kumpulan guthrie berhad

Transcription

ANNUAL REPORT
KUMPULAN GUTHRIE BERHAD
(4001-P)
(4001-P)
2006
Wisma Guthrie, 21 Jalan Gelenggang,
Damansara Heights,
50490 Kuala Lumpur, Malaysia.
Tel: 603-2094 1644 Fax: 603-2095 7934
ANNUAL REPORT
(4001-P)
2006
date : 7 June 2007
venue : Ballroom, Mezzanine Floor
Hotel Equatorial
Jalan Sultan Ismail
50250 Kuala Lumpur
time : 10.30 a.m.
Contents
46th
Annual General Meeting
Financial
Calendar
Notice of Annual General Meeting
2
Group Performance Highlights
4
Group Quarterly Performance
5
Group Quarterly Performance Highlights
5
Group Five Year Financial Review
6
Group Five Year Financial Highlights
7
Group Five Year Plantation Review
8
Group Five Year Plantation Highlights
9
Group Five Year Property Highlights
10
Employees and Productivity
10
Statement of Value Added
11
Distribution of Value Added
11
Group Structure
12
Corporate Information
14
our vision
FINANCIAL YEAR END ......................31 December 2006
To be a leading global producer of palm oil and a
reputable poperty developer.
ANNOUNCEMENT OF RESULTS
First Quarter....................................................30 May
Second Quarter..........................................29 August
Third Quarter.........................................29 November
Fourth Quarter.........................................28 February
2006
2006
2006
2007
PUBLISHED ANNUAL REPORT AND FINANCIAL
STATEMENTS
Despatch Date................................................15 May 2007
ANNUAL GENERAL MEETING .......................7 June 2007
our values
• Ethical
• Efficient & Effective
• Quality
• Caring
• Trust & Cooperation
our mission
We are committed to:
DIVIDENDS
Interim
Declaration..................................................29 August 2006
Record Date.........................................18 September 2006
Payment Date ......................................29 September 2006
Final
Recommendation ....................................28 February 2007
Record Date...................................................14 June 2007
Payment Date ................................................21 June 2007
•
Exceeding CUSTOMERS’ expectations through
innovative and high quality products and services.
•
Providing career development opportunities for
EMPLOYEES to realise their potential.
•
Continuously enhancing SHAREHOLDERS value.
•
Being a responsible corporate citizen towards the
environment and contributing to the socio-economic
development of the COUNTRIES in which we operate.
Profile of Directors
16
Research & Development
60
Management Team
24
Total Quality & Environmental Management
64
Audit Committee
28
Information & Communications Technology
68
Statement on Corporate Governance
31
Organisational Capabilities & Human Capital
72
Statement on Internal Control
39
Corporate Social Responsibility
75
Enterprise-Wide Risk Management
42
Corporate Highlights
80
Chairman’s Statement
44
Group Chief Executive’s Review
50
History
86
Financial Statements
87
Economic Review
• Malaysia
• Indonesia
52
53
Operations Review
Properties of the Group
220
Group Area Statement
236
Analysis of Shareholdings
237
241
242
• Plantation Malaysia
54
Share Price and Volume Traded
• Plantation Indonesia
56
Group Directory
• Property
58
Proxy Form
Cover
Rationale
Guthrie is home to one of the world’s most
advanced new planting material R&D centres.
It is also at the forefront in the production of
bi-clonal seeds, the Group’s new planting
material, to strengthen the next threshold of
excellence in the Plantation Industry.
Production of Guthrie’s
Bi-Clonal Seeds
CLONAL Dura
CLONAL Pisifera
On the cover, the blue circle encapsulates
a symbolic depiction of a critical stage in
bi-clonal oil palm fertilisation: Pollen from the
clonal PISIFERA onto the clonal DURA fusing
Guthrie’s new plant breeding technology.
The symbolic depiction on the cover signifies the fertilisation of new ideas within the
Guthrie work environment that will bring forth new thoughts, processes and innovations
that will form the thrust in the Group’s Next Threshold of Excellence. The next level of
Guthrie’s excellence will be characterised by stronger R&D programmes, new strategic
management approach in its Value Chain and a new competency development model.
The Group has completed the turnaround phase of its transformation programme in
2006, a challenging period during which it has productively consolidated its position,
changed processes and systems, and raised its level for higher achievement in line with
the G-Excellence programme, and through a performance-driven work culture. The
Group is now poised to take on the next threshold of excellence, a level that will create
new opportunities in a vast and dynamic operating environment. Akin to creating new
heights in R&D, the Group will flourish to deliver new standards of services and products
to create new levels of KPI and value to its stakeholders.
Fertilisation
BI-CLONAL Seeds
NOTICE OF
ANNUAL
GENERAL
MEETING
NOTICE IS HEREBY GIVEN that the Forty-Sixth Annual General Meeting of Kumpulan Guthrie
Berhad will be held at the Ballroom, Mezzanine Floor, Hotel Equatorial, Jalan Sultan Ismail,
50250 Kuala Lumpur, Malaysia on Thursday, 7 June 2007 at 10.30 a.m. for the following
purposes:
ORDINARY BUSINESS:
2
1.
To receive and adopt the Report of the Directors and the
Audited Financial Statements for the financial year ended
31 December 2006 and the Auditors’ Report thereon.
2.
To approve the payment of a final dividend of 10% (10 sen
per RM1.00 share) comprising:
• 6 sen per RM1.00 share (Tax Exempt)
• 4 sen per RM1.00 share less 27% Malaysian income tax
3.
To approve the Directors’ fees and remuneration as
disclosed in the Audited Financial Statements for the
financial year ended 31 December 2006.
4.
To re-elect the following Directors who retire by rotation in
accordance with Article 102 of the Company’s Articles of
Association:
– Datuk Mohamed Adnan Ali
– Dato’ Muhammad Nawawi Arshad
5.
To consider and if thought fit, to pass the following
Resolution:
“That pursuant to Section 129(6) of the Companies Act,
1965, Raja Tan Sri Muhammad Alias Raja Muhammad Ali be
reappointed as Director of the Company to hold office until
the next Annual General Meeting.”
Kumpulan Guthrie Berhad
6.
To reappoint Messrs. Ernst & Young as Auditors of the
Company and to authorise the Directors to fix their
remuneration.
7.
AS SPECIAL BUSINESS:
To consider and, if thought fit, to pass the following
Ordinary Resolutions:(a) AUTHORITY TO ISSUE AND ALLOT SHARES
“That, subject always to the Companies Act, 1965, the
Articles of Association of the Company and the
approvals of the relevant governmental/regulatory
authorities, the Directors be and are hereby authorised
pursuant to Section 132D of the Companies Act, 1965
to issue and allot shares in the Company at any time
until the conclusion of the next Annual General Meeting
and upon such terms and conditions and for such
purposes as the Directors may, in their absolute
discretion, deem fit provided that the aggregate number
of shares to be issued does not exceed ten percent
(10%) of the issued share capital of the Company for
the time being.”
Notice
(b) PROPOSED ALLOCATION OF OPTIONS TO DATO’
ABD WAHAB MASKAN PURSUANT TO THE
KUMPULAN GUTHRIE BERHAD (“KGB”) SECOND
EMPLOYEES’ SHARE OPTION SCHEME (“the
Scheme”)
“THAT, subject to the approvals of the relevant
authorities, the Company and the Board of Directors be
and are hereby authorised at any time, and from time
to time, to offer and to grant Dato’ Abd Wahab Maskan,
being an Executive Director and Group Chief Executive
Officer of the Company, options to subscribe for up to
a maximum allotment of 240,000 new KGB shares,
subject always to such terms and conditions and/or
adjustments which may be made in accordance with
the provisions of the Bye-Laws of the Scheme.”
8.
To consider any other ordinary business of the Company of
which due notice shall have been received.
NOTICE OF DIVIDEND ENTITLEMENT
NOTICE IS ALSO HEREBY GIVEN that the final dividend of
10% comprising 6 sen per RM1.00 share (Tax Exempt) and 4
sen per RM1.00 share less Malaysian income tax of 27%, if
approved by the shareholders at the forthcoming Annual General
Meeting, will be paid on 21 June 2007 to shareholders whose
names appear in the Register of Members (for those exempted
from mandatory deposit) and the Record of Depositors on
14 June 2007.
FURTHER NOTICE IS HEREBY GIVEN that a Depositor shall
qualify for dividend entitlement only in respect of:
•
Shares deposited into the Depositor’s Securities Account
before 12.30 p.m. on 12 June 2007 in respect of shares
which are exempted from mandatory deposit;
•
Shares transferred into the Depositor’s Securities Account
before 4.00 p.m. on 14 June 2007 in respect of ordinary
transfers; and
•
Shares bought on Bursa Malaysia Securities Berhad on a
cum entitlement basis according to the Rules of Bursa
Malaysia Securities Berhad.
By Order of the Board
MORIAMI MOHD (MAICSA 7031470)
Company Secretary
15 May 2007
Kuala Lumpur, Malaysia
of
Annual
General
Meeting
Explanatory Notes on Special Business:
(a) The Ordinary Resolution proposed under item 7 of the Agenda, if
passed, will empower the Directors to issue shares in the
Company up to an amount not exceeding in total 10% of the
issued share capital of the Company, subject to compliance with
regulatory requirements. The approval is sought to avoid any delay
and cost in convening a general meeting for such issuance of
shares. This authority, unless revoked or varied by the Company at
a general meeting, will expire at the next Annual General Meeting.
(b) The Scheme which was approved by the shareholders at the
EGM of the Company held on 18 June 2003, came into effect
on 30 July 2003 and will be in force for a period of five years.
Dato’ Abd Wahab Maskan, the Group Chief Executive of the
Company, became eligible to participate in the Scheme as at
2 January 2007 upon completion of his three (3) years service
with the Company as required by the Bye-Laws of the Scheme.
He has no family relationship with and is not related to any
director and/or major shareholder of the Company.
Resolution No. 7 (b), if passed, will enable the Company to offer
and grant Dato’ Abd Wahab Maskan up to a maximum of
240,000 options under the Scheme, subject to the terms and
conditions of the Bye-Laws of the Scheme.
Note on Appointment of Proxy:
A member entitled to attend and vote at the Annual General Meeting
may appoint a proxy to attend and vote in his stead. A proxy need not
be a member of the Company. The instrument appointing the proxy
must be deposited with the Company’s Share Registrar, Symphony
Share Registrars Sendirian Berhad, Level 26, Menara Multi-Purpose,
Capital Square, No. 8, Jalan Munshi Abdullah, 50100 Kuala Lumpur,
Malaysia not less than 48 hours before the time appointed for holding
the meeting or any adjournment thereof. The lodging of the proxy form
will not preclude shareholders from attending and voting in person at
the meeting should they subsequently wish to do so.
STATEMENT ACCOMPANYING NOTICE OF ANNUAL
GENERAL MEETING
A total of twelve (12) Board of Directors’ Meetings of Kumpulan
Guthrie Berhad were held during the financial year ended
31 December 2006.
The Directors who are standing for re-election and
reappointment and details of their attendance at the Board
Meetings are as follows:
i. Datuk Mohamed Adnan Ali, who is standing for re-election,
attended all the twelve (12) Board Meetings held in 2006.
ii Dato’ Muhammad Nawawi Arshad, who is standing for
re-election, attended eleven (11) out of twelve (12) Board
Meetings held in 2006.
iii. Raja Tan Sri Muhammad Alias Raja Muhammad Ali, who is
standing for reappointment, attended all the twelve (12)
Board Meetings held in 2006.
Further details of Directors who are standing for re-election and
reappoinment, are set out on pages 18, 21 and 22 of this Annual
Report.
Annual Report 2006
3
GROUP PERFORMANCE HIGHLIGHTS
2006
2005
%
+/(-)
FINANCIAL PERFORMANCE
Continuing Operations:
Revenue (RM’000)
Operating profit (RM’000)
Profit before taxation (RM’000)
Profit after taxation (RM’000)
Loss from discontinued operations (RM’000)
Profit attributable to equity holders (RM’000)
2,406,513
766,140
605,463
446,618
(12,908)
284,194
1,980,769
419,480
263,008
152,452
(10,053)
48,844
21.5
82.6
130.2
193.0
28.4
481.8
Total borrowings (RM’000)
Average equity attributable to equity holders (RM’000)
Equity attributable to equity holders (RM’000)
2,759,374
2,993,290
3,127,546
3,062,692
2,904,291
2,859,033
(9.9)
3.1
9.4
Operating profit on revenue (%)
Pre-tax profit on average equity attributable to equity holders (%)
Return on equity (%)
31.8
20.2
9.1
21.2
9.1
1.7
50.0
122.0
435.3
Basic earnings per share (sen)
Dividend per share – gross (sen)
Dividend cover (number of times)
Debt to equity ratio (number of times)
Net tangible assets per share (RM)
28.1
16.0
2.1
0.9
2.81
4.9
10.0
0.7
1.1
2.58
473.5
60.0
200.0
(18.2)
8.9
5.3
2.8
5.4
2.3
(1.9)
21.7
1,847,629
429,147
1,521,735
484,610
21.4
(11.4)
Yield per mature hectare (tonnes FFB)
20.7
17.3
19.7
Extraction rates (%)
– palm oil
– palm kernel
20.2
5.3
20.4
5.7
(1.0)
(7.0)
Average selling prices (RM per tonne ex-mill)
– palm oil
– palm kernel
1,460
884
1,377
1,025
6.0
(13.8)
Profit per mature hectare (RM)
2,771
1,887
46.8
2,633,490
294,257
2,436,829
232,711
8.1
26.4
16.5
15.5
6.5
– palm oil
– palm kernel
22.9
4.4
22.9
4.0
–
10.0
– palm oil
– palm kernel
1,392
618
1,276
753
9.1
(17.9)
1,906
1,576
20.9
Revenue per RM of employment cost (RM)
Value added per RM of employment cost (RM)
PLANTATION PERFORMANCE – OIL PALM
Malaysia
Crop – FFB (tonnes)
– own
– outside
Indonesia
– own
– outside
4
GROUP QUARTERLY PERFORMANCE
FINANCIAL PERFORMANCE
Continuing Operations:
Revenue (RM’000)
Operating profit (RM’000)
Profit before taxation (RM’000)
Profit attributable to equity holders (RM’000)
Basic earnings per share (sen)
Dividend per share – gross (sen)
PLANTATION PRODUCTION – OIL PALM
Malaysia
– own
– outside
Mill production (tonnes)
– palm oil
– palm kernel
Indonesia
– own
– outside
– palm oil
– palm kernel
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
Year
2006
398,328
198,992
156,558
97,066
9.7
-
634,175
148,538
106,933
32,901
3.2
6.0
583,526
162,959
123,631
59,920
5.9
-
790,484
255,651
218,341
94,307
9.3
10.0
2,406,513
766,140
605,463
284,194
28.1
16.0
372,260
95,945
518,489
107,026
539,575
131,036
417,305
95,140
1,847,629
429,147
89,094
24,878
116,432
31,077
128,124
32,305
97,502
25,485
431,152
113,745
623,071
91,378
767,486
77,824
717,121
59,687
525,812
65,368
2,633,490
294,257
156,140
28,365
180,410
34,450
172,291
32,395
132,514
26,380
641,355
121,590
Note:
Certain figures for the respective quarters have been restated to conform with the presentation for the year.
GROUP QUARTERLY PERFORMANCE HIGHLIGHTS
Profit Before Taxation
100
Q3
Q4
5.9
2
0
Q1
Q2
Q3
Q4
(Sen)
9.3
9.7
4
50
0
Q2
8
6
3.2
123.6
106.9
156.6
320
150
10
(RM Million)
200
218.3
640
(RM Million)
583.5
250
160
Q1
Basic Earnings Per Share
800
480
398.3
634.2
790.5
Revenue
0
Q1
Q2
Q3
Q4
Annual Report 2006
5
GROUP FIVE YEAR FINANCIAL REVIEW
2006
RM'000
2005
RM'000
2004
RM'000
2003
RM'000
2002
RM'000
1,782,727
22,821
567,828
33,137
1,542,527
21,476
395,132
950
1,014
19,670
1,547,298
22,143
563,550
7,809
122,095
33,531
1,324,112
17,696
393,200
269,128
29,522
722,049
56,017
1,033,008
14,832
348,507
534,307
18,913
839,593
49,367
2,406,513
1,980,769
2,296,426
2,811,724
2,838,527
RESULTS
Plantation
Agricultural services
Property development
Land held for property development
Manufacturing
General trading
Investment and Others
526,556
12,104
168,048
(1,822)
(961)
62,215
261,163
15,286
176,198
218
(3,679)
(29,706)
273,530
14,098
179,392
(3,208)
5,782
(1,096)
300,920
9,018
93,739
221,739
(8,286)
(26,162)
21,087
229,643
8,005
74,423
432,168
(9,928)
(805)
(13,064)
Operating Profit
Profit before taxation
Profit from continuing operations
(Loss)/profit from discontinued operations
Profit attributable to equity holders
766,140
605,463
446,618
(12,908)
284,194
419,480
263,008
152,452
(10,053)
48,844
468,498
350,749
285,682
4,045
160,442
612,055
490,193
322,761
(20,633)
138,834
720,442
553,213
369,281
(2,247)
302,488
2,530,776
2,434,846
342,357
266,200
254,558
16,700
1,962
1,773
68,347
18,018
15,106
152,050
1,964,910
678,900
2,535,812
2,480,611
347,202
399,074
585,742
261,510
13,795
2,550
17,550
23,873
195,777
1,837,326
-
2,547,809
2,679,207
356,131
343,790
657,193
276,696
14,141
2,550
61,968
18,552
16,659
219,616
2,040,084
-
2,515,704
2,991,896
366,998
321,859
451,276
296,149
11,261
2,550
123,936
23,679
14,045
180,882
1,811,313
-
2,573,982
2,558,262
413,311
382,348
157,349
325,586
9,628
4,550
50,166
23,070
10,562
219,816
1,827,729
-
8,746,503
8,700,822
9,234,396
9,111,548
8,556,359
REVENUE FROM CONTINUING OPERATIONS
Plantation
Agricultural services
Manufacturing
General trading
Investment and Others
ASSETS
Property, plant and equipment
Plantation development expenditure
Prepaid lease payments
Concession asset
Goodwill on consolidation
Associated companies
Jointly controlled entity
Other investments
Long-term trade receivables
Advances for Plasma PIR-Trans projects
Advances for KKPA projects
Deferred tax assets
Current assets
Assets of disposal group classified as held for sale
6
GROUP FIVE YEAR FINANCIAL REVIEW (cont’d.)
2006
RM'000
2005
RM'000
2004
RM'000
2003
RM'000
2002
RM'000
EQUITY AND LIABILITIES
Share capital
Reserves
1,021,449
2,106,097
1,006,939
1,852,094
1,005,419
1,944,130
1,001,207
2,071,010
1,001,125
1,801,497
Equity attributable to equity holders
Minority interests
3,127,546
1,568,042
2,859,033
1,536,534
2,949,549
1,541,987
3,072,217
1,610,683
2,802,622
1,524,765
Total Equity
4,695,588
4,395,567
4,491,536
4,682,900
4,327,387
2,450,435
675,435
8,123
24,946
882,870
2,620,673
708,170
1,785
15,384
959,243
2,502,855
750,797
9,922
9,938
1,469,348
2,061,729
287,392
711,189
15,748
9,733
1,342,857
1,977,972
127,263
615,415
1,498
8,132
1,498,692
9,106
-
-
-
-
8,746,503
8,700,822
9,234,396
9,111,548
8,556,359
Liabilities:
Long-term borrowings
Long-term payable
Deferred tax liabilities
Deferred income
Retirement benefits
Current liabilities
Liabilities directly asociated with assets of disposal
group classified as held for sale
Note:
Certain comparative figures have been restated to conform with current year’s presentation.
GROUP FIVE YEAR FINANCIAL HIGHLIGHTS
7
0
’04
’03
’02
’05
’04
’03
1.2
4
0.6
(RM)
2.77
2.66
2.58
2.47
1.8
8
0
’06
2.4
8.0
8.0
10.0
10.0
12
2.81
16
3.0
(Sen)
28
16.0
20
14
13.9
16.0
’05
Net Tangible Assets Per Share
35
21
4.9
’06
Gross Dividend Per Share
(Sen)
28.1
30.2
Basic Earnings Per Share
’02
0.0
’06
’05
’04
’03
’02
Annual Report 2006
7
GROUP FIVE YEAR PLANTATION REVIEW
2006
2005
2004
2003
2002
1,847,629
429,147
1,521,735
484,610
1,428,825
460,760
1,434,211
343,297
1,243,344
230,017
89,302
9,758
99,060
87,918
12,180
100,098
80,717
19,346
100,063
73,214
27,237
100,451
69,313
30,937
100,250
20.7
17.3
17.7
19.6
17.9
431,152
113,745
406,274
112,712
380,929
105,317
348,210
100,561
303,683
84,868
20.2
5.3
20.4
5.7
20.5
5.7
20.1
5.8
20.7
5.8
– palm oil
– palm kernel
1,460
884
1,377
1,025
1,595
1,013
1,526
711
1,238
652
2,771
1,887
2,757
2,673
1,226
2,633,490
294,257
2,436,829
232,711
2,076,703
191,859
1,667,888
190,036
1,502,899
144,811
159,290
11,221
170,511
157,384
9,147
166,531
156,983
4,677
161,660
151,024
11,728
162,752
145,168
17,372
162,540
16.5
15.5
13.2
11.0
10.4
641,355
121,590
584,510
103,170
473,472
81,321
374,987
68,569
329,524
60,465
22.9
4.4
22.9
4.0
23.2
4.0
23.0
4.2
22.7
4.2
– palm oil
– palm kernel
1,392
618
1,276
753
1,473
824
1,460
568
1,273
576
1,906
1,576
1,555
1,037
778
OIL PALM – MALAYSIA
– own
– outside
Mature hectares
Immature hectares
Total planted hectares
– palm oil
– palm kernel
– palm oil
– palm kernel
OIL PALM – INDONESIA
– own
– outside
Mature hectares
Immature hectares
Total planted hectares
– palm oil
– palm kernel
– palm oil
– palm kernel
8
GROUP FIVE YEAR PLANTATION HIGHLIGHTS
MALAYSIA
INDONESIA
Oil Palm Planted Area/
FFB Production
Oil Palm Planted Area/
FFB Production
0
Production
(’000) Tonnes
Yield Per Mature Hectare/
Extraction Rates (Tonnes FFB/%)
1,502.9
1,667.9
17.4
0
Mature Area
(’000) Hectares
Production
(’000) Tonnes
Yield Per Mature Hectare/
Extraction Rates (Tonnes FFB/%)
22.7
23.0
23.2
22.9
22.9
20
15.5
16.5
10.4
11.0
13.2
15
10
5
4.2
4.0
4.0
4.2
5
4.4
5.8
5.8
5.7
5.7
10
(Tonnes/%)
15
5.3
25
20
20.7
17.9
19.6
20.1
20.5
20.4
17.3
20.2
17.7
20.7
25
0
’04
’03
Yield Per Mature
Extraction Rates (%)
Hectare (Tonnes FFB) - Palm Oil
0
’02
’06
- Palm Kernel
Average Selling Prices Realised (Ex-Mill)
For Palm Oil And Palm Kernel (RM)
’04
’03
Yield Per Mature
Hectare (Tonnes FFB) - Palm Oil
’02
- Palm Kernel
Average Selling Prices Realised (Ex-Mill)
For Palm Oil And Palm Kernel (RM)
1,800
1,440
1,273
1,238
1,440
1,460
1,392
1,526
1,595
1,800
1,377
1,460
’05
1,473
’05
1,276
’06
576
824
753
720
568
360
618
652
884
711
720
1,080
(RM)
1,013
1,025
1,080
0
’06
Palm Oil
(RM Per Tonne)
’05
’04
’03
Palm Kernel
(RM Per Tonne)
(’000 Tonnes)
145.2
151.0
157.0
2,076.7
11.7
9.1
Immature Area
(’000) Hectares
600
’02
(Tonnes/%)
Mature Area
(’000) Hectares
1,200
’02
’03
’04
’05
’06
1,800
(RM)
Immature Area
(’000) Hectares
0
’02
’03
’04
’05
157.4
40
400
0
’06
80
4.7
800
120
2,400
2,436.8
1,200
2,633.5
160
3,000
159.3
69.3
1,243.3
1,600
(’000 Hectares)
27.2
19.3
200
11.2
9.8
12.2
20
30.9
40
2,000
(’000 Tonnes)
73.2
1,434.2
80.7
60
1,428.8
1,521.7
87.9
89.3
80
(’000 Hectares)
1,847.6
100
360
0
’06
Palm Oil
(RM Per Tonne)
’05
’04
’03
’02
Palm Kernel
(RM Per Tonne)
Annual Report 2006
9
GROUP FIVE YEAR PROPERTY HIGHLIGHTS
Operating Profit
Operating Profit Margin
31.8
30
21.3
23.8
74.4
40
29.6
80
0
40
0
’02
’03
’04
’05
(RM Million)
120
130
’06
44.6
179.4
176.2
168.0
160
93.7
260
(RM Million)
348.5
393.2
395.1
390
50
200
520
563.6
567.8
650
’04
’05
’06
’02
’03
’04
’05
’06
EMPLOYEES AND PRODUCTIVITY
Employees by Classification
Employees by Ethnic Composition
Workers
Bumiputra
3,077
3,495
205
0
’05
’06
Chinese
Indian
Others
Productivity - Value Added
3.0
44
2.4
33
1.8
30
27.0
55
24
1.2
11
0
0
’06
’05
Per RM
Employment Cost (RM)
10
’06
Per Employee
(RM’000)
’05
1.2
0.6
12
6
0
0
’06
’05
Per RM
Employment Cost (RM)
’06
Per Employee
(RM’000)
’05
(RM’000)
22
18
15.2
2.4
(RM)
36.0
(RM)
3.6
(RM’000)
2.3
50.6
5.4
2,840
3,443
11,000
168
3,095
821
11,000
0
6.0
5.3
33,000
22,000
Productivity - Revenue
4.8
44,000
22,000
’05
Non-Executive
Staff
48,282
41,108
44,000
2.8
Executive
Staff
55,000
33,000
2,967
831
43,761
51,143
55,000
’06
10
0
’02
’03
20
(%)
Revenue
STATEMENT OF VALUE ADDED
2006
RM'000
2005
RM'000
VALUE ADDED
Revenue
Purchase of goods and services
2,406,513
(962,964)
1,980,769
(985,371)
Value added by the Group
Finance expense
Share of results in associated companies
Share of results in a jointly controlled entity
1,443,549
(163,387)
2,748
(38)
995,398
(157,347)
875
-
Value added available for distribution
1,282,872
838,926
458,186
366,534
158,845
110,556
135,005
149,516
72,495
93,555
232,131
219,437
149,189
(23,651)
1,282,872
838,926
DISTRIBUTION
To Employees
Employment cost
To Government
Taxation
To Shareholders
Dividends
Minority interest
Retained for re-investment
Depreciation / Amortisation
Retained for future growth
Retained profit / (loss)
DISTRIBUTION OF VALUE ADDED (RM’000)
2006
2005
458,186
To Employees
- Employment Cost
366,534
158,845
To Government
- Taxation
110,556
135,005
149,516
To Shareholders
- Dividends
- Minority Interest
232,131
72,495
93,555
219,437
Retained for Re-investment
- Depreciation / Amortisation
149,189
Retained for Future Growth
- Retained Profit / (Loss)
(23,651)
Annual Report 2006
11
GROUP STRUCTURE
(Listed on Bursa Malaysia)
54.53%
54.77%
HIGHLANDS &
LOWLANDS BERHAD
45.23%
100%
Kumpulan Tebong Sdn. Berhad
100%
Kumpulan Sua Betong
Sdn. Berhad
57.85%
GUTHRIE PROPERTY
DEVELOPMENT
HOLDING BERHAD
100%
GUTHRIE ROPEL
BERHAD
Syarikat Pembangunan Hartanah
Guthrie Sdn. Berhad
100%
Kumpulan Temiang Sdn. Berhad
100% Augsburg (M) Sdn. Berhad
100%
Guthrie Ropel Development
Sdn. Berhad
100% Paralimni Sdn. Berhad
100% Vicworld (M) Sdn. Berhad
100%
Syarikat Jeleta Bumi Sdn. Berhad
100%
HRU Sdn. Berhad
100%
Sanguine (Malaysia) Sdn. Berhad
24%
Boustead Bulking Sdn. Berhad
100%
Guthrie Property Management
Sdn. Berhad
Note:
Companies listed above are in respect of those in active operations as at 15 May 2007. The list of the companies in the Group is
available in Note 7 to the Financial Statements on pages 129 to 138.
12
Group
100%
Kumpulan Linggi Sdn. Berhad
100%
Kumpulan Jerai Sdn. Berhad
100%
Kumpulan Kamuning
Sdn. Berhad
100%
Harvard Jerai Development
Sdn. Berhad
99% Harvard Golf Resort
(Jerai) Berhad
100%
100%
Guthrie International
Investments (L) Ltd. – Labuan
100%
Kumpulan Jelei Sdn. Berhad
100% Mulligan International BV – Netherlands
Harvard Hotel (Jerai)
Sdn. Berhad
99.999%
100%
Guthrie Export Sdn. Berhad
50.7%
100%
Guthrie Plantation & Agricultural
Services Sdn. Berhad
100%
Guthrie Biotech Laboratory
Sdn. Berhad
100%
Guthrie Wood Industry
Sdn. Berhad
Malaysia Land Development
Company Berhad
100%
Guthrie Landscaping
Sdn. Berhad
100%
The Eden Bungalow Association
Sdn. Berhad
PT MINAMAS
GEMILANG
0.001%
(Indonesia)
PT Minamas Gemilang and PT Anugerah
Sumbermakmur have direct interest of between
50% and 100% in 24 companies in Indonesia.
100% Genting View Resort
Management Sdn. Berhad
60% Genting View Resort
Development Sdn. Berhad
Structure
99.999%
PT ANUGERAH
SUMBERMAKMUR
0.001%
(Indonesia)
100%
Guthrie Tapis Sdn. Berhad
95% PT Guthrie Pecconina Indonesia – Indonesia
100%
Guthrie Technologies
Sdn. Berhad
100%
The Whittington Hill Bungalow
Association
100%
Guthrie Harta (Damansara)
Sdn. Berhad
100%
Guthrie Siam Sdn. Berhad
49% Muang Mai Guthrie Public
Company Limited – Thailand
Annual Report 2006
13
CORPORATE
INFORMATION
Board Committees
Audit Committee
Datuk Khoo Eng Choo (Chairman)
Datuk Mohamed Adnan Ali
Dato’ Muhammad Nawawi Arshad
Board of Directors
Remuneration Committee
CHAIRMAN
Tan Sri Dato’ Dr. Wan Mohd. Zahid Mohd. Noordin
(appointed as Chairman on 18.7.2006)
Raja Tan Sri Muhammad Alias Raja
Muhammad Ali (Chairman)
Datuk Khoo Eng Choo
Nomination Committee
Directors
Tan Sri Dato’ Dr. Wan Mohd. Zahid
Mohd. Noordin (Chairman)
Datuk Khoo Eng Choo
Dato’ Abd Wahab Maskan
(Group Chief Executive)
Datuk Alladin Hashim
Raja Tan Sri Muhammad Alias Raja Muhammad Ali
ESOS* Committee
Datuk Nik Mohamed Affandi Nik Yusoff **
Datuk Nik Mohamed Affandi Nik Yusoff
(Chairman)
*(Employees’ Share Option Scheme)
Datuk Khoo Eng Choo *
Dato’ Muhammad Nawawi Arshad *
*
Independent Directors
** redesignated as Independent Director on 12.1.2007
14
Note: The Executive Committee and Finance
& Tender Committee were abolished on
29.8.2006
Corporate
Company Secretary
Registered Office
Share Registrar
Auditors
Information
Moriami Mohd
(MAICSA 7031470)
Wisma Guthrie
No. 21, Jalan Gelenggang
Damansara Heights
50490 Kuala Lumpur, Malaysia
Telephone : 603-2094 1644
Facsimile : 603-2095 7934
Website : www.guthrie.com.my
Symphony Share Registrars
Sendirian Berhad
Level 26, Menara Multi-Purpose
Capital Square
No. 8, Jalan Munshi Abdullah
Telephone : 603-2721 2222
Facsimile : 603-2721 2530 / 603-2721 2531
Ernst & Young
Level 23A, Menara Milenium
Jalan Damanlela
Pusat Bandar Damansara
Telephone : 603-7495 8000
Facsimile : 603-2095 9078
Principal Bankers
Malayan Banking Berhad
Bumiputra-Commerce Bank Berhad
RHB Bank Berhad
HSBC Bank Malaysia Berhad
Place of Incorporation
and Domicile
Malaysia
Stock Exchange Listing
Form of Legal Entity
Incorporated on 25 November 1960 as a
private limited company under the Companies
Act, 1965. Converted to a public company on
2 December 1987.
Listed on the Main Board of Bursa Malaysia
Securities Berhad on 25 August 1989.
Annual Report 2006
15
TAN SRI DATO’ DR. WAN MOHD. ZAHID
DATO’ ABD WAHAB MASKAN
MOHD. NOORDIN
Chairman
16
Group Chief Executive
PROFILE OF
DIRECTORS
TAN SRI DATO’ DR. WAN MOHD. ZAHID
MOHD. NOORDIN
Tan Sri Dato’ Dr. Wan Mohd. Zahid Mohd. Noordin, aged 67,
Malaysian, has been a Non-Independent Non-Executive Director
since 20 May 2002. He was appointed as Chairman of Kumpulan
Guthrie Berhad on 18 July 2006. He is also Chairman of the
Nomination Committee of the Board of Kumpulan Guthrie
Berhad. He attended all the twelve (12) Board Meetings held in
the financial year under review.
Dato’ Abd Wahab Maskan, aged 56, Malaysian, was appointed
as a Non-Independent Executive Director of Kumpulan Guthrie
Berhad ("KGB") on 30 June 2004. He attended all the twelve (12)
Board Meetings held during the financial year under review.
He is the Non-Executive Chairman of Guthrie Property
Development Holding Berhad, a subsidiary company of
Kumpulan Guthrie Berhad. He is also Chairman of Paradigm
Systems Berhad, Universiti Teknologi MARA (UiTM), Federal
Power Sdn. Berhad, Furukawa Sdn. Berhad and Kolej Universiti
Teknologi dan Pengurusan Malaysia, and Director of Permodalan
Nasional Berhad, Yayasan Felcra Berhad, Perbadanan Usahawan
Nasional Berhad, Amanah Saham Nasional Berhad and Universiti
Teknologi Tun Abdul Razak.
Tan Sri Dato’ Dr. Wan Mohd. Zahid obtained his Bachelor of Arts
(Honours) in Sociology and Anthropology from University of
Malaya, Masters in Development Education from Stanford
University, California, USA and Doctorate (Ph.D) in Sociology of
Education from University of California, Berkeley, California, USA.
He also attended the Advanced Management Program at
Harvard Business School, Boston, USA. He had served as a
teacher, School Principal and held various positions with the
Ministry of Education, including as Planning Officer and Deputy
Director, Educational Planning & Research Division, Chief
Inspectorate of Schools, Director of Curriculum and Deputy
Director-General. He had also served as Director of Education of
Negeri Sembilan and Kelantan. His last post prior to retirement
in December 1997 was as Director-General of Education of
Malaysia.
Tan Sri Dato’ Dr. Wan Mohd. Zahid has no family relationship
with and is not related to any director and/or major shareholder
of Kumpulan Guthrie Berhad, except by virtue of being a
nominee Director of Permodalan Nasional Berhad, and does not
have any conflict of interest with Kumpulan Guthrie Berhad.
He became the Group Chief Executive of KGB on 1 January
2004 and, subsequently, was appointed a Director of its
subsidiaries, Highlands & Lowlands Berhad, Guthrie Ropel
Berhad, Guthrie Property Development Holding Berhad and
Harvard Golf Resort (Jerai) Berhad. Dato’ Abd Wahab also holds
directorship in Pelaburan Hartanah Nasional Berhad and
Merdeka Ventures Sdn Bhd. He is also a member of the
Financial Reporting Foundation of Ministry of Finance and was a
Director of Danaharta Bhd.
Dato’ Abd Wahab was the Group Chief Executive Director and
Group Chief Executive of Golden Hope Plantations Berhad prior
to joining KGB.
He has held executive and non-executive directorships in
companies in Malaysia, Europe and Asia, both listed and nonlisted, covering estate and plantation management, refinery and
oleochemicals, trading and marketing, property development and
investment, engineering and construction, manufacturing and
retailing, as well as resort.
Dato’ Abd Wahab holds a Bachelor of Science in Estate
Management from England. He is a Fellow of the Institution of
Surveyors (Malaysia) and a Fellow of the Royal Institution of
Chartered Surveyors (England and UK). He is also a member of
Malaysian Institute of Directors.
Dato’ Abd Wahab has no family relationship with and is not
related to any director and/or major shareholder of Kumpulan
Guthrie Berhad and does not have any conflict of interest with
Kumpulan Guthrie Berhad, except by virtue of being the Group
Chief Executive of Kumpulan Guthrie Berhad. He does not hold
any share in Kumpulan Guthrie Berhad, Guthrie Ropel Berhad
and Highlands & Lowlands Berhad.
Annual Report 2006
17
Profile
of
Directors
RAJA TAN SRI MUHAMMAD ALIAS
RAJA MUHAMMAD ALI
DATUK NIK MOHAMED AFFANDI NIK YUSOFF
Raja Tan Sri Muhammad Alias Raja Muhammad Ali, aged 74,
Malaysian, has been a Non-Independent Non-Executive Director
since 20 May 2002. He is Chairman of the Remuneration
Committee of the Board of Kumpulan Guthrie Berhad. He
attended all the twelve (12) Board Meetings held in the financial
year under review.
Datuk Nik Mohamed Affandi Nik Yusoff, aged 63, Malaysian, has
been a Non-Independent Non-Executive Director since 20 May
2002 and was redesignated as an Independent Non-Executive
Director since 12 January 2007. He is Chairman of the
Employees’ Share Option Scheme (ESOS) Committee of the
Board of Kumpulan Guthrie Berhad. He attended all twelve (12)
Board Meetings held in the financial year under review.
He is Chairman of Highlands & Lowlands Berhad, a subsidiary
company of Kumpulan Guthrie Berhad. Other public companies
in which he is a director are Malayan Banking Berhad, Kuala
Lumpur Kepong Berhad, Batu Kawan Berhad, Sime Darby
Berhad and Mayban Fortis Holdings Berhad. He is also
Chairman of Felda-Johore Bulkers Sdn. Berhad.
Raja Tan Sri Muhammad Alias obtained his Bachelor of Arts
(Honours) degree from the University of Malaya, Singapore and
Certificate of Public Administration from the Royal Institute of
Public Administration, London. He also attended the Advanced
Management Program at Harvard Business School, Boston, USA.
Raja Tan Sri Muhammad Alias has no family relationship with
and is not related to any director and/or major shareholder of
Kumpulan Guthrie Berhad, except by virtue of being a nominee
Director of Permodalan Nasional Berhad, and does not have any
conflict of interest with Kumpulan Guthrie Berhad.
He is also a director of Malaysia Land Development Company
Berhad and Goodyear Malaysia Berhad Group.
Datuk Nik Mohamed Affandi obtained his Bachelor of Arts
(Honours) degree in History (International Relations) from
University of Malaya, Diploma in Public Administration from
University of Malaya and a Masters in Public Policy and
Administration from University of Wisconsin, USA.
He held various posts while in the Malaysian Government
Service, among which, were as Director of State Economic
Planning Unit, Pahang State Government, Deputy Director of
Supply and Contracts Division, Ministry of Finance, Secretary,
Foreign Investment Committee in the Prime Minister’s
Department, Secretary, Capital Issues Committee and Director,
Government Sector Companies Monitoring Division in the
Ministry of Finance. He was also Deputy Managing Director of
Khazanah Nasional Berhad. His last post prior to retirement in
February 1999 was as Director-General of Majlis Amanah Rakyat
(MARA).
Datuk Nik Mohamed Affandi has no family relationship with and
is not related to any director and/or major shareholder of
Kumpulan Guthrie Berhad and does not have any conflict of
interest with Kumpulan Guthrie Berhad.
18
RAJA TAN SRI MUHAMMAD ALIAS
DATUK NIK MOHAMED AFFANDI
RAJA MUHAMMAD ALI
NIK YUSOFF
Annual Report 2006
19
DATUK MOHAMED ADNAN ALI
20
DATUK ALLADIN HASHIM
Profile
of
Directors
DATUK MOHAMED ADNAN ALI
DATUK ALLADIN HASHIM
Datuk Mohamed Adnan Ali, aged 64, Malaysian, has
been a Non-Independent Non-Executive Director since
31 May 2002. He is a member of the Audit Committee
and Remuneration Committee of the Board of
Kumpulan Guthrie Berhad. He attended all the twelve
(12) Board Meetings held in the financial year under
review.
Datuk Alladin Hashim, aged 68, Malaysian, has been a
Non-Independent Non-Executive Director since 25
November 2002. He is a member of the Nomination
Committee and Employees’ Share Option Scheme
Committee of the Board of Kumpulan Guthrie Berhad.
He attended eleven (11) out of twelve (12) Board
Meetings held in the financial year under review.
He is also a Director of Highlands & Lowlands Berhad,
a subsidiary company of Kumpulan Guthrie Berhad. He
is also a director of Amanah Raya-JMF Assets
Management Sdn Berhad.
He is the Non-Executive Chairman of Guthrie Ropel
Berhad, a subsidiary company of Kumpulan Guthrie
Berhad. Other public companies in which he is a
Director are PK Resources Berhad, UAC Berhad and
Timberwell Berhad.
Datuk Mohamed Adnan is a Fellow, Chartered Institute
of Management Accountants, U.K.. He was formerly
Accountant-General, Malaysia. He had served as
Accountant with various ministries in Government
Department such as Ministry of Trade and Industry, and
Ministry of Energy and Public Works. He was also a
Senior Manager, Investment with Employees Provident
Fund, Malaysia; Treasurer, Universiti Islam Antarabangsa
Malaysia and Bursar, Universiti Teknologi Malaysia.
Datuk Mohamed Adnan has no family relationship with
and is not related to any director and/or major
shareholder of Kumpulan Guthrie Berhad, except by
virtue of being a nominee Director of Permodalan
Nasional Berhad, and does not have any conflict of
Datuk Alladin obtained his Bachelor of Agricultural
Science from the University of Malaya and Master of
Science in Agricultural Economics from the University of
Massachusetts, USA. He attended the executive
development programme of the Harvard Business
School. He is a Fellow of the Academy of Sciences
Malaysia.
He had served the Federal Land Development Authority
(FELDA) from 1964 in various capacities, and was the
Director-General from 1979 to 1989. He had also served
as the Chairman of the Malaysian Rubber Board.
Datuk Alladin Hashim has no family relationship with
and is not related to any director and/or major
shareholder of Kumpulan Guthrie Berhad, except by
virtue of being a nominee Director of Permodalan
Nasional Berhad, and does not have any conflict of
Annual Report 2006
21
Profile
of
Directors
DATUK KHOO ENG CHOO
DATO’ MUHAMMAD NAWAWI ARSHAD
Datuk Khoo Eng Choo, aged 64, Malaysian, has been an
Independent Non-Executive Director since 4 June 2002. He is
Chairman of the Audit Committee and a member of the
Nomination Committee and Remuneration Committee of the
Board of Kumpulan Guthrie Berhad. He attended all the twelve
(12) Board Meetings held in the financial year under review.
Dato’ Muhammad Nawawi Arshad, aged 67, Malaysian, is an
Independent Non-Executive Director. He was appointed to the
Board on 31 May 2002. He is a member of the Audit Committee
of the Board of Kumpulan Guthrie Berhad. He attended eleven
(11) of the twelve (12) Board Meetings held in the financial year
under review.
He is also an Independent Non-Executive Director of Highlands
& Lowlands Berhad and Guthrie Property Development Holding
Berhad, subsidiary companies of Kumpulan Guthrie Berhad.
He is a Non-Executive Director of Guthrie Ropel Berhad and
Guthrie Property Development Holding Berhad.
Datuk Khoo is also an independent non-executive director of
Kontena Nasional Berhad. He was formerly the Chairman of
Tanjong Public Limited Company and a director of Powertek
Berhad.
He was the Chairman of Malaysian Institute of Management and
the Chairman of the Asian Association of Management
Organisations. He is the Chairman of eckhoo Associates Sdn.
Berhad. Datuk Khoo is a Chartered Accountant. For over a
decade prior to 2002, Datuk Khoo had served in key leadership
positions in Pricewaterhouse and PricewaterhouseCoopers in
Malaysia, Asia and its world’s firm. He also held significant
appointments that were made by the Malaysian Government. He
served in senior capacities in councils of professional and
management bodies in Malaysia and Asia.
Datuk Khoo has no family relationship with and is not related to
any director and/or major shareholder of Kumpulan Guthrie
Berhad, and does not have any conflict of interest with
Kumpulan Guthrie Berhad.
22
Dato’ Muhammad Nawawi is the Chairman of DTZ Debenham
Tie Leung (Malaysia) Sdn. Berhad, DTZ Nawawi Tie Leung
Property Consultant Sdn. Berhad and DTZ Nawawi Tie Leung
Estate Agents Sdn. Berhad. He had served as a Committee
Member of International Assets Valuation Standards Committee
and Committee Member and President of Institution of Surveyors
Malaysia, President of International Real Estate Federation
(FIABCI) Malaysia, and Deputy World President of FIABCI. He
had also served as Vice President of the Asean Valuers
Association.
Dato’ Muhammad Nawawi is a Chartered Surveyor from College
of Estate Management, London and Fellow, Institution of
Surveyors, Malaysia. He was formerly the Director-General,
Valuation and Property Services Department, Ministry of Finance
Malaysia and Director of CH Williams, Talhar & Wong Sdn.
Berhad.
Dato’ Muhammad Nawawi has no family relationship with and is
not related to any director and/or major shareholder of Kumpulan
Guthrie Berhad. He does not have any conflict of interest with
Kumpulan Guthrie Berhad.
DATUK KHOO ENG CHOO
DATO’ MUHAMMAD NAWAWI ARSHAD
Annual Report 2006
23
MANAGEMENT TEAM
Group Chief Executive
Dato’ Abd Wahab Maskan, aged 56, has been the Group
Chief Executive of Kumpulan Guthrie Berhad since 1 January
2004 and subsequently was appointed as a NonIndependent Executive Director of Kumpulan Guthrie Berhad
on 30 June 2004. He is a member of the Executive
Committee of the Board of Kumpulan Guthrie Berhad. Dato’
Abd Wahab is also a Director of Highlands & Lowlands
Berhad, Guthrie Ropel Berhad, Guthrie Property Development
Holding Berhad and other subsidiaries of KGB. He also holds
directorship in Pelaburan Hartanah Nasional Berhad and is a
member of the Financial Reporting Foundation of Ministry of
Finance.
Dato’ Abd Wahab’s immediate previous positions were the
Group Chief Executive Director and Group Chief Executive
Officer of Golden Hope Plantations Berhad.
He has held executive and non-executive directorships in
companies in Malaysia, Europe and Asia, both listed and
non-listed, covering estate plantation management, refinery
and oleochemicals, trading and marketing, property
development and investment, engineering and construction,
manufacturing and retailing, resort, both in public and private
sectors.
Dato’ Abd Wahab holds a Bachelor of Science in Estate
Management from University of Reading, England. He is a
Fellow of the Institution of Surveyors (Malaysia) and a Fellow
of the Royal Institution of Chartered Surveyors (England and
UK). He is also a member of the Malaysian Institute of
Directors.
24
Management
Te a m
RUSLI UJANG
Head, Plantation Indonesia
Encik Rusli Ujang, aged 51, was appointed as Head, Plantation Indonesia on 7
March 2006. Prior to this, he was the Head of Plantation Malaysia from 1 February
2005 to 6 March 2006. A graduate of Universiti Pertanian Malaysia, Serdang (UPM)
(now known as Universiti Putra Malaysia) in Agriculture Science, he joined the
Group on 16 April 1978 as an Assistant Estate Manager and subsequently served
as Estate Manager in several estates within the Group. Encik Rusli was a member
of the Task Force Management of Minamas Plantation in 2001 before being
promoted to General Manager, Estates in Kalimantan, Indonesia in 2002.
HELMY OTHMAN BASHA
Head, Plantation Malaysia
Encik Helmy Othman Basha, aged 40, was appointed as Head, Plantation Malaysia
on 1 August 2006. Prior to this, he was the Head, Planning & Development. He is
a Fellow of the Association of Chartered Certified Accountants, UK (FCCA) and a
member of the Malaysian Institute of Accountants. He joined the Group in 1997 as
Finance & Administration Manager, Property Division and was subsequently
appointed as General Manager, Guthrie Landscaping Sdn. Berhad and General
Manager, Finance, Property Division. Encik Helmy was promoted to Group General
Manager, Finance in 2001 in charge of Group Treasury and Minamas Plantation,
Indonesia (Finance). He was promoted to Head, Marketing, Plantation Division in
2003 and in 2004 was appointed as Head, Planning & Development.
Annual Report 2006
25
Management
Te a m
TENGKU AB. AZIZ TENGKU MAHMUD
Head, Property
Y.M. Tengku Ab. Aziz Tengku Mahmud, aged 49, joined Kumpulan Guthrie Berhad
as Head, Property on 1 April 2005. He is also the Chief Executive Officer, Guthrie
Property Development Holding Berhad. He graduated from Loughborough
University of Technology, UK with a Bachelor of Science (Hons) in Civil Engineering
in 1980. He obtained his Masters in Business Administration from Cranfield Institute
of Technology, UK in 1991. Y.M. Tengku Ab. Aziz Tengku Mahmud is a registered
member of the Institution of Engineers Malaysia (MIEM), the American Society of
Civil Engineers (MASCE) and the Malaysian Institute of Management (MIM). Prior to
joining the Group, he served in various organisations in a senior management
capacity.
TONG POH KEOW
Head, Group Finance & Administration and Chief Finance Officer
Madam Tong Poh Keow, aged 53, is Head, Group Finance & Administration and
Chief Finance Officer since 1 January 2006. She is a member of the Malaysian
Institute of Accountants, a Fellow of the Association of Chartered Certified
Accountants, UK (FCCA) and a member of the Institute of Chartered Secretaries &
Administrators, UK. She joined the Group in 1983 as the Accountant-cum-Assistant
Company Secretary for Highlands & Lowlands Berhad, and was subsequently
promoted to General Manager, Accounting & Financial Reporting in 1997 and
Group General Manager, Finance (Group Accounting & Financial Reporting) in 2001.
She has been the Chief Finance Officer since April 2003.
26
Management
Te a m
ABU SAMAH HAJI SAMSURI
Head, Group Marketing
Encik Abu Samah Haji Samsuri, aged 47, has been Head, Group Marketing since
15 October 2004. He holds a Bachelor of Science (Honours) with a major in
Chemistry and a minor in Management from Universiti Sains Malaysia, Penang. He
began his career as Executive at Eastern Plantation Agency (J) Sdn. Bhd. and was
subsequently appointed as Marketing Manager at Plantation Agency Sdn. Berhad,
Penang. He joined East Asiatic Company Bhd (now known as Hap Seng
Consolidated Bhd) as its Manager, Commodities Trading in 1991 and was promoted
to General Manager, Commodities Trading in 2000.
SAADIAH HAJI HUSSIN
Head, Group Human Resource
Puan Saadiah Haji Hussin, aged 54, was Head, Group Human Resource for the
period under review until her retirement on 31 March 2007. She joined the Group
in 1998 as Group General Manager, Human Resource. A graduate of Universiti
Malaya in Economics, she served with Rothmans of Pall Mall (M) Berhad (now
known as British American Tobacco) as Manager, Compensation/Benefits, Human
Resource Department. Prior to that, she worked for Perbadanan Kemajuan Negeri
Selangor in the areas of investment, supply and procurement, and training and
development.
NORZILAH MEGAWATI DATO’ ABDUL RAHMAN
Head, Group Legal & Compliance
Puan Norzilah Megawati Dato’ Abdul Rahman, aged 47, has been Head, Group
Legal & Compliance since 1 March 2004. She joined the Group in 1994 as
Manager, Group Chief Executive’s Office. She was subsequently promoted to
Controller, Corporate Business Development & Monitoring in 1996 and Director,
Corporate Business Development & Human Resource in 2001. She obtained her
degree in Law (Honours) from Universiti Malaya and served as Executive in the
areas of investment analysis, money market trading, corporate secretarial and legal
work with Permodalan Nasional Berhad (PNB) and as Manager, Group Chief
Executive’s Office at PNB.
Annual Report 2006
27
AUDIT COMMITTEE
DATUK KHOO ENG CHOO
Chairman
DATUK MOHAMED
ADNAN ALI
DATO’ MUHAMMAD
NAWAWI ARSHAD
Independent Non-Executive Director
Non-Independent Non-Executive Director
Independent Non-Executive Director
* En. Sreesanthan s/o Eliathamby resigned with effect 23 November 2006.
COMPOSITION
PRIMARY PURPOSES
The Audit Committee of Kumpulan
Guthrie Berhad ("Audit Committee")
comprises four (4) Directors of the Board
of Kumpulan Guthrie Berhad ("Board"),
the majority of whom, including the
Chairman, are Independent NonExecutive Directors.
The Audit Committee shall:
With effect from 23 November 2006, En.
Sreesanthan s/o Eliathamby had resigned
from becoming a member of the Audit
Committee.
28
•
•
Provide assistance to the Board in
fulfilling its fiduciary responsibilities
relating to the corporate accounting,
reporting practices and risk
management of Kumpulan Guthrie
Berhad and its subsidiary companies
("Group").
Maintain, through regularly scheduled
meetings, a direct line of
communication between the Board
and the Internal Auditors as well as
the External Auditors.
•
Avail to the Internal Auditors and
Exter nal
Auditors
a
private
confidential audience at any time
they desire and request through the
Chairman, with or without the prior
knowledge of Management.
•
Act upon the Board's request to
investigate and report on any issues
or concer ns with regard to the
Group.
Audit
FUNCTIONS
•
Material issues arising from the reports of the Internal
Auditors and External Auditors and whether appropriate
action is being or has been taken based on the
recommendations of the Internal Auditors and External
Auditors.
•
Any significant difficulties encountered or material
discoveries and findings made by the Internal Auditors or
External Auditors.
•
Any related party transaction and conflict of interest situation
that may arise including any transaction, procedure or
course of conduct that raises questions of management
integrity.
•
The firm of External Auditors retained by the Group and the
fees payable to the External Auditors and any change in
their fees, and recommendation, if any, to retain or replace
such firm in the ensuing year.
The functions of the Audit Committee include the functions set
out below and such other functions as may be determined by
the Board from time to time.
The Audit Committee shall review, appraise, report and make
appropriate recommendations to the Board on:
•
The quality and effectiveness of the entire accounting and
internal control system of the Group.
•
The adequacy of the annual audit programme by both the
Internal Auditors and the External Auditors and the reports
of the Internal Auditors and External Auditors relating
thereto.
•
The adequacy of the scope, functions and resources of the
Internal Auditors and whether they have the necessary
authority to carry out their work.
•
The adequacy of the scope, functions and resources of the
Enterprise Risk Management unit in ensuring the Group has
in place an ongoing process for identifying, evaluating,
monitoring and managing the significant risks affecting the
achievement of its business objectives.
•
The assistance given by the employees of the Group to the
External Auditors.
•
The propriety of accounting policies adopted by
Management and accepted by the External Auditors, where
alternatives are also acceptable.
•
The effects of any change in accounting principles or of any
development emanating from the accounting profession or
any statutory authority.
•
•
The adequacy of the disclosure of information essential for
a fair and full presentation of the financial affairs of the
Group.
The quarterly results and year-end financial statements, prior
to the approval by the Board, focusing particularly on:
– changes in or implementation of major accounting policy
changes;
– significant and unusual events; and
– compliance with accounting standards and other legal
requirements.
Committee
MEETINGS
The Audit Committee held seventeen (17) meetings during the
financial year ended 31 December 2006. The Chief Finance
Officer and the Group Controller, Internal Audit, Kumpulan
Guthrie Berhad, together with the Company Secretary were in
attendance at the seventeen (17) meetings. Datuk Khoo Eng
Choo and Dato' Muhammad Nawawi Arshad attended all the
meetings whilst Datuk Mohamed Adnan Ali attended sixteen (16)
and Encik Sreesanthan s/o Eliathamby attended twelve (12)
meetings prior to his resignation on 23 November 2006.
Representatives of the External Auditors and other officers of the
Company were also invited to brief the Audit Committee on
specific issues.
At the conclusion of each meeting, recommendations were made
for the Management to improve the internal controls, procedures
and systems of the Group, wherever appropriate.
Annual Report 2006
29
Audit
Committee
ACTIVITIES
INTERNAL AUDITORS
A summary of the activities of the Audit Committee in the
discharge of its functions and duties during the year under
review was as follows:
In the discharge of its duties, the Audit Committee is strongly
supported by the Internal Auditors. The Internal Auditors' role is
to independently and objectively evaluate and report on the
adequacy, integrity and effectiveness of the Group's overall
system of internal control and risk management activities for
assurance purposes.
•
Reviewed the quarterly financial statements of the Group
and ensured compliance with approved accounting
standards and adherence to other legal and regulatory
requirements.
•
Evaluated the audit planning strategy of the Internal Auditors
and External Auditors to confirm the groundwork for the
annual audit of the Group.
•
Reviewed and assessed the progress of risk management
activities and significant risk issues of the Group.
•
Reviewed significant issues and audit findings arising from
the annual audit of the Group by the External Auditors.
•
Reviewed and appraised the audit reports tabled by the
Internal Auditors.
•
Reviewed the allocation of option shares pursuant to the
Employees' Share Option Scheme of the Company.
•
Reviewed the various internal control systems of the Group.
•
Reviewed the Internal Audit Planning Memorandum and
Budget for year 2007.
REPORTS/MINUTES
Detailed audit reports by the Internal Auditors, together with
responses by Management, were circulated to the Group Chief
Executive and Heads of the respective Business Units, Divisions/
Departments of the Company upon completion of the audit
fieldwork and prior to the Audit Committee meetings. Minutes of
meetings of the Audit Committee were circulated to all members
of the Board, and significant issues were discussed at the Board
Meetings.
30
The Internal Auditors also carried out audit programmes which
focused on the management of the Group's significant corporate
risks and executed audit plans approved by the Audit
Committee. In conducting their independent audit, the Internal
Auditors placed emphasis on a risk-based auditing approach
which forms an integral part of the audit plans. The audit
findings and recommendations, which also highlighted areas of
non-compliance with the Group's policies, procedures and
guidelines, were periodically tabled to the Audit Committee for
review.
Due to the nature of their functions, the Internal Auditors are well
placed to undertake investigations on any suspicion of fraud or
operational failures reported to them within the Group, on behalf
of the Audit Committee. Such regular monitoring is essential to
ensure the integrity and effectiveness of the Group's system of
internal control.
STATEMENT ON EMPLOYEES’ SHARE OPTION
SCHEME (ESOS)
The Audit Committee hereby verifies that during the financial
year under review, the actual allocation of option shares pursuant
to the Second ESOS of Kumpulan Guthrie Berhad ("Scheme") to
eligible employees had been made in accordance with the
criteria of allocation of option shares as set out in the Bye-Laws
governing the Scheme and the guidelines of the Scheme.
STATEMENT ON
CORPORATE
GOVERNANCE
The Board of Directors of Kumpulan Guthrie Berhad (“Guthrie” or “the Company”) confirms that
throughout the financial year ended 31 December 2006, it has continued to integrate good and
effective corporate governance practices into the overall business direction and management of the
Company and its subsidiary companies (“Kumpulan Guthrie Group” or “the Group”), in compliance
with the Best Practices of the Malaysian Code of Corporate Governance (“the Code”).
Annual Report 2006
31
Statement
on
Corporate
Governance
The Board is determined and committed towards ensuring maximum shareholders’ value and
enhancing investors’ interest in line with the application of the principles of the Code.
A. BOARD OF DIRECTORS
Board Composition
The composition of the Board is
continuously reviewed. During the
year, the Board continued to be well
balanced, with its effective mix of
Executive Director as well as
Independent and Non-Independent
Non-Executive Directors. The diverse
professional background and
expertise of the Directors, spanning
various fields including finance,
human resource development,
accounting, legal, public services,
plantation management and property
development, provide the Board with
the requisite depth and quality in its
deliberation and decision-making.
The Board is equipped with sufficient
breadth of knowledge and skills to
competently control the direction of
the Company and Group.
Board Meetings
The agenda and Board papers for deliberation by the Board are dispatched to the
Directors in advance of Board meetings to facilitate informed discussion and
decision-making.
At each regularly scheduled Board meeting, the Board deliberates and approves
various key matters specifically presented for the Board’s decision. These matters
include, among others, formulation of the Group’s strategic business plans and
policies, review of annual and interim financial results, including those of operating
subsidiaries, evaluation of actual and projected performance against targets and
budgets, and other corporate initiatives requiring the Board’s due attention.
At appropriate times, presentations on business developments/proposals are also
made to the Board by Management and/or consultants/advisers. Reports by Board
Committees are also presented and discussed at the Board Meetings.
All matters arising, deliberations and conclusions of the meetings of the Board are
accurately recorded in minutes of meetings by the Group Company Secretary. The
minutes are thereafter confirmed by the Board and signed as a correct record by
the Chairman.
During the year ended 31 December 2006, five (5) Board Meetings and seven (7)
Special Board Meetings were held. The following are the details of attendance of
each Director in respect of meetings held.
Chairman and Group Chief Executive
In accordance with good corporate
gover nance,
the
roles
and
responsibilities of the Chairman, who
is a Non-Independent Non-Executive
Director, and the Group Chief
Executive, are separate and clearly
distinguished. Hence, an effective
balance of power and authority in
the Board is ensured.
Members
The Chairman seeks to ensure the
effective conduct and contribution of
the Directors, collectively. The Group
Chief Executive, supported by his
team of management, is responsible
for the implementation of Board
policies and strategies, including
execution and management of the
day-to-day decisions and monitoring
operations of the Company and
Group’s business.
*
No. of
meetings
attended
Percentage
Tan Sri Dato’ Dr. Wan Mohd. Zahid
Mohd. Noordin (Chairman)
12 out of 12
100%
12 out of 12
100%
Raja Tan Sri Muhammad Alias Raja
Muhammad Ali
12 out of 12
100%
12 out of 12
100%
12 out of 12
100%
Datuk Khoo Eng Choo
12 out of 12
100%
11 out of 12
92%
Dato’ Muhammad Nawawi Haji Mohd Arshad
11 out of 12
92%
Sreesanthan s/o Eliathamby *
7 out of 10
70%
Tun Musa Hitam **
5 out of 5
100%
resigned w.e.f 23.11.06
** retired w.e.f 22.6.06
32
Statement
Board Balance
The Board, as at the date of this statement, consists of
eight (8) members. Seven (7) are Non-Executive Directors
(including the Chairman) and one (1) is an Executive Director.
Three (3) of the eight (8) Directors are Independent as
defined under the Listing Requirements of Bursa Malaysia
Securities Berhad (“Bursa Malaysia Listing Requirements”).
The Independent Directors are:
(i) Datuk Khoo Eng Choo
(ii) Dato’ Muhammad Nawawi Haji Mohd Arshad
(iii) Datuk Nik Mohamed Affandi Nik Yusoff (redesignated as
Independent Director w.e.f 12 January 2007)
(During the financial year under review, Encik Sreesanthan
s/o Eliathamby had resigned as an Independent Director on
23 November 2006.)
The appointment of Independent Non-Executive Directors
facilitates the unbiased exercise of independent evaluation in
Board deliberations and decision-making, taking into
account the interest of all stakeholders. The presence of
independent Non-Executive Directors fulfils a central role in
corporate accountability and serves to provide the ‘check
and balance’ in the Board.
A brief profile of each Director is presented on pages 16 to
23.
Supply of Information
The Board and its Committees are empowered with full and
unrestricted access to all information pertaining to the
Company/Group’s business and affairs.
By the same token, all Directors have direct access to the
advice and services of the Group Company Secretary, both
in their individual capacity of a Director as well as a Board
collectively. The Group Company Secretary also serves in
the same capacity for the various Board Committees.
The Directors are regularly updated by the Group Company
Secretary on new statutory and regulatory requirements
relating to the duties and responsibilities of Directors.
All the Directors may obtain independent professional advice
in the furtherance of their duties, at the Company’s expense.
All decisions by the Board in respect of proposals and
recommendations by the Management are arrived at via
comprehensive examination and discussion undertaken by
the Board.
on
Corporate
Governance
Board Committees
Certain responsibilities are delegated to Board Committees
established to assist the Board in discharging its duties. The
functions and terms of references of the Board Committees
are clearly defined.
In furtherance of the principles of the Malaysian Code
of Corporate Gover nance and guidelines of the
Government–Linked Companies’ (“GLCs”) Transformation
Manual, including the “Green Book – Enhancing Board
Effectiveness” issued by Putrajaya Committee on GLC High
Performance (“PCG”), the Executive Committee and the
Finance & Tender Committee of the Company were
abolished on 29 August 2006.
The said two (2) committees were abolished with the
objective of increasing the frequency of Board meetings
from a quarterly basis to once in every six (6) weeks. This
change is introduced to facilitate an improvement in the
quality and timing of discussion as well as enhance the
participation of Directors in the decision–making of matters
requiring the Board’s attention.
During the financial year under review, the Board had also
undertaken an assessment on its own efficiency and the
performance of the individual Directors. As a result, the
Board was able to identify relevant aspects and areas of
concern for further improvement.
a.
Audit Committee
The Audit Committee of Kumpulan Guthrie Berhad
(“Audit Committee”) presently comprises three (3)
Directors of the Board, the majority of whom, including
the Chairman, are Independent Non-Executive Directors.
In line with good corporate governance practice, the
Executive Director is not a member of the Audit
Committee.
The Audit Committee’s principal function is to assist the
Board in maintaining a sound system of internal control.
The Committee has full access to the auditors both
internal and external who, in turn, have access at all
times to the Chairman of the Committee. During the
year ended 31 December 2006, eighteen (18) meetings
of the Committee were held.
The functions of the Audit Committee are laid down on
page 29 of this Annual Report.
Annual Report 2006
33
Statement
b.
on
Corporate
Governance
Remuneration Committee
The Remuneration Committee is responsible for
developing the Group’s remuneration policy and
recommending to the Board the appropriate
remuneration packages of Non-Executive Directors and
executive employees of the Group.
As the Executive Director is not a member of the
Committee, he plays no part in the decisions of his own
remuneration. Nonetheless, remuneration of both the
Non-Executive and Executive Director is the ultimate
responsibility of the entire Board.
The Remuneration Committee may seek independent
professional advice, where appropriate, to review the
salaries and benefits of staff of the Group.
The Remuneration Committee, whose members
comprise non-executive Directors, meets on a need
basis. During the year ended 31 December 2006, eight
(8) meetings of the Committee were held.
c.
Nomination Committee
The Nomination Committee provides a transparent
procedure for identifying and recommending new
nominees to the Board, as well as committees of the
Board and its public listed/major subsidiaries. In any
case, all decisions on appointments shall be made by
the respective Boards after considering the
recommendations of the Committee.
The Committee would also recommend suitable training
programmes to equip the Directors on new laws and
regulations which are particularly relevant to the
operations of the KGB Group.
The Nomination Committee, the members of whom are
non-executive Directors, meets as and when required
but shall hold at least one (1) meeting a year. During the
year ended 31 December 2006, five (5) meetings were
held.
d.
34
Employees’ Share Option Sheme ("ESOS") Committee
The ESOS Committee of the Company was established
by resolutions of the Board on 16 December 1996 and
26 March 1997, to administer the KGB ESOS in
accordance with the Bye-Laws approved by the
shareholders of the Company. The current Second
ESOS Scheme (ESOS 2003/2008) ("the Scheme") was
implemented on 30 July 2003 and is governed by the
Bye-Laws approved by the shareholders on 18 June
2003.
The ESOS Committee is primarily responsible for the
proper administration of the Scheme in accordance with
the Bye-Laws of the Scheme. It is also responsible to
review and recommend to the Board any relevant
amendments to the provisions of the Bye-Laws
Scheme. However, any such amendments proposed
should not be prejudicial to the eligible employees of
the Group and are subject to prior approval of the
Company’s shareholders.
The ESOS Committee, currently comprising two (2)
members of the Board both of whom are non-executive
directors, meets at least every quarter during the
relevant financial year. During the year ended 31
December 2006, four (4) meetings were held.
B. DIRECTORS
Appointments to the Board
The Company has established a transparent procedure for
the appointment of new Board member(s), as well as the
proposed re-appointment or re-election of Directors at the
Annual General Meeting. Such appointment or reappointments would be at the recommendation of the
Nomination Committee for approval of the Board.
The Group Company Secretary ensures all appointments are
properly effected and necessary information is duly obtained
from the Directors, both for the Company’s records and in
compliance with relevant regulatory and statutory
obligations.
The Board undertakes to periodically examine the
effectiveness of its present size in discharging its duties,
from time to time.
Re-election of Directors
Article 102 of the Company’s Articles of Association
provides that at least one-third of the Directors (including the
Group Chief Executive) for the time being, is required to
retire at every Annual General Meeting (“AGM”) and be
subject to re-election by rotation at least once in every three
years.
Directors who are over seventy (70) years of age are
required to submit themselves for reappointment annually, in
accordance with Section 129(6) of the Companies Act, 1965.
Presently, there is one (1) Director of the Company who is
subject to such reappointment.
Statement
Directors’ Remuneration
The main objective of the Company’s policy on Directors’
remuneration is to attract and retain Directors of requisite
calibre to steer and propel the Group towards improved
prospects and growth.
The fee allocated to each Non-Executive Director, approved
by the shareholders of the Company at its Annual General
Meeting (“AGM”) held on 18 June 2003, is RM40,000 per
annum. For the Non-Executive Chairman, the fee is
RM60,000 per annum.
The Chairman and the members (who are Non-Executive
Directors) of each Committee of the Board are also entitled
to a fee of RM10,000 and RM8,000 per annum (for each
member) respectively. The fee of each Non-Executive
Director is determined by the Board as a whole.
The Company reimburses reasonable expenses incurred by
the Non-Executive Directors in the course of their duties as
Directors.
At the same aforementioned AGM, each Non-Executive
Director was also approved a meeting allowance of RM500
for his attendance at each meeting of the Board and the
respective Committees of the Board. In addition, the
provision of medical benefits for each of the Non-Executive
Directors is similar to that provided to executives of the
Company.
The aggregate remuneration of the Directors categorised into
the appropriate components are as follows:
Executive Director
Salary and other
remuneration
Benefits-in-kind
Total
Non-Executive Directors
Fees
Other remuneration
Benefits-in-kind
Total
Group
(RM’000)
Company
(RM’000)
1,269
1,269
149
149
1,418
1,418
958
196
34
516
141
34
1,188
691
on
Corporate
Governance
The aggregate remuneration of Directors for the financial
year ended 31 December 2006, in respective bands of
RM50,000 are as follows:
Range of Remuneration
Number of Directors
RM50,001 to RM100,000
RM100,001 to RM150,000
RM150,001 to RM200,000
RM200,000 to RM250,000
2
4
2
1
Executive Director
RM1,150,001 to RM1,200,000
RM1,300,001 to RM1,350,000
1
Directors’ Training
All the Directors, having completed the Mandatory
Accreditation Programme prescribed by Bursa Malaysia
Securities Berhad, continue to benefit from attending
programmes and seminars accreditated under Bursa
Malaysia Securities Berhad’s Continuing Education
Programme.
Directors are also encouraged to attend various professional
programmes deemed beneficial to the discharge of their
duties and keep abreast with current issues arising from the
ever-changing business environment within which the
Company and Group operate.
During the financial year under review, the Directors had
attended a seminar on “Improving Directors’ Performance,
Leadership and Governance” by Mr. James Crown of
Knowledge Group Consulting on 27 September 2006 and a
talk on “Innovation and Knowledge Management” by
Mr. S.V. Lingam of Paradigm Systems Berhad held on 11
December 2006.
As the Board of a Government-linked company (“GLC”), the
Directors had also during the financial year under review,
adopted the principles/guidelines of the “Green Book –
Enhancing Board Effectiveness” issued by the Putrajaya
Committee on GLC High Performance (“PCG”) in accordance
with the framework for the GLC Transformation Manual.
The Green Book is consistent with and complements the
principles/guidelines of the Malaysian Code of Corporate
Governance, placing particular emphasis on the performance
aspects of the GLC Boards in order to raise their
effectiveness levels to best practice levels.
Annual Report 2006
35
Statement
on
Corporate
Governance
As prescribed by the Green Book, the Board had conducted
an assessment of its effectiveness from September to
October 2006. Subsequently, actionable improvement
actions/plans to resolve gaps identified in the Board’s
effectiveness were identified in November 2006, ie. a
schedule/programme for sharing enhanced communication
between Board and Management, for implementation in
December 2006 and formulation of strategic innovation for
recommendation to the Board in June 2007.
Indeed, the Board strives to pursue the objectives of
enhancing its effectiveness as a continuous process.
In addition to the publication of summarised quarterly
financial results of the Group in the newspapers, copies of
the full announcement are also supplied to shareholders and
members of the public upon request.
The Annual General Meeting
The Annual General Meeting (“AGM”) is the principal forum
at which the Board reports on its stewardship to
shareholders and account for the performance of the
Company/Group. The AGM provides the opportunity for
constructive communication among shareholders, Directors
and the Management, in respect of pertinent issues such as
the interim/quarterly financial reports and any other matters
which merit due clarification.
C. SHAREHOLDERS
Investor Relations and Shareholder Communication
The Board acknowledges the crucial need for shareholders
to be duly informed of material information affecting the
Company as an on-going business concern, particularly, its
status of financial performance.
Towards this end, the Company undertakes to comply with
adequate disclosure requirements in furtherance of good
corporate governance as well as part of the effort to ensure
market credibility and investors’ confidence in the Company.
In discharging the obligations imposed by the Listing
Requirements of Bursa Malaysia on public listed companies,
material information with regard to the Company are
disclosed in a timely and accurate manner. In this way,
shareholders and investors benefit from a transparent
evaluation of the Company’s securities and would be able to
make well-informed decisions on the same.
The AGM also provides the opportunity for the Directors to
gather the views of the minority shareholders. In any case,
adequate time is provided for the shareholders’ questionand-answer session, as the Board believes that proper and
efficient proceedings of the AGM is paramount. Turnout at
the Company’s Annual General Meetings has been good and
in 2006, about 1,000 shareholders had attended the
meeting.
The various announcements made by the Company during
the year, including the quarterly release of financial results,
provide shareholders with an overview of the Group’s
performance and operations.
In addition, shareholders may obtain up-to-date information
relating to the various activities of the Company and
the KGB Group by accessing its website at
www.guthrie.com.my. Press releases and the latest quarterly
results announcement of the Company can also be found on
this site.
The Annual Report
The Annual Report, which incorporates the Financial
Statements sections, is printed for distribution to
shareholders in English and Bahasa Malaysia, and serves as
a useful tool to reach a wider audience of potential investors.
Senior Independent Non-Executive Director
Other than through the Chairman of the Board, shareholders
may convey their concerns on issues affecting the Company
and the Group, to Dato’ Muhammad Nawawi Arshad, the
senior independent Non-Executive Director of the Board.
Briefing to Analysts and Shareholders
The Management of KGB conducts annual dialogues and
briefings with financial analysts and investors on the Group’s
financial performance, including its potential for new
developments/business. This exercise provides the investing
community the opportunity to obtain a balanced view of the
Group’s performance within the context of prevailing
regional/global economic climate and the challenges arising
therefrom.
36
The presence of Board members, representatives of the
external auditors and the Management at each AGM
ensures immediate and ready response to queries on the
business operations of the Group. This also demonstrates a
high level of accountability and transparency with regard to
the Group’s business operations, strategies and goals.
D. ACCOUNTABILITY AND AUDIT
Financial Reporting
The Directors aim to present the Group’s financial position
and prospects to its stakeholders with quality financial
reporting which is balanced and clearly assessed. The
relevant financial reporting made available by the Company
in a timely manner further attest to the Company’s
adherence to the immediate disclosure policy.
Statement
The quarterly financial results and annual financial
statements are duly reviewed by the Audit Committee, prior
to submission for approval of the Board.
Appropriate accounting policies are consistently applied in
the financial reporting, supported by reasonable and prudent
judgements and estimates. In addition, any explanation for
material departures are disclosed in the notes to the
financial statements. Such information is released to the
public only upon approval of the Board.
The Chairman’s Statement and the Operations Review of the
Group, contained in this Annual Report, also provide an
insight into the performance of the Group throughout the
financial year and on the Group’s future prospects.
Statement on Going Concern
The Board, having reviewed the budgets and long-term
business plans of the Company and of the Group, has a
reasonable expectation that the Company and the Group
have adequate resources to continue in operation for the
foreseeable future. Accordingly, the financial statements of
the Company and the Group have been prepared on a going
concern basis.
Relationship of the Board with Management - Internal
Control
Whilst the Board retains overall responsibility for and control
of the Group, it also effectively monitors Management.
Management of the Group’s businesses is conducted by the
Group Chief Executive and Senior Management of the
various divisions and departments which implement the
policies and strategies adopted by the Board within the
limits of authority laid down by the Board.
The Board also ensures the smooth running of the Company
and the Group operations through the establishment of a
succession plan for top Management.
The Management’s performance is measured against the
Group’s objectives, ensuring any implementation of policies
and strategies are in the best interests of the shareholders
of the Company.
Relationship with the Auditors
The Board has established and maintains an active,
transparent and professional relationship with the Group’s
auditors, both external and internal, through the Audit
Committee.
on
Corporate
Governance
The Audit Committee meets with the external auditors
without the presence of any executive, except for the Group
Company Secretary, at least once a year. The audit
conducted by the external auditors on the Company and its
subsidiary companies during the financial year provide
reasonable assurance that the financial statements present a
true and fair view of the Group’s performance.
Following completion of the audit, any significant issues
arising from the audit of the KGB Group would be
highlighted to the Board by the external auditors through a
Management Letter.
The Board, through the Audit Committee, also seeks the
external auditors’ professional advice in ensuring compliance
with the appropriate accounting standards in Malaysia and
the provisions of the Companies Act, 1965.
The functions of the Audit Committee and its relations with
the Auditors are set out on pages 29 to 30 of this Annual
Report. The activities of the internal auditors relating to the
operation of the Group during the financial year are set out
on page 30 of this Annual Report.
E. COMPLIANCE WITH THE CODE ON CORPORATE
GOVERNANCE
The Kumpulan Guthrie Group was substantially in
compliance with the principles of corporate governance and
best practices in corporate governance throughout the
financial year ended 31 December 2006.
F. OTHER INFORMATION
Material Contracts
Other than as set out below, the Company and/or its
subsidiary companies had not entered into any material
contract which involved Directors’ and/or major
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.
The Company and its subsidiaries, namely Highlands &
Lowlands Berhad (“H&L”) and Guthrie Ropel Berhad
(“Ropel”) were each served with the Offer to Acquire the
Entire Business and Undertaking including All their Assets
and Liabilities from Synergy Drive Sdn. Berhad (“Synergy
Drive”) on 27 November 2006 (“Proposed Merger”). At its
meeting held on 21 December 2006, the Company’s
Directors had agreed to accept the offer made by Synergy
Drive for the Proposed Merger.
Annual Report 2006
37
Statement
on
Corporate
Governance
Subsequently, the Board of the Company, as well as that of
H&L and Ropel, respectively, had on 24 January 2007,
agreed to accept the terms and conditions of the Sale and
Business Agreement with the Synergy Drive in relation to the
Proposed Merger.
As this centralised treasury system entails the provision of
financial assistance between the Kumpulan Guthrie Group,
H&L Group and Ropel Group, the Board, thus, proposes to
seek renewal of the Financial Assistance Mandate at the
forthcoming EGM of the Company.
The final decision on the Proposed Merger will therefore be
made by the respective shareholders of the Company, H&L
and Ropel via voting on the relevant resolutions at their
extraordinary general meetings scheduled to be convened
before the end of year 2007, accordingly.
Share Buy-Back
During the financial year under review, the Company has not
exercised any share buy-back permitted by Section 67A of
the Companies Act, 1965 of which mandate was given by
the shareholders at the last EGM of the Company held on
22 June 2006.
Material Contracts Related to Loan
During the financial year under review, there were no
material contracts related to loans, entered into by the
Company and/or its subsidiary companies which involved
Directors’ and/or major shareholders’ interests.
Non-Audit Fee
During the financial year ended 31 December 2006, the
Group had paid non-audit fees to the External Auditors,
apart from the annual audit fees, amounting to RM589,000
for other services undertaken by the Auditors for and on
behalf of the Group, during the financial year.
Options, Warrants or Convertible Securities
As at 31 December 2006, a total of 21,762,800 option shares
were exercised under the Second ESOS. The Directors had
obtained a relief under Section 169A (1) of the Companies
Act, 1965 exempting the Company from having to disclose
the names of option holders granted less than 50,000 option
shares each during the year in the Annual Report. This
exemption is subject to a yearly renewal. All information
regarding the allocation and exercise of the said option
shares are registered in the Company’s Register of Options.
The names of option holders who were granted with 50,000
or more option shares under the Second ESOS as at
31 December 2006 are as set out in the Directors’ Report –
Second Employees’ Share Option Scheme, on page 195 of
this Annual Report.
Proposed Provision of Financial Assistance Mandate
At the last Extraordinary General Meeting (EGM) held on
22 June 2006, the Company had obtained the Financial
Assistance Mandate from its shareholders to enable the
financial assistance transactions to be effected between the
Kumpulan Guthrie Group and Highlands & Lowlands Berhad
Group (H&L Group) and Guthrie Ropel Berhad Group (Ropel
Group), via a centralised treasury management system for
an estimated net amount of RM40 million and RM10 million
respectively, subject to it not exceeding the 5% benchmark
under the Bursa Malaysia Listing Requirements.
Pursuant to the Management Agreements entered into by
the Company with H&L Group and Ropel Group, the
treasury functions for all the plantation companies within the
Guthrie Group, are centralised and the services include
remittances to the estates, mills, centralised receipt and
payments, and placement of funds with financial institutions.
38
Profit Estimation, Forecast or Projection
The Company had, on 22 March 2006, announced its
headline Key Performance Indicators (“KPIs”), for financial
year 2006 and its three (3) year headline KPIs. These
headline KPIs had been set and agreed by the Board and
Management of the Company as part of the broader KPI
framework that the Company has in place, as prescribed
under the GLC Transformation Programme.
The Company had also announced on 28 March 2007, its
headline KPIs for financial year 2007 and its three (3) year
headline KPIs which focused mainly on the following:
1. Infrastructure and capacity enhancement in
strengthening value chain in Plantation;
2. Revamp Landbank Management and developing new
master-plans in dedicated area to enhance value; and
3. Strengthening Capital Management.
Profit Guarantee
There was no profit guarantee given by the Company during
the financial year under review.
Revaluation Policy of Landed Properties
The revaluation policy of the Group in relation to its landed
properties is set out in Note 3(e) to the Financial Statements
on page 103 of this Annual Report.
Imposition of Sanctions and/or Penalties
There were no sanctions and/or penalties imposed on the
Company and/or its arising from any significant breach of
rules/guidelines/legislation by the relevant regulatory bodies.
STATEMENT
ON INTERNAL
CONTROL
INTRODUCTION
The Malaysian Code on Corporate Governance places the onus for Internal Control on the Board.
It states: “The Board should maintain a sound system of internal control to safeguard shareholders’
investment and the company’s assets”.
The Board of Directors of Kumpulan Guthrie Berhad (“the Board”) is committed to maintaining a sound system of internal control in
the Group and is pleased to provide hereinafter the annual update and disclosure statement in respect of the state of internal control
in Kumpulan Guthrie Berhad as a Group.
Acknowledgement of Responsibilities
The Board affirms its responsibility for maintaining a sound system of internal control. It recognises that reviewing the Group system
of internal control is a concerted and continuing process. However, it should be noted that these systems are designed to manage
rather than eliminate the risks of failure to achieve business objectives and as such, could only provide reasonable but not absolute
assurance against material misstatement or loss.
The Board has reviewed and confirmed that the system of internal control within the internal control framework was in place during
the financial year under review and continues to take measures to strengthen the internal control framework. The Board also confirms
that there were no material losses incurred during the financial year as a result of weaknesses in internal control.
Annual Report 2006
39
Statement
On
Internal
Control
Key Elements of Internal Control Framework
The current system of internal control in the Group has the
following key elements:Standard of Business Ethics
All employees are required to sign and adhere to the
Standard of Business Ethics, which emphasises corporate
values and ethical code of conduct. The Standard of
Business Ethics represents the employees’ undertaking to the
Group’s minimum standard of behaviour and ethical conduct.
Enterprise-wide Risk Management
The Board views Structured Enterprises Risk Management
(ERM) as the logical step in the pursuit of its corporate
governance agenda and the fulfillment of its long-term
corporate objectives towards protecting shareholders’
investment and safeguarding organisational assets.
The ERM programme provides sufficient documentation and
groundwork for the implementation of a risk based audit
approach. The internal auditors, besides performing audit on
the adequacy and integrity of internal controls also provide
assurance on how effective the risks are being managed
through the risk based audit approach. The risk based audit
approach is currently being implemented on certain units in
Malaysia and will be expanded to include other subsidiaries
including overseas subsidiary companies.
Human Resource Management
A systematic Performance Management and Development
(PMD) system, which is linked to and guided by established
Key Performance Indicators (KPI’s) and Key Result Areas
(KRA’s) parameters, has been implemented. The PMD system
is now being driven by the Balanced Scorecard System (BSC)
to support its delivery. The BSC provides a framework to
translate strategy into operational terms and is being used as
a performance measurement tool.
The PMD system has been implemented on personnel at the
executive and managerial levels and will be expanded to
include the clerical level.
Training and Development
Emphasis is placed on enhancing the quality and ability of
employees through continuous training and development.
Through the PMD system, employees’ competencies are
being properly addressed and suitable training programmes
or schemes will be identified to expand on the competencies.
Policies, Procedures and Financial Authority Limits
Delegation of authority including authorisation limits at various
levels of Management and matters requiring the Board’s
approval are clearly defined and set out in written policies
and procedures to ensure accountability and proper
segregation of duties.
Operations Review & Monitoring
Group Management Committee meetings are conducted to
review and monitor matters pertaining to the business
operations based on performance reports which provide
comprehensive information on financial performance and
other key non-financial indicators.
Tender Award System
A policy on awarding of tenders has been revised to enhance
coordination and control on purchase of goods and services.
The policy serves to increase efficiency and places assurance
on the effectiveness of the system of internal control
embedded in the process of awarding tenders.
Insurance and Physical Safeguards
Adequate insurance of major assets i.e buildings and
machineries in major operating subsidiary companies is in
place to ensure that assets of Kumpulan Guthrie Berhad are
sufficiently covered against any mishap that will result in
material losses to the Group and/or its subsidiary companies.
Strategic Business Planning, Budgeting and Reporting
The annual budget is linked to the Group Strategic Business
Planning. The Group Strategic Business Plan for financial year
ended 2006 was approved in December 2005. The Group
Strategic Business Plan is the basis upon which the budget will
be reviewed and tracked periodically during the budget year.
Management Information System
Critical information of the Group such as financial data, human
resources data, land ownership records and debtors’ records
are captured within the various information systems that have
been developed to keep track of the Group operations.
Group Internal Audit
The Internal Audit function, which reports directly to the Audit
Committee provides assurance on the effectiveness of the
system of internal control within the Group. Independent
reviews based on the annual inter nal audit plan are
conducted to identify and report risks in units under the
Group’s major core activities.
Monitoring and Review of the Effectiveness of the System of Internal Control
The processes adopted to monitor and review the effectiveness of the system include:•
Issues highlighted by the Group Internal Auditors and the corrective action taken by management are required to be discussed
and monitored by the respective operating units in its monthly meetings.
•
Quarterly reports to the Audit Committee are formatted such that all corrective actions taken on issues highlighted by the Group
Internal Auditors are tracked according to the progress of completion.
40
Statement
On
Internal
Control
Internal Control Framework & Environment
of Kumpulan Guthrie Berhad
SHAREHOLDERS
Board of Directors
ESOS
Committee
Remuneration
Committee
Nomination
Committee
Group
Chief
Executive
Executive
Committee*
Finance &
Tender
Committee*
Audit
Committee
Risk
Management
Unit
Standard of Business
Ethics
Human
Resource
Management
Internal
Auditors
Strategic Business
Planning & Budgeting
Group Management
Committee
Enterprise-wide Risk
Management
Support
Divisions /
Departments
External
Auditors
Management
Property
Plantation
Credit
ICT
Tender
Development Development
Committee
Committee
Committee
Committee Committee
Training &
Development
Written
Policies &
Procedures
Financial
Authority
Limit
Regular Monthly
Reporting
Human
Management
ERM
Resource
Finance
Committee
Committee Committee
Group Tender
Award System
Insurance
& Physical
Safeguard
Business
Divisions /
Units
Management
Information
Systems
The Group’s internal control framework shown above signifies the accountability and
reporting relationship between the Shareholders, Board, Audit Committee, Auditors and Management
Management Committee
Organisational Structure
Key Internal Control Element
*
Discontinued with effect from 29 August 2006
Annual Report 2006
41
ENTERPRISE-WIDE
RISK MANAGEMENT
A Journey In Transformation Of Prospects & Performance
Over the years, the Group has evolved a sustainable Enterprise-wide Risk Management
(ERM) Blueprint and Framework that shape and mould its long-term risk governance
strategy with the objective of minimising risks and maximising opportunities.
The Group ERM Framework is now benchmarked at the matured stage of the ERM
Maturity Model, a plan of attack that is positioned as a strategic tool to enhance future
Group performance and prospects, and to deliver maximum value to all Stakeholders.
INHERENT BUSINESS RISKS
Consistent with good corporate governance and international best practice, described
below are the macro components of the Group risk profile.
As Guthrie Group continues
its
jour ney
along
the
Risk Management Maturity
Continuum, the Board is
increasingly conscious of its
regulatory and shareholders
obligations and is committed
to systematically manage its
enterprise risks profile in
a proactive, ongoing and
assured manner.
42
•
Industry Specific Risks
Plantation Business Risks
Production yield of fresh palm fruit bunches (“FFB”) are dependent upon climatic
conditions, quality of estate soil, timely harvesting and processing of FFB, outbreaks
of pests and diseases, constraints in labour supply and escalating production costs.
The Group seeks to limit these through efficient CPO pricing strategies and
plantation management practices with emphasis on continuous improvements in FFB
yields, high crop quality and cost efficiencies.
Property Development Risks
In this sector, the Group is exposed to the economic conditions of the Malaysian
economy, impact of competition from other property developers, consumer market
demand, timely completion of projects, changes in regulatory environment, constraint
in project financing costs and possible shortage of resources such as labour supply
and building materials. The Group has achieved international standards in its
property development processes through the attainment of inter national
accreditations in Quality Management and Environmental Management Systems.
Enterprise-wide
Financial Risks
The Group financial risk management
policy and its objective to manage
financial and market exposures are set
out and discussed in detail in the
Notes to the Financial Statements
under “Financial Instruments” caption.
•
Other Risks
Other key aspects of external and
internal risks inherent in the business
operating environments include noncompliance to legal and regulatory
requirements, risks associated
to environmental and social
responsibilities and retention of key
personnel. The Group assessed the
risk of an adverse effect on its
business operations arising from the
above set of risks as highly unlikely at
the moment.
As an evolving process, the Group ERM
Framework is progressively benchmarked
against the components of best-practices
ERM Maturity Model (a benchmarking
framework that is designed to facilitate
thorough planning and communication in
effective risk management), and has the
following key attributes:
Leading
Strategic
Integrated Risk
Management
Risk Metrics and Performance
Monitoring
– the use of key
performance and risk indicators to
track and monitor performance of
each operating unit. The Group is
Next Level
&
Matured
Improved
Controls
&
Basic
Remain in
Compliance
Below Target
Process
Transformation
Improved
Processes
Met Target
Above Target
Business Performance
•
ERM FRAMEWORK
Compliance and Performance
Objectives
The Group risk management philosophy
is to balance risk awareness and control
with the need to create and exploit
opportunities. The Group practices a
holistic and integrated ERM because it
offers a consolidated view of all types of
risks and opportunities across the
organisation, management processes and
business activities.
•
2006 ERM
Dashboard Matrix
RISK CONSIDERATION
Notwithstanding the proposed merger
exercise with Synergy Drive Sdn. Bhd.,
no immediate risks have been identified
that could jeopardise the Group’s current
business outlook. However, no absolute
assurance can be given of any tangible
adverse effect that may arise from a
political or regulatory nature. The Group
has taken the appropriate precautions
against identified business risks that
could negatively affect its financial
standing and business profitability
through implementation of a sound
system of internal control and effective
ERM Framework, explained below.
Management
nature and characteristics, identified
risks are broadly categorised into
major risk types such as strategic,
operational, financial, legal and
compliance, human capital, reputation
and environmental. Risks are further
classified, measured and prioritised
using a uniform “5 x 5” risk matrix
methodology.
For the period under review, the Group
has in place an ongoing process for
identifying, evaluating, monitoring and
managing the significant risks affecting
the achievement of its business
objectives.
Risk Management Maturity Levels
•
Risk
•
Risk Governance & Strategy –
established within the Corporate ERM
Policy & Procedural Manual, with three
levels of defense structures: (i) day to
day risk management residing at the
business units and divisions, (ii) Group
ERM Taskforce comprising the Group
Chief Executive, Senior Management
team and anchored by a Group Risk
Officer (iii) Board & Audit Committee
which retains the overall risk
governance responsibility and risk
oversight for the Group and its
subsidiaries.
Risk Management Portfolio and
Optimisation – risk appetite
management, uncovering of risks and
root cause discipline are managed
within this attribute. Based on its
currently piloting an in-house risk
software, G-RiPS (Guthrie Riskintelligent Performance System) to link
identified risks to key performance
indicators and risk control measures.
•
Risk Control Assurance – driven by
the Audit Committee and Internal
Audit Department.
For Guthrie Group, the practice of risk
management is not designed to stop
employees from taking risks but rather to
create value by enhancing the chances of
achieving corporate success and
enabling managers and shareholders to
understand the level of risks undertaken
and to manage the risk-reward profile
accordingly.
Annual Report 2006
43
CHAIRMAN’S
STATEMENT
Dear Shareholders,
On behalf of the Board of Directors, it is my pleasure to present
the Annual Report of Kumpulan Guthrie Berhad for the financial
year ended 31 December 2006.
BUSINESS ENVIRONMENT
During the year under review, the
Malaysian economy continued to remain
resilient, underpinned by strong consumer
sentiment and sustained business
confidence. The combination of strong
domestic demand, primarily from private
sector activities, the strong expansion in
the services and agricultural sectors, the
continued upturn in global electronics
cycle and stronger external demand for
key export products resulted in an overall
growth in real gross domestic product
(GDP) of 5.9%. The broad based
expansion of the economy was
buttressed by the continued monetary
policy stance supportive of growth and
pro-business and investor friendly
macroeconomic policies.
The global palm oil market in 2006 saw
record high production amidst a buoyant
palm oil market environment. Based on
Oil World, global palm oil production was
at 36.7 million tonnes in 2006, an
increase of 8.9% from 33.5 million tonnes
in 2005. Malaysia remained the largest
producer in 2006, with annual production
44
expanded by 6.1% while Indonesia’s
production grew further by 11.5%.
Exports of crude palm oil (CPO) from
Malaysia and Indonesia rose by 46.7%
and 10.8% respectively in 2006. For
processed palm oil, Malaysia’s exports
grew by 7.1% while Indonesia’s exports
expanded at an estimated annual growth
of 13.0%. Palm oil prices in Rotterdam
surged to an annual average of USD478
per tonne compared to USD422 per
tonne in the previous year.
Against this backdrop, the Malaysian
palm oil industry recorded an impressive
performance in 2006. Export earnings of
oil palm products rose to a record
RM31.8 billion, while palm oil stocks
declined and prices firmed up sharply
especially during the last quarter of the
year. The industry also saw exciting
developments shaping up in the local and
global landscape with the structural
changes in the industry arising from
biofuel initiatives. The initiatives had
fuelled the demand for palm oil in the EU
and catalysed the growth of exports to
the region. Meanwhile, enhanced market
access for palm oil resulting from the
progressive trade liberalisation involving
the removal of both tariff and non-tariff
barriers by member economies facilitated
the
industry
development.
The
abolishment of the Tariff Rate Quota for
vegetable oils effective from I January
2006 by China coupled with the
increased price competitiveness of palm
oil had provided further impetus for
increased Malaysian palm oil exports to
the country. Meanwhile, the new trans-fat
labelling law which came into effect on 1
January 2006 saw an escalation in CPO
import volume into the US market. Closer
to home, the lower import duty on
processed palm oil in line with the
commitment under the ASEAN Free Trade
Agreement (AFTA) contributed to
increased exports to Vietnam.
Palm oil stocks closed at 1.51 million
tonnes, lower by 6.1% compared with 1.6
million tonnes in 2005 due to the lower
monthly CPO production by 26.3% or
407,605 tonnes in December arising from
the floods that disrupted harvesting in
some major oil palm plantations.
C h a i r m a n ’s
Statement
The CPO production expanded further
reaching 15.9 million tonnes in 2006 from
15 million tonnes in 2005. Meanwhile, the
average CPO prices recovered and
strengthened in 2006. Positive market
sentiments arising from the anticipated
demand from the biodiesel industry
coupled with higher soyabean oil prices
were the contributing factors for the
upward trend in palm oil prices. In
addition, the rise in world crude oil prices
also spurred local palm oil market
sentiments.
According to the Malaysian Palm Oil
Board data, the average CPO prices
improved by 8.4% to RM1,511 per tonne
(on delivered basis) during the year under
review compared with RM1,394 per tonne
in 2005. CPO prices traded in a narrow
range during the first nine months of the
year and subsequently traded higher in
the last quarter of 2006. The highest
monthly average price was recorded in
December at RM1,865 per tonne whilst
the lowest monthly average price was
recorded in June at RM1,397 per tonne.
During the year under review, the
property market remained cautious and
vigilant of the movement of the crude
petroleum prices and the risks of higher
inflation and possible interest rate hikes
arising from the fluctuations. However, the
fundamentals of the Malaysian property
market remained positive throughout the
year. Strong banking support for end
financing through attractive interest rates,
and sustained demand particularly in the
medium to high end residential units and
commercial properties in prime and
strategic locations continued to provide
support to the development of the
property sector.
Annual Report 2006
45
Statement
CORPORATE DEVELOPMENTS
The year 2006 was a significant one for
the Group. The Group has achieved
significant milestones in the consolidation
and divestment of its non-core assets
and businesses.
On 27 November 2006, the Company
entered into a Share Sale Agreement with
Projek Lintasan Kota Holdings Sdn.
Berhad (Prolintas) for the proposed
divestment
of
Guthrie
Corridor
Expressway Sdn. Berhad (GCESB), a
wholly-owned subsidiary of the Group
which is principally involved in the toll
concession operations i.e. the Guthrie
Corridor Expressway. The proposed
divestment involves the disposal of the
entire equity interest in GCESB
comprising 5,000,000 ordinary shares for
a disposal consideration of RM5 million,
and the settlement of inter-company
balance owing by GCESB to another
wholly-owned subsidiary through cash
payment of RM431 million and issuance
of RM500 million nominal value of
Redeemable Loan Stocks of GCESB.
On another significant divestment, the
Group on 22 February 2007, entered into
a Share Sale and Purchase Agreement
with Dongwha GH International Sdn Bhd
for the disposal of the entire equity
interest in Guthrie MDF Sdn Bhd for a
total cash consideration of RM145 million.
Concurrent with the signing of the Share
Sale and Purchase Agreement, the
Group’s 54.53% subsidiary, Highlands &
Lowlands Berhad, also signed a Land
Sale and Purchase Agreement for the
disposal of land where Guthrie MDF
operations is sited for a consideration of
RM30 million to Dongwha Fibreboard Sdn
Bhd, a wholly-owned subsidiary of
Dongwha GH International Sdn Bhd.
The divestments of GCESB and Guthrie
MDF are consistent with the Group’s
strategic objective to strengthen its
business and structure. With these
divestments, Guthrie can devote its
46
In 2006, the Group plantations registered improvements in production of FFB and palm products.
resources on its core businesses of
plantation and property development. A
significant portion of the cash proceeds
from the proposed divestments will be
used to pare down the borrowings and
strengthen the Group’s financial position.
The divestments are expected to be
completed by the first half of 2007.
The Group turnaround and transformation
programme encompassing the Guthrie
Excellence initiatives has yielded positive
results. The turnaround stage has been
completed.
On 27 November 2006, the Company
received a proposal from Synergy Drive
Sdn Bhd to acquire Kumpulan Guthrie
Berhad’s
entire
business
and
undertakings including all assets and
liabilities as part of the proposal for the
merger of Kumpulan Guthrie Berhad,
Golden Hope Plantations Berhad and
Sime Darby Berhad. On the same date,
Synergy Drive had made similar offers to
the two listed subsidiaries of the Group,
namely Highlands & Lowlands Berhad
and Guthrie Ropel Berhad. The Board on
21 December 2006, after considering the
expert opinion of the advisers, has
accepted the offer from Synergy Drive.
On 24 January 2007, the Company and
its subsidiaries, Highlands & Lowlands
Berhad and Guthrie Ropel Berhad
entered into the Sale of Business
Agreement with Synergy Drive in relation
to the proposed merger. Subject to the
necessary regulatory and shareholders’
approvals, the proposed merger is
targeted to be completed with the listing
of the new merged entity by the fourth
quarter of 2007.
PERFORMANCE
During the year under review, the Group
chalked up a 21.5% increase in revenues
to RM2,406.5 million from RM1,980.8
million recorded in 2005. The Group’s core
businesses, plantations and property
development contributed RM1,782.7
million and RM567.8 million respectively to
the total revenues in 2006. This compares
with the revenue contributions of
RM1,542.5 million from plantation
operations and RM395.1 million from
property development in the preceding
year. Meanwhile, the consolidation
exercise on the divestments of the noncore businesses resulted in the absence of
revenue contribution from manufacturing
and general trading in 2006.
Group operating profit from continuing
operations surged by 82.6% to RM766.1
million in 2006 from RM419.5 million
registered in the previous year. Group profit
before tax from continuing operations rose
by RM342.5 million or 130.2% to RM605.5
million, excluding loss of RM12.9 million
from discontinued operations in the year
under review from RM263.0 million
recorded in the previous year. Earnings of
the Group increased substantially to
RM284.2 million from RM48.8 million in
2005, an increase of RM235.35 million.
Consequently, earnings per share rose to
28.1 sen compared to 4.85 sen for 2005.
The improved performance of the Group
for the year was driven by stronger results
from plantations amidst the buoyant palm
oil market environment and supported by
sustained earnings from the property
business segment. A net gain from foreign
exchange of RM148.6 million as a result
of the strengthening of Ringgit and Rupiah
against US Dollar bolstered the Group
performance further as against a loss of
RM46.7 million for the previous year.
Group revenue from plantation operations
rose by 15.6% to RM1,782.7 million for
the year under review from RM1,542.5
million in 2005. Plantation Malaysia
contributed 43.4% or RM774.3 million of
the Group revenue from plantation
operations compared with 44.7% or
RM690.3 million in the previous year.
Revenue contribution from Plantation
Indonesia continued its upward trend,
breaching the RM1 billion level in 2006.
During the year, Plantation Indonesia
recorded revenue of RM1,008.5 million
against RM852.3 million in 2005. In terms
of revenue contribution, Plantation
Indonesia constituted 56.6% of the Group
revenue from plantation operations in
2006 against 55.3% in the preceding year.
The Group gross profit from plantation
operations was RM609.4 million in 2006,
higher by 20.6% compared with RM505.4
million in the previous year. Group
operating profit increased by more than
two folds to RM526.6 million from
RM261.2 million in 2005 on account of
higher FFB yield and productivity, higher
realised palm oil prices and a gain on the
Statement
sale of Ladang Bertam of RM68.5 million.
It is important to note Plantation
Indonesia’s growing significance and
substantial earnings contribution to the
Group. Significant progress was also
achieved in unlocking the growth
potential and accelerating the contribution
of Plantation Indonesia. During the year
under review, Plantation Indonesia has
completed the planting of an additional
6,045 hectares of the remaining 36,278
hectares suitable for planting. With the
on-going implementation of performance
enhancement initiatives, Plantation
Indonesia is in position to show better
prospects in the years to come.
Meanwhile,
Plantation
Malaysia
experienced the impact of a larger young
mature area resulting from accelerated
replanting during the period between
2000 and 2002. The improving Group
plantation profile saw the reduction in the
young mature area of oil palms in 3-5
years age category to 21,904 hectares in
2006 from 27,344 hectares in the
previous year and increased area for 6-10
years age category to 26,212 hectares in
2006 from 22,994 hectares in 2005.
The implementation of Guthrie Excellence
Transformation initiatives which has now
entered the second phase, in tandem with
the initiatives identified by Putrajaya
Committee on GLC High Performance also
resulted in quantum enhancements in the
yield and productivity of the core
businesses of plantation and property
which subsequently contributed to the
stronger performance of the Group. The
higher performance is in line with the
Group’s projection for the year as stated in
the Quarterly Reports to Bursa Malaysia.
Plantation
The Group is one of the largest oil palm
plantation players in the world with a total
plantation landbank of about 320,000
hectares and planted area of
approximately 275,000 hectares. During
the year under review, the Group
plantations registered improvements in
FFB and palm product production in both
its Malaysian and Indonesian operations.
The Multi Bin Silo Fertiliser Application System is a strategy to achieve man-to-land ratio of one worker
to 12 hectares.
Annual Report 2006
47
Statement
Jelutong and Denai Alam, which offer
good value proposition to both
purchasers and investors, will remain the
driver of Group property revenue and
earnings growth for the years ahead.
DIVIDENDS
The Board of Directors has recommended
final dividends comprising a tax exempt
dividend of 6 sen per share and a dividend
of 4 sen per share, less 27% tax, be paid
on 21 June 2007, subject to shareholders’
approval. An interim dividend of 6 sen per
share, less 28% tax, has been paid on 29
September 2006. The total annual gross
dividend for 2006 will amount to 16 sen
per share, higher than the rate of 10 sen
per share distributed in the previous year.
The total annual dividend to be paid out
for the financial year ended 31 December
2006 net of tax is RM135 million
compared with RM72.6 million paid out for
the previous financial year.
De Galleria, a signature product in Bukit Jelutong.
Agricultural services continued to
contribute positively to the Group. During
the year under review, this business
segment contributed RM22.8 million in
revenue and RM12.1 million in operating
profit. The demand for oil palm planting
materials and plantation advisory services
continued to support the Group
agricultural services operations.
Property
The property business development
continued to contribute positively to the
Group revenues and profits. In 2006,
revenue contribution from Group property
increased by 43.7% to RM567.8 million
from RM395.1 million recorded in the
previous year. In terms of segment
contribution, Group property constituted
23.6% of the total Group revenues in 2006
compared with 19.9% in the preceding
year. At the operating level, the prudent
and strategic approach to landbank
management and development, enhanced
project development and delivery, quality
assurance and cost management resulted
in sustained earnings contribution to the
48
Group. Amidst the consolidation in the
general property market, Group property
achieved profit before tax of RM183.3
million, including RM168.1 million from
property development in 2006 against
RM176.2 million in the previous year.
Group property operations, undertaken by
Guthrie Properties continued to focus on
the development of Bukit Jelutong, the
Group’s established residential enclave
and township and Denai Alam, another
innovative and unique development
launched in 2005. Located approximately
five kilometres north of Bukit Jelutong, off
the Guthrie Corridor Expressway, Denai
Alam has performed well in terms of
sales performance, product quality, and
project management, development and
delivery. Denai Alam is set to replicate the
success of Bukit Jelutong as another
branded development and township. With
a total of 1,002 acres planned for mixed
development, Denai Alam will be the
home for about 35,000 residents when
the whole development project is
completed in the next six years. Bukit
PROSPECTS
Plantation
The prospects for CPO and palm kernel,
our principal produce, look positive,
primarily on the strength of global demand
for oils and fats. The depleting stocks in
the EU-25 and American edible oil market
as a result of bio-diesel operations and
the increasing demand for CPO for palm
based bio-diesel operations, the
anticipated El-Nino effects on global
grains and oilseeds supply, the
implementation of trans-fatty acid labelling
requirements and the enhanced market
access for palm oil to China’s market are
expected to provide continued support for
the price of CPO. The improving palm age
profile of the Group plantations together
with proven results of the Guthrie
Excellence Transformation initiatives
emphasising on the performance driven
culture is expected to result in a higher
next level of performance excellence. The
initiatives will be continued and further
strengthened in 2007.
The implementation of the Five Strategic
Thrusts, focused enhancement on key
areas of operations or the 5Es namely,
yield maximisation, cost optimisation,
enhancement of quality and sustainability
practices, enhancement of agricultural
and milling practices, and the
strengthening of human capital will
continue to be emphasised in the Group
plantation operations.
Significantly, the Group expansion
programme for its next 36,298 hectares of
plantable area over the next few years in
Indonesia will be further accelerated.
Following the completion of the planting
of 6,046 hectares in 2006, another 7,000
to 8,000 hectares will be planted in 2007.
Statement
ringgit and rising consumer sentiment as well as the easing of foreign ownership of
property in the country are expected to uplift demand for property. Property
development in prime locations is expected to continue to perform favourably.
The Group properties will continue to leverage on the strategic location of its landbank,
its innovative projects and brand. Besides the residential property development projects,
further development of commercial and investment properties especially in the prime
areas will be undertaken. Guthrie Properties will also introduce higher margin products
including commercial properties. Guthrie Properties, like its Plantation counterpart, is
driven by Guthrie Excellence initiatives and the various enhancement of yields, product
mix and quality system. The Group property’s growth strategies will hinge upon large
and visionary development projects, development of niche and unique high-end
products, and other developments outside the vicinity of the Guthrie Corridor
Expressway.
The next level of Guthrie Excellence supports the GLC Transformation Stage 3. With the
enhanced Group structure and operations, the Group under the phase II implementation
of Guthrie Excellence Transformation is prepared to progress further in the years ahead.
The Group is on course with its capacity
expansion to reach a critical level of
efficiency by 2008. The expansion of
milling and logistics capacity in Sumatera
and Kalimantan with the construction of
an additional four 30-tonnes per hour
mills and five jetties and bulking stations
complete with storage facilities in
Kalimantan over the period 2006-2008 will
enable the Group to achieve greater
operational efficiency, higher oil quality
and improved cost efficiency.
All in all, the performance of the Group plantations in 2007 is expected to be better than
that of 2006 on account of the projected higher production of FFB and the expected
higher palm oil prices. Meanwhile, the Group expects its locational advantage and
unique property products would sustain the performance of property development
operations.
Meanwhile, further strengthening of the
Minamas Research Centre (MRC) and
TQEM capacity and capability will
significantly contribute to the improvement
in productivity and product quality to the
Group through R&D, innovations and
plantation science and technology advisory
services. Managed by a dedicated Value
Chain Management System, all these
developments will augur well for the
plantation operations performance.
I would like to record the vote of thanks and appreciation from the Board to YABhg. Tun
Musa Hitam who retired from the Board in June 2006 for his able leadership and
prominent roles particularly in facilitating the integration of Plantation Indonesia into the
Group during his four-year tenure of Chairmanship. I also thank Mr. Sreesanthan s/o
Eliathamby who resigned from the Board in November 2006 for his constructive
contribution to the Group. Mr. Sreesanthan had served with the Board as Independent
Non-Executive Director since 31 May 2002.
Property
The general property market outlook is
expected to be positive in 2007. The
notion of the stable interest rate
environment, the expected multiplier
effects from the implementation of the
Ninth Malaysia Plan projects, a stronger
ACKNOWLEDGEMENT
On behalf of the Board, I extend my appreciation to the Group Chief Executive,
management and staff for their contribution to the Group during the year. I wish to also
acknowledge the sense of collective responsibility, professionalism and the wisdom of
my fellow directors on the Board.
Last but not least, I also thank our valued shareholders, business associates, customers,
friends and the authorities for their continued trust, partnership, support and guidance.
TAN SRI DATO’ DR. WAN MOHD. ZAHID MOHD. NOORDIN
Chairman
15 May 2007
Annual Report 2006
49
GROUP CHIEF EXECUTIVE’S
REVIEW
The year 2006 was significant to Kumpulan
Guthrie Berhad. The Group achievements in
2006 underscored the results of the series
of Guthrie Excellence Transformation
programmes that were introduced in 2004
and 2005 and the stronger management of
the Group operations and performance
achieved through systematic and structured
implementation of the Group-wide Guthrie
Excellence Transformation programmes.
Group earnings for the year under review surged to
RM433.7 million. Net earnings of the Group attributable to
equity holders of the Company jumped significantly to
RM284.2 million. Earnings per share rose to 28.10 sen from
4.9 sen in the previous year.
The Group achieved a 9.1% return on equity (ROE) for the
year exceeding its target KPI of 8% ROE. At the same
time, Guthrie recorded a positive economic profit. In terms
of operational performance, the Group had reached a new
level of threshold, and hence, is ready to move into the
next level of performance excellence. The completion of the
Group consolidation and divestment of its non-core assets
during the year has positioned Guthrie to be a stronger and
more focused global plantation and property player.
50
Over the last three years, the Management, in collaboration with
the Board, and with the support from dedicated employees, has
successfully transformed Guthrie into a strong performing
plantation and property company. We have completed Stage One
of the Guthrie Excellence Transformation Programme. We have
gone through a challenging period of integration process in
Indonesia, making bold decisions and introducing new
processes, systems and work culture. We have completed the
divestment of non-core assets and businesses and this will
enable Guthrie to devote its resources on its core businesses.
Group
This transformation is reflected in the turnaround of and
improvement in the Group performance. The stronger
governance, innovative systems, best practices, technology, R&D
and human capital development have been put in place to drive
the Group performance. All these have culminated in quantum
enhancements in Group operations, reflected by higher
productivity and stronger results in Guthrie’s plantations, both in
Malaysia and Indonesia as well as strong and sustained earnings
contribution from the property business. Our 5Es or Enhancement
Initiatives focusing on Governance, Revenue, Cost, Total Quality
Process, and Human Capital have produced substantial
improvement in yield, productivity and operating margin. Similarly,
operational efficiency, both in plantation and property operations,
has also shown a positive trend of improvement.
FFB Yield Per Mature Hectare (Malaysia)
20
15
10
(Tonnes)
20.7
17.3
17.7
23.3
25
12.6%
5
Chief
E x e c u t i v e ’s
Review
Similarly, for the property business, Guthrie Property will continue
to leverage on its strategic landbank within the vicinity of Guthrie
Corridor Expressway as well as other Group landbank outside the
corridor. A new approach to margin and product development will
be a key feature in the property development strategy. Guthrie
Property has established a new level of excellence over the last
three years. It is amongst the leading property players in the
country; having three internationally recognised ISO certifications,
Guthrie Property is set to implement an Integrated Management
System for all its projects. It has also positioned a new level of
profitability which is nearly three-fold higher than its earlier profits.
Guthrie Property is adopting a new R&D approach to property
development and a differentiation strategy to place itself at the
next threshold of excellence. Towards this end, it has prepared a
new strategic master-plan.
With the reorganisation of structure and talent redistribution as
well as the leadership mapping and competency development
that have been undertaken, we are happy to note that alignment
and clarity are in place and that the business sectors are
managed competently. These will augur well as we embark on
the next threshold of excellence where we target to deliver a
double digit ROE supported by a higher benchmark of
operational KPIs.
0
’04
’05
’06
’09 (Target)
Return on Equity
15
25
5
5.4
3
1.7
(Tonnes)
10
6
’04
(%)
9.1
9
20
15
17.1
15.8
13.4
21.6
26.3%
12
12.8
40.7%
FFB Yield Per Mature Hectare (Minamas Plantation)
’05
0
’06
’09 (Target)
0
’04
’05
’06
’09 (Target)
There are two unique Guthrie features that need to be
recapitulated. The Group’s Minamas Plantation in Indonesia has
demonstrated enormous capacity for growth and profitability.
Minamas Plantation poses a unique plantation challenge to the
Group. We are happy to record that our human capital has
acquired valuable skills and expertise in managing a vast and
diverse territory spanning across the entire Indonesian
archipelago. Their management talent has placed them in good
stead resulting in the successful implementation of best practice
estate management.
The Group recognises its human capital as a critical and
invaluable asset. Sufficiently equipped both in in-depth expertise
and experience, the Group’s workforce is poised to take on
further challenges and create new opportunities as it moves into
Stage Two of the Guthrie Transformation Programme.
Annual Report 2006
51
Economic
Review
MALAYSIA
The Malaysian economy remained
resilient in 2006. During the year, real
gross domestic product (GDP) expanded
by 5.9% against 5.2% in 2005. The
economic expansion was principally
driven by increased domestic activity,
particularly in the private sector amidst
high external demand for electronics and
primary commodities.
The aggregate domestic demand grew by
7.4% during the year, with the private
sector continuing to be the driver of
growth while the public sector continued
to provide a supportive enabling
environment for private sector activities.
Private investment increased by 9.7%
during the year, catalysed by significant
capital outlays in the major sectors
namely manufacturing, services and oil
and gas sectors. Private consumption
expanded by 7.0%, uplifted by higher
incomes arising from higher commodities
prices, strong export earnings and stable
labour market conditions.
52
for resource based industries and
improvement in the domestic oriented
industries. Similarly, the broad-based
expansion in the agriculture sector
reflected higher yields and productivity in
both industrial (namely palm oil, rubber
and cocoa) and food crops amidst the
buoyant market environment.
On the contrary, the mining sector
experienced a mild contraction of 0.2%
as a result of lower production of crude
petroleum and natural gas following the
shutdown of a number of oil fields and
plants for maintenance and capacity
upgrading. Meanwhile, the construction
sector showed signs of recovery with the
moderating pace of contraction of 0.5%.
The improved performance of the sector
was driven by the recovery in the civil
engineering segment following the
commencement of several 9MP
infrastructure projects, increased
construction activity in the oil and gas
industry and higher activity in the nonresidential segment.
Public investment was also higher in
2006, expanding by 6.5% compared with
1.9% in the preceding year. The roll out
of several Ninth Malaysia Plan (9MP)
projects following the release of the Plan
in March 2006 contributed to the
increased public investment. Similarly,
public consumption increased by 7.9%,
higher compared with 5.4% in 2005, due
to higher expenditure for the maintenance
and improvement of the delivery system.
Notwithstanding the higher petroleum
prices and tariff hikes, inflation remained
at a manageable level during the year.
The headline inflation rate, as measured
by the Consumer Price Index (CPI),
edged up to 3.6% from 3% in 2005.
While other key categories also registered
some price increases, the rising cost of
transport was the main contributor to the
higher inflation in 2006.
On the sectoral front, the economic
expansion was supported by the robust
growth in the services, manufacturing and
agriculture sectors. The services sector
sustained its growth pace of 6.5% on
account of higher trade related activities,
finance, tourism and increased contribution
from new sources of growth. Meanwhile,
both manufacturing and agriculture sectors
grew at accelerated paces of 7.0% and
6.4% respectively. The expansion in the
manufacturing sector was underpinned by
the continued upturn in the global
electronics cycle, strong external demand
On the financial developments, the
monetary policy in 2006 focused on
attaining an appropriate balance between
maintaining price stability and achieving
the maximum sustainable level of
economic growth. The continued strong
macroeconomic fundamentals had enabled
Bank Negara Malaysia to align monetary
conditions to the prevailing environment of
heightened inflation risks. The central bank
raised the Overnight Policy Rate (OPR)
twice, in February and April, by 25 basis
points each time. With inflationary
pressures easing off in the second half of
the year, coupled with emerging signs of a
moderation in the global economic
outlook, the OPR was left unchanged from
May onwards. At 3.50%, the OPR
remained supportive of economic activity.
A significant development during the year
was the gradual strengthening of ringgit
against major currencies. To date, the
appreciation of ringgit has been broadly
in line with the currencies of Malaysia’s
major trading partners and is reflective of
the nation’s sound macroeconomic
fundamentals. Equally important, the
equity markets have improved markedly
during the year. After the relatively weak
performance in 2005, the Kuala Lumpur
Composite Index (KLCI) ended 2006 on a
positive note to close at 1,096.24 points,
higher by 21.8% compared to that of
2005. Renewed investors’ confidence,
stronger corporate earnings, corporate
mergers and acquisitions and the
expectation of the 9MP to propel further
economic growth contributed to the
better performance of the equity markets.
Looking ahead, the world economy is
projected to grow at 4.5% in 2007 (2006:
5%), with expectations of lower inflation
risks and moderation in growth of world
trade. The US economy is expected to
grow at 2.7% in 2007 (2006: 3.3%).
Recovery in Japan would continue, albeit
at a more gradual pace. Prospects for the
Euro area are positive following signs of a
broad-based recovery in major member
countries.
Notwithstanding
the
expectation of some moderation in the
global trade, the outlook for the Asian
region remains positive, supported
increasingly by domestic demand,
particularly in China and India.
Against this backdrop, the Government
has forecast the Malaysian economy to
expand by 6% in 2007. With the global
electronics industry expected to pick up
in the second half of the year, the
Malaysian economy is projected to
expand more rapidly during that period.
Growth would also be supported by
Economic
domestic developments including, among
others, the intensive implementation of
9MP projects, the commencement of the
Kikeh oil field operations in Sabah and
the expected higher tourist arrivals
following intensive promotion of Visit
Malaysia Year 2007.
Domestic demand would continue to drive
economic growth. While the private sector,
particularly private investment, continues to
provide the impetus to growth, the public
sector is expected to play a more
significant role in facilitating growth in 2007.
Review
The monetary policy is expected to remain
accommodative. The conduct of monetary
policy in 2007 will continue to balance
between the need to ensure that interest
rates remain at a level that would enable
the central bank to respond to any risks of
rising inflation, while remaining conducive
to sustaining growth in domestic demand.
INDONESIA
2006 was another challenging year for the
Indonesian economy. During the year, the
economy grew by 5.5%. While the
economy registered positive growth in the
first half of 2006, the growth was mainly
propelled and accelerated by higher
export ear nings, increased private
consumption and government spending in
the second half of the year.
The economy moved cautiously into 2006
with concerns over the possibility of
further external shocks arising from the
prevailingly high inflation risk environment.
While the economy was vigilant of the
risks of external shocks, the inflationary
pressures, heightened by the volatile and
higher crude petroleum prices particularly
in the first half of the year had adversely
affected corporate ear nings and
household incomes. Consumer spending,
which constituted more than 60% of
gross domestic product (GDP), was
stunted due to reduced disposable
incomes and lower consumption
propensity. Motorcycle and car sales,
proxies of consumer confidence and
consumer spending fell significantly by
11% and 40% respectively in the first half
of the year. The total loan growth in the
banking sector stalled at 3.7% during
that period. During the first two quarters
of 2006, economic growth slowed down
to 4.98% and 4.96% respectively.
However, the economy started to regain
momentum in the second half of the year,
expanding by 5.9% and 6.1% respectively
in the third and fourth quarters of 2006. The
inflation rate started to slow down in March
2006 and stabilised at 6.6% at the end of
the year as against 17.1% at the end of
2005. The average inflation rate for 2006
was 13.3%. The Government’s role in
maintaining the electricity tariff against an
earlier plan to raise it played a significant
role in taming the inflation.
The regained macroeconomic stability
provided opportunity for a broad-based
economic growth. The economic
expansion was principally driven by both
exter nal
demand
and
private
consumption. The relatively stable
petroleum prices and the higher palm oil
and other commodity prices in the
second half of 2006 resulted in a marked
improvement in the country’s current
account and trade balance position.
Crude palm oil prices (CPO) strengthened
amidst the lower production resulting
from the El-Nino phenomenon and the
increasing demand for CPO for biofuel
production. The CPO prices breached
RM1,500 per tonne in August 2006 and
stayed above the level to close the year
at an average price of RM1,865 per tonne
for December 2006. The higher CPO
prices benefited Indonesia, the world’s
second largest producer of palm oil.
Indonesia registered a record high
monthly trade surplus of USD4.2 billion in
October 2006. The trade surplus for the
whole year was USD32.1 billion. By the
same token, Indonesia’s foreign exchange
reserves also strengthened during the
year. As at the end of 2006, net
international reserves stood at USD42.6
billion. Similarly, the Rupiah strengthened
by 8% from 9,835 to the USD at the end
of 2005 to 9,034 at the end of 2006,
following the country’s stronger current
account and international reserves.
Significantly, with the stable macroeconomic
conditions, the Indonesian Government
settled its outstanding obligations to IMF of
USD7.8 billion. The second half of 2006 also
saw the upswing in credit growth, which
was followed by acceleration in government
spending thus, helping to boost economic
growth. Amidst the lower inflation risks and
stable exchange rate environment in the
second half of the year, the BI rate which is
the benchmark interest rate for Indonesia
was revised seven times in 2006. The first
revision was in May 2006 which saw a
reduction of 25 basis points from 12.75%
per annum to 12.50% per annum. In
December, the BI rate was 9.75% per
annum. This BI rate revision has effectively
induced growth in consumer spending and
catalysed loan growth to spur the economy.
Loan growth had effectively picked up by
14.1% in the fourth quarter of the year.
Looking ahead, with indicators pointing to
further improvement in economic growth,
Bank Indonesia has forecast the economy
to grow by 6.0% for 2007 and 5.7%-6.7%
for 2008. The major sources of economic
growth will be exports and rising domestic
demand, particularly from sustained
investment growth in line with improving
business sentiments. Government actions
for improvement of the investment climate
and the ongoing programme for accelerated
construction of needed infrastructure mainly
for electrical power and transportation
projects are expected to foster higher levels
of investment growth. Meanwhile, exports
are expected to maintain a high level of
growth, supported by agricultural
production and manufacturing. The planned
deficit spending by the Government will
also contribute to the targeted economic
growth.
Annual Report 2006
53
Operations
Review
PLANTATION
MALAYSIA
In 2006, the Group’s fresh fruit bunches (FFB) production
increased by 21% to 1,847,629 tonnes compared to 1,521,735
tonnes in 2005. The year also saw an improvement of FFB yield
to 20.7 tonnes per hectare compared to 17.3 tonnes per hectare
achieved in 2005. The higher yield achievement is attributable to
the improvement in palm prime age profile and the increase in
mature area from 87,918 hectares to 89,302 hectares.
The FFB yield has been on an upward
trend and is expected to move up further
in tandem with the yield enhancement
programmes. The trend of yield increase
will continue due to the improving age
profile. This was already evident in 2006,
with more estates moving beyond the
25 tonnes per hectare category in
comparison to 2005. The prime age
profile is expected to be at its peak in
2009.
The total crude palm oil (CPO) produced
in 2006 was 431,152 tonnes against
406,274 tonnes produced in 2005, an
increase of 6% on the back of higher
Group crop processed.
In 2006, the initiative undertaken within
the PNB Group to optimise operational
efficiency resulted in the sales and
purchase of FFB between the Group and
Golden Hope Plantations Berhad. This
arrangement benefited both parties in
reducing transportation and mill
processing costs.
Oil yield was 4.2 tonnes per hectare in
2006 compared with only 3.6 tonnes in
2005 with a total of seven estates
achieving more than 5.0 tonnes of oil per
hectare. Jeleta Bumi Estate in Sabah
achieved the highest oil yield in the
Group with 6.3 tonnes per hectare.
The oil extraction rate (OER) declined
slightly to 20.2% from 20.4% achieved in
2005. Sg. Dingin Mill in Kedah recorded
the Group’s highest OER of 21.4% in 2006.
Focus On Five Strategic Thrusts
The continued strengthening of the
implementation of the five strategic thrusts,
which focused on the enhancement of key
areas of operations, had resulted in higher
operational performance. The five strategic
thrusts implemented for operational
excellence are Yield Maximisation, Cost
Optimisation, Quality and Sustainable
Practices Enhancement, Agricultural and
Milling Practices Enhancement, and
the Strengthening of Human Capital
Development.
The first strategic thrust, Yield
Maximisation is driven by several
components namely accelerated planting
of clonal material, maintaining prime age
profile in the 40%-50% range through
structured replanting of 4%-5% of the
total area annually, joint culling of
seedlings with Guthrie Research Chemara
to optimise productive stand, water
management initiatives, proactive pests
and diseases management, and improving
crop recovery, quality and work standards.
The second thrust, Cost Optimisation
strategy entails focus areas such as
outsourcing of transport, preventive
maintenance of vehicles, monitoring of
contract rates and spares procurement,
planned plant maintenance and latest mill
technology.
The third strategic thrust, Quality and
Sustainable Practices enhancement
comprises crop evacuation management,
mill process control, tracking of quality
performance and SOPs to shorten worker
lear ning curve, and improvement of
worker performance.
The Group’s Sg. Dingin Mill in Kedah achieved the highest OER in Peninsular Malaysia.
54
As for the Agricultural and Milling
Practices enhancement, the areas of
focus are improved nursery practices,
better planting material, optimisation of
mill utilisation, and the strengthening of
engineering practices.
Operations
Review
Finally, in Strengthening of Human Capital
development, building a pool of talented
and skilled people driven by high
performance is a key focus of the Group
through Competency Based Training and
Education (CBTE), technical training and
leadership development. Retention of
these talented and skilled workers will be
the key drivers for long term sustainability
of the Group operations. The
performance targets are aligned to the
balanced scorecard and performance
management development reward system
for all levels of employees.
The initiatives undertaken that had
contributed to the 2006 performance are
outlined below:
1. Canopy Management
Introduced in 2005, the Canopy
Management
initiative
which
emphasises on maintaining the right
number of fronds has resulted in
improved yield from young mature
palm areas.
Guthrie Research Chemara staff tracking progress of the Group’s planting materials.
4. Replanting Policy
All Group replanting activities in 2006
have complied with the zero-burning
policy. All biomass from the replanting
is left in-situ to be recycled as organic
mulch which assists in improving soil
organic matter content.
The MBS is a strategy to improve labour
productivity and entails a sharing of
application
equipment
between
neighbouring estates, thus reducing
capital expenditure.
PROSPECTS
2. MAIC (Mechanically Assisted InField Collection)
MAIC continues to be a mainstay of
the Group policy to ensure worker
productivity can be enhanced and
dependency on foreign workers is
optimised. The introduction of MAIC
has over the years contributed
significantly to improving the coverage
per harvester from 1 harvester to
11-12 hectares to 1 harvester to
18-20 hectares. This is in line with the
Group pursuit to improve productivity
of workers which is the key
component in achieving and
sustaining a higher cost efficiency in
the long term.
3. Strategic Operations Unit Model
The Strategic Operations Unit (SOU)
model provides a strong linkage in the
relationship between estates and mills
and is the reference point to address
issues pertaining to the critical factors
of yield, crop quality and operational
cost.
The Group focus is to maintain prime
age profile in the 40% – 50% range
at all times to ensure consistency of
yields. A structured replanting policy
will also contribute to enhanced
planting standards and optimum
yields.
5. Structured Block Supervision (SBS)
This is a systematic and well-planned
approach designed to enhance
effectiveness of Block Supervision
through a structured tracking
of performance for continuous
improvement and cost effectiveness.
The main areas of focus for SBS are
in harvesting, manuring and
maintenance operations.
6. Multi Bin Silo Fertiliser (MBS)
Application
This is an integrated system of
fertiliser management, involving
transportation and application of
fertiliser, which provides an
opportunity to maximise all resources
including vehicles, labour and
supervisory input.
With the improving age profile of Group
plantations and strengthening of
operational efficiency firmly in place,
Plantation Malaysia expects to achieve
higher performance through higher yield
and FFB production in 2007 and in the
years ahead. Higher palm oil prices which
so far have averaged more than RM1900
per tonne will further contribute to
positive results for the Group.
Realising that technology and innovation
will play a crucial role in maximising yield,
the Group has taken the initiative to
accelerate the planting of clonal oil palms
in the Group annual replanting
programme. More Group estates will be
planted with the AAB1 clonal oil palms in
2007. The first batch of clonal oil palms
planted in Bukit Cheraka Estate, Selangor
in 2006 is making significant progress.
The Group’s integrated ICT project, GEMAS was successfully completed at its
pilot project site in Labu Mill, Negeri
Sembilan. Group-wide implementation is
scheduled to be completed within the
first half of 2007 to further enhance
efficiency in operations.
Annual Report 2006
55
Operations
Review
PLANTATION
INDONESIA
Plantation Indonesia operations is carried out through
subsidiaries, PT. Minamas Gemilang and PT. Anugerah
Sumbermakmur (together known as Minamas Plantation), and
PT. Guthrie Pecconina Indonesia (GPI).
The Group titled area is 220,428 hectares
spread over 56 estates. The planted area
increased to 174,564 hectares in 2006
compared to 169,111 hectares in 2005.
The Group operates 17 mills with a total
milling capacity of 775 tonnes per hour.
In 2006, the Group fresh fruit bunches
(FFB) production increased by 8%
to 2.63 million tonnes compared to
2.44 million tonnes in 2005. The year also
saw an improvement of FFB yield to 16.5
tonnes per hectare compared to 15.5
tonnes per hectare achieved in 2005.
The FFB yield has been on an upward
trend in 2006 despite being affected by
adverse weather conditions of six months
prolonged wet season and five months of
distinct dry condition.
The total crude palm oil (CPO) produced
in 2006 was 641,355 tonnes against
584,510 tonnes produced in 2005, an
increase of 10% on the back of higher
Group FFB production. Outside crop
processed also increased 26% to
294,257 tonnes in 2006 compared to
232,711 tonnes in 2005.
The oil extraction rate (OER) is about
22.9% in 2006, similar to the rate
achieved in 2005. A total of eight mills
achieved OER level of more than 23%
with Ungkaya mill in Sulawesi recording
the highest OER of 23.9%. The kernel
extraction ratio (KER) in 2006 was 4.3%
in 2006 against 4.0% in 2005.
Oil yield achieved in 2006 was higher at
3.78 tonnes per hectare compared to
3.55 tonnes per hectare in 2005.
Implementation
of
Plantation
Operations Blueprint
The 2006-2010 Operations Blueprint
provides the roadmap and the action
plans to maximise yields, improve work
efficiency, improve quality of palm
products, and reduce costs of production
with emphasis on strengthening human
capital capability.
Yield enhancement initiatives such as soil
and
water
conservation,
better
management of manuring, pests and
diseases control, canopy management
and other agro-techno practices have
improved FFB yield and increased FFB
production in the estates.
In mature areas, fronds, empty fruit bunch
and palm oil waste are applied in the
inter-rows to provide a good source of
nutrients to the palm. Through water
conservation
methods
such
as
conservation pits, terraces in inland soils,
a system of water-gates and flood pumps
Yield enhancement initiatives undertaken have resulted in increased FFB production.
56
Operations
Review
PROSPECTS
Capacity/Infrastructure Building
Development of the support services and
infrastructure including new mills, jetties,
bulking facilities and roads to further
enhance the performance of the
Indonesian operations will continue in
2007.
The newly completed Angsana Mill, Pamukan area in South Kalimantan.
in the peat areas, optimal water levels are
maintained supplying the water
requirement for the palms. Biological
controls such as barn owls, beneficial
plants and judicious spraying have
minimised damage to the palms caused
by pests and diseases.
The focus on mill cleanliness
and preventive maintenance have
enhanced mill processing efficiency.
Potential sources of contamination and
losses are eliminated by implementing
good management practices throughout
the
processing
stages.
Good
housekeeping practices are advocated in
all the mills to ensure mill sanitation and
workers’ safety.
In 2006, the construction of a jetty with
bulking and storage facilities at Pamukan,
South Kalimantan was completed and is
now in operation. The building of the jetty
will not only enhance the dispatch
process and quality of CPO and kernel
but also expedite the delivery of fertilisers
and road work materials to the
surrounding estates.
The establishment of the Minamas
Research Centre (MRC) in Teluk Siak,
Sumatera in 2006 strengthened research
and development works to support the
Group’s key strategic goals of maximising
yields, improving quality and reducing
costs through new innovations and
sustainable practices. The MRC will also
play an integral role in advocating new
technologies, better agro-techno
practices and site-specific management
systems for the Group to excel and be
recognised as a leading plantation
company in the region.
With the increasing awareness on food
safety and environment and to maintain
the highest standards of social and
environmental responsibility, Good
Agricultural Practices (GAP) and Hazard
Analysis and Critical Control Point
(HACCP) management principles have
also been introduced to estates and mills.
The Plantation Advisory Department team
continued to conduct baseline audits in
estates and mills, engaging external
estate and mill advisors as part of the
independent assessment on compliance
to Group practices and standards.
In 2006, two new mills in Kalimantan and
one new mill in Sumatera have
commenced construction and are
expected to be in operation by mid-2007.
The construction of another new mill in
Sumatera will start in 2007 and to be
completed in 2008. On completion, the
milling capacity in Indonesia will reach
920 tonnes per hour. The additional
capacity is to meet the expected surge in
crop production when most of the young
matured palms move into the prime age
group in the next few years.
The construction of a jetty at Sungai
Durian, South Kalimantan commenced in
2006 and will be completed in 2007.
Three more jetties are expected to be
built in 2007. Various projects to upgrade
field roads to all-weather roads and
bridges will improve crop quality and
reduce the cost of transport for both the
estates and mills.
Operational Efficiency
The Group will further maximise yields,
improve quality and reduce costs through
new initiatives adopted from its Malaysian
operations such as Structured Block
Supervision (SBS) and Huka-bin
mechanisation system for FFB transport.
The SBS advocates a systematic check
for all levels of management to enhance
control and supervision of key field
operations such as manuring, spraying
and harvesting.
With the on-going implementation of
performance enhancement initiatives,
Plantation Indonesia is in position to
show better prospects in the years to
come.
Annual Report 2006
57
Operations
Review
PROPERTY
In year 2006, Group property operations remained focused on the
development of Bukit Jelutong and Denai Alam. In a move to
strengthen its position as the premium property brand, GPDH
unveiled the new brand name ‘Guthrie Properties’ in January
2006. This rebranding exercise coupled with an aggressive
promotion and marketing drive are aimed at expanding the Group
property business and market base, and essentially, to reposition
Guthrie Properties as a leading and visionary property player.
Bukit Jelutong, a unique and innovativelyplanned self-contained 2,205-acre
residential and commercial development
continued to attract the attention of
potential property buyers and investors.
This low-density township, with an
average of four units per acre, is targeted
towards affluent, discerning individuals
and families who value privacy, security
and community living. A branded
development and township, Bukit
Jelutong’s strategic and prime location
within the Klang Valley with easy
accessibility offers good value proposition
to its owners.
Guthrie
Properties’
other
main
development project, Denai Alam is
strategically located at Bukit Subang
Interchange, about 5 km North of Bukit
Jelutong via Guthrie Corridor Expressway.
It is the recipient of the Malaysian
Institute of Planners’ Planning Innovation
award in 2003.
The “Denai” concept refers to the
development of residential community
with design aimed at promoting intra and
inter-neighbourhood interaction. “Denai”
is an extensive network of a 30-metre
wide path, developed as an exclusive
passageway for pedestrians and nonmotorised traffic, offering a fresh
dimension to the concept of open space
and superior community safety.
Denai Alam offers essential amenities
such as shops and schools, as well as
adequate facilities for wholesome
recreation including shaded walkways,
jogging and cycling paths, playgrounds,
water features and parklands. Another
factor luring people to Denai Alam is its
low density nature of an average of eight
units per acre compared with the industry
average of 12 units per acre.
PERFORMANCE
The performance of the Group property
business generally mirrored the modest
economic conditions during the period
under review. Amidst the moderation of the
general property market coupled with the
expectation of increase in interest rates,
fluctuations in crude petroleum prices and
the hike in power tariff, the property
development of the Group’s associated
company, GPDH continued to contribute
significantly to the Group in 2006.
At the operating level, Guthrie Properties
registered an operating profit of
RM168.05 million (2005: RM176.2 million)
on a back of a turnover of RM567.8
million (2005: RM395.1 million).
The sale of developed areas at Sungai
Kapar Indah and Bukit Jelutong Parcel J
Commercial Centre valued at RM152.8
million and RM30.6 million respectively,
boosted the earnings from the property
development segment of the Group.
OPERATIONS
Tropika Collection, Guthrie Properties’ ‘build-then-sell’ product.
58
Bukit Jelutong
The year 2006 saw another successful
launching of Bukit Jelutong’s commercial
units in Parcel J neighbourhood. The
commercial units, with a price tag ranging
from RM314,600 to RM3.19 million, were
fully sold out within hours of the launch,
and generated a total gross sales revenue
of RM30.6 million.
Operations
In November 2006, Guthrie Properties
launched its first ‘build-then-sell’ (BTS)
project, Tropika 2 Double Storey Super
Link houses.
A total of six phases of property projects
comprising 511 units of landed properties
were completed and handed over to the
buyers of Bukit Jelutong in 2006. Guthrie
Properties
also
completed
the
construction of another commercial
property development, the D’ Pangkin
Double Storey Shop Offices ahead of
schedule which were handed over to the
purchasers in January 2007. Bukit
Jelutong development is nearing full
completion with 80% of the 2,205-acre
land
having
been
opened
for
development.
Denai Alam
The development of Denai Alam saw the
successful launching and sales of 296
units of double storey terrace houses in
mid 2006. In addition, Guthrie Properties
launched another 48 units of high-end
double storey terrace Alstonia homes in
September 2006. With a price tag ranging
from RM383,000 to RM701,000, the
Alstonia homes are expected to generate
a total gross sales revenue of RM21.2
million.
As for development progress at project
sites in Denai Alam, building works are
ahead of schedules. Major infrastructure
works, key to the successful development
of townships, are nearing completion and
expected to be ready for handover of the
first batch of houses to purchasers in
June 2007.
Performance Excellence and Total
Quality Improvement
During the year, Guthrie Properties
achieved another major milestone in its
mission to further strengthen the quality
culture in its operations. Guthrie
Properties
was
awarded
the
Environmental Management System, EMS
14001 certification and Occupational
Health & Safety Accreditation System,
OHSAS 18001 certification by SIRIM
Berhad for its commitment and
compliance to total quality management
pertaining to environmental management,
occupational health and safety
requirements.
PROSPECTS
Review
perform favourably. The township and
community development in Bukit Jelutong
and Denai Alam will continue to be a
major source of revenue and earnings for
Group Property. With the positive market
outlook, Guthrie Properties is preparing
for a series of new property launches in
2007 which includes high-end bungalows
and Semi-Ds in Bukit Jelutong and highend products in Denai Alam.
Moving forward, Guthrie Properties’
immediate to medium term growth
strategies will hinge upon large and
visionary
development
projects,
development of niche and unique highend products, and other developments
outside the vicinity of Guthrie Corridor
Expressway.
With the achievement of the three Quality
certifications from SIRIM, Guthrie
Properties targets to implement the
Integrated Management System (IMS) by
mid 2007 that will integrate the ISO 9001,
EMS 14001 and OSHAS 18001 into a
single system and enable projects to be
implemented more effectively.
The general property market outlook is
expected to be positive in 2007 with
property development in strategic and
prime locations expected to continue to
To further spur the sale of these mediumend homes, a special end-financing
package was offered exclusively to
purchasers of Guthrie Properties’
residential products made possible by
Malaysia Building Society Berhad
(MBSB). Known as the ‘Easy Ownership
Scheme’ (EOS), the MBSB 100%
financing facility will help many first-time
house buyers.
To further establish its presence as well
as provide buyers with enhanced and
excellent customer service, Guthrie
Properties has opened Denai Alam Show
Village and Sales Gallery at its Denai
Alam Township.
D’Pangkin, Guthrie Properties’ Commerical Development in Bukit Jelutong.
Annual Report 2006
59
RESEARCH &
DEVELOPMENT
Plantation
Science & Technology
In line with the Guthrie vision to be a global centre of
excellence in agribusiness, the Research and Development
Division (R&D) is continuously innovating and exploiting
strategic driven technologies to support and advance the
Group’s core businesses. The R&D strategic focus has
always been on addressing issues in an effort to increase
and sustain yield.
Guthrie Research Chemara
Guided by its primary objective to narrow the gap between actual and potential yield,
Guthrie Research Chemara (GRC) in Seremban, Negeri Sembilan is actively pursuing
areas that can best resolve issues. The continuing increase in cost of production
coupled with a persistent labour constraint, challenging field conditions, persistent threat
from pests and diseases (P&D), and the demands for sustainable agriculture from
consumers and society are significant challenges that confront R&D.
The main thrust of R&D activities is to increase oil yield per hectare. Towards this end,
Precision Agriculture has helped identify areas of concern such as marginal soils, difficult
terrain, uneven rainfall pattern, and P&D. This exercise has enabled efforts to effectively
mitigate such concerns. A precision approach has enabled development in various
critical aspects and opens up new opportunities for yield improvement. On this score,
GRC continuously provides technical training to estate personnel in its effort to
disseminate knowledge and to expand usage of new technologies. Through these
activities, GRC prepares the foundation for the planting of new improved planting
materials vigorously selected so as to exhibit their genetic potential.
60
Plant Breeding Research
Improving the potential oil yields of
planting material has always been the
strategic thrust of the oil palm Plant
Breeding Department of the Group R&D.
Research focuses on the selection of high
bunch productivity and superior oil yield
capacity. Over the years, significant
progress has been achieved in improving
the parental lines that gave rise to
improved hybrid DxP oil palm planting
materials. This is achieved through
dedicated breeding and selection for
improvement in the already advanced
female (Dura) and male (Pisifera) parental
lines in the Group’s breeding collection. A
stringent progeny testing programme
carried out over the years, has also
ensured the production of continuously
improved DxP planting materials with
superior oil yield potential, not only for the
Group’s plantations but also for the
industry.
In 2006, a complete re-evaluation of the
Group stock parental lines was made to
enhance the production of superior DxP
materials in anticipation of the new SIRIM
MS 157:2005 standards for oil palm that
will take effect in 2007. A structured
parental palms replacement programme is
already in place to meet future demands
for improved material and production
capacity.
In the long term, Guthrie’s relatively wide
collection of available oil palm germplasm
works to its advantage as exploitation of
these materials through conventional and
molecular or marker assisted breeding
techniques will further hasten the
improvement progress and superiority of
the Group’s planting material in the future.
Oil palm agronomy and fertiliser
research
With an advanced Information and
Communications Technology (ICT) system,
yield from every field in our Group estates
are matched against their potentials. The
system utilises the extensive database
holding data spreading over 30 years, and
is the foundation in formulating the Site
Yield Potential (SYP) for each field.
Research
Analysis of the characteristics from each
site enables estates to identify and focus
efforts on areas of significant concern
such as soil conditions, types of terrain,
yearly and monthly rainfall pattern, all of
which directly impact the production
system. Based on these SYP, an effective
strategy is formulated to enable estates
to overcome such concerns.
A research programme to ensure effective
nutrient uptake was vigorously pursued
over the past two years. It is focused on
the development of oil palm roots in
relation to the application of empty fruit
bunches (EFB) and inorganic fertilisers.
The interaction between organic matter
(EFB) and inorganic fertilisers influences
the development of oil palm roots which
directly impact nutrient uptake. With
suitable amounts of organic material and
inorganic fertilisers, oil palm roots are
better maintained which leads to
enhanced nutrient uptake. This
development is now a part of the
foundation for a more efficient crop
production system.
Crop Protection Research
Research undertaken continues to focus
on preventive and control measures to
minimise crop loss due to pests and
diseases in order to maximise palm oil
production. Consideration is given to the
increasing concern on issues related to
environment and sustainable agricultural
practices. The continued emphasis on
Integrated Pest Management approach
ensures a continuous concern and care
for the environment and for the society
that lives within and around the estates.
Over the past two years, the concept of
proactive crop protection has been
introduced and put into practice. An
active pest surveillance programme is
now implemented in all estates against
the leaf defoliators such as bagworms
and nettle caterpillars. Beneficial plants
are progressively planted in all estates to
promote beneficial insects which are
parasites and predators of the common
insect pests. This has helped to prevent
serious pest outbreaks. The barn owl
population is maintained and constantly
monitored to assist in rat control through
biological means. Sanitation and cultural
measures were incorporated into the
replanting programme to reduce basal
stem rot due to Ganoderma.
Active research continues to focus on
common pest and disease problems in oil
palm, namely, Ganoderma basal stem rot,
Oryctes beetles, rats and various species
of leaf eaters, to further refine and
improve control technologies. Research on
the use of baculovirus against rhinoceros
beetle and application of Trichoderma to
suppress the infection of Ganoderma are
efforts to exploit the use of natural
enemies for biological control. This clearly
signifies a dedicated commitment to an
efficient, safe and sustainable production
system pursued by the Group.
Sdn. Bhd.
Biotechnology represents an interface of
basic and applied sciences, where
gradual and subtle transformation of
science into technology can be
witnessed. The Government has identified
biotechnology as the key driver for
Malaysia as the country heads towards
becoming a developed knowledge
&
Development
economy by the year 2020. Agricultural
biotechnology is vital in enhancing
Malaysia’s oil palm industry to play a key
role in bringing wealth and well-being to
the nation. During the last decade,
tremendous progress has been made in
the area of plant cell and tissue culture.
In-vitro techniques constitute an
important component of biotechnology to
improve existing oil palm planting
materials by cloning high-yielding palms
to optimise the genetic yield potential.
Realising the potential of biotechnology,
the Group’s main focus includes the
production of clonal oil palms at Guthrie
Biotech Laboratory Sdn Bhd (GBLSB)
using a proven, safe and reproducible
Guthrie Tissue Culture (GTC) technology.
The main task of GBLSB is to produce
clonal oil palm through tissue culture, to
increase productivity. At present, GBLSB
has been in semi-commercial production
and has the capacity to produce 350,000
clonal palms annually. Besides producing
clonal oil palms, GBLSB has also started
to tissue culture parental palms (Dura and
Pisifera) for Guthrie Plantation &
Agricultural Services (GPAS). The cloning
of Dura and Pisifera parents are aimed at
exploiting the specific combining ability of
selected parental palms to produce semiclonal and bi-clonal seeds.
The Group’s new pesticide and microbiology laboratory is equipped with the latest high end analytical
equipment to analyse the Group’s palm oil.
Annual Report 2006
61
Research
Guthrie’s clonal oil palm AAB1
The AAB1 clonal palm production
programme introduced by GBLSB in 2005
has shown significant progress. During the
year, 90% of the ortets in culture turned
embryogenic and somatic embryogenesis
rate also increased significantly by almost
100% compared to the previous year. To
date 3,000 AAB1 ramets have been
planted in the field and another 70,000
ramets are in the nurseries waiting to be
field planted in 2007. Field observation
showed that the clones can adapt well to
the environment, uniform in the vegetative
growth and that the flowering was normal.
Newly selected ortets show potential for
>40 tonnes FFB with oil to bunch (O/B) of
>30% (lab figures).
The landmark achievement of 2006 was
the first commercial planting of the AAB1
clonal oil palm on 20 April 2006 during
the 7th Minggu Saham Amanah Malaysia
(MSAM) in Kuala Terengganu by Dato’
Seri Abdullah Hj. Ahmad Badawi, Prime
Minister of Malaysia. The first batch of
AAB1 ramets were planted simultaneously
in Bukit Cheraka Estate, Selangor.
Research & Development at GBLSB
GBLSB is committed to the exploiting of
innovative technologies and advanced
research to develop an efficient clonal
palm production system and ultimately
Development
commercially reliable clonal planting
materials. GBLSB has entered into
strategic research alliances with other
centres of excellence, namely Universiti
Putra Malaysia (UPM) and Universiti
Kebangsaan Malaysia (UKM). Through
these partnerships, GBLSB has invested
RM3.6 million on state-of-the-art facilities
to carry out high-throughput research.
In the collaboration with UPM, a novel
approach, known as Surface Enhanced
Laser Desorption/Ionisation (SELDI)Protein chip Array technology is adopted
for its proteomic (protein research)
programme, which primarily aims to
increase frequency and culture quality, as
well as to accelerate the in-vitro process.
Proteins, a final product of gene
expression play an important role in
almost any biochemical pathway involved
in plant development and reproduction,
including tissue culture. Conventional
methods for identifying and validating
proteins are normally difficult, laborious
and time consuming. This new approach
has been discovered to be a rapid way to
capture and identify plant proteins,
hastening the company’s protein research
programme. Methods that previously
require days and even weeks can be
accomplished in a day. This rapid
technology is being utilised to profile
changes in protein expression patterns in
EFB application using giltrap. GRC conducts research focused on the development of oil palm roots in
relation to the application of EFB.
62
&
the oil palm tissue culture processes and
to uncover specific proteins through a
highly sensitive device that only requires
a small amount of bio-molecules in the
sample to be perfectly detected.
GBLSB-UKM research collaboration is
targeted at answering some of the
setbacks that have been limiting the
economical gains of the oil palm tissue
culture
activity,
by
monitoring
endogenous levels of plant hormones at
the various stages of the oil palm tissue
culture process. Levels of hormones in oil
palm cultures are determined using a
highly sensitive and efficient device
known as the High Pressure Liquid
Chromatography (HPLC). The information
obtained is then used to determine the
role of hormones whether beneficial or
detrimental in tissue differentiation and
development. This study will optimise
tissue culture processes and operation in
terms of its hormonal regulation of callus
and somatic embryo production.
Research
&
Development
The first batch of AAB1 ramets were planted in Bukit Cheraka Estate, Selangor.
Chemara Laboratory Sdn. Bhd.
Food Safety
Recognising the importance of food
safety as a competitive advantage, the
Group has established a new pesticide
and microbiology laboratory, equipped
with the latest high end analytical
instrument, to undertake analysis on the
Group palm oil to ensure that the oil the
Group sells for consumption, either
directly or indirectly, is safe and free from
contaminants. In addition, the new
pesticide and microbiology laboratory
also plays an important role in research
and development activities, particularly
the impact of organic and chemical
fertilisers on soil fertility and diseases
management through microbiological
means.
Minamas Research Centre
(MRC)
MRC was set up to carry out R&D
activities in Group Plantation Indonesia to
provide strategic driven technical
expertise to enhance yield and
productivity. Among others, it functions to
evaluate agronomic issues in estates
especially in relation to fertiliser
application and other site specific
technical requirements. It also provides
technical recommendations for yield
enhancement, conducts research to
mitigate yield losses due to P&D and to
fully exploit the use of biological control
in integrated pest management. The
laboratories at MRC are equipped with
the latest equipment to provide analytical
services on foliar, fertiliser, palm oil,
effluents, soil and water analyses.
Annual Report 2006
63
Total Quality Management (TQM)
TOTAL QUALITY &
ENVIRONMENTAL
MANAGEMENT
In 2006, the Total Quality & Environmental Management
Department (TQEM) continued to focus on providing
education and enhancing good agricultural practices in the
Group operations.
Plantations
TQEM is strategically positioned to address the growing challenges and stringent market
requirements including product quality, certification, traceability and best practice, and
sustainable development. It supports the Group strategic operations by providing
independent compliance assessment, laboratory technical services, process
improvements and standard compliance for the Group businesses.
To achieve these objectives, the Group has implemented policies that will contribute
positively to employees’ growth, welfare and productivity, the interest of the community,
the care and enhancement of the environment, socio-economic development, and our
business success.
In conducting business in an ethical manner, the Group has and will continue to
undertake the following measures:
• Introduce new processes that are safe, clean, cost effective and sustainable.
• Improve existing activities for compliance with all relevant laws, regulations and
standards.
• Conduct regular monitoring and audits of all possible sources of pollution that may
deteriorate the environment.
During the year under review, TQEM continued to further strengthen the Group efforts
towards capacity and capability building in Sustainable Agriculture Practices, Food
Safety and Quality Improvement Projects.
64
To boost the Group effort in promoting
innovation and best developed practice,
TQEM has taken a step forward by
introducing the Quality and Productivity
Improvement Project (QPIP) as part of its
TQM initiatives.
The QPIP is a strategic programme in
TQEM and is becoming a part of Guthrie
Group best practices in problem solving
and performance improvement.
In 2006, TQEM conducted a road show in
educating and providing the basic
structure to facilitate the adoption of QPIP
among the Group estates and mills. A
total of seven improvement projects
involving six of the Group estates, namely,
Bukit Asahan in Melaka, Pengkalan Bukit
and Sembrong in Johor, Bukit Selarong in
Kedah, Bukit Talang in Selangor and
Changkat Salak in Perak and the Bukit
Talang Mill, Selangor were carried out in
2006.
Good Agricultural Practices (GAP)
Sustainable Agricultural Practices is
significant in the Group plantation
operations to keep up with stringent
requirements from customers, NonGovernment Organisations (NGOs) and
regulatory requirements. The Group
continues to focus on efforts to promote
GAP including food safety, social
responsibility, production efficiency and
environmental conservation for the Group
plantation business.
The Group has developed an in-house
certification scheme based on EN45011
accredited certification under the
European Retailers and Producers Good
Agricultural Practices (EUREPGAP)
protocol. This protocol incorporates most
of the principles in the Roundtable on
Sustainable Palm Oil (RSPO).
To t a l Q u a l i t y & E n v i r o n m e n t a l M a n a g e m e n t
Further to the Group’s initiatives and
commitment towards GAP, the following
15 estates have implemented GAP
protocols:
production to customers. HACCP gives
the reassurance that the Group crude
palm oil (CPO) or palm kernel will not
present a danger to consumers.
Melaka
– Serkam
– Kemuning
Selangor
– Sabak Bernam
– Bukit Talang
Negeri Sembilan
– Siliau
– Bukit Pelandok
– Tampin Linggi
– Sua Betong
– Sengkang
Johor
– Pekan
– Lambak
– Sembrong
– Tun Dr. Ismail
– Ulu Remis
– Simpang Rengam
During the year, Tanah Merah Mill, Negeri
Sembilan has passed the recertification
audit and Ulu Remis in Johor, Rantau in
Negeri Sembilan and Bukit Talang in
Selangor Mills have been actively
implementing the HACCP system. These
mills have also undergone the SIRIM
assessment audit and are awaiting
certification.
Food Safety
With the food safety issues taking centre
stage today, the Group has committed to
implementing the Hazard Analysis and
Critical
Control
Point
(HACCP)
programme for all its palm oil mills.
HACCP is a management system in
which food safety is addressed through
the analysis and control of biological,
chemical and physical hazards throughout
the product value chain from raw material
Johor, Tanah Merah in Negeri Sembilan,
Jabor in Terengganu, Kemuning in Melaka
and Bukit Cheraka in Selangor. As for the
mills, occupational safety and health
audits were conducted in six mills namely
Kerayong and Bukit Talang in Selangor,
Ulu Remis and Yong Peng in Johor, Jabor
in Terengganu and Tanah Merah in Negeri
Sembilan.
A new process, the Hazard Identification
Risk Assesment Control (HIRAC), used to
identify any potential unsafe operations,
has been established in all estates and
mills.
Safety & Health Management
Employee Safety & Health is a priority in
the Group agenda. To meet the
occupational
safety
and
health
requirements for the Plantation Division
and to further enhance safety awareness
among the employees, the Group
appointed a Safety Manager in June 2006.
During the year, TQEM conducted
occupational safety and health audits at
10 estates, namely Yong Peng, Simpang
Renggam, Sembrong, Tun Dr. Ismail,
Temiang Renchong and Ulu Remis in
The Department also organised a safety
awareness campaign for the Group. To
minimise occupational incidents, TQEM
has established the Safety and Health
Training Material for the Group. The
training material covers the scope of
OSHA 1994 requirements, occupational
hazards, accidents, personal protective
equipment, importance and method of
application, safety signages, fire hazard,
accident emergency response and
healthy lifestyle.
Tanah Merah Mill, Port Dickson, Negeri Sembilan is implementing HACCP system.
Annual Report 2006
65
During the year, TQEM carried out
training for employees on safety
awareness.
TQEM has put in place a series of
preventive and corrective actions to raise
safety and health standards. These
include:
• Establishing
clear
roles,
responsibilities and authority for
personnel who manage, perform and
verify activities having an effect on the
OSH risks of the Group’s activities,
facilities and processes.
• Continuously identifying hazards,
assessing risks and implementing the
necessary risk control measures.
• Ensuring that personnel are
competent to perform tasks that may
impact OSH in the work place.
• Ensuring that OSH information is
communicated
to
and
from
employees and other interested
parties effectively.
• Ensuring the necessary measures and
specified conditions are in place to
control
identified
risks
and
establishing Health Identification Risk
and Control (HIRAC)
• Improving plans and procedures and
response time to emergency
situations.
The effluent treatment plant at Sg. Dingin Mill is part of the Group’s best practices in waste
management.
•
Monitoring and measuring OSH
performance on a regular basis and
tying performance to the reward
system.
–
In general, the number of accidents in the
estates and mills have been reduced.
Biodiversity
The concept of biodiversity conservation
is important for the Group’s oil palm
plantations. The concept involves creating
the right environment for communities to
prosper. It emphasises the following:
•
A wild bird found at Guthrie estates.
66
Protection and conservation of existing
natural areas within the following
estates:
– Anak Kulim Estate, Kedah – 232
hectares to be planted with forest
species trees
– Andrassy Estate, Sabah – 28
species trees
– Jeleta Bumi Estate, Sabah – 25
hectares of water catchment area
•
•
•
•
•
Kalumpong Estate, Perak – 13.6
hectares of Bakau and mangrove
area
– Kemuning Estate, Melaka – 5.3
trees
– Tanah Merah Estate, Negeri
Sembilan – 212 hectares of forest
reserve
– Tanah Merah Estate, Negeri
Sembilan – 43 hectares of wetland
– Cenas Estate, Johor – 14.7
hectares of hilly areas & 4.2
hectares of swampy area
– Cha’ah Estate, Johor – 2 hectares
of water catchment area
Creation of a greenbelt corridor to the
adjacent natural areas.
Rehabilitation of rivers namely, Sungai
Sayong, Cha’ah Estate in Johor;
Sungai Janging and Sungai Keroh, in
Tanah Merah Estate, Negeri Sembilan.
Strict adherence to the zero-burning
policy in Group Plantation operations.
Soil and water conservation.
Recycling of palm oil mill effluent
(POME) and empty fruit bunches
(EFB) back to the field.
Property
EMS 14001 and OHSAS 18001
Quality Certifications
Guthrie Property achieved a major
milestone in 2006 with the attainment of
two international accreditations for its
quality systems in place – the EMS 14001
for Environmental Management System
and the OHSAS 18001 for Occupational
Health and Safety Management from the
Standard & Industrial Research Institute
of Malaysia (SIRIM).
The attainment of the two international
certifications defines Guthrie Property’s
stringent operational initiatives in
delivering the best to its stakeholders and
further enhancing its Total Quality
Environmental Management systems. The
awards achieved are also in line with the
Company’s objective of achieving system
certification that covers the entire
spectrum of the Group operations.
The successful implementation and
tracking of these best practices
throughout the year 2006 has enabled the
Property Division to deliver all its
products with due care taken for the
environment and safety and health to the
workers and to the public.
Contractors and consultants engaged by
Property Division for its projects have
similarly demonstrated positive response
to the new total quality environment
management system being implemented
by the Company.
positive movement in line with the
Division’s objective of progressive
reduction and delay and achieving zero
delay by 2007.
Management Inspection System
(MIS)
ISO 9001 Quality Certification
The Property Division has also maintained
in 2006 its excellent performance in the
implementation of ISO 9001 quality
system in its operational processes. This
has produced positive results in the form
of further improvements achieved in
Quality Assurance, Timely Delivery and
Cost effectiveness.
For Quality Assurance, the number of
purchasers’ complaints has dropped from
that of 2005, thereby reflecting improved
customer satisfaction. Construction cost
has also been maintained in the first half
of 2006 and has only increased slightly in
the second half despite increase in fuel,
labour and material cost in the industry.
The resultant effect is that profit margins
to the development have been
maintained. Similarly, the delay incurred in
projects has dropped in 2006. This is a
In meeting customer needs and
expectations,
the
Division
has
implemented process improvements such
as pre-qualification and quality-rating of
contractors and consultants, customer
survey feedback and third party
workmanship quality inspection.
For 2006, the Division has advanced this
further in the form of the Management
playing a bigger role in the field to
inspect and ensure that quality of
workmanship meets the customer
expectation. This periodic inspection has
produced results in the form of finer
quality workmanship detailing as well as
improved design criteria for future
products.
Integrated Management
System (IMS)
With the attainment of the three Quality
certifications from SIRIM, the Division
targets to implement the Integrated
Management System (IMS) by early 2007,
that will eventually integrate the ISO
9001, EMS 14001 and OHSAS 18001 into
a single system and enable the projects
to be implemented more effectively. The
Integrated Management System is the
first of its kind to be implemented in 2007
by a property developer in the country in
ensuring total quality commitment
throughout the company.
Guthrie Property preserves rivers within its project development some of which are developed into
recreational areas for residents.
Annual Report 2006
67
INFORMATION &
COMMUNICATIONS
TECHNOLOGY
It has been a challenging and productive year for the
Information and Communications Technology Department
(ICT). A number of key initiatives have been put in place to
enhance the Group’s business ICT landscape to achieve the
strategic objective of the organisation. The move is in line
with the Group’s vision to transform Kumpulan Guthrie
Berhad into a high performance entity.
The ICT focus is on establishing a framework covering ICT infrastructure, business
application and Group integration. On the infrastructure landscape, WAN (Wide Area
Network) and LAN (Local Area Network) have been upgraded using satellite and wireless
technology to provide higher bandwidth connectivity between remote operating units and
the Group headquarters. The enablement of high speed transmission via WAN and LAN
would provide the means to access up-to-date critical information for strategic decision
making and also facilitate remote troubleshooting and maintenance to enhance
productivity and efficiency. To further maximise the usage of the existing infrastructure,
ICT is currently undertaking Proof-Of-Concept (POC) to test the viability of introducing
VoIP (Voice over Internet Protocol) for the Group. POC is currently being undertaken at
a number of sites within the Group and is expected to be completed by the first quarter
of 2007. Upon completion, Group-wide deployment will commence with completion
targeted by end of 2007.
On the application front, ICT has embarked on a number of key initiatives to enhance
operational and management effectiveness. The “G-EMAS” (Guthrie Estates and Mills
Application System) project, an integrated business solution for the Group’s Plantation
arm, has been earmarked to pave the way towards Precision Agriculture. During the
year, ICT provided an integrated solution to improve plantation yield by using ICT to
process data and make informed decisions based on collaboration between research
68
and plantation operations. The Mill
system is undergoing testing at the pilot
site in Labu, Negeri Sembilan and is
expected to be completed in January
2007. Testing for the Estate system will
commence in January 2007 and is
expected to be completed in February
2007. Group-wide deployment and
commissioning of the system for the Mill
and Estate is expected to be completed
by the first quarter and second quarter
respectively.
ICT has embarked on the second phase
of the Group’s integrated human resource
management system, the e-GHRM
implemented in 2005. The Employee Self
Service (ESS) programme, comprising the
eStaff and eLeave modules, was
introduced at the Group’s headquarters in
2006. The eStaff module empowers users
to update and access selected personnel
information. The e-Leave module, on the
other hand, allows electronic submission
of leave application. The ESS aims to
assist the Group Human Resource
Division to develop and maintain up-todate information for effective decision
making. The ESS will be implemented
Group-wide by mid 2007.
The “e-library” system which supports
the Group’s culture of knowledge building
and sharing to enhance operational and
decision making efficiency has been
commissioned for use Group-wide. The
e-library, a repository of information and
knowledge comprising a collection of
documents that are updated daily in a
centralised and easy-to-use environment,
provides access to the latest information
that can be easily shared within the
Group.
As part of good corporate governance
and our long-term pursuit of creating
shareholder value, the managing of risks
becomes critical. A system has been
designed for the Enterprise Risk
Management (ERM) division to inculcate
a systematic and disciplined Risk
Information
&
Communications
Te c h n o l o g y
network from anywhere and at anytime.
With this intranet system, users are now
able to securely access the Group’s
internal email, e-Leave, G-e2R and other
Web applications from any place through
Internet connection.
The Group capitalises on the ‘e-library’ for knowledge building and sharing.
Management culture across the Group
to achieve Group KPIs through regular
application of risk management
techniques. It provides an effective
method of risk treatments in mitigating
risk impact based on assessments of
historical records and past performance.
The system is currently being tested at a
pilot
site
pending
Group-wide
deployment.
The timely reporting of our financial
results is a very challenging task
considering the vast number of
subsidiaries and associate companies
within the Group. To ensure accurate and
timely reporting, we are set to implement
the Group Financial Consolidation system
to improve the turnaround time of the
Group Financial Consolidation process by
automating the entire process.
Another key area of computerisation
involves the automation of the
Procurement process. A system to
manage central purchases has been
commissioned for use in the Group
headquarters. The system has the
capability to handle requisition from
operating units and automate the
processing of purchase orders and
payments. The Administration Department
handling procurement will be able to track,
monitor and improve the turn-around time
to meet the targeted datelines. The system
is in operation at the Group headquarters
and is targeted to be rolled out to the
operating units in the coming year.
To further enhance information sharing,
the G-VANS (Guthrie Virtual Access
Network System) has been introduced.
The system enables mobile users to
seamlessly access Guthrie’s internal
A number of initiatives have also
been undertaken for Guthrie Property
Development Holding Berhad (GPDH)
which includes Land Title Management
and Project, Contract and Cost
Management. The land title management
system will provide GPDH with the
means to manage and monitor areas
pertaining to land matters such as
acquisition, sales, lease, conversion and
encumbrances management effectively
and efficiently. For effective management,
the system provides a visual map of the
properties through the Geographical
Information System (GIS) to assist in
strategic decision making. The project,
contract and property management will
assist in managing and monitoring the
project progress, contracts, procurement
and cost management. It is envisaged
that with the implementation of the
system, project cost variation will be
reduced due to timely reporting thereby
resulting in better performance.
Plantation Indonesia has also embarked
on a number of ICT projects to enhance
operational efficiency. As part of the
G-EMAS initiative, Plantantion Indonesia
will be implementing a number of key
application systems covering operational
and management needs for its estates
and mills to be linked to the Group
headquarters. The project is expected to
be completed in year 2007 and is
currently being tested at a pilot site. The
infrastructure is also being upgraded to
support the above initiatives by enhancing
the network performance. To ensure
shared resources are fully leveraged on,
ICT has identified common application
platforms to be implemented Group-wide
thus reducing total cost of ownership. The
application includes e-GHR, e-Library,
Annual Report 2006
69
Information
&
Communications
Te c h n o l o g y
Marketing, Financial Consolidation and
Procurement System for central
purchases. The integration of information
between KGB and Plantation Indonesia
will be undertaken at the business
intelligence level.
To
safeguard
the
Group
ICT
infrastructure against threats and risks,
ICT has reviewed and upgraded the
security features of the Group’s network
and infrastructure. The upgraded system
will provide adequate and reliable
network services to all business
applications in a more effective manner.
To further enhance the use of ICT,
training to educate users on the effective
use of technology and tools that are
available and essential to their job was
provided. This leads to an effective,
efficient and knowledge-driven workforce,
not only capable of contributing
productively to Group performance but
also helping individuals fulfil their
development potential.
Head, Plantation Malaysia, Helmy Othman Basha
officiating the deployment of the G-EMAS project
in Labu Mill.
70
Information
&
Communications
Te c h n o l o g y
Existing guidelines and procedures (disaster recovery plan) to ensure business continuity,
should a disaster happens, have been further strengthened. Trial runs are continuously
being undertaken to ensure the smooth execution of the Group’s disaster recovery plan.
The ICT challenge is to ensure departmental systems are interoperable and that there is
a seamless flow of information to promote knowledge sharing, boost productivity,
collaboration, and operational efficiency across the user community. By integrating the
Group information systems and enterprise applications, critical information can be
delivered on a timely basis for strategic decision making and to gain competitive
advantage. The ICT goal is to deliver solutions and services to meet Group business
objectives and maximise return on investment. Several projects have been indentified for
implementation in the coming year to realise ICT objectives including Portal deployment,
Network & ICT Inventory Management and adopting the most widely accepted ICT
service management model best practices, and the Information Technology Infrastructure
Library (ITIL).
The Group ICT aims to reinforce its G-Excellence Motto, ICT Empowerment for
Excellence and drive the Group’s G-Excellence initiatives. It will continuously strive to
identify future growth areas to enhance Group efficiency.
Advanced ICT applications undertaken at Group
Mills allow for the processing of data for decision
making.
G-VANS (Guthrie Virtual Access Network System) enables mobile users to access Guthrie’s internal network from anywhere and at anytime.
Annual Report 2006
71
ORGANISATIONAL
CAPABILITIES &
HUMAN CAPITAL
The Group Human Resource Management Division (GHRM)
is a strategic business partner to businesses/divisions to
build organisational, team and individual capabilities to
realise the Group objectives. The two overarching strategies
adopted in the management and development of the
Group’s human capital are firstly, to be an Employer of
Choice and secondly, to build organisational capabilities.
Driven by these strategies, GHRM has implemented and
monitored
various
human
capital
programmes
encompassing four strategic thrusts namely, organisational
development, human capital development, human resource
systems development and operational efficiency of human
resource services.
72
Driving Performance Excellence
In 2006, the Performance Management
Office (PMO) continued to closely monitor
the implementation and performance of
the G-Excellence initiatives undertaken by
the respective Divisions. Efforts in the
Guthrie Transformation journey are aligned
to the need to synergistically build a high
performance culture through best market
practice, corporate governance and
business conduct. Programmes under the
Guthrie Excellence Transformation initiative
are in tandem with the Government-Linked
Investment
Companies
(GLIC)
transformation initiatives which have seen
the formation of project champions and
task forces going forward.
Performance Management System
The foundation for the establishment of the
Group performance management system
has been set with the implementation of
the Balanced Scorecard (BSC). The
Corporate scorecard is already established
and Headline Key Performance Indicators
(KPIs) communicated. Corporate KPIs have
been cascaded to core businesses and
structured training on BSC organised for all
managers in the business and corporate
divisions. Systematic monitoring of
performance continued to be undertaken
by heads of businesses and the Group
Performance Monitoring Task force.
Similarly, there is continued support and
follow up of the Performance Management
& Development (PMD) appraisal system
which has been established to achieve
individual performance excellence in
alignment with Group goals and objectives.
The performance-linked bonus scheme
was enhanced as an integral part of the
system.
Human Capital Development
Several programmes were undertaken as
part of the Group human capital
development and talent management
plans with the aim of building a culture of
excellence. At senior management level,
phase 1 of the ‘Top Leadership Team
Programme’ was organised which
included a two-day residential workshop
entitled ‘Visionary Business Leadership’.
Organisational
Apart from participation in conferences
and seminars for global and industry
updates, management forums on
innovation, knowledge management and
corporate governance were also held for
the Board of Directors and Senior
Management. In 2006, the Group
provided training in Project Management,
a key organisational capability. Two
management appreciation workshops and
project management training were
organised for managers and supervisors
to improve operational efficiency.
Similarly, Group managers and executives
attended training in-house and through
public courses to enhance both their
technical and management skills.
Consistent with the policy of continuous
improvement, various courses were
organised in compliance with the
requirements of the Quality Management
System and Occupational Safety and
Health Act (OSHA).
In Plantation Indonesia, a series of
workshops on leadership, management,
problem solving and decision making
were organised for management.
Capabilities
&
Human
Capital
Management staff in estates, mills,
research and development as well as
other operations in the Group Plantation
business in Malaysia and Indonesia
participated in relevant national
conferences and seminars including those
organised by the Malaysian Oil Scientists’
and Technologists’ Association. Guthrie
Lear ning Centre, Malaysia and the
Minamas Training Centre, Indonesia
organised the six-month Basic Estate
Management Training Programme for
Cadet Planters as well as the threemonth Field Conductor Training
Programme for new Field Conductors.
In the Property Division, management
staff attended technical conferences and
seminars relevant to the property industry
to enhance knowledge and networking.
The then Head of GHRM, Saadiah Hussin (left)
presenting food supplies to a representative of
PDK, Bedong in Kedah.
Competency Standards Training and
Education
In 2006, the Competency Based Training
and Education (CBTE) systems continued
to be maintained through various projects
including the development of assessment
tools for Management Standards. CBTE
assessments on technical CBTE modules
such as oil palm harvesting, oil palm
replanting, and oil palm mill operations
are regularly reviewed at all levels to keep
track of the competency levels of the
workforce. Technical and operational
training conducted are guided by the
competency standards and tools
established. Supervisors have available
the CBTE Pictorial Work Instruction tool
to support training of new estate/mill
workers. For estate and mill staff,
competency standards and assessment
tools are also developed for the
management of human resource activities
such as training and development and
succession planning to fully realise the
Group’s human capital potential.
The Property Division has successfully
completed the Technical Competency
Framework and Standards in the Group’s
project department covering maintenance
and property management. The
competency standards and assessment
tools are also being developed for the
management of human resources
activities such as training and
development and succession planning.
Senior Management undergoing project management training, a key organisational capability.
Annual Report 2006
73
Organisational
Capabilities
&
Human
Capital
GHRM staff and the children at PDK as
well as instill awareness on how GHRM
can contribute to such welfare
organisations.
Sports & Recreation
Sports activities were organised
throughout 2006 to encourage a healthy
community spirit among the staff of
Guthrie Group. Employees participated in
various competitions and local sports
tournaments including golf, football, lawn
tennis and futsal.
Group employees and their families at the Family Day.
Employee Relations
The Group continued to ensure that
industrial harmony is maintained at the
workplace through the effective
enforcement of the Group policies and
procedures relating to industrial relations
as well as providing timely advice and
support to line managers. Training of
management and supervisory staff on
labour laws, industrial relations and
domestic inquiry are also organised to
ensure managers are competent and
effective when handling disputes and
disciplinary actions.
Employee Welfare
The Group’s commitment to the welfare
of its employees is reflected in the regular
activities and programmes undertaken at
Group centres. In 2006, there was active
participation in medical camps organised
for eye and dental care. Seminars were
organised in collaboration with
Government bodies on legal literacy,
health education, leadership and social
issues. Support services such as family
counselling and other forms of assistance
such as EPF/SOCSO/Will documentation
were also provided.
Enhancement of Operational Efficiency
Focus was given to reviewing existing
business processes and standard
operating procedures as required.
Progress was also made in the Group
human resource systems development
with the successful mobilisation of the
Group pilot Performance Management
Development (PMD) on-line module which
will be implemented in the Group in 2007.
The Retirees Recognition and Long
Service Awards Dinner continue to be an
important event in the Group’s calendar
of events. This bears testimony to the
value the Group places on the loyalty
shown by long-serving employees.
An innovative sales commission incentive
scheme was successfully introduced in
the Sales & Marketing department of the
Property Division.
74
A ‘gotong royong’ community project to
spruce up the premises of a “Pusat
Dalam Komuniti” (PDK) in Bedong,
Kedah, was undertaken by GHRM and
HR Heads from business units as part of
the quarterly Group HRM meeting
activities in August 2006. The project
fostered closer relationship between
2006 culminated with the successful
organisation of the Group Family Day on
9 December 2006 at A’Famosa Resort,
Melaka. It was attended by about 3,000
participants comprising employees and
their family members from all Group
centres. The landmark event achieved its
objective of promoting integration
amongst Group employees at all levels
and strengthening the Group identity
thereby boosting employee morale and
motivation.
As at December 2006, the Group
employee strength is 47,591 comprising
836 executives, 2,989 non-executives and
43,766 workers.
Estate staff undergoing training on ‘Calibration of
spraying equipment’ in accordance with OSHA
requirements.
CORPORATE
SOCIAL RESPONSIBILITY
Corporate Social Responsibility (CSR) is a part
of the Guthrie Group’s committed mission. As a
leading player in the oil palm plantation and
property industries with a presence of 186
years, Guthrie recognises its obligation to lead
by example. This encompasses its commitment
to deliver profits to enhance shareholder value
and at the same time, make a positive social
contribution to the immediate communities
where it operates as well as to the wider
business community of which it belongs.
The Guthrie Group’s philosophy in CSR is to share its resources
with the community, add significant value to lives and create a
quality lifestyle. In undertaking CSR, the Group also recognises
the benefits that have accrued to its business including the
strengthening of reputation and branding as well as enhancing
employee motivation which in turn, contribute to the long-term
profitability, growth and sustainability of the business.
The Group’s CSR involvement is with the direct community, its
immediate neighbours, and at the national level where it
operates. CSR is undertaken at many levels including Group
corporate office, the plantation division both in Malaysia and
Indonesia, Guthrie Property, as well as through the Yayasan
Guthrie. The latter administers funds for education, scientific
research, charity and public welfare.
In 2006, more CSR initiatives were undertaken that reflect the
Group’s role as a caring corporate citizen.
CSR in the Workplace
Guthrie Plantation allocates resources to provide a quality
environment and facilities within its estates, some of which have
won awards.
Guthrie contingent with the management of Ulu Remis Estate at the
National Labour Day Celebration.
Guthrie Plantation won National Award
Ulu Remis Estate, Johor won the ‘Ladang Bahagia Harapan Award
2006’ at the National Workers Day 2006 on 13 May 2006 for its
commitment towards the welfare of estate staff. The award was
presented in recognition of the estate’s integrated concept, to
provide a quality environment and facilities, which takes into
consideration the provision of work, housing, recreational and
spiritual facilities and infrastructure. Ulu Remis Estate was specially
lauded for its kindergarten and its clean and well-organised crèche
which is well-equipped with toys and a reading corner, the estate
hospital which caters for the estate and mill workers, and the
availability of four schools, i.e. Tamil, Chinese, Religious and
National schools, located within the estate.
Annual Report 2006
75
Corporate
Social
Responsibility
This award is the second consecutive win for the Guthrie Group. Last year, the Bukit Selarong and
Padang Buluh Estates in Kedah had bagged the same award.
Other CSR programmes instituted by Guthrie Plantation include the following:
Safe and efficient work environment
In order to provide a safe and effective work environment in estates and mills, the Group launched its
Pictorial Work Instruction Manual and a Safety Awareness campaign on 19 May and 12 November 2006
respectively.
Drug awareness
Concerned with the rising number of drug cases in Malaysia, Rantau Mill, Negeri Sembilan organised a
Drug Awareness campaign on 9 April 2006 to educate the employees on the dangers of drug abuse.
The campaign was held in association with PEMADAM, Seremban.
Education for children of employees
The Group encourages its operating units to focus on educational programmes such as those conducted
at its estates. Elmina Estate, Selangor conducts weekly computer classes covering lessons on basic
computer skills such as Microsoft Office application. The classes conducted in a former workshop at the
estate, facilitate early adoption of ICT among school-going children of the employees.
The management of Rantau Mill initiated reward to motivate students to excel in examinations by
organising a prize presentation ceremony for academic excellence in PMR (Penilaian Menengah Rendah)
for children of employees on 2 January 2006.
CSR for the Community
Education
Guthrie believes in human capital development and education. It is
committed to developing a learning community by motivating the young
towards a strong basic education and continuous learning.
Some of Guthrie’s educational programmes are undertaken by Yayasan
Guthrie.
KGB Chairman (right) sharing a light moment with Guthrie
scholarship recipients.
Yayasan Guthrie
Yayasan Guthrie grants scholarship to students in various fields of study
with priority given to disciplines in Agricultural Science, Scientific
Research, Property Management, Social Sciences, and Economics. The
value of the scholarships awarded to each student depends on the
choice of academic discipline, programme and its duration. Scholarship
recipients in a Masters, Degree, Diploma, and Vocational Training
programme receive RM15,000, RM7,000, RM6,000 and RM5,000 a year
respectively.
In 2006, Guthrie awarded scholarships to 37 students from local
universities and other institutions of higher learning pursuing tertiary
education at undergraduate and postgraduate levels. The total value of
the scholarship awarded was RM600,000.
76
Corporate
Social
Responsibility
Yayasan Guthrie also extends assistance through its Educational Financial Assistance Scheme (EFAS) for
children of deceased employees. The value of the financial aid ranges from RM900 to RM1,500 a year for
each child based on expenses incurred in school fees, books, uniforms, examination fees and pocket money.
In 2006, Yayasan Guthrie presented Special Goodwill Financial Assistance amounting to RM13,200 to 10
children (aged 9-19 years old) of three deceased Kumpulan Guthrie Berhad employees who died while
in service.
An education fund for vocational training has also been set up for eligible students who require financial
assistance to pursue education at Government approved vocational schools or institutions. In 2006,
Yayasan Guthrie funded 14 students seIected to further their studies in agriculture (at certificate level) at
the Institut Pertanian Ayer Hitam, Johor and Institut Pertanian Titi Gantung, Perak. Under this programme,
Guthrie sponsors the fees and cost of meals and accommodation for a period of two years amounting
to RM84,000.
Yayasan Guthrie also organises education learning programmes to enhance learning skills. A ‘Learn How
To Learn’ workshop was held on 20-22 November 2006 involving 30 Form Four students studying in three
schools in remote locations in Segamat, Johor; Durian Tunggal, Melaka; and Port Dickson, Negeri Sembilan.
During this highly interactive programme, students and teachers were exposed to a customised
methodology aimed at overcoming barriers in learning. The programme, a licensed model developed by L.
Ron Hubbard, a scientific researcher in the United States of America was conducted by a team of trainers
from the Professional Advancement Centre (PAC) of Kolej Universiti Teknologi dan Pengurusan Malaysia.
The programme equips students with life long learning skills. PAC will track the performance of the students
until they sit for the Sijil Peperiksaan Malaysia (SPM) examination.
KGB Chairman handing
over food supplies to
staff of Cha’ah Estate.
Contribution to National disaster relief programme
Another focus area of the Group is its CSR role in National disaster
relief programmes. In 2006, the Group’s Malaysian operations was
affected by the major flood which severely affected the southern
region of Peninsular Malaysia particularly Johor. The first incident of
floods which occurred on 19-31 December 2006 followed by the
second wave on 11 January 2007 caused loss of lives, immense
difficulties to the community and severe damage to property and
infrastructure. Efforts undertaken by the Group included providing
cash contributions and food supplies to residents at affected estates
in Cha’ah and Sg Tawing in Johor, neighbouring villagers in
Kampung Haji Kamisan and flood victims at the Yong Peng Relief
Centre. In Kampung Haji Kamisan, the Group also contributed
towards the rehabilitation of its mosque which had served as a
shelter for flood victims.
Participation in National Day
Guthrie together with nine other plantation companies organised
and participated in a float parade at the 49th National Day
celebrations in Kuching, Sarawak. Guthrie Property also
participated in a float parade organised by the property sector.
The plantation sector float at the National Day celebrations
in Kuching, Sarawak.
More than 500 workers and their families at Bukit Talang Estate
participated in a Merdeka Sports Day organised to commemorate
the National Day. Activities for the celebration included a parade,
games and the singing of patriotic songs.
Annual Report 2006
77
Corporate
Relief Effort for Earthquake Victims in Jogjakarta, Indonesia
In Indonesia, Group staff at Minamas Plantation raised
Rp146,297,673 for victims of the earthquake in Jogjakarta in May
2006. On 7 July 2006, Minamas Plantation represented Guthrie
in providing contributions in the form of food and medical
supplies to affected victims through the Universitas Gadjah Mada
(UGM) Peduli Jogja programme and to the Sardjito hospital in
Jogjakarta. The Management of Minamas Plantation also
presented donations to staff whose families were affected by the
earthquake.
Sports Development
Guthrie continues to support sports development in the country.
This covers Golf, Cricket and Lawn Bowl. An annual event
organised and hosted by Guthrie, in collaboration with the
Malaysian Professional Golf Association and the Group’s Harvard
Golf & Country Club is the Guthrie Classic. The Guthrie Classic,
a significant highlight in the local golf calendar, has earned a
distinction in promoting the development of golf and golfing
competitions. The 2006 tournament, held on 11-15 July 2006 in
Jerai, Kedah, attracted the participation of more than 80 local
and international professional golfers.
Guthrie also introduced its Guthrie Cup Challenge in golf for
employees.
Social
Responsibility
Minamas
Plantation staff
delivering food
and medical
supplies to flood
victims in
Jogjakarta.
KGB Group
Chief Executive
presenting the
Guthrie Classic
trophy to fourth
time winner, P.
Gunasagaran
(right).
Community Centres for Residents of Bukit Subang, Shah Alam
In July 2006, GPDH completed and handed over two community centres valued
at RM2.5 million to the Majlis Bandaraya Shah Alam (MBSA). The community
centres will enable the residents to organise activities for social interaction to
further a culture of social engagement and a quality lifestyle.
Community Rehabilitation Centre
Plantation Malaysia, through the management of Kamuning Estate, Perak provides
and maintains the building housing the Sg Siput Community Rehabilitation Centre
located on a 1-acre plot within the estate. Operating since 1994, the centre
currently runs rehabilitation programmes for both the physically and mentally
disabled, early intervention counselling, and social and recreational activities.
KGB Chairman presenting school supplies to orphans
at the Guthrie Hari Raya Open House 2006.
Assisting the under-privileged
Kumpulan Guthrie Berhad hosted 40 orphans from the Rumah Anak-Anak Yatim
Ulu Gadong, Rembau at a Hari Raya Open House on 4 November 2006 at
Guthrie Pavilion in Bukit Jelutong. Besides sharing in the festivities, the children
also received ‘duit raya’ and school supplies.
Guthrie once again contributed school supplies to 22 orphans in the Alor Gajah
district, Melaka during the Group Family Day on 9 December 2006.
In conjunction with ‘Ramadhan’ and ‘Malam Nuzul Quran’, Guthrie Properties
together with the committee of the Bukit Jelutong mosque, hosted a special
breaking-of-fast for orphans from the ‘Rumah Anak Yatim Limpahan Kasih’,
Puchong at the Bukit Jelutong mosque on 9 October 2006.
78
Corporate
Social
Responsibility
Maintenance Culture and Values
The Group encourages a maintenance culture in the surrounding
communites located in its areas of operations. Estates including
Tanah Merah in Negeri Sembilan, Ulu Remis and Cha’ah in Johor
and Bukit Asahan in Melaka contribute to the landscape
maintenance of the surau, police station and schools’
compounds located in their vicinity.
Health Services and Blood Donation Programme
Bukit Asahan Estate, Melaka organised its annual CSR event, a
blood donation drive aptly themed ‘The Gift of Hope’ on 1 April
2006. This marked the 17th consecutive year that an event of
this nature had been organised by the estate. A total of 700 pints
of blood was donated to the Melaka Hospital Blood Bank.
Caring employees contributing to the blood bank.
Medical Services for residents of neighbouring villages
Bukit Cheraka Estate, Selangor subsidises the medical treatment
provided by the Jeram District Hospital for the residents of
Kampong Ijok, Bukit Cheraka and Simpang Tiga. The hospital is
funded by a group of estates, including Bukit Cheraka, operating
in the Jeram district.
Medical Camp at Pengkalan Bukit estate
On 19 November 2006, the Pengkalan Bukit Estate, Johor
organised a medical camp to promote healthy living for estate
staff and residents of the surrounding community. A total of
1,500 people including residents of five villages attended the
medical camp to take advantage of the various treatments and
medical check-ups that were provided by the medical team from
various organisations including Tun Hussein Onn National Eye
Hospital and Sultanah Fathima Specialist Hospital, Muar.
A resident of the community surrounding Pengkalan Bukit Estate
undergoing an eye examination conducted by Tun Hussein Onn Eye
hospital.
CSR for the Environment
The Group places special emphasis on environmental
conservation in its oil palm plantations and property business.
Toward this objective, the Group practices zero-burning,
biodiversity conservation and greening of the urban community.
Annual Report 2006
79
CORPORATE
HIGHLIGHTS
Annual Long Service Awards
Kumpulan Guthrie Berhad (KGB) honoured employees who had
served for a period of 15, 20, 25 and 30 years through an
appreciation dinner held on 4 March 2006. Retirees who had
served for more than 10 years were also recognised at the event.
A total of 125 staff received their long service awards from Tun
Musa Hitam, the then Chairman.
Retirees with Board of Directors and Senior Management of KGB.
First Commercial Planting of Guthrie’s Clonal
Oil Palm, AAB1
In April 2006, the Prime Minister officiated the first commercial
planting of the AAB1 clonal oil palm, at the Minggu Saham
Amanah Malaysia in Kuala Terengganu. Simultaneous planting of
the clonal oil palm was done in Bukit Cheraka, Selangor. The
AAB1 is produced by Guthrie Biotech Laboratory.
Prime Minister of Malaysia, Dato’ Seri Abdullah Haji Ahmad Badawi officiating
the commercial planting of Guthrie’s AAB1.
Launch of 2006 CBTE WI and
PWI in Plantation Management
The Group Chief Executive of KGB, Dato’ Abd
Wahab Maskan launched the Competency Based
Training and Education and Work Instruction
(CBTE WI), and Pictorial Work Instruction (PWI) at
the Guthrie Learning Centre on 19 May 2006. The
effort initiated by Group Plantation Malaysia will
further enhance efficiency in estate operations and
promote the culture of high performance.
Plantation executives sharing thoughts on the PWI Manual.
80
Corporate
Highlights
Guthrie Board Members visit Group Estates
Guthrie Board Members visited the Group’s estates in the South including Sembrong Estate, Johor on 9 June 2006 and got a close
look at the performance of the estate. The delegation comprised Tan Sri Dato’ Dr. Wan Mohd Zahid Mohd Noordin, Datuk Alladin
Hashim, Dato’ Abd Wahab Maskan, Dato’ Muhammad Nawawi Arshad and Haji Adam Abdullah.
Guthrie updates Analysts and the Media
KGB conducted its annual briefing on 15 June and 16 June 2006
respectively. Both sessions led by Dato’ Abd Wahab Maskan, the
Group Chief Executive were devoted to ensuring that investment
analysts and the media received a comprehensive reporting of the
Group’s strategies, business focus and future direction.
The Group Chief Executive (centre) responding to queries posed by
investment analysts and fund managers.
Meeting the Shareholders
KGB held its 45th Annual General Meeting (AGM) on 22 June 2006
with over 800 shareholders in attendance. The AGM was chaired
by Tun Musa Hitam who announced that he was not seeking
reappointment as a Director of the company. KGB board member,
Tan Sri Dato’ Dr. Wan Mohd Zahid Mohd Noordin delivered a
tribute to Tun Musa thanking the latter for his steadfast
commitment and sterling contributions to the Group.
Shareholders at the meeting were also briefed by the Group Chief
Executive, Dato’ Abd Wahab Maskan on the latest development
within the Group.
The 45th AGM being chaired by the then Chairman, Tun Musa Hitam (centre).
Course on Estate Management Practices for
Stakeholders
A two-day oil palm nursery course (OPNC) was organised by
Guthrie Plantation & Agricultural Services Sdn Bhd (GPAS) on 1214 July 2006 at Sri Bayu, Port Dickson, Negeri Sembilan. The
OPNC is a significant service provided by GPAS to customers to
further enhance their knowledge on nursery management.
Participants included those from Government agencies, private
estates, and commercial nursery operators.
Participants of the OPNC being briefed on nursery management at Guthrie’s
Tanah Merah Estate.
Annual Report 2006
81
Corporate
Highlights
KGB welcomes new Chairman
Tan Sri Dato’ Dr. Wan Mohd Zahid Mohd Noordin assumed
Chairmanship of KGB with effect from 18 July 2006. Tan Sri Dato’
Dr. Wan Mohd Zahid has been on the Board of Directors of KGB
since May 2002. Also a Director of Permodalan Nasional Berhad, he
is a very distinguished, qualified and respected figure in the country
with an illustrious and expansive background as an educationist and
corporate figure.
Investment Analysts visit Guthrie Operations
Tanah Merah Estate and Mill in Port Dickson, Negeri Sembilan hosted a group of Malaysian plantation analysts and fund managers
on 27 July 2006. The visit was organised with the purpose of giving the analysts a better understanding and insight into Guthrie
estate and mill operations in Malaysia.
Review of AAB1 Clonal Oil Palm
Planting
KGB Group Chief Executive, Dato’ Wahab Maskan
reviewed progress of the first batch of AAB1 clonal
oil palm planted on 20 April 2006 at Bukit Cheraka
Estate, Selangor on 5 August 2006.
The Group Chief Executive (right) evaluating growth of the AAB1 clonal oil palm.
Participation in PNB Quality Symposium
The KGB exhibition booth at the Symposium Q organised by PNB on 8 – 9 October 2006 staged quality initiatives undertaken by the
Group’s Plantation Malaysia, Indonesia and Property operations as well as their achievements. The event, officiated by Tan Sri Dato’
Seri Dr. Ahmad Sarji Abdul Hamid, is a forum for all PNB subsidiaries to showcase their programmes/initiatives to achieve high quality
products and services.
82
Corporate
Highlights
Guthrie briefs EPF
KGB received officials from the Employees Provident Fund
(EPF) at Guthrie Pavilion, Shah Alam on 9 October 2006. The
EPF delegation was led by Datuk Azlan Zainol, the Group
Chief Executive. The briefing led by Guthrie Group Chief
Executive, Dato’ Wahab Maskan was a constructive platform
to share information on the Group’s business and operational
performance as well as its future objectives.
EPF delegates, led by its Group Chief Executive, take a closer look at Guthrie
Property development projects.
GPDH achieves another two international
certifications
Guthrie Property Development Holding Berhad (GPDH) achieved a major
milestone on 16 November 2006 with the attainment of another two
international accreditation for its quality systems in place, the ISO
14001:2004 for Environmental Management System and the OHSAS
18001:1999 for Health and Safety Management from SIRIM Berhad
(Standard & Industrial Research Institute of Malaysia Berhad). The
certification defines the GPDH stringent operational initiatives to deliver
the best to its stakeholders and further enhances its Total Quality &
Environmental Management System. GPDH now has in its possession
three certifications for its quality systems including the ISO 9001:2000
certification received in 2005.
Guthrie Board members together with SIRIM President (centre) at the
presentation of the EMS 14001 and OHSAS 18001 certification awards.
Guthrie Property develops ‘Build-thenSell’ Property
Guthrie Property introduced its ‘build-then-sell’ (BTS)
concept, the luxurious Tropika Collection superlink homes
in Bukit Jelutong.
The Tropika Collection comprises 160 units of superlink
houses with eight designs on a 24’x 90’ plot with prices
ranging from RM577,000 to RM1,125,000 per unit. These
homes have a large built-up area and innovative design set
in lush greenery.
The Tropika Collection was a hit among potential buyers.
Annual Report 2006
83
Corporate
Highlights
Plantation Indonesia Annual SOU Award
Plantation Indonesia organised the annual Strategic Operating Unit (SOU)
Award 2005 in Balikpapan, East Kalimantan on 25 November 2006. The
SOU award is presented to excellent performing strategic operating
units. SOU Sekunyir and SOU Teluk Bakau bagged the Best Performing
SOU and the Most Improved SOU respectively.
SOU Teluk Bakau team accepting their award from the Chairman of
Board of Commissioners, Tan Sri Dato’ Dr. Wan Mohd Zahid Mohd
Noordin.
Divestment of Guthrie Corridor Expressway
KGB entered into a Share Sale Agreement with Projek Lintasan Kota
Holdings Sdn Berhad (Prolintas) for the proposed divestment of the
Guthrie Corridor Expressway Sdn Bhd (GCESB) on 27 November
2006. The proposed divestment involves the disposal of the entire
equity interest in GCESB comprising 5,000,000 ordinary shares.
Exchange of documents between KGB Director, Datuk Khoo Eng Choo
(second from left) and Chairman of Prolintas, Tan Sri Dato’ Hamad Kama
Piah Che Othman (second from right) withnessed by KGB Chairman and
Group Chief Executive.
Health & Safety Policy penned
The Group estate and mill managers put pen to paper to signify their acceptance of the Group Health and Safety Policy to place
safety first in estate and mill operations. The agreement was part of the Group Safety Campaign and road show held at the Sg.
Dingin, Tanah Merah and Ulu Remis estates in November 2006 to implement a safe working environment.
Guthrie wins four NACRA Awards
KGB bagged four awards at the National Annual Corporate
Report Award (NACRA) 2006. The awards signify the
Company’s high quality of reporting standards reflecting
good corporate governance and transparency. The four
awards received were the Industry Excellence Award for
Main Board Companies Listed on Bursa Malaysia for the
Plantation & Mining Sector; Best Annual Report in Bahasa
Malaysia (Gold Prize); Environmental Reporting (Silver
Prize); and Most Outstanding Annual Report 2005 (Silver
Prize). The NACRA awards were presented by Datuk Mohd.
Shafie bin Haji Apdal, Minister of Domestic Trade and
Consumer Affairs.
Datuk Mohd. Shafie bin Haji Apdal (centre) with KGB Senior Management present at
the NACRA 2006.
84
Corporate
Highlights
Highest OER Achievement
Guthrie’s Sungai Dingin Mill in Kedah was awarded the 2005
Oil Palm Industry Award by the Malaysian Palm Oil Board
(MPOB) in December 2006. The mill was recognised as
having achieved the highest oil extraction rate (OER) in
Peninsular Malaysia. Prior to this, the mill had been
proclaimed by MPOB to have achieved the highest OER in
the northern region of 22.23% for 2005.
Mohd Ghozali Yahaya, Senior General Manager of Plantation Operations (second
from right) receiving the MPOB award from Senator Datuk Dr. Vijayaratnam from the
Ministry of Plantation Industry & Commodities.
Analysts visited Plantation Indonesia
KGB organised a four-day analyst visit to the Sungai Cengal and
Pamukan areas in South Kalimantan. The analysts had a better
understanding and insight into the Group’s Plantation Indonesia
operations. While there, the analysts witnessed and were briefed on
estate and yield enhancement initiatives, mill improvement programmes
and infrastructure upgrading.
Analysts at Bebunga Mill, South Kalimantan.
Proposal by Synergy Drive
In December 2006, the Board of KGB accepted the offer from Synergy Drive Sdn. Bhd. to acquire the business of the Company.
Following the acceptance of the offer, a Sale of Business Agreement was signed on 24 January 2007.
Annual Report 2006
85
HISTORY
1821 – Alexander Guthrie established the Guthrie
agency house in Singapore.
1896 – Guthrie began to take firm root in the
Malay Peninsular by laying the foundation
for Malaya to be a major rubber producer.
1924 – Guthrie introduced oil palm to the Malay
Peninsular.
1960 – Kumpulan Guthrie Sdn. Berhad (KGSB)
was incorporated on 25 November 1960.
It was initially formed to serve as the local
agent for Guthrie Estates Agency Limited
(GEAL), a company incorporated in the
United Kingdom (UK).
– GEAL was the agent for UK-incorporated
plantation companies that owned
plantations in Malaya.
1965 – The abovementioned plantation companies
merged to form Guthrie Corporation
Limited (GCL) which was listed on the
London Stock Exchange in 1965.
1977 – GCL transferred its plantation interests
from 10 of its UK-incorporated
subsidiaries to six Malaysian-incorporated
subsidiary companies. GCL further
expanded its plantation interests to the
Philippines, China and Africa.
1981 – On 7 September 1981, Permodalan
Nasional Berhad (PNB) acquired the entire
ordinary share capital of GCL.
1982 – GCL’s plantation interests came home to
Malaysia. On 18 November 1982, GCL’s
plantation assets situated both in
Malaysia and overseas (Philippines, China
and Africa), together with the marketing
and distribution network companies
situated in the UK and United States of
America (USA) were transferred to KGSB.
A new UK company, Guthrie Holdings
Limited, a wholly-owned subsidiary of
PNB, was formed to hold the share
capital of GCL.
– Guthrie Ropel Berhad, which officially
commenced business in 1970, became a
subsidiary of KGSB.
1984 – KGSB acquired the entire issued share
capital of Uniroyal Malaysian Plantations
Sdn. Berhad from Uniroyal Incorporated,
a company incorporated in the USA.
1985 – In January 1985, KGSB, through its whollyowned subsidiary, Kumpulan Jelei Sdn.
Berhad, entered into an agreement with
Kuala Lumpur Kepong Berhad (KLK) to
purchase KLK’s 26.23% holding in
Highlands & Lowlands Berhad (H&L). The
acquisition gave KGSB, together with
PNB’s 19.36% interest in H&L, 45.59%
86
control of H&L. KGSB subsequently made
a cash offer to acquire all the shares of
H&L not already controlled by itself or PNB.
This resulted in KGSB acquiring a further
5.41% interest in H&L. Following this cash
offer, PNB rationalised its interest in H&L by
transferring its interest in H&L to KGSB.
With the completion of this exercise, H&L
became a subsidiary of KGSB.
1987 – KGSB was converted to a public
company, known as Kumpulan Guthrie
Berhad (Guthrie).
1989 – Guthrie was listed on the Kuala Lumpur
Stock Exchange (now renamed Bursa
Malaysia Securities Berhad) on 25 August
1989.
1990 – Guthrie Property Development Holding
Sdn. Berhad [now known as Guthrie
Property Development Holding Berhad
(GPDH)] was established. GPDH would
undertake property development activities
of Guthrie Group.
1994 – The Guthrie Group strategically diversified
its core businesses into plantations,
property development, manufacturing and
services. The Group commenced its
property development activity in Bukit
Jelutong.
1995 – Guthrie, through its wholly-owned
subsidiary, Guthrie Tapis Sdn. Berhad,
entered into a joint-venture agreement
with PT Pecconina Baru to form a jointventure company, PT Guthrie Pecconina
Indonesia, to develop an oil palm
plantation in Palembang, South Sumatera,
Indonesia.
1997 – Bukit Jelutong project won the Best
Planned Township Award from the
Institute of Town Planners.
1998 – The Guthrie Pavilion which houses the
office of GPDH was completed.
2000 – Guthrie Corridor Expressway Sdn. Berhad
(GCESB) was awarded the Guthrie
Corridor Expressway, a 33-year concession
highway project.
– Guthrie won a bid to acquire interests in
companies which are substantially
involved in oil palm cultivation covering
approximately 265,000 hectares in seven
Indonesian provinces.
2001 – Guthrie signed an agreement to issue
USD395 million (RM1.5 billion) worth of
Islamic bonds, the first US dollar
denominated international Islamic bonds
traded on the Labuan Financial Exchange,
to refinance its Indonesian acquisition and
operations.
2002 – Jeleta Bumi Mill registered the highest oil
palm extraction rate (OER) of 24.53% in
the Malaysian palm oil industry in March
2002. The achievement was endorsed by
the Malaysian Palm Oil Board (MPOB).
2003 – GPDH’s Denai Alam won the coveted
Malaysian Institute of Planners’ Planning
Innovation Award.
2004 – GPDH acquired 1,609 acres of its
landbank from the Group.
– Guthrie is the first plantation company in
the world to be granted EUREPGAP
(European Retailers and Producers Good
Agricultural Practices) certification for
plantation management. Tanah Merah
SOU comprising the Tanah Merah, Sua
Betong and Bukit Pelandok estates was
awarded the EUREPGAP certification, a
quality standard recognised by the Food
and Agricultural Organisation (FAO).
– Guthrie launched its Performance-driven
system for G-Excellence in October 2004.
2005 – Guthrie launched the EUREPGAP
programme group-wide to its plantation
estates for global recognition on
sustainable agricultural practices.
– Guthrie launched its clonal oil palm, the
AAB1 in April 2005.
– Guthrie launched its G-Emas, the
integrated IT estate and mill management
system.
– GPDH was awarded ISO 9001:2000
certification from SIRIM QAS International
Sdn. Berhad. The achievement paves the
way for recognition of a quality builder
status.
– Guthrie Group implemented Phase I
of the Performance Transformation
Programme and Balanced Scorecarddriven (BSC) Key Performance Indicators
(KPIs).
2006 – First Commercial planting of the Group’s
clonal oil palm, AAB1, at Bukit Cheraka
Estate in Selangor.
– Guthrie signed an agreement with Projek
Lintasan Kota Holdings Sdn Bhd for the
proposed divestment of the entire equity
interest in GCESB.
– GPDH achieved ISO 14001:2004 for
Environmental Management System and
OHSAS 18001:1999 for Health and Safety
Management from SIRIM Bhd.
– In December 2006, the Board of KGB
accepted the offer from Synergy Drive
Sdn. Bhd. to acquire the business and
undertakings of the Company.
Financial
Statements
88
Directors’ Report
92
Income Statements
94
Balance Sheets
96
Statements of Changes in Equity
99
Cash Flow Statements
101
218
Statement by Directors
218
Statutory Declaration
219
Report of the Auditors
Directors’ Report
for the year ended 31 December 2006
The directors have pleasure in presenting their report together with the audited financial statements of the Group and of the Company
for the financial year ended 31 December 2006.
PRINCIPAL ACTIVITIES
The Company is an investment holding company and it also provides research, agricultural and advisory services. The principal
activities of its subsidiary and associated companies are respectively described in Notes 7 and 26 to the financial statements.
There have been no significant changes in the nature of these principal activities during the financial year other than as disclosed in
Note 15 to the financial statements.
RESULTS
GROUP
RM’000
COMPANY
RM’000
Profit after tax from continuing operations
Loss for the year from discontinued operations
446,618
(12,908)
272,955
(24,575)
Profit for the year
433,710
248,380
Attributable to:
Equity holders of the Company
Minority interests
284,194
149,516
248,380
–
433,710
248,380
There were no material transfers to or from reserves or provisions during the financial year other than as disclosed in the statements
of changes in equity.
In the opinion of the directors, the results of the operations of the Group and of the Company during the financial year were not
substantially affected by any item, transaction or event of a material and unusual nature other than the following:
(a) The effects arising from the changes in accounting policies due to the adoption of the new and revised Financial Reporting
Standards (“FRS”) which have resulted in a decrease in the Group’s and the Company’s profit for the year by RM9,858,000 and
RM1,245,000 respectively, as disclosed in Note 4(i)(ii) to the financial statements;
(b) The disposal of Ladang Bertam by Guthrie Ropel Berhad (“Ropel”), a subsidiary of the Company and Guthrie Ropel Development
Sdn. Berhad, a wholly-owned subsidiary of Ropel resulting in a gain on disposal of RM68,515,000 to the Group as disclosed in
Note 11 to the financial statements;
(c) The disposal of Integrated Brickworks Sdn. Berhad, a wholly-owned subsidiary of the Group resulting in a loss on disposal of
RM23,008,000 and RM24,575,000 to the Group and the Company respectively as disclosed in Notes 15(e) and 15(f) to the
financial statements; and
(d) The surplus on liquidation of subsidiary companies resulting in an increase in the Company’s profit for the year by RM17,756,000
as disclosed in Note 11 to the financial statements.
88
DIVIDENDS
During the financial year, the following dividends were paid by the Company:
(a) A final dividend of 6 sen per share, less 28% tax, amounting to RM43,579,000, in respect of the previous financial year as
proposed in the Directors’ Report of that year; and
(b) An interim dividend of 6 sen per share, less 28% tax, amounting to RM43,892,000, in respect of the current financial year.
The directors have proposed a final tax-exempt dividend of 6 sen per share, and a gross dividend of 4 sen per share, less 27% tax,
amounting to RM91,113,000 which, subject to shareholders’ approval at the forthcoming Annual General Meeting of the Company,
will be paid on 21 June 2007. The financial statements for the current financial year do not reflect these proposed dividends. Such
dividends, if approved by the shareholders, will be accounted for in equity as an appropriation of revenue reserve in the financial year
ending 31 December 2007.
DIRECTORS
The names of the directors of the Company in office since the date of the last report and at the date of this report are:
Tan Sri Dato’ Dr. Wan Mohd. Zahid Mohd. Noordin
Datuk Alladin Mohd. Hashim
Datuk Khoo Eng Choo
Dato’ Muhammad Nawawi Haji Mohd. Arshad
Tun Musa Hitam
Sreesanthan s/o Eliathamby
(Appointed Chairman on 18 July 2006)
(Resigned on 22 June 2006)
(Resigned on 23 November 2006)
In accordance with Article 102 of the Company’s Articles of Association, YBhg. Datuk Mohamed Adnan Ali and YBhg. Dato’
Muhammad Nawawi Haji Mohd. Arshad retire from the Board of Directors by rotation at the forthcoming Annual General Meeting and,
being eligible, offer themselves for re-election.
In compliance with Section 129(2) of the Companies Act, 1965, YM. Raja Tan Sri Muhammad Alias Raja Muhammad Ali, being over
the age of seventy, retires from the Board of Directors. The Board recommends that he be reappointed as director pursuant to Section
129(6) of the Companies Act, 1965.
DIRECTORS’ BENEFITS
Neither at the end of the financial year, nor at any time during that year, did there subsist any arrangement to which the Company
was a party, whereby the directors might acquire benefits by means of the acquisition of shares in, or debentures of, the Company
or any other body corporate.
Since the end of the previous financial year, no director has received or become entitled to receive a benefit (other than benefits
included in the aggregate amount of emoluments received or due and receivable by the directors or the fixed salary of a full-time
employee of the Company as shown in Note 13(b) to the financial statements) by reason of a contract made by the Company or a
related corporation with any 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 required to be disclosed by Section 169(8) of the Companies Act, 1965, except as disclosed in Note
48 to the financial statements.
Annual Report 2006
89
DIRECTORS’ INTERESTS
The following directors who held office at the end of the financial year had, according to the register of directors’ shareholdings
required to be kept under Section 134 of the Companies Act, 1965, interests in shares of the Company and its subsidiary companies,
as stated below:
Name of director
of this Company
Name of company
in which interest
is held
Direct Interest:
Datuk Khoo Eng Choo
Datuk Nik Mohamed Affandi
Nik Yusof
Dato’ Muhammad Nawawi
Haji Mohd. Arshad
Company Berhad
Company Berhad
As at
1.1.2006
Number of Ordinary Shares
Bought
Sold
As at
During the year
31.12.2006
2,000
1,000
–
–
2,000
–
–
1,000*
1,000
–
–
1,000*
* Held in trust for the Company
None of the other directors in office at the end of the financial year had any interest in shares in the Company or its related
corporations during the financial year.
ISSUE OF SHARES
During the financial year, the issued and paid-up share capital of the Company was increased from 1,006,939,300 ordinary shares of
RM1 each to 1,021,449,400 ordinary shares of RM1 each following the issue of 14,510,100 ordinary shares of RM1 each pursuant to
the Second Employees’ Share Option Scheme (“Second ESOS”) of the Company. These new ordinary shares were issued and credited
as fully paid and rank pari passu in all respects with the existing ordinary shares of the Company. The share premium arising from
this issue amounted to RM18,019,000.
OTHER STATUTORY INFORMATION
(a) Before the financial statements of the Group and of the Company were made out, the directors took reasonable steps:
(i)
to ascertain that proper action had been taken in relation to the writing off of bad debts and the making of provision for
doubtful debts and satisfied themselves that all known bad debts had been written off and that adequate provision had been
made for doubtful debts; and
(ii)
to ensure that any current assets which were unlikely to realise their value as shown in the accounting records in the ordinary
course of business had been written down to an amount which they might be expected so to realise.
(b) At the date of this report, the directors are not aware of any circumstances which would render:
(i)
the amount written off for bad debts or the amount of the provision for doubtful debts in the financial statements of the
Group and of the Company inadequate to any substantial extent; and
(ii)
the values attributed to the current assets in the financial statements of the Group and of the Company misleading.
(c) At the date of this report, the directors are not aware of any circumstances which have arisen which would render adherence to
the existing method of valuation of assets or liabilities of the Group and of the Company misleading or inappropriate.
(d) At the date of this report, the directors are not aware of any circumstances not otherwise dealt with in this report or financial
statements of the Group and of the Company which would render any amount stated in the financial statements misleading.
90
OTHER STATUTORY INFORMATION (cont’d.)
(e) At the date of this report, there does not exist:
(f)
(i)
any charge on the assets of the Group or of the Company which has arisen since the end of the financial year which secures
the liabilities of any other person; or
(ii)
any contingent liability of the Group or of the Company which has arisen since the end of the financial year.
In the opinion of the directors:
(i)
no contingent or other liability has become enforceable or is likely to become enforceable within the period of twelve months
after the end of the financial year which will or may affect the ability of the Group or of the Company to meet their obligations
when they fall due; and
(ii)
no item, transaction or event of a material and unusual nature has arisen in the interval between the end of the financial year
and the date of this report which is likely to affect substantially the results of the operations of the Group or of the Company
for the financial year in which this report is made.
SIGNIFICANT EVENTS DURING THE FINANCIAL YEAR
The significant events during the financial year are disclosed in Note 53 to the financial statements.
SUBSEQUENT EVENT
Details of the subsequent event are disclosed in Note 54 to the financial statements.
AUDITORS
The auditors, Ernst & Young, have expressed their willingness to continue in office.
Signed on behalf of the Board in accordance with a resolution of the directors dated 28 March 2007.
Chairman
Director
Annual Report 2006
91
Income Statements
Note
GROUP
2006
2005
RM’000
RM’000
(restated)
COMPANY
2006
2005
RM’000
RM’000
(restated)
Continuing Operations
Revenue
Cost of sales
2,406,513
(1,583,312)
1,980,769
(1,260,470)
478,858
–
280,352
–
823,201
328,822
(8,319)
(122,193)
(255,371)
720,299
88,384
(7,081)
(120,707)
(261,415)
478,858
173,761
–
(50,358)
(105,143)
280,352
50,077
–
(48,531)
(44,004)
766,140
(163,387)
419,480
(157,347)
497,118
(149,130)
237,894
(137,730)
2,748
875
–
–
(38)
–
–
–
605,463
(158,845)
263,008
(110,556)
347,988
(75,033)
100,164
(31,353)
446,618
152,452
272,955
68,811
(12,908)
(10,053)
(24,575)
(1,817)
Profit for the year
433,710
142,399
248,380
66,994
Attributable to:
Equity holders of the Company
Minority interests
284,194
149,516
48,844
93,555
248,380
–
66,994
–
433,710
142,399
248,380
66,994
Gross profit
Other income
Distribution costs
Administration expenses
Other expenses
Operating profit
Finance expense
Share of results after tax of
associated companies
Share of results after tax of a jointly
controlled entity
Taxation
9
10
11
12
13
14
Profit for the year from
continuing operations
Discontinued Operations
Loss for the year from
discontinued operations
92
15
Note
Basic earnings per share attributable to
equity holders of the Company (sen):
Loss from discontinued operations
16
Profit for the year
Diluted earnings per share attributable to
equity holders of the Company (sen):
Profit for the year
GROUP
2006
2005
(restated)
29.38
(1.28)
5.85
(1.00)
28.10
4.85
29.27
(1.27)
5.80
(0.99)
28.00
4.81
16
The accompanying notes form an integral part of the financial statements.
Annual Report 2006
93
Balance Sheets
as at 31 December 2006
Note
GROUP
2006
2005
RM’000
RM’000
(restated)
COMPANY
2006
2005
RM’000
RM’000
(restated)
ASSETS
Non-Current Assets
Investment property
Concession asset
Investments in subsidiary companies
Investments in associated companies
Investment in a jointly controlled entity
Other investments
Loans to subsidiary companies
Advances for Plasma PIR-Trans projects
Advances for KKPA projects
Deferred tax assets
Current Assets
Property development costs
Inventories
Amounts due from customers on contracts
Trade receivables
Other receivables
Income tax recoverable
Amounts due from subsidiary companies
Marketable securities
Deposits, bank balances and cash
Assets of disposal groups classified as held for sale
TOTAL ASSETS
94
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
2,530,776
2,434,846
342,357
266,200
–
–
254,558
–
16,700
1,962
1,773
–
68,347
18,018
15,106
152,050
2,535,812
2,480,611
347,202
399,074
–
585,742
261,510
–
13,795
–
2,550
–
–
17,550
23,873
195,777
17,193
–
615
–
–
–
–
2,636,526
–
2,000
459
379,548
–
–
–
–
18,507
–
645
–
21,524
–
–
2,823,585
–
–
959
390,472
–
–
–
346
6,102,693
6,863,496
3,036,341
3,256,038
38
39
40
413,444
189,265
–
280,087
137,261
97,514
–
37,403
809,936
392,092
191,066
7,640
287,720
107,678
119,197
–
22,866
709,067
–
–
–
–
28,183
74,779
795,636
–
29,030
–
–
–
–
31,799
103,927
1,025,828
–
56,394
41
1,964,910
678,900
1,837,326
–
927,628
104,800
1,217,948
–
2,643,810
1,837,326
1,032,428
1,217,948
8,746,503
8,700,822
4,068,769
4,473,986
34
35
36
30
37
Note
GROUP
2006
2005
RM’000
RM’000
(restated)
COMPANY
2006
2005
RM’000
RM’000
(restated)
EQUITY AND LIABILITIES
Equity Attributable to Equity Holders
of the Company
Share capital
Share premium
Revaluation reserve
Capital reserve
Exchange reserve
Share option reserve
Revenue reserve
1,021,449
28,584
691,403
58,725
17,805
1,101
1,308,479
1,006,939
8,178
699,257
53,860
(4,881)
–
1,095,680
1,021,449
28,584
10,122
–
–
1,101
261,829
1,006,939
8,178
10,136
–
–
–
100,898
Minority interests
3,127,546
1,568,042
2,859,033
1,536,534
1,323,085
–
1,126,151
–
Total Equity
4,695,588
4,395,567
1,323,085
1,126,151
2,450,435
–
8,123
675,435
24,946
2,620,673
–
1,785
708,170
15,384
239,657
1,664,395
–
1,394
73
679,633
1,522,640
3,158,939
3,346,012
1,905,519
2,202,336
326,919
200,321
2,280
–
298,170
55,180
301,213
197,495
8,330
–
426,570
25,635
9,426
25,482
–
503,297
279,437
–
4,600
17,347
–
800,751
322,801
–
882,870
959,243
817,642
1,145,499
9,106
–
22,523
–
891,976
959,243
840,165
1,145,499
Total Liabilities
4,050,915
4,305,255
2,745,684
3,347,835
TOTAL EQUITY AND LIABILITIES
8,746,503
8,700,822
4,068,769
4,473,986
Non-Current Liabilities
Borrowings
Loans from subsidiary companies
Deferred income
Retirement benefits
Current Liabilities
Trade payables
Other payables
Deferred income
Amounts due to subsidiary companies
Borrowings
Taxation
Liabilities directly associated with assets
of disposal groups classified as held for sale
42
43
43
43
43
43
43
44
29
45
33
46
47
45
38
44
41
–
63
Annual Report 2006
95
GROUP
<----------------------------------------------------------------------------------Share
Capital
RM’000
Share
Premium
RM’000
Revaluation
Reserve
RM’000
Capital
Reserve
RM’000
1,006,939
8,178
699,257
53,860
–
–
–
–
–
–
2,387
–
–
–
(14,675)
6,821
–
–
4,865
–
–
–
2,387
–
(7,854)
–
4,865
–
–
14,510
–
–
2,387
18,019
–
–
(7,854)
–
–
–
4,865
–
–
–
At 31 December 2006
1,021,449
28,584
691,403
58,725
At 1 January 2005
Foreign currency translation
Group
Associated company
Transfers (from)/to reserves
1,005,419
6,472
715,555
54,305
–
–
–
–
–
–
–
–
(16,298)
–
–
(445)
Net (expense)/income recognised directly in equity
Profit for the year
–
–
–
–
(16,298)
–
(445)
–
Total recognised income and expense for the year
Issue of shares pursuant to Second ESOS
Dividends paid (Note 17)
–
1,520
–
–
1,706
–
(16,298)
–
–
(445)
–
–
1,006,939
8,178
699,257
53,860
At 1 January 2006
Foreign currency translation
Group
Associated company
Transfers (from)/to reserves
Effects of changes in tax rates
Net income/(expense) recognised directly in equity
Profit for the year
Total recognised income and expense for the year
Cost of share options granted under Second ESOS
At 31 December 2005
96
----------------Attributable to Equity Holders of the Company --------->
Share
Exchange
Option
Revenue
Reserve
Reserve
Reserve
Total
RM’000
RM’000
RM’000
RM’000
Minority
Interests
RM’000
Total
Equity
RM’000
(4,881)
–
1,095,680
2,859,033
1,536,534
4,395,567
23,088
810
(1,212)
–
–
–
(2,387)
–
–
–
16,076
–
23,088
810
5,054
6,821
1,508
–
–
–
24,596
810
5,054
6,821
22,686
–
(2,387)
–
16,076
284,194
35,773
284,194
1,508
149,516
37,281
433,710
22,686
–
–
–
(2,387)
–
3,488
–
300,270
–
–
(87,471)
319,967
32,529
3,488
(87,471)
151,024
–
–
(119,516)
470,991
32,529
3,488
(206,987)
17,805
1,101
1,308,479
3,127,546
1,568,042
4,695,588
72,476
–
1,095,322
2,949,549
1,541,987
4,491,536
(76,507)
(850)
–
–
–
–
–
–
16,743
(76,507)
(850)
–
(11,142)
–
–
(87,649)
(850)
–
(77,357)
–
–
–
16,743
48,844
(77,357)
48,844
(11,142)
93,555
(88,499)
142,399
(77,357)
–
–
–
–
–
65,587
–
(65,229)
(28,513)
3,226
(65,229)
82,413
–
(87,866)
53,900
3,226
(153,095)
(4,881)
–
1,095,680
2,859,033
1,536,534
4,395,567
Annual Report 2006
97
for the year ended 31 December 2006 (cont’d.)
COMPANY
Share
Capital
RM’000
Share
Premium
RM’000
Revaluation
Reserve
RM’000
Share
Option
Reserve
RM’000
Revenue
Reserve
RM’000
Total
RM’000
1,006,939
–
8,178
–
165,626
(155,490)
–
–
100,898
–
1,281,641
(155,490)
1,006,939
8,178
10,136
–
100,898
1,126,151
Transfer to/(from) reserves
Effects of changes in tax rates
–
–
2,387
–
(22)
8
(2,387)
–
22
–
–
8
Net income/(expense) recognised directly
in equity
Profit for the year
–
–
2,387
–
(14)
–
(2,387)
–
22
248,380
8
248,380
–
14,510
2,387
18,019
(14)
–
(2,387)
–
248,402
–
248,388
32,529
–
–
–
–
–
–
3,488
–
–
(87,471)
3,488
(87,471)
At 31 December 2006
1,021,449
28,584
10,122
1,101
261,829
1,323,085
At 1 January 2005
As previously stated
Effects of adopting FRS 127 [Note 4(g)]
1,005,419
–
6,472
–
165,645
(155,490)
–
–
99,114
–
1,276,650
(155,490)
1,005,419
6,472
10,155
–
99,114
1,121,160
–
–
–
–
(19)
–
–
–
19
66,994
–
66,994
–
1,520
–
–
1,706
–
(19)
–
–
–
–
–
67,013
–
(65,229)
66,994
3,226
(65,229)
1,006,939
8,178
10,136
–
100,898
1,126,151
At 1 January 2006
Effects of adopting FRS 127 [Note 4(g)]
As restated
Total recognised income and expense
for the year
Cost of share options granted under
Second ESOS
As restated
Transfer (from)/to reserves, representing net
(expense)/income recognised directly in equity
Profit for the year
Total recognised income and expense
for the year
At 31 December 2005
98
GROUP
2006
2005
RM’000
RM’000
Cash Flows from Operating Activities
Cash receipts from customers
Cash paid to suppliers and employees
COMPANY
2006
2005
RM’000
RM’000
2,580,521
(1,758,978)
2,303,451
(1,615,208)
51,426
(54,160)
53,259
(68,164)
Cash from/(used in) operations
Tax paid
Tax refunded
Interest paid
Proceeds from compulsory land acquisitions
Proceeds from disposal of land held for property development
Proceeds from disposal of land
821,543
(150,647)
64,618
(78,207)
9,480
61,968
83,698
688,243
(171,413)
55,896
(83,509)
18,001
61,968
4,275
(2,734)
–
60,515
(80,169)
–
–
–
(14,905)
–
37,027
(80,955)
–
–
–
Net cash from/(used in) operating activities
812,453
573,461
(22,388)
(58,833)
(209,115)
(1,405)
(65,181)
(20,812)
(14,224)
(39,496)
(2,000)
(7,721)
1,176
1,308
27,793
–
–
3,495
38,215
(64,883)
–
–
–
–
–
(86,381)
(1,909)
(59,142)
(93,211)
(56,205)
(16,334)
–
(3,047)
4,985
9,951
26,706
–
–
1,192
25,991
(49,610)
–
–
–
–
–
(974)
–
–
–
–
–
(2,000)
–
164
545
–
10,000
323,400
1,682
26,975
(64,883)
18,782
(15,362)
323,407
157,030
(268,536)
(3,250)
–
–
–
–
–
–
–
677
15,040
–
–
161,634
407
37,926
(49,610)
–
(77,799)
1,435,640
(34,312)
23,569
(352,850)
(297,014)
510,230
1,509,922
Cash Flows from Investing Activities
Purchase of property, plant and equipment
Prepayment of land lease
Replanting expenditure
Property development activities
Construction of concession asset
Purchase of other investments
Subscription of shares in a jointly controlled entity
Purchase of shares from minority shareholders
Proceeds from disposal of property, plant and equipment
Proceeds from disposal of subsidiary companies (Note 15)
Proceeds from disposal of other investments
Proceeds from disposal of investment property
Net dividends received from subsidiary companies
Net dividends received from investments
Interest received
Interest paid
Distribution in specie from subsidiary companies
Net change in amounts due from subsidiary companies
Net change in amounts due to subsidiary companies
Net cash (used in)/from investing activities
Annual Report 2006
99
for the year ended 31 December 2006 (cont’d.)
GROUP
2006
2005
RM’000
RM’000
Cash Flows from Financing Activities
Drawdown of borrowings
Repayment of borrowings
Repayment of Islamic Lease SUKUK
Net repayment of hire purchase and lease financing
Release of fixed deposits pledged
Dividends paid to shareholders of the Company
Dividends paid to minority shareholders of subsidiary companies
Proceeds from issuance of ordinary shares of the
Company pursuant to the Second ESOS
COMPANY
2006
2005
RM’000
RM’000
358,066
(184,778)
(353,433)
–
11,446
(87,471)
(119,516)
1,776,415
(2,014,484)
–
(1,000)
21,850
(65,229)
(87,866)
–
(106,831)
(353,433)
–
–
(87,471)
–
167,913
(1,622,756)
–
–
–
(65,229)
–
32,529
3,226
32,529
3,226
(343,157)
(367,088)
(515,206)
(1,516,846)
Net change in cash and cash equivalents
Cash and cash equivalents at 1 January
Effects of changes in foreign exchange rates
116,446
697,621
(1,259)
(90,641)
795,426
(7,164)
(27,364)
56,394
–
(65,757)
122,151
–
Cash and cash equivalents at 31 December
812,808
697,621
29,030
56,394
809,936
2,872
709,067
–
29,030
–
56,394
–
–
(11,446)
–
–
812,808
697,621
29,030
56,394
Net cash used in financing activities
Cash and cash equivalents at 31 December comprise:
Deposits, bank balances and cash (Note 40)
Cash and bank balances classified as held for sale (Note 41)
Less:
Fixed deposits with licensed banks pledged for
banking facilities (Note 40)
100 Kumpulan Guthrie Berhad
– 31 December 2006
1. CORPORATE INFORMATION
The Company is a public limited liability company, incorporated and domiciled in Malaysia, and is listed on the Main Board of
Bursa Malaysia Securities. The registered office of the Company is located at Wisma Guthrie, 21 Jalan Gelenggang, Damansara
Heights, 50490 Kuala Lumpur.
The principal activities of the Company are investment holding and the provision of research, agricultural and advisory services.
The principal activities of the subsidiary and associated companies, which are also described in Notes 7 and 26, are as follows:
–
–
–
–
–
cultivation, processing and sale of palm oil, palm kernel and fresh fruit bunches;
property development;
road concession operation;
manufacture and sale of medium–density fibreboard and concrete blocks and bricks; and
hotel and resort management.
There have been no significant changes in the nature of these activities during the financial year except as disclosed in Note 15.
The financial statements were authorised for issue by the Board of Directors in accordance with a resolution of the directors on
28 March 2007.
2. BASIS OF PREPARATION
The financial statements comply with the applicable MASB Approved Accounting Standards in Malaysia for Entities Other Than
Private Entities and the provisions of the Companies Act, 1965. As at 1 January 2006, the Group and the Company had adopted
new and revised FRS which are mandatory for financial periods beginning on or after 1 January 2006 as disclosed in Note 4.
The financial statements of the Group and of the Company have been prepared under the historical cost convention except for
the following, which are stated at valuation:
(a) Landed properties comprising freehold land and buildings, as disclosed in Note 3(e);
(b) Plantation development expenditure, as disclosed in Note 3(f); and
(c) Land held for property development, as disclosed in Note 3(i).
The financial statements are presented in Ringgit Malaysia (RM) and all values are rounded to the nearest thousand (RM’000)
except when otherwise indicated.
Annual Report 2006 101
3. SIGNIFICANT ACCOUNTING POLICIES
(a) Subsidiary Companies
Subsidiary companies are those enterprises in which the Group has a long-term equity interest and which are controlled by
the Group. Control exists when the Group has the power, directly or indirectly, to govern the financial and operating policies
of an enterprise so as to obtain benefits from its activities.
Investments in subsidiary companies in the financial statements of the Company are stated at cost less impairment losses.
The gain or loss on disposal of a subsidiary company is the difference between the net disposal proceeds and the Group’s
share of its net assets together with any balance of goodwill and exchange differences which were not previously recognised
in the consolidated income statement.
The policy for the recognition and measurement of impairment losses is in accordance with Note 3(n).
(b) Basis of Consolidation
The consolidated financial statements comprise the financial statements of the Company and all its subsidiary companies,
after the elimination of all material intercompany transactions and unrealised gains and losses. The financial statements of
subsidiary companies are included in the consolidated financial statements from the date that control effectively commences
until the date such control effectively ceases.
The financial statements of subsidiary companies are prepared for the same reporting period as the Company. In the
preparation of the consolidated financial statements, the financial statements of subsidiary companies are adjusted for the
effects of any material dissimilar accounting policies.
Subsidiary companies are consolidated using the acquisition method of accounting. This method involves allocating the cost of
acquisition to the fair value of the assets acquired and liabilities and contingent liabilities assumed at the date of acquisition. The
cost of acquisition is measured at the aggregate of the fair values, at the date of exchange, of the assets given, liabilities incurred
or assumed, and equity instruments issued plus any costs directly attributable to the acquisition. The difference between the cost
of acquisition of subsidiary companies and the Group’s interest in the fair value ascribed to the net assets of these acquired
subsidiary companies at dates of acquisition represents goodwill. Any excess of the Group’s interest in net fair value of the
identifiable assets, liabilities and contingent liabilities over the cost of acquisition is recognised immediately in income statement.
Minority interests represent the portion of profit or loss and net assets in subsidiaries not held by the Group. It is measured
at the minorities’ share of the fair value of the subsidiaries’ identifiable assets and liabilities at the acquisition date and
minorities’ share of change in the subsidiaries’ equity since then.
(c) Associated Companies
Associated companies are entities in which the Group has significant influence and that is neither a subsidiary nor an interest
in a joint venture. Significant influence is the power to participate in the financial and operating policy decisions of the
investee but not control or joint control over those policies.
The Group equity accounts for its share of post-acquisition results and reserves of associated companies based on the latest
audited financial statements. The Group’s share of results and reserves of the associated companies are included in the
consolidated financial statements from the date the Group obtains significant influence until the date the Group cease to
have significant influence over the associate. Where there has been a change recognised directly in equity of the associate,
the Group recognises its share of such changes. In applying the equity method, unrealised gains and losses on transactions
between the Group and the associate are eliminated to the extent of the Group’s interest in the associate.
3. SIGNIFICANT ACCOUNTING POLICIES (cont’d.)
(c) Associated Companies (cont’d.)
Goodwill relating to an associate is included in the carrying amount of the investment and is not amortised. Any excess of
the Group’s share of the net fair value of the associate’s identifiable assets, liabilities and contingent liabilities over the cost
of the investment is excluded from the carrying amount of the investment and is instead included as income in the
determination of the Group’s share of the associate’s profit or loss in the period in which the investment is acquired.
The financial statements of the associated companies are prepared for the same reporting period as the Group. Investments
in associated companies are stated at cost less impairment losses. The policy for the recognition and measurement of
impairment losses is in accordance with Note 3(n). On disposal of such investments, the difference between the net disposal
proceeds and their carrying amounts is recognised in the income statement.
(d) Jointly Controlled Entity
The Group has an interest in a joint venture which is a jointly controlled entity. A joint venture is a contractual arrangement
whereby two or more parties undertake an economic activity that is subject to joint control, and a jointly controlled entity is
a joint venture that involves the establishment of a separate entity in which each venturer has an interest.
Investment in a jointly controlled entity is accounted for in the consolidated financial statements using the equity method of
accounting as described in Note 3(c).
In the Company’s financial statements, investment in a jointly controlled entity is stated at cost less impairment losses.
On disposal of such investment, the difference between the net disposal proceeds and its carrying amount is recognised in
the income statement.
(e) Property, Plant and Equipment
All items of property, plant and equipment are initially recorded at cost. Subsequent costs are included in the asset’s carrying
amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated
with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replaced
part is derecognised. All other repairs and maintenance cost are charged to the income statement during the financial period
in which they are incurred.
Subsequent to recognition, property, plant and equipment except for freehold land and buildings are stated at cost less
accumulated depreciation and any accumulated impairment losses. The policy for the recognition and measurement of
impairment losses is in accordance with Note 3(n).
The Group has adopted the policy to state its landed properties comprising freehold land and buildings, at valuation less
accumulated depreciation and impairment losses. These assets are revalued by independent professionally qualified valuers
once every five years based on open market value basis. Revaluations are performed with sufficient regularity to ensure that
the fair value of a revalued asset does not differ materially from that which would be determined using fair values at the
balance sheet date. The treatment of surplus or deficit from revaluation is as described in Note 3(q).
Freehold land has an unlimited useful life and is therefore not depreciated. Capital work-in-progress is not depreciated as
these assets are not available for use.
(e) Property, Plant and Equipment (cont’d.)
Golf course development expenditure are amortised over the period of the lease. All other property, plant and equipment are
depreciated to their residual values over their estimated economic useful lives based upon the original cost or subsequent
valuation.
The principal annual rates of depreciation used are:
Golf course development expenditure
Buildings
Machinery, equipment and vehicles
58 years
2 – 5%
10 – 33 1/3%
The residual values, useful life and depreciation method are reviewed at each financial year-end to ensure that the amount,
method and period of depreciation are consistent with previous estimates and the expected pattern of consumption of the
future economic benefits embodied in the items of property, plant and equipment.
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected
from its use or disposal. The difference between the net disposal proceeds, if any and the net carrying amount is recognised
in the income statement and the outstanding portion of the revaluation surplus on that item is taken directly to revenue reserve.
(f)
Plantation Development Expenditure
Plantation development expenditure, consisting of land clearing and upkeep of trees to maturity, are initially recorded at cost
and upon maturity of the crops, the plantation development expenditure is amortised over 20 to 24 years, representing the
economic useful lives of the crops.
Subsequent to recognition, the Group has adopted the policy to state the plantation development expenditure at valuation less
accumulated amortisation and any accumulated impairment losses. These assets are revalued by independent professionally
qualified valuers once every five years based on open market value basis. Revaluations are performed with sufficient regularity
to ensure that the fair value of a revalued asset does not differ materially from that which would be determined using fair
values at the balance sheet date. The treatment of surplus or deficit from revaluation is as described in Note 3(q).
(g) Leases
(i)
Classification
A lease is recognised as a finance lease if it transfers substantially to the Group all the risks and rewards incidental to
ownership. All leases that do not transfer substantially all the risks and rewards are classified as operating leases.
(g) Leases (cont’d.)
(ii)
Finance Leases
Assets acquired by way of hire purchase or finance leases are stated at an amount equal to the lower of their fair values
and the present value of the minimum lease payments at the inception of the leases, less accumulated depreciation and
impairment losses. The corresponding liability is included in the balance sheet as borrowings. In calculating the present
value of the minumum lease payments, the discount factor used is the interest rate implicit in the lease, when it is
practicable to determine; otherwise, the Company’s incremental borrowing rate is used. Any initial direct costs are also
added to the carrying amount of such assets.
Lease payments are apportioned between the finance costs and the reduction of the outstanding liability. Finance costs,
which represent the difference between the total leasing commitments and the fair value of the assets acquired, are
recognised in the profit or loss over the term of the relevant lease so as to produce a constant periodic rate of charge
on the remaining balance of the obligations for each accounting period.
The depreciation policy for leased assets is in accordance with that for depreciable property, plant and equipment as
described in Note 3(e).
(iii) Operating Leases
Operating lease payments are recognised as an expense in the income statement on a straight-line basis over the lease
term. In the case of the lease of lands, the minimum lease payments or the up-front payments representing the prepaid
lease payments are amortised on a straight-line basis over the lease term.
The Group and the Company had previously revalued its leasehold land and have retained the unamortised revalued
amount as the surrogate cost of prepaid lease payments in accordance with the transitional provisions in FRS 117.
Prepaid lease payments on leasehold land are stated at surrogate cost less accumulated amortisation and any
impairment loss. The policy for the recognition and measurement of impairment losses are in accordance with Note 3(n).
In respect of the subsidiary companies in Indonesia, prepaid lease payments include deferred land rights which represent
the costs associated with the legal transfer or renewal of land titles, including legal fees, area survey and land
remeasurement fees, notarial fees, taxes and other expenses. These costs are deferred and amortised using the straightline method over the legal terms of the related land rights.
The principal annual rates of amortisation used are:
Short-term leasehold land
Long-term leasehold land
Deferred land rights
1 – 49 years
50 – 99 years
21 – 35 years
(h) Land Acquisition
Gains arising from the acquisition of land by the Government are recognised in the income statement upon the physical handing
over of land, receipt of compensation or notice in Form K under the Land Acquisition Act, 1960, whichever is the earlier.
Interest receivable in respect of any compensation awarded, of 8% per annum as provided under Section 32(l) of the Land
Acquisition Act, 1960, is recognised in the income statement upon receipt.
(i)
Land Held for Property Development and Property Development Costs
(i)
Land Held for Property Development
Land held for property development consists of land where no development activities have been undertaken or where
development activities are not expected to be completed within the normal operating cycle.
Such land is classified within non-current assets and is stated at cost to the Group less any accumulated impairment
losses, with the exception of the freehold land held for property development which were revalued by the directors in
1989. According to the transitional provisions of FRS 201, the Group has continued to retain the revalued amount of the
land (and subsequently, its carrying costs) as its surrogate cost.
Costs include cost of land, professional fees and other direct development expenditure and related overheads. Land
held for property development is reclassified as property development costs at the point when development works have
been undertaken and where it can be demonstrated that the development activities are expected to be completed
within the normal operating cycle. The policy for the recognition and measurement of impairment losses is in
accordance with Note 3(n).
(ii)
Property Development Costs
Property development costs comprise all costs that are directly attributable to development activities or that can be
allocated on a reasonable basis to such activities. Costs include cost of land, development expenditure and allocation
of overhead expense, including interest expense incurred during the period of active development.
When the financial outcome of a development activity can be reliably estimated, property development revenue and
expenses are recognised in the income statement by using the stage of completion method. The stage of completion is
determined by the proportion that property development costs incurred for work performed to date bear to the estimated
total property development costs.
Where the financial outcome of a development activity cannot be reliably estimated, property development revenue is
recognised only to the extent of property development costs incurred that is probable will be recoverable, and property
development costs on properties sold are recognised as an expense in the period in which they are incurred.
Any expected loss on a development project, including costs to be incurred over the defects liability period, is recognised
as an expense immediately.
Property development costs not recognised as an expense are recognised as an asset, which is measured at the lower
of cost and net realisable value.
The excess of revenue recognised in the income statement over billings to purchasers is classified as accrued billings and
the excess of billings to purchasers over revenue recognised in the income statement is classified as progress billings.
(j)
Investment Property
Investment property is a property which is held either to earn rental income or for capital appreciation or for both. The Group
has adopted a policy to measure its investment property at cost, including transaction costs. The depreciation policy for
investment property is in accordance with that for depreciable property, plant and equipment as described in Note 3(e).
A property interest under an operating lease is classified and accounted for as an investment property on a property-byproperty basis when the Group holds it to earn rental or for capital appreciation or both. Any such property interest under
an operating lease, classified as an investment property, is carried at cost.
Investment property is derecognised when either it has been disposed of or when the investment property is permanently
withdrawn from use and no future economic benefits is expected from its disposal. Any gains or losses on the retirement or
disposal of an investment property is recognised in income statement in the year in which they arise.
(k) Concession Asset
Concession asset represents development costs incurred to design, construct, manage and maintain the Guthrie Corridor
Expressway (“Expressway”), a 25km expressway which links Shah Alam and Kuang, Selangor Darul Ehsan.
Items classified within Concession Asset comprise Expressway Development Expenditure (“EDE’’) and Other Concession
Assets.
(i)
Expressway Development Expenditure (“EDE’’)
EDE comprises development and upgrading expenditure including interest charges relating to financing of the
development incurred in connection with the Expressway. EDE is stated at cost less accumulated amortisation and any
impairment losses. The policy for the recognition and measurement of impairment losses is in accordance with Note 3(n).
The cumulative actual EDE incurred up to the completion of the Expressway and any additions incurred thereafter is to
be amortised to the income statement over the concession period (“Concession Period”) upon completion of construction
works of the Expressway and the commencement of toll collection, based on the following formula:
Cumulative Toll Revenue to date
Projected Total Toll Revenue for
the Concession Period
x
Cumulative Actual Expressway
Development Expenditure
The Concession Period is defined as a period of thirty three (33) years commencing from the Effective Date (being the
date of fulfillment of the conditions precedent stipulated in the Concession Agreement), which is 1 August 2001. The
Concession Period, by way of letter from the Works Minister dated 23 March 2005, has been extended for a further
period of twenty two (22) months expiring 30 June 2036 as remedy to meet any loss and cost of expenses incurred as
a consequence of the delay on the part of the Government in handing over third party land.
The projected total toll revenue for the Concession Period is based on the best estimate traffic volumes projected by an
independent professional firm of traffic consultants in the projection study commissioned by Guthrie Corridor Expressway
Sdn. Berhad, a wholly-owned subsidiary of the Company, taking into account the agreed toll rates stipulated in the
Concession Agreement.
(k) Concession Asset (cont’d.)
(ii)
Other Concession Assets
Other Concession Assets comprise toll equipment, video surveillance equipment, telecommunication network, and toll
operation computer hardware and software, are stated at cost less accumulated amortisation and any impairment losses.
The policy for the recognition and measurement of impairment losses is in accordance with Note 3(n).
The annual amortisation in respect of these assets is computed on a straight line basis over their estimated useful lives
at the following rates:
Software and computers
Others
(l)
10%
10%
Intangible Assets
(i)
Goodwill
Goodwill acquired in a business combination is initially measured at cost being the excess of the cost of business
combination over the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities.
Following the initial recognition, goodwill is measured at cost less any accumulated impairment losses. Goodwill is not
amortised but instead, it is reviewed for impairment, annually or more frequently if events or changes in circumstances
indicate that the carrying value may be impaired. Gains and losses on the disposal of an entity include the carrying
amount of goodwill relating to the entity sold.
(ii)
Research and Development Costs
All research costs are recognised in the income statement as incurred.
Expenditure incurred on projects to develop new products is capitalised and deferred only when the Group can
demonstrate the technical feasibility of completing the intangible asset so that it will be available for use or sale, its
intention to complete and its ability to use or sell the asset, the ability of the asset to generate future economic benefits,
the availability of resources to complete the project and the ability to measure reliably the expenditure during the
development. Product development expenditures which do not meet these criterias are expensed when incurred.
Development costs, considered to have finite useful lives, are stated at cost less any impairment losses and are
amortised using the straight-line basis over the commercial lives of the underlying products. Impairment is assessed
whenever there is an indication of impairment and the amortisation period and method are also reviewed at least at each
balance sheet date.
(m) Advances for Plasma PIR-Trans Projects and KKPA Projects
Advances for Plasma PIR-Trans Projects, in respect of the subsidiary companies in Indonesia, represent the accumulated
costs (including borrowing costs and indirect overhead costs) to develop plasma plantations. When a plasma plantation
project is substantially completed and ready to be transferred or turned-over to the plasma farmers, the corresponding
investment credit from the bank is also transferred to the Plasma Farmers. Any gain or loss resulting from the difference
between the carrying value of the Plasma PIR-Trans projects and the corresponding investment credit transferred to the
plasma farmers is reflected in the income statement.
Advances for KKPA (“Kredit Koperasi Primer untuk Anggotanya”) projects represent the accumulated costs to develop plasma
plantations which are currently being financed by creditor banks and self-financed by a subsidiary company in Indonesia
totalling 16,000 hectares of land. Upon the cooperative obtaining KKPA financing from the creditor bank, the said advances
will be recovered from the cooperative.
An estimate is made at each balance sheet date for losses on recovery of Plasma PIR-Trans projects and KKPA projects
based on a review of the recoverable development costs, and anticipated losses are provided for in full.
(n) Impairment of Assets
Inventories, assets arising from construction contracts, investment property, deferred tax assets and assets arising from
employee benefits are reviewed in accordance with the relevant accounting policies stated. In addition, the carrying amounts
of the assets of the Group and the Company are reviewed at each balance sheet date to determine whether there is any
indication of impairment. If any such indication exists, the assets recoverable amount is estimated to determine the amount
of impairment loss.
For goodwill, intangible assets that have an indefinite useful life and intangible assets that are not yet available for use, the
recoverable amount is estimated at each balance sheet date or more frequently when indicators of impairment are identified.
For the purpose of impairment testing of these assets, recoverable amount is determined on an individual asset basis unless
the asset does not generate cash flows that are largely independent of those from other assets. If this is the case,
recoverable amount is determined for the cash-generating unit (CGU) to which the asset belongs to. Goodwill acquired in a
business combination is, from the acquisition date, allocated to each of the Group’s CGUs, or groups of CGUs, that are
expected to benefit from the synergies of the combination, irrespective of whether other assets or liabilities of the Group are
assigned to those units or groups of units.
An asset’s recoverable amount is the higher of an asset’s or CGU’s fair value less costs to sell and its value in use. In
assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate
that reflects current market assessments of the time value of money and the risks specific to the assets. Where the carrying
amount of an asset exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable
amount. Impairment losses recognised in respect of a CGU or groups of CGUs are allocated first to reduce the carrying
amount of any goodwill allocated to those units or groups of units and then, to reduce the carrying amount of the other
assets in the unit or groups of units on a pro-rata basis.
An impairment loss is charged to the income statement immediately, unless the asset is carried at revalued amount. Any
impairment loss of a revalued asset is treated as a revaluation decrease to the extent of any unutilised previously recognised
revaluation surplus for the same asset.
(n) Impairment of Assets (cont’d.)
Impairment loss on goodwill is not reversed in a subsequent period. Reversal of an impairment loss for an asset other than
goodwill on consolidation, recognised in prior years is recorded if and only if there is a change in the estimates used to
determine the assets recoverable amount since the last impairment loss was recognised. The carrying amount of an asset
other than goodwill is increased to its revised recoverable amount, provided that this amount does not exceed the carrying
value that would have been determined (net of amortisation or depreciation) had no impairment loss been recognised for the
assets in prior years. A reversal of an impairment loss for an asset other than goodwill is recognised in income statement,
unless the asset is carried at revalued amount, in which case, such reversal is treated as a revaluation increase.
(o) Inventories
Inventories are stated at the lower of cost and net realisable value. Net realisable value represents the estimated selling price
in the ordinary course of business, less the estimated cost to completion and the estimated costs to be incurred in marketing,
selling and distribution.
Costs incurred in bringing each product to its present location and condition are accounted for as follows:
Produce stocks
– weighted average ex-estate cost and includes manufacturing and transport charges,
where applicable.
Raw materials
– purchase cost on a first-in, first-out basis.
Work-in-progress
– cost of direct materials and labour and overheads, where appropriate, determined on a
specific identification basis.
Completed houses
– relevant costs of land, development expenditure, overheads and related interest costs
allocated based on specific identification basis.
Finished goods
– cost of direct materials and labour and manufacturing overheads, where appropriate,
determined on a first-in first-out basis.
Stores
– weighted average cost.
(p) Construction Contracts
Where the outcome of a construction contract can be reliably estimated, contract revenue and contract costs are recognised
as revenue and expenses respectively by using the stage of completion of the contract activity at the balance sheet date.
The stage of completion is measured by reference to the proportion of contract costs incurred for work performed to date
to the estimated total contract costs.
Where the outcome of a construction contract cannot be reliably estimated, contract costs are recognised as expenses in
the period in which they are incurred and contract revenue is recognised to the extent of contract costs incurred that it is
probable will be recoverable.
When it is probable that total contract costs will exceed total contract revenue, the expected loss is recognised as an
expense immediately.
When the total costs incurred on construction contracts plus recognised profits (less recognised losses), exceeds progress
billings, the balance is classified as amount due from customers on contracts. When progress billings exceed costs incurred
plus recognised profits (less recognised losses), the balance is classified as amount due to customers on contracts.
(q) Revaluation Reserve
A surplus arising from revaluation is credited to revaluation reserve while a deficit is recognised as an expense in the income
statement. However, a deficit relating to previous revaluations is charged directly against revaluation reserve to the extent that
the decrease does not exceed the amount held in the revaluation reserve for the same asset.
Each year an amount equal to the depreciation/amortisation charge for the year on the surplus on revaluation of relevant assets
is transferred from revaluation reserve to revenue reserve. Upon the disposal of a revalued asset, the attributable revaluation
surplus (net of depreciation/amortisation, where applicable) is transferred from revaluation reserve to revenue reserve.
(r)
Provisions for Liabilities
Provisions for liabilities are recognised when the Group has a present obligation, legal or constructive, as a result of a past
event, and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation,
and a reliable estimate of the amount can be made. Provisions are reviewed at each balance sheet date and adjusted to
reflect the current best estimate.
Where the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects,
where appropriate, the risks specific to the liability. Where discounting is used, the increase in the provision due to the
passage of time is recognised as finance cost.
Provisions for restructuring costs are recognised when the Group’s detailed formal plan for the restructuring has been
approved, and the restructuring has either commenced or has been announced publicly. Costs relating to ongoing activities
are not provided for.
(s) Income Tax
Income tax on the profit or loss for the year comprises current and deferred tax. Current tax is the expected amount of
income taxes payable in respect of the taxable profit for the year and is measured using tax rates that have been enacted
at the balance sheet date.
Deferred tax is provided for, using the liability method, on temporary differences at the balance sheet date between the tax
bases of assets and liabilities and their carrying amounts in the financial statements. In principle, deferred tax liabilities are
recognised for all taxable temporary differences and deferred tax assets are recognised for all deductible temporary
differences, unused tax losses and unused tax credits to the extent that it is probable that taxable profit will be available
against which the deductible temporary differences, unused tax losses and unused tax credits can be utilised. Deferred tax
is not recognised if the temporary difference arises from goodwill or negative goodwill or from the initial recognition of an
asset or liability in a transaction which is not a business combination and at the time of the transaction, affects neither
accounting profit nor taxable profit.
Deferred tax is measured at tax rates that are expected to apply in the period when the asset is realised or the liability is
settled, based on tax rates that have been enacted or substantively enacted at the balance sheet date. Deferred tax is
recognised in the income statement, except when it arises from a transaction which is recognised directly in equity, in which
case the deferred tax is also recognised directly in equity, or when it arises from a business combination that is an
acquisition, in which case the deferred tax is included in the resulting goodwill or negative goodwill.
(s) Income Tax (cont’d.)
Where there is a change in the carrying amount of asset arising from revaluation, the tax effects of the asset revaluation are
credited or charged to equity. Where an amount equal to depreciation or amortisation of the revalued asset is transferred
from revaluation surplus to revenue reserve, the related deferred tax is also transferred. Upon the disposal of the related
asset, the attributable portion of the tax effect arising from revaluation is credited or charged to the income statement.
(t)
Employee Benefits
(i)
Short-Term Benefits
Wages, salaries, bonuses and social security contributions are recognised as an expense in the year in which the
associated services are rendered by employees of the Group. Short-term accumulating compensated absences such as
paid annual leave are recognised when services are rendered by employees that increase their entitlement to future
compensated absences. Short-term non-accumulating compensated absences such as sick leave are recognised when
the absences occur.
(ii)
Defined Benefit Plans
Malaysia
The Group’s plantation subsidiary companies in Malaysia operate an unfunded, defined retirement benefit scheme (“the
Scheme”) for its eligible employees. The Group’s obligations under the Scheme are determined based on triennial
actuarial valuation where the amount of benefits that employees have earned in return for their service in the current and
prior years is estimated. The amount of those benefits is discounted using the Projected Unit Credit Method in order to
determine its present value. Actuarial gains and losses are recognised as income or expense over the expected average
remaining working lives of the participating employees when the cumulative unrecognised actuarial gains and losses for
the Scheme exceed 10% of the higher of the present value of the defined benefit obligation and the fair value of plan
assets. Past service cost are recognised immediately to the extent that the benefits are already vested, and otherwise
are amortised on a straight-line basis over the average period until the amended benefits become vested.
The amount recognised in the balance sheet represents the present value of the defined benefit obligations adjusted for
unrecognised actuarial gains and losses and unrecognised past service costs, and reduced by the fair value of plan
assets. Any asset resulting from the calculation is limited to the net total of any unrecognised actuarial losses and past
service cost, and the present value of any economic benefits in the form of refunds or reductions in future contributions
to the plan.
Indonesia
Effective 1 January 2003, the Group’s subsidiary companies in Indonesia provide for employee benefit liabilities in
accordance with the Labour Law No. 13 Year 2003 (“Law No. 13/2003”) which was enacted on 25 March 2003. The
arising transitional liability, if higher than the liability that was recognised under the subsidiary companies’ previous policy
(Ministry of Manpower No. Kep.150/Men/2000 on - The Settlement of Work Dismissal and Determination of Termination,
Appreciation and Compensation Payments in Companies) is being recognised as an expense on a straight-line basis over
five years starting 2003.
(t)
Employee Benefits (cont’d.)
(iii) Defined Contribution Plans
Defined contribution plans are post-employment benefit plans under which the Group pays fixed contributions into
separate entities or funds and will have no legal or constructive obligation to pay further contributions if any of the funds
do not hold sufficient assets to pay all employee benefits relating to employee services in the current and preceding
financial years.
As required by law, companies in Malaysia make contributions to the Employees Provident Fund (“EPF’’). Such
contributions are recognised as an expense in the income statement as incurred.
The Group’s subsidiary companies in Indonesia have established defined contribution retirement plans covering
substantially all of the qualified permanent employees. The pension plans’ assets are managed by approved pension
funds. The retirement plans were approved by the Ministry of Finance of Indonesia in February 1999. Past service costs,
which are also being contributed by the subsidiary companies, were computed based on a formula as stated in the
Employment Policy already existing before the establishment of the retirement plans. Past service costs are amortised
on a systematic basis over the remaining service years of the related employees.
(iv) Share-Based Compensation
The Second ESOS of the Company, an equity-settled, share-based compensation plan, allows the Group’s employees to
acquire ordinary shares of the Company. As the share options granted to the employees by the Company vests
immediately, the total fair value of share options granted to employees is recognised immediately on grant date as an
employee cost or charged to related companies with a corresponding increase in the share option reserve within equity.
The equity amount is recognised in the share option reserve until the option is exercised, upon which it will be transferred
to share premium, or until the option expires, upon which it will be transferred directly to revenue reserve.
The proceeds received net of any directly attributable transaction costs are credited to equity when the options are
exercised.
(v) Termination Benefits
Termination benefits are payable when employment is terminated before the normal retirement date or whenever an
employee accepts voluntary redundancy in exchange for these benefits. The Group recognises termination benefits as a
liability and an expense when it is demonstrably committed to either terminate the employment of current employees
according to a detailed plan without possibility of withdrawal or providing termination benefits as a result of an offer
made to encourage voluntary redundancy. In the case of an offer made to encourage voluntary redundancy, the
measurement of termination benefits is based on the number of employees expected to accept the offer. Benefits falling
due more than twelve months after balance sheet date are discounted to present value.
(u) Deferred Income
Deferred income comprises the following:
(i)
the surplus of sales proceeds over the present value of future receivables arising from the sale of land held for property
development, which is deferred and amortised to the income statement over the period of instalment payments at a rate
representing a constant return on the balance of capital repayment outstanding; and
(ii)
net time share income, which is deferred and amortised to the income statement on a straight-line basis over the term
of the time share agreement.
(v) Foreign Currencies
(i)
Functional and Presentation Currency
The individual financial statements of each entity in the Group are measured using the currency of the primary economic
environment in which the entity operates (“the functional currency’’). The consolidated financial statements are presented
in Ringgit Malaysia (RM), which is also the Company’s functional currency.
(ii)
Foreign Currency Transactions
In preparing the financial statements of the individual entities, transactions in currencies other than the entity’s functional
currency (foreign currencies) are recorded in the functional currencies using the exchange rates prevailing at the dates
of the transactions. At each balance sheet date, monetary items denominated in foreign currencies are translated at the
rates prevailing on the balance sheet date. Non-monetary items that are measured in terms of historical cost in a foreign
currency are not translated.
Exchange differences arising on the settlement of monetary items, and on the translation of monetary items, are included
in profit or loss for the period except for exchange differences arising on monetary items that form part of the Group’s
net investment in foreign operation. Exchange differences arising on monetary items that form part of the Group’s net
investment in foreign operations, where that monetary item is denominated in either the functional currency of the
reporting entity or the foreign operation, are initially taken directly to the foreign currency translation reserve within equity
until the disposal of the foreign operations, at which time they are recognised in profit or loss. Exchange differences
arising on monetary items that form part of the Group’s net investment in foreign operations, where that monetary item
is denominated in a currency other than the functional currency of either the reporting entity or the foreign operations,
are recognised in income statement for the period. Exchange differences arising on monetary items that form part of the
Company’s net investment in foreign operation, regardless of the currency of the monetary item, are recognised in
income statement in the Company’s financial statements or the individual financial statements of the foreign operation,
as appropriate.
(v) Foreign Currencies (cont’d.)
(iii) Foreign Operations
The results and financial position of foreign operations that have a functional currency different from the presentation
currency (RM) of the consolidated financial statements are translated into RM as follows:
– Assets and liabilities for each balance sheet presented are translated at the closing rate prevailing at the balance sheet
date;
– Income and expenses for each income statement are translated at each monthly average exchange rate, which
approximate the exchange rates at the dates of the transactions; and
– All resulting exchange differences are taken to the foreign currency translation reserve within equity.
Goodwill and fair value adjustments arising on the acquisition of foreign operations on or after 1 January 2006 are treated
as assets and liabilities of the foreign operations and are recorded in the functional currency of the foreign operations
and translated at the closing rate at the balance sheet date. Goodwill and fair value adjustments which arose on the
acquisition of foreign subsidiaries before 1 January 2006 are deemed to be assets and liabilities of the parent company
and are recorded in RM at the rates prevailing at the date of acquisition.
(w) Revenue Recognition
Revenue is recognised when it is probable that the economic benefits associated with the transaction will flow to the
Group/Company and the amount of the revenue can be measured reliably. The following specific recognition criteria must
also be met before revenue is recognised:
(i)
Sale of Goods/Services
Revenue from the sale of goods is recognised when significant risks and rewards of ownership of goods have been
transferred to the buyer. Revenue for services rendered is recognised upon performance of services. Rental income is
recognised on an accrual basis.
(ii)
Sale of Properties
Revenue from sale of properties is recognised based on the “stage of completion” method as described in Note 3(i).
(iii) Construction Contracts
Revenue from work done on construction contracts is recognised based on the “stage of completion” method as
described in Note 3(p).
(iv) Toll Collection
Toll revenue is accounted for as and when toll is chargeable for the usage of the expressway.
(v) Interest Income
Interest income is recognised as interest accrues (taking into account the effective yield on the asset) unless collectibility
is in doubt.
(vi) Investment Income
Investment income is accounted for when the right to receive is established and no significant uncertainty exists as
regards receipt.
(x) Financial Instruments
Financial instruments are recognised in the balance sheet when the Group has become a party to the contractual provisions
of the instrument.
Financial instruments are classified as liabilities or equity in accordance with the substance of the contractual arrangement.
Interest, dividends, and gains and losses relating to a financial instrument classified as a liability, are reported as expense or
income. Distributions to holders of financial instruments classified as equity are recognised directly in equity. Financial
instruments are offset when the Group has a legally enforceable right to offset and intends to settle either on a net basis or
to realise the asset and settle the liability simultaneously.
(i)
Cash and Cash Equivalents
For the purposes of the cash flow statements, cash and cash equivalents include cash on hand and at bank, deposit
at call and short term highly liquid investments which have an insignificant risk of changes in value, net of outstanding
bank overdrafts.
(ii)
Other Non-Current Investments
Non-current investments, other than investments in subsidiaries and associated companies, and investment in a jointly
controlled entity are stated at cost less impairment losses. On disposal of an investment, the difference between the net
disposal proceeds and its net carrying amount is recognised in the income statement.
(iii) Marketable Securities
Marketable securities comprise corporate bonds, quoted shares and quoted warrants/loan stocks.
Marketable securities held as current assets are stated at the lower of cost and market value determined on an aggregate
basis. Cost is the purchase price of the securities while market value is determined based on quoted market values. Any
reduction to market value or any reversal of such reduction is recognised in the income statement. Gains and losses
arising from the disposal of these investments are dealt with through the income statement.
(iv) Trade and Other Receivables
Trade and other receivables are recognised and stated at original invoiced amounts and carried at anticipated realisable
values. Bad debts are written off when identified. An estimate is made for doubtful debts based on a review of all
outstanding amounts as at the balance sheet date.
(v) Trade and Other Payables
Trade and other payables are stated at cost which approximates the fair value of the consideration to be paid in the
future for goods and services rendered.
(x) Financial Instruments (cont’d.)
(vi) Interest-Bearing Borrowings
Interest-bearing bank loans and overdrafts are recorded at the amount of proceeds received, net of transaction costs.
After initial recognition, interest-bearing bank loans are subsequently measured at amortised cost using the effective
interest method.
Borrowing costs directly attributable to the acquisition and construction of qualifying assets, which are assets that
necessarily take a substantial period of time to get ready for their intended use or sale, are capitalised as part of the
cost of those assets, until such time as the assets are substantially ready for their intended use or sale.
All other borrowing costs are charged to the income statement as an expense in the period in which they are incurred.
(vii) Islamic Lease SUKUK
Islamic Lease SUKUK issued by the Company are stated at net proceeds received on issue. SUKUK issuance expenses
which represent the difference between the net proceeds and the total amount of the payment of the SUKUK are
allocated to periods over the terms of the SUKUK at a constant rate on the carrying amounts, and charged to the income
statement.
(viii) Equity Instruments
Ordinary shares are classified as equity. Dividends on ordinary shares will be accounted for as liabilities only when the
obligation to pay is established.
The transaction costs of an equity transaction, other than in the context of a business combination, are accounted for
as a deduction from equity, net of tax. Equity transaction costs comprise only those incremental external costs directly
attributable to the equity transaction which would otherwise have been avoided. Costs of issuing equity securities in
connection with a business combination are included in the cost of acquisition.
When the issued share capital of the Company is repurchased and is not cancelled, the consideration paid, including
any attributable transaction costs are classified as treasury shares and presented as a deduction from equity. No gain
or loss is recognised in the income statement on the sale, re-issuance or cancellation of treasury shares. When treasury
shares are reissued by resale, the difference between the sales consideration and the carrying amount is recognised in
equity.
(ix) Derivative Financial Instruments
The Group uses derivative financial instruments in the form of forward foreign exchange contracts and interest rate swap
contracts to hedge its exposure to foreign exchange arising from operating, financing and investing activities. In
accordance with its treasury policy, the Group does not hold or issue derivative financial instruments for trading
purposes.
Derivative financial instruments are not recognised in the financial statements.
(x) Financial Instruments (cont’d.)
(ix) Derivative Financial Instruments (cont’d.)
Forward Foreign Exchange Contracts
The underlying foreign currency assets or liabilities are translated at their respective hedged exchange rates and all
exchange gains or losses are recognised as income or expense in the income statement in the same period as the
exchange differences on the underlying hedged items. Exchange gains and losses arising on contracts entered into as
hedges of anticipated future transactions are deferred until the date of such transaction, at which time they are included
in the measurement of such transactions.
Interest Rate Swap Contracts
Net differentials in interest receipts and payments arising from interest rate swap contracts are recognised as interest
income or expense over the period of the contract.
(y) Non-Current Assets (or Disposal Groups) Held for Sale and Discontinued Operations
Non-current assets (or disposal groups) are classified as held for sale if their carrying amount will be recovered principally
through a sale transaction rather than through continuing use. This condition is regarded as met only when the sale is highly
probable and the asset (or disposal group) is available for immediate sale in its present condition subject only to terms that
are usual and customary.
Immediately before classification as held for sale, the measurement of the non-current assets (or all the assets and liabilities
in a disposal group) is brought up-to-date in accordance with applicable FRSs. Then, on initial classification as held for sale,
non-current assets or disposal groups (other that investment properties, deferred tax assets, employee benefits assets,
financial assets and inventories) are measured in accordance with FRS 5 that is at the lower of carrying amount and fair
value less costs to sell. Any differences are included in income statement.
A component of the Group is classified as a discontinued operation when the criteria to be classified as held for sale have
been met or it has been disposed of and such a component represents a separate major line of business or geographical
area of operations, is part of a single co-ordinated major line of business or geographical area of operations or is a subsidiary
acquired exclusively with a view to resale.
4. CHANGES IN ACCOUNTING POLICIES
On 1 January 2006, the Group and the Company adopted the following new and revised FRS mandatory for financial periods
beginning on or after 1 January 2006:
FRS
FRS
FRS
FRS
FRS
FRS
FRS
FRS
FRS
FRS
FRS
FRS
FRS
FRS
FRS
FRS
FRS
2: Share-based Payment
3: Business Combinations
5: Non-Current Assets Held for Sale and Discontinued Operations
101: Presentation of Financial Statements
102: Inventories
108: Accounting Policies, Changes in Accounting Estimates and Errors
110: Events After the Balance Sheet Date
116: Property, Plant and Equipment
121: The Effects of Changes in Foreign Exchange Rates
127: Consolidated and Separate Financial Statements
128: Investments in Associates
131: Interests in Joint Ventures
132: Financial Instruments: Disclosure and Presentation
133: Earnings Per Share
136: Impairment of Assets
138: Intangible Assets
140: Investment Property
In addition to the above, the Group has early adopted the following new and revised FRS for the financial period beginning
1 January 2006:
FRS 117: Leases
FRS 124: Related Party Disclosures
The Group has not early adopted the following FRS and amendment that are mandatory for financial periods beginning on or
after 1 January 2007 as they are not applicable to the Group’s operations:
FRS 6: Exploration for and Evaluation of Mineral Resources
Amendment to FRS 1192004 : Employee Benefits – Actuarial Gains and Losses, Group Plans and Disclosures
The Group has also not early adopted the “Amendments to FRS 121: The Effects of Changes in Foreign Exchange Rates – Net
Investment in a Foreign Operation” that are mandatory for financial periods beginning on or after 1 July 2007. This amendment
requires the exchange differences arising from monetary items that forms part of its net investment in a foreign operation to be
recognised in equity in the consolidated financial statements and should not be dependent on the currency of the monetary item.
Prior to this amendment, exchange differences arising on a monetary item that forms part of the Group’s net investment in a
foreign operation are recognised in equity in the consolidated financial statements only when the monetary item is denominated
in a currency other than the functional currency of either the reporting entity or the foreign operation. The Group will early adopt
this amendment for the financial period beginning 1 January 2007.
4. CHANGES IN ACCOUNTING POLICIES (cont’d.)
The adoption of the above FRS does not have financial impact on the Group other than the FRS listed below. The principal
effects of the changes in accounting policies resulting from the adoption of FRS are as follows:
(a) FRS 2: Share-based Payment
The Company operates an equity-settled, share-based compensation plan for eligible employees of the Group, the Second
Employees’ Share Option Scheme (Second ESOS). Prior to 1 January 2006, no compensation expense was recognised in
the income statement for share options granted. The Group and the Company recognised an increase in share capital and
share premium when the options were exercised. Upon the adoption of FRS 2, as the options vest on grant date, the total
fair value of share options granted to eligible employees of the Group is recognised immediately in the income statement as
employee costs with a corresponding increase in the share option reserve within equity.
For the year ended 31 December 2006, the impact to the Group and to the Company arising from the adoption of this
standard is a decrease in profit for the year of RM3,488,000 and RM1,245,000 respectively as disclosed in Notes 4(i)(i) and
4(i)(ii).
(b) FRS 3: Business Combinations, FRS 136: Impairment of Assets and FRS 138: Intangible Assets
The new FRS 3 has resulted in consequential amendments to two other accounting standards, FRS 136 and FRS 138.
Prior to 1 January 2006, goodwill was amortised on a straight-line basis over its estimated useful life of 20 years. The
adoption of FRS 3 and the consequential changes to FRS 136 and FRS 138 have resulted in the Group ceasing annual
amortisation of goodwill. Goodwill is carried at cost less accumulated impairment losses and is tested for impairment
annually, or more frequently if events or changes in circumstances indicate that it might be impaired. Any impairment loss is
recognised in the income statement and subsequent reversal is not allowed.
In accordance with the transitional provisions of FRS 3, the Group has applied the revised accounting policy for goodwill
prospectively from 1 January 2006. The transitional provisions of FRS 3 also require the Group to eliminate the carrying
amount of the accumulated amortisation at 1 January 2006 amounting to RM85,887,000 against the carrying amount of
goodwill. The net carrying amount of RM261,510,000 ceased to be amortised thereafter. The effect of this is a reduction in
amortisation charge of RM17,163,000 for the year ended 31 December 2006.
Consequent to the adoption of FRS 136, impairment losses of RM14,688,000 and RM10,667,000 on goodwill and carrying
amount of assets respectively were charged to the income statement for the year ended 31 December 2006, which are set
out in Notes 4(i)(i) and 4(i)(ii).
(c) FRS 5: Non-Current Assets Held for Sale and Discontinued Operations
Prior to 1 January 2006, non-current assets (or disposal groups) held for sale were neither classified nor presented as current
assets or liabilities. There were no differences in the measurement of non-current assets (or disposal groups) held for sale
and those for continuing use. Upon the adoption of FRS 5, non-current assets (or disposal groups) held for sale are classified
as current assets (and current liabilities, in the case of non-current liabilities included within disposal groups) and are stated
at the lower of carrying amount and fair value less costs to sell.
(c) FRS 5: Non-Current Assets Held for Sale and Discontinued Operations (cont’d.)
Prior to 1 January 2006, the Group would have recognised a discontinued operation at the earlier of the date the Group
enters into a binding sale agreement and the date the Board of Directors have approved and announced a formal disposal
plan. FRS 5 requires a component of an entity to be classified as a discontinued operation when the criteria to be classified
as held for sale have been met or it has been disposed of and such a component represents a separate major line of
business or geographical area of operations, is part of a single co-ordinated major line of business or geographical area of
operations or is a subsidiary acquired exclusively with a view to resale.
The Group has applied FRS 5 prospectively in accordance with the transitional provisions. However, as required by FRS 5,
certain comparatives have been re-presented due to the current financial year’s discontinued operations. The effects on the
balance sheets and income statements of the Group and of the Company are set out in Notes 4(i)(i) and 4(i)(ii).
(d) FRS 101: Presentation of Financial Statements
Prior to 1 January 2006, minority interests at the balance sheet date were presented in the consolidated balance sheet
separately from liabilities and equity. Upon the adoption of the revised FRS 101, minority interests are now presented within
total equity. In the consolidated income statement, minority interests are presented as an allocation of the total profit or loss
for the year. A similar requirement is also applicable to the statement of changes in equity. The revised FRS 101 also requires
disclosure, on the face of the statement of changes in equity, total recognised income and expenses for the year, showing
separately the amounts attributable to equity holders of the Company and to minority interests.
Prior to 1 January 2006, the Group’s share of taxation of associates and jointly controlled entity accounted for using the
equity method was included as part of the Group’s income tax expense in the consolidated income statement. Upon the
adoption of the revised FRS 101, the share of taxation of associates and jointly controlled entity accounted for using the
equity method are now included in the respective share of profit or loss reported in the consolidated income statement before
arriving at the Group’s profit or loss before tax.
These changes in presentation have been applied retrospectively and as disclosed in Note 5, certain comparatives have been
restated. These changes in presentation have no impact on the financial statements of the Group and of the Company.
(e) FRS 116: Property, Plant and Equipment
Prior to 1 January 2006, plantation development expenditure was included as part of property, plant and equipment. Upon
the adoption of the revised FRS 116, plantation development expenditure is now presented in the consolidated balance sheet
separately from property, plant and equipment.
The changes have been applied retrospectively and comparatives have been restated as disclosed in Note 5. There were no
effects on the income statements of the Group and of the Company for the year ended 31 December 2006.
Consequent to the adoption of FRS 116, the Group has reviewed the residual value and the remaining useful life of property,
plant and equipment and had revised the estimated useful lives of certain buildings from 25 years to a maximum of 50 years.
The revisions were accounted for prospectively as a change in accounting estimates resulting in a reduction to the
depreciation charge for the Group for the current financial year amounting to RM1,822,000. The effects on the income
statement of the Group are set out in Note 4(i)(ii).
(f)
FRS 117: Leases
Prior to 1 January 2006, leasehold land held for own use was classified as property, plant and equipment and was stated
at valuation less accumulated amortisation and impairment losses. The leasehold land was last revalued in 2003.
The adoption of the revised FRS 117 has resulted in a change in the accounting policy relating to the reclassification of
leases of land. Leasehold land for own use is now classified as operating lease and the upfront payments representing
prepaid lease payments are amortised on a straight line basis over the lease term.
The Group has applied the change in accounting policy in respect of leasehold land in accordance with the transitional
provisions of FRS 117. At 1 January 2006, the unamortised amount of leasehold land is retained as the surrogate cost of
prepaid lease payments as allowed by the transitional provisions.
The reclassification of leasehold land as prepaid lease payments has been accounted for retrospectively and certain
comparatives have been restated as disclosed in Notes 4(i)(i) and 5. There were no effects on the income statements of the
Group and the Company for the year ended 31 December 2006.
(g) FRS 127: Consolidated and Separate Financial Statements
Prior to 1 January 2006, investments in subsidiary companies were stated at cost and at directors’ valuation, less any
impairment losses. The investments were last revalued in 1982.
The adoption of the revised FRS 127 has resulted in a change in accounting policy relating to investments previously carried
at directors’ valuation. The Company has applied the change in accounting policy retrospectively and these investments are
henceforth restated at cost. Certain comparatives have been restated. There were no effects to the income statement of the
Company. The effects on the balance sheet of the Company are disclosed in Note 5. There were no effects to the financial
statements of the Group arising from the adoption of FRS 127.
(h) FRS 140: Investment Property
Prior to 1 January 2006, investment property were included within property, plant and equipment. Upon the adoption of FRS
140, investment property are now classified as a separate category on the balance sheet and stated at cost less accumulated
depreciation.
The reclassification of land and building as investment property has been accounted for retrospectively and certain
comparatives have been restated as disclosed in Note 5.
This change in accounting policy has no impact on the income statements of the Group and of the Company for the year
ended 31 December 2006.
(i)
Summary of Effects of Adopting New and Revised FRS on the Current Year’s Financial Statements
The following tables provide estimates of the extent to which each of the line items in the balance sheets and income
statements for the year ended 31 December 2006 is higher or lower than it would have been had the previous policies been
applied in the current year.
(i)
Effects on balance sheets
<----------------------------Increase/(Decrease)-------------------------------->
FRS 2
FRS 3
FRS 5
FRS 116
FRS 117
FRS 136
Note 4(a)
Note 4(b)
Note 4(c)
Note 4(e)
Note 4(f)
Note 4(b)
RM’000
RM’000
RM’000
RM’000
RM’000
RM’000
GROUP
Plantation development
expenditure
Concession asset
Deferred tax assets
Inventories
Trade receivables
Other receivables
Deposits, bank balances
and cash
Assets of disposal groups
classified as held for sale
Trade payables
Other payables
Liabilities directly associated
with assets of disposal
groups classified as held
for sale
Total
RM’000
–
–
(73,871)
(2,434,846)
(342,357)
(5,357)
(2,856,431)
–
–
–
–
–
–
–
–
–
–
17,163
–
–
–
–
–
–
–
–
(582,366)
(2,589)
(9,664)
(6,990)
(548)
2,434,846
–
–
–
–
–
–
–
–
342,357
–
–
–
–
–
–
(4,923)
(387)
(14,688)
–
–
–
–
–
2,429,923
341,970
2,475
(582,366)
(2,589)
(9,664)
(6,990)
(548)
–
–
(2,872)
–
–
–
(2,872)
–
–
–
–
–
–
678,900
(2,780)
(6,326)
–
–
–
–
–
–
–
–
–
678,900
(2,780)
(6,326)
–
3,488
–
–
9,106
–
–
–
–
–
–
–
9,106
3,488
(i)
Summary of Effects of Adopting New and Revised FRS on the Current Year’s Financial Statements (cont’d.)
(i)
Effects on balance sheets (cont’d.)
FRS 2
FRS 3
FRS 5
FRS 116
FRS 117
FRS 136
Note 4(a)
Note 4(b)
Note 4(c)
Note 4(e)
Note 4(f)
Note 4(b)
RM’000
RM’000
RM’000
RM’000
RM’000
RM’000
COMPANY
Investment in subsidiary
companies
Assets of disposal groups
Amounts due to subsidiary
companies
Liabilities directly associated
with assets of disposal
groups classified as held for
sale
Total
RM’000
–
–
–
–
(615)
–
(615)
–
–
–
–
(104,800)
–
–
–
–
615
–
–
(104,800)
615
–
–
104,800
–
–
–
104,800
–
–
(22,523)
–
–
–
(22,523)
–
3,488
–
–
22,523
–
–
–
–
–
–
–
22,523
3,488
(i)
Summary of Effects of Adopting New and Revised FRS on the Current Year’s Financial Statements (cont’d.)
(ii)
Effects on income statements
FRS 2
FRS 3
FRS 5
FRS 116
FRS 136
FRS 136
Note 4(a)
Note 4(b)
Note 4(c)
Note 4(e)
Note 4(b)
Note 4(b)
RM’000
RM’000
RM’000
RM’000
RM’000
RM’000
GROUP
Revenue
Cost of sales
Other income
Distribution costs
Other expenses
Operating profit
Taxation
Profit for the year from
continuing operations
Profit for the year
Earnings per share (sen):
Basic
Diluted
COMPANY
Other expenses
Operating profit
Profit for the year
Total
RM’000
–
1,139
–
–
2,349
–
(3,488)
(3,488)
–
–
–
–
–
–
(17,163)
17,163
17,163
–
(106,860)
(77,672)
(660)
(9,152)
(5,759)
(30,434)
15,497
15,497
2,589
–
–
–
–
–
(1,822)
1,822
1,822
–
–
–
–
–
–
10,667
(10,667)
(10,667)
–
–
–
–
–
–
14,688
(14,688)
(14,688)
–
(106,860)
(76,533)
(660)
(9,152)
(3,410)
(24,064)
5,639
5,639
2,589
(3,488)
17,163
12,908
1,822
(10,667)
(14,688)
3,050
–
(3,488)
–
17,163
(12,908)
–
–
1,822
–
(10,667)
–
(14,688)
(12,908)
(9,858)
(0.34)
(0.34)
1.70
1.69
–
–
0.18
0.18
(1.05)
(1.05)
(1.45)
(1.45)
(0.97)
(0.97)
1,245
–
(1,245)
–
–
–
–
24,575
24,575
–
–
–
–
–
–
–
–
–
1,245
24,575
23,330
–
(1,245)
–
–
(24,575)
–
–
–
–
–
–
–
(24,575)
(1,245)
5. COMPARATIVES
The following comparative amounts have been restated as a result of adopting the new and revised FRSs:
(a) Balance Sheets
Increase/(Decrease)
Previously
Stated
RM’000
FRS 116
RM’000
FRS 117
RM’000
FRS 127
RM’000
FRS 140
RM’000
Restated
RM’000
5,583,147
–
–
(2,679,207)
2,679,207
–
(356,132)
356,132
–
–
–
–
–
–
2,547,808
2,679,207
356,132
40,251
–
–
–
–
–
(675)
675
–
–
–
–
(21,762)
–
21,762
17,814
675
21,762
2,987,639
165,645
6,951
–
–
–
–
–
–
(162,050)
(155,490)
(6,560)
–
–
–
2,825,589
10,155
391
5,363,625
–
–
(2,480,611)
2,480,611
–
(347,202)
–
347,202
–
–
–
–
–
–
2,535,812
2,480,611
347,202
40,676
–
–
–
–
–
(645)
645
–
–
–
–
(21,524)
–
21,524
18,507
645
21,524
2,985,635
–
165,626
6,214
–
–
–
–
–
–
–
–
(162,050)
346
(155,490)
(6,214)
–
–
–
–
2,823,585
346
10,136
–
At 1 January 2005
GROUP
COMPANY
Investment property
Investments in subsidiary
companies
Revaluation reserve
At 31 December 2005
GROUP
COMPANY
Investment property
Investments in subsidiary
companies
Deferred tax assets
Revaluation reserve
5. COMPARATIVES (cont’d.)
(b) Income Statements
Increase/(Decrease)
Previously
Stated
RM’000
FRS 5
RM’000
FRS 101
RM’000
Restated
RM’000
2,132,274
1,374,941
48,674
31,295
129,224
214,232
54,108
4,243
157,944
30,198
1,601
859
113,706
(151,505)
(114,471)
1,137
(24,214)
(8,517)
(15,973)
–
(4,243)
(597)
(110)
–
–
(3,166)
–
–
38,573
–
–
63,156
(54,108)
–
–
(30,088)
(1,601)
16
16
1,980,769
1,260,470
88,384
7,081
120,707
261,415
–
–
157,347
–
–
875
110,556
15,410
(5,357)
–
10,053
53,259
1,208
34,954
1,128
1,817
38,225
227,559
–
–
–
–
(1,817)
–
–
227,093
48,869
9,050
(1,128)
–
(38,225)
(227,559)
280,352
50,077
44,004
–
–
–
–
–
1,817
–
1,817
For the year ended 31 December 2005
GROUP
Revenue
Cost of sales
Other income
Distribution costs
Other expenses
Net unrealised exchange loss
Gain on disposal of subsidiary companies
Finance expense
Finance income
Investment income
Share of results after tax of associated companies
Taxation
COMPANY
Revenue
Other income
Other expenses
Net unrealised exchange gain/(loss)
Loss on disposal of subsidiary companies
Finance income
Investment income
6. ACCOUNTING ESTIMATES
(a) Significant Accounting Estimates
The key assumptions concerning the future and other key sources of estimation uncertainty at the balance sheet date, that
have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next
financial year are discussed below:
(i)
Impairment of goodwill
During the financial year, the Group had recognised impairment losses in respect of goodwill. The Group carries out
impairment tests on goodwill annually. This requires an estimation of the value-in-use of the cash generating unit (“CGU”)
to which goodwill is allocated. Estimating the value-in-use amount requires management to make an estimate of the
expected future cash flows from the CGU and also to select a suitable discount rate in order to calculate the present
value of those cash flows. The carrying amount of goodwill of the Group as at 31 December 2006 were RM254,558,000
(2005: RM261,510,000). Further details of the impairment losses recognised are disclosed in Note 24.
(ii)
Amortisation of Concession Asset
The costs of the Concession Asset which represent the cost to design, construct, manage and maintain the Guthrie
Corridor Expressway (“Expressway”) is amortised to income statement over the concession period based on the following
formula:
Cumulative Toll Revenue to date
Projected Total Toll Revenue for
the Concession Period
x
Cumulative Actual Expressway
Development Expenditure
The Concession Period is defined as a period of thirty three (33) years, expiring on 30 June 2036.
The projected total toll revenue for the Concession Period is based on the best estimate total traffic volumes projected
by independent professional firm of traffic consultants in the projection study commissioned by Guthrie Corridor
Expressway Sdn Bhd, taking into account the agreed toll rate stipulated in the Concession Agreement.
The traffic consultants have derived future traffic volume based on the following information and assumptions:
– Anticipated level of development that would occur during the concession period based on published information on
large-scale land use and the transportation development in the Klang Valley and Selangor that were collated from the
respective District Structure Plans and other relevant studies.
– Future population and economic growth based on government published economic reports, review of Eighth Malaysian
Plan, Third Outline Perspective Plan, Population Census 2000 and previous transportation studies.
– Socio-economic and demographic trends in Klang Valley to establish new forecast for variables such as growth in
population, gross domestic product, employment, car ownership and value of time.
– Qualitative judgments to determine the targeted progress of the land use development and their potential impact on
the road network in the Klang Valley.
The carrying amount of the Concession Asset as at 31 December 2006 were RM582,366,000 (2005: RM585,742,000).
6. ACCOUNTING ESTIMATES (cont’d.)
(a) Significant Accounting Estimates (cont’d.)
(iii) Property development
The Group recognises property development revenue and expenses in the income statement by using the stage of
completion method. The stage of completion is determined by the proportion that property development costs incurred
for work performed to date bear to the estimated total property development costs.
Significant judgments are required in determining the stage of completion, the extent of the property development costs
incurred, the estimated total property development revenue and costs, as well as the recoverability of the development
projects. In making the judgments, the Group evaluates based on past experience and by relying on the work of
specialists.
(b) Changes in Accounting Estimates
Property, Plant and Equipment
The revised FRS 116: Property, Plant and Equipment requires the review of the residual value and remaining useful life of an
item of property, plant and equipment at least at each financial year end. The Group had revised the estimated useful lives
of certain buildings from 25 years to a maximum of 50 years with effect from 1 January 2006. The revisions were accounted
for prospectively as a change in accounting estimates and as a result, the depreciation charges for the Group for the current
financial year have been reduced by RM1,822,000.
7. GROUP STRUCTURE
The Company’s holding company is Permodalan Nasional Berhad, a company incorporated in Malaysia. The Company’s ultimate
holding company is Yayasan Pelaburan Bumiputra, a company incorporated in Malaysia, limited by guarantee.
The subsidiary companies are as follows:
Name of company
Country of
incorporation
Group’s
effective
interest
2006
2005
%
%
Issued and
paid-up
capital at
31.12.2006
Principal
activities
PLANTATION
Kumpulan Jerai Sdn. Bhd.
Malaysia
100
100
RM51,200,000
Kumpulan Kamuning Sdn. Bhd.
Malaysia
100
100
RM30,383,002
Kumpulan Linggi Sdn. Bhd.
Malaysia
100
100
RM35,443,002
Guthrie Ropel Berhad
Malaysia
58
58
RM127,036,071
Kumpulan Temiang Sdn. Bhd.
Malaysia
58
58
RM29,652,002
)
)
)
)
)
)
)
)
)
Production
and/or processing
of palm oil and
palm kernel
7. GROUP STRUCTURE (cont’d.)
Name of company
Country of
incorporation
Group’s
effective
interest
2006
2005
%
%
Issued and
paid-up
capital at
31.12.2006
Principal
activities
PLANTATION (cont’d.)
* Highlands & Lowlands Berhad
Malaysia
55
55
RM302,167,829
)
)
)
)
)
* Kumpulan Sua Betong Sdn. Bhd.
Malaysia
55
55
RM36,831,002
Production
and/or processing
of palm oil and
palm kernel
* Kumpulan Tebong Sdn. Bhd.
Malaysia
55
55
RM32,678,002
* Syarikat Jeleta Bumi Sdn. Bhd.
Malaysia
55
55
RM9,000,000
)
)
)
)
)
Production and
processing of palm
oil and palm kernel
and property
development
** PT Ladangrumpun Suburabadi
Indonesia
100
100
Rp29,435,000,000
100
100
Rp14,965,000,000
Indonesia
100
100
Rp28,401,000,000
** PT Kridatama Lancar
Indonesia
100
100
Rp28,192,000,000
** PT Sajang Heulang
Indonesia
100
100
Rp28,153,000,000
** PT Aneka Intipersada
Indonesia
100
100
Rp26,000,000,000
** PT Langgeng Muaramakmur
Indonesia
100
100
Rp35,901,000,000
** PT Bhumireksa Nusasejati
Indonesia
100
100
Rp41,366,000,000
** PT Swadaya Andika
Indonesia
100
100
Rp28,026,000,000
** PT Bina Sains Cemerlang
Indonesia
100
100
Rp55,263,000,000
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
** PT Perkasa Subur Sakti
Indonesia
** PT Teguh Sempurna
Production
and/or processing
of palm oil and
palm kernel
Name of company
Country of
incorporation
Group’s
effective
interest
2006
2005
%
%
Issued and
paid-up
capital at
31.12.2006
Principal
activities
** PT Lahan Tani Sakti
Indonesia
100
100
Rp32,981,000,000
)
)
Oil palm and
rubber cultivation
** PT Bahari Gembira Ria
Indonesia
99
99
Rp15,000,000,000
** PT Guthrie Pecconina Indonesia
Indonesia
95
95
USD20,000,000
** PT Paripurna Swakarsa
Indonesia
93
93
Rp68,897,000,000
** PT Bersama Sejahtera Sakti
Indonesia
91
91
Rp74,453,000,000
** PT Tamaco Graha Krida
Indonesia
90
90
Rp17,400,000,000
** PT Laguna Mandiri
Indonesia
89
89
Rp47,727,000,000
** PT Perusahaan Perkebunan
Industri dan Niaga Sri Kuala
Indonesia
76
76
Rp500,000,000
Production
and/or
processing
of palm oil
and palm
kernel
** PT Padang Palma Permai
Indonesia
75
75
Rp16,307,000,000
** PT Tunggal Mitra Plantations
Indonesia
60
60
Rp23,750,000,000
** PT Indotruba Tengah
Indonesia
50
50
Rp12,400,000,000
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
Malaysia
100
100
RM200
)
)
)
Palm oil
storage
installation
Malaysia
100
100
RM2,000,000
)
)
)
)
)
)
)
)
Provision of
plantation
consultancy
services and
production and
sale of oil palm
seeds, seedlings
and rat baits
Guthrie Export Sdn. Bhd.
** Guthrie Plantation & Agricultural
Services Sdn. Bhd.
Name of company
Country of
incorporation
Group’s
effective
interest
2006
2005
%
%
Issued and
paid-up
capital at
31.12.2006
Principal
activities
Chemara Laboratories Sdn. Bhd.
Malaysia
100
100
RM2
)
)
)
)
Provision of
laboratory
and technical
services
* Guthrie Biotech Laboratory
Sdn. Bhd.
Malaysia
100
100
RM200,000
)
)
)
Research and
cloning of oil
palm for sale
* HRU Sdn. Bhd.
Malaysia
55
55
RM205,000
)
)
)
)
Production and
sale of oil palm
seeds, seedlings
and rat baits
Guthrie Harta (Damansara)
Sdn. Bhd.
Malaysia
100
100
RM2,000,000
)
)
Property
investment
Sdn. Bhd.
Malaysia
100
100
RM5,000,000
)
)
)
)
Property
development
)
)
)
)
)
)
)
)
Property
development
and investment
holding
PROPERTY
* Guthrie Chemara Sdn. Bhd.
Malaysia
100
100
RM2
Malaysia
79
79
RM243,334,888
* Syarikat Perumahan Guthrie
Sdn. Bhd.
Malaysia
79
79
RM37,423,985
* Syarikat Pembangunan
Hartanah Guthrie Sdn. Bhd.
Malaysia
79
79
RM448,560,002
Guthrie Property Development
Holding Berhad
Name of company
Country of
incorporation
Group’s
effective
interest
2006
2005
%
%
Issued and
paid-up
capital at
31.12.2006
Principal
activities
PROPERTY (cont’d.)
Guthrie Lukut Development
Sdn. Bhd.
Malaysia
79
79
RM9,450,002
)
)
)
)
)
)
)
)
)
Accord Shipping & Forwarding
Sdn. Bhd.
Malaysia
79
79
RM27,725,000
* Augsburg (M) Sdn. Bhd.
Malaysia
79
79
RM210,360,002
* Paralimni Sdn. Bhd.
Malaysia
79
79
RM2
Guthrie Property Management
Sdn. Bhd.
Malaysia
79
79
RM22,836,589
)
)
)
Real estate
and property
management
Guthrie Ropel Development
Sdn. Bhd.
Malaysia
58
58
RM2
* Vicworld (M) Sdn. Bhd.
Malaysia
55
55
RM2
)
)
)
)
Property
development
and cultivation
of oil palm
* Malaysia Land Development
Company Berhad
Malaysia
51
51
RM9,993,470
)
)
Property
investment
* Genting View Resort Development
Sdn. Bhd.
Malaysia
31
31
RM1,000,000
)
)
Property
development
Property
development
Name of company
Country of
incorporation
Group’s
effective
interest
2006
2005
%
%
Issued and
paid-up
capital at
31.12.2006
Principal
activities
MANUFACTURING
Guthrie MDF Sdn. Bhd.
Malaysia
100
100
RM53,000,000
)
)
)
)
Manufacture
of mediumdensity
fibreboard
** PT Guthrie Abdinusa Industri
Indonesia
70
70
USD500,000
)
)
Construction
of palm oil mills
# Integrated Brickworks Sdn. Bhd.
Malaysia
–
100
RM14,450,000
)
)
)
)
)
Manufacture and
trading of concrete
blocks and bricks
and ready-mix
concrete
The Eden Bungalow
Association Sdn. Bhd.
Malaysia
100
100
RM273,470
The Whittington Hill
Bungalow Association
Malaysia
100
100
RM133,050
)
)
)
)
)
Operation
of holiday
bungalows
Guthrie Landscaping Sdn. Bhd.
Malaysia
100
100
RM2,000,000
)
)
)
)
)
)
Horticultural
supplies,
landscape and
design
consultants
and civil works
Guthrie Corridor Expressway
Sdn. Bhd.
Malaysia
100
100
RM5,000,000
)
)
Road concession
operation
Harvard Hotel (Jerai) Sdn. Bhd.
Malaysia
100
100
RM7,500,000
)
Hotel operation
* Guthrie Technologies Sdn. Bhd.
Malaysia
100
100
RM7,466,667
)
)
Provision of
computer services
OTHER ACTIVITIES
Name of company
Group’s
effective
interest
2006
2005
%
%
Country of
incorporation
Issued and
paid-up
capital at
31.12.2006
Principal
activities
OTHER ACTIVITIES (cont’d.)
Harvard Golf Resort (Jerai) Bhd.
Malaysia
99
99
RM5,210,100
)
)
Operation
of golf club
* Sanguine (Malaysia) Sdn. Bhd.
Malaysia
55
55
RM2
)
)
Investment
dealing
* Genting View Resort
Management Sdn. Bhd.
Malaysia
51
51
RM1,000,000
)
)
Resort
management
Name of company
Country of
incorporation
Group’s
effective
interest
2006
2005
%
%
Issued and
paid-up
capital at
31.12.2006
INVESTMENT HOLDING
Kumpulan Jelei Sdn. Bhd.
Malaysia
100
100
RM31,036,072
Right Class Sdn. Bhd.
Malaysia
100
100
RM12,000,000
Guthrie International Investments (L) Limited
Malaysia
100
100
USD1
* Guthrie Siam Sdn. Bhd.
Malaysia
100
100
RM2
* Guthrie Tapis Sdn. Bhd.
Malaysia
100
100
RM2
* Guthrie Wood Industry Sdn. Bhd.
Malaysia
100
100
RM18,000,000
* Laverton Holdings Limited
Mauritius
100
100
USD2
* Guthrie Overseas Limited
U.K.
100
100
GBP13,200,000
* Guthrie Symington Overseas Investments Inc.
U.S.A.
100
100
USD2,000,000
* Guthrie Symington Investments (USA) Inc.
U.S.A.
100
100
USD6,000,000
* Mulligan International BV
Netherlands
100
100
Euro18,000
** PT Minamas Gemilang
Indonesia
100
100
Rp391,088,000,000
Name of company
Country of
incorporation
Group’s
effective
interest
2006
2005
%
%
Issued and
paid-up
capital at
31.12.2006
INVESTMENT HOLDING (cont’d.)
** PT Anugerah Sumbermakmur
Indonesia
100
100
Rp337,774,000,000
** PT Muda Perkasa Sakti
Indonesia
100
100
Rp100,000,000
** PT Asricipta Indah
Indonesia
90
90
Rp120,000,000
** PT Kartika Inti Perkasa
Indonesia
60
60
Rp23,750,000,000
** PT Sritijaya Abaditama
Indonesia
60
60
Rp120,000,000
Haron Estate Development Sdn. Bhd.
Malaysia
100
100
RM600,000
* Guthrie Dimensional Stones Sdn. Bhd.
Malaysia
100
100
RM25,000,000
* Guthrie Bina Sdn. Bhd.
Malaysia
100
100
RM2
* Kamuning Marble Sdn. Bhd.
Malaysia
100
100
RM2
* Guthrie Wood Products Sdn. Bhd.
Malaysia
100
100
RM30,000,000
Guthrie Industries Malaysia Sdn. Bhd.
Malaysia
100
100
RM5,000,100
Guthrie Furniture Sdn. Bhd.
Malaysia
100
100
RM2,000,000
Guthrie Rubber Processing Sdn. Bhd.
Malaysia
86
86
RM5,747,170
Ladang Cenas Sdn. Bhd.
Malaysia
58
58
RM7,512,000
* Sepang Nilai Estate Sdn. Bhd.
Malaysia
55
55
RM10,000,000
* Pekan Plantations Sdn. Bhd.
Malaysia
55
55
RM9,400,000
* GVR Construction Sdn. Bhd.
Malaysia
31
31
RM500,000
* Guthrie Plantations Liberia Inc.
Liberia
100
100
L$4,649,048
* Guthrie Symington Limited
U.K.
100
100
GBP8,350,000
* Guthrie Furniture Products Limited
U.K.
100
100
GBP100,000
INACTIVE COMPANIES
Name of company
Country of
incorporation
Group’s
effective
interest
2006
2005
%
%
Issued and
paid-up
capital at
31.12.2006
COMPANIES UNDER MEMBERS’
VOLUNTARY LIQUIDATION
Guthrie Land Sdn. Bhd.
Malaysia
–
100
RM2,200,000
Guthrie Livestock Corporation Sdn. Bhd.
Malaysia
–
100
RM1,000,000
Guthrie Medicare Products (Holdings)
Sdn. Bhd.
Malaysia
–
100
RM5,500,000
* Guthrie Industries (Indonesia) Sdn. Bhd.
Malaysia
–
100
RM2
* Guthrie Pharmaceuticals Sdn. Bhd.
Malaysia
–
100
RM2
* Guthrie KD Sdn. Bhd.
Malaysia
–
100
RM3,000,000
* Guthrie Training Centre Sdn. Bhd.
Malaysia
–
100
RM2
* Guthrie Polymer Sdn. Bhd.
Malaysia
–
100
RM2
* Guthrie Solutions Sdn. Bhd.
Malaysia
–
100
RM100,000
Guthrie Palm Products Sdn. Bhd.
Malaysia
–
86
RM9,996
Guthrie Assets Management Sdn. Bhd.
Malaysia
–
86
RM2,100,000
Guthrie Distributors Sdn. Bhd.
Malaysia
–
80
RM500,000
Hock Guan Seng Plantations Sdn. Bhd.
Malaysia
–
58
RM1,150,000
* Syarikat Yew Lian Plantations
Sendirian Berhad
Malaysia
–
55
RM620,008
* K & K Plantations Sdn. Bhd.
Malaysia
–
55
RM440,000
* Hatawa Plantation Sdn. Bhd.
Malaysia
–
55
RM8,875,646
* Highlands Estates Sdn. Bhd.
Malaysia
–
55
RM7
* Highlands Assets Management
Sdn. Bhd.
Malaysia
–
55
RM1,000,002
Name of company
Country of
incorporation
Group’s
effective
interest
2006
2005
%
%
Issued and
paid-up
capital at
31.12.2006
COMPANIES STRUCK OFF (@)
Layang Layang Golf & Country Club
Sdn. Bhd.
Malaysia
–
100
RM2
Harvard Country Resorts Sdn. Bhd.
Malaysia
–
100
RM2
Ampar Tenang Development Sdn. Bhd.
Malaysia
–
100
RM2
* Guthrie Nominees Sdn. Bhd.
Malaysia
–
100
RM2
* Guthrie Taylor Woodrow Sdn. Bhd
Malaysia
–
100
RM2
* Medang Mekar Sdn. Bhd.
Malaysia
–
55
RM3
* Beringin Permai Sdn. Bhd.
Malaysia
–
55
RM2
* Damar Cahaya Sdn. Bhd.
Malaysia
–
55
RM2
* Keruntum Murni Sdn. Bhd.
Malaysia
–
55
RM2
* Lagong Indah Sdn. Bhd.
Malaysia
–
55
RM2
* Serentang Segar Sdn. Bhd.
Malaysia
–
55
RM2
* Serinai Teguh Sdn. Bhd.
Malaysia
–
55
RM2
* Genting View Resort Recreation
Sdn. Bhd.
Malaysia
–
51
RM2
* Resort Exchange Sdn. Bhd.
Malaysia
–
51
RM2
* Guthrie (B) Sdn. Bhd.
Brunei
–
100
B$2
*
Subsidiary companies audited by firms of auditors other than Ernst & Young.
** Subsidiary companies audited by affiliate of Ernst & Young.
#
This subsidiary company was disposed of during the year as disclosed in Note 15.
@ During the year, the Companies Commission of Malaysia (“CCM”) had approved the strike off of these subsidiary companies
from the Register of the CCM under Section 308 of the Companies Act 1965. Similarly, the Registrar of Companies, Brunei
Darussalam had approved the strike off of Guthrie (B) Sdn. Bhd. from its Register.
8. SEGMENT INFORMATION – GROUP
The primary segment reporting format is determined to be the business segments as the Group’s risks and rates of return are
affected predominantly by differences in the products and services provided. The secondary information is reported
geographically. The Group’s operating businesses are organised and managed separately according to the nature of products and
services provided, with each segment representing a strategic business unit that offers different products and serves different
markets.
Revenue of plantation companies comprises the aggregate sales proceeds of palm products and rubber sold during the year.
Revenue of property development companies represents revenue recognised based on the stage of completion method of the
development properties and sale of plots of development land. Revenue of the Company and other subsidiary companies
comprises the invoiced value of goods sold and services rendered.
(a) Information on Business Segments
The main business segments of the Group comprise the following:
Plantation and agricultural services
:
Cultivation, processing and sale of palm oil, palm kernel and fresh fruit
bunches and the provision of plantation consultancy services, production
and sale of oil palm seeds and seedlings and rat baits.
:
Development and construction of residential, commercial and industrial
property and sale of plots of development land.
Manufacturing
:
Manufacturing and sale of medium-density fibreboard and concrete blocks
and bricks.
Investment & Others
:
Investment holding, provision of computer services, hotel and resort
management, golf club operation, general contracting and toll collection.
Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated
on a reasonable basis. Unallocated items comprise mainly corporate assets, liabilities and expenses.
Transfer prices between business segments are set on an arm’s length basis in a manner similar to transactions with third
parties. Segment revenue, expenses and results include transfers between business segments. These transfers are eliminated
on consolidation.
8. SEGMENT INFORMATION – GROUP (cont’d.)
(a) Information on business segments (cont’d.)
Plantation &
Agricultural Services
2006
2005
RM’000
RM’000
Property
Development
2006
2005
RM’000
RM’000
Manufacturing
2006
2005
RM’000
RM’000
REVENUE
External sales
Inter-segment sales
1,805,549
11,085
1,564,005
12,903
567,828
537
395,132
308
–
9,300
949
5,224
Total revenue
1,816,634
1,576,908
568,365
395,440
9,300
6,173
579,806
(47,265)
381,897
(50,745)
170,826
(35,375)
155,451
(33,177)
20,722
(7)
3,720
(268)
–
–
25,407
55,317
–
–
–
–
–
–
–
–
532,541
331,152
160,858
177,591
20,715
3,452
ASSETS
Segment assets
Investments in associated companies
Investment in a jointly controlled entity
Unallocated corporate assets
6,827,274
744
–
–
6,721,794
8,716
–
–
1,694,811
212,375
–
–
1,649,846
187,768
–
–
33,907
–
–
–
160,616
–
–
–
Total assets
6,828,018
6,730,510
1,907,186
1,837,614
33,907
160,616
LIABILITIES
Segment liabilities
Unallocated corporate liabilities
1,006,370
–
946,116
–
917,253
–
901,538
–
51,641
–
89,455
–
Total liabilities
1,006,370
946,116
917,253
901,538
51,641
89,455
RESULTS
Operating Profit/(Loss)
Finance expense
(Loss)/Gain on disposal of discontinued
operations
Share of results after tax of associated
companies
Share of results after tax of a jointly
controlled entity
Profit/(Loss) before taxation
Taxation
Profit/(Loss) for the year
Discontinued
Operations
Investment &
Others
2006
2005
RM’000
RM’000
Eliminations
2006
2005
RM’000
RM’000
Consolidated
2006
2005
RM’000
RM’000
2006
RM’000
2005
RM’000
Consolidated
2006
2005
RM’000
RM’000
33,136
65,493
20,683
56,257
–
(86,415)
–
(74,692)
2,406,513
–
1,980,769
–
106,860
–
151,505
–
2,513,373
–
2,132,274
–
98,629
76,940
(86,415)
(74,692)
2,406,513
1,980,769
106,860
151,505
2,513,373
2,132,274
559,690
(298,065)
376,702
(222,639)
(564,904)
217,325
(498,290)
149,482
766,140
(163,387)
419,480
(157,347)
7,616
(105)
(10,533)
(597)
773,756
(163,492)
408,947
(157,944)
–
–
(23,008)
4,243
(23,008)
4,243
–
–
(22,659)
(54,442)
2,748
875
–
–
2,748
875
–
–
(38)
–
(38)
–
–
–
(38)
–
261,625
154,063
(370,276)
(403,250)
605,463
263,008
(15,497)
(6,887)
589,966
256,121
(158,845)
(110,556)
2,589
(3,166)
(156,256)
(113,722)
446,618
152,452
(12,908)
(10,053)
433,710
142,399
5,316,483
12,225
1,962
–
5,874,585
12,225
–
–
(6,327,656)
(208,644)
–
–
(6,296,298)
(194,914)
–
–
7,544,819
16,700
1,962
504,122
8,110,543
13,795
–
576,484
676,311
–
–
2,589
–
–
–
–
8,221,130
16,700
1,962
506,711
8,110,543
13,795
–
576,484
5,330,670
5,886,810
(6,536,300)
(6,491,212)
8,067,603
8,700,822
678,900
–
8,746,503
8,700,822
7,404,053
–
7,575,053
–
(6,068,123)
–
(5,940,712)
–
3,311,194
730,615
3,571,450
733,805
9,106
–
–
–
3,320,300
730,615
3,571,450
733,805
7,404,053
7,575,053
(6,068,123)
(5,940,712)
4,041,809
4,305,255
9,106
–
4,050,915
4,305,255
(a) Information on business segments (cont’d.)
Plantation &
Agricultural Services
2006
2005
RM’000
RM’000
CAPITAL EXPENDITURE
NON–CASH EXPENSES
Depreciation/Amortisation:
– Property, plant and equipment
– Plantation development expenditure
– Prepaid lease payments
– Concession asset
Amortisation of goodwill
Amortisation of deferred and
SUKUK financing expenses
Property, plant and equipment written off
written off
Impairment of:
– Property, plant and equipment
– Plantation development expenditure
– Prepaid lease payments
– Goodwill
– Other investments
Write down of inventories
Write down in value of marketable securities
Loss on strike off of subsidiary companies
Provisions for:
– retirement benefits
– doubtful debts
– loss on conversion of plasma projects
Unrealised loss on foreign exchange
differences
NON–CASH INCOME
Write back of:
– provision for doubtful debts
– provision for loss on conversion of
plasma project
Write back in value of marketable securities
Unrealised gain on foreign exchange
differences
Property
Development
2006
2005
RM’000
RM’000
Manufacturing
2006
2005
RM’000
RM’000
271,220
142,973
5,746
1,483
–
–
91,722
127,513
6,353
–
–
79,368
125,233
6,112
–
17,163
1,005
–
–
–
–
1,040
–
–
–
–
605
–
–
–
–
3
–
–
–
–
–
3,761
–
1,169
–
86
–
37
–
1,162
–
–
15,528
4,121
–
–
–
–
5,356
4,923
388
14,688
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
8
–
–
10,922
–
2,675
12,303
–
5,329
–
422
–
–
156
–
–
–
–
–
26
–
1,841
43,514
–
–
–
–
–
4
211
2,496
–
15
–
–
6,834
–
–
–
–
–
–
–
–
–
63,777
–
–
–
–
28
Discontinued
Operations
Investment &
Others
2006
2005
RM’000
RM’000
Eliminations
2006
2005
RM’000
RM’000
Consolidated
2006
2005
RM’000
RM’000
2006
RM’000
2005
RM’000
Consolidated
2006
2005
RM’000
RM’000
976
3,916
–
–
277,942
148,372
3,150
1,115
281,092
149,487
4,849
–
84
–
–
7,597
–
84
–
–
–
–
–
–
–
–
–
–
–
–
98,180
127,513
6,437
–
–
88,008
125,233
6,196
–
17,163
11,751
–
–
4,682
–
14,847
–
–
661
–
109,932
127,513
6,437
4,682
–
102,855
125,233
6,196
661
17,163
3,794
164
11,128
535
–
–
–
–
3,794
5,173
11,128
1,741
–
–
–
–
3,794
5,173
11,128
1,741
–
–
–
–
15,528
4,121
–
–
15,528
4,121
–
–
–
–
500
121
–
–
–
–
–
–
–
129
1,337
2,031
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
5,356
4,923
388
14,688
500
121
–
–
–
–
–
–
–
137
1,337
2,031
–
–
–
–
–
64
–
–
9,347
–
–
–
–
304
–
–
5,356
4,923
388
14,688
500
185
–
–
9,347
–
–
–
–
441
1,337
2,031
10
1,507
–
10
12,964
–
–
–
–
–
–
–
10,932
1,929
2,675
12,313
13,146
5,329
–
962
–
–
1,472
–
10,932
2,891
2,675
12,313
14,618
5,329
37,651
14,725
–
–
39,492
58,239
–
–
39,492
58,239
985
126
–
–
1,196
2,641
220
380
1,416
3,021
–
4,247
–
–
–
–
–
–
–
4,247
6,834
–
–
–
–
–
–
4,247
6,834
–
98,089
11,838
–
–
161,866
11,866
–
–
161,866
11,866
(b) Geographical segments
The Group’s geographical segments are based on the location of the Group’s assets. Sales to external customers disclosed
in geographical segments are based on the geographical location of its customers. The Group’s four business segments
operate in two main geographical areas as follows:
Malaysia
–
Plantation and agricultural services, property development, manufacturing and investment and others
Indonesia
–
Plantation
The following is an analysis of the carrying amount of segment assets and capital expenditure, analysed by the Group’s
geographical segments:
Capital Expenditure
2006
2005
RM’000
RM’000
Malaysia
Indonesia
Others
Segment Assets
2006
2005
RM’000
RM’000
68,016
213,076
–
57,597
91,878
12
6,019,904
2,726,078
521
5,724,815
2,975,868
139
281,092
149,487
8,746,503
8,700,822
The following is an analysis of the Group’s revenue analysed by the geographical location of customers:
2006
2005
RM’000
RM’000
Malaysia
South East Asia
Asia
United Kingdom
Others
2006
2005
RM’000
RM’000
Total
2006
RM’000
2005
RM’000
1,396,176
1,009,339
175
–
823
1,126,652
853,260
183
–
674
50,354
19,762
35,517
–
1,227
41,850
25,215
42,603
20,870
20,967
1,446,530
1,029,101
35,692
–
2,050
1,168,502
878,475
42,786
20,870
21,641
2,406,513
1,980,769
106,860
151,505
2,513,373
2,132,274
9. REVENUE
GROUP
2006
2005
RM’000
RM’000
COMPANY
2006
2005
RM’000
RM’000
Plantation and Agricultural Services:
Palm products
Rubber
Oil palm seeds and seedlings
Consultancy services
1,777,228
5,499
20,769
2,052
1,534,959
7,568
19,632
1,844
–
–
–
–
–
–
–
–
Sale of goods
Services rendered
Construction contracts (Note 36)
Dividend income from subsidiary companies
Management fees from subsidiary companies
Rental income from investment property
1,805,548
567,828
4,806
21,834
6,497
–
–
–
1,564,003
395,132
540
14,748
6,346
–
–
–
–
–
–
–
–
427,398
50,448
1,012
–
–
–
–
–
226,994
52,346
1,012
2,406,513
1,980,769
478,858
280,352
10. COST OF SALES
GROUP
2006
2005
RM’000
RM’000
COMPANY
2006
2005
RM’000
RM’000
Plantation and Agricultural Services:
Palm products
Rubber
Oil palm seeds and seedlings
Consultancy services
1,167,638
5,697
4,609
1,131
1,032,274
4,845
3,981
1,040
–
–
–
–
–
–
–
–
Goods sold
Services rendered
Construction contracts (Note 36)
1,179,075
372,575
2,656
11,201
17,805
1,042,140
198,119
4,428
7,281
8,502
–
–
–
–
–
–
–
–
–
–
1,583,312
1,260,470
–
–
11. OTHER INCOME
GROUP
2006
2005
RM’000
RM’000
Interest income received/receivable on:
– Intragroup borrowings
– Fixed deposits with licensed banks and
financial institutions
– Others
Dividend income from investments:
– Unquoted in Malaysia
– Quoted in Malaysia
Accretion of deferred income (Note 45)
Gain on compulsory land acquisitions
Gain on sale of land
Gain on sale of property, plant and equipment
Gain on sale of investment property
Gain on foreign exchange differences:
– Realised
– Unrealised
Gain on disposal of marketable securities
Surplus on liquidation of subsidiary companies
Write back in value of marketable securities
Write back of provision for doubtful debts
Write back of provision for loss on conversion of
plasma projects
Others
COMPANY
2006
2005
RM’000
RM’000
–
–
23,762
35,583
23,714
5,865
19,723
4,678
2,813
400
2,224
418
4,138
672
8,330
5,980
68,515
803
–
1,001
600
5,687
14,262
4,167
661
–
2,336
–
–
–
–
56
4,576
565
–
–
–
–
–
–
30,204
161,866
1,503
945
4,247
1,196
701
11,866
472
–
–
2,641
25,876
94,705
–
17,756
–
–
82
9,996
–
–
–
–
–
10,844
6,834
15,091
–
1,481
–
1,209
328,822
88,384
173,761
50,077
12. FINANCE EXPENSE
GROUP
2006
2005
RM’000
RM’000
Interest paid/payable on:
– Intragroup borrowings
– Hire purchase and finance lease liabilities
– Short-term borrowings
– Bankers acceptances and export credit refinancing loans
– Long-term borrowings
– Long-term payable
Less: Interest capitalised in qualifying assets:
– Capital work-in-progress (Note 18)
– Plantation development expenditure (Note 19)
– Concession asset (Note 23)
Amortisation of:
– Deferred financing expenses (Note 44)
– SUKUK issuance expenses (Note 44)
COMPANY
2006
2005
RM’000
RM’000
–
25,607
9,989
3,974
120,939
–
–
20,084
20,303
6,055
101,453
95
97,910
25,564
6,274
3,974
14,366
–
48,098
20,020
15,725
5,873
38,078
–
160,509
147,990
148,088
127,794
(115)
(801)
–
(992)
(684)
(95)
–
–
–
–
–
–
159,593
146,219
148,088
127,794
2,752
1,042
10,068
1,060
–
1,042
8,876
1,060
163,387
157,347
149,130
137,730
13. PROFIT BEFORE TAXATION
Profit before taxation from continuing operations has been arrived at after charging:
GROUP
2006
2005
RM’000
RM’000
Auditors’ remuneration [Note (a)]
Directors’ remuneration [Note (b)]
Employees’ benefits expense [Note (c)]
Depreciation of property, plant and equipment (Note 18)
Amortisation of plantation development expenditure (Note 19)
Amortisation of prepaid lease payments (Note 20)
Depreciation of investment property (Note 22)
Amortisation of goodwill included in other expenses (Note 24)
Property, plant and equipment written off (Note 18)
2,151
2,783
447,254
98,181
127,513
6,437
–
–
5,173
1,960
2,543
366,534
88,008
125,233
6,196
–
17,163
1,741
COMPANY
2006
2005
RM’000
RM’000
510
2,109
39,820
2,053
–
30
–
–
4
522
1,895
24,430
1,715
–
30
238
–
–
13. PROFIT BEFORE TAXATION (cont’d.)
Profit before taxation from continuing operations has been arrived at after charging: (cont’d.)
GROUP
2006
2005
RM’000
RM’000
Plantation development expenditure written off (Note 19)
Impairment of assets included in other expenses:
– Property, plant and equipment (Note 18)
– Plantation development expenditure (Note 19)
– Prepaid lease payments (Note 20)
– Goodwill (Note 24)
– Investments in subsidiary companies (Note 25)
– Other investments (Note 28)
Loss on disposal of property, plant and equipment
Loss on disposal of marketable securities
Loss on strike off of subsidiary companies
Rent of land and buildings
Research and development costs
Write down in value of marketable securities
Provisions for:
– loss on conversion of plasma projects
– doubtful debts
– amounts due from subsidiary companies (Note 38)
Loss on foreign exchange differences:
– Realised
– Unrealised
COMPANY
2006
2005
RM’000
RM’000
15,528
4,121
–
–
5,356
4,923
388
14,688
–
500
13
262
–
602
10,657
121
–
–
–
–
–
–
–
3,986
–
2,031
1,636
10,965
137
1,337
–
–
–
–
53,673
500
–
–
218
1,780
10,657
–
–
–
–
–
–
2,003
–
314
–
–
1,675
10,166
69
–
2,675
1,929
–
5,329
13,146
–
–
–
19,200
–
–
26,974
3,996
39,492
1,025
58,239
3,031
17,796
20
1,134
GROUP
2006
2005
RM’000
RM’000
COMPANY
2006
2005
RM’000
RM’000
(a) Auditors’ Remuneration
Auditors of the Company
– statutory audit
– other services
Other Auditors in Malaysia
– statutory audit
– other services
Other Auditors outside Malaysia
– statutory audit
– other services
369
36
342
306
95
31
72
199
405
648
126
271
274
306
270
236
–
215
–
126
580
506
215
126
919
247
681
125
–
169
–
125
1,166
806
169
125
2,151
1,960
510
522
1,093
176
149
793
293
79
1,093
176
149
793
293
79
1,418
1,165
1,418
1,165
958
196
34
945
186
28
516
141
34
568
134
28
1,188
1,159
691
730
(b) Directors’ Remuneration
Directors of the Company
Executive Director:
– salaries and other emoluments
– bonus
– benefits-in-kind
Non-Executive Directors:
– fees
– allowances
– benefits-in-kind
GROUP
2006
2005
RM’000
RM’000
COMPANY
2006
2005
RM’000
RM’000
(b) Directors’ Remuneration (cont’d.)
Directors of subsidiary companies
– fees
– allowances
146
31
190
29
–
–
–
–
177
219
–
–
2,783
2,543
2,109
1,895
The number of directors of the Company whose total remuneration during the financial year fell within the following bands
is analysed below:
Executive
Director
2006
2005
No.
No.
Executive Director
RM1,150,001 – RM1,200,000
RM1,400,001 – RM1,450,000
RM50,001
– RM100,000
RM100,001 – RM150,000
RM150,001 – RM200,000
RM200,001 – RM250,000
Non-Executive
Directors
2006
2005
No.
No.
–
1
1
–
–
–
–
–
–
–
–
–
–
–
–
–
2
4
2
1
–
7
2
–
GROUP
2006
2005
RM’000
RM’000
COMPANY
2006
2005
RM’000
RM’000
(c) Employees’ Benefits Expense
Wages and salaries
Social security contribution
Pension costs:
– defined contribution plans
– retirement benefits (Note 46)
Termination benefits
Cost of share options
428,695
359
340,078
313
35,665
128
21,891
59
14,018
10,932
694
3,488
13,285
12,313
545
–
2,772
10
–
1,245
2,470
10
–
–
458,186
366,534
39,820
24,430
The remuneration of the executive director amounting to RM1,418,000 (2005: RM1,165,000) is disclosed in Note 13(b).
14. TAXATION
GROUP
2006
2005
RM’000
RM’000
Current income tax:
Malaysian income tax
Foreign income tax
Under/(Over) provision in prior years:
Malaysian income tax
Foreign income tax
Deferred tax
Relating to origination and reversal of temporary differences
Relating to changes in tax rates
(Over)/Under provision in prior years
COMPANY
2006
2005
RM’000
RM’000
70,152
83,989
66,678
52,844
71,232
–
40,468
–
154,141
119,522
71,232
40,468
2,894
(8,431)
(7,092)
(3,485)
2,053
–
(8,378)
–
148,604
108,945
73,285
32,090
11,213
(202)
(770)
8,760
–
(7,149)
1,778
(53)
23
(412)
–
(325)
10,241
1,611
1,748
(737)
14. TAXATION (cont’d.)
GROUP
2006
2005
RM’000
RM’000
COMPANY
2006
2005
RM’000
RM’000
Total income tax expense from continuing operations
Deferred tax (Note 15):
Relating to origination and reversal of temporary differences
158,845
110,556
75,033
31,353
(2,589)
3,166
–
–
Total income tax expense
156,256
113,722
75,033
31,353
Domestic current income tax is calculated at the statutory tax rate of 28% (2005: 28%) of the estimated assessable profit for
the year. The domestic statutory tax rate of 28% will be reduced to 27% effective year of assessment 2007 and to 26% effective
year of assessment 2008. The computation of deferred tax as at 31 December 2006 has reflected these changes. Taxation for
other jurisdictions is calculated at the rates prevailing in the respective jurisdictions.
A reconciliation of income tax expense applicable to profit before taxation at the statutory income tax rate to income tax expense
at the effective income tax rate of the Group and of the Company is as follows:
GROUP
2006
2005
RM’000
RM’000
COMPANY
2006
2005
RM’000
RM’000
605,463
(15,497)
263,008
(6,887)
347,988
(24,575)
100,164
(1,817)
589,966
256,121
323,413
98,347
Taxation at Malaysia statutory tax rate of 28% (2005: 28%)
Effects of:
Income subject to tax rate of 20%
Different tax rates in other countries
Income not subject to tax
Changes in tax rate on deferred tax
Expenses not deductible for tax purposes
Utilisation of previously unrecognised tax losses
and unabsorbed capital allowances
Share of results of associated companies
Expenses subject to double deduction
(Over)/Under provision of deferred tax in prior years
(Over)/Under provision of income tax in prior years
Deferred tax assets not recognised in respect of current
year’s tax losses and unabsorbed capital allowances
Deferred tax liability on intragroup assets transfer
165,190
71,714
90,556
27,537
(215)
(3,034)
(80,563)
(202)
69,187
(215)
(5,603)
(11,865)
–
48,656
–
–
(49,689)
(53)
32,018
–
–
(507)
–
15,180
(5,516)
(793)
(1,577)
(770)
(4,916)
(740)
(251)
(2,154)
(7,149)
(10,577)
–
–
(1,577)
23
2,053
–
–
(2,154)
(325)
(8,378)
20,019
(554)
31,906
–
1,702
–
–
–
Tax expense for the year
156,256
113,722
75,033
31,353
Profit/(Loss) before taxation
– Continuing operations
– Discontinued operations
14. TAXATION (cont’d.)
Tax savings during the financial year arose from:
GROUP
2006
2005
RM’000
RM’000
Utilisation of current year tax losses
Utilisation of previously unrecognised tax losses
Utilisation of previously unrecognised capital allowances
128
491
2,171
COMPANY
2006
2005
RM’000
RM’000
1,419
172
262
–
–
–
954
–
–
15. DISCONTINUED OPERATIONS AND DISPOSAL GROUP CLASSIFIED AS HELD FOR SALE
In line with the Group’s objective to focus on its core businesses of plantation and property development, the Group had
disposed/propose to dispose the following subsidiary companies:
(a) Disposal of Subsidiary Company during the Current Financial Year
On 12 October 2006, the Company entered into a Sale and Purchase Agreement for the disposal of the entire equity interest
of Integrated Brickworks Sdn. Berhad (“IBSB”), a wholly-owned subsidiary company involved in the manufacture and trading
of concrete blocks and bricks which has been under-performing over the past several years. The disposal was completed
on 10 January 2007 and a loss on disposal of RM23,008,000 and RM24,575,000 was recognised in the income statements
of the Group and of the Company respectively for the financial year ended 31 December 2006. The financial results of IBSB
is presented separately on the consolidated income statement as discontinued operations.
(b) Proposed Disposals of Subsidiary Companies
(i)
On 27 November 2006, the Company entered into a Sale and Purchase of Shares Agreement for the proposed disposal
of the entire equity interest of Guthrie Corridor Expressway Sdn. Berhad (“GCESB”), a wholly-owned subsidiary involved
in road concession operations. As at 31 December 2006, the proposed disposal is pending shareholders’ and regulatory
approvals. The disposal is expected to be completed by 30 June 2007.
(ii)
On 22 February 2007, the Company and Guthrie Wood Industries Sdn. Berhad, a wholly-owned subsidiary, entered into
a Share Sale and Purchase Agreement for the disposal of the entire equity interests in Guthrie MDF Sdn. Berhad
(“GMDF”). The disposal is expected to be completed by 30 June 2007 upon completion of the conditions precedent,
including approval of regulatory authorities.
Accordingly, the assets and liabilities of GCESB and GMDF have been presented on the consolidated balance sheet as
disposal groups held for sale and the financial results of GCESB and GMDF are presented separately on the consolidated
income statement as discontinued operations. The carrying amounts of the investments in GCESB and GMDF have also been
presented as non-current assets held for sale on the Company’s balance sheet as at 31 December 2006.
In the financial year ended 31 December 2005, the Group completed the disposal of the rubber gloves manufacturing and
healthcare products trading operations undertaken by Guthrie Medicare Products (NS) Sdn. Berhad and Healthline Products Ltd.
respectively.
15. DISCONTINUED OPERATIONS AND DISPOSAL GROUP CLASSIFIED AS HELD FOR SALE (cont’d.)
(c) The results of the discontinued operations are as follows:
2006
Manufacturing
RM’000
Investment
& Others
RM’000
Total
RM’000
Revenue
Cost of sales
87,645
(72,639)
19,215
(5,033)
106,860
(77,672)
Gross profit
Expenses
15,006
(14,640)
14,182
(6,932)
29,188
(21,572)
Operating profit
Finance expense
366
(105)
7,250
–
7,616
(105)
Taxation (Note 14)
261
–
7,250
2,589
7,511
2,589
Profit for the year from discontinued operations
Loss on disposal of discontinued operations
261
(23,008)
9,839
–
10,100
(23,008)
(Loss)/Profit for the year from discontinued operations
(22,747)
9,839
(12,908)
The following amounts have been included in arriving at the profit before taxation of discontinued operations:
Auditors’ remuneration:
– statutory audit
Directors’ remuneration:
– fees and allowances
– property, plant and equipment
– concession asset
Provision for doubtful debts
Manufacturing
RM’000
Investment
& Others
RM’000
Total
RM’000
18
15
33
17
26
43
11,457
–
962
64
(220)
294
4,682
–
–
–
11,751
4,682
962
64
(220)
(c) The results of the discontinued operations are as follows: (cont’d.)
2005
Manufacturing
RM’000
Investment
& Others
RM’000
Total
RM’000
Revenue
Cost of sales
105,553
(84,573)
45,952
(29,898)
151,505
(114,471)
Gross profit
Expenses
20,980
(32,995)
16,054
(14,572)
37,034
(47,567)
Operating (loss)/profit
Finance expense
(12,015)
(176)
1,482
(421)
(10,533)
(597)
(Loss)/Profit before taxation
Taxation (Note 14)
(12,191)
(2,722)
1,061
(444)
(11,130)
(3,166)
(Loss)/Profit on disposal of discontinued operations
(14,913)
(2,968)
617
7,211
(14,296)
4,243
(17,881)
7,828
(10,053)
The following amounts have been included in arriving at the profit/(loss) before taxation of discontinued operations:
Auditors’ remuneration:
– statutory audit
Directors’ remuneration:
– fees and allowances
– property, plant and equipment
– concession asset
Impairment of property, plant and equipment
Hire of plant and machinery
Manufacturing
RM’000
Investment
& Others
RM’000
Total
RM’000
17
5
22
17
33
50
14,326
–
9,347
260
1,472
304
(380)
521
661
–
340
–
–
–
14,847
661
9,347
600
1,472
304
(380)
(d) The cash flows attributable to the discontinued operations are as follows:
2006
Cash flows from operating activities
Cash flows from investing activities
Net cash flows
2005
Cash flows from operating activities
Cash flows from investing activities
Net cash flows
Manufacturing
RM’000
Investment
& Others
RM’000
Total
RM’000
10,898
(11,393)
10,234
(10,252)
21,132
(21,645)
(495)
(18)
(513)
9,062
5,602
(17,201)
(56,866)
(8,139)
(51,264)
14,664
(74,067)
(59,403)
(e) The assets and liabilities of the subsidiary companies disposed of at the effective date are as follows:
As at
30.9.2006
RM’000
As at
30.6.2005
RM’000
Inventories
Receivables
Deposit, bank balances and cash
Advances from affiliates
Bank borrowings
Payables
12,838
2,020
3,925
284
–
–
(18,273)
13,582
11,016
16,728
6,849
(5,706)
(18,583)
(9,319)
Net assets disposed of
Proceeds from disposal of subsidiary companies
Reversal of goodwill on disposal
Provision for warranty and incidental expenses
Effect of changes in exchange rates
Provisions written off
794
(1,592)
–
–
–
23,806
14,567
(16,800)
4,005
2,548
(8,563)
–
Loss/(Gain) on disposal of subsidiary companies
23,008
(4,243)
Proceeds from disposal of subsidiary companies
Cash and cash equivalents of subsidiary companies disposed of
1,592
(284)
16,800
(6,849)
Net cash inflow
1,308
9,951
There were no tax charge or credit arising from the disposals.
(f)
The disposal of subsidiary companies had the following effects on the financial results of the Company:
2006
RM’000
2005
RM’000
992
(968)
16,720
(4,940)
Net proceeds from disposal of subsidiary companies
Less: Cost of investment in subsidiary companies
Add: Reversal of provisions for:
Impairment of investment in subsidiary companies (Note 25)
Loans to subsidiary companies (Note 29)
Amounts due from subsidiary companies (Note 38)
Net assets of subsidiary companies taken over
24
(9,000)
(15,599)
–
11,780
(35,076)
(22,506)
(75,000)
–
–
–
–
35,076
74,460
3,000
6,449
Loss on disposal of subsidiary companies
(24,575)
(1,817)
Total disposal proceeds
Less: Incidental expenses incurred
16. EARNINGS PER SHARE
(a) Basic
Basic earnings per share are calculated by dividing the profit for the year attributable to ordinary equity holders of the
Company by the weighted average number of ordinary shares in issue during the financial year.
GROUP
2006
Profit from continuing operations attributable to
ordinary equity holders of the Company (RM’000)
Loss from discontinued operations attributable to
2005
297,102
58,897
(12,908)
(10,053)
284,194
48,844
1,011,222
1,006,590
Basic earnings per share (sen) for:
29.38
(1.28)
5.85
(1.00)
Profit attributable to ordinary equity holders of the Company
28.10
4.85
Profit attributable to ordinary equity holders of the Company (RM’000)
Weighted average number of ordinary shares in issue (‘000)
16. EARNINGS PER SHARE (cont’d.)
(b) Diluted
Diluted earnings per share are calculated by dividing the profit for the year attributable to ordinary equity holders of the
Company by the weighted average number of ordinary shares in issue during the financial year which have been adjusted
for the dilutive effects of all share options granted to employees.
GROUP
2006
Profit from continuing operations attributable to
Loss from discontinued operations attributable to
2005
297,102
58,897
(12,908)
(10,053)
284,194
48,844
Weighted average number of ordinary shares in issue (‘000)
Effects of dilution of share options (‘000)
1,011,222
3,721
1,006,590
8,849
Adjusted weighted average number of ordinary shares
in issue and issuable (‘000)
1,014,943
1,015,439
Diluted earnings per share (sen) for:
29.27
(1.27)
5.80
(0.99)
Profit attributable to ordinary equity holders of the Company
28.00
4.81
Profit attributable to ordinary equity holders
of the Company (RM’000)
17. DIVIDENDS
GROUP/COMPANY
2006
2005
RM’000
RM’000
(a) Dividends Paid
Final dividend of 6 sen per share, less 28% tax for the financial year 2005
(2005: 5 sen per share, less 28% tax for the financial year 2004)
Adjustment for underprovision of prior year’s final dividend
due to increase in share capital arising from the Second ESOS
Interim dividend of 6 sen per share, less 28% tax for the current financial year
(2005: 4 sen per share, less 28% tax)
(b) Dividend Proposed
Final tax exempt dividend of 6 sen per share (2005: Nil)
Final dividend of 4 sen per share, less 27% tax for the current
financial year (2005: 6 sen per share, less 28% tax)
43,500
36,195
79
39
43,579
36,234
43,892
28,995
87,471
65,229
61,287
–
29,826
43,500
91,113
43,500
The final dividends proposed in respect of the financial year ended 31 December 2006 are subject to shareholders’ approval at
the forthcoming Annual General Meeting of the Company to be held on 7 June 2007. The financial statements for the current
financial year do not reflect these proposed dividends. Such dividends, if approved by the shareholders, will be accounted for in
equity as an appropriation of revenue reserve in the financial year ending 31 December 2007.
18. PROPERTY, PLANT AND EQUIPMENT
GROUP
Golf course
Freehold development
land expenditure
RM’000
RM’000
Cost or Valuation
At 1 January 2006
Cost
Valuation – 2003
Buildings
RM’000
Machinery,
equipment
& vehicles
RM’000
Capital
work-inprogress
RM’000
Total
RM’000
357
1,670,463
–
23,637
169,626
284,636
916,653
–
18,398
–
1,105,034
1,978,736
1,670,820
–
–
(14,723)
–
–
23,637
71
–
–
–
(137)
454,262
18,832
17,281
(867)
(6,009)
(4,030)
916,653
42,091
24,157
(3,426)
(21,247)
(10,951)
18,398
148,121
(41,914)
–
–
(6)
3,083,770
209,115
(476)
(19,016)
(27,256)
(15,124)
–
–
–
–
(33,389)
3,811
(144,628)
8,001
(3,150)
195
(181,167)
12,007
At 31 December 2006
1,656,097
23,571
449,891
810,650
121,644
3,061,853
Representing:
Cost
Valuation – 2003
357
1,655,740
–
23,571
191,646
258,245
810,650
–
121,644
–
1,124,297
1,937,556
At 31 December 2006
1,656,097
23,571
449,891
810,650
121,644
3,061,853
Additions
Reclassification
Disposals
Disposal of a subsidiary company
Write off
Transfer to assets of disposal groups
Exchange differences
18. PROPERTY, PLANT AND EQUIPMENT (cont’d.)
GROUP (cont’d.)
Golf course
land expenditure
RM’000
RM’000
Accumulated Depreciation and
Impairment Losses
At 1 January 2006
Depreciation charge for the year
Recognised in income statement:
Buildings
RM’000
Machinery,
equipment
& vehicles
RM’000
Capital
work-inprogress
RM’000
Total
RM’000
–
–
3,486
834
35,023
25,107
509,449
83,991
–
–
547,958
109,932
–
–
834
–
23,985
1,122
73,362
10,629
–
–
98,181
11,751
Reclassification
Disposals
Disposal of a subsidiary company
Impairment losses recognised in
income statement (Note 13)
Write off
Transfer to assets of disposal
groups classified as held for sale
–
–
–
–
–
–
(470)
(120)
(359)
(6)
(3,311)
(14,059)
–
–
–
(476)
(3,431)
(14,418)
–
–
–
–
570
(1,152)
941
(8,799)
3,845
–
5,356
(9,951)
–
–
–
–
(8,219)
106
(99,077)
3,297
–
–
(107,296)
3,403
At 31 December 2006
–
4,320
50,486
472,426
3,845
531,077
Net Carrying Amount
Cost
Valuation – 2003
357
1,655,740
–
19,251
188,284
211,121
338,224
–
117,799
–
644,664
1,886,112
At 31 December 2006
1,656,097
19,251
399,405
338,224
117,799
2,530,776
GROUP (cont’d.)
Golf course
land expenditure
RM’000
RM’000
Buildings
RM’000
Machinery,
equipment
& vehicles
RM’000
Capital
work-inprogress
RM’000
Total
RM’000
Cost or Valuation
At 1 January 2005
Cost
Valuation – 2003
–
1,669,899
–
23,357
69,123
318,556
924,807
–
57,083
–
1,051,013
2,011,812
Additions
Reclassification
Disposals
Disposal of subsidiary companies
Write off
Transfer from concession asset
Transfer from completed properties
1,669,899
–
2,934
(2,355)
–
(15)
–
357
–
23,357
280
–
–
–
–
–
–
–
387,679
11,836
24,526
(966)
(19,713)
(132)
60,000
974
(9,942)
924,807
35,289
47,759
(21,364)
(40,542)
(8,333)
–
–
(20,963)
57,083
40,249
(75,219)
–
–
–
–
–
(3,715)
3,062,825
87,654
–
(24,685)
(60,255)
(8,480)
60,000
1,331
(34,620)
At 31 December 2005
1,670,820
23,637
454,262
916,653
18,398
3,083,770
Representing:
Cost
Valuation – 2003
357
1,670,463
–
23,637
169,626
284,636
916,653
–
18,398
–
1,105,034
1,978,736
At 31 December 2005
1,670,820
23,637
454,262
916,653
18,398
3,083,770
GROUP (cont’d.)
Golf course
land expenditure
RM’000
RM’000
Accumulated Depreciation
and Impairment Losses
At 1 January 2005
Depreciation for the year
Capitalised in concession asset
(Note 23)
Buildings
RM’000
Machinery,
equipment
& vehicles
RM’000
Capital
work-inprogress
RM’000
Total
RM’000
–
–
1,093
2,393
17,239
22,688
496,685
77,784
–
–
515,017
102,865
–
–
2,393
–
20,895
1,793
64,720
13,054
–
–
88,008
14,847
–
–
–
10
–
10
Disposals
Disposal of subsidiary companies
Impairment losses recognised in
income statement (Note 15)
Write off
–
–
–
–
(137)
(3,920)
(15,538)
(42,512)
–
–
(15,675)
(46,432)
–
–
–
–
–
–
–
(12)
(835)
9,347
(6,727)
(9,590)
–
–
–
9,347
(6,739)
(10,425)
At 31 December 2005
–
3,486
35,023
509,449
–
547,958
Net Carrying Amount
Cost
Valuation – 2003
357
1,670,463
–
20,151
157,514
261,725
407,204
–
18,398
–
583,473
1,952,339
At 31 December 2005
1,670,820
20,151
419,239
407,204
18,398
2,535,812
At 31 December 2006
443,685
19,251
399,405
338,224
117,799
1,318,364
At 31 December 2005
446,886
20,151
419,081
407,204
18,398
1,311,720
The net carrying amount of property,
plant and equipment had the
assets been carried under the
cost model, would have been:
Interest expense capitalised during the financial year under capital work-in-progress of the Group amounted to RM115,000 (2005:
RM992,000) as disclosed in Note 12.
COMPANY
Buildings
RM’000
Machinery,
equipment
& vehicles
RM’000
Total
RM’000
–
10,411
–
1,398
22,139
–
22,139
11,809
Additions
Disposals
Write off
Transfer to subsidiary companies
10,411
–
–
–
–
1,398
–
–
(3)
–
22,139
974
(675)
(127)
(319)
33,948
974
(675)
(130)
(319)
At 31 December 2006
10,411
1,395
21,992
33,798
Representing:
Cost
Valuation – 2003
–
10,411
–
1,395
21,992
–
21,992
11,806
At 31 December 2006
10,411
1,395
21,992
33,798
–
–
–
–
–
176
79
–
(2)
–
15,265
1,974
(567)
(124)
(196)
15,441
2,053
(567)
(126)
(196)
–
253
16,352
16,605
Net Carrying Amount
Cost
Valuation – 2003
–
10,411
–
1,142
5,640
–
5,640
11,553
At 31 December 2006
10,411
1,142
5,640
17,193
Freehold
land
RM’000
Cost or Valuation
At 1 January 2006
Cost
Valuation – 2003
At 1 January 2006
Depreciation recognised in income statement (Note 13)
Disposals
Write off
At 31 December 2006
COMPANY (cont’d.)
Buildings
RM’000
Machinery,
equipment
& vehicles
RM’000
Total
RM’000
–
10,411
–
1,391
20,551
–
20,551
11,802
Additions
Disposals
Transfer from subsidiary companies
10,411
–
–
–
–
1,391
7
–
–
–
20,551
3,243
(2,026)
565
(194)
32,353
3,250
(2,026)
565
(194)
At 31 December 2005
10,411
1,398
22,139
33,948
Representing:
Cost
Valuation – 2003
–
10,411
–
1,398
22,139
–
22,139
11,809
At 31 December 2005
10,411
1,398
22,139
33,948
At 1 January 2005
Disposals
Transfer from subsidiary companies
–
–
–
–
–
88
88
–
–
–
14,451
1,627
(1,035)
363
(141)
14,539
1,715
(1,035)
363
(141)
At 31 December 2005
–
176
15,265
15,441
Net Carrying Amount
Cost
Valuation – 2003
–
10,411
–
1,222
6,874
–
6,874
11,633
At 31 December 2005
10,411
1,222
6,874
18,507
Freehold
land
RM’000
Cost or Valuation
At 1 January 2005
Cost
Valuation – 2003
COMPANY (cont’d.)
Buildings
RM’000
Machinery,
equipment
& vehicles
RM’000
Total
RM’000
600
1,142
5,640
7,382
600
1,222
6,874
8,696
Freehold
land
RM’000
At 31 December 2006
At 31 December 2005
The net carrying amount of property, plant and
equipment had the assets been carried under
the cost model, would have been:
The landed properties of the Group and of the Company included within property, plant and equipment were revalued by the
directors in 2003 based on open market values on existing use basis carried out by independent professional valuers, CH Williams
Talhar & Wong Sdn. Berhad.
The net carrying amounts of property, plant and equipment of the Group amounting to RM271,067,000 (2005: RM418,047,000)
have been pledged as securities to financial institutions for banking facilities as referred to in Note 44.
19. PLANTATION DEVELOPMENT EXPENDITURE
GROUP
2006
2005
RM’000
RM’000
Cost or Valuation
At 1 January
Cost
Valuation – 2003
116,513
2,608,108
57,075
2,748,813
Additions
Disposal
Write off
2,724,621
64,257
(4,806)
(16,722)
44,653
2,805,888
59,825
–
(4,734)
(136,358)
At 31 December
2,812,003
2,724,621
Representing:
Cost
Valuation – 2003
186,131
2,625,872
116,513
2,608,108
At 31 December
2,812,003
2,724,621
19. PLANTATION DEVELOPMENT EXPENDITURE (cont’d.)
GROUP
2006
2005
RM’000
RM’000
Accumulated Amortisation and Impairment Losses
At 1 January
Amortisation recognised in income statement (Note 13)
Disposal
Impairment losses recognised in income statement (Note 13)
Write off
244,010
127,513
(383)
4,923
(1,194)
2,288
126,681
125,233
–
–
(613)
(7,291)
At 31 December
377,157
244,010
Net Carrying Amount
Cost
Valuation – 2003
183,389
2,251,457
115,303
2,365,308
At 31 December
2,434,846
2,480,611
The net book value of plantation development expenditure comprises:
Oil Palm
Rubber
2,433,344
1,502
2,478,258
2,353
2,434,846
2,480,611
801
684
2,095,240
2,117,863
Interest expense capitalised during the financial year (Note 12)
The net carrying amounts of plantation development expenditure
had it been carried under the cost model, would have been:
The plantation development expenditure of the Group were revalued by the directors in 2003 based on valuations carried out by
independent professional valuers, CH Williams Talhar & Wong Sdn. Berhad, to reflect the market values on existing use basis.
The net carrying amounts of plantation development expenditure of the Group amounting to RM447,699,000 (2005: 458,077,000)
have been pledged as securities to financial institutions for banking facilities as referred to in Note 44.
20. PREPAID LEASE PAYMENTS
GROUP
2006
2005
RM’000
RM’000
COMPANY
2006
2005
RM’000
RM’000
At 1 January
Additions
Amortisation recognised in income statement (Note 13)
Disposal
347,202
1,402
(6,437)
(358)
(388)
936
356,132
1,630
(6,196)
(1,555)
–
(2,809)
645
–
(30)
–
–
–
675
–
(30)
–
–
–
At 31 December
342,357
347,202
615
645
Analysed as:
Long-term leasehold land
Short-term leasehold land
285,480
56,877
289,616
57,586
–
615
–
645
342,357
347,202
615
645
Short-term leasehold land amounting to RM14,920,000 (2005: RM15,031,000) of certain subsidiary companies in Indonesia have
been pledged as securities to financial institutions for banking facilities as referred to in Note 44.
The leasehold interest in land were revalued in 2003 by independent professional valuers, CH Williams Talhar & Wong Sdn. Berhad
to reflect the market value on existing use basis. As allowed by the transitional provisions of FRS 117, where the leasehold land
had been previously revalued, the unamortised revalued amount of leasehold land is retained as the surrogate cost of prepaid
lease payments and is amortised over the remaining lease term of the leasehold land.
21. LAND HELD FOR PROPERTY DEVELOPMENT
GROUP
Freehold
Land
RM’000
Development
Costs
RM’000
Total
RM’000
At 1 January 2006
Additions
Disposals
Transfer from/(to) property development costs
78,625
405
(5,585)
11,516
320,449
20,407
(22,967)
(136,650)
399,074
20,812
(28,552)
(125,134)
At 31 December 2006
84,961
181,239
266,200
At 1 January 2005
Additions
Disposals
Transfer from concession asset
Transfer to property development costs
86,654
–
(554)
–
(7,475)
257,136
93,211
(2,515)
15,400
(42,783)
343,790
93,211
(3,069)
15,400
(50,258)
At 31 December 2005
78,625
320,449
399,074
Land held for property development comprises land banks which are being held for future development. The land banks are not
expected to be developed within the normal operating cycle.
22. INVESTMENT PROPERTY
COMPANY
Freehold
Land
RM’000
Building
RM’000
Total
RM’000
17,000
(17,000)
5,000
(5,000)
22,000
(22,000)
At 31 December 2006
–
–
–
At 1 January 2006
Disposal to a subsidiary company
–
–
476
(476)
476
(476)
At 31 December 2006
–
–
–
Net Carrying Amount
At 31 December 2006
–
–
–
17,000
5,000
22,000
At 1 January 2005
–
–
238
238
238
238
At 31 December 2005
–
476
476
Net Carrying Amount
At 31 December 2005
17,000
4,524
21,524
Cost
At 1 January 2006
Disposal to a subsidiary company
Cost
At 1 January 2005/31 December 2005
In the financial year ended 31 December 2006, the Company had disposed of the investment property to a subsidiary company.
The carrying amount of the asset at the date of disposal was RM21,524,000. The disposal resulted in a gain of RM4,576,000 to
the Company as disclosed in Note 11.
23. CONCESSION ASSET
On 18 July 2000, the Government of Malaysia (“the Government”) and Guthrie Corridor Expressway Sdn. Berhad (“GCESB”)
entered into a concession agreement whereby the Government granted to GCESB, inter-alia, the exclusive right and authority to
undertake the design, construction, maintenance, operation and management of the Guthrie Corridor Expressway (“the
Expressway”). The Expressway is a 25km expressway which links Shah Alam to Kuang, Selangor Darul Ehsan. The “Sijil
Kesempurnaan Pembinaan Lebuhraya” for the Expressway was issued by the Government on 14 April 2005 and the Expressway
was fully opened for toll collection on 15 August 2005.
The Concession Asset represents the development expenditure incurred to design, construct, manage and maintain the
Expressway. The development expenditure incurred in respect of this Concession Agreement consists of the following:
Expressway
Development
Expenditure
RM’000
Other
Concession
Assets
RM’000
Total
RM’000
569,059
1,239
(570,298)
17,344
67
(17,411)
586,403
1,306
(587,709)
–
–
–
643
2,941
(3,584)
18
1,741
(1,759)
661
4,682
(5,343)
At 31 December 2006
–
–
–
Net Carrying Amount
At 31 December 2006
–
–
–
Cost
At 1 January 2005
Additions
Transfer to property, plant and equipment
Transfer to land held for property development
Transfer to property development costs
651,082
66,577
(60,000)
(15,400)
(73,200)
6,111
11,233
–
–
–
657,193
77,810
(60,000)
(15,400)
(73,200)
At 31 December 2005
569,059
17,344
586,403
Cost
At 1 January 2006
Additions
Transfer to assets of disposal groups classified as held for sale
At 31 December 2006
Accumulated Amortisation/Depreciation
At 1 January 2006
Amortisation/Depreciation recognised in income statement (Note 15)
Transfer to assets of disposal groups classified as held for sale
23. CONCESSION ASSET (cont’d.)
Expressway
Development
Expenditure
RM’000
Other
Concession
Assets
RM’000
Total
RM’000
Accumulated Amortisation/Depreciation
At 1 January 2005
Amortisation/Depreciation recognised in income statement (Note 15)
–
643
–
18
–
661
At 31 December 2005
643
18
661
Net Carrying Amount
At 31 December 2005
568,416
17,326
585,742
Included in expressway development expenditure in 2005 were interest capitalised amounting to RM95,000 and depreciation on
property, plant and equipment amounting to RM10,000 as disclosed in Notes 12 and 18 respectively.
24. GOODWILL ON CONSOLIDATION
GROUP
2006
2005
RM’000
RM’000
Cost
At 1 January
Effect of adopting FRS 3 [Note 4(b)]
Acquisition of shares in subsidiary companies
347,397
(85,887)
7,720
16
345,461
–
2,008
(72)
At 31 December
269,246
347,397
Accumulated Amortisation and Impairment Losses
At 1 January
Effect of adopting FRS 3 [Note 4(b)]
Amortisation for the year (Note 13)
85,887
(85,887)
–
14,688
–
68,765
–
17,163
–
(41)
At 31 December
14,688
85,887
254,558
261,510
Net Carrying Amount
24. GOODWILL ON CONSOLIDATION (cont’d.)
(a) Impairment Losses Recognised
In accordance with the revised FRS 136, the Group had carried out its first review of the recoverable amount of its
investments in Indonesia in the fourth quarter of 2006. The review led to the recognition of an impairment loss of
RM14,688,000 for certain subsidiary companies arising from net deficit in the present value of cash flow projections. The
recoverable amount was based on value-in-use and was determined at each cash generating unit (“CGU”). In determining
value-in-use for the CGU, the cash flows were discounted at a rate of 16% on a pre-tax basis.
Following this impairment test, impairment losses on the carrying amounts of property, plant and equipment, plantation
development expenditure and prepaid lease payments amounting to RM5,356,000, RM4,923,000 and RM388,000 respectively
were recognised in the income statement as disclosed in Note 13.
(b) Impairment Tests for Goodwill
Allocation of Goodwill
Goodwill has been allocated to nineteen CGUs which in this respect, comprise operating plantation subsidiary companies in
Indonesia based on the net assets value as of the date of acquisition of 31 March 2001.
Key Assumptions used in Value-in-use Calculations
The principal activities of the subsidiary companies in Indonesia comprise the cultivation of oil palm on plantations. The
recoverable amount of a CGU is determined based on value-in-use calculations using cash flow projections covering a tenyear period. The first three years cash flow projections are based on financial budgets approved by management. The cash
flow projections beyond the three-year period are based on the long range expected crude palm oil (“CPO”) price and the
anticipated palm productivity and cost of production. If the net present value of the respective CGU is less than the carrying
amount, the cash flow projections will be extended further until the expiry date of the lease period. The key assumptions
used for value-in-use calculations for the current year are as follows:
Gross margin
Growth rate
Discount rate
27%
3%
16%
The following describes each key assumption on which management has based its cash flow projections to undertake
impairment testing of goodwill:
(i)
Budgeted gross margin
The basis used to determine the value assigned to the budgeted gross margin is the average gross margin achieved
from the sale of palm products in the year before the budget year increased for expected efficiency improvements.
(ii)
Growth rate
The basis used to determine the growth rate is based on the long range expected palm product price, anticipated
productivity and cost of production which is comparable with the average productivity of the palms in the industry.
Productivity refers to average yield of fresh fruit bunches per mature hectare and average oil and kernel extraction rates.
(iii) Discount rate
The discount rates used are pre-tax and reflect specific risks relating to the industry. The rate applied have taken into
account the Government Securities yield, inflation rate and lending rates as announced by Bank Indonesia.
Sensitivity to Changes in Assumptions
With regards to the assessment of value-in-use, management believes that no reasonably possible change in any of the
above key assumptions would cause the carrying values of the CGUs to materially exceed their recoverable amounts.
25. INVESTMENTS IN SUBSIDIARY COMPANIES
COMPANY
2006
2005
RM’000
RM’000
Unquoted shares
At Directors’ valuation – 1982
Effects of adopting FRS 127
As restated
At cost
Reclassified as held for sale (Note 41)
Total unquoted shares
Accumulated impairment losses
Quoted shares in Malaysia:
At Directors’ valuation – 1982
As restated
At cost
Total quoted shares
TOTAL
295,033
(120,282)
295,033
(120,282)
174,751
174,751
2,376,036
(104,800)
2,409,089
-
2,271,236
2,409,089
2,445,987
(204,277)
2,583,840
(155,071)
2,241,710
2,428,769
154,764
(41,768)
154,764
(41,768)
112,996
281,820
112,996
281,820
394,816
394,816
2,636,526
2,823,585
Movements in accumulated impairment losses during the financial year are as follows:
COMPANY
2006
2005
RM’000
RM’000
At 1 January
Written off upon disposal of subsidiary companies (Note 15)
Written off upon liquidation of subsidiary companies
155,071
53,673
–
(4,467)
188,144
2,003
(35,076)
–
At 31 December
204,277
155,071
1,264,584
992,720
Market value of quoted shares in Malaysia
25. INVESTMENTS IN SUBSIDIARY COMPANIES (cont’d.)
In determining the impairment losses, consideration has been given to the history of results and the carrying amounts of
underlying assets of these investments and where such analysis has indicated the possibility of impairment, the future operating
plans and cash flows have also been considered. The net carrying amounts reflect the extent to which the directors consider the
investments are recoverable in light of current plans for future operations and anticipated cash flows.
Certain shares held in quoted subsidiary companies at the book value of RM168,577,000 and at market value of RM427,646,000
in 2005 were pledged to financial institutions for credit facilities granted to certain overseas subsidiary companies. In July 2006,
these shares were released by the financial institutions upon restructuring of the credit facilities.
The unquoted shares of certain subsidiary companies in Indonesia are pledged to financial institutions for credit facilities granted
to the subsidiary companies as disclosed in Note 44.
Subsidiary Companies under Members’ Voluntary Liquidation
During the financial year, the following subsidiary companies have been placed under members’ voluntary liquidation and have
accordingly been deconsolidated effective from the dates the subsidiaries were placed under liquidation:
Date Placed
Under Liquidation
Guthrie Assets Management Sdn. Berhad
Guthrie KD Sdn. Berhad
Guthrie Pharmaceuticals Sdn. Berhad
Guthrie Distributors Sdn. Berhad
Guthrie Polymer Sdn. Berhad
Guthrie Land Sdn. Berhad
Guthrie Medicare Products (Holdings) Sdn. Berhad
Guthrie Livestock Corporation Sdn. Berhad
Guthrie Solutions Sdn. Berhad
Guthrie Palm Products Sdn. Berhad
Guthrie Industries (Indonesia) Sdn. Berhad
Highlands Assets Management Sdn. Berhad
Highlands Estate Sdn. Berhad
K & K Plantations Sdn. Berhad
Hatawa Plantation Sdn. Berhad
Syarikat Yew Lian Plantations Sdn. Berhad
Hock Guan Seng Plantations Sdn. Berhad
Guthrie Training Centre Sdn. Berhad
15
15
15
15
21
5 June 2006
5 June 2006
5 June 2006
5 June 2006
5 June 2006
5 June 2006
5 June 2006
5 June 2006
5 June 2006
5 June 2006
5 June 2006
5 June 2006
7 June 2006
November 2006
November 2006
November 2006
November 2006
December 2006
25. INVESTMENTS IN SUBSIDIARY COMPANIES (cont’d.)
The effects of deconsolidation for subsidiaries placed under members’ voluntary liquidation during the year are as follows:
GROUP
2006
2005
RM’000
RM’000
Total distribution in cash
Less:
Net assets deconsolidated
28,250
–
(27,305)
–
945
–
Net gain on liquidation of subsidiary companies (Note 11)
Subsequent to the financial year ended 31 December 2006, Kamuning Marble Sdn. Berhad, a wholly-owned subsidiary of the
Company, was placed under member’s voluntary liquidation on 29 January 2007.
26. INVESTMENTS IN ASSOCIATED COMPANIES
GROUP
2006
2005
RM’000
RM’000
Unquoted shares at cost
Share of post-acquisition reserves
The Group’s interest in the associated
companies are analysed as follows:
Share of net tangible assets
COMPANY
2006
2005
RM’000
RM’000
12,465
6,409
(2,174)
12,465
4,314
(2,984)
–
–
–
–
–
–
16,700
13,795
–
–
16,700
13,795
Details of the associated companies, held by subsidiary companies, are as follows:
Name of
company
Country of
incorporation
Effective interest
2006
2005
%
%
Principal activities
Muang Mai Guthrie Co. Ltd.
Thailand
49
49
Processing and distribution of rubber
Boustead Bulking Sdn. Bhd.
Malaysia
24
24
Bulking and marketing services
The financial statements of the associated companies are coterminous with those of the Group.
26. INVESTMENTS IN ASSOCIATED COMPANIES (cont’d.)
The summarised financial information of the associated companies are as follows:
GROUP
2006
2005
RM’000
RM’000
Assets and Liabilities
Non-current assets
Current assets
20,733
29,984
21,458
23,138
Total assets
50,717
44,596
Current liabilities
16,230
15,867
149,089
5,573
87,742
1,915
Results
Revenue
Profit for the year
27. INVESTMENT IN A JOINTLY CONTROLLED ENTITY
GROUP
2006
2005
RM’000
RM’000
Unquoted shares at cost
Share of post-acquisition reserves
COMPANY
2006
2005
RM’000
RM’000
2,000
(38)
–
–
2,000
–
–
–
1,962
–
2,000
–
Details of the jointly controlled entity are as follows:
Name of Jointly
Controlled Entity
Country of
Incorporation
Effective Interest
2006
2005
%
%
Principal Activity
PNB Enterprise Sdn. Berhad
Malaysia
25
Animal husbandry
–
27. INVESTMENT IN A JOINTLY CONTROLLED ENTITY (cont’d.)
The Group’s aggregate share of the non-current assets, current assets, current liabilities, income and expenses of the jointly
controlled entity are as follows:
2006
RM’000
2005
RM’000
Assets and Liabilities
Non-current assets
Current assets
44
1,944
–
–
Total assets
1,988
–
Current liabilities
31
–
Results
Revenue
Expenses
7
45
–
–
28. OTHER INVESTMENTS
GROUP
2006
2005
RM’000
RM’000
At cost:
Unquoted shares in Malaysia
Less: Accumulated impairment losses
Quoted shares in Malaysia
Malaysian Government Securities, net of accretion/premium
At market value:
Quoted shares in Malaysia
Malaysian Government Securities
COMPANY
2006
2005
RM’000
RM’000
3,314
(2,500)
3,314
(2,000)
2,959
(2,500)
2,959
(2,000)
814
–
959
1,314
277
959
459
–
–
959
–
–
1,773
2,550
459
959
–
1,071
1,554
1,084
–
–
–
–
1,071
2,638
–
–
In the financial year ended 31 December 2006, the Group and the Company had recognised an impairment loss of RM500,000
(2005: Nil) for an investment in unquoted shares in Malaysia.
29. LOANS TO/FROM SUBSIDIARY COMPANIES
COMPANY
2006
2005
RM’000
RM’000
404,548
(25,000)
415,472
(25,000)
379,548
390,472
1,664,395
1,522,640
Movements in provision for doubtful debts during the financial year are as follows:
COMPANY
2006
2005
RM’000
RM’000
At 1 January
Written off on disposal of subsidiary companies (Note 15)
25,000
–
99,460
(74,460)
At 31 December
25,000
25,000
The loans to subsidiary companies have been reviewed at balance sheet date for their recoverability. In assessing the extent of
the provision required, due consideration has been given to all pertinent information relating to the ability of the subsidiary
companies to repay the loans, such as the history of results, recoverability amounts of the underlying assets, the current plans
for the future operations and anticipated cash flows.
The loans to subsidiary companies include an amount of RM261,248,000 (2005: RM267,173,000) which bore interest at rates
ranging from 3.5% to 6.9% (2005: 3.3% to 5.0%) per annum. The loans from subsidiary companies include an amount of
RM1,664,395,000 (2005: RM1,435,640,000) which bore interest at rates ranging from 5.5% to 6.0% (2005: 4.6% to 4.9%) per
annum. All other loans are non-interest bearing.
All loans to/from subsidiary companies are unsecured and have no fixed terms of repayment and are not expected to be repaid
within the next twelve months.
30. TRADE RECEIVABLES
GROUP
2006
2005
RM’000
RM’000
Trade receivables
375,359
(26,925)
318,716
(30,996)
Less: Current portion
348,434
(280,087)
287,720
(287,720)
68,347
–
Long-term trade receivables and RM68,500,000 (2005: RM61,968,000) of the total current portion of trade receivables relate to
proceeds from the sale of plots of development properties by certain subsidiary companies involved in property development
activities.
Included in the current portion of trade receivables is an amount of RM22,350,000 (2005: RM36,917,000) relating to subsidiary
companies in Indonesia which are pledged as security for banking facilities granted to the subsidiary companies as disclosed in
Note 44.
Other information on financial risks of trade receivables are disclosed in Note 52.
31. ADVANCES FOR PLASMA PIR-TRANS PROJECTS
GROUP
2006
2005
RM’000
RM’000
At 1 January
Additions
Write off
Conversion
38,660
3,896
–
–
813
46,946
2,582
(6,867)
(1,092)
(2,909)
At 31 December
Accumulated allowance for losses on recovery
43,369
(25,351)
38,660
(21,110)
18,018
17,550
31. ADVANCES FOR PLASMA PIR-TRANS PROJECTS (cont’d.)
In accordance with the Indonesian government policy, oil palm plantation owners/operators (herein referred to as the “Nucleus”)
are required to develop plantations for small holders (herein referred to as “Plasma Farmers”). This form of assistance to the
Plasma Farmers is known as the “Perusahaan Inti Rakyat Transmigrasi (PIR-Trans)” program. Under the PIR-Trans program, the
Nucleus is also required to train and develop the skills of the Plasma Farmers, and purchase the fresh fruit bunches harvested
by Plasma Farmers at prices determined by the government.
The PIR-Trans program is funded by state-owned banks. The investment credit is rendered to the Nucleus, which receives the funds
through several drawdowns during the plantation development period (land preparation up to the end of the immature stage). When
the plasma plantation projects are completed and ready for conversion, the investment credit is transferred to the Plasma Farmers
who then operate the Plasma PIR-Trans projects under the supervision of the Nucleus. The allowance for losses on recovery of
Plasma PIR-Trans projects was provided for to cover the possible non-recoverable investments under the PIR-Trans program.
Three subsidiary companies in Indonesia have commitments to develop oil palm plantations for the Plasma Farmers under this
program covering a total area of 16,500 hectares of which 8,024 have been converted.
32. ADVANCES FOR KKPA (“KREDIT KOPERASI PRIMER UNTUK ANGGOTANYA”) PROJECTS
GROUP
2006
2005
RM’000
RM’000
At 1 January
Additions
Conversion
26,093
13,373
(22,648)
556
19,026
8,246
–
(1,179)
At 31 December
Accumulated allowances for losses on recovery
17,374
(2,268)
26,093
(2,220)
15,106
23,873
Under an existing government policy in Indonesia, oil palm plantation owners/operators (herein referred to as the “Nucleus”) are
required to assist in the development of plantations for small holders (herein referred to as the “Plasma Farmers”) through a
program called “Kredit Koperasi Primer untuk Anggotanya” or “KKPA”. Under the KKPA program, all participating Plasma Farmers
are under the coordination of a cooperative, and any investment credit availed during the development of the plantations (land
preparation up to the end of the immature stage) shall also be rendered to the cooperative. The Nucleus, on the other hand,
serves as the contractor for developing the plantations.
Advances for present and proposed KKPA projects represent the accumulated costs to develop plasma plantations, totalling
16,000 hectares which are currently being financed by creditor banks and self-financed by a subsidiary company. Upon the
cooperative obtaining KKPA financing from the creditor bank, the said advances will be recovered from the cooperative.
The allowance for losses on recovery of KKPA project is based on a periodic review of the recoverability of the development costs.
33. DEFERRED TAX
GROUP
2006
2005
RM’000
RM’000
COMPANY
2006
2005
RM’000
RM’000
At 1 January
512,393
–
531,181
–
6,214
(6,560)
6,951
(6,560)
As restated
Recognised in income statement (Note 41)
Effects of changes in tax rates recognised in equity
Reclassified as held for sale (Note 41)
512,393
7,652
(6,821)
2,589
7,572
531,181
4,777
–
–
(23,565)
(346)
1,748
(8)
–
–
391
(737)
–
–
–
At 31 December
523,385
512,393
1,394
(346)
(152,050)
(195,777)
–
(836)
618,682
56,753
649,766
58,404
904
490
–
490
523,385
512,393
1,394
(346)
Presented after appropriate offsetting as follows:
Deferred tax assets
– subject to income tax
– subject to capital gains tax
The components and movements of deferred tax liabilities and assets during the financial year prior to offsetting are as follows:
GROUP
DEFERRED TAX LIABILITIES
Accelerated
Capital
Allowances
RM’000
Revaluation
of
Properties
RM’000
Others
RM’000
Total
RM’000
At 1 January 2006
Recognised in income statement
Reclassified as held for sale
174,718
29,293
–
(38,826)
892
555,046
(26,223)
(6,821)
–
8,531
115
(115)
–
–
–
729,879
2,955
(6,821)
(38,826)
9,423
At 31 December 2006
166,077
530,533
–
696,610
At 1 January 2005
161,340
14,906
(1,528)
613,134
(31,797)
(26,291)
154
(29)
(10)
774,628
(16,920)
(27,829)
At 31 December 2005
174,718
555,046
115
729,879
33. DEFERRED TAX (cont’d.)
GROUP (cont’d.)
DEFERRED TAX ASSETS
Unabsorbed
Tax Losses
RM’000
Unutilised
Capital
Allowances
RM’000
Unrealised
Intragroup
Profits
RM’000
Others
RM’000
Total
RM’000
At 1 January 2006
Reclassified as held for sale
49,329
(8,952)
(2,400)
1,262
2,736
36,408
(39,015)
–
153,004
(34,410)
–
–
12,417
2,257
–
589
217,486
(4,697)
(41,415)
1,851
At 31 December 2006
39,239
129
118,594
15,263
173,225
At 1 January 2005
58,698
(5,921)
(3,448)
9,490
(6,754)
–
158,238
(5,234)
–
17,021
(3,788)
(816)
243,447
(21,697)
(4,264)
At 31 December 2005
49,329
2,736
153,004
12,417
217,486
GROUP
2006
2005
RM’000
RM’000
Deferred tax assets
696,610
(173,225)
729,879
(217,486)
523,385
512,393
33. DEFERRED TAX (cont’d.)
COMPANY
DEFERRED TAX LIABILITIES
Accelerated
Capital
Allowances
RM’000
Revaluation
of
Properties
RM’000
Others
RM’000
Total
RM’000
(947)
–
7,179
(6,560)
(18)
–
6,214
(6,560)
(947)
1,757
–
619
(8)
(8)
(18)
(1)
–
(346)
1,748
(8)
At 31 December 2006
810
603
(19)
1,394
At 1 January 2005
(221)
–
7,187
(6,560)
(15)
–
6,951
(6,560)
As restated
(221)
(726)
627
(8)
(15)
(3)
391
(737)
At 31 December 2005
(947)
619
(18)
(346)
At 1 January 2006
As restated
Deferred tax assets have not been recognised in respect of the following items:
GROUP
2006
2005
RM’000
RM’000
Unused tax losses
Unabsorbed capital allowances
Reinvestment and investment tax allowances
200,510
7,188
115,305
202,015
197,614
115,319
The unused tax losses and unabsorbed capital allowances of the subsidiary companies in Malaysia amounting to RM19,519,000
and RM496,000 respectively are available indefinitely for offset against future taxable profits of the subsidiary companies in which
those items arose. The availability for utilisation is subject to no substantial changes in shareholdings of the subsidiary companies
under Section 44(5A) and (5B) of the Income Tax Act 1967.
The unused tax losses of the subsidiary companies in Indonesia amounting to RM34,163,000 are available for offset against future
taxable profits for a maximum period of five years.
34. PROPERTY DEVELOPMENT COSTS
GROUP
2006
2005
RM’000
RM’000
Property development costs at 1 January:
Freehold land
Development costs
80,977
1,308,206
22,202
1,651,772
1,389,183
1,673,974
(187)
(1,471)
(3,146)
(507,394)
(1,658)
(510,540)
278,746
171,983
(1,068,871)
1,658
(449,294)
(1,386,275)
510,540
(193,136)
(1,516,507)
(1,068,871)
172,225
(37,903)
46,517
(7,374)
134,322
39,143
Accrued billings
129,358
86,403
Property development costs at 31 December
413,444
392,092
Accumulated costs reversed during the year in respect of completed products:
Freehold land
Development costs
Costs incurred during the year:
Development costs
Costs charged to income statement:
At 1 January
Accumulated costs reversed during the year in respect of completed products
Charge for the year
At 31 December
Transfers:
From land held for property development
To inventories
Included in the property development costs in 2005 was the apportionment of shared development cost in respect of the
Concession Asset, amounting to RM73,200,000 as disclosed in Note 23.
35. INVENTORIES
GROUP
2006
2005
RM’000
RM’000
At cost:
Produce stocks
Raw materials
Work-in-progress
Completed properties
Finished goods
Stores
At net realisable value:
Finished goods
COMPANY
2006
2005
RM’000
RM’000
28,783
380
–
81,059
72
78,971
35,578
667
8,976
64,626
3,918
75,982
–
–
–
–
–
–
–
–
–
–
–
–
189,265
189,747
–
–
–
1,319
–
–
189,265
191,066
–
–
Produce stocks at cost amounting to RM3,905,000 (2005: RM2,944,000) relating to certain subsidiary companies in Indonesia are
pledged to financial institutions as securities for credit facilities granted to the subsidiary companies as disclosed in Note 44.
36. AMOUNTS DUE FROM CUSTOMERS ON CONTRACTS
GROUP
2006
2005
RM’000
RM’000
Construction contract costs incurred to date
Less: Attributable loss
Provisions for foreseeable losses
91,818
(14,952)
(1,777)
29,971
(768)
–
Less: Progress billings
75,089
(75,089)
29,203
(21,563)
–
7,640
Contract Revenue:
– Cumulative
– Recognised during the year (Note 9)
75,089
6,497
20,970
6,346
Contract Costs:
– Cumulative
– Recognised during the year (Note 10)
91,818
17,805
21,780
8,502
–
791
Retention sums on contracts, included in trade receivables
37. OTHER RECEIVABLES
GROUP
2006
2005
RM’000
RM’000
Deposits
Prepayments
Staff loans
Project cost
Interest receivable
Insurance claims recoverable
Other taxes
Sundry receivables
Amount due from an associated company
COMPANY
2006
2005
RM’000
RM’000
9,954
28,961
13,300
1,813
3,954
4,416
35,481
38,877
11,143
32,114
13,410
4,439
1,024
2,705
13,134
29,189
70
516
12,474
–
2,630
235
–
11,753
83
10,563
12,988
–
299
178
–
7,168
136,756
505
107,158
520
27,678
505
31,279
520
137,261
107,678
28,183
31,799
The amounts due from an associated company is unsecured, non-interest bearing and has no fixed term of repayment.
Other information on financial risks of other receivables are disclosed in Note 52.
38. AMOUNTS DUE FROM/TO SUBSIDIARY COMPANIES
COMPANY
2006
2005
RM’000
RM’000
972,129
(176,493)
1,193,525
(167,697)
795,636
1,025,828
503,297
800,751
38. AMOUNTS DUE FROM/TO SUBSIDIARY COMPANIES (cont’d.)
Movements in provision for amounts due from subsidiary companies during the financial year are as follows:
COMPANY
2006
2005
RM’000
RM’000
At 1 January
Recognised in income statement (Note 13)
Written off upon disposal of subsidiary companies (Note 15)
Written off upon members’ voluntary liquidation
167,697
19,200
–
(10,404)
143,723
26,974
(3,000)
–
At 31 December
176,493
167,697
The amounts due from subsidiary companies include an amount of RM58,746,000 (2005: RM176,825,000) which bore interest at
rates ranging from 4.04% to 5% (2005: 4% to 5%) per annum. The amounts due to subsidiary companies include an amount of
RM496,602,000 (2005: RM651,689,000) which bore interest at rates ranging from 4.04% to 5% (2005: 4% to 5%) per annum. All
other amounts due from/to subsidiary companies are non-interest bearing.
All amounts due from/to subsidiary companies are unsecured and have no fixed terms of repayment.
39. MARKETABLE SECURITIES
GROUP
2006
2005
RM’000
RM’000
At cost, net of accretion/premium:
Shares quoted in Malaysia
Warrants/Loan stocks quoted in Malaysia
Corporate bonds
At market value:
Shares quoted in Malaysia
Warrants/Loan stocks quoted in Malaysia
Corporate bonds
14,212
–
23,191
11,469
954
10,443
37,403
22,866
14,815
–
23,241
13,532
891
13,158
38,056
27,581
40. DEPOSITS, BANK BALANCES AND CASH
GROUP
2006
2005
RM’000
RM’000
COMPANY
2006
2005
RM’000
RM’000
Fixed deposits with:
Licensed banks
Licensed financial institutions
Licensed banks pledged for banking facilities
380,196
271,510
–
282,981
245,472
11,446
2,549
18,110
–
32,022
23,200
–
Cash held under Housing Development Accounts
Cash and bank balances
651,706
102,357
55,873
539,899
115,073
54,095
20,659
–
8,371
55,222
–
1,172
809,936
709,067
29,030
56,394
The fixed deposits with licensed banks pledged to financial institutions in 2005 were for credit facilities granted to certain
subsidiary companies in Indonesia. The pledge was released in the current financial year.
Cash held under the Housing Development Accounts represents receipts from purchasers of residential properties less payments
or withdrawals provided under Section 7A of the Housing Development (Control and Licensing) Amendment Act, 2002. These
accounts are available only to the subsidiary companies involved in the property development activities.
The range of interest rates per annum for fixed deposits at the balance sheet date were as follows:
GROUP
2006
%
Licensed banks
1.50 – 5.28
2.72 – 4.05
2005
%
1.50 – 4.35
2.60 – 3.90
COMPANY
2006
2005
%
%
2.30 – 5.28
2.72 – 3.61
2.50 – 4.35
2.60 – 2.97
The range of maturities of fixed deposits at the end of the financial year were as follows:
GROUP
2006
Days
Licensed banks
1 – 182
1 – 367
2005
Days
1 – 120
1 – 365
COMPANY
2006
2005
Days
Days
1 – 44
1 – 58
1 – 92
1 – 45
41. ASSETS OF DISPOSAL GROUP CLASSIFIED AS HELD FOR SALE
The following classes of assets and liabilities of Guthrie Corridor Expressway Sdn. Berhad and Guthrie MDF Sdn. Berhad have
been classified as held for sale as at 31 December 2006:
GROUP
COMPANY
2006
2005
2006
2005
RM’000
RM’000
RM’000
RM’000
Assets
Concession asset
Investments in subsidiary companies
Deferred tax assets
Inventories
Trade receivables
Other receivables
Deposits, bank balances and cash
Liabilities
Trade payables
Other payables
73,871
582,366
–
2,589
9,664
6,990
548
2,872
–
–
–
–
–
–
–
–
–
–
104,800
–
–
–
–
–
–
–
–
–
–
–
–
–
678,900
–
104,800
–
2,780
6,326
–
–
–
–
–
–
22,523
–
–
–
9,106
–
22,523
–
(a) Proposed Disposal of Guthrie Corridor Expressway Sdn. Berhad (“GCESB”)
On 27 November 2006, the Company had entered into a Sale and Purchase of Shares Agreement with Projek Lintasan Kota
Holdings Sdn. Berhad (“Prolintas”) for the proposed disposal of the entire equity interest in GCESB, a wholly-owned
subsidiary of the Company, which involves the following:
(i)
the disposal of the entire equity interest in GCESB comprising 5,000,000 ordinary shares for a disposal consideration of
RM5 million; and
(ii)
the settlement of intercompany balance owing by GCESB to another wholly-owned subsidiary of the Company through cash
payment of RM431 million and issuance of RM500 million nominal value of Redeemable Loan Stocks (“RLS”) of GCESB.
In conjunction with the proposed divestment, the Company, Prolintas and GCESB have also entered into an agreement (“GCE
Agreement”) to deal with, inter alia, future access roads, utility corridor and landscaping in relation to the Expressway and
the agreed land banks along the Expressway.
The proposed disposal is subject to the approval of the shareholders of the Company and regulatory authorities.
(b) Proposed Disposal of Guthrie MDF Sdn. Berhad (“GMDF”)
The Board of Directors had on 21 December 2006 agreed to the proposed disposal of GMDF which is in line with the Group’s
strategic objectives to focus on its two core businesses of plantation and property development.
42. SHARE CAPITAL
GROUP/COMPANY
Number of Ordinary
Shares of RM1 each
Amount
2006
2005
2006
2005
’000
’000
RM’000
RM’000
Authorised share capital
At 1 January/31 December
1,500,000
1,500,000
1,500,000
1,500,000
Issued and fully paid share capital
At 1 January
Issued pursuant to the Second ESOS
1,006,939
14,510
1,005,419
1,520
1,006,939
14,510
1,005,419
1,520
1,021,449
1,006,939
1,021,449
1,006,939
At 31 December
Ordinary Shares Issued for Cash
During the financial year, the issued and paid-up share capital of the Company was increased from 1,006,939,300 ordinary shares
of RM1 each to 1,021,449,400 ordinary shares of RM1 each following the issue of 14,510,100 ordinary shares of RM1 each
pursuant to the Second Employees’ Share Option Scheme (“Second ESOS”) of the Company. The new shares were issued and
credited as fully paid and ranked pari passu in all respects with the existing shares of the Company. The share premium arising
from this issue amounting to RM18,019,000 has been credited to the share premium account.
Second Employees’ Share Option Scheme
The Second ESOS of the Company was approved by the shareholders at the Extraordinary General Meeting of the Company
held on 18 June 2003. The Scheme came into effect on 30 July 2003 and will be in force for a period of five years and can be
extended for another maximum period of five years, subject to approvals by the relevant authorities.
42. SHARE CAPITAL (cont’d.)
Second Employees’ Share Option Scheme (cont’d.)
The salient features of the Scheme are as follows:
(a) The maximum number of new ordinary shares to be made available under the Scheme should not in aggregate, exceed five
percent of the total issued and paid-up share capital of the Company, at any one time during the existence of the Scheme
provided that:
(i)
not more than fifty percent of the new shares available under the Scheme shall be allocated, in aggregate, to executive
directors and senior management; and
(ii)
not more than ten percent of the new shares available under the Scheme shall be allocated to any individual or eligible
employee who, individually or collectively through his associates, holds twenty percent or more of the issued and paidup share capital of the Company.
(b) Eligible employees comprise employees of the Company and its eligible subsidiary companies incorporated in Malaysia (“the
Group”) including executive directors of the Company, who have attained the age of eighteen years and whose employment
have been confirmed with at least one continuous year of service (inclusive of service during any probationary period) in the
Group prior to the date of offer of options to subscribe for shares in the Company. An employee or executive director who
is employed on a contract basis must have served the Group for a duration of at least three years (inclusive of service under
any previous contract).
(c) The total number of new shares for subscription and allotment to eligible employees under the Scheme shall not exceed
twenty percent of the Maximum Allowable Allotment of the eligible employee in any year.
(d) Eligible employees are allowed to participate in the Scheme currently in operation of only one member company of the
Group.
(e) The options to subscribe for new shares may be exercised at any time before the expiry of the Scheme and may be
exercised either in full or in part or in lesser number of shares, provided that the number shall be in multiples of and not
less than one hundred shares.
(f)
The price at which the employees are entitled to exercise their options under the Scheme shall be at a discount of not more
than ten percent on the simple weighted average market price of the Company’s shares, as shown in the daily official list
issued by Bursa Malaysia Securities for five market days immediately preceding the respective dates of offer of the option
shares or at par value of the Company’s shares, whichever is higher.
The terms of share options granted and outstanding as at the end of the financial year are as follows:
Number of Share Options
Grant
Date
Expiry
Date
2006
08.08.03
28.10.03
04.02.04
30.04.04
02.08.04
28.10.04
02.02.05
04.05.05
28.07.05
28.10.05
27.01.06
28.04.06
31.07.06
07.11.06
29.07.08
29.07.08
29.07.08
29.07.08
29.07.08
29.07.08
29.07.08
29.07.08
29.07.08
29.07.08
29.07.08
29.07.08
29.07.08
29.07.08
2005
08.08.03
28.10.03
04.02.04
30.04.04
02.08.04
28.10.04
02.02.05
04.05.05
28.07.05
28.10.05
29.07.08
29.07.08
29.07.08
29.07.08
29.07.08
29.07.08
29.07.08
29.07.08
29.07.08
29.07.08
Exercise
Price
RM
As at
1 January
‘000
Granted
‘000
Exercised
‘000
Lapsed
‘000
As at
31 December
‘000
2.16
2.31
2.32
2.26
2.12
2.41
2.02
1.94
2.16
2.17
2.16
2.32
2.65
3.33
1,631
192
146
84
3,706
447
352
246
3,635
355
–
–
–
–
–
–
–
–
–
–
–
–
–
–
614
341
3,725
1,143
(1,030)
(159)
(115)
(53)
(3,140)
(349)
(347)
(193)
(3,333)
(307)
(575)
(322)
(2,981)
(320)
–
–
–
–
–
–
–
–
–
(5)
(16)
(10)
(7)
–
601
33
31
31
566
98
5
53
302
43
23
9
737
823
10,794
5,823
(13,224)
(38)
3,355
2,659
219
228
137
5,832
498
–
–
–
–
–
–
–
–
–
–
651
463
5,075
577
(100)
–
(1)
(3)
(374)
–
(54)
(38)
(32)
–
(928)
(27)
(81)
(50)
(1,752)
(51)
(245)
(179)
(1,408)
(222)
1,631
192
146
84
3,706
447
352
246
3,635
355
9,573
6,766
(602)
(4,943)
10,794
2.16
2.31
2.32
2.26
2.12
2.41
2.02
1.94
2.16
2.17
Details of shares allotted pursuant to exercise of the Second ESOS during the financial year and the fair value, at exercise date,
of ordinary shares issued are as follows:
Exercise Date
Exercise
Price
RM
2006
January – March
January – March
April – June
April – June
April – June
April – June
April – June
April – June
April – June
April – June
July – September
July – September
July – September
July – September
July – September
July – September
July – September
July – September
July – September
July – September
October – December
Less: Par value of ordinary shares
Share premium
2.12
2.16
1.94
2.02
2.12
2.16
2.17
2.26
2.31
2.41
1.94
2.02
2.12
2.16
2.17
2.26
2.31
2.32
2.41
2.65
1.94
2.02
2.12
2.16
2.17
2.26
2.31
2.32
2.41
2.65
3.33
Fair Value of
Ordinary Shares
RM
2.35
2.35
2.56
2.57
2.55
2.55
2.55
–
–
–
–
–
–
–
2.62
3.02
2.62
2.62
2.62
3.60
3.60
3.18
3.02
3.62
3.66
3.64
3.64
3.64
3.64
3.64
3.66
3.64
3.66
3.66
4.56
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
2.42
2.58
2.75
2.75
2.76
2.76
2.75
2.65
2.66
2.67
3.74
3.76
3.76
3.76
3.76
3.76
3.74
3.74
3.74
3.74
4.24
4.58
4.58
4.58
4.56
4.56
4.56
4.58
4.56
4.58
4.58
Number of
Share Options
‘000
Consideration
Received
RM’000
8
29
138
102
495
976
71
1
5
15
51
761
2,143
2,981
156
102
570
229
171
172
29
147
857
1,523
71
27
55
131
133
2,321
40
16
63
268
206
1,049
2,108
154
2
12
36
99
1,537
4,543
6,439
339
231
1,317
531
412
456
56
297
1,817
3,290
154
61
127
304
321
6,151
133
14,510
32,529
(14,510)
18,019
Exercise Date
Exercise
Price
RM
2005
January – March
January – March
January – March
January – March
January – March
July – September
July – September
July – September
July – September
2.02
2.12
2.16
2.26
2.32
1.94
2.02
2.12
2.16
1.94
2.12
2.16
Fair Value of
Ordinary Shares
RM
2.29
2.29
2.29
2.29
2.29
2.17
2.17
2.17
2.17
2.30
2.30
2.30
–
–
–
–
–
–
–
–
–
–
–
–
2.37
2.37
2.37
2.37
2.37
2.56
2.56
2.56
2.56
2.50
2.50
2.50
Number of
Share Options
’000
Consideration
Received
RM’000
35
731
297
4
1
28
19
222
46
10
74
53
71
1,549
641
9
2
55
39
471
100
19
156
114
1,520
3,226
Less: Par value of ordinary shares
(1,520)
Share premium
1,706
Number of unexercised share options granted and vested as at the end of the financial year is as follows:
At 1 January
At 31 December
2006
’000
2005
’000
10,794
3,355
9,573
10,794
The Company has been granted exemption by the Companies Commission of Malaysia from having to disclose the names of
options holders, other than directors, who have been granted options to subscribe for less than 50,000 ordinary shares of RM1
each.
The names of employees who have been granted options to subscribe for 50,000 or more ordinary shares of RM1 each during
the financial year are as follows:
Number of Share Options
Grant
Date
Expiry
Date
Moriami Mohd
27.01.06
07.11.06
Ahmad Ridzal Ahmad
Liza Suryani Mustapha
Name of Option Holders
Exercise
Price
RM
Granted
Exercised
As at
31.12.2006
29.07.08
29.07.08
2.16
3.33
50,000
31,100
50,000
31,100
–
–
07.11.06
29.07.08
3.33
50,000
–
50,000
07.11.06
29.07.08
3.33
50,000
–
50,000
Fair value of share options granted during the year
The fair value of share options granted during the year was estimated by an external valuer, taking into account the terms and
conditions upon which the options were granted. The fair value of share options measured at grant date and the assumptions
used are as follows:
27 January
Number of options granted (‘000)
Fair value of share options (RM’000)
Weighted average share price (RM)
Weighted average exercise price (RM)
Expected volatility (%)
Expected life (year)
Risk free rate (%)
Expected dividend yield (%)
614
256
2.39
2.16
25.1
2.5
3.45
5.02
GRANT DATE
28 April
31 July
341
157
2.58
2.32
25.1
2.3
3.82
4.65
3,725
2,166
3.02
2.65
25.1
2.0
3.99
3.74
7 November
1,143
909
3.84
3.33
25.1
1.7
3.56
2.00
The expected life of the options is based on historical data and is not necessarily indicative of exercise patterns that may occur.
The expected volatility reflects the assumptions that the historical volatility is indicative of future trends, which may also not
necessarily be the actual outcome. No other features of the option grant were incorporated into the measurement of fair value.
43. RESERVES
GROUP
2006
2005
RM’000
RM’000
Distributable:
Revenue reserve
Capital reserve
Non-distributable:
Share premium
Revaluation reserve
Capital reserves:
Capital redemption reserve
Legal reserve
Exchange reserve
COMPANY
2006
2005
RM’000
RM’000
1,308,479
47,444
1,095,680
42,659
261,829
–
100,898
–
1,355,923
1,138,339
261,829
100,898
28,584
691,403
8,178
699,257
28,584
10,122
8,178
10,136
10,972
309
17,805
1,101
10,892
309
(4,881)
–
–
–
–
1,101
–
–
–
–
750,174
713,755
39,807
18,314
2,106,097
1,852,094
301,636
119,212
Movements in reserves are shown in the statement of changes in equity.
The nature and purpose of each category of reserve are as follows:
(a) Revenue Reserve
Distributable reserves are those available for distribution by way of dividends. Based on estimated tax credits and tax exempt
income balance available the entire distributable reserves of the Company is available for distribution by way of dividends
without the Company having to incur additional tax liability.
(b) Revaluation Reserve
The revaluation reserve is used to record the increase in fair value, net of deferred tax liabilities, of freehold land, plantation
development expenditure and prepaid lease payments and decrease to the extent such decrease relates to an increase on
the same asset previously recognised in equity. The Group has applied FRS 117 in accordance with the transitional provisions
which allows the Group to retain the unamortised revalued amount as the surrogate cost of prepaid lease payments and
accordingly the Group has retained the outstanding revaluation reserve attributable to the prepaid lease payments.
(c) Capital Redemption Reserve
Capital redemption reserve represents a transfer from revenue reserve arising from the redemption of redeemable preference
shares by certain subsidiary companies.
43. RESERVES (cont’d.)
(d) Legal Reserve
Legal reserve arises from the provisions of the Civil and Commercial Code in Thailand, where an associated company is
required to set aside legal reserve of at least 5% of net income at each dividend declaration until the reserve reaches 10%
of the said company’s authorised share capital.
(e) Exchange Reserve
Exchange reserve comprises all foreign exchange differences arising from the translation of the financial statements of overseas
subsidiary companies whose functional currencies are different from that of the Group’s presentation currency. It also includes
exchange differences arising from monetary items which form part of the Group’s net investment in foreign operations, where
the monetary item is denominated in either the functional currency of the reporting entity or the foreign operations.
(f)
Share Option Reserve
The share option reserve represents the equity-settled share options granted to employees. This reserve is made up of the
cumulative value of services received from employees recorded on grant of share options.
44. BORROWINGS
GROUP
2006
2005
RM’000
RM’000
Long-Term Borrowings
Secured:
Islamic Lease SUKUK
Term loans
Unsecured:
Al-Bai Bithaman Ajil
Murabahah Medium Term Notes
Term loans
Total long-term borrowings
Less: Current portion of borrowings included
under current liabilities
– Secured
– Unsecured
Unamortised deferred financing expenses
Unamortised SUKUK issuance expenses
COMPANY
2006
2005
RM’000
RM’000
–
175,885
377,800
212,675
–
–
377,800
–
175,885
590,475
–
377,800
113,465
400,000
1,854,395
129,000
400,000
1,625,640
113,465
–
190,000
129,000
–
190,000
2,367,860
2,154,640
303,465
319,000
2,543,745
2,745,115
303,465
696,800
(18,733)
(63,808)
(92,868)
(16,125)
–
(63,808)
–
(16,125)
2,461,204
(10,769)
–
2,636,122
(14,407)
(1,042)
239,657
–
–
680,675
–
(1,042)
2,450,435
2,620,673
239,657
679,633
44. BORROWINGS (cont’d.)
GROUP
2006
2005
RM’000
RM’000
Short-Term Borrowings
Secured:
Short-term loans
Current portion of long-term borrowings
Unsecured:
Bankers acceptances and export credit refinancing loans
Murabahah Commercial Papers
Current portion of long-term borrowings
TOTAL BORROWINGS
Unamortised deferred financing expenses:
At 1 January
Incurred during the year
At 31 December
Unamortised SUKUK issuance expenses:
At 1 January
At 31 December
COMPANY
2006
2005
RM’000
RM’000
–
18,733
10,901
92,868
–
–
–
–
18,733
103,769
–
–
66,556
149,073
63,808
157,852
148,824
16,125
66,556
149,073
63,808
157,852
148,824
16,125
279,437
322,801
279,437
322,801
298,170
426,570
279,437
322,801
2,748,605
3,047,243
519,094
1,002,434
14,407
–
(2,752)
(886)
10,238
14,237
(10,068)
–
–
–
–
–
8,876
–
(8,876)
–
10,769
14,407
–
–
1,042
(1,042)
2,102
(1,060)
1,042
(1,042)
2,102
(1,060)
–
1,042
–
1,042
The repayment schedule on total long-term borrowings are as follows:
Within one year
Between one to two years
Between two to five years
More than five years
GROUP
2006
2005
RM’000
RM’000
COMPANY
2006
2005
RM’000
RM’000
82,541
696,809
932,198
832,197
108,993
1,051,564
866,738
717,820
63,808
239,657
–
–
16,125
442,300
238,375
–
2,543,745
2,745,115
303,465
696,800
(a) Islamic Lease SUKUK (“SUKUK”)
The SUKUK Issue was structured under the Syariah principle of Al-Ijarah Al-Muntahiyah Bit-Tamlik or sale and leaseback.
The SUKUK which was denominated in US Dollar at an Al-Ijarah return of USD LIBOR plus 2.0% was fully repaid in
December 2006.
(b) Term Loans
The term loans of the Group comprise the following:
(i)
Secured term loans of RM175,885,000 in respect of the Indonesian subsidiary companies.
(ii)
An unsecured syndicated term loan facility of USD471.5 million with a yield of 0.55% above USD LIBOR and is repayable
over eight equal semi-annual instalments commencing 42 months after the first drawdown date on 29 August 2005.
(iii) An unsecured three year term loan facility of RM190 million drawndown on 15 December 2005.
(c) Al-Bai Bithaman Ajil (“BBA facility”)
The BBA facility is based on the Syariah principle of deferred payment sale and is repayable over three years commencing
December 2006.
(d) Murabahah Medium Term Notes (“MMTN”)
The MMTN totalling RM400 million, consists of RM300 million five-year tranche and RM100 million seven-year tranche,
drawndown in March 2004 with average yield of 5.15% per annum and 5.82% per annum respectively. The MMTN was
structured under the Syariah principle of Murabahah or deferred payment concept.
(e) Murabahah Commercial Papers (“CP”)
The Murabahah Commercial Papers was issued for RM150 million nominal value at a discount with maturity period of six
months and at a profit rate of 3.80% - 4.22% per annum.
The range of interest rates per annum for all borrrowings are as follows:
GROUP
2006
%
Floating Rates:
Term loans:
Malaysian subsidiary companies
Overseas subsidiary companies
Islamic Lease SUKUK
Murabahah Medium-Term Notes
Murabahah Commercial Papers
Short-term loans:
Overseas subsidiary companies
Bankers acceptances and export credit refinancing loans
2005
%
COMPANY
2006
2005
%
%
5.53 – 6.01 4.56 – 4.95
–
4.00 – 15.58 3.00 – 16.09
–
6.71 – 7.61 4.76 – 6.71 6.71 – 7.61
5.15 – 6.29 5.15 – 5.79
–
3.80 – 4.225
3.80 3.80 – 4.225
–
–
4.76 – 6.71
–
3.80
15.33
3.25 – 4.37
14.28
2.65 – 3.42
–
3.25 – 4.37
–
2.92 – 3.40
4.70
4.25
4.70
4.25
4.70
4.25
4.70
4.25
Fixed Rates:
Term loan
Al-Bai Bithaman Ajil
Details of net book value of collaterals pledged against long–term borrowings of the Indonesian subsidiary companies as at
31 December 2006 are as follows:
Long-term
Borrowings
RM’000
Net Book
Value of
Collaterals
RM’000
2,072
101,836
2008
Property, plant and equipment, trade receivables, inventories
and shares of certain subsidiary companies in Indonesia
112,700
338,619
2010
Fixed and floating charge over assets of certain subsidiary
companies and corporate guarantee of the Company
45,994
299,908
2009
Fixed and floating charge over assets of certain subsidiary
companies and corporate guarantee of the Company
15,119
31,266
2009
Property, plant and equipment, trade receivables and
inventories of certain subsidiary companies and corporate
guarantee of the Company
175,885
771,629
Year of
Maturity
Collaterals
45. DEFERRED INCOME
GROUP
2006
2005
RM’000
RM’000
Surplus of sales proceeds over present value of future receivables
Net time share income
47,286
1,518
38,401
1,785
48,804
40,186
30,071
8,330
24,384
5,687
38,401
30,071
10,403
(8,123)
10,115
(1,785)
2,280
8,330
Malaysia
RM’000
Indonesia
RM’000
Total
RM’000
At 1 January 2006
Recognised in income statement [Note 13(c)]
Contributions paid
5,943
795
(462)
–
9,441
10,137
(855)
(53)
15,384
10,932
(1,317)
(53)
At 31 December 2006
6,276
18,670
24,946
At 1 January 2005
Contributions paid
5,603
872
(532)
–
4,335
11,441
(6,066)
(269)
9,938
12,313
(6,598)
(269)
At 31 December 2005
5,943
9,441
15,384
Accumulated Accretion
At 1 January
Accretion for the year (Note 11)
At 31 December
Net
Less: Long-term portion
46. RETIREMENT BENEFITS
GROUP
Movements in net liability during the financial year are as follows:
46. RETIREMENT BENEFITS (cont’d.)
GROUP (cont’d.)
The amounts recognised in the balance sheet are determined as follows:
At 31 December 2006:
Present value of defined benefit obligations
Unrecognised actuarial gains/(losses)
Unrecognised net actuarial losses
Malaysia
RM’000
Indonesia
RM’000
Total
RM’000
6,089
187
31,728
(13,058)
37,817
(12,871)
6,276
18,670
24,946
5,943
–
15,990
(6,549)
21,933
(6,549)
5,943
9,441
15,384
Malaysia
RM’000
Indonesia
RM’000
Total
RM’000
667
128
–
–
8,070
5,030
(3,525)
562
8,737
5,158
(3,525)
562
795
10,137
10,932
528
344
–
–
9,100
5,669
(3,963)
635
9,628
6,013
(3,963)
635
872
11,441
12,313
The amounts recognised in the income statement are as follows:
Current service cost
Interest cost
Expected return on plan assets
Net transition liabilities
Interest cost
Net transition liabilities
GROUP (cont’d.)
The amounts recognised in the income statement are as follows: (cont’d.)
2006
RM’000
2005
RM’000
10,742
190
12,170
143
10,932
12,313
2006
RM’000
2005
RM’000
At 1 January
63
10
53
10
At 31 December
73
63
72
1
63
–
73
63
6
4
6
4
10
10
10
10
Cost of sales
COMPANY
Movements in net liability during the financial year are as follows:
The amount recognised in the balance sheet is determined as follows:
At 31 December:
Unrecognised net actuarial gain
The amount recognised in the income statement is as follows:
At 31 December:
Interest cost
The subsidiary companies of the Group in Malaysia, involved in plantation operations, operate an unfunded, defined retirement
benefit scheme for plantation workers as provided under the agreement between the Malayan Agricultural Producers Association
and the National Union of Plantation Workers. The benefits payable are determined based on the length of service at
predetermined contractual rates.
Certain subsidiary companies in Indonesia operate a funded defined benefit scheme for qualified permanent employees in
accordance with Labour Law No. 13 Year 2003.
The obligations under the schemes are calculated using the Projected Unit Credit Method carried out at least every three years
based on actuarial computations by independent actuaries. The most recent review for the Company and subsidiary companies
in Malaysia was performed in September 2006 whilst for subsidiary companies in Indonesia, the review was performed in
December 2006. The principal actuarial assumptions used are as follows:
Malaysia
Discount rate
Expected rate of salary increases
2006
%
2005
%
6.8
N/A
4
7
N/A
4
Indonesia
2006
2005
%
%
10
9
8
10
9
8
47. OTHER PAYABLES
GROUP
2006
2005
RM’000
RM’000
Staff costs
Retrenchment benefits
Advances from third parties
Accruals
Sundry payables
13,062
59
43,534
105,254
38,412
15,563
191
45,323
88,175
48,243
1,659
–
–
11,984
11,839
1,808
–
–
12,851
2,688
200,321
197,495
25,482
17,347
Other information on financial risk of other payables are disclosed in Note 52.
COMPANY
2006
2005
RM’000
RM’000
48. SIGNIFICANT RELATED PARTY TRANSACTIONS
(a) In addition to the transactions detailed elsewhere in the financial statements, the Group and the Company had the following
transactions with related parties during the financial year:
GROUP
2006
2005
RM’000
RM’000
Trade transactions:
Agency fees charged to subsidiary companies
Marketing charges and other expenses charged to
subsidiary companies
Purchases from a company in which
Datuk Alladin Mohd. Hashim,
a director of the Company, is a director
Sale of property to Dato’ Abd Wahab Maskan,
a director of the Company
Non-trade transactions:
Fees and benefits-in-kind paid to non-executive directors
of the Company
Remuneration and benefits-in-kind paid to
an executive director of the Company
Interest paid/payable to subsidiary companies
Interest received/receivable from subsidiary companies
Advances to subsidiary companies
Advances from subsidiary companies
Services rendered from a company in which
Dato’ Muhammad Nawawi Haji Mohd. Arshad,
a director of the Company, is a director
COMPANY
2006
2005
RM’000
RM’000
–
–
41,059
42,212
–
–
9,389
10,134
4,736
44,526
–
–
1,436
–
–
–
1,188
1,159
691
730
1,418
–
–
–
–
1,165
–
–
–
–
1,418
97,910
(23,762)
721,744
(646,440)
1,165
48,098
(35,583)
93,487
(325,988)
84
–
–
–
The above transactions have been entered into in the normal course of business at terms mutually agreed between the
parties. All the transactions have been fully settled as at 31 December, except for the following amounts:
GROUP
2006
2005
RM’000
RM’000
Trade transactions due from subsidiary companies
Non-trade transactions due from subsidiary companies
–
–
–
–
COMPANY
2006
2005
RM’000
RM’000
46,846
402,687
51,023
169,008
48. SIGNIFICANT RELATED PARTY TRANSACTIONS (cont’d.)
(b) Compensation of key management personnel
Key management personnel includes personnel having authority and responsibility for planning, directing and controlling the
activities of the entities, directly or indirectly, including any executive director of the Group and of the Company.
The remunerations of the key management, excluding the executive director which is disclosed in Note 13(b), are as follows:
GROUP
2006
2005
RM’000
RM’000
Short-term employee benefits
Defined contribution plan
Share-based payment
COMPANY
2006
2005
RM’000
RM’000
2,046
279
42
1,721
222
–
1,004
135
42
973
123
–
2,367
1,943
1,181
1,096
The members of key management have been granted the following number of options under the Second Employees Share
Option Scheme (“Second ESOS”):
GROUP/COMPANY
2006
2005
’000
’000
At 1 January
Granted during the year
Exercised during the year
At 31 December
358
71
(429)
232
126
–
–
358
49. COMMITMENTS
(a) Capital Expenditure
GROUP
2006
2005
RM’000
RM’000
Property, plant and equipment:
Approved and contracted for
Approved but not contracted for
Concession asset
COMPANY
2006
2005
RM’000
RM’000
61,373
480,316
111
10,119
298,687
30,444
–
5,721
–
–
3,399
–
541,800
339,250
5,721
3,399
49. COMMITMENTS (cont’d.)
(b) Plasma PIR-Trans Projects
Three subsidiary companies in Indonesia, PT Bahari Gembira Ria, PT Tamaco Graha Krida and PT Guthrie Pecconina
Indonesia have commitments to develop 16,500 hectares of oil palm plantations for the plasma farmers under PIR-Trans
program at Kabupaten Batanghari, Province of Jambi, Kabupaten Poso, Province of Central Sulawesi and Kabupaten Musi
Banyuasin, Province of South Sumatera, respectively. A total of 12,091 hectares have been developed of which about 3,626
hectares are pending conversion.
(c) KKPA (“Kredit Koperasi Primer untuk Anggotanya”) Projects
A subsidiary company in Indonesia, PT Sajang Heulang has entered into Cooperation Agreements and Credit Agreements to
develop 16,000 hectares of oil palm plantations for the plasma farmers under the KKPA program at Kabupaten Kotabaru and
Kabupaten Tanah Bumbu, Province of South Kalimantan. A total of 15,846 hectares have been developed of which 5,466
hectares have been converted and 10,380 hectares are pending conversion.
50. CONTINGENT LIABILITIES
(a) Material Litigations
COMPANY
(i)
Breach of contract
On 3 May 2001, a legal suit was filed against the Company for an alleged breach of contract on the provision for
consultancy services in connection with the acquisition of subsidiary companies in Indonesia. The amount claimed by
the plaintiff was for a sum of USD25.76 million (equivalent to RM90.93 million), damages of 9% per annum and interest
of 6% per annum, both calculated from the date of submission of the claim until the full settlement of the amount
claimed.
On 29 October 2001, the District Court dismissed the plaintiff’s civil suit with costs. The plaintiff appealed to the High
Court of Jakarta. On 27 February 2003, the High Court of Jakarta rejected the appeal by the plaintiff.
On 17 September 2003, the plaintiff filed a fresh legal suit against the Company and six of its Indonesian subsidiary
companies on the same alleged breach of contract. On 28 October 2004, the District Court of South Jakarta rejected
the plaintiff’s claim in its entirety and decided in favour of the Company and the six Indonesian subsidiary companies.
On 20 January 2005, the plaintiff filed an appeal against the decision of the District Court. On 25 May 2005, the Court
of Appeal of Jakarta rejected the appeal by the plaintiff and affirmed the decision of the District Court of South Jakarta.
On 25 November 2005, the plaintiff filed a Notice of Appeal against the decision of the Court of Appeal of Jakarta
rejecting the claims. The Company filed a Notice of Appeal on 30 November 2005 against the decision of the Court of
Appeal in disallowing its counterclaim. The Company will oppose the appeal made by the plaintiff and seek that the
Supreme Court of Jakarta upholds the decision of the Court of Appeal.
50. CONTINGENT LIABILITIES (cont’d.)
(a) Material Litigations (cont’d.)
GROUP
The following pending legal actions were instituted against certain subsidiary companies in Indonesia:
(ii)
Damages/alleged losses suffered involving land disputes
In 1999, a legal suit was filed against a subsidiary company for damages/losses suffered of approximately Rp22 billion
(equivalent to RM8.6 million) for material loss and Rp50 billion (equivalent to RM19.6 million) for moral loss allegedly caused
by clearing, occupying and planting of oil palm on the plaintiff’s land. At the District Court, the plaintiff’s claim was rejected.
At the High Court, the plaintiff’s claim was partially accepted and the High Court ordered the subsidiary company to cease
all activities on the disputed land and to surrender the said land to the plaintiff. The subsidiary company has subsequently
filed an appeal to the Supreme Court of Jakarta. The case is presently pending decision of the Supreme Court.
(iii) Damages/alleged losses suffered involving land disputes
In 2006, a legal suit was filed against a subsidiary company and three other external parties involving land disputes. The
plaintiffs are claiming for the subsidiary to surrender the land or to pay the sum of Rp86 billion (equivalent to RM34
million). The plaintiffs are also claiming for the other three external parties, among others, to revoke the rights to use the
land by the subsidiary company and for a conservatory order against moveable and immovable property of the subsidiary
company. On 16 August 2006, the District Court rejected the plaintiffs’ claims. The plaintiffs have appealed to the High
Court against the decision of the District Court.
(iv) Alleged issuance of land certificate
In 2006, a legal suit was filed in the Administrative Court against a subsidiary company and two other external parties
alleging that the land certificate issued to the subsidiary company was issued on an illegal basis. The Administrative
Court rejected the plaintiff’s claim. The plaintiff has appealed to the High Court. The High Court had decided in favour
of the plaintiff. The subsidiary company intends to appeal to the Supreme Court against the decision of the High Court.
Based on legal counsel’s advice, the directors are of the opinion that the outcome of the abovementioned cases are not
determinable at the date of this report.
(b) Guarantees (Unsecured)
(i)
The Company has provided guarantees amounting to RM1,927,408,000 (2005: RM2,044,460,000) to financial institutions
in respect of credit facilities granted to certain subsidiary companies.
(ii)
In prior years, certain subsidiary companies have given guarantees to the liquidators of certain other companies for which
liquidation commenced in 1977, to indemnify them against any claims and damages which may be sustained in connection
with the settlement or discharge of any liabilities arising out of the distribution of assets ‘in specie’ by the liquidators. The
directors are of the opinion that there would not be any material liability arising from the guarantees given.
(iii) The Company has provided guarantees amounting to RM76,820,000 to third parties in respect of certain tenders awarded
to a subsidiary company.
(iv) Certain subsidiary companies in Indonesia have provided guarantees amounting to approximately Rp311 billion
(equivalent to RM122 million) for the development of oil palm plantations for small holders through the KKPA program
as disclosed in Note 49(c).
50. CONTINGENT LIABILITIES (cont’d.)
(c) Others
(i)
There are claims for interest on certain other payables of a subsidiary company in Indonesia amounting to Rp57.3 billion
(equivalent to RM23 million). In the absence of any agreement between both parties, there is uncertainty of the amount
of interest charges that should be accrued and recorded in the financial statements of the subsidiary company and the
Group. The directors are of the opinion that such payables should be non-interest bearing and, accordingly, such interest
claims are not accrued and recorded in the financial statements.
(ii)
In relation to the construction of the Guthrie Corridor Expressway, several former landowners have filed appeals under
Form N of the Land Acquisition Act, 1960 claiming for higher land values than the compensations awarded to them. In
the event the said landowners are successful in their appeals, the additional compensations payable by the Company is
estimated to be approximately RM9.7 million.
In addition, several former landowners have requested additional compensation for their remaining land area that has
proved uneconomical for usage. In the event the said landowners are successful in their appeals, the additional
compensations payable by the Company is estimated to be approximately RM9.9 million.
51. CONTINGENT ASSETS
GROUP
2006
2005
RM’000
RM’000
Difference between the amount claimed and the amount awarded by the
the Government in respect of land acquired or utilised by the Government
189,075
194,663
52. FINANCIAL INSTRUMENTS
(a) Financial Risk Management Objectives and Policies
The Group’s financial risk management policy seeks to ensure that adequate financial resources are available for the
development of the Group’s businesses whilst managing its foreign exchange, interest rate, price fluctuation, liquidity and
credit risks. The Group operates within clearly defined guidelines that are approved by the Board and the Group’s policy is
to not engaged in speculative transactions.
(b) Foreign Exchange Risk
The Group operates internationally and is exposed to various currencies, mainly Indonesian Rupiah and United States Dollar.
Foreign currency denominated assets and liabilities together with expected cash flows from highly probable purchases and
sales give rise to foreign exchange exposures.
The Group maintains a natural hedge, whenever possible, by borrowing in the currency of the country in which the property
or investment is located or by borrowing in currencies that match the future revenue stream to be generated from its
investments.
Foreign exchange exposures in transactional currencies other than functional currencies of the operating entities are kept to
an acceptable level. Material foreign currency transaction exposures are hedged, mainly with derivative financial instruments
such as forward foreign exchange contracts.
52. FINANCIAL INSTRUMENTS (cont’d.)
(b) Foreign Exchange Risk (cont’d.)
The net unhedged financial assets and financial liabilities of the Group that are not denominated in their functional currencies
are as follows:
Net Current Assets/(Liabilities) Held in
<-------------- Non-Functional Currency --------------->
Functional Currency
of Group Companies
Ringgit Malaysia
Indonesian Rupiah
Ringgit Malaysia
Indonesian Rupiah
United States Dollar
United States
Dollar
RM’000
Euro
RM’000
Indonesian
Rupiah
RM’000
Total
RM’000
2,427
(508,069)
(159)
–
–
(32,019)
2,268
(540,088)
(505,642)
(159)
(32,019)
(537,820)
(374,496)
(166,270)
–
1,846
–
–
–
–
50,398
(372,650)
(166,270)
50,398
(540,766)
1,846
50,398
(488,522)
As at 31 December 2006, the Group has no outstanding forward foreign currency contracts.
(c) Interest Rate Risk
The Group’s primary interest rate risk relates to interest-bearing debt. The Group had no substantial long-term interest-bearing
assets as at 31 December 2006. The investments in financial assets are mainly short-term in nature and have been mostly
placed in fixed deposits or occasionally, in short-term commercial papers which yield better returns than cash at bank.
The Group manages its interest rate exposure by maintaining a prudent mix of fixed and floating rate borrowings. The Group
actively reviews its debt portfolio, taking into account the investment holding period and nature of its assets. This strategy
allows it to capitalise on cheaper funding in a low interest rate environment and achieve a certain level of protection against
rate hikes. The Group also uses hedging instruments such as interest rate swaps to minimise its exposure to interest rate
volatility.
The information on maturity dates and effective interest rates of financial assets and liabilities are disclosed in their respective
notes.
(c) Interest Rate Risk (cont’d.)
As at 31 December 2006, the Group has entered into interest rate swaps (“IRS”) to convert floating rate liabilities to fixed
rate liabilities and vice versa to reduce the Group’s exposure from adverse fluctuations in interest rates on underlying debt
instruments as follows:
Interest Rate Swap
USD Term Loan
USD Term Loan
USD Term Loan
USD Term Loan
Ringgit 5-7 Year
Islamic Bond
Notional
Amount
RM741.30
million
(equivalent to
USD210 million)
RM529.50
million
(equivalent to
USD150 million)
RM34.59
million
(equivalent to
USD9.8 million)
RM34.59
million
(equivalent to
USD9.8 million)
RM40
million
Effective
Period
Weighted Average
Rate p.a.
28/02/06 to
28/02/08
4.98% – 5.15% for the entire tenor of the liability
28/02/08 to
29/08/12
4.98% – 5.15% for the entire tenor of the liability,
provided the spread is within the range
28/02/06 to
28/02/09
4.795% – 5.00% for the entire tenor of the liability
28/02/09 to
29/08/12
Floating but capped at 6.0% provided the
6 month LIBOR is within the specified ranges
27/07/06 to
26/07/10
6.425% for the entire tenor of the liability
27/07/06 to
26/07/07
5.6% for the entire tenor of the liability
27/07/07 to
26/07/10
5.6% for the entire tenor of the liability, provided
the spread is within the range
19/03/04 to
18/03/11
6 month KLIBOR + 1.80%
All the above instruments were executed with creditworthy financial institutions and the directors are of the view that the
possibility of non-performance by these financial institutions is unlikely on the basis of their respective financial strengths.
(d) Price Fluctuation Risk
The Group is exposed to price fluctuation risk on commodities particularly of palm oil. The Group mitigates its risk to the
price volatility through forward hedging contracts in futures and selling forward in the physical market.
(e) Liquidity Risk
The Group actively manages its debt maturity profile, operating cash flows and the availability of funding so as to ensure
that all refinancing, repayment and funding needs are met. As part of its overall liquidity management, the Group maintains
sufficient levels of cash or cash convertible investments to meet its working capital requirements. In addition, the Group
strives to maintain available banking facilities of a reasonable level to its overall debt position. As far as possible, the Group
raises committed funding from both capital markets and financial institutions and prudently balances its portfolio with some
short-term funding so as to achieve overall cost effectiveness.
(f)
Credit Risk
Credit risk, or the risk of counterparties defaulting, is controlled by the application of credit approvals, limits and monitoring
procedures. Credit risks are minimised and monitored by limiting the Group’s associations to business partners with high
creditworthiness. Trade receivables are monitored on an ongoing basis through Group management reporting procedures.
The Group does not have any significant exposure to any individual customer or counterparty nor does it have any major
concentration of credit risk related to any financial instruments.
The Group’s normal trade credit terms granted to customers range from 30 to 90 days. Other credit terms are assessed and
approved on a case-by-case basis. The normal trade credit terms granted to the Group by its creditors range from 14 to 90 days.
(g) Fair Values
The aggregate net fair values of financial assets and financial liabilities which are not carried at fair value on the balance
sheets of the Group and of the Company as at the end of the financial year are represented as follows:
Note
2006
Carrying
Amount
RM’000
Fair
Value
RM’000
2005
Carrying
Amount
RM’000
Fair
Value
RM’000
GROUP
Financial Assets
Other investments:
– Quoted shares
– Unquoted shares
– Malaysian Government Securities
Marketable Securities:
– Quoted shares
– Warrants/Loan stocks quoted in Malaysia
– Corporate bonds
28
28
28
–
814
959
–
#
1,071
277
1,314
959
1,554
#
1,084
39
39
39
14,212
–
23,191
14,815
–
23,241
11,469
954
10,443
13,532
891
13,158
Financial Liabilities
44
2,450,435
2,391,468
2,620,673
2,432,133
(g) Fair Values (cont’d.)
Note
2006
Carrying
Amount
RM’000
Fair
Value
RM’000
2005
Carrying
Amount
RM’000
Fair
Value
RM’000
COMPANY
Financial Assets
Other investments – unquoted shares
28
29
38
459
379,548
795,636
#
##
##
959
390,472
1,025,828
#
##
##
Financial Liabilities
29
38
44
1,664,395
503,297
239,657
##
##
244,962
1,522,640
800,751
679,633
##
##
512,229
#
It is not practicable to estimate the fair value of the non-current investments in unquoted shares because of the lack of
quoted market prices. However, the Group believes that the carrying amount represents the recoverable values.
## It is also not practicable to estimate the fair values of balances due to/from subsidiary companies due principally to a
lack of fixed repayment terms entered into by the parties involved. However, the Group does not anticipate the carrying
amounts recorded at the balance sheet date to be significantly different from the values that would eventually be received
or settled.
The nominal/notional amounts and net fair value of financial instruments not recognised in the balance sheets of the Group
and of the Company as at 31 December 2006 are as follows:
Interest rate swap agreements
Nominal/
Notional
Amount
RM’000
Net Fair
Value
RM’000
1,345,394
(6,842)
(g) Fair Values (cont’d.)
The following methods and assumptions are used to estimate the fair values of the following classes of financial instruments:
(i)
Cash and cash equivalents, trade and other receivables/payables and short-term borrowings
The carrying amounts approximate fair values due to the relatively short-term maturity of these financial instruments.
(ii)
Investments in quoted shares
The fair value of quoted shares is determined by reference to stock exchange quoted market bid prices at the close of
business on the balance sheet date.
(iii) Borrowings
The fair value of borrowings is estimated by using discounted cash flow analysis, based on current incremental lending
rates for liabilities with similar risk profiles.
(iv) Derivative Financial Instruments
The fair value of a forward foreign currency contract is the estimated amount which the Group would expect to pay or
receive on the termination of the outstanding position arising and is determined by reference to the difference between
the contracted rate and the forward exchange rate as at the balance sheet date applied to a contract of similar quantum
and maturity profile.
The fair value of an interest rate swap is the amount that would be payable or receivable upon termination of the position
at the balance sheet date, and is calculated as the difference between the present value of the estimated future cash
flows at the contracted rate compared to that calculated at the market rate at the balance sheet date.
53. SIGNIFICANT EVENTS DURING THE FINANCIAL YEAR
(a) Disposal of Ladang Bertam
On 5 May 2006, Guthrie Ropel Berhad, a subsidiary of the Company and its wholly-owned subsidiary, Guthrie Ropel
Development Sdn. Berhad, entered into Sale and Purchase Agreements for the disposal of 2,285.5 acres of Ladang Bertam
for a total cash consideration of RM91,348,000.
The disposal was completed on 1 November 2006 upon all conditions precedent being met and a gain on disposal of
RM68,515,000 was included in the income statement of the Group.
(b) Disposal of Integrated Brickworks Sdn. Berhad
On 12 October 2006, the Company and Right Class Sdn. Berhad, a wholly-owned subsidiary of the Group, entered into a
Sale and Purchase Agreement with Mr. Wong Chong Leong for the disposal of the entire equity interests of Integrated
Brickworks Sdn. Berhad, a wholly-owned subsidiary of the Group for a total cash consideration of RM1,592,283. The disposal
was completed on 10 January 2007 upon all conditions precedent being met and a loss on disposal of RM23,008,000 and
RM24,575,000 was recognised in the income statement of the Group and of the Company respectively for the financial year
ended 31 December 2006.
53. SIGNIFICANT EVENTS DURING THE FINANCIAL YEAR (cont’d.)
(c) Proposed Disposal of Guthrie Corridor Expressway Sdn. Berhad
On 27 November 2006, the Company entered into a Sale and Purchase of Shares Agreement with Projek Lintasan Kota
Holdings Sdn. Berhad (“Prolintas”) for the proposed disposal of the entire equity interests in Guthrie Corridor Expressway
Sdn. Berhad (“GCESB”), a wholly-owned subsidiary of the Group, which involves the following:
(i)
the disposal of the entire equity interests in GCESB comprising 5,000,000 ordinary shares for a disposal consideration
of RM5 million; and
(ii)
the settlement of intercompany balance owing by GCESB to another wholly-owned subsidiary through cash payment of
RM431 million and issuance of RM500 million nominal value of Redeemable Loan Stocks (“RLS”) of GCESB.
In conjunction with the proposed divestment, the Company, Prolintas and GCESB have also entered into an agreement (“GCE
Agreement”) to deal with, inter alia, future access roads, utility corridor and landscaping in relation to the Expressway and
the agreed land banks along the Expressway.
The proposed disposal is pending the shareholders’ and regulatory approvals.
(d) Offer by Synergy Drive Sdn. Berhad
The Company had on 27 November 2006, received an offer (“Offer”) from Synergy Drive Sdn Bhd (“Synergy Drive”) to acquire
the entire business and undertaking of the Company as carried on by the Company as at the date of the Offer, including its
assets and liabilities (“Proposed Disposal”).
On the same date, Synergy Drive had made similar offers to the two listed subsidiaries of the Company, namely Highlands
& Lowlands Berhad (“H&L”) and Guthrie Ropel Berhad (“GRopel”) and to five other listed entities namely Sime Darby Berhad
(“Sime Darby”), Sime Engineering Services Berhad (“Sime Engineering”), Sime UEP Properties Berhad (“Sime UEP”), Golden
Hope Plantations Berhad (“GHope”) and Mentakab Rubber Company (Malaya) Berhad (“Mentakab”), collectively referred to
as the “Target Companies”. The proposed disposal by the Company and the Target Companies shall collectively be referred
to as “Proposed Disposals”.
On 27 December 2006, the Company, H&L and GRopel accepted the Offer, subject to, amongst others, shareholders’ and
regulatory approvals. The Company and the Target Companies had on 24 January 2007 entered into separate Sale of
Business Agreements (“SBA”) with Synergy Drive in relation to the Proposed Disposals.
(d) Offer by Synergy Drive Sdn. Berhad (cont’d.)
The Proposed Disposal of the Company involves the following:
(i)
The disposal of the entire business and undertaking carried on by the
date of the Offer), including its assets and liabilities as at completion,
RM4.27 per ordinary share of RM1.00 each in the issued and paid-up
outstanding shares as at completion. Based on the number of shares
2005, the Disposal Price is RM4,299.5 million.
Company as at 27 November 2006 (being the
for a total disposal consideration equivalent to
capital of the Company multiplied by the total
in issue of 1,006.9 million as at 31 December
As at 31 December 2005, the Company had 10.8 million outstanding share options under its Employees’ Share Option
Scheme (“ESOS”). Subsequent to 31 December 2005, the Company had granted a further 5.8 million ESOS options.
Assuming the full exercise of these ESOS options and assuming that no further ESOS options are granted, the maximum
possible Disposal Price is approximately RM4.4 billion.
(ii)
The Disposal Price shall be satisfied in full on the date of completion of the SBA by Synergy Drive through the issuance
of an equivalent value of Series A redeemable convertible preference shares of Synergy Drive (“RCPS A”) at RM5.25 for
each RCPS A.
The RCPS A received by the Company are proposed to be distributed to the shareholders of the Company under the
Proposed Capital Repayment via a Capital Reduction Exercise (“Proposed Capital Repayment”). For the avoidance of doubt,
the Proposed Disposal is not conditional upon the Proposed Capital Repayment.
Simultaneously with the Proposed Capital Repayment, the Company shall carry out the Proposed Share Issue of 2 new
ordinary shares of RM1.00 each to Synergy Drive at a subscription price of RM1.00 each, which will result in the Company
becoming a wholly-owned subsidiary of Synergy Drive (“Proposed Share Issue”).
The proposed capital repayment and proposed share issue by the Company and the Target Companies shall collectively be
referred to as “Proposed Capital Repayments” and “Proposed Share Issues”.
In addition to the approval of the shareholders’ and the regulatory authorities, each of the Proposed Disposals, Proposed
Capital Repayments and Proposed Share Issues are also conditional upon the following:
(i)
Synergy Drive notifying the Target Companies in writing that the results of the due diligence inquiry carried out by it as
set out in the SBA are satisfactory;
(ii)
The Proposed Disposals of the Company, Sime Darby and GHope are inter-conditional, and the completion of the
Proposed Disposals of the Company, Sime Darby and GHope shall occur simultaneously;
(iii) The Proposed Disposal of Sime Engineering and Sime UEP are conditional on the confirmation of the Court for the
Proposed Capital Repayment of Sime Darby;
(iv) The Proposed Disposal of H&L and GRopel are conditional on the confirmation of the Court for the Proposed Capital
Repayment of the Company;
(d) Offer by Synergy Drive Sdn. Berhad (cont’d.)
(v) The Proposed Disposal of Mentakab is conditional on the confirmation of the Court for the Proposed Capital Repayment
of GHope;
(vi) The Proposed Capital Repayments of the Company, Sime Darby, Sime Engineering, Sime UEP, H&L, GRopel, GHope and
Mentakab are conditional on each of their respective Proposed Disposals becoming unconditional;
(vii) The Proposed Share Issues of the Company, Sime Darby, Sime Engineering, Sime UEP, H&L, GRopel, GHope and
Mentakab are conditional on each of their respective Proposed Capital Repayments occurring;
(viii) Permodalan Nasional Berhad (“PNB”) and the unit trust funds managed by companies related to PNB providing Synergy
Drive with an undertaking in writing to convert any RCPS A received or receivable by each of them pursuant to the
Proposed Capital Repayment of any Target Company or otherwise, into Synergy Drive Shares prior to the listing of
Synergy Drive on Bursa Securities; and
(ix) The approval of the respective lenders of the Target Companies (where applicable).
Consequently, as at the end of the financial year, as the Proposed Disposal is still inter-conditional principally upon the
completion of the Proposed Disposal of the Company, Sime Darby and GHope and the undertaking by PNB and the unit
trust funds managed by PNB as stated in (viii) above, the assets and liabilities of the Group and of the Company have not
been classified as Non-Current Assets Held for Sale/Disposal Group following the provisions of FRS 5.
54. SUBSEQUENT EVENT
On 22 February 2007, the Company and Guthrie Wood Industries Sdn. Berhad, a wholly-owned subsidiary of the Company,
entered into a Share Sale and Purchase Agreement with Dongwha GH International Sdn. Berhad for the disposal of the entire
equity interests in Guthrie MDF Sdn. Berhad (“GMDF”), a wholly-owned subsidiary of the Group, for a disposal consideration of
RM145 million. In conjunction with the proposed divestment, Highlands & Lowlands Berhad, a subsidiary of the Company had
entered into a Land Sale and Purchase Agreement with Dongwha Fibreboard Sdn. Berhad for the disposal of 459,922 square
meters of land for a total cash consideration of RM30 million.
The proposed disposals are pending completion of certain conditions precedent.
Statement By Directors
PURSUANT TO SECTION 169(15) OF THE COMPANIES ACT, 1965
We, TAN SRI DATO’ DR. WAN MOHD. ZAHID MOHD. NOORDIN and DATO’ ABD WAHAB MASKAN, being two of the directors of
KUMPULAN GUTHRIE BERHAD, do hereby state that, in the opinion of the directors, the accompanying financial statements set out
on pages 92 to 217 are drawn up in accordance with the provisions of the Companies Act, 1965 and applicable MASB Approved
Accounting Standards in Malaysia for Entities Other Than Private Entities so as to give a true and fair view of the financial position
of the Group and of the Company as at 31 December 2006 and of the results and the cash flows of the Group and of the Company
for the year then ended.
Signed on behalf of the Board in accordance with a resolution of the directors dated 28 March 2007:
Chairman
Director
Statutory Declaration
PURSUANT TO SECTION 169(16) OF THE COMPANIES ACT, 1965
I, TONG POH KEOW, being the officer primarily responsible for the financial management of KUMPULAN GUTHRIE BERHAD, do
solemnly and sincerely declare that the accompanying financial statements set out on pages 92 to 217 are in my opinion 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 Kuala Lumpur in the
Federal Territory on 28 March 2007.
Before me,
Maisharah binti Abu Hassan
No. W181
Commissioner for Oaths
)
)
)
TONG POH KEOW
Report Of The Auditors
TO THE MEMBERS OF KUMPULAN GUTHRIE BERHAD (INCORPORATED IN MALAYSIA)
We have audited the financial statements set out on pages 92 to 217. These financial statements are 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 applicable 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 presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.
In our opinion:
(a) the financial statements have been properly drawn up in accordance with the provisions of the Companies Act, 1965 and
applicable MASB Approved Accounting Standards in Malaysia for Entities Other Than Private Entities so as to give a true and
fair view of:
(i)
the financial position of the Group and of the Company as at 31 December 2006 and of the results and the cash flows of
the Group and of the Company for the year then ended; and
(ii)
the matters required by Section 169 of the Companies Act, 1965 to be dealt with in the financial statements; and
(b) the accounting and other records and the registers required by the Act to be kept by the Company and by its subsidiary
companies of which we have acted as auditors have been properly kept in accordance with the provisions of the Act.
We have considered the financial statements and the auditors’ reports thereon of the subsidiary companies of which we have not
acted as auditors, as indicated in Note 7 to the financial statements, being financial statements that have been included in the
consolidated financial statements.
We are satisfied that the financial statements of the subsidiaries that have been consolidated with the financial statements of the
Company 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 auditors’ reports on the financial statements of the subsidiary companies were not subject to any qualification material to the
consolidated financial statements and did not include any comment required to be made under Section 174(3) of the Companies Act,
1965.
ERNST & YOUNG
AF: 0039
Chartered Accountants
Ahmad Zahirudin bin Abdul Rahim
No. 2607/12/08(J)
Partner
Kuala Lumpur, Malaysia
28 March 2007
Properties
of
the
Group
as
at
31
December
2006
Estate
Estate with
Palm Oil Mill
Kedah
4
3
2
5
Pulau
Pinang
1
6
Location
Tenure
Year
Lease
Expiring
Title
Area
Hectares
Description
Age of
Buildings
Years
Net Book
Value
31.12.2006
RM’000
PLANTATION PROPERTIES
– MALAYSIA
Kedah Darul Aman
1
Ladang Anak Kulim
Kulim
Freehold
—
1,512
Oil palm estate
—
30,438
2
Ladang Bukit Selarong
Padang Serai
Freehold
—
1,718
Oil palm estate
—
43,425
3
Ladang Jerai
Bedong
Freehold
—
1,240
Oil palm estate
—
21,009
4
Ladang Padang Buluh
Sg. Petani
Freehold
—
1,986
Oil palm estate
—
47,462
5
Ladang Sungai Dingin
Karangan
Freehold
—
4,264
Oil palm estate and
palm oil mill
3
110,636
Freehold
—
378
Oil palm estate
—
10,008
Pulau Pinang
6
Ladang Byram
Nibong Tebal, Seberang Prai
Estate
Estate with
Palm Oil Mill
8
Perak
7
10
9
11
16
15
13 14
Selangor
12
Location
Tenure
Year
Lease
Expiring
Title
Area
Hectares
Description
Age of
Buildings
Years
Net Book
Value
31.12.2006
RM’000
– MALAYSIA (Cont’d.)
Perak Darul Ridzuan
7
Ladang Changkat Salak
Salak North
Freehold
—
1,598
Oil palm estate
—
31,508
8
Ladang Kalumpong
Bagan Serai
Freehold
—
1,399
Oil palm estate and
palm oil mill
40
32,559
9
Ladang Kamiri
Sungai Siput (North)
Freehold
—
951
Oil palm estate
—
21,689
10 Ladang Kamuning
Sungai Siput
Freehold
—
2,197
Oil palm estate
—
44,514
11 Ladang Yew Lian
Simpang Empat (Hilir Perak)
Leasehold
2035
406
Oil palm estate
—
7,746
Selangor Darul Ehsan
12 Ladang Ampar Tenang
Dengkil
Freehold
—
879
Oil palm estate
—
21,411
13 Ladang Bukit Cheraka
Jeram
Freehold
—
1,627
Oil palm estate
—
46,801
14 Ladang Bukit Kerayong
Kapar
Freehold
—
1,317
Oil palm estate and
palm oil mill
39
44,313
15 Ladang Bukit Lagong
Rawang
Freehold
—
420
Oil palm estate
—
7,228
16 Ladang Bukit Talang
Kuala Selangor
Freehold
—
2,079
Oil palm estate and
palm oil mill
53
60,124
Estate
Estate with
Palm Oil Mill
19
18
21
17
Selangor
20
24
25
22
23
26
Negeri Sembilan
Location
Tenure
Year
Lease
Expiring
Title
Area
Hectares
Description
Age of
Buildings
Years
Net Book
Value
31.12.2006
RM’000
Selangor Darul Ehsan (Cont’d.)
17 Ladang Bukit Tinggi
Klang
Freehold
—
264
Oil palm estate
—
9,493
18 Ladang Elmina
Sungai Buloh
Freehold
—
1,898
Oil palm estate
—
99,855
19 Ladang Sabak Bernam
Sabak Bernam
Freehold
—
2,507
Oil palm estate
—
81,680
20 Ladang Subang
Subang Village
Freehold
—
296
Oil palm estate
—
16,452
21 Ladang Sungai Kapar
Kapar
Freehold
—
389
Oil palm estate
—
7,968
22 Ladang Sungai Rawang
Sungai Pelek
Freehold
—
462
Oil palm estate
—
13,883
23 Ladang Bukit Pelandok
Port Dickson
Freehold
—
1,709
Oil palm estate
—
44,551
24 Ladang Labu
Labu
Freehold
—
2,664
Oil palm estate and
palm oil mill
7
66,430
25 Ladang P.D. Lukut
Port Dickson
Freehold
—
2,237
Oil palm estate
—
54,961
26 Ladang Sengkang
Pasir Panjang
Freehold
—
2,884
Oil palm estate
—
72,733
Negeri Sembilan Darul Khusus
Estate
Estate with
Palm Oil Mill
30
27
Negeri Sembilan
29
28
32
31
Melaka
33
Location
Tenure
Year
Lease
Expiring
Title
Area
Hectares
Description
Age of
Buildings
Years
Net Book
Value
31.12.2006
RM’000
Negeri Sembilan Darul Khusus (Cont’d.)
27 Ladang Siliau
Siliau
Freehold
—
2,067
Oil palm estate and
palm oil mill
35
53,582
28 Ladang Sua Betong
Port Dickson
Freehold
—
2,872
Oil palm estate
—
76,918
29 Ladang Tampin Linggi
Rantau
Freehold
—
2,103
Oil palm estate
—
55,103
30 Ladang Tanah Merah
Port Dickson
Freehold
—
4,271
Oil palm estate and
palm oil mill
29
109,057
Melaka
31 Ladang Bukit Asahan
Asahan
Freehold
Leasehold
—
2047
2039
2038
2037
2032
2,903
55
2
80
1
33
Oil palm estate
—
59,418
32 Ladang Kemuning
Tebong
Freehold
Leasehold
—
2048
2,111
2
Oil palm estate
—
48,662
33 Ladang Serkam
Jasin
Freehold
—
2,291
Oil palm estate
—
58,737
Estate
Estate with
Palm Oil Mill
Johor
42
43
36
39
35
37
40
41
38
34
Location
Tenure
Year
Lease
Expiring
Title
Area
Hectares
Description
Age of
Buildings
Years
Net Book
Value
31.12.2006
RM’000
Johor Darul Takzim
34 Ladang Bukit Badak
Layang Layang
Freehold
—
3,245
Oil palm estate
—
85,617
35 Ladang Cenas
Layang Layang
Leasehold
2081
2079
1,797
81
Oil palm estate
—
41,314
36 Ladang Cha’ah
Cha’ah
Leasehold
2077
2,795
Oil palm estate and
palm oil mill
27
69,869
37 Ladang Lambak/Elaeis
Kluang
Freehold
—
2,576
Oil palm estate
—
69,840
38 Ladang Pekan
Layang Layang
Leasehold
2076
2068
405
2,827
Oil palm estate
—
71,760
39 Ladang Pengkalan Bukit
Panchor
Freehold
—
1,560
Oil palm estate
—
42,694
40 Ladang Sembrong
Layang Layang
Freehold
Leasehold
—
2020
1,338
454
Oil palm estate
—
50,265
41 Ladang Simpang Rengam
Rengam
Freehold
—
1,170
Oil palm estate
—
31,025
42 Ladang Sungai Gemas
Gemas
Freehold
—
971
Oil palm estate
—
23,542
43 Ladang Sungai Labis
Labis
Freehold
—
1,603
Oil palm estate
—
43,868
Estate
Estate with
Palm Oil Mill
Pahang
49
50
45
44
48
47
Johor
46
Location
Tenure
Year
Lease
Expiring
Title
Area
Hectares
Description
Age of
Buildings
Years
Net Book
Value
31.12.2006
RM’000
Johor Darul Takzim (Cont’d.)
44 Ladang Sungai Tawing
Kluang
Leasehold
2079
2,226
Oil palm estate and
palm oil mill
22
51,189
45 Ladang Temiang Renchong
Pagoh
Freehold
—
1,596
Oil palm estate
—
45,349
46 Ladang Tun Dr. Ismail
Simpang Rengam
Freehold
—
2,406
Oil palm estate
—
66,478
47 Ladang Ulu Remis
Layang Layang
Freehold
Leasehold
—
2081
2009
314
1,899
383
Oil palm estate and
palm oil mill
31
53,224
48 Ladang Yong Peng
Yong Peng
Freehold
—
3,363
Oil palm estate and
palm oil mill
35
87,267
—
2076
1,393
606
Oil palm estate
—
58,140
827
Oil palm estate
—
23,243
Pahang Darul Makmur
49 Ladang Chenor
Sungai Jerik
Freehold
Leasehold
50 Ladang Sungai Tekal
Mentakab
Freehold
—
Estate
Estate with
Palm Oil Mill
54
53
Sabah
52
51
Location
Tenure
Year
Lease
Expiring
Title
Area
Hectares
Terengganu
Description
Age of
Buildings
Years
Net Book
Value
31.12.2006
RM’000
Terengganu Darul Iman
51 Ladang Jabor
Kemaman
Freehold
—
2,399
Oil palm estate and
palm oil mill
30
57,679
Oil palm estate
—
25,453
Oil palm estate and
palm oil mill
7
63,804
Oil palm estate
—
45,895
Sabah
52 Ladang Andrassy
Tawau
Leasehold
2077
2073
2070
161
23
810
53 Ladang Jeleta Bumi
Tawau
Leasehold
2076
1,897
54 Ladang Tingkayu
Tawau
Leasehold
2078
2077
2076
222
535
850
100,804
2,617,869
Estate
Estate with
Palm Oil Mill
2
3
1
Aceh
Aceh
Riau
8
Riau
4
Jambi
West
Kalimantan
Central
Sulawesi
Central
Kalimantan
South
Sumatera
Jambi
7
South
Kalimantan
6
5
Jakarta
Location
Tenure
Year
Lease
Expiring
Title
Area
Hectares
Description
Age of
Buildings
Years
Net Book
Value
31.12.2006
RM’000
– INDONESIA
Sumatera – East Aceh
1
Ladang Tamiang
Karang Baru
Leasehold
2027
1,452
Oil palm estate and
palm oil mill
20
12,183
2
Ladang Blang Simpo
Karang Baru
Leasehold
2022
6,239
Oil palm estate and
palm oil mill
9
44,637
3
Ladang Batang Ara
Karang Baru
Leasehold
2037
1,129
Oil palm estate
—
9,943
Leasehold
2038
4,000
Oil palm estate and
palm oil mill
2
55,618
Sumatera – Jambi
4
Ladang Air Merah
Kumpeh Ulu, Muaro Jambi
Sumatera – South Sumatera
5
Ladang GPI 1-5
Sekayu, Musi Banyuasin
Leasehold
2033
10,140
5,573*
Oil palm estate and
palm oil mill
5
135,286
6
Ladang Sungai Pinang
Muara Lakitan, Musi Rawas
Leasehold
2034
3,698
Oil palm estate and
palm oil mill
8
56,031
7
Ladang Bukit Pinang
Muara Lakitan, Musi Rawas
Leasehold
2034
3,354
Oil palm estate
—
48,950
Leasehold
2034
3,915
Oil palm estate and
palm oil mill
6
52,633
Sumatera – Riau
8
Ladang Teluk Siak
Tualang, Siak
* Pending issuance of title
Estate
Estate with
Palm Oil Mill
13
11
Riau
12
Aceh
14
19
18
Riau
9
15
16
10
Jambi
West
Kalimantan
17
Central
Sulawesi
Central
Kalimantan
South
Sumatera
South
Kalimantan
Jakarta
Location
Tenure
Year
Lease
Expiring
Title
Area
Hectares
Description
Age of
Buildings
Years
Net Book
Value
31.12.2006
RM’000
– INDONESIA (Cont’d.)
Sumatera – Riau (Cont’d.)
9
Ladang Pinang Sebatang
Bukit Raya, Pekan Baru
Leasehold
2034
3,562
Oil palm estate
—
38,698
10 Ladang Aneka Perkasa
Bukit Raya, Pekan Baru
Leasehold
2034
4,136
Oil palm estate
—
45,979
11 Ladang Menggala – 1
Tanah Putih, Rokan Hilir
Leasehold
2034
4,920
Oil palm estate and
palm oil mill
13
43,367
Leasehold
2034
4,922
Oil palm estate
—
52,661
Leasehold
2034
3,994
Oil palm estate
—
35,361
14 Ladang Alur Dumai
Bagan Sinembah, Rokan Hilir
Leasehold
2036
3,759
Oil palm and
rubber estate
—
25,159
15 Ladang Teluk Bakau
Kateman, Indragiri Hilir
Leasehold
2031
4,025
Oil palm estate and
palm oil mill
6
40,472
16 Ladang Rotan Semelur
Leasehold
2031
7,313
Oil palm estate
—
60,581
17 Ladang Mandah
Leasehold
2031
5,040
Oil palm estate
—
53,991
18 Ladang Nusa Lestari
Leasehold
2031
3,457
Oil palm estate
—
34,943
19 Ladang Nusa Perkasa
Leasehold
2031
5,836
Oil palm estate
—
41,797
Estate
Estate with
Palm Oil Mill
Aceh
South
Kalimantan
26
29
23
27
28
22
Riau
Jambi
West
Kalimantan
Central
Sulawesi
Central
Kalimantan
South
Sumatera
30
25 24
South
Kalimantan
20
21
Jakarta
Location
Tenure
Year
Lease
Expiring
Title
Area
Hectares
Description
Age of
Buildings
Years
Net Book
Value
31.12.2006
RM’000
Kalimantan – South Kalimantan
20 Ladang Angsana
Kusan Hulu, Kotabaru
Leasehold
2034
3,250
Oil palm estate and
palm oil mill
2
49,896
21 Ladang Gunung Sari
Kusan Hulu, Kotabaru
Leasehold
2034
2,832
Oil palm estate
—
29,264
22 Ladang Bakau
Pamukan Utara, Kotabaru
Leasehold
2032
5,144
Oil palm estate
—
43,226
23 Ladang Bebunga
Leasehold
2032
4,258
Oil palm estate and
palm oil mill
10
40,252
24 Ladang Lanting
Leasehold
2032
3,249
Oil palm estate
—
26,083
25 Ladang Sungai Cengal
Leasehold
2032
4,926
Oil palm estate
—
50,514
26 Ladang Betung
Leasehold
2032
3,314
Oil palm estate
—
31,903
27 Ladang Matalok
Leasehold
2032
3,082
Oil palm estate
—
26,961
28 Ladang Rantau
Leasehold
2032
4,638
Oil palm estate and
palm oil mill
6
53,431
29 Ladang Sekayu
Leasehold
2032
4,266
Oil palm estate
—
42,692
30 Ladang Gunung Aru
Pulau Laut Timur, Kotabaru
Leasehold
2022
3,228
Oil palm estate and
palm oil mill
13
12,254
Estate
Estate with
Palm Oil Mill
South
Kalimantan
Aceh
39
41
42
38
Riau
40
37
Jambi
West
Kalimantan
Central
Sulawesi
Central
Kalimantan
36
31
South
Kalimantan
South
Sumatera
33
34
35
32
Jakarta
Location
Tenure
Year
Lease
Expiring
Title
Area
Hectares
Description
Age of
Buildings
Years
Net Book
Value
31.12.2006
RM’000
Kalimantan – South Kalimantan (Cont’d.)
31 Ladang Gunung Kemasan
Leasehold
2022
3,726
Oil palm estate
—
50,295
32 Ladang Laut Timur
Leasehold
2022
3,478
Oil palm estate
—
47,064
33 Ladang Pantai Timur
Leasehold
2022
3,488
Oil palm estate
—
38,236
34 Ladang Mustika
Satui, Kotabaru
Leasehold
2030
5,079
Oil palm estate and
palm oil mill
2
42,177
35 Ladang Pantai Bonati
Satui, Kotabaru
Leasehold
2030
2,715
Oil palm estate
—
33,099
36 Ladang Randi
Leasehold
2032
3,150
Oil palm estate
—
34,360
37 Ladang Selabak
Leasehold
2032
3,835
Oil palm estate
—
53,575
38 Ladang Sangkoh
Leasehold
2032
3,443
Oil palm estate
—
37,950
39 Ladang Binturung
Leasehold
2032
4,247
Oil palm estate
—
37,639
40 Ladang Pondok Labu
Pamukan Utara/Selatan, Kotabaru
Leasehold
2032
3,964
Oil palm estate
—
43,138
41 Ladang Rampa
Pamukan Utara/Selatan, Kotabaru
Leasehold
2032
3,476
Oil palm estate
—
29,429
42 Ladang Sesulung
Pamukan Selatan, Kotabaru
Leasehold
2032
4,719
Oil palm estate and
palm oil mill
3
52,861
Estate
Estate with
Palm Oil Mill
Central
Kalimantan
Aceh
49
50
Riau
48
47
45 46
44
43
51
Jambi
West
Kalimantan
Central
Sulawesi
Central
Kalimantan
South
Kalimantan
South
Sumatera
52
Central
Sulawesi
Jakarta
Location
Tenure
Year
Lease
Expiring
Title
Area
Hectares
Description
Age of
Buildings
Years
Net Book
Value
31.12.2006
RM’000
Kalimantan – Central Kalimantan
43 Ladang Hantantiring
Kuala Kuayan, Kotawaringin Timur
Leasehold
2034
3,197
Oil palm estate
—
19,041
44 Ladang Kawan Batu
Leasehold
2034
8,973
Oil palm estate
—
41,191
45 Ladang Pemantang
Leasehold
2034
4,432
Oil palm estate
—
28,518
46 Ladang Kuala Kuayan
Leasehold
2032
3,421
Oil palm estate
—
21,777
47 Ladang Baras Danum
Leasehold
2032
3,440
Oil palm estate
—
10,785
48 Ladang Sapiri
Leasehold
2032
2,966
Oil palm estate
—
18,883
49 Ladang Sukamandang
Leasehold
2032
4,953
Oil palm estate and
palm oil mill
5
64,326
50 Ladang Sekunyir
Kumai, Kotawaringin Barat
Leasehold
2033
3,553
Oil palm estate and
palm oil mill
11
44,185
51 Ladang Seruyan
Kumai, Kotawaringin Barat
Leasehold
2033
4,182
Oil palm estate
—
38,786
Leasehold
2024
4,597
Oil palm estate and
palm oil mill
13
56,276
Sulawesi – Central Sulawesi
52 Ladang Ungkaya
Bungku Utara, Poso
221,685
2,138,357
LAND HELD FOR
PROPERTY DEVELOPMENT
Lembah
Beringin
Kuala Selangor
Rawang
4
5
6
7
North South
Expressway (NSE)
Guthrie Corridor
Expressway
Kangar
Klang
NSE Central Link (ELITE)
Kota
Bharu
1
2
3
Georgetown
Kuala
Terengganu
No
rt
Ipoh
hS
outh
way
ress
Exp
Kuantan
16
Kuala
Lumpur
Shah
Alam
10
9
11 Seremban
13 12
Melaka
14
15
Johor
Bahru
Ampang
Petaling
Subang Jaya
Jaya
Puchong
Putrajaya
Carey
Island
Federal Highway
Alor
Setar
Shah
Alam
Kuala
Lumpur
Kajang
8
Salak Tinggi
Banting
KLIA
Location
Tenure
Year
Lease
Expiring
Title
Area
Hectares
Description
Age of
Buildings
Years
Net Book
Value
31.12.2006
RM’000
LAND HELD FOR PROPERTY
DEVELOPMENT
Kedah Darul Aman
1
Jerai
Bedong
Freehold
—
512
Mixed development
—
33,625
2
Padang Serai
Freehold
—
167
Oil palm estate
—
4,447
3
Taman Sungai Dingin
Karangan
Freehold
—
3
Housing estate
—
226
4
Ladang Bukit Lagong
Rawang
Freehold
—
213
Oil palm estate
—
36,042
5
Ladang Elmina
Sungai Buloh
Freehold
—
7
Oil palm estate
—
175
6
Bukit Subang
Subang Village
Freehold
—
249
Mixed development
—
79,821
7
Bukit Jelutong
Shah Alam
Freehold
—
121
Mixed development
—
72,246
8
Ladang Ampar Tenang
Dengkil
Freehold
—
93
Oil palm estate
—
4,361
Freehold
—
170
Oil palm estate
—
4,384
10 Ladang Tanah Merah
Port Dickson
Freehold
—
252
Oil palm estate
—
6,759
11 Guthrie Chemara
Seremban
Freehold
Leasehold
—
2066
32
2
Research centre
—
3,661
12 Ladang Sua Betong
Port Dickson
Freehold
—
168
Oil palm estate
—
4,794
13 Taman Sengkang
Port Dickson
Freehold
—
5
Oil palm estate
—
1,304
14 Ladang Pengkalan Bukit
Panchor
Freehold
—
141
Oil palm estate
—
2,689
15 Ladang Lambak/Elaeis
Kluang
Freehold
—
234
Oil palm estate
—
6,692
Freehold
—
9
Oil palm estate
—
4,801
9
Ladang Bukit Pelandok
Port Dickson
Johor Darul Takzim
Pahang Darul Makmur
16 Genting View Resort
10km Genting Highlands
2,378
266,027
Location
Tenure
Year
Lease
Expiring
Title
Area
Hectares
Description
Age of
Buildings
Years
Net Book
Value
31.12.2006
RM’000
QUARRIES
Kamuning, Sungai Siput
Perak Darul Ridzuan
Freehold
—
95
Black marble
—
2,622
Tanah Merah, Port Dickson
Freehold
—
26
Granite
—
11,332
121
13,954
FACTORIES
Lot 833
Mukim Padang Meha
Padang Serai Kulim
Kedah Darul Aman
Freehold
—
34
Medium-density
fibreboard factory
11
25,170
Lot 370
Mukim Port Dickson
Sendayan, Siliau
Freehold
—
3
Oil palm research
and cloning centre
10
2,960
37
28,130
GENERAL PROPERTIES
No. 2A, Biggs Road/
No. 5, Cantonment Road
Penang
Freehold
—
1
No. 3, Western Avenue
Penang
Freehold
—
—
Harvard Suasana Hotel
Bedong, Kedah Darul Aman
Freehold
—
2
Harvard Golf Resort
Bedong, Kedah Darul Aman
Leasehold
Guthrie Pavilion
No. 2A, Persiaran B
Section U8, Bukit Jelutong
Shah Alam, Selangor Darul Ehsan
Freehold
—
3
No. 20 Jalan Astaka U8/82
Bukit Jelutong, Shah Alam
Freehold
—
Wisma Guthrie
No. 21, Jalan Gelenggang
Damansara Heights
Kuala Lumpur
Freehold
—
2053
Holiday bungalows
53
9,500
Bungalow
57
7,400
Hotel
9
9,488
Golf course and
club house
9
26,818
Office complex
9
22,364
—
Office
7
3,674
—
Office complex
33
17,978
132
Location
Tenure
Year
Lease
Expiring
Title
Area
Hectares
Description
Age of
Buildings
Years
Net Book
Value
31.12.2006
RM’000
GENERAL PROPERTIES (Cont’d.)
No. 19 & 19A, Jalan Uthant
Kuala Lumpur
Freehold
No. 10, Jalan Kampung Pandan
Kuala Lumpur
Kayangan Bungalow
Frasers Hill
Pahang Darul Makmur
Port Dickson Bungalows
– Sri Fajar
– Sri Bayu
– Sri Menyinsing
– Sinaran Selat
—
—
Vacant land
—
9,998
Leasehold
2026
—
Bungalow
79
849
Leasehold
2026
1
Holiday bungalow
79
867
Freehold
Freehold
Freehold
Leasehold
—
—
—
2072
2
—
—
1
Holiday bungalows
48
20
17
12
9,138
—
21
Hotel resort
17
22,616
Office complex
3
2,452
Warehouse
4
264
Genting View Resort
10km, Genting Highlands
Pahang Darul Makmur
Freehold
Regional Office
Jln. Ahmad Yani KM22.6
Landasan Ulin Utara
Banjarbaru
South Kalimantan
Leasehold
2033
3
Kawasan Industri Cikarang
Block GG Kav. No 5H
Bekasi, West Java
Leasehold
2027
—
TOTAL
166
143,406
325,191
5,207,743
Note:
The latest revaluation of the Group’s plantation properties was performed in 2003 whilst the revaluation of land held for property
development was performed in 1989.
Group
Area
Statement
Malaysia
Crop
Oil Palm
– Mature
– Immature
Rubber
– Mature
Total Planted Area
Area occupied by villages,
factories, roads, plantable
reserves and swamps
Land held for property
development
Area occupied by factories,
office complex, quarries
and holiday bungalows
TOTAL AREA
2006
Hectares
Indonesia
Total
Percent
Malaysia
2005
Hectares
Indonesia
Total
Percent
90,119
7,718
159,330
14,534
249,449
22,252
91.5
8.2
88,941
9,776
157,384
10,524
246,325
20,300
92.0
7.6
97,837
173,864
271,701
99.7
98,717
167,908
266,625
99.6
-
700
700
0.3
-
1,203
1,203
0.4
97,837
174,564
272,401
100.0
98,717
169,111
267,828
100.0
2,967
47,121
50,088
2,875
51,090
53,965
2,378
-
2,378
2,820
-
2,820
321
3
324
327
3
330
103,503
221,688
325,191
104,739
220,204
324,943
ANALYSIS OF PLANTED AREA
Malaysia
2006
Hectares
Indonesia
Total
Percent
Malaysia
2005
Hectares
Indonesia
Total
Percent
OIL PALM
Mature Area
Age In Years
4 – 8
9 – 18
19 – 25
Above 25
39,292
27,834
17,407
5,586
18,756
136,412
3,706
456
58,048
164,246
21,113
6,042
21.3
60.2
7.8
2.2
39,180
26,283
17,923
5,555
16,952
136,182
3,818
432
56,132
162,465
21,741
5,987
21.0
60.7
8.1
2.2
90,119
159,330
249,449
91.5
88,941
157,384
246,325
92.0
125
2,479
2,501
2,613
1,153
1,619
5,717
6,045
1,278
4,098
8,218
8,658
0.5
1.5
3.0
3.2
538
4,265
2,476
2,497
-
2,082
1,773
1,681
4,988
-
2,620
6,038
4,157
7,485
-
1.0
2.2
1.6
2.8
-
7,718
14,534
22,252
8.2
9,776
10,524
20,300
7.6
-
700
700
0.3
-
1,203
1,203
0.4
97,837
174,564
272,401
100.0
98,717
169,111
267,828
100.0
Immature Area
Year of Planting
2002
2003
2004
2005
2006
Rubber
9 – 18
TOTAL PLANTED AREA
Analysis
Authorised share capital
Paid-up share capital
Type of share
Voting right
:
:
:
:
of
Shareholdings
as
at
16
April
2007
RM1,500,000,000
RM1,025,117,000
Ordinary share of RM1.00 each
One vote per ordinary share
DIRECTORS’ SHAREHOLDINGS
Name of Directors
1.
2.
3.
4.
5.
6.
7.
8.
Direct
Shareholdings
Percentage of
Issued Shares
Indirect
Shareholdings
Percentage of
Issued Shares
_
_
_
_
_
_
_
_
_
_
_
_
_
_
_
_
_
_
_
_
_
_
_
_
_
_
_
_
_
_
_
_
Tan Sri Dato' Dr. Wan Mohd. Zahid Mohd. Noordin
Dato' Abd Wahab Maskan
Datuk Alladin Mohd. Hashim
Datuk Khoo Eng Choo
Dato' Muhammad Nawawi Haji Mohd. Arshad
DIRECTORS’ SHAREHOLDINGS IN RELATED CORPORATION
MALAYSIA LAND DEVELOPMENT COMPANY BERHAD
Name of Directors
Dato’ Muhammad Nawawi Arshad
*
**
Direct
Shareholdings
Percentage of
Issued Shares
Indirect
Shareholdings
Percentage of
Issued Shares
1,000**
2,000**
0.00*
0.00*
—
—
—
—
Percentage is negligible
Held in trust for Kumpulan Guthrie Berhad
DISTRIBUTION OF SHAREHOLDINGS
Number of
Shareholders
Percentage of
Shareholders
Number of
Shares
Percentage of
Issued Shares
Less than 100
100 – 1,000
1,001 – 10,000
10,001 – 100,000
100,001 to less than 5% of issued shares
5% and above of issued shares
49
3,227
2,231
316
169
3
0.82
53.83
37.21
5.27
2.82
0.05
1,019
3,134,539
8,064,748
10,202,200
270,520,994
733,193,500
0.00
0.31
0.78
1.00
26.39
71.52
Total
5,995
100.00
1,025,117,000
100.00
Number of
Shareholders
Percentage of
Shareholders
Number of
Shares
Percentage of
Issued Shares
654
336
10.91
5.60
2,178,600
881,629,022
0.22
86.00
990
16.51
883,807,622
86.22
Non-Bumiputra
– Individual
– Institutions/Corporate Bodies
4,447
324
74.18
5.40
11,590,662
31,614,456
1.13
3.08
Total for Non-Bumiputra
4,771
79.58
43,205,118
4.21
Total for Malaysians
5,761
96.09
927,012,740
90.43
73
161
1.22
2.69
487,400
97,616,860
0.05
9.52
234
3.91
98,104,260
9.57
5,995
100.00
1,025,117,000
100.00
Size of Shareholdings
CLASSIFICATION OF SHAREHOLDERS
1.
Malaysians
a.
Bumiputra
– Individual
Total for Bumiputra
b.
2.
Foreigners
– Individual
Total for Foreigners
GRAND TOTAL
SUBSTANTIAL SHAREHOLDERS
Name of Shareholders
Permodalan Nasional Berhad (PNB)
Skim Amanah Saham Bumiputera (SASB)
Employees Provident Fund Board
Number of Shares
Direct
Indirect
556,569,700
1
106,953,400
2
72,593,700
—
—
Total
Shares
Percentage of
Issued Shares
556,569,700
106,953,400
72,593,700
54.29
10.43
7.08
Notes:
1.
Held through Amanah Raya Nominees (Tempatan) Sdn. Bhd.
2.
Includes 962,200 shares held through Cimsec Nominees (Tempatan) Sdn. Bhd. and 1,961,100 shares held through Am Nominees
(Tempatan) Sdn. Bhd.
•
SASB is a unit trust scheme managed by PNB.
•
By virtue of the Gazette notification P.U.(B) 61 dated 7 February 2002 (which came into effect on 28 February 2002), PNB is not
deemed to have indirect interest in the direct shareholding of SASB in the Company.
THIRTY (30) LARGEST SHAREHOLDERS
Number of
Shares Held
Percentage
of Issued
Shares
1.
Permodalan Nasional Berhad
556,569,700
54.29
2.
Amanah Raya Nominees (Tempatan) Sdn Bhd
[Skim Amanah Saham Bumiputera]
106,953,400
10.43
3.
Employees Provident Fund Board
69,670,400
6.80
4.
Lembaga Kemajuan Tanah Persekutuan (FELDA)
18,778,224
1.83
5.
[Amanah Saham Wawasan 2020]
16,716,200
1.63
6.
Lembaga Kemajuan Tanah Persekutuan
15,000,000
1.46
7.
Lembaga Kemajuan Tanah Persekutuan
15,000,000
1.46
8.
AIBB Nominees (Tempatan) Sdn Bhd
[Chua Ma Yu]
11,966,600
1.17
9.
HSBC Nominees (Asing) Sdn Bhd
[Exempt AN for JPMorgan Chase Bank, National Association (Netherlands)]
10,974,100
1.07
10.
[Amanah Saham Didik]
10,949,700
1.07
11.
[Sekim Amanah Saham Nasional]
9,588,800
0.94
THIRTY (30) LARGEST SHAREHOLDERS (cont’d.)
Number of
Shares Held
Percentage
of Issued
Shares
12.
[Morgan Stanley And Co International London (FIRM A/C)]
9,257,400
0.90
13.
[Amanah Saham Malaysia]
8,614,200
0.84
14.
[BNY Brussels for Queensland Investment Corporation]
7,744,500
0.76
15.
Mayban Nominees (Tempatan) Sdn Bhd
[Mayban Trustees Berhad for Public Ittikal Fund (N14011970240)]
5,891,200
0.57
16.
[Exempt AN for Morgan Stanley & Co. International Limited]
5,749,100
0.56
17.
AIBB Nominees (Tempatan) Sdn Bhd
[Low Mei Loon]
5,313,000
0.52
18.
Citigroup Nominees (Asing) Sdn Bhd
[Exempt AN for Mellon Bank (Mellon)]
5,285,701
0.52
19.
Lembaga Tabung Angkatan Tentera
4,882,000
0.48
20.
Cartaban Nominees (Asing) Sdn Bhd
[Credit Suisse (Hong Kong) Limited]
4,325,800
0.42
21.
[TNTC for Government of Singapore Investment Corporation Pte Ltd]
4,148,100
0.40
22.
Mayban Securities Nominees (Tempatan) Sdn Bhd
[Pledged Securities Account for Chua Ma Yu (Dealer 072)]
4,033,200
0.39
23.
[Exempt AN for Merrill Lynch Pierce Fenner & Smith Incorporated (Foreign)]
3,595,400
0.35
24.
Affin Nominees (Asing) Sdn Bhd
[Mandarin Asian Prosperity Fund (Class B)]
3,573,000
0.35
25.
[Public Growth Fund]
3,209,000
0.31
26.
BHLB Trustee Berhad
[Public Regional Sector Fund]
3,119,900
0.30
27.
[Exempt AN for JPMorgan Chase Bank, National Association (U.S.A)]
2,905,859
0.28
28.
[UBS AG Singapore for Alex Lee Lao]
2,697,000
0.26
29.
Mayban Nominees (Tempatan) Sdn Bhd
[Mayban Trustees Berhad for Public Regular Savings Fund]
2,560,000
0.25
30.
[HSBC-FS for Value Partners "A" Fund]
2,141,500
0.21
Share
Price
and
Volume
Tr a d e d
BURSA MALAYSIA SECURITIES BERHAD – JANUARY 2005 TO MARCH 2007
Jan-Mar
2007
2006
2005
5.15
5.50
4.10
4.60
4.74
2.35
2.43
2.65
2.03
50,535
3.21
18.33
238,186
3.21
16.37
17,301
4.38
49.89
Share Prices (RM)
– Closing
– High
– Low
Volume traded (’000)
Dividend yield (%)
Price-earnings ratio (times)
Volume Traded
(’000)
Share Price
(RM)
60,000
6.0
48,000
4.8
36,000
3.6
24,000
2.4
12,000
1.2
0
0
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar
05 05 05 05 05 05 05 05 05 05 05 05 06 06 06 06 06 06 06 06 06 06 06 06 07 07 07
High Price
Low Price
Volume Traded
Kuala Lumpur
Composite
Index
Closing
Share Price
(RM)
1,250
6.0
1,000
4.8
750
3.6
500
2.4
250
1.2
0
0
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar
05 05 05 05 05 05 05 05 05 05 05 05 06 06 06 06 06 06 06 06 06 06 06 06 07 07 07
Kuala Lumpur Composite Index
Closing Share Price (RM)
Group
Directory
SUBSIDIARY COMPANIES
MALAYSIA
Highlands & Lowlands Berhad
Wisma Guthrie
21, Jalan Gelenggang
Bukit Damansara
50490 Kuala Lumpur
Tel
: 03-2094 1644
Fax
: 03-2095 7934
Website : www.guthrie.com.my/hlb
Guthrie Ropel Berhad
Wisma Guthrie
21, Jalan Gelenggang
Bukit Damansara
50490 Kuala Lumpur
Tel
: 03-2094 1644
Fax
: 03-2095 7934
Website : www.guthrie.com.my/grb
AGRICULTURAL SERVICES
Guthrie Research Chemara
Locked Bag No. 28
70990 Seremban, Negeri Sembilan
Tel
: 06-765 5200
Fax
: 06-764 0831
Chemara Laboratories Sdn. Berhad
P. O. Box 403, Pejabat Pos
Tel
: 06-765 5250/7 or
06-763 1773 (Direct)
Fax
: 06-764 0831/762 4430
Sdn. Berhad
Lot 370, Mukim Port Dickson
71100 Siliau, Negeri Sembilan
Tel
: 06-651 0351/55
Fax
: 06-651 0641
E-mail : [email protected]
PROPERTY
Guthrie Property Development
Holding Berhad
Guthrie Pavilion
2A Persiaran Tebar Layar
Seksyen U8, Bukit Jelutong
40150 Shah Alam, Selangor
Tel
: 03-7844 8400
Fax
: 03-7846 6909
Website : www.guthrieproperties.com.my
Syarikat Pembangunan Hartanah
Guthrie Sdn. Berhad
Guthrie Pavilion
2A Persiaran Tebar Layar
Tel
: 03-7844 8400
03-3290 1636 (site office)
Fax
: 03-3250 1639 (site office)
Sdn. Berhad
C/O Harvard Golf & Country Club
08100 Bedong, Kedah
Tel
: 04-458 8888
Fax
: 04-458 1507
Guthrie Plantation & Agricultural
Services Sdn. Berhad
P. O. Box 134, Jalan Sg Ujong
Tel
: 06-765 5300/301/302
Fax
: 06-763 6569
HRU Sdn. Berhad
No. 4 Jalan Astaka LU 8/L
Tel
: 03-7846 3755/9853
Fax
: 03-7846 9296
HOTEL/RESORT MANAGEMENT
Harvard Golf Resort (Jerai) Berhad
08100 Bedong, Kedah
Tel
: 04-458 8888
Fax
: 04-458 5107
Company Berhad
Genting View Resort Management
Sdn. Berhad
10 Km, Genting View Resort
Genting Highlands, 69000 Pahang
Management Office
Tel
: 03-6100 2255
Fax
: 03-6100 2058
Front Office/Reservation
Tel
: 03-6100 2260/6100 2268
Fax
: 03-6100 1016
OTHER OPERATIONS
Guthrie Corridor Expressway
Sdn. Berhad
Km 14.4, Lebuhraya Guthrie Koridor
47000 Sungai Buloh, Selangor
Tel
: 03-6038 5270
Fax
: 03-6038 5798
Guthrie Landscaping Sdn. Berhad
12, Jalan Astaka LU 8/L
Bukit Jelutong, 40150 Shah Alam
Selangor
Tel
: 03-7845 7581/0385/0395
Fax
: 03-7845 8170
Guthrie Technologies Sdn. Berhad
15 Jalan U8/84, Seksyen U8
Bukit Jelutong, 40150 Shah Alam
Selangor
Tel
: 03-7845 3180/7845 3004
Fax
: 03-7845 3426
SUBSIDIARY COMPANIES
OVERSEAS
INDONESIA
PT. Minamas Gemilang
PT. Anugerah Sumbermakmur
5th Floor, Plaza Sentral
Jl Jend Sudirman kav. 47
Jakarta 12930
Tel
: 00-62-21-570 7001
Fax
: 00-62-21-252 4593/
571 1652/522 7188
SUMATERA
PT. Aneka Intipersada
PT. Bina Sains Cemerlang
PT. Tunggal Mitra Plantations
Jl. Riau Ujung No. 256
RT 04 RW 06
Kel. Tampan, Kec. Tampan
Pekanbaru-28292
Tel
: 00-62-761-849187
Fax
: 00-62-761-849378
PT. Bhumireksa Nusasejati
Sungai Guntung, Desa Rotan Semelur
Kecamatan Kateman, Indra Giri Hilir
Riau 29255
Tel
: 00-62-768-21951
Fax
: 00-62-768-21951
Or at :
RT 04 RW 06
Pekanbaru-28292
Tel
: 00-62-761-849187
Fax
: 00-62-761-849378
PT. Bahari Gembira Ria
Perum Pesona Jambi Blok V No. 1
Kel. Mayang Mengurai
Kotabaru, Jambi
Mailbox: P.O. Box 02 JBI, Jambi
Tel
: 00-62-741-53421
Fax
: 00-62-741-53272
PT. Padang Palma Permai
C/O Minamas Plantation
5th Floor Plaza Sentral
Jl. Jend. Sudirman Kav. 47
Jakarta 12930
Tel
: 00-62-21-570 7001
Fax
: 00-62-21-252 4593 /
571 1652 / 522 7188
Or at :
Desa Kebun Tanah Terban
Kuala Simpang
Kabupaten Aceh Tamiang
Nanggroe Aceh Darussalam
Tel
: 0641-31126
PT. Guthrie Pecconina Indonesia
RT 04 RW 06
Pekanbaru-28292
Tel
: 00-62-761-849187
Fax
: 00-62-761-849378
KALIMANTAN
PT. Bersama Sejahtera Sakti
PT. Laguna Mandiri
PT. Langgeng Muara Makmur
PT. Sajang Heulang
PT. Ladangrumpun Suburabadi
PT. Swadaya Andika
PT. Paripurna Swakarsa
Jl. Ahmad Yani KM. 22,6
Landasan Ulin Utara
Banjarbaru, Kalimantan Selatan
Tel
: 00-62-511-4706180
Fax
: 00-62-511-4706179
PT. Indotruba Tengah
JI. Kasan Rejo No. 4
Pangkalan Bun
Kalimantan Tengah
Tel
: 00-62-532-21608
Fax
: 00-62-532-21923
SULAWESI
PT. Tamaco Graha Krida
Jl. Merpati no. 9
Palu, Sulawesi Tengah
Or at :
Jl. Ahmad Yani KM. 22,6
Landasan Ulin Utara
Banjarbaru, Kalimantan Selatan
Tel
: 00-62-511-4706180
Fax
: 00-62-511-4706179
ASSOCIATED COMPANIES
OVERSEAS
THAILAND
Muang Mai Guthrie Co. Ltd
9/17 Thepkrasattri Road, Rasada Muang
Phuket 83000
Tel
: 00-66-76-211332
Fax
: 00-66-76-215966
ESTATES – MALAYSIA
NORTHERN REGION
PT. Kridatama Lancar
JI. Batu Pirus No. 83 RT.17 RW. 07,
Sampit
Kalimantan Tengah-74300
Tel
: 00-62-532-21813
Fax
: 00-62-532-21813
PT. Teguh Sempurna
JI. Batu Pirus No. 83 RT.17 RW. 07,
Sampit
Kalimantan Tengah-74300
Tel
: 00-62-531-21813
Fax
: 00-62-531-21813
KEDAH DARUL AMAN
Ladang Sungai Dingin
09700 Karangan, Kedah
Tel
: 04-404 1104
Fax
: 04-404 2155
Ladang Anak Kulim
09009 Kulim, Kedah
Tel/Fax : 04-490 6344
09400 Padang Serai, Kedah
Tel
: 04-403 5233
Fax
: 04-403 3155
Ladang Padang Buluh / Jerai
P. O. Box 10
08007 Sungai Petani, Kedah
Tel/Fax : 04-421 2352
Ladang Bukit Cheraka
P. O. Box 202, 45809 Jeram, Selangor
Tel
: 03-3264 7144
Fax
: 03-3264 7666
PERAK DARUL RIDZUAN
Ladang Elmina/Ladang Subang/
Ladang Bukit Lagong
P. O. Box 204
47000 Sungai Buloh, Selangor
Tel
: 03-6038 3215
Fax
: 03-6038 1035
Ladang Sungai Tekal
28050 Kuala Krau, Pahang
Tel/Fax : 09-286 1344
SABAH
Ladang Kalumpong/Ladang Byram
34300 Bagan Serai, Perak
Tel/Fax : 05-721 5841
Ladang Kamuning
31100 Sungei Siput, Perak
Tel/Fax : 05-598 1109
Ladang Changkat Salak / Kamiri
31050 Salak North, Perak
Tel/Fax : 05-757 6505
SELANGOR DARUL EHSAN
Ladang Sabak Bernam/
Ladang Yew Lian
45207 Sabak Bernam, Selangor
Tel
: 03-3216 1254
Fax
: 03-3216 1208
Tel
: 05-623 5008 (Ladang Yew Lian)
Ladang Bukit Talang
P. O. Box 1
45000 Kuala Selangor, Selangor
Tel
: 03-3289 1180/8402
Fax
: 03-3289 5370
Ladang Bukit Kerayong/Ladang
Sungai Kapar/Ladang Bukit Tinggi
P. O. Box 204, 42200 Kapar, Selangor
Tel
: 03-3250 8232
Fax
: 03-3250 9917
Ladang Ampar Tenang
P. O. Box 4, 43807 Dengkil, Selangor
Tel/Fax : 03-8768 6304
NEGERI SEMBILAN DARUL KHUSUS
Ladang Labu
71900 Labu, Negeri Sembilan
Tel
: 06-791 1215
Fax
: 06-791 3243
Ladang P.D. Lukut
71000 Port Dickson, Negeri Sembilan
Tel
: 06-647 1988 (main office)
06-651 0566 (Sendayan)
Fax
: 06-647 7824
PAHANG DARUL MAKMUR
Ladang Jabor
Locked Bag No. 7
25990 Kuantan, Pahang
Tel
: 09-514 9260
Fax
: 09-514 9286
Ladang Chenor
Sungai Jerik
26400 Bandar Pusat Jengka, Pahang
Tel
: 09-466 2002
Fax
: 09-466 2759
Ladang Jeleta Bumi
P. O. Box 135, 91207 Kunak, Sabah
Tel
: 089-915 080
Fax
: 089-915 081
SOUTHERN REGION
Ladang Tanah Merah
71009 Port Dickson
Negeri Sembilan
Tel
: 06-667 3211/3794
Fax
: 06-667 4058
Ladang Bukit Pelandok/
Ladang Sungai Rawang
Tel
: 06-667 3399
Fax
: 06-667 3120
Ladang Sua Betong
Tel
: 06-634 2143
Fax
: 06-634 2715
Ladang Siliau
71100 Siliau, Negeri Sembilan
Tel
: 06-694 1477
Fax
: 06-694 4589
Ladang Sengkang
71259 Pasir Panjang, Negeri Sembilan
Tel
: 06-661 9311
Fax
: 06-661 9458
Ladang Tampin Linggi
71209 Rantau, Negeri Sembilan
Tel
: 06-697 0344
Fax
: 06-697 0508
Ladang Sungai Gemas
73400 Gemas, Negeri Sembilan
Tel
: 07-948 1101
Fax
: 07-948 4716
Ladang Temiang Renchong
Locked Bag No. 104
84600 Pagoh, Muar, Johor
Tel
: 06-974 6231
Fax
: 06-974 7434
Ladang Bukit Badak
P. O. Box 108
81850 Layang Layang, Johor
Tel
: 07-752 7206
Fax
: 07-752 8646
Ladang Cha’ah
P. O. Box 102, 85400 Cha’ah, Johor
Tel
: 07-439 2096/2021
Fax
: 07-439 2097
Ladang Lambak/Elaeis
P. O. Box 510, 86009 Kluang, Johor
Tel/Fax : 07-772 1043
MELAKA
Ladang Kemuning
76460 Tebong, Melaka
Tel
: 06-448 6245
Fax
: 06-448 6589
Ladang Serkam/Ladang Ledang
(Kemendore Division)
77009 Jasin, Melaka
Tel
: 06-529 1200/263 1212
(Serkam Division)
Fax
: 06-529 2162
Ladang Bukit Asahan
77100 Asahan, Melaka
Tel
: 06-523 6004
Fax
: 06-523 5077
JOHOR DARUL TAKZIM
Ladang Yong Peng
83700 Yong Peng, Johor
Tel
: 07-481 1849
Fax
: 07-481 1872
Ladang Pengkalan Bukit
Locked Bag No. 103
84500 Panchor, Muar, Johor
Tel
: 06-973 6239
Fax
: 06-973 7131
Ladang Sungai Labis
P. O. Box 1, 85300 Labis, Johor
Tel/Fax : 07-925 1009
Ladang Ulu Remis
P. O. Box 103
Tel
: 07-752 7107/752 7121
Fax
: 07-752 6353
Ladang Tun Dr Ismail
Locked Bag No. 112
86300 Rengam, Johor
Tel
: 07-753 6768
Fax
: 07-753 6769
Ladang Cenas
Locked Bag No. 104
Bandar Tenggara, 81000 Kulai, Johor
Tel
: 07-786 4002
Fax
: 07-786 4001
Ladang Sungai Tawing
Tel
: 07-781 3500
Fax
: 07-788 6142
PALM OIL MILLS
NORTHERN REGION
KEDAH DARUL AMAN
Ladang Pekan
Locked Bag 102, Bandar Tenggara
81000 Kulai, Johor
Tel
: 07-896 1370
Fax
: 07-896 2678
Ladang Sembrong
Tel
: 07-752 7100
Fax
: 07-752 5200
Ladang Simpang Rengam
Locked Bag No. 101
86300 Rengam, Johor
Tel
: 07-755 6500
Fax
: 07-755 3652
Kilang Kelapa Sawit Sungai Dingin
c/o Ladang Sungai Dingin
09700 Karangan, Kedah
Tel
: 04-406 4122
Fax
: 04-406 4121
PERAK DARUL RIDZUAN
Kilang Kelapa Sawit Kalumpong
34300 Bagan Serai, Perak
Tel/Fax : 05-721 5814
SELANGOR DARUL EHSAN
Kilang Kelapa Sawit Bukit Talang
P. O. Box 4
45000 Kuala Selangor, Selangor
Tel
: 03-3289 1401
Fax
: 03-3289 2313
Kilang Kelapa Sawit Bukit Kerayong
Jalan Bukit Kerayong
42200 Kapar, Selangor
Tel
: 03-3250 8209
Fax
: 03-3250 8080
PAHANG DARUL MAKMUR
Kilang Kelapa Sawit Jabor
Locked Bag No. 33
25990 Kuantan, Pahang
Tel
: 09-514 9101
Fax
: 09-514 9189
Kilang Kelapa Sawit Rantau
71209 Rantau, Negeri Sembilan
Tel
: 06-694 1288
Fax
: 06-694 2591
JOHOR DARUL TAKZIM
Kilang Kelapa Sawit Yong Peng
P. O. Box 104, 83700 Yong Peng, Johor
Tel
: 07-481 1811
Fax
: 07-481 1922
Kilang Kelapa Sawit Cha’ah
P. O. Box 104, 85400 Cha’ah, Johor
Tel
: 07-439 2454
Fax
: 07-439 2455
Kilang Kelapa Sawit Ulu Remis
P. O. Box 107
Tel
: 07-752 7126
Fax
: 07-752 7323
Palm Oil Mill Technology Centre
71900 Labu, Negeri Sembilan
Tel
: 06-791 6795
Fax
: 06-791 6796
Kilang Kelapa Sawit Sungai Tawing
Tel
: 07-772 6778
Fax
: 07-773 2779
SABAH
PALM OIL INSTALLATION
Kilang Kelapa Sawit Jeleta Bumi
P. O. Box 135, 91207 Kunak, Sabah
Tel
: 089-915 080
Fax
: 089-915 081
SOUTHERN REGION
Kilang Kelapa Sawit Tanah Merah
P. O. Box 45, 71007 Port Dickson
Negeri Sembilan
Tel
: 06-667 3317
Fax
: 06-667 2506
Guthrie Export Sdn. Berhad
Palm Oil Installation
P. O. Box 60, 42007 Port Klang
Tel
: 03-3168 6407/8
(Latex Installation)
03-3168 6406
(Palm Oil Installation)
Fax
: 03-3167 1973
Proxy Form
I/We
(FULL NAME IN BLOCK LETTERS)
of
(FULL ADDRESS)
being (a) member(s) of KUMPULAN GUTHRIE BERHAD hereby appoint
of
(FULL NAME IN BLOCK LETTERS)
(FULL ADDRESS)
or failing him, the Chairman of the Meeting as my/our proxy to vote for me/us and on my/our behalf at the Annual General
Meeting of the Company to be held at the Ballroom, Mezzanine Floor, Hotel Equatorial, Jalan Sultan Ismail, 50250 Kuala
Lumpur, Malaysia on Thursday, 7 June 2007 at 10.30 a.m. and at any adjournment thereof and to vote as indicated below:
RESOLUTIONS
FOR
1.
The resolution to receive and adopt the Report of the Directors and the Audited Financial
Statements for the financial year ended 31 December 2006 and the Auditors’ Report thereon.
2.
The resolution to approve the payment of a final dividend of 10% (10 sen per RM1.00 share)
comprising:
• 6 sen per RM1.00 share (Tax Exempt)
• 4 sen per RM1.00 share less 27% Malaysian income tax
3.
The resolution to approve the Directors’ fees for the financial year ended 31 December 2006.
4.
The resolution to re-elect Datuk Mohamed Adnan Ali as Director.
5.
The resolution to re-elect Dato’ Muhammad Nawawi Arshad as Director.
6.
The resolution to reappoint Raja Tan Sri Muhammad Alias Raja Muhammad Ali as Director.
7.
The resolution to reappoint Messrs. Ernst & Young as Auditors.
8.
The resolution to authorise the Directors to issue shares pursuant to Section 132D of the
Companies Act, 1965.
9.
The resolution to authorise the Allocation of Options to Dato’ Abd Wahab Maskan pursuant
to the Second Employees’ Share Option Scheme.
Dated this
day of
Number of Shares
, 2007.
AGAINST
CDS Account No.
Signature
or affix Common Seal
Notes and Instructions
1.
If you wish to appoint a proxy, this proxy form, duly signed, must reach Symphony Share Registrars Sendirian Berhad, Level 26, Menara Multi-Purpose,
Capital Square, No. 8, Jalan Munshi Abdullah, 50100 Kuala Lumpur, not less than 48 hours before the time appointed for holding the meeting.
2.
If you wish to appoint as your proxy, any person other than the Chairman of the Meeting, please insert the full name of the proxy (in block letters)
in the space provided and delete the words “the Chairman of the Meeting”. A proxy need not be a member of the Company.
3.
The signature of any joint holder is sufficient.
4.
A corporation may complete the proxy form under its common seal or under the hand of a duly authorised officer.
5.
Please indicate with √ either “For” or “Against”. If neither “For” nor “Against” is indicated, the proxy will vote as he thinks fit or abstain from voting.
Fold here
POSTAGE
Symphony Share Registrars Sendirian Berhad
Level 26, Menara Multi-Purpose
Capital Square
No. 8, Jalan Munshi Abdullah
50100 Kuala Lumpur
Malaysia
Fold here
1994
1997
1998
1999
2000
1995
2001
2002
NACRA AWARD 2003
• Industry Excellence
Award in Plantation
and Mining Category
• Best Annual Report in
Bahasa Malaysia
1996
2003
NACRA AWARD 2004
2004
NACRA AWARD 2005
Award in Plantation
and Mining Category
Award in Plantation and
Mining Category
• Best Annual Report in
Bahasa Malaysia
NACRA AWARD 2006
• Most Outstanding Annual Report (Silver)
• Industry Excellence Award in Plantation
and Mining Category
• Best Annual Report in Bahasa Malaysia
(Gold)
• Environmental Reporting Award (Silver)
2005

kumpulan guthrie berhad

Transcription

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