 - -

RM100,001 to RM150,000 - 3

RM150,001 to RM200,000 - -

RM200,001 to RM250,000 - -

RM250,001 to RM300,000 - -

RM300,001 to RM350,000 - -

RM350,001 to RM400,000 - -

RM400,001 to RM500,000 - -

RM500,001 to RM600,000 1 -

ACCOUNTABILITY AND AUDIT

Financial Reporting

The Board is responsible for presenting a clear, balanced and comprehensive assessment of the Group’s financial position, performance and prospects each time it releases its quarterly and annual financial statements to its shareholders. The Board is responsible for ensuring that financial statements prepared give a true and fair view of the state of affairs of the Company and of the Group. The Board considers the presentation of the financial statements and that the Group has used appropriate accounting policies, consistently applied and supported by reasonable and prudent judgments and estimates. Timely release of announcements on quarterly financial statements reflects the Board’s commitment to provide transparent and up-to-datedisclosures of the performance of the Company and of the Group.

The statement of Directors’ responsibilities for the preparation of the audited financial statements of the Company and of the Group is set out in page 24 of this Annual Report.

Risk Management & Internal Control

The Statement on Risk Management & Internal Control provides an overview of the state of internal controls within the Group and is set out on pages 22 and 23 of this Annual Report.

Relationship with External Auditors

The Board ensures that there are formal and transparent arrangements for the achievement of objectives and maintenance of professional relationship with the External Auditors. The External Auditors have full access to the books and records of the Group at all time. They participate in the annual stock counts of the Group.

The Audit Committee meets the External Auditors at least twice a year to discuss their audit plan, audit findings and the financial statements. These meetings are held without the presence of the Executive Director and any member of the Management whenever deemed necessary. In addition, the External Auditors are invited to attend the Annual General Meeting of the Company and are available to answer shareholders’ questions on the conduct of the statutory audit and the preparation and content of their audit report.



The Audit Committee’s role with respect to Internal and External Auditors is described in the Audit Committee Report set out on pages 18 to 21 of this Annual Report.

SHAREHOLDERS AND INVESTORS

The Board recognises the importance of effective communication with the shareholders and investors through various appropriate channels. The Group regularly communicates with the investor community in conformity with disclosure requirements. The Group maintains strict confidentiality and employs best efforts to ensure that no disclosure of material information is made on a selective basis to any individuals unless such information has previously been fully disclosed and announced to the relevant authorities.

The annual report continues to be the Group’s main channel of communication with stakeholders. The Company disseminates its annual report to its shareholders either in hard copy or in CD-ROM media.

The Annual General Meeting is the primary forum for the Directors to communicate with shareholders. The Board provides opportunities for shareholders to raise questions pertaining to issues in the Annual Report, corporate developments in the Group, the resolutions being proposed and the business of the Group at every general meeting. The Board encourages other channels of communication with shareholders. For this purpose, the Board has identified YBM Tunku Mahmood Bin Tunku Mohammed D.K. PSI as the Senior Independent Director to whom questions or concerns regarding the Group may be conveyed. YBM Tunku Mahmood Bin Tunku Mohammed D.K. PSI can be contacted via the following channels:-

Post : YBM Tunku Mahmood Bin Tunku Mohammed D.K. PSI c/o Corporate Secretarial Department Suite 2.02, Level 2, Wisma E & C No. 2, Lorong Dungun Kiri Damansara Heights 50490 Kuala LumpurFax : (603) 2093 5571

Investors may also direct their queries to Investor Relations Officer at the above address and fax number or email: [email protected]

The Company’s website, www.javaberhad.com.my houses all other corporate information and financial information that is made public, such as the quarterly announcement of the financial results of the Group, announcements and disclosures made pursuant to the disclosure requirements of Bursa Securities Main Market Listing Requirements and other corporate information on Java.

Whistle-Blowing Policy

The Whistle-Blowing Policy of the Company was adopted in February 2011. The Policy is to ensure that sufficient coverage and protection to whistleblowers, which encompasses report of suspected misconduct, wrong doings, corruption and instance of fraud, and/or abuse involving the resources of the Group.

The Whistle-Blowing Policy is circulated to all employees and associates of the Group.

Compliance with the Code

The Board has approved this statement and is of the opinion that the Company has, in all material respects, complied with the principles and best practices outlined in the Code for the financial period ended 31 December 2015.

This Statement on Corporate Governance is made in accordance with the resolution of the Board of Directors dated 19 April 2016.



AUDIT COMMITTEEREPORT

The Audit Committee reviews and monitors the integrity of the Group’s financial reporting process, in addition to reviewing the Group’s system of internal controls. It also reviews the Group’s audit process, compliance with legal and regulatory requirements, code of business conduct and any other matters that are specially delegated by the Board.

1. Membership and Attendance

The Audit Committee of the Company was established on 6 June 1994. The Audit Committee members and details of attendance of each member of the Audit Committee meetings during the financial period from 1 July 2014 to 31 December 2015 are as follows:-

Audit Committee Attendance/Number of Meetings Held

Mohd Zulkhairis Bin Mohd Zain (Chairman)Independent Non-Executive Director (Resigned on 27 November 2015)

6/6

YBM Tunku Mahmood Bin Tunku Mohammed D.K. PSIIndependent Non-Executive Director

6/6

Dato’ Dr. Abu Talib Bin Bachik Independent Non-Executive Director

6/6

Hedzir Bin Aminudin was appointed on 27 November 2015 as the Chairman of the Audit Committee of the Company.

The Audit Committee met six (6) times during the financial period ended 31 December 2015.

2. Summary of Activities of the Audit Committee

During the financial period ended 31 December 2015, the Audit Committee carried out its duties as set out in the terms of reference which included the following:-

(a) Review of the quarterly financial reports before recommending to the Board for their approval and release of the Group’s results to Bursa Malaysia Securities Berhad;

(b) Reviewed the audited financial statements of the Company and of the Group with the External Auditors prior to submission to the Board of Directors for their approval;

(c) Reviewed the internal audit plan to ensure adequate scope and comprehensive coverage over the activities of Java and the Java Group;

(d) Reviewed the internal audit reports which were tabled during the year, the audit recommendations made and management’s response to these recommendations. Where appropriate, the Committee has directed management torectifyandimprovecontrolproceduresandworkflowprocessesbasedontheinternalauditors’recommendationsand suggestions for improvement;

(e) Reviewed Internal Auditors’ risk and audit methodologies in assessing and rating risks of auditable areas and ensure that all high and critical risk areas are audited;

(f) Reviewed of the Audit Planning Memorandum with the External Auditors; (g) Reviewed of the results and issues arising from the audit and their resolutions with the External Auditors; (h) Reviewed the appointment of the internal auditors and took cognisance of the resignation of the internal auditor; and (i) Reviewed any related party transactions.

3. Internal Audit Function

The Company has outsourced its internal audit function to an independent internal audit services provider for the financial period ended 31 December 2015. The Internal Audit function is to assist the Board and the Audit Committee to evaluate the system of internal control, risk management and corporate governance and to provide their recommendation to the Board and the Management for further improvement.


The Internal Auditors independently reviews the risk identification practices and control processes implemented by the management and reports to the Audit Committee. The results of the reviews performed by the Internal Auditors were communicated to both Management and the Committee together with the implementation status of audit recommendations. Further details on the internal audit function is reported in the Statement of Internal Audit Function on page 24 of this Annual Report.

4. Terms of Reference

Composition

The Committee shall be appointed by the Board from amongst its Directors excluding alternate Directors and shall comprise no fewer than three (3) members, all of whom must be Non-Executive Directors with a majority of whom shall be Independent Directors. Alternate Director shall not be appointed as member of the Committee.

All members should be financially literate and at least one (1) member must be:-

(a) a member of the Malaysian Institute of Accountants (“MIA”); or (b) if he is not a member of MIA, he must have at least 3 years’ working experience and must have passed the examinations

specified in Part I of the 1st Schedule of the Accountants Act 1967; or (c) he must be a member of one of the associations of accountants specified in Part II of the 1st Schedule of the Accountants

Act, 1967; or (d) fulfils such other requirements as prescribed or approved by the Bursa Malaysia Securities Berhad.

In the event a Member of the Committee resigns, dies, or for any reason ceases to be a member with the result the number of members is reduced to below three (3), or if the majority of the members become Non-Independent Directors, the Board of Directors shall within three (3) months of such vacancy, appoint such number of new members as may be required to make up the minimum number of three (3) members or the majority being Independent Directors. Therefore a member of the Audit Committee who wishes to retire or resign should provide sufficient written notice to the Company so that a replacement may be appointed before he leaves.

The Board of Directors of the Company must review the term of office and performance of an audit committee and each of its members at least once every three (3) years to determine whether such audit committee and members have carried out their duties in accordance with their terms of reference.

Chairman

The Chairman, shall be elected from amongst their number, who shall be an Independent Director. In event of the Chairman’s absence, the meeting shall be chaired by an Independent Director.

The Chairman should engage on a continuous basis with senior management, such as the chairman of the Board, the Chief Executive Officer, the finance director, the head of internal audit and the external auditors in order to be kept informed of matters affecting the Company.

Secretary

The Company Secretary shall be the Secretary of the Committee and shall be responsible, in conjunction with the Chairman, for drawing up the agenda and circulating it prior to each meeting.



The Secretary shall also be responsible for keeping the minutes of meetings of the Committee and circulating them to the Committee Members. The Committee Members may inspect the minutes of the Audit Committee at the Registered Office or such other place as may be determined by the Audit Committee.

Meetings

The Committee shall meet at least four (4) times in each financial year and may regulate its own procedure in lieu of convening a formal meeting by means of video or teleconference. The quorum for a meeting shall be two (2) members, provided that the majority of the members present at the meeting shall be independent. In addition to its (4) meetings each financial year, the Committee may take action by unanimous written consent of its members.

The Committee may call for a meeting as and when required with reasonable notice as the Committee Members deem fit.

All decisions at such meeting shall be decided on a show of hands on a majority of votes.

The external auditors and internal auditors have the right to appear at any meeting of the Audit Committee and shall appear before the Committee when required to do so by the Committee. The external auditors may also request a meeting if they consider it necessary.

The other directors and employees of the Company may attend any particular Audit Committee meeting only at the Committee’s invitation, specific to the relevant meeting.

Rights

The Audit Committee shall:-

(a) have explicit authority to investigate any matter within its terms of reference; (b) have the resources which are required to perform its duties; (c) have full and unrestricted access to any information pertaining to the Group; (d) have direct communication channels with the external auditors and person(s) carrying out the internal audit function or activity; (e) have the right to obtain legal or independent professional or other advice at the Company’s expense; (f) have the right to convene meetings with the external auditors, the internal auditors or both excluding the attendance of

other directors and employees of the Company, whenever deemed necessary; (g) promptly report to the Bursa Malaysia Securities Berhad (“Bursa Securities”), or such other name(s) as may be adopted

by Bursa Securities, matters which have not been satisfactorily resolved by the Board of Directors resulting in a breach of the listing requirements;

(h) have the right to pass resolutions by a simple majority vote from the Committee and that the Chairman shall have the casting vote should a tie arise;

(i) meet as and when required on a reasonable notice; and (j) the Chairman shall convene a meeting to consider any matter external auditor believes should be brought to the attention

of the directors or shareholders, upon the request of the External Auditors.

Duties

(a) To review with the external auditors on:-

• theauditplan,itsscopeandnature; • theauditreport; • the results of their evaluation of the accounting policies and systems of internal accounting controls within the Group; and • theassistancegivenbytheofficersoftheCompanytoexternalauditors,includinganydifficultiesordisputeswith Management encountered during the audit.



(b) To review the adequacy of the scope, functions, competency and resources of the internal audit function, and that it has the necessary authority to carry out its work.

(c) To recommend such measures as to be taken by the Board of Directors on the effectiveness of the system of internal control, management information and risk management practices of the Group.

(d) To review the internal audit programme, processes, the results of the internal audit programme, processes or investigation undertaken and whether or not appropriate action is taken on the recommendations of the internal audit function.

(e) To review any appraisal or assessment of the performance of members of the internal audit function.

(f) To review any appointment or termination of the internal auditors and take cognisance of resignations of internal auditors and provide the resigning internal auditors an opportunity to submit reasons for resigning.

(g) To review with management:-

• auditreportsandmanagementletterissuedbytheexternalauditorsandtheimplementationofauditrecommendations; • interimfinancialinformation;and • theassistancegivenbytheofficersoftheCompanytoexternalauditors.

(h) To review related party transactions entered into by the Company or the Group and to determine if such transactions are undertaken on an arm’s length basis and normal commercial terms and on terms not more favourable to the related parties than those generally available to the public, and to ensure that the Directors report such transactions annually to shareholdersviatheannualreport,andtoreviewconflictsofinterestthatmayarisewithintheCompanyortheGroup including any transaction, procedure or course of conduct that raises questions of management integrity.

(i) To review the quarterly reports on consolidated results and year-end financial statements prior to submission to the Board of Directors, focusing particularly on:-

• changesinorimplementationofmajoraccountingpolicyandpractices; • significantand/orunusualmattersarisingfromtheaudit; • thegoingconcernassumption;and • compliancewithaccountingstandardsandotherlegalrequirements.

(j) To discuss problems and reservations arising from the interim and final audits, and any matter the auditor may wish to discuss (in the absence of management where necessary).

(k) To meet with the external auditors without executive board members present at least twice a year, where necessary.

(l) To consider the appointment and/or re-appointment of auditors, the audit fee and any questions of resignation or dismissal including recommending the nomination of person or persons as external auditors to the Board.

(m) To verify the allocation of options pursuant to a share scheme for employees as being in compliance with the criteria for allocation of options under the share scheme, at the end of each financial year.



Introduction

The Board of Directors (“the Board”) of Java Berhad (“Java” or “the Group”) is pleased to present its Statement on Risk Management & Internal Control for the financial period ended 31 December 2015, which has been prepared pursuant to Paragraph 15.26(b) of Bursa Malaysia Securities Berhad (“Bursa Securities”) Listing Requirements for the Main Market and as guided by the Statement on Risk Management & Internal Control: Guidance for Directors of Public Listed Companies (“the Guidance”).

Board’s Responsibility

The Board acknowledges its ultimate responsibility for the Group’s system of risk management and internal control, which includes the establishment of an appropriate control environment and framework as well as for reviewing its adequacy and integrity. The Board recognises the importance of ensuring that a sound system of internal controls and effective risk management practices to safeguard shareholders’ interests and Group’s assets. It has therefore given due attention towards improving the effectiveness of internal control, risk management and governance process of the organisation. The Board recognised that the risk management and internal control system are designed to manage rather than eliminate the risks to achieve the business objectives. In addition, it should be noted that the system could provide only reasonable and not absolute assurance against material misstatement or loss.

The Group’s Executive Director and Chief Financial Officer have provided assurance to the Board that the Group’s system of risk management and internal control system is operating adequately and effectively in all material aspects. This assurance is further supported by the respective Heads of Department to assists the Board on the implementation of the Board’s policies and procedure on risk and control, design, operations and monitoring of suitable internal controls to mitigate and control risks.

Risk Management

The Board recognises the importance of identifying and managing principal risks of the Group’s daily operations and that the identification and the management of such risk will affect the achievement of the Group’s corporate objectives. As part of the integral process of risk management, the Group shall formalise the Group’s risk management framework in which the existence of significant risks of the Group can be identified and quantified.

Whilst the Board maintains ultimate control over risk and control issues, the Board has delegated such responsibilities to the management the implementation of the system of risk management and internal control within an established risk policy framework. Functional management has been given a clear line of accountability and delegated authority as part of the internal control efforts. These have been documented in the Group’s standard operating practices. Senior Management is responsible for identifying, managing and reporting on significant risks on an on-going basis and any significant risk matters will be brought to the attention of the Executive Director, and if necessary, are also raised for discussion at Board meetings.

As part of the Board’s commitment to continuously enhance the Group’s risk management practices, and as the Group is in the midst of embarking on a regularisation plan, the Board intends to build on the current risk profile by further developing the requisite structure and systems within the risk management framework to be designed against the Group’s intended operations and activities.

Internal Audit Function

The Group’s internal audit function is outsourced to a professional services firm. The outsourced internal audit function assists the Board and the Audit Committee by providing independent assessment on the adequacy, efficiency and effectiveness of the Group’s internal control system. In addition, follow up review would be conducted to ensure that corrective actions have been implemented on a timely manner.

The outsourced internal audit function reports directly to the Audit Committee. Internal audit plans are tabled to the Audit Committee for review and approval to ensure adequate coverage of the internal audit reviews carried out. During the financial period under review, the internal auditors has carried out a review on the estate management process of Ladang Bunga Tanjong Sdn Bhd and reported the results of the review to the Audit Committee.

STATEMENT ONRISK MANAGEMENT & INTERNAL CONTROL


Key Internal Control Processes

1. Board Committees

Clear roles of the Board and Board Committees are stated under the Terms of Reference, Code of Ethics and other policies of the various Committee established by the Board. These Board Committees, which include Audit Committee, Nomination Committee, Remuneration Committee and ESOS Committee, operates within their respective defined terms of references approved and specific authority delegated by the Board.

2. Organisational Structure and Responsibility Levels

The Group has established an organised structure with a clear line of accountability and has strict authorisation, approval and control procedures which provide a sound framework within the organisation and facilitate proper corporate decision making at the appropriate level in the organisation’s hierarchy. Responsibility levels are communicated throughout the Group which set out, amongst other, authorisation levels, segregation of duties and other control procedures.

3. Authority Levels

The Board is ultimately responsible for all decisions made and delegate some of its approving authority to the Management through the Executive Director based on the agreed policies and procedures set out within the Group. The policies of the Group are reviewed and updated when necessary to ensure its relevance to the Group’s operations.

4. Financial Performance

Management accounts and reports are prepared periodically for review by Senior Management for effective monitoring and decision making. The Board monitors the Group’s performance by reviewing the quarterly results and examines the announcement to be made to Bursa Securities. These results are reviewed by the Audit Committee before they are tabled to the Board.

Conclusion

The system of risk management and internal control described in this statement are considered appropriate to the business operations. It should be noted that such arrangements do not eliminate the possibility of collusion or deliberate circumvention of procedures by employees. Human error and/or other unforeseen circumstances can result in poor judgment. However, the system of risk management and internal controls that exist throughout the Group and based on inquiry, information and assurance given, provides the Board the level of confidence on which it relies for assurance. There will be continual focus on measures to protect and enhance Shareholder value and business sustainability.

Given the pending regularisation plan and Practice Note (“PN”) 17 status, the Group faced several challenges and limitation includingcashflowconstraintsforthefinancialperiodunderreviewanduptothedateofapprovalofthestatement.

Review of the Statement by External Auditors

As required by Paragraph 15.23 of the Bursa Malaysia Securities Berhad Main Market Listing Requirements, the external auditors have reviewed this Statement on Risk Management and Internal Control. Their limited assurance review was performed in accordance with Recommended Practice Guide (“RPG”) 5 (Revised) issued by the Malaysian Institute of Accountants. RPG 5 (Revised) does not require the external auditors to form an opinion on the adequacy and effectiveness of the risk management and internal control systems of the Group.

This statement is made in accordance with the resolution of the Board dated 19 April 2016.

STATEMENT ONRISK MANAGEMENT & INTERNAL CONTROL


The Board of Java Berhad is pleased to present the Statement on the Internal Audit function for the financial period ended from 1 July 2014 to 31 December 2015.

The Group’s Internal Audit function, which is outsourced to a professional services firm, is an integral part of the assurance mechanism in ensuring that the Group’s system of internal control is adequate and effective. The Internal Audit function reports directly to the Audit Committee.

On an annual basis, an internal audit plan is tabled to the Audit Committee for review and approval, and the Internal Audit function executes internal audits based on the approved audit plan. The results of the audit reviews are periodically reported to the Audit Committee to enable the Audit Committee to assess the effectiveness of the system of internal control as it operated during the year and subsequently reports its opinion to the Board. In addition, the Internal Audit function carries out follow-up reviews to ensure that previously reported issues have been adequately addressed by Management.

The Board and Management recognise that the development of internal control system is an ongoing process and maintains an ongoing commitment to strengthen the existing internal control environment of the Group.

The total costs incurred for the outsourcing of the Internal Audit function for the financial period ended 31 December 2015 was RM 27,000.

The Company has changed its financial year end from 30 June to 31 December. Hence, the financial period under review is from 1 July 2014 to 31 December 2015.The Directors are responsible for ensuring that the financial statements of the Group and of the Company are drawn up in accordance with the applicable approved accounting standards in Malaysia and provisions of the Companies Act, 1965 so as to give a true and fair view of the state of affairs of the Group and the Company as at 31 December 2015andoftheresultsandcashflowsoftheGroupandtheCompanyforthefinancialyearendedonthatdate.

In preparing the financial statements, the Directors have:-

(a) adopted suitable accounting policies and applied them consistently;(b) made judgments and estimates that are reasonable and prudent;(c) ensured the adoption of applicable approved accounting standards; and(d) used the going concern basis for the preparation of the financial statements.

The Directors are responsible for keeping proper accounting records that disclose with reasonable accuracy of the financial position of the Group and of the Company and are kept in accordance with the Companies Act, 1965. The Directors are also responsible for safeguarding the assets of the Group and of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

STATEMENT OFINTERNAL AUDIT FUNCTION

DIRECTORS’RESPONSIBILITY STATEMENT


CORPORATE SOCIALRESPONSIBILITY STATEMENT

Corporate Social Responsibility (“CSR”) relates to open and transparent business practices that are based on ethical values and respect for the employees, community, the environment, shareholders and other stakeholders. It is designed to deliver sustainable value and development to society at large.

In view of the nature of the Company’s business and products, the Company is committed to operating in an economically, socially and environmentally sustainable manner whilst balancing the interest of the diverse stakeholders.

At Java Berhad, we view CSR as a journey towards integrating the values of CSR initiatives and business practices to promote ethical values, respect for the employees, the community and the environment while ensuring the real long-term benefits for the relevant stakeholders.

EMPLOyEESCOMMUNITy

ENvIRONMENT

We Care ForOur Employees

The Group strive to provide our employees a safe and healthy work environment. Our employees at the oil palm plantation in Kelantan resides in the housing estates which have been developed for our employees to strive. Our housing estates are equipped with facilities to provide our employees with constant supply of clean water and electricity as well as a canteen and surau to ensure that our employees have access to regular and healthy food and to carry out their religious obligations. We occasionally have social and recreational events to encourage networking and socialising between colleagues and peers in order to foster better working relationships and understanding.

In January 2016, the Group has ceased its timber operations and as part of its cessation process, it has undertaken a mutual separation scheme with its affected employees. As part of the Group’s philosophy of caring for its employees, the mutual separation scheme involves direct consultation by the superior or human resources personnel with the affected employees to ensure there are mutual understanding and agreement of the separation scheme exercise. The compensation given out to the affected employees under the mutual separation scheme are carried out within the applicable employment laws and the terms of their contract of service and also takes into account of their years of service and contribution to the Group.


CORPORATE SOCIALRESPONSIBILITY STATEMENT

We are working responsibly to reduce the environmental impact of our operations through improvement of our production processes and skills of our staff, which would in turn increase productivity and reduce wastage of resources and energy. We firmly believe in adopting waste management and recycling programme in our manufacturing process. The Management has adopted a paperless system to circulate its meeting papers to the Board and the Board committee in bid to reduce usage of paper as part of its waste management programme. The Group has implemented key initiatives such as separating used papers from its other waste and arranging for proper disposition of recycleable waste on a periodic basis in support of recycling programmes.

Our Board would continue to seek ways to grow our business while upholding our values and respect for the community, employees, the environment, shareholders and other stakeholders. With the commitment of our employees and with the support of our stakeholders, we will achieve our vision.

Our nature of business affects many of the indigenous people living in the area of our operations. It has been the Group’s aim to assist the community in term of empowering them with knowledge, promoting healthy and balanced living and preserving their culture, beliefs and traditions.

The Group’s development of the oil palm plantation has provided the local community in the vicinity with opportunities to supplement their income by engaging them to carry out field work, manuring and maintenance work. We also maintain effective, transparent and open communication with the local communities and would try our best during consultation and dialogues to accede to communities request for support that would help them lead more comfortable lives.

In the Company’s bid to support the local communities in the State of Kelantan, we have conducted provided donations to schools, native community and religious bodies.

We Care ForOur Community

We Care ForOur Environment

FinancialStatementS28 Directors’ Report37 Consolidated Statement of Financial Position38 Statement of Financial Position39 Consolidated Statement of Comprehensive Income40 Statement of Comprehensive Income41 Consolidated Statement of Changes in Equity43 Statement of Changes in Equity44 Consolidated Statement of Cash Flows46 Statement of Cash Flows47 Notes to the Financial Statements112 Supplementary Information on the Breakdown of Realised and Unrealised Profit or Losses113 Statement by Directors114 Statutory Declaration115 Independent Auditors’ Report


The directors hereby submit their report together with the audited financial statements of Java Berhad (“the Company”) and its subsidiaries (“the Group”) for the financial period ended 31st December 2015.

CHANGE OF FINANCIAL YEAR END

On 21st August 2015, the Company announced that the Group and the Company changed their financial year end from 30th June to 31st December with effect from current financial period ended 31st December 2015. Accordingly, the financial statements for the current financial period covered a period of 18 months from 1st July 2014 to 31st December 2015.

PRINCIPAL ACTIVITIES AND GENERAL INFORMATION

The principal activities of the Company are investment holding and provision of management services. The principal activities of its subsidiaries are disclosed in Note 9 to the financial statements.

Other than the cessation of timber operations which was completed subsequent to the financial period ended 31st December 2015 as disclosed in the Note 2 to the financial statements, there have been no other significant changes in the nature of these principal activities during the financial period.

On 14th December 2015, the Company announced the default in repayment of the financial facilities to a bank as disclosed in Note 33(A) to the financial statements.

Subsequent to the financial period end, the Company received the letter from the Bank dated 15th February 2016 that the management of the Bank has agreed to grant an indulgence of time up to 1st July 2017 to settle the financial facilities as disclosed in Note 33(A) to the financial statements.

The Group is currently in the process of formulating the plan to meet the revised payment obligations and announcement will be made once the plan has been finalised.

On 14th December 2015, the Company announced the intention to cease its respective timber operation of the subsidiaries of the Company, namely Java Industries Sdn. Bhd., Java Woods Sdn. Bhd., Java Timber Sdn. Bhd., and Java Resources Sdn. Bhd..

On 8th January 2016, the Company announced that it has completed the cessation of timber operations of the subsidiaries of the Company, namely Java Industries Sdn. Bhd., Java Woods Sdn. Bhd., Java Timber Sdn. Bhd. and Java Resources Sdn. Bhd.. Pursuant to the said completion of cessation of timber operations, the Company had triggered Paragraph 8.03A(2) of the Main Market Listing Requirements (“MMLR”) of Bursa Malaysia Securities Berhad (“Bursa Securities”) whereby a listed issuer has suspended or ceased all of its business or its major business.

Pursuant to the Listing Requirements (“LR”) of Bursa Securities in relation to Practice Note 17 (“PN17”), the Company had on 8th January 2016 announced that the Company is deemed to be a PN17 company as the shareholders’ equity of the Company is 25% or less of the issued and paid-up capital of the Company and such shareholders’ equity is less than RM40 million based on the Company’s unaudited management accounts.

DIRECTORS’ REPORT


PRINCIPAL ACTIVITIES AND GENERAL INFORMATION (Continued)

As a PN17 company, the Company is required to comply with the following conditions:-

(a) within 12 months from the date of First Announcement;

(i) submit a regularisation plan to the Securities Commission (“SC”) if the plan will result in a significant change in the business direction or policy of the Company; or

(ii) submit a regularisation plan to Bursa if the plan will not result in a significant change in the business direction or policy of the Company, and obtain Bursa’s approval to implement the plan;

(b) implement the regularisation plan within the timeframe stipulated by the SC or Bursa, as the case may be;

(c) provide such information as may be prescribed by Bursa from time to time for public release; and

(d) so such acts or things as may be required by Bursa.

Further, the Company is also required to:-

(i) announce within 3 months from the First Announcement, on whether the regularisation plan will result in a significant change in the business direction or policy of the Company;

(ii) announce the status of its regularisation plan and the number of months to the end of the relevant time frames referred to in the Paragraphs 5.1 and 5.2 of PN17, as may be applicable, on a monthly basis until further notice from Bursa;

(iii) announce its compliance or non-compliance with a particular obligation imposed pursuant to PN17, on an immediate basis; and

(iv) announce the details of the regularisation plan (“Requisite Announcement”) which must contain the following:-

(a) contain details of the regularisation plan and sufficient information to demonstrate that the Company is able to comply with all the requirements set out under Paragraph 5.4 of PN17 after the implementation of the regularisation plan;

(b) include a timeline for the complete implementation of the regularisation plan;

(c) be announced by the Company’s Principal Adviser.

In the event that the Company fails to comply with the obligation to regularise its condition, all of its listed securities shall be suspended and delisted, immediately upon notification of suspension and de-listing by Bursa.

The Company is currently in the process of formulating the Regularisation Plan to regularise its financial condition and the Requisite Announcement will be made once the Regularisation Plan has been finalised.

DIRECTORS’ REPORT


RESULTS

Group CompanyRM’000 RM’000

Loss for the financial period, net of tax (54,618) (4,550)

Attributable to:-Owners of the Company (53,970) (4,550)Non-controlling interests (648) -

(54,618) (4,550)

DIVIDEND

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

The directors do not recommend the payment of any dividend in respect of the financial period ended 31st December 2015.

RESERVES AND PROVISIONS

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

BAD AND DOUBTFUL DEBTS

Before the statements of comprehensive income and statements of financial position of the Group and of the Company were made out, the directors took reasonable steps to ascertain that action had been taken in relation to the writing off of bad debts and the making of allowance for doubtful debts, and had satisfied themselves that all known bad debts had been written off and adequate allowance had been made for doubtful debts.

At the date of this report, the directors are not aware of any circumstances that would render the amount written off for bad debts or the amount of the allowance for doubtful debts in the financial statements of the Group and of the Company inadequate to any substantial extent.

CURRENT ASSETS

Before the statements of comprehensive income and statements of financial position of the Group and of the Company were made out, the directors took reasonable steps to ensure that any current assets, other than debts, which were unlikely to be realised in the ordinary course of business, their values as shown in the accounting records of the Group and of the Company had been written down to an amount that they might be expected to be realised.

At the date of this report, the directors are not aware of any circumstances that would render the values attributed to the current assets in the financial statements of the Group and of the Company misleading.

DIRECTORS’ REPORT


VALUATION METHODS

Other than as disclosed in the notes to the financial statements, at the date of this report, the directors are not aware of any circumstances which have arisen which would render adherence to the existing method of valuation of assets or liabilities of the Group and of the Company misleading or inappropriate.

CONTINGENT AND OTHER LIABILITIES

Other than as disclosed in the Note 18 to the financial statements, at the date of this report, there does not exist:-

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

(ii) any contingent liabilities in respect of the Group and of the Company which has arisen since the end of the financial period.

Other than as disclosed in the Note 18 to the financial statements, in the opinion of the directors, no contingent or other liability of the Group and of the Company has become enforceable, or is likely to become enforceable within the period of twelve months after the end of the financial period which, will or may affect the ability of the Group and of the Company to meet their obligations as and when they fall due.

CHANGE OF CIRCUMSTANCES

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

ITEMS OF AN UNUSUAL NATURE

Other than as disclosed in Note 23 to the financial statements, in the opinion of the directors, the results of the operations of the Group and of the Company for the financial year were not, substantially affected by any item, transaction or event of a material and unusual nature nor has any such item, transaction or event accrued in the interval between the end of the financial year and the date of this report.

ISSUE OF SHARES AND DEBENTURES

During the financial period, the Company increased its issued and fully paid share capital from RM173,393,639/- to RM173,396,089/- by the issuance of 2,450 ordinary shares of RM1/- each via the exercise of 2,450 warrants.

The new shares rank pari-passu with the existing shares of the Company.

The Company did not issue any debentures during the financial period.

DIRECTORS’ REPORT


2004/2015 WARRANTS (“Warrants”)

The Warrants issued on 29th November 2004 are constituted under a Deed Poll dated 18th August 2004 executed by the Company. The Warrants are listed on the Bursa Malaysia Securities Berhad.

The outstanding Warrants during the financial period ended 31st December 2015 are as below:-

Number of WarrantsAt 1.7.2014 Exercised Expired At 31.12.2015

Warrants 24,467,846 (2,450) (24,465,396) -

The salient terms of the Warrants are as follows:-

(a) Each Warrant entitles the registered holder/(s) at any time during the exercise period to subscribe for one (1) new ordinary share of RM1/- each at an exercise price of RM1/- per ordinary share. The Warrants entitlement is subject to adjustments under the terms and conditions set out in the Deed Poll.

(b) The exercise price for the Warrants is fixed at RM1/- per new ordinary share of the Company, subject to adjustments under certain circumstances in accordance with the provision of the Deed Poll.

(c) The exercise period is ten (10) years from the date of issuance until the maturity date, i.e. the date preceding the tenth (10th) anniversary of the date of issuance. Upon the expiry of the exercise period, any unexercised rights will lapse and cease to be valid for any purposes.

(d) The new ordinary shares of RM1/- each to be issued pursuant to the exercise of the Warrants upon allotment and issue, rank

pari passu in all respect with the existing ordinary shares of the Company except that the new ordinary shares so allotted shall not be entitled to any dividends, rights, allotment and/or other distributions declared, made or paid to shareholders, the entitlement date for which is before the date of allotment of the said new ordinary shares.

The entire Warrants was expired on 28th November 2014.

EMPLOYEES’ SHARE OPTION SCHEME

The Employees’ Share Option Scheme (“ESOS”) is governed by the ESOS By-Laws approved by the shareholders at the Extraordinary General Meeting held on 30th July 2004.

The salient features of the ESOS are as follows:-

(a) The maximum number of new ordinary shares in the Company which may be made available under the share options (“Options”) granted pursuant to the ESOS shall not exceed ten percent (10%) (or such other higher percentage as may be permitted by the relevant regulatory authorities from time to time) of the issued and paid-up share capital of the Company at any point in time during the duration of the ESOS. The Company will, during the option period, keep available sufficient authorised and unissued ordinary shares to satisfy all outstanding Options which may be exercisable from time to time throughout the duration of the ESOS;

DIRECTORS’ REPORT


EMPLOYEES’ SHARE OPTION SCHEME (Continued)

(b) An Eligible Employee is any executive director or employee of the Company or its subsidiaries (“the Group”) who at the date of allocation:-

(i) has attained the age of eighteen (18) years; and(ii) is a confirmed employee of the Group.

Provided that the ESOS Committee may, at its discretion, nominate any employee (including executive directors) of the Group to be an Eligible Person despite the eligibility criteria under the By-Laws 3.1 herein if not met, at any time and from time to time.

No Options will be offered to an Eligible Director of the Company unless the specific allotment of Options to that Eligible Director to participate in the ESOS shall have previously been approved by the shareholders of the Company in a general meeting;

(c) The ESOS shall be in force for a period of five (5) years from the date of full compliance with the statutory requirements (“Commencement Date”) and is subject to an extension for a maximum period of up to five (5) years commencing from the day the date of expiration of the original five (5) years period. The directors had on 14th October 2011 extended the ESOS which expired on 15th October 2011 for another five (5) years until 15th October 2016;

(d) The number of ESOS shares that may be offered and allotted to any one of the Eligible Person shall be at the discretion of the ESOS Committee and the Board of Directors after taking into consideration the performance, length of service and seniority of the Eligible Person and such other factors that the ESOS Committee and the Board of Directors may deem relevant, subject to the following:-

(i) the number of ESOS shares allocated, in aggregate, to Eligible Directors and senior management of the Group shall not exceed fifty percent (50%) of the total ESOS shares available under the ESOS; and

(ii) the number of ESOS shares allocated to any individual Eligible Person who, either singly or collectively through person/(s) connected with them as defined in the Listing Requirements of Bursa Malaysia Securities Berhad (“Listing Requirements”), hold twenty percent (20%) or more in the total issued and paid-up share capital of the Company shall not exceed ten percent (10%) of the total ESOS shares available under the ESOS.

At the discretion of the ESOS Committee, an Eligible Person may be eligible for more than one (1) offer provided that the total aggregate number of shares to be offered to such Eligible Person shall not exceed the maximum allowable allotment as set out in the By-Laws;

(e) The subscription price shall be determined by the Board of Directors upon the recommendation of the ESOS Committee in accordance with the Listing Requirements based on the 5-days weighted average market price of the Company’s ordinary shares immediately prior to the date of offer with a discount of not more than 10% (or such higher discount as may be allowed under the Listing Requirements from time to time) if deemed appropriate, subject to the par value of the Company’s ordinary shares and subject to adjustments in accordance with the By-Laws;

(f) The Options granted to an Eligible Person is exercisable only by the Eligible Person during his/her tenure of services whilst he/she is employed/appointed/retained for services by the Group and subject to any extension pursuant to the By-Laws. No Options shall be exercised after the expiry of the option period; and

DIRECTORS’ REPORT


EMPLOYEES’ SHARE OPTION SCHEME (Continued)

(g) The new ordinary shares to be allotted upon the exercise of an Options shall, upon issue and allotment, rank pari passu in all respect with the existing issued and paid up shares of the Company for any dividends, rights, allotments and/or other distributions (including those arising on a liquidation of the Company or its subsidiary, as the case may be), if the date of allotment is on or before the entitlement date and subject to all the provisions of the Articles of Association of the Company.

The ESOS Committee comprising appointed members of the Board was set up on 29th August 2005 to administer the ESOS, who may from time to time offer Options to eligible employees and full-time Executive Directors of the Group and of the Company to subscribe for new ordinary shares in the Company.

The movement in the Options exercisable by the Eligible Persons during the financial period to take up unissued ordinary shares of RM1/- each at the exercise price of RM1/- per ordinary share are as stated below:-

Grant Date

Expiry Date

ExercisePrice

RM/Share

BalanceAt

1.7.2014 Granted Lapsed Exercised

Balance At

31.12.2015

16.10.2006 15.10.2016 1.00 573,000 - (141,200) - 431,800

There were no new Options granted to the directors during the financial period.

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:-

Dato’ Dr. Abu Talib Bin BachikSy Choon Yen YBM Tunku Mahmood Bin Tunku Mohammed D.K.Mohd Zulkhairis Bin Mohd Zain - Resigned on 27th November 2015Hedzir Bin Aminudin - Appointed on 27th November 2015

DIRECTORS’ REPORT


DIRECTORS’ INTERESTS

According to the register of directors’ shareholdings kept by the Company under Section 134 of the Companies Act, 1965 in Malaysia, the interests of those directors who held office at the end of the financial year in shares in the Company during the financial period ended 31st December 2015 are as follows:-

Number of ordinary shares of RM1/- eachAt 1.7.2014 Bought Sold At 31.12.2015

The CompanyJava Berhad

Direct InterestSy Choon Yen 1,400,000 - - 1,400,000

Indirect InterestSy Choon Yen* 41,912,449 - - 41,912,449

* Deemed interested in the shares held by Amalan Menang Sdn. Bhd. by virtue of Section 6A of the Companies Act, 1965 in Malaysia and those shares held by his spouse, Looh Yen Loo by virtue of Section 134(12)(c) of the Companies Act, 1965 in Malaysia.

Other than as disclosed above, none of the other directors in office at the end of the financial period had any other interests in shares, warrants and options in the Company during the financial period.

DIRECTORS’ BENEFITS

Since the end of the previous financial period, no director of the Company has received or become entitled to receive a benefit (other than the benefits included in the aggregate amount of emoluments received or due and receivable by the directors as disclosed in the financial statements) by reason of a contract made by the Company or a related corporation with the director or with a firm of which the director is a member, or with a company in which the director has a substantial financial interest except for any benefit which may be deemed to have arisen by virtue of the transactions as disclosed in Note 28 to the financial statements.

Neither during nor at the end of the financial period was the Company a party to any arrangement whose object was to enable the directors to acquire benefits by means of the acquisition of shares in, or debentures of, the Company or any other body corporate.

SIGNIFICANT EVENTS DURING AND SUBSEQUENT TO THE FINANCIAL PERIOD

Details of significant events during and subsequent to the financial year are disclosed in Note 33 to the financial statements.

DIRECTORS’ REPORT


AUDITORS

The auditors, Messrs. Baker Tilly Monteiro Heng, have indicated that they are not seeking for reappointment and shall retire at the forthcoming Annual General Meeting.

On behalf of the Board,

HEDZIR BIN AMINUDIN Director

SY CHOON YENDirector

Kuala Lumpur

Date: 18th February 2016

DIRECTORS’ REPORT


Group31.12.2015 30.6.2014

Note RM’000 RM’000

ASSETSNon-current assetsProperty, plant and equipment 6 82,343 90,786 Plantation development expenditure 7 12,815 13,800 Timber concession rights 8 - -

Total non-current assets 95,158 104,586

Current assetsInventories 10 26 31,118 Trade and other receivables 11 2,090 10,127 Prepayments 12 - 7,203 Tax recoverable 7 396 Short term deposits with licensed banks 13 561 292 Cash and bank balances 14 113 644

Total current assets 2,797 49,780

TOTAL ASSETS 97,955 154,366

EQUITY AND LIABILITIESEquity attributable to owners of the CompanyShare capital 15 173,396 173,394 Share premium 1,571 1,571 Revaluation reserve 16 40,253 41,103 Share options reserve 17 86 114 Accumulated losses (183,183) (130,070)

32,123 86,112 Non-controlling interests 393 1,020

Total Equity 32,516 87,132

Non-current liabilitiesOther payable 19 - 15,113 Loans and borrowings 18 5,656 8,107

Total non-current liabilities 5,656 23,220

Current liabilitiesTrade and other payables 19 23,728 10,446 Loans and borrowings 18 35,960 33,502 Tax payable 95 66

Total current liabilities 59,783 44,014

Total Liabilities 65,439 67,234

TOTAL EQUITY AND LIABILITIES 97,955 154,366

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

CONSOLIDATED STATEMENT

OF FInanCIaL POSItIOn AS AT 31ST DECEMBER 2015


Company31.12.2015 30.6.2014

Note RM’000 RM’000

ASSETSNon-current assetsProperty, plant and equipment 6 236 767 Investment in subsidiaries 9 34,393 34,393

Total non-current assets 34,629 35,160

Current assetsTrade and other receivables 11 122,002 126,479 Prepayments 64 35 Tax recoverable - 146 Short term deposits with licensed banks 13 250 59 Cash and bank balances 14 33 131

Total current assets 122,349 126,850

TOTAL ASSETS 156,978 162,010

EQUITY AND LIABILITIESEquity attributable to owners of the CompanyShare capital 15 173,396 173,394 Share premium 1,571 1,571 Share options reserve 17 86 114 Accumulated losses (54,761) (50,239)

Total Equity 120,292 124,840

Non-current liabilityLoans and borrowings 18 - 49

Total non-current liability - 49

Current liabilitiesTrade and other payables 19 36,668 36,991 Loans and borrowings 18 13 130 Tax payable 5 -

Total current liabilities 36,686 37,121

Total Liabilities 36,686 37,170

TOTAL EQUITY AND LIABILITIES 156,978 162,010


STATEMENT OF FInanCIaL POSItIOn

AS AT 31ST DECEMBER 2015


Note

Group1.7.2014

to31.12.2015

RM’000

1.7.2013to

30.6.2014RM’000

Revenue 20 18,895 40,214 Cost of sales 21 (58,908) (56,085)Gross loss (40,013) (15,871)Other income 1,901 8,643 Distribution expenses (209) (565)Administrative expenses (12,042) (24,549)Results from operating activities (50,363) (32,342)Finance costs 22 (4,268) (2,688)Loss before taxation 23 (54,631) (35,030)Taxation 24 13 24 Loss for the financial period/year (54,618) (35,006)

Other comprehensive income, net of taxItem that will be reclassified subsequently to profit or lossRealisation of revaluation reserve 850 566

Total comprehensive loss for the financial period/year (53,768) (34,440)

Loss for the financial period/year attributable to:-Owners of the Company (53,970) (34,381)Non-controlling interests (648) (625)

(54,618) (35,006)

Total comprehensive loss attributable to:-Owners of the Company (53,141) (33,829)Non-controlling interests (627) (611)

(53,768) (34,440)

Loss per ordinary share attributable to owners of the Company (sen)Basic loss per share 25 (31.13) (19.83)

Diluted loss per share 25 (31.13) (19.83)



OF COmPReHenSIVe InCOme FOR THE FINANCIAL PERIOD ENDED 31ST DECEMBER 2015


Note

Company1.7.2014

to31.12.2015

RM’000

1.7.2013to

30.6.2014RM’000

Revenue 20 54 4,320 Cost of sales - - Gross profit 54 4,320 Other income 90 16 Administrative expenses (4,687) (65,664)

Result from operating activities (4,543) (61,328)

Finance costs 22 (7) (15)Loss before taxation 23 (4,550) (61,343)Taxation 24 - - Loss for the financial period/year (4,550) (61,343)Other comprehensive income, net of tax - -

Total comprehensive loss for the financial period/year (4,550) (61,343)

STATEMENT OF COmPReHenSIVe InCOme

FOR THE FINANCIAL PERIOD ENDED 31ST DECEMBER 2015



Att

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OF CHanGeS In eQUItY FOR THE FINANCIAL PERIOD ENDED 31ST DECEMBER 2015


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173

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94

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114

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1,0

20

87,

132

CONSOLIDATED STATEMENT OF CHanGeS In eQUItY


The

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186

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-

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Issu

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173

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20,2

92

STATEMENT OF

CHanGeS In eQUItY FOR THE FINANCIAL PERIOD ENDED 31ST DECEMBER 2015

The

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.


Group1.7.2014

to31.12.2015

RM’000

1.7.2013to

30.6.2014RM’000

CASH FLOWS FROM OPERATING ACTIVITIES:-Loss before taxation (54,631) (35,030)Adjustments for:-

Amortisation of plantation development expenditure 985 658 Depreciation of plant, property and equipment 7,621 5,700 Deposit written off 151 1,200 Impairment loss on:-- trade receivables 273 - - other receivables 60 - - timber concession rights - 13,198 Prepayments expensed off 3,064 - Interest expenses 4,268 2,688 Inventories write down 27,910 8,500 Property, plant and equipment written off 140 - Unrealised loss on foreign exchange - 24 Interest income (87) - (Gain)/loss on disposal of property, plant and equipment (1,421) 11

Operating Loss before Working Capital Changes (11,667) (3,051)Changes In Working Capital:-

Inventories 3,182 5,768 Receivables 11,692 922 Payables (1,831) 1,835

Cash Generated From Operations 1,376 5,474 Interest paid (1,343) (1,292)Net tax refunded 431 55

Net Operating Cash Flows 464 4,237

CONSOLIDATED STATEMENT OF CaSH FLOWS



Group1.7.2014

to31.12.2015

RM’000

1.7.2013to

30.6.2014RM’000

CASH FLOWS FROM INVESTING ACTIVITIES:- Purchase of property, plant and equipment (Note 26) (699) (1,856) Proceeds from disposal of property, plant and equipment 2,802 188 Interest received 8 - Net Investing Cash Flows 2,111 (1,668)

CASH FLOWS FROM FINANCING ACTIVITIES:- Interest paid (2,925) (1,396) Repayment of finance lease liabilities (525) (538) Net (repayment)/drawndown of bank borrowings (485) 7,862 Proceeds from issuance of ordinary shares 2 - Net Financing Cash Flows (3,933) 5,928 NET CHANGE IN CASH AND CASH EQUIVALENTS (1,358) 8,497 EFFECT OF EXCHANGE DIFFERENCES - (24)CASH AND CASH EQUIVALENTS AT THE BEGINNING OF

THE FINANCIAL PERIOD/YEAR (2,710) (11,183)

CASH AND CASH EQUIVALENTS AT THE END OF THE FINANCIAL PERIOD/YEAR (4,068) (2,710)

ANALYSIS OF CASH AND CASH EQUIVALENTS:- Cash and bank balances 113 644 Deposits placed with licensed banks 561 292 Bank overdrafts (4,431) (3,414)

(3,757) (2,478)Less: deposits pledged as security to licensed banks (311) (232)

(4,068) (2,710)

CONSOLIDATED STATEMENT OF CaSH FLOWS




Company1.7.2014

to31.12.2015

RM’000

1.7.2013to

30.6.2014RM’000

CASH FLOWS FROM OPERATING ACTIVITIES:-Loss before taxation (4,550) (61,343)Adjustments for:- Depreciation of property, plant and equipment 318 252 Impairment loss on other receivables 14 - Impairment loss on investment in subsidiaries - 61,239 Impairment loss on amount owing by subsidiaries no longer required (37) - Interest expenses 7 15 Loss on disposal of property, plant and equipment 24 18 Short term deposits interest income (7) - Operating (Loss)/Profit before Working Capital Changes (4,231) 181 Changes in Working Capital:- Receivables 132 303 Payables 2,227 (94)Cash Used In Operations (1,872) 390 Tax refunded/(tax paid) 151 (13)Net Operating Cash Flows (1,721) 377

CASH FLOWS FROM INVESTING ACTIVITIES:- Interest received from short term deposit 7 - Net change in amount owing to/by subsidiaries 1,789 (599) Proceeds from disposal of property, plant and equipment 201 180 Purchase of property, plant and equipment (Note 26) (12) (2)Net Investing Cash Flows 1,985 (421)

CASH FLOWS FROM FINANCING ACTIVITIES:- Interest paid (7) (15) Proceeds from issuance of ordinary shares 2 - Repayment of finance lease liabilities (166) (286)Net Financing Cash Flows (171) (301)NET CHANGE IN CASH AND CASH EQUIVALENTS 93 (345)CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE FINANCIAL PERIOD/YEAR 190 535 CASH AND CASH EQUIVALENTS AT THE END OF THE FINANCIAL PERIOD/YEAR 283 190

ANALYSIS OF CASH AND CASH EQUIVALENTS:- Cash and bank balances 33 131 Short term deposits placed with licensed banks 250 59

283 190

STATEMENT OF CaSH FLOWS




1. CORPORATE INFORMATION

Java Berhad (“The Company”) is a public limited liability company, incorporated and domiciled in Malaysia and listed on the Main Market of Bursa Malaysia Securities Berhad. The registered office of the Company is located at Suite 2.02, Level 2, Wisma E & C, No. 2, Lorong Dungun Kiri, Damansara Heights, 50490 Kuala Lumpur. The principal place of business of the Company is located at Suite M.02, Mezzanine Floor, Wisma E & C, No. 2, Lorong Dungun Kiri, Damansara Heights, 50490 Kuala Lumpur. The principal activities of the Company are investment holding and provision of management services. The principal activities of its subsidiaries are disclosed in Note 9 to the financial statements.

Other than the cessation of timber operations which was completed subsequent to the financial period ended 31st December 2015 as disclosed in the Note 2 to the financial statements, there have been no other significant changes in the nature of these principal activities during the financial period. The financial statements were authorised for issue by the Board of Directors in accordance with a resolution of the directors on 18th February 2016.

On 14th December 2015, the Company announced the default in repayment of the financial facilities to a bank as disclosed in Note 33(A) to the financial statements.

Subsequent to the financial period end, the Company received the letter from the Bank dated 15th February 2016 that the management of the Bank has agreed to grant an indulgence of time up to 1st July 2017 to settle the financial facilities as disclosed in Note 33(A) to the financial statements.

The Group is currently in the process of formulating the plan to meet the revised payment obligations and announcement will be made once the plan has been finalised.

On 14th December 2015, the Company announced the intention to cease its respective timber operations of the subsidiaries of the Company, namely Java Industries Sdn. Bhd., Java Woods Sdn. Bhd., Java Timber Sdn. Bhd. and Java Resources Sdn. Bhd..

On 8th January 2016, the Company announced that it has completed the cessation of timber operations of the subsidiaries of the Company, namely Java Industries Sdn. Bhd., Java Woods Sdn. Bhd., Java Timber Sdn. Bhd. and Java Resources Sdn. Bhd.. Pursuant to the said completion of cessation of timber operations, the Company had triggered Paragraph 8.03A(2) of the Main Market Listing Requirements (“MMLR”) of Bursa Malaysia Securities Berhad (“Bursa Securities”) whereby a listed issuer has suspended or ceased all of its business or its major business.

Pursuant to the Listing Requirements (“LR”) of Bursa Securities in relation to Practice Note 17 (“PN17”), the Company had on 8th January 2016 announced that the Company is deemed to be a PN17 company as the shareholders’ equity of the Company is 25% or less of the issued and paid-up capital of the Company and such shareholders’ equity is less than RM40 million based on the Company’s unaudited management accounts.

NOTES TO THEFInanCIaL StatementS



1. CORPORATE INFORMATION (Continued)




















2. FUNDAMENTAL ACCOUNTING CONCEPT

The financial statements of the Group and of the Company have been prepared on the assumption that the Group and the Company will continue as going concerns. The application of the going concern basis is based on the assumption that the Group and the Company will be able to realise their assets and liquidate their liabilities in the normal course of business.

During the financial period, the Group and the Company incurred net losses amounting to RM54,618,000/- and RM4,550,000/- and the Company recorded a negative operating cash flows of RM1,721,000/-. As at 31st December 2015, the Group’s current liabilities exceeded its current assets by RM56,986,000/-. In addition, during the financial period, the Group has defaulted on the borrowings as disclosed in Note 33(A) to the financial statements. These conditions indicate the existence of a material uncertainty which may cast significant doubt about the Group’s and the Company’s abilities to continue as going concerns.

As disclosed in Note 33(A) to the financial statements, on 14th December 2015, the Company announced the default in repayment of the financial facilities to a bank. Subsequent to the financial period end, the Company received the letter from the Bank dated 15th February 2016 that the management of the Bank has agreed to grant an indulgence of time up to 1st July 2017 to settle the financial facilities. The Group is currently in the process of formulating the plan to meet the revised payment obligations and announcement will be made once the plan has been finalised.

Subsequent to the financial period on 8th January 2016, the Company announced that it has completed the cessation of its timber operations of the subsidiaries of the Company, namely Java Industries Sdn. Bhd., Java Woods Sdn. Bhd., Java Timber Sdn. Bhd. and Java Resources Sdn. Bhd.. Pursuant to the said completion of cessation of timber operations, the Company had triggered Paragraph 8.03A(2) of the Main Market Listing Requirements (“MMLR”) of Bursa Securities whereby a listed issuer has suspended or ceased all of its business or its major business.

On 8th January 2016, the Company announced that it became an Affected Listed Issuer pursuant to Paragraph 2.1(a) of Practice Note No.17/2011 of the MMLR of Bursa Securities. As a result, the Company is required to submit a Regularisation Plan to the relevant authorities and to implement the Regularisation Plan within the stipulated timeframe.

The ability of the Group and of the Company to continue as going concerns is dependent upon:-

(i) the timely and successful formulation and implementation of a Regularisation Plan;

(ii) the continuing support from its lenders and the formulation and timely implementation of the plan to meet the revised payment obligations;

(iii) the Group and the Company achieving sustainable and viable operations; and

(iv) the Group and the Company generating adequate cash flows from its operating activities.

In the event that these are not forthcoming, the Group and the Company may be unable to realise their assets and discharge their liabilities in the normal course of business. Accordingly, the financial statements may require adjustments relating to the recoverability and classification of recorded assets and liabilities that may be necessary should the Group and the Company be unable to continue as going concerns.



3. BASIS OF PREPARATION

3.1 Statement of Compliance

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

3.2 Basis of measurement

The financial statements of the Group and of the Company have been prepared under the historical cost basis, other than as disclosed in the significant accounting policies in Note 4 to the financial statements.

3.3 Use of estimates and judgement

The preparation of financial statements in conformity with FRSs requires the use of certain critical accounting estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amounts of the revenue and expenses during the reported period. It also requires directors to exercise their judgement in the process of applying the Group’s and the Company’s accounting policies. Although these estimates and judgement are based on the directors’ best knowledge of current events and actions, actual results may differ.

The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in Note 5 to the financial statements.

3.4 Functional and presentation currency

The individual financial statements of each entity in the Group are measured using the currency at the primary economic environment in which they operate (“the functional currency”). The consolidated financial statements are presented in Ringgit Malaysia (“RM”), which is also the Company’s functional currency, and has been rounded to the nearest thousand, unless otherwise stated.

3.5 Adoption of Amendments/Improvements to FRSs and New IC Interpretation (“IC Int”)

The Group and the Company have adopted the following amendments/improvements to FRSs and new IC Int that are mandatory for the current financial period:-

Amendments/Improvements to FRSsFRS 1 First-time Adoption of Financial Reporting StandardsFRS 2 Share-based PaymentFRS 3 Business CombinationsFRS 8 Operating SegmentsFRS 10 Consolidated Financial StatementsFRS 12 Disclosure of Interests in Other EntitiesFRS 13 Fair Value MeasurementFRS 116 Property, Plant and Equipment



3. BASIS OF PREPARATION (Continued)

3.5 Adoption of Amendments/Improvements to FRSs and New IC Interpretation (“IC Int”) (Continued)

Amendments/Improvements to FRSsFRS 119 Employee BenefitsFRS 124 Related Party DisclosuresFRS 127 Separate Financial StatementsFRS 132 Financial Instruments: PresentationFRS 136 Impairment of AssetsFRS 138 Intangible AssetsFRS 139 Financial Instruments: Recognition and MeasurementFRS 140 Investment Property

New IC Int IC Int 12 Levies

The adoption of the above amendments/improvements to FRSs and new IC Int did not have any significant effect on the financial statements of the Group and of the Company, and did not result in significant changes to the Group’s and the Company’s existing accounting policies except for those as discussed below:-

Amendments to FRS 136 Impairment of Assets

Amendments to FRS 136 clarifies that disclosure of the recoverable amount (based on fair value less costs of disposal) of an asset or cash generating unit is required to be disclosed only when an impairment loss is recognised or reversed.

3.6 New FRS and Amendments/Improvements to FRSs that have been issued, but not yet effective

The Group and the Company have not adopted the following new FRSs and amendments/improvements to FRSs that have been issued but yet to be effective:-

Effective for financial periods

beginning on or after

New FRSFRS 9 Financial Instruments 1 January 2018

Amendments/Improvements to FRSsFRS 5 Non-current Assets Held for Sale and Discontinued Operations 1 January 2016FRS 7 Financial Instruments: Disclosures 1 January 2016FRS 10 Consolidated Financial Statements 1 January 2016FRS 11 Joint Arrangements 1 January 2016FRS 12 Disclosure of Interest in Other Entities 1 January 2016FRS 101 Presentation of Financial Statements 1 January 2016FRS 116 Property, Plant and Equipment 1 January 2016FRS 119 Employee Benefits 1 January 2016FRS 127 Separate Financial Statements 1 January 2016FRS 128 Investments in Associates and Joint Ventures 1 January 2016FRS 138 Intangible Assets 1 January 2016




3.6 New FRS and Amendments/Improvements to FRSs that have been issued, but not yet effective (Continued)

A brief discussion on the above significant new FRS and amendments/improvements to FRSs are summarised below. Due to the complexity of these new FRS and the amendments/improvements to FRSs, the financial effects of their adoption are currently still being assessed by the Group and the Company.

FRS 9 Financial Instruments

Key requirements of FRS 9:-

• FRS9introducesanapproachforclassificationoffinancialassetswhichisdrivenbycashflowcharacteristicsand the business model in which an asset is held. The new model also results in a single impairment model being applied to all financial instruments.

In essence, if a financial asset is a simple debt instrument and the objective of the entity’s business model within which it is held is to collect its contractual cash flows, the financial asset is measured at amortised cost. In contrast, if that asset is held in a business model the objective of which is achieved by both collecting contractual cash flows and selling financial assets, then the financial asset is measured at fair value in the statements of financial position, and amortised cost information is provided through profit or loss. If the business model is neither of these, then fair value information is increasingly important, so it is provided both in the profit or loss and in the statements of financial position.

• FRS9introducesanew,expected-lossimpairmentmodelthatwillrequiremoretimelyrecognitionofexpectedcredit losses. Specifically, this Standard requires entities to account for expected credit losses from when financial instruments are first recognised and to recognise full lifetime expected losses on a more timely basis. The model requires an entity to recognise expected credit losses at all times and to update the amount of expected credit losses recognised at each reporting date to reflect changes in the credit risk of financial instruments. This model eliminates the threshold for the recognition of expected credit losses, so that it is no longer necessary for a trigger event to have occurred before credit losses are recognised.

• FRS9 introducesasubstantially-reformedmodel forhedgeaccounting,withenhanceddisclosuresaboutriskmanagement activity. The new model represents a significant overhaul of hedge accounting that aligns the accounting treatment with risk management activities, enabling entities to better reflect these activities in their financial statements. In addition, as a result of these changes, users of the financial statements will be provided with better information about risk management and the effect of hedge accounting on the financial statements.




3.6 New FRS and Amendments/Improvements to FRSs that have been issued, but not yet effective (Continued)

Amendments to FRS 5 Non-current Assets Held for Sale and Discontinued Operations

Amendments to FRS 5 introduce specific guidance on when an entity reclassifies an asset (or disposal group) from held for sale to held for distribution to owners (or vice versa), or when held-for-distribution is discontinued.

Amendments to FRS 7 Financial Instruments: Disclosures

Amendments to FRS 7 provide additional guidance to clarify whether servicing contracts constitute continuing involvement for the purposes of applying the disclosure requirements of FRS 7.

The amendments also clarify the applicability of Disclosure – Offsetting Financial Assets and Financial Liabilities (Amendments to FRS 7) to condensed interim financial statements.

Amendments to FRS 101 Presentation of Financial Statements

Amendments to FRS 101 improve the effectiveness of disclosures. The amendments clarify guidance on materiality and aggregation, the presentation of subtotals, the structure of financial statements and the disclosure of accounting policies.

Amendments to FRS 116 Property, Plant and Equipment

Amendments to FRS 116 prohibit revenue-based depreciation because revenue does not reflect the way in which an item of property, plant and equipment is used or consumed.

Amendments to FRS 127 Separate Financial Statements

Amendments to FRS 127 allow a parent and investors to use the equity method in its separate financial statements to account for investments in subsidiaries, joint ventures and associates, in addition to the existing options.




3.7 MASB Approved Accounting Standards, MFRSs

In conjunction with the planned convergence of FRSs with International Financial Reporting Standards as issued by the International Accounting Standards Board on 1st January 2012, the MASB had on 19th November 2011 issued a new MASB approved accounting standards, MFRSs (“MFRSs Framework”) for application in the annual periods beginning on or after 1st January 2012.

The MFRSs Framework is mandatory for adoption by all Entities Other Than Private Entities for annual periods beginning on or after 1st January 2012, with the exception of entities subject to the application of MFRS 141 Agriculture and/or IC Int 15 Agreements for the Construction of Real Estate (“Transitioning Entities”). The Transitioning Entities are given an option to defer the adoption of MFRSs Framework and shall apply the MFRSs framework for annual periods beginning on or after 1st January 2018. Transitioning Entities also include those entities that consolidate or equity account or proportionately consolidate another entity that has chosen to continue to apply the FRSs framework for annual periods beginning on or after 1st January 2012.

Accordingly, the Group and the Company which are Transitioning Entities have chosen to defer the adoption of the MFRSs framework. As such, the Group and the Company will prepare their first MFRSs financial statements using the MFRSs framework for financial year ended 31st December 2018. The main effects arising from the transition to the MFRSs Framework are discussed below.

Application of MFRS 1: First-time Adoption of Malaysian Financial Reporting Standards (“MFRS 1”)

MFRS 1 requires comparative information to be restated as if the requirements of MFRSs have always been applied, except when MFRS 1 allows certain elective exemptions from such full retrospective application or prohibits retrospective application of some aspects of MFRSs.

The Group and the Company are currently assessing the impact of adoption of MFRS 1, including identification of the differences in existing accounting policies as compared to the new MFRSs and the use of optional exemptions as provided for in MFRS 1. As at the date of authorisation of issue of the financial statements, accounting policy decisions or elections have not been finalised. Thus, the impact of adoption of MFRS 1 cannot be determined and estimated reliably until the process is completed.




3.7 MASB Approved Accounting Standards, MFRSs (Continued)

MFRS 15 Revenue from Contracts with Customers

The core principle of MFRS 15 is that an entity recognises revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. An entity recognises revenue in accordance with the core principle by applying the following steps:-

(i) identify the contracts with a customer;(ii) identify the performance obligation in the contract;(iii) determine the transaction price;(iv) allocate the transaction price to the performance obligations in the contract; and(v) recognise revenue when (or as) the entity satisfies a performance obligation.

MFRS 15 also includes new disclosures that would result in an entity providing users of financial statements about the nature, amount, timing and uncertainty of revenue and cash flows from contracts with customers.

The Group is currently assessing the impact of the adoption of this standard.

MFRS 141 Agriculture

MFRS 141 requires a biological asset shall be measured on initial recognition and at the end of each reporting period at its fair value less costs to sell, except where the fair value cannot be measured reliably. MFRS 141 also requires agricultural produce harvested from an entity’s biological assets shall be measured at its fair value less costs to sell at the point of harvest. Gains or losses arising on initial recognition of a biological asset and the agricultural produce at fair value less costs to sell and from a change in fair value less costs to sell of a biological asset shall be included in the profit or loss for the period in which it arises.

The Group is currently assessing the impact of the adoption of this standard.

Amendments to MFRS 116 Property, Plant and Equipment and Amendments to MFRS 141 Agriculture

With the amendments, bearer plants would come under the scope of MFRS 116 and would be accounted for in the same way as property, plant and equipment. A bearer plant is defined as a living plant that is used in the production or supply of agricultural produce, is expected to bear produce for more than one period and has a remote likelihood of being sold as agricultural produce, except for incidental scrap sales.

Nevertheless, the produce growing on the bearer plant would remain within the scope of MFRS 141. This is because the growth of the produce directly increases the expected revenue from the sale of the produce. Moreover, fair value measurement of the growing produce provides useful information to users of financial statements about future cash flows that an entity will actually realise as the produce will ultimately be detached from the bearer plants and sold separately.



4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Unless otherwise stated, the following accounting policies have been used consistently in dealing with items which are considered material in relation to the financial statements.

4.1 Basis of consolidation

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

(a) Subsidiaries and business combination

Subsidiaries are entities over which the Group is exposed, or has rights, to variable returns from its involvement with the acquirees and has the ability to affect those returns through its power over the acquirees.

The financial statements of subsidiaries are included in the consolidated financial statements from the date the Group obtains control of the acquirees until the date the Group losses control of the acquirees.

The Group applies the acquisition method to account for business combinations from the acquisition date.

For a new acquisition, goodwill is initially measured at cost, being the excess of the following:-

• thefairvalueoftheconsiderationtransferred,calculatedasthesumoftheacquisition-datefairvalueofassetstransferred (including contingent consideration), the liabilities incurred to former owners of the acquiree and the equity instruments issued by the Group. Any amounts that relate to pre-existing relationships or other arrangements before or during the negotiations for the business combination, that are not part of the exchange for the acquiree, will be excluded from the business combination accounting and be accounted for separately; plus

• therecognisedamountofanynon-controllinginterestsintheacquireeeitheratfairvalueorattheproportionateshare of the acquiree’s identifiable net assets at the acquisition date (the choice of measurement basis is made on an acquisition-by-acquisition basis); plus

• ifthebusinesscombinationisachievedinstages,theacquisition-datefairvalueofthepreviouslyheldequityinterest in the acquiree; less

• thenetfairvalueoftheidentifiableassetsacquiredandtheliabilitiesassumedattheacquisitiondate.

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

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



4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

4.1 Basis of consolidation (Continued)

(a) Subsidiaries and business combination (Continued)

If the business combination is achieved in stages, the Group remeasures the previously held equity interest in the acquiree to its acquisition-date fair value, and recognises the resulting gain or loss, if any, in profit or loss. Amounts arising from interests in the acquiree prior to the acquisition date that have been previously been recognised in other comprehensive income are reclassified to profit or loss or transferred directly to retained earnings, on the same basis as could be required if the acquirer had disposed directly of the previously held equity interest.

If the initial accounting for a business combination is incomplete by the end of the reporting period in which the business combination occurs, the Group uses provisional fair value amounts for the items for which the accounting is incomplete. The provisional amounts are adjusted to reflect new information obtained about facts and circumstances that existed as of the acquisition date, including additional assets or liabilities identified in the measurement period. The measurement period for completion of the initial accounting ends as soon as the Group receives the information it was seeking about facts and circumstances or learns that more information is not obtainable, subject to the measurement period not exceeding one year from the acquisition date.

Upon the loss of control of subsidiary, the Group derecognises the assets and liabilities of the former subsidiary, any non-controlling interests and the other components of equity related to the former subsidiary from the consolidated statement of financial position. Any surplus or deficit arising on the loss of control is recognised in profit or loss. If the Group retains any interest in the former subsidiary, then such interest is measured at fair value at the date that control is lost. Subsequently, it is accounted for as an associate, joint venture, an available-for-sale financial asset or a held for trading financial asset.

Changes in the Group’s ownership interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions. The difference between the Group’s share of net assets before and after the change, and the fair value of the consideration received or paid, is recognised directly in equity.

(b) Non-controlling interests

Non-controlling interests represent the equity in subsidiaries not attributable, directly or indirectly, to owners of the Company and are presented separately in the consolidated statement of financial position within equity.

Losses attributable to the non-controlling interests are allocated to the non-controlling interests even if the losses exceed the non-controlling interests.

(c) Transactions eliminated on consolidation

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

Unrealised gains arising from transactions with equity-accounted associates and joint ventures are eliminated against the investment to the extent of the Group’s interest in the investee. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment.




4.2 Separate financial statements

In the Company’s statement of financial position, investments in subsidiaries and associates are measured at cost less any impairment losses, unless the investment is classified as held for sale or distribution. The cost of investment includes transaction costs. The policy for the recognition and measurement of impairment losses shall be applied on the same basis as could be required for impairment of non-financial assets as disclosed in Note 4.17(b) to the financial statements.

4.3 Foreign currency transactions

Translation of foreign currency transactions

Foreign currency transactions are translated to the respective functional currencies of the Group entities at the exchange rates prevailing at the dates of the transactions.

At the end of each reporting date, monetary items denominated in foreign currencies are retranslated at the exchange rates prevailing at the reporting date.

Non-monetary items denominated in foreign currencies that are carried at fair value are retranslated at the rates prevailing at the dates the fair values were determined. Non-monetary items denominated in foreign currencies that are measured at historical cost are translated at the historical rates as at the dates of the initial transactions.

Foreign exchange differences arising on settlement or retranslation of monetary items are recognised in profit or loss

except for monetary item that is designated as a hedging instrument in either a cash flow hedge or a hedge of the Group’s net investment of a foreign operation. When settlement of a monetary item receivable from or payable to a foreign operation is neither planned nor likely to occur in the foreseeable future, exchange differences are recognised in profit or loss in the separate financial statements of the parent company or the individual financial statements of the foreign operation. In the consolidated financial statements, the exchange differences are considered to form part of a net investment in a foreign operation and are recognised initially in other comprehensive income until its disposal, at which time, the cumulative amount is reclassified to profit or loss.

The gain or loss arising on translation of non-monetary items measured at fair value is treated in line with the recognition of the gain or loss on the change in fair value of the item (i.e. translation differences on items whose fair value gain or loss is recognised in other comprehensive income or profit or loss are also recognised in other comprehensive income or profit or loss, respectively).




4.4 Property, plant and equipment

(a) Recognition and measurement

Property, plant and equipment are measured at cost less accumulated depreciation and any accumulated impairment losses. The policy for the recognition of measurement of impairment losses is in accordance with Note 4.17(b) to the financial statements.

Cost of assets includes expenditures that are directly attributable to the acquisition of the asset and any other costs that are directly attributable to bringing the asset to working condition for its intended use, and the costs of dismantling and removing the items and restoring the site on which they are located. The cost of self-constructed assets also includes cost of materials, direct labour, and any other direct attributable costs but excludes internal profits. For qualifying assets, borrowing costs are capitalised in accordance with the accounting policy on borrowing costs in Note 4.10 to the financial statements.

Purchased software that is integral to the functionality of the related equipment is capitalised as part of that equipment.

When significant parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items of property, plant and equipment.

(b) Subsequent cost

The cost of replacing a part of an item of property, plant and equipment is included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that the future economic benefits associated with the part will flow to the Group or the Company and its cost can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to the profit or loss as incurred.

(c) Depreciation

Property, plant and equipment are depreciated on a straight line basis to write off the cost of each asset to its residual value over the estimated useful lives of the assets concerned. The annual rates used for this purpose are as follows:-

Leasehold land and building 2%Renovation 10%Plant and machinery 5% - 10%Office equipment, furniture and fittings and motor vehicles 10% - 20%

Capital work-in-progress will be depreciated when the property, plant and equipment are ready for their intended use.

The residual values and useful lives of property, plant and equipment are reviewed, and adjusted if appropriate, at each reporting date. The effects of any revisions of the residual values and useful lives are included in the profit or loss for the financial year in which the changes arise.

Fully depreciated assets are retained in the financial statements until the assets are no longer in use.




4.4 Property, plant and equipment (Continued)

(d) Derecognition

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

4.5 Leases

The determination of whether an arrangement is, or contains, a lease is based on the substance of the arrangement at the inception of the lease. The arrangement is, or contains, a lease if fulfilment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset or assets.

A lease is classified as a finance lease if it transfers substantially all the risks and rewards incidental to ownership. All other leases that do not meet this criterion are classified as operating leases.

For finance leases, the Group capitalises the leased asset and recognises the related liability. The amount recognised at the inception date is the fair value of the underlying leased asset or, if lower, the present value of the minimum lease payments. Subsequent to initial recognition, the asset is accounted for in accordance with the accounting policy applicable to that assets.

Minimum lease payments are apportioned between the finance charge and the reduction of the outstanding liability. The finance charge is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability. Contingent lease payments are charged as expenses in the periods in which they are incurred.

The capitalised leased asset is classified by nature as property, plant and equipment.

For operating leases, the Group does not capitalise the leased asset or recognise the related liability. Instead lease payments under an operating lease are recognised as an expense on the straight-line basis over the lease term unless another systematic basis is more representative of the time pattern of the user’s benefit.

4.6 Inventories

Inventories are measured at the lower of cost and net realisable value. Cost is determined on the weighted average basis.

Cost of manufactured goods and work-in-progress include cost of raw materials, direct labour and an appropriate proportion of fixed and variable production overheads.

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




4.7 Plantation development expenditure

Plantation development expenditure, include mature and immature oil palm plantations. Immature plantations are stated at acquisition cost which includes costs incurred for field preparation, planting, fertilising and maintenance, capitalisation of borrowing costs incurred on loans used to finance the developments of immature plantations and an allocation of other indirect costs based on planted hectares.

In general, oil palms are considered mature 30 to 36 months after field planting. Point-of-sale costs include all costs that would be necessary to sell the assets.

Upon maturity, all subsequent maintenance expenditure is charged to profit or loss and the capitalised pre-cropping cost is amortised on a straight line basis over 25 years, the expected useful life at the oil palm trees.

4.8 Timber concession rights

Timber concession rights are stated at cost less accumulated amortisation and impairment losses, if any. The accounting policy for the recognition and measurement of impairment losses is in accordance with Note 4.16(b) to the financial statements.

The timber concession rights are amortised on the basis of the volume of the logs extracted during the period under review as a proportion over the total volume of timber logs extractable over the remaining period from the timber concession areas.

4.9 Financial Instruments

Financial instruments are recognised in the statements of financial position when, and only when, the Group and the Company become a party to the contract provisions of the financial instruments.

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

(a) Subsequent measurement

The Group and the Company categorise the financial instruments as follows:-

(i) Financial assets

Financial assets at fair value through profit or loss

Financial assets are classified as financial assets at fair value through profit or loss when the financial assets are held for trading, including derivatives or are designated into this category upon initial recognition.

Subsequent to initial recognition, financial assets at fair value through profit or loss are measured at fair value with the gain or loss recognised in profit or loss.

Derivatives that are linked to and must be settled by delivery of unquoted equity instruments whose fair values cannot be reliably measured are measured at cost.




4.9 Financial Instruments (Continued)

(a) Subsequent measurement (Continued)

(i) Financial assets (Continued)

Loans and receivables

Financial assets with fixed or determinable payments that are not quoted in an active market are classified as loans and receivables.

Subsequent to initial recognition, loans and receivables are measured at amortised cost using the effective interest method less accumulated impairment losses, if any. The policy for the recognition and measurement of impairment losses is in accordance with Note 4.16(a) to the financial statements. Gains and losses are recognised in profit or loss through the amortisation process.

Held-to-maturity investments

Financial assets with fixed or determinable payments and fixed maturities are classified as held-to-maturity when the Group has the positive intention and ability to hold them to maturity.

Subsequent to initial recognition, held-to-maturity investments are measured at amortised cost using the effective interest method less accumulated impairment losses, if any. The policy for the recognition and measurement of impairment losses is in accordance with Note 4.16(a) to the financial statements. Gains and losses are recognised in profit or loss through the amortisation process.

Available-for-sale financial assets

Available-for-sale financial assets comprise investment in equity and debt securities that are designated as available-for-sale or are not classified in any of the three preceding categories.

Subsequent to initial recognition, available-for-sale financial assets are measured at fair value. Gains or losses from changes in fair value of the financial assets are recognised in other comprehensive income, except for impairment losses and foreign exchange gains and losses arising from monetary items and gains and losses of hedged items attributable to hedge risks of fair values hedges which are recognised in profit or loss. The cumulative gain or loss previously recognised in other comprehensive income is reclassified from equity to profit or loss as a reclassification adjustment when the financial asset is derecognised. Interest income calculated using the effective interest method is recognised in profit or loss. Dividends on an available-for-sale equity instrument are recognised in profit or loss when the Group’s and the Company’s right to receive the payment is established.





(a) Subsequent measurement (Continued)

(ii) Financial liabilities

Financial liabilities at fair value through profit or loss

Financial liabilities at fair value through profit or loss include financial liabilities held for trading, including derivatives or financial liabilities that are specifically designated into this category upon initial recognition.

Derivatives that are linked to and must be settled by delivery of equity instruments that do not have a quoted price in an active market for identical instruments whose fair values otherwise cannot be reliably measured are measured at cost.

Other financial liabilities

Subsequent to initial recognition, other financial liabilities are measured at amortised cost using the effective interest method. Gains and losses are recognised in profit or loss through the amortisation process.

(b) Financial guarantee contracts

A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due in accordance with the original or modified terms of a debt instrument.

Financial guarantee contracts are recognised initially as a liability at fair value, net of transaction costs that are directly attributable to the issuance of the guarantee. Subsequent to initial recognition, the liability is measured at the higher of the best estimate of the expenditure required to settle the present obligation at the reporting date and the amount initially recognised less cumulative amortisation.

(c) Derecognition

A financial asset or a part of it is derecognised when, and only when, the contractual rights to receive the cash flows from the financial asset expire or control of the asset is not retained or substantially all of the risks and rewards of ownership of the financial asset are transferred to another party. On derecognition of a financial asset, the difference between the carrying amount and the sum of the consideration received (including any new asset obtained less any new liability assumed) and any cumulative gain or loss that had been recognised in other comprehensive income is recognised in profit or loss.

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





(d) Offsetting of financial instruments

Financial assets and financial liabilities are offset and the net amount is presented in the statements of financial position if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously.

4.10 Borrowing costs

Borrowing costs are interests and other costs that the Group and the Company incur in connection with borrowing of funds.

Borrowing costs that are not directly attributable to the acquisition, construction or production of a qualifying asset are recognised in profit or loss using the effective interest method.

Borrowing costs that are 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.

The Group and the Company begin capitalising borrowing costs when the Group and the Company have incurred the expenditures for the asset, incurred related borrowing costs and undertaken activities that are necessary to prepare the asset for its 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.

4.11 Income tax

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

(a) Current tax

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

(b) Deferred tax

Deferred tax is provided using the liability method on temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts in the statements of financial position. Deferred tax liabilities are generally recognised for all taxable temporary differences. Deferred tax assets are generally recognised for all deductible temporary differences, unused tax losses and unused tax credits, to the extent that it is probable that future taxable profit will be available against which the deductible temporary differences, unused tax losses and unused tax credits can be utilised.




4.11 Income tax (Continued)

(b) Deferred tax (Continued)

Deferred tax is not recognised if the temporary difference arises from the initial recognition of assets and liabilities in a transaction that is not a business combination and that affects neither the taxable profit nor the accounting profit.

Deferred tax liabilities are recognised for taxable temporary differences associated with investments in subsidiaries and associates, except where the Group is able to control the timing of the reversal of the temporary differences and it is probable that the temporary differences will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated with such investments and interests are only recognised to the extent that it is probable that there will be sufficient taxable profits against which to utilise the benefits of the temporary differences and they are expected to reverse in the foreseeable future.

The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow the benefit of part or all of that deferred tax asset to be utilised. Unrecognised deferred tax assets are reassessed at each reporting date and are recognised to the extent that it has become probable that future taxable profit will allow the deferred tax assets to be utilised.

Deferred tax 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 and tax laws that have been enacted or substantively enacted at the reporting date.

Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss. Deferred tax items are recognised in correlation to the underlying transaction either in other comprehensive income or directly in equity.

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

4.12 Employee benefits

(a) Short-term employee benefits

Short-term employee benefit obligations in respect of wages, salaries, social security contributions, annual bonuses, paid annual leave, sick leave and non-monetary benefits are recognised as an expense in the financial year where the employees have rendered their services to the Group and the Company.

(b) Defined contribution plans

As required by law, the Group and the Company contribute to the Employees Provident Fund (“EPF”), the national defined contribution plan. Such contributions are recognised as an expense in the profit or loss in the period in which the employees render their services.




4.13 Share based payments

The Group operates its Employees’ Share Option Scheme (“ESOS”), an equity-settled, share-based compensation plan for employees of the Group which allows the Group’s employees to acquire ordinary shares of the Company. The fair value of the employee services received in exchange for the grant of the share options is recognised as an expense in the profit or loss over the vesting periods of the grant with a corresponding increase in the share options reserve within equity.

The total amount to be expensed over the vesting period is determined by reference to the fair value of the share options granted at the granting date, taking into account, if any, the market vesting conditions upon which the options were granted, excluding the impact of any non-market vesting conditions. Non-market vesting conditions are included in the assumptions about the number of share options that are expected to vest.

At each reporting date, the Group revises its estimates of the number of share options that are expected to vest. It recognises the impact of the revision of original estimates, if any, in the profit or loss, with a corresponding adjustment to equity over the remaining vesting period.

The equity amount is recognised in the share options reserve until the option is exercised, upon which it will be transferred to share premium, or until the option expires, upon which it will be transferred directly to retained earnings.

The proceeds received net of any directly attributable transaction costs are credited to share capital (nominal value) and share premium when the options are exercised.

4.14 Discontinued operations

A disposal group qualifies as discontinued operation if it is a component of an entity that either has been disposed of, or is classified as held for sale, and:-

• representsaseparatemajorlineofbusinessorgeographicalareaofoperations;• ispartof a singleco-ordinatedplan todisposeof a separatemajor lineofbusinessorgeographical areaof

operations; or• isasubsidiaryacquiredexclusivelywithaviewtoresale.

Classification as a discontinued operation occurs upon disposal or when the operation meets the criteria to be classified as held for sale. When an operation is classified as a discontinued operation, the comparative statements of profit or loss and other comprehensive income is re-presented as if the operation had been discontinued from the start of the comparative period.

4.15 Cash and cash equivalents

For the purpose of the statements of cash flows, cash and cash equivalents include cash in hand, bank balances, fixed deposits, demand deposit and short term, highly liquid investments, that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, net of bank overdrafts, deposits pledged to financial institutions and bankers’ acceptance.




4.16 Revenue and other income

The Group recognises revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits will flow to the entity and specific criteria have been met for each of the Group’s activities as described below. The amount of revenue is not considered to be reliably measurable until all contingencies relating to the sale have been resolved. The Group bases its estimates on historical results, taking into consideration the type of customer, the type of transaction and the specifics of each arrangement.

(a) Timber products

Revenue derived from harvesting and trading of raw timber products is recognised upon goods delivered and customer’s acceptance.

Revenue from manufacturing and trading of downstream timber products is measured at the fair value of the consideration receivable and is recognised in the profit or loss when the significant risks and rewards of ownership have been transferred to the buyers.

(b) Plantation products

Revenue derived from harvesting and trading of plantation products is recognised upon goods delivered and customer’s acceptance.

(c) Management fee

Management fee is recognised upon completion of services rendered in accordance with the terms of the agreement entered into.

(d) Interest income

Interest income is recognised on accrual basis.

Service charges and other related fees on financing facilities extended to customers are recognised on inception of such transactions.

(e) Rental income

Rental income is recognised on an accrual basis.




4.17 Impairment of assets

(a) Impairment and uncollectibility of financial assets

At each reporting date, all financial assets (except for financial assets categorised as fair value through profit or loss and investment in subsidiaries and associates) are assessed whether there is any objective evidence of impairment as a result of one or more events having an impact on the estimated future cash flows of the financial asset that can be reliably estimated. Losses expected as a result of future events, no matter how likely, are not recognised.

Evidence of impairment may include indications that the debtors or a group of debtors are experiencing significant financial difficulty, default or delinquency in interest or principal payments, the probability that they will enter bankruptcy or other financial reorganisation, and where observable data indicate that there is a measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate with defaults.

Loans and receivables and held-to-maturity investments

The Group and the Company first assess whether objective evidence of impairment exists individually for financial assets that are individually significant, and individually or collectively for financial assets that are not individually significant. If there is no objective evidence for impairment exists for an individually assessed financial asset, whether significant or not, the Group and the Company include the financial asset in a group of financial assets with similar credit risk characteristics and collectively assess them for impairment. Financial assets that are individually assessed for impairment for which an impairment loss is or continues to be recognised are not included in a collective assessment of impairment.

Available-for-sale financial assets

Available-for-sale financial assets comprise investment in equity and debt securities that are designated as available-for-sale or are not classified in any of the three preceding categories.

Subsequent to initial recognition, available-for-sale financial assets are measured at fair value. Gains or losses from changes in fair value of the financial assets are recognised in other comprehensive income, except for impairment losses and foreign exchange gains and losses arising from monetary items and gains and losses of hedged items attributable to hedge risks of fair values hedges which are recognised in profit or loss. The cumulative gain or loss previously recognised in other comprehensive income is reclassified from equity to profit or loss as a reclassification adjustment when the financial asset is derecognised. Interest income calculated using the effective interest method is recognised in profit or loss.

Dividends on an available-for-sale equity instrument are recognised in profit or loss when the Group’s and the Company’s right to receive payment is established.

Unquoted equity instruments carried at cost

In the case of unquoted equity instruments carried at cost, the amount of the impairment loss is measured as the difference between the carrying amount of financial asset and the present value of estimated future cash flows discounted at the current market rate of return for a similar financial asset. Such impairment shall not be reversed.




4.17 Impairment of assets (Continued)

(b) Impairment of non-financial assets

The carrying amounts of non-financial assets (except for inventories) are reviewed at the end of each reporting period to determine whether there is any indication of impairment. If any such indication exists, the Group and the Company make an estimate of the asset’s recoverable amount.

For the purpose of impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of non-financial assets or cash-generating units (“CGUs”).

The recoverable amount of an asset of CGU is the higher of its fair value less costs of disposal 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 or CGU. In determining the fair value less costs of disposal, recent market transactions are taken into account. If no such transactions can be identified, an appropriate valuation model is used.

Where the carrying amount of an asset exceed its recoverable amount, the carrying amount of asset is reduced to its recoverable amount. Impairment losses recognised in respect of a CGU or groups of CGUs are allocated first to reduce the carrying amount of any goodwill allocated to those units or groups of units and then, to reduce the carrying amount of the other assets in the unit or groups of units on a pro-rata basis.

Impairment losses are recognised in profit or loss.

An assessment is made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. An impairment loss is reversed only if there has been a change in the estimates used to determine the assets recoverable amount since the last impairment loss was recognised. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised previously. Such reversal is recognised in profit or loss.

4.18 Share capital

Ordinary shares are equity instruments. An equity instrument is a contract that evidences a residual interest in the assets of the Company after deducting all of its liabilities. Ordinary shares are recorded at the proceeds received, net of directly attributable incremental transaction costs. Dividends on ordinary shares are recognised in equity in the period in which they are declared.

4.19 Operating segment

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The Executive Officer of the Group, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the chief operating decision maker that makes strategic decisions.




4.20 Fair Value Measurements

Fair value of an asset or a liability, except for share-based payment and lease transactions, is determined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The measurement assumes that the transaction to sell the asset or transfer the liability takes place either in the principal market or in the absence of a principal market, in the most advantageous market.

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

When measuring the fair value of an asset or a liability, the Group and the Company use observable market data as far as possible. Fair value is categorised into different levels in a fair value hierarchy based on the input used in the valuation technique as follows:-

Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the Group can access at the measurement date.

Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.

Level 3: Unobservable inputs for the asset or liability.

The Group and the Company recognise transfers between levels of the fair value hierarchy as of the date of the event or change in circumstances that caused the transfers.

5. SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS

The preparation of the Group’s financial statements requires management to make judgement, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities and the disclosure of contingent liabilities at the reporting date. However, uncertainty about these assumptions and estimates could result in outcomes that could require a material adjustments to the carrying amount of the asset or liability affected in the future. The estimates and judgements are continually evaluated by the directors and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

(a) Useful lives of property, plant and equipment

The Group estimate the useful lives of property, plant and equipment based on period over which the assets are expected to be available for use. The estimated useful lives of property, plant and equipment are reviewed periodically and are updated if expectation differs from previous estimates due to physical wear and tear, technical or commercial obsolescence and legal or other limits on the use of the relevant assets. In addition, the estimation of useful lives of property, plant and equipment are based on internal technical evaluation and experience with similar assets. It is possible, however, that future results of operations could be materially affected by changes in the estimates brought about by changes in factors mentioned above. The amounts and timing of recorded expenses for any period would be affected by changes in these factors and circumstances. A reduction in estimated useful lives of the property, plant and equipment would increase the recorded expenses and decrease the non-current assets.



5. SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS (Continued)

(b) Impairment of investment in subsidiaries and recoverability of amount owing by subsidiaries

The Company tests investment in subsidiaries for impairment annually in accordance with its accounting policy. Reviews are performed regularly if events indicate that this is necessary. The assessment of the net tangible assets of the subsidiaries affects the result of the impairment test. Costs of investments in subsidiaries which have ceased operations were impaired up to the net assets of the subsidiaries. The impairment made on investment in subsidiaries entails an impairment to be made to the amount owing by these subsidiaries.

As disclosed in Note 9 to the financial statements, the recoverable amount of the investment in subsidiaries has not been reliably determined at this stage pending the formulation and implementation of a Regularisation Plan.

As disclosed in Note 11 to the financial statements, the recoverable amount of the amount owing by subsidiaries has not been reliably determined at this stage pending the formulation and implementation of a Regularisation Plan.

(c) Going concern

As disclosed in Note 2 to the financial statements, judgement is made by the directors whether the Group and the Company will be able to continue as a going concern. The financial statements of the Group and of the Company have been prepared on a going concern basis.

(d) Impairment of property, plant and equipment

The Group reviews the carrying amount of its property, plant and equipment, to determine whether there is an indication that those assets have suffered an impairment loss in accordance with relevant accounting policies. Independent professional valuations to determine the carrying amount of these assets will be procured when the need arise.

As disclosed in Note 6 to the financial statements, the recoverable amount of the property, plant and equipment has not been reliably determined by the Group and the Company at this stage pending the formulation and implementation of a Regularisation Plan.

(e) Impairment of plantation development expenditure

The Group assess the carrying amount of its plantation development expenditure at each reporting date whether there is an indication that an asset may be impaired. If such indication exists, or when an annual impairment assessment for an asset is required, the Group makes an estimate of the plantation development expenditure’s recoverable amount based on the fair value less cost to sell. In determining the fair value of the plantation development expenditure, the management takes into consideration of valuation carried out by professional valuer.

(f) Allowance for write down in inventories

Reviews are made periodically by management on damaged, obsolete and slow-moving inventories. These reviews require judgement and estimates. Changes in these estimates may result in revisions to the valuation of inventories.

As disclosed in Note 10 to the financial statements, the timber inventories amounted to RM27,910,000/- have been written down in view of the cessation of the timber operation by the subsidiaries as disclosed in Note 2 to the financial statements.



5. SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS (Continued)

(g) Impairment of receivables

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

Where there is objective evidence of impairment, the amount and timing of future cash flows are estimated based on historical loss experience for assets with similar credit risk characteristics. The carrying amount of the Group’s and the Company’s receivables at the reporting date is disclosed in Note 11 to the financial statements.

(h) Taxation

Significant judgement is required in determining the capital allowances and deductibility of certain expenses during the estimation of the provision for income taxes. There are many transactions and calculations for which the ultimate tax determination is uncertain during the course of business. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the income tax and deferred income tax provisions in the period in which such determination is made.

(i) Deferred tax assets

Deferred tax assets are recognised for all deductible temporary differences and unused tax credits to the extent that it is probable that taxable profit will be available against which the deductible temporary differences and unused tax credits 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.



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t 5

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1

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25,

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-

-

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30,

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61,

193

33,

175

4,6

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2,8

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-

1,3

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Dep

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5,80

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3,3

80

15,

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27,

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4,5

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-

210

-

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3,91

9

Net

Bo

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31

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201

5 2

7,42

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8

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6

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22,

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38,

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-

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-

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4

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-

-

-

-

-

(489

) -

At 3

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4 3

0,96

0 6

1,61

6 3

7,35

6 7

,028

3

,895

5

,800

1

,349

2

,308

1

50,3

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Rep

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1

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2 3

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6 7

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3

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5

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1

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7

4,01

4 Va

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25,

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50,

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-

-

-

-

-

-

76,

298

30,

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61,

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37,

356

7,0

28

3,8

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5,8

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1,3

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2,3

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5

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At 3

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June

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1

2,48

4 2

8,74

1 5

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3

,895

5

,800

1

88

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59,

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Net

Bo

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30

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2014

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49,

132

8,6

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34

-

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90,

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2

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2

4,32

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43,

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-

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-

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66,

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236

49,

132

8,6

15

1,3

34

-

-

1,1

61

2,3

08

90,

786



6. PROPERTY, PLANT AND EQUIPMENT (Continued)

Company31.12.2015

MotorVehiclesRM’000

Furniture,Fittings andEquipment

RM’000

Office Renovation

RM’000Total

RM’000

CostAt 1st July 2014 1,043 679 84 1,806 Additions - 6 6 12 Disposals (1,035) - - (1,035)

At 31st December 2015 8 685 90 783

Accumulated DepreciationAt 1st July 2014 613 405 21 1,039 Depreciation charge for the financial period 203 102 13 318 Disposals (810) - - (810)

At 31st December 2015 6 507 34 547

Net Book Value at 31st December 2015 2 178 56 236

30.6.2014

CostAt 1st July 2013 1,425 677 84 2,186 Additions - 2 - 2 Disposals (382) - - (382)

At 30th June 2014 1,043 679 84 1,806

Accumulated DepreciationAt 1st July 2013 621 337 13 971 Depreciation charge for the financial year 176 68 8 252 Disposals (184) - - (184)

At 30th June 2014 613 405 21 1,039

Net Book Value at 30th June 2014 430 274 63 767




The leasehold land and buildings are stated at valuation based on the valuation conducted by firms of professional valuers during the financial year ended 30th June 2012 using the open market value basis.

The following analyses the non-financial assets carried at fair value, by valuation method. The different levels have been defined as follows:-

Level 1 – quoted prices (unadjusted) in active markets for identical assets or liabilities.Level 2 – inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly

(that is, as prices) or indirectly (that is, derived from prices).Level 3 – inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs).

The fair value of the leasehold land and buildings of the Group are categorised as Level 2.

Had these assets been carried at historical cost less accumulated depreciation, the net book values of these assets that would have been included in the financial statements of the Group are as follows:-

Group 31.12.2015

RM’000 30.6.2014

RM’000

Leasehold land 2,610 2,648 Buildings 85,164 88,353

87,774 91,001 Included in property, plant and equipment of the Group are assets pledged to the licensed banks to secure credit facilities granted to its subsidiaries with net book values as follows:-

Group 31.12.2015

RM’000 30.6.2014

RM’000

Leasehold land 8,006 8,191 Buildings 41,201 44,805

49,207 52,996




Included in property, plant and equipment of the Group and of the Company are assets acquired under finance lease instalment plans with net book values as follows:-

Group Company31.12.2015 30.6.2014 31.12.2015 30.6.2014

RM’000 RM’000 RM’000 RM’000

Motor vehicles 157 1,261 - 428

In view of the cessation of the timber operation by the subsidiaries as disclosed in Note 2 to the financial statements, there are indications of impairment on the carrying amount of property, plant and equipment. However, the recoverable amount of the property, plant and equipment has not been reliably determined by the Group and the Company at this stage pending the formulation and implementation of a Regularisation Plan.

7. PLANTATION DEVELOPMENT EXPENDITURE

Group 31.12.2015

RM’000 30.6.2014

RM’000

At costAt 1st July/31st December/30th June 16,343 16,343

Less: Accumulated amortisation At 1st July 2,543 1,885 Amortisation 985 658

At 31st December/30th June 3,528 2,543

Carrying amount as at 31st December/30th June 12,815 13,800

The oil palm plantation of the Group is developed on a parcel of land measuring approximately 1,331 hectares situated in Mukim of Lubok Bungor, Jajahan of Jeli, State of Kelantan Darul Naim, Malaysia.



8. TIMBER CONCESSION RIGHTS

Group 31.12.2015 30.6.2014

RM’000 RM’000

At costAt 1st July/31st December/30th June - 76,000

Less: Accumulated amortisationAt 1st July/31st December/30th June - 55,322

Less: Accumulated impairment lossesAt 1st July - 7,480 Impairment during the financial year - 13,198 At 31st December/30th June - 20,678

- -

This represents the exclusive rights of the subsidiaries to extract, purchase and sell merchantable timber logs from designated areas situated at Sungai Pinangah Forest Reserve Sabah, Malaysia.

9. INVESTMENT IN SUBSIDIARIES

Company31.12.2015 30.6.2014

RM’000 RM’000

Unquoted shares, at cost 124,240 124,240 Less: Accumulated impairment losses (89,847) (89,847)

34,393 34,393



9. INVESTMENT IN SUBSIDIARIES (Continued)

The following information relates to the subsidiaries which are all incorporated in Malaysia:-

Effective Equity InterestName of the Companies 31.12.2015 30.6.2014 Principal Activities % %

Direct subsidiaries

Java Timber Sdn. Bhd. (1) 100 100 Manufacturing and marketing of sawn timber, moulded timber and other timber related products, providing wood treatment and kiln drying services, trading in timber logs and also as a timber contractor.

Java Industries Sdn. Bhd. (1) 100 100 Manufacturing and marketing of veneer, plywood and related products, trading in timber logs and as a timber contractor.

Java Woods Sdn. Bhd. (2) 100 100 Manufacturing and marketing of veneer related products.

Java Resources Sdn. Bhd. (3) 100 100 Provision of transportation and engineering services.

Java Trading Sdn. Bhd. (4) 100 100 Investment holding and general trading.

Key Heights Sdn. Bhd. (5) 100 100 Investment holding and property development.

Java Plantations Sdn. Bhd. (6) 100 100 Investment holding.

Indirect subsidiaries held through Key Heights Sdn. Bhd.

Pinawantai Sdn. Bhd. (2) 100 100 Trading in timber logs.

Kumpulan Kinabatangan Timber Sdn. Bhd. (4) 100 100 Timber contractor.

Bizkaya Sdn. Bhd. (6) 100 100 Trading in timber logs.

Wincohasil Sdn. Bhd. (6) 100 100 Timber contractor.

Indirect subsidiary held through Java Plantations Sdn. Bhd.

Ladang Bunga Tanjong Sdn. Bhd. (7) 80 80 Oil palm plantation.




The Group’s subsidiary which has non-controlling interest is not material individually or in aggregate to the financial position, financial performance and cash flows of the Group.

On 8th January 2016, Java Industries Sdn. Bhd., Java Woods Sdn. Bhd., Java Timber Sdn. Bhd. and Java Resources Sdn. Bhd. have ceased their timber operations.

Audit Modifications

(1) The auditors’ reports of these subsidiaries for the financial period ended 31st December 2015 contain disclaimer of opinion on those financial statements in view of the following:-- Going concern consideration;- Impairment review on property, plant and equipment;- Inventories written down;- Completeness of bank borrowings and other liabilities including contingent liabilities;- Impairment review on amount owing by fellow subsidiaries; and- Other matters.

(2) The auditors’ reports of these subsidiaries for the financial period ended 31st December 2015 contain disclaimer of opinion on those financial statements in view of the following:-- Going concern consideration;- Impairment review on property, plant and equipment;- Impairment review on amount owing by fellow subsidiaries; and- Other matters.

(3) The auditors’ report of this subsidiary for the financial period ended 31st December 2015 contains disclaimer of opinion on those financial statements in view of the following:-- Going concern consideration;- Impairment review on property, plant and equipment;- Inventories written down;- Impairment review on amount owing by fellow subsidiaries; and- Other matters.

(4) The auditors’ reports of these subsidiaries for the financial period ended 31st December 2015 contain disclaimer of opinion on those financial statements in view of the following:-- Going concern consideration; and- Other matters.

(5) The auditors’ report of this subsidiary for the financial period ended 31st December 2015 contains disclaimer of opinion on those financial statements in view of the following:-- Going concern consideration;- Impairment review on property, plant and equipment; and- Other matters.

(6) The auditors’ reports of these subsidiaries for the financial period ended 31st December 2015 contain disclaimer of opinion on those financial statements in view of the following:-- Going concern consideration;- Impairment review on amount owing by fellow subsidiaries; and- Other matters.




Audit Modifications (Continued)

(7) The auditors’ report of this subsidiary for the financial period ended 31st December 2015 contains disclaimer of opinion on those financial statements in view of the following:-- Going concern consideration;- Impairment review on property, plant and equipment; - Completeness of bank borrowings and other liabilities including contingent liabilities; and- Other matters.

In view of the cessation of the timber operations by the subsidiaries as disclosed in Note 2 to the financial statements and the adverse financial performance of the remaining subsidiaries, there are indications of impairment on the carrying amount of investment in subsidiaries. However, the recoverable amount of the investment in subsidiaries has not been reliably determined at this stage pending the formulation and implementation of a Regularisation Plan.

10. INVENTORIES

Group31.12.2015 30.6.2014

RM’000 RM’000

At lower of cost and net realisable value:Raw material and consumables 16 12,326 Work-in-progress - 10,860 Manufactured goods 10 7,932

26 31,118

(a) The cost of inventories of the Group recognised as an expenses in cost of sales during the financial period was RM12,172,000/- (30.6.2014: RM32,058,000/-).

(b) The cost of inventories of the Group recognised as an expense in cost of sales during the financial period in respect of the write down of inventories to net realisable value was RM27,910,000/- (30.6.2014: RM8,500,000/-).

The timber inventories amounting to RM27,910,000/- have been written down in view of the cessation of the timber operations by the subsidiaries as disclosed in Note 2 to the financial statements.



11. TRADE AND OTHER RECEIVABLES

Group Company31.12.2015 30.6.2014 31.12.2015 30.6.2014

RM’000 RM’000 RM’000 RM’000

Trade receivablesTrade receivables 1,010 4,728 - - Less: Accumulated impairment loss (533) (322) - - Trade receivables, net 477 4,406 - -

Other receivablesOther receivables 1,244 1,188 105 416 Amount owing by subsidiaries - - 123,149 127,382 Deposits 429 4,533 156 112

1,673 5,721 123,410 127,910 Less: Accumulated impairment loss- Other receivables (60) - (14) - - Amount owing by subsidiaries - - (1,394) (1,431)

(60) - (1,408) (1,431)Other receivables, net 1,613 5,721 122,002 126,479 Total trade and other receivables 2,090 10,127 122,002 126,479

The currency exposure profile of trade and other receivables are as follows:-

Group Company31.12.2015 30.06.2014 31.12.2015 30.06.2014

RM’000 RM’000 RM’000 RM’000

Ringgit Malaysia 2,090 9,994 122,002 126,479 US Dollar - 133 - -

2,090 10,127 122,002 126,479

(a) Trade Receivables

The Group’s and the Company’s normal trade credit terms are ranges from 7 to 90 days (30.6.2014: 7 to 90 days). Other credit terms are assessed and approved on a case-to-case basis.

In the previous financial year, included in trade receivables is an amount of RM1,049,000/- due from companies in which a director has interest. The amounts are unsecured, non-interest bearing and repayable on demand.



11. TRADE AND OTHER RECEIVABLES (Continued)

(a) Trade Receivables (Continued)

Ageing analysis on trade receivables

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

Group 31.12.2015 30.6.2014

RM’000 RM’000

Neither past due nor impaired 321 2,364 Past due but not impaired Past due 1 - 30 days 1 90 Past due 31 - 120 days - - Past due more than 120 days 155 1,952

156 2,042 Impaired 533 322

1,010 4,728

Receivables that are neither past due nor impaired

Trade receivables that are neither past due nor impaired are creditworthy debtors with good payment records with the Group. Significant number of receivables of the Group’s trade receivables arises from regular and existing customers of the Group and losses have incurred infrequently.

Receivables that are past due

The management has a credit policy in place to monitor and minimise the exposure of default. The Group trades only with recognised and credit worthy third parties. Trade receivables are monitored on an ongoing basis. As at the reporting date, there were no significant concentrations of credit risk in the Group and receivables that are past due but not impaired and are unsecured in nature.

Receivables that are impaired

The Group’s trade and other receivables that are impaired at the reporting date and the movement of the impairment used to record the impairment are as follows:-

Individually impaired31.12.2015 30.6.2014

RM’000 RM’000 GroupTrade and other receivables- nominal amounts 593 322 Less: Accumulated impairment loss (593) (322)

- -



11. TRADE AND OTHER RECEIVABLES (Continued)

(a) Trade Receivables (Continued)

Movements in impairment:-

Group 31.12.2015 30.6.2014

RM’000 RM’000

At 1st July 322 1,004 Charge for the financial period/year 333 - Written off (62) (682)

At 31st December/30th June 593 322

Receivables that are individually determined to be impaired at the reporting date relate to debtors that are in significant financial difficulties and have defaulted on payments. These receivables are not secured by any collateral or credit enhancements.

(b) Amount owing by subsidiaries

Amount owing by subsidiaries are unsecured, non-interest bearing and repayable on demand.

In view of the cessation of the timber operation by the subsidiaries as disclosed in Note 2 to the financial statements and the adverse financial performance of the remaining subsidiaries, there is objective evidence of impairment on the amount owing by subsidiaries. However, the recoverable amount of the amount owing by subsidiaries has not been reliably determined at this stage pending the formulation and implementation of a Regularisation Plan.

(c) Deposits

Included in deposits are rental and parking deposits of RM143,000/- (30.6.2014: RM130,000/-) paid to a Company in which a substantial shareholder has interest.

12. PREPAYMENTS

In the previous financial year, included in prepayments of the Group is an amount of RM4,017,000/- paid to log suppliers for logs to be received, of which RM2,576,000/- is paid to a company in which a director has interest.

13. SHORT TERM DEPOSITS WITH LICENSED BANKS

Included in fixed deposits placed with licensed banks of the Group are amounts of RM311,000/- (30.6.2014: RM232,000/-) pledged to licensed banks to secure credit facilities granted to certain subsidiaries.

The effective interest rate of fixed deposits at the reporting date was 3.05% (30.6.2014: 3.05%) per annum.



14. CASH AND BANK BALANCES

The currency exposure profile of cash and bank balances are as follows:-

Group Company 31.12.2015 30.6.2014 31.12.2015 30.6.2014

RM’000 RM’000 RM’000 RM’000

Ringgit Malaysia 106 595 33 131 US Dollar 7 49 - -

113 644 33 131

15. SHARE CAPITAL

Group and CompanyNumber of shares

of RM1/- each Amount31.12.2015 30.6.2014 31.12.2015 30.6.2014‘000 units ‘000 units RM’000 RM’000

Authorised:-Ordinary sharesAt the beginning/end of the financial period/year 500,000 500,000 500,000 500,000 Preference shares At the beginning/end of the financial period/year 100,000 100,000 100,000 100,000

600,000 600,000 600,000 600,000

Issued and fully paid:-Ordinary sharesAt the beginning of the financial period/year 173,394 173,394 173,394 173,394 Issuance of ordinary shares during the

financial period/year 2 - 2 -

At the end of the financial period/year 173,396 173,394 173,396 173,394

During the financial period, the Company increased its issued and fully paid share capital from RM173,393,639/- to RM173,396,089/- by issuance of 2,450 ordinary shares of RM1/- each via the exercise of 2,450 warrants.

The new shares rank pari-passu with the existing shares of the Company.

The Company did not issue any debentures during the financial period.



15. SHARE CAPITAL (Continued)

(a) 2004/2014 Warrants (“Warrants”)

The Warrants issued on 29th November 2004 are constituted under a Deed Poll dated 18th August 2004 executed by the Company. The Warrants are listed on the Bursa Malaysia Securities Berhad.

The outstanding Warrants during the financial year ended 31st December 2015 are stated as below:-

Number of WarrantsAt 1.7.2014 Exercised Expired At 31.12.2015

Warrants 24,467,846 (2,450) (24,465,396) -

The salient terms of the Warrants are as follows:-

(i) Each Warrant entitles the registered holder/(s) at any time during the exercise period to subscribe for one (1) new ordinary share of RM1/- each at an exercise price of RM1/- per ordinary share. The Warrants entitlement is subject to adjustments under the terms and conditions set out in the Deed Poll.

(ii) The exercise price for the Warrants is fixed at RM1/- per new ordinary share of the Company, subject to adjustments under certain circumstances in accordance with the provision of the Deed Poll.

(iii) The exercise period is ten (10) years from the date of issuance until the maturity date, i.e. the date preceding the tenth (10th) anniversary of the date of issuance. Upon the expiry of the exercise period, any unexercised rights will lapse and cease to be valid for any purposes.

(iv) The new ordinary shares of RM1/- each to be issued pursuant to the exercise of the Warrants will upon allotment and issue rank pari passu in all respects with the existing ordinary shares of the Company except that the new ordinary shares so allotted shall not be entitled to any dividends, rights, allotment and/or other distributions declared, made or paid to shareholders, the entitlement date for which is before the date of allotment of the said new ordinary shares.

The entire Warrants was expired on 28th November 2014.

(b) Employees’ Share Option Scheme (“ESOS”)

The ESOS is governed by the ESOS By-Laws approved by the shareholders at the Extraordinary General Meeting held on 30th July 2004.

The salient features of the ESOS are as follows:-

(i) The maximum number of new ordinary shares in the Company which may be made available under the share options (“Options”) granted pursuant to the ESOS shall not exceed ten percent (10%) (or such other higher percentage as may be permitted by the relevant regulatory authorities from time to time) of the issued and paid-up share capital of the Company at any point in time during the duration of the ESOS. The Company will, during the option period, keep available sufficient authorised and unissued ordinary shares to satisfy all outstanding Options which may be exercisable from time to time throughout the duration of the ESOS;




(b) Employees’ Share Option Scheme (“ESOS”) (Continued)

(ii) An Eligible Employee is any executive director or employee of the Company or its subsidiaries (“the Group”) who at the date of allocation:-

(a) has attained the age of eighteen (18) years; and(b) is a confirmed employee of the Group.

Provided that the ESOS Committee may, at its discretion, nominate any employee (including executive directors) of the Group to be an Eligible Person despite the eligibility criteria under the By-Laws 3.1 herein if not met, at any time and from time to time.

No Options will be offered to an Eligible Director of the Company unless the specific allotment of Options to that Eligible Director to participate in the ESOS shall have previously been approved by the shareholders of the Company in a general meeting;

(iii) The ESOS shall be in force for a period of five (5) years from the date of full compliance with the statutory requirements (“Commencement Date”) and is subject to an extension for a maximum period of up to five (5) years commencing from the day the date of expiration of the original five (5) years period. The directors had on 14th October 2011 extended the ESOS which expired on 15th October 2011 for another five (5) year until 15th October 2016;

(iv) The number of ESOS shares that may be offered and allotted to any one of the Eligible Person shall be at the discretion of the ESOS Committee and the Board of Directors after taking into consideration the performance, length of service and seniority of the Eligible Person and such other factors that the ESOS Committee and the Board of Directors may deem relevant, subject to the following:-

(a) the number of ESOS shares allocated, in aggregate, to Eligible Directors and senior management of the Group shall not exceed fifty percent (50%) of the total ESOS shares available under the ESOS; and

(b) the number of ESOS shares allocated to any individual Eligible Person who, either singly or collectively through person/(s) connected with them as defined in the Listing Requirements of Bursa Malaysia Securities Berhad (“Listing Requirements”), hold twenty percent (20%) or more in the total issued and paid-up share capital of the Company shall not exceed ten percent (10%) of the total ESOS shares available under the ESOS.

At the discretion of the ESOS Committee, an Eligible Person may be eligible for more than one (1) offer provided that the total aggregate number of shares to be offered to such Eligible Person shall not exceed the maximum allowable allotment as set out in the By-Laws;

(v) The subscription price shall be determined by the Board of Directors upon the recommendation of the ESOS Committee in accordance with the Listing Requirements based on the 5-day weighted average market price of the Company’s ordinary shares immediately prior to the date of offer with a discount of not more than 10% (or such higher discount as may be allowed under the Listing Requirements from time to time) if deemed appropriate, subject to the par value of the Company’s ordinary shares and subject to adjustments in accordance with the By-Laws;




(b) Employees’ Share Option Scheme (“ESOS”) (Continued)

(vi) The Options granted to an Eligible Person is exercisable only by the Eligible Person during his/her tenure of services whilst he/she is employed/appointed/retained for services by the Group and subject to any extension pursuant to the By-Laws. No Options shall be exercised after the expiry of the option period; and

(vii) The new ordinary shares to be allotted upon the exercise of an option shall, upon issue and allotment, rank pari passu in all respect with the existing issued and paid up shares of the Company for any dividends, rights, allotments and/or other distributions (including those arising on a liquidation of the Company or its subsidiary, as the case may be), if the date of allotment is on or before the entitlement date and subject to all the provisions of the Articles of Association of the Company.

The ESOS Committee comprising appointed members of the Board was set up on 29th August 2005 to administer the ESOS, who may from time to time offer Options to eligible employees and full-time Executive Directors of the Group and of the Company to subscribe for new ordinary shares in the Company.

The directors had on 14th October 2011 extended the ESOS which expired on 15th October 2011 for another five (5) years until 15th October 2016.

The movement in the options exercisable by the Eligible Persons during the financial year to take up unissued ordinary shares of RM1/- each at the exercise price of RM1/- per ordinary share are as stated below:-

Grant Date

Expiry Date

Exercise Balance BalancePrice At At

RM/Share 1.7.2014 Granted Lapsed Exercised 31.12.2015

16.10.2006 15.10.2016 1.00 573,000 - (141,200) - 431,800

There were no new options granted to the directors during the financial period.

16. REVALUATION RESERVE

Group31.12.2015 30.6.2014

RM’000 RM’000

At 1st July 41,103 41,669 Realisation of revaluation reserves (850) (566)

At 31st December/30th June 40,253 41,103

This represents surplus arising from revaluation of leasehold land and buildings.



17. SHARE OPTIONS RESERVE

Group and Company31.12.2015 30.6.2014

RM’000 RM’000

At 1st July 114 132 ESOS lapsed (28) (18)

At 31st December/30th June 86 114

The share options reserve comprises the cumulative value of employee services received for the issue of share options. When the option is exercised, the share options reserve is transferred to share premium. When the share option is expired, the amount from the share option reserve is transferred to retained earnings.

Fair value of Share Options

The fair value of the services received in return for the share options granted is based on the fair value of share options granted measured using a binomial model with the following inputs to the model used:-

Grant and valuation date

2007RM

Fair value at grant date on 16th October 2006 0.20Share price at valuation date on 16th October 2006 0.94Exercise price 1.00Risk – free rate of interest (based on Malaysian government bonds) (%) 1Expected volatility (%) 65Expected dividend yield (%) 1.5

Actual volatility in the future may differ from the expenses volatility, nonetheless the expenses volatility reflected the Group’s best estimate of future volatility over the remaining option period.



18. LOANS AND BORROWINGS

Group Company31.12.2015 30.6.2014 31.12.2015 30.6.2014

RM’000 RM’000 RM’000 RM’000

Current (secured)Finance leases obligation 179 378 13 130 Floating rate bank loans 31,350 1,003 - - Bankers’ acceptances - 28,707 - - Bank overdrafts 4,431 3,414 - -

35,960 33,502 13 130

Non-current (secured)Finance leases obligation 31 357 - 49 Floating rate bank loans 5,625 7,750 - -

5,656 8,107 - 49

Total loans and borrowings 41,616 41,609 13 179

(a) Finance lease obligation

Group Company31.12.2015 30.6.2014 31.12.2015 30.6.2014

RM’000 RM’000 RM’000 RM’000

Minimum lease payments- not later than one year 185 408 13 135 - later than one year and not later than

five years 31 366 - 51 216 774 13 186

Less: Amount representing finance charges (6) (39) - (7)

Present value of minimum lease payment 210 735 13 179

Represented by:-Current - not later than one year 179 378 13 130 Non-current- later than one year and not later than

five years 31 357 - 49 31 357 - 49

210 735 13 179

Obligations under finance lease

The effective interest rate is at 4.64% to 7.16% (30.6.2014: 4.64% to 7.16%) per annum. Interest rates are fixed at the inception of the finance lease arrangements.

The finance lease liabilities are effectively secured on the rights of the assets under finance lease.



18. LOANS AND BORROWINGS (Continued)

(b) Loans and borrowings (Continued)

Floating rate bank loan

The remaining maturities of the long term loans are as follows:-

Group31.12.2015 30.6.2014

RM’000 RM’000

On demand and within one year 31,350 1,003 Later than one year and not later than five years 5,625 5,875 Later than five years - 1,875

36,975 8,753

The long term loans bear interest rate ranges from 7.35% to 7.85% (30.6.2014: 7.10%) per annum and are repayable by fixed monthly instalments.

The secured long term loans due to a licensed bank are secured over the followings:-

(i) a debenture in the form and substance prescribed by the lender;

(ii) creation of a first fixed and floating charge over all the assets of the subsidiaries;

(iii) third party first legal charge on the oil palm plantation;

(iv) legal charge of 800,000 of RM1/- each ordinary shares of a subsidiary; and

(v) corporate guarantee by the Company.

The term loans and bank overdrafts of the Group are secured over the followings:-

(i) a fixed deposits of subsidiaries of RM311,000/- (30.6.2014: RM232,000/-);

(ii) legal charge of lands with an integrated timber complex;

(iii) first party second legal charge by the Company in favour of the Bank over the registered sublease interest by third party;

(iv) first and second debenture by way of fixed and floating charge over certain subsidiaries’ present and future assets; and

(v) corporate guarantee by the Company.

As disclosed in Note 33(A) to the financial statements, the Group defaulted on the repayment of certain borrowings during the financial period and subsequent to the financial period end, the Company received a letter from the bank that the management of the Bank has agreed to grant an indulgence of time to settle certain borrowings but subject to terms and conditions as mentioned in Note 33(A) to the financial statements. The Group is currently in the process of formulating the plan to meet the revised payment obligations and announcement will be made once the plan has been finalised.



19. TRADE AND OTHER PAYABLES

Group Company31.12.2015 30.6.2014 31.12.2015 30.6.2014

RM’000 RM’000 RM’000 RM’000

CurrentTrade payables

Trade payables 1,139 4,216 - - Other payables

Accrued operating expenses 1,730 2,222 - 959 Other payables 20,798 3,914 4,081 1,001 Refundable deposits 61 94 - - Amount owing to subsidiaries - - 32,587 35,031

22,589 6,230 36,668 36,991

23,728 10,446 36,668 36,991

Non-currentOther payable

Other payable - 15,113 - - Total trade and other payables 23,728 25,559 36,668 36,991 Add: Loans and borrowings (Note 18) 41,616 41,609 13 179

Total financial liabilities 65,344 67,168 36,681 37,170

(a) Trade payables

The normal trade credit term granted to the Group is 15 to 90 days (30.6.2014: 15 to 90 days).

In the previous financial year, included in trade payables is an amount of RM301,000/- payable to a Company in which a director has interest.

(b) Other payables

Included in other payables is an amount of RM446,000/- (30.6.2014: RM700,000/-) payable to a Company in which a director has interest which is non-trade in nature, unsecured, interest free and repayable on demand.

Included in other payable is an amount of RM14,914,000/- (30.6.2014: RM15,113,000/-) payable to a substantial shareholder, which is non-trade in nature, unsecured, interest free and repayable on demand.

(c) Amount owing to subsidiaries

The amount owing to subsidiaries is non-trade in nature, unsecured, interest free and is repayable on demand.



20. REVENUE

Group Company1.7.2014 1.7.2013 1.7.2014 1.7.2013

to to to to31.12.2015 30.6.2014 31.12.2015 30.6.2014

RM’000 RM’000 RM’000 RM’000

Timber products 16,886 38,731 - - Plantation products 2,009 1,483 - - Management fee - - 54 4,320

18,895 40,214 54 4,320

21. COST OF SALES

Cost of sales represents the costs of inventories sold, production costs, direct material, labour costs and related overheads.

22. FINANCE COSTS

Group Company1.7.2014 1.7.2013 1.7.2014 1.7.2013

to to to to31.12.2015 30.6.2014 31.12.2015 30.6.2014

RM’000 RM’000 RM’000 RM’000

Interest expenses- term loans (secured) 2,894 671 - - - bank overdraft and bankers’ acceptances 1,343 1,873 - - - finance lease and others 31 144 7 15

4,268 2,688 7 15



23. LOSS BEFORE TAXATION Loss before taxation has been arrived at:-

Group Company1.7.2014 1.7.2013 1.7.2014 1.7.2013

to to to to31.12.2015 30.6.2014 31.12.2015 30.6.2014

RM’000 RM’000 RM’000 RM’000

After charging:-Audit fee:-- current year 269 166 45 30 - prior years 10 27 14 10 Impairment loss on:-- trade receivables 273 - - - - other receivables 60 - 14 - - investment in subsidiaries companies - - - 61,239 - timber concession rights - 13,198 - - Amortisation of plantation development

expenditure 985 658 - - Depreciation of property, plant and equipment 7,621 5,700 318 252 Deposit written off 151 1,200 - - Directors’ remuneration:-- Executive

- fee 26 25 25 25 - salaries 771 717 558 372 - other emoluments 147 363 106 71

- Non-executive- fee 79 75 75 75 - other emoluments 243 162 243 162

Inventories written down 27,910 8,500 - - Prepayments expensed off 3,064 - - - Property, plant and equipment written-off 140 - - - Loss on foreign exchange- realised 3 - - - - unrealised - 24 - - Loss on disposal of property, plant

and equipment - 11 24 18 Staff costs:-- salaries, allowances and bonuses 6,135 6,374 1,694 1,664 - Employees’ Provident Fund 596 466 245 279 - SOCSO 33 42 11 8 - other staff related expenses 73 67 19 21 Rental of premises:-- land 92 74 - - - office 550 453 550 449 Rental:-- office equipment 9 5 9 5 - stumping 1 18 - -



23. LOSS BEFORE TAXATION (Continued)

Group Company1.7.2014 1.7.2013 1.7.2014 1.7.2013

to to to to31.12.2015 30.6.2014 31.12.2015 30.6.2014

RM’000 RM’000 RM’000 RM’000

And crediting:-Gain on disposal of property, plant and

equipment (1,421) - - - Short term deposits interest income (87) - (7) - Impairment loss on amount owing by subsidiaries

no longer required - - (37) - Gain on foreign exchange- realised (8) (41) - - Rental income (68) (77) - -

24. TAXATION

Group Company1.7.2014 1.7.2013 1.7.2014 1.7.2013

to to to to31.12.2015 30.6.2014 31.12.2015 30.6.2014

RM’000 RM’000 RM’000 RM’000

Income tax- prior years 13 24 - - Deferred taxation - - - -

13 24 - -

The income tax is calculated at the statutory tax rate of 25% (30.6.2014: 25%) of the estimated taxable profit for the financial year.

In the Budget Speech 2014, the Government announced that the domestic corporate tax rate would be reduced to 24% from the current year’s rate of 25% with effect from year of assessment 2016. The computation of deferred tax as at 31st December 2015 has reflected these changes.



24. TAXATION (Continued)

The reconciliation of income tax expense applicable to loss before taxation at the statutory tax rate to income tax expense at the effective income tax rate are as follows:-

Group Company1.7.2014 1.7.2013 1.7.2014 1.7.2013

to to to to31.12.2015 30.6.2014 31.12.2015 30.6.2014

RM’000 RM’000 RM’000 RM’000

Loss before taxation (54,631) (35,030) (4,550) (61,343)

Taxation at applicable tax rate of 25% (30.6.2014: 25%) 13,658 8,758 1,138 15,336

Tax effects arising from- non-taxable income 101 2,128 - - - non-deductible expenses (680) (3,838) (205) (15,428)- origination of deferred tax assets not recognised (12,556) (2,694) (896) 245 - overprovision in prior years 13 24 - - - deferred tax recognised at differrent tax rate (523) (4,354) (37) (153)

13 24 - -

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

Group Company1.7.2014 1.7.2013 1.7.2014 1.7.2013

to to to to31.12.2015 30.6.2014 31.12.2015 30.6.2014

RM’000 RM’000 RM’000 RM’000

Taxable temporary differences (467) (4,286) (523) (354)Unused tax losses 305,833 261,027 18,965 15,087 Unabsorbed capital allowances 157,710 154,018 476 451

463,076 410,759 18,918 15,184

Potential deferred tax assets not recognised at 24% (30.6.2014: 24%) 111,138 98,582 4,540 3,644



25. LOSS PER SHARE

(a) Basic

Basic loss per share is calculated by dividing the net loss for the financial period/year attributable to owners of the Company by the weighted average number of ordinary shares in issue during the financial period/year:-

Group 31.12.2015 30.6.2014

Net loss for the financial period/year attributable to to owners of the Company (RM’000) (53,970) (34,381)

Weighted average number of shares (‘000 unit) 173,396 173,394

Basic loss per ordinary share (sen) (31.13) (19.83)

(b) Diluted

The diluted earnings per ordinary shares equals to the basic earnings per share because the outstanding ESOS are anti-dilutive as the market value of the Company’s shares are lower than the exercise prices of ESOS.

26. PURCHASE OF PROPERTY, PLANT AND EQUIPMENT

During the financial period, the Group and the Company makes the following cash payments to purchase property, plant and equipment:-

Group Company31.12.2015 30.6.2014 31.12.2015 30.6.2014

RM’000 RM’000 RM’000 RM’000

Purchase of property, plant and equipment 699 1,972 12 2 Financed by finance lease arrangements - (116) - -

Cash payments on purchase of property, plant and equipment 699 1,856 12 2

27. CONTINGENT LIABILITY

Group31.12.2015 30.6.2014

RM’000 RM’000

Bank guarantee issued in favour of third parties as performances bond 5 2,403



28. SIGNIFICANT RELATED PARTY TRANSACTIONS

(a) Transactions with related parties

Group Company

1.7.2014 1.7.2013 1.7.2014 1.7.2013

to to to to

31.12.2015 30.6.2014 31.12.2015 30.6.2014

RM’000 RM’000 RM’000 RM’000

Management fees received/receivable from subsidiaries

- Java Timber Sdn. Bhd. - - - 2,190

- Java Woods Sdn. Bhd. - - - 30

- Java Industries Sdn. Bhd. - - - 1,680

- Java Resources Sdn. Bhd. - - - 384

- Ladang Bunga Tanjong Sdn. Bhd. - - 54 36

Purchases of raw materials from a Company which a director, Sy Choon Yen and a substantial shareholder, Dato’ Choo Keng Weng have interests

- Anika Desiran Sdn. Bhd. Management fees paid/payable to a Company in which

a substantial shareholder, Dato’ Choo Keng Weng has interests

11,425 23,638 - -

- SHC Technopalm Plantation Services Sdn. Bhd. 104 411 - -

Rental expenses paid to a Company in which a substantial shareholder, Dato’ Choo Keng Weng has interests

- Desa Samudra Sdn. Bhd. 598 490 598 490

6 years motor vehicles sold to a Company in which a substantial shareholder, Dato’ Choo Keng Weng has interest

- Desa Samudra Sdn. Bhd. 130 - 130 -

5 years motors vehicle and 20 years safety vehicle sold to a Company in which a substantial shareholder, Sy Choon Yen has interest

- SPR Energy (M) Sdn. Bhd. 437 - - -

5 years motor vehicle sold to a substantial shareholder

- Sy Choon Yen 155 - - -

5 years motor vehicle sold to a Non-Executive Director

- Dato’ Dr. Abu Talib Bin Bachik 49 - 49 -



28. SIGNIFICANT RELATED PARTY TRANSACTIONS (Continued)

(b) Key management compensation The remuneration of key management personnel, which includes the director’s remuneration, is disclosed as follows:-

Group Company1.7.2014 1.7.2013 1.7.2014 1.7.2013

to to to to31.12.2015 30.6.2014 31.12.2015 30.6.2014

RM’000 RM’000 RM’000 RM’000

Short term employees benefits 2,693 1,837 1,918 1,255 Defined contribution plans 614 405 431 301

3,307 2,242 2,349 1,556

29. OPERATING SEGMENTS

The Group has three reporting segments, as described below, which are the Group’s strategic business units. The strategic business units offer different products and services, and are managed separately because they require different technology and marketing strategies. The Group’s operating segments are classified according to the nature of activities as follows:-

Timber products : Harvesting and trading of raw timber products and manufacturing and trading of downstream timber products.Plantation : Oil palm plantation.Investment : Investment holding.



29. OPERATING SEGMENTS (Continued)

Segment revenues, expenses and results include transfers between segments. The prices charged on inter-segment transactions are the same as those charged for similar goods to parties outside the economic entity and are at arm’s length. These transfers are eliminated on consolidation.

GroupTimber

products Plantation Investment Elimination Total31.12.2015 RM’000 RM’000 RM’000 RM’000 RM’000

REVENUEExternal revenue 16,886 2,009 - - 18,895 Inter-segment revenue 5,931 - 45 (5,976) A -

Total revenue 22,817 2,009 45 (5,976) 18,895

RESULTSSegment results (43,583) (2,198) (4,544) (37) B (50,362)Finance costs (3,221) (1,041) (7) - (4,269)Loss before taxation (46,804) (3,239) (4,551) (37) (54,631)Taxation 13 - - - 13 Loss after taxation (46,791) (3,239) (4,551) (37) (54,618)Non-controlling interest - 648 - - 648

Loss attributable to owners of the Company (46,791) (2,591) (4,551) (37) (53,970)

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

Segment assets 69,440 29,037 38,422 (38,952) C 97,947

Total assets 69,448 29,037 38,422 (38,952) C 97,955

Segment liabilities 49,199 10,005 6,139 - 65,343

Total liabilities 49,290 10,005 6,144 - 65,439

OTHER INFORMATIONCapital expenditure 516 172 11 - D 699Depreciation and amortisation 6,377 1,910 319 - 8,606 Other non-cash expenses 31,598 - - - E 31,598




GroupTimber

products Plantation Investment Elimination Total30.06.2014 RM’000 RM’000 RM’000 RM’000 RM’000

REVENUEExternal revenue 38,730 1,484 - - 40,214 Inter-segment revenue 4,306 - 4,320 (8,626) A -

Total revenue 43,036 1,484 4,320 (8,626) 40,214

RESULTSSegment results (30,151) (2,286) (61,331) 61,426 B (32,342)Finance costs (1,835) (838) (15) - (2,688)Loss before taxation (31,986) (3,124) (61,346) 61,426 (35,030)Taxation 24 - - - 24 Loss after taxation (31,962) (3,124) (61,346) 61,426 (35,006)Non-controlling interest - 625 - - 625

Loss attributable to owners of the Company (31,962) (2,499) (61,346) 61,426 (34,381)

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

Segment assets 122,583 31,330 39,009 (38,952) C 153,970

Total assets 122,833 31,330 39,155 (38,952) C 154,366

Segment liabilities 51,246 11,737 4,185 - 67,168

Total liabilities 51,312 11,737 4,185 - 67,234

OTHER INFORMATIONCapital expenditure 1,541 428 3 - D 1,972Depreciation and amortisation 4,871 1,235 252 - 6,358 Other non-cash expenses 22,898 - - - E 22,898




Note: Nature of adjustments and eliminations to arrive at amounts reported in the consolidated financial statements

A Inter-segment revenue are eliminated on consolidation.

B The following items are added in/(deducted from) segment results to arrive at loss before taxation:-

1.7.2014 1.7.2013to to

31.12.2015 30.6.2014RM’000 RM’000

Impairment loss on investment in subsidiary - 61,426 Impairment loss on amount owing by subsidiary no longer required (37) -

(37) 61,426

C The following items are deducted from segment assets to arrive at total assets reported in the consolidated statement of financial position:-

31.12.2015 30.6.2014RM’000 RM’000

Investment in subsidiaries (38,952) (38,952)

D Additions of capital expenditure consist of:-

31.12.2015 30.6.2014RM’000 RM’000

Property, plant and equipment 699 1,972

E Other non-cash expenditure consist of:-

1.7.2014 1.7.2013to to

31.12.2015 30.6.2014RM’000 RM’000

Deposit written off 151 1,200 Impairment loss on trade receivables 273 - Impairment loss on other receivables 60 - Impairment on timber concession rights - 13,198 Inventories written down 27,910 8,500 Prepayments expensed off 3,064 - Property, plant and equipment written off 140 -

31,598 22,898




Geographical information

The following is an analysis of the Group’s external sales by location of customers, irrespective of the origin of the goods/services:-

1.7.2014 1.7.2013to to

31.12.2015 30.6.2014RM’000 RM’000

Revenue- Malaysia 18,895 33,652 - Taiwan - 6,562

18,895 40,214

In the previous financial year, revenue from one major customer of the Group amounted to RM4,048,000/- arising from sales by the timber product segment.

30. FINANCIAL INSTRUMENTS

(a) Fair value of financial instruments

The following are classes of financial instruments that are not carried at fair value and whose carrying amounts are a reasonable approximation of their fair value:-

NoteTrade and other receivables (current) 11Loans and borrowings 18Trade and other payables (current) 19Trade and other payables (non-current) 19

The carrying amounts of the current portion of loans and borrowings and other payables are reasonable approximations of fair values due to the insignificant impact of discounting.

The carrying amounts of trade and other receivables and trade and other payables are reasonable approximation of fair values due to the relatively short term nature of these financial instruments.

The fair value of loans and borrowings are estimated by discounting expected future cash flows at market incremental lending rate for similar types of loans and borrowings at the reporting date.



30. FINANCIAL INSTRUMENTS (Continued)

(a) Fair value of financial instruments (Continued)

Other than the fair value of other financial assets and liabilities together with the carrying amount shown in the statement of financial position are as follows:-

31.12.2015 30.6.2014Carrying CarryingAmount Fair Value Amount Fair ValueRM’000 RM’000 RM’000 RM’000

GroupFinance lease liabilities 210 218 735 757

CompanyFinance lease liabilities 13 15 179 189

(b) Classification of financial instruments

The following tables analyse the financial assets and liabilities in the statements of financial position by the class of financial instruments to which they are assigned, and therefore by the measurement basis:-

Loan and receivablesGroup Company

31.12.2015 30.6.2014 31.12.2015 30.6.2014RM’000 RM’000 RM’000 RM’000

Financial assetsTrade and other receivables 2,090 10,127 122,002 126,479 Short term deposits with licensed banks 561 292 250 59 Cash and bank balances 113 644 33 131

2,764 11,063 122,285 126,669

Finance liabilties at amortised costGroup Company

31.12.2015 30.6.2014 31.12.2015 30.6.2014RM’000 RM’000 RM’000 RM’000

Financial liabilitiesTrade and other payables (current) 23,728 10,446 36,668 36,991 Other payable (non-current) - 15,113 - - Borrowings 41,616 41,609 13 179

65,344 67,168 36,681 37,170



30. FINANCIAL INSTRUMENTS (Continued)

(c) Fair value hierarchy

The Group classifies fair value measurements using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. The fair value hierarchy has the following levels:-

• Level1 – quotedprices(unadjusted)inactivemarketsforidenticalassetsorliabilities.• Level2 – inputsotherthanquotedpricesincludedwithinLevel1thatareobservablefortheassetorliability,

either directly (i.e. as prices) or indirectly (i.e. derived from prices).• Level3 – inputsfortheassetorliabilitythatarenotbasedonobservablemarketdata(unobservableinputs).

The carrying amounts of these financial assets and liabilities are reasonable approximation of fair values, either due to their short-term nature or that they are floating rate instruments that are re-priced to market interest rates on or near the reporting date.

31. FINANCIAL RISK MANAGEMENT AND OBJECTIVES

The operations of the Group and of the Company are subject to a variety of financial risks, including credit risk, liquidity risk, interest rate risk and foreign currency risk. The Group and the Company have formulated a financial risk management framework whose principal objective is to minimise the Group’s and the Company’s exposure to risks and/or costs associated with the financing, investing and operating activities of the Group and of the Company.

(i) Credit Risk

Credit risk is the risk of loss that may arise on outstanding financial instruments should a counterparty default on its obligations. The Group’s and the Company’s exposure to credit risk arises primarily from trade and other receivables. For other financial assets (including investment securities, cash and bank balances and derivatives), the Group and the Company minimise credit risk by dealing exclusively with high credit rating counterparties.

The management has a credit policy in place to monitor and minimise the exposure of default. The Group and the Company trade only with recognised and credit worthy third parties. Trade receivables are monitored on an ongoing basis.

Financial assets that are neither past due nor impaired

Information regarding trade and other receivables that are neither past due nor impaired is disclosed in Note 11 to the financial statements. Deposits with banks that are neither past due nor impaired are placed with reputable financial institutions with no history of default.

Financial assets that are either past due or impaired

Information regarding financial assets that are past due or impaired is disclosed in Note 11 to the financial statements.

Financial guarantee contracts

The Company is exposed to credit risk in relation to financial guarantees given to banks in respect of loans granted to certain subsidiaries. As at the reporting date, there was default on the repayment on certain borrowings as disclosed in Note 33(A) to the financial statements.



31. FINANCIAL RISK MANAGEMENT AND OBJECTIVES (Continued)

(ii) Liquidity Risk

Liquidity risk is the risk that the Group or the Company will not be able to meet its financial obligations as they fall due. The Group’s exposure to liquidity risk arises principally from its various payables, loans and borrowings.

The Group and the Company maintain a level of cash and cash equivalents and bank facilities deemed adequate by the management to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when they fall due.

Maturity analysis

The table below summarises the maturity profile of the Group’s and the Company’s liabilities at the reporting date based on contractual undiscounted repayment obligations.

Contractual Contractual On demand Carrying interest cash or within One to Over fiveamount rate flow one year five years years

31.12.2015 RM’000 RM’000 RM’000 RM’000 RM’000

GroupFinancial liabilitiesTrade and other payables 23,728 - 23,728 23,728 - - Loans and borrowings:-- Finance leases obligation 210 4.64 - 7.16 216 185 31 - - Floating rate bank loans 36,975 7.35 - 7.85 37,019 31,361 5,658 - - Bank overdrafts 4,431 7.60 - 7.85 4,431 4,431 - -

65,344 65,394 59,705 5,689 -

CompanyFinancial liabilitiesTrade and other payables:- 36,668 - 36,668 36,668 - - Loans and borrowings- Finance leases obligation 13 4.64 - 5.57 13 13 - -

36,681 36,681 36,681 - -




(ii) Liquidity Risk (Continued)

Maturity analysis (Continued)

Contractual Contractual On demand Carrying interest cash or within One to Over fiveamount rate flow one year five years years

30.6.2014 RM’000 RM’000 RM’000 RM’000 RM’000

GroupFinancial liabilitiesTrade and other payables

(current) 10,446 - 10,446 10,446 - - Other payable

(non-current) 15,113 - 15,113 - 15,113 - Loans and borrowings:-- Finance leases obligation 735 4.64 - 7.16 774 408 366 - - Floating rate bank loans 8,753 7.10 10,904 1,611 7,326 1,967 - Bankers’ acceptances 28,707 4.14 - 5.83 28,707 28,707 - - - Bank overdrafts 3,414 7.60 - 7.85 3,414 3,414 - -

67,168 69,358 44,586 22,805 1,967

CompanyFinancial liabilitiesTrade and other payables 36,991 - 36,991 36,991 - - Loans and borrowings:-- Finance leases obligation 179 3.97 - 4.61 186 135 51 -

37,170 37,177 37,126 51 -

(iii) Interest Rate Risk

Interest rate risk is the risk that the fair value or future cash flows of the Group’s and the Company’s financial instruments will fluctuate because of changes in market interest rates.

The Group’s and the Company’s exposure to interest rate risk arises primarily from their loans and borrowings.

The Group and the Company manage the net exposure to interest rate risks by maintaining sufficient lines of credit to obtain acceptable lending costs and by monitoring the exposure to such risks on an ongoing basis. Management does not enter into interest rate hedging transactions since it considers that the cost of such instruments outweigh the potential risk of interest rate fluctuation.

The information on maturity dates and effective interest rate of financial assets and liabilities are disclosed in their respective notes.




(iii) Interest Rate Risk (Continued)

Sensitivity analysis for interest rate risk

Fair value sensitivity analysis for fixed rate instruments

The Group and the Company do not account for any fixed rate financial assets at fair value through profit or loss and equity. Therefore a change in interest rates at the reporting date would not affect profit or loss and equity.

Cash flow sensitivity analysis for variable rate instruments

A change of 100 basis points in interest rates at the reporting date would have increased/(decreased) equity and profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular foreign currency rates, remain constant.

Profit or Loss/Equity31.12.2015 30.6.2014

100bp 100bp 100bp 100bpIncrease Decrease Increase DecreaseRM’000 RM’000 RM’000 RM’000

GroupVariable rate instruments (414) 414 (409) 409

32. CAPITAL MANAGEMENT

The primary objective of the Group’s capital management is to ensure that it maintains a strong capital base and safeguard the Group’s ability to continue as a going concern, so as to maintain investor, creditor and market confidence and to sustain future development of the business. The directors monitor and determine to maintain an optimal debt-to-equity ratio that complies with debt covenants and regulatory requirements.

During the financial period of 2015, the Group’s strategy, which was unchanged from year 2014, was to maintain the debt-to-equity ratio at 31st December 2015 and 30th June 2014 was as follows:-

Group31.12.2015 30.6.2014

RM’000 RM’000

Total loans and borrowings 41,616 41,609

Equity attributable to owners of the Company 32,123 86,112

Debt-to-equity ratio 1.30 0.48

There were no changes in the Group’s approach to capital management during the financial period.

The Group is also required to comply with the disclosure and necessary capital requirements as prescribed in the Main Market Listing Requirements of Bursa Malaysia Securities Berhad.



33. SIGNIFICANT EVENTS DURING AND SUBSEQUENT TO THE FINANCIAL PERIOD

(A) On 14th December 2015, pursuant to Rule 9.19A of the of the Main Market Listing Requirements (“MMLR”) of Bursa Securities, the Company announced that the Company’s wholly owned subsidiaries, Java Industries Sdn. Bhd. (“JISB”) and Java Timber Sdn. Bhd. (“JTSB”), have defaulted in their repayment of the financial facilities to a bank (“the Bank”) with the amount owing of RM15,108,748/- and RM15,108,748/- as at 24th November 2015 respectively. Subsequent to a meeting held with the Bank on 30th November 2015, the Company has submitted vide its letter dated 4th December 2015 with a proposal for settlement of the outstanding sums.

The Company is the corporate guarantor to these financial facilities.

Subsequent to the financial period end, the Company received the letter from the Bank dated 15th February 2016 that the management of the Bank has agreed to grant the two subsidiaries an indulgence of time up to 1st July 2017 to settle the financial facilities but subject to the terms and conditions detailed below.

As at 31st December 2015, a summary of the indebtedness under the facilities granted to JISB and JTSB by the Bank is set out below:-

Borrower Banking Facility Amount Outstanding (RM)

JISB Overdraft Restructured Term Loan

1,247,321/-14,936,425/-

JTSB Overdraft Restructured Term Loan

1,246,940/-14,913,937/-

The above indebtedness together with any interest and/or charges accrued thereof at their respective prevailing rates and other miscellaneous costs and expenses as and when incurred in relation to the aforementioned facilities shall be part of the total indebtedness owing to the Bank (“the Indebtedness”) until full settlement thereof.

Further, as consideration for the time indulgence up to 1st July 2017 granted by the Bank to settle the Indebtedness:-

(1) The Group shall pay the Bank in the following manner:-

Due Date for Payment Amount

31st March 2016 RM5,000,000/-30th June 2016 RM12,800,000/-1st July 2017 RM14,550,000/-

(2) The Group shall pay interest on Restructured Term Loan account on quarterly basis in arrears on 31st March 2016 and 30th June 2016.

(3) Overdraft accounts to be maintained within limits i.e. no excess at any point of time.

(4) The Group shall pay in advance a sum of RM1,000,000/- to the Bank by 30th June 2016 as interest on Restructured Term Loan accounts for the period from 1st July 2016 to 1st July 2017.



33. SIGNIFICANT EVENTS DURING AND SUBSEQUENT TO THE FINANCIAL PERIOD (Continued)

(A) (Continued)

(5) The Bank reserves the rights to request for additional payment in the event the payments received in relation to these Facilities are insufficient to settle all sums due to the Bank and should there be any variations in the interest rate or any further transactions, the settlement sum will be adjusted accordingly.

(6) The Bank reserves the right to review, vary and/or impose/amend any of the terms and conditions when deemed fit.

The Group is currently in the process of formulating the plan to meet the above revised payment obligations and announcement will be made once the plan has been finalised.

(B) On 14th December 2015, the Company announced the intention to cease their respective timber operations of the subsidiaries of the Company, namely Java Industries Sdn. Bhd., Java Woods Sdn. Bhd., Java Timber Sdn. Bhd. and Java Resources Sdn. Bhd..

On 8th January 2016, the Company announced that it has completed the cessation of timber operations of the subsidiaries of the Company, namely Java Industries Sdn. Bhd., Java Woods Sdn. Bhd., Java Timber Sdn. Bhd. and Java Resources Sdn. Bhd. Pursuant to the said completion of cessation of timber operations, the Company has triggered Paragraph 8.03A(2) of the Main Market Listing Requirements (“MMLR”) of Bursa Securities whereby a listed issuer has suspended or ceased all of its business or its major business.

(C) Pursuant to the Listing Requirements (“LR”) of Bursa Securities in relation to Practice Note 17 (“PN17”), the Company had on 8th January 2016 announced that the Company is deemed to be a PN17 company as the shareholders’ equity of the Company is 25% or less of the issued and paid-up capital of the Company and such shareholders’ equity is less than RM40 million based on the Company’s unaudited management accounts.









33. SIGNIFICANT EVENTS DURING AND SUBSEQUENT TO THE FINANCIAL PERIOD (Continued)

(C) (Continued)












34. COMPARATIVE FIGURES

The Group and the Company changed their financial year end from 30th June to 31st December with effect from current financial period ended 31st December 2015.

Accordingly, the comparative figures of the preceding financial year covered a period of 12 months whilst the figures of the current financial period’s financial statements covered a period of 18 months from 1st July 2014 to 31st December 2015. Accordingly, the statements of comprehensive income, statements of changes in equity, statements of cash flows and their related notes are not in respect of comparable periods.

112 Annual Report 2015 | JAVA BERHAD 112Annual Report 2015 | JAVA BERHAD

On 25th March 2010, Bursa Malaysia Securities Berhad (“Bursa Malaysia”) issued a directive to all listed issuers pursuant to Paragraphs 2.06 and 2.23 of Bursa Malaysia Main Market Listing Requirements. The directive requires all listed issuers to disclose the breakdown of the retained profits or accumulated losses as at the end of the reporting period, into realised and unrealised profits and/or losses.

On 20th December 2010, Bursa Malaysia further issued guidance on the disclosure and the format required.

Pursuant to the directive, the amounts of realised and unrealised profits or losses included in the accumulated losses of the Group and the Company as at 31st December 2015 are as follows:-

Group Company31.12.2015 30.6.2014 31.12.2015 30.6.2014

RM’000 RM’000 RM’000 RM’000

The accumulated losses of the Group and of the Company

- Realised (183,183) (130,046) (54,761) (50,239) - Unrealised - (24) - -

(183,183) (130,070) (54,761) (50,239)

The determination of realised and unrealised profits or losses is based on Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, issued by the Malaysian Institute of Accountants on 20th December 2010.

The disclosure of realised and unrealised profits or losses above is solely for complying with the disclosure requirements stipulated in the directive of Bursa Malaysia and should not be applied for any other purposes.

SUPPLEMENTARY INFORMATION On tHe BReaKDOWn

Of Realised and UnRealised PROfits OR lOsses


We, HEDZIR BIN AMINUDIN and SY CHOON YEN being two of the directors of Java Berhad, do hereby state that in the opinion of the directors, the financial statements set out on pages 37 to 111 are properly drawn up so as to give a true and fair view of the state of affairs of the Group and of the Company as at 31st December 2015 and of the results and cash flows of the Group and of the Company for the financial period ended on that date in accordance with the Financial Reporting Standards and the requirement of the Companies Act, 1965 in Malaysia.

The supplementary information set out on page 112 has been compiled in accordance with the Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, issued by the Malaysian Institute of Accountants.

On behalf of the board,

HEDZIR BIN AMINUDIN SY CHOON YENDirector Director

Kuala Lumpur


STATEMENT BY DIReCtORS


STATUTORY

DeCLaRatIOn

I, AHMAD KHAMIS MAGRIBI ABDUL RAHMAN, being the officer primarily responsible for the financial management of Java Berhad, do solemnly and sincerely declare that to the best of my knowledge and belief, the accompanying financial statements set out on pages 37 to 111, and the supplementary information set out on page 112 are 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.

AHMAD KHAMIS MAGRIBI ABDUL RAHMAN

Subscribed and solemnly declared by the abovenamed at Kuala Lumpur in the Federal Territory on 18th February 2016.

Before me,

ZULKIFLA MOHD DAHLIMCommissioner for Oaths W541


Report on the financial statements

We were engaged to audit the financial statements of Java Berhad, which comprise the statements of financial position as at 31st December 2015 of the Group and of the Company, and the statements of comprehensive income, statements of changes in equity and statements of cash flows of the Group and of the Company for the financial period then ended, and a summary of significant accounting policies and other explanatory information, as set out on pages 37 to 111.

Directors’ responsibility for the financial statements

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

Auditors’ responsibility

Our responsibility is to express an opinion on these financial statements based on conducting the audit in accordance with approved standards on auditing in Malaysia. Because of the matters described in the Basis of Disclaimer of Opinion paragraphs, however, we were not able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion.

Basis for Disclaimer of Opinion

1. As disclosed in Note 2 to the financial statements, the financial statements of the Group and the Company have been prepared on the assumption that the Group and the Company will continue as going concerns. The application of the going concern basis is based on the assumption that the Group and the Company will be able to realise their assets and liquidate their liabilities in the normal course of business.

During the financial period, the Group and the Company incurred net losses of RM54,618,000/- and RM4,550,000/- and the Company recorded negative operating cash flows of RM1,721,000/-. As at 31st December 2015, the Group’s current liabilities exceeded its current assets by RM56,986,000/-. In addition, during the financial period, the Group has defaulted on the borrowings as disclosed in Note 33(A) to the financial statements. These conditions indicate the existence of material uncertainties which may cast significant doubt about the Group’s and the Company’s abilities to continue as going concerns.

As disclosed in Note 33(A) to the financial statements, on 14th December 2015, the Company announced the default in repayment of the financial facilities to a bank. Subsequent to the financial period end, the Company received the letter from the Bank dated 15th February 2016 that the management of the Bank has agreed to grant an indulgence of time up to 1st July 2017 to settle the financial facilities. The Group is currently in the process of formulating the plan to meet the revised payment obligations and announcement will be made once the plan has been finalised.

Subsequent to the financial period on 8th January 2016, the Company announced that it has completed the cessation of its timber operations of the subsidiaries of the Company, namely Java Industries Sdn. Bhd., Java Woods Sdn. Bhd., Java Timber Sdn. Bhd. and Java Resources Sdn. Bhd.. Pursuant to the said completion of cessation of timber operations, the Company had triggered Paragraph 8.03A(2) of the Main Market Listing Requirements (“MMLR”) of Bursa Securities whereby a listed issuer has suspended or ceased all of its business or its major business.

On 8th January 2016, the Company announced that it became an Affected Listed Issuer pursuant to Paragraph 2.1(a) of Practice Note No.17/2011 of the MMLR of Bursa Securities. As a result, the Company is required to submit a Regularisation Plan to the relevant authorities and to implement the Regularisation Plan within the stipulated timeframe.

INDEPENDENT AUDITORS’ REPORT tO tHe memBeRS OF JaVa BeRHaD

(InCORPORateD In maLaYSIa)


The ability of the Group and of the Company to continue as going concerns is dependent upon:-

(i) the timely and successful formulation and implementation of a Regularisation Plan;(ii) the continuing support from its lenders and the formulation and timely implementation of the plan to meet the revised

payment obligations;(iii) the Group and the Company achieving sustainable and viable operations; and (iv) the Group and the Company generating adequate cash flows from its operating activities.

In the event that these are not forthcoming, the Group and the Company may be unable to realise their assets and discharge their liabilities in the normal course of business. Accordingly, the financial statements may require adjustments relating to the recoverability and classification of recorded assets and liabilities that may be necessary should the Group and the Company be unable to continue as going concerns.

We were unable to obtain sufficient and appropriate audit evidence regarding the plans for the Group and the Company to achieve sustainable and viable operations and generating adequate cash flows from its operating activities. The timely and successful formulation and implementation of a Regularisation Plan, including obtaining continuous support from the lenders and the formulation and timely implementation of the plan to meet the revised payment obligations, remain uncertain at the date of this report.

2. As disclosed in Note 6 to the financial statements, the carrying amount of the property, plant and equipment of the Group and the Company amounted to RM82,343,000/- and RM236,000/- respectively. In view of the cessation of the timber operation by the subsidiaries as disclosed in Note 2 to the financial statements, there are indications of impairment on the carrying amount of property, plant and equipment. However, the recoverable amount of the property, plant and equipment has not been reliably determined by the Group and the Company at this stage pending the formulation and implementation of a Regularisation Plan.

We were unable to obtain sufficient and appropriate audit evidence on the carrying amount of the property, plant and equipment as at 31st December 2015 as the recoverable amount has not been reliably assessed by the Group and the Company in accordance with FRS 136: Impairment of Assets. Therefore, we could not determine the effect of adjustments, if any, on the financial position of the Group and the Company as at 31st December 2015 or on its financial performance for the period then ended.

3. As disclosed in Note 10 to the financial statements, the inventories of the Group amounted to RM26,000/- as at 31st December 2015. The timber inventories amounting to RM27,910,000/- have been written down in view of the cessation of the timber operation by the subsidiaries as disclosed in Note 2 to the financial statements.

We were unable to obtain sufficient and appropriate audit evidence on the write down of inventories as there was no assessment performed by the Group on the net realisable values of the inventories in accordance with FRS 102: Inventories. Therefore, we could not determine the effect of adjustments, if any, on the financial position of the Group and the Company as at 31st December 2015 or on its financial performance for the period then ended.

4. As disclosed in Note 18 to the financial statements, the borrowings of the Group amounted to RM41,616,000/- as at 31st December 2015. As disclosed in Note 33 (A) to the financial statements, the Group defaulted on the repayment of certain borrowings during the financial period and subsequent to the financial period end, the Company received a letter from the bank that the management of the Bank has agreed to grant an indulgence of time to settle certain borrowings but subject to terms and conditions as mentioned in Note 33 (A) to the financial statements. The Group is currently in the process of formulating the plan to meet the revised payment obligations and announcement will be made once the plan has been finalised.




As at the date of this report, the replies relating to the request for certain bank confirmations to confirm the bank borrowings of the Group as at 31 December 2015 were outstanding. We were unable to obtain sufficient and appropriate audit evidence on the completeness of the borrowings in respect of any other possible costs, the completeness of other liabilities, any contingent liabilities and financial guarantee liabilities recorded and unrecorded in the Group’s and the Company’s financial statements for the financial period ended 31st December 2015. Therefore, we could not determine the effect of adjustments, if any, on the financial position of the Group and the Company as at 31st December 2015 or on their financial performance for the period then ended.

5. As disclosed in Note 9 to the financial statements, the investment in subsidiaries of the Company as at 31st December 2015 amounted to RM34,393,000/-. In view of the cessation of the timber operations by the subsidiaries as disclosed in Note 2 to the financial statements and the adverse financial performance of the remaining subsidiaries, there are indications of impairment on the carrying amount of investment in subsidiaries. However, the recoverable amount of the investment in subsidiaries has not been reliably determined at this stage pending the formulation and implementation of a Regularisation Plan.

We were unable to obtain sufficient and appropriate audit evidence on the carrying amount of the investment in subsidiaries of the Company as at 31st December 2015 as the recoverable amounts have not been reliably assessed by the Company in accordance with FRS 136: Impairment of Assets. Therefore, we could not determine the effect of adjustments, if any, on the financial position of the Company as at 31st December 2015 or on its financial performance for the period then ended.

6. As disclosed in Note 11 to the financial statements, the amount owing by subsidiaries of the Company as at 31st December 2015 amounted to RM121,755,000/-. In view of the cessation of the timber operation by the subsidiaries as disclosed in Note 2 to the financial statements and the adverse financial performance of the remaining subsidiaries, there is objective evidence of impairment on the amount owing by subsidiaries. However, the recoverable amount of the amount owing by subsidiaries has not been reliably determined at this stage pending the formulation and implementation of a Regularisation Plan.

We were unable to obtain sufficient and appropriate audit evidence on the carrying amount of the amount owing by subsidiaries as at 31st December 2015 and the recoverability has not been reliably assessed by the Company to ensure the carrying amount are recorded in accordance with FRS 139: Financial Instruments: Recognition and Measurement. Therefore, we could not determine the effect of adjustments, if any, on the financial position of the Company as at 31st December 2015 or on its financial performance for the period then ended.

7. As disclosed in Note 2 to the financial statements, the Group ceased its timber operations of its subsidiaries and the formulation and implementation of a Regularisation Plan is pending at this stage.

We were unable to carry out certain procedures or to obtain information we considered necessary during our audit of the financial statements of the Group and the Company. Therefore, we could not determine the effect of adjustments, if any, on the financial position of the Group and the Company as at 31st December 2015 or on its financial performance and cash flows for the period then ended.

Disclaimer of Opinion

Because of the significance of the matters described in the Basis for Disclaimer of Opinion paragraphs, we have not been able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion. Accordingly, we do not express an opinion on the financial statements.




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) Because of the significance of the matters described in the Basis for Disclaimer of Opinion paragraphs, we are unable to report whether the accounting and other records required by the Companies Act, 1965 in Malaysia 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 Companies Act, 1965 in Malaysia. However, in our opinion, the registers required by the Companies Act, 1965 in Malaysia 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 Companies Act, 1965 in Malaysia.

(b) Because of the significance of the matters described in the Basis for Disclaimer of Opinion paragraphs, we are unable to report whether we are satisfied that the financial statements of the subsidiaries that have been consolidated with the Company’s financial statements are in a form and content appropriate and proper for the purposes of the preparation of the financial statements of the Group and whether we have received satisfactory information and explanations required by us for those purposes.

(c) As disclosed in Note 9 to the financial statements, the auditors’ reports on the financial statements of the subsidiaries contain modified opinions.

Other Reporting Responsibilities

The supplementary information set out on page 112 is disclosed to meet the requirement of Bursa Malaysia Securities Berhad and is not part of the financial statements. The directors are responsible for the preparation of the supplementary information in accordance with the Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants (“MIA Guidance”) and the directive of Bursa Malaysia Securities Berhad.

Because of the significance of the matters described in the Basis for Disclaimer of Opinion paragraphs, we are unable to report as to whether the supplementary information is prepared, in all material aspects, in accordance with the MIA Guidance and the directive of Bursa Malaysia Securities Berhad.

Other Matters

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

Baker Tilly Monteiro Heng Dato’ Lock Peng KuanNo. AF 0117 No. 2819/10/16 (J)Chartered Accountants Chartered Accountant

Kuala Lumpur





Utilisation of Proceeds

There were no corporate proposals conducted in the financial year under review.

Share Buy-Backs

The Company did not enter into any share buy-back transactions during the financial year.

Employees’ Share Options Scheme (“ESOS”)

The Company granted options under the ESOS on 16 October 2006 to eligible Directors and employees of the Group to subscribe in accordance with the ESOS Bye-laws. The ESOS was subsequently extended for an additional five (5) years from 15 October 2011 and will expire on 15 October 2016. There were no ESOS granted or exercised during the financial year and details of the ESOS outstanding since commencement of the ESOS on 16 October 2006 are as follows:-

No. of ESOS Granted No. of ESOS ExerciseNo. of ESOS Lapsed/

Forfeited No. of ESOS outstanding

11,911,000 8,002,400 3,476,800 431,800

American Depository Receipt (“ADR”) or Global Depository Receipt (“GDR”)

The Company did not sponsor any ADR or GDR during the financial year.

Sanctions and/or Penalties

There were no material sanctions and/or penalties imposed on the Company and its subsidiaries, Directors or Management by the relevant authorities during the financial year.

Non-Audit Fees

During the financial period ended 31 December 2015, the total non-audit fees payable to companies affiliated to the external auditors’ firm for services rendered to the Company’s subsidiaries were RM 22,610/-.

Variation in Results

There were no variances of 10% or more between the results for the financial year and the unaudited results. The Company did not make any release on the profit estimate, forecast or projection for the financial year.

Profit Guarantee

The Company did not grant any profit guarantee during the financial year.

Material Contracts Involving Directors and Major Shareholders

There were no material contracts outside the ordinary course of business entered into by the Company and its subsidiaries involving directors’ or major shareholders’ interest which are still subsisting as at 31 December 2015 or which have been entered into subsequent to the end of the previous financial year.

ADDITIONALCOmPLIanCe DISCLOSUReS


At the Annual General Meeting held on 10 October 2014, the Company obtained its shareholders’ mandate to allow the Group to enter into recurrent related party transactions (“RRPTs”) of a revenue or trading nature.

In accordance with the Listing Requirements of the Bursa Malaysia Securities Berhad, the details of RRPTs conducted during the financial period ended 31 December 2015 pursuant to the shareholders’ mandate are as follows:-

No

Company in the Java Berhad (“JAVA”) Group Involved in the Transaction

Transacting Party

Nature of Transaction

Interested Related Party

Incurred from10 October 2014to 31 December

2015 (RM’000)

2014Mandate(RM’000)

1 Java Industries Sdn. Bhd. (“JISB”)

Ratus Awansari Sdn Bhd(“RASB”)

Purchase of round logs by JISB from RASB

Dato’ Choo Keng Weng (“DCKW”) Sy Choon Yen (“SCY”)

NIL 22,400

2 Java Timber Sdn. Bhd. (“JTSB”)

RASB Purchase of round logs by JTSB from RASB

DCKWSCY

NIL 9,600

3 JTSB Anika DesiranSdn Bhd(“ADSB”)

Purchase of round logs by JTSB from ADSB

DCKWSCY

1,268 32,000

4 JISB ADSB Purchase of round logs by JISB from ADSB

DCKWSCY

2,662 48,000

5 Ladang Bunga Tanjong Sdn Bhd (“LBTSB”)

SHC Technopalm Plantation Services Sdn Bhd (“STPSSB”)

Provision of technical, professional, development, management and consulting expertise and/ or other related services by STPSSB to LBTSB

DCKWSCY

24 450

RELATED PARTYtRanSaCtIOnS


No Location DescriptionArea

(Acres)Tenure

(Year Expiring)Age of

Building

Net BookValue as at

31 December2015

(RM’000)

1 Kampung Biah, 5th Mile, Jalan Nabawan, Keningau, Sabah

CL 135345112 Land with office and factory buildings

9.88 Leasehold(2049)

Between19 – 26 years

17,697


NT 133062763 Land with store and workers’ quarters

10.75 Sublease(2090)


2,754


NT 133074281 Land with workers’ quarters

9.90 Sublease(2090)


7,924


NT 133055142 Land with factory buildings

10.35 Sublease(2091)

22 years 9,621


NT 133058367 Land with factory buildings

6.65 Sublease(2092)

22 years 6,297


FR 134015080 Land with factory buildings

7.55 Sublease(2092)


3,608


NT 133058376 Land with office and factory buildings

9.58 Sublease(2091)


3,768

8 Kampung Murut, Kalabakan, Tawau, Sabah

CL 105479178 Land with office building

18.83 Leasehold(2089)

11 years 687

9 Mukim of Lubok Bongor, Daerah Jajahan Jeli, Negeri Kelantan

HS (D) 2/93 PT 3023 Oil Palm plantation

3,299.49 Leasehold(2069)


15,531

10 Miles 4, Apas Road Tawau, Sabah

CL1052449291 Land 1.925 Leasehold(2916)

- 5,256

GRAND TOTAL 73,143

LIST OF PROPeRtIeS HeLD

as at 31 decembeR 2015


Authorised Share Capital : RM600,000,000 divided into 500,000,000 Ordinary Shares of RM1.00 each and 100,000,000 Irredeemable Cumulative Convertible Preference Shares of RM1.00 eachIssued and paid-up Share Capital : RM173,396,089 ordinary shares of RM1.00 eachVoting Rights : 1 Vote per ordinary share

Size of Shareholdings No. of Holders % No. of Shares %

1 – 99 32,228 92.40 228,262 0.13

100 – 1,000 1,505 4.32 468,607 0.27

1,001 – 10,000 642 1.84 3,054,421 1.76

10,001 – 100,000 393 1.13 13,374,381 7.71

100,001 – 8,669,803 106 0.30 65,777,443 37.93

8,669,804 and above 3 0.01 90,492,975 52.20

34,877 100.00 173,396,089 100.00

Substantial Shareholders (based on the Register of Substantial Shareholders)

Direct Indirect

Name of Substantial Shareholder No. of Shares % No. of Shares %

Amalan Menang Sdn Bhd 40,912,449 23.60 - -

Dato’ Choo Keng Weng 28,925,277 16.68 - -

Samudera Sentosa Sdn Bhd 22,055,249 12.72 - -

Sy Choon Yen 1,400,000 0.81 41,912,449(1) 24.17

1 Deemed interest in shares held by Amalan Menang Sdn Bhd by virtue of Section 6A of Companies Act, 1965 and shares held by his spouse, Looh Yen Loo by virtue of Section 134 (12)(c) of Companies Act, 1965.

Thirty Largest Shareholders

No Name No. of Shares Held %

1 Sabah Development Nominees (Tempatan) Sdn BhdPledged Securities Account for Amalan Menang Sdn Bhd

40,912,449 23.59

2 Choo Keng Weng 27,525,277 15.87

3 Sabah Development Nominees (Tempatan) Sdn BhdPledged Securities Account for Samudera Sentosa Sdn Bhd

22,055,249 12.72

4 Affin Hwang Nominees (Tempatan) Sdn BhdPledged Securities Account for Tee Tiam Lee (M09)

6,365,900 3.67

5 Affin Hwang Nominees (Tempatan) Sdn BhdPledged Securities Account for Rashidi Aly Bin Abdul Rais (M09)

5,305,200 3.06

6 RHB Nominees (Tempatan) Sdn BhdPledged Securities Account for J.V. Avenue Sdn Bhd

4,514,391 2.60

7 Ong Sok Hean 3,680,000 2.12

8 Looh Keo @ Looh Lim Teng 2,255,200 1.30

9 Affin Hwang Nominees (Tempatan) Sdn BhdPledged Securities Account for Esa Bin Mohamed

2,144,100 1.24

10 Tee Chee Boon 2,026,000 1.17

11 HSBC Nominees (Asing) Sdn BhdExempt An for Credit Suisse (SG BR-TST-Asing)

1,683,067 0.97

12 Niaga Serimas Sdn Bhd 1,585,021 0.91

13 Havys Development Sdn Bhd 1,453,600 0.84

14 Maybank Nominees (Tempatan) Sdn BhdMaybank Private Wealth Management for Sy Choon Yen (PW-M00099) (749560)

1,400,000 0.81

ANALYSIS OFSHaReHOLDInGS

as at 8 aPRil 2016


Thirty Largest Shareholders (Continued)

No Name No. of Shares Held %

15 TA Nominees (Tempatan) Sdn BhdPledged Securities Account for Choo Keng Weng

1,400,000 0.81

16 TASec Nominees (Tempatan) Sdn BhdTA First Credit Sdn Bhd for Looh Chai Boon

1,400,000 0.81

17 Teo Kwee Hock 1,210,200 0.70

18 Sy Ban Lee 1,151,000 0.66

19 Langkaran Asia Sdn Bhd 1,000,000 0.58

20 Looh Yen Loo 1,000,000 0.58

21 Ling Chu Nyo @ Ding Chuo Ngo 977,700 0.56

22 Malaysian Trustees BerhadExempted-Trust Account for Aokam Perdana Berhad Scheme

964,735 0.56

23 How Lin Chew @ How Lim Chew 938,000 0.54

24 Lim Seng Chee 873,000 0.50

25 Kenanga Nominees (Tempatan) Sdn BhdPledged Securities Account for Mohd Salleh Bin Yeop Abd Rahman

872,500 0.50

26 Chu Siew Fei 825,600 0.48

27 Yeo Tai In @ Yong Tye Eng 800,000 0.46

28 Tan Boon Hoo 650,600 0.38

29 Lim Chin Lee 625,200 0.36

30 Tan Kok Peng 617,000 0.36

Total 138,210,989 79.71

Directors’ Interest in Shares (based on the Register of Directors’ Shareholdings)

Directors

Direct Indirect

No. of Shares % No. of Shares %

Dato’ Dr. Abu Talib Bin Bachik - - - -

Sy Choon Yen 1,400,000 0.81 41,912,449(1) 24.17

YBM Tunku Mahmood Bin Tunku Mohammed D.K. PSI

- - - -

Hedzir Bin Aminudin - - - -

1 Deemed interest in shares held by Amalan Menang Sdn Bhd by virtue of Section 6A of Companies Act, 1965 and shares held by his spouse, Looh Yen Loo by virtue of Section 134 (12)(c) of Companies Act, 1965.

By virtue of his interest in shares in the Company, Sy Choon Yen is deemed to have interests in the subsidiaries to the extent of the Company has an interest.

Dato’ Dr. Abu Talib Bin Bachik, YBM Tunku Mahmood Bin Tunku Mohammed D.K. PSI and Hedzir Bin Aminudin did not have any interest in shares of the Company or its related corporations during the financial year.

None of the Directors held or have been granted any options in the Company during the financial year.

ANALYSIS OFSHaReHOLDInGS

as at 8 aPRil 2016


AGENDA

ORDINARY BUSINESS

1. To receive the Audited Financial Statements for the financial period ended 31 December 2015 together with the Reports of the Directors and the Auditors thereon.

2. To re-elect Dato’ Dr. Abu Talib Bin Bachik, a Director who retires by rotation in accordance with Article 81 of the Company’s Articles of Association.

3. To re-elect Encik Hedzir Bin Aminudin, who retires in accordance with Article 88 of the Articles of Association of the Company.

4. To approve the payment of Directors’ fees amounting to RM100,000 for the financial period ended 31 December 2015.

5. To re-appoint Messrs. Baker Tilly Monteiro Heng as Auditors of the Company until the conclusion of the next Annual General Meeting and to authorise the Directors to fix their remuneration.

SPECIAL BUSINESS To consider and, if thought fit, to pass the following Ordinary Resolutions:-

6. Re-Appointment of Director pursuant to Section 129 of the Companies Act, 1965

“THAT YBM Tunku Mahmood Bin Tunku Mohammed D.K. PSI who is of the age of seventy years and retiring in accordance with Section 129(2) of the Companies Act, 1965 be and is hereby reappointed as a Director of the Company and to hold office until the conclusion of the next Annual General Meeting of the Company.”

7. Proposed Retention of Independent Non-Executive Director

“THAT approval be and is hereby given to YBM Tunku Mahmood Bin Tunku Mohammed D.K. PSI who has served as an Independent Non-Executive Director of the Company for a cumulative term of more than nine (9) years, to continue to act as an Independent Non-Executive Director of the Company in accordance with the Malaysian Code on Corporate Governance 2012.”

NOTICE IS HEREBY GIVEN that the Sixty-First (61st) Annual General Meeting of JAVA BERHAD will be held at Advena Room, 3rd Floor, Grandis Hotels and Resorts, Suria Sabah Shopping Mall, 1A, Jalan Tun Fuad Stephens, 88000 Kota Kinabalu, Sabah on Friday, 3 June 2016 at 11:00 a.m. for the following purposes:-

(Ordinary Resolution 1)






NOTICE OFannUaL GeneRaL meetInG


8. Authority to Allot Shares Pursuant to Section 132D of the Companies Act, 1965

“THAT pursuant to Section 132D of the Companies Act, 1965, the Directors be and are hereby empowered to allot and to issue shares in the share capital of the Company at any time until the conclusion of the next Annual General Meeting and upon such terms and conditions and for such purposes as the Directors may, in their absolute discretion, deem fit provided that the aggregate number of shares to be issued does not exceed 10% of the issued share capital of the Company for the time being.

AND THAT the Directors be and are also empowered to obtain the approval for the listing of and quotation for the additional shares so issued on the Bursa Malaysia Securities Berhad and THAT such authority shall continue in force until the conclusion of the next Annual General Meeting of the Company.”

9. Proposed Amendments to the Articles of Association of the Company

“THAT the amendments to the existing Articles of Association of the Company as proposed and set forth in Appendix I of the Annual Report be and are hereby approved.”

10. To transact any other business of which due notice shall have been given.

By order of the Board

LIM SIEW TING(MAICSA 7029466)Company Secretary

Kuala Lumpur29 April 2016



(Special Resolution)


Notes:-

1. A member of the Company entitled to attend and vote at the Meeting is entitled to appoint one or more proxies to attend and vote in his stead. A proxy may but need not be a member of the Company and a member may appoint any person to be his proxy without limitation and the provisions of Section 149(1)(b) of the Act shall not apply to the Company. Where a member of the Company is an authorised nominee as defined under the Securities Industry (Central Depositories) Act, 1991, it may appoint at least one proxy in respect of each securities account it holds with ordinary shares of the Company standing to the credit of the said securities account.

2. Where a member of the Company is an exempt authorised nominee as defined under the Securities Industry (Central Depositories) Act 1991, which holds shares for multiple beneficial owners in one securities account (“Omnibus account”), there is no limit to the number of proxies it may appoint in respect of each Omnibus account.

3. In the case of a corporate member, the instrument appointing a proxy shall be under its Common Seal or under the hand of an officer or attorney, duly authorised in writing.

4. Where a member appoints more than one proxy, the appointment shall be invalid unless he specifies the proportion of his holding to be represented by each proxy.

5. To be valid, the original Form of Proxy, must be completed and deposited at the Registered Office of the Company at Suite 2.02, Level 2, Wisma E & C, No. 2, Lorong Dungun Kiri, Damansara Heights, 50490 Kuala Lumpur, Malaysia not less than forty-eight (48) hours before the time for holding the Meeting or any adjournment thereof.

6. The lodging of a completed Form of Proxy will not preclude a member from attending and voting in person at the meeting should the member subsequently wish to do so, however such attendance would be an automatic revocation of the proxy’s authority unless an intimation in writing has been made to the Company at the registered office.

7. For the purposes of determining a member entitled to attend the meeting, the Company will request Bursa Malaysia Depository Sdn Bhd (in accordance with Article 53(2) of the Company’s Articles of Association), to issue the Record of Depositors (“ROD”) as at 27 May 2016 for determining the depositors who shall be deemed to be the registered holders of the shares of the Company eligible to be present and vote at the meeting. Only a depositor whose name appears on the ROD as at 27 May 2016 shall be entitled to attend the meeting.

ExPLANATORy NOTES ON ORDINARy bUSINESS

1. Agenda 1 is meant for discussion only, as the provision of Section 169(1) of the Company Act, 1965 does not require a formal approval of the shareholders of the Company and hence, Agenda 1 is not put forward for voting.

2. Agenda 4 – Re-appointment of Auditors

The Company had on 20 April 2016 received a notice from the retiring auditors, Messrs. Baker Tilly Monteiro Heng expressing their willingness to continue in office as Auditors of the Company.



ExPLANATORy NOTES ON SPECIAL bUSINESS

3. Re-Appointment of Director pursuant to Section 129 of the Companies Act, 1965

The re-appointment of YBM Tunku Mahmood Bin Tunku Mohammed D.K. PSI, a person of the age of seventy years, as a Director of the Company to hold office until the conclusion of the next Annual General Meeting of the Company shall take effect if the Proposed Resolution is passed by a majority of not less than three-fourth ( ¾ ) of such members as being entitled so to do to vote in person or, where proxies are allowed, by proxy, at a general meeting of which not less than 21 days’ notice specifying the intention to proposed the resolution has been duly given.

4. Proposed Retention of Independent Director

The proposed Ordinary Resolution 6, if passed will allows YBM Tunku Mahmood Bin Tunku Mohammed D.K. PSI to be retained and continues to act as Independent Directors to fulfil the requirement of Paragraph 3.04 of Bursa Securities Main Market Listing Requirement and in line with the Recommendation 3.3 of the MCGG.

The Nomination Committee has assessed the independence of YBM Tunku Mahmood Bin Tunku Mohammed D.K. PSI. Pursuant to the Recommendation 3.3 of the MCCG, the Board strongly recommends to the shareholders at the forthcoming AGM that YBM Tunku Mahmood Bin Tunku Mohammed D.K. PSI continues to act as Independent Non-Executive Director for the purposes based on the following justifications:-

(i) He fulfilled the criteria under the definition of Independent Director as set out in Chapter 1 of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad and therefore is able to bring independent and objective judgement to the Board.

(ii) Able to provide proper check and balance in the proceedings of the Board and the Committees.

(iii) YBM Tunku Mahmood’s years of experience as a businessman enabled him to provide the Board with a diverse set of experience, expertise and independent judgment and performed his duty diligently and in the best interest of the Company and provides a broader view, independent and balanced assessment of proposal from the Management.

5. Authority to Allot Shares Pursuant to Section 132D of the Companies Act, 1965

The Ordinary Resolution 7, if passed, will empower the Directors from the date of the Sixty-First (61st) Annual General Meeting (“AGM”) to allot and issue up to a maximum of 10% of the issued share capital of the Company for the time being (other than bonus or rights issue) for such purposes as they consider would be in the best interest of the Company. This authority, unless revoked or varied at a general meeting, will expire at the next AGM of the Company.

As at the date of this notice, no new shares in the Company were issued pursuant to the mandate granted to the Directors at the last AGM held on 10 October 2014 and will lapse at the conclusion of the Sixty-First (61st) AGM of the Company.

The General Mandate will provide flexibility to the Company for any possible fund raising activities, including but not limited to further placing of shares, for purpose of funding future investment project(s), working capital and/or acquisitions.

6. Proposed Amendments to the Articles of Association of the Company

The Proposed Special Resolution is to amend the Company’s Articles of Association to be in line with the recent amendments to the Main Market Listing Requirements of Bursa Malaysia Securities Berhad. The details of the Proposed Amendments to the Articles of Association of the Company is set out under Appendix I of the Annual Report.



1. THE DIRECTOR STANDING FOR RE-ELECTION

The following are Directors who are standing for re-election at the Annual General Meeting of the Company:-

(i) Dato’ Dr. Abu Talib Bin Bachik (ii) Hedzir Bin Aminudin

The profile of the above Directors are set out in the Section entitled “Profile of Directors” on pages 6 and 7 of this Annual Report. The details of their securities holding in the Company and its Subsidiaries are stated on page 123 of this Annual Report.

2. DETAILS OF ATTENDANCE OF DIRECTORS

A total of eight (8) Board Meetings were held during the financial period ended 31 December 2015.

Details of the current Directors’ attendance since their respective appointments are as follows:-

Directors No. of Meetings Attended

Dato’ Dr. Abu Talib Bin Bachik 8/8

Sy Choon Yen 8/8

YBM Tunku Mahmood Bin Tunku Mohammed D.K. PSI 8/8

Mohd Zulkhairis Bin Mohd Zain (Resigned on 27 November 2015) 7/8

Hedzir Bin Aminudin (Appointed on 27 November 2015) 1/8

All eight (8) meetings were held at Board Room, Suite M.02, Mezzanine Floor, Wisma E & C, No. 2, Lorong Dungun Kiri, Damansara Heights, 50490 Kuala Lumpur on the following dates and time:-

Date Time

8 August 2014 11:00 a.m.

12 November 2014 11:00 a.m.

17 February 2015 11:00 a.m.

22 May 2015 11:00 a.m.

30 July 2015 10:00 a.m.

26 August 2015 11:00 a.m.

18 November 2015 11:00 a.m.

9 December 2015 11:00 a.m.

3. DATE, TIME AND PLACE OF THE ANNUAL GENERAL MEETING

The Sixty-First (61st) Annual General Meeting of Java Berhad will be held as follows:-

Date : Friday, 3 June 2016 Time : 11:00 a.m. Place : Advena Room, 3rd Floor, Grandis Hotels and Resorts, Suria Sabah Shopping Mall, 1A, Jalan Tun Fuad Stephens,

88000 Kota Kinabalu, Sabah

STATEMENT ACCOMPANYINGtHe nOtICe OF annUaL GeneRaL meetInG


APPENDIx I

Proposed Amendments to the Articles of Association of the Company

Existing Articles Proposed Articles

2. Interpretation 2. Interpretation

WORDS MEANINGS WORDS MEANINGS

CD-ROM - Compact disc read-only memory Deleted

New Electronic - Issuance in CD-ROM, USB thumb drive, USB Format flash drive or USB pen drive

57. Notice of Meetings

Subject to the provisions of the Act relating to convening of meetings to pass special resolutions and other agreements for shorter notice to these Articles, every notice convening meetings shall specify the place, the day, date and the hour of the meeting and shall be given to all Members at least fourteen (14) days before the meeting or at least twenty-one (21) days before the meeting where any special resolution is to be proposed or where it is an Annual General Meeting. Any notices of a meeting called to consider special business shall be accompanied by a statement regarding the effect of any proposed resolution in respect of such special business. At least fourteen (14) days’ notice or twenty-one (21) days’ notice in the case where any special resolution is proposed or where it is the Annual General Meeting, of every such meeting shall be given by advertisement in at least one nationally circulated Bahasa Malaysia or English daily newspaper and in writing to the Stock Exchange upon which the Company is listed.

57. Notice of Meetings

Subject to the provisions of the Act relating to convening of meetings to pass special resolutions and other agreements for shorter notice to these Articles, every notice convening meetings shall specify the place, the day, date and the hour of the meeting. The notices must also include the date of the Record of Depositors, as at the latest date which is reasonably practical and in any event shall not be less than three (3) market days before the meeting for the purpose of determining whether a depositor shall be registered as a Member entitled to attend, speak and vote at the meeting. The notices shall be given to all Members at least fourteen (14) days before the meeting or at least twenty-one (21) days before the meeting where any special resolution is to be proposed or where it is an Annual General Meeting. Any notices of a meeting called to consider special business shall be accompanied by a statement regarding the effect of any proposed resolution in respect of such special business. At least fourteen (14) days’ notice or twenty-one (21) days’ notice in the case where any special resolution is proposed or where it is the Annual General Meeting, of every such meeting shall be given by advertisement in at least one nationally circulated Bahasa Malaysia or English daily newspaper and in writing to the Stock Exchange upon which the Company is listed.


136. Copy to be sent to Members

The Directors shall from time to time in accordance with Section 169 of the Act cause to be prepared and laid before the Company in general meeting, such profit and loss accounts, balance sheets and reports as are referred to in the Section. The interval between the close of a financial year of the Company and the issue of accounts relating to it shall not exceed four (4) months. The Company must issue to its shareholders an annual report relating to it within six (6) months after the expiry of its financial year end in printed forms or CD-ROM or in such other form of electronic media not less than twenty-one (21) days before the date of the meeting (or such shorter period as may be agreed in any year of the receipt of notice of the meeting pursuant to Article 57, be sent to every Member of, and to every holder of debentures of the Company and to every other person who is entitled to receive notices from the Company under the provision of the Act or of these Articles. Provided that this Article shall not require a copy of these documents to be sent to any person of whose address the Company is not aware but any Member to whom a copy of these documents has not been sent shall be entitled to receive a copy, free of charge on application at the Company’s Office. The requisite number of copies of each such documents as may be required shall be the same time likewise sent to the Stock Exchange upon which the Company’s shares are listed.

In the event the Company issues a CD-ROM annual report, the Company must issue hard copies of the notice of the Annual General Meeting, the proxy form and the following documents to its Members:-

(i) a note containing the following statement or information:-

(a) the Company shall forward a printed copy of the annual report to the Member within four (4) market days from the date of receipt of the verbal or written request; and

(b) the Company’s website and email address, name(s) of the designated person(s) attending to the Members’ request and queries and contact number(s); and

(ii) a request form to enable the Member to request for the annual report in printed form, with particular of the Company’s facsimile number and mailing address.

136. Copy to be sent to Members

The Directors shall from time to time in accordance with Section 169 of the Act cause to be prepared and laid before the Company in general meeting, such profit and loss accounts, balance sheets and reports as are referred to in the Section. The interval between the close of a financial year of the Company and the issue of accounts relating to it shall not exceed four (4) months. The Company must issue to its shareholders an annual report relating to it within four (4) months after the expiry of its financial year end in printed forms or in electronic format not less than twenty-one (21) days before the date of the meeting (or such shorter period as may be agreed in any year of the receipt of notice of the meeting pursuant to Article 57, be sent to every Member of, and to every holder of debentures of the Company and to every other person who is entitled to receive notices from the Company under the provision of the Act or of these Articles. Provided that this Article shall not require a copy of these documents to be sent to any person of whose address the Company is not aware but any Member to whom a copy of these documents has not been sent shall be entitled to receive a copy, free of charge on application at the Company’s Office. The requisite number of copies of each such documents as may be required shall be the same time likewise sent to the Stock Exchange upon which the Company’s shares are listed.

In the event the Company issues the annual report in electronic format, the Company must issue hard copies of the notice of the Annual General Meeting, the proxy form and the following documents to its Members:-

(i) a note containing the following statement or information:-

(a) the Company shall forward a printed copy of the annual report to the Member within four (4) market days from the date of receipt of the verbal or written request; and

(b) the Company’s website and email address, name(s) of the designated person(s) attending to the Members’ request and queries and contact number(s); and

(ii) a request form to enable the Member to request for the annual report in printed form, with particular of the Company’s facsimile number and mailing address.

APPENDIx I

PROXY FORmNo. of Shares held

ORDINARY RESOLUTION FOR AGAINST

1 To re-elect Dato’ Dr. Abu Talib Bin Bachik., who retires by rotation in accordance with Article 81 of the Company’s Articles of Association.

2 To re-elect Encik Hedzir Bin Aminudin, who retires in accordance with Article 88 of the Articles of Association of the Company.

3 To approve the payment of Directors’ fees amounting to RM100,000 for the financial period ended 31 December 2015.

4 To re-appoint Messrs. Baker Tilly Monteiro Heng as Auditors of the Company until the conclusion of the next Annual General Meeting and to authorise the Directors to fix their remuneration.

5 Special Business:-Ordinary Resolutions:Re-appointment of YBM Tunku Mahmood Bin Tunku Mohammed D.K. PSI as Director pursuant to Section 129 of the Companies Act, 1965.

6 To retain YBM Tunku Mahmood Bin Tunku Mohammed D.K. PSI as Independent Non-Executive Director.

7 To authorise the Directors to issue shares pursuant to Section 132D of the Companies Act, 1965.

8Special Resolution:-To approve the Proposed Amendments to the Articles of Association of the Company.

(Please indicate with an “X” on who you wish your vote to be cast. In the absence of specific directions, your proxy may vote or abstain at his/her discretion.)*Delete the words “the Chairman of the Meeting” if you wish to appoint some other person(s) to be your proxy.

Dated this day of 2016

Signature/Common Seal of Shareholder

Notes:-

1. A member of the Company entitled to attend and vote at the Meeting is entitled to appoint one or more proxies to attend and vote in his stead. A proxy may but need not be a member of the Company and a member may appoint any person to be his proxy without limitation and the provisions of Section 149(1)(b) of the Act shall not apply to the Company. Where a member of the Company is an authorised nominee as defined under the Securities Industry (Central Depositories) Act, 1991, it may appoint at least one proxy in respect of each securities account it holds with ordinary shares of the Company standing to the credit of the said securities account.

2. Where a member of the Company is an exempt authorised nominee as defined under the Securities Industry (Central Depositories) Act 1991, which holds shares for multiple beneficial owners in one securities account (“Omnibus account”), there is no limit to the number of proxies it may appoint in respect of each Omnibus account.

3. In the case of a corporate member, the instrument appointing a proxy shall be under its Common Seal or under the hand of an officer or attorney, duly authorised in writing.

4. Where a member appoints more than one proxy, the appointment shall be invalid unless he specifies the proportion of his holding to be represented by each proxy.

5. To be valid, the original Form of Proxy, must be completed and deposited at the Registered Office of the Company at Suite 2.02, Level 2, Wisma E & C, No. 2, Lorong Dungun Kiri, Damansara Heights, 50490 Kuala Lumpur, Malaysia not less than forty-eight (48) hours before the time for holding the Meeting or any adjournment thereof.

6. The lodging of a completed Form of Proxy will not preclude a member from attending and voting in person at the meeting should the member subsequently wish to do so, however such attendance would be an automatic revocation of the proxy’s authority unless an intimation in writing has been made to the Company at the registered office.

7. For the purposes of determining a member entitled to attend the meeting, the Company will request Bursa Malaysia Depository Sdn Bhd (in accordance with Article 53(2) of the Company’s Articles of Association), to issue the Record of Depositors (“ROD”) as at 27 May 2016 for determining the depositors who shall be deemed to be the registered holders of the shares of the Company eligible to be present and vote at the meeting. Only a depositor whose name appears on the ROD as at 27 May 2016 shall be entitled to attend the meeting.

I/We, NRIC/Registration No.: (FULL NAME IN BLOCK LETTERS)

of (ADDRESS IN FULL)

being a member/members of Java Berhad, hereby appoint THE CHAIRMAN OF THE MEETING* or

NRIC No.: (FULL NAME IN BLOCK LETTERS)


or failing him/her NRIC No.: _ (FULL NAME IN BLOCK LETTERS)


as my/our proxy to vote for me/us and on my/our behalf at the Sixty-First (61st) Annual General Meeting to be held at Advena Room, 3rd Floor, Grandis Hotels and Resorts, Suria Sabah Shopping Mall, 1A, Jalan Tun Fuad Stephens, 88000 Kota Kinabalu, Sabah on Friday, 3 June 2016 at 11:00 a.m. and at any adjournment thereof and to vote as indicated below:-

2nd fold here

Fold this flap for sealing

1st fold here

The Company Secretary

Java BerhadSuite 2.02, Level 2

Wisma E & CNo. 2, Lorong Dungun Kiri

Damansara Heights50490 Kuala Lumpur

Malaysia

AFFIXSTAMP

JAVA BERHAD (2511-M)

Suite M.02, Mezzanine FloorWisma E & C, No. 2, Lorong Dungun Kiri

Damansara Heights, 50490 Kuala Lumpur

Tel : 03 2092 3535Fax : 03 2093 9690

www.javaberhad.com.my

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