bringing you nourishing foods 2013 annual reportql.listedcompany.com/misc/ar2013.pdf · Marine Products Manufacturing and Oil Palm Activities, and operates in Malaysia, Indonesia,

2013annualreport

bringing you nourishing foods

3

2013annualreport

The cover of this year’s annual report highlights the importance of our mission, to create nourishing foods. As we expand our consumer foods presence and become a household brand, we are bringing nourishing foods to more people than ever before.

7 Principal Activities

10 Group Corporate Structure

12 5 Years Financial Summary

13 Corporate Information

16 Board of Directors’ Profile

22 Chairman’s Statement

24 Group Managing Director’s Report

26 Audit Committee Report

30 Corporate Governance Statement

5

Statement of Directors’ Responsibility 39

Statement on Risk Management and Internal Control 40

Corporate Social Responsibility at QL 42

Financial Statements 46

List of Properties 150

Shareholders’ Analysis Report 152

Notice of Annual General Meeting 154

Recurrent Related Party Transactions 158

Form of Proxy 161

7

principal activities

QL Resources is a sustainable and scalable multinational agro-food corporation that farms and produces some of the most

resource-efficient protein and food energy sources. The Group has three principal activities; Integrated Livestock Farming,

Marine Products Manufacturing and Oil Palm Activities, and operates in Malaysia, Indonesia, Vietnam and now China.

Marine Products Manufacturing Activities

Marine Products Manufacturing consists of upstream and downstream activities including deep-sea fishing, aquaculture

farming, surimi and fishmeal production and consumer foods. Through the use of innovative technology and quality

practices, QL has achieved industry leadership positions including being Malaysia’s largest fishmeal manufacturer and

producer of surimi-products, and Asia’s largest surimi producer. Mushroom and Figo, QL’s marine-product consumer foods

brands, are distributed across Asia, Europe and North America.

Integrated Livestock Farming Activities

Organic growth and a series of strategic acquisitions has driven QL’s rise to become one of Malaysia’s leading operators

in animal feed raw materials and poultry farming. QL is among ASEAN’s leading poultry egg producers with a group

production rate of 4 million eggs per day. Approximately 40 million Day Old Chicks (DOC) are produced annually across

poultry farms in Malaysia and Indonesia. In Malaysia, QL trades over 700,000 metric tonnes of animal feed raw materials

annually.

Palm Oil Activities

QL has built-up its capabilities in palm oil from milling and estate ownership to biomass

clean energy in a move that expands the value chain of traditional agriculture. QL has

developed proprietary technology that converts palm waste biomass into a high quality

burning fuel, and manufactures industrial boiler systems which convert that biomass fuel

into energy, minimising carbon emissions and improving energy cost efficiencies. QL has

two independent Crude Palm Oil (CPO) mills servicing small and medium sized estates in

the Tawau and Kunak regions of Sabah, East Malaysia. QL’s first CPO mill in Indonesia is in

Eastern Kalimantan and was commissioned during FY2013. QL owns a 1,200 hectare palm

oil estate in Sabah, as well as 15,000 hectare plantation (currently under development) in

Eastern Kalimantan, Indonesia.

Mission

we create nourishing products from agro resources, leading to

benefit for all parties

Vision

to be the preferred global agro based enterprise

9

Values

integrity

win–win

team work

innovative

Personality

progressive

trustworthy

initiative

humility

Group Corporate Structure as at 28 June, 2013

Integrated Livestock Farming

QL Feedingstuffs Sdn.

Bhd. 100%

Palm Oil ActivitiesQL Oil Sdn. Bhd. 100%

Biomass Energy Business

QL Green Resources Sdn. Bhd. 100%

Marine Products Manufacturing

QL Fishery Sdn. Bhd. 100%

QL IPC Sdn. Bhd. 100%

11

100% QL BioEnergy Sdn. Bhd.

78.42% QL Mutiara (S) Pte. Ltd.

95% PT. Pipit Mutiara Indah

100% QL Plantation Sdn. Bhd.

100% QL Tawau Biogas Sdn. Bhd.

85% QL Green Energy Sdn. Bhd.

51% QL Tawau Palm Pellet Sdn. Bhd.

84.99% QL NatureCo Sdn. Bhd.

100% QL Palm Pellet Sdn. Bhd.

100% QL Carbon Sdn. Bhd.

66.67% Leisure Pyramid Sdn. Bhd.

100% QL ESCO Sdn. Bhd.

(fka: QL ZeroPoint Green Energy Sdn. Bhd.)

100% Chingsan Development Sdn. Bhd.

100% Maxincome Resources Sdn. Bhd.

100% QL Agrofood Sdn. Bhd.

90% Pacific Vet Group (M) Sdn. Bhd.

100% QL Pacific Vet Group Sdn. Bhd.

100% QL Agroventures Sdn. Bhd.

100% QL Feed Sdn. Bhd.

100% QL Poultry Farms Sdn. Bhd.

50.50% QL AgroBio Sdn. Bhd.

85% QL AgroResources Sdn. Bhd.

100% QL Livestock Farming Sdn. Bhd.

100% Gelombang Elit (M) Sdn. Bhd.

51% QL TP Fertilizer Sdn. Bhd.

(fka: Inspirasi Sutera Sdn. Bhd.)

99% PT. QL Feed Indonesia

100% QL Realty Sdn. Bhd.

80% PT. QL Trimitra

99% PT. QL Agrofood

100% QL Tawau Feedmill Sdn. Bhd.

100% QL KK Properties Sdn. Bhd.

(fka: QL Feedmills Sdn. Bhd.)

100% QL Figo Foods Sdn. Bhd.

(fka: Figo Foods Sdn. Bhd.)

60% QL Fujiya Pastry Sdn. Bhd.

100% QL Marine Products Sdn. Bhd.

100% Icon Blitz Sdn. Bhd.

100% QL Deep Sea Fishing Sdn. Bhd.

100% QL Fresh Choice Seafood Sdn. Bhd.

70.59% QL Endau Marine Products Sdn. Bhd.

100% QL Endau Deep Sea Fishing Sdn. Bhd.

100% QL Endau Fishmeal Sdn. Bhd.

100% Pilihan Mahir Sdn. Bhd.

100% Rikawawasan Sdn. Bhd.

100% QL Foods Sdn. Bhd.

100% QL Aquaculture Sdn. Bhd.

100% QL Aquamarine Sdn. Bhd.

100% QL Fishmeal Sdn. Bhd.

99.97% PT. QL Hasil Laut

100% QL Corporate Services Sdn. Bhd.

(fka: Ambang Spektrum Sdn. Bhd.)

82% QL Lian Hoe Sdn. Bhd.

100% QL Lian Hoe (S) Pte Ltd

100% Zhongshan True Taste Food

Industrial Co. Ltd

100% QL Farms Sdn. Bhd.

100% Adequate Triumph Sdn. Bhd.

100% QL Breeder Farm Sdn. Bhd.

100% QL Inter-Food Sdn. Bhd.

100% Merkaya Sdn. Bhd.

85% QL Ansan Poultry Farm Sdn. Bhd.

100% QL Rawang Poultry Farm Sdn. Bhd.

100% Hybrid Figures Sdn. Bhd.

100% QL Vietnam AgroResources

Liability Ltd Co

100% Saga Inovatif Sdn. Bhd.

100% QL International Pte. Ltd.

1%

49%

15%

1%

0.5%

5 Years Financial Summary

1,39

7.91

109.

89 89.3

3

953.

53

412.

40

1,47

6.40

1,77

7.08

1,94

6.67

2,14

6.31

172.

71

131.

71

2,00

8.53

883.

55

136.

02

160.

81

172.

28

106.

91

124.

55 131.

41

1,106

.12

1,47

2.37 1,67

0.66

496.

45

727.

30 804.

01

,09 ,10 ,11 ,12 ,13 ,13 ,13 ,13 ,13,12 ,12 ,12 ,12,11 ,11 ,11 ,11,09 ,10,09 ,10 ,09 ,10 ,09 ,10

TurnoverRM Million

Profit Before TaxRM Million

Profit After Tax AfterMinority InterestRM Million

Total AssetsRM Million

Net Tangible AssetsRM Million

2009 2010 2011 2012 2013 RM MIL RM MIL RM MIL RM MIL RM MIL

Turnover 1,397.91 1,476.40 1,777.08 1,946.67 2,146.31

Profit Before Tax 109.89 136.02 160.81 172.28 172.71

Profit After Tax After Minority Interest 89.33 106.91 124.55 131.41 131.71

Total Assets 953.53 1,106.12 1,472.37 1,670.66 2,008.53

Net Tangible Assets 412.40 496.45 727.30 804.01 883.55

Profit as % of Turnover

Before Tax 7.86 9.21 9.05 8.85 8.05

After Tax 6.39 7.24 7.01 6.75 6.14

Earnings Per Share (sen) - Basic # 11 14 16 ^ 16 16

Net Tangible Assets Per Share (sen) 125.85 127.01 87.42 96.63 106.19

Paid-up share Capital 165.00 197.59 208.00 208.00 208.00

No. of shares in Issue (million) 327.68 ** 390.86 ** 832.00 832.00 832.02

# Adjusted for share split in 2011 and bonus issue in 2008 and January 2010^ Adjusted for share placements in 2011** Adjusted for treasury shares

13

Corporate Information

Board of Directors

YM Tengku Dato’ Zainal Rashid Bin Tengku MahmoodChairman/Independent Non-Executive Director

Chia Song KunGroup Managing Director

Chia Seong PowExecutive Director

Chia Seong FattExecutive Director

Chia Song KooiExecutive Director

Chia Song SwaExecutive Director

Chia Mak HooiExecutive Director

Cheah Juw Teck Executive Director

Chieng Ing Huong, EddySenior Independent Non-Executive Director

Tan Bun Poo, RobertIndependent Non-Executive Director

Datuk Wira Jalilah Binti BabaIndependent Non-Executive Director(Appointed on 1 April 2013)

Teh Kim TehIndependent Non-Executive Director(Resigned on 31 March 2013)

Company Secretary

Ng Geok Ping(MAICSA 7013090)

Auditors

KPMGChartered AccountantsLevel 10, KPMG Tower8, First AvenueBandar Utama47800 Petaling JayaSelangor

Audit Committee



Tan Bun Poo, RobertIndependent Non-Executive Director

Datuk Wira Jalilah Binti BabaIndependent Non-Executive Director(Appointed on 1 April 2013)

Teh Kim TehIndependent Non-Executive Director(Resigned on 31 March 2013)

Remuneration Committee


Chia Song KunNon-Independent Executive Director


Nominating Committee



Registered Office

No 16A, Jalan Astaka U8/83Bukit Jelutong40150 Shah AlamSelangor Darul EhsanTel: 03-7801 2288Fax: 03-7801 2228http://www.ql.com.my

Principal Bankers

Alliance Bank Berhad

Al Rajhi Banking & Investment Corporation (Malaysia) Berhad

AmBank (M) Berhad

Bank of Tokyo-Mitsubishi UFJ (Malaysia) Berhad

CIMB Bank Berhad

Deutsche Bank (Malaysia) Berhad

Hong Leong Bank Berhad

HSBC Amanah Malaysia Berhad

HSBC Bank Malaysia Berhad

Malayan Banking Berhad

OCBC Bank (Malaysia) Berhad

Rabobank

RHB Bank Berhad

RHB Investment Bank Berhad

Standard Chartered Bank Malaysia Berhad

United Overseas Bank (Malaysia) Berhad

Registrars

Bina Management (M) Sdn BhdLot 10, The Highway CentreJalan 51/20546050 Petaling JayaSelangor Darul EhsanTel: 03-7784 3922Fax: 03-7784 1988

Stock Exchange Listing

Main Market of Bursa Malaysia Securities Berhad

Investor RelationFreddie YapTel: 03-7801 2288Fax: 03-7801 2222E-mail: [email protected]

Board of Directors

15

Board of Directors’ Profile

YM Tengku Dato’ Zainal Rashid Bin Tengku Mahmood, aged 74, Malaysian, was appointed as the Chairman and Independent Non-Executive Director of the Company on 3 January 2000. He is also the Chairman of Audit, Nominating and Remuneration Committees.

He has a wide range of experience, having been actively involved in a variety of business over the last 40 years. YM Tengku has an MBA from Syracuse University, USA. He began his business career with the Harper Gilfillan Group (a diversified British organisation) in the early 1960’s and retired as the Group Managing Director of Harper Wira Sdn. Bhd. Currently, he is the Executive Chairman of K-Line Maritime (Malaysia) Sdn. Bhd., a Malaysian-Japanese joint-venture company with K-Line Tokyo, one of the biggest Japanese shipping company. He also sits on the boards of several other companies. Apart from managing various companies, YM Tengku is also actively involved in the affairs of maritime related organisations.

He was the Chairman of the International Shipowners Association of Malaysia (ISOA) and the past president of I.C.H.C.A. Malaysian chapter. He also sat on the Boards of Klang and Kuantan Port Authorities for more than a decade.

In addition to maritime bodies, YM Tengku is also an active participant in the affairs of Chambers of Commerce. He is the past President of the Malaysian International Chamber of Commerce and Industry (MICCI) and a Vice-President of the National Chamber of Commerce and Industry of Malaysia (NCCIM). At the ASEAN level, he was the Malaysia Chairman of the ASEAN Chambers of Commerce and Industry. YM Tengku was also on the board of MIDA, a Council Member of the Malaysia-India Business Council and the Malaysian Norway Business Council and a Director of Port Klang Free Zone Sdn. Bhd., a GLC.

YM Tengku Dato’ Zainal Rashid is also the Hononary Consul of Norway.

He attended all five board of directors’ meetings held for the financial year.

He has no family relationship with any Director and/or major shareholders of QL. He has no conflict of interest with the Company and he has no convictions for any offences within the past ten years.

Chia Song Kun, aged 63, Malaysian, was appointed as the Group Managing Director of QL Resources Berhad on 3 January 2000. He is also a member of Remuneration Committee.

Mr Chia was born and raised in Sungai Burong, an impoverished fishing village on the northern coast of Selangor. He graduated with a Bachelor of Science (Honours) degree majoring in Mathematics from the University of Malaya in 1973 and obtained a Masters in Business Administration in 1988 from the same university. He started his career as a tutor and subsequently joined University Teknologi Mara as a lecturer where he served for 11 years until 1984.

During his lecturing years, Mr Chia, along with his brothers and his brothers-in-law began trading in fish meal and feed meal raw material. The business they founded was subsequently incorporated as QL Resources. Today, QL is a billion ringgit sustainable and scalable multinational agro-food corporation, with interests in Integrated Livestock Farming, Marine Products Manufacturing and Palm Oil Activities.

He is a founder member of INTI Universal Holdings Berhad, which operates one of the leading private university colleges in Malaysia. On 5 July 2008, he was conferred the honorary degree of Doctor of Laws (Hon LLD) by the Honorary Awards Board of the University of Hertfordshire in recognition of his outstanding contribution to the development of business and education in Malaysia. He is also the Chairman of Boilermech Holdings Berhad, a company listed on the ACE Market of Bursa Malaysia Securities Berhad on 5 May 2011.

Mr Chia Song Kun is the brother to Mr Chia Song Swa and Mr Chia Song Kooi. He is also the brother-in-law to Mr Chia Seong Pow and Mr Chia Seong Fatt. He is the director and substantial shareholder of CBG Holdings Sdn. Bhd., a major shareholder of QL.


He has no conflict of interest with the Company and he has no convictions for any offences within the past ten years.

17

Chia Seong Pow, aged 57, Malaysian, was appointed as an Executive Director of the Company on 3 January 2000.

He graduated from Tuanku Abdul Rahman College with a diploma in Building Technology.

He is one of the founder members of QL Group. He joined CBG Holdings Sdn. Bhd., a substantial shareholder of QL, as Marketing Director in 1984. He has more than 25 years of experience in the livestock and food industry covering layer farming, manufacturing, trading and shipping.

Currently, Mr Chia Seong Pow is mainly in charge of layer farming, regional merchanting trade in food grains as well as new business developments.

Majority of the Group’s new expansion programmes were initiated by him.

He is the younger brother to Mr Chia Seong Fatt. Both of them are brothers-in-law to Mr Chia Song Kun. He is the director and beneficial shareholder of Farsathy Holdings Sdn. Bhd., a major shareholder of QL.


Mr Chia Seong Pow has no conflict of interest with the Company and he has no convictions for any offences within the past ten years.

Chia Seong Fatt, aged 57, Malaysian, was appointed as an Executive Director of the Company on 3 January 2000.

He obtained his B.Sc. Honours degree in chemistry from University of London in 1979. He practised as an industrial chemist for 3 years before he pursued further studies in University Malaya.

In 1984, he graduated from University of Malaya with a Master degree in Business Administration.

He served for seven years as Managing Director in Sri Tawau Farming Sdn. Bhd., a company involved in layer farming. The Company is an associated company of Lay Hong Berhad, a company listed on the Main Market of the Bursa Malaysia Securities Berhad.

In 1991, he was appointed as Managing Director of QL Farms Sdn. Bhd., a subsidiary of QL overseeing its operations in Tawau. In January 1996, he was appointed as an Executive Director of QL Feedingstuffs Sdn. Bhd. in charge of layer farm and Crude Palm Oil (“CPO”) milling operations. In view of the restructuring of the QL Group, he has resigned as a director of QL Feedingstuffs Sdn. Bhd., however he is still in charge of layer, broiler farm and CPO milling operations in Tawau.

He is also an alternate director in Boilermech Holdings Berhad, a company listed in the ACE Market of Bursa Malaysia Securities Berhad on 5 May 2011.

He is the elder brother to Mr Chia Seong Pow. Both of them are brothers-in-law to Mr Chia Song Kun. He is the director and beneficial shareholder of Farsathy Holdings Sdn. Bhd., a major shareholder of QL.


Mr Chia Seong Fatt has no conflict of interest with the Company and he has no convictions for any offences within the past ten years.

Chia Song Kooi, aged 53, Malaysian, was appointed as an Executive Director of the Company on 3 January 2000.

He holds a bachelor of Agricultural Science from University Putra Malaysia (1985).

He began his career with Ancom Berhad, a company listed on the Main Market of the Bursa Malaysia Securities Berhad, as a Marketing Executive for agro-chemical products and eventually headed the Product and Market Development Division in 1987.

He joined QL Feedingstuffs Sdn. Bhd. as an executive director on 21 September 1988. He has 20 years experience in farm management and in trading of raw materials for farm use, as well as 8 years of experience in marine products processing. He is currently the Deputy Chairman of Sabah Livestock Poultry Association. In view of the restructuring of the QL Group, he has resigned as a director of QL Feedingstuffs Sdn. Bhd. He is overall in charge of the group’s operations in Kota Kinabalu.

Mr Chia Song Kooi is the brother to Mr Chia Song Kun and Mr Chia Song Swa. He has indirect interest in QL by virtue of his interest in CBG Holdings Sdn. Bhd., a major shareholder of QL.


Mr Chia Song Kooi has no conflict of interest with the Company and he has no convictions for any offences within the past ten years.

Chia Song Swa, aged 53, Malaysian, was appointed as an Executive Director of the Company on 3 January 2000.

He holds a degree in Chemistry and Statistics from the University of Campbell, USA.

He began his career at Genting Berhad, a company listed on the Bursa Malaysia Securities Berhad as a Management Trainee in 1984 and served for 2 years.

In 1987 he joined QL Feedingstuffs Sdn. Bhd. as a sales executive and was appointed as a director of QL Feedingstuffs Sdn. Bhd. on 22 June 1987. In line with the transfer of business from QL Feedingstuffs Sdn. Bhd. to QL Feed Sdn. Bhd., he was appointed as the director in charge of sales and trading function at QL Feed Sdn. Bhd. As a result of his vast experience in feed raw material distribution, he has helped the Company to establish a very strong distribution network.

He is the brother to Mr Chia Song Kun and Mr Chia Song Kooi. He has indirect interest in QL by virtue of his interest in CBG Holdings Sdn. Bhd., a major shareholder of QL.


Mr Chia Song Swa has no conflict of interest with the Company and he has no convictions for any offences within the past ten years.

19

Chia Mak Hooi, aged 48, Malaysian, was appointed as an Executive Director of the Company on 3 January 2000. He graduated from Arizona State University, USA with a degree in Accounting and Finance in 1988.

He started his career in 1989 as an Assistant Accountant at Concept Enterprises Inc. In 1991, he joined QL Feedingstuffs Sdn. Bhd. as Finance Manager where he was mainly responsible for the accounts, tax and audit planning, and cash management and liaised with bankers for banking facilities. In 1996, he was appointed Finance Director of QL Feedingstuffs Sdn. Bhd., and was involved in the proposed listing of the Company on the Second Board of Bursa Malaysia.

Currently, he is actively involved in group corporate activities and strategic business planning and also group integrated livestock business expansion programs both locally and overseas.

Mr Chia Mak Hooi is the director of EITA Resources Berhad, a company listed on the Main Market of the Bursa Malaysia Securities Berhad on 9 April 2012. EITA group of companies is involved in the distribution and manufacturing of electrical related products.

He is also a director of Lay Hong Berhad and Group, an associate company of the Company.

He is the nephew to Mr Chia Song Kun, Mr Chia Song Swa and Mr Chia Song Kooi. He has indirect interest in QL by virtue of his interest in CBG Holdings Sdn. Bhd., a major shareholder of QL.


Mr Chia Mak Hooi has no conflict of interest with the Company and he has no convictions for any offences within the past ten years.

Cheah Juw Teck, aged 44, Malaysian, was appointed as appointed as an Executive Director of the Company on 1 June 2011.

He holds a degree in Food Technology from University Putra Malaysia (1993).

Prior to joining QL Group in 1994, he was involved in quality control in S & P Foods Bhd as quality control executive. In 1994, he joined QL Group as operations manager to set up the surimi and surimi-based products business and subsequently was appointed as a Director of QL Foods Sdn. Bhd. in 1997. He is also the director in charge of the surimi and surimi-based products division in QL Group.

Mr Cheah Juw Teck is the nephew to Mr Chia Song Kun, Mr Chia Song Swa and Mr Chia Song Kooi. He is the cousin of Mr Chia Mak Hooi.


He has no conflict of interest with the Company and he has no convictions for any offences within the past ten years.

Chieng Ing Huong, Eddy, aged 55, Malaysian, was appointed as a Senior Independent Non-Executive Director of the Company on 24 December 2001. He is also a member of the Audit, Nominating and Remuneration Committees.

Mr Eddy Chieng graduated in 1980 from the University of New South Wales, Australia with a Bachelor of Commerce Degree with Merit in Accounting, Finance and Information Systems. He qualified as a Chartered Accountant in 1981 and is a Fellow of the Institute of Chartered Accountants, Australia. He is also a Chartered Accountant registered with the Malaysian Institute of Accountants since 1983.

Mr Eddy Chieng has extensive senior management experience having been involved in a number of successful entrepreneurial businesses in Malaysia and overseas; primarily in ASEAN, Hong Kong and Australia.

Mr Eddy Chieng is also the Executive Chairman of Esthetics International Group Berhad, Chairman of Selangor Dredging Berhad, and an Independent Non-Executive Director of OrotonGroup Limited, which is listed on the Australian Securities Exchange. He was previously a Director of Nationwide Express Courier Services Berhad, Executive Director of OSK Holdings Berhad, Ancom Berhad, Nylex (Malaysia) Berhad and Chairman of Asia Poly Holdings Berhad. In addition, he was instrumental in bringing Fedex to Malaysia and was a Director of Federal Express Malaysia for a number of years.


He does not have any family relationship with any director and/or major shareholder of the Company. Mr Chieng has no conflict of interest with the Company and he has no convictions for any offences within the past ten years.

Tan Bun Poo, Robert, aged 63, Malaysian, was appointed as an Independent Non-Executive Director of the Company on 1 June 2011. He is also a member of Audit Committee.

He graduated with a Bachelor of Commerce from University of Newcastle, Australia. He is a member of The Malaysian Institute of Accountants, The Malaysian Institute of Certified Public Accountants (MICPA), The Malaysian Institute of Taxation and a fellow member of The Institute of Chartered Accountants in Australia. He is also a member in the Council of MICPA.

Mr Tan Bun Poo a retired Senior Partner with Deloitte KassimChan, has 37 years of experience in the audits of various industries, including banking and financial services, manufacturing, food and distribution industry. His other experiences include reporting accountants work relating to Initial Public Offerings and other corporate exercises, leading assignments in corporate acquisition and overseeing the provision of risk management and internal audit services.

He is also a director of Faber Group Berhad, AmCorp Properties Berhad, RCE Capital Berhad and AmLife Insurance Berhad.


Mr Tan Bun Poo has no family relationship with any director and/or major shareholder of the Company. He has no conflict of interest with the Company and he has no conviction for any offences within the past ten years.

21

Datuk Wira Jalilah Binti Baba, aged 59, Malaysian, was appointed as an Independent Non-Executive Director of the Company and a member of Audit Committee on 1 April 2013.

Datuk Wira Jalilah holds a Bachelor of Arts (Econs) Hons from University of Malaya. She is one of the top economist in the country with expertise in handling investment related matters especially Foreign Direct Investment, tax matters and high impact incentives packages. Her positions include being a Board Member of several companies and Member of the International Advisory Panel of Labuan International Offshore Centre.

From her tenure of service of more than 30 years in Malaysian Investment Development Authority (“MIDA”), she has developed expertise in various industries such as green technology, aerospace, automotive, oil and gas, resource-based (i.e. food, palm oil and rubber).

Prior to assuming the post of Director General and Chief Executive Officer of MIDA in 2008, she assumed various roles including the Deputy Director General of MIDA in 2006; Director of Foreign Direct Investment; Director of Cross Border Investment and Director of Domestic Investment.

She was appointed as the first female Overseas Director and Consulate based in Milan, Italy in 1994, covering Switzerland and Austria.

Datuk Wira Jalilah is a Board member of RHB Capital Berhad, Felda Global Ventures Holdings Berhad, Education Malaysia Global Services Sdn. Bhd., PKT Group Sdn. Bhd. and Crewstone International Sdn. Bhd. She is also a Chairman and Board member of KOMARKCorp Berhad.

Her appointment took place after the financial year of the Company.

Datuk Wira Jalilah has no family relationship with any director and/or major shareholder of the Company. She has no conflict of interest with the Company and she has no conviction for any offences within the past ten years.

Chairman’s Statement

Dear Shareholders,

QL Resources has produced a resilient performance over the financial year 2013. Despite droughts in the USA that caused significant global increases in animal feed costs, QL has succeeded in delivering 10% sales growth and marginal earnings growth. The results serve as another indication that QL has a robust business model capable of weathering challenging external economic conditions.

The positive results accrued in FY2013 maintain QL’s record of consistent growth. Placing it into a wider context, in the 13 years since QL made its debut on Bursa Malaysia, the Company has delivered earnings after tax CAGR of 20%, sales CAGR of 14%, an average yearly dividend payout ratio of 28% and an average yearly return on equity of 15%.

Acquisitions

I am pleased to announce that on 6 March 2013, QL Resources established a presence in China by wholly acquiring Zhongshan Food (ZF), an existing marine products manufacturing business. ZF’s principal activities involve the production and sale of various kinds of frozen minced fish fillets and other flavoured foods to China’s domestic market. The acquisition provides QL with the opportunity to expand ZF’s range of consumer products and work toward building a significant presence in China’s frozen food market, a market that will be worth approximately USD30 billion by 2015. 1

Investor Relations

QL’s investor relations team worked diligently through FY2013 to engage, communicate and build professional relationships with the region’s investment community. The team led over 50 presentations with analysts and fund managers in Kuala Lumpur; participated in Invest Malaysia 2012, a Hong Kong-based conference held in November 2012 where selected public listed companies were showcased to promote Malaysia; and took to the stage as QL was highlighted by

RHB-OSK , UOB-Kayhian and Hwang-DBS in their annual Singapore conferences.

Underpinning the above, the investor relations team conducted numerous site visits to QL’s plants with analysts and fund managers to give them first-hand appreciation for the scale of QL’s group-wide activities and the investment opportunity the Company presents. This year, Freddie Yap, Group Accountant and head of investor relations at QL, was nominated by the Malaysia Investor Relations Awards for the excellence of his performance. Mr Yap came in seventh place for Best IR Professional (Main Board – Mid) and sixth place for Quality of One-on-One Meetings (All Malaysian Companies), while QL came in second place for Best Company IR (Main Board – Mid).

Awards

I am deeply proud that our Group Managing Director, Dr Chia Song Kun, was bestowed with the Malaysian Ernst & Young Entrepreneur Of The Year (EOY) 2012 title at the Ernst & Young EOY awards gala. The award recognises outstanding entrepreneurs who demonstrate excellence and extraordinary success in areas such as innovation, financial performance and personal commitment to their business and communities.

New Board Members

It is with pleasure that I welcome Datuk Wira Jalilah Baba as an Independent Non-Executive Director of QL Resources. Datuk Wira Jalilah, who joined the Board on 1 April 2013, is considered to be among Malaysia’s foremost economists and has accrued a vast wealth of knowledge from her 30 years in the Malaysian Investment Development Authority. Her experience and expertise in international investment, investment promotion, economics, finance, government procedures and regulations governing issues such as tariffs, customs, free zones, warehousing and logistics will be invaluable as QL continues its regional expansion.

Looking Forward

I am confident that in FY2014 we will improve on our growth figures, barring unforeseen circumstances. The fundamentals of QL are excellent, and with growing presences in Indonesia and Vietnam, and a new domestic operation in China, the future is very encouraging.

Appreciation

I take this opportunity to express my gratitude to QL’s people, everyone from my Board colleagues to our dedicated workers across the region. Their efforts, once again, have translated into another year of growth for the Company. On behalf of the Board of Directors I wish to thank Dr Chia Song Kun for his ongoing leadership. Dr Chia and his senior management team have mapped out QL’s strategic vision and are turning that vision into reality, a task which they are accomplishing with aplomb.

I extend my thanks to the wider stakeholder community, particularly our shareholders, for their continued support and faith in our efforts to grow the Company in a responsible and sustainable manner. Finally I would like to thank Mr Teh Kim Teh, who resigned from QL’s Board at the end of March 2013 after 10 years with the Company. We will miss his wisdom and influence, and wish him the very best as he pursues his own ventures.

I look forward to seeing as many of you as possible at our annual shareholders’ meeting.

Tengku Dato’ Zainal Rashid Bin Tengku MahmoodChairman

1 http://www.sinomarketinsight.com/?p=433

23

Group Managing Director’s Report

Fellow Shareholders,

If there is one quality that could describe QL Resources over FY2013 it is ‘resilience’. It is this resilience that has led the Company’s to deliver a positive financial performance despite record worldwide price hikes in animal feed raw material costs. The fact that QL has increased its top and bottom line in the face of uncontrollable external factors is cause for satisfaction. The Company’s geographical spread, the balance that comes from a diversified portfolio and its long value chains with resulting upstream and downstream activities ensure QL remains sustainable in the long term.

Financial Review

Revenues for FY2013 amounted to RM2.15 billion, up RM200 million from the FY2012 total of RM1.95 billion. Profit before tax, however, grew marginally, totalling RM173 million for the year. Our Indonesian and Vietnamese operations contributed over RM250 million, or 12%, of QL’s total turnover. This is up from RM109 million, or 6%, in FY2012. Although regional revenues are higher than the previous year, profits from our regional operations accounted for a modest 3% of total Group profits. In QL’s FY2012 annual report I wrote that we could expect significant returns from our regional operations if macroeconomic factors remained stable. Unfortunately there have been two crippling weather phenomena that have affected our ability to return more meaningful profit growth.

Our Integrated Livestock Farming sector was hit, along with all other agro-food companies, by what the United States Department of Agriculture called the most severe and extensive North American drought in at least 25 years. Over 1,600 counties across 36 US states were declared primary natural disaster areas, with hundreds of additional counties bordering primary disaster areas designated as “contiguous” disaster areas. Crops including corn and soybean were wiped out by the drought, inevitably leading to a supply shortfall and subsequent record high feed prices. Closer to home, excessive rainfall over the east

coast of Borneo at the beginning of FY2013 affected the harvesting expectation of our Indonesian palm plantations, leading to negative variance in the Palm Oil Activities sector.

Economic growth has trended downwards across the countries in which we operate, though our domestic market of Malaysia showed resilience in 2012, with overall GDP growth at 5.6%, up from 5.1% in 2011. However, a strong 6.4% in Q4 2012 gave way to a slower 4.1% in Q1 2013, a drop that led CIMB to lower its full year growth forecast for the Malaysian economy to 5.1% from an earlier 5.5%. Indonesia’s GDP growth for 2012 was 6.1%, down from 6.5% in 2011. This downward trend has continued with Q1 2013 growth at 6.02%, the slowest pace in more than two years. Slowdown in Vietnam’s domestic production and consumption was the driving force behind a lower than expected 5.03% growth in GDP, down from 5.9% in 2011. Again, the downward trend has continued into 2013 with Q1 growth at 4.89%.

We were of the belief in the FY2012 annual report that the world economy was trending toward a second round of recession. I am pleased to say that this belief hasn’t come to pass, though the global economic environment continues to trend downwards. China and India both experienced their slowest growth in a decade, the eurozone debt crisis is still playing havoc with the economies of member states, and the US’s recovery is proving painfully slow. In the context of this economic backdrop, QL’s FY2013 results are encouraging, though we are disappointed that weather phenomena have dampened profit resurgence.

Operational Review

Our vision is for QL Resources to be the preferred global agro-based enterprise. To work towards this objective we have implemented a medium-term three-pronged growth strategy: Regional expansion and business model replication; strengthening and further integration of the Company’s value chain; and development of a stronger presence in the consumer

foods market. We are pleased with the pace of regional expansion and the revenues being generated by our regional operations, though as mentioned previously, profit growth has not yet reached expectations, primarily due to external factors. Over FY2013 nearly RM200 million was invested across our three sectors, of which 60% was used for regional expansion.

In the Integrated Livestock Farming sector, our regional investments have helped to increase our group egg production per day from 3.2 million in FY2012 to 4 million in FY2013. In FY2014, we target to increase Group egg production per day to 4.6 million. Our Group ‘day old chicks’ yearly production has increased from 35 million per year in FY2012 to 40 million in FY2013 and we are targeting to produce 50 million per year by the end of FY2014. In the Marine Products Manufacturing sector, we have increased our fishmeal production per year from 25,000MT in FY2012 to 30,000MT in FY2013 and we target to achieve 35,000MT by end of FY2014. Similarly in the surimi foods division we have increased our production per year from 35,000MT in FY2012 to 45,000MT in FY2013 and we target 50,000MT by end of FY2014. In the Palm Oil Activities sector, mature acreage amounted to 4,000Ha in FY2013 and will reach 6,000Ha by the end of FY2014, which will lead to higher yields.

The theme for this year’s annual report is ‘Bringing you Nourishing Foods’, and it gives me pride to say that QL took an important step forward in terms growing of our consumer foods presence by acquiring Zhongshan Food , a marine products manufacturing business based in mainland China. With capital investment, innovative technology and modern management practices, QL will service China’s burgeoning domestic frozen foods market and provide nourishing food to the most populous country in the world. Across Malaysia and Indonesia we will focus on brand building with the intention of becoming a trusted household name in the consumer foods markets. Greater distribution channels into modern-trade shops, supermarkets and hypermarkets will form part of this overall strategy.

25

Looking Forward

QL is a diversified, sustainable and scalable agro-food corporation that farms and produces some of the most resource-efficient protein and food energy sources. As our geographical spread widens, the nourishing products that have built our reputation are made available to more people than ever before. With this in mind, and despite the world economy’s continuing downward trend, I am optimistic that our FY2014 performance will be an improvement, barring a repeat of the sort of natural phenomena we experienced in FY2013. We anticipate profit margins from our regional operations to normalise in FY2014 which, when combined with our domestic operations, will bring profit before tax margins back above 8%. Looking further ahead, our objective is to get back to double digit top-line and bottom-line growth for the years to come.

Acknowledgement and Appreciation

The senior management team and I would like to thank our shareholders for their continued commitment and loyalty. We believe QL’s regional expansion, which now covers China, is cause for much optimism and we hope shareholders will walk with us as we take this journey further. We thank the rural communities in which we operate for their commitment to our cause and the customers across the world who find value in our products.

Finally, we would like to acknowledge the continued excellence from QL’s 7,000 employees. Their hard work, perseverance and loyalty has enabled QL to deliver another set of respectable results in the face of challenging circumstances.

Chia Song Kun,Group Managing Director

Audit Committee Report

Membership

The present members of the Audit Committee comprise:-

YM Tengku Dato’ Zainal Rashid Bin Tengku Mahmood Chairman/Independent Non-Executive Director

Chieng Ing Huong, Eddy Member/Independent Non-Executive Director

Tan Bun Poo, Robert Member/Independent Non-Executive Director

Datuk Wira Jalilah Binti Baba* Member/Independent Non-Executive Director

Teh Kim Teh^ Member/Independent Non-Executive Director

* Appointed as member on 1 April 2013^ Resigned as member on 31 March 2013

Attendance at meetings

During the financial year, the Committee held a total of six (6) meetings. Details of attendance of the Committee members are as follows:

Name of member Number of meetings attended

YM Tengku Dato’ Zainal Rashid Bin Tengku Mahmood 6

Mr. Chieng Ing Huong, Eddy 6

Mr. Teh Kim Teh 6

Mr. Tan Bun Poo, Robert 6

The Managing Director, Finance Director, Group Accountant and Risk Management Manager were present by invitation in all the meetings. The Secretary to the Committee is the Company Secretary.

Summary of activities during the financial year

The main activities undertaken by the Committee were as follows:• Reviewed the external auditors’ scope of work and the audit plan for the year prior to the commencement of audit.• Reviewed with the external auditors the results of the audit, the audit report and areas of concern.• Assessed the external auditors’ independence, objectivity, effectiveness and terms of engagement, including taking

into consideration the provision of audit and non-audit services by the external auditors before recommending their re-appointment and remuneration.

• Reviewed the adequacy and relevance of scope, functions, competency and resources of internal audit and that it has the necessary authority to carry out its work.

• Reviewed the internal audit plan, considered the major findings of the Internal Audit Report, which highlighted the risk issues, recommendations and management’s response.

• Reviewed quarterly risk summary reports on the Group’s top risks and management action plans to manage the risks.• Reviewed the quarterly unaudited financial result and annual audited financial statements before submission to the

Board for consideration and approval.• Reviewed the related party transactions entered into by the Group.

In the financial year under review, the Audit Committee held two (2) meetings with the external auditors without the presence of executive board members, and management, to allow the auditors to discuss any issues arising from the audit assignment or any other matter, which the external auditors wish to raise.

Internal audit function

The Company has outsourced its internal audit function to an independent professional consulting firm together with the Risk Management Manager, which is tasked with the aim of providing assurance to the Audit Committee and the Board on the adequacy and effectiveness of the internal control systems and risk management in the Company. This function also acts as a source to assist the Audit Committee and the Broad to strengthen and improve current management and operating style in pursuit of best practices. During the financial year, the major areas of work performed by the Internal Audit are as follows:-

27

• Reviewedandcommentedontheeffectivenessandadequacyoftheexistingcontrolandproceduresandperformcompliance testing to ensure that the intended controls are in place and operating effectively;

• Issued audit report to the Audit Committee in detailing the findings from the performance of the procedures,recommendations for improvements, and management responses to the findings and recommendations;

• Identified,understandandmanagedriskedembeddedintheprocessesandactivitiesthatcouldnegativelyimpactthe achievement of the Company’s objectives;

• AssessedtheriskprofileoftheGroupbycarryingoutriskidentificationandassessmentofstrategicrisks,businessrisksand operational risk; and

• Conducted follow up in previous recommendations made to ensure that appropriate corrective actions wereimplemented on a timely basis.

During the financial year, the total cost incurred for the internal audit function is RM229,000.

TERMS OF REFERENCE OF AUDIT COMMITTEEThe Audit Committee is governed by the following terms of reference:

1. Memberships

The Committee shall be appointed by the Board of Directors of the Company from amongst the Board and shall consist of not less than three (3) members, majority of which shall comprise of independent directors. At least one member must be a member of the Malaysian Institute of Accountants or eligible for membership.

In the event of any vacancy in an audit committee resulting in the non compliance with the above, the Board shall, within three (3) months of that event, fill the vacancy.

The members of the Committee shall elect a Chairman from among their members who shall be an Independent Director.

The terms of office and performance of an audit committee and each of its members should be reviewed by the Board at least once a year.

2. Authority

The Committee is authorised by the Board to investigate any activity within its terms of reference. It shall have resources which are required to perform its duties. It is authorised to seek any information it requires from any employee and all employees are directed to co-operate with any request made by the Committee. It shall have direct communication channels with the external auditors and person(s) carrying out the internal audit function or activity.

The Committee is authorised by the Board to obtain outside legal or other independent professional advice and secure the attendance of outsiders with relevant experience and expertise if it considers this necessary.

The Committee shall report to the Board.

The Audit Committee has the authority to investigate any matter within its terms of reference, at the cost of the Company and with the following:

(a) the resources which are required to perform its duties;

(b) full and unrestricted access to any information pertaining to the Company;

(c) direct communication channels with the external auditors and the internal auditors

(d) ability to obtain independent professional or other advice; and

(e) ability to convene meetings with the external auditors, the internal auditors or both, excluding the attendance of other Directors and employees of the listed corporation, whenever deemed necessary.

The Internal Auditor shall report directly to the Committee and shall have direct access to the Chairman of the Committee on all matters of control and audit. All proposals by Management regarding the appointment, transfer and removal of the Internal Auditor of the Company shall require prior approval of the Committee. Any inappropriate restrictions on audit scope are to be reported to the Committee.

3. Functions of the Committee:

(1) To review the quarterly and annual financial statements of the Company, before the approval of the Board of Directors, focusing particularly on:

(a) any significant changes to accounting policies and practices;

(b) significant adjustments arising from the audits;

(c) compliance with accounting standards and other legal requirements; and

(d) the going concern assumption.

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

(3) To review, on an annual basis, the principal risks identified by Management and the methodology employed in the identification, analysis, assessment, monitoring and communication of risks in a regular and timely manner.

(4) To ensure that the system of internal control is soundly conceived and in place, effectively administered and regularly monitored.

(5) To cause reviews to be made of the extent of compliance with established internal policies, standards, plans and procedures.

(6) To obtain assurance that proper plans for control have been developed prior to the commencement of major areas of change within the organisation.

(7) To be satisfied that the strategies, plans, manning and organisation for internal auditing are communicated down through the Company.

Specifically: (a) to review the internal audit plans and to be satisfied with their consistency with the results of the risk

assessment made, the adequacy of coverage and the audit methodologies employed; (b) to be satisfied that the internal audit function within the Company has the proper resources and

authority to enable them to complete their mandates and approved audit plans;

(c) to review status reports from internal audit and ensure that appropriate action is taken on the recommendations of the internal audit function. To recommend any broader reviews deemed necessary as a consequence of the issues or concerns identified;

(d) to review the effectiveness of the internal auditor and to approve the reappointment, termination or replacement of the incumbent and the appointment of any other internal auditor;

(e) to ensure internal audit has full, free and unrestricted access to all activities, records, property and personnel necessary to perform its duties; and

(f ) to request and review any special audit which it deems necessary.

(8) To review with the external auditors the nature and scope of their audit plan, their evaluation of the system of internal controls and report.

(9) To review any matters concerning the appointment and reappointment, audit fee and any questions of resignation or dismissal of the external auditors and internal auditors.

(10) To review and evaluate factors related to the independence of the external auditors and assist them in preserving their independence.

(11) To be advised of significant use of the external auditors in performing non-audit services within the Group, considering both the types of services rendered and the fees, such that their independence and objectivity as external auditors are not deemed to be compromised.

29

(12) To review the external auditors’ findings arising from audits, particularly any comments and responses in management letters as well as the assistance given by the employees of the Group in order to be satisfied that appropriate action is being taken.

(13) To recommend to the Board steps to improve the system of internal control derived from the findings of the internal and external auditors and from the consultations of the Audit Committee itself.

(14) To prepare the annual Audit Committee Report to the Board which includes the composition of the Audit Committee, its terms of reference, number of meetings held, a summary of its activities and the existence of an internal audit function and summary of the activities of that function for inclusion in the annual report.

(15) To review the Board’s statements on compliance with the Malaysian Code of Corporate Governance for inclusion in the annual report.

(16) To review ordinary and extraordinary dividend payments.

(17) To review the assistance given by the employees of the Company to the external auditors.

(18) To recommend the nomination of a person or persons as external auditors.

4. Attendance at Meetings The Company must ensure that other Directors and employees attending any particular Audit Committee meeting

only at the Audit Committee’s invitation, specific to the relevant meeting. However, at least twice a year the Committee shall meet with external auditors excluding the attendance of other Directors and employees of the listed corporation, whenever deemed necessary.

The Company Secretary shall be the secretary of the Committee.

5. Procedure of the committee:

(a) The internal and external auditors and members of the Committee may call for the Audit Committee meeting which they deem necessary.

(b) The notice of such meeting shall be given at least 7 days before the meetings unless such requirement is waived by the members present in the meeting.

(c) The voting and proceedings of such meetings shall be on show of hands. The Chairman shall have a casting vote.

(d) The minutes shall be kept by the secretarial department and shall be available for inspection during working

hours at the request of the Directors and members.

(e) The Committee shall cause minutes to be duly entered in books provided for the following purpose:-

(i) of all appointments of member;(ii) of the names of members and invitees such as others Director, and employees present at all meetings

of the Committee;(iii) of all actions, resolutions and proceedings at all meetings of committee. Such minutes shall be signed

by the Chairman of the meeting at which the proceedings were held or by the Chairman of the next succeeding meeting in which case the minutes shall be confirmed as correct by a member or members present at the succeeding meeting who was or were also present at the preceding meeting. Such minutes shall be conclusive evidence without further proof of the facts thereon stated; and

(iv) of all other orders made by the members of the Committee.

6. Quorum

A majority of members present must be Independent Directors and shall form the quorum of the Committee.

7. Frequency of Meetings

Meetings shall be held at least every quarter in a calendar year. The external auditor may request a meeting if they consider one necessary.

Corporate Governance Statement

The Board of Directors of QL Resources Berhad recognises the importance of adopting high standards of corporate governance throughout the Group as a fundamental part of discharging its roles and responsibilities to protect and enhance shareholders’ value and financial performance of the Group.

As such, the Board strives to adopt the substance behind corporate governance prescriptions and not merely the form. The Board is therefore committed to maintain high standards of corporate governance by supporting and implementing the prescriptions of the principles and recommendations as set out in the Malaysian Code on Corporate Governance 2012 (“MCCG”).

PRINCIPLE 1: ESTABLISH CLEAR ROLES AND RESPONSIBILITIES

Functions of the Board and Management

The Board is ultimately responsible for establishing all strategies and policies relating to the running of the Company.

The Board’s role is to govern the Company rather than to manage it. In governing the Company, the Directors must act in the best interests of the Company as a whole. It is the role of Senior Management to manage the Company in accordance with the direction and delegations of the Board and the responsibility of the Board to oversee the activities of Management in carrying out these delegated duties.

Board’s Roles and Responsibilities

The Company is led by an experienced and dynamic Board. It has a balanced board composition with effective independent directors. The Board plays a pivotal role in the stewardship of the Group and ultimately enhancing shareholders value. To fulfill this role, the Board is responsible for the following:-

• to review and adopt a strategic plan, addressing the sustainability of the Group’s business; • to oversee the conduct of the Group’s businesses and evaluate whether or not the businesses are being properly managed; • to identify principal business risks faced by the Group and ensure the implementation of appropriate systems to manage

these risks; • to consider and implement succession planning, including appointing, training, fixing the compensation of and, where

appropriate, replacing members of the Board and Senior Management;• to develop and implement an investor relations programme or shareholder communications policy for the Company; and• to review the adequacy and the integrity of the Group’s internal control systems and management information systems,

including systems for compliance with applicable laws, regulations, rules, directives and guidelines.

Ethical Standards through a Code of Conduct

The Board recognises the importance to establish a standard of competence for corporate accountability which includes standard of professionalism and trustworthiness in order to uphold good corporate integrity. The Board will adopt a Code of Conduct which is embedded in the Board Charter of the Company.

Company’s Strategies for Sustainability

The Board recognises the environmental sustainability role as a corporate citizen in its business approach, and always endeavors in adopting most environmental friendly, ecological and cost effective production process.

The Board also endeavors in developing Group objectives and strategies having regard to the Group’s responsibilities to its shareholders, employees, customers and other stakeholders and ensuring the long term stability of the business, succession planning and sustainability of the environment. A corporate social responsibility statement is also set out on page 42 to 43 of this Annual Report.

31

Access to Information and Advice

A record of submissions, papers and material presented to the Board is maintained and kept by the Company Secretary, together with minutes of meetings, and is accessible to Directors during office hours.

All Directors (Executive and Non-Executive) have the same right of access to information relevant to the furtherance of their duties and responsibilities as Directors of the Company, subject to a formal written request to the Board Chairman furnishing satisfactory and explicit justification for such a request.

In addition, the Directors may obtain independent professional advices, where necessary, at the Group’s expenses in furtherance of their duties.

Company Secretary

The Board recognises the fact that the Company Secretary should be suitably qualified and capable of carrying out the duties required of the post.

The key role of the Company Secretary is to provide unhindered advice and services for the Directors, as and when the need arises, to enhance the effective functioning of the Board and to ensure regulatory compliance.

Board Charter

The Board Charter sets out the roles and responsibilities of the Board and Committees, and the rights, process and procedures of the Board. It is drafted in accordance with the principles and recommendations of MCCG, fundamental requirements of provisions in the Companies Act, 1965, Bursa Listing Requirements, Articles and Association of the Company and other applicable rules and regulations.

The Board had formally adopted the Board Charter on 22 May 2013 and is subject to review periodically. The Abridged version

of the Board Charter is available on the Company’s website http://www.ql.com.my.

PRINCIPLE 2: STRENGTHEN COMPOSITION

The Board of Directors delegates specific responsibilities to the respective Committees of the Board namely, the Nominating Committee, the Remuneration Committee, the Audit Committee, the Executive Committee and the Risk Management Committee, all of which have their terms of reference to govern their respective scopes and responsibilities.

Nominating Committee

The Nominating Committee was established on 18 February 2002. The Committee consists entirely of non-executive Directors, all of whom are independent and chaired by the Board Chairman. The members during the year were:

YM Tengku Dato’ Zainal Rashid Bin Tengku Mahmood - Chairman, Independent and Non-Executive Director

Chieng Ing Huong, Eddy - Senior Independent and Non-Executive Director

The Nominating Committee oversees matters relating to the nomination of new Directors, annually reviews the required mix of skills, experience, assessment of independent directors’, reviews succession plans and, boardroom diversity; oversees training courses for directors and other requisite qualities of Directors, as well as the annual assessment of the effectiveness of the Board as a whole, its Committees and the contribution of each individual Director.

The Nominating Committee met once during the financial year to review and assess the following:• Directors’ Performance;• Board effectiveness; and• MCCG 2012.

Criteria for Recruitment and Annual Assessment of Directors

For the assessment and selection of Directors, the Nominating Committee shall consider prospective Directors’ character, experience, competence, integrity and time availability, as well as the following factors:

• industry skills, knowledge and expertise;• professionalism;• diversity;• contribution and performance; and• in the case of candidates for the position of Independent Non-Executive Directors, the Board shall also evaluate the

candidates’ ability to discharge such responsibilities/functions as are expected from Independent Non-Executive Directors.

In recognition of the call for gender diversity to consider female participation in Board membership, the Nominating Committee had recommended and the Board had appointed Datuk Wira Jalilah Binti Baba as Independent Non-Executive Director on 1 April 2013. However, the Board has taken note pertaining to the establishment of policy formalising its approach to boardroom diversity, the Board has no specific policy on setting targets on female candidates to be appointed to the Board. The evaluation of the suitability of candidates is solely based on candidates’ competency, character, time commitment, integrity and experience in meeting the needs of the Company, including where appropriate, the ability of the candidates to act as Independent Non-Executive Director as the case may be. With the current composition, the Board feels that its members have the necessary knowledge, experience, requisite range of skills and competence to enable them to discharge their duties and responsibilities effectively. All Directors on the Board have gained extensive experience with their many years of experience on company Boards and also as professionals in their respective fields of expertise.

Each year, the Board, through Nominating Committee, reviews the board committee’s effectiveness. The Chairman of each board committee should assess the performance of individual member on annual basis. These assessments can be used to facilitate the Nominating Committee’s evaluation of board committees’ performance. The Articles of Association of the Company provide that one third of the Board members are required to retire at every Annual General Meeting and be subjected to re-election by shareholders. Newly appointed directors shall hold office until the next annual general meeting and shall be subjected to re-election by the shareholders. The Articles of Association provided that all Directors shall retire once every three years.

Directors over seventy (70) years of age are required to submit themselves for re-appointment by the shareholders annually in accordance with Section 129(6) of the Companies Act, 1965. The resolution must be passed by a majority of not less than ¾ of such members of the Company present and voting who, being so entitled to do so, vote in person or by proxy at the General Meeting of the Company.

Remuneration Policies and Procedures

The members of the Remuneration Committee during the year were:

YM Tengku Dato’ Zainal Rashid Bin Tengku Mahmood - Chairman/Independent Non-Executive Director

Chieng Ing Huong, Eddy - Senior Independent Non-Executive Director

Chia Song Kun- Non-Independent Excecutive Director

The Remuneration Committee is responsible for reviewing and recommending the remuneration framework for Directors as well as the remuneration packages of Executive Director and Non-Executive Director to the Board, drawing from outside

advice if necessary.

The Board as a whole determines the remuneration of Non-Executive Directors with individual Director abstaining from decisions in respect of their individual remuneration. During the financial year, the Remuneration Committee has meet once to review the remuneration package of the Directors, however going forward shall meet at least 2 times a year.

33

The Remuneration Committee in its recommendation to the Board shall take into account that the component parts of remuneration should be structured so as to link rewards to corporate and individual performance and contribution to the success of the Company in the case of Executive Directors; and that in the case of Non-Executive directors, the level of remuneration should reflect the experience and level of responsibilities undertaken by the particular Non-Executive director.

The aggregate remuneration of directors of the Company is as follows:

Subject Executive Directors Non-Executive Directors

Aggregate Remuneration RM RM

• Directors’ fees 728,722 216,000

• Salaries 2,759,710 -

• Allowance 6,400 8,000

• Bonuses 4,676,334 -

• Benefits-in-kind based on an estimated money value

124,850 -

Total 8,296,016 224,000

Band (RM) No. of Directors No. of Directors

50,000 and below - 2

50,001 – 100,000 - 2

800,000 – 850,000 1 -

850,001 – 900,000 1 -

1,100,001 – 1,150,000 3 -

1,200,001 – 1,250,000 1 -

2,000,001 – 2,050,000 1 -

The Non-Executive Directors will be paid attendance allowance of RM500.00 for each board meeting that they have attended.

PRINCIPLE 3: REINFORCE INDEPENDENCE

Annual Assessment of Independent Directors

The existence of Independent Directors on the board by itself does not ensure the exercise of independent and objective judgment as independent judgment can be compromised by, amongst others, familiarity or close relationship with other board members.

Therefore, the Board with assistance from Nominating Committee will undertake to carry out annual assessment of the independence of its independent directors and focus beyond the Independent Director’s background, economic and family relationships and consider whether the Independent Director can continue to bring independent and objective judgment to board deliberations.

The Nominating Committee had conducted an evaluation of level of independence of the Independent Non-Executive Directors of the Company through the Directors’ self evaluation. The Board is satisfied with the level of independence of the Independent Non-Executive Directors.

Tenure of an Independent Director

The Board in its Charter had provided that upon completion of nine (9) years, an independent director may continue to serve the Board subject to the director’s re-designation as a Non-Independent Director and assessment of the Nominating Committee.

Shareholders’ Approval for Retaining Independent Director exceeding 9 years service

The Board will justify and seek shareholders’ approval to retain 2 of its Independent Directors who has served in that capacity for more than nine (9) years. The Nominating Committee and the Board have assessed, reviewed and determined that the independence of YM Tengku Dato’ Zainal Rashid, who has served on the Board for 13 years and Mr Eddy Chieng,

who has served on the Board for 12 years, remain objective and independent based on the following justifications:-

• they have fulfilled the criteria under the definition of Independent Director pursuant to the Main Market Listing Requirements of Bursa Malaysia;

• they have ensured effective check and balance in the proceedings of the Board and the Board Committees;• they have actively participated in the Board deliberations, provided objectivity in decision making and an independent

voice to the Board and contributed in preventing Board domination by any single party;• they have devoted sufficient time and attention to their responsibilities as an independent Non-Executive Director of

the Company; and• they have exercised their due care in the interest of the Company and shareholders during their tenure as an

Independent Non-Executive Director of the Company.

Separation of Positions of Chairman and Group Managing Director (“GMD”)

The positions of Chairman and GMD are held by different individuals and the Chairman is an Independent Non-Executive Director of the Board and there is a clear division of responsibilities of these individuals to ensure a balance of authority and power. Their roles and responsibilities were defined in the Board Charter.

Composition of the Board

As at the date of this statement, the Board consists of eleven members; comprising one Independent and Non-Executive Chairman, seven Executive Directors and three Independent and Non-executive Directors.

The Board will ensure that its size and composition is optimum and well balanced, which is consistent with the size of the Group and its operation. At least 1/3 of the Board, or two (2) members, whichever higher, shall consist of Independent Non-Executive Directors. The Company’s Articles of Association allows a minimum of 2 and maximum of 15 Directors.

A brief profile of each Director is presented on pages 16 to 21 of this Annual Report. The Directors have wide ranging experience and all have occupied or currently occupying senior positions both in the public and private sectors. The Board has appointed Mr Eddy Chieng as the Senior Independent and Non-executive Director to whom concerns may be conveyed by shareholders and the public.

PRINCIPLE 4: FOSTER COMMITMENT

Time Commitment

During the financial year ended 31 March 2013, the Board met on five (5) occasions and 18 circular resolutions were passed; where it deliberated upon and considered a variety of matters including the Group’s financial results, major investments and strategic decisions and the business plan and direction of the Group.

The Board receives documents on matters requiring its consideration prior to and in advance of each meeting to enable them to obtain explanations, where necessary to allow them to effectively discharge their responsibilities. All proceedings from the Board meetings are minuted and signed by the Chairman of the meeting.

Details of each existing Director’s meeting attendances are as follows:

Name of Director Designation Attendance

YM Tengku Dato’ Zainal Rashid Bin Tengku Mahmood Independent and Non-Executive Chairman 5/5

Chia Song Kun Managing Director and Executive Director 5/5

Chia Seong Pow Non-Independent and Executive Director 5/5

Chia Seong Fatt Non-Independent and Executive Director 5/5

Chia Song Swa Non-Independent and Executive Director 5/5

Chia Song Kooi Non-Independent and Executive Director 5/5

35

Name of Director Designation Attendance

Chia Mak Hooi Non-Independent and Executive Director 5/5

Cheah Juw Teck Non-Independent and Executive Director 5/5

Chieng Ing Huong, EddySenior Independent and Non-Executive Director

5/5

Tan Bun Poo, Robert Independent and Non-Executive Director 5/5

Teh Kim Teh(Resigned on 31 March 2013)

Independent and Non-Executive Director 5/5

Datuk Wira Jalilah Binti Baba(Appointed on 1 April 2013)

Independent and Non-Executive Director N/A

Directors shall devote sufficient time to carry out their responsibilities. Directors shall notify the Chairman before accepting any new directorships and the notification shall provide for an indication of time that will be spent on the new appointment.

A Director of the Company or Group shall not hold more than five (5) directorships in listed company or such lesser number as required under MMLR.

Continuing Education Programmes

Newly appointed Directors are required to undergo the mandatory accreditation programme under the requirements of Bursa Malaysia. The Board through Nominating Committee shall review the training needs of the Directors annually, each Director is required to attend at least one training per year. Directors are encouraged to attend relevant training courses/seminars at periodic intervals to keep them abreast with development pertaining to the oversight function of Directors as well as updates on technical matters, for example financial reporting standards, tax budgets, etc.

The Training Programmes, Seminar and Briefings attended by Directors during the financial year ended 31 March 2013 are as follows:-

Name Seminar/Course Organiser

1. Chia Song Kun Understanding The Governance Framework for Boardroom Excellence – MCCG 2012 & Amended Listing Requirements

Bursatra Sdn. Bhd.

2. Chia Seong Pow3. Chia Song Swa4. Chia Song Kooi

5. YM Tengku Dato’ Zainal Rashid Bin Tengku Mahmood

Directors’ Duties and Responsibilities under Companies Act, 1965 and Directors’ Obligations under Listing Requirements

Malaysian Investor Relations Association

6. Chia Seong Fatt The 7th China International Oils and Oilseeds Conference Dalian Commodity Exchange

Annual Palm and Lauric Oils Conference & Exhibition: Price Outlook 2013/14 (POC2013)

Bursa Malaysia Derivatives

7. Chia Mak Hooi Making the Most of the Chief Financial Officer Role: Everyone’s Responsibility?

Bursa Malaysia

8. Cheah Juw Teck Sustainability Training for Directors & Practitioners Bursa Malaysia

9. Chieng Ing Huong Malaysian Code on Corporate Governance 2012 Bursatra Sdn. Bhd.

2012 IBM Global CEO Study Launch IBM Corporation Inc

Economic & Investment Outlook – US, Europe, China & India by Julius Bar

WPO-CPE (YPO AGM)

10. Teh Kim Teh Malaysian Code on Corporate Governance 2012 Bursatra Sdn. Bhd.

11. Tan Bun Poo Board’s Role in Governance & Audit Committee Oversight Responsibilities – Passion Beyond Numbers

Bursatra Sdn. Bhd.

PRINCIPLE 5: UPHOLD INTEGRITY IN FINANCIAL REPORTING

Compliance with Applicable Financial Reporting Standards

The Board aims to present a balanced and understandable assessment of the Company’s and the Group’s position and prospects in the various financial reports to the shareholders, investors and regulatory authorities. The assessment is primarily provided in the annual report through the Chairman’s Statement, the audited financial statements and the quarterly results announcement.

The Audit Committee reviews the integrity and reliability of the quarterly financial statements and audited financial statements prior to recommending to the Board. The GMD, Finance Director, Group Accountant, Risk Manager, external auditors and internal auditors are invited to participate in the Audit Committee Meeting periodically and as and when required.

The Audit Committee will also meet with the external auditors without the presence of any Executive Directors and management at least twice in a financial year to discuss any matters that the Audit Committee members and the external auditors may wish to discuss.

In presenting the annual financial statements and the quarterly announcements to shareholders, the Board has taken reasonable steps to ensure that the financial statements are true and fair reflection of the Group’s position and prospects. This also applies to circulars to shareholders and other documents that are submitted to the authorities and regulators.

Directors’ responsibility statement in respect of the preparation of the audited financial statements is set out on page 39 of this Annual Report.

Assessment of Suitability and Independence of External Auditors by the Audit Committee

The Company, through the Audit Committee, has an appropriate and transparent relationship with the external auditors. In the course of audit of the Group’s operation, the external auditors have highlighted to the Audit Committee and the Board, matters that requires the Board’s attention. The external auditors provide statutory audit function to the Group.

A summary of the activities of the Audit Committee during the year, including the evaluation of the independent audit process, are set out in the Audit Committee Report on pages 26 to 29 of this Annual Report. The assessment of suitability and independence of the external auditors was not performed by the Audit Committee during the financial year ended 31 March 2013.

The Audit Committee discusses the nature and scope of audit and reporting obligations with the external auditors before commencement of audit engagement. It is also the practice of the Audit Committee to respond to auditors’ enquiries and recommendations, if any, to ensure compliance with the various approved accounting standards in the preparation of the Group’s financial statements.

The Audit Committee is empowered by the Board to review all issues in relation to appointment and re-appointment, resignation or dismissal of external auditors. The external auditors have confirmed, at an Audit Committee meeting that, they are, and have been, independent throughout the conduct of audit engagement in accordance with terms of relevant professional and regulatory requirements.

Going forward, the Audited Committee will establish procedures to assess the suitability and independence of the external auditors as well as policy governing the circumstance under which contracts for provision of non-audit services could be entered into by the external auditors.

PRINCIPLE 6: RECOGNISE AND MANAGE RISKS

Sound Framework to Manage Risks

The Board of Directors acknowledges its responsibility for maintaining a sound system of internal control covering not only financial controls but also controls relating to operational, compliance and risk management to safeguard shareholders’ investments and the Group’s assets. There is an on-going review process by the Board to ensure the adequacy and integrity of the system and accord with the Statement on Risk Management & Internal Control : Guidelines for Directors of Listed Issuers (the “Internal Control Guidance”). However, the Board recognises that reviewing of the Group’s system of internal controls is a concerted and continuing process, designed to manage rather than eliminate the risk of failure to achieve business objectives. In pursuing this objective, internal control can only provide reasonable and not absolute assurance against material misstatement or loss.

37

The Statement on Risk Management and Internal Control furnished on pages 40 to 41 of this Annual Report provides an overview of the state of internal controls within the Group.

Internal Audit Function

The Company has outsourced its internal audit function to an independent professional consulting firm who, together with the Risk Management Manager, which is tasked with the aim of providing assurance to the Audit Committee and the Board on the adequacy and effectiveness of the internal control systems and risk management in the Company. This function also acts as a source to assist the Audit Committee and the Broad to strengthen and improve current management and operating style in pursuit of best practices.

A summary of the major areas of work performed by the Internal Audit during the year are set out in the Audit Committee Report on pages 26 to 27 of this Annual Report.

PRINCIPLE 7: ENSURE TIMELY AND HIGH QUALITY DISCLOSURE

Corporate Disclosure Policies

In line with increased investor awareness for greater accountability and transparency, the Board will formalise a Corporate Disclosure Policy and procedure which is in line with requirements of Main Market Listing Requirements of Bursa Malaysia to enable comprehensive, timely and accurate disclosures on the Group to the regulators, shareholders and other stakeholders.

Leverage on Information Technology for Effective Dissemination of Information

The Company uses information technology in communicating with stakeholders, including a dedicated section for Investor Relations on the Company’s website http://www.ql.com.my. This site provides information such as, amongst others, the Company’ performance, corporate strategy, Annual Report, various announcements and other matters affecting shareholders’ interests.

PRINCIPLE 8: STRENGHTHEN RELATIONSHIP BETWEEN COMPANY AND SHAREHOLDERS

Shareholders’ Participation at General Meeting

The Annual General Meeting (“AGM”) is the principal forum for dialogue between the Company and its shareholders and investors. At the AGM, the Board briefs the shareholders on the status of the Group’s businesses and operations. The shareholders are given the opportunity to raise questions on the Group’s activities and prospects as well as to communicate their expectations and concerns to the Company. Extraordinary General Meeting is held as and when shareholders’ approvals are required on specific matters.

The Board will consider adopting electronic voting to facilitate greater shareholders participation when the facilities for electronic voting mechanism are more prevalent in the future.

Poll Voting

The Board encourages poll voting for substantive resolutions, whilst the ordinary business resolutions are being voted by show of hands. The Chairman does inform the shareholders of their right to demand a poll vote at the commencement of the general meeting.

Effective Communication and Proactive Engagements with Shareholders

The Company recognises the importance of communicating with its shareholders and does this through the Annual Report, AGM and announcements via Bursa Malaysia. The Company has set up a website to enable an active dialogue with its investors and shareholders with the intention of giving investors and shareholders a clear and complete picture of the Company’s performance and position as possible. Further, QL’s investors relation activities serves as an important communication channel with the shareholders, investors and the investment community, both in Malaysia and internationally. Additionally, a press conference is held immediately after the AGM where the Managing Director advises the press of the resolutions passed, and answers questions on the Group. The Chairman and the Executive Director are also present at the press conference to clarify and explain any issue.

OTHER INFORMATION

(a) Recurrent Related Party Transactions (RRPT) of revenue nature

The shareholders of the Company approved the Proposed Shareholders’ Mandate for RRPT of revenue nature during its AGM held on 24 August 2012.

The Company is also seeking shareholders approval to renew the Proposed Shareholders’ Mandate for RRPT in the forthcoming AGM. The details of the RRPT entered into or to be entered by the Company or its subsidiaries with related parties are included in the Circular to Shareholders.

(b) Share Buy Back

The Shareholders of the Company approved the Proposed Renewal of Share Buy Back Authority during its AGM held on 24 August 2012.

The Company is also seeking shareholder approval to renew the Share Buy Back Authority in the forthcoming AGM. The details of the Share Buy Back are included in the Circular to Shareholders.

(c) Non-audit fee

The amount of non-audit fees charged by the external auditor for the financial year ended 31 March 2013 is RM117,000.

The Board has deliberated, reviewed and approved the Corporate Governance Statement on 10 July 2013.

ADDITIONAL COMPLIANCE INFORMATION

In compliance with Bursa Malaysia Listing Requirements, the following additional information is provided:-

During the financial year under review, there were no:

i) share buy back exercise; ii) American Depository Receipt (ADR) or Global Depository Receipt (GDR) programme sponsored by the Company;iii) sanctions and/or penalties imposed on the Company and its subsidiaries, directors or management by the relevant

regulatory bodies;iv) material variance between the results for the financial year and the unaudited results previously announced; v) profit guarantees given by the Company;vi) material contracts between the Company and its subsidiaries that involve directors’ or major shareholders’ interests,

except as those disclose on RRPT transactions;vii) contract of loans between the Company and its subsidiaries that involve directors’ or major shareholders’ interests;viii) options, warrants or convertible securities exercised, save for as follows:-

a) Conversion of Warrants

There was an issuance of 17,822 ordinary shares of RM0.25 each arising from the exercise of 17,822 Warrant 2011/2013 at an exercise price of RM3.30 per warrant.

The Warrant 2011/2013 has expired on 13 February 2013.

39

Statement of Directors’ Responsibility

Directors are required by Company Law to prepare financial statement for each financial year which give a true and fair view of the state of affairs of the Group and of the Company at the end of the financial year and of the results of the Group and of the Company for the financial year then ended.

In preparing those financial statements, the Directors have:• adopted suitable accounting policies and then apply them consistently;• made judgements and estimates that are prudent and reasonable;• ensures applicable accounting standards for entities other than private entities have been followed, subject to any

material departures disclosed and explained in the financial statements; and• prepared the financial statements on the going concern basis unless it is inappropriate to presume that the Group and

the Company will continue in business.

The Directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the Group and of the Company and to enable them to ensure that the financial statements comply 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.

Directors’ Shareholdings (as at 28 June 2013)

No. of shares held

Name of directors Direct %^ Indirect %^

YM Tengku Dato’ Zainal Rashid Bin Tengku Mahmood 2,700,000 0.32 - -

Chia Song Kun 450,000 0.05 383,677,998 * 46.11

Chia Seong Pow 1,880,000 0.23 111,132,740 # 13.36

Chia Song Kooi 580,000 0.07 377,753,882 ** 45.40

Chia Seong Fatt 324,000 0.04 110,121,540 ## 13.24

Chia Song Swa 378,000 0.05 376,486,682 ** 45.25

Chia Mak Hooi 465,000 0.06 380,331,382 @ 45.71

Cheah Juw Teck 1,380,000 0.17 4,859,800 + 0.58

Chieng Ing Huong, Eddy - - - -

Tan Bun Poo, Robert - - - -

Datuk Wira Jalilah Binti Baba (appointed on 1 April 2013)

- - - -

Notes:

* Deemed interest via his and his spouse’s interest in CBG Holdings Sdn. Bhd. (“CBG”), Attractive Features Sdn. Bhd., his and his spouse’s indirect interest in Ruby Technique Sdn. Bhd. (“RT”) as well as his spouse’s, children’s and their spouse’s shares in QL.

** Deemed interest via his interest in CBG and indirect interest in RT and his spouse’s shares in QL. # Deemed interest via his and his spouse’s beneficial shareholding in Farsathy Holdings Sdn. Bhd. (“FH”), his and his

spouse’s indirect interest in RT, his spouse’s and children’s shares in QL.## Deemed interest via his and his spouse’s beneficial shareholding in FH, his and his spouse’s indirect interest in RT and

his children’s shares in QL. @ Deemed interest via his and his father’s interest in CBG, his and his father’s indirect interest in RT and his father’s and his

spouse’s shares in QL. + Deemed interest via his spouse’s and his parent’s shares in QL. ^ Based on the issued and paid-up share capital of the Company comprising 832,019,620 ordinary shares.

Statement on Risk Managementand Internal Control

Board’s Responsibilities

The Board of Directors acknowledges its responsibility for maintaining a sound system of internal control covering not only financial controls but also controls relating to operational, compliance and risk management to safeguard shareholders’ investments and the Group’s assets. There is an on-going review process by the Board to ensure the adequacy and integrity of the system and accord with the Statement on Risk Management and Internal Control: Guidelines for Directors of Listed Issuers. However, the Board recognises that reviewing of the Group’s system of internal controls is a concerted and continuing process, designed to manage rather than eliminate the risk of failure to achieve business objectives. In pursuing this objective, internal control can only provide reasonable and not absolute assurance against material misstatement or loss.

Control Environment

The key elements of the Group’s control environment are summarized as follows:

• Organisational structure and accountability levels

Key responsibilities and lines of accountability within the Group are defined, with clear reporting lines up to the Senior Management of the Group and to the Board of Directors of QL Resources Berhad. The Group’s delegation of authority sets out the decisions that need to be taken and the appropriate authority levels of Management including matters that require Board approval.

• Strategic business planning processes

Business planning and budgeting is undertaken bi-annually, to establish plans and targets against which performance is monitored.

• Reporting and review

The Group’s management teams carry out the monitoring and reviewing of the financial results and forecasts for all businesses within the Group, including reporting thereon, of performance against the operating plans and annual budgets. The Group’s management teams then formulate action plans to address any areas of concern.

• Control procedures

Operating companies in the Group maintains policies and procedures for sales, procurement and cash management processes to establish the accountabilities and standard controls procedures. These policies and procedures are revised as needed to meet changing business needs.

Internal Audit

Internal audits are carried out by an independent professional services firm to review the effectiveness and adequacy of the internal control systems of certain business units during the financial year ended 31 March 2013. The internal audit team had completed the review of certain internal controls for selected subsidiaries in the Group and had highlighted to the executive and operational management on areas for improvement. The reports are submitted to the Audit Committee, which reviews the findings with management at the Audit Committee Meeting. In assessing the adequacy and effectiveness of the system of internal controls of the Group, the Audit Committee reports to the Board of Directors its activities, significant results, findings and the necessary recommendations or changes.

41

Risk Management

The Board have formalised a Risk Management framework that projects the Group’s desire to identify, evaluate and manage significant business risks. The Risk Management Committee had carried out its duties in accordance with the Group’s Risk Management Policies and Procedures.

The Committee had monitored and reviewed the Risk Management plan and activities and had reported to the Audit Committee on a quarterly basis. The Audit Committee had, on a quarterly basis, performed formal reviews on the adequacy and integrity of the system of internal controls.

The risk management framework enhances risk oversight and facilitates in continuously identifying significant risks of the Group. Instituted controls are consistently applied by the Management to achieve acceptable exposures consistent with the Group’s risk management practices.

Conclusion The Board is of the view that there is no significant breakdown or weaknesses in the system of internal control of the Group that may result in material losses incurred by the Group for the financial year ended 31 March 2013. The Group continues to take the necessary measures to ensure that the system of internal control is in place and functioning effectively.

The Group’s system of internal control applies to QL Resources Berhad and its subsidiaries. Associated companies have been excluded because the Group does not have full management and control over them. However, the Group’s interest is served through representations on the boards of the respective Associate companies.

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

Corporate Social Responsibility at QL

Corporate Social Responsibility is intrinsically entwined with QL’s business model. As such, the projects in which we invest remain sustainable in the long term and benefit one or several stakeholders, including the environment, while adding value to QL. Our business model, and our CSR, brings employment and microfinance to underprivileged rural communities, creates green solutions that reduce environmental damage and produces safe and nutritious food that helps in the fight for food security. In line with Bursa Malaysia’s four key pillars of CSR, our report serves as an update on our efforts in the Environment, Community, Workplace and Market Place.

Environment

The palm oil milling industry has long been considered environmentally damaging due to POME, or palm oil mill effluent, a waste by-product of the milling process. Traditional POME treatment involved open lagoon fermentation, which emitted a type of biogas that was inherently damaging to the environment. The open lagoon methodology was also highly inefficient and costly. With R&D investment, QL constructed an innovative biogas plant that ferments and treats POME, capturing its biogas emissions, consisting mainly of methane, and converting it into electricity. The digestate from the biogas plant is dewatered and processed into organic fertilizer, while liquids go through secondary and tertiary water treatment to maximise purity. With this innovative solution QL has turned cost to profit while significantly reducing our effect on the environment.

The Palm Oil Mill Effluent Biogas project has produced the following results:• A holistic and effective POME treatment which results in

cleaner effluent discharge• QL’spalmmillingbiogasplanthasthecapacitytotreatupto50

metric tonnes of POME per hour• A reduction in methane emissions (Green House Gas) by

approximately 40,000 metric tonnes of carbon emission reduction (CER) per year

• The production of 2megawatts of electricitywhich can besold or reused for internal power generation.

In total QL has invested over USD$30 million into clean energy projects that minimise the impact of agricultural waste on the environment while turning cost to profit. Another example of this is the Chicken Manure Biogas Renewable Energy project in our Pajam poultry farm. It follows a similar process to the Palm Oil Mill Effluent Biogas plant, whereby waste – in this case chicken manure – is processed in a biogas plant and subsequently converted into electricity.

The anaerobic digestion process takes place in air-tight digester tanks, which eliminate any odour emissions associated with chicken manure fermentation. The fermented biogas produced is scrubbed and piped to gas engines for power generation. The digestate from

the biogas plant is dewatered and processed into organic fertilizer, while the liquid portion is treated through a reed bed system so that the water can be recycled. Thus, there is minimal discharge of wastewater and fermented ammonia. As a result, the project directly benefits the communities which live close to the plant, while also minimising the farm’s environmental footprint.

Community

Since 1987 QL has operated the Fishermen’s Financial Assistance Scheme (FFAS), a classic example of business model innovation that creates value for the Company in tandem with the rural community. QL needed to secure a consistent supply of good quality marine catch, and fishermen needed access to capital funding as no traditional financial establishment would risk lending to them. This problem was the genesis of FFAS. The scheme provides interest-free microfinance to fishermen to upgrade their boats and equipment and in exchange QL receives first right of refusal of catch at market prices.

FFAS operates with stringent lending-management practices and in-depth understanding of the risk factors. In this way we minimise our exposure to defaults. Similar to the microfinance concept made famous by Grameen Bank in Bangladesh, QL’s FFAS empowers fishermen and allows them to improve their livelihoods. Fishing communities that have access to the scheme have seen noticeable increases in standards of living as result of FFAS and its economic multiplying effect. At any one time we have a thousand fishermen taking part in the scheme, and to date the book value exceeds RM40 million.

Workplace

The culture of QL Resources is based on a Value for All philosophy. We recognise that it is our personal and corporate responsibility to get involved and share value with less fortunate members of society. So it was that in FY2013 some of our employees took part in a treasure hunt and raised RM10,000 for the Kiwanis Down Syndrome Foundation, a charitable initiative created to help Down Syndrome children and their families. Kiwanis provides physiotherapy, occupational therapy, speech therapy and special educational help to this special section of our society. It was with great pride that we were able to contribute this year.

Many of QL’s management participate in The 7 Habits Of Highly Effective People training on an on-going basis. Habit 7, to Sharpen the Saw, focusses on development of the physical, spiritual, mental and social components of the self, and is strongly encouraged within the Company. Sharpening the Saw balances and renews an individual’s resources, energy, and health to create a sustainable, long-term, effective lifestyle. The Company promotes The 7 Habits, and Sharpen the Saw in particular, as it gels with our Value for All philosophy. Our management receives internationally renowned

43

personal development and the company is strengthened by its leaders’ greater productivity, improved communication, strengthened relationships, increased influence, and precise focus on critical priorities.

Market Place

Palm biomass waste contains stores of energy that can be used a burning fuel for biomass boilers. QL’s Palm Biomass Pellet project was undertaken with the development of an innovative production process that converts empty fruit bunches – a palm processing biomass waste – into condensed palm biomass pellets that are rich in energy and capable of powering industrial processes. Palm pellets are an environmentally sound substitute for coal and fossil fuel oil, though they must be burned in a biomass boiler. For every metric tonne of coal substituted palm pellet biofuel, more than 1 MT of CO2 emissions are reduced. In addition, the real-time treatment of EFB in palm oil mills into every MT of palm pellet biofuel also reduces our EFB landfill GHG emission by an average of 1 MT of CO2-equivalent. The production of palm pellets is powered by our Palm Oil Mill Effluent Biogas plant, which further reduces the environmental impact of QL’s operations. Long term sustainability of the product is assured as agricultural residue does not depend on deforestation. In FY2013 the Palm Biomass Pellet project was officially registered with the United Nations Framework Convention on Climate Change’s Clean Development Mechanism (CDM).

Financial Statements

45

The Directors have pleasure in submitting their report and the audited financial statements of the Group and of the Company for the financial year ended 31 March 2013.

Principal activities

The Company is principally engaged in investment holding and provision of management services, whilst the principal activities of the subsidiaries are as stated in Note 33 to the financial statements. There has been no significant change in the nature of these activities during the financial year.

Results Group Company RM’000 RM’000

Profit for the year attributable to: Owners of the Company 131,706 24,415 Non-controlling interests 5,846 - 137,552 24,415

Reserves and provisions

There were no material transfers to or from reserves and provisions during the financial year under review except as disclosed in these financial statements.

Dividends

Since the end of the previous financial year, the Company declared and paid a final single tier dividend of 4.50 sen per ordinary share totalling RM37,440,000 in respect of the financial year ended 31 March 2012 on 14 September 2012.

The Directors recommend a final single tier dividend of 4.50 sen per ordinary share in respect of the year ended 31 March 2013 subject to the approval of the shareholders at the forthcoming general meeting. Based on the issued and paid-up capital of the Company at the end of the reporting period, the final dividend would amount to approximately RM37,441,000.

Directors of the Company

Directors who served since the date of the last report are:

Tengku Dato’ Zainal Rashid bin Tengku Mahmood Chia Song Kun Chia Seong Pow Chia Seong Fatt Chia Song Kooi Chia Song Swa Chia Mak Hooi Cheah Juw Teck Chieng Ing Huong Tan Bun Poo Datuk Wira Jalilah Binti Baba (Appointed on 01.04.2013) Teh Kim Teh (Resigned on 31.03.2013)

Directors’ Report for the year ended 31 March 2013

47

Directors’ interests in shares The interests and deemed interests in the ordinary shares and warrants of the Company and of its related companies (other than wholly-owned subsidiaries) of those who were Directors at financial year end (including the interests of the spouses and children of the Directors who themselves are not Directors of the Company) as recorded in the Register of Directors’ Shareholdings are as follows:

Number of ordinary shares of RM0.25 each At At 1.4.2012 Bought Sold 31.3.2013

Shareholdings in the Company which Directors have direct interests

Tengku Dato’ Zainal Rashid bin Tengku Mahmood 2,700,000 - - 2,700,000 Chia Song Kun 450,000 - - 450,000 Chia Seong Pow 1,880,000 - - 1,880,000 Chia Seong Fatt 324,000 - - 324,000 Chia Song Kooi 580,000 - - 580,000 Chia Song Swa 378,000 - - 378,000 Chia Mak Hooi 465,000 - - 465,000 Cheah Juw Teck 1,320,000 22,000 - 1,342,000

Shareholdings in the Company which Directors have indirect interests

Chia Song Kun 383,344,998 333,000 - 383,677,998 Chia Seong Pow 110,932,740 200,000 - 111,132,740 Chia Seong Fatt 109,921,540 200,000 - 110,121,540 Chia Song Kooi 377,553,882 200,000 - 377,753,882 Chia Song Swa 376,286,682 200,000 - 376,486,682 Chia Mak Hooi 380,370,682 200,000 (239,300) 380,331,382 Cheah Juw Teck 4,939,800 - (100,000) 4,839,800 Teh Kim Teh 185,000 - - 185,000

Directors’ Report for the year ended 31 March 2013(continued)

Directors’ interests in shares (continued) Number of warrants* At At 1.4.2012 Granted Exercised Lapsed 31.3.2013

Warrant holdings in the Company which Directors have direct interests

Tengku Dato’ Zainal Rashid bin Tengku Mahmood 135,000 - - (135,000) - Chia Song Kun 22,500 - - (22,500) - Chia Seong Pow 36,000 - - (36,000) - Chia Seong Fatt 16,200 - - (16,200) - Chia Song Kooi 9,000 - - (9,000) - Chia Song Swa 18,900 - - (18,900) - Chia Mak Hooi 18,000 - - (18,000) - Cheah Juw Teck 66,000 - - (66,000) -

Warrant holdings in the Company which Directors have indirect interests

Chia Song Kun 19,010,905 - - (19,010,905) - Chia Seong Pow 5,494,137 - - (5,494,137) - Chia Seong Fatt 5,503,577 - - (5,503,577) - Chia Song Kooi 18,885,200 - - (18,885,200) - Chia Song Swa 18,821,840 - - (18,821,840) - Chia Mak Hooi 18,916,540 - - (18,916,540) - Cheah Juw Teck 96,400 - - (96,400) -

* The warrants expired on 13 February 2013 and thus, any unsold/unexercised warrants have lapsed.

By virtue of their interest in the shares of the Company, Chia Song Kun, Chia Seong Pow, Chia Seong Fatt, Chia Song Kooi, Chia Song Swa and Chia Mak Hooi are also deemed interested in the shares of all subsidiaries disclosed in Note 33 to these financial statements to the extent that the Company has an interest. Details of their deemed shareholdings in non-wholly owned subsidiaries are shown in Note 33.1 to these financial statements.

The other Directors, Chieng Ing Huong and Tan Bun Poo, holding office at 31 March 2013 did not have any interest in the ordinary shares and warrants of the Company and of its related companies during the financial year.

49

Directors’ benefits Since the end of the previous financial year, no Director of the Company has received nor become entitled to receive any benefit (other than a benefit included in the aggregate amount of emoluments received or due and receivable by Directors as shown in the financial statements or the fixed salary of a full time employee of the Company or of related corporations) 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, other than certain Directors who have significant financial interests in companies which traded with certain companies in the Group in the ordinary course of business.

There were no arrangements during and at the end of the financial year which had the object of enabling Directors of the Company to acquire benefits by means of the acquisition of shares in or debentures of the Company or any other body corporate.

Issue of shares and debentures During the financial year, the Company issued 17,822 new ordinary shares of RM0.25 each for cash pursuant to conversion of warrants at an exercise price of RM3.30 per share.

There were no other changes in the authorised, issued and paid-up capital of the Company during the financial year.

There were no debentures issued during the financial year.

Options granted over unissued shares No options were granted to any person to take up unissued shares of the Company during the financial year.

Share buy-back The shareholders of the Company, by an ordinary resolution passed in an extraordinary general meeting held on 24 August 2012, renewed the Company’s plan to buy-back its own shares.

There was no share buy-back during the financial year.

Other statutory information Before the financial statements of the Group and of the Company were made out, the Directors took reasonable steps to ascertain that: i) all known bad debts have been written off and adequate provision made for doubtful debts, and

ii) any current assets which were unlikely to be realised in the ordinary course of business have been written down to an amount which they might be expected so to realise.

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

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

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

iii) which have arisen which render adherence to the existing method of valuation of assets or liabilities of the Group and of the Company misleading or inappropriate, or

iv) not otherwise dealt with in this report or the financial statements, that would render any amount stated in the financial statements of the Group and of the Company misleading.

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

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

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

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

In the opinion of the Directors, the financial performance of the Group and of the Company for the financial year ended 31 March 2013 have not been substantially affected by any item, transaction or event of a material and unusual nature nor has any such item, transaction or event occurred in the interval between the end of that financial year and the date of this report.

Directors’ Report for the year ended 31 March 2013 (continued)

51

Significant events during the year The significant events during the year are as disclosed in Note 34 to the financial statements.

Subsequent events The significant subsequent events are as disclosed in Note 35 to the financial statements.

Auditors The auditors, Messrs KPMG, have indicated their willingness to accept re-appointment.

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

Chia Song Kun

Chia Mak Hooi

Shah Alam,

Date: 10 July 2013

Statements of financial position as at 31 March 2013

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

Assets Property, plant and equipment 3 960,702 877,260 580 517 Intangible assets 4 7,229 7,586 - - Biological assets 5 111,838 103,979 - - Investment properties 6 29,466 4,077 - - Prepaid lease payments 7 53,300 51,700 - - Investment in subsidiaries 8 - - 418,517 273,933 Investment in associates 9 74,564 65,819 23,432 23,432 Other investments, including derivatives 10 - 40 - - Deferred tax assets 11 539 593 - - Trade and other receivables 12 2,817 1,355 118,102 26,407

Total non-current assets 1,240,455 1,112,409 560,631 324,289

Inventories 13 219,363 153,207 - - Biological assets 5 74,168 61,365 - - Other investment, including derivatives 10 138 442 19 97 Trade and other receivables 12 279,668 215,000 352,466 397,910 Prepayments and other assets 14 37,595 17,348 305 308 Current tax assets 9,007 9,249 684 884 Asset held for sale 15 7,035 134 - - Cash and cash equivalents 16 141,101 101,503 4,568 9,658

Total current assets 768,075 558,248 358,042 408,857

Total assets 2,008,530 1,670,657 918,673 733,146

53


Equity Share capital 208,005 208,000 208,005 208,000 Share premium 113,599 113,544 113,599 113,544 Reserves 569,177 490,052 5,187 17,790

Equity attributable to owners of the Company 890,781 811,596 326,791 339,334

Non-controlling interests 68,857 68,438 - -

Total equity 17 959,638 880,034 326,791 339,334

Liabilities Loans and borrowings 18 451,074 304,375 418,934 271,485 Employee benefits 19 769 368 - - Deferred tax liabilities 11 59,791 54,018 - -

Total non-current liabilities 511,634 358,761 418,934 271,485

Trade and other payables, including derivatives 20 152,536 136,779 56,565 34,655 Loans and borrowings 18 376,679 292,143 116,383 87,672 Current tax liabilities 8,043 2,940 - -

Total current liabilities 537,258 431,862 172,948 122,327

Total liabilities 1,048,892 790,623 591,882 393,812

Total equity and liabilities 2,008,530 1,670,657 918,673 733,146

The notes on pages 64 to 145 are an integral part of these financial statements.

Statements of profit or loss and other comprehensive income for the year ended 31 March 2013


Revenue - sale of goods 2,146,307 1,946,672 - - - dividend income - - 30,354 39,325 - management fee - - 3,949 3,015 - administrative charges - - 2,491 1,727

2,146,307 1,946,672 36,794 44,067Cost of sales (1,795,179) (1,645,188) - - Gross profit 351,128 301,484 36,794 44,067

Administration expenses (117,318) (105,874) (11,209) (11,211)Distribution costs (37,130) (28,048) - - Other expenses (15,765) (13,421) - - Other income 11,220 30,674 20 10,188

Results from operating activities 21 192,135 184,815 25,605 43,044Finance costs 22 (28,593) (22,648) (19,552) (14,603)Finance income 23 1,931 1,688 20,173 17,355Share of profits of equity accounted investees, net of tax 7,236 8,427 - - Profit before tax 172,709 172,282 26,226 45,796Tax expense 24 (35,157) (33,113) (1,811) (2,167) Profit for the year 137,552 139,169 24,415 43,629

55


Other comprehensive (expenses)/ income, net of tax

Items that may be reclassified subsequently to profit or loss Foreign currency translation differences for foreign operations (15,178) (12,759) - - Fair value of available-for-sale financial assets - Gain arising during the year - 3,128 - 3,128 - Reclassification adjustments for gain included in profit or loss - (10,150) - (10,150) - (7,022) - (7,022) Cash flow hedge 579 (578) 422 (357) Total other comprehensive (expenses)/ income for the year (14,599) (20,359) 422 (7,379) Total comprehensive income for the year 122,953 118,810 24,837 36,250 Profit attributable to: Owners of the Company 131,706 131,407 24,415 43,629 Non-controlling interests 5,846 7,762 - - Profit for the year 137,552 139,169 24,415 43,629 Total comprehensive income attributable to: Owners of the Company 117,098 111,052 24,837 36,250 Non-controlling interests 5,855 7,758 - - Total comprehensive income for the year 122,953 118,810 24,837 36,250 Basic/Diluted earnings per ordinary share (sen) 25 16 16

The notes on pages 64 to 145 are an integral part of these financial statements

Consolidated statements of changes in equity for the year ended 31 March 2013

At 1

Apr

il 20

11

208,

000

113,

561

(4,3

42)

7,022

-

41

1,68

0 73

5,92

1 63

,431

79

9,35

2Fo

reig

n cu

rren

cy tr

ansl

atio

n

diffe

renc

es fo

r for

eign

ope

ratio

ns

-

-

(12,

759)

-

-

-

(12,

759)

-

(1

2,75

9)

Fair

valu

e of

ava

ilabl

e-fo

r-sal

e fin

anci

al a

sset

s

- Gai

n ar

ising

dur

ing

the

year

-

-

-

3,

128

-

-

3,

128

-

3,12

8

- Rec

lass

ifica

tion

adju

stm

ents

for g

ain

incl

uded

in p

rofit

or l

oss

-

-

-

(10,

150)

-

-

(1

0,15

0)

-

(10,

150)

Cas

h flo

w h

edge

-

-

-

-

(5

74)

-

(5

74)

(4)

(578

) To

tal o

ther

com

preh

ensi

ve e

xpen

ses

fo

r the

yea

r

-

-

(1

2,75

9)

(7,0

22)

(574

)

-

(20,

355)

(4

) (2

0,35

9)

Profi

t for

the

year

-

-

-

-

-

13

1,40

7

13

1,40

7 7,7

62

139,1

69

Tota

l com

preh

ensi

ve (e

xpen

ses)

/inco

me

fo

r the

yea

r

-

-

(1

2,75

9)

(7,0

22)

(574

)

131,

407

111,

052

7,758

11

8,81

0Co

ntrib

utio

ns b

y an

d di

strib

utio

ns to

ow

ners

of th

e Co

mpa

ny

- I

ssua

nce

of s

hare

s

- c

onve

rsio

n of

war

rant

s

-

5

-

-

-

-

5 -

5

- S

hare

issu

e ex

pens

es

-

(22)

-

-

-

-

(2

2)

-

(22)

- Div

iden

ds to

ow

ners

of t

he C

ompa

ny

26

-

-

-

-

-

(35,

360)

(3

5,36

0)

-

(35,

360)

- Div

iden

ds to

non

-con

trol

ling

inte

rest

s

-

-

-

-

-

-

-

(3,8

58)

(3,8

58)

- C

ontr

ibut

ion

from

non

-con

trol

ling

inte

rest

s

-

-

-

-

-

-

-

1,107

1,1

07

Tota

l tra

nsac

tions

with

ow

ners

of th

e Co

mpa

ny

-

(17)

-

-

-

(3

5,36

0)

(35,

377)

(2

,751

) (3

8,12

8)

At 3

1 M

arch

201

2

20

8,00

0 11

3,54

4 (1

7,101

) -

(5

74)

507,7

27

811,

596

68,4

38

880,

034

Not

e 17

.1

N

ote

17.2

N

ote

17.3

N

ote

17.4

Attr

ibut

able

to o

wne

rs o

f the

Com

pany

Non

-dis

trib

utab

le

D

istr

ibut

able

Gro

upN

ote

Shar

e ca

pita

lRM

’000

Shar

e pr

emiu

mRM

’000

Tran

slat

ion

rese

rve

RM’0

00

Avai

labl

e-

for-

sale

re

serv

eRM

’000

Hed

ging

re

serv

eRM

’000

Reta

ined

ea

rnin

gsRM

’000

Tota

lRM

’000

Non

-co

ntro

lling

in

tere

sts

RM’0

00

Tota

l eq

uity

RM’0

00

57

At 1

Apr

il 20

12

208,

000

113,

544

(17,1

01)

-

(574

) 50

7,727

81

1,59

6 68

,438

88

0,03

4

Fore

ign

curr

ency

tran

slat

ion

di

ffere

nces

for f

orei

gn o

pera

tions

-

-

(1

5,17

8)

-

-

-

(15,

178)

-

(1

5,17

8)C

ash

flow

hed

ge

-

-

-

-

570

-

570

9 57

9To

tal o

ther

com

preh

ensi

ve (e

xpen

ses)

/inco

me

f

or th

e ye

ar

-

-

(15,

178)

-

57

0 -

(1

4,60

8)

9 (1

4,59

9)Pr

ofit f

or th

e ye

ar

-

-

-

-

-

131,

706

131,

706

5,84

6 13

7,552

Tota

l com

preh

ensi

ve (e

xpen

ses)

/inco

me

f

or th

e ye

ar

-

-

(15,

178)

-

57

0 13

1,70

6 11

7,098

5,

855

122,

953

Cont

ribut

ions

by

and

dist

ribut

ions

to o

wne

rs

of

the

Com

pany

- I

ssua

nce

of s

hare

s

- c

onve

rsio

n of

war

rant

s

5

55

-

-

-

-

60

-

60

- Div

iden

ds to

ow

ners

of t

he C

ompa

ny

26

-

-

-

-

-

(37,4

40)

(37,4

40)

-

(37,4

40)

- D

ivid

ends

to n

on-c

ontr

ollin

g in

tere

sts

-

-

-

-

-

-

-

(3

,875

) (3

,875

)

- Acq

uisi

tion

from

non

-con

trol

ling

inte

rest

s

-

-

-

-

-

(533

)

(533

)

(1,5

61)

(2,0

94)

Tota

l tra

nsac

tions

with

ow

ners

of th

e Co

mpa

ny

5 55

-

-

-

(3

7,973

) (3

7,913

) (5

,436

) (4

3,34

9) A

t 31

Mar

ch 2

013

208,

005

11

3,59

9 (3

2,27

9)

-

(4)

601,

460

890,

781

68,8

57

959,

638

Not

e 17

.1

N

ote

17.2

N

ote

17.3

N

ote

17.4

Attr

ibut

able

to o

wne

rs o

f the

Com

pany

Non

-dis

trib

utab

le

D

istr

ibut

able

Gro

upN

ote

Shar

e ca

pita

lRM

’000

Shar

e pr

emiu

mRM

’000

Tran

slat

ion

rese

rve

RM’0

00

Avai

labl

e-

for-

sale

re

serv

eRM

’000

Hed

ging

re

serv

eRM

’000

Reta

ined

ea

rnin

gsRM

’000

Tota

lRM

’000

Non

-co

ntro

lling

in

tere

sts

RM’0

00

Tota

l eq

uity

RM’0

00

At 1

Apr

il 20

11

20

8,00

0 11

3,56

1 7,0

22

-

9,

878

338,

461

Fair

valu

e of

ava

ilabl

e-fo

r-sal

e fin

anci

al a

sset

s

- G

ain

arisi

ng d

urin

g th

e ye

ar

-

-

3,12

8

-

-

3,12

8

- Rec

lass

ifica

tion

adju

stm

ents

for g

ain

-

-

(1

0,15

0)

-

-

(10,

150)

Cas

h flo

w h

edge

-

-

-

(357

) -

(357

)

To

tal o

ther

com

preh

ensi

ve e

xpen

ses

for t

he y

ear

-

-

(7

,022

) (3

57)

-

(7

,379

)Pr

ofit f

or th

e ye

ar

-

-

-

-

43,6

29

43,6

29

Tota

l com

preh

ensi

ve (e

xpen

se)/

inco

me

for t

he y

ear

-

-

(7,0

22)

(357

) 43

,629

36

,250

Cont

ribut

ions

by

and

dist

ribut

ions

to o

wne

rs

of

the

Com

pany

- I

ssua

nce

of s

hare

s

- c

onve

rsio

n of

war

rant

s

-

5 -

-

-

5

- Sha

re is

sue

expe

nses

-

(2

2)

-

-

-

(2

2)

- Div

iden

ds to

ow

ners

of t

he C

ompa

ny

26

-

-

-

-

(35,

360)

(3

5,36

0)

Tota

l tra

nsac

tions

with

ow

ners

of th

e Co

mpa

ny

-

(17)

-

-

(3

5,36

0)

(35,

377)

At 3

1 M

arch

201

2

208,

000

113,

544

-

(3

57)

18,14

7 33

9,33

4

N

ote

17.1

Not

e 17

.3

Not

e 17

.4

Not

e 17

.5

Attr

ibut

able

to o

wne

rs o

f the

Com

pany

Non

-dis

trib

utab

le

Dis

trib

utab

le

Com

pany

Not

e

Shar

e ca

pita

lRM

’000

Shar

e pr

emiu

mRM

’000

Avai

labl

e-

for-

sale

re

serv

eRM

’000

Hed

ging

re

serv

eRM

’000

Reta

ined

ea

rnin

gsRM

’000

Tota

l eq

uity

RM’0

00

Statements of changes in equity for the year ended 31 March 2013

59

At 1

Apr

il 20

12

20

8,00

0 11

3,54

4 -

(357

) 18

,147

339,

334

Cas

h flo

w h

edge

-

-

-

422

-

422

Tota

l oth

er c

ompr

ehen

sive

inco

me

for t

he y

ear

-

-

-

422

-

422

Profi

t for

the

year

-

-

-

24

,415

24

,415

Tota

l com

preh

ensi

ve in

com

e fo

r the

yea

r

-

-

-

42

2 24

,415

24

,837

Cont

ribut

ions

by

and

dist

ribut

ions

to o

wne

rs

of

the

Com

pany

-

Issu

ance

of s

hare

s

-

conv

ersi

on o

f war

rant

s

5

55

-

-

-

60

-

Div

iden

ds to

ow

ners

of t

he C

ompa

ny

26

-

-

-

-

(3

7,440

) (3

7,440

)

Tota

l tra

nsac

tions

with

ow

ners

of t

he C

ompa

ny

5

55

-

-

(37,4

40)

(37,3

80)

At 3

1 M

arch

201

3

208,

005

113,

599

-

65

5,12

2 32

6,79

1

N

ote

17.1

Not

e 17

.3

Not

e 17

.4

Not

e 17

.5

At

trib

utab

le to

ow

ners

of t

he C

ompa

ny

N

on-d

istr

ibut

able

D

istr

ibut

able

Com

pany

Not

e

Shar

e ca

pita

lRM

’000

Shar

e pr

emiu

mRM

’000

Avai

labl

e-

for-

sale

re

serv

eRM

’000

Hed

ging

re

serv

eRM

’000

Reta

ined

ea

rnin

gsRM

’000

Tota

l eq

uity

RM’0

00

The

note

s on

pag

es 6

4 to

145

are

an

inte

gral

par

t of t

hese

fina

ncia

l sta

tem

ents

.

Statements of cash flows for the year ended 31 March 2013


Cash flows from operating activities Profit before tax 172,709 172,282 26,226 45,796 Adjustments for: Amortisation of prepaid lease payments 999 1,098 - - Amortisation of intangible assets 181 309 - - Amortisation of investment properties 547 501 - - Asset held for sale written off 32 - - - Depreciation of property, plant and equipment 64,156 54,313 147 128 Derivative loss/(gain) 551 (1,263) - - Dividends from subsidiaries - - (29,760) (38,731) Dividends from liquid investments (188) (428) (20) (37) Dividends from associates - - (594) (594) Finance costs 28,593 22,648 19,552 14,603 Finance income (1,931) (1,688) (20,173) (17,355) Gain on disposal of asset held for sale (58) - - - Gain on deemed disposal of investment - (10,150) - (10,150) Gain on disposal of property, plant and equipment (658) (288) - - Gain on disposal of prepaid lease payments - (246) - - Gain on disposal of investment properties (218) (9,844) - - Loss on deemed disposal of investment in associates - 517 - - Loss/(Gain) on foreign exchange – unrealised 246 830 (99) 397 Impairment loss on intangible assets - 197 - - Intangible assets written off - 581 - - Impairment loss on asset held for sale - 102 - - Property, plant and equipment written off 248 858 - - Share of profits of equity accounted investees, net of tax (7,236) (8,427) - -

Operating profit/(loss) before changes in working capital 257,973 221,902 (4,721) (5,943)

61


Changes in working capital: Biological assets (18,451) (40,020) - - Inventories (66,156) 16,806 - - Trade and other receivables and other financial assets (ii) (95,055) 11,314 (144,705) 603 Employee benefits 401 368 - - Trade and other payables, including derivatives 15,622 (3,842) (1,514) (2,509) Bills payable 55,000 (10,642) - -

Cash generated from/(used in) operations 149,334 195,886 (150,940) (7,849) Dividends from liquid investments 188 428 20 37 Income taxes (paid)/refunded (23,985) (22,756) (1,611) 219 Interest paid (8,402) (7,443) - - Interest received 1,931 1,688 20,173 17,355

Net cash generated from/(used in) operating activities 119,066 167,803 (132,358) 9,762

Cash flows from investing activities Acquisition of subsidiaries, net of cash acquired 36 (2,313) (1,178) - (454) Acquisition of investment properties (1,568) (5) - - Acquisition of prepaid lease payments (2,660) (958) - - Acquisition of property, plant and equipment (iii) (188,703) (258,815) (210) (19) Acquisition of intangible assets - (49) - - Proceeds from disposal of asset held for sale 106 - - - Proceeds from disposal of other investment, including derivatives - 5 - - Proceeds from disposal of property, plant and equipment 3,521 1,685 - - Proceeds from disposal of prepaid lease payments - 1,699 - - Proceeds from disposal of investment properties 1,147 14,847 - -


Cash flows from investing activities (continued) Dividends received from subsidiaries - - 29,760 37,010 Dividends received from associates 2,669 2,476 594 443 Increase in other investment - (1,090) - (1,090) Increase in investment in associate (4,178) (2,409) - (624) Net cash (used in)/generated from investing activities (191,979) (243,792) 30,144 35,266

Cash flows from financing activities Advances to subsidiaries - - (22,104) (91,836) (Acquisition)/Contribution from non-controlling interests (1,561) 1,107 - - Dividends paid to non-controlling interests (3,875) (3,858) - - Dividends paid to owners of the Company (37,440) (35,360) (37,440) (35,360) Interest paid (20,191) (15,205) (19,552) (14,603) Repayment of finance lease liabilities (90) (774) - - Proceeds from loans and other borrowings 177,731 100,533 176,160 80,038 Share issue expenses - (22) - (22) Proceeds from conversion of warrants 60 5 60 5

Net cash generated from/(used in) financing activities 114,634 46,426 97,124 (61,778) Net increase/(decrease) in cash and cash equivalents 41,721 (29,563) (5,090) (16,750)

Cash and cash equivalents at beginning of the year 87,642 117,205 9,658 26,408 Cash and cash equivalents at end of the year (i) 129,363 87,642 4,568 9,658

Statements of cash flows for the year ended 31 March 2013 (continued)

63

Note to the statements of cash flows

i) Cash and cash equivalents

Cash and cash equivalents included in the statements of cash flows comprise the following statements of financial position amounts:


Cash and bank balances 122,770 78,601 3,777 8,971 Deposits placed with licensed banks 18,331 11,242 791 585 Liquid investments - 11,660 - 102

16 141,101 101,503 4,568 9,658 Bank overdrafts 18 (11,738) (13,861) - -

129,363 87,642 4,568 9,658

ii) Non-cash transactions

The Company increased its investments in subsidiaries amounting to RM144,584,000 via capitalisation of debts.

iii) Acquisition of property, plant and equipment

During the financial year, the Group acquired property, plant and equipment with an aggregate cost of RM189,002,000 (2012: 258,815,000), of which RM299,000 (2012: Nil) were acquired by means of finance leases.

The notes on pages 64 to 145 are an integral part of these financial statements.

Notes to the financial statements

QL Resources Berhad is a public limited liability company, incorporated and domiciled in Malaysia and is listed on the Main Market of Bursa Malaysia Securities Berhad. The address of its registered office and principal place of business is as follow:

Registered office/Principal place of businessNo. 16A, Jalan Astaka U8/83Bukit Jelutong40150 Shah AlamSelangor Darul Ehsan

The consolidated financial statements of the Company as at and for the financial year ended 31 March 2013 comprise the Company and its subsidiaries (together referred to as the “Group” and individually referred to as “Group entities”) and the Group’s interest in associates. The financial statements of the Company as at and for the financial year ended 31 March 2013 do not include other entities.

The Company is principally engaged in investment holding and provision of management services, whilst the principal activities of the subsidiaries are as stated in Note 33 to the financial statements. There has been no significant change in the nature of these activities during the financial year.

These financial statements were authorised for issue by the Board of Directors on 10 July 2013.

1. Basis of preparation

(a) Statement of compliance

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

The Group and the Company have early adopted the amendments to FRS 101, Presentation of Financial Statements which are effective for annual periods beginning on or after 1 July 2012. The early adoption of the amendments to FRS 101 has no impact on the financial statements other than the presentation format of the statement of profit or loss and other comprehensive income.

The following are accounting standards, interpretations and amendments that have been issued by the Malaysian Accounting Standards Board (“MASB”) but have not been adopted by the Group and the Company:

FRS, Interpretations and Amendments effective for annual periods beginning on or after 1 January 2013• FRS 10, Consolidated Financial Statements• FRS 11, Joint Arrangements• FRS 12, Disclosure of Interests in Other Entities• FRS 13, Fair Value Measurement• FRS 119, Employee Benefits (2011)• FRS 127, Separate Financial Statements (2011)• FRS 128, Investments in Associates and Joint Ventures (2011)• IC Interpretation 20, Stripping Costs in the Production Phase of a Surface Mine• Amendments to FRS 7, Financial Instruments: Disclosures – Offsetting Financial Assets and Financial Liabilities• Amendments to FRS 1, First-time Adoption of Financial Reporting Standards – Government Loans• Amendments to FRS 1, First-time Adoption of Financial Reporting Standards (Annual Improvements 2009-2011 Cycle)• Amendments to FRS 101, Presentation of Financial Statements (Annual Improvements 2009-2011 Cycle)• Amendments to FRS 116, Property, Plant and Equipment (Annual Improvements 2009-2011 Cycle)• Amendments to FRS 132, Financial Instruments: Presentation (Annual Improvements 2009-2011 Cycle)• Amendments to FRS 134, Interim Financial Reporting (Annual Improvements 2009-2011 Cycle)• Amendments to FRS 10, Consolidated Financial Statements: Transition Guidance• Amendments to FRS 11, Joint Arrangements: Transition Guidance• Amendments to FRS 12, Disclosure of Interests in Other Entities: Transition Guidance

65

1. Basis of preparation (continued)

(a) Statement of compliance (continued)

FRS, Interpretations and Amendments effective for annual periods beginning on or after 1 January 2014• AmendmentstoFRS10, Consolidated Financial Statements: Investment Entities• Amendments to FRS 12, Disclosure of Interests in Other Entities: Investment Entities• AmendmentstoFRS127,Separate Financial Statements (2011): Investment Entities• AmendmentstoFRS132,Financial Instruments: Presentation – Offsetting Financial Assets and Financial Liabilities

FRS, Interpretations and Amendments effective for annual periods beginning on or after 1 January 2015• FRS9, Financial Instruments (2009)• FRS9, Financial Instruments (2010)• Amendments to FRS 7, Financial Instruments: Disclosures – Mandatory Effective Date of FRS 9 and Transition Disclosures

The Group and the Company plan to apply those standards, interpretations or amendments that are effective for annual periods beginning on or after 1 January 2013, except for FRS 11, IC Interpretation 20, Amendments to FRS 1, and Amendments to FRS 11 which are not applicable to the Group and the Company from the annual period beginning on 1 April 2013.

Material impacts of initial application of a standard, an interpretation or an amendment, which will be applied retrospectively, are discussed below:

FRS 10, Consolidated Financial StatementsFRS 10, Consolidated Financial Statements introduces a new single control model to determine which investees should be consolidated. FRS 10 supersedes FRS 127, Consolidated and Separate Financial Statements and IC Interpretation 112, Consolidation – Special Purpose Entities. There are three elements to the definition of control in FRS 10: (i) power by investor over an investee, (ii) exposure, or rights, to variable returns from investor’s involvement with the investee, and (iii) investor’s ability to affect those returns through its power over the investee.

The Group is currently examining the relevance and financial impact of adopting FRS 10.

FRS 13, Fair Value MeasurementFRS 13, Fair Value Measurement established the principles for fair value measurement and replaces the existing guidance in FRS.

The Group is currently examining the relevance and financial impact of adopting FRS 13.

FRS 119, Employee Benefits (2011)The amendments to FRS 119, Employee Benefits, change the accounting for defined benefit plans and termination benefits. The most significant change relates to the accounting for changes in defined benefit obligations and plan assets. The amendments require the recognition of changes in defined benefit obligations and in fair value of plan assets when they occur, and hence eliminate the ‘corridor method’ permitted under the previous version of FRS 119 and accelerate the recognition of past service costs. The amendments require all actuarial gains and losses to be recognised immediately through other comprehensive income in order for the net pension asset or liability recognised in the consolidated statement of financial position to reflect the full value of the plan deficit or surplus.

The Group is currently assessing the financial impact of adopting the amendments to FRS 119.

The Group’s and the Company’s financial statements for annual period beginning on 1 April 2014 will be prepared in accordance with the Malaysian Financial Reporting Standards (“MFRS”) issued by MASB and International Financial Reporting Standards (“IFRS”). As a result, the Group and the Company will not be adopting FRS, Interpretations and amendments that are effective for annual periods beginning on or after 1 January 2014 and 1 January 2015.

Notes to the financial statements (continued)

1. Basis of preparation (continued)

(b) Basis of measurement

These financial statements have been prepared on the historical cost basis other than as disclosed in Note 2.

(c) Functional and presentation currency

These financial statements are presented in Ringgit Malaysia (“RM”), which is the Company’s functional currency. All financial information is presented in RM and has been rounded to the nearest thousand, unless otherwise stated.

(d) Use of estimates and judgements

The preparation of financial statements in conformity with FRS requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected.

There are no significant areas of estimation uncertainty and critical judgements in applying accounting policies that have significant effect on the amounts recognised in the financial statements other than those disclosed in the following notes:

• Note 3 - measurement of the residual value and useful lives• Note 4 - measurement of the recoverable amounts of cash-generating units• Note 5 - valuation of biological assets• Note 11 - recognition of unutilised tax losses and capital allowances• Note 12 - valuation of receivables• Note 13 - valuation of inventories• Note 19 - employee benefits

2. Significant accounting policies

The accounting policies set out below have been applied consistently to the periods presented in these financial statements, and have been applied consistently by the Group entities, unless otherwise stated.

(a) Basis of consolidation

(i) Subsidiaries

Subsidiaries are entities, including unincorporated entities, controlled by the Company. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases. Control exists when the Company has the ability to exercise its power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, potential voting rights that presently are exercisable are taken into account.

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

67

2. Significant accounting policies (continued)

(a) Basis of consolidation (continued)

(i) Subsidiaries (continued)

The accounting policies of subsidiaries are changed when necessary to align them with the policies adopted by the Group.

(ii) Accounting for business combinations

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

Acquisitions on or after 1 April 2011

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

• thefairvalueoftheconsiderationtransferred;plus• therecognisedamountofanynon-controllinginterestsintheacquiree;plus• if the business combination is achieved in stages, the fair value of the existing equity interest in the

acquiree;less• thenetrecognisedamount(generallyfairvalue)oftheidentifiableassetsacquiredandliabilitiesassumed.

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

The consideration transferred does not include amounts related to the settlement of pre-existing relationships. Such amounts are generally recognised in profit or loss.

Costs related to the acquisition, 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.

Any contingent consideration payable is recognised at fair value at the acquisition date. If the contingent consideration is classified as equity, it is not remeasured and settlement is accounted for within equity. Otherwise, subsequent changes to the fair value of the contingent consideration are recognised in profit or loss.

When share-based payment awards (replacement awards) are required to be exchanged for awards held by the acquiree’s employees (acquiree’s awards) and relate to past services, then all or a portion of the amount of the acquirer’s replacement awards is included in measuring the consideration transferred in the business combination. This determination is based on the market-based value of the replacement awards compared with the market-based value of the acquiree’s awards and the extent to which the replacement awards relate to past and/or future service.

Acquisitions between 1 April 2006 and 1 April 2011

For acquisitions between 1 April 2006 and 1 April 2011, goodwill represents the excess of the cost of the acquisition over the Group’s interest in the recognised amount (generally fair value) of the identifiable assets, liabilities and contingent liabilities of the acquiree. When the excess was negative, a bargain purchase gain was recognised immediately in profit or loss.

Transaction costs, other than those associated with the issue of debt or equity securities, that the Group incurred in connection with business combinations were capitalised as part of the cost of the acquisition.




(ii) Accounting for business combinations (continued)

Acquisitions prior to 1 April 2006

For acquisitions prior to 1 April 2006, goodwill represents the excess of the cost of the acquisition over the Group’s interest in the fair values of the net identifiable assets and liabilities.

(iii) Accounting for acquisitions of non-controlling interests

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

(iv) Loss of control

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

(v) Associates

Associates are entities, including unincorporated entities, in which the Group has significant influence, but not control, over the financial and operating policies.

Investments in associates are accounted for in the consolidated financial statements using the equity method less any impairment losses, unless it is classified as held for sale or distribution. The cost of the investment includes transaction costs. The consolidated financial statements include the Group’s share of the profit or loss and other comprehensive income of the equity accounted investees, after adjustments if any, to align the accounting policies with those of the Group, from the date that significant influence commences until the date that significant influence ceases.

When the Group’s share of losses exceeds its interest in an associate, the carrying amount of that interest including any long-term investments is reduced to zero, and the recognition of further losses is discontinued except to the extent that the Group has an obligation or has made payments on behalf of the investee.

When the Group ceases to have significant influence over an associate, it is accounted for as a disposal of the entire interest in that associate, with a resulting gain or loss being recognised in profit or loss. Any retained interest in the former associate at the date when significant influence is lost is re-measured at fair value and this amount is regarded as the initial carrying amount of a financial asset.

When the Group’s interest in an associate decreases but does not result in a loss of significant influence, any retained interest is not re-measured. Any gain or loss arising from the decrease in interest is recognised in profit or loss. Any gains or losses previously recognised in other comprehensive income are also reclassified proportionately to profit or loss.

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

69



(vi) Non-controlling interests

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

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

(vii) 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 investees are eliminated against the investment to the extent of the Group’s interest in the associates. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment.

(b) Foreign currency

(i) Foreign currency transactions

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

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

Non-monetary assets and liabilities denominated in foreign currencies are not retranslated at the end of the reporting date, except for those that are measured at fair value are retranslated to the functional currency at the exchange rate at the date that the fair value was determined.

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

(ii) Operations denominated in functional currencies other than Ringgit Malaysia (“RM”)

The assets and liabilities of operations denominated in functional currencies other than RM, including goodwill and fair value adjustments arising on acquisition, are translated to RM at exchange rates at the end of the reporting period, except for goodwill and fair value adjustments arising from business combinations before 1 April 2006 which are reported using the exchange rates at the dates of the acquisitions. The income and expenses of foreign operations are translated to RM at exchange rates at the dates of the transactions.



(b) Foreign currency (continued)

(ii) Operations denominated in functional currencies other than Ringgit Malaysia (“RM”) (continued)

Foreign currency differences are recognised in other comprehensive income and accumulated in the foreign currency translation reserve (“FCTR”) in equity. However, if the operation is a non-wholly-owned subsidiary, then the relevant proportionate share of the translation difference is allocated to the non-controlling interests. When a foreign operation is disposed of such that control, significant influence or joint control is lost, the cumulative amount in the FCTR related to that foreign operation is reclassified to profit or loss as part of the profit or loss on disposal.

When the Group disposes of only part of its interest in a subsidiary that includes a foreign operation while retaining control, the relevant proportion of the cumulative amount is reattributed to non-controlling interests. When the Group disposes of only part of its investment in an associate or joint venture that includes a foreign operation while retaining significant influence or joint control, the relevant proportion of the cumulative amount is reclassified to profit or loss.

In the consolidated financial statements, when settlement of a monetary item receivable from or payable to a foreign operation is neither planned nor likely in the foreseeable future, foreign exchange gains and losses arising from such a monetary item are considered to form part of a net investment in a foreign operation and are recognised in other comprehensive income, and are presented in the FCTR in equity.

(c) Financial instruments

(i) Initial recognition and measurement

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

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

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

(ii) Financial instrument categories and subsequent measurement

The Group and the Company categorise financial instruments as follows:

Financial assets

(a) Financial assets at fair value through profit or loss

Fair value through profit or loss category comprises financial assets that are held for trading, including derivatives (except for a derivative that is a financial guarantee contract or a designated and effective hedging instrument) or financial assets that are specifically designated into this category upon initial recognition.

71


(c) Financial instruments (continued)

(ii) Financial instrument categories and subsequent measurement (continued)

Financial assets (continued)

(a) Financial assets at fair value through profit or loss (continued)

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.

Other financial assets categorised as fair value through profit or loss are subsequently measured at their fair values with the gain or loss recognised in profit or loss.

(b) Loans and receivables

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

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

(c) Available-for-sale financial assets

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

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

All financial assets, except for those measured at fair value through profit or loss, are subject to review for impairment (see note 2(l)(i)).

Financial liabilities

All financial liabilities are subsequently measured at amortised cost other than those categorised as fair value through profit or loss.

Fair value through profit or loss category comprises financial liabilities that are derivatives (except for a derivative that is a financial guarantee contract or a designated and effective hedging instrument) 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 unquoted equity instruments whose fair values cannot be reliably measured are measured at cost.

Other financial liabilities categorised as fair value through profit or loss are subsequently measured at their fair values with the gain or loss recognised in profit or loss.



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

(iv) Regular way purchase or sale of financial assets

A regular way purchase or sale is a purchase or sale of a financial asset under a contract whose terms require delivery of the asset within the time frame established generally by regulation or convention in the marketplace concerned.

A regular way purchase or sale of financial assets is recognised and derecognised, as applicable, using trade date accounting. Trade date accounting refers to:

(a) therecognitionofanassettobereceivedandtheliabilitytopayforitonthetradedate;and (b) derecognition of an asset that is sold, recognition of any gain or loss on disposal and the recognition of a receivable from the buyer for payment on the trade date.

(v) Hedge accounting

Fair value hedge

A fair value hedge is a hedge of the exposure to changes in fair value of a recognised asset or liability or an unrecognised firm commitment, or an identified portion of such an asset, liability or firm commitment, that is attributable to a particular risk and could affect the profit or loss.

In a fair value hedge, the gain or loss from remeasuring the hedging instrument at fair value or the foreign currency component of its carrying amount translated at the exchange rate prevailing at the end of the reporting period is recognised in profit or loss. The gain or loss on the hedged item, except for hedge item categorised as available-for-sale, attributable to the hedged risk is adjusted to the carrying amount of the hedged item and recognised in profit or loss. For a hedge item categorised as available-for-sale, the fair value gain or loss attributable to the hedge risk is recognised in profit or loss.


73



(v) Hedge accounting (continued)

Fair value hedge (continued)

Fair value hedge accounting is discontinued prospectively when the hedging instrument expires or is sold, terminated or exercised, the hedge is no longer highly effective or the hedge designation is revoked.

Cash flow hedge

A cash flow hedge is a hedge of the exposure to variability in cash flows that is attributable to a particular risk associated with a recognised asset or liability or a highly probable forecast transaction and could affect the profit or loss. In a cash flow hedge, the portion of the gain or loss on the hedging instrument that is determined to be an effective hedge is recognised in other comprehensive income and the ineffective portion is recognised in profit or loss.

Subsequently, the cumulative gain or loss recognised in other comprehensive income is reclassified from equity into profit or loss in the same period or periods during which the hedged forecast cash flows affect profit or loss. If the hedge item is a non-financial asset or liability, the associated gain or loss recognised in other comprehensive income is removed from equity and included in the initial amount of the asset or liability. However, loss recognised in other comprehensive income that will not be recovered in one or more future periods is reclassified from equity into profit or loss.

Cash flow hedge accounting is discontinued prospectively when the hedging instrument expires or is sold, terminated or exercised, the hedge is no longer highly effective, the forecast transaction is no longer expected to occur or the hedge designation is revoked. If the hedge is for a forecast transaction, the cumulative gain or loss on the hedging instrument remains in equity until the forecast transaction occurs. When the forecast transaction is no longer expected to occur, any related cumulative gain or loss recognised in other comprehensive income on the hedging instrument is reclassified from equity into profit or loss.

(vi) Derecognition

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

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


(d) Property, plant and equipment

(i) Recognition and measurement

Freehold land and capital work-in-progress are measured at cost less any impairment losses. All other items of property, plant and equipment are measured at cost less accumulated depreciation and any accumulated impairment losses.

Cost includes expenditures that are directly attributable to the acquisition of the asset and any other costs

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 the cost of materials and direct labour. For qualifying assets, borrowing costs are capitalised in accordance with the accounting policy on borrowing costs. Cost also may include transfers from equity of any gain or loss on qualifying cash flow hedges of foreign currency purchases of property, plant and equipment.

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

The cost of property, plant and equipment recognised as a result of a business combination is based on fair value at acquisition date. The fair value of property is the estimated amount for which a property could be exchanged between knowledgeable willing parties in an arm’s length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion. The fair value of other items of plant and equipment is based on the quoted market prices for similar items when available and replacement cost when appropriate.

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

The gain or loss on disposal of an item of property, plant and equipment is determined by comparing the proceeds from disposal with the carrying amount of property, plant and equipment and is recognised net within “other income” or “other expenses” respectively in profit or loss.

(ii) Subsequent costs

The cost of replacing a component of an item of property, plant and equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the component will flow to the Group or the Company, and its cost can be measured reliably. The carrying amount of the replaced component is derecognised to profit or loss. The costs of the day-to-day servicing of property, plant and equipment are recognised in profit or loss as incurred.

(iii) Depreciation

Depreciation is based on the cost of an asset less its residual value. Significant components of individual assets are assessed, and if a component has a useful life that is different from the remainder of that asset, then that component is depreciated separately.

Depreciation is recognised in profit or loss on a straight-line basis over the estimated useful lives of each component of an item of property, plant and equipment. Leased assets are depreciated over the shorter of the lease term and their useful lives unless it is reasonably certain that the Group will obtain ownership by the end of the lease term. Freehold land is not depreciated. Property, plant and equipment under construction are not depreciated until the assets are ready for their intended use.


75


(d) Property, plant and equipment (continued)

(iii) Depreciation (continued)

The estimated useful lives for the current and comparative periods are as follows: Buildings and improvements 4 - 50 years Farm buildings 10 - 50 years Fishing boat and equipment 5 - 20 years Furniture, fittings and equipment 4 - 12.5 years Plant and machinery 4 - 15 years Office improvements and renovation 5 - 10 years Motor vehicles 5 - 10 years

Depreciation methods, useful lives and residual values are reviewed at end of the reporting period, and adjusted as appropriate.

(e) Leased assets

(i) Finance lease

Leases in terms of which the Group assumes substantially all the risks and rewards of ownership are classified as finance leases. Upon initial recognition, the leased asset is measured at an amount equal to the lower of its fair value and 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 asset.

Minimum lease payments made under finance leases are apportioned between the finance expense and the reduction of the outstanding liability. The finance expense 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 accounted for by revising the minimum lease payments over the remaining term of the lease when the lease adjustment is confirmed.

Leasehold land which in substance is a finance lease is classified as property, plant and equipment.

(ii) Operating lease

Leases, where the Group does not assume substantially all the risks and rewards of ownership are classified as operating leases and, except for property interest held under operating lease, the leased assets are not recognised on the statement of financial position. Property interest held under an operating lease, which is held to earn rental income or for capital appreciation or both, is classified as investment property.

Payments made under operating leases are recognised in profit or loss on a straight-line basis over the term of the lease. Lease incentives received are recognised in profit or loss as an integral part of the total lease expense, over the term of the lease. Contingent rentals are charged to profit or loss in the reporting period in which they are incurred.

In respect of a subsidiary in Indonesia, prepaid lease payments include land use rights which represent location permit, plantation license and cultivation rights title over the plantation land. The land use rights are amortised using straight-line method over the legal terms of the related land use rights.

Leasehold land which in substance is an operating lease is classified as prepaid lease payments.



(f) Intangible assets

(i) Goodwill

Goodwill arises on business combinations and is measured at cost less any accumulated impairment losses. In respect of equity accounted investees, the carrying amount of goodwill is included in the carrying amount of the investment and an impairment loss on such an investment is not allocated to any asset, including goodwill, that forms part of the carrying amount of the equity accounted associates.

(ii) Research and development

Expenditure on research activities, undertaken with the prospect of gaining new scientific or technical knowledge and understanding, is recognised in profit or loss as incurred.

Expenditure on development activities, whereby the application of research findings are applied to a plan or design for the production of new or substantially improved products and processes, is capitalised only if development costs can be measured reliably, the product or process is technically and commercially feasible, future economic benefits are probable and the Group intends to and has sufficient resources to complete development and to use or sell the asset.

The expenditure capitalised includes the cost of materials, direct labour and overheads costs that are directly attributable to preparing the asset for its intended use. For qualifying assets, borrowing costs are capitalised in accordance with the accounting policy on borrowing costs. Other development expenditure is recognised in profit or loss as incurred.

Capitalised development expenditure is measured at cost less any accumulated amortisation and any accumulated impairment losses.

(iii) Other intangible assets

Intangible assets, other than goodwill, that are acquired by the Group, which have finite useful lives, are measured at cost less any accumulated amortisation and any accumulated impairment losses.

(iv) Subsequent expenditure

Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure, including expenditure on internally generated goodwill and brands, is recognised in profit or loss as incurred.

(v) Amortisation

Amortisation is based on the cost of an asset less its residual value.

Goodwill and intangible assets with indefinite useful lives are not amortised but are tested for impairment annually and whenever there is an indication that they may be impaired.

Other intangible assets are amortised from the date they are available for use.

Amortisation is recognised in profit or loss on a straight-line basis over the estimated useful lives of intangible assets from the date that they are available for use.

77


(f) Intangible assets (continued)

(v) Amortisation (continued)

The estimated useful lives for the current and comparative periods are as follows:

Capitalised development costs 10 years Patents and trademarks 15 years

Amortisation methods, useful lives and residual values are reviewed at the end of each reporting period and adjusted, if appropriate.

(g) Investment property

(i) Investment property carried at cost

Investment properties are properties which are owned or held under a leasehold interests to earn rental income or for capital appreciation or for both. These include land held for a currently undetermined future use. Properties that are occupied by the companies in the Group are accounted for as owner-occupied rather than as investment properties.

Investment properties are measured at cost less any accumulated depreciation and any accumulated impairment losses, consistent with the accounting policy for property, plant and equipment as stated in Note 2(d).

Depreciation is charged to profit or loss on a straight-line basis over the estimated useful lives.

An investment property is derecognised on its disposal, or when it is permanently withdrawn from use and no future economic benefits are expected from its disposal. The difference between the net disposal proceeds and the carrying amount is recognised in profit or loss in the period in which the item is derecognised.

(ii) Reclassification to/from investment property

When an item of property, plant and equipment is transferred to investment property following a change in its use, the transfer does not change the cost and the carrying amount of that property transferred.

(iii) Determination of fair value disclosure

The Directors estimate the fair values of the Group’s investment properties without involvement of independent valuers.

The estimated fair values are based on market values, being the estimated amount for which a property could be exchanged on the date of the estimation between knowledgeable willing parties in an arm’s length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion.

In the absence of current prices in an active market, the valuations are prepared by considering the aggregate of the estimated cash flows expected to be received from renting out the property. A yield that reflects the specific risks inherent in the net cash flows then is applied to the net annual cash flows to arrive at the property valuation.



(h) Biological assets

(i) Plantation development expenditure

New planting expenditure which include land clearing, planting, field upkeep and maintenance of oil palms plantings to maturity are capitalised as plantation development expenditure and it is not amortised. Oil palm plantings are considered mature 30 months after the date of planting. Expenditures incurred after maturing of crops are recognised in profit or loss. Estate overhead expenditure is apportioned to revenue and plantation development expenditure on the basis of the proportion of mature and immature areas.

Net income from scout harvesting prior to maturity is offset against plantation development expenditure.

Replanting expenditure is written off during the period in which it is incurred.

(ii) Livestock

Layer farms

Pullets and layers are measured at the lower of amortised cost and net realisable value. Cost includes cost of the pullet plus all attributable costs including relevant overheads in nursing the pullet to the point of lay. Thereafter the cost is amortised over its estimated economic life of the layers of approximately 60 weeks.

Net realisable value is defined as the aggregate income expected to be generated from total eggs to be produced per layer and sales proceeds from the disposal of the ex-layer less related expenses expected to be incurred to maintain the layer.

Breeder farms

Breeders and hatching eggs are measured at the lower of amortised cost and net realisable value. Cost of breeders includes cost of parent stock plus all attributable cost including relevant overheads in breeding the parent stock and is amortised over its estimated economic useful lives of approximately 40 weeks. Cost of hatching eggs includes cost of raw materials, direct labour and all other attributable cost including relevant overheads.

Net realisable value is defined as the aggregate income expected to be generated from the sales of day-old-chicks produced and sales proceeds from the disposal of the ex-layer less related expenses expected to be incurred to maintain the layer.

Broiler farms Broilers are measured at lower of cost and net realisable value. Cost of broilers includes costs of chicks plus all

attributable costs in breeding the chicks to saleable condition.

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

(i) Inventories

Inventories comprise raw materials, manufactured inventories and trading inventories which are measured at the lower of cost and net realisable value. The cost of inventories is based on first-in-first-out principle.

The cost of raw materials and trading inventories comprises the original purchase price plus incidentals in bringing these inventories to their present location and condition. For manufactured inventories, cost consists of raw materials, direct labour, an appropriate portion of fixed and variable production overheads based on normal operating capacity and other incidental costs.

79


(i) Inventories (continued)

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

The fair value of inventories acquired in a business combination is determined based on the estimated selling price in the ordinary course of business less the estimated costs of completion and sale, and a reasonable profit margin based on the effort required to complete and sell the inventories.

(j) Non-current asset held for sale or distribution to owners

Non-current assets, or disposal group comprising assets and liabilities, that are expected to be recovered primarily through sale or distribution to owners rather than through continuing use, are classified as held for sale or distribution.

Immediately before classification as held for sale or distribution, the assets, or components of a disposal group, are remeasured in accordance with the Group’s accounting policies. Thereafter generally the assets, or disposal group, are measured at the lower of their carrying amount and fair value less costs to sell.

Any impairment loss on a disposal group is first allocated to goodwill, and then to remaining assets and liabilities on pro rata basis, except that no loss is allocated to inventories, financial assets, deferred tax assets, employee benefit assets and investment property, which continue to be measured in accordance with the Group’s accounting policies. Impairment losses on initial classification as held for sale or distribution and subsequent gains or losses on remeasurement are recognised in profit or loss. Gains are not recognised in excess of any cumulative impairment loss.

Intangible assets and property, plant and equipment once classified as held for sale or distribution are not amortised

or depreciated. In addition, equity accounting of equity accounted investees ceases once classified as held for sale or distribution.

(k) Cash and cash equivalents

Cash and cash equivalents consist of cash on hand, balances and deposits with banks and highly liquid investments which have an insignificant risk of changes in fair value. For the purpose of the statement of cash flows, cash and cash equivalents are presented net of bank overdrafts and pledged deposits.

Cash and cash equivalents (other than bank overdrafts) are categorised and measured as loans and receivables in accordance with Note 2(c).

(l) Impairment

(i) Financial assets

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


(l) Impairment (continued)

(i) Financial assets (continued)

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

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

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

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

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

(ii) Other assets

The carrying amounts of other assets (except for inventories, deferred tax asset and non-current assets (or disposal groups) classified as held for sale) are reviewed at the end of each reporting period to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated. For goodwill, and intangible assets that have indefinite useful lives or that are not yet available for use, the recoverable amount is estimated each period at the same time.

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 other assets or cash-generating units. Subject to an operating segment ceiling test, for the purpose of goodwill impairment testing, cash-generating units to which goodwill has been allocated are aggregated so that the level at which impairment testing is performed reflects the lowest level at which goodwill is monitored for internal reporting purposes. The goodwill acquired in a business combination, for the purpose of impairment testing, is allocated to group of cash-generating units that are expected to benefit from the synergies of the combination.

The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell. 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 cash-generating unit.

An impairment loss is recognised if the carrying amount of an asset or its related cash-generating unit exceeds its estimated recoverable amount.


81


(l) Impairment (continued)

(ii) Other assets (continued)

Impairment losses are recognised in profit or loss. Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to the cash-generating unit (group of cash-generating units) and then to reduce the carrying amounts of the other assets in the cash-generating unit (groups of cash-generating units) on a pro rata basis.

An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognised in prior periods are assessed at the end of each reporting period for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the 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. Reversals of impairment losses are credited to profit or loss in the financial year in which the reversals are recognised.

(m) Equity instruments

Instruments classified as equity are measured at cost on initial recognition and are not remeasured subsequently.

(i) Issue expenses

Costs directly attributable to the issue of instruments classified as equity are recognised as a deduction from equity.

(ii) Ordinary shares

Ordinary shares are classified as equity.

(iii) Repurchase, disposal and reissue of share capital (treasury shares)

When share capital recognised as equity is repurchased, the amount of the consideration paid, including directly attributable costs, net of any tax effects, is recognised as a deduction from equity. Repurchased shares that are not subsequently cancelled are classified as treasury shares in the statement of changes in equity.

When treasury shares are distributed as share dividends, the cost of the treasury shares is applied in the reduction of the share premium account or distributable reserves, or both.

When treasury shares are sold or reissued subsequently, the difference between the sales consideration net of directly attributable costs and the carrying amount of the treasury shares is recognised in equity, and the resulting surplus or deficit on the transaction is presented in share premium.

(n) Employee benefits

(i) Short-term employee benefits

Short-term employee benefit obligations in respect of salaries, annual bonuses, paid annual leave and sick leave are measured on an undiscounted basis and are expensed as the related service is provided.

A liability is recognised for the amount expected to be paid under short-term cash bonus if the Group has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.


(n) Employee benefits (continued)

(ii) State plans

The Group’s contributions to statutory pension funds are charged to profit or loss in the financial year to which they relate. Once the contributions have been paid, the Group has no further payment obligations.

(iii) Defined benefit plans

The Group’s net obligation in respect of defined benefit retirement plans arises from its subsidiaries in Indonesia for long-term and post-employment benefits, such as pension, severance pay, service pay and other benefits.

The obligation for post-employment benefits recognised in the statement of financial position is calculated at present value of estimated future benefits that the employees have earned in return for their services in the current and prior years, deducted by any plan assets. The calculation is performed by an independent actuary using the Projected-Unit-Credit method.

When the benefits of a plan change, the portion of the increased or decreased benefits relating to past services by employees is recognised in profit or loss on the straight-line method over the average remaining service period until the benefits become vested. To the extent that the benefits vest immediately, the expense is recognised immediately in profit or loss.

Actuarial gains or losses are recognised as income or expense when the net cumulative unrecognised actuarial gains or losses at the end of the previous reporting year exceeded 10% of the present value of the defined benefit obligation at that date. These gains or losses are recognised on the straight-line method over the average remaining working lives of the employees. Otherwise, the actuarial gains or losses are not recognised.

(o) Provisions

A provision is recognised if, as a result of a past event, the Group has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The unwinding of the discount is recognised as finance cost.

(p) Revenue and other income

(i) Goods sold

Revenue from the sale of goods in the course of ordinary activities is measured at fair value of the consideration received or receivable, net of returns and allowances, trade discounts and volume rebates. Revenue is recognised when persuasive evidence exists, usually in the form of an executed sales agreement, that the significant risks and rewards of ownership have been transferred to the customer, recovery of the consideration is probable, the associated costs and possible return of goods can be estimated reliably, and there is no continuing management involvement with the goods, and the amount of revenue can be measured reliably. If it is probable that discounts will be granted and the amount can be measured reliably, then the discount is recognised as a reduction of revenue as the sales are recognised.

(ii) Management fee and administrative charges

Management fee and administrative charges are recognised on an accrual basis.


83


(p) Revenue and other income (continued)

(iii) Rental income

Rental income from investment property is recognised in the profit or loss on a straight-line basis over the term of the lease. Lease incentives granted are recognised as an integral part of the total rental income, over the term of the lease.

(iv) Government grants

Government grants are recognised initially as deferred income at fair value when there is reasonable assurance that they will be received and that the Group will comply with the conditions associated with the grant.

Grants that compensate the Group for expenses incurred are recognised in profit or loss as other income on a systematic basis in the same periods in which the expenses are recognised.

Grants that compensate the Group for the cost of an asset are deducted in arriving at the carrying amount of the asset.

(v) Dividend income

Dividend income is recognised in profit or loss on the date that the Group’s or the Company’s right to receive payment is established, which in the case of quoted securities is the ex-dividend date.

(vi) Interest income

Interest income is recognised as it accrues using the effective interest method in profit or loss except for interest income arising from temporary investment of borrowings taken specifically for the purpose of obtaining a qualifying asset which is accounted for in accordance with the accounting policy on borrowing costs.

(q) Borrowing costs

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 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 capitalised as part of the cost of those assets.

The capitalisation of borrowing costs as part of the cost of a qualifying asset commences when expenditure for the asset is being incurred, borrowing costs are being incurred and activities that are necessary to prepare the asset for its intended use or sale are in progress. Capitalisation of borrowing costs is suspended or ceases when substantially all the activities necessary to prepare the qualifying asset for its intended use or sale are interrupted or completed.

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.

(r) Income tax

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



(r) Income tax (continued)

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

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

The amount of deferred tax recognised is measured based on the expected manner of realisation or settlement of the carrying amount of the assets and liabilities, using tax rates enacted or substantively enacted at the reporting date. Deferred tax assets and liabilities are not discounted.

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

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

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

(s) Earnings per ordinary share

The Group presents basic and diluted earnings per share data for its ordinary shares (“EPS”).

Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the period, adjusted for own shares held.

Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding, adjusted for own shares held, for the effects of all dilutive potential ordinary shares.

(t) Contingent liabilities

Where it is not probable that an outflow of economic benefits will be required, or the amount cannot be estimated reliably, the obligation is not recognised in the statements of financial position and is disclosed as a contingent liability, unless the probability of outflow of economic benefits is remote. Possible obligations, whose existence will only be confirmed by the occurrence or non-occurrence of one or more future events, are also disclosed as contingent liabilities unless the probability of outflow of economic benefits is remote.

Where the Company enters into financial guarantee contracts to guarantee the indebtedness of other companies within its group, the Company considers these to be insurance arrangements, and accounts for them as such. In this respect, the Company treats the guarantee contract as a contingent liability until such time as it becomes probable that the Company will be required to make a payment under the guarantee.

85

Cost

At 1

Apr

il 20

11

40,6

62

57,0

58

121,

038

97,9

99

40,4

43

43,3

79

365,

851

3,05

5 50

,717

92

,413

91

2,61

5A

dditi

ons

24

,380

2,

775

6,87

7 12

,905

38

5 5,

403

46,6

42

291

9,50

0 14

9,87

5 25

9,03

3D

ispos

als

-

-

(3

91)

-

(27)

(1

,322

) (9

92)

(104

) (1

,444

) (1

01)

(4,3

81)

Writ

ten

off

-

-

(7

7)

(59)

(8

4)

(272

) (2

,458

) -

(2

02)

-

(3,15

2)Tr

ansf

er in

/(out

) 85

-

22

,687

30

,789

-

5,

521

16,5

19

-

369

(75,

970)

-

Tr

ansf

er fr

om p

repa

id

le

ase

paym

ents

-

56

1 -

-

-

-

-

-

-

-

56

1Tr

ansf

er to

inve

stm

ent

pr

oper

ties

-

(1

,530

) -

-

-

-

-

-

-

-

(1

,530

)Eff

ect o

f mov

emen

ts in

exch

ange

rate

s (8

0)

-

(149

) (2

72)

-

(1

2)

(734

) (1

)

(201

) (8

65)

(2,3

14)

At 3

1 M

arch

/1 A

pril

2012

65

,047

58

,864

14

9,98

5 14

1,36

2 40

,717

52

,697

42

4,82

8 3,

241

58,7

39

165,

352

1,160

,832

Add

ition

s

5,82

1 4,

790

8,47

6 1,1

06

79

6,23

0 40

,865

31

9 10

,526

11

1,08

3 18

9,29

5D

ispos

als

-

-

-

-

-

(1

,596

) (1

,163)

(2

,391

) (2

,820

) (2

6)

(7,9

96)

Writ

ten

off

-

-

(1

02)

-

-

(7)

(271

) -

(1

21)

-

(501

)Tr

ansf

er in

/(out

) 42

1,

890

15,0

48

34,8

72

-

313

102,

926

69

248

(155

,408

) -

Tr

ansf

er to

inve

stm

ent

pr

oper

ties

(6

94)

(1,6

44)

(3,4

16)

-

-

-

-

-

-

(20,

051)

(2

5,80

5)Tr

ansf

er to

ass

et h

eld

for s

ale

(6,6

37)

(229

) -

-

-

-

-

-

-

-

(6

,866

)A

cqui

sitio

n of

sub

sidi

arie

s -

2,

552

-

-

-

-

-

-

-

-

2,55

2Eff

ect o

f mov

emen

ts in

exch

ange

rate

s 11

6 28

(2

93)

(598

) -

(1

2)

(1,5

18)

-

5 (2

,300

) (4

,572

) At

31

Mar

ch 2

013

63,6

95

66,2

51

169,

698

176,

742

40,7

96

57,6

25

565,

667

1,23

8 66

,577

98

,650

1,

306,

939

Gro

up

Free

hold

land

RM’0

00

Long

term

le

aseh

old

land

RM’0

00

Build

ings

an

dim

prov

e-m

ents

RM’0

00

Farm

build

ings

RM’0

00

Fish

ing

boat

and

equi

pmen

tRM

’000

Furn

iture

,fit

tings

and

equi

pmen

tRM

’000

Plan

t and

m

achi

nery

RM’0

00

Offi

ceim

prov

e-m

ents

and

reno

vatio

nRM

’000

Mot

orve

hicl

esRM

’000

Capi

tal

wor

k-in

-pr

ogre

ssRM

’000

Tota

lRM

’000

3. Property, plant and equipment

3. Property, plant and equipment (continued)

Dep

reci

atio

n an

d im

pairm

ent l

oss

At

1 A

pril

2011

Acc

umul

ated

dep

reci

atio

n -

4,

781

17,9

32

31,6

41

7,153

16

,825

12

5,35

9 2,

018

25,9

40

-

231,

649

A

ccum

ulat

ed im

pairm

ent l

oss

-

-

-

-

-

-

369

-

-

-

369

-

4,78

1 17

,932

31

,641

7,1

53

16,8

25

125,

728

2,01

8 25

,940

-

23

2,01

8D

epre

ciat

ion

for t

he y

ear

-

675

4,81

4 7,1

68

2,20

7 4,

291

31,8

05

73

6,16

0 -

57

,193

Disp

osal

s

-

-

(288

) -

(5

) (1

,043

) (5

62)

(86)

(1

,000

) -

(2

,984

)W

ritte

n off

-

-

(26)

(5

7)

(84)

(1

91)

(1,8

08)

-

(128

) -

(2

,294

)Tr

ansf

er fr

om p

repa

id le

ase

pa

ymen

ts

-

493

-

-

-

-

-

-

-

-

493

Tran

sfer

to in

vest

men

t pro

pert

ies

-

(71)

-

-

-

-

-

-

-

-

(7

1)Eff

ect o

f mov

emen

ts in

exc

hang

e

rate

s

-

-

(25)

(6

6)

-

(15)

(6

14)

(4)

(59)

-

(7

83)

At 3

1 M

arch

/1 A

pril

2012

Acc

umul

ated

dep

reci

atio

n -

5,

878

22,4

07

38,6

86

9,27

1 19

,867

15

4,54

9 2,

001

30,9

13

-

283,

572

Dep

reci

atio

n fo

r the

yea

r -

66

8 5,

184

8,88

6 2,

221

4,87

8 37

,875

11

5 6,

833

-

66,6

60D

ispos

als

-

-

-

-

-

(6

59)

(679

) (1

,615

) (2

,180)

-

(5

,133)

Writ

ten

off

-

-

(4

3)

-

-

(3)

(183

) -

(2

4)

-

(253

)A

cqui

sitio

n of

sub

sidi

arie

s -

52

-

-

-

-

-

-

-

-

52

Tran

sfer

to a

sset

hel

d fo

r sal

e -

(1

02)

-

-

-

-

-

-

-

-

(102

)Tr

ansf

er to

inve

stm

ent p

rope

rtie

s -

(1

60)

(131

) -

-

-

-

-

-

-

(2

91)

Effec

t of m

ovem

ents

in e

xcha

nge

ra

tes

-

7

467

564

-

39

672

3 (2

0)

-

1,73

2

At 3

1 M

arch

201

3

A

ccum

ulat

ed d

epre

ciat

ion

-

6,34

3 27

,884

48

,136

11,4

92

24,12

2 19

2,23

4 50

4 35

,522

-

34

6,23

7

Gro

up

Free

hold

land

RM’0

00

Long

term

le

aseh

old

land

RM’0

00

Build

ings

an

dim

prov

e-m

ents

RM’0

00

Farm

build

ings

RM’0

00

Fish

ing

boat

and

equi

pmen

tRM

’000

Furn

iture

,fit

tings

and

equi

pmen

tRM

’000

Plan

t and

m

achi

nery

RM’0

00

Offi

ceim

prov

e-m

ents

and

reno

vatio

nRM

’000

Mot

orve

hicl

esRM

’000

Capi

tal

wor

k-in

-pr

ogre

ssRM

’000

Tota

lRM

’000


87


Carr

ying

am

ount

s

At 1

Apr

il 20

11

40,6

62

52,2

77

103,

106

66,3

58

33,2

90

26,5

54

240,

123

1,03

7 24

,777

92

,413

68

0,59

7 At

31

Mar

ch/1

Apr

il 20

12

65,0

47

52,9

86

127,5

78

102,

676

31,4

46

32,8

30

270,

279

1,24

0 27

,826

16

5,35

2 87

7,260

At 3

1 M

arch

201

3 63

,695

59

,908

14

1,81

4 12

8,60

6 29

,304

33

,503

37

3,43

3 73

4 31

,055

98

,650

96

0,70

2

Gro

up

Free

hold

land

RM’0

00

Long

term

le

aseh

old

land

RM’0

00

Build

ings

an

dim

prov

e-m

ents

RM’0

00

Farm

build

ings

RM’0

00

Fish

ing

boat

and

equi

pmen

tRM

’000

Furn

iture

,fit

tings

and

equi

pmen

tRM

’000

Plan

t and

m

achi

nery

RM’0

00

Offi

ceim

prov

e-m

ents

and

reno

vatio

nRM

’000

Mot

orve

hicl

esRM

’000

Capi

tal

wor

k-in

-pr

ogre

ssRM

’000

Tota

lRM

’000



Furniture, Company fittings and Motor equipment vehicles Total RM’000 RM’000 RM’000

Cost At 1 April 2011 200 616 816Additions 19 - 19 At 31 March/1 April 2012 219 616 835Additions 207 3 210 At 31 March 2013 426 619 1,045 Accumulated depreciationAt 1 April 2011 67 123 190Depreciation for the year 37 91 128 At 31 March/1 April 2012 104 214 318Depreciation for the year 56 91 147 At 31 March 2013 160 305 465 Carrying amountsAt 1 April 2011 133 493 626 At 31 March/1 April 2012 115 402 517

At 31 March 2013 266 314 580

3.1 Depreciation charge for the year is allocated as follows:

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

Income statement (Note 21) 64,156 54,313 147 128 Biological assets (Note 5) 2,211 2,662 - - Property, plant and equipment under construction 293 218 - -

66,660 57,193 147 128

89


3.2 Assets under finance lease Included in property, plant and equipment of the Group are assets acquired under finance lease agreements with

the following net book value:

Group

2013 2012 RM’000 RM’000

Plant and machinery - 4 Motor vehicles 611 157 611 161

3.3 Capital work-in-progress

Capital work-in-progress is in respect of the on-going construction of buildings and installation of plant and machinery in certain subsidiaries.

4. Intangible assets

Development Patents and Goodwill costs trademarks Total Group RM’000 RM’000 RM’000 RM’000

Cost At 1 April 2011 6,593 1,668 554 8,815 Additions - 49 - 49 Written off - (581) - (581) At 31 March/1 April 2012 6,593 1,136 554 8,283 Effect of movements in exchange rates (176) - - (176) At 31 March 2013 6,417 1,136 554 8,107

Amortisation and impairment loss At 1 April 2011 - Accumulated amortisation - 12 90 102 - Accumulated impairment loss - - 89 89 - 12 179 191 Amortisation for the year - 289 20 309 Impairment for the year 197 - - 197

At 31 March/1 April 2012 - Accumulated amortisation - 301 110 411 - Accumulated impairment loss 197 - 89 286 197 301 199 697 Amortisation for the year - 152 29 181

4. Intangible assets (continued)

Development Patents and Goodwill costs trademarks Total Group RM’000 RM’000 RM’000 RM’000

Amortisation and impairment loss (continued)

At 31 March 2013

- Accumulated amortisation - 453 139 592

- Accumulated impairment loss 197 - 89 286

197 453 228 878 Carrying amounts At 1 April 2011 6,593 1,656 375 8,624 At 31 March/1 April 2012 6,396 835 355 7,586 At 31 March 2013 6,220 683 326 7,229

The goodwill recognised on acquisition is attributable mainly to the synergies expected to be achieved from integrating the acquired companies into the Group’s existing operations.

For the purpose of the impairment testing, goodwill is allocated to the lowest level within the Group of which the goodwill is monitored for internal management purposes.

The recoverable amounts of the cash-generating units were based on value in use calculation. These calculation use pre-tax cash flow projections based on financial budgets approved by management.

5. Biological assets

Group

2013 2012 RM’000 RM’000

Non-current At cost: Plantation development expenditure 111,838 103,979 Current At cost: Livestock 74,168 61,365 186,006 165,344

Included in non-current biological assets is depreciation charge of RM2,211,000 (2012: RM2,662,000) (Note 3.1).


91

6. Investment properties Group Cost RM’000

At 1 April 2011 9,446 Additions 5 Transfer from property, plant and equipment 1,530 Transfer from prepaid lease payments 1,155 Disposal (5,003) At 31 March/1 April 2012 7,133 Additions 1,568 Transfer from property, plant and equipment 25,805 Transfer to asset held for sale (392) Disposal (1,165) At 31 March 2013 32,949 Amortisation and impairment lossAt 1 April 2011 - Accumulated amortisation 1,030 - Accumulated impairment loss 1,221 2,251 Amortisation for the year 501 Transfer from property, plant and equipment 71 Transfer from prepaid lease payments 233 At 31 March/1 April 2012 - Accumulated amortisation 1,835 - Accumulated impairment loss 1,221 3,056 Amortisation for the year 547 Transfer from property, plant and equipment 291 Transfer to asset held for sale (175) Disposal (236) At 31 March 2013 - Accumulated amortisation 2,262 - Accumulated impairment loss 1,221 3,483 Carrying amount At 1 April 2011 7,195 At 31 March/1 April 2012 4,077 At 31 March 2013 29,466 Fair value At 1 April 2011 30,588 At 31 March/1 April 2012 20,792

At 31 March 2013 58,570


7. Prepaid lease payments Short-term Group leasehold land* RM’000

CostAt 1 April 2011 58,685Additions 958Acquisition of subsidiaries 1,169Disposals (2,305)Transfer to property, plant and equipment (561)Transfer to investment properties (1,155)Effect of movements in exchange rates (146) At 31 March/1 April 2012 56,645Additions 2,660Effect of movements in exchange rates (31) At 31 March 2013 59,274

AmortisationAt 1 April 2011 5,410Amortisation for the year 1,098Disposals (852)Transfer to property, plant and equipment (493)Transfer to investment property (233)Effect of movements in exchange rates 15 At 31 March/1 April 2012 4,945Amortisation for the year 999Effect of movements in exchange rates 30 At 31 March 2013 5,974

Carrying amountsAt 1 April 2011 53,275 At 31 March/1 April 2012 51,700 At 31 March 2013 53,300

* Unexpired period less than 50 years. Included in prepaid lease payments is an amount of RM19,740,000 (equivalent to USD6,000,000) which represent the valuation of the land use rights in respect of a subsidiary in Indonesia, as agreed in master joint venture agreement dated 16 August 2006. The land use rights represent the location permit, plantation license and the cultivation right title over the plantation land of approximately 20,000 hectares.

The approval for the land utilisation rights measuring in area of 14,177 hectares was granted in 2010 for a period of 35 years, out of which title to 10,159 hectares was issued. The cultivation right title is extendable under Indonesian Land Ordinance. QL’s Indonesian partners have taken active steps to obtain additional land for the remaining cultivation right. As at 31 March 2013, 1,300 hectares of additional land have been identified for the remaining cultivation right.

Under the Indonesian regulations, approximately 20% of the land use rights have to be set aside for Plasma Scheme. This Scheme is a programme where oil palm plantation owners/operators are required to participate in selected programmes to develop plantations to smallholders (herein referred to as plasma farmers)(see Note 12.2).

93

8. Investment in subsidiaries Company

2013 2012 RM’000 RM’000

Unquoted shares, at cost 418,517 273,933

Details of the Company’s subsidiaries are shown in Note 33.

9. Investment in associates

Group Company

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

At cost: Unquoted shares 2,496 2,496 - - Quoted shares in Malaysia 58,383 54,205 23,432 23,432 Share of post-acquisition reserve 13,685 9,118 - - 74,564 65,819 23,432 23,432 Market value: Quoted shares in Malaysia 111,192 95,282 13,659 21,379

Summary of financial information on associates:

Country Effective of ownership Profit/ Total Total incorporation interest Revenue (Loss) assets liabilities 2013 (100%) (100%) (100%) (100%) % RM’000 RM’000 RM’000 RM’000

Indahgrains Logistics Sdn. Bhd. * Malaysia 29.87 5,601 2,546 10,594 (1,478) Boilermech Holdings Berhad * Malaysia 37.99 182,286 28,670 176,997 (98,285)

Lay Hong Berhad * Malaysia 23.86 521,028 (17,786) 388,680 (254,195)

9. Investment in associates (continued)

Summary of financial information on associates (continued):

Country Effective of ownership Profit/ Total Total incorporation interest Revenue (Loss) assets liabilities 2012 (100%) (100%) (100%) (100%) % RM’000 RM’000 RM’000 RM’000

Indahgrains Logistics Sdn. Bhd. * Malaysia 29.87 6,719 2,535 10,925 (1,620) Boilermech Holdings Berhad * Malaysia 36.03 146,974 15,339 134,786 (80,782)

Lay Hong Berhad * Malaysia 24.17 492,096 14,844 360,594 (206,028)

* Equity accounted based on management accounts.

10. Other investments, including derivatives

Group Shares Total Unquoted Derivatives RM’000 RM’000 RM’000

2013 Current Derivatives designated as hedging instruments 138 - 138 Representing items: At fair value 138 - 138

2012 Non-current Available-for-sale financial assets 40 40 - Current Derivatives designated as hedging instruments 442 - 442 482 40 442 Representing items: At cost/amortised cost 40 40 - At fair value 442 - 442 482 40 442


95

10. Other investments, including derivatives (continued) Company Total RM’000

2013 Current Derivatives designated as hedging instruments 19 Representing items: At fair value 19 2012 Current Derivatives designated as hedging instruments 97 Representing items: At fair value 97

11. Deferred tax assets/(liabilities)

Recognised deferred tax assets/(liabilities)

Deferred tax assets and liabilities are attributable to the following:

Assets Liabilities Net

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

Property, plant and equipment - - (58,156) (51,611) (58,156) (51,611) Biological assets - - (2,001) (2,063) (2,001) (2,063) Provision 181 556 - - 181 556 Revaluation - - (933) (1,097) (933) (1,097) Tax loss carry-forwards 548 399 - - 548 399 Unabsorbed capital allowance 1,014 365 - - 1,014 365 Other temporary differences 111 28 (16) (2) 95 26 Tax assets/(liabilities) 1,854 1,348 (61,106) (54,773) (59,252) (53,425) Set-off of tax (1,315) (755) 1,315 755 - - Net tax assets/ (liabilities) 539 593 (59,791) (54,018) (59,252) (53,425)

11. Deferred tax assets/(liabilities) (continued) Movement in temporary differences during the year

Recognised Recognised in profit in profit At or loss At or loss At 1.4.2011 (Note 24) 31.3.2012 (Note 24) 31.3.2013 Group RM’000 RM’000 RM’000 RM’000 RM’000

Property, plant and equipment (41,799) (9,812) (51,611) (6,545) (58,156) Biological assets (1,999) (64) (2,063) 62 (2,001) Provision 699 (143) 556 (375) 181 Revaluation (1,261) 164 (1,097) 164 (933) Tax loss carry-forwards 898 (499) 399 149 548 Unabsorbed capital allowance 1,430 (1,065) 365 649 1,014 Other temporary differences 7 19 26 69 95 (42,025) (11,400) (53,425) (5,827) (59,252)

Unrecognised deferred tax

Deferred tax has not been recognised in respect of the following items (stated at gross):

Group

2013 2012 RM’000 RM’000

Property, plant and equipment 17,631 23,043 Tax loss carry-forwards (6,815) (2,405)

10,816 20,638

Certain subsidiaries have tax incentives with tax exemption of 100% on its statutory income in accordance with Section 127 of the Income Tax Act 1967 for a period of 10 years commencing from the year the subsidiaries achieve statutory income. Deferred tax has not been recognised for temporary differences expected to be crystalised within the tax incentive period.

The tax loss carry-forwards do not expire under current tax legislation, except for RM2,303,000 (2012: Nil) which expires in 2016 under the tax legislation in Vietnam. Deferred tax assets have not been recognised in respect of the tax loss carry-forwards because it is not probable that future taxable profit will be available against which the Group entities can utilise the benefits there from.


97

12. Trade and other receivables

Group Company

2013 2012 2013 2012 Note RM’000 RM’000 RM’000 RM’000 Non-current Subsidiaries 12.1 - - 118,102 26,407 Other receivables 12.2 2,817 1,355 - - 2,817 1,355 118,102 26,407 Current Trade Trade receivables 12.3 236,025 181,112 - - Less: Allowance for impairment loss 12.4 (6,394) (8,035) - - 229,631 173,077 - -

Non-trade Subsidiaries 12.1 - - 352,233 397,900 Associates 12.1 24 725 24 10 Other receivables 12.2 51,249 42,750 209 - Less: Allowance for impairment loss 12.4 (1,236) (1,552) - - 50,013 41,198 209 - 279,668 215,000 352,466 397,910 282,485 216,355 470,568 424,317

12.1 Amount due from subsidiaries and associates

Subsidiaries

The amounts due from subsidiaries of the Company are in respect of advances, which are unsecured, interest free and repayable on demand except for:

i) RM158,645,000 (2012: RM41,774,000) which is subject to the Company’s weighted cost of funds (“COF”) plus 0.50% (2012: COF plus 0.50%) per annum with fixed terms of repayment over a period of 1 to 5 years (2012: 1 to5years);

ii) RM308,552,000 (2012: RM382,298,000) which is subject to Company’s COF plus 0.50% (2012: COF plus 0.50%) perannumandisrepayableondemand;

Associates The amounts due from associates are unsecured, interest free and repayable on demand.

12. Trade and other receivables (continued)

12.2 Other receivables

i) Included in non-current other receivables of the Group are advances for plasma plantation projects in Indonesia amounting to RM2,817,000 (2012: RM1,355,000).

The advances made by the Group in the form of plasma plantation development costs are recoverable from the plasma farmers upon the completion and handover of the plasma plantation projects to plasma farmers. These advances are recoverable from plasma farmers or through bank loans obtained by plasma farmers. Impairment losses are made when the estimated amount recoverable is less than the outstanding advances.

ii) Included in current other receivables of the Group are advances made to suppliers of certain subsidiaries amounting to RM38,481,000 (2012: RM29,353,000) to secure the constant source of raw material supplies for the manufacturing activities. The amount is net of impairment for doubtful debts, unsecured, interest free and repayment is substantially made through the supply of raw materials.

12.3 Trade receivables

Included in the trade receivables of the Group are the following amounts due from related parties:

Group

2013 2012 RM’000 RM’000

A person connected with a Director of a subsidiary 234 189 Companies in which certain Directors of the Company have interests 9,455 876 9,689 1,065

The amounts due from related parties are subject to normal trade credit terms.

12.4 Allowance for impairment loss

During the year, impairment loss on receivables written off against the receivable previously provided for by the Group amounted to RM2,004,000 (2012: RM381,000).

13. Inventories

Group

2013 2012 RM’000 RM’000 At cost: Raw materials 56,860 55,125 Manufactured and trading inventories 161,570 97,183

At net realisable value: Manufactured and trading inventories 933 899 219,363 153,207


99

14. Prepayment and other assets

Group Company

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

Deposits 14.1 30,219 12,504 186 194 Prepayment 7,376 4,844 119 114 37,595 17,348 305 308 14.1 Deposits

Included in deposits of the Group are:

i) deposits paid for purchase of property, plant and equipment amounting to RM21,849,000 (2012: RM6,870,000); and

ii) deposit paid for the purpose of entering into futures contracts and options amounting to RM92,000 (2012: RM857,000).

15. Asset held for sale

Assets classified as held for sale comprise the following: Group

2013 2012 RM’000 RM’000 At net book value Freehold land 6,637 - Long term leasehold land 344 - Machinery and equipment 54 134

7,035 134

Assets are classified as held for sale when efforts to sell the assets have been commenced prior to the reporting date, and the sales are expected to be completed within the next twelve months.

16. Cash and cash equivalents Group Company

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

Cash and bank balances 122,770 78,601 3,777 8,971 Deposits with licensed banks 18,331 11,242 791 585 Liquid investments - 11,660 - 102

141,101 101,503 4,568 9,658

17. Capital and reserves 17.1 Share capital

Group and Company

Number Number Amount of shares Amount of shares 2013 2013 2012 2012 RM’000 ’000 RM’000 ’000

Authorised: Ordinary shares of RM0.25 At 1 April 2011/31 March 2012/ 1 April 2012/31 March 2013 500,000 2,000,000 500,000 2,000,000

Issued and fully paid up: Ordinary shares of RM0.25 At 1 April 2012/2011 208,000 832,002 208,000 832,000 Issued during the year - Exercise of warrants 5 18 - 2 At 31 March 208,005 832,020 208,000 832,002

17.2 Translation reserve

The translation reserve comprises all foreign currency differences arising from the translation of the financial statements of the Group entities with functional currencies other than RM.

17.3 Available-for-sale reserve

The available-for-sale reserve comprises the cumulative net change in the fair value of available-for-sale financial assets until the investments are derecognised or impaired.

17.4 Hedging reserve

The hedging reserve comprises the effective portion of the cumulative net change in the fair value of cash flow hedges related to hedged transactions that have not yet occurred.

17.5 Retained earnings

Pursuant to Section 50 of the Saving and Transitional Provisions under the Finance Act 2007, the Company has elected the irrevocable option to disregard the Section 108 balance and exercise an irrevocable option not to deduct tax under Section 40 of the said Act. As such, the Company may distribute single tier exempt dividend to its shareholders out of its entire retained earnings.

17.6 Warrants

The Company had issued 41,600,000 free warrants on the basis of one (1) free Warrant for every twenty (20) existing ordinary shares of RM0.25 each in 2011. The Warrants are constituted by a Deed Poll dated 8 February 2011 and were listed on Bursa Malaysia Securities Berhad.


101

17. Capital and reserves (continued) 17.6 Warrants (continued)

The main features of the Warrants are as follows:

a) each warrant will entitle its registered holder during the exercise period to subscribe for one (1) new ordinary share at the exercise price, which has been fixed at RM3.30 per share, subject to adjustment in accordance with the provisions of the Deed Poll.

b) the Warrants may be exercised at any time on or after 16 February 2011 until the end of the tenure of the Warrants. The tenure of the Warrants is for a period of two (2) years. The Warrants not exercised during the exercise period shall thereafter lapse and cease to be valid.

c) the new ordinary shares of RM0.25 each to be issued arising from the exercise of the Warrants shall, upon allotment and issue, rank pari passu in all respects with the existing ordinary shares of RM0.25 each of the Company, save and except that the new ordinary shares of RM0.25 each will not be entitled to any dividends, rights, allotments and/or other forms of distribution where the entitlement date precedes the relevant date of allotment and issuance of the new ordinary shares of RM0.25 each arising from the exercise of the Warrants.

There are 17,822 (2012: 1,798) warrants exercised during the financial year. The warrants have expired on 13 February 2013 and thus, any unsold/unexercised warrants have lapsed.

18. Loans and borrowings

Group Company

2013 2012 2013 2012 RM’000 RM’000 RM’000 RM’000 Non-current: Term loans - Conventional - unsecured 282,203 149,529 251,427 116,676 - Islamic - unsecured 149,789 125,891 148,593 125,891 Islamic Commercial Papers - unsecured 18,914 28,918 18,914 28,918 Finance lease liabilities 168 37 - - 451,074 304,375 418,934 271,485

Current: Term loans - Conventional - unsecured 58,380 56,418 44,197 42,101 - Islamic - unsecured 31,982 20,250 30,396 20,250 Bank overdrafts - unsecured 11,738 13,861 - - Islamic Commercial Papers - unsecured 8,750 8,750 8,750 8,750 Bills payable - Conventional - unsecured 193,856 149,465 - - - Islamic - unsecured 37,794 26,767 - - Revolving credit - unsecured 34,040 16,571 33,040 16,571 Finance lease liabilities 139 61 - - 376,679 292,143 116,383 87,672

827,753 596,518 535,317 359,157

18. Loans and borrowings (continued)

18.1 Interest rate

Group

Term loans

The term loans for the Group are subject to the following interest:

i) Ataninterestrangingfrom3.21%to5.86%(2012:3.65%to6.50%)perannum; ii) 3 months Kuala Lumpur Interbank Offered Rate (“KLIBOR”) plus 0.48% - 1.35% (2012: 3 months KLIBOR plus

0.48%-1.35%)perannum;

iii) 1monthCostofFund(“COF”)plus1.20%(2012:1monthCOFplus1.20%)perannum;

iv) 3monthsCOFplus1.50%(2012:3monthsCOFplus1.50%)perannum;and

v) Kuala Lumpur Islamic Reference Rate (“KLIRR”) plus 1.25% (2012: Nil) per annum.

The term loans for the Group are repayable in equal monthly instalments over periods ranging from 1 to 5 years (2012: 1 to 6 years).

Bank overdrafts

The bank overdrafts are subject to interest ranging from 0.50% to 1.75% above Base Lending Rate (“BLR”) (2012: 0.50% to 1.50% above BLR) per annum.

Bills payable

The unsecured bills payable are subject to interest ranging from 0.25% to 1.50% above COF (2012: 0.25% to 1.50% above COF) per annum.

Revolving credit

The revolving credit is subject to interest of monthly COF plus 0.85% (2012: monthly COF plus 0.85%) per annum.

Finance lease liabilities

Finance lease liabilities are payable as follows:

Present Present Future value of Future value of minimum minimum minimum minimum lease lease lease lease payments Interest payments payments Interest payments 2013 2013 2013 2012 2012 2012 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Less than one year 155 (16) 139 65 (4) 61Between one and five years 179 (11) 168 38 (1) 37 334 (27) 307 103 (5) 98

Finance lease liabilities bear interest rates at 3.20% to 4.25% (2012: 3.20% to 4.00%) per annum.


103


18.1 Interest rate (continued)

Group and Company

Islamic Commercial Papers

In prior year, the Company issued RM45 million 3.5 years Islamic Commercial Papers (“ICP”) under the Sukuk Program (“Programme”) at par with profit rates ranging from 4.33% to 4.57% per annum.

Salient features of the Programme are as follows:

i) Total outstanding nominal value of the ICP at any point in time shall not exceed RM45 million.

ii) The aggregate tenure of the Progamme is up to 3.5 years from the date of the first issuance of the ICP under the Programme.

iii) The ICP will be issued at a discount to the nominal value and repayable in 6 monthly installment over period of 3.5 years. There will not be profit payable on the ICP issued under the Programme in view that they are issued at a discount.

Company

Term loans

The term loans for the Company are subject to the following interest:

i) Ataninterestrangingof3.21%to4.50%(2012:3.65%to5.50%)perannum;

ii) 3monthsKLIBORplus0.48%to1.35%(2012:3monthsKLIBORplus0.48%to1.35%)perannum;

iii) 1monthCOFplus1.20%(2012:1monthCOFplus1.20%)perannum;and

iv) KLIRRplus1.25%(2012:Nil)perannum;

The term loans for the Company are repayable in equal monthly instalments over periods ranging from 1 to 5 years (2012: 1 to 5 years).

Revolving credit

The revolving credit is subject to interest of monthly COF plus 0.85% (2012: monthly COF plus 0.85%) per annum.

18.2 Security

Group

Term loans

Unsecured

The term loans are supported by way of:

i) corporateguaranteesbycertainsubsidiariesandtheCompany;and

ii) a negative pledge on all assets of the Company.


18.2 Security (continued)

Group and Company

Bank overdrafts

Unsecured

The bank overdrafts are supported by way of:

i) anegativepledgeonallassetsofcertainsubsidiariesandtheCompany;and

ii) corporate guarantee by the Company.

Significant covenants for certain term loans and bank overdraft granted to the Group and the Company:

i) dividend payment shall not exceed current year net profit after tax of the Company.

ii) maximumgearingof2.0timesoftheGroupatalltimes;and

iii) minimum debt service cover ratio of 1.25 times of the Group.

Bills payable

Unsecured

Bills payable are supported by way of corporate guarantee by the Company.

Revolving credit

Unsecured

Revolving credit is supported by way of a negative pledge on all assets of the Company.

Company

Term loans

Unsecured

The term loans are supported by way of a negative pledge over the assets of the Company and corporate guarantees from certain subsidiaries.

Islamic Commercial Papers

The ICP are supported by way of a negative pledge on all assets of the Company.

Significant covenants for ICP granted to the Group and the Company:

i) total annual dividends payout by subsidiary companies to the Issuer shall not be less than 20% of net profit aftertax;

ii) maximumgearingof1.5timesoftheGroupatalltimes;

iii) minimumdebtservicecoverratioof1.8timesoftheGroup;and

iv) minimum finance service cover ratio of 3 times of the Group.


105

19. Employee benefits

The Group’s net obligation in respect of defined benefit retirement plans arises from its subsidiaries in Indonesia. The following tables summarise the components of net employee benefit expense recognised in the statement of profit or loss and other comprehensive income and in the statement of financial position as employee benefits.

Group

2013 2012 RM’000 RM’000

a. Expense recognised in profit or loss Current service cost 416 342 Interest on obligation 12 26 Net benefit expense 428 368

b. Present value of defined benefit obligations

Present value of defined benefit obligations 833 486 Unrealised actuarial loss (64) (118) Net benefit expense 769 368

c. Movement in present value of defined benefit obligations

Defined benefit obligations at 1 April 368 - Current service cost and interest 428 368 Payment during the year (27) - Defined benefit obligations at 31 March 769 368

The principal assumptions used in determining the retirement benefit cost at end of the reporting period are as follows:

Calculation method : Projected Unit Credit Normal pension age : 55 years Annual salary increment (estimated) : 7% - 10% (2012: 7% - 10%) Annual discount rate : 6.5% (2012: 6.7% - 7%) Mortality level : Indonesian Mortality Table (“TMI”) 2 Disability level : 10% from mortality level (2012: 10%) Resignation level : 5% constant until the age of 34 and linearly decreasing until the pension age.

The Group’s management believes that the accrued employee benefit as of 31 March 2013 is sufficient to meet the requirements of the law in Indonesia.


20. Trade and other payables, including derivatives

Group Company

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

Current Subsidiaries 20.1 - - 52,400 28,476 Trade payables 20.2 70,125 70,283 - - Other payables 20.3 60,623 46,250 9 191 Accrued expenses 17,649 14,095 362 309 Financial liabilities at fair value through profit or loss: - Held for trading, including derivatives 20.4 - 86 - - Derivatives designated as hedging instrument 4,139 6,065 3,794 5,679 152,536 136,779 56,565 34,655

20.1 Amounts due to subsidiaries

The amounts due to subsidiaries are non-trade in nature, subject to an interest of Company’s weighted cost of funds (‘‘COF’’) plus 0.50% (2012: COF plus 0.50%) per annum, unsecured and repayable on demand. In prior year, included in amount due to subsidiaries was RM30,000 which was non-trade in nature, interest free and repayable on demand.

20.2 Trade payables

Included in trade payables of the Group are the following amounts due to related parties:

Group

2013 2012 RM’000 RM’000

Companies in which certain Directors of subsidiaries have interest 671 1,704

20.3 Other payables

Included in other payables of the Group are the following amounts due to related parties:

Group

2013 2012 RM’000 RM’000

Companies in which certain Directors have interests 27 2,454 Amount due to shareholders of subsidiaries 35,523 30,454 35,550 32,908

107

20. Trade and other payables, including derivatives (continued)

20.3 Other payables (continued) The amounts due to related parties are unsecured, interest free and repayable on demand.

20.4 Financial liabilities at fair value through profit or loss

In prior year, included in derivatives held for trading are fair value forward exchange contracts and cross currency swaps.

21. Results from operating activities

Group Company

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

Results from operating activities is arrived at after crediting

Bad debts recovered 85 2,517 - - Dividends from subsidiaries - gross - - 1,960 6,893 - tax exempt - - 27,800 31,838 Dividends from liquid investments 188 428 20 37 Dividends from associates - - 594 594 Derivative gain - 1,263 - - Gain on foreign exchange - realised 1,485 798 49 - - unrealised - - 99 - Gain on disposal of asset held for sale 58 - - - Gain on disposal of quoted investment - 54 - - Gain on disposal of prepaid lease payment - 246 - - Gain on disposal of property, plant and equipment 658 288 - - Gain on disposal of investment properties 218 9,844 - - Gain on deemed disposal of investment - 10,150 - 10,150 Rental of equipment - 77 - - Rental of premises 1,000 663 - - Reversal of inventories written down - 51 - - Reversal of impairment loss on receivables 1,573 4,549 - - Reversal of impairment loss of asset held sale 193 - - -

21. Results from operating activities (continued)

Group Company

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

and after charging:

Auditors’ remuneration - Audit fees KPMG Malaysia - current year 735 650 63 63 - prior years 85 95 - 13 Overseas affiliates of KPMG Malaysia - current 88 42 - - Other auditors 172 165 - - - Non-audit fees - KPMG Malaysia 117 117 117 117 - Other auditors - 39 - - Allowance for slow moving inventories 16 - - - Amortisation of investment properties 547 501 - - Amortisation of intangible assets 181 309 - - Amortisation of prepaid lease payments 999 1,098 - - Asset held for sale written off 32 - - - Bad debts written off 127 461 - - Derivative loss 551 - - - Depreciation of property, plant and equipment 64,156 54,313 147 128 Hire of plant and machinery 64 35 - - Loss on deemed disposal of investment in associate - 517 - - Loss on foreign exchange - realised - - - 665 - unrealised 246 830 - 397 Impairment loss on receivables 1,620 3,036 - - Impairment loss on intangible assets - 197 - - Impairment losses on asset held for sale - 102 - - Intangible assets written off - 581 - - Personnel expenses (including key management personnel): - wages, salaries and others 101,861 89,703 6,420 5,719 - contribution to state plans 7,207 6,313 542 499 - expenses related to defined benefit plans 428 368 - - Property, plant and equipment written off 248 858 - - Rental of land and buildings and office premises 2,012 1,408 451 355 Rental of plant, machinery, equipment and motor vehicle 7 2 68 68


109

22. Finance costs

Group Company

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

Interest expense of financial liabilities that are not at fair value through profit or loss: - term loans and ICP 18,663 14,159 17,259 12,548 - bank overdrafts 928 659 - - - bills payable 7,474 6,793 - - - finance lease liabilities 15 53 - - - revolving credit 619 922 608 824 - subsidiaries - - 1,685 1,231 27,699 22,586 19,552 14,603 Other finance costs 894 62 - - 28,593 22,648 19,552 14,603

23. Finance income

Group Company

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

Interest income of financial assets that are not at fair value through profit or loss: - Deposits placed with licensed banks 1,392 890 230 135 - Subsidiaries - - 19,426 17,220 - Others 539 798 517 - 1,931 1,688 20,173 17,355


24. Tax expense

Group Company

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

Tax expense on operations 35,157 33,113 1,811 2,167 Share of tax of equity accounted investees 2,085 2,809 - - Total tax expense 37,242 35,922 1,811 2,167 Current tax expense - current year 28,938 22,295 1,818 2,167 - under/(over) provision in prior years 392 (582) (7) - 29,330 21,713 1,811 2,167 Deferred tax expense - origination and reversal of temporary differences 6,392 11,124 - - - (over)/under provision in prior years (565) 276 - -

5,827 11,400 - - Share of tax of equity accounted investees 2,085 2,809 - - Total tax expense 37,242 35,922 1,811 2,167 Reconciliation of tax expense Profit for the year 137,552 139,169 24,415 43,629 Total income tax expense 37,242 35,922 1,811 2,167 Profit excluding tax 174,794 175,091 26,226 45,796 Income tax calculated using Malaysian tax rate of 25% (2012: 25%) 43,699 43,773 6,557 11,449 Effect of tax rates in foreign jurisdictions 213 (1,320) - - Non-deductible expenses 9,150 5,857 2,211 1,215 Tax exempt income (4,254) (5,292) (6,950) (10,497) Tax incentives (13,785) (8,105) - - Effect of temporary differences not recognised 2,456 1,061 - - Crystalisation of deferred tax liabilities arising from revaluation reserve (164) (164) - - Others 100 418 - - 37,415 36,228 1,818 2,167 Over provision in prior year (173) (306) (7) - Tax expense 37,242 35,922 1,811 2,167

111

25. Earnings per ordinary share

Basic earnings per ordinary share

The calculation of basic earnings per ordinary share is based on the profit attributable to the owners of the Company of RM131,706,000 (2012: RM131,407,000) and the weighted average number of ordinary shares in issue during the year.

2013 2012 ’000 ’000

Issued ordinary shares at beginning of the year 832,002 832,000Effect of warrant conversion 2 1 Weighted average number of ordinary shares 832,004 832,001

sen sen Basic earnings per ordinary share 16 16

Diluted earnings per ordinary share

The Group has no dilution in its earnings per ordinary share at 31 March 2013 as the warrants have expired on 13 February 2013 and thus, any unsold/unexercised warrants have lapsed.

In prior year, the Group has no dilution in its earnings per ordinary share as the average fair value of the ordinary shares for the year ended 31 March 2012 is lower than the exercise price of the Warrants. Therefore, no consideration for adjustment in the form of an increase in the number of shares has been used in calculating potential dilution of its earnings per ordinary share.

26. Dividends

Dividends recognised by the Company:

Sen per Total share amount (net of tax) RM’000 Date of payment

2013 Final 2012 4.50 37,440 14 September 2012 2012 Final 2011 4.25 35,360 23 September 2011

At the forthcoming general meeting, a final single tier dividend of 4.50 sen per share amounting to approximately RM37,441,000 (based on the issued and paid up capital at the end of the reporting period) in respect of the year ended 31 March 2013 will be proposed for approval by the shareholders of the Company. The proposed final dividend is payable in respect of all ordinary shares in issue at the date of entitlement. The said dividend will be recognised in subsequent financial reports upon approval by the shareholders.

27. Operating segments

The Group’s resources allocation is assessed on a quarterly basis in accordance to the business performance and requirements of the respective business segments as reviewed and determined by the Group’s Chief Operating Decision Maker (‘‘CODM’’) whom is also the Managing Director of the Group. Hence, segment information is presented by business segment that the Group operates in. The format of the business segment is based on the Group’s operation management and internal reporting structure.

Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. The Company’s expenses are allocated to the respective business segments based on a pre-agreed percentage allocation, while the Company’s assets and liabilities are absorbed into integrated livestock farming segment.

Segment capital expenditure is the total cost incurred during the period to acquire property, plant and equipment,

investment properties, prepaid lease payments and intangible assets other than goodwill.

Business segments

The Group comprises the following main business segments:

Marine-products manufacturing Deep-sea fishing, manufacture and sale of fishmeal, surimi and surimi based products. Palm oil activities Crude palm oil milling and oil palm cultivations.

Integrated livestock farming Distribution of animal feed raw materials, food related products and livestock farming.

The inter-segment transactions have been entered into in the normal course of business and are based on normal trade terms.

Geographical segments

The Group’s business operates in four principal geographical areas, Malaysia, Indonesia, Singapore and Vietnam.

In presenting information on the basis of geographical segments, segment revenue is based on the geographical location of the group entities, segment assets are based on the geographical location of the assets.


113

Busi

ness

Seg

men

ts

Reve

nue

from

ext

erna

l cus

tom

ers

546,

415

473,

672

299,

991

354,

792

1,29

9,90

1 1,1

18,2

08

2,14

6,30

7 1,

946,

672

Segm

ent p

rofit

bef

ore

taxa

tion

85,7

72

65,5

72

15,17

5 14

,657

71

,762

92

,053

17

2,70

9 17

2,28

2

In

clud

ed in

the

mea

sure

men

t of

segm

ent p

rofit

bef

ore

taxa

tion

are:

In

ter-s

egm

ent r

even

ue

94,0

76

71,6

64

2,87

3 3,

314

9,67

8 13

,277

10

6,62

7 88

,255

F

inan

ce c

osts

(6

,884

) (5

,765

) (4

,830

) (3

,490

) (1

6,87

9)

(13,

393)

(2

8,59

3)

(22,

648)

F

inan

ce in

com

e 18

2 64

76

76

1,

673

1,54

8 1,

931

1,68

8

Dep

reci

atio

n an

d am

ortis

atio

n (2

5,13

1)

(23,

998)

(1

2,09

3)

(6,0

10)

(31,1

63)

(26,

213)

(6

8,38

7)

(56,

221)

S

hare

of p

rofit

of

inve

stee

s,

n

et o

f tax

-

-

10

,580

5,

505

(3,3

44)

2,92

2 7,2

36

8,42

7

Not

incl

uded

in th

e m

easu

rem

ent

o

f seg

men

t pro

fit b

efor

e

tax

atio

n bu

t pro

vide

d to

Man

agin

g D

irect

or:

I

ncom

e ta

x ex

pens

e (1

1,94

3)

(10,

404)

(2

,954

) (2

,794

) (2

0,26

0)

(19,

915)

(3

5,15

7)

(33,

113)

20

13RM

’000

2012

RM’0

0020

13RM

’000

2012

RM’0

0020

13RM

’000

2012

RM’0

0020

13RM

’000

2012

RM’0

00

M

arin

e-pr

oduc

ts

Palm

In

tegr

ated

live

stoc

k

man

ufac

turi

ng

oil a

ctiv

ities

fa

rmin

g Co

nsol

idat

ed

27. Operating segments (continued)

Segm

ent A

sset

s 57

9,91

2 45

2,40

8 41

5,33

1 36

8,01

6 1,

013,

287

850,

233

2,00

8,53

0 1,

670,

657

Segm

ent l

iabi

litie

s 84

,003

74

,840

10

8,02

2 11

0,00

4 85

6,86

7 60

5,77

9 1,

048,

892

790,

623

Incl

uded

in th

e m

easu

rem

ent o

f

seg

men

t ass

ets a

re:

I

nves

tmen

t in

asso

ciat

es

-

-

51,3

05

37,9

94

23,2

59

27,8

25

74,5

64

65,8

19

Add

ition

s to

non

-cur

rent

ass

ets

oth

er th

an fi

nanc

ial i

nstr

umen

ts

a

nd d

efer

red

tax

asse

ts

80,5

92

45,3

33

20,3

86

90,5

86

100,

404

145,

706

201,

382

281,

625

20

13RM

’000

2012

RM’0

0020

13RM

’000

2012

RM’0

0020

13RM

’000

2012

RM’0

0020

13RM

’000

2012

RM’0

00

M

arin

e-pr

oduc

ts

Palm

In

tegr

ated

live

stoc

k

man

ufac

turi

ng

oil a

ctiv

ities

fa

rmin

g Co

nsol

idat

ed

27. Operating segments (continued)


Geo

grap

hica

l seg

men

ts Re

venu

e fro

m e

xter

nal

cu

stom

ers

1,89

3,51

7 1,

833,

411

-

4,66

1 21

3,25

7 10

3,52

3 39

,533

5,

077

2,14

6,30

7 1,

946,

672

Non

-cur

rent

ass

ets

othe

r

than

def

erre

d ta

x as

set

907,2

89

818,

760

-

1,08

4 29

3,09

4 26

0,99

0 39

,533

30

,982

1,

239,

916

1,111

,816

20

13RM

’000

2012

RM’0

0020

13RM

’000

2012

RM’0

0020

13RM

’000

2012

RM’0

0020

13RM

’000

2012

RM’0

0020

13RM

’000

2012

RM’0

00

M

alay

sia

Sing

apor

e In

done

sia

Vi

etna

m

Cons

olid

ated

115

20

13RM

’000

2012

RM’0

0020

13RM

’000

2012

RM’0

0020

13RM

’000

2012

RM’0

0020

13RM

’000

2012

RM’0

0020

13RM

’000

2012

RM’0

00

28. Financial instruments

28.1 Categories of financial instruments

The table below provides an analysis of financial instruments categorised as follows:

(a) Loansandreceivables(‘‘L&R’’);(b) Fairvaluethroughprofitorloss(‘‘FVTPL‘‘); -Heldfortrading(‘‘HFT‘‘);(c) Available-for-salefinancialassets(‘‘AFS‘‘);and(d) Financial liabilities measured at amortised cost (‘‘FL‘‘).

Derivatives Carrying L&R/ FVTPL used for amount (FL) -HFT AFS hedging RM’000 RM’000 RM’000 RM’000 RM’000

2013 Financial assetsGroupOther investments, including derivatives 138 - - - 138Trade and other receivables 282,485 282,485 - - - Cash and cash equivalents 141,101 141,101 - - - 423,724 423,586 - - 138

CompanyOther investments, including derivatives 19 - - - 19Trade and other receivables 470,568 470,568 - - - Cash and cash equivalents 4,568 4,568 - - -

475,155 475,136 - - 19 Financial liabilities GroupLoans and borrowings (827,753) (827,753) - - - Trade and other payables, including derivatives (152,536) (148,397) - - (4,139) (980,289) (976,150) - - (4,139) CompanyLoans and borrowings (535,317) (535,317) - - - Trade and other payables, including derivatives (56,565) (52,771) - - (3,794) (591,882) (588,088) - - (3,794)

28. Financial instruments (continued)

28.1 Categories of financial instruments (continued)

Derivatives Carrying L&R/ FVTPL used for amount (FL) -HFT AFS hedging RM’000 RM’000 RM’000 RM’000 RM’000

2012 Financial assetsGroupOther investments, including derivatives 482 - - 40 442Trade and other receivables 216,355 216,355 - - - Cash and cash equivalents 101,503 101,503 - - - 318,340 317,858 - 40 442 CompanyOther investments, including derivatives 97 - - - 97Trade and other receivables 424,317 424,317 - - - Cash and cash equivalents 9,658 9,658 - - - 434,072 433,975 - - 97 Financial liabilities GroupLoans and borrowings (596,518) (596,518) - - - Trade and other payables, including derivatives (136,779) (130,628) (86) - (6,065) (733,297) (727,146) (86) - (6,065)

CompanyLoans and borrowings (359,157) (359,157) - - - Trade and other payables, including derivatives (34,655) (28,976) - - (5,679) (393,812) (388,133) - - (5,679)


117


28.2 Net gains and losses arising from financial instruments

Group Company

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

Net gains/(losses) arising on: Fair value through profit or loss: - Held for trading - (197) - - Derivatives designated as hedging instrument: - recognised in other comprehensive income/(expenses) 579 (578) 422 (357) - recognised in profit or loss (551) 1,460 - - 28 882 422 (357)

Available-for-sale financial assets - gain arising during the year - 3,128 - 3,128 Loans and receivables 3,053 6,282 20,341 17,355 Financial liabilities measured at amortised cost (28,377) (23,705) (19,552) (15,665) (25,296) (13,610) 1,211 4,461

28.3 Financial risk management

The Group’s financial risk management policy seeks to ensure that adequate financial resources are available for the Group’s business development. The Group has clear defined guidelines and written risk management policies on credit risk, foreign currency risk, liquidity and cash flow risk. The Group operates within clearly defined guidelines and do not engage in speculative transactions.

The Group has exposure to the following risks from its use of financial instruments:

• Creditrisk • Liquidityrisk • Marketrisk



28.4 Credit risk

Receivables

Credit risk is the risk of a financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations. The Group’s exposure to credit risk arises principally from its receivables from customers and advances to suppliers. The Company’s exposure to credit risk arises principally from loans and advances to subsidiaries and financial guarantees given to banks for credit facilities granted to subsidiaries.

Risk management objectives, policies and processes for managing the risk Credit risk is controlled by the application of credit approvals, limits and monitoring procedures. Management has

a credit policy in place and the exposure to credit risk is monitored on an ongoing basis. Credit evaluations are performed on all customers requiring credit over a certain amount. The Group and the Company do not have any significant exposure to any individual counterparty. The Group and the Company have credit policy in place to ensure that transactions are conducted with creditworthy counterparty.

Exposure to credit risk, credit quality and collateral As at the end of the reporting period, the maximum exposure to credit risk arising from receivables is represented

by the carrying amounts in the statements of financial position.

Management has taken reasonable steps to ensure that receivables that are neither past due nor impaired are measured at their realisable values. A significant portion of these receivables are regular customers that have been transacting with the Group. The Group uses ageing analysis to monitor the credit quality of the receivables.

Impairment losses

The ageing of receivables as at the end of the reporting period was:

Individual Group Gross impairment Net RM’000 RM’000 RM’000

2013 Not past due 221,156 (1,237) 219,919 Past due 1-120 days 59,474 (160) 59,314 Past due more than 120 days 9,485 (6,233) 3,252 290,115 (7,630) 282,485

119


28.4 Credit risk (continued)

Receivables (continued)

Impairment losses (continued)

Individual Group Gross impairment Net RM’000 RM’000 RM’000

2012 Not past due 159,120 (249) 158,871 Past due 1-120 days 57,731 (2,236) 55,495 Past due more than 120 days 9,091 (7,102) 1,989 225,942 (9,587) 216,355

The movements in the allowance for impairment losses of receivables during the financial year were:

Group

2013 2012 RM’000 RM’000

At 1 April 2012/2011 9,587 11,481 Impairment loss recognised 1,620 3,036 Impairment loss reversed (1,573) (4,549) Impairment loss written off (2,004) (381)

At 31 March 7,630 9,587

Financial guarantees

Risk management objectives, policies and processes for managing the risk

The Company provides unsecured financial guarantees to banks in respect of banking facilities granted to certain subsidiaries. The Company monitors on an ongoing basis the results of the subsidiaries and repayments made by the subsidiaries.

Exposure to credit risk, credit quality and collateral

As at the end of the reporting period, there was no indication that any subsidiary would default on repayment.

The financial guarantees have not been recognised since the fair value on initial recognition was not material.


28.4 Credit risk (continued)

Inter company balances


The Company provides unsecured advances to subsidiaries. The Company monitors the results of the subsidiaries regularly.

Exposure to credit risk, credit quality and collateral

As at the end of the reporting period, the maximum exposure to credit risk is represented by their carrying amounts in the statements of financial position.

Impairment losses

As at the end of the reporting period, there was no indication that the advances to the subsidiaries are not recoverable. The Company does not specifically monitor the ageing of the advances to subsidiaries. Nevertheless, non-current loans to subsidiaries are not overdue and the remaining advances are repayable on demand.

28.5 Liquidity risk

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

The Group and the Company maintains 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.

It is not expected that the cash flows included in the maturity analysis could occur significantly earlier, or at significantly different amounts.


121

Mat

urity

ana

lysis

The

tabl

e be

low

sum

mar

ises

the

mat

urity

pro

file

of t

he G

roup

’s an

d th

e Co

mpa

ny’s

finan

cial

liab

ilitie

s as

at

the

end

of t

he r

epor

ting

perio

d ba

sed

on u

ndis

coun

ted

cont

ract

ual p

aym

ents

:

Carr

ying

Co

ntra

ctua

l Co

ntra

ctua

l U

nder

1

1 - 2

2

- 5

> 5

Gro

up

amou

nt

inte

rest

rate

ca

sh fl

ows

year

ye

ars

year

s ye

ars

2013

RM’0

00

%

RM’0

00

RM’0

00

RM’0

00

RM’0

00

RM’0

00

Non

-der

ivat

ive

finan

cial

liab

ilitie

sRe

volv

ing

cred

it

34,0

40

4.23

- 4.

47

34,3

64

34,3

64

-

-

-

Bank

ove

rdra

fts

11

,738

7.1

0 - 8

.35

11,7

50

11,7

50

-

-

-

Bills

pay

able

231,

650

1.60

- 4.

98

231,

650

231,

650

-

-

-

Term

loan

s

52

2,35

4 3.

21 -

5.86

54

3,93

6 11

1,95

8 10

8,33

4 32

3,64

4 -

Isl

amic

Com

mer

cial

Pap

ers

27

,664

4.

33 -

4.57

28

,862

9,1

29

11,7

37

7,996

-

Fi

nanc

e le

ase

liabi

litie

s

307

3.20

- 4.

25

334

155

179

-

-

Trad

e an

d ot

her p

ayab

les,

excl

udin

g de

rivat

ives

148,

397

- 14

8,39

7 14

8,39

7 -

-

-

976,

150

99

9,29

3 54

7,403

12

0,25

0 33

1,64

0 -

D

eriv

ativ

e fin

anci

al li

abili

ties

Forw

ard

exch

ange

con

trac

ts (g

ross

set

tled)

:

Out

flow

30

2 -

70,3

68

70,3

68

-

-

-

In

flow

-

-

(70,

066)

(7

0,06

6)

-

-

-

Com

mod

ity o

ptio

n

(76)

-

(76)

(7

6)

-

-

-

Cros

s cu

rren

cy s

wap

3,63

0 -

3,63

0 3,

630

-

-

Inte

rest

rate

sw

ap

14

5 -

145

145

-

-

-

98

0,15

1

1,00

3,29

4 55

1,40

4 12

0,25

0 33

1,64

0 -


28.5 Liquidity risk (continued)

Mat

urity

ana

lysis

(con

tinue

d)

Carr

ying

Co

ntra

ctua

l Co

ntra

ctua

l U

nder

1

1 - 2

2

- 5

> 5

Gro

up

amou

nt

inte

rest

rate

ca

sh fl

ows

year

ye

ars

year

s ye

ars

2012

RM’0

00

%

RM’0

00

RM’0

00

RM’0

00

RM’0

00

RM’0

00

Non

-der

ivat

ive

finan

cial

liab

ilitie

sRe

volv

ing

cred

it

16,5

71

4.21

16

,571

16

,571

-

-

-

Ba

nk o

verd

raft

s

13,8

61

7.10

- 8.10

13

,941

13

,941

-

-

-

Bi

lls p

ayab

le

17

6,23

2 1.

66 -

5.47

17

6,36

0 17

6,36

0 -

-

-

Te

rm lo

ans

352,

088

3.65

- 6.

50

366,

635

78,0

04

109,

430

177,6

79

1,52

2Isl

amic

Com

mer

cial

Pap

ers

37

,668

4.

33 -

4.57

40

,802

11

,638

13

,639

15

,525

-

Fi

nanc

e le

ase

liabi

litie

s

98

3.30

- 7.1

8 10

3 65

38

-

-

Trad

e an

d ot

her p

ayab

les,

excl

udin

g de

rivat

ives

130,

628

- 13

0,62

8 13

0,62

8 -

-

-

727,1

46

74

5,04

0 42

7,207

12

3,10

7 19

3,20

4 1,

522

Der

ivat

ive

finan

cial

liab

ilitie

sFo

rwar

d ex

chan

ge c

ontr

acts

(gro

ss s

ettle

d):

O

utflo

w

-

-

33,0

66

33,0

66

-

-

-

I

nflow

(2

45)

- (3

3,31

1)

(33,

311)

-

-

-

Co

mm

odity

opt

ions

372

- 37

2 37

2 -

-

-

Cr

oss

curr

ency

sw

ap

5,

391

- 5,

391

5,39

1 -

-

-

In

tere

st ra

te s

wap

191

- 19

1 19

1 -

-

-

73

2,85

5

750,

749

432,

916

123,

107

193,

204

1,52

2




123

Mat

urity

ana

lysis

(con

tinue

d)

Carr

ying

Co

ntra

ctua

l Co

ntra

ctua

l U

nder

1

1 - 2

2

- 5

Com

pany

am

ount

in

tere

st ra

te

cash

flow

s ye

ar

year

s ye

ars

2013

RM’0

00

%

RM’0

00

RM’0

00

RM’0

00

RM’0

00

Non

-der

ivat

ive

finan

cial

liab

ilitie

sRe

volv

ing

cred

it

33,0

40

4.2

3 33

,288

33

,288

-

-

Te

rm lo

ans

474,

613

3.48

- 4.

50

494,

475

77,5

53

94,3

70

322,

552

Islam

ic C

omm

erci

al P

aper

s

27,6

64

4.33

- 4.

57

28,8

62

9,129

11

,737

7,9

96Tr

ade

and

othe

r pay

able

s, ex

clud

ing

deriv

ativ

es

52

,771

4.

83

55,13

4 55

,134

-

-

58

8,08

8

611,

759

175,

104

106,

107

330,

548

Der

ivat

ive

finan

cial

liab

ilitie

sCr

oss

curr

ency

sw

ap

3,

630

- 3,

630

3,63

0 -

-

In

tere

st ra

te s

wap

145

- 14

5 14

5 -

-

59

1,86

3

615,

534

178,

879

106,

107

330,

548



Mat

urity

ana

lysis

(con

tinue

d)

Carr

ying

Co

ntra

ctua

l Co

ntra

ctua

l U

nder

1

1 - 2

2

- 5

Com

pany

am

ount

in

tere

st ra

te

cash

flow

s ye

ar

year

s ye

ars

2012

RM’0

00

%

RM’0

00

RM’0

00

RM’0

00

RM’0

00

Non

-der

ivat

ive

finan

cial

liab

ilitie

sRe

volv

ing

cred

it

16,5

71

4.21

16

,571

16

,571

-

-

Te

rm lo

ans

304,

918

3.65

- 5.

50

316,

669

62,5

52

83,4

54

170,

663

Islam

ic C

omm

erci

al P

aper

s

37,6

68

4.33

- 4.

57

40,8

02

11,6

38

13,6

39

15,5

25Tr

ade

and

othe

r pay

able

s, ex

clud

ing

deriv

ativ

es

28

,976

4.

88

30,3

64

30,3

64

-

-

38

8,13

3

404,

406

121,1

25

97,0

93

186,

188

Der

ivat

ive

finan

cial

liab

ilitie

sCr

oss

curr

ency

sw

ap

5,

391

5,

391

5,39

1 -

-

In

tere

st ra

te s

wap

191

19

1 19

1 -

-

393,

715

40

9,98

8 12

6,70

7 97

,093

18

6,18

8




125


28.6 Market risk

Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and other prices will affect the Group’s and the Company’s financial position or cash flows.

28.6.1 Currency risk

The Group is exposed to foreign currency risk arising from transactions that are denominated in a currency other than the respective functional currencies of Group entities. The currency giving rise to this risk is primarily US Dollars.

The management does not view the exposure to other currencies to be significant.


The Group’s foreign exchange management policies are to minimise exposures arising from currency movements. The Group monitors currency movements closely and may enter into foreign currency swaps, forward foreign currency contracts and options to limit its exposure when the needs arise.

Exposure to foreign currency risk

The Group’s main exposure to foreign currency (a currency which is other than the functional currency of the Group entities) risk, based on carrying amounts as at the end of the reporting period was:

Denominated in USD 2013 2012 Group RM’000 RM’000

Trade receivables 23,249 5,730 Unsecured bank loans (15,203) (21,573) Trade payables (3,624) (648) Forward exchange contracts 35,280 30,661 Cash and cash equivalents 3,651 665 Net exposure 43,353 14,835

Currency risk sensitivity analysis

A 1.50% (2012: 1.50%) strengthening of RM against USD at the end of the reporting period would have increased (decreased) equity and post-tax profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular interest rates, remained constant and ignores any impact of forecasted sales and purchases.


28.6 Market risk (continued)

28.6.1 Currency risk (continued)

Currency risk sensitivity analysis (continued) 2013 2012

Profit or Profit or Equity (loss) Equity (loss) RM’000 RM’000 RM’000 RM’000

Group USD (108) (380) (118) (49)

A 1.50% (2012: 1.50%) weakening of RM against USD at the end of the reporting period would have had equal but opposite effect on the above currencies to the amounts shown above, on the basis that all other variables remained constant.

28.6.2 Interest rate risk

The Group’s fixed rate borrowings are exposed to a risk of change in their fair value due to changes in interest rates. The Group’s variable rate borrowings are exposed to a risk of change in cash flows due to changes in interest rates. Investments in equity securities and short term receivables and payables are not significantly exposed to interest rate risk.


In managing interest rate risk, the Group maintains a balanced portfolio of fixed and floating rate instruments. All interest rate exposures are monitored and managed by the Group on a regular basis.

Exposure to interest rate risk

The interest rate profile of the Group’s and the Company’s significant interest-bearing financial instruments, based on carrying amounts as at the end of the reporting period was:

Group Company

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

Fixed rate instruments Financial assets 18,331 11,242 791 585 Financial liabilities (369,678) (104,593) (133,336) (94,361) (351,347) (93,351) (132,545) (93,776)

Floating rate instruments Financial assets 122,770 78,601 470,974 424,072 Financial liabilities (458,075) (491,925) (454,381) (293,272) (335,305) (413,324) 16,593 130,800


127


28.6 Market risk (continued)

28.6.2 Interest rate risk (continued)

Interest rate risk sensitivity analysis

(a) Fair value sensitivity analysis for fixed rate instruments

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

(b) Cash flow sensitivity analysis for variable rate instruments

A change of 50 basis points (bp) in interest rates at the end of the reporting period would have increased (decreased) the post-tax profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular foreign currency rates, remained constant.

Profit or (loss)

50 bp 50 bp 50 bp 50 bp increase decrease increase decrease 2013 2013 2012 2012 RM’000 RM’000 RM’000 RM’000

Group Floating rate instruments (1,257) 1,257 (1,512) 1,512

Company Floating rate instruments 62 (62) 491 (491)

28.6.3 Other price risk

Equity price risk arises from the Group’s investments in equity securities.


Investments are managed on an individual basis and all buy and sell decisions are approved by the Executive Committee of the Group. Equity price risk sensitivity analysis

The exposure to equity price risk of Group is not material and hence, sensitivity analysis is not presented.



28.7 Hedging activities

28.7.1 Cash flow hedge

The Group has entered into forward exchange contract to hedge the cash flow risk in relation to the potential change in foreign exchange rates totalling RM70,066,000 (2012: RM24,741,000). The forward exchange contract has the same nominal value of RM70,066,000 (2012: RM24,741,000) and is to be settled in full upon maturity. The Group has also entered into cross currency swap, interest rate swap and commodity options to hedge against cash flow risk in relation to loans in foreign currency, changes in interest rates and commodity prices respectively.

The following table indicates the periods in which the cash flows associated with the forward exchange contract that are expected to occur and affect profit and loss:

Carrying Expected Under amount cash flows 1 year RM’000 RM’000 RM’000

Group2013Financial liabilitiesForward exchange contracts Outflow 302 70,368 70,368 Inflow - (70,066) (70,066)Cross currency swap 3,630 3,630 3,630Interest rate swap 145 145 145Commodity options (76) (76) (76) 2012Financial liabilitiesForward exchange contracts Outflow - 33,066 33,066 Inflow (245) (33,311) (33,311)Cross currency swap 5,391 5,391 5,391Interest rate swap 191 191 191Commodity options 372 372 372

Company2013Financial liabilitiesCross currency swap 3,630 3,630 3,630Interest rate swap 145 145 145

2012Financial liabilitiesCross currency swap 5,391 5,391 5,391Interest rate swap 191 191 191

During the year, the Group and the Company had recognised net gain of RM579,000 (2012: net loss of RM578,000) and RM422,000 (2012: net loss of RM357,000) respectively in other comprehensive income/(expense).

Ineffectiveness loss amounting to RM187,000 (2012: ineffectiveness gain of RM175,000) was recognised by the Group in profit or loss in respect of the hedge. There was no ineffectiveness gain or loss being recognised by the Company.

129


28.8 Fair value of financial instruments

The carrying amounts of cash and cash equivalents, short term receivables and payables and short term borrowings approximate fair values due to the relatively short term nature of these financial instruments.

The carrying amounts of variable long term advances to subsidiaries approximate fair value as they are subject to variable interest rates which in turn approximate the current market interest rates for similar loans at the end of the reporting period.

It was not practicable to estimate the fair value of the Group’s investment in unquoted shares due to the lack of comparable quoted market prices and the inability to estimate fair value without incurring excessive costs.

The fair values of other financial assets and liabilities, together with the carrying amounts shown in the statement of financial position, are as follows:

2013 2012

Carrying Fair Carrying Fair amount value amount value RM’000 RM’000 RM’000 RM’000

GroupFinancial assetsCommodity options - Put options 92 92 - - Interest rate swap 19 19 - - Forward exchange contracts 27 27 335 335

Financial liabilitiesUnsecured fixed rate term loans (103,681) (103,311) (104,495) (100,691)Finance lease liabilities (307) (317) (98) (98)Commodity options - Put options (16) (16) (372) (372)Forward exchange contracts (329) (329) (90) (90)Cross currency swap (3,630) (3,630) (5,391) (5,391)Interest rate swap (164) (164) (191) (191) CompanyFinancial assets Interest rate swap 19 19 - - Financial liabilitiesUnsecured fixed rate term loan (100,296) (100,006) (94,361) (90,809)Cross currency swap (3,630) (3,630) (5,391) (5,391)Interest rate swap (164) (164) (191) (191)

The following summarises the methods used in determining the fair value of financial instruments reflected in the above table.

Derivatives

The fair value of forward exchange contracts and commodity option are based on the market price obtained from licensed financial institutions.


28.8 Fair value of financial instruments (continued)

Non-derivative financial liabilities

Fair value, which is determined for disclosure purposes, is calculated based on the present value of future principal and interest cash flows, discounted at the market rate of interest at the end of the reporting period. For finance leases the market rate of interest is determined by reference to similar lease agreements.

Interest rates used to determine fair value

The interest rates used to discount estimated cash flows, when applicable, are as follows:

2013 2012 % %

Loans and borrowings 5.33 5.50Finance lease liabilities 3.50 5.24

28.8.1 Fair value hierarchy

The table below analyses financial instruments carried at fair value, by valuation method. The different levels have been defined as follows:

• Level1: Quotedprices(unadjusted)inactivemarketsforidenticalassetsorliabilities.• Level2: InputsotherthanquotedpricesincludedwithinLevel1thatareobservablefortheassetorliability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).• Level3: Inputsfortheassetorliabilitythatarenotbasedonobservablemarketdata(unobservableinputs).

Level 1 Level 2 Level 3 Total Group RM’000 RM’000 RM’000 RM’000

2013Financial assetsCommodity options - 92 - 92Interest rate swap - - 19 19Forward exchange contracts - 27 - 27 - 119 19 138

Financial liabilitiesCommodity options - (16) - (16)Forward exchange contracts - (329) - (329)Cross currency swap - - (3,630) (3,630)Interest rate swap - - (164) (164)

- (345) (3,794) (4,139)


131



28.8.1 Fair value hierarchy (continued)

Level 1 Level 2 Level 3 Total Group RM’000 RM’000 RM’000 RM’000

2012Financial assetsForward exchange contracts - 335 - 335

Financial liabilitiesCommodity options - (372) - (372)Forward exchange contracts - (90) - (90)Cross currency swap - - (5,391) (5,391)Interest rate swap - - (191) (191)

- (462) (5,582) (6,044)

Level 1 Level 2 Level 3 Total Company RM’000 RM’000 RM’000 RM’000

2013Financial assetsInterest rate swap - - 19 19

Financial liabilitiesCross currency swap - - (3,630) (3,630)Interest rate swap - - (164) (164)

- - (3,794) (3,794)

2012Financial liabilitiesCross currency swap - - (5,391) (5,391)Interest rate swap - - (191) (191)

- - (5,582) (5,582)




28.8.1 Fair value hierarchy (continued)

The following table shows a reconciliation from the beginning balances to the ending balances for fair value measurements in Level 3 of the fair value hierarchy: 2013 2012Group/Company RM’000 RM’000

Balance at 1 April 2012/2011 (5,582) (7,534) Total gains and losses recognised in profit or loss, net 1,385 2,309 Total gains and losses recognised in other comprehensive income, net 422 (357) Balance at 31 March (3,775) (5,582) The unrealised gains/(losses) have been recognised in other income/(expenses) in profit or loss.

29. Commitments

Group 2013 2012 RM’000 RM’000

Capital commitments:Property, plant and equipment Authorised but not contracted for 73,632 200,353 Contracted but not provided for in the financial statements 91,021 65,860

Investment properties Authorised but not contracted for 10,294 -

Other commitments: Commodity future sales contract on crude palm oil 1,041 5,708 Investment in unquoted equity instrument 9,100 -

30. Capital management

The Group defines capital as the total equity and debt. The objective of the Group’s capital management is to maintain an optimal capital structure and ensuring funds availability to support business operations and maximises shareholders value. The Group monitors debts to equity ratio to ensure compliance with management policies as well as maintaining shareholders’ confidence in the management.

133

31. Operating leases

Non-cancellable operating leases are as follows:

Group

2013 2012 RM’000 RM’000

Less than one year 267 207Between one and five years 663 459More than five years 352 288 1,282 954

The subsidiaries lease land, retail outlets and equipment under operating lease. For the land under operating leases, the lease typically run for a period ranging from 15 to 25 years, with an option to renew the lease after that date. None of the operating leases for land includes contingent rentals. For the retail outlets and equipment, the leases typically run for an initial period of three years with an option to renew the leases after the expiry date for another three years.

32. Related parties

Identity of related parties For the purposes of these financial statements, parties are considered to be related to the Company if the Company has

the ability, directly or indirectly, to control the party or exercise significant influence over the party in making financial and operating decisions, or vice versa, or where the Company and the party are subject to common control. Related parties may be individuals or other entities.

Related parties also include key management personnel defined as those persons having authority and responsibility for planning, directing and controlling the activities of the Company either directly or indirectly. The key management personnel include all the Directors of the Company, and certain members of senior management of the Company.

The Group and the Company has related party relationship with its subsidiaries, associates, Directors and key management personnel.

Significant related party transactions

Related party transactions have been entered into in the normal course of business under normal trade terms. The significant related party transactions of the Group and the Company are as follows:

Group 2013 2012 RM’000 RM’000

With companies in which Dr Ng Siew Thiam, Chia Song Kun, Chia Song Phuan, Chia Teow Guan, Cheah Yaw Song, Cheah Juw Teck, Chia Song Pou, Chia Seong Fatt, Chia Song Swa, Chia Song Kooi, Heng Hup Peng and Sim Chin Swee, Directors of certain subsidiaries have interests Success Portfolio Sdn. Bhd.: Sales (4,888) (6,271) Fusipim Sdn. Bhd.: Sales (1,052) (1,574) MB Agriculture (Sandakan) Sdn. Bhd.: Sales (5,033) (4,877) Purchases 241 4,531

32. Related parties (continued)

Identity of related parties (continued)

Group

2013 2012 RM’000 RM’000

With companies in which Dr Ng Siew Thiam, Chia Song Kun, Chia Song Phuan, Chia Teow Guan, Cheah Yaw Song, Cheah Juw Teck, Chia Song Pou, Chia Seong Fatt, Chia Song Swa, Chia Song Kooi, Heng Hup Peng and Sim Chin Swee, Directors of certain subsidiaries have interests (continued)

MB Agriculture (Sabah) Sdn. Bhd.: Sales (14,344) (13,170) Arena Dijaya Sdn. Bhd.: Sales (3,799) (3,623) Keang Huat Trading Sdn. Bhd.: Purchases 1,856 2,202 Perikanan Sri Tanjung Sdn. Bhd.: Purchases 1,111 1,088 Credential Development Sdn. Bhd.: Purchase of land - 3,200 RubyTech Resources Sdn. Bhd.: Sale of land - (14,600) Green Breeder Sdn. Bhd.: Sales (9,730) (6,650) Timurikan Trengganu Marine Products Sdn. Bhd.: Sales (688) (688) Purchases 816 1,280 C Care Enterprise Sdn. Bhd.: Sales (1,138) (634) Sin Teow Fatt Trading Co.:

Purchases 617 754 With a person connected to Cheah Yaw Song and Cheah Juw Teck, Directors of certain subsidiaries have interests

Cheah Joo Kiang: Sales (2,583) (2,345)

Associates Gross dividend received (2,669) (2,476) Warehousing services 5,192 4,755


135



Company

2013 2012 RM’000 RM’000

Subsidiaries Administrative charges (2,491) (1,727) Finance income (19,426) (17,220) Finance costs 1,685 1,231 Management fee income (3,949) (3,015) Net dividend received (29,270) (37,009) Rental expenses 1,038 355 Associate Gross dividend received (594) (594)

As of 31 March, amounts owing by/(to) related parties are as follows:

Gross balance Net balance outstanding outstanding at at 31 March 31 March Group RM’000 RM’000 2013 Included in: - Trade and other receivables Related parties 9,689 9,689 Associates 24 24

- Trade and other payables, including derivatives Related parties (36,221) (36,221)

2012 Included in: - Trade and other receivables Related parties 1,065 1,065 Associates 725 725

- Trade and other payables, including derivatives Related parties (34,612) (34,612)



Gross balance Net balance outstanding outstanding at at 31 March 31 March Company RM’000 RM’000 2013

Included in: - Trade and other receivables Subsidiaries 470,335 470,335 Associate 24 24 - Trade and other payables, including derivatives Subsidiaries (52,400) (52,400)

2012

Included in: - Trade and other receivables Subsidiaries 424,307 424,307 Associate 10 10 - Trade and other payables, including derivatives Subsidiaries (28,476) (28,476)

All the amounts outstanding are unsecured and expected to be settled with cash.


137


The key management personnel compensation are as follows:

Group Company

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

Directors of the Company - Fees 945 888 528 517 - Remuneration 8,104 7,618 3,774 3,290 - Other short-term employee benefits (including estimated monetary value of benefits-in-kind) 125 112 73 66 9,174 8,618 4,375 3,873 Directors of subsidiaries - Fees 326 333 12 12 - Remuneration 7,872 7,033 739 653 - Other short-term employee benefits (including estimated monetary value of benefits-in-kind) 67 62 - - 8,265 7,428 751 665 Other key management personnel - Remuneration 1,150 1,071 1,150 1,071 - Other short-term employee benefits

(including estimated monetary value of benefits-in-kind) 8 8 8 8

1,158 1,079 1,158 1,079 18,597 17,125 6,284 5,617

Other key management personnel comprises persons other than the Directors of Group entities having authority and responsibility for planning, directing and controlling the activities of the Group entities either directly or indirectly.

33. Subsidiaries The principal activities of the subsidiaries and the interest of QL Resources Berhad are as follows:

Effective ownership Name of Company Principal activities interest (%) 2013 2012

QL Feedingstuffs Sdn. Bhd. Investment holding, provision 100.00 100.00 and its subsidiaries of management services, and distribution of animal feed, raw materials and food grain QL Agrofood Sdn. Bhd. Investment holding, processing 100.00 100.00 and its subsidiary and sale of animal feed, trading of raw materials for animal feeds, lubricants and foodstuffs Rikawawasan Sdn. Bhd.# Deep sea fishing - 100.00 QL Agroventures Sdn. Bhd. Layer and broiler farming 100.00 100.00 QL AgroBio Sdn. Bhd. Commercial production and 51.00 51.00 supply of biologically digested feeding raw materials QL KK Properties Sdn. Bhd. Property development activities 100.00 100.00 (f.k.a. QL Feedmills Sdn. Bhd.) QL Poultry Farms Sdn. Bhd. Layer farming 100.00 100.00 QL Realty Sdn. Bhd. Investment holding 100.00 100.00 and its subsidiaries PT QL Trimitra** Distribution of animal feed 80.00 80.00 raw material, food grain and poultry breeding PT QL Agrofood** Layer farming 100.00 100.00 Pacific Vet Group (M) Sdn. Bhd. Investment holding 90.00 90.00 and its subsidiary QL Pacific Vet Group Sdn. Bhd. Trading of feed supplement, 90.00 90.00 animal health food and agricultural products Maxincome Resources Sdn. Bhd. Dormant 100.00 100.00 Chingsan Development Sdn. Bhd. Property holding 100.00 100.00 QL AgroResources Sdn. Bhd. Investment holding, feed 85.00 80.00 and its subsidiaries milling, selling and distribution of animal feeds, raw materials and other related products QL Livestock Farming Sdn. Bhd. Poultry farming, feed milling, as well as 85.00 80.00 selling and distribution of animal feed, poultry and related product.


139

33. Subsidiaries (continued)


Gelombang Elit (M) Sdn. Bhd. Letting of investment property 85.00 80.00 QL Feed Sdn. Bhd. Marketing and distribution 100.00 100.00 of animal feed raw materials and food grain QL Deep Sea Fishing Sdn. Bhd. Deep sea fishing and sale of 100.00 100.00 subsidised diesel to fishermen QL Farms Sdn. Bhd. Investment holding, 100.00 100.00 and its subsidiaries layer and broiler farming, wholesale of frozen chicken parts, manufacturing and sales of organic fertilizer Adequate Triumph Sdn. Bhd. Letting of investment property 100.00 100.00 QL Inter-Food Sdn. Bhd. General trading business 100.00 100.00 QL Breeder Farm Sdn. Bhd. Poultry breeding and farming 100.00 100.00 Merkaya Sdn. Bhd. Dormant 100.00 - QL Tawau Feedmill Sdn. Bhd. Manufacture and sale of 100.00 100.00 animal feed and providing chicken parts processing services QL Ansan Poultry Farm Sdn. Bhd. Investment holding and 85.00 85.00 and its subsidiaries poultry farming QL Rawang Poultry Farm Sdn. Bhd. Property holding 85.00 85.00

Hybrid Figures Sdn. Bhd. Dormant 85.00 85.00 QL Vietnam AgroResources Poultry farming 100.00 100.00 Liability Limited Company*** QL Oil Sdn. Bhd. Investment holding 100.00 100.00 and its subsidiaries QL Plantation Sdn. Bhd. Investment holding, oil palm 100.00 100.00 and its subsidiary cultivation, processing and marketing of palm oil products QL Tawau Biogas Sdn. Bhd. Operating a biogas power plant 100.00 100.00 QL BioEnergy Sdn. Bhd. Dormant 100.00 100.00 QL Mutiara (S) Pte. Ltd. * Investment holding 78.42 78.42 and its subsidiary PT Pipit Mutiara Indah ** Oil palm plantation 74.50 74.50



QL Fishery Sdn. Bhd. Investment holding 100.00 100.00 and its subsidiaries QL Marine Products Sdn. Bhd. Investment holding, 100.00 100.00 and its subsidiary manufacturing of surimi, surimi-based products and fishmeal as well as processing and sale of frozen seafood Icon Blitz Sdn. Bhd. Dormant 100.00 100.00 QL Foods Sdn. Bhd. Investment holding, 100.00 100.00 and its subsidiaries manufacturing of surimi and surimi-based products QL Aquaculture Sdn. Bhd. Dormant 100.00 100.00 QL Aquamarine Sdn. Bhd. Aqua-farming 100.00 - (f.k.a. MSLP Jasa Sdn. Bhd.) # QL Fishmeal Sdn. Bhd. Investment holding, 100.00 100.00 and its subsidiaries manufacturing and trading of fishmeal PT QL Hasil Laut** Manufacturing 99.97 99.97 of surimi and fishmeal QL Corporate Services Sdn. Bhd. Dormant 100.00 100.00 (f.k.a. Ambang Spektrum Sdn. Bhd.) QL Endau Marine Products Investment holding, 70.59 70.59 Sdn. Bhd. and its subsidiaries manufacturing of surimi QL Endau Deep Sea Fishing Sdn. Bhd. Deep sea fishing 70.59 70.59 QL Endau Fishmeal Sdn. Bhd. Manufacturing and trading 70.59 70.59 of fishmeal Pilihan Mahir Sdn. Bhd. Fishery activities 70.59 70.59 QL TP Fertilizer Sdn. Bhd. Dormant 70.59 - (f.k.a. Inspirasi Sutera Sdn. Bhd.) Rikawawasan Sdn. Bhd. # Deep sea fishing 70.59 - QL Figo Foods Sdn. Bhd. Investment holding, 100.00 100.00 (f.k.a. Figo Foods Sdn. Bhd.) manufacturing and sales of and its subsidiary “halal” food products QL Fujiya Pastry Sdn. Bhd. Manufacturing and sale of 60.00 60.00 “halal” food products QL Fresh Choice Seafood Sdn. Bhd. Coastal fish trawling and 100.00 100.00 wholesale of marine products


141



QL Lian Hoe Sdn. Bhd. Investment holding, 82.00 82.00 and its subsidiary manufacturing and sale of surimi-based products QL Lian Hoe (S) Pte. Ltd.*# Manufacturing and processing - 82.00 of food products QL Lian Hoe (S) Pte. Ltd.*# Manufacturing and processing 100.00 - of food products QL Green Resources Sdn. Bhd. Investment holding 100.00 100.00 and its subsidiaries QL Green Energy Sdn. Bhd. Investment holding 97.75 97.00 and its subsidiary QL Tawau Palm Pellet Sdn. Bhd. Operating a palm pellet plant 98.85 98.47 QL NatureCo Sdn. Bhd. Investment holding 84.99 80.00 and its subsidiaries QL Palm Pellet Sdn. Bhd. Development and marketing 84.99 80.00 of “Palm Pelletising System” to produce pellet sized fuel cells called “palm pellets” QL ESCO Sdn. Bhd. Dormant - 80.00 (f.k.a. QL ZeroPoint Green Energy Sdn. Bhd.) # QL ESCO Sdn. Bhd. Dormant 100.00 - (f.k.a. QL ZeroPoint Green Energy Sdn. Bhd.) # QL Carbon Sdn. Bhd. Dormant 100.00 100.00 Leisure Pyramid Sdn. Bhd. Manufacturing of wood pellet 66.67 100.00 QL IPC Sdn. Bhd. Dormant 100.00 100.00 * Subsidiaries incorporated in Singapore and audited by another firm of accountants.

** Subsidiaries incorporated in Indonesia and audited by another firm of accountants.

*** Subsidiary incorporated in Vietnam and audited by a member firm of KPMG.

# During the year, these subsidiaries were restructured within the Group.

All other subsidiaries are incorporated in Malaysia and audited by KPMG.

33. Subsidiaries (continued) 33.1 The Company’s shareholdings in non-wholly owned subsidiaries are as follows:

Number of ordinary shares of RM1 each

At At 1.4.2012 Bought Sold 31.3.2013

Interest in non-wholly owned subsidiaries via QL Feedingstuffs Sdn. Bhd. Pacific Vet Group (M) Sdn. Bhd. 2,736,000 - - 2,736,000 and its subsidiary QL Pacific Vet Group Sdn. Bhd. 2,000,000 - - 2,000,000 QL AgroResources Sdn. Bhd. 8,480,000 530,000 - 9,010,000 and its subsidiaries QL Livestock Farming Sdn. Bhd. 20,000,000 - - 20,000,000 Gelombang Elit (M) Sdn. Bhd. 352,600 - - 352,600 QL Ansan Poultry Farm Sdn. Bhd. 17,000,000 - - 17,000,000 and its subsidiaries QL Rawang Poultry Farm Sdn. Bhd. 4,400,000 - - 4,400,000 Hybrid Figures Sdn. Bhd. 2 - - 2 QL Agrobio Sdn. Bhd. 510,000 - - 510,000 PT QL Trimitra ## 1,200,000 - - 1,200,000

Interest in non-wholly owned subsidiaries via QL Oil Sdn. Bhd. QL Mutiara (S) Pte. Ltd. ## and 11,919,998 - - 11,919,998 its subsidiary PT Pipit Mutiara Indah @ 2,983,000 - - 2,983,000

Interest in non-wholly owned subsidiaries via QL Fishery Sdn. Bhd. PT QL Hasil Laut ## 2,999,000 - - 2,999,000 QL Endau Marine Products Sdn. Bhd. 3,361,980 - - 3,361,980 and its subsidiaries QL Endau Deep Sea Fishing Sdn. Bhd. 43,800,000 - - 43,800,00

QL Endau Fishmeal Sdn. Bhd. 20,100,000 - - 20,100,000 Pilihan Mahir Sdn. Bhd. 10,000 - - 10,000 QL TP Fertilizer Sdn. Bhd. - 2 - 2 (f.k.a. Inspirasi Sutera Sdn. Bhd.) Rikawawasan Sdn. Bhd. 6,000,000 4,000,000 - 10,000,000 QL Fujiya Pastry Sdn. Bhd. 2,999,999 - - 2,999,999 QL Lian Hoe Sdn. Bhd. 8,200,000 - - 8,200,000

Interest in non-wholly owned subsidiaries via QL Green Resources Sdn. Bhd QL NatureCo Sdn. Bhd. and 2,399,999 532,500 - 2,932,499 its subsidiary QL Palm Pellet Sdn. Bhd. 2,760,000 450,000 - 3,210,000 QL Green Energy Sdn. Bhd. 500,000 - - 500,000 and its subsidiary QL Tawau Palm Pellet Sdn. Bhd. 2,000,000 - - 2,000,000 Leisure Pyramid Sdn. Bhd. 2 799,998 - 800,000

## Ordinary shares of USD1.00 each@ Ordinary shares of RP50,000 each


143

34. Significant events during the year

34.1 In March 2012, the Group, via its wholly-owned subsidiary, QL Fishmeal Sdn. Bhd. (“QLFM”) had entered into an Agreement for Sale of Shares to acquire 817,000 ordinary shares of RM1.00 each, representing the entire total issued and paid-up capital of QL Aquamarine Sdn. Bhd. (f.k.a. MSLP Jasa Sdn. Bhd.) (“QLAM”) for a total consideration of RM1,300,000. The acquisition was completed during the financial year.

34.2 In August 2012, the Group, via its wholly-owned subsidiary, QL Farms Sdn. Bhd. had acquired four (4) ordinary shares of RM1.00 each of Merkaya Sdn. Bhd. (“MK”), representing the entire issued and paid-up capital of MK for a consideration of RM1,012,499.

34.3 In October 2012, the Group, via its wholly-owned subsidiary, QL Endau Marine Products Sdn. Bhd. had acquired two (2) ordinary shares of RM1.00 each of Inspirasi Sutera Sdn. Bhd. (“IS”), representing the entire issued and paid-up capital of IS for a consideration of RM2.

34.4 In March 2013, the Group, via its wholly-owned subsidiary, QL Lian Hoe (S) Pte. Ltd. had acquired the entire issued and paid-up capital of Zhongsan True Taste Food Industrial Co. of USD1,200,000 for a total consideration of RMB18,800,000 (equivalent to RM9,400,000). The acquisition is completed subsequently to year end.

34.5 In March 2013, the Group, via its wholly-owned subsidiary, QL Figo Foods Sdn. Bhd. (f.k.a. Figo Foods Sdn. Bhd.) had entered into a Sale and Purchase Agreement with a related party, namely, RubyTech Resources Sdn. Bhd. to dispose a vacant industrial land held under Geran Mukim 1082, Lot 3410, Mukim Kajang, Tempat Sungai Keladi, District of Hulu Langat, Negeri Selangor for a total consideration of RM10,000,000. The disposal is yet to complete at the end of the reporting period.

35. Subsequent events

35.1 In May 2013, the Group, via its wholly-owned subsidiary, QL Feedingstuffs Sdn. Bhd. had acquired two (2) ordinary shares of RM1.00 each of Saga Inovatif Sdn. Bhd. (“SI”), representing the entire issued and paid-up capital of SI for a consideration of RM2.

35.2 In May 2013, the Group, via its wholly-owned subsidiary, QL Feedingstuffs Sdn. Bhd. had acquired one (1) ordinary shares of USD1.00 each of QL International Pte Ltd. (“QLI”), representing the entire issued and paid-up capital of QLI for a consideration of USD1.

35.3 In July 2013, the Group, via its wholly-owned subsidiary, QL Feedingstuffs Sdn. Bhd. and QL Realty Sdn. Bhd. received approval from the relevant authorities in Indonesia for the incorporation of a wholly-owned subsidiary known as PT QL Feed Indonesia (“PQFI”). The intended principal activities of PQFI are general trading of animal feed raw materials and related products.

36. Acquisition of subsidiaries

During the financial year, the Group acquired the following subsidiaries:

- 100%equityinterestinQLAquamarineSdn.Bhd.(f.k.a.MSLPJasaSdn.Bhd.)foracashconsiderationofRM1,300,000;

- 100%equityinterestinMerkayaSdn.Bhd.foracashconsiderationofRM1,012,499;and

- 100% equity interest in Inspirasi Sutera Sdn. Bhd. for a cash consideration of RM2.

The above subsidiaries are dormant or at its pre-operating stage and hence, there is no contribution to the Group’s revenue and the contribution to the consolidated profit of the Group is insignificant.

The acquisition had the following effect on the Group’s assets and liabilities on acquisition date:

Recognised values on acquisition RM’000

Property, plant and equipment 2,500Other payables (187)

Fair value of net assets acquired/consideration paid, satisfied in cash 2,313

The value of assets and liabilities recognised on acquisition are their estimated fair values.


145

37. Supplementary financial information on the breakdown of realised and unrealised profits or losses

The breakdown of the retained earnings of the Group and of the Company as at 31 March, into realised and unrealised profits, pursuant to the Paragraphs 2.06 and 2.23 of Bursa Malaysia Main Market Listing Requirements, are as follows:

Group Company

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

Total retained earnings of the Company and its subsidiaries: - realised 750,468 657,419 5,023 18,544 - unrealised (60,322) (60,700) 99 (397)

690,146 596,719 5,122 18,147Total share of retained earnings of associates - realised 7,236 9,118 - -

697,382 605,837 5,122 18,147 Less: Consolidation adjustments (95,400) (98,110) - - Total retained earnings 601,982 507,727 5,122 18,147

The determination of realised and unrealised profits is based on the Guidance of 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 Malaysian Institute of Accountants on 20 December 2010.


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

In the opinion of the Directors, the financial statements set out on pages 52 to 144 are drawn up in accordance with Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia so as to give a true and fair view of the financial position of the Group and of the Company as at 31 March 2013 and of their financial performance and cash flows for the financial year then ended.

In the opinion of the Directors, the information set out in Note 37 in page 145 to the financial statements 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 Disclosures Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, issued by the Malaysian Institute of Accountants, and presented based on the format prescribed by Bursa Malaysia Securities Berhad.

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

Chia Song Kun

Chia Mak Hooi

Shah Alam,

Date: 10 July 2013

147

I, Chia Mak Hooi, the Director primarily responsible for the financial management of QL Resources Berhad, do solemnly and sincerely declare that the financial statements set out on pages 52 to 145 are, to the best of my knowledge and belief, correct and I make this solemn declaration conscientiously believing the same to be true, and by virtue of the provisions of the Statutory Declarations Act, 1960.

Subscribed and solemnly declared by the above named in Klang on 10 July 2013.

Chia Mak Hooi

Before me:Goh Cheng TeakCommissioner for OathsKlang, Selangor

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

Report on the Financial Statements

We have audited the financial statements of QL Resources Berhad, which comprise the statements of financial position as at 31 March 2013 of the Group and of the Company, and the statements of profit or loss and other comprehensive income, changes in equity and cash flows of the Group and of the Company for the year then ended, and a summary of significant accounting policies and other explanatory information, as set out on pages 52 to 144.

Directors’ Responsibility for the Financial Statements

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

Auditors’ Responsibility

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

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

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

In our opinion, these financial statements give a true and fair view of the financial position of the Group and of the Company as of 31 March 2013 and of their financial performance and cash flows for the year then ended in accordance with Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia.

Independent Auditors’ Report to the members of QL Resources Berhad

149

Report on Other Legal and Regulatory Requirements

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

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

b) We have considered the accounts and the auditors’ reports of all the subsidiaries of which we have not acted as auditors, which are indicated in Note 33 to the financial statements.

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

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

Other Reporting Responsibilities

Our audit was made for the purpose of forming an opinion on the financial statements taken as a whole. The information set out in Note 37 on page 145 to the financial statements has been compiled by the Company as required by the Bursa Malaysia Securities Berhad Listing Requirements and is not required by the Financial Reporting Standards. We have extended our audit procedures to report on the process of compilation of such information. In our opinion, the information has been properly compiled, in all material respects, in accordance with the Guidance of Special Matter No.1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosures Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, issued by the Malaysian Institute of Accountants, and presented based on the format prescribed by Bursa Malaysia Securities Berhad.

Other Matters

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

KPMG Peter Ho Kok WaiFirm Number: AF 0758 Approval Number: 1745/12/13(J)Chartered Accountants Chartered Accountant Petaling Jaya, Selangor

Date: 10 July 2013

Independent Auditors’ Report to the members of QL Resources Berhad (continued)

List of Properties as at 31 March 2013

Owner Company

P.T. Pipit Mutiara Indah

QL Marine Products Sdn. Bhd.

QL Feedingstuffs Sdn. Bhd.

QL KK Properties Sdn. Bhd .(FKA: QL Feedmills Sdn. Bhd.)

QL Endau Fishmeal Sdn. Bhd.

QL BioEnergy Sdn. Bhd.

QL Plantation Sdn. Bhd.

QL KK Properties Sdn. Bhd.

QL Fishmeal Sdn. Bhd.

QL Agroventures Sdn. Bhd.

Particulars of property

Desa Sekatak Buji, Kecamatan Sekatak, Kabupaten Bulungan, Provinsi Kalimantan Timur

1. CL045081687 2. CL045076042 Kampung Bolong, District of Tuaran, Sabah

PT76108, GRN 104808

Lot 76108(Fasa D9),Persiaran Balairong, Bukit Jelutong(TK-Pejabat Korporat) Shah Alam,40150 Shah Alam

CL016143114Mile 7¾ , Off Jalan Tuaran, Kota Kinabalu, Sabah

H.S.(M) 1763, PTD 4159Jalan Tg. Merit, Mukim Padang Endau, District of Mersing, Johor

Lot 13 & 13APOIC Phase 1, Lahad Datu

Lot 13B, POIC Phase 1,Lahad Datu

CL015485864 Mile 7¾ , Off Jalan Tuaran, Kota Kinabalu, Sabah

Lot 164, 2647 & 3314GM1653, GM1416 & GM2415Mukim of Hutan Melintang, District of Hilir Perak, Perak

Lot 2647, Jalan Tepi Sungai 36400 Hutan Melintang, Perak

CL 025061116

NT023079183NT023079192NT023078659NT023907039NT023907048NT023136174NT023136183NT023136192NT023136209NT023904538NT023904556NT023904592NT023903684NT023903693NT023903700NT023903719NT023903728NT023903746District of Papar, Sabah

NT023903755Kg MookNT023161873Kg MookNT023239910District of Papar, SabahKg Mook

Date of revaluation or(date of acquisition)

Dec 2009 (date obtained Hak Guna Usaha)

(27.12.2002)(19.09.2003)

(June 2011)

31.03.2012

(02.01.2009)

(28.08.2006)

(18.09.2007)

31.03.2011

(Nov 2003)

(14.07.2006)

(3.4.2009)

(18.3.2009)

(27.07.2011)

151

Tenure

Leasehold to: 30.12.2044

1. Leasehold to 31.12.21042. Leasehold to 27.04.2929

Freehold

Leasehold to 01.01.2916

Leasehold expiring 25.11.2061




Freehold

Leasehold to: 22.06.2924Sublease to30.09.2036

Sublease to 30.06.2039



Existing use

Oil Palm Estate together with palm oil mill & building thereon

Surimi & Fishmeal Factory

Industrial Land

Vacant Land

Fishmeal factoryWarehouse Office

Industrial Land

Industrial Land

Vacant Land

Fishmeal factory, warehouse cum office

Chicken Layer Farm

Land & Build-up area

14,157 ha

Build-up area 20.0 ha

26 acres3 acres Build-up area 21,448 sq. m.

2.72 acres

7.169 ha

1.3152 ha

Build-up area 6,131 sq. m.

871,200 square feet

871,200 square feet

2.727 ha

Gross Build-up area of 7,544 square metre

4.365 ha

22.72 acres

4.94 acres2.47 acres1.08 acres0.83 acres1.24 acres1.11 acres1.81 acres0.86 acres2.00 acres1.03 acres2.97 acres1.08 acres0.80 acres0.73 acres0.89 acres0.64 acres0.58 acres2.64 acres

1.0815 acres

0.46 acres

0.328 ha

Total grossbuild-up area715,194 sq. ft.

Net Book ValueRM’000

152,691

3,074217

17,222 20,513

16,022

12,490

10,253

10,142

10,088

9,099

9,078

1,897

31815970538071

11755

13066

191705247574137

170

54

18

48

4,901

8,702

Age of building(years)

4

9

N/A

N/A

443

N/A

N/A

N/A

9

14

14

14

14

Shareholders’ Analysis Report as at 28 June 2013

Authorised share capital : RM500,000,000.00 Issued and paid-up capital : RM208,004,905.00 Type of shares : Ordinary shares of RM0.25 each Voting rights : One vote per ordinary share Shareholders by Size of Holdings, Directors’ Shareholdings and Substantial Shareholders No. of Holders Holdings Total Holdings %

99 less than 100 2,665 0.00

962 100 to 1,000 738,494 0.09

3,431 1,001 to 10,000 16,529,150 1.98

1,848 10,001 to 100,000 58,635,163 7.05

455 100,001 to less than 5% of issued shares 277,551,546 33.36

2 5% and above of issued shares 478,562,602 57.52 6,797 832,019,620 100.00 Note:- Based on the issued and paid-up share capital of the Company comprising 832,019,620 ordinary shares of RM0.25 each. Directors’ Shareholdings The direct and deemed interests of the Company’s Directors are stated in page 39 of this Annual Report.

Substantial Shareholders Name of Shareholders Shareholdings %

1 CBG Holdings Sdn. Bhd. 371,286,682 44.62

2 Farsathy Holdings Sdn. Bhd. 107,275,920 12.89

List of Largest 30 Shareholders

Name of Shareholders Shareholdings %

1 CBG HOLDINGS SDN BHD 371,286,682 44.62

2 FARSATHY HOLDINGS SDN BHD 107,275,920 12.89

3 CARTABAN NOMINEES (TEMPATAN) SDN BHD BENEFICIARY : EXEMPT AN FOR EASTSPRING INVESTMENTS BERHAD

9,528,520 1.15

4 MAYBANK NOMINEES (TEMPATAN) SDN BHD BENEFICIARY : MAYBANK TRUSTEES BERHAD FOR PUBLIC ITTIKAL FUND (N14011970240)

9,000,000 1.08

5 AMANAHRAYA TRUSTEES BERHAD PERMODALAN NASIONAL BERHAD

BENEFICIARY : AMANAH SAHAM WAWASAN 2020

6,542,340 0.79

6 CITIGROUP NOMINEES (TEMPATAN) SDN BHDBENEFICIARY : EMPLOYEES PROVIDENT FUND BOARD (NOMURA)

5,343,400 0.64

153

7 LIU SIN 4,808,160 0.58

8 HSBC NOMINEES (ASING) SDN BHD BENEFICIARY : EXEMPT AN FOR THE BANK OF NEW YORK MELLON (MELLON ACCT)

4,801,400 0.58

9 CHIA SIANG ENG 3,976,310 0.48

10 HLIB NOMINEES (TEMPATAN) SDN BHD BENEFICIARY : PLEDGED SECURITIES ACCOUNT FOR NG SAI BEE @ NG SAU BEE (CCTS )

3,958,002 0.48

11 CHIA TEOW GUAN 3,906,700 0.47

12 ATTRACTIVE FEATURES SDN BHD 3,030,000 0.36

13 CITIGROUP NOMINEES (ASING) SDN BHDBENEFICIARY : CBNY FOR OLD WESTBURY GLOBAL SMALL & MID CAP FUND

3,005,200 0.36

14 KHOO NG HIONG 3,005,000 0.36

15 MALACCA EQUITY NOMINEES (TEMPATAN) SDN BHDBENEFICIARY : EXEMPT AN FOR PHILLIP CAPITAL MANAGEMENT SDN BHD (EPF)

2,672,700 0.32

16 CITIGROUP NOMINEES (TEMPATAN) SDN BHDBENEFICIARY : EMPLOYEES PROVIDENT FUND BOARD (HDBS)

2,592,500 0.31

17 LAU SAM SIONG 2,566,000 0.31

18 CARTABAN NOMINEES (ASING) SDN BHD BENEFICIARY : BBH (LUX) SCA FOR FIDELITY FUNDS MALAYSIA

2,543,100 0.31

19 CHEAH SUI SIN 2,542,400 0.31

20 AMSEC NOMINEES (TEMPATAN) SDN BHD BENEFICIARY : PLEDGED SECURITIES ACCOUNT - AMBANK (M) BERHAD FOR CBG HOLDINGS SDN BHD

2,500,000 0.30

21 CHEAH YAW SONG 2,500,000 0.30

22 CIMB COMMERCE TRUSTEE BERHADBENEFICIARY : PUBLIC FOCUS SELECT FUND

2,414,400 0.29

23 HLB NOMINEES (TEMPATAN) SDN BHD BENEFICIARY : PLEDGED SECURITIES ACCOUNT FOR WONG YEE HUI

2,300,000 0.28

24 CHIA BAK LANG 2,254,000 0.27

25 CITIGROUP NOMINEES (ASING) SDN BHD BENEFICIARY : CBNY FOR DFA EMERGING MARKETS SMALL CAP SERIES

2,205,020 0.27

26 TAN THEAN HOCK 2,128,820 0.26

27 CITIGROUP NOMINEES (TEMPATAN) SDN BHDBENEFICIARY : EMPLOYEES PROVIDENT FUND BOARD (AMUNDI)

2,103,000 0.25

28 RUBY TECHNIQUE SDN BHD 2,080,000 0.25

29 CITIGROUP NOMINEES (TEMPATAN) SDN BHD BENEFICIARY : BANK NEGARA MALAYSIA NATIONAL TRUST FUND (HWANG)

1,991,300 0.24

30 LIU SIN 1,807,200 0.22

Notice of Annual General Meeting

NOTICE IS HEREBY GIVEN that the 16th Annual General Meeting has been scheduled on Friday, 23 August 2013 at 10.00 a.m. to be held at Glenmarie Ballroom, Holiday Inn Kuala Lumpur Glenmarie, 1 Jalan Usahawan U1/8, 40250 Shah Alam, Selangor Darul Ehsan.

AGENDA

As Ordinary Business:

(1) To receive the Audited Financial Statements for the financial year ended 31 March 2013 together with the Directors’ and Auditors’ Report thereon.

OrdinaryResolution 1

(2) To approve the payment of a final single tier dividend of 4.5 sen per ordinary share of RM0.25 each in respect of the financial year ended 31 March 2013.


(3) To re-elect the following Directors who retire in accordance with Article No. 97 of the Company’s Articles of Association and being eligible, offers themselves for re-election:

Mr Chia Song Kooi

Mr Chia Song Swa

Mr Chia Mak Hooi




(4) To re-elect Datuk Wira Jalilah Binti Baba as a Director who retire in accordance with Article No. 103 of the Company’s Articles of Association and being eligible, offers herself for re-election.


(5) To approve the Directors’ fees for the financial year ended 31 March 2013 OrdinaryResolution 7

(6) To re-appoint Messrs. KPMG as the auditors of the Company and to authorise the Directors to fix their remuneration.


As Special Business: To consider and if thought fit, pass the following resolutions:-

(7) “THAT YM Tengku Dato’ Zainal Rashid Bin Tengku Mahmood, retiring pursuant to Section 129(6) of the Companies Act, 1965, be and is hereby re-appointed a Director of the Company and to hold office until the next annual general meeting.”


(8) Retention of Independent Non-Executive Directors “THAT approval be and is hereby given to YM Tengku Dato’ Zainal Rashid Bin Tengku Mahmood who has served as an Independent Non-Executive Director of the Company for a cumulative term of more than thirteen (13) years, to continue to act as an Independent Non-Executive Director of the Company in accordance with the Malaysian Code on Corporate Governance 2012.”


“THAT approval be and is hereby given to Chieng Ing Huong, Eddy who has served as an Independent Non-Executive Director of the Company for a cumulative term of more than eleven (11) years, to continue to act as an Independent Non-Executive Director of the Company in accordance with the Malaysian Code on Corporate Governance 2012.”


(9) Authority to Directors to allot and issue shares pursuant to Section 132D of the Companies Act, 1965

“THAT pursuant to Section 132D of the Companies Act, 1965, and subject to the approval of all relevant authorities being obtained, the Directors be and are hereby empowered to issue


155

shares in the Company at any time and upon such terms and conditions and for such purposesas the Directors may, in their absolute discretion deem fit, provided that the aggregate number of shares issued pursuant to this resolution does not exceed 10% of the issued 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.”

(10) Proposed Renewal of Share Buy Back Authority

THAT approval be and is hereby given to the Company to, from time to time, purchase through Bursa Securities such number of ordinary shares of RM0.25 each in the Company (“Shares”) and/or retain such Shares so purchased as treasury shares (“Treasury Shares”) as may be determined by the Directors of the Company upon such terms and conditions as the Directors may deem fit and expedient in the best interests of the Company provided that the aggregate number of Shares purchased and/or retained as Treasury Shares shall not exceed ten percent (10%) of the issued and paid-up share capital of the Company at the time of purchase (“Proposed Share Buy Back”);

THAT the maximum amount of funds to be utilised for the purpose of the Proposed Share Buy BackshallnotexceedtheCompany’saggregateretainedprofitsandsharepremiumaccount; THAT upon the purchase by the Company of its own Shares, the Directors of the Company be and are hereby authorised to:-

(a) cancelallorpartoftheSharessopurchased;and/or

(b) retainallorpartoftheSharessopurchasedasTreasuryShares;and/or

(c) distribute the Treasury Shares as share dividends to the Company’s shareholders for the timebeingand/ortoreselltheTreasurySharesonBursaSecurities;

THAT such authority from shareholders of the Company will be effective immediately upon passing of this ordinary resolution and will continue to be in force until:-

(i) the conclusion of the next Annual General Meeting (“AGM”) of the Company at which time the authority shall lapse unless by ordinary resolution passed at that meeting the authorityisrenewedeitherunconditionallyorsubjecttoconditions;or

(ii) theexpirationoftheperiodwithinwhichthenextAGMisrequiredbylawtobeheld;or

(iii) revoked or varied by ordinary resolution passed by the shareholders of the Company in ageneralmeeting;

whichever occurs first, but not so as to prejudice the completion of purchase(s) by the Company before the aforesaid expiry date and in any event, in accordance with the provisions of the guidelinesissuedbyBursaSecuritiesoranyotherrelevantauthority;

AND THAT authority be and is hereby given to the Directors of the Company to take all such steps as are necessary, including the opening and maintaining of a central depositories account(s) and entering into all other agreements, arrangements and guarantees with any party or parties to implement, finalise and give full effect to and to implement the Proposed Share Buy back with full powers to assent to any conditions, modifications, revaluations, variations and/ or amendments (if any) as may be required or imposed by the relevant authorities from time to time and to do all such acts and things as the Directors may deem fit and expedient in the best interest of the Company.”


(11) Proposed Renewal of Shareholders’ Mandate for Recurrent Related Party Transactions of a Revenue or Trading Nature (“Proposed Renewal of RRPT Mandate”)

“THAT approval be and is hereby given to the Company and its subsidiaries to renew the shareholders’ mandate for the recurrent related party transactions of a revenue or trading nature as set out in Section 2.2.4 of the Circular to Shareholders dated 30 July 2013 with the related parties described therein which are necessary for the Group’s day to day operations, carried out in the normal course of business, at arm’s length, on normal commercial terms, not more favourable to the related parties than those generally available to the public and are not detrimentoftheminorityshareholders;

THAT such approval shall continue to be in force until:-

(i) the conclusion of the next annual general meeting of the Company following the general meeting at which the mandate was passed, at which time it will lapse, unless byaresolutionpassedatthemeeting,theauthorityisrenewed;or

(ii) the expiration of the period within which the next annual general meeting after the date it is required to be held pursuant to section 143(1) of the Companies Act, 1965 (“CA”) (but shall not extend to such extension as may be allowed pursuant to section 143(2)oftheCA);or

(iii) revoked or varied by resolution passed by the shareholders in general meeting, whichever is the earlier.

AND THAT the Directors of the Company be authorised to complete and do all such acts and things (including all such documents as may be required) as they may consider expedient or necessary to give effect to the Proposed Renewal of RRPT Mandate.”


(12) To transact any other business for which due notice shall have been given in accordance with the Company’s Articles of Association and the Companies Act, 1965.

Notice of Annual General Meeting (continued)

BY ORDER OF THE BOARD Ng Geok Ping(MAICSA 7013090)Company Secretary Shah Alam, Selangor Darul Ehsan30 July 2013

Notice of Dividend Entitlement and Payment

NOTICE IS ALSO HEREBY GIVEN that the final dividend, if approved, will be paid on 13 September 2013 to shareholders whose names appear in the Record of Depositors of the Company at the close of business on 2 September 2013.

A Depositor shall qualify for entitlement only in respect of:

(a) Shares transferred into the Depositor’s Securities Account before 4.00 p.m. on 2 September 2013 in respectoftransfers;and

(a) Shares bought on the Bursa Malaysia Securities Berhad on a cum entitlement basis according to the Rules of the Bursa Malaysia Securities Berhad.

157

NOTES:- PROXY:1. A member of the Company entitled to attend and vote at the Meeting may appoint up to two proxies to attend and vote in his place. Where a member

appoints two proxies, he shall specify the proportion of his shareholdings to be represented by each proxy. A proxy can be any person and there shall be no restriction as to the qualification of the proxy and paragraphs (a), (b) and (d) of Section 149(1) of the Companies Act, 1965 shall not apply.

2. Where a member of the Company is an exempt authorised nominee as defined under the Securities Industry (Central Depository) Act, 1991 which holds ordinary shares in the Company for multiple beneficial owners in one securities account (“omnibus account”), there is no limit to the number of proxies which the exempt authorised nominee may appoint in respect of each omnibus account it holds.

3. Only members whose name appears on the Register of Depositors as at 12 August 2013 shall be entitled to attend the said meeting or appoint proxy(ies) to attend and/or vote on his behalf.

4. The instrument appointing a proxy must be deposited at the Registered Office of the Company at No. 16A, Jalan Astaka U8/83, Bukit Jelutong, 40150 Shah Alam, Selangor Darul Ehsan, at least 48 hours before the appointed time of holding the Meeting.

5. In the case of a corporation, the instrument appointing a proxy or proxies must be under seal or under the hand of an officer or attorney duly authorised.

SPECIAL BUSINESS: 1. Ordinary Resolution 9 The re-appointment of YM Tengku Dato’ Zainal Rashid Bin Tengku Mahmood, a person over the age of seventy (70) years as Director of the Company to hold

office until the conclusion of the next AGM of the Company shall take effect if the proposed Ordinary Resolution 9 has been passed by a majority of not less than three-fourths (3/4) of such members as being entitled to vote in person or, where proxies are allowed, by proxy, at the 16th AGM.

2. Ordinary Resolution 10 YM Tengku Dato’ Zainal Rashid Bin Tengku Mahmood was appointed as an Independent Non-Executive Director of the Company on 3 January 2000, and

has, therefore served the Company for more than thirteen (13) years. He met the criteria of an Independent Director as defined in Chapter 1 of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad. He has performed his duty diligently and in the best interest of the Company and has provided independent judgement and broader views and balanced assessments to the proposals from the Management with his diverse experience and expertise. The Board, therefore recommends that he should be retained as an Independent Non-Executive Director.

3. Ordinary Resolution 11 Mr Chieng Ing Huong, Eddy was appointed as an Independent Non-Executive Director of the Company on 24 December 2001, and has, therefore served the

Company for more than eleven (11) years. He met the criteria of an Independent Director as defined in Chapter 1 of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad. He has performed his duty diligently and in the best interest of the Company and has provided independent judgement and broader views and balanced assessments to the proposals from the Management with his diverse experience and expertise. The Board, therefore recommends that he should be retained as an Independent Non-Executive Director.

4. Ordinary Resolution 12 The proposed resolution is a renewal of the general authority for the Directors to issue shares pursuant to Section 132D of the Companies Act, 1965. If

passed will empower the Directors from the date of the above Annual General Meeting until the next Annual General Meeting to allot and issue shares in the Company up to an amount not exceeding in total 10% of the issued share capital of the Company for the time being for such purposes as the Directors consider would be in the interests of the Company. This authority, unless revoked or varied at a general meeting, will expire at the next Annual General Meeting.

The Company has not issued any new shares pursuant to Section 132D of the Companies Act, 1965 under the general mandate which was approved at the 15th AGM of the Company held on 24 August 2012 and which will lapse at the conclusion of the 16th AGM. A renewal of this authority is being sought at the 16th AGM.

The general authority to issue shares will allow the Company to take advantage of any strategic opportunities, including but not limited to, issuance of new shares for purpose of funding investment project(s), working capital and/or acquisitions which require new shares to be allotted and issued. This would avoid any delay and costs in convening a general meeting to specifically approve such an issue of shares.

5. Ordinary Resolution 13 The proposed resolutions, if passed, will empower the Company to purchase and/or hold up to 10% of the issued and paid-up share capital of the Company.

This authority unless revoked or varied by the Company at a General Meeting will expire at the next Annual General Meeting of the Company. For further information, please refer to the Circular dated 30 July 2013.

6. Ordinary Resolution 14 The proposed resolutions are shareholders’ mandate required under Part E, Chapter 10.09 and Chapter 10.02 of the Listing Requirements of the Bursa

Malaysia Securities Berhad. The said Proposed Renewal of RRPT Mandate if passed, will mandate the Company and/or its subsidiaries to enter into categories of recurrent transactions of a revenue or trading nature and with those related parties as specified in Section 2.2.2 of the Circular dated 30 July 2013. The mandate is subject to annual renewal and disclosure is made in the annual report of the aggregate value of transactions conducted pursuant to the shareholders’ mandate during the financial year. The interested director, interested major shareholder or interested person connected with a director or major shareholder; and where it involves the interest of an interested person connected with a director or major shareholder, such director or major shareholder, must not vote on the resolutions approving the transactions. An interested director or interested major shareholder must ensure that persons connected to him abstain from voting on the resolutions approving the transactions.

Existing RRPT

Nature of Transaction

Related Parties

Actual transacted value for financial

year ended 31 March 2013

RM’000

Estimated Value from the date of the forthcoming AGM to the next

AGM *

RM’000

Mandate obtained from

last year’s AGM

RM’000

Actual transacted value for the period

from 25 August 2012 to 30 June 2013

RM’000

Sale of animal feeds by QL Livestock Farming Sdn. Bhd. (“QLLF”)

Success Portfolio Sdn. Bhd.

4,888 6,000 6,000 4,185

Sale of animal feeds by QLLF

Green Breeder Sdn. Bhd.

9,730 12,000 12,000 8,882

Sale of animal feeds by QL Agrofood Sdn. Bhd.

M.B. Agriculture (Sabah) Sdn. Bhd.

14,344 15,000 15,000 11,812

Sale of animal feeds by QL Tawau Feedmill Sdn. Bhd. (“QLTF”)

Arena Dijaya Sdn. Bhd. 3,799 4,500 5,000 3,289

Sales of animal feeds by QLTF

M.B. Agriculture (Sandakan) Sdn. Bhd. (“MBAS”)

5,033 5,500 5,500 4,387

Sale of eggs, broiler and surimi based products by QL Agroventures Sdn. Bhd.

C Care Enterprise Sdn. Bhd.

1,138 3,000 3,000 1,365

Sale of surimi by QL Foods Sdn. Bhd. (“QLF”)

Fusipim Sdn. Bhd. 1,052 2,000 2,000 765

Sale of surimi-based products by QLF

Mr Cheah Joo Kiang 2,583 2,600 2,600 2,287

Purchase of fish by QLF Sin Teow Fatt Trading Co.

617 800 800 452

Purchase of spare parts by Endau Group@

Keang Huat Trading Sdn. Bhd.

1,856 3,300 3,300 1,698

Purchase of fish by Endau Group@

Perikanan Sri Tanjung Sdn. Bhd.

1,111 1,850 1,850 775

Trading of fish by Endau Group@

Timurikan Trengganu Marine Products Sdn. Bhd.

1,504 2,900 2,900 1,120

Purchase of fresh fruit bunch by QL Plantation Sdn. Bhd.

MBAS 241 400 5,000 174

Recurrent Related Party Transactions of Revenue or Trading Nature of QL Resources Berhad Group

Notes:* The basis on arriving at the new estimated value is mainly based on the actual transacted values for the financial year ended 31

March 2013. However, the actual value of these transactions may be subjected to changes in the current financial year in light of the changing economic and competitive environment. Announcement will be made accordingly if the actual value exceeds the estimated value by 10% or more.

@ Aggregated RRPT

159

Nature of Transaction

Related Parties

Actual transacted value for financial

year ended 31 March 2013

RM’000

Mandate obtained from

last year’s AGM

RM’000

Actual transacted value for the period

form 25 August 2012 to 30 June 2013

RM’000

Purchase of spare parts by QL Endau Deep Sea Fishing Sdn. Bhd. (“QLEDSF”)

Keang Huat Trading Sdn. Bhd. (“KHT”)

1,698 3,000 1,587

Purchase of spare parts by QL Endau Fishmeal Sdn. Bhd. (“QLEF”)

KHT 55 150 37

Purchase of spare parts by QL Endau Marine Products Sdn. Bhd. (“QLEMP”)

KHT 103 150 74

Purchase of fish by QLEMP Perikanan Sri Tanjung Sdn. Bhd. (“PST”)

937 1,500 623

Purchase of raw fish by QLEF PST 174 350 152

Sale of fish by QLEDSF Timurikan Trengganu Marine Products Sdn. Bhd. (“TTMP”)

688 800 195

Purchase of raw fish by QLEF TTMP 198 600 252

Purchase of fish by QLEMP TTMP 618 1,500 673

Classes of Related Parties

The Proposed Renewal of RRPT Mandate will apply to the following Related Parties:

Green Breeder Sdn. Bhd. is a company involved in livestock breeding. The directors are Dr Ng Siew Thiam and his spouse, Chew Ching Kwang. The major shareholder (77.5%) is May Hoo Trading Sdn. Bhd., a company owned by Dr Ng Siew Thiam and his spouse. Dr Ng Siew Thiam is a Director of QL Livestock Farming Sdn. Bhd. (“QLLF”) and also a director and major shareholder (14.98%) of QL AgroResources Sdn. Bhd., which is the holding company of QLLF

C Care Enterprise Sdn. Bhd. (“C Care”) is a retail shop owned by Mr Chia Soon Hooi and his spouse. They are also directors of C Care. Mr Chia Soon Hooi is the brother of Mr Chia Mak Hooi, a director and major shareholder in QL.

Fusipim Sdn. Bhd. (“Fusipim”) is a company involved in food processing and distribution. The directors and shareholders of Fusipim are Madam Chia Kah Chuan and her spouse Mr Eng Seng Poo. Madam Chia Kah Chuan is the sister of Mr Cheah Yaw Song, a director of QL Foods Sdn. Bhd. (“QL Foods”) and family member of the Chia family.

Mr Cheah Joo Kiang is the son of Mr Cheah Yaw Song and the brother of Mr Cheah Juw Teck who are directors of QL Foods.

No mandate to be sought for the following RRPT as it will be sought on aggregated basis as per table earlier.

Sin Teow Fatt Trading Co. is a partnership involved in fish wholesale and it is owned by Mr Chia Teow Guan, Mr Chia Song Pou, Mr Cheah Yaw Song and Mr Chia Song Phuan. The directors of QL Foods are Mr Chia Song Kun, Mr Chia Seong Pow, Mr Cheah Yaw Song, Mr Chia Teow Guan, Mr Chia Song Phuan and Mr Cheah Juw Teck. QL Foods is a wholly-owned subsidiary of QL Fishery Sdn. Bhd., which in turn is wholly-owned by QL whereby Mr Chia Song Kun, Mr Chia Seong Pow and Mr Chia Mak Hooi, is the director and major shareholder.

Keang Huat Trading Sdn. Bhd. (“KH”) is a trading company of all kinds of hardware, marine engines and fishing equipment. Mr Lim Kwan Cheang, Mr Sim Chin Swee and Mr Chua Lee Guan are directors and substantial shareholders of KH. KH is also a major shareholder (10.88%) of QL Endau Marine Products Sdn. Bhd. (“QLEMP”). QL Endau Fishmeal Sdn. Bhd. (“QLEF”) is the wholly-owned subsidiary of QLEMP.

Perikanan Sri Tanjung Sdn. Bhd. (“PST”) is into deep sea fishing, diesel and transportation services. Mr Lim Kwan Cheang, Mr Sim Chin Swee, Mr Heng Hup Peng, Mr Heng Chai Khoon, Mr Chua Lee Guan, Mr Loh Yoo Ming and Mr Heng Seng See are major shareholders of PST. They are also shareholders of QLEMP holding 13.35% in total. Mr Sim Chin Swee and Mr Heng Hup Peng are directors of QLEMP and QLEF. QLEMP is 70.59% owned by QL.

Timurikan Trengganu Marine Products Sdn. Bhd. (“TTMP”) is a company engage in the business as marine products manufacturing, trading of edible fishes, frozen fishes and other aquatic animals. Mr Lim Kwan Cheang, Mr Sim Chin Swee, Mr Heng Hup Peng, Mr Heng Chai Khoon, Mr Chua Lee Guan, Mr Loh Yoo Ming and Mr Heng Seng See are major shareholders of TTMP. They are also shareholders of QLEMP holding 13.35% in total. Mr Sim Chin Swee and Mr Heng Hup Peng are directors of QLEMP & QLEF.

Success Portfolio Sdn. Bhd. (“SP”) is a company engaged in livestock farming which Dr Ng Siew Thiam has interest. Dr Ng Siew Thiam is a director and shareholder in QL AgroResources Sdn. Bhd., a 85% owned subsidiary of QL and the holding company of QL Livestock Farming Sdn. Bhd.. SP is 75% owned by Ruby Technique Sdn. Bhd. (“RT”) which in turn is 77.67% and 22.33% owned by CBG Holdings Sdn. Bhd. (“CBG”) and Farsathy Holdings Sdn. Bhd. (“Farsathy”) respectively. CBG and Farsathy are the major shareholders of QL.

M.B. Agriculture (Sabah) Sdn. Bhd. (“MB (Sabah)”) is engaged in livestock farming and is wholly-owned by RT which in turn is 77.67% and 22.33% owned by CBG Holdings Sdn. Bhd. (“CBG”) and Farsathy Holdings Sdn. Bhd. (“Farsathy”) respectively. CBG and Farsathy are the major shareholders of QL.

M.B. Agriculture (Sandakan) Sdn. Bhd. (“MB (Sandakan)”) is engaged in livestock farming which Mr Liu Sin is a director and shareholder. He is also a shareholder of QL and brother-in-law to Mr Chia Song Kun who is a director and major shareholder of QL. MB (Sandakan) is 90% owned by RT.

Arena Dijaya Sdn. Bhd. (“Arena”) is engaged in livestock farming and is 90% owned by RT. Mr Liu Sin is a director and shareholder of Arena.

161

FORM OF PROXY

I/We...................................................................................................................................................................................................................................... (FULL NAME IN BLOCK LETTERS)

of........................................................................................................................................................................................................................................... (FULL ADDRESS)

being a member of QL RESOURCES BERHAD, hereby appoint...................................................................................................................(Proxy 1) (FULL NAME)

of .......................................................................................................................................................................................................................................... (FULL ADDRESS)

or failing him, .....................................................................................................................................................................................................(Proxy 2)

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

as my/our proxy/proxies to vote for me/us on my/our behalf at the 16th Annual General Meeting of the Company, to be held at Glenmarie Ballroom, Holiday Inn Kuala Lumpur Glenmarie, 1 Jalan Usahawan U1/8, 40250 Shah Alam, Selangor Darul Ehsan on Friday, 23 August 2013 at 10.00 a.m. or any adjournment thereof.

My/our proxy is to vote as indicated below:

Resolutions For Against

OrdinaryResolutionNo.1














Please indicate with an “X” or “√” in the space provided as to how you wish your votes to be cast on the resolutions specified in the Notice of 16th

Annual General Meeting. If you do not do so, the proxy will vote or abstain from voting at his /her discretion.

Dated this........................day of...........................................2013

......................................................................................................................................Signature of Shareholder

Notes:-1. A member of the Company entitled to attend and vote at the Meeting may appoint up to two proxies to attend and vote in his place. Where a member

appoints two proxies, he shall specify the proportion of his shareholdings to be represented by each proxy. A proxy can be any person and there shall be no restriction as to the qualification of the proxy and paragraphs (a), (b) and (d) of Section 149(1) of the Companies Act, 1965 shall not apply.

2. Where a member of the Company is an exempt authorised nominee as defined under the Securities Industry (Central Depository) Act, 1991 which holds ordinary shares in the Company for multiple beneficial owners in one securities account (“omnibus account”), there is no limit to the number of proxies which the exempt authorised nominee may appoint in respect of each omnibus account it holds.

3. Only members whose name appears on the Register of Depositors as at 12 August 2013 shall be entitled to attend the said meeting or appoint proxy(ies) to attend and/or vote on his behalf.

4. The instrument appointing a proxy must be deposited at the Registered Office of the Company at No. 16A, Jalan Astaka U8/83, Bukit Jelutong, 40150 Shah Alam, Selangor Darul Ehsan, at least 48 hours before the appointed time of holding the Meeting.

5. In the case of a corporation, the instrument appointing a proxy or proxies must be under seal or under the hand of an officer or attorney duly authorised.

No.ofordinarysharesheldCDSAccountNo.Tel/HandphoneNo.

QL RESOURCES BERHAD(Company No. 428915-X)(Incorporated in Malaysia)

Proxy1

Proxy2

Total

No.ofSharesPercentage

Forappointmentoftwo(2)proxies,percentageofshareholdingtoberepresentedbytheproxies:

TheCompanySecretary QL RESOURCES BERHAD (428915-X)

No. 16A, Jalan Astaka U8/83Bukit Jelutong40150 Shah AlamSelangor Darul Ehsan, Malaysia

1st fold here

Then fold here

Affix stamp

Fold this flap for sealing

Documents

bringing you nourishing foods 2013 annual reportql.listedcompany.com/misc/ar2013.pdf · Marine Products Manufacturing and Oil Palm Activities, and operates in Malaysia, Indonesia,