Quarterly Report For The Financial Period Ended 30 June 2024

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Condensed Consolidated Statements Of Profit Or Loss And Comprehensive Income For The Current Quarter And Year-To-Date ("YTD")
Ended 30 June 2024

Condensed Consolidated Statements of Financial Position
As at 30 June 2024

Group's Financial Performance Review

Current quarter and YTD ended

The Group reported a significant revenue increase for the quarter ended 30 June 2024, reaching RM21.41 million, an 81% surge compared to RM11.83 million in the same period last year. This remarkable growth was predominantly driven by the Manufacturing division, which contributed RM20.43 million from its pulp & paper and fertilizer segments. Conversely, the Printing and Publishing division experienced a 62% decline in operating revenue compared to the corresponding period of the previous year, while the other three divisions reported no revenue for the current quarter.

The Group's profit also saw substantial growth, with a reported profit of RM10.34 million, a significant improvement from the RM1.18 million profit recorded in the same period last year. This impressive performance was largely fueled by the Manufacturing division, which generated a profit of RM12.59 million, bolstered by the robust sales of the Group's in-house liquid fertilizer brand, NexBooster. However, it is important to note that this profit was partially offset by losses incurred by other divisions.

The Group's other income for the quarter was recorded at RM1.17 million, despite the absence of RM1.05 million in rental income due to the termination of a lease agreement. This income was primarily derived from debt recovery and gains on the disposal of property, plant, and equipment by the Printing & Publishing division.

Net finance costs for the Group saw a slight increase of 19%, in line with additional term loans, trade financing, bank facilities, hire purchases, and leasing.

Reflecting the improved financial performance, the Group's Profit After Tax and Minority Interests (PATAMI) and basic Earnings Per Share (EPS) for the current quarter surged by 759% and 605%, respectively.

Commentary on Prospects and Targets

The Group has outlined several upcoming and ongoing developments within the GTP for its manufacturing business and currently undertaking site preparation works, and the relevant applications for the development are expected to be submitted by mid-2024 for the below project:

• 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.

Within the verdant expanse of the Green Technology Park (GTP), Nextgreen Fertilizer Sdn Bhd (NGF), our Group's wholly owned subsidiary, is constructing a fertilizer processing plant. This facility is poised to yield solid fertilizers, both in granular and powder forms with an impressive annual capacity of 30,000 metric tons (MT). As the construction timeline marches toward completion in the third quarter of 2024, we eagerly anticipate the subsequent phases of testing and commissioning. By the final quarter of this year, we expect this endeavor to blossom into a fresh revenue stream for the Group.

Our Research and Development (R&D) team achieved a significant breakthrough by transforming black liquor, a manufacturing by-product (waste) of Phase 1A pulp and paper manufacturing process into a cutting-edge liquid fertilizer product. This innovative process is projected to yield approximately 30,000 metric tons of liquid fertilizer annually.

Since its successful development, we've conducted rigorous trial plots to evaluate the efficacy of this new fertilizer across various crops, soil types, and environmental conditions. These trials have yielded promising results, demonstrating the product's potential to enhance agricultural productivity. Our commitment to excellence extends nationwide, as we respond to requests from potential off-takers, ranging from small-scale plantations to large organizations. By engaging in these ongoing activities, we aim to fine-tune our understanding of the product's performance and adapt it to diverse farming contexts.

As we continue refining our liquid fertilizer, we're optimistic that the current trial plots will pave the way for strategic off-take agreements. These agreements will allow us to collaborate with partners who recognize the value of our innovative solution and seek sustainable agricultural practices. Our vision extends beyond the laboratory; it encompasses real-world impact. By forging these agreements, we aim to contribute to crop yield optimization, soil health improvement, and environmental stewardship.

In summary, our journey from black liquor to liquid fertilizer exemplifies our commitment to research-driven growth. As we nurture these prospects, we remain steadfast in our pursuit of sustainable solutions that benefit both our business and the broader ecosystem.

As we continue our detailed evaluation of the GTP project's land, where we carefully identify subdivided plots for third-party development, our focus remains steadfast. At the same time, our wholly-owned subsidiary, BHS Book Printing Sdn Bhd, remains a key global printing partner for Oxford University Press in the United Kingdom. Despite the growing digital trend, our strength continues to resonate within the realms of both commercial printing and book publishing.

In parallel, GTC Biomass Berhad, a special purpose vehicle in which we hold a 65% stake, is leading significant change. Their goal is to establish 20 collection and processing centers (CPCs) for oil palm biomass waste throughout Malaysia. The first of these CPCs will be set up within our GTP in Paloh Hinai, with subsequent centers planned for Gua Musang and Sandakan, Sabah.

Looking to the overview and outlook of the Malaysian palm oil biomass and pulp and paper industries, the Group's strategic focus remains on manufacturing, with a primary objective to bring the GTP project to fruition.