ladang perbadanan-fima berhad annual report 2006

8/14/2019 Ladang Perbadanan-Fima Berhad Annual Report 2006

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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:

NOTICE OF BOOK CLOSURE

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 Depositors Securities Account before 4:00 p.m. on 27 June 2007 in respect of

transfers;

(ii) Shares deposited into the Depositors 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.

BY ORDER OF THE BOARD

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 o f the Company at No. 10, Persiaran Gopeng Satu, 31350 Ipoh, Perak, Malaysia

not less than 48 hours before the time fixed for the Meeting.

Resolution 1

Resolution 2

Resolution 3

Resolution 4

Resolution 5

Resolution 6

1. To receive and consid er the Audit ed Financial Statements for the financial year ended 31

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

December 2006 as recommended by the Board.

3. To re-elect the following Directors who shall retire in accordance with Article 66 of the CompanysArticles of Association:

(i) Encik Kamisan bin Suja

(ii) Mr. Yeoh Hock Thong

4. To approve the payment of Directors fees for the financial year ended 31 December 2006.

5. To re-appoint Messrs. KPMG Desa Megat & Co. as Auditors of the Company and to authorise the

Directors to fix their remuneration.

6. To transact any other ordinary business of the Company of which due notice shall have been given.

2006 annual report

02Notice

Of Annua l

Genera l Meet ing

LADANG PERBADANAN-FIMA BERHAD


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1. DIRECTORS STANDING FOR RE-ELECTION AT THE 27TH

ANNUAL GENERAL MEETING

The Directors retiring by rotation pursuant to Article 66 of the Companys Articles of Association and seeking

re-election are:

(i) Encik Kamisan bin Suja

(ii) 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 respectively appearing in the Annual Report.

2. ATTENDANCE OF DIRECTORS AT BOARD MEETINGS

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.

3. DATE, TIME AND VENUE OF THE 27TH

ANNUAL GENERAL MEETING

Date : Friday, 22 June 2007

Time : 10:30 a.m.

Venue : Crystal 1 Ballroom

Impiana Casuarina Hotel

18 Jalan Raja Dr. Nazrin Shah

30250 Ipoh

Perak, Malaysia

2006 annual report

03Statement

Accompany ing

Not ice Of Annua l Genera l Meet ing



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Income Statements (RM'000) 2002 2003 2004 2005 2006

Revenue 35,812 40,464 44,574 40,616 49,679

Profit before tax 13,860 14,685 17,803 11,609 16,782

Taxation -3,835 -4,087 -9 -3,323 -4,100

Profit after tax 10,025 10,598 17,794 8,286 12,682

Financial Ratios 2002 2003 2004 2005 2006

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

Balance Sheets (RM'000) 2002 2003 2004 2005 2006

Property, plant & equipment 43,224 42,283 41,718 40,814 40,237

Prepaid lease payments 9,702 9,578 9,454 9,330 11,229

Biological assets 98,439 98,439 98,439 98,439 98,439

Investments 120 120 120 120 120

Current assets 37,397 40,030 43,293 32,730 40,082

Total assets 188,882 190,450 193,024 181,433 190,107

Share capital 114,300 114,300 114,300 114,300 114,300

Reserves 51,291 52,013 57,462 49,288 56,209

Shareholders' funds 165,591 166,313 171,762 163,588 170,509

Non-current liabilities 20,046 19,931 14,880 14,575 13,644

Current liabilities 3,245 4,206 6,382 3,270 5,954

Total equity and liabilities 188,882 190,450 193,024 181,433 190,107

2006 annual report

04Five-Year

F inanc ia l

High l ights



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Shareholders' funds (RM'000)

2002 2003 2004 2005 20060

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

180,000

200,000

Revenue (RM'000)

2002 2003 2004 2005 20060

10,000

20,000

30,000

40,000

50,000

Basic earnings per share (sen)

2002 2003 2004 2005 20060

2

4

6

8

10

12

14

16

18

Gross dividend per share (sen)

2002 2003 2004 2005 20060

5

10

15

20

25

Profit before tax (RM'000)

2002 2003 2004 2005 20060

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

20,000

Net assets per share (RM)

2002 2003 2004 2005 20061.40

1.42

1.44

1.46

1.48

1.50

1.52

2006 annual report

05Five-Year

F inanc ia l

High l ights



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Financial Performance 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Year 2006

Revenue (RM'000) 7,479 10,756 13,186 18,258 49,679

Profit before tax (RM'000) 1,142 3,709 5,640 6,291 16,782

Net profit after tax (RM'000) 840 2,664 3,994 5,184 12,682

Basic earnings per share (sen) 0.73 2.33 3.50 4.54 11.10

Gross dividend per share (sen) 0.00 2.00 0.00 8.00 10.00

Plantation Production 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Year 2006

Crude palm oil (m/tonnes) 6,076 6,952 8,220 7,474 28,722

Palm kernel (m/tonnes) 1,613 1,737 2,150 1,824 7,324

Revenue (RM'000)

1st

Quarter

2nd

Quarter

3rd

Quarter

4th

Quarter

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

20,000

Profit before tax (RM'000)

1st

Quarter2nd

Quarter3rd

Quarter4th

Quarter

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

Basic earnings per share (sen)

1st

Quarter2nd

Quarter3rd

Quarter4th

Quarter

0.00

0.50

1.00

1.50

2.00

2.50

3.00

3.50

4.00

4.50

5.00

CPO production (m/tonnes)

1st

Quarter2nd

Quarter3rd

Quarter4th

Quarter

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

PK production (m/tonnes)

1st

Quarter2nd

Quarter3rd

Quarter4th

Quarter

0

500

1,000

1,500

2,000

2,500

2006 annual report

06Quarterly

Performance

2006



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passion forexcellence

29 April 200626th Annual General Meeting of the Company.

25 May 2006Announcement of the unaudited results for the 1st quarter and 3 months ended 31 March 2006.

29 May 2006Book Closure for determining entitlement of the final dividend of 5 sen less 28% tax for the financial year ended

31 December 2005.

12 June 2006Payment of final dividend for financial year ended 31 December 2005.

25 August 2006Announcement of the unaudited results for the 2nd quarter and 6 months ended 30 June 2006.

28 August 2006Notice of Book Closure for the payment of interim dividend of 2 sen less 28% tax for the financial year ended 31December 2006.

19 September 2006Book Closure for determining entitlement of the interim dividend for the financial year ended 31 December 2006.

3 October 2006Payment of interim dividend for the financial year ended 31 December 2006.

29 November 2006Announcement of the unaudited results for the 3rd quarter and 9 months ended 30 September 2006.

26 February 2007Announcement of the unaudited results for the 4th quarter and 12 months ended 31 December 2006.

23 May 2007Notice 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 200727th Annual General Meeting of the Company.

28 June 2007Book Closure for determining entitlement of the final dividend* for the financial year ended 31 December 2006.

12 July 2007Payment of final dividend* for the financial year ended 31 December 2006.

* Subject to shareholders approval at the Companys 27

th

Annual General Meeting.

Financial Calendar

07


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DATO SHAMSUL BAHARI BIN SALLEH KHIRDPMP, PCM, AMP, PPT

Independent, Non-Executive Chairman, 60 years of age, Malaysian

A First Director of the Company, he was re-designated Chairman on 10 August

2005. He previously served as Chairman of the Company from 29 November 1979

and as Executive Chairman from 1994 until November 2000. He also serves as

Chairman of the Management Committee and as a member of the Tender, Audit ,

Risk Management and Nominating Committees.

He obtained his Bachelor of Arts in Economics from University Malaya in 1969 and

his Master in Rural Development from Instit ute of Social Stud ies, 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 Agricultur al 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.

DATO HAJI AHMAD ZAKIUDDIN BIN HARUNDSDK, AMK

Independent, Non-Executive Director, 65 years of age, Malaysian

A lawyer by profession , he was appointed to the Board on 4 Augus t 1994 and

serves as a member of the Audit and Risk Management Committees since their

formation in 1994 and 2001 respectively. On 10 August 2005, he was re-designated

Chairman of both Committees.

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 JAAFAR BIN LAJISDMSM, DSM, PJKNon-Independent, Non-Executive Director, 54 years of age, Malaysian

He was appointed a Director on 11 December 2004 and Chairman of the Tender

Committee on 4 January 2005. On 10 August 2005, he was appointed Chairman of

the Nominating Committee.

He graduated from Universiti Kebangsaan Malaysia with Bachelor of Economics. After

graduat ion, he served in the civil ser vice 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 Ministers 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, Chairman for Penasihat Panel Kesihatan Melaka, Director of Malacca Farmer

Association and Board member of Malacca Smallholder Cooperative.

Directors

Prof i le

2006 annual report

10Directors

Prof i le



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CORPORATE GOVERNANCE

We have included Statements on Corporate Governance and Internal Control in our Annual Report, which affirms

the Boards 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 Companys vision and

mission. I would also like to record my gratitude for the contribut ion 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.

DATO SHAMSUL BAHARI BIN SALLEH KHIR

CHAIRMAN

Chairmans Statement44

assionassion forforexcellenceexcellence


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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

The Audit Committee comprises the following members:

ChairmanDato 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:

Audit Committee Members No. of Meetings Attended

Dato Haji Ahmad Zakiuddin bin Harun 2/3

Dato Shamsul Bahari bin Salleh Khir 3/3

Yeoh Hock Thong 3/3

Hajjah Sharifah Nor Hashimah binti Syed Kamaruddin 3/3

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 thecourse 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.

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Internal Audit

Reviewed the Internal Audit Departments 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 Departments 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.

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 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.

EMPLOYEES SHARE OPTION SCHEME (ESOS)

The Company has not at the moment subscribed to any share scheme for its employees.

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TERMS OF REFERENCE

1.0 Composition

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 SecuritiesBerhad.

1.2 The Chairman, who shall be elected by the members of the Committee, shall be an independent non-executive

director.

1.3 No alternate director may be appointed as a member of the Committee.

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

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 Companys accounting, operation and management controls, financial reporting and business ethics and

policies.

(ii) Provide greater emphas is on the audit funct ion 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:

(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 Committees meetings whenever

deemed necessary.

(vi) Obtain external legal and other independent professional advice 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.

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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:

4.1 External and Internal Audit

The Audit Committee shall oversee all matters relating to the External and Internal Audit as outlined in Paragraphs

4.1(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.

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 shal l consider whether there are any reasons (supported by

grounds) to believe that the External Audi tor is not suitable for re-appointment and if just ified , 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.

(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.

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(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.

4.2 Internal Controls and Financial Reporting

(i) Appraise with Management:

(a) The adequacy, integrity and effectiveness of the Companys internal controls in safeguarding shareholders

investment and the Companys 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 Companys accounting, financial

and operational activities.

(ii) Meet and discuss with the External and Internal Auditors on their evaluation of the Companys 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 Managements response.

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.

(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.

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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 situat ion that may arise within the Group or the Company including any transaction,

procedure or course of conduct that raises questions of Managements integrity.

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.

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 Committees 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.

7.3 The Chairman shall report on each meeting to the Board.

8.0 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 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.

2006 annual report

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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 head ings: Board of Directors, Directors Remunerat ion, 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 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 fulfill ing 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.

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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.

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 Companys assets. The terms

of reference and activities of the Audit Committee are provided in the Audit Committee Report appearing in the

Annual Report.

Risk Management Committee

The Risk Management Committee was established on 8 October 2001 and is entrusted to formalise the

identifica tion, measurement and control of risks that threaten the assets or earnings of the Group. For

further details on the Companys risk management, please refer to the Internal Control Statement presented

in the Annual Report.

Company

Secretary

Board of

Directors

Shareholders

Internal

AuditManagement

RiskManagementCommittee

Audit

Committee

Management

Committee

Tender

Committee

Nominating

Committee

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Tender Committee

The Tender Committee was established on 28 April 1982 and is entrusted to facilitate a fair and transparenttender 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 theservice 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

identi fying 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 processensures 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 tothe Board. The actual decision as to who shall be appointed should be the responsibility of the Board as awhole after considering the recommendations of the Committee.

The Nominating Committee also assesses the effectiveness of the Board as a whole and the respective BoardCommittees 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 convenedwhen 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 wasas follows:

Name of Directors Attendance

Dato Shamsul Bahari bin Salleh Khir 6/6Dato Haji Ahmad Zakiuddin bin Harun 3/6 *Dato Jaafar bin Lajis 6/6

Kamisan bin Suja 6/6Yeoh Hock Thong 6/6

Hajjah Sharifah Nor Hashimah binti Syed Kamaruddin 6/6

* 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 ofthe unaudited interim financial statements, prior to releasing them to Bursa Malaysia.

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 CompanySecretary. 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 andinformation relevant to the issues of the meetings covering the areas of strategic, financial, operational andregulatory compliance matters, are circulated in advance to all the Directors for their information, in order to be

properly briefed before the meeting.

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Further, there is a schedule of matters reserved specifically for the Boards 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 profes sional advice, where necessar y and in appropriate circumstances, in

furtherance of their duties, at the Groups expense.

1.5 Directors Training

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. Directors 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 f irst 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 of fice

since their appointment or re-appointment. The Articles of Association also provide that all the Board members

shal l also retire once at least in each three years and shall be elig ibl e for re-elec tion . 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.

2.0 DIRECTORS REMUNERATION

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:

(a) Aggregate remuneration of Directors categorised into the appropriate components:

(b) The number of Directors of the Company whose total remuneration falls within the respective bands of

RM50,000:

Fees

RM000

230

Other emoluments

RM000

204

Total

RM000

434Non-Executive Directors

Range of remuneration

Less than RM50,000

Between RM50,000 and RM100,000

Number of Non-Executive Directors

-

6

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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 Companys 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 Groups 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 Groups performance and operations. Members of the

public are also able to access the Companys announcements and Annual Reports from Bursa Malaysias website.

In addition, nominees of the Companys 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.

4.0 ACCOUNTABILITY AND AUDIT

4.1 Financial Reporting

The Board aims to provide and present a balanced and meaning ful assessme nt of the Groups financi al

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 Chairmans Statement in the Annual Report.

The Board is assisted by the Audit Committee to oversee the Groups financial reporting processes and the

quality of its financial reporting.

4.2 Internal Control

The information on the Groups 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.

5.0 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 affa irs 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

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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

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.

6.0 OTHER DISCLOSURES

6.1 Non-Audit Fees

Non-audit fees paid and payable to the Companys External Auditors in the financial year ended 31 December

2006 were as follows:

Name of Auditors Nature of Engagement RM

KPMG Desa Megat & Co. Review of Internal Control Statement 6,000KPMG Tax Services Sdn. Bhd. Taxation Services 5,500

6.2 Recurrent Related Party Transactions of Revenue Nature

Recurrent related party transact ions of a revenue nature of the Company for the financial year ended 31

December 2006 were as follows:

6.3 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.

6.4 Sanctions and/or PenaltiesDuring the financia l year, there were no sanctions and/or penalt ies 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.

6.5 Profit Estimate, Forecast or Projection

The Group had not provided any profit estimate, forecast or projection in the financial year ended 31 December

2006.

6.6 Variation in Results

There was no major variation in results (of 10% or more) from the unaudited results announced.

6.7 Profit Guarantee

The Group had not provided any profit guarantee in the financial year ended 31 December 2006.

6.8 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 or, which

were entered into since the end of the previous financial year.

Related Party

Perak Meat Industries

Sdn. Bhd.

Relationship

A company which Dato Shamsul

Bahari bin Salleh Khir has an interest.

Nature of Transaction

Lease rental received

RM

3,000

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6.9 Share Buyback

During the financial year under review, the Company did not exercise any share buy backs permitted by Section

67A, Companies Act, 1965.

6.10 Utilisation of Proceeds Raised from Corporate Proposals

There were no corporate proposals conducted in the financial year under review.

6.11 Options, Warrants and Convertible Securities

There were no options, warrants or convertible securities in issue in the financial year under review.

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.

6.13 Directors Family Relationships

None of the Directors have any family relationship with any Director and/or substantial shareholders of the

Company.

6.14 Directors Conflict of Interest

None of the Directors have any conflict of interest with the Company.

6.15 Directors Conviction for Offences

None of the Directors have been convicted of any offence.

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 Managements positions.

This statement is made in accordance with a resolution of the Board of Directors dated 18 April 2007.

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Ladang Changkat

Cermin

Ladang Lekir

Ladang Raja Hitam

PERAK

Ipoh

Lumut

Sitiawan

Oil Palms Others Total

Estate Mature Immature TotalHectare Hectare Hectare Hectare Hectare

Ladang Lekir 3,672.84 209.50 3,882.34 257.89 4,140.23

Ladang Changkat Chermin 1,515.03 850.60 2,365.63 175.76 2,541.39

Ladang Raja Hitam 729.40 682.80 1,412.20 77.45 1,489.65

Total 5,917.27 1,742.90 7,660.17 511.10 8,171.27

2006 annual report

30Area Statement

As At

31 December 2006



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34/67

1. SHARE CAPITAL

Authorised share capital : 150,000,000 ordinary shares of RM1.00 each

Issued and fully paid : 114,300,000 ordinary shares of RM1.00 eachClass of shares : Ordinary share of RM1.00 eachVoting right : One vote per ordinary share

2. ANALYSIS BY SIZE OF SHAREHOLDINGS

No. of % of Total % of issued

Size of shareholdings shareholders shareholders shareholdings share capital

Less than 100 5 0.33 234 0.00

100 to 1,000 1,017 67.09 1,000,666 0.871,001 to 10,000 394 25.99 1,438,600 1.26

10,001 to 100,000 67 4.42 1,551,300 1.36100,001 to less than 5% of issued shares 29 1.91 26,868,200 23.515% and above of issued shares 4 0.26 83,441,000 73.00

Total 1,516 100.00 114,300,000 100.00

3. SUBSTANTIAL SHAREHOLDERS

No. of % of issuedNo. Name of shareholders shares held share capital

1. Glamour Green Sdn Bhd 36,524,000 31.952. Taipan Heritage Sdn Bhd 27,520,000 24.08

3. Ablington Holdings Sdn Bhd 17,600,000 15.404. BHR Enterprise Sdn Bhd 5,717,000 5.00

4. DIRECTORS' SHAREHOLDINGS

Direct Deemed Total % of issuedNo. Name of Directors Interest interest Shareholdings share capital

1. Dato' Shamsul Bahari bin Salleh Khir - 1,499,800 1,499,800 1.312. Dato' Haji Ahmad Zakiuddin bin Harun 10,000 - 10,000 0.01

3. Dato' Jaafar bin Lajis - 36,524,000 36,524,000 31.954. Kamisan bin Suja' - 36,524,000 36,524,000 31.955. Yeoh Hock Thong - - - -

6. Hajjah Sharifah Nor Hashimahbinti Syed Kamaruddin - - - -

2006 annual report

32Shareholding Statistics

As At

25 Apr i l 2007



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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 principa l activity of the subsidiary is set out in note 6 to the financia l statements. There has been no

significant change in the nature of these activities during the financial year.

RESULTS

GROUP COMPANYRM000 RM000

Profit for the year 12,682 12,683

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 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 31December 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 2006amounting to RM6,675,120 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:

Dato' Shamsul Bahari bin Salleh KhirDato' Haji Ahmad Zakiuddin bin Harun

Dato Jaafar bin LajisKamisan bin Suja

Yeoh Hock ThongHajjah Sharifah Nor Hashimah binti Syed Kamaruddin

In accordance with Article 66 of the Companys Articles of Association, Kamisan bin Suja and Yeoh Hock Thong retireby rotation from the Board at the forthcoming Annual General Meeting and being eligible , offer themselves forre-election.

2006 annual report

36Directors' Report

For The

Year Ended 31 December 2006



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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:

of RM 1 each

Balance at Balance at1.1.2006 Bought Sold 31.12.2006

Dato' Shamsul Bahari bin Salleh Khir

- held directly - - - -- deemed interest 2,000,000 - 500,200 1,499,800

Dato Haji Ahmad Zakiuddin bin Harun- held directly 10,000 - - 10,000- deemed interest - - - -

Dato' Jaafar bin Lajis- held directly - - - -

- deemed interest 36,524,000 - - 36,524,000

Kamisan bin Suja- held directly - - - -- deemed interest 36,524,000 - - 36,524,000

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 receiveany benefit (other than a benefit included in the aggregate amount of emoluments received or due and receivableby Directors as shown in the financial sta tements) 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 theDirector has a substantial financial interest, other than any deemed benefits that may accrue to certain Directors byvirtue 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 ofthe 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.

OPTIONS GRANTED OVER UNISSUED SHARES

No options were granted to any person to take up unissued shares of the Company during the year.

2006 annual report

37Directors' Report

For The




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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 attri buted to the current asset s 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.

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 liabili ty or other liabiliti es 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 substanti ally 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:

Dato Shamsul Bahari bin Salleh Khir

Director

Yeoh Hock Thong

Director

IPOH

Date: 18 April 2007

2006 annual report

38Directors' Report

For The




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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:

Clarence Joseph (No. A044)

Commissioner for Oaths

Ipoh

2006 annual report

40Statutory Declaration

Pur suan t To

Sect ion 169(16) Of The Compan ies Act , 1965



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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 thatwe 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 disclosuresin the financial statements. An audit also includes assessing the accounting principles used and significant estimatesmade 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 MalaysianAccounting 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 operationsand 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 statementsof 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 theCompany 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 subsidiar y that have been consolidated with the Companysfinancial 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 forthose purposes.

The audit report on the financial statements of the subsidiary was not subject to any qualification and did not includeany comment made under subsection (3) of Section 174 of the Act.

KPMG Desa Megat & Co. Peter Ho Kok Wai

Firm Number: AF-0759 PartnerChartered Accountants Approval Number: 1745/12/07 (J)

IPOH

Date: 18 April 2007

2006 annual report

41Report Of The Auditors

To

The Members



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Group Company

Note 2006 2005 2006 2005

RM000 RM000 RM000 RM000

(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

Total non-current assets 150,025 148,703 150,025 148,703

Inventories 9 1,558 1,410 1,558 1,410

Trade receivables 2,917 713 2,917 713

Other receivables, deposits and

prepayments 10 5,557 7,079 5,557 7,079

Tax recoverable - 283 - 283

Amount due from subsidiary 6 - - 11 9

Cash and cash equivalents 11 30,050 23,245 30,050 23,245

Total current assets 40,082 32,730 40,093 32,739

Total assets 190,107 181,433 190,118 181,442

Equity

Share capital 12 114,300 114,300 114,300 114,300

Revaluation reserve 13 20,409 20,409 20,409 20,409

Retained earnings 35,800 28,879 35,811 28,889

Total equity attributable to 170,509 163,588 170,520 163,598

shareholders of the Company

Liabilities

Deferred tax liabilities 14 11,656 12,621 11,656 12,621

Retirement benefits 15 1,988 1,954 1,988 1,954

Total non-current liabilities 13,644 14,575 13,644 14,575

Trade payables 1,551 938 1,551 938

Other payables and accruals 2,738 2,332 2,738 2,331

Current taxation 1,665 - 1,665 -

Total current liabilities 5,954 3,270 5,954 3,269

Total liabilities 19,598 17,845 19,598 17,844

Total equity and liabilities 190,107 181,433 190,118 181,442

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

42Balance Sheets

As At

31 December 2006



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Group Company

Note 2006 2005 2006 2005

RM000 RM000 RM000 RM000

Revenue 16 49,679 40,616 49,679 40,616

Cost of sales (17,669) (15,286) (17,669) (15,286)

Gross profit 32,010 25,330 32.010 25,330

Other income 863 1,152 863 1,152

Selling and distribution expenses (1,122) (930) (1,122) (930)

Administrative expenses (8,634) (8,031) (8,633) (8,030)

Other expenses (6,335) (5,912) (6,335) (5,912)

Profit before tax 17 16,782 11,609 16,783 11,610

Tax expense 18 (4,100) (3,323) (4,100) (3,323)

Profit for the year 12,682 8,286 12,683 8,287

Attributable to:

Shareholders of the Company 12,682 8,286 12,683 8,287

Basic earnings per share (sen) 19 11.1 7.2


statements.

2006 annual report

43Income Statements

For The




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Distributable

Share Revaluation Retained Total

capital reserve profits reserves Total

RM000 RM000 RM000 RM000 RM000

Group

At 1 January 2005 114,300 20,409 37,053 57,462 171,762

Net profit for the year - - 8,286 8,286 8,286

Dividends:

- 2004 final (Note 20) - - (8,230) (8,230) (8,230)

- 2004 special (Note 20) - - (4,115) (4,115) (4,115)

- 2005 interim (Note 20) - - (4,115) (4,115) (4,115)

At 31 December 2005 114,300 20,409 28,879 49,288 163,588


Dividends:

- 2005 final (Note 20) - - (4,115) (4,115) (4,115)

- 2006 interim (Note 20) - - (1,646) (1,646) (1,646)

At 31 December 2006 114,300 20,409 35,800 56,209 170,509

Note 12 Note 13

Company

At 1 January 2005 114,300 20,409 37,062 57,471 171,771


Dividends:

- 2004 final (Note 20) - - (8,230) (8,230) (8,230)

- 2004 special (Note 20) - - (4,115) (4,115) (4,115)

- 2005 interim (Note 20) - - (4,115) (4,115) (4,115)

At 31 December 2005 114,300 20,409 28,889 49,298 163,598


Dividends:

- 2005 final (Note 20) - - (4,115) (4,115) (4,115)

- 2006 interim (Note 20) - - (1,646) (1,646) (1,646)

At 31 December 2006 114,300 20,409 35,811 56,220 170,520

Note 12 Note 13


statements.

2006 annual report

44Statements Of

Changes In Equ i ty

For The Year Ended 31 Decembe r 2006



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Ladang Perbadanan-Fima Berhad is a public limited liability company, incorporated and domici led in Malaysia and islisted on the Main Board of Bursa Malaysia Securities Berhad. The address of its registered office and principal placeof business is as follows:

Registered office and principal place of business

No. 10, Persiaran Gopeng Satu31350 IpohPerak, Malaysia

The consolidated financial statements as at and for the year ended 31 December 2006 comprise the Company and itssubsidiary (together referred to as the Group) and the Groups 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 financi al statemen ts of the Group and of the Company have been prepared in accordance withapplicable approved accounting standards for entities other than private entities issued by the MalaysianAccounting Standards Board (MASB), accounting princip les generally accepted in Malaysia and theprovisions of the Companies Act, 1965. These financial statements also comply with the applicable disclosureprovisions 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 effectivefor accounting periods beginning after 1 January 2006 or available for early adoption. In this set of financialstatements, the Group has chosen to early adopt FRS 117, Leases, which is effective for annual periodsbeginning on or after 1 October 2006.

The MASB has also issued the following new and revised FRSs or interpretation that are effective for futureperiods that have not been applied in preparing these financial statements:

(i) FRS 124, Related Party Disclosures This FRS is effect ive for annual periods beginning on or after 1October 2006. By virtue of the exemption in paragraph 22A of FRS 124, the impact of applying FRS 124on the financial statements upon first adoption of this standard as required by paragraph 30(b) of FRS108, 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 MASBbut the MASB has yet to announce the effective date of this standard. By virtue of the exemption inparagraph 103AB of FRS 139, the impact of applying FRS 139 on the financial statements upon firstadoption of this standard as required by paragraph 30(b) of FRS 108 is not disclosed;

(iii) Amendment to FRS 1192004, Empl oyee Benefi t Actu aria l Gains and Loss es, Group Pla ns andDisclosures Certain amendment made to FRS 1192004 are effective for annual periods beginning on orafter 1 January 2007. The adoption of these amendments does not have any significant impact on thefinancial 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 periodsbeginning 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 periodsbeginning on or after 1 July 2007. These amendments and interpretations are not applicable to the Groupand 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.

2006 annual report

46Notes To The

F inanc ia l Statements

- 31 December 2006



49/67

(c) Functional and presentation currency

These financial statements are presented in Ringgit Malaysia (RM), which is the Companys functionalcurrency. All financ ial informat ion presented in RM has been rounded to the nearest thousand, unlessotherwise stated.

(d) Use of estimates and judgements

The preparation of financi al statements requires management to make judgements, estimates andassumptions that affect the application of accounting policies and the reported amounts of assets, liabilities,income and expenses. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates

are recognised in the period in which the estimate is revised and in any future periods affected.2. Significant accounting policies

The accounting poli cies set out below have been applied consistently to all periods presented in thesefinancial statements, and have been applied consistently by Group entities, unless otherwise stated.

Certain comparative amounts have been reclassified to conform to the current years presentation (see note 26).

(a) Basis of consolidation

(i) Subsidiaries

Subsidiaries are entities controlled by the Group. Control exists when the Group has the ability toexercise its power to govern the financial and operating policies of an entity so as to obtain benefitsfrom its activities. In assessing control, potential voting rights that presently are exercisable are takeninto account.

The financial statements of subsidiaries are included in the consolidated financial statements from the

date that control commences until the date that control ceases.

Investments in subsidiaries are stated in the Companys balance sheet at cost less impairment losses,unless the investment is classified as held for sale (or included in a disposal group that is classif ied asheld for sale).

There were no minority interests at the balance sheet date as the sole subsidiary of the Company iswholly-owned by the Company.

(ii) Associates

Associates are entities, including unincorporated entities, in which the Group has significant influence,but not control, over the financial and operating policies.

Associates are accounted for in the consolidated financial statements using the equity method unless itis classif ied as held for sale (or included in a disposal group that is class ified as held for sale) . Theconsolidated financial statements include the Groups share of the income and expenses of the equityaccounted associates, after adjustments to align the accounting policies with those of the Group, fromthe date that significant influence commences until the date that significant influence ceases.

When the Groups share of losses exceeds its interest in an equity accounted associate , the carryingamount of that interest (including any long-term investments) is reduced to nil and the recognition offurther losses is discontinued except to the extent that the Group has an obligation or has madepayments on behalf of the investee.

Investments in associates are stated in the Companys balance sheet at cost less impairment losses,unless the investment is classified as held for sale (or included in a disposal group that is classif ied asheld for sale).

(iii) Changes in Group composition

Where a subsidiary issues new equity shares to minority interest for cash consideration and the issueprice has been established at fair value, the reduction in the Groups interest in the subsidiary isaccounted for as a disposal of equity interest with the corresponding gain or loss recognised in theincome statement.

When a group purchases a subsidiarys equity shares from minority interest for cash consideration andthe purchase price has been established at fair value , the accretion of the Groups interests in thesubsidiary is accounted for as a purchase of equity interest for which the acqu isition accountingmethod of accounting is applied.

The Group treats all other changes in group composition as equity transactions between the Groupand its minority shareholders. Any difference between the Groups share of net assets before and afterthe change, and any consideration received or paid, is adjusted to or against Group reserves.

1. Basis of accounting (continued)

2006 annual report

47Notes To The

F inanc ia l S tatements

- 31 December 2006



50/67

(a) Basis of consolidation (continued)

(iv) Transactions eliminated on consolidationIntra-group balances, and any unrealised income and expenses arising from intra-group transactions, areeliminated in preparing the consolidated financial statements.

Unrealised gains arising from transactions with equity accounted investees are eliminated against theinvestment to the extent of the Groups interest in the investee. Unrealised losses are eliminated in thesame way as unrealised gains, but only to the extent that there is no evidence of impairment.

(b) Property, plant and equipment

(i) Recognition and measurementItems of property, plant and equipment are stated at cost/valuation less accumulated depreciation andimpairment losses.

The Group has availed itse lf to the transitional provision when the MASB first adopted IAS 16,Property, Plant and Equipment in 1998. Certain freehold land, was revalued in July 1993 and no latervaluation has been recorded for these properties.

Cost includes expenditures that are directly attributable to the acquisition of the asset and any othercosts directly attributable to bringing the asset to working condition for its intended use, and the costsof dismantling and removing the items and restoring the site on which they are located. Purchasedsoftware that is integral to the functionality of the related equipment is capitalised as part of thatequipment.

When significant parts of an item of property, plant and equipment have different useful lives, they areaccounted for as separate items (major components) of property, plant and equipment.

(ii) Subsequent costsThe cost of replacing part of an item of property, plant and equipment is recognised in the carryingamount of the item if it is probable that the future economic benefits embodied within the part willflow to the Group and its cos t can be measured reliably. The costs of the day-to-day servicing ofproperty, plant and equipment are recognised in the income statement as incurred.

(iii) DepreciationDepreciation is recognised in the income statement on a straight-line basis over the estimated usefullives of each part o f an item of proper ty, plant and equipment. Freehold land is not deprecia ted.Property, plant and equipment under construction are not depreciated until the assets are ready fortheir intended use.

The estimated useful lives for the current and comparative periods are as follows:

buildings and installations 5 - 20 years plant and machinery 7 years

motor vehicles 5 years furniture, fittings and office equipment 5 - 10 years agricultural implements and other equipment 5 - 7 years

The depreciable amount is determined after deducting the residual value.

Depreciation methods, useful lives and residual values are reassessed at the reporting date.

(c) Prepaid lease payments

Leasehold land that normally has an indefinite economic life and title is not expected to pass to the lesseeby the end of the lease te rm is treated as an opera ting lease. The payment made on entering into oracquiring a leasehold land is accounted as prepaid lease payments that are amortised over the lease term inaccordance with the pattern of benefits provided except for leasehold land classified as investment property.

The Group had previously classified a lease of land as finance lease and had recognised the amount ofprepaid lease payments as property within its property, plant and equipment. On early adoption of FRS 117,Leases, the Group treats such a lease as an operating lease, with the unamortised carrying amount classified

as prepaid lease payments in accordance with the transitional provisions in FRS 117.67A.

The Group had previously revalued its leasehold land and has retained the unamortised revalued amount asthe surrogate carrying amount of prepaid lease payments in accordance with the transitional provisions inFRS 117.67A. Such prepaid lease payments is amortised over the lease term.

2. Significant accounting policies (continued)

2006 annual report

48Notes To The

F inanc ia l Statements

- 31 December 2006



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(d) Biological assets

(i) New planting expenditure New planting expenditure incurred on land clearing and upkeep of trees to maturity is capitalised

under biological assets and is not amortised.

(ii) Replanting expenditureReplanting expenditure is charged to income statement in the financial year in which the expenditure isincurred.

(e) Investments in equity securities

Investments in equity securities are recognised initia

ladang perbadanan-fima berhad annual report 2006

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