Harn Len Corporation Bhd -Annual Report 2021 - Malaysian Agricultural Repository

The company has not paid or declared any dividend since the end of the previous financial year. Bhd. and Shande Ancestral Park Berhad and the shares held by the executors under section 8 of the Companies Act 2016.

STATUTORY DECLARATION

Signed on behalf of the Board of Directors in accordance with a decision of the Board of Directors.

ANNUAL REPORT 2021

INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF

The other information includes the information contained in the annual report, but does not include the financial statements of the Group and the Company and our auditors' report thereon. Our opinion on the financial statements of the Group and the Company does not cover the other information and we do not express any form of assurance about it.

INCOME FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2021

ATEMENTS OF CHANGES IN EQUITY THE FINANCIAL YEAR ENDED 31 DECEMBER 2021

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 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 interests.

The adoption of the above new and amended MFRS has no material impact on the financial statements of the Group and of the Company in the period of initial application. The amendments provide relief to lessees from the application of MFRS 16 guidance on lease amendments which take into account lease concessions arising as a direct result of the Covid-19 pandemic.

The estimate of the value in use requires the Group to make an estimate of the expected future cash flows from the cash generating unit and also to select an appropriate discount rate to calculate the present value of those cash flows. Estimating a VIU amount requires the directors to make an estimate of the expected future cash flows from the CGUs and also choose a suitable discount rate to calculate the present value of those cash flows.

The Group's financial statements consolidate the audited financial statements of the Company and all its subsidiaries, which have been prepared in accordance with the Group's accounting policies. The amounts reported in the financial statements of the subsidiaries have been adjusted where necessary to ensure consistency with the accounting policies adopted by the Group.

Goodwill disposed of in this circumstance is measured based on the relative values of the operations disposed of and the portion of the cash-generating unit retained. On the loss of control of a subsidiary company, the Group derecognises the assets and liabilities of the subsidiary company, any non-controlling interests and the other components of equity relating to the subsidiary company.

SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

The Group and the Company recognize right-of-use assets on the lease commencement date (i.e. the date the underlying asset is available for use). If ownership of the leased asset is transferred to the Group and the Company at the end of the lease term or if the costs reflect the exercise of a purchase option, depreciation is calculated based on the estimated useful life of the asset.

SIGNIFICANT ACCOUNTING POLICIES (CONT’D) 3 Leases (cont’d)

However, if a fair value gain reverses a previous impairment loss, the gain is recognized in the income statement. Any gains or losses arising from changes in fair value less costs of disposal, net of transfers to produce inventories, are recognized net in the income statement.

SIGNIFICANT ACCOUNTING POLICIES (CONT’D) 5 Biological assets (cont’d)

For the purpose of annual impairment testing, goodwill is allocated to each of the Group's cash-generating units (or groups of cash-generating units) that are expected to benefit from the synergies of the combination. On disposal of the relevant cash-generating unit, the attributable amount of goodwill is included in the determination of the profit or loss on disposal.

Any reimbursement that the Group and the Company will almost certainly collect from a third party in respect of the obligation is recognized as a separate asset. A financial asset is recognized in the statements of financial position when and only when the Group and the Company become parties to the contractual terms of the instrument.

Financial assets measured at FVOCI are subsequently measured at fair values with the gain or loss recognized in other comprehensive income. On derecognition, the cumulative gain or loss recognized in other comprehensive income is not subsequently transferred to profit or loss.

A financial liability is recognized in the balance sheet when and only when the Group and the Company become parties to the contractual provisions of the instrument. Upon initial recognition, the Group and the Company may irrevocably designate a financial liability that otherwise meets the requirements to be measured at amortized cost as at fair value through profit or loss:-.

A related party transaction is a transfer of assets, services or liabilities between the Group and its related party, regardless of whether a price is charged. A person or a close family member of that person is associated with a group if that person:-. i) has control or joint control over the Group; ii) has a significant impact on the Group; or iii).

Provide benefits that the customer receives and consumes simultaneously while the Group and the Company perform. When the Group and the Company satisfy a performance obligation by providing the promised goods or services, it creates an asset-based contract over the amount of the performance proceeds.

SIGNIFICANT ACCOUNTING POLICIES (CONT’D) 18 Revenue recognition (cont’d)

Salaries, wages, bonuses and social security contributions are recognized as an expense in the period in which the related services are performed by employees of the Group and the Company. Defined contribution plans are post-employment benefit plans under which the Group and the Company pay fixed contributions to separate entities or funds and will have no legal or constructive obligation to pay further contributions if any of the funds have not sufficient assets to pay all employees. benefits related to employee services in the current and previous financial period.

Government grants are recognized in profit or loss on a systematic basis over the periods in which the Group recognizes as expenses the related costs that the grants are intended to reimburse. Government grants receivable as compensation for expenses or losses already incurred or for the purpose of providing immediate financial support to the Group without future related costs are recognized in profit or loss in the period in which they become receivable.

TO THE FINANCIAL STATEMENTS DECEMBER 2021 (CONT’D)

TO THE FINANCIAL STATEMENTS 2021 (CONT’D)

PROPERTY, PLANT AND EQUIPMENT (CONT’D) Security

Tangible fixed assets include assets under installment purchase agreements, which are classified as assets representing the right to use, as follows:-. The entire book value of the assets in the buyout is pledged as a guarantee for the lease obligations.

RIGHT-OF-USE ASSETS AND LEASE LIABILITIES Right-of-use assets

RIGHT-OF-USE ASSETS AND LEASE LIABILITIES (CONT’D) Right-of-use assets (cont’d)

The lease obligations arise when the Group entered into an agreement with the Land Owner with Native Customary Rights ("NCR Landowners") for the rights to develop land in Sarawak into oil palm plantation for a lease period of 60 years. The Group and the Company had purchased motor vehicles under hire purchase contracts, which are classified under lease liabilities.

RIGHT-OF-USE ASSETS AND LEASE LIABILITIES (CONT’D) Lease liabilities (cont’d)

INVESTMENT PROPERTIES

INVESTMENT PROPERTIES (CONT’D) Included in above are the following

In estimating the fair value of real estate, the highest and best use of the real estate is its current use. The Group and the Company have classified their investment properties according to the fair value hierarchy, which reflects the nature and complexity of the significant inputs used in disclosure.

INVESTMENTS IN SUBSIDIARIES

The Group's subsidiaries that have material minority interests are as follows: - Harn Len Pelita. The summary of financial information before intra-group elimination for the Group's subsidiaries that have material non-controlling interests is as follows: -.

AMOUNT OWING FROM/(TO) SUBSIDIARIES

GOODWILL ON CONSOLIDATION

In determining the fair values of unharvested FFB, management considered the oil content of the unripe FFB from the week after pollination to the week before harvest and derived the assumption that the net cash flows to be generated from FFB before more than 15 days (2020: 15 days) to harvest is negligible. 2020: 91%) of the ripe FFB, based on actual oil extraction rate and kernel extraction rate of the unripe FFB from the laboratory tests.

INVENTORIES

TRADE RECEIVABLES

Receivables from sales include receivables from the sale of plantation products and related products as well as rental. Information about the group's and the company's exposure to the credit risk and ECLs for trade receivables is provided in note 30(b).

OTHER RECEIVABLES

The credit terms granted to the Group's and the Company's customers are 7 days (2020: 7 days). Trade receivables are recorded at their original invoice amounts, which represent their fair value upon initial recognition.

OTHER RECEIVABLES (CONT’D)

AMOUNT OWING FROM/(TO) AFFILIATED COMPANIES

Presented below is the movement in the provision for expected credit losses in the amount owed by related companies: - .. a) Related companies refer to companies in which certain directors have significant financial interests. The amount due to/(to) related companies is in respect of the share of profits or losses arising from the management of assets and plantations by the Group and the Company, advances or payments on behalf of which are unsecured, without interest, except for advances from related companies in the amount in RM RMNil) which bear interest at zero%) per annum and repayable on demand.

CASH AND BANK BALANCES

CASH AND BANK BALANCES (CONT’D)

The new ordinary shares issued during the financial year ranked pari passu in all respects with the existing ordinary shares of the Company.

RESERVES

RESERVES (CONT’D) Warrants

When options are exercised, the amount from the option reserve is transferred to the share capital. When the stock options expire or expire, the amount from the stock option reserve is transferred to retained earnings.

DEFERRED TAX LIABILITIES

The reserve for share options of the Group and the Company represents equity-settled share options granted to employees. The reserve consists of the fair value of services received from employees based on the fair value of the stock option granted.

DEFERRED TAX LIABILITIES (CONT’D)

The Group's and the Company's overdrafts and term loans are covered by a corporate guarantee from the Company. The Group's and the Company's equity margin account is backed by the Company's pledged deposits.

LOANS AND BORROWINGS (CONT’D) Breach of loan covenant

TRADE PAYABLES

OTHER PAYABLES

Loss)/Profit before tax is calculated after collection/(crediting) including the following items:-. Loss)/Profit before tax is calculated after collection/(crediting), including the following items (continued):-.

TAX (INCOME)/EXPENSE

A reconciliation of income tax (income)/expense applicable to (loss)/profit before tax with the statutory tax rate of income tax (income)/expense to the effective tax rate of the group and the company is as follows (continued 'd):-.

The main features of the ESS are, among others, the following (continued):. e) the total maximum number of awards that can be awarded to a selected person will be determined entirely at the sole discretion of the ESS Board, provided that:- (i) directors and eligible employees do not participate in the consultation or talk about your own assignment and the assignment of any other person associated with them; ii) directors and/or senior management of the company will not be awarded more than 80% of the total awards; iii) no more than 10% of the awards will be granted to each director; and. iv) no more than 10% of the awards will be granted individually or jointly through persons related to them who own 20% or more of the total number of issued shares of the company. f) the share award price and the exercise price are based on a discount of no more than 10% from the weighted average market price of the company concluded with the securities of the Bursa immediately before the date of the offer;. g) ESS stock options granted immediately upon grant and exercisable within 3 to 5 years. No performance targets were set; and. h) the ESS Board may at any time and from time to time before and after the grant of ESS options limit the exercise of ESS options to the maximum number of new company shares and/or such percentage of the company's total shares included in the ESS options during such period within the option period and impose any other terms and/or conditions that the ESS Committee in its sole discretion deems appropriate, including amending any terms and conditions previously introduced, except those relating to the imposition of performance targets.

The fair value of the services received in exchange for the stock options granted is based on the fair value of the stock options granted, measured using a Monte Carlo model, and is RM0.27 (RM) per stock option. The fair value of the services received in exchange for the shares granted was measured at the fair value (market price) of the shares granted and the weighted average grant date fair value was RM0.68 per share.

EMPLOYEE BENEFITS EXPENSE (CONT’D) 3 Directors’ remunerations

RELATED PARTY DISCLOSURES (CONT’D)

CAPITAL COMMITMENTS

The table below shows the analysis of financial instruments classified as follows:- a) Financial assets and liabilities measured at amortized cost ("AC") .. b) Financial assets and liabilities measured at fair value through profit or loss ("FVTPL") c) Financial assets and liabilities measured at fair value through other comprehensive.

FINANCIAL INSTRUMENTS (CONT’D) Categories of financial instruments (cont’d)

The table below provides an analysis of financial instruments categorized as follows:- a) Financial assets and liabilities measured at amortized cost ("AC"). The Group and the Company are exposed to various risks in relation to financial instruments.

FINANCIAL INSTRUMENTS (CONT’D)

Credit risk is the risk that a counterparty fails to fulfill an obligation to the Group and the Company. The aging analysis of trade receivables of the Group and of the Company is as follows:-.

FINANCIAL INSTRUMENTS (CONT’D) Risk management objectives and policies (cont’d)

Generally, the Company considers loans and advances to subsidiaries and related companies to be of low credit risk. Risk management objectives and policies (continued) (b) Credit risk (continued). iv) Loans and advances between companies (continued).

CAPITAL MANAGEMENT OBJECTIVE

FAIR VALUE OF FINANCIAL INSTRUMENTS

There have been no transfers between all three levels in the fair value hierarchy in the financial year. The following summarizes the methods used to determine the fair value of the financial instruments reflected in the above table.

Fair Value

OPERATING SEGMENT - GROUP
OPERATING SEGMENT - GROUP (CONT’D) Business segments
OPERATING SEGMENT - GROUP (CONT’D) Business segments (cont’d)
EARNINGS/(LOSS) PER ORDINARY SHARE Group
LEGAL CASES DURING THE YEAR
LEGAL CASES DURING THE YEAR (CONT’D) (b) (cont’d)
SIGNIFICANT EVENT DURING THE FINANCIAL YEAR
LIST OF SUBSTANTIAL SHAREHOLDERS
LIST OF SUBSTANTIAL SHAREHOLDERS (Cont’d) Notes:- (Cont’d)
LIST OF DIRECTORS’ SHAREHOLDINGS
TOP 30 LARGEST SECURITIES ACCOUNT HOLDERS

MAYBANK NOMINEES (TEMPATAN) SDN BHD PLEDGED SECURITIES ACCOUNT
TA NOMINEES (TEMPATAN) SDN BHD PLEDGED SECURITIES ACCOUNT
ALLIANCEGROUP NOMINEES (TEMPATAN) SDN BHD PLEDGED SECURITIES ACCOUNT
AMSEC NOMINEES (TEMPATAN) SDN BHD PLEDGED SECURITIES ACCOUNT - AMBANK (M)
HLIB NOMINEES (TEMPATAN) SDN BHD PLEDGED SECURITIES ACCOUNT
ALLIANCEGROUP NOMINEES (TEMPATAN) SDN BHD 3,188,100 1.57

TOP 30 LARGEST SECURITIES ACCOUNT HOLDERS (Cont’d)

AMSEC NOMINEES (TEMPATAN) SDN BHD PLEDGED SECURITIES ACCOUNT
TA NOMINEES (TEMPATAN) SDN BHD
AMBANK (M) BERHAD
CGS-CIMB NOMINEES (TEMPATAN) SDN BHD PLEDGED SECURITIES ACCOUNT

LIST OF SUBSTANTIAL WARRANTHOLDERS
LIST OF DIRECTORS’ WARRANTHOLDINGS
DISTRIBUTION OF WARRANTHOLDINGS No. of

AMSEC NOMINEES (TEMPATAN) SDN BHD PLEDGED SECURITIES ACCOUNT - AMBANK (M)
KENANGA NOMINEES (TEMPATAN) SDN BHD
CITIGROUP NOMINEES (ASING) SDN BHD
PUBLIC NOMINEES (TEMPATAN) SDN BHD
AFFIN HWANG NOMINEES (TEMPATAN) SDN. BHD
KENANGA NOMINEES (TEMPATAN) SDN BHD
PUBLIC NOMINEES (TEMPATAN) SDN BHD PLEDGED SECURITIES ACCOUNT
MAYBANK NOMINEES (TEMPATAN) SDN BHD
CGS-CIMB NOMINEES (TEMPATAN) SDN BHD PLEDGED SECURITIES ACCOUNT

Sons Sdn Bhd, LNH Enterprise Sdn Bhd and Shande Ancestral Park Berhad and the shares of his immediate family members, namely the executors under section 8 of the Companies Act, 2016. Sons Sdn Bhd, LNH Enterprise Sdn Bhd and Shande Ancestral Park Berhad and the shares held by his immediate family members, namely the executors of the will and Low Yew Yi in accordance with section 8 of the Companies Act, 2016.