(Incorporated in Malaysia)

Transcription

1 (Incorporated in Malaysia) CONDENSED CONSOLIDATED STATEMENTS OF PROFIT OR LOSS (UNAUDITED) FOR THE THIRD QUARTER AND YEAR-TO-DATE ENDED 30 SEPTEMBER 2017 Quarter ended Year-to-date ended Increase/ Increase/ RM 000 RM 000 (Decrease) RM 000 RM 000 (Decrease) Revenue 1,398,073 1,414,543-1% 3,880,440 3,682,875 5% Operating expenses (1,144,435) (1,149,874) (3,247,375) (3,148,436) Other operating income 31,259 17, , ,128 Operating profit 284, ,980 1% 775, ,567 16% Finance costs (36,591) (31,333) (111,823) (97,344) Other gain items , ,085 Share of results of associates and a joint venture 10,823 7,837 24,486 18,894 Profit before tax 259, , % 1,185,488 1,104,202 7% Tax expense (65,920) (67,050) (172,428) (142,138) Profit for the period 193, ,434 1% 1,013, ,064 5% Profit attributable to: Owners of the Company 175, ,583 5% 959, ,390 5% Non-controlling interests 17,602 24,851 53,358 48, , ,434 1,013, ,064 Earnings per share (sen) Basic % 38.55* % Diluted N/A N/A N/A N/A * due to higher weighted average number of ordinary shares in issue arising from the exercise of warrants and resale of treasury shares in the previous financial year. The Condensed Consolidated Statements of Profit or Loss should be read in conjunction with the Audited Financial Statements for the financial year ended 31 December 2016 and the accompanying explanatory notes attached to the Interim Financial Statements QtrlyReport 30 Sept HSCB.docx Page 1 of 34

2 (Incorporated in Malaysia) CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) FOR THE THIRD QUARTER AND YEAR-TO-DATE ENDED 30 SEPTEMBER 2017 Quarter ended Year-to-date ended RM 000 RM 000 RM 000 RM 000 Profit for the period 193, ,434 1,013, ,064 Other comprehensive income/(expense) net of tax: Items that will be reclassified subsequently to profit or loss Foreign currency translation differences for foreign operations (1,955) 4,876 (4,487) (5,064) Share of foreign currency translation differences of associates and a joint venture (143) 2, Change in fair value of cash flow hedge (1,771) (436) 3,410 (14,648) (3,869) 7,377 (655) (19,702) Items that will not be reclassified subsequently to profit or loss Revaluation of property, plant and equipment upon transfer of property to investment property 50,237-50,237 - Total other comprehensive income/(expense) for the period 46,368 7,377 49,582 (19,702) Total comprehensive income for the period 239, ,811 1,062, ,362 Total comprehensive income attributable to: Owners of the Company 222, ,965 1,009, ,243 Non-controlling interests 17,258 26,846 52,851 46, , ,811 1,062, ,362 The Condensed Consolidated Statements of Comprehensive Income should be read in conjunction with the Audited Financial Statements for the financial year ended 31 December 2016 and the accompanying explanatory notes attached to the Interim Financial Statements QtrlyReport 30 Sept HSCB.docx Page 2 of 34

3 (Incorporated in Malaysia) CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (UNAUDITED) AS AT 30 SEPTEMBER 2017 As at RM 000 As at RM 000 (Audited) Non-current assets Property, plant and equipment 1,780,602 1,798,774 Prepaid lease payments 196, ,367 Biological assets 458, ,585 Investment properties 1,589,174 1,675,054 Investment in associates 451, ,934 Investment in a joint venture Land held for property development 1,124, ,173 Intangible assets 85,149 85,149 Trade and other receivables 1,224,797 1,041,254 Other non-current financial assets 40, ,844 Deferred tax assets 19,079 21,809 6,970,480 6,619,787 Current assets Inventories 1,261,387 1,163,461 Property development costs 815, ,386 Trade and other receivables 1,808,993 2,030,093 Tax recoverable 17,663 19,471 Other current financial assets 55, ,243 Money market deposits 444, ,736 Cash and bank balances 839, ,284 5,243,467 5,105,674 TOTAL ASSETS 12,213,947 11,725,461 QtrlyReport 30 Sept HSCB.docx Page 3 of 34

4 (Incorporated in Malaysia) CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (UNAUDITED) (Continued) AS AT 30 SEPTEMBER 2017 As at RM 000 As at RM 000 (Audited) Equity attributable to owners of the Company Share capital 2,489,682 2,489,682 Reserves 3,636,967 3,001,010 6,126,649 5,490,692 Less: Treasury shares (35) (16) 6,126,614 5,490,676 Non-controlling interests 633, ,779 TOTAL EQUITY 6,760,353 6,122,455 Non-current liabilities Payables and provisions 6,584 18,433 Borrowings 1,258,452 1,920,316 Other non-current financial liabilities 1,436 - Deferred tax liabilities 230, ,590 1,497,255 2,169,339 Current liabilities Payables and provisions 975, ,160 Tax payable 86,129 47,375 Borrowings 2,870,570 2,504,931 Other current financial liabilities 23,898 1,201 3,956,339 3,433,667 TOTAL LIABILITIES 5,453,594 5,603,006 TOTAL EQUITY AND LIABILITIES 12,213,947 11,725,461 Net assets per share (RM) Number of shares net of treasury shares ( 000) 2,489,678 2,489,680 The Condensed Consolidated Statements of Financial Position should be read in conjunction with the Audited Financial Statements for the financial year ended 31 December 2016 and the accompanying explanatory notes attached to the Interim Financial Statements QtrlyReport 30 Sept HSCB.docx Page 4 of 34

5 (Incorporated in Malaysia) CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (UNAUDITED) FOR THE YEAR-TO-DATE ENDED 30 SEPTEMBER 2017 Attributable to Owners of the Company Share Capital Nondistributable Reserves Distributable Reserves Treasury Shares Total Noncontrolling interests Total Equity RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 At 1 January ,489,682 1,058,398 1,942,612 (16) 5,490, ,779 6,122,455 Profit for the period , ,702 53,358 1,013,060 Total other comprehensive income for the period - 50, ,089 (507) 49,582 Total comprehensive income for the period - 50, ,702-1,009,791 52,851 1,062,642 Share-based payments by a subsidiary Changes in ownership interest in subsidiaries - (468) (12) - (480) 4,680 4,200 Purchase of treasury shares (19) (19) - (19) Purchase of treasury shares by a subsidiary (5) (5) Dividend - - (373,452) - (373,452) - (373,452) Dividends paid to non-controlling interests (55,661) (55,661) At 30 September ,489,682 1,108,117 2,528,850 (35) 6,126, ,739 6,760,353 QtrlyReport 30 Sept HSCB.docx Page 5 of 34

6 (Incorporated in Malaysia) CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (UNAUDITED) (Continued) FOR THE YEAR-TO-DATE ENDED 30 SEPTEMBER 2017 Attributable to Owners of the Company Share Capital Nondistributable Reserves Distributable Reserves Treasury Shares Total Noncontrolling interests Total Equity RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 At 1 January ,249, ,063 1,797,758 (289,904) 4,242, ,746 4,841,394 Profit for the period , ,390 48, ,064 Total other comprehensive expense for the period - (17,147) - - (17,147) (2,555) (19,702) Total comprehensive income for the period - (17,147) 913, ,243 46, ,362 Share-based payments by a subsidiary Exercise of warrants 239, , , ,918 Changes in ownership interests in subsidiaries ,300 5,300 Purchase of treasury shares (778) (778) - (778) Purchase of treasury shares by a subsidiary (5) (5) Resale of treasury shares - 423, , , ,303 Transfer of reserves upon expiry of warrants - (144) Dividend - - (359,783) - (359,783) - (359,783) Dividends paid to non-controlling interests (33,174) (33,174) At 30 September ,489,682 1,047,490 2,351,509-5,888, ,111 6,505,792 The Condensed Consolidated Statements of Changes in Equity should be read in conjunction with the Audited Financial Statements for the financial year ended 31 December 2016 and the accompanying explanatory notes attached to the Interim Financial Statements QtrlyReport 30 Sept HSCB.docx Page 6 of 34

7 (Incorporated in Malaysia) CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) FOR THE YEAR-TO-DATE ENDED 30 SEPTEMBER 2017 Year-to-date ended RM RM 000 Cash flows from operating activities Profit before tax 1,185,488 1,104,202 Adjustments for: Non-cash items 108,198 (145,062) Non-operating items (582,392) (373,868) Dividend income (14,597) (6,053) Net interest expense 101,627 89,450 Operating profit before working capital changes 798, ,669 Net changes in working capital (212,875) 52,481 Net changes in loan receivables (227,836) 260,357 Net tax paid (129,190) (106,633) Net interest paid (119,884) (118,344) Additions to land held for property development (504,335) (20,380) Net cash flows (used in)/generated from operating activities (395,796) 736,150 Cash flows from investing activities Dividends received from associates and a joint venture 75,120 13,068 Dividends received from available-for-sale equity instruments - 1,960 Dividends received from held for trading equity instruments - 36 Dividends received from money market deposits 11,739 5,397 Increase in money market deposits (89,286) (231,424) Acquisition of subsidiaries net of cash acquired - (369,343) Redemption of preference shares held by non-controlling interests (7,000) - Disposal of subsidiaries net of cash disposed 744, ,925 Proceeds from disposal of remaining 49% equity interest in a former subsidiary 367,500 - Proceeds from issuance of shares to non-controlling interests 11,200 5,300 Proceeds from disposal of property, plant and equipment 82, ,708 Proceeds from the redemption of available-for-sale equity instruments - 12,000 Proceeds from disposal of held for trading equity instruments 104,479 - Purchase of held for trading equity instruments - (91,047) Purchase of property, plant and equipment (107,852) (112,132) Additions to prepaid lease payments (1,338) (57,983) Additions to biological assets (437) (16,440) Additions to investment properties (31,678) (85,316) Net cash flows generated from/(used in) investing activities 1,159,338 (422,291) Cash flows from financing activities Dividends paid to owners of the Company and non-controlling interests (429,113) (392,957) Net repayment of borrowings (209,427) (639,487) Proceeds from resale of treasury shares - 714,303 Proceeds from issuance of shares pursuant to the exercise of warrants - 395,918 Shares repurchased at cost (24) (783) Net cash flows (used in)/generated from financing activities (638,564) 76,994 Net increase in cash and cash equivalents 124, ,853 Effects on exchange rate changes Cash and cash equivalents at beginning of the period 684, ,145 Cash and cash equivalents at end of the period 809, ,132 Cash and cash equivalents comprise the following amounts: Deposits with licensed banks 582, ,839 Cash in hand and at bank 256, ,119 Bank overdrafts (29,840) (6,826) 809, ,132 The Condensed Consolidated Statements of Cash Flows should be read in conjunction with the Audited Financial Statements for the financial year ended 31 December 2016 and the accompanying explanatory notes attached to the Interim Financial Statements QtrlyReport 30 Sept HSCB.docx Page 7 of 34

8 PART A Explanatory Notes Pursuant to Financial Reporting Standard (FRS) 134, Interim Financial Reporting 1. Basis of preparation These interim financial statements have been prepared in accordance with the requirements of FRS 134, Interim Financial Reporting and the Main Market Listing Requirements of Bursa Malaysia Securities Berhad [ Bursa Securities ], and should be read in conjunction with the Group s audited financial statements for the financial year ended 31 December Significant accounting policies The accounting policies and presentation adopted by the Group in these interim financial statements are consistent with those adopted in the audited financial statements for the year ended 31 December 2016 except for changes arising from the adoption of FRS, IC Interpretations and Amendments that are effective for financial period beginning on or after 1 January 2017 which do not have a material impact on the financial statements of the Group on initial adoption. Malaysian Financial Reporting Standards [ MFRS ] On 19 November 2011, the Malaysian Accounting Standards Board [ MASB ] issued a new MASB approved accounting framework, the MFRS framework, to be adopted by non-private entities for annual periods beginning on or after 1 January However, adoption of the MFRS framework by 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 ] will only be mandatory for annual periods beginning on or after 1 January The Group falls within the definition of Transitioning Entities and is currently exempted from adopting the MFRS framework. Accordingly, the Group s financial statements for annual period beginning on 1 January 2018 will be prepared in accordance with the MFRS and International Financial Reporting Standards. In presenting its first MFRS financial statements, the Group will be required to restate the comparative financial statements to amounts reflecting the application of MFRS framework. The majority of the adjustments required on transition will be made, retrospectively, against opening retained profits. Accordingly, the consolidated financial statements could be different if prepared under the MFRS framework. 3. Comments on the seasonality or cyclicality of operations The seasonal or cyclical factors affecting the results of the operations of the Group are as follows: (a) The performances of the Group s Property Division and Building Materials Division were influenced by the slowdown in construction activities in the first quarter attributable to the timing of seasonal festive period. (b) The Group s Plantation Division performance was influenced by general climatic conditions, age profile of oil palms, the cyclical nature of annual production and movements in commodity prices. 4. Nature and amount of items affecting assets, liabilities, equity, net income, or cash flows that are unusual because of their nature, size or incidence Save for the information disclosed in this interim financial report, there were no unusual items affecting assets, liabilities, equity, net income or cash flow during the interim period. QtrlyReport 30 Sept HSCB.docx Page 8 of 34

9 5. Nature and amount of changes in estimates of amounts reported in prior interim periods of the current financial year or changes in estimates of amounts reported in prior financial years There were no changes in estimates of amounts reported in prior interim period of the current financial year or changes in estimates of amounts reported in prior financial years. 6. Issues, cancellations, repurchases, resale and repayments of debt and equity securities Share buyback by the Company During the current quarter, there was no buyback of shares, resale nor cancellation of treasury shares. Accordingly, the total number of shares bought back and retained as treasury shares during the interim period remained unchanged at 2,000. As at 30 September 2017, the Company held 4,000 ordinary shares as treasury shares and the issued share capital of the Company remained unchanged at RM2,489,681,583 comprising 2,489,681,583 ordinary shares. 7. Dividend The dividend paid out of shareholders equity for ordinary shares during the interim period and preceding year corresponding period were as follows: Year-to-date ended RM 000 RM 000 Dividend in respect of financial year ending 31 December 2016: - first interim (15 sen) under the single tier system approved by the Directors on 19 May 2016 and paid on 28 June ,783 Dividend in respect of financial year ending 31 December 2017: - first interim (15 sen) under the single tier system approved by the Directors on 31 May 2017 and paid on 28 June , , ,783 (The remainder of this page has been intentionally left blank) QtrlyReport 30 Sept HSCB.docx Page 9 of 34

10 8. Segment information Current quarter ended 30 September 2017 Plantation Property Credit financing Automotive Fertilizers trading Building materials Other nonreportable segments Eliminations Consolidated RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 Revenue External revenue 113, ,724 39, , , , ,398,073 Inter-segment revenue - 3,529 11,991 1,598 11,597 10,541 - (39,256) - Total revenue 113, ,253 51, , , ,915 - (39,256) 1,398,073 Operating profit 35, ,289 43,264 5,193 10,302 20,002 2,339 (17,641) 284,897 Finance costs (36,591) Share of results of associates and a joint venture 10,823 Profit before tax 259,129 Current quarter ended 30 September 2016 Revenue External revenue 160, ,390 36, , , , ,414,543 Inter-segment revenue - 158,792 7,644 3,127 10,287 7,060 11,705 (198,615) - Total revenue 160, ,182 43, , , ,401 11,705 (198,615) 1,414,543 Operating profit 57, ,723 33,932 7,056 6,491 20,524 (5,171) (12,188) 281,980 Finance costs (31,333) Share of results of associates and a joint venture 7,837 Profit before tax 258,484 QtrlyReport 30 Sept HSCB.docx Page 10 of 34

11 8. Segment information (continued) Year-to-date ended 30 September 2017 Plantation Property Credit financing Automotive Fertilizers trading Building materials Other nonreportable segments Eliminations Consolidated RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 RM 000 Revenue External revenue 391, , , , ,186 1,091, ,880,440 Inter-segment revenue - 10,816 27,769 3,436 27,369 30,996 12,742 (113,128) - Total revenue 391, , , , ,555 1,122,467 12,742 (113,128) 3,880,440 Operating profit 121, , ,525 19,042 28,732 95,987 5,904 (40,898) 775,987 Finance costs (111,823) Other gain items 496,838 Share of results of associates and a joint venture 24,486 Profit before tax 1,185,488 Segment assets 1,163,977 4,443,721 2,085, , ,065 2,294, ,723-11,725,639 Year-to-date ended 30 September 2016 Revenue External revenue 374, , , , , , ,682,875 Inter-segment revenue - 164,746 20,761 9,596 26,797 19,124 24,534 (265,558) - Total revenue 374, , , , , ,651 24,534 (265,558) 3,682,875 Operating profit 109, , ,029 20,964 24, ,707 (19,907) (39,675) 667,567 Finance costs (97,344) Other gain items 515,085 Share of results of associates and a joint venture 18,894 Profit before tax 1,104,202 Segment assets 1,146,202 3,331,605 1,695, , ,089 2,324, ,783-10,622,471 QtrlyReport 30 Sept HSCB.docx Page 11 of 34

12 9. Effect of changes in the composition of the Group during the interim period, including business combinations, obtaining or losing control of subsidiaries and long term investments, restructuring and discontinued operations There were no changes in the composition of the Group during the interim period, except for the following: (a) On 7 March 2017, the Company entered into a conditional shares sale agreement with LSH Logistics Limited [ LSHL ], a wholly-owned subsidiary of Lei Shing Hong Limited [ LSH ], pursuant to which the Company agreed to dispose 100% equity interest in Hap Seng Logistics Sdn Bhd [ HSL ] comprising 250,000,000 ordinary shares for a cash consideration of RM750 million [ HSL Disposal ]. The HSL Disposal is deemed a related party transaction. As at the date hereof, Tan Sri Datuk Seri Panglima Lau Cho Lau Yu Chak [ Tan Sri Lau ] is deemed to have a 50.10% shareholding in LSH comprising 37.68% shareholding held via Lead Star Business Limited and 12.42% shareholding held via Gek Poh (Holdings) Sdn Bhd [ Gek Poh ] and is a 56.00% major shareholder and director of Gek Poh. Gek Poh s aggregate shareholdings in HSCB is 61.43%, comprising 54.63% direct shareholding and 6.80% indirect shareholding through Hap Seng Insurance Services Sdn Bhd [ HSIS ], a wholly-owned subsidiary of Gek Poh. In addition, Lei Shing Hong Investment Limited [ LSHI ], a company incorporated in Hong Kong and a wholly-owned subsidiary of Lei Shing Hong Capital Limited [ LSHCL ] which in turn is the wholly-owned subsidiary of LSH, is a 12.08% major shareholder of HSCB. Hence, Tan Sri Lau, Gek Poh, HSIS, LSH, LSHCL and LSHI are deemed interested in the HSL Disposal. Datuk Edward Lee Ming Foo is the managing director of both the Company and Gek Poh. Mr Lee Wee Yong is an executive director of the Company and a director of Gek Poh. As at the date hereof, Gek Poh holds 12.42% equity interest in LSH and hence, a major shareholder of LSH. Premised on the said common directorship, Datuk Edward Lee Ming Foo and Mr Lee Wee Yong are deemed interested in the HSL Disposal. Datuk Simon Shim Kong Yip is a non-independent non-executive director of the Company and a non-executive director of LSH. Mr Ch ng Kok Phan is a non-independent non-executive director of the Company and an executive director of LSH. Premised on Datuk Simon Shim Kong Yip and Mr Ch ng Kok Phan s common directorship in the Company and LSH, they are interested in the HSL Disposal. The interested or deemed interested directors and shareholders have abstained from voting and that they shall ensure persons connected to them are to abstain from voting in respect of their direct and/or indirect shareholdings on the resolution in relation to the HSL Disposal during the extraordinary general meeting of the Company held on 31 May 2017 [ EGM ]. The HSL Disposal was approved by the shareholders during the EGM and completed on 1 June The HSL Disposal resulted in a gain of approximately RM496.8 million to the Group. (b) On 29 June 2017, *Hap Seng Land Development Sdn Bhd acquired the entire issued share capital of Sunpoint Resources Sdn Bhd [ Sunpoint ] comprising 1 ordinary share at a cash consideration of RM1.00. Sunpoint is a private limited company incorporated in Malaysia and is principally involved in property development. (c) On 3 July 2017, Hafary Holdings Limited ( Hafary ) allotted and issued 1,550,000 shares pursuant to the vesting of share awards under the Hafary performance share plan, thereby decreasing *Hap Seng Investment Holdings Pte Ltd s shareholding in Hafary, a company listed in main market of Singapore Exchange Securities Trading Limited from 51% to 50.82%. (d) On 1 August 2017, the Company acquired the entire issued share capital of Sunrise Addition Sdn Bhd [ Sunrise ] comprising 1 ordinary share at a cash consideration of RM1.00. Sunrise is a private limited company incorporated in Malaysia and is principally involved in investment holding. (e) On 4 August 2017, *Sunrise Addition Sdn Bhd acquired the entire issued share capital of Super8 Capital Sdn Bhd [ Super8 ] comprising 1 ordinary share at a cash consideration of RM1.00. Super8 is a private limited company incorporated in Malaysia and is currently dormant. QtrlyReport 30 Sept HSCB.docx Page 12 of 34

13 9. Effect of changes in the composition of the Group during the interim period, including business combinations, obtaining or losing control of subsidiaries and long term investments, restructuring and discontinued operations (continued) (f) (g) On 16 August 2017, the Company incorporated a wholly-owned subsidiary in Labuan, HSC International Limited [ HSCI ]. HSCI has an issued share capital of USD1.00 comprising 1 ordinary share and is principally involved in investment holding. On 18 August 2017, HSCI incorporated 3 wholly-owned subsidiaries in Labuan namely, HSC Sydney Holding Limited [ HSC Sydney ], HSC Melbourne Holding Limited [ HSC Melbourne ] and HSC Brisbane Holding Limited [ HSC Brisbane ]. All HSC Sydney, HSC Melbourne and HSC Brisbane have an issued share capital of USD1.00 comprising 1 ordinary share each and are principally involved in investment holding. On 23 August 2017, Hafary Pte. Ltd, the wholly-owned subsidiary of Hafary Holdings Limited which is in turn a 50.82% owned subsidiary of *Hap Seng Investment Holdings Pte Ltd incorporated a wholly-owned subsidiary in Singapore namely, Hafary Building Materials Pte. Ltd [ Hafary BM ]. Hafary BM has an issued and paid-up share capital of SGD comprising 100 shares and is principally involved in investment holding. (h) On 25 August 2017, *Hap Seng Auto Sdn Bhd acquired the entire issued share capital of Hap Seng CarFleet Sdn Bhd (formerly known as Sunlink Resources Sdn Bhd) [ HS CarFleet ] comprising 1 ordinary share at a cash consideration of RM1.00. HS CarFleet is a private limited company incorporated in Malaysia and is currently dormant. (i) (j) On 28 August 2017, *HSC Melbourne Holding Limited incorporated a wholly-owned subsidiary in Australia namely, HSC Melbourne Pty Ltd [ HMPL ]. HMPL has an issued and paid-up share capital of AUD comprising 100 ordinary shares and is currently dormant. On 28 August 2017, *HSC Brisbane Holding Limited incorporated a wholly-owned subsidiary in Australia namely, HSC Brisbane Pty Ltd [ HBPL ]. HBPL has an issued and paid-up share capital of AUD comprising 100 ordinary shares and is currently dormant. * These are the Company s wholly-owned subsidiaries. 10. Significant events and transactions There were no events or transactions which are significant to an understanding of the changes in financial position and performance of the Company since the end of the last annual reporting period and up to 17 November Events after the end of interim period Save for the subsequent events as disclosed in Note 10 of Part B, events after the end of interim period and up to 17 November 2017 that have not been reflected in these financial statements are as follows: (a) (b) On 13 October 2017, *Hap Seng Land Sdn Bhd acquired the entire issued share capital of Fresh Green Planet Sdn Bhd [ Fresh Green ] comprising 1 ordinary share at a cash consideration of RM1.00. Fresh Green is a private limited company incorporated in Malaysia and is principally involved in provision of management services. As part of the Group s re-organisation, the Company had on 16 October 2017 completed the transfer of 1,000,000 ordinary shares representing the entire issued share capital of *Hap Seng Automotive Acceptance Sdn Bhd [ HSAA ] to *Sunrise Addition Sdn Bhd for a cash consideration of RM1,804,145. HSAA is a private limited company incorporated in Malaysia and is principally involved in the provision of financial services. QtrlyReport 30 Sept HSCB.docx Page 13 of 34

14 11. Events after the end of interim period (continued) (c) On 23 October 2017, *Malaysian Mosaics Sdn Bhd [ MMSB ], the registered and beneficial owner of all that parcel of 60-year leasehold land which lease is due to expire on 3 April 2060 (with an unexpired term of 43 years) with a provisional titled land area of approximately hectares and actual surveyed area of hectares held under H.S.(D) 43799, Lot No. PTD (New Lot No ), Mukim and District of Kluang, State of Johor Darul Ta zim [the Kluang Land ] entered into a sale and purchase agreement [ MMSB SPA ] to dispose of the Kluang Land together with various buildings for the production and manufacturing of floor and wall tiles [the MMSB Buildings ] erected thereon [the Kluang Land and the MMSB Buildings are collectively referred to as the said Property ] to Byorion Sdn Bhd [ Byorion ], a wholly-owned subsidiary of Akal Megah Sdn Bhd which in turn is wholly-owned by Lei Shing Hong Limited [ LSH ], for a cash consideration of RM97.5 million [ MMSB Disposal ]. Simultaneous with the execution of MMSB SPA, MMSB entered into a lease agreement with Byorion whereby MMSB as the lessee shall lease back from Byorion as the lessor, the said Property for an initial period of 10 years [ Initial Period ] at a monthly rental of RM337, with an option to renew for a further term of 10 years subject to the terms contained therein which Initial Period shall commence upon completion of the MMSB SPA [ Leaseback ]. The MMSB Disposal was deemed a related party transaction. As at 23 October 2017, Tan Sri Datuk Seri Panglima Lau Cho Lau Yu Chak [ Tan Sri Lau ] was a 37.68% major shareholder of LSH and a 56.00% major shareholder and director of Gek Poh (Holdings) Sdn Bhd [ Gek Poh ]. Gek Poh held 12.42% shares of LSH and was also the holding company of the Company with an aggregate shareholding of 60.83%, comprising 54.63% direct shareholding and 6.20% indirect shareholding via Hap Seng Insurance Services Sdn Bhd [ HSIS ]. Lei Shing Hong Investment Ltd [ LSHI ], a wholly-owned subsidiary of Lei Shing Hong Capital Limited [ LSHCL ], which in turn is the wholly-owned subsidiary of LSH, was a 13.08% major shareholder of the Company. Hence, Tan Sri Lau, Gek Poh, HSIS, LSH, LSHCL and LSHI were deemed interested in the MMSB Disposal and Leaseback. The MMSB SPA was completed on 25 October 2017 with the full purchase consideration paid by the purchaser and accordingly, the Leaseback has become effective on the same day. The MMSB Disposal resulted in a net gain of approximately RM26.52 million to the Group. (d) (e) (f) (g) On 26 October 2017, *Hap Seng Auto Sdn Bhd acquired the entire issued share capital of Sungreen Synergy Sdn Bhd [ Sungreen ] comprising 1 ordinary share at a cash consideration of RM1.00. Sungreen is a private limited company incorporated in Malaysia and is currently dormant. On 1 November 2017, *HSC International Limited incorporated 2 wholly-owned subsidiaries in Singapore namely, HSC Melbourne Holding Pte Ltd [ HMH ] and HSC Brisbane Holding Pte Ltd [ HBH ]. Both HMH and HBH have an issued and paid-up share capital of SGD1.00 comprising 1 ordinary share each and are currently dormant. On 2 November 2017, *HSC Melbourne Holding Pte Ltd incorporated a wholly-owned subsidiary in Australia namely, HS Credit (Melbourne) Pty Ltd [ HCMPL ]. HCMPL has an issued and paid-up share capital of AUD comprising 100 ordinary shares and is currently dormant. On 2 November 2017, *HSC Brisbane Holding Pte Ltd incorporated a wholly-owned subsidiary in Australia namely, HS Credit (Brisbane) Pty Ltd [ HCBPL ]. HCBPL has an issued and paid-up share capital of AUD comprising 100 ordinary shares and is currently dormant. * These are the Company s wholly-owned subsidiaries. QtrlyReport 30 Sept HSCB.docx Page 14 of 34

15 12. Changes in contingent liabilities or contingent assets since the end of the last annual reporting period Since the end of the last annual reporting period, the Group does not have any contingent liability or contingent asset as at the end of the year which is expected to have an operational or financial impact on the Group. 13. Capital commitments The Group has the following capital commitments: As at As at RM 000 RM 000 (Audited) Contracted but not provided for 76,204 63,141 Authorised but not contracted for 32, , , , Significant related party transactions During the interim period, the Company and its subsidiaries did not enter into any related party transactions or recurrent related party transactions of a revenue or trading nature that had not been included or exceeded by 10% of the estimated value which had been mandated by the shareholders at the extraordinary general meeting held on 19 May 2016 and the annual general meeting held on 31 May 2017, except for the followings: (a) On 13 January 2017, *Hap Seng Properties Development Sdn Bhd [ HSPD ], the registered owner of all that parcel of vacant leasehold land held under CL measuring approximately acres situated at Mile 10, Apas Road, District of Tawau, State of Sabah [ Apas Road Land ] entered into a sale and purchase agreement [ HSPD SPA ] to dispose portions of the Apas Road Land, Lot 1 and Lot 4 measuring approximately acres and acres respectively to Goldcoin Ventures Sdn Bhd, the wholly-owned subsidiary of Akal Megah Sdn Bhd [ Akal Megah ] which in turn is wholly-owned by Lei Shing Hong Limited [ LSH ], for a total cash consideration of RM91,000,000 [ HSPD Disposal ]. HSPD Disposal was deemed a related party transaction. As at the date hereof, Tan Sri Datuk Seri Panglima Lau Cho Lau Yu Chak [ Tan Sri Lau ] was a 37.68% major shareholder of LSH and a 56.00% major shareholder and director of Gek Poh (Holdings) Sdn Bhd [ Gek Poh ]. Gek Poh held 12.42% shares of LSH and was also the holding company of the Company with an aggregate shareholding of 61.43%, comprising 54.63% direct shareholding and 6.80% indirect shareholding via Hap Seng Insurance Services Sdn Bhd [ HSIS ]. Lei Shing Hong Investment Ltd [ LSHI ], a wholly-owned subsidiary of Lei Shing Hong Capital Limited [ LSHCL ], which in turn is the wholly-owned subsidiary of LSH, was a 12.08% major shareholder of the Company. Hence, Tan Sri Lau, Gek Poh, HSIS, LSH. LSHCL and LSHI were deemed interested in the HSPD Disposal. The HSPD SPA was completed on 23 January 2017 with the full purchase consideration paid by the purchaser and resulted in a net gain of approximately RM61.65 million to the Group. (b) HSL Disposal as disclosed in Note 9(a) above. QtrlyReport 30 Sept HSCB.docx Page 15 of 34

16 14. Significant related party transactions (continued) (c) On 14 August 2017, *Hap Seng Commercial Development Sdn Bhd [ HSCD ], the registered and/or beneficial owner of all those 48 contiguous parcels of vacant leasehold land measuring approximately 438, square feet situated at Mile 1, Jalan Kuhara, Tawau, Sabah [ Jalan Kuhara Lands ] entered into a sale and purchase agreement [ HSCD SPA ] to dispose the Jalan Kuhara Lands to Zillion Sunrise Sdn Bhd, the wholly-owned subsidiary of Akal Megah Sdn Bhd [ Akal Megah ] which in turn is wholly-owned by Lei Shing Hong Limited [ LSH ], for a total cash consideration of RM175,276,000 [ HSCD Disposal ]. HSCD Disposal was deemed a related party transaction. As at 14 August 2017, Tan Sri Datuk Seri Panglima Lau Cho Lau Yu Chak [ Tan Sri Lau ] was a 37.68% major shareholder of LSH and a 56.00% major shareholder and director of Gek Poh (Holdings) Sdn Bhd [ Gek Poh ]. Gek Poh held 12.42% shares of LSH and was also the holding company of the Company with an aggregate shareholding of 60.83%, comprising 54.63% direct shareholding and 6.20% indirect shareholding via Hap Seng Insurance Services Sdn Bhd [ HSIS ]. Lei Shing Hong Investment Ltd [ LSHI ], a wholly-owned subsidiary of Lei Shing Hong Capital Limited [ LSHCL ], which in turn is the wholly-owned subsidiary of LSH, was a 13.08% major shareholder of the Company. Hence, Tan Sri Lau, Gek Poh, HSIS, LSH, LSHCL and LSHI were deemed interested in the HSCD Disposal. The HSCD SPA was completed on 18 August 2017 with the full purchase consideration paid by the purchaser and resulted in a net gain of approximately RM million to the Group. * These are the Company s wholly-owned subsidiaries. (The remainder of this page has been intentionally left blank) QtrlyReport 30 Sept HSCB.docx Page 16 of 34

17 PART B Explanatory Notes Pursuant to the Main Market Listing Requirements of Bursa Malaysia Securities Berhad 1. Review of performance The Group s revenue for the current quarter at RM1.4 billion was marginally below the preceding year corresponding quarter. Nevertheless, the Group s operating profit for the current quarter at RM284.9 million was marginally above the preceding year corresponding quarter with better profit contribution from Property, Credit Financing and Fertilizers Trading Divisions but negated by lower profit contribution from Plantation, Automotive and Building Materials Divisions. Group profit before tax [ PBT ] and profit after tax [ PAT ] for the current quarter at RM259.1 million and RM193.2 were both marginally above the preceding year corresponding quarter. Plantation Division s revenue and operating profit for the current quarter at RM113.6 million and RM35.1 million were both lower than the preceding year corresponding quarter by 29% and 39% respectively mainly due to lower sales volume of Crude Palm Oil [ CPO ] and Palm Kernel [ PK ] as well as lower average selling price realization of PK but mitigated somewhat by higher average selling price realization of CPO. Average selling price per tonne of CPO and PK for the current quarter were RM2,765 and RM2,327 respectively as compared to the preceding year corresponding quarter of RM2,644 for CPO and RM2,669 for PK. CPO sales volume for the current quarter at 33,376 tonnes was 32% lower than the preceding year corresponding quarter whilst PK sales volume was 19% lower at 8,331 tonnes. The lower sales volume of CPO and PK were mainly due to lower production. CPO and PK production were affected by Fresh fruit bunches [ FFB ] production for the current quarter which was 15% lower than the preceding year corresponding quarter mainly due to the lingering effect of El-Nino which has affected the seasonal yield trend and cropping patterns. The lower production has also resulted in higher unit production cost of CPO. The Property Division s revenue for the current quarter at RM297.3 million was 38% below the preceding year corresponding quarter mainly due to lower project sales but mitigated somewhat by better revenue contribution from its investment properties segment and higher sales of non-strategic properties. Nevetheless, the division s operating profit for the current quarter at RM186.3 million was 7% higher than the preceding year corresponding quarter of RM173.7 million due to higher profit contribution from the sales of non-strategic properties. Current new projects namely Aria Luxury Residences in the Kuala Lumpur City Centre, Akasa at Cheras South and Kingfisher Inanam Condominiums in Kota Kinabalu are at their early stage of construction recording lower project revenue whereas in the preceding year corresponding quarter, the projects segment benefitted from the advanced stage of completion of Nadi Bangsar which was 87% sold as at end of the preceding year corresponding quarter. Credit Financing Division continues to register improved performance on the back of higher loan portfolio of RM2.64 billion, 23% above the preceding year corresponding quarter of RM2.15 billion. Accordingly, the division s revenue and operating profit for the current quarter at RM51.6 million and RM43.3 million were higher than the preceding year corresponding quarter by 18% and 28% respectively. The non-performing loans ratio at the end of the current quarter improved further to 1.77% from the end of preceding quarter of 1.96% and end of the preceding year corresponding period of 2.15%. The Automotive Division s revenue at RM279.8 million was 8% lower than the preceding year corresponding quarter mainly affected by lower vehicle sales revenue due to vehicles sales mix variance but mitigated by better performance of its after sales and services segment with higher throughput. The revenue contribution from its vehicle sales segment was 12% below the preceding year corresponding quarter whilst its after sales and services segment was 29% higher than the preceding year corresponding quarter. Consequently, the operating profit for the current quarter at RM5.2 million was lower than the preceding year corresponding quarter by 26%, affected by higher operating expenses relating to the initial start up costs of its new autohauses. The Division launched its 8th and 9th autohauses at Bukit Tinggi, Klang and Iskandar, Johor Bahru respectively in April and September 2017 to broaden its market coverage. QtrlyReport 30 Sept HSCB.docx Page 17 of 34

18 1. Review of performance (continued) Fertilizers Trading Division continued to operate in a very competitive fertilizers market in Malaysia and Indonesia. Nevertheless, it recorded improvement in both revenue and operating profit in the current quarter as compared to preceding year corresponding quarter with better performance mainly from Malaysia and Indonesia. The Division s revenue and operating profit for the current quarter at RM287.2 million and RM10.3 million were higher than the preceding year corresponding quarter by 24% and 59% respectively, benefitting from higher average selling prices and higher sales volume. Building Materials Division s revenue for the current quarter at RM407.9 million was 8% higher than the preceding year corresponding quarter of RM377.4 million with improvement from all the segments. However, the division s operating profit for the current quarter at RM20 million was 3% lower than the preceding year corresponding quarter mainly affected by lower contribution from Malaysian Mosaics Sdn Bhd [ MMSB ] and Hafary Holdings Limited [ Hafary ]. MMSB and Hafary recorded improvement in revenue by 4% and 8% respectively over the preceding year corresponding quarter but registered lower operating profit as trading margins were affected by the competitive market conditions. The building materials trading, quarry, asphalt and bricks businesses registered higher revenue by 11% whilst operating profit was higher than the preceding year corresponding quarter amidst the competitive pricing and soft market conditions. The improvement was mainly attributable to better contribution from its quarry businesses which benefitted from better selling prices and margins as well as cost control measures and ongoing efforts to improve operational efficiencies. Overall, Group PBT and PAT for the year to date at RM1.19 billion and RM1.01 billion were higher than the preceding corresponding period by 7% and 5% respectively. Profit attributable to owners of the Company for the year to date at RM959.7 million was 5% higher than the preceding year corresponding period whilst basic earnings per share for the year to date at sen was 2% below last year corresponding period of sen due to the enlarged share capital arising from the warrants exercised and treasury shares resold in the previous financial year. 2. Comments on material changes in the profit before tax for the quarter reported as compared with the immediate preceding quarter Current Quarter ended Immediate Preceding Quarter ended Increase/ RM 000 RM 000 (Decrease) Revenue 1,398,073 1,306,287 7% Operating profit 284, ,750 23% Profit before tax 259, ,496-63% Group PBT for the current quarter at RM259.1 million was 63% lower than the immediate preceding quarter mainly due to the inclusion of the gain arising from the disposal of a subsidiary of RM496.8 million in the immediate preceding quarter. Excluding the gain, Group PBT for the current quarter was 27% higher than the immediate preceding quarter mainly attributable to better performance from Property Division but offset somewhat by lower contribution from Plantation Division. Property Division s operating profit for the current quarter was RM56.3 million (43%) higher than the immediate preceding quarter of RM130 million mainly attributable to better project sales and higher sales of non-strategic properties. QtrlyReport 30 Sept HSCB.docx Page 18 of 34

19 2. Comments on material changes in the profit before tax for the quarter reported as compared with the immediate preceding quarter (continued) Plantation Division s operating profit for the current quarter was RM5.2 million (13%) lower than the immediate preceding quarter of RM40.4 million mainly due to lower sales volume of CPO and PK as well as lower average selling price of CPO. Sales volume of CPO and PK for the current quarter were 14% and 4% lower than the immediate preceding quarter of 39,009 tonnes and 8,693 tonnes respectively. Average selling price per tonne of CPO was 5% lower than the immediate preceding quarter of RM2,897 per tonne whilst average selling price of PK was 9% above the immediate preceding quarter of RM2,142 per tonne. 3. Current year prospects Malaysia s palm oil inventories as at end of October were 2.2 million tonnes, the highest since January This was partly due to palm oil crop production recovery which was previously affected by the El-Nino weather phenomenon. The expectation of global production of palm oil exceeding consumption may exert downward pressure on palm oil prices in the near term. However, such expectation could be dampened by meteorologists forecast of the possibility of the La-Nina weather phenomenon occurring in the months ahead. The La-Nina phenomenon impacts the global climate and disrupts normal weather patterns which can cause heavy rainfall and lead to intense storms in some regions whilst others may experience droughts or much colder climate. This phenomenon may affect the yield of global production of vegetable oils, including soybean oil and palm oil. Heavy rainfall caused by La Nina could potentially reduce palm oil yields due to disruption to harvesting and formation of healthy fruit bunches. The Property Division continues to drive sales and progress completion of its current development projects namely Aria Luxury Residences in the Kuala Lumpur City Centre, Akasa at Cheras South, Kingfisher Putatan and Kingfisher Inanam Condominiums in Kota Kinabalu and Ria Heights in Tawau which are expected to contribute positively to its current year s performance. Upcoming launches of new projects in Kota Kinabalu, Lahad Datu and Kuala Lumpur City Centre are expected to contribute positively to the division s future performance. The division continues to actively engage with potential tenants to optimise the occupancy rates of its strategically located investment properties in Kuala Lumpur City Centre and Kota Kinabalu. Credit Financing Division continues to focus on growing its term loan portfolio with innovative and flexible financing products to cater to the needs of its wide network of customers and managing its cost of funds and funding requirements to improve interest yield. Leveraging on group synergy by tapping on to other division s wide business network and customers base will further grow its customers base and expand its loan portfolio. Concerted efforts are placed on ensuring timely collections and loans recovery to manage non-performing loans at acceptable levels. Automotive Division s wider market coverage through its newly launched autohauses at Bukit Tinggi, Klang and Iskandar, Johor Bahru as well as the opening of another new autohaus in Puchong South in early next year are expected to contribute positively to its future performance and expanding its market share. The division will continue to focus on providing excellent after sales services to its customers to retain and to expand its customers base amidst a very competitive premium passenger vehicles segment in Malaysia. Fertilizers Trading Division expects the trading environment in which it operates to remain competitive especially within the fertilizers tender markets in Malaysia and Indonesia. The fertilizers market will continue to be influenced by volatility in foreign exchange movements, fluctuations in palm oil prices and supply constraints. Palm oil prices are in turn affected by global supply and demand as well as price movement of related edible oils. Building Materials Division expects its quarries businesses in East Malaysia to continue to benefit from the increasing demand arising from the construction of the Pan Borneo Highway and benefitting from the various Group s property development activities. The division s operations in Singapore are expected to benefit from the higher public sector construction demand in Singapore. The division continues to grow the OEM sourcing for its tiles segment via MMSB to increase its market share in both the export and renovation markets. Based on the foregoing, the Group is optimistic of achieving better results for the financial year ending 31 December QtrlyReport 30 Sept HSCB.docx Page 19 of 34

20 4. Variances between actual profit and forecast profit Variances between actual profit and forecast profit are not applicable as the Company has not provided any profit forecast in any public document. 5. Profit before tax Quarter ended Year-to-date ended RM 000 RM 000 RM 000 RM 000 Profit before tax is arrived at after crediting/(charging): Interest income 3,098 2,574 10,196 7,894 Dividend income from available-for-sale equity instrument Dividend income from held for trading equity instrument Dividend income from money market deposits 6,131 4,075 14,057 5,397 Gain on held for trading equity instruments at fair value - (5,531) 8,918 (5,531) Gain on money market deposits at fair value Interest expense (36,591) (31,333) (111,823) (97,344) Depreciation and amortisation (36,207) (31,532) (108,452) (92,100) Net reversal/(allowance) of impairment losses - trade receivables 33 (3,438) (1,054) (6,677) Net inventories written down (2,869) (1,922) (8,479) (3,789) Gain on disposal of property, plant and equipment 1, ,068 92,550 Property, plant and equipment written off (685) (1,017) (1,639) (1,503) Biological assets written off - - (87) (63) Bad debts written off (134) (60) (165) (152) Net foreign exchange (loss)/gain (2,086) 3,854 (3,946) 3,249 (Loss)/Gain on hedging activities (344) (1,325) Gain/(Loss) on non-hedging derivative instruments 36 (252) 444 (320) Recovery of bad debts ,653 Other gain items - Gain on disposal of a subsidiary , Gain on disposal of 51% equity interest in a subsidiary ,424 - Gain on recognition of 49% equity interest retained in a former subsidiary at its fair value , , ,085 Save as disclosed above, the other items as required under Appendix 9B, Part A(16) of the Main Market Listing Requirements are not applicable. QtrlyReport 30 Sept HSCB.docx Page 20 of 34