Contents Penang Tel: 04-228 7828 Fax: 04-227 9828 PRINCIPAL BANKERS AmBank (M) Berhad Hong Leong...

Contents02 Corporate Information

03 History, Principal Activities and Group Structure

04 Chairman's Statement

05 Statement on Corporate Social Responsibility

06 - 07 Directors' Profiles

08 - 13 Corporate Governance Statement

14 Statement on Risk Management and Internal Control

15 - 17 Audit Committee's Report

18 - 20 Directors' Report

21 Directors' Statement and Statutory Declaration

22 - 23 Independent Auditors' Report to the Members of Scope Industries Berhad

24 Statements of Financial Position

25 Statements of Comprehensive Income

26 Consolidated Statement of Changes in Equity

27 Statement of Changes in Equity

28 - 29 Statements of Cash Flows

30 - 71 Notes to the Financial Statements

72 Supplementary Information

73 - 74 Notice of Annual General Meeting

75 Statement Accompanying Notice of Annual General Meeting

76 Appendix 1

77 List of Properties

78 - 81 Analysis of Shareholdings

83 Proxy Form

SCOPE INDUSTRIES BERHAD (591376-D)ANNUAL REPORT 201302

CORPORATE INFORMATION

DIRECTORS

Dato’ Philip Chan Hon Keong (Independent Non-Executive Chairman)

Lim Chiow Hoo (Managing Director)

Lee Min Huat (Executive Director)

Tan Poh Heng (Independent Non-Executive Director)

Yong Loong Chen (Independent Non-Executive Director)

COMPANY SECRETARIES Chee Wai Hong (MIA 17181)Foo Li Ling (MAICSA 7019557)

AUDIT COMMITTEE Tan Poh Heng (Chairman)Dato’ Philip Chan Hon Keong Yong Loong Chen

NOMINATION COMMITTEE

Dato’ Philip Chan Hon Keong (Chairman) Tan Poh Heng Yong Loong Chen

REMUNERATION COMMITTEE Tan Poh Heng (Chairman)Dato’ Philip Chan Hon Keong Lee Min Huat

REGISTERED OFFICE 51-13-A Menara BHL BankJalan Sultan Ahmad Shah10050 Penang Tel: 04-228 9700Fax: 04-227 9800

BUSINESS ADDRESS Lot 6181 Jalan Perusahaan 2Kawasan Perindustrian Parit Buntar34200 Parit BuntarPerakTel: 05-716 9605Fax: 05-716 6606

SHARE REGISTRAR Symphony Share Registrars Sdn. Bhd.Level 6, Symphony HouseBlock D13, Pusat Dagangan Dana 1Jalan PJU 1A/4647301 Petaling JayaSelangorTel: 03-7841 8000Fax : 03-7841 8008

AUDITORS Grant ThorntonChartered Accountants51-8-A Menara BHL BankJalan Sultan Ahmad Shah10050 Penang Tel: 04-228 7828Fax: 04-227 9828

PRINCIPAL BANKERS AmBank (M) BerhadHong Leong Bank BerhadHSBC Bank Malaysia Berhad

STOCK EXCHANGE LISTING

ACE Market of Bursa Malaysia Securities BerhadStock Name for Ordinary Shares: SCOPE (Stock Code: 0028) Stock Name for Warrants: SCOPE-WA (Stock Code: 0028WA)Website : http://www.scope.com.my

SCOPE INDUSTRIES BERHAD (591376-D)ANNUAL REPORT 2013 03

HISTORY, PRINCIPAL ACTIVITIES AND GROUP STRUCTURE

Scope Industries Berhad (“Scope”) was incorporated in Malaysia on 2 September 2002 under the Companies Act, 1965 as a public limited company under its present name. Scope is principally an investment holding company with four (4) wholly-owned subsidiaries, namely Scope Manufacturers (M) Sdn. Bhd. (“SMSB”), Benua Mutiara Sdn. Bhd. (“BMSB”), Scope Sales & Services Sdn. Bhd. (“SSSSB”) and Trans Industry Sdn Bhd (“TISB”). Besides that, Scope has a seventy percent (70%) owned subsidiary namely Pioneer Glow Sdn. Bhd. (“PGSB”).

The core business of Scope Group are trading and manufacturing of electronic components and products as well as oil palm plantation business.

The current group structure is as follows:-

TISB*100%

Scope Industries

Berhad

SSSSB100%

PGSB70%

BMSB100%

SMSB100%

The principal activities of its subsidiaries are as follow:-

CompaniesDate and Place of Incorporation

Issued and Paid-up Share Capital Principal activities

RM

Subsidiaries

Scope Manufacturers (M) Sdn. Bhd. (SMSB)

20 November 1991Malaysia

3,220,000 Manufacturing and assembling of electronic components and products.

Benua Mutiara Sdn. Bhd. (BMSB) 28 September 1990Malaysia

500,000 Cultivation of oil palm.

Scope Sales & Services Sdn. Bhd. (SSSSB)

18 December 2002Malaysia

2 Trading of electrical products.

Pioneer Glow Sdn. Bhd. (PGSB) 20 August 1997 Malaysia

10,600,000 Cultivation of oil palm.

Trans Industry Sdn. Bhd. (TISB) 18 February 2000Malaysia

500,000 Strike off during the year.

Note:* TISB had on 30 November 2012 submitted an application to Companies Commission of Malaysia to strike off the name of

TISB from the register pursuant to Section 308 of the Companies Act, 1965.


CHAIRMAN’S STATEMENT

On behalf of the Board of Directors, I am pleased to present to you the Annual Report and Audited Financial Statements of the Group and the Company for the financial year ended 30 June 2013.

INDUSTRY TRENDS AND DEVELOPMENT

Global growth continued at a moderate pace in the second quarter of 2013 supported by a mild expansion in the US and Japan, while the euro area improved with a smaller contraction. The US growth was backed by higher business investment as well as improved labour and housing markets. In Japan, economic growth was contributed by exports and private consumption. The euro zone gained from higher growth in Germany and France. Growth moderated in China due to declining exports and softening investment amid policy reforms to shift from rapid expansion to higher quality growth.

The Malaysian economy continued to expand 4.3% in the second quarter of 2013 as compared to 4.1% in the previous quarter, underpinned by the services sector and a rebound in the manufacturing sector. The manufacturing sector recorded a higher growth of 3.3% (Q1 2013: 0.3%) following strong expansion in domestic-oriented industries. The E&E subsector continued to grow 1.3% on account of stabilized export demand. However, the agriculture sector only grew 0.4% (Q1 2013: 6%) which was weighed down by a sharp reduction in natural rubber output and slower growth in crude palm oil production. The oil palm subsector registered a growth of 1.2% (Q1 2013: 14.6%) which was affected by seasonal down trend of oil palm production during the first half of the year.

OPERATION REVIEW

Manufacturing division

The manufacturing division recorded revenue of RM21.18 million and net profit of RM3.06 million which represents a corresponding increase of 16.39% in revenue and increase of 255.10% in net profit respectively. The increase in the profit was mainly due to continuing cost saving exercise and economies of scale arising from better utilisation of fixed factory overheads following the increase in revenue.

Plantation division

Revenue derived from the plantation division for the year to date was RM3.81 million and total production in fresh fruit bunches (‘FFB”) for the year to date was 9,490 metric tonnes (“MT”). The plantation division is loss-making due to the on-going efforts and expenses invested to improve the infrastructure and other facilities of the plantation.

PROSPECT

Manufacturing division

The Group will continue to improve the efficiency and cost reduction measures in manufacturing operations to achieve the necessary competitive edge in the market. Barring any unforeseen circumstances, the Board is optimistic of achieving better performance in the next financial year.

Plantation division

On 20 June 2013, the total palm oil plantation land bank of the Company increased from 3,496 acres to 4,289 acres. The Group will continue to manage its costs effectively through sharing of common resources, group procurement of plantation materials and equipment as well as the consolidation of estate management best practices.

However, in view of the costs associated with the ongoing improvement exercise and new development on unplanted area, the plantation division is not expected to contribute positive results to the Group in the next financial year.

DIVIDEND

No dividend has been recommended for the financial year ended 30 June 2013.

APPRECIATION

On behalf of the Boards of Directors, I wish to convey my gratitude to our shareholders, affiliates, partners and esteemed customers for their support and confidence in our Group. I would like to extend my heartfelt gratitude to all of our employees for your patience, dedication, hard work and the spirit of excellence that you have all exhibited. These attributes will definitely help the Group to ride through the future challenges amidst the expected difficult business environment in the year ahead.

Last but not least, my sincere thanks to my Board Members for your expert guidance and insight. I look forward to your support and commitment to secure the future growth of the Group.

Dato’ Philip Chan Hon KeongChairman


STATEMENT ON CORPORATE SOCIAL RESPONSIBILITY (CSR)

Scope Group’s Corporate Social Responsibility (CSR) principle emphasises on achieving commercial success in a balanced and responsible manner by addressing the interests of all stakeholders. The Group not only increases the stakeholder value through its core business but also bearing in mind of its responsibilities for the betterment of the community and the environment.

This simple guiding principle ensures that CSR, as we see it, is part and parcel of how we do business. The key initiatives currently undertaken by the Group are:-

ü Stakeholder Relations

• We are committed to timely and meaningful dialogues with all stakeholders, including shareholders, customers, employees, regulators, etc.

ü Employees

• The Group recognises that its employees are important assets. It takes good care of the welfare of its employees and employs them under fair and equitable terms besides offering equal opportunity for career advancement based on performance and academic qualification.

• Training on industrial safety is frequently conducted to ensure high level of awareness on safety requirement at all levels. The Company has conducted the following safety training for its employee :Ø Firefighting and emergency response by BombaØ First aid and CPR courses by Ahli Persekutuan Antarabangsa Persatuan-persatuan Palang Merah dan Bulan Sabit

Merah

• During the year, the Company has organized the following programmes for its employees :Ø Eye care programme inclusive of free eye consultant, free eye test, free spectacles services and obtained of a

special discount from the merchandises Ø Employees were provided special discount rate of up to 60% on the healthcare services by BP Healthcare Group.

ü Community

• Strengthening our contribution to the community in our township and helping to foster better community care and goodwill with a target in place to employ 50% of local workforce

• We have been conducting industrial training programmes to students from various universities and polytechnics for a period of 3 months with objective of equipping the students with the necessary working skills and knowledge.

• In January 2013, in line with the theme of “Save a Life Campaign”, the Company organized a blood donation campaign at its premises for the blood bank of Parit Buntar General Hospital. The objective of this campaign is to impart a sense of responsibility among employees in saving life and also helping people live longer. The campaign received a very good response from our employees.

ü Environment

• The Group is committed to environmental awareness and preservation throughout our business. Waste and sludge from production are treated before being discharged.

• Employees are encouraged to reduce the use of paper, recycle any recyclable items and reduce wastages. Efforts have also been made to conserve energy by ensuring that all lights and air-conditioning are operating only when there is a need.


DIRECTORS’ PROFILE

Dato’ Philip Chan Hon Keong, a Malaysian, aged 48, was appointed as an Independent Non-Executive Chairman of Scope on 17 April 2006. He graduated with a Bachelor of Economics and a Bachelor of Laws from The University of Sydney in 1989. Upon admission to the Malaysian Bar in June 1990, he practiced in Messrs Azalina, Chan & Chia and was a partner of the firm until 2000. He then joined Messrs Skrine as a partner in the Corporate Division in January 2001. Currently, he is the co-head of the Banking and Property Unit in Messrs Skrine. In addition to his directorship in Scope, he currently sits on the board of several private limited companies and two public companies, JF Technology Berhad and Eksons Corporation Berhad.

Dato’ Philip Chan Hon Keong is the Chairman of the Nomination Committee and a member of the Audit Committee and Remuneration Committee.

Lim Chiow Hoo, a Malaysian, aged 50 was appointed as the Managing Director of Scope on 15 July 2003. He is a businessman by profession and is the founder of the Group. After completing his Higher School Certificate, he started his career as a Treasurer at Hup Hin Chan Rice Mill Sdn. Bhd. from 1984 to 1990. In 1990, he became a sole-proprietor when he set up his business of assembling PCB for office equipments. In 1991, he founded SMSB and his business in the sole proprietorship was subsequently transferred to SMSB. SMSB’s operations expanded to include the assembly of PCB for telecommunication products. Being the founder, he is directly involved in the growth and development of SMSB since its inception in 1991. Under his stewardship, SMSB’s operations have since expanded to include the assembly of PCB for various electronic products with specialisation in audio and telecommunication equipments.

Backed by more than 10 years of experience in the electronics industry, Mr. Lim Chiow Hoo possesses in-depth knowledge on the overall operations of SMSB. His functional roles in the Group include the overall management of sales and marketing of the Group.

Lee Min Huat, a Malaysian, aged 56, was appointed as the Executive Director of Scope on 15 July 2003. He graduated with a Diploma in Aircraft Maintenance Engineering from Confederation College, Canada in 1979. Upon graduation, he worked as a Manager at Kalayaan Sdn. Bhd., a property developer, from 1980 to 1984. For the past 20 years, he has been involved in property development and commodity trading. In addition to his directorship in Scope, he currently holds directorships in other private limited companies. He is currently responsible for the formulation of corporate strategies, plans for the Group and oversee the Group finance and operations.

Mr. Lee Min Huat is a member of the Remuneration Committee.


DIRECTORS’ PROFILE (cont’d)

Tan Poh Heng, a Malaysian, aged 56 was appointed as the Independent Non-Executive Director of Scope on 13 May 2008. After completing his High School Certificate in 1977, he joined Messrs Price Waterhouse & Co. as an Audit Assistant in May 1978 until March 1983 when he completed his professional examination and qualified as an accountant. In the same year he was admitted as a member of the Malaysian Institute of Certified Public Accountants and later a member of the Malaysian Institute of Accountants in year 1987. On April 1983, Mr. Tan Poh Heng joined Messrs Peat, Marwick, Mitchell & Co. as a Qualified Assistant and was subsequently promoted as an Audit Supervisor in January 1985. He left Messrs Peat, Marwick, Mitchell & Co. in August 1985 to join South Island Garment Sdn. Bhd. as a Chief Accountant. Mr. Tan left South Island Garment Sdn. Bhd. in March 2002 when he held the position of Senior General Manager and was subsequently employed by Messrs JB Lau & Associates (now known as Grant Thornton) in June 2002 as the Senior Audit Manager, a position he held until September 2003. He re-joined the workforce in December 2004 as the Chief Financial Officer of GPS Tech Solutions Sdn. Bhd., an associated company of a public listed entity, Magni-Tech Industries Berhad, a position he held until his retirement in August 2012. Currently he is the Financial Controller of Panther Precision Tools Sdn Bhd.

Mr. Tan Poh Heng is also the Chairman of the Audit Committee and Remuneration Committee and a member of the Nomination Committee.

Yong Loong Chen, a Malaysian, aged 47, was appointed as the Independent Non-Executive Director of Scope on 1 December 2008. He is a Chartered Accountant by profession as well as a member of the Malaysian Institute of Certified Public Accountants and also member of the Malaysian Institute of Accountants. He joined Messrs KMPG Peat Marwick as audit senior in year 1990 until 1994. Subsequently, he was attached with Paul Chuah & Co as Audit Manager from year 1994 to 1995. From year 1995 to 2010, he was a dealer representative with Affin Investment Bank Berhad. Currently he is the Chairman and Executive Director of Cittasukha Berhad .

Mr. Yong Loong Chen is a member of the Audit Committee and a member of the Nomination Committee.

Notes:

None of the Directors of the Company have any family relationship with any Director or major shareholders of the Company.

All the Directors do not have any conflict of interest with the Company and they also had not been convicted of any offence within the past ten (10) years, other than traffic offences, if any.

The Directors’ shareholdings are as disclosed in page 78 of this Annual Report.


CORPORATE GOVERNANCE STATEMENT

The Board of Directors of Scope recognises that exercise of good corporate governance in conducting the business and affairs of the Company with integrity, transparency and professionalism are key components for the Company’s continued progress and success. These will not only safeguard and enhance shareholders’ investment and value but will at the same time ensure that the interests of other stakeholders are protected.

The Board is pleased to report on the application of the principles of the Malaysian Code on Corporate Governance 2012 (“MCCG 2012” or “Code”) and extent of compliance with the Recommendations of the MCCG 2012 as required under MCCG 2012 during the financial year ended 30 June 2013.

A. BOARD OF DIRECTORS

1. Board Composition and Balance Scope is led and managed by the Board who has a wide range of competencies and experiences ranging from the

accounting, business, engineering and law. Presently, the Board has five (5) Directors comprising two (2) Executive Directors and three (3) Independent Non-Executive Directors. The Chairman of the Board is an Independent Non-Executive Director. The number of Independent Directors is in compliance with the Listing Requirements of Bursa Malaysia Securities Berhad (“Bursa Securities”) for the ACE Market which requires the Board to have at least two (2) Independent Directors or 1/3 of the Board of Directors, whichever is the higher, to be Independent Directors. The tenure of all the Independent Non-Executive Directors do not exceed a cumulative term of nine (9) years as recommended by the MCCG 2012. The Nomination Committee and the Board had reviewed and assessed their Independent Non-Executive Directors after the financial year ended 30 June 2013 and is satisfied with the level of independence demonstrated by the present Independent Non-Executive Directors. The profiles of the Directors are presented on pages 6 to 7 of this Annual Report.

2. Duties and Responsibilities of the Board

The Group acknowledges the pivotal role played by the Board of Directors in the stewardships of its direction and operations. To fulfil this role, the Board is responsible for the following:

• Reviewing and adopting strategic plans for the Group which will enhance the future growth of the Group while addressing sustainability of the Group’s business;

• Overseeing the conduct of the Group’s businesses to evaluate whether the business are being properly managed;• Identifying principal risks of the business and ensuring the implementation of appropriate systems to manage

these risks;• Reviewing the adequacy and integrity of the Group’s internal control systems and management information

systems;• To consider and implement plans for effective appointments to senior management positions and Board

members which includes appropriate and adequate training and ensuring orderly succession of senior management.

The role of the Independent Non-Executive Chairman, Managing Director and Executive Director are distinct and separate to ensure that there is a balance of power and authority. The Independent Non-Executive Chairman is responsible for the leadership, effectiveness, conduct and governance of the Board.

The Managing Director and Executive Director have overall responsibility for the day-to-day management of the business and implementation of the Board’s policies and decisions. The Managing Director and Executive Director are responsible to ensure due execution of strategic goals, effective operations within the Group, and to explain, clarify and inform the Board on key matters pertaining to the Group.

All decisions of the Board are based on the decision of the majority and no single Board member can make any decision on behalf of the Board, unless duly authorised by the Board. As such, no single individual or a group of individuals dominates the Board's decision-making process.

The Board Charter is currently being drafted and will be ready by end of the year 2013.

3. Functions of the Board and Management

The Board is responsible for the overall corporate governance of the Group, including the strategic direction, risk management and establishes the vision and strategic objectives of the Group for development which includes management development, succession planning and policies to ensure all procedures within the Group are to be carried out in a systematic and orderly manner to ease the decision-making process.

The Senior Management carries out the role of managing the business of the Group under the direction and delegations of the Managing Director and Executive Director.


CORPORATE GOVERNANCE STATEMENT (cont’d)

A. BOARD OF DIRECTORS (cont'd)

4. Code of Ethics

The Directors observed the code in accordance with the Company Directors’ Code of Ethics established by the Companies Commission of Malaysia.

5. Appointments of Directors

The Board has established the Nomination Committee for the purpose of making recommendations on suitable candidates for appointment to the Board and for assessing Directors on an ongoing basis. Candidates recommended must be approved and appointed by the Board. The Nomination Committee is responsible for recommending the right candidates with the required skills, experience and attributes to the Board for appointment.

Further details on the Nomination Committee are set out on page 11 of this Annual Report.

6. Re-election of Directors

Any Director appointed during the year is required under the Company’s Articles of Association, to retire and is eligible to seek re-election by shareholders at the forthcoming Annual General Meeting (“AGM”). The Articles of Association of the Company also requires that Directors shall retire from office at least once every three years at the forthcoming AGM and shall be eligible for re-election.

The Director who is seeking for re-election at the forthcoming Eleventh AGM is set out in the Notice of the AGM on pages 73 to 74 in this Annual Report.

7. Board Meetings

Board Meetings are held every quarter and additional meetings are held as and when necessary. Besides Board meetings, the Board also exercises control on matters that require Board’s approval through Directors’ Circular Resolutions. Key matters reserved for Board’s approval include quarterly results, financial statements, major acquisitions and disposals, major capital expenditure, corporate proposal on fund raising and any other significant business direction.

The Board met five (5) times in the financial year ended 30 June 2013. The Board is satisfied with the time commitment given by the Directors of the Company in discharging their duties for financial year ended 30 June 2013 as evidenced by the attendance record of the Directors at the Board meeting. The composition of the Board and the individual Directors’ attendance of meetings during the financial year ended 30 June 2013 were as follows:-

Attendance

Dato’ Philip Chan Hon Keong Chairman/Independent Non-Executive Director 5/5Mr. Lim Chiow Hoo Managing Director 5/5Mr. Lee Min Huat Executive Director 5/5Mr. Tan Poh Heng Independent Non-Executive Director 5/5Mr. Yong Loong Chen Independent Non-Executive Director 5/5

The Company Secretary ensures there is a quorum for all meetings and that such meetings are convened in accordance with the Articles of Association of the Company. The minutes prepared by the Company Secretary record the proceedings of all meetings including pertinent issues, the substance of inquiries and responses, members’ suggestions and the decisions made. This reflects the fulfilment of the Board’s fiduciary duties and the significant oversight role performed by the respective Board Committees.

8. Internal Corporate Disclosure Policies and Procedures

Along with good corporate governance practices, the Company is committed to providing the investors and public with comprehensive, accurate and material information on a timely basis.

In line with this commitment and in order to enhance transparency and accountability, the Board has adopted an Internal Corporate Disclosure Policies and Procedures to facilitate the handling and disclosure of material information in a timely and accurate manner.



A. BOARD OF DIRECTORS (cont'd)

9. Sustainability

The Group identified the environment conservation and social contribution as key elements in formulation of its objectives and strategies. The Group recognise the need to safeguarding and developing the workforce, strengthening stakeholders’ relationship and protecting the interest of shareholders. A corporate social responsibility statement is also set out in the relevant section of this Annual Report.

10. Board Gender Diversity Policy

Corporate Governance Blueprint 2011 stated that the Board should ensure women participation on board to reach 30% by 2016. The Company does not have a policy on gender diversity. The Company will provide equal opportunity to candidates with merit. Nonetheless, the Board will give consideration to the gender diversity objectives.

11. Supply and Access to Information

The Board members have full and unrestricted access to information on the Group’s business and affairs in discharging their duties. Prior to the meetings, all Directors are provided with sufficient and timely reports and supporting documents which are circulated in advance of each meeting to ensure sufficient time is given to understand the key issues and contents.

All Directors also have full access to the advice and service of the Company Secretaries in furtherance of their duties. Where necessary, the Directors may obtain independent professional advice at the Company’s expense on specific issues to enable the Board to discharge their duties on the matters being deliberated.

12. Directors’ Training

All the Directors of Scope have attended and successfully completed the Mandatory Accreditation Programme as required by the Bursa Securities. In addition, the Directors are encouraged to attend other relevant training programmes, courses and seminars relevant in enhancing the Directors in discharging their duties.

During the year, the Directors have also attended and participated at other seminars and conferences for the continuing enhancement of their knowledge and to keep abreast of developments in the market place. Among the training programmes attended by the Directors are as listed :

No. Name of Director Seminar/Training Course Attended No of days

1. Dato’ Philip Chan Hon Keong · Introduction to Asia Pacific Loan Market Association Documents. (28 January 2013)

· EPF - Global Private Equity Summit 2013. (25 & 26 March 2013)

· Extra Territoriality in International Derivatives Regulation & Australia’s Changing Regulatory Landscape for OTC Derivatives. (21 May 2013)

· Global Transaction Reporting Conference. (22 May 2013)

1 day

2 days

1 day

1 day

2. Mr. Lim Chiow Hoo · Connecting the Dots, Leading Towards the Future (16 & 17 June 2013)

2 days

3. Mr. Lee Min Huat · Advocacy Sessions on Corporate Disclosure for Directors (20 June 2013) Half day

4. Mr. Tan Poh Heng · Tax Audit Framework and Findings. (8 October 2012) 1 day

5. Mr. Yong Loong Chen · International Trade and Industry as the Drivers of Growth (19 March 2013) · Prospect of Long Haul Budget Airlines (3 April 2013)

· Advocacy Sessions on Corporate Disclosure for Directors (20 June 2013)

Half day

Half day

Half day



B. COMMITTEES OF THE BOARD

To assist the Board in the discharge of their duties effectively, the Board has delegated specific functions to certain committees, namely Nomination Committee, Remuneration Committee and Audit Committee. Each committee will operate within its clearly defined terms of reference. The Chairman of the various committees will report to the Board on the outcome of the committee meetings.

1. Audit Committee

The terms of reference of the Company’s Audit Committee and its activities during the financial year are set out under the Audit Committee Report on pages 15 to 17 of this Annual Report.

2. Nomination Committee

The Nomination Committee which was formed on 19 November 2003 comprises of the following members and the individual Directors’ attendance of meetings during the financial year ended 30 June 2013 were as follows:-

Attendance

Dato’ Philip Chan Hon Keong (Chairman) Independent Non-Executive Chairman 1/1

Mr. Tan Poh Heng Independent Non-Executive Director 1/1

Mr. Yong Loong Chen Independent Non-Executive Director 1/1

The Nomination Committee is empowered by its terms of reference and its primary function is to identify and recommend to the Board, technically competent persons of integrity and a strong sense professionalism to be appointed to the Board. The Committee will assess the suitability of an individual to be appointed to the Board by taking into consideration of the individual’s resources, other commitments and time available for input to the Board before recommendation is made for the Board’s approval. The Committee will also review annually, if necessary, the required mix of skill and experience and other qualities and competencies of its Directors and shall review the composition, structure and size of the Board.

The Nomination Committee meets at least once a year and as and when necessary.

During the financial year, the Committee has assessed the effectiveness of the Board, the committees of the Board and the contribution of each individual director, including Independent Non-Executive Directors as well as reviewing re-election of the retiring Directors of the Company. The Nomination Committee has also reviewed and assessed the Independent Non-Executive Directors after financial year ended 30 June 2013.

3. Remuneration Committee

The Remuneration Committee which was formed on 19 November 2003 comprises of the following members and the individual Directors’ attendance of meetings during the financial year ended 30 June 2013 were as follows:-

Attendance

Mr. Tan Poh Heng (Chairman) Independent Non-Executive Director 1/1

Dato’ Philip Chan Hon Keong Independent Non-Executive Chairman 1/1

Mr. Lee Min Huat Executive Director 1/1

The Remuneration Committee is governed by its terms of reference and its primary function is to be responsible for recommending to the Board from time to time, the remuneration framework and package of the Executive Directors in all forms to commensurate with the respective contributions of the Executive Directors. The Executive Directors are to abstain from deliberations and voting on the decision in respect of their own remuneration packages. The Board as a whole decides on the remuneration of the Non-Executive Directors, including the Non-Executive Chairman. The individual concerned should abstain from deliberations of their own remuneration packages. Directors’ fees are subject to shareholders’ approval at the forthcoming AGM.

3.1 Remuneration

The Directors are satisfied with the current levels of remuneration, which are in line with the responsibilities expected by the Company. In general, the remuneration is structured so as to link reward to corporate and individual performance, as in the case of the Executive Directors and senior management. As for the Non-Executive Directors, the level of remuneration reflects the experience, expertise and level of responsibilities undertaken by the particular Non-Executive Directors concerned.



B. COMMITTEES OF THE BOARD (cont'd)

3. Remuneration Committee (cont'd)

3.1 Remuneration (cont'd)

The details of the nature and amount of remuneration paid or payable to the Directors of the Company for the financial year ended 30 June 2013 are as follows :

Executive Non-Executive Total RM

Salaries and bonuses 443,580 - 443,580Fees 34,000 36,000 70,000EPF 44,352 - 44,352Allowance 7,000 10,500 17,500

528,932 46,500 575,432

The number of Directors whose remuneration falls into the following bands for the financial year ended 30 June 2013 are as follows :

Number of DirectorsRange of Remuneration Executive Non-Executive

Below RM50,000 - 3RM50,001 to RM100,000 - -RM100,001 to RM150,000 - -RM150,001 to RM200,000 - -RM200,001 to RM250,000 - -RM250,001 to RM300,000 2 -

C. SHAREHOLDERS

The Board recognises the value of investor relations and endeavours to maintain constant and effective communication with shareholders through timely and comprehensive announcements.

The AGM is the principal forum dialogue with all shareholders. The participation of shareholders and investors, both individual and institutional, at general meetings is encouraged whilst requests for briefings from the press and investment analysts are usually met as a matter of course.

Notice of Annual General Meeting and the annual report are sent to shareholders at least 21 days before the date of the meeting.

Information of the Group is also accessible through the Company’s website at (http://www.scope.com.my) which is updated on a regular basis. Information available in the website includes among others the Group Annual Report, quarterly financial announcements, major and significant announcements, press release and latest corporate developments of the Group.

D. ACCOUNTABILITY AND AUDIT

1. Financial Reporting

The Board has a responsibility to present a true and fair assessment of the Group’s position and prospects primarily through the quarterly reports to the Bursa Securities and the Annual Report to shareholders. The Audit Committee assists the Board in scrutinising information for disclosure to ensure accuracy and adequacy.

2. Statement of Directors’ Responsibility for Annual Audited Financial Statements

The Directors are responsible for the preparation of financial statements each financial year in accordance with the requirements of the Companies Act, 1965 and Financial Reporting Standards in Malaysia. Central to those requirements is the need to ensure that these financial statements present a true and fair view of the state of affairs of the Group and the Company, the results, cash flows and statement of changes in equity. In the preparation of these financial statements for the year under review, appropriate accounting policies have been selected and they have been applied in a consistent manner.

The Directors have the general responsibility of taking such steps as are reasonably open to them to safeguard the assets of the Group and to prevent and detect fraud and other irregularities.



D. ACCOUNTABILITY AND AUDIT (cont'd)

3. Internal Control

The Group’s Statement on Risk Management And Internal Control is laid out on page 14 of this Annual Report.

4. Relationship with the Auditors

The role of the Audit Committee in relation to the External Auditors may be found in the Report of the Audit Committee set out in pages 15 to 17. The Group has always maintained a close and transparent relationship with its auditors in seeking professional advice and ensuring compliance with the appropriate accounting standards.

5. Statement on the Compliance with the best practices of the Code Save for the exceptions set out above, the Group is in substantial compliance through the financial year with the

principles and recommendations of the Code.

E. OTHER INFORMATION

1. Share Buybacks

During the financial year, the Company did not enter into any share buyback transactions. 2. Options, Warrants or Convertible Securities

The Company had on 19 July 2012 issued 118,596,363 warrants, further details of the warrants issued are described in page 50 of this Annual Report.There was no exercise of warrants during the financial year.

Other than the above, there was no issuance of convertible securities during the financial year.

3. Depository Receipt (DR)

During the financial year, the Company did not sponsor any DR programme.

4. Imposition of Sanctions and/or Penalties

There was no public imposition of sanctions and/or penalties imposed on the Company and its subsidiaries, directors or management by the regulatory bodies during the financial year.

5. Profit Guarantee

The Company did not receive any profit guarantee from any parties during the financial year.

6. Material Contracts

There were no material contracts entered into by the Company and its subsidiaries involving Directors’ and major shareholders’ interests either still subsisting as at 30 June 2013 or entered into since the end of the previous financial year.

7. Recurrent Related Party Transactions of a Revenue or Trading Nature

There was no recurrent related party transaction of a revenue or trading nature during the financial year ended 30 June 2013.

8. Variation in Results

There were no material variations between the audited results for the financial year ended 30 June 2013 and the unaudited results released for the financial quarter ended 30 June 2013.

9. Utilisation of Proceeds

The Company has on financial year ended 30 June 2012 fully utilised the proceeds raised from the private placement exercise undertaken by the Company during the said financial year.

During the financial year ended 30 June 2013, there were no cash proceeds raised by the Company from any corporate exercise.

10. Non-Audit Fees

During the financial year, the non-audit fees paid to the external auditors of the Group or a company affiliated to the auditors’ firm amounted to RM61,000.


STATEMENT ON RISK MANAGEMENT AND INTERNAL CONTROL

The Board is committed to nurture and preserve throughout the Group a sound system of risk management and internal controls in accordance with the Statement on Risk Management and Internal Control: Guidance for Directors of Listed Issuers issued by the Institute of Internal Auditors Malaysia and as adopted by Bursa Malaysia Securities Berhad.

Board Responsibility

The Board has overall responsibility for internal control and risk management, and for reviewing the adequacy and integrity of those systems. The Board fully understands its responsibility to maintain a sound system of internal control to safeguard the interest of shareholders. The systems in place are designed to manage rather than eliminate the risk of failure to achieve business objectives, and can only provide reasonable but not absolute assurance against material misstatement or loss.

Risk Management

The Board recognises the importance of establishing a structured risk management framework to sustain and enhance good corporate governance practices. The Board has a structured Risk Management framework that undertakes the Group’s desires to identify evaluate and manage significant business risks. The framework includes examining of business risks, assessing impact and likelihood of risks and taking management action plans to mitigate and minimise risks exposure.

Key Elements of the Group’s Risk Management and Internal Control System

The Board maintains an organisational structure with clearly defined levels of responsibility and authority and appropriate reporting procedures. The following outlines the main elements of the Group’s control system:-

(a) Supplying comprehensive financial and management reports to the Audit Committee and the Board on a quarterly basis for review.

(b) Stringent recruitment policy is set to ensure only capable and competent staff are employed which in turn ensure each operating unit is functioning effectively.

(c) The Group’s performance is monitored through management and operational meeting attended by senior management. The Managing Director and Executive Directors are involved in the day to day operations of the Group.

Internal Audit Function

During the financial year, the Group has appointed an independent internal audit service provider to carry out internal audit reviews on assessing the adequacy and integrity of the internal control systems of the business units within the Group. The internal audit team highlights to the executive and operational management on areas for improvement and subsequently reviews the extent to which its recommendations have been implemented. The reports are submitted to the Audit Committee, who reviews the findings with management at its quarterly meetings. In addition, the management’s response to the control recommendations on deficiencies found during the internal audits in order to provide an added assurances that control procedures are in place, and being followed.

The cost incurred for the internal audit function in respect of the financial year ended 30 June 2013 was RM5,500.

Conclusion

The Board has received assurance from the Managing Director and Executive Director that the Group’s risk management and internal control system is operating adequately and effectively, in all material aspects, based on the risk management and internal control system of the Group.

Overall, the Board and Management are satisfied that the process of identifying, evaluating and managing significant risks that may affect achievement of the Group’s business objectives are in place. There are continuing efforts to strengthen the internal control environment taking into consideration the recommendations from the internal auditors.


AUDIT COMMITTEE’S REPORT

MEMBERS POSITION

Mr. Tan Poh Heng Chairman (Independent Non-Executive Director)

Dato’ Philip Chan Hon Keong Member (Chairman/Independent Non-Executive Director)

Mr. Yong Loong Chen Member (Independent Non-Executive Director)

The Terms of Reference of the Committee are as follows: -

1. MEMBERSHIP

The Board should establish an audit committee of at least three directors, a majority of whom must be independent Non-Executive Directors with written terms of reference which deal clearly with its authority and duties. All members of the Committee should be Non-Executive Directors of the Company and all members of the Committee should be financially literate. At least one member of the Committee:-

• must be member of the Malaysian Institute of Accountants; or

• if he is not a member of the Malaysian Institute of Accountants, he must have at least 3 years of working experience and- he must have passed the examinations specified in Part I of the 1st Schedule of the Accountants Act, 1967; or- he must be a member of one of the associations of accountants specified in Part II of the 1st Schedules of the

Accountants Act, 1967; or- fulfills such other requirements as prescribed or approved by the Exchange.

The members of the Committee shall elect the Chairman from among their number who shall be an Independent Non-executive Director. The alternate director shall not be a member of the Audit Committee.

If a Member of the Committee for any reason ceases to be a Member of the Committee with the result that the number of Member is reduced below (3), the Board shall within three (3) months of that event, appoint such number of new Member as may be required to make up the minimum number of three (3) Members.

2. ATTENDANCE AT MEETINGS

The Financial Controller, representatives of the internal auditor and external auditors will be invited to some of the Audit Committee Meetings. Other board members and employees may attend any particular Audit Committee meeting only at the Audit committee’s invitation, specific to the relevant meeting. At least twice a year, the Committee shall meet with the external auditors without the presence of the Executive Directors. The Company Secretary shall be the secretary of the Committee.

3. FREQUENCY AT MEETINGS

Meetings will be held not less than four times a year. Additional meetings may be held at the discretion of the Committee or at the request of external auditors. The external auditors may request a meeting if they consider that one is necessary. The quorum for any meeting shall be two and the majority members of the Committee present must be Independent Non-Executive Directors.

The Chairman of the Audit Committee should engage on a continuous basis with senior management, such as the Chairman, the Managing Director, the Financial Controller, the head of the internal audit and the external auditors in order to be kept informed of matters affecting the Company.

4. RETIREMENT AND RESIGNATION

In the event of any vacancy in an audit committee resulting in the non-compliance of sub-Rule 15.09(1) of the ACE Market Listing Requirements of Bursa Malaysia Securities Berhad, a listed company must fill the vacancy within 3 months.


AUDIT COMMITTEE’S REPORT (cont’d)

5. AUTHORITY

The Committee is authorised by the Board to investigate any activity within its terms of reference, the resources it needs to do so and full access to information pertaining to the Company. The Committee should have direct communication channels with the external auditors and person(s) carrying out the internal audit function or activity and be able to obtain external professional advice and to invite outsiders with relevant experience to attend, if necessary. The Committee should be able to convene meetings with the external auditors, the internal auditors or both, excluding the attendance of other directors and employees of the listed company, whenever deemed necessary. It is authorised to seek any information it requires from any employee and all employees are directed to co-operate with any request made by the Committee.

6. DUTIES AND RESPONSIBILITIES

The duties and responsibilities of the Committee shall include:-

(a) to consider the appointment/nomination/suitability of the external auditors, their audit fees and any question of their resignation or dismissal and to recommend to the Board.

(b) to discuss with the external auditors before the audit commences, the nature and scope of their audit, their evaluation of the system of internal accounting controls and to ensure co-ordination where more than one audit firm is involved.

(c) to discuss problems and reservations arising from the interim and final audits, and any matters the external auditors may wish to discuss (in the absence of management where necessary).

(d) to keep under review the effectiveness of internal control system and, in particular, review external auditors’ management letter and management’s response.

(e) to do the following, in relation to the internal audit function

• review the adequacy of the scope, functions, competency and resources of the internal audit functions, and to ensure that it has the necessary authority to carry out its work;

• review the internal audit programme, processes, the results of the internal audit programme, processes or investigation undertaken and, where necessary, ensure that appropriate actions are taken on the recommendations of the internal audit function;

• review any appraisal or assessment of the performance of members of the internal audit function;• approve any appointment or termination of senior members of the internal audit function; and• take cognizance of resignations of internal audit staff members and provide the resigning staff member an

opportunity to submit his reasons for resigning.

(f ) to review the quarterly results and year-end financial statements of the Company and the Group, prior to the approval by the Board, whilst ensuring that they are prepared in a timely and accurate manner, focusing particularly on:-

• public announcements of results and dividend payment;• any changes in or implementation of major accounting policies and practices;• major judgmental areas;• significant adjustments resulting from the audit;• the going-concern assumption;• compliance with accounting standards; • compliance with Bursa Securities and legal requirements; and• significant and unusual events.

(g) to consider/review any related party transactions and conflict of interest situation that may arise within the Company or Group, including any transaction, procedure or course of conduct that raises questions of management integrity.

(h) to consider the major findings of internal investigations and management’s response and ensure co-ordination between the internal and external auditors.

(i) to review and verify the allocation of share options granted to employees pursuant to the Employees share option scheme, transactions, procedure or course of conduct that raises questions of management integrity.

(j) to review with the external auditor, his audit report.

(k) to review with the external auditor the assistance given by the employees of the Company.

(l) to review with the Board of Directors of the Company whether there is reason (supported by grounds) to believe that the Company’s external auditors is not suitable for re-appointment.

(m) to consider/carry out such other functions and consider other topics, as may be agreed upon by the Board.


AUDIT COMMITTEE’S REPORT (cont’d)

7. REPORTING PROCEDURES

The Company Secretary shall circulate the minutes of meetings of the Committee to all members of the Board.

ATTENDANCE AT MEETINGS

A total of four (4) Audit Committee meetings were held during the financial year ended 30 June 2013. The details of attendance of the Committee members are as follows:

Name of Committee Member Attendance

Mr. Tan Poh Heng 4/4

Dato’ Philip Chan Hon Keong 4/4

Mr. Yong Loong Chen 4/4

ACTIVITIES OF THE COMMITTEE

During the financial year in discharging its functions and duties, the Committee has considered, reviewed, discussed and approved the following:

a. The audited financial statements for the financial year ended 30 June 2012 and made recommendations to the Board for approval;

b. The financial results for the quarters ended 30 June 2012, 30 September 2012, 31 December 2012 and 31 March 2013;

c. Audit reports prepared by the Internal Auditors, considered their material findings and assess the Management’s responses and actions thereto;

d. The nature and scope of audit plan for the financial year ended 30 June 2013 before the commencement of audit together with the External Auditors;

e. Recommendation on the re-appointment of External Auditors and their fees; and

f. Dialogue session with External Auditors, without the presence of Executive Directors and Management.

INTERNAL AUDIT FUNCTION

The Group has engaged an external independent professional services firm to carry out its internal audit functions. The internal auditors report directly to the Audit Committee and assist the Board in monitoring and reviewing the effectiveness of the risk management, internal control and governance process within the Group.

The Audit Committee approved the internal audit plan presented by the external consultant. The internal audit plan is derived based on the risk-based assessment of all units and operations of the Group. The internal audit reports highlight any deficiencies or findings which were discussed with the management and relevant action plans agreed to be implemented. Significant findings are presented in Audit Committee Meetings for consideration and reported to the Board and audit review is also conducted to determine whether the recommendations made by internal auditor are implemented.

Further details on the internal audit function and its activities are set out in the Statement on Risk Management and Internal Control on page 14 of this Annual Report.

The Board is of the view that there is no significant breakdown or weakness in the systems of internal controls of the Group that may result in material losses incurred by the Group for the financial year ended 30 June 2013.


DIRECTORS’ REPORTFOR THE FINANCIAL YEAR ENDED 30 JUNE 2013

The directors hereby submit their report together with the audited financial statements of the Group and of the Company for the financial year ended 30 June 2013.

PRINCIPAL ACTIVITIES

The principal activity of the Company is investment holding. The principal activities of the subsidiaries are disclosed in Note 6 to the financial statements.

There have been no significant changes in the nature of these activities during the financial year.

RESULTS

GROUP COMPANYRM RM

(Loss)/Profit after taxation for the year (4,038,022) 44,771

Attributable to:Equity holders of the Company (2,561,158) 44,771Non-controlling interests (1,476,864) -

(4,038,022) 44,771 In the opinion of the directors, the results of the operations of the Group and of the Company for the financial year ended 30 June 2013 have not been substantially affected by any item, transaction or event of a material and unusual nature nor has any such item, transaction or event occurred in the interval between the end of that financial year and the date of this report.

DIVIDENDS

No dividend have been declared or paid by the Company since the end of the previous financial year.

The directors do not recommend any dividend payment for the financial year.

RESERVES AND PROVISIONS

All material transfers to or from reserves or provisions during the financial year are disclosed in the notes to the financial statements.

SHARE CAPITAL AND DEBENTURE

Share Capital

During the financial year, the Company increased its authorised share capital from RM50,000,000 to RM200,000,000 through the creation of an additional 1,500,000,000 ordinary shares of RM0.10 each and the issued and paid-up share capital was increased from RM29,498,182 to RM50,048,443 through the following:

Number of ordinary shares Amountof RM0.10 each RM

Issued pursuant to the acquisition of:- Pioneer Glow Sdn. Bhd. (1) 89,400,000 8,940,000- Benua Mutiara Sdn. Bhd. (2) 116,102,612 11,610,261

205,502,612 20,550,261 (1) Issued at an issue price of RM0.15 per share(2) Issued at an issue price of RM0.25 per share

Please refer to Note 35 to the financial statements for details of the acquisitions.

The new ordinary shares issued ranked pari passu with the existing shares in all respects.


DIRECTORS’ REPORT (cont’d)FOR THE FINANCIAL YEAR ENDED 30 JUNE 2013

WARRANTS

During the financial year, the Company issued 59,600,000 warrants pursuant to the acquisition of Pioneer Glow Sdn. Bhd. and 58,996,363 free warrants on the basis of two (2) free warrants for every ten (10) ordinary shares of RM0.10 each held by the existing shareholders of the Company. No warrants were exercised during this financial year.

The salient features of the warrants are disclosed in Note 16.2 to the financial statements.

Other than the foregoing, the Company did not issue any other share or debenture and did not grant any option to anyone to take up unissued shares of the Company during the financial year.

DIRECTORS

The directors who served since the date of the last report are as follows:

Dato’ Philip Chan Hon Keong Lim Chiow Hoo Lee Min Huat Tan Poh Heng Yong Loong Chen

DIRECTORS’ INTERESTS IN SHARES

According to the register of directors’ shareholdings, the interests of directors in office at the end of the financial year in shares and warrants of the Company and its related corporations during the financial year are as follows:

----------------------- Number of ordinary shares of RM0.10 each -----------------------Balance Balance

at at1.7.12 Bought Sold 30.6.13

The CompanyDirect Interest :Dato’ Philip Chan Hon Keong 875,000 - (100,000) 775,000Lim Chiow Hoo 78,249,330 200,000 (25,000,000) 53,449,330Lee Min Huat 57,701,860 - - 57,701,860Tan Poh Heng 500,000 - (250,000) 250,000

--------------------------------------- Number of warrants ---------------------------------------Balance Balance

at at19.7.12 Bought Sold 30.6.13

(Date of issuance)

Direct Interest:Dato’ Philip Chan Hon Keong 175,000 - (150,000) 25,000Lim Chiow Hoo 10,649,866 - - 10,649,866Lee Min Huat 11,540,372 - - 11,540,372Tan Poh Heng 100,000 - - 100,000

Other than as disclosed above, none of the other directors in office at the end of the financial year had any interest in ordinary shares and warrants of the Company and of its related corporations during the financial year.

DIRECTORS’ BENEFITS

Since the end of the previous financial year, no director of the Company has received or become entitled to receive any benefit (other than a benefit included in the aggregate amount of emoluments received or due and receivable by the directors as shown in the financial statements) by reason of a contract made by the Company or a related corporation with a director or with a firm of which the director is a member or with a company in which the director has a substantial financial interest, other than those related party transactions disclosed in the notes to the financial statements.

During and at the end of the financial year, no arrangements subsisted to which the Company is a party, with the objects of enabling directors of the Company to acquire benefits by means of the acquisition of shares in or debentures of the Company or any other body corporate.


DIRECTORS’ REPORT (cont’d)FOR THE FINANCIAL YEAR ENDED 30 JUNE 2013

OTHER STATUTORY INFORMATION

Before the financial statements of the Group and of the Company were made out, the directors took reasonable steps:

(i) to ascertain that proper action had been taken in relation to the writing off of bad debts and the making of allowance for doubtful debts and satisfied themselves that all known bad debts had been written off and that adequate allowance had been made for doubtful debts, and

(ii) to ensure that any current assets which were unlikely to realise their value as shown in the accounting records in the ordinary course of business had been written down to an amount which they might be expected to realise.

At the date of this report, the directors are not aware of any circumstances:

(i) that would render the amount written off for bad debts or the amount of the allowance for doubtful debts in the Group and in the Company inadequate to any substantial extent, and

(ii) that would render the value attributed to the current assets in the financial statements of the Group and of the Company misleading, and

(iii) that would render any amount stated in the financial statements of the Group and of the Company misleading, and

(iv) which have arisen which render adherence to the existing methods of valuation of assets or liabilities of the Group and of the Company misleading or inappropriate.

At the date of this report, there does not exist:

(i) any charge on the assets of the Group and of the Company that has arisen since the end of the financial year which secures the liabilities of any other person, and

(ii) any contingent liability in respect of the Group and of the Company that has arisen since the end of the financial year.

No contingent liability or other liability of the Group and of the Company has become enforceable, or is likely to become enforceable, within the period of twelve months after the end of the financial year which, in the opinion of the directors, will or may substantially affect the ability of the Group and of the Company to meet their obligations as and when they fall due.

SIGNIFICANT EVENTS

Details of significant events are disclosed in Note 35 to the financial statements.

AUDITORS

The auditors, Grant Thornton, have expressed their willingness to continue in office.

Signed in accordance with a resolution of the Board of Directors:

....................................................................... .......................................................................Lim Chiow Hoo Lee Min HuatManaging Director Executive Director

Penang,

Date: 28 October 2013


DIRECTORS’ STATEMENT

We, Lim Chiow Hoo and Lee Min Huat, being two of the directors of Scope Industries Berhad state that in the opinion of the directors, the financial statements set out on pages 24 to 71 are properly drawn up in accordance with Financial Reporting Standards and the Companies Act, 1965 in Malaysia so as to give a true and fair view of the financial position of the Group and of the Company as at 30 June 2013 and of their financial performance and cash flows for the financial year then ended.

In the opinion of the Directors, the information set out on Note 36 on page 72 to the financial statements has been complied in accordance with the Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosures Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, issued by the Malaysian Institute of Accountants, and presented based on the format prescribed by Bursa Malaysia Securities Berhad.

Signed in accordance with a resolution of the Board of Directors:

....................................................................... .......................................................................Lim Chiow Hoo Lee Min Huat


STATUTORY DECLARATION

I, Lee Min Huat, the director primarily responsible for the financial management of Scope Industries Berhad do solemnly and sincerely declare that the financial statements set out on pages 24 to 72 are to the best of my knowledge and belief, correct and I make this solemn declaration conscientiously believing the same to be true and by virtue of the provisions of the Statutory Declarations Act, 1960.

Subscribed and solemnly declared by )the abovenamed at Penang, this 28th )day of October 2013. ) ....................................................................... Lee Min HuatBefore me,

.......................................................................Commissioner for Oaths


INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OFSCOPE INDUSTRIES BERHADReport on the Financial Statements

We have audited the financial statements of Scope Industries Berhad, which comprise the statements of financial position as at 30 June 2013 of the Group and of the Company, and the statements of comprehensive income, statements of changes in equity and statements of cash flows of the Group and of the Company for the financial year then ended, and a summary of significant accounting policies and other explanatory notes, as set out on pages 24 to 71.

Directors’ Responsibility for the Financial Statements

The directors of the Company are responsible for the preparation of financial statements so as to give a true and fair view in accordance with Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia. The directors are also responsible for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with approved standards on auditing in Malaysia. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on our judgement, including the assessment of risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity’s preparation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the financial statements give a true and fair view of the financial position of the Group and of the Company as at 30 June 2013 and of its financial performance and cash flows for the financial year then ended in accordance with Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia.

Report on Other Legal and Regulatory Requirements

In accordance with the requirements of the Companies Act, 1965 in Malaysia, we also report the following:

(a) In our opinion, the accounting and other records and the registers required by the Act to be kept by the Company and its subsidiaries of which we have acted as auditors have been properly kept in accordance with the provisions of the Act,

(b) We have considered the accounts and the auditors’ report of a subsidiary of which we have not acted as auditors, which are indicated in Note 6 to the financial statements,

(c) We are satisfied that the accounts of the subsidiaries that have been consolidated with the Company’s financial statements are in form and content appropriate and proper for the purposes of the preparation of the financial statements of the Group and we have received satisfactory information and explanations required by us for those purposes, and

(d) The auditors’ reports on the accounts of the subsidiaries did not contain any qualification or any adverse comment made under Section 174(3) of the Act.


INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OFSCOPE INDUSTRIES BERHAD (cont’d)

Other Reporting Responsibilities

The supplementary information set out in Note 36, on page 72 is disclosed to meet the requirement of Bursa Malaysia Securities Berhad and is not part of the financial statements. The directors are responsible for the preparation of the supplementary information in accordance with Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants (“MIA Guidance”) and the directive of Bursa Malaysia Securities Berhad. In our opinion, the supplementary information is prepared, in all material respects, in accordance with the MIA Guidance and the directive of Bursa Malaysia Securities Berhad.

Other Matters

This report is made solely to the members of the Company, as a body, in accordance with Section 174 of the Companies Act, 1965 in Malaysia and for no other purpose. We do not assume responsibility to any other person for the content of this report.

Grant Thornton Yap Soon HinNo. AF: 0042 No. 947/03/15 (J)Chartered Accountants Chartered Accountant Penang



STATEMENTS OF FINANCIAL POSITIONAS AT 30 JUNE 2013

GROUP COMPANY2013 2012 2013 2012

NOTE RM RM RM RMASSETSNon-current assetsProperty, plant and equipment 4 89,188,362 22,305,803 31,571 16,171 Biological assets 5 8,161,910 - - - Investment in subsidiaries 6 - - 65,790,182 18,882,884 Investment in associates 7 - 1,654,097 - - Other investments 8 536,883 889,400 536,883 889,400 Goodwill 9 34,965,796 - - -

132,852,951 24,849,300 66,358,636 19,788,455

Current assetsInventories 10 1,993,008 1,512,498 - - Trade receivables 11 2,373,132 1,880,879 - - Other receivables, deposits and prepayments 12 433,852 2,269,555 29,312 2,025,380 Amount due from subsidiaries 13 - - 24,426,899 13,340,135 Tax recoverable 55,073 - 2,762 - Cash and cash equivalents 14 4,781,844 7,129,245 3,775,296 6,005,905

9,636,909 12,792,177 28,234,269 21,371,420

TOTAL ASSETS 142,489,860 37,641,477 94,592,905 41,159,875

EQUITY AND LIABILITIESEquity attributable to equity holders of the CompanyShare capital 15 50,048,443 29,498,182 50,048,443 29,498,182 Reserves 16 60,095,152 9,702,894 32,092,771 9,702,894 (Accumulated losses)/Retained profits 17 (5,498,391) (2,937,233) 1,620,965 1,576,194

104,645,204 36,263,843 83,762,179 40,777,270 Non-controlling interests 6,780,289 - - - Total equity 111,425,493 36,263,843 83,762,179 40,777,270

Non-current liabilitiesBorrowings 18 726,778 - - - Deferred tax liabilities 19 15,434,063 - - - Other payable 21 10,612,862 - 10,612,862 -

26,773,703 - 10,612,862 -

Current liabilitiesTrade payables 20 2,716,782 505,969 - - Other payables and accruals 21 712,914 364,243 217,864 75,427 Amount due to a subsidiary 13 - - - 295,190 Borrowings 18 751,688 392,380 - - Provision for taxation 109,280 115,042 - 11,988

4,290,664 1,377,634 217,864 382,605 Total liabilities 31,064,367 1,377,634 10,830,726 382,605

TOTAL EQUITY AND LIABILITIES 142,489,860 37,641,477 94,592,905 41,159,875

The notes set out on pages 30 to 71 form an integral part of these financial statements.


STATEMENTS OF COMPREHENSIVE INCOMEFOR THE FINANCIAL YEAR ENDED 30 JUNE 2013


GROUP COMPANYNOTE 2013 2012 2013 2012

RM RM RM RM

Revenue 22 25,234,452 18,386,948 3,089,258 8,706,684

Cost of sales (24,412,089) (15,440,879) - -

Gross profit 822,363 2,946,069 3,089,258 8,706,684

Other income 112,681 96,101 - - Administrative expenses (4,627,867) (2,078,940) (2,623,720) (272,370)

Operating (loss)/ profit (3,692,823) 963,230 465,538 8,434,314

Finance costs (94,243) (70,056) - -

Share of results of associates - (148,052) - -

(Loss)/Profit before taxation 23 (3,787,066) 745,122 465,538 8,434,314

Taxation 24 (250,956) (155,984) (420,767) (862,488)

(Loss)/Profit for the year (4,038,022) 589,138 44,771 7,571,826

Other comprehensive income/(loss), net of tax: Fair value adjustment on available-for-sale financial assets 504,485 (405,800) 504,485 (405,800)

Total comprehensive (loss)/income for the year (3,533,537) 183,338 549,256 7,166,026

Net (loss)/profit attributable to:Equity holders of the Company (2,561,158) 589,138 44,771 7,571,826 Non-controlling interests (1,476,864) - - -

(4,038,022) 589,138 44,771 7,571,826

Total comprehensive (loss)/income attributable to:Equity holders of the Company (2,056,673) 183,338 549,256 7,166,026 Non-controlling interests (1,476,864) - - -

(3,533,537) 183,338 549,256 7,166,026

(Loss)/Earnings per share attributable to equity holders of the Company (sen) - Basic 25 (0.67) 0.21

- Diluted 25 (0.57) 0.21


CONSOLIDATED STATEMENT OF CHANGES IN EQUITYFOR THE FINANCIAL YEAR ENDED 30 JUNE 2013

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STATEMENT OF CHANGES IN EQUITYFOR THE FINANCIAL YEAR ENDED 30 JUNE 2013

|----------------------- Non-distributable -----------------------|Share Share Warrants Discount on Fair Value Retained Total

Capital Premium Reserve Shares Reserve Profits EquityNOTE RM RM RM RM RM RM RM

2013

Balance at beginning 29,498,182 10,214,464 - - (511,570) 1,576,194 40,777,270

Transactions with owners:Issuance of shares 16 20,550,261 21,885,392 - - - - 42,435,653

Issuance of warrants 16 - - 4,234,878 (4,234,878) - - - Total transactions with

owners 20,550,261 21,885,392 4,234,878 (4,234,878) - - 42,435,653

Total comprehensive income for the year - - - - 504,485 44,771 549,256

Balance at end 50,048,443 32,099,856 4,234,878 (4,234,878) (7,085) 1,620,965 83,762,179

2012

Balance at beginning 26,818,182 9,363,934 - - (105,770) (4,654,723) 31,421,623

Transactions with owners:Issuance of shares pursuant

to private placement 16 2,680,000 938,000 - - - - 3,618,000

Share issuance expenses 16 - (87,470) - - - - (87,470)

Dividend 26 - - - - - (1,340,909) (1,340,909)Total transactions with

owners 2,680,000 850,530 - - - (1,340,909) 2,189,621

Total comprehensive income for the year - - - - (405,800) 7,571,826 7,166,026

Balance at end 29,498,182 10,214,464 - - (511,570) 1,576,194 40,777,270



STATEMENTS OF CASH FLOWSFOR THE FINANCIAL YEAR ENDED 30 JUNE 2013

GROUP COMPANY2013 2012 2013 2012

RM RM RM RM

CASH FLOWS FROM OPERATING ACTIVITIES(Loss)/ Profit before taxation (3,787,066) 745,122 465,538 8,434,314 Adjustments for: Addition/(Reversal) of allowance for slow moving inventories 1,997 (13,277) - - Amortisation of biological assets 466,230 - - - Bad debts - 5,404 - - Depreciation 4,502,413 3,810,494 3,508 - Dividend income (30,025) (20,800) (2,928,025) (8,553,800) (Gain)/Loss on disposal of property, plant and equipment (13,292) 123,117 - - Impairment loss on investment in a subsidiary - - 295,000 - Interest expense 94,243 70,056 - - Interest income (185,402) (155,065) (161,233) (152,884) Investment in an associate written off - 59,118 - - Loss on disposal of investment in an associate 34,042 - - - Loss on disposal of other investments 321,564 - 321,564 - Property, plant and equipment written off 1,325 217 - - Share of results of associates - 148,052 - - Surplus arising from liquidation of an associate - (51,000) - - Unrealised (gain)/loss on foreign exchange (1,214) 1,573 - -

Operating profit/(loss) before working capital changes 1,404,815 4,723,011 (2,003,648) (272,370)Increase in inventories (446,672) (25,333) - - (Increase)/Decrease in receivables (72,970) (1,373,170) 1,996,068 (2,025,380)Increase/(Decrease) in payables 1,616,156 (895,292) 142,437 (38,177)

Cash generated from/(used in) operations 2,501,329 2,429,216 134,857 (2,335,927)Dividend received 30,025 20,800 2,525,525 7,708,550 Income tax paid (368,583) (50,696) (33,017) - Income tax refund - 335,807 - 14,349 Interest paid (94,243) (70,056) - -

Net cash from operating activities 2,068,528 2,665,071 2,627,365 5,386,972

CASH FLOWS FROM INVESTING ACTIVITIESInterest received 185,402 155,065 161,233 152,884 Proceeds from disposal of investment in an associate 1,620,055 - - - Proceeds from disposal of other investments 860,242 - 860,242 - Proceeds from disposal of property, plant and equipment 35,600 160,928 - - Purchase of other investments (324,804) - (324,804) - Purchase of investment in subsidiaries - - (3,290,000) -

(1) Net cash outflow on acquisition of subsidiaries (3,195,112) - - - Purchase of biological assets (1,346,738) - - -

(2) Purchase of property, plant and equipment (1,278,332) (595,207) (18,908) (16,171)Net cash (used in)/from investing activities (3,443,687) (279,214) (2,612,237) 136,713

Balance carried forward (1,375,159) 2,385,857 15,128 5,523,685



STATEMENTS OF CASH FLOWS (cont’d)FOR THE FINANCIAL YEAR ENDED 30 JUNE 2013

GROUP COMPANY2013 2012 2013 2012

RM RM RM RM

Balance brought forward (1,375,159) 2,385,857 15,128 5,523,685

CASH FLOWS FROM FINANCING ACTIVITIESAdvance to subsidiaries' account - - (2,245,737) (5,438,300)Dividend paid - (1,340,909) - (1,340,909)Payment of finance lease (933,476) (664,244) - - Payment of private placement expenses - (87,470) - (87,470)Proceeds from issuance of shares pursuant to private placement - 3,618,000 - 3,618,000 Repayment to a director (300) - - - Repayment of term loans (111,104) (666,672) - - Net cash (used in)/from financing activities (1,044,880) 858,705 (2,245,737) (3,248,679)

NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS (2,420,039) 3,244,562 (2,230,609) 2,275,006

CASH AND CASH EQUIVALENTS AT BEGINNING 7,129,245 3,884,683 6,005,905 3,730,899

CASH AND CASH EQUIVALENTS AT END 4,709,206 7,129,245 3,775,296 6,005,905

Represented by: Short term money market deposit with a

licensed bank 500,000 - - - Fixed deposits with licensed banks 3,005,148 5,981,105 3,005,148 5,481,105 Cash and bank balances 1,204,058 1,148,140 770,148 524,800

4,709,206 7,129,245 3,775,296 6,005,905

Pioneer Glow Benua MutiaraSdn. Bhd. Sdn. Bhd. Total

RM RM RM2013

(1) Cash flows on acquisition of subsidiariesAdjusted net assets of acquired subsidiaries (Note 35) 27,523,844 20,972,193 48,496,037 Add: Goodwill (Note 9) 32,136,954 2,828,842 34,965,796 Less: Non-controlling interests (8,257,153) - (8,257,153)Total consideration paid 51,403,645 23,801,035 75,204,680 Add: Deed of assignment (Note 35) 9,136,217 - 9,136,217 Less: Cash and cash equivalents (52,775) (42,114) (94,889) Deferred consideration (Note 21) (10,612,861) - (10,612,861) Satisfied by way of issuance of Company's shares (Note 35) (46,637,000) (23,801,035) (70,438,035)

Net cash outflow on acquisition of subsidiaries 3,237,226 (42,114) 3,195,112

GROUP COMPANY2013 2012 2013 2012

RM RM RM RM (2) Purchase of property,plant and equipment

Total acquisition cost 2,449,532 595,207 18,908 16,171 Acquired under finance lease (1,171,200) - - - Total cash acquisition 1,278,332 595,207 18,908 16,171



NOTES TO THE FINANCIAL STATEMENTS30 JUNE 2013

1. CORPORATE INFORMATION General

The Company is a public limited liability company, incorporated and domiciled in Malaysia, and is listed on the ACE Market of Bursa Malaysia Securities Berhad.

The registered office of the Company is located at 51-13-A, Menara BHL Bank, Jalan Sultan Ahmad Shah, 10050 Penang.

The principal place of business of the Company is located at Lot 6181, Jalan Perusahaan 2, Kawasan Perindustrian Parit Buntar, 34200 Parit Buntar, Perak.

The financial statements were authorised for issue by the Board of Directors in accordance with a resolution of the directors on 28 October 2013.

Principal Activities

The principal activity of the Company is investment holding. The principal activities of the subsidiaries are disclosed in Note 6 to the financial statements.

There have been no significant changes in the nature of these activities during the financial year.

2. BASIS OF PREPARATION

2.1 Statement of Compliance

The financial statements of the Group and of the Company have been prepared in accordance with applicable Financial Reporting Standards (“FRSs”) and the Companies Act, 1965 in Malaysia.

2.2 Basis of Measurement

The financial statements have been prepared on the historical cost basis other than as set out in the Note 3.

2.3 Functional and Presentation Currency

The financial statements are presented in Ringgit Malaysia (“RM”), which is also the Group’s and the Company’s functional currency.

2.4 Significant Accounting Estimates and Judgements

The preparation of financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised and in any future periods affected.

2.4.1 Judgements made in applying accounting policies

There are no significant areas of critical judgement in applying accounting policies that have any significant effect on the amount recognised in the financial statements.

2.4.2 Key sources of estimation uncertainty

The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below:

(i) Useful lives of depreciable assets

Plant and machinery are depreciated on a straight line basis over their estimated useful lives. Management estimates that the useful lives of the plant and machinery is 10 years. Changes in the expected level of usage and technological developments could impact the economic useful lives and residual values of the plant and equipment. Therefore the future depreciation charges could be revised.

(ii) Useful lives of biological assets The costs of oil palm plantation development expenditure are amortised on a straight line basis over the

assets’ estimated economic useful lives of 10 to 20 years. The useful lives is within the commercial life span of oil palm trees. Technological developments could impact the productivity of the produce which could ultimately impact the economic useful lives and residual value of the biological assets. Therefore the future amortisation charges could be revised.


NOTES TO THE FINANCIAL STATEMENTS (cont’d)30 JUNE 2013

2. BASIS OF PREPARATION (cont’d)

2.4 Significant Accounting Estimates and Judgements (cont’d)

2.4.2 Key sources of estimation uncertainty (cont’d)

(iii) Impairment of plant and equipment and biological assets

The Group and the Company perform an impairment review as and when there are impairment indicators to ensure that the carrying value of the plant and equipment and biological assets does not exceed its recoverable amount. The recoverable amount represents the present value of the estimated future cash flows expected to arise from continuing operations. Therefore, in arriving at the recoverable amount, management exercises judgement in estimating the future cash flows, growth rate and discount rate.

(iv) Impairment of goodwill

An impairment loss is recognised for the amount by which the asset’s or cash-generating unit’s carrying amount exceeds its recoverable amount. To determine the recoverable amount, management estimates expected future cash flows from each cash-generating unit and determines a suitable interest rate in order to calculate the present value of those cash flows. In the process of measuring expected future cash flows management makes assumptions about future operating results. These assumptions relate to future events and circumstances. The actual results may vary, and may cause significant adjustments to the Group’s assets within the next financial year.

In most cases, determining the applicable discount rate involves estimating the appropriate adjustment to market risk and the appropriate adjustment to asset-specific risk factors.

Further details of the carrying value, the key assumptions applied in the impairment assessment of goodwill and sensitivity analysis to changes in the assumptions are in Note 9 to the financial statements.

(v) Inventories

The management reviews for damage, obsolete and slow-moving inventories. These reviews require judgement and estimates. Possible changes in these estimates could result in revisions to the valuations of inventories.

(vi) Impairment of receivables

The Group assesses at the end of each reporting period whether there is any objective evidence that a receivables is impaired. To determine whether there is objective evidence of impairment, the Group considers factors such as the probability of insolvency or significant financial difficulties of the debtor and default or significant delay in payments.

Where there is objective evidence of impairment, the amount and timing of future cash flows are estimated based on historical loss experience of assets with similar credit risk characteristics.

2.5 Adoption of Revision/Amendments to FRS

On 1 July 2012, the Group and the Company adopted the following revised and amendments to FRSs:

FRS 124 Related Party DisclosuresAmendments to FRS 1 Severe Hyperinflation and Removal of Fixed

Dates for First-time AdoptersAmendments to FRS 101 Presentation of Items of Other Comprehensive IncomeAmendments to FRS 112 Deferred Tax: Recovery of Underlying Assets

Adoption of the above standards did not have any significant effect on the financial statements of the Group and of the Company.



2.6 Standards Issued But Not Yet Effective

2.6.1 FRSs, Amendments/Improvements to FRSs Issued and IC Interpretations Issued But Not Yet Effective

The following are accounting standards and amendments that have been issued by the MASB but have not been early adopted by the Group and by the Company:

Effective for financial periods beginning on or after 1 January 2013

FRSsFRS 10 Consolidated Financial StatementsFRS 11 Joint ArrangementsFRS 12 Disclosure of Interests in Other EntitiesFRS 13 Fair Value MeasurementFRS 119 Employee BenefitsFRS 127 Separate Financial StatementsFRS 128 Investments in Associates and Joint VenturesAmendments/Improvements toFRS 1 First-time Adoption of Financial Reporting Standards – Government LoansFRS 7 Financial Instruments: Disclosures - Offsetting Financial Assets and Financial LiabilitiesFRS 101 Presentation of Financial Statements FRS 116 Property, Plant and Equipment FRS 132 Financial Instruments: Presentation FRS 134 Interim Financial Reporting Amendments to IC IntIC Int 20 Stripping Costs in the Production Phase of a Surface Mine

Effective for financial periods beginning on or after 1 January 2014Amendments to FRS 10,

FRS 12 and FRS 127 Investment EntitiesAmendments to FRS 132 Offsetting Financial Assets and LiabilitiesAmendments to FRS 136 Impairment of AssetsAmendments to FRS 139 Financial Instruments: Recognition and Measurement

Effective for financial periods beginning on or after 1 January 2015FRS 9 Financial Instruments

Unless otherwise described below, the new FRSs, IC Interpretations and Amendments to FRSs above are expected to have no significant impact on the financial statements of the Group and of the Company upon their initial application except for the changes in presentation and disclosures of financial information arising from the adoption of certain FRSs, IC Interpretations and Amendments to FRSs.

The Group and the Company are currently assessing the impact that the adoption of the standards below will have on their financial position and performance.

FRS 9 Financial Instruments

FRS 9 addresses the classification and measurement of financial instruments. FRS 9 defines criteria for financial assets that can be measured at amortised costs subsequent to its initial recognition and also requires changes of fair value attributable to credit risk change for financial liabilities to be presented in statement of other comprehensive income.

FRS 13 Fair Value Measurement

FRS 13 established a single source of guidance under FRS for all fair value measurements. FRS 13 does not change when an entity is required to use fair value, but rather provides guidance on how to measure fair value under FRS when fair value is required or permitted.

2.6.2 Malaysian Financial Reporting Standards Framework

On 19 November 2011, the Malaysian Accounting Standards Board (“MASB”) issued a new MASB approved accounting framework, the Malaysian Financial Reporting Standards (“MFRS Framework”).




2.6 Standards Issued But Not Yet Effective (cont’d)

2.6.2 Malaysian Financial Reporting Standards Framework (cont’d)

The MFRS Framework is to be applied by all entities other than private entities for annual period beginning on or after 1 January 2012, with the exception of entities that are within the scope of MFRS 141 Agriculture and IC Interpretation 15 Agreements for Construction of Real Estate, including its parent, significant investor and venturer (“Transitioning Entities”).

Transitioning Entities will be allowed to defer adoption of the new MFRS Framework. Consequently, adoption of the MFRS Framework by Transitioning Entities will be mandatory for annual periods beginning on or after 1 January 2015.

The Company and certain subsidiaries fall within the scope of Transitioning Entities and have opted to defer the adoption of MFRS Framework. However for subsidiaries whose financial statements are prepared in accordance with MFRS, were converted to FRSs for the purpose of the preparation of the Group financial statements.

In presenting its first MFRS financial statements, the Group and the Company will be required to restate the comparative financial statements to amounts reflecting the application of the MFRS Framework. The majority of the adjustments required on transition will be made, retrospectively, against opening retained profits.

The Group and the Company have not completed their quantification of the financial effects of the differences between FRSs and accounting standards under the MFRS Framework and are in the process of assessing the financial effects of the differences. Accordingly, the financial performance and financial position as disclosed in these financial statements for the financial year ended 30 June 2013 could be different if prepared under the MFRS Framework.

The Group and the Company expect to be in a position to fully comply with the requirements of the MFRS

Framework for the financial year ending 30 June 2016.

3. SIGNIFICANT ACCOUNTING POLICIES

3.1 Basis of Consolidation

(i) Subsidiaries

Subsidiaries are entities, including unincorporated entities, controlled by the Company. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases. Control exists when the Company has the ability to exercise its power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, potential voting rights that presently are exercisable are taken into account.

Investment in subsidiaries is measured in the Company’s statement of financial position at cost less any impairment losses, unless the investment is classified as held for sale or distribution.

(ii) Business combination

Business combinations are accounted for using the acquisition method from the acquisition date which is the date on which control is transferred to the Group.

Acquisition on or after 1 July 2011

For acquisitions on or after 1 July 2011, the Group measures the cost of goodwill at the acquisition date as:

• the fair value of the consideration transferred, plus• the recognised amount of any non-controlling interest in the acquiree, plus• if the business combination is achieved in stages, the fair value of the existing equity interest in the

acquiree, less• the net recognised amount at fair value of the identifiable assets acquired and liabilities assumed

When the excess is negative, a bargain purchase gain is recognised in profit or loss.

For each business combination, the Group elects whether to recognise non-controlling interest in the acquiree at fair value, or at the proportionate share of the acquiree’s identifiable net assets at the acquisition date.

Transaction costs, other than those associated with the issue of debt or equity securities, that the Group incurs in connection with a business combination are expensed as incurred.



3. SIGNIFICANT ACCOUNTING POLICIES (cont’d)

3.1 Basis of Consolidation (cont’d)

(iii) Acquisitions of non-controlling interests

The Group treats all changes in its ownership interest in a subsidiary that do not result in a loss of control as equity transactions between the Group and its non-controlling interest holders. Any difference between the Group’s share of net assets before and after the change, and any consideration received or paid, is adjusted to or against Group reserve.

(iv) Loss of control

Upon the loss of control of a subsidiary, the Group derecognises the assets and liabilities of the subsidiary, any non-controlling interests and the other components of equity related to the subsidiary. Any surplus or deficit arising on the loss of control is recognised in profit or loss. If the Group retains any interest in the previous subsidiary, then such interest is measured at fair value at the date that control is lost. Subsequently it is accounted for as an equity accounted investee or as an available-for sale financial asset depending on the level of influence retained.

(v) Non-controlling interests Non-controlling interests at the end of the reporting period, being the equity in a subsidiary not attributable

directly or indirectly to the equity holders of the Company, are presented in the consolidated statement of financial position and statement of changes in equity within equity, separately from equity attributable to the owners of the Company. Non-controlling interests in the results of the Group is presented in the consolidated statement of comprehensive income as an allocation of the profit or loss and the comprehensive income for the year between non-controlling interests and the owners of the Company.

Losses applicable to the non-controlling interests in a subsidiary are allocated to the non-controlling interests even if doing so causes the non-controlling interests to have a deficit balance.

(vi) Transactions eliminated on consolidation

Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group transactions, are eliminated in preparing the consolidated financial statements.

3.2 Property, Plant and Equipment

Property, plant and equipment are initially stated at cost less accumulated depreciation and accumulated impairment losses.

Property, plant and equipment are depreciated on the straight line method to write off the cost of each asset to its

residual value over its estimated useful life at the following annual rates:

Long leasehold land Amortised over lease period of 67 to 87 years Short leasehold land Amortised over lease period of 30 to 40 years Buildings 2% -10% Plant and machinery 10% Renovation and electrical installation 10% Air conditioners 10% Office equipment, furniture and fittings 10% Motor vehicles 10% - 20%

Long leasehold land refers to land with remaining lease period in excess of fifty years whilst short leasehold land refers to land with remaining lease period of less than fifty years determined as at the end of the reporting period.

Depreciation on capital work in progress commences when the assets are ready for their intended use.

The residual value, useful life and depreciation method are reviewed at the end of each reporting period to ensure that the amount, method and period of depreciation are consistent with previous estimates and the expected pattern of consumption of the future economic benefits embodied in the items of property, plant and equipment.

Upon the disposal of an item of property, plant and equipment, the difference between the net disposal proceeds and its carrying amount is recognised in profit or loss.




3.3 Biological assets

New planting and replanting expenditure incurred on land clearing, development and upkeep of immature oil palms (including interest incurred) during the pre-maturity period (pre-cropping costs) is capitalised under biological assets and is not amortised. Upon maturity, all subsequent maintenance expenditure is charged to profit or loss and the capitalised expenditure is amortised on a straight line basis over 10 to 20 years.

3.4 Investment in Associates

An associate is an entity, including unincorporated entity, in which the Group has significant influence, but not control, over the financial and operating policies.

Investments in associates are accounted for in the consolidated financial statements using the equity method less any impairment losses, unless it is classified as held for sale or distribution. The cost of the investment includes transaction costs. The consolidated financial statements include the Group’s share of the profit or loss and other comprehensive income of the associates, after adjustments if any, to align the accounting policies with those of the Group, from the date that significant influence commences until the date that significant influence ceases.

When the Group’s share of losses exceeds its interest in an associate, the carrying amount of that interest including any long-term investments is reduced to zero, and the recognition of further losses is discontinued except to the extent that the Group has an obligation or has made payments on behalf of the associate.

Unrealised gains arising from transactions with associates are eliminated against the investment to the extent of the Group’s interest in the associates. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment.

Investment in associates are measured in the Company’s statement of financial position at cost less any impairment losses, unless the investment is classified as held for sale or distribution. The cost of investment includes transaction costs.

3.5 Leases

Finance Lease

In accordance with FRS 117 Leases, the economic ownership of a leased asset is transferred to the lessee if the lessee bears substantially all the risks and rewards related to the ownership of the leased asset. The related asset is then recognised at the inception of the lease at the fair value of the leased asset or, if lower, the present value of the lease payments plus incidental payments, if any. A corresponding amount is recognised as a finance leasing liability, irrespective of whether some of these lease payments are payable up-front at the date of inception of the lease. Leases of land and buildings are classified separately and are split into a land and a building element, in accordance with the relative fair values of the leasehold interests at the date the asset is recognised initially.

Depreciation methods and useful lives for assets held under finance lease agreements correspond to those applied to comparable assets which are legally owned by the Group. The corresponding finance leasing liability is reduced by lease payments less finance charges, which are expensed as part of finance costs. The interest element of leasing payments represents a constant proportion of the capital balance outstanding and is charged to profit or loss over the period of the lease.

Operating Lease All other leases are treated as operating leases. Payments on operating lease agreements are recognised as an

expense on a straight-line basis over the lease term. Associated costs, such as maintenance and insurance, are expensed as incurred.




3.6 Intangible Assets

Goodwill

Goodwill acquired in a business combination is initially measured at cost being the excess of the cost of business combination over the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities.

Goodwill is stated at cost less accumulated impairment losses. Goodwill is not amortised but instead, it is reviewed for impairment, annually or more frequently if events or changes in circumstances indicate that the carrying value may be impaired.

3.7 Impairment of Non-Financial Assets

The Group and the Company assess at the end of each reporting period whether there is an indication that an asset may be impaired.

For the purpose of impairment testing, recoverable amount (i.e. the higher of the fair value less cost to sell and value-in-use) is determined on an individual asset basis unless the asset does not generate cash flows that are largely independent of those from other assets. If this is the case, the recoverable amount is determined for the cash-generating units (“CGU”) to which the asset belongs.

If the recoverable amount of the asset (or CGU) is estimated to be less than its carrying amount, the carrying amount of the asset (or CGU) is reduced to its recoverable amount.

The difference between the carrying amount and recoverable amount is recognised as an impairment loss in the profit or loss except for assets that were previously revalued where the revaluation surplus was taken to other comprehensive income. In this case the impairment loss is also recognised in other comprehensive income up to the amount of any previous revaluation surplus.

An impairment loss for an asset is reversed if, and only if, there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognised. The carrying amount of this asset is increased to its revised recoverable amount, provided that this amount does not exceed the carrying amount that would have been determined (net of any accumulated amortisation or depreciation) had no impairment loss been recognised for the asset in prior years. A reversal of impairment loss for an asset is recognised in profit or loss unless the asset is measured at revalued amount, in which case the reversal is treated as a revaluation increase.

3.8 Inventories

Inventories are stated at the lower of cost and net realisable value.

Costs of all inventories are determined on the first-in, first-out basis.

The cost of inventories includes expenditure incurred in acquiring the inventories and other costs incurred in bringing them to their existing location and condition. In the case of finished goods and work-in-progress, cost includes direct labour and attributable production overheads.

Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale.

3.9 Financial Instruments

3.9.1 Initial recognition and measurement

A financial asset or a financial liability is recognised in the statement of financial position when, and only when, the Group and the Company become a party to the contractual provisions of the instrument.

A financial instrument is recognised initially, at its fair value plus, in the case of a financial instrument not at fair value through profit or loss, transactions costs that are directly attributable to the acquisition or issue of the financial instrument.

An embedded derivative is recognised separately from the host contract and accounted for as a derivative if, and

only if, it is not closely related to the economic characteristics and risks of the host contract and the host contract is not categorised at fair value through profit or loss. The host contract, in the event an embedded derivative is recognised separately, is accounted for in accordance with policy applicable to the nature of the host contract.




3.9 Financial Instruments (cont’d)

3.9.2 Financial instrument categories and subsequent measurement The Group and the Company categorise financial instruments as follows:

Financial assets

(i) Loans and receivables Loans and receivables category comprises debt instruments that are not quoted in an active market.

Financial assets categorised as loans and receivables are subsequently measured at amortised cost using the effective interest method.

Loans and receivables are classified as current assets, except for those having maturity dates later than 12 months after the end of the reporting period which are classified as non-current.

(ii) Available-for-sale financial assets Available-for-sale category comprises investment in equity and debt securities instruments that are not

held for trading.

Investments in equity instruments that do not have a quoted market price in an active market and whose fair value cannot be reliably measured are measured at cost. Other financial assets categorised as available-for-sale are subsequently measured at their fair values with the gain or loss recognised in other comprehensive income, except for impairment losses, foreign exchange gains and losses arising from monetary items and gains and losses of hedged items attributable to hedge risks of fair value hedges which are recognised in profit or loss. On derecognition, the cumulative gain or loss recognised in other comprehensive income is reclassified from equity into profit or loss. Interest calculated for a debt instrument using the effective interest method is recognised in profit or loss.

All financial assets, except for those measured at fair value through profit or loss, are subject to review for impairment.

Financial liabilities

All financial liabilities are subsequently measured at amortised cost.

Financial liabilities are classified as current liabilities, except for those having maturity dates later than 12 months after the end of the reporting period which are classified as non-current.

3.9.3 Financial guarantee contracts

A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due in accordance with the original or modified terms of a debt instrument.

Financial guarantee contracts are classified as deferred income and are amortised to profit or loss using a straight-line method over the contractual period or, when there is no specified contractual period, recognised in profit or loss upon discharge of the guarantee. When settlement of a financial guarantee contract becomes probable, an estimate of the obligation is made. If the carrying value of the financial guarantee contract is lower than the obligation, the carrying value is adjusted to the obligation amount and accounted for as a provision.




3.9 Financial Instruments (cont’d)

3.9.4 Derecognition

A financial asset or part of it is derecognised, when and only when the contractual rights to the cash flows from the financial asset expire or the financial asset is transferred to another party without retaining control or substantially all risks and rewards of the asset. On derecognition of a financial asset, the difference between the carrying amount and the sum of the consideration received (including any new asset obtained less any new liability assumed) and any cumulative gain or loss that had been recognised in equity is recognised in the profit or loss.

A financial liability or a part of it is derecognised when, and only when, the obligation specified in the contract is discharged or cancelled or expired. On derecognition of a financial liability, the difference between the carrying amount of the financial liability extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in profit or loss.

3.10 Impairment of Financial Assets

All financial assets (except for financial assets categorised as fair value through profit or loss) are assessed at the end of each reporting period whether there is any objective evidence of impairment as a result of one or more events having an impact on the estimated future cash flows of the asset. Losses expected as a result of future events, no matter how likely, are not recognised. For an investment in an equity instrument, a significant or prolonged decline in the fair value below its cost is an objective evidence of impairment.

An impairment loss in respect of loans and receivables and held-to-maturity investments is recognised in profit or loss and is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the asset’s original effective interest rate. The carrying amount of the asset is reduced through the use of an allowance account.

An impairment loss in respect of available-for-sale financial assets is recognised in profit or loss and is measured as the difference between the asset’s acquisition cost (net of any principal repayment and amortisation) and the asset’s current fair value, less any impairment loss previously recognised. Where a decline in the fair value of an available-for-sale financial asset has been recognised in other comprehensive income, the cumulative loss in other comprehensive income is reclassified from equity to profit or loss.

An impairment loss in respect of unquoted equity instrument that is carried at cost is recognised in profit or loss and is measured as the difference between the financial asset’s carrying amount and the present value of estimated future cash flows discounted at the current market rate of return for a similar financial asset.

Impairment losses recognised in profit or loss for an investment in an equity instrument classified as available-for-sale is not reversed through profit or loss.

If, in a subsequent period, the fair value of a debt instrument increases and the increase can be objectively related to an event occurring after the impairment loss was recognised in profit or loss, the impairment loss is reversed, to the extent that the asset’s carrying amount does not exceed what the carrying amount would have been had the impairment not been recognised at the date the impairment is reversed. The amount of the reversal is recognised in profit or loss.

3.11 Cash and Cash Equivalents

Cash comprises cash in hand, cash at bank and demand deposits. Cash equivalents are short term and highly liquid investments that are readily convertible to known amount of cash and which are subject to an insignificant risk of changes in value, against which bank overdraft balances, if any, are deducted.

3.12 Provisions

Provisions are recognised when the Group has a present obligation as a result of a past event and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate of the amount can be made. Provisions are reviewed at the end of each reporting period and adjusted to reflect the current best estimate. Where the effect of the time value of money is material, the amount of a provision is the present value of the expenditure expected to be required to settle the obligation.




3.13 Borrowing Costs

Borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset are capitalised during the period of time that is necessary to complete and prepare the asset for its intended use or sale. Capitalisation of borrowing costs commences when the activities to prepare the asset for its intended use or sale are in progress and the expenditures and borrowing costs are incurred. Borrowing costs are capitalised until the assets are substantially completed for their intended use or sale.

Other borrowing costs are expensed in the period in which they are incurred. Borrowing costs consist of interest and other costs that the Company incurred in connection with the borrowing of funds.

3.14 Income Recognition

Sale of goods

Revenue from sale of goods in the course of ordinary activities is measured at fair value of the consideration received or receivable, net of discount and returns. Revenue is recognised when the significant risks and rewards of ownership have been transferred to the customer.

Dividend income

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

Interest income

Interest income is recognised on an accrual basis using the effective interest method.

3.15 Employee Benefits

Short term benefits Wages, salaries, bonuses and social security contributions are recognised as an expense in the year in which the

associated services are rendered by employees of the Group. Short term accumulating compensated absences such as paid annual leave are recognised when services are rendered by employees that increase their entitlement to future compensated absences, and short term non-accumulating compensated absences such as sick leave are recognised when the absences occur.

Defined contribution plans

As required by law, companies in Malaysia make contributions to the national pension scheme, the Employees Provident Fund (“EPF”). Such contributions are recognised as an expense in the profit or loss as incurred.

3.16 Income Tax

Income tax expense comprises current and deferred tax. Current tax and deferred tax is recognised in profit or loss except to the extent that it relates to a business combination or items recognised directly in equity or other comprehensive income.

Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantively enacted by the end of the reporting period, and any adjustment to tax payable in respect of previous years.

Deferred tax is recognised using the liability method, providing for temporary differences between the carrying amounts of assets and liabilities in the statement of financial position and their tax bases. Deferred tax is not recognised for the following temporary differences: the initial recognition of goodwill, the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss. Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the end of the reporting period.

Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realised simultaneously.




3.16 Income Tax (cont’d)

A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which the temporary difference can be utilised. Deferred tax assets are reviewed at the end of each reporting period and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.

Unutilised reinvestment allowance and investment tax allowance, being tax incentives that is not a tax base of an asset, is recognised as a deferred tax asset to the extent that it is probable that the future taxable profits will be available against the unutilised tax incentive can be utilised.

3.17 Foreign Currency Translations

Assets and liabilities in foreign currencies at the end of reporting period are translated into Ringgit Malaysia at the rates of exchange ruling on that date. Transactions in foreign currencies during the financial year have been translated into Ringgit Malaysia at the rates of exchange ruling on transaction dates. Gains and losses on foreign exchange are included in profit or loss.

3.18 Equity instruments

3.18.1 Warrants

Warrants are classified as equity instruments and its value is allocated based on the Black-Scholes model upon issuance. The issuance of the ordinary shares upon exercise of warrants is treated as new subscription of ordinary shares for the consideration equivalent to the exercise price of the warrants.

Upon exercise of warrants, the proceeds are credited to share capital and share premium. The warrants reserve in relation to the unexercised warrants at the expiry of the warrants will be reversed.

3.18.2 Share Capital and Share Issuance Expenses

An equity instrument is any contract that evidences a residual interest in the assets of the Group and the Company after deducting all of its liabilities. Ordinary shares are equity instruments.

Share capital represents the nominal value of shares that have been issued. Dividends on ordinary shares are accounted for in shareholder’s equity as an appropriation of unappropriated profits and recognised as a liability in the period in which they are declared.

Share premium includes any premiums received upon issuance of share capital. Any transaction costs associated with the issuing shares are deducted from share premium, net of any related income tax benefits.

3.19 Segment Reporting

An operating segment is a component of the Group that engages in business activities from which it may earn revenue and incur expenses, including revenue and expenses that relate to transactions with any of the Group’s other components. An operating segment’s operating results are reviewed regularly by the chief operating decision maker, who in this case are the Executive Directors of the Group, to make decisions about resources to be allocated to the segment and assess its performance, and for which discrete financial information is available.

3.20 Contingencies

A contingent liability or asset is a possible obligation or asset that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of uncertain future events not wholly within the control of the Group and of the Company.

Contingent liabilities and assets are not recognised in the statements of financial position of the Group and of the Company.



4.PR

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4. PROPERTY, PLANT AND EQUIPMENT (cont'd)

RenovationRM

Airconditioners

RM

Off ice equipment,

furniture andfittings

RM

TotalRM

COMPANY

2013

At costBalance at beginning 16,171 - - 16,171 Additions 380 300 18,228 18,908

Balance at end 16,551 300 18,228 35,079

Accumulated depreciationCurrent charge 1,655 30 1,823 3,508

Carrying amount 14,896 270 16,405 31,571

2012

Additions/ Carrying amount 16,171 - - 16,171

GROUP

(i) The carrying amount of plant and machinery charged to a licensed bank as security for banking facilities granted to the Group was RM928,000.

(ii) The carrying amount of property, plant and equipment acquired under finance lease liabilities are as follows:

2013 2012

RM RM

Plant and machinery 37,125 1,481,256

Motor vehicles 1,988,238 -

2,025,363 1,481,256

The leased assets are pledged as security for the related finance lease liability (Note 18).



5. BIOLOGICAL ASSETS

GROUP2013 2012

RM RM

At costArising from acquisition of subsidiaries 7,281,402 -Additions 1,346,738 -

Balance at end 8,628,140 -

Amortisation charge 466,230 -

Carrying amount 8,161,910 -

Biological assets represent plantation development expenditure.

6. INVESTMENT IN SUBSIDIARIES

COMPANY2013 2012

RM RM

Unquoted shares, at cost 71,790,182 24,587,884

Less: Accumulated impairment loss Balance at beginning 5,705,000 5,705,000Additions 295,000 -

Balance at end (6,000,000) (5,705,000)

65,790,182 18,882,884

Details of the subsidiaries which are all incorporated in Malaysia are as follows:

Name of CompanyEffective

Equity Interest Principal Activities2013 2012

Direct Scope Manufacturers (M) Sdn. Bhd. 100% 100% Manufacturing and assembling of electronic

components and products.

Scope Sales & Services Sdn. Bhd. 100% 100% Investment holding and trading of electrical products.

Trans Industry Sdn. Bhd. ^ 100% 100% Strike off during the year.

Pioneer Glow Sdn. Bhd. 70% - Cultivation of oil palm.

Benua Mutiara Sdn. Bhd. # 100% - Cultivation of oil palm.



6. INVESTMENT IN SUBSIDIARIES (cont’d) 2013

On 19 July 2012, the Company acquired 7,420,000 ordinary shares of RM1 each which represent 70% equity interest in Pioneer Glow Sdn. Bhd. for a total consideration of RM28,700,000. Refer to Note 35 to the financial statements for details of the acquisition.

On 20 June 2013, the Company acquired 500,000 ordinary shares of RM1 each which represent 100% equity interest in Benua Mutiara Sdn. Bhd. for a total consideration of RM29,025,653. Refer to Note 35 to the financial statements for details of the acquisition.

^ Not required for audit as the company is in the process of striking-off.

# Not audited by Grant Thornton.

7. INVESTMENT IN ASSOCIATES

GROUP2013 2012

RM RM

Unquoted shares, at cost - 2,329,149Share of post-acquisition reserves - (675,052)

- 1,654,097

Details of the associates are as follows:

Place of EffectiveName of Company Incorporation Equity Interest Principal Activity

2013 2012

Paramit Scope Sdn. Bhd. Malaysia - 33.00% Under members’ voluntary winding up.

Dien Quang -Scope Joint Stock Company

Vietnam - 46.80% Manufacturing and assembling of electronic components and products.

The summarised financial information of the associates is as follow:

GROUP2013 2012

RM RM

Assets and LiabilitiesTotal assets - 6,496,281

Total liabilities - 2,961,511

ResultsRevenue - 3,636,757Profit for the year - 15,260

The above summarised financial information is based on the unaudited financial statements of the associates for the financial period ended 30 June 2012. The financial year end of Paramit Scope Sdn. Bhd. and Dien Quang-Scope Joint Stock Company are 30 September and 31 December respectively to conform with their holding company’s financial year end.



7. INVESTMENT IN ASSOCIATES (cont’d)

2013

Dien Quang-Scope Joint Stock Company

On 21 February 2013, a subsidiary of the Company, Scope Sales & Services Sdn. Bhd. (“SSSB”) entered into a Stock Transfer Agreement (“the Agreement”) with Dien Quang Lamp Joint Stock Company (“The Purchaser”) to dispose of 46.80% equity interest in Dien Quang-Scope Joint Stock Company comprising 1,182,603 ordinary shares of VND 10,000 each for a total cash consideration of VND 10,872,851,982 (RM1,620,055).

Under the terms of the Agreement, SSSB shall procure its holding company, Scope Industries Berhad (“Scope”) to reinvest the entire proceeds received from the disposal in shares of the Purchaser by way of acquisition from the open market. The Purchaser is listed on the Ho Chi Minh Stock Exchange. The shares purchased must be held for a period of 5 years from the date of the Agreement. Should Scope decide to dispose of the shares after the 5 year period, the Purchaser shall have the right of first refusal to buy back its own shares within 7 days after the expiry of the 5 year period. In the event the Purchaser does not buy back its own shares, then Scope shall have the right to sell the shares to any third party provided the disposal price must not be lower than the price offered to the Purchaser.

Paramit Scope Sdn. Bhd.

Paramit Scope Sdn. Bhd. was dissolved on 23 October 2012.

8. OTHER INVESTMENTSGROUP AND COMPANY

2013 2012RM RM

Available-for-sale financial assets Shares quoted in MalaysiaBalance at beginning 889,400 1,295,200Fair value adjustment 449,406 (405,800)Disposals (1,181,806) -

Balance at end 157,000 889,400

Shares quoted outside MalaysiaAdditions 324,804 -Fair value adjustment 55,079 -

Balance at end 379,883 -

536,883 889,400

Market value of shares quoted:In Malaysia 157,000 889,400Outside Malaysia 379,883 -

536,883 889,400

Analysis by currencies:Ringgit Malaysia 157,000 889,400Vietnamese Dong 379,883 -

536,883 889,400



9. GOODWILL

GROUP2013 2012

RM RM

Arising from acquisition of the following subsidiaries :- Pioneer Glow Sdn Bhd (Note 35(i)) 32,136,954 -- Benua Mutiara Sdn Bhd (Note 35(ii)) 2,828,842 -

34,965,796 -

Goodwill on consolidation arose from the acquisition of certain subsidiaries and has been allocated to its plantation operation as the cash-generating unit (“CGU”).

For annual impairment testing purposes, the recoverable amount of the CGU is determined based on its value-in-use, which applies a discounted cash flow model using cash flow projections based on financial budget and projections approved by management.

No impairment loss was required for the goodwill as its recoverable amount is in excess of its carrying amount.

The key assumptions on which the management has based on for the computation of value-in-use are as follows:

(i) Cash flow projections and growth rate

Management uses fifteen (15) year cash flow projections to derive the expected cash flows. The projection was determined based on past-experience, actual operating results and projected production of fresh fruit bunches (“FFB”) over the 15 year period. The 15 year projection used by the management is justified considering the expected life cycle of an oil palm tree of between 10 to 20 years.

Selling price of FFB was estimated to be between RM480 to RM600 per metric tonne over the 15 year period. The estimated selling price was derived based on past historical market price and management’s assessment of future trends in the industry.

(ii) Discount rate

The discount rate of 5% is applied to the cash flow projections. The discount rate was estimated based on the Group’s effective borrowing rate.

Sensitivity to changes in assumptions

A 10% decrease in the future planned revenues and an increase of 1% in the discount rate used would require an impairment loss on goodwill by RM7,884,000 and RM1,023,000 respectively.

10. INVENTORIES

GROUP2013 2012

RM RM

Raw materials 1,806,000 1,334,538Less: Allowance for slow moving inventories

Balance at beginning (30,172) (30,290)(Current year)/Reversal (2,312) 118Written off 21,141 -

Balance at end (11,343) (30,172)

Balance carried forward 1,794,657 1,304,366



10. INVENTORIES (cont’d)

GROUP2013 2012

RM RM

Balance brought forward 1,794,657 1,304,366

Work-in-progress - 7,018

Finished goods 154,416 233,092Less: Allowance for slow moving inventories

Balance at beginning (31,978) (45,137)Reversal 315 13,159

Balance at end (31,663) (31,978)

122,753 201,114

Consumables 75,598 -

1,993,008 1,512,498

Recognised in profit or loss:Allowance for slow moving inventories 1,997 (13,277)Inventories recognised as cost of sales 16,288,357 15,447,521

11. TRADE RECEIVABLES

GROUP

The trade receivables are non-interest bearing and are generally on 30 to 60 days (2012: 30 to 60 days) credit terms. They are recognised at their original invoice amounts which represent their fair values on initial recognition.

12. OTHER RECEIVABLES, DEPOSITS AND PREPAYMENTS

GROUP COMPANY2013 2012 2013 2012

RM RM RM RM

Other receivables 117,583 20,376 8,425 -Refundable deposits 181,107 172,577 20,887 19,887

* Non-refundable deposits 39,800 2,000,000 - 2,000,000Prepayments 95,362 76,602 - 5,493

433,852 2,269,555 29,312 2,025,380

Analysis by currencies:Ringgit Malaysia 421,703 2,265,831 20,887 2,025,380US Dollar 3,724 3,724 - -Vietnamese Dong 8,425 - 8,425 -

433,852 2,269,555 29,312 2,025,380

* Included herein is an amount of RM Nil (2012: RM2,000,000) paid to a third party as deposit for the acquisition of 70% equity interest in Pioneer Glow Sdn. Bhd. Please refer to Note 35 (i) to the financial statements.



13. AMOUNT DUE FROM/TO SUBSIDIARIES

COMPANY

The amount due from/to subsidiaries is non-trade related, unsecured, non-interest bearing and is repayable on demand.

14. CASH AND CASH EQUIVALENTS

GROUP COMPANY2013 2012 2013 2012

RM RM RM RM

Short term money market deposits with a licensed bank 500,000 - - -

Fixed deposits with licensed banks 3,077,786 5,981,105 3,005,148 5,481,105Cash and bank balances 1,204,058 1,148,140 770,148 524,800

4,781,844 7,129,245 3,775,296 6,005,905

Analysis by currencies:Ringgit Malaysia 4,308,987 7,118,266 3,319,795 6,005,905US Dollar 17,692 10,979 336 -Vietnamese Dong 455,165 - 455,165 -

4,781,844 7,129,245 3,775,296 6,005,905

Included in the fixed deposits is an amount of RM72,638 (2012: RM Nil) which are held on lien for banking facilities extended to a subsidiary.

Included in the cash and cash equivalents is an amount of RM1,295,251 (2012: RM Nil) representing the balance of the uninvested proceeds from the disposal of Dien-Quang Scope Joint Stock Company as disclosed in Note 7 to the financial statements.

The effective interest rates per annum and maturities as at the end of the reporting period are as follows:

GROUP COMPANY2013 2012 2013 2012

Short term money market deposits with a licensed bank- % per annum 2.05 to 2.10 - - -- Days 7 to 12 - - -

Fixed deposits with licensed banks- % per annum 3.00 to 3.15 3.05 to 3.30 3.15 3.05 to 3.30- Days 30 to 90 29 to 95 30 to 32 29 to 95



15. SHARE CAPITAL

Number of ordinaryshares of RM0.10 each Amount

2013 2012 2013 2012RM RM

Authorised:Balance at beginning 500,000,000 500,000,000 50,000,000 50,000,000Creation 1,500,000,000 - 150,000,000 -

Balance at end 2,000,000,000 500,000,000 200,000,000 50,000,000

Issued and fully paid:Balance at beginning 294,981,818 268,181,818 29,498,182 26,818,182Issuance pursuant to private placement - 26,800,000 - 2,680,000Issuance pursuant to acquisition of

subsidiaries 205,502,612 - 20,550,261 -

Balance at end 500,484,430 294,981,818 50,048,443 29,498,182

16. RESERVES

GROUP COMPANY2013 2012 2013 2012

RM RM RM RM

Non-distributable:Share premium (Note 16.1) 32,099,856 10,214,464 32,099,856 10,214,464Warrant reserve (Note 16.2) 4,234,878 - 4,234,878 -Discount on shares (Note 16.2) (4,234,878) - (4,234,878) -Fair value reserve (Note 16.3) (7,085) (511,570) (7,085) (511,570)Capital reserve (Note 16.4) 28,002,381 - - -

60,095,152 9,702,894 32,092,771 9,702,894

16.1 Share premium

2013 2012RM RM

Balance at beginning 10,214,464 9,363,934

Add: Issue of 26,800,000 ordinary shares at a premium of 0.035 sen per share - 938,000Issue of 89,400,000 ordinary shares at a premium of 0.05 sen per shares 4,470,000 -Issue of 116,102,612 ordinary shares at a premium of 0.15 sen per shares 17,415,392 -

Less: Share issuance expenses - (87,470)

Balance at end 32,099,856 10,214,464



16. RESERVES (cont’d)

16.2 Warrants reserve and Discount on shares The warrants reserve is in respect of the allocated fair value of the 118,596,363 warrants issued in the following manner:

(i) Issuance of 89,400,000 new ordinary shares of RM0.10 each at issue price of RM0.15 together with 59,600,000 warrants for acquisition of a subsidiary.

(ii) Issuance of 58,996,363 free warrants on the basis of two free warrants for every ten ordinary shares of RM0.10 each held by the existing shareholders of the Company.

The fair value allocated to the warrants reserve is derived by adjusting the proceeds of the above issuance to the fair value of the shares and warrants on a proportionate basis. The discount on shares is a reserve account that is created to preserve the par value of the ordinary shares.

Each warrant entitles the registered holder of warrant to subscribe for one new ordinary share in the Company at any time on or after 23 July 2012 up to the date of expiry on 22 July 2020, at an exercise price of RM0.15 per share or such adjusted price in accordance with the provisions in the Deed Poll dated 13 June 2012.

As at the end of the financial year ended 30 June 2013, no warrants were exercised.

16.3 Fair value reserve

Fair value adjustment reserve represents the cumulative fair value changes, net of tax, of available-for-sale financial assets until they are disposed of or impaired.

16.4 Capital reserve

Capital reserve relates to fair value adjustment to the shares issued for the acquisition of subsidiaries.

17. RETAINED PROFITS The Company has made an irrevocable election to move to a single tier system for the purpose of dividend distribution. As a

result, there are no longer any restrictions on the Company to frank the payment of dividends out of its entire retained profit as at end of the reporting period.

18. BORROWINGS

GROUP2013 2012

RM RM

Non-current liabilitiesFinance lease liabilities 726,778 -

Current liabilitiesFinance lease liabilities 751,688 281,276Term loan - 111,104

751,688 392,380

Total borrowings 1,478,466 392,380

The borrowings (except for finance lease liabilities) were secured by way of:

(i) Fixed charge on certain plant and machinery of a subsidiary; and(ii) Corporate guarantee of the Company.



18. BORROWINGS (cont’d)

A summary of the effective interest rates and the maturities of the borrowings are as follows:

Averageeffective More than one

interest rate Within year and lessper annum Total one year than two years

(%) RM RM RM

GROUP

2013

Finance lease liabilities 2.68 to 6.78 1,478,466 751,688 726,778

2012

Finance lease liability 4.00 281,276 281,276 -Term loan 6.80 111,104 111,104 -

19. DEFERRED TAX LIABILITIES

GROUP2013 2012

RM RM

Arising from acquisition of subsidiaries 15,545,928 -Transfer to profit or loss (111,865) -

15,434,063 -

The deferred tax liabilities are represented by taxable temporary differences arising from:

Property, plant and equipment 15,176,020 -Excess of capital allowances over depreciation 258,043 -

15,434,063 -

20. TRADE PAYABLES

GROUP2013 2012

RM RM

Analysis by currencies: Ringgit Malaysia 2,665,657 332,783US Dollar 9,654 24,688Singapore Dollar 41,471 148,498

2,716,782 505,969

The trade payables are non-interest bearing and are normally settled on 30 to 90 days (2012: 30 to 60 days) credit terms.



21. OTHER PAYABLES AND ACCRUALS

GROUP COMPANY2013 2012 2013 2012

RM RM RM RM

Non-current liabilitiesOther payable

(1) Deferred cash considerationLater than 1 year but not less than 2 years 2,469,357 - 2,469,357 -Later than 2 years but not less than 5

years 8,143,505 - 8,143,505 -

10,612,862 - 10,612,862 -

Current liabilities(2) Other payables 327,784 68,792 139,677 2,827

Accruals 385,130 295,451 78,187 72,600

712,914 364,243 217,864 75,427

GROUP

(1) Deferred cash consideration arose as part of the purchase consideration to satisfy the acquisition of a subsidiary (Note 35 (i)). It is measured and recorded at the present value of the consideration determined at RM10,612,862 as at the end of the reporting period.

The deferred cash consideration shall be paid to the vendors subsequent to the completion date of the sale and purchase agreement (“SPA”) in the following manner:

Payment timeframe(from completion date of SPA)

Deferred Cash Consideration Present Value

RM RM

At the end of 24 months 3,000,000 2,469,357At the end of 36 months 3,450,000 2,892,825At the end of 48 months 3,300,000 2,714,966At the end of 60 months 3,150,000 2,535,714

Total *12,900,000 10,612,862

* Inclusive of interest payment of 5% per annum on the outstanding deferred cash consideration after the first repayment in accordance with the terms and conditions of the SPA.

(2) Included herein was an amount of RM660 due to an associate of a subsidiary.




22. REVENUE

GROUP COMPANY2013 2012 2013 2012

RM RM RM RM

Gross dividend income from a subsidiary - - 2,898,000 8,533,000Gross dividend income from investments

quoted in Malaysia 21,600 20,800 21,600 20,800Gross dividend income from investments

quoted outside Malaysia 8,425 - 8,425 -Interest income 161,233 152,884 161,233 152,884Invoiced value of goods sold less returns and

discounts 25,043,194 18,213,264 - -

25,234,452 18,386,948 3,089,258 8,706,684

23. (LOSS)/PROFIT BEFORE TAXATION

This is arrived at:

GROUP COMPANY2013 2012 2013 2012

RM RM RM RM

After charging:

Allowance for slow moving inventories 1,997 - - -Amortisation of biological assets 466,230 - - -Auditors’ remuneration- Statutory audit 44,200 29,000 15,000 11,000- Other services 61,000 - 61,000 -Bad debts - 5,404 - -Depreciation 4,502,413 3,810,494 3,508 -

* Directors’ remuneration for non-executive directors 46,500 42,000 46,500 42,000

Interest expense 94,243 70,056 - -Impairment loss on investment in a

subsidiary - - 295,000 -Investment in an associate written off - 59,118 - -Loss on disposal of investment in an

associate 34,042 - - - Loss on disposal of other investments 321,564 - 321,564 -Loss on disposal of property, plant and

equipment 1,220 123,117 - -Property, plant and equipment written

off 1,325 217 - -Realised loss on foreign exchange 922 2,515 922 -Rental of machinery 33,337 31,579 - -Rental of premises 102,486 40,120 65,911 -

** Staff costs 7,090,191 5,905,152 31,000 28,000Unrealised loss on foreign exchange - 1,573 - -


23. (LOSS)/PROFIT BEFORE TAXATION (cont’d)

GROUP COMPANY2013 2012 2013 2012

RM RM RM RM

And crediting:

Gain on disposal of property plant and equipment 14,512 - - -

Gross dividend income from- a subsidiary - - 2,898,000 8,533,000

- investments quoted in Malaysia 21,600 20,800 21,600 20,800- investments quoted outside Malaysia 8,425 - 8,425 -Interest income 185,402 155,065 161,233 152,884Realised gain on foreign exchange 15,089 - - -Reversal of allowance for slow moving

inventories - 13,277 - -Surplus arising from liquidation of an

associate - 51,000 - -Unrealised gain on foreign exchange 1,214 - - -

* Directors’ remuneration for non-executive directors of the Company

Directors’ emoluments 10,500 6,000 10,500 6,000Directors’ fee 36,000 36,000 36,000 36,000

46,500 42,000 46,500 42,000

** Staff costs- Salaries, allowance, bonus and wages 6,641,660 5,526,822 31,000 28,000- EPF 391,127 328,611 - -- SOCSO 57,404 49,719 - -

7,090,191 5,905,152 31,000 28,000

Directors’ remuneration

Included in the staff costs of the Group and of the Company is directors’ emoluments as shown below:

GROUP COMPANY2013 2012 2013 2012

RM RM RM RM

Executive directors of the Company: - Salary and allowance 450,580 446,080 7,000 4,000- EPF 44,352 43,200 - -

494,932 489,280 7,000 4,000Directors’ fee 34,000 24,000 24,000 24,000

528,932 513,280 31,000 28,000Executive directors of subsidiaries: - Salary and allowance 84,800 83,500 - -- EPF 8,856 8,400 - -

93,656 91,900 - -Directors’ fee 15,000 - - -

108,656 91,900 - -

Total executive directors’ remuneration 637,588 605,180 31,000 28,000



24. TAXATION

GROUP COMPANY2013 2012 2013 2012

RM RM RM RM

Malaysian income tax:Based on results for the year- Current tax (384,000) (164,750) (416,500) (870,000)- Deferred tax 111,865 - - -

(272,135) (164,750) (416,500) (870,000)Over/(Under) provision of current tax in prior

years 21,179 8,766 (4,267) 7,512

(250,956) (155,984) (420,767) (862,488)

The reconciliation of tax expense of the Group and of the Company is as follows:

GROUP COMPANY2013 2012 2013 2012

RM RM RM RM

(Loss)/Profit before taxation (3,787,066) 745,122 465,538 8,434,314Less: Share of results of associates - 148,052 - -

(3,787,066) 893,174 465,538 8,434,314

Income tax at Malaysian statutory tax rate of 25% 946,767 (223,294) (116,385) (2,108,579)

Income not subject to tax 8,216 12,750 330,216 1,293,200Expenses not deductible for tax purposes (505,383) (44,470) (630,331) (54,621)Deferred tax assets not recognised (781,223) (130,253) - -Utilisation of unabsorbed tax losses and

capital allowances 3,685 58,342 - -Current year unabsorbed reinvestment

allowance 55,803 162,175 - -

(272,135) (164,750) (416,500) (870,000)Over/(Under) provision in prior years 21,179 8,766 (4,267) 7,512

(250,956) (155,984) (420,767) (862,488)



24. TAXATION (cont’d)

GROUP

The net deferred tax (assets)/liabilities which have not been recognised are represented by temporary differences arising from:

2013 2012RM RM

Property, plant and equipment (244,149) (294,134)Biological assets 34,381 -Unabsorbed tax losses (993,234) (334)Unabsorbed capital allowances (358,740) 58,342Unabsorbed reinvestment allowance 784,204 164,215

(777,538) (71,911)

The amount and future availability of unabsorbed tax losses, capital allowances and reinvestment allowance for which the related tax effects have not been accounted for at the end of the reporting period are as follows:

2013 2012RM RM

Unabsorbed tax losses 8,353,000 4,380,000Unabsorbed capital allowances 12,795,000 1,360,000Unabsorbed reinvestment allowance 16,374,000 19,502,000

The unabsorbed tax losses, capital allowances and reinvestment allowance are available to be carried forward for set-off against assessable income of a nature and amount sufficient for them to be utilised.

25. (LOSS)/EARNINGS PER SHARE

GROUP

(a) Basic (loss)/earnings per share Basic (loss)/earnings per share is calculated by dividing the loss attributable to owners of the parent by the weighted

average number of ordinary shares in issue during the financial year as follows:

2013 2012RM RM

(Loss)/Profit for the year attributable to equity holders of the Company (RM) (2,561,158) 589,138

Weighted average number of ordinary shares of RM 0.10 each issued shares at 1 July 276,111,681 268,181,818Effect of shares issued pursuant to private placement - 7,929,863

Effect of shares issued pursuant to acquisition of subsidiaries 107,360,353 -

Weighted average number of shares at 30 June 383,472,034 276,111,681

Basic (loss)/earnings per share (sen) (0.67) 0.21



25. (LOSS)/EARNINGS PER SHARE (cont’d)

(b) Diluted (loss)/earnings per share

The calculation of diluted (loss)/earnings per share was based on (loss)/profit attributed to equity holders of the Company and on the weighted average number of shares outstanding after adjustment for the effects of all dilutive potential ordinary shares as follows:

2013 2012RM RM

(Loss)/Profit for the year attributable to equity holders of the Company (RM) (2,561,158) 589,138

Weighted average number of ordinary shares above 383,472,034 276,111,681Effects on conversion of warrants 68,045,410 -

451,517,444 276,111,681

Diluted (loss)/earnings per share (sen) (0.57) 0.21 *

* There is no diluted earnings per share in previous financial year as the Company did not have any convertible financial instruments as at 30 June 2012.

26. DIVIDEND

GROUP AND COMPANY2013 2012

RM RM

In respect of the financial year ended 30 June 2011- A final single tier dividend of 0.5 sen - 1,340,909

27. FINANCIAL GUARANTEE (UNSECURED)

COMPANY2013 2012

RM RM

Corporate guarantee extended by the Company to financial institutions for credit facilities granted to a subsidiary as at the end of the reporting period are as follows:

- Limit 19,550,000 19,550,000

- Utilised - 111,104

The corporate guarantee does not have a determinable effect on the terms of the credit facilities due to the financial institutions requiring parent guarantee as a pre-condition for approving the credit facilities granted to a subsidiary. The actual terms of the credit facilities are likely to be the best indicator of “at market” terms and hence the fair value of the credit facilities are equal to the credit facilities amount received by the subsidiary. As such, there is no value on the corporate guarantee to be recognised in the financial statements.



28. SEGMENTAL INFORMATION

Segmental information is presented in respect of the Group’s business segments. The business segment is based on the Group’s management and internal reporting structure.

Business Segment

For management purposes, the Group is organised into manufacturing, plantation, trading and investment holding divisions. Inter-segment pricing is determined based on negotiated terms.

By business segments

Investment2013 Manufacturing Plantation Trading holding Elimination Total

RM RM RM RM RM Note RM

Revenue from external customers 21,178,945 3,805,004 59,245 191,258 - 25,234,452 Inter-segment revenue - - 35,685 2,898,000 (2,933,685) A -

Total revenue 21,178,945 3,805,004 94,930 3,089,258 (2,933,685) 25,234,452

Segment results 3,403,537 (4,961,865) (20,202) 304,305 (2,603,000) (3,878,225)Interest expense (12,175) (82,068) - - - (94,243)Interest income 14,980 9,189 - 161,233 - 185,402

Profit/(Loss) before taxation 3,405,342 (5,034,744) (20,202) 465,538 (2,603,000) (3,787,066)Taxation (344,554) 111,865 - (420,767) 402,500 (250,956)

Profit/(Loss) for the year 3,060,788 (4,922,879) (20,202) 44,771 (2,200,500) (4,038,022)

AssetsSegment assets 22,881,316 79,085,404 123,219 90,814,847 (55,251,843) 137,652,943 Tax recoverable - 55,073 - - - 55,073 Cash and cash equivalents 564,658 437,281 4,609 3,775,296 - 4,781,844

Total assets 23,445,974 79,577,758 127,828 94,590,143 (55,251,843) 142,489,860

LiabilitiesSegment liabilities 8,208,741 34,526,134 338,475 10,830,726 (24,427,455) 29,476,621 Borrowings - 1,478,466 - - - 1,478,466 Provision for taxation 98,292 - - 10,988 - 109,280

Total liabilities 8,307,033 36,004,600 338,475 10,841,714 (24,427,455) 31,064,367

Other informationCapital expenditure 141,299 3,636,621 - 18,908 (558) B 3,796,270 Amortisation of biological

assets - 466,230 - - - 466,230 Depreciation 3,095,386 1,403,519 - 3,508 - 4,502,413 Non-cash expenses/(income) other than depreciation 296,207 (14,512) (258,837) 616,564 (295,000) C 344,422



28. SEGMENTAL INFORMATION (cont’d)

By business segments

Investment2012 Manufacturing Trading holding Elimination Total

RM RM RM RM Note RM

Revenue from external customers 18,195,610 17,654 173,684 - 18,386,948 Inter-segment revenue - 6,642 8,533,000 (8,539,642) A -

Total revenue 18,195,610 24,296 8,706,684 (8,539,642) 18,386,948

Segment results 1,069,479 (157,796) 8,429,482 (8,533,000) 808,165 Interest expense (70,056) - - - (70,056)Interest income 2,181 - 152,884 - 155,065 Share of results of associates - - (148,052) - (148,052)

Profit/(Loss) before taxation 1,001,604 (157,796) 8,434,314 (8,533,000) 745,122 Taxation (139,783) 1,037 (862,488) 845,250 (155,984)

Profit/(Loss) for the year 861,821 (156,759) 7,571,826 (7,687,750) 589,138

AssetsSegment assets 26,013,446 1,863,025 33,499,873 (32,518,209) 28,858,135 Investment in associates - - 1,654,097 - 1,654,097 Cash and cash equivalents 1,122,555 785 6,005,905 - 7,129,245

Total assets 27,136,001 1,863,810 41,159,875 (32,518,209) 37,641,477

LiabilitiesSegment liabilities 11,774,036 2,347,134 370,617 (13,621,575) 870,212 Borrowings 392,380 - - - 392,380 Provision for taxation 103,054 - 11,988 - 115,042

Total liabilities 12,269,470 2,347,134 382,605 (13,621,575) 1,377,634

Other informationCapital expenditure 579,036 - 16,171 - B 595,207 Depreciation 3,810,494 - - - 3,810,494 Non-cash expenses other than depreciation 117,034 - 156,170 - C 273,204



28. SEGMENTAL INFORMATION (cont’d)

Notes to segment information:

A Inter-segment revenue are eliminated on consolidation.

B Additions to non-current assets consist of:

2013 2012RM RM

Property, plant and equipment 2,449,532 595,207Biological assets 1,346,738 -

3,796,270 595,207

C Other material non-cash expenses/(income) consist of the following items:

2013 2012RM RM

Addition/(Reversal) of allowance for slow moving inventories 1,997 (13,277)Bad debts - 5,404(Gain)/Loss on disposal of property, plant and equipment (13,292) 123,117Investment in an associate written off - 59,118Loss on disposal of investment in an associate 34,042 -Loss on disposal of other investments 321,564 -Property, plant and equipment written off 1,325 217Share of results of associates - 148,052Surplus arising from liquidation of an associate - (51,000)Unrealised (gain)/loss on foreign exchange (1,214) 1,573

344,422 273,204

Geographical segments

Revenue and non-current assets information based on the geographical location of customers are as follows:

Revenue2013 2012

RM RM

Malaysia 25,141,489 18,240,567Singapore 92,963 146,381

25,234,452 18,386,948

The Group’s non-current assets are maintained entirely in Malaysia. Information about major customer

The Group has a major customer under the manufacturing segment which contributed RM17,641,962 (2012: RM15,593,285) of the Group’s total revenue.



29. RELATED PARTY DISCLOSURES

(i) Related party transactions

GROUP COMPANY2013 2012 2013 2012

RM RM RM RM

Gross dividend income from a subsidiary - - 2,898,000 8,533,000

Sales of property, plant and equipment to certain directors of the Company - 27,801 - -

(ii) Compensation of key management personnel

The Group and the Company have no other members of key management personnel apart from the Board of Directors which compensation has been shown in Note 23.

Key management personnel are those persons including directors having authority and responsibility for planning, directing and controlling the activities of the Group and of the Company, directly or indirectly.

30. CAPITAL COMMITMENT

GROUP2013 2012

RM RM

Authorised and contracted for:- Acquisition of a subsidiary - 26,700,000Please refer to Note 35 for mode of payments

Authorised but not provided for:- Acquisition of property, plant and equipment 164,150 -



31. CATEGORIES OF FINANCIAL INSTRUMENTS

The table below provides an analysis of financial instruments categorised as loans and receivables (“L&R”), available-for-sale financial assets (“AFS”) and financial liabilities measured at amortised cost (“FL”).

Carryingamount L&R AFS FL

RM RM RM RMGROUP2013Financial assetsOther investments (Note 8) 536,883 - 536,883 -Trade receivables (Note 11) 2,373,132 2,373,132 - -Other receivables and refundable deposits

(Note 12) 298,690 298,690 - -Cash and cash equivalents (Note 14) 4,781,844 4,781,844 - -

7,990,549 7,453,666 536,883 -

Financial liabilitiesBorrowings (Note 18) 1,478,466 - - 1,478,466Trade payables (Note 20) 2,716,782 - - 2,716,782Other payables and accruals (Note 21) 11,325,776 - - 11,325,776

15,521,024 - - 15,521,024

2012Financial assetsOther investments (Note 8) 889,400 - 889,400 -Trade receivables (Note 11) 1,880,879 1,880,879 - -Other receivables and refundable deposits

(Note 12) 192,953 192,953 - -Cash and cash equivalents (Note 14) 7,129,245 7,129,245 - -

10,092,477 9,203,077 889,400 -Financial liabilitiesBorrowings (Note 18) 392,380 - - 392,380Trade payables (Note 20) 505,969 - - 505,969Other payables and accruals (Note 21) 364,243 - - 364,243

1,262,592 - - 1,262,592

COMPANY2013Financial assetsOther investments (Note 8) 536,883 - 536,883 -Other receivables and refundable deposits

(Note 12) 29,312 29,312 - -Amount due from subsidiaries (Note 13) 24,426,899 24,426,899 - -Cash and cash equivalents (Note 14) 3,775,296 3,775,296 - -

28,768,390 28,231,507 536,883 -

Financial liabilitiesOther payables and accruals (Note 21) 10,830,726 - - 10,830,726



31. CATEGORIES OF FINANCIAL INSTRUMENTS (cont’d)

Carryingamount L&R AFS FL

RM RM RM RM

COMPANY

2012

Financial assets

Other investments (Note 8) 889,400 - 889,400 -Other receivables and refundable deposits

(Note 12) 19,887 19,887 - -

Amount due from subsidiaries (Note 13) 13,340,135 13,340,135 - -

Cash and cash equivalents (Note 14) 6,005,905 6,005,905 - -

20,255,327 19,365,927 889,400 -

Financial liabilities

Other payables and accruals (Note 21) 75,427 - - 75,427

Amount due to a subsidiary (Note 13) 295,190 - - 295,190

370,617 - - 370,617

32. FINANCIAL RISK MANAGEMENT

The Group and the Company are exposed to a variety of financial risks arising from their operations and the use of financial instruments. The key financial risks include credit risk, liquidity risk, interest rate risk and foreign currency exchange risk. The Group operates within clearly defined guidelines that are approved by the Board and the Group’s policy is not to engage in speculative activities.

32.1 Credit risk

Credit risk refers to the risk that the counterparty will default on its contractual obligations resulting in financial loss to the Group and to the Company. The Group’s exposure to credit risk arises principally from its trade receivables whilst the Company’s exposure to credit risk arises principally from advances to its subsidiaries and financial guarantees provided to financial institutions in respect of credit facilities granted to a subsidiary.

32.1.1 Trade receivables

The Group extends to existing customers credit terms that range between 30 to 60 days. In deciding whether credit terms shall be extended, the Group will take into consideration factors such as the relationship with the customer, its payment history and credit worthiness. The Group subjects new customers to credit verification procedures. In addition, debt monitoring procedures are performed on an on-going basis with the result that the Group’s exposure to bad debts is not significant.

The maximum exposure to credit risk arising from trade receivables is represented by their carrying amount in the statement of financial position.




32. FINANCIAL RISK MANAGEMENT (cont’d)

32.1 Credit risk (cont’d)

32.1.1 Trade receivables (cont’d)

The ageing of trade receivables of the Group is as follows:

2013 2012RM RM

Not past due 2,346,828 1,877,019

1 to 30 days past due 25,459 2,68831 to 60 days past due - 24061 to 90 days past due - 932Past due more than 91 days 845 -

26,304 3,860

2,373,132 1,880,879

Trade receivables that are neither past due nor impaired are creditworthy customers with good payment record with the Group. None of the Group’s trade receivables that are neither past due nor impaired have been renegotiated during the financial year.

The Group has trade receivables amounting to RM26,304 (2012: RM3,860) that are past due as at the end of

the reporting period but not impaired as the management is of the view that these past due amounts will be collected in due course.

The Group has concentration of credit risk on 1 customer which represents 75% (2012: 77%) of total trade receivables.

32.1.2 Intercompany balances

The Company obtains and provides advances to its subsidiaries and monitors the result of the subsidiaries regularly.

The maximum exposure to credit risk is represented by their carrying amount in the statement of financial position.

As at the end of the reporting period, there was no indication that the advances to its subsidiaries are not recoverable. The Company does not specifically monitor the ageing of the advances to its subsidiaries.

32.1.3 Financial guarantees The Company provides unsecured corporate guarantee to financial institutions in respect of credit facilities

granted to a subsidiary.

The maximum exposure to credit risk is disclosed in Note 27, representing the outstanding credit facilities of the said subsidiary as at the end of the reporting period. The Company monitors on an ongoing basis the results of the subsidiary and repayments made by the subsidiary.



32.2 Liquidity risk

Liquidity risk is the risk that the Group will not be able to meet its financial obligations as and when they fall due. The Group actively manages its debt maturity profile, operating cash flows and availability of funding so as to ensure that all repayment and funding needs are met. As part of its overall prudent liquidity management, the Group maintains sufficient level of cash and cash equivalents to meet its working capital requirements.

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

Carryingamount

RM

Contractualcash flows

RM

Withinone year

RM

More thanone yearand less

thantwo years

RM

More thantwo years

and lessthan

five yearsRM

GROUP

2013

Interest bearing borrowings 1,478,466 1,581,894 822,467 759,427 -Trade payables 2,716,782 2,716,782 2,716,782 - -Other payables and accruals 11,325,776 13,612,914 712,914 3,000,000 9,900,000

15,521,024 17,911,590 4,252,163 3,759,427 9,900,000

2012

Interest bearing borrowings 392,380 404,579 404,579 - -Trade payables 505,969 505,969 505,969 - -Other payables and accruals 364,243 364,243 364,243 - -

1,262,592 1,274,791 1,274,791 - -

COMPANY

2013

Other payables and accruals 10,830,726 13,117,864 217,864 3,000,000 9,900,000

2012

Other payables and accruals 75,427 75,427 75,427 - -Intercompany balances 295,190 295,190 295,190 - -

370,617 370,617 370,617 - -




32.3 Interest rate risk

The Group’s and the Company’s fixed rate deposits, borrowings and deferred cash consideration are exposed to a risk of change in their fair value due to changes in interest rates whilst the Group’s and the Company’s floating rate borrowings are exposed to a risk of change in cash flows due to changes in interest rates.

The interest rate profile of the Group’s and the Company’s interest-bearing financial instruments based on the carrying amount as at the end of the reporting period is as follows:

GROUP COMPANY2013 2012 2013 2012

RM RM RM RM

Fixed rate instrumentsFinancial assets 3,577,786 5,981,105 3,005,148 5,481,105Financial liabilities 12,091,328 281,276 10,612,862 -

Floating rate instrumentsFinancial liabilities - 111,104 - -

Fair value sensitivity analysis for fixed rate instruments

The Group and the Company do not account for any fixed rate financial assets and financial liabilities at fair value through profit or loss, and the Group and the Company do not designate derivatives as hedging instruments under a fair value hedge accounting model. Therefore, a change in interest rates at the end of the reporting period would not affect profit or loss.

Cash flow sensitivity analysis for variable rate instruments

Assuming all the variables remain constant, an increase of 25 basis point will not have a material impact on the financial results of the Company.

32.4 Foreign currency risk

The Group is exposed to foreign currency risk on sales and purchases that are denominated in currencies other than the functional currency of the Group entities. The Group also holds cash and bank balances denominated in foreign currency for working capital purposes. The currencies giving rise to this risk is US Dollar (“USD”), Singapore Dollar (“SGD”) and Vietnamese Dong (“VND”).

The Group’s exposure to foreign currency risk, based on carrying amounts as at the end of the reporting period is as follows:

2013 2012

USD VND SGD USD SGDRM RM RM RM RM

GROUP

Other receivables 3,724 8,425 - 3,724 -Cash and bank balances 17,692 455,165 - 10,979 -Trade payables (9,654) - (41,471) (24,688) (148,498)

Net exposure 11,762 463,590 (41,471) (9,985) (148,498)

COMPANY

Other receivables - 8,425 - - -Cash and bank balances 336 455,165 - - -

Net exposure 336 463,590 - - -




32.4 Foreign currency risk (cont’d)

Sensitivity analysis for foreign currency risk

Below demonstrates the sensitivity to a reasonably possible change in the foreign currencies exchange rates (against Ringgit Malaysia), with all other variables held constant, of the Group’s and the Company’s results. A 10% strengthening of the RM against the following currencies at the end of the reporting period would have increased (loss)/profit before taxation by the amount shown below and a corresponding decrease would have an equal but opposite effect.

GROUP2013 2012

RM RM

USD (1,176) 999VND (46,359) -SGD 4,147 14,850

Increase in (loss)/profit before taxation (43,388) 15,849

COMPANY2013 2012

RM RM

USD (34) -VND (46,359) -

Decrease in profit before taxation (46,393) -

33. CAPITAL MANAGEMENT

The primary objective of the Group’s capital management policy remains unchanged and is to maintain a strong capital base to support its businesses and maximise shareholders’ value.

The Group manages its capital structure and makes adjustments to it in the light of changes in economic conditions or expansion of the Group. The Group may adjust the capital structure by issuing new shares, returning capital to shareholders or adjusting the amount of dividends to be paid to shareholders or sell assets to reduce debts.

34. FAIR VALUE OF FINANCIAL INSTRUMENTS

GROUP AND COMPANY

The carrying amounts of financial assets (other than investments in quoted equity instruments) and financial liabilities of the Group and of the Company approximation their fair values, either due to their short-term nature or that they are floating rate instruments that are re-priced to market interest rates on or near the end of the reporting period.

The fair value of investments in quoted equity instruments is its quoted market price at 30 June 2013. The fair value of the investments is disclosed in Note 8.



34. FAIR VALUE OF FINANCIAL INSTRUMENTS (cont’d)

34.1 Fair value hierarchy

The table below analyses financial instruments that are measured subsequent to initial recognition at fair value, grouped into Levels 1 to 3 based on the degree to which the fair value is observable.

Level 1 Quoted prices (unadjusted) in active markets for identical assets and liabilities.

Level 2 Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

Level 3 Inputs for the asset and liability that are not based on observable market data (unobservable inputs).

Level 1 Level 2 Level 3 TotalRM RM RM RM

2013Available-for-sale financial assetsInvestment in quoted equity instruments 536,883 - - 536,883

2012Available-for-sale financial assetsInvestment in quoted equity instruments 889,400 - - 889,400

35. SIGNIFICANT EVENTS

(i) Pioneer Glow Sdn. Bhd. (“Pioneer”)

On 19 July 2012, the Company acquired 7,420,000 ordinary shares of RM1 each in Pioneer, representing 70% of the issued and paid-up share capital of Pioneer, for a total purchase consideration of RM28,700,000 satisfied in the following manner:

No. Consideration RM

1. Cash 2,000,0002. Issuance of 89,400,000 new shares in the Company at an issue price of RM0.15 per

share (“Consideration Shares”) together with 59,600,000 warrants in the Company (“Consideration Warrants”) 13,410,000

3. Deferred cash payment over a period of 5 years 13,290,00028,700,000

The above proposals were approved by the shareholders in an extraordinary general meeting of the Company held on 28 June 2012 and the issuance of the Consideration Shares and Consideration Warrants were completed, listed and quoted on the ACE Market of Bursa Malaysia Securities Berhad on 23 July 2012.

The fair value of the purchase consideration is derived based on the following:

RM

Cash consideration 3,290,000Deferred cash consideration (1) 10,612,862Satisfied by way of issuance of Company’s shares (2) 46,637,000Deed of assignment (3) (9,136,217)

Total fair value of consideration transferred 51,403,645



35. SIGNIFICANT EVENTS (cont’d)

(i) Pioneer Glow Sdn. Bhd. (“Pioneer”) (cont’d)

(1) Refer to Note 21 to the financial statements for details of the deferred cash consideration.

(2) For the purpose of computing the fair value of the purchase consideration, a fair value of RM0.365 per share and RM0.235 per warrant (being the published price of the shares at the date of exchange to the vendor on 23 July 2012) is allocated to the Consideration Shares and Consideration Warrants.

(3) Under the terms of the sale and purchase agreement, a deed of assignment is executed whereby the debts owing by Pioneer to the vendor is assigned to the Company.

The following are the carrying amount of the assets and liabilities which is also the fair value on acquisition date:

RM

AssetsProperty, plant and equipment 42,572,472Biological assets 6,436,675Inventories 35,835Receivables 375,103Cash and cash equivalents 52,775

49,472,860

LiabilitiesBorrowings 933,385Deferred tax liabilities 9,117,000Payables 762,114Amount due to a director 300 Amount due to holding company 11,136,217

21,949,016

Net identifiable assets 27,523,844

Goodwill arising from acquisition:RM

Total fair value of consideration transferred 51,403,645Non-controlling interests 8,257,153Recognised amount at fair value of net identifiable assets acquired (27,523,844)

Goodwill (Note 9) 32,136,954




(ii) Benua Mutiara Sdn. Bhd. (“Benua”)

On 20 June 2013, the Company acquired 500,000 ordinary shares of RM1 each in Benua, representing 100% of the issued and paid-up share capital of Benua, for a total purchase consideration of RM29,025,653 satisfied by issuance of 116,102,612 new ordinary shares in the Company at an issue price of RM0.25 per share (“Consideration Shares”).

The issuance of Consideration Shares were completed, listed and quoted on the ACE Market of Bursa Malaysia Securities Berhad on 1 July 2013.

Total fair value of consideration transferred

The Company issued 116,102,612 new ordinary shares of RM0.10 each to the vendor at an issue price of RM0.25. For the purpose of computing the fair value of purchase consideration, a fair value of RM0.205 per share (being the published price of the shares at the date of exchange to the vendor on 1 July 2013) is allocated to the 116,102,612 ordinary shares issued.

The following are the carrying amount of the assets and liabilities which is also the fair value on acquisition date:

RM

AssetsProperty, plant and equipment 26,386,601Biological assets 844,727Receivables 208,477Tax recoverable 55,073Cash and cash equivalents 114,752

27,609,630

LiabilitiesBorrowings 26,081Deferred tax liabilities 6,428,928Payables 182,428

6,637,437

Net identifiable assets 20,972,193

Goodwill arising from acquisition:

Total fair value of consideration transferred 23,801,035Recognised amount at fair value of net identifiable assets acquired (20,972,193)

Goodwill (Note 9) 2,828,842




(iii) Matang Holdings Berhad (“Matang”)

On 19 November 2012, the Company announced the following :

(a) the Company entered into a business merger agreement (“BMA”) with Matang Holdings Berhad (“Matang”) for the transfer of the entire business and undertakings, including all assets and liabilities of Matang to the Company for a total consideration of RM145,000,000 (“Proposed Merger”).

(b) Proposed exemption under Para 16 PN9 of the Malaysian Code on Takeover and Mergers, 2010 to Matang and Parties Acting in concert with Matang from the obligation to extend a take-over offer for all the remaining ordinary shares of the Company of RM0.10 each not already held by them pursuant to the Proposed Merger; and

(c) Proposed change of name of Scope Industries Berhad to Matang Scope Berhad.

The Company and Matang had mutually agreed on 17 August 2013 to extend the time period of the BMA dated 19 November 2012 for a further period of 9 months from 19 August 2013.

As at the date of this report, the deal is still ongoing and the extension period was to facilitate further discussions and re-negotiation of the terms of the Proposed Merger. During the extension period, Matang shall have the right to negotiate and to explore with other parties to realise the value of its assets/shares.



SUPPLEMENTARY INFORMATION30 JUNE 2013

36. SUPPLEMENTARY INFORMATION DISCLOSED PURSUANT TO BURSA MALAYSIA SECURITIES BERHAD LISTING REQUIREMENTS

With the purpose of improving transparency, Bursa Malaysia Securities Berhad has on 25 March 2010, and subsequently on 20 December 2010, issued directives which require all listed corporations to disclose the breakdown of unappropriated profits or accumulated losses into realised and unrealised on group and company basis in the annual audited financial statements.

The breakdown of (accumulated losses)/retained profits as at the end of the reporting period has been prepared by the directors in accordance with the directives from Bursa Malaysia Securities Berhad stated above and the Guidance on Special Matter No. 1 - Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants are as follows:

GROUP COMPANY2013 2012 2013 2012

RM RM RM RM

Total (accumulated losses)/retained profits of the Company and its subsidiaries:

- Realised (2,405,564) 10,481,624 1,620,965 1,576,194- Unrealised (256,839) (1,573) - -

(2,662,403) 10,480,051 1,620,965 1,576,194Less: Consolidation adjustments (2,835,988) (12,742,232) - -

(5,498,391) (2,262,181) 1,620,965 1,576,194Total share of results of associates- Realised - (675,052) - -

Total (accumulated losses)/retained profits as per statements of financial position (5,498,391) (2,937,233) 1,620,965 1,576,194


NOTICE OF ANNUAL GENERAL MEETING

NOTICE IS HEREBY GIVEN THAT the Eleventh Annual General Meeting of the Company will be held at Bamboo Room, Scope Manufacturers (M) Sdn. Bhd., Lot 6181 Jalan Perusahaan 2, Kawasan Perindustrian Parit Buntar, 34200 Parit Buntar, Perak on Thursday, 21 November 2013 at 11:30 am for the following purposes:-

AGENDA

AS ORDINARY BUSINESS :

1. To receive the Audited Financial Statements of the Company for the financial year ended 30 June 2013 together with the Reports of the Directors and Auditors thereon.

2. To approve the payment of Directors’ fee of RM60,000-00 for the financial year ended 30 June 2013. Resolution 1

3. To re-elect Mr Lim Chiow Hoo as a Director who retires in accordance with Article 127 of the Company’s Articles of Association. Resolution 2

4. To re-elect Mr Tan Poh Heng as a Director who retires in accordance with Article 127 of the Company’s Articles of Association. Resolution 3

5. To re-appoint Messrs Grant Thornton as Auditors of the Company for the ensuing year and to authorise the Directors to fix their remuneration. Resolution 4

AS SPECIAL BUSINESS :

6. To consider and if thought fit, to pass with or without modifications the following resolutions:-

(i) ORDINARY RESOLUTIONAUTHORITY TO ISSUE SHARES

“That pursuant to Section 132D of the Companies Act, 1965, and subject to the approvals of the relevant Governmental and/or regulatory authorities, the Directors be and are hereby empowered to issue shares in the Company, at such time and upon such terms and conditions and for such purposes as the Directors may, in their absolute discretion deem fit, provided that the aggregate number of shares issued pursuant to this resolution in any one financial year does not exceed 10% of the issued share capital of the Company for the time being and that the Directors be and are also empowered to obtain the approval from Bursa Malaysia Securities Berhad for the listing of and quotation for the additional shares so issued and that such authority shall continue to be in force until the conclusion of the next Annual General Meeting of the Company.” Resolution 5

(ii) SPECIAL RESOLUTION PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION OF THE COMPANY“That the amendments to the Articles of Association of the Company contained in Appendix I be and are hereby approved.” Resolution 6

7. To transact any other business of which due notices shall have been given in accordance with the Companies Act, 1965.

By Order of the Board,

CHEE WAI HONG (MIA 17181)FOO LI LING (MAICSA 7019557)Company Secretaries

Penang

Date : 30 October 2013


NOTICE OF ANNUAL GENERAL MEETING (cont’d)

Notes :

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

2. The proxy form must be duly completed and deposited at the Registered Office of the Company, 51-13-A Menara BHL Bank, Jalan Sultan Ahmad Shah, 10050 Penang not less than forty-eight (48) hours before the time for holding the meeting.

3. A member shall be entitled to appoint more than one (1) proxy to attend and vote at the same meeting.

4. Where a member appoints two (2) or more proxies, the appointments shall be invalid unless he specifies the proportions of his holdings to be represented by each proxy.

5. If the appointor is a corporation, this form must be executed under its Common Seal or under the hand of its attorney.

6. Where a member of the Company is an authorised nominee as defined under the Securities Industry (Central Depositories) Act 1991 (“Central Depositories Act”), it may appoint at least one proxy in respect of each securities account it holds with ordinary shares of the Company standing to the credit of the said securities account.

7. Where a member of the Company is an exempt authorised nominee as defined under the Central Depositories Act which holds ordinary shares in the Company for multiple beneficial owners in one securities account (“Omnibus Account”), there shall be no limit to the number of proxies which the Exempt Authorised Nominee may appoint in respect of each Omnibus Account it holds.

8. For purpose of determining who shall be entitled to attend this meeting, the Company shall be requesting Bursa Malaysia Depository Sdn Bhd to make available to the Company pursuant to Article 77 of the Articles of Association of the Company and Paragraph 7.16(2) of the ACE Market Listing Requirements of Bursa Malaysia Securities Berhad, a Record of Depositors (“ROD”) as at 15 November 2013 and only a Depositor whose name appears on such ROD shall be entitled to attend, speak and vote at this meeting or appoint proxy to attend and/or speak and/or vote in his/her behalf.

Explanatory Notes on Special Business

Resolution 5 – Authority to issue sharesThe Ordinary Resolution proposed under item 6(i) above, if passed, primarily to renew the mandate to give authority to the Board of Directors of the Company to issue and allot shares in the Company up to an amount not exceeding 10% of the total issued capital of the Company for the time being for such purposes as the Directors consider would be in the best interest of the Company without convening a general meeting. This would avoid any delay and costs in convening a general meeting to specifically approve such an issue of shares. This authority, unless revoked or varied by the shareholders of the Company in general meeting, will expire at the conclusion of the next Annual General Meeting.

As at the date of this Notice, the Company has not issued any new shares pursuant to Section 132D of the Companies Act, 1965 under the general authority which was approved at the Tenth Annual General Meeting held on 28 November 2012 and which will lapse at the conclusion of the Eleventh Annual General Meeting to be held on 21 November 2013. A renewal of this authority is being sought at the Eleventh Annual General Meeting under proposed Resolution 5.

This authority if granted will provide flexibility to the Company for any possible fund raising activities, including but not limited to further placing of shares, for purpose of funding future investment project(s), working capital, acquisition(s) and/or settlement of banking facility(ies).

Resolution 6 – Proposed Amendments to the Articles of Association of the Company The Special Resolution proposed under item 6(ii) above, if passed, will give authority for the Company to amend its Articles of Association to be in line with the amendments to the ACE Market Listing Requirements of Bursa Malaysia Securities Berhad.


STATEMENT ACCOMPANYING NOTICE OF ANNUAL GENERAL MEETING(Pursuant to Rule 8.29(2) of the Listing Requirements of Bursa Malaysia Securities Berhad)

As at date of this notice, there are no individuals who are standing for election as Directors (excluding the above Directors who are standing for re-election) at this forthcoming Annual General Meeting.


“APPENDIX I“

PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION OF THE COMPANY

The existing Articles of Association of the Company is proposed to be amended in order to be in line with the Listing Requirements (for which the proposed amendments are highlighted in bold and the portion struck through are text deleted) as follows: -

Article No. Existing Articles Amended Articles

To amend the definition of

Article 2

‘Approved Market Place’ : means a stock exchange which is specified to be an approved market place in the Securities Industry (Central Depositories) Exemption Order 1998

Deleted.

To amend Article 49(2)

Closure of register

give notice of such intended closure to the KLSE at least 12 clear Market Days before the intended date of such closure including in such notice, such date, the reason for such closure and the address of the share registry at which documents will be accepted for registration;

Closure of register

give notice of such intended closure to the KLSE at least 10 12 clear Market Days before the intended date of such closure including in such notice, such date, the reason for such closure and the address of the share registry at which documents will be accepted for registration;

To amend Article 55

Transmission

(1) Where:

(a) the securities of the Company are listed on an Approved Market Place; and

(b) the Company is exempted from compliance with Section 14 of the Central Depositories Act or Section 29 of the Securities Industry (Central Depositories) (Amendment) (No.2) Act 1998, as the case may be, under the Rules in respect of such securities,

the Company shall, upon request of a securities holder, permit a transmission of securities held by such securities holder from the register of holders maintained by the registrar of the Company in the jurisdiction of the Approved Market Place (‘Foreign Register’), to the register of holders maintained by the registrar of the Company in Malaysia (‘Malaysian Register”) subject to the following conditions:

(i) there shall be no change in the ownership of such securities; and

(ii) the transmission shall be executed by causing such securities to be credited directly into the Securities Account of such securities holder.

(2) For the avoidance of doubt, the Company where it fulfils the requirements of paragraphs (a) and (b) of Article 55(1) shall not allow any transmission of securities from the Malaysian Register into the Foreign Register.

Transmission

(1) Where:

(a) the securities of the Company are listed on another stock exchange an Approved Market Place; and

(b) the Company is exempted from compliance with Section 14 of the Central Depositories Act or Section 29 of the Securities Industry (Central Depositories) (Amendment) (No.2) Act 1998, as the case may be, under the Rules in respect of such securities,

the Company shall, upon request of a securities holder, permit a transmission of securities held by such securities holder from the register of holders maintained by the registrar of the Company in the jurisdiction of the other stock exchange Approved Market Place (‘Foreign Register’), to the register of holders maintained by the registrar of the Company in Malaysia (‘Malaysian Register”) and vice versa subject to the following conditions:

(i) there shall be no change in the ownership of such securities; and

(ii) the transmission shall be executed by causing such securities to be credited directly into the Securities Account of such securities holder.

(2) For the avoidance of doubt, the Company where it fulfils the requirements of paragraphs (a) and (b) of Article 55(1) shall not allow any transmission of securities from the Malaysian Register into the Foreign Register.


LIST OF PROPERTIES

RegisteredOwner / Location

Date of

Acquisition Description TenureAge of

buildingLandArea

Built upArea

ExistingUse

Audited Carrying Amount

as at 30 June

2013 (Years) RM '000

1 Scope Manufacturers(M) Sdn. Bhd. HS(D) 8228PT 4149, Lot 6181Jalan Perusahaan 2Kawasan Perindustrian Parit Buntar34200 Parit BuntarPerak, Malaysia

27.02.1998 Industrial Land

& Building

Leaseholdfor 60 years(expiring on16.02.2049)

13 65,340 Sq. ft

58,040 Sq. ft

Double storeyoffice withannexed singlestorey factorybuilding for use asoffice and factory

4,134

2 Scope Manufacturers(M) Sdn. Bhd.HS(D) 2841,PT 1803, Lot 6181Jalan Perusahaan 2Kawasan Perindustrian Parit Buntar34200 Parit BuntarPerak, Malaysia

14.11.2002 Industrial Land

& Building


7 87,120 Sq. ft

66,000 Sq. ft

Double storeyoffice withannexed singlestorey factorybuilding for use ashead office and factory

6,109

3 Pioneer Glow Sdn. Bhd. Title No. CL 095331801District of Kinabatangan (Tongod)Locality of Sungai Milian Sabah

19.7.2012 Plantation land


N/A 3,496.47 acres

N/A Plantation land

40,503

4 Benua Mutiara Sdn. Bhd.Title No. CL 095311167District of Kinabatangan Locality of Segaliud-LokanOff KM 83Sandakan-LahadDatu HighwaySabah

20.6.2013 Plantation land


N/A 793.2 acres

N/A Plantation land

26,079


ANALYSIS OF SHAREHOLDINGSAS AT 3 OCTOBER 2013

A. Authorised Share Capital : RM200,000,000.00Issued and fully paid-up Share Capital : RM50,048,443.20Class of Shares : Ordinary Shares of RM0.10 eachVoting Rights : On show of hands – One vote for one person

On a poll – One vote for one ordinary share

B. ANALYSIS BY SIZE OF SHAREHOLDINGS

Size of holdings No. of holders % No. of shares %

1 – 99 12 0.93 453 0.00

100 – 1,000 241 18.68 214,500 0.04

1,001–10,000 438 33.95 2,620,300 0.52

10,001 – 100,000 404 31.32 16,424,300 3.28

100,001 – 25,024,220 (*) 190 14.73 232,118,075 46.39

25,024,221 and above (**) 5 0.39 249,106,802 49.77

Total 1,290 100.00 500,484,430 100.00

Remark : * - Less than 5% of Issued Holdings ** - 5% and above of Issued Holdings

C. SUBSTANTIAL SHAREHOLDERS

Name Number of Ordinary Shares of RM0.10 eachDirect % Indirect %

Lim Chiow Hoo 61,449,330 12.28 - -Lee Min Huat 57,701,860 11.53 - -Chew Kong Yoon 60,854,896 12.16 - -Wah Len Enterprise Sdn. Bhd. 81,200,000 16.22 - -Dato’ Lim Chee Wah - - 81,200,000* 16.22Lim Ee Tatt 13,000 0.00 81,200,000* 16.22Lim Ee Keong - - 81,200,000* 16.22Lim Saw Khim - - 81,200,000* 16.22Agriculturists Incorporated Development Sdn. Bhd. 33,100,716 6.61 - -Han Siew King - - 33,100,716# 6.61Han Kim Leng - - 33,100,716# 6.61

Notes:

* Deemed interested by virtue of his/her shareholdings of not less than 15% in Wah Len Enterprise Sdn. Bhd. pursuant to Section 6A of the Companies Act, 1965.

# Deemed interested by virtue of his shareholdings of not less than 15% in Agriculturists Incorporated Development Sdn. Bhd. pursuant to section 6A of the Companies Act, 1965.

D. DIRECTORS’ SHAREHOLDINGS

Name Number of Ordinary Shares of RM0.10 eachDirect % Indirect %

Lim Chiow Hoo 61,449,330 12.28 - -Lee Min Huat 57,701,860 11.53 - -Dato’ Philip Chan Hon Keong 775,000 0.15 - -Tan Poh Heng 250,000 0.05 - -Yong Loong Chen - - - -


ANALYSIS OF SHAREHOLDINGS (cont’d)AS AT 3 OCTOBER 2013

E. THIRTY LARGEST SHAREHOLDERS

Name of Shareholders No. of Shares % of total issued

capital

1. Wah Len Enterprise Sdn. Bhd. 81,200,000 16.22

2. Chew Kong Yoon 50,854,896 10.16

3. Lee Min Huat 42,701,860 8.53

4. Lim Chiow Hoo 41,249,330 8.24

5. Agriculturists Incorporated Development Sdn. Bhd. 33,100,716 6.61

6. Public Nominees (Tempatan) Sdn. Bhd.Pledged Securities Account For Leong KokVvi (E-TWU/LDU)

20,312,700 4.06

7. Lim Chiow Hoo 20,200,000 4.04

8. Lee Min Huat 15,000,000 3.00

9. Ngan Mee Ling 11,734,665 2.34

10. Gan Sook Peng 10,014,900 2.00

11. HLIB Nominees (Tempatan) Sdn. Bhd.Pledged Securities Account For Chew Kong Yoon

10,000,000 2.00

12. Lee Tack Chong 8,500,000 1.70

13. Lok Huey Ming 7,849,500 1.57

14. AIBB Nominees (Tempatan) Sdn. Bhd.Pledged Securities Account For Tan Siew Booy (D18)

7,708,200 1.54

15. Siew Lee Ying @ Siew Lee Yong 7,112,310 1.42

16. Yap Pei Pei 7,045,900 1.41

17. Wong Lee Peng 6,000,000 1.20

18. Khor It Kwang 5,966,000 1.19

19. Lim Jhy Torng 5,555,000 1.11

20. Lim Seng Chong 3,925,000 0.78

21. Ong Lai Choon 3,325,900 0.66

22. Mohammed Ab Halim Bin Ab Rahman 2,700,000 0.54

23. Lee Meow Lim @ Lee Meow Yee 2,600,000 0.52

24. Tee Ah Leck 2,557,100 0.51

25. Lee Choon Guek 2,520,000 0.50

26. Wong Jee Yai 2,173,000 0.43

27. Christina Lay-See Cheah 2,110,000 0.42

28. Tan Eng Kim 2,058,500 0.41

29. AIBB Nominees (Tempatan) Sdn. Bhd.Pledged Securities Account For Syabas Permai Sdn. Bhd.

2,027,800 0.41

30. Getaria Realty Sdn. Bhd. 2,000,000 0.40


ANALYSIS OF WARRANT HOLDINGSAS AT 3 OCTOBER 2013

A. Total Number of Warrants 2012/2020 (“Warrants”) issued : 118,596,361

Total Number of Warrants outstanding : 118,596,361

Exercise Price Per Warrant : RM0.15 each

B. ANALYSIS BY SIZE OF WARRANT HOLDINGS

Size of holdings No. of holders % No. of Warrants %

1 – 99 34 3.56 731 0.00

100 – 1,000 481 50.26 220,197 0.19

1,001 – 10,000 270 28.21 994,800 0.84

10,001 – 100,000 114 11.91 4,222,880 3.56

100,001 – 5,929,817 (*) 50 5.22 37,575,300 31.68

5,929,818 and above (**) 8 0.84 75,582,453 63.73

Total 957 100.00 118,596,361 100.00

Remark : * - Less than 5% of Issued Warrants ** - 5% and above of Issued Warrants

C. DIRECTORS’ WARRANT HOLDINGS

Name Number of Warrants

Direct % Indirect %

Lim Chiow Hoo 10,649,866 8.98 - -

Lee Min Huat 11,540,372 9.73 - -

Dato’ Philip Chan Hon Keong 25,000 0.02 - -

Tan Poh Heng 100,000 0.08 - -

Yong Loong Chen - - - -


ANALYSIS OF WARRANT HOLDINGS (cont’d)AS AT 3 OCTOBER 2013

D. THIRTY LARGEST WARRANT HOLDERS

Name of Warrant holders No. ofWarrants% of total issued

Warrants

1. Yap Wah On @ Yup Hong 11,265,600 9.50

2. Tong Moi Chai 10,000,000 8.43

3. Wah Len Enterprise Sdn. Bhd. 10,000,000 8.43

4. Gan Sook Peng 9,840,000 8.30

5. Siew Lee Ying @ Siew Lee Yong 9,798,382 8.26

6. Ngan Mee Ling 9,488,233 8.00

7. Lee Min Huat 8,540,372 7.20

8. Lim Chiow Hoo 6,649,866 5.61

9. Lee Tack Chong 4,700,000 3.96

10. Lim Chiow Hoo 4,000,000 3.37

11. Cartaban Nominees (Asing) Sdn. Bhd.Standard Chartered Bank Singapore For BMO Spore Branch Foreign Client

3,025,400 2.55

12. Lee Min Huat 3,000,000 2.53

13. AIBB Nominees (Tempatan) Sdn. Bhd.Pledged Securities Account For Tan Siew Booy (D18)

2,244,000 1.89

14. Wong Lee Peng 1,658,500 1.40

15. Yap Pei Pei 1,621,000 1.37

16. HLIB Nominees (Tempatan) Sdn. Bhd.Pledged Securities Account For Chew Kong Yoon

1,600,000 1.35

17. Lok Huey Ming 1,284,200 1.08

18. Tee Ah Leck 1,110,300 0.94

19. Chew Kong Yoon 960,000 0.81

20. Lim Seng Chong 785,000 0.66

21. Ong Lai Choon 769,200 0.65

22. RHB Nominees (Tempatan) Sdn. Bhd.Pledged Securities Account For Wong Lee Peng

741,500 0.63

23. Lim Ee Tatt 700,000 0.59

24. HLIB Nominees (Tempatan) Sdn. Bhd.Pledged Securities Account For Chan Swee Booi

667,900 0.56

25. Mohammed Ab Halim Bin Ab Rahman 600,000 0.51

26. Lee Choon Guek 520,000 0.44

27. Lee Meow Lim @ Lee Meow Yee 500,000 0.42

28. Lee Tack Chong 450,000 0.38

29. Wong Jee Yai 438,000 0.37

30. Christina Lay-See Cheah 420,000 0.35


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PROXY FORM

No. of ordinary shares held

*I / We........................................................................................................................................................................... of ...................................................................... (Full Name in Block Letters)

.......................................................................................................................................................................................... being a *Member/Members of Scope (Full Address)

Industries Berhad hereby appoint * the Chairman of the meeting or ............................................................................................................................ (Full Name in Block Letters)

of ...............................................................................................................................................................................................................................................................(Full Address)

or failing him/her, ................................................................................................................................................. of ........................................................................ (Full Name in Block Letters)

............................................................................................................................................................................................................ as *my/our proxy/proxies to (Full Address)

attend and vote for *me/ us and on *my/ our behalf at the Eleventh Annual General Meeting of the Company to be held at Bamboo Room, Scope Manufacturers (M) Sdn. Bhd., Lot 6181 Jalan Perusahaan 2, Kawasan Perindustrian Parit Buntar, 34200 Parit Buntar, Perak on Thursday, 21 November 2013 at 11:30 am, and at any adjournment thereof to vote as indicated below:

No. of Resolution Resolutions For Against

1 Approval of payment of Directors’ fees for the financial year ended 30 June 2013

2 Re-election of Mr Lim Chiow Hoo as Director

3 Re-election of Mr Tan Poh Heng as Director

4 Re-appointment of Messrs Grant Thornton as Auditors and to authorise the Directors to fix Auditor’s remuneration.

5 Authority under Section 132D of the Companies Act, 1965 for the Directors to issue shares

6 Proposed Amendments to the Articles of Association of the Company

(Please indicate with an “X” in the spaces provided above to how you wish your vote to be cast. If you do not do so, the proxy will vote or abstain from voting at his/ her discretion)

The proportion of my holdings to be represented by my *proxy/ proxies are as follows:-

First named Proxy %

Second named Proxy %

100%

In case of a vote taken by a show of hands, the First Proxy shall vote on *my/ our behalf.

As witness my hand this .......................... day of ............................................ 2013. ....................................................................................................... Signature of Member(s)/Common Seal* Strike out whichever is not desired

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

to the Company.

2. The proxy form must be duly completed and deposited at the Registered Office of the Company, 51-13-A Menara BHL Bank, Jalan Sultan Ahmad Shah, 10050 Penang not less than forty-eight (48) hours before the time for holding the meeting.

3. A member shall be entitled to appoint more than one (1) proxy to attend and vote at the same meeting.

4. Where a member appoints two (2) or more proxies, the appointments shall be invalid unless he specifies the proportions of his holdings to be represented by each proxy.

5. If the appointor is a corporation, this form must be executed under its Common Seal or under the hand of its attorney.

6. Where a member of the Company is an authorised nominee as defined under the Securities Industry (Central Depositories) Act 1991 (“Central Depositories Act”), it may appoint at least one proxy in respect of each securities account it holds with ordinary shares of the Company standing to the credit of the said securities account.

7. Where a member of the Company is an exempt authorised nominee as defined under the Central Depositories Act which holds ordinary shares in the Company for multiple beneficial owners in one securities account (“Omnibus Account”), there shall be no limit to the number of proxies which the Exempt Authorised Nominee may appoint in respect of each Omnibus Account it holds.

8. For purpose of determining who shall be entitled to attend this meeting, the Company shall be requesting Bursa Malaysia Depository Sdn Bhd to make available to the Company pursuant to Article 77 of the Articles of Association of the Company and Paragraph 7.16(2) of the ACE Market Listing Requirements of Bursa Malaysia Securities Berhad, a Record of Depositors (“ROD”) as at 15 November 2013 and only a Depositor whose name appears on such ROD shall be entitled to attend, speak and vote at this meeting or appoint proxy to attend and/or speak and/or vote in his/her behalf.

Please fold across the line and close

Please fold across the line and close

The Company SecretariesSCOPE INDUSTRIES BERHAD (591376-D)

51-13-A Menara BHL BankJalan Sultan Ahmad Shah

10050 Penang

Affix Stamp

SCOPE INDUSTRIES BERHAD (591376-D)

(Incorporated In Malaysia)

6th Floor, Menara Hap Seng, Jalan P. Ramlee, 50250 Kuala Lumpur.Tel : (60)3 2022 1376 Fax : (60)3 2026 0916 Email : [email protected], [email protected] Website : www.scope.com.my

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