JAVA BERHAD ( JAVA OR COMPANY ) - REPLY TO QUERY FROM BURSA MALAYSIA SECURITIES BERAHD ( BURSA SECURITIES ) ON CESSATION OF TIMBER OPERATIONS OF JAVA INDUSTRIES SDN BHD, JAVA WOODS SDN BHD, JAVA TIMBER SDN BHD AND JAVA RESOURCES SDN BHD We refer to the announcement made by the Company on 14 December 2015 in respect to the Cessation of Timber Operations of Java Industries Sdn Bhd ( JISB ), Java Woods Sdn Bhd ( JWSB ), Java Timber Sdn Bhd ( JTSB ) and Java Resources Sdn Bhd ( JRSB ), the Board is pleased to furnish herewith the following additional information as requested by Bursa Securities via its letter dated 15 December 2015: 1. To define timber manufacturing operations and to provide the specific types of timber businesses to cease, including whether the cessation would include the trading of timber products. The cessation of the timber manufacturing operations of its subsidiaries, Java Industries Sdn Bhd ( JISB ), Java Woods Sdn Bhd ( JWSB ), Java Timber Sdn Bhd ( JTSB ) and Java Resources Sdn Bhd ( JRSB ) (collectively known as the Subsidiaries ) would also include the cessation of all of its other timber trading activities principally carried out by these Subsidiaries. 2. Historical financial information of JISB, JWSB, JTSB and JRSB for the past 3 including turnover, profit/loss before tax, profit/loss after tax, total assets and total liabilities. JISB JWSB Jun-14 Jun-13 Jun-12 Jun-14 Jun-13 Jun-12 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 Turn Over 25,624 26,675 34,673 - - 78 Loss Before Tax (22,438) (9,726) (15,556) (122) (164) (1,937) Loss After Tax (22,448) (9,726) (15,556) (122) (164) (1,937) Total Assets 82,819 101,588 105,268 5,326 5,557 5,757 Total Liabilities 130,415 126,736 120,690 2,313 2,422 2,458
JTSB JRSB Jun-14 Jun-13 Jun-12 Jun-14 Jun-13 Jun-12 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 Turn Over 25,777 10,520 40,302 35 1,946 4,174 Loss Before Tax (7,806) (25,921) (28,078) (924) (2,356) (4,133) Loss After Tax (7,806) (25,921) (28,078) (924) (2,356) (4,133) Total Assets 144,379 159,324 169,704 8,076 7,873 13,950 Total Liabilities 129,950 137,089 121,548 18,242 17,115 20,836 3. Details / description of properties owned by JISB, JWSB, JTSB and JRSB and what is the proposed usage of the properties after the cessation. No. Location Description Area (acres) 1. Kampung Biah, 2. Kampung Biah, 3. Kampung Biah, 4. Kampung Biah, CL 135345112 Land with office and factory NT 133062763 Land with store and workers quarters NT 133074281 Land with workers quarters NT 133055142 Land with factory Tenure (Year Expiring) 9.88 Leasehold (2049) 10.75 Sublease (2090) 9.90 Sublease (2090) 10.35 Sublease (2091) Age of Building 18-25 17-21 5-21 21 Net Book Value as at 30 June 2014 (RM 000) 19,432 2,821 8,191 9,948
No. Location Description Area (acres) 5. Kampung Biah, 6. Kampung Biah, 7. Kampung Biah, NT 133058367 Land with factory FR 134015080 Land with factory NT 133058376 Land with office and factory Tenure (Year Expiring) 6.65 Sublease (2092) 7.55 Sublease (2092) 9.58 Sublease (2091) Age of Building 21 19-21 20-24 Net Book Value as at 30 June 2014 (RM 000) 6,510 3,722 3,894 The Group will evaluate and determine if the above properties are to be disposed of as part of its proposed restructuring exercise. 4. To quantify the impairment loss on plant and retrenchment cost and its source of funds together with its effects on the earnings per share and net assets per share. The proposed Cessation will result in a reduction of the consolidated earnings per share and the net assets value of JAVA for the year ending 31 December 2015. The exceptional items relating to the cessation of the Subsidiaries manufacturing operations to be charged to the JAVA Group s financial statement for the financial period ending 31 December 2015 are estimated to be about RM21.95million, being the inventory written of (RM16.84million), impairment of the trade receivables (RM4.78million) and estimated cash payout in relation to the staff retrenchment exercise (RM0.33million). Hence, the estimated net assets per share will be reduced from 0.32sen to 0.17sen and the estimated loss per share will be 32.8sen. In the light of the proposed Cessation, the Company is engaging an independent valuer to determine the estimated net realisable value for the assets (including the plant and machineries) held by the Subsidiaries (Net Book Value as at 30 September 2015: RM61.64million).
5. To provide the segmental revenue and profit from the timber business, plantation and investment holding respectively (in absolute amount and percentage) based on the latest audited financial statements and latest unaudited financial results Unaudited Sept 2015 Timber products Plantation Investment Holding Eliminations Consolidated RM'000 RM'000 RM'000 RM'000 RM'000 Segment revenue External revenue 16,848 1,747 - - 18,595 91% 9% 0% 0% 100% Intersegment revenue 5,931-45 (5,976) - Total revenue 22,779 1,747 45 (5,976) 18,595 123% 9% 0% -32% 100% Net profit/(loss) attributable to owners of the Group for the period (24,372) (2,860) (3,317) - (30,549) 80% 9% 11% 0% 100% Audited June 2014 Timber products Plantation Investment Holding Eliminations Consolidated RM'000 RM'000 RM'000 RM'000 RM'000 Segment revenue External revenue 38,730 1,484 - - 40,214 96% 4% 0% 0% 100% Intersegment revenue 4,306-4,320 (8,626) - Total revenue 43,036 1,484 4,320 (8,626) 40,214 107% 4% 11% -21% 100% Net profit/(loss) attributable to owners of the Group for the period (31,962) (3,124) (60,721) 61,426 (34,381) 93% 9% 177% -179% 100%
6. Further details of the other existing business of the Group to be restructured. The further details on the other existing business of the Group are as follows: Subsidiaries Principal activities Issued & Paidup Share Capital Java Trading Sdn Bhd Investment Holding & General Trading (Non-active) % of shareholdings 5,050,000 100 Java Plantations Sdn Bhd Investment Holding 1,000,000 100 - Subsidiary: 80 Ladang Bunga Tanjong Sdn Bhd Oil Palm Plantation 7,000,000 Key Heights Sdn Bhd Investment Holding & Property Development (Nonactive) - Subsidiaries: Wincohasil Sdn Bhd Timber Contractor (Nonactive) Pinawantai Sdn Bhd Trading in timber logs (Nonactive) Bizkaya Sdn Bhd Trading in timber logs (Non- Kumpulan Kinabatangan Timber Sdn Bhd active) Timber Contractor (Nonactive) 6,000,002 100 1,000,000 100 1,000,000 100 1,000,000 100 1,000,000 100 7. The types of business that is being currently considered by the Board in order to turnaround the Group The Board has considered various options for the Subsidiaries and would decide on the new principal activities to be undertaken outside the timber industry when the proposed restructuring exercise is firmed up. 8. The Group s corporate structure before and after the cessation of timber business and what are the Company s plan with regard to the remaining business moving forward Please refer to the table attached for the Group s corporate structure before and after the proposed Cessation. The Group s plan is to continue with the other remaining business while it undertakes the proposed restructuring exercise to move into new profitable business ventures to turnaround the Group s financial position.
9. Whether JISB, JWSB, JTSB and JRSB will be wound up upon the completion of cessation of timber business JISB, JWSB, JTSB and JRSB would not be wound up upon completion of cessation of timber business as it will be restructured based on the new principal activities upon finalization of the proposed restructuring exercise. 10. Whether JISB, JWSB, JTSB and JRSB are major subsidiaries of the Company JISB, JWSB, JTSB and JRSB are major subsidiaries of the Company. 11. Whether the Company will trigger Paragraph 8.03A / PN17 arising from the cessation of the timber business. The Company will trigger Paragraph 8.03A and Practice Note 17 ( PN17 ) upon completion of the proposed Cessation. Bursa Securities may then classify the Company as an Affected Listed Issuer under PN17 as the Company may be deemed to have triggered the Prescribed Criteria under PN17, where the shareholders equity of the listed issuer on a consolidated basis is 25% or less of the issued and paid-up capital (excluding treasury shares) of the listed issuer and such shareholder s equity is less than RM40million on the cessation of the timber business as of 1 January 2016. Hence, the Board shall take all necessary steps to undertake a proposed restructuring exercise and to acquire a new business so that the Company can maintain its listing status on the Main Market of Bursa Securities. This announcement is dated 16 December 2015.
CORPORATE STRUCTURE OF JAVA BERHAD GROUP BEFORE PROPOSED CESSATION JAVA BERHAD (2511-M) (Issued & Paid up: RM173,396,089) 1. Investment holding 2. Provision of management services 100% 100% 100% 100% 100% 100% 100% KEY HEIGHTS SDN BHD (592628-M) JAVA TIMBER SDN BHD (53469-A) JAVA INDUSTRIES SDN BHD (269014-D) JAVA WOODS SDN BHD (29775-T) JAVA TRADING SDN BHD (136741-A) JAVA RESOURCES SDN BHD (276278-W) JAVA PLANTATIONS SDN BHD (210695-H) Investment Holding Manufacturing and marketing of sawn timber, moulded timber and other timber related products, providing wood treatment and kiln drying services, extracting and trading of timber logs and also as a timber contractor Manufacturing and marketing of veneers, plywood and related products, trading of timber logs and as a timber contractor Manufacturing and marketing of veneers products Investment holdings and general trading (Non-Active) Provision of transportation and engineering services Investment holding 80% 100% 100% 100% 100% WINCOHASIL SDN BHD (542521-A) Timber Contractor (Non-active) KUMPULAN KINABATANGAN TIMBER SDN BHD (74040-X) Timber Contractor (Non-active) PINAWANTAI SDN BHD (68640-M) Trading of Timber Logs (Nonactive) BIZKAYA SDN BHD (541934-D) Trading of Timber Logs (Nonactive) LADANG BUNGA TANJONG SDN BHD (389827-K) Oil Palm Plantation
CORPORATE STRUCTURE OF JAVA BERHAD GROUP AFTER PROPOSED CESSATION JAVA BERHAD (2511-M) (Issued & Paid up: RM173,396,089) 1. Investment holding 2. Provision of management services 100% 100% 100% 100% 100% 100% 100% KEY HEIGHTS SDN BHD (592628-M) JAVA TIMBER SDN BHD (53469-A) JAVA INDUSTRIES SDN BHD (269014-D) JAVA WOODS SDN BHD (29775-T) JAVA TRADING SDN BHD (136741-A) JAVA RESOURCES SDN BHD (276278-W) JAVA PLANTATIONS SDN BHD (210695-H) Investment Holding Dormant Dormant Dormant Investment holdings and general trading (Non-active) Dormant Investment holding 80% 100% 100% 100% 100% WINCOHASIL SDN BHD (542521-A) Timber Contractor (Non-active) KUMPULAN KINABATANGAN TIMBER SDN BHD (74040-X) Timber Contractor (Non-active) PINAWANTAI SDN BHD (68640-M) Trading of Timber Logs (Nonactive) BIZKAYA SDN BHD (541934-D) Trading of Timber Logs (Nonactive) LADANG BUNGA TANJONG SDN BHD (389827-K) Oil Palm Plantation