our - chartnexusir.chartnexus.com/kwantas/docs/ar2018.pdf · 2018. 11. 1. · proxy form. 2 kwantas...

Corporate Culturebased on 7 Values

• Integrity• Innovativeness• Commitmentandfollowthrough• Proactiveandpromptness• Loyalty• Teamwork• Costconsciousness

ourVision

Tobetherecognisedintegratedglobaloilpalmgroupofchoice.

ourMission

• StrivetowardsQualityandExcellencewithoutcompromise.

• Endeavourtoaccelerateefficiencyandoperateaneffectivemanagementtoachievesatisfactoryresultsforourcustomersandinvestors.

• Enhancethelivesofouremployees,shareholdersandcommunitybyestablishinggoodbusinesspractices,makingsoundinvestmentsandundertakingsocialresponsibilities.

• Pursueenviromentallyfriendlypoliciestohelpkeepourworldgreenforfuturegenerations.

Contents2 NoticeofAnnual GeneralMeeting

6 StatementAccompanyingNoticeof23rdAnnualGeneralMeeting

8 5-YearGroupFinancialHighlights

9 SharePerformance

10 5-YearGroupStatisticsandPerformances

12 CorporateInformation

13 CorporateStructure

14 Directors’Profile

18 KeySeniorManagement’sProfile

19 ManagementDiscussionsandAnalysis

24 SustainabilityStatement

42 CorporateGovernanceOverviewStatement

49 StatementofDirectors’ Responsibility

50 StatementonRiskManagementandInternalControl

52 AdditionalComplianceInformation

53 AuditandRiskManagementCommitteeReport

57 FinancialStatements

149 PropertiesofTheGroup

155 ShareholdingsStatistics

ProxyForm

KWANTAS CORPORATION BERHAD (356602-W) • ANNUAL REPORT 20182

NOTICEISHEREBYGIVENthattheTwenty-ThirdAnnualGeneralMeetingofthemembersoftheCompanywillbeheldatK-63A-3rdFloor,SignatureOffice,KKTimesSquare,OffCoastal

Highway,88100KotaKinabalu,SabahonFriday,30November2018at10.00a.m.forthefollowingpurposes:

AGENDA1. ToreceivetheAuditedFinancialStatementsforthefinancialyearended30June2018

andtheDirectors’andAuditors’Reportsthereon.

2. ToapprovethefollowingpaymentstoNon-ExecutiveDirectors:-

(a)FeestotallingRM200,000fromthe23rdAnnualGeneralMeetingtothenextAnnualGeneralMeetingoftheCompany;

(b)MeetingallowanceofRM500permeetingdayfromthe23rdAnnualGeneralMeetingtothenextAnnualGeneralMeetingoftheCompany

3. To re-elect the followingDirectors,who retireby rotationpursuant toArticle73of theCompany’sConstitution(ArticlesofAssociation)andbeingeligible,offerthemselvesforre-election:

(a)MsKwanJinNget (b)MrPetrusGimbad

4. Tore-appointMessrsPKFasAuditorsoftheCompanyandauthorisetheDirectorstofixtheirremuneration.

5. AsspeCial business toconsiderand,ifthoughtfit,passthefollowingresolutions:

ordinarY resolution no. 1

AUTHORITY TO ALLOT AND ISSUE SHARES PURSUANT TO SECTIONS 75 AND 76 OF THECOMPANIESACT2016.

THATpursuanttoSections75and76oftheCompaniesAct2016andsubjectalwaystotheapprovaloftherelevantauthorities,theDirectorsbeandareherebyempoweredtoissueshares inthecapitaloftheCompanyfromtimetotimeuponsuchtermsandconditionsandforsuchpurposesastheDirectorsmayintheirdiscretiondeemfit,providedthatthetotalnumberofshares issuedpursuanttothisresolutiondoesnotexceedtenpercent(10%)oftheissuedshares(excludingtreasuryshares)oftheCompanyforthetimebeingandthattheDirectorsbeandarealsoempoweredtoobtaintheapprovalforlistingofandquotationfortheadditionalsharessoissuedonBursaMalaysiaSecuritiesBerhadandthatsuchauthorityshallcontinueinforceuntiltheconclusionofthenextAnnualGeneralMeetingoftheCompany.


PROPOSED RENEWAL OF THE EXISTING SHAREHOLDERS’ MANDATE FOR RECURRENTRELATEDPARTYTRANSACTIONSOFAREVENUEORTRADINGNATURE.

THATsubjectalwaystothecompliancewiththeCompaniesAct2016,theCompany’sConstitution(MemorandumandArticlesofAssociation),theListingRequirementsofBursaMalaysia Securities Berhadandall otherapplicable laws, regulationsandguidelines,approval be and is hereby given to the Company and its subsidiaries to enter intorecurrentrelatedpartytransactionsofarevenueortradingnaturewhicharenecessary

[please reFer tonotes a(1)]

resolution 1

resolution 2

resolution 3resolution 4

resolution 5

resolution 6

resolution 7

notiCe oF annual General MeetinG

ANNUAL REPORT 2018 • KWANTAS CORPORATION BERHAD (356602-W) 3

resolution 8

fortheday-to-dayoperationsoftheCompanyanditssubsidiariesfromtimetotime,thenatureandthecontractingpartyofwhichreferredtounderSections2.1.2and2.1.3oftheCirculartoShareholdersdated31October2018,providedthat:

(i) thetransactionsareintheordinarycourseofbusinessonanarm’slengthbasis,onnormalcommercialtermsandontermsnotmorefavourabletotherelatedpartiesthanthosegenerallyavailabletothepublicandarenotdetrimentaltotheminorityshareholdersoftheCompany;and

(ii) disclosureismadeintheAnnualReportofthebreakdownoftheaggregatevalueof the transactionsconductedpursuant to this shareholders’mandateduring thefinancialyearoftheCompany.

and tHatsuchauthorityshallcommenceuponthepassingofthisresolutionandshallcontinuetobeinforceuntil:

(a)theconclusionofthenextAnnualGeneralMeetingoftheCompanyfollowingthegeneralmeetingatwhich suchmandatewaspassed,atwhich time itwill lapse,unlessbyaresolutionpassedatthemeeting,theauthorityisrenewed;or

(b)theexpirationoftheperiodwithinwhichthenextAnnualGeneralMeetingafterthedateitisrequiredtobeheldpursuanttoSection340(2)oftheCompaniesAct2016butshallnotextendtosuchextensionasmaybeallowedpursuanttoSection340(4)oftheCompaniesAct2016;or

(c) revokedorvariedbyresolutionpassedbytheshareholdersingeneralmeeting

whicheverisearlier.

and FurtHerTHATauthoritybeandisherebygiventotheDirectorsoftheCompanytocompleteanddoallsuchactsandthings(includingexecutingsuchdocumentsasmayberequired)togiveeffecttothetransactionscontemplatedand/orauthorisedbythisOrdinaryResolution.


PROPOSEDRENEWALOFAUTHORITYFORTHECOMPANYTOPURCHASEUPTOTENPERCENT(10%)OFTHEISSUEDSHARESOFTHECOMPANY.

tHatsubjectalwaystotheCompaniesAct2016,provisionsoftheCompany’sConstitution(Memorandum and Articles of Association) and the Listing Requirements of BursaMalaysiaSecuritiesBerhad(“BursaSecurities”)andanyotherrelevantauthorities,andotherrelevantapprovals,theDirectorsoftheCompanybeandareherebyauthorizedtorenewtheauthoritytopurchasetheCompany’sordinaryshares(“Shares”)throughBursaSecurities,subjecttothefollowing:-

(a)themaximumnumberofSharesthatmaybepurchasedbytheCompanyshallnotexceedtenpercent(10%)oftheissuedsharesoftheCompanyatanypointoftime;

(b)themaximumfundtobeallocatedbytheCompanyforpurposeofpurchasingitsSharesshallnotexceedtheaggregateoftheretainedprofitsoftheCompany;and

(c) theSharespurchasedaretobetreatedineitherofthefollowingmanner:-

(i) canceltheSharessopurchased;or

(ii) retaintheSharessopurchasedastreasuryshares;or

(iii) retainpartoftheSharespurchasedastreasurysharesandcanceltheremainder

NOTICEOFANNUALGENERALMEETING


Thetreasurysharesmaybedistributedasdividendstotheshareholdersand/or resoldthroughBursaSecuritiesand/orsubsequentlycancelled.

and tHattheauthorityconferredbythisresolutionshallcommenceuponthepassingofthisresolutionuntil:-

(i) theconclusionofthenextAnnualGeneralMeeting,atwhichtimeitwilllapse,unlesstheauthorityisrenewedbyaresolutionpassedatthemeeting,eitherunconditionallyorsubjecttoconditions;or

(ii) theexpirationof theperiodwithinwhichthenextAnnualGeneralMeetingof theCompanyafter thatdate is required tobeheldpursuant toSection340(2)of theCompaniesAct2016 (but shallnotextend to suchextensionsasmaybeallowedpursuanttoSection340(4)oftheCompaniesAct2016);or

(iii) revokedorvariedbyordinary resolutionof theshareholdersof theCompany inageneralmeetingoftheCompany

whicheveroccursfirst.

and FurtHer tHattheDirectorsoftheCompanybeandareherebyauthorizedtotakesuchstepstogivefulleffecttotheaforesaidpurchasewithfullpowertoassenttoanyconditions,modifications, variationsand/oramendmentsasmaybe imposedby therelevantauthoritiesand/ortodoallactsandthingsastheDirectorsmaydeemfitandexpedientinthebestinterestoftheCompany.


CONTINUINGINOFFICEASINDEPENDENTNON-EXECUTIVEDIRECTOR.

tHatapprovalbeandisherebygiventoMrOoiJitHuatwhohasservedasanIndependentNon-ExecutiveDirectoroftheCompanyforacumulativetermofmorethantwelve(12)years,tocontinueinofficeasanIndependentNon-ExecutiveDirectoroftheCompanyuntiltheconclusionofthenextAnnualGeneralMeetingoftheCompany.

MrOoi JitHuatwasappointedon09March2000asan IndependentNon-ExecutiveDirectoroftheCompanyandhasthereforeservedasanIndependentNon-ExecutiveDirectorforacumulativetermofmorethantwelve(12)years.Theproposedresolution,ifpassed,willallowMrOoiJitHuattobecontinuedinofficeasanIndependentNon-Executive Director of the Company. The details of the Board’s justification for theretentionofMrOoiJitHuatissetoutintheCorporateGovernanceOverviewStatementandCorporateGovernanceReportintheCompany’sAnnualReportandwebsitewww.kwantas.com.myrespectively.

6. TotransactanyotherbusinessoftheCompanyforwhichduenoticeshallhavebeengiven inaccordancewith theCompaniesAct2016and theCompany’sConstitution(ArticlesofAssociation)oftheCompany.

ByorderoftheBoardMSKWANFEIFEN(MAICSA7040966)MSKWANCHIEWGIOK(LS0007125)CompanySecretariesKotaKinabalu,Sabah31October2018


resolution 9


A) NOTES 1. This Agenda is meant for discussion only as under the provision of Section 340(1) of the Companies Act 2016, the Audited Financial

Statements do not require formal approval of the shareholders. Hence, this matter will not be put forward for voting. 2. A member of the Company entitled to attend and vote at the meeting is entitled to appoint not more than two (2) proxies to

attend and vote instead of him. 3. A proxy may but need not be a member of the Company. 4. Wheretwo(2)proxiesareappointed,theappointmentshallbeinvalidunlesshespecifiestheproportionsofhisholdingstobe

represented by each proxy. 5. Where a member of the Company is an Exempt Authorised Nominee which holds ordinary shares in the Company for multiple

beneficialownersinone(1)SecuritiesAccount(“omnibusaccount”),thereshallbenolimittothenumberofproxieswhichtheExempt Authorised Nominee may appoint in respect of each omnibus account it holds.

6. TheinstrumentappointingaproxymustbedepositedattheRegisteredOfficeoftheCompanyatK-63A-3A,SignatureOffice,KKTimesSquare,OffCoastalHighway,88100KotaKinabalu,Sabah,notlessthanforty-eight(48)hoursbeforethetimeappointedfor holding the meeting.

7. WheretheProxyFormisexecutedbyacorporation,itmustbeeitherundersealorunderthehandofanyofficerorattorneydulyauthorized.

B) EXPLANATORY NOTES ON SPECIAL BUSINESS (i) Resolution 6

The proposed resolution is in relation to the authority to allot shares pursuant to Sections 75 and 76 of the Companies Act 2016 and if passed, will give the Directors of the Company from the date of the above general meeting, authority to issue and allot shares fromtheunissuedcapitaloftheCompanyforsuchpurposeastheDirectorsmaydeemfitandintheinterestoftheCompany.Thisauthority, unless revoked or varied by the Company in general meeting, will expire at the conclusion of the next Annual General Meeting of the Company.

As at the date of this Notice, no new shares in the Company were issued pursuant to the mandate granted to Directors at the last Annual General Meeting held on 30 November 2017 and accordingly no proceeds were raised.

TherenewalofthisgeneralmandatewillprovideflexibilitytotheCompanyforanypossiblefundraisingexercise,includingbutnot limited to further placement of shares for purpose of funding investment projects, working capital and/or acquisitions and/or as consideration for acquisitions, and to avoid delay and cost in convening general meeting to approve such issue of shares.

(ii) Resolution 7The proposed resolution is in relation to the renewal of the existing shareholders’ mandate for recurrent related party transactions of a revenue or trading nature with related parties in the ordinary course of business which are necessary for the Company’s day-to-dayoperations.

(iii) Resolution 8The proposed resolution is in relation to the renewal of authority for the Company to purchase up to ten percent (10%) of the issued shares of the Company.

(iv) Resolution 9Theproposedresolution,ifpassed,willallowMrOoiJitHuattobecontinuedinofficeasIndependentNon-ExecutiveDirectorof the Company. Mr Ooi Jit Huat has met the independence criteria as stated in the Main Market Listing Requirements of Bursa Malaysia Securities Berhad. The length of his service does not interfere with his ability to continuously allowing him to exercise independentjudgementasIndependentDirector.Therefore,theBoardhasrecommendedthattheapprovaloftheshareholdersbesoughtthroughatwo-tiervotingprocessforMrOoiJitHuattocontinuetoactastheIndependentNon-ExecutiveDirectorofthe Company pursuant to Practice 4.2 of the Malaysian Code on Corporate Governance.

C) MEMBERS ENTITLED TO ATTENDFor the purpose of determining who shall be entitled to attend this 23rd Annual General Meeting, the Company shall be requesting Bursa Malaysia Depository Sdn Bhd to issue a Record of Depositors as at 23 November 2018. Only depositors whose names appear in the Record of Depositors as at 23 November 2018 shall be entitled to attend, speak and vote at the 23rd Annual General Meeting.



stateMent aCCoMpanYinG notiCe oF23rd annual General MeetinG

a. details oF indiViduals WHo are standinG For eleCtion as direCtors

NoindividualisseekingelectionasaDirectorattheforthcomingTwenty-ThirdAnnualGeneralMeetingoftheCompany.

b. partiCulars oF direCtors standinG For re-eleCtion at tHe tWentY-tHird annual General MeetinG

1. directors who are standing for re-election at the twenty-third annual General Meeting of the Company are as follows:-

(a)MsKwanJinNget (b)MrPetrusGimbad

TheaboveDirectorsareretiringbyrotationpursuanttoArticle73oftheCompany’sConstitution(ArticlesofAssociation).

2. attendance of directors at board of directors’ Meetings.

DetailsofattendanceatBoardofDirectors’Meetingsheldinfinancialyearended30June2018:

naMe oF direCtors attendanCe

(i) DatukIsmailBinAbdullah 4/4

(ii) MrKwanNgenChung 4/4 (Demisedon23July2018)

(iii) MrKwanNgenWah 4/4

(iv) Dato’ChongKanHiung 4/4

(v) MsKwanJinNget 4/4

(vi) MsKwanMinNyet 4/4

(vii)MrOoiJitHuat 4/4

(viii) MrPetrusGimbad 4/4

ANNUAL REPORT 2018 • KWANTAS CORPORATION BERHAD (356602-W) 7STATEMENTACCOMPANYINGNOTICEOF

23RDANNUALGENERALMEETING

b. partiCulars oF direCtors standinG For re-eleCtion at tHe tWentY-tHird annual General MeetinG (cont’d)

3. place, date and hour of board of directors’ Meetings held.

TheBoardofDirectors’Meetingsduringtheyearwereheldatthefollowingdate,timeandvenue:

date tiMe Venue

(i) 25August2017 2:45p.m. K-63-3rdFloor,SignatureOffice KKTimesSquare,OffCoastalHighway 88100KotaKinabalu,Sabah,Malaysia

(ii) 29November2017 12:45p.m. K-63-3rdFloor,SignatureOffice KKTimesSquare,OffCoastalHighway KotaKinabalu,Sabah,Malaysia

(iii) 26February2018 1:35p.m. K-63-3rdFloor,SignatureOffice KKTimesSquare,OffCoastalHighway 88100KotaKinabalu,Sabah,Malaysia

(iv) 18May2018 2:00p.m. K-63-3rdFloor,SignatureOffice KKTimesSquare,OffCoastalHighway 88100KotaKinabalu,Sabah,Malaysia

4. Further details of directors who are standing for re-election.

DetailsofDirectorswhoarestandingforre-electionaresetoutintheDirectors’Profileappearingonpages14to17oftheAnnualReport.


2,100

1,800

1,500

1,200

900

600

300

0

1,769

1,318

1,258

1,380

reVenue(RMMILLION)

90

60

30

0

-30

-60

-90

-120

(105)

(69)

(18)

60

proFit/(loss) beFore taX(RMMILLION)

sHareHolders’ Fund(RMMILLION)

1,800

1,500

1,200

900

600

300

0

1,375

1,219

1,201

(7.69)

1,18

9

2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018

5-Year Group FinanCial HiGHliGHts

3,000

2,500

2,000

1,500

1,000

500

0

10

8

6

4

2

0

2,240

2,260

2,263

2,171

1,86

7

total assets(RMMILLION)

5

0 0 0 0

diVidend(SEN)

basiC earninGs/(loss)per sHare (SEN)

14

21

7

0

-7

-14

-21

-35

-28

-42

(37.40)

(21.89)

(16.

69)

12.50

1,263

2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018

(35)

780


5,000

6,000

7,000

8,000

4,000

3,000

2,000

1,000

0

sHare VoluMe traded ForKwantas Corporation berhad/ July 17 - June 18

sHare perForManCe

sHare priCe traded ForKwantas Corporation berhad/ July 17 - June 18

7,89

71.

48

1,05

21.

48

730

1.50

1,24

31.

42

2,72

61.

41

6,43

51.

41

4,16

81.

43

2,77

81.

44

2,62

81.

50

4,51

81.

49

592

1.40

2,84

0

Jul auG sep oCt noV deC Jan Feb MaC apr MaY Jun

1.33

1.50

2.00

1.00

0.50

0

Jul auG sep oCt noV deC Jan Feb MaC apr MaY Jun


5-Year Group statistiCs and perForManCes

UNIT 2018 2017 2016 2015 2014

plantations

OilPalmAreaMature(16-25Years) hectare 12,447 12,649 12,497 11,570 8,964Mature-Prime(8-15Years) hectare 1,659 2,837 3,128 3,778 4,981Mature-Young(4-7Years) hectare 1,643 1,492 1,542 1,086 1,813Immature(1-3Years) hectare 4,124 4,209 3,079 2,446 2,118TotalPlantedArea hectare 19,873 21,187 20,246 18,880 17,876TotalUnplanted,ReservesandInfrastructureAreas hectare 37,044 37,263 38,204 39,570 43,723TotalArea hectare 56,917 58,450 58,450 58,450 61,599

FFBProduction tonne 333,333 375,624 346,556 371,658 371,688YieldPerMatureHectare tonne 21.2 22.1 20.2 22.6 23.6AverageSellingPricePerTonne RM 498 469 420 386 434

Mills

FFBProcessedOwn tonne 326,623 373,069 342,850 368,425 369,709Outside tonne 289,117 214,429 180,925 254,135 174,512Total tonne 615,740 587,497 523,775 622,560 544,221

ProductionCrudePalmOil tonne 128,549 120,793 109,738 132,570 111,607PalmKernel tonne 31,008 28,926 24,473 29,513 26,168

ExtractionRatesCrudePalmOil % 20.9 20.6 21.0 21.3 20.5PalmKernel % 5.0 4.9 4.7 4.7 4.8

AverageSellingPrice(PerTonne)CrudePalmOil RM 2,638 2,884 2,260 2,248 2,330PalmKernel RM 2,214 2,674 1,622 1,473 1,275

doWnstreaM ManuFaCturinG

production(Malaysia)CrudePalmKernelOil tonne 26,676 24,573 27,379 27,364 21,407PalmKernelExpeller tonne 31,443 30,989 32,643 33,328 24,148RefinedBleachedDeodorisedPalmOil tonne 54,900 47,689 38,007 55,504 53,212PalmFattyAcidDistillate tonne 5,230 3,750 2,231 3,935 3,936RefinedBleachedDeodorisedStearin tonne 2,631 2,504 5,433 5,103 4,061RefinedBleachedDeodorisedOlein tonne 9,179 7,741 15,433 14,349 14,289RefinedBleachedDeodorisedPalmKernelOil tonne - 493 - - 21,407

(China)RefinedBleachedDeodorisedStearin tonne - - - - 1,004RefinedBleachedDeodorisedOlein tonne - - - - 22,105OleochemicalProducts tonne 3,672 80,213 84,540 89,930 88,641RefinedBleachedDeodorisedPalmOil tonne - - - - 15,008PalmFattyAcidDistillate tonne - - - - 315


UNIT 2018 2017 2016 2015 2014

doWnstreaM ManuFaCturinG (cont’d)

extraction rates(Malaysia)CrudePalmKernelOil % 43.9 43.0 43.4 43.6 45.1PalmKernelExpeller % 51.8 54.3 51.8 53.1 50.8RefinedBleachedDeodorisedPalmOil % 90.8 92.2 94.4 93.7 92.7PalmFattyAcidDistillate % 8.7 7.3 5.5 6.6 6.9RefinedBleachedDeodorisedStearin % 22.2 24.3 26.0 26.2 22.1RefinedBleachedDeodorisedOlein % 77.7 75.1 73.9 73.8 77.9RefinedBleachedDeodorisedPalmKernelOil % - 0.9 - - 94.4

(China)RefinedBleachedDeodorisedStearin % - - - - 16.5RefinedBleachedDeodorisedOlein % - - - - 88.0OleochemicalProducts % 96.0 96.2 96.0 94.9 93.4Glycerine % 9.6 9.8 10.1 9.8 10.4RefinedBleachedDeodorisedPalmOil % - - - - 93.2PalmFattyAcidDistillate % - - - - 5.7

average selling price (per tonne)(Malaysia)CrudePalmKernelOil RM 4,795 5,520 3,250 3,075 2,026PalmKernelExpeller RM 451 443 334 359 525RefinedBleachedDeodorisedPalmOil RM - 2,789 2,564 2,125 2,520PalmFattyAcidDistillate RM 2,326 2,775 2,185 2,064 2,264RefinedBleachedDeodorisedStearin RM 2,447 3,123 2,174 2,040 2,638RefinedBleachedDeodorisedOlein RM - 2,904 2,537 2,377 2,712RefinedBleachedDeodorisedPalmKernelOil RM - - - - 2,464

(China)RefinedBleachedDeodorisedOlein RMB - - - 4,551 5,293OleochemicalProducts RMB 5,614 5,685 4,648 5,452 5,882Glycerine RMB 4,695 3,516 4,107 3,846 4,986RefinedBleachedDeodorisedStearin RMB 4,099 4,440 3,640 4,507 5,257PalmFattyAcidDistillate RMB - - - - 3,270

FinanCial perForManCe

Revenue RM’000 771,272 1,379,894 1,258,493 1,317,797 1,768,800(Loss)/ProfitfromOperation RM’000 (10,925) 92,143 15,291 (36,982) (78,348)FinanceCost RM’000 (24,536) (31,998) (33,267) (32,295) (27,107)(Loss)/ProfitBeforeTax RM’000 (35,461) 60,145 (17,976) (69,277) (105,455)Taxation RM’000 (20,456) (23,621) (7,152) (39) (11,217)MinorityInterests RM’000 (3,908) 2,427 1,161 1,098 105Net(Loss)/Profit RM’000 (55,917) 36,524 (25,128) (69,316) (116,567)Shareholders’Fund RM’000 1,188,829 1,263,415 1,201,328 1,219,256 1,374,594TotalAssets RM’000 1,867,456 2,170,946 2,262,906 2,259,531 2,239,704

(Loss)/EarningPerShare-Basic sen (16.69) 12.50 (7.69) (21.89) (37.40)(Loss)/Earnings/PerShare-Diluted sen (16.69) 12.50 (7.69) (21.89) (37.40)GrossDividendPerShare sen - - - 5.00 5.00NetTangibleAssetsPerShare RM 3.81 4.05 3.85 3.91 4.41

SharePriceHigh RM 1.69 1.72 1.76 2.12 2.30Low RM 1.32 1.18 1.32 1.45 1.89Closing RM 1.32 1.60 1.32 1.75 2.13

Others*NetDebt/Equity number oftimes 0.31 0.39 0.50 0.51 0.35

*Netdebtrepresentstotalbankborrowingslessshorttermfunds,depositswithfinancialinstitutionsandcashandbankbalances.

5-YEARGROUPSTATISTICSANDPERFORMANCES


MrOoiJitHuatChairmanDatukIsmailBinAbdullahMemberMrPetrusGimbadMember

MessrsPKFMsKwanFeiFen(MAICSA7040966)MsKwanChiewGiok(LS0007125)

audit and risKManaGeMent CoMMittee auditorsseCretaries

K-63A-3A,SignatureOfficeKKTimesSquareOffCoastalHighway88100KotaKinabalu,SabahT088-486555F088-486777

SymphonyShareRegistrarsSdnBhdLevel6,SymphonyHousePusatDaganganDana1JalanPJU1A/4647301PetalingJayaSelangorDarulEhsanT03-78490777F03-78418151/52

MainMarketofBursaMalaysiaSecuritiesBerhadStockName:KWANTASStockCode:6572

reGistered oFFiCe reGistrarsstoCK eXCHanGe listinG

AffinBankBerhadAgriculturalBankofChinaAmBank(M)BerhadAmBankIslamicBerhadBankofChinaBankofCommunicationsChinaConstructionBankChinaMerchantsBankCIMBBankBerhad

Lind,Willie,Wong&ChinSzetu&CoLlinksLawOffices

banKerssoliCitors

HSBCBankMalaysiaBerhadIndustrialandCommercialBankofChinaMalayanBankingBerhadMaybankInternational(L)Ltd.StandardCharteredBankMalaysiaBerhadUnitedOverseasBank(M)Berhad

DatukIsmailBinAbdullahChairman/IndependentNon-ExecutiveDirector

MrKwanNgenChung(Demised on 23 July 2018)GroupChiefExecutiveOfficer/Non-IndependentExecutiveDirector

board oF direCtors

MrKwanNgenWahNon-IndependentExecutiveDirector

Dato’ChongKanHiungNon-IndependentExecutiveDirector

MsKwanJinNgetNon-IndependentExecutiveDirector

MsKwanMinNyetNon-IndependentExecutiveDirector

MrPetrusGimbadIndependentNon-ExecutiveDirector

MrOoiJitHuatIndependentNon-ExecutiveDirector

Corporate inForMation


KWANTASCORPORATIONBERHAD(KCB)356602-WIncorporated: 23Aug1995PrincipalActivities: InvestmentHoldingCompanyandProvisionofManagementServicestotheSubsidiaries

KwantasInternationalInc(KII)LL02811Incorporated: 19Apr2001PrincipalActivity: Internationaltrading100%

PTKinabaluInvesdagIndonesia(PTKINABALU)PrincipalActivity: InvestmentHolding Company95%

DongmaPalmIndustries(Zhangjiagang)CoLtd(DMPI)PrincipalActivities:Operationofoleochemicalsand glycerineplants100%

PTKalsumPratamaPerkasa(PTKALSUM)PrincipalActivity: Dormant95%

PTGerbangMerantiAgrobisnis(PTGERBANG)PrincipalActivity: Operationofoilpalmplantations95%

DongmaOils&Fats(ZhangjiagangFreeTradeZone)CoLtd(DMZJGFTZ)PrincipalActivities:-Operationofabulking installation - Tradingofpalmoilsproducts

100%

DongmaOils&Fats(GuangzhouFreeTradeZone)CoLtd(DMGZFTZ)PrincipalActivities:-Operationofabulking installation,palmoilrefinery andshorteningplants - Tradingofpalmoilsproducts

100%

KwantasLandDevelopmentSdnBhd(KLDSB)206035-XIncorporated: 11Oct1990PrincipalActivity: Operationofoilpalmplantations100%

KwantasEdibleOil(Bintulu)SdnBhd(KEOBSB)57449-KIncorporated: 21Apr1980PrincipalActivity: Dormant100%

KwantasOleoSdnBhd(KOLEO)143459-DIncorporated: 12Aug1985PrincipalActivity: Operationofoilpalmplantation100%

KwantasCommodityTradingSdnBhd(KCTSB)873024-TIncorporated: 23Sept2009PrincipalActivity: Dormant100%

GreenGreenGrassSdnBhd(GGGSB)769163-HIncorporated: 11Apr2007PrincipalActivity: Operationofawasteincinerationplant100%

HarankySdnBhd(HSB)28971-KIncorporated: 18Aug1976PrincipalActivity: Operationofoilpalmplantation100%

AmanBersatuSdnBhd(ABSB)145295-MIncorporated: 25Sept1985PrincipalActivity: Operationofoilpalmplantations100%

BenarBersatuSdnBhd(BBSB)143185-DIncorporated: 05Aug1985PrincipalActivity: Operationofoilpalmplantation100%

MaximlinkEnterpriseSdnBhd(MESB)179828-VIncorporated: 17Mar1989PrincipalActivity: Rentalofleaseholdland100%

MiracleHarvestSdnBhd(MHSB)700310-AIncorporated: 15Jul2005PrincipalActivity: Rentalofleaseholdland100%

PalmEnergySdnBhd(PESB)539089-XIncorporated: 13Feb2001PrincipalActivity: Dormant100%

KwantasPlantationsSdnBhd(KPSB)85636-XIncorporated: 01Jun1982PrincipalActivity: Operationofoilpalmplantations100% 100%

GagasanUsahasamaSdnBhd(GUSB)927944-KIncorporated: 30Dec2010PrincipalActivities:Rentalofleaseholdlandandoperation ofoilpalmplantation

60%KwantasPelitaPlantation(Balingian)SdnBhd(KPPBSB)682158-UIncorporated: 23Feb2005PrincipalActivity: Operationofoilpalmplantations

KwantasOilSdnBhd(KOSB)57450-XIncorporated: 21Apr1980PrincipalActivities:-Operationofpalmoilmills,kernel crushingplant,palmoilrefinery andtradingofpalmoils -Wholesaling&supplyofdiesel andlubricants

100%

MalaysianCompanies Subsidiaries

ForeignCompanies

Corporate struCture


datuk ismail bin abdullahChairman/IndependentNon-ExecutiveDirector

Mr Kwan ngen Chung(Demisedon23July2018)

GroupChiefExecutiveOfficer/Non-IndependentExecutiveDirector

•Age:63•Gender:Male•Nationality:Malaysian

•DateAppointed:25March2013

DatukIsmailBinAbdullahgraduatedwithaBachelorofArts(Hons)EconomicsfromUniversityofSunderland,UKin1982.HethenlaterattachedwithHarvardUniversity,USAfor joiningtheProgramon InvestmentAppraisal&Management(“PIAM”)in1995.

DatukIsmailBinAbdullahwasaDirectorandPermanentSecretary of several private companies and publicsectors. He has had a distinguished career with thegovernment sector primarily in the fields of industrialdevelopment and economic planning. He was theDirectorofSabahStatePlanningUnitfrom2009to2014.PriortohisappointmentasDirectoroftheStatePlanningUnit,he servedasPermanent Secretary to theMinistryof Industrial Development from 2000 to 2009. He wastheDirectorofStateArchives in1998,Secretary to theState Secretary’s office from 1994 to 1998 and ChiefInvestmentOfficer/Assistant SecretaryofMajlis UgamaIslamSabah(“MUIS”)from1988to1994.HewasalsotheAssistantDirectortotheStatePlanningUnitfrom1982to1988.

Datuk Ismail Bin Abdullah holds nil shares in KwantasCorporation Berhad and does not have any familyrelationshipwithanyotherDirectorsand/orothermajorshareholders of the Company and has no conflict ofinterestwiththeCompany.Hehasnotbeenconvictedforanyoffenceswithinthepastfive(5)yearsotherthantrafficoffencesandwas not imposedwithanypublicsanction or penalty by the relevant regulatory bodiesduringthefinancialyearunderreview.

DatukIsmailBinAbdullahistheChairmanofNominationandRemunerationCommitteeandamemberofAuditandRiskManagementCommitteeoftheCompany.

Datuk Ismail Bin Abdullah attended 4 out of 4 BoardmeetingsoftheCompanyheldduringthefinancialyearended30June2018.


•DateAppointed:23August1995

MrKwanNgenChungisoneoftheco-founderDirectorsof the Company and is the former Group ManagingDirector cum Group Chief Executive Officer of theCompany. He holds a degree of Master of BusinessAdministration from Wisconsin International University,USA. Prior to the founding of theCompany,Mr KwanNgen Chung has been principally involved in the oilpalm industry. He also has substantial experience instonequarryoperation,roadconstructionandpropertydevelopment.Usinghisvastknowledgeandexperienceobtainedinthepastthirty(30)years,heandhisbrother,Mr KwanNgenWahestablished KwantasCorporationBerhadin1995.

MrKwanNgenChungholds94,188,632sharesinKwantasCorporationBerhad.HeisthebrotherofMrKwanNgenWah,MsKwanJinNgetandMsKwanMinNyet.Exceptfor certain recurrent related party transactions of arevenueortradingnaturewhicharenecessaryforday-to-dayoperationsof theCompanyand its subsidiariesandforwhichheisdeemedtobeinterestedasdisclosedonpages128to130oftheAnnualReport,therearenootherbusinessarrangementswiththeCompanyinwhichhehaspersonalinterests.Hehasnotbeenconvictedforany offenceswithin the past five (5) years other thantrafficoffencesandwas not imposedwithanypublicsanction or penalty by the relevant regulatory bodiesduringthefinancialyearunderreview.

Mr KwanNgenChungattended4outof the 4 BoardmeetingsoftheCompanyheldduringthefinancialyearended30June2018.

direCtors’ proFile


dato’ Chong Kan HiungNon-IndependentExecutiveDirector

Mr Kwan ngen WahNon-IndependentExecutiveDirector



MrKwanNgenWahisoneoftheco-founderDirectorsoftheCompanyandiscurrentlyanExecutiveDirector.HereceivedhistertiaryeducationintheUK.

MrKwanNgenWahhasbeenactivelyinvolvedintheoilpalmindustry,stonequarryoperation,roadconstructionand property development projects for the pastthirty (30) years and gained substantial knowledgeand experience in these industries. The accumulatedexperience coupled with the close relationship withcustomersandsuppliersprovideadequate impetusforhimtoefficientlysteertheCompanytogreatersuccess.

MrKwanNgenWahholds93,188,632sharesinKwantasCorporationBerhad.HeistheelderbrotherofMrKwanNgenChung,MsKwanJinNgetandMsKwanMinNyet.Exceptforcertainrecurrentrelatedpartytransactionsofarevenueortradingnaturewhicharenecessaryforday-to-dayoperationsof theCompanyand its subsidiariesandforwhichheisdeemedtobeinterestedasdisclosedonpages128to130oftheAnnualReport,therearenootherbusinessarrangementswiththeCompanyinwhichhehaspersonalinterests.Hehasnotbeenconvictedforany offenceswithin the past five (5) years other thantrafficoffencesandwas not imposedwithanypublicsanction or penalty by the relevant regulatory bodiesduringthefinancialyearunderreview.

With the demised of the late Group Chief ExecutiveOfficer,MrKwanNgenWahhasbeenredesignatedastheChiefExecutiveOfficeron24July2018.

Mr Kwan Ngen Wah attended 4 out of the 4 BoardmeetingsoftheCompanyheldduringthefinancialyearended30June2018.


•DateAppointed:12November2001

Dato’ChongKanHiung isaCharteredAccountantoftheMalaysianInstituteofAccountantsandaFellowofthe Chartered Association of Certified Accountant intheUKandalsoamemberoftheMalaysianInstituteofTaxation.

Prior to joining the Kwantas Group in 1996, he wasattachedtoaninternationalpublicaccountantsfirm.Hehasconsiderableexperienceincorporatefinanceandgeneralmanagement.Dato’ChongKanHiungisalsoacertifiedmemberof theFinancialPlanningAssociationofMalaysia.

Dato’ Chong Kan Hiung holds 2,600,000 shares inKwantas Corporation Berhad. He does not have anyfamilyrelationshipwithanyotherDirectorsand/orothermajorshareholdersoftheCompanyandhasnoconflictofinterestwiththeCompany.Hehasnotbeenconvictedforanyoffenceswithinthepastfive(5)yearsotherthantrafficoffencesandwas not imposedwithanypublicsanction or penalty by the relevant regulatory bodiesduringthefinancialyearunderreview.

Dato’ChongKanHiungattended4outofthe4BoardmeetingsoftheCompanyheldduringthefinancialyearended30June2018.

DIRECTORS’PROFILE


Ms Kwan Min nyetNon-IndependentExecutiveDirector

Ms Kwan Jin ngetNon-IndependentExecutiveDirector

•Age:49•Gender:Female•Nationality:Malaysian


MsKwanMinNyetgraduatedwithaBachelorDegreeofBusinessAdministrationfromUniversityofIowa,USAin1989.

MsKwanMinNyetisresponsibleforthefinanceandthemarketingfunctionsoftheCompany’soilmilloperations.

Ms Kwan Min Nyet holds 238,000 shares in KwantasCorporationBerhad.She is thesisterofMrKwanNgenWah, Mr Kwan Ngen Chung and Ms Kwan Jin Nget.Exceptforcertainrecurrentrelatedpartytransactionsofarevenueortradingnaturewhicharenecessaryforday-to-dayoperationsof theCompanyand its subsidiariesandforwhichsheisdeemedtobeinterestedasdisclosedonpages128to130oftheAnnualReport,therearenootherbusinessarrangementswiththeCompanyinwhichshehaspersonalinterests.Shehasnotbeenconvictedforanyoffenceswithinthepastfive(5)yearsotherthantrafficoffencesandwas not imposedwithanypublicsanction or penalty by the relevant regulatory bodiesduringthefinancialyearunderreview.

Ms Kwan Min Nyet attended 4 out of the 4 BoardmeetingsoftheCompanyheldduringthefinancialyearended30June2018.

•Age:51•Gender:Female•Nationality:Malaysian


MsKwanJinNgetgraduatedwithaBachelorDegreeofBusinessAdministrationfromUniversityofIowa,USAin1989.

MsKwan JinNget is currently theRegionalDirectoroftheGroup.Herresponsibilities includethecoordinationfor the efficient operations of the Regional Office,overseeinghumanresourcesmanagemenandgeneraladministrationoftheoilpalmplantationsbusiness.

Ms Kwan Jin Nget holds 689,500 shares in KwantasCorporationBerhad.She is thesisterofMrKwanNgenWah, Mr Kwan Ngen Chung andMs KwanMin Nyet.Exceptforcertainrecurrentrelatedpartytransactionsofarevenueortradingnaturewhicharenecessaryforday-to-dayoperationsof theCompanyand its subsidiariesandforwhichsheisdeemedtobeinterestedasdisclosedonpages128to130oftheAnnualReport,therearenootherbusinessarrangementswiththeCompanyinwhichshehaspersonalinterests.Shehasnotbeenconvictedforanyoffenceswithinthepastfive(5)yearsotherthantrafficoffencesandwas not imposedwithanypublicsanction or penalty by the relevant regulatory bodiesduringthefinancialyearunderreview.

MsKwanJinNgetattended4outofthe4BoardmeetingsoftheCompanyheldduringthefinancialyearended30June2018.

DIRECTORS’PROFILE


Mr petrus GimbadIndependentNon-ExecutiveDirector

Mr ooi Jit HuatIndependentNon-ExecutiveDirector



MrOoiJitHuatisaCharteredAccountantofMalaysianInstitute of Accountants and the managing partnerofpublicaccountingfirm,RussOoi&Associates since1985.HeisalsoamemberoftheMalaysianInstituteofTaxation.

MrOoiJitHuathasoverthirty(30)yearsofexperienceinthefinancialindustryhavingcarvedareasofexpertisein corporate consultancy, financial management,management information systems and auditing andinvestigations. His professional assignments coveredfloatation exercises, investigations and due diligencereportingandthereversetakeoverofseveralcompanieson theBursaMalaysiaSecuritiesBerhad.Hesitson theBoardofPriceworthInternationalBerhad.

MrOoiJitHuatholdsnilshares inKwantasCorporationBerhad.HedoesnothaveanyfamilyrelationshipwithanyotherDirectorsand/orothermajorshareholdersoftheCompanyand has no conflict of interestwith theCompany.Hehasnotbeenconvictedforanyoffenceswithinthepastfive(5)yearsotherthantrafficoffencesandwasnotimposedwithanypublicsanctionorpenaltyby the relevant regulatory bodies during the financialyearunderreview.

MrOoi Jit Huat is theChairman of theAudit and RiskManagementCommitteeandamemberofNominationandRemunerationCommitteeoftheCompany.

MrOoiJitHuatattended4outofthe4Boardmeetingsof theCompanyheldduringthefinancialyearended30June2018.



Mr Petrus Gimbad is a Chartered Accountant of theMalaysian Institute of Accountants, a Fellow of theAssociationofCharteredCertifiedAccountantsandanAssociateof the Instituteof InternalAuditorsMalaysia.He holds a Master Degree in Business Administrationand Advanced Business Practice. He is a member ofthe Energy Commission and also sits as independentmember of the Board of SabahDevelopment BerhadGroup of Companies, Progressive Insurance Berhad,YayasanInnovasiMalaysia,andEastlandEquityBerhad.HewasapartnerofErnst&Young,basedintheadvisorypractices of Malaysia and Vietnam. He has acted asQualityDirectorofErnst&YoungadvisorypracticesfortheFarEastRegion.PriortojoiningErnst&Young,hewasanaccountantwithPetronas.

MrPetrusGimbadholdsnilsharesinKwantasCorporationBerhadanddoesnothaveanyfamilyrelationshipwithanyotherDirectorsand/orothermajorshareholdersoftheCompanyand has no conflict of interestwith theCompany.Hehasnotbeenconvictedforanyoffenceswithinthepastfive(5)yearsotherthantrafficoffencesandwasnotimposedwithanypublicsanctionorpenaltyby the relevant regulatory bodies during the financialyearunderreview.

Mr Petrus Gimbad is a member of Audit and RiskManagementCommittee,NominationCommitteeandRemunerationCommitteeoftheCompany.

Mr Petrus Gimbad attended 4 out of the 4 BoardmeetingsoftheCompanyheldduringthefinancialyearended30June2018.

DIRECTORS’PROFILE


KeY senior ManaGeMent’s proFile

Mr Chai Foo YinGeneralManager•Marketing

Mr Jiang Yun longGeneral Manager

•ChinaDongmaGroup

Mr shammugam periayahGroup Operation Manager

•Operation


Mr Chai Foo Yin graduatedwith aBachelorDegree inBusinessStudiesfromNorthEastLondonPolytechnic,UK.

Prior to joining Kwantas Group in1996 as a Marketing Manager, MrChai Foo Yin was a cocoa beanProcurement Officer in Sime DarbyCommodities from 1983 to 1995.Hewas thenpromoted toGeneralManager of the Marketing Divisionin year2002.Heoversees the localpacked cooking oil andmarketingof crude palm oil, refine oil andpalmkerneloilfortheGroup.Apartfrom managing the hedgingprocess necessary for the refinery’soperation and other raw material,he has to ensure that there aresufficientrawmaterialsofqualityarereadyforshipment.Hisresponsibilityalso covers China DongmaZhangjiagang’s raw material andstearicacidmarket.

Mr Chai Foo Yin holds 100 sharesin Kwantas Corporation Berhadand does not have any familyrelationshipwithanyotherDirectorsand/orothermajor shareholdersoftheCompanyandhasnoconflictofinterestwith theCompany. He hasnotbeenconvictedforanyoffenceswithin the past five (5) years otherthan traffic offences and was notimposedwithanypublicsanctionorpenalty by the relevant regulatorybodies during the financial yearunderreview.

•Age:49•Gender:Male•Nationality:Chinese

Mr Jiang Yun Long graduatedwith a Bachelor Degree in BusinessManagementfromHebeiUniversity,China.

Mr Jiang Yun Long joined KwantasGroupin1999asaGeneralManager– China Dongma Group. He hasaccumulatedmorethantwenty(20)yearsofexperienceingrainandoilindustry andmore than fifteen (15)yearsinforeigntrademanagement.Heiscurrentlyoverseeingtheentireoperations and management inChinaDongmaGroup.

Mr Jiang Yun Long holds nil sharesin Kwantas Corporation Berhadand does not have any familyrelationshipwithanyotherDirectorsand/orothermajor shareholdersoftheCompanyandhasnoconflictofinterestwith theCompany. He hasnotbeenconvictedforanyoffenceswithin the past five (5) years otherthan traffic offences and was notimposedwithanypublicsanctionorpenalty by the relevant regulatorybodies during the financial yearunderreview.


MrShammugamPeriayahobtaineda Matriculation Certificate fromSouthIndia.

Mr Shammugam Periayah joinedKwantasGroup on 21 August 2017as a Group Operation Manager.He gained his experiences in theoil palm industry when he waspreviously with Equatorial Palm Oilin Liberia (West Africa), PT LangkatNusatraKepong(Indonesia)andPTKresna Duta Agroindo (Indonesia).Healsoreceivedforestryplantationsexperiencesduringhisemploymentwith PT Bumi Mekah Hijau andSchrader Forest Management SdnBhd in Indonesia. Additionally,he also has experiences in teaplantation, cocoa plantation,landscapeandinfloriculture.

Mr Shammugam Periayah hasgatheredmorethanforty(40)yearsof extensive practical, technicaland management experiencesvarying in palm plantation, forestryplantation, tea plantation, cocoaplantation and landscape andfloriculture. His responsibilities coverthe management and operationsof Kwantas Group’s oil palmplantations, refinery, palm oil millsandkernelcrushingplant.

Mr Shammugam Periayah holdsnil shares in Kwantas CorporationBerhadanddoesnothaveanyfamilyrelationshipwithanyotherDirectorsand/orothermajor shareholdersoftheCompanyandhasnoconflictofinterestwith theCompany. He hasnotbeenconvictedforanyoffenceswithin the past five (5) years otherthan traffic offences and was notimposedwithanypublicsanctionorpenalty by the relevant regulatorybodies during the financial yearunderreview.


rM771.27Million

FYE2018recordedarevenueof

translatetoaprofitmarginof

9%

profitofrM66.90

Million

ManaGeMent disCussions and analYsis

overview of Group’s business and operations

Kwantas Corporation Berhad (“Kwantas” or “the Group”) is anintegratedpalmoilproducerwithitsbusinessesrangingfromupstreamactivityofcultivationofoilpalmtothedownstreamresource-basedmanufacturing segments that comprise of refinery, palm oil mills,kernelcrushingplant,cookingoilpackaginganddistributionaswellasoperationofoleochemicalplant.

Duringthefinancialyearunderreview,theGrouphasatotaloftwentyfive (25) estates which produce 333,333 MT of fresh fruit bunches(“FFB”).TheFFBproducedbytheGrouptogetherwiththirdparties’FFBpurchasedwerethenprocessedbytheGroup’sthree(3)palmoilmillsthatarelocatedincloseproximitytoitsplantations.

TheGroup’sthree(3)palmoilmillshaveatotalproductioncapacityof180tonnesperhour.Atotalof615,740MTofFFBinclusiveofoutsidecropswereprocessedduringthefinancialyearended30June2018,outofwhich53.05%ofFFBwassuppliedbytheGroup’sownestates.Atotalof128,549MTofcrudepalmoil(“CPO”)and31,008MTofpalmkernel(“PK”)wereproducedfromtheprocessingofFFB.

Refined palmproducts tradingmade up of the remaining revenuecontribution to the Group and in the financial year under review,trading volume had decreased significantly as compared to theprecedingfinancialyear,mainlyduetoweakmarketdemandfromPeople’s Republic of China coupled with higher inventory supplyavailableinthelocalmarket.


Financial overview

For the financial yearended30 June2018, theGrouprecorded a revenue of RM771.27million whichwas asubstantial reduction of 44.11% compared to RM1.38billion for FYE 2017. The reduction was mainly due tothedecrease inboth theaverageunit sellingpriceofpalmproductsandsalesvolume.Thesignificantdropinthetradingvolumeandaverageunitsellingpriceweremostly attributed to market forces including sluggishexportdemandcoupledwithhighCPOinventorylevelavailable in thepalmoilmarketandexpectationofacontinuedupwardtrendinproduction.Inaddition,theoleochemical production facility was utilized mainlyunder processing contract services for customers andthis resulted in the reduction of sales in refined palmproducts.

Net loss for the financial year under review wasRM55.92 million as against a profit of RM36.52 millionin the preceding year. The Group had provided foran impairment loss of property, plant, equipmentandbiological assets, loss on disposal of assets held forsale,andprovisionforlong-termnon-tradereceivablesamounted to RM41.64 million, RM22.18 million andRM8.44millionrespectivelyduringtheyearunderreview.

Animpairmentlossisrecognizedwhenthereisobjectiveevidencethatafinancialasset is impaired.TheGroupspecifically reviewed its loan and receivables andperformed historical and trend analysis when makinga judgement to evaluate the adequacy of theallowance for impairment losses. During the financialyear,theGrouphadprovidedforalong-termnon-tradereceivable amounting to RM8.44 million as doubtfuldebts.Therecoverabilityoftheamount isuncertainasattheendofthereportingperiod.

The renewal of certain licenses from the relevantIndonesiaauthorityforanagriculturelandisstillpending.The renewability of the licenses remains uncertain asat the end of the reporting period. TheManagementhas relied on the professional valuation assessmentperformed by an independent valuer to assess thefairvaluelesscoststosellofthelandanditsbiologicalassets. Consequently, an impairment allowance ofRM20.90millionhadbeenprovidedforduringtheyearunderreviewinrelationtothesaidassets.

Nevertheless, excluding the non-cash and provisionalitems, the Group has made an underlying profit ofRM66.90million for financial year ended 30 June 2018(FYE2017:RM110.63million),translatetoaprofitmarginof9%(FYE2017:8%).

201879%

(*21%)

201488%(*12%)

201587%(*13%)

201685%(*15%)

201780%

(*20%)

total planted areaMatureArea(*ImmatureArea)

2018333,333(*21.2)

2014371,688(*23.6)

2015371,658(*22.6)

2016346,556(*20.2)

2017375,624(*22.1)

FFb production (mt) & Yield per Mature Ha (mt/ha)FFBProduction(*YieldperMatureHa)

MANAGEMENTDISCUSSIONSANDANALYSIS


201853%

(*47%)

201468%(*32%)

201559%(*41%)

201666%(*34%)

201764%

(*36%)

total FFb processedInternalFFB(*ExternalFFB)

2018128,549(*20.9)

2014111,607(*20.5)

2015132,570(*21.3)

2016109,738(*21.0)

2017120,793(*20.6)

Cpo production (mt) & oil extraction rate for Cpo (%)CPOProduction(*OER)

MANAGEMENTDISCUSSIONSANDANALYSIS

As at 30 June 2018, the Group has fully repaid andsettledalloutstandingbalances relatingtotheforeigncurrencydenominatedborrowingwithalicensedbank.TheGroup’s gearing ratiowas 0.31 at the end of thereportingperiod (FYE2017 : 0.39).With this settlement,the financial covenants of the bank was no longerapplicable.

The decrease in the Group’s total borrowings byRM177.66milliontoRM390.13millionasat30June2018(FYE2017:567.79million) isconsistentwiththeGroup’sintention to reduce its borrowing costs. The Group’scurrentyearinterestexpensesalsodecreasedbyRM7.5milliontoRM24.54million(FYE2017:RM32.0million).

plantations operations

The Group’s oil palm plantations and palm productsprocessingactivitieshadcontributedtomorethanninetypercent(90%)oftheGroup’stotalearningsfortheyearended30June2018,equivalenttoRM710.02millionandrepresentingadecreaseof34.70%orRM377.24millioninvaluecomparedtoRM1.09billion revenue reported inFYE2017.ThedeclineinaverageunitsellingpricesandvolumeofCPOandPKwerethemainfactorcontributingtolowerplantationearnings.Thesignificantdropinthetraded volume and average unit selling price weremainly attributed to market factors including sluggishexportdemand,coupledwithhighCPOinventorylevelin thepalmoilmarket, andexpectationof continuedupwardtrendinproduction.

As at 30 June 2018, theGroup has a total land bankof 56,917 hectares as against 58,450 hectares in thepreceding year. The difference of 1,533 hectares oflandorequivalenttoestimated3,791acresidentifiedasPintasan 8wasdisposed to KUBMalua Plantation SdnBhdbyKwantasPlantationsSdnBhd.

TheGroup’stotalplantedareastoodat19,873hectares,of which 79.25% or 15,749 hectares arematured and20.75% or 4,124 hectares are classified as immature.Forpalmsexceedingageoftwentyfive(25)years,theGroup will continue with its replanting programme. Atotalof750hectareswerereplantedwithhigh-yieldingclonalmaterialsduringtheyearunderreview.TheGroupis targetedanother550hectares for replanting for thefinancialyearended30June2019.

KWANTAS CORPORATION BERHAD (356602-W) • ANNUAL REPORT 201822MANAGEMENTDISCUSSIONSANDANALYSIS

FFBproductionoftheGrouphaddecreasedby11.26%to333,333MTfortheyearended30June2018asagainst375,624MTinFYE2017.FFByieldpermaturehectare(“YPMH”)achievedbytheGroupwas21.2MT/YPMH,aslightdecrease from22.1MT/YPMH in theprecedingyear. Theslightdecrease inFFB’sYPMHfor thecurrentyearwasmainlyduetotheoveragedpalmsoftheGroup.

TheGroupiscommittedtopromotethegrowthanduseofsustainablepalmoiltowardsachievingtheprotectionoftheenvironmentitoperateandsustainablesocialinitiatives.KwantashassubscribedtoRoundtableonSustainablePalmOil (“RSPO”) since 2014.A time-boundplan is in-place forall theGroup’splantationactivities toprogresstowardRSPOcertificationsinitsestatesandoilmills.

ApartfromRSPOcertification,theMalaysianMinistryofPlantationandCommoditieshasmandatedallMalaysianpalmoilproducerstobeMalaysianSustainablePalmOil(“MSPO”)certifiedbyyear2019.TheGroup’sHarankyPalmOilMillanditssupplybasearecurrentlyRSPOcertifiedandhencewillbesetforMSPOcertifiedbyendofDecember2018.OtheroperationalunitsareintheprocesstobeMSPOcertifiedby2019.

Milling operations

TheGroupowns three (3)palmoilmills in LahadDatu,Sabah -HarankyPalmOilMill,MewahPalmOilMillandPintasanPalmOilMill.Duringtheyear,thethree(3)palmoilmillshadprocessedatotalof615,740MTofFFB,anincreaseof4.81%comparedwith587,497MTintheprecedingyear.Kwantas’sownFFBaccountedfor53.05%ofthetotalFFBprocessed.HighertonnageofFFBprocessedwasduetothehigherFFBtonnagepurchasedfromthirdparties.

Oil extraction rates (“OER”) and kernel extraction rates (“KER”) achieved by the Group were 20.9% and 5%respectively,aslightincreaseof0.3%and0.1%respectivelyfromtheprecedingyear.

• Sabah

• Kalimantan,Indonesia

• Sarawak

ANNUAL REPORT 2018 • KWANTAS CORPORATION BERHAD (356602-W) 23MANAGEMENTDISCUSSIONSANDANALYSIS

oleochemical segment

Oleochemicalsegmentaccountedfor7.94%ofthetotalGroup’srevenueinthecurrentfinancialyear.Revenuereportedfromthissegmentdecreasedby79.06%toRM61.23millioninthecurrentyear(FYE2017:RM292.35million),mainly due to thedecrease in trading volumeof oleochemical products as a result of thechange inbusinessmodelwherebytheoleochemicalproductioncapacitywascontractedoutfortheprocessingcontractservicesforcustomers.

ThissegmenthasincurredalossbeforetaxationofRM44.33millioninthecurrentfinancialyear,whichwasRM8.88million higheras compared topreceding financial year’s loss of RM35.45million. Thecurrent year losses for thissegmentwasmainlyattributedtotheimpairmentlossofRM16.9milliononproperty,plantandequipment(FYE2017:RMNil).

The fairvalueand recoverableamountof theproperty,plantandequipmentwasassessedby theprofessionalvaluerstodeterminethechangesintheconditionsoftheassetsandotherfactorsthatcouldimpactitsfairvalueforthecurrentyear.

Theunderlying lossesofRM19.27millionexcludingnon-cashandprovisional items in thecurrentyear (FYE2017 :RM14.3million)wasmainlyduetotheincreaseinoperatingcostsincurred,asaresultofthenon-fulfilmentoftermsandconditionsstipulatedintheoleochemicalsprocessingcontractswithacustomer.Subsequently,theGrouphastakenstepstomitigatesuchoperationallossbyterminatingthecontractservicesprovidedtothecustomerandre-commencingthebusinessinprocessingandsaleofoleochemicalproductsonitsown.

Oleochemicaloperationsremainchallengingunderpresentuncertainmarketcondition.Thebusinessperformanceoftheoleochemicalsegmentisanticipatedtobechallengingforthefinancialyear2019inviewofthecontinuingdifficultmarketconditions,sluggishdemand,overcapacitiesandhigherrawmaterialprices.

prospects

OilpalmplantationsandpalmproductstradingsegmentremainassignificantcontributorstotheoverallprofitabilityoftheGroup.Althoughpalmoilpricesmaybeunderpressureintheshortterm,theBoardofDirectorsisoptimisticthatpalmpriceswillrecoverintheneartermduetothewiderpricediscountofpalmoilpricingcomparedwithothercompetingoilprices in themarket.TheBoardofDirectorsexpects theGrouptocontinueachievingsatisfactoryresultsfromthissegmentthroughforwardsalescommitment,robustGroupwidehedgingandcostmanagementstrategies.TheManagementhascontinuouslyfocusedonthematurityprofileoftheoilpalmtreeswithreplantingprogrammetoberolledoutontimelybasis.TheManagementhasalsofocusedoneffortsandstrategiestoincreaseproductionefficiency,toimprovethequalityofpalmproductsandtoexpediteandimplementgoodplantationstandardsandpracticesacrossitsoilpalmplantationsinordertoachievelong-termsustainability.

Oleochemicalsegment remainsvolatileduetothesignificantfluctuations inRMB/USDcurrencywhichultimatelyaffectsthepalmproductprices,importdemands,downstreamproductsmarketsupply,inventorylevelandshort-termmarketoutlookinChina.Duringtheyearunderreview,theGroup’sbusinessmodelwastosubcontractoutitsoleochemicalproductsprocessingfacilitiestoacustomer.However,duetothenon-fulfilmentofcertaincontractualtermsoftheprocessingcontractbythecustomer,theGrouphassinceterminatedthesubcontractarrangementsubsequenttotheyearended30June2018,andrecommencedtheprocessingandsaleofoleochemicalproductsonitsowninChinalocalmarket.

TheGroup’slong-termplanistoreduceitsoverallborrowingstoagearingratioof0.2timesorlowerbycontinuingwith itson-goingde-gearing initiatives to reducecapitalcommitmentson low returnassets.During thefinancialyearunderreview,theGrouphadimproveditsbalancesheetpositiononliabilitiesreductionandminimizedforeignexchangerisksexposurebysettlingitsforeigncurrencydenominatedtermloan.Thishadresultedinthereductionofcostofborrowings.

Despitethechallengingmarketconditionsforthepalmoilproducts,theBoardofDirectorsisconfidentthattheGroupwillcontinuetoachievepositiveandfavourableperformancewithitsforwardsalescommitmentandsustainablebusinessstrategies.


about tHis stateMent

sustainabilitY GoVernanCe struCture

sustainabilitY stateMent

“Sustainability”initsbroadesttermissimplydescribedasthemeetingofKwantasCorporationBerhad(“Kwantas”or“theGroup”)presentneedswithoutcompromisingtheabilityoftheGroup’sfuturegenerationstomeetitsownneeds.TheBoardofDirectors(“theBoard”)ofKwantasisresponsibleforthebroaddirectionandperformanceoftheGroupincludingplayinganactiveroleindirectorialandformulatingthesustainabilitystrategyessentialtotheoverallsuccessoftheGroup.

Kwantashasalwaysbelievedthesustainabilityofitscorebusinesswouldbelargelyimpactedbythree(3)importantaspectsthathavematerialimpactinachievingtheGroup’ssustainabledevelopmentgoal.Thethree(3)importantaspectsarecategorizedintoeconomic,environmentandsocialcontext.TheGroupfocusesonprudentfinancialmanagement to enhance stakeholders’ values, promotes environmental stewardship and good agriculturalpracticesatitsplantationsandoperatingunits.Itiscommittedtoimprovethewell-beingofthecommunitieswithinandarounditsoperationareas.

TheGroup’ssustainabilitygovernancestructureisasfollows:

sCope

ThisStatementcoverstheGroup’svariousactivitiesinMalaysiaandfocusesonsignificanteconomic,environmentalandsocial impactbroughtaboutbytheGroup’sbusinessactivities.Thereportingperiod is forthefinancialyearended30June2018.

BoardofDirectors GroupChiefExecutiveOfficer HeadofDepartment

Sustainability strategyandperformanceareoverseenby theBoard. TheGroupChiefExecutive Officer is responsible for developing the Sustainability Policies andimplementing the sustainable initiatives. A Sustainability Unit consisting of theheadsoftheplantationunitreportingdirectlytotheGroupChiefExecutiveOfficerwasformedinOctober2017.


CoMMitMent

A Sustainability Unit for the plantation activitieswas formed inOctober 2017 and reports directly to theGroupChief ExecutiveOfficer. TheGroup is committed tooperate inconformitywith theenvironmental, social, legal,health,safetyandothersustainabilityrequirements.AsignificantpartoftheprocessisthroughobtainingrelevantcertificationsfortheGroup’sactivities.KwantasiscurrentlyworkingcloselywithcertificationbodiessuchasISO9001,HazardAnalysisandCriticalControlPoint(“HACCP”),RSPOandMSPO.

Kwantasunderstandstheimportanceofguidingitsactivitiestowardsasustainableapproachtotheenvironmentalandsocialwell-being.ThefollowingsustainabilityobjectivesareindicatedinitsEnvironmentalandSocialPolicies:

SUSTAINABILITYSTATEMENT

• To protect Kwantas’ employees by minimizingoccupational risks, providing them with adequatepersonalprotectiveequipmentandhealthcoverage;

• Toprovideafulfillingworkenvironment,withpossibilitiesforpersonalandprofessionaldevelopmentandaccesstotraining;

• TocertifyKwantasoilpalmoperations inaccordancewith theRSPO standardandnational industry-specificstandardforoilpalmplantationsMSPO,whichfocusesonenvironmentalandsocialaspects;

• To improve the level of performance by continuousimprovementinKwantasoperationsthroughperiodicalinternalandexternalaudits;and

• To minimize the impact of industrial activities on theenvironment through the strictenforcementonwastemanagement and the use of hydrocarbons andchemical.


staKeHolder enGaGeMent

Kwantascontinuouslyengageswith key stakeholders toalign its businesspractices throughvariouschannels ofcommunication.Thetablebelowsummarizestheengagementprocess:-

KeyStakeholder EngagementChannels KeyTopics GovernmentAuthoritiesand •Meetingsanddialogues •CompliancewithlegalRegulators •Sitevisitsandaudits requirementsandregulations • Briefingsandtrainings • Industryguidelinesandbest •Applications/submissions practices /compliance/certifications

Customers •Meetings • Satisfactioninproductand •Customersvisits servicequality •Contractnegotiation • Timelydelivery/shipment • Sustainabilityupdates - certification,best managementpractices

Shareholders/Investors/ •AnnualGeneralMeetings • BusinessstrategiesandFundManagers •Companywebsite directions •Annualreports • Financialandoperational •AnnouncementsviaBursalink performances

LocalCommunities/ •Volunteeringopportunitiesand • ResponsiblecorporateNon-Governmental charitableevents citizenshipsthroughcommunityOrganisations/Associations/ • Internshipprogrammes servicesLocalTertiaryInstitutions •Donations/sponsorships • Identifypotentialtalentfor •Meetingsanddialogues futureexpansion • Strategicpartnerships

Employees • Internalportal • Personaladvancementand •Newstafforientation careerdevelopment •Annualappraisal • Employees’welfareand • Traininganddevelopment benefits programme •Healthandsafetyatwork • Informalgatheringtoenhance • Employees’loyaltyandteam bonding work •Welfareandremunerationpackage

Contractors/Suppliers •Meetingsandbriefings • Paymenttermsandtimeliness • Tenderandbiddingprocess • Long-termbusinessrelationship • Sitevisits •Workethics •Contractnegotiations



eConoMiC sustainabilitY

Palmoildemandintheinternationaloilsandfatsmarketremainsstrong.Priceoutlookforcrudepalmoil(“CPO”)remainspositiveandisexpectedtobe intheregionofRM2,300perMT. Inthemidterm,CPOpricedownside isexpectedtobelimitedgiventhewidediscountthatpalmoiltradesrelativetosoyoil,rapeseedoilwhichwillhelptostimulatedemand.

DespitethelossofRM55.92millioninthefinancialyearended30June2018,theGroupachievedapositivecashflowpositionofRM25.17million.Thelosswasmainlyattributedtoone-offnonecashitemimpairmentlossonproperty,plant,equipmentandbiologicalassetsandlossondisposalofassetsheldforsale,andprovisionforlong-termnon-tradereceivablesamountingtoRM41.64million,RM22.18millionandRM8.44millionrespectively.

TheGroup’splantationmanagementcloselymonitorsitsproductivity,plantationyieldandoilextractionrate,i.ethekeyperformanceindicatorsinensuringperformancetargetisachieved.

TheGroup isalsomodernised itsplantationmanagementpracticesbyusingunmannedaerialvehiclesormorecommonlyknownasdronescoupleswithGlobalPositioningSystem(“GPS”).Thecountingofoilpalmtreesareanimportantpartinthemanagementofoilpalmplantationswithregardstofertilisations,harvestingandmonitoringpalmtreeconditions.TheGroupusesdronestocaptureimageforpalmcensusandtoperformgeographicmapping.Informationgatheredthroughdroneimagecapturingwillbemoreaccurateforanalysispurpose,reducehumanerror,facilitateenhancementintermofefficiencyandshortenresponsetime.



RSPOPalmGHGCalculator

TheGroupuses theRSPOPalmGHGcalculator tomeasure theGHGemissionsof itsRSPO-certifiedpalmoilmillsannuallyasrequiredbytheRSPOstandards.TheRSPOPalmGHGcalculationistestedbyusingthelatestversion,PalmGHG3.0.1.Historicaldatacanthereforenotbeusedasadefinitiveindicatorofreductionsand/orincreasesincarbondioxideemissionsyear-by-year.ThestatisticbelowshowsthedataderivedfromthecalculationusingRSPOPalmGHGCalculatorandobtainedfromtheGroup’sRSPOcertifiedoperationalunit:-

enVironMental sustainabilitY

no deforestation

TheGroup’s plantations activities isprogressively aligned with the HighCarbon Stock (“HCS”) principle.LandareaidentifiedasHCSwillnotbe developed and left untouchedto ensure its biodiversity andecologicalpropertiesareremainedintact. The Group also adopts theapproach of consultation andengagementwiththegovernments,local communities and NGOsthrough Free, Prior and InformedConsent (“FPIC”), and agronomicpracticalitypracticeswithaviewtolong-termconservationbenefits.

High Conservation Value areas

The Group is actively identifying,protecting,restoringandmanagingany High Conservation Value(“HCV”)area that is locatedwithinand around its vicinity. This will bedocumented in HCV AssessmentReportinaccordancewithPrinciple5.2 and 7.3 of the “RSPO Principlesand Criteria for the Production ofSustainablePalmOil2014”.

reduce Greenhouse Gas emissions on existing plantations

The Group will identify significantpollutants and Greenhouse Gas(“GHG”) emissions, progressivelyrecord andmonitorGHGemissionsfrom its plantations and oil mills.Strategies are implemented toreduce its GHG emission across allaspectsofplantationdevelopment.In this regard, the measurementof relevant GHG emission data isimportant in serving as a basis forobjectiveevaluationof the impactontheenvironment.


Kwantas’businessisinterwovenwiththeenvironment.Accordingly,theGroupadoptsaNoDeforestation,NoPeat,NoExploitationPolicy(“NDPE”)inlinewithitscommitmenttowardssustainableproductionandoperationefficiency.


Note:Peatoxidationandsequestrationconservationareahadbeenomittedastherewerenoemissionsoroffsetinthesetwo(2)categories.

30000

25000

20000

15000

10000

5000

0

-5000

-10000

-15000

emission source and sinks 2017 2016tC02e

24,5

32.3

4

17,1

59.8

0

189.

92

256.

22

527.

58

485.

17

354.

42

156.

38

461.

19

331.

01 3,29

9.23

4,31

6.11

-11,

595.

82

-11,

595.

82

17,7

68.8

6

11,1

08.8

7

LandConservation

C02Emissionfrom

Fertiliser

N20Emission

FuelConsumption

(Field)

FuelConsumption

(Mill)

POME

CropSequestration

NetEmission

enVironMental sustainabilitY (cont’d)

EmissionbySourceandSinks

Basedon theabove illustration, themost significantemissionby sourceswasderived from landconversion. ThisillustratedthattheGroupmanagedtobringdownthetotalGHGemissionin2017comparedto2016asrequiredinRSPOstandard.

GHGEmissionMitigationMeasures

SomeofthemeasuresthatwereundertakenbytheGroupforthefinancialyearunderreviewtoreducetheGHGemissionsinclude:-

• Avoidingdevelopmentonpeatsoil;• Creatingawarenessontheclimatechange-relatedadvancesinscienceforthereductionofGHGemissions;• Recyclingofpalmbiomasssuchasprunedfronds,oldpalmtrunksandtreatedpalmoilmilleffluentbacktothe

soilasnaturalfertilisers;• Usingpalmoilshellsandemptyfruitbunchesasrenewableenergysourcetogeneratesteamandelectricityfor

millprocessing;and• Maintainingthecollaborationwithexternalresearchersandconsultantstoexplorealternativeandinnovative

meanstoreduceGHGemissions.

Shouldtherebeanynewdevelopmentandreplantingproject,wastegeneratedfromlandclearingwillbeusedasbiomasstofurtherenhancethenutrientcycleofthesoil.


KWANTAS CORPORATION BERHAD (356602-W) • ANNUAL REPORT 201830SUSTAINABILITYSTATEMENT

Zero burning

Kwantas continues to adhere to its strict policy of Zero Burning in the operation of landclearing for newdevelopmentandalso for replantingpurposes. TheGroupwill carefullymonitoranyhotspotsarisingnearitsassetsusingremotesensingtechnologyappliedinfirewatchmonitoringsystemfromGlobalForestWatchandcomplywithlocalregulationsandstandardsassetoutbytheRSPO.

no exploitation of people and Communities

TheGroup isdedicatedtoupholdingandpromotingtheUniversalDeclarationofHumanRightsforallitsworkers,contractors,indigenouspeople,localcommunitiesandallindividualsimpactedbytheGroup’soperations.

respect and recognize all Workers’ rights

TheGrouprespectsworkers’rightsinaccordancewithlocalandnationallaws,regulationsandpractices,includingtheInternationalLabourOrganizationrequirementsforadequatework and core conventions on child labour, forced or compulsory labour, freedom ofassociationandeliminationofdiscrimination.Kwantasshows itscommitmentsbyassuringand supporting theUniversalDeclarationofHumanRights initiatives forallworkerswhichincludecontract,temporaryandmigrantworkers.

Health and safety

TheGrouptakessafetyveryseriouslyandstrivestoreducethenumberofaccidents in itsoperations.Thisconcernsnotonlyitsworkersandemployees,butalsoitsfamilies,contractorsandvisitorstoitsfacilities.Inoverall,theGrouphasmadeprogresswithnotablereductionsinitsLostTimeInjuryFrequentRate,whileensuringstrictcompliancetoStandardOperatingProceduresthathavebeendeveloped.Duringtheyearunderreview,Kwantasachievedanaccident rateof0.70,anoccurrencerateof0.28andaseverity rateof2.67forallofKwantas’operations.


ANNUAL REPORT 2018 • KWANTAS CORPORATION BERHAD (356602-W) 31SUSTAINABILITYSTATEMENT

rspo

TheobjectiveofRSPOis topromotethegrowthanduseofsustainablepalmoilproductsthroughcredibleglobalstandardsandstakeholderengagement.Kwantashasbecomeanordinarymemberof theRSPOunder thecategoryofOil PalmGrowerson02April 2014.UnderRSPOguidelines,thereisaneedtocomplywithitsprincipleandcriteria(“P&C”)forcertificationandtheGroupbelievesthattheintegrationofP&Cwithinitsdailyoperationsandinvestmentwillsupportitsgoalofsustainablypalmoilproductsproduced.TheGroupis committed to promoting the growth and the use of sustainable palm oil towards theprotectionoftheenvironmentandsustainablesocialinitiatives.Aspartofitscommitment,theGroupbelievestheneedtopromoteenvironmentalawarenessandsustainablepracticesaswellastoupkeeptheGroup’ssocialresponsibilitythroughaneffectiveandresponsibleManagement.TheGrouphasplacedatime-boundplan forall itsplantationactivities toprogresstowardreceivingRSPOcertificationsforalltheestatesandmills.

Certification of Refinery and Edible Oil Complex

ToadvancetheGroup’scommitmenttowardtheproductionofsustainablepalmoil, therefinery of the Group has obtained its RSPO Supply Chain certification for its processedpalm oil products segment, Kwantas Oil Sdn Bhd Edible Oil Complex – based in LahadDatuon28September2016.Asa result, thisunit iscapableof supplyingpalmandpalmkernelbasedproducts throughmassbalancemechanisms. ThisRSPOcertification isvaliduntil27September2021.Anannualsurveillanceauditwillbeconductedinordertoensurecomplianceismaintained.

Certification of Palm Oil Processing Mills

TheprimaryassessmentofRSPOcertificationforHarankyPalmOilMilltogetherwithitssupplybasewasconductedinJuly2017.Withthisaudit,HarankyPalmOilMillanditssupplybasehavebeenRSPOcertifiedsinceDecember2017.Thiscertificationre-iteratesthattheCPOproducedbythismillismeetingtherequirementssetoutbytheRSPOandcanbeidentifiedasRSPOCERTIFIEDSUSTAINABLEPALMOIL.TheGroup’splantationswillbealsoauditedforMSPOcertification. Kwantas is oncourse tomeet its aim to complywith thismandatorystandardforallitsmillsandestatesby2019.

Mspo

The MSPO provides general principles for the implementation, establishment andimprovementoftheoperationalpracticesofasustainablesystemincorporatedinMalaysiainensuringthesustainabilityofpalmoilproduced.Thiscertificationstandardcurrentlycoversthe oil palm industry supply chain comprising independent and organized smallholders,plantationsandpalmoilmills.ItalsoincludesgroupingsmallholdersintoSustainablePalmOilClustersorothergroupmanagementsystems.Certificationofpalmkernelcrushers,refineriesandpalmbiomassandbiofuelplantswillbeimplementedoncethestandardsareready.

BeingalreadyRSPOcertified,HarankyPalmOilMillanditssupplybasearesettobeMSPOcertifiedbyendof2018.OtheroperationalunitsareduetobeMSPOcertifiedbyyear2019.



soCial sustainabilitY

Noorganizationcanstandonitsown.Kwantasbelievesthatsocialsustainabilityisaboutunderstandingthebusinessimpactsthat,whetherdirectlyorindirectly,theGrouphasonthepeopleandsociety.TheGrouphasalwaystakenproactiveways inmanaginganyadverse impactsonhuman rightsandwell-beingof the society thatmayberelatedtotheGroup’sactivities.

Human Capital development

Kwantasrecognizesthesuccessofthebusinesshighlydependentontheperformancesofitsemployees.Investinginstaffdevelopmentandtrainingprogrammestobuildthenecessarystrength,competencies,leadershipskillsandknowledgeofitspeoplearethelong-termcommitmentoftheGrouptomeetemployees’careeraspirationswithan emphasis on continuous learning. TheGroup’sworkplacepolicies arealignedwith the International LabourOrganisationDeclarationon FundamentalPrinciplesandRightsatworkaswellas theUNGuidingPrinciplesonHumanRights,whichareoutlinedasfollows:-

(i) ForcedLabour

Noemployeemaybecompelled towork through forceor intimidationofany form,asameanofpoliticalcoercionoraspunishmentforholdingorexpressingpoliticalviews.

(ii)FreedomofAssociationandCollectiveBargaining

Kwantas respects the legal rightsof itsemployees to formandbecomemembersofworkers’organisations,including labourorganisationsor tradeunions.Kwantasbelieves that the interestsof theCompanyand theemployeesarebest served througha favourable,collaborativeworkenvironmentbetweenemployeesandManagement.

TherearenounionsrepresentingtheGroup’splantationsworkersasNationalUnionofPlantationsWorkersandallMalaysianEstateStaffUnionarenotrecognizedinSabah.Nevertheless,theSocialLiaisonwillvisittheplantationsandmillsregularlytogatherfeedbackandbriefemployeesonthelatestKwantas’developments.Kwantasalsohasgrievanceprocedure inplacethatallowsallemployeestoraise issuesandseekredress. Inaddition,theBoardofKwantashasformulatedWhistleblowingPoliciesandProcedurestoencourageemployeestoreportanymalpractice,wrongdoingorsuspectedbreachoflaworrulesandregulationswithintheGroupwithoutfearofretaliationorvictimisation.

(iii) EqualOpportunities

Kwantassupportstheprincipleoffairnessandnon-discriminationwiththeaimstotreatindividualswithrespect,freefromunlawfulandunethicaldiscrimination. Inparticular, itaimsnottodiscriminategender, race,ethnicorigin,disability,sexualorientation,ageorfaith,buttobuildaworkforcethatisbasedonmeritocracy.

SUSTAINABILITYSTATEMENTSUSTAINABILITYSTATEMENT


employees’ engagement and development

Kwantas recognizes thecontributionmadeby its employees toward thecontinuedgrowthand success of theGroup.Kwantas’employeesareencouragedtovolunteertheir time inparticipatingvarious indoorandoutdooractivities aswell as theGroup’s corporate social responsibility projects organized throughout the financial yearended30June2018inordertofosterbetterrelationshipandmutualunderstandingamongtheemployees.

Inordertoequiptheemployeeswiththenecessarystrength,competencies,leadershipskillsandknowledge,varioustrainings,workshopsandseminarsarestructuredandorganizedbasedonindividualemployeetrainingneedsandtypesofjobperformed.TheGrouphasalsoinvestedinaleadershiptrainingprogrammenamedInternationalStrategicTransformationalLeadershipProgramme(“ISTLP”)aspartoftheGroup’ssuccessionplanningandcontinuouseffortinattractingandretainingtalentedemployees.ThisISTLPprogrammeprovidesapipelinetoenabletheGrouptodevelopandadvancethecapabilityoffutureleadersandmanagersthroughtheprovisionofextensivelearningresourcesandmanagementproficiency.

soCial sustainabilitY (cont’d)



Chinese new Year luncheon Kwantas Group welcomed the Chinese New Year2018 by keeping its tradition of celebration andappreciation to itsManagementandstaff.A lavishluncheon was held at a fine restaurant where redpacketsandluckydrawswerealsogivenoutduringthe luncheon to amplify the Chinese New Yearatmosphere.

Christmas Luncheon & Inter-Office Christmas Decoration Contest (Recycling Theme)A simple luncheon gathering was held in the office as continuation of Kwantas’Christmas tradition, followed by a gift exchange session among the staff whichbrought the staff together in festivecheeras theyexchangedChristmaspresentsandalsosocializingwitheachother.

Tomake itamore joyousChristmas seasonduring themonthofDecember 2017,an Inter-Office Christmas Decoration Contest was organized of which staff wereencouraged to decorate their respective floor/department by using only recycleitemsormaterials.Thismovewasinsupportofcreatingawarenessontheimportanceofcaringfortheenvironmentandthatrecyclingwasagoodwaytoreducewastageswhichcouldharmtheearth.

ThewinnersofInter-OfficeChristmasDecorationContestbasedonrecyclingthemewerealsoannouncedbeforetheendoftheluncheongathering.




Heroes runTheGroupshowsitscontinuousstrongsupportoncharityeventbysponsoringitsstafftoparticipateinHeroesRuninApril2018organizedbySeriMengasihCentre,whichisaspecialdevelopmentalcentrelocatedinKotaKinabaluforspecialneedschildren.

staff Fitness – badminton & swimming activityKwantasbelieves inpromotinghealthybodyandhealthymindamong its staff.A fundwasspeciallymadeavailabletosupportsportsactivitiestoencourageactivehealthylifestyle.

Badmintonsessionswereregularlyheldbythestafftomaintainphysicalfitnessandpositivemind.Swimmingactivitieswerealsoaddedintothe“healthy-to-do”listtofurtherencourageandpromotehealthawarenessamongthestaff.Itwasalsoanopportunityforthestafftoget-togetherandpromotefriendshipandcamaraderie.




Family Day at Refinery & Mewah-Pintasan Oil MillKwantasunderstandsthathavingabalancefamilylifeiscrucialtothestaff.FamilyDaywasorganizedrespectivelyattherefineryandMewah-PintasanOilMillwherebyallthestaffandtheirfamilymemberswereinvitedtojoinalong.

Varioustele-matchandgameswereplayedatbotheventtostrengthenrelationshipsbetweenco-workersandtheirfamilymembers.Therewerealsoluckydrawsgivenawaytoluckywinners.




Community development

Kwantasisacorporationthatcaresandbelievesinthemotto“Todogoodisthegreatestjoy”.Variouscommunityprojectswereorganizedduringtheyearunderreviewsuchasvisittotheoldfolkshomeandlessfortunatechildren,blood donation drives in collaboration with the local government hospital, sponsorship for the haemodialysiscentreandothernon-profitmakingorganisations.Duringtheyear,theGrouphadmadeseveralcontributionsanddonationsamountingtoRM104,350.00tothesocieties,associations,schoolsandnon-profitmakingorganisations.

TheGroupoffersinternshipstoassisttraineesfromvariouslocaluniversities,institutesofhigherlearningandtrainingcentres to undergo practical training. At the end of the internship programmes, some suitable and potentialcandidateswillbeidentifiedtofillupavailablevacanciesfortheGroup’sfutureexpansion.

TheGrouphasajointventureprojectwiththeSarawaklocal landauthoritytodevelopNativeCustomaryRights(“NCR”)landinSarawak.TheGrouphaddevelopedatotalof1,985.88hectaresofNCRlandasat30June2018,outofwhich1,761.24hectareshadbeenplantedwithoilpalms.AnnualincentivepaymentswillbeconsistentlypaidoutbyKwantastothoseNCRlandownersjoiningtheNCRproject.Besides,theNCRprojecthasalsoenabledtheGrouptoprovidejobopportunitiesforthelocalcommunity.


Kwantas Charity Visit to Jireh HomeIngivingbacktothecommunity,KwantasstaffvisitedtheJirehHomeatTuaran,Sabah–ahomeforthelessfortunatechildreninthenearbydistrict.TheHomeisasheltercenterfor children who are neglected, under privileged andabused,allcomingfromnearbydistrictssuchasPitas,KotaMarudu,PulauBanggi,Kudat,NabawanandSipitang.Dailynecessities, educational supplies, used and new clothescollectedfromadonationdriveamongKwantas’staffwerealsogivenouttotheHomeandthechildrenduringthevisit.




disaster relief – Flood donationFollowing a continuous heavy downpour of rain during May2018,manyareasanddistrictsalongtheWestCoastofSabahwerebadlyaffected.Alotofpeopleweredrivenawayorhadto be evacuated from their homes. Thiswas oneof theworstdisasterintherecentdecadeinthestateandmanypropertiesandbelongingswerelostordestroyedintheflood.

The Penampang District Office reported that fourteen (14)villagesunderitspurviewwerebadlyaffectedbytheflashflood.In response to this flooddisaster,Kwantasdonated food,dailyessentialsandusedclothes to thevictimsvia thePenampangFloodDonationReliefCenter.

autism FairKwantassponsoredAutismFairorganizedbyProgramPendidikanKhas Integrasi SMK Tansau, Penampang in collaboration withPejabatPendidikanDaerahPenampang.TheAutismfairwasheldat ImagoShoppingMall, KotaKinabalu, Sabahwhich receiveda good response and support from the public. A certificate ofappreciationwaspresentedtoKwantasduringthefair.



Charity Visit to sMK datuk peter Mojuntin, penampangA fire broke out and destroyed the school’s hostelinthemonthofMarch2018andatotalof117boys,agedbetween13to15yearsold,lostnotonlyalloftheirpersonalbelongingsbuttheir“home”aswell.

In aid of the students’ losses, Kwantas organized acollectionofusedclothesanditemsintheofficeandtheCompanyalsodonatedsomedailyessentialsandstationeries. Itwasthenhandedovertotheschool’srepresentativeinavisittotheschool.

donation to persatuan Hemodialisis Kinabalu sabahBelievinginthemotto“Todogoodisthegreatestjoy”,KwantascontinuesitscontributiontosupporttheCharityBazaarorganizedbyPersatuanHemodialisisKinabaluSabah(“PHKS”).PHKSisacenterthatprovidesaffordabledialysistreatmentandensuresitisaccessibletoallthoseinneedofit,especiallypoordialysispatients.




blood donation Campaign at Kota Kinabalu and lahad datu regionsKwantasstaffofferedtheirservicesto organize blood donationannuallyincollaborationwiththeQueenElizabethHospital(inKotaKinabalu)andJabatanKesihatanLahadDatuinaidtoincreasetheawareness and importance ofdonating blood – by refilling thebloodbanktosave livesofthoseinneed.Thestaffalsoshowedtheirsupportbypersonallyparticipatingintheblooddonation.




Csr Malaysia awards 2018In recognition of the tireless and continuous efforts ingiving back to the community, Kwantas was onceagain awarded the “CSRMalaysia Awards 2018” fromthe CSR Malaysia publication. It is an annual eventhonouring outstanding SMEs and giant corporationsthathaveexcelledtremendouslyinthesocio-economictransformationofMalaysia.

Regional Office Gotong RoyongKeeping in mind the importance of hygiene andcleanliness,afullscaleGotongRoyongwasorganizedattheLahadDatuRegionalOffice.TheDistrictOfficerof Lahad Datu, Sabah together with personnel fromJabatan Kesihatan were also present to officiatethe event. All the RegionalOffice staff joined forcestogethertocleantheofficepremisesandsurroundingsoftheofficebuilding.


performance indicators to Monitor sustainability Management

TherelevantperformanceindicatorstomonitortheGroup’ssustainabilityinitiativesandmanagementhaveyettobefinalizedandimplementedastheSustainabilityUnitisstillintheprocessofcollectingtherelevantdata.

ThisStatementhasbeenapprovedbytheBoardofDirectorson18October2018.



Corporate GoVernanCe oVerVieW stateMent

The Board of Directors (“the Board”) of Kwantas Corporation Berhad (“the Company”) is committed to goodcorporategovernanceinhelpingtobuildanenvironmentoftrust,transparencyandaccountabilitynecessaryintheconductofthebusinessesandaffairsoftheCompanyanditssubsidiaries(“theGroup”).

TheBoardviewsgoodcorporategovernancepracticeasessential in fostering long-termbusinessgrowthwhilstbalancingtheinterestsofotherstakeholders.

ThisCorporateGovernanceOverviewStatementdisclosesasummaryofthecorporategovernancepracticesthattheCompanyhasappliedwithintheprinciplesandbestpracticesofMalaysianCodeonCorporateGovernance(“the Code”) during the financial year ended 30 June 2018 and it is to be read together with the CorporateGovernanceReport(“CGReport”)whichisavailableontheCompany’swebsiteatwww.kwantas.com.my.

prinCiple a: board leadersHip and eFFeCtiVeness

i. board responsibilities

1.1. TheBoardisprimarilyresponsibleforfiduciaryoversight,settingpoliciesandactinginthebestinterestsoftheCompanyanditsstakeholders.RecognisingtheneedtoprovideguidancetotheBoardtoeffectivelydischargeitsdutiesandresponsibilities,theBoardhasformalisedandadoptedanapprovedBoardCharterthatsetsouttherolesandresponsibilitieswhichisavailableontheCompany’swebsiteatwww.kwantas.com.my.TheBoardCharterissubjecttoreviewbytheBoardperiodicallytoreflectthelatestchangesinregulationsandbestpractices.

1.2. ThefunctionsofNon-IndependentExecutiveDirectorandIndependentNon-ExecutiveDirectorwithintheBoardareclearlydefined. TheNon-IndependentExecutiveDirectorsare responsible formanagingandimplementing theGroup’sdailyexecutive functionsunder the leadershipof theGroupChiefExecutiveOfficerwhilstthepresenceofIndependentNon-ExecutiveDirectorsisessentialtoexerciseunbiasedandindependentviewstoensurefairandobjectivedeliberationonManagementproposalsanddecisions.

1.3. The positions of Chairman andGroupChief ExecutiveOfficer are held by two (2) different individualswithclear segregationof rolesand responsibilities. TheBoardbelieves that suchdivisionofpowersandresponsibilitieswillavoidanyunfetteredpowerofdecisionmakinginanyone(1)individual.

1.4. TheBoardissupportedbyin-housesuitablyqualifiedandcompetentCompanySecretaries.TheCompanySecretariesfacilitateoverallcompliancewithCompaniesAct2016,theMainMarketListingRequirements(“MMLR”)ofBursaMalaysiaSecuritiesBerhad(“BursaSecurities”)andotherlawsandregulationsaswellasregulatoryrequirementsinrelationtotheBoard’sdutiesandresponsibilities.

1.5. TheBoardmeetsatleastonceeveryquarter,withadditionalmeetingsconvenedasandwhentheneedarises.PriortotheBoardmeeting,allDirectorsareprovidedwithanagendaandrelevantmeetingpapersorreportstofacilitateproductivediscussionandtoenablethemtomakeinformeddecisionatthemeeting.

MinutesofproceedingsandresolutionspassedareproperlyrecordedandkeptintheminutesbookattheregisteredofficeoftheCompany.Duringthefinancialyearended30June2018,theBoardmetfour(4)timeswherepertinentissuesinrelationtotheGroup’sfinancialperformances,monetizingoftheGroup’sassets to improve cashflowposition, operational, corporate, business development and activitieswereconsideredanddeliberated.TheattendancerecordsofeachDirectorattheBoardmeetingheldduringthefinancialyearended30June2018areasfollows:-

ANNUAL REPORT 2018 • KWANTAS CORPORATION BERHAD (356602-W) 43CORPORATEGOVERNANCEOVERVIEWSTATEMENT

prinCiple a: board leadersHip and eFFeCtiVeness (cont’d)

i. board responsibilities (cont’d)

No.ofBoardMeeting PercentageofNameofDirectors Attended Attendance

DatukIsmailBinAbdullah 4/4 100%MrKwanNgenChung 4/4 100%(Demised on 23 July 2018)MrKwanNgenWah 4/4 100%Dato’ChongKanHiung 4/4 100%MsKwanJinNget 4/4 100%MsKwanMinNyet 4/4 100%MrOoiJitHuat 4/4 100%MrPetrusGimbad 4/4 100%

TheDirectors have indicated their commitment towards theCompany in their attendanceandactiveparticipationatBoardmeetingsthroughouttheyearunderreview.

1.6. TheCodeofConductandBusinessEthicsisessentialtosetoutthebehaviouralethicsandconductsexpectedofallDirectorsandemployeesof theCompany in livingup theGroup’sethicalcultureandstandardsofgood practice within the Group’s business landscape. The Company also has in place WhistleblowingPoliciesandProcedureswhichserveasanavenueforraisingconcernsrelatedtomalpractice,wrongdoingoranysuspectedbreachoflaworrulesandregulationswithintheCompany.BoththeCodeofEthicsandWhistleblowingPoliciesandProceduresareavailableviatheCompany’swebsiteatwww.kwantas.com.my.

ii. board CoMposition

2.1.Currently, there are seven (7) members in the Board, comprising four (4) Non-Independent ExecutiveDirectors and three (3) Independent Non-Executive Directors. The composition of the Board fulfills therequirementsassetoutunderMMLRofBursaSecuritieswherebyatleasttwo(2)Directorsorone-third(1/3)oftheBoard,whicheverishigher,mustbeIndependentDirectors.IntheeventifanyvacancyintheBoardresultinginnon-complianceofthenumberofIndepe

our - chartnexusir.chartnexus.com/kwantas/docs/ar2018.pdf · 2018. 11. 1. · proxy form. 2 kwantas...

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