Ladang Perbadanan-Fima Berhad Annual Report 2004

ANNUAL REPORT
LADANG PERBADANAN-FIMA BERHAD

Co. No. 52682-H
Incorporated in Malaysia
1979 - 2004
1994
1995
COVER RATIONALE Oil palm fronds shown on the cover symbolise the core business activity of LADANG PERBADANAN-FIMA BERHAD in oil palm cultivation since its incorporation in 1979. The healthy green frond signifies the coming into maturity of a new generation of high yielding progenies with ageing palms, as depicted by the yellowish green frond, replanted progressively under the Company's accelerated replanting programme. The year 2004 hot stamped in silver commemorates the Company's 25th Anniversary celebration, accumulating 25 years of experience and embracing a mix of proven and progressive culture devoted to becoming a successful and exemplary homegrown plantation company. Set against a white background to represent clarity and transparency, the Company continues with its commitment to focus on its business operations towards increasing profitability and enhancing shareholders' value. 1998 1999
1996
1997
2000
2001
2002
2003
Contents
Notice of Annual General Meeting Statement Accompanying Notice of Annual General Meeting Corporate Vision and Mission Corporate and Organisational Structures Corporate Information Directors' Profile Chairman's Statement Audit Committee Report Corporate Governance Statement Internal Control Statement Additional Disclosures Code of Business Conduct and Ethics Financial Calendar Financial Highlights Quarterly Results Area Statement Properties Shareholding Statistics Directors' Responsibility Statement Financial Statements Proxy Form 2 3 4 5 6-7 8-9 10 - 11 12 - 17 18 - 22 23 - 24 25 - 26 27 28 29 30 31 32 33 - 34 35 36 - 62
Notice of
Annual General Meeting
NOTICE IS HEREBY GIVEN THAT the Twenty-Fifth Annual General Meeting of the Company will be held at Crystal 1 Ballroom, Casuarina Ipoh, 18 Jalan Raja Dr. Nazrin Shah (Jalan Gopeng), 30250 Ipoh, Perak, Malaysia on Wednesday, 22 June 2005 at 11:00 a.m. for the following purposes: 1. To receive and consider the Audited Financial Statements for the year ended 31 December 2004 and the Reports of the Directors and Auditors thereon. To sanction the payment of a final dividend of 10 sen less 28% tax and a special dividend of 5 sen less 28% tax for the year ended 31 December 2004 as recommended by the Board. To re-elect Ir. Muhammad Hafni bin Ibrahim who retires in accordance with Article 66 of the Company's Articles of Association. To re-elect YBhg. Dato' Richard Ong Guan Seng who retires in accordance with Article 66 of the Company's Articles of Association. To re-elect YBhg. Dato' Jaafar bin Lajis who retires in accordance with Article 72 of the Company's Articles of Association. To re-elect Encik Kamisan bin Suja' who retires in accordance with Article 72 of the Company's Articles of Association. To re-elect Mr. Yeoh Hock Thong who retires in accordance with Article 72 of the Company's Articles of Association. To approve the payment of Directors' fees for the year ended 31 December 2004. To re-appoint Messrs. KPMG Desa Megat & Co. as Auditors of the Company and to authorise the Directors to fix their remuneration.
2.
3.
4.
5. 6. 7. 8. 9.
10. To transact any other ordinary business of the Company of which due notice shall have been given.
NOTICE OF BOOK CLOSURE NOTICE IS HEREBY GIVEN THAT the Register of Members of the Company will be closed on 28 June 2005 for the purpose of determining members' entitlement to the dividends. The dividends, if so approved at the Twenty-Fifth Annual General Meeting, will be paid on 12 July 2005 to depositors registered in the Register of Depositors at the close of business at 5:00 p.m. on 27 June 2005.
LADANG PERBADANAN-FIMA BERHAD Annual Report 2004
FURTHER NOTICE IS HEREBY GIVEN THAT a depositor shall qualify for entitlement to the dividends only in respect of: (a) Shares transferred into the Depositor's Securities Account before 4:00 p.m. on 27 June 2005 in respect of transfers;
(b) Shares deposited into the Depositor's Securities Account before 12:30 p.m. on 23 June 2005 in respect of shares exempted from mandatory deposit; (c) Shares bought on the Bursa Malaysia Securities Berhad on a cum entitlement basis according to the rules of the Bursa Malaysia Securities Berhad.
BY ORDER OF THE BOARD Gowrie Navaratnam Mohd Nasir bin Ismail Secretaries IPOH 18 May 2005
NOTES
1. 2. 3. 4. The proxy form, duly signed, must be deposited at the Registered Office of the Company, No. 10 Persiaran Gopeng Satu, 31350 Ipoh, Perak, Malaysia, not less than 48 hours before the meeting. A corporation must complete the proxy form under its common seal or under the hand of an officer or attorney duly authorised. A proxy need not be a member of the Company. Unless voting instructions are indicated in the spaces provided in the proxy form, the proxy may vote as he thinks fit.
Statement Accompanying
Notice of Annual General Meeting
1.0 DIRECTORS STANDING FOR RE-ELECTION AT THE 25TH ANNUAL GENERAL MEETING 1.1 The Directors retiring by rotation pursuant to Article 66 of the Company's Articles of Association and seeking re-election as Directors of the Company are: (i) (ii) 1.2 Ir. Muhammad Hafni bin Ibrahim YBhg. Dato' Richard Ong Guan Seng
The Directors who were appointed during the year and seeking re-election as Directors of the Company pursuant to Article 72 of the Company's Articles of Association are: (i) (ii) (iii) YBhg. Dato' Jaafar bin Lajis Encik Kamisan bin Suja' Mr. Yeoh Hock Thong
The details of Directors standing for re-election and their shareholdings are set out in the Directors' Profile and Shareholding Statistics appearing in the Annual Report.
2.0 ATTENDANCE OF DIRECTORS AT BOARD MEETINGS A total of five Board Meetings were held during the financial year ended 31 December 2004. Details of the Directors' attendance are as listed below: Name of Director Ir. Muhammad Hafni bin Ibrahim Dato' Shamsul Bahari bin Salleh Khir Dato' Haji Ahmad Zakiuddin bin Harun Dato' Richard Ong Guan Seng Ahmad Riza bin Basir (resigned on 11 December 2004) Dato' Haji Shaharuddin bin Haji Haron (resigned on 11 December 2004) Ho Dua Tiam @ Ho Guat Tiam (resigned on 11 December 2004) Roslan bin Hamir (resigned on 11 December 2004) Dato' Jaafar bin Lajis (appointed on 11 December 2004) Kamisan bin Suja' (appointed on 11 December 2004) Yeoh Hock Thong (appointed on 11 December 2004) Attendance 5/5 4/5 4/5 4/5 4/4 4/4 4/4 4/4 0/1 * 0/1 * 0/1 *
* The 3 Directors who were appointed on 11 December 2004 were unable to attend the Emergency Board Meeting held on 15 December 2004, being the first Meeting convened subsequent to their appointment and the last meeting held for the financial year. 3.0 DATE, TIME AND VENUE OF THE 25TH ANNUAL GENERAL MEETING Date Time Venue : : 22 June 2005 11:00 a.m. : Crystal 1 Ballroom Casuarina Ipoh 18, Jalan Raja Dr. Nazrin Shah (Jalan Gopeng) 30250 Ipoh Perak, Malaysia
Corporate
Vision and Mission
VISION
LADANG PERBADANAN-FIMA BERHAD strives to be a successful, responsible and exemplary homegrown plantation company.
MISSION
Generate good earnings and steady growth to Our Shareholders through enhancing productivity and efficiency in the management of its plantation and milling operations, expanding the Company's existing business and exploring new opportunities to expanding the Company's earning base with a view of enhancing shareholder value. Promote a conducive and performance based working environment to Our Employees while focusing on human resource development and long-term employment. Meet Our Customers' needs, preferences and expectations through the provision of quality produce more efficiently than our competitors. Develop and maintain mutually beneficial relationship with Our Business Associates. Participating and contributing to Our Country through provision of employment, business opportunities and development of agricultural land. By being a good corporate citizen, we maintain our commitment to the needs of Our Environment through responsible agronomic practices.
Corporate
And Organisational Structures
CORPORATE STRUCTURE LADANG PERBADANAN-FIMA BERHAD

LPF PROPERTIES SDN BHD (100%)
MILLJET SDN BHD* (40%)

* In creditors' liquidation
ORGANISATIONAL STRUCTURE BOARD OF DIRECTORS
COMPANY SECRETARY
AUDIT COMMITTEE
MANAGEMENT COMMITTEE
TENDER COMMITTEE
NOMINATING COMMITTEE
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FINANCE & ADMINISTRATION
INTERNAL AUDIT
RISK MANAGEMENT UNIT
PLANTATION OPERATIONS
MILL OPERATIONS
RISK MANAGEMENT COMMITTEE
Corporate
Information
CORPORATE PROFILE Company no. Legal form Country of incorporation Date of incorporation Authorised share capital Par value Paid-up share capital Financial year end Registered office Principal activities Telephone no. Facsimile no. : : : : : : : : : : : : 52682-H Public Limited Company Malaysia 29 November 1979 RM150.0 million RM1.00 per share RM114.3 million 31 December No. 10 Persiaran Gopeng Satu, 31350 Ipoh, Perak, Malaysia Oil palm cultivation and production and sale of crude palm oil and palm kernel 605-2415661 605-2559846
SECRETARIES Gowrie Navaratnam Mohd Nasir bin Ismail
AUDITORS KPMG Desa Megat & Co., Chartered Accountants
PRINCIPAL BANKERS Bumiputra-Commerce Bank Berhad RHB Bank Berhad Malayan Banking Berhad
SHARE REGISTRAR Symphony Share Registrars Sdn Bhd 35 Jalan Hussein, 30250 Ipoh, Perak, Malaysia Telephone no. : 605 - 2415633 Facsimile no. : 605 - 2415578
STOCK EXCHANGE LISTING Listing Sector Stock name Stock code Listing date : : : : : Main Board of Bursa Malaysia Securities Berhad Plantations LPF 5851 11 November 1994
Corporate
Information
BOARD OF DIRECTORS AND BOARD COMMITTEES
Management Committee
BOARD OF DIRECTORS
Audit Committee
Risk Management Committee Nominating Committee

BOARD OF DIRECTORS Ir. Muhammad Hafni bin Ibrahim Dato' Shamsul Bahari bin Salleh Khir Dato' Richard Ong Guan Seng Dato' Haji Ahmad Zakiuddin bin Harun Dato' Jaafar bin Lajis Kamisan bin Suja' Yeoh Hock Thong Ahmad Riza bin Basir Dato' Haji Shaharuddin bin Haji Haron Ho Dua Tiam @ Ho Guat Tiam Roslan bin Hamir MANAGEMENT COMMITTEE Ir. Muhammad Hafni bin Ibrahim Dato' Shamsul Bahari bin Salleh Khir Yeoh Hock Thong Dato' Haji Shaharuddin bin Haji Haron Roslan bin Hamir AUDIT COMMITTEE (Chairman) (appointed on 4 January 2005) (resigned on 11 December 2004) (resigned on 11 December 2004) (Chairman)
Tender Committee
(appointed on 11 December 2004) (appointed on 11 December 2004) (appointed on 11 December 2004) (resigned on 11 December 2004) (resigned on 11 December 2004) (resigned on 11 December 2004) (resigned on 11 December 2004)
(appointed on 4 January 2005) (resigned on 11 December 2004) (resigned on 11 December 2004)
RISK MANAGEMENT COMMITTEE Dato' Richard Ong Guan Seng Dato' Shamsul Bahari bin Salleh Khir Dato' Haji Ahmad Zakiuddin bin Harun Kamisan bin Suja' Dato' Haji Shaharuddin bin Haji Haron Roslan bin Hamir TENDER COMMITTEE Dato' Jaafar bin Lajis Dato' Shamsul Bahari bin Salleh Khir Dato' Richard Ong Guan Seng Roslan bin Hamir NOMINATING COMMITTEE Dato' Richard Ong Guan Seng Dato' Shamsul Bahari bin Salleh Khir Yeoh Hock Thong Ahmad Riza bin Basir Ho Dua Tiam @ Ho Guat Tiam (Chairman) (appointed on 26 February 2005) (appointed on 26 February 2005) (resigned on 11 December 2004) (resigned on 11 December 2004) (Chairman, appointed on 4 January 2005) (Chairman)
(appointed on 4 January 2005) (resigned on 11 December 2004) (resigned on 11 December 2004)
(resigned on 11 December 2004)
Dato' Richard Ong Guan Seng Dato' Shamsul Bahari bin Salleh Khir Dato' Haji Ahmad Zakiuddin bin Harun Kamisan bin Suja' Dato' Haji Shaharuddin bin Haji Haron Roslan bin Hamir
(Chairman)
Directors'
Profile
Ir. MUHAMMAD HAFNI BIN IBRAHIM Independent, Non-Executive Chairman, 48 years of age, Malaysian An Engineer by qualification, he was appointed to the Board on 14 January 1999 and Chairman on 12 December 2000. He serves as a member of the Management Committee and was appointed its Chairman on 15 November 2003. He obtained his Bachelor of Science in Engineering (Honours) from Plymouth Polytechnic, United Kingdom. He has been with the Perak State Development Corporation ("PSDC") since 1980 and was promoted to Deputy Chief Executive Officer (II) in 2004. Whilst he does not hold any directorships in any other public listed companies, he sits on the board of several companies within the PSDC Group.
DATO' SHAMSUL BAHARI BIN SALLEH KHIR DPMP, PCM, AMP, PPT Independent, Non-Executive Director, 58 years of age, Malaysian A First Director of the Company, he also serves as a member of the Management Committee, Tender Committee, Audit Committee and Risk Management Committee. On 26 February 2005, he was appointed a member of the Nominating Committee. He was the Chairman of the Company from 29 November 1979 and was appointed Executive Chairman in 1994 until November 2000. He obtained his Bachelor of Arts in Economics from University Malaya in 1969 and his Master in Rural Development from Institute of Social Studies, The Hague, Netherlands in 1977. He served the Perak State Government from 1970 to 1982. In 1978, he was seconded to the Perak State Agricultural Development Corporation and was appointed its General Manager and Chief Executive in 1982, where he served until 1994. He does not hold any directorship in any other public listed companies.
DATO' HAJI AHMAD ZAKIUDDIN BIN HARUN DSDK, AMK Independent, Non-Executive Director, 63 years of age, Malaysian A lawyer by profession, he was appointed to the Board on 4 August 1994 and serves as a member of the Audit Committee and Risk Management Committee. He qualified as a Barrister at Law (Inner Temple), London, United Kingdom in 1976 and currently runs his own legal practice, Messrs. Hoe and Ahmad Zaki, since 1980. He does not hold any directorship in any other public listed companies.
DATO' RICHARD ONG GUAN SENG DPMP, PMP, AMP, JP Independent, Non-Executive Director, 66 years of age, Malaysian
Appointed to the Board on 22 August 1994, he serves as Chairman of the Audit Committee, Risk Management Committee and Nominating Committee. He also sits as a member on the Tender Committee. He is a member of the Malaysian Institute of Accountants, Malaysian Institute of Certified Public Accountants, Institute of Chartered Accountants in Australia and Institute of Chartered Secretaries and Administrators. He joined KPMG / KPMG Desa Megat & Co. in 1967 where he was a partner until 30 September 1993 when he retired from practice. He is also a Director of Hexza Corporation Berhad, Malaysian Mosaics Berhad and Rock Chemical Industries (Malaysia) Berhad.
Directors'
Profile
DATO' JAAFAR BIN LAJIS DMSM, DSM, PJK Non-Independent, Non-Executive Director, 52 years of age, Malaysian He was appointed a Director on 11 December 2004 and Chairman of the Tender Committee on 4 January 2005. He graduated from Universiti Kebangsaan Malaysia with Bachelor of Economics. After graduation, he served in the civil service for more than 16 years where he was responsible for socio economic matters for rural residents and infrastructure in Malacca. Between 1980 and 1986, he was the State Development Officer of Malacca, attached to the Prime Minister's Department. In 1986, he was a State Assemblyman where he was appointed an Executive Councilor and the Malacca State Assembly Speaker for two terms from 1986 to 1994. He is still active in politics and business. Currently, he is a Director of DPS Resources Berhad and G-TWO Development Sdn Bhd, Chairman for Penasihat Panel Kesihatan Melaka, Director of Malacca Farmer Association and Board member of Malacca Smallholder Cooperative.
KAMISAN BIN SUJA' Non-Independent, Non-Executive Director, 45 years of age, Malaysian He was appointed a Director on 11 December 2004 and a member of the Audit Committee and Risk Management Committee on 4 January 2005. He holds a Bachelor of Art Architecture from Hull School of Architecture, United Kingdom and practiced architecture after graduating until 1994 when he became involved in businesses of various activities such as contractor, project management, turnaround management, project financing and property development. Currently, he is the Group Senior Vice President of Pubel Berhad, a property development based company and sits on the Board of its subsidiary companies, PuBel U-Home Everight Sdn Bhd and PuBel Project Management Sdn Bhd. He is also a Director of Musfa & Co Sdn Bhd, a PKK Class "A" contractor. He does not hold any directorship in any other public listed companies.
YEOH HOCK THONG Non-Independent, Non-Executive Director, 49 years of age, Malaysian He was appointed a Director on 11 December 2004 and a member of the Management Committee and Nominating Committee on 4 January 2005 and 26 February 2005 respectively. He is a Chartered Member of the Institute of Internal Auditors and a Professional Member of the National Institute of Accountants, Australia. He is at present the Executive Director (Finance) of Kamni Corporation Sdn Bhd. Previous to that, he was the Group Chief Financial Officer/Executive Director of Siah Brothers Corporation Berhad from 1997 to 2001. Between 1994 to 1997, he was the General Manager - Finance, Business Planning and Business Development of Land and General Berhad. Prior to 1994, he held various positions in the banking and finance industry. He does not hold any directorship in any other public listed companies.
Note : Save as disclosed, all of the Directors named above do not have any conflict of interest with the Company or have any family relationships with any Director and/or substantial shareholders of the Company. None of the Directors have been convicted of any offence.
Chairman's
Statement
On behalf of the Board of Directors of Ladang Perbadanan-Fima Berhad, it is my pleasure to present to you the Annual Report incorporating the Audited Financial Statements of the Group and the Company for the financial year ended 31 December 2004. Also, I wish to take this opportunity to congratulate the Company on its 25th Anniversary this year. The Company has come a long way since its incorporation in 1979 and is now into its second generation of oil palm planting.
BUSINESS OVERVIEW CPO prices for the first half of the year were favourable, reaching as high as RM2,000 per metric tonne level during the said period. However, the upward momentum lost ground in the second half and eventually caused the prices to hover around RM1,300 to RM1,400 per metric tonne as at the end of the financial year. Nevertheless, the Board of Directors is pleased to inform that the Company had managed to secure reasonably good average CPO and PK prices for the year under review amidst the volatile market conditions.
FINANCIAL RESULTS The Group achieved another year of good results, registering higher revenue of RM44.57 million and pre-tax profit of RM17.80 million for the financial year under review. Revenue from sales of the Company's produce grew by 10% from RM40.46 million attained last year whilst pre-tax profit increased by 21% in comparison to RM14.69 million recorded in 2004. The better result was largely due to favourable prices obtained for the Company's CPO and PK.
REVIEW OF OPERATIONS In the year under review, the Company's planted hectarage comprised of 73% mature and 27% immature palms. With more young palms coming into maturity combined with the presence of ageing and tall palms and the tight manpower situation, FFB yield attained was marginally lower in comparison to last year. However, plans are ahead to increase mechanical assisted infield collection ("MAIC") in 2005 to overcome the labour shortage situation in the estates. On a positive note, the Board of Directors is pleased to report that higher oil extraction rates were recorded in the second half of the year with concerted efforts by both the estates and mill. The Company is into its seventh year of replanting in 2004 and a total of 509 hectares was replanted in the year under review. Another 405 hectares has been earmarked for replanting in 2005. In addition to the existing nursery sited at Ladang Lekir II, another nursery of approximately 7 hectares was constructed at Ladang Changkat Chermin to cater for future replanting requirements. The Company had also engaged the services of a Visiting Adviser and a Mill Consultant to assist the Management Committee to improve the operating standards of the estates and the mill.
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DIVIDEND The Board had recommended a final dividend of 10 sen less 28% tax, for the financial year ended 31 December 2004. In addition, to commemorate the Company's 25th Anniversary, the Board of Directors is also recommending the payment of a special dividend of 5 sen less 28% tax. Both dividends are subject to shareholders' approval at the forthcoming Annual General Meeting. Together with the interim dividend of 5 sen less 28% tax paid on 9 September 2004, the total dividends declared for the financial year ended 31 December 2004 amounted to 20 sen less 28% tax.
Chairman's
Statement
PROSPECTS 2005 will be a challenging year for the Company as more momentum is anticipated in CPO prices. CPO price is expected to remain favourable in the second half of 2005 on expectation of higher global demand. New emerging markets such as Eastern Europe and Africa and the recent use of palm oil as biofuel to substitute mineral-base fuel in Europe should boost the demand for it. In the near term however, the bumper crops of soyabean, rapeseed and cottonseed could have some effect on the CPO price rise. Domestically, the Government's on-going initiative to opt for palm oil as one of the many potential sources of biodiesel should also auger well for the industry. The Board is optimistic of the Company's performance in 2005.
CORPORATE GOVERNANCE We have included statements on Corporate Governance and Internal Control in our Annual Report, which affirms the Board's commitment in ensuring that the highest standards of corporate governance are practiced throughout the Group.
DIRECTORATE The Board of Directors had seen some changes in its composition during the year under review. On 11 December 2004, YBhg. Dato' Haji Shaharuddin bin Haji Haron, Encik Ahmad Riza bin Basir, Mr. Ho Dua Tiam and Encik Roslan bin Hamir resigned from the Board. On behalf of the Board, I wish to place on record our sincere heartfelt gratitude and appreciation for their invaluable contribution and assistance during their tenure of office. The Board extends a warm welcome to YBhg. Dato' Jaafar bin Lajis, Encik Kamisan bin Suja' and Mr. Yeoh Hock Thong as Directors of the Company with effect from 11 December 2004 and we look forward to their cooperation, support and guidance in driving the Company to greater heights.
ACKNOWLEDGEMENT On behalf of the Board, I would like to take this opportunity to thank the Management and employees at all levels for their dedication and hard work without which, the results achieved would not have been possible. To our shareholders and business associates, I extend my sincere appreciation to you for your confidence and continued support in Ladang Perbadanan-Fima Berhad. Last but not least, I wish to express my appreciation to my fellow Directors for their cooperation and untiring efforts in making 2004 another successful year for the Company.
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Ir. MUHAMMAD HAFNI BIN IBRAHIM CHAIRMAN
Audit
Committee Report
The Board of Directors is pleased to present the Audit Committee Report for the year ended 31 December 2004. 1.0 COMPOSITION The Audit Committee comprises the following members: Chairman Dato' Richard Ong Guan Seng Members Dato' Shamsul Bahari bin Salleh Khir Dato' Haji Ahmad Zakiuddin bin Harun Kamisan bin Suja' (appointed on 4 January 2005) Roslan bin Hamir (resigned on 11 December 2004) Secretary Gowrie Navaratnam (Independent, Non-Executive Director) (Independent, Non-Executive Director) (Non-Independent, Non-Executive Director) (Non-Independent, Non-Executive Director) (Independent, Non-Executive Director)
Dato' Haji Shaharuddin bin Haji Haron (resigned on 11 December 2004) (Independent, Non-Executive Director)
2.0 MEETINGS The Audit Committee met five times in the year under review and the attendance of each committee member was as follows: Audit Committee Members Dato' Richard Ong Guan Seng Dato' Shamsul Bahari bin Salleh Khir Dato' Haji Ahmad Zakiuddin bin Harun Dato' Haji Shaharuddin bin Haji Haron Roslan bin Hamir Kamisan bin Suja'
No. of Meetings Attended 4/5 5/5 5/5 5/5 5/5 Not applicable (appointed on 4 January 2005)
3.0 ACTIVITIES During the year, the main activities undertaken by the Audit Committee were as follows:
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(i) Reviewed the annual audit plan with the External Auditors focusing on reporting deadlines, audit strategy and significant risks areas and the impact of changes in the accounting standards and regulatory requirements. (ii) Reviewed with the External Auditors the audit report and results of their audit. Also assessed the assistance and cooperation given by the Management and other employees of the Company to the External Auditors during the course of the audit. (iii) Considered and reviewed the audited financial statements of the Group and the Company before recommending the same for the Board of Directors' approval. (iv) Reviewed the Internal Audit Department's resource requirements, programmes and plan for the financial year and assessed the Internal Audit Department's performance. (v) Received and considered reports from the Internal Audit Department on its activities and findings together with recommendations and reported the same to the Board. Recommended to the Board steps to strengthen the internal controls in the Company.
Audit
Committee Report
(vi) Assessed and considered the internal audit coverage on the Company's principal risk areas and the Internal Audit Department's authority and independence in carrying out its function. (vii) Reviewed whether Management had taken appropriate action on the recommendations of the Internal Audit Department and assessed whether Management and other employees of the Company had given the required assistance and cooperation to the Internal Audit Department in carrying out its function. (viii) Reviewed and considered the quarterly results of the Group and the Company and recommended the same to the Board for approval. (ix) Reviewed the Company's application of the principles set out in Part 1 of the Malaysian Code on Corporate Governance and the extent of the Company's compliance with the Best Practices set out in Part 2 of the Malaysian Code on Corporate Governance and recommended to the Board on the necessary action for compliance. (x) Considered and recommended to the Board the re-appointment of the External Auditors and the audit fees to be received by them. (xi) Reviewed the Company's compliance with applicable laws, regulations, rules, directives and guidelines.
4.0 TERMS OF REFERENCE 4.1 Composition 4.1.1 The Board of Directors shall appoint an Audit Committee from amongst themselves and shall: (i) Comprise of no fewer than 3 members; (ii) A majority of the members must be independent directors; and (iii) At least one member must be a member of the Malaysian Institute of Accountants or if he is not, then he must be a person who complies with Paragraph 15.10 of the Listing Requirements of Bursa Malaysia Securities Berhad. 4.1.2 The Chairman, who shall be elected by the members of the Committee, shall be an independent non-executive director. 4.1.3 No alternate director may be appointed as a member of the Committee. 4.1.4 In the event of any vacancy in the Audit Committee resulting in non-compliance with subparagraph 4.1.1, the Company must fill the vacancy within 3 months. 4.2 Objectives 4.2.1 The primary objectives of the Audit Committee are to: (i) Provide assistance to the Board in fulfilling its fiduciary responsibilities, particularly in the areas relating to the Company's accounting, operation and management controls, financial reporting and business ethics and policies. (ii) Provide greater emphasis on the audit function by increasing the objectivity and independence of the External and Internal Auditors and providing a forum for discussion that is independent of the Management. (iii) Maintain through regularly scheduled meetings a direct line of communication between the Board and the External Auditors, Internal Auditors and Financial Management.
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Audit
Committee Report
4.3 Authority 4.3.1 The Audit Committee is authorised by the Board to undertake the following: (i) Investigate any matters within its term of reference. (ii) Have the necessary resources to perform its duties. (iii) Have full and unrestricted access to any information and documents relevant to its activities. (iv) Have direct communication channels with External Auditors, Internal Auditors, members of the Management and other employees of the Company and Group. (v) Convene meetings with or request the attendance of the External Auditors, Internal Auditors, members of the Management and/or other employees of the Company during the Committee's meetings whenever deemed necessary. (vi) Obtain external legal and other independent professional advise and secure the attendance of outsiders with relevant experience and expertise if it considers necessary. (vii) Promptly report to Bursa Malaysia Securities Berhad matters, which result in breach in the listing requirements. 4.4 Functions In fulfilling its primary objectives, the Audit Committee shall, amongst others, discharge the following functions and report to the Board of Directors: 4.4.1 External and Internal Audit The Audit Committee shall oversee all matters relating to the External and Internal Audit as outlined in Paragraphs 4.4.1(i) to (iii) below. (i) External Auditors (a) Review the annual audit plan with the External Auditors prior to the commencement of the annual audit and discuss:
The general outline of the scope and timing of the auditors' proposed coverage and reporting deadlines. The nature of the audit procedures to be performed.
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The extent of any planned reliance on the work of Internal Auditors and the anticipated effect of this reliance on the examination. Any significant accounting and auditing problems that the auditors may foresee. The impact on the financial statements of any new or proposed changes in the accounting standards or legal or regulatory requirements. The Audit Committee may also request the External Auditors to perform additional audit work directed at specific areas of concern. (b) Recommend to the Board the re-appointment of External Auditors on expiry of their tenure. In considering the re-appointment, the Audit Committee shall consider whether there are any reasons (supported by grounds) to believe that the External Auditor is not suitable for re-appointment and if justified, to recommend to the Board for termination. (c) Receive any letter of resignation from the External Auditors of the Company. (d) Recommend to the Board the nomination of a person or persons for appointment as External Auditors. (e) Recommend to the Board the audit fees to be received by the External Auditors.
Audit
Committee Report
(ii) Internal Audit (a) Review the audit programme, processes and the results of the internal audit programme, processes or investigation undertaken. (b) Assess the adequacy of the scope, functions and resources of the internal audit function and whether it has the necessary authority and independence to carry out its work. (c) Review whether or not Management has taken appropriate actions on the recommendations of the Internal Auditors. (d) Review any appraisal or assessment of the performance of the members of the internal audit function. (e) Approve any appointment or termination of senior staff members of the internal audit function. (f) Be informed of resignations of internal audit staff members and provide the resigning staff member an opportunity to submit his reasons for resigning. (iii) Others (a) Review the assistance and cooperation given by the Management and other employees of the Company to the External and Internal Auditors. (b) Upon request of the External and/or Internal Auditors, the Chairman of the Audit Committee shall convene a meeting of the Committee, excluding the attendance of the executive members of the Committee, whenever deemed necessary to hear and consider any matters the auditors believed should be brought to the attention of the Committee. 4.4.2 Internal Controls and Financial Reporting (i) Appraise with Management: (a) The adequacy, integrity and effectiveness of the Company's internal controls in safeguarding shareholders' investment and the Company's assets. The internal controls cover financial, operational and compliance controls and risk management. (b) The adequacy of compliance with applicable laws, regulations, rules, directives and guidelines. (c) The adequacy of established policies, procedures and guidelines on the Company's accounting, financial and operational activities. (ii) Meet and discuss with the External and Internal Auditors on their evaluation of the Company's system of internal control. (iii) Consider the nature and disposition of the relevant comments appearing in the reports prepared by the Internal Auditors and in the External Auditors' management letter and Management's response. 4.4.3 Interim and Annual Financial Statements (i) Review the interim financial statements of the Group and Company with Management before recommending approval to the Board for announcement to Bursa Malaysia Securities Berhad. (ii) Meet with the Management and External Auditors to discuss and review the annual financial statements of the Group and the Company and the audit report of the External Auditors at the conclusion of the annual audit before recommending to the Board for approval. (iii) Review the nature and resolution of any significant accounting and auditing problems encountered during the annual audit. (iv) Review the nature of any significant adjustments, reclassifications or additional disclosures proposed by the External Auditors that are currently significant or may become significant in the future.
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Audit
Committee Report
(v) Review compliance with accounting standards and other legal and regulatory requirements. (vi) Review any implementation or changes in major accounting policies, accounting standards, significant and unusual events and/or legal and regulatory requirements during the year and the adequacy of disclosure in the financial statements. (vii) Review the reasons for major fluctuations in balances in the financial statements for the current year compared to the previous year. (viii) Review the nature of any significant and unusual events, commitments, contingent liabilities and post balance sheet events. (ix) Review the going concern assumption. 4.4.4 Related Party Transactions The Audit Committee shall from time to time consider and review the nature of any related party transactions or conflict of interest situation that may arise within the Group or the Company including any transaction, procedure or course of conduct that raises questions of Management's integrity. 4.4.5 Other Duties and Responsibilities The Audit Committee shall undertake any other additional duties and responsibilities as may be decided by the Board from time to time. 4.5 Meetings 4.5.1 The Audit Committee shall hold a minimum of four (4) meetings a year, although additional meetings may be called at any time at the Chairman of the Audit Committee's discretion. 4.5.2 Notice of meetings shall be sent at least seven (7) days before the time set for the meeting to all members of the Committee and any persons that may be required to attend. 4.6 Attendance 4.6.1 A quorum shall comprise of at least three (3) members comprising of a majority of independent directors.
4.6.2 The other directors, members of the Management, the Head of Internal Audit and representatives of the External Auditors may be invited to be present in the meeting for the duration where their presence is considered relevant, as determined by the Chairman of the Audit Committee.
16
4.7 Minutes 4.7.1 The Company Secretary shall be the Secretary to the Audit Committee and shall be present at all meetings to record minutes of the meeting. 4.7.2 Minutes of each meeting shall be kept and distributed to each member of the Audit Committee. 4.7.3 The Chairman shall report on each meeting to the Board. 4.8 Performance Evaluation The Board shall review the terms of office and the performance of the Audit Committee and each of its members at least once every 3 years to determine whether such Audit Committee and members have carried out their duties in accordance with their terms of reference.
Audit
Committee Report
5.0 INTERNAL AUDIT FUNCTION The Audit Committee is assisted by the Internal Audit Department in discharging its duties and responsibilities. The Internal Audit Department adopts a risk-based approach, focusing its work mainly on key processes and principal risk areas of the operating units and provides the Audit Committee with independent reports on the state of internal controls of the operating units and the extent of compliance of the operating units with established policies and procedures. The Audit Committee reports the same to the Board after reviewing and deliberating on the internal audit reports. During the financial year, the Internal Audit Department carried out and completed audits of the key processes and principal risk areas identified in the enterprise risk management review and reports were issued to the process owners incorporating findings and recommendations with regard to weaknesses noted. The audits focused on key controls to mitigate risks, safeguard assets, compliance with policies and procedures and promote effectiveness of management and efficiency of operations. The Internal Audit Department also followed up on implementation and disposition of previous significant findings and recommendations.
6.0 EMPLOYEES SHARE OPTION SCHEME ("ESOS") The Company had not todate subscribed to any share scheme for its employees.
This report is made in accordance with a resolution of the Board of Directors dated 18 April 2005.
17
Corporate
Governance Statement
The Board of Directors fully appreciates the importance of adopting high standards of corporate governance within the Group. The Board views corporate governance as synonymous with three key concepts; namely transparency, accountability as well as corporate performance. As such, the Board strives to adopt the substance behind corporate governance prescriptions and not merely the form. The Board is thus fully committed to the maintenance of high standards of corporate governance by supporting and implementing the prescriptions of the principles and best practices set out in Parts 1 and 2 of the Malaysian Code on Corporate Governance ("the Code"), respectively. The Board is pleased to provide the following statement, which outlines the main corporate governance practices that were in place throughout the financial year, unless otherwise stated.
PRINCIPLES STATEMENT The following statement sets out how the Company has applied the principles in Part 1 of the Code. The principles are dealt with under the following headings: Board of Directors, Directors' Remuneration, Shareholders and Accountability and Audit.
1.0 BOARD OF DIRECTORS 1.1 Board Balance and Responsibilities The Group acknowledges the pivotal role played by the Board of Directors in the stewardship of its direction and operations, and ultimately the enhancement of long-term shareholder value. To fulfill this role, the Board is responsible for the overall corporate governance of the Group, including its strategic direction, establishing goals for management and monitoring the achievement of these goals. As at the date of this statement, the Board consists of seven (7) members; comprising four (4) Independent NonExecutive Directors and three (3) Non-Independent Non-Executive Directors. The concept of independence adopted by the Board is in tandem with the definition of an Independent Director in Section 1.01 of the Listing Requirements of Bursa Malaysia Securities Berhad. The key elements for fulfilling the criteria are the appointment of an Independent Director who is not a member of management (a non-executive Director) and who is free of any relationship which could interfere with the exercise of independent judgement or the ability to act in the best interests of the Company. The Board complied with paragraph 15.02 of the Listing Requirements, which requires that at least two (2) Directors or one-third of the Board of the Company, whichever is the higher, be Independent Directors. The Directors, with their different backgrounds and specialisation, collectively bring with them a wide range of experience and expertise in areas such as operations, corporate affairs, finance and administration. The profile of each Director is presented in Directors' Profile in the Annual Report. There is a clear division of responsibilities at the head of the Company to ensure a balance of authority and power. The Board is led by Ir. Muhammad Hafni bin Ibrahim, a non-executive Chairman and the day-to-day operations of the Company are overseen by the Management Committee, on behalf of the Board. The Board is satisfied that the current Board composition fairly reflects the investment of minority shareholders in the Company. 1.2 Board Committees The Board of Directors delegates certain responsibilities to the Board Committees, namely the Management Committee, the Audit Committee, the Risk Management Committee, the Nominating Committee and the Tender Committee in order to enhance business and operational efficiency as well as efficacy. All committees have written terms of reference. The Chairman of the various committees briefs the Board on the outcome of the Committee meetings and minutes of these meetings are circulated to the full Board. The members of the Board Committees are listed in the Corporate Information appearing in the Annual Report.
18
Corporate
Management Committee The Management Committee was established on 9 November 2000, which functions as a subsidiary of the Board of Directors, to focus on Corporate Governance, the operational performance of the estates and mill and the compliance of internal controls established by the Company. The Management Committee examined in depth of the performance of the business and agreed on recommendations to enhance and improve on operational matters affecting the Group. On matters such as expenditure exceeding a prescribed limit, the Management Committee makes recommendation to the Tender Committee, for their approval. In addition, the Management Committee will explore and recommend to the Board of Directors new business ventures, expansion and diversification opportunities with the aim to enhance the growth and performance of the Group. In the year under review, the Management Committee met a total of 8 times. Audit Committee The Audit Committee, established on 22 August 1994 assists the Board in discharging its duty in maintaining a sound system of internal control to safeguard the shareholders' investments and the Company's assets. The terms of reference and activities of the Audit Committee are provided in the Audit Committee Report appearing in the Annual Report. Nominating Committee The Nominating Committee was established on 8 October 2001 and is entrusted with the specific task of proposing new nominees to the Board and for assessing directors on an on-going basis. The actual decision as to who shall be nominated should be the responsibility of the Board as a whole after considering the recommendations of the Committee. For the year under review, the Nominating Committee reviewed the mix of experience and expertise of each Director and assessed the effectiveness of the Board as a whole and the respective Board Committees and contribution of each individual Director and is satisfied with the present line-up. Risk Management Committee The Risk Management Committee was established on 8 October 2001 and is entrusted to formalise the identification, measurement and control of risks that threaten the assets or earnings of the Group. For further details on the Company's risk management, please refer to the Internal Control Statement presented in the Annual Report. Tender Committee The Tender Committee was established on 28 April 1982 and is entrusted to facilitate a fair and transparent tender submission and review process and award of contract procedure. The Committee is responsible to ensure that the most advantageous tenders are accepted taking into account the price and the quality of the service or product. The Tender Committee, therefore, ensures transparency in the award of contracts. During the financial year, the Tender Committee approved the tenders selected for supply of fertilisers and chemicals to the Company's estates. 1.3 Meetings The Board ordinarily meets at least four times a year at quarterly intervals with additional meetings convened when urgent and important decisions need to be taken between the scheduled meetings. For the year under review, the Board had five meetings. Details of the Directors' meeting attendances since the last financial year can be found in the Statement Accompanying the Notice of Annual General Meeting of the Annual Report. The Board receives documents on matters requiring its consideration prior to and in advance of each meeting. All proceedings from the Board meetings are minuted and signed by the Chairman of the meeting. In addition, the Directors meet, review and approve all corporate announcements, including the announcement of the unaudited interim financial statements, prior to releasing them to Bursa Malaysia Securities Berhad.
19
Corporate
1.4 Supply of Information The Chairman ensures that all Directors have full and timely access to information with Board papers distributed in advance of meetings. Every Director has also unhindered access to the advice and services of the Company Secretaries. The Board believes that the Company Secretaries are capable of carrying out their duties to ensure the effective functioning of the Board. The Articles of Association specify that the removal of the Company Secretary is a matter for the Board as a whole. Prior to the meetings of the Board and the Board Committees, Board papers which include the agenda and information relevant to the issues of the meetings covering the areas of strategic, financial, operational and regulatory compliance matters, were circulated in advance to all the Directors for their information, in order to be properly briefed before the meeting. Further, there is a schedule of matters reserved specifically for the Board's decision, including the approvals of annual budgets, acquisitions and disposals of undertakings and properties of substantial value, major investments and financial decisions and changes to management including key policies and delegated authority limits. The Board as a whole determines, whether as a full Board, as a full Board Committee or in their individual capacity, to take independent professional advice, where necessary and in appropriate circumstances, in furtherance of their duties, at the Group's expense. 1.5 Directors' Training All the Directors have attended the Mandatory Accreditation Programme and the Continuing Education Programme as required by Bursa Malaysia Securities Berhad to keep abreast of new regulatory developments and listing requirements. Newly appointed Directors would be attending the Mandatory Accreditation Programme in 2005. A familiarisation programme is also in place to facilitate new Board members' understanding of the Company's business, which includes visits to the Company's plantations and mill and briefings by senior management as appropriate. 1.6 Re-election The Articles of Association provide that at the first Annual General Meeting ("AGM") of the Company, all the Directors shall retire from office and at least one-third of the Board, are subject to retirement by rotation at each subsequent AGM. The Directors to retire in each year are the Directors who have been longest in office since their appointment or reappointment. The Articles of Association also provide that all the Board members shall also retire once at least in each three years and shall be eligible for re-election. These provide an opportunity for the shareholders to renew their mandates. The election of each Director is voted on separately. To assist shareholders in their decision, sufficient information such as personal profile, meeting attendance and the shareholdings in the Group of each Director standing for election are furnished in the Annual Report, which also includes the Notice of the AGM.
20
The Company Secretaries will ensure that all appointments are properly made, that all information necessary is obtained, as well as all legal and regulatory obligations are met.
2.0 DIRECTORS' REMUNERATION The Company pays its Directors annual fees, which are approved annually by the shareholders. In addition, members of Board and Board Committees are paid allowances for each meeting they attend. Details of the nature and amount of each major element of the remuneration of the Directors of the Company are as follows: (a) Aggregate remuneration of Directors categorised into appropriate components: Fees RM'000 Non-Executive Directors 258 Other Emoluments RM'000 40 Total RM'000 298
Corporate
(b) The number of Directors of the Company whose total remuneration falls within the following bands: Number of Non-Executive Directors 10 * 1
Range of remuneration Less than RM50,000 Between RM50,000 and RM100,000 *
Includes Directors who resigned during the financial year.
3.0 SHAREHOLDERS The Company recognises the importance of communicating with its shareholders and does this through the Annual Report, AGM and Extraordinary General Meeting. The policy of the Company is to maintain an active dialogue with its shareholders with the intention of giving shareholders as clear and complete a picture of the Company's performance and position as possible. It has also been the Company's practice to send the Notice of the Annual General Meeting and related papers to shareholders at least twenty one days before the meeting. At the AGM, the shareholders are encouraged to ask questions both about the resolutions being proposed or about the Group's operations in general. The Company makes various announcements through Bursa Malaysia Securities Berhad, in particular the timely release of the unaudited interim financial statements within two months from the close of a particular quarter. Members of the public can obtain the full financial statements and the Company's announcements from the Bursa Malaysia Securities Berhad's website. In addition, nominees of the Company's major shareholders sit on the Board. This provides a forum for interactions and direct communications between the Board, Management and major shareholders. All queries from shareholders, whether by mail or telephone call, are communicated to the Company Secretaries.
4.0 ACCOUNTABILITY AND AUDIT 4.1 Financial Reporting The Board aims to provide and present a balanced and meaningful assessment of the Group's financial performance and prospects at the end of the financial year, primarily through the annual financial statements and unaudited interim financial statements to shareholders as well as the Chairman's Statement in the Annual Report. The Board is assisted by the Audit Committee to oversee the Group's financial reporting processes and the quality of its financial reporting. The directors' responsibility in respect of the preparation of the audited financial statements is detailed in the Directors' Responsibility Statement included in the Annual Report. 4.2 Internal Control The information on the Group's internal control is detailed in the Internal Control Statement appearing in the Annual Report. 4.3 Relationship with the Auditors Key features underlying the relationship of the Audit Committee with the External and Internal Auditors including a summary of the activities of the Audit Committee during the year and evaluation of the independent audit process, are included in the Audit Committee Report appearing in the Annual Report.
21
Corporate
COMPLIANCE STATEMENT Save as disclosed below, the Group has complied with the Principles and Best Practices of the Code throughout the year: (a) appointment of a senior independent non-executive director to whom concerns may be conveyed has not been made as the Board believes to be not necessary since the Chairman encourages full participation during discussion and deliberation of issues affecting the Group by all the Board members; establishment of a Remuneration Committee has not been undertaken as none of the Board members are Executive Directors. In addition, the Board as a whole recommends the Directors' fees to be approved at the AGM and determines the other emoluments of the Directors with the individual Director abstaining from decisions in respect of their individual remuneration; remuneration of each member of the Board of Directors is not detailed as the Directors are of the opinion that there was necessity to safeguard the physical security of the Directors and members of their family; and there is informal succession planning within the organisation whereby middle Management is constantly being appraised to assess their capability of taking over the Senior Management's positions.
(b)
(c)
(d)
This statement is made in accordance with a resolution of the Board of Directors dated 18 April 2005.
22
Internal Control
Statement
The Board of Directors ("the Board") recognises the importance of sound internal controls and risk management practices and acknowledges its overall responsibility for the Group's system of internal controls and its effectiveness in order to safeguard shareholders' investment and the Group's assets. The system is designed to manage the Group's risks within an acceptable risk profile rather than to eliminate the risk of failure to achieve business objectives of the Group. Accordingly, the system can only provide reasonable and not absolute assurance against material misstatement, fraud or loss. The role of Management is to implement the Board's policies, procedures and guidelines on risk and control by identifying and evaluating the risks faced and design, operate and monitor a suitable system of internal controls to manage these risks. The key elements of the Group's system of internal controls are summarised as follows:
Risk Management The Board regards risk management as an integral part of the business operations and has adopted a risk management framework encompassing risk management policy, procedures and objectives. The framework is intended to provide the Board with an on-going process for identifying, evaluating and managing the significant risks faced by the Group. The monitoring, review and reporting arrangements provide reasonable assurance that the risks are managed at an acceptable level. This process is reviewed by the Board through its Risk Management Committee. The Board confirms that the risk management process is in place for the financial year under review. The last risk management review was completed in November 2004.
Internal Audit The Internal Audit complements the above function by providing the Board with the independent assurance it requires on the adequacy and effectiveness of the risk management framework and control environment. The internal audit performs regular independent audits on the operating units within the Group in a continuous effort to identify areas for improvement and reports its findings and recommendations to the Audit Committee. Details of the activities undertaken by the Audit Committee are set out in the Audit Committee Report.
23
Internal Control
Statement
Other Key Elements of Internal Control Apart from risk management and internal audit, the Group's system of internal controls comprises the following key elements: Specific responsibilities have been delegated to the Board Committees with clearly defined terms of reference including authorisation levels. Comprehensive annual budgeting process has been established requiring all operating units to submit budgets which are reviewed by the Board Management Committee and tabled to the Board for approval. The Board receives and reviews management and progress reports on a regular basis. The Board Management Committee carries out monitoring and review of operational and financial performance as well as recommending action plans to address any areas of concern. Major purchases of goods and contract works are referred to the Board Tender Committee or Board of Directors for consideration and approval. Scheduled meetings are held at management and operational levels to identify, discuss and resolve operational issues. Regular visits to operating units are conducted by senior management. Services of a Visiting Adviser and Mill Consultant to advise the Management Committee on the estate and mill operations. Emphasis is placed on improving the quality and ability of employees with continuing education, training and development. Investment proposals covering the acquisition of properties and long term investments are thoroughly appraised by the Board.
Conclusion by Board The Board is of the view that there was no significant breakdown or weaknesses in the Group's current system of internal control that may result in material losses being incurred by the Group for the financial year ended 31 December 2004.
External Auditor Review The External Auditors have reviewed the Internal Control Statement for inclusion in the Annual Report 2004.
24
Based on their review, the External Auditors have reported that nothing had come to their attention that caused them to believe that the said Statement was inconsistent with their understanding of the process the Board has adopted in the review of the adequacy and integrity of the internal controls of the Group.
This Statement is made in accordance with a resolution of the Board of Directors dated 18 April 2005.
Additional
Disclosures
1. Non-Audit Fees Non-audit fees paid and payable to the Company's External Auditors in the financial year ended 31 December 2004 were as follows: Paid/Payable to: (i) KPMG Desa Megat & Co. (ii) KPMG Tax Services Sdn. Bhd. Details Review of Internal Control Statement Taxation Services RM 6,000 4,700 10,700
2.
Recurrent Related Party Transactions of Revenue Nature Recurrent related party transactions of a revenue nature of the Company for the financial year ended 31 December 2004 were as follows:
Related Party
Relationship
Nature of Transaction
Value of Transaction RM'000 48
United Plantations Berhad (From 1 January 2004 to 11 December 2004)
Common directorship held by Encik Ahmad Riza bin Basir (resigned on 11 December 2004), who also has an indirect interest in the shares of the Company and Mr. Ho Dua Tiam (resigned on 11 December 2004) in the Company and United Plantations Berhad. Encik Ahmad Riza is also the son of a substantial shareholder of a major shareholder in the Company.
Agronomic consultancy services
Purchase of germinated oil palm seeds
105
Others
The transactions individually and in aggregate were below the Prescribed Limit of the Listing Requirements of Bursa Malaysia Securities Berhad and are disclosed for information purposes only.
25
3.
Revaluation Policy on Landed Properties The revaluation policy of the Group in relation to landed properties is set out in the Notes to the Financial Statements appearing in the Annual Report.
Perak Meat Industries Sdn Bhd
A company which Dato' Shamsul Bahari bin Salleh Khir has an interest.
Lease rental received
Additional
Disclosures
4. Sanctions and/or Penalties During the financial year, there were no sanctions and/or penalties imposed on the Company or its subsidiary company, Directors or Management arising from any significant breach of rules/guidelines/legislations by the relevant regulatory authorities.
5.
Profit Estimate, Forecast or Projection The Group has not provided any profit estimate, forecast or projection in the financial year ended 31 December 2004.
6.
Variation in Results There was no major variation in results (differ by 10% or more) from unaudited results announced.
7.
Profit Guarantee The Group has not provided any profit guarantee in the financial year ended 31 December 2004.
8.
Material Contracts There were no material contracts entered into by the Company and its subsidiary company which involved Directors' and substantial shareholders' interests either still subsisting at the end of the financial year ended 31 December 2004 or entered into since the end of the previous financial year.
9.
Share Buyback During the financial year under review, there were no share buy backs as permitted by Section 67A, Companies Act, 1965.
10. Utilisation of Proceeds Raised from Corporate Proposals There were no corporate proposals conducted in the financial year under review.
11. Options, Warrants and Convertible Securities
26
There were no options, warrants or convertible securities in issue in the financial year under review.
12. American Depository Receipt ("ADR") or Global Depository Receipt ("GDR") Programme The Company did not sponsor any ADR or GDR programme during the financial year.
Code of
Business Conduct and Ethics
LADANG PERBADANAN-FIMA BERHAD prescribes to the following Code of Business Conduct and Ethics for all of its employees. The Code represents minimum standards of behavior and ethical conduct to be observed at all times by its employees in the day-to-day operations and business practices.
1.0 BUSINESS CONDUCT 1.1 Professional Conduct Employees shall at all times, conduct themselves in a professional manner. 1.2 Relations with Business Associates Employees shall endeavor to safeguard, at all times, the Company's integrity and reputation in their business dealings with contractors, customers, suppliers and other business associates. Employees shall not offer and are strictly prohibited from receiving or soliciting any gratification of any kind in any business transactions between the Company and business associates. 1.3 Gifts and Entertainment Employees shall not offer or accept gifts of material value and extravagant entertainment from any third party. 1.4 Procurement Procedures Employees shall adhere to ethical practices in all contracts, tender and purchasing procedures. 1.5 Occupational Safety and Health The Company is committed to ensure, in so far as is practicable, the safety, health and welfare of all its employees and to protect them against risks to their safety and health at their place of work.
2.0 ETHICAL CONDUCT 2.1 Conflict of Interest Employees shall endeavor to avoid possible conflict of interest, which would result in any possible personal gains at the expense of the Company. 2.2 Disclosure and Use of Company's Information Employees are strictly prohibited from disclosing, communicating or disseminating information outside the normal requirements of their job, unless prior approval of the Company is obtained. 2.3 Insider Trading Employees shall not either by themselves or through their relatives or agents engage in insider trading of the Company's shares where the aim is to secure personal profit. 2.4 Misuse of Resources Employees shall not misuse any resources of the Company for their personal benefit (including that of their relatives). 2.5 Abuse of Position Employees shall not abuse their position in the Company for personal advantage (including that of their relatives) and shall not enter into any activity, which may detriment or prejudice the interest of the Company. 2.6 Involvement in Illegal Activity Employees shall not be involved in any illegal activity. 2.7 Personal Conduct Outside Work Employees shall conduct their personal affairs as good, responsible and law-abiding citizens. 2.8 Fair and Equitable Treatment Employees shall conduct the Company's business dealings in a fair and equitable manner bearing in mind that the best interest of the Company is paramount.
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Financial
Calendar
Quarterly Result Announcement 1st Quarter 2004 2nd Quarter 2004 3rd Quarter 2004 4th Quarter 2004 30 April 2004 9 August 2004 8 November 2004 28 February 2005
2004 Annual Report
18 May 2005
Notice of Annual General Meeting
18 May 2005
25th Annual General Meeting
22 June 2005
Dividends Interim Final *
Declaration Entitlement Book Closure Payment
7 August 2004 26 August 2004 27 August 2004 9 September 2004
Declaration Entitlement Book Closure Payment
26 February 2005 27 June 2005 28 June 2005 12 July 2005
* Subject to shareholders' approval at the Company's 25th Annual General Meeting
28
Financial
Highlights
2000* Results Revenue Profit before tax Profit after tax Assets and Liabilities Share capital Reserves Shareholders' funds Share Information Basic earnings per share Gross dividend per share NTA per share * Restated sen sen RM 5.27 12.00 1.47 2.04 6.00 1.44 8.77 12.00 1.45 9.27 15.00 1.46 15.57 20.00 1.50 RM'million RM'million RM'million 114.3 53.7 168.0 114.3 50.3 164.6 114.3 51.3 165.6 114.3 52.0 166.3 114.3 57.5 171.8 RM'million RM'million RM'million 39.4 8.4 6.0 30.5 3.5 2.3 35.8 13.9 10.0 40.5 14.7 10.6 44.6 17.8 17.8 2001* 2002 2003 2004
Revenue 50 40 30 10 20 20
Profit before tax 172 170 15 168 166 164
Shareholders' funds
10 0
5 162 2000 2001 2002 2003 2004 0 2000 2001 2002 2003 2004 160 2000 2001 2002 2003 2004
29
Basic earning per share 16 20 16 12 8 8 4 4 0
Gross dividend per share 1.50 1.48 1.46 1.44 1.42 1.40
NTA per share
12
2000 2001 2002 2003 2004
2000 2001 2002 2003 2004
2000 2001 2002 2003 2004
Quarterly
Results
1st Quarter RM'000 Revenue Operating profit Interest income Profit before taxation Tax expense Net profit after taxation Basic EPS per share (sen) 10,847 5,005 319 5,324 (1,500) 3,824 3.35 2nd Quarter RM'000 10,892 4,002 326 4,328 (1,218) 3,110 2.72 3rd Quarter RM'000 13,360 5,947 303 6,250 (1,762) 4,488 3.93 4th Quarter RM'000 9,475 1,584 317 1,901 4,471 6,372 5.57 Year ended 31 Dec 2004 RM'000 44,574 16,538 1,265 17,803 (9) 17,794 15.57
Revenue 16,000 14,000 12,000

RM'000
10,000 8,000 6,000 4,000 2,000 0 1st 2nd 3rd 4th Quarter Quarter Quarter Quarter
30
Profit Before Taxation 7,000 6,000 5,000
RM'000
4,000 3,000 2,000 1,000 0 1st 2nd 3rd 4th Quarter Quarter Quarter Quarter
Area Statement
As at 31 December 2004
Oil Palms Estate Mature Hectare 977.50 1,736.74 2,361.63 534.20 5,610.07 Immature Hectare 508.60 661.00 0.00 878.00 2,047.60 Total Hectare 1,486.10 2,397.74 2,361.63 1,412.20 7,657.67 Others Hectare 112.43 143.96 179.76 77.45 513.60 Total Hectare 1,598.53 2,541.70 2,541.39 1,489.65 8,171.27
Ladang Lekir I Ladang Lekir II Ladang Changkat Chermin Ladang Raja Hitam Total
LAND USAGE
6%
AGE OF OIL PALMS
35 % 25 % 69 % 43 %
13 %
9% 0-10 Years 11-15 Years 16-20 Years Above 20 Years

Planted - Mature Planted - Immature
Others
LOCATION OF ESTATES
LADANG RAJA HITAM
31
PERAK
LADANG CHANGKAT CERMIN
IPOH
Lumut Sitiawan LADANG LEKIR I & II
Properties
As at 31 December 2004
Location Tenure Year of Expiry Area Approximate Age of Buildings Net Book Value Date of Last Acquisition/ Revaluation Description
Ladang Lekir I Lot 3916, Mukim Lekir, Daerah Manjung, Perak and Lot 67 & 68, Mukim Jaya Baru, Daerah Perak Tengah, Perak.
Freehold
1,598.53 hectares
23 years
RM10.08 million
Revalued on 29 July 1993
Oil palm estate
Ladang Lekir II Lot 67, Mukim Jaya Baru, Daerah Perak Tengah, Perak.
Freehold
2,541.70 hectares
20 - 23 years
RM16.08 million
Oil palm and mango estates
Ladang Changkat Chermin Lot 65 & 66, Mukim Jaya Baru, Daerah Perak Tengah, Perak, Lot 10944, Mukim Bota, Daerah Perak Tengah, Perak, P.T. 365 & 366, Mukim Sitiawan, Daerah Manjung, Perak and Lot 20079, 20402 - 20406 & 20409 - 20412, Mukim Sitiawan, Daerah Manjung, Perak.
Leasehold
2080
2,541.39 hectares
20 - 23 years
RM10.85 million
Oil palm estate with a mill situated therein
32
Ladang Raja Hitam P.T. 344, 345 & 371, Mukim Sitiawan, Daerah Manjung, Perak and P.T. 86 & Lot 7761, Mukim Beruas, Daerah Manjung, Perak.
Freehold
1,489.65 hectares
23 years
RM9.41 million
Oil palm estate
Head Office H.S. (D) Ka 1132/74, Lot 11730S, Bandar Ipoh, Daerah Kinta, No. 10, Persiaran Gopeng Satu 31350 Ipoh, Perak.
Freehold
1,843.10 sq. metres
30 years
RM0.17 million
Acquired on 30 September 1993
Head Office
Shareholding Statistics
As at 18 April 2005
1. SHARE CAPITAL Authorised share capital Issued and fully paid Class of shares Voting right : : : : 150,000,000 ordinary shares of RM1.00 each 114,300,000 ordinary shares of RM1.00 each Ordinary share of RM1.00 each One vote per ordinary share
2.
ANALYSIS BY SIZE OF SHAREHOLDINGS No. of shareholders 2 1,086 358 57 26 3 1,532 % of shareholders 0.13 70.89 23.37 3.72 1.70 0.19 100.00 Total shareholdings 100 1,071,100 1,258,000 1,461,000 32,785,800 77,724,000 114,300,000 % of issued share capital 0.00 0.94 1.10 1.28 28.68 68.00 100.00
Size of shareholdings Less than 100 100 to 1,000 1,001 to 10,000 10,001 to 100,000 100,001 to less than 5% of issued shares 5% and above of issued shares Total
3.
SUBSTANTIAL SHAREHOLDERS No. of shares held 36,524,000 27,520,000 17,600,000 % of issued share capital 31.95 24.08 15.40
No. Name of shareholders 1. 2. 3. Glamour Green Sdn Bhd Taipan Heritage Sdn Bhd Ablington Holdings Sdn Bhd
4.
DIRECTORS' SHAREHOLDINGS
No. Name of Directors 1. 2. 3. 4. 5. 6. 7. Ir. Muhammad Hafni bin Ibrahim Dato' Shamsul Bahari bin Salleh Khir Dato' Haji Ahmad Zakiuddin bin Harun Dato' Richard Ong Guan Seng Dato' Jaafar bin Lajis Kamisan bin Suja' Yeoh Hock Thong
Direct interest 10,000 12,000 -
Deemed interest 2,000,000 36,524,000 36,524,000 -
Total shareholdings 2,000,000 10,000 12,000 36,524,000 36,524,000 -
% of issued share capital 1.75 0.01 0.01 31.95 31.95 -
33
Shareholding Statistics
As at 18 April 2005
5. THIRTY (30) LARGEST SHAREHOLDERS AS IN THE REGISTER OF MEMBERS No. of shares held 36,524,000 23,600,000 17,600,000 4,000,000 3,920,000 2,445,000 2,115,000 2,000,000 2,000,000 1,619,000 1,567,000 1,532,000 1,477,000 1,475,000 1,353,000 1,080,000 1,022,000 800,000 744,000 730,000 670,000 432,500 381,000 353,000 336,000 320,000 156,000 135,000 123,300 100,000 % of issued share capital 31.95 20.65 15.40 3.50 3.43 2.14 1.85 1.75 1.75 1.42 1.37 1.34 1.29 1.29 1.18 0.94 0.89 0.70 0.65 0.64 0.59 0.38 0.33 0.31 0.29 0.28 0.14 0.12 0.11 0.09
No. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17.

Name of shareholders Amsec Nominees (Tempatan) Sdn Bhd (AmBank Berhad for Glamour Green Sdn Bhd) HDM Nominees (Tempatan) Sdn Bhd (Malaysian Assurance Alliance Berhad for Taipan Heritage Sdn Bhd) Mayban Securities Nominees (Tempatan) Sdn Bhd (Pledged Securities Account for Ablington Holdings Sdn Bhd) Hamidah binti Abdul Rahman HDM Nominees (Tempatan) Sdn Bhd (Leong Tuck Onn for Taipan Heritage Sdn Bhd) Ng Song Choon Enterprises Sdn Berhad United Plantations Berhad HDM Nominees (Asing) Sdn Bhd (DBS Vickers Secs (S) Pte Ltd for Ong Beng Huat) S.B.S.K. Plantations Sdn Bhd RHB Capital Nominees (Tempatan) Sdn Bhd (Pledged Securities Account for Leong Wei Kong) Malaysian Assurance Alliance Berhad Mayban Securities Nominees (Tempatan) Sdn Bhd (Pledged Securities Account for Poh Gaik Lye) Malaysian Assurance Alliance Berhad Malaysian Assurance Alliance Berhad Ong Teng Kek Amazing Portfolio Sdn Bhd Malaysian Assurance Alliance Berhad TA Nominees (Tempatan) Sdn Bhd (Pledged Securities Account for Ronald Leong Vui Khiong) M & A Nominee (Asing) Sdn Bhd (FRLA Services Sdn Bhd for Thomas Chua Boon Lee) EB Nominees (Tempatan) Sendirian Berhad (Pledged Securities Account for Ho Soon Mei) EB Nominees (Tempatan) Sendirian Berhad (Pledged Securities Account for Ong Teng Kek) M & A Nominee (Tempatan) Sdn Bhd (Jendarata Bernam Provident Fund) RHB Capital Nominees (Tempatan) Sdn Bhd (Pledged Securities Account for Abd Aziz bin Jantan) SK Capital Sdn Bhd SK Capital Sdn Bhd M & A Nominee (Tempatan) Sdn Bhd (United Plantations Workers Benevolent Retirement Scheme) Sahamann @ Basir bin Ismail Ang Ka Chin Mayban Nominees (Tempatan) Sdn Bhd (Pledged Securities Account for Thai Seong) HDM Nominees (Tempatan) Sdn Bhd (Pledged Securities Account for Amazing Portfolio Sdn Bhd)
18. 19.
34
20. 21. 22. 23. 24. 25. 26. 27. 28. 29. 30.
Directors' Responsibility
Statement
The Directors are required by the Companies Act, 1965 to prepare financial statements for each financial year, which give a true and fair view of the state of affairs of the Group and the Company at the end of the financial year and of their results and cash flows for the financial year then ended. In preparing the financial statements for the financial year ended 31 December 2004, the Directors have:
complied with the applicable approved accounting standards in Malaysia adopted and consistently applied appropriate accounting policies made judgements and estimates that are prudent and reasonable
The Directors have responsibility for ensuring that the Group and the Company keep accounting records, which disclose with reasonable accuracy the financial position of the Group and the Company and which enable them to ensure that the financial statements comply with the Companies Act, 1965. The Directors are also responsible for taking such steps as are reasonably open to them to safeguard the assets of the Group and the Company and to prevent and detect fraud and other irregularities. The Directors consider that they have pursued the actions necessary to meet their responsibilities as set out on this Statement.
This statement is made in accordance with a resolution of the Board of Directors dated 18 April 2005.
35
Financial Statements
Directors' Report Statement by Directors Statutory Declaration Auditors' Report Balance Sheets Income Statements Statements of Changes in Equity Cash Flow Statements Notes to the Financial Statements
38 - 40 41 42 43 44 45 46 47 48 - 62
Directors' Report
For the year ended 31 December 2004
The Directors have pleasure in submitting their report and the audited financial statements of the Group and of the Company for the year ended 31 December 2004.
PRINCIPAL ACTIVITIES The Company is principally engaged in oil palm cultivation and production and sale of crude palm oil and palm kernel, whilst the principal activity of the subsidiary is set out in Note 4 to the financial statements. There has been no significant change in the nature of these activities during the financial year.
RESULTS GROUP RM'000 Net profit for the year 17,794 COMPANY RM'000 17,795
RESERVES AND PROVISIONS There were no material transfers to or from reserves and provisions during the year.
DIVIDENDS Since the end of the previous financial year, the Company paid: (i) a final dividend of 10 sen less 28% tax totalling RM8,229,600 in respect of the financial year ended 31 December 2003 on 10 June 2004; and
(ii) an interim dividend of 5 sen less 28% tax totalling RM4,114,800 in respect of the financial year ended 31 December 2004 on 9 September 2004. The Directors recommend a final dividend of 10 sen less 28% tax and a special dividend of 5 sen less 28% tax in respect of the financial year ended 31 December 2004 amounting to RM8,229,600 and RM4,114,800 respectively, subject to approval of the shareholders at the forthcoming Annual General Meeting.
DIRECTORS OF THE COMPANY Directors who served since the date of the last report are:
38
Ir. Muhammad Hafni bin Ibrahim Dato' Shamsul Bahari bin Salleh Khir Dato' Haji Ahmad Zakiuddin bin Harun Dato' Richard Ong Guan Seng Dato' Jaafar bin Lajis Kamisan bin Suja' Yeoh Hock Thong Ahmad Riza bin Basir Dato' Haji Shaharuddin bin Haji Haron Ho Dua Tiam @ Ho Guat Tiam Roslan bin Hamir
(appointed on 11.12.2004) (appointed on 11.12.2004) (appointed on 11.12.2004) (resigned on 11.12.2004) (resigned on 11.12.2004) (resigned on 11.12.2004) (resigned on 11.12.2004)
Directors' Report
In accordance with Article 66 of the Company's Articles of Association, Ir. Muhammad Hafni bin Ibrahim and Dato' Richard Ong Guan Seng retire by rotation from the Board at the forthcoming Annual General Meeting and being eligible, offer themselves for re-election. Dato' Jaafar bin Lajis, Kamisan bin Suja' and Yeoh Hock Thong, who were appointed during the year retire in accordance with Article 72 of the Company's Articles of Association and, being eligible, offer themselves for re-election.
DIRECTORS' SHAREHOLDINGS The holdings and deemed holdings in the ordinary shares of the Company of those who were Directors at year end as recorded in the Register of Directors' Shareholdings are as follows: <----------- Number of Ordinary Shares of RM 1 each ------------> Balance at 1.1.2004/Date Balance at of appointment Bought Sold 31.12.2004 Dato' Shamsul Bahari bin Salleh Khir - held directly - deemed interest Dato' Haji Ahmad Zakiuddin bin Harun - held directly - deemed interest Dato' Richard Ong Guan Seng - held directly - deemed interest Dato' Jaafar bin Lajis - held directly - deemed interest Kamisan bin Suja' - held directly - deemed interest
2,000,000
2,000,000
10,000 -
10,000 -
12,000 -
12,000 -
36,524,000
36,524,000
36,524,000
36,524,000
None of the other Directors holding office at 31 December 2004 had any interest in the ordinary shares 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 nor become entitled to receive any benefit (other than a benefit included in the aggregate amount of emoluments received or due and receivable by Directors as shown in the financial statements) by reason of a contract made by the Company or a related corporation with the 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 any deemed benefits that may accrue to certain Directors by virtue of normal trading transactions by the Group and the Company with related parties as disclosed in Note 21 to the financial statements. There were no arrangements during and at the end of the financial year which had the object of enabling Directors of the Company to acquire benefits by means of the acquisition of shares in the Company or any other body corporate.
39
ISSUE OF SHARES There were no changes in the issued and paid-up capital of the Company during the financial year.
OPTIONS GRANTED OVER UNISSUED SHARES No options were granted to any person to take up unissued shares of the Company during the year.
Directors' Report
OTHER STATUTORY INFORMATION Before the financial statements of the Group and the Company were made out, the Directors took reasonable steps to ascertain that: (i) there are no bad debts to be written off and no provision need to be made for doubtful debts, and
(ii) all current assets have been stated at the lower of cost and net realisable value. At the date of this report, the Directors are not aware of any circumstances: (i) that would render it necessary to write off any bad debts or provide for any doubtful debts, or
(ii) that would render the value attributed to the current assets in the financial statements of the Group and of the Company misleading, or (iii) which have arisen which render adherence to the existing method of valuation of assets or liabilities of the Group and of the Company misleading or inappropriate, or (iv) not otherwise dealt with in this report or the financial statements, that would render any amount stated in the financial statements of the Group and of the Company misleading. At the date of this report, there does not exist: (i) any charge on the assets of the Group or of the Company that has arisen since the end of the financial year and which secures the liabilities of any other person, or
(ii) any contingent liability in respect of the Group or of the Company that has arisen since the end of the financial year. No contingent liability or other liabilities of any company in the Group 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. In the opinion of the Directors, other than the effect as disclosed in Note 11 to the financial statements, the results of the operations of the Group and of the Company for the financial year ended 31 December 2004 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.
AUDITORS The auditors, Messrs KPMG Desa Megat & Co., have indicated their willingness to accept re-appointment.
40
Signed in accordance with a resolution of the Directors:
Ir. Muhammad Hafni bin Ibrahim Director
Dato' Richard Ong Guan Seng Director
IPOH 18 April 2005
Statement By Directors
Pursuant to Section 169(15) of the Companies Act, 1965
In the opinion of the Directors, the financial statements set out on pages 44 to 62 are drawn up in accordance with the provisions of the Companies Act, 1965 and applicable approved accounting standards in Malaysia so as to give a true and fair view of the state of affairs of the Group and of the Company at 31 December 2004 and of the results of their operations and cash flows for the year ended on that date.
Signed in accordance with a resolution of the Directors:
Ir. Muhammad Hafni bin Ibrahim Director
Dato' Richard Ong Guan Seng Director
IPOH 18 April 2005
41
Statutory Declaration
Pursuant to Section 169(16) of the Companies Act, 1965
I, Gowrie Navaratnam, the officer primarily responsible for the financial management of Ladang Perbadanan-Fima Berhad, do solemnly and sincerely declare that the financial statements set out on pages 44 to 62 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 Ipoh in the State of Perak Darul Ridzuan on 18 April 2005
) ) ) ) )
Gowrie Navaratnam
BEFORE ME:
Clarence Joseph ( No. A 044 ) Commissioner for Oaths Ipoh
42
Report of the Auditors

To the Members
We have audited the financial statements set out on pages 44 to 62. The preparation of the financial statements is the responsibility of the Company's Directors. It is our responsibility to form an independent opinion, based on our audit, on the financial statements and to report our opinion to you, as a body, in accordance with Section 174 of the Companies Act, 1965 and for no other purpose. We do not assume responsibility towards any other person for the content of this report. We conducted our audit in accordance with approved Standards on Auditing in Malaysia. These standards require that we plan and perform the audit to obtain all the information and explanations which we consider necessary to provide us with evidence to give reasonable assurance that the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence relevant to the amounts and disclosures in the financial statements. An audit also includes an assessment of the accounting principles used and significant estimates made by the Directors as well as evaluating the overall adequacy of the presentation of information in the financial statements. We believe our audit provides a reasonable basis for our opinion. In our opinion: (a) the financial statements are properly drawn up in accordance with the provisions of the Companies Act, 1965 and applicable approved accounting standards in Malaysia so as to give a true and fair view of: (i) the state of affairs of the Group and of the Company at 31 December 2004 and the results of their operations and cash flows for the year ended on that date; and the matters required by Section 169 of the Companies Act, 1965 to be dealt with in the financial statements of the Group and of the Company;
(ii)
and (b) the accounting and other records and the registers required by the Companies Act, 1965 to be kept by the Company and its subsidiary have been properly kept in accordance with the provisions of the said Act. We are satisfied that the financial statements of the subsidiary 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 consolidated financial statements and we have received satisfactory information and explanations required by us for those purposes. The audit report on the financial statements of the subsidiary was not subject to any qualification and did not include any comment made under subsection (3) of Section 174 of the Act.
43
KPMG Desa Megat & Co. Firm Number: AF-0759 Chartered Accountants Abdullah Abu Samah Partner Approval Number: 2013/06/06 (J)
IPOH 18 April 2005
Balance Sheets
At 31 December 2004
GROUP Note 2004 RM'000 51,172 98,439 120 2003 RM'000 51,861 98,439 120 COMPANY 2004 2003 RM'000 RM'000 51,172 98,439 120 51,861 98,439 120
PROPERTY, PLANT AND EQUIPMENT PLANTATION DEVELOPMENT EXPENDITURE SUBSIDIARY COMPANY ASSOCIATED COMPANY OTHER INVESTMENTS CURRENT ASSETS Inventories Trade receivables Other receivables Amount due from subsidiary company Deposits Cash and bank balances
2 3 4 5 6
4 8
1,917 678 2,704 37,800 194 43,293
1,433 916 2,795 34,650 236 40,030
1,917 678 2,704 8 37,800 194 43,301
1,433 916 2,795 7 34,650 236 40,037
CURRENT LIABILITIES Trade payables Other payables Provision for taxation 1,771 3,516 1,095 6,382 Net current assets 36,911 186,642 Financed by: CAPITAL AND RESERVES Share capital Reserves 9 114,300 57,462 171,762 114,300 52,013 166,313 114,300 57,471 171,771 114,300 52,021 166,321 1,040 2,922 244 4,206 35,824 186,244 1,771 3,515 1,095 6,381 36,920 186,651 1,040 2,921 244 4,205 35,832 186,252
44
LONG TERM LIABILITIES Deferred taxation Retirement benefits 11 12 13,037 1,843 14,880 186,642 18,142 1,789 19,931 186,244 13,037 1,843 14,880 186,651 18,142 1,789 19,931 186,252
The financial statements were approved and authorised for issue by the Board of Directors on 18 April 2005.
The notes set out on pages 48 to 62 form an integral part of, and should be read in conjunction with, these financial statements.
Income Statements
GROUP Note 2004 RM'000 44,574 16,538 1,265 17,803 17 (9) 17,794 18 19 15.6 14.4 2003 RM'000 40,464 13,600 1,085 14,685 (4,087) 10,598 9.3 10.8 COMPANY 2004 2003 RM'000 RM'000 44,574 16,539 1,265 17,804 (9) 17,795 40,464 13,601 1,085 14,686 (4,087) 10,599
Revenue Operating profit Interest income Profit before taxation Tax expense Profit after taxation Earnings per share (sen) Net dividends per ordinary share (sen)
13 14 16
45
Statements of Changes in Equity

Nondistributable Revaluation reserve RM'000 Share capital RM'000 GROUP At 1 January 2003 Net profit for the year Dividends - 2002 final (Note 19) - 2003 interim (Note 19) At 31 December 2003 Net profit for the year Dividends: - 2003 final (Note 19) - 2004 interim (Note 19) At 31 December 2004 114,300 114,300 114,300 Note 9 COMPANY At 1 January 2003 Net profit for the year Dividends - 2002 final (Note 19) - 2003 interim (Note 19) At 31 December 2003
Distributable Retained profits RM'000
Total reserves RM'000
Total RM'000
20,409 20,409 20,409 Note 10
30,882 10,598 (5,761) (4,115) 31,604 17,794 (8,230) (4,115) 37,053
51,291 10,598 (5,761) (4,115) 52,013 17,794 (8,230) (4,115) 57,462
165,591 10,598 (5,761) (4,115) 166,313 17,794 (8,230) (4,115) 171,762
114,300 114,300 114,300 Note 9
20,409 20,409 20,409 Note 10
30,889 10,599 (5,761) (4,115) 31,612 17,795 (8,230) (4,115) 37,062
51,298 10,599 (5,761) (4,115) 52,021 17,795 (8,230) (4,115) 57,471
165,598 10,599 (5,761) (4,115) 166,321 17,795 (8,230) (4,115) 171,771
Net profit for the year Dividends: - 2003 final (Note 19) - 2004 interim (Note 19)
46
At 31 December 2004
Cash Flow Statements

GROUP 2004 RM'000 Cash flows from operating activities Net profit before taxation Adjustments for: Amortisation Depreciation Dividends from quoted investments Interest income from fixed deposits Interest income from vehicle loans Gain on disposal of equipment Property, plant and equipment written off Retirement benefits charged Operating profit before working capital changes Increase in inventories Decrease in trade receivables Decrease in other receivables Increase in amount due from subsidiary company Increase in trade payables Increase in other payables 17,803 124 1,750 (3) (1,262) (3) (52) 87 54 18,498 (484) 238 137 731 594 1,216 Cash generated from operations Income taxes paid Income taxes refunded Net cash generated from operating activities Cash flows from investing activities Dividends from quoted investments Interest income from fixed deposits Interest income from vehicle loans Proceeds from disposal of equipment Purchase of plant and equipment Net cash generated from/(used in) investing activities Cash flows from financing activities Dividends paid Net increase in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year Analysis of cash and cash equivalents: Deposits (excluding deposits pledged) Cash and bank balances 37,300 194 37,494 34,150 236 34,386 37,300 194 37,494 34,150 236 34,386 (12,345) 3,108 34,386 37,494 (9,876) 6,472 27,914 34,386 (12,345) 3,108 34,386 37,494 (9,876) 6,472 27,914 34,386 3 1,216 3 52 (1,272) 2 3 798 5 9 (1,127) (312) 3 1,216 3 52 (1,272) 2 3 798 5 9 (1,127) (312) 19,714 (4,554) 291 15,451 14,685 124 1,725 (3) (1,080) (5) (8) 342 22 15,802 (521) 760 75 414 303 1,031 16,833 (4,204) 4,031 16,660 17,804 124 1,750 (3) (1,262) (3) (52) 87 54 18,499 (484) 238 137 (1) 731 594 1,215 19,714 (4,554) 291 15,451 14,686 124 1,725 (3) (1,080) (5) (8) 342 22 15,803 (521) 760 75 (1) 414 303 1,030 16,833 (4,204) 4,031 16,660 2003 RM'000 COMPANY 2004 2003 RM'000 RM'000
47
Notes To The Financial Statements

31 December 2004
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The following accounting policies are adopted by the Group and by the Company and are consistent with those adopted in previous years. 1.1 Basis of accounting The financial statements of the Group and of the Company are prepared on the historical cost basis except as disclosed in the notes to the financial statements and in compliance with the provisions of the Companies Act, 1965 and applicable approved accounting standards in Malaysia. 1.2 Basis of consolidation Subsidiaries are those enterprises controlled by the Company. Control exists when the Company has the power, directly or indirectly, to govern the financial and operating policies of an enterprise so as to obtain benefits from its activities. The financial statements of the subsidiary are included in the consolidated financial statements from the date that control effectively commences until the date that control effectively ceases. The financial statements of the subsidiary are consolidated using the acquisition method of accounting. A subsidiary is excluded from consolidation when either control is intended to be temporary if the subsidiary is acquired and held exclusively with a view of its subsequent disposal in the near future and it has not previously been consolidated or it operates under severe long term restrictions which significantly impair its ability to transfer funds to the Company. Subsidiaries excluded on these grounds are accounted for as investments. Under the acquisition method of accounting, the results of subsidiaries acquired or disposed of during the year are included from the date of acquisition or up to the date of disposal. At the date of acquisition, the fair values of the subsidiaries' net assets are determined and these values are reflected in the Group financial statements. The difference between the acquisition cost and the fair values of the subsidiaries' net assets is reflected as goodwill or negative goodwill as appropriate. Intragroup transactions and balances and the resulting unrealised profits are eliminated on consolidation. Unrealised losses resulting from intragroup transactions are also eliminated unless the cost cannot be recovered. 1.3 Associated company Associated companies are those enterprises in which the Group has significant influence, but not control, over the financial and operating policies.
The consolidated financial statements include the total recognised gains and losses of the associated company on an equity accounted basis from the date that significant influence effectively commences until the date that significant influence effectively ceases.
48
Unrealised profits arising on transactions between the Group and its associated company which are included in the carrying amount of the related assets and liabilities are eliminated partially to the extent of the Group's interest in the associated company. Unrealised losses on such transactions are also eliminated partially unless cost cannot be recovered. Goodwill on acquisition is calculated based on the fair value of net assets acquired. 1.4 Property, plant and equipment Freehold land and long term leasehold land are stated at valuation. Plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses, if any. Property, plant and equipment retired from active use and held for disposal are stated at the carrying amount at the date when the asset is retired from active use, less impairment losses, if any. Depreciation and amortisation (a) Freehold and leasehold land Freehold land is not amortised. Leasehold land is amortised in equal instalments over the lease period of 99 years.

31 December 2004
(b) Property, plant and equipment The straight line method is used to write off the cost of the other property, plant and equipment over the term of their estimated useful lives at the following principal annual rates: Buildings Mill machinery Motor vehicles Office renovation (presented under buildings) Office furniture, fittings and equipment Other equipment Revaluation Revaluation of freehold land, long term leasehold land and plantation development expenditure (Note 1.5) in 1993 were not intended to effect a change in accounting policy to one of revaluation of properties. Hence, in accordance with the transitional provisions issued by MASB on the Approved Accounting Standard IAS 16: Property, Plant and Equipment, the valuations of 1993 are not revised. Surpluses arising from revaluation are dealt with in the revaluation reserve account. Any deficit arising is offset against the revaluation reserve to the extent of a previous increase for the same property. In all other cases, a decrease in carrying amount is charged to the income statement. 1.5 Plantation development expenditure (a) New planting expenditure New planting expenditure incurred on land clearing and upkeep of trees to maturity is capitalised under Plantation Development Expenditure and is not amortised. (b) Replanting expenditure Replanting expenditure is charged to the income statement in the financial year in which the expenditure is incurred. 1.6 Investments Long term unquoted investments including investments in the subsidiary and associated company are stated at cost, less impairment loss where applicable. An allowance is made when the Directors are of the view that there is a diminution in their value which is other than temporary. Long term quoted investments are stated at the lower of cost and market value on an individual investment basis. 1.7 Inventories Inventories are valued at the lower of cost and net realisable value. Inventories of produce include cost of raw materials, direct labour and an appropriate proportion of fixed and variable production overheads, and are determined by the weighted average basis. Seedlings include cost of seeds, fertilisers, sprays and certain variable costs, and are determined by the weighted average basis. Stores and materials are determined by the weighted average basis and include purchase price and transportation charges. 1.8 Trade and other receivables Trade and other receivables are stated at cost less allowance for doubtful debts. 1.9 Trade and other payables Trade and other payables are stated at cost. 5% 10% 25% 331/3% 10% - 20% 10% - 25%
49

31 December 2004
1.10 Cash and cash equivalents Cash and cash equivalents consist of cash on hand, balances and deposits with banks and highly liquid investments which have an insignificant risk of changes in value. For the purpose of the cash flow statement, cash and cash equivalents are presented net of pledged deposits. 1.11 Impairment The carrying amount of assets, other than inventories (refer note 1.7), deferred tax assets (refer Note 1.12) and financial assets (other than investments in the subsidiary and associated company), are reviewed at each balance sheet date to determine whether there is any indication of impairment. If any such indication exists, the asset's recoverable amount is estimated. An impairment loss is recognised whenever the carrying amount of an asset or the cash-generating unit to which it belongs exceeds its recoverable amount. Impairment losses are recognised in the income statement, unless the asset is carried at a revalued amount, in which case the impairment loss is charged to equity. The recoverable amount is the greater of the asset's net selling price and its value in use. In assessing value in use, estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For an asset that does not generate largely independent cash inflows, the recoverable amount is determined for the cash-generating unit to which the asset belongs. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount and is reversed only to the extent that the asset's carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised. The reversal is recognised in the income statement, unless it reverses an impairment loss on a revalued asset, in which case it is taken to equity. 1.12 Income tax Tax on the profit or loss for the year comprises current and deferred tax. Income tax is recognised in the income statement except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity. Current tax expense is the expected tax payable on the taxable income for the year, using tax rates enacted or substantially enacted at the balance sheet date, and any adjustment to tax payable in respect of previous years. Deferred tax is provided, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Temporary differences are not recognised for goodwill not deductible for tax purposes and the initial recognition of assets or liabilities that at the time of the transaction affects neither accounting nor taxable profit. The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantially enacted at the balance sheet date. A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be utilised.
50
1.13 Retirement benefits The Group and the Company provide for retirement benefits for eligible employees on an unfunded defined benefit basis. Full provision has been made for retirement benefits payable to all eligible employees based on the last drawn salaries at the year end and the length of service rendered. The present value of the defined benefit obligations as required by MASB 29, Employee Benefits has not been used in arriving at the provision, as the amount involved is insignificant to the Group and the Company. Accordingly no further disclosure as required by the standard is made. 1.14 Employee benefits (a) Defined contribution plan Obligations for statutory employer's contribution for employees are recognised as an expense in the income statement as incurred. (b) Short term employee benefits Wages, salaries, bonuses and social security contributions are recognised as an expense in the income statement in the period in which the associated services are rendered by the employees. 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.

31 December 2004
1.15 Revenue recognition (a) Sale of goods Revenue from sale of goods is measured at the fair value of the consideration receivable and is recognised in the income statement when the significant risks and rewards of ownership have been transferred to the buyer. (b) Interest income Interest income is recognised in the income statement as it accrues, taking into account the effective yield on the asset. (c) Dividend income Dividend income is recognised when the right to receive payment is established.
2.
PROPERTY, PLANT AND EQUIPMENT GROUP/COMPANY Land and buildings (Note 2.1) RM'000 57,892 124 (30) 57,986 Motor vehicles, office equipment and other equipment RM'000 4,980 928 (276) (102) 5,530
Mill machinery RM'000 18,560 220 (321) 18,459
Total RM'000 81,432 1,272 (276) (453) 81,975
At Cost/Valuation At 1 January 2004 Additions Disposals Written off At 31 December 2004 Representing items at: Cost Directors' valuation
12,251 45,735 57,986
18,459 18,459
5,530 5,530
36,240 45,735 81,975

Accumulated Amortisation and Depreciation At 1 January 2004 Charge for the year Disposals Written off At 31 December 2004 10,941 478 (26) 11,393 14,312 900 (240) 14,972 4,318 496 (276) (100) 4,438 29,571 1,874 (276) (366) 30,803
51
Net Book Value At 31 December 2004 At 31 December 2003 Depreciation charge for the year ended 31 December 2003 46,593 46,951 3,487 4,248 1,092 662 51,172 51,861
527
913
409
1,849

31 December 2004
2.1 Land and Buildings Long term leasehold land RM'000 Buildings and office renovation RM'000
Freehold land RM'000 At Cost/Valuation At 1 January 2004 Additions Written off At 31 December 2004 34,790 34,790
Total RM'000
10,945 10,945
12,157 124 (30) 12,251
57,892 124 (30) 57,986
Representing items at: Cost Directors' valuation 34,790 34,790 Accumulated Amortisation and Depreciation At 1 January 2004 Charge for the year Written off At 31 December 2004 1,367 124 1,491 9,574 354 (26) 9,902 10,941 478 (26) 11,393 10,945 10,945 12,251 12,251 12,251 45,735 57,986
Net Book Value At 31 December 2004 At 31 December 2003

34,790 34,790
9,454 9,578
2,349 2,583
46,593 46,951
Depreciation charge for the year ended 31 December 2003
124
403
527
52
The freehold land, long term leasehold land and plantation development expenditure (as disclosed in Note 3) are stated at Directors' valuation based on professional valuation made by a chartered surveyor on the open market basis conducted in July 1993. Subsequent additions thereafter are stated at cost. A piece of freehold land totalling 34.8 acres is leased to a company in which a Director has an interest, for 60 years from the year ended 31 December 1996. Had the land been carried at historical cost less accumulated depreciation, the carrying amount of the revalued assets that would have been included in the financial statements at the end of the year would be as follows: GROUP/COMPANY 2004 2003 RM'000 RM'000 Freehold land Long term leasehold land 4,697 1,131 5,828 4,697 1,146 5,843

31 December 2004
3. PLANTATION DEVELOPMENT EXPENDITURE GROUP/COMPANY 2004 2003 RM'000 RM'000 At Cost/Valuation At 1 January and 31 December Representing items at: Cost Directors' valuation 1,496 96,943 98,439 1,496 96,943 98,439 98,439 98,439
The basis of revaluation for plantation development expenditure is the same as disclosed in Note 2. The carrying value of plantation development expenditure on freehold land and leasehold land are RM62,453,000 (2003: RM62,453,000) and RM34,490,000 (2003: RM34,490,000) respectively. The carrying value of plantation development expenditure on freehold land and leasehold land had this asset been carried at cost would be RM43,240,000 and RM21,429,000 (2003: RM43,240,000 and RM21,429,000) respectively.
4.
SUBSIDIARY COMPANY COMPANY 2004 2003 RM'000 RM'000
4.1 Unquoted shares at cost * 4.2 Amount due from subsidiary company (non-trade)
The amount due from subsidiary company is unsecured, non-interest bearing and has no fixed terms of repayment. Details of the subsidiary company are as follows: Name of company Place of incorporation Effective ownership interest 2004 2003 100% 100% Principal activity
53
Dormant
LPF Properties Sdn Bhd *
Malaysia
The cost of investment in subsidiary is RM2 (2003: RM2).

31 December 2004
5. ASSOCIATED COMPANY GROUP 2004 RM'000 5.1 Unquoted shares at cost Less: Allowance for diminution in value of investment 400 400 Group's share of post- acquisition losses (400) 2003 RM'000 400 400 (400) COMPANY 2004 2003 RM'000 RM'000 400 (400) 400 (400) -
5.2 Amount due from associated company Less: Allowance for doubtful debt
1,380 (1,380) -
1,380 (1,380) -
1,380 (1,380) -
1,380 (1,380) -
The Group's share of the cumulative losses amounting to RM539,000 (2003: RM539,000) has not been recognised in the Group's income since commencement of consolidation in 1999 as the Group's share of losses had exceeded the carrying amount of its investment in the associated company. The losses not recognised were based on the last available audited financial statements of the associated company, which were for the financial year ended 31 December 2001. Subsequent to this, the associated company has not prepared its audited financial statements and is currently under creditors' liquidation. The amount due from associated company is unsecured, interest free with no fixed repayment terms. Details of the associated company are as follows: Name of company Place of incorporation Effective ownership interest 2004 2003 40% 40% Principal activity
Milljet Sdn Bhd *

Malaysia
Development and marketing of new processes for crude palm oil clarification.
In creditors' liquidation
54
6.
OTHER INVESTMENTS GROUP/COMPANY 2004 2003 RM'000 RM'000
Long term In Malaysia Unquoted shares, at cost Less: Allowance for diminution in value
20 (20) 120 120
20 (20) 120 120
Quoted shares, at cost
Market value at 31 December In Malaysia Quoted shares, at market value 199 201

31 December 2004
7. INVENTORIES GROUP/COMPANY 2004 2003 RM'000 RM'000 11 593 123 511 679 1,917 9 461 78 375 510 1,433
At cost: Fresh fruit bunches Crude palm oil Palm kernel Seedlings Stores and materials
8.
DEPOSITS GROUP/COMPANY 2004 2003 RM'000 RM'000 Fixed deposits with licensed banks Fixed deposits with licensed financial institutions 34,000 2,000 36,000 1,800 37,800 19,500 14,000 33,500 1,150 34,650
Repo with licensed banks
Fixed deposits amounting to RM500,000 (2003: RM500,000) are held under lien by one bank (2003: one bank) for banking facilities granted to the Company.
9.
SHARE CAPITAL GROUP/COMPANY 2004 2003 RM'000 RM'000 Authorised: 150,000,000 ordinary shares of RM1 each Issued and fully paid: 114,300,000 ordinary shares of RM1 each 150,000 150,000
55
114,300 114,300
10. REVALUATION RESERVE - GROUP/COMPANY The revaluation reserve is in relation to the revaluation of freehold land, long term leasehold land and plantation development expenditure and is stated at Directors' valuation based on professional valuation made by a registered valuer on the open market basis conducted in July 1993.

31 December 2004
11. DEFERRED TAXATION The recognised deferred tax assets and liabilities (before offsetting) are as follows: GROUP/COMPANY 2004 2003 RM'000 RM'000 Property, plant and equipment - Capital allowances - Revaluation Plantation development expenditure - Agricultural allowances claimed Provisions Other taxable temporary differences 859 8,452 4,106 (516) 136 13,037 902 8,483 9,135 (501) 123 18,142
The deferred taxation on the taxable temporary difference of plantation development expenditure ("PDE") located on freehold land previously computed at 28% is now recomputed at 5% based on the expected manner of recovery of the said PDE. The change in tax rate has an effect of reducing the deferred taxation liability in respect of this temporary difference by RM5,002,000 which was written back to the income statement for the financial year ended 31 December 2004.
12. RETIREMENT BENEFITS GROUP/COMPANY 2004 2003 RM'000 RM'000 Balance at 1 January Provision during the year Balance at 31 December 1,789 54 1,843 1,767 22 1,789
13. REVENUE
Revenue consists of invoiced value of crude palm oil and palm kernel sold.
56

31 December 2004
14. OPERATING PROFIT GROUP 2004 RM'000 Revenue Cost of sales Gross profit Selling and distribution expenses Other operating expenses Other operating income Administrative expenses Operating profit 44,574 (14,116) 30,458 (1,101) (5,179) 142 (7,782) 16,538 2003 RM'000 40,464 (13,777) 26,687 (932) (4,538) 31 (7,648) 13,600 COMPANY 2004 2003 RM'000 RM'000 44,574 (14,116) 30,458 (1,101) (5,179) 142 (7,781) 16,539 40,464 (13,777) 26,687 (932) (4,538) 31 (7,647) 13,601
Operating profit is arrived at after charging: Amortisation Auditors' remuneration Depreciation Directors' remuneration (Note 21.3) - fees - other emoluments Property, plant and equipment written off Replanting expenditure Provision for retirement benefits and crediting: Dividends from quoted investments Gain on disposal of equipment Lease rental Canteen rental (3) (52) (3) (2) (3) (8) (3) (2) (3) (52) (3) (2) (3) (8) (3) (2)
124 28 1,750 258 40 87 5,139 54
124 25 1,725 261 60 342 4,526 22
124 27 1,750 258 40 87 5,139 54
124 24 1,725 261 60 342 4,526 22
15. EMPLOYEE INFORMATION GROUP/COMPANY 2004 2003 RM'000 RM'000 Employee costs 7,369 6,427
57
The number of employee for the Group and the Company at the end of the financial year was 600 (2003: 499). Included in employee costs is the Company's contribution to the Employees Provident Fund of RM623,000 (2003: RM616,000) for the year ended 31 December 2004.

31 December 2004
16. INTEREST INCOME GROUP/COMPANY 2004 2003 RM'000 RM'000 Fixed deposits interest earned Vehicle loan interest received 1,262 3 1,265 1,080 5 1,085
17. TAX EXPENSE 17.1 Components of tax expense: GROUP/COMPANY 2004 2003 RM'000 RM'000 Current year provision for income tax Under provision in previous years Deferred taxation - Reversal of temporary differences - Effect of change in tax rate (Note 11) 5,105 9 (103) (5,002) 9 17.2 Reconciliation of effective tax rate: GROUP/COMPANY 2004 2003 % % Statutory tax rate Non-deductible expenses Others Underprovision in previous years Effect of change in tax rate (Note 11) 28.0 0.1 (28.0) 0.1 28.0 0.2 (0.6) 0.2 27.8 4,200 24 (137) 4,087
58
17.3 Subject to agreement with the Inland Revenue Board, the Company has sufficient tax exempt income and Section 108 credit to frank all of its retained profits as at 31 December 2004 if paid out as dividends.
18. EARNINGS PER SHARE - GROUP Earnings per share has been calculated based on the Group's profit after tax of RM17,794,000 (2003: RM10,598,000) and 114,300,000 (2003: 114,300,000) ordinary shares in issue.

31 December 2004
19. DIVIDENDS GROUP/COMPANY 2004 2003 RM'000 RM'000 Dividends paid: 2004 Interim dividend of 5 sen less 28% tax 2003 Final dividend of 10 sen less 28% tax 2003 Interim dividend of 5 sen less 28% tax 2002 Final dividend of 7 sen less 28% tax 4,115 8,230 12,345 Dividend proposed: 2004 Final dividend of 10 sen less 28% tax (2003: 10 sen less 28% tax) 2004 Special dividend of 5 sen less 28% tax (2003: NIL) 8,230 4,115 12,345 8,230 8,230 4,115 5,761 9,876
The proposed final dividend and special dividend for the financial year ended 31 December 2004 has not been accounted for in the financial statements.
20. CAPITAL COMMITMENTS GROUP/COMPANY 2004 2003 RM'000 RM'000 Property, plant and equipment Contracted but not provided for in the financial statements Approved but not contracted for 119 4,207 48 3,012
21. RELATED PARTIES - GROUP/COMPANY 21.1 The Company has controlling related party relationship with its subsidiary as disclosed in Note 4 to the financial statements. 21.2 Related parties transactions (a) Transactions with a company with common Directors, Ahmad Riza bin Basir and Ho Dua Tiam @ Ho Guat Tiam up to 11 December 2004. United Plantations Berhad GROUP/COMPANY 2004 2003 RM'000 RM'000 Agronomic consultancy fee Purchases of germinated oil palm seeds Others 48 105 5 48 82 1
59

31 December 2004
(b) Transaction with a company in which Dato' Shamsul Bahari bin Salleh Khir has an interest. Perak Meat Industries Sdn Bhd GROUP/COMPANY 2004 2003 RM'000 RM'000 Lease rental received 3 3
These transactions have been entered into in the normal course of business and have been established under negotiated terms.
21.3 Directors' remuneration Members of the Board of Directors were remunerated for their services rendered as Directors of the Company. Details of the Directors' remuneration are as follows: GROUP/COMPANY 2004 2003 RM'000 RM'000 Remuneration of Non-Executive Directors: - Fees - Other emoluments Total
258 40 298
261 60 321
Range of remuneration
Number of Non-Executive Directors 2004 2003 10 * 1 8 1
Less than RM50,000 Between RM50,000 and RM100,000 *

Includes Directors who resigned during the financial year.
22. SEGMENTAL INFORMATION - GROUP The Group only engages in oil palm cultivation and production and sale of crude palm oil and palm kernel in Malaysia and accordingly, no segmental information is presented.
60

31 December 2004
23. FINANCIAL INSTRUMENTS 23.1 Financial risk management objectives and policies The main risks arising from the normal course of the Group's and the Company's business are interest rate risk, liquidity risk and credit risk. The Group's and the Company's normal practice for managing each of these risks are summarised below: Interest rate risk The Group and the Company places cash balances with reputable banks and financial institutions to generate interest income for the Group and the Company. The Group and the Company manages its interest rate risk by monitoring market rates and placing such balances on varying maturities and interest rate terms. Effective interest rates analysis: In respect of interest earning financial assets, the following table indicates their effective interest rates at the balance sheet date and the periods in which they mature or reprise, whichever is earlier. GROUP/COMPANY 2004 2003 Effective interest rates Deposits (maturing within 1 year) (RM'000) Liquidity risk In the management of liquidity risk, the Group and the Company monitor and maintain a level of cash and cash equivalents deemed adequate by the management to finance the Group's and the Company's operations and mitigate the effects of fluctuations in cash flows. Credit risk The Group's and the Company's primary exposure to credit risk arises through its trade receivables. The management has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis. Appropriate credit evaluations are performed on all customers requiring credit from the Company.
2.35% - 4.40% 37,800
2.35% - 4.40% 34,650
Concentration of credit risk on trade receivables of the Group and the Company is limited to a small number of customers as is common to the industry. At the balance sheet date, 5 (2003: 3) customers owed a majority of the Group's and Company's trade receivables, which had been received after the balance sheet date. Other than the concentration of credit risk described above, the Group and Company are not materially exposed to any individual customer. The maximum exposure to credit risk is represented by the carrying amount of each financial asset presented in the balance sheet. 23.2 Fair value of recognised financial instruments In respect of cash and cash equivalents, trade and other receivables and trade and other payables, the carrying amounts approximate fair value due to the relatively short term nature of these financial instruments. For the unquoted shares as disclosed in Note 6 to the financial statements, it was not practicable to estimate the fair value of this unquoted investment as the information for the said fair value was not available. The carrying amount to this investment had been fully allowed for in previous years.
61

31 December 2004
24. SIGNIFICANT EVENTS The Board of Directors of the Company had on 14 December 2004 received a Notice of Conditional Mandatory General Offer ("Mandatory Offer") from Commerce International Merchant Bankers Berhad given for and on behalf of Ablington Holdings Sdn Bhd ("AHSB"), a wholly owned subsidiary of KL-Kepong Equity Holdings Sdn Bhd which in turn is wholly-owned by Kuala Lumpur Kepong Berhad ("KLK"). On 16 December 2004, Glamour Green Sdn Bhd, a shareholder of the Company obtained an injunction from the High Court of Malaya restraining KLK and AHSB from implementing the Mandatory Offer. Subsequently on 29 December 2004, KLK and AHSB had applied to the High Court of Malaya at Kuala Lumpur for the preservation of assets of the Company and on 11 April 2005 a Consent Order pending the disposal of the suit between the parties mentioned above had been recorded, the terms of which pertaining to the Company are as follows: The Company by itself and/or its Board of Directors, employees, servants, agents, representatives, nominees or howsoever otherwise be prevented from: (i) issuing any authorised but unissued shares of the Company; (ii) issuing or granting options in respect of any unissued shares of the Company; (iii) creating or issuing or permitting the creation or subscription of any shares of the Company; (iv) selling, disposing of or acquiring or agreeing to sell, dispose of or acquire assets of the Company of RM500,000 or over; or (v) entering into or allowing contracts for and on behalf of the Company to be entered into, otherwise than in the ordinary course of business of the Company, without the approval of the shareholders of the Company in general meeting and the approval of the Securities Commission (provided always that the Order does not prohibit the Company from entering into any contract not in the ordinary course of business, the effectiveness of such contract being conditional on the approval of the shareholders of the Company in general meeting and the approval of the Securities Commision and such approval not capable of being waived). No date has yet to be fixed for trial but 24 May 2005 has been fixed for case management.
62

Company No. 52682-H Incorporated in Malaysia
PROXY FORM
25TH ANNUAL GENERAL MEETING No. of shares held
I/We ___________________________________________________________________________________________________________________________ of
__________________________________________________________________________________________________________________________________
being a member of LADANG PERBADANAN-FIMA BERHAD, hereby appoint ____________________________________________________________

________________________________________________________________________________________________________________________________ of ________________________________________________________________________________________________________________________________ or
failing him______________________________________________________________________________________________________________________ of
________________________________________________________________________________________________________________________________ as
my/our proxy to vote for me/us on my/our behalf at the 25th Annual General Meeting of the Company, to be held on Wednesday, 22 June 2005 at 11:00 a.m. and at any adjournment thereof. My/our proxy is to vote as indicated below: No. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. Motions To receive and consider the Audited Financial Statements for the year ended 31 December 2004 and the Reports of the Directors and Auditors thereon. To sanction the payment of a final dividend of 10 sen less 28% tax and a special dividend of 5 sen less 28% tax for the year ended 31 December 2004 as recommended by the Board. To re-elect Ir. Muhammad Hafni bin Ibrahim who retires in accordance with Article 66 of the Company's Articles of Association. To re-elect YBhg. Dato' Richard Ong Guan Seng who retires in accordance with Article 66 of the Company's Articles of Association. To re-elect YBhg. Dato' Jaafar bin Lajis who retires in accordance with Article 72 of the Company's Articles of Association. To re-elect Encik Kamisan bin Suja' who retires in accordance with Article 72 of the Company's Articles of Association. To re-elect Mr. Yeoh Hock Thong who retires in accordance with Article 72 of the Company's Articles of Association. To approve the payment of Directors' fees for the year ended 31 December 2004. To re-appoint Messrs. KPMG Desa Megat & Co. as Auditors of the Company and to authorise the Directors to fix their remuneration. To transact any other ordinary business of the Company of which due notice shall have been given. For Against
(Please indicate with a "X" in the space provided as to how you wish your votes to be cast.)
Dated this____________day of_________________________2005
____________________________ Signature / Company Seal
NOTES
1. 2. 3. 4. The proxy form, duly signed, must be deposited at the Registered Office of the Company, No. 10 Persiaran Gopeng Satu, 31350 Ipoh, Perak, Malaysia, not less than 48 hours before the meeting. A corporation must complete the proxy form under its common seal or under the hand of an officer or attorney duly authorised. A proxy need not be a member of the Company. Unless voting instructions are indicated in the spaces provided in the proxy form, the proxy may vote as he thinks fit.
Fold here
STAMP
THE COMPANY SECRETARY

NO. 10, PERSIARAN GOPENG SATU 31350 IPOH PERAK MALAYSIA
2nd Fold here
3rd Fold here

Ladang Perbadanan-Fima Berhad Annual Report 2004

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ANNUAL REPORT

LADANG PERBADANAN-FIMA BERHAD

LADANG PERBADANAN-FIMA BERHAD Annual Report 2004

CORPORATE STRUCTURE LADANG PERBADANAN-FIMA BERHAD

MILLJET SDN BHD* (40%)

ORGANISATIONAL STRUCTURE BOARD OF DIRECTORS

FINANCE & ADMINISTRATION

RISK MANAGEMENT UNIT

LADANG PERBADANAN-FIMA BERHAD Annual Report 2004

RISK MANAGEMENT COMMITTEE

SECRETARIES Gowrie Navaratnam Mohd Nasir bin Ismail

AUDITORS KPMG Desa Megat & Co., Chartered Accountants

LADANG PERBADANAN-FIMA BERHAD Annual Report 2004

Risk Management Committee Nominating Committee

(appointed on 4 January 2005) (resigned on 11 December 2004) (resigned on 11 December 2004)

(appointed on 4 January 2005) (resigned on 11 December 2004) (resigned on 11 December 2004)

(resigned on 11 December 2004)

LADANG PERBADANAN-FIMA BERHAD Annual Report 2004

LADANG PERBADANAN-FIMA BERHAD Annual Report 2004

LADANG PERBADANAN-FIMA BERHAD Annual Report 2004

Ir. MUHAMMAD HAFNI BIN IBRAHIM CHAIRMAN

LADANG PERBADANAN-FIMA BERHAD Annual Report 2004

LADANG PERBADANAN-FIMA BERHAD Annual Report 2004

LADANG PERBADANAN-FIMA BERHAD Annual Report 2004

LADANG PERBADANAN-FIMA BERHAD Annual Report 2004

LADANG PERBADANAN-FIMA BERHAD Annual Report 2004

Range of remuneration Less than RM50,000 Between RM50,000 and RM100,000 *

Includes Directors who resigned during the financial year.

LADANG PERBADANAN-FIMA BERHAD Annual Report 2004

LADANG PERBADANAN-FIMA BERHAD Annual Report 2004

LADANG PERBADANAN-FIMA BERHAD Annual Report 2004

Value of Transaction RM'000 48

United Plantations Berhad (From 1 January 2004 to 11 December 2004)

Agronomic consultancy services

Purchase of germinated oil palm seeds

LADANG PERBADANAN-FIMA BERHAD Annual Report 2004

Perak Meat Industries Sdn Bhd

Lease rental received

11. Options, Warrants and Convertible Securities

2004 Annual Report

Notice of Annual General Meeting

25th Annual General Meeting

Dividends Interim Final *

Declaration Entitlement Book Closure Payment

7 August 2004 26 August 2004 27 August 2004 9 September 2004

Declaration Entitlement Book Closure Payment

26 February 2005 27 June 2005 28 June 2005 12 July 2005

LADANG PERBADANAN-FIMA BERHAD Annual Report 2004

* Subject to shareholders' approval at the Company's 25th Annual General Meeting

Profit before tax 172 170 15 168 166 164

Basic earning per share 16 20 16 12 8 8 4 4 0

NTA per share

2000 2001 2002 2003 2004

2000 2001 2002 2003 2004

2000 2001 2002 2003 2004

Revenue 16,000 14,000 12,000

AGE OF OIL PALMS

9% 0-10 Years 11-15 Years 16-20 Years Above 20 Years

Planted - Mature Planted - Immature

Lumut Sitiawan LADANG LEKIR I & II

Revalued on 29 July 1993

Oil palm estate

Revalued on 29 July 1993

Oil palm and mango estates