Quarterly Report For The Financial Period Ended 31 December 2023

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Condensed Consolidated Statements of Profit or Loss for the Quarter and year-to-date
ended 31 December 2023

Condensed Consolidated Statements of Comprehensive Income
for the Quarter and year-to-date ended 31 December 2023

Condensed Consolidated Statements of Financial Position
As at 31 December 2023

Group Performance Review

CURRENT QUARTER GROUP'S FINANCIAL PERFORMANCE REVIEW

The Group's revenue surged to RM30.41 million compared to the same period last year, driven primarily by progress claims from a construction contract within GTP from a former subsidiary company that has been divested during the current year quarter under review. Despite higher revenue, the Group's result dropped significantly to RM4.83 million, a 56% decrease compared to the previous year's RM10.98 million. Similarly, the net profit attributable to the owner fell to RM4.88 million from RM11.00 million. This decline also affected the Group's basic earnings per share, which decreased to 0.47 cents from 1.42 cents. It was mainly due to the combination of several factors such as lower Gross Profit margin from the construction contract and reduction in revenue attributed to the printing and segment due to the lower customer orders. Besides, the absence of certain non-operating income, such as the reversal of impairment losses on Property, Plant, and Equipment (PPE) of RM20.27 million and gains on disposal of PPE of RM2.57 million. Additionally, the Group also recorded a share of loss of RM0.77 million from an associate company, compared to no reported figure in the same period of the preceding year.

However, these adverse factors were partially offset by non-operating income which derived from the sale of manufacturing by-products worth RM13.95 million, gains from the disposal of a subsidiary of RM3.22 million, and reversal of the impairment losses on receivables worth of RM1.99 million. On the operating expenses, there is no significant movement except the reduction in impairment of receivables amounting to RM4.58 million compared to the same period a year ago.

YEAR-TO-DATE GROUP'S FINANCIAL PERFORMANCE REVIEW

The Group achieved a significant revenue milestone, reaching RM63.73 million, more than double the figure from the previous year. Leading this growth was the Manufacturing division, with its segments in pulp and paper and fertilizer contributing a substantial 51%. The Property and Construction division followed closely, accounting for 43% of the revenue. Despite challenges in demand from both local and international markets, the Printing & Publishing division remained active, adding RM3.59 million to the group's revenue. However, the property and construction division experienced an absence of sub-divided land in GTP as compared to the previous year of RM9.60 million.

Despite encouraging revenue growth, Group result dropped to RM9.51 million, a 29% decrease compared to the previous year's RM13.48 million. Similarly, the net profit attributable to the owner fell to RM9.65 million from RM13.61 million. This decline also affected the Group's basic earnings per share for the year, which decreased to 1.14 cents from 1.76 cents. Despite an increase in operating revenue, the Group's profitability was impacted by the absence of certain non-operating income, such as the reversal of impairment losses on Property, Plant, and Equipment (PPE) of RM20.27 million and gains on disposal of PPE of RM2.57 million. Additionally, the low gross profit margin particularly for construction contract revenue as well as the gross loss incurred by printing and publishing during the period contributed to the unfavorable position of the group's profitability. Besides, the Group also recorded a share of loss of RM0.77 million from an associate company, compared to no reported figure in the same period of the preceding year.

Despite those shortfalls, the Group's result was partially offset by the additional non-operating income such as gain on disposal of a subsidiary of RM3.22 million, selling of the manufacturing by-product amounting to RM13.95 million. As for Group operating expenses, there is no significant movement except a decrease in impairment of financial assets amounting to RM4.24 million compared to the same period a year ago.

The group's net finance cost rose by RM1.22, marking a 38% increase from the corresponding period in the financial year ending December 31, 2022. This increase was primarily attributed to the acquisition of additional hire purchase loans and a new bank facility of RM16.00 million secured from Bank Muamalat Malaysia Berhad.

Furthermore, the group's tax expense was reported at RM2.54 million, a provision that has been made on its taxable revenue of semi-finished fertiliser and non-operating income. In contrast, zero income tax expenses were provided during the same period of the previous year. The breakdown for Group tax expenses was tabulated on note 6 of this report.

Commentary on Prospects and Targets

As part of the development in the Green Technology Park ("GTP"), the Group has initiated its manufacturing business with the completion of its inaugural pulp and paper mill boasting an annual production capacity of 10,000 metric tons of wood-free paper. This plant is equipped with patented technology "PRC RBMP", enabling the conversion of Empty Fruit Bunches (EFB) into non-wood pulp and paper products with minimal waste. Furthermore, the Group has outlined several upcoming and ongoing developments within the GTP for its manufacturing business:

• Two pulp mills with annual production capacities of 100,000 metric tons of bleached chemical EFB pulp under Phase 2A and 2B of the GTP;
• A pulp mill with an annual production capacity of 200,000 metric tons of bleached chemical EFB pulp under Phase 3 of the GTP.

All of these developments will be equipped with PRC RBMP technology. The Group is currently undertaking site preparation works, and the relevant applications for the development are expected to be submitted by mid-2024.

In the realm of the fertiliser manufacturing segment, the Group has initiated the construction of a fertilizer production plant designed to accommodate an annual capacity of 30,000 metric tons. Situated within GTP (Phase 1A extension), this plant will be operated by the wholly owned subsidiary Nextgreen Fertilizer Sdn Bhd ("NGF"). Its operations will involve the production of solid and liquid fertiliser, utilizing waste and/ or manufacturing by-product from Phase 1A production as well as Fermented EFB. The construction of the production plant is anticipated to be completed in Quarter 2 2024, with testing and commissioning initially scheduled for Quarter 3 2024.

As for the property and construction segment, the land for the GTP project remains a key driver for the Group. The Group will continue to assess and identify subdivided lands within the GTP to be sold to third parties, either as vacant land or developed into completed units such as factories.

Despite the increased use of digital products reducing the demand for physical printing, the printing and publishing business remains competitive. The Group intends to focus on commercial printing and aims to penetrate the box and packaging segment in the local market for its printing and publishing business.

In the utility and renewable energy segment, the Group incorporated a 65% owned special purpose vehicle, GTC Biomass Berhad, on 5 April 2023. This entity will undertake the building, development, and commissioning of 20 collection and processing centers for palm oil waste throughout Malaysia.

Considering the above, as well as the overview and outlook of the Malaysian palm oil biomass and pulp and paper industries, the Group expects its key focus to be on its manufacturing business. Accordingly, the Group will prioritize bringing its development in the GTP project to realization.