7089 LIIHEN AnnualReport 2016-12-31 Lii Hen 2016 Annual Report 1661818133

CONTENTS
STATEMENT ON MANAGEMENT
DISCUSSION AND ANALYSIS 2
GROUP FINANCIAL HIGHLIGHTS 10
CORPORATE STRUCTURE 12
NOTICE OF ANNUAL GENERAL MEETING 13
CORPORATE INFORMATION 17
PROFILE OF DIRECTORS 18
PROFILE OF KEY SENIOR MANAGEMENT 21
STATEMENT ON CORPORATE GOVERNANCE 24
AUDIT COMMITTEE REPORT 44
STATEMENT ON RISK MANAGEMENT AND
INTERNAL CONTROL 48
DIRECTORS’ RESPONSIBILITY STATEMENT 53
CORPORATE SOCIAL RESPONSIBILITY 54

FINANCIAL STATEMENTS 56
LIST OF MATERIAL LANDED PROPERTIES 148
ANALYSIS OF SHAREHOLDINGS 151
30 LARGEST SHAREHOLDERS 153
PROXY FORM 155
1
LII HEN INDUSTRIES BHD. (301361-U)
STATEMENT ON MANAGEMENT DISCUSSION

AND ANALYSIS
OBJECTIVES AND STRATEGIES

LII HEN group of companies are customers orientated. We always
place the customer’s need and quality aspects as priority to meet
customer’s expectation and satisfaction and strive to be a high
performance furniture manufacturer to deliver sustainable shareholder
value to all stakeholders.
The Group’s strategies in creating value through

(i) enhance returns on invested capital via innovative,
sustainable product portfolio and differentiation and;
(ii) enhance profitability and operational excellence
with state of art technology.
2

AND ANALYSIS
OUR CLOSE PROXIMITY AND COUPLED WITH THE STRONG SUPPORT FROM THE
SUBCONTRACTORS BASE IN MUAR AREA HAVE ENABLE THE GROUP TO HAVE BETTER
CONTROL OVER MOVEMENT AND FLOW OF MATERIALS THUS REDUCING DOWNTIME AND
OPERATING COSTS.
General Description of the Group’s Business
MANUFACTURING
Lii Hen Group of Companies is principally involved in the manufacturing of furniture. Currently the main office of the Group is operating at PLO
43, Kawasan Perindustrian Bukit Pasir, Mukim of Sungai Raya, 84300 Bukit Pasir, Muar, Johor DarulTakzim. The Group’s furniture operation
occupies about 83 acres of land in Muar, Johor. There are five(5) main subsidiary companies manufacture different product range, namely
bedroom sets, dinettes, office furniture and kiln drying timber processing. During the year, a 60% owned subsidiary company was set up to
manufacture upholstery sofa set; that complement well to the Group’s existing products range.
The furniture products of the Group are mainly cater for the oversea market, especially to the US and Canada, made up 76% of total revenue.
Other markets include Middle East region, Asia region, Africa and Australia. There are about 95% of revenue are denominated in US dollar.
Our manufacturing bases are located at Muar, Johor. Our close proximity and coupled with the strong support from the subcontractors base
in Muar area have enable the Group to have better control over movement and flow of materials thus reducing downtime and operating costs.
The Group’s factories have a total workforce of more than 2,400 people and are equipped with modern automated panel based wood working
machinery and finishing line systems.
THE CARRYING VALUE OF THE DEVELOPMENT OF PLANTATION INFRASTRUCTURE

AND BIOLOGY ASSET STOOD AT RM1,612,410(2015: RM1,584,367) AND RM3,938,027
(2015: RM3,018,629) RESPECTIVELY.
PLANTATION
PPL Plantations Sdn Bhd (PPLP), is an 80% owned subsidiary to Lii Hen Plantation Sdn Bhd(LHP).LHP and PPLP have entered into Joint
Venture Agreement (“JVA”) and Sub-Development Agreement (“SDA”) respectively for the right of use (”ROU”) over approximately 3,473
hectares of permanent reserve forest land in the State of Johor Darul Takzim for planting and/or cultivation of rubber wood trees. Last year,
the ROU is impaired by RM4.2 million due to the exclusion of 3,037 hectares of land from the rubber wood tree planting programme. In 2015,
PPLP has taken possession of the remaining 436 hectares of land and commenced the development of plantation infrastructure and
agricultural activities. As at to date, the carrying value of the development of plantation infrastructure and biology asset stood at
RM1,612,410(2015: RM1,584,367) and RM3,938,027(2015: RM3,018,629) respectively.
OTHER
Other subsidiary companies are involved either in renting of property or investment holding which contributed relative small portion in the
Group’s revenue and earnings.
3
For the financial year 2016, export sales had grown by 6% from USD 135 million in 2015 to
USD 143 million in 2016. The growth was mainly contributed by bedroom set and office furniture.
The appreciation of US Dollar against the Ringgit Malaysian was another contributing factor for the
increase in revenue.
4

AND ANALYSIS
Financial Year Ended 31 December 2016 (“2016”) compared with Financial Year Ended 31 December
2015(“2015”)

REVENUE
The Group’s revenue were mainly generated from the sales of furniture products. In the current year, the Group’s revenue registered at RM623
million, an increase of RM76 million(14%) compared with RM547 million for 2015. The revenue from the furniture operation can be further
analyzed as follow: -
Export Sales Export Sales Local Sales Total Sales

(USD’000) (RM’000) (RM’000) (RM’000)
Product 2016 2015 2016 2015 2016 2015 2016 2015
Bedroom sets 123,959 117,702 512,558 455,700 5,292 3,877 517,850 459,577
Office furniture 9,636 8,054 39,776 31,129 863 642 40,639 31,771
Dining sets 9,224 9,265 38,192 36,437 2,244 1,081 40,436 37,518
Upholstery 366 Nil 1,562 Nil 2,074 Nil 3,636 Nil
Kiln-drying Nil Nil Nil Nil 20,899 18,000 20,899 18,000

Total 143,185 135,021 592,088 523,266 31,372 23,556 623,460 546,866
For the financial year 2016, export sales had grown by 6% from USD 135 million in 2015 to USD 143 million in 2016. The growth was mainly
contributed by bedroom set and office furniture. The appreciation of US Dollar against the Ringgit Malaysian was another contributing factor
for the increase in revenue. The average conversion rate in 2016 stood at 4.14 compared to 3.88 in 2015, appreciated 6.70%. Generally, all
the five (5) main subsidiary companies had increased their revenue for the year under review.
THE CHART BELOW SHOW THE NUMBER OF CONTAINERS SHIPPED OF THE GROUP FOR
2016 AND 2015
No. of containers for 2016 & 2015

1400
1200
2016
1000 2015
No. of containers
800
600
400
200
0
Jan Feb Mar Apr May Jun July Aug Spet Oct Nov Dec
5

AND ANALYSIS
The gross profit for 2016 recorded at RM146 million, representing 25% increased from preceding year of
RM117 million.The raw materials cost in 2016 amounted to RM336 million, increased 7% compared to
RM314 million in 2015, which was in line with the increase in turnover.
GROSS PROFITS
The gross profit for 2016 recorded at RM146 million, representing 25% increased from preceding year of RM117 million.The raw materials
cosumed in 2016 amounted to RM292 million, increased 8.5% compared to RM269 million in 2015, which was in line with the increase in
turnover. However the cost of sales was negatively impacted by the increase in labour cost, increased 25% as compared to last year due to
the acute shortage of man power where higher overtime needed to incur in order to generate the revenue.
OTHER INCOME
The other income of RM5.6 million for 2016 are mainly from bank interest income of RM3.0 million generated from the surplus funds invested
in the short term fixed deposit placed with licensed financial institutions.
OPERATING EXPENSES
The operating costs recorded at RM56 million, increased 7.7% compared to 2015 of RM52 million. In 2015, there was an impairment loss of
RM4.2 million for intangible assets of PPL Plantations Sdn Bhd. By excluding the non-recurring item of RM4.2 million, the Group’s operating
expenses had increased 17.1% compared to last year.
PROFIT FROM OPERATIONS

The Group’s profit before tax grew 30% from RM72 million to RM94 million as compared to 2015. This increase was led by the volume growth
in turnover as well as the appreciation of USD against RM despite the acceleration of labour cost and other operating expenses.
6

AND ANALYSIS
TAXATION
The effective tax rate of the Group for the financial year ended 31 December 2016 was 22%, lower than the statutory tax rate of 24% due to
export allowance incentive claimed of RM12.1 million (2015: RM18.8 million).
LIQUIDITY AND CAPITAL RESOURCES

Cash and cash equivalents of the Group increased from RM112 million as at 31 December 2015 to RM125 million as at 31 December 2016.
The cash generated from operation for the year under review amounted to RM82 million, in which these inflows were used to pay off dividends
of RM40 million, income tax of RM20 million and purchase of properties, plant and equipment of RM17 million.
GEARING RATIO
The Group’s gearing ratio still maintain at a healthier level of 0.14 (2015: 0.13)
OPERATIONAL DEVELOPMENTS
LiiHen is committed to scaling up our operational capabilities in order to tap into the furniture industry long term prospects. During the year,
one of the subsidiary companies, Favourite Design Sdn Bhd (FDSB) has acquired a leasehold factory building from its landlord for RM5.6
million, although no additional capacity increased compared to last year but it served as part of our long term growth strategy. Furtherance
to this, FDSB also incurred and expect to incur capital expenditure of RM2.2 million and RM2.0 million respectively on the factory buildings
on the company’s existing vacant freehold land. These projects are expected to complete in the year 2017 and the capacity will expect to
increase by 10%.
7

AND ANALYSIS
The Board is also pleased to propose a final single tier dividend of 4% per share, amounting to
RM7.2 million for the financial year ended 31 December 2016. The paid and proposed dividends for
this financial year represent a distribution of 64 % (2015: 54%) of the Group’s consolidated net profit
after tax.
ANTICIPATED OR KNOWN RISK

The Group has established an ongoing process for identifying, evaluating and managing the significant risks faced by the Group. During the
year, the key risks identified were (i) shortage of man power, (ii) fluctuation of US dollar against RM.
Due to the high dependency on foreign labour within the furniture industry, the shortage of workers and the uncertainty on the levy policy on
who should responsible for the payment of levy will definitely increase the cost of production and impact on the Group’s earnings. With the
postponement of the new EMC (Employer Mandatory Commitment) foreign worker levy until 2018, will allow the Group to plan and adjust for
the transition. A progressive reduction in employment of low skilled foreign labour will be in place through increase automation.
The Group is exposed to foreign currency risk on sales that are denominated in foreign currency other than the functional currency. The
uncertainty on the movement of US Dollar against RM has posed a material impact on the Group’s earnings, performance, financial condition
and liquidity. However in year 2016, the appreciation of US Dollar was to the Group favour compared to previous years. The Group has in
place a hedging policy and costing mechanism to monitor currency fluctuation.
8

AND ANALYSIS
DIVIDENDS
The Group continued its commitment to pay dividends to its shareholders. In 2016, the Group again declared and paid three quarterly interim
single tier dividends and a special interim single tier dividend amounted to RM39.6 million. The Board is also pleased to propose a final single
tier dividend of 4% per share, amounting to RM7.2 million for the financial year ended 31 December 2016. The paid and proposed dividends
for this financial year represent a distribution of 64 % (2015: 54%) of the Group’s consolidated net profit after tax.
The final dividend so proposed will be tabled for approval by the shareholders at the forthcoming 23rd Annual General Meeting which to be
held on 13 June 2017.
PROSPECTS
The global economy for 2017 is expected to continue growing at moderate pace, amid modest economic recovery in the major advanced
economies and slowed growth in the emerging markets. The outcome of the last year U.S. elections has heightened policy uncertainty. The
effects of policy proposals by the new U.S. administration are likely to have sizable effects on the U.S. economic outlook, as well as the spill-
overs on the rest of the world.
Domestically, the acute shortage of labour and the uncertainty on the government policy on foreign workers will continue to pose challenges
to the Group. The acceleration of labour cost will erode the profit margin of the Group, therefore in order to mitigate the effect, the Group has
gradually upgrade and automate the existing production line to reduce reliance of low skilled labour and to improve the production efficiency.
As we move forward, the Group will continue to innovate and renovate in our product portfolio to cater to evolving customer preferences;
aggressive marketing plans will be in place to widen ours customer base either in the Group’s traditional market or non-traditional market.
With the initiatives and efforts to achieve the corporate objective, the Group is expect to continue to be profitable for the years to come.
OTHER
The FTSE4Good Bursa Malaysia Index is designed to measure the performance of companies demonstrating good Environmental, Social and
Governance (ESG) practices.On 9 December 2016, Bursa Malaysia has informed that LHIB has met the globally recognized standards and
had been included in the FTSE4Good Bursa Malaysia Index.
9
GROUP FINANCIAL HIGHLIGHTS
REVENUE PROFIT BEFOR

RM Million RM Million
100,000
623,460
600,000 90,000
546,866
80,000
500,000
70,000
397,928
400,000 60,000
346,482
315,876 50,000
300,000
40,000
30,000
200,000 26,452
20,000
100,000 10,000
2012 2013 2014 2015 2016 2012
PROFIT BEFORE TAXATION

NET EARNINGS PER SHARE
RM Million
100,000
NET ASSETS P
623,460 93,574
,866 90,000
SEN SEN
80,000 150
50 72,083
70,000
125
41
60,000
40
50,000 100
35,696 32
30
40,000
75
75
30,000
20 26,452 24,516
20,000 16
50
12 10
10,000
10
015 2016 2012 2013 2014 2015 2016 25
0
2012 2013 2014 2015 2016 2012
Financial Year 2012 2013 2014 2015 2016

NET ASSETS PER SHARE RM’000 RM’000 RM’000 RM’000 RM’000
Revenue SEN 346,482 315,876 397,928 546,866 623,460

Profit before taxation
150 26,452 24,516 35,696
147 72,083 93,574
Profit after taxation 21,363 17,760 28,125 57,207 73,130
128
41
Profit attributable to 125
the owners of the Company 21,423 17,727 28,266 57,603 73,274
106
32
Total assets 100 197,682 208,767 276,381 339,118 388,230
81
Equity attributable to the owners75of the Company 134,578 145,371 190,643 230,228 264,024
Net debts 75 27,284 25,042 29,076 30,683 37,299
Total equity 134,697 145,523 190,654 229,876 264,131
50
25
10
400,000 60,000
346,482
315,876 50,000
300,000
40,000
30,000
200,000 LII HEN INDUSTRIES BHD.26,452
(301361-U) 24,5
20,000
100,000 10,000
2012 2013 2014 2015 2016 2012 20
GROUP FINANCIAL HIGHLIGHTS
PROFIT BEFORE TAXATION
NET EARNINGS PER SHARE
RM Million
100,000
NET ASSETS PE
623,460 93,574
6 90,000
SEN SEN
80,000 150
50 72,083
70,000
125
41
60,000
40
50,000 100
35,696 32
30
40,000 8
75
75
30,000
20 26,452 24,516
20,000 16
50
12 10
10,000
10
5 2016 2012 2013 2014 2015 2016 25
0
2012 2013 2014 2015 2016 2012 20
NET ASSETS PER SHARE

SEN
150
147
128
125
41
106
100
81
75
75
50
25
5 2016 2012 2013 2014 2015 2016
Financial Year 2012 2013 2014 2015 2016
Gearing ratio(net debts/total equity) 0.20 0.17 0.15 0.13 0.14

*Gross dividend per share(sen) 4 5 6 17 22
*Net earnings per share (sen) 12 10 16 32 41
*Net assets per share (sen) 75 81 106 128 147
* The preceding years EPS and NTA per share were restated to reflect the retrospective adjustments arising from the bonus issue and
share split.
11
CORPORATE STRUCTURE
60%
100% 100%
100% 90%
80%
100%
100% 100%
MAYTECK KILANG
KAYU DAN PERABUT
SDN BHD
FAVOURITE DESIGN
SDN BHD
LII HEN FURNITURE
SDN BHD
LII HEN INDUSTRIES BHD

EF FURNITURE
SDN BHD
CT HAUP HENG
SDN BHD
12
NOTICE OF ANNUAL GENERAL MEETING
NOTICE IS HEREBY GIVEN that the Twenty Third (23rd) Annual General Meeting of Lii Hen Industries Bhd. will be held at
Classic 1, Ballroom, Classic Hotel, 69, Jalan Ali, 84000 Muar, Johor Darul Takzim on Tuesday, 13 June 2017 at 11.30 a.m. for
the following purposes:
AS ORDINARY BUSINESS
1. To lay before the meeting the Audited Financial Statements for the financial year ended (Please refer to
31 December 2016 and the Reports of the Directors and Auditors thereon. Explanatory Note 8)
2. To sanction the declaration of a final single tier dividend of 4 sen per share for the financial year
ended 31 December 2016. (Ordinary Resolution 1)
3. To re-elect the following Directors who retire pursuant to the Company’s Articles of
Association:
(a) Mr. Lan Haw Chong @ Lau Haw Chong - Article 83 (Ordinary Resolution 2)
(b) Mr.Chua Yong Haup - Article 83 (Ordinary Resolution 3)

(c) Mr. Chan Wah Chong - Article 83 (Ordinary Resolution 4)
(d) Dato’ Mustapha Bin Abd Hamid - Article 90 (Ordinary Resolution 5)
4. To approve the following payments to Directors:

(a) Directors’ fees of RM45,000 in respect of the financial year ended 31 December 2016; (Ordinary Resolution 6)
and
(b) Directors’ remuneration (excluding fees) to the Non-Executive Directors up to an amount

of RM375,000 from 1 January 2017 until the next AGM of the Company. (Ordinary Resolution 7)
5. To re-appoint Messrs. John Lim & Associates as auditors of the Company and to authorise the
Directors to fix their remuneration. (Ordinary Resolution 8)
AS SPECIAL BUSINESS
To consider and if thought fit, to pass the following resolutions with or without any modifications as Ordinary
Resolutions:
6. Proposed Retention of Independent Non-Executive Director
“THAT Mr. Tey Ping Cheng who has served as Independent Non-Executive Director of the
Company for a cumulative term of more than nine years, be continued to act as an Independent
Non-Executive Director of the Company in accordance with the Malaysian Code on Corporate
Governance 2012 until the conclusion of the next Annual General Meeting.” (Ordinary Resolution 9)
13
7. Authority to Issue Shares
“THAT subject always to the Companies Act, 2016 (‘the Act”), and the approvals of the relevant
governmental and/or regulatory authorities, the Directors be and are hereby empowered, pursuant
to Section 76 of the Act, to issue shares in the Company from time to time upon such terms and
conditions and for such purposes and to such person or persons whomsoever as the Directors may, in
their absolute discretion, deem fit, provided that the aggregate number of shares issued pursuant to this
resolution in any one financial year does not exceed 10% of the issued share capital of the Company for
the time being and that the Directors be and are also empowered to obtain the approval from the Bursa
Malaysia Securities Berhad for the listing of and quotation for the additional shares so issued and that
such authority shall continue in force until the conclusion of the next Annual General Meeting of the
Company.” (Ordinary Resolution 10)
8. Proposed Renewal of Shareholders’ Mandate for Recurrent Related Party Transactions of a

Revenue or Trading Nature pursuant to paragraph 10.09 of the Bursa Securities Main Market
Listing Requirements
“THAT, subject to the Companies Act, 2016 (“the Act”), the Memorandum and Articles of Association of
the Company and the Bursa Malaysia Main Market Listing Requirements, approval be and is hereby
given for the subsidiaries of the Company to enter into recurrent related party transactions of a revenue
or trading nature as set out in Section 2.2 of the Circular to Shareholders dated 27 April 2017, which are
necessary for the day-to-day operations of the Company and/or its subsidiaries in the ordinary course
of business, at arm’s length, on normal commercial terms and on terms not more favourable to the
related parties, than those generally available to the public and which are not detrimental to the minority
shareholders of the Company;
AND THAT such approval shall continue to be in force until the conclusion of the next Annual General
Meeting of the Company at which time it will lapse unless the authority is renewed by a resolution at
the next Annual General Meeting, or at the expiration of the period within which the next Annual
General Meeting of the Company is required to be held under the Section 340(2) of the Act (excluding
any extension of such period as may be allowed under Section 340(4) of the Act), or revoked or varied
by resolution passed by the shareholders in a general meeting; whichever is earlier; and
AND FURTHER THAT the Directors of the Company be and are hereby authorised to complete and
do all such acts and things (including executing all such documents as may be required) as they may
consider expedient or necessary to give effect to the Mandate.” (Ordinary Resolution 11)
9. To consider any other business of which due notice shall have been given in accordance with the
Companies Act, 2016 and the Company’ Articles of Association.
14
NOTICE OF ENTITLEMENT DATE AND DIVIDEND PAYMENT
NOTICE IS ALSO HEREBY GIVEN that a final single tier dividend of 4 sen per share in respect of the financial year ended 31 December
2016, if approved by members at the Twenty Third (23rd) Annual General Meeting on 13 June 2017, will be paid on 27 July 2017 to Depositors
registered in the Records of Depositors at the close of business on 11 July 2017.
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 11 July 2017 in respect of ordinary transfers; and
(b) Shares bought on the Bursa Malaysia Securities Berhad on a cum entitlement basis according to the Rules of the Bursa Malaysia
Securities Berhad.
By Order of the Board
Tan Wang Giap (MACS 00523)

Company Secretary
Muar, Johor Darul Takzim
27 April 2017
Notes:
1. In respect of deposited securities, only members whose names appear in the Record of Depositors on 5 June 2017 (General Meeting
Record of Depositors) shall be entitled to attend, speak and vote at this 23rd AGM or appoint proxies to attend, speak and vote on
their behalf.
2. A proxy need not be a member of the Company and a member may appoint any person as his proxy.
3. A member entitled to attend and vote at the Meeting is entitled to appoint one (1) or more proxies to attend and vote in his stead.
Where a member appoints more than one (1) proxy, the appointment shall be invalid unless the member specifies the proportions of
his holding to be represented by each proxy.
4. Where a member of the Company is an exempt authorised nominee as defined under the Securities Industry (Central Depositories)
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.
5. The instrument appointing a proxy in the case of any individual shall be signed by the appointor or his attorney duly authorised in
writing and in the case of a corporation under its common seal or under the hand of an officer or attorney duly authorised.
6. In the event the member(s) duly exercises the form of proxy but does not name any proxy, such member(s) shall be deemed to have
appointed the Chairman of the 23rd Annual General Meeting as his/her proxy, provided always that the rest of the form of proxy, other
than the particulars of the proxy, have been duly completed by the member(s).
7. To be valid the proxy form must be duly completed and deposited at the Registered Office of the Company, No. 67, 3rd Floor, Jalan
Ali, 84000 Muar, Johor Darul Takzim, not less than forty eight (48) hours before the time for holding the meeting and any alteration to
the proxy form must be initialed.
15
Explanatory Notes on Special Business
8. The audited financial statements are for discussion only as they do not require shareholders’ approval pursuant to Section 340(1)(a)
of the Companies Act, 2016. Hence, this matter will not be put for voting.
9. Resolution 6 & 7
Section 230(1) of the Companies Act 2016 provides amongst others, that the fees of the Directors and any benefits available to the
Directors of a listed company shall be approved at a general meeting. In this respect, the Board wishes to seek shareholders’ approval
for the payments to Directors at the forthcoming 23rd AGM in two (2) separate resolutions.
10. Resolution 9
The purpose of the Resolution 9, if passed, will allow Mr. Tey Ping Cheng who has served as Independent Non-Executive Directors
(“INED”) of the Company for a cumulative term of more than nine (9) years, to be retained and continue acting as an independent
director. In line with the Malaysian Code on Corporate Governance 2012 and the Bursa Malaysia Main Market Listing Requirements,
the Board is of the opinion that he has remained independent. In fact, he remains objective and independent in expressing his
view with pertinent expertise, skills and competence through his experience in finance industries and is actively participating in
deliberations and decision making process of the Board and Board Committees. In addition, he has devoted sufficient time and
attention to the duties and responsibilities as INED of the Company. To that, the Board recommends Mr. Tey Ping Cheng to continue
his office as Independent Non-Executive Director.
11. Resolution10
The proposed ordinary resolution, if passed, will empower the Directors of the Company to issue and allot shares in the Company from
time to time and for such purpose as the Directors consider would be in the interest of the Company. This authority, unless revoked
or varied by the Company in general meeting, will expire at the next Annual General Meeting of the Company. This is the renewal of
the mandate obtained from the members on the last Annual General Meeting (“the previous mandate”). The previous mandate was
not utilised and accordingly no proceeds were raised. The renewed mandate will provide flexibility to the Company for any possible
fund raising activities, including but not limited to placing of shares for purpose of funding future investment project(s), working capital
and/or acquisitions.
12. Resolution 11
The proposed ordinary resolution under item 8, if passed, will authorise the subsidiaries of the Company to enter into recurrent related
party transactions of a revenue or trading nature which are necessary for day-to-day operations of the subsidiaries of the Company,
subject to the transactions being in the ordinary course of business and on normal commercial terms which are not more favourable to
the related parties than those generally available to the public and are not detrimental to the minority shareholders of the Company.
Further information is set out in the Circular to Shareholders dated 27 April 2017 which is dispatched together with the Annual Report
2016.
13. Pursuant to Paragraph 8.29A(1) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad, the resolutions No.1
to No.11 set out in this Notice shall be put to vote by poll.
Statement Accompanying Notice of annual General Meeting

(Pursuant to Paragraph 8.27(2) of the Bursa Securities Main Market Listing Requirements)
Further details of individuals who are standing for election as Director (excluding Directors standing for re-election)
There is no person seeking for election as Director of the Company at the Twenty Third (23rd) Annual General Meeting.
16
CORPORATE INFORMATION
DIRECTORS: PRINCIPAL BANKERS:
Lan Haw Chong @ Lau Haw Chong Independent Non-Executive Chairman OCBC Bank (Malaysia) Berhad
Chua Yong Haup Managing Director HSBC Bank Malaysia Berhad
Chua Lee Seng Executive Director Malayan Banking Berhad
Tok Heng Leong Executive Director
Tan Bee Eng Executive Director
Tey Ping Cheng Independent Non-Executive Director
Chan Wah Chong Independent Non-Executive Director SOLICITORS:
Dato’ Mustapha Bin Abd Hamid Independent Non-Executive Director
Chan Nyat Keong Non-Independent Non-Executive Director K. H. Tan & Co.
AUDIT COMMITTEE: REGISTRARS:
Tey Ping Cheng Committee Chairman Plantation Agencies Sdn Berhad

Lan Haw Chong @ Lau Haw Chong Standard Chartered Bank Chambers
Chan Wah Chong Lebuh Pantai 10300 Penang
Dato’ Mustapha Bin Abd Hamid Tel: 04-2625333 Fax: 04-2622018
NOMINATION COMMITTEE: REGISTERED OFFICE:
Tey Ping Cheng Committee Chairman 67, 3rd Floor, Jalan Ali
Lan Haw Chong @ Lau Haw Chong 84000 Muar, Johor Darul Takzim
Chan Wah Chong Tel: 06-9541818 Fax: 06-9525823
Dato’ Mustapha Bin Abd Hamid
PRINCIPAL PLACE OF BUSINESS:

REMUNERATION COMMITTEE:
Plo 43, Kawasan Perindustrian Bukit Pasir
Chan Wah Chong Committee Chairman Jalan Raja, Mukim Sungai Raya
Tey Ping Cheng 84300 Bukit Pasir, Muar, Johor Darul Takzim
Lan Haw Chong @ Lau Haw Chong Tel: 06-9857202 Fax: 06-9857818
Dato’ Mustapha Bin Abd Hamid Email: lhib@liihenfurniture.com
SECRETARY: STOCK EXCHANGE LISTING:
Tan Wang Giap MACS 00523 Main Market of the Bursa Malaysia Securities Berhad

AUDITORS: WEBSITE:
John Lim & Associates www.liihenfurniture.com

Chartered Accountants
17
PROFILE OF DIRECTORS
MR CHUA LEE SENG

Executive Director
Mr Chua Lee Seng, male, 67 , a Malaysian, was appointed to the Board of Lii Hen Industries Berhad (LHIB) on 24 May 1994 as
its Chairman and Managing Director. On 26th August 2006, he was appointed as an Executive Chairman of the Group. To be in line with the
recommendations of the Malaysian Code on Corporate Governance 2012 to reinforce the principle of independence, on 23 February 2013, he
was re-designated and appointed as the Executive Director of the Board.
Mr Chua was the President of The Muar Furniture Association since 2003 and retired on 28th February 2009.
.
He began his working career as an apprentice after completing his Senior Middle Three Diploma in Chung Hwa High School, Muar
in 1968. He set up Oasis Furniture, a partnership involved in furniture manufacturing in 1976. Thereafter, in 1979, he set up Seng
Heng Furniture with three partners to manufacture sofas and dining furniture for the local market. He was the co-founder of Lii Hen
Furniture Sdn Bhd and CT Haup Heng Sdn Bhd.
On 30 November 2007, Mr Chua resigned from the Audit Committee in order to comply with the 15.10 of the amended Listing Requirements of
Bursa Malaysia Securities Bhd in relation to corporate governance.

He is not a director of any other public company.
He is a brother in law to Mr Tok Heng Leong and uncle of Mr Chua Yong Haup.
MR CHUA YONG HAUP

Managing Director
Mr Chua Yong Haup, male, aged 50, a Malaysian, was appointed to the Board of LHIB on 30 December 1999. On 26th August
2006, he was appointed as the Managing Director of the Group.
He began his working career as an apprentice in Seng Heng Furniture in 1981. Later he joined Hong Kong Teak, a company
principally involving in furniture manufacturing as a supervisor in the Research and Development Division and established Hup Heng
Furniture in 1989. He is also the co-founder and Director of CT Haup Heng Sdn Bhd since 12 September 1992. Mr Chua now leads
the Group in the areas of strategic planning, business development and he also involves in the daily operation of the Group.
He is a nephew to Mr Chua Lee Seng.
MR TAN BEE ENG

Executive Director
Mr Tan Bee Eng, male, aged 59, a Malaysian, was appointed to the Board of LHIB on 30 December 1999. He commenced his
career as an apprentice with a woodworking company in Singapore in 1971. Upon his return to Muar in 1976, he joined Wong
Kam Chin Perabut Sdn Bhd as a production operator. He then entered into partnership under Hup Cheong Furniture in 1980 and
subsequently set up Eng Furniture Industries in 1989. He was appointed as Director of EF Furniture Sdn Bhd on 21 November
1992.
He is not a director of any other public company
He has no family relationship with any other Directors or major shareholders of the Company.
18
MR TOK HENG LEONG

Executive Director
Mr Tok Heng Leong, male, aged 60, a Malaysian, was appointed to the Board of LHIB on 24 May 1994. He began his career
in 1973 as an apprentice with a company involved in the manufacture of household furniture for government schools. In 1979,
he set up Seng Heng Furniture with three partners to manufacture sofas and dining furniture for the local market. He is also the
co-founder and Director of Lii Hen Furniture Sdn Bhd.
He is a brother in law to Mr Chua Lee Seng.
MR TEY PING CHENG

Independent Non-Executive Director
Mr Tey Ping Cheng, male, aged 48, a Malaysian, was appointed to the Board of LHIB on 2 July 2001.
He graduated with a Bachelor of Business degree in Accounting from the Curtin University of Technology, Perth, Australia. He is
a partner of Tey Consultancy, a company engaged in secretarial and tax consultancy in Malacca since 1992. He is a member
of Malaysia Institute of Accountants and Certified Practicing Accountant of Australia. He is also a council member of Malaysia
Association of Company Secretaries and President of Malaysian Institute of Chartered Company Secretaries Bhd. He also sits on the
Board of KSL Holdings Berhad.
He is the Chairman of the Audit Committee and Nomination Committee. He is also a member of the Remuneration Committee.
He does not have any family relationship with other Directors or major shareholders of the Company.
MR LAN HAW CHONG @ LAU HAW CHONG

Independent Non-Executive Chairman
Mr Lau Haw Chong, male, 65, a Malaysian, was appointed to the Board of LHIB on 12 September 2013. He is a Chartered Accountant of the
Malaysian Institute of Accountants, Fellow member of the Malaysian Association of Company Secretaries, Malaysian Institute of Chartered
Company Secretaries and the Chartered Tax Institute of Malaysia.
Mr Lau had been involved in professional association activities and he had represented the various associations in consultative meetings/
dialogues with the Companies Commission of Malaysia, Ministry of Finance Malaysia, Malaysia Department of Insolvency, Inland Revenue
Board of Malaysia, Royal Malaysian Customs Department and other Governments departments and Agencies. He was formerly a Council
member and President of the Malaysian Association of Company Secretaries.
He is a member of the Audit Committee, Remuneration and Nomination Committees.
He does not have any family relationship with other Directors or major shareholders of the Company.
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MR CHAN WAH CHONG

Mr Chan Wah Chong, male, 53, a Malaysian, was appointed to the Board of LHIB on 12 September 2013. He has been a qualified member
of Malaysian Association of Certified Public Accountants since 1994.
He started his career in accountancy with Ernst & Young, an international accounting firm for 6 years before joining a local medium size audit
firm as a senior staff for a year. He then joined a local pharmaceutical manufacturing concern as Corporate Finance Manager which he left
after one and half years to join a startup medical trading company as its Finance Director. He is presently running his own corporate advisory
company. He also holds directorship positions in several other private limited companies.
He is Chairman of the Remuneration Committee and member of the Audit and Nomination Committees for the Board of LHIB.
He sits on the Boards of two public companies listed on Main Market of Bursa Securities namely SLP Resources Berhad and Teo Guan Lee
Corporation Berhad as an Independent Non Executive Director. He retired from the Board of Teo Guan Lee Corporation Berhad on November
28,2016.
He does not have any family relationship with any other Directors and/or major shareholders of the Company.
MR CHAN NYAT KEONG

Non-Independent & Non-Executive Director
Mr Chan Nyat Keong, male, age 61, A Malaysian, was appointed to the Board of LHIB on 1 Apirl 2016. Mr Chan obtained his Bachelor of
Engineering (Chemical) from University of Malaya.
He has 28 years of experience in project department of Colgate Palmolive (M) Sdn Bhd involved with building of new factories and waste water
treatment plants. His last post was Regional Asia Pacific EHS Consultant for Colgate Palmolive Company in US from 2011 – 2013. Before
retirement in March, 2015, he was consultant for Power Generation specifically for coal fired power plant in Africa and Myanmar.
He is not a director of any other company.
He is brother in law to one of the major shareholders of the Company, Mr Koon Yew Yin.
DATO’ MUSTAPHA BIN ABD HAMID

Independent & Non-Executive Director
Dato’ Mustapha bin Abd Hamid, male, age 64, a Malaysian, was appointed to the Board on 1 September 2016. Dato’ started his career as an
Administrative and Diplomatic Officer of the Research Division in the Prime Minister’s Department and was posted as the First Secretary of
the Malaysian Embassy in Paris, France (1982-1985). During his 16 years in the public service sector, he was also the Consul of Consulate
General Malaysia in Medan, Indonesia (1990 -1993) and the Principal Assistant Director in the Prime Minister’s Department (1993-1994).
He currently sits on the board of Berjaya Food Berhad and Teo Guan Lee Corporation Berhad.
He is a member of the Audit Committee, Remuneration and Nomination Committees.
He does not have any family relationship with other Directors and/or major shareholders of the Company.
20
PROFILE OF KEY SENIOR MANAGEMENT
MR NEOH CHER LEONG

EXECUTIVE DIRECTOR of EF FURNITURE SDN BHD
Mr Neoh Cher Leong, male, aged 59, a Malaysian, was appointed as Director to EF Furniture Sdn Bhd on 21 November 1992. He commenced
his career as a shopkeeper in a grocery shop in Singapore after his graduation from primary school in 1970. Upon his return to Muar in 1973,
he worked in Neo Nam Bee furniture store. He later entered into partnership with Mr Tan Bee Eng to form Hup Cheong Furniture in 1980. He
was the co-founder and Director of EF Furniture Sdn Bhd.
Mr Neoh currently involves in Group’s procurement activities.
He is not a director of any public company.
He is brother in law to Mr Tan Bee Eng.
MR TOK SOON HING

EXECUTIVE DIRECTOR of MAYTECK KILANG KAYU DAN PERABUT SDN BHD
Mr Tok Soon Hing, male, aged 50, a Malaysian, was appointed as Director of Mayteck Kilang Kayu Dan Perabut Sdn Bhd on 1 July 2005. He
commenced his career as an apprentice in Lii Hen Furniture Sdn Bhd in 1985. In 1989, he established Hup Heng Furniture with Mr Chua Yong
Haup. He was the co-founder and Director of CT Haup Heng Sdn Bhd since 2 September 1992.
Mr Tok currently manages the daily operation of Mayteck Kilang Kayu Dan Perabut Sdn Bhd.
He is brother to Mr Tok Heng Leong and brother in law to Mr Chua Lee Seng.
MR CHUA YONG HOCK

EXECUTIVE DIRECTOR of FAVOURITE DESIGN SDN BHD
Mr Chua Yong Hock, male, aged 43, a Malaysian, was appointed as Director of Favourite Design Sdn Bhd in 1993. He worked in a sofa
factory in Johor Bahru before joining Lii Hen Furniture Sdn Bhd as an apprentice. He was the co-founder and Director of Favourite Design Sdn
Bhd since 1993. Mr Chua currently manages the daily operation of Favourite Design Sdn Bhd, the major contributor to the Group’s revenue.
He is brother to Mr Chua Yong Haup and nephew to Mr Chua Lee Seng.
21
MDM LYDIA SIM LEE HEA

GROUP SENIOR MANAGER OF CORPORATE & FINANCE
Mdm Sim, female, aged 54, a Malaysian. She is a qualified member of ACCA and member of the Malaysian Institute of Accountants (MIA)
since 1991. She is currently supervising the accounting, financial and corporate aspects of the Group.
She has many years of experience in the fields of accounting, audit, taxation and corporate finance. She started her career in Ling Kam Hong
& co as an audit junior in 1987 for 2 years before pursuing her studies to United Kingdom. While in London, she joined some local audit firms in
carrying out accounting and audit works. Upon her return to Malaysia, she joined BDO Binder, Kuala Lumpur in 1991 before returning to Muar
in 1994. She joined one of the furniture manufacturers in Muar in 1994 as a Group Accountant to assist the company in the IPO application.
Later in 2001, she joined LHIB as Group Finance Manager and subsequently promoted as Group Senior Manager of Corporate & Finance.
Mdm Sim is not a director of any public company.
She does not have any family relationship with any other Directors and/or major shareholders of the Company.
MDM TOK SIEW TIN

GROUP MARKETING MANAGER
Mdm Tok Siew Tin, female, aged 47, a Malaysian, was appointed as Group Marketing Manager on 1 August 2003. She graduated with a
Diploma of London Chamber of Commerce Industry (LCCI) in 1990. She worked as a sales executive in Leong Hup Poultry Berhad from 1991
to 1993 and joined Lii Hen Furniture Sdn Bhd since September 1993.
She is not a director of any public company.
She is sister to Mr Tok Heng Leong and Mr Tok Soon Hing and a sister in law to Mr Chua Lee Seng.
MR TAN CHEE BENG

FACTORY MANAGER of LII HEN FURNITURE SDN BHD
Mr Tan Chee Beng, male, aged 52, a Malaysian, was appointed as Factory Manager of Lii Hen Furniture Sdn Bhd on 17 July 2006.
He graduated with a Diploma in Shipbuilding Engineering from National Kaohsiung Institute of Marine Technology (now known as National
Kaohsiung Marine University) in 1987.
He has more than 20 years of working experience in the furniture field.
He does not have any family relationship with any other Directors and/or major shareholders of the Company.
22
MDM TOH SIEW TIN

FACTORY MANAGER of FAVOURITE DESIGN SDN BHD
Mdm Toh Siew Tin, female, Aged 40, a Malaysian, was appointed as Factory Manager to Favourite Design Sdn Bhd in 2004. She worked as a
leader in an electronic factory in Singapore after her graduation from secondary school. Upon her return to Muar in 2002, she joined Favourite
Design Sdn Bhd.
She graduated with a Diploma of London Chamber of Commerce Industry (LCCI) in 1998.
She currently assists Mr Chua Yong Hock in managing the daily operation of Favourite Design Sdn Bhd.
She is not a director of any public company.
She is the spouse of Mr Chua Yong Hock and a sister in law to Mr Chua Yong Haup.
Conflict of Interest
None of the Directors and key senior management has any conflict of interest with the Company.
Conviction of Offence
None of the Directors and key senior management has conviction for offences within the past five (5) years, and public sanction or penalty
imposed by the relevant regulatory bodies on him or her during the financial year ended 31 December 2016, which require disclosure pursuant
to paragraph 4A(g) of Part A of Appendix 9C of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad.
23
STATEMENT ON CORPORATE GOVERNANCE
The Board of Directors (the “Board”) of Lii Hen Industries Bhd. recognizes the importance of good Corporate Governance as the
fundamental means in discharging its corporate responsibilities by ensuring that it is answerable not just to the Company’s shareholders but
to all its stakeholders.
The Board is therefore committed to the Malaysian Code on Corporate Governance 2012 (“the Code”) and the Main Market Listing
Requirements of Bursa Malaysia Securities Berhad (“Bursa Malaysia”) of adopting the high standards of corporate governance within
the Group as a fundamental part of discharging its responsibilities to protect and enhance shareholders’ value and financial
performance of the Group.
The Board approved this Statement on 27 March 2017 and is pleased to report to the shareholders on the application by the Company
of the Principles of the Code and the extent of its compliance with the Recommendations set out on the Code, and to provide the
following statements which outline the main corporate governance that has been in place, except with non-observation explained, throughout
the financial year.
(A) ESTABLISH CLEAR ROLES AND RESPONSIBILITIES FOR THE BOARD AND MANAGEMENT
The Board’s Roles and Responsibilities
The Board is to control and provide stewardship role of the Group’s business and affairs on behalf of its shareholders.
The Group is headed by the Board that leads and manages the Group in an effective and responsible manner to ensure proper
conduct of the Group’s business. The Board assumes the following specific duties in the management the affairs of the Group:
• establishing and reviewing the strategic direction of the Group;
• set and review corporate objectives and formulate strategies to achieve these objectives;
• identifying principal risks and ensure that the risks are properly managed;
• establish policies and procedures for the execution of business plans and monitoring of results against set targets;
• establishing a succession plan;
• developing and implementing an investors relations programme or shareholder communication policy;
• reviewing the adequacy of the management information and internal control policy and regulatory compliance;
• determining the remuneration of Non-Executive Directors, with the individuals concerned abstaining from discussions of their own
remuneration; and
• ensuring that the Group adheres to high standards of ethics and corporate behavior.
Clear Function of the Board and Management
The Board has empowered the Executive Directors to manage the day to day operations of the Group’s business subject to an agreed
authority limit. The Executive Directors lead the management in the implementation of business plans and regularly monitoring and
reporting to the Board on the performance of the Group. They represent the Company at the highest level and are decision makers
in matters within their scope and are accountable for the conduct and performance of the Group’s businesses within the agreed
business strategies. The Executive Directors are also responsible for the implementation of policies and compliance with the established
system of control and hold monthly meeting to discuss and review any significant changes in the business and the external
environment which affect the risks faced by the Group.
24
(A) ESTABLISH CLEAR ROLES AND RESPONSIBILITIESFOR THE BOARD AND MANAGEMENT - continued
Clear Function of the Board and Management - continued
Board meets formally to deliberate on matters relating to the strategic direction and objectives setting, operating plans and budgets,
major capital expenditures, material acquisitions and disposals, material capital projects and monitoring of the Group’s operating and
financial performance.
The oversight of the Board is to ensure that management has executed the delegated power in prudent and morally acceptable ways
by having meetings on a quarterly basis to review the quarter results of the Group prior to announcement to the Bursa Malaysia and
with additional meetings being convened whenever necessary. During these meetings, the operational and financial performance
of the Group together with any material development and issues relating to the business of the Group are discussed and where
applicable responded to accordingly. During these meetings, the Board also reviews the internal audit reports on compliance and
endorses corrective and improvement, recommendations proposed by the internal audit function.The Board through performance
incentive scheme for executive directors and management to ensure the business is running effectively.
The Board has delegated certain responsibilities to the Board Committees which operate in accordance with the terms of reference
approved by the Board.All deliberations and decisions taken by the Board Committees are documented and approved by their
respective Chairman of the Committees prior to submission as agenda items for deliberation at the meetings of the Board. The
ultimate responsibility for decision making, however, lies with the Board.
There is a schedule of key matters reserved for full decision-making powers to the Board to ensure the direction and control of the
business of the Group are in its hands. Key matters reserved for the Board for decision comprise of the following:
• Conflict of interest issues relating to a substantial shareholder or a Director;
• Material acquisitions and disposition of assets not in the ordinary course of business;
• Investments in Capital projects;
• Authority levels;
• Treasury policies;
• Risk management policies; and
• Key human resource issues.
The Board recognizes the importance of having a clearly accepted division of power and responsibilities at the division head of
the Company so as to ensure that there is a balance of power and authority and no one individual has unfettered powers over
decision making.The role of Independent Non-Executive Chairman and the Managing Director are distinct and separate to engender
accountability and facilitate a clear division of responsibilities to ensure that there is a balance of power and authority in the Company.
The Independent Non-Executive Chairman is primarily responsible for ensuring the effective conduct of the Board whilst the Managing
Director has the overall responsibility for the implementation of Board’s decisions and operational effectiveness, the details of which
are as follows:
i) The Chairman is responsible for:
•
leading the Board in setting the values and standards of the Company;
•
maintaining a relationship of trust with and between the Executive and Non-Executive Directors and overseeing how the Board
conducts its relationship with management;
• ensuring the provision of accurate, timely and clear information to Directors;
• ensuring effective communication with shareholders and relevant stakeholders;
• arranging regular evaluation of the performance of the Board, its Committees and individual Directors;
• facilitating the effective contribution of Non-Executive Directors and ensuring constructive relations be maintained between
Executive and Non-Executive Directors; and
• implementing the policies, strategies and decisions adopted by the Board.
25
Clear Function of the Board and Management - continued
ii) The Managing Director, supported by the senior management is responsible for:
• ensuring, as conduit between the Board and the Management, the success of the Company’s governance and management
functions;
• the day-to-day management of the Group’s business; and
• implementing the policies and decisions adopted by the Board, overseeing the operations as well as developing, coordinating and
implementing business and corporate strategies.
It is the Board’s policy that Directors devote sufficient time and effort in discharging their responsibilities. This commitment is obtained
from the Directors at the time of appointment.
Gender Diversity
The Board believes that diversity in skills and experience is fundamental to good governance and constructive Board. However,
the Board has not established a policy on gender diversity. The Board opines that the on-boarding process of directors shall be
evaluated mainly on the competency, character, time commitment, integrity and experience of the candidates in meeting the
Company’s needs, including, where appropriate, the ability of the candidates to acts as Independent Non-Executive Directors, as
the case may be. Nevertheless, the Board is committed to provide opportunities and nurturing diversity within the Group evidenced
through a substantial percentage of its female senior management team.
Sustainability of Business
The Group is cognizant of the importance of business sustainability and is committed to operating in a sustainable manner and seeks
to contribute positively to the well-being of stakeholders. Details of the Group’s key corporate responsibility and approach toward
sustainability are set out in the Corporate Responsibility Statement on page 54 of this Annual Report.
Board Charter, Code of Conduct and Whistleblower Policy
Board Charter
In manifestation of the Company’s commitment to the Code, the Board has established Group’s Governance comprising a Board
Charter and a Code of Conduct to guide the Directors, Management and employees in the governance of the affairs of the Group. The
Charter and Code do not overrule or pre-empt the statutory requirements and other relevant statutes.
The Code of Conduct provides ethical and legal guidance to all Directors, employees and all other affected personnel in the conduct
of their business and that of the Group. It also provides a common behavior framework for all employees of the Group, irrespective of
their specific job or location.
Senior Independent Non-Executive Director
The Chairman of the Audit Committee and Nomination Committee is also the Senior Independent Non-Executive Director, to whom
concerns from the other Directors, public or investors may be conveyed. Inquiries or complaints about decisions or actions taken by
the Group should be addressed to the Senior Independent Non-Executive Director.
Whistle Blowing Policy
The Whistle blower Policy is formalized with the aim to provide and acts as a mechanism for raising concerns related to possible
breaches of the securities laws or the rules of the stock exchange or any other matter may adversely affect, to a material extent,
the financial well-being of the Group. Any officer or employee of the Group can report genuine concerns relating to any malpractice
or improper conduct of the Group’s businesses. Whistle blowers can make the disclosures electronically through the Lii Hen Group
Bhd. intranet, in writing or verbally to the Disclosure Officer, i.e. members of audit committee. As far as reasonably practicable,
disclosures should be made privately and in person to the Disclosure Officer. Whistle blowers can choose to remain anonymous as the
Company has put in safeguards to protect the identity of the Discloser acting in good faith.Procedures are in place for investigations and
appropriate follow-up action.
26
Whistle Blowing Policy - continued
The Board Charter, Code of Conduct and Whistleblower Policy as published in the website of the Company, i.e. www.liihenfurniture.
com under the heading of “Investor Relations”,are reviewed periodically, at least every three years, to ensure their relevance and
compliance.
Access to Information and advice
All Directors have access to all information concerning the Company and the Group from the Board Committees as well as the
advice and services of the Company Secretary for the performance of their duties.In facilitating Board meetings, notices of meetings
together with the agenda, minutes of previous meetings, financial reports and supporting board papers are provided and circulated to
the Board at least five (5) days in advance of each meeting. Sufficient time has been provided to the Board to review the information
provided, to make enquiries and to obtain information and clarification if necessary. Senior management or professional advisers are
invited to attend the board meetings to provide additional insights and professional views, advice and explanation on specific items on
the meeting agenda, where necessary. During the meetings, the Management provides further detailed information and clarification
on issues raised by members of the Board. Where necessary, the Directors may engage independent professionals at the Group’s
expense on specialized issues to enable the directors to discharge their duties with adequate knowledge on the matters being
deliberated.
Company Secretary
The Board has access to information with regard to the activities within the Group and to the advice and services of the Company
Secretary, who are responsible for ensuring the Board meeting procedures are adhered to. All matters discussed and resolutions
passed at each Board Meeting are recorded in the minutes of the Board meeting.
The Board is regularly updated and advised by a suitably qualified and competent Company Secretary on new statutory and
regulatory requirements, and the resultant implications to the Company and Directors in relation to their duties and responsibilities.
The Company Secretary organizes and attends all Board and Board Committee meetings.All pertinent issues discussed at Board and
Board Committee meetings in arriving at the decisions and conclusions are properly recorded by the Company Secretary by way of
minutes of meetings and are signed by the Chairman of the meeting and maintained in the statutory register at the registered office of
the Company. He keeps the Board updated on regulatory developments if there is change, either by writing or briefing in the meeting.
(B) STRENGTHEN COMPOSITION OF THE BOARD
Composition and Board Balance
The Board currently consists of nine (9) members comprising of the Independent Non-Executive Chairman, the Managing Director,
three (3) Executive Directors, three(3) Independent Non Executive Directors and one(1) Non-Independent Non-Executive Director.
This composition exceeds the requirement under the Bursa Malaysia’s Listing Requirements which stipulated that at least 2 directors
or one third (1/3) of the Board, whichever is the higher, must be independent.
The Board consists of qualified individuals with diverse experience, backgrounds and perspectives together with time commitment.
The composition and size of the Board is such that it facilitates the making of informed and critical decisions.
The strength of the Executive Directors is complemented by the experience and independent views of the Independent Non-Executive
Directors whom are professionals in the field of law, corporate, finance and accounting. The Board members possess a wide range
of business, finance, administration and public relation experience. The mix skills and experience are vital in directing and
supervising the Group’s overall business activities in light of the increasing challenging economic and operating environment in
which the Group operates. The Independent Non-Executive Directors provide unbiased and independent view and judgement in the
decision making process of the Board and thus ensuring that interests of not only the Group, but also shareholders and stakeholders
are well safeguarded. A brief profile of each Director is presented on pages 18 to 20 of this Annual Report.
27
(B) STRENGTHEN COMPOSITION OF THE BOARD - continued
Composition and Board Balance - continued
The Board has identified the Independent Non-Executive Director, Mr. Tey Ping Cheng as the Senior Independent Director.
In discharging the duties, the Board is assisted by the Board of Committees, namely the Audit Committee, Risk Management Working
Committee, Nomination Committee and Remuneration Committee. Each Committee operates within its respective terms of reference
which have been approved by the Board.
Audit Committee
The Board is currently assisted by the Audit Committee and is governed by its terms of reference approved by the Board which is
made available at the Company’s website.
Risk Management Working Committee
Risk Management Working Committeeis to assist the audit committee on risk mitigation actions, new risk identification and risk
control. The details of its function are described in the Statement on Risk Management and Internal Control on page 48 of this Annual
Report.
Nomination Committee
The Board has established a Nomination Committee consisting of the following Independent Non-Executive Directors:
Chairman
Tey Ping Cheng (Appointed on 1 June 2016)

Senior Independent Non-Executive Director
Onn Yee Han (Resigned on 1 June 2016)

Member
Chan Wah Chong
Lan Haw Chong @ Lau Haw Chong

Dato’ Mustapha Bin Abd Hamid (Appointed on 1 September 2016)

The terms of reference of the Nomination Committee can be viewed at the Company’s website.
Meetings of the Nomination Committee are held as and when necessary, and at least once a year. The Nominating Committee met
twice during the financial year under review.
28
Nomination Committee - continued

Re-election and Retention of Directors
During the financial year, the Nomination Committee reviewed and recommended to Board, the re-election and retention of Directors
who will be retiring at the forthcoming AGM of the Company as follows:
The Directors standing for re-election and retention at the forthcoming Annual General Meeting of the Company are as follows:
Re-election - Mr. Chua Yong Haup,Mr.Lan Haw Chong @ Lau Haw Chong and
Mr. Chan Wah Chong(retire by rotation under Article 83 of the Articles of Association of the Company)
- Dato’ Mustapha Bin Abd Hamid

(newly appointed shall hold office until the forthcoming AGM under Article 90 of the Articles of Association
of the Company)
Retention - Mr. Tey Ping Cheng
The recommendation to re-elect Mr. Chua Yong Haup is attributed to his outstanding leadership to grow the Group whereas
Mr. Lan Haw Chong @ Lau Haw Chong and Mr. Chan Wah Chong are supported by their contribution to the Board by providing their
independent views and opinions on the matters discussed on the Board.
The recommendation to retain Mr. Tey Ping Cheng is described more detail in Part C of this Statement of Corporate Governance.
All of the above Directors have complied with the various statutory provisions and other regulatory matters and were recommended
for re-election/retention by the Nomination Committee and was subsequently approved by the Board pursuant to the respective
Articles and Sections. Directors seeking for re-election, re-appointment and retention have abstained from all deliberations regarding
his or her re-election and retention. Information of each Director standing for re-election/ retention is set out at section of Profiles of
Directors in this Annual Report.
Appointment of New Director
On 19 August 2016, the Nomination Committee held a meeting for the purpose of evaluating a candidate, Dato’ Mustapha Bin Abd
Hamid, to fill the vacancy arising from the resignation of Mr. Onn Yee Han as Independent Non-Executive Director, before
recommending him to the Board for appointment. In view of his well verse with corporate affair especially in administration and public
relation, the Nomination Committee agreed that this candidate covers a diverse experience (corporate world), background (public
service sector) and perspective and is recommended for Board’s approval.
The induction programme was conducted during the year after his appointment as new Independent Non-Executive Director of the
Company on 1 September 2016.
Board Evaluation
The Nomination Committee has assessed the effectiveness of the Board as a whole, Board Committee and individual Directors
through Board Evaluation, Board Committee Performance Evaluation, Director’/Key Officers’ Evaluation, Audit Committee and its
Members’ Self & Peer Evaluation, and Independent Directors’ Self-Assessment.
The Board Evaluation by individual directors is based on specific criteria, covering the board mix and composition, the board process,
the key officers’ performance, succession plan and board governance. For Self & Peer Evaluation, the criteria include contribution
to interaction, knowledge and integrity, and risk management. The criteria for Independent Directors’ Self-Assessment include the
relationship between the Independent Director and the Group and his involvement in any significant transaction with the Group.
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Board Evaluation - continued
Based on the annual evaluation, the Nomination Committee is satisfied that:
• The size and composition of the Company is effective with appropriate mix of skill, experience and competence
• The Board has discharged its responsibilities in a commendable manner and performed competently and effectively
• All the Directors continue to uphold the governance standards in their conduct and that of the Board
• The Directors are able to devote sufficient time commitment to their roles and responsibilities as directors of the Company
• The Independent Directors have complied with the definition of Independent Directors as defined in the Bursa Malaysia Listing
Requirements.
For the financial year ended 31 December 2016, the Committee held two (2) meetings and the minutes including meeting papers, on
matters deliberated by the Nomination Committee in the discharge of its functions are properly documented.
Remuneration Committee
The members of the Remuneration Committee (“RC”) comprises solely of Independent Non-Executive Directors as follows:
Chairman
Chan Wah Chong

Member
Tey Ping Cheng


Dato’ Mustapha Bin Abd Hamid (Appointed on 1 September 2016)

Onn Yee Han (Resigned on 1 June 2016)

The principal responsibilities of the Remuneration Committee are as follows:
(i) Overseeing the remuneration policy framework of executive directors and senior management;
(ii) Ensure that the remuneration packages for executive directors and senior management are consistent with the Group’s
objectives and strategies:
(iii) Ensure that the remuneration policy framework is periodically reviewed and;
(iv) Recommend the compensation packages to the Board for approval.
It is the ultimate responsibility of the entire Board to approve the remuneration of these Directors and the Board as a whole
recommends the remuneration of Non-Executive Directors with individual directors abstaining from decision in respect of their
remuneration.
The individual concerned should abstain from discussion of their own remuneration.
30
Remuneration Committee - continued
All Remuneration Committee meeting minutes, including meeting papers, on matters deliberated by the Remuneration Committee in
the discharge of its functions are properly documented.
All the members have attended one (1) meeting held during the financial year.
Remuneration Policy and Review
The remuneration policy aims to attract and retain the Directors and management necessary to lead and control the Group
effectively. The policy of the RC is in line with the Group’s over all practice on compensation and benefits, which is to reward
employees competitively by taking into account of business performance and market conditions of the industry. The components of
their remuneration package are linked to corporate and individual performance.
During the year the Remuneration Committee has reviewed and evaluated the remuneration packages of Executive Directors at the
meeting for the Board’s consideration and approval.
Non-Executive Directors are paid fixed directors’ allowances as members of the Board and fee payable is deliberated and decided
at Board before it is presented at the AGM for shareholders’ approval. In compliance with Section 230(1) of the Companies Act,
2016, Non-Executive Directors’ remuneration (excluding fees) for year 2017 up to the next AGM is tabled in the forthcoming AGM for
shareholders’ approval.
Details of the Directors’ Remuneration
Details of the Directors’ remuneration payable to the Directors of the Company for the financial year ended 31 December
2016, by category and in successive bands of RM 50,000 are as follows :
Executive Non-Executive
Directors Directors Total
RM RM RM
Salaries and emoluments 5,794,390 224,500 6,018,890

Defined contribution retirement plan 713,766 - 713,766
Benefits in kind 64,450 - 64,450
Range of Remuneration Number of Directors

Executive Non-Executive
Below RM50,000 - 5
RM50,001 – RM100,000 - 1
RM1,000,001 – RM1,500,000 3 -
RM 1,500,001 – RM2,000,000 - -
RM 2,000.001 – RM2,500,000 - -
RM 2,500,001 – RM 3,000,000 - -
RM 3,100,001 – RM 3,150,000 1 -
While it is aware that the best practice under the Code’s Principles B III to provide for disclosure of individual remuneration packages,
the Board has considered and is of the view that the transparency and accountability aspects of corporate governance applicable for
Directors’ Remuneration are adequately served by the disclosure of Directors’ remuneration in successive bands of RM50,000 as
prescribed under Bursa Malaysia Listing Requirements.
31
(C) REINFORCE INDEPENDENCEOF THE BOARD
The Board has a collective responsibility for the management of the Group. The Non-Executive Directors bring their respective
knowledge and experience and provide independent judgment to the Board to ensure that the interest of all shareholders, and not only
the interests of a particular fraction or group, are indeed taken into account by the Board and that the relevant issues are subjected
to objective and impartial consideration by the Board.
The Non-Executive Directors do not participate in the day-to-day management of the Group and do not engage in any business
dealing or other relationship with the Group and this is to ensure that they are capable of exercising judgment objectively. To enhance
accountability, the Board has specific functions reserved for the Board and those delegated to Management.
During the financial year under review, the Board conducted an annual assessment on the independence of its Independent
Non-Executive Directors based on criteria set out in Paragraph 1.01 of the Listing Requirements of Bursa Malaysia to ensure
the effectiveness of independent Non-Executive Directors on the Board. The Nomination Committee was satisfied that all the
Independent directors are independent of management and free from any business or other relationship which would interfere with
the exercise of independent judgment, objectivity or the ability to act in the best interests of the Company.
Tenure of Independent Directors
The Board noted Recommendation 3.2 of the Code that the tenure of an independent director should not exceed a cumulative term
of nine (9) years. However, the Board may, in appropriate cases and subject to the assessment of the Nomination Committee on an
annual basis, retain an Independent Director who has served a cumulative term of nine (9) years to continue to serve as Independent
Director subject to shareholders’ approval.
Currently, the Company has one (1) serving the Independent Non-Executive Director, Mr. Tey Ping Cheng who has served on the
Board for more than nine (9) years. At the forthcoming Annual General Meeting 2017, the Company will seek shareholders’ mandate
to retain him as Independent Director of the Company. The Nomination Committee as entrusted by the Board, has duly assessed,
determined and resolved that this Independent Non-Executive Director, who have served on the Board for more than nine (9) years,
to continue as independent based on the following justifications as well as his contributions as member of the Board and also member
of the Board Committees:
(i) he has fulfilled the criteria of independent as per the definition set out under Charter 1 of the Bursa Malaysia Listing
Requirements;
(ii) he remains objective and independent in expressing his views and actively participating in deliberation and decision making
process of the Board and Board Committees; and
(iii) he has devoted sufficient time and attention to the duties and responsibilities as Independent Non-Executive Director of the
Company.
The Board is of the view that there are significant advantages to be gained from the long serving Independent Director who has
tremendous insight and knowledge of the Group’s business .In addition, as the Board is of the view that ultimately the Independent
Directors themselves are the best person to determine whether they can continue to bring independent and objective judgment to
board deliberations. The Board has prescribed that all Independent Directors provide an annual confirmation of their independence
to the Board based on its policy and criteria of assessing independence as prescribed by the Bursa Malaysia Listing Requirements.
Hence, the Board recommends that shareholders’ approval be sought for the continuation of office of Mr. Tey Ping Cheng as
Independent Non-Executive Director.
32
(C) REINFORCE INDEPENDENCEOF THE BOARD - continued
Separation of position of the Chairman and Managing Director
The position of Chairman and Managing Director are held by two different individuals. The Chairman is Independent Non-Executive
Director whereas Managing Director is Non-Independent Executive Director. The distinction and separate roles of the Chairman
and Managing Director, with their clear division of responsibilities as described in Section A – Clear Function of the Board and
Management, ensure balance of power and authority, such that no one individual has unfeltered decision-making powers.
(D) FOSTER COMMITMENT OF DIRECTORS
Time Commitment
In line with Recommendation 4.1 of the Code whereby the Board should set out expectations on time commitment for its members and
protocols for accepting new directorships, each Director is required to notify the Chairman of the Board prior to accepting directorships
in other public and public listed companies incorporated in Malaysia as well as directorships in corporations with similar business
operating in the same jurisdiction, together with an indication of time that will be spent on the new appointment.
The Directors are also required to comply at all time with the restriction of the number of directorships as prescribed in the Bursa
Malaysia Listing Requirements. The Directors has to inform the Chairman and the Managing Director before accepting any new
external board appointment. If there is a potential conflict in the pending appointment, it will be tabled at the Nomination Committee
notwithstanding that Paragraph 15.06 of the Listing Requirements of Bursa allow for a Director to sit on the board of up to five (5)
listed issuers. Such notification is expected to include an indication of time that will be spent on the new external appointment.
Board Meeting
The Board normally meets at least five (5) times a year, scheduled well in advance before the end of the current financial year to
facilitate the Directors in planning ahead their attendance for the forthcoming year.Additional or special meetings are convened when
urgent and important decisions need to be made in between the scheduled meeting.Decision of directors is made unanimously or by
consensus. Where appropriate, decisions are also made by way of circular resolutions in between scheduled and special meetings
during the financial year. During the year under review, the Board met five (5) times and the attendance record for each Director is as
follows:
Name of Director No. of Meeting Attended Percentage of Attendance(%)

Chua Lee Seng 5/5 100%
Chua Yong Haup 5/5 100%
Tan Bee Eng 5/5 100%
Tok Heng Leong 4/5 80%
Tey Ping Cheng 5/5 100%
Lan Haw Chong@ Lau Haw Chong 5/5 100%
Chan Wah Chong 5/5 100%
Dato’ Mustapha Bin Abd Hamid
(Appointed on 1 September 2016) 1/1 100%
Onn Yee Han
(Resigned on 1 September 2016) 2/2 100%
All the Directors have complied with the minimum 50% attendance requirement in respect of Board meetings as stipulated by the
Bursa Malaysia Listing Requirements with appropriate leave of absence be notified to the Non-Executive Independent Chairman and/
or Company Secretary, where appropriate.
It is the Board’s policy that Directors devote sufficient time and effort in discharging their responsibilities. This commitment is obtained
from the Directors at the time of appointment.

33
(D) FOSTER COMMITMENT OF DIRECTORS - continued
Directors’ Training
All Directors have attended the Mandatory Accreditation Programme (“MAP”) as prescribed by Bursa Malaysia. Directors are also
encouraged to attend various external professional programmes which deemed necessary to keep abreast with the developments or
changes to relevant laws and regulatory requirements.
The Board has undertaken an assessment of the training needs of each director during the financial year. The Directors have attended
the following training programme and seminars as shown below:
Name of Directors Seminars/Workshops
Mr. Lan Haw Chong @Lau Haw Chong - SSM National Conference 2016 (SSM)
- Malaysian Company Secretaries Conference 2016 (MACS)
- 2017 Budget Seminar (CTIM)
Mr. Chua Yong Haup - Enterprise Resource Planning – ERP

- Seminar on Competitiveness of Furniture Industry
- Attended the following furniture exhibition:-
* The 37th China International Furniture Fair (Guangzhou)
* The 35th Famous Furniture Fair (DongGuan)
* The 38th China International Furniture Fair (Shanghai)
* 2016 Spring High Point Market
* Export Furniture Exhibition (EFE)
* Malaysian International Furniture Fair(MIFF)
Mr. Chua Lee Seng - Enterprise Resource Planning – ERP

* Export Furniture Exhibition (EFE)
* Malaysian International Furniture Fair (MIFF)
* The 38th China International Furniture Fair (Shanghai)
Mr. Tok Heng Leong - Enterprise Resource Planning – ERP

Mr. Tan Bee Eng - Enterprise Resource Planning – ERP

Mr. Tey Ping Cheng - Malaysian Company Secretaries Conference 2016

- The Companies Act 2016 – Transitioning the Memorandum & Articles to a
Constitution in Compliance with the new Act
- Tax Planning and Issues for Property Developers and Property Investors
- Seminar Percukaian Kebangsaan 2016
- Transfer Pricing Documentation
- Program Kerjasama Strategik SSM Melaka Bersama
Setiausaha Syarikat Negeri Melaka
Mr. Onn Yee Han - Psychology by National University Chang Hwa, Taiwan

34
(D) FOSTER COMMITMENT OF DIRECTORS - continued
Directors’ Training - continued

Name of Directors Seminars/Workshops
Mr. Chan Wah Chong - Understanding MPERS by MICPA

- Evening talk on Current & Upcoming Accounting Issues for Directors by
MICPA
- The Essence of Independence by Bursa Malaysia & ICLIF
- Analysis GST Audit file by MIA
* The 37th China International Furniture Fair (Guangzhou)
Mr Chan Nyat Keong - Mandatory Accreditation Programme for Directors of Public Listed
Companies
Dato’ Mustapha Bin Abd Hamid - CG Breakfast Series: How to Maximise Internal Audit by Bursa Malaysia
- Future of Auditors Reporting – The Game Changer for Boardroom by
Bursa Malaysia
- Analysis of Corporate Governance Disclosure in Annual Report
As an integral part of training programme, the Company Secretary circulated the relevant updates on regulatory requirements from
time to time for the Board’s reference and provided briefings on key developments on these updates.
The external auditors also continuously brief the Board on any changes to the Malaysian Financial Reporting Standards that affect
the Group’s financial statements during the year.
(E) UPHOLD INTEGRITY IN FINANCIAL REPORTING
Compliance with Statutory and Financial Reporting Standards
In presenting the annual reports and audited financial statements and announcing quarterly results, the Board in discharge of its
fiduciary duties, aims to present a balanced and meaningful assessment of the Group’s financial performance, position and prospects.
The Directors are required by the Companies Act, 1965 to prepare financial statements for each financial year which have been
made out in accordance with the Malaysian Financial Reporting Standards, International Financial Reporting Standards and the
requirements of Companies Act 1965 in Malaysia 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 and cash flows of the Group and of the Company for the financial year
then ended.
In preparing the financial statements, the Directors have selected and applied consistently suitable accounting policies and made
reasonable and prudent estimates and judgements on an on-going basis and are based on historical experience and other factors,
including expectations of future events that are believed to be reasonable under the circumstances. The Directors also have a general
responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Group and of the Company and
to prevent and detect fraud and other irregularities through the implementation and continued operation of adequate accounting and
internal control systems.
The Board is satisfied that to the best of its knowledge, it has met its obligation to present a balanced and meaningful assessment of
the Group’s financial performance, position and prospects in the Directors’ Report and the audited Financial Statements as set out on
pages 56 to 147 of this Annual Report.
35
(E) UPHOLD INTEGRITY IN FINANCIAL REPORTING - continued
Compliance with Statutory and Financial Reporting Standards - continued
The Board is assisted by the Audit Committee in the discharge of its duties on financial reporting and ensuring that the Group
maintains a proper financial reporting process and a high quality financial reporting. The Audit Committee oversees and reviews the
financial reporting before recommendation to the Board for approval. As Chairman of the Audit Committee and one of its members
are practicing Chartered Accountants, it has enhanced the reliability of the financial reports as prepared by the management and also
promotes meaningful discourse when the Committee engages with the internal and external auditors.A full Audit Committee Report
detailing its composition, terms of reference and a summary of activities during the financial year is set out on pages 44 to 47 of this
Annual Report.
Suitability and Independence of External Auditors
The Board, through the Audit Committee has established an active, transparent and professional relationship with its external auditors.
It is the policy of the Audit Committee to meet with the external auditors at least two times a financial year without the presence of the
Executive Directors and senior management for discussing their audit plan, audit findings and the audited financial statements and
additionally to meet them whenever the Committee deems necessary. The external auditors are also invited to attend the annual general
meeting of the Company and are available to answer questions raised by shareholders on the conduct of the statutory audit the preparation
and contents of their audit report and also invited to attend the AC meetings to give their views on the stage of affairs of the Group during
the reporting period.
The Audit Committee also keeps under review the scope and results of the audit and its cost effectiveness and the independence and
objectivity of the Company’s external auditors.
Appointment of the Company’s external auditors is subject to approval of shareholders at General Meetings. The auditors have to retire
during the AGM every year and be re-appointed by shareholders for the ensuing year.
The Audit Committee had reviewed vide the conduct of an annual assessment of external auditor caliber, performance and independence,
the suitability and independence of external auditors after taking into consideration of the types of non-audit services which are conducted
by engagement team to be different from the external audit team and no major gaps have been identified. The external auditors had
provided a confirmation of their independence to the Audit Committee that they are and have independent throughout the conduct of the
audit engagement in accordance with the criteria set out by the Malaysian Institute of Accountants.
The Audit Committee is satisfied with the competence and independence of the external auditors and has obtained the assurance from the
auditors confirming their independence.Hence, it recommended their re-appointment for the financial year ending 31 December 2017.
Key features underlying the relationship of the Audit Committee with the external auditors are included in the Audit Committee Report as
detailed on pages 45 of this Annual Report.
36
(F) RECOGNISE AND MANAGE RISKS OF THE GROUP
Risk Management
The Board has always placed significant emphasis on sound internal controls which are necessary to safeguard the Group’s assets
and shareholders’ investment. To this end, the Board affirms its overall responsibility for the Group’s internal controls system which
encompasses risk management practices as well as financial, operational and compliance controls. However it should be noted that
such system, by its nature, manages but not eliminate risks and therefore can provide only reasonable and not absolute assurance
against material misstatement, loss and fraud.
Ongoing reviews are performed by the Risk Management Committee throughout the year to identify, evaluate, monitor and manage
significant risks affecting the business and ensure that adequate and effective controls are in place. Such continuous review
processes are also conducted by an outsourced internal audit company on a quarterly basis.

Internal Audit Function
The Board has mandated the Audit Committee with the overall responsibility of ensuring adequacy, completeness and effectiveness
of internal control system. The Committee reviews and monitors the compliance to this system by outsourcing it to an independent
professional firm. The outsourced internal audit function provides the Audit Committee with quarterly independent assessment on the
adequacy, efficiency and effectiveness of the Group’s internal control and management reporting system and risk management.
The key features of the Risk Management Framework and Internal Controls of the Group are set out in the Statement on Risk
Management and Internal Control on pages 48 to 52 of this Annual Report.
(G) ENSURE TIMELY AND HIGH QUALITY DISCLOSURE
Policy on Corporate Disclosure
The Board acknowledges the importance of timely and equal dissemination of material information to the shareholders,
stakeholders and public at large. Accordingly, the Board has formalized corporate disclosure policies not only to comply with disclosure
requirements as stipulated in the Bursa Malaysia Listing Requirements, but also setting out the persons authorized and responsible
to approve and disclose material information to regulatory authorities, shareholders and stakeholders.
An internal policy on confidentiality is in place to ensure that confidential information is handled properly by the Directors, senior
management and relevant parties to avoid leakage and improper use of the information.

The Board ensures timely dissemination of information on the Group’s performance and other matters affecting shareholders’
interests through appropriate announcement (where necessary), quarterly financial result, relevant circulars, distribution of annual
report and, where appropriate, ad-hoc press statements and interviews.

The Board approved and released the quarterly financial results for the year ended 31 December 2016 on the following dates:
2016 Quarterly Results Date of Issue/ Release Bursa Securities Deadline Number of Days
Number of days after
End of Quarter

1st Quarter 20 May 2016 31 May 2016 12
2nd Quarter 19 August 2016 31 August 2016 13
3rd Quarter 25 November 2016 30 November 2016 6
4th Quarter 22 February 2017 28 February 2017 7
(including full year results)
37
(G) ENSURE TIMELY AND HIGH QUALITY DISCLOSURE - continued
Policy on Corporate Disclosure - continued
The Group maintains a corporate website at www.liihenfurniture.com for effective dissemination of information where shareholders
as well as members of the public can access the latest information on the Company and on the business activities of the Group.
Alternatively, they may obtain the Company’s latest announcements via the website of Bursa Securities at www.bursamalaysia.com .
(H) STRENGTHEN RELATIONSHIP BETWEEN COMPANY AND ITS SHAREHOLDERS
The Board acknowledges the need for shareholders to be informed of all material business matters affecting the Company and as
such adopts an open and transparent policy in respect of its relationship with its shareholders and investors. The Board ensures that
all the Company’s shareholders are treated equitably and the rights of all investors, including minority shareholders, are protected.
The Board provides shareholders and investors with information on its business, financials and other key activities in the Annual
Report of the Company, the contents of which are continuously enhanced to take into account the developments, amongst others, in
corporate governance.
The Board aims to provide and present a clear and comprehensive assessment of disclosures in Annual Report to the Company’s
shareholders. In disclosing information in the Annual Report, the Board is guided by the principles as set out in the Bursa Malaysia
Listing Requirements.
Shareholders Participation at General Meeting
General meetings of the Company represent the principal forum for dialogue with individual shareholder. Shareholders are
encouraged to attend and participate at these meetings.
The Company dispatches its notice of General Meeting to shareholders at least 21 days before the said meeting. The notice
of General Meeting provides information to shareholders with regard to details of the agendas to be presented at the General
Meeting, shareholders’ entitlement to attend the General Meeting and shareholders’ right and procedures relating to the appointment of
proxies.
Where special business items appear in the Notice of the Annual General Meeting, a full explanation is provided to shareholders on
the effect of the proposed resolution arising from such items.
At the Annual General Meeting, shareholders actively participate in discussing the resolutions proposed or on future developments
of the Group’s operations in general. The Board, the management and the Company’s external auditors, are present to answer
questions raised and provide clarification as required by shareholders.
At every Annual General Meeting, helpdesks are set up as a contact point for shareholders. The Company’s primary contact with
shareholders is through the Chairman, Managing Director, Executive Directors, Senior Manager of Finance & Corporate and the
Company Secretary. All shareholders’ queries are received by the Company Secretary. The Company Secretary provides feedback
and responses to the shareholders’ queries, save for sensitive information, which may not be privy to the general public. Written
responses will also be given, if necessary.
An open Question and Answer Session will be held whereby any shareholder may seek further details and clarification regarding any
proposed resolutions as well as matters relating to the Group’s business and affairs. At the Company’s Annual General Meetings,
members of the Board, the external auditors and where applicable, other advisers of the Company will be in attendance to answer
queries. Where questions raised-up not requiring the disclosure of material or price-sensitive information, the Board has always
provided all information relevant to the query. Where applicable, the Directors will also present to the shareholders any written
question raised by and responses given to the Minority Shareholders Watchdog Group or any shareholder who has written to the
Company prior to the general meeting.
38
(H) STRENGTHEN RELATIONSHIP BETWEEN COMPANY AND ITS SHAREHOLDERS - continued
Shareholders Participation at General Meeting - continued
In line with Paragraph 7.21A(2) of Listing Requirements for further promoting participation of members through proxies, the
information regarding procedures and the rights of the members, corporate representatives and proxies present to speak and vote by
show of hands or by poll on the resolutions set out in the Notice of Annual General Meeting will be briefed by the Chairman. Following
the removal of the limit on the number of proxies to be appointed by an exempt authorized nominee with shares in the Company for
multiple beneficial owners in one securities account under the Bursa Malaysia Listing Requirements, the beneficial owners of shares
will have greater participation of general meetings of the Company.
In response to the Recommendation 8.2 of the Code, the Board shall pass all the resolutions by poll at the Annual General Meeting.
The outcome of the Meeting is to be announced on the same meeting day.
The outcome of the Annual General Meeting is announced to Bursa Malaysia on the same meeting day. The 22nd Annual General
Meeting was held on 1 June 2016 at Classic Hotel, Muar, Johor Darul Takzim.
Communication with Shareholders and Other Stakeholders
The Board recognizes the importance of timely dissemination of material information to shareholders and other stakeholders to
ensure that they are well informed of major developments of the Group. The information communicated to them are through the
following:
(i) the Annual Report;

(ii) the various disclosures and announcements made to Bursa Malaysia including the Quarterly Report and Audited Financial
Statements and Circular to Shareholders; and
(iii) Corporate website of the Company at www.liihenfurniture.com.
As part of the Company’s commitment towards this objective, experienced members of the management are directly involved in the
Company’s investor relations activities,including the Independent Non-Executive Director, Senior Manager of Finance & Corporate
whose details are as follows:
(i) MrTey Ping Cheng/Ms. Lydia Sim

Senior Independent Non-Executive Director/
Group Senior Manager of Corporate & Finance
Tel: 06-9859222, Fax: 06-9858270
(ii) Mr Tan Wang Giap

Company Secretary
Tel: 06-9541818, Fax:06-9525823
While the Company endeavours to provide as much information as possible to its shareholders and stakeholders, the Board is mindful
of the legal and regulatory framework governing the release of material and price sensitive information.
The Company conducts dialogues with financial analysts from time to time as a means of effective communication that enables the
Board and management to convey information relating to the Company’s performance, corporate strategy and other matters affecting
shareholders’ interests.
39
(I) ADDITIONAL COMPLIANCE INFORMATION
Utilization of Proceeds
No proceeds were raised by the Company from any corporate exercise during the financial year.
Non-audit Fees Payable to External Auditors
There was an amount of RM119,010 being professional fees paid/payable to external auditors for the financial year ended
31 December 2015 in respect of the follwing:
RM
- Tax compliance 48,010
- Transfer pricing documentation 64,000
- Review of Statement on Risk Management and Internal Control and
Disclosure Realised and Unrealised profits 7,000
119,010
Revaluation Policy
The Group has a policy of revaluing landed properties every five (5) years. The last valuation was undertaken in 2014.
Material Contracts
There were no material contracts subsisting or entered into by the Company and its subsidiary companies involving any
Directors or major shareholders of the Company or any persons connected to Directors or major shareholders of the
Company during the financial year.
Recurrent Related Party Transactions
There is an internal compliance framework exists to ensure that the Group meets its obligations under the Bursa Malaysia
Listing Requirements on related party transactions and recurrent related party transactions. The Board, through its Audit Committee,
reviews all related party transactions and conflict of interest situations, if any, on a quarterly basis. A Director who has an interest in a
transaction must abstain from deliberating and voting on the relevant resolution, in respect of such a transaction at the meeting of the
Board, the Annual General Meeting or Extraordinary General Meeting.
The Company has formulated a Related Party Transactions Policy (“Policy”) designed to ensure the related party transactions (“RPT”)
that are carried out in the ordinary course of business, are made at arm’s length and on normal commercial terms which are not more
favourable to the related party or parties than those generally available to the public and are not on terms that are detrimental to the
minority shareholders of Company.
This Policy also aims to comply with the Part E, Paragraph 10.08 and 10.09 of the Listing Requirements of Bursa Malaysia Securities
Berhad. and is made available at the Company’s website.
Policies and procedures for determination of transaction price review procedures for RPT are described in the Policy
40
(I) ADDITIONAL COMPLIANCE INFORMATION - continued
Recurrent Related Party Transactions - continued
During the financial year, the Recurrent Related Party Transactions conducted pursuant to the mandate granted by the shareholders
of the Company on 1June 2016 are as follows:
Related Parties Nature of the Recurrent Value of transactions Interested Directors, major
Related Party Transactions as at 31 Dec 2016 shareholders and connected
persons (Please refer to following
notes for details of relationship
between Interested Directors,
major shareholders and
persons connected)
Domain Partners Sdn Renting of warehouse located RM 382,594 Chua Lee Seng1
Bhd7 and Lii Hen at GM356, Lot 1833, a total Tok Heng Leong2
Furniture Sdn Bhd built-up area of approximately Soo Tee Heng (f) 3
(from Jan to Nov 2016) 99,375 sq.ft Mukim of Sg Raya, Tan Bee Eng4
Muar with a monthly rental of Chua Yong Haup5
RM34,781 Neoh Cher Leong4
Chua Yong Hock6

Tok Soon Hing11
Domain Partners Sdn Renting of warehouse located RM 135,240

Bhd and Lii Hen at GM 156, Lot 1907, Mukim
Furniture Sdn Bhd of Sungai Raya, District
(from Jan to June 2016) of Muar, Johor, a total built up
area of 64,400 sqft with a
monthly rental of RM22,540.

Domain Partners Sdn Renting of warehouse located RM 126,000
Bhd and Lii Hen at GM 157, Lot 1908 and GM 1795
Furniture Sdn Bhd Lot 1911, Mukim of Sungai Raya,
(from Jan to June 2016) District of Muar, Johor, a total
built up area of 60,000 sqft with
a monthly rental of RM21,000.

Domain Partners Sdn Renting of warehouse located RM452,405

Bhd and Favourite at Lot 905, GM9, Mukim of
Design Sdn Bhd Sungai Raya, District of Muar,
(from Jan to Nov 2016) Johor, a total built up area of
91,395 sqft with a monthly rental
of RM41,128

Domain Partners Sdn Renting of warehouse located RM623,700

Bhd and Favourite at Lot 1909 &1911 GM 1793 &
Design Sdn Bhd 1795 Mukim of Sungai Raya,
( from Jan to Dec 2016) District of Muar, Johor, a total
built up area of 221,607 sqft with
a monthly rental of RM51,975
41
During the financial year, the Recurrent Related Party Transactions conducted pursuant to the mandate granted by the shareholders
of the Company on 1June 2016 are as follows: - continued
Related Parties Nature of the Recurrent Value of transactions Interested Directors, major
Related Party Transactions as at 31 Dec 2016 shareholders and connected
persons (Please refer to following
notes for details of relationship
between Interested Directors,
major shareholders and
persons connected)
Domain Partners Sdn Renting of warehouse located RM286,594 Chua Lee Seng1
Bhd and Favourite at Lot 1906 Mukim of Sungai Tok Heng Leong2
Design Sdn Bhd Raya, District of Muar, Johor, Soo Tee Heng (f)3
(from Feb to Dec 2016) a total built up area of 54,279 Tan Bee Eng4
sqft with a monthly rental of Chua Yong Haup5
RM26,054 Neoh Cher Leong4
Chua Yong Hock6

Tok Soon Hing11
Domain Partners Sdn Renting of warehouse located RM358.272

Bhd and Favourite at Lot 1907, Lot 1908 and
Design Sdn Bhd Lot 1911 Mukim of Sungai
(from July to Dec 2016) Raya, District of Muar, Johor,
a total built up area of 124,400
sqft with a monthly rental of
RM59,712
Double Soon Hua A company providing RM1,886,618 Chua Yong Haup

Enterprise9 and subcontract services
Favourite Design
Sdn Bhd
NNST Capital Sdn Bhd8 Renting of factory located RM 246,400 Tan Bee Eng
with Favourite Design at GM 1829 Lot 774 situated Neoh Cher Leong
Sdn Bhd in MukimJalan Bakri, District Chua Yong Haup
of Muar, a total built up area
of 43.691 sqft with a revised
monthly rental of RM20,970.
T Home Furniture Selling of furniture parts RM266,388 Tok Heng Leong

Industry Sdn Bhd10
Purchase RM 45,153
42
Notes:
1. Chua Lee Seng is the Executive Director of LHIB. He is also a major shareholder of LHIB by virtue of his shareholding in Assets
Muar Sdn Bhd (``AMSB``). Mr. Chua is also a Director of LHF, KJSB, LHP & PPLP, subsidiaries in the Group.
2. Tok Heng Leong is the Executive Director of LHIB. He is also a major shareholder of LHIB by virtue of his shareholding in AMSB.
Mr. Tok is brother-in-law to Mr. Chua Lee Seng. He is also a Director of all the subsidiaries in the Group.

3. Madam Soo Tee Heng is a major shareholder of LHIB by virtue of her shareholding in AMSB. She is sister-in-law to Mr. Chua Lee
Seng.

4. Tan Bee Eng is the Executive Director of LHIB. He is also a major shareholder of LHIB by virtue of his shareholding in AMSB. Mr.
Tan is brother-in-law to Neo Cher Leong who is also a major shareholder of LHIB by virtue of his shareholding in AMSB and a
director of EFF. Mr. Tan is also a director of EFF, LHP and PPLP.

5. Chua Yong Haup is the Managing Director of LHIB and is also a director of LHF, FD, EFF, CTHH and LSG, subsidiaries in the
Group.
6. Chua Yong Hock is the director of FD and brother to Chua Yong Haup.

7. Chua Lee Seng, Tok HengLeong and Neoh Cher Leong are the directors and shareholders of Domain Partners Sdn Bhd and,
Tan Bee Eng, Chua Yong Haup ,Madam Soo Tee Heng, Chua Yong Hock and Tok Soon Hing are its shareholders.
8. Tan Bee Eng is the director of and he and his spouse are the shareholders of NNST Capital Sdn Bhd. (“NNST”).
Neoh Cher Leong, is the director of and he and his spouse are the shareholders of NNST. Chua Yong Haup is the director of and
shareholder of NNST and Chua Yong Hock is shareholder of NNST.

9. Chua Yong Haup is the brother and brother-in-law of the partners of Double Soon Huat, Madam Chua Sai Choo and Mr. Ong
Swee Guan respectively.

10. Tay Soon Aik, a director of T-Home Furniture Industry Sdn Bhd. is brother-in-law to Tok Heng Leong and his spouse, Ms Tok Siew
Tin, is a senior officer of the Group.

11. Tok Soon Hing is the director of MKKP, FD, KJSB and CTHH and is brother to Tok Heng Leong and brother-in-law to
Mr. Chua Lee Seng.
(j) COMPLIANCE STATEMENT
The Board has deliberated, reviewed and approved this Statement on Corporate Governance. The Board is satisfied that to the best
of its knowledge, save for the above relevant explanations, the Company has applied the broad principles and recommendations of
the Code throughout the financial year 2016. The Company will continue to strengthen its governance practices to safeguard the best
interest of its shareholders and stakeholders.
This Statement is issued in accordance with a Resolution of the Board of Directors on 27 March 2017
43
AUDIT COMMITTEE REPORT
The Board of the Company is pleased to present the Audit Committee Report for the financial year ended 31 December 2016 which provides
insights into the manner in which the Audit Committee discharged its function for the Group in 2016.
A. COMPOSITION

The Audit Committee was appointed by the Board from amongst its members and shall consist of not less than three (3)
members. The members of the AC elected a Chairman of the Committee among its members who is an Independent Director. No
alternate director shall be appointed as a member of AC in the event of any vacancy arises.
The Committee is formally constituted with its terms of reference approved by the Board. The terms of reference of the AC is made
available on the Company’s website at www.liihenfurniture.com.
The Company Secretary shall be the Secretary of the Committee.
B. Meetings and Attendances
The details of attendance of each member at the Audit Committee Meetings held during the year are as follows :
No. of Percentage
Meeting Attended of Attendance (%)
CHAIRMAN
Tey Ping Cheng 5/5 100
Members

Lan Haw Chong@ Lau Haw Chong 5/5 100
Chan Wah Chong 5/5 100

Dato’ Mustapha Bin Abd Hamid 1/1 100

(Appointed on 1 September 2016)
Onn Yee Han (Resigned on 1 June 2016) 2/2 100

The Group Senior Manager, Internal Auditors and External Auditors were also invited to attend the AC Meetings.
C. SUMMARY OF ACTIVITIES FOR THE FINANCIAL YEAR
In line with the terms of reference of the Committee, the following activities were carried out by the Committee during the year up to
the date of this Report:
• Reviewed the quarterly unaudited financial results of the Group and of the Company before recommending them for
Board’s approval with the presence of the Group Senior Manager of Corporate & Finance for reporting on the results of the Group
as well as to answer questions raised by the members of the Committee.
44
C. SUMMARY OF ACTIVITIES FOR THE FINANCIAL YEAR - continued
• Reviewed the audited financial statements of the Group and of the Company with the external auditors prior to
submission to the Board for its consideration and approval. The review was to ensure that the audited financial
statements were drawn up in accordance with the provision of the Companies Act, 1965 and the applicable approved
accounting standards.
• Reviewed the Audit Committee Report and Statement on Risk Management and Internal Control for inclusion in the Annual
Report.
• Reviewed together with the external auditors on key audit matters on issues of valuation and written down on inventories and
impairment of loans and receivables of the Group for the financial year ended 31 December 2016. The Committee agreed with
the management treatments of these two issues.
Internal Audit
• Reviewed the outsourced internal auditors’ plan for the year under review to ensure adequate scope and comprehensive
coverage over the activities of the Group;
• Reviewed the internal audit reports presented by internal auditors in all the quarterly meetings, which highlighted the audit
issues, recommendations and appraised the adequacy and effectiveness of management’s response in resolving the audit
issues reported;
• Reviewed the risk register and reassessed the risk profile of each key risk areas;
• Evaluated the performance, effectiveness and competencies of the outsourced internal auditors and made recommendation to
the Board on their appointment and remuneration;
• Suggested on further improvement in the areas of internal control systems and efficiency; and
• Performed the following up on the status of implementation of recommendations made for reporting to the Audit Committee and
Management on a yearly basis.
External Audit
• Reviewed with the external auditors their audit plan and the scope of their work;
• Reviewed with the external auditors the results of the audit, audit report and the significant issues as highlighted in
management letter together with management’s responses to the findings of the external auditors;
• Evaluated the performance, effectiveness and independence of the external auditors and made recommendation to the Board on
their appointment and remuneration;
• Ensured the engagement team conducting the non-audit services to be different from the external audit team;
• Ensured the assistance given by the Group’s employees to the external auditor;
• Met with the external auditors twice during the financial year in the absence of Executive Directors and the Group Senior manager
of Corporate & Finance on the audit planning and audit findings for the financial year ended 31 December 2016; and
The Audit Committee worked closely with the external auditors in establishing procedures to assess the suitability, objectivity,
independence and quality of service of the external auditors, in confirming that they are, and have been, independent throughout the
conduct of the audit engagement with the Group in accordance with the independence criteria set out by the International Federation
of Accountants, and the Malaysian Institute of Accountants. The Committee also ensured that the external auditors met the criteria
provided by Paragraph 15.21 of the Listing Requirements of Bursa Securities. In 2016, the Company spent approximately RM119,010
on Non-Audit Fees representing 41% of the total fees to external auditors, details of which are disclosed on page 40.
45
C. SUMMARY OF ACTIVITIES FOR THE FINANCIAL YEAR - continued
Related Party Transactions
• Reviewed the updates on the related party transactions entered and any conflict of interest that may arise within the Group
and the Company and the disclosure of all such transactions in the annual report;
• Reviewed the Circular to Shareholders relating to renewal of shareholders’ mandate for recurrent related party transactions of
revenue or trading nature prior to recommending it for Board’s approval; and
• Updated Related Party Transactions Policy and uploaded in the Company’s website.
Others
• Reviewed annual financial budget before recommendation for Board’s approval;
• Reviewed the application of corporate governance principles and the extent of the Group’s compliance with the best practices set
out in the Code;
• Reviewed the Audit Committee Report for inclusion in the Annual Report; and
• Reviewed of the Statement of Internal Control and Risk Management in compliance with the Listing Requirements and the Code.
D. EVALUATION OF THE AUDIT COMMITTEE
The Board of Directors has ensured the performance of the Audit Committee and each of its members are evaluated yearly by Board
Committee Performance Evaluation.
E. INTERNAL AUDIT FUNCTION
The internal audit function of the Group is outsourced to Messrs. PSP Management Services Sdn. Bhd., an independent firm
which operates independently from the other operating units in assisting the Committee to discharge of its duties and
responsibilities. The principal role of the service provider is to undertake independent, regular and systematic reviews of the
Group’s systems of internal controls, risk management and governance processes so as to provide reasonable assurance that
such systems continue to operate adequately and effectively.
The activities carried by the outsourced internal auditors during the year under review include:
• Reviewed the control function of Treasury management and Information technology management of CTHH, FD, LHF ,MKKP and
EF;
• Followed up review of the findings highlighted in 2015 internal audit report;
• Reviewed controls on Human Resources Management function of CTHH, EF, MKKP, FD and LHF;
• Updated risk management with a full risk assessment;
• Reviewed of Inventory Management function of CTHH, EF and FD; and
• Attended four Audit Committee meetings to table and discuss the internal audit reports and followed up on matters raised
46
The total fee paid for the services rendered for the year 2016 amounted to RM32,500
The Statement on Risk Management and Internal Control as set out on page 48 to 52 is to provide an overview on the state of risk
management and internal control.
47
STATEMENT ON RISK MANAGEMENT

AND INTERNAL CONTROL
Pursuant to paragraph 15.26(b) of the Bursa Malaysia Main Market Listing Requirements, the Board is pleased to provide the following
Statement on Risk Management and Internal Control of the Group, which had been prepared in accordance with the “Statement on Risk
Management & Internal Control: Guidance for Directors of Listed Issuers” (the “ Guidelines”).
BOARD RESPONSIBILITY
The Board acknowledges that it is ultimately responsible for the adequacy and effectiveness of the Group’s systems of risk management
and internal controls to safeguard all its stakeholders’ interests and the Group’s assets. This is vital to ensure that they are consistent
with the overall Group’s objectives with the help of the systems operated within an environment where losses and liabilities arising from
risks, uncertainty and random events to be minimized, protected against and even avoided altogether. However, such a system is designed
to manage the Group’s key areas of risk within an acceptable risk profile, rather than eliminate the risk of failure to achieve the
policies and business objectives of the Group. Accordingly, the systems of risk management and internal controls can only provide
reasonable but not absolute assurance against material misstatement of financial information and records or against financial losses or
fraud.
THE RISK MANAGEMENT PROCESS
The Board has established an ongoing process for identifying, evaluating and managing the significant risks faced by the Group and has put
in place a structured risk management framework which includes the following key elements:
• Guiding principles of the risk management framework;
• Approach to risk management;
• Approach in reviewing and monitoring significant risks;
• Regular review of the effectiveness of internal controls.
The framework and an internal control system as integrated in the Group’s operations and working culture are applied continuously throughout
the year, to determine, evaluate and manage the significant risks of the Group. Hence, any significant risk arising from factors within the Group
and from changes in business environment can be addressed on a timely basis. The risk management process is regularly reviewed with
updating the system of internal controls when there are changes to the business environment or regulatory guidelines by the Board via the
Audit Committee and in accordance with the Guidelines.
1. Risk Management
a. Roles and Responsibilities
The Group adopts a decentralized approach to risk management, whereby all employees take Ownership and accountability for risks
at their respective levels. The process of risk management and treatment is the responsibilities of the Heads of Department.
A working group, the Risk Management Working Committee (RMWC) headed by executive director, Mr Chua Yong Haup and
comprise of key persons from all departments provides risk management support to Management for the Group as a whole. The role
of the RMWC includes reporting on an annual basis, the status of the risk mitigation actions, new risks identified and risk that have
changed characteristics together with the corresponding controls. The RMWC submits its report annually to the Audit Committee for
their oversight role on risk management and the Audit Committee reports to the Board on any significant changes in the business and
external environment which affect key risks.
48

1. Risk Management - continued
a. Roles and Responsibilities - continued
The Group’s Managing Director and Group Senior Manager of Corparate & Finance have provided the Board the assurance that the
Group’s risk management and internal control systems are operating adequately and effectively, in all material aspects, to ensure
achievement of corporate objectives.

The Board is primarily responsible for strategic risks management while the responsibility to address all risks associated with the
business operations rests with senior management.

b. Risk Identification and Assessment
The risk management methodology and approach applied are described as below:
The Risk Register is compiled and reviewed on a regularly basis. Any emerging new risks will be identified and followed
up with the implementation of the control action plans.
The Group’s risk appetite defines the amount and types of risk that the Group is able and willing to accept in pursuit of the Group’s
business objectives. It also sets out the level of risk tolerance and limits to govern, manage and control the Group’s risk taking
activities. The management has been given a clear line of accountability and the delegated authorities have been established as part
of internal control efforts through standard operating procedures.
During the year, the risk registers were reviewed by the RMWC with the assistance from the outsourced internal audit service provider.
There was no significant change in the database of risks and corresponding controls.
2. Internal Control System
a. The Internal Control Process
The internal control and monitoring procedures include:
• clearly defined systems and procedures, for key operational and financial departments, include maintaining of good operational
and financial records and controls and producing an accurate and timely management information;
• control of key financial risks through clearly laid down authorization levels and proper segregation of accounting duties;
• detailed reporting of trading results, balance sheets and cash flows, with regular review by the management;
• regular independent internal audit activities to monitor compliance with procedures and assess the integrity of operational and
financial information provided; and
• regular information provided to the management, covering financial performance and key indicators and cash flow
performance.
49

2. Internal Control System - continued
a. The Internal Control Process - continued
The key elements of the Group’s internal control system that considered as an integral part of the assurance framework are
described below:
• Organizational Structure
The Board has put in place an organizational structure with formally defined lines of responsibility and delegation of
authority for the Board, Committees of the Board and the executive management of the Group’s operating units.
Meetings of Board and Committees meetings are held on scheduled basis to review the performance of the Group on financial
and operational perspective, and to carry out their fiduciary duties and responsibilities. Potential business strategies are pro-
posed by Executive Directors to the Board for review and approved.

• Audit Committee
The Audit Committee is responsible for monitoring, overseeing and evaluating the duties and responsibilities of the Internal and
External Auditors as those duties and responsibilities relate to the organization’s processes for controlling its operations. The
Audit Committee also provide an oversight role in the risk management of the Group.
The Audit Committee meets quarterly to review the quarterly result, internal and external audit findings, discuss risk
management plans and ensures weaknesses in controls highlighted are appropriately addressed by management. The
Group’s Senior Manager of Corporate & Finance also participates in these meetings.
• Internal Audit
The internal audit function of the Group is outsourced to an independent internal audit service provider which operates
independently from the other operating units. It provides the Board with much of the assurance it requires regarding the
adequacy and effectiveness of the risk management, internal controls and governance processes. The systematic and
disciplined approach is employed to draw up the annual audit plans for the review and approval of the Audit Committee. Audits
are independently carried out on the internal controls in the key activities of the Group’s business in accordance to
the risk-based approach and the internal auditors have full and direct access to the Audit Committee.
• Policies and Procedures
Policies and procedures regulating financial and operating activities are documented in manuals as the key framework
for good internal control practices. These manuals are subject to regular reviews and updates to reflect the changing
business risks and to resolve operational deficiencies, if any. The employees of the Group are aware of the objectives
of the risk management and the need for the various checks and balances put in place as mentioned in the manual to achieve
effective internal control. The code of conduct and policy of whistle-blowing as posted in the Company’s website have been
disseminated to the employees.
50

2. Internal Control System - continued
a. The Internal Control Process - continued
• Business Plan and Budgeting Process
Detailed annual business plan and budgets are prepared by individual operating units containing business strategies,
financial and operating targets, performance indicators and capital expenditure proposals, which are approved both at
operating unit level and by the Board. The budgets are prepared as a performance measurement of the Group. The annual
budget is reviewed on half yearly basis to reflect the changing business operating environment and any significant variances
are tabled in the Audit Committee meeting for discussion and rectification actions.
• Reporting System
The Board entrusts the daily running of the operations to the Managing Director, Executive Directors and the
management team. Executive Directors held their regular meetings at least once a month to discuss and review
significant changes in the business and the external environment which affect the risks faced by the Group especially
exposure to currency transaction risks through monitoring procedures on forward contracts on foreign currency.
At operation level, clear reporting lines are established across the Group and operation and management reports are prepared
for dissemination to relevant personnel for effective communication of critical information throughout the Group for timely
decision-making and execution in pursuit of business objectives.
At quarterly Board Meetings, the Directors discuss and deliberate the strategic issues facing the business and the
principal risks affecting the Group. The Executive Directors will report to the Board of any significant matters arising
and necessary action to mitigate such risks. Comprehensive information are provided by the respective business units
covering financial performance and operation, including the monthly monitoring of results against budget, with major
variances being followed up and management action taken, where necessary.
• Appraisal System
A clear defined framework for investment appraisal covers acquisition or disposal of any business, application of capital
expenditure and approval on borrowings. Proposals for major expenditure and new investment by the Group are reviewed by
the Audit Committee and approved by the Board. Post implementation reviews are conducted and reported to the Board.
b. Monitoring process
The Audit Committee has full and direct access to the internal auditors and reviews reports on all internal audits performed. Key
findings and recommendations to improve the internal controls are highlighted to the head of operating units and the Audit Committee,
and with performing a year end follow-up assessment on corrective actions.
Based on the quarterly internal audit reports for the financial year ended 31 December 2016, the Board has reasonable assurance
that the Group’s system of internal control are generally adequate and appear to be working satisfactorily. A number of minor internal
control weaknesses were identified during the financial year, all which have been, or are being addressed. None of the weaknesses
have resulted in any material losses, contingencies or uncertainties that would require disclosure in the Group’s annual report.
The Board has received statement from the Managing Director that the Group’s risk management and internal control system is operating
adequately and effectively in all material respect.
51

REVIEW OF THE STATEMENT BY EXTERNAL AUDITORS
The external auditors have reviewed this Statement on Risk Management and Internal Control for inclusion in the annual report of the Group
for the year ended 31 December 2016 and reported to the Board that nothing has come to their attention that causes them to believe that
the Statement is inconsistent with their understanding of the process adopted by the Board in reviewing the adequacy and effectiveness of
the risk management and internal control system. Their review was performed in accordance with Recommended Practice Guide (“RPG 5”):
Guidance for Auditors on the Review of Directors’ Statement on Internal Control, issued by the Malaysian Institute of Accountants. RPG 5 does
not require the external auditors to, and they did not, consider whether this Statement covers all risk and controls, or to form an opinion on the
effectiveness of the Group’s risk and control procedures.
CONCLUSION
The system of risk management and internal controls comprising the respective framework, management processes and
monitoring processes described in this Statement are considered appropriate. Based on inquiry, information and assurances provided by the
Managing Director and the Group Senior Manager of Corporate & Finance, the Board is satisfied that the system of risk management
and internal controls for the year under review was generally satisfactorily. Measures are in placed and continually being taken to ensure
the ongoing adequacy and effectiveness of internal controls to safeguard the Group’s assets and hence shareholders’ investment.
There were no material losses that have arisen from any inadequacy or failure of the Group’s internal control system which requires additional
disclosure in the financial statements. The management continues to take measures to strengthen the control environment and processes.
This Statement is issued in accordance with a Resolution of Board of Directors passed on 27 March 2017.
52
DIRECTORS’ RESPONSIBILITY STATEMENT
The Board is responsible for preparing yearly financial statements and ensuring that they give a true and fair view of the financial
position of the Group and of the Company as at 31 December 2016 and of the financial performance and cash flows of the Group and
of the Company for the financial year then ended.
In preparing the financial statements, the Directors have selected and applied consistently suitable accounting policies and made
reasonable and prudent judgments and estimates. Hence the financial statements are drawn up on a going concern basis in accordance
with the Malaysian Financial Reporting Standards, International Financial Reporting Standards and the provisions of the Companies Act 1965.
It is the duty of the Board to review the appropriateness of the basis before adopting the financial statements and present them before the
Annual General Meeting together with the Report of the external auditors and the Board.
The Board is also responsible for ensuring that proper accounting and other records are kept to sufficiently explain the transactions recorded.
The Board also has a general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the
Group and to prevent and detect fraud and other irregularities.
53
CORPORATE SOCIAL RESPONSIBILITY

STATEMENT
The Bursa Malaysia Securities Berhad’s Corporate Social Responsibility (“CSR”) Framework defines CSR as open and transparent business
practices that are based on ethical values and respect for the community, employees, the environment, shareholders and other stakeholders.
In pursuit of its corporate objective, the Group is committed to conduct its business in an economical, social and environmental sustainable
manner. The Group practices CSR as an integral part of its business operations. The CSR initiatives undertaken by the Group are as follows:
The Community
As an entity, the Group is an integral part of the community in which it operates. As a responsible corporate citizen, we provide resources
when necessary in times of disaster and need.During the year, the Group donated funds to local schools, to charitable events organized by
both government and private organizations, providing industrial training to local university students and carrying out activities in relation to
environmental preservation.
The Workforce
We always believe that employees are the assets to the Company and they are the key to the success of the organization. Currently the Group
has 2,400 employees, comprises of Malaysian and foreign workers. The policies on recruitment, working hours, remuneration and welfare are
in accordance with the requirements of the relevant laws and regulations. We provide accommodation, medical benefit and transportation for
foreign workers and ensure their living places are always clean and not health hazard.
The Group believes in continuing education and personal improvement, hence, the skilled employees and managerial staff are provided
training in technical and managerial upgrading programmes to enhance their work caliber, job performance and career development. As part
of the worker welfare, the Group has set up a bursary scheme for its eligible employee who has children pursue higher education at any
institution, college or university either locally or aboard. This scheme is RM1000 for each student per academic year. In Jan 2017, the Group
has distributed RM28,000 under this scheme to his employees.
The Workplace
The group has the fundamental responsibility and commitment to ensure that all employees work in a safe and healthy environment. A Safety
& Health Committee has been set up to take charge of maintaining and reviewing of work practices, manufacturing processes and the usage
of environmental friendly raw materials to ensure conducive workplace for all its employees. The ongoing training is in place to ensure safe
work practices are adhered to at all times. All hazardous waste are identified, labelled, segregated and disposed in accordance to the safety
requirements and regulations.
54
CORPORATE SOCIAL RESPONSIBILITY

STATEMENT
The Environment
The Group is committed to reduce the impact of our operations on the environment and firmly believes in adopting waste management and
recycling programs in its manufacturing processes. As a major wood-based furniture manufacturer, we are espouses to stringent ethical
sourcing practices, adopt sustainability practices in our manufacturing processes and consistently passed the suppliers assessments. One
of the raw materials used like particleboard, plywood and medium density fiberboard (MDF) are CARB2 certified to ensure the formaldehyde
emissions capped at 0.05 parts per million(ppm). Besides this, we are also committed to be in compliance with the relevant laws relating to
sustainable forestry, emission standards and plant effluent management.
The Marketplace
The Group will continue with its efforts to enhance its shareholders’ value and this is reflected by the Group’s uninterrupted profit track record
since 25 April 2000, the date of listing. It is the Group’s aim to provide quality products with reasonable price to the customers.
The Group believes in maintaining the relationship with all stakeholders including shareholders, regulatory authorities, business partners,
bankers and suppliers and local communities to achieve the above.
Others

It is delighted to report that LHIB has met the globally recognized standards for inclusion in the FTSE4Good Bursa Malaysia Index. The Index
is designed to measure the performance of companies demonstrating good Environmental, Social and Governance (ESGH) practices.
55
FINANCIAL STATEMENTS
31 DECEMBER 2016
DIRECTORS’ REPORT 57
STATEMENT BY DIRECTORS 62
STATUTORY DECLARATION 63
INDEPENDENT AUDITORS’ REPORT 64

CONSOLIDATED STATEMENT OF FINANCIAL POSITION 70
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND
OTHER COMPREHENSIVE INCOME 71
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 72
CONSOLIDATED STATEMENT OF CASH FLOWS 74
STATEMENT OF FINANCIAL POSITION 76

STATEMENT OF PROFIT OR LOSS AND OTHER
COMPREHENSIVE INCOME 77
STATEMENT OF CHANGES IN EQUITY 78
STATEMENT OF CASH FLOWS 79
NOTES TO THE FINANCIAL STATEMENTS 80
DIRECTORS’ REPORT
The Directors have pleasure in submitting their report together with the audited financial statements of the Group and of the Company for the
financial year ended 31 December 2016.
PRINCIPAL ACTIVITIES
The principal activity of the Company is that of investment holding.
The principal activities and details of the subsidiary companies are as set out in note 9 to the financial statements.
There have been no significant changes in the nature of these activities of the Group and of the Company during the financial year.

RESULTS
Group Company
RM RM

Profit for the financial year attributable to:
Owners of the Company 73,274,180 40,438,269
Non-controlling interests (144,510) -

73,129,670 40,438,269
DIVIDENDS
The dividends paid or declared by the Company since the end of the previous financial year were as follows:
RM
In respect of the financial year ended 31 December 2015,

- special single tier dividend of 6.0 sen per share declared on
24 February 2016 and dealt with in the previous Directors’ report was
paid on 25 March 2016 10,800,000

- final single tier dividend of 4.0 sen per share proposed in the previous
financial year and dealt with in the previous Directors’ report was
paid on 26 July 2016 7,200,000


- first interim single tier dividend of 4.0 sen per share declared on
20 May 2016 and paid on 28 June 2016 7,200,000

- second interim single tier dividend of 4.0 sen per share declared on
19 August 2016 and paid on 23 September 2016 7,200,000

- third interim single tier dividend of 4.0 sen per share declared on
25 November 2016 and paid on 28 December 2016 7,200,000

39,600,000
57
DIRECTORS’ REPORT
- continued
DIVIDENDS - continued
RM

After the end of the financial year,

- special single tier dividend of 10 sen per share declared on
22 February 2017 and paid on 24 March 2017 18,000,000

The above single tier dividend, declared subsequent to the financial year end, has not been included as liability in the financial statements.
The Directors proposed a final single tier dividend of 4 sen per share amounting to RM7,200,000 in respect of the financial year ended 31
December 2016. The proposed final dividend is subject to approval by the shareholders at the forthcoming Annual General Meeting and has
not been included as liability in the financial statements.
RESERVES AND PROVISIONS
There were no material transfers to or from reserves or provisions during the financial year except as disclosed in the financial statements.
ISSUE OF SHARES AND DEBENTURES
The Company did not issue any new shares or debentures during the financial year.
DIRECTORS

The Directors in office since the date of the last report are:

Chua Yong Haup
Chua Lee Seng
Tok Heng Leong
Tan Bee Eng
Tey Ping Cheng
Chan Wah Chong
Dato’ Mustapha Bin Abd Hamid (Appointed on 01.09.2016)
Chan Nyat Keong (Appointed on 01.04.2016)
Onn Yee Han (Resigned on 01.06.2016)
In accordance with Article 83 of the Company’s Articles of Association, Messrs. Lan Haw Chong @ Lau Haw Chong, Chua Yong Haup,
and Chan Wah Chong, retire by rotation from the Board at the forthcoming Annual General Meeting and, being eligible, offer themselves for
re-election.
In accordance with Article 90 of the Company’s Articles of Association, Dato’ Mustapha Bin Abd Hamid who was appointed to fill casual
vacancy on the Board, retires at the forthcoming Annual General Meeting and, being eligible, offers himself for re-election.
58
DIRECTORS’ REPORT
- continued
DIRECTORS’ INTEREST

The Directors holding office at the financial year end and their interests in share capital of the Company and of its related corporations during
the financial year were as follows:

Number of ordinary shares of RM0.50 each

Balance at Balance at
01.01.2016 Bought Sold 31.12.2016
Direct interest
Ordinary shares of the Company
- Chua Yong Haup 120,000 30,000 - 150,000

- Chua Lee Seng 2,517,700 - (2,279,900) 237,800
- Tok Heng Leong 450,128 - (406,700) 43,428
- Tan Bee Eng 796,994 - (475,900) 321,094

Indirect interest
Ordinary shares of the Company
- Chua Lee Seng 77,207,010 - - 77,207,010

- Tok Heng Leong 77,058,510 - - 77,058,510
- Tan Bee Eng 77,643,510 - (585,000) 77,058,510
N
umber of ordinary shares of RM1.00 each
Ordinary shares of the immediate and ultimate holding Company

- Assets Muar Sdn. Bhd.

- Chua Yong Haup 1,427,778 - - 1,427,778
- Chua Lee Seng 3,055,140 - - 3,055,140
- Tok Heng Leong 3,055,140 - - 3,055,140
- Tan Bee Eng 2,911,617 - - 2,911,617
By virtue of their interests in the shares of the Company, Messrs. Chua Lee Seng, Tok Heng Leong and Tan Bee Eng are also deemed to have
interests in the shares of all the subsidiary companies to the extent that the Company has an interest.
None of the other directors holding office at the financial year end had any interest in the share capital of the Company and of its related
companies during the financial year.

DIRECTORS’ BENEFITS

Since the end of the previous financial year, no Director of the Company has received or become entitled to receive any benefit (other than as
disclosed in the financial statements) by reason of a contract made by the Company or a related corporation with the Director or with a firm
of which the Director is a member, or with a company in which the Director has a substantial financial interest except as disclosed in note 29
to the financial statements.
Neither during nor at the end of the financial year, was the Company or any of its subsidiary companies a party to any arrangements whose
object is to enable the Directors to acquire benefits by means of the acquisition of shares in or debentures of the Company or any other body
corporate.
59
DIRECTORS’ REPORT
- continued
OTHER STATUTORY INFORMATION ON THE FINANCIAL STATEMENTS
(a) Before the financial statements of the Group and of the Company were made out, the Directors took reasonable steps:
(i) to ascertain that action had been taken in relation to the writing off of bad debts and the making of allowance for impairment
and satisfied themselves that there were no known bad debts and that no allowance for impairment was required; and
(ii) to ensure that any current assets, other than debts, which were unlikely to realise in the ordinary course of business their
value as shown in the accounting records of the Group and of the Company had been written down to an amount which they
might be expected so to realise.
(b) At the date of this report, the Directors are not aware of any circumstances:
(i) which would require any amounts to be written off for bad debts or allowed for as impairment in the financial statements of
the Group and of the Company,
(ii) which would render the values attributed to current assets in the financial statements of the Group and of the Company
misleading,
(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 which would render any amount stated in the financial
statements misleading.
(c) At the date of this report, there does not exist:
(i) any charge on the assets of the Group and of the Company which has arisen since the end of the financial year which secures
the liability of any other person, or
(ii) any contingent liability of the Group and of the Company which has arisen since the end of the financial year.
(d) No contingent or other liability of the Group and of the Company has become enforceable, or is likely to become enforceable within
the period of twelve months after the end of the financial 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.
(e) In the opinion of the Directors,
(i) the results of the operations of the Group and of the Company during the financial year were not substantially affected by any
item, transaction or event of a material and unusual nature; and

(ii) there has not arisen in the interval between the end of the financial year and the date of this report any item, transaction
or event of a material and unusual nature likely to affect substantially the results of the operations of the Group and of the
Company for the current financial year.
60
DIRECTORS’ REPORT
- continued
IMMEDIATE AND ULTIMATE HOLDING COMPANY
The Directors regard Assets Muar Sdn. Bhd., a company incorporated in Malaysia, as the immediate and ultimate holding company.
SIGNIFICANT EVENT DURING THE FINANCIAL YEAR
Details of significant event during the financial year are as disclosed in note 36 to the financial statements.
AUDITORS
John Lim & Associates have expressed their willingness to continue in office.
The auditors’ remuneration is as disclosed in note 25(a) to the financial statements.
Signed in accordance with a resolution of the Directors.
Chua Yong Haup

Director
Chua Lee Seng

Director
Muar
Date: 27 March 2017
61
STATEMENT BY DIRECTORS
We, the undersigned, being two of the Directors of Lii Hen Industries Bhd. do hereby state that, in the opinion of the Directors, the
accompanying statements of financial position, statements of profit or loss and other comprehensive income, statements of changes in equity
and statements of cash flows together with the notes attached thereto are drawn up in accordance with Malaysian Financial Reporting
Standards, International Financial Reporting Standards and the Companies Act 1965 in Malaysia so as to give a true and fair view of the state
of affairs of the Group and of the Company at 31 December 2016 and of the results and the cash flows of the Group and of the Company for
the financial year then ended.
The information set out in note 38 to the financial statements has been prepared in accordance with the Guidance on Special Matter No. 1,
Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing
Requirements, as issued by the Malaysian Institute of Accountants.
Signed in accordance with a resolution of the Directors.
Chua Yong Haup

Director
Chua Lee Seng

Director
Date: 27 March 2017
62
STATUTORY DECLARATION
I, Lydia Sim Lee Hea, the officer primarily responsible for the financial management of Lii Hen Industries Bhd., do solemnly and sincerely
declare that the accompanying statements of financial position, statements of profit or loss and other comprehensive income, statements of
changes in equity and statements of cash flows together with the notes thereto 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 Declaration Act, 1960.
Subscribed and solemnly declared )

by the abovenamed at Muar in the )
State of Johore on 27 March 2017 )

Lydia Sim Lee Hea
Before me,
Lim Pei Ling

No: J 238
Pesuruhjaya Sumpah
63
INDEPENDENT AUDITORS’ REPORT TO

THE MEMBERS OF LII HEN INDUSTRIES BHD.
(Incorporated in Malaysia)
Report on the Audit of the Financial Statements
Opinion
We have audited the financial statements of Lii Hen Industries Bhd., which comprise the statements of financial position at 31 December 2016
of the Group and of the Company, and the statements of profit or loss and other comprehensive income, statements of changes in equity and
statements of cash flows of the Group and of the Company for the financial year then ended, and notes to the financial statements, including
a summary of significant accounting policies, as set out on pages 70 to 147.
In our opinion, the accompanying financial statements give a true and fair view of the financial position of the Group and of the Company at
31 December 2016, and of their financial performance and their cash flows for the financial year then ended in accordance with Malaysian
Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia.
Basis for Opinion
We conducted our audit in accordance with approved standards on auditing in Malaysia and International Standards on Auditing. Our
responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Financial Statements section
of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Independence and Other Ethical Responsibilities
We are independent of the Group and of the Company in accordance with the By-Laws (on Professional Ethics, Conduct and Practice) of the
Malaysian Institute of Accountants (“By-Laws”) and the International Ethics Standards Board for Accountants’ Code of Ethics for Professional
Accountants (“IESBA Code”), and we have fulfilled our other ethical responsibilities in accordance with the By-Laws and the IESBA Code.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the
Group and of the Company for the current financial year. These matters were addressed in the context of our audit of the financial statements
of the Group and of the Company as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
64

(Incorporated in Malaysia) - continued
Key Audit Matters - continued
Key Audit Matters How our audit addressed the key audit matters

Inventories valuation and written down (Refer to note 3(g), 6(a)

and 11 to the financial statements)

The Group had inventories of RM63,007,035 at 31 December 2016 We obtained assurance over the appropriateness of the assumptions
and is significant to the financial statements. applied by the management in calculating the value of the inventories
by:
Inventories are stated at the lower of cost and net realisable value.
The valuation of the inventories and the assessment of inventories - Obtaining an understanding of the inventory management
write down due to excess quantities, obsolescence and decline in process of the Group including how the Group values the
net realisable value below cost involved judgements and estimation inventories and identifies and assesses the inventory written
uncertainty in forming expectations about future revenue and down;
demands.
- Performing sample test to confirm that inventories are

valued at the lower of cost and net realisable value, through
testing of raw materials costs, labour and overhead
absorption into inventories and post period end sales values;
- Participating in the annual inventory count, performed sample

test counts and observed the counts performed by management;
- Reviewing the inventories records for inventory movements and

to identify slow moving items and assessed the adequacy of the
written down;
- Inquiring of management pertaining the plans to clear the slow

moving and obsolete inventories; and
- Evaluating the reasonableness and adequacy of the written

down for inventories recognised for identified exposures.
65

Key Audit Matters - continued
Key Audit Matters How our audit addressed the key audit matters

Impairment of loans and receivables (Refer to note 6(b) and 12

to the financial statements)

The Group had receivables of RM57,896,182 at 31 December 2016 Our audit procedures in this area included, among others:
and is significant to the financial statements. As disclosed in note 32
to the financial statements, the Group is subjected to concentration
of credit risk and other major credit risk exposure. - Obtaining an understanding of how the Group has control over
the receivable collection process, identifies and assesses the
impairment of receivables and make the accounting estimates
The Group assesses at the end of each reporting period whether for impairment;
there is any objective evidence that a financial asset is impaired. The
assessment of recoverability of receivables involved judgements and
estimation uncertainty in assessing the probability of insolvency or - Reviewing the receivables ageing analysis and testing the
significant financial difficulties of the debtor and default or significant reliability thereof;
delay in payments, analysing the historical loss experience and
subsequent cash collections.
- Reviewing subsequent cash collections for major receivables
and overdue debts;
- Making inquiries of management pertaining to the recoverability

of significant and overdue debts; and
- Evaluating the basis and evidence used by management for

the impairment test and adequacy of allowance for impairment
made.
66

Information Other Than the Financial Statements and Auditors’ Report Thereon
The Directors of the Company are responsible for the other information. The other information comprises the information included in the
Annual Report and Directors’ Report, but does not include the financial statements of the Group and of the Company and our auditors’ report
thereon.
Our opinion on the financial statements of the Group and of the Company does not cover the other information and we do not express any
form of assurance conclusion thereon.
In connection with our audit of the financial statements of the Group and of the Company, our responsibility is to read the other information and,
in doing so, consider whether the other information is materially inconsistent with the financial statements of the Group and of the Company
or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report
that fact. We have nothing to report in this regard.
Responsibilities of the Directors for the Financial Statements
The Directors of the Company are responsible for the preparation of financial statements of the Group and of the Company that give a true
and fair view in accordance with Malaysian Financial Reporting Standards, International 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 of the Group and of the Company that are free from material misstatement, whether due to
fraud or error.
In preparing the financial statements of the Group and of the Company, the Directors are responsible for assessing the Group’s and the
Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern
basis of accounting unless the Directors either intend to liquidate the Group or the Company or to cease operations, or have no realistic
alternative but to do so.
Auditors’ Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements of the Group and of the Company as a whole
are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable
assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with approved standards on auditing
in Malaysia and International Standards on Auditing will always detect a material misstatement when it exists. Misstatements can arise from
fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with approved standards on auditing in Malaysia and International Standards on Auditing, we exercise
professional judgement and maintain professional scepticism throughout the audit. We also:
• Identify and assess the risks of material misstatement of the financial statements of the Group and of the Company, whether due
to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and
appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for
one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal
control.
• Obtain an understanding of internal control relevant to the audit 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 Group’s and the Company’s internal
control.
67

Auditors’ Responsibilities for the Audit of the Financial Statements - continued
As part of an audit in accordance with approved standards on auditing in Malaysia and International Standards on Auditing, we exercise
professional judgement and maintain professional scepticism throughout the audit. We also: - continued
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures
made by the Directors.
• Conclude on the appropriateness of the Directors’ use of the going concern basis of accounting and, based on the audit evidence
obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s or the
Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention
in our auditors’ report to the related disclosures in the financial statements of the Group and of the Company or, if such disclosures
are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report.
However, future events or conditions may cause the Group or the Company to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the financial statements of the Group and of the Company, including the
disclosures, and whether the financial statements of the Group and of the Company represent the underlying transactions and events
in a manner that achieves fair presentation.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group
to express an opinion on the financial statements of the Group. We are responsible for the direction, supervision and performance of
the group audit. We remain solely responsible for our audit opinion.
We communicate with the Directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings,
including any significant deficiencies in internal control that we identify during our audit.
We also provide the Directors with a statement that we have complied with relevant ethical requirements regarding independence, and to
communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where
applicable, related safeguards.
From the matters communicated with the Directors, we determine those matters that were of most significance in the audit of the financial
statements of the Group and of the Company for the current financial year and are therefore the key audit matters. We describe these
matters in our auditors’ report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances,
we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be
expected to outweigh the public interest benefits of such communication.
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 subsidiary
companies have been properly kept in accordance with the provisions of the Act.
b) We are satisfied that the financial statements of the subsidiary companies 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.
c) Our audit reports on the financial statements of the subsidiary companies did not contain any qualification or any adverse comment
made under Section 174(3) of the Act.
68

Other Reporting Responsibilities
The supplementary information set out in note 38 to the financial statements is disclosed to meet the requirement of Bursa Malaysia
Securities Berhad and is not part of the financial statements. The Directors are responsible for the preparation of the supplementary
information in accordance with Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context
of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants (‘MIA
Guidance’) and the directive of Bursa Malaysia Securities Berhad. In our opinion, the supplementary information is prepared, in all material
respects, in accordance with the MIA Guidance and the directive of Bursa Malaysia Securities Berhad.
Other Matters
This report is made solely to the members of the Company, as a body, in accordance with Section 266 of the Companies Act, 2016 in Malaysia
and for no other purpose. We do not assume responsibility to any other person for the content of this report.
JOHN LIM & ASSOCIATES FOO KEE FATT

A.F. No. 0393 1923/06/17(J)
Chartered Accountants Chartered Accountant
Date: 27 March 2017
67, 2nd Floor, Room A Phone : 06-9515317 / 9523513

Jalan Ali, 84000 Muar Fax : 06-9545393
Johor Darul Takzim E-mail : jlim0393@gmail.com
69
CONSOLIDATED STATEMENT OF FINANCIAL

POSITION AT 31 DECEMBER 2016
Note 2016 2015

RM RM
ASSETS

Non-current assets

Property, plant and equipment 7 122,034,710 112,004,048
Biological asset 8 3,938,027 3,018,629
Intangible assets 10 522,565 541,228

126,495,302 115,563,905
Current assets

Inventories 11 63,007,035 55,751,726
Receivables 12 57,896,182 41,304,576
Prepaid operating expenses and other assets 13 5,535,130 5,362,346
Derivative financial instruments 15 - 114,918
Tax assets 16 1,301,521 513,887
Deposits, cash and bank balances 17 133,994,519 120,506,396

261,734,387 223,553,849
TOTAL ASSETS 388,229,689 339,117,754

EQUITY AND LIABILITIES

Equity attributable to owners of the Company
Share capital 18 89,999,994 89,999,994
Reserves 19 174,024,166 140,228,214

264,024,160 230,228,208

Non-controlling interests 106,620 (352,098)
Total equity 264,130,780 229,876,110
LIABILITIES

Non-current and deferred liabilities
Loans and borrowings 20 5,615,724 7,827,994
Deferred taxation 21 11,332,150 11,248,825

16,947,874 19,076,819
Current liabilities
Payables 22 68,257,072 63,481,932
Loans and borrowings 20 31,683,210 22,854,604
Derivative financial instruments 15 2,649,565 -
Tax liabilities 16 4,561,188 3,828,289

107,151,035 90,164,825
Total liabilities 124,098,909 109,241,644

TOTAL EQUITY AND LIABILITIES 388,229,689 339,117,754
The annexed notes form an integral part of the financial statements.
70
CONSOLIDATED STATEMENT OF PROFIT OR

LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2016
Note 2016 2015

RM RM

Revenue 23 623,459,650 546,865,573
Cost of sales (477,876,508) (429,570,240)

Gross profit 145,583,142 117,295,333
Other income 5,666,675 7,465,326

Administrative expenses (27,909,267) (24,366,736)
Selling expenses (25,794,806) (22,867,736)
Other expenses (2,728,720) (4,475,033)
Finance costs 24 (1,243,027) (968,432)
Profit before tax 25 93,573,997 72,082,722

Income tax expenses 16 (20,444,327) (14,875,732)

Profit for the financial year representing
total comprehensive income for the financial year 73,129,670 57,206,990

Profit attributable to:

Non-controlling interests (144,510) (395,523)

73,129,670 57,206,990
Total comprehensive income attributable to:

Non-controlling interests (144,510) (395,523)

73,129,670 57,206,990

Basic earnings per share attributable to owners
of the Company (sen) 26 40.71 32.00


71
CONSOLIDATED STATEMENT OF CHANGES

IN EQUITY FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2016
Attributable to owners of the Company

Note Non-distributable Distributable
Asset Total Non-
Share Share Revaluation Retained Shareholders’ Controlling Total
Capital Premium Reserves Profits Equity Interests Equity
RM RM RM RM RM RM RM

At 01 January 2015 60,000,000 1,432,852 30,208,459 99,001,729 190,643,040 10,852 190,653,892

Profit for the financial year - - - 57,602,513 57,602,513 (395,523) 57,206,990

Other comprehensive income

Depreciation transfer on land
and buildings - - (583,109) 583,109 - - -
Total comprehensive income/
(expenses) for the financial
year - - (583,109) 58,185,622 57,602,513 (395,523) 57,206,990

Contributions by and distributions to owners

Bonus issue 18 29,999,994 (1,432,852) - (28,567,142) - - -
Share issuance expense - - - (284,772) (284,772) - (284,772)
Dividends 27 - - - (17,700,000) (17,700,000) - (17,700,000)
Total contributions by and
distributions to owners 29,999,994 (1,432,852) - (46,551,914) (17,984,772) - (17,984,772)

Changes in ownership interest
in a subsidiary company

Additional interest in a subsidiary
company - - - (32,573) (32,573) 32,573 -
Total transactions with owners 29,999,994 (1,432,852) - (46,584,487) (18,017,345) 32,573 (17,984,772)

At 31 December 2015 89,999,994 - 29,625,350 110,602,864 230,228,208 (352,098) 229,876,110
72
CONSOLIDATED STATEMENT OF CHANGES

IN EQUITY FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2016
- continued

Asset Total Non-
Share Revaluation Retained Shareholders’ Controlling Total
Capital Reserves Profits Equity Interests Equity
RM RM RM RM RM RM

At 01 January 2016 89,999,994 29,625,350 110,602,864 230,228,208 (352,098) 229,876,110
Profit for the financial year - - 73,274,180 73,274,180 (144,510) 73,129,670

Other comprehensive income

Depreciation transfer on land and buildings - (582,720) 582,720 - - -

Total comprehensive income/
(expenses) for the financial year - (582,720) 73,856,900 73,274,180 (144,510) 73,129,670
Dividends, representing total contributions by
and distributions to owners 27 - - (39,600,000) (39,600,000) - (39,600,000)

Changes in ownership interest in
subsidiary companies
Subscription of shares by non-controling interests 28(a) - - - - 725,000 725,000
Dilution of interest in a subsidiary company - - 121,772 121,772 (121,772) -
Total changes in ownership interest in
subsidiary companies - - 121,772 121,772 603,228 725,000
Total transactions with owners - - (39,478,228) (39,478,228) 603,228 (38,875,000)

At 31 December 2016 89,999,994 29,042,630 144,981,536 264,024,160 106,620 264,130,780


73
CONSOLIDATED STATEMENT OF CASH FLOWS

Note 2016 2015

RM RM
CASH FLOWS FROM OPERATING ACTIVITIES

Profit before taxation 93,573,997 72,082,722
Adjustments for:
Amortisation of intangible asset 18,663 18,663
Bad debt written off - 89,705
Depreciation 6,946,575 6,738,017
Expenditure on increase of authorised capital - 38,000
Impairment loss on intangible asset - 4,253,228
Impairment loss on receivable - 106,500
Interest expenses 1,243,027 968,432
Inventories written down to net realisable value 39,287 71,842
Net fair value loss/(gain) on derivative financial instruments 2,649,565 (114,918)
Preliminary expenses written off 4,770 -
Property, plant and equipment written off 74,385 -
Gain on disposal of property, plant and equipment (221,470) (47,993)
Interest income (3,065,699) (1,806,065)
Reversal of impairment loss on receivable - (89,705)
Unrealised foreign exchange gain (308,123) (527,276)

Operating profit before working capital changes 100,954,977 81,781,152

(Increase)/decrease in inventories (7,294,596) 9,159,405
Increase in receivables (16,305,454) (12,111,994)
Increase in prepaid operating expenses and other assets (180,655) (2,468,406)
Increase in payables and other financial liabilities 5,276,487 19,991,143

Cash generated from operations 82,450,759 96,351,300

Income tax paid 16(a) (20,751,117) (13,749,326)
Interest paid (1,243,027) (1,176,722)
Income tax refunded 16(a) 335,380 337,885
Net cash from operating activities 60,791,995 81,763,137
74
CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2016 - continued
Note 2016 2015

RM RM
CASH FLOWS FROM INVESTING ACTIVITIES

Addition to biological asset (919,398) (3,018,629)
Expenditure on increase of authorised capital paid - (38,000)
Preliminary expenses paid (4,770) -
Purchase of property, plant and equipment (17,080,887) (10,069,495)
Interest received 3,073,570 1,617,007
Proceeds from disposal of property, plant and equipment 250,735 732,854

Net cash used in investing activities (14,680,750) (10,776,263)

CASH FLOWS FROM FINANCING ACTIVITIES

Changes in pledged short term deposits (85,342) (78,971)
Dividends paid 27 (39,600,000) (17,700,000)
Repayment of term loans (2,351,444) (2,444,891)
Drawdown of term loans - 1,688,792
Net changes in bankers’ acceptances 8,733,666 1,462,275
Proceeds from issuance of shares by subsidiary
companies to non-controlling interests 28(a) 200,000 -
Share issuance expense - (284,772)

Net cash used in financing activities (33,103,120) (17,357,567)

NET INCREASE IN CASH AND CASH EQUIVALENTS 13,008,125 53,629,307
EFFECT OF EXCHANGE RATE CHANGES

ON CASH AND CASH EQUIVALENTS 160,542 761,178

CASH AND CASH EQUIVALENTS AT
BEGINNING OF THE FINANCIAL YEAR 111,813,931 57,423,446

CASH AND CASH EQUIVALENTS AT
END OF THE FINANCIAL YEAR 28(c) 124,982,598 111,813,931


75
STATEMENT OF FINANCIAL POSITION

AT 31 DECEMBER 2016
Note 2016 2015

RM RM
ASSETS

Non-current assets
Property, plant and equipment 7 1,288 -
Investments in subsidiary companies 9 61,000,954 58,200,954

61,002,242 58,200,954

Current assets
Prepaid operating expenses and other assets 13 139,492 160,753
Amounts due by subsidiary companies 14 9,034,361 6,102,312
Tax asset 16 23,082 -
Deposits, cash and bank balances 17 25,282,941 30,150,930

34,479,876 36,413,995

TOTAL ASSETS 95,482,118 94,614,949

EQUITY AND LIABILITIES

Equity attributable to owners of the Company

Share capital 18 89,999,994 89,999,994
Reserves 19 5,391,984 4,553,715

Total equity 95,391,978 94,553,709
LIABILITIES

Current liabilities
Payables 22 90,140 34,719
Tax liability 16 - 26,521

Total liabilities 90,140 61,240

TOTAL EQUITY AND LIABILITIES 95,482,118 94,614,949


76
STATEMENT OF PROFIT OR LOSS AND

OTHER COMPREHENSIVE INCOME
Note 2016 2015

RM RM
Revenue 23 39,600,000 47,700,000

Other income 1,705,466 2,209,691
Administrative expenses (528,763) (440,739)
Finance cost 24 - (23,879)

Profit before tax 25 40,776,703 49,445,073

Income tax expense 16 (338,434) (259,260)

Profit for the financial year representing
total comprehensive income for
the financial year attributable to
owners of the Company 40,438,269 49,185,813


77
STATEMENT OF CHANGES IN EQUITY


Share Share Retained Total
Capital Premium Profits Equity
RM RM RM RM

At 01 January 2015 60,000,000 1,432,852 1,919,816 63,352,668

Profit for the financial year representing total
comprehensive income for the financial year - - 49,185,813 49,185,813

Bonus issue 29,999,994 (1,432,852) (28,567,142) -
Share issuance expense - - (284,772) (284,772)
Dividends 27 - - (17,700,000) (17,700,000)

Total transactions with owners 29,999,994 (1,432,852) (46,551,914) (17,984,772)

At 31 December 2015 89,999,994 - 4,553,715 94,553,709
At 01 January 2016 89,999,994 - 4,553,715 94,553,709

Profit for the financial year representing total
comprehensive income for the financial year - - 40,438,269 40,438,269

Dividends 27 - - (39,600,000) (39,600,000)

At 31 December 2016 89,999,994 - 5,391,984 95,391,978


78
STATEMENT OF CASH FLOWS

Note 2016 2015

RM RM
CASH FLOWS FROM OPERATING ACTIVITIES

Profit before taxation 40,776,703 49,445,073
Adjustments for:
Depreciation 79 -
Interest expense - 23,879
Dividend income (39,600,000) (47,700,000)
Gain on disposal of property, plant and equipment - (1)
Interest income (1,705,466) (1,679,836)
Reversal of impairment loss on investment in a subsidiary company - (529,554)

Operating loss before working capital changes (528,684) (440,439)

(Increase)/decrease in prepaid operating expenses
and other assets (686) 4,109
Increase in payables 55,421 6,164

Cash used in operations (473,949) (430,166)

Dividends received from subsidiary companies 39,600,000 47,700,000
Income tax paid 16(a) (388,037) (821,011)
Interest expense - (23,879)

Net cash from operating activities 38,738,014 46,424,944

CASH FLOWS FROM INVESTING ACTIVITIES

Incorporation of a subsidiary company 9(c) (60) -
Additional subscription of shares in
existing subsidiary companies 28(b) (2,799,940) -
Advances to subsidiary companies (42,537,226) (49,745,268)
Purchase of property,plant and equipment (1,367) -
Repayment to subsidiary companies - (379,272)
Advances from subsidiary companies - 193,767
Interest received 1,727,413 1,531,029
Proceeds from disposal of property, plant and equipment - 1
Repayment from subsidiary companies 39,605,177 50,100,169
Net cash (used in)/from investing activities (4,006,003) 1,700,426
CASH FLOWS FROM FINANCING ACTIVITIES

Dividends paid 27 (39,600,000) (17,700,000)
Share issuance expense - (284,772)

Net cash used in financing activities (39,600,000) (17,984,772)

NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS (4,867,989) 30,140,598

CASH AND CASH EQUIVALENTS AT BEGINNING OF THE FINANCIAL YEAR 30,150,930 10,332
CASH AND CASH EQUIVALENTS AT END OF THE FINANCIAL YEAR 28(c) 25,282,941 30,150,930


79
NOTES TO THE FINANCIAL STATEMENTS

- 31 DECEMBER 2016
1. GENERAL
The principal activity of the Company is that of investment holding. The principal activities of the subsidiary companies are as set out
in note 9.
The Company is a public limited liability company, incorporated and domiciled in Malaysia and listed on the Main Market of the Bursa
Malaysia Securities Berhad (‘Bursa Malaysia’).
The immediate and ultimate holding company is Assets Muar Sdn. Bhd., a company incorporated in Malaysia.
The registered office of the Company is at 67, 3rd Floor, Jalan Ali, 84000 Muar, Johor Darul Takzim, and the principal place of
business is at Plo 43, Kawasan Perindustrian Bukit Pasir, Jalan Raja, Mukim Sungai Raya, 84300 Bukit Pasir, Muar, Johor Darul
Takzim.
The Board has authorised the issuance of the financial statements on 27 March 2017.
2. BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS

The financial statements of the Group and of the Company have been prepared in accordance with Malaysian Financial Reporting
Standards (‘MFRSs’), International Financial Reporting Standards and the Companies Act, 1965 in Malaysia.
Estimates and judgements are evaluated by the management on an on-going basis and are based on historical experience and
other factors, including expectations of future events that are believed to be reasonable under the circumstances. The estimates
and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities are as
disclosed in note 6.
The financial statements of the Group and of the Company are prepared under the historical cost convention except as disclosed in
the accounting policies set out below.
The financial statements are presented in Ringgit Malaysia (‘RM’).
3. SIGNIFICANT ACCOUNTING POLICIES

The accounting policies set out below have been applied consistently to the periods presented in these financial statements, other
than disclosed in note 5.
a) Basis of consolidation, business combinations and subsidiary companies
i) Basis of consolidation

The consolidated financial statements comprise the financial statements of the Company and its subsidiary companies at the
end of the reporting period. The financial statements of the subsidiary companies used in the preparation of the consolidated
financial statements are prepared for the same reporting date as the Company. Consistent accounting policies are applied to
like transactions and events in similar circumstances.
All intra-group balances, income and expenses and unrealised gains and losses resulting from intra-group transactions and
dividends are eliminated in full.
Subsidiary companies are consolidated from the date of acquisition, being the date on which the Group obtains control, and
continue to be consolidated until the date that such control ceases.
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- 31 DECEMBER 2016 - Continued
3. SIGNIFICANT ACCOUNTING POLICIES - continued

a) Basis of consolidation, business combinations and subsidiary companies - continued
i) Basis of consolidation - continued

Losses and other comprehensive expenses within a subsidiary company are attributed to the non-controlling interest even if
that results in a deficit balance.
A change in the ownership interest of a subsidiary company, without a loss of control, is accounted for as an equity transaction.
If the Group losses control over a subsidiary company, it
- de-recognises the assets (including goodwill) and liabilities of the subsidiary company at their carrying amounts at the
date when control is lost;
- de-recognises the carrying amounts of any non-controlling interest;
- de-recognises the cumulative translation differences recorded in equity;
- recognises the fair value of the consideration received;
- recognises the fair value of any investment retained;
- recognises any surplus or deficit in profit or loss; and
- re-classifies the Group’s shares of components previously recognised in other comprehensive income to profit or loss or
retained profits, as appropriate.
ii) Business combinations

Business combinations are accounted for by applying the acquisition method. Identifiable assets acquired and liabilities
assumed in a business combination are measured initially at their fair values at the acquisition date. Acquisition-related costs
are recognised as expenses in the financial periods in which the costs are incurred and the services are received.
Any contingent consideration to be transferred by the acquirer will be recognised at fair value at the acquisition date.
Subsequent changes to the fair value of the contingent consideration which is deemed to be an asset or liability, will be
recognised in profit or loss.
The Group elects for each individual business combination, whether non-controlling interest in the acquiree (if any), that
are present ownership interests and entitle their holders to a proportionate share of net assets in the event of liquidation,
is recognised on the acquisition date at fair value, or at the non-controlling interest’s proportionate share of the acquiree’s
identifiable net assets. Other components of non-controlling interests are measured at their acquisition date fair value, unless
another measurement basis is required by another MFRS.
Any excess of the sum of the fair value of the consideration transferred in the business combination, the amount of
non-controlling interest in the acquiree (if any), and the fair value of the Group’s previously held equity interest in the acquiree
(if any), over the net fair value of the acquiree’s identifiable assets and liabilities is recorded as goodwill. The accounting policy
for goodwill is set out in note 3(f)(i). In instances where the latter amount exceeds the former, the excess is recognised as gain
on bargain purchase in profit or loss on the acquisition date.
81


a) Basis of consolidation, business combinations and subsidiary companies - continued
ii) Business combinations - continued

Business combinations involving entities under common control adopted before 01 January 2011
Business combinations involving entities under common control are accounted for by applying the pooling of interest method.
The assets and liabilities of the combining entities are reflected at their carrying amounts reported in the consolidated financial
statements of the controlling holding company. Any difference between the consideration paid and the share capital of the
“acquired” entity is reflected within the equity as merger reserve or merger deficit. Merger deficit is adjusted against suitable
reserves of the entity acquired to the extent that laws or statutes do not prohibit the use of such reserves.
As part of its transition of MFRSs, the Group elected not to restate those business combinations that occurred before the date
of transition to MFRSs, i.e. 01 January 2011.
iii) Subsidiary companies

A subsidiary company is an investee that is controlled by the Group. The Group controls an investee when it is exposed, or has
rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power
over the investee.

Thus, the Group controls an investee if, and only if, the Group has all of the following:

- power over the investee;
- exposure, or rights or variable returns from its involvement with the investee; and
- the ability to use its power over the investee to affect its returns.
The Group reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one
or more of the three elements of control listed above.
In the Company’s separate financial statements, investments in subsidiary companies are accounted for at cost less
impairment losses. On disposal of such investment, the difference between net disposal proceeds and its carrying amount
is recognised in profit or loss.
b) Transactions with non-controlling interests

Non-controlling interest represents the equity in subsidiary companies not attributable, directly or indirectly, to owners of the
Company.
Changes in the interest in a subsidiary company that do not result in a loss of control are accounted for as equity transactions. In
such circumstances, the carrying amounts of the controlling and non-controlling interests are adjusted to reflect the changes in their
relative interests in the subsidiary company. Any difference between the amount by which the non-controlling interest is adjusted and
the fair value of the consideration paid or received is recognised directly in equity and attributed to owners of the Company.
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c) Property, plant and equipment

All items of property, plant and equipment are initially recorded at cost. Subsequent to recognition, property, plant and equipment
(other than certain land and buildings) are measured at cost less accumulated depreciation and accumulated impairment losses, if
any. The cost includes the cost of replacing part of the property, plant and equipment and borrowing costs that are directly attributable
to the acquisition, construction or production of a qualifying property, plant and equipment. The accounting policy for borrowing costs
is set out in note 3(p). The cost of an item of property, plant and equipment is recognised as an asset if, and only if, it is probable that
future economic benefits associated with the item will flow to the Group and to the Company and the cost of the item can be measured
reliably.
Where significant parts of property, plant and equipment are required to be replaced in intervals, the Group and the Company
recognise such parts as individual assets with specific useful lives and depreciation respectively. Likewise, when a major inspection
is performed, its cost is recognised in the carrying amount of the plant and equipment as a replacement if the recognition criteria are
satisfied. All other repair and maintenance costs are recognised in profit or loss as incurred.
Certain land and buildings are measured at fair values less accumulated depreciation and impairment losses recognised after the
date of the revaluation. Valuations are performed with sufficient regularity (every five years or at shorter intervals whenever the fair
value of the revalued assets is expected to differ materially from the carrying value) to ensure that the carrying amount does not differ
materially from the fair value of the land and buildings at the end of the reporting period.
Any revaluation surplus is recognised in other comprehensive income and accumulated in equity under the asset revaluation reserve,
except to the extent that it reverses a revaluation decrease of the same asset previously recognised in profit or loss, in which case the
increase is recognised in profit or loss. A revaluation deficit is recognised in profit or loss, except to the extent that it offsets an existing
surplus on the same asset carried in the asset revaluation reserve.
Any accumulated depreciation as at the revaluation date is eliminated against the gross carrying amount of the asset and the net
amount is restated to the revalued amount of the asset. The revaluation surplus included in the asset revaluation reserve in respect
of an asset is transferred directly to retained profits on retirement or disposal of the asset.
The carrying amounts of property, plant and equipment are reviewed for impairment when events or changes in circumstances
indicate that the carrying amount may not be recoverable.

The residual values, useful lives and depreciation methods are reviewed at the end of each reporting period, and adjusted
prospectively, if appropriate.
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from
its use or disposal. Any gain or loss on de-recognition of the asset is included in profit or loss in the financial period the asset is
derecognised.
d) Depreciation

Freehold land is not amortised as it is deemed to have an infinite life.
Construction-in-progress is not depreciated as this asset is not yet ready for its intended use.
83


d) Depreciation - continued

Depreciation for all the other property, plant and equipment is calculated so as to write off the cost of the assets or their revalued
amounts to their residual values on a straight line basis over the estimated useful lives of the assets concerned.

The annual rates in use are as follows:

Freehold factory buildings 2%
Short leasehold land 57 to 60 years
Short leasehold factory buildings 2%
Plant, machinery and equipment 10% - 33%
Plantation infrastructure development expenditure 5%
Hostels, store, renovation and electrical installation 10% - 20%
Motor vehicles 20%
Other assets 5% - 20%
e) Biological asset

Biological asset is immature rubber wood trees. Immature plantation is stated at acquisition cost which includes costs incurred for
planting, fertilizer and maintenance and an allocation of other indirect costs based on planted hectares. It is measured at fair value
less costs to sell, with any changes therein recognised in profit or loss.
f) Intangible assets
i) Goodwill

Goodwill is initially measured at cost. Following initial recognition, goodwill is measured at cost less accumulated impairment
losses, if any.
For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to
each of the Group’s cash-generating units that are expected to benefit from the synergies of the combination, irrespective of
whether other assets or liabilities of the acquiree are assigned to those units.
The cash-generating unit to which goodwill has been allocated is tested for impairment annually and whenever there is an
indication that the cash-generating unit may be impaired. Impairment is determined for goodwill by assessing the recoverable
amount of each cash-generating unit (or group of cash-generating units) to which the goodwill relates. Where the recoverable
amount of the cash-generating unit is less than the carrying amount, an impairment loss is recognised in profit or loss.
Impairment losses recognised for goodwill are not reversed in subsequent financial periods.
Where goodwill forms part of a cash-generating unit and part of the operation within that cash-generating unit is disposed of,
the goodwill associated with the operation disposed of is included in the carrying amount of the operation when determining
the gain or loss on disposal of the operation. Goodwill disposed of in this circumstance is measured based on the relative fair
values of the operations disposed of and the portion of the cash-generating unit retained.
84


f) Intangible assets - continued

ii) Other intangible assets

Intangible assets acquired are measured initially at cost. Following initial acquisition, intangible assets are carried at cost
less accumulated amortisation and accumulated impairment losses, if any. Internally generated intangible assets, excluding
capitalised development costs, are not capitalised and expenditure is reflected in profit or loss in the reporting period in which
the expenditure is incurred.
The useful lives of intangible assets are assessed as either finite or indefinite.
Intangible assets with finite useful lives are amortised over the estimated useful lives and assessed for impairment whenever
there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method
are reviewed at least at the end of each financial period. Changes in the expected useful life or the expected pattern of
consumption of future economic benefits embodied in the asset is accounted for by changing the amortisation period or
method, as appropriate, and are treated as changes in accounting estimates.
Intangible assets with indefinite useful lives or not yet available for use are tested for impairment annually, or more frequently if
the events and circumstances indicate that the carrying value may be impaired either individually or at the cash-generating unit
level. Such intangible assets are not amortised. The useful life of an intangible asset with an indefinite useful life is reviewed
annually to determine whether the useful life assessment continues to be supportable. If not, the change in useful life from
indefinite to finite is made on a prospective basis.
Gains or losses arising from de-recognition of an intangible asset are measured as the difference between the net disposal
proceeds and the carrying amount of the asset and are recognised in profit or loss when the asset is derecognised.
Other intangible assets consist of:
- Right of use over permanent reserve forest land (‘ROU”).

ROU acquired is measured initially at cost. Following initial acquisition, ROU is measured at cost less accumulated
depreciation and impairment losses, if any. The ROU is amortised over its lease term of 30 years.
- Computer software

Computer software acquired separately is amortised on a straight line basis over its finite useful life of five years.
g) Inventories

Inventories are stated at the lower of cost and net realisable value. Costs incurred in bringing the inventories to their present location
and condition are accounted for as follows:

- Raw materials and consumables: purchase cost on a first-in first-out basis and incidental cost in bringing the raw materials and
consumables to their intended location and condition.
- Finished goods and work-in-progress: cost of direct materials and labour and a proportion of manufacturing overheads based
on normal operating capacity. These costs are assigned on a first-in first-out basis.
85


g) Inventories - continued
Where necessary, allowance is provided for damaged, obsolete and slow moving items to adjust the carrying amount of inventories
to the lower of cost and net realisable value.
Net realisable value is the estimate of the selling price in the ordinary course of business, less the estimated cost of completion and
the estimated costs of necessary to make the sale.
h) Financial instruments
i) Financial assets

Initial recognition and measurement

Financial assets are recognised when, and only when, the Group and the Company become a party to the contractual
provisions of the financial instrument. The Group and the Company determine the classification of their financial assets at initial
recognition.
When financial assets are recognised initially, they are measured at fair value, plus, in the case of financial assets not at fair
value through profit or loss, directly attributable transaction costs. The Group and the Company do not have any held-to-
maturity investments and available-for-sale financial assets.
Subsequent measurement
The subsequent measurement of financial assets depends on their classification as follows:
- Financial assets at fair value through profit or loss

Financial assets at fair value through profit or loss include financial assets held for trading. Financial assets are
classified as held for trading if they are acquired for the purpose of selling or repurchasing in the near term. This category
includes derivative financial instruments entered into by the Group and the Company that are not designated as hedging
instruments in hedge relationships as defined by MFRS 139. Derivatives, including separated embedded derivatives
are also classified as held for trading unless they are designated as effective hedging instruments.
Subsequent to initial recognition, financial assets at fair value through profit or loss are measured at fair value. Any gains
or losses arising from changes in fair value of the financial assets are recognised in profit or loss. Net gains or net losses
on financial assets at fair value through profit or loss include exchange differences, interest and dividend income.
Derivatives embedded in host contracts are accounted for as separate derivatives and recorded at fair value if their
economic characteristics and risks are not closely related to those of the host contracts and the host contracts are not
measured at fair value with changes in fair value recognised in profit or loss. These embedded derivatives are measured
at fair value with changes in fair value recognised in profit or loss. Reassessment only occurs if there is a change in the
terms of the contract that significantly modifies the cash flows that would otherwise be required.
- Loans and receivables

Non-derivative financial assets with fixed or determinable payments that are not quoted in an active market are classified
as loans and receivables. Subsequent to initial recognition, loans and receivables are measured at amortised cost using
the effective interest method, less impairment. Gains and losses are recognised in profit or loss when the loans and
receivables are derecognised or impaired, and through the amortisation process.
86


h) Financial instruments - continued
i) Financial assets - continued
De-recognition
A financial asset is de-recognised where the contractual right to receive cash flows from the asset has expired. On
de-recognition of a financial asset in its entirety, the difference between the carrying amount and the sum of the consideration
received and any cumulative gain or loss that had been recognised in other comprehensive income is recognised in profit or
loss.
Regular way purchase or sale of a financial asset
All regular way purchases and sales of financial assets are recognised or derecognised on the trade date i.e., the date that
the Group and the Company commit to purchase or sell the asset. Regular way purchases or sales are purchases or sales
of financial assets that require delivery of assets within the period generally established by regulation or convention in the
marketplace concerned.
ii) Financial liabilities
Initial recognition and measurement
Financial liabilities are recognised when, and only when, the Group and the Company become a party to the contractual
provisions of the financial instrument. The Group and the Company determine the classification of their financial liabilities at
initial recognition.
All financial liabilities are recognised initially at fair value plus in the case of financial liabilities not at fair value through profit or
loss, directly attributable transaction costs.
Subsequent measurement
The measurement of financial liabilities depends on their classification as follows:
- Financial liabilities at fair value through profit or loss

Financial liabilities at fair value through profit or loss include financial liabilities held for trading. Financial liabilities
are classified as held for trading if they are acquired for the purpose of selling in the near term. This category includes
derivative financial instruments entered into by the Group and the Company that are not designated as hedging
instruments in hedge relationships. Separated embedded derivatives are also classified as held for trading unless they
are designated as effective hedging instruments.
Subsequent to initial recognition, financial liabilities at fair value through profit or loss are measured at fair value. Any
gains or losses arising from changes in fair value of the financial liabilities are recognised in profit or loss.
The Group and the Company have not designated any financial liabilities upon initial recognition at fair value through
profit or loss.
- Financial liabilities measured at amortised cost

After initial recognition, financial liabilities that are not carried at fair value through profit or loss are subsequently
measured at amortised cost using the effective interest method. Gains or losses are recognised in profit or loss when
the liabilities are derecognised, and through the amortisation process.
87

h) Financial instruments - continued
ii) Financial liabilities - continued
De-recognition

A financial liability is de-recognised when the obligation under the liability is discharged or cancelled or expires. When an
existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an
existing liability are substantially modified, such an exchange or modification is treated as a de-recognition of the original
liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in profit or loss.
Offsetting of financial instruments

Financial assets and financial liabilities are offset and the net amount is presented in the statements of financial position, when,
and only when, there is a currently enforceable legal right to set off the recognised amounts and there is an intention to settle
on a net basis, or to realise the assets and settle the liabilities simultaneously.
i) Leases
The determination of whether an arrangement is, or contains a lease is based on the substance of the arrangement at the inception
date, whether fulfillment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a
right to use the asset, even if that right is not explicitly specified in an arrangement.
i) As lessee
Finance leases which transfer to the Group substantially all the risks and rewards incidental to ownership of the leased item,
are capitalised at the inception of the lease at the fair value of the leased asset or, if lower, at the present value of the minimum
lease payments. Any initial direct costs are also added to the amount capitalised. Lease payments are apportioned between
the finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance
of the liability. Finance charges are charged to profit or loss. Contingent rents, if any, are charged as expenses in the financial
periods in which they are incurred.
Capitalised leased assets are depreciated over the shorter of the estimated useful life of the asset and the lease term, if there
is no reasonable certainty that the Group will obtain ownership by the end of the lease term.
Operating lease payments are recognised as an expense in profit or loss on a straight-line basis over the lease term. The
aggregate benefit of incentives provided by the lessor is recognised as a reduction of rental expense over the lease term on a
straight-line basis.
ii) As lessor

Leases where the Group retains substantially all the risks and rewards of ownership of the asset are classified as operating
leases. Initial direct costs incurred in negotiating an operating lease are added to the carrying amount of the leased asset and
recognised over the term on the same bases as rental income. Contingent rents are recognised as revenue in the financial
periods in which they are earned.
88

j) Financial guarantee contract
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 terms of a debt instrument.
Financial guarantees are recognised initially as a liability at fair value, adjusted for transaction costs that are directly attributable to
the issuance of the guarantee. Subsequent to initial recognition, financial guarantees are recognised as income in profit or loss over
the period of the guarantee. If it is probable that the liability will be higher than the amount initially recognised less amortisation, the
liability is recorded at the higher amount with the difference charged to profit or loss.
k) Non-current assets held for sale and discontinued operations

Non-current assets and disposal groups classified as held for sale are measured at the lower of their carrying amount and fair value
less costs to sell. Non-current assets and disposal groups are classified as held for sale if their carrying amounts will be recovered
principally through a sale transaction rather than through continuing use. A component of the Group is classified as a ‘discontinued
operation’ when the criteria to be classified as held for sale have been met or it has been disposed of and such a component
represents a separate major line of business or geographical area of operations or is part of a single coordinated plan to dispose of
a separate major line of business or geographical area of operations.
Property, plant and equipment and intangible assets once classified as held for sale are not depreciated or amortised.
l) Share capital and share issuance expenses

Proceeds from issuance of ordinary shares are recognised as share capital in equity. Incremental costs directly attributable to the
issuance of ordinary shares are deducted against share capital.
m) Provisions

Provisions are recognised when the Group and the Company have a present obligation (legal or constructive) as a result of a past
event and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and the
amount of the obligation can be estimated reliably.
Provisions are reviewed at the end of each reporting period and adjusted to reflect the current best estimate. If it is no longer probable
that an outflow of economic resources will be required to settle the obligation, the provision is reversed. If the effect of the time value
of money is material, provisions are discounted using a current pre-tax rate that reflects, where appropriate, the risk specific to the
liability. Where discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.
n) Revenue recognition

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the Company and the
revenue can be reliably measured, regardless of when the payment is made. Revenue is measured at the fair value of consideration
received or receivable, taking into account contractually defined terms of payment and excluding taxes or duty. The Group and the
Company assess their revenue arrangements to determine if they are acting as principal or agent.
89


n) Revenue recognition - continued
The following specific recognition criteria must also be met before revenue is recognised:
i) Sale of goods

Revenue from the sale of goods is recognised upon the transfer of significant risk and rewards of ownership of the goods to
the customer, usually on delivery of goods. Revenue is not recognised to the extent where there are significant uncertainties
regarding recovery of the consideration due, associated costs or the possible return of goods.
ii) Services
Revenue from service rendered is recognised in profit or loss based on the value of work performed and invoiced to customers.
iii) Interest income

Interest income is recognised on accrual basis using the effective interest method.
iv) Dividend income

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

Rental income is recognised on a straight-line basis over the term of the lease.
o) Currency translations
i) Functional and presentation currency

Items included in the financial statements of each entity in the Group are measured using the currency of the primary economic
environment in which the entity operates (the functional currency). These financial statements are presented in RM, which is
the Group’s and the Company’s functional currency.
ii) Transactions and balances

Transactions in foreign currencies are measured in the functional currency of the Group and are recorded on initial
recognition in the functional currency at exchange rates approximating those ruling at the transaction dates. Monetary assets
and liabilities denominated in foreign currencies are translated at the rate of exchange ruling at the end of the reporting period.
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates
as at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using
the exchange rates at the date when the fair value was measured.
Exchange differences arising on the settlement of monetary items or on translation of monetary items at the end of the
reporting period are recognised in profit or loss.
90


p) Borrowing costs
Borrowing costs are capitalised as part of the cost of a qualifying asset if they are directly attributable to the acquisition, construction
or production of that asset. Capitalisation of borrowing costs commences when the activities to prepare the asset for its intended use
or sale are in progress and the expenditures and borrowing costs are incurred. Borrowing costs are capitalised until the assets are
substantially completed for their intended use or sale. All other borrowing costs are recognised in profit or loss in the financial period
they are incurred. Borrowing costs consist of interest and other costs that the Group and the Company incurred in connection with the
borrowing of funds.
q) Employee benefits
i) Short term benefits

Wages, salaries, bonuses and social security contributions are recognised as an expense in the financial period in which the
associated services are rendered by employees. Short term accumulating compensated absences such as paid annual leave
are recognised when services are rendered by employees that increase their entitlement to future compensated absence.
Short term non-accumulating compensated absences such as sick leaves are recognised when the absences occur.
ii) Post-employment benefits

The Group contributes to the Employees Provident Fund, the national defined contribution plan. Such contributions are charged
to profit or loss in the financial period to which they relate. Once the contributions have been paid, the Group has no further
payment obligations.
r) Impairment of non-financial assets
The Group and the Company assess at the end of each reporting period whether there is an indication that an asset may be impaired.
If any indication exists, or when an annual impairment testing for an asset is required, the Group and the Company make an estimate
of the asset’s recoverable amount.
An asset’s recoverable amount is the higher of an asset’s or cash-generating unit’s fair value less costs of disposal and its value in use
and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from
other assets or groups of assets. Where the carrying amount of an asset or cash-generating unit exceeds its recoverable amount, the
asset is considered impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash flows
expected to be generated by the asset are discounted to their present value using a pre-tax discount rate that reflects current market
assessments of the time value of money and the risks specific to the asset. In determining fair value less costs of disposal, recent
market transactions are taken into account, if available. If no such transactions can be identified, an appropriate valuation model is
used.
The Group and the Company base their impairment calculation on detailed budgets and forecast calculations which are prepared
separately for each of the Group’s and of the Company’s cash-generating units to which the individual assets are allocated.
These budgets and forecast calculations are generally covering a period of five years. For longer periods, a long-term growth rate is
calculated and applied to project future cash flows after the fifth year.
Impairment losses of continuing operations are recognised in profit or loss, except for assets that are previously revalued where the
revaluation was taken to other comprehensive income. In this case, the impairment is also recognised in other comprehensive income
up to the amount of any previous revaluation.
91


r) Impairment of non-financial assets - continued
For assets excluding goodwill, an assessment is made at the end of each reporting period as to determine whether there is any
indication that previously recognised impairment losses may no longer exist or may have decreased. If such indication exists, the
Group and the Company estimate the asset’s or cash-generating unit’s recoverable amount. A previously recognised impairment
loss is reversed only if there has been a change in the estimates used to determine the asset’s recoverable amount since the last
impairment loss was recognised. If that is the case, the carrying amount of the asset is increased to its recoverable amount. That
increase cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been
recognised for the asset previously. Such reversal is recognised in profit or loss unless the asset is measured at revalued amount, in
which case the reversal is treated as a revaluation increase.
s) Income taxes

i) Current income tax

Current income tax assets and liabilities for the current and prior reporting periods are measured at the amount expected to be
recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are
enacted or substantively enacted at the end of the reporting period.
Current income taxes are recognised in profit or loss except to the extent that the tax relates to items recognised outside profit
or loss, either in other comprehensive income or directly in equity. Management periodically evaluates positions taken in the
tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions
where appropriate.
ii) Deferred taxation

Deferred tax is provided using the liability method on temporary differences at the end of the reporting period between the tax
bases of assets and liabilities and their carrying amounts for financial reporting purposes.

Deferred tax liabilities are recognised for all temporary differences, except:

- where the deferred tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that
is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit
or loss; and

- in respect of taxable temporary differences associated with investments in subsidiary companies, associates and
interests in joint ventures, where the timing of the reversal of the temporary differences can be controlled and it is
probable that the temporary differences will not reverse in the foreseeable future.
Deferred tax assets are recognised for all deductible temporary differences, carry forward of unused tax credits and unused tax
losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences,
and the carry forward of unused tax credits and unused tax losses can be utilised except:
- where the deferred tax relating to the deductible temporary difference arises from the initial recognition of an asset
or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the
accounting profit nor taxable profit or loss; and
- in respect of deductible temporary differences associated with investments in subsidiary companies, associates and
interests in joint ventures, deferred tax assets are recognised only to the extent that it is probable that the temporary
differences will reverse in the foreseeable future and taxable profit will be available against which the temporary
differences can be utilised.
92


s) Income taxes - continued
ii) Deferred taxation - continued
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it
is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised.
Unrecognised deferred tax assets are reassessed at the end of each reporting period and are recognised to the extent that it
has become probable that future taxable profit will allow the deferred tax asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the financial year when the asset
is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the
end of each reporting period.
Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss. Deferred tax items are
recognised in correlation to the underlying transaction either in other comprehensive income or directly in equity and deferred
tax arising from a business combination is adjusted against goodwill on acquisition.
t) Impairment of financial assets

The Group and the Company assess at each reporting period whether there is any objective evidence that a financial asset is
impaired.
i) Financial assets carried at amortised cost

For financial assets carried at amortised cost, the Group and the Company first assess whether objective evidence of
impairment exists individually for financial assets that are individually significant, or collectively for financial assets that are
not individually significant. If the Group and the Company determine that no objective evidence of impairment exists for an
individually assessed financial asset, whether significant or not, it includes the asset in a group of financial assets with similar
credit risk characteristics and collectively assesses them for impairment. Assets that are individually assessed for impairment
and for which an impairment loss is, or continues to be recognised are not included in a collective assessment of impairment.
If there is objective evidence that an impairment loss on financial assets carried at amortised cost has been incurred, the
amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated
future cash flows discounted at the financial asset’s original effective interest rate. If a loan has a variable interest rate, the
discount rate for measuring any impairment loss is the current effective interest rate. The carrying amount of the asset is
reduced through the use of an allowance account. The impairment loss is recognised in profit or loss.
When the asset becomes uncollectible, the carrying amount of impaired financial assets is reduced directly or if an amount was
charged to the allowance account, the amounts charged to the allowance account are written off against the carrying value of
the financial asset.
To determine whether there is objective evidence that an impairment loss on financial assets has been incurred, the Group and
the Company consider factors such as the probability of insolvency or significant financial difficulties of the debtor and default
or significant delay in payments.
If in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event
occurring after the impairment was recognised, the previously recognised impairment loss is reversed to the extent that the
carrying amount of the asset does not exceed its amortised cost at the reversal date. The amount of reversal is recognised in
profit or loss.
93


t) Impairment of financial assets - continued
ii) Financial assets carried at cost

If there is objective evidence (such as significant adverse changes in the business environment where the issuer operates,
probability of insolvency or significant financial difficulties of the issuer) that an impairment loss on financial assets carried at
cost has been incurred, the amount of the loss is measured as the difference between the 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. Such
impairment losses are not reversed in subsequent periods.
u) Segment reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the management of the Group who
regularly reviews the segment results in order to allocate resources to the segments and to assess the segment performance.
v) Contingencies

A contingent liability is:

i) a possible obligation that arises from past events and whose existence will be confirmed only by the occurrence or
non-occurrence of one or more uncertain future events not wholly within the control of the Group and of the Company; or
ii) a present obligation that arises from past events but is not recognised because:
- it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation; or

- the amount of the obligation cannot be measured with sufficient reliability.
A contingent asset is a possible asset that arises from past events and whose existence will be confirmed only by the occurrence or
non-occurrence of one or more uncertain future events not wholly within the control of the Group and of the Company.
Contingent liabilities and assets are not recognised on the statements of financial position of the Group and of the Company, except
for contingent liabilities assumed in a business combination that are present obligations and which the fair values can be reliably
determined.
w) Related parties
A related party is defined as follows:
i) A person or a close member of that person’s family is related to the Group and the Company if that person:

- has control or joint control over the Company;

- has significant influence over the Company; and

- is a member of the key management personnel of the Group or of the Company or of a parent of the Company.
94


w) Related parties - continued

A related party is defined as follows: -continued
ii) An entity is related to the Group and the Company if any one of the following conditions applies:
- the entity and the Company are members of the same group (which means that each parent, subsidiary company and
fellow subsidiary company is related to the others);

- one entity is an associate or joint venture of the other entity (or an associate or joint venture of a member of a group of
which the other entity is a member);

- both entities are joint ventures of the same third party;

- one entity is a joint venture of a third entity and the other entity is an associate of the third party;

- the entity is a post-employment benefit plan for the benefit of employees of either the Company or an entity related to the
Company. If the Company is itself such a plan, the sponsoring employers are also related to the Company;

- the entity is controlled or jointly controlled by a person identified in (i); and

- a person identified in (i) has significant influence over the entity or is a member of the key management personnel of the
entity (or of a parent of the entity).
x) Fair value measurements

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market
participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset
or transfer the liability takes place either in the principal market for the asset or liability or in the absence of a principal market, in the
most advantageous market for the asset or liability. The principal or the most advantageous market must be accessible by the Group
and the Company.
The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset
or liability, assuming that market participants act in their economic best interest.
The Group and the Company use valuation techniques that are appropriate in the circumstances and for which sufficient data are
available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value
hierarchy based on the lowest level input that is significant to the fair value measurement as a whole.
For assets and liabilities that are recognised in the financial statements on a recurring basis, the Group and the Company determine
whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest level input that
is significant to the fair value measurement as a whole) at the end of the reporting period.
y) Cash and cash equivalents

Cash and cash equivalents comprise cash at bank and on hand, demand deposits, and short term, highly liquid investments that are
readily convertible to known amount of cash and which are subject to an insignificant risk of changes in value. These also include
bank overdrafts that form an integral part of the Group’s and of the Company’s cash management.
95

4. NEW AND REVISED MFRSs, AMENDMENTS TO MFRSs AND IC INTERPRETATION NOT ADOPTED

a) MFRSs, Amendments to MFRSs and IC Interpretation that are not yet effective and have not been early adopted by the Group and
the Company:

For financial period
beginning on or after

MFRS 9 Financial Instruments (IFRS 9 As 01 January 2018
Issued By IASB In July 2014)

MFRS 15 Revenue From Contracts With Customers 01 January 2018

MFRS 15 Clarifications To MFRS 15 01 January 2018

MFRS 16 Leases 01 January 2019

Amendments to MFRS 107 Disclosure Initiative 01 January 2017

Amendments to MFRS 112 Recognition Of Deferred Tax Assets 01 January 2017
For Unrealised Losses

IC Interpretation 22 Foreign Currency Transactions 01 January 2018
And Advance Consideration
The initial adoption of the standards or amendments is not expected to have any significant impact on the financial performance or
position of the Group or of the Company except for those disclosed as follows:
i) MFRS 9 Financial Instruments

MFRS 9 replaces the guidance in MFRS139, Financial Instruments - Recognition and Measurement on the classification and
measurement of financial assets. Upon adoption of MFRS 9, financial assets will be measured at either fair value or amortised
cost. The impairment requirements in MFRS 9 are based on an expected credit loss model and replace the MFRS 139 incurred
loss model. Adopting the expected credit losses requirements will require the Group and the Company to make changes to
their current systems and processes.
The adoption of MFRS 9 will result in a change in accounting policy. The Group and the Company are currently assessing the
financial impact of adopting MFRS 9.
ii) MFRS 15 Revenue from Contracts with Customers

MFRS 15 establishes a five-step model that will apply to revenue arising from contracts with customers. Under MFRS 15,
revenue is recognised at an amount that reflects the consideration which an entity expects to be entitled in exchange for
transferring goods or services to a customer. The principles in MFRS 15 provide a more structured approach to measuring and
recognising revenue when the promised goods and services are transferred to the customer i.e. when performance obligations
are satisfied.
Key issues for the Group include identifying performance obligations, accounting for contract modifications, applying the
constraint to variable consideration, evaluating significant financing components, measuring progress toward satisfaction of a
performance obligation, recognising contract cost assets and addressing disclosure requirements.
Either a full or modified retrospective application is required for annual financial periods beginning on or after 01 January 2018
with early adoption permitted. The Group is currently assessing the impact of MFRS 15 and plans to adopt the new standard
on the required effective date.
96

4. NEW AND REVISED MFRSs, AMENDMENTS TO MFRSs AND IC INTERPRETATION NOT ADOPTED - continued

a) MFRSs, Amendments to MFRSs and IC Interpretation that are not yet effective and have not been early adopted by the Group and
the Company:- continued
The initial adoption of the standards or amendments is not expected to have any significant impact on the financial performance or
position of the Group or of the Company except for those disclosed as follows: - continued

iii) MFRS 16 Leases

MFRS 16 requires lessees to recognise most leases on statement of financial position to reflect the rights to use the leased
assets and the associated obligations for lease payments as well as the corresponding interest expense and depreciation
charges. The standard includes two recognition exemptions for lessees - leases of ‘low value’ assets and short-term leases.
The Group is currently assessing the financial impact of adopting MFRS 16.
b) Amendments to MFRSs that are not yet effective and not relevant to the Group and the Company:
For financial period

beginning on or after

Amendments to MFRS 2 Classification And Measurement Of 01 January 2018
Share-based Payment Transactions

Amendments to MFRS 4 Applying MFRS 9 Financial Instruments 01 January 2018
With MFRS 4 Insurance Contracts
Amendments to MFRS 10 Sale Or Contribution Of Assets Between Deferred

And MFRS 128 An Investor And Its Associate Or Joint Venture

Amendments to MFRS 140 Transfers Of Investment Property 01 January 2018
Annual Improvements to MFRSs 2014-2016 Cycle
Amendments to MFRS 1 First-Time Adoption Of MFRS 01 January 2018

Amendments to MFRS 12 Disclosure Of Interest In Other Entities 01 January 2017

Amendments to MFRS 128 Investments In Associates And 01 January 2018
Joint Ventures
5. CHANGES IN ACCOUNTING POLICIES

The accounting policies adopted are consistent with those of the previous financial reporting period except in the current reporting
period, the Group and the Company have adopted all the new and revised standards which are effective for annual financial periods
beginning on or after 01 January 2016.
The Group had early adopted MFRS 141 Agriculture: Bearer Plants and Amendments to MFRS 116 Property, Plant and Equipment in
last reporting period due to the Group had carried out agricultural activity during the last reporting period.
The adoption of these standards did not have any significant effect on the financial performance or position of the Group and of the
Company.

97

6. SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGEMENTS

The preparation of the financial statements in conformity with MFRSs 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
financial period in which the estimates are revised and in any future financial 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 as follows:
a) Inventories valuation and written down

Reviews are made periodically by management on damaged, obsolete and slow-moving inventories. These reviews require
judgement and estimates. Possible changes in these estimates could result in revisions to the valuations and written down of
inventories. The carrying amount of the Group’s inventories at the end of the reporting period is disclosed in note 11.
b) Impairment of loans and receivables

The Group and the Company assess at the end of each reporting period whether there is any objective evidence that a financial asset
is impaired. To determine whether there is objective evidence of impairment, the Group and the Company consider factors such as
the probability of insolvency or significant financial difficulties of the debtor and default or significant delay in payments.
Where there is objective evidence of impairment, the amount and timing of future cash flows are estimated based on historical loss
experience for assets with similar credit risk characteristics. The net carrying amount of the Group’s and the Company’s loans and
receivables at the end of the reporting period is disclosed in note 12 and 14.
c) Revaluation of property, plant and equipment

The Group carries its land and buildings at fair value, with changes in fair value being recognised in other comprehensive income.
The Group engaged independent professional valuers to assess the fair value during 2014. The fair value of land and buildings is
determined by using sales comparison approach.
Information on the fair value and valuation techniques used to determine the fair value of the land and buildings is disclosed in note
31.
At the end of the reporting period, management is of the view that there is no significant change in the fair value of land and buildings
of the Group. The net carrying amounts of the land and buildings are approximate their fair values.
The net carrying amount of the Group’s land and buildings at the end of the reporting period is disclosed in note 7.
98

6. SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGEMENTS - continued

d) Depreciation of property, plant and equipment

The cost of property, plant and equipment is depreciated on a straight line basis over the assets’ useful lives. The useful lives of these
assets are estimated by management and are disclosed in note 3(d). These are common life expectancies applied in this industry.
Changes in the expected level of usage and technological developments could impact the economic useful lives and the residual
values of these assets and therefore future depreciation charges could be revised.
e) Biological asset

Biological asset comprises pre-cropping expenditure incurred for rubber wood trees from planting to the point of maturity.
The agricultural produces of the rubber wood trees are latex and rubber wood trees. Thus, the rubber wood trees are recognised as
biological asset.
At the end of the reporting period, management is of the view that the cost incurred is approximate to the fair value of the biological
asset based on the following:
i) little biological transformation has taken place since initial cost incurrence in 2015; and

ii) the impact of the biological transformation on price is not expected to be material as management estimates the rubber trees
plantation cycle is about 20 years.
f) Income taxes

Judgement is required in determining the capital and export allowances and deductibility of certain expenses when estimating the
provision for income taxes. There are many transactions and calculations for which the ultimate tax determination is uncertain during
the ordinary course of business. The Group recognises liabilities for anticipated tax based on estimates of whether additional taxes
will be due. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences
will impact the income tax and deferred tax in the periods in which the outcome is known.
g) Fair value of financial instruments

Where the fair values of financial instruments recorded on the statements of financial position cannot be derived from active markets,
they are determined using valuation techniques including the discounted cash flow model. The inputs to this model are derived from
observable market data where possible, but where this is not feasible, a degree of judgment is required in establishing fair values.
The judgments include considerations of liquidity and model inputs regarding the future financial performance of the investee, its risk
profile, and economic assumptions regarding the industry and geographical jurisdiction in which the investee operates. Changes in
assumptions about these factors could affect the reported fair value of financial instruments. The valuation of financial instruments is
described in more detail in note 31.
99

7. PROPERTY, PLANT AND EQUIPMENT
Group

Plant, Plantation
machinery infrastructure
Land and Construction and Motor development Other
buildings* -in-progress equipment vehicles expenditure assets# Total

Cost or valuation

At 01 January 2015 102,558,241 1,295,720 41,177,253 7,089,506 744,800 3,493,574 156,359,094

Additions 1,713,525 2,795,517 3,539,245 975,712 922,955 330,831 10,277,785
Disposals (865,469) - (687,380) (804,093) - (1,235) (2,358,177)
Write-offs (10,500) - (217,629) - - - (228,129)
Reclassification 398,959 (398,959) - - - - -

At 31 December 2015/
01 January 2016 103,794,756 3,692,278 43,811,489 7,261,125 1,667,755 3,823,170 164,050,573

Additions 6,306,330 3,771,793 4,231,705 2,182,717 117,295 471,047 17,080,887
Disposals (12,450) - (647,885) (402,266) - - (1,062,601)
Write-offs - - (927,644) - - (4,479) (932,123)

At 31 December 2016 110,088,636 7,464,071 46,467,665 9,041,576 1,785,050 4,289,738 179,136,736

Accumulated depreciation


At 01 January 2015 11,667,030 - 28,799,156 4,023,018 - 2,720,749 47,209,953

Depreciation charge for
the financial year 2,035,783 - 3,492,962 933,207 83,388 192,677 6,738,017
Disposals (447,146) - (599,438) (626,598) - (134) (1,673,316)
Write-offs (10,500) - (217,629) - - - (228,129)

01 January 2016 13,245,167 - 31,475,051 4,329,627 83,388 2,913,292 52,046,525

Depreciation charge for
the financial year 2,011,255 - 3,440,120 1,153,497 89,252 252,451 6,946,575
Disposals (12,450) - (618,620) (402,266) - - (1,033,336)
Write-offs - - (856,319) - - (1,419) (857,738)

At 31 December 2016 15,243,972 - 33,440,232 5,080,858 172,640 3,164,324 57,102,026

Net carrying amounts

At 31 December 2015 90,549,589 3,692,278 12,336,438 2,931,498 1,584,367 909,878 112,004,048

At 31 December 2016 94,844,664 7,464,071 13,027,433 3,960,718 1,612,410 1,125,414 122,034,710

# Other assets comprise computers, furniture, fittings, office equipment and signboard.
100

7.
PROPERTY, PLANT AND EQUIPMENT - continued

Group Hostels,
store,
Short renovation
Freehold Short leasehold and
Freehold factory Freehold leasehold factory electrical
*Land and buildings land buildings building land buildings installation Total
Cost or valuation

At 01 January 2015 17,399,555 20,209,989 - 17,500,682 42,485,850 4,962,165 102,558,241

Additions 896,519 77,723 - - 101,218 638,065 1,713,525
Disposal - - - - - (865,469) (865,469)
Write-off - - - - - (10,500) (10,500)
Reclassification - - 398,959 - - - 398,959

01 January 2016 18,296,074 20,287,712 398,959 17,500,682 42,587,068 4,724,261 103,794,756

Additions - 228,783 - 1,766,047 4,013,995 297,505 6,306,330
Disposal - - - - - (12,450) (12,450)

At 31 December 2016 18,296,074 20,516,495 398,959 19,266,729 46,601,063 5,009,316 110,088,636


At 01 January 2015 - 1,472,630 - 1,275,454 6,926,861 1,992,085 11,667,030
Depreciation charge for the
financial year - 398,924 - 359,689 976,274 300,896 2,035,783
Disposal - - - - - (447,146) (447,146)
Write-off - - - - - (10,500) (10,500)

01 January 2016 - 1,871,554 - 1,635,143 7,903,135 1,835,335 13,245,167
Depreciation charge for the
financial year - 400,484 7,979 388,407 1,043,168 171,217 2,011,255
Disposal - - - - - (12,450) (12,450)

At 31 December 2016 - 2,272,038 7,979 2,023,550 8,946,303 1,994,102 15,243,972


At 31 December 2015 18,296,074 18,416,158 398,959 15,865,539 34,683,933 2,888,926 90,549,589

At 31 December 2016 18,296,074 18,244,457 390,980 17,243,179 37,654,760 3,015,214 94,844,664
101

7. PROPERTY, PLANT AND EQUIPMENT - continued
Company
Motor Office
vehicle equipment Total
RM RM RM

Cost
At 01 January 2015 451,867 - 451,867
Disposal (451,867) - (451,867)

At 31 December 2015/01 January 2016 - - -

Addition - 1,367 1,367

At 31 December 2016 - 1,367 1,367

At 01 January 2015 451,867 - 451,867
Disposal (451,867) - (451,867)

At 31 December 2015/ 01 January 2016 - - -

Depreciation charge for the financial year - 79 79

At 31 December 2016 - 79 79

At 31 December 2015 - - -

At 31 December 2016 - 1,288 1,288
a) The following property, plant and equipment of the Group have been pledged as securities for banking facilities granted to the Group
as disclosed in note 20(a)(i):
Group
2016 2015
RM RM

Buildings 43,270,245 44,274,250
Construction-in-progress 5,129,206 3,531,020
Land 20,076,390 20,305,379

68,475,841 68,110,649
b) The Group’s property, plant and equipment include borrowing cost arising from a term loan borrowed specifically for the purpose
of the construction of a building in 2015. The borrowing cost capitalised as cost of property, plant and equipment amounted to
RM208,290 in 2015. The rate used to determine the amount of borrowing cost eligible for capitalisation was 4.60%, which is the
effective interest rate of the specific borrowing.
102

7. PROPERTY, PLANT AND EQUIPMENT - continued
c) In 2014, the Group engaged independent professional valuers, Mr. Lee Thiam Sing of Jordan Lee & Jaafar (M’CCA) Sdn. Bhd. and Mr.
Tan Beng Sooi of VPC Alliance (JB) Sdn. Bhd. to assess the fair value of the land and buildings. The valuers have relevant recognised
professional qualification and have recent experience in valuing the properties in the relevant locations.
Information on the fair value and valuation techniques used to determine the fair value of these properties is disclosed in note 31.
As disclosed in note 6(c), at the end of the reporting period, the net carrying amounts of the land and buildings are approximate to
their fair values.
d) The carrying amounts of the revalued land and buildings that would have been included in the financial statements stated at cost less
accumulated depreciation:

Group
2016 2015
RM RM
Freehold factory buildings 8,485,235 8,736,526

Freehold hostels 460,682 470,100
Short leasehold factory buildings 15,039,253 15,577,042
Freehold land 10,204,487 10,204,487
Short leasehold land 5,950,462 6,120,824

40,140,119 41,108,979

8. BIOLOGICAL ASSET
Group
2016 2015
RM RM
Non-current
At fair value
Immature rubber wood trees
At 01 January 3,018,629 -
Purchase/planting 919,398 3,018,629

At 31 December 3,938,027 3,018,629
a) At the end of the reporting period, the rubber wood trees which are from newly established plantation are less than two (2) years old
(2015 - one (1) year old) and considered as immature assets. The plantation area cultivated is 436 hectares.
b) Risk management strategy related to agricultural activity

i) Regulatory and environmental risks

The Group has established procedures to comply with the environmental and other laws and regulations.
103

8. BIOLOGICAL ASSET - continued
b) Risk management strategy related to agricultural activity - continued

ii) Climate and other risks

The Group’s rubber wood trees plantation is exposed to the risk of damage from climate changes, diseases, forest fires, pests
and other natural forces. The Group has processes in place aimed at monitoring and mitigating those risks.
c) The Group’s biological asset includes staff cost arising for the planting of the rubber wood trees. During the reporting period, the staff
cost capitalised as cost of biological asset amounts to RM136,702 (2015 - RM127,583).
9. INVESTMENTS IN SUBSIDIARY COMPANIES
Company
2016 2015
RM RM
At cost
Unquoted shares
At 01 January 58,200,954 29,100,954
Acquisition of a subsidiary company (note 9(c)) 60 -
Subscription of shares in existing
subsidiary companies (note 28(b)) 2,799,940 29,100,000

At 31 December 61,000,954 58,200,954

Accumulated impairment loss
At 01 January - (529,554)
Impairment loss reversed (note 25(a)) - 529,554

At 31 December - -

Net carrying amounts 61,000,954 58,200,954
104

9. INVESTMENTS IN SUBSIDIARY COMPANIES - continued
a)
The subsidiary companies, all incorporated and with principal place of business in Malaysia and audited by John Lim & Associates,
are as follows:

Name of Proportion of
subsidiary companies ownership interest Principal activities
2016 2015
(%) (%)

Lii Hen Furniture Sdn. Bhd.* 100 100 Investment holding and manufacturing
(‘LHF’) of furniture

Kejora Juara Sdn. Bhd. 100 100 Property investment

Favourite Design Sdn. Bhd. 100 100 Manufacturing of furniture
(‘FD’)
Lii Hen Plantation Sdn. Bhd. 90 99 Investment holding

(‘LHP’)

LSG Furniture Sdn. Bhd. 60 - Manufacturing and designing
(‘LSG’) of upholstery furniture

Subsidiary companies of LHF

CT Haup Heng Sdn. Bhd.* 100 100 Manufacturing of furniture

EF Furniture Sdn. Bhd.* 100 100 Manufacturing of office and residential
furniture

Mayteck Kilang Kayu Dan 100 100 Manufacturing of furniture components,
Perabut Sdn. Bhd. processing and kiln drying of rubber wood
(“MTKK”) * and timber

Subsidiary company of LHP

PPL Plantations Sdn. Bhd. 80 80 Planting, cultivating, milling and dealing
(‘PPLP’) in agriculture and forest products
* Consolidated under merger method of accounting
105

9. INVESTMENTS IN SUBSIDIARY COMPANIES - continued
b) Non-controlling interests
Percentage of Carrying Profit/(loss) Dividend

ownership amount of allocated to paid to
interest and non-controlling non-controlling non-controlling
voting interest of interests interests interests
non-controlling
interests
% RM RM RM

2016
LHP 10 546,195 7,034 -
PPLP 20 (715,451) (227,419) -
LSG 40 275,876 75,875 -

Total 106,620 (144,510) -

2015
LHP 1 10,440 (36,059) -
PPLP 20 (362,538) (359,464) -

Total (352,098) (395,523) -
As the non-controlling interests of LHP, PPLP and LSG are not material to the Group, summarised financial information (before
inter-group elimination) of the subsidiary companies is hence not presented.
c) Incorporation of a subsidiary company

On 28 January 2016, the Company subscribed for 60% equity interest of 60 ordinary shares of RM1 each fully paid in a newly
incorporated company, LSG Furniture Sdn. Bhd. (“LSG”) for a cash consideration of RM60.

LSG is principally engaged in manufacturing and designing of upholstery furniture products. The setting up of LSG is to expand the
product range to upholstery furniture products and to secure new revenue streams for the Group.

The details of net asset acquired and cash flows arising from acquisition of the subsidiary company were as follows:
Company
2016 2015
RM RM
Fair value of net asset acquired - cash in hand 60 -

Purchase consideration 60 -

Less:
Cash and cash equivalents of a subsidiary company acquired (60) -

Cash flows on acquisition of a subsidiary company, net of cash acquired - -
106

10. INTANGIBLE ASSETS
Group

Computer
ROU software Total
RM RM RM

At cost
At beginning and end of the financial year 4,813,119 1,198 4,814,317

Accumulated amortisation and impairment loss
At 01 January 2015 - (1,198) (1,198)
Amortisation (18,663) - (18,663)
Impairment loss (4,253,228) - (4,253,228)

At 31 December 2015/01 January 2016 (4,271,891) (1,198) (4,273,089)

Amortisation (18,663) - (18,663)

At 31 December 2016 (4,290,554) (1,198) (4,291,752)

At 31 December 2015 541,228 - 541,228

At 31 December 2016 522,565 - 522,565

2016 2015
RM RM
ROU
Amount to be amortised :
Not later than one year 18,663 18,663
Later than one year but not later than five years 74,652 74,652
Later than five years 429,250 447,913

522,565 541,228
a) ROU relates to the incidental costs incurred in connection with the lease of right to use of approximately 3,473 hectares of permanent
reserve forest land in the State of Johor Darul Takzim for planting and/or cultivation of rubber wood trees.
b) In 2015, the Group had taken possession of 436 hectares of land and commenced the development of plantation infrastructure and
agricultural activity.
The 436 hectares of ROU has a remaining tenure of 28 years (2015 - 29 years). The amortisation of ROU is in relation to the 436
hectares of ROU of land and is recognised as administrative expense in profit or loss.
c) On 22 February 2016, PPLP has received a letter from Joint Venture partner, PIJ Plantation & Agriculture Sdn Bhd, informing PPLP
that the remaining portion of undeveloped forest land of 3,037 hectares out of the total 3,473 hectares are excluded from the rubber
trees planting programme as decided by the relevant state authority.
The Group has impaired the undeveloped portion of ROU of the land at the end of the last reporting period on proportionate basis.
The impairment loss of RM4,253,228 was recognised as other operating expense in profit or loss in the last reporting period.
107

10. INTANGIBLE ASSETS - continued
d) The Group estimated the remaining recoverable amount of the plantation segment based on the ROU for 436 hectares of land at
approximately RM13,080,000 (2015 - RM11,100,000).
e) Significant assumptions applied in estimating the plantation segment value-in-use are as follows:
i) Cash flow projections from the financial budgets approved by management covering a period of 20 years which the management
expects to complete the harvest of the rubber wood trees planted.
ii) The pre-tax discount rate applied to the cash flow projections is 10% (2015 - 10%).
iii) The following is budgeted in the cash flow projections:

2016 2015

Production yield 2,000 kg/ha/year 2,000 kg/ha/year

Selling price
- Rubber wood RM130 per m3 RM150 per m3
- Latex RM6.50/kg RM5.50/kg

Production cost 40% - 45% 40% - 45%
iv) Sensitivity to changes in assumptions

Management believes that no reasonably possible changes in any of the above key assumptions would cause the carrying value
of the unit to materially exceed its recoverable amount.
11. INVENTORIES

Group
2016 2015
RM RM
At cost
Finished goods 15,258,478 18,008,023
Work-in-progress 24,423,888 19,403,535
Raw materials 21,603,941 13,355,578
Consumables 1,617,945 4,807,454

62,904,252 55,574,590

At net realisable value
Finished goods 98,269 117,171
Raw materials 4,514 59,965

102,783 177,136

63,007,035 55,751,726

Recognised in profit or loss:

Inventories recognised as cost of sales 477,876,508 429,570,240

Included in cost of sales is:

Inventories written down to net realisable value 39,287 71,842
108

12. RECEIVABLES

Group
2016 2015
RM RM

Trade receivables
- Related parties 158,671 141,240
- Third parties 50,236,283 35,498,495

50,394,954 35,639,735

Less:
Accumulated impairment losses (note 12(a)(v)) (136,371) (136,371)

50,258,583 35,503,364

Other receivables 7,637,599 5,801,212

57,896,182 41,304,576
a) Trade receivables
i) Trade receivables are non-interest bearing and are generally from 7 to 90 days (2015 - 15 to 90 days) terms. They are
recognised at their original invoice amounts which represent their fair values on initial recognition.
ii) Ageing analysis of trade receivables

The ageing analysis of the Group’s trade receivables is as follows:
Group
Individually
2016 Gross impaired Net
RM RM RM

Neither past due nor impaired 38,623,677 - 38,623,677

1 to 30 days past due not impaired 9,452,391 - 9,452,391
61 to 90 days past due not impaired 509,487 - 509,487
More than 121 days past due not impaired 221,085 - 221,085
More than 121 days past due and impaired 136,371 (136,371) -

11,771,277 (136,371) 11,634,906

50,394,954 (136,371) 50,258,583
109

12. RECEIVABLES - continued

a) Trade receivables - continued
ii) Ageing analysis of trade receivables - continued

The ageing analysis of the Group’s trade receivables is as follows: - continued
Group
Individually
2015 Gross impaired Net
RM RM RM

Neither past due nor impaired 28,823,283 - 28,823,283

More than 121 days past due not impaired 204,186 - 204,186
More than 121 days past due and impaired 136,371 (136,371) -

6,816,452 (136,371) 6,680,081

35,639,735 (136,371) 35,503,364
iii) Receivables that are neither past due nor impaired

Trade receivables that are neither past due nor impaired are creditworthy debtors with good payment records with the Group.
More than 77% (2015 - 66%) of the Group’s trade receivables arise from customers with more than four (2015 - four) years of
experience with the Group and losses have occurred infrequently.
None of the Group’s trade receivables that are neither past due nor impaired have been renegotiated during the reporting
period.
iv) Receivables that are past due but not impaired

The Group has trade receivables amounting to RM11,634,906 (2015 - RM6,680,081) that are past due at the reporting date
but not impaired.
At the end of the reporting period, included in trade receivables that are past due but not impaired which are arising from
export sales amounting to RM5,034,484 (2015 - RM3,099,310) have been arranged to be settled via letters of credit issued by
reputable banks in countries where the customers are based. The remaining balances of trade receivables that are past due
but not impaired are unsecured in nature. The Group considers the outstanding amounts are still recoverable and there has
not been a significant change in credit quality.
The Group does not hold any collateral or other credit enhancements over their balances.
110

a) Trade receivables - continued
v) The Group’s trade receivables that are impaired at the end of the reporting period and the movement of the accounts used to
record the impairment is as follows:
Group
Individually impaired
2016 2015
RM RM

Trade receivables - nominal amounts 136,371 136,371

Less:
Impairment losses (136,371) (136,371)

- -

Group
2016 2015
RM RM

Movement of impairment losses

At 01 January 136,371 119,576
Impairment loss recognised (note 25(a)) - 106,500
Impairment loss reversed (note 25(a)) - (89,705)

At 31 December 136,371 136,371

Trade receivables that are individually determined to be impaired at the end of the reporting period relate to two debtors
(2015 - two) that are in financial difficulties and have defaulted on payments. These receivables are not secured by any
collateral or credit enhancements.
b) Other receivables
i) Credit terms for other receivables are assessed and approved on a case-by-case basis. Other receivables that are neither
past due nor impaired are creditworthy debtors with good payment records with the Group.
ii) Included in other receivables are the following:

- advance payments made to one (2015 - two) supplier of MTKK for the supply of rubber wood amounting to RM50,000
(2015 - RM1,182,072); and

- an amount of RM107 due by a related party in the last reporting period represents labour charges receivable from the
related party.
111

c) The currency exposure profile of the trade and other receivables is as follows:

Group
2016 2015
RM RM

RM 16,292,420 12,598,447
Singapore Dollar (‘SGD’) - 10,350
United States Dollar (‘USD’) 41,740,133 28,832,150

58,032,553 41,440,947

d) Other information on financial risks of receivables is disclosed in note 32.

13. PREPAID OPERATING EXPENSES AND OTHER ASSETS
Group Company
2016 2015 2016 2015
RM RM RM RM

Prepaid operating expenses
and other assets 5,535,130 5,362,346 139,492 160,753
Included in prepaid operating expenses and other assets of the Group are:
a) rental deposits paid to related parties - Domain Partners Sdn. Bhd. and NNST Capital Sdn. Bhd. amounting to RM397,971
(2015 - RM505,632); and
b) deposit paid to a third party in last reporting period amounting to RM560,000 for the purchase of properties as disclosed in note 37(b).
14. AMOUNTS DUE BY SUBSIDIARY COMPANIES

The amounts due by subsidiary companies which arose from non-trade advances are unsecured and repayable on demand.
The above advances bear interest at an effective rate of 8.35% (2015 - 8.35%) per annum.
112

15. DERIVATIVE FINANCIAL INSTRUMENTS

Group
2016 2015
RM RM
Contract/ Contract/
Notional Notional
Amount Liabilities Amount Assets

Non-hedging derivatives:

Current Forward currency contracts 41,599,685 (2,649,565) 15,174,135 114,918

Total financial (liabilities)/
assets at fair value
through profit or loss (2,649,565) 114,918

Forward currency contracts are used to hedge foreign currency risk arising from the Group’s sales denominated in USD for which firm
commitments existed at the end of the reporting period, extending to February 2017 (2015 - March 2016).
Other information on foreign currency risk is disclosed in note 32(d).
16. TAXATION

a) Movements in the taxation statements in statements of financial position:

Group Company
2016 2015 2016 2015
RM RM RM RM

At 01 January 3,314,402 1,964,856 26,521 588,272
Current income tax 20,268,063 14,840,739 338,359 318,533
Income tax paid (20,751,117) (13,749,326) (388,037) (821,011)
Income tax refunded 335,380 337,885 - -
Income tax under/(over)provision
in prior financial year 92,939 (79,752) 75 (59,273)

At 31 December 3,259,667 3,314,402 (23,082) 26,521

Disclosed as:
Tax assets (1,301,521) (513,887) (23,082) -
Tax liabilities 4,561,188 3,828,289 - 26,521

3,259,667 3,314,402 (23,082) 26,521
113

16. TAXATION - continued
b)
Income tax expenses comprise:

Statements of profit or loss and other comprehensive income

Group Company
2016 2015 2016 2015
RM RM RM RM

Malaysian income tax:
- current 20,268,063 14,840,739 338,359 318,533
- under/(over)provision
in prior financial year 92,939 (79,752) 75 (59,273)

20,361,002 14,760,987 338,434 259,260
Deferred taxation
(note 21(a)):
- origination and reversal
of temporary differences 189,688 162,384 - -
- asset revaluation reserves (183,291) (72,043) - -
- underprovision in prior financial year 76,928 24,404 - -

83,325 114,745 - -

Income tax expenses recognised
in profit or loss 20,444,327 14,875,732 338,434 259,260

c)
Reconciliation of tax expenses with accounting profit:

Group Company
2016 2015 2016 2015
RM RM RM RM
Profit before tax 93,573,997 72,082,722 40,776,703 49,445,073

Taxation at statutory tax rate of 24% 22,457,759 18,020,681 9,786,409 12,361,268
(2015 - 25%)

Deferred tax asset not recognised 188,916 239,220 - -
Export allowances incentive (2,918,450) (4,719,037) - -

Tax effects of:
- double deduction expenses (120,695) (211,818) - -
- income not subject to income tax (140,958) (352,851) (9,504,000) (12,057,388)
- non-allowable expenses 807,888 1,954,885 55,950 14,653

20,274,460 14,931,080 338,359 318,533
Under/(over)provision in prior financial year:

- deferred tax 76,928 24,404 - -
- income tax 92,939 (79,752) 75 (59,273)

Income tax expenses recognised
in profit or loss 20,444,327 14,875,732 338,434 259,260
114

16. TAXATION - continued
c) Reconciliation of tax expenses with accounting profit: - continued

The current income tax is calculated at the Malaysian statutory tax rate of 24% (2015 - 25%) of the estimated assessable profit for the
financial year.
d)
The Group has the following which can be used to offset against future taxable profit:

Group
2016 2015
RM RM

Unused capital allowances 111,607 111,432
Unused agricultural allowances 5,204,731 2,715,593
Unused tax losses 1,479,583 802,371

6,795,921 3,629,396
17.
DEPOSITS, CASH AND BANK BALANCES

Group Company
2016 2015 2016 2015
RM RM RM RM

Cash and bank balances 62,677,462 52,268,443 421,340 1,071,192
Short term deposits
with licensed banks 71,317,057 68,237,953 24,861,601 29,079,738

133,994,519 120,506,396 25,282,941 30,150,930

Short term deposits of the Group amounting to RM2,669,118 (2015 - RM2,583,776) are pledged as securities against banking
facilities granted to certain subsidiary companies as disclosed in note 20(a)(ii).

Other information on financial risks of short term deposits is disclosed in note 32.

115

18. SHARE CAPITAL

Group and Company
2016 2015 2016 2015
No. of No. of RM RM
shares shares

Authorised:
At 01 January 200,000,000 100,000,000 100,000,000 100,000,000
(Ordinary shares of RM0.50/RM1 each)

Share split into RM0.50 each - 100,000,000 - -

At 31 December
(Ordinary shares of RM0.50 each) 200,000,000 200,000,000 100,000,000 100,000,000

Issued and fully paid:

At 01 January 179,999,988 60,000,000 89,999,994 60,000,000
(Ordinary shares of RM0.50/RM1 each)

Bonus issue - 29,999,994 - 29,999,994

Share split into RM0.50 each - 89,999,994 - -

At 31 December
(Ordinary shares of RM0.50 each) 179,999,988 179,999,988 89,999,994 89,999,994
The shareholders are entitled to receive dividends as and when declared by the Company. All ordinary shares carry one vote per
share without restrictions and rank equally with regard to the Company’s residual assets.
19. RESERVES
Group Company
2016 2015 2016 2015
RM RM RM RM

Non-distributable
Asset revaluation reserves 29,042,630 29,625,350 - -

Distributable
Retained profits 144,981,536 110,602,864 5,391,984 4,553,715

174,024,166 140,228,214 5,391,984 4,553,715
116

19. RESERVES - continued
Group
Asset revaluation reserves
The asset revaluation reserves represent increases in the fair value of the land and buildings, net of tax, and decreases to the extent
that such decrease relates to an increase on the same asset previously recognised in other comprehensive income.

Company
Retained profits
The Company is under the single tier dividend system and hence, there is no restriction on the Company to distribute the payment of
dividends out of its entire retained profits at the end of the reporting period.
20. LOANS AND BORROWINGS
Group
2016 2015
RM RM
Secured
Current portion
Bank overdrafts 6,342,803 6,108,689
Bankers’ acceptances 22,848,319 14,114,653
Term loans 2,492,088 2,631,262

Total current portion 31,683,210 22,854,604

Non-current portion
Term loans 5,615,724 7,827,994

Total loans and borrowings 37,298,934 30,682,598
Group
a) The bank overdrafts and bankers’ acceptances are secured by:

i) debenture incorporating fixed charges on landed properties of a subsidiary company and legal charges on landed properties
of certain subsidiary companies as disclosed in note 7(a); and
ii) short term deposits of certain subsidiary companies as disclosed in note 17.
117

20. LOANS AND BORROWINGS - continued
Group

b) The term loans are repayable as follows:
Securities over
Monthly the properties of
Repayment Period Installment the Group as
Term No. of amount disclosed in
loan Installments From Until RM note 7(a)

I 120 November 2009 End of repayment period 40,214 Freehold factory
buildings

II 60 March 2011 March 2016 45,326 Freehold land
(fully settled)

III 166 November 2012 July 2014 31,250 Freehold land
August 2014 July 2016 28,192
August 2016 End of repayment period 56,122

IV 236 January 2013 July 2014 40,240 Short leasehold
August 2014 June 2015 12,554 land and buildings
July 2015 August 2016 32,113
September 2016 End of repayment period 57,262

V 48 February 2014 End of repayment period 54,351 Freehold factory
buildings
c) Other information on financial risks of loans and borrowings is disclosed in note 32.
21. DEFERRED TAXATION
a) Movements in temporary differences during the financial year:

Group
2016 2015
RM RM
At 01 January 11,248,825 11,134,080

Recognised in profit or loss (note 16(b)):
- asset revaluation reserves (183,291) (72,043)
- property, plant and equipment 266,616 186,788

83,325 114,745

At 31 December 11,332,150 11,248,825
118

21. DEFERRED TAXATION - continued

b)
Recognised deferred tax assets and liabilities are attributable to the following:

Group

Assets Liabilities Net
2016 2015 2016 2015 2016 2015
RM RM RM RM RM RM
Property, plant and equipment - - 4,487,201 3,649,534 4,487,201 3,649,534

Asset revaluation reserves - - 8,057,404 8,240,695 8,057,404 8,240,695
Unused capital allowances (26,786) (26,744) - - (26,786) (26,744)
Unused agriculture
allowances (1,185,669) (614,660) - - (1,185,669) (614,660)

(1,212,455) (641,404) 12,544,605 11,890,229 11,332,150 11,248,825

Set off of tax 1,212,455 641,404 (1,212,455) (641,404) - -

- - 11,332,150 11,248,825 11,332,150 11,248,825
c) The deferred tax assets, stated at gross, have not been recognised as it is not probable that sufficient future taxable profit will be
available to offset against the following unrecognised deferred tax assets of the Group:
Group
2016 2015
RM RM

Unused agriculture allowances 264,445 154,508
Unused tax losses 1,479,583 802,371

1,744,028 956,879
Deferred tax assets of the Group have not been recognised in respect of these items as they were derived from different business
sources and it is not probable that taxable profit of the Group from the same business source would be available against which the
deductible temporary differences could be utilised.
The deductible temporary differences do not expire under current tax legislation.
119

22. PAYABLES
Group Company
2016 2015 2016 2015
RM RM RM RM
Trade payables
- A related party 80,090 3,462,447 - -
- Third parties 41,121,539 36,643,377 - -

41,201,629 40,105,824 - -

Other payables 3,389,081 2,860,121 896 100
Accrued operating expenses 23,666,362 20,515,987 89,244 34,619

68,257,072 63,481,932 90,140 34,719
a) Trade payables

These amounts are non-interest bearing. Trade payables are normally settled on 7 to 120 days (2015 - 7 to 120 days) terms.

b) Other payables

i) These amounts are non-interest bearing. Credit terms for other payables are negotiated on a case-by-case basis.

ii) Included in other payables is an amount of RM126,038 (2015 - nil) due to a related party representing sub-contract charges
payable to the related party.
c)
The currency exposure profile of the trade and other payables is as follows:

Group Company
2016 2015 2016 2015
RM RM RM RM
RM 43,646,128 41,538,898 896 100

USD 944,582 1,427,047 - -

44,590,710 42,965,945 896 100
d) Other information on financial risks of payables is disclosed in note 32.

23. REVENUE
Group Company
2016 2015 2016 2015
RM RM RM RM
Sale of goods 623,459,650 546,865,573 - -

Dividend income from subsidiary
companies - - 39,600,000 47,700,000

623,459,650 546,865,573 39,600,000 47,700,000
120

24. FINANCE COSTS
Group Company
2016 2015 2016 2015
RM RM RM RM

Interest on
- amounts due to subsidiary companies - - - 23,879
- bank overdrafts 3,801 4,268 - -
- bankers’ acceptances 805,903 613,134 - -
- term loans 433,323 559,320 - -

1,243,027 1,176,722 - 23,879
Less:
Interest expense capitalised in
property, plant and equipment
(note 7(b)) - (208,290) - -

1,243,027 968,432 - 23,879
25.
PROFIT BEFORE TAX

a) This is arrived at after inclusion of the following charges/(income):
Group Company
2016 2015 2016 2015
RM RM RM RM
Amortisation of intangible asset 18,663 18,663 - -

Auditors’ remuneration:
- other services 119,010 89,955 13,300 9,088
- statutory audit 168,000 145,000 30,000 23,000
Bad debt written off - 89,705 - -
Depreciation 6,946,575 6,738,017 79 -
Expenditure on increase
of authorised capital - 38,000 - -
Impairment loss on:
- intangible asset - 4,253,228 - -
- receivables - 106,500 - -
Indemnity insurance of Directors 11,510 - 11,510 -
Inventories written down
to net realisable value 39,287 71,842 - -
Lease of computer software 180,000 180,000 - -
Net fair value loss/(gain) on
derivative financial instruments 2,649,565 (114,918) - -
Preliminary expenses written off 4,770 - - -
Property, plant and equipment written off 74,385 - - -
121

25. PROFIT BEFORE TAX - continued
a) This is arrived at after inclusion of the following charges/(income): - continued
Group Company
2016 2015 2016 2015
RM RM RM RM
Rental of:
- factories 4,930,378 3,653,050 - -
- hostel 16,300 82,793 - -
- premises 8,400 8,400 - -
Bad debts recovered (3,788) (24,000) - -
Foreign exchange gain:
- realised (1,536,706) (4,142,601) - -
- unrealised (308,123) (527,276) - -
Gain on disposal of property,
plant and equipment (221,470) (47,993) - (1)
Interest income from loans
and receivables (3,065,699) (1,806,065) (1,705,466) (1,679,836)
Rental income (142,410) (399,122) - -
Reversal of impairment loss
on investment in a
subsidiary company - - - (529,554)
Reversal of impairment
loss on receivables - (89,705) - -

b) Directors’ remuneration:
Group Company
2016 2015 2016 2015
RM RM RM RM
i)
Directors of the Company

Executive:
Short term employee benefits
- Fees 20,000 - 20,000 -
- Salaries and other emoluments 5,774,390 5,602,305 - -

Post-employee benefits
- Defined contribution retirement plan 713,766 686,866 - -

The estimated monetary value of
benefit-in-kind 64,450 64,450 - -

6,572,606 6,353,621 20,000 -

Non-executive:
- Fees 25,000 - 25,000 -
- Other emoluments 199,500 168,000 199,500 168,000

224,500 168,000 224,500 168,000
122

25. PROFIT BEFORE TAX - continued
b) Directors’ emoluments: - continued
Group Company
2016 2015 2016 2015
RM RM RM RM
ii)
Directors of the subsidiary companies

Executive:
- Salaries and other emoluments 5,622,148 5,156,055 - -
Post-employee benefits
- Defined contribution retirement plan 640,978 726,143 - -

The estimated monetary value of
benefit-in-kind 63,800 63,800 - -

6,326,926 5,945,998 - -

Non-executive:
- Other emoluments 42,350 42,000 - -

13,166,382 12,509,619 244,500 168,000
c) Additional information:
Group
2016 2015
RM RM
Cost of sales
Raw materials consumed 292,236,575 269,302,210
(The remaining of this page is intentionally left blank)
123

26. EARNINGS PER SHARE
Basic
The basic earnings per share is calculated by dividing the Group’s profit for the financial year attributable to owners of the Company
by the number of ordinary shares in issue during the reporting period.

Group
2016 2015
RM RM

Profit net of tax attributable to owners of the Company 73,274,180 57,602,513

2016 2015
Units Units
Number of ordinary shares in issue
At 01 January 179,999,988 60,000,000
Bonus issue - 29,999,994
Share split - 89,999,994

At 31 December 179,999,988 179,999,988

2016 2015
Sen Sen

Basic earnings per share 40.71 32.00

Diluted
No diluted earnings per share is presented as there is no dilutive potential ordinary shares at the end of the reporting period.
124

27. DIVIDENDS
Group and Company

2016 2015
RM RM
Recognised during the reporting period

Dividends on ordinary shares:

Special single tier dividend for 2015 - 6.0 sen
(2014 - 3.5 sen) * 10,800,000 2,100,000

Final single tier dividend for 2015 - 4.0 sen
(2014 - 4.0 sen) * 7,200,000 2,400,000

First interim single tier dividend for 2016 - 4.0 sen
(2015 - 6.0 sen) * 7,200,000 3,600,000

Second interim single tier dividend for 2016 - 4.0 sen
(2015 - 7.0 sen) * 7,200,000 4,200,000

Third interim single tier dividend for 2016 - 4.0 sen
(2015 - 3.0 sen) 7,200,000 5,400,000

39,600,000 17,700,000

* The dividends paid in 2015 are based on 60,000,000 ordinary shares of RM1 each.

Group and Company

RM

Not recognised as liabilities at 31 December 2016
Dividends on ordinary shares

Declared and paid after the reporting period:
- Special single tier dividend of 10.0 sen per share for 2016 18,000,000

Proposed for shareholders’ approval at the forthcoming
Annual General Meeting:
- Final single tier dividend of 4.0 sen per share for 2016 7,200,000
125

28. STATEMENTS OF CASH FLOWS

a) Non-cash transaction of the Group:
Group
2016 2015
RM RM
Issuance of shares by subsidiary companies

subscribed by non-controlling interests 725,000 -
Satisfaction of debt due to a non-controlling interest (525,000) -

Proceeds from issuance of shares by subsidiary
companies to non-controlling interests 200,000 -
b) Non-cash transaction of the Company:
Company
2016 2015
RM RM
Issuance of shares by subsidiary companies

subscribed by the Company (note 9) 2,799,940 29,100,000
Satisfaction of debts due to the Company - (29,100,000)

Additional subscription of shares in
existing subsidiary companies 2,799,940 -
c) Cash and cash equivalents included in the statements of cash flows comprise the following:
Group Company
2016 2015 2016 2015
RM RM RM RM

Cash and bank balances 62,677,462 52,268,443 421,340 1,071,192
Short term deposits with licensed banks 68,647,939 65,654,177 24,861,601 29,079,738

131,325,401 117,922,620 25,282,941 30,150,930

Bank overdrafts (6,342,803) (6,108,689) - -

124,982,598 111,813,931 25,282,941 30,150,930
d) The currency exposure profile of the cash and cash equivalents is as follows:

Group Company
2016 2015 2016 2015
RM RM RM RM
RM 92,597,482 67,006,015 25,282,941 30,150,930

SGD 70,484 50,397 - -
USD 32,310,240 44,753,127 - -
Others 4,392 4,392 - -
124,982,598 111,813,931 25,282,941 30,150,930
126

29. SIGNIFICANT RELATED PARTY DISCLOSURES

In addition to related party disclosure disclosed elsewhere in the financial statements, the related party relationships and significant
transactions are set out as follows:
a) Identity of related parties

The Company has related party relationships with the following parties:

i) Immediate and ultimate holding company of the Company, Assets Muar Sdn. Bhd.

ii) Subsidiary companies of the Company as disclosed in note 9.

iii) Companies in which certain Directors of the Company and certain directors of the subsidiary companies have control or
significant influence:

- Domain Partners Sdn. Bhd. (‘DP’);

- NNST Capital Sdn. Bhd. (‘NNST’);

- Paragon Progress Sdn. Bhd. (‘PP’);

- Double Soon Huat Enterprise (‘DSHE’);

- T- Home Furniture Industry Sdn. Bhd. (“THFI’); and

- Hong Tat Sofa Enterprise (“HTSE’).

iv) Key management personnel, including Directors, are those persons having authority and responsibility for planning, directing
and controlling the activities of the Group.
b) Significant transactions undertaken with the related parties during the reporting period were as follows:
Group Company
2016 2015 2016 2015
RM RM RM RM
Subsidiary companies

Advances to - - 42,537,226 49,745,268

Repayment from - - 39,605,177 50,100,169

Advances from - - - 193,767

Repayment to 379,272

Interest income from - - 582,049 1,131,984

Interest paid/payable to - - - 23,879

Disposal of property, plant
and equipment to LHF - - - 1
127

29. SIGNIFICANT RELATED PARTY DISCLOSURES - continued

b) Significant transactions undertaken with the related parties during the reporting period were as follows: - continued
Group Company
2016 2015 2016 2015
RM RM RM RM
Related parties

Sales of goods to
- THFI 266,388 269,832 - -
- HTSE 21,619 - - -

Purchases of goods from
- PP - 32,316,400 - -
- THFI 48,153 - - -

Labour charges
received/receivable from DSHE 748 1,311 - -
Rental paid/payable to certain Directors

and close family members of certain
Directors of the Company - 3,000 - -

Rental paid/payable to
- DP 2,364,805 1,641,288 - -
- NNST 246,400 235,920 - -

Sub-contract charges paid/payable to
- DSHE 1,886,618 1,697,353 - -
- HTSE 126,038 - - -

The Directors of the Company are of the opinion that these transactions are transacted at approximate market prices and at mutually
agreed terms.

c) Compensation paid/payable to key management personnel (other than executive Directors whose remuneration are disclosed in note
25(b)) were as follows:
Group
2016 2015
RM RM

Short term employee benefits 1,468,368 1,138,745
Post-employment benefits 475,620 303,994

1,943,988 1,442,739

Information regarding outstanding balances which are unsecured, arising from related party transactions at the end of the reporting
period is disclosed in note 12, 13, 14 and 22.

128

30. EMPLOYEE BENEFITS EXPENSES

The total staff costs were as follows:
Group Company
2016 2015 2016 2015
RM RM RM RM

Salaries and wages 71,329,482 61,176,932 199,500 168,000
Defined contribution
retirement plan 3,642,709 3,053,845 - -
Other employee benefits 730,270 304,430 - -

75,702,461 64,535,207 199,500 168,000
31. FAIR VALUE OF ASSETS AND LIABILITIES

a) Fair value hierarchy

The Group categories fair value measurement using a fair value hierarchy that is dependent on the valuation inputs used as follows:

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

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

- Level 3 - Unobservable inputs for the asset or liability.

Fair value measurements that use inputs of different hierarchy levels are categorised in its entirety in the same level of the fair value
hierarchy as the lowest level input that is significant to the entire measurement.
129

31. FAIR VALUE OF ASSETS AND LIABILITIES - continued

b) Assets and liabilities measured at fair value

The following table shows an analysis of each class of assets and liability measured at fair value at the end of the reporting period:

Group
Fair value measurement at the end of the reporting period
using hierachy analysis
Quoted prices Significant

in active observable
markets for inputs other Significant
identical than quoted unobservable
instruments prices inputs Total
(Level 1) (Level 2) (Level 3)
RM RM RM RM
Recurring fair value measurement

2016
Assets

Non-financial assets:

Property, plant and equipment
Land and buildings
Freehold land - 18,296,074 - 18,296,074
Freehold building - 390,980 - 390,980
Freehold factory buildings - 18,244,457 - 18,244,457
Freehold hostels - 1,930,502 - 1,930,502
Freehold warehouses - 1,084,712 - 1,084,712
Short leasehold land - 17,243,179 - 17,243,179
Short leasehold
factory buildings - 37,654,760 - 37,654,760

Biological asset - - 3,938,027 3,938,027

- 94,844,664 3,938,027 98,782,691

Financial liability:
Derivatives
Forward currency contracts - (2,649,565) - (2,649,565)
130


b) Assets and liabilities measured at fair value - continued

The following table shows an analysis of each class of assets and liability measured at fair value at the end of the reporting period: -
continied

Group

RM RM RM RM
Recurring fair value measurement

2015
Assets

Non-financial assets:

Land and buildings
Freehold land - 18,296,074 - 18,296,074
Freehold building - 398,959 - 398,959
Freehold factory buildings - 18,416,158 - 18,416,158
Freehold hostels - 2,541,709 - 2,541,709
Freehold warehouse - 347,217 - 347,217
Short leasehold land - 15,865,539 - 15,865,539
Short leasehold
factory buildings - 34,683,933 - 34,683,933
Biological asset - - 3,018,629 3,018,629
- 90,549,589 3,018,629 93,568,218

Financial asset:
Derivatives
Forward currency contracts - 114,918 - 114,918

Group
Highest and best use

In 2015, one parcel of the Group’s freehold land with net carrying amount of RM1,970,474 was planted with oil palm. The oil palm is
cleared in 2016 and the Group plans to construct warehouses and hostels for its own use.
131


c) Level 2 fair value measurements
i) The following is a description of the valuation techniques and inputs used in the fair value measurement for assets and
liability that are categorised within level 2 of the fair value hierarchy:

- Property, plant and equipment
The valuations of land and buildings are based on sales comparison approach. Sales price of comparable market
transactions that in close proximity is adjusted for the differences in the key attributes such as property location, size,
shape and terrain. The most significant input into this valuation is the price per square foot of the comparable properties.
- Derivatives
Forward currency contracts are valued based on the quotations obtained from the counterparty bankers. The fair value
of forward currency contracts is estimated by discounting the difference between the contractual forward price and the
current forward price for the residual maturity of the contract using a risk-free interest rate (based on government bonds).

d) Level 3 fair value measurements
i) Determination of fair value

At the end of the reporting period, management is of the view that the cost incurred is approximate to the fair value of the
biological asset based on the follwing;
- little biological transformation has taken place since initial cost incurrence in 2015; and
- the impact of the biological tranformation on price is not expected to be material as management estimates the rubber
trees plantation cycle is about 20 years.

ii) Valuation processes applied by the Group for Level 3 fair value
The Group Senior Manager of Corporate & Finance has overall responsibilly for overseeing all significant fair value
measurements, including level 3 fair values and regularly reviews significant unobservable inputs and valuation adjustments.
ii) Transfers between Level 1, Level 2 and Level 3 fair values
There were no transfers between Level 1, Level 2 and Level 3 during the reporting period (2015 - no transfers in either
direction).

132


e) Assets and liabilities not carried at fair value but for which fair value is disclosed
i) The following table shows an analysis of the Group’s liability not measured at fair value at the end of the reporting period but
for which fair value is disclosed:
Group

RM RM RM RM
2016
Liability
Financial liability
Loans and borrowings
Term loans
(non-current portion) - - 4,708,241 4,708,241
2015
Liability
Financial liability
Loans and borrowings
Term loans
(non-current portion) - - 6,280,460 6,280,460
ii) Determination of fair value
The fair value as disclosed in the table above is estimated by discounting expected future cash flows at market incremental
lending rate for similar types of lending or borrowing at the end of the reporting period.
f) The following are classes of assets and liabilities that are reasonable approximate to their fair value:

Receivables
Amounts due by subsidiary companies
Deposits, cash and bank balances
Loans and borrowings (current)
Payables
133


g) The Company has provided corporate guarantee to bankers for banking facilities to a limit of approximately RM136 million
(2015 - RM134 million) granted to certain subsidiary companies.
Accordingly, the Company has exposure to credit risk to the extent of banking facilities utilised by the subsidiary companies amounting
to approximately RM37 million (2015 - RM31 million) at the end of the reporting period.
There was no indication that the subsidiary companies would default on repayments. Thus, the fair value of the financial guarantee
contract for the Company is nil. Other financial risk information is as disclosed in note 32.
32. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
The Group and the Company are exposed to financial risks arising from their operations and the use of financial instruments. The key
financial risks include credit risk, liquidity risk, interest rate risk and foreign currency risk.
The Board of Directors reviews and agrees policies and procedures for the management of these risks. The audit committee provides
an independent oversight to the effectiveness of the risk management process.
It is, and has been throughout the current and previous reporting periods, the Group’s policy that no trading in derivatives for
speculative purposes shall be undertaken.
The following sections provide details regarding the Group’s and the Company’s exposure to the above-mentioned financial risks and
the objectives, policies and processes for the management of these risks.

There has been no change to the Group’s and the Company’s exposure to these financial risks or the manner in which they manage
and measure the risks.
a) Credit risk

Credit risk is the risk of loss that may arise on outstanding financial instruments should a counterparty defaults on its obligations.
The Group’s and the Company’s exposure to credit risk arises principally from trade and other receivables. For other financial assets
(including derivative financial instruments, loans and advances to subsidiary companies, short term deposits with licensed banks and
bank balances), the Group and the Company minimise credit risk by dealing with high credit rating counterparties.
The Group’s objective is to seek continual revenue growth while minimising losses incurred due to increased credit risk exposure.
The Group trades only with recognised and creditworthy third parties. It is the Group’s policy that all customers who wish to trade on
credit terms are subject to credit verification procedures. In addition, receivable balances are monitored on an ongoing basis with the
result that the Group’s exposure to bad debts is not significant. The Group manages credit risk by setting credit limits.
i) Exposure to credit risk

At the end of the reporting period, the Group’s and the Company’s maximum exposure to credit risk is represented by:

- receivables as disclosed in note 12;

- amounts due by subsidiary companies as disclosed in note 14; and

- a nominal value of RM136 million (2015 - RM134 million) relating to a corporate guarantee provided by the Company to the
bankers for banking facilities granted to certain subsidiary companies as disclosed in note 31(g).
134

32. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES - continued

a) Credit risk - continued
ii) Credit risk concentration profile

The Group determines concentrations of credit risk by monitoring the key trade receivables on an ongoing basis. The credit
risk concentration profile of the Group’s trade receivables at the end of the reporting period is as follows:
Group
2016 2015
RM % RM %
By country:

United States of America 32,427,536 64.35 23,888,800 67.03
Malaysia 9,132,544 18.12 8,511,663 24.23
Other countries 8,834,874 17.53 3,239,272 8.74

50,394,954 100.00 35,639,735 100.00
At the end of the reporting period, approximately 21% (2015 - 22%) of the Group’s trade receivables were due from one
(2015 - one) customer who is located in The United States of America.
iii) Financial assets that are neither past due nor impaired

Trade receivables that are neither past due nor impaired are creditworthy debtors who are reputable or have good payment
records with the Group.
Short term deposits with licensed banks and bank balances that are neither past due nor impaired are placed with reputable
banks with high credit rating and no history of default.
The Company provides unsecured advances to subsidiary companies. The Company monitors the results of the subsidiary
companies regularly.
iv) Financial assets that are either past due or impaired

Information regarding financial assets that are either past due or impaired is disclosed in note 12.
b) Liquidity risk

Liquidity risk is the risk that the Group or the Company will encounter difficulty in meeting financial obligations due to shortage of
funds. The Group’s and the Company’s exposure to liquidity risk arises primarily from mismatches of the maturities of financial assets
and liabilities. The Group’s and the Company’s objective is to maintain a balance between continuity of funding and flexibility through
the use of stand-by credit, continuously monitoring forecast and actual cash flows, and by matching the maturity profiles of financial
assets and liabilities.
At the end of the reporting period, approximately 85% (2015 - 74%) of the Group’s loans and borrowings will mature in less than one
year based on the carrying amount reflected in the financial statements.
135


b) Liquidity risk - continued

Analysis of financial instruments by remaining contractual maturities

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

Group
On
demand One to Over
Carrying Contractual or within five five
amount cash flows one year years years Total
Note RM RM RM RM RM RM

2016
Financial assets:
Receivables 12 57,896,182 57,896,182 57,896,182 - - 57,896,182
Deposits, cash and
bank balances 17 133,994,519 133,994,519 133,994,519 - - 133,994,519

Total undiscounted
financial assets 191,890,701 191,890,701 191,890,701 - - 191,890,701

Financial liabilities:
Payables 22 68,257,072 68,257,072 68,257,072 - - 68,257,072
Loans and borrowings 20 37,298,934 37,414,204 31,737,775 5,046,545 629,884 37,414,204
Derivative financial
instruments 15 2,649,565 2,649,565 2,649,565 - - 2,649,565

Total undiscounted
financial liabilities 108,205,571 108,320,841 102,644,412 5,046,545 629,884 108,320,841
2015
Financial assets:
Receivables 12 41,304,576 41,304,576 41,304,576 - - 41,304,576
Derivative financial
instruments 15 114,918 114,918 114,918 - - 114,918
Deposits, cash and
bank balances 17 120,506,396 120,506,396 120,506,396 - - 120,506,396

Total undiscounted

Payables 22 63,481,932 63,481,932 63,481,932 - - 63,481,932
Loans and borrowings 20 30,682,598 30,811,917 22,941,418 7,099,799 770,700 30,811,917

Total undiscounted
financial liabilities 94,164,530 94,293,849 86,423,350 7,099,799 770,700 94,293,849
136


b) Liquidity risk - continued

Analysis of financial instruments by remaining contractual maturities - continued

The table below summarises the maturity profile of the Group’s and the Company’s financial assets and liabilities at the end of the
reporting period based on contractual undiscounted repayment obligations: - continued

Company
On
demand One to Over
Carrying Contractual or within five five
amount cash flows one year years years Total
Note RM RM RM RM RM RM

2016
Financial assets:
Amounts due by
subsidiary companies 14 9,034,361 9,034,361 9,034,361 - - 9,034,361
Bank balances 17 25,282,941 25,282,941 25,282,941 - - 25,282,941

Total undiscounted


Payables, representing
total undiscounted
financial liabilty 22 90,140 90,140 90,140 - - 90,140

Financial guarantee contracts * 31(g) - 37,414,204 37,414,204 - - 37,414,204
2015
Financial assets:
Amounts due by
subsidiary companies 14 6,102,312 6,102,312 6,102,312 - - 6,102,312
Bank balances 17 30,150,930 30,150,930 30,150,930 - - 30,150,930

Total undiscounted


Payables, representing
total undiscounted
financial liabilty 22 34,719 34,719 34,719 - - 34,719

Financial guarantee contracts * 31(g) - 30,811,917 30,811,917 - - 30,811,917
* As disclosed in note 31(g), the fair value of the financial guarantee contracts of the Company is nil. The disclosure represents the
maximum amount that is required to be settled by the Company if the loans and borrowings of subsidiary companies are in default.
137


c) Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of the Group’s and the Company’s financial instruments will fluctuate
because of changes in market interest rates.
The Group’s exposure to interest rate risk arises primarily from its borrowings and short term deposits with licensed banks. The Group
borrows principally on a floating rate basis for working capital purposes.
The Company’s exposure to interest rate risk arises from its interest bearing advances provided to its subsidiary companies.
The following table sets out the carrying amounts, the weighted average effective interest rates (‘WAEIR’) at the end of the reporting
period and the remaining maturities of the Group’s and of the Company’s financial instruments that are exposed to interest rate risk:

2016 2015
Note WAEIR Carrying amount WAEIR Carrying amount
% RM % RM

Group

Fixed rate
Short term deposits
with licensed banks 17 3.68 71,317,057 3.91 68,237,953

Floating rate
Bank overdrafts 20 8.35 6,342,803 8.35 6,108,689
Bankers’ acceptances 20 3.86 22,848,319 3.81 14,114,653
Term loans 20 4.70 8,107,812 4.73 10,459,256

Company

Floating rate
Amounts due by
subsidiary
companies 14 8.35 9,034,361 8.35 6,102,312
Interest rate risk sensitivity analysis for fixed rate instruments

The Group does not account for any fixed rate financial asset and financial liability at fair value through profit or loss, and the Group
does not designate derivative financial instruments 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 the profit or loss.
138


c) Interest rate risk - continued

Interest rate risk sensitivity analysis for variable rate instruments
The following table demonstrates the sensitivity of the Group’s and of the Company’s profit net of tax, if interest rate had been 25 basis
points lower/higher, with all other variables held constant:

Group Company
2016 2015 2016 2015
RM RM RM RM
Profit net of tax Profit net of tax Profit net of tax Profit net of tax

If interest rate had been 25
basis points lower +70,867 +57,530 -17,165 -11,442

If interest rate had been 25
basis points higher -70,867 -57,530 +17,165 +11,442
d) Foreign currency risk
The Group has transactional currency exposures arising from sales or purchases that are denominated in a currency other than the
functional currency, RM. The foreign currencies in which these transactions are denominated are mainly USD.

Approximately 91% (2015 - 92%) of the Group’s sales are denominated in USD. The Group’s trade receivables and payables at the
end of the reporting period for foreign currency balances are as disclosed in the note 12(c) and note 22(c) respectively.

The Group also holds cash and cash equivalents denominated in foreign currencies for working capital purposes. At the end of the
reporting period, the foreign currency balances are as disclosed in note 28(d).

The Group uses forward currency contracts to eliminate the currency exposures on certain percentage of its budgeted sales that
are quoted in foreign currency. The period is ranging from 30 days to 90 days (2015 - 30 days to 90 days). The Group hedged an
acceptable level of its foreign currency denominated sales, for which firm commitments existed at the end of the reporting period,
extending to February 2017 (2015 - March 2016).
Foreign currency risk sensitivity analysis

The following table demonstrates the sensitivity of the Group’s profit net of tax to a reasonably possible change in the exchange rates
in the RM against the USD, with all other variables held constant:
Group
2016 2015
RM RM
Profit net of tax Profit net of tax

USD / RM - strengthened by 5% + 3,655,290 + 3,607,911
USD / RM - weakened by 5% - 3,655,290 - 3,607,911
139

33. CATEGORIES OF FINANCIAL INSTRUMENTS
The following table provides an analysis of financial instruments categorised as follows:

a) Loans and receivables;
b) Financial assets and liabilities at fair value through profit or loss; and
c) Financial liabilities measured at amortised cost.

Group
Financial
assets or Financial
liabilities at liabilities
fair value measured
Carrying Loans and through at amortised
amount receivables profit or loss cost
RM RM RM RM
2016
Financial assets:
Receivables 57,896,182 57,896,182 - -
Deposits, cash and bank balances 133,994,519 133,994,519 - -

191,890,701 191,890,701 - -

Payables 68,257,072 - - 68,257,072
Loans and borrowings 37,298,934 - - 37,298,934
Derivative financial instruments 2,649,565 - 2,649,565 -

108,205,571 - 2,649,565 105,556,006

2015
Financial assets:
Receivables 41,304,576 41,304,576 - -
Derivative financial instruments 114,918 - 114,918 -
Deposits, cash and bank balances 120,506,396 120,506,396 - -

161,925,890 161,810,972 114,918 -

Payables 63,481,932 - - 63,481,932
Loans and borrowings 30,682,598 - - 30,682,598

94,164,530 - - 94,164,530
140

33. CATEGORIES OF FINANCIAL INSTRUMENTS - continued

Company
Financial
liability
measured
Carrying Loans and at amortised
amount receivables cost
RM RM RM
2016
Financial assets:
Amounts due by subsidiary companies 9,034,361 9,034,361 -

Deposits, cash and bank balances 25,282,941 25,282,941 -

34,317,302 34,317,302 -

Payables 90,140 - 90,140

2015
Financial assets:

Amounts due by subsidiary companies 6,102,312 6,102,312 -
Deposits, cash and bank balances 30,150,930 30,150,930 -

36,253,242 36,253,242 -


Payables 34,719 - 34,719
34. CAPITAL MANAGEMENT

The primary objective of the Group’s capital management is to safeguard the Group’s ability to provide return for shareholders,
benefits for other stakeholders and to maintain an optimal capital structure.
The Group manages its capital structure and makes adjustments to it, in light of changes in economic conditions. To maintain or adjust
the capital structure, the Group may adjust the dividend payment to shareholders or issue new shares. No changes were made in the
objectives, policies or processes during the financial years ended 31 December 2016 and 31 December 2015.
141

34. CAPITAL MANAGEMENT - continued

The Group monitors capital using a gearing ratio, which is total liabilities divided by total equity. The Directors monitor and determine
to maintain an optimal liabilities-to-equity ratio.

Group
2016 2015
RM RM

Total liabilities 124,098,909 109,241,644

Total equity 264,130,780 229,876,110

Total liabilities-to-equity ratio 47% 48%
35. SEGMENTAL REPORTING - GROUP

a) The Group has the following reportable segments which are operating in Malaysia:

Reportable segments Operations

Furniture manufacturing Manufacturing of furniture products
Plantation Cultivating of rubber wood trees
Other Investment holdings
The management monitors the operating results of its reportable segments separately for the purpose of making decisions about
resource allocation and performance assessment. Segment performance is evaluated based on operating profit or loss which is the
most relevant to the evaluation of results of the segments.
The accounting policies of operating segments are the same as those described in the summary of significant accounting policies.
Inter-segment revenue is priced along the same lines after taking into consideration of volume rebate and credit risk as sales to
external customers and is eliminated in the consolidated financial statements. These policies have been applied consistently
throughout the current and previous financial years.
Segment results, assets and liabilities include items directly attributable to a segment. Segment capital expenditure is the total costs
incurred during the financial period to acquire segment assets that are expected to be used for more than one year.
b) Segmental information

2016 Furniture
manufacturing Plantation Other Total
Note RM RM RM RM
Revenue
Total revenue 629,929,630 - 39,600,000 669,529,630
Inter-segment revenue (6,469,980) - (39,600,000) (46,069,980)

Revenue from external customers 35(b)(i) 623,459,650 - - 623,459,650

Interest income 1,941,073 1,209 1,123,417 3,065,699
Finance costs (1,243,027) - - (1,243,027)

Net finance income 698,046 1,209 1,123,417 1,822,672
142

35. SEGMENTAL REPORTING - GROUP - continued

b) Segmental information - continued

2016 Furniture
Note RM RM RM RM
Amortisation of intangible asset - 18,663 - 18,663

Depreciation of property, plant
and equipment 6,836,558 109,938 79 6,946,575
Inventories written down to

net realisable value 39,287 - - 39,287

written off 74,385 - - 74,385

Segment profit/(loss) before tax 35(b)(ii) 96,300,855 (715,921) 40,776,703 136,361,637
Additions to non-current assets 35(b)(iii) 16,963,592 1,036,693 - 18,000,285

Segment assets 35(b)(iv) 366,408,394 6,715,081 95,482,118 468,605,593

Segment liabilities 35(b)(v) 126,907,514 7,330,902 90,140 134,328,556
2015
Revenue
Total revenue 553,699,309 - 47,700,000 601,399,309
Inter-segment revenue (6,833,736) - (47,700,000) (54,533,736)

Revenue from external customers 35(b)(i) 546,865,573 - - 546,865,573

Interest income 1,222,116 36,097 547,852 1,806,065
Finance costs (968,432) - - (968,432)

Net finance income 253,684 36,097 547,852 837,633

Amortisation of intangible asset - 18,663 - 18,663

Depreciation of property,
plant and equipment 6,634,182 103,835 - 6,738,017

Impairment loss on intangible asset - 4,253,228 - 4,253,228

Impairment loss on receivable 106,500 - - 106,500

Inventories written down to net realisable value 71,842 - - 71,842

Bad debt written off 89,705 - - 89,705
143



2015 Furniture
Note RM RM RM RM
Segment profit/(loss) before tax 35(b)(ii) 86,512,146 (4,942,839) 49,445,073 131,014,380

Additions to non-current assets 35(b)(iii) 9,354,830 3,941,584 - 13,296,414

Segment assets 35(b)(iv) 314,819,620 5,514,092 94,614,949 414,948,661

Segment liabilities 35(b)(v) 111,750,045 5,913,046 61,240 117,724,331
Reconciliations
Reconciliations of reportable segment revenue, profit or loss, assets and liabilities to the corresponding amounts of the Group are as
follows:
2016 2015
RM RM
i) Revenue
Total revenue for reportable segments 669,529,630 601,399,309
Elimination of inter-segment revenue (46,069,980) (54,533,736)

Revenue of the Group per consolidated
statement of profit or loss and other
comprehensive income 623,459,650 546,865,573

ii) Profit for the financial year
Total profit for reportable segments 136,361,637 131,014,380
Elimination of inter-segment profit (42,787,640) (58,931,658)

93,573,997 72,082,722

Tax expenses (20,444,327) (14,875,732)

Profit for the financial year of the Group
per consolidated statement of profit or
loss and other comprehensive income 73,129,670 57,206,990
144


Reconciliations of reportable segment revenue, profit or loss, assets and liabilities to the corresponding amounts of the Group are as
follows: - continued
iii) Additions to non-current assets consist of additions to property, plant and equipment and biological asset.

2016 2015
RM RM
iv) Assets
Total assets for reportable segments 468,605,593 414,948,661
Elimination of investments in subsidiary companies (61,000,954) (58,200,954)
Elimination of inter-segment balances (19,374,950) (17,629,953)

Total assets of the Group per consolidated
statement of financial position 388,229,689 339,117,754

v) Liabilities

Total liabilities for reportable segments 134,328,556 117,724,331
Elimination of inter-segment balances (10,229,647) (8,482,687)

Total liabilities of the Group per consolidated
statement of financial position 124,098,909 109,241,644
c) Geographical segment

The following table provides an analysis of the Group’s revenue by geographical segment:
2016 2015
RM RM

Malaysia 60,927,520 45,085,177
United States of America 470,694,319 426,741,856
Other countries 91,837,811 75,038,540

Total revenue 623,459,650 546,865,573
d) The following are major customers with revenue equal or more than 10% of the Group’s total revenue:
2016 2015
RM RM

Customer A 61,727,265 57,638,584
Customer B 60,236,549 55,449,524
Customer C 113,368,425 103,892,679

235,332,239 216,980,787
145

36. SIGNIFICANT EVENT DURING THE REPORTING PERIOD

In the last reporting period, FD entered into a Sale and Purchase Agreement to purchase a piece of freehold land together with two
blocks of factory buildings erected thereon for a total cash consideration of RM5,600,000. The transaction has been completed during
the reporting period.
37. COMMITMENTS
a) Operating lease
i) PPLP has long-term lease commitments in respect of the ROU over the permanent reserve forest land arising from SDA as
disclosed in note 10.
PPLP has to pay annual use permit fee based on 436 hectares (2015 - 436 hectares) of ROU as follows:
Group
2016 2015
RM RM
First three years from the date of delivery of
vacant possession of the land or the date of
commencement of the development of the
land whichever is later - -
Next fourth to seventh years 10,900 10,900
Next eighth to twentieth years 21,800 21,800
Next twenty first to thirtieth years 43,600 43,600

76,300 76,300
ii) The SDA includes contingent payment which is based on certain percentage of profit after taxation of PPLP.
b) Contracted but not provided for
Group
2016 2015
RM RM
Landed properties, net of deposit of

RM560,000 as disclosed in note 13(b) - 5,040,000
Construction-in-progress 2,126,625 642,885
Other assets 87,052 1,002,559

2,213,677 6,685,444
146

38. DISCLOSURE OF REALISED AND UNREALISED PROFITS

On 25 March 2010, Bursa Malaysia issued a directive to all listed issuers pursuant to Paragraphs 2.06 and 2.23 of the Bursa
Malaysia Main Market Listing Requirements. The directive requires all listed issuers to disclose the breakdown of the retained profits or
accumulated losses at the end of the reporting period, into realised and unrealised profits or losses.
On 20 December 2010, Bursa Malaysia further issued guidance on the disclosure and the format required.
The breakdown of the retained profits of the Group and of the Company at the end of the reporting date into realised and unrealised
profits, pursuant to the directive, are as follows:
Group Company
2016 2015 2016 2015
RM RM RM RM
Retained profits
- Realised 150,610,280 112,981,356 5,391,984 4,553,715
- Unrealised (5,628,744) (2,378,492) - -

144,981,536 110,602,864 5,391,984 4,553,715
The determination of realised and unrealised profits is complied based on Guidance of Special Matter No. 1 Determination of
Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Listing Requirements, issued by
the Malaysian Institute of Accountants on 20 December 2010.
The disclosure of realised and unrealised profits above is solely for complying with the disclosure requirements stipulated in the
directive of Bursa Malaysia and should not be applied for any other purposes.
147
LIST OF MATERIAL LANDED PROPERTIES
Net Carrying Date of

Land Tenure / Amounts at Revaluation
Area Existing Age of 31-12-2016 or
Location Description (sq.m) Use Building RM Acquisition
Lii Hen Furniture Sdn Bhd

H.S (D) 21321, 3 blocks of single-storey 16,187 Office and Leasehold 10,964,744 28.11.2014
PTD No. 1465, factory building, a double- furniture 60 years, ( Date of
Mukim of Sg. Terap, storey and a 3-storey manufacturing Expiring on Revaluation )
District of Muar, office block annexes and facilities 20.05.2056 /
State of Johore. ancillary buildings 19 to 22 years
(PLO 43)
H.S (D) 21322, A block of single-storey 6,070 Furniture Leasehold 3,278,115 20.10.2014
PTD No. 1466, factory building and TNB manufacturing 60 years, ( Date of
Mukim of Sg. Terap, substation facilities Expiring on Revaluation )
District of Muar, 20.05.2056 /
State of Johore. 19 years
(PLO 44)
H.S (D) 21323, A block of single-storey 6,358 Office and Leasehold 2,841,114 28.11.2014
PTD No. 1467, factory building with an furniture 60 years, ( Date of
Mukim of Sg. Terap, office annexe manufacturing Expiring on Revaluation )
District of Muar, facilities 20.05.2056 /
(PLO 10)

Kejora Juara Sdn Bhd

H.S (D) 21971, A block of single-storey 8,094 Furniture Leasehold 4,467,793 20.10.2014
PTD No. 1475, factory building manufacturing 60 years, ( Date of
Mukim of Sg. Terap, facilities Expiring on Revaluation )
District of Muar, 24.09.2056 /
148

- Continued

EF Furniture Sdn Bhd

H.S (D) 21325, A block of single-storey 10,117 Office and Leasehold 5,807,668 20.10.2014
PTD No. 1469, factory building and a furniture 60 years, ( Date of
Mukim of Sg. Terap, double-storey office manufacturing Expiring on Revaluation )
District of Muar, annexe, a guard house facilities 20.05.2056 /
State of Johore. and pump house 20 years
(PLO 8)

CT Haup Heng Sdn Bhd

H.S (D) 21318, 2 blocks of single-storey 10,117 Furniture Leasehold 5,739,574 28.11.2014
PTD No. 1462, factory building together manufacturing 60 years, ( Date of
Mukim of Sg. Terap, with extension and a facilities Expiring on Revaluation )
District of Muar, guard house 20.05.2056 /
State of Johore. 19 to 22 years
(PLO 9)

Mayteck Kilang Kayu Dan Perabut Sdn Bhd

H.S (D) 22630 & 22631, A block of single-storey 18,460 Office and Freehold / 6,210,905 20.10.2014
PTD No. 6042 & 6043, factory building with a furniture 18 to 28 years ( Date of
Mukim of Grisek, double-storey office manufacturing, Revaluation )
District of Muar, annexe, 2 blocks of kiln- wood treatment,
State of Johore. drying factories, 20 units and kiln-drying
of K-D chambers and facilities
ancillary buildings
149

- Continued

Favourite Design Sdn Bhd

H.S.(D) 21960, A large block of single- 8,094 Office and Leasehold 8,841,733 20.10.2014
PTD No: 1544, storey furniture factory furniture 60 years, ( Date of
Mukim of Sungai Terap, building together with a manufacturing Expiring on Revaluation)
District of Muar three-storey office block facilities 05.09.2056/
State of Johore. and a guard house as 20 years
well as factory extension
H.S.(D) 22295, A block of single -storey 3,808 Office and Leasehold 3,048,040 20.10.2014
PTD No: 1472, factory building together furniture 60 years. (Date of
Mukim of Sungai Raya, with a double-storey office manufacturing Expiring on Revluation)
District of Muar office block, a guard house, facilities 10.03.2057/
State of Johore. a pump house and a TNB 19 years
sub-station

H.S.(D) 23830, A block of single -storey 2,556 Office and Leasehold 2,845,447 20.10.2014
PTD No: 1471, factory building together furniture 60 years. (Date of
Mukim of Sungai Raya, with lean-to coverd sheds manufacturing Expring on Revluation)
District of Muar facilities 16.09.2059/

GM 347 Lot 1915, A block of single-storey 31,361 Furniture Freehold land/ 21,489,977 14.10.2014
Mukim of Sungai Raya, factory building manufacturing 3 years (Date of
District of Muar, facilities Revluation)
State of Johore

Lot 5052 PN 38525, 2 units of single-storey 9,049 Furniture Leasehold 5,686,444 23.04.2016
Mukim of Sungai Raya, detached factory building manufacturing 60 years (Date of
District of Muar, facilities Expiring on Acquisition)
State of Johore 10.03.2057/
20 years

81,221,554
150
ANALYSIS OF SHAREHOLDING
AS AT 31 MARCH 2017
PRINCIPAL STATISTICS
Authorised Share Capital - RM 100,000,000

Issued & Paid-Up Share Capital - RM 89,999,994
Class of Shares - Ordinary Shares
Voting Rights - One vote per ordinary share
Number of Shareholders 4,546

DISTRIBUTION OF SHAREHOLDINGS
No. of % of No. of % of Issued

Shareholders Shareholders Shares Held Share Capital
less than 100 shares 11 0.24% 294 0.00%

100 to 1,000 shares 839 18.46% 652,300 0.36%
1,001 to 10,000 shares 2,683 59.02% 12,244,370 6.80%
10,001 to 100,000 shares 863 18.98% 26,831,426 14.91%
100,001 to less than 5% of issued shares 149 3.28% 64,312,588 35.73%
5% and above of issued shares 1 0.02% 75,959,010 42.20%

Total 4,546 100.00% 179,999,988 100.00%
DIRECTORS’ SHAREHOLDINGS
No. of Shares Held % of Issued Shares Capital

Name of Directors Direct Indirect Direct Indirect
Chua Lee Seng 237,800 77,207,010 (a) 0.13 42.89

Tok Heng Leong 43,428 77,058,510 (b) 0.02 42.81
Tan Bee Eng 321,094 75,058,510 (b) 0.18 42.81
Chua Yong Haup 150,000 - 0.08 -
Tey Ping Cheng - - - -
Lan Haw Chong @ Lau Haw Chong - - - -
Chan Wah Chong - - - -
Chan Nyat Keong - - - -
Dato’ Mustapha bin Abd Hamid - - - -
151
ANALYSIS OF SHAREHOLDING
AS AT 31 MARCH 2017 - Continued
SUBSTANTIAL SHAREHOLDERS
No. of Shares Held % of Issued Shares Capital

Shareholders Direct Indirect Direct Indirect
Assets Muar Sdn Bhd 77,058,510 - 42.81 -

Koon Yew Yin 17,012,000 - 9.45 -
Chua Lee Seng 237,800 77,207,010 (a) 0.13 42.89

Tan Bee Eng 321,094 77,465,510 (b) 0.18 42.81

Tok Heng Leong 43,428 77,058,510 (b) 0.02 42.81

Soo Tee Heng ( f ) - 77,103,510 (c) 0.00 42.84

Neoh Cher Leong 702,994 77,058,510 (b) 0.39 42.81

Notes :
(a) Deemed interest by virtue of his substantial shareholdings in Assets Muar Sdn Bhd 77,058,510
Daughter - Chua Gek Tiow 28,500
Son - Chua Yong Chai 120,000

77,207,010

(b) Deemed interest by virtue of their substantial shareholdings in Assets Muar Sdn Bhd

(c) Deemed interest by virtue of her substantial shareholdings in Assets Muar Sdn Bhd 77,058,510
Husband - Chua Lee Wat 45,000

77,103,510

152
THIRTY (30) LARGEST SHAREHOLDERS

(Without aggregating the securities from different securities accounts belonging to the same Depositor)
No. of % of Issued
No. Name Shares Held Share Capital
1 ASSETS MUAR SDN. BHD. 75,959,010 42.20

2 RHB NOMINEES (TEMPATAN) SDN BHD 5,515,500 3.06
PLEDGED SECURITIES ACCOUNT FOR KOON YEW YIN

3 KENANGA NOMINEES (TEMPATAN) SDN BHD 5,039,000 2.80
PLEDGED SECURITIES ACCOUNT FOR KOON YEW YIN(002)

4 MAYBANK NOMINEES (TEMPATAN) SDN BHD 3,907,400 2.17
PLEDGED SECURITIES ACCOUNT FOR KOON YEW YIN

5 SOON PENG LEN 3,398,000 1.89

6 MAYBANK NOMINEES (TEMPATAN) SDN BHD 2,738,700 1.52
PLEDGED SECURITIES ACCOUNT FOR TAN KIT PHENG

7 AMANAHRAYA TRUSTEES BERHAD 1,830,600 1.02
PMB SHARIAH AGGRESSIVE FUND

8 CIMSEC NOMINEES (TEMPATAN) SDN BHD 1,669,400 0.93
CIMB BANK FOR KOON YEW YIN (MY0951)

9 ONG PECK SIM 1,535,900 0.85

10 DB (MALAYSIA) NOMINEE (TEMPATAN) SENDIRIAN BERHAD 1,530,000 0.85
EXEMPT AN FOR KUMPULAN SENTIASA CEMERLANG SDN BHD
(TSTAC/CLNT)

11 LIM SEN OON 1,200,900 0.67

12 AFFLUENT PROJECTS SDN BHD 1,174,300 0.65
13 JEGANATHAN A/L K MURUGASU 1,174,000 0.65

14 CITIGROUP NOMINEES (ASING) SDN BHD 1,154,900 0.64
EXEMPT AN FOR UBS SWITZERLAND AG (CLIENTS ASSETS)

15 ASSETS MUAR SDN BHD 1,099,500 0.61
153
THIRTY (30) LARGEST SHAREHOLDERS- Continued

(Without aggregating the securities from different securities accounts belonging to the same Depositor)
No. of % of Issued
No. Name Shares Held Share Capital
16 HLIB NOMINEES (TEMPATAN) SDN BHD 880,700 0.49

PLEDGED SECURITIES ACCOUNT FOR KOON YEW YIN (M)

17 ANUCIA A/P MUTHUCUMARU 800,000 0.44

18 VINTAGE PROJECTS SDN BHD 777,000 0.43

19 HO KIM LAN 750,500 0.42

20 ALLIANCE GROUP NOMINEES (TEMPATAN) SDN BHD 737,300 0.41
PLEDGED SECURITIES ACCOUNT FOR LEE SOON BOON

21 TAN SUN TING 713,000 0.40

22 MALACCA EQUITY NOMINEES (TEMPATAN) SDN BHD 711,300 0.40
EXEMPT AN FOR PHILLP CAPITAL MANAGEMENT SDN BHD (EPF)

23 NEOH CHER LEONG 702,994 0.39

24 CIMSEC NOMINEES (TEMPATAN) SDN BHD 650,000 0.36
CIMB BANK FOR LOH MUN MOI (MY0139)

25 TAY CHIN HENG 641,700 0.36

26 LOW WEE SIONG 600,000 0.33

CIMB FOR CHONG TON NEN & PETER CHONG (PB)

28 YEAM SEW MOY @ NYIAM SIEW MOY 480,000 0.27

CIMB BANK FOR CHIEW CHIENG SIEW (MK0111)

30 PM NOMINEES (TEMPATAN) SDN BHD 372,900 0.21
PLEDGED SECURITIES ACCOUNT FOR ANG LIP CHEE (B)

154
PROXY FORM No of Ordinary Shares held
I/We
of (Full Name in Block Letters)

(Address)
being a Member/Members of the Lii Hen Industries Bhd. hereby appoint

(Full Name in Block Letters)
of
or failing him, (Address)

of (Full Name in Block Letters)
(Address)
or failing whom, the Chairman of the Meeting as *my/our proxy/proxies to vote for *me/us and on *my/our behalf at Twenty Third (23rd) Annual General
Meeting of the Company, to be held at Classic 1, Ballroom, Classic Hotel, 69, Jalan Ali, 84000 Muar, Johor on Tuesday, 13th June 2017, at 11.30 a.m.
and, at every adjournment thereof to vote as indicated below:

RESOLUTION FOR AGAINST
To sanction a final single tier dividend of 4 sen per share Resolution 1

To re-elect the following retiring Directors pursuant to the Company’s Articles of Association:
(a) Lan Haw Chong @ Lau Haw Chong (Article 83) Resolution 2
(b) Chua Yong Haup (Article 83) Resolution 3
(c) Chan Wah Chong (Article 83) Resolution 4
(d) Dato’ Mustapha Bin Abd Hamid (Article 90) Resolution 5
To approve Directors’ fees Resolution 6
To approve Non- Executive Directors’ remuneration Resolution 7
To re-appoint John Lim & Associates as auditors Resolution 8
To retain Tey Ping Cheng as Independent Non-Executive Director Resolution 9
To empower the Directors to issue and allot shares up to 10%
of the issued share capital of the Company. Resolution 10
To approve Proposed Renewal of Shareholders’ Mandate for Recurrent Related Party

Transactions. Resolution 11
(Please indicate with an “X” in the space provided above on how you wish your vote to be cast. If you do not do so, the proxy will vote or abstain from
voting at his discretion).
The proportions of shareholding to be represented by my/our proxy/proxies are as follows:
First named Proxy %

Second named Proxy %
100%
In case of a vote taken by a show of hands, the First Proxy shall vote on *my/our behalf.
As witness my hand this day of 2017
Signature of Shareholder or Common Seal
* Strike out whichever is not desired

NOTES:
1. In respect of deposited securities, only members whose names appear in the Record of Depositors on 5 June 2017 (General Meeting
Record of Depositors) shall be entitled to attend, speak and vote at this 23rd AGM or appoint proxies to attend, speak and vote on their
behalf.
2. A proxy need not be a member of the Company and a member may appoint any person as his proxy.
3. A member entitled to attend and vote at the Meeting is entitled to appoint one (1) or more proxies to attend and vote in his stead. Where a
member appoints more than one (1) proxy, the appointment shall be invalid unless the member specifies the proportions of his holding to be
represented by each proxy.
4. Where a member of the Company is an exempt authorised nominee as defined under the Securities Industry (Central Depositories) 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.
5. The instrument appointing a proxy in the case of any individual shall be signed by the appointor or his attorney duly authorised in writing and
in the case of a corporation under its common seal or under the hand of an officer or attorney duly authorised.
6. In the event the member(s) duly exercises the form of proxy but does not name any proxy, such member(s) shall be deemed to have ap-
pointed the Chairman of the 23rd Annual General Meeting as his/her proxy, provided always that the rest of the form of proxy, other than the
particulars of the proxy, have been duly completed by the member(s).
7. To be valid the proxy form must be duly completed and deposited at the Registered Office of the Company, No. 67, 3rd Floor, Jalan Ali,
84000 Muar, Johor Darul Takzim, not less than forty eight (48) hours before the time for holding the meeting and any alteration to the proxy
form must be initialed.
STAMP
THE COMPANY SECRETARY

NO. 67, 3RD FLOOR, JALAN ALI

84000 MUAR
JOHOR DARUL TAKZIM

7089 LIIHEN AnnualReport 2016-12-31 Lii Hen 2016 Annual Report 1661818133

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CONTENTS

CORPORATE SOCIAL RESPONSIBILITY 54

STATEMENT ON MANAGEMENT DISCUSSION

OBJECTIVES AND STRATEGIES

The Group’s strategies in creating value through

STATEMENT ON MANAGEMENT DISCUSSION

General Description of the Group’s Business

THE CARRYING VALUE OF THE DEVELOPMENT OF PLANTATION INFRASTRUCTURE

STATEMENT ON MANAGEMENT DISCUSSION

Export Sales Export Sales Local Sales Total Sales

No. of containers for 2016 & 2015

STATEMENT ON MANAGEMENT DISCUSSION

PROFIT FROM OPERATIONS

STATEMENT ON MANAGEMENT DISCUSSION

LIQUIDITY AND CAPITAL RESOURCES

STATEMENT ON MANAGEMENT DISCUSSION

ANTICIPATED OR KNOWN RISK

STATEMENT ON MANAGEMENT DISCUSSION

GROUP FINANCIAL HIGHLIGHTS

REVENUE PROFIT BEFOR

PROFIT BEFORE TAXATION

Financial Year 2012 2013 2014 2015 2016

Revenue SEN 346,482 315,876 397,928 546,866 623,460

NET ASSETS PER SHARE

5 2016 2012 2013 2014 2015 2016

Financial Year 2012 2013 2014 2015 2016

Gearing ratio(net debts/total equity) 0.20 0.17 0.15 0.13 0.14

LII HEN INDUSTRIES BHD

NOTICE OF ANNUAL GENERAL MEETING

(b) Mr.Chua Yong Haup - Article 83 (Ordinary Resolution 3)

(d) Dato’ Mustapha Bin Abd Hamid - Article 90 (Ordinary Resolution 5)

4. To approve the following payments to Directors:

(b) Directors’ remuneration (excluding fees) to the Non-Executive Directors up to an amount

6. Proposed Retention of Independent Non-Executive Director

NOTICE OF ANNUAL GENERAL MEETING

7. Authority to Issue Shares

8. Proposed Renewal of Shareholders’ Mandate for Recurrent Related Party Transactions of a

NOTICE OF ANNUAL GENERAL MEETING

NOTICE OF ENTITLEMENT DATE AND DIVIDEND PAYMENT

A Depositor shall qualify for entitlement only in respect of:

By Order of the Board

Tan Wang Giap (MACS 00523)

Muar, Johor Darul Takzim

NOTICE OF ANNUAL GENERAL MEETING

Explanatory Notes on Special Business

Statement Accompanying Notice of annual General Meeting

DIRECTORS: PRINCIPAL BANKERS:

AUDIT COMMITTEE: REGISTRARS:

Tey Ping Cheng Committee Chairman Plantation Agencies Sdn Berhad

NOMINATION COMMITTEE: REGISTERED OFFICE:

PRINCIPAL PLACE OF BUSINESS:

SECRETARY: STOCK EXCHANGE LISTING:

John Lim & Associates www.liihenfurniture.com

MR CHUA LEE SENG

MR CHUA YONG HAUP

He is not a director of any other public company.

He is a nephew to Mr Chua Lee Seng.

MR TAN BEE ENG

He is not a director of any other public company

MR TOK HENG LEONG

He is not a director of any other public company.

He is a brother in law to Mr Chua Lee Seng.

MR TEY PING CHENG

MR LAN HAW CHONG @ LAU HAW CHONG