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02
Notice
Of Annual
Gener al M e e t i n g
NOTICE IS HEREBY GIVEN THAT the Twenty-Seventh Annual General Meeting of the Company will be held
at Crystal 1 Ballroom, Impiana Casuarina Hotel, 18 Jalan Raja Dr. Nazrin Shah, 30250 Ipoh, Perak, Malaysia on Friday,
22 June 2007 at 10:30 a.m. for the following purposes:
1. To receive and consider the Audited Financial Statements for the financial year ended 31 Resolution 1
December 2006 and the Reports of the Directors and Auditors thereon.
2. To sanction the payment of a final dividend of 8 sen less 27% tax for the financial year ended 31 Resolution 2
December 2006 as recommended by the Board.
3. To re-elect the following Directors who shall retire in accordance with Article 66 of the Company’s
Articles of Association:
(i) Encik Kamisan bin Suja’ Resolution 3
(ii) Mr. Yeoh Hock Thong Resolution 4
4. To approve the payment of Directors’ fees for the financial year ended 31 December 2006. Resolution 5
5. To re-appoint Messrs. KPMG Desa Megat & Co. as Auditors of the Company and to authorise the Resolution 6
Directors to fix their remuneration.
6. To transact any other ordinary business of the Company of which due notice shall have been given.
NOTICE IS HEREBY GIVEN THAT the Register of Members of the Company will be closed on 28 June 2007
for the purpose of determining members’ entitlement to the dividend payment. The dividend, if so approved at the
Twenty-Seventh Annual General Meeting, will be paid on 12 July 2007 to depositors registered in the Register of
Depositors at the close of business at 5:00 p.m. on 27 June 2007.
FURTHER NOTICE IS HEREBY GIVEN THAT a depositor shall qualify for entitlement to the dividend only
in respect of:
(i) Shares transferred into the Depositor’s Securities Account before 4:00 p.m. on 27 June 2007 in respect of
transfers;
(ii) Shares deposited into the Depositor’s Securities Account before 12:30 p.m. on 25 June 2007 in respect of shares
exempted from mandatory deposit;
(iii) Shares bought on the Bursa Malaysia Securities Berhad on a cum entitlement basis according to the rules of
Bursa Malaysia Securities Berhad.
Gowrie Navaratnam
Secretary
Ipoh
23 May 2007
NOTES:
(i) A member of the Company entitled to attend and vote at this meeting is also entitled to appoint one or more proxies to attend and vote in his/her stead.
Where a member appoints two proxies or more, the appointments shall be invalid unless he/she specifies the proportion of his/her shareholdings to be
represented by each proxy.
(ii) A proxy need not be a member of the Company.
(iii) The Proxy Form must be signed by the appointer or his/her attorney duly authorised in writing or in the case of a corporation, executed under its common
seal or under the hand of an officer or attorney duly authorised.
(iv) The Proxy Form should be completed and deposited at the Registered Office of the Company at No. 10, Persiaran Gopeng Satu, 31350 Ipoh, Perak, Malaysia
not less than 48 hours before the time fixed for the Meeting.
LADANG PERBADANAN-FIMA BERHAD 2006 annual report
03
Statement
A c c o m p a ny i n g
Notice Of Annu a l G e n e r a l M e e t i n g
TH
1. DIRECTORS STANDING FOR RE-ELECTION AT THE 27 ANNUAL GENERAL MEETING
The Directors retiring by rotation pursuant to Article 66 of the Company’s Articles of Association and seeking
re-election are:
The details of Directors standing for re-election and their shareholdings are set out in the Directors’ Profile and
Shareholding Statistics respectively appearing in the Annual Report.
A total of six (6) Board Meetings were held during the financial year ended 31 December 2006. The details of
the attendance of Directors at Board Meetings held in the financial year ended 31 December 2006 were as
disclosed in the Corporate Governance Statement contained in the Annual Report.
TH
3. DATE, TIME AND VENUE OF THE 27 ANNUAL GENERAL MEETING
04
Five-Yea r
Financial
Highlights
Basic earnings per share (sen) 8.77 9.27 15.57 7.25 11.10
Gross dividend per share (sen) 12.00 15.00 20.00 10.00 10.00
Net assets per share (RM) 1.45 1.46 1.50 1.43 1.49
LADANG PERBADANAN-FIMA BERHAD 2006 annual report
05
F i ve - Ye a r
Financial
Highlights
50,000 20,000
18,000
40,000 16,000
14,000
30,000 12,000
10,000
20,000 8,000
6,000
10,000 4,000
2,000
0 0
2002 2003 2004 2005 2006 2002 2003 2004 2005 2006
200,000 25
180,000
160,000 20
140,000
120,000 15
100,000
80,000 10
60,000
40,000 5
20,000
0 0
2002 2003 2004 2005 2006 2002 2003 2004 2005 2006
Basic earnings per share (sen) Net assets per share (RM)
18 1.52
16
1.50
14
12 1.48
10
1.46
8
6 1.44
4
1.42
2
0 1.40
2002 2003 2004 2005 2006 2002 2003 2004 2005 2006
2006 annual report LADANG PERBADANAN-FIMA BERHAD
06
Q uart e rl y
Pe rf o rmance
2006
Financial Performance 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Year 2006
Plantation Production 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Year 2006
Revenue (RM'000) Profit before tax (RM'000) Basic earnings per share (sen)
18,000 4.50
6,000
16,000 4.00
12,000 3.00
4,000
10,000 2.50
3,000
8,000 2.00
4,000 1.00
1,000
2,000 0.50
0 0 0.00
1st 2nd 3rd 4th 1st 2nd 3rd 4th 1st 2nd 3rd 4th
Quarter Quarter Quarter Quarter Quarter Quarter Quarter Quarter Quarter Quarter Quarter Quarter
9,000 2,500
8,000
2,000
7,000
6,000
1,500
5,000
4,000
1,000
3,000
2,000
500
1,000
0 0
1st 2nd 3rd 4th 1st 2nd 3rd 4th
Quarter Quarter Quarter Quarter Quarter Quarter Quarter Quarter
passion for excellence
07
Financial Calendar
29 April 2006
26th Annual General Meeting of the Company.
25 May 2006
Announcement of the unaudited results for the 1st quarter and 3 months ended 31 March 2006.
29 May 2006
Book Closure for determining entitlement of the final dividend of 5 sen less 28% tax for the financial year ended
31 December 2005.
12 June 2006
Payment of final dividend for financial year ended 31 December 2005.
25 August 2006
Announcement of the unaudited results for the 2nd quarter and 6 months ended 30 June 2006.
28 August 2006
Notice of Book Closure for the payment of interim dividend of 2 sen less 28% tax for the financial year ended 31
December 2006.
19 September 2006
Book Closure for determining entitlement of the interim dividend for the financial year ended 31 December 2006.
3 October 2006
Payment of interim dividend for the financial year ended 31 December 2006.
29 November 2006
Announcement of the unaudited results for the 3rd quarter and 9 months ended 30 September 2006.
26 February 2007
Announcement of the unaudited results for the 4th quarter and 12 months ended 31 December 2006.
23 May 2007
Notice of 27th Annual General Meeting, Notice of Book Closure for payment of final dividend * of 8 sen less 27% tax
for the financial year ended 31 December 2006 and issue of Annual Report 2006.
22 June 2007
27th Annual General Meeting of the Company.
28 June 2007
Book Closure for determining entitlement of the final dividend* for the financial year ended 31 December 2006.
12 July 2007
Payment of final dividend* for the financial year ended 31 December 2006.
10
Directors ’
ProfileDirectors’
Profile
DATO’ SHAMSUL BAHARI BIN SALLEH KHIR DPMP, PCM, AMP, PPT
Independent, Non-Executive Chairman, 60 years of age, Malaysian
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 worked with 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
until 1994.
He does not hold any directorship in any other public listed companies.
He does not hold any directorship in any other public listed companies.
11
D i re c t o rs ’
P r o fi l e
A BSc in Agriculture degree holder from Universiti Putra Malaysia, she was
appointed to the Board on 12 August 2005 and as a member of the Audit and Risk
Management Committees on 25 February 2006. On 1 February 2007, she was
appointed a member of the Management Committee.
She ser ved in the Ministr y of Agriculture from 1986 to 1990. She was then
transferred to the Perak State Government where she served until 1997 after which
she joined Perak Corporation Berhad. She currently holds the position of Assistant
General Manager, Land & Property Division and Director of PCB Development Sdn.
Bhd., a subsidiary of Perak Corporation Berhad.
She does not hold any directorship in any public listed company.
passion for excellence
13
Chairman’s Statement
OPERATIONAL PERFORMANCE
I am proud to announce that on 13 April 2006, the Company was accorded recognition by the Malaysian Palm Oil
Board for the achievement of OER above the Peninsular Average 2005 (Northern Region) and Highest Increase in
OER Northern Region 2005 (Private Sector). For and on behalf of the Board of Directors, I would like to
congratulate the staff at all levels in the organisation for their dedication and commitment in making this achievement
possible.
Following the encouraging performance in 2005, I am happy to report that the Company maintained its OER by
recording 20.0% for the year under review. The current OER surpassed the Peninsular Average of 19.2% and the
home state, Perak Average of 19.1%.
During 2006, the Company’s three estates with a combined planted hectarage of 7,660 hectares, produced a total of
130,230 metric tonnes of FFB, an increase of 13% from the previous year. The average FFB yield per mature hectare
was 21.3 metric tonnes compared to 19.1 metric tonnes in the previous year.
Our efforts towards environmental conservation are an on-going process. The Company is committed to safeguard
and enhance the quality of the environment. Zero-burning policy is adopted in the replanting exercise whereby all felled
palms were chipped and pulverised mechanically. Huts for barn owl occupancy were built to increase the population of
barn owls in the estates. Planting of beneficial plants and maintaining the growth of ground-cover vegetation to encourage
insect and animal biodiversity, besides enhancing soil fertility, also contributed to the reduction of chemical pesticide and
herbicide usage. In addition, controlled grazing in selected fields by cattle from neighbouring areas had also proven to be
effective in reducing weeding and manuring requirements. Organic materials from the mill such as empty fruit bunches were
returned to the fields and left to decompose under the palms, reducing the need for inorganic fertilisers.
DIVIDENDS
Our dividend policy addresses the need to provide shareholders with satisfactory cash returns as reward for their
continued support and confidence in the Group whilst also conserving adequate funds for reinvestment to enhance
the Group’s future profitability and shareholders’ value.
The Board is pleased to recommend a final dividend of 8 sen less 27% tax, subject to shareholders’ approval at the
forthcoming Annual General Meeting. Together with the interim dividend of 2 sen less 28% tax paid on 3 October
2006, the total dividends declared for the financial year ended 31 December 2006 is 10 sen less tax totalling RM8.32
million.
passion for excellence
14
Chairman’s Statement
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.
PROSPECTS
The future outlook for palm oil appears promising primarily on the strength of increasing global demand. The Board
believes that the Company will perform favourably under the prevailing market conditions.
The Company will continue to leverage on its human capital strengths, efficiency and productivity whilst initiatives to
increase mechanisation to reduce reliance on foreign labour will be intensified.
BEREAVEMENT
It is with profound sadness that we record the passing of our former Chairman, Allahyarham Tan Sri Dato’ Seri Haji
Basir bin Ismail whose wise council and support during his tenure as Chairman, contributed to the success of the
Company.
ACKNOWLEDGEMENT
On behalf of the Board, I would like to extend my appreciation to the Management team and employees for delivering
the commendable results for the year and their untiring efforts at striving to achieve the Company’s vision and
mission. I would also like to record my gratitude for the contribution and wisdom of my fellow directors on the
Board.
Last but not least, to our valued shareholders, business associates and relevant Government authorities. I thank you
for your continued trust, confidence and support.
15
Audit
Committee
Repor t
The Board of Directors is pleased to present the Audit Committee Report for the year ended 31 December 2006.
The Audit Committee was established on 22 August 1994 by the Board of Directors, to assist them to carry out their
responsibilities. The Audit Committee is guided by their Terms of Reference which are set out in this report.
COMPOSITION
Chairman
Dato’ Haji Ahmad Zakiuddin bin Harun (Independent, Non-Executive Director)
Members
Dato’ Shamsul Bahari bin Salleh Khir (Independent, Non-Executive Director)
Yeoh Hock Thong (Non-Independent, Non-Executive Director)
Hajjah Sharifah Nor Hashimah binti Syed Kamaruddin (Independent, Non-Executive Director)
Secretary
Gowrie Navaratnam
MEETINGS
During the year under review, the Audit Committee met 3 times and the attendance of each member was as follows:
Due to insufficient quorum, the Chairman being on medical leave for a period of 9 months, matters to be reviewed by
the Audit Committee at the Meeting scheduled for 25 February 2006 were tabled and deliberated upon by the Board
as a whole at the Meeting of the Board of Directors convened on the same. At the same Board Meeting, Hajjah
Sharifah Nor Hashimah binti Syed Kamaruddin was appointed a member of the Audit Committee, thus increasing the
number of Audit Committee members from 3 members to 4 members.
SUMMARY OF ACTIVITIES
During the year, the main activities undertaken by the Audit Committee were as follows:
External Audit
• 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.
• Reviewed with the External Auditors the audit report and results of their audit and 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.
• Considered and recommended to the Board the re-appointment of the External Auditors and the audit fees to
be received by them.
2006 annual report LADANG PERBADANAN-FIMA BERHAD
16
A udit
Committee
Repor t
Internal Audit
• Reviewed the Internal Audit Department’s annual audit programme to ensure adequacy of coverage on principal
risk areas.
• 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.
• Assessed and considered the Internal Audit Department’s performance and its authority and independence in
carrying out its function.
• 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.
Financial Reporting
• Considered and reviewed the Interim and Annual Financial Statements of the Group and the Company and
recommended the same to the Board for approval.
Annual Reporting
• Reviewed and recommend to the Board for approval the Statements on Corporate Governance and Internal
Control, Audit Committee Report and other disclosures contained in the Annual Report.
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 and reports were issued to the process owners incorporating its findings and recommendations.
The audits focused on key controls to mitigate risks, safeguard assets, ensure 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.
The Company has not at the moment subscribed to any share scheme for its employees.
LADANG PERBADANAN-FIMA BERHAD 2006 annual report
17
Audit
Committee
Repor t
TERMS OF REFERENCE
1.0 Composition
1.1 The Board of Directors shall appoint an Audit Committee from amongst themselves and shall:
1.2 The Chairman, who shall be elected by the members of the Committee, shall be an independent non-executive
director.
1.4 In the event of any vacancy in the Audit Committee resulting in non-compliance with subparagraph 1.1, the
Company must fill the vacancy within 3 months.
2.0 Objectives
(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.
3.0 Authority
3.1 The Audit Committee is authorised by the Board to undertake the following:
18
A udit
Committee
Repor t
4.0 Functions
In fulfilling its primary objectives, the Audit Committee shall, amongst others, discharge the following functions
and report to the Board of Directors:
The Audit Committee shall oversee all matters relating to the External and Internal Audit as outlined in Paragraphs
4.1(i) to (iii) below.
(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.
• 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.
(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.
LADANG PERBADANAN-FIMA BERHAD 2006 annual report
19
Audit
Committee
Repor t
(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.
(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.
(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.
(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.
2006 annual report LADANG PERBADANAN-FIMA BERHAD
20
A udit
Committee
Repor t
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.
The Audit Committee shall undertake any other additional duties and responsibilities as may be decided by the
Board from time to time.
5.0 Meetings
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.
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.
6.0 Attendance
6.1 A quorum shall comprise of at least three (3) members consisting of a majority of independent directors.
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.
7.0 Minutes
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.
7.2 Minutes of each meeting shall be kept and distributed to each member of the Audit Committee.
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 the Audit Committee and members have carried out
their duties in accordance with their terms of reference.
This report is made in accordance with a resolution of the Board of Directors dated 18 April 2007.
LADANG PERBADANAN-FIMA BERHAD 2006 annual report
21
C o rp o ra t e
G ove r n a n c e
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 present 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.
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 six (6) members; comprising three (3) Independent
Non-Executive 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 (“Bursa Malaysia”). 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 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.
2006 annual report LADANG PERBADANAN-FIMA BERHAD
22
Corporat e
Gover nanc e
Statement
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.
Shareholders
Board of Company
Directors Secretary
Internal
Management
Audit
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.
• 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 examines in depth the monthly performance of the business and recommendations
made to enhance and improve operational matters affecting the Group. The Management Committee also reviews
the Annual Budget of the Company in detail and makes recommendation to the Board 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.
• 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.
23
C o rp o ra t e
G ove r n a n c e
Statement
• 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.
• Nominating Committee
The Nominating Committee was established on 8 October 2001 and is entrusted with the specific task of
identifying and recommending new nominees to the Board. As such, the Company has in place through the
Nominating Committee a formal and transparent process for the appointment of new Directors. The process
ensures that all nominees to the Board are first considered by the Nominating Committee taking into
account the required mix of skills and experience and other qualities, before making a recommendation to
the Board. The actual decision as to who shall be appointed should be the responsibility of the Board as a
whole after considering the recommendations of the Committee.
The Nominating Committee also assesses the effectiveness of the Board as a whole and the respective Board
Committees and contribution of each individual Director.
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 6 meetings and the number of meetings attended by each Director was
as follows:
* Dato’ Haji Ahmad Zakiuddin bin Harun was on medical leave for a period of 9 months.
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.
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
Secretary. The Board believes that the Company Secretary is capable of carrying out her 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, are circulated in advance to all the Directors for their information, in order to be
properly briefed before the meeting.
2006 annual report LADANG PERBADANAN-FIMA BERHAD
24
Corporat e
Gover nanc e
Statement
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.
All Directors had attended the Mandatory Accreditation Programme and the Directors were also informed and
encouraged to attend professional programmes organised by various professional organisers to keep abreast with
relevant new regulatory developments on a continuous basis. Director’s attendance at external programmes was
based on the training needs of individual Directors. Amongst the topics covered by the programmes attended in
the year under review were the introduction of new financial reporting standards, taxation, legal matters
pertaining to employment of foreign workers and the issues and challenges arising from the Malaysian Code on
Takeover and Mergers.
In addition, the members of the Board also benefited from briefings by the Management and Advisers on the
progress and development in the plantation and milling operations.
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 re-appointment. 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.
The Company pays its Directors annual fees, which are approved annually by the shareholders. The Directors are
also given emoluments as determined by the Board as a whole, to reflect the expertise, experience and level of
responsibilities undertaken which include meeting allowances for each meeting they attend.
The nature and amount of each major element of the remuneration of the Directors of the Company for the
financial year under review were as follows:
(b) The number of Directors of the Company whose total remuneration falls within the respective bands of
RM50,000:
25
C o rp o ra t e
G ove r n a n c e
Statement
3.0 SHAREHOLDERS
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.
The Annual General Meeting provides the platform for two-way communication between the Company and
shareholders. Shareholders who are unable to attend are allowed to appoint proxies to attend and vote on their
behalf. At the AGM, the shareholders are encouraged to ask questions both about the resolutions being
proposed or about the Group’s operations in general. Members of the Board as well as the External Auditors of
the Company are present to answer questions raised by the shareholders.
Besides the various announcements made to Bursa Malaysia, the timely release of the unaudited interim financial
statements provides shareholders with an overview of the Group’s performance and operations. Members of the
public are also able to access the Company’s announcements and Annual Reports from Bursa Malaysia’s website.
In addition, nominees of the Company’s major shareholders sit on the Board. This provides a forum for interaction
and direct communication between the Board, Management and major shareholders.
All queries from shareholders, whether by mail or telephone call, are communicated to the Company Secretary.
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 information on the Group’s internal control is detailed in the Internal Control Statement appearing in the
Annual Report.
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.
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 2006, the Directors have:
• complied with the applicable approved accounting standards for entities other than private entities issued by
the Malaysian Accounting Standards Board, accounting principles generally accepted in Malaysia and the
provisions of the Companies Act, 1965
2006 annual report LADANG PERBADANAN-FIMA BERHAD
26
Corporat e
Gover nanc e
Statement
The Directors have responsibility for ensuring that the Group and the Company keep accounting records, which
disclosed 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 considered that they have pursued the actions necessary to meet their responsibilities as set out
in this Statement.
27
C o rp o ra t e
G ove r n a n c e
Statement
6.12 American Depository Receipt (“ADR”) or Global Depository Receipt (“GDR”) Programme
The Company did not sponsor any ADR or GDR programme during the financial year.
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;
(b) 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;
(c) remuneration of each member of the Board of Directors is not detailed as the Directors after due consideration,
are of the opinion that the transparency and accountability aspects of Corporate Governance as applicable to
Directors’ remuneration are appropriately served by the band disclosure made in this Statement; and
(d) 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.
This statement is made in accordance with a resolution of the Board of Directors dated 18 April 2007.
2006 annual report LADANG PERBADANAN-FIMA BERHAD
28
Internal
Control
Statement
In accordance with the principles of good corporate governance, the Board of Directors of Ladang Perbadanan-Fima
Berhad (“the Board”) is pleased to provide the disclosure statement on the state of internal control of the Group for
the year under review.
RESPONSIBILITY
The Board affirms its overall responsibility for maintaining a sound system of internal control to safeguard
shareholders’ investment and the Group’s assets. The internal control system, by its nature, is designed to manage the
Group’s risks 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 key elements of the Group’s system of internal control are summarised as follows:
1. Risk Management
The Board regards risk management as an integral part of the business operations and has adopted a risk
management framework for the Group to identify, evaluate and manage significant risks faced by the Group. The
Management of each operating units is responsible for the identification and evaluation of significant risks
applicable to their respective areas of operations and to formulate suitable internal controls to manage the risks.
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.
All employees are required to adhere to the Code of Business Conduct and Ethics, which defines the minimum
standard of behaviour and ethical conduct for all employees of the Group.
The Internal Audit function provides the Board via the Audit Committee with the independent assurance on the
adequacy and effectiveness of the internal control system within the Group. Details of the activities undertaken
by the Audit Committee and Internal Audit function are set out in the Audit Committee Report.
• Delegation of responsibilities to Board Committees through defined terms of reference including authorisation
levels for various aspect of the business.
• The Board receives and reviews the Group’s financial statements including quarterly reports to Bursa Malaysia
Securities Berhad on a regular basis. The financial results are monitored against the year’s budget and previous
year’s results and major variances are deliberated by the Board.
• Regular meetings of the Board Management Committee are conducted to review and monitor matters pertaining
to the business operations based on reports, which provide information on financial and non-financial matters.
LADANG PERBADANAN-FIMA BERHAD 2006 annual report
29
Internal
Control
Statement
• Comprehensive annual budgeting process requiring all operating units to submit budgets which are reviewed by the
Board Management Committee and approved by the Board.
• Critical information of the Group such as financial data and human resource data are captured within the various
information systems in place to keep track of the Group’s operations. Relevant information is also obtained from
external sources to monitor and benchmark the Group’s performance.
• Major purchases of goods and contract works are referred to the Board Tender Committee or Board of Directors
for consideration and approval.
• Services of a Visiting Adviser and Mill Consultant are engaged to review and advise the Board Management
Committee on the estate and mill operations.
• Adequate insurance coverage on major assets is in place to ensure that the Group’s assets are sufficiently
protected against any mishap that will result in losses to the Group.
• Visits by members of the Board, Board Management Committee and Management to the operating units.
• 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
The Board is of the view that there was no significant breakdown or weakness in the Group’s system of internal
control that may result in material losses being incurred by the Group for the financial year under review.
The External Auditors have reviewed the Internal Control Statement in accordance with the Auditing Technical
Release 5, Guidance for Auditors on the Review of Directors’ Statement on Internal Control, for inclusion in the
Annual Report 2006. 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 2007.
2006 annual report LADANG PERBADANAN-FIMA BERHAD
30
Ar e a S tate m e n t
As At
31 D ecem ber 2006
PERAK
Ipoh
Ladang Lekir
LADANG PERBADANAN-FIMA BERHAD 2006 annual report
31
P ro p e rt i e s
As At
31 December 2006
Location Description & Tenure Year of Area Approximate Date of Last Net
Existing Use Expiry Age of Acquisition/ Book
Buildings Revaluation Value
RM’000
Lot 3916, Mukim Ladang Lekir Freehold - 4,140.23 22 – 25 years Revalued on 26,201
Lekir, Daerah - Oil palm and hectares 29 July 1993
Manjung, Perak and mango plantation
Lot 67 & 68, Mukim
Jaya Baru, Daerah
Perak Tengah, Perak,
Malaysia.
Lot 65 & 66, Mukim Ladang Changkat Leasehold 2080 2,541.39 22 – 25 years Revalued on 10,409
Jaya Baru, Daerah Chermin hectares 27 July 1993
Perak Tengah, Perak, - Oil palm
Lot 10944, Mukim plantation & palm
Bota, Daerah Perak oil mill
Tengah, Perak, P.T.
365 & 366, Mukim
Sitiawan, Daerah
Manjung, Perak and
Lot 20079, 20402 –
20406 & 20409 –
20412, Mukim
Sitiawan, Daerah
Manjung, Perak,
Malaysia.
P.T. 344, 345 & 371, Ladang Raja Hitam Freehold - 1,489.65 25 years Revalued on 9,384
Mukim Sitiawan, - Oil palm hectares 26 July 1993
Daerah Manjung, plantation
Perak and P.T. 86 &
Lot 7761, Mukim
Beruas, Daerah
Manjung, Perak,
Malaysia.
Lot 11730S, Bandar Office building Freehold - 1,843.10 32 years Acquired on 118
Ipoh, Daerah Kinta, - Head Office sq. metres 30 September
Perak. 1993
No. 10, Persiaran
Gopeng Satu, 31350
Ipoh, Perak,
Malaysia.
H.S. (D) 134493, P.T. Vacant Land Leasehold 2103 6,070 - Acquired on 2,075
198731, Bandar sq. metres 27 July 2006
Ipoh, Daerah Kinta,
Perak.
Jalan Caldwell,
30350 Ipoh, Perak,
Malaysia.
2006 annual report LADANG PERBADANAN-FIMA BERHAD
32
Sha reho l d i n g S t a t i s t i c s
As At
25 Apr il 2007
1. SHARE CAPITAL
3. SUBSTANTIAL SHAREHOLDERS
No. of % of issued
No. Name of shareholders shares held share capital
4. DIRECTORS' SHAREHOLDINGS
33
Sha reh o l d i n g S t a t i s t i c s
As At
25 A p r i l 2007
No. of % of issued
No. Name of shareholders shares held share capital
1. Amsec Nominees (Tempatan) Sdn Bhd 36,524,000 31.95
(Ambank (M) Berhad for Glamour Green Sdn Bhd)
2. HDM Nominees (Tempatan) Sdn Bhd 23,600,000 20.65
(Malaysian Assurance Alliance Berhad for Taipan Heritage Sdn Bhd)
3. Ablington Holdings Sdn Bhd 17,600,000 15.40
4. BHR Enterprise Sdn Bhd 5,717,000 5.00
5. HDM Nominees (Tempatan) Sdn Bhd 3,920,000 3.43
(Leong Tuck Onn for Taipan Heritage Sdn Bhd)
6. Ng Song Choon Enterprises Sdn Berhad 2,445,000 2.14
7. United Plantations Berhad 2,115,000 1.85
8. HDM Nominees (Asing) Sdn Bhd 2,000,000 1.75
(DBS Vickers Secs (S) Pte Ltd for Ong Beng Huat)
9. Malaysian Assurance Alliance Berhad 1,567,000 1.37
10. S.B.S.K. Plantations Sdn Bhd 1,488,800 1.30
11. Malaysian Assurance Alliance Berhad 1,477,000 1.29
12. Mayban Securities Nominees (Tempatan) Sdn Bhd 1,460,800 1.28
(Pledged Securities Account for Poh Gaik Lye)
13. Malaysian Assurance Alliance Berhad 1,435,000 1.26
14. Ong Teng Kek 1,353,000 1.18
15. Malaysian Assurance Alliance Berhad 1,022,000 0.89
16. TA Nominees (Tempatan) Sdn Bhd 800,000 0.70
(Pledged Securities Account for Ronald Leong Vui Khiong)
17. EB Nominees (Tempatan) Sendirian Berhad 750,000 0.66
(Pledged Securities Account for Ho Soon Mei)
18. EB Nominees (Tempatan) Sendirian Berhad 670,000 0.59
(Pledged Securities Account for Ong Teng Kek)
19. EB Nominees (Tempatan) Sendirian Berhad 500,000 0.44
(Pledged Securities Account for Azian bin Osman)
20. RHB Capital Nominees (Tempatan) Sdn Bhd 435,000 0.38
(Pledged Securities Account for Leong Wei Kong)
21. M & A Nominee (Tempatan) Sdn Bhd 432,500 0.38
(Jendarata Bernam Provident Fund)
22. Sinny United Sdn Bhd 428,800 0.38
23. RHB Capital Nominees (Tempatan) Sdn Bhd 381,000 0.33
(Pledged Securities Account for Abd Aziz bin Jantan)
24. SK Capital Sdn Bhd 370,000 0.32
25. M & A Nominee (Tempatan) Sdn Bhd 320,000 0.28
(United Plantations Workers Benevolent Retirement Scheme)
26. Alliancegroup Nominees (Tempatan) Sdn Bhd 263,000 0.23
(Pledged Securities Account for Tan Sew Ching)
27. Citigroup Nominees (Asing) Sdn Bhd 248,000 0.22
(UBS AG Hong Kong for Seven-Heaven Investments Limited)
28. Citigroup Nominees (Asing) Sdn Bhd 248,000 0.22
(UBS AG Hong Kong for Pink Tourmaline Corp)
29. Kenanga Nominees (Tempatan) Sdn Bhd 182,000 0.16
(Pledged Securities Account for Mohamed Yusoff bin Ismail)
30. EB Nominess (Tempatan) Sendirian Berhad 150,000 0.13
(Pledged Securities Account for Mohamed Yusoff bin Ismail)
2006 annual report LADANG PERBADANAN-FIMA BERHAD
36
Directors ' Re p o rt
For The
Year Ende d 3 1 D e c e m b e r 2 0 0 6
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 2006.
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 6 to the financial statements. There has been no
significant change in the nature of these activities during the financial year.
RESULTS
GROUP COMPANY
RM’000 RM’000
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 5 sen less 28% tax for the year ended 31 December 2005 amounting to RM4,114,800 on 12
June 2006; and
(ii) an interim dividend of 2 sen less 28% tax totalling RM1,645,920 in respect of the financial year ended 31
December 2006 on 3 October 2006.
The Directors recommend a final dividend of 8 sen less 27% tax in respect of the financial year ended 31 December 2006
amounting to RM6,675,120 subject to approval of the shareholders at the forthcoming Annual General Meeting.
Directors who served since the date of the last report are:
Dato' Shamsul Bahari bin Salleh Khir
Dato' Haji Ahmad Zakiuddin bin Harun
Dato’ Jaafar bin Lajis
Kamisan bin Suja’
Yeoh Hock Thong
Hajjah Sharifah Nor Hashimah binti Syed Kamaruddin
In accordance with Article 66 of the Company’s Articles of Association, Kamisan bin Suja’ and Yeoh Hock Thong retire
by rotation from the Board at the forthcoming Annual General Meeting and being eligible, offer themselves for
re-election.
LADANG PERBADANAN-FIMA BERHAD 2006 annual report
37
D i re c t o rs ' Re p o rt
For The
Year Ended 3 1 D e c e m b e r 2 0 0 6
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:
None of the other Directors holding office at 31 December 2006 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 22 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.
ISSUE OF SHARES
There were no changes in the authorised issued and paid-up capital of the Company during the financial year.
No options were granted to any person to take up unissued shares of the Company during the year.
2006 annual report LADANG PERBADANAN-FIMA BERHAD
38
Directors ' Re p o rt
For The
Year Ende d 3 1 D e c e m b e r 2 0 0 6
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 Group and in the Company financial
statements 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.
(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, except for the effect arising from the change in accounting policies as disclosed in the
financial statements, the results of the operations of the Group and of the Company for the financial year ended 31
December 2006 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.
Signed on behalf of the Board of Directors in accordance with a resolution of the Directors:
IPOH
Date: 18 April 2007
LADANG PERBADANAN-FIMA BERHAD 2006 annual report
39
Statem e n t B y D i re c t o rs
P u r s u a n t To
Section 169(15) Of The C o m p a n i e s A c t , 1 9 6 5
In the opinion of the Directors, the financial statements set out on pages 42 to 62 are drawn up in accordance with
the provisions of the Companies Act, 1965 and applicable approved accounting standards for entities other than
private entities issued by the Malaysian Accounting Standards Board so as to give a true and fair view of the state of
affairs of the Group and of the Company at 31 December 2006 and of the results of their operations and cash flows
for the year ended on that date.
IPOH
Date: 18 April 2007
2006 annual report LADANG PERBADANAN-FIMA BERHAD
40
Statutor y D e c l a ra t i o n
Pur suant To
Section 16 9 ( 1 6 ) O f T h e C o m p a n i e s A c t , 1 9 6 5
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 42 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 2007.
Gowrie Navaratnam
Before me:
41
Re port O f T h e A u d i t o rs
To
The Member s
We have audited the financial statements set out on pages 42 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 to any other person for the content of this report.
We conducted our audit in accordance with approved Standards on Auditing in Malaysia. Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. An audit also includes assessing the accounting principles used and significant estimates
made by the Directors, as well as evaluating the overall financial statements presentation. 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 for entities other than private entities issued by the Malaysian
Accounting Standards Board 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 2006 and the results of their operations
and cash flows for the year ended on that date; and
(ii) 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; 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.
IPOH
Date: 18 April 2007
2006 annual report LADANG PERBADANAN-FIMA BERHAD
42
Bala nce S h e e t s
As At
31 Decem b e r 2 0 0 6
Group Company
Note 2006 2005 2006 2005
RM’000 RM’000 RM’000 RM’000
(restated) (restated)
Assets
Property, plant and equipment 3 40,237 40,814 40,237 40,814
Prepaid lease payments 4 11,229 9,330 11,229 9,330
Biological assets 5 98,439 98,439 98,439 98,439
Investment in subsidiary 6 - - - -
Investment in associate 7 - - - -
Other investments 8 120 120 120 120
Equity
Liabilities
Deferred tax liabilities 14 11,656 12,621 11,656 12,621
Retirement benefits 15 1,988 1,954 1,988 1,954
The notes set out on pages 46 to 62 form an integral part of, and should be read in conjunction with, these financial
statements.
LADANG PERBADANAN-FIMA BERHAD 2006 annual report
43
Inc o m e S t a t e m e n t s
Fo r T h e
Year Ended 3 1 D e c e m b e r 2 0 0 6
Group Company
Note 2006 2005 2006 2005
RM’000 RM’000 RM’000 RM’000
Attributable to:
The notes set out on pages 46 to 62 form an integral part of, and should be read in conjunction with, these financial
statements.
2006 annual report LADANG PERBADANAN-FIMA BERHAD
44
Stateme n t s O f
Changes In E q u i t y
For The Ye a r E n d e d 3 1 D e c e m b e r 2 0 0 6
Note 12 Note 13
Company
Note 12 Note 13
The notes set out on pages 46 to 62 form an integral part of, and should be read in conjunction with, these financial
statements.
LADANG PERBADANAN-FIMA BERHAD 2006 annual report
45
Cash F low S t a t e m e n t s
For The
Year Ended 3 1 D e c e m b e r 2 0 0 6
Group Company
2006 2005 2006 2005
RM’000 RM’000 RM’000 RM’000
Cash flows from operating activities
Net profit before taxation 16,782 11,609 16,783 11,610
Adjustments for:
Amortisation of prepaid lease payments 137 124 137 124
Depreciation of property, plant and equipment 2,113 2,041 2,113 2,041
Dividend income from shares quoted in Malaysia (1) (4) (1) (4)
Gain on disposal of plant and equipment (20) (32) (20) (32)
Interest income from fixed deposits (739) (1,075) (739) (1,075)
Interest income from vehicle loans (1) (2) (1) (2)
Property, plant and equipment written off 62 108 62 108
Provision for retirement benefits 240 201 240 201
Operating profit before working capital changes 18,573 12,970 18,574 12,971
Change in inventories (148) 507 (148) 507
Change in trade receivables (2,204) (35) (2,204) (35)
Change in other receivables, deposits and prepayments 1,520 (4,564) 1,520 (4,564)
Change in trade payables 613 (833) 613 (833)
Change in other payables and accruals 406 (1,184) 407 (1,184)
Change in amount due from subsidiary - - (2) (1)
Net cash generated from operating activities 15,437 1,654 15,437 1,654
Cash flows from investing activities
Proceeds from disposal of equipment 20 32 20 32
Purchase of plant and equipment (1,598) (1,245) (1,598) (1,245)
Lease payments (2,036) - (2,036) -
Dividend income from shares quoted in Malaysia 1 4 1 4
Interest income from fixed deposits 741 1,264 741 1,264
Interest income from vehicle loans 1 2 1 2
Deposits pledged with licensed banks (1,000) - (1,000) -
Net cash (used in) / generated from investing activities (3,871) 57 (3,871) 57
Cash flows from financing activities
Cash and cash equivalents included in the cash flow statements comprise the following balance sheet amounts:
The notes set out on pages 46 to 62 form an integral part of, and should be read in conjunction with, these financial
statements.
2006 annual report LADANG PERBADANAN-FIMA BERHAD
46
Notes To T h e
Financial S t a t e m e n t s
- 31 Decem b e r 2 0 0 6
Ladang Perbadanan-Fima Berhad is a public limited liability company, incorporated and domiciled in Malaysia and is
listed on the Main Board of Bursa Malaysia Securities Berhad. The address of its registered office and principal place
of business is as follows:
Registered office and principal place of business
No. 10, Persiaran Gopeng Satu
31350 Ipoh
Perak, Malaysia
The consolidated financial statements as at and for the year ended 31 December 2006 comprise the Company and its
subsidiary (together referred to as the Group) and the Group’s interest in an associate. The financial statements of
the Company as at and for the year ended 31 December 2006 do not include other entities.
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 6 to the financial statements.
1. Basis of accounting
(a) Statement of compliance
The financial statements of the Group and of the Company have been prepared in accordance with
applicable approved accounting standards for entities other than private entities issued by the Malaysian
Accounting Standards Board (“MASB”), accounting principles generally accepted in Malaysia and the
provisions of the Companies Act, 1965. These financial statements also comply with the applicable disclosure
provisions of the Listing Requirements of Bursa Malaysia Securities Berhad.
The MASB has issued a number of new and revised Financial Reporting Standards (“FRS”) that are effective
for accounting periods beginning after 1 January 2006 or available for early adoption. In this set of financial
statements, the Group has chosen to early adopt FRS 117, Leases, which is effective for annual periods
beginning on or after 1 October 2006.
The MASB has also issued the following new and revised FRSs or interpretation that are effective for future
periods that have not been applied in preparing these financial statements:
(i) FRS 124, Related Party Disclosures – This FRS is effective for annual periods beginning on or after 1
October 2006. By virtue of the exemption in paragraph 22A of FRS 124, the impact of applying FRS 124
on the financial statements upon first adoption of this standard as required by paragraph 30(b) of FRS
108, Accounting Policies, Changes in Accounting Estimates and Error is not disclosed;
(ii) FRS 139, Financial Instruments: Recognition and Measurement – This FRS has been issued by the MASB
but the MASB has yet to announce the effective date of this standard. By virtue of the exemption in
paragraph 103AB of FRS 139, the impact of applying FRS 139 on the financial statements upon first
adoption of this standard as required by paragraph 30(b) of FRS 108 is not disclosed;
(iii) Amendment to FRS 119 2004 , Employee Benefit – Actuarial Gains and Losses, Group Plans and
Disclosures – Certain amendment made to FRS 1192004 are effective for annual periods beginning on or
after 1 January 2007. The adoption of these amendments does not have any significant impact on the
financial statements of the Group and of the Company in the period of initial application; and
(iv) FRS 6, Exploration for and Evaluation of Mineral Resources – This FRS is effective for annual periods
beginning on or after 1 January 2007. This Standard is not applicable to the Group and the Company.
The MASB has also issued amendments and other interpretations that are effective for annual periods
beginning on or after 1 July 2007. These amendments and interpretations are not applicable to the Group
and the Company.
The Group plans to apply FRS 124 initially for the annual period beginning 1 January 2007.
The effects of adopting the new/revised FRSs in 2006 are set out in note 26.
The financial statements were approved by the Board of Directors on 18 April 2007.
(b) Basis of measurement
The financial statements have been prepared on the historical cost basis.
LADANG PERBADANAN-FIMA BERHAD 2006 annual report
47
N o t e s To T h e
Financial Statements
- 31 December 2006
48
Notes To T h e
Financial S t a t e m e n t s
- 31 Decem b e r 2 0 0 6
49
N o t e s To T h e
Financial Statements
- 31 December 2006
50
Notes To T h e
Financial S t a t e m e n t s
- 31 Dece m b e r 2 0 0 6
51
N o t e s To T h e
Financial Statements
- 31 December 2006
52
Notes To T h e
Financial S t a t e m e n t s
- 31 Dece m b e r 2 0 0 6
Had the freehold land been carried under the cost model, the carrying amount of the revalued freehold land
would have been RM4,697,000 (2005: RM4,697,000).
At 1 January 2005 -
Effect of adopting FRS 117 10,945
Cost 2,036
Directors’ valuation 10,945
12,981
Amortisation
At 1 January 2005 -
Effect of adopting FRS 117 1,491
Carrying amounts
The above stated prepaid lease payments (previously classified as long term leasehold land) comprise of leasehold
land with unexpired lease period of more than 50 years.
The basis of revaluation for prepaid lease payments is the same as disclosed in note 3.
Had the prepaid lease been carried under the cost model, the carrying amount of the revalued prepaid lease
would have been RM1,102,000 (2005: RM1,117,000).
LADANG PERBADANAN-FIMA BERHAD 2006 annual report
53
N o t e s To T h e
Financial Statements
- 31 December 2006
5. Biological assets
Group/Company
2006 2005
RM’000 RM’000
Cost/Valuation
At 1 January and 31 December 98,439 98,439
96,943 96,943
98,439 98,439
The basis of revaluation for biological assets (previously classified as plantation development expenditure) is the
same as disclosed in note 3.
The carrying value of the biological assets located on freehold land and leasehold land had this asset been carried
under the cost model would be as follows:
Group/Company
2006 2005
RM’000 RM’000
64,669 64,669
6. Subsidiary company
Company
2006 2005
RM’000 RM’000
Unquoted shares at cost * - -
The amount due from subsidiary company is unsecured, non-interest bearing and has no fixed terms of
repayment.
54
Notes To T h e
Financial S t a t e m e n t s
- 31 Dece m b e r 2 0 0 6
7. Associated company
Group Company
2006 2005 2006 2005
RM’000 RM’000 RM’000 RM’000
400 400 - -
- - - -
- - - -
The Group's share of the cumulative losses amounting to RM539,000 (2005: 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.
Effective
Country of ownership interest
Name of company incorporation 2006 2005 Principal activity
* In creditors’ liquidation
LADANG PERBADANAN-FIMA BERHAD 2006 annual report
55
N o t e s To T h e
Financial Statements
- 31 December 2006
8. Other investments
Group/Company
2006 2005
Non-current RM’000 RM’000
In Malaysia
Unquoted shares, at cost 20 20
Less: Allowance for diminution in value (20) (20)
- -
Quoted shares, at cost 120 120
120 120
Market value at 31 December
In Malaysia
Quoted shares, at market value 143 119
9. Inventories
Group/Company
2006 2005
RM’000 RM’000
At cost:
Fresh fruit bunches 11 10
Crude palm oil 457 253
Palm kernel 85 43
Seedlings 646 617
Stores and materials 359 487
1,558 1,410
Included in other receivables, deposits and prepayments is a refundable earnest deposit of RM4.8 million (2005:
RM4.8 million) paid as part of the terms of offer to indicate the Company’s interest for the purchase of 100%
equity interest in two unquoted plantation based companies.
The proposed purchase is being considered by the Board of Directors and the terms of the offer are still being
negotiated by both parties. The Company has not to-date entered into any sale and purchase agreement with the offeror.
30,050 23,245
Fixed deposits amounting to RM1,500,000 (2005: RM500,000) are held under lien by one bank (2005: one bank)
for banking facilities granted to the Company.
2006 annual report LADANG PERBADANAN-FIMA BERHAD
56
Notes To T h e
Financial S t a t e m e n t s
- 31 Decem b e r 2 0 0 6
The revaluation reserve is in relation to the revaluation of freehold land, prepaid lease payments (previously
classified as long term leasehold land) and biological assets (previously classified as 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.
11,656 12,621
16. Revenue
Revenue consists of invoiced value of crude palm oil and palm kernel sold.
LADANG PERBADANAN-FIMA BERHAD 2006 annual report
57
N o t e s To T h e
Financial Statements
- 31 December 2006
5,065 3,739
Deferred taxation
– reversal of temporary differences (353) (416)
– effect of changes in tax rates (612) -
(965) (416)
4,100 3,323
2006 annual report LADANG PERBADANAN-FIMA BERHAD
58
Notes To T h e
Financial S t a t e m e n t s
- 31 Decem b e r 2 0 0 6
* In the Malaysian Budget 2007, it was announced that the corporate income tax rate will be reduced to 27% in
Year of Assessment 2007 and to 26% in Year of Assessment 2008. Consequently, the Company’s deferred tax
liabilities are measured using these tax rates.
18.3 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 2006, if paid out as dividends.
Diluted earnings per share were not presented as there were no dilutive potential ordinary shares in issue.
5,761
2005
Interim 2005 ordinary 5.0 4,115 15 September 2005
Final 2004 ordinary 10.0 8,230 12 July 2005
Special 2004 ordinary 5.0 4,115 12 July 2005
16,460
After the balance sheet date the following dividend was proposed by the Directors. This dividend will be
recognised in subsequent financial reports upon approval by the shareholders.
Sen per Total amount
share net of 27% tax
RM’000
Final 2006 ordinary 8 6,675
LADANG PERBADANAN-FIMA BERHAD 2006 annual report
59
N o t e s To T h e
Financial Statements
- 31 December 2006
The Group has a related party relationship with its subsidiary (as disclosed in note 6), associate (as disclosed
in note 7) and Directors.
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
2006 2005
RM’000 RM’000
Remuneration of Non-Executive Directors:
– Fees 230 241
– Other emoluments 204 59
Transaction value
2006 2005
Perak Meat Industries Sdn. Bhd. RM’000 RM’000
Lease rental received 3 3
The transaction has been entered into in the normal course of business and has been established under
negotiated terms.
2006 annual report LADANG PERBADANAN-FIMA BERHAD
60
Notes To T h e
Financial S t a t e m e n t s
- 31 Decem b e r 2 0 0 6
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.
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 is summarised below:
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.
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 if earlier, reprice.
Group/Company
2006 2005
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.
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, 3 (2005: 2) 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.
LADANG PERBADANAN-FIMA BERHAD 2006 annual report
61
N o t e s To T h e
Financial Statements
- 31 December 2006
In respect of cash and cash equivalents, trade and other receivables and trade and other payables, the
carr ying amounts approximate fair value due to the relatively shor t term nature of these financial
instruments.
For the unquoted shares as disclosed in note 8 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.
As disclosed in the financial statements of the previous year, there was a material litigation in respect of the
injunction obtained by Glamour Green Sdn. Bhd. (“GGSB”), a shareholder of the Company restraining Kuala
Lumpur Kepong Berhad (“KLK”) and its wholly owned subsidiary, Ablington Holdings Sdn. Bhd. (“AHSB”)
from implementing the Mandatory General Offer (“MGO”).
On 3 April 2006, the High Court dismissed GGSB’s claims and KLK/AHSB’s counter-claim against the
Company under the Suit was allowed. Inter-alia, the ruling lifted the injunction which restrained AHSB from
making the MGO. GGSB applied for an injunction pending appeal, which was heard and dismissed by the
High Court on 27 April 2006.
GGSB appealed against the High Court’s decision and obtained an interim injunction/stay of proceedings in
the Court of Appeal on 28 April 2006 pending the hearing and disposal of the Appeal. The Company also
filed an Appeal on 28 April 2006 against the decision of the High Court.
On 19 May 2006, the Court of Appeal declared that the sale of 35 million shares in the Company to AHSB
was null and void and of no effect and consequently, AHSB/KLK cannot proceed with the MGO. The Court
of Appeal also dismissed the counter-claim filed by KLK/AHSB against the Company.
On 20 July 2006, the Board of Directors of the Company received a Notice of Conditional MGO from
Commerce International Merchant Bankers Berhad given for and on behalf of AHSB and on 24 July 2006,
GGSB managed to obtain an ex-parte interim injunction from the High Court to restrain the sale and the
MGO. Pursuant to the Order, the Board of Directors will not be taking further steps on the Notice of
Conditional MGO issued by AHSB until any further Order of the said High Court is received.
2006 annual report LADANG PERBADANAN-FIMA BERHAD
62
Notes To T h e
Financial S t a t e m e n t s
- 31 Dece m b e r 2 0 0 6
Certain comparative figures have been reclassified to conform to the presentation requirements of FRS 101,
Presentation of Financial Statements including plantation development expenditure amounting to RM98,439,000
that has been reclassified as biological assets.
Following the early adoption of FRS 117, Leases, long term leasehold land amounting to RM9,330,000 was
reclassified from property, plant and equipment to prepaid lease payments.
Group/Company
As As previously
restated stated
2005 2005
RM’000 RM’000
Balance sheets
I/We of
of
or
failing him of
as
my/our proxy to vote for me/us on my/our behalf at the 27th Annual General Meeting of the Company to be held at
Crystal 1 Ballroom, Impiana Casuarina Hotel, 18 Jalan Raja Dr. Nazrin Shah, 30250 Ipoh, Perak, Malaysia on Friday,
22 June 2007 at 10:30 a.m. and at any adjournment thereof.
5. To approve the payment of Directors’ fees for the financial year ended 31 December
2006.
6. To re-appoint Messrs. KPMG Desa Megat & Co. as Auditors of the Company and to
authorise the Directors to fix their remuneration.
(Please indicate with a “X” in the space provided as to how you wish your votes to be cast.)
STAMP