Annual Report 2009 - Malaysian Agricultural Repository

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To be Malaysia’s leading producer of renewable and sustainable quality wood and oil palm based products.

Corporate Vision

To create a strong, viable corporate entity, a first choice employer, continuously improving by harnessing our resources of people,

processes and technology contributing to the nation’s development.

Corporate Mission

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JAYA TIASA HOLDINGS BERHAD (3751-V)

Corporate Information 2

5-Year Financial Highlights 3

Notice of Annual General Meeting 4 - 6

Key Information 7

Directors’ Profiles 8 - 11

Chairman’s Statement 12 - 17

Corporate Social Responsibility 18 - 22

Corporate Structure 23

Export Market 24 - 25

Statement on Corporate Governance 26 - 33 Statement on Internal Control 34 - 35

Audit Committee Report 36 - 39

Directors’ Responsibility Statement 40

Financial Statements 41 - 117

Additional Compliance Information 118 - 119 Analysis of Shareholdings 120 - 122 Properties Owned by the Group 123 - 124 Proxy Form

5-YEAR FINANCIAL HIGHLIGHtS

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NOtICE OF ANNUAL GENERAL MEEtING

NOTICE IS HEREBY GIVEN that the Forty-Ninth Annual General Meeting of the Company will be held at the Auditorium, Ground Floor, No.62, Lorong Upper Lanang 10A, 96000 Sibu, Sarawak on Wednesday, 30 September 2009 at 11.45 a.m. for the following purposes:

AGENDA

AS ORDINARY BUSINESS

1. To receive the Audited Financial Statements for the financial year ended 30 April 2009 together with the Reports of the Directors and Auditors thereon.

Resolution 1

2. To re-elect the following Directors who retire by rotation pursuant to Article 78 of the Company’s Articles of Association:

i. Dato’ Sri Dr Tiong Ik King Resolution 2

ii. Mdm Tiong Choon Resolution 3

3. To consider and if thought fit, pass the following resolutions:

“THAT Gen (Rtd) Tan Sri Abdul Rahman Bin Abdul Hamid, retiring pursuant to Section 129 of the Companies Act, 1965, be and is hereby re-appointed a Director of the Company to hold office until the next Annual General Meeting.”

Resolution 4

4. To approve the payment of Directors’ fees for the financial year ended 30 April 2009. Resolution 5

5. To re-appoint Messrs Ernst & Young as Auditors of the Company and to authorise the Directors to fix their remuneration.

Resolution 6

AS SPECIAL BUSINESS

6. To consider and if thought fit, pass the following resolutions:

ORDINARY RESOLUtIONS

(i) Proposed Renewal of Authority for the Company to Purchase its Own Shares

“THAT subject to the Companies Act, 1965 (“Act”), the Memorandum and Articles of Association of the Company, the Main Market Listing Requirements of Bursa Malaysia Securities Berhad (“Bursa Securities”) and any other relevant authorities, the Directors be and are hereby authorised to utilise an amount not exceeding the total audited share premium and retained profits of the Company as at 30 April 2009 of RM282 million and RM43.2 million respectively to purchase such number of ordinary shares of the Company provided that the ordinary shares so purchased shall [in aggregate with the treasury shares as defined under section 67A of the Act then still held by the Company] not exceed ten per centum (10%) of the total issued and paid-up share capital of the Company for the time being;

Resolution 7

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NOtICE OF ANNUAL GENERAL MEEtING

(i) Proposed Renewal of Authority for the Company to Purchase its Own Shares (cont’d)

AND THAT such authority shall commence upon the passing of this resolution until the conclusion of the next Annual General Meeting of the Company unless earlier revoked or varied by an ordinary resolution of the shareholders of the Company in general meeting;

AND THAT the Directors may cancel the ordinary shares so purchased or to retain the same as treasury shares and may distribute the treasury shares as share dividend or may resell the same in a manner they deem fit and expedient as prescribed by the Act and the applicable regulations and guidelines of Bursa Securities and any other relevant authorities for the time being in force;

AND THAT authority be and is hereby given to the Directors to take all such steps to implement, finalise and to give effect to the aforesaid transactions with full power to assent to any conditions modifications variations and amendments as may be imposed by the relevant authorities and to do all such acts and things and upon such terms and conditions as the Directors may in their discretion deem fit and expedient in the best interest of the Company in accordance with the aforesaid Act, regulations and guidelines.”

(ii) Proposed Shareholders’ Mandate for Recurrent Related Party Transaction

“THAT approval be and is hereby given to the Company and/or its subsidiary companies to enter into any of the recurrent related party transactions of a revenue or trading nature as set out in Section 2.2 of Part B of the Circular to Shareholders dated 8 September 2009 with specific classes of Related Parties which are necessary for the day-to-day operations and in the ordinary course of business on terms not more favourable to the Related Parties than those generally available to the public and are not to the detriment of the minority shareholders;

AND THAT such mandate shall commence upon the passing of this resolution until the conclusion of the next Annual General Meeting of the Company unless earlier revoked or varied by an ordinary resolution of the shareholders of the Company in general meeting;

AND THAT the Directors of the Company be authorised to complete and do all such acts and things as they may consider expedient or necessary to give full effect to the transactions authorised by this resolution.”

Resolution 8

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7. To transact any other business of which due notice shall have been given in accordance with the Company’s Articles of Association and the Companies Act, 1965.

By Order of the Board

JAYA TIASA HOLDINGS BERHAD NGU UNG HUONG (MAICSA 7010077) Company Secretary

Sibu, Sarawak 8 September 2009

NOtES ON APPOINtMENt OF PROXY

1. A member of the Company entitled to attend and vote at the meeting is also entitled to appoint one or more proxies in his/her stead. Where a member appoints more than one (1) proxy, the appointment shall be invalid unless he/she specifies the proportion of his/her shareholdings to be represented by each proxy.

2. A proxy may but need not be a member of the Company and the provision of Section 149(1)(b) of the Companies Act, 1965 shall not apply to the Company.

3. The instrument appointing a proxy must be deposited at the Company’s Registered Office at No.1-9, Pusat Suria Permata, Lorong Upper Lanang 10A, 96000 Sibu, Sarawak not less than forty-eight (48) hours before the time for holding the meeting or at any adjournment thereof.

4. If the appointer is a corporation, the proxy form must be executed under its common seal or under the hand of its attorney. If the proxy form is executed by an attorney, supporting documents has to be produced on the day of the Annual General Meeting for verification by the Company Secretary.

EXPLANAtORY NOtES ON SPECIAL BUSINESS

(a) Proposed Renewal of Authority for the Company to Purchase its Own Shares

The Proposed Ordinary Resolution No. 7 if passed, will authorise the Company to purchase up to 10% of the issued and paid-up share capital of the Company through Bursa Malaysia Securities Berhad.

(b) Proposed Shareholders’ Mandate for Recurrent Related Party Transaction

The Proposed Ordinary Resolution No. 8 if passed, will enable the Company and/or its subsidiaries to enter into recurrent related party transactions involving the interests of Related Parties, which are of a revenue or trading nature necessary for the Group’s day-to-day operations and the transactions being carried out are in the ordinary course of business on terms not to the detriment of the minority shareholders of the Company.

NOtICE OF ANNUAL GENERAL MEEtING

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KEY INFORMAtION

Forest Concessions

Gross Area : 713,211 hectares (1,760,535 acres) Extraction Quota : 99,900m³ monthly

Main Species : Meranti, Kapor, Keruing, Selangan Batu, Jelutong, Melapi, Mersawa, Nyatoh, Arau, Penyau, Bindang and MLH (mixed light hardwood).

Oil Palm Plantation

Total Land Area : 83,480 hectares Plantable Area : 69,055 hectares Planted Area : 45,571 hectares Matured Area : 14,772 hectares

Reforestation

Total Land Area : 235,859 hectares Plantable Area : 141,308 hectares Planted Area : 26,323 hectares

Annual Production Capacity

Jaya tiasa

Jaya tiasa Rimbunan timber

Plywood Hijau Plywood Products

sdn Bhd Sdn Bhd Sdn Bhd total

Plywood 180,000 120,000 120,000 420,000

(cubic metre)

Rotary Veneer 324,000 - - 324,000

(cubic metre)

Sawntimber 98,400 - 14,400 112,800

(cubic metre)

Blockboard - 12,000 - 12,000

(cubic metre)

Film-Overlay Plywood - 6,000 - 6,000

(cubic metre)

Sliced-Veneer - - 6,000,000 6,000,000

(square metre)

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GEN (RtD) tAN SRI ABDUL RAHMAN BIN ABDUL HAMID Independent Non-Executive Chairman

Gen (Rtd) Tan Sri Abdul Rahman bin Abdul Hamid, aged 70, was appointed to the Board on 27 March 1995. He serves as chairman of the Board and the Audit Committee.

Tan Sri was the Chief of the Malaysian Army and Defence Force between 1992 and 1994 and was the Acting Governor of Penang in 1994. From 1958 to 1994, he served in various capacities and appointments in the Malaysian Armed Forces. He is a graduate of the Royal Military College, Malaysia and Army Staff College, Camberlay, United Kingdom.

Presently, he is the Chairman of DVM Technology Bhd, an ICT company listed on the ACE Market and AXA Affin Life Insurance Berhad, a joint-venture company of Lembaga Tabung Angkatan Tentera. He is also the Chairman and Director of a few other multinational and private companies incorporated in Malaysia.

Tan Sri has no family relationship with any Director and/or major shareholder of the Company.

DIRECtORS’ PROFILES

DAtO’ SRI tIONG CHIONG HOO Group Managing Director

Dato’ Sri Tiong Chiong Hoo, aged 48, was appointed Executive Director on 27 March 1995 and subsequently re-designated as Managing Director on 26 April 1995. He is the Chairman of the Risk Management Committee.

Dato’ Sri is a businessman with extensive experience in timber and plantation industries. As Group Managing Director, he actively oversees the operations of the Group. He holds a Bachelor of Law and a Bachelor of Economics degrees from Monash University, Australia and is a registered barrister.

Dato’ Sri is the son of Tan Sri Datuk Tiong Hiew King, a major shareholder of the Company. His uncle Dato’ Sri Dr Tiong Ik King, sister Mdm Tiong Choon and cousin brother Mr Tiong Chiong Hee are also members of the Board.

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DIRECtORS’ PROFILES

DAtO’ SRI DR tIONG IK KING

Non-Independent Non-Executive Director

Dato’ Sri Dr Tiong Ik King, aged 59, joined the Board on 27 March 1995. He is a member of the Remuneration Committee and the Nomination Committee.

Dato’ Sri Dr Tiong has extensive experience in many industries including media and publishing, information technology, timber, plantation and manufacturing industries. He graduated with a degree in M.B.B.S from the National University of Singapore in 1975 and subsequently obtained his M.R.C.P. from the Royal College of Physicians, UK in 1977.

Currently, he also serves on the Board of EON Capital Berhad and Media Chinese International Limited.

Dato’ Sri Dr Tiong is the brother of Tan Sri Datuk Tiong Hiew King, a major shareholder of the Company. His nephews, Dato’ Sri Tiong Chiong Hoo and Mr Tiong Chiong Hee and his niece Mdm Tiong Choon are also members of the Board.

MDM tIONG CHOON

Mdm Tiong Choon, aged 40, was appointed to the Board on 3 May 1999.

She has been with Rimbunan Hijau Group since 1991 and served in various managerial and senior positions. She graduated with a Bachelor of Economics Degree from Monash University, Australia.

She is the daughter of Tan Sri Datuk Tiong Hiew King, a major shareholder of the Company. Her uncle Dato’ Sri Dr Tiong Ik King, brother Dato’ Sri Tiong Chiong Hoo and cousin brother Mr Tiong Chiong Hee are also members of the Board.

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DIRECtORS’ PROFILES

MR tIONG CHIONG HEE

Mr Tiong Chiong Hee, aged 35, was appointed to the Board on 14 May 1999.

He is the Managing Director of Mafrica Corporation Sdn Bhd, a company with operations in logging (both in Malaysia and Overseas), oil palm plantations and aquaculture prawn farming since 1997.

He holds a Bachelor of Commerce Degree from University of Melbourne, Australia.

He is the nephew of Tan Sri Datuk Tiong Hiew King, a major shareholder of the Company. His uncle Dato’ Sri Dr Tiong Ik King, cousin brother Dato’ Sri Tiong Chiong Hoo and cousin sister Mdm Tiong Choon are also members of the Board.

DIRECtORS’ PROFILES

MR JOHN LEONG CHUNG LOONG Independent Non-Executive Director

Mr John Leong Chung Loong, aged 62, was appointed to the Board on 28 March 2002. He serves as the Chairman of the Remuneration Committee and is a member of the Audit Committee and Nomination Committee.

He is an Approved Company Auditor and a member of several professional bodies, including the Australian Society of Certified Practising Accountants, Malaysian Institute of Accountants, Malaysian Institute of Certified Public Accountants and Malaysian Institute of Taxation (Associate). He started his career as an Accountant in Tractors Malaysia Berhad, Sandakan Branch in 1972 and left in 1973 to join John Liaw & Co as an audit manager. He was a Partner of Liaw, Leong, Wong & Co from 1986 to 1997 and a Partner of Ernst & Young from 1997 to 2001.

He holds a Bachelor of Economics degree majoring in Accounting from Sydney University, NSW, Australia.

He has no family relationship with any Director and/or major shareholder of the Company.

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DIRECtORS’ PROFILES DIRECtORS’ PROFILES

MS WONG LEE YUN

Independent Non-Executive Director

Ms Wong Lee Yun, aged 56, was appointed to the Board on 21 June 2007. She is a member of the Audit Committee.

She is a Certified Public Accountant by profession.

She has extensive experience in investment banking, Finance and Strategic Planning for large investment projects, as well as acquisition of strategic businesses. She was a Corporate Finance Manager at Permata Chartered Merchant Bank and Vice President at Chase Manhattan Bank. From 1991 to 1996, she was the Director of Finance and Strategy for the Renong Group of Companies. She became the Chief Executive of Jaya Tiasa Holdings Berhad from 1997 to 2000. She was also a Director of Sin Chew Media Corporation Bhd from 2004 to early 2008 and remains as an Adviser to Sin Chew Media Corporation Bhd. In addition, she holds directorship in several private limited companies.

She has no family relationship with any Director and/or major shareholder of the Company.

DAtUK tALIB BIN HAJI JAMAL

Independent Non-Executive Director

Datuk Talib Bin Haji Jamal, aged 57, was appointed to the Board on 12 November 2007. He is the Chairman of the Nomination Committee and is a member of the Audit Committee and Remuneration Committee.

Datuk Talib has served in various senior capacities and positions in the Police Diraja Malaysia for more than 30 years. He was the Commissioner of Police, Sarawak from 2004 until his retirement in November 2007. He was the Director of Police Cooperatives for 10 years and the Director of Bank Kerjasama Rakyat for 2 years.

Datuk Talib holds a Master of Science in Mechanical Engineering from Cranfield Institute of Technology, England, United Kingdom.

Datuk Talib has no family relationship with any Director and/or major shareholder of the Company.

None of the Directors has:

• Any conviction for offences within the past 10 years other than traffic offences.

• Entered into any transaction whether directly or indirectly which has a conflict of interest with the Company.

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CHAIRMAN’S StAtEMENt

Dear Valued Shareholders,

On behalf of the Board of Directors of Jaya tiasa Holdings Berhad, it is my pleasure once again to present to you the Annual Report and Audited Financial Statements of the Group for the financial year ended 30 April 2009.

The financial year (“FY”) 2009 started out less optimistically and proved to be a very challenging year. The slump in the US sub-prime mortgage market eventually escalated to become a major financial crisis that extended across the world, retarding economic growth and lowering levels of business as well as consumers’

confidence. GDP growth generally fell due to sluggish export demand, fewer funding sources, declining commodity prices and higher rates of unemployment.

Developing economies like Malaysia were more susceptible to the domino effect of inflation which intensified in the first half of the previous year stemming from the upswing in fuel and food prices. This was especially conspicuous in July 2008 when the crude oil price was pushed up alarmingly to USD147 per barrel.

Given this prevailing economic situation, operations were tough and challenging for the timber industry in the year under review. The worldwide slowdown in the construction activities as a result of the rapid decline in global macroeconomic conditions has adversely impacted the industry across the board. With a decline in housing starts in global key markets, such as in the US and Japan, there has been a drop in the prices of and demand for our wood products. The higher cost of operations due to the surge in fuel and adhesives costs as well as the depreciation of the US Dollar during the first half of FY2009 were among the factors that exerted pressure on the Group’s profit margins.

The oil palm industry was not spared the adverse effects of the global economic turmoil, thereby resulting in tremendous fluctuations in the prices of crude palm oil (“CPO”) and its related products. Palm oil prices were on an unprecedented upward trend in the first half of 2008 but declined significantly in the second half of 2008. However, on a more encouraging note, prices have moderately recovered lately. The year 2008 also saw a sharp rise in the prices of fertilisers and transportation costs due to the sudden hike in crude oil prices. As a result, this had affected the profitability of our oil palm division.

In order to remain focused in our objectives to maintain performance and create maximum returns for shareholders, the Group has undertaken various measures to counter the challenges brought about by the uncertainties of the current economic crisis. These, among others, include various cost-saving exercises, re-engineering of our manufacturing processes for better product quality and output productivity, procurement of Green certification for our wood products and developing new markets and customers.

With a refreshed and renewed outlook of our strategies, functions and processes, the Group plans for a steady long-term growth and to be well prepared in the wake of market recovery.

FINANCIAL PERFORMANCE

Against this background, the revenue of the Group for the financial year under review decreased from RM794 million in the previous year to RM757 million, indicating a reduction of 5%. Lower selling prices together with higher operating costs led to an erosion in profit after tax of the Group to RM14.6 million from RM52.5 million attained in the preceding year. As a result, earning per share was down to 5.20 sen. Net tangible assets per share stood at RM3.80.

An overview of the current financial position highlighted that the Group applied a balanced mixture of equity and long term debt capital to finance a total base of assets with value above RM2 billion.

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CHAIRMAN’S StAtEMENt

Throughout the whole year under review, prudent management of liquidity was assumed. The Group’s development of oil palm plantations involved a cash outlay of RM173 million in addition to an investment of RM99 million cash in property, plant and equipment. Out of the total acquisition of capital assets amounting to nearly RM270 million, 75% of the cash requirement was satisfied by the draw down of existing bank borrowings while business earnings generated internally from operations constituted the source for the remainder.

REVIEW OF OPERAtIONS Plywood

The FY2009 posed a challenging year for the plywood division. Demand for plywood fell in response to weakening global economic conditions. The margin was adversely affected due to the higher price of fuel and international freight charges. In addition, rising glue rates also led to increase in costs for the Group’s operations.

The Group’s plywood sales volume during the financial year under review was 14% lower than that attained in the preceding financial year. The average selling price of plywood achieved during the financial year contracted by 0.8% from the previous year. Sales volume and prices fell in tandem with the weaker demand, primarily due to the continued deterioration of the U.S. and Japan housing markets. In response to the contraction in demand, the scale of plywood manufacturing activities was correspondingly controlled to avoid incurring excessive holding costs of plywood stock. We achieved better utilisation of the Group’s resources by this initiative.

The USA has become the top export destination for the Group during the reporting year, making up 22% of the Group’s total export, overtaking the Middle East (19%), Japan (19%) and Korea (16%).

Korea and Middle East

During the Year 2008, the domestic slump in the furniture sector was exacerbated by more local manufacturers of furniture in South Korea turning to CDX pine plywood and medium density fibre-board as feasible substitutes for plywood in order to stabilise the supply of raw materials. Moreover, volumes of veneers imported into the country were maintained broadly at the same level over the past two years. This was despite stronger competition among plywood exporters when the Korean market was supplied abundantly with more sources originating from Indonesia and China. These demand and supply forces interacting in export markets have collectively led to the significant curtailment of plywood exported to South Korea.

Meanwhile, contractions in the Middle Eastern construction activities have resulted in shrinkage of general demand for plywood exported from South East Asia.

Japan and USA

Despite a tightly squeezed economic environment, the Group’s high quality plywood was able to compete in Japan resulting in higher sales compared to the previous year. Two subsidiaries of the Group renewed the prestigious award of JAS Certification, paving the way for consolidating its premium position in the Japan market.

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CHAIRMAN’S StAtEMENt

In addition, we are pleased to highlight that the Group’s plywood had on 30 October 2008 successfully obtained the California Air Resources Board (CARB) certificate. With this certification, our composite wood product (hardwood plywood) is recognised to have met the formaldehyde emission limits stipulated in the California Code of Regulations. Besides ensuring consumers the safety aspects of our product, the CARB certification will also provide the Group a competitive edge in the US market and further boost the volume of plywood exported by the Group to North America.

Our commitment to support environmentally friendly wood products enables us wider access to a growing number of markets and consumers that demand certified products. During the year, we are also delighted to have passed the stringent surveillance audit of JAS certification, Wood Packaging Treatment Certification and CE Marking (EC Certificate for Factory Production Control) for our factories.

Plywood: Outlook and Strategy

In spite of the difficult market conditions, our plywood division continues to upgrade its existing plywood products by focusing on producing and exporting value-added products such as Floor Based and Thin Panels for niche markets which offer premium pricing. We believe that our strategy has resulted in an increase in market share in other potential markets with better margins that are sustainable over time. Furthermore, the Group will also concentrate on supplying certified plywood products to effectively exploit a rising number of markets that demand certified wood products.

In the coming financial year, we will press ahead with improvement to our operations; especially to achieve optimum recovery from smaller diameter logs. At the same time, the Group will take this opportunity to carry out major maintenance of the production facilities to further improve efficiency. With the initiatives and innovative marketing strategies, we are well equipped to stay ahead in this competitive marketplace and to benefit when markets recover.

Logging

Despite a very challenging operating condition, the logging division continued to perform well in FY2009.

Total revenue rose by 4% which was attributable to a dual increase in sales volume from local and export markets. A sizeable fraction of the surge in export revenue was contributed by higher foreign exchange conversion gains. This was due to the depreciation of the Ringgit against the US Dollar in the second half of year 2008 which boost the Group’s export sales return that were denominated in US Dollar.

Total log production during the year was 11% below the previous year’s production. The unusual rainy season from December last year to January this year caused a disruption to our timber harvesting activities which accounted for the lower production volume. Meranti, Selangan Batu, MLH, Kapor and Keruing were the main species of logs produced by the logging division. The Group’s export markets remain predominantly India, Taiwan and Japan representing 46%, 23% and 14% respectively.

India

India emerged as the largest market for exported logs for the Group in FY2009. The demand for logs from India displayed an upward trend particularly towards the end of the current reporting year when a double quantum of rise in turnover was recorded. This positive performance was underpinned by India’s resilient economy which benefited from the country’s lucrative housing schemes driven by its booming population in urban districts. In view of the country’s high demand for tropical hardwoods from its construction industry, the Group is getting promising volume from Indian buyers especially for the harder species with good margins.

Hence, India will continue to be an important market segment of the Group.

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CHAIRMAN’S StAtEMENt

Japan

Given the deteriorating economic scenario and weak housing starts in Japan, import demand of logs from the country has plunged and consequently log prices were negatively affected. The huge inventory build-up due to the implementation of the new Building Standards Act had resulted in plywood manufacturers reducing their purchase of logs. Furthermore, the decline in demand for raw material of logs was exacerbated by a number of new bankruptcies in the sectors of construction and real estate investment trust, a much slower growth in its housing development projects, and the closure of Japanese factories using logs shipped from South East Asia. However, due to our strategy of having a diversified export sales market, our reliance on the Japan market has been reduced and subsequently reducing negative impact on the Group.

Logging: Outlook and Strategy

We remain committed to sustaining growth and generating earnings during these trying times. The Group’s strategies for the division are to manage forests on a sustainable basis and to achieve optimum returns from our forest resource through effective resource allocation. We will continue to ensure that the quality of logs is maintained by enhancing infrastructure and transportation support systems with the aim to accomplish timely log production and delivery. In response to the growing global demand for verified legal and sustainable forest products, we are implementing a phased approach to obtain forest management certification. Supplying certified products will help to ease the passage of the Group to penetrate wider export markets.

Oil Palm Plantation

For the year under review, the division recorded a 20% increase in revenue from the sale of fresh fruit bunches (“FFB”) to RM44 million, despite highly volatile CPO prices movements and challenging market conditions.

The rise in revenue was mainly supported by further improvement in our FFB yield as more oil palm trees reached harvesting stage. The division’s share of contribution to the Group’s profit before tax has increased from 28% to 53%.

Higher production costs especially during the first half of FY2009 was due to the escalating cost of fuel that resulted in higher fertiliser cost and other fuel related materials. In addition, a sudden downward trend of CPO prices towards the second half of FY2009 following the sharp decline in crude oil and other vegetable oil prices also narrowed the operating margin of the division.

During the year, the division produced a total of 99,191 Metric Tonnes (“MT”) of FFB in FY2009, achieving a growth of 62% compared to a year ago. The increase in production was mainly attributable to the increase of mature area by 115% or 4,064 hectares (“ha”).

As at 30 April 2009, the total land bank of the Group stood at 83,483 ha with 68,267 ha estimated to be suitable for planting. Our total planted area increased by 26% to 43,558 ha, from 34,531 ha previously. Of the 43,558 ha planted area, approximately 17% or 7,595 ha were mature oil palms. The FFB production of the Group is projected to increase further over the next few years from additional areas coming into maturity and a higher yield expected from the oil palm trees at their more productive age.

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The construction of our first CPO mill in Pulau Bruit, Sarawak has been completed in March 2009. The CPO mill is strategically located to keep the logistic cost low and to facilitate timely delivery. It has a capacity of processing 45-MT of FFB per hour and it is expandable to 90-MT per hour, to support the anticipated higher crop levels in the coming years from the surrounding plantations owned by the Group.

Oil Palm Plantation: Outlook and Strategy

Despite the challenging and volatile conditions, the long term outlook for the palm oil industry remains positive backed by rising global demand for palm oil in the food and energy sectors. Our business strategy is to focus on further improving operational efficiency by ensuring best practices in agronomy and using high yielding planting materials with the aim to maximise FFB yields. In the coming years, we can look forward to an upward trend of FFB production from new areas coming into maturity, better maturity profile of the palms and our on-going planting programme. We continue to demonstrate consistent responsible corporate conduct across our operations and are committed to achieve growth in an environmentally and socially responsible manner.

Reforestation

Forest plantation is the Group’s strategic long-term asset that will sustain and maximise timber supply for the Group’s downstream production. We are currently developing three Licensed Forest Plantations, covering a total land area of 235,859 ha in Kapit Region, Sarawak. To date, the Group has planted 26,007 ha of the licensed areas and the average survival rate of the planted seedlings is above 90%. The main species being planted were Eucalyptus Deglupta, Eucalyptus Pellita and Kelampayan.

Planting performance as at end of FY2009 is as follows:

LPF Project Gross Area (Ha) Plantable Area (Ha) Planted to date (Ha)

% Planted

LPF 0023 MERIRAI BALUI 55,887 34,271 7,939 23%

LPF 0024 BAHAU LINAU 108,144 61,878 8,718 14%

LPF 0028 GUANACO MAUJAYA 71,828 45,159 9,350 21%

TOTAL 235,859 141,308 26,007 18%

The plantation development of the Group uses two methods of reforestation system, namely Island Corridor Planting (ICP) and Industrial Tree Planting (ITP). The ICP or enrichment planting method is used for reforestation areas with steep terrains. This system enhances the yield of mixed tropical hardwood as it increases the stocking density in an already growing timber stand. The ITP planting method is used for reforestation areas with gentler terrains where the site is clear felled and replanted with fast growing species to create a monoculture tree stand.

CHAIRMAN’S StAtEMENt

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Reforestation: Outlook and Strategy

The reforestation division is continuously researching and developing silvicultural practices with the aim to obtain better timber yield and quality at harvest. We will implement strict quality control on new plantings and subsequent maintenance to improve the survival rate and growth of planted trees. The Group also focuses on measures to improve the efficiency of manpower utilisation and transportation in the reforestation areas.

GOING FORWARD

While there have been some signs of improvement in the economic situation of late, it remains unknown if the projection of the economy would improve or retrograde even further. Still, we believe that the significant stimulus packages announced by many major countries would be able to provide some form of support for commodities, including wood products.

The general outlook for the timber industry remains challenging as consumer sentiment has been affected by continued uncertainty in the existing economic climate. We also expect a much slower pace for the revival of demand and pricing for plywood based on the severity of the existing economic turmoil in Japan, the major global market. However, log prices should remain resilient owing to limited supply. Like any other cyclical industry, we believe that the current market slowdown is transient and that economic conditions will eventually improve. With wood-based products remaining in steady demand, especially from several emerging markets, the future for the global timber business remains buoyant.

CPO prices are also expected to stabilise at a reasonable level due to several factors such as a positive growth in palm oil consumption in countries like India and China, better acceptance of palm oil and rising demand from the renewable energy sector. Bearing that in mind, we are optimistic of the favourable outlook for the palm oil industry in the long run.

In light of the above, the Group will continuously monitor developments closely and be proactive in implementing measures to face any eventualities. All initiatives and measures for improvement will be refined further and sustained in the coming year. The Board is confident that with all the requisite skills and management structure, we would be able to mitigate the risks and seize any opportunities that may arise, apart from continuing to create value for its shareholders over the long term. We pledge our commitment and believe that we will emerge stronger from the current economic crisis and be even better equipped to face the challenges ahead.

ACKNOWLEDGEMENt

On behalf of the Board, I would like to thank our valued shareholders, customers, business associates, the regulatory authorities, financiers and members of the community, for their continued support and trust in our Group. I would also like to record our sincere appreciation to the management team and all employees of the Group for their tireless efforts and invaluable contributions throughout the period. With your support and confidence, I look forward to a productive year despite the economic challenges ahead.

GEN (RtD) tAN SRI ABDUL RAHMAN BIN ABDUL HAMID Chairman

CHAIRMAN’S StAtEMENt

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In the financial year (“FY”) 2009, we continue our ongoing commitments to integrate corporate social responsibility (“CSR”) into our business policies and business practices. In pursuit of our business objectives and our endeavour to generate value for all our stakeholders, we undertake to strike a balance between our financial and non-financial performance. We place great emphasis on operating responsibly in every aspect of our day-to-day business operation and demonstrate this through preserving and protecting the long-term health and viability of the environment, supporting communities, promoting ethical behaviour, operating safely and contributing to the well-being of our workforce.

ENVIRONMENt: tOWARDS GREENER ENVIRONMENt

Caring for the environment is a major concern for the Group. We continue to maintain responsible forestry practices and sustainable resource management. In ensuring environmental sustainability, the Group not only complies with statutory environment laws and regulations but goes beyond this by lowering the environmental impact of its production processes, producing environmentally-conscious products, practicing eco-friendly waste management and exercising environmental conservation by supporting tree planting.

Improving the Forest for the Future

We practise internationally-recognised Reduced Impact Logging (“RIL”) techniques in our harvesting operations. RIL is a technique that minimises damage to the residual stands and soil. Additionally, it is also a procedure that improves utilisation of timber resources and reduces waste through forest inventory and planning from pre-harvesting to post-harvesting. This practice ensures continued benefit for our future generations as it leaves the environment in good condition.

Responsible Oil Palm Plantation

The Group’s oil palm division continues to monitor procedures and systems to ensure that good agronomic practices are prevalent throughout the plantation. Among the various practices adopted by the Group’s estates are zero burning land clearing techniques and good agricultural practices in water management, manuring and weeding. In managing pest control, our biological and integrated pest management practice which involves light traps and planting of beneficial plants, has vastly reduced dependency on the usage of chemical pesticides.

Providing Environmentally Friendly Products

The Group advocates responsible forest management concepts and appreciates the value of products manufactured from timber of legal sources. A reflection of the Group’s commitment towards this is manifested in its efforts to obtain certifications under different standards. Jaya Tiasa Plywood Sdn Bhd and Rimbunan Hijau Plywood Sdn Bhd at Tanjung Ensurai, both obtained the CE Marking and the Japanese Agriculture Standard (“JAS”) certifications. During the FY2009, we are delighted to announce that we passed all the surveillance audits for both certifications. In addition to that, our factories, namely Jaya Tiasa Plywood Sdn Bhd and Jaya Tiasa Timber Products Sdn Bhd have been awarded with the Wood Packaging Material Treatment Providers Certifications by the Department of Agriculture, Sarawak. The certification validates that the wood packaging treatment facilities of our factories complies with the Sarawak Department of Agriculture Plant Protection and Quarantine Branch conditions for wood packaging material treatment in accordance with the International Standards for Phytosanitary Measures No.15 (ISPM 15).

CORPORAtE SOCIAL RESPONSIBILItY

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CORPORAtE SOCIAL RESPONSIBILItY

Providing Environmentally Friendly Products (Cont’d)

Another highlight of the year was the Group’s plywood that successfully obtained California Air Resources Board (CARB) certification on 30 October 2008. This certification verifies that our composite wood product (hardwood plywood) meets the formaldehyde emission limits stipulated in the California Code of Regulations.

With this certification, consumers can be rest assured of the safety aspects of our product.

Renewable Energy, Green and Clean

The Group has always been conscientious of the environment and had since 1996 erected biomass power plants that convert wood waste into fuel for use in our mills as a source of renewable energy. This effectively allows us to maximise the value of our wood resources at all our mills and processing plants whilst minimising waste produce for a cleaner environment. The energy generated by our biomass power plants sufficiently supplies electricity for the consumption of our factories, offices and workers’ quarters hence lowering energy costs.

Greening initiative

The establishment of well-managed forest plantations of the Group aims to support the Government’s reforestation program that ensures continuous replenishment of the wood resources as well as conserves biodiversity and protects the environment. Rapid growing forest plantation requires shorter rotation period and thus produce more rapidly than natural forest to adequately meet the wood demand on a sustainable basis and regenerate the habitat for flora and fauna. We are well aware of the dire consequences of global warming and therefore, preserving the environment has always been our top agenda. By regenerating forests through reforestation, we hope to contribute towards reducing the effect of global warming as forests absorb noticeable amounts of carbon dioxide which is one of the greenhouse gases that increases the temperature around the globe. Ongoing forest plantation project of the Group is being carried out in Kapit, Sarawak and we are developing a total area of over 236,000 ha.

WORKPLACE: MOtIVAtING AND EMPOWERING EMPLOYEES

Human capital is considered as the most important asset of the Group. The continued growth of our business relies on the Group’s ability to attract, motivate and retain the best talent with appropriate skills at every level. We provide our employees career advancement opportunities, fair and equitable remuneration and a safe and motivating work environment. The Group has a growing workforce of more than 4500 people as of 30 April, 2009 to meet the demands of our rapid development.

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CORPORAtE SOCIAL RESPONSIBILItY

Continuous training and Skills Enhancement

We have always been consistent in helping our employees achieve their fullest potential by equipping them with the necessary skills via specialised training. Apart from organising in-house training, our employees are also encouraged to attend the Group’s sponsored external courses. In our logging division, forest workers are sent for training provided by the Sarawak Timber Association. Upon completion of different ongoing courses such as tree felling, log extraction and log loading, the workers are expected to be more competent in their tasks. In our oil palm division, we have a training team that plans various courses and modules pertaining to technical knowledge, management and skills reinforcement in managing oil palm crops. In further enhancing their practical knowledge and field exposure, our plantation personnel are given the opportunity to attend numerous plantation workshops and seminars to better familiarise them with the plantation industry.

Performance-oriented Culture and Equal Opportunity

We embodied a performance-oriented work culture based on meritocracy. Regular performance appraisals and evaluations are carried out to enable due reward for achievers and performers and promote motivation and performance upgrading for the rest.

Employee Benefits

We keep abreast of the latest marketplace development on compensation and benefits to ensure our remuneration packages are market-competitive and reflective of how much we value our employees. We offer both short-term and long-term incentives to further motivate staff of every level and the fruit of our attempt is reflected in the low staff turnover rate.

Work-Life Balance and Healthy Living

Our corporate mantra to be “an employer of choice” is evident in our drive to develop and maintain a balanced, fair, collaborative, healthy and conducive work environment for continuous learning and personal growth. The Group goes to great lengths to ensure that the mental and physical well-being of its employees is well cared for through encouragement in participation in social programmes, sports and recreational activities. These activities are aimed at promoting rapport and fostering closer teamwork among employees as well as to encourage work-life balance and healthy living. The Group also promotes staff appreciation efforts like our annual dinners, birthday celebrations, festive gatherings and family events.

In addition, we invest in workforce welfare by providing quality environment and accompanying facilities, building of quarters, playgrounds as well as recreational and medical facilities, which cater to the estate and mill-workers.

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CORPORAtE SOCIAL RESPONSIBILItY

Committed to Health and Safety at Work

We are committed to enforcing workplace health and safety excellence not just for our employees but also for our customers and visitors. We are constantly improving safety standards and our goal is to have a casualty-free workplace. We provide regular training to enable our employees understand the requirements of the Occupational Safety and Health Act (OSHA) 1994 and also to instil safety awareness. Emergency exercises, including fire-fighting drills, are regularly conducted. To further support this, we have appointed trained and qualified safety officers who conduct frequent quality audits and safety checks at individual sites to ensure that all safety requirements and precautions are strictly observed.

COMMUNItY: CONtRIBUtING tO tHE NEEDS OF SOCIEtY

As a responsible corporate citizen, the Group recognises its duty to operate conscientiously and add value to the communities. We continue to support the needy and the less privileged in the community, through activities ranging from raising donations and sponsorship for the needy to providing hands-on assistance to charitable events, local community projects and social causes.

Our efforts include:

• Charity drives for the autistic society, the kidney foundation, children’s homes and old folks’ home

• Fund-raising for the victims of cyclone and earthquake

• Fund-raising for the fire victims

• Blood donation drives to meet the continuous need for blood supplies at hospitals and blood banks

• Cash contributions to support several sporting events Strengthening ties with local communities

The Group strongly believes that its business success can only be sustained when local communities grow and prosper together with the Group. We have established a symbiotic relationship with local communities and make every endeavour to bring about mutual benefits. We have been consistently rendering support by means of monetary terms and in-kind to ensure that the basic needs and expectations of surrounding communities are attended to. The Group has contributed water tanks for the folks at longhouses to tap rainwater, as clean water is not readily available. This enables them to obtain cleaner water more conveniently for daily consumption. From offering job opportunities to providing necessities and infrastructure, we have contributed in a significant way to help raise the living standards of native communities. Our dedicated site management team takes responsibility for resolving the concerns of various local groups and also assists in improving their rural and remote livelihoods.

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CORPORAtE SOCIAL RESPONSIBILItY

MARKEtPLACE: UPHOLDING tHE HIGHESt PRINCIPLES OF INtEGRItY Engaging with our Shareholders and Investors

The Group recognises the importance of maintaining transparency and accountability to the investment community and is thus committed to cultivate the best practices in complying with all laws and regulations and maintaining the highest Corporate Governance standards. Our carefully planned investor relations programme aims to establish and maintain open communications with shareholders and investors so as to provide timely information and assure the best possible transparency. We keep the market and investors well versed with our key business activities, strategies and performance through general meetings, briefings and road shows. In addition, our website at www.jayatiasa.net also provides a wide range of information on the Group.

Responsibility to our Customers

As one of the key players in the global timber industry, we have an extensive list of customers. Strong customer loyalty has brought us long-term support from those who are impressed by our expertise, values and services. We place great emphasis on customer feedback as we deem it to be an important element in ensuring continuous improvements of our products, services and processes.

Going forward, Jaya Tiasa intends to stay the course and fulfil our corporate social obligations by continuously performing good CSR initiatives.

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100% - Jaya Tiasa Plywood Sdn Bhd 100% - Jaya Tiasa Timber Products Sdn Bhd 100% - Rimbunan Hijau Plywood Sdn Bhd 100% - Jaras Sdn Bhd

70% - Sericahaya Sdn Bhd 70% - Curiah Sdn Bhd

100% - Jaya Tiasa Forest Plantation Sdn Bhd 100% - Guanaco Sdn Bhd

100% - Maujaya Sdn Bhd

100% - Maxiwealth Holdings Sdn Bhd 100% - Mantan Sdn Bhd

100% - Simalau Plantation Sdn Bhd 100% - Hariyama Sdn Bhd

100% - Eastern Eden Sdn Bhd 100% - Poh Zhen Sdn Bhd 100% - Erajaya Synergy Sdn Bhd

100% - JT Oil Palm Development Sdn Bhd 100% - Multi Greenview Sdn Bhd

100% - Jaya Tiasa Aviation Sdn Bhd

100% - Jaya Tiasa R&D Sdn Bhd 100% - Hak Jaya Sdn Bhd 100% - Kunari Timber Sdn Bhd 100% - Eastern Timber Ltd

40% - Mafrica Trading Sdn Bhd

100% - Jaya Tiasa Aquaculture Sdn Bhd 100% - Eastern Green Company Inc.

100% - Atlantic Evergreen Holdings

100% - Western Timber Resources Limited 100% - Pacific Timber Holdings Limited

66% - Selvaplac Verde Ltda

34%

100% - Atlantic Timber Holdings Limited

JAYA TIASA HOLDINGS BERHAD

Timber Operations

Oil Palm Operations

Helicopter Chartering Services

Research and Development Aquaculture

Marketing and Trading

CORPORAtE StRUCtURE

Offshore Companies Malaysian Companies

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PERCENTAGE OF EXPORT SALES

YEAR ENDED 30 April 2009 30 April 2008 30 April 2007

LOGS

39.5%

33.9%

PLYWOOD

59.1%

64.3%

VENEER

0.1%

0.2%

OTHERS

1.3%

1.6%

100%

45.0% 52.6% 1.3% 1.0% 100%

100%

EXPORt MARKEt

Export Market Australia China

European Union Hong Kong India Japan Korea Middle East Pakistan

Papua New Guinea Singapore

Taiwan Thailand

United Kingdom USA

Vietnam

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PERCENTAGE OF EXPORT SALES

YEAR ENDED 30 April 2009 30 April 2008 30 April 2007

LOGS

39.5%

33.9%

PLYWOOD

59.1%

64.3%

VENEER

0.1%

0.2%

OTHERS

1.3%

1.6%

100%

45.0% 52.6% 1.3% 1.0% 100%

100%

MIDDLE TAIWAN EAST

EXPORt MARKEt

SALES VALUE 2009 (%)

SALES VALUE 2008 (%)

SALES VALUE 2007 (%) 5.9

8.9 6.2 9.4 5.3 7.4 5.8

11.2 8.8

16.1

13.8

20.6 29.6

18.4 23.2

9.1 6.1

22.5 10.4

9.4

15.7

11.6 4.8 5.1

10.1 6.9 6.2 13.2 8.0

18.2

15.3

22.1 20.5

17.4 15.8

13.8 12.0

17.2 9.4

8.5 8.9

8.5 10.6

16.7

8.4 5.4

16.9

24.6

SALES VOLUME 2009 (%)

INDIA JAPAN USA CHINA KOREA OTHERS

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Corporate Governance in Jaya Tiasa Holdings Berhad (“JTH” or the “Company”) adheres to the principles and best practices of corporate governance prescribed in the Malaysian Code on Corporate Governance (Revised 2007) (the “Code”) wherever possible.

The Board is committed to ensuring that the highest standards of corporate governance is practiced throughout the Group as a fundamental part of discharging its responsibilities to protect and enhance shareholder value and the financial performance of JTH.

Set out below is a statement by the Board on the application by the Group of the principles contained in the Code, and the extent of compliance with the best practices of the Code.

BOARD OF DIRECTORS

The Board retains effective control of the Group and is responsible for the Group’s overall corporate governance, strategic direction, annual budget, business performance and operations, succession planning, risk management, investor relations, internal control and management information systems.

Board Balance

The Board, as at the date of this statement, has eight (8) members. Seven (7) are Non-Executive Directors (including the Chairman) and one (1) is the Managing Director. Four (4) Directors, representing half (1/2) of the Board members, are Independent Non-Executive Directors. The Directors with their wide experiences in both the public and private sectors and diverse academic background provide a collective range of skills, expertise and experience which is vital for the successful direction of the Group. A brief profile of each Director is presented on pages 8 to 11. The Board is of the opinion that its current size and composition is appropriate and constitutes an effective Board.

There is a clear demarcation of responsibility between the Chairman and the Managing Director to ensure the balance of power and authority. The positions of the Chairman and the Managing Director are separately held by two persons. The Chairman is primarily responsible for ensuring Board effectiveness and conduct. The day-to-day responsibilities of overseeing the overall Group’s financial and operational matters lie with the Executive Management under the direction of the Managing Director to ensure that the Group is managed in an efficient manner. The Managing Director is also responsible for the implementation of Board policies and decisions. Adequate support is in place to ensure continuity in the absence of key executive.

The presence of Independent Non-Executive Directors facilitates the exercise of independent evaluation in Board deliberations and decision-making, and thus provides check and balance in the Board. The Independent Non-Executive Directors are not engage in the day-to-day management of the Company and do not participate in any business dealings and are not involved in any other relationship with the Company.

This is to facilitate the Independent Non-Executive Directors to discharge their duties and responsibilities effectively, void of conflict of interest situation.

The Board has identified Gen (Rtd) Tan Sri Abdul Rahman Bin Abdul Hamid as the Senior Independent Non- Executive Director to whom concerns of shareholders, management and others may be conveyed.

STATEMENT ON

CORPORATE GOVERNANCE

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Board Meetings

The Board holds scheduled meetings regularly, with additional meetings to be convened as and when necessary. A total of five (5) Board of Directors Meetings were held in the financial year ended 30 April 2009.

Details of the attendance of each Directors are as follows:

Name of Directors Number of Meetings Attended

Gen (Rtd) Tan Sri Abdul Rahman Bin Abdul Hamid 5/5

Dato’ Sri Tiong Chiong Hoo 5/5

Dato’ Sri Dr Tiong Ik King 3/5

Mdm Tiong Choon 3/5

Mr Tiong Chiong Hee 5/5

Mr John Leong Chung Loong 5/5

Ms Wong Lee Yun 4/5

Datuk Talib Bin Haji Jamal 5/5

Board Meetings for each year are scheduled well ahead so that the Directors can plan accordingly and fit the year’s Board Meetings into their respective schedules.

Supply of Information

The Directors have unrestricted access to information pertaining to the Group’s business and affairs to enable them to discharge their duties and responsibilities.

The agenda for each Board Meeting together with relevant board papers which include quarterly and annual financial statements, operational reports, annual business plan, corporate proposals, minutes of meetings as well as reports from Board Committee are forwarded to each Director for their perusal well in advance of the date of Board Meeting to facilitate informed decision making.

In addition, there is a schedule of matters reserved specifically for the Board’s decision, including the approval of corporate plans and annual budgets, acquisitions and disposals of undertakings and properties of a substantial value, major investments and financial decisions.

The Senior Management Staff are invited to attend the Board Meetings to report to the Board on matters relating to their areas of responsibility and also to brief and provide details to the Directors on recommendations or to provide clarification on issue(s) that may be raised by any Director.

All the Directors have direct access to the advice and services of the Company Secretary whether as a full Board or in their individual capacity. The Board is regularly updated and advised by the Company Secretary on new statutes and directives issued by regulatory authorities, and the resultant implications to the Company and the Directors in relation to their duties and responsibilities. The Company Secretary serves notice to Directors on the closed period for trading in JTH’s shares. The Directors also have the liberty to seek external professional advice if so required by them at the Company’s expense.

STATEMENT ON

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BOARD COMMITTEES

The following Board Committees have been established to assist the Board in the execution of its duties and responsibilities. The functions and terms of reference of the committees as well as authority delegated by the Board to these Committees are clearly defined.

a. Audit Committee

The composition, terms of reference and summary of the Audit Committee and internal audit activities are presented on pages 36 to 39.

b. Nomination Committee

The Nomination Committee is made up entirely of Non-Executive Directors, of whom two-third (2/3) are independent.

The following Directors are members of the Nomination Committee:

Chairman - Datuk Talib Bin Haji Jamal (Independent Non-Executive Director) Members - Mr John Leong Chung Loong (Independent Non-Executive Director)

- Dato’ Sri Dr. Tiong Ik King (Non-Independent Non-Executive Director) The key terms of reference of the Nomination Committee are:

• to propose and identify new nominees for appointment to the Board of Directors.

• to recommend to the Board, Directors to fill the seats on Board Committees.

• to assess Directors on an on-going basis, the effectiveness of the Board as a whole, the Committees of the Board and the contribution of each individual Director.

• to review annually the Board’s mix of skills, experience and other qualities including core competencies which Non-Executive Directors should bring to the Board; and

• to recommend to the Board for continuation the service of Executive Director(s) and Non-Executive Director(s) who are due for retirement by rotation.

The Nomination Committee upon its annual review carried out, is satisfied that the size of the JTH Board is optimum and that there is appropriate mix of skills, experience and core competencies in the composition of the Board. The Nomination Committee is satisfied that all the Members of the Board are suitably qualified to hold their positions as Directors of the Company in view of their respective academic and professional qualifications, experience and qualities.

The Committee met once and conducted individual director appraisal as well as Board appraisal and recommended to the Board for continuation, the services of the Directors due for retirement by rotation.

The meeting was attended by all the members.

STATEMENT ON

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c. Remuneration Committee

The Remuneration Committee is made up entirely of Non-Executive Directors, of whom two-third (2/3) are independent.

The following Directors are members of the Remuneration Committee:

Chairman - Mr John Leong Chung Loong (Independent Non-Executive Director) Members - Datuk Talib Bin Haji Jamal (Independent Non-Executive Director) - Dato’ Sri Dr. Tiong Ik King (Non-Independent Non-Executive Director)

The key terms of reference of the Remuneration Committee are:

• to recommend to the Board the framework, remuneration package and performance related pay schemes for Executive Director; and

• to review the Executive Director’s scope of service contracts.

Remuneration packages of both Executive Directors and Non-Executive Directors are a matter to be decided by the Board as a whole with the Director concerned abstaining from deliberations and voting on decisions in respect of his individual remuneration.

The Remuneration Committee met once during the financial year and recommended to the Board the remuneration package for the Managing Director. The meeting was attended by all the members.

d. Risk Management Committee

The Managing Director, Dato’ Sri Tiong Chiong Hoo is the Chairman of the Risk Management Committee.

He is authorised by the Board to appoint members to support him in his role in leading the management in the risk management activities. Currently, his team members are from the senior management.

The terms of reference of the Risk Management Committee are:

• to establish a risk management framework and execute an annual risk assessment. The framework should provide a consistent approach to risk and facilitate an accurate perception of acceptable risk by all employees. The annual risk assessment will characterize the full range of corporate risk exposures, including risk impacts such as harm to employees and the public, environmental harm, and damage to corporate reputation;

• as part of the annual business planning process, to review the defined risk/return parameters, risk appetite and risk management standards;

• to report annually to the Board of Directors on risk assessment results and report at least half-yearly to the Board on the risk management activities and the effectiveness of the risk management framework;

and

• to formulate the annual risk assessment plan for Board’s approval.

STATEMENT ON

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d. Risk Management Committee (Cont’d)

The ultimate responsibility for ensuring an effective risk management framework/program is in place and is aligned with the business objectives of the Group, however, rests with the Board.

The Risk Management Committee held bi-monthly meetings during the financial year ended 30 April 2009.

DIRECTORS’ REMUNERATION

The policy on Directors’ remuneration is to provide remuneration packages to attract and retain the Directors of the calibre needed to run the Group successfully. The Remuneration Committee recommends to the Board the remuneration package for the Managing Director. In making its recommendation, the Committee has taken into account the pay as well as employment conditions within the same industry and link the Managing Director’s package to corporate and individual performance. It is the ultimate responsibility of the Board to approve the remuneration package of the Managing Director.

In the case of Non-Executive Directors, the level of remuneration relate to contribution and the level of responsibilities undertaken by the individual Non-Executive Director. The Company reimburses expenses incurred by the Directors in the course of their duties as Directors.

The Directors have the benefit of the Directors and Officers (D&O) Insurance in respect of liabilities arising from their acts committed in their capacity as D&O of the Company. However, the said insurance policy does not indemnify a Director or officer if he is proven to have acted fraudulently, dishonestly, maliciously or in willful breach of any statute or regulation. The premium of the D&O policy is borne by the Company.

During the financial year ended 30 April 2009, the remuneration of the Executive Director and Non-Executive Directors are as follows:

Directors’ remuneration Executive

Director

Non-Executive Directors

RM RM

Directors’ Fees 45,461 350,153

Other Fees - 120,000

Salary and Bonus (including EPF) 985,240 -

Allowance (including EPF) - 50,880

Benefit-in-kinds 15,500 23,950

Total 1,046,201 544,983

Directors’ remuneration Executive

Director

Non-Executive Directors

Below RM50, 000 - 3

RM50,001 to RM100,000 - 2

RM100,001 to RM150,000 - 1

RM150,001 to RM200,000 - 1

RM1,000,001 to RM1,050,000 1 -

Annual Report 2009 - Malaysian Agricultural Repository

To be Malaysia’s leading producer of renewable and sustainable quality wood and oil palm based products.

Corporate Information 2

Financial Statements 41 - 117

CONtENtS

BOARD OF DIRECtORS

RM million RM million

5-YEAR FINANCIAL HIGHLIGHtS

AGENDA

AS SPECIAL BUSINESS

ORDINARY RESOLUtIONS

NOtICE OF ANNUAL GENERAL MEEtING

NOtES ON APPOINtMENt OF PROXY

EXPLANAtORY NOtES ON SPECIAL BUSINESS

NOtICE OF ANNUAL GENERAL MEEtING

Forest Concessions

Reforestation

DIRECtORS’ PROFILES

DIRECtORS’ PROFILES

DAtO’ SRI DR tIONG IK KING

MDM tIONG CHOON

DIRECtORS’ PROFILES

MR tIONG CHIONG HEE

DIRECtORS’ PROFILES

DIRECtORS’ PROFILES DIRECtORS’ PROFILES

DAtUK tALIB BIN HAJI JAMAL

CHAIRMAN’S StAtEMENt

Dear Valued Shareholders,

FINANCIAL PERFORMANCE

REVIEW OF OPERAtIONS Plywood

CHAIRMAN’S StAtEMENt

Plywood: Outlook and Strategy

CHAIRMAN’S StAtEMENt

Logging: Outlook and Strategy

Oil Palm Plantation: Outlook and Strategy

LPF Project Gross Area (Ha) Plantable Area (Ha) Planted to date (Ha)

CHAIRMAN’S StAtEMENt

Reforestation: Outlook and Strategy

GOING FORWARD

ACKNOWLEDGEMENt

CHAIRMAN’S StAtEMENt

ENVIRONMENt: tOWARDS GREENER ENVIRONMENt

Providing Environmentally Friendly Products

CORPORAtE SOCIAL RESPONSIBILItY

Providing Environmentally Friendly Products (Cont’d)

Greening initiative

CORPORAtE SOCIAL RESPONSIBILItY

Continuous training and Skills Enhancement

Work-Life Balance and Healthy Living

CORPORAtE SOCIAL RESPONSIBILItY

Committed to Health and Safety at Work

CORPORAtE SOCIAL RESPONSIBILItY

MARKEtPLACE: UPHOLDING tHE HIGHESt PRINCIPLES OF INtEGRItY Engaging with our Shareholders and Investors

100% - Jaya Tiasa Plywood Sdn Bhd 100% - Jaya Tiasa Timber Products Sdn Bhd 100% - Rimbunan Hijau Plywood Sdn Bhd 100% - Jaras Sdn Bhd

100% - JT Oil Palm Development Sdn Bhd 100% - Multi Greenview Sdn Bhd

100% - Western Timber Resources Limited 100% - Pacific Timber Holdings Limited

JAYA TIASA HOLDINGS BERHAD

Timber Operations

CORPORAtE StRUCtURE

PERCENTAGE OF EXPORT SALES

MIDDLE TAIWAN EAST

EXPORt MARKEt

INDIA JAPAN USA CHINA KOREA OTHERS

BOARD OF DIRECTORS

Board Balance

STATEMENT ON

Board Meetings

Supply of Information

STATEMENT ON

a. Audit Committee

STATEMENT ON

c. Remuneration Committee

d. Risk Management Committee

STATEMENT ON

d. Risk Management Committee (Cont’d)

DIRECTORS’ REMUNERATION

Directors’ remuneration Executive

STATEMEN